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Name | Symbol | Market | Type |
---|---|---|---|
Grupo Financiero Galicia SA | NASDAQ:GGAL | NASDAQ | Depository Receipt |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
2.22 | 4.55% | 51.04 | 50.85 | 51.63 | 50.65 | 48.2018 | 49.06 | 774,476 | 00:56:17 |
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of August, 2014
Commission File Number: 0-30852
GRUPO FINANCIERO GALICIA S.A.
(the Registrant)
Galicia Financial Group S.A.
(translation of Registrants name into English)
Tte. Gral. Juan D. Perón 430, 25th Floor
(CP1038) Buenos Aires, Argentina
(address of principal executive offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark whether by furnishing the information contained in this form, the Registrant is also thereby furnishing the information to the Securities and Exchange Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If Yes is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-
FORM 6-K
Commission File No. 0-30852
Month Filed | Event and Summary | Exhibit No. | ||
August, 2014 | Consolidated financial results of the Registrant, presented in comparative format, for the six-month period commenced January 1, 2014 and ended June 30, 2014. | 99.1 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GRUPO FINANCIERO GALICIA S.A. (Registrant) | ||||||
Date: August 27, 2014 | By: | /s/ Pedro Alberto Richards | ||||
Name: | Pedro Alberto Richards | |||||
Title: | Chief Executive Officer |
Exhibit 99.1
GRUPO FINANCIERO GALICIA S.A.
FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
GRUPO FINANCIERO GALICIA S.A.
FINANCIAL STATEMENTS
FOR THE SIX-MONTH PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Fiscal Year No. 16, commenced January 1, 2014
Legal Domicile: Tte. Gral. Juan D. Perón No. 430 25th floor, Buenos Aires, Argentina
Principal Line of Business: Financial and Investment Activities
Registration No. with the Corporation Control Authority (I.G.J.): 12,749
Sequential Number Corporation Control Authority: 1,671,058
Date of Registration with the Corporation Control Authority (I.G.J.):
Of Bylaws: September 30, 1999
Date of Latest Amendment to Bylaws: July 16, 2010
Date of Expiration of the Companys Bylaws: June 30, 2100
Information on the Controlling Company:
Companys Name: EBA HOLDING S.A.
Principal Line of Business: Financial and Investment Activities
Interest Held by the Controlling Company in the Shareholders Equity as of 06.30.14: 21.63%
Interest held by the Controlling Company in the Votes as of 06.30.14: 57.98%
Capital Status as of 06.30.14 (Note 8 to the Financial Statements):
(Figures Stated in Thousands of Pesos for Subscribed, Paid-in and Registered Shares)
Shares | ||||||||||||||||||
Amount |
Type | Voting Rights per Share |
Subscribed | Paid-in | Registered | |||||||||||||
281,221,650 | Ordinary Class A, Face Value of 1 |
5 | 281,222 | 281,222 | 281,222 | |||||||||||||
1,019,042,947 | Ordinary Class B, Face Value of 1 |
1 | 1,019,043 | 1,019,043 | 1,019,043 | |||||||||||||
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1,300,264,597 | | | 1,300,265 | 1,300,265 | 1,300,265 | |||||||||||||
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1
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Notes |
06.30.14 | 12.31.13 | ||||||||
Assets |
||||||||||
Cash and Due from Banks |
14,687,978 | 12,560,345 | ||||||||
|
|
|
|
|||||||
Cash |
2,830,456 | 2,930,380 | ||||||||
Financial Institutions and Correspondents |
11,857,522 | 9,629,965 | ||||||||
Argentine Central Bank (B.C.R.A.) |
11,723,232 | 9,473,778 | ||||||||
Other Local Financial Institutions |
32,622 | 36,014 | ||||||||
Foreign |
101,668 | 120,173 | ||||||||
|
|
|
|
|||||||
Government and Private Securities |
3 | 10,322,671 | 3,987,329 | |||||||
|
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|
|
|||||||
Holdings Recorded at Fair Market Value |
2,292,882 | 742,873 | ||||||||
Holdings Recorded at their Acquisition Cost plus the I.R.R. |
550,156 | 1,137,013 | ||||||||
Instruments Issued by the Argentine Central Bank |
7,466,992 | 2,077,018 | ||||||||
Investments in Listed Private Securities |
12,641 | 30,425 | ||||||||
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|
|||||||
Loans |
4 and 5 | 58,846,394 | 55,264,926 | |||||||
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|
|||||||
To the Non-financial Public Sector |
14,454 | 12,570 | ||||||||
To the Financial Sector |
723,240 | 632,838 | ||||||||
Interbank Loans (Call Money Loans Granted) |
238,208 | 135,000 | ||||||||
Other Loans to Local Financial Institutions |
422,803 | 462,927 | ||||||||
Accrued Interest, Adjustments and Exchange Rate Differences Receivable |
62,229 | 34,911 | ||||||||
To the Non-financial Private Sector and Residents Abroad |
60,628,167 | 56,748,165 | ||||||||
Overdrafts |
4,872,155 | 3,323,226 | ||||||||
Promissory Notes |
13,781,179 | 13,322,514 | ||||||||
Mortgage Loans |
1,798,924 | 1,803,375 | ||||||||
Collateral Loans |
506,993 | 480,707 | ||||||||
Personal Loans |
7,849,786 | 8,050,655 | ||||||||
Credit Card Loans |
29,007,425 | 27,388,708 | ||||||||
Others |
2,092,029 | 1,825,190 | ||||||||
Accrued Interest, Adjustments and Exchange Rate Differences Receivable |
954,712 | 826,668 | ||||||||
Unearned Discount |
(233,973 | ) | (270,564 | ) | ||||||
Unallocated Collections |
(1,063 | ) | (2,314 | ) | ||||||
Allowances |
6 | (2,519,467 | ) | (2,128,647 | ) | |||||
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Other Receivables Resulting from Financial Brokerage |
6,473,005 | 5,696,143 | ||||||||
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|
|||||||
Argentine Central Bank |
1,018,997 | 1,048,268 | ||||||||
Amounts Receivable for Spot and Forward Sales to be Settled |
1,195,061 | 199,623 | ||||||||
Securities Receivable under Spot and Forward Purchases to be Settled |
484,435 | 248,613 | ||||||||
Others Not Included in the Debtor Classification Regulations |
7 | 2,399,296 | 2,505,274 | |||||||
Unlisted Negotiable Obligations |
5 | 738,102 | 1,091,061 | |||||||
Balances from Forward Transactions without Delivery of Underlying Asset to be Settled |
8 | 42,554 | 15,068 | |||||||
Others Included in the Debtor Classification Regulations |
5 | 715,531 | 664,859 | |||||||
Accrued Interest Receivable Included in the Debtor Classification Regulations |
5 | 4,438 | 2,810 | |||||||
Allowances |
(125,409 | ) | (79,433 | ) | ||||||
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Receivables from Financial Leases |
1,084,585 | 1,128,067 | ||||||||
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Receivables from Financial Leases |
5 | 1,076,845 | 1,121,026 | |||||||
Accrued Interest and Adjustments Receivable |
5 | 21,625 | 23,024 | |||||||
Allowances |
(13,885 | ) | (15,983 | ) |
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
2
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 12.31.13 | ||||||||
Equity Investments |
9 | 57,165 | 89,953 | |||||||
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|
|||||||
In Financial Institutions |
4,032 | 3,231 | ||||||||
Others |
55,068 | 108,817 | ||||||||
Allowances |
(1,935 | ) | (22,095 | ) | ||||||
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Miscellaneous Receivables |
1,395,225 | 1,161,669 | ||||||||
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Receivables for Assets Sold |
5 | 10,213 | 9,811 | |||||||
Minimum Presumed Income Tax Tax Credit |
1.15 | 10,328 | 16,899 | |||||||
Others |
10 | 1,496,352 | 1,262,530 | |||||||
Other Accrued Interest and Adjustments Receivable |
19,317 | 11,416 | ||||||||
Allowances |
(140,985 | ) | (138,987 | ) | ||||||
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Bank Premises and Equipment |
11 | 1,437,218 | 1,394,243 | |||||||
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Miscellaneous Assets |
12 | 255,886 | 233,479 | |||||||
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Intangible Assets |
13 | 1,614,269 | 1,434,230 | |||||||
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Goodwill |
29,827 | 13,249 | ||||||||
Organization and Development Expenses |
1,584,442 | 1,420,981 | ||||||||
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Unallocated Items |
8,090 | 4,022 | ||||||||
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Other Assets |
14 | 239,490 | 201,417 | |||||||
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Total Assets |
96,421,976 | 83,155,823 | ||||||||
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The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
3
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 12.31.13 | ||||||||
Liabilities |
||||||||||
Deposits |
58,564,028 | 51,395,323 | ||||||||
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|
|||||||
Non-financial Public Sector |
2,209,953 | 1,706,215 | ||||||||
Financial Sector |
22,047 | 22,101 | ||||||||
Non-financial Private Sector and Residents Abroad |
56,332,028 | 49,667,007 | ||||||||
Checking Accounts |
14,024,182 | 11,990,174 | ||||||||
Savings Accounts |
13,001,168 | 11,801,077 | ||||||||
Time Deposits |
27,954,291 | 24,875,124 | ||||||||
Investment Accounts |
182,329 | 68,767 | ||||||||
Others |
539,210 | 505,869 | ||||||||
Accrued Interest, Adjustments and Exchange Rate Differences Payable |
630,848 | 425,996 | ||||||||
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Other Liabilities Resulting from Financial Brokerage |
23,393,021 | 19,333,341 | ||||||||
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Argentine Central Bank |
6,910 | 6,028 | ||||||||
Others |
6,910 | 6,028 | ||||||||
Banks and International Entities |
1,550,485 | 679,760 | ||||||||
Unsubordinated Negotiable Obligations |
16 | 7,059,923 | 5,787,631 | |||||||
Amounts Payable for Spot and Forward Purchases to be Settled |
435,240 | 247,366 | ||||||||
Securities to be Delivered under Spot and Forward Sales to be Settled |
1,332,339 | 201,123 | ||||||||
Loans from Local Financial Institutions |
1,350,025 | 1,442,501 | ||||||||
Interbank Loans (Call Money Loans Received) |
30,020 | 105,500 | ||||||||
Other Loans from Local Financial Institutions |
1,305,313 | 1,321,031 | ||||||||
Accrued Interest Payable |
14,692 | 15,970 | ||||||||
Balances from Forward Transactions without Delivery of Underlying Asset to be Settled |
8 | 21,968 | 66,908 | |||||||
Others |
17 | 11,391,421 | 10,725,506 | |||||||
Accrued Interest, Adjustments and Exchange Rate Differences Payable |
16 | 244,710 | 176,518 | |||||||
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|
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Miscellaneous Liabilities |
2,698,466 | 2,475,782 | ||||||||
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Directors and Syndics Fees |
14,301 | 23,165 | ||||||||
Others |
18 | 2,684,165 | 2,452,617 | |||||||
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Provisions |
19 | 396,521 | 442,872 | |||||||
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Subordinated Negotiable Obligations |
16 | 1,916,614 | 1,656,297 | |||||||
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Unallocated Items |
32,457 | 15,532 | ||||||||
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Other Liabilities |
20 | 328,655 | 287,488 | |||||||
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|
|||||||
Minority Interest in Controlled Companies |
659,635 | 601,959 | ||||||||
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Total Liabilities |
87,989,397 | 76,208,594 | ||||||||
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|
|||||||
Shareholders Equity |
8,432,579 | 6,947,229 | ||||||||
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|
|||||||
Total Liabilities and Shareholders Equity |
96,421,976 | 83,155,823 | ||||||||
|
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|
|
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
4
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Memorandum Accounts |
Notes | 06.30.14 | 12.31.13 | |||||||
Debit |
93,490,411 | 91,306,310 | ||||||||
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Contingent |
20,055,273 | 19,403,715 | ||||||||
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Loans Obtained (Unused Balances) |
| 64,202 | ||||||||
Guarantees Received |
12,994,945 | 13,055,174 | ||||||||
Others not Included in the Debtor Classification Regulations |
20,937 | 16,780 | ||||||||
Contingencies re. Contra Items |
7,039,391 | 6,267,559 | ||||||||
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Control |
55,690,113 | 48,697,309 | ||||||||
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Loans Classified as Irrecoverable |
2,801,562 | 2,429,743 | ||||||||
Others |
21 | 50,933,680 | 44,930,819 | |||||||
Control re. Contra Items |
1,954,871 | 1,336,747 | ||||||||
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Derivatives |
8 | 11,587,287 | 17,068,790 | |||||||
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Notional Value of Forward Transactions without Delivery of Underlying Asset |
6,405,015 | 11,759,787 | ||||||||
Interest Rate Swaps |
450,268 | 919,365 | ||||||||
Derivatives re. Contra Items |
4,732,004 | 4,389,638 | ||||||||
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Trust Accounts |
6,157,738 | 6,136,496 | ||||||||
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Trust Funds |
22 | 6,157,738 | 6,136,496 | |||||||
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Credit |
93,490,411 | 91,306,310 | ||||||||
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Contingent |
20,055,273 | 19,403,715 | ||||||||
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Loans Granted (Unused Balances) Included in the Debtor Classification Regulations |
5 | 4,754,273 | 4,423,341 | |||||||
Guarantees Granted to the Argentine Central Bank |
2,277 | 2,235 | ||||||||
Other Guarantees Granted Included in the Debtor Classification Regulations |
5 | 421,283 | 430,915 | |||||||
Other Guarantees Granted not Included in the Debtor Classification Regulations |
840,420 | 619,906 | ||||||||
Others Included in the Debtor Classification Regulations |
5 | 946,658 | 725,563 | |||||||
Others not Included in the Debtor Classification Regulations |
74,480 | 65,599 | ||||||||
Contingencies re. Contra Items |
13,015,882 | 13,136,156 | ||||||||
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Control |
55,690,113 | 48,697,309 | ||||||||
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Checks and Drafts to be Credited |
1,950,711 | 1,310,307 | ||||||||
Others |
4,160 | 26,440 | ||||||||
Control re. Contra Items |
53,735,242 | 47,360,562 | ||||||||
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Derivatives |
8 | 11,587,287 | 17,068,790 | |||||||
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Notional Value of Forward Transactions without Delivery of Underlying Asset |
4,732,004 | 4,389,638 | ||||||||
Derivatives re. Contra Items |
6,855,283 | 12,679,152 | ||||||||
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Trust Accounts |
6,157,738 | 6,136,496 | ||||||||
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Trust Liabilities re. Contra Items |
6,157,738 | 6,136,496 |
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
5
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 06.30.13 | ||||||||
Financial Income |
9,999,879 | 5,692,537 | ||||||||
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Interest on Cash and Due from Banks |
| 11 | ||||||||
Interest on Loans to the Financial Sector |
90,131 | 41,740 | ||||||||
Interest on Overdrafts |
701,328 | 398,586 | ||||||||
Interest on Promissory Notes |
1,751,471 | 1,059,623 | ||||||||
Interest on Mortgage Loans |
162,294 | 85,665 | ||||||||
Interest on Collateral Loans |
41,529 | 26,738 | ||||||||
Interest on Credit Card Loans |
3,019,482 | 2,020,871 | ||||||||
Interest on Financial Leases |
112,166 | 84,869 | ||||||||
Interest on Other Loans |
1,809,811 | 1,497,326 | ||||||||
Net Income from Government and Private Securities |
1,169,092 | 366,237 | ||||||||
Interest on Other Receivables Resulting from Financial Brokerage |
106,656 | 27,876 | ||||||||
Net Income from Secured Loans - Decree No. 1387/01 |
2,158 | 1,504 | ||||||||
C.E.R. Adjustment |
821 | 421 | ||||||||
Others |
1,032,940 | 81,070 | ||||||||
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Financial Expenses |
5,213,942 | 2,632,359 | ||||||||
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Interest on Savings Account Deposits |
887 | 2,364 | ||||||||
Interest on Time Deposits |
3,351,139 | 1,570,442 | ||||||||
Interest on Interbank Loans Received (Call Money Loans) |
12,835 | 5,037 | ||||||||
Interest on Other Loans from Financial Institutions |
71,573 | 41,571 | ||||||||
Interest on Other Liabilities Resulting From Financial Brokerage |
776,500 | 414,794 | ||||||||
Interest on Subordinated Negotiable Obligations |
149,129 | 71,769 | ||||||||
Other Interest |
31,114 | 13,940 | ||||||||
Net Income from Options |
| 2,487 | ||||||||
C.E.R. Adjustment |
195 | 277 | ||||||||
Contributions Made to Deposit Insurance Fund |
46,648 | 35,395 | ||||||||
Exchange Rate Differences on Gold and Foreign Currency |
87,585 | 30,112 | ||||||||
Others |
24 | 686,337 | 444,171 | |||||||
|
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|
|||||||
Gross Financial Brokerage Margin |
4,785,937 | 3,060,178 | ||||||||
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Provision for Loan Losses |
1,248,470 | 875,684 | ||||||||
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|
|||||||
Income from Services |
3,694,113 | 2,875,006 | ||||||||
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|
|||||||
Related to Lending Transactions |
781,500 | 753,855 | ||||||||
Related to Borrowing Transactions |
550,526 | 437,935 | ||||||||
Other Commissions |
105,442 | 88,282 | ||||||||
Others |
24 | 2,256,645 | 1,594,934 | |||||||
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|
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Expenses For Services |
1,171,361 | 913,101 | ||||||||
|
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Commissions |
570,876 | 433,639 | ||||||||
Others |
24 | 600,485 | 479,462 |
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
6
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 06.30.13 | ||||||||
Administrative Expenses |
4,343,128 | 3,543,351 | ||||||||
|
|
|
|
|||||||
Personnel Expenses |
2,489,596 | 2,070,454 | ||||||||
Directors and Syndics Fees |
40,309 | 30,179 | ||||||||
Other Fees |
98,753 | 96,078 | ||||||||
Advertising and Publicity |
202,433 | 185,921 | ||||||||
Taxes |
388,595 | 285,012 | ||||||||
Depreciation of Bank Premises and Equipment |
11 | 82,680 | 73,190 | |||||||
Amortization of Organization Expenses |
13 | 148,497 | 120,651 | |||||||
Other Operating Expenses |
542,144 | 428,475 | ||||||||
Others |
350,121 | 253,391 | ||||||||
|
|
|
|
|||||||
Net Income from Financial Brokerage |
1,717,091 | 603,048 | ||||||||
|
|
|
|
|||||||
Income from Insurance Activities |
25 | 567,212 | 446,532 | |||||||
|
|
|
|
|||||||
Minority Interest |
(83,023 | ) | (100,474 | ) | ||||||
|
|
|
|
|||||||
Miscellaneous Income |
483,067 | 310,122 | ||||||||
|
|
|
|
|||||||
Net Income from Equity Investments |
51,235 | 44,234 | ||||||||
Penalty Interest |
151,443 | 98,170 | ||||||||
Loans Recovered and Allowances Reversed |
155,625 | 109,531 | ||||||||
Others |
24 | 124,764 | 58,187 | |||||||
|
|
|
|
|||||||
Miscellaneous Losses |
198,619 | 112,323 | ||||||||
|
|
|
|
|||||||
Penalty Interest and Charges in favor of the Argentine Central Bank |
18 | 31 | ||||||||
Provisions for Losses on Miscellaneous Receivables and Other Provisions |
122,604 | 63,772 | ||||||||
C.E.R. Adjustment |
1 | 29 | ||||||||
Amortization of Differences Arising from Court Resolutions |
2,683 | 4,846 | ||||||||
Depreciation and Losses from Miscellaneous Assets |
12 | 667 | 485 | |||||||
Amortization of Goodwill |
13 | 2,930 | 970 | |||||||
Others |
24 | 69,716 | 42,190 | |||||||
|
|
|
|
|||||||
Net Income before Income Tax |
2,485,728 | 1,146,905 | ||||||||
|
|
|
|
|||||||
Income Tax |
1.14 | 961,783 | 486,165 | |||||||
|
|
|
|
|||||||
Net Income for the Period |
27 | 1,523,945 | 660,740 |
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
7
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 06.30.13 | ||||||||
Changes in Cash and Cash Equivalents |
||||||||||
Cash at Beginning of Fiscal Year |
29 | 15,823,881 | 11,323,978 | |||||||
Cash at Period-end |
29 | 21,239,885 | 10,755,761 | |||||||
|
|
|
|
|||||||
Increase in Cash, Net (in Constant Currency) |
5,416,004 | (568,217 | ) | |||||||
|
|
|
|
|||||||
Causes for Changes in Cash (in Constant Currency) |
||||||||||
Operating Activities |
||||||||||
Net Collections/(Payments) for: |
||||||||||
Government and Private Securities |
(1,949,223 | ) | (462,040 | ) | ||||||
Loans |
||||||||||
To the Financial Sector |
58,926 | (53,730 | ) | |||||||
To the Non-financial Public Sector |
(61 | ) | (54,327 | ) | ||||||
To the Non-financial Private Sector and Residents Abroad |
3,497,887 | (764,696 | ) | |||||||
Other Receivables Resulting from Financial Brokerage |
1,962,781 | (489,909 | ) | |||||||
Receivables from Financial Leases |
157,083 | (53,285 | ) | |||||||
Deposits |
||||||||||
From the Financial Sector |
(54 | ) | (8,513 | ) | ||||||
From the Non-financial Public Sector |
503,738 | 215,632 | ||||||||
From the Non-financial Private Sector and Residents Abroad |
2,526,835 | 2,081,528 | ||||||||
Other Liabilities Resulting from Financial Brokerage |
||||||||||
Financing from the Financial Sector |
||||||||||
Interbank Loans (Call Money Loans Received) |
(88,335 | ) | (32,037 | ) | ||||||
Others (Except from Liabilities Included in Financing Activities) |
335,350 | 252,640 | ||||||||
Collections related to Income from Services |
4,550,437 | 3,531,586 | ||||||||
Payments related to Expenses for Services |
(1,040,113 | ) | (806,980 | ) | ||||||
Administrative Expenses Paid |
(4,447,796 | ) | (3,620,931 | ) | ||||||
Payment of Organization and Development Expenses |
(311,524 | ) | (280,777 | ) | ||||||
Collection for Penalty Interest, Net |
151,443 | 98,139 | ||||||||
Differences Arising from Court Resolutions Paid |
(2,683 | ) | (4,846 | ) | ||||||
Collection of Dividends from Other Companies |
23,799 | 9,519 | ||||||||
Other Collections related to Miscellaneous Profits and Losses |
43,612 | 54,378 | ||||||||
Net Collections / (Payments) for Other Operating Activities |
||||||||||
Other Receivables and Miscellaneous Liabilities |
(776,826 | ) | (750,162 | ) | ||||||
Other Operating Activities, Net |
(235,799 | ) | (46,244 | ) | ||||||
Income Tax and Minimum Presumed Income Tax Payment |
(861,958 | ) | (248,830 | ) | ||||||
|
|
|
|
|||||||
Net Cash Flow Provided by Operating Activities |
4,097,519 | (1,433,885 | ) | |||||||
|
|
|
|
|||||||
Investing Activities |
||||||||||
Payments for Bank Premises and Equipment, Net |
(108,842 | ) | (112,383 | ) | ||||||
Payments for Miscellaneous Assets, Net |
(33,993 | ) | (43,587 | ) | ||||||
Payments for Equity Investments |
(49,376 | ) | (8,955 | ) | ||||||
Collections from Sale of Equity Investments |
| 926 | ||||||||
|
|
|
|
|||||||
Net Cash Flow Used in Investing Activities |
(192,211 | ) | (163,999 | ) | ||||||
|
|
|
|
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
8
GRUPO FINANCIERO GALICIA S.A.
CONSOLIDATED STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 06.30.13 | ||||||||
Financing Activities |
||||||||||
Net Collections/(Payments) for: |
||||||||||
Unsubordinated Negotiable Obligations |
9,979 | 396,188 | ||||||||
Argentine Central Bank |
||||||||||
Others |
882 | 1,178 | ||||||||
Banks and International Entities |
679,271 | 260,428 | ||||||||
Subordinated Negotiable Obligations |
(242,623 | ) | (38,491 | ) | ||||||
Loans from Local Financial Institutions |
(164,067 | ) | 141,934 | |||||||
Distribution of Dividends |
(49,520 | ) | (14,725 | ) | ||||||
|
|
|
|
|||||||
Net Cash Flow (Used in) / Provided by Financing Activities |
233,922 | 746,512 | ||||||||
|
|
|
|
|||||||
Financial Income and Holding Gain on Cash and Cash Equivalents (including Interest and Monetary Gain) |
1,276,774 | 283,155 | ||||||||
|
|
|
|
|||||||
Increase in Cash, Net |
5,416,004 | (568,217 | ) | |||||||
|
|
|
|
The accompanying notes 1 to 38 are an integral part of these consolidated financial statements.
9
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 1. BASIS FOR THE PRESENTATION OF THE FINANCIAL STATEMENTS AND ACCOUNTING PRINCIPLES APPLIED
Grupo Financiero Galicia S.A. (the Company) was constituted on September 14, 1999, as a financial services holding company organized under the laws of Argentina. The Companys main asset is its interest in Banco de Galicia y Buenos Aires S.A. (the Bank).
The Bank is a private-sector bank that offers a full spectrum of financial services both to individual and corporate customers.
PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS:
These consolidated financial statements, which stem from accounting records, have been stated in thousands of Argentine Pesos and are presented in line with the provisions of Argentine Central Banks (B.C.R.A.) Communiqué A 3147 and supplementary regulations regarding financial reporting requirements for the publication of annual financial statements, with the guidelines of Technical Pronouncement Nos. 8 and 19 of the Argentine Federation of Professional Councils in Economic Sciences (F.A.C.P.C.E.) and with the regulations of the National Securities Commission (C.N.V.) (text amended in 2013). These financial statements include the balances corresponding to the operations carried out by the Company and its subsidiaries located in Argentina and abroad.
The financial statements of the Company have been consolidated on a line-by-line basis with those of its controlled companies, either directly or indirectly, which are detailed in Note 2.
Due to the fact that the Bank is the Companys main equity investment, a financial institution subject to the Argentine Central Bank regulations, and pursuant to the regulations of the C.N.V. (text amended in 2013), the Company has adopted the valuation and disclosure criteria applied by the Bank, which in some significant aspects differ from Argentine GAAP in force in Buenos Aires. (See Note 1.16).
Furthermore, the consolidated financial statements of Sudamericana Holding S.A. were prepared in accordance with the disclosure and valuation criteria approved by the Argentine Superintendence of Insurance; which in some aspects differ from Argentine GAAP in force in Buenos Aires, in particular as regards the valuation of investments in Secured Loans and certain Government Securities. Nevertheless, this departure has not produced a significant effect on the financial statements of the Company.
These consolidated financial statements include the balances of its subsidiary abroad: Banco Galicia Uruguay S.A. (in liquidation). The conversion into Pesos of this subsidiarys accounting balances was made according to the following:
i. | Assets and liabilities were converted into Pesos according to item 1.2 of this Note. |
ii. | Allotted capital has been computed for the actually disbursed restated amounts. |
iii. | Retained earnings were determined as the difference between assets, liabilities and the allotted capital. |
iv. | Net income for the period was determined by the difference between retained earnings at the beginning of the fiscal year and retained earnings at period-end. The balances of income statement accounts were converted into Pesos applying the monthly average exchange rates recorded in each month of this period. |
v. | The significant items arising from intercompany transactions, not involving third parties, have been eliminated from the Balance Sheet and the Income Statement. |
10
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
CONSIDERATION OF THE EFFECTS OF INFLATION:
These consolidated financial statements reflect the effects of the changes in the purchasing power of the currency up to February 28, 2003, by following the restatement method established by Technical Pronouncement No. 6 of F.A.C.P.C.E. In line with Communiqué A 3921 of the Argentine Central Bank, Decree No. 664/03 of the National Executive Branch and General Resolution No. 441/03 of the C.N.V., the Company discontinued the application of that method and therefore did not recognize the effects of the changes in the purchasing power of the currency that originated after March 1, 2003.
This criterion is not in line with Resolution M.D. No. 41/03 of the Professional Council in Economic Sciences of Buenos Aires (C.P.C.E.C.A.B.A.), which established the discontinuation of the recognition of the changes in the purchasing power of the currency, effective October 1, 2003. Nevertheless, this departure has not produced a significant effect on the financial statements.
The index used for restating the items in these financial statements was the domestic wholesale price index published by the Argentine Institute of Statistics and Census (I.N.D.E.C.).
COMPARATIVE INFORMATION:
The comparative information in the Balance Sheet, Schedules and Notes corresponds to the end of the previous fiscal year, while that of the Income Statement, the Statement of Changes in Shareholders Equity and Statement of Cash Flows and Cash Equivalents correspond to the same period of the previous fiscal year.
Certain figures in the consolidated financial statements for the fiscal year ended December 31, 2013 and the six-month period ended June 30, 2013 have been reclassified for purposes of their presentation in comparative format with those for this period.
ACCOUNTING ESTIMATES:
The preparation of financial statements at a given date requires the Company to make estimates and assessments that affect the amounts of assets and liabilities reported and the disclosure of contingent assets and liabilities, as well as the income and expenses accrued for the period/fiscal year. In this regard, the Company makes estimates in order to calculate, at any given moment, the allowance for uncollectible receivables, the depreciation and amortization charges, the recoverable value of assets, the income tax charge and the provisions for contingencies, among others. Future actual results may differ from estimates and assessments made at the date these financial statements were prepared.
MOST RELEVANT ACCOUNTING POLICIES:
1.1. ASSETS AND LIABILITIES IN DOMESTIC CURRENCY
Monetary assets and liabilities which include, where applicable, the interest accrued at period/fiscal year-end, are stated in period-end currency and therefore require no adjustment whatsoever.
1.2. ASSETS AND LIABILITIES IN FOREIGN CURRENCY
Foreign currency assets and liabilities have been stated at the U.S. Dollar exchange rate set by the Argentine Central Bank, in force at the close of operations on the last working day of each month.
As of June 30, 2014, December 31, 2013 and June 30, 2013, balances in U.S. Dollars were converted applying the reference exchange rate (figures stated in Pesos: $ 8.1327, $ 6.5180 and $ 5.3852, respectively) set by the Argentine Central Bank.
Assets and liabilities valued in foreign currencies other than the U.S. Dollar have been converted into the latter currency using swap rates informed by the Argentine Central Bank.
11
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Interest receivable or payable has been accrued at period/fiscal year-end, where applicable.
12
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
1.3. GOVERNMENT AND PRIVATE SECURITIES
Argentine Central Bank regulations set forth, according to the assets most probable use, two valuation criteria for holdings of non-financial public sector debt instruments:
a. Fair Market Value: These holdings are government securities and monetary regulation instruments included in the volatilities or present values lists issued by the Argentine Central Bank.
These are recorded at the closing price for each class of securities in the corresponding markets or at their present value, plus the value of amortization and/or interest coupons due and receivable.
b. Acquisition Cost plus the I.R.R.: These include government securities and monetary regulation instruments issued by the Argentine Central Bank that are not included in the preceding item.
These holdings are recorded at their acquisition cost increased on an exponential basis according to their I.R.R. The monthly accrual is charged to income or an asset offset account, depending on the securities involved:
b.1. Government debt instruments subscribed through swap, payment or exchange by any other government debt instruments. In the case the market value of each instrument is lower than its book value, 50% of the monthly accrual of the I.R.R. must be charged against an asset offset account. Said offset account shall be reversed by charging to income to the extent its balance exceeds the positive difference between the market value and book value.
b.2. Monetary regulation instruments issued by the Argentine Central Bank. The monthly accrual of the I.R.R. shall be charged to income.
b.3. Government securities that were not subscribed through swap with no volatility or present value informed by the Argentine Central Bank. These are recorded at the present value of cash flows discounted by the internal rate of return of instruments with similar characteristics and duration and with volatility. When the book value exceeds the present value, the monthly accrual shall be recorded to an asset offset account.
b.4. Argentine Saving Bond for Economic Development (BAADE Bono Argentino de Ahorro para el Desarrollo Económico) and Saving Promissory Note for Economic Development (Pagaré de Ahorro para el Desarrollo Económico), acquired through primary subscription. These are recorded at their acquisition cost, the monthly accrual of the I.R.R. being charged to income.
Furthermore, those instruments subject to be valued at the fair market value and then decided to be valued at their acquisition cost plus the I.R.R. may be recorded in this item, when the purpose thereof is to obtain contractual cash flows. In these cases, the maximum amount to be used shall not exceed net liquid assets of 40% of deposits.
As of June 30, 2014 and December 31, 2013, taking into account the above-mentioned valuation criteria, the Company records its holdings as follows:
1.3.1. Holdings Recorded at Fair Market Value
These holdings include trading securities that were valued according to what is stated in item a. above.
The same criterion is applied to holdings of such securities used in loans, as guarantees, transactions to be settled and repo transactions, when appropriate.
1.3.2. Holdings Recorded at their Acquisition Cost plus the I.R.R.
In this account, the Company records Peso-denominated Bonds issued by the Argentine Nation at Badlar rate due 2015 (Bonar 2015), and the Argentine Saving Bond for Economic Development (BAADE), among others.
The holding of such securities has been valued pursuant to the criterion stated in item b. above.
The same criterion was applied to the securities used in loans, as guarantees, transactions to be settled and repo transactions, when appropriate.
1.3.3. Investments in Listed Private Securities
These securities are valued at the period/fiscal year-end closing price in the corresponding market, less estimated selling costs, where applicable.
13
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
1.3.4. Instruments Issued by the Argentine Central Bank
Holdings of instruments issued by the Argentine Central Bank which are included in the volatilities list have been valued at their closing price in the corresponding markets. The same criterion was applied to holdings of such securities used in loans, as guarantees, transactions to be settled and repo transactions, when appropriate.
Holdings of instruments issued by the Argentine Central Bank which are not included in the volatilities list have been valued at their acquisition cost increased on an exponential basis according to their I.R.R. The same criterion was applied to holdings of such securities used in loans, as guarantee and in repo transactions, where appropriate.
1.4. ACCRUAL OF ADJUSTMENTS, INTEREST, EXCHANGE RATE DIFFERENCES, PREMIUMS ON FUTURE TRANSACTIONS AND VARIABLE INCOME
For foreign and local currency transactions with a principal adjustment clause, as well as for those in which rates have been prearranged for terms up to 92 days, the accrual has been recognized on a linear basis.
For local currency transactions at rates arranged for longer periods, interest has been accrued on an exponential basis.
For lending and borrowing transactions, which according to the legal and/or contractual conditions may be applicable, the adjustment by the C.E.R. has been accrued.
For lending transactions, the Company does not recognize interest accrual when debtors are classified in a non-accrual status.
1.5. OTHER RECEIVABLES RESULTING FROM FINANCIAL BROKERAGE
1.5.1. Mutual Fund Units
The holdings of mutual fund units have been valued pursuant to the value published by the mutual fund manager at period/fiscal year-end, less estimated selling costs, when applicable.
1.5.2. Financial Trust Debt Securities - Unlisted
Debt securities added at par have been valued at their technical value; the remaining holdings were valued at their acquisition cost increased on an exponential basis according to their I.R.R.
1.5.3. Participation Certificates in Financial Trusts - Unlisted
Participation certificates in financial trusts are valued taking into account the share in the assets, net of liabilities, which stem from the financial statements of the respective trusts, as modified by the application of the Argentine Central Bank regulations, when applicable.
Trusts with government-sector assets as underlying assets have been valued pursuant to the valuation criteria described in item 1.3.2 of this Note. In the particular case of the Participation Certificate in Galtrust I Financial Trust, it has been recorded according to what is stated in item 1.3.b.3 of this Note.
1.5.4. Unlisted Negotiable Obligations
These have been valued at their acquisition cost increased on an exponential basis according to their I.R.R.
1.6. RECEIVABLES FROM FINANCIAL LEASES
These receivables are recorded at the present value of the sum of periodic installments and residual values previously established and calculated pursuant to the terms and conditions agreed upon in the corresponding financial lease agreements by applying their I.R.R.
1.7. EQUITY INVESTMENTS
The Companys equity investments in companies where it has a significant interest were valued pursuant to the equity method.
14
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The remaining equity investments were valued at their acquisition cost plus, when applicable, uncollected cash dividends and stock dividends from capitalized profits. An allowance for impairment of value has been established on such equity investments where the book value exceeds the equity method value.
1.8. BANK PREMISES AND EQUIPMENT AND MISCELLANEOUS ASSETS
Bank Premises and Equipment and Miscellaneous Assets have been valued at their acquisition cost, restated at constant currency as mentioned in this Note, net of the corresponding accumulated depreciation.
Financial leases that mainly transfer risks and benefits inherent to the leased property are recognized at the beginning of the lease either by the cash value of the leased property or the present value of cash flows established in the financial lease, whichever is lower.
Depreciation charges are calculated following the straight-line method, at rates determined based on the useful life assigned to the assets, which is 600 months for real estate, up to 120 months for furniture and fixtures and no more than 60 months for the balance of the assets.
The updated residual value of the assets, taken as a whole, does not exceed their value-in-use at period/fiscal year-end.
1.9. INTANGIBLE ASSETS
Intangible assets have been valued at their acquisition cost, restated at constant currency as mentioned in this Note, net of the corresponding accumulated amortization.
Amortization has been recognized on a straight-line basis over 120 months for Goodwill and over 60 months for Organization and Development Expenses.
Effective March 2003, the Argentine Central Bank established that the difference between the amount paid for compliance with court resolutions made in lawsuits filed challenging the current regulations applicable to deposits with the financial system, within the framework of the provisions of Law No. 25561, Decree No. 214/02 and supplementary regulations, and the amount resulting from converting deposits at the $ 1.40 per U.S. Dollar exchange rate adjusted by the C.E.R. and interest accrued up to the payment date must also be recorded under this account.
As of June 30, 2014 and December 31, 2013, this item has been fully amortized; thus total accumulated amortization amounts to $ 894,496 and $ 891,814, respectively.
The Bank carried out the abovementioned amortization for the purposes of complying with the provisions set forth by the Argentine Central Bank only. However, the Bank has repeatedly reserved its right to make claims in view of the negative effect caused on its financial condition by the reimbursement of deposits originally in U.S. Dollars pursuant to court orders, which exceeded the amount established in the aforementioned regulation. On November 30, 2003, the Bank formally requested the National Executive Branch, with a copy to the Ministry of Economy (MECON) and to the Argentine Central Bank, the payment of due compensation for the losses incurred that were generated by the asymmetric pesification and especially for the negative effect on its financial condition caused by court resolutions.
In June 2014, through Resolution No. 365, the Ministry of Economy and Public Finance rejected the administrative claim filed by the Bank. The Bank is analyzing which course of action to follow.
1.10. MISCELLANEOUS LIABILITIES
1.10.1. Liabilities Customers Fidelity Program Quiero (I Want)
The fair value of the points assigned to customers through the Quiero (I Want) Program is estimated. Said value is assessed by means of the use of a mathematical model that takes into account certain assumptions of exchange percentages, the cost for the exchanged points based on the combination of available products and the preferences of the Banks customers, as well as the expiration term of the customers non-exchanged points. As of June 30, 2014 and December 31, 2013, the liabilities recorded under Miscellaneous Liabilities Others for its customers non-exchanged points amounted to $ 168,919 and $ 129,535, respectively.
15
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
1.11. ALLOWANCES AND PROVISIONS:
1.11.1. Allowances for Loan Losses and Provisions for Contingent Commitments
These have been established based upon the estimated default risk of the Companys credit assistance granted through its subsidiaries, which results from an evaluation of debtors compliance with their payment obligations, their economic and financial condition, and the guarantees securing their related transactions, in line with the Argentine Central Bank regulations.
1.11.2. Severance Payments
The Company directly charges severance payments to expenses.
The amounts that the Company may possibly have to pay for labor lawsuits are covered by a provision, which is recorded under Liabilities Provisions for Severance Payments.
1.11.3. Liabilities Other Provisions
Provisions have been set up to cover contingent situations related to labor, commercial, legal, civil and tax issues and other miscellaneous risks that are likely to occur.
1.12. NEGATIVE GOODWILL
The Company recorded a negative goodwill. This stems from the difference between the acquisition cost paid for the companies Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. and the value of assets and liabilities purchased as of June 30, 2010. Such negative goodwill is recorded under Liabilities Provisions. As of June 30, 2014 and December 31, 2013, it amounts to $ 99,123 and $ 148,685, respectively, net of amortizations.
The negative goodwill is charged to Income on a straight-line basis during 60 months, pursuant to the Argentine Central Bank regulations.
1.13. DERIVATIVES AND HEDGING TRANSACTIONS
They have been recorded as stated in Note 8.
1.14. INCOME TAX
Pursuant to the Argentine Central Bank regulations, at the subsidiaries the Bank and Compañía Financiera Argentina S.A., the income tax charge is determined by applying the effective tax rate to the estimated taxable income, without considering the effect of any temporary differences between taxable and book income.
1.15. MINIMUM PRESUMED INCOME TAX
The minimum presumed income tax is determined at the effective rate of 1% of the computable assets at fiscal year-end. Since this tax is supplementary to the income tax, the Companys tax liability for each fiscal year is to coincide with the higher of the two taxes. However, if the minimum presumed income tax were to exceed income tax in a given fiscal year, such excess may be computed as a payment on account of the income tax that could be generated in any of the next ten fiscal years. Recognition and realization of this right stem from the ability to generate future taxable income sufficient for offsetting purposes.
16
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Based on the foregoing, as of June 30, 2014 and December 31, 2013, the Company has assets for $ 10,328 and $ 16,899, respectively.
1.16. DIFFERENCES BETWEEN THE ARGENTINE CENTRAL BANK REGULATIONS AND ARGENTINE GAAP IN FORCE IN BUENOS AIRES
The main differences between the valuation and disclosure criteria applied to these consolidated financial statements and Argentine GAAP in force in Buenos Aires are as follows:
1.16.1. Accounting for Income Tax according to the Deferred Tax Method
The subsidiaries Banco de Galicia y Buenos Aires S.A. and Compañía Financiera Argentina S.A. determine the income tax charge by applying the effective tax rate to the estimated taxable income, without considering the effect of any temporary differences between book and taxable income.
Pursuant to Argentine GAAP in force, the income tax must be recognized using the deferred tax method and, therefore, deferred tax assets or liabilities must be established based on the aforementioned temporary differences. In addition, unused tax loss carry-forwards or tax credits that may be offset against future taxable income should be recognized as deferred assets, provided that taxable income is likely to be generated.
The application of this criterion, based on projections prepared by the aforementioned subsidiaries, would determine deferred tax assets amounting to $ 282,019 as of June 30, 2014, and to $ 252,945 as of December 31, 2013.
1.16.2. Valuation of Government Securities
Argentine Central Bank regulations set forth specific valuation criteria for government securities recorded at their acquisition cost plus the I.R.R., which are described in 1.3.b. of this Note. Pursuant to Argentine GAAP in force in Buenos Aires, the above-mentioned assets must be valued at their current value.
As of June 30, 2014 and December 31, 2013, the application of this criterion would determine an increase in Shareholders Equity of about $ 6,875 and $ 43,220, respectively, due to the securities held by the Bank
1.16.3. Allowances for Receivables from the Non-Financial Public Sector
Current regulations issued by the Argentine Central Bank on the establishment of allowances provide that credits against the public sector are not subject to allowances for loan losses. Pursuant to Argentine GAAP, those allowances must be estimated based on the recoverability risk of assets.
1.16.4. Negative Goodwill
A negative goodwill has been recorded which corresponds to the difference between the acquisition cost paid for the companies Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A. and their equity method value estimated at the time of the purchase. Such negative goodwill is recorded under the Liabilities Provisions account.
Pursuant to the Argentine Central Bank regulations, the negative goodwill has to be charged to income with regard to the causes that have originated it, not to exceed a 60-month straight-line method amortization. Pursuant to Argentine GAAP, the negative goodwill that is not related to expenses estimations or estimated future losses should be recognized as a gain at the time of the purchase.
As of June 30, 2014 and December 31, 2013, the negative goodwill balance amounts to $ 99,123 and $ 148,685, respectively.
17
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
1.16.5. Restructured Loans and Liabilities
Restructured loans and financial obligations are valued based on the actually restructured principal amounts plus accrued interest and principal adjustments, when applicable, minus collections or payments made.
Pursuant to Argentine GAAP, those restructured loans and liabilities, for which modification of original conditions imply a substitution of instruments, must be recorded on the basis of the best possible estimate of the amounts receivable or payable discounted at a market rate that reflects market evaluations on the time value of money and the specific risks of such assets and liabilities at the time of restructuring.
1.16.6. Conversion of Financial Statements
The conversion into Pesos of the financial statements of the foreign subsidiaries for the purposes of their consolidation, made in accordance with the Argentine Central Bank regulations, differs from Argentine GAAP. Argentine GAAP requires that: a) the measurements in the financial statements to be converted into Pesos that are stated in period-end foreign currency (current values, recoverable values) be converted at the exchange rate of the financial statements date; and b) the measurements in the financial statements to be converted into Pesos that are stated in foreign currency of periods predating the closing date (for example: those which represent historical costs, income, expenses) be converted at the relevant historical exchange rates, restated at period-end currency, when applicable due to the application of Technical Pronouncement No. 17. Exchange-rate differences arising from conversion of the financial statements shall be treated as financial income or expenses, as the case may be.
The application of this criterion that replaces what has been stated in this Note does not have a significant impact on the consolidated financial statements.
1.17. ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (I.F.R.S.) BY THE C.N.V.
The C.N.V. has established the application of Technical Pronouncement No. 26 of the Argentine Federation of Professional Councils in Economic Sciences, which adopts the International Financial Reporting Standards issued by the International Accounting Standards Board for certain entities included within the public offering system, whether because of their capital or their notes, or because they have requested to be included in such system, for financial statements corresponding to fiscal years started as from January 1, 2012.
The adoption of such standards is not applicable to the Company since the C.N.V., in Article 2 Section I Chapter I of Title IV: Periodic Reporting System of the C.N.V. (text amended in 2013), exempts banks, insurance companies and companies that invest in banks and insurance companies.
With regard to the requirements set forth in the aforementioned article, the following is detailed:
| The Companys corporate purpose is exclusively related to financial and investment activities; |
| The interest in the Bank accounts for 93.64% of the Companys assets, being the Companys main asset; |
| 95.13% of the Companys income stems from the interest in the Banks income; and |
| The Company has a 100% interest in the Bank, thus having control over such institution. (See also Note 2 to the consolidated financial statements). |
In February 2014, the Argentine Central Bank decided financial institutions should comply with the I.F.R.S., effective for fiscal years commenced in January 2018. The Argentine Central Bank shall disclose the tasks to be fulfilled by establishing a schedule until full compliance.
18
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 2. CONSOLIDATED CONTROLLED COMPANIES
The basic information regarding the Companys consolidated controlled companies is detailed as follows:
Information as of: |
06.30.14 | |||||||||||||
Issuing Company |
Direct and Indirect Holding | |||||||||||||
Shares | Percentage of Equity Investment Held in | |||||||||||||
Type | Amount | Total Capital | Possible Votes | |||||||||||
Banco de Galicia y Buenos Aires S.A. (*) |
Ordinary | 562,326,651 | 100.00000 | 100.00000 | ||||||||||
Banco Galicia Uruguay S.A. (In liquidation) (**) |
Ordinary | 174,621 | 100.00000 | 100.00000 | ||||||||||
Cobranzas Regionales S.A. (***) |
Ordinary | 10,000 | 77.00000 | 77.00000 | ||||||||||
Cobranzas y Servicios S.A. |
Ordinary | 475,728 | 99.84991 | 99.84991 | ||||||||||
Compañía Financiera Argentina S.A. |
Ordinary | 557,562,500 | 100.00000 | 100.00000 | ||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
Ordinary | 20,000 | 100.00000 | 100.00000 | ||||||||||
Galicia Broker Asesores de Seguros S.A. |
Ordinary | 71,314 | 99.99439 | 99.99439 | ||||||||||
Galicia Cayman S.A. |
Ordinary | 132,657,332 | 100.00000 | 100.00000 | ||||||||||
Galicia Retiro Compañía de Seguros S.A. |
Ordinary | 4,512,278 | 99.99993 | 99.99993 | ||||||||||
Galicia Seguros S.A. |
Ordinary | 18,308,870 | 99.99978 | 99.99978 | ||||||||||
Galicia Valores S.A. |
Ordinary | 1,000,000 | 100.00000 | 100.00000 | ||||||||||
Galicia Warrants S.A. |
Ordinary | 1,000,000 | 100.00000 | 100.00000 | ||||||||||
Net Investment S.A. |
Ordinary | 12,000 | 100.00000 | 100.00000 | ||||||||||
Procesadora Regional S.A. |
Ordinary | 16,263,554 | 78.15000 | 78.15000 | ||||||||||
Sudamericana Holding S.A. |
Ordinary | 185,653 | 100.00000 | 100.00000 | ||||||||||
Tarjeta Naranja S.A. (****) |
Ordinary | 2,400 | 77.00000 | 77.00000 | ||||||||||
Tarjetas Cuyanas S.A. (****) |
Ordinary | 3,233,283 | 77.00000 | 77.00000 | ||||||||||
Tarjetas del Mar S.A. (****) |
Ordinary | 35,707,712 | 60.00000 | 60.00000 | ||||||||||
Tarjetas Regionales S.A. (*) |
Ordinary | 1,077,774,298 | 77.00000 | 77.00000 |
(*) | Ordinary shares A and B. (**) With a F.V. of 1000. (***) With a F.V. of 100. (****) With a F.V. of 10. |
Information as of: |
12.31.13 | |||||||||||||
Issuing Company |
Direct and Indirect Holding | |||||||||||||
Shares | Percentage of Equity Investment Held in | |||||||||||||
Type | Amount | Total Capital | Possible Votes | |||||||||||
Banco de Galicia y Buenos Aires S.A. (*) |
Ordinary | 560,199,603 | 99.62174 | % | 99.62174 | % | ||||||||
Banco Galicia Uruguay S.A. (In liquidation) (**) |
Ordinary | 174,621 | 99.62174 | % | 99.62174 | % | ||||||||
Cobranzas Regionales S.A. (***) |
Ordinary | 7,671 | 76.70874 | % | 76.70874 | % | ||||||||
Cobranzas y Servicios S.A. |
Ordinary | 473,217 | 99.47222 | % | 99.47222 | % | ||||||||
Compañía Financiera Argentina S.A. |
Ordinary | 555,516,744 | 99.63309 | % | 99.63309 | % | ||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
Ordinary | 19,924 | 99.62174 | % | 99.62174 | % | ||||||||
Galicia Broker Asesores de Seguros S.A. |
Ordinary | 71,276 | 99.94711 | % | 99.94711 | % | ||||||||
Galicia Cayman S.A. |
Ordinary | 16,580,168 | 99.62174 | % | 99.62174 | % | ||||||||
Galicia Retiro Compañía de Seguros S.A. |
Ordinary | 4,510,142 | 99.95265 | % | 99.95265 | % | ||||||||
Galicia Seguros S.A. |
Ordinary | 18,300,173 | 99.95250 | % | 99.95250 | % | ||||||||
Galicia Valores S.A. |
Ordinary | 996,221 | 99.62208 | % | 99.62208 | % | ||||||||
Galicia Warrants S.A. |
Ordinary | 999,527 | 99.95272 | % | 99.95272 | % | ||||||||
Net Investment S.A. |
Ordinary | 11,994 | 99.95272 | % | 99.95272 | % | ||||||||
Procesadora Regional S.A. |
Ordinary | 12,661,890 | 77.85439 | % | 77.85439 | % | ||||||||
Sudamericana Holding S.A. |
Ordinary | 185,565 | 99.95272 | % | 99.95272 | % | ||||||||
Tarjeta Naranja S.A. (****) |
Ordinary | 1,841 | 76.70874 | % | 76.70874 | % | ||||||||
Tarjetas Cuyanas S.A. (****) |
Ordinary | 2,480,211 | 76.70874 | % | 76.70874 | % | ||||||||
Tarjetas del Mar S.A. (****) |
Ordinary | 3,771,369 | 99.56196 | % | 99.56196 | % | ||||||||
Tarjetas Regionales S.A. (*) |
Ordinary | 826,747,094 | 76.70874 | % | 76.70874 | % |
(*) | Ordinary shares A and B. It includes 25,454,193 ordinary class B shares incorporated due to the Merger described in Note 16 to the Financial Statements. (**) With a F.V. of 1000. (***) With a F.V. of 100. (****) With a F.V. of 10. |
19
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Information as of: |
06.30.14 | |||||||||||||||
Company |
Assets | Liabilities | Shareholders Equity | Net Income | ||||||||||||
Banco de Galicia y Buenos Aires S.A. |
80,419,912 | 72,232,220 | 8,187,692 | 446,856 | ||||||||||||
Banco Galicia Uruguay S.A. (In liquidation) |
82,314 | 5,172 | 77,142 | (1,130 | ) | |||||||||||
Cobranzas Regionales S.A. |
30,997 | 14,663 | 16,334 | 1,599 | ||||||||||||
Cobranzas y Servicios S.A. |
41,038 | 8,742 | 32,296 | 5,716 | ||||||||||||
Compañía Financiera Argentina S.A. |
3,653,946 | 2,577,877 | 1,076,069 | 66,145 | ||||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
33,920 | 10,728 | 23,192 | 19,271 | ||||||||||||
Sudamericana Holding S.A. |
411,228 | 4,748 | 406,480 | 211,490 | ||||||||||||
Galicia Cayman S.A. |
485,779 | | 485,779 | (46,808 | ) | |||||||||||
Galicia Retiro Compañía de Seguros S.A. |
106,328 | 90,135 | 16,193 | 2,516 | ||||||||||||
Galicia Seguros S.A. |
750,264 | 487,265 | 262,999 | 198,608 | ||||||||||||
Galicia Valores S.A. |
93,118 | 60,111 | 33,007 | 7,559 | ||||||||||||
Galicia Warrants S.A. |
49,653 | 28,720 | 20,933 | 6,538 | ||||||||||||
Net Investment S.A. |
170 | 6 | 164 | 15 | ||||||||||||
Procesadora Regional S.A. |
25,040 | 8,605 | 16,435 | 545 | ||||||||||||
Galicia Broker Asesores de Seguros S.A. |
7,168 | 3,749 | 3,419 | 2,840 | ||||||||||||
Tarjeta Naranja S.A. |
11,855,311 | 9,821,774 | 2,033,537 | 221,803 | ||||||||||||
Tarjetas Cuyanas S.A. |
2,623,985 | 2,137,813 | 486,172 | 99,233 | ||||||||||||
Tarjetas del Mar S.A. |
561,000 | 469,559 | 91,441 | 9,606 | ||||||||||||
Tarjetas Regionales S.A. |
2,734,114 | 25,381 | 2,708,733 | 340,292 | ||||||||||||
Information as of: |
12.31.13 | 06.30.13 | ||||||||||||||
Company |
Assets | Liabilities | Shareholders Equity | Net Income | ||||||||||||
Banco de Galicia y Buenos Aires S.A. |
69,000,176 | 62,259,344 | 6,740,832 | 705,669 | ||||||||||||
Banco Galicia Uruguay S.A. (In liquidation) |
80,558 | 17,826 | 62,732 | 2,003 | ||||||||||||
Cobranzas Regionales S.A. |
24,863 | 10,128 | 14,735 | 3,379 | ||||||||||||
Cobranzas y Servicios S.A. |
31,146 | 4,566 | 26,580 | 1,155 | ||||||||||||
Compañía Financiera Argentina S.A. |
3,641,812 | 2,631,887 | 1,009,925 | 75,798 | ||||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
33,260 | 9,338 | 23,922 | 3,589 | ||||||||||||
Galicia Broker Asesores de Seguros S.A. |
4,337 | 2,752 | 1,585 | 945 | ||||||||||||
Galicia Cayman S.A. |
435,521 | | 435,521 | 10,527 | ||||||||||||
Galicia Retiro Compañía de Seguros S.A. |
96,832 | 81,772 | 15,060 | 1,134 | ||||||||||||
Galicia Seguros S.A. |
634,484 | 383,467 | 251,017 | 142,936 | ||||||||||||
Galicia Valores S.A. |
55,719 | 30,271 | 25,448 | 1,169 | ||||||||||||
Galicia Warrants S.A. |
42,890 | 17,485 | 25,405 | 4,141 | ||||||||||||
Net Investment S.A. |
160 | 11 | 149 | (3 | ) | |||||||||||
Procesadora Regional S.A. |
25,835 | 9,945 | 15,890 | (335 | ) | |||||||||||
Sudamericana Holding S.A. |
291,079 | 3,510 | 287,569 | 152,182 | ||||||||||||
Tarjeta Naranja S.A. |
10,905,765 | 8,963,681 | 1,942,084 | 207,242 | ||||||||||||
Tarjetas Cuyanas S.A. |
2,292,860 | 1,869,326 | 423,534 | 63,116 | ||||||||||||
Tarjetas del Mar S.A. |
453,826 | 403,910 | 49,916 | 4,032 | ||||||||||||
Tarjetas Regionales S.A. |
2,512,228 | 8,534 | 2,503,694 | 273,835 |
On February 25, 2014, the Companys Board of Directors resolved the following: (i) to issue the statement of willingness to acquire provided for in Section 91, Subsection b) of Law No. 26831 with regard to all the remaining shares of the Bank held by third parties; (ii) to approve the criterion suggested by the Management Division on the fair price provided for in Section 94, second paragraph, of Law No. 26831, and establish it in $ 23.22 (figure stated in Pesos) for each remaining share held by third parties; (iii) to request the National Securities Commission the immediate withdrawal of the Bank from the public offering and listing at the Buenos Aires Stock Exchange, under the terms of Section 94, third paragraph, of Law No. 26831; (iv) to appoint the Bank as the financial institution where the Company shall deposit the amount corresponding to the total value of the Banks remaining shares; and (v) to give the Bank notice of the statement of willingness to acquire.
20
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
On April 24, 2014, the Board of Directors of the C.N.V. approved the unilateral statement of willingness to acquire issued by the Company. Thus, on May 6, 2014, the amount corresponding to the total value of the Banks remaining shares was deposited. The C.N.V.s approval of the aforementioned proceedings was registered with the Corporation Control Authority (I.G.J.) on July 14, 2014.
On August 4, 2014, the statement of willingness to acquire was executed by public deed, what makes the Company the owner, by operation of law, of all of the Banks existing shares, pursuant to the provisions of Section 95 of Law No. 26831.
On April 7, 2014, the Bank presented the Company with an offer to sell 19,000 shares of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión, representing 95% of the aforementioned companys capital stock, being the offer considered accepted at the time the buyer made a payment equivalent to 25% of the total purchase price. On April 15, 2014, the Companys Board of Directors approved the purchase of 95% of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversións capital stock, and paid 25% of the total agreed price, which amounted to $ 39,482.
Galicia (Cayman) Ltd.s Shareholders Meeting held in March 2014 decided to transfer its domicile in the Cayman Islands to the Republic of Argentina. The company was registered at the Bureau of Legal Entities (Dirección de Personas Jurídicas) of the Province of Mendoza under the name Galicia Cayman S.A.
Tarjetas del Mar S.A.s General Extraordinary Shareholders Meeting, held in May 2014, decided to increase the capital stock in the amount of $ 31,919, which was completely subscribed by Sociedad Anónima Importadora y Exportadora de la Patagonia. By virtue of the aforementioned decision, the companys capital stock is composed as follows: Banco de Galicia S.A.: 58.8% interest; Compañía Financiera Argentina S.A.: 1.2% interest; Sociedad Anónima Importadora y Exportadora de la Patagonia: 40% interest.
The percentage of the controlled companies Shareholders Equity owned by third parties has been disclosed in the Balance Sheet, under the Minority Interest in Consolidated Controlled Companies account.
The gain (loss) on the minority interest is disclosed in the Income Statement under Minority Interest Gain (Loss).
The minority interest percentages at period/fiscal year-end are the following:
Information as of: |
06.30.14 | 12.31.13 | ||||||
Banco de Galicia y Buenos Aires S.A. |
| 0.37826 | % | |||||
Banco Galicia Uruguay S.A. (In liquidation) |
| 0.37826 | % | |||||
Cobranzas Regionales S.A. |
23.00000 | % | 23.29126 | % | ||||
Cobranzas y Servicios S.A. |
| 0.52778 | % | |||||
Compañía Financiera Argentina S.A. |
| 0.36691 | % | |||||
Galicia (Cayman) Ltd. |
| 0.37826 | % | |||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
| 0.37826 | % | |||||
Galicia Broker Asesores de Seguros S.A. |
0.00561 | % | 0.05289 | % | ||||
Galicia Retiro Compañía de Seguros S.A. |
0.00007 | % | 0.04735 | % | ||||
Galicia Seguros S.A. |
0.00022 | % | 0.04750 | % | ||||
Galicia Valores S.A. |
| 0.37792 | % | |||||
Galicia Warrants S.A. |
| 0.04728 | % | |||||
Net Investment S.A. |
| 0.04728 | % | |||||
Procesadora Regional S.A. |
21.85000 | % | 22.14561 | % | ||||
Sudamericana Holding S.A. |
| 0.04728 | % | |||||
Tarjeta Naranja S.A. |
23.00000 | % | 23.29126 | % | ||||
Tarjetas Cuyanas S.A. |
23.00000 | % | 23.29126 | % | ||||
Tarjetas del Mar S.A. |
40.00000 | % | 0.43804 | % | ||||
Tarjetas Regionales S.A. |
23.00000 | % | 23.29126 | % |
21
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 3. GOVERNMENT AND PRIVATE SECURITIES
As of June 30, 2014 and December 31, 2013, holdings of government and private securities were as follows:
06.30.14 | 12.31.13 | |||||||
Government Securities |
||||||||
Holdings Recorded at Fair Market Value |
||||||||
Government Bonds |
2,292,882 | 742,873 | ||||||
|
|
|
|
|||||
Total Holdings Recorded at Fair Market Value |
2,292,882 | 742,873 | ||||||
|
|
|
|
|||||
Holdings Recorded at their Acquisition Cost plus the I.R.R. |
||||||||
Government Bonds |
550,156 | 1,137,013 | ||||||
|
|
|
|
|||||
Total Holdings Recorded at their Acquisition Cost plus the I.R.R. |
550,156 | 1,137,013 | ||||||
|
|
|
|
|||||
Instruments Issued by the Argentine Central Bank |
||||||||
Argentine Central Bank Bills at Fair Market Value |
1,020,865 | 948,838 | ||||||
Argentine Central Bank Bills for Repo Transactions |
1,111,144 | | ||||||
Argentine Central Bank Bills at Acquisition Cost plus the I.R.R. |
4,679,496 | 1,110,230 | ||||||
Argentine Central Bank Notes at Fair Market Value |
655,487 | 17,950 | ||||||
|
|
|
|
|||||
Total Instruments Issued by the Argentine Central Bank |
7,466,992 | 2,077,018 | ||||||
|
|
|
|
|||||
Total Government Securities |
10,310,030 | 3,956,904 | ||||||
|
|
|
|
|||||
Private Securities |
||||||||
Negotiable Obligations (Listed) |
12,641 | 30,425 | ||||||
|
|
|
|
|||||
Total Private Securities |
12,641 | 30,425 | ||||||
|
|
|
|
|||||
Total Government and Private Securities |
10,322,671 | 3,987,329 | ||||||
|
|
|
|
NOTE 4. LOANS
The lending activities carried out by the Company through its subsidiaries are as follows:
a. | Loans to the Non-financial Public Sector: They are primarily loans to the National Government and to Provincial Governments. |
b. | Loans to the Financial Sector: They represent loans to banks and local financial institutions. |
c. | Loans to the Non-financial Private Sector and Residents Abroad: They include the following types of loans: |
Overdrafts: Short-term obligations issued in favor of customers.
Promissory Notes: Endorsed promissory notes, discount and factoring.
Mortgage Loans: Loans for the purchase of real estate for housing purposes, secured by such purchased real estate or commercial loans secured by real estate mortgages.
Collateral Loans: Loans in which a pledge is granted as collateral, as an integral part of the loan instrument.
Credit Card Loans: Loans granted to credit card holders.
Personal Loans: Loans to natural persons.
Others: This item primarily involves export prefinancing loans and short-term placements in banks abroad.
According to the Argentine Central Bank regulations, the loan portfolio breaks down as follows: The non-financial public sector, the financial sector and the non-financial private sector and residents abroad. Moreover, the Company must disclose the type of collateral established on the applicable loans to the non-financial private sector.
As of June 30, 2014 and December 31, 2013, the classification of the loan portfolio was as follows:
06.30.14 | 12.31.13 | |||||||
Non-financial Public Sector |
14,454 | 12,570 | ||||||
Financial Sector |
723,240 | 632,838 | ||||||
Non-financial Private Sector and Residents Abroad |
60,628,167 | 56,748,165 | ||||||
With Preferred Guarantees |
2,702,893 | 2,433,356 | ||||||
With Other Collateral |
7,745,319 | 8,257,006 | ||||||
With No Collateral |
50,179,955 | 46,057,803 | ||||||
|
|
|
|
|||||
Subtotal |
61,365,861 | 57,393,573 | ||||||
|
|
|
|
|||||
Allowance for Loan Losses |
(2,519,467 | ) | (2,128,647 | ) | ||||
|
|
|
|
|||||
Total |
58,846,394 | 55,264,926 | ||||||
|
|
|
|
22
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Said loans were granted in the normal course of transactions with standard terms, interest rates and collateral requirements.
NOTE 5. STATEMENT OF DEBTORS STATUS
Loan portfolio classification pursuant to the loan classification criteria set forth by the Argentine Central Bank is as follows:
COMMERCIAL LOAN PORTFOLIO
Classification: |
Description | |
Normal | Cash flow analysis shows that the customer is widely able to meet all of its financial commitments. Among the indicators that can reflect this situation, the following are worth noting: The customer shows a liquid financial situation, regularly complies with the payment of its obligations, has a qualified and honest management, has an appropriate information system, belongs to a sector of the economic activity or to a business sector that shows an acceptable future trend and is competitive with regard to the activities it conducts. | |
With Special Follow-Up Under Observation |
Cash flow analysis shows, at the time of carrying out the analysis, that the customer is able to meet all of its financial commitments. However, there are possible situations that, in case they are not duly controlled or else solved, could compromise the customers future repayment capacity. | |
With Special Follow-Up Under Negotiation or under Refinancing Agreements. |
This category includes those customers who, when unable to meet their financial commitments pursuant to the terms and conditions agreed, irrefutably state their intention to refinance their debt. | |
With Problems | Cash flow analysis shows that the customer is unable to meet its financial commitments in a normal manner and that, in case such problems are not solved, they could result in a loss for the financial institution. | |
High Risk of Insolvency | Cash flow analysis shows that the customer is highly unlikely to meet all of its financial commitments. | |
Uncollectible | Customers debts included in this category are considered uncollectible. Even though there is some possibility of recovering these assets under certain circumstances in the future, it is evident they are uncollectible at the time of the analysis. |
CONSUMER AND HOUSING LOAN PORTFOLIO
Classification: |
Description | |
Normal | This category includes customers who duly and timely comply with the payment of their commitments, or else with payment in arrears of less than 31 days. Provisional overdrafts shall be considered normal until day 61 from the granting date. | |
Low Risk | It includes customers with occasional late payments at the time of meeting their commitments, with payments in arrears of more than 31 days and up to 90 days. | |
Medium Risk | This category includes customers who show some inability to meet their commitments, with payments in arrears of more than 90 days and up to 180 days. | |
High Risk | It includes customers with payments in arrears of more than 180 days and up to one year. | |
Uncollectible | This category includes insolvent or bankrupt customers, with little or no possibility of collection, or with payments in arrears in excess of one year. |
The financing category includes the items with regard to which debtors should be classified, from the point of view of the debtors creditworthiness, recorded under the accounts detailed below:
06.30.14 | 12.31.13 | |||||||
Loans |
61,365,861 | 57,393,573 | ||||||
Other Receivables Resulting from Financial Brokerage |
1,458,071 | 1,758,730 | ||||||
Receivables from Financial Leases |
1,098,470 | 1,144,050 | ||||||
Miscellaneous Receivables |
10,213 | 9,811 | ||||||
Contingent Liabilities |
6,122,214 | 5,579,819 | ||||||
|
|
|
|
|||||
Total |
70,054,829 | 65,885,983 | ||||||
|
|
|
|
23
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
As of June 30, 2014 and December 31, 2013, the classification of debtors was as follows:
06.30.14 | 12.31.13 | |||||||
COMMERCIAL LOAN PORTFOLIO |
||||||||
Normal |
27,302,828 | 25,414,059 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees A |
413,129 | 248,638 | ||||||
Backed by Preferred Guarantees and Counter-guarantees B |
2,210,105 | 2,195,364 | ||||||
With No Preferred Guarantees or Counter-guarantees |
24,679,594 | 22,970,057 | ||||||
|
|
|
|
|||||
With Special Follow-Up Under Observation |
288,441 | 72,226 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
72,216 | 20,182 | ||||||
With No Preferred Guarantees or Counter-guarantees |
216,225 | 52,044 | ||||||
|
|
|
|
|||||
With Problems |
57,960 | 72,598 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
23,597 | 16,649 | ||||||
With No Preferred Guarantees or Counter-guarantees |
34,363 | 55,949 | ||||||
|
|
|
|
|||||
High Risk of Insolvency |
110,082 | 62,834 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
34,657 | 6,905 | ||||||
With No Preferred Guarantees or Counter-guarantees |
75,425 | 55,929 | ||||||
|
|
|
|
|||||
Uncollectible |
6,008 | 1,905 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
1,734 | 1,734 | ||||||
With No Preferred Guarantees or Counter-guarantees |
4,274 | 171 | ||||||
|
|
|
|
|||||
Total Commercial Loan Portfolio |
27,765,319 | 25,623,622 | ||||||
|
|
|
|
|||||
06.30.14 | 12.31.13 | |||||||
CONSUMER AND HOUSING LOAN PORTFOLIO |
||||||||
Normal |
38,726,745 | 37,132,132 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees A |
3,958 | 5,694 | ||||||
Backed by Preferred Guarantees and Counter-guarantees B |
992,144 | 970,779 | ||||||
With No Preferred Guarantees or Counter-guarantees |
37,730,643 | 36,155,659 | ||||||
|
|
|
|
|||||
Low Risk |
1,232,742 | 1,182,258 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
10,105 | 11,066 | ||||||
With No Preferred Guarantees or Counter-guarantees |
1,222,637 | 1,171,192 | ||||||
|
|
|
|
|||||
Medium Risk |
926,136 | 675,788 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
1,887 | 5,925 | ||||||
With No Preferred Guarantees or Counter-guarantees |
924,249 | 669,863 | ||||||
|
|
|
|
|||||
High Risk |
1,093,237 | 866,879 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees A |
122 | 134 | ||||||
Backed by Preferred Guarantees and Counter-guarantees B |
3,337 | 3,938 | ||||||
With No Preferred Guarantees or Counter-guarantees |
1,089,778 | 862,807 | ||||||
|
|
|
|
|||||
Uncollectible |
307,735 | 402,635 | ||||||
|
|
|
|
|||||
Backed by Preferred Guarantees and Counter-guarantees B |
6,180 | 5,808 | ||||||
With No Preferred Guarantees or Counter-guarantees |
301,555 | 396,827 | ||||||
|
|
|
|
|||||
Uncollectible due to Technical Reasons: |
2,915 | 2,669 | ||||||
|
|
|
|
|||||
With No Preferred Guarantees or Counter-guarantees |
2,915 | 2,669 | ||||||
|
|
|
|
|||||
Total Commercial and Housing Loan Portfolio |
42,289,510 | 40,262,361 | ||||||
|
|
|
|
|||||
Grand Total |
70,054,829 | 65,885,983 | ||||||
|
|
|
|
The management and mitigation of credit risk are described in Note 36 on risk management policies.
NOTE 6. ALLOWANCES FOR LOAN LOSSES
The changes in allowances for loan losses as of June 30, 2014 and December 31, 2013 were the following:
06.30.14 | 12.31.13 | |||||||
Balances at Beginning of Fiscal Year |
2,128,647 | 1,731,954 | ||||||
Increases |
1,206,960 | 1,700,450 | ||||||
Decreases |
816,140 | 1,303,757 | ||||||
Reversals |
1,000 | | ||||||
Uses |
815,140 | 1,303,757 | ||||||
|
|
|
|
|||||
Balances at Period-end |
2,519,467 | 2,128,647 | ||||||
|
|
|
|
24
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 7. OTHER RECEIVABLES RESULTING FROM FINANCIAL BROKERAGE OTHERS NOT INCLUDED IN THE DEBTOR CLASSIFICATION REGULATIONS
As of June 30, 2014 and December 31, 2013, the breakdown of the account Others Not Included in the Debtor Classification Regulations was as follows:
06.30.14 | 12.31.13 | |||||||
Unlisted Participation Certificates and Debt Securities in Financial Trusts |
1,621,040 | 1,797,587 | ||||||
Others |
778,256 | 707,687 | ||||||
|
|
|
|
|||||
Total |
2,399,296 | 2,505,274 | ||||||
|
|
|
|
NOTE 8. DERIVATIVE INSTRUMENTS
FORWARD PURCHASE-SALE OF FOREIGN CURRENCY WITHOUT DELIVERY OF THE UNDERLYING ASSET
Mercado Abierto Electrónico (M.A.E.) and Rosario Futures Exchange (RO.F.EX.) have trading environments for the closing, recording and settlement of financial forward transactions carried out among its agents. The general settlement mode for these transactions is without delivery of the traded underlying asset. Settlement is carried out on a daily basis, in Pesos, for the difference, if any, between the closing price of the underlying asset and the closing price or value of the underlying asset corresponding to the previous day, the difference in price being charged to income.
As of June 30, 2014, forward purchase and sale transactions carried out by the Bank, Compañía Financiera Argentina S.A. and Tarjeta Naranja S.A. through such exchanges amounted to $ 5,925,230 and $ 3,594,255, respectively, while as of December 31, 2013, they amounted to $ 11,729,780 and $ 3,598,136, respectively.
Additionally, transactions have been conducted directly with customers pursuant to the above-mentioned conditions, being the balances settled at the expiration date of the contract. As of June 30, 2014, forward purchase and sale transactions totaled $ 479,785 and $ 1,137,749, respectively, while as of December 31, 2013, purchase and sale transactions totaled $ 30,007 and $ 771,502, respectively.
Said transactions are recorded under Memorandum Accounts for the notional value traded. Accrued balances pending settlement are recorded in the category Balances from Forward Transactions without Delivery of Underlying Asset to be Settled under Other Receivables Resulting from Financial Brokerage and/or Other Liabilities Resulting from Financial Brokerage, when appropriate.
PURCHASE-SALE OF INTEREST RATE FUTURES
These products are traded within the trading environment created by the M.A.E. The underlying asset is the Badlar rate of private banks for time deposits of more than one million Pesos for a term from 30 to 35 days. Settlement is carried out on a daily basis for the difference between the forward price or value of the traded underlying asset and the closing price or value, the difference in price being charged to income. As of December 31, 2013, sale transactions conducted by the Bank amounted to $ 20,000. Said transactions are recorded under Memorandum Accounts for the notional value traded.
In case balances pending settlement exist, they are recorded in the category Balances from Forward Transactions without Delivery of Underlying Asset to be Settled under Other Receivables Resulting from Financial Brokerage and/or Other Liabilities Resulting from Financial Brokerage, as the case may be.
INTEREST RATE SWAPS
These transactions are conducted within the environment created by the M.A.E., and the settlement thereof is carried out on a monthly basis, in Pesos, for the difference between the cash flows calculated using a variable rate (Badlar for private banks for time deposits of 30 to 35 days) and the cash flows calculated using a fixed rate, or vice versa, on the notional value agreed, the difference in price being charged to income.
As of June 30, 2014, transactions conducted by the Bank and Compañía Financiera Argentina S.A. amounted to $ 141,000, while as of December 31, 2013, they amounted to $ 437,000. Said transactions are recorded under Memorandum Accounts for the notional value traded.
25
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Moreover, transactions have been conducted with customers of the Bank, which amount to $ 309,268 as of June 30, 2014, and to $ 457,365 as of December 31, 2013.
In turn, as of December 31, 2013, Compañía Financiera Argentina S.A. had swap contracts recorded corresponding to an exchange of fixed rate for variable rate for the purpose of hedging the exposure of its Peso-denominated deposits adjusted by the BADLAR rate, the notional value of which amounts to $ 25,000.
Accrued balances pending settlement are recorded in the category Balances from Forward Transactions without Delivery of Underlying Asset to be Settled under Other Receivables Resulting from Financial Brokerage and/or Other Liabilities Resulting from Financial Brokerage, as the case may be.
The balances mentioned in this note are recorded, if appropriate, net of eliminations corresponding to transactions conducted with the Company and/or other controlled companies.
The Banks management of financial risks is carried out within the limits of the policies approved by the Board of Directors in such respect. In that sense, derivative instruments carried out are means for the Company to hedge its risk exposures and/or used as a financial product to develop investment and trading strategies. In both cases, the use of these instruments is performed within the guidelines of internal policies set forth by the Bank.
NOTE 9. EQUITY INVESTMENTS
As of June 30, 2014 and December 31, 2013, the breakdown of Equity Investments was as follows:
06.30.14 | 12.31.13 | |||||||
In Financial Institutions and Supplementary and Authorized Activities |
||||||||
Banco Latinoamericano de Exportaciones S.A. |
4,032 | 3,231 | ||||||
Banelco S.A. |
6,035 | 12,264 | ||||||
Mercado de Valores de Buenos Aires S.A. |
8,143 | 8,084 | ||||||
Tarjeta Naranja Perú S.A. |
| 21,483 | ||||||
Visa Argentina S.A. |
7,836 | 7,836 | ||||||
Others |
828 | 882 | ||||||
|
|
|
|
|||||
Total Equity Investments in Financial Institutions, Supplementary and Authorized Activities |
26,874 | 53,780 | ||||||
|
|
|
|
|||||
In Non-financial Institutions |
||||||||
AEC S.A. |
| 26,703 | ||||||
Aguas Cordobesas S.A. |
8,911 | 8,911 | ||||||
Distrocuyo S.A. |
3,955 | 3,955 | ||||||
Electrigal S.A. |
5,455 | 5,455 | ||||||
Nova Re Compañía Argentina de Reaseguros S.A. |
12,514 | 11,705 | ||||||
Others |
1,391 | 1,539 | ||||||
|
|
|
|
|||||
Total Equity Investments in Non-financial Institutions |
32,226 | 58,268 | ||||||
|
|
|
|
|||||
Provisions |
(1,935 | ) | (22,095 | ) | ||||
|
|
|
|
|||||
Total |
57,165 | 89,953 | ||||||
|
|
|
|
NOTE 10. MISCELLANEOUS RECEIVABLES OTHERS
As of June 30, 2014 and December 31, 2013, the breakdown of Miscellaneous Receivables Others was as follows:
06.30.14 | 12.31.13 | |||||||
Sundry Debtors |
418,377 | 335,377 | ||||||
Deposits as Collateral |
413,189 | 431,279 | ||||||
Tax Advances |
453,733 | 351,032 | ||||||
Payments in Advance |
179,564 | 112,791 | ||||||
Others |
31,489 | 32,051 | ||||||
|
|
|
|
|||||
Total |
1,496,352 | 1,262,530 | ||||||
|
|
|
|
26
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 11. BANK PREMISES AND EQUIPMENT
As of June 30, 2014 and December 31, 2013, the breakdown of Bank Premises and Equipment was as follows:
06.30.14 | 12.31.13 | |||||||
Real Estate |
1,348,599 | 1,294,893 | ||||||
Furniture and Fixtures |
375,593 | 349,108 | ||||||
Machines and Equipment |
786,911 | 746,604 | ||||||
Vehicles |
18,484 | 16,350 | ||||||
Others |
10,054 | 9,750 | ||||||
Accumulated Depreciation |
(1,102,423 | ) | (1,022,462 | ) | ||||
|
|
|
|
|||||
Total |
1,437,218 | 1,394,243 | ||||||
|
|
|
|
As of June 30, 2014 and December 31, 2013, the depreciation charge amounted to $ 82,680 and $ 73,190, respectively.
NOTE 12. MISCELLANEOUS ASSETS
As of June 30, 2014 and December 31, 2013, the breakdown of Miscellaneous Assets was as follows:
06.30.14 | 12.31.13 | |||||||
Work in Progress |
111,650 | 65,669 | ||||||
Advances for Purchase of Assets |
19,263 | 32,294 | ||||||
Works of Art |
1,530 | 1,527 | ||||||
Assets under Lease |
2,987 | 18,605 | ||||||
Assets Acquired through Foreclosures |
3,640 | 3,660 | ||||||
Stationery and Office Supplies |
39,774 | 32,879 | ||||||
Other Miscellaneous Assets |
77,042 | 78,845 | ||||||
|
|
|
|
|||||
Total |
255,886 | 233,479 | ||||||
|
|
|
|
As of June 30, 2014 and June 30, 2013, the depreciation and loss charge amounted to $ 667 and $ 485, respectively.
NOTE 13. INTANGIBLE ASSETS
As of June 30, 2014 and December 31, 2013, the breakdown of Intangible Assets was as follows:
06.30.14 | 12.31.13 | |||||||
Goodwill Net of Accumulated Amortization amounting to $ 19,638 and $ 16,708, respectively |
29,827 | 13,249 | ||||||
Organization and Development Expenses Net of Accumulated Amortization amounting to $ 1,698,275 and $ 1,553,938, respectively |
1,584,442 | 1,420,981 | ||||||
|
|
|
|
|||||
Total |
1,614,269 | 1,434,230 | ||||||
|
|
|
|
As of June 30, 2014 and 2013, the amortization charge amounted to $ 151,427 and $ 121,621, respectively.
NOTE 14. OTHER ASSETS
The account Other Assets includes assets related to the insurance activity. As of June 30, 2014 and December 31, 2013, the breakdown of this account was as follows:
06.30.14 | 12.31.13 | |||||||
Premiums Receivable |
241,468 | 199,067 | ||||||
Receivables from Reinsurers |
1,930 | 6,520 | ||||||
Commissions Receivable |
1,989 | 1,586 | ||||||
Others |
1,356 | 1,669 | ||||||
Allowances |
(7,253 | ) | (7,425 | ) | ||||
|
|
|
|
|||||
Total |
239,490 | 201,417 | ||||||
|
|
|
|
27
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 15. RESTRICTED ASSETS AND OTHER CONTINGENT LIABILITIES
Pursuant to the Argentine Central Bank regulations, the Bank shall maintain a monthly average liquidity level.
As of June 30, 2014, the balances recorded by such institution as computable items are as follows:
Item |
$ | US$ | ||||||
Checking Accounts at the Argentine Central Bank |
5,831,891 | 704,501 | ||||||
Special Guarantees Accounts at the Argentine Central Bank |
928,708 | 1,800 | ||||||
Special Checking Accounts at the Argentine Central Bank for Social Security Purposes |
11,269 | | ||||||
|
|
|
|
|||||
Total Computable Items to Meet Minimum Cash Requirements |
6,771,868 | 706,301 | ||||||
|
|
|
|
As of June 30, 2014, the ability to freely dispose of certain assets corresponding to the controlled companies was restricted, as follows:
BANCO DE GALICIA Y BUENOS AIRES S.A.
a) | Cash and Government Securities |
- For transactions carried out at RO.F.EX. and at M.A.E. |
$ | 136,412 | ||
- For debit / credit cards transactions |
$ | 307,986 | ||
- For attachments |
$ | 1,832 | ||
- For other transactions |
$ | 13,694 |
b) | Special Guarantees Accounts |
Special guarantees accounts have been opened at the Argentine Central Bank as collateral for transactions involving electronic clearing houses, checks for settling debts and other similar transactions, which, as of June 30, 2014 amounted to $ 943,347.
c) | Deposits in favor of the Argentine Central Bank |
- Unavailable deposits related to foreign exchange transactions |
$ | 533 | ||
- Securities held in custody to act as register agent of book-entry mortgage securities |
$ | 2,277 |
d) | Equity Investments |
The account Equity Investments includes shares, the transfer of which is subject to the prior approval of the National or Provincial authorities, as applicable, under the terms of the concession contracts signed:
| Electrigal S.A.: 1,222,406 non-transferable non-endorsable registered ordinary shares. |
| Aguas Cordobesas S.A.: 900,000 class E ordinary shares. |
The Bank, as shareholder of Aguas Cordobesas S.A. and proportionally to its 10.833% interest, is jointly responsible before the Provincial State for the contractual obligations arising from the concession contract during the entire term thereof.
If any of the other shareholders fails to comply with the commitments arising from their joint responsibility, the Bank may be forced to assume the unfulfilled commitment by the grantor, but only in the proportion and to the extent of the interest held by the Bank.
e) | Contributions to Garantizar S.G.R.s Risk Fund |
The Bank, in its capacity as sponsoring partner of Garantizar S.G.R.s Risk Fund, is committed to maintaining the contributions made to the fund for two (2) years. As of June 30, 2014, the Banks contribution amounts to $ 37,687.
28
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
f) | Guarantees Granted for Direct Obligations |
As of June 30, 2014, the Bank has recorded $ 546,100 as collateral for credit lines granted by the International Finance Corporation (IFC), and the related transactions have been allocated to the resources provided thereby.
As collateral for the funds requested, through the Argentine Central Bank, from the Subsecretaría de la Micro, Pequeña y Mediana Empresa y Desarrollo Provincial destined to the financing of the Global Credit Program for Micro, Small and Medium-sized Companies, Banco de Galicia y Buenos Aires S. A. used four promissory notes. As of June 30, 2014, the balance of secured loans was $ 42,833.
Furthermore, as of June 30, 2014, the Bank used promissory notes as collateral for the loans granted within the Credit Program to the Provinces of San Juan and Mendoza for the amount of $ 18,063.
As of June 30, 2014, the total amount of restricted assets corresponding to the Bank for the aforementioned items was $ 2,050,764, while as of December 31, 2013 it was $ 1,908,651.
COMPAÑÍA FINANCIERA ARGENTINA S.A.
As a consequence of certain lawsuits and claims related to the ordinary course of business, as of June 30, 2014 and December 31, 2013, Compañía Financiera Argentina S.A. has been levied attachments on some banking accounts for an amount of $ 469. This amount has been fully included in a provision.
Furthermore, as of June 30, 2014, with the purpose of conducting transactions at Mercado Abierto Electrónico S.A. (M.A.E.), this company records collateral in favor of the Argentine Central Bank for $ 2,438, corresponding to a F.V. of $ 2,500 of Peso-denominated Bonds issued by the Argentine Nation due 2019. At the end of the previous fiscal year, collateral granted totaled $ 113,956.
In turn, as of June 30, 2014, the company records collateral for repo transactions for $ 10,848, corresponding to a F.V. of $ 3,000 of instruments issued by the Argentine Central Bank and a F.V. of $ 12,050 of Peso-denominated Bonds issued by the Argentine Nation at Badlar rate due 2015.
Additionally, as of June 30, 2014 and December 31, 2013, the company had special guarantees accounts open at the Argentine Central Bank as collateral for transactions involving electronic clearing houses and other similar transactions, which amount to $ 9,788 and $ 8,912, respectively.
GALICIA VALORES S.A.
As of June 30, 2014 and December 31, 2013, this company holds six shares of Mercado de Valores de Buenos Aires S.A., which secure an insurance policy covering transactions for $ 6,450.
TARJETA DEL MAR S.A.
As of June 30, 2014 and December 31, 2013, this company has $ 127 and $ 110, respectively, as guarantees related to certain real property lease agreements.
TARJETA NARANJA S.A.
As of June 30, 2014 and December 31, 2013, Tarjeta Naranja S.A. has been levied attachments in connection with lawsuits for $ 572. Furthermore, this company has paid $ 350 as guarantees regarding certain tax issues. These amounts shall not be available until such issues are resolved.
Also, as of June 30, 2014 and December 31, 2013, the company has paid $ 1,476 and $ 1,993, respectively, as guarantees related to certain real property lease agreements.
During the period, Tarjeta Naranja S.A. has performed guarantees for $ 134,973 with the Rosario Futures Exchange (RO.F.E.X), through mutual funds and instruments issued by the Argentine Central Bank, for hedging transactions carried out with such market.
Moreover, pursuant to the agreements entered into with financial institutions and as collateral for the loans received and the issuance of notes, Tarjeta Naranja S.A. has agreed not to dispose of any assets or levy any encumbrance thereon, for an amount higher than 35% of Tarjeta Naranja S.A.s assets in some cases, and 15% of said companys Shareholders Equity. It is worth mentioning that the above-mentioned restrictions shall not be applied for transactions carried out during the ordinary course of the companys business.
29
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 16. NEGOTIABLE OBLIGATIONS
There follows a breakdown of the Global Programs for the Issuance of Negotiable Obligations outstanding:
Company |
Authorized Amount (*) |
Type of Negotiable Obligations |
Term of Program |
Date of Approval by Shareholders Meeting |
Approval by the C.N.V. | |||||||
Grupo Financiero Galicia S.A. | US$ | 100,000 | Simple negotiable obligations, not convertible into shares | 5 years | 03.09.09 confirmed on 08.02.12 |
Resolution No. 16113 dated 04.29.09 and extended through Resolution No. 17343 dated 05.08.14. Authorization of the increase, Resolution No. 17064 dated 04.25.13 | ||||||
Banco de Galicia y Buenos Aires S.A. | US$ | 2,000,000 | Simple negotiable obligations, not convertible into shares, subordinated or not, secured or unsecured. | 5 years | 09.30.03 confirmed on 04.27.06 |
Resolution No. 14708 dated 12.29.03 | ||||||
Banco de Galicia y Buenos Aires S.A. | US$ | 342,500 | Simple negotiable obligations, not convertible into shares, subordinated or not, to be adjusted or not, secured or unsecured. | 5 years | 04.28.05 confirmed on 04.26.07 |
Resolution No. 15228 dated 11.04.05 and extended through Resolution No. 16454 dated 11.11.10 | ||||||
Compañía Financiera Argentina S.A. | US$ | 250,000 | Simple negotiable obligations, not convertible into shares | 08.03.16 | 11.25.10 | Resolution No. 16505 dated 01.27.11 | ||||||
Tarjeta Naranja S.A. | US$ | 650,000 | Simple negotiable obligations, not convertible into shares | 5 years | 03.08.12 | Resolution No. 16822 dated 05.23.12 | ||||||
Tarjetas Cuyanas S.A. | US$ | 120,000 | Simple negotiable obligations, not convertible into shares | 5 years | 03.30.10 confirmed on 04.06.10 |
Resolution No. 16328 dated 05.18.10 |
(*) | Or its equivalent in any other currency. |
Banco de Galicia y Buenos Aires S.A. has the following Subordinated Negotiable Obligations outstanding issued under the Global Program of US$ 2,000,000 as of the close of the period/fiscal year:
Date of Issuance |
Currency | Residual F.V. (US$) as of 06.30.14 |
Term | Rate | Book Value (*) | Issuance Authorized by the C.N.V. |
||||||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||||||
05.18.04 |
US$ | 218,211 | (1 | ) | (2 | ) | 1,916,614 | 1,656,297 | |
12.29.03 and 04.27.04 |
|
(*) | It includes principal and interest net of expenses. |
The net proceeds of the above-mentioned issue of Negotiable Obligations were used to refinance the foreign debt in accordance with Section 36 of the Law on Negotiable Obligations, the Argentine Central Bank regulations, and other applicable regulations.
(1) | These Negotiable Obligations shall be fully amortized upon maturity on January 1, 2019, unless their principal is previously redeemed at par, plus unpaid accrued interest and additional amounts, if any, fully or partially at the issuers option at any time, after all Negotiable Obligations due 2014 have been fully repaid. |
(2) | Interest on Negotiable Obligations due 2019 shall be payable in cash and in additional Negotiable Obligations due 2019, semi-annually in arrears on January 1 and July 1 of each year. Negotiable Obligations due 2019 shall accrue interest payable in cash at an annual fixed rate of 6% as from January 1, 2004. Such interest rate will increase to 11% per annum as from January 1, 2014. The maturity date of the Negotiable Obligations due 2019 is January 1, 2019. |
Interest payable in kind (by means of Negotiable Obligations due 2019) shall accrue at an annual fixed rate of 5%, beginning on January 1, 2004, and shall be payable on January 1, 2014 and January 1, 2019, unless these Negotiable Obligations are previously redeemed.
In January 2014, the company paid capitalized interest on Negotiable Obligations 2019 for the period from July 1, 2011 to December 31, 2013, for $ 28,675.
30
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The Company has the following Negotiable Obligations outstanding issued under these Global Programs as of the close of the period/fiscal year:
Company |
Date of Placement |
Currency | Class No. |
F.V. | Type (**) | Term | Maturity Date |
Rate | Book Value (*) | Issuance Authorized by the C.N.V. |
||||||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||||||||||
Grupo Financiero Galicia S.A. |
08.28.12 | $ | III | $ | 78,075 | Simple | 18 Months |
02.28.14 | Variable Badlar Rate + 3.59% |
| 80,750 | 08.08.12 | ||||||||||||||||||
Grupo Financiero Galicia S.A. |
05.10.13 | $ | IV | $ | 220,000 | Simple | 18 Months |
11.10.14 | Variable Badlar Rate + 3.49% |
228,447 | 222,897 | 04.25.13 | ||||||||||||||||||
Grupo Financiero Galicia S.A. |
01.30.14 | $ | V Series I |
$ | 101,800 | Simple | 18 months |
07.31.15 | Variable Badlar Rate + 4.25% |
105,997 | | 04.25.13 | ||||||||||||||||||
Grupo Financiero Galicia S.A. |
01.30.14 | $ | V Series II |
$ | 78,200 | Simple | 36 months |
01.31.17 | Variable Badlar Rate + 5.25% |
82,098 | | 04.25.13 | ||||||||||||||||||
Banco de Galicia y Bs. As. S.A. |
05.04.11 | US$ | | US$ | 300,000 | Simple | 84 months |
| (1) | 2,462,409 | 1,973,564 | |
11.04.05 and 11.11.10 |
| ||||||||||||||||
Compañía Financiera Argentina S.A. |
05.17.12 | $ | VI Series II |
$ | 72,000 | Simple | 21 months |
02.17.14 | Variable Badlar Rate + 2.30% |
| 24,567 | 05.08.12 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
09.26.12 | $ | VII Series II |
$ | 112,500 | Simple | 18 months |
03.26.14 | Variable Badlar Rate + 3.75% |
| 111,713 | 09.13.12 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
01.17.13 | $ | VIII Series II |
$ | 157,800 | Simple | 18 months |
07.17.14 | Variable Badlar Rate + 4.40% |
166,686 | 165,131 | 01.08.13 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
04.23.13 | $ | IX Series I |
$ | 45,000 | Simple | 270 days |
01.18.14 | Annual Nominal Fixed at 18.89% |
| 46,637 | 04.12.13 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
04.23.13 | $ | IX Series II |
$ | 155,000 | Simple | 18 months |
10.23.14 | Variable Badlar Rate + 2.93% |
162,815 | 160,998 | 04.12.13 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
10.17.13 | $ | X Series I |
$ | 26,143 | Simple | 9 months |
07.14.14 | Annual Nominal Fixed at 23.50% |
27,416 | 27,102 | 09.27.13 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
10.17.13 | $ | X Series II |
$ | 124,000 | Simple | 18 months |
04.17.15 | Variable Badlar Rate + 4.25% |
130,520 | 129,609 | 09.27.13 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
04.16.14 | $ | XI Series I |
$ | 49,900 | Simple | 9 months |
01.11.15 | Variable Badlar Rate + 2.97% |
52,348 | | 04.08.14 | ||||||||||||||||||
Compañía Financiera Argentina S.A. |
04.16.14 | $ | XI Series II |
$ | 150,100 | Simple | 18 months |
10.16.15 | Variable Badlar Rate + 4.30% |
156,430 | | 04.08.14 | ||||||||||||||||||
Tarjeta Naranja S.A. |
01.28.11 | US$ | XIII | US$
|
200,000 |
|
Simple | 72 months |
01.28.17 | Annual Nominal Fixed at 9% |
1,694,424 | 1,347,015 | 01.14.11 | |||||||||||||||||
Tarjeta Naranja S.A. |
08.07.12 | $ | XVIII Series |
$ | 102,315 | Simple | 549 days |
02.07.14 | Variable Badlar Rate + 4% |
| 106,401 | 07.26.12 |
(*) | It includes principal and interest, net of eliminations when appropriate. |
(**) | Not convertible into shares. |
(1) | Interest agreed at an annual 8.75% rate shall be paid semiannually on May 4 and November 4 of each year until the maturity date, starting on November 4, 2011. The net proceeds from this issuance of negotiable obligations was applied to investments in working capital, other loans and other uses envisaged by the provisions of the Law on Negotiable Obligations and the Argentine Central Bank regulations. |
31
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Company |
Date of Placement |
Currency | Class No. |
F.V. | Type (**) |
Term | Maturity Date |
Rate | Book Value (*) | Issuance Authorized by the C.N.V. |
||||||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||||||||||
Tarjeta Naranja S.A. |
10.30.12 | $ | XIX Series II |
$ | 112,345 | Simple | 547 days |
04.30.14 | Variable Badlar Rate + 4.19% |
| 117,719 | 10.19.12 | ||||||||||||||||||
Tarjeta Naranja S.A. |
02.07.13 | $ | XX Series II |
$ | 208,136 | Simple | 546 days |
08.07.14 | Variable Badlar Rate + 4.25% |
210,350 | 217,085 | 01.24.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
05.17.13 | $ | XXI Series II |
$ | 201,800 | Simple | 549 days |
11.17.14 | Variable Badlar Rate + 4.39% |
203,688 | 202,900 | 05.08.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
08.09.13 | $ | XXII Series I |
$ | 42,023 | Simple | 270 days |
05.06.14 | Annual Nominal Fixed at 21% |
| 43,255 | 07.18.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
08.09.13 | $ | XXII Series II |
$ | 114,020 | Simple | 549 days |
02.09.15 | Variable Badlar Rate + 3.75% |
118,647 | 117,297 | 07.18.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
12.04.13 | $ | XXIII Series I |
$ | 35,000 | Simple | 270 days |
08.31.14 | Annual Nominal Fixed at 24.50% |
35,681 | 35,338 | 11.20.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
12.04.13 | $ | XXIII Series II |
$ | 152,174 | Simple | 547 days |
06.04.15 | Variable Badlar Rate + 4.50% |
155,324 | 153,445 | 11.20.13 | ||||||||||||||||||
Tarjeta Naranja S.A. |
02.26.14 | $ | XIV Series I |
$ | 173,800 | Simple | 546 days |
08.26.15 | Variable Badlar Rate + 4% |
175,304 | | 02.14.14 | ||||||||||||||||||
Tarjeta Naranja S.A. |
02.26.14 | $ | XXIV Series II |
$ | 33,500 | Simple | 1096 days |
02.26.17 | Variable Badlar Rate + 5% |
34,449 | | 02.14.14 | ||||||||||||||||||
Tarjeta Naranja S.A. |
04.30.14 | $ | XXV Series I |
$ | 79,968 | Simple | 365 days |
04.30.15 | Variable Badlar Rate + 2.89% |
83,656 | | 04.21.14 | ||||||||||||||||||
Tarjeta Naranja S.A. |
04.30.14 | $ | XXV Series II |
$ | 170,032 | Simple | 731 days |
04.30.16 | Variable Badlar Rate + 4.15% |
167,786 | | 04.21.14 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
07.31.12 | $ | VIII Series II |
$ | 99,275 | Simple | 549 days |
01.31.14 | Variable Badlar Rate + 3.75% |
| 102,089 | 07.18.12 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
11.20.12 | $ | IX Series II |
$ | 102,603 | Simple | 546 days |
05.20.14 | Variable Badlar Rate + 4.5% |
| 105,632 | 11.06.12 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
02.21.13 | $ | X Series II |
$ | 153,168 | Simple | 546 days |
08.21.14 | Variable Badlar Rate + 4.19% |
157,612 | 156,800 | 02.06.13 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
06.19.13 | $ | XI Series I |
$ | 13,370 | Simple | 270 days |
03.16.14 | Annual Nominal Fixed at 20.50% |
| 13,222 | 05.17.13 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
06.19.13 | $ | XI Series II |
$ | 101,214 | Simple | 548 days |
12.19.14 | Variable Badlar Rate + 4.89% |
100,927 | 101,791 | 05.17.13 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
11.07.13 | $ | XII Series II |
$ | 175,000 | Simple | 546 days |
05.07.15 | Variable Badlar Rate + 4.20% |
174,819 | 180,919 | 10.28.13 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
02.17.14 | $ | XIII Series I |
$ | 173,200 | Simple | 546 days |
08.17.15 | Variable Badlar Rate + 4% |
178,157 | | 02.06.14 |
(*) | It includes principal and interest, net of eliminations when appropriate. |
(**) | Not convertible into shares. |
32
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Company |
Date of Placement |
Currency | Class No. |
F.V. | Type (**) | Term | Maturity Date |
Rate | Book Value (*) | Issuance Authorized by the C.N.V. |
||||||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||||||||||
Tarjetas Cuyanas S.A. |
05.16.14 | $ | XIV Series I |
$ | 54,250 | Simple | 365 days |
05.16.15 | Variable Badlar Rate + 3% |
55,988 | | 05.07.14 | ||||||||||||||||||
Tarjetas Cuyanas S.A. |
05.16.14 | $ | XIV Series II |
$ | 145,750 | Simple | 731 days |
05.16.16 | Variable Badlar Rate + 4.15% |
148,596 | | 05.07.14 | ||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||
Total |
7,270,574 | 5,943,876 | ||||||||||||||||||||||||||||
|
|
|
|
(*) | It includes principal and interest, net of eliminations when appropriate. |
(**) | Not convertible into shares. |
Furthermore, as of June 30, 2014 and December 31, 2013, the Bank holds past due Notes, the holders of which have not tendered to the restructuring offer as follows:
Date of Issuance |
Currency | Residual F.V. (US$) as of 06.30.14 |
Type | Term | Rate | Book Value (*) | Issuance Authorized by the C.N.V. |
|||||||||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||||||||||
11.08.93 |
US$ | 840 | Simple | 10 years | 9 | % | 14,619 | 11,470 | 10.08.93 |
(*) | It includes principal and interest. |
On February 27, 2013, the Companys Board of Directors approved to begin the proceedings to increase the amount of the program. On April 25, 2013, the C.N.V. authorized to increase the maximum amount of issuance of the Global Program of Simple Notes, not convertible into shares, for up to a F.V. of US$ 100,000 or its equivalent in other currencies. On March 18, 2014, the Company requested the C.N.V. the extension of the aforementioned Program of Negotiable Obligations.
On May 8, 2013, the Company placed Class IV Notes for a face value of $ 220,000, for an 18-month term, the principal of which shall be amortized upon maturity and shall accrue interest at a variable Badlar rate, plus 3.49%, payable semiannually.
On January 30, 2014, the Company issued Class V Notes, in two Series: Series I for $ 101,800, maturing on July 31, 2015, and Series II, for $ 78,200, maturing on January 31, 2017, both with interest paid on a quarterly basis from April 30, 2014. Part of the subscription of Class V Notes was carried out through the payment in Class III Notes, with a face value of $ 20,622.
On February 28, 2014, the Company repaid Class III Notes through the payment of $ 64,302 as amortization of principal and the corresponding interest.
On May 8, 2014, through Resolution No. 17343, the C.N.V. decided to authorize the extension of the term of the Global Program for five (5) years.
As of June 30, 2014, the Bank records in its portfolio Notes due 2018 for the amount of $ 42,502, while as of December 31, 2013, it recorded Notes due 2018 for the amount of $ 33,741.
After period-end, Compañía Financiera Argentina S.A. repaid Class VIII, Series II, and Class X, Series I, Notes.
During July 2014, Tarjeta Naranja S.A. placed Class XXVI, Series I and Series II, Notes, for a total amount of $ 138,500 and $ 161,500, respectively. Series I, maturing in July 2015, shall accrue interest on a quarterly basis at Badlar rate plus 2.89%, and Series II, maturing in July 2016, shall accrue interest on a quarterly basis at Badlar rate plus 3.99%. Amortization shall be paid in only one installment upon maturity of each series.
33
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 17. OTHER LIABILITIES RESULTING FROM FINANCIAL BROKERAGE OTHERS
As of June 30, 2014 and December 31, 2013, the breakdown of Other Liabilities Resulting from Financial Brokerage Others was as follows:
06.30.14 | 12.31.13 | |||||||
Collections and Other Transactions on Account of Third Parties |
1,250,314 | 1,101,378 | ||||||
Liabilities due to Financing of Purchases |
8,454,965 | 8,019,174 | ||||||
Other Withholdings and Additional Withholdings |
725,439 | 613,098 | ||||||
IDB Credit Line Global Credit Program for Micro, Small and Medium-sized Companies |
16,380 | 20,086 | ||||||
Correspondent Transactions on Our Account |
74,599 | 70,451 | ||||||
FONTAR Credit Line to Fund Capital Goods |
| 12,262 | ||||||
Liabilities Subject to Minimum Cash Requirements |
107,519 | 139,380 | ||||||
Miscellaneous Liabilities not Subject to Minimum Cash Requirements |
642,325 | 644,067 | ||||||
Commissions Accrued Payable |
57,820 | 52,947 | ||||||
Others |
62,060 | 52,663 | ||||||
|
|
|
|
|||||
Total |
11,391,421 | 10,725,506 | ||||||
|
|
|
|
NOTE 18. MISCELLANEOUS LIABILITIES OTHERS
As of June 30, 2014 and December 31, 2013, the breakdown of Miscellaneous Liabilities Others was as follows:
06.30.14 | 12.31.13 | |||||||
Sundry Creditors |
593,795 | 536,252 | ||||||
Taxes Payable |
1,354,160 | 1,149,486 | ||||||
Salaries and Social Security Contributions Payable |
573,267 | 608,863 | ||||||
Others |
162,943 | 158,016 | ||||||
|
|
|
|
|||||
Total |
2,684,165 | 2,452,617 | ||||||
|
|
|
|
NOTE 19. PROVISIONS
As of June 30, 2014 and December 31, 2013, the breakdown of Provisions was as follows:
06.30.14 | 12.31.13 | |||||||
Severance Payments |
5,947 | 4,269 | ||||||
Contingent Commitments |
612 | 2 | ||||||
Other Contingencies |
286,253 | 286,492 | ||||||
Negative Goodwill |
99,123 | 148,685 | ||||||
Differences due to Dollarization of Judicial Deposits |
4,586 | 3,424 | ||||||
|
|
|
|
|||||
Total |
396,521 | 442,872 | ||||||
|
|
|
|
34
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 20. OTHER LIABILITIES
The account Other Liabilities includes liabilities related to the insurance activity. As of June 30, 2014 and December 31, 2013, the breakdown of this account was as follows:
06.30.14 | 12.31.13 | |||||||
Debts with Insureds |
94,211 | 85,670 | ||||||
Debts with Reinsurers |
1,915 | 7,732 | ||||||
Debts with Co-insurers |
396 | 286 | ||||||
Debts with Insurance Brokers |
37,351 | 30,092 | ||||||
Statutory Reserves |
184,862 | 154,464 | ||||||
Others |
9,920 | 9,244 | ||||||
|
|
|
|
|||||
Total |
328,655 | 287,488 | ||||||
|
|
|
|
NOTE 21. MEMORANDUM ACCOUNTS CONTROL DEBIT ACCOUNTS OTHERS
As of June 30, 2014 and December 31, 2013, the breakdown of Control Debit Accounts Others was as follows:
06.30.14 | 12.31.13 | |||||||
Securities Held in Custody |
29,011,489 | 26,175,532 | ||||||
Values for Collection |
6,520,735 | 7,173,809 | ||||||
Security Agent Function |
12,340,598 | 9,800,515 | ||||||
Others |
3,060,858 | 1,780,963 | ||||||
|
|
|
|
|||||
Total |
50,933,680 | 44,930,819 | ||||||
|
|
|
|
NOTE 22. TRUST AND SECURITY AGENT ACTIVITIES
a) Trust Contracts for Purposes of Guaranteeing Compliance with Obligations:
Purpose: In order to guarantee compliance with contractual obligations, the parties to these agreements have agreed to deliver to the Bank, as fiduciary property, amounts to be applied according to the following breakdown:
Date of Contract |
Trustor |
Balances of Trust Funds | Maturity Date (1) | |||||||||||
$ | US$ | |||||||||||||
12.21.09 |
Las Blondas | 5 | | 09.30.14 | ||||||||||
12.07.10 |
Fondo Fiduciario Aceitero | 3,548 | | 12.31.14 | ||||||||||
07.26.11 |
Tecsan III | 55,609 | | 07.28.16 | ||||||||||
03.21.12 |
Latinoamericana III | 4,720 | | 04.30.15 | ||||||||||
03.29.12 |
Benito Roggio II | 50,045 | | 03.30.15 | ||||||||||
04.29.13 |
Profertil | 2 | 116,500 | 04.30.18 | ||||||||||
07.01.13 |
Ribeiro | 120,000 | | 06.30.16 | ||||||||||
10.21.13 |
Sinteplast | 4 | | 10.27.16 | ||||||||||
11.13.13 |
Tecsan IV | 95,938 | | 04.28.15 | ||||||||||
12.20.13 |
Los Cipreses | 594 | | 12.28.16 | ||||||||||
12.28.13 |
Citricola Ayui | 296 | | 01.28.17 | ||||||||||
|
|
|
|
|||||||||||
Total | 330,761 | 116,500 | ||||||||||||
|
|
|
|
(1) | These amounts shall be released monthly until settlement date of trustor obligations or maturity date, whichever occurs first. |
35
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
b) Financial Trust Contracts:
Purpose: To administer and exercise the fiduciary ownership of the trust assets until the redemption of debt securities and participation certificates:
Date of Contract |
Trust |
Balances of Trust Funds | Maturity Date | |||||||||||
$ | US$ | |||||||||||||
07.13.05 |
Rumbo Norte I | 1 | 4 | 09.30.14 | (3) | |||||||||
10.12.05 |
Hydro I | 7,648 | | 09.05.17 | (2) | |||||||||
12.05.06 |
Faid 2011 | 22 | | 09.30.14 | (3) | |||||||||
12.06.06 |
Gas I | 24,980 | | 12.31.14 | (3) | |||||||||
09.05.07 |
Saturno VII | 27 | | 09.30.14 | (3) | |||||||||
05.06.08 |
Agro Nitralco II | 1,191 | | 12.31.14 | (3) | |||||||||
05.14.09 |
Gas II | 4,391,833 | | 12.31.22 | (3) | |||||||||
02.10.11 |
Cag S.A. | 30,025 | | 12.31.14 | (3) | |||||||||
04.25.11 |
Faid 2015 | 38,466 | | 02.29.16 | (3) | |||||||||
06.08.11 |
Mila III | 5,530 | | 10.31.16 | (3) | |||||||||
09.01.11 |
Mila IV | 9,201 | | 06.30.17 | (3) | |||||||||
09.14.11 |
Cag S.A. II | 18,278 | | 12.31.14 | (3) | |||||||||
10.07.11 |
Sursem III | 77 | | 09.30.14 | (3) | |||||||||
05.31.12 |
Fideicred Agro Series I | 52,657 | | 09.30.14 | (3) | |||||||||
12.27.12 |
Pla I | 7,921 | | 08.31.16 | (3) | |||||||||
04.03.13 |
Welfas I | 3,285 | | 09.30.14 | (3) | |||||||||
04.17.13 |
Sursem IV | 6,465 | | 10.31.14 | (3) | |||||||||
09.18.13 |
Don Mario Semillas Series I | 36,039 | | 10.31.14 | (3) | |||||||||
09.30.13 |
Fideicred Atanor I | 56,376 | | 01.31.15 | (3) | |||||||||
11.05.13 |
Pla II | 19,339 | | 12.31.16 | (3) | |||||||||
11.21.13 |
Comafi Prendas I | 48,819 | | 12.31.16 | (3) | |||||||||
01.14.14 |
Fideicred Atanor II | 83,887 | | 09.30.14 | (3) | |||||||||
02.13.14 |
Mila V | 37,418 | | 06.30.19 | (3) | |||||||||
|
|
|
|
|||||||||||
Totals | 4,879,485 | 4 | ||||||||||||
|
|
|
|
(2) | These amounts shall be released monthly until redemption of debt securities. |
(3) | Estimated date, since maturity date shall occur at the time of the distribution of all of trust assets. |
c) Activities as Security Agent:
c.1) Under the terms and conditions for the issuance of Class I Notes for a F.V. of US$ 25,000 corresponding to INVAP S.E., the Bank entered into an agreement with the latter whereby the Bank undertakes the function of Security Agent.
Pursuant to the terms set forth in the above agreement, INVAP S.E. granted in rem rights with first pledge and privilege over payment rights and any other credit right owned by INVAP S.E. in favor of the Security Agent and in representation of the holders of the secured Notes, in order that the latter can guarantee compliance thereof until the redemption of such Notes.
The Bank, in its capacity as Security Agent, is in charge of the administration of pledged banking accounts, authorized investments, and also carries out all functions specified under the terms and conditions of the agreement. Pledged balances as of June 30, 2014 amount to US$ 36,744 and $ 111, while as of December 31, 2013 said balances amounted to US$ 22,935 and $ 85.
c.2) The Bank was appointed Security Agent to custody of the National Treasurys endorsement guarantees in favor of ENARSA (Energía Argentina S.A.) that were assigned in favor of Nación Fideicomisos S.A. in its capacity of Trustee of ENARSA-BARRAGAN and ENARSA-BRIGADIER LOPEZ financial trusts.
Said endorsement securely guarantees the payment of all obligations arising from the above-mentioned trusts.
The Bank, in its capacity as Security Agent, will take custody of the documents regarding the National Treasurys endorsement guarantees and will be in charge of managing all legal and notarial proceedings with respect to the enforcement thereof.
As of June 30, 2014 and December 31, 2013, the balances recorded from these transactions amount to US$ 1,364,097 and $ 408, respectively.
c.3) In April 2013, at the time of entering into the Contract for the Fiduciary Assignment and Trust for Guarantee Purposes Profertil S.A., the Bank was appointed security agent with regard to the Chattel Mortgage Agreement, a transaction that was completed on June 18, 2013, which additionally secures all the obligations undertaken.
36
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
As of June 30, 2014 and December 31, 2013, the balance recorded from these transactions amounts to US$ 116,500.
NOTE 23. ASSETS AND LIABILITIES IN FOREIGN CURRENCY
The balances of assets and liabilities in foreign currency (mainly in U.S. Dollars) as of June 30, 2014 and December 31, 2013 are detailed as follows.
Assets |
06.30.14 | 12.31.13 | ||||||
Cash and Due from Banks |
6,362,048 | 5,108,580 | ||||||
Government and Private Securities |
1,270,946 | 1,022,866 | ||||||
Loans |
4,002,350 | 2,912,322 | ||||||
Other Receivables Resulting from Financial Brokerage |
911,615 | 633,389 | ||||||
Receivables from Financial Leases |
26,939 | 27,536 | ||||||
Equity Investments |
4,188 | 24,839 | ||||||
Miscellaneous Receivables |
35,252 | 28,848 | ||||||
Unallocated Items |
249 | 15 | ||||||
Other Assets |
30 | 3,770 | ||||||
|
|
|
|
|||||
Total |
12,613,617 | 9,762,165 | ||||||
|
|
|
|
|||||
Liabilities |
06.30.14 | 12.31.13 | ||||||
Deposits |
4,090,215 | 3,677,341 | ||||||
Other Liabilities Resulting from Financial Brokerage |
6,829,339 | 5,095,556 | ||||||
Miscellaneous Liabilities |
14,619 | 13,876 | ||||||
Subordinated Negotiable Obligations |
1,916,614 | 1,656,297 | ||||||
Unallocated Items |
43 | 17 | ||||||
Other Liabilities |
2,323 | 5,816 | ||||||
|
|
|
|
|||||
Total |
12,853,153 | 10,448,903 | ||||||
|
|
|
|
The management and mitigation of currency risk are described in Note 36 on risk management policies.
NOTE 24. BREAKDOWN OF THE ITEMS RECORDED UNDER OTHERS IN THE INCOME STATEMENT
Financial Expenses |
06.30.14 | 06.30.13 | ||||||
Turnover Tax |
674,375 | 435,324 | ||||||
Adjustment due to Forward Transactions in Foreign Currency Settled in Pesos |
1,129 | | ||||||
Premiums for Repo Transactions |
10,098 | 8,671 | ||||||
Others |
735 | 176 | ||||||
|
|
|
|
|||||
Total |
686,337 | 444,171 | ||||||
|
|
|
|
|||||
Income from Services |
06.30.14 | 06.30.13 | ||||||
Commissions from Cards |
1,613,230 | 1,159,065 | ||||||
Commissions from Insurance |
130,331 | 103,885 | ||||||
Others |
513,084 | 331,984 | ||||||
|
|
|
|
|||||
Total |
2,256,645 | 1,594,934 | ||||||
|
|
|
|
|||||
Expenses For Services |
06.30.14 | 06.30.13 | ||||||
Turnover Tax |
270,520 | 179,356 | ||||||
Related to Credit Cards |
139,428 | 165,903 | ||||||
Others |
190,537 | 134,203 | ||||||
|
|
|
|
|||||
Total |
600,485 | 479,462 | ||||||
|
|
|
|
37
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Miscellaneous Income |
06.30.14 | 06.30.13 | ||||||
Income from Sale of Bank Premises and Equipment |
1,866 | 488 | ||||||
Income from Transactions with Miscellaneous Assets |
2,962 | 1,843 | ||||||
Leases |
563 | 1,017 | ||||||
Adjustments and Interest from Miscellaneous Receivables |
70,488 | 20,071 | ||||||
Others |
48,885 | 34,768 | ||||||
|
|
|
|
|||||
Total |
124,764 | 58,187 | ||||||
|
|
|
|
|||||
Miscellaneous Losses |
06.30.14 | 06.30.13 | ||||||
Adjustment to Interest on Miscellaneous Liabilities |
321 | 357 | ||||||
Claims |
15,797 | 11,106 | ||||||
Donations |
10,979 | 8,586 | ||||||
Turnover Tax |
8,213 | 3,970 | ||||||
Income from Financial Leases Taken on |
373 | 729 | ||||||
Others |
34,033 | 17,442 | ||||||
|
|
|
|
|||||
Total |
69,716 | 42,190 | ||||||
|
|
|
|
NOTE 25. INCOME FROM INSURANCE ACTIVITIES
As of June 30, 2014 and 2013, the breakdown of Income from Insurance Activities was as follows:
06.30.14 | 06.30.13 | |||||||
Premiums and Surcharges Accrued |
776,191 | 596,539 | ||||||
Claims Accrued |
(114,905 | ) | (68,358 | ) | ||||
Surrenders |
(2,259 | ) | (2,466 | ) | ||||
Life and Ordinary Annuities |
(1,741 | ) | (1,734 | ) | ||||
Underwriting and Operating Expenses |
(33,423 | ) | (29,965 | ) | ||||
Reinsurance Management Expenses |
(60,596 | ) | (44,948 | ) | ||||
Other Income and Expenses |
3,945 | (2,536 | ) | |||||
|
|
|
|
|||||
Total |
567,212 | 446,532 | ||||||
|
|
|
|
NOTE 26. MINIMUM CAPITAL REQUIREMENTS
The Company is not subject to the minimum capital requirements established by the Argentine Central Bank.
Furthermore, the Company meets the minimum capital requirements established by the Corporations Law, which amount to $ 100.
Pursuant to the Argentine Central Bank regulations, the Bank is required to maintain a minimum capital, which is calculated by weighting risks related to assets and to balances of bank premises and equipment, miscellaneous and intangible assets.
As called for by the Argentine Central Bank regulations, as of June 30, 2014 and December 31, 2013, minimum capital requirements were as follows:
Date |
Capital Required | Computable Capital | Computable Capital as a % of the Capital Requirement |
|||||||||
06.30.14 |
6,594,928 | 8,698,382 | 131.90 | |||||||||
12.31.13 |
5,690,525 | 7,512,978 | 132.03 |
38
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 27. EARNINGS PER SHARE
Below is a breakdown of the earnings per share as of June 30, 2014 and 2013:
06.30.14 | 06.30.13 | |||||||
Income for the Period |
1,523,945 | 660,740 | ||||||
Outstanding Ordinary Shares Weighted Average |
1,300,265 | 1,241,407 | ||||||
Diluted Ordinary Shares Weighted Average |
1,300,265 | 1,241,407 | ||||||
Earnings per Ordinary Share (*) |
||||||||
Basic |
1.1720 | 0.5323 | ||||||
Diluted |
1.1720 | 0.5323 |
(*) | Figures stated in whole numbers. |
NOTE 28. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF PROFITS
The Argentine Central Bank regulations require that 20% of the profits shown in the Income Statement at fiscal year-end, plus (or less), the adjustments made in previous fiscal years and, less, if any, the loss accumulated at previous fiscal year-end, be allocated to the legal reserve.
This proportion applies regardless of the ratio of the Legal Reserve fund to Capital Stock. In the event said reserve is reduced for any reason, no profits can be distributed until its total refund.
The Argentine Central Bank set rules for the conditions under which financial institutions can make the distribution of profits. According to the new scheme, profits can be distributed as long as results of operations are positive after deducting not only the Reserves, that may be legally and statutory required, but also the following items from Unappropriated Retained Earnings: The difference between the book value and the market value of public sector assets and/or debt instruments issued by the Argentine Central Bank not valued at market price, the amounts capitalized for lawsuits related to deposits and any unrecorded adjustments required by the external auditors or the Argentine Central Bank.
Moreover, in order for a financial institution to be able to distribute profits, such institution must comply with the capital adequacy rule, i.e. with the calculation of minimum capital requirements and the regulatory capital.
For these purposes, this shall be done by deducting from its assets and Unappropriated Retained Earnings all the items mentioned in the paragraph above.
Moreover, in such calculation, a financial institution shall not be able to compute the temporary reductions that affect minimum capital requirements, computable regulatory capital or its capital adequacy.
In addition, the Argentine Central Bank requires that computable capital be in excess of the minimum capital requirements, equal to 75%.
Distribution of profits shall require the prior authorization of the Argentine Central Banks Superintendent of Financial and Foreign Exchange Institutions, whose intervention shall have the purpose of verifying the aforementioned requirements have been fulfilled.
In addition to the aforementioned restrictions established by the Argentine Central Bank, which are applicable to the Bank and Compañía Financiera Argentina S.A., pursuant to Section 70 of the Corporations Law, stock companies shall establish a reserve not lower than 5% of the realized and liquid profits shown in the Income Statement for the fiscal year, until 20% of the corporate capital is reached. In the event said reserve is reduced for any reason, no profits can be distributed until its total refund.
Tarjeta Naranja S.A.s Ordinary and Extraordinary Shareholders Meeting held on March 16, 2006 decided to set the maximum limit for the distribution of dividends at 25% of the realized and liquid profits of each fiscal year. This restriction shall remain in force as long as the companys Shareholders Equity is below $ 300,000.
Pursuant to the Price Supplement of Class XIII Notes, as well as in accordance with certain financial loan contracts, Tarjeta Naranja S.A. has agreed not to distribute dividends that may exceed 50% of the companys net income. This restriction also applies in the event of any excess over certain indebtedness ratios.
39
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
NOTE 29. STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS
Cash and due from banks and assets held with the purpose of complying with the short-term commitments undertaken, with a high level of liquidity, easily converted into known amounts of cash, subject to insignificant changes in value and with a maturity less than six (6) months from the date of the acquisition thereof, are considered to be cash and cash equivalents. The breakdown is as follows:
06.30.14 | 12.31.13 | 06.30.13 | 12.31.12 | |||||||||||||
Cash and Due from Banks |
14,687,978 | 12,560,345 | 8,249,087 | 8,345,015 | ||||||||||||
Instruments Issued by the Argentine Central Bank |
3,917,365 | 1,909,979 | 1,249,116 | 2,202,108 | ||||||||||||
Reverse Repo Transactions with the Argentine Central Bank |
1,000,030 | | 481,975 | 38,497 | ||||||||||||
Interbank Loans - (Call Money Loans Granted) |
238,208 | 179,000 | 102,000 | 84,000 | ||||||||||||
Overnight Placements in Banks Abroad |
545,719 | 586,123 | 458,102 | 277,528 | ||||||||||||
Other Cash Placements |
850,585 | 588,434 | 215,481 | 376,830 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Cash and Cash Equivalents |
21,239,885 | 15,823,881 | 10,755,761 | 11,323,978 | ||||||||||||
|
|
|
|
|
|
|
|
NOTE 30. CONTRIBUTION TO THE DEPOSIT INSURANCE SYSTEM
Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.
The National Executive Branch through Decree No. 1127/98, dated September 24, 1998, established the maximum amount for this insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency. As of January 2011, said amount has been established at $ 120.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to the Bank, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up after July 1, 1995 at an interest rate exceeding the one established regularly by the Argentine Central Bank based on a daily survey it conducted. Deposits acquired through endorsement and placements made as a result of incentives other than interest rates are also excluded. This system has been implemented through the constitution of the Deposit Insurance Fund (FGD), which is managed by a company called Seguros de Depósitos S.A. (SE.DE.S.A.). SE.DE.S.A.s shareholders are the Argentine Central Bank and the financial institutions, in the proportion determined for each one by the Argentine Central Bank based on the contributions made to the fund.
As of January 1, 2005, the Argentine Central Bank set this contribution at 0.015% per month.
NOTE 31. NATIONAL SECURITIES COMMISSION (C.N.V.)
Within the framework of Resolution No. 622/13 and Circular Letter M.A.E. No. 120/2014, it is determined that registered brokers who have proceedings pending at the C.N.V. for their registration as agents shall be able to continue conducting transactions normally until the start of operations under the new category pursuant to the amended text of the regulations of the C.N.V. (text amended in 2013). The Bank shall continue conducting transactions under the current conditions since it complied with the requirements set forth in the aforementioned resolution. The Bank has requested to be registered as settlement and clearing agent and trading agent comprehensive, and manager of collective investment products at the registry of financial trustees, and as custodial agent of collective investment products corresponding to mutual funds.
As of June 30, 2014, the Banks Shareholders Equity exceeds that required by the C.N.V. to act as agent in the categories in which the Bank has already carried out the registration proceedings. Such requirement amounts to $ 26,500 with a minimum liquidity requirement of $ 13,250, which the Bank made up at the end of the period with Peso-denominated Bonds at Badlar rate due 2017 for the amount of $ 9,460, which are held in custody at Caja de Valores (Depositor No. 100100), and the remaining with a balance held in checking account No. 007 open at the Argentine Central Bank (See Note 15 to the consolidated financial statements). At the date of these financial statements, the Bank made up the total amount requested by depositing it in the aforementioned custody account.
40
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Furthermore, in compliance with Section 7 of Chapter II, Title V of that Resolution, in its capacity as custodial agent of collective investment products corresponding to mutual funds (depository) of the FIMA ACCIONES, FIMA P.B. ACCIONES, FIMA RENTA EN PESOS, FIMA AHORRO PESOS, FIMA RENTA PLUS, FIMA PREMIUM, FIMA AHORRO PLUS, FIMA CAPITAL PLUS, FIMA ABIERTO PYMES funds, as of June 30, 2014, the Bank holds a total of 3,453,954,834 units under custody for a market value of $ 7,088,903, which is included in the Depositors of Securities Held in Custody account. As of December 31, 2013, the securities held in custody totaled 3,506,326,870 units and their market value amounted to $ 6,655,021.
The balances of the Mutual Funds as of period/fiscal year-end are detailed as follows:
Mutual Fund |
06.30.14 | 12.31.13 | ||||||
FIMA Acciones |
52,886 | 29,223 | ||||||
FIMA P.B. Acciones |
109,243 | 56,352 | ||||||
FIMA Renta en pesos |
56,514 | 18,081 | ||||||
FIMA Ahorro en pesos |
1,240,295 | 1,474,503 | ||||||
FIMA Renta Plus |
60,959 | 27,004 | ||||||
FIMA Premium |
2,397,378 | 2,164,601 | ||||||
FIMA Ahorro Plus |
1,585,058 | 1,076,550 | ||||||
FIMA Capital Plus |
1,551,211 | 1,773,606 | ||||||
FIMA Abierto PyMES |
35,359 | 11,377 | ||||||
Fondos FIMA Liquidados |
| 23,724 | ||||||
|
|
|
|
|||||
Total |
7,088,903 | 6,655,021 | ||||||
|
|
|
|
NOTE 32. SECURED LIABILITIES FROM FORMER BANCO ALMAFUERTE COOP. LTDO.
Due to the dissolution of former Banco Almafuerte Coop. Ltdo., the Company has undertaken certain secured liabilities corresponding to 5 (five) branches of said institution, receiving a Class A Participation Certificate in Nues Trust, and it has participated in the creation of a Special Fund.
As of December 31, 2013, the balance of such Fund amounted to $ 170,688; and it was fully settled in January 2014.
NOTE 33. SETTING UP OF FINANCIAL TRUSTS
a) Financial trusts with the Bank as trustor:
Name |
Creation Date | Estimated Maturity Date |
Trustee |
Trust Assets |
Portfolio Transferred |
Book Value of Securities Held in Own Portfolio |
||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||
Galtrust I |
10.13.00 | 02.04.18 | First Trust of New York N.A. | Secured Bonds in Pesos at 2% due 2018 (1) | US$ | 490,224 | (*) | 853,845 | 743,442 | |||||||||||
Galicia |
04.16.02 | 05.06.32 | Bapro Mandatos y Negocios S.A. | National Government Promissory Note Bonds in Pesos at 2% due 2014 (2) | $ | 108,000 | | 142,806 |
(*) | The remaining US$ 9,776 was transferred in cash. |
(1) | In exchange for loans to the Provincial Governments. |
(2) | In exchange for Secured Loans, paid during this period. |
b) As of June 30, 2014 and December 31, 2013, the Bank records in its own portfolio participation certificates and debt securities from financial trusts amounting to $ 573,497 and $ 649,313, respectively.
41
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
c) Compañía Financiera Argentina S.A. transferred part of its portfolio to create a trust:
Name |
Creation Date | Estimated Maturity Date |
Trustee |
Trust Assets |
Portfolio Transferred |
Book Value of Securities Held in Own Portfolio |
||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||
Fideicomiso Financiero CFA Trust I |
02.19.14 | 02.22.16 | Deutsche Bank S.A. |
Personal Loans | $ | 180,000 | $ | 49,633 | (*) | |
(*) | It corresponds to Participation Certificates. |
NOTE 34. SEGMENT REPORTING
The Company measures the performance of each of its business segments mainly in terms of Net Income. The segments defined are made up of one or more operating segments with similar economic characteristics, distribution channels and regulatory environments.
Below there is a description of each business segments composition:
Banks: It represents the banking business operations results and includes the results of operations of subsidiaries the Bank, Banco Galicia Uruguay S.A. (In liquidation) and Galicia Cayman S.A.
Regional Credit Cards: This segment represents the results of operations of the regional credit card business and includes the results of operations of Tarjetas del Mar S.A. and Tarjetas Regionales S.A. consolidated with its subsidiaries, as follows: Cobranzas Regionales S.A., Procesadora Regional S.A., Tarjeta Naranja S.A. and Tarjetas Cuyanas S.A.
Personal Loans CFA: This segment includes the results of operations of Compañía Financiera Argentina S.A. and Cobranzas y Servicios S.A.
Insurance: This segment represents the results of operations of the insurance companies business and includes the results of operations of Sudamericana Holding S.A. consolidated with its subsidiaries, as follows: Galicia Retiro Cía. de Seguros S.A., Galicia Seguros S.A. and Galicia Broker Asesores de Seguros S.A.
Other Businesses: This segment shows the results of operations of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión, Galicia Warrants S.A. and Net Investment S.A.
Adjustments: This segment includes results of operations other than those related to the preceding segments and consolidation adjustments, eliminations corresponding to transactions conducted between consolidated companies and minority interest.
Banks | Regional Credit Cards |
Personal Loans - CFA |
Insurance | Other Businesses |
Adjustments | 06.30.14 | ||||||||||||||||||||||
Net Financial Income |
3,257,062 | 819,219 | 546,514 | 86,641 | 8,089 | 68,412 | 4,785,937 | |||||||||||||||||||||
Net Income from Services |
1,304,265 | 1,504,996 | 42,551 | | 49,410 | (378,470 | ) | 2,522,752 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Operating Income |
4,561,327 | 2,324,215 | 589,065 | 86,641 | 57,499 | (310,058 | ) | 7,308,689 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Provision for Loan Losses |
650,546 | 423,988 | 173,936 | | | | 1,248,470 | |||||||||||||||||||||
Administrative Expenses |
2,393,185 | 1,479,202 | 351,452 | 115,841 | 18,759 | (15,311 | ) | 4,343,128 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating Income |
1,517,596 | 421,025 | 63,677 | (29,200 | ) | 38,740 | (294,747 | ) | 1,717,091 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income from Insurance Companies Activities |
| | | 212,282 | | 354,930 | 567,212 | |||||||||||||||||||||
Income from Equity Investments |
515,911 | (14,283 | ) | 630 | 808 | 8 | (451,839 | ) | 51,235 | |||||||||||||||||||
Minority Interest |
| (31 | ) | | | | (82,992 | ) | (83,023 | ) | ||||||||||||||||||
Miscellaneous Income, Net |
72,349 | 114,959 | 51,714 | (677 | ) | 1,076 | (6,208 | ) | 233,213 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Income before Income Tax |
2,105,856 | 521,670 | 116,021 | 183,213 | 39,824 | (480,856 | ) | 2,485,728 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income Tax |
659,000 | 223,131 | 42,792 | 64,302 | 14,000 | (41,442 | ) | 961,783 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net Income for the Period |
1,446,856 | 298,539 | 73,229 | 118,911 | 25,824 | (439,414 | ) | 1,523,945 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Banks | Regional Credit Cards |
Personal Loans - CFA |
Insurance | Other Businesses |
Adjustments | 06.30.13 | ||||||||||||||||||||||
Net Financial Income |
1,982,976 | 671,875 | 449,485 | 40,831 | 2,569 | (87,558 | ) | 3,060,178 | ||||||||||||||||||||
Net Income from Services |
926,886 | 1,250,096 | 61,253 | | 21,068 | (297,398 | ) | 1,961,905 | ||||||||||||||||||||
|
|
|
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Net Operating Income |
2,909,862 | 1,921,971 | 510,738 | 40,831 | 23,637 | (384,956 | ) | 5,022,083 | ||||||||||||||||||||
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Provision for Loan Losses |
392,902 | 361,727 | 121,055 | | | | 875,684 | |||||||||||||||||||||
Administrative Expenses |
1,914,401 | 1,228,875 | 308,543 | 88,314 | 12,536 | (9,318 | ) | 3,543,351 | ||||||||||||||||||||
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|||||||||||||||
Operating Income |
602,559 | 331,369 | 81,140 | (47,483 | ) | 11,101 | (375,638 | ) | 603,048 | |||||||||||||||||||
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Income from Insurance Companies Activities |
| | | 182,718 | | 263,814 | 446,532 | |||||||||||||||||||||
Income from Equity Investments |
327,710 | | 89 | 68 | | (283,633 | ) | 44,234 | ||||||||||||||||||||
Minority Interest |
| 4 | | | | (100,478 | ) | (100,474 | ) | |||||||||||||||||||
Miscellaneous Income, Net |
18,400 | 93,198 | 40,065 | (2,422 | ) | 1,071 | 3,253 | 153,565 | ||||||||||||||||||||
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Net Income before Income Tax |
948,669 | 424,571 | 121,294 | 132,881 | 12,172 | (492,682 | ) | 1,146,905 | ||||||||||||||||||||
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Income Tax |
243,000 | 193,551 | 44,350 | 47,012 | 4,314 | (46,062 | ) | 486,165 | ||||||||||||||||||||
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|||||||||||||||
Net Income for the Period |
705,669 | 231,020 | 76,944 | 85,869 | 7,858 | (446,620 | ) | 660,740 | ||||||||||||||||||||
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The accounting measurement of assets and liabilities allocated to the above-mentioned segments is the following:
06.30.14 | 12.31.13 | |||||||
Government and Private Securities |
10,322,671 | 3,987,329 | ||||||
Loans |
58,846,394 | 55,264,926 | ||||||
Other Receivables Resulting from Financial Brokerage |
6,473,005 | 5,696,143 | ||||||
Receivables from Financial Leases |
1,084,585 | 1,128,067 | ||||||
Other Assets |
239,490 | 201,417 | ||||||
|
|
|
|
|||||
Total Assets |
76,966,145 | 66,277,882 | ||||||
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|
|
|||||
06.30.14 | 12.31.13 | |||||||
Deposits |
58,564,028 | 51,395,323 | ||||||
Other Liabilities Resulting from Financial Brokerage |
23,393,021 | 19,333,341 | ||||||
Subordinated Negotiable Obligations |
1,916,614 | 1,656,297 | ||||||
Other Liabilities |
328,655 | 287,488 | ||||||
|
|
|
|
|||||
Total Liabilities |
84,202,318 | 72,672,449 | ||||||
|
|
|
|
NOTE 35. CONTINGENCIES
TAX ISSUES
Banco de Galicia y Buenos Aires S.A.
At the date of these financial statements, provincial tax collection authorities, as well as tax collection authorities from Buenos Aires, are in the process (in different degrees of completion) of conducting audits and assessments mainly regarding the Compensatory Bond granted by the National Government to compensate financial institutions for the losses generated by the asymmetric pesification of loans and deposits.
As regards the assessment of tax collection authorities from Buenos Aires, within the framework of the legal actions brought by the Bank with the purpose of challenging the assessment of the tax collection authorities, a preliminary injunction was granted by the Argentine Federal Court of Appeals in Administrative Matters for the amount corresponding to the Compensatory Bond, which was ratified by the Supreme Court of Justice. Therefore, the Court ordered the A.G.I.P. (Governmental Public Revenue Authority) to refrain from starting tax enforcement proceedings or else requesting precautionary measures for such purpose until a final judgment is issued. The proceedings are currently pending a decision by the Argentine Federal Court of Appeals in Administrative Matters with regard to the appeal filed by the Bank against the decision issued on the core issue by the Court of First Instance in November 2013.
With regard to Buenos Aires claims on account of other items, the Bank adhered to the System for the Settlement of Tax Liabilities in Arrears (Law No. 3,461 and the related regulations), which envisaged the total relief of interest and fines. The Banks adherence to such system was communicated within the framework of the respective cases before the corresponding judicial authorities.
43
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
In connection with the assessments made by tax collection authorities from the Province of Buenos Aires, under the framework of some of the processes under discussion at the Provincial Tax Courts stage, at this stage of proceedings the decision issued was: (i) unfavorable to the Banks request regarding the items not related to the Compensatory Bond, and (ii) favorable with regard to the non-taxability thereof. Therefore, the Bank adhered to the System for the Regularization of Tax Debts (Regulatory Decision No. 12 and related decisions), which envisages discounts on the amounts not related to the Compensatory Bond. The Banks adherence to such system was communicated within the framework of the respective cases before the corresponding judicial authorities. In turn, the authorities from the Province of Buenos Aires objected to the judgment rendered by the Provincial Tax Court with regard to the Compensatory Bond, and requested the Court of Appeals in Administrative Matters of La Plata to set such decision aside. The Bank entered an appearance and filed a motion for lack of jurisdiction, since it believes only the Argentine Supreme Court of Justice has jurisdiction to issue a decision on such a matter. On April 15, 2014, the aforementioned Court sustained the motion for lack of jurisdiction and ordered the proceedings to be filed. Thus, the controversy would appear to be finished. To date, the judgment is not yet final.
Furthermore, regarding the claims made by the different jurisdictions, the Bank has been expressing its disagreement regarding these adjustments at the corresponding administrative and/or legal proceedings.
These proceedings and their possible effects are constantly being monitored by Management. Even though the Bank considers that it has complied with its tax liabilities in full pursuant to current regulations, provisions deemed adequate pursuant to the evolution of each proceeding have been set up.
Tarjetas Regionales S.A.
At the date of these consolidated financial statements, the Argentine Revenue Service (A.F.I.P.), Provincial Revenue Boards and Municipalities are in the process of conducting audits and assessments, in different degrees of completion, at the companies controlled by Tarjetas Regionales S.A. Said agencies have served notices and made claims regarding taxes applicable to Tarjetas Regionales S.A.s subsidiaries. Therefore, the companies are taking the corresponding administrative and legal steps in order to resolve such issues. The original amount claimed for taxes totals approximately $ 15,302.
Based on their tax advisors opinions, the companies believe that the above-mentioned claims are both legally and technically groundless and that taxes related to the claims have been correctly calculated in accordance with current tax regulations in force and existing case law.
Compañía Financiera Argentina S.A.
The A.F.I.P. conducted audits on fiscal years 1998 and 1999, not accepting certain uncollectible loans to be recorded as uncollectible receivables deductible from income tax and minimum presumed income tax. The original amount claimed for taxes by the tax collection authorities totals $ 2,094.
In July 2013, the Federal Tax Court was notified the judgment sustaining the appeal filed by the company. Tax collection authorities later filed an appeal against the aforementioned judgment, which was answered by the company in December 2013. In May 2014, the Argentine Federal Court of Appeals in Administrative Matters rejected the appeal filed by the A.F.I.P, thus confirming the judgment issued by the Federal Tax Court, which was favorable to Compañía Financiera Argentina S.A. In June 2014, the A.F.I.P. filed an appeal before the Argentine Supreme Court of Justice.
Based on the information available at the date of these financial statements, the company foresees the decision to be issued by the Argentine Supreme Court of Justice shall not be different from the judgments issued by the other courts that heard the case.
Notwithstanding the foregoing, the companies have set up provisions deemed appropriate pursuant to the evolution of each proceeding.
44
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
CONSUMER PROTECTION ASSOCIATIONS
Banco de Galicia y Buenos Aires S.A.
Consumer Protection Associations, on behalf of consumers, have filed claims against the Bank regarding the collection of certain financial charges.
Tarjeta Naranja S.A.
Tarjeta Naranja S.A. reached an agreement with the Consumer and User Protection Association of Argentina (Asociación de Defensa de los Consumidores y Usuarios de la Argentina A.D.E.C.U.A.) on certain aspects related to amounts collected on account of life insurance on debt balances. This agreement was judicially approved. The court that heard the case later decided that Tarjeta Naranja S.A. should make additional reimbursements with regard to the aforementioned items. Tarjeta Naranja S.A. filed an appeal against this decision before the Court of Appeals, since the company considered it had carried out all the transactions in due time and manner.
In May 2014, Tarjeta Naranja S.A. was notified of the judgment that ordered it to reimburse part of what had already been collected on account of life insurance on debt balances. In turn, the A.D.E.C.U.A. filed an extraordinary appeal before the Argentine Court of Appeals. At the date of these financial statements, the outcome of the appeal filed by the aforementioned institution is unknown. Thus, the company has set up provisions for such claim.
The Bank considers that the resolution of these controversies will not have a significant impact on its financial condition.
NOTE 36. RISK MANAGEMENT POLICIES
The tasks related to risk information and internal control of each of the controlled companies are defined and carried out, rigorously. This particularly affects the Bank, where requirements are stringent as it is a financial institution regulated by the Argentine Central Bank. Apart from applicable local regulations, Grupo Financiero Galicia S.A., in its capacity as a listed company in the United States, complies with the certification of its internal controls pursuant to Section 404 of the Sarbanes Oxley Act (Sarbanes-Oxley). Corporate risk management is monitored by the Audit Committee, which as well gathers and analyzes the information submitted by the main controlled companies.
The specific function of the comprehensive management of the Banks risks has been allocated to the Risk Management Division, guaranteeing its independence from the rest of the business areas since it directly reports to the Banks General Division and, at the same time, it is involved in the decisions made by each area. In addition, the control and prevention of risks related to asset laundering, funding of terrorist activities and other illegal activities are allocated to the Anti-Money Laundering Unit Division. The aim of both divisions is to guarantee the Board of Directors that they are fully aware of the risks the Bank is exposed to, and they are in charge of designing and proposing the policies and procedures necessary to mitigate and control such risks.
The Risk Management Division is also in charge of monitoring compliance with the laws, regulations and internal policies applicable to the Bank, its affiliated companies and individuals, in order to prevent monetary and/or criminal penalties and to mitigate the impact on reputation.
The Bank has developed the Capital Adequacy Assessment Process (Proceso de Evaluación de Suficiencia de Capital - PESC) to assess the relationship between the Banks available resources and necessary resources to maintain an appropriate risk profile. This process should allow identifying both the economic capital needs for future fiscal years and the sources to meet such needs.
In turn, the Bank has developed a risk appetite framework, which has risk acceptance levels, both on an individual and a consolidated basis. Within this framework, ratios have been established, which are regularly submitted to the Risk Management Committee.
Each of these ratios has an excess threshold and related actions in case of deviations.
45
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
FINANCIAL RISKS
Short- and medium-term financial risks are managed within the framework of policies approved by the Banks Board of Directors, which establishes limits to the different risk exposure and also considers their interrelation. Management is supplemented by contingency plans devised to face adverse market situations. Furthermore, stress tests that make it possible to assess risk exposure under historical and simulated scenarios are created, which identify critical levels of the different risk factors.
LIQUIDITY
Daily liquidity is managed according to the set strategy, which seeks to keep liquid resources adequate to mitigate the adverse effects caused by irregular variations in loans and deposits, in addition to coping with stress situations.
The current liquidity policy in force provides for setting limits and monitoring a) liquidity as it relates to stock: a level of Management Liquidity Requirement was established, taking into consideration the characteristics and behavior of the Banks different liabilities; and b) cash flow liquidity: gaps between the contractual maturities of consolidated financial assets and liabilities are analyzed and monitored. There is a cap for the gap between maturities, determined based on the gap accumulated against total liabilities permanently complied with during the first year.
Furthermore, the policy sets forth a contingency plan, by currency type, that determines the steps to be taken and the assets from which additional liquid resources can be obtained.
With the purpose of mitigating the liquidity risk that arises from deposit concentration per customer, the Bank has a policy that regulates the concentration of deposits among its main customers.
CURRENCY RISK
The Banks current policy in force establishes limits in terms of maximum net asset positions (assets denominated in a currency which are higher than the liabilities denominated in such currency) and net liability positions (assets denominated in a foreign currency which are lower than the liabilities denominated in such currency) for mismatches in currency, as a proportion of the Banks R.P.C., on a consolidated basis.
An adequate balance between assets and liabilities denominated in foreign currency is what characterizes the management strategy for this risk factor, seeking to achieve a full coverage of long-term asset-liability mismatches and allowing a short-term mismatch management margin that contributes to the possibility of improving certain market situations. Short- and long-term goals are attained by appropriately managing assets and liabilities and by using the financial products available in our market, particularly dollar futures both in institutionalized markets (M.A.E. and RO.F.EX.) and in forward transactions performed with customers.
Transactions in foreign currency futures (Dollar futures) are subject to limits that take into consideration the particular characteristics of each trading environment.
INTEREST RATE RISK
The Banks exposure to the interest rate risk, as a result of interest rate fluctuations and the different sensitivity of assets and liabilities, is managed according to the strategy approved. On the one hand, it considers a short-term horizon, seeking to keep the net financial margin within the levels set by the policy. On the other hand, it considers a long-term horizon, the purpose of which is to mitigate the negative impact on the economic value of the Banks Shareholders Equity in the face of changes in interest rates.
From a comprehensive viewpoint of risk exposure and contributing to including a risk premium in the pricing process, the aim is to systematically estimate the economic capital used up by the structural risk as per the financial statements (interest rate risk) and the contribution of the price risk, in its different expressions, to using up the capital.
MARKET RISK
Trading of and/or investment in government and corporate securities, currencies, derivatives and debt instruments issued by the Argentine Central Bank, which are listed on the capital markets and the value of which varies pursuant to the variation of the market prices thereof, are included within the policy which limits the maximum authorized losses for a fiscal year.
46
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The price risk (market) is daily managed according to the strategy approved, the purpose of which is to keep the Bank present in the different derivatives, variable- and fixed-income markets while obtaining the maximum return as possible on trading, without exposing the latter to excessive risk levels. Finally, the designed policy contributes to providing transparency and facilitates the perception of the risk levels to which it is exposed.
In order to measure and monitor risks derived from the variation in the price of financial instruments frequently listed in the secondary markets that form the trading securities portfolio, a model known as Value at Risk (also known as VaR) is used. This model measures, for the Bank individually, the possible loss that could be generated by the positions in securities and currencies under certain parameters. For financial instruments not frequently listed or with no representative listing in the secondary markets, the methodology known as DV01 is used. This consists in estimating the change of value of a portfolio, for variations of one interest rate percentage point.
CROSS-BORDER RISK
The Banks foreign trade transactions and management of treasury resources imply assuming cross-border risk positions. These exposures related to cross-border assets are in line with the Banks business and financial strategy, the purpose of which is to provide customers with an efficient commercial assistance and to improve the management of available liquid resources within an appropriate risk and yield environment.
TRANSFER RISK
The possibility of diversifying funding sources, as contemplated by the liquidity strategy, by obtaining resources in foreign capital markets, involves the possible exposure to potential regulatory changes that hinder or increase the cost of the transfer of foreign currency abroad to meet liability commitments. The policy that manages the risk of transferring foreign currency abroad thus contributes to the liquidity strategy and pursues the goal of reaching an adequate balance between liabilities payable to local counterparties and those payable to foreign counterparties in a return-risk proportion that is adequate for the Banks business and growth.
EXPOSURE TO THE NON-FINANCIAL PUBLIC SECTOR
With the purpose of regulating risk exposures with regard to the non-financial public sector, in the national, provincial and municipal jurisdictions, the Bank defined a policy which by design envisages risk exposures in each jurisdiction, as well as the possible loss of value related to such holdings.
CREDIT RISK
The Banks credit granting and analysis system is applied in a centralized manner and is based on the concept of opposition of interests, which takes place when risk management, credit and commercial duties are segregated, with respect to both retail and wholesale businesses. This allows an ongoing and efficient monitoring of the quality of assets, a proactive management of problem loans, aggressive write-offs of uncollectible loans and a conservative policy on allowances for loan losses.
Apart from that, this system includes the follow-up of the models for measuring the portfolio risk at the operation and customer levels, thus making it easier to detect problem loans and the related losses. This allows early detection of situations that can entail some degree of portfolio deterioration, appropriately safeguarding the Banks assets.
Credit risk management entails approving the credit risk policies and procedures, verifying compliance therewith and assessing credit risk on an ongoing basis.
As an outstanding aspect we can mention that the credit granting policy for retail banking focuses on automatic granting processes. These are based on behavior analysis models. The Bank is strongly geared towards obtaining portfolios with direct payroll deposit, which statistically have a better compliance behavior when compared to other types of portfolios.
As for the wholesale banking, credit granting is based on analyses conducted on credit, cash flow, balance sheet, and capacity of the applicant. These are supported by statistical rating models and qualitative adjustment models for corporate businesses.
Internal policies were implemented regarding concentration per customer/group, acceptance and concentration per internal rating and review-by-sector. The latter determines the levels of review for the economic activities belonging to the private-sector portfolio according to the concentration they show with regard to the Banks total credit and/or R.P.C.
47
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The Credit Risk Management Division also constantly monitors its portfolio through different indicators (asset quality of the loan portfolio, provision for the non-accrual portfolio, non-performance, roll rates, etc.), as well as the classification and concentration thereof (through maximum ratios between the exposure to each customer, its own computable capital or R.P.C. or regulatory capital, and that of each customer). The loan portfolio classification as well as its concentration control was carried out following the Argentine Central Bank regulations.
OPERATIONAL RISK
Pursuant to the best practices and the guidelines determined by the Argentine Central Bank, the Bank has the Operational Risk Unit, through which it has implemented the Operational Risk Management Framework. This framework includes the Banks policies, practices, procedures and structures for the appropriate management of Operational Risk.
Operational Risk is the risk because of external events. It includes legal risk, but does not include strategic and reputational risks.
The Bank manages operational risk inherent to its products, activities, processes and material systems, technology and information security processes, as well as risks derived from subcontracted activities and from services rendered by providers. Such management includes the identification, assessment, monitoring, control and mitigation of operational risks.
Before launching or introducing new products, activities, processes or systems, the Bank makes sure its operational risks are appropriately assessed.
The Bank has the necessary structure and resources to be able to determine the operational risk profile and thus take the corresponding corrective measures, complying with the regulations set forth by the Argentine Central Bank on guidelines for operational risk management in financial institutions and operational risk events database.
The minimum capital requirement with regard to the operational risk is determined according to the Argentine Central Bank regulations.
An appropriate management of operational risks also helps improve customer service quality.
In compliance with Communiqué A 5398, securitization, concentration, reputational and strategic risks were identified as significant risks, and a computation and measurement method was developed, which is currently being implemented. These risks, together with those mentioned previously, were included in the Capital Adequacy Assessment Report (I.A.C., as per its acronym in Spanish), within the framework of Communiqué A 5515.
SECURITIZATION RISK
Securitization is an alternative source of financing and a mechanism for the transfer of risks to investors. Notwithstanding the foregoing, securitization activities and the fast innovation with regard to the techniques and instruments used in such activities also generate new risks, including the following:
i) Credit, market, liquidity, concentration, legal and reputational risks, due to the securitization positions held or invested, including, among others, liquidity facilities and credit enhancement granted; and
ii) Credit risk due to the underlying exposures with regard to securitization.
CONCENTRATION RISK
Risk concentration has to do with the exposures or groups of exposure with similar characteristics, for instance when they belong to the same debtor, counterparty or guarantor, geographic area or economic sector; or because they are secured by the same type of assets used as collateral, with the possibility of generating:
i) Losses with regard to income, regulatory capital, assets or the global risk level, that are significant enough to affect the financial strength of the financial institution or its ability to keep the financial institutions main transactions; and
ii) A major change in the financial institutions risk profile.
REPUTATIONAL RISK
Reputational risk is defined as the risk associated with a negative perception of the financial institution by customers, counterparties, shareholders, investors, account holders, market analysts and other significant market players, which adversely affects the financial institutions ability to keep existing business relationships or establish new relationships, and continue having access to funding sources such as the interbank market or the securitization market.
48
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
STRATEGIC RISK
Strategic risk is that which arises from an inappropriate business strategy or an adverse change in forecasts, parameters, goals and other functions that support such strategy. Even though estimating this risk is complex, institutions must develop new management techniques that include all the related aspects.
ASSET LAUNDERING, FUNDING OF TERRORIST ACTIVITIES AND OTHER ILLEGAL ACTIVITIES RISK
As regards the control and prevention of asset laundering and the funding of terrorist activities, the Bank complies with the regulations set forth by the Argentine Central Bank, the Financial Information Unit and Law No. 25246, as amended, which creates the Financial Information Unit (U.I.F. as per its initials in Spanish - Unidad de Información Financiera), under the jurisdiction of the Ministry of Justice and Human Rights with functional autarchy. The Financial Information Unit is in charge of analyzing, addressing and reporting the information received, in order to prevent and avoid both asset laundering and the funding of terrorist activities.
The Bank has promoted the implementation of measures designed to fight against the use of the international financial system by criminal organizations. For such purposes, the Bank has control policies, procedures and structures that are applied using a risk-based approach, which allow monitoring transactions, pursuant to the customer profile (defined individually based on the information and documentation related to the economic, financial and tax condition of the customer), in order to detect such transactions that should be considered unusual, and to report them before the U.I.F. in the cases that may correspond. The Anti-Money Laundering Unit (U.A.L. as per its initials in Spanish Unidad Antilavado) is in charge of managing this activity, through the implementation of control and prevention procedures as well as the communication thereof to the rest of the organization by drafting the related handbooks and training all employees. In addition, the management of this risk is regularly reviewed by Internal Audit.
The Bank has appointed a director as Compliance Officer, pursuant to Resolution 121/11 of the U.I.F., who shall be responsible for ensuring compliance with and implementation of the proceedings and obligations on the issue.
The Bank contributes to the prevention and mitigation of risks from transaction-related criminal behaviors by being involved in the international regulatory standards adoption process.
In compliance with Communiqué A 5394 issued by the Argentine Central Bank, in its website (http://www.bancogalicia.com.ar), inside the Conózcanos tab within Información Corporativa, the Bank has a document entitled Disciplina de Mercado Requisitos mínimos de divulgación, where there is information related to the structure and adequacy of regulatory capital, the exposure to the different risks and the management thereof.
NOTE 37. CORPORATE GOVERNANCE TRANSPARENCY POLICY
GRUPO FINANCIERO GALICIA S.A.
Grupo Financiero Galicia S.A.s Board of Directors is the Companys highest management body. It is made up of nine (9) directors and four (4) alternate directors, who must have the necessary knowledge and skills to clearly understand their responsibilities and duties within the corporate governance, and to act with the loyalty and diligence of a good businessman.
As set out in its bylaws, the term of office for both directors and alternate directors is three (3) years; they are partially changed every year and may be reelected indefinitely.
The Company complies with the appropriate standards regarding total number of directors, as well as the number of independent directors. Furthermore, its bylaws provide for the flexibility necessary to adapt the number of directors to the possible changes in the conditions in which the Company carries out its activities, from three to nine directors.
The Board of Directors complies, in every relevant aspect, with the recommendations included in the Code on Corporate Governance as schedule IV to Title IV of the regulations issued by the National Securities Commission (text amended in 2013).
It also monitors the application of the corporate governance policies provided for by the regulations in force through the Audit Committee and the Committee for Information Integrity. Periodically, the Committees provide the Board of Directors with information, and the Board gets to know the decisions of each Committee. What is appropriate is transcribed in the minutes drafted at the Board of Directors meetings.
49
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The Audit Committee set by Capital Markets Law No. 26831 and the C.N.V.s regulations is formed by three (3) directors, two of whom are independent directors, and the Committee for Information Integritys mission is to comply with the provisions of Sarbanes-Oxley.
Basic Holding Structure
The Company is the holding company of a group whose main asset is the controlling equity interest in the Bank. The latter, as a banking institution, is subject to certain regulatory restrictions imposed by the Argentine Central Bank. In particular, the Bank can only hold a 12.5% interest in the capital stock of companies that do not carry out activities considered supplementary by the Argentine Central Bank. Therefore, the Company holds, either directly or indirectly, the remaining interests in several companies. In addition, the Company indirectly holds a number of equity investments in supplementary companies that belong to the Bank as controlling company.
It is worth noting that the Company is a company whose purpose is solely to conduct financial and investment activities as per Section 31 of the Corporations Law, that is to say, it is a holding company whose activity involves managing its equity investments, assets and resources. This explains its limited personnel structure, as well as the fact that many of the business organization requirements, common for large institutions, cannot be applied.
One should note that the Company is technically under the control of a holding company, EBA Holding S.A., because the latter holds the majority of votes at the Shareholders Meetings, although it does not have any managerial functions over the Company and the Company has no group relationship with EBA Holding S.A. No director of EBA Holding S.A. is a director of Grupo Financiero Galicia S.A.
Compensation Systems
Directors compensation is defined by the General Shareholders Meeting and is fixed within the limits established by law and the corporate bylaws.
The Audit Committee expresses its opinion on whether compensation proposals for Directors are reasonable, taking into consideration market standards.
Business Conduct Policy
The Company has consistently shown respect for the rights of its shareholders, reliability and accuracy in the information provided, transparency as to its policies and decisions, and caution with respect to the disclosure of strategic business issues.
Code of Ethics
The Company has a formally approved Code of Ethics that guides its policies and activities. It considers business objectivity and conflict-of-interests-related aspects, and how the employee should act upon identifying a breach of the Code of Ethics.
BANCO DE GALICIA Y BUENOS AIRES S.A.
The Companys Board of Directors is the Banks highest management body. It is made up of seven (7) directors and five (5) alternate directors, who must have the necessary knowledge and skills to clearly understand their responsibilities and duties within the corporate governance, and to act with the loyalty and diligence of good businessmen.
The Bank complies with the appropriate standards regarding total number of directors, as well as number of independent directors. Furthermore, its bylaws provide for the flexibility necessary to adapt the number of directors to the possible changes in the conditions in which the Bank carries out its activities, from three to nine directors.
The General Shareholders Meeting has the power to establish the number of directors, both independent and non-independent ones, and appoint them. Out of the seven directors, two are independent. In addition, three of the alternate directors are independent. The independence concept is defined in the regulations set forth by the C.N.V. and the Argentine Central Bank regulations.
As regards prevention of conflicts of interest, the provisions set forth in the Corporations Law and the Capital Markets Law are applicable.
50
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
As set out in the bylaws, the term of office for both directors and alternate directors is three years; two thirds of them (or a fraction of at least three) are changed every year and may be reelected indefinitely.
The Board of Directors meeting is held at least once a week and when required by any director. The Board of Directors is responsible for the Banks general management and makes all the necessary decisions to such end. The Board of Directors members also take part, to a higher or lesser extent, in the commissions and committees created. Therefore, they are continuously informed about the Banks course of business and become aware of the decisions made by such bodies, as transcribed into minutes.
Additionally, the Board of Directors receives a monthly report prepared by the General Manager, the purpose of which is to report the material issues and events addressed at the different meetings held between him and Senior Management. The Board of Directors becomes aware of such reports, as evidenced in the minutes.
In connection with directors training and development, the Bank has a program, which is reviewed every six months, whereby they regularly attend courses and seminars of different kinds and subjects.
It may be said that the Banks executives, including directors, have provided updated knowledge and skills, and that the Board of Directors performance is the most effective, which corresponds with the current dynamics of this body.
According to the activities carried out by the Bank, effective laws and corporate strategies, the following commissions and committees have been created to achieve an effective control over all activities performed by the Bank:
- Risk Management Committee.
It is in charge of approving risk management strategies, policies, processes and procedures, with the related contingency plans, establishing the specific limits for each risk exposure and approving, when appropriate, temporary limit excesses and becoming aware of each risk position and compliance with policies.
- Credit Committee.
This committees function is to review loans greater than $ 90,000 and all loans to be granted to financial institutions (local or foreign) and related customers.
- Asset and Liability Management Committee.
It is in charge of analyzing the growth of the Banks business from a financial perspective regarding fundraising and its placement in different assets. This committee is also responsible for the follow-up and control of liquidity and interest-rate and currency mismatches. It is also in charge of analyzing and recommending business areas, measures related to the management of interest-rate and currency mismatches, and maturity gaps in order to maximize financial and foreign exchange income within acceptable parameters of risk and use of capital, and proposing changes to such parameters, as deemed necessary, to the Board of Directors.
- Information Technology Committee.
It is in charge of supervising and approving new systems development plans and budgets, as well as supervising these systems budget controls. It is also responsible for approving the general design of the systems structure, the main processes and systems implemented, and quality supervision.
- Audit Committee (Argentine Central Bank).
The Audit Committee is responsible for helping, within the framework of its specific functions, the Board of Directors with: (1) internal controls, individual and corporate risk management and compliance with the standards established by the Bank, the Argentine Central Bank and effective laws; (2) the issuance of financial statements; (3) the external auditors suitability and independence; (4) the Internal and External Audits performance; (5) the solution to the observations made by the Internal and External Audits, the Argentine Central Bank and other regulatory agencies; and (6) evaluation and approval of the follow-up of the implementation of recommendations. It is also responsible for coordinating the Internal and External Audit functions.
- Audit Committee (National Securities Commission).
Public companies are required to have an Audit Committee. This committees mission is to provide the Board of Directors with assistance in overseeing the financial statements, as well as in the task of controlling the Bank and its controlled companies and the companies it owns a stake in.
- Committee for the Control and Prevention of Money Laundering and Funding of Terrorist Activities.
Its mission is to plan, coordinate and ensure compliance with the policies on anti-money laundering and funding of terrorist activities set and approved by the Board of Directors, taking into consideration effective regulations. It is also responsible in this regard for designing internal controls, personnel training plans and ensuring compliance by the Internal Audit.
51
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
- Committee for Information Integrity.
Its mission is to comply with the provisions of Sarbanes-Oxley.
- Human Resources Committee.
It is in charge of promotions and appointments, transfers, turnovers, development, staff and compensation for the personnel included in nine salary levels and above.
- Planning and Management Control Committee.
It is in charge of analyzing, defining and following up with the consolidated balance sheet and income statement.
- Business and Segment Management Committee.
It is in charge of analyzing, defining and following businesses and segments.
- Crisis Committee.
It is in charge of evaluating the situation upon facing a liquidity crisis and deciding the steps to be implemented to tackle it.
- Finance Committee Consumer Banking.
It is in charge of analyzing the financial evolution and the funding needs of companies devoted to the provision of financing to consumers, as well as analyzing the evolution of the credit portfolio.
The Bank considers the General Manager and Division Management reporting to the General Manager as Senior Management. These are detailed as follows:
- Retail Banking Division
- Wholesale Banking Division
- Finance Division
- Comprehensive Corporate Services Division
- Organizational Development and Human Resources Division
- Risk Management Division
- Credit Division
- Strategic Planning and Management Control Division
Senior Managements main duties are as follows:
- Ensure that the Banks activities are consistent with the business strategy, the policies approved by the Board of Directors and the risks to be assumed.
- Implement the necessary policies, procedures, processes and controls to manage operations and risks cautiously, meet the strategic goals set by the Board of Directors and ensure that the latter receives material, full and timely information so that it may assess management and analyze whether the responsibilities assigned are effectively fulfilled.
- Monitor the managers from different divisions, in line with the policies and procedures set by the Board of Directors and establish an effective internal control system.
Basic Holding Structure
The Banks majority shareholder is the Company. In turn, the Bank holds equity investments in supplementary companies as controlling company, as well as minority interests in companies whose controlling company is its own controlling company. From a business point of view, this structure allows the Bank to take advantage of significant synergies that guarantee the loyalty of its customers and additional businesses. All business relationships with these companies, whether permanent or occasional in nature, are fostered under the normal and usual market conditions and this is true when the Bank holds either a majority or minority interest. Grupo Financiero Galicia S.A.s Board of Directors submits to the Shareholders Meetings vote which shall be Grupo Financiero Galicias vote, in its capacity as controlling company, at Banco de Galicia y Buenos Airess Shareholders Meeting. The same method of transparency and information as to its controlled companies and companies it owns a stake in is applied at the Banks Shareholders Meetings, which are always attended by directors and officers thereof and the Board of Directors always provides detailed information about the Companys activities.
52
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Business Conduct Policy and/or Code of Ethics
The Bank has a formally approved Code of Ethics that guides its policies and activities. It considers business objectivity and conflict-of-interests-related aspects, and how the employee should act upon identifying a breach of the Code of Ethics, with the involvement of the Organizational Development and Human Resources Management.
Information Related to Personnel Economic Incentive Practices
The Human Resources Committee, composed of two Directors, the Managing Director and the Organizational Development and Human Resources Division Manager, is in charge of establishing the compensation policy for the Banks personnel.
It is the policy of the Bank to manage the full compensation of its personnel based on the principles of fairness, meritocracy and justice, within the framework of the legal regulations in force.
The aim of this policy is to provide an objective and fair basis, through the design and implementation of tools for the management of the fixed and variable compensation paid to each employee, based on the scope and complexity of each positions responsibilities, individual performance with regard to compliance thereof, contribution to the Banks results and conformity to market values, with the purpose of:
| Attracting and creating loyalty with regard to quality personnel suitable for the achievement of the business strategy and goals. |
| Being an individual motivation means. |
| Easing the decentralized management of compensation administration. |
| Allowing the effective budget control of personnel costs. |
| Guaranteeing internal fairness. |
In order to monitor and guarantee both external and internal fairness with regard to the payment of fixed and variable compensation, the Compensation area uses, and puts at the disposal of the Senior Management and the Human Resources Committee, market surveys published by consulting firms specialized in compensation issues, pursuant to the market positioning policies defined by the management division for the different corporate levels.
With the purpose of gearing individuals towards the achievement of attainable results that contribute to the global performance of the Bank/Area, and to the increase in motivation for the common attainment of goals, differentiating individual contribution, the Bank has different variable compensation systems:
1. | Business Incentives and/or Incentives through Commissions system for business areas. |
2. | Annual Bonus System for management levels, officers and the rest of the employees who are not included in the business incentives system. The annual bonus is determined based on individual performance and the Banks results, and is paid in the first quarter of the next fiscal year. To determine the variable compensation for the senior management and middle management, the Bank uses the Management Performance Assessment System. This system has been designed including both qualitative and quantitative K.P.I. (Key Performance Indicators). In particular, quantitative Key Performance Indicators are designed respecting at least three minimum aspects: |
| Results. |
| Business volume or size. |
| Projections: Indicators that protect the business for the future (For example: Quality, internal and external customer satisfaction, risk coverage, work environment, etc.). |
The significance or impact of each of them is monitored and adjusted yearly pursuant to the strategy approved by the Board of Directors.
53
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
The interaction among these three aspects seeks to make incentives related to results and growth consistent with the risk thresholds determined by the Board of Directors.
In turn, there is no deferred payment of variable compensation subject to the occurrence of future events or in the long term, taking into consideration that the business environment in the Argentine financial system is characterized by being mainly transactional, with lending and borrowing transactions with a very short seasoning term.
Annual budget and management control the latter carried out monthly in a general manner and quarterly in a more detailed manner include different risk ratios, including the ratio between compensation and risks undertaken.
Variable compensation is only paid in cash. There are no payments in shares.
Every change to this policy is submitted to the Banks Human Resources Committee for its consideration.
NOTE 38. CREDIT LINES FOR THE PRODUCTIVE INVESTMENT
The Argentine Central Bank established the conditions to grant loans under the program Credit Lines for the Productive Investment, aimed at financing specific-purposes investment projects. The minimum conditions for the placement of the aforementioned line of credit are as follows:
2012 Quota: Amount equivalent to 5% of the monthly average of daily balances of deposits in the non-financial private sector in Pesos for June 2012.
2013 Quota, first and second tranches: Amount equivalent to 5% of the deposits mentioned in the previous paragraph calculated with regard to the balance at the end of November 2012 and May 2013, respectively.
2014 Quota, first and second tranches: Amount equivalent to 5% and 5.50% of the aforementioned deposits calculated with regard to the balance at the end of November 2013 and May 2014, respectively.
The interest rate to be earned by financial institutions shall be up to a fixed nominal 15.01% rate per annum for the 2012 quota, a fixed nominal 15.25% rate per annum for the 2013 quota (both tranches), a fixed nominal 17.50% rate per annum for the first tranche of the 2014 quota, and of up to 19.50% for the second tranche of the 2014 quota, at least for three (3) years. With regard to the remaining term, a variable rate not to exceed Badlar rate plus 400 basis points may be applied for the 2012 and 2013 quotas, and a rate not to exceed Badlar rate plus 300 basis points may be applied for the 2014 quota.
The Bank has complied with the placement of the above-mentioned loans, in accordance with the conditions set forth by the Argentine Central Bank.
54
GRUPO FINANCIERO GALICIA S.A.
BALANCE SHEET
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Notes | Schedules | 06.30.14 | 12.31.13 | |||||||||
Assets |
||||||||||||
Current Assets |
||||||||||||
Cash and Due from Banks |
2 | G | 40 | 327 | ||||||||
Investments |
9 and 11 | D and G | 5,892 | 10,416 | ||||||||
Other Receivables |
3, 9 and 11 | G | 27,825 | 28,886 | ||||||||
|
|
|
|
|||||||||
Total Current Assets |
33,757 | 39,629 | ||||||||||
|
|
|
|
|||||||||
Non-current Assets |
||||||||||||
Other Receivables |
3, 9, 11 and 13 | E and G | 83,200 | 66,683 | ||||||||
Investments |
9 | B and C | 8,848,202 | 7,202,304 | ||||||||
Fixed Assets |
A | 1,206 | 1,348 | |||||||||
|
|
|
|
|||||||||
Total Non-current Assets |
8,932,608 | 7,270,335 | ||||||||||
|
|
|
|
|||||||||
Total Assets |
8,966,365 | 7,309,964 | ||||||||||
|
|
|
|
|||||||||
Liabilities |
||||||||||||
Current Liabilities |
||||||||||||
Financial Debt |
4, 9, 11 and 15 | 299,650 | 336,728 | |||||||||
Salaries and Social Security Contributions |
5 and 9 | 1,110 | 3,218 | |||||||||
Tax Liabilities |
6 and 9 | 18,584 | 17,927 | |||||||||
Other Liabilities |
7, 9 and 11 | G | 34,436 | 4,856 | ||||||||
|
|
|
|
|||||||||
Total Current Liabilities |
353,780 | 362,729 | ||||||||||
|
|
|
|
|||||||||
Non-current Liabilities |
||||||||||||
Financial Debt |
4, 9 and 15 | 180,000 | | |||||||||
Other Liabilities |
7 and 9 | 6 | 6 | |||||||||
|
|
|
|
|||||||||
Total Non-current Liabilities |
180,006 | 6 | ||||||||||
|
|
|
|
|||||||||
Total Liabilities |
533,786 | 362,735 | ||||||||||
|
|
|
|
|||||||||
Shareholders Equity (per Related Statement) |
8,432,579 | 6,947,229 | ||||||||||
|
|
|
|
|||||||||
Total Liabilities and Shareholders Equity |
8,966,365 | 7,309,964 | ||||||||||
|
|
|
|
The accompanying notes 1 to 16 and schedules A, B, C, D, E, G and H are an integral part of these financial statements.
55
GRUPO FINANCIERO GALICIA S.A.
BALANCE SHEET MEMORANDUM ACCOUNTS
AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
(Figures Stated in Thousands of Pesos)
Notes | Schedules | 06.30.14 | 12.31.13 | |||||||||
Unused Overdrafts |
11 | 62,704 | 158,343 | |||||||||
|
|
|
|
|||||||||
Total |
62,704 | 158,343 | ||||||||||
|
|
|
|
The accompanying notes 1 to 16 and schedules A, B, C, D, E, G and H are an integral part of these financial statements.
56
GRUPO FINANCIERO GALICIA S.A.
INCOME STATEMENT
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | Schedules | 06.30.14 | 06.30.13 | |||||||||||
Net Income on Investments in Related Institutions |
1,568,622 | 763,004 | ||||||||||||
|
|
|
|
|||||||||||
Administrative Expenses |
11 | H | (15,650 | ) | (18,138 | ) | ||||||||
|
|
|
|
|||||||||||
Financial and Holding Loss |
11 | (30,583 | ) | (82,610 | ) | |||||||||
|
|
|
|
|||||||||||
Generated by Assets |
25,676 | (50,409 | ) | |||||||||||
Interest |
||||||||||||||
On Special Checking Account Deposits |
1 | 8 | ||||||||||||
On Mutual Funds |
2,803 | 8 | ||||||||||||
On Time Deposits |
(*) | 11 | | |||||||||||
On Promissory Notes Receivable |
(*) | 11 | 86 | |||||||||||
Income from Shares |
| (2,411 | ) | |||||||||||
Loss from Government and Corporate Securities |
3,411 | (57,215 | ) | |||||||||||
Foreign Exchange Income |
19,439 | 9,115 | ||||||||||||
Generated by Liabilities |
(56,259 | ) | (32,201 | ) | ||||||||||
Interest |
||||||||||||||
On Financial Debt |
( | *) | (55,599 | ) | (23,024 | ) | ||||||||
Others |
(151 | ) | (84 | ) | ||||||||||
Foreign Exchange Loss |
(509 | ) | (9,093 | ) | ||||||||||
|
|
|
|
|||||||||||
Other Income and Expenses - Income (Loss) |
1,556 | (1,516 | ) | |||||||||||
|
|
|
|
|||||||||||
Net Income before Income Tax |
1,523,945 | 660,740 | ||||||||||||
|
|
|
|
|||||||||||
Income Tax |
13 | | | |||||||||||
|
|
|
|
|||||||||||
Net Income for the Period |
14 | 1,523,945 | 660,740 | |||||||||||
|
|
|
|
(*) | Balances net of eliminations corresponding to transactions conducted with companies included in Section 33 of Law No. 19550. See Note 11. |
The accompanying notes 1 to 16 and schedules A, B, C, D, E, G and H are an integral part of these financial statements.
57
GRUPO FINANCIERO GALICIA S.A.
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Item |
Shareholders Contributions (*) | Retained Earnings (**) | Total Shareholders Equity |
|||||||||||||||||||||||||||||||||
Capital Stock |
Capital Adjustment |
Premium for Negotiation of Shares in Own Portfolio |
Additional Paid-in Capital |
Total | Legal Reserve |
Discretionary Reserve |
Unappropriated Retained Earnings |
|||||||||||||||||||||||||||||
Balances as of 12.31.12 |
1,241,407 | 278,131 | 606 | | 1,520,144 | 133,254 | 1,880,465 | 1,336,215 | 4,870,078 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Distribution of Unappropriated Retained Earnings (1) |
||||||||||||||||||||||||||||||||||||
Legal Reserve |
| | | | | 66,811 | | (66,811 | ) | | ||||||||||||||||||||||||||
Discretionary Reserve |
| | | | | | 1,245,054 | (1,245,054 | ) | | ||||||||||||||||||||||||||
Cash Dividends |
| | | | | | | (24,350 | ) | (24,350 | ) | |||||||||||||||||||||||||
Income for the Period |
| | | | | | | 660,740 | 660,740 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balances as of 06.30.13 |
1,241,407 | 278,131 | 606 | | 1,520,144 | 200,065 | 3,125,519 | 660,740 | 5,506,468 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balances as of 12.31.13 |
1,300,265 | 278,131 | 606 | 218,990 | 1,797,992 | 200,065 | 3,125,519 | 1,823,653 | 6,947,229 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Distribution of Unappropriated Retained Earnings (2) |
||||||||||||||||||||||||||||||||||||
Legal Reserve |
| | | | | 91,183 | (91,183 | ) | | |||||||||||||||||||||||||||
Discretionary Reserve |
| | | | | | 1,693,875 | (1,693,875 | ) | | ||||||||||||||||||||||||||
Cash Dividends |
| | | | | | | (38,595 | ) | (38,595 | ) | |||||||||||||||||||||||||
Income for the Period |
| | | | | | | 1,523,945 | 1,523,945 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balances as of 06.30.14 |
1,300,265 | 278,131 | 606 | 218,990 | 1,797,992 | 291,248 | 4,819,394 | 1,523,945 | 8,432,579 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | See Notes 8 and 16. |
(**) | See Note 12. |
(1) | Approved by the Ordinary Shareholders Meeting held on April 15, 2013. |
(2) | Approved by the Ordinary Shareholders Meeting held on April 29, 2014. |
The accompanying notes 1 to 16 and schedules A, B, C, D, E, G and H are an integral part of these financial statements.
58
GRUPO FINANCIERO GALICIA S.A.
STATEMENT OF CASH FLOWS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Notes | 06.30.14 | 06.30.13 | ||||||||
Changes in Cash |
||||||||||
Cash at Beginning of Fiscal Year |
1.I | 10,743 | 9,270 | |||||||
Cash at Period-end |
1.I | 5,932 | 4,132 | |||||||
|
|
|
|
|||||||
Net Decrease in Cash |
(4,811 | ) | (5,138 | ) | ||||||
|
|
|
|
|||||||
Causes for Changes in Cash |
||||||||||
Operating Activities |
||||||||||
Collections for Services |
1,730 | | ||||||||
Payments to Suppliers of Goods and Services |
(10,697 | ) | (9,508 | ) | ||||||
Personnel Salaries and Social Security Contributions |
(5,134 | ) | (6,027 | ) | ||||||
Payments of Other Taxes |
(17,560 | ) | (11,948 | ) | ||||||
Collections for Other Operating Activities, Net |
2,839 | 5,439 | ||||||||
|
|
|
|
|||||||
Net Cash Flow Used for Operating Activities |
(28,822 | ) | (22,044 | ) | ||||||
|
|
|
|
|||||||
Investing Activities |
||||||||||
Payments for Purchases of Fixed Assets |
| (236 | ) | |||||||
Collection of Dividends |
| 22,832 | ||||||||
Collections for Sale of Fixed Assets |
122 | | ||||||||
Payments of Interest, Net |
(35,812 | ) | (11,638 | ) | ||||||
Sale of Short-Term Investments |
| 926 | ||||||||
Payments for Equity Investments |
(59,246 | ) | (655 | ) | ||||||
|
|
|
|
|||||||
Net Cash Flow (Used for) / Provided by Investing Activities |
(94,936 | ) | 11,229 | |||||||
|
|
|
|
|||||||
Financing Activities |
||||||||||
Loans Received, Net |
138,567 | 20,402 | ||||||||
Distribution of Dividends, Net of Taxes |
(19,620 | ) | (14,725 | ) | ||||||
|
|
|
|
|||||||
Net Cash Flow Provided by Financing Activities |
118,947 | 5,677 | ||||||||
|
|
|
|
|||||||
Net Decrease in Cash |
(4,811 | ) | (5,138 | ) | ||||||
|
|
|
|
The accompanying notes 1 to 16 and schedules A, B, C, D, E, G and H are an integral part of these financial statements.
59
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
NOTE 1. BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS
These financial statements have been stated in thousands of Argentine Pesos and prepared in accordance with disclosure and valuation accounting standards contained in Technical Pronouncements issued by the F.A.C.P.C.E., approved by the C.P.C.E.C.A.B.A. and the C.N.V., with the considerations mentioned in Note 1 to the consolidated financial statements in relation to the criteria for the valuation of the subsidiaries the Bank and Sudamericana Holding S.A.
The preparation of financial statements at a given date requires the Companys management to make estimates and assessments regarding events and/or situations and/or circumstances that affect or may affect the amounts of assets and liabilities reported and the disclosure of contingent assets and liabilities at that date, as well as the income and expenses recorded for the period/fiscal year. The Companys management makes estimates in order to calculate, at any given moment, for example, the depreciation charges, the recoverable value of assets, the income tax charge and provisions for contingencies. Estimates and assessments made at the date these financial statements were prepared may differ from the situations, events and/or circumstances that may finally occur in the future.
On March 25, 2003, the National Executive Branch issued Decree No. 664 establishing that financial statements for fiscal years ending as from said date be stated in nominal currency. Consequently, in accordance with Resolution No. 441/03 of the C.N.V., the Company discontinued the restatement of its financial statements as from March 1, 2003. This criterion is not in line with Argentine GAAP, under which financial statements are to be restated until September 30, 2003. Nevertheless, this departure has not produced a significant effect on the financial statements.
The index used for restating the items in these financial statements was the domestic wholesale price index published by the Argentine Institute of Statistics and Census (I.N.D.E.C.).
The most significant accounting policies used in preparing the Financial Statements are listed below:
A. ASSETS AND LIABILITIES IN DOMESTIC CURRENCY
Monetary assets and liabilities which include, where applicable, the interest accrued at period/fiscal year-end, are stated in period-end currency and therefore require no adjustment whatsoever.
B. ASSETS AND LIABILITIES IN FOREIGN CURRENCY (U.S. DOLLARS)
The assets and liabilities in foreign currency were stated at the U.S. Dollar exchange rate set by the Argentine Central Bank, at the close of operations on the last business day of the period/fiscal year.
Interest receivable or payable has been accrued, where applicable.
C. INVESTMENTS
C.1. Current
Special checking account deposits have been measured at their face value, plus accrued interest at period/fiscal year-end.
Argentine mutual fund units have been valued at period-end closing price.
C.2. Non-current
The equity investments in companies are recognized using the equity method as of period/fiscal year-end.
The consolidated financial statements of Sudamericana Holding S.A. have been prepared pursuant to the regulations of the Argentine Superintendency of Insurance (S.S.N.), which differ from Argentine GAAP in certain aspects. Nevertheless, this departure has not produced a significant effect on the financial statements of Grupo Financiero Galicia S.A.
The equity investments in the Bank and Compañía Financiera Argentina S.A. have been recognized using the equity method as of June 30, 2014 and December 31, 2013, which arises from financial statements prepared in accordance with Argentine Banking GAAP, which differ in the aspects mentioned in Note 1.16. to the consolidated financial statements from Argentine GAAP.
60
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
D. GOODWILL
Goodwill resulting from the acquisition of shares in other companies, which is recorded under Investments, has been valued at its acquisition cost, net of the corresponding accumulated amortization, calculated proportionally over the estimated useful life.
Amortization is assessed on a straight-line basis in equal monthly installments, which is the amortization term of 120 months. See Schedule B.
The updated residual value of the assets does not exceed their estimated recoverable value at period/fiscal year-end.
E. FIXED ASSETS
Fixed Assets have been valued at their acquisition cost, restated at constant currency as mentioned in this Note, net of the corresponding accumulated depreciation.
Depreciation charges are calculated following the straight-line method, at rates determined based on the useful life assigned to the assets, which is 60 months for hardware and software and furniture and fixtures and 600 months for real estate. See Schedule A.
The Company retired from its assets those that, due to their physical and/or technological obsolescence, were not useful for their intended purpose, and which pieces could not be used or exploited.
On July 22, 2014, the Companys Board of Directors decided to approve the sale of the real estate to the Bank.
The updated residual value of the assets, taken as a whole, does not exceed their value-in-use at period/fiscal year-end.
F. FINANCIAL DEBT
Financial debt has been valued pursuant to the amount of money received, plus the accrued portion of interest as of period/fiscal year-end.
G. INCOME TAX AND MINIMUM PRESUMED INCOME TAX
The Company has recognized the income tax charge according to the deferred tax method, thus recognizing the temporary differences between measurements of accounting and tax assets and liabilities, at the rate in force (see Note 13 to the financial statements). Due to the unlikelihood that future taxable income may be enough to absorb tax loss carry-forwards, the Company has established an allowance for impairment of value with regard to such income and has not recorded tax loss carry-forwards. See Schedule E.
The Company determines the minimum presumed income tax at the effective rate of 1% of the computable assets at fiscal year-end. This tax is supplementary to the income tax. The Companys tax liability for each fiscal year shall be determined by the higher of the two taxes. However, if the minimum presumed income tax were to exceed income tax in a given fiscal year, such excess may be computed as a payment on account of the income tax that could be generated in any of the next ten fiscal years.
The Company has set up a provision for the minimum presumed income tax credit accrued during this period and the previous fiscal year, for $ 3,889 and $ 3,320, respectively, since its recovery is not likely at the issuance date of these financial statements. See Schedule E.
H. SHAREHOLDERS EQUITY
H.1. Activity in the Shareholders Equity accounts has been restated as mentioned in paragraphs three and four of this Note.
The Subscribed and Paid-in Capital account has been stated at its face value and at the value of the contributions in the currency value of the fiscal year in which those contributions were actually made.
The adjustment stemming from the restatement of that account in constant currency has been allocated to the Capital Adjustment account.
H.2. Income and Expense Accounts
The results of operations for each period are presented in the period in which they accrue.
61
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
I. STATEMENT OF CASH FLOWS
Cash and Due from Banks, investments and receivables held with the purpose of complying with the short-term commitments undertaken, with a high level of liquidity, easily converted into known amounts of cash, subject to insignificant risks of changes in value and with a maturity less than three months from the date of the acquisition thereof, are considered to be cash and cash equivalents. The breakdown is as follows:
Notes | Schedules | 06.30.14 | 12.31.13 | 06.30.13 | 12.31.12 | |||||||||||||||
Cash and Due from Banks |
2 | G | 40 | 327 | 308 | 404 | ||||||||||||||
Investments |
D and G | 5,892 | 10,416 | 3,824 | 8,866 | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
5,932 | 10,743 | 4,132 | 9,270 | ||||||||||||||||
|
|
|
|
|
|
|
|
NOTE 2. CASH AND DUE FROM BANKS
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Notes | Schedules | 06.30.14 | 12.31.13 | |||||||||
Cash |
14 | 12 | ||||||||||
Cash in Custody in Other Banks |
G | | 192 | |||||||||
Due from Banks Checking Accounts |
11 | 26 | 123 | |||||||||
|
|
|
|
|||||||||
Total |
40 | 327 | ||||||||||
|
|
|
|
NOTE 3. OTHER RECEIVABLES
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Tax Credits |
||||||||||||
Minimum Presumed Income Tax Receivables |
3,889 | 3,320 | ||||||||||
Allowance for Impairment of Value of Minimum Presumed Income Tax Receivables |
E | (3,889 | ) | (3,320 | ) | |||||||
Deferred Tax Asset |
78,481 | 71,134 | ||||||||||
Allowance for Impairment of Value of Deferred Tax Asset |
(78,481 | ) | (71,134 | ) | ||||||||
Others |
1,636 | 1,418 | ||||||||||
Miscellaneous Receivables |
||||||||||||
Recoverable Expenses |
14,657 | 19,235 | ||||||||||
Promissory Notes Receivable |
11 | G | 4,630 | 9,355 | ||||||||
Sundry Debtors |
11 | 9,685 | | |||||||||
Prepaid Expenses |
13 | 28 | ||||||||||
Others |
141 | 279 | ||||||||||
Allowance for Impairment of Value of Miscellaneous Receivables |
E | (2,937 | ) | (1,429 | ) | |||||||
|
|
|
|
|||||||||
Total |
27,825 | 28,886 | ||||||||||
|
|
|
|
|||||||||
Non-current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Promissory Notes Receivable |
11 | G | 83,197 | 66,679 | ||||||||
Prepaid Expenses |
2 | 3 | ||||||||||
Sundry Debtors |
1 | 1 | ||||||||||
|
|
|
|
|||||||||
Total |
83,200 | 66,683 | ||||||||||
|
|
|
|
62
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
NOTE 4. FINANCIAL DEBT
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Loans Received |
11 | 62,298 | 25,657 | |||||||||
Negotiable Obligations |
15 | 237,352 | 311,071 | |||||||||
|
|
|
|
|||||||||
Total |
299,650 | 336,728 | ||||||||||
|
|
|
|
|||||||||
Non-current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Negotiable Obligations |
15 | 180,000 | | |||||||||
|
|
|
|
|||||||||
Total |
180,000 | | ||||||||||
|
|
|
|
NOTE 5. SALARIES AND SOCIAL SECURITY CONTRIBUTIONS
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Argentine Integrated Social Security System (S.I.P.A.) |
222 | 234 | ||||||||||
Provision for Bonuses |
425 | 1,903 | ||||||||||
Provision for Retirement Insurance |
453 | 907 | ||||||||||
Provision for Directors and Syndics Fees |
| 167 | ||||||||||
Others |
10 | 7 | ||||||||||
|
|
|
|
|||||||||
Total |
1,110 | 3,218 | ||||||||||
|
|
|
|
NOTE 6. TAX LIABILITIES
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Income Tax Withholdings to Be Deposited |
174 | 121 | ||||||||||
Provision for Tax on Personal Property Substitute Taxpayer |
18,410 | 17,806 | ||||||||||
|
|
|
|
|||||||||
Total |
18,584 | 17,927 | ||||||||||
|
|
|
|
NOTE 7. OTHER LIABILITIES
As of June 30, 2014 and December 31, 2013, the breakdown of the account was as follows:
Current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Sundry Creditors |
30,684 | 69 | ||||||||||
Provision for Expenses |
11 | G | 3,749 | 4,784 | ||||||||
Guarantee Deposit of Directors |
3 | 3 | ||||||||||
|
|
|
|
|||||||||
Total |
34,436 | 4,856 | ||||||||||
|
|
|
|
|||||||||
Non-current |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Guarantee Deposit of Directors |
6 | 6 | ||||||||||
|
|
|
|
|||||||||
Total |
6 | 6 | ||||||||||
|
|
|
|
63
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
NOTE 8. CAPITAL STATUS
The capital status as of June 30, 2014 and December 31, 2013 was as follows:
Capital Stock |
Face Value | Restated at Constant Currency |
||||||||||||||
Subscribed | Paid-in | Registered | ||||||||||||||
Balances as of 12.31.12 |
1,241,407 | 1,241,407 | 1,241,407 | 1,519,538 | ||||||||||||
Increase due to Merger (*) |
58,858 | 58,858 | | 58,858 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balances as of 12.31.13 |
1,300,265 | 1,300,265 | 1,241,407 | 1,578,396 | ||||||||||||
Increase due to Merger (*) |
| | 58,858 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balances as of 06.30.14 |
1,300,265 | 1,300,265 | 1,300,265 | 1,578,396 | ||||||||||||
|
|
|
|
|
|
|
|
(*) | See Note 16. |
NOTE 9. ESTIMATED COLLECTION OR PAYMENT TERMS OF RECEIVABLES, INVESTMENTS AND DEBTS
As of June 30, 2014, the breakdown of receivables, investments and debts according to their estimated collection or payment term was as follows:
Investments | Other Receivables |
Financial Debt |
Salaries and Social Security Contributions |
Tax Liabilities | Other Liabilities | |||||||||||||||||||
1st Quarter (*) |
5,892 | 13,156 | 79,650 | 1,110 | 5,937 | 4,825 | ||||||||||||||||||
2nd Quarter (*) |
| 8 | 220,000 | | | 29,611 | ||||||||||||||||||
3rd Quarter (*) |
| 2 | | | | | ||||||||||||||||||
4th Quarter (*) |
| 14,659 | | | 12,647 | | ||||||||||||||||||
After One Year (*) |
| 83,200 | 180,000 | | | 6 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Subtotal Falling Due |
5,892 | 111,025 | 479,650 | 1,110 | 18,584 | 34,442 | ||||||||||||||||||
No Set Due Date |
8,848,202 | | | | | | ||||||||||||||||||
Past Due |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
8,854,094 | 111,025 | 479,650 | 1,110 | 18,584 | 34,442 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Non-interest Bearing |
8,848,734 | 23,198 | | 1,110 | 12,647 | 34,442 | ||||||||||||||||||
At Variable Rate |
| 87,827 | 417,352 | | | | ||||||||||||||||||
At Fixed Rate |
5,360 | | 62,298 | | 5,937 | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
8,854,094 | 111,025 | 479,650 | 1,110 | 18,584 | 34,442 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(*) | From the closing date of these financial statements. |
NOTE 10. EQUITY INVESTMENTS
The breakdown of the Companys direct equity investments as of period/fiscal year-end was as follows:
Information as of: |
06.30.14 | |||||||||||||||
Issuing Company |
Direct Holding | |||||||||||||||
Shares | Percentage of Equity Investment Held in |
|||||||||||||||
Type | Amount | Total Capital |
Possible Votes |
|||||||||||||
Banco de Galicia y Buenos Aires S.A. (*) |
Ordinary | 562,326,651 | 100.00000 | 100.00000 | ||||||||||||
Compañía Financiera Argentina S.A. |
Ordinary | 16,726,875 | 3.00000 | 3.00000 | ||||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
Ordinary | 19,000 | 95.00000 | 95.00000 | ||||||||||||
Galicia Warrants S.A. |
Ordinary | 875,000 | 87.50000 | 87.50000 | ||||||||||||
Net Investment S.A. |
Ordinary | 10,500 | 87.50000 | 87.50000 | ||||||||||||
Sudamericana Holding S.A. |
Ordinary | 162,447 | 87.50034 | 87.50034 |
(*) | Ordinary shares A and B. |
64
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
Information as of: |
12.31.13 | |||||||||||||||
Issuing Company |
Direct Holding | |||||||||||||||
Shares | Percentage of Equity Investment Held in |
|||||||||||||||
Type | Amount | Total Capital | Possible Votes |
|||||||||||||
Banco de Galicia y Buenos Aires S.A. (*) |
Ordinary | 560,199,603 | 99.62174 | 99.62174 | ||||||||||||
Compañía Financiera Argentina S.A. |
Ordinary | 16,726,875 | 3.00000 | 3.00000 | ||||||||||||
Galicia Warrants S.A. |
Ordinary | 875,000 | 87.50000 | 87.50000 | ||||||||||||
Net Investment S.A. |
Ordinary | 10,500 | 87.50000 | 87.50000 | ||||||||||||
Sudamericana Holding S.A. |
Ordinary | 162,447 | 87.50034 | 87.50034 |
(*) | Ordinary shares A and B. It includes 25,454,193 ordinary class B shares incorporated due to the Merger described in Note 16. |
The controlled companies financial position and results of operations as of period/fiscal year-end are as follows:
Information as of: |
06.30.14 | |||||||||||||||
Company |
Assets | Liabilities | Shareholders Equity |
Net Income | ||||||||||||
Banco de Galicia y Buenos Aires S.A. |
80,419,912 | 72,232,220 | 8,187,692 | 1,446,856 | ||||||||||||
Compañía Financiera Argentina S.A. |
3,653,946 | 2,577,877 | 1,076,069 | 66,145 | ||||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
33,920 | 10,728 | 23,192 | 19,271 | ||||||||||||
Galicia Warrants S.A. |
49,653 | 28,720 | 20,933 | 6,538 | ||||||||||||
Net Investment S.A. |
170 | 6 | 164 | 15 | ||||||||||||
Sudamericana Holding S.A. |
411,228 | 4,748 | 406,480 | 211,490 |
Information as of: |
12.31.13 | 06.30.13 | ||||||||||||||
Company |
Assets | Liabilities | Shareholders Equity |
Net Income |
||||||||||||
Banco de Galicia y Buenos Aires S.A. |
69,000,176 | 62,259,344 | 6,740,832 | 705,669 | ||||||||||||
Compañía Financiera Argentina S.A. |
3,641,812 | 2,631,887 | 1,009,925 | 75,798 | ||||||||||||
Galicia Warrants S.A. |
42,890 | 17,485 | 25,405 | 4,141 | ||||||||||||
Net Investment S.A. |
160 | 11 | 149 | (3 | ) | |||||||||||
Sudamericana Holding S.A. |
291,079 | 3,510 | 287,569 | 152,182 |
On February 25, 2014, the Companys Board of Directors resolved the following: (i) to issue the statement of willingness to acquire provided for in Section 91, Subsection b) of Law No. 26831, with regard to all the remaining shares of the Bank held by third parties; (ii) to approve the criterion suggested by the Management Division on the fair price provided for in Section 94, second paragraph, of Law No. 26831, and establish it in $ 23.22 (figure stated in Pesos) for each remaining share held by third parties; (iii) to request the National Securities Commission the immediate withdrawal of the Bank from the public offering and listing at the Buenos Aires Stock Exchange, under the terms of Section 94, third paragraph, of Law No. 26831; (iv) to appoint the Bank as the financial institution where the Company shall deposit the amount corresponding to the total value of the Banks remaining shares; and (v) to give the Bank notice of the statement of willingness to acquire.
On April 24, 2014, the Board of Directors of the C.N.V. approved the unilateral statement of willingness to acquire issued by the Company. Thus, on May 6, 2014, the amount corresponding to the total value of the Banks remaining shares was deposited. The C.N.V.s approval of the aforementioned proceedings was registered with the Corporation Control Authority (I.G.J.) on July 14, 2014.
On August 4, 2014, the statement of willingness to acquire was executed by public deed, which makes the Company the owner, by operation of law, of all of the Banks existing shares, pursuant to the provisions of Section 95 of Law No. 26831.
65
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
On April 7, 2014, the Bank presented the Company with an offer to sell 19,000 shares of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión, representing 95% of the aforementioned companys capital stock, which was considered accepted at the time the buyer made a payment equivalent to 25% of the total purchase price.
On April 15, 2014, the Companys Board of Directors approved the purchase of 95% of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversións capital stock, and paid 25% of the total agreed price, which amounted to $ 39,482.
NOTE 11. SECTION 33 OF LAW 19550 - CORPORATIONS LAW
The financial statements include the following significant balances corresponding to transactions with its controlled companies and its subsidiaries:
BANCO DE GALICIA Y BUENOS AIRES S.A.
Assets |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Investments Special Checking Account |
D | 532 | 427 | |||||||||
Other Receivables Promissory Notes Receivable |
3 | G | 87,827 | 76,034 | ||||||||
|
|
|
|
|||||||||
Total |
88,359 | 76,461 | ||||||||||
|
|
|
|
|||||||||
Liabilities |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Financial Debt in Pesos |
4 | 62,298 | 25,657 | |||||||||
Other Liabilities Sundry Creditors |
7 | 29,611 | | |||||||||
Other Liabilities Provision for Expenses |
7 | 1,469 | 1,544 | |||||||||
|
|
|
|
|||||||||
Total |
93,378 | 27,201 | ||||||||||
|
|
|
|
|||||||||
Memorandum Accounts |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Unused Balance of Agreement |
62,704 | 158,343 | ||||||||||
|
|
|
|
|||||||||
Total |
62,704 | 158,343 | ||||||||||
|
|
|
|
|||||||||
Income |
Notes | Schedules | 06.30.14 | 06.30.13 | ||||||||
Financial Income Interest on Promissory Notes Receivable |
4,591 | 1,708 | ||||||||||
Financial Income Interest on Time Deposits |
1,694 | | ||||||||||
|
|
|
|
|||||||||
Total |
6,285 | 1,708 | ||||||||||
|
|
|
|
|||||||||
Expenses |
Notes | Schedules | 06.30.14 | 06.30.13 | ||||||||
Administrative Expenses |
H | |||||||||||
Other Operating Expenses |
24 | 27 | ||||||||||
Other Expenses |
514 | 1,057 | ||||||||||
Expenses Corresponding to the Issuance of the Global Program for the Issuance of Negotiable Obligations |
1,080 | 1,320 | ||||||||||
Financial Expenses Interest on Financial Debt |
2,705 | 9,060 | ||||||||||
|
|
|
|
|||||||||
Total |
4,323 | 11,464 | ||||||||||
|
|
|
|
GALICIA WARRANTS S.A.
Assets |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Other Receivables Sundry Debtors |
3 | 9,625 | | |||||||||
|
|
|
|
|||||||||
Total |
9,625 | | ||||||||||
|
|
|
|
SUDAMERICANA HOLDING S.A.
Expenses |
Notes | Schedules | 06.30.14 | 06.30.13 | ||||||||
Financial Expenses Interest on Financial Debt |
| 15,149 | ||||||||||
|
|
|
|
|||||||||
Total |
| 15,149 | ||||||||||
|
|
|
|
66
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
TARJETAS REGIONALES S.A.
Expenses |
Notes | Schedules | 06.30.14 | 06.30.13 | ||||||||
Financial Expenses Interest on Financial Debt |
| 8 | ||||||||||
|
|
|
|
|||||||||
Total |
| 8 | ||||||||||
|
|
|
|
NOTE 12. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF PROFITS
Pursuant to section 70 of the Corporations Law, the Corporate Bylaws and Resolution No. 368/01 of the C.N.V., 5% of the net income for the year should be transferred to the Legal Reserve until 20% of the capital stock is reached.
NOTE 13. INCOME TAX
The following tables show the changes and breakdown of deferred tax assets and liabilities:
Assets |
Tax Loss Carry- forwards |
Other Receivables |
Allowances | Other Liabilities |
Total | |||||||||||||||
Balances as of 12.31.12 |
29,560 | 1,804 | 603 | | 31,967 | |||||||||||||||
Charge to Income |
38,399 | 683 | 359 | | 39,441 | |||||||||||||||
Others |
209 | (1 | ) | | 428 | 636 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances as of 12.31.13 |
68,168 | 2,486 | 962 | 428 | 72,044 | |||||||||||||||
Charge to Income |
5,409 | 387 | 727 | | 6,523 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances as of 06.30.14 |
73,577 | 2,873 | 1,689 | 428 | 78,567 |
Liabilities |
Fixed Assets |
Financial Debt |
Total | |||||||||
Balances as of 12.31.12 |
112 | 85 | 197 | |||||||||
Charge to Income |
(20 | ) | (85 | ) | (105 | ) | ||||||
|
|
|
|
|
|
|||||||
Balances as of 12.31.13 |
92 | | 92 | |||||||||
Charge to Income |
(6 | ) | | (6 | ) | |||||||
|
|
|
|
|
|
|||||||
Balances as of 06.30.14 |
86 | | 86 |
Net deferred tax assets as of June 30, 2014 and December 31, 2013 amount to $ 78,481 and $ 71,952, respectively.
A provision for the deferred tax asset has been fully recorded, since it is supposed that the recovery thereof is not likely at the issuance date of these financial statements. See Schedule E.
Tax loss carry-forwards recorded by the Company, pending use, amount to approximately $ 210,216, pursuant to the following breakdown:
Year of Generation |
Amount |
Year Due |
Deferred Tax Assets | |||
2010 |
19,035 | 2015 | 6,662 | |||
2011 |
28,062 | 2016 | 9,822 | |||
2012 |
37,359 | 2017 | 13,076 | |||
2013 |
110,305 | 2018 | 38,607 | |||
2014 |
15,455 | 2019 | 5,409 |
The classification of net deferred tax assets and liabilities recorded in accordance with their expected term of turn-around is shown in Note 9.
67
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
The following table shows the reconciliation of income tax charged to income to that which would result from applying the tax rate in force to the book income before tax:
06.30.14 | 06.30.13 | |||||||
Book Income Before Income Tax |
1,523,945 | 660,740 | ||||||
Income Tax Rate in Force |
35 | % | 35 | % | ||||
|
|
|
|
|||||
Result for the Period at the Tax Rate |
533,381 | 231,259 | ||||||
Permanent Differences at the Tax Rate |
||||||||
Increase in Income Tax |
||||||||
Expenses not Included in Tax Return |
5,635 | 17,094 | ||||||
Other Causes |
1,026 | 364 | ||||||
Decrease in Income Tax |
||||||||
Loss on Investments in Related Institutions |
(546,544 | ) | (274,253 | ) | ||||
Other Causes |
(27 | ) | (6,118 | ) | ||||
Allowance for Impairment of Value (Schedule E) |
6,529 | 31,654 | ||||||
|
|
|
|
|||||
Total Income Tax Charge Recorded |
| | ||||||
|
|
|
|
The following table shows the reconciliation of tax charged to income to tax determined for the period for tax purposes:
06.30.14 | 06.30.13 | |||||||
Total Income Tax Charge Recorded |
| | ||||||
Temporary Differences |
||||||||
Variation in Deferred Tax Assets |
6,523 | 31,560 | ||||||
Variation in Deferred Tax Liabilities |
6 | 94 | ||||||
Allowance for Impairment of Value (Schedule E) |
(6,529 | ) | (31,654 | ) | ||||
|
|
|
|
|||||
Total Tax Determined for Tax Purposes |
| | ||||||
|
|
|
|
NOTE 14. EARNINGS PER SHARE
Below is a breakdown of the earnings per share as of June 30, 2014 and 2013:
06.30.14 | 06.30.13 | |||||||
Income for the Period |
1,523,945 | 660,740 | ||||||
Outstanding Ordinary Shares Weighted Average |
1,300,265 | 1,241,407 | ||||||
Diluted Ordinary Shares Weighted Average |
1,300,265 | 1,241,407 | ||||||
Earnings per Ordinary Share (*) |
||||||||
Basic |
1.1720 | 0.5323 | ||||||
Diluted |
1.1720 | 0.5323 |
(*) | Figures stated in Pesos. |
NOTE 15. GLOBAL PROGRAM FOR THE ISSUANCE OF NEGOTIABLE OBLIGATIONS
On March 9, 2009, the General Ordinary Shareholders Meeting approved the creation of a Global Program for the Issuance of Simple Notes, not convertible into shares. Such Notes may be short-, mid- and/or long-term, secured or unsecured, peso-denominated, dollar-denominated or else may be in any other currency, subject to the compliance with all the legal or regulatory requirements applicable to the issuance in such currency or currency unit, adjustable or nonadjustable, and for a maximum outstanding face value of up to US$ 60,000 (sixty million U.S. Dollars) or the equivalent thereof in another currency.
The maximum term of the program shall be five years as from the date the program is authorized by the C.N.V., or for any longer term authorized pursuant to regulations in force.
The Notes may be issued pursuant to the laws and jurisdiction of Argentina and/or any other foreign country, in several classes and/or series during the period the Program is outstanding, with the possibility to reissue the amortized classes and/or series without exceeding the Programs total amount, and notwithstanding the fact that the maturity dates of the different classes and/or series issued occur after the Programs expiration date, with amortization terms not shorter than the minimum term or longer than the maximum term permitted by the regulations set forth by the C.N.V., among other terms.
68
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
By means of Resolution No. 16113 dated April 29, 2009, the C.N.V. decided to authorize, with certain conditions, the creation of the Global Program. Such conditions were released on May 8, 2009.
The Shareholders Meeting held on April 14, 2010 approved an increase of US$ 40,000 in the amount of the Global Program for the Issuance of Notes, which was later confirmed by the Companys Shareholders Meeting held on August 2, 2012.
On February 27, 2013, the Companys Board of Directors approved to begin the proceedings to increase the amount of the program. On April 25, 2013, the C.N.V. authorized to increase the maximum amount of issuance of the Global Program of Simple Notes, not convertible into shares, for up to a F.V. of US$ 100,000 or its equivalent in other currencies. On May 8, 2013, the Company placed Class IV Notes and, on January 30, 2014, it placed Class V, Series I and Series II, Notes.
On May 8, 2014, through Resolution No. 17343, the C.N.V. decided to authorize the extension of the term of the Global Program for five (5) years.
As of June 30, 2014 and December 31, 2013, the following Notes issued in Pesos were outstanding:
Class |
F.V. Amount | Term | Maturity Date | Interest Rate |
Book Value $ |
|||||||||||||||||
06.30.14 | 12.31.13 | |||||||||||||||||||||
III |
$ | 78,075 | 18 months | 02.28.14 | Variable Badlar Rate + 3.59% | | 84,044 | |||||||||||||||
IV |
$ | 220,000 | 18 months | 11.10.14 | Variable Badlar Rate + 3.49% | 228,549 | 227,027 | |||||||||||||||
V Series I |
$ | 101,800 | 18 months | 07.31.15 | Variable Badlar Rate + 4.25% | 106,705 | | |||||||||||||||
V Series II |
$ | 78,200 | 36 months | 01.31.17 | Variable Badlar Rate + 5.25% | 82,098 | |
On February 28, 2014, the Company repaid Class III Notes through the payment of $ 64,302 as amortization of principal and the corresponding interest.
NOTE 16. MERGER BY ABSORPTION OF THESEUS S.A. AND LAGARCUE S.A. AND CAPITAL INCREASE
On September 10, 2013, a Preliminary Merger Agreement was entered into, which described the terms and conditions of the merger by absorption by the Company, as merging company, of the total assets and liabilities of Lagarcué S.A. and Theseus S.A., as merged companies.
The Preliminary Merger Agreement, the special balance sheets for merger purposes and the consolidated balance sheet for merger purposes, ended on June 30, 2013, were approved by Lagarcué S.A. and Theseus S.A. at the Extraordinary Shareholders Meetings held on September 10, 2013.
At the Companys Extraordinary Shareholders Meeting held on November 21, 2013, the aforementioned documents were approved, as well as the exchange ratio and the capital increase by $ 58,858, through the issuance of 58,857,580 ordinary book-entry Class B shares, with a face value of $ 1 (figure stated in Pesos) and one vote per share, entitled to take part in the distribution of profits as from the fiscal year commenced on January 1, 2013.
On December 18, 2013, the Final Merger Agreement was signed and executed by public deed pursuant to the provisions of Section 83, Subsection 4 of the Corporations Law. Therefore, the Company incorporated the aforementioned companies by absorption, in effect as of September 1, 2013. This way, 25,454,193 Class B shares of the controlled company the Bank, representing 4.526585% of the capital stock, owned by Lagarcué S.A. and Theseus S.A., were incorporated.
Consequently, the Company held 560,199,603 shares of the Bank, representing 99.621742% of the Companys capital stock and 99.621742% of votes.
69
GRUPO FINANCIERO GALICIA S.A.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$)
On February 27, 2014, through Resolution No. 17,300, the Board of Directors of the National Securities Commission (C.N.V.) gave its consent to the merger by absorption of the Company (as merging company) with Lagarcué S.A. and Theseus S.A. (as merged companies) and to the Companys capital increase, ordering its registration.
The merger by absorption and the dissolution of the merged companies was registered at the Corporation Control Authority (I.G.J.) on June 12, 2014, while the capital increase of the merging company was registered on July 10, 2014.
70
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE A FIXED ASSETS AND INVESTMENTS IN ASSETS OF A SIMILAR NATURE
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Main Account |
At Beginning of Fiscal Year |
Increases | Decreases (*) |
Balance at Period- end |
Amortization | Net Book Value |
Net Book Value for Previous Fiscal Year |
|||||||||||||||||||||||||||||||||||||
Accumulated at Beginning of Year |
Decreases (*) |
Annual Rate % |
Amount for the Period |
Accumulated at Period- end |
||||||||||||||||||||||||||||||||||||||||
Real Estate (*) |
918 | | | 918 | 194 | | 2 | 8 | 202 | 716 | 724 | |||||||||||||||||||||||||||||||||
Furniture and Fixtures |
222 | | 220 | 2 | 220 | 219 | 20 | | 1 | 1 | 2 | |||||||||||||||||||||||||||||||||
Machines and Equipment |
1,128 | | 432 | 696 | 698 | 432 | 20 | 70 | 336 | 360 | 430 | |||||||||||||||||||||||||||||||||
Vehicles |
236 | | 128 | 108 | 155 | 92 | 20 | 11 | 74 | 34 | 81 | |||||||||||||||||||||||||||||||||
Hardware |
434 | | 267 | 167 | 323 | 268 | 20 | 17 | 72 | 95 | 111 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Totals as of 06.30.14 |
2,938 | | 1,047 | 1,891 | 1,590 | 1,011 | 106 | 685 | 1,206 | | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Totals as of 12.31.13 |
2,705 | 236 | 3 | 2,938 | 1,346 | 2 | 246 | 1,590 | | 1,348 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) | See Note 1.E. |
71
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE B GOODWILL
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Main Account |
At Beginning of Fiscal Year |
Increases | Decreases | Balance at Period- end |
Amortization | Net Book Value |
Net Book Value for Previous Fiscal Year |
|||||||||||||||||||||||||||||||||||||
Accumulated at Beginning of Year |
Decreases | Annual Rate % |
Amount for the Period |
Accumulated at Period- end |
||||||||||||||||||||||||||||||||||||||||
Goodwill (Schedule C) |
23,544 | 19,508 | | 43,052 | 10,295 | | 10 | 2,930 | 13,225 | 29,827 | 13,249 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Totals as of 06.30.14 |
23,544 | 19,508 | | 43,052 | 10,295 | | 2,930 | 13,225 | 29,827 | | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Totals as of 12.31.13 |
17,190 | 6,354 | | 23,544 | 8,302 | | 1,993 | 10,295 | | 13,249 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE C INVESTMENTS IN SHARES AND OTHER NEGOTIABLE SECURITIES EQUITY INVESTMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Issuance and Characteristics of the Securities |
Class | Face Value |
Amount | Acquisition Cost |
Market Price |
Equity Method |
Recorded value as of 06.30.14 |
Book Value as of 12.31.13 |
||||||||||||||||||||||||
Non-current Investments |
||||||||||||||||||||||||||||||||
Corporations. Section 33 of Law No. 19550: |
||||||||||||||||||||||||||||||||
Companies subject to Direct and Indirect Control (*) |
||||||||||||||||||||||||||||||||
Ord. A | 0.001 | 101 | ||||||||||||||||||||||||||||||
Ord. B | 0.001 | 562,326,550 | ||||||||||||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A. |
562,326,651 | 3,384,304 | | 8,396,034 | 8,396,034 | 6,890,919 | ||||||||||||||||||||||||||
Goodwill | (**) | 43,052 | | | 29,827 | 13,249 | ||||||||||||||||||||||||||
Compañía Financiera Argentina S.A. |
Ordinary | 0.001 | 16,726,875 | 25,669 | | 32,284 | 32,284 | 30,300 | ||||||||||||||||||||||||
Galicia Administradora de Fondos Comunes de Inversión S.A. Sociedad Gerente de Fondos Comunes de Inversión |
Ordinary | 0.001 | 19,000 | 39,481 | | 22,033 | 22,033 | | ||||||||||||||||||||||||
Galicia Warrants S.A. |
Ordinary | 0.001 | 875,000 | 11,829 | | 18,316 | 18,316 | 22,229 | ||||||||||||||||||||||||
Net Investment S.A. |
Ordinary | 0.001 | 10,500 | 22,341 | | 143 | 143 | 130 | ||||||||||||||||||||||||
Sudamericana Holding S.A. |
Ordinary | 0.001 | 162,447 | 42,918 | | 349,565 | 349,565 | 245,477 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total Non-current Investments |
3,569,594 | | 8,818,375 | 8,848,202 | 7,202,304 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(*) | See Note 10. (**) See Schedule B. |
73
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE C INVESTMENTS IN SHARES AND OTHER NEGOTIABLE SECURITIES EQUITY INVESTMENTS (CONTINUED)
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Issuance and Characteristics of the Securities |
Information on the Issuing Companies | |||||||||||||||||||||
Latest Financial Statements (*) | ||||||||||||||||||||||
Principal Line of Business |
Date | Capital Stock |
Net Income | Shareholders Equity |
Percentage of Equity Held in the Capital Stock |
|||||||||||||||||
Non-current Investments |
||||||||||||||||||||||
Corporations. Section 33 of Law No. 19550: |
||||||||||||||||||||||
Companies subject to Direct and Indirect Control |
||||||||||||||||||||||
Banco de Galicia y Buenos Aires S.A. |
Financial Activities | 06.30.14 | 562,327 | 1,446,856 | 8,187,692 | 100.00000 | ||||||||||||||||
Compañía Financiera Argentina S.A. |
Financial Activities | 06.30.14 | 557,563 | 66,145 | 1,076,069 | 3.00000 | ||||||||||||||||
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión |
Administration of Mutual Funds |
06.30.14 | 20 | 19,271 | 23,192 | 95.00000 | ||||||||||||||||
Galicia Warrants S.A. |
Issuance of Warrants | 06.30.14 | 1,000 | 6,538 | 20,933 | 87.50000 | ||||||||||||||||
Net Investment S.A. |
Information Technology | 06.30.14 | 12 | 15 | 164 | 87.50000 | ||||||||||||||||
Sudamericana Holding S.A. |
Financial and Investment Activities |
06.30.14 | 186 | 211,490 | (**) | 406,480 | 87.50034 |
(*) | See Note 10. (**) For the fiscal period ended June 30, 2014. |
74
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE D OTHER INVESTMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Main Account and Characteristics |
Notes | Schedules | 06.30.14 | 12.31.13 | ||||||||
Current Investments (*) |
||||||||||||
Deposits in Special Checking Accounts |
11 | G | 5,795 | 10,416 | ||||||||
Time Deposits |
97 | | ||||||||||
|
|
|
|
|||||||||
Total |
5,892 | 10,416 | ||||||||||
|
|
|
|
(*) | Include accrued interest, if applicable. |
75
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE E ALLOWANCES
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos)
Accounts |
Balances at Beginning of Fiscal Year |
Increases | Decreases | Balances at Period-end |
Balances at the Previous Fiscal Year-end |
|||||||||||||||
Deducted from Assets |
||||||||||||||||||||
Impairment of Value of Deferred Tax Asset |
71,134 | 7,347 | | 78,481 | 71,134 | |||||||||||||||
Impairment of Value of Miscellaneous Receivables |
1,429 | 1,508 | | 2,937 | 1,429 | |||||||||||||||
Impairment of Value of Minimum Presumed Income Tax Receivables |
3,320 | 569 | | 3,889 | 3,320 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total as of 06.30.14 |
75,883 | 9,424 | | 85,307 | | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total as of 12.31.13 |
36,803 | 49,926 | 10,846 | | 75,883 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
76
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE G FOREIGN CURRENCY ASSETS AND LIABILITIES
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos ($) and Thousands of U.S. Dollars (US$))
Accounts |
Amount and Type of Foreign Currency |
Exchange Rate |
Amount in Argentine Pesos ($) as of 06.30.14 |
Amount and Type of Foreign Currency |
Amount in Argentine Pesos ($) as of 12.31.13 |
|||||||||||||||||||||||
Assets |
||||||||||||||||||||||||||||
Current Assets |
||||||||||||||||||||||||||||
Cash and Due from Banks |
||||||||||||||||||||||||||||
Cash in Custody in Other Banks |
| | | | US$ | 29.50 | 192 | |||||||||||||||||||||
Investments |
||||||||||||||||||||||||||||
Deposits in Special Checking Accounts |
US$ | 712.43 | 8.1327 | 5,794 | US$ | 1,597.89 | 10,415 | |||||||||||||||||||||
Other Receivables |
||||||||||||||||||||||||||||
Promissory Notes Receivable |
US$ | 569.25 | 8.1327 | 4,630 | US$ | 1,435.18 | 9,355 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Current Assets |
10,424 | 19,962 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Non-current Assets |
||||||||||||||||||||||||||||
Other Receivables |
||||||||||||||||||||||||||||
Promissory Notes Receivable |
US$ | 10,229.98 | 8.1327 | 83,197 | US$ | 10,229.98 | 66,679 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Non-current Assets |
83,197 | 66,679 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Assets |
93,621 | 86,641 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Liabilities |
||||||||||||||||||||||||||||
Current Liabilities |
||||||||||||||||||||||||||||
Other Liabilities |
||||||||||||||||||||||||||||
Provision for Expenses |
US$ | 208.03 | 8.1327 | 1,692 | US$ | 317.64 | 2,070 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Current Liabilities |
1,692 | 2,070 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total Liabilities |
1,692 | 2,070 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
GRUPO FINANCIERO GALICIA S.A.
SCHEDULE H INFORMATION REQUIRED BY SECTION 64, SUBSECTION B) OF LAW NO. 19550
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
(Figures Stated in Thousands of Pesos )
Total as of 06.30.14 | Administrative Expenses |
Total as of 06.30.13 | ||||||||||
Personnel Expenses |
4,579 | 4,579 | 6,656 | |||||||||
Directors and Syndics Fees |
1,208 | 1,208 | 1,146 | |||||||||
Other Fees |
4,508 | 4,508 | 3,220 | |||||||||
Taxes |
3,204 | 3,204 | 5,025 | |||||||||
Depreciation of Fixed Assets |
106 | 106 | 122 | |||||||||
Other Operating Expenses (*) |
387 | 387 | 402 | |||||||||
Other (*) |
994 | 994 | 965 | |||||||||
Expenses Corresponding to the Global Program for the Issuance of Negotiable Obligations (*) |
664 | 664 | 602 | |||||||||
|
|
|
|
|
|
|||||||
Totals |
15,650 | 15,650 | 18,138 | |||||||||
|
|
|
|
|
|
(*) | Balances net of eliminations corresponding to transactions conducted with companies included in Section 33 of Law No. 19550. See Note 11. |
78
GRUPO FINANCIERO GALICIA S.A.
ADDITIONAL INFORMATION TO THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($)
I. GENERAL ISSUES REGARDING THE COMPANYS ACTIVITIES:
1. SIGNIFICANT SPECIFIC LEGAL SYSTEMS ENTAILING CONTINGENT EXPIRATION OR RESURGENCE OF BENEFITS ENVISAGED BY THOSE REGULATIONS.
None.
2. SIGNIFICANT CHANGES IN THE COMPANY ACTIVITIES OR OTHER SIMILAR CIRCUMSTANCES THAT OCCURRED DURING THE FISCAL YEARS COVERED BY THE FINANCIAL STATEMENTS WHICH MAY HAVE AN EFFECT ON THEIR COMPARISON WITH THOSE PRESENTED IN PREVIOUS FISCAL YEARS, OR THOSE THAT SHALL BE PRESENTED IN FUTURE FISCAL YEARS.
None.
3. CLASSIFICATION OF RECEIVABLES AND DEBT BALANCES ACCORDING TO THEIR ESTIMATED COLLECTION OR PAYMENT TERM.
Receivables: See Note 9 to the financial statements.
Debts: See Note 9 to the financial statements.
4. CLASSIFICATION OF RECEIVABLES AND DEBTS IN SUCH A MANNER THAT ALLOWS KNOWING THE FINANCIAL EFFECTS OF THEIR MAINTENANCE.
Receivables: See Notes 1.A., 1.B. and 9 and Schedule G to the financial statements.
Debts: See Notes 1.A., 1.B. and 9 and Schedule G to the financial statements.
5. BREAKDOWN OF PERCENTAGE OF EQUITY INVESTMENTS SECTION 33 OF LAW No. 19550, BOTH IN THE CAPITAL STOCK AND THE TOTAL VOTES. DEBIT AND/OR CREDIT BALANCES BY COMPANY AND CONSIDERED IN THE MANNER SET FORTH IN THE AFOREMENTIONED ITEMS 3 AND 4.
See Notes 9, 10 and 11 and Schedule C to the financial statements.
6. RECEIVABLES FROM OR LOANS GRANTED TO DIRECTORS OR SYNDICS OR THEIR RELATIVES UP TO THE SECOND DEGREE INCLUSIVE.
As of June 30, 2014 and December 31, 2013, there were no receivables from or loans granted to directors or syndics or their relatives up to the second degree inclusive.
II. PHYSICAL INVENTORY OF INVENTORIES:
7. FREQUENCY AND SCOPE OF THE PHYSICAL INVENTORIES OF INVENTORIES.
As of June 30, 2014 and December 31, 2013, the Company did not have any inventories.
III. CURRENT VALUES:
8. SOURCES OF THE INFORMATION USED FOR CALCULATING CURRENT VALUES FOR THE ASSESSMENT OF INVENTORIES, FIXED ASSETS AND OTHER SIGNIFICANT ASSETS.
See Notes 1.C. and 1.D. to the financial statements.
9. FIXED ASSETS THAT HAVE BEEN TECHNICALLY APPRAISED.
As of June 30, 2014 and December 31, 2013, the Company did not have any fixed assets that have been technically appraised. See Schedule A.
79
GRUPO FINANCIERO GALICIA S.A.
ADDITIONAL INFORMATION TO THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($)
10. FIXED ASSETS NOT USED BECAUSE THEY ARE OBSOLETE.
As of June 30, 2014 and December 31, 2013, the Company did not have any obsolete fixed assets which have a book value. See Schedule A.
IV. EQUITY INVESTMENTS:
11. EQUITY INVESTMENTS IN EXCESS OF WHAT IS SET FORTH BY SECTION 31 OF LAW No. 19550 AND PLANS FOR THE REGULARIZATION OF THIS SITUATION.
The Company is engaged in financial and investment activities, therefore the restrictions of Section 31 of Law No. 19550 do not apply to its equity investments in other companies.
V. RECOVERABLE VALUES:
12. CRITERIA FOLLOWED TO DETERMINE THE SIGNIFICANT RECOVERABLE VALUES OF INVENTORIES, FIXED ASSETS AND OTHER ASSETS, USED AS LIMIT FOR THEIR RESPECTIVE ACCOUNTING VALUATIONS.
As of June 30, 2014 and December 31, 2013, the criterion followed by the Company for determining the recoverable value of its fixed assets consisted in taking their value-in-use, based on the possibility of absorbing future depreciation charges with the profits reported by it.
VI. INSURANCE:
13. INSURANCE POLICIES FOR TANGIBLE ASSETS.
As of June 30, 2014 and December 31, 2013, the breakdown of insurance policies taken out by the Company for its fixed assets was as follows:
Insured Assets |
Risks Covered |
Insured Amount |
Book Value as of 06.30.14 |
Book Value as of 12.31.13 |
||||||||||
Building, Electronic Equipment and/or Office Assets |
Fire, Lightening, Explosion and/or Theft |
2,777 | 1,206 | 1,267 | ||||||||||
Vehicles | Theft, Robbery, Fire or Total Loss | 209 | 34 | 81 |
VII. POSITIVE AND NEGATIVE CONTINGENCIES:
14. ELEMENTS USED FOR THE CALCULATION OF PROVISIONS, THE BALANCES OF WHICH, EITHER TAKEN INTO CONSIDERATION INDIVIDUALLY OR JOINTLY, EXCEED TWO PER CENT (2%) OF SHAREHOLDERS EQUITY.
None.
15. CONTINGENCIES WHICH, AT THE DATE OF THE FINANCIAL STATEMENTS, ARE NOT OF REMOTE OCCURRENCE, THE EFFECTS OF WHICH ON SHAREHOLDERS EQUITY HAVE NOT BEEN GIVEN ACCOUNTING RECOGNITION. IT SHOULD BE STATED WHETHER THE LACK OF ACCOUNTING RECOGNITION IS BASED ON THE LIKELIHOOD OF OCCURRENCE OR ON THE DIFFICULTY TO ANALYZE SUCH EFFECTS.
As of June 30, 2014 and December 31, 2013, there were no contingencies which are not of remote occurrence and the effects of which on Shareholders Equity have not been given accounting recognition.
80
GRUPO FINANCIERO GALICIA S.A.
ADDITIONAL INFORMATION TO THE NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($)
VIII. IRREVOCABLE ADVANCES TOWARDS FUTURE SHARE SUBSCRIPTIONS:
16. STATUS OF CAPITALIZATION ARRANGEMENTS.
As of June 30, 2014 and December 31, 2013, there were no irrevocable contributions towards future share subscriptions.
17. CUMULATIVE UNPAID DIVIDENDS ON PREFERRED SHARES.
As of June 30, 2014 and December 31, 2013, there were no cumulative unpaid dividends on preferred shares.
18. CONDITIONS, CIRCUMSTANCES OR TERMS FOR THE TERMINATION OF THE RESTRICTIONS ON THE DISTRIBUTION OF UNAPPROPRIATED RETAINED EARNINGS, INCLUDING THOSE ORIGINATED DUE TO THE USE OF THE LEGAL RESERVE FOR THE ABSORPTION OF LOSSES WHICH ARE STILL PENDING REIMBURSEMENT.
See Note 12 to the financial statements.
81
GRUPO FINANCIERO GALICIA S.A.
SUPPLEMENTARY AND EXPLANATORY STATEMENT BY THE BOARD OF DIRECTORS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($)
Pursuant to the provisions of the Rules regarding Accounting Documentation of the Córdoba Stock Exchange Regulations, the Board of Directors hereby submits the following supplementary and explanatory information.
A. CURRENT ASSETS
a) Receivables:
1) See Note 9 to the financial statements.
2) See Notes 3 and 9 to the financial statements.
3) As of June 30, 2014 and December 31, 2013, the Company had not set up any allowances.
b) Inventories:
As of June 30, 2014 and December 31, 2013, the Company did not have any inventories.
B. NON-CURRENT ASSETS
a) Receivables:
See Schedule E to the financial statements.
b) Inventories:
As of June 30, 2014 and December 31, 2013, the Company did not have any inventories.
c) Investments:
See Note 10 and Schedule C to the financial statements.
d) Fixed Assets:
1) As of June 30, 2014 and December 31, 2013, the Company did not have any fixed assets that have been technically appraised.
2) As of June 30, 2014 and December 31, 2013, the Company did not have any obsolete fixed assets which have a book value.
e) Intangible Assets:
1) See Note 1.D. and Schedules B and C to the financial statements.
2) As of June 30, 2014 and December 31, 2013, there were no deferred charges.
C. CURRENT LIABILITIES
a) Liabilities:
1) See Note 9 to the financial statements.
2) See Notes 4, 5, 6, 7 and 9 to the financial statements.
D. PROVISIONS
See Schedule E to the financial statements.
E. FOREIGN CURRENCY ASSETS AND LIABILITIES
See Note 1.B. and Schedule G to the financial statements.
F. SHAREHOLDERS EQUITY
1) As of June 30, 2014 and December 31, 2013, the Shareholders Equity did not include the Irrevocable Advances towards Future Share Issues account.
2) As of June 30, 2014 and December 31, 2013, the Company had not set up any technical appraisal reserve; nor has it reversed any reserve of that kind.
G. MISCELLANEOUS
1) The Company is engaged in financial and investment activities, therefore the restrictions of Section 31 of Law No. 19550 do not apply to its equity investments in other companies.
2) See Notes 9 and 11 to the financial statements.
82
GRUPO FINANCIERO GALICIA S.A.
SUPPLEMENTARY AND EXPLANATORY STATEMENT BY THE BOARD OF DIRECTORS
FOR THE PERIOD COMMENCED JANUARY 1, 2014 AND ENDED JUNE 30, 2014, PRESENTED IN COMPARATIVE FORMAT
Figures Stated in Thousands of Pesos ($)
3) As of June 30, 2014 and December 31, 2013, there were no receivables from or loans granted to directors or syndics or their relatives up to the second degree inclusive.
4) See Notes 9 and 11 to the financial statements.
5) As of June 30, 2014 and December 31, 2013, the breakdown of insurance policies taken out by the Company for its fixed assets was as follows:
Insured Assets |
Risks Covered |
Insured Amount | Book Value as of 06.30.14 |
Book Value as of 12.31.13 |
||||||||||
Building, Electronic Equipment and/or Office Assets |
Fire, Lightening, Explosion and/or Theft | 2,777 | 1,206 | 1,267 | ||||||||||
Vehicles |
Theft, Robbery, Fire or Total Loss | 209 | 34 | 81 |
6) As of June 30, 2014 and December 31, 2013, there were no contingencies highly likely to occur which have not been given accounting recognition.
7) As of June 30, 2014 and December 31, 2013, the Company did not have any receivables including implicit interest or index adjustments.
The Company has complied with the requirements of Section 65 of Law No. 19550 in these financial statements.
Buenos Aires, August 7, 2014.
83
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
Figures Stated in Thousands of Pesos ($)
Grupo Financiero Galicia S.A.s purpose is to strengthen its position as a leading company devoted to providing comprehensive financial services and, at the same time, to continue to strengthen the Banks position as one of the leading companies in Argentina. This strategy shall be carried out by supplementing the operations and business conducted by the Bank through equity investments in companies and undertakings, either existing or to be created, engaged in financial activities as they are understood in the modern economy.
JUNE 30, 2014
The income for the fiscal period ended June 30, 2014 amounted to $ 1,523,945. This income has been mainly generated as a consequence of the valuation of equity investments in our subsidiaries.
On January 30, 2014, the Company issued Class V Notes, in two Series: Series I for $ 101,800, maturing on July 31, 2015, and Series II for $ 78,200, maturing on January 31, 2017, both with interest paid on a quarterly basis from April 30, 2014. Part of the subscription of Class V Notes was carried out through the payment in Class III Notes, with a face value of $ 20,622.
The General Ordinary Shareholders Meeting held on April 29, 2014 resolved, pursuant to the rules and regulations in force, to allocate Unappropriated Retained Earnings as of December 31, 2013, as follows:
- To Legal Reserve |
$ | 91,183 | ||
- To Discretionary Reserve |
$ | 1,693,875 | ||
- To Cash Dividends (2.9682% of the Capital Stock) |
$ | 38,595 |
MERGER BY ABSORPTION OF THESEUS S.A. AND LAGARCUÉ S.A.
On September 10, 2013, a Preliminary Merger Agreement was entered into, which described the terms and conditions of the merger by absorption by the Company, as merging company, of the total assets and liabilities of Lagarcué S.A. and Theseus S.A., as merged companies.
The Preliminary Merger Agreement, the special balance sheets for merger purposes and the consolidated balance sheet for merger purposes, ended on June 30, 2013, were approved by Lagarcué S.A. and Theseus S.A. at the Extraordinary Shareholders Meeting held on September 10, 2013.
At the Companys Extraordinary Shareholders Meeting held on November 21, 2013, the aforementioned documents were approved, as well as the exchange ratio and the capital increase by $ 58,858, through the issuance of 58,857,580 ordinary book-entry Class B shares, with a face value of $ 1 (figure stated in Pesos) and one vote per share, entitled to take part in the distribution of profits as from the fiscal year commenced on January 1, 2013.
On December 18, 2013, the Final Merger Agreement was signed and executed by public deed pursuant to the provisions of Section 83, Subsection 4 of the Corporations Law. Therefore, the Company incorporated the aforementioned companies by absorption, in effect as of September 1, 2013. In this way, 25,454,193 Class B shares of the controlled company the Bank, representing 4.526585% of the capital stock, owned by Lagarcué S.A. and Theseus S.A., were incorporated.
Consequently, the Company held 560,199,603 shares of the Bank, representing 99.621742% of the Companys capital stock and 99.621742% of votes.
On February 27, 2014, through Resolution No. 17300, the Board of Directors of the National Securities Commission (C.N.V.) gave its consent to the merger by absorption of the Company (as merging company) with Lagarcué S.A. and Theseus S.A. (as merged companies) and to Grupo Financiero Galicia S.A.s capital increase, ordering its registration.
The dissolution by absorption of each of the merged companies and the merger by absorption by the merging company were registered on June 12, 2014, while the capital increase of the merging company was registered on July 10, 2014.
84
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
Figures Stated in Thousands of Pesos ($)
BANCO DE GALICIA Y BUENOS AIRES S.A.S ACQUISITION OF MINORITY SHAREHOLDING
On February 25, 2014, Grupo Financiero Galicia S.A.s Board of Directors resolved the following:
i. | to issue the statement of willingness to acquire provided for in Section 91, Subsection b) of Law No. 26831 with regard to all the remaining shares of the Bank held by third parties; |
ii. | to approve the criterion suggested by the Management Division on the fair price provided for in Section 91, second paragraph, of Law No. 26831, and establish it in $ 23.22 (figure stated in Pesos) for each remaining share held by third parties; |
iii. | to request the National Securities Commissions immediate withdrawal of the Bank from the public offering and listing at the Buenos Aires Stock Exchange, under the terms of Section 94, third paragraph, of Law No. 26831; |
iv. | to appoint the Bank as the financial institution where the Company shall deposit the amount corresponding to the total value of the Banks remaining shares; and |
v. | to give the Bank notice of the statement of willingness to acquire. |
On April 24, 2014, the Board of Directors of the C.N.V. approved the unilateral statement of willingness to acquire issued by the Company. Thus, on May 6, 2014, the amount corresponding to the total value of the Banks remaining shares was deposited. The C.N.V.s approval of the aforementioned proceedings was registered with the Corporation Control Authority (I.G.J.) on July 14, 2014.
On August 4, 2014, the statement of willingness to acquire was executed by public deed, which makes the Company the owner, by operation of law, of all of the Banks existing shares, pursuant to the provisions of Section 95 of Law No. 26831.
FINANCIAL STRUCTURE MAIN ACCOUNTS OF THE CONSOLIDATED BALANCE SHEET
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Assets |
||||||||||||||||||||
Cash and Due from Banks |
14,687,978 | 8,249,087 | 6,636,540 | 5,546,723 | 3,999,529 | |||||||||||||||
Government and Private Securities |
10,322,671 | 3,803,370 | 5,210,711 | 5,246,016 | 3,627,061 | |||||||||||||||
Loans |
58,846,394 | 48,276,641 | 34,183,981 | 26,079,557 | 17,028,298 | |||||||||||||||
Other Receivables Resulting from Financial Brokerage |
6,473,005 | 5,185,908 | 5,137,293 | 4,541,679 | 3,207,595 | |||||||||||||||
Receivables from Financial Leases |
1,084,585 | 985,189 | 625,632 | 501,986 | 343,641 | |||||||||||||||
Equity Investments |
57,165 | 78,719 | 65,324 | 47,407 | 54,172 | |||||||||||||||
Bank Premises and Equipment, Miscellaneous Assets and Intangible Assets |
3,307,373 | 2,706,343 | 2,113,245 | 1,639,966 | 1,463,719 | |||||||||||||||
Other Assets |
1,642,805 | 1,383,734 | 1,193,484 | 1,249,544 | 877,860 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Assets |
96,421,976 | 70,668,991 | 55,166,210 | 44,852,878 | 30,601,875 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Liabilities |
||||||||||||||||||||
Deposits |
58,564,028 | 44,131,259 | 33,236,833 | 27,081,852 | 18,554,009 | |||||||||||||||
Other Liabilities Resulting from Financial Brokerage |
23,393,021 | 16,361,853 | 13,945,357 | 11,538,254 | 6,690,289 | |||||||||||||||
Subordinated Negotiable Obligations |
1,916,614 | 1,334,391 | 1,053,058 | 939,477 | 1,208,342 | |||||||||||||||
Other Liabilities |
3,456,099 | 2,553,462 | 2,163,727 | 1,936,232 | 1,664,613 | |||||||||||||||
Minority Interest |
659,635 | 781,558 | 612,563 | 435,820 | 325,943 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities |
87,989,397 | 65,162,523 | 51,011,538 | 41,931,635 | 28,443,196 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Shareholders Equity |
8,432,579 | 5,506,468 | 4,154,672 | 2,921,243 | 2,158,679 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Liabilities and Shareholders Equity |
96,421,976 | 70,668,991 | 55,166,210 | 44,852,878 | 30,601,875 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
85
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
Figures Stated in Thousands of Pesos ($)
INCOME STATEMENT MAIN ACCOUNTS OF THE CONSOLIDATED INCOME STATEMENT
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Net Financial Income |
4,785,937 | 3,060,178 | 2,504,867 | 1,624,856 | 894,775 | |||||||||||||||
Net Income from Services |
2,522,752 | 1,961,905 | 1,470,622 | 1,134,390 | 810,667 | |||||||||||||||
Provision for Loan Losses |
1,248,470 | 875,684 | 604,344 | 366,347 | 235,999 | |||||||||||||||
Administrative Expenses |
4,343,128 | 3,543,351 | 2,696,425 | 1,918,009 | 1,219,484 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Income from Financial Brokerage |
1,717,091 | 603,048 | 674,720 | 474,890 | 249,959 | |||||||||||||||
Other Miscellaneous Income |
773,635 | 543,857 | 327,966 | 248,662 | (42,711 | ) | ||||||||||||||
Income Tax |
961,783 | 486,165 | 381,877 | 246,981 | 109,168 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net Income |
1,523,945 | 660,740 | 620,809 | 476,571 | 98,080 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
STRUCTURE OF THE CONSOLIDATED STATEMENT OF CASH FLOWS
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Funds Provided by (Used for) Operating Activities |
4,097,519 | (1,433,885 | ) | 272,603 | 222,465 | 1,619,393 | ||||||||||||||
Funds (Used for) Investing Activities |
(192,211 | ) | (163,999 | ) | (79,968 | ) | (130,128 | ) | (266,675 | ) | ||||||||||
Funds Provided by (Used for) Financing Activities |
233,922 | 746,512 | 187,287 | 1,727,124 | (381,659 | ) | ||||||||||||||
Financial Results and by Holding of Cash and Cash Equivalents |
1,276,774 | 283,155 | 135,846 | 110,233 | 72,767 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Funds Provided or Used during the Period |
5,416,004 | (568,217 | ) | 515,768 | 1,929,694 | 1,043,826 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
RATIOS
LIQUIDITY
Since the consolidated accounts mainly stem from the Bank, the individual liquidity ratio for the Bank is detailed as follows:
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Liquid Assets (*) as a Percentage of Transactional Deposits |
84.82 | 53.15 | 69.77 | 74.08 | 66.05 | |||||||||||||||
Liquid Assets (*) as a Percentage of Total Deposits |
40.11 | 25.63 | 36.56 | 39.64 | 35.27 |
(*) | Liquid Assets include cash due from banks, Lebacs and Nobacs, net call money, short-term placements in correspondent banks, Special Guarantees Accounts at the Argentine Central Bank and repo and reverse repo transactions with the local market. |
SOLVENCY
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Solvency |
9.58 | 8.45 | 8.14 | 6.97 | 7.59 |
CAPITAL ASSETS
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Capital Assets (*) |
3.49 | 3.94 | 3.95 | 3.76 | 4.96 |
(*) | Equity investments, bank premises and equipment, miscellaneous assets and intangible assets/total assets. |
PROFITABILITY
06.30.14 | 06.30.13 | 06.30.12 | 06.30.11 | 06.30.10 | ||||||||||||||||
Return on Average Assets (*) |
3.68 | 2.34 | 2.79 | 2.92 | 1.06 | |||||||||||||||
Return on Average Shareholders Equity (*) |
39.27 | 25.77 | 33.07 | 35.29 | 9.33 |
(*) | Annualized. |
86
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
Figures Stated in Thousands of Pesos ($)
EQUITY INVESTMENTS
BANCO DE GALICIA Y BUENOS AIRES S.A.
Founded in 1905, the Bank is one of the largest private-sector banks in the Argentine financial system, and one of the leading providers of financial services in the country. As a universal bank, through affiliated companies and a variety of distribution channels, the Bank offers a full spectrum of financial services to both individual and corporate customers.
The Bank operates one of the most extensive and diversified distribution networks of the Argentine private financial sector, offering 261 branches, together with 391 points of contact gathered between regional credit-card companies and Compañía Financiera Argentina S.A. During the first half of fiscal year 2014, the Bank recorded net income of $ 1,446,856, while during the same period of the previous fiscal year it had recorded net income for $ 705,669. The increase in income for the period, when compared to the first half of fiscal year 2013, mainly resulted from the increase in net operating income (net financial income plus net income from services) (41.4%), offset by higher provisions for loan losses (42.6%) and administrative expenses (22.2%). The positive evolution of net operating income was due both to an increase in net financial income, amounting to $ 1,600,749 (51.3%), and to higher net income from services amounting to $ 611,282 (27.5%). During the first semester of fiscal year 2014, the Company established provisions for loan losses of $ 1,248,470, $ 372,786 higher than those established for the same period of the previous fiscal year, an increase both regarding corporations and individuals. Administrative expenses for the period totaled $ 4,199,208, increasing 22.2% when compared to the same period of the previous fiscal year. Personnel expenses grew 19.8%, mainly due to the salary increase agreed upon with unions, offset by the decrease in staff. The remaining administrative expenses showed a 25.5% increase, mainly due to the increase in the costs related to the different services rendered to the Bank. The income tax charge amounted to $ 928,163, $ 444,724 higher than that for the first half of fiscal year 2013. Banco Galicias credit exposure to the private sector amounted to $ 70,084,062, showing a 21.0% growth during the last twelve months. Meanwhile, deposits reached $ 58,906,968, growing 32.2% when compared to the same period of the previous fiscal year. As of June 30, 2014, the Banks estimated share in loans to the private sector was 8.65%, while in deposits from the private sector its share was 8.93%, when compared to 9.11% and 8.98%, respectively, for the previous fiscal year.
NET INVESTMENT S.A.
Grupo Financiero Galicia S.A.s equity investment in Net Investment S.A.s capital stock is 87.50%, whereas the remaining 12.50% is owned by the Bank.
Net Investment S.A. was created to carry out Internet business transactions.
Taking into consideration the Board of Directors search for new business alternatives, in fiscal year 2010 the company subscribed shares belonging to a foreign company that carries out activities related to business development through the Internet. The equity investment held in this company represents 0.19% of corporate capital.
SUDAMERICANA HOLDING S.A.
Sudamericana Holding S.A. is a holding company providing life, retirement, property insurance and insurance brokerage services. The equity investment held by the Company in this company is 87.50%. The Bank has the remaining 12.50%.
The insurance business undertaken by the Company is one of the most important aspects of the Companys general plan to strengthen its position as a leading financial services provider.
Joint production of the insurance companies controlled by Sudamericana Holding S.A. in the life, retirement and property insurance business amounted to $ 819,400 during the fiscal period commenced on January 1, 2014 and ended on June 30, 2014. As of June 30, 2014, these companies had approximately 6 million policies/certificates in all their insurance lines.
From a commercial standpoint, the company maintains its purpose of taking advantage of the greater demand for insurance coverage to significantly increase the companies sales.
As a result of this effort, the premium volume for the second quarter of 2014 exceeded that for the same quarter of the previous year by 32%.
87
GRUPO FINANCIERO GALICIA S.A.
INFORMATIVE REVIEW AS OF JUNE 30, 2014 AND DECEMBER 31, 2013
Figures Stated in Thousands of Pesos ($)
GALICIA WARRANTS S.A.
Galicia Warrants S.A. was established in 1993 and, since then, has become a leading company. It renders services to the productive sector as an additional credit instrument, also rendering a full spectrum of services related to inventory management.
Its shareholders are Grupo Financiero Galicia S.A., which holds an 87.5% equity investment in the company, and the Bank, which holds a 12.5% interest.
The company has its corporate headquarters in Buenos Aires and an office in the city of Tucumán, through which it carries out its transactions in the warrants market and as well includes other services related to its main activity, for different regional economies and geographic areas of the country.
During the first half of 2014, deposit certificates and warrants were issued for $ 599,635, regarding merchandise under custody located throughout the country.
As of June 30, 2014, Galicia Warrants S.A. obtained income from services amounting to $ 15,199.
GALICIA ADMINISTRADORA DE FONDOS S.A. SOCIEDAD GERENTE DE FONDOS COMUNES DE INVERSION
On April 7, 2014, the Bank presented the Company with an offer to sell 19,000 shares of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión, representing 95% of the aforementioned companys capital stock, being the offer considered accepted at the time the buyer made a payment equivalent to 25% of the total purchase price.
On April 15, 2014, Grupo Financiero Galicia S.A.s Board of Directors approved the purchase of 95% of Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversións capital stock, and paid 25% of the total agreed price, which amounted to $ 39,482.
Galicia Administradora de Fondos S.A. Sociedad Gerente de Fondos Comunes de Inversión administers the FIMA mutual funds distributed by the Bank (custodial agent of collective investment products corresponding to mutual funds), through its broad channel network (branches, electronic banking, phone banking), to different customer segments (institutional, corporate and individual customers).
As of December 31, 2013, FIMA funds amounted to $ 6,631 million, representing a 9.1% market share. During this six-month period of January 1, 2014 through June 30, 2014, the volume of FIMA funds increased 6.9%, reaching $ 7,089 million. This increase in volume mainly took place in the wholesale banking customer segments (both institutional and corporate customers), particularly regarding FIMA Premium, FIMA Ahorro Pesos and FIMA Ahorro Plus.
Once the new Capital Markets Law had become effective, Galicia Administradora de Fondos S.A. sent the C.N.V. the documents necessary so that the Company, which acts as manager, could comply with its role as manager of collective investment products corresponding to mutual funds. The outlook for this fiscal year is that mutual funds will continue growing, as well as the businesses related thereto, within the framework of the new Capital Markets Law, including advisory services and management of discretionary investment portfolios.
OUTLOOK
Grupo Financiero Galicia S.A.s outlook for this fiscal year is basically linked to the development of the Argentine economy, and particularly the evolution of the financial system.
Buenos Aires, August 7, 2014.
88
REPORT OF THE SUPERVISORY SYNDICS COMMITTEE
To the Directors of
Grupo Financiero Galicia S.A.
Tte. Gral. Juan D. Perón 430 25th floor
Buenos Aires
1. | We have performed a limited review of the Balance Sheet of Grupo Financiero Galicia S.A. (the Company) as of June 30, 2014, and the related Income Statement, Statement of Changes in Shareholders Equity and Statement of Cash Flows for the six-month period then ended, as well as supplementary Notes 1 to 16, and Schedules A, B, C, D, E, G and H, which supplement them, which have been submitted by the Company for our consideration. Furthermore, we have performed a limited review of the consolidated financial statements of Grupo Financiero Galicia S.A. and its controlled companies for the six-month period ended June 30, 2014, with Notes 1 to 38, which are presented as supplementary information. The preparation and issuance of those financial statements are the responsibility of the Company. |
2. | Our work was conducted in accordance with standards applicable to syndics in Argentina. These standards require the application of the procedures established by Technical Pronouncement No. 7 of the Argentine Federation of Professional Councils in Economic Sciences for limited reviews of financial statements for interim periods, and include verifying the consistency of the documents reviewed with the information concerning corporate decisions, as disclosed in minutes, and the conformity of those decisions with the law and the bylaws insofar as concerns formal and documental aspects. For purposes of our professional work, we have reviewed the work performed by the external auditors of the Company, Price Waterhouse & Co. SRL, who submitted their limited review report on August 7, 2014, in accordance with auditing standards applicable in Argentina for limited reviews of financial statements for interim periods. A limited review mainly involves applying analytical procedures to the accounting information and making inquiries to the staff responsible for accounting and financial issues. The scope of such review is substantially more limited than that of an audit of financial statements, the objective of which is to render an opinion on the financial statements taken as a whole. Therefore, we do not express such an opinion. We have not evaluated the business criteria regarding the different areas of the Company, as these matters are its exclusive responsibility. |
We also report that, in compliance with the legality control that is part of our area of competence, during this period we have applied the procedures described in Section 294 of Law No. 19550, which we deemed necessary according to the circumstances.
3. | The subsidiary Banco de Galicia y Buenos Aires S.A. has prepared its financial statements following the valuation and disclosure criteria established by Argentine Central Bank regulations, which have been taken as the basis for calculating the equity method and preparing the consolidated financial statements of the Company. As mentioned in Note 1.16 to the consolidated financial statements, those criteria for valuing certain assets and liabilities and the regulations on financial reporting issued by the control body differ from the professional accounting standards applicable in Buenos Aires. |
4. | Based on our review, with the scope mentioned in paragraph 2 above, we report that the financial statements of Grupo Financiero Galicia S.A. as of June 30, 2014 and its consolidated financial statements at that date, detailed in paragraph 1 above, were prepared in accordance with Argentine Central Bank regulations and, except as mentioned in paragraph 3 above, with accounting standards applicable in Buenos Aires, give consideration to all significant facts and circumstances which are known to us and, in relation to said financial statements, we have no observations to make. In compliance with the legality control that is part of our area of competence, we have no observations to make. |
As regard to the Additional Information to the Notes to the Financial Statements required by the National Securities Commission (text amended in 2013) and by Section 68 of the Rules and Regulations of the Buenos Aires Stock Exchange, the Supplementary and Explanatory Statement by the Board of Directors required by the Rules concerning Accounting Documentation of the Córdoba Stock Exchange Regulations, and the Informative Review, we have no observations to make insofar as concerns our area of competence, and the assertions on future events are the exclusive responsibility of the Companys Board of Directors.
Furthermore, we report that the accompanying financial statements stem from accounting records kept, in all formal aspects, in compliance with legal regulations prevailing in Argentina.
Buenos Aires, August 7, 2014.
Supervisory Syndics Committee
LIMITED REVIEW REPORT
To the Chairman and Directors of
Grupo Financiero Galicia S.A.
Legal Domicile:
Tte. Gral. Juan D. Perón 430 25th floor
Buenos Aires
C.U.I.T. 30-70496280-7
1. | We have performed a limited review of the Balance Sheet of Grupo Financiero Galicia S.A. as of June 30, 2014, and the related Income Statements, Statements of Changes in Shareholders Equity and Statements of Cash Flows for the six-month periods ended June 30, 2014 and 2013, as well as supplementary Notes 1 to 16 and Schedules A, B, C, D, E, G and H, which supplement them. Furthermore, we have performed a limited review of the Consolidated Balance Sheet of Grupo Financiero Galicia S.A. as of June 30, 2014, and the Consolidated Income Statements and Consolidated Statements of Cash Flows and Cash Equivalents for the six-month periods ended June 30, 2014 and 2013, together with Notes 1 to 38, which are presented as supplementary information. The preparation and issuance of those financial statements are the responsibility of the Company. |
2. | Our reviews were limited to the application of the procedures set forth by Technical Pronouncement No. 7 of the Argentine Federation of Professional Councils in Economic Sciences for limited reviews of financial statements for interim periods, which mainly involve applying analytical procedures to the financial statement figures and making inquiries to the Companys staff responsible for preparing the information included in the financial statements and its subsequent analysis. The scope of these reviews is substantially more limited than that of an audit examination, the purpose of which is to express an opinion on the financial statements under examination. Accordingly, we do not express an opinion on the Companys financial condition, the results of its operations, changes in its Shareholders Equity and cash flows, or on its consolidated financial condition, the consolidated results of its operations and consolidated cash flows. |
3. | The subsidiary Banco de Galicia y Buenos Aires S.A. has prepared its financial statements following the valuation and disclosure criteria established by Argentine Central Bank regulations, which have been taken as the basis for calculating the equity method and preparing the consolidated financial statements of the Company. As mentioned in Note 1.16 to the consolidated financial statements, the above-mentioned valuation criteria regarding certain assets and liabilities, and the regulations on the financial reporting issued by the control body, differ from the Argentine professional accounting standards in force in Buenos Aires. |
4. | On February 18, 2014, we issued our audit report on the Companys financial statements and consolidated financial statements for the fiscal years ended December 31, 2013 and 2012 with an unqualified opinion regarding the Argentine Central Bank regulations and an except-for qualification due to departures from professional accounting standards similar to those indicated in item 3 above. |
5. | Based on the work done and on our examination of the financial statements of Grupo Financiero Galicia S.A. and its consolidated financial statements for the fiscal years ended December 31, 2013 and 2012 mentioned in item 4 of this report, we express the following: |
a) | the financial statements of Grupo Financiero Galicia S.A. as of June 30, 2014 and 2013 and its consolidated financial statements at those dates, detailed in item 1 above, were prepared in accordance with Argentine Central Bank regulations and, except as mentioned in item 3 above, with professional accounting standards applicable in Buenos Aires, give consideration to all significant facts and circumstances which are known to us and, in relation to said financial statements, we have no observations to make. |
b) | the comparative information included in the stand-alone and consolidated balance sheet and in the supplementary Notes and Schedules to the accompanying financial statements stems from financial statements of Grupo Financiero Galicia S.A. as of December 31, 2013. |
6. | As called for by the regulations in force, we report that: |
a) | the financial statements of Grupo Financiero Galicia S.A. and its consolidated financial statements have been transcribed to the Inventory and Balance Sheet book and, insofar as concerns our area of competence, are in compliance with the provisions of the Corporations Law, and pertinent resolutions of the National Securities Commission. |
b) | the financial statements of Grupo Financiero Galicia S.A. stem from accounting records kept, in all formal aspects, in compliance with legal regulations. |
c) | we have read the Additional Information to the Notes to the Financial Statements required by Section 68 of the Buenos Aires Stock Exchange regulations and Title IV, Chapter III, Article 12 of the amended text of the regulations of the National Securities Commission (text amended in 2013), the Supplementary and Explanatory Statement by the Board of Directors, required by the Rules concerning Accounting Documentation of the Córdoba Stock Exchange Regulations and the Informative Review, about which, insofar as concerns our area of competence, we have no significant observations to make. |
d) | as of June 30, 2014, Grupo Financiero Galicia S.A.s accrued debt with the Argentine Integrated Social Security System, which stems from the accounting records and settlements carried out by the Company, amounted to $ 177,375.36, which was not yet due at that date. |
e) | as required by Article 2 of General Resolution No. 595 issued by the National Securities Commission, we report that: |
e.1) | Grupo Financiero Galicia S.A.s corporate purpose is exclusively related to financial and investment activities. |
e.2) | the investment in Banco de Galicia y Buenos Aires S.A. represents 93.64% of Grupo Financiero Galicia S.A.s assets and it is the Companys main asset. |
e.3) | 95.13% of Grupo Financiero Galicia S.A.s income stems from the equity investment in the Bank mentioned in e.2). |
e.4) | Grupo Financiero Galicia S.A. holds a 100% equity percentage in the capital stock, thus having a controlling interest in the Bank mentioned in e.2). |
Buenos Aires, August 7, 2014.
PRICE WATERHOUSE & CO. S.R.L.
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