Grupo Financiero Galicia’s 2026 Outlook: Loan Growth, NPL Peak Timing, and ROE Guidance Clash With Prior Statements

Date of Call: Mar 5, 2026

Guidance:

• 2026 loan growth projected at 25%, with slower pace in first half and accelerating in second half.
• NPLs expected to peak in March 2026; cost of risk already peaked in Q4 2025 and charges decreased in Q1 2026.
• ROE guidance for 2026 maintained in low-double-digit range, between 10% and 11%.
• Deposit growth projected at 15% to 20% for 2026.
• Cost of risk projected to end 2026 at 8% for the bank.
• Efficiency ratio target below 40% for 2026, with administrative expenses down 10-11% year-over-year (excl. prior year one-offs).
• Proposing dividend payment of ARS 190 billion (ARS 40 billion subject to Central Bank approval).

Business Commentary:

Economic Indicators and Financial Performance:

• Argentina's economy grew by an average of 4.4% in 2025, with inflation decelerating to 31.5% year-on-year, the lowest in 8 years.
• Despite economic growth, monthly inflation accelerated to 2.9% in January 2026, and the year-on-year rate increased to 32.4%.
• The Central Bank expanded the monetary base by ARS 0.7 trillion in Q4 and by ARS 13.2 trillion over the year, resulting in a 44.5% year-on-year increase.

Banking Sector Challenges:

• Banco Galicia reported an ARS 104 billion loss in 2025, with a 105 billion loss in Q4, primarily due to a deterioration in asset quality and increased loan loss provisions.
• The bank's non-performing loans (NPLs) rose to 14.3% in Q4, up from 3.2% in the previous year, mainly affecting personal loans and credit card financing.
• The increase in interest rates and loss of purchasing power among customers were key factors contributing to the deterioration in asset quality.

Deposits and Lending Trends:

• Private sector peso-denominated deposits increased by 10.6% in Q4 and 40.1% over the last 12 months, while dollar-denominated deposits grew by 11.7% in Q4.
• Peso-denominated loans to the private sector rose by 10.4% quarterly and 73% year-over-year, while dollar-denominated loans decreased by 0.5% in Q4.
• The bank's focus on commercial lending, especially in sectors like agribusiness and oil and gas, reflects an attempt to mitigate retail loan challenges and capitalize on growth opportunities.

Profitability and Cost Management:

• Grupo Financiero Galicia reported a net income of ARS 196 billion for 2025, a 91% decrease from the previous year, with a return on average assets of 0.4% and return on average shareholders' equity of 2.5%.
• The decline in profitability was mainly due to a ARS 70 billion loss from Banco Galicia, partially offset by profits from Galicia Asset Management and Naranja X.
• Efforts to improve efficiency and cost management are ongoing, with a goal to reduce administrative expenses by 10% to 11% year-over-year in 2026.

Sentiment Analysis:

Overall Tone: Positive

• Management expects 'Argentina is entering in a phase of stability, more predictable policy framework and renewal potential for great growth.' They anticipate 'an improvement in profitability during 2026' and see 'positive trends for the future for the country.' Guidance for ROE and loan growth is maintained, with confidence in cost of risk peaking and then declining.

Q&A:

• Question from Brian Flores (Citi): Just a quick follow-up on the 2026 guidance. So basically, you're maintaining around 25% real year-over-year growth in deposits should be a bit lower. I think the last notion you provided was around 20%. So I just wanted to confirm if these ranges are still value.
  Response: Deposit growth guidance is between 15% and 20%, with no material changes.

• Question from Brian Flores (Citi): And then something that caught our attention here is that we saw a strong maybe revision of the growth strategy, right? Because you were growing very fast in the first 3 quarters and you slowed down significantly in the last quarter. Just wanted to check if you have changed your focus on growth, if we should see maybe Galicia losing a bit of market share in 2026 as this asset quality is digested? Or do you think you will defend and keep it steady during 2026?
  Response: Goal is to defend and try to increase market share, with lower growth in first half and higher growth in second half of 2026.

• Question from Brian Flores (Citi): If I may, just a very quick follow-up. So in terms of potential catalysts, do you think the recovery could come more from the macro filtering to the micro, or do you think regulatory -- this is more on the regulatory side than on the economic side?
  Response: Expect macro to start accelerating impact on micro; not betting on regulatory changes.

• Question from Daer Labarta (Goldman Sachs): My question, you mentioned already provisioning levels should begin to come down in 1Q, although this quarter was a bit higher than expected, and we're still seeing that deterioration in asset quality. I guess how quickly can it come down? And what does give you that comfort that you maintain the loan growth guidance, but that credit quality should improve sufficiently to be able to grow at a faster pace in the second half of the year?
  Response: Believe cycle is passing and macroeconomic growth will impact microeconomic activity, supporting loan growth and improving credit quality.

• Question from Daer Labarta (Goldman Sachs): Okay. No, that's helpful. And just on the cost of risk because it was a little bit elevated, you compared to the last quarter, and you said it should, I guess, beginning to improve already in 1Q. But how -- can you get back to the low-double-digits, high-single-digits maybe by the end of the year? Just sort of what kind of magnitude of improvement should we expect from here on the cost of risk?
  Response: Expect cost of risk to end 2026 at 8% (down from 12.5% in Q4 2025); next model update not expected to increase charges.

• Question from Pedro Offenhenden (Latin Securities): I wanted to ask on cost. Should we expect some restructuring or acquisition or integration costs throughout the year or the one-offs are largely behind that?
  Response: One-offs are largely behind; future efficiency improvements will be part of normal operations, nothing material.

• Question from Pedro Offenhenden (Latin Securities): And do you have some target on efficiency or administrative expenses growth for the year?
  Response: Expect administrative expenses down 10-11% year-over-year (excl. prior year one-offs); efficiency ratio target below 40%.

• Question from Yuri Fernandes (JPMorgan): No, very briefly on margins. If you can help us understand a little bit the trajectory because I guess the risk-adjusted message is clear, right? This was likely the peak and NPLs still could deteriorate a little bit in the first quarter, but the cost of risk is lower. But I'd like to understand the margins because if your cost of risk improves, maybe we could see better risk-adjusted NIMs this year. So maybe just asking, could we see more stable or not? Like what is the view given the mix shift towards commercial lending?
  Response: Bank margin expected around 16.4% for 2026, starting higher and ending lower during the year.

• Question from Yuri Fernandes (JPMorgan): And then my second question is regarding -- I think like there are 2 big debates in Argentina, right? One is the ROE recovery -- and the second one is growth, right? Like when growth will pick up, like could we see more than 20% real growth or not? How confident you are on those 2? Like if you were to pick just one for 2026, are you more comfortable that ROEs, they should recover to more normalized level? Or are you more comfortable with growth?
  Response: Confidence in achieving both ROE and growth guidance depends on economy evolving as expected; ROE can reach above 15% next year, with further improvement post-2028 when inflation accounting ends.

• Question from Yuri Fernandes (JPMorgan): If I may, just on the growth, just to touch on deposits. I think the guidance is 15% to 20%, right? Can you break down dollar and pesos on this? And I don't know like we have another tax kind of flexibilization, right? Like the dollar under the mattress kind of the date. Can this be helpful for deposits to grow this year? So just checking if funding could be another part of the equation for growth.
  Response: Peso deposit growth forecast around 20%; dollar deposits more sensitive to legislation, but effect expected to be smaller than prior tax amnesty; focus is on profitable peso funding/lending.

• Question from Mario Estrella (Itau Asset Management): Well, I guess you already answered with the evolution for the next quarters. I believe well, the next quarter is going to be relatively better than 2025, going from lower ROE to higher as we move towards the end of the year, right? And I understood that the drivers for that, of course, is going to be less pressure on the cost of risk side. But because, I mean, the full quarter results, I mean, in terms of NII, I believe they weren't that bad, I would say. So my question is, I mean, with the inflation trend that we've seen, the first quarter was more inflationary than expected. I mean, what are the downside risk that you see for your guidance if inflation keeps surprising in the upside right?
  Response: Downside risks include higher inflation affecting balance sheet and slower-than-expected improvement in cost of risk; also depends on economic growth and loan demand.

• Question from Mario Estrella (Itau Asset Management): I understood that the ROE evolution for this year will be something around high-single-digits. And then 2027 something around 15%, right? I mean, based on improvement in asset quality, right? Is that right?
  Response: ROE guidance: 10-11% in 2026, around 15% in 2027, stabilizing in 2028 without inflation accounting drag.

• Question from Bruno Kenji (UBS): It would be a follow-up regarding the recovery that you expected for results next -- this year. When we look to Naranja X and lower ROE levels that we saw in those fourth quarter results, should the recovery on the metrics such as NPL and cost of risk be on the same pace of the bank or it could have a little delay in terms of the recovery? And if that and also reflects on the ROEs, do you think that there might be a lower acceleration of loans considering the portfolio of Naranja X for the first half and then an opportunity to have a quicker recovery in second quarter if the economies have some space for personal loans and retail when we compare to the bank?
  Response: NPLs improving at Naranja X but slower than bank; growth scenario similar with higher growth in second half; more cautious in first half due to portfolio stabilization.

• Question from Santiago Petri (Franklin Templeton): Can you help us understand in which segments are you expecting to grow this year, this 20%, 25%? Is it commercial, consumer? And within commercial, which sectors do you see that you can lend to?
  Response: Mix shifting towards more commercial lending (targeting 60% by year-end); focusing on agribusiness, oil & gas, mining, automotive, and technology SMEs; avoiding sectors like retail commerce.

• Question from Santiago Petri (Franklin Templeton): A follow-up, if I may. There are some conversations or I don't know how to name it, about the possibility of banks expanding their U.S. dollar lending to non-U.S. dollar revenue-generating entities. Is this something that you see with, are you comfortable with this change in regulation?
  Response: Would evaluate cautiously on a case-by-case basis, not planning massive lending to non-dollar producers; focus would be on strong local or international companies in wholesale/commercial segments.

Contradiction Point 1

Loan Growth and NPL Peak Timing

Timing of loan growth acceleration and NPL peak differs between quarters.

Brian Flores (Citigroup Inc., Research Division) - Brian Flores (Citigroup Inc., Research Division)

2025Q4: The plan is to accelerate later in the year (2026)... - Gonzalo Covaro(CFO)

Has the company shifted its growth focus, potentially impacting Galicia's market share by 2026? - Daer Labarta (Goldman Sachs Group, Inc.)

2025Q3: NPLs are expected to peak around March 2026... A fast turnaround is seen in November, with December margins expected to return to Q2 2025 levels. - Gonzalo Covaro(CFO)

Contradiction Point 2

Cost of Risk Trajectory

Expected timing of cost of risk decline differs, impacting the recovery outlook.

Daer Labarta (Goldman Sachs Group, Inc., Research Division) - Daer Labarta (Goldman Sachs Group, Inc., Research Division)

2025Q4: The cost of risk is expected to end 2026 around 8%... The Q4 spike was partly due to annual model updates; future updates are not expected to increase charges. - Gonzalo Covaro(CFO)

How can the company return to low-double-digit or high-single-digit growth by the end of the year? - Ernesto María Gabilondo Márquez (BofA Securities)

2025Q3: Cost of risk is also expected to peak around March at 9-10%, then decline. - Gonzalo Covaro(CFO)

Contradiction Point 3

ROE Recovery Outlook

Specific ROE guidance for 2026 appears inconsistent between quarters.

Yuri Fernandes (JPMorgan Chase & Co, Research Division) - Yuri Fernandes (JPMorgan Chase & Co, Research Division)

2025Q4: ...the ROE guidance for 2026 is low-double-digits (10-11%). - Gonzalo Covaro(CFO)

Are you more comfortable expecting ROEs to recover to more normalized levels by 2026? - Brian Flores (Citigroup Inc.)

2025Q3: ROE is expected to be lower in Q1 2026, then improve to reach a 15% run rate by Q4 2026. - Gonzalo Covaro(CFO)

Contradiction Point 4

NPL Outlook and Stabilization Timeline

Inconsistent timeline for NPL stabilization and improvement.

Daer Labarta (Goldman Sachs Group, Inc.) - Daer Labarta (Goldman Sachs Group, Inc.)

2025Q4: The improvement is based on the expectation that the macroeconomic growth will start to impact microeconomic activity, leading to a rebound in sectors. - Gonzalo Covaro(CFO)

How quickly will provisioning levels decrease, and what factors support maintaining loan growth guidance while improving credit quality, along with potential risks? - Yuri Rocha Fernandes (JPMorgan Chase & Co)

2025Q2: NPLs are expected to stabilize (slight increase) by the end of Q3. ... Stabilization is expected by the end of Q3, with a slight increase in Q3 and a target NPL ratio around 5% by year-end. - Gonzalo Fernandez Covaro(CFO)

Contradiction Point 5

Loan Growth Guidance

Inconsistent loan growth targets between quarters.

Daer Labarta (Goldman Sachs Group, Inc.) - Daer Labarta (Goldman Sachs Group, Inc.)

2025Q4: The 25% loan growth for 2026 is a deceleration from the prior year's pace, reflecting the cycle. - Gonzalo Covaro(CFO)

How quickly can provisioning levels decline, what factors provide confidence in maintaining loan growth guidance while improving credit quality for faster growth in H2, and what risks or timeframes remain? - Brian Flores (Citigroup Inc.)

2025Q2: loan growth is now expected around 30-40% (down from 50%) - Gonzalo Fernandez Covaro(CFO)