Bank of the Year 2018 -- Argentina: Banco Galicia
Home / 2018 / November/December 2018 / Bank of the Year 2018 -- Argentina: Banco Galicia Bank of the Year 2018 -- Argentina: Banco Galicia Bank of the Year 2018 -- Argentina: Banco Galicia November 5, 2018 Banco Galicia has remained profitable despite Argentinaâs economic turbulence and is on the lookout for opportunities in 2019
Banks in Argentina came into 2018 hoping for a buoyant economic rebound. âIt was an excellent year until May,â says Fabian Kon, chief executive of Banco Galicia. âThen the convulsion came.â
Battered by a currency run and double-digit inflation, Argentina reached an agreement with the International Monetary Fund in June on a $50 billion bailout package to help stem a run on the peso. In September, the IMF announced it would lend Argentina an extra $7.1 billion.
Before the financial turbulence, Galicia, Argentinaâs largest domestic bank by loans and deposits, had been capitalizing on Argentinaâs more optimistic economic outlook by reigniting its mortgage business and opening new branches. For 2017, Banco Galicia posted a profit of 8.329 billion pesos, up from 6.018 billion pesos in 2016.
Grupo Financiero Galicia, which controls Banco Galicia, also visited the capital markets. Proceeds from a $550 million September 2017 follow-on equity offering recapitalized the bank and its subsidiaries, and funded the purchase of local credit card company, Tarjetas Regionales, which operates Tarjeta Naranja. In April, Banco Galicia sold a dual-tranche 6.24 billion peso local bond.
Kon says that, despite Argentinaâs volatility, âprofitability and liquidity of the financial system have remained positive.â He believes the Argentine economy, now mired in recession, could see a recovery in next yearâs second quarter.
Regardless, Kon expects 2019 to be a dynamic year in Argentinaâs banking industry, where several new digital banks and mobile banking apps are expected to come online. Traditional banks, including Galicia, are also expected to roll out new digital offerings.
âItâs going to be an interesting year in terms of how the market develops between incumbent banks and newcomers,â he says. âWe believe that clients will respond to our digital offerings and ultimately choose to stay with the brand they have a long-term relationship with.â LF
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