##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 20-F
  o
    
    Registration Statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
 or
 þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the fiscal year ended December 31, 2007
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 or
 o
    
    Shell Company Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission File Number 0-30852
 
 GRUPO FINANCIERO GALICIA S.A.
  GALICIA FINANCIAL GROUP
 REPUBLIC OF ARGENTINA
 Grupo Financiero Galicia S.A.
Tte. Gral. Juan D. Perón 456
C1038 AAJ-Buenos Aires, Argentina
 Pablo Firvida, VP Investor Relations
Tel: 54 11 4 343 7528 / Fax: 54 11 4 331 9183, pfirvida@gfgsa.com
Perón 456, 2° Piso C1038AAJ Buenos Aires ARGENTINA
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
  Securities registered or to be registered pursuant to Section 12(g) of the Act:
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
   Class A Ordinary Shares, Ps. 1.00 par value
    
    
    281,221,650Class B Ordinary Shares, Ps. 1.00 par value
    
    
    960,185,367
 Yes
o No
þ
 o þ
 þ o
  o þ o
  U.S. GAAP o
    
    International Financial Reporting Standards
    
    Other þAs issued by the International Accounting Standards Board o
 o þ
 o þ




---



##### Table of Contents



TABLE OF CONTENTS
 PageItem 1. Identity of Directors, Senior Management and Advisers
    
    
    4Item 2. Offer Statistics and Expected Timetable
    
    
    4Item 3. Key Information
    
    
    4Selected Financial Data
    
    
    4Exchange Rate Information
    
    
    7Risk Factors
    
    
    8Item 4. Information on the Company
    
    
    17Overview
    
    
    17Organizational Structure
    
    
    17History
    
    
    18Business
    
    
    24Competition
    
    
    33Sales and Marketing
    
    
    35Property
    
    
    37Capital Investments and Divestitures
    
    
    38Selected Statistical Information
    
    
    39Government Regulation
    
    
    71Argentine Banking Regulation
    
    
    76Credit Cards Regulation
    
    
    86Concealment and Laundering of Assets of a Criminal Origin
    
    
    86Item 4A. Unresolved Staff Comments
    
    
    88Item 5. Operating and Financial Review and Prospects
    
    
    88Item 5A. Operating Results
    
    
    88Overview
    
    
    88The Argentine Economy, Financial System and Insurance Industry in the Three
Years Ended December 31, 2007
    
    
    90Inflation
    
    
    92Currency Composition of Our Balance Sheet
    
    
    93Results of Operations for the Fiscal Years Ended December 31, 2007, December 31, 2006 and December 31, 2005
    
    
    93U.S. GAAP and Argentine Banking GAAP Reconciliation
    
    
    107Results by Segments
    
    
    111Consolidated Assets
    
    
    115Exposure to the Argentine Public Sector
    
    
    117Securitization of Assets
    
    
    117Funding
    
    
    118Contractual Obligations
    
    
    122Off-Balance Sheet Arrangements
    
    
    124Critical Accounting Policies
    
    
    125U.S. GAAP  Critical Accounting Policies
    
    
    126Principal Trends
    
    
    129Item 5B. Liquidity and Capital Resources
    
    
    131Liquidity  Holding Company on an Individual Basis
    
    
    131Consolidated Cash Flows
    
    
    132Banco Galicias Liquidity Management
    
    
    135Capital
    
    
    138Capital Expenditures
    
    
    138Item 6. Directors, Senior Management and Employees
    
    
    138Our Board of Directors
    
    
    138Functions of Our Board of Directors
    
    
    140Our Supervisory Committee
    
    
    141Compensation of Our Directors
    
    
    142
  (i)




---



##### Table of Contents



TABLE OF CONTENTS
 PageManagement of Grupo Financiero Galicia
    
    
    142Board of Directors of Banco Galicia
    
    
    143Functions of the Board of Directors of Banco Galicia
    
    
    145Banco Galicias Executive Officers
    
    
    147Banco Galicias Supervisory Committee
    
    
    148Compensation of Banco Galicias Directors and Officers
    
    
    149Employees
    
    
    150Nasdaq Corporate Governance Standards
    
    
    151Share Ownership
    
    
    153Item 7. Major Shareholders and Related Party Transactions
    
    
    153Major Shareholders
    
    
    153Related Party Transactions
    
    
    154Item 8. Financial Information
    
    
    155Legal Proceedings
    
    
    155Dividend Policy and Dividends
    
    
    156Significant Changes
    
    
    158Item 9. The Offer and Listing
    
    
    158Shares and ADSs
    
    
    158Argentine Securities Market
    
    
    161Market Regulations
    
    
    162Item 10. Additional Information
    
    
    163Description of Our Bylaws
    
    
    163Exchange Controls
    
    
    169Taxation
    
    
    170Material Contracts
    
    
    175Documents on Display
    
    
    176Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    176General
    
    
    176Interest Rate Risk
    
    
    176Foreign Exchange Rate Risk
    
    
    179Currency Mismatches
    
    
    181Market Risk
    
    
    183Item 12. Description of Securities Other Than Equity Securities
    
    
    183Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    184Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
    
    
    184Item 15. Controls and Procedures
    
    
    184Item 16. [Reserved]
    
    
    185Item 16A. Audit Committee Financial Expert
    
    
    185Item 16B. Code of Ethics
    
    
    185Item 16C. Principal Accountants Fees and Services
    
    
    185Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    186Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
    
    
    186Item 17. Financial Statements
    
    
    187Item 18. Financial Statements
    
    
    187Item 19. Exhibits
    
    
    187SIGNATURE
    
    
    189Exhibit 4.5Exhibit 4.6Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
   (ii)




---



##### Table of Contents



PRESENTATION OF FINANCIAL INFORMATION
  
    
    Grupo Financiero Galicia S.A.;
    
    Banco de Galicia y Buenos Aires S.A., our largest subsidiary, its wholly-owned
subsidiary Banco Galicia Uruguay S.A., which we refer to as Galicia Uruguay, and its
subsidiaries and other subsidiaries and affiliated companies required to be consolidated
under Argentine Banking GAAP, which we refer to as Banco Galicia or the Bank, except
indication of the contrary;
    
    Tarjetas Regionales S.A., a wholly owned subsidiary of the Bank, and its operating subsidiaries;
    
    Sudamericana Holding S.A., and its subsidiaries;
    
    Galicia Warrants S.A.;
    
    Net Investment S.A. and its subsidiaries; and
    
    Galval Agente de Valores S.A.




---



##### Table of Contents



FORWARD LOOKING STATEMENTS
  
    
    changes in general political, legal, social or other conditions in Argentina;
    
    changes in capital markets in general that may affect policies or attitudes toward
lending to Argentina or Argentine companies, including expected or unexpected
turbulence or volatility in domestic or international financial markets;
    
    changes in regional, national and international business and economic conditions,
including inflation;
    
    changes in government regulation, including tax regulations and changes in or
failure to comply with banking or other regulations;
    
    increased competition in the banking, financial services, credit card services,
insurance, asset management and related industries;
    
    changes in interest rates which may, among other things, adversely affect margins;
    
    a loss of market share by any of our main businesses;
    
    a change in the credit cycle and increased borrowers defaults;
  -2-




---



##### Table of Contents




    
    our inability to sustain or improve our performance;
    
    our inability to obtain additional debt or equity financing on attractive conditions
or at all, which may limit our ability to fund existing operations and to finance new
activities;
    
    technological changes, changes in consumer spending and saving habits, successful
implementation of new technologies, and
    
    other factors discussed under Item 3. Key InformationRisk Factors in this annual
report.
    -3-




---



##### Table of Contents



PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 Selected Financial Data
     Fiscal Year Ended December 31,2007
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of USDollars, except asnoted)( 1)Unaudited
    
    
    (in millions of Pesos, except as noted)(1)Consolidated Income Statement in Accordance with
Argentine Banking GAAPFinancial Income
    
    
    634.1
    
    
    
    1,997.9
    
    
    
    2,229.8
    
    
    
    2,398.6
    
    
    
    1,391.6
    
    
    
    1,452.1Financial Expenses
    
    
    395.7
    
    
    
    1,246.7
    
    
    
    1,851.6
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,304.8Net Financial Income (2)
    
    
    238.4
    
    
    
    751.2
    
    
    
    378.2
    
    
    
    552.7
    
    
    
    224.2
    
    
    
    147.3Provision for Losses on Loans and Other Receivables
    
    
    81.1
    
    
    
    255.5
    
    
    
    110.9
    
    
    
    76.7
    
    
    
    190.2
    
    
    
    286.4Income / (Loss) before Taxes
    
    
    37.3
    
    
    
    117.5
    
    
    
    75.3
    
    
    
    126.5
    
    
    
    (66.1
    )
    
    
    (221.6
    )Income Tax
    
    
    (22.7
    )
    
    
    (71.5
    )
    
    
    (94.2
    )
    
    
    (19.3
    )
    
    
    (43.8
    )
    
    
    (0.6
    )Net Income / (Loss)
    
    
    14.6
    
    
    
    46.0
    
    
    
    (18.9
    )
    
    
    107.2
    
    
    
    (109.9
    )
    
    
    (222.2
    )Earnings / (Loss) per Share (in Pesos)
    
    
    0.012
    
    
    
    0.037
    
    
    
    (0.015
    )
    
    
    0.086
    
    
    
    (0.093
    )
    
    
    (0.203
    )Cash Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book Value per Share (in Pesos)
    
    
    0.423
    
    
    
    1.333
    
    
    
    1.296
    
    
    
    1.310
    
    
    
    1.224
    
    
    
    1.299Amounts in Accordance with U.S. GAAPNet Income / (Loss)
    
    
    188.2
    
    
    
    592.9
    
    
    
    3,524.9
    
    
    
    731.0
    
    
    
    (1.1
    )
    
    
    731.3Basic and Diluted Earnings / (Losses) per Share (in Pesos)
    
    
    0.152
    
    
    
    0.478
    
    
    
    2.841
    
    
    
    0.589
    
    
    
    (0.001
    )
    
    
    0.669Book Value / (Deficit) per Share (in Pesos)
    
    
    0.061
    
    
    
    0.192
    
    
    
    0.117
    
    
    
    (1.714
    )
    
    
    (2.574
    )
    
    
    4.077Financial Income
    
    
    772.2
    
    
    
    2,433.2
    
    
    
    5,456.4
    
    
    
    2,958.7
    
    
    
    1,448.7
    
    
    
    2,752.0Financial Expenses
    
    
    368.2
    
    
    
    1,160.1
    
    
    
    1,863.6
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,502.9Net Financial Income / (Loss)
    
    
    404.0
    
    
    
    1,273.1
    
    
    
    3,592.8
    
    
    
    1,112.8
    
    
    
    281.3
    
    
    
    1,249.1Provision for Losses on Loans and Other Receivables
    
    
    64.6
    
    
    
    203.4
    
    
    
    160.3
    
    
    
    113.5
    
    
    
    210.0
    
    
    
    274.6Income Tax
    
    
    (29.4
    )
    
    
    (92.5
    )
    
    
    (277.1
    )
    
    
    19.3
    
    
    
    35.4
    
    
    
    (38.4
    )
  -4-




---



##### Table of Contents



Fiscal Year Ended December 31,2007
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of USDollars, except asnoted)( 1)Unaudited
    
    
    (in millions of Pesos, except as noted)(1)Consolidated Balance Sheet in Accordance with Argentine
Banking GAAPCash and Due from Banks
    
    
    939.4
    
    
    
    2,960.0
    
    
    
    2,294.8
    
    
    
    1,041.2
    
    
    
    988.7
    
    
    
    826.2Government Securities, Net
    
    
    537.3
    
    
    
    1,693.0
    
    
    
    3,188.3
    
    
    
    5,967.4
    
    
    
    5,518.0
    
    
    
    6,407.1Loans, Net
    
    
    3,681.7
    
    
    
    11,601.0
    
    
    
    10,525.0
    
    
    
    10,557.6
    
    
    
    8,439.8
    
    
    
    7,507.1Total Assets
    
    
    7,244.9
    
    
    
    22,828.7
    
    
    
    23,615.4
    
    
    
    25,638.1
    
    
    
    23,652.2
    
    
    
    22,823.5Deposits
    
    
    4,178.2
    
    
    
    13,165.6
    
    
    
    10,779.4
    
    
    
    8,421.7
    
    
    
    6,756.9
    
    
    
    5,584.0Other Funds (3)
    
    
    2,541.6
    
    
    
    8,008.6
    
    
    
    11,227.5
    
    
    
    15,589.6
    
    
    
    15,375.8
    
    
    
    15,820.1Total Shareholders Equity
    
    
    525.1
    
    
    
    1,654.5
    
    
    
    1,608.5
    
    
    
    1,626.8
    
    
    
    1,519.5
    
    
    
    1,419.4Average Total Assets (4)
    
    
    6,770.0
    
    
    
    21,332.4
    
    
    
    24,614.5
    
    
    
    24,238.1
    
    
    
    22,725.9
    
    
    
    22,530.3Percentage of Period-end Balance Sheet Items
Denominated in Dollars:Loans, Net of Allowances
    
    
    15.13
    
    
    
    15.13
    
    
    
    16.66
    
    
    
    9.84
    
    
    
    10.42
    
    
    
    9.36Total Assets
    
    
    27.60
    
    
    
    27.60
    
    
    
    28.94
    
    
    
    26.55
    
    
    
    32.92
    
    
    
    36.39Deposits
    
    
    15.53
    
    
    
    15.53
    
    
    
    14.13
    
    
    
    15.55
    
    
    
    20.89
    
    
    
    29.67Total Liabilities
    
    
    32.84
    
    
    
    32.84
    
    
    
    30.41
    
    
    
    25.81
    
    
    
    29.56
    
    
    
    36.87Amounts in Accordance with U.S. GAAPTrading Securities
    
    
    151.1
    
    
    
    476.2
    
    
    
    208.2
    
    
    
    790.0
    
    
    
    564.7
    
    
    
    328.8Available-for-Sale Securities
    
    
    1,179.7
    
    
    
    3,717.3
    
    
    
    5,214.6
    
    
    
    5,350.3
    
    
    
    3,923.1
    
    
    
    3,727.9Total Assets
    
    
    7,752.8
    
    
    
    24,429.1
    
    
    
    24,107.0
    
    
    
    19,949.3
    
    
    
    17,007.3
    
    
    
    14,835.2Total Liabilities
    
    
    7,677.2
    
    
    
    24,191.0
    
    
    
    23,961.2
    
    
    
    22,077.6
    
    
    
    20,203.0
    
    
    
    19,288.5Shareholders Equity (Deficit)
    
    
    75.6
    
    
    
    238.1
    
    
    
    145.8
    
    
    
    (2,128.3
    )
    
    
    (3,195.7
    )
    
    
    (4,453.3
    )
  -5-




---



##### Table of Contents



Fiscal Year Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos, except as noted)(1)Selected Ratios
in Accordance with Argentine Banking GAAPProfitability and EfficiencyNet Yield on Interest Earning Assets (5)
    
    
    4.13
    %
    
    
    1.21
    %
    
    
    2.38
    %
    
    
    1.02
    %
    
    
    0.89
    %Financial Margin (6)
    
    
    4.12
    
    
    
    1.74
    
    
    
    2.53
    
    
    
    1.08
    
    
    
    0.71Return on Average Assets (7)
    
    
    0.37
    
    
    
    0.0004
    
    
    
    0.59
    
    
    
    (0.42
    )
    
    
    (0.95
    )Return on Average Shareholders Equity (8)
    
    
    2.86
    
    
    
    (1.15
    )
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (14.53
    )Net Income from Services as a Percentage of Operating Income (9)
    
    
    54.86
    
    
    
    63.99
    
    
    
    48.65
    
    
    
    66.06
    
    
    
    73.08Efficiency ratio (10)
    
    
    77.29
    
    
    
    92.80
    
    
    
    72.56
    
    
    
    94.46
    
    
    
    113.91CapitalShareholders Equity as a Percentage of Total Assets
    
    
    7.25
    %
    
    
    6.81
    %
    
    
    6.35
    %
    
    
    6.42
    %
    
    
    6.22
    %Total Liabilities as a Multiple of Shareholders Equity
    
    
    12.80
    x
    
    
    13.68
    x
    
    
    14.76
    x
    
    
    14.56
    x
    
    
    15.08
    xTotal Capital Ratio (11)
    
    
    15.54
    %
    
    
    15.03
    %
    
    
    20.78
    %
    
    
    25.11
    %
    
    
    0.00
    %LiquidityCash and Due from Banks as a Percentage of Total Deposits
    
    
    22.48
    %
    
    
    21.29
    %
    
    
    12.36
    %
    
    
    14.63
    %
    
    
    14.80
    %Loans, Net as a Percentage of Total Assets
    
    
    50.82
    
    
    
    44.57
    
    
    
    41.18
    
    
    
    35.68
    
    
    
    32.89Credit QualityPast Due Loans (12) as a Percentage of Total Loans
    
    
    2.77
    %
    
    
    2.38
    %
    
    
    2.34
    %
    
    
    4.97
    %
    
    
    11.70
    %Non-Accrual Loans (13) as a Percentage of Total Loans
    
    
    3.14
    
    
    
    2.58
    
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04Allowance for Loan Losses as a Percentage of Non-accrual
Loans(13)
    
    
    114.05
    
    
    
    117.16
    
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61Net Charge-Offs (14) as a Percentage of Average Loans
    
    
    0.65
    
    
    
    1.42
    
    
    
    1.49
    
    
    
    3.77
    
    
    
    1.98Ratios in Accordance with U.S. GAAPCapitalShareholders Equity (deficit) as a Percentage of Total Assets
    
    
    0.97
    %
    
    
    0.60
    %
    
    
    (10.67
    )%
    
    
    (18.79)
    %
    
    
    (30.02)
    %Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    101.61
    x
    
    
    164.33
    x
    
    
    (10.37
    )x
    
    
    (6.32
    )x
    
    
    (4.33
    )xLiquidityLoans, Net as a Percentage of Total Assets
    
    
    49.36
    %
    
    
    40.10
    %
    
    
    50.15
    %
    
    
    43.91
    %
    
    
    43.32
    %Credit QualityAllowance for Loan Losses as a Percentage of Non-Accrual Loans
    
    
    132.13
    
    
    
    168.58
    
    
    
    139.49
    
    
    
    84.75
    
    
    
    85.98Inflation and Exchange RateWholesale Inflation (15)
    
    
    14.56
    %
    
    
    7.14
    %
    
    
    10.67
    %
    
    
    7.87
    %
    
    
    1.95
    %Consumer Inflation (16)
    
    
    8.47
    
    
    
    9.84
    
    
    
    12.33
    
    
    
    6.10
    
    
    
    3.66Exchange Rate Variation (17) (%)
    
    
    2.66
    
    
    
    1.25
    
    
    
    1.94
    
    
    
    1.39
    
    
    
    (12.79
    )CER (18)
    
    
    8.50
    
    
    
    10.08
    
    
    
    11.75
    
    
    
    5.49
    
    
    
    3.67CVS (19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.32
    
    
    
    15.85
 (1)
    
    The exchange rate used to convert the December 31, 2007 amounts into US Dollars was Ps. 3.1510 per US$ 1.00. All amounts are stated in millions of Pesos, except inflation, percentages, ratios, multiples and per-share data.(2)
    
    Net financial income represents mainly income from interest on loans and other receivables resulting from financial brokerage plus net income from government and corporate debt securities, including gains and losses, less interest
on deposits and other liabilities from financial intermediation and monetary loss from financial brokerage. It also includes the CER adjustment.(3)
    
    Includes mainly liabilities with other banks and international entities. Until December 31, 2006, debt with the Argentine Central Bank was also included.  -6-




---



##### Table of Contents



(4)
    
    The average balances of assets and liabilities, including the related interest receivable and payable are calculated on a daily basis for Banco Galicia and for Galicia Uruguay, as well as for Tarjetas Regionales S.A consolidated
with its operating subsidiaries, and on a monthly basis for Grupo Financiero Galicia and our non-banking subsidiaries.(5)
    
    Net interest earned divided by interest-earning assets. For a description of net interest earned, see Item 4. Information on the CompanySelected Statistical InformationInterest-Earning AssetsNet Yield on Interest-Earning
Assets.(6)
    
    Financial margin represents net financial income divided by average interest-earning assets.(7)
    
    Net income excluding minority interest as a percentage of average total assets.(8)
    
    Net income as a percentage of average shareholders equity.(9)
    
    Operating income is defined as net financial income plus net income from services.(10)
    
    Administrative expenses as a percentage of operating income as defined above.(11)
    
    Compliance with the capital adequacy rules of the Argentine Central Bank was suspended during 2002 and 2003 (including December 31, 2003). See Item 4.Information on the CompanySelected Statistical InformationRegulatory Capital.(12)
    
    Past-due loans consist of amounts of entire loan principal and interest receivable for those loans for which either the principal or any interest payment is 91 days or more past due.(13)
    
    Non-Accrual loans are defined as those loans falling into the following categories under the Argentine Central Banks classification system: (a) consumer: defective fulfillment, difficulty in recovery, uncollectible or
uncollectible for technical reasons and (b) commercial: with problems, high risk of insolvency, uncollectible or uncollectible for technical reasons.(14)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.(15)
    
    As measured by the annual change in the end-of-period WPI or IPIM, as published by INDEC.(16)
    
    As measured by the annual change in the end-of-period Consumer Price Index (CPI) as published by INDEC.(17)
    
    Annual change in the end-of-period exchange rate expressed in Pesos per US Dollar.(18)
    
    The CER is the Coeficiente de Estabilización de Referencia, an adjustment coefficient based on changes in the Consumer Price Index, which became effective February 3, 2002. See Item 4. Information on the CompanyGovernment
RegulationMain Regulatory Changes since 2002.(19)
    
    The CVS is the Coeficiente de Variación Salarial, an adjustment coefficient based on the variation of salaries, which was effective between October 1, 2002 and March 31, 2004. See Item 4. Information on the CompanyGovernment
RegulationMain Regulatory Changes since 2002. The percentage disclosed for fiscal year 2004 corresponds to the variation between January 1, 2004 and March 31, 2004. 
 Exchange Rate Information
  Exchange Rate(1)High
    
    
    Low
    
    
    Average(2)(3)
    
    
    Period-End(in Pesos per US Dollar)2003
    
    
    3.3625
    
    
    
    2.7485
    
    
    
    2.9491
    (3)
    
    
    2.93302004
    
    
    3.0718
    
    
    
    2.8037
    
    
    
    2.9415
    (3)
    
    
    2.97382005
    
    
    3.0523
    
    
    
    2.8592
    
    
    
    2.9233
    (3)
    
    
    3.03152006
    
    
    3.1072
    
    
    
    3.0305
    
    
    
    3.0740
    (3)
    
    
    3.06952007
    
    
    3.1797
    
    
    
    3.0553
    
    
    
    3.1154
    (3)
    
    
    3.1510December 2007
    
    
    3.1510
    
    
    
    3.1318
    
    
    
    3.1397
    (2)
    
    
    3.1510January 2008
    
    
    3.1575
    
    
    
    3.1282
    
    
    
    3.1444
    (2)
    
    
    3.1557February 2008
    
    
    3.1695
    
    
    
    3.1505
    
    
    
    3.1583
    (2)
    
    
    3.1587March 2008
    
    
    3.1688
    
    
    
    3.1448
    
    
    
    3.1558
    (2)
    
    
    3.1653April 2008
    
    
    3.1845
    
    
    
    3.1520
    
    
    
    3.1665
    (2)
    
    
    3.1635May 2008
    
    
    3.1812
    
    
    
    3.0978
    
    
    
    3.1511
    (2)
    
    
    3.0978
 (1)
    
    Using closing reference exchange rates as published by the Argentine Central Bank.(2)
    
    Monthly average of daily closing quotations, unless otherwise noted.(3)
    
    Based on monthly averages.   -7-




---



##### Table of Contents



Risk Factors
 You should carefully consider the risks described below in addition to the other information
contained in this annual report. We also may face risks and uncertainties that are not presently
known to us or that we currently deem immaterial, which may impair our business. Substantially all
of our operations, property and customers are located in Argentina. Accordingly, our financial
condition and results of operations depend to a significant extent on macroeconomic and political
conditions prevailing in Argentina. In general, you take more risk when you invest in the
securities of issuers from emerging markets such as Argentina than when you invest in the
securities of issuers from the United States and certain other markets.
 Risk Factors Relating to Argentina
 The current economic growth and favorable fundamentals may not be sustainable, which could
adversely affect the economy, the financial system and us
  Inflation may rise and undermine the economy and our business
    -8-




---



##### Table of Contents



An ongoing dispute over agricultural export taxes could reduce the Argentine economys growth
rate, which would adversely affect our business
   A significant devaluation of the Peso may adversely affect the Argentine economy and us
  Argentinas economy and its real, financial and securities market remain vulnerable to
external shocks which could have an adverse effect on the countrys economic growth and on us
   -9-




---



##### Table of Contents



A decline in international prices for Argentinas main commodity exports could have an adverse
effect on Argentinas economic growth and on us
  Argentinas ability to obtain financing from international markets and direct-foreign
investment is limited, which may have negative effects on the Argentine economy and on us
   -10-




---



##### Table of Contents



The foreign exchange market is subject to controls that restrict our access to foreign
currency and our access to foreign funds and more restrictive measures could be implemented in the
future that would adversely affect our business operations
   Volatility of the regulatory environment in Argentina could continue to be high and future
Argentine governmental policies could adversely affect the Argentine economy as a whole as well as
financial institutions such as us
   -11-




---



##### Table of Contents



Risk Factors Relating to the Argentine Financial System
 The negative consequences of the 2001-2002 crisis on the profile and activities of the
financial system may not be overcome in the short term or at all
    The current low credit risk environment could deteriorate, which would have a negative impact
on financial institutions profitability as well as on ours
    -12-




---



##### Table of Contents



Judgments against financial institutions in connection with the pesification and restructuring
of deposits in 2002 may result in a deterioration of financial institutions deposit base and
liquidity, including ours
 amparo
   New limitations on creditors rights in Argentina and to the ability to foreclose on certain
guarantees and collateral may adversely impact financial institutions such as us
  Certain administrative proceedings being initiated by Argentine provincial tax authorities
against financial institutions could generate losses for such institutions, including us
   -13-




---



##### Table of Contents



Risk Factors Relating to us
 Since we are a holding company, our ability to pay cash dividends depends on the ability of
our subsidiaries to pay dividends to us
   Our ability to repay indebtedness at the holding company level may be impaired due to the lack
of liquidity at such level
   We may operate finance-related businesses that have little or no regulatory supervision
  We are subject to corporate disclosure and accounting standards that may limit the information
available to our shareholders
   -14-




---



##### Table of Contents



Our shareholders may be subject to liability for certain votes of their securities
  United States holders of our class B shares may not be able to exercise preemptive and
accretion rights
  The concentration of our assets in Argentine public-sector debt instruments is high, which
makes our future financial condition strongly dependent on the Governments credit quality and
ability and willingness to comply with its repayment obligations
  We carry a significant portion of our public-sector assets at values that do not reflect their
market value, which is substantially lower than their respective book value
 Préstamos Garantizados Nacionales
  -15-




---



##### Table of Contents



Our net position in CER-adjusted assets exposes us to increases in the real interest rate
  A breach of any of the covenants under the Banks debt agreements and the agreement entered
into by the Bank and us as part of the restructuring of the Banks foreign debt in 2004 could
result in the occurrence of an event of default under these agreements
  It may be difficult for us to fully overcome all of the residual negative effects of the
2001-2002 crisis
 amparo
  -16-




---



##### Table of Contents



Increased competition and consolidation in the banking industry may adversely affect our
operations
  
 Item 4. Information on the Company
 
 Overview
 sociedad anónima
   th
 
 Organizational Structure
  
    
    Galicia Uruguay, incorporated in Uruguay and currently not an operating financial
institution;
    
    Galval Agente de Valores S.A. or Galval, incorporated in Uruguay;
    
    Galicia Pension Fund Ltd. and Galicia (Cayman) Ltd. or Galicia Cayman, incorporated in
the Cayman Islands;
    
    Net Investment BV (in liquidation), incorporated in the Netherlands; and
    
    Tarjeta Naranja Dominicana S.A., incorporated in the Dominican Republic.
  -17-




---



##### Table of Contents



History
 Grupo Financiero Galicia
    -18-




---



##### Table of Contents



Banco Galicia
 Superintendencia de Entidades Financieras y Cambiarias
     -19-




---



##### Table of Contents



-20-




---



##### Table of Contents



Restructuring of the Banks New York Branch Debt
  Restructuring of the Banks Debt with the Argentine Central Bank
  Restructuring of the Foreign Debt of the Banks Head Office in Argentina and its Cayman Branch
    -21-




---



##### Table of Contents




    
    US$ 648.5 million of long-term Dollar-denominated debt instruments, of which US$
464.8 million were Dollar-denominated negotiable obligations due 2014 (referred to as
the Step Up Notes Due 2014 or the 2014 Notes) issued under an indenture.
    
    US$ 399.8 million of medium-term Dollar-denominated debt instruments, of which US$
352.8 million were Dollar-denominated negotiable obligations due 2010 (referred to as
the Floating Rate Notes Due 2010 or the 2010 Notes) issued under an indenture.
    
    US$ 230.0 million of subordinated Dollar-denominated debt instruments, of which US$
218.2 million were Dollar-denominated negotiable obligations due 2019 (referred to as
the Subordinated Notes Due 2019 or the 2019 Notes) issued under an indenture.
  Capitalization as a Result of the Restructuring of the Foreign Debt
 Banco Galicias 2007 Capital Increase
    -22-




---



##### Table of Contents



Banco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.
 Casa Bancaria
  Regional Credit Card Companies
       -23-




---



##### Table of Contents



Sudamericana
  Net Investment S.A.
 Inspección General de Justicia
 Galicia Warrants S.A.
  Galval
  
 Business
 Banking
   -24-




---



##### Table of Contents



Wholesale Banking
      -25-




---



##### Table of Contents



Middle-Market Banking Ps. 1 million,
 
    
    SMEs: Annual sales between Ps. 1 million and Ps. 150 million. Service of this sector is
also divided in subcategories. Under Ps. 1 million, the customer is served by the Retail
Division.
    
    Large companies: Annual sales above Ps. 150 million.
    
    Agribusinesses: All agribusinesses or individuals with activity in the agriculture and
livestock sectors, with annual revenues above Ps. 200,000 (below Ps. 200,000 corresponds to
Retail Banking).
     Corporate Banking
 Capital Markets and Investment Banking
  -26-




---



##### Table of Contents



International Trade
  Non-Financial Public Sector
 Corporate and Real Estate Business Development
 Retail Banking
    -27-




---



##### Table of Contents



$0 Gastos
   Private Banking
   -28-




---



##### Table of Contents



Branch Network
  Geographical Area
    
    Number of BranchesCity of Buenos Aires
    
    
    76Greater Buenos Aires
    
    
    59Rest of the Province of Buenos Aires
    
    
    31Santa Fe
    
    
    14Córdoba
    
    
    13Mendoza
    
    
    9Entre Ríos
    
    
    4Chubut and Río Negro
    
    
    3 eachCorrientes, La Pampa, Misiones, and Tierra del Fuego
    
    
    2 eachCatamarca, Chaco, Formosa, Jujuy, La Rioja, Neuquén,
Salta, Santa
Cruz, Santiago del Estero, San Juan, San Luis, and Tucumán
    
    
    1 eachTotal
    
    
    232
   Alternative Channels
  e-galicia.com
    -29-




---



##### Table of Contents



Customer Contact Center
 Red Galicia 24
 Galicia Móvil
 Retail Sales Unit
 Real Estate Center
 Treasury and Asset Management
   -30-




---



##### Table of Contents



Asset Management
 International
 Regional Credit Cards
      -31-




---



##### Table of Contents



Insurance
    Other Businesses
 Galicia Warrants.
 Net Investment.
 Galval
   -32-




---



##### Table of Contents



Competition
  Banking
     Argentine Banking System
    -33-




---



##### Table of Contents



Ley de Entidades Financieras,
   Regional Credit Cards
  Insurance
     -34-




---



##### Table of Contents



Sales and Marketing
  Branches
(number)
    
    Mar-08Bank Branches
    
    
    232Regional Credit-Card Cos. Branches
    
    
    141Business Centers and In-House Facilities
    
    
    13Private-Banking Centers
    
    
    12Electronic
Banking Terminals (number)ATMs
    
    
    586Self-Service Terminals
    
    
    628Electronic
Banking Transactions (number per month)ATMs + Self Service Terminals
    
    
    5,112,130Phone-Banking
    
    
    585,600e-banking
    
    
    9,282,930
      -35-




---



##### Table of Contents



-36-




---



##### Table of Contents



Property
  SquareMetersProperty
    
    
    Address
    
    (approx.)
    
    
    Main UsesGrupo Financiero Galicia- Owned
    
    -Tte. Gral. Juan D. Perón 456, 2nd floor, Buenos Aires, Argentina
    
    
    191
    
    
    Administrative activities-Maipú 241, Buenos Aires, Argentina(1)
    
    
    1,619
    
    
    Administrative activitiesBanco de Galicia y Buenos Aires S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 407, Buenos Aires, Argentina
    
    
    17,300
    
    
    Administrative activities-Tte. Gral. Juan D. Perón 430, Buenos Aires, Argentina
    
    
    42,000
    
    
    Administrative activities-Florida 361, Buenos Aires, Argentina
    
    
    7,340
    
    
    Administrative activities- Rented
    
    -San Martín 178/200, Buenos Aires, Argentina
    
    
    3,600
    
    
    Administrative activitiesBanco Galicia Uruguay S.A.- Owned
    
    -Luis Alberto Herrera 1248, 21st and 22nd floors,
Edificio World Trade Center, Montevideo, Uruguay
    
    
    880
    
    
    Administrative activities-Punta del Este, Uruguay
    
    
    
    
    
    Former Branch- Rented
    
    -Montevideo, Uruguay: 2 properties
    
    
    960
    
    
    Storage and administrative activitiesTarjeta Naranja S.A.- Owned
    
    -Sucre 152, 154 and 541, Córdoba, Argentina
    
    
    6,500
    
    
    Administrative activities-Ruta Nacional 36, km. 8, Córdoba, Argentina
    
    
    49,200
    
    
    Storage-San Jerónimo 2348 and 2350, Santa Fe, Argentina
    
    
    1,500
    
    
    Administrative activities- Rented
    
    -Sucre 145/151, La Rioja 359, 364 and 375, and Los Andes 197, Córdoba, Argentina
    
    
    4,450
    
    
    Administrative activities, printing centre and storageTarjetas Cuyanas S.A.- Rented
    
    -Belgrano 1415, Mendoza, Argentina
    
    
    1,160
    
    
    Administrative activities-Vicente Zapata 145, Mendoza, Argentina
    
    
    280
    
    
    Printing centre-Olascoaga 348, San José, Mendoza, Argentina
    
    
    580
    
    
    StorageTarjetas del Mar S.A.- Rented
    
    -Luro 3001, Mar del Plata, Buenos Aires, Argentina
    
    
    240
    
    
    Administrative Activities-Luro 2943, Mar del Plata, Buenos Aires, Argentina
    
    
    765
    
    
    Administrative ActivitiesGalicia Seguros S.A.- Owned
    
    -Maipú 241, Buenos Aires, Argentina
    
    
    1,643
    
    
    Administrative activitiesNet Investment S.A.- Rented
    
    -25 de Mayo 702, 3rd floor, Buenos Aires, Argentina
    
    
    290
    
    
    Administrative activitiesGalicia Warrants S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 456, 6th floor, Buenos Aires, Argentina
    
    
    118
    
    
    Administrative activities-Ruta Nacional 18, Km. 209, San Salvador, Entre Ríos, Argentina
    
    
    47,917
    
    
    Storage- Rented
    
    -Alsina 3450, San Miguel de Tucumán, Tucumán, Argentina
    
    
    12,800
    
    
    Storage-Lavalle 3272, San Miguel de Tucumán, Tucumán, Argentina
    
    
    3,200
    
    
    Storage-Alto Verde, Chicligasta, Tucumán, Argentina
    
    
    2,000
    
    
    Storage-Pasaje 1° de Mayo Esquina 25 de Mayo, Barrio el Corte Alderete, Tucumán,
Argentina
    
    
    2,000
    
    
    Storage-San Martín 891 PB, San Miguel de Tucumán, Tucumán, Argentina
    
    
    64
    
    
    Administrative activities
 (1)
    
    We lease seven units to the Bank, equivalent to 1,373 square meters, for Ps. 14,800 per month, and hold a 45 square meters unit vacant for
storage. Galicia Vida occupies the remaining unit.   -37-




---



##### Table of Contents




    
    Banco Galicia: 232 branches located in Argentina, 137 of which were owned
and 95 of which were rented by Banco Galicia, located in all of Argentinas 23
provinces.
 
    
    Tarjeta Naranja S.A.: 101 sales points located in 21 of the 23 Argentine
provinces, 100 of which were rented by the company.
 
    
    Tarjetas Cuyanas S.A.: 24 sales points located in the provinces of
Mendoza, San Juan, San Luis, Santiago del Estero, La Pampa, La Rioja, Catamarca,
Neuquén, Rio Negro, Salta, Jujuy and Tucumán. All of them were rented.
 
    
    Tarjetas del Mar S.A.: 7 sales points located in the Province of Buenos
Aires, all of which were rented.
 
 Capital Investments and Divestitures
  
    
    Ps. 80.5 million in fixed assets (real estate, machinery and equipment,
vehicles, furniture and fittings);
 
    
    Ps. 44.7 million in construction in progress; and
 
    
    Ps. 83.5 million in organizational and IT system development expenses.
  
    
    Ps. 41.7 million in fixed assets;
 
    
    Ps. 46.7 million in construction in progress; and
 
    
    Ps. 48.1 million in organizational and IT system development expenses.
  
    
    Ps. 30.5 million in fixed assets;
 
    
    Ps. 38.1 million in construction in progress; and
 
    
    Ps. 20.3 million in organizational and IT system development expenses.
       (in millions of Pesos)Construction of the New Corporate Tower (construction,
furniture, equipment, phones, etc.)
    
    Ps.
    31.9Fixed Assets
    
    
    114.7Organizational and IT System Development
    
    
    134.0Total
    
    Ps.
    280.6
  -38-




---



##### Table of Contents



Selected Statistical Information
    Average Balance Sheet and Income from Interest-Earning Assets and Expenses from Interest-Bearing
Liabilities
     Fiscal Year Ended December 31, 2007 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    1,209.1
    
    
    
    16.9
    
    
    
    1.40
    
    
    
    3,069.7
    
    
    
    129.4
    
    
    
    4.22
    
    
    
    4,278.8
    
    
    
    146.3
    
    
    
    3.42LoansPrivate Sector
    
    
    7,178.8
    
    
    
    1,163.5
    
    
    
    16.21
    
    
    
    1,665.0
    
    
    
    107.1
    
    
    
    6.43
    
    
    
    8,843.8
    
    
    
    1,270.6
    
    
    
    14.37Public Sector
    
    
    1,685.1
    
    
    
    221.2
    
    
    
    13.13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,685.1
    
    
    
    221.2
    
    
    
    13.13Total Loans
    
    
    8,863.9
    
    
    
    1,384.7
    
    
    
    15.62
    
    
    
    1,665.0
    
    
    
    107.1
    
    
    
    6.43
    
    
    
    10,528.9
    
    
    
    1,491.8
    
    
    
    14.17Other(1)
    
    
    2,378.1
    
    
    
    155.2
    
    
    
    6.53
    
    
    
    1,040.1
    
    
    
    29.8
    
    
    
    2.87
    
    
    
    3,418.2
    
    
    
    185.0
    
    
    
    5.41Total Interest-Earning Assets
    
    
    12,451.1
    
    
    
    1,556.8
    
    
    
    12.50
    
    
    
    5,774.8
    
    
    
    266.3
    
    
    
    4.61
    
    
    
    18,225.9
    
    
    
    1,823.1
    
    
    
    10.00Cash and Gold
    
    
    484.6
    
    
    
    
    
    
    
    
    
    
    
    201.6
    
    
    
    
    
    
    
    
    
    
    
    686.2
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    661.0
    
    
    
    
    
    
    
    
    
    
    
    65.2
    
    
    
    
    
    
    
    
    
    
    
    726.2
    
    
    
    
    
    
    
    Other Assets
    
    
    2,010.4
    
    
    
    
    
    
    
    
    
    
    
    126.8
    
    
    
    
    
    
    
    
    
    
    
    2,137.2
    
    
    
    
    
    
    
    Allowances
    
    
    (335.9
    )
    
    
    
    
    
    
    
    
    
    
    (107.2
    )
    
    
    
    
    
    
    
    
    
    
    (443.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    15,271.2
    
    
    
    
    
    
    
    
    
    
    
    6,061.2
    
    
    
    
    
    
    
    
    
    
    
    21,332.4
    
    
    
    
    
    
    
    
  -39-




---



##### Table of Contents



Fiscal Year Ended December 31, 2007 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)Liabilities and EquityDepositsCurrent Accounts
    
    
    531.0
    
    
    
    16.4
    
    
    
    3.09
    
    
    
    147.4
    
    
    
    
    
    
    
    
    
    
    
    678.4
    
    
    
    16.4
    
    
    
    2.42Saving Accounts
    
    
    1,647.2
    
    
    
    5.1
    
    
    
    0.31
    
    
    
    605.7
    
    
    
    
    
    
    
    
    
    
    
    2,252.9
    
    
    
    5.1
    
    
    
    0.23Time Deposits
    
    
    5,705.6
    
    
    
    547.0
    
    
    
    9.59
    
    
    
    900.6
    
    
    
    15.4
    
    
    
    1.71
    
    
    
    6,606.2
    
    
    
    562.4
    
    
    
    8.51Total Interest-Bearing Deposits
    
    
    7,883.8
    
    
    
    568.5
    
    
    
    7.21
    
    
    
    1,653.7
    
    
    
    15.4
    
    
    
    0.93
    
    
    
    9,537.5
    
    
    
    583.9
    
    
    
    6.12Argentine Central Bank
    
    
    261.3
    
    
    
    68.8
    
    
    
    26.33
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    261.5
    
    
    
    68.8
    
    
    
    26.31Other Financial Entities
    
    
    186.4
    
    
    
    27.2
    
    
    
    14.59
    
    
    
    352.8
    
    
    
    16.9
    
    
    
    4.79
    
    
    
    539.2
    
    
    
    44.1
    
    
    
    8.18Debt Securities
    
    
    530.0
    
    
    
    77.7
    
    
    
    14.66
    
    
    
    2,830.1
    
    
    
    213.3
    
    
    
    7.54
    
    
    
    3,360.1
    
    
    
    291.0
    
    
    
    8.66Other
    
    
    149.7
    
    
    
    16.5
    
    
    
    11.02
    
    
    
    1,010.8
    
    
    
    66.9
    
    
    
    6.62
    
    
    
    1,160.5
    
    
    
    83.4
    
    
    
    7.19Total Interest-Bearing
Liabilities
    
    
    9,011.2
    
    
    
    758.7
    
    
    
    8.42
    
    
    
    5,847.6
    
    
    
    312.5
    
    
    
    5.34
    
    
    
    14,858.8
    
    
    
    1,071.2
    
    
    
    7.21Demand Deposits
    
    
    2,287.6
    
    
    
    
    
    
    
    
    
    
    
    19.9
    
    
    
    
    
    
    
    
    
    
    
    2,307.5
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,872.7
    
    
    
    
    
    
    
    
    
    
    
    513.8
    
    
    
    
    
    
    
    
    
    
    
    2,386.5
    
    
    
    
    
    
    
    Minority Interests
    
    
    172.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    172.9
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,606.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,606.7
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    14,951.1
    
    
    
    
    
    
    
    
    
    
    
    6,381.3
    
    
    
    
    
    
    
    
    
    
    
    21,332.4
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    4.08
    
    
    
    
    
    
    
    
    
    
    
    (0.73
    )
    
    
    
    
    
    
    
    
    
    
    2.79Cost of
Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.09
    
    
    
    
    
    
    
    
    
    
    
    5.41
    
    
    
    
    
    
    
    
    
    
    
    5.88Net Yield on
Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    6.41
    
    
    
    
    
    
    
    
    
    
    
    (0.80
    )
    
    
    
    
    
    
    
    
    
    
    4.13
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Hedge Bond to be received, among others.  Fiscal Year Ended December 31, 2006 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    3,501.5
    
    
    
    252.5
    
    
    
    7.21
    
    
    
    1,174.3
    
    
    
    60.0
    
    
    
    5.11
    
    
    
    4,675.8
    
    
    
    312.5
    
    
    
    6.68LoansPrivate Sector
    
    
    5,148.2
    
    
    
    754.0
    
    
    
    14.65
    
    
    
    1,333.3
    
    
    
    75.1
    
    
    
    5.63
    
    
    
    6,481.5
    
    
    
    829.1
    
    
    
    12.79Public Sector
    
    
    4,369.5
    
    
    
    496.3
    
    
    
    11.36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,369.5
    
    
    
    496.3
    
    
    
    11.36Total Loans
    
    
    9,517.7
    
    
    
    1,250.3
    
    
    
    13.14
    
    
    
    1,333.3
    
    
    
    75.1
    
    
    
    5.63
    
    
    
    10,851.0
    
    
    
    1,325.4
    
    
    
    12.21Other(1)
    
    
    1,778.4
    
    
    
    125.5
    
    
    
    7.06
    
    
    
    4,447.4
    
    
    
    158.8
    
    
    
    3.57
    
    
    
    6,225.8
    
    
    
    284.3
    
    
    
    4.57Total Interest-Earning Assets
    
    
    14,797.6
    
    
    
    1,628.3
    
    
    
    11.00
    
    
    
    6,955.0
    
    
    
    293.9
    
    
    
    4.23
    
    
    
    21,752.6
    
    
    
    1,922.2
    
    
    
    8.84Cash and Gold
    
    
    432.7
    
    
    
    
    
    
    
    
    
    
    
    210.0
    
    
    
    
    
    
    
    
    
    
    
    642.7
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    561.1
    
    
    
    
    
    
    
    
    
    
    
    44.2
    
    
    
    
    
    
    
    
    
    
    
    605.3
    
    
    
    
    
    
    
    Other Assets
    
    
    1,970.2
    
    
    
    
    
    
    
    
    
    
    
    80.8
    
    
    
    
    
    
    
    
    
    
    
    2,051.0
    
    
    
    
    
    
    
    Allowances
    
    
    (348.8
    )
    
    
    
    
    
    
    
    
    
    
    (88.3
    )
    
    
    
    
    
    
    
    
    
    
    (437.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    17,412.8
    
    
    
    
    
    
    
    
    
    
    
    7,201.7
    
    
    
    
    
    
    
    
    
    
    
    24,614.5
    
    
    
    
    
    
    
    
  -40-




---



##### Table of Contents



Fiscal Year Ended December 31, 2006 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)Liabilities and EquityDepositsCurrent Accounts
    
    
    536.8
    
    
    
    21.0
    
    
    
    3.91
    
    
    
    122.0
    
    
    
    
    
    
    
    
    
    
    
    658.8
    
    
    
    21.0
    
    
    
    3.19Saving Accounts
    
    
    1,283.0
    
    
    
    4.4
    
    
    
    0.34
    
    
    
    506.3
    
    
    
    
    
    
    
    
    
    
    
    1,789.3
    
    
    
    4.4
    
    
    
    0.25Time Deposits
    
    
    4,556.3
    
    
    
    405.8
    
    
    
    8.91
    
    
    
    741.6
    
    
    
    9.6
    
    
    
    1.29
    
    
    
    5,297.9
    
    
    
    415.4
    
    
    
    7.84Total Interest-Bearing Deposits
    
    
    6,376.1
    
    
    
    431.2
    
    
    
    6.76
    
    
    
    1,369.9
    
    
    
    9.6
    
    
    
    0.70
    
    
    
    7,746.0
    
    
    
    440.8
    
    
    
    5.69Argentine Central Bank
    
    
    6,083.0
    
    
    
    769.5
    
    
    
    12.65
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    6,083.1
    
    
    
    769.5
    
    
    
    12.65Other Financial Entities
    
    
    265.9
    
    
    
    35.1
    
    
    
    13.20
    
    
    
    172.9
    
    
    
    11.3
    
    
    
    6.54
    
    
    
    438.8
    
    
    
    46.4
    
    
    
    10.57Debt Securities
    
    
    170.7
    
    
    
    24.4
    
    
    
    14.29
    
    
    
    3,261.7
    
    
    
    270.5
    
    
    
    8.29
    
    
    
    3,432.4
    
    
    
    294.9
    
    
    
    8.59Other
    
    
    108.8
    
    
    
    12.2
    
    
    
    11.21
    
    
    
    1,084.9
    
    
    
    96.2
    
    
    
    8.87
    
    
    
    1,193.7
    
    
    
    108.4
    
    
    
    9.08Total Interest-Bearing
Liabilities
    
    
    13,004.5
    
    
    
    1,272.4
    
    
    
    9.78
    
    
    
    5,889.5
    
    
    
    387.6
    
    
    
    6.58
    
    
    
    18,894.0
    
    
    
    1,660.0
    
    
    
    8.79Demand Deposits
    
    
    1,735.8
    
    
    
    
    
    
    
    
    
    
    
    20.6
    
    
    
    
    
    
    
    
    
    
    
    1,756.4
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,651.9
    
    
    
    
    
    
    
    
    
    
    
    518.8
    
    
    
    
    
    
    
    
    
    
    
    2,170.7
    
    
    
    
    
    
    
    Minority Interests
    
    
    144.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144.1
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,649.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,649.3
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    18,185.6
    
    
    
    
    
    
    
    
    
    
    
    6,428.9
    
    
    
    
    
    
    
    
    
    
    
    24,614.5
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    1.22
    
    
    
    
    
    
    
    
    
    
    
    (2.35
    )
    
    
    
    
    
    
    
    
    
    
    0.05Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    8.60
    
    
    
    
    
    
    
    
    
    
    
    5.57
    
    
    
    
    
    
    
    
    
    
    
    7.63Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    2.41
    
    
    
    
    
    
    
    
    
    
    
    (1.35
    )
    
    
    
    
    
    
    
    
    
    
    1.21
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Hedge Bond to be received, among others.  Fiscal Year Ended December 31, 2005 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)AssetsGovernment Securities
    
    
    4,945.8
    
    
    
    660.9
    
    
    
    13.36
    
    
    
    801.9
    
    
    
    16.4
    
    
    
    2.05
    
    
    
    5,747.7
    
    
    
    677.3
    
    
    
    11.78LoansPrivate Sector
    
    
    3,917.2
    
    
    
    610.3
    
    
    
    15.58
    
    
    
    989.9
    
    
    
    39.6
    
    
    
    4.00
    
    
    
    4,907.1
    
    
    
    649.9
    
    
    
    13.24Public Sector
    
    
    4,839.8
    
    
    
    714.9
    
    
    
    14.77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,839.8
    
    
    
    714.9
    
    
    
    14.77Total Loans
    
    
    8,757.0
    
    
    
    1,325.2
    
    
    
    15.13
    
    
    
    989.9
    
    
    
    39.6
    
    
    
    4.00
    
    
    
    9,746.9
    
    
    
    1,364.8
    
    
    
    14.00Other(1)
    
    
    1,584.4
    
    
    
    134.6
    
    
    
    8.50
    
    
    
    4,765.2
    
    
    
    138.7
    
    
    
    2.91
    
    
    
    6,349.6
    
    
    
    273.3
    
    
    
    4.30Total Interest-Earning Assets
    
    
    15,287.2
    
    
    
    2,120.7
    
    
    
    13.87
    
    
    
    6,557.0
    
    
    
    194.7
    
    
    
    2.97
    
    
    
    21,844.2
    
    
    
    2,315.4
    
    
    
    10.60Cash and Gold
    
    
    357.1
    
    
    
    
    
    
    
    
    
    
    
    184.2
    
    
    
    
    
    
    
    
    
    
    
    541.3
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    446.7
    
    
    
    
    
    
    
    
    
    
    
    43.5
    
    
    
    
    
    
    
    
    
    
    
    490.2
    
    
    
    
    
    
    
    Other Assets
    
    
    1,901.2
    
    
    
    
    
    
    
    
    
    
    
    89.3
    
    
    
    
    
    
    
    
    
    
    
    1,990.5
    
    
    
    
    
    
    
    Allowances
    
    
    (555.7
    )
    
    
    
    
    
    
    
    
    
    
    (72.4
    )
    
    
    
    
    
    
    
    
    
    
    (628.1
    )
    
    
    
    
    
    
    Total Assets
    
    
    17,436.5
    
    
    
    
    
    
    
    
    
    
    
    6,801.6
    
    
    
    
    
    
    
    
    
    
    
    24,238.1
    
    
    
    
    
    
    
    
  -41-




---



##### Table of Contents



Fiscal Year Ended December 31, 2005 (*)Pesos
    
    
    Dollars
    
    
    TotalAverage
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/
    
    
    Average
    
    
    Interest
    
    
    Yield/Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate
    
    
    Balance
    
    
    Accrued
    
    
    Rate(in millions of Pesos, except rates)Liabilities and EquityDepositsCurrent Accounts
    
    
    536.8
    
    
    
    15.3
    
    
    
    2.85
    
    
    
    78.2
    
    
    
    
    
    
    
    
    
    
    
    615.0
    
    
    
    15.3
    
    
    
    2.49Saving Accounts
    
    
    1,023.9
    
    
    
    4.7
    
    
    
    0.46
    
    
    
    364.1
    
    
    
    
    
    
    
    
    
    
    
    1,388.0
    
    
    
    4.7
    
    
    
    0.34Time Deposits
    
    
    3,351.3
    
    
    
    238.9
    
    
    
    7.13
    
    
    
    767.8
    
    
    
    7.9
    
    
    
    1.03
    
    
    
    4,119.1
    
    
    
    246.8
    
    
    
    5.99Total Interest-Bearing Deposits
    
    
    4,912.0
    
    
    
    258.9
    
    
    
    5.27
    
    
    
    1,210.1
    
    
    
    7.9
    
    
    
    0.65
    
    
    
    6,122.1
    
    
    
    266.8
    
    
    
    4.36Argentine Central Bank
    
    
    8,341.3
    
    
    
    1,177.2
    
    
    
    14.11
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    8,341.6
    
    
    
    1,177.2
    
    
    
    14.11Other Financial Entities
    
    
    206.6
    
    
    
    36.8
    
    
    
    17.81
    
    
    
    152.0
    
    
    
    9.8
    
    
    
    6.45
    
    
    
    358.6
    
    
    
    46.6
    
    
    
    12.99Debt Securities
    
    
    101.3
    
    
    
    9.7
    
    
    
    9.58
    
    
    
    3,427.3
    
    
    
    224.4
    
    
    
    6.55
    
    
    
    3,528.6
    
    
    
    234.1
    
    
    
    6.63Other
    
    
    41.2
    
    
    
    6.4
    
    
    
    15.53
    
    
    
    1,045.7
    
    
    
    65.0
    
    
    
    6.22
    
    
    
    1,086.9
    
    
    
    71.4
    
    
    
    6.57Total Interest-Bearing
Liabilities
    
    
    13,602.4
    
    
    
    1,489.0
    
    
    
    10.95
    
    
    
    5,835.4
    
    
    
    307.1
    
    
    
    5.26
    
    
    
    19,437.8
    
    
    
    1,796.1
    
    
    
    9.24Demand Deposits
    
    
    1,414.3
    
    
    
    
    
    
    
    
    
    
    
    20.8
    
    
    
    
    
    
    
    
    
    
    
    1,435.1
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,358.0
    
    
    
    
    
    
    
    
    
    
    
    310.0
    
    
    
    
    
    
    
    
    
    
    
    1,668.0
    
    
    
    
    
    
    
    Minority Interests
    
    
    127.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    127.9
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,569.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,569.3
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    
    18,071.9
    
    
    
    
    
    
    
    
    
    
    
    6,166.2
    
    
    
    
    
    
    
    
    
    
    
    24,238.1
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.92
    
    
    
    
    
    
    
    
    
    
    
    (2.29
    )
    
    
    
    
    
    
    
    
    
    
    1.36Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    9.74
    
    
    
    
    
    
    
    
    
    
    
    4.68
    
    
    
    
    
    
    
    
    
    
    
    8.22Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    4.13
    
    
    
    
    
    
    
    
    
    
    
    (1.71
    )
    
    
    
    
    
    
    
    
    
    
    2.38
 (*)
    
    Rates include the CER adjustment.(1)
    
    Includes the amounts corresponding to the Compensatory Bond and the Hedge Bond to be received, among others. Changes in Net Interest IncomeVolume and Rate Analysis
  Fiscal Year 2007/ Fiscal Year 2006,
    
    
    Fiscal Year 2006/ Fiscal Year 2005,Increase (Decrease) due to changes in
    
    
    Increase (Decrease) due to changes inVolume
    
    
    Rate
    
    
    Net Change
    
    
    Volume
    
    
    Rate
    
    
    Net Change(in millions of Pesos)Interest Earning AssetsGovernment SecuritiesPesos
    
    
    (105.6
    )
    
    
    (130.0
    )
    
    
    (235.6
    )
    
    
    (158.5
    )
    
    
    (249.9
    )
    
    
    (408.4
    )Dollars
    
    
    77.8
    
    
    
    (8.4
    )
    
    
    69.4
    
    
    
    10.3
    
    
    
    33.3
    
    
    
    43.6Total
    
    
    (27.8
    )
    
    
    (138.4
    )
    
    
    (166.2
    )
    
    
    (148.2
    )
    
    
    (216.6
    )
    
    
    (364.8
    )LoansPrivate SectorPesos
    
    
    322.3
    
    
    
    87.2
    
    
    
    409.5
    
    
    
    177.6
    
    
    
    (33.9
    )
    
    
    143.7Dollars
    
    
    20.4
    
    
    
    11.6
    
    
    
    32.0
    
    
    
    16.3
    
    
    
    19.2
    
    
    
    35.5Total
    
    
    342.7
    
    
    
    98.8
    
    
    
    441.5
    
    
    
    193.9
    
    
    
    (14.7
    )
    
    
    179.2Public SectorPesos
    
    
    (368.5
    )
    
    
    93.4
    
    
    
    (275.1
    )
    
    
    (64.7
    )
    
    
    (153.9
    )
    
    
    (218.6
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (368.5
    )
    
    
    93.4
    
    
    
    (275.1
    )
    
    
    (64.7
    )
    
    
    (153.9
    )
    
    
    (218.6
    )OtherPesos
    
    
    38.2
    
    
    
    (8.5
    )
    
    
    29.7
    
    
    
    23.7
    
    
    
    (32.8
    )
    
    
    (9.1
    )Dollars
    
    
    (102.6
    )
    
    
    (26.4
    )
    
    
    (129.0
    )
    
    
    (8.4
    )
    
    
    28.5
    
    
    
    20.1Total
    
    
    (64.4
    )
    
    
    (34.9
    )
    
    
    (99.3
    )
    
    
    15.3
    
    
    
    (4.3
    )
    
    
    11.0Total Interest-Earning AssetsPesos
    
    
    (113.6
    )
    
    
    42.1
    
    
    
    (71.5
    )
    
    
    (21.9
    )
    
    
    (470.5
    )
    
    
    (492.4
    )Dollars
    
    
    (4.4
    )
    
    
    (23.2
    )
    
    
    (27.6
    )
    
    
    18.2
    
    
    
    81.0
    
    
    
    99.2Total
    
    
    (118.0
    )
    
    
    18.9
    
    
    
    (99.1
    )
    
    
    (3.7
    )
    
    
    (389.5
    )
    
    
    (393.2
    )
  -42-




---



##### Table of Contents



Fiscal Year 2007/ Fiscal Year 2006,
    
    
    Fiscal Year 2006/ Fiscal Year 2005,Increase (Decrease) due to changes in
    
    
    Increase (Decrease) due to changes inVolume
    
    
    Rate
    
    
    Net Change
    
    
    Volume
    
    
    Rate
    
    
    Net Change(in millions of Pesos)Interest Bearing LiabilitiesDemand AccountPesos
    
    
    (0.2
    )
    
    
    (4.4
    )
    
    
    (4.6
    )
    
    
    
    
    
    
    5.7
    
    
    
    5.7Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (0.2
    )
    
    
    (4.4
    )
    
    
    (4.6
    )
    
    
    
    
    
    
    5.7
    
    
    
    5.7Saving AccountPesos
    
    
    1.1
    
    
    
    (0.4
    )
    
    
    0.7
    
    
    
    1.0
    
    
    
    (1.3
    )
    
    
    (0.3
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1.1
    
    
    
    (0.4
    )
    
    
    0.7
    
    
    
    1.0
    
    
    
    (1.3
    )
    
    
    (0.3
    )Time DepositsPesos
    
    
    108.4
    
    
    
    32.8
    
    
    
    141.2
    
    
    
    98.5
    
    
    
    68.4
    
    
    
    166.9Dollars
    
    
    2.3
    
    
    
    3.5
    
    
    
    5.8
    
    
    
    (0.3
    )
    
    
    2.0
    
    
    
    1.7Total
    
    
    110.7
    
    
    
    36.3
    
    
    
    147.0
    
    
    
    98.2
    
    
    
    70.4
    
    
    
    168.6With the Argentine Central BankPesos
    
    
    (1,110.3
    )
    
    
    409.6
    
    
    
    (700.7
    )
    
    
    (294.8
    )
    
    
    (112.9
    )
    
    
    (407.7
    )Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (1,110.3
    )
    
    
    409.6
    
    
    
    (700.7
    )
    
    
    (294.8
    )
    
    
    (112.9
    )
    
    
    (407.7
    )With Other Financial EntitiesPesos
    
    
    (12.2
    )
    
    
    4.3
    
    
    
    (7.9
    )
    
    
    9.1
    
    
    
    (10.8
    )
    
    
    (1.7
    )Dollars
    
    
    7.5
    
    
    
    (1.9
    )
    
    
    5.6
    
    
    
    1.4
    
    
    
    0.1
    
    
    
    1.5Total
    
    
    (4.7
    )
    
    
    2.4
    
    
    
    (2.3
    )
    
    
    10.5
    
    
    
    (10.7
    )
    
    
    (0.2
    )Negotiable ObligationsPesos
    
    
    52.7
    
    
    
    0.6
    
    
    
    53.3
    
    
    
    8.5
    
    
    
    6.2
    
    
    
    14.7Dollars
    
    
    (33.8
    )
    
    
    (23.4
    )
    
    
    (57.2
    )
    
    
    (10.2
    )
    
    
    56.3
    
    
    
    46.1Total
    
    
    18.9
    
    
    
    (22.8
    )
    
    
    (3.9
    )
    
    
    (1.7
    )
    
    
    62.5
    
    
    
    60.8Other liabilitiesPesos
    
    
    4.5
    
    
    
    (0.2
    )
    
    
    4.3
    
    
    
    7.0
    
    
    
    (1.2
    )
    
    
    5.8Dollars
    
    
    (6.2
    )
    
    
    (23.1
    )
    
    
    (29.3
    )
    
    
    2.5
    
    
    
    28.7
    
    
    
    31.2Total
    
    
    (1.7
    )
    
    
    (23.3
    )
    
    
    (25.0
    )
    
    
    9.5
    
    
    
    27.5
    
    
    
    37.0Total Interest Bearing LiabilitiesPesos
    
    
    (956.0
    )
    
    
    442.3
    
    
    
    (513.7
    )
    
    
    (170.7
    )
    
    
    (45.9
    )
    
    
    (216.6
    )Dollars
    
    
    (30.2
    )
    
    
    (44.9
    )
    
    
    (75.1
    )
    
    
    (6.6
    )
    
    
    87.1
    
    
    
    80.5Total
    
    
    (986.2
    )
    
    
    397.4
    
    
    
    (588.8
    )
    
    
    (177.3
    )
    
    
    41.2
    
    
    
    (136.1
    )
 Interest-Earning AssetsNet Yield on Interest-Earning Assets
  Fiscal Year Ended December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos, except percentages)Total Average Interest-Earning AssetsPesos
    
    
    12,451.1
    
    
    
    14,797.6
    
    
    
    15,287.2Dollars
    
    
    5,774.8
    
    
    
    6,955.0
    
    
    
    6,557.0Total
    
    
    18,225.9
    
    
    
    21,752.6
    
    
    
    21,844.2Net Interest Earned(1)Pesos
    
    
    798.1
    
    
    
    355.9
    
    
    
    631.7Dollars
    
    
    (46.2
    )
    
    
    (93.7
    )
    
    
    (112.4
    )Total
    
    
    751.9
    
    
    
    262.2
    
    
    
    519.3Net Yield on Interest-Earning Assets(2)(%)Pesos
    
    
    6.41
    
    
    
    2.41
    
    
    
    4.13Dollars
    
    
    (0.80
    )
    
    
    (1.35
    )
    
    
    (1.71
    )Weighted-Average Yield
    
    
    4.13
    
    
    
    1.21
    
    
    
    2.38Interest Spread, Nominal Basis(3)(%)Pesos
    
    
    4.08
    
    
    
    1.22
    
    
    
    2.92Dollars
    
    
    (0.73
    )
    
    
    (2.35
    )
    
    
    (2.29
    )Weighted-Average Yield
    
    
    2.79
    
    
    
    0.05
    
    
    
    1.36Credit Related Fees Included in Net Interest EarnedPesos
    
    
    43.5
    
    
    
    26.4
    
    
    
    26.4Dollars
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    43.5
    
    
    
    26.4
    
    
    
    26.4
  -43-




---



##### Table of Contents



(1)
    
    Net interest earned corresponds to the net financial income (Financial Income minus Financial Expenses, as set
forth in the Income Statement), plus (i) financial fees included in Income from Services  In Relation to Lending
Transactions in the Income Statement,(ii) contributions to the Deposits Insurance Fund included in the item with the same
denomination that is part of the Financial Expenses caption in the Income Statement, and (iii) contributions and taxes on
financial income included in the Income Statement under
Financial Expenses  Others; minus (i) net income from corporate
securities, included under Financial Income/Expenses  Interest Income and Gains/Losses from Holdings of Government and
Corporate Securities, in the Income Statement,(ii) differences in quotation of gold and foreign currency included in the
item with the same denomination that is part of the Financial Expenses/Income caption in the Income Statement, and (iii)
the premiums and adjustments on forward transactions in foreign currency, included in the item Financial Income-Others in
the Income Statement. Net interest earned also includes income from government securities used as security margins in repo
transactions. This income/loss is included in Miscellaneous Income/Loss  Others in the Income Statement. Net income from
government securities includes both interest and gains/losses due to the variation of market quotations.(2)
    
    Net interest earned, divided by average interest-earning assets.(3)
    
    Interest spread, nominal basis is the difference between the average nominal interest rate on interest-earning assets
and the average nominal interest rate on interest-bearing deposits. Government and Corporate Securities
  Fiscal Year Ended December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Government SecuritiesPesosInvestment
    
    
    17.1
    
    
    
    
    
    
    
    -Issued by Argentine Central Bank  Lebac and Nobac
    
    
    17.1
    (1)
    
    
    
    
    
    
    Trading
    
    
    38.9
    
    
    
    0.1
    
    
    
    14.6Bonar
    
    
    36.7
    
    
    
    
    
    
    
    12.0Bogar Bonds
    
    
    2.1
    (1)
    
    
    
    
    
    
    Others
    
    
    0.1
    
    
    
    0.1
    
    
    
    2.6Issued by Argentine Central Bank
    
    
    331.6
    
    
    
    119.5
    
    
    
    704.5Lebac Unquoted
    
    
    11.0
    
    
    
    
    
    
    
    5.4Lebac Quoted
    
    
    103.3
    
    
    
    17.7
    
    
    
    388.4Lebac in Connection with Reverse Repo Transactions
    
    
    
    
    
    
    
    
    
    
    293.4Nobac Unquoted
    
    
    8.3
    
    
    
    101.8
    
    
    
    Nobac Quoted
    
    
    209.0
    
    
    
    
    
    
    
    17.3Without Quotation
    
    
    1.9
    
    
    
    433.5
    
    
    
    4,591.1Bogar Bonds
    
    
    
    
    
    
    428.6
    (2)
    
    
    3,823.3Discount Bonds in Pesos
    
    
    1.9
    
    
    
    4.9
    
    
    
    733.3Fiscal Credit Certificate
    
    
    
    
    
    
    
    
    
    
    34.5Total Government Securities in Pesos
    
    
    389.5
    
    
    
    553.1
    
    
    
    5,310.2DollarsInvestment
    
    
    1,303.4
    
    
    
    2,608.8
    
    
    
    650.9Boden 2012 Bonds
    
    
    1,303.4
    
    
    
    2,608.8
    
    
    
    650.9Trading
    
    
    0.1
    
    
    
    26.4
    
    
    
    6.3Boden 2012 Bonds
    
    
    0.1
    
    
    
    26.3
    
    
    
    6.3Others
    
    
    
    
    
    
    0.1
    
    
    
    Total Government Securities in Dollars
    
    
    1,303.5
    
    
    
    2,635.2
    
    
    
    657.2Total Government Securities
    
    
    1,693.0
    
    
    
    3,188.3
    
    
    
    5,967.4Corporate Securities
    
    
    1.0
    
    
    
    0.3
    
    
    
    4.4Corporate Equity Securities (Quoted) in Pesos
    
    
    1.0
    (3)
    
    
    
    
    
    
    3.9Corporate Equity Securities (Quoted) in Dollars
    
    
    
    
    
    
    0.3
    
    
    
    0.5Total Government and Corporate Securities
    
    
    1,694.0
    
    
    
    3,188.6
    
    
    
    5,971.8
 (1)
    
    Corresponds to Sudamericana.(2)
    
    Includes holdings of
Bogar Bonds from Grupo Galicia on an individual basis for Ps. 1.7
million.(3)
    
    Corresponds to Tarjetas Regionales S.A. consolidated.  -44-




---



##### Table of Contents



Government Securities  Net Position
   As of December 31, 2007Spot
    
    
    SpotForward
    
    
    Forward
    
    
    purchases
    
    
    sales
    
    
    NetIn millions of Pesos
    
    Holdings
    
    
    Purchases
    
    
    Sales
    
    
    to be settled
    
    
    to be settled
    
    
    PositionGovernment SecuritiesHeld for Investment PurposesPesos
    
    
    17.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17.1Dollar
    
    
    1,303.4
    
    
    
    1,440.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,744.3Other
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3Held for Trading PurposesPesos
    
    
    38.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38.9Dollar
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    Securities without QuotationPesos
    
    
    1.9
    
    
    
    695.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697.8Instruments issued by the Argentine Central BankPesos
    
    
    331.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12.2
    
    
    
    319.4Other
    
    
    
    
    
    
    59.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59.0Total Government Securities
    
    
    1,693.0
    
    
    
    2,197.1
    
    
    
    
    
    
    
    0.1
    
    
    
    12.4
    
    
    
    3,877.8Corporate Equity Securities (Quoted)
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0Total Government and Corporate Securities
    
    
    1,694.0
    
    
    
    2,197.1
    
    
    
    
    
    
    
    0.1
    
    
    
    12.4
    
    
    
    3,878.8
  -45-




---



##### Table of Contents




    
    The market value of our position in Boden 2012 Bonds was Ps 2,437.8 million.
This total comprises both our holdings recorded as government securities held for
investment and our forward purchases in connection with repurchase agreements.
    
    The market value of our position in Discount Bonds in Pesos and GDP-Linked
Negotiable Securities was Ps. 379.7 million.
    
    Our holdings of Lebac and Nobac and Bonar Bonds were marked-to-market.
 Valuation
    
    -46-




---



##### Table of Contents



January
    
    
    February
    
    
    March
    
    
    April
    
    
    May
    
    
    June
    
    
    July
    
    
    August
    
    
    September
    
    
    October
    
    
    November
    
    
    December2003
    
    
    
    
    
    
    
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.00
    
    
    
    3.002004
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.25
    
    
    
    3.29
    
    
    
    3.33
    
    
    
    3.37
    
    
    
    3.41
    
    
    
    3.46
    
    
    
    3.502005
    
    
    3.54
    
    
    
    3.58
    
    
    
    3.62
    
    
    
    3.66
    
    
    
    3.71
    
    
    
    3.75
    
    
    
    3.79
    
    
    
    3.83
    
    
    
    3.87
    
    
    
    3.91
    
    
    
    3.96
    
    
    
    4.002006
    
    
    4.08
    
    
    
    4.15
    
    
    
    4.23
    
    
    
    4.31
    
    
    
    4.39
    
    
    
    4.47
    
    
    
    4.56
    
    
    
    4.64
    
    
    
    4.73
    
    
    
    4.82
    
    
    
    4.91
    
    
    
    5.002007
    
    5% + 0.04xTMC
    
    5% + 0.08xTMC
    
    5% + 0.13xTMC
    
    5% + 0.17xTMC
    
    5% + 0.21xTMC
    
    5% + 0.25xTMC
    
    5% + 0.29xTMC
    
    5% + 0.33xTMC
    
    5% + 0.38xTMC
    
    5% + 0.42xTMC
    
    5% + 0.46xTMC
    
    5% + 0.50xTMC2008
    
    5% + 0.58xTMC
    
    5% + 0.66xTMC
    
    5% + 0.75xTMC
    
    5% + 0.83xTMC
    
    5% + 0.92xTMC
    
    TM (as from June 2008)
 Where:TM =
    
    average market rate informed by the Argentine Central Bank based on the internal rates
of return of government securities with similar modified duration.TMC =
    
    average market rate corrected = TM  5%.      -47-




---



##### Table of Contents



Remaining Maturity and Weighted-Average Yield
  Maturity YieldMaturing after 1
    
    
    Maturing after 5Maturing
    
    
    year but within
    
    
    years but within
    
    
    MaturingTotal
    
    
    within 1 year
    
    
    5 years
    
    
    10 years
    
    
    after 10 yearsBook
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    BookValue
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)(in millions of Pesos, except percentages)Government SecuritiesHeld for Trading and Brokerage
Purposes (carried at market value)Pesos
    
    
    38.9
    
    
    
    0.1
    
    
    
    9.4
    %
    
    
    37.6
    
    
    
    10.5
    %
    
    
    1.2
    
    
    
    9.4
    %
    
    
    
    
    
    
    Dollars
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    9.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Held for Investment (carried at amortized cost)Pesos
    
    
    17.1
    
    
    
    17.1
    
    
    
    11.4
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dollars
    
    
    1,303.4
    
    
    
    260.7
    
    
    
    9.3
    %
    
    
    1,042.7
    
    
    
    9.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Instruments Issued by the Argentine Central
BankPesos
    
    
    331.6
    
    
    
    331.6
    
    
    
    13.8
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Securities Without QuotationPesos
    
    
    1.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    8.4
    %Total Government Securities
    
    
    1,693.0
    
    
    
    609.5
    
    
    
    11.8
    %
    
    
    1,080.4
    
    
    
    9.3
    %
    
    
    1.2
    
    
    
    9.4
    %
    
    
    1.9
    
    
    
    Corporate Debt Securities
    
    
    1.0
    
    
    
    1.0
    
    
    
    9.0
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Portfolio
    
    
    1,694.0
    
    
    
    610.5
    
    
    
    11.8
    %
    
    
    1,080.4
    
    
    
    9.3
    %
    
    
    1.2
    
    
    
    9.4
    %
    
    
    1.9
    
    
    
    
 (1)
    
    Effective yield based on December 31, 2007 quoted market values. Loan Portfolio
  As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos)Principal and InterestNon-Financial Public Sector
    
    
    1,210.5
    
    
    
    2,690.6
    
    
    
    5,187.5
    
    
    
    4,513.7
    
    
    
    4,277.7Local Financial Sector
    
    
    110.0
    
    
    
    311.6
    
    
    
    128.2
    
    
    
    150.5
    
    
    
    194.7Non-Financial Private Sector and Residents Abroad (1)Advances
    
    
    792.1
    
    
    
    346.3
    
    
    
    223.6
    
    
    
    199.8
    
    
    
    219.1Promissory Notes
    
    
    2,911.2
    
    
    
    2,143.7
    
    
    
    1,836.9
    
    
    
    1,099.2
    
    
    
    1,280.1Mortgage Loans
    
    
    945.1
    
    
    
    688.0
    
    
    
    503.4
    
    
    
    623.9
    
    
    
    719.6Pledge Loans
    
    
    94.5
    
    
    
    67.1
    
    
    
    121.1
    
    
    
    92.9
    
    
    
    54.6Personal Loans
    
    
    977.9
    
    
    
    563.2
    
    
    
    258.0
    
    
    
    58.2
    
    
    
    55.2Credit Card Loans
    
    
    3,630.1
    
    
    
    2,458.6
    
    
    
    1,732.1
    
    
    
    1,105.4
    
    
    
    818.8
  -48-




---



##### Table of Contents



As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos)Placements in Banks Abroad
    
    
    158.0
    
    
    
    608.0
    
    
    
    212.9
    
    
    
    379.2
    
    
    
    172.4Other Loans
    
    
    1,010.8
    
    
    
    794.8
    
    
    
    599.8
    
    
    
    393.9
    
    
    
    325.7Accrued Interest, Adjustment and Quotation Differences
Receivable
    
    
    177.0
    
    
    
    155.0
    
    
    
    146.8
    
    
    
    414.4
    
    
    
    523.1Documented Interest
    
    
    (42.5
    )
    
    
    (23.3
    )
    
    
    (12.3
    )
    
    
    (3.7
    )
    
    
    (1.9
    )Total Non-Financial Private-Sector and Residents Abroad
    
    
    10,654.2
    
    
    
    7,801.4
    
    
    
    5,622.3
    
    
    
    4,363.2
    
    
    
    4,166.7Total Gross Loans
    
    
    11,974.7
    
    
    
    10,803.6
    
    
    
    10,938.0
    
    
    
    9,027.4
    
    
    
    8,639.1Allowance for Loan Losses
    
    
    (428.6
    )
    
    
    (327.0
    )
    
    
    (427.9
    )
    
    
    (632.6
    )
    
    
    (1,177.3
    )Total Loans
    
    
    11,546.1
    
    
    
    10,476.6
    
    
    
    10,510.1
    
    
    
    8,394.8
    
    
    
    7,461.8Loans with GuaranteesWith Preferred Guarantees (2) (3)
    
    
    1,289.8
    
    
    
    1,076.2
    
    
    
    838.5
    
    
    
    1,190.0
    
    
    
    1,228.8Other Guarantees (3)
    
    
    3,180.2
    
    
    
    4,103.6
    
    
    
    6,317.3
    
    
    
    5,235.8
    
    
    
    5,163.0Total Loans with Guarantees
    
    
    4,470.0
    
    
    
    5,179.8
    
    
    
    7,155.8
    
    
    
    6,425.8
    
    
    
    6,391.8
 (1)
    
    Categories of above loans include:
    
    Advances: short-term obligations drawn on by customers through overdrafts.
    
    Promissory Notes: endorsed promissory notes, negotiable obligations and other promises to pay signed by one borrower or
group of borrowers and factored loans.
    
    Mortgage Loans: loans granted to purchase or improve real estate and collateralized by such real estate and commercial loans
secured by a real estate mortgage.
    
    Pledge Loans: loans secured by collateral (such as cars or machinery) other than real estate, where such collateral is an
integral part of the loan documents.
    
    Personal Loans: loans to individuals.
    
    Credit-Card Loans: loans granted through credit cards to credit card holders.
    
    Placements in Banks Abroad: short-term loans to banks abroad.
    
    Other loans: loans not included in other categories.
    
    Documented interest: discount on notes and bills.(2)
    
    Preferred guarantees include mortgages on real estate property or pledges on movable property, such as cars or machinery, where the
Bank has the priority right, endorsements of the Federal Office of the Secretary of Finance, pledges of Government securities, or gold
or cash collateral.(3)
    
    Pursuant to Argentine Central Bank Communiqué A 3918, beginning in April 2003, tax revenues shared by the Government and the
provinces ceased to be considered Preferred Guarantees.     -49-




---



##### Table of Contents



Loans by Type of Borrower
  As of December 31,2007
    
    
    2006
    
    
    2005Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total(in millions of Pesos, except percentages)Corporate
    
    
    1,870.0
    
    
    
    15.62
    
    
    
    1,534.7
    
    
    
    14.21
    
    
    
    1,412.9
    
    
    
    12.92Middle-Market Companies
    
    
    3,993.8
    
    
    
    33.35
    
    
    
    2,521.9
    
    
    
    23.34
    
    
    
    1,899.9
    
    
    
    17.37- Agribusiness
    
    
    1,341.9
    
    
    
    11.21
    
    
    
    902.1
    
    
    
    8.35
    
    
    
    694.2
    
    
    
    6.35- SMEs
    
    
    2,651.9
    
    
    
    22.15
    
    
    
    1,619.8
    
    
    
    14.99
    
    
    
    1,205.7
    
    
    
    11.02Commercial Loans
    
    
    5,863.8
    
    
    
    48.97
    
    
    
    4,056.6
    
    
    
    37.55
    
    
    
    3,312.8
    
    
    
    30.29Individuals
    
    
    4,631.4
    
    
    
    38.68
    
    
    
    3,131.0
    
    
    
    28.98
    
    
    
    2,094.0
    
    
    
    19.14- Bank
    
    
    2,603.1
    
    
    
    21.74
    
    
    
    1,720.2
    
    
    
    15.92
    
    
    
    1,057.8
    
    
    
    9.67- Regional Credit Card Companies
    
    
    2,028.3
    
    
    
    16.94
    
    
    
    1,410.8
    
    
    
    13.06
    
    
    
    1,036.2
    
    
    
    9.47Financial Sector (1)
    
    
    269.0
    
    
    
    2.25
    
    
    
    925.4
    
    
    
    8.57
    
    
    
    343.7
    
    
    
    3.14Non-Financial Public Sector
    
    
    1,210.5
    
    
    
    10.10
    
    
    
    2,690.6
    
    
    
    24.90
    
    
    
    5,187.5
    
    
    
    47.43Other Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total(2)
    
    
    11,974.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
    
    
    
    10,938.0
    
    
    
    100.00
 (1)
    
    Includes local and international financial sector. Financial Sector loans are primarily composed of interbank loans
(call money loans), overnight deposit at international money center banks and loans to provincial banks.(2)
    
    Before the allowance for loan losses.  Loans by Economic Activity
  As of December 31,2007
    
    
    2006
    
    
    2005% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of Pesos, except percentages)Financial Sector(1)
    
    
    269.0
    
    
    
    2.25
    
    
    
    925.4
    
    
    
    8.57
    
    
    
    343.7
    
    
    
    3.14ServicesNon-Financial Public Sector
    
    
    1,210.5
    
    
    
    10.10
    
    
    
    2,690.6
    
    
    
    24.90
    
    
    
    5,187.5
    
    
    
    47.43Communications, Transportation Health and Others
    
    
    936.7
    
    
    
    7.82
    
    
    
    517.2
    
    
    
    4.79
    
    
    
    409.7
    
    
    
    3.75Electricity, Gas, Water Supply and Sewage
Services
    
    
    198.2
    
    
    
    1.66
    
    
    
    234.8
    
    
    
    2.17
    
    
    
    154.2
    
    
    
    1.41Other Financial Services
    
    
    11.7
    
    
    
    0.10
    
    
    
    35.7
    
    
    
    0.33
    
    
    
    83.5
    
    
    
    0.76Total
    
    
    2,357.1
    
    
    
    19.68
    
    
    
    3,478.3
    
    
    
    32.19
    
    
    
    5,834.9
    
    
    
    53.35Primary ProductsAgriculture and Livestock
    
    
    1,217.8
    
    
    
    10.17
    
    
    
    971.8
    
    
    
    9.00
    
    
    
    768.3
    
    
    
    7.02Fishing, Forestry and Mining
    
    
    49.8
    
    
    
    0.42
    
    
    
    29.8
    
    
    
    0.28
    
    
    
    11.9
    
    
    
    0.11Total
    
    
    1,267.6
    
    
    
    10.59
    
    
    
    1001.6
    
    
    
    9.28
    
    
    
    780.2
    
    
    
    7.13
  -50-




---



##### Table of Contents



As of December 31,2007
    
    
    2006
    
    
    2005% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of Pesos, except percentages)Consumer
    
    
    4,402.4
    
    
    
    36.76
    
    
    
    2,988.0
    
    
    
    27.65
    
    
    
    1,961.8
    
    
    
    17.94Retail Trade
    
    
    721.0
    
    
    
    6.02
    
    
    
    524.1
    
    
    
    4.85
    
    
    
    435.8
    
    
    
    3.98Wholesale Trade
    
    
    854.3
    
    
    
    7.13
    
    
    
    333.7
    
    
    
    3.09
    
    
    
    189.0
    
    
    
    1.73Construction
    
    
    268.1
    
    
    
    2.24
    
    
    
    309.7
    
    
    
    2.87
    
    
    
    388.3
    
    
    
    3.55ManufacturingFoodstuffs
    
    
    561.4
    
    
    
    4.69
    
    
    
    406.1
    
    
    
    3.76
    
    
    
    386.0
    
    
    
    3.53Transportation Materials
    
    
    69.3
    
    
    
    0.58
    
    
    
    100.2
    
    
    
    0.93
    
    
    
    68.3
    
    
    
    0.62Chemicals and Oil
    
    
    339.6
    
    
    
    2.84
    
    
    
    177.4
    
    
    
    1.64
    
    
    
    24.8
    
    
    
    0.23Manufacturing Industries
    
    
    836.1
    
    
    
    6.98
    
    
    
    545.7
    
    
    
    5.05
    
    
    
    492.0
    
    
    
    4.50Total
    
    
    1,806.4
    
    
    
    15.09
    
    
    
    1,229.4
    
    
    
    11.38
    
    
    
    971.1
    
    
    
    8.88Other Loans
    
    
    28.8
    
    
    
    0.24
    
    
    
    13.4
    
    
    
    0.12
    
    
    
    33.2
    
    
    
    0.30Total(2)
    
    
    11,974.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
    
    
    
    10,938.0
    
    
    
    100.00
 (1)
    
    Includes local and international financial sectors.(2)
    
    Before the allowance for loan losses.   Maturity Composition of the Loan Portfolio
  After 1
    
    
    After 6
    
    
    
    
    
    
    After 3Month but
    
    
    Months but
    
    
    After 1 Year
    
    
    Years but
    
    
    
    
    
    
    Total atWithin 1
    
    
    within 6
    
    
    within 12
    
    
    but within 3
    
    
    within 5
    
    
    After 5
    
    
    DecemberMonth
    
    
    Months
    
    
    Months
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    31, 2007(in millions of Pesos)Non-Financial Public Sector(1)
    
    
    1.9
    
    
    
    3.3
    
    
    
    0.5
    
    
    
    1,202.3
    
    
    
    1.6
    
    
    
    0.9
    
    
    
    1,210.5Financial Sector(1)
    
    
    110.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110.0Private Sector and Residents Abroad
    
    
    6,539.1
    
    
    
    1,712.0
    
    
    
    557.1
    
    
    
    1,068.4
    
    
    
    459.4
    
    
    
    318.2
    
    
    
    10,654.2- Advances
    
    
    650.1
    
    
    
    138.6
    
    
    
    2.2
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    792.2- Promissory Notes
    
    
    972.0
    
    
    
    1,153.8
    
    
    
    240.2
    
    
    
    375.9
    
    
    
    108.1
    
    
    
    61.2
    
    
    
    2,911.2- Mortgage Loans
    
    
    26.3
    
    
    
    79.9
    
    
    
    107.3
    
    
    
    278.4
    
    
    
    197.8
    
    
    
    255.4
    
    
    
    945.1- Pledge Loans
    
    
    5.3
    
    
    
    15.5
    
    
    
    18.3
    
    
    
    46.8
    
    
    
    7.0
    
    
    
    1.6
    
    
    
    94.5- Personal Loans
    
    
    53.2
    
    
    
    225.7
    
    
    
    187.9
    
    
    
    364.8
    
    
    
    146.4
    
    
    
    
    
    
    
    978.0- Credit-Card Loans
    
    
    3,630.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,630.1- Other Loans
    
    
    1,067.7
    
    
    
    98.5
    
    
    
    1.2
    
    
    
    1.2
    
    
    
    0.1
    
    
    
    
    
    
    
    1,168.7- Accrued Interest and Quotation
Differences Receivable (1)
    
    
    177.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177.0- (Documented Interest)
    
    
    (42.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42.5
    )- (Unallocated Colletions)
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Allowance for Loan Losses(2)
    
    
    (428.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (428.6
    )Total Loans, Net
    
    
    6,222.4
    
    
    
    1,715.3
    
    
    
    557.6
    
    
    
    2,270.7
    
    
    
    461.0
    
    
    
    319.1
    
    
    
    11,546.1
 
 (1)
    
    Interest and the CER adjustment were assigned to the first month.(2)
    
    Allowances were assigned to the first month as well as past due loans and loans in judicial proceedings.  -51-




---



##### Table of Contents



Interest Rate Sensitivity of Outstanding Loans
  In millions of Pesos
    
    
    As a % of Total LoansVariable Rate (1)(2)Pesos
    
    
    5,815.4
    
    
    
    51.79Dollars
    
    
    923.6
    
    
    
    8.23Total
    
    
    6,739.0
    
    
    
    60.02Fixed Rate (2)(3)Pesos
    
    
    3,583.6
    
    
    
    31.92Dollars
    
    
    905.8
    
    
    
    8.07Total
    
    
    4,489.4
    
    
    
    39.99Past Due LoansPesos
    
    
    424.9
    
    
    
    3.78Dollars
    
    
    50.2
    
    
    
    0.45Total
    
    
    475.1
    
    
    
    4.23
 (1)
    
    Includes overdraft loans.(2)
    
    Includes past due loans and excludes interest receivable, differences in quotations and the CER adjustment.(3)
    
    Includes short-term and long-term loans whose rates are determined at the beginning of the loans life. Credit Review Process
   Banco Galicia
    -52-




---



##### Table of Contents



Retail Credit
      -53-




---



##### Table of Contents



Corporate Credit
  Qualitative analysis
    
    assessment of the quality of the corporate
borrower performed by the line officer to
which the account has been assigned on the
basis of personal knowledge.Economic and financial risk
    
    quantitative analysis of the borrowers
financial statements.Economic sector risk
    
    measurement of the general risk of the
sector in which the borrower operates
(based on statistical information gathered
from internal and external sources).Environmental risk
    
    environmental impact assessment (required
to all investment projects exceeding Ps. 15
million).
     
    
    Up to Ps. 3.5 million: credit granting proposals are presented by line
business officers and approved by officers of the Corporate Credit
Department in accordance with pre established credit authority levels.
    
    Over Ps. 3.5 million and up to Ps. 5.0 million: credit granting
proposals are presented by the manager of the business department to
which the account belongs and approved by the manager of the Credit
Division.
    
    Over Ps. 5.0 million: credit granting operations must be approved by
the Board of Directors Committee. The participation of the managers of
the business departments depends on the account under approval.
 Policy for Requiring Collateral
  -54-




---



##### Table of Contents



Regional Credit Card Companies
    Main Argentine Central Banks Rules on Loan Classification and Loan Loss Provisions
 General
      -55-




---



##### Table of Contents




    
    the possibility to classify as normal, at the financial institutions option, those customers having reached a
restructuring agreement, without repayment percentages being required, and having enough cash flow to repay the new debt
(this option was effective until June 2006);
    
    the reduction in the required loan amortization necessary to improve the customers classification;
    
    the possibility to provide customers with new financial assistance and classify as normal customers classified in a
non-performing status in the financial system, thereby restricting this financing assistance to pre-established percentages
based on the worst situation a customer registers in the financial system.
   
    
    to achieve this better quality status, the client must comply with the
rest of the requirements for the new category;
    
    in case of having refinanced and non-refinanced obligations, the
resulting classification shall be the lowest resulting from the
individual analysis of each transaction;
    
    if a client with a refinanced loan received or had received additional
financial assistance, it will remain within the category for 180 days
after the refinancing or the granting of additional credit, whichever
is more recent;
    
    debtors with arrears of over 31 days must be classified within the
category resulting from adding the number of arrear days corresponding
to the first refinanced debt unpaid installment and those of the
minimum arrears set forth for the category in which the debtor is
classified at the time default is recorded.
  -56-




---



##### Table of Contents



Loan Classification
  Commercial Portfolio
 Loan Classification
    
    Description1. Normal
    
    The debtor is widely able to meet its financial obligations, demonstrating a
significant cash flow, a liquid financial situation, an adequate financial structure, a timely
payment record, competent management, available information in a timely, accurate manner and
satisfactory internal controls. The debtor is in the upper 50% of a sector of activity that is
operating properly and presents good prospects.2. With Special Follow Up
    
    The cash flow analysis reflects that the debt may be repaid even
though it is possible that the clients future payment ability may deteriorate without a
proper follow up.This category is divided into two
subcategories:(2.a). Under observation;(2.b). Under negotiation or under agreements
to refinance.3. With Problems
    
    The cash flow analysis evidences problems to repay the debt, and therefore,
should these problems not be solved, there may be some losses.4. High Risk of Insolvency
    
    The cash flow analysis evidences that repayment of the full debt is
highly unlikely.5. Uncollectible
    
    The amounts in this category are deemed total losses. Even though these assets
may be recovered under certain future circumstances, inability to make payments is evident at
the date of analysis. Includes loans to insolvent or bankrupt borrowers.6. Uncollectible due to
Technical Reasons
    
    Includes borrowers indicated by the Argentine Central
Bank to be in non performing status with financial institutions that have been liquidated or
are being liquidated, or whose authorization to operate has been revoked. It also includes
loans to foreign banks and other institutions that are not:(i)   classified as normal,(ii)  subject to the supervision of the Argentine
Central Bank or other similar authority of the
country of origin, and(iii) classified as investment grade by any of
the rating agencies admitted to the Argentine
Central Bank pursuant to Communiqué A 2729.
  -57-




---



##### Table of Contents



Consumer
Portfolio
 Loan Classification
    
    Description1. Normal Situation
    
    Loans with timely repayment or arrears not exceeding 31 days, both of
principal and interest. In addition, a client classified under category 2 having been
refinanced may be recategorized within this category, as long as he amortizes one principal
installment (whether monthly or bimonthly) or repays 10% of principal.2. Low Risk
    
    Occasional late payments, with a payment in arrears for more than 32 days and up to
90 days. A client classified under category 3 having been refinanced may be recategorized
within this category, as long as he amortizes two principal installments (whether monthly or
bimonthly) or repays 10% of principal.3. Medium Risk
    
    Some inability to make payments, with arrears of more than 91 days and up to 180
days. A client classified under category 4 having been refinanced may be recategorized within
this category, as long as he amortizes three principal installments (whether monthly or
bimonthly) or repays 15% of principal.4. High Risk
    
    Judicial proceedings seeking collection have been initiated or arrears of more
than 180 days and up to one year. A client classified under category 5 having been refinanced
may be recategorized within this category, as long as he amortizes three principal
installments (whether monthly or bimonthly) or repays 20% of principal.5. Uncollectible
    
    Loans to insolvent or bankrupt borrowers, or subject to judicial proceedings,
with little or no possibility of collection, or with arrears in excess of one year.6. Uncollectible due to
Technical Reasons
    
    Loans to borrowers who fall within the conditions
described above under Commercial PortfolioUncollectible due to Technical Reasons.
 Loan Loss Provision Requirements
 Allocated Provisions
 Minimum Allowances for Loan Losses
    
    Secured
    
    
    UnsecuredCategory1. Normal/ Normal Situation
    
    
    1.0
    %
    
    
    1.0
    %2. (a) Under Observation and Low Risk
    
    
    3.0
    
    
    
    5.02. (b) Under Negotiation or Agreement to Refinance
    
    
    6.0
    
    
    
    12.03. With Problems and Medium Risk
    
    
    12.0
    %
    
    
    25.0
    %4. High Risk of Insolvency and High Risk
    
    
    25.0
    
    
    
    50.05. Uncollectible
    
    
    50.0
    
    
    
    100.06. Uncollectible Due to Technical Reasons
    
    
    100.0
    
    
    
    100.0
   -58-




---



##### Table of Contents



General Provisions
 .
 Classification of the Loan Portfolio based on Argentine Central Bank Regulations
  As of December 31, 2007Amounts Not Yet Due(1)
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    11,242.7
    
    
    
    96.57
    
    
    
    
    
    
    
    
    
    
    
    11,242.7
    
    
    
    93.892. With Special Follow-up and Low Risk
    
    
    356.2
    
    
    
    3.06
    
    
    
    
    
    
    
    
    
    
    
    356.2
    
    
    
    2.973. With Problems and Medium Risk
    
    
    31.7
    
    
    
    0.27
    
    
    
    56.0
    
    
    
    16.87
    
    
    
    87.7
    
    
    
    0.734. High Risk of Insolvency and High Risk
    
    
    12.1
    
    
    
    0.10
    
    
    
    221.0
    
    
    
    66.57
    
    
    
    233.1
    
    
    
    1.955. Uncollectible
    
    
    
    
    
    
    
    
    
    
    48.1
    
    
    
    14.49
    
    
    
    48.1
    
    
    
    0.406. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.9
    
    
    
    2.07
    
    
    
    6.9
    
    
    
    0.06Total
    
    
    11,642.7
    
    
    
    100.00
    
    
    
    332.0
    
    
    
    100.00
    
    
    
    11,974.7
    
    
    
    100.00
 As of December 31, 2006Amounts Not Yet Due(1)
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    10,149.9
    
    
    
    96.24
    
    
    
    
    
    
    
    
    
    
    
    10,149.9
    
    
    
    93.942. With Special Follow-up and Low Risk
    
    
    374.6
    
    
    
    3.54
    
    
    
    
    
    
    
    
    
    
    
    374.6
    
    
    
    3.473. With Problems and Medium Risk
    
    
    12.2
    
    
    
    0.12
    
    
    
    30.0
    
    
    
    11.69
    
    
    
    42.2
    
    
    
    0.394. High Risk of Insolvency and High Risk
    
    
    10.2
    
    
    
    0.10
    
    
    
    192.7
    
    
    
    75.07
    
    
    
    202.9
    
    
    
    1.885. Uncollectible
    
    
    
    
    
    
    
    
    
    
    28.8
    
    
    
    11.22
    
    
    
    28.8
    
    
    
    0.276. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    2.02
    
    
    
    5.2
    
    
    
    0.05Total
    
    
    10,546.9
    
    
    
    100.00
    
    
    
    256.7
    
    
    
    100.00
    
    
    
    10,803.6
    
    
    
    100.00
  -59-




---



##### Table of Contents



As of December 31, 2005Amounts Not Yet Due(1)
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    10,171.2
    
    
    
    95.22
    
    
    
    
    
    
    
    
    
    
    
    10,171.2
    
    
    
    92.992. With Special Follow-up and Low Risk
    
    
    384.4
    
    
    
    3.60
    
    
    
    
    
    
    
    
    
    
    
    384.4
    
    
    
    3.513. With Problems and Medium Risk
    
    
    120.4
    
    
    
    1.13
    
    
    
    206.9
    
    
    
    80.82
    
    
    
    327.3
    
    
    
    2.994. High Risk of Insolvency and High Risk
    
    
    6.0
    
    
    
    0.05
    
    
    
    23.0
    
    
    
    8.98
    
    
    
    29.0
    
    
    
    0.275. Uncollectible
    
    
    
    
    
    
    
    
    
    
    22.8
    
    
    
    8.91
    
    
    
    22.8
    
    
    
    0.216. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    1.29
    
    
    
    3.3
    
    
    
    0.03Total
    
    
    10,682.0
    
    
    
    100.00
    
    
    
    256.0
    
    
    
    100.00
    
    
    
    10,938.0
    
    
    
    100.00
 As of December 31, 2004Amounts Not Yet Due(1)
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    7,766.0
    
    
    
    90.53
    
    
    
    
    
    
    
    
    
    
    
    7,766.0
    
    
    
    86.022. With Special Follow-up and Low Risk
    
    
    562.5
    
    
    
    6.56
    
    
    
    
    
    
    
    
    
    
    
    562.5
    
    
    
    6.233. With Problems and Medium Risk
    
    
    197.1
    
    
    
    2.30
    
    
    
    251.7
    
    
    
    56.06
    
    
    
    448.8
    
    
    
    4.974. High Risk of Insolvency and High Risk
    
    
    52.8
    
    
    
    0.61
    
    
    
    105.8
    
    
    
    23.56
    
    
    
    158.6
    
    
    
    1.765. Uncollectible
    
    
    
    
    
    
    
    
    
    
    85.5
    
    
    
    19.04
    
    
    
    85.5
    
    
    
    0.956. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    1.34
    
    
    
    6.0
    
    
    
    0.07Total
    
    
    8,578.4
    
    
    
    100.00
    
    
    
    449.0
    
    
    
    100.00
    
    
    
    9,027.4
    
    
    
    100.00
 As of December 31, 2003Amounts Not Yet Due(1)
    
    
    Amounts Past Due
    
    
    Total Loans(in millions of Pesos, except percentages)Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %Loan Portfolio Classification1. Normal and Normal Performance
    
    
    6,531.9
    
    
    
    85.63
    
    
    
    
    
    
    
    
    
    
    
    6,531.9
    
    
    
    75.622. With Special Follow-up and Low Risk
    
    
    807.9
    
    
    
    10.59
    
    
    
    
    
    
    
    
    
    
    
    807.9
    
    
    
    9.353. With Problems and Medium Risk
    
    
    237.9
    
    
    
    3.12
    
    
    
    426.5
    
    
    
    42.19
    
    
    
    664.4
    
    
    
    7.694. High Risk of Insolvency and High Risk
    
    
    50.4
    
    
    
    0.66
    
    
    
    245.4
    
    
    
    24.27
    
    
    
    295.8
    
    
    
    3.425. Uncollectible
    
    
    
    
    
    
    
    
    
    
    324.9
    
    
    
    32.14
    
    
    
    324.9
    
    
    
    3.766. Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    14.2
    
    
    
    1.40
    
    
    
    14.2
    
    
    
    0.16Total
    
    
    7,628.1
    
    
    
    100.00
    
    
    
    1,011.0
    
    
    
    100.00
    
    
    
    8,639.1
    
    
    
    100.00
   -60-




---



##### Table of Contents



Amounts Past Due and Non-Accrual Loans
  As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos, except ratios)Total Loans(1)
    
    
    11,974.7
    
    
    
    10,803.6
    
    
    
    10,938.0
    
    
    
    9,027.4
    
    
    
    8,639.1Non-Accrual Loans(2)With Preferred Guarantees
    
    
    43.5
    
    
    
    40.2
    
    
    
    58.4
    
    
    
    383.7
    
    
    
    496.5With Other Guarantees
    
    
    5.0
    
    
    
    5.1
    
    
    
    6.5
    
    
    
    67.4
    
    
    
    275.8Without Guarantees
    
    
    327.3
    
    
    
    233.8
    
    
    
    317.5
    
    
    
    247.8
    
    
    
    527.0Total Non-Accrual Loans(2)
    
    
    375.8
    
    
    
    279.1
    
    
    
    382.4
    
    
    
    698.9
    
    
    
    1,299.3Past Due Loan PortfolioNon-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Financial Private Sector and Residents AbroadAdvances
    
    
    23.0
    
    
    
    20.9
    
    
    
    14.1
    
    
    
    29.9
    
    
    
    93.9Promissory Notes
    
    
    134.5
    
    
    
    135.2
    
    
    
    191.6
    
    
    
    253.1
    
    
    
    528.2Mortgage Loans
    
    
    30.0
    
    
    
    28.4
    
    
    
    14.6
    
    
    
    115.1
    
    
    
    211.7Pledge Loans
    
    
    0.8
    
    
    
    0.3
    
    
    
    0.5
    
    
    
    4.2
    
    
    
    28.3Personal Loans
    
    
    17.6
    
    
    
    4.1
    
    
    
    0.8
    
    
    
    4.2
    
    
    
    110.2Credit-Card Loans
    
    
    115.4
    
    
    
    62.7
    
    
    
    33.4
    
    
    
    24.9
    
    
    
    30.6Placements with Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Loans
    
    
    10.7
    
    
    
    5.1
    
    
    
    1.0
    
    
    
    17.6
    
    
    
    8.1Total Past Due Loans
    
    
    332.0
    
    
    
    256.7
    
    
    
    256.0
    
    
    
    449.0
    
    
    
    1,011.0Past Due LoansWith Preferred Guarantees
    
    
    30.8
    
    
    
    28.9
    
    
    
    16.1
    
    
    
    308.0
    
    
    
    415.7With Other Guarantees
    
    
    4.2
    
    
    
    4.3
    
    
    
    4.9
    
    
    
    11.4
    
    
    
    235.6Without Guarantees
    
    
    297.0
    
    
    
    223.5
    
    
    
    235.0
    
    
    
    129.6
    
    
    
    359.7Total Past Due Loans
    
    
    332.0
    
    
    
    256.7
    
    
    
    256.0
    
    
    
    449.0
    
    
    
    1,011.0Allowance for Loan Losses
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6
    
    
    
    1,177.3Ratios (%)As a % of Total Loans:- Total Past Due Loans
    
    
    2.77
    
    
    
    2.38
    
    
    
    2.34
    
    
    
    4.97
    
    
    
    11.70- Past Due Loans with Preferred Guarantees
    
    
    0.26
    
    
    
    0.27
    
    
    
    0.15
    
    
    
    3.40
    
    
    
    4.81- Past Due Loans with Other Guarantees
    
    
    0.03
    
    
    
    0.04
    
    
    
    0.04
    
    
    
    0.13
    
    
    
    2.73- Past Due Unsecured Amounts
    
    
    2.48
    
    
    
    2.07
    
    
    
    2.15
    
    
    
    1.44
    
    
    
    4.16- Non-Accrual Loans (2)
    
    
    3.14
    
    
    
    2.58
    
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04- Non-Accrual Loans (2) (Excluding Interbank Loans)
    
    
    3.18
    
    
    
    2.79
    
    
    
    3.57
    
    
    
    8.10
    
    
    
    15.35Non-Accrual Loans (2) as a Percentage of Loans to the
Private Sector
    
    
    3.53
    
    
    
    3.49
    
    
    
    6.77
    
    
    
    15.92
    
    
    
    31.15Allowance for Loan Losses as a % of:- Total Loans
    
    
    3.58
    
    
    
    3.03
    
    
    
    3.91
    
    
    
    7.01
    
    
    
    13.63- Total Loans Excluding Interbank Loans
    
    
    3.63
    
    
    
    3.27
    
    
    
    4.00
    
    
    
    7.33
    
    
    
    13.91- Total Non-Accrual Loans (2)
    
    
    114.05
    
    
    
    117.16
    
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61Non-Accrual Loans with Guarantees as a Percentage
of Non-Accrual Loans (2)
    
    
    12.91
    
    
    
    16.23
    
    
    
    16.97
    
    
    
    64.54
    
    
    
    59.44Non-Accrual Loans as a Percentage of Total Past Due
Loans
    
    
    113.20
    
    
    
    108.73
    
    
    
    149.38
    
    
    
    155.66
    
    
    
    128.52
 (1)
    
    Before the allowance for loan losses.(2)
    
    Non-Accrual loans are defined as those loans in the categories of: (a) Consumer portfolio: Medium Risk, High Risk,
Uncollectible, and Uncollectible Due to Technical Reasons; (b) Commercial portfolio: With problems, High Risk of Insolvency,
Uncollectible, and Uncollectible Due to Technical Reasons.  -61-




---



##### Table of Contents




    
    in the consumer portfolio: Medium Risk, High Risk, Uncollectible, and
Uncollectible Due to Technical Reasons.
 
    
    in the commercial portfolio: With Problems, High Risk of Insolvency,
Uncollectible, and Uncollectible Due to Technical Reasons.
  As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos)Interest Income
that Would Have
Been Recorded on
Non-Accrual Loans
on which the
Accrual of Interest
was Discontinued
    
    
    35.9
    
    
    
    23.7
    
    
    
    45.9
    
    
    
    32.5
    
    
    
    39.9Recoveries of
Interest on Loans
Classified as
Non-Accrual on
which the Accrual
of Interest had
been Discontinued
(1)
    
    
    1.8
    
    
    
    1.2
    
    
    
    2.3
    
    
    
    1.6
    
    
    
    2.0
 (1)
    
    Recorded under Miscellaneous Income. Loan Loss Experience
  Fiscal Year EndedDecember 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in millions of Pesos, except ratios)Total Loans, Average(1)
    
    
    10,528.9
    
    
    
    10,851.0
    
    
    
    9,746.9
    
    
    
    11,137.9
    
    
    
    11,556.7Allowance for Loan Losses at Beginning of Period(2)
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6
    
    
    
    1,177.3
    
    
    
    1,681.8Changes in the Allowance for Loan Losses During the Period (2)Provisions Charged to Income
    
    
    248.4
    
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1Prior Allowances Reversed
    
    
    (21.5
    )
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )Charge-Offs (A)
    
    
    (125.4
    )
    
    
    (200.8
    )
    
    
    (174.5
    )
    
    
    (521.3
    )
    
    
    (267.3
    )Inflation and Foreign Exchange Effect and Other Adjustments
    
    
    0.1
    
    
    
    27.1
    
    
    
    4.9
    
    
    
    7.6
    
    
    
    (52.2
    )Allowance for Loan Losses at End of Period
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9
    
    
    
    632.6
    
    
    
    1,177.3Charge to the Income Statement during the PeriodProvisions Charged to Income (2)
    
    
    248.4
    
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1Direct Charge-Offs, Net of Recoveries (B)
    
    
    (57.2
    )
    
    
    (46.4
    )
    
    
    (28.9
    )
    
    
    (101.6
    )
    
    
    (38.6
    )Recoveries of Provisions
    
    
    (21.5
    )
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )Net Charge (Benefit) to the Income Statement
    
    
    169.7
    
    
    
    26.4
    
    
    
    (64.0
    )
    
    
    (132.6
    )
    
    
    (223.6
    )Ratios (%)Charge-Offs (A+B) to Average Loans (3)
    
    
    0.65
    
    
    
    1.42
    
    
    
    1.49
    
    
    
    3.77
    
    
    
    1.98Net Charge to the Income Statement to Average Loans)
    
    
    1.61
    
    
    
    0.24
    
    
    
    (0.66
    )
    
    
    (1.19
    )
    
    
    (1.93
    )
 (1)
    
    Before the allowance for loan losses.(2)
    
    Includes quotation differences for Galicia Uruguay and Cayman Branch.(3)
    
    Charge-offs plus direct charge-offs minus bad debts recovered.  -62-




---



##### Table of Contents



Allocation of the Allowance for Loan Losses
 
 As of December 31,2007
    
    
    2006
    
    
    2005Loan
    
    
    
    
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    
    
    
    
    Loan% of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    Category
    
    
    
    
    
    
    % of
    
    
    CategoryAmount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %
    
    
    Amount
    
    
    Loans
    
    
    %(in millions of Pesos, except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    10.11
    
    
    
    
    
    
    
    
    
    
    
    24.90
    
    
    
    
    
    
    
    
    
    
    
    47.43Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    0.92
    
    
    
    
    
    
    
    
    
    
    
    2.88
    
    
    
    
    
    
    
    
    
    
    
    1.17Non-Financial Private
Sector and Residents
AbroadAdvances
    
    
    16.2
    
    
    
    0.13
    
    
    
    6.61
    
    
    
    16.3
    
    
    
    0.15
    
    
    
    3.21
    
    
    
    12.3
    
    
    
    0.11
    
    
    
    2.04Promissory Notes
    
    
    119.8
    
    
    
    1.00
    
    
    
    24.31
    
    
    
    151.1
    
    
    
    1.40
    
    
    
    19.84
    
    
    
    186.4
    
    
    
    1.70
    
    
    
    16.79Mortgage Loans
    
    
    26.5
    
    
    
    0.22
    
    
    
    7.89
    
    
    
    25.0
    
    
    
    0.23
    
    
    
    6.37
    
    
    
    21.6
    
    
    
    0.20
    
    
    
    4.60Pledge Loans
    
    
    0.3
    
    
    
    
    
    
    
    0.79
    
    
    
    0.4
    
    
    
    
    
    
    
    0.62
    
    
    
    0.5
    
    
    
    
    
    
    
    1.11Personal Loans
    
    
    14.0
    
    
    
    0.12
    
    
    
    8.17
    
    
    
    3.7
    
    
    
    0.03
    
    
    
    5.21
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    2.36Credit-Card Loans
    
    
    56.0
    
    
    
    0.47
    
    
    
    30.31
    
    
    
    28.5
    
    
    
    0.26
    
    
    
    22.76
    
    
    
    14.0
    
    
    
    0.13
    
    
    
    15.84Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    1.32
    
    
    
    
    
    
    
    
    
    
    
    5.63
    
    
    
    
    
    
    
    
    
    
    
    1.95Other
    
    
    7.9
    
    
    
    0.07
    
    
    
    9.57
    
    
    
    1.0
    
    
    
    0.01
    
    
    
    8.58
    
    
    
    17.1
    
    
    
    0.16
    
    
    
    6.71Unallocated (1)
    
    
    187.9
    
    
    
    1.57
    
    
    
    
    
    
    
    101.0
    
    
    
    0.95
    
    
    
    
    
    
    
    175.1
    
    
    
    1.60
    
    
    
    Total
    
    
    428.6
    
    
    
    3.58
    
    
    
    100.00
    
    
    
    327.0
    
    
    
    3.03
    
    
    
    100.00
    
    
    
    427.9
    
    
    
    3.91
    
    
    
    100.00
  -63-




---



##### Table of Contents



As of December 31,2004
    
    
    2003Amount
    
    
    % of Loans
    
    
    Loan Category %
    
    
    Amount
    
    
    % of Loans
    
    
    Loan Category %(in millions of Pesos, except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    50.00
    
    
    
    
    
    
    
    
    
    
    
    49.52Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    1.67
    
    
    
    
    
    
    
    
    
    
    
    2.25Non-Financial Private
Sector and Residents
AbroadAdvances
    
    
    22.7
    
    
    
    0.25
    
    
    
    2.21
    
    
    
    78.8
    
    
    
    0.91
    
    
    
    2.54Promissory Notes
    
    
    270.9
    
    
    
    3.00
    
    
    
    12.18
    
    
    
    441.9
    
    
    
    5.12
    
    
    
    14.82Mortgage Loans
    
    
    97.6
    
    
    
    1.08
    
    
    
    6.91
    
    
    
    142.6
    
    
    
    1.65
    
    
    
    8.33Pledge Loans
    
    
    3.5
    
    
    
    0.04
    
    
    
    1.03
    
    
    
    22.7
    
    
    
    0.27
    
    
    
    0.63Personal Loans
    
    
    4.0
    
    
    
    0.04
    
    
    
    0.64
    
    
    
    157.6
    
    
    
    1.82
    
    
    
    0.64Credit-Card Loans
    
    
    10.8
    
    
    
    0.12
    
    
    
    12.24
    
    
    
    14.5
    
    
    
    0.17
    
    
    
    9.48Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    4.20
    
    
    
    
    
    
    
    
    
    
    
    2.00Other
    
    
    32.1
    
    
    
    0.36
    
    
    
    8.92
    
    
    
    5.6
    
    
    
    0.06
    
    
    
    9.79Unallocated (1)
    
    
    191.0
    
    
    
    2.12
    
    
    
    
    
    
    
    313.6
    
    
    
    3.63
    
    
    
    Total
    
    
    632.6
    
    
    
    7.01
    
    
    
    100.00
    
    
    
    1,177.3
    
    
    
    13.63
    
    
    
    100.00
 (1)
    
    The unallocated reserve consists of the allowances established on the portfolio classified in the normal and normal
performance categories and includes additional reserves in excess of Argentine Central Bank minimum requirements Charge-Offs
  Fiscal Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Charge-offs by TypeAdvances
    
    
    6.1
    
    
    
    2.1
    
    
    
    12.5Promissory Notes
    
    
    35.1
    
    
    
    155.2
    
    
    
    50.6Mortgage Loans
    
    
    5.4
    
    
    
    6.4
    
    
    
    57.6Pledge Loans
    
    
    0.2
    
    
    
    0.2
    
    
    
    3.5Personal Loans
    
    
    6.6
    
    
    
    1.5
    
    
    
    1.1Credit-Card LoansBanco Galicia
    
    
    9.2
    
    
    
    3.0
    
    
    
    8.8Regional Credit-Card Companies
    
    
    60.6
    
    
    
    31.9
    
    
    
    22.0Other Loans
    
    
    2.2
    
    
    
    0.5
    
    
    
    18.4Total
    
    
    125.4
    
    
    
    200.8
    
    
    
    174.5
   -64-




---



##### Table of Contents



Foreign Outstandings
  Fiscal Year EndedDecember 31,Country
    
    2007
    
    
    2006
    
    
    2005(in millions of Pesos)United KingdomDemand Deposits
    
    
    2.0
    
    
    
    0.7
    
    
    
    1.7Forward Purchases of Boden 2012
    
    
    1,244.8
    
    
    
    355.1
    
    
    
    347.8Forward Purchases of Discount Bonds in Pesos
    
    
    600.6
    
    
    
    723.9
    
    
    
    Total
    
    
    1,847.4
    
    
    
    1,079.7
    
    
    
    349.5United StatesDemand Deposits
    
    
    532.1
    
    
    
    234.0
    
    
    
    238.6Overnight Placements
    
    
    159.3
    
    
    
    608.1
    
    
    
    Total
    
    
    691.4
    
    
    
    842.1
    
    
    
    238.6GermanyDemand Deposits
    
    
    0.9
    
    
    
    
    
    
    
    Forward Purchases of Boden 2012
    
    
    240.8
    
    
    
    
    
    
    
    Forward Purchases of Discount Bonds in Pesos
    
    
    105.9
    
    
    
    
    
    
    
    Total
    
    
    347.6
    
    
    
    
    
    
    
    
  
    
    Ps. 1,847.4 million (8.09% of our total assets) with United Kingdom financial
institutions, of which Ps. 1,244.8 million represent 9 forward purchases of Boden 2012
Bonds and Ps. 600.6 million represent three forward purchases of Discount Bonds in
Pesos, both in connection with repo transactions with such financial institutions, and
Ps. 2.0 million correspond to demand deposits with such institutions; two transactions
are for 13-month terms and two other for 20 and 21 months terms, with the remaining ones
being for one-year terms; all transactions bear market floating interest rates based on
Libor plus a fixed spread.
 
    
    Ps. 691.4 million (3.03% of our total assets) representing liquid placements with
United States financial institutions, of which Ps. 532.1 million correspond to demand
deposits and Ps. 159.3 million represent overnight placements.
 
    
    Ps. 347.6 million (1.52% of our total assets) with a German financial
institution, of which Ps. 240.8 million represent two forward purchases of Boden 2012
Bonds, Ps. 105.9 million represent a forward purchase of Discount Bonds in Pesos, both
in connection with repo transactions with such financial institution, and Ps. 0.9
million correspond to demand deposits with such institution; two repo transactions are
for 13-month terms and one is for a one-year term; all bear market floating interest
rates based on Libor plus a fixed spread.
  Deposits
  As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Current Accounts and Other Demand Deposits
    
    
    2,675.4
    
    
    
    2,011.4
    
    
    
    1,657.6Savings Accounts
    
    
    3,380.1
    
    
    
    2,589.5
    
    
    
    2,213.4Time Deposits
    
    
    6,704.8
    
    
    
    5,831.5
    
    
    
    4,261.9Other Deposits(1)
    
    
    291.6
    
    
    
    215.6
    
    
    
    192.9Plus: Accrued Interest, Quotation
Differences and CER Adjustment
    
    
    113.7
    
    
    
    131.4
    
    
    
    95.9Total Deposits
    
    
    13,165.6
    
    
    
    10,779.4
    
    
    
    8,421.7
 (1)
    
    Includes among other, deposits originated by Decree No. 616/2005, Reprogrammed
Deposits under judicial proceedings and other demand deposits.  -65-




---



##### Table of Contents



Peso-Denominated
    
    
    Dollar-Denominated
    
    
    Total% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of Pesos, except percentages)Current Accounts and Demand Deposits
    
    Ps.
    2,675.4
    
    
    
    24.3
    %
    
    
    
    
    
    
    
    %
    
    Ps.
    2,675.4
    
    
    
    20.5Savings Accounts
    
    
    2,482.9
    
    
    
    22.5
    
    
    Ps.
    897.2
    
    
    
    44.0
    
    
    
    3,380.1
    
    
    
    25.9Time Deposits
    
    
    5,720.8
    
    
    
    52.0
    
    
    
    984.1
    
    
    
    48.2
    
    
    
    6,704.9
    
    
    
    51.4Maturing Within 30 Days
    
    
    975.5
    
    
    
    8.9
    
    
    
    183.4
    
    
    
    9.0
    
    
    
    1,158.9
    
    
    
    8.9Maturing After 31 Days but Within 59 Days
    
    
    1,907.5
    
    
    
    17.3
    
    
    
    180.1
    
    
    
    8.8
    
    
    
    2,087.6
    
    
    
    16.0Maturing After 60 Days but Within 89 Days
    
    
    1,034.8
    
    
    
    9.4
    
    
    
    101.2
    
    
    
    5.0
    
    
    
    1,136.0
    
    
    
    8.7Maturing After 90 Days but Within 179 Days
    
    
    880.8
    
    
    
    8.0
    
    
    
    235.0
    
    
    
    11.5
    
    
    
    1,115.8
    
    
    
    8.5Maturing After 180 Days but Within 365 Days
    
    
    559.6
    
    
    
    5.1
    
    
    
    140.2
    
    
    
    6.9
    
    
    
    699.8
    
    
    
    5.4Maturing After 365 Days
    
    
    362.6
    
    
    
    3.3
    
    
    
    144.2
    
    
    
    7.0
    
    
    
    506.8
    
    
    
    3.9Other Deposits
    
    
    131.8
    
    
    
    1.2
    
    
    
    159.6
    
    
    
    7.8
    
    
    
    291.4
    
    
    
    2.2Maturing Within 30 Days
    
    
    117.1
    
    
    
    1.1
    
    
    
    159.5
    
    
    
    7.8
    
    
    
    276.6
    
    
    
    2.1Maturing After 31 Days but Within 59 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing After 60 Days but Within 89 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing After 90 Days but Within 179 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing After 180 Days but Within 365 Days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Maturing After 365 Days
    
    
    14.7
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    14.8
    
    
    
    0.1Total Deposits(1)
    
    Ps.
    11,010.9
    
    
    
    100.0
    %
    
    Ps.
    2,040.9
    
    
    
    100.0
    %
    
    Ps.
    13,051.8
    
    
    
    100.0
    %
 (1)
    
    Only principal. Excludes the CER adjustment amparo
   -66-




---



##### Table of Contents



Domestic Offices
    
    
    Foreign Offices(in millions of Pesos)Time DepositsWithin 30 Days
    
    
    606.3
    
    
    
    After 31 Days but Within 59 Days
    
    
    1,454.8
    
    
    
    After 60 Days but Within 89 Days
    
    
    716.2
    
    
    
    After 90 Days but Within 179 Days
    
    
    677.0
    
    
    
    After 180 Days but Within 365 Days
    
    
    489.4
    
    
    
    After 365 Days
    
    
    340.5
    
    
    
    104.9Total Time Deposits
    
    
    4,284.2
    
    
    
    104.9Other Deposits
    
    
    
    
    
    
    Total Deposits(1)
    
    
    4,284.2
    
    
    
    104.9
 (1)
    
    Only principal. Excludes the CER adjustment. Return on Equity and Assets
  Fiscal Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos, except percentages)Net Income / (Loss)
    
    
    46.0
    
    
    
    (18.9
    )
    
    
    107.2Average Total Assets
    
    
    21,332.4
    
    
    
    24,614.5
    
    
    
    24,238.1Average Shareholders Equity
    
    
    1,606.7
    
    
    
    1,649.3
    
    
    
    1,569.3Shareholders Equity at End of the Period
    
    
    1,654.5
    
    
    
    1,608.5
    
    
    
    1,626.8Net Income / (Loss) as a Percentage of:Average Total Assets
    
    
    0.37
    
    
    
    0.00
    
    
    
    0.59Average Shareholders Equity
    
    
    2.86
    
    
    
    (1.15
    )
    
    
    6.83Declared Cash Dividends
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Dividend Payout Ratio
    
    
    0.0
    
    
    
    0.0
    
    
    
    0.0Average Shareholders Equity as a Percentage of Average Total Assets
    
    
    7.53
    
    
    
    6.70
    
    
    
    6.47Shareholders Equity at the End of the Period as a Percentage of
Average Total Assets
    
    
    7.76
    
    
    
    6.53
    
    
    
    6.71
 Short-term Borrowings
  As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos )Short-Term BorrowingsArgentine Central Bank
    
    
    0.7
    
    
    
    0.4
    
    
    
    0.3Other Banks and International EntitiesLines of Credit from Domestic Banks
    
    
    33.2
    
    
    
    134.5
    
    
    
    60.8Lines of Credit from Foreign Banks
    
    
    258.0
    
    
    
    45.4
    
    
    
    Repos with Domestic Banks
    
    
    
    
    
    
    522.9
    
    
    
    Repos with Foreign Banks
    
    
    
    
    
    
    
    
    
    
    220.5Negotiable Obligations
    
    
    36.3
    
    
    
    65.1
    
    
    
    89.7Total
    
    
    328.2
    
    
    
    768.3
    
    
    
    371.3
  -67-




---



##### Table of Contents




    
    the weighted-average interest rate at year-end,
 
    
    the maximum balance recorded at the monthly closing dates of the periods,
 
    
    the average balances for each period, and
 
    
    the weighted-average interest rate for the periods.
 As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos, except percentages)Argentine Central BankWeighted-average Interest Rate at End of Period
    
    
    
    
    
    
    
    
    
    
    Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    0.9
    
    
    Ps.
    0.9
    
    
    Ps.
    1.2Average Balances for Each Period
    
    Ps.
    0.6
    
    
    Ps.
    0.5
    
    
    Ps.
    0.5Weighted-average Interest Rate for the Period
    
    
    
    
    
    
    
    
    
    
    Lines of Credit from Domestic BanksWeighted-average Interest Rate at End of Period
    
    
    14.2
    %
    
    
    9.1
    %
    
    
    7.0
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    92.6
    
    
    Ps.
    378.7
    
    
    Ps.
    164.1Average Balances for Each Period
    
    Ps.
    57.5
    
    
    Ps.
    142.0
    
    
    Ps.
    96.3Weighted-average Interest Rate for the Period
    
    
    9.5
    %
    
    
    8.0
    %
    
    
    5.5
    %Lines of Credit from Foreign BanksWeighted-average Interest Rate at End of Period
    
    
    5.6
    %
    
    
    6.1
    %
    
    
    Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    258.0
    
    
    Ps.
    45.4
    
    
    
    Average Balances for Each Period
    
    Ps.
    106.7
    
    
    Ps.
    9.7
    
    
    
    Weighted-average Interest Rate for the Period
    
    
    5.8
    %
    
    
    6.1
    %
    
    
    Repos with Domestic BanksWeighted-average Interest Rate at End of Period
    
    
    
    
    
    
    9.3
    %
    
    
    Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    317.4
    
    
    Ps.
    525.9
    
    
    Ps.
    165.6Average Balances for Each Period
    
    Ps.
    138.3
    
    
    Ps.
    101.6
    
    
    Ps.
    15.8Weighted-average Interest Rate for the Period
    
    
    8.9
    %
    
    
    7.6
    %
    
    
    4.9
    %Repos with Foreign BanksWeighted-average Interest Rate at End of Period
    
    
    
    
    
    
    
    
    
    
    7.5
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    
    
    
    
    Ps.
    223.5
    
    
    Ps.
    220.6Average Balances for Each Period
    
    
    
    
    
    Ps.
    145.7
    
    
    Ps.
    216.7Weighted-average Interest Rate for the Period
    
    
    
    
    
    
    8.3
    %
    
    
    6.6
    %Negotiable ObligationsWeighted-average Interest Rate at End of Period
    
    
    8.2
    %
    
    
    9.9
    %
    
    
    7.4
    %Maximum Balance Recorded at the Monthly Closing Dates
    
    Ps.
    65.7
    
    
    Ps.
    65.1
    
    
    Ps.
    123.2Average Balances for Each Period
    
    Ps.
    50.8
    
    
    Ps.
    49.6
    
    
    Ps.
    79.5Weighted-average Interest Rate for the Period
    
    
    9.3
    %
    
    
    7.5
    %
    
    
    6.1
    %
  -68-




---



##### Table of Contents



Regulatory Capital
 Ley de Sociedades Comerciales
 Banco Galicia
    January 1st/ December 31st
    
    Alfa 1
    
    
    Alfa 22004
    
    
    0.05
    
    
    
    0.202005
    
    
    0.15
    
    
    
    0.402006
    
    
    0.30
    
    
    
    0.702007
    
    
    0.50
    
    
    
    1.002008
    
    
    0.75
    
    
    
    2009
    
    
    1.00
    
    
    
    
    -69-




---



##### Table of Contents



As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos, except percentages)Shareholders Equity
    
    
    1,759.4
    
    
    
    1,263.0
    
    
    
    1,389.2Argentine Central Bank Minimum Capital Requirements(1)Allocated to Financial Assets
    
    
    845.3
    
    
    
    597.1
    
    
    
    477.2Allocated to Fixed Assets, Intangible and Unquoted Equity
Investments
    
    
    153.2
    
    
    
    143.5
    
    
    
    138.0Allocated to Market Risk
    
    
    20.4
    
    
    
    12.3
    
    
    
    16.8Allocated to Interest-Rate Risk
    
    
    52.4
    
    
    
    61.6
    
    
    
    87.1Lending to the Non-Financial Public Sector
    
    
    231.5
    
    
    
    269.8
    
    
    
    162.4Total (A)
    
    
    1,302.8
    
    
    
    1,084.3
    
    
    
    881.5Computable Regulatory Capital Calculated Under Argentine Banking
GAAPCore Capital
    
    
    1,756.4
    
    
    
    1,395.0
    
    
    
    1,207.1Supplemental Capital
    
    
    757.1
    
    
    
    608.4
    
    
    
    807.5Deductions
Investments in Financial Entities
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    (1.5
    )Organization Expenses
    
    
    (100.6
    )
    
    
    (64.2
    )
    
    
    (55.6
    )Goodwill Recorded from June 30, 1997
    
    
    (47.6
    )
    
    
    (66.8
    )
    
    
    (85.9
    )Other
    
    
    (9.8
    )
    
    
    (11.3
    )
    
    
    (9.1
    )Total
    
    
    (159.5
    )
    
    
    (143.8
    )
    
    
    (152.1
    )Additional Capital  Market Variation
    
    
    3.1
    
    
    
    2.0
    
    
    
    22.7Total (B)
    
    
    2,357.1
    
    
    
    1,861.6
    
    
    
    1,885.2Excess CapitalExcess Over Required Capital (B)-(A)
    
    
    1,054.3
    
    
    
    777.3
    
    
    
    1,003.7Excess Over Required Capital as a % of Required Capital
    
    
    80.93
    
    
    
    71.69
    
    
    
    113.86Total Capital Ratio
    
    
    15.54
    
    
    
    15.03
    
    
    
    20.78
 (1)
    
    In accordance with Argentine Central Bank rules applicable at each date.    Regional Credit Card Companies
   -70-




---



##### Table of Contents



Minimum Capital Requirements of Insurance Companies
  a)
    
    By line of insurance: This method establishes a fixed amount by line of insurance. For life
insurance companies, it is Ps. 4 million, rising to Ps. 5 million for companies that offer
pension-linked life insurance. For retirement providers that do not offer pension-linked
annuities, the requirement is Ps. 3 million (rising to Ps. 5 million for companies that offer
pension-linked annuities). For property insurance companies that offer damage coverage
(excluding vehicles related) the requirement is Ps. 1.5 million (rising to Ps. 8 million for
companies that offer all P&C products).
 b)
    
    By premiums and additional fees: To use this method, the company must calculate the sum of
the premiums written and additional fees earned in the last 12 months. Of the total, the
company must calculate 16%. Finally, it must adjust the total by the ratio of net paid claims
to gross paid claims for the last 36 months. This ratio must be at least 50%.
 c)
    
    By claims: To use this method, the company must calculate the sum of gross claims paid
during the 36 months prior to the end of the period under analysis. To that amount, it must
add the difference between the balance of unpaid claims as of the end of the period under
analysis and the balance of unpaid claims as of the 36th month prior to the end of the period
under analysis. The resulting figure must be divided by three. Then the company must
calculate 23%. The resulting figure must be adjusted by the ratio of net paid claims to gross
paid claims for the last 36 months. This ratio must be at least 50%.
 d)
    
    For life insurance companies that offer policies with an investment component, the figures
obtained in b) and c) must be increased by an amount equal to 4% of the technical reserves
adjusted by the ratio of net technical reserves to gross technical reserves (at least 85%),
plus 0.3% of at-risk capital adjusted by the ratio of retained at-risk capital to total
at-risk capital (at least 50%).
  
 Government Regulation
 General
  Régimen de la Transparencia de la Oferta
Pública
 Ley de Defensa de la Competencia Ley
de Lealtad Comercial Ley de Defensa del
Consumidor
  -71-




---



##### Table of Contents



Ley de Tarjetas de
Crédito
   Foreign Exchange Market
     -72-




---



##### Table of Contents



(a)
    
    foreign exchange flows into and from the local foreign exchange market
and all resident new debt transactions that may imply future foreign exchange
payments to nonresidents must be registered with the Argentine Central Bank.
 (b)
    
    All new debt of the private sector with non-residents must be for a
minimum term of 365 days, except for international trade financing and primary
issuances of debt securities, if such securities public offering and listing on
self-regulated markets in Argentina has been duly authorized.
 (c)
    
    All inflows of foreign exchange resulting from such indebtedness, with
the exceptions mentioned in the previous item and those regulated by the Argentine
Central Bank which are detailed below, and all inflows of foreign exchange by
non-residents, excluding direct foreign investments and certain portfolio
investments (subscriptions of primary issuances of debt and equity securities,
which public offering and listing in self-regulated markets in Argentina has been
duly authorized, and government securities acquired in the secondary market), must
be for a term of at least 365 days and will be subject to a 30% deposit
requirement.
 (d)
    
    Such deposit requirement will be held in a local financial institution
as an unremunerated Dollar-denominated deposit maturing in at least 365 days; such
funds will not be available as a guarantee for any kind of debt and, upon the
deposit maturity date, such funds will become available within the country and,
therefore, will be subject to certain restrictions on foreign exchange transfers
abroad.
 (e)
    
    The 30% deposit is not required for, among other things, inflows of
foreign currency:
 (i)
    
    resulting from loans granted to residents by local financial
institutions in foreign currency;
 (ii)
    
    resulting from capital contributions to local institutions,
when the contributor owns, previously or as a result of such contributions,
10% or more of the companys capital or votes, subject to compliance with
certain requirements;
 (iii)
    
    resulting from sales of interests in local entities to
direct investors;
 (iv)
    
    to be applied to real estate acquisitions;
 (v)
    
    resulting from an indebtedness with multilateral and
bilateral credit agencies and with official credit agencies;
 (vi)
    
    resulting from other foreign indebtedness of the local
non-financial private sector, with an average life of no less than two years,
the proceeds of which will be applied to non-financial investments (as defined
by the Argentine Central Bank);
 (vii)
    
    resulting from other foreign indebtedness where the proceeds
will be applied to the settlement of foreign debt principal amortization or
long term investments in foreign assets;
 (viii)
    
    resulting from the sale of foreign assets of residents in order to subscribe
to primary issuances of public debt issued by the Government; and
 (f)
    
    the proceeds of sales of foreign assets brought into the country by
residents (capital repatriation) will be subject to the 30% deposit requirement,
which will apply to any amounts exceeding US$ 2.0 million per month.
    -73-




---



##### Table of Contents



a.
    
    with no limit in the case of: (i) proceeds from the principal amortization of
government securities; (ii) recoveries from local bankruptcies; (iii) proceeds from the
sale of direct investments in the non-financial private sector in Argentina or the final
disposition of such investments if they were made with foreign currency that entered the
local foreign exchange market no less than 365 days before; and (iv) certain other specific
cases.
 b.
    
    with a US$ 500,000 monthly limit in the case of the aggregate proceeds of the sale of
portfolio investments made with foreign currency that entered the local foreign exchange
market no less than 365 days before.
 c.
    
    with a US$ 5,000 monthly limit in cases not contemplated above, unless authorization
from the Argentine Central Bank is obtained.
 d.
    
    Access to the local foreign exchange market by residents (both individuals and
entities) to make foreign real estate, direct or portfolio investments or buy foreign
exchange or traveler checks is allowed but limited to US$ 2.0 million per month, with such
limit increased in certain cases.
 e.
    
    Access to the foreign exchange local market for the transfer of profits and dividends
abroad is permitted when corresponding to audited and final balance sheets.
 mercado libre y único de cambios
 Compensation to Financial Institutions
 For the Asymmetric Pesification and its Consequences
  
    
    the losses caused by the mandatory conversion into Pesos of certain liabilities
at the Ps. 1.4 per US$ 1.0 exchange rate, greater than the Ps. 1.0 per US$ 1.0 exchange
rate established for the conversion into Pesos of certain Dollar-denominated assets.
This was to be achieved through the delivery of a Peso-denominated compensatory bond
issued by the Government (Boden 2007 Bonds).
 
    
    the currency mismatch left on financial institutions balance sheets after the
compulsory pesification of certain of their assets and liabilities after the conversion
of the Peso-denominated compensatory bond into a Dollar-denominated compensatory bond.
This would be achieved by the purchase by financial institutions of a
Dollar-denominated hedge bond. For such purpose, the Government established the
issuance of a Dollar-denominated bond bearing Libor and maturing in 2012 (Boden 2012
Bonds).
      -74-




---



##### Table of Contents



For Differences Related to Amparo Claims
     -75-




---



##### Table of Contents



Argentine Banking Regulation
 The following is a summary of certain matters relating to the Argentine banking system,
including provisions of Argentine law and regulations applicable to financial institutions in
Argentina. This summary is not intended to constitute a complete analysis of all laws and
regulations applicable to financial institutions in Argentina.
 General
    -76-




---



##### Table of Contents



Supervision
    Examination by the Argentine Central Bank
    -77-




---



##### Table of Contents



BASIC System
  
    
    B (Bonos orBonds).On an annual basis, all financial institutions in Argentina were
required to engage in certain debt issuing transactions in order to expose them to scrutiny
and analysis by third parties with high standards. This requirement was eliminated by the
Argentine Central Bank effective March 1, 2002.
    
    A (Auditoría orAudit).The Argentine Central Bank requires a set of external audit
procedures that include: (a) the creation of a registry of auditors; (b) the implementation
of strict accounting procedures to be complied with by external auditors; (c) the payment of
a performance guarantee by those auditors to induce their compliance with the procedures,
and (d) the creation of a department within the Argentine Central Bank liable for verifying
that the procedures are followed. The purpose of this requirement is to assure accurate
disclosure by the financial institutions to both the Superintendency and the public.
    
    S (Supervisión orSupervision).The Argentine Central Bank has the right to inspect
financial institutions from time to time.
    
    I (Información orInformation).Financial institutions are required to file on a monthly
basis certain daily, weekly, monthly and quarterly statistical information.
    
    C (Calificación orRating).The Argentine Central Bank established a system that
required the periodic credit evaluation of financial entities by internationally recognized
rating agencies, which was suspended by Communiqué A 3601 in May 2002. A rating by such
agencies is still required for financial institutions to be able to receive deposits from
local pension funds (AFJPs).
 Legal Reserve
  Limitations on Types of Business
 fondos comunes de inversión
 
    
    equity shares without quotation, excluding (a) stock of companies which provide services
complementary to the services offered by the bank, and (b) certain stock participations
which are necessary in order to obtain the rendering of public services, if any,
 
    
    listed stock and participations in mutual funds which are not included in order to
determine the capital requirements related to market risk; and
 
    
    listed stock that does not have a largely publicly available market price (when daily
quotes of relevant transactions are available, which quotes would not be significantly
affected by the disposition of the banks holdings of such stock)
    -78-




---



##### Table of Contents



Computable Regulatory Capital
      Capital Adequacy Requirements
  Capitalization of Debt Instruments
  Profit Distribution
  Treatment of Losses in Connection with Amparo Claims
   -79-




---



##### Table of Contents



amparo amparo
  Legal Reserve Requirements for Liquidity Purposes
 amparo
 see below
    
    
    Demand deposits:
 
    
    Peso-denominated current accounts and savings accounts: 19%.
    
    Dollar-denominated savings accounts: 30%.
 
    
    Time deposits, including those adjusted by CER (by remaining maturity):
 
    
    denominated in Pesos: up to 29 days: 14%; from 30 to 59 days: 11%; from 60 to
89 days: 7%; from 90 to 179 days: 2%; from 180 to 365 days: 0%.
    
    denominated in Dollars: up to 29 days: 35%; from 30 to 59 days: 28%; from 60 to
89 days: 20%; from 90 to 179 days: 10%; from 180 to 365 days: 6%; and more than 365
days: 0%.
  -80-




---



##### Table of Contents



Lending Limits
  i) Limits to financial assistance that refer to the borrowers capital
 ii) Limits that refer to the financial institutions RPC
 Without Collateral
    
    
    With CollateralNon-related Customers
    
    
    15
    %
    
    
    25
    %Domestic Financial Institutions (*)
    
    
    25
    %
    
    
    25
    %Foreign Financial Institutions (Investment Grade)
    
    
    25
    %
    
    
    25
    %Foreign Financial Institutions (Other)
    
    
    5
    %
    
    
    5
    %Reciprocal Guarantee Entities Authorized by the Argentine Central Bank (**)
    
    
    
    
    
    
    25
    %Public Sector (***):i) National
    
    
    50
    %
    
    
    50
    %ii) City of Buenos Aires and Provinces (Each)
    
    
    10
    %
    
    
    10
    %iii) Municipalities (Each)
    
    
    3
    %
    
    
    3
    %
 (*)
    
    For bankers banks, the limit is 100%.(**)
    
    Law 24,467: associations of companies authorized by the Argentine Central Bank to guarantee loans. In case one of
the companies fails to pay, the other takes responsibility.(***)
    
    Excess over the new limits set in March 2003 will not be computed if arising from loans granted before March
2003, if determined or increased by the reception of bonds or promissory notes as compensation for the asymmetric
pesification, or if arising from the rolling over of preexisting loans.   -81-




---



##### Table of Contents



The limits on equity interests in other companies are the following:
 Limit based on a Banks RPC
    
    
    Limit based on Customers Net WorthCompanies with Non-complementaryActivities
    
    
    
    
    
    
    12.5
    % (**)Companies with Complementary Activities
    
    
    
    
    
    
    100
    %Total Shares
    
    
    50
    %Shares Without Quotation (*)
    
    
    15
    %
 (*)
    
    Includes shares that do not quote frequently and therefore are not subject capital requirements to cover market risk.(**)
    
    Shares or equity interests could be taken in payment of credits, up to 20% of the firms capital, without exceeding 20% of the
votes. They had to be sold within one year so as to reach the regulatory limit.         -82-




---



##### Table of Contents



Loan Classification System and Loan Loss Provisions
  Valuation of Public Sector Assets
  Financial Assistance from the Argentine Central Bank
 Financial Assistance Granted for Liquidity Support Granted After March 10, 2003
  Financial Assistance for Liquidity Support Granted Before April 1, 2003
   Foreign Currency Position
   -83-




---



##### Table of Contents



Deposit Insurance System
 Fondo de Garantía de los Depósitos
   Priority Rights of Depositors
   
    
    deposits of individuals or entities up to Ps. 50,000 or the equivalent thereof in foreign
currency, with only one person per deposit being able to use this preference. For the
determination of this preference, all deposits of the same person registered by the entity
shall be computed;
    
    deposits in excess of Ps. 50,000 or the equivalent thereof in foreign currency, referred
to above;
    
    liabilities originated on commercial credit lines granted to the financial entity, which
are directly related with international trade.
    -84-




---



##### Table of Contents



Financial Institutions with Economic Difficulties
      Dissolution and Liquidation of Financial Institutions
     -85-




---



##### Table of Contents



Credit Cards Regulation
  
    
    places the supervision of credit and debit card companies in the hands of the Argentine
Central Bank for financial matters and of the National Undersecretary of Industry and Trade
for business and commercial matters;
    
    sets a 3% cap on the rate a credit card company can charge merchants with which it has
entered into card acceptance agreements for processing customer card holders transactions
with such merchants, calculated as a percentage of the customers purchases;
    
    establishes that credit card companies must provide the Argentine Central Bank with the
information on their loan portfolio that such entity requires, and
    
    sets a cap on the interest rate a credit card company can charge a card holder, which
cannot exceed by more than 25% the average interest rate charged by the issuer on personal
loans and, for non-bank issuers, it
cannot exceed by more than 25% the financial systems average interest rate on personal
loans published by the Argentine Central Bank.
  
 Concealment and Laundering of Assets of a Criminal Origin
 Unidad de Información Financiera
  i)
    
    Any person who converts, transfers, administers, sells, encumbers or uses money
or any other asset derived from any crime in which he was not involved, with the
possible result of giving those original or secondary assets the appearance of having a
legal origin and as long as their value is greater than Ps. 50,000, whether through a
single act or through a series of related events, will be imprisoned for two to ten
years and will be fined an amount that will be between two and ten times the amount of
the transaction.ii)
    
    Any person that was not involved in a crime committed by another person but
that (a) helps a person to elude or escape from an investigation by the relevant
authority; (b) hides, alters or destroys any trail, evidence or object related to the
crime or helps the perpetrator of the crime or any participant to hide them, alter them
or make them disappear; (c) acquires, receives or hides money or objects arising from a
crime; (d) does not report a crime or does not identify a perpetrator of or participant
in a crime that is known to him when obligated to do so in order to promote the
criminal prosecution of a crime of such nature; (e) secures or helps the perpetrator of
or participant in a crime to secure the product or profit of a crime, will be
imprisoned for six (6) months to three (3) years.
   -86-




---



##### Table of Contents



the Consejo de
Profesionales de Ciencias Económica
     -87-




---



##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 
 Item 5A. Operating Results
  
 Overview
  
    
    Consistently expand the volume of our business with the private sector;
    
    Progressively strengthen our balance sheet by: (i) advancing in the process of receiving
compensation for the Bank from the Government for the negative effects of the asymmetric
pesification, and (ii) consistently reducing the Banks high exposure to the public sector,
mainly a legacy of the 2001-2002 crisis, as well as those liabilities incurred by the Bank
as a consequence of such crisis, and
    
    Capitalize the Bank.
     -88-




---



##### Table of Contents



-89-




---



##### Table of Contents



amparo
 
 The Argentine Economy, Financial System and Insurance Industry in the Three Years Ended December
31, 2007
       -90-




---



##### Table of Contents



The Argentine Financial System
    -91-




---



##### Table of Contents



The Argentine Insurance Industry
  
 Inflation
  For the 12-month period ended December 31,(in percentages)
    
    2007
    
    
    2006
    
    
    2005Price Indices (1)WPI
    
    
    14.56
    
    
    
    7.14
    
    
    
    10.67CPI
    
    
    8.47
    
    
    
    9.84
    
    
    
    12.33Adjustment IndicesCER
    
    
    8.50
    
    
    
    10.08
    
    
    
    11.75
 (1)
    
    Source: INDEC.   -92-




---



##### Table of Contents



Currency Composition of Our Balance Sheet
  As of December 31,2007
    
    
    2006
    
    
    2005(In millions of Pesos)AssetsIn Pesos, unadjusted
    
    
    14,177.0
    
    
    
    12,510.4
    
    
    
    8,159.3In Pesos, adjusted by the CER
    
    
    2,350.7
    
    
    
    4,271.5
    
    
    
    10,671.5In foreign currency (1)
    
    
    6,301.0
    
    
    
    6,833.5
    
    
    
    6,807.4Total Assets
    
    
    22,828.7
    
    
    
    23,615.4
    
    
    
    25,638.2Liabilities and Shareholders EquityIn Pesos, Unadjusted, Including Shareholders Equity
    
    
    15,597.3
    
    
    
    13,096.4
    
    
    
    7,532.0In Pesos, Adjusted by the CER
    
    
    277.3
    
    
    
    3,826.2
    
    
    
    9,909.4In Foreign Currency (1)
    
    
    6,954.1
    
    
    
    6,692.8
    
    
    
    6,196.8Total Liabilities and Shareholders Equity
    
    
    22,828.7
    
    
    
    23,615.4
    
    
    
    23,638.2
 (1)
    
    If adjusted to reflect forward sales and purchases of foreign exchange made by the Bank
and recorded off-balance sheet, assets amounted to Ps. 8,041.3 million and liabilities Ps.
7,833.9 million.  
 Results of Operations for the Fiscal Years Ended December 31, 2007, December 31, 2006 and December
31, 2005
  Net Income/Loss
 Fiscal Year Ended
    
    
    ChangeDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005(in millions of Pesos, except percentages)Consolidated Income StatementFinancial Income
    
    
    1,997.9
    
    
    
    2,229.8
    
    
    
    2,398.6
    
    
    
    (231.9
    )
    
    
    (168.8
    )Financial Expenses
    
    
    1,246.7
    
    
    
    1,851.6
    
    
    
    1,845.9
    
    
    
    (604.9
    )
    
    
    5.7Net financial Income
    
    
    751.2
    
    
    
    378.2
    
    
    
    552.7
    
    
    
    373.0
    
    
    
    (174.5
    )Provision for Losses on Loans and Other Receivables
    
    
    255.5
    
    
    
    110.9
    
    
    
    76.7
    
    
    
    144.6
    
    
    
    34.2Net income from Services
    
    
    913.1
    
    
    
    672.0
    
    
    
    523.7
    
    
    
    241.1
    
    
    
    148.3Administrative Expenses
    
    
    1,286.3
    
    
    
    974.6
    
    
    
    781.0
    
    
    
    311.7
    
    
    
    193.6Minority Interest
    
    
    (32.1
    )
    
    
    (19.0
    )
    
    
    (34.6
    )
    
    
    (13.1
    )
    
    
    15.6Income / (Loss) from Equity Investments
    
    
    2.0
    
    
    
    (14.4
    )
    
    
    6.7
    
    
    
    16.4
    
    
    
    (21.1
    )Miscellaneous Income / (Loss), Net
    
    
    25.1
    
    
    
    144.0
    
    
    
    (64.3
    )
    
    
    (118.9
    )
    
    
    208.3Income Tax
    
    
    (71.5
    )
    
    
    (94.2
    )
    
    
    (19.3
    )
    
    
    22.7
    
    
    
    (74.9
    )Net income / (Loss)
    
    
    46.0
    
    
    
    (18.9
    )
    
    
    107.2
    
    
    
    64.9
    
    
    
    (126.1
    )Return on Average Assets (1)
    
    
    0.37
    
    
    
    0.0004
    
    
    
    0.59
    
    
    
    0.3696
    
    
    
    (0.59
    )Return on Average Shareholders Equity
    
    
    2.86
    
    
    
    (1.15
    )
    
    
    6.83
    
    
    
    4.01
    
    
    
    (7.98
    )
 (1)
    
    For the calculation of the return on average assets, profits or losses corresponding to minority interests are excluded from
net income.    -93-




---



##### Table of Contents



Fiscal Year 2007 Compared to Fiscal Year 2006
  
    
    a 32.7% reduction in financial expenses, from Ps. 1,851.6 million to Ps. 1,246.7
million,
    
    a 35.9% increase in net income from services from Ps. 672.0 million to Ps. 913.1
million, and
    
    income tax charges for Ps. 71.5 million, 24.1% less than the Ps. 94.2 million
corresponding to the prior fiscal year.
  
    
    a 32.0% increase in administrative expenses, which increased from Ps. 974.6 million to
Ps. 1,286.3 million,
    
    a 10.4% reduction in financial income, from Ps. 2,229.8 million to Ps. 1,997.9 million,
    
    a Ps. 144.6 million increase in loan loss provisions, from Ps. 110.9 million to Ps.
255.5 million, and
    
    a Ps. 118.9 million decrease in net miscellaneous income, from Ps. 144.0 million to Ps.
25.1 million.
 Fiscal Year 2006 Compared to Fiscal Year 2005
  
    
    a 31.6% reduction in net financial income, from Ps. 552.7 million to Ps. 378.2 million.
Net financial income in 2006 included a Ps. 198.4 million loss from the valuation of
public-sector assets in accordance with Argentine Central Bank rules;
    
    a 24.8% increase in administrative expenses, from Ps. 781.0 million to Ps. 974.6
million;
    
    a 44.6% increase in loan loss provisions, from Ps. 76.7 million to Ps. 110.9 million;
and
    
    a Ps. 74.9 million increase in income tax charges.These factors were partially offset by:
    
    a Ps. 208.3 million increase in net miscellaneous income, from Ps. (64.3) million to Ps.
144.0 million, and
    
    a 28.3% increase in net income from services, to Ps. 672.0 million from Ps. 523.7
million.
 Financial Income
  Fiscal Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Income on Loans and Other Receivables Resulting
from Financial Brokerage and Premiums Earned on
Reverse Repos
    
    
    1,413.2
    
    
    
    1,149.1
    
    
    
    899.8Income from Government and Corporate Securities, Net
    
    
    241.3
    
    
    
    235.3
    
    
    
    333.1CER Adjustment
    
    
    205.1
    
    
    
    736.0
    
    
    
    1,091.8Other (1)
    
    
    138.3
    
    
    
    109.4
    
    
    
    73.9Total
    
    
    1,997.9
    
    
    
    2,229.8
    
    
    
    2,398.6
 (1)
    
    Reflects income from financial leases, net, and differences in the quotation of gold and
foreign currency as well as premiums on forward sales of foreign exchange.  -94-




---



##### Table of Contents



As of December 31,2007
    
    
    2006
    
    
    2005Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate
    
    
    Balance
    
    
    Rate(in millions of Pesos, except rates)Interest-Earning Assets
    
    
    18,225.9
    
    
    
    10.00
    
    
    
    21,752.6
    
    
    
    8.84
    
    
    
    21,844.2
    
    
    
    10.60Government Securities
    
    
    4,278.8
    
    
    
    3.42
    
    
    
    4,675.8
    
    
    
    6.68
    
    
    
    5,747.7
    
    
    
    11.78Loans
    
    
    10,528.9
    
    
    
    14.17
    
    
    
    10,851.0
    
    
    
    12.21
    
    
    
    9,746.9
    
    
    
    14.00Other (1)
    
    
    3,418.2
    
    
    
    5.41
    
    
    
    6,225.8
    
    
    
    4.57
    
    
    
    6,349.6
    
    
    
    4.30Interest-Bearing Liabilities
    
    
    14,858.8
    
    
    
    7.21
    
    
    
    18,894.0
    
    
    
    8.79
    
    
    
    19,437.8
    
    
    
    9.24Current Accounts
    
    
    678.4
    
    
    
    2.42
    
    
    
    658.8
    
    
    
    3.19
    
    
    
    615.0
    
    
    
    2.49Saving Accounts
    
    
    2,252.9
    
    
    
    0.23
    
    
    
    1,789.3
    
    
    
    0.25
    
    
    
    1,388.0
    
    
    
    0.34Time Deposits (2)
    
    
    6,606.2
    
    
    
    8.51
    
    
    
    5,297.9
    
    
    
    7.84
    
    
    
    4,119.1
    
    
    
    5.99Argentine Central Bank (3)
    
    
    261.5
    
    
    
    26.31
    
    
    
    6,083.1
    
    
    
    12.65
    
    
    
    8,341.6
    
    
    
    14.11Debt Securities
    
    
    3,360.1
    
    
    
    8.66
    
    
    
    3,432.4
    
    
    
    8.59
    
    
    
    3,528.6
    
    
    
    6.63Other Interest-bearing Liabilities
    
    
    1,699.7
    
    
    
    7.50
    
    
    
    1,632.5
    
    
    
    9.48
    
    
    
    1,445.5
    
    
    
    8.16Spread and Net YieldInterest Spread, Nominal Basis (4)
    
    
    
    
    
    
    2.79
    
    
    
    
    
    
    
    0.05
    
    
    
    
    
    
    
    1.36Net Yield on Interest-earning Assets (5)
    
    
    
    
    
    
    4.13
    
    
    
    
    
    
    
    1.21
    
    
    
    
    
    
    
    2.38Financial Margin (6)
    
    
    
    
    
    
    4.12
    
    
    
    
    
    
    
    1.74
    
    
    
    
    
    
    
    2.53
 (1)
    
    Includes amounts corresponding to the Compensatory Bond and the Hedge Bond.(2)
    
    Includes restructured deposits certificates and restructured deposits with amparo claims.(3)
    
    Includes the financial assistance from the Argentine Central Bank and the advance from the Argentine Central Bank for the subscription of the Hedge Bond.(4)
    
    Reflects the difference between the average nominal interest rate on interest-earning assets and the average nominal interest rate on interest-bearing liabilities. Interest rates
include the CER adjustment.(5)
    
    Net interest earned divided by average interest-earning assets. Interest rates include the CER adjustment.(6)
    
    Represents net financial income, divided by average interest-earning assets. Fiscal Year 2007 Compared to Fiscal Year 2006
       -95-




---



##### Table of Contents



-96-




---



##### Table of Contents



Fiscal Year EndedDecember 31,(in percentages)
    
    2007
    
    
    2006
    
    
    2005Total Deposits
    
    
    6.32
    
    
    
    6.18
    
    
    
    5.93Private-Sector DepositsTotal
    
    
    8.23
    
    
    
    8.43
    
    
    
    7.96Deposits in Current and Savings Accounts and Non-Restructured Time Deposits
    
    
    8.55
    
    
    
    8.78
    
    
    
    8.32Total Loans
    
    
    7.41
    
    
    
    8.13
    
    
    
    9.79Private-Sector Loans
    
    
    7.75
    
    
    
    7.22
    
    
    
    7.31
 Banco de Galicia y Buenos Aires S.A., only, within the Argentine financial system. Based on daily information on
deposits and loans prepared by the Argentine Central Bank using-end of month balances.
 Fiscal Year 2006 Compared to Fiscal Year 2005
   -97-




---



##### Table of Contents



-98-




---



##### Table of Contents



Financial Expenses
  Fiscal Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Interest on Deposits
    
    
    547.3
    
    
    
    346.1
    
    
    
    172.3Negotiable Obligations
    
    
    335.2
    
    
    
    294.9
    
    
    
    234.1Contributions and Taxes
    
    
    86.4
    
    
    
    68.6
    
    
    
    48.8CER Adjustment
    
    
    67.0
    
    
    
    697.7
    
    
    
    1,006.8Other (1)
    
    
    210.8
    
    
    
    444.3
    
    
    
    383.9Total
    
    
    1,246.7
    
    
    
    1,851.6
    
    
    
    1,845.9
 (1)
    
    Includes accrued interest on liabilities resulting from financial brokerage with banks and international entities and
premiums payable on repos. Fiscal Year 2007 Compared to Fiscal Year 2006
   -99-




---



##### Table of Contents



-100-




---



##### Table of Contents



Fiscal Year 2006 Compared to Fiscal Year 2005
         -101-




---



##### Table of Contents



Net Financial Income
     Provision for Losses on Loans and Other Receivables
   -102-




---



##### Table of Contents



Net Income from Services
  Fiscal Year Ended
    
    
    % ChangeDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005(in millions of Pesos)
    
    
    (in percentages)Income FromCredit Cards
    
    
    669.5
    
    
    
    473.6
    
    
    
    360.3
    
    
    
    41.4
    
    
    
    31.4Deposits Accounts
    
    
    160.5
    
    
    
    125.7
    
    
    
    102.7
    
    
    
    27.7
    
    
    
    22.4Financial Fees
    
    
    28.8
    
    
    
    19.4
    
    
    
    13.4
    
    
    
    48.5
    
    
    
    44.8Credit-related Fees
    
    
    79.1
    
    
    
    53.4
    
    
    
    23.5
    
    
    
    48.1
    
    
    
    127.2Check Collection
    
    
    27.3
    
    
    
    18.3
    
    
    
    12.4
    
    
    
    49.2
    
    
    
    47.6Collection Services (Taxes and Utility Bills)
    
    
    14.1
    
    
    
    11.2
    
    
    
    9.5
    
    
    
    25.9
    
    
    
    17.9International Trade
    
    
    39.5
    
    
    
    31.9
    
    
    
    24.5
    
    
    
    23.8
    
    
    
    30.2Insurance
    
    
    60.8
    
    
    
    45.0
    
    
    
    33.4
    
    
    
    35.1
    
    
    
    34.7Other (1)
    
    
    91.1
    
    
    
    74.6
    
    
    
    66.0
    
    
    
    22.1
    
    
    
    13.0Total Income
    
    
    1,170.7
    
    
    
    853.1
    
    
    
    645.7
    
    
    
    37.2
    
    
    
    32.1Total Expenses
    
    
    257.6
    
    
    
    181.1
    
    
    
    122.0
    
    
    
    42.2
    
    
    
    48.4Net Income from Services
    
    
    913.1
    
    
    
    672.0
    
    
    
    523.7
    
    
    
    35.9
    
    
    
    28.3
 (1)
    
    Includes, among others, fees from investment banking activities, asset management, safe deposit boxes and cash management. Fiscal Year 2007 Compared to Fiscal Year 2006
       -103-




---



##### Table of Contents



Fiscal Year 2006 Compared to Fiscal Year 2005
    % ChangeDecember 31,
    
    
    December 31,Credit Cards
    
    2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005(number of credit cards, except purchases inmillions of Pesos)
    
    
    
    
    
    
    
    
    (percentages)Visa
    
    
    855,708
    
    
    
    721,105
    
    
    
    578,211
    
    
    
    18.67
    
    
    
    24.71Gold
    
    
    172,830
    
    
    
    124,287
    
    
    
    102,669
    
    
    
    39.06
    
    
    
    21.06International
    
    
    433,000
    
    
    
    387,485
    
    
    
    299,269
    
    
    
    11.75
    
    
    
    29.48Domestic
    
    
    229,174
    
    
    
    198,409
    
    
    
    169,434
    
    
    
    15.51
    
    
    
    17.10Business
    
    
    15,962
    
    
    
    10,877
    
    
    
    6,839
    
    
    
    46.75
    
    
    
    59.04Corporate
    
    
    295
    
    
    
    47
    
    
    
    
    
    
    
    527.66
    
    
    
    Platinum
    
    
    4,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Galicia Rural
    
    
    5,841
    
    
    
    5,049
    
    
    
    4,587
    
    
    
    15.69
    
    
    
    10.07American Express
    
    
    195,360
    
    
    
    131,660
    
    
    
    94,869
    
    
    
    48.38
    
    
    
    38.78Gold
    
    
    79,829
    
    
    
    56,563
    
    
    
    43,834
    
    
    
    41.13
    
    
    
    29.04International
    
    
    115,531
    
    
    
    75,097
    
    
    
    51,035
    
    
    
    53.84
    
    
    
    47.15MasterCard
    
    
    50,577
    
    
    
    41,271
    
    
    
    13,993
    
    
    
    22.55
    
    
    
    194.94Gold
    
    
    13,203
    
    
    
    10,437
    
    
    
    2,987
    
    
    
    26.50
    
    
    
    249.41MasterCard
    
    
    35,684
    
    
    
    29,765
    
    
    
    10,817
    
    
    
    19.89
    
    
    
    175.17Argencard
    
    
    1,690
    
    
    
    1,069
    
    
    
    189
    
    
    
    58.09
    
    
    
    465.61Regional Credit-Card Companies
    
    
    4,283,770
    
    
    
    3,383,483
    
    
    
    2,444,526
    
    
    
    26.61
    
    
    
    38.41Local Brands
    
    
    2,479,788
    
    
    
    2,192,098
    
    
    
    1,849,724
    
    
    
    13.12
    
    
    
    18.51Visa
    
    
    1,599,046
    
    
    
    1,068,702
    
    
    
    594,802
    
    
    
    49.63
    
    
    
    79.67MasterCard
    
    
    182,237
    
    
    
    122,683
    
    
    
    
    
    
    
    48.54
    
    
    
    American Express
    
    
    22,699
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    5,391,256
    
    
    
    4,282,568
    
    
    
    3,136,186
    
    
    
    25.89
    
    
    
    36.55Total Amount of Purchases(in millions of Pesos)
    
    
    11,566.3
    
    
    
    8,305.1
    
    
    
    5,098.6
    
    
    
    39.27
    
    
    
    62.89
  -104-




---



##### Table of Contents



Administrative Expenses
  Fiscal Year Ended
    
    
    % ChangeDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005
    
    
    2007/2006
    
    
    2006/2005(in millions of Pesos)
    
    
    (in percentages)Salaries and Social Security Contributions
    
    
    540.6
    
    
    
    415.4
    
    
    
    330.5
    
    
    
    30.1
    
    
    
    25.7Property-related Expenses
    
    
    89.9
    
    
    
    65.1
    
    
    
    57.7
    
    
    
    38.1
    
    
    
    12.8Personnel Services
    
    
    75.7
    
    
    
    46.6
    
    
    
    30.0
    
    
    
    62.4
    
    
    
    55.3Advertising and Publicity
    
    
    113.8
    
    
    
    84.5
    
    
    
    68.2
    
    
    
    34.7
    
    
    
    23.9Amount Accrued in Relation to Directors and Syndics Compensation
    
    
    6.4
    
    
    
    6.0
    
    
    
    5.8
    
    
    
    6.7
    
    
    
    3.4Electricity and Communications
    
    
    57.2
    
    
    
    41.1
    
    
    
    31.1
    
    
    
    39.2
    
    
    
    32.2Taxes
    
    
    70.4
    
    
    
    50.5
    
    
    
    37.4
    
    
    
    39.4
    
    
    
    35.0Other
    
    
    332.3
    
    
    
    265.4
    
    
    
    220.3
    
    
    
    25.2
    
    
    
    20.5Total
    
    
    1,286.3
    
    
    
    974.6
    
    
    
    781.0
    
    
    
    32.0
    
    
    
    24.8
 Fiscal Year 2007 Compared to Fiscal Year 2006
  Fiscal Year 2006 Compared to Fiscal Year 2005
  Income/(Loss) from Equity Investments
   -105-




---



##### Table of Contents



Miscellaneous Income/(Loss), Net
 amparo amparo
 amparo
 Income Tax
     -106-




---



##### Table of Contents



U.S. GAAP and Argentine Banking GAAP Reconciliation
 General
  Allowances for Loan Losses
   December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Argentine Banking GAAP
    
    
    428.6
    
    
    
    327.0
    
    
    
    427.9U.S. GAAPSFAS 114Allowance for Loan Losses
    
    
    246.3
    
    
    
    291.9
    
    
    
    397.9Effect of BG Trust Securitization
 Treated as a Secured Borrowing
for U.S. GAAP Purposes
    
    
    (64.9
    )
    
    
    (89.7
    )
    
    
    (84.8
    )SFAS 5
    
    
    240.9
    
    
    
    170.6
    
    
    
    111.2U.S. GAAP Shareholders Equity Adjustment
    
    
    6.3
    
    
    
    (45.8
    )
    
    
    3.6
 SFAS 114 Analysis
  
    
    With Problems
    
    High Risk of Insolvency
    
    Uncollectible
  December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Loan Loss Reserve Under
U.S. GAAP  SFAS 114 Analysis
    
    
    246.3
    
    
    
    291.9
    
    
    
    397.9
   -107-




---



##### Table of Contents



SFAS 5 Analysis
  December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Loan Loss Reserve Under
U.S. GAAP  SFAS 5 Analysis
    
    
    240.9
    
    
    
    170.6
    
    
    
    111.2
  
    
    Loan loss reserves as a percentage of non-accrual loans,
    
    Loan loss reserves as a percentage of total amounts past due, and
    
    Loan loss reserves as a percentage of past-due unsecured amounts.
  December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005Loan Loss Reserves as a Percentage of Non-accrual Loans
    
    
    132.13
    %
    
    
    168.58
    %
    
    
    139.49
    %Loan Loss Reserves as a Percentage of Total Amounts Past Due
    
    
    149.57
    
    
    
    183.29
    
    
    
    208.36Loan Loss Reserves as a Percentage of Past-due Unsecured Amounts
    
    
    167.19
    
    
    
    210.51
    
    
    
    226.98
 Carrying Value of Secured Loans, Certain Government Securities and Receivables for Government
Securities
    Elements of Financial Statements
  -108-




---



##### Table of Contents



amparo amparo
 Foreign Debt Restructuring
    Securitizations
    -109-




---



##### Table of Contents



Income Tax
   Summary
  Net Income (Loss)
    
    
    Shareholders Equity (Deficit)Argentine Banking
    
    
    
    
    
    
    Argentine BankingGAAP
    
    
    U.S. GAAP
    
    
    GAAP
    
    
    U.S. GAAP(in millions of Pesos)Fiscal Year 2007
    
    
    46.0
    
    
    
    592.9
    
    
    
    1,654.5
    
    
    
    238.1Fiscal Year 2006
    
    
    (18.9
    )
    
    
    3,524.9
    
    
    
    1,608.5
    
    
    
    145.8Fiscal Year 2005
    
    
    107.2
    
    
    
    731.0
    
    
    
    1,626.8
    
    
    
    (2,128.3
    )
  
    
    Significant losses were recognized in 2001 from the effects of several Government
actions reflected at the end of that year. Subsequently, the improvement in the
Argentine economy and business environment generated changes in estimated losses that
are reflected in the income statement and under other comprehensive income in 2005,
2006 and 2007.
    
    Since 2005, given that the Compensatory Bond was received in full in that year, the
corresponding Boden 2012 Bonds are reflected at market value, with changes in values
being recognized under other comprehensive income, the effect of which varies
significantly in 2005, 2006 and 2007.
    
    The Hedge Bond and the liability with the Argentine Central Bank for its purchase
were not recognized under U.S. GAAP in 2005, while they were recognized in 2006. With
the delivery to the Bank of 90.8% of the Hedge Bond in 2006, as the Bank acquired
control of 90.8% of the asset that previously was not recognized as such, the
adjustment made in the prior year (to reflect that the asset, recognized under
Argentine Banking GAAP, was not recognized under U.S. GAAP) was reversed in the same
proportion which generated a significant increase in our net income for fiscal year
2006 under U.S. GAAP.
    
    Under U.S. GAAP, Secured Loans and Bogar Bonds balances reflect market-value
adjustments recognized from exchange transactions. Accretion of the discount,
considering the amounts estimated to be collected, is recognized as income after the
exchange transaction occurred. Significant amounts of these assets were used to repay
Argentine Central Bank liabilities or sold, especially during 2006 and 2007, which
resulted in the realization of the corresponding accretion, which was recognized as
income.
    
    Bogar Bonds and Discount Bonds in Pesos are reflected at market values, with changes
from market values at the time of exchange being recognized as other comprehensive
income. With the improvement in the Argentine economy, market values have varied
significantly. In addition, during 2006, we sold significant amounts of Bogar Bonds,
realizing all the gains related to changes in the market value of these bonds in prior
years that were recorded in other comprehensive income. The same occurred in 2007, for
a lower amount.
  -110-




---



##### Table of Contents




    
    The above mentioned sales resulted in significant gains under U.S. GAAP (and not
under Argentine Banking GAAP) as the fair values and sales prices of the Secured Loans
and Bogar Bonds were similar to the Argentine Banking GAAP book values and much higher
than the U.S. GAAP amounts.
    
    The Banks foreign debt restructuring completed in 2004 was accounted as a troubled
debt restructuring. Therefore the carrying value of such debt is higher under U.S. GAAP
and no gain was recognized at the time of the restructuring.
    
    Certain of our securitization transactions are considered sales under U.S. GAAP,
with the valuation of retained interests reflecting fair values, with changes in
unrealized gains and losses charged to equity through other comprehensive income.
 
 Results by Segments
   
    
    Banking: our banking business segment represents Banco de Galicia y Buenos Aires S.A.
consolidated line by line with Galicia Uruguay and its subsidiaries and the results of other
small banking-related subsidiaries.
    
    Regional Credit Cards: our regional credit cards business segment represents the accounts
of Tarjetas Regionales S.A. consolidated with its subsidiaries.
    
    Insurance: our insurance business segment represents the accounts of Sudamericana and its
subsidiaries.
    
    Other Grupo Businesses: this segment includes the results of Net Investment, Galicia
Warrants and Galval.
  Banking
  As of December 31,In millions of Pesos, except percentages
    
    2007
    
    
    2006
    
    
    2005Net Financial Income
    
    
    516.2
    
    
    
    66.0
    
    
    
    360.5Net Income from Services
    
    
    520.4
    
    
    
    377.3
    
    
    
    316.8Net Operating Revenue
    
    
    1,036.6
    
    
    
    443.3
    
    
    
    677.3Provisions for Loan Losses
    
    
    159.2
    
    
    
    57.6
    
    
    
    48.4Administrative Expenses
    
    
    875.1
    
    
    
    681.4
    
    
    
    571.9Net Operating Income
    
    
    2.3
    
    
    
    (295.7
    )
    
    
    57.0Income from Equity InvestmentsTarjetas Regionales SA
    
    
    88.2
    
    
    
    70.9
    
    
    
    63.1Sudamericana
    
    
    1.9
    
    
    
    1.1
    
    
    
    1.4Others
    
    
    3.5
    
    
    
    (14.8
    )
    
    
    4.4Income from Equity Investments
    
    
    93.6
    
    
    
    57.2
    
    
    
    68.9Other Income (Loss)
    
    
    (65.5
    )
    
    
    112.3
    
    
    
    65.1Pre-tax Income
    
    
    30.4
    
    
    
    (126.2
    )
    
    
    191.0Net Income
    
    
    30.4
    
    
    
    (126.2
    )
    
    
    191.0Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    66
    %
    
    
    667
    %
    
    
    178
    %Average Loans
    
    
    7,140.6
    
    
    
    5,332.3
    
    
    
    4,105.6Average Deposits
    
    
    11,857.0
    
    
    
    9,506.0
    
    
    
    7,571.0
  -111-




---



##### Table of Contents



-112-




---



##### Table of Contents



amparo
 Regional Credit Cards
  As of December 31,In millions of Pesos, except percentages
    
    2007
    
    
    2006
    
    
    2005Net Financial Income
    
    
    203.2
    
    
    
    157.5
    
    
    
    134.8Net Income from Services
    
    
    409.0
    
    
    
    289.8
    
    
    
    206.1Net Operating Revenue
    
    
    612.2
    
    
    
    447.3
    
    
    
    340.9Provisions for Loan Losses
    
    
    96.3
    
    
    
    53.2
    
    
    
    28.2Administrative Expenses
    
    
    369.5
    
    
    
    263.9
    
    
    
    179.3Net Operating Income
    
    
    146.4
    
    
    
    130.2
    
    
    
    133.4Other Income (Loss)
    
    
    41.3
    
    
    
    20.7
    
    
    
    7.7Minority Interests
    
    
    (27.5
    )
    
    
    (24.1
    )
    
    
    (21.2
    )Pre-tax Income
    
    
    160.2
    
    
    
    126.8
    
    
    
    119.9Income Tax Provision
    
    
    72.1
    
    
    
    55.9
    
    
    
    56.8Net Income
    
    
    88.1
    
    
    
    70.9
    
    
    
    63.1Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    192
    %
    
    
    (375
    )%
    
    
    59
    %Average Loans
    
    
    1,703.1
    
    
    
    1,149.3
    
    
    
    801.6
  -113-




---



##### Table of Contents



Insurance
  As of December 31,In millions of Pesos, except percentages
    
    2007
    
    
    2006
    
    
    2005Net Financial Income
    
    
    16.6
    
    
    
    17.0
    
    
    
    17.2Net Operating Revenue
    
    
    16,6
    
    
    
    17.0
    
    
    
    17.2Administrative Expenses
    
    
    16,1
    
    
    
    11.2
    
    
    
    11.6Net Operating Income
    
    
    0.5
    
    
    
    5.8
    
    
    
    5.6Other Income (Loss)
    
    
    22.0
    
    
    
    6.9
    
    
    
    6.0Pre-tax Income
    
    
    22.5
    
    
    
    12.7
    
    
    
    11.6Income Tax Provision
    
    
    7.9
    
    
    
    3.7
    
    
    
    0.3Net Income
    
    
    14.6
    
    
    
    9.0
    
    
    
    11.3Net Income as a % of Grupo Financiero Galicias Net Income
    
    
    32
    %
    
    
    (48
    )%
    
    
    10
    %
   -114-




---



##### Table of Contents



Other Grupo Businesses
  
 Consolidated Assets
  As of December 31,2007
    
    
    2006
    
    
    2005Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %(in millions of Pesos, except percentages)Cash and Due from Banks
    
    
    2,960.0
    
    
    
    13.0
    
    
    
    2,294.8
    
    
    
    9.7
    
    
    
    1,041.2
    
    
    
    4.1Government and Corporate Securities
    
    
    1,694.0
    
    
    
    7.4
    
    
    
    3,188.6
    
    
    
    13.5
    
    
    
    5,971.8
    
    
    
    23.3Loans to the Non Financial Public Sector
    
    
    11,601.0
    
    
    
    50.8
    
    
    
    10,525.0
    
    
    
    44.6
    
    
    
    10,557.7
    
    
    
    41.2Hedge Bond to be Acquired
    
    
    
    
    
    
    
    
    
    
    401.3
    
    
    
    1.7
    
    
    
    4,155.0
    
    
    
    16.2Other Receivables  Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    1,733.3
    
    
    
    7.3
    
    
    
    
    
    
    
    Other Assets
    
    
    6,573.7
    
    
    
    28.8
    
    
    
    5,472.4
    
    
    
    23.2
    
    
    
    3,912.5
    
    
    
    15.2Total
    
    
    22,828.7
    
    
    
    100.0
    
    
    
    23,615.4
    
    
    
    100.0
    
    
    
    25,638.2
    
    
    
    100.0
  -115-




---



##### Table of Contents




    
    Ps. 1,440.9 million of forward purchases of Boden 2012 Bonds in
connection with repurchase agreements (including the corresponding
security margins recorded as Miscellaneous Receivables in the
balance sheet).
    
    Ps. 1,004.1 million recorded under Bank Premises and Equipment,
Miscellaneous Assets and Intangible Assets, excluding from the
latter the deferred losses from amparoclaims.
    
    Ps. 695.91 million of forward purchases of Discount Bonds in Pesos in
connection with repurchase agreements (including the corresponding
security margins recorded as Miscellaneous Receivables in the
balance sheet).
    
    Ps. 600.9 million corresponding to our holdings of debt securities and
participation certificates issued by the Galtrust I Financial Trust,
resulting from the securitization of loans to the provincial public
sector in late 2000.
    
    Ps. 414.0 million corresponding to participation certificates in, and
debt securities of, different financial trusts, created by the Bank or
by third parties.
    
    Ps. 382.4 million corresponding to holdings of the participation
certificate in, and debt securities of, the special fund (referred to
as Special Fund Former Almafuerte Bank) jointly formed by the Bank
with other private-sector banks in order to facilitate the recovery of
the assets of former Almafuerte Bank.
    
    Ps. 355.8 million corresponding to Assets under Financial Leases.
    
    Ps. 277.0 million recorded as an intangible asset, which reflect
deferred losses in connection with amparoclaims due to the difference
between the amount paid to depositors (the deposits original
contractual amount, collected by depositors in US Dollars or at the
free market exchange rate) as a consequence of court orders, and the
amount established by the pesification rules (conversion at the Ps.
1.40 per US Dollar exchange rate, plus CER adjustment and interest),
net of the accumulated amortization, plus the amount of deferred
amortization.
    
    Ps. 258.5 million corresponding to the minimum presumed income tax
recorded under Miscellaneous Receivables.
  -116-




---



##### Table of Contents




    
    Ps. 184.1 million corresponding to balances deposited at the Argentine
Central Bank as guarantees in favor of clearing houses.
    
    Ps. 81.2 million corresponding to debt securities, mostly of the Bank
(Ps. 59.8 million) and the rest corresponding to securities issued by
other companies.
    
    Ps. 51.2 million corresponding to equity investments.
 
 Exposure to the Argentine Public Sector
  As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Net Position in Government Securities
    
    
    3,877.8
    
    
    
    4,832.7
    
    
    
    6,041.0Trading and Investment Accounts
    
    
    435.8
    
    
    
    164.3
    
    
    
    462Fiscal Credit Certificates
    
    
    
    
    
    
    
    
    
    
    34.5Boden 2012 Bonds
    
    
    2,744.3
    
    
    
    3,582.9
    
    
    
    987.9Bogar Bonds
    
    
    
    
    
    
    366.5
    
    
    
    3,823.30Discount Bonds in Pesos and GDP-Linked Negotiable Securities
    
    
    697.7
    
    
    
    719.0
    
    
    
    733.3Loans
    
    
    1,372.9
    
    
    
    2,846.7
    
    
    
    5,341.7Financial Sector
    
    
    107.4
    
    
    
    107.4
    
    
    
    105.9Secured Loans and Others
    
    
    1,265.5
    
    
    
    2,739.3
    
    
    
    5,235.80Other Receivables Resulting from Financial Brokerage
    
    
    870.1
    
    
    
    1,218.6
    
    
    
    5,031.8Boden 2012 Bonds (Hedge Bond)
    
    
    
    
    
    
    401.3
    
    
    
    4,155.00Trusts Certificates of Participation and Securities
    
    
    870.1
    
    
    
    817.3
    
    
    
    876.8Total Assets(1)
    
    
    6,120.8
    
    
    
    8,898.0
    
    
    
    16,414.5Liabilities with the Argentine Central Bank
    
    
    
    
    
    
    3,026.0
    
    
    
    8,611.9Net Exposure
    
    
    6,120.8
    
    
    
    5,872.0
    
    
    
    7,802.6
 (1)
    
    Does not include deposits with the Argentine Central Bank, which constitute one of the items by which the
Bank complies with the Argentine Central Banks minimum cash requirements.   
 Securitization of Assets
   -117-




---



##### Table of Contents



Funding
       -118-




---



##### Table of Contents



December 31,2007
    
    
    2006
    
    
    2005Amounts
    
    
    %
    
    
    Amounts
    
    
    %
    
    
    Amounts
    
    
    %(in millions of Pesos, except percentages)Deposits
    
    
    13,165.6
    
    
    
    57.8
    
    
    
    10,779.4
    
    
    
    45.6
    
    
    
    8,421.7
    
    
    
    32.8Current Accounts and Other Demand Deposits
    
    
    2,675.4
    
    
    
    11.7
    
    
    
    2,011.4
    
    
    
    8.5
    
    
    
    1,657.6
    
    
    
    6.5Savings Accounts
    
    
    3,380.1
    
    
    
    14.8
    
    
    
    2,589.5
    
    
    
    11.0
    
    
    
    2,213.4
    
    
    
    8.6Time Deposits
    
    
    6,708.8
    
    
    
    29.5
    
    
    
    5,831.5
    
    
    
    24.6
    
    
    
    4,261.9
    
    
    
    16.6Other Deposits
    
    
    291.6
    
    
    
    1.3
    
    
    
    215.6
    
    
    
    0.9
    
    
    
    192.9
    
    
    
    0.8Accrued Interest, Quotation Differences and CER Adjustment
    
    
    113.7
    
    
    
    0.5
    
    
    
    131.4
    
    
    
    0.6
    
    
    
    95.9
    
    
    
    0.4Debt with Financial Institutions(1)
    
    
    2,307.8
    
    
    
    10.1
    
    
    
    5,217.2
    
    
    
    22.1
    
    
    
    9,844.6
    
    
    
    38.5Argentine Central BankFinancial Assistance
    
    
    
    
    
    
    
    
    
    
    2,688.7
    
    
    
    11.4
    
    
    
    5,314.9
    
    
    
    20.7Advance for the Acquisition of the Hedge Bond
    
    
    
    
    
    
    
    
    
    
    336.8
    
    
    
    1.4
    
    
    
    3,296.6
    
    
    
    12.9Domestic Financial Institutions
    
    
    318.5
    
    
    
    1.4
    
    
    
    287.7
    
    
    
    1.2
    
    
    
    228.0
    
    
    
    0.9International Banks and Credit Agencies
    
    
    733.3
    
    
    
    3.2
    
    
    
    870.5
    
    
    
    3.7
    
    
    
    784.6
    
    
    
    3.1Repos
    
    
    1,256.0
    
    
    
    5.5
    
    
    
    1,033.5
    
    
    
    4.4
    
    
    
    220.5
    
    
    
    0.9Negotiable Obligations (Unsubordinated and Subordinated)(1)
    
    
    3,105.6
    
    
    
    13.6
    
    
    
    3,676.0
    
    
    
    15.6
    
    
    
    3,569.6
    
    
    
    13.9Other obligations
    
    
    2,595.2
    
    
    
    11.3
    
    
    
    2,334.3
    
    
    
    9.9
    
    
    
    2,175.5
    
    
    
    8.5Shareholders Equity
    
    
    1,654.5
    
    
    
    7.2
    
    
    
    1,608.5
    
    
    
    6.8
    
    
    
    1,626.8
    
    
    
    6.3Total Funding
    
    
    22,828.7
    
    
    
    100.0
    
    
    
    23,615.4
    
    
    
    100.0
    
    
    
    25,638.2
    
    
    
    100.0
 (1)
    
    Includes accrued interest, quotation differences, and CER adjustment where applicable.    -119-




---



##### Table of Contents




    
    Ps. 536.6 million and Ps. 944.4 million of 2010 Notes and 2014 Notes, respectively, and
Ps. 855.3 million of 2019 Notes, all of them issued in 2004 and corresponding to new debt of
the Bank resulting from the foreign debt restructuring completed in May of said year.
    
    Ps. 115.0 million of negotiable obligations issued by Galicia Uruguay to refinance its
deposits, which securities were issued either in connection with the original restructuring
or with the exchange offers subsequently made by Galicia Uruguay to its customers.
    
    Ps. 36.3 million of Class V Negotiable Obligations maturing in 2008, issued by Tarjeta
Naranja S.A.
    
    Ps. 12.1 million of past due foreign debt included in the Banks 2004 debt restructuring,
the holders of which did not participate in such restructuring.
    -120-




---



##### Table of Contents



Ratings
     LOCAL RATINGS
 EvaluadoraStandard & Poors
    
    Fitch Argentina
    
    LatinoamericanaGrupo Financiero Galicia S.A.Rating of Shares
    
    1Banco de Galicia y Buenos Aires S.A.Counterparty Rating
    
    ra A+Medium-/Long-Term Debt (1) (2)
    
    ra A+
    
    
    
    A+Subordinated Debt (1) (3)
    
    ra A
    
    
    
    AAFJPs Deposits (Long Term / Short Term)
    
    ra A+ / ra A1Tarjeta Naranja S.A.Medium-/Long-Term Debt (1) (4)
    
    
    
    AA- (arg)Short-Term Debt (1) (5)
    
    
    
    A1 (arg)Tarjetas Cuyanas S.A.Long-Term Debt (1) (6)
    
    
    
    A (arg)INTERNATIONAL RATINGSTarjeta Naranja S.A.Medium-/Long-Term Debt (1) (4)
    
    
    
    BTarjetas Cuyanas S.A.Long-Term Debt (1) (7)
    
    
    
    B
 (1)
    
    See Managements Discussion and Analysis of Financial Condition and Results of OperationsFunding and Liabilities, Debt Securities table.(2)
    
    Negotiable Obligations Due 2010 and Negotiable Obligations Due 2014.(3)
    
    Subordinated Negotiable Obligations.(4)
    
    Classes II and IV Negotiable Obligations.(5)
    
    Class V Negotiable Obligations.(6)
    
    Series XVIII Negotiable Obligations.(7)
    
    Classes II and IV Negotiable Obligations. Debt Programs
   -121-




---



##### Table of Contents



Contractual Obligations
  Annual
    
    
    
    
    
    Less than
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5Maturity
    
    Interest Rate
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsBanco GaliciaDepositsTime Deposits (including Other Deposits) (Pesos/US$)
    
    Various
    
    Various
    
    
    6,922.8
    
    
    
    6,704.4
    
    
    
    185.6
    
    
    
    32.5
    
    
    
    0.3Bonds2010 Notes (US$) (1) (2) (3)
    
    2010
    
    Libor + 350 basis points
    
    Ps.
    561.1
    
    
    Ps.
    239.1
    
    
    Ps.
    322.0
    
    
    
    
    
    
    
    2014 Notes (US$) (1) (2) (4)
    
    2014
    
    6.0%
    
    
    966.0
    
    
    
    21.6
    
    
    
    223.9
    
    
    Ps.
    447.8
    
    
    Ps.
    272.72019 Notes (US$) (1) (5)
    
    2019
    
    11.0%
    
    
    855.3
    
    
    
    45.0
    
    
    
    
    
    
    
    
    
    
    
    810.39% Notes Due 2003 (US$) (6)
    
    2003
    
    9.0%
    
    
    18.8
    
    
    
    18.8
    
    
    
    
    
    
    
    
    
    
    
    LoansFloating Rate Loans Due 2010 (US$)(1) (2) (3)
    
    2010
    
    Libor + 350 basis points
    
    
    8.7
    
    
    
    3.7
    
    
    
    5.0
    
    
    
    
    
    
    
    Floating Rate Loans Due 2014 (US$) (1) (2) (4)
    
    2014
    
    Libor + 85 basis points
    
    
    80.2
    
    
    
    1.9
    
    
    
    18.6
    
    
    
    37.1
    
    
    
    22.6Floating Rate Loans Due 2019 (US$) (1) (7)
    
    2019
    
    Libor + 578 basis points
    
    
    5.6
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    5.3IBD Financial Loans (US$)
    
    Various
    
    Various
    
    
    2.2
    
    
    
    0.1
    
    
    
    2.1
    
    
    
    
    
    
    
    IFC Financial Loans (US$)
    
    Various
    
    Libor + 350 basis points
    
    
    113.9
    
    
    
    19.1
    
    
    
    47.7
    
    
    
    38.6
    
    
    
    8.5Other Loans (US$) (8)
    
    2008
    
    Various
    
    
    261.9
    
    
    
    261.9
    
    
    
    
    
    
    
    
    
    
    
    Merrill Lynch Intl. Financial Loan (US$) (9)
    
    2009
    
    7.8%
    
    
    260.5
    
    
    
    65.3
    
    
    
    195.2
    
    
    
    
    
    
    
    BID Financial Loans (Pesos) (10)

    2017
    
    Various
    
    
    102.9
    
    
    
    13.1
    
    
    
    33.6
    
    
    
    27.2
    
    
    
    29.0BICE Loans (CER Adjusted Pesos)
    
    Various
    
    CER + 4.0%
    
    
    10.6
    
    
    
    8.4
    
    
    
    2.2
    
    
    
    
    
    
    
    BICE Loans (US$) (11)
    
    Various
    
    Libor + 550 basis points
    
    
    9.5
    
    
    
    6.3
    
    
    
    3.2
    
    
    
    
    
    
    
    Short-Term Interbank Loans (Pesos)
    
    2008
    
    10.8%
    
    
    12.5
    
    
    
    12.5
    
    
    
    
    
    
    
    
    
    
    
    FFRE Loan (CER Adjusted Pesos) (12)
    
    2008
    
    CER + 4.0%
    
    
    4.7
    
    
    
    4.7
    
    
    
    
    
    
    
    
    
    
    
    FFRE Loan (US$)
    
    2008
    
    8.1%
    
    
    7.2
    
    
    
    7.2
    
    
    
    
    
    
    
    
    
    
    
    Repos (US$) (13)
    
    Various
    
    Various
    
    
    1,256.0
    
    
    
    885.1
    
    
    
    370.9
    
    
    
    
    
    
    
    Galicia UruguayNegotiable Obligations (US$) (14)
    
    Various
    
    Various
    
    
    115.7
    
    
    
    24.6
    
    
    
    59.0
    
    
    
    32.1
    
    
    
    Tarjetas Regionales S.A.Financial Loans with Local Banks (US$)
    
    Various
    
    Various
    
    
    183.0
    
    
    
    71.8
    
    
    
    80.2
    
    
    
    31.0
    
    
    
    Negotiable Obligations (Pesos/US$)
    
    Various
    
    Various
    
    
    588.8
    
    
    
    219.4
    
    
    
    252.9
    
    
    
    116.5
    
    
    
    Total
    
    
    
    
    
    Ps.
    12,347.9
    
    
    Ps.
    8,634.3
    
    
    Ps.
    1,802.1
    
    
    Ps.
    762.8
    
    
    Ps.
    1,148.7
 Principal and interest. Includes the CER adjustment, where applicable.(1)
    
    Issued in 2004 as part of the restructuring of the foreign debt of the Banks Head Office and its Cayman Branch.(2)
    
    Interest payable in cash, semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004.(3)
    
    Floating Rate Notes Due 2010: Principal amortizes semiannually, on January 1 and July 1 of each year, beginning on July 1, 2006, in eight equal installments of 12.5% of principal at issuance or incurrence, until maturity on January
1,2010, when the remaining 12.5% is due.(4)
    
    Step-Up Notes Due 2014: Principal amortizes semiannually, on January 1 and July 1 of each year, beginning on January 1, 2010, in eight equal installments of 11.11% of principal at issuance or incurrence, until maturity, when the remaining
4.86% is due (during 2007, the Bank made a cancellation in advance which was applied to the last installment, which modified the original cash flow). The rate increases 1% on January 1 of each year, until reaching 7% on January 1, 2008.  -122-




---



##### Table of Contents



(5)
    
    Subordinated Notes Due 2019: Interest paid in cash: 6% per annum from January 1, 2004 until (but not including) January 1, 2014, payable semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004. Unless the notes are
previously redeemed, the annual interest rate will increase to 11% per annum from that date until (but not including) January 1, 2019. Interest paid in additional subordinated negotiable obligations due 2019: 5% per annum from January 1,
2004, to be paid on January 1, 2014 and January 1, 2019. Principal amortizes in full on January 1, 2019, unless the notes are previously redeemed at par plus accrued but unpaid interest, in whole or in part, at the Banks option, at any time
after the 2010 Notes and the 2014 Notes have been repaid in full and, otherwise, in accordance with the terms of the agreements governing such notes.(6)
    
    The balance represents debt not tendered by its holders to the exchange offered by the Bank to restructure its foreign debt, which was completed in May 2004.(7)
    
    Interest payable in cash: Libor+78 basis points, per annum from January 1, 2004, until (but not including) January 1, 2014, payable semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004. Unless the loans are
previously redeemed, the annual interest rate will increase to Libor+578 basis points per annum from that date until (but not including) January 1, 2019. Also pays interest in additional subordinated loans, due 2019: 5% per annum from January
1, 2004, to be paid on January 1, 2014 and January 1, 2019. Principal amortizes in full on January 1, 2019 unless the loans are previously redeemed at part plus accrued interest and additional amounts, if any, in whole or in part at the
Banks option, in accordance with the terms of the agreements governing such loans.(8)
    
    Borrowings to finance international trade operations to Bank customers.(9)
    
    Borrowing from Grupo Financiero Galicia to fund part of the subscription of the Banks shares issued as part of its August 2007 capital increase. The principal of the loan amounts to US$ 80 million. Interest accrues at a fixed rate of
7.75% per annum in the first year and in the second year it accrues at the 3-month Libor+350 basis points. Principal will be amortized as follows: US$ 18 million are due in July 2008 and the remaining principal amount is due in July 2009.(10)
    
    Ps. 47.2 million accrue at a 2.7% annual interest rate, and the remaining balance accrues at a 3.9% annual interest rate.(11)
    
    Corresponds to US$ 10.0 million of principal at incurrence accruing Libor+550 basis points, with interest payable semiannually, in May and November of each year, and. principal amortizing in 9 semiannual installments, beginning in May
2005 and ending in May 2009.(12)
    
    FFRE : Fondo Fiduciario para la Reconstrucción de Empresas (Fiduciary Fund for Reconstruction of Companies).(13)
    
    Includes premiums.(14)
    
    Issued in 2002 as part of the restructuring of Galicia Uruguays deposits. Includes: 
    
    2% Negotiable Obligations Due 2011: principal amortizes in 9 equal annual installments in September of each year, beginning in September 2003, the first 2 installments are of 15% of principal, and the remaining 7 are of 10% of
principal. Interest is payable annually in September of each year, beginning in September 2003 and accrues at a fixed rate of 2% per annum.
    
    Floating Rate Negotiable Obligations Due 2011: principal amortizes in 3 annual installments in December of each year, beginning in December 2009, the first 2 installments are of 30% of principal, and the remaining one is 40% of
principal. Interest is payable semiannually in June and December of each year, beginning in December 2003, and accrues at Libor+300 basis points, and has a 7% cap.
    
    2% Negotiable Obligations Due 2008: principal amortizes in 3 annual installments in December of each year, beginning in December 2006, the first 2 installments are of 30% of principal, and the remaining one is of 40% of
principal. Interest is payable semiannually in June and December of each year, beginning in December 2003, and accrues at a fixed rate of 2% per annum.
 Off- Balance Sheet Contractual Obligations
 Operating Leases
  In millions of Pesos2008
    
    
    34.982009
    
    
    39.772010
    
    
    43.892011
    
    
    50.002012
    
    
    57.982013 and After
    
    
    67.10Total
    
    
    293.73
 Other
    -123-




---



##### Table of Contents



Off-Balance Sheet Arrangements
   Commitments to Extend Credit, Stand-By Letters of Credit and Guarantees Granted
      December 31,2007(in millions of Pesos)Commitments to Extend Credit
    
    
    827.9Standby Letters of Credit
    
    
    144.2Guarantees Granted
    
    
    139.7Acceptances
    
    
    56.3
   December 31,2007(in millions of Pesos)Preferred Counter Guarantees
    
    
    24.8Other Counter Guarantees
    
    
    26.5
   -124-




---



##### Table of Contents



Other
  December 31,2007(in millions of Pesos)Checks Drawn on the Bank
    
    
    297,1Checks Drawn on Other Banks
    
    
    360,5Bills and Other Items for Collection
    
    
    1,640,9
   
 Critical Accounting Policies
  Allowance for Loan Losses
    Other Receivables Resulting from Financial Brokerage and Miscellaneous Receivables
   -125-




---



##### Table of Contents



Minimum Presumed Income Tax
  Goodwill
  
 U.S. GAAP  Critical Accounting Policies
  Allowance for Loan Losses
  Fair Value Estimates
      -126-




---



##### Table of Contents



Impairment of Assets Other Than Loans
    Deferred Tax Asset Valuation Allowance
       -127-




---



##### Table of Contents



Assets Not Recognized Under U.S. GAAP
 Elements of Financial Statements
  amparo amparo
 Financial Guarantees
   Securitizations
    -128-




---



##### Table of Contents



Principal Trends
 Related to Argentina
       -129-




---



##### Table of Contents



Related to Us
   amparo
  -130-




---



##### Table of Contents



Item 5B. Liquidity and Capital Resources
 
 Liquidity  Holding Company on an Individual Basis
      -131-




---



##### Table of Contents



Consolidated Cash Flows
 Statement of Cash Flows
    December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Funds (1) at the Beginning of the Fiscal Year
    
    Ps.
    4,988.2
    
    
    Ps.
    2,046.8
    
    
    Ps.
    1,646.6Funds Provided (Used) by Operating Activities
    
    
    2,449.8
    
    
    
    3,548.1
    
    
    
    1,379.5- Funds
Provided by the Sale of or Proceeds from Government Securities
    
    
    1,589.5
    
    
    
    1,267.5
    
    
    
    1,045.0- CER Adjustment
    
    
    485.6
    
    
    
    891.9
    
    
    
    (484.8
    )- Other
    
    
    374.7
    
    
    
    1,388.7
    
    
    
    819.3Funds Provided (Used) by Investing Activities
    
    
    (1,715.7
    )
    
    
    689.3
    
    
    
    (943.3
    )- Net Increase/Decrease in Loans
    
    
    (1,410.8
    )
    
    
    894.1
    
    
    
    (804.1
    )Loans to the Private Sector
    
    
    (2,027.8
    )
    
    
    (27.3
    )
    
    
    (810.7
    )Loans to the Public Sector
    
    
    617.0
    
    
    
    921.4
    
    
    
    6.6- Other
    
    
    (304.9
    )
    
    
    (204.9
    )
    
    
    (139.2
    )
  -132-




---



##### Table of Contents



December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos)Funds Provided (Used) by Financing Activities
    
    
    (2,003.9
    )
    
    
    (1,302.4
    )
    
    
    (41.4
    )- Net Increase in Deposits
    
    
    1,752.5
    
    
    
    1,894.3
    
    
    
    1,696.3- Funds Provided/Used by Repos
    
    
    229.9
    
    
    
    934.4
    
    
    
    (259.1
    )- Funds Raised by the Regional Credit Card Companies
    
    
    174.9
    
    
    
    418.0
    
    
    
    179.2- Payments on Long-term Debt
    
    
    (1,770.3
    )
    
    
    (656.5
    )
    
    
    (301.5
    )- Payments on Long-term Debt by Galicia Uruguay
    
    
    (53.2
    )
    
    
    (30.5
    )
    
    
    (117.0
    )- Payments on Debt with the Argentine Central Bank
    
    
    (2,713.0
    )
    
    
    (4,034.7
    )
    
    
    (1,170.0
    )- Other
    
    
    375.3
    
    
    
    172.6
    
    
    
    (69.3
    )-Effect of Exchange Rate on Cash and Cash Equivalents
    
    
    47.8
    
    
    
    6.4
    
    
    
    5.4Funds at the End of the Fiscal Year
    
    Ps.
    3,766.2
    
    
    Ps.
    4,988.2
    
    
    Ps.
    2,046.8
 (1)
    
    Cash and cash equivalents.       -133-




---



##### Table of Contents



Cash Flows from Operating Activities
    Cash Flows from Investing Activities
 amparo
 amparo
 amparo
  -134-




---



##### Table of Contents



Cash Flows from Financing Activities
        
 Banco Galicias Liquidity Management
 Banco Galicia Consolidated Liquidity Gaps
   -135-




---



##### Table of Contents



As of December 31, 2007(1)Less thanone Year
    
    
    1  5 Years
    
    
    5  10 Years
    
    
    Over 10 Years
    
    
    Total(in millions of Pesos, except ratios)AssetsCash and Due from Banks
    
    
    1,300.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,300.2Argentine Central Bank  Escrow Accounts
    
    
    1,832.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,832.9Overnight Placements
    
    
    158.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    158.0Loans  Public Sector
    
    
    68.8
    
    
    
    1,203.9
    
    
    
    0.9
    
    
    
    
    
    
    
    1,273.6Loans  Private Sector
    
    
    8,122.6
    
    
    
    1,533.1
    
    
    
    271.8
    
    
    
    22.4
    
    
    
    9,949.9Government Securities
    
    
    1,351.2
    
    
    
    1,735.0
    
    
    
    
    
    
    
    
    
    
    
    3,086.2Negotiable Obligations and Corporate Securities
    
    
    4.4
    
    
    
    52.8
    
    
    
    26.0
    
    
    
    
    
    
    
    83.2Financial Trusts
    
    
    180.1
    
    
    
    259.8
    
    
    
    602.5
    
    
    
    32.9
    
    
    
    1,075.3Special Fund Former Almafuerte Bank
    
    
    184.1
    
    
    
    182.9
    
    
    
    
    
    
    
    
    
    
    
    367.0Assets under Financial Lease
    
    
    156.1
    
    
    
    242.3
    
    
    
    5.1
    
    
    
    0.0
    
    
    
    403.5Other  Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Assets
    
    
    13,358.4
    
    
    
    5,209.8
    
    
    
    906.3
    
    
    
    55.3
    
    
    
    19,529.8LiabilitiesSaving Accounts
    
    
    3,391.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,391.8Demand Deposits
    
    
    2,865.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,865.3Time Deposits
    
    
    6,632.3
    
    
    
    218.1
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    6,850.7Argentine Central Bank
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Negotiable Obligations
    
    
    422.2
    
    
    
    1,500.1
    
    
    
    1,083.1
    
    
    
    
    
    
    
    3,005.4International Banks and Credit Agencies
    
    
    279.9
    
    
    
    149.0
    
    
    
    74.9
    
    
    
    
    
    
    
    503.8Domestic Banks
    
    
    121.4
    
    
    
    191.8
    
    
    
    35.7
    
    
    
    
    
    
    
    348.9Other Liabilities (1)
    
    
    2,279.8
    
    
    
    370.9
    
    
    
    
    
    
    
    
    
    
    
    2,650.7Total Liabilities
    
    
    15,992.7
    
    
    
    2,429.9
    
    
    
    1,193.9
    
    
    
    0.1
    
    
    
    19,616.6Asset / Liability Gap
    
    
    (2,634.3
    )
    
    
    2,779.9
    
    
    
    (287.6
    )
    
    
    55.2
    
    
    
    (86.8
    )Cumulative Gap
    
    
    (2,634.3
    )
    
    
    145.6
    
    
    
    (142.0
    )
    
    
    (86.8
    )
    
    
    (86.8
    )Ratio of Cumulative Gap to Cumulative Liabilities
    
    
    (16.5
    )%
    
    
    0.8
    %
    
    
    (0.7
    )%
    
    
    (0.4
    )%Ratio of Cumulative Gap to Total Liabilities
    
    
    (13.4
    )%
    
    
    0.7
    %
    
    
    (0.7
    )%
    
    
    (0.4
    )%
 Principal plus CER adjustment. Does not include interest.(1)
    
    Includes, mainly, debt with retailers due to credit card operations, liabilities in connection with repo transactions, debt with
domestic credit agencies and collections for third parties. The Less than One Year bucket also includes Ps. 12.1 million
corresponding to the Banks foreign debt not tendered by its holders in the exchange offered to restructure such foreign debt, which
was completed in May 2004.  -136-




---



##### Table of Contents



Banco Galicia (Unconsolidated) Liquidity Management
   As of December 31, 2007(in millions of Pesos)Legal Requirement
    
    Ps.
    2,441.4Excess Liquidity
    
    
    1,518.0Total Liquidity (1)
    
    Ps.
    3,959.4
 (1)
    
    Excludes cash and due from banks of consolidated companies.       -137-




---



##### Table of Contents



Capital
  As of December 31,2007
    
    
    2006
    
    
    2005(in millions of Pesos, except ratios, multiples and percentages)Shareholders Equity
    
    Ps.
    1,654.5
    
    
    Ps.
    1,608.5
    
    
    Ps.
    1,626.8Shareholders Equity as a Percentage of Total Assets
    
    
    7.25
    %
    
    
    6.81
    %
    
    
    6.35
    %Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    12.80
    x
    
    
    13.68
    x
    
    
    14.76
    xTangible Shareholders Equity (1) as a Percentage of Total Assets
    
    
    5.28
    %
    
    
    4.68
    %
    
    
    4.43
    %
 (1)
    
    Tangible shareholders equity represents shareholders equity minus intangible assets.  
 Capital Expenditures
  
 Item 6. Directors, Senior Management and Employees
 
 Our Board of Directors
  Principal
    
    
    
    CurrentName
    
    Position
    
    Date of Birth
    
    Occupation
    
    Member Since
    
    Term EndsAntonio Garcés
    
    Chairman of the
Board and Chief
Executive Officer
    
    May 30, 1942
    
    Banker
    
    April 2002
    
    December 2010Federico Braun
    
    Vice Chairman
    
    February 4, 1948
    
    Businessman
    
    September 1999
    
    December 2010Abel Ayerza
    
    Director
    
    May 27, 1939
    
    Businessman
    
    September 1999
    
    December 2008Eduardo Escasany
    
    Director
    
    June 30, 1950
    
    Businessman
    
    April 2005
    
    December 2009Enrique Martin
    
    Director
    
    October 19, 1945
    
    Businessman
    
    April 2006
    
    December 2008Luis Oddone
    
    Director
    
    May 11, 1938
    
    Businessman
    
    April 2005
    
    December 2009Pedro Richards
    
    Director
    
    November 14, 1952
    
    Businessman
    
    April 2005
    
    December 2009Silvestre Vila Moret
    
    Director
    
    April 26, 1971
    
    Businessman
    
    June 2002
    
    December 2010Eduardo Zimmermann
    
    Director
    
    January 3, 1931
    
    Businessman
    
    April 2000
    
    December 2008Pablo Gutierrez
    
    Alternate Director
    
    December 9, 1959
    
    Banker
    
    April 2003
    
    December 2008María Ofelia Hordeñana 
    de Escasany
    
    Alternate Director
    
    December 30, 1920
    
    Businesswoman
    
    April 2000
    
    December 2010Sergio Grinenco
    
    Alternate Director
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Alejandro Rojas Lagarde
    
    Alternate Director
    
    July 17, 1937
    
    Lawyer
    
    April 2000
    
    December 2010Luis Monsegur
    
    Alternate Director
    
    August 15, 1936
    
    Accountant
    
    April 2000
    
    December 2010
  Antonio Garcés:
 Federico Braun
  -138-




---



##### Table of Contents



Abel Ayerza
 Eduardo Escasany
 Enrique Martin
 Luis Oddone
 Pedro Richards
 Silvestre Vila Moret:
 Eduardo Zimmermann
 Pablo Gutierrez
 María Ofelia Hordeñana de Escasany
  -139-




---



##### Table of Contents



Sergio Grinenco
 Alejandro Rojas Lagarde
 Luis Monsegur
    
 Functions of Our Board of Directors
  Audit Committee
   -140-




---



##### Table of Contents



Disclosure Committee:
 
 Our Supervisory Committee
   Principal
    
    Current TermName
    
    Position
    
    Occupation
    
    EndsNorberto Corizzo
    
    Syndic
    
    Accountant
    
    December 2008Raúl Estévez
    
    Syndic
    
    Accountant
    
    December 2008Adolfo Melián
    
    Syndic
    
    Lawyer
    
    December 2008Miguel Armando
    
    Alternate Syndic
    
    Lawyer
    
    December 2008Fernando Noetinger
    
    Alternate Syndic
    
    Lawyer
    
    December 2008Horacio Tedín
    
    Alternate Syndic
    
    Lawyer
    
    December 2008
  Norberto Corizzo:
 Raúl Estévez:
 Adolfo Melián:
  -141-




---



##### Table of Contents



Miguel Armando
 Fernando Noetinger
 Horacio Tedín
 
 Compensation of Our Directors
     
 Management of Grupo Financiero Galicia
     -142-




---



##### Table of Contents



Board of Directors of Banco Galicia
  Date of
    
    Principal
    
    Member
    
    Current TermName
    
    Position
    
    Birth
    
    Occupation
    
    Since
    
    EndsAntonio R. Garcés
    
    Chairman of the
Board
    
    May 30, 1942
    
    Banker
    
    September 2001
    
    December 2008Sergio Grinenco
    
    Vice Chairman and
Chief Financial
Officer
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Enrique M. Garda Olaciregui
    
    Secretary Director
    
    April 29, 1946
    
    Banker
    
    April 2003
    
    December 2010Daniel A. Llambías
    
    Director
    
    February 8, 1947
    
    Banker
    
    September 2001
    
    December 2009Luis M. Ribaya
    
    Director
    
    July 17, 1952
    
    Banker
    
    September 2001
    
    December 2010Guillermo J. Pando
    
    Director
    
    October 23, 1948
    
    Banker
    
    April 2003
    
    December 2010Pablo Gutierrez
    
    Director
    
    December 9, 1959
    
    Banker
    
    April 2005
    
    December 2008Eduardo O. Del Piano (1)
    
    Director
    
    May 12, 1938
    
    Accountant
    
    April 2004
    
    December 2009Pablo M. Garat (1)
    
    Director
    
    January 12, 1953
    
    Lawyer
    
    April 2004
    
    December 2009Eduardo A. Fanciulli
    
    Alternate Director
    
    April 10, 1951
    
    Banker
    
    September 2001
    
    December 2009Raúl Héctor Seoane
    
    Alternate Director
    
    July 18, 1953
    
    Banker
    
    April 2005
    
    December 2008Juan C. Fossatti (2)
    
    Alternate Director
    
    September 11, 1955
    
    Lawyer
    
    June 2002
    
    December 2008Osvaldo H. Canova (2)
    
    Alternate Director
    
    December 8, 1934
    
    Accountant
    
    April 2004
    
    December 2009Julio P. Naveyra (2)
    
    Alternate Director
    
    March 24, 1941
    
    Accountant
    
    April 2004
    
    December 2009
 (1)
    
    In accordance with the rules of the CNV, and pursuant to the classifications adopted by the CNV, Messrs. Eduardo O. Del Piano and Pablo
M. Garat are independent and were reelected at the ordinary shareholders meeting held on April 26, 2007. The Board of Directors meeting
held on April 27, 2007 reelected them as members of the Audit Committee. Messrs. Del Piano and Garat are also independent directors in
accordance with the new Nasdaq rules.(2)
    
    In accordance with the rules of the CNV, and pursuant to the classifications adopted by the CNV, Mr. Fossatti, Mr. Canova and Mr.
Naveyra are independent alternate directors. They would replace the independent directors in case of vacancy. They are also independent
directors in accordance with the new Nasdaq rules.  -143-




---



##### Table of Contents



Antonio Roberto Garcés
 Sergio Grinenco
 Enrique M. Garda Olaciregui
 Daniel Antonio Llambías
 Luis María Ribaya
 Guillermo Juan Pando
 Pablo Gutierrez
 Eduardo Oscar Del Piano
 Pablo María Garat
 Eduardo Antonio Fanciulli
 Raúl Héctor Seoane
 Juan Carlos Fossatti
  -144-




---



##### Table of Contents



Osvaldo Héctor Canova:
 Julio Pedro Naveyra:
 
 Functions of the Board of Directors of Banco Galicia
    Risk Management Committee:
 Credit Committee:
 Financial Risk Policy Committee:
 Systems Committee:
  -145-




---



##### Table of Contents



Audit Committee:
 Committee for the Control and Prevention of Money Laundering and Financing of Terrorist
Activities:
 Disclosure Committee:
 Human Resources Committee:
 Assets and Liabilities Committee (Alco):
 Customer Assistance Committee:
   -146-




---



##### Table of Contents



Banco Galicias Executive Officers
  Division
    
    ManagerWholesale Banking
    
    Juan Miguel WoodyattRetail Banking
    
    Daniel A. Llambías (in charge)Treasury
    
    To be appointedDistribution
    
    Juan SarquísCredit
    
    Juan Carlos LAfflittoCorporative Services
    
    Miguel Angel Peña
 Wholesale Banking
 Retail Banking
 Treasury
 Credit
 Corporate Services
 Distribution
    -147-




---



##### Table of Contents



Juan Miguel Woodyatt
 Juan H. Sarquis:
 Miguel Angel Peña: Asociación Argentina de Usuarios de la
Informática y las Comunicaciones
 Juan Carlos LAfflitto
 Luis Alberto Díaz:
 Enrique Carlos Behrends:
 Diego Francisco Videla:
 Nicolás Dujovne
 
 Banco Galicias Supervisory Committee
   -148-




---



##### Table of Contents



Year of
    
    
    
    PrincipalName
    
    Appointment
    
    Position
    
    Occupation
    
    Current Term EndsAdolfo Héctor Melián
    
    
    2008
    
    
    Syndic
    
    Lawyer
    
    December 31, 2008Norberto Daniel Corizzo
    
    
    2008
    
    
    Syndic
    
    Accountant
    
    December 31, 2008Raúl Estévez
    
    
    2008
    
    
    Syndic
    
    Accountant
    
    December 31, 2008Fernando Noetinger
    
    
    2008
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2008Miguel N. Armando
    
    
    2008
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2008Ricardo Adolfo Bertoglio
    
    
    2008
    
    
    Alternate Syndic
    
    Accountant
    
    December 31, 2008
  Ricardo Adolfo Bertoglio
 
 Compensation of Banco Galicias Directors and Officers
      
    
    total compensation, including salaries, variable compensation and other related concepts
for the directors that are also employees and for executive and supervision functions they
perform, and
    
    compensation for the independent directors.
   -149-




---



##### Table of Contents



Employees
  As of December 31,2007
    
    
    2006
    
    
    2005Grupo Financiero Galicia S.A.
    
    
    10
    
    
    
    8
    
    
    
    8Banco de Galicia y Buenos Aires S.A.
    
    
    5,164
    
    
    
    4,676
    
    
    
    4,118Branches
    
    
    2,474
    
    
    
    2,410
    
    
    
    2,121Head Office
    
    
    2,690
    
    
    
    2,266
    
    
    
    1,997Galicia Uruguay
    
    
    13
    
    
    
    13
    
    
    
    18Regional Credit-Card Companies
    
    
    3,769
    
    
    
    3,174
    
    
    
    2,586Sudamericana Consolidated
    
    
    96
    
    
    
    91
    
    
    
    85Other Subsidiaries
    
    
    35
    
    
    
    31
    
    
    
    34Total
    
    
    9,087
    
    
    
    7,993
    
    
    
    6,849
     -150-




---



##### Table of Contents



Nasdaq Corporate Governance Standards
  (i)
    
    Rule 4350 (b) (1) (A)  Distribution of Annual and Interim Reports. In lieu of the
requirements of Rule 4350 (b) (1) (A), we follow Argentine law, which requires that
companies make public a Spanish language annual report, including annual audited
consolidated financial statements, by filing such annual report with the CNV and the BASE,
within 70 calendar days of the end of the companys fiscal year. Interim reports must be
filed with the CNV and the BASE within 42 calendar days of the end of each
fiscal quarter. The BASE publishes the annual reports and interim reports in the BASE
bulletin and makes the bulletin available for inspection at its offices. In addition, our
shareholders can receive copies of our annual reports and any interim reports upon such
shareholders request. English language translations of our annual reports and interim
reports are furnished to the SEC. We also post the English language translation of our
annual reports and quarterly press releases on our website. Furthermore, under the terms
of the Second Amended and Restated Deposit Agreement, dated as of June 22, 2000, among us,
The Bank of New York, as depositary, and owners of ADSs issued thereunder, we are required
to furnish The Bank of New York with, among other things, English language translations of
our annual reports and each of our quarterly press releases. Annual reports and quarterly
press releases are available for inspection by ADR holders at the offices of The Bank of
New York located at, 101 Barclay Street, 22nd Floor, New York, New York.
Finally, Argentine law requires that 20 calendar days before the date of a shareholders
meeting, the board of directors must provide to the shareholders, at the companys
executive office or through electronic means, all information relevant to the
shareholders meeting, including copies of any documents to be considered by the
shareholders (which includes the annual report), as well as proposals of the companys
board of directors.(ii)
    
    Rule 4350 (c) (1)  Majority of Independent Directors. In lieu of the requirements of
Rule 4350 (c) (1), we follow Argentine law, which does not require that a majority of the
board of directors be comprised of independent directors. Argentine law instead requires
that public companies in Argentina such as us must have a sufficient number of independent
directors to be able to form an audit committee of at least three members, the majority of
which must be independent pursuant to the criteria established by the CNV. In addition,
because we are a controlled company as defined in Rule 4350 (c) (5), we are relying on
the exemption provided thereby for purposes of complying with Rule 4350 (c) (1).(iii)
    
    Rule 4350 (c) (2)  Executive Sessions of the Board of Directors. In lieu of the
requirements of Rule 4350 (c) (2), we follow Argentine law which does not require
independent directors to hold regularly scheduled meetings at which only such independent
directors are present (i.e., executive sessions). Our Board of Directors as a whole is
responsible for monitoring our affairs. In addition, under Argentine law, the board of
directors may approve the delegation of specific responsibilities to designated directors
or non-director managers of the company. Also, it is mandatory for public companies to form
a supervisory committee (composed of syndics), which is responsible for monitoring the
legality of the companys actions under Argentine law and the conformity thereof with its
by-laws. Finally, our audit committee has regularly scheduled meetings and, as such, such
meetings will serve a substantially similar purpose as executive sessions.(iv)
    
    Rule 4350 (c) (3)  Compensation of Officers. In lieu of the requirements of Rule 4350
(c) (3), we follow Argentine law, which does not require companies to form a compensation
committee comprised solely of independent directors. It also is not required in Argentine
law that the compensation of the chief executive officer and all other executive officers
be determined by either a majority of the independent directors or a compensation committee
comprised solely of independent directors. Under Argentine law, the board of directors is
the corporate body responsible for determining the compensation of the chief executive
officer and all other executive officers, so long as they are not directors. In addition,
under Argentine law, the audit committee shall give its opinion about the reasonableness of
managements proposals on fees and option plans for directors or managers of the company.
Finally, because we are a controlled company as defined in Rule 4350 (c) (5), we are
relying on the exemption provided thereby for purposes of complying with Rule 4350 (c) (3).(v)
    
    Rule 4350(c)(4)  Nomination of Directors. In lieu of the requirements of Rule 4350 (c)
(4), we follow Argentine law which requires that directors be nominated directly by the
shareholders at the shareholders meeting and that they be selected and recommended by the
shareholders themselves. Under Argentine law, it is the responsibility of the ordinary
shareholders meeting to appoint and remove directors and to set their compensation. In
addition, because we are a controlled company as defined in Rule 4350 (c) (5), we are
relying on the exemption provided thereby for purposes of complying with Rule 4350 (c) (4).
  -151-




---



##### Table of Contents



(vi)
    
    Rule 4350 (d) (1)  Audit Committee Charter. In lieu of the requirements of Rule 4350
(d) (1), we follow Argentine law, which requires that audit committees have a charter but
does not require that companies certify as to the adoption of the charter nor does it
require an annual review and assessment thereof.
Argentine law instead requires that companies prepare a proposed plan or course of action
with respect to those matters, which are the responsibility of the companys audit
committee. Such plan or course of action could, at the discretion of our audit committee,
include a review and assessment of the audit committee charter.(vii)
    
    Rule 4350 (d) (2)  Audit Committee Composition. Argentine law does not require, and
it is equally not customary business practice in Argentina, that companies have an audit
committee comprised solely of independent directors. Argentine law instead requires that
companies establish an audit committee with at least three members comprised of a majority
of independent directors as defined by Argentine law. Nonetheless, although not required by
Argentine law, we have a three member audit committee comprised of entirely independent
directors, as independence is defined in Rule 10 (A)-3 (b) (1), one of which the Board of
Directors has determined to be an audit committee financial expert. In addition, we have a
supervisory committee (comisión fiscalizadora) composed of three syndics, which are in
charge of monitoring the legality, under Argentine law, of the actions of our board of
directors and the conformity of such actions with our by-laws.(viii)
    
    Rule 4350 (f)  Quorum. In lieu of the requirements of Rule 4350 (f), we follow Argentine
law and our bylaws, which distinguish between ordinary meetings and extraordinary meetings
and require, in connection with ordinary meetings, that a quorum consist of a majority of
stock entitled to vote. If no quorum is present at the first meeting, a second meeting may
be called at which the shareholders present, whatever their number, constitute a quorum and
resolutions may be adopted by an absolute majority of the votes present. Argentine law, and
our bylaws, require in connection with extraordinary meetings, that a quorum consist of 60%
of the stock entitled to vote. However, if such quorum is not present at the first meeting,
our bylaws provide that a second meeting may be called which may be held with the number of
shareholders present. In both ordinary and extraordinary meetings, decisions are adopted by
an absolute majority of votes present at the meeting, except for certain fundamental
matters (such as mergers and spin-offs (when we are not the surviving entity and the
surviving entity is not listed on any stock exchange), anticipated liquidation, a change in
our domicile to outside of Argentina, total or partial recapitalization of our statutory
capital following a loss, any transformation in our corporate legal form or a substantial
change in our corporate purpose) which require an approval by vote of the majority of all
the stock entitled to vote (all stock being entitled to only one vote).(ix)
    
    Rule 4350 (g)  Solicitation of Proxies. In lieu of the requirements of Rule 4350 (g),
we follow Argentine law which requires that notices of shareholders meetings be published,
for five consecutive days, in the Official Gazette and in a widely circulated newspaper in
Argentina no earlier than 45 calendar days prior to the meeting and at least 20 calendar
days prior to such meeting. In order to attend a meeting and be listed on the meeting
registry, shareholders are required to submit evidence of their book-entry share account
held at Caja de Valores S.A. (Caja de Valores) up to three business days prior to the
scheduled meeting date. If entitled to attend the meeting, a shareholder may be represented
by proxy (properly executed and delivered with a certified signature) granted to any other
person, with the exception of a director, syndic, member of the surveillance committee
(consejo de vigilancia), manager or employee of the issuer, which are prohibited by
Argentine law from acting as proxies. In addition, our ADR holders receive, prior to the
shareholders meeting, a notice listing the matters on the agenda, a copy of the annual
report and a voting card.(x)
    
    Rule 4350 (h)  Conflicts of Interest. In lieu of the requirements of Rule 4350 (h), we
follow Argentine law which requires that related party transactions be approved by the
audit committee when the transaction exceeds one percent (1%) of the corporations net
worth, measured pursuant to the last audited balance sheet, so long as the relevant
transaction exceeds the equivalent of three hundred thousand Argentine Pesos (Ps. 300,000).
Directors can contract with the corporation only on terms consistent with prevailing market
terms. If the contract is not in accordance with prevailing market terms, such transaction
must be pre-approved by the board of directors (excluding the interested director). In
addition, under Argentine law, a shareholder is required to abstain from voting on a
business transaction in which its interests may be in conflict with the interests of the
company. In the event such shareholder votes on such business transaction and such business
transaction would not have been approved without such shareholders vote, such shareholder
may be liable to the company for damages and the resolution may be declared void.
  -152-




---



##### Table of Contents



Share Ownership
  
 Item 7. Major Shareholders and Related Party Transactions
 
 Major Shareholders
    Class A Shares
 Name
    
    Class A Shares
    
    % of Class A Shares
    
    
    % of Total VotesEBA Holding S.A.
    
    281,221,650 class A shares
    
    
    100
    
    
    
    59.4
 Class B Shares
 Name
    
    Class B Shares
    
    % of Class B Shares
    
    
    % of Total VotesThe Bank of New York(1)
    
    410,275,850 class B shares
    
    
    42.7
    
    
    
    17.3Members of the Families that are Shareholders
of EBA Holding S.A.
    
    99,985,046 class B shares
    
    
    10.4
    
    
    
    4.2Banco Santander Central Hispano(2)
    
    82,741,540 class B shares
    
    
    8.6
    
    
    
    3.5BBVA Consolidar AFJP S.A.(3)
    
    51,301,883 class B shares
    
    
    5.3
    
    
    
    2.2Met AFJP S.A.(4)
    
    49,979,861 class B shares
    
    
    5.2
    
    
    
    2.1
 (1)
    
    Pursuant to the requirements of Argentine law, all class B shares represented by ADSs are owned of record by The Bank of
New York, as Depositary. The address for the Bank of New York is 101 Barclay Street, 22nd Floor, New York 10286, and the
country of organization is the United States. Includes the holdings of Banco Santander Central Hispano.(2)
    
    Information is based on a Schedule 13 G filed by Banco Santander Central Hispano dated February 16, 2001. However, we
have confirmed the amount with information provided by third party companies. The address for Banco Santander Central
Hispano is Plaza de Canalejas 28014, Madrid, Spain, and the country of organization is the Kingdom of Spain. The holding is
in ADRs.(3)
    
    Source: Superintendencia
de AFJPs (Pension Funds Superintendency). The address for BBVA Consolidar AFJP S.A. is Av.
Independencia 169 5th. Floor, Ciudad de Buenos Aires, Argentina, and the country of organization is Argentina. The holding
is partly in ADRs.(4)
    
    Source: Superintendencia
de AFJPs (Pension Funds Superintendency). The address for Met AFJP S.A. is Av. de Mayo 654 10th.
Floor, Ciudad de Buenos Aires, Argentina, and the country of organization is Argentina. The holding is partly in ADRs.  -153-




---



##### Table of Contents



% of Total
    
    
    % of TotalName
    
    Total Shares
    
    Capital
    
    
    VotesMembers of the controlling shareholders:EBA Holding S.A.
    
    281,221,650 class A shares
    
    
    22.7
    
    
    
    59.4Members of the Families that are Shareholders of EBA Holding S.A.
    
    99,985,046 class B shares
    
    
    8.1
    
    
    
    4.2Others:The Bank of New York (1)
    
    410,275,850 class B shares
    
    
    33.0
    
    
    
    17.3Banco Santander Central Hispano
    
    82,741,540 class B shares
    
    
    6.7
    
    
    
    3.5
 (1)
    
    Pursuant to the requirements of Argentine law, all class B shares represented by ADSs are owned of record by The Bank of New
York, as Depositary.      
 Related Party Transactions
     -154-




---



##### Table of Contents



In millions of Pesos, except as noted
    
    April 30, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006
    
    
    December 31, 2005Aggregate Total Financial Exposure
    
    Ps.
    46.2
    
    
    Ps.
    40.8
    
    
    Ps.
    19.3
    
    
    Ps.
    78.0Number of Recipient Related Parties
    
    
    210
    
    
    
    207
    
    
    
    205
    
    
    
    204Individuals
    
    
    170
    
    
    
    168
    
    
    
    163
    
    
    
    160Companies
    
    
    40
    
    
    
    39
    
    
    
    42
    
    
    
    44Average Total Financial Exposure
    
    Ps.
    0.2
    
    
    Ps.
    0.2
    
    
    Ps.
    0.1
    
    
    Ps.
    0.4Single Largest Exposure
    
    Ps.
    12.6
    
    
    Ps.
    11.6
    
    
    Ps.
    3.6
    
    
    Ps.
    19.3
   
 Item 8. Financial Information
  
 Legal Proceedings
    -155-




---



##### Table of Contents



Banco Galicia
  amparo Amparo
 
 Dividend Policy and Dividends
 Dividend Policy
    -156-




---



##### Table of Contents



-157-




---



##### Table of Contents



In millions of PesosTo Legal Reserve
    
    
    0.9To Next Fiscal Year
    
    
    3.7
 amparo
   Dividends
   
 Significant Changes
  
 Item 9. The Offer and Listing
 
 Shares and ADSs
    -158-




---



##### Table of Contents



Grupo Financiero Galicia  Class B Shares  Buenos Aires Stock Exchange (in Pesos)
 Average Daily VolumeHigh
    
    
    Low
    
    
    (in thousands of Class B shares)Calendar Year2003
    
    
    2.02
    
    
    
    0.69
    
    
    
    4,175.32004(1)
    
    
    2.61
    
    
    
    1.42
    
    
    
    5,571.52005
    
    
    2.81
    
    
    
    2.06
    
    
    
    4,784.62006
    
    
    2.86
    
    
    
    1.72
    
    
    
    2,045.32007
    
    
    3.37
    
    
    
    2.23
    
    
    
    1,924.8Two Most Recent Fiscal Years2006First Quarter
    
    
    2.40
    
    
    
    2.11
    
    
    
    2,471.0Second Quarter
    
    
    2.32
    
    
    
    1.76
    
    
    
    1,976.2Third Quarter
    
    
    2.10
    
    
    
    1.72
    
    
    
    1,208.8Fourth Quarter
    
    
    2.86
    
    
    
    2.03
    
    
    
    2,552.32007First Quarter
    
    
    3.37
    
    
    
    2.69
    
    
    
    2,762.6Second Quarter
    
    
    3.34
    
    
    
    2.98
    
    
    
    1,622.9Third Quarter
    
    
    3.11
    
    
    
    2.25
    
    
    
    2,000.7Fourth Quarter
    
    
    2.63
    
    
    
    2.23
    
    
    
    1,259.62008First Quarter
    
    
    2.36
    
    
    
    1.94
    
    
    
    1,290.8Second Quarter (through May 31, 2008)
    
    
    2.26
    
    
    
    1.75
    
    
    
    1,356.1Most Recent Six MonthsDecember 2007
    
    
    2.46
    
    
    
    2.23
    
    
    
    1,138.2January 2008
    
    
    2.33
    
    
    
    1.94
    
    
    
    1,354.7February 2008
    
    
    2.36
    
    
    
    2.05
    
    
    
    1,618.3March 2008
    
    
    2.32
    
    
    
    2.08
    
    
    
    830,5April 2008
    
    
    2.26
    
    
    
    1.98
    
    
    
    1,104.1May 2008
    
    
    2.01
    
    
    
    1.75
    
    
    
    1,910.0
 (1)
    
    On April 28, 2004, our class B shares began trading ex-coupon, which coupon related to the
right to subscribe for the preferred shares as part of the preemptive rights offering. The value of
each class B share was reduced by the value of the coupon of Ps. 0.101 per class B share.  Grupo Financiero Galicia  Preferred Shares Outstanding from May 13, 2004 to May 11, 2005  Buenos Aires
Stock Exchange (in Pesos)
 Average Daily VolumeHigh
    
    
    Low
    
    
    (in thousands of preferred shares)Calendar Year2004(from May 13, 2004)
    
    Ps.
    2.48
    
    
    Ps.
    1.29
    
    
    
    490.02005(through May 11, 2005)
    
    
    2.72
    
    
    
    2.03
    
    
    
    183.4Most Recent Fiscal Year2004Second Quarter (from May 13, 2004)
    
    
    1.59
    
    
    
    1.29
    
    
    
    345.6Third Quarter
    
    
    1.87
    
    
    
    1.33
    
    
    
    681.4Fourth Quarter
    
    
    2.48
    
    
    
    1.88
    
    
    
    376.12005First Quarter
    
    
    2.72
    
    
    
    2.10
    
    
    
    230.9Second Quarter (through May 11, 2005)
    
    
    2.34
    
    
    
    2.03
    
    
    
    81.8Most Recent Six MonthsDecember 2004
    
    
    2.48
    
    
    
    1.99
    
    
    
    275.2January 2005
    
    
    2.44
    
    
    
    2.26
    
    
    
    146.0February 2005
    
    
    2.69
    
    
    
    2.37
    
    
    
    184.3March 2005
    
    
    2.72
    
    
    
    2.10
    
    
    
    360.3April 2005
    
    
    2.25
    
    
    
    2.03
    
    
    
    100.4May 2005 (through May 11, 2005)
    
    
    2.34
    
    
    
    2.15
    
    
    
    32.9
  -159-




---



##### Table of Contents



Grupo Financiero Galicia  ADSs  Nasdaq National Market / Nasdaq Capital Market (in US$)
 Average Daily VolumeHigh
    
    
    Low
    
    
    (in thousands of ADRs)Calendar Year2003
    
    
    6.73
    
    
    
    2.05
    
    
    
    238.12004
    
    
    8.85
    
    
    
    4.65
    
    
    
    324.22005
    
    
    9.62
    
    
    
    6.87
    
    
    
    347.32006
    
    
    9.56
    
    
    
    5.61
    
    
    
    190.22007
    
    
    11.12
    
    
    
    6.98
    
    
    
    273.1Two Most Recent Fiscal Years2006First Quarter
    
    
    7.84
    
    
    
    6.91
    
    
    
    237.4Second Quarter
    
    
    7.70
    
    
    
    5.70
    
    
    
    181.4Third Quarter
    
    
    6.83
    
    
    
    5.61
    
    
    
    121.7Fourth Quarter
    
    
    9.56
    
    
    
    6.60
    
    
    
    221.02007First Quarter
    
    
    11.12
    
    
    
    8.69
    
    
    
    289.3Second Quarter
    
    
    11.00
    
    
    
    9.59
    
    
    
    239.0Third Quarter
    
    
    10.00
    
    
    
    7.15
    
    
    
    335.7Fourth Quarter
    
    
    8.25
    
    
    
    6.98
    
    
    
    229.42008First Quarter
    
    
    7.60
    
    
    
    6.14
    
    
    
    259.3Second Quarter (through May 31, 2008)
    
    
    7.07
    
    
    
    5.33
    
    
    
    252.6Most Recent Six MonthsDecember 2007
    
    
    8.00
    
    
    
    6.98
    
    
    
    228.8January 2008
    
    
    7.60
    
    
    
    6.14
    
    
    
    280.8February 2008
    
    
    7.47
    
    
    
    6.35
    
    
    
    287.9March 2008
    
    
    7.33
    
    
    
    6.58
    
    
    
    208.0April 2008
    
    
    7.07
    
    
    
    6.10
    
    
    
    125.3May 2008
    
    
    6.45
    
    
    
    5.33
    
    
    
    385.9
  -160-




---



##### Table of Contents



Banco Galicia  Class B Shares  Buenos Aires Stock Exchange (in Pesos)
 Average Daily Trading VolumeHigh
    
    
    Low
    
    
    (in thousand Class B shares)Calendar Year2003
    
    
    3.85
    
    
    
    1.58
    
    
    
    1.062004
    
    
    5.10
    
    
    
    3.30
    
    
    
    1.222005
    
    
    4.30
    
    
    
    3.60
    
    
    
    1.962006
    
    
    4.50
    
    
    
    3.04
    
    
    
    1.562007
    
    
    6.46
    
    
    
    4.25
    
    
    
    2.74Two Most Recent Fiscal Years2006First Quarter
    
    
    4.25
    
    
    
    3.65
    
    
    
    1.04Second Quarter
    
    
    3.65
    
    
    
    3.38
    
    
    
    2.21Third Quarter
    
    
    3.35
    
    
    
    3.04
    
    
    
    1.21Fourth Quarter
    
    
    4.5
    
    
    
    3.32
    
    
    
    1.832007First Quarter
    
    
    6.46
    
    
    
    4.25
    
    
    
    5.94Second Quarter
    
    
    5.80
    
    
    
    4.99
    
    
    
    2.40Third Quarter
    
    
    5.05
    
    
    
    4.45
    
    
    
    1.43Fourth Quarter
    
    
    4.70
    
    
    
    4.30
    
    
    
    1.102008First Quarter
    
    
    4.40
    
    
    
    4.08
    
    
    
    0.38Second Quarter (through May 31, 2008)
    
    
    4.45
    
    
    
    3.70
    
    
    
    2.02Most Recent Six MonthsDecember 2007
    
    
    4.42
    
    
    
    4.30
    
    
    
    0.38January 2008
    
    
    4.25
    
    
    
    4.15
    
    
    
    0.45February 2008
    
    
    4.10
    
    
    
    4.08
    
    
    
    0.54March 2008
    
    
    4.40
    
    
    
    4.40
    
    
    
    0.10April 2008
    
    
    4.45
    
    
    
    4.40
    
    
    
    0.06May 2008
    
    
    4.00
    
    
    
    3.70
    
    
    
    3.99
  
 Argentine Securities Market
  Sistema Integrado de Negociación Asistida
por Computación
  -161-




---



##### Table of Contents



Market Regulations
        -162-




---



##### Table of Contents



Item 10. Additional Information
 
 Description of Our Bylaws
 General
    
 Outstanding Capital Stock
  As of December 31, 2007Shares
    
    Number of Shares
    
    
    % of Capital Stock
    
    
    % of Voting RightsClass A Shares
    
    
    281,221,650
    
    
    
    22.7
    %
    
    
    59.4
    %Class B Shares
    
    
    960,185,367
    
    
    
    77.3
    
    
    
    40.6Total
    
    
    1,241,407,017
    
    
    
    100.0
    %
    
    
    100.0
    %
 Registration and Transfer
    -163-




---



##### Table of Contents



Voting Rights
  
    
    a merger or spin-off in which we are not the surviving corporation, unless the
acquirers shares are authorized to be publicly offered or listed on any stock exchange;
    
    a transformation in our legal corporate form;
    
    a fundamental change in our corporate purpose;
    
    a change of our domicile to outside Argentina;
    
    a voluntary termination of our public offering or listing authorization;
    
    our continuation following a delisting or a mandatory cancellation of our public
offering or listing authorization;
    
    a total or partial recapitalization of our statutory capital following a loss; or
    
    the appointment of syndics.
  
    
    EBA Holding sells 100% of its class A shares;
    
    EBA Holding sells a portion of our class A shares to a third person who, when
aggregating all our class A shares with our class B shares owned by such person, if any,
obtains 50% plus one vote of our total votes; or
    
    the current shareholders of EBA Holding sell shares of EBA Holding that will allow the
buyer to exercise more than 50% of the voting power of EBA Holding at any general
shareholders meeting of EBA Holding shareholders, except for transfers to other current
shareholders of EBA Holding or to their heirs or their legal successors or to entities
owned by any of them.
 Limited Liability of Shareholders
  Directors
      -164-




---



##### Table of Contents



Appointment of Directors and Syndics by Cumulative Voting
  Compensation of Directors
    Syndics
   -165-




---



##### Table of Contents



Shareholders Meetings
  
    
    approval of the financial statements and general performance of the management for the
preceding fiscal year;
    
    appointment and remuneration of directors and members of the supervisory committee;
    
    allocation of profits; and
    
    any other matter the board of directors decides to submit to the shareholders meeting
concerning the companys business administration. Matters which may be discussed at these
or other ordinary meetings include resolutions regarding the responsibility of directors
and members of the supervisory committee, as well as capital increases and the issuance of
negotiable obligations.
          -166-




---



##### Table of Contents



Dividends
       Capital Increases and Reductions
  Preemptive Rights
     -167-




---



##### Table of Contents



Appraisal Rights
  
    
    a merger or spin-off in which we are not the surviving corporation, unless the
acquirers shares are authorized to be publicly offered or listed on any stock exchange,
    
    a transformation in our legal corporate form,
    
    a fundamental change in our corporate purpose,
    
    a change of our domicile to outside Argentina,
    
    a voluntary termination of our public offering or listing authorization,
    
    our continuation following a delisting or a mandatory cancellation of our public
offering or listing authorization, or
    
    a total or partial recapitalization of our statutory capital following a loss,
     Preferred Stock
   -168-




---



##### Table of Contents



Conflicts of Interest
  Redemption or Repurchase
 
  Liquidation
  Other Provisions
  
 Exchange Controls
   -169-




---



##### Table of Contents



Taxation
  Argentine Taxes
 Taxation of Dividends
    Taxation of Capital Gains
    Procurador del Tesoro
 Transfer Taxes
  Tax on Minimum Notional Income
   -170-




---



##### Table of Contents



Personal Assets Tax
 st
 
  Other Taxes
  Deposit and Withdrawal of Class B Shares in Exchange for ADSs
   -171-




---



##### Table of Contents



United States Taxes
      Each prospective purchaser should consult its own tax advisor with respect to the U.S.
Federal, state, local and foreign tax consequences of acquiring, owning or disposing of class B
shares or ADSs.
 Ownership of ADSs in General
  Taxation of Cash Dividends and Distribution of Stock
   -172-




---



##### Table of Contents



Taxation of Capital Gains
     -173-




---



##### Table of Contents



Passive Foreign Investment Company Considerations
     Backup Withholding and Information Reporting
     -174-




---



##### Table of Contents



THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES
RELATING TO THE OWNERSHIP OF THE CLASS B SHARES OR ADSs. YOU SHOULD CONSULT AN INDEPENDENT TAX
ADVISOR CONCERNING THE TAX CONSEQUENCES OF YOUR PARTICULAR SITUATION.
 
 Material Contracts
       -175-




---



##### Table of Contents



Documents on Display
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 
 General
     
 Interest Rate Risk
   -176-




---



##### Table of Contents



Limit on the Net Financial Income for the First Year
    Net Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    (57.6
    )
    
    
    (7.55
    )%
    
    
    (64.2
    )
    
    
    (17.65
    )%150
    
    
    (43.2
    )
    
    
    (5.66
    )%
    
    
    (48.2
    )
    
    
    (13.24
    )%100
    
    
    (28.8
    )
    
    
    (3.77
    )%
    
    
    (32.1
    )
    
    
    (8.83
    )%50
    
    
    (14.4
    )
    
    
    (1.89
    )%
    
    
    (16.1
    )
    
    
    (4.41
    )%(50)
    
    
    9.8
    
    
    
    1.28
    %
    
    
    10.9
    
    
    
    3.00
    %(100)
    
    
    19.6
    
    
    
    2.57
    %
    
    
    21.8
    
    
    
    6.01
    %(150)
    
    
    26.1
    
    
    
    3.42
    %
    
    
    29.1
    
    
    
    8.00
    %(200)
    
    
    30.0
    
    
    
    3.93
    %
    
    
    33.4
    
    
    
    9.19
    %
  -177-




---



##### Table of Contents



Net Trading Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    6.7
    
    
    
    0.88
    %
    
    
    2.9
    
    
    
    0.80
    %150
    
    
    5.0
    
    
    
    0.66
    %
    
    
    2.1
    
    
    
    0.58
    %100
    
    
    3.4
    
    
    
    0.45
    %
    
    
    1.4
    
    
    
    0.38
    %50
    
    
    1.7
    
    
    
    0.22
    %
    
    
    0.7
    
    
    
    0.19
    %(50)
    
    
    (1.6
    )
    
    
    (0.21
    )%
    
    
    (0.8
    )
    
    
    (0.22
    )%(100)
    
    
    (3.3
    )
    
    
    (0.43
    )%
    
    
    (1.5
    )
    
    
    (0.41
    )%(150)
    
    
    (4.9
    )
    
    
    (0.64
    )%
    
    
    (2.2
    )
    
    
    (0.60
    )%(200)
    
    
    (6.6
    )
    
    
    (0.86
    )%
    
    
    (3.0
    )
    
    
    (0.82
    )%
 Net Non Trading Portfolio
    
    Net Financial Income(1)(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the NFI
    
    
    Variation
    
    
    % Change in the NFI200
    
    
    (64.3
    )
    
    
    (8.43
    )%
    
    
    (67.1
    )
    
    
    (18.45
    )%150
    
    
    (48.2
    )
    
    
    (6.32
    )%
    
    
    (50.3
    )
    
    
    (13.82
    )%100
    
    
    (32.2
    )
    
    
    (4.22
    )%
    
    
    (33.5
    )
    
    
    (9.21
    )%50
    
    
    (16.1
    )
    
    
    (2.11
    )%
    
    
    (16.8
    )
    
    
    (4.61
    )%(50)
    
    
    11.4
    
    
    
    1.49
    %
    
    
    11.7
    
    
    
    3.22
    %(100)
    
    
    22.9
    
    
    
    3.00
    %
    
    
    23.3
    
    
    
    6.42
    %(150)
    
    
    31.0
    
    
    
    4.06
    %
    
    
    31.3
    
    
    
    8.60
    %(200)
    
    
    36.6
    
    
    
    4.80
    %
    
    
    36.4
    
    
    
    10.02
    %
 (1)
    
    Net interest of the first year. Net Present Value of Assets and Liabilities
     -178-




---



##### Table of Contents



Net Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (47.8
    )
    
    
    (2.02
    )%
    
    
    (93.5
    )
    
    
    (5.02
    )%150
    
    
    (36.2
    )
    
    
    (1.53
    )%
    
    
    (70.7
    )
    
    
    (3.80
    )%100
    
    
    (24.5
    )
    
    
    (1.03
    )%
    
    
    (47.9
    )
    
    
    (2.57
    )%50
    
    
    (12.4
    )
    
    
    (0.52
    )%
    
    
    (24.3
    )
    
    
    (1.31
    )%(50)
    
    
    12.8
    
    
    
    0.54
    %
    
    
    25.1
    
    
    
    1.35
    %(100)
    
    
    26.1
    
    
    
    1.10
    %
    
    
    50.9
    
    
    
    2.73
    %(150)
    
    
    39.3
    
    
    
    1.66
    %
    
    
    76.8
    
    
    
    4.13
    %(200)
    
    
    53.3
    
    
    
    2.25
    %
    
    
    104.2
    
    
    
    5.60
    %
 Net Trading Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (3.8
    )
    
    
    (0.16
    )%
    
    
    (1.7
    )
    
    
    (0.09
    )%150
    
    
    (2.8
    )
    
    
    (0.12
    )%
    
    
    (1.2
    )
    
    
    (0.06
    )%100
    
    
    (1.9
    )
    
    
    (0.08
    )%
    
    
    (0.8
    )
    
    
    (0.04
    )%50
    
    
    (0.9
    )
    
    
    (0.04
    )%
    
    
    (0.4
    )
    
    
    (0.02
    )%(50)
    
    
    1.0
    
    
    
    0.04
    %
    
    
    0.5
    
    
    
    0.03
    %(100)
    
    
    1.9
    
    
    
    0.08
    %
    
    
    0.9
    
    
    
    0.05
    %(150)
    
    
    2.9
    
    
    
    0.12
    %
    
    
    1.3
    
    
    
    0.07
    %(200)
    
    
    3.8
    
    
    
    0.16
    %
    
    
    1.7
    
    
    
    0.09
    %
 Net Non Trading Portfolio
    
    Net Fair Value(In millions of Pesos, except percentages)
    
    As of December 31, 2007
    
    
    As of December 31, 2006Change in Interest Rates in Basis Points
    
    Variation
    
    
    % Change in the RPC
    
    
    Variation
    
    
    % Change in the RPC200
    
    
    (44.0
    )
    
    
    (1.86
    )%
    
    
    (91.8
    )
    
    
    (4.93
    )%150
    
    
    (33.4
    )
    
    
    (1.41
    )%
    
    
    (69.5
    )
    
    
    (3.73
    )%100
    
    
    (22.6
    )
    
    
    (0.95
    )%
    
    
    (47.1
    )
    
    
    (2.53
    )%50
    
    
    (11.5
    )
    
    
    (0.49
    )%
    
    
    (23.9
    )
    
    
    (1.28
    )%(50)
    
    
    11.8
    
    
    
    0.50
    %
    
    
    24.6
    
    
    
    1.32
    %(100)
    
    
    24.2
    
    
    
    1.02
    %
    
    
    50.0
    
    
    
    2.69
    %(150)
    
    
    36.4
    
    
    
    1.54
    %
    
    
    75.5
    
    
    
    4.06
    %(200)
    
    
    49.5
    
    
    
    2.09
    %
    
    
    102.5
    
    
    
    5.51
    %
 
 Foreign Exchange Rate Risk
   -179-




---



##### Table of Contents



Value of Foreign Currency Net Position as ofDecember 31, 2007Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    453.9
    
    
    
    129.7
    
    
    
    40.030%
    
    
    421.5
    
    
    
    97.3
    
    
    
    30.020%
    
    
    389.0
    
    
    
    64.8
    
    
    
    20.010%
    
    
    356.6
    
    
    
    32.4
    
    
    
    10.0Static
    
    
    324.2
    
    
    
    
    
    
    
    (10)%
    
    
    291.8
    
    
    
    (32.4
    )
    
    
    (10.0
    )(20)%
    
    
    259.4
    
    
    
    (64.8
    )
    
    
    (20.0
    )(30)%
    
    
    226.9
    
    
    
    (97.3
    )
    
    
    (30.0
    )(40)%
    
    
    194.5
    
    
    
    (129.7
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum
accounts. In addition, as of December 31, 2007, the fair value of the Banks foreign currency derivatives amounted to Ps. 7.7 million. Value of Foreign Currency Net Position as ofDecember 31, 2006Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    101.5
    
    
    
    29.0
    
    
    
    40.030%
    
    
    94.3
    
    
    
    21.8
    
    
    
    30.120%
    
    
    87.0
    
    
    
    14.5
    
    
    
    20.010%
    
    
    79.8
    
    
    
    7.3
    
    
    
    10.1Static
    
    
    72.5
    
    
    
    
    
    
    
    (10)%
    
    
    65.3
    
    
    
    (7.2
    )
    
    
    (9.9
    )(20)%
    
    
    58.0
    
    
    
    (14.5
    )
    
    
    (20.0
    )(30)%
    
    
    50.8
    
    
    
    (21.7
    )
    
    
    (29.9
    )(40)%
    
    
    43.5
    
    
    
    (29.0
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum
accounts. In addition, as of December 31, 2006, the fair value of the Banks foreign currency derivatives amounted to Ps. 2.6 million.  -180-




---



##### Table of Contents



Value of Foreign Currency Net Position as ofDecember 31, 2005Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(In millions of Pesos, except percentages)40%
    
    
    53.2
    
    
    
    15.2
    
    
    
    40.030%
    
    
    49.4
    
    
    
    11.4
    
    
    
    30.020%
    
    
    45.6
    
    
    
    7.6
    
    
    
    20.010%
    
    
    41.8
    
    
    
    3.8
    
    
    
    10.0Static
    
    
    38.0
    (2)
    
    
    
    
    
    
    (10)%
    
    
    34.2
    
    
    
    (3.8
    )
    
    
    (10.0
    )(20)%
    
    
    30.4
    
    
    
    (7.6
    )
    
    
    (20.0
    )(30)%
    
    
    26.6
    
    
    
    (11.4
    )
    
    
    (30.0
    )(40)%
    
    
    22.8
    
    
    
    (15.2
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).(2)
    
    Adjusted to reflect forward purchases and sales of foreign currency without delivery of the underlying asset, registered in memorandum accounts.
In addition, as of December 31, 2005, the fair value of the Banks foreign currency derivatives amounted to Ps. 8.0 million. 
 Currency Mismatches
    As of December 31, 2007Assets
    
    
    Liabilities
    
    
    Gap(In millions of Pesos)Financial Assets and Liabilities
    
    
    19,821.7
    
    
    
    20,076.2
    
    
    
    (254.5
    )Pesos  Adjusted by CER
    
    
    2,293.8
    
    
    
    277.3
    
    
    
    2,016.5Pesos  Unadjusted
    
    
    11,325.0
    
    
    
    13,059.7
    
    
    
    (1,734.7
    )Foreign Currency (1)
    
    
    6,202.9
    
    
    
    6,739.2
    
    
    
    (536.3
    )Other Assets and Liabilities
    
    
    2,704.4
    
    
    
    690.5
    
    
    
    2,013.9Total Gap
    
    
    22,526.1
    
    
    
    20,766.7
    
    
    
    1,759.4Adjusted for Forward Transactions Recorded in Memo Accounts
Financial Assets and Liabilities
    
    
    19,821.7
    
    
    
    20,076.2
    
    
    
    (254.5
    )Pesos  Adjusted by the CER
    
    
    2,293.8
    
    
    
    277.3
    
    
    
    2,016.5Pesos  Unadjusted, Including Shareholders Equity (2)
    
    
    9,584.7
    
    
    
    12,179.9
    
    
    
    (2,595.2
    )Foreign Currency (1)(2)
    
    
    7,943.2
    
    
    
    7,619.0
    
    
    
    324.2Other Assets and Liabilities
    
    
    2,704.4
    
    
    
    690.5
    
    
    
    2,013.9Total Adjusted Gap
    
    
    22,526.1
    
    
    
    20,766.7
    
    
    
    1,759.4
 (1)
    
    In Pesos, at an exchange rate of Ps. 3.1510 per US$1.0.(2)
    
    Adjusted for forward sales and purchases of foreign exchange made by the Bank and recorded off-balance sheet.  -181-




---



##### Table of Contents



Peso-denominated Assets and Liabilities Adjusted by CER
  Assets and Liabilities Denominated in Foreign Currency
  Non-adjusted Peso-denominated Assets and Liabilities
  Other Assets and Liabilities
 amparo
  -182-




---



##### Table of Contents



Market Risk
  i)
    
    A 95% degree of confidence.ii)
    
    VaR estimates are made for holding periods of one day and n days, where n is
defined as the number of days necessary to liquidate the position in each security.iii)
    
    In the case of new issuances, the available trading days are taken into
consideration, with a maximum; if there are not enough trading days or if there are no
quotations, the volatility of bonds from domestic issuers with similar risk and
characteristics is used.
  
 Item 12. Description of Securities Other Than Equity Securities
   -183-




---



##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
        -184-




---



##### Table of Contents



Item 16. [Reserved]
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 http://www.gfgsa.com
 
 Item 16C. Principal Accountants Fees and Services
  2007
    
    
    2006(In thousands of Pesos)Audit Fees
    
    
    4,788
    
    
    
    3,838Audit Related Fees
    
    
    1,819
    
    
    
    1,428Tax Fees
    
    
    280
    
    
    
    407All Other Fees
    
    
    434
    
    
    
    114Total
    
    Ps.
    7,321
    
    
    Ps.
    5,787
 Audit Fees
  Audit-Related Fees
   -185-




---



##### Table of Contents



Tax Fees
  All Other Fees
  Audit Committee Pre-approval
  
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
   -186-




---



##### Table of Contents



PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
        
 Item 19. Exhibits
 Exhibit
    
    Description1.1
    
    Unofficial English language translation of the Bylaws (estatutos sociales). ****2.1
    
    Form of Deposit Agreement between The Bank of New York and the registrant, including the form
of American Depositary Receipt.*2.2
    
    Indenture, dated as of May 18, 2004, among the Bank, The Bank of New York and Banco Rio de la
Plata S.A.**4.1
    
    English translation of form of Financial Trust Contract, dated April 16, 2002, among the
Bank, Banco Provincia de Buenos Aires and BAPRO Mandatos y Negocios S.A.***4.2
    
    Form of Restructured Loan Facility (as evidenced by the Note Purchase Agreement, dated as of
April 27, 2004, among Banco de Galicia y Buenos Aires S.A., Barclays Bank PLC, the holders
party thereto and Deutsche Bank Trust Company Americas).**4.3
    
    Form of First Amendment and Waiver to Restructured Loan Facility (as evidenced by the First
Amendment and Waiver to the Note Purchase Agreement, dated as of December 20, 2004, among
Banco de Galicia y Buenos Aires S.A., the holders party thereto and Deutsche Bank Trust
Company Americas). ****4.4
    
    Form of Second Amendment to Restructured Loan Facility (as evidenced by the Second Amendment
to the Note Purchase Agreement, dated as of August 25, 2006, among Banco de Galicia y Buenos
Aires S.A., the holders party thereto and Deutsche Bank Trust Company Americas).*****4.5
    
    Form of Third Amendment to Restructured Loan Facility (as evidenced by the Third Amendment to
the Note Purchase Agreement, dated as of December 28, 2007, among Banco de Galicia y Buenos
Aires S.A., the holders party thereto and Deutsche Bank Trust Company Americas).
  -187-




---



##### Table of Contents



Exhibit
    
    Description4.6
    
    Loan Agreement, dated as of July 24, 2007, between Grupo Financiero Galicia S.A. and Merrill
Lynch International.8.1
    
    For a list of our subsidiaries as of the end of the fiscal year covered by this annual
report, please see Item 4. Information on the CompanyOrganizational Structure.12.1
    
    Certification of the principal executive officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    Certification of the principal financial officer required under Rule 13a-14(a) or Rule
15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1
    
    Certification of the principal executive officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.13.2
    
    Certification of the principal financial officer required pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 *
    
    Incorporated by reference from our Registration Statement on Form F-4 (333-11960).**
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2003.***
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2002.****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December 31,
2004.*****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended December
31, 2006.  -188-




---



##### Table of Contents



SIGNATURE
  GRUPO FINANCIERO GALICIA S.A.By:
    /s/ Antonio GarcésName:
    Antonio GarcésTitle:
    Chairman of the Board and Chief Executive Officer   -189-




---



##### Table of Contents



GRUPO FINANCIERO GALICIA S.A. AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of the Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    F-4Consolidated Statements of Income for the fiscal years ended December 31, 2007, 2006 and 2005
    
    
    F-7Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2007, 2006 and 2005
    
    
    F-9Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended December 31, 2007, 2006 and 2005
    
    
    F-11Notes to the Consolidated Financial Statements
    
    
    F-12
  F-1




---



##### Table of Contents



Report of the Independent Registered Public Accounting Firm
  Internal Control  Integrated Framework
    F-2




---



##### Table of Contents



F-3




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Balance Sheets
 As of December 31, 2007 and 2006
  December 31,2007
    
    
    2006ASSETSA. Cash and due from banksCash
    
    
    743,185
    
    
    
    550,851Financial institutions and correspondents
    
    
    2,216,828
    
    
    
    1,743,998Argentine Central Bank
    
    
    1,648,864
    
    
    
    1,494,699Other local financial institutions
    
    
    26,425
    
    
    
    6,781Foreign
    
    
    541,539
    
    
    
    242,518Ps.
    2,960,013
    
    
    Ps.
    2,294,849B. Government and corporate securitiesHoldings of investment account securities
    
    
    1,320,572
    
    
    
    2,608,827Holdings of trading securities
    
    
    38,991
    
    
    
    28,566Government securities without quotation
    
    
    1,872
    
    
    
    431,753Securities issued by the Argentine Central Bank
    
    
    331,622
    
    
    
    119,520Investments in quoted corporate securities
    
    
    973
    
    
    
    339Allowances
    
    
    
    
    
    
    (357
    )Ps.
    1,694,030
    
    
    Ps.
    3,188,648C. LoansTo the non-financial public sector
    
    
    1,265,466
    
    
    
    2,739,282To the financial sector
    
    
    110,028
    
    
    
    311,623Interbank loans  (call money loans granted)
    
    
    2,906
    
    
    
    204,191Other loans to domestic financial institutions
    
    
    64,895
    
    
    
    64,881Accrued interest, adjustments and exchange rate differences receivable
    
    
    42,227
    
    
    
    42,551To the non-financial private sector and residents abroad
    
    
    10,654,142
    
    
    
    7,801,109Overdrafts
    
    
    792,148
    
    
    
    346,135Promissory notes
    
    
    2,911,170
    
    
    
    2,143,706Mortgage loans
    
    
    945,088
    
    
    
    687,954Pledge loans
    
    
    94,520
    
    
    
    67,145Personal loans
    
    
    977,976
    
    
    
    563,232Credit card loans
    
    
    3,630,133
    
    
    
    2,458,572Other
    
    
    1,168,684
    
    
    
    1,403,209Accrued Interest, adjustments and quotation differences receivable
    
    
    177,027
    
    
    
    154,960Documented interest
    
    
    (42,462
    )
    
    
    (23,231
    )Unallocated collections
    
    
    (142
    )
    
    
    (573
    )Allowances
    
    
    (428,607
    )
    
    
    (327,042
    )Ps.
    11,601,029
    
    
    Ps.
    10,524,972D. Other receivables resulting from financial brokerageArgentine Central Bank
    
    
    192,911
    
    
    
    1,878,286Amounts receivable for spot and forward sales to be settled
    
    
    31,090
    
    
    
    91,441Securities receivable under spot and forward purchases to be settled
    
    
    1,517,600
    
    
    
    1,464,917Negotiable obligations without quotation
    
    
    20,868
    
    
    
    26,721Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    1,087
    
    
    
    1,807Compensation to be received from the national government
    
    
    
    
    
    
    401,335Other
    
    
    1,852,584
    
    
    
    1,570,213Allowances
    
    
    (19,170
    )
    
    
    (21,896
    )Ps.
    3,596,970
    
    
    Ps.
    5,412,824
 The accompanying Notes are an integral part of these consolidated financial statements
  F-4




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Balance Sheets  Continued
As of December 31, 2007 and 2006
 December 31,2007
    
    
    2006ASSETS (Continued)E. Assets under financial leasesAssets under financial leases
    
    
    359,552
    
    
    
    208,603Allowances
    
    
    (3,768
    )
    
    
    (2,428
    )Ps.
    355,784
    
    
    Ps.
    206,175F. Equity investmentsIn financial institutions
    
    
    3,138
    
    
    
    3,057Other
    
    
    82,009
    
    
    
    77,385Allowances
    
    
    (41,357
    )
    
    
    (44,867
    )Ps.
    43,790
    
    
    Ps.
    35,575G. Miscellaneous receivablesReceivables for assets sold
    
    
    15,980
    
    
    
    15,118Tax on minimum presumed income  Tax credit
    
    
    258,515
    
    
    
    218,884Other
    
    
    1,056,970
    
    
    
    515,805Accrued interest on receivables for assets sold
    
    
    98
    
    
    
    93Other accrued interest and adjustments receivable
    
    
    79
    
    
    
    82Allowances
    
    
    (85,588
    )
    
    
    (74,472
    )Ps.
    1,246,054
    
    
    Ps.
    675,510H. Bank premises and equipment
    
    Ps.
    743,132
    
    
    Ps.
    490,290I. Miscellaneous assets
    
    Ps.
    112,575
    
    
    Ps.
    271,107J. Intangible assetsGoodwill
    
    
    58,266
    
    
    
    65,165Organization and development expenses
    
    
    390,052
    
    
    
    437,631Ps.
    448,318
    
    
    Ps.
    502,796K. Unallocated items
    
    
    9,161
    
    
    
    4,381L. Other Assets
    
    
    17,882
    
    
    
    8,311Total Assets
    
    Ps.
    22,828,738
    
    
    Ps.
    23,615,438
 The accompanying Notes are an integral part of these consolidated financial statements
  F-5




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Balance Sheets  Continued
As of December 31, 2007 and 2006
 December 31,2007
    
    
    2006LIABILITIES AND SHAREHOLDERS EQUITYM. DepositsNon-financial public sector
    
    Ps.
    193,911
    
    
    Ps.
    63,922Financial sector
    
    
    167,206
    
    
    
    154,303Non-financial private sector and residents abroad
    
    
    12,804,504
    
    
    
    10,561,144Current accounts
    
    
    2,629,925
    
    
    
    1,982,765Saving accounts
    
    
    3,228,954
    
    
    
    2,442,946Time deposits
    
    
    6,543,910
    
    
    
    5,789,299Investment accounts
    
    
    199
    
    
    
    4,031Other
    
    
    291,103
    
    
    
    211,176Accrued interest and quotation differences payable
    
    
    110,413
    
    
    
    130,927Ps.
    13,165,621
    
    
    Ps.
    10,779,369N. Other liabilities resulting from financial brokerageArgentine Central Bank
    
    
    698
    
    
    
    3,025,977Other
    
    
    698
    
    
    
    3,025,977Banks and international entities
    
    
    717,316
    
    
    
    844,263Unsubordinated negotiable obligations
    
    
    2,190,231
    
    
    
    2,809,416Amounts payable for spot and forward purchases to be settled
    
    
    1,273,308
    
    
    
    1,046,181Securities to be delivered under spot and forward sales to be settled
    
    
    30,734
    
    
    
    91,329Loans from domestic financial institutions
    
    
    213,039
    
    
    
    281,445-Interbank loans (call money loans received)
    
    
    12,501
    
    
    
    99,594-Other loans from domestic financial institutions
    
    
    199,191
    
    
    
    181,461-Accrued interest payable
    
    
    1,347
    
    
    
    390Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    
    
    
    
    2,478Other
    
    
    1,855,825
    
    
    
    1,577,126Accrued interest and quotation differences payable
    
    
    81,803
    
    
    
    128,001Ps.
    6,362,954
    
    
    Ps.
    9,806,216O. Miscellaneous liabilitiesDividends payable
    
    
    40
    
    
    
    Directors and Syndics fees
    
    
    4,343
    
    
    
    3,255Other
    
    
    320,200
    
    
    
    219,002Adjustments and accrued interest payable
    
    
    
    
    
    
    838Ps.
    324,583
    
    
    Ps.
    223,095P. Provisions
    
    
    170,083
    
    
    
    182,927Q. Subordinated negotiable obligations
    
    
    855,258
    
    
    
    777,617R. Unallocated items
    
    
    6,347
    
    
    
    5,734S. Other Liabilities
    
    
    71,800
    
    
    
    64,827T. Minority interests
    
    
    217,587
    
    
    
    167,185Total Liabilities
    
    Ps.
    21,174,233
    
    
    Ps.
    22,006,970SHAREHOLDERS EQUITY
    
    
    1,654,505
    
    
    
    1,608,468Total Liabilities and Shareholders Equity
    
    Ps.
    22,828,738
    
    
    Ps.
    23,615,438
 The accompanying Notes are an integral part of these consolidated financial statements
  F-6




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Income
 For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006
    
    
    2005A. Financial incomeInterest on cash and due from banks
    
    Ps.
    14,895
    
    
    Ps.
    874
    
    
    Ps.
    68Interest on loans granted to the financial sector
    
    
    3,345
    
    
    
    2,869
    
    
    
    2,823Interest on overdrafts
    
    
    111,299
    
    
    
    69,670
    
    
    
    39,957Interest on promissory notes
    
    
    294,154
    
    
    
    200,564
    
    
    
    119,017Interest on mortgage loans
    
    
    98,364
    
    
    
    69,967
    
    
    
    74,052Interest on pledge loans
    
    
    12,408
    
    
    
    12,146
    
    
    
    10,806Interest on credit card loans
    
    
    431,790
    
    
    
    281,116
    
    
    
    222,657Interest on other loans
    
    
    202,771
    
    
    
    105,813
    
    
    
    35,705Interest on other receivables resulting from financial brokerage
    
    
    36,231
    
    
    
    171,878
    
    
    
    165,895Net income from government and corporate securities
    
    
    241,303
    
    
    
    235,272
    
    
    
    333,107Net income from secured loans  Decree No. 1387/01
    
    
    79,709
    
    
    
    194,777
    
    
    
    203,487Consumer price index adjustment (CER)
    
    
    205,145
    
    
    
    736,029
    
    
    
    1,091,832Exchange rate differences on gold and foreign currency
    
    
    87,957
    
    
    
    76,154
    
    
    
    58,734Other
    
    
    178,515
    
    
    
    72,694
    
    
    
    40,492Ps.
    1,997,886
    
    
    Ps.
    2,229,823
    
    
    Ps.
    2,398,632B. Financial expensesInterest on current account deposits
    
    
    16,377
    
    
    
    21,043
    
    
    
    15,301Interest on savings account deposits
    
    
    4,540
    
    
    
    4,105
    
    
    
    4,557Interest on time deposits
    
    
    521,096
    
    
    
    313,036
    
    
    
    142,051Interest on interbank loans received (call money loans)
    
    
    3,918
    
    
    
    3,517
    
    
    
    1,642Interest on financing from the financial sector
    
    
    1,946
    
    
    
    3,462
    
    
    
    4,625Interest on other liabilities resulting from financial brokerage
    
    
    313,586
    
    
    
    317,459
    
    
    
    267,590Interest on subordinated obligations
    
    
    94,660
    
    
    
    76,480
    
    
    
    51,633Other interest
    
    
    45,848
    
    
    
    186,578
    
    
    
    282,765Consumer price index adjustment
    
    
    66,984
    
    
    
    697,694
    
    
    
    1,006,752Contributions made to Deposit Insurance Fund
    
    
    20,378
    
    
    
    15,771
    
    
    
    12,059Other
    
    
    157,367
    
    
    
    212,454
    
    
    
    56,954Ps.
    1,246,700
    
    
    Ps.
    1,851,599
    
    
    Ps.
    1,845,929C. Gross brokerage margin
    
    
    751,186
    
    
    
    378,224
    
    
    
    552,703Loan loss provisions
    
    
    255,502
    
    
    
    110,869
    
    
    
    76,730D. Income from servicesIn relation to lending transactions
    
    
    334,730
    
    
    
    247,501
    
    
    
    185,825In relation to borrowing transactions
    
    
    293,308
    
    
    
    220,543
    
    
    
    175,907Other commissions
    
    
    18,731
    
    
    
    17,056
    
    
    
    14,898Other
    
    
    523,931
    
    
    
    367,993
    
    
    
    269,106Ps.
    1,170,700
    
    
    Ps.
    853,093
    
    
    Ps.
    645,736E. Expenses for servicesCommissions
    
    
    117,708
    
    
    
    80,801
    
    
    
    53,906Other
    
    
    139,896
    
    
    
    100,291
    
    
    
    68,065Ps.
    257,604
    
    
    Ps.
    181,092
    
    
    Ps.
    121,971
 The accompanying Notes are an integral part of these consolidated financial statements
  F-7




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Income  Continued
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005F. Administrative expensesPersonnel expenses
    
    
    670,587
    
    
    
    506,632
    
    
    
    392,308Directors and syndics fees
    
    
    6,415
    
    
    
    5,989
    
    
    
    5,793Other fees
    
    
    42,939
    
    
    
    36,148
    
    
    
    32,314Advertising and publicity
    
    
    113,809
    
    
    
    84,507
    
    
    
    68,132Taxes
    
    
    70,393
    
    
    
    50,469
    
    
    
    37,349Depreciation of bank premises and equipment
    
    
    49,952
    
    
    
    37,095
    
    
    
    36,450Amortization of organization expenses
    
    
    35,640
    
    
    
    34,904
    
    
    
    36,480Other operating expenses
    
    
    190,616
    
    
    
    145,017
    
    
    
    114,293Other
    
    
    105,973
    
    
    
    73,803
    
    
    
    57,849Ps.
    1,286,324
    
    
    Ps.
    974,564
    
    
    Ps.
    780,968Net Income / (Loss) from financial brokerage
    
    Ps.
    122,456
    
    
    Ps.
    (35,208
    )
    
    Ps.
    218,770G. Minority interests result
    
    Ps.
    (32,119
    )
    
    Ps.
    (19,016
    )
    
    Ps.
    (34,609
    )H. Miscellaneous incomeNet lncome from equity investments
    
    
    1,957
    
    
    
    
    
    
    
    6,662Default interests
    
    
    1,988
    
    
    
    1,062
    
    
    
    835Loans recovered and allowances reversed
    
    
    95,969
    
    
    
    142,885
    
    
    
    163,608Other
    
    
    173,581
    
    
    
    151,176
    
    
    
    111,061Consumer price index adjustment (CER)
    
    
    8
    
    
    
    105
    
    
    
    7,341Ps.
    273,503
    
    
    Ps.
    295,228
    
    
    Ps.
    289,507I. Miscellaneous lossesNet loss on long-term investments
    
    
    
    
    
    
    14,362
    
    
    
    Default interests and charges in favor of the Argentine Central Bank
    
    
    15
    
    
    
    571
    
    
    
    16Loan loss provisions for miscellaneous receivables and other provisions
    
    
    48,151
    
    
    
    62,424
    
    
    
    99,754Amortization of differences arising from court resolutions
    
    
    108,667
    
    
    
    
    
    
    
    122,279Depreciation and losses from miscellaneous assets
    
    
    627
    
    
    
    923
    
    
    
    906Amortization of goodwill
    
    
    19,687
    
    
    
    20,478
    
    
    
    24,574Other
    
    
    69,155
    
    
    
    66,922
    
    
    
    99,058Consumer price index adjustment
    
    
    35
    
    
    
    
    
    
    
    541Ps.
    246,337
    
    
    Ps.
    165,680
    
    
    Ps.
    347,128Net Income / (Loss) before tax
    
    
    117,503
    
    
    
    75,324
    
    
    
    126,540J. Income tax
    
    Ps.
    71,466
    
    
    Ps.
    94,238
    
    
    Ps.
    19,302Net Income / (Loss) for the fiscal year
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238Net Income / (Loss) per common share (basic and assuming full dilution)
    
    
    0.037
    
    
    
    (0.015
    )
    
    
    0.086
 The accompanying Notes are an integral part of these consolidated financial statements
  F-8




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Cash Flow from operating activities:Net Income / (Loss) for the year
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238Adjustments to reconcile net income to net cash from
Operating activities:Depreciation of bank premises and equipment and Miscellaneous assets
    
    
    50,570
    
    
    
    37,550
    
    
    
    36,962Amortization of intangible assets
    
    
    163,994
    
    
    
    55,382
    
    
    
    182,713Increase in allowances for loan and other losses, net of reversals
    
    
    269,201
    
    
    
    80,863
    
    
    
    48,209Equity loss (gain) of unconsolidated subsidiaries
    
    
    (1,957
    )
    
    
    14,362
    
    
    
    (6,662
    )Gain on sale of premises and equipment
    
    
    (1,472
    )
    
    
    (1,261
    )
    
    
    (1,355
    )Consumer price index adjustment (CER/CVS)
    
    
    485,628
    
    
    
    891,866
    
    
    
    (484,834
    )Unrealized foreign exchange (loss) / gain
    
    
    37,057
    
    
    
    (5,914
    )
    
    
    (13,569
    )Decrease (Increase) in government securities
    
    
    1,589,476
    
    
    
    1,267,505
    
    
    
    1,044,988Decrease (Increase) in other assets
    
    
    (27,441
    )
    
    
    1,064,407
    
    
    
    445,506Increase (Decrease) in other liabilities
    
    
    (161,327
    )
    
    
    162,287
    
    
    
    20,321Net cash provided by operating activities
    
    Ps.
    2,449,766
    
    
    Ps.
    3,548,133
    
    
    Ps.
    1,379,517Cash Flow from investing activities:(Increase)/Decrease in loans, net
    
    
    (1,410,830
    )
    
    
    894,129
    
    
    
    (804,074
    )Sales of investments in other companies
    
    
    
    
    
    
    13,774
    
    
    
    Increase in equity investments in other companies
    
    
    (1,698
    )
    
    
    
    
    
    
    Increase in deposits at the Argentine Central Bank
    
    
    (45,941
    )
    
    
    (36,169
    )
    
    
    (30,356
    )Additions to
bank premises and equipment, miscellaneous, and intangible assets
    
    
    (287,620
    )
    
    
    (196,313
    )
    
    
    (127,252
    )Proceeds from sales of premises and equipment
    
    
    30,381
    
    
    
    13,838
    
    
    
    18,350Net cash (used in) / provided by investing activities
    
    Ps.
    (1,715,708
    )
    
    Ps.
    689,259
    
    
    Ps.
    (943,332
    )Cash Flow from financing activities:Capital Increase in subsidiaries from minority shareholders
    
    
    299
    
    
    
    
    
    
    
    Cash dividends paid in minority interests
    
    
    (5,517
    )
    
    
    (5,280
    )
    
    
    Increase in deposits, net
    
    
    1,752,527
    
    
    
    1,894,251
    
    
    
    1,696,266Borrowings under credit facilities  long-term
    
    
    369,668
    
    
    
    418,018
    
    
    
    179,181Payments on credit facilities  long-term
    
    
    (1,823,464
    )
    
    
    (687,024
    )
    
    
    (418,483
    )Decrease in short-term borrowings, net
    
    
    (2,527,284
    )
    
    
    (3,856,813
    )
    
    
    (1,239,176
    )Increase / (Decrease) in repurchase agreements
    
    
    229,886
    
    
    
    934,408
    
    
    
    (259,142
    )Net cash used in financing activities
    
    Ps.
    (2,003,885
    )
    
    Ps.
    (1,302,440
    )
    
    Ps.
    (41,354
    )
 The accompanying Notes are an integral part of these consolidated financial statements
  F-9




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Statements of Cash Flows  Continued
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Increase in cash and cash equivalents, net
    
    Ps.
    (1,269,827
    )
    
    Ps.
    2,934,952
    
    
    Ps.
    394,831Cash and cash equivalents at the beginning of the year
    
    
    4,988,198
    
    
    
    2,046,836
    
    
    
    1,646,646Effect of exchange rate changes on cash and cash equivalents
    
    
    47,836
    
    
    
    6,410
    
    
    
    5,359Cash and cash equivalents at the end of the year
    
    Ps.
    3,766,207
    
    
    Ps.
    4,988,198
    
    
    Ps.
    2,046,836Supplemental disclosures relative to cash flows:Interest paid
    
    Ps.
    951,134
    
    
    Ps.
    734,756
    
    
    Ps.
    516,429Income tax paid
    
    Ps.
    32,996
    
    
    Ps.
    20,074
    
    
    Ps.
    44,625Minimum Presumed Income Tax .(*)
    
    Ps.
    31,353
    
    
    Ps.
    30,031
    
    
    Ps.
    42,419Non-Cash Investing and financing activities  Trust Interest
    
    Ps.
    98,121
    
    
    Ps.
    99,573
    
    
    Ps.
    95,801
 (*)
    
    The MPIT is calculated based on assets and can be credited against future income
tax. The accompanying Notes are an integral part of these consolidated financial statements
  F-10




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholders Equity
 For the years ended December 31, 2007, 2006 and 2005
  Inflation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Accumulatedadjustments to
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    deficit) /
    
    
    TotalCapital
    
    
    Paid in
    
    
    Capital Stock and
    
    
    Treasury
    
    
    Profit reserves
    
    
    Retained
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Paid in Capital
    
    
    Stock
    
    
    Legal
    
    
    Other
    
    
    earnings
    
    
    EquityBalance at December 31,
2004
    
    Ps.
    1,241,407
    
    
    Ps.
    140,277
    
    
    Ps.
    1,410,048
    
    
    
    
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    (1,301,687
    )
    
    Ps.
    1,519,538Absorption approved by
the shareholders meeting
on April 28,2005
    
    
    
    
    
    
    (140,277
    )
    
    
    (1,131,917
    )
    
    
    
    
    
    
    (29,493
    )
    
    
    
    
    
    
    1,301,687
    
    
    
    Net Income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,238
    
    
    
    107,238Balance at December 31,
2005
    
    Ps.
    1,241,407
    
    
    
    
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    107,238
    
    
    Ps.
    1,626,776Distribution of retained
earnings by the
shareholders meeting on
April 27,2006Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,855
    
    
    
    
    
    
    
    (34,855
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,383
    
    
    
    (72,383
    )
    
    
    Purchase of treasury stock
    
    
    (1,614
    )
    
    
    
    
    
    
    (362
    )
    
    
    1,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sales of treasury stock
    
    
    1,614
    
    
    
    606
    
    
    
    362
    
    
    
    (1,976
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    (18,914
    )Balance at December 31,
2006
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    34,855
    
    
    Ps.
    72,383
    
    
    Ps.
    (18,914
    )
    
    Ps.
    1,608,468Absorption approved by
the shareholders meeting
on April 26.2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    18,914
    
    
    
    Net Income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,037
    
    
    
    46,037Balance at December 31,
2007
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    278,131
    
    
    
    
    
    
    Ps.
    34,855
    
    
    Ps.
    53,469
    
    
    Ps.
    46,037
    
    
    Ps.
    1,654,505
 The accompanying Notes are an integral part of these consolidated financial statements
  F-11




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Notes to the Consolidated Financial Statements
 For the fiscal years ended December 31, 2007, 2006 and 2005
 1. Basis of Presentation.
    Issuing Company
    
    December 31, 2007
    
    
    December 31, 2006Banco de Galicia y Buenos Aires S.A.
    
    
    94.66
    %
    
    
    93.60
    %Net Investment S.A.
    
    
    100.00
    %
    
    
    100.00
    %Galicia Warrants S.A.
    
    
    100.00
    %
    
    
    100.00
    %Sudamericana Holding S.A.
    
    
    100.00
    %
    
    
    100.00
    %Galval Agente de Valores S.A.
    
    
    100.00
    %
    
    
    100.00
    %Banco Galicia Uruguay S.A.
    
    
    100.00
    %
    
    
    100.00
    %Tarjetas Regionales S.A.
    
    
    100.00
    %
    
    
    100.00
    %Galicia Factoring y Leasing S.A.
    
    
    99.98
    %
    
    
    99.98
    %Galicia Valores S.A. Sociedad de Bolsa
    
    
    99.99
    %
    
    
    99.99
    %Galicia Administradora de Fondos S.A.
Sociedad Gerente de Fondos Comunes de
Inversión
    
    
    100.00
    %
    
    
    99.985
    %Tarjetas Cuyanas S.A.
    
    
    60.00
    %
    
    
    60.00
    %Tarjeta Naranja S.A.
    
    
    80.00
    %
    
    
    80.00
    %Tarjetas del Mar S.A.
    
    
    99.995
    %
    
    
    99.995
    %Cobranzas Regionales S.A.
    
    
    77.54
    %
    
    
    77.54
    %Galicia Pension Fund S.A.
    
    
    100.00
    %
    
    
    100.00
    %Tarjeta Naranja Dominicana S.A.
    
    
    39.9998
    %
    
    
    79.52
    %Galicia (Cayman) Ltd.
    
    
    100.00
    %
    
    
    100.00
    %
    F-12




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 2. Significant Accounting Policies.
     2.1 Presentation of Financial Statements in Constant Argentine Pesos.
    2.2 Foreign Currency.
    2.3 Government and Corporate Securities.
   F-13




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  Valuation of Government Securities under Argentine Banking GAAP.
              F-14




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
    National Secured Loans and Provincial Bogar Bonds.
   2.4 Financial Trust Debt Securities and Certificates of Participation.
  2.5 Interest Income (Expense) Recognition.
    2.6 Allowances for Loan Losses.
   F-15




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 2.7 Provisions for Contingencies.
  2.8 Equity Investments.
   
    
    Ownership of a portion of a related companys capital granting the voting power necessary
to influence the approval of such companys financial statements and profits distribution.
    
    Representation in the related companys board of directors or corporate governance body.
    
    Participation in the definition of the related companys policies.
    
    Existence of significant transactions between the company holding the interest and the
related company (for example, when the former is the latters only supplier or by far its most
important client).
    
    Interchange of senior officers among companies.
    
    Technical dependence of one of the companies on the other.
   F-16




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 2.9 Bank Premises and Equipment and Miscellaneous Assets.
     2.10 Intangible Assets.
    2.11 Shareholders Equity.
   F-17




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 2.12 Minimum Presumed Income Tax and Income Tax.
     2.13 Statements of Cash Flows.
 Statement of Cash Flows
    F-18




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 2.14 Use of Estimates.
  3. Restricted Assets.
   December 31,2007
    
    
    2006Peso balances
    
    Ps.
    1,573,904
    
    
    Ps.
    1,217,511Foreign currency balances
    
    
    868,529
    
    
    
    658,751
  December 31,2007
    
    
    2006Funds and securities pledged under various arrangements
    
    Ps.
    1,218,993
    
    
    Ps.
    562,081Shares on equity investments (*)
    
    
    5,250
    
    
    
    5,250Deposits in the Argentine Central Bank, restricted
under Argentine Central Bank regulations
    
    
    1,937
    
    
    
    1,734,969Loans pledged and real property granted as
collateral-Banco Galicia Uruguay S.A. (**)
    
    
    120,639
    
    
    
    249,738Loans granted as collateral (***)
    
    
    
    
    
    
    955,414Total
    
    Ps.
    1,346,819
    
    
    Ps.
    3.507,452
 (*)
    
    Shares over which transferability is subject to prior approval of the National or Provincial
authorities, as applicable, under the terms of certain concession contracts signed.(**)
    
    Under a fixed pledged agreement signed on July 24, 2003 and registered with the Registry of
Property Movable Property  Pledges Division of Montevideo  Uruguay, on August 5, 2003, Galicia
Uruguay S.A.s credit rights against all of its debtors have been pledged in favor of the holders
of transferable time deposit certificates and/or negotiable obligations issued in compliance with
the debt restructuring plan approved.(***)
    
    As a shareholder of the concessionaries Aguas Argentinas S.A., Aguas Provinciales de Santa Fe
S.A. (in liquidation) and Aguas Cordobesas S.A., the Group has guaranteed their compliance with
certain obligations arising from the concession contracts signed by these companies.   F-19




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Aguas Cordobesas S.A.:
 Aguas Provinciales de Santa Fe S.A.
 Aguas Argentinas S.A.:
 Guarantees granted for direct obligations:
 4. Interest-Bearing Deposits with Other Banks.
 .
  F-20




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 5. Government and Corporate Securities.
  December 31,2007
    
    
    2006Government SecuritiesFor trading purposes:Government Bonds
    
    Ps.
    38,991
    
    
    Ps.
    28,206Other
    
    
    
    
    
    
    360Less: Valuation allowances
    
    
    
    
    
    
    (357
    )Total trading securities
    
    Ps.
    38,991
    
    
    Ps.
    28,209In investment accountsGovernment Bonds (Boden 2012 Bonds)
    
    
    1,303,437
    
    
    
    2,608,827Total securities in investment accounts
    
    Ps.
    1,303,437
    
    
    Ps.
    2,608,827Securities issued by the Argentine Central BankSecurities with quotation
    
    
    329,518
    
    
    
    119,520Securities without quotation
    
    
    19,239
    
    
    
    Total Securities issued by the Argentine Central Bank
    
    Ps.
    348,757
    
    
    Ps.
    119,520Without quotationGovernment Bonds
    
    
    1,872
    
    
    
    431,753Total Without quotation securities
    
    
    1,872
    
    
    
    431,753Total government securities
    
    Ps.
    1,693,057
    
    
    Ps.
    3,188,309Corporate SecuritiesShares
    
    
    5
    
    
    
    Marketable Negotiable obligations
    
    
    
    
    
    
    339Mortgage Bonds
    
    
    968
    
    
    
    Total corporate securities
    
    Ps.
    973
    
    
    Ps.
    339Total government and corporate securities
    
    Ps.
    1,694,030
    
    
    Ps.
    3,188,648
    6. Loans.
  
    
    Loans to the non-financial public sector: loans to the federal and provincial governments of
Argentina.
    
    Loans to the financial sector: loans to local banks and financial entities.
    
    Loans to the non-financial private sector and residents abroad: include the following types of
lending:
 Overdrafts
 Promissory Notes
  F-21




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Mortgage loans
 Pledge loans
 Credit card loans
 Personal loans
 Others
   December 31,2007
    
    
    2006Non-financial public sector
    
    Ps.
    1,265,466
    
    
    Ps.
    2,739,282Financial sector (Argentine)
    
    
    110,028
    
    
    
    311,623Non-financial private sector and residents abroad
    
    
    10,654,142
    
    
    
    7,801,109- With preferred guarantees
    
    
    1,289,818
    
    
    
    1,076,170- With other guarantees
    
    
    1,864,482
    
    
    
    1,307,511- Unsecured
    
    
    7,499,842
    
    
    
    5,417,428Subtotal
    
    
    12,029,636
    
    
    
    10,852,014Allowance for loan losses (See Note 7)
    
    
    (428,607
    )
    
    
    (327,042
    )Total
    
    Ps.
    11,601,029
    
    
    Ps.
    10,524,972
  December 31,2007
    
    
    2006Financial Sector
    
    
    2.25
    %
    
    
    8.57
    %Services
    
    
    19.68
    %
    
    
    32.19
    %Primary Products
    
    
    10.59
    %
    
    
    9,28
    %Consumer
    
    
    36.76
    %
    
    
    27.65
    %Retail Trade
    
    
    6.02
    %
    
    
    4.85
    %Wholesale Trade
    
    
    7.13
    %
    
    
    3.09
    %Construction
    
    
    2.24
    %
    
    
    2.87
    %Manufacturing
    
    
    15.09
    %
    
    
    11.38
    %
  F-22




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 7. Allowance for Loan Losses.
  December 31,2007
    
    
    2006
    
    
    2005Balance at beginning of year
    
    Ps.
    327,042
    
    
    Ps.
    427,911
    
    
    Ps.
    632,619Provision charged to income
    
    
    248,415
    
    
    
    105,312
    
    
    
    61,071Recoveries
    
    
    (21,556
    )
    
    
    (32,492
    )
    
    
    (96,240
    )Inflation and foreign exchange effect and other adjustments
    
    
    131
    
    
    
    27,113
    
    
    
    4,957Loans charged off
    
    
    (125,425
    )
    
    
    (200,802
    )
    
    
    (174,496
    )Balance at end of year
    
    Ps.
    428,607
    
    
    Ps.
    327,042
    
    
    Ps.
    427,911
  December 31,2007
    
    
    2006
    
    
    2005Provisions charged to income
    
    Ps.
    248,415
    
    
    Ps.
    105,312
    
    
    Ps.
    61,071Direct charge-offs
    
    
    4,334
    
    
    
    3,338
    
    
    
    6,068Other receivable losses
    
    
    1,413
    
    
    
    788
    
    
    
    8,430Financial leases
    
    
    1,340
    
    
    
    1,431
    
    
    
    1,161Ps.
    255,502
    
    
    Ps.
    110,869
    
    
    Ps.
    76,730
  8. Other Receivables Resulting from Financial Brokerage.
  December 31,2007
    
    
    2006Preferred guarantees, including deposits with
The Argentine Central Bank (1)
    
    Ps.
    234,939
    
    
    Ps.
    1,900,094Other guarantees
    
    
    76
    
    
    
    229Unsecured
    
    
    3,381,125
    
    
    
    3,534,397Less: Allowance for doubtful accounts
    
    
    (19,170
    )
    
    
    (21,896
    )Ps.
    3,596,970
    
    
    Ps.
    5,412,824
 (1)
    
    As of December 31, 2006, includes Ps.1,733,298 of restricted deposits at the Argentine
Central Bank for the payment of the financial assistance received from such institution during
the economic crisis of late 2001 and early 2002. (See Note 29 Compensation to financial
institutions)  F-23




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006Mutual funds
    
    Ps.
    59,256
    
    
    Ps.
    32,190Galtrust I
    
    
    600,909
    
    
    
    571,582Other financial trust participation certificates
    
    
    828,318
    
    
    
    721,795Accrued commissions
    
    
    15,836
    
    
    
    8,992Others
    
    
    348,265
    
    
    
    235,654Ps.
    1,852,584
    
    
    Ps.
    1,570,213
 9. Equity Investments.
  December 31,2007
    
    
    2006In Financial Institutions, complementary and
authorized activitiesBanelco S.A.
    
    Ps.
    7,852
    
    
    Ps.
    7,868Visa Argentina S.A.
    
    
    951
    
    
    
    951Mercado de Valores de Buenos Aires S.A.
    
    
    8,141
    
    
    
    8,050Banco Latinoamericano de Exportaciones S.A.
    
    
    1,562
    
    
    
    1,522Others
    
    
    2,429
    
    
    
    2,362Total equity investments in Financial Institutions,
complementary and authorized activities
    
    Ps.
    20,935
    
    
    Ps.
    20,753In Non-financial InstitutionsAguas Argentinas S.A.
    
    Ps.
    23,370
    
    
    Ps.
    23,370Electrigal S.A.
    
    
    5,455
    
    
    
    5,455Aguas Provinciales de Santa Fe S.A.
    
    
    10,771
    
    
    
    10,771A.E.C. S.A.
    
    
    10,656
    
    
    
    6,139Aguas Cordobesas S.A.
    
    
    8,911
    
    
    
    8,911Other
    
    
    5,049
    
    
    
    5,043Total equity investments in non-financial institutions
    
    Ps.
    64,212
    
    
    Ps.
    59,689Allowances
    
    Ps.
    (41,357
    )
    
    Ps.
    (44,867
    )Total Equity investments
    
    Ps.
    43,790
    
    
    Ps.
    35,575
 10. Fixed Assets and Intangible Assets.
  December 31,2007
    
    
    2006Land and buildings
    
    Ps.
    782,787
    
    
    Ps.
    568,330Furniture and fittings
    
    
    165,470
    
    
    
    140,734Machinery and equipment
    
    
    280,044
    
    
    
    225,327Vehicles
    
    
    1,202
    
    
    
    1,008Others
    
    
    7,052
    
    
    
    6,684Accumulated depreciation
    
    
    (493,423
    )
    
    
    (451,793
    )Ps.
    743,132
    
    
    Ps.
    490,290
   F-24




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006Goodwill,
net of accumulated amortization of Ps.144,328 and
Ps.187,189 , respectively
    
    Ps.
    58,266
    
    
    Ps.
    65,165Organization and development
expenses, net of accumulated
amortization of Ps.170,610 and
Ps.139,247 respectively
    
    
    113,028
    
    
    
    70,410Legal actions related to the
payment of deposits (amparo
claims), net of accumulated
amortization of Ps.429,836 and
Ps.321,169 , respectively (see
Note 2.10)
    
    
    277,024
    
    
    
    367,221Ps.
    448,318
    
    
    Ps.
    502,796
    December 31,2007
    
    
    2006Banking
    
    
    47,932
    
    
    
    45,192Regional Credit Card companies
    
    
    10,334
    
    
    
    19,973Ps.
    58,266
    
    
    Ps.
    65,165
 11. Miscellaneous Assets.
  December 31,2007
    
    
    2006Construction in progress
    
    Ps.
    53,331
    
    
    Ps.
    161,279Deposits on fixed asset purchases
    
    
    22,285
    
    
    
    30,110Stationery and supplies
    
    
    6,249
    
    
    
    5,304Real estate held for sale
    
    
    7,571
    
    
    
    14,311Others
    
    
    23,139
    
    
    
    60,103Ps.
    112,575
    
    
    Ps.
    271,107
  F-25




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 12. Allowances and Provisions.
  December 31,2007
    
    
    2006Allowances against asset accounts:Government and corporate securities
    
    Ps.
    
    
    
    Ps.
    357Other receivables resulting from financial brokerage, for collection risk (a)
    
    
    19,170
    
    
    
    21,896Assets under financial leases (a)
    
    
    3,768
    
    
    
    2,428Equity investments in other companies (b)
    
    
    41,357
    
    
    
    44,867Miscellaneous receivables, for collection risk (a)
    
    
    85,588
    
    
    
    74,472Reserves for contingencies:For severance payments (c)
    
    
    2,477
    
    
    
    2,718Litigations (d)
    
    
    28,694
    
    
    
    22.202Other contingencies
    
    
    114,448
    
    
    
    131,063Sundry liabilities arising from credit card activities (e)
    
    
    24,110
    
    
    
    25,777Other commitments (f)
    
    
    354
    
    
    
    1,167Total reserves for contingencies
    
    Ps.
    170,083
    
    
    Ps.
    182,927
 (a)
    
    Based upon an assessment of debtors performance, the economic and financial situation and the
guarantees collateralizing their respective transactions.(b)
    
    Includes the estimated losses due to the excess of the cost plus dividend method over the
equity method in non-majority owned equity investments.(c)
    
    Estimated amounts payable under labor lawsuits filed against the Bank by former employees.(d)
    
    Litigation arising from different types of claims from customers (e.g., claims for thefts from
safe deposit boxes, the cashing of checks that have been fraudulently altered, discrepancies in
deposits and payments services that the Bank renders, etc).(e)
    
    Reserves for rewards to be given under a credit-card reward program, for a guarantee of
credit-cards receivable and for the estimated liability for the insurance of the payment of
credit-cards balance in the event of the death of the credit-card holders.   (f)
    
    Represents contingent commitments in connection with customers classified in categories other
than the normal categories under Argentine Banking GAAP.  F-26




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 13.
    
    Other Liabilities
Resulting from Financial Brokerage  Argentine Central Bank.
  December 31,2007
    
    
    2006DescriptionContractual Long-term liabilities:Advance for the acquisition of national government bonds in U.S. Dollars (1)
    
    Ps.
    
    
    
    Ps.
    307,998Argentine Central Banks financial assistance (2)
    
    
    
    
    
    
    2,681,673Total long-term liabilities
    
    Ps.
    
    
    
    Ps.
    2,989,671Contractual Short-term liabilities:Other Central Bank Obligations
    
    
    695
    
    
    
    423Total short-term liabilities
    
    Ps.
    695
    
    
    Ps.
    423Accrued interest
    
    
    3
    
    
    
    35,883Ps.
    698
    
    
    Ps.
    3,025,977
 (1)
    
    See Note 29 Compensation to financial institutions.(2)
    
    Accrued interest on the
advance for the purchase of the Hedge Bond was Ps. 28,840 as of December
31, 2006. During the first quarter of 2007, and mainly through the sale of public sector assets,
the Bank repaid in advance all the financial assistance received from the Argentine Central Bank
during the 2001-2002 economic crisis, which was originally due on October 2011. 14.
    
    Other Liabilities Resulting from Financial Brokerage- Banks and International Entities, and
Loans from Domestic Financial Institutions
  December 31,2007
    
    
    2006DescriptionBank and International EntitiesContractual long-term LiabilitiesFloating Rate Bank Loans 2010
    
    Ps.
    8,318
    
    
    Ps.
    124,986Floating Rate Bank Loans 2014
    
    
    78,266
    
    
    
    249,896Commodity Credit Corp (C.C.C.) 2014
    
    
    
    
    
    
    290,793Floating Rate Bank Loans 2019
    
    
    5,276
    
    
    
    40,368Internacional Finance Corp. (I.F.C.)
    
    
    113,444
    
    
    
    79,237New York Branch
    
    
    
    
    
    
    9,932Loan Merrill Lynch
    
    
    251,920
    
    
    
    Other lines from foreign banks
    
    
    2,096
    
    
    
    3,668Total long-term liabilities
    
    Ps.
    459,320
    
    
    Ps.
    798,880Contractual short-term liabilities:Other lines from foreign banks
    
    
    257,996
    
    
    
    45,383Total short-term liabilities
    
    Ps.
    257,996
    
    
    Ps.
    45,383Total Banks and International Entities
    
    Ps.
    717,316
    
    
    Ps.
    844,263Domestic and Financial InstitutionsContractual long-term liabilities:BICE (Banco de Inversión y Comercio Exterior)
    
    
    15,805
    
    
    
    37,135Other lines from domestic banks
    
    
    164,007
    
    
    
    109,455Total long-term liabilities
    
    Ps.
    179,812
    
    
    Ps.
    146,590Contractual short-term liabilities:Other lines from credit from domestic banks
    
    
    33,227
    
    
    
    134,855Total short-term liabilities
    
    Ps.
    33,227
    
    
    Ps.
    134,855Total Domestic and Financial Institutions
    
    Ps.
    213,039
    
    
    Ps.
    281,455TOTAL
    
    Ps.
    930,355
    
    
    Ps.
    1,125,708
  F-27




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
     Contractual long-term Liabilities2008
    
    
    142,4322009
    
    
    243,7762010
    
    
    109,7592011
    
    
    59,0132012
    
    
    47,680Thereafter
    
    
    36,472Ps.
    639,132
  15.
    
    Other Liabilities Resulting from Financial Brokerage  Negotiable Obligations.
  AnnualInterest
    
    
    December 31,Negotiable Obligations (1)
    
    Maturity
    
    
    Rate
    
    
    2007
    
    
    2006Contractual Long-term liabilities:9% Notes Due 2003(*)
    
    
    2003
    
    
    
    9.00
    %
    
    
    12,106
    
    
    
    13,488(Semi-annual interest, principal payable at maturity)6th Series 7.875% Notes Due 2007
    
    
    2007
    
    
    
    7.88
    %
    
    
    
    
    
    
    74,318(Semi-annual interest, principal payable at maturity)7th Series Floating Rate Notes Due 2007 
Libor + 400 BP
    
    
    2007
    
    
    
    9.51
    %
    
    
    
    
    
    
    44,161(Semi-annual interest, principal payable at maturity)Tarjeta Naranja Class I
    
    
    2007
    
    
    CER+1.68
    %
    
    
    
    
    
    
    40,781(Quarterly interest, principal payable in June 2007,
September 2007 and December 2007)Banco Galicia  Note 2010  Libor +350 BP
    
    
    2010
    
    
    
    9.14
    %
    
    
    536,594
    
    
    
    941,990(Semi-annual interest)Banco Galicia Uruguay S.A. Unsubordinated
    
    Various
    
    
    
    Various
    
    
    
    114,957
    
    
    
    157,675(restructured deposits)(Annual interest, principal payable every year)Banco Galicia  Note 2014
    
    
    2014
    
    
    
    6.00
    %
    
    
    944,404
    
    
    
    1,083,821(Semi  annual interest)Banco Galicia  Subordinated Note 2019
    
    
    2019
    
    
    
    11.00
    %
    
    
    855,258
    
    
    
    777,617(Semi-annual interest, principal payable at maturity)
  F-28




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 AnnualInterest
    
    
    December 31,Negotiable Obligations (1)
    
    Maturity
    
    
    Rate
    
    
    2007
    
    
    2006Tarjeta Naranja Class II
    
    
    2008
    
    
    
    17.00
    %
    
    
    40,075
    
    
    
    80,150(Interest fixed, semi-annual interest- principal
payable every six months)Tarjeta Naranja Class IV
    
    
    2011
    
    
    
    15.50
    %
    
    
    307,900
    
    
    
    307,900(Interest fixed, semi-annual interest- principal
payable every six months)Tarjeta Cuyanas S.A. Serie XVIII
    
    
    2012
    
    
    
    12.00
    %
    
    
    197,855
    
    
    
    (Interest fixed, semi-annual interest- principal
payable every six months)Total long-term liabilities
    
    
    
    
    
    
    
    
    
    Ps.
    3,009,149
    
    
    Ps.
    3,521,901Contractual Short-term liabilities:Tarjeta Cuyanas S.A. Class XVII
    
    
    2007
    
    
    
    12.46
    %
    
    
    
    
    
    
    34,613(Fixed Interest, principal payable at maturity)Tarjeta Naranja Class III
    
    
    2007
    
    
    
    7.00
    %
    
    
    
    
    
    
    30,519(Interest fixed, principal payable at maturity)Tarjeta Naranja Class V
    
    
    2008
    
    
    
    8.25
    %
    
    
    36,340
    
    
    
    (Fixed Interest, principal payable at maturity)Total short-term liabilities
    
    
    
    
    
    
    
    
    
    
    36,340
    
    
    
    65,132Ps.
    3,045,489
    
    
    Ps.
    3,587,033
 (1)
    
    Only principal, except for Subordinated Obligations which include accrued interest for
Ps. 44,953.    Past due (*)
    
    
    12,1062008
    
    
    414,9642009
    
    
    380,4372010
    
    
    477,2152011
    
    
    362,6382012
    
    
    233,776Thereafter
    
    
    1,128,013Total
    
    Ps.
    3,009,149
 (*)
    
    Corresponds to past due debt not yet restructured.  F-29




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 16.
    
    Balances in Foreign Currency.
  December 31,2007
    
    
    2006Assets:Cash and due from banks
    
    Ps.
    1,481,130
    
    
    Ps.
    932,081Government and corporate securities
    
    
    1,303,518
    
    
    
    2,635,633Loans
    
    
    1,755,230
    
    
    
    1,753,911Other receivables resulting from financial brokerage
    
    
    1,170,778
    
    
    
    1,327,009Equity investments in other companies
    
    
    3,186
    
    
    
    3,099Miscellaneous receivables
    
    
    570,780
    
    
    
    169,530Bank premises and equipment
    
    
    10,928
    
    
    
    10,998Miscellaneous assets
    
    
    41
    
    
    
    40Intangible assets
    
    
    974
    
    
    
    907Unallocated items
    
    
    4,166
    
    
    
    13Other assets
    
    
    252
    
    
    
    242Total
    
    Ps.
    6,300,983
    
    
    Ps.
    6,833,463Liabilities:Deposits
    
    Ps.
    2,044,743
    
    
    Ps.
    1,523,622Other liabilities resulting from financial brokerage
    
    
    4,035,208
    
    
    
    4,374,748Miscellaneous liabilities
    
    
    16,381
    
    
    
    15,776Subordinated Negotiable Obligations
    
    
    855,258
    
    
    
    777,617Provisions
    
    
    1,182
    
    
    
    841Unallocated items
    
    
    1,205
    
    
    
    128Other Liabilities
    
    
    83
    
    
    
    90Total
    
    Ps.
    6,954,060
    
    
    Ps.
    6,692,822
  F-30




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 17.
    
    Transactions with Related Parties.
   18.
    
    Breakdown of Captions Included in the Income Statement.
 December 31,2007
    
    
    2006
    
    
    2005Financial IncomeInterest on other receivables resulting from
financial brokerage:Interest on purchased certificates of deposits
    
    
    5,374
    
    
    
    3,667
    
    
    
    4,367Compensatory Bond
    
    
    3,699
    
    
    
    150,737
    
    
    
    133,446Additional
interest on current accounts and special accounts with the Argentine Central Bank
    
    
    19,621
    
    
    
    14,811
    
    
    
    16,453Other
    
    
    7,537
    
    
    
    2,663
    
    
    
    11,629Ps.
    36,231
    
    
    Ps.
    171,878
    
    
    Ps.
    165,895OtherPremiums on
forward purchases of Government securities under repos
    
    
    2,863
    
    
    
    3,548
    
    
    
    3,865Interest on pre-export and export financing
    
    
    57,447
    
    
    
    34,669
    
    
    
    21,501Result from other credits by financial brokerage
    
    
    71,667
    
    
    
    
    
    
    
    Leasing
    
    
    46,534
    
    
    
    33,268
    
    
    
    15,073Other
    
    
    4
    
    
    
    1,209
    
    
    
    53Ps.
    178,515
    
    
    Ps.
    72,694
    
    
    Ps.
    40,492Financial ExpensesInterest on other liabilities resulting from
financial brokerage:Discounts on negotiable obligations
    
    
    
    
    
    
    
    
    
    
    102Interest on negotiable obligations
    
    
    240,569
    
    
    
    225,903
    
    
    
    182,394Interest on other liabilities resulting from
financial brokerage from other banks and
international entities
    
    
    73,017
    
    
    
    91,556
    
    
    
    85,094Ps.
    313,586
    
    
    Ps.
    317,459
    
    
    Ps.
    267,590Other interest:Interest on Argentine Central Bank loans
    
    
    5,782
    
    
    
    109,459
    
    
    
    193,426CER adjustment on Argentine Central Bank advances
    
    
    34,766
    
    
    
    69,156
    
    
    
    79,124Other
    
    
    5,300
    
    
    
    7,963
    
    
    
    10,215Ps.
    45,848
    
    
    Ps.
    186,578
    
    
    Ps.
    282,765Other:Premiums on repo transactions
    
    
    68,727
    
    
    
    34,586
    
    
    
    16,235Contributions and taxes on financial income
    
    
    66,028
    
    
    
    52,865
    
    
    
    36,700Adjustment valuation public sector loans
    
    
    6,440
    
    
    
    122,261
    
    
    
    Adjustment from forward transactions without
delivery asset to be settled
    
    
    16,172
    
    
    
    1,868
    
    
    
    1,195Other
    
    
    
    
    
    
    874
    
    
    
    2,824Ps.
    157,367
    
    
    Ps.
    212,454
    
    
    Ps.
    56,954
  F-31




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Income from servicesOtherCommissions on credit cards
    
    
    410,543
    
    
    
    279,598
    
    
    
    198,086Safety rental
    
    
    13,213
    
    
    
    10,007
    
    
    
    7,928Insurance premiums
    
    
    49,032
    
    
    
    39,980
    
    
    
    26,503Other
    
    
    51,143
    
    
    
    38,408
    
    
    
    36,589Ps.
    523,931
    
    
    Ps.
    367,993
    
    
    Ps.
    269,106Expenses for servicesOtherGross revenue taxes
    
    
    52,504
    
    
    
    36,671
    
    
    
    25,269Linked with credit cards
    
    
    77,555
    
    
    
    58,342
    
    
    
    33,609Other
    
    
    9,837
    
    
    
    5,278
    
    
    
    9,187Ps.
    139,896
    
    
    Ps.
    100,291
    
    
    Ps.
    68,065Administrative expensesOther operating expensesRentals
    
    
    39,963
    
    
    
    28,032
    
    
    
    21,036Electricity and communications
    
    
    57,205
    
    
    
    41,104
    
    
    
    31,115Maintenance and repair expenses
    
    
    34,780
    
    
    
    31,979
    
    
    
    27,905Other operating expenses
    
    
    58,668
    
    
    
    43,902
    
    
    
    34,237Ps.
    190,616
    
    
    Ps.
    145,017
    
    
    Ps.
    114,293Miscellaneous incomeOtherInterest on miscellaneous receivables
    
    
    19,875
    
    
    
    58,143
    
    
    
    15,426Premiums and commissions from insurance business
    
    
    115,567
    
    
    
    59,984
    
    
    
    64,913Other
    
    
    38,139
    
    
    
    33,049
    
    
    
    30,722Ps.
    173,581
    
    
    Ps.
    151,176
    
    
    Ps.
    111,061Miscellaneous lossesOtherClaims
    
    
    1,191
    
    
    
    1,288
    
    
    
    1,303Commissions and expenses on insurance business
    
    
    52,019
    
    
    
    53,074
    
    
    
    54,476Other
    
    
    15,945
    
    
    
    12,560
    
    
    
    43,279Ps.
    69,155
    
    
    Ps.
    66,922
    
    
    Ps.
    99,058
 19.
    
    Income Taxes.
  
  F-32




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 20.
    
    Shareholders Equity and Restrictions Imposed on the Distribution of Dividends.
           F-33




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
   21.
    
    Minimum Capital.
  
   Computable Capital as a %Minimum Capital.
    
    
    Computable Capital.
    
    
    of Minimum Capital.December 31, 2007
    
    Ps.
    1,302,827
    
    
    Ps.
    2,357,135
    
    
    
    180,92December 31, 2006
    
    Ps.
    1,084,313
    
    
    Ps.
    1,861,559
    
    
    
    171.68
  F-34




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 22.
    
    Earnings per Share.
    23.
    
    Contribution to the Deposit Insurance System.
     
  F-35




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 24.
    
    Statements of Income and Balance Sheets.
  December 31,2007
    
    
    2006
    
    
    2005Interest income:Interest and fees on loans (*)
    
    Ps.
    1,505,134
    
    
    Ps.
    1,337,273
    
    
    Ps.
    1,377,432Interest and dividends on investment securities:Tax-exempt
    
    
    99,880
    
    
    
    54,380
    
    
    
    185,854Interest on interest bearing deposits with other banks
    
    
    14,895
    
    
    
    874
    
    
    
    68Interest on other receivables from financial brokerage
    
    
    158,767
    
    
    
    272,635
    
    
    
    261,488Government securities and other trading gains (loss),
net
    
    
    46,396
    
    
    
    258,098
    
    
    
    491,404Total interest income
    
    
    1,825,072
    
    
    
    1,923,260
    
    
    
    2,316,246Interest expenseInterest on deposits
    
    
    583,873
    
    
    
    440,784
    
    
    
    266,759Interest on securities sold under agreements to
repurchase
    
    
    68,736
    
    
    
    34,586
    
    
    
    16,235Interest on short-term liabilities from financial
intermediation
    
    
    58,926
    
    
    
    60,032
    
    
    
    42,806Interest on long-term liabilities from financial
intermediation (*)
    
    
    359,602
    
    
    
    1,124,644
    
    
    
    1,470,250Total interest expense
    
    
    1,071,137
    
    
    
    1,660,046
    
    
    
    1,796,050Net interest income
    
    
    753,935
    
    
    
    263,214
    
    
    
    520,196Provision for loan losses Net
    
    
    172,470
    
    
    
    28,628
    
    
    
    (54,512
    )Net interest income /(expense) after provision for
loan losses
    
    
    581,465
    
    
    
    234,586
    
    
    
    574,708
 (*)
    
    Includes CER/CVS adjustments.  F-36




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Non-interest income:Service charges on deposit accounts
    
    Ps.
    160,534
    
    
    Ps.
    125,687
    
    
    Ps.
    102,606Credit-card service charges and fees
    
    
    434,358
    
    
    
    316,324
    
    
    
    253,688Other commissions
    
    
    610,984
    
    
    
    435,109
    
    
    
    325,988Income from equity in other companies
    
    
    1,957
    
    
    
    
    
    
    
    6,662Premiums and commissions on insurance business
    
    
    115,567
    
    
    
    59,984
    
    
    
    64,913Gain on sale of other investment
    
    
    
    
    
    
    93,575
    
    
    
    Other
    
    
    121,428
    
    
    
    219,047
    
    
    
    131,410Total non-interest income
    
    Ps.
    1,444,828
    
    
    Ps.
    1,249,726
    
    
    Ps.
    885,267Non-interest expense:Commissions
    
    
    204,867
    
    
    
    144,240
    
    
    
    90,720Salaries and social security charges
    
    
    540,643
    
    
    
    415,406
    
    
    
    330,428Fees and external administrative services
    
    
    125,502
    
    
    
    102,799
    
    
    
    82,910Depreciation of bank premises and equipment
    
    
    49,952
    
    
    
    37,095
    
    
    
    36,450Personnel services
    
    
    75,650
    
    
    
    46,622
    
    
    
    30,018Rentals
    
    
    39,963
    
    
    
    28,032
    
    
    
    21,036Electricity and communications
    
    
    57,205
    
    
    
    41,104
    
    
    
    31,115Advertising and publicity
    
    
    113,809
    
    
    
    84,507
    
    
    
    68,132Taxes
    
    
    214,006
    
    
    
    158,352
    
    
    
    113,005Amortization of organization and development expenses
    
    
    35,640
    
    
    
    34,904
    
    
    
    36,480Loss from equity in other companies
    
    
    
    
    
    
    14,362
    
    
    
    Maintenance and repair expenses
    
    
    34,780
    
    
    
    31,979
    
    
    
    27,905Minority interest
    
    
    32,119
    
    
    
    19,016
    
    
    
    34,609Commissions and expenses on insurance business
    
    
    52,019
    
    
    
    53,072
    
    
    
    60,903Amortization of Amparo claims
    
    
    108,667
    
    
    
    
    
    
    
    122,279Other Provisions and reserves
    
    
    48,151
    
    
    
    62,424
    
    
    
    99,754Other
    
    
    175,817
    
    
    
    135,074
    
    
    
    147,691Total non-interest expense
    
    Ps.
    1,908,790
    
    
    Ps.
    1,408,988
    
    
    Ps.
    1,333,435Income / (loss) before tax expense
    
    
    117,503
    
    
    
    75,324
    
    
    
    126,540Income tax expense
    
    
    (71,466
    )
    
    
    (94,238
    )
    
    
    (19,302
    )Net (loss) / income
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
  F-37




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006Assets:Cash and due from banks
    
    Ps.
    3,008,009
    
    
    Ps.
    2,308,819Interest-bearing deposits in other banks
    
    
    159,252
    
    
    
    607,998Federal funds sold and securities purchased under resale agreements or similar agreements
    
    
    2,906
    
    
    
    204,191Trading account assets
    
    
    476,195
    
    
    
    208,188Available for sale securities
    
    
    4,743,676
    
    
    
    5,993,795Loans
    
    
    12,444,276
    
    
    
    10,197,002Allowances for loan losses
    
    
    (437,917
    )
    
    
    (329,562
    )Fixed assets
    
    
    743,132
    
    
    
    490,290Compensatory and Hedge Bonds to be received
    
    
    
    
    
    
    401,335Other assets
    
    
    2,260,360
    
    
    
    3,768,892Total assets
    
    Ps.
    23,399,889
    
    
    Ps.
    23,850,948Liabilities and Shareholders Equity:Deposits
    
    Ps.
    13,070,023
    
    
    Ps.
    10,692,751Short-term borrowing
    
    
    328,261
    
    
    
    281,286Other liabilities
    
    
    4,311,149
    
    
    
    3,461,289Long-term debt
    
    
    3,648,281
    
    
    
    7,457,042Commitments and contingent liabilities
    
    
    170,083
    
    
    
    182,927Minority interest in Consolidated Subsidiaries
    
    
    217,587
    
    
    
    167,185Common stock
    
    
    1,241,407
    
    
    
    1,241,407Other shareholders equity
    
    
    413,098
    
    
    
    367,061Total liabilities and shareholders equity
    
    Ps.
    23,399,889
    
    
    Ps.
    23,850,948
  December 31, 2007
    
    
    December 31, 2006Unrealized
    
    
    
    
    
    
    
    
    
    
    UnrealizedCarrying value
    
    
    Gains/(Losses)
    
    
    Market value
    
    
    Carrying value
    
    
    Gains/(Losses)
    
    
    Market valueBoden 2012 Bonds 
Compensatory Bond
and Hedge Bond
    
    
    2,744,256
    
    
    
    (47,694
    )
    
    
    2,437,796
    
    
    
    3,582,858
    
    
    
    89,441
    
    
    
    3,394,991Bogar Bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    426,851
    
    
    
    168,908
    
    
    
    397,660GalTrust I
    
    
    600,909
    
    
    
    (97,166
    )
    
    
    295,325
    
    
    
    571,582
    
    
    
    (7,443
    )
    
    
    355,721Discount Bonds
    
    
    671,492
    
    
    
    34,020
    
    
    
    312,087
    
    
    
    691,929
    
    
    
    125,251
    
    
    
    387,604Other assets
    
    
    727,019
    
    
    
    (32,981
    )
    
    
    672,132
    
    
    
    720,575
    
    
    
    (19,356
    )
    
    
    678,612TOTAL
    
    Ps.
    4,743,676
    
    
    Ps.
    (143,821
    )
    
    Ps.
    3,717,340
    
    
    Ps.
    5,993,795
    
    
    Ps.
    356,801
    
    
    Ps.
    5,214,588
  F-38




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31, 2007Maturing after 1
    
    
    Maturing afterMaturing within
    
    
    year but within
    
    
    5 years but within
    
    
    Maturing afterCarrying Value
    
    
    1 year
    
    
    5 years
    
    
    10 years
    
    
    10 yearsBoden 2012 Bonds  Compensatory Bond and Hedge Bond
    
    Ps.
    2,744,256
    
    
    Ps.
    548,851
    
    
    Ps.
    2,195,405
    
    
    Ps.
    
    
    
    Ps.
    GalTrust I
    
    
    600,909
    
    
    
    
    
    
    
    4,152
    
    
    
    564,165
    
    
    
    32,592Discount Bonds
    
    
    671,492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    671,492Participation Certificates
    
    
    436,532
    
    
    
    228,274
    
    
    
    208,258
    
    
    
    
    
    
    
    Debt Securities
    
    
    121,123
    
    
    
    81,764
    
    
    
    19,822
    
    
    
    19,537
    
    
    
    Other assets
    
    
    169,364
    
    
    
    169,364
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    Ps.
    4,743,676
    
    
    Ps.
    1,028,253
    
    
    Ps.
    2,427,637
    
    
    Ps.
    583,702
    
    
    Ps.
    704,084
 25. Operations by Geographical Segment.
  December 31,2007
    
    
    2006
    
    
    2005Total revenues:(*)Republic of Argentina
    
    Ps.
    3,376,524
    
    
    Ps.
    3,315,964
    
    
    Ps.
    3,196,626Republic of Uruguay
    
    
    65,565
    
    
    
    82,194
    
    
    
    136,240Grand Cayman Island
    
    
    
    
    
    
    
    
    
    
    1,009Net income (loss), net
of monetary effects
allocable to each
country:Republic of Argentina
    
    
    28,214
    
    
    
    (64,399
    )
    
    
    4,639Republic of Uruguay
    
    
    17,823
    
    
    
    45,485
    
    
    
    99,804Grand Cayman Island
    
    
    
    
    
    
    
    
    
    
    2,795Total assets:Republic of Argentina
    
    
    22,335,675
    
    
    
    23,075,194
    
    
    
    25,037,725Republic of Uruguay
    
    
    493,063
    
    
    
    540,244
    
    
    
    584,189Grand Cayman Island
    
    
    
    
    
    
    
    
    
    
    16,262Fixed assetsRepublic of Argentina
    
    
    732,109
    
    
    
    479,184
    
    
    
    472,832Republic of Uruguay
    
    
    11,023
    
    
    
    11,106
    
    
    
    11,366Miscellaneous assetsRepublic of Argentina
    
    
    112,534
    
    
    
    271,067
    
    
    
    199,113Republic of Uruguay
    
    
    41
    
    
    
    40
    
    
    
    39GoodwillRepublic of Argentina
    
    
    58,266
    
    
    
    65,165
    
    
    
    85,003Other intangible assetsRepublic of Argentina
    
    
    389,078
    
    
    
    436,724
    
    
    
    404,459Republic of Uruguay
    
    
    974
    
    
    
    907
    
    
    
    898Geographical segment
assets as a percentage
of total assetsRepublic of Argentina
    
    
    97.84
    %
    
    
    97.71
    %
    
    
    97.66
    %Republic of Uruguay
    
    
    2.16
    %
    
    
    2.29
    %
    
    
    2.28
    %Grand Cayman Island
    
    
    
    
    
    
    
    
    
    
    0.06
    %
 (*)
    
    The caption Revenues include financial income, income from services and miscellaneous income.  F-39




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 26. Financial Instruments with Off-Balance Sheet Risk.
     December 31,2007
    
    
    2006Commitments to extend credit
    
    Ps.
    827,851
    
    
    Ps.
    624,847Standby letters of credit
    
    
    144,215
    
    
    
    129,021Guarantees granted
    
    
    139,692
    
    
    
    123,790Acceptances
    
    
    56,251
    
    
    
    35,353
     December 31,2007
    
    
    2006Preferred counter-guarantees
    
    Ps.
    24,840
    
    
    Ps.
    32,783Other counter-guarantees
    
    
    26,546
    
    
    
    21,599
  F-40




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006Checks drawn on the Bank
    
    Ps.
    297,143
    
    
    Ps.
    162,986Checks drawn on the other Bank
    
    
    360,481
    
    
    
    187,358Bills and other items for collection
    
    
    1,640,885
    
    
    
    1,184,353
   27. Derivative Financial Instruments.
  Memorandum Accounts
    
    
    Fair ValueDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Option contracts:Written put options (1)
    
    Ps.
    162,336
    
    
    Ps.
    175,923
    
    
    Ps.
    7,697
    
    
    Ps.
    2,592
 (1)
    
    As established by Decree 1836/02 and Argentine Central Bank regulations, in connection with the
second exchange offered by the government to exchange restructured deposits for government bonds,
the Bank granted an option to sell coupons to the holders of restructured deposits certificates who
had opted to receive Boden 2013 Bonds and Boden 2012 Bonds in exchange for their certificates.      F-41




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
    28. Disclosure about Fair Value of Financial Instruments.
    2007
    
    
    2006Book Value
    
    
    Fair Value
    
    
    Book Value
    
    
    Fair ValueDerivative activities: (see Note 27)Liabilities
    
    Ps
    162,336
    
    
    Ps
    7,697
    
    
    Ps
    175,923
    
    
    Ps
    2,592Non derivative activities:Assets:Cash and due from banks (1)
    
    Ps
    2,960,013
    
    
    Ps
    2,960,013
    
    
    Ps
    2,294,849
    
    
    Ps
    2,294,849Government securities (2)Trading
    
    
    370,613
    
    
    
    370,604
    
    
    
    147,729
    
    
    
    146,362Without quotation Securities
    
    
    1,872
    
    
    
    1,872
    
    
    
    431,753
    
    
    
    402,562Investment
    
    
    1,320,572
    
    
    
    1,175,089
    
    
    
    2,608,827
    
    
    
    2,473,029Loans (3)
    
    
    11,601,029
    
    
    
    11,486,918
    
    
    
    10,524,972
    
    
    
    10,333,176Compensatory and Hedge Bond to be received (4)
    
    
    
    
    
    
    
    
    
    
    401,335
    
    
    
    386,890Others (5)
    
    
    4,270,925
    
    
    
    3,434,243
    
    
    
    5,305,353
    
    
    
    4,744,340Liabilities:Deposits (6)
    
    Ps
    13,165,621
    
    
    Ps
    13,132,756
    
    
    Ps
    10,779,369
    
    
    Ps
    10,754,230Other liabilities resulting from financial
Intermediation:Argentine Central Bank (7)
    
    
    698
    
    
    
    698
    
    
    
    3,025,977
    
    
    
    2,741,104Banks and international entities and
Loans from Domestic Financial
Institutions (8) and
Negotiable obligations (9)
    
    
    4,054,516
    
    
    
    3,780,254
    
    
    
    4,834,673
    
    
    
    4,814,875Others (10)
    
    
    3,162,998
    
    
    
    3,131,472
    
    
    
    2,741,920
    
    
    
    2,734,267
  F-42




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  (1) Cash and due from banks:
 (2) Government securities:
 (3) Loans:
  (4) Compensatory and Hedge Bonds to be received:
 (5) Others:
 (6) Deposits:
  F-43




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 (7) Argentine Central Bank:As of
December 31, 2006, Argentine Central Bank included the advance
from the Argentine Central Bank for the acquisition of the Hedge Bond and long term loans for
liquidity support granted to the Bank during the 2001-2002 crisis. The fair value for December
2006 was estimated based on the fair value of the Argentine Government portfolio that guarantees
the debt.(8) Banks and international entities and loans from domestic financial institutions:Includes
credit lines borrowed under different credit arrangements from local and foreign banks and
entities. Most of them were restructured as of May 2004. As of December 2007 and December 2006, the
quoted market prices have been taken as a best estimate of their fair value and, when no quoted
market prices were available, the estimated fair value has been calculated by discounting the
contractual cash flows of these liabilities at estimated market rates.(9) Negotiable obligations:As of December 31, 2007 and December 31, 2006, the fair value of the
negotiable obligations was determined based on quoted market prices and when no quoted market
prices were available, the estimated fair value has been calculated by discounting the contractual
cash flows of these liabilities at estimated market rates.(10) Others:Includes other liabilities resulting from financial brokerage. Their fair value was
estimated at the expected future cash discounted at the estimated rates at year-end. 29. Pending events derived from the systems crisis in late 2001.
 Legal actions requesting protection of Constitutional guarantees.
    F-44




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
          F-45




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Claims due to foreign exchange differences arising from the repayment of financial assistance
during foreign exchange market holidays in January 2002.
      Compensation to financial institutions.
     F-46




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Repurchase of restructured foreign debt.
     30. Preferred Liabilities of the former Banco Almafuerte Coop. Ltdo.
      F-47




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 31. Financial Trusts.
 a)
    
    Financial trusts with Banco de Galicia y Buenos Aires S.A. as trustee outstanding at
fiscal year-end:
 Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities held inCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    own portfolioName
    
    Date
    
    
    date
    
    
    Trustee
    
    
    Trust assets
    
    
    transferred
    
    
    12.31.07
    
    
    12.31.06Galtrust I
    
    
    10.13.00
    
    
    
    10.10.15
    
    
    First Trust of New York N.A.
    
    Loans to provincial governments (Bogar)
    
    US$
    490,224(*
    )
    
    Ps.
    600,909
    
    
    Ps.
    571,582Galtrust II
    
    
    12.17.01
    
    
    
    12.10.10
    
    
    First Trust of New York N.A.
    
    Mortgage loans
    
    US$
    61,191
    
    
    Ps.
    8,146
    
    
    Ps.
    7,683Galtrust V
    
    
    12.17.01
    
    
    
    01.10.16
    
    
    First Trust of New York N.A.
    
    Mortgage loans
    
    US$
    57,573
    
    
    Ps.
    16,854
    
    
    Ps.
    16,457Galicia
    
    
    04.16.02
    
    
    
    05.06.32
    
    
    Bapro mandatos y negocios
    
    Secured loans
    
    Ps.
    108,000
    
    
    Ps.
    65,347
    
    
    Ps.
    58,159Galicia Hipotecas Comerciales
    
    
    02.22.05
    
    
    
    07.12.13
    
    
    Deustche Bank S.A.
    
    Commercial mortgage loans
    
    Ps.
    29,059
    
    
    
    
    
    
    Ps.
    6,892Créditos Inmobiliarios Galicia I
    
    
    08.17.05
    
    
    
    03.15.15
    
    
    Deustche Bank S.A.
    
    Mortgage loans
    
    Ps.
    91,000
    
    
    Ps.
    20,313
    
    
    Ps.
    18,776Créditos Inmobiliarios Galicia II
    
    
    10.12.05
    
    
    
    12.15.25
    
    
    Deustche Bank S.A.
    
    Mortgage loans
    
    Ps.
    150,000
    
    
    Ps.
    47,493
    
    
    Ps.
    43,347Galicia Personales II
    
    
    01.25.06
    
    
    
    11.15.09
    
    
    Deustche Bank S.A.
    
    Consumer loans
    
    Ps.
    97,367
    
    
    
    
    
    
    Ps.
    21,155Galicia Personales III
    
    
    05.16.06
    
    
    
    03.15.11
    
    
    Deustche Bank S.A.
    
    Consumer loans
    
    Ps.
    100,000
    
    
    Ps.
    15,909
    
    
    Ps.
    13,355Galicia Prendas Comerciales
    
    
    07.03.06
    
    
    
    02.15.11
    
    
    Deustche Bank S.A.
    
    Pledge loans
    
    Ps.
    86,623
    
    
    Ps.
    12,780
    
    
    Ps.
    12,409Galicia Leasing I
    
    
    09.22.06
    
    
    
    05.15.11
    
    
    Deustche Bank S.A.
    
    Assets under financial leases
    
    Ps.
    150,000
    
    
    Ps.
    23,015
    
    
    Ps.
    20,653Galicia Personales IV
    
    
    01.17.07
    
    
    
    10.15.11
    
    
    Deustche Bank S.A.
    
    Consumer loans
    
    Ps.
    100,000
    
    
    Ps.
    13,824
    
    
    
    Galicia Personales V
    
    
    04.13.07
    
    
    
    01.15.12
    
    
    Deustche Bank S.A.
    
    Consumer loans
    
    Ps.
    150,000
    
    
    Ps.
    19,939
    
    
    
    Galicia Personales VI
    
    
    09.28.07
    
    
    
    06.15.12
    
    
    Deustche Bank S.A.
    
    Consumer loans
    
    Ps.
    108,081
    
    
    Ps.
    15,257
    
    
    
    
 (*)
    
    The remaining US$ 9,776 was transferred in cash. b)
    
    As of December 31, 2007, Banco de Galicia y Buenos Aires S.A. records financial
trusts.
 
    
    Acquired as investments for Ps.7,325. As of the previous fiscal years end, these
amounted to Ps.1,322.
    
    Acquired in its capacity as underwriter for Ps.8,423.
    
    Received as loan repayment for Ps.24,884. As of December 31, 2006, these amounted to
Ps.25,094.
  F-48




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 c)
    
    BG Financial Trust
   d)
    
    Financial trusts with the companies controlled by Tarjetas Regionales S.A. as trustees
outstanding at fiscal year-end:
  Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securitiesCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    held in own portfolioName
    
    date
    
    
    date
    
    
    Trustee
    
    
    Trust assets
    
    
    transferred
    
    
    12.31.07
    
    
    12.31.06Tarjeta Naranja Trust I
    
    
    11.07.05
    
    
    
    05.20.08
    
    
    Equity Trust 
Company 
(Argentina) 
S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    94,500
    
    
    Ps.
    21,254
    
    
    Ps.
    16,946Tarjeta Naranja Trust II
    
    
    02.16.06
    
    
    
    12.20.07
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    80,000
    
    
    
    
    
    
    Ps.
    11,255Tarjeta Naranja Trust III
    
    
    08.15.06
    
    
    
    09.20.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    139,342
    
    
    Ps.
    26,835
    
    
    Ps.
    20,612Tarjeta Naranja Trust IV
    
    
    08.14.07
    
    
    
    07.20.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    76,052
    
    
    Ps.
    8,707
    
    
    
    Tarjeta Naranja Trust V
    
    
    10.09.07
    
    
    
    11.20.09
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    115,306
    
    
    Ps.
    17,818
    
    
    
    Tarjeta Naranja Trust VI
    
    
    12.11.07
    
    
    
    01.23.10
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    153,727
    
    
    Ps.
    22,440
    
    
    
    
   F-49




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
   Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities heldCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    in own portfolioName
    
    date
    
    
    date
    
    
    Trustee
    
    
    Trust assets
    
    
    transferred
    
    
    12.31.07
    
    
    12.31.06Tarjeta Nevada II
    
    
    12.01.04
    
    
    Settled
    
    Banco Patagonia 
S.A.
    
    Certain credit 
rights against 
cardholders
    
    Ps.
    16,000
    
    
    
    
    
    
    Ps.
    122Tarjeta Nevada III
    
    
    05.24.05
    
    
    Settled
    
    Banco Patagonia S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    25,000
    
    
    
    
    
    
    Ps.
    5,429Tarjetas Cuyanas Trust I
    
    
    11.23.05
    
    
    Settled
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    26,784
    
    
    
    
    
    
    Ps.
    1,284Tarjetas Cuyanas Trust II
    
    
    04.04.06
    
    
    Settled
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    37,680
    
    
    
    
    
    
    Ps.
    5,091Tarjetas Cuyanas Trust III
    
    
    07.14.06
    
    
    Settled
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    22,407
    
    
    
    
    
    
    Ps.
    2,725Tarjetas Cuyanas Trust IV
    
    
    11.01.06
    
    
    
    11.15.08
    
    
    Equity Trust Company (Argentina) S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    68,120
    
    
    Ps.
    17,911
    
    
    Ps.
    13,919
   Estimated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value of securities heldCreation
    
    
    maturity
    
    
    
    
    
    
    
    
    
    
    Portfolio
    
    
    in own portfolioName
    
    date
    
    
    date
    
    
    Trustee
    
    
    Trust assets
    
    
    transferred
    
    
    12.31.07
    
    
    12.31.06Tarjetas del Mar Serie II
    
    
    10.17.06
    
    
    Settled
    
    Banco de 
Galicia y 
Buenos 
Aires S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    6,000
    
    
    
    
    
    
    Ps.
    1,158Tarjetas del Mar Serie III
    
    
    11.09.07
    
    
    
    05.27.08
    
    
    Banco de Galicia y Buenos Aires S.A.
    
    Certain credit rights against cardholders
    
    Ps.
    14,217
    
    
    Ps.
    2,692
    
    
    
    
  F-50




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 32. Segment Reporting.
     Banking:
 Regional Credit Cards
  F-51




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Insurance:
 Other Grupo Businesses:
   F-52




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos Thousands
    
    Banking
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2007Net Financial Income
    
    
    516,158
    
    
    
    203,187
    
    
    
    16,640
    
    
    
    559
    
    
    
    14,642
    
    
    
    751,186Net Income from Services
    
    
    520,471
    
    
    
    409,019
    
    
    
    0
    
    
    
    8,468
    
    
    
    (24,862
    )
    
    
    913,096Net Operating Revenue
    
    
    1,036,629
    
    
    
    612,206
    
    
    
    16,640
    
    
    
    9,027
    
    
    
    (10,220
    )
    
    
    1,664,282Provisions for Loan Losses
    
    
    159,197
    
    
    
    96,305
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255,502Administrative Expenses
    
    
    875,085
    
    
    
    369,476
    
    
    
    16,147
    
    
    
    9,147
    
    
    
    16,469
    
    
    
    1,286,324Net Operating Income
    
    
    2,347
    
    
    
    146,425
    
    
    
    493
    
    
    
    (120
    )
    
    
    (26,689
    )
    
    
    122,456Income from Equity InvestmentTarjetas Regionales SA
    
    
    88,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (88,154
    )
    
    
    Sudamericana
    
    
    1,910
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,910
    )
    
    
    Others
    
    
    3,476
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    (1,488
    )
    
    
    1,957Other Income (Loss)
    
    
    (65,465
    )
    
    
    41,343
    
    
    
    21,983
    
    
    
    2,198
    
    
    
    25,150
    
    
    
    25,209Minority Interests
    
    
    
    
    
    
    (27,510
    )
    
    
    
    
    
    
    
    
    
    
    (4,609
    )
    
    
    (32,119
    )Pre-tax Income
    
    
    30,422
    
    
    
    160,258
    
    
    
    22,476
    
    
    
    2,047
    
    
    
    (97,700
    )
    
    
    117,503Income tax provision
    
    
    
    
    
    
    72,104
    
    
    
    7,846
    
    
    
    819
    
    
    
    (9,303
    )
    
    
    71,466Net Income
    
    
    30,422
    
    
    
    88,154
    
    
    
    14,630
    
    
    
    1,228
    
    
    
    (88,397
    )
    
    
    46,037Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    66.1
    %
    
    
    191.5
    %
    
    
    31.8
    %
    
    
    2.7
    %
    
    
    
    
    
    
    Average:Loans
    
    
    7,140,643
    
    
    
    1,703,145
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,843,788Deposits
    
    
    11,857,001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,059
    )
    
    
    11,844,942End of Period:Assets
    
    
    20,682,613
    
    
    
    2,397,126
    
    
    
    155,427
    
    
    
    12,449
    
    
    
    (418,877
    )
    
    
    22,828,738Equity
    
    
    1,759,396
    
    
    
    377,294
    
    
    
    64,506
    
    
    
    9,406
    
    
    
    (556,097
    )
    
    
    1,654,505
  F-53




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos thousand
    
    Galicia Bank
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2006Net Financial Income
    
    
    66,044
    
    
    
    157,474
    
    
    
    17,049
    
    
    
    472
    
    
    
    137,185
    
    
    
    378,224Net Income from Services
    
    
    377,346
    
    
    
    289,798
    
    
    
    
    
    
    
    7,870
    
    
    
    (3,013
    )
    
    
    672,001Net Operating Revenue
    
    
    443,390
    
    
    
    447,272
    
    
    
    17,049
    
    
    
    8,342
    
    
    
    134,172
    
    
    
    1,050,225Provisions for Loan Losses
    
    
    57,628
    
    
    
    53,239
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    110,869Administrative Expenses
    
    
    681,438
    
    
    
    263,789
    
    
    
    11,234
    
    
    
    7,340
    
    
    
    10,763
    
    
    
    974,564Net Operating Income
    
    
    (295,676
    )
    
    
    130,244
    
    
    
    5,815
    
    
    
    1,001
    
    
    
    123,408
    
    
    
    (35,208
    )Income from Equity InvestmentTarjetas Regionales SA
    
    
    70,897
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,897
    )
    
    
    Sudamericana
    
    
    1,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,126
    )
    
    
    Others
    
    
    (14,821
    )
    
    
    
    
    
    
    
    
    
    
    (163
    )
    
    
    622
    
    
    
    (14,362
    )Other Income (Loss)
    
    
    112,263
    
    
    
    20,666
    
    
    
    6,910
    
    
    
    954
    
    
    
    3,117
    
    
    
    143,910Minority Interests
    
    
    
    
    
    
    (24,124
    )
    
    
    (3
    )
    
    
    
    
    
    
    5,111
    
    
    
    (19,016
    )Pre-tax Income
    
    
    (126,211
    )
    
    
    126,786
    
    
    
    12,722
    
    
    
    1,792
    
    
    
    60,235
    
    
    
    75,324Income tax provision
    
    
    
    
    
    
    55,889
    
    
    
    3,697
    
    
    
    864
    
    
    
    33,788
    
    
    
    94,238Net Income
    
    
    (126,211
    )
    
    
    70,897
    
    
    
    9,025
    
    
    
    928
    
    
    
    26,447
    
    
    
    (18,914
    )Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    667.3
    %
    
    
    (374.8
    %)
    
    
    (47.7
    %)
    
    
    (4,9
    %)
    
    
    
    
    
    
    Averages:Loans
    
    
    5,332,256
    
    
    
    1,149,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,481,513Deposits
    
    
    9,505,994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,528
    )
    
    
    9,502,466End of Period:Assets
    
    
    22,105,651
    
    
    
    1,820,887
    
    
    
    121,908
    
    
    
    12,000
    
    
    
    (426,271
    )
    
    
    23,634,175Equity
    
    
    1,263,008
    
    
    
    289,141
    
    
    
    48,061
    
    
    
    8,980
    
    
    
    (722
    )
    
    
    1,608,468
  F-54




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Regional
    
    
    
    
    
    
    Other Grupo
    
    
    
    
    
    
    ConsolidatedIn Pesos thousand
    
    Galicia Bank
    
    
    Credit Cards
    
    
    Insurance
    
    
    Businesses
    
    
    Adjustments
    
    
    TotalYear ended December 31, 2005Net Financial Income
    
    
    360,476
    
    
    
    134,773
    
    
    
    17,249
    
    
    
    148
    
    
    
    40,057
    
    
    
    552,703Net Income from Services
    
    
    316,792
    
    
    
    206,122
    
    
    
    
    
    
    
    5,287
    
    
    
    (4,436
    )
    
    
    523,765Net Operating Revenue
    
    
    677,268
    
    
    
    340,895
    
    
    
    17,249
    
    
    
    5,435
    
    
    
    35,621
    
    
    
    1,076,468Provisions for Loan Losses
    
    
    48,441
    
    
    
    28,196
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    76,730Administrative Expenses
    
    
    571,823
    
    
    
    179,294
    
    
    
    11,641
    
    
    
    4,382
    
    
    
    13,828
    
    
    
    780,968Net Operating Income
    
    
    57,004
    
    
    
    133,405
    
    
    
    5,608
    
    
    
    1,053
    
    
    
    21,700
    
    
    
    218,770Income from Equity InvestmentTarjetas Regionales SA
    
    
    63,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63,111
    )
    
    
    Sudamericana
    
    
    1,406
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,406
    )
    
    
    Others
    
    
    4,372
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,290
    
    
    
    6,662Other Income (Loss)
    
    
    65,077
    
    
    
    7,693
    
    
    
    5,986
    
    
    
    (2,043
    )
    
    
    (140,996
    )
    
    
    (64,283
    )Minority Interests
    
    
    
    
    
    
    (21,180
    )
    
    
    (1
    )
    
    
    
    
    
    
    (13,428
    )
    
    
    (34,609
    )Pre-tax Income
    
    
    190,970
    
    
    
    119,918
    
    
    
    11,593
    
    
    
    (990
    )
    
    
    (194,951
    )
    
    
    126,540Income tax provision
    
    
    
    
    
    
    56,807
    
    
    
    342
    
    
    
    584
    
    
    
    (38,431
    )
    
    
    19,302Net Income
    
    
    190,970
    
    
    
    63,111
    
    
    
    11,251
    
    
    
    (1,574
    )
    
    
    (156,520
    )
    
    
    107,238Net Income as a % of Grupo
Financiero Galicias Net
Income
    
    
    178.1
    %
    
    
    58.9
    %
    
    
    10.5
    %
    
    
    (1.5
    %)
    
    
    
    
    
    
    Averages:Loans
    
    
    4,105,576
    
    
    
    801,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,907,129Deposits
    
    
    7,571,046
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,874
    )
    
    
    7,557,171End of Period:Assets
    
    
    24,545,579
    
    
    
    1,280,486
    
    
    
    113,766
    
    
    
    10,574
    
    
    
    (314,681
    )
    
    
    25,635,724Equity
    
    
    1,389,217
    
    
    
    147,470
    
    
    
    39,049
    
    
    
    8,752
    
    
    
    42,288
    
    
    
    1,626,776
  F-55




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 33. Differences between the Argentine Central Banks regulations and Argentine GAAP in the
Autonomous City of Buenos Aires.
  Investment securities
   Compensation to be received from the national government
    Secured loans
    F-56




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  
  
 Accounting disclosure of effects generated by court decisions on deposits
  Conversion of financial statements
     Allowance for loan losses  Non-financial public sector
  Discount Bonds and GDP-Linked Negotiable Securities
   F-57




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Accounting for income tax according to the deferred tax method
   34. Summary of Significant Differences between Argentine Central Bank Rules and United States
Accounting Principles.
  a. Income tax
    F-58




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31, 2007SFAS 109applied to
    
    
    SFAS 109 appliedArgenline GAAP
    
    
    to U.S. GAAPBalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    91,306
    
    
    
    (2,189
    )
    
    
    89,117Allowance for loan losses  public sector
    
    
    15,306
    
    
    
    
    
    
    
    15,306Compensation and Hedge Bond
    
    
    
    
    
    
    107,261
    
    
    
    107,261Amortization of Intangible assets
    
    
    85,564
    
    
    
    
    
    
    
    85,564Compensation related to the payment of deposits
    
    
    
    
    
    
    96,958
    
    
    
    96,958Provincial public debt / Discount Bond
    
    
    
    
    
    
    111,309
    
    
    
    111,309Impairment of fixed assets and foreclosed assets
    
    
    
    
    
    
    21,063
    
    
    
    21,063Provision for contingencies
    
    
    55,358
    
    
    
    
    
    
    
    55,358Debt restructuring
    
    
    
    
    
    
    70,396
    
    
    
    70,396Others
    
    
    37,296
    
    
    
    28,465
    
    
    
    65,761Loss carry forward
    
    
    553,796
    
    
    
    
    
    
    
    553,796Total gross deterred tax assets
    
    Ps.
    838,626
    
    
    Ps.
    433,263
    
    
    Ps.
    1,271,889Deferred tax liabilities:Provincial public debt / Discount Bond
    
    Ps.
    232,862
    
    
    Ps.
    
    
    
    Ps.
    232,862Others
    
    
    134,933
    
    
    
    
    
    
    
    134,933Total gross deferred tax liabilities
    
    Ps.
    367,795
    
    
    Ps.
    
    
    
    Ps.
    367,795Net deferred income tax asset before valuation allowance
    
    Ps.
    470,831
    
    
    Ps.
    433,263
    
    
    Ps.
    904,094Valuation allowance
    
    
    (553,796
    )
    
    
    
    
    
    
    (553,796
    )Net deferred income tax (liabilities) / assets
    
    Ps.
    (82,965
    )
    
    Ps.
    433,263
    
    
    Ps.
    350,298
 December 31, 2006SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    112,745
    
    
    
    16,031
    
    
    
    128,776Compensation and Hedge Bond
    
    
    
    
    
    
    81,654
    
    
    
    81,654Amortization of intangible assets
    
    
    59,305
    
    
    
    
    
    
    
    59,305Compensation related to the payment of deposits
    
    
    
    
    
    
    128,527
    
    
    
    128,527Impairment of fixed assets and foreclosed assets
    
    
    
    
    
    
    21,551
    
    
    
    21,551Debt restructure
    
    
    
    
    
    
    111,217
    
    
    
    111,217Provision for contingencies
    
    
    43,554
    
    
    
    
    
    
    
    43,554Loss carry forward
    
    
    538,956
    
    
    
    
    
    
    
    538,956Total gross deferred tax assets
    
    Ps.
    754,560
    
    
    Ps.
    358,980
    
    
    Ps.
    1,113,540Deferred tax liabilities:Provincial public debt / Discount Bond
    
    Ps.
    189,228
    
    
    Ps.
    (93,959
    )
    
    Ps.
    95,269Liabilities
    
    
    5,555
    
    
    
    
    
    
    
    5,555Others
    
    
    53,985
    
    
    
    (3,379
    )
    
    
    50,606Total gross deferred tax liabilities
    
    Ps.
    248,768
    
    
    Ps.
    (97,338
    )
    
    Ps.
    151,430Net deferred income tax asset before valuation allowance
    
    Ps.
    505,792
    
    
    Ps.
    456,318
    
    
    Ps.
    962,110Valuation allowance
    
    
    (590,756
    )
    
    
    
    
    
    
    (590,756
    )Net deferred income tax
    
    Ps.
    (84,964
    )
    
    Ps.
    456,318
    
    
    Ps.
    371,354
   F-59




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Statutory income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Tax provision computed by applying the statutory rate to the income before taxation
calculated in accordance with U .S. GAAP
    
    Ps.
    239,896
    
    
    Ps.
    1,136,729
    
    
    Ps.
    262,616Tax exempt income
    
    
    (162,249
    )
    
    
    (752,120
    )
    
    
    20,377Valuation allowance
    
    
    14,875
    
    
    (661,725
    )
    
    
    (263,691
    )Actual tax provision under U.S. GAAP
    
    Ps.
    92,522
    
    
    Ps.
    (277,116
    )
    
    Ps.
    19,302
      F-60




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
   Jurisdiction
    
    Tax yearArgentina
    
    
    2003 - 2007Uruguay
    
    
    2003 - 2007
 b. Commissions on loans
  c. Intangible assets
 Goodwill
     Software costs
   F-61




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 d. Loan loss reserves
  (i) Loan charge offs and recoveries
  (ii) Loans  Non-financial national public sector
    (iii) Loans / Bonds  Non-financial provincial public sector
    F-62




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
      (iv) Loans to the non-financial private sector and residents abroad
    F-63




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  December 31,2007
    
    
    2006
    
    
    2005Total impaired loans
    
    Ps.
    399,528
    
    
    Ps.
    460,615
    
    
    Ps.
    784,439Average impaired loans during the year
    
    
    398,419
    
    
    
    586,410
    
    
    
    722,172Total impaired loans with no allowance under U.S. GAAP
    
    
    7,132
    
    
    
    10,262
    
    
    
    31,718Cash payments received for interest on impaired loans,
Recognized as income
    
    
    473
    
    
    
    342
    
    
    
    584Allowance for impaired loans under SFAS 114
    
    
    246,293
    
    
    
    291,882
    
    
    
    397,875
  e. Government securities and other investments
 (i) Investment securities
   (ii) Hedge bonds received and to be received in connection with the compensation for foreign
currency position and compensatory bonds received and to be received in connection with the
compensation for asymmetric pesification.
    F-64




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
           F-65




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 (iii) External Notes / Discount Bonds and GDP-Linked Negotiable Securities
 ,
    f. Items in process of collection
   g. Compensation related to the payment of deposits
    F-66




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
   h. Transfers of financial assets
 Financial trust Galtrust I
  
   F-67




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  Discount real rate for:
 December 31,
    
    
    December 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2005Galtrust I Class B Debt Securities
    
    
    11
    %
    
    
    4
    %
    
    
    2
    %Galtrust I Participation Certificates
    
    
    9
    %
    
    
    5
    %
    
    
    2
    %
   Financial trust Galtrust II and Galtrust V
   Financial Trust Secured Loans"
   BG Financial Trust
   F-68




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Financial Trust Tarjetas del Mar Serie III
  Other transfers of financial assets consolidated into the Groups financial statements in
accordance with U.S. GAAP
  Other transfers of financial assets accounted for as sales under U.S. GAAP
       F-69




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 i. Acceptances
   j. Impairment of real estate properties and foreclosed assets
 Impairment of Long-lived Assets
      F-70




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 k. Equity investments in other companies
     F-71




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 l. Guarantees
 Financial guarantee  Exchange of deposits with the financial system II  Written Options.
    Other Financial Guarantees
   2007Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount -Payments (*)
    
    
    Recourse
    
    
    LiabilityFinancial guarantees
    
    
    47,667
    
    
    
    2,133
    
    
    
    Ps.
    47,667
    
    
    Ps.
    2,133
    
    
    Ps.
    
 2006Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    Amount -Payments (*)
    
    
    Recourse
    
    
    LiabilityFinancial guarantees
    
    
    25,131
    
    
    
    2,355
    
    
    
    188Ps.
    25,131
    
    
    Ps.
    2,355
    
    
    Ps.
    188
 (*)
    
    The maximum potential payments represent a worse-case scenario, and do not necessarily
reflect expected results. Estimated proceeds from collateral and recourse represent the anticipated
value of assets that could be liquidated or received from other parties to offset the Companys
payments under guarantees.  F-72




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
   m. Minority Interest
    n. Foreign Debt Restructuring
    F-73




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
      o. Repurchase Agreements and Reverse Repurchase Agreements (Repos and Reverse Repos)
    F-74




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Consolidated net income
 December 31,2007
    
    
    2006
    
    
    2005Net income (loss) as stated
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238Loan origination fees and costs (Note 34 b.)
    
    
    (38,629
    )
    
    
    (9,855
    )
    
    
    (4,899
    )Intangible assets:Goodwill amortization (Note 34 c.)
    
    
    18,909
    
    
    
    18,612
    
    
    
    26,374Goodwill impairment (Note 34 c.)
    
    
    778
    
    
    
    1,226
    
    
    
    3,703Other intangible assets (Note 34 c.)
    
    
    3,965
    
    
    
    (14,888
    )
    
    
    (2,504
    )Compensation related to the payment of deposits (Note 34 g.)
    
    
    90,197
    
    
    
    (19,444
    )
    
    
    103,651Equity investments in other companies  Impairment (Note 34 k.)
    
    
    (8,381
    )
    
    
    45,442
    
    
    
    (22,117
    )Loss on exchange of National Public Debt (Note 34 d.(ii))
    
    
    196,743
    
    
    
    591,227
    
    
    
    144,050Provincial Public Debt (Note 34 d.(iii))
    
    
    198,099
    
    
    
    1,790,197
    
    
    
    (257,013
    )Loan impairment  Private sector (Note 34 d.(iv))
    
    
    52,056
    
    
    
    (49,393
    )
    
    
    (36,766
    )Transfers of financial assets (Note 34 h.)
    
    
    8,814
    
    
    
    (22,607
    )
    
    
    48,233Government Securities and other investments:Compensatory Bond received (Note 34 e.(ii))
    
    
    18,542
    
    
    
    (61,261
    )
    
    
    214,254Compensatory Bond to be received (Note 34 e.(ii))
    
    
    
    
    
    
    
    
    
    
    159,814Hedge Bond (Note 34 e.(ii))
    
    
    45,431
    
    
    
    812,909
    
    
    
    177,915Impairment of other available for sale securities (Note 34 e.(iii))
    
    
    36,151
    
    
    
    21,096
    
    
    
    91,095GDP  Linked Negotiable Securities (Note 34 e.(iii))
    
    
    (23,683
    )
    
    
    54,940
    
    
    
    10,123Real estate properties asset amortization (Note 34 j.)
    
    
    1,395
    
    
    
    1,395
    
    
    
    1,395Recognition for the fair value of obligations assumed under
Financial guarantees issued (Note 34 l.)
    
    
    (5,773
    )
    
    
    11,047
    
    
    
    (4,146
    )Troubled Debt restructuring (Note 34 n.)
    
    
    86,558
    
    
    
    28,039
    
    
    
    (28,425
    )Deferred Income tax (Note 34 a.)
    
    
    (21,056
    )
    
    
    371,354
    
    
    
    Minimum Presumed Income Tax (Note 34 a. )
    
    
    (39,631
    )
    
    
    (47,895
    )
    
    
    (32,979
    )Minority interest (Note 34 m.)
    
    
    (73,627
    )
    
    
    21,686
    
    
    
    32,032Net income (loss) in accordance with U.S. GAAP
    
    
    592,895
    
    
    
    3,524,913
    
    
    
    731,028Average number of shares outstanding (in thousands) (Note 22)
    
    
    1,241,407
    
    
    
    1,240,932
    
    
    
    1,241,407Basic net income (loss) per share in accordance with U.S. GAAP

(Note 22)
    
    
    0.478
    
    
    
    2.841
    
    
    
    0.589Diluted net income (loss) per share in accordance with U.S. GAAP

(Note 22)
    
    
    0.478
    
    
    
    2.841
    
    
    
    0.589
  F-75




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Consolidated shareholders equity
 December 31,2007
    
    
    2006Shareholders equity as stated
    
    Ps.
    1,654,505
    
    
    Ps.
    1,608,468Loan origination fees and costs (Note 34 b.)
    
    
    (50,536
    )
    
    
    (11,907
    )Intangible assets:Goodwill amortization (Note 34 c.)
    
    
    92,813
    
    
    
    73,904Goodwill impairment (Note 34 c.)
    
    
    (1,459
    )
    
    
    (2,237
    )Other intangible assets (Note 34 c.)
    
    
    (22,213
    )
    
    
    (26,178
    )Compensation related to the payment of deposits (Note 34 g)
    
    
    (277,024
    )
    
    
    (367,221
    )Equity investments in other companies  Impairment (Note 34 k.)
    
    
    (22,935
    )
    
    
    (14,554
    )Loans  non Financial Public Sector  Secured loans (Note 34 d.(ii))
    
    
    (80,723
    )
    
    
    (277,466
    )Loans / Bonds  non Financial Provincial Public Sector  Bogar
Bonds (Note 34 d.(iii))
    
    
    
    
    
    
    (29,191
    )Loan impairment  Private sector (Note 34 d.(iv))
    
    
    6,253
    
    
    
    (45,803
    )Government securities and other investments:Compensatory and Hedge Bond received (Note 34 e.(ii))
    
    
    (306,460
    )
    
    
    (187,867
    )Hedge Bond to be received (Note 34 e.(ii))
    
    
    
    
    
    
    (45,431
    )Discount Bonds (Note 34 e.(iii))
    
    
    (359,405
    )
    
    
    (304,325
    )GDP  Linked Negotiable Securities (Note 34 e.(iii))
    
    
    41,380
    
    
    
    65,063Financial assets transferred (Note 34 h.)
    
    
    (360,471
    )
    
    
    (257,824
    )Minority interest (Note 34 m.)
    
    
    101,671
    
    
    
    167,185Impairment of real estate properties and foreclosed assets
(Note 34 j.)
    
    
    (67,155
    )
    
    
    (67,155
    )Real Estate properties amortization (Note 34 j.)
    
    
    6,975
    
    
    
    5,580Minimum Presumed Income Tax (Note 34 a.)
    
    
    (258,515
    )
    
    
    (218,884
    )Deferred Income tax (Note 34 a.)
    
    
    350,298
    
    
    
    371,354Recognition for the fair value of obligations assumed under
financial guarantees issued (Note 34 l.)
    
    
    (7,785
    )
    
    
    (2,012
    )Foreign debt restructuring (Note 34 n.)
    
    
    (201,132
    )
    
    
    (287,690
    )Consolidated shareholders equity (deficit) in accordance with
U.S. GAAP
    
    Ps.
    238,082
    
    
    Ps.
    145,809
  F-76




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
  Grupo Galicia
 Adjustments to
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCapital
    
    
    Paid
    
    
    Shareholders
    
    
    Profit Reserves
    
    
    Comprehensive
    
    
    Retained
    
    
    ShareholdersStock
    
    
    in Capital
    
    
    Equity
    
    
    Legal
    
    
    Other
    
    
    Income (loss)
    
    
    Earnings
    
    
    EquityBalance at December 31, 2004
    
    Ps.
    1,241,407
    
    
    Ps.
    147,594
    
    
    Ps.
    1,418,854
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    1,271,874
    
    
    Ps.
    (7,304,887
    )
    
    Ps.
    (3,195,665
    )Distribution of retained earnings:Unrealized appreciation of available-for-sale securities, net of tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336,376
    
    
    
    
    
    
    
    336,376Absorption approved by the shareholders meeting on April 28, 2005
    
    
    
    
    
    
    (147,594
    )
    
    
    (1,124,600
    )
    
    
    (29,493
    )
    
    
    
    
    
    
    
    
    
    
    1,301,687
    
    
    
    Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    731,028
    
    
    
    731,028Balance at December 31, 2005
    
    Ps.
    1,241,407
    
    
    Ps.
    
    
    
    Ps.
    294,254
    
    
    Ps.
    
    
    
    Ps.
    
    
    
    Ps.
    1,608,250
    
    
    Ps.
    (5,272,172
    )
    
    Ps.
    (2,128,261
    )Distribution of retained earnings by the shareholders meeting on April 27, 2006Legal Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,855
    
    
    
    
    
    
    
    
    
    
    
    (34,855
    )
    
    
    Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,383
    
    
    
    
    
    
    
    (72,383
    )
    
    
    Unrealized gain of available-for-sale securities, net of tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,251,449
    )
    
    
    
    
    
    
    (1,251,449
    )Sale of Treasury Stock
    
    
    
    
    
    
    606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,524,913
    
    
    
    3,524,913Balance at December 31, 2006
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    294,254
    
    
    Ps.
    34,855
    
    
    Ps.
    72,383
    
    
    Ps.
    356,801
    
    
    Ps.
    (1,854,497
    )
    
    Ps.
    145,809Distribution of retained earnings:Absorption approved by the shareholders meeting on April 26, 2007Discretionary Reserve
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,914
    )
    
    
    
    
    
    
    18,914
    
    
    
    Unrealized gain of available-for-sale securities, net of tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500,622
    )
    
    
    
    
    
    
    (500,622
    )Net income for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592,895
    
    
    
    592,895Balance at December 31, 2007
    
    Ps.
    1,241,407
    
    
    Ps.
    606
    
    
    Ps.
    294,254
    
    
    Ps.
    34,855
    
    
    Ps.
    53,469
    
    
    Ps.
    (143,821
    )
    
    Ps.
    (1,242,688
    )
    
    Ps.
    238,082
 Comprehensive income
    F-77




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 December 31,2007
    
    
    2006
    
    
    2005Income StatementFinancial Income
    
    Ps.
    2,433,198
    
    
    Ps.
    5,456,352
    
    
    Ps.
    2,958,678Financial Expenditures
    
    
    1,160,142
    
    
    
    1,863,588
    
    
    
    1,845,929Net Financial Income
    
    
    1,273,056
    
    
    
    3,592,764
    
    
    
    1,112,749Provision for Loan Losses
    
    
    203,446
    
    
    
    160,262
    
    
    
    113,496Income from Services
    
    
    1,153,619
    
    
    
    837,340
    
    
    
    628,968Expenditures from Services
    
    
    257,242
    
    
    
    180,408
    
    
    
    121,305Administrative Expenses
    
    
    1,258,089
    
    
    
    982,843
    
    
    
    770,874Net Income / (Loss) from Financial Brokerage
    
    
    707,898
    
    
    
    3,106,591
    
    
    
    736,042Minority Interests
    
    
    (105,746
    )
    
    
    2,670
    
    
    
    (2,577
    )Miscellaneous Income
    
    
    271,546
    
    
    
    326,308
    
    
    
    282,845Miscellaneous Losses
    
    
    188,281
    
    
    
    187,772
    
    
    
    265,980Net Income / (Loss) before Income tax
    
    
    685,417
    
    
    
    3,247,797
    
    
    
    750,330Income Tax
    
    
    92,522
    
    
    
    277,116
    
    
    
    (19,302
    )Net income (loss) under U.S. GAAP
    
    
    592,895
    
    
    
    3,524,913
    
    
    
    731,028Other comprehensive income (loss):Unrealized gains (losses) on securities
    
    
    (500,622
    )
    
    
    (1,251,449
    )
    
    
    336,376Other comprehensive income (loss)
    
    
    (500,622
    )
    
    
    (1,251,449
    )
    
    
    336,376Comprehensive income
    
    Ps.
    92,273
    
    
    Ps.
    2,273,464
    
    
    Ps.
    1,067,404
  December 31,2007
    
    
    2006
    
    
    2005Boden 2012 Bonds  Compensatory Bond
    
    
    (47,694
    )
    
    
    89,441
    
    
    
    104,757Bogar Bonds
    
    
    
    
    
    
    168,908
    
    
    
    1,531,789GalTrust I
    
    
    (97,166
    )
    
    
    (7,443
    )
    
    
    (74,673
    )Discount Bonds
    
    
    34,020
    
    
    
    125,251
    
    
    
    56,581Other
    
    
    (32,981
    )
    
    
    (19,356
    )
    
    
    (10,204
    )Accumulated other comprehensive
income/
(loss)
    
    Ps.
    (143,821
    )
    
    Ps.
    356,801
    
    
    Ps.
    1,608,250
   F-78




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Concentration of risk  Total exposure to the public sector  Argentine government and provinces
  December 31, 2007
    
    
    December 31, 2006Argentine
    
    
    
    
    
    
    ArgentineBanking
    
    
    
    
    
    
    BankingGAAP
    
    
    U.S. GAAP
    
    
    GAAP
    
    
    U.S. GAAPArgentine national government loans
    
    Ps.
    1,372,854
    
    
    Ps.
    1,306,743
    
    
    Ps.
    2,846,253
    
    
    Ps.
    2,576,512Argentine provincial debt
    
    
    
    
    
    
    
    
    
    
    366,519
    
    
    
    337,328Other Argentine public-sector receivables
    
    
    272,966
    
    
    
    215,047
    
    
    
    249,223
    
    
    
    221,782Galtrust I (securitization of Provincial Loans)
    
    
    597,123
    
    
    
    291,539
    
    
    
    568,095
    
    
    
    355,721Compensatory bond received
    
    
    2,744,256
    
    
    
    2,437,796
    
    
    
    3,582,858
    
    
    
    3,394,991Bonds to be received (1) (2)
    
    
    
    
    
    
    
    
    
    
    401,335
    
    
    
    394,531Other (3)
    
    
    1,133,572
    
    
    
    815,547
    
    
    
    883,280
    
    
    
    644,018Total
    
    Ps.
    6,120,771
    
    
    Ps.
    5,066,672
    
    
    Ps.
    8,897,563
    
    
    Ps.
    7,924,883
 (1)
    
    The advance to be requested from the Argentine Central Bank for the acquisition of the Hedge
Bond was recorded in Other Liabilities Resulting from Financial Brokerage  Other, for Ps.336,838
as of December 31, 2006. As of December 31, 2006 the hedge bond pending to be received and the
related advance was accounted for at fair value, as an option contract in accordance with SFAS 133.(2)
    
    Includes the Hedge Bond to be received as of December 31, 2006.(3)
    
    Includes bonds and other national government bonds. Risks and Uncertainties
     F-79




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 U.S. GAAP estimates
  35. Parent only Financial Statements
   F-80




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Balance sheet (Parent Company only)
 December 31,2007
    
    
    2006ASSETSA. Cash and due from banksCash
    
    Ps.
    11
    
    
    Ps.
    49Financial institutions and correspondents
    
    
    10,689
    
    
    
    82Ps.
    10,700
    
    
    Ps.
    131B. Government and corporate securitiesInvestments in quoted corporate securities
    
    
    
    
    
    
    325,335Ps.
    
    
    
    Ps.
    325,335C. LoansTo the financial sector
    
    
    43,511
    
    
    
    14,365Ps.
    43,511
    
    
    Ps.
    14,365D. Other receivables resulting from financial brokerageNegotiable obligations without quotation
    
    
    2,591
    
    
    
    Other receivables not included in the debtor classification
Regulations
    
    
    3,212
    
    
    
    2,484Other receivables included in the debtor classification
Regulations
    
    
    12,465
    
    
    
    13,089Accrued interest receivable included in the debtor
Classification regulations
    
    
    47
    
    
    
    23Ps.
    18,315
    
    
    Ps.
    15,596F. Equity investmentsIn financial institutions
    
    
    1,700,152
    
    
    
    1,208,450Other
    
    
    56,336
    
    
    
    50,327Ps.
    1,756,488
    
    
    Ps.
    1,258,777G. Miscellaneous receivablesOther
    
    
    76,848
    
    
    
    2,122Ps.
    76,848
    
    
    Ps.
    2,122H. Bank premises and equipment
    
    
    3,134
    
    
    
    3,014J. Intangible assetsGoodwill
    
    
    12,255
    
    
    
    Organization and development expenses
    
    
    18
    
    
    
    14Ps.
    12,273
    
    
    Ps.
    14Total Assets
    
    Ps.
    1,921,269
    
    
    Ps.
    1,619,354
 December 31,2007
    
    
    2006LIABILITIES AND SHAREHOLDERS EQUITYN.Other liabilities resulting from financial brokerageBanks and international entities
    
    Ps.
    251,920
    
    
    Ps.
    Other
    
    
    8,569
    
    
    
    260,489
    
    
    
    O. Miscellaneous liabilitiesDirectors and Syndics fees
    
    Ps.
    132
    
    
    Ps.
    113Other
    
    
    6,143
    
    
    
    10,7736,275
    
    
    
    10,886Total Liabilities
    
    Ps.
    266,764
    
    
    Ps.
    10,886SHAREHOLDERS EQUITY
    
    Ps.
    1,654,505
    
    
    Ps.
    1,608,468Total Liabilities and Shareholders Equity
    
    Ps.
    1,921,269
    
    
    Ps.
    1,619,354
  F-81




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Statement of Income (Parent Company only)
 December 31,2007
    
    
    2006
    
    
    2005A. Financial incomeInterest on loans granted to the financial sector
    
    
    694
    
    
    
    54
    
    
    
    Interest on other loans
    
    
    670
    
    
    
    
    
    
    
    Interest on other receivables resulting from financial brokerage
    
    
    388
    
    
    
    665
    
    
    
    9,700Net income from government and corporate securities
    
    
    5,817
    
    
    
    114,641
    
    
    
    238Consumer price index adjustment (CER)
    
    
    
    
    
    
    
    
    
    
    6Other
    
    
    897
    
    
    
    3,100
    
    
    
    279Ps.
    8,466
    
    
    Ps.
    118,460
    
    
    Ps.
    10,223B. Financial expensesInterest on other liabilities resulting from financial brokerage
    
    
    8,565
    
    
    Ps.
    
    
    
    Ps.
    Other
    
    
    302
    
    
    
    53
    
    
    
    334Ps.
    8,867
    
    
    Ps.
    53
    
    
    Ps.
    334C. Gross brokerage margin
    
    
    (401
    )
    
    
    118,407
    
    
    
    9,889F. Administrative expensesPersonnel expenses
    
    
    2,953
    
    
    
    2,149
    
    
    
    2,446Directors and syndics fees
    
    
    933
    
    
    
    702
    
    
    
    664Other fees
    
    
    3,522
    
    
    
    2,033
    
    
    
    2,762Taxes
    
    
    2,150
    
    
    
    704
    
    
    
    865Other operating expenses
    
    
    529
    
    
    
    613
    
    
    
    1,754Other
    
    
    4,665
    
    
    
    4,265
    
    
    
    4,390Ps.
    14,752
    
    
    Ps.
    10,466
    
    
    Ps.
    12,881Net Income / (Loss) from financial brokerage
    
    Ps.
    (15,153
    )
    
    Ps.
    107,941
    
    
    Ps.
    (2,992
    )H. Miscellaneous incomeNet income on long-term investments
    
    
    65,840
    
    
    
    
    
    
    
    215,531Loans recovered and allowances reversed
    
    
    
    
    
    
    640
    
    
    
    1,384Other
    
    
    609
    
    
    
    1,111
    
    
    
    129Ps.
    66,449
    
    
    Ps.
    1,751
    
    
    Ps.
    217,044I. Miscellaneous lossesNet loss on long-term investments (1)
    
    
    
    
    
    
    81,238
    
    
    
    Other
    
    
    2,111
    
    
    
    1,723
    
    
    
    139,197Ps.
    2,111
    
    
    Ps.
    82,961
    
    
    Ps.
    139,197Net Income / (Loss) before tax
    
    
    49,185
    
    
    
    26,731
    
    
    
    74,855J. Income tax
    
    Ps.
    3,148
    
    
    Ps.
    45,645
    
    
    Ps.
    (32,383
    )Net income / (Loss) for the fiscal year
    
    Ps.
    46,037
    
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
 (1)
    
    Includes the foreign currency position compensation.  F-82




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Statement of cash flows (Parent Company only)
 December 31,2007
    
    
    2006
    
    
    2005CHANGES IN CASHCash at the beginning of the period
    
    Ps.
    131
    
    
    Ps.
    650
    
    
    Ps.
    540Increase / (decrease) in cash
    
    
    10,569
    
    
    
    (519
    )
    
    
    110Cash at end of period
    
    
    10,700
    
    
    
    131
    
    
    
    650Cash provided by (used in) operating activitiesLess:
    
    
    (25,409
    )
    
    
    (31,146
    )
    
    
    (68,228
    )Operating expenses paidPlus:Other operating income received
    
    
    20,549
    
    
    
    18,387
    
    
    
    23,732Cash provided by (used in) operating activities
    
    Ps.
    (4,860
    )
    
    Ps.
    (12,759
    )
    
    Ps.
    (44,496
    )Other sources of cashLoan received
    
    
    250,960
    
    
    
    
    
    
    
    Dividends
    
    
    9,450
    
    
    
    613
    
    
    
    350Increase in short-term investment
    
    
    5,101
    
    
    
    11,130
    
    
    
    46,825Other sources of cash
    
    
    718
    
    
    
    546
    
    
    
    161Other sources of cash
    
    Ps.
    266,229
    
    
    Ps.
    12,289
    
    
    Ps.
    47,336Other uses of cashIncrease in short-term loans
    
    
    
    
    
    
    
    
    
    
    (635
    )Increase in fixed assets
    
    
    (213
    )
    
    
    (42
    )
    
    
    (17
    )Increase in long-term investments
    
    
    (175,299
    )
    
    
    (7
    )
    
    
    (2,078
    )Deposit as per Decree 616/2005
    
    
    (75,288
    )
    
    
    
    
    
    
    Total other uses of cash
    
    Ps.
    (250,800
    )
    
    Ps.
    (49
    )
    
    Ps.
    (2,730
    )Increase / (decrease) in cash
    
    Ps.
    10,569
    
    
    Ps.
    (519
    )
    
    Ps.
    110
  New authoritative pronouncements
   F-83




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115,
  Noncontrolling Interests in Consolidated Financial
Statementsan Amendment of ARB No. 51,
   F-84




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2007, 2006 and 2005
 Disclosures about Derivative Instruments and Hedging
Activitiesan Amendment of FASB Statement No. 133,
   The Hierarchy of Generally Accepted Accounting
Principles,
   F-85




---



##### Table of Contents



Exhibit
    
    Description1.1
    
    Unofficial English language translation of the Bylaws (estatutos sociales). ****2.1
    
    Form of Deposit Agreement between The Bank of New York and the registrant,
including the form of American Depositary Receipt.*2.2
    
    Indenture, dated as of May 18, 2004, among the Bank, The Bank of New York and
Banco Rio de la Plata S.A.**4.1
    
    English translation of form of Financial Trust Contract, dated April 16, 2002,
among the Bank, Banco Provincia de Buenos Aires and BAPRO Mandatos y Negocios
S.A.***4.2
    
    Form of Restructured Loan Facility (as evidenced by the Note Purchase
Agreement, dated as of April 27, 2004, among Banco de Galicia y Buenos Aires
S.A., Barclays Bank PLC, the holders party thereto and Deutsche Bank Trust
Company Americas).**4.3
    
    Form of First Amendment and Waiver to Restructured Loan Facility (as evidenced
by the First Amendment and Waiver to the Note Purchase Agreement, dated as of
December 20, 2004, among Banco de Galicia y Buenos Aires S.A., the holders
party thereto and Deutsche Bank Trust Company Americas). ****4.4
    
    Form of Second Amendment to Restructured Loan Facility (as evidenced by the
Second Amendment to the Note Purchase Agreement, dated as of August 25, 2006,
among Banco de Galicia y Buenos Aires S.A., the holders party thereto and
Deutsche Bank Trust Company Americas).*****4.5
    
    Form of Third Amendment to Restructured Loan Facility (as evidenced by the
Third Amendment to the Note Purchase Agreement, dated as of December 28, 2007,
among Banco de Galicia y Buenos Aires S.A., the holders party thereto and
Deutsche Bank Trust Company Americas).4.6
    
    Loan Agreement, dated as of July 24, 2007, between Grupo Financiero Galicia
S.A. and Merrill Lynch International.8.1
    
    For a list of our subsidiaries as of the end of the fiscal year covered by this
annual report, please see Item 4. Information on the CompanyOrganizational
Structure.12.1
    
    Certification of the principal executive officer required under Rule 13a-14(a)
or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    Certification of the principal financial officer required under Rule 13a-14(a)
or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1
    
    Certification of the principal executive officer required pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.13.2
    
    Certification of the principal financial officer required pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 *
    
    Incorporated by reference from our Registration Statement on Form F-4 (333-11960).**
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended
December 31, 2003.***
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended
December 31, 2002.****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended
December 31, 2004.*****
    
    Incorporated by reference from our Annual Report on Form 20-F for the year ended
December 31, 2006.