Banco Galicia's Q2 profits soar on solid loan growth, lower public sector exposure

Wednesday, August 10, 2011

Argentina's Banco Galicia saw second quarter profits soar to 248mn pesos (US$59.6mn), up 240% over 2Q10, thanks to strong private sector loan growth, as well as lower exposure to government debt, according to its latest earnings statement.

The results were also helped by the decrease of its foreign currency debt, which was restructured in 2004, and the contribution from finance company CFA, which Galicia acquired from US insurer AIG (NYSE: AIG) in mid-2009. The CFA purchase was approved by central bank BCRA in June 2010.

Galicia's net loans to the private sector jumped 53.2% in the year through June, to 26.1bn pesos. Lending expansion was mainly led by the consumer loan segment, up 50.5% in the same comparison.

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The non-performing ratio for loans to the private sector decreased to 3.06% at end-June, from 4.57% at the same time in 2010, with the coverage ratio rising to 141% from 114% a year ago.

Banco Galicia is the country's largest locally owned private sector bank, and is the main asset of Argentine financial holding Grupo Financiero Galicia (Nasdaq: GGAL).

The bank's strong results helped the group boost its second quarter earnings more than fourfold on 2Q10, to 249mn pesos.

Contribution from the group's insurance units, operating under the Sudamericana Holding label, also helped drive earnings in 2Q11.

For financial services firm Raymond James (NYSE: RJF), Grupo Galicia's result were supported by "impressive loan growth and robust flow of fees, especially related to its profitable credit card division, while maintaining sound asset quality," but noted that its efficiency ratio slid slightly, as a result of higher non-interest expenses.

To read the bank's full earnings release, in English, go to this link

To read the bank's full earnings release, in Spanish, go to this link