Grupo Financiero Galicia (NASDAQ:GGAL) used its latest earnings call to review Argentina’s shifting macroeconomic backdrop, detail the drivers behind a sharp decline in 2025 profitability, and outline management’s expectations for a recovery in 2026 as credit costs ease and restructuring benefits flow through results.
Argentina macro: disinflation continued, but monthly inflation firmed late in 2025
In prepared remarks, Head of Investor Relations Pablo Firvida summarized recent macro data, noting that Argentina’s economy grew by an average of 4.4% during 2025. He said the primary surplus was 1.4% of GDP and the overall fiscal result was 0.2% of GDP.
On monetary conditions, Firvida said the central bank expanded the monetary base by ARS 0.7 trillion in the fourth quarter and by ARS 13.2 trillion over 2025, bringing the year-on-year increase to 44.5% at year-end. The exchange rate averaged ARS 1,448 per dollar in December 2025, reflecting 29.5% year-over-year depreciation. He added that starting Jan. 1, 2026, the floor and ceiling of the exchange-rate band began adjusting monthly in line with the latest available monthly inflation data.
2025 results: net income fell sharply as Banco Galicia posted a loss
Firvida said net income for 2025 totaled ARS 196 billion, down 91% from the prior year, translating to a 0.4% return on average assets (ROA) and a 2.5% return on average shareholders’ equity (ROE). Excluding integration expenses, he said the result would have been ARS 333 billion and ROE would have been 4.2%.
Management attributed 2025 results primarily to contributions from non-bank businesses and a loss at Banco Galicia. Firvida said the full-year outcome was mainly driven by profits of ARS 127 billion from Galicia Asset Management, ARS 59 billion from Naranja X, and ARS 40 billion from Galicia Seguros, partially offset by a ARS 70 billion loss from Banco Galicia.
For the fourth quarter, Firvida reported a net loss of ARS 84 billion, saying an improvement in financial margin was more than offset by asset quality deterioration. In the quarter, Banco Galicia recorded a ARS 104 billion loss and Naranja X recorded a ARS 49 billion loss, while Galicia Asset Management and Galicia Seguros posted profits of ARS 36 billion and ARS 27 billion, respectively. The quarterly loss implied an annualized ROA of -0.7% and ROE of -4.3%.
Banco Galicia: margin improved sequentially, but provisioning surged and NPLs rose
Firvida said Banco Galicia’s fiscal-year result was negatively affected by non-recurring merger-related expenses tied to the integration with HSBC’s business in Argentina; without those items, he said the bank would have reported a profit of ARS 60 billion.
He described several pressures on profitability during 2025, including changes in reserve requirement regulations and a significant increase in interest rates that lifted funding costs. He also said loan loss provisions rose significantly versus 2024, mainly due to higher delinquency in the retail portfolio. He cited key drivers of the deterioration in asset quality as a sharp increase in real interest rates, loss of customers’ purchasing power, and the disappearance of the “dilution effect” on installment loans as inflation declined.
Within the fourth quarter, Firvida said Banco Galicia posted a ARS 105 billion loss, 6% smaller than the third-quarter loss. Operating income rose to ARS 164 billion from ARS 6 billion in the prior quarter, driven by higher net operating income and an improvement in financial margin, though offset by higher loan loss provisions that “still showed an upward trend.”
- Net interest income: up 23% versus the third quarter, reflecting a 7% increase in interest income and a 9% decline in interest expense.
- Average interest-earning assets: ARS 25 trillion, up 3% sequentially, primarily due to a 9% increase in average dollar-denominated loans.
- Yield: up 130 basis points to 31.4% (39.7% on ARS portfolio and 8% on dollar portfolio).
- Interest-bearing liabilities: ARS 22 trillion, up 4% sequentially, mainly due to higher dollar deposits; cost decreased 220 basis points to 14.3%.
Asset quality was a central theme. Firvida said provisions for loan losses increased 42% from the third quarter and 220% from the fourth quarter of 2024, with deterioration concentrated in retail. Retail NPLs rose to 14.3% from 3.2% at the end of the prior year, particularly affecting personal loans and credit card financing. For the overall book, the ratio of non-performing loans to total financing ended the quarter at 6.9%, worsening 110 basis points from 5.8% in the third quarter. Coverage with allowances was 97.4%, down from 101.5% a quarter earlier.
On funding and balance sheet metrics, Firvida said the bank’s financing to the private sector ended the quarter at ARS 21 trillion, down 2% sequentially, while deposits rose 4% to ARS 26 trillion, driven mainly by a 6% increase in dollar-denominated deposits. He estimated the bank’s market share of private-sector loans at 14.3% (down 50 basis points sequentially) and deposit share at 16.2% (down 20 basis points). Liquid assets represented 93.2% of transactional deposits and 59.4% of total deposits, “similar levels” to the previous quarter.
Firvida also pointed to stronger capital ratios at year-end: the total regulatory capital ratio was 25.2% (up 310 basis points from the third quarter) and the Tier 1 ratio was 25.1% (up 330 basis points).
2026 outlook: easing credit costs, low double-digit ROE guidance, and dividends proposed
CFO Gonzalo Fernández Covaro said management believes Argentina is entering “a phase of stability,” with a more predictable policy framework and potential for growth, and that banks should play a central role in supporting investment and productive activity as normalization and structural reforms advance.
For 2026, Fernández Covaro said the company now expects inflation around 23% (higher than its first estimate) and GDP growth of 3.7%. He maintained a projection of 25% loan growth for the year, but with a slower pace in the first half and acceleration in the second half, which he said could pressure revenues.
On credit quality, Fernández Covaro reiterated expectations that bank NPLs will peak in March 2026. He also said cost of risk peaked in the fourth quarter of 2025 and that the bank began to see credit loss charges to the P&L decrease in the first quarter of 2026; he said Naranja X was showing the same trend but at a slower pace. In the Q&A, he said the bank’s cost of risk was 12.5% in the fourth quarter of 2025 and that management expects to end 2026 at 8% (for the 12 months of 2026).
Management also emphasized expense discipline. Fernández Covaro said one-off integration items were “largely behind” the company, and that while it would continue to seek the “right size” for the organization, it did not expect a material one-off impact like last year. He said that excluding last year’s one-offs, the company expects a year-over-year expense reduction of around 10% to 11% and efficiency “a bit below 40%” for 2026.
On profitability, Fernández Covaro said the company is maintaining ROE guidance for 2026 in the low double digits, around 10% to 11%, “going from low to high during the year.” He also proposed dividend payments of ARS 190 billion in pesos, with ARS 40 billion subject to central bank approval.
Business mix, market share, and sector focus
Responding to investor questions about a slowdown in lending growth late in 2025, Fernández Covaro said management’s goal is to defend—and try to increase—market share, though at a lower pace in the first half of 2026 before accelerating later. He said the fourth-quarter slowdown was mainly tied to consumer lending, while commercial lending opportunities remain, and he noted that wholesale portfolio NPLs were “okay.”
When asked where growth is expected, Fernández Covaro said the bank’s current mix is roughly 45% consumer and 55% companies, and that in the first half of 2026 the focus would tilt more to commercial lending, with potential for the mix to move toward 60/40 by year-end. He cited areas of focus in commercial lending including agribusiness, oil and gas (including the supply chain), mining-related supply chains, and parts of the automotive value chain, while noting that some retail commerce segments were not performing as well and the bank was not growing in those areas.
On margins, Fernández Covaro said net interest margins recovered in December, following the impact of an interest-rate spike during the election period. He guided to total margin for the bank around 16.4% for 2026 on average, starting higher (around 17% to 18%) and ending near 16% by year-end.
He also discussed risks to guidance, pointing to higher-than-expected inflation as a potential downside given its impact through inflation accounting and monetary correction losses, as well as the pace of improvement in credit costs and loan demand. At the same time, he said the cost side was more manageable following the restructuring completed after the HSBC acquisition.
About Grupo Financiero Galicia (NASDAQ:GGAL)
Grupo Financiero Galicia is a diversified financial services holding company headquartered in Buenos Aires, Argentina. As one of the country’s largest private-sector financial institutions, the company provides a comprehensive suite of banking, insurance and investment products to individual, small-to-medium enterprise (SME) and corporate clients. Its operations span retail and commercial banking, asset management, leasing, factoring and pension fund administration.
The core banking segment offers deposit and lending services, credit and debit cards, payment solutions and digital banking platforms.
