• Net Income for 2024: 1.6 trillion pesos, 121% higher than the previous year.
• Return on Average Assets: 7% for 2024.
• Return on Average Equity: 34% for 2024.
• Net Income for Q4 2024: 574 billion pesos, 203% higher year-over-year.
• Banco Galicia Net Income for Q4 2024: 527 billion pesos, 311% higher year-over-year.
• Net Interest Income Decrease: 56% compared to Q4 2023.
• Net Fee Income Increase: 10% from December 2023.
• Net Income from Financial Instruments: Increased 234% due to higher results from government securities.
• Provision for Loan Losses: Increased 80% due to growth in the financing portfolio.
• Personal Expenses Increase: 20% higher than Q4 2023.
• Deposits: 14.3 trillion pesos, 18% higher year-over-year.
• Non-Performing Loans Ratio: 1.85%, a 49 basis points improvement year-over-year.
• Total Regulatory Capital Ratio: 18.5%, decreased by 626 basis points from the previous year.

• Warning! GuruFocus has detected 3 Warning Signs with NVDA.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Grupo Financiero Galicia SA (NASDAQ:GGAL) reported a significant increase in net income for 2024, amounting to 1.6 trillion pesos, which is 121% higher than the previous year.
• The acquisition of HSBC operations in Argentina was successfully completed, consolidating GGAL's position as the largest private sector financial group in Argentina.
• The company's return on average assets and equity were strong, with a 7% return on average assets and a 34% return on average equity for 2024.
• Private sector deposits and loans showed substantial growth, with peso-denominated loans increasing by 228.8% year over year.
• Asset quality improved, with the ratio of non-performing loans to total financing decreasing to 1.85%, a 49 basis points improvement from the previous year.

Negative Points

• The operating result decreased by 83% from the year-ago quarter, primarily due to a 58% lower net operating income.
• Net interest income decreased by 56% compared to the fourth quarter of 2023, due to lower interest on government securities and loans to the private sector.
• The company's total regulatory capital ratio decreased by 626 basis points from the end of the same quarter in 2023.
• Inflation remains a challenge, with the National Consumer Price Index recording an 8% increase during the fourth quarter of 2024.
• The company anticipates a lower return on equity (ROE) of around 15% for 2025, down from the extraordinary 34% in 2024, due to the absence of extraordinary items and the focus on merging operations with HSBC.

Q & A Highlights

Q: What are the projections for ROE in 2025, and how will Grupo Financiero Galicia fund growth given the recent capital consumption? A: Pablo Firvida, Head of Investor Relations, stated that the ROE for 2025 is expected to be around 15% in real terms, down from 34% in 2024 due to extraordinary items like the HSBC acquisition. Growth in loans is expected to be around 50%, with deposits growing at 35%. The capital ratio is expected to be sufficient to fund growth without needing to raise additional capital until at least 2027.

Q: Will there be a change in dividend distribution in 2025 given the transition year and lower ROE? A: Pablo Firvida mentioned that dividends will be paid in May, subject to central bank approval. The plan is to distribute 88 billion pesos from subsidiaries and 400 billion pesos from the bank. The dividend amount in dollars will be similar to the previous year, despite the high results in 2024.

Q: How will the weight of securities and loans evolve in 2025, and what are the expectations for loan-to-asset and security-to-asset ratios? A: Pablo Firvida explained that the asset breakdown is shifting, with loans to the private sector now representing 42% of total assets, up from 30%, while government exposure has decreased to 22%. The trend is expected to continue, with loans potentially reaching 60% of total assets by the end of 2025.

Q: What caused the significant increase in provisions at Naranja X, and what should be expected going forward? A: The increase in provisions was due to a change in the expected loss model and charge-off methodology, which was adjusted to account for personal loans. This was a one-off adjustment, and provisions are expected to return to normal levels of around 9-10% in future quarters.

Q: What are the expectations for inflation and exchange rate movements in 2025? A: The chief economist forecasts a GDP growth of 5.5% with inflation in the range of 23-25%. The devaluation of the official exchange rate is expected to align with estimated inflation. The timing of lifting FX restrictions remains uncertain, which could impact these projections.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.