##### 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, 2006
 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
 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
 o þ
 o þ
 þ o
  o þ o
 o þ
 o þ




---



##### 



TABLE OF CONTENTS
 PageItem 1. Identity of Directors, Senior Management and Advisers
    
    
    3Item 2. Offer Statistics and Expected Timetable
    
    
    3Item 3. Key Information
    
    
    3Selected Financial Data
    
    
    3Exchange Rate Information
    
    
    6Risk Factors
    
    
    7Item 4. Information on the Company
    
    
    14Organization
    
    
    14Organizational Structure
    
    
    14History
    
    
    15Capital Investments and Divestitures
    
    
    20Business Overview
    
    
    21Competition
    
    
    34Sales and Marketing
    
    
    35Property
    
    
    36Selected Statistical Information
    
    
    37Government Regulation
    
    
    70Argentine Banking System and Regulation
    
    
    77Item 4A. Unresolved Staff Comments
    
    
    88Item 5. Operating and Financial Review and Prospects
    
    
    88Item 5A. Operating Results
    
    
    88Overview
    
    
    89Currency Composition of Our Balance Sheet
    
    
    91The Argentine Economy and Financial System in 2006
    
    
    91Inflation
    
    
    93Results of Operations for the Fiscal Years Ended December 31, 2006, December 31,
2005 and December 31, 2004
    
    
    93U.S. GAAP and Argentine Banking GAAP Reconciliation
    
    
    108Results by Segments
    
    
    112Consolidated Assets
    
    
    120Exposure to the Argentine Public Sector
    
    
    121Off-Balance Sheet Arrangements
    
    
    122Securitization of Assets
    
    
    123Funding
    
    
    124Contractual Obligations
    
    
    127Other Commitments
    
    
    128Critical Accounting Policies
    
    
    129U.S. GAAP  Critical Accounting Policies
    
    
    130Principal Trends
    
    
    133Item 5B. Liquidity and Capital Resources
    
    
    135Liquidity
    
    
    135Capital
    
    
    142Capital Expenditures
    
    
    143Item 6. Directors, Senior Management and Employees
    
    
    143Our Board of Directors
    
    
    143Functions of Our Board of Directors
    
    
    145Our Supervisory Committee
    
    
    146Compensation of Our Directors
    
    
    147Management of Grupo Financiero Galicia
    
    
    147Board of Directors of Banco Galicia
    
    
    148Functions of the Board of Directors of Banco Galicia
    
    
    150
  (i)




---



##### Table of Contents



TABLE OF CONTENTS
 PageBanco Galicias Executive Officers
    
    
    152Banco Galicias Supervisory Committee
    
    
    154Compensation of Banco Galicias Directors and Officers
    
    
    154Employees
    
    
    155Nasdaq Corporate Governance Standards
    
    
    156Share Ownership
    
    
    158Item 7. Major Shareholders and Related Party Transactions
    
    
    158Major Shareholders
    
    
    158Related Party Transactions
    
    
    160Item 8. Financial Information
    
    
    161Legal Proceedings
    
    
    161Dividend Policy and Dividends
    
    
    163Significant Changes
    
    
    164Item 9. The Offer and Listing
    
    
    165Shares and ADSs
    
    
    165Argentine Securities Market
    
    
    168Market Regulations
    
    
    169Item 10. Additional Information
    
    
    170Description of Our Bylaws
    
    
    170Exchange Controls
    
    
    176Taxation
    
    
    176Material Contracts
    
    
    182Documents on Display
    
    
    183Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    183General
    
    
    183Interest Rate Risk
    
    
    183Foreign Exchange Rate Risk
    
    
    191Currency Mismatches
    
    
    192Market Risk
    
    
    194Item 12. Description of Securities Other Than Equity Securities
    
    
    194Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    195Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    195Item 15. Controls and Procedures
    
    
    195Item 16. [Reserved]
    
    
    196Item 16A. Audit Committee Financial Expert
    
    
    196Item 16B. Code of Ethics
    
    
    196Item 16C. Principal Accountants Fees and Services
    
    
    196Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    197Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
    
    
    197Item 17. Financial Statements
    
    
    198Item 18. Financial Statements
    
    
    198Item 19. Exhibits
    
    
    198EX-4.6:
FORM OF SECOND AMENDMENT TO RESTRUCTURED LOAN FACILITYEX-12.1:
CERTIFICATIONEX-12.2:
CERTIFICATIONEX-13.1:
CERTIFICATIONEX-13.2:
CERTIFICATION
 (ii)




---



##### Table of Contents



PRESENTATION OF FINANCIAL INFORMATION
  -
    
    Sudamericana Holding S.A., or Sudamericana, and its subsidiaries;-
    
    Galicia Warrants S.A.;-
    
    Net Investment S.A. and its subsidiaries;-
    
    Galval Agente de Valores S.A.; and-
    
    Banco de Galicia y Buenos Aires S.A., 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 collectively as the Bank or Banco Galicia.




---



##### Table of Contents




    
    changes in general economic, business, political, legal, social or other conditions
in Argentina or elsewhere in Latin America;
    
    changes in capital markets in general that may affect policies or attitudes toward
lending to Argentina or Argentine companies;
    
    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; and
    
    the other factors discussed under Item 3. Key InformationRisk Factors in this
annual report.
   -2-




---



##### 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
 
    
    The following table presents summary historical financial and other information about us as
of the dates and for the periods indicated.
 
    
    The financial statements for the fiscal years ended December 31, 2004, December 31, 2005
and December 31, 2006 do not include any effect for inflation accounting. The financial
statements for the fiscal year ended December 31, 2003 include the effects of inflation
accounting through February 28, 2003. The financial statements as of and for the fiscal year
ended December 31, 2002, and the financial data for prior periods have been restated in
constant pesos of February 28, 2003.
 
    
    The selected consolidated financial information as of December 31, 2006 and December 31,
2005, and for the fiscal years ended December 31, 2006, 2005 and 2004 has been derived from
our audited consolidated financial statements included in this annual report.
 
    
    The selected consolidated financial information as of December 31, 2003 and 2002 has been
derived from our audited consolidated financial statements not included in this annual report.
 
    
    We prepare our financial statements in accordance with Argentine Banking GAAP, which
differs from Argentine GAAP and U.S. GAAP. Our audited consolidated financial statements
contain a description of the principal differences between Argentine GAAP and Argentine
Banking GAAP and a reconciliation to U.S. GAAP of our shareholders equity as of December 31,
2006 and December 31, 2005, and our net income for the three years ended December 31, 2006.
See notes 38 and 39 to our audited consolidated financial statements included in this annual
report.
 
    
    You should read this data in conjunction with Item 5. Operating and Financial Review and
Prospects and our audited consolidated financial statements.
 -3-




---



##### Table of Contents



Fiscal Year Ended December 31,2006
    
    2006
    
    2005
    
    2004
    
    2003
    
    2002(in millionsof February(in millions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28, 2003,of U.S.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    constantdollars,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    pesos,except as
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    except asnoted)( 1 )
    
    (in millions of pesos, except as noted)(1)
    
    noted)(1)Consolidated Income Statement in Accordance with Argentine Banking GAAPFinancial Income
    
    
    733.0
    
    
    
    2,249.8
    
    
    
    2,398.6
    
    
    
    1,391.6
    
    
    
    1,452.1
    
    
    
    5,757.3Financial Expenses
    
    
    609.7
    
    
    
    1,871.6
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,304.8
    
    
    
    4,560.4Net Financial Income (2)
    
    
    123.3
    
    
    
    378.2
    
    
    
    552.7
    
    
    
    224.2
    
    
    
    147.3
    
    
    
    1,196.9Provision for Losses on Loans and Other Receivables
    
    
    36.1
    
    
    
    110.9
    
    
    
    76.7
    
    
    
    190.2
    
    
    
    286.4
    
    
    
    1,648.6Income / (Loss) before Taxes
    
    
    24.5
    
    
    
    75.3
    
    
    
    126.5
    
    
    
    (66.1
    )
    
    
    (221.6
    )
    
    
    (2,812.9
    )Income Tax
    
    
    (30.7
    )
    
    
    (94.2
    )
    
    
    (19.3
    )
    
    
    (43.8
    )
    
    
    (0.6
    )
    
    
    (66.4
    )Net Income / (Loss) before the Absorption
    
    
    (6.2
    )
    
    
    (18.9
    )
    
    
    107.2
    
    
    
    (109.9
    )
    
    
    (222.2
    )
    
    
    (2,879.3
    )Absorption Approved in the Annual Shareholders Meeting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,370.0Net Income / (Loss) after the Absorption
    
    
    (6.2
    )
    
    
    (18.9
    )
    
    
    107.2
    
    
    
    (109.9
    )
    
    
    (222.2
    )
    
    
    (1,509.3
    )Net Income / (Loss) after the Absorption per Share (in Pesos) (*)
    
    
    
    
    
    
    (0.015
    )
    
    
    0.086
    
    
    
    (0.093
    )
    
    
    (0.203
    )
    
    
    (1.382
    )Cash Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book Value per Share (in Pesos)
    
    
    
    
    
    
    1.296
    
    
    
    1.310
    
    
    
    1.224
    
    
    
    1.299
    
    
    
    1.465Stock Dividends per Share (in Pesos)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amounts in Accordance with U.S. GAAPNet Income / (Loss)
    
    
    1,148.4
    
    
    
    3,524.9
    
    
    
    731.0
    
    
    
    (1.1
    )
    
    
    731.3
    
    
    
    422.5Adjusted Net Income (Loss) per Share (in Pesos)
    
    
    
    
    
    
    2.841
    
    
    
    0.589
    
    
    
    (0.001
    )
    
    
    0.669
    
    
    
    0.386Book Value / (Deficit) per Share (in Pesos)
    
    
    
    
    
    
    0.117
    
    
    
    (1.714
    )
    
    
    (2.574
    )
    
    
    4.077
    
    
    
    (4.964
    )Financial Income
    
    
    1,771.1
    
    
    
    5,436.3
    
    
    
    2,958.7
    
    
    
    1,448.7
    
    
    
    2,752.0
    
    
    
    2,613.1Financial Expenses
    
    
    600.6
    
    
    
    1,843.6
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    1,502.9
    
    
    
    4,560.4Net Financial Income / (Loss)
    
    
    1,170.5
    
    
    
    3,592.7
    
    
    
    1,112.8
    
    
    
    281.3
    
    
    
    1,249.1
    
    
    
    (1,947.3
    )Provision for Losses on Loans and Other Receivables
    
    
    52.2
    
    
    
    160.3
    
    
    
    113.5
    
    
    
    210.0
    
    
    
    274.6
    
    
    
    928.8Income Tax
    
    
    (90.3
    )
    
    
    (277.1
    )
    
    
    19.3
    
    
    
    35.4
    
    
    
    (38.4
    )
    
    
    66.5Consolidated Balance Sheet in Accordance with Argentine Banking GAAPCash and Due from Banks
    
    
    747.6
    
    
    
    2,294.8
    
    
    
    1,041.2
    
    
    
    988.7
    
    
    
    826.2
    
    
    
    576.8Government Securities, Net
    
    
    1,038.7
    
    
    
    3,188.3
    
    
    
    5,967.4
    
    
    
    5,518.0
    
    
    
    6,407.1
    
    
    
    1,786.5Loans, Net
    
    
    3,425.5
    
    
    
    10,514.6
    
    
    
    10,555.2
    
    
    
    8,438.2
    
    
    
    7,506.5
    
    
    
    10,682.1Total Assets
    
    
    7,699.7
    
    
    
    23,634.2
    
    
    
    25,635.7
    
    
    
    23,650.6
    
    
    
    22,822.9
    
    
    
    23,864.1Deposits
    
    
    3,511.8
    
    
    
    10,779.4
    
    
    
    8,421.7
    
    
    
    6,756.9
    
    
    
    5,584.0
    
    
    
    5,209.4Other Funds (3)
    
    
    3,663.9
    
    
    
    11,246.3
    
    
    
    15,587.2
    
    
    
    15,374.2
    
    
    
    15,819.5
    
    
    
    17,053.9Total Shareholders Equity
    
    
    524.0
    
    
    
    1,608.5
    
    
    
    1,626.8
    
    
    
    1,519.5
    
    
    
    1,419.4
    
    
    
    1,600.8Average Total Assets (4)
    
    
    8,019.1
    
    
    
    24,614.5
    
    
    
    24,238.1
    
    
    
    22,725.9
    
    
    
    22,530.3
    
    
    
    29,500.9Percentage of Period-end Balance Sheet Items
Denominated in Dollars:Loans, Net of Allowances
    
    
    16.68
    
    
    
    16.68
    
    
    
    9.84
    
    
    
    10.43
    
    
    
    9.36
    
    
    
    9.11Total Assets
    
    
    28.91
    
    
    
    28.91
    
    
    
    26.55
    
    
    
    32.92
    
    
    
    36.39
    
    
    
    43.20Deposits
    
    
    14.13
    
    
    
    14.13
    
    
    
    15.55
    
    
    
    20.89
    
    
    
    29.67
    
    
    
    40.08Total Liabilities
    
    
    30.39
    
    
    
    30.39
    
    
    
    25.81
    
    
    
    29.57
    
    
    
    36.87
    
    
    
    43.98Amounts in Accordance with U.S. GAAPTrading Securities
    
    
    67.8
    
    
    
    208.2
    
    
    
    790.0
    
    
    
    564.7
    
    
    
    328.8
    
    
    
    35.5Available-for-Sale Securities
    
    
    1,698.8
    
    
    
    5,214.6
    
    
    
    5,350.3
    
    
    
    3,923.1
    
    
    
    3,727.9
    
    
    
    1,380.6Total Assets
    
    
    7,859.8
    
    
    
    24,125.8
    
    
    
    19,949.3
    
    
    
    17,007.3
    
    
    
    14,835.2
    
    
    
    14,821.9Total Liabilities
    
    
    7812.3
    
    
    
    23,980.0
    
    
    
    22,077.6
    
    
    
    20,203.0
    
    
    
    19,288.5
    
    
    
    20,244.2Shareholders Equity (Deficit)
    
    
    47.5
    
    
    
    145.8
    
    
    
    (2,128.3
    )
    
    
    (3,195.7
    )
    
    
    (4,453.3
    )
    
    
    (5,422.3
    )
 -4-




---



##### Table of Contents



Fiscal Year Ended December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in millions ofFebruary 28,2003, constantpesos, except(in millions of pesos, except as noted)(1)
    
    as noted)(1)Selected RatiosRatios in Accordance with Argentine Banking GAAPProfitability and EfficiencyNet Yield on Interest Earning Assets (5)
    
    
    1.21
    %
    
    
    2.38
    %
    
    
    1.02
    %
    
    
    0.89
    %
    
    
    3.66
    %Financial Margin (6)
    
    
    1.74
    
    
    
    2.53
    
    
    
    1.08
    
    
    
    0.71
    
    
    
    4.44Return on Average Assets (7)
    
    
    0.0004
    
    
    
    0.59
    
    
    
    (0.42
    )
    
    
    (0.95
    )
    
    
    (6.04
    )Return on Average Shareholders Equity (8)
    
    
    (1.15
    )
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (14.53
    )
    
    
    (62.06
    )Net Income from Services as a Percentage of Operating Income
(9)
    
    
    63.99
    
    
    
    48.65
    
    
    
    66.06
    
    
    
    73.08
    
    
    
    24.95Efficiency ratio (10)
    
    
    92.80
    
    
    
    72.56
    
    
    
    94.46
    
    
    
    113.91
    
    
    
    61.58CapitalShareholders Equity as a Percentage of Total Assets
    
    
    6.81
    %
    
    
    6.35
    %
    
    
    6.42
    %
    
    
    6.22
    %
    
    
    6.71
    %Total Liabilities as a Multiple of Shareholders Equity
    
    
    13.69
    x
    
    
    14.76
    x
    
    
    14.56
    x
    
    
    15.08
    x
    
    
    13.91
    xTotal Capital Ratio (11)
    
    
    15.03
    %
    
    
    20.78
    %
    
    
    25.11
    %
    
    
    
    
    
    
    LiquidityCash and Due from Banks as a Percentage of Total Deposits
    
    
    21.29
    %
    
    
    12.36
    %
    
    
    14.63
    %
    
    
    14.80
    %
    
    
    11.07
    %Loans, Net as a Percentage of Total Assets
    
    
    44.49
    
    
    
    41.17
    
    
    
    35.68
    
    
    
    32.89
    
    
    
    44.76Credit QualityPast Due Loans (12) as a Percentage of Total Loans
    
    
    2.38
    %
    
    
    2.34
    %
    
    
    4.97
    %
    
    
    11.70
    %
    
    
    9.93
    %Non-Accrual Loans (13) as a Percentage of Total Loans
    
    
    2.59
    
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04
    
    
    
    13.08Allowance for Loan Losses as a Percentage of Non-accrual
Loans(13)
    
    
    117.16
    
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61
    
    
    
    104.45Net Charge-Offs (14) as a Percentage of Average Loans
    
    
    1.42
    
    
    
    1.49
    
    
    
    3.77
    
    
    
    1.98
    
    
    
    1.89Ratios in Accordance with U.S. GAAPCapitalShareholders Equity (deficit) as a Percentage of Total Assets
    
    
    0.60
    %
    
    
    (10.67
    )%
    
    
    (18.79
    )%
    
    
    (30.02
    )%
    
    
    (36.58
    )%Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    164.46x
    
    
    
    (10.37
    )x
    
    
    (6.32
    )x
    
    
    (4.33
    )x
    
    
    (3.73
    )xLiquidityLoans, Net as a Percentage of Total Assets
    
    
    40.05
    %
    
    
    50.15
    %
    
    
    43.91
    %
    
    
    43.32
    %
    
    
    55.03
    %Credit QualityAllowance for Loan Losses as a Percentage of Non-Accrual Loans
    
    
    168.58
    %
    
    
    139.49
    %
    
    
    84.75
    %
    
    
    85.98
    %
    
    
    101.48
    %Inflation and Exchange RateInflation (Deflation) (15) (16)
    
    
    7.01
    %
    
    
    10.69
    %
    
    
    7.84
    %
    
    
    2.03
    %
    
    
    118.44
    %Currency Devaluation Rate (16) (%)
    
    
    1.25
    
    
    
    1.94
    
    
    
    1.39
    
    
    
    (12.79
    )
    
    
    236.30CER (17)
    
    
    10.08
    
    
    
    11.75
    
    
    
    5.48
    
    
    
    3.66
    
    
    
    40.53CVS (18)
    
    
    
    
    
    
    
    
    
    
    5.32
    
    
    
    15.85
    
    
    
    0.83
 -5-




---



##### Table of Contents



(*)
    
    Before the loss absorption mechanism established by Argentine Central Bank Communiqué A 3800,
net loss per share for fiscal year 2002 was Ps.(2.636).(1)
    
    The exchange rate used to convert the December 31, 2006 amounts into U.S. dollars was Ps.3.0695
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 the Argentine Central Bank, other banks and international
entities.(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 (plus unrealized valuation difference for fiscal year 2002)
as a percentage of average total assets. Before the loss absorption mechanism allowed by Argentine
Central Bank Communiqué A 3800, this ratio was (10.68)% for fiscal year 2002.(8)
    
    Net income (plus unrealized valuation difference for fiscal year 2002) as a percentage of average
shareholders equity. Before the loss absorption mechanism allowed by Argentine Central Bank
Communiqué A 3800, this ratio was (118.40) % for fiscal year 2002.(9)
    
    Operating income is defined as net financial income plus net income from services (plus monetary
loss from financial intermediation plus the unrealized valuation difference for fiscal year 2002).
Excluding from the calculation the unrealized valuation difference (in accordance with Argentine
Central Bank Communiqué A 3703), this ratio was 278.90% for fiscal year 2002.(10)
    
    Administrative expenses (net of the monetary gain (loss) from operating expenses for fiscal year
2002) as a percentage of operating income as defined above. Excluding from the calculation the
unrealized valuation difference (in accordance with Argentine Central Bank Communiqué A 3703), this
ratio was 688.34% for fiscal year 2002.(11)
    
    Compliance with the capital adequacy rules of the Argentine Central Bank was suspended during
2002 and 2003 (including December 31, 2002, and 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 changes in the WPI in Argentina.(16)
    
    Source: INDEC.(17)
    
    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.(18)
    
    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 FY 2004 corresponds to the variation between January 1, 2004 and March 31, 2004. 
 Exchange Rate Information
  Exchange Rate(1)High
    
    Low
    
    Average(2)
    
    Period-End(in pesos per US dollar)2001
    
    
    1.0000
    
    
    
    1.0000
    
    
    
    1.0000
    (3)
    
    
    1.00002002
    
    
    3.9000
    
    
    
    1.0000
    
    
    
    3.0724
    (3)
    
    
    3.36302003
    
    
    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)
    
    
    3.0695December 2006
    
    
    3.0792
    
    
    
    3.0492
    
    
    
    3.0603
    
    
    
    3.0695
 -6-




---



##### Table of Contents



Exchange Rate(1)High
    
    Low
    
    Average(2)
    
    Period-End(in pesos per US dollar)January 2007
    
    
    3.1068
    
    
    
    3.0553
    
    
    
    3.0850
    
    
    
    3.1063February 2007
    
    
    3.1058
    
    
    
    3.0975
    
    
    
    3.1026
    
    
    
    3.1010March 2007
    
    
    3.1060
    
    
    
    3.0963
    
    
    
    3.1010
    
    
    
    3.1007April 2007
    
    
    3.1008
    
    
    
    3.0808
    
    
    
    3.0891
    
    
    
    3.0898May 2007
    
    
    3.0852
    
    
    
    3.0727
    
    
    
    3.0800
    
    
    
    3.0785
 (1)
    
    Until June 2002, asked closing quotations as quoted by Banco Nación. Since July 2002, closing
reference exchange rate as published by the Argentine Central Bank.(2)
    
    Daily average of closing quotations, unless otherwise noted.(3)
    
    Based on monthly averages.  
 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, the quality of our
loan portfolio and our financial condition and results of operations depend to a significant extent
on macroeconomic and political conditions prevailing from time to time in Argentina. In general,
you take more risk when you invest in the securities of issuers in emerging markets such as
Argentina than when you invest in the securities of issuers in the United States and certain other
markets.
 Risk Factors Relating to Argentina
 The current growth and stabilization may not be sustainable, which could adversely affect the
economy, the financial system and our financial condition and prospects
  Inflation may rise from current levels and undermine the economy and our financial condition
    -7-




---



##### Table of Contents



A significant devaluation of the peso may adversely affect the Argentine economy and our operations
  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 our operations
and prospects
    A decline in international prices for Argentinas main commodity exports could have an adverse
effect on Argentinas economic growth and on our financial condition and prospects
  The foreign exchange market is subject to controls and the Argentine Central Bank could implement
more restrictive measures in the future that could adversely affect our business operations
  -8-




---



##### Table of Contents



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 like us
  Government measures may adversely affect the Argentine economy as a whole, as well as our business
operations
  Elections for the executive and legislative branches of the Government in 2007 may generate
uncertainty with respect to the economic policies to be adopted and could cause volatility in the
Argentine market and thus affect us and our operations and/or cause volatility in the market price
of our securities
  -9-




---



##### 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 post-crisis improvement in financial institutions asset quality could be interrupted if the
Argentine economy stops growing
  An increasing number of 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
 -10-




---



##### Table of Contents



New limitations to creditors rights in Argentina and to the ability to foreclose on certain
guarantees and collateral may adversely impact financial institutions
such as us
  Risk Factors Relating to us
 We are a holding company and our ability to pay cash dividends depends on the ability of our
subsidiaries to pay dividends to us
   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
  -11-




---



##### Table of Contents



Our shareholders may be subject to liability for certain votes of their securities
  U.S. holders of our class B shares may not be able to exercise preemptive and accretion rights
  Our assets are concentrated in Argentine public-sector debt instruments making 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
 -12-




---



##### 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
 -13-




---



##### Table of Contents



Increased competition and consolidation in the banking industry may adversely affect our operations
  
 Item 4. Information on the Company
 
 Organization
 sociedad anónima )
  
 Organizational Structure
  
    
    Galicia Uruguay, incorporated in Uruguay and currently not an operating financial institution (See HistoryBanco
Galicia Uruguay S.A. and Galicia (Cayman) Ltd.);
    
    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 (See
HistoryBanco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.);
    
    Net Investment BV (in liquidation), incorporated in the Netherlands; and
    
    Ancud Comercial S.A., incorporated in the Dominican Republic.
 -14-




---



##### Table of Contents



(1)
    
    Banelco S.A. 17.15%; Aguas Provinciales de Santa Fe S.A. 12.5%; Electrigal S.A. 12.5%;
Galicia Inmobiliaria S.A. 12.5%; Correo Argentino S.A. 11.77%; Aguas Cordobesas S.A. 10.83%;
Alfer S.A. (in liquidation) 9.80%; Interbanking S.A. 9.09%; Seguros de Depósitos S.A. (Sedesa) 8.71%;
Aguas Argentinas S.A. 8.26%; Compensadora Electrónica S.A. 8.22%; A.E.C. S.A. 6.97%; Finanban S.A. 6.67%;
Argencontrol S.A. 5.766%; Visa S.A. 5.0%; Garbin S.A. 4.10%; Mercado Abierto Electrónico S.A. 1.49%;
Corporación Interamericana para el Financiamiento de Infraestructura S.A. 1.39%; Banco Latinoamericano de
Exportaciones S.A. 0.10%; S.W.I.F.T. S. C. 0.02%. 
 History
   -15-




---



##### Table of Contents



Ley de Entidades Financieras,
  Restructuring of our Subsidiaries Debt
 Banco Galicia
  Approval of the Banks Foreign Debt Restructuring and Argentine Central Bank Debt
Restructuring
  
 -16-




---



##### Table of Contents



Restructuring of the Foreign Debt of the Banks Head Office in Argentina and its Cayman
Branch
  Terms of the Foreign Debt Restructuring
  
    
    cash (at a discount) (the cash offer);
    
    Boden 2012 Bonds (at a discount) (the Boden offer);
    
    new long-term debt instruments (at par); or
    
    new medium-term debt instruments (at par) and up to 149 million preferred shares
of our preferred shares (or, instead of such shares, cash, if any, paid to us by
existing shareholders electing to subscribe for our preferred shares in a
preemptive rights offering) (the equity participation option).
    
    
    We issued 149 million preferred shares on May 13, 2004, each of them mandatorily
convertible into one of our class B shares a year later, which occurred on May 12,
2005. As a result of the exercises made by the existing shareholders in our preemptive
rights offering, creditors opting for the equity participation offer received 87.8
million preferred shares and US$ 30 million in cash and we received US$ 100 million of
subordinated bonds in exchange for the above-mentioned shares and cash.
    
    We entered into an agreement with the Banks bank creditors in which we agreed to
maintain certain corporate governance standards and to provide them with certain
financial information and reports on a quarterly and annual basis.
  -17-




---



##### Table of Contents




    
    paid US$13.6 million to creditors participating in the cash offer;
    
    transferred US$ 36.9 million of nominal value of Boden 2012 Bonds to creditors
participating in the Boden offer; and
    
    issued the following new debt instruments:
 
    
    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.
   Principal amount of:
    
    In US$ millionsa) Old debt to be restructured as of December 31, 2003
    
    
    1,349.6b) Old debt to be restructured as of April 27, 2004 (1)
    
    
    1,344.7
    (2)c) Old debt participating in the restructuring as of April 27, 2004 (1)
    
    
    1,320.9d) New debt, including past due interest capitalized (3) (4)
    
    
    1,399.6e) New debt issued (4) (5)
    
    
    1,278.3f) Old debt not restructured as of May 18, 2004 (6)
    
    
    22.9
    (7)g) Old debt not restructured as of December 31, 2006
    
    
    4.4
 (1)
    
    Expiration date of the exchange offer.(2)
    
    The decrease in the principal amount of debt to be restructured as compared to December 31,
2003, resulted from the fact that, in accordance with Argentine law, borrowers that were also
holders of certain of the Banks debt instruments under restructuring used such holdings to
repay past-due loans granted to them by the Bank.(3)
    
    Interest past due between May 1, 2002, and December 31, 2003, was capitalized at 4.75% per
annum, except for trade debt for a principal amount of US$ 25.3 million for which interest was
capitalized at Libor plus 1%. Interest past due until April 30, 2002, was paid in cash.(4)
    
    Excludes trade debt.(5)
    
    After having applied US$ 42.4 million not used in the cash offer to prepay long-term debt
instruments included in (d).(6)
    
    Settlement date of the exchange offer.(7)
    
    Between the expiration date and the settlement date, the amount of debt not restructured
decreased by US$ 0.9 million as a result of the repayment by borrowers that were also holders
of debt subject to restructuring of past-due loans made to them by the Bank by using their
holdings of such debt and, to a lesser extent, as a result of the renegotiation of debt not
restructured under the terms of the restructuring.   Restructuring of the Banks New York Branch Debt
  -18-




---



##### Table of Contents



Capitalization as a Result of the Restructuring of the Foreign Debt
  
    
    the exchange of debt subject to restructuring for cash and Boden 2012 Bonds at a
discount and the capitalization of interest at a rate lower than the contractual rate
recorded in the Banks books, which generated in aggregate a US$ 48.9 million increase
in shareholders equity; and
    
    the issuance of US$ 230.0 million of subordinated debt computable as supplemental
capital in accordance with the Argentine Central Banks capital adequacy rules.
  Banco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.
 Galicia Uruguay
     Galicia (Cayman) Ltd.
  -19-




---



##### Table of Contents



Capital Increase of the Bank Approved by the Shareholders Meeting held on October 11, 2006
   Superintendencia de Entidades Financieras y
Cambiarias
  
 Capital Investments and Divestitures
  
    
    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.
  
    
    Ps.15.1 million in fixed assets;
    
    Ps.9.7 million in construction in progress; and
    
    Ps.17.6 million in organizational and IT system development expenses.
 -20-




---



##### Table of Contents



(in millions of pesos)Construction of the new corporate tower (construction,
furniture, equipment, phones, etc.)
    
    Ps
    .44.6Fixed Assets
    
    
    62.2Organizational and IT System Development
    
    
    79.2Total
    
    Ps
    .186.0
  
 Business Overview
    Retail Banking Business
   -21-




---



##### Table of Contents



Retail Banking (this section figures are not consolidated with the regional credit-card companies)
       -22-




---



##### Table of Contents



Consumer Banking
      -23-




---



##### Table of Contents



Private Banking
   -24-




---



##### Table of Contents



Distribution
  Traditional Channels
   Geographical Area
    
    Number of BranchesCity of Buenos Aires
    
    
    76Greater Buenos Aires (GBA)
    
    
    59Rest of the Province of Buenos Aires
    
    
    31Santa Fe
    
    
    14Córdoba
    
    
    13Mendoza
    
    
    9Entre Ríos
    
    
    4Chubut
    
    
    3Río Negro
    
    
    3Corrientes
    
    
    2La Pampa
    
    
    2Misiones
    
    
    2Tierra del Fuego
    
    
    2Catamarca
    
    
    1Chaco
    
    
    1Formosa
    
    
    1Jujuy
    
    
    1La Rioja
    
    
    1Neuquén
    
    
    1Salta
    
    
    1Santa Cruz
    
    
    1Santiago del Estero
    
    
    1San Juan
    
    
    1San Luis
    
    
    1Tucumán
    
    
    1Total
    
    
    232
 -25-




---



##### Table of Contents



Alternative Channels
   Customer Contact Center, or CCC
 Red Galicia 24
 e-galicia.com
  -26-




---



##### Table of Contents



Galicia Móvil
 Retail Sales Unit
 Real Estate Center
 Wholesale Banking Business
       -27-




---



##### Table of Contents



Corporate Banking
   Middle-Market Banking
   Fondo
Tecnológico Argentino
   -28-




---



##### Table of Contents



Investment Banking and Capital Markets
     Corporate and Real-Estate Business Development
  -29-




---



##### Table of Contents



Non-Financial Public Sector
  Foreign Trade
     Galicia Office
    -30-




---



##### Table of Contents



Treasury and Asset Management
  Financial Operations
     -31-




---



##### Table of Contents



Asset Management
    International
     Sudamericana Holding S.A.
   -32-




---



##### Table of Contents



Net Investment S.A.
 Inspección General de Justicia
  Galicia Warrants S.A.
   Galval Agente de Valores S.A.
  -33-




---



##### Table of Contents



Competition
  Banking
        Regional Credit-Card Companies
  Insurance Industry
 -34-




---



##### Table of Contents



Sales and Marketing
        -35-




---



##### Table of Contents



Property
  SquareProperty
    
    
    
    Address
    
    Meters
    
    
    Main UsesGrupo Financiero Galicia- Owned
    
    -Tte. Gral. Juan D. Perón 456, 2nd floor, Buenos Aires, Argentina
    
    
    146
    
    
    Administrative activities-Maipú 241, Buenos Aires, Argentina(1)
    
    
    1,619
    
    
    Administrative activitiesGalicia Retiro Compañía de Seguros S.A.- Owned
    
    -Maipú 241, Buenos Aires, Argentina
    
    
    723
    
    
    Administrative activitiesGalicia Vida Compañía de Seguros S.A.- Owned
    
    -Maipú 241, Buenos Aires, Argentina
    
    
    915
    
    
    Administrative activitiesNet Investment S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 456, 2nd floor, Buenos Aires, Argentina
    
    
    45
    
    
    Administrative activities
 -36-




---



##### Table of Contents



SquareProperty
    
    
    
    Address
    
    Meters
    
    
    Main Uses- 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
    
    -Alto Verde, Chicligasta, Tucumán, Argentina
    
    
    2,000
    
    
    Storage-Alsina 3450, San Miguel de Tucumán, Tucumán, Argentina
    
    
    12,800
    
    
    Storage-Pasaje 1° de Mayo Esquina 25 de Mayo, Barrio el Corte Alderete, Tucumán, Argentina
    
    
    2,000
    
    
    Storage-Ruta Prov. 316 km. 14, Obispo Colombres, Depto. Alta Cruz, Tucumán, Argentina
    
    
    3,000
    
    
    Storage-San Martín 784, San Miguel de Tucumán, Tucumán, Argentina
    
    
    85
    
    
    Administrative activitiesBanco de Galicia y Buenos Aires S.A.- Owned
    
    -Tte. Gral. Juan D. Perón 407, Buenos Aires, Argentina
    
    
    17,270
    
    
    Administrative activities-Florida 361, Buenos Aires, Argentina
    
    
    7,340
    
    
    Administrative activities- Rented
    
    -Tte. Gral. Juan D. Perón 525, Buenos Aires, Argentina
    
    
    9,325
    
    
    Administrative activities-San Martín 178/200, Buenos Aires, Argentina
    
    
    3,630
    
    
    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
    
    
    
    
    
    StorageTarjeta Naranja S.A.- Owned
    
    -Sucre 152, 154 and 541, Córdoba, Argentina
    
    
    6,500
    
    
    Administrative activities-San Jerónimo 2348, 2350, Santa Fe, Argentina
    
    
    1,500
    
    
    Administrative activities- Rented
    
    -Sucre 145/151, La Rioja 364 and 375, and Los Andes 197, Córdoba, Argentina
    
    
    6,100
    
    
    Administrative
activities, printing
centre and storageTarjetas Cuyanas S.A.- Rented
    
    -Belgrano 1415, Mendoza, Argentina
    
    
    1,160
    
    
    Administrative activities-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 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. The remaining unit is occupied by Galicia Vida.
       
 Selected Statistical Information
  -37-




---



##### Table of Contents



Average Balance Sheet and Income from Interest-Earning Assets and Expenses from Interest-Bearing
Liabilities
     Fiscal Year Ended December 31, 2006 (*)Pesos
    
    
    Dollars
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps.
    3,501.5
    
    
    Ps.
    252.5
    
    
    
    7.21
    
    
    Ps.
    1,174.3
    
    
    Ps.
    60.0
    
    
    
    5.11
    
    
    Ps.
    4,675.8
    
    
    Ps.
    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
    
    
    
    8.84
    %Cash 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
    
    Ps.
    17,412.8
    
    
    
    
    
    
    
    
    
    
    Ps.
    7,201.7
    
    
    
    
    
    
    
    
    
    
    Ps.
    24,614.5
    
    
    
    
    
    
    
    
 -38-




---



##### Table of Contents



Fiscal Year Ended December 31, 2006 (*)Pesos
    
    
    Dollars
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    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
    
    Ps.
    18,185.6
    
    
    
    
    
    
    
    
    
    
    Ps.
    6,428.9
    
    
    
    
    
    
    
    
    
    
    Ps.
    24,614.5
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    1.22
    %
    
    
    
    
    
    
    
    
    
    
    (2.35
    )%
    
    
    
    
    
    
    
    
    
    
    0.05
    %Cost 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
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps.
    4,945.8
    
    
    Ps.
    660.9
    
    
    
    13.36
    
    
    Ps.
    801.9
    
    
    Ps.
    16.4
    
    
    
    2.05
    
    
    Ps.
    5,747.7
    
    
    Ps.
    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
    
    
    
    10.60
    %Cash 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
    
    Ps.
    17,436.5
    
    
    
    
    
    
    
    
    
    
    Ps.
    6,801.6
    
    
    
    
    
    
    
    
    
    
    Ps.
    24,238.1
    
    
    
    
    
    
    
    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
    
    
    
    4.36
 -39-




---



##### Table of Contents



Fiscal Year Ended December 31, 2005 (*)Pesos
    
    
    Dollars
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)Argentine 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
    
    Ps.
    18,071.9
    
    
    
    
    
    
    
    
    
    
    Ps.
    6,166.2
    
    
    
    
    
    
    
    
    
    
    Ps.
    24,238.1
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.92
    %
    
    
    
    
    
    
    
    
    
    
    (2.29
    )%
    
    
    
    
    
    
    
    
    
    
    1.36
    %Cost 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.
  Fiscal Year Ended December 31, 2004 (*)Pesos
    
    
    Dollars
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)AssetsGovernment Securities
    
    Ps.
    1,226.7
    
    
    Ps.
    78.5
    
    
    
    6.40
    
    
    Ps.
    2,012.0
    
    
    Ps.
    (87.8
    )
    
    
    (4.36
    )
    
    Ps.
    3,238.7
    
    
    Ps.
    (9.3
    )
    
    
    (0.29
    )LoansPrivate Sector
    
    
    3,213.9
    
    
    
    490.9
    
    
    
    15.27
    
    
    
    907.3
    
    
    
    44.1
    
    
    
    4.86
    
    
    
    4,121.2
    
    
    
    535.0
    
    
    
    12.98Public Sector
    
    
    7,016.7
    
    
    
    564.6
    
    
    
    8.05
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,016.7
    
    
    
    564.6
    
    
    
    8.05Total Loans
    
    
    10,230.6
    
    
    
    1,055.5
    
    
    
    10.32
    
    
    
    907.3
    
    
    
    44.1
    
    
    
    4.86
    
    
    
    11,137.9
    
    
    
    1,099.6
    
    
    
    9.87Other(1)
    
    
    1,385.8
    
    
    
    92.5
    
    
    
    6.67
    
    
    
    4,973.0
    
    
    
    73.3
    
    
    
    1.47
    
    
    
    6,358.8
    
    
    
    165.8
    
    
    
    2.61Total Interest-Earning Assets
    
    
    12,843.1
    
    
    
    1,226.5
    
    
    
    9.55
    %
    
    
    7,892.3
    
    
    
    29.6
    
    
    
    0.38
    %
    
    
    20,735.4
    
    
    
    1,256.1
    
    
    
    6.06
    %Cash and Gold
    
    
    290.2
    
    
    
    
    
    
    
    
    
    
    
    150.0
    
    
    
    
    
    
    
    
    
    
    
    440.2
    
    
    
    
    
    
    
    Equity in Other Companies
    
    
    339.2
    
    
    
    
    
    
    
    
    
    
    
    88.5
    
    
    
    
    
    
    
    
    
    
    
    427.7
    
    
    
    
    
    
    
    Other Assets
    
    
    2,142.9
    
    
    
    
    
    
    
    
    
    
    
    104.0
    
    
    
    
    
    
    
    
    
    
    
    2,246.9
    
    
    
    
    
    
    
    Allowances
    
    
    (840.2
    )
    
    
    
    
    
    
    
    
    
    
    (284.1
    )
    
    
    
    
    
    
    
    
    
    
    (1,124.3
    )
    
    
    
    
    
    
    Total Assets
    
    Ps.
    14,775.2
    
    
    
    
    
    
    
    
    
    
    Ps.
    7,950.7
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,725.9
    
    
    
    
    
    
    
    Liabilities and EquityDepositsCurrent Accounts
    
    
    364.5
    
    
    
    4.8
    
    
    
    1.32
    %
    
    
    69.5
    
    
    
    
    
    
    
    
    
    
    
    434.0
    
    
    
    4.8
    
    
    
    1.11
    %Saving Accounts
    
    
    767.1
    
    
    
    4.2
    
    
    
    0.55
    
    
    
    267.4
    
    
    
    
    
    
    
    
    
    
    
    1,034.5
    
    
    
    4.2
    
    
    
    0.41Time Deposits
    
    
    2,228.9
    
    
    
    116.3
    
    
    
    5.22
    
    
    
    1,088.6
    
    
    Ps.
    18.2
    
    
    
    1.67
    %
    
    
    3,317.5
    
    
    
    134.5
    
    
    
    4.05Total Interest-Bearing Deposits
    
    
    3,360.5
    
    
    
    125.3
    
    
    
    3.73
    
    
    
    1,425.5
    
    
    
    18.2
    
    
    
    1.28
    
    
    
    4,786.0
    
    
    
    143.5
    
    
    
    3.00Argentine Central Bank
    
    
    8,165.6
    
    
    
    698.9
    
    
    
    8.56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,165.6
    
    
    
    698.9
    
    
    
    8.56Other Financial Entities
    
    
    168.2
    
    
    
    47.9
    
    
    
    28.48
    
    
    
    815.4
    
    
    
    66.8
    
    
    
    8.19
    
    
    
    983.6
    
    
    
    114.7
    
    
    
    11.66Debt Securities
    
    
    10.7
    
    
    
    
    
    
    
    
    
    
    
    3,179.9
    
    
    
    27.6
    
    
    
    0.87
    
    
    
    3,190.6
    
    
    
    27.6
    
    
    
    0.87Other
    
    
    95.7
    
    
    
    7.9
    
    
    
    8.25
    
    
    
    1,072.5
    
    
    
    52.5
    
    
    
    4.90
    
    
    
    1,168.2
    
    
    
    60.4
    
    
    
    5.17Total Interest-Bearing
Liabilities
    
    
    11,800.7
    
    
    
    880.0
    
    
    
    7.46
    %
    
    
    6,493.3
    
    
    
    165.1
    
    
    
    2.54
    %
    
    
    18,294.0
    
    
    
    1,045.1
    
    
    
    5.71
    %
 -40-




---



##### Table of Contents



Fiscal Year Ended December 31, 2004 (*)Pesos
    
    
    Dollars
    
    
    TotalInterest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/
    
    
    Average
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(in millions of pesos, except rates)Demand deposits
    
    
    1,038.2
    
    
    
    
    
    
    
    
    
    
    
    34.0
    
    
    
    
    
    
    
    
    
    
    
    1,072.2
    
    
    
    
    
    
    
    Other Liabilities
    
    
    1,197.4
    
    
    
    
    
    
    
    
    
    
    
    558.2
    
    
    
    
    
    
    
    
    
    
    
    1,755.6
    
    
    
    
    
    
    
    Minority Interests
    
    
    103.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103.2
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    1,500.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500.9
    
    
    
    
    
    
    
    Total Liabilities and Equity
    
    Ps.
    15,640.4
    
    
    
    
    
    
    
    
    
    
    Ps.
    7,085.5
    
    
    
    
    
    
    
    
    
    
    Ps.
    22,725.9
    
    
    
    
    
    
    
    Spread and Net YieldInterest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.09
    %
    
    
    
    
    
    
    
    
    
    
    (2.16
    )%
    
    
    
    
    
    
    
    
    
    
    0.35
    %Cost of Funds Supporting
Interest-Earning Assets
    
    
    
    
    
    
    
    
    
    
    6.85
    
    
    
    
    
    
    
    
    
    
    
    2.09
    
    
    
    
    
    
    
    
    
    
    
    5.04Net Yield on Interest-Earning
Assets
    
    
    
    
    
    
    
    
    
    
    2.70
    
    
    
    
    
    
    
    
    
    
    
    (1.72
    )
    
    
    
    
    
    
    
    
    
    
    1.02
 (*)
    
    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 2006/ Fiscal Year 2005,
    
    Fiscal Year 2005/ Fiscal Year 2004,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
    
    
    (158.5
    )
    
    
    (249.9
    )
    
    
    (408.4
    )
    
    
    428.5
    
    
    
    153.9
    
    
    
    582.4Dollars
    
    
    10.3
    
    
    
    33.3
    
    
    
    43.6
    
    
    
    30.3
    
    
    
    73.9
    
    
    
    104.2Total
    
    
    (148.2
    )
    
    
    (216.6
    )
    
    
    (364.8
    )
    
    
    458.8
    
    
    
    227.8
    
    
    
    686.6LoansPrivate SectorPesos
    
    
    177.6
    
    
    
    (33.9
    )
    
    
    143.7
    
    
    
    109.4
    
    
    
    10.0
    
    
    
    119.4Dollars
    
    
    16.3
    
    
    
    19.2
    
    
    
    35.5
    
    
    
    4.8
    
    
    
    (9.3
    )
    
    
    (4.5
    )Total
    
    
    193.9
    
    
    
    (14.7
    )
    
    
    179.2
    
    
    
    114.2
    
    
    
    0.7
    
    
    
    114.9Public SectorPesos
    
    
    (64.7
    )
    
    
    (153.9
    )
    
    
    (218.6
    )
    
    
    (88.7
    )
    
    
    239.0
    
    
    
    150.3Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (64.7
    )
    
    
    (153.9
    )
    
    
    (218.6
    )
    
    
    (88.7
    )
    
    
    239.0
    
    
    
    150.3OtherPesos
    
    
    23.7
    
    
    
    (32.8
    )
    
    
    (9.1
    )
    
    
    14.5
    
    
    
    27.6
    
    
    
    42.1Dollars
    
    
    (8.4
    )
    
    
    28.5
    
    
    
    20.1
    
    
    
    (2.9
    )
    
    
    68.3
    
    
    
    65.4Total
    
    
    15.3
    
    
    
    (4.3
    )
    
    
    11.0
    
    
    
    11.6
    
    
    
    95.9
    
    
    
    107.5Total Interest-Earning AssetsPesos
    
    
    (21.9
    )
    
    
    (470.5
    )
    
    
    (492.4
    )
    
    
    463.7
    
    
    
    430.5
    
    
    
    894.2Dollars
    
    
    18.2
    
    
    
    81.0
    
    
    
    99.2
    
    
    
    32.2
    
    
    
    132.9
    
    
    
    165.1Total
    
    
    (3.7
    )
    
    
    (389.5
    )
    
    
    (393.2
    )
    
    
    495.9
    
    
    
    563.4
    
    
    
    1,059.3Interest Bearing LiabilitiesDemand AccountPesos
    
    
    
    
    
    
    5.7
    
    
    
    5.7
    
    
    
    3.1
    
    
    
    7.4
    
    
    
    10.5Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    5.7
    
    
    
    5.7
    
    
    
    3.1
    
    
    
    7.4
    
    
    
    10.5Saving AccountPesos
    
    
    1.0
    
    
    
    (1.3
    )
    
    
    (0.3
    )
    
    
    1.0
    
    
    
    (0.5
    )
    
    
    0.5Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1.0
    
    
    
    (1.3
    )
    
    
    (0.3
    )
    
    
    1.0
    
    
    
    (0.5
    )
    
    
    0.5Time DepositsPesos
    
    
    98.5
    
    
    
    68.4
    
    
    
    166.9
    
    
    
    71.0
    
    
    
    51.6
    
    
    
    122.6Dollars
    
    
    (0.3
    )
    
    
    2.0
    
    
    
    1.7
    
    
    
    (4.5
    )
    
    
    (5.8
    )
    
    
    (10.3
    )Total
    
    
    98.2
    
    
    
    70.4
    
    
    
    168.6
    
    
    
    66.5
    
    
    
    45.8
    
    
    
    112.3With the Argentine Central BankPesos
    
    
    (294.8
    )
    
    
    (112.9
    )
    
    
    (407.7
    )
    
    
    15.3
    
    
    
    463.0
    
    
    
    478.3
 -41-




---



##### Table of Contents



Fiscal Year 2006/ Fiscal Year 2005,
    
    Fiscal Year 2005/ Fiscal Year 2004,Increase (Decrease) due to changes in
    
    Increase (Decrease) due to changes inVolume
    
    Rate
    
    Net Change
    
    Volume
    
    Rate
    
    Net Change(in millions of pesos)Dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    (294.8
    )
    
    
    (112.9
    )
    
    
    (407.7
    )
    
    
    15.3
    
    
    
    463.0
    
    
    
    478.3With Other Financial EntitiesPesos
    
    
    9.1
    
    
    
    (10.8
    )
    
    
    (1.7
    )
    
    
    17.4
    
    
    
    (28.5
    )
    
    
    (11.1
    )Dollars
    
    
    1.4
    
    
    
    0.1
    
    
    
    1.5
    
    
    
    (45.2
    )
    
    
    (11.8
    )
    
    
    (57.0
    )Total
    
    
    10.5
    
    
    
    (10.7
    )
    
    
    (0.2
    )
    
    
    (27.8
    )
    
    
    (40.3
    )
    
    
    (68.1
    )Negotiable ObligationsPesos
    
    
    8.5
    
    
    
    6.2
    
    
    
    14.7
    
    
    
    2.5
    
    
    
    7.2
    
    
    
    9.7Dollars
    
    
    (10.2
    )
    
    
    56.3
    
    
    
    46.1
    
    
    
    2.3
    
    
    
    194.5
    
    
    
    196.8Total
    
    
    (1.7
    )
    
    
    62.5
    
    
    
    60.8
    
    
    
    4.8
    
    
    
    201.7
    
    
    
    206.5Other liabilitiesPesos
    
    
    7.0
    
    
    
    (1.2
    )
    
    
    5.8
    
    
    
    2.5
    
    
    
    (4.0
    )
    
    
    (1.5
    )Dollars
    
    
    2.5
    
    
    
    28.7
    
    
    
    31.2
    
    
    
    (1.3
    )
    
    
    13.8
    
    
    
    12.5Total
    
    
    9.5
    
    
    
    27.5
    
    
    
    37.0
    
    
    
    1.2
    
    
    
    9.8
    
    
    
    11.0Total Interest Bearing LiabilitiesPesos
    
    
    (170.7
    )
    
    
    (45.9
    )
    
    
    (216.6
    )
    
    
    112.8
    
    
    
    496.2
    
    
    
    609.0Dollars
    
    
    (6.6
    )
    
    
    87.1
    
    
    
    80.5
    
    
    
    (48.7
    )
    
    
    190.7
    
    
    
    142.0Total
    
    
    (177.3
    )
    
    
    41.2
    
    
    
    (136.1
    )
    
    
    64.1
    
    
    
    686.9
    
    
    
    751.0
 Interest-Earning AssetsNet Yield on Interest-Earning Assets
  Fiscal Year Ended December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos)Total Average Interest-Earning AssetsPesos
    
    Ps.
    14,797.6
    
    
    Ps.
    15,287.2
    
    
    Ps.
    12,843.1Dollars
    
    
    6,955.0
    
    
    
    6,557.0
    
    
    
    7,892.3Total
    
    
    21,752.6
    
    
    
    21,844.2
    
    
    
    20,735.4Net Interest Earned(1)Pesos
    
    
    355.9
    
    
    
    631.7
    
    
    
    346.5Dollars
    
    
    (93.7
    )
    
    
    (112.4
    )
    
    
    (135.5
    )Total
    
    
    262.2
    
    
    
    519.3
    
    
    
    211.0Net Yield on Interest-Earning Assets(2)(%)Pesos
    
    
    2.41
    
    
    
    4.13
    
    
    
    2.70Dollars
    
    
    (1.35
    )
    
    
    (1.71
    )
    
    
    (1.72
    )Weighted-Average Yield
    
    
    1.21
    
    
    
    2.38
    
    
    
    1.02Interest Spread, Nominal Basis(3)(%)Pesos
    
    
    1.22
    
    
    
    2.92
    
    
    
    2.09Dollars
    
    
    (2.35
    )
    
    
    (2.29
    )
    
    
    (2.16
    )Weighted-Average Yield
    
    
    0.05
    
    
    
    1.36
    
    
    
    0.35Credit Related Fees Included in Net Interest EarnedPesos
    
    
    26.4
    
    
    
    26.4
    
    
    
    20.7Dollars
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    26.4
    
    
    
    26.4
    
    
    
    20.7
 (1)
    
    Net interest earned corresponds to our net financial income plus:- Credit related fees (included in Income from Services  In Relation to Lending Transactions in the Income Statement)- Contributions to the deposit insurance system, and contributions and taxes on financial income included in the income statement line Financial Expenses -
Other, minus:- Net income from corporate securities included under Financial Income/Expenses- Interest Income and Holdings Gains/Losses from Government and Corporate
Securities, in the income statement, and- Differences in quotation of gold and foreign currency and premiums on foreign currency transactions, included in Financial Income/Expenses  Other, in the
income statement.(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.
 -42-




---



##### Table of Contents



Government and Corporate Securities
  As of December 31,2006
    
    
    2005(in millions of pesos)Government SecuritiesPesosTrading
    
    Ps.
    0.1
    
    
    Ps.
    14.6Issued by the Argentine Central Bank
    
    
    119.5
    
    
    
    704.5Without Quotation
    
    
    433.5
    
    
    
    4,591.1Total Government Securities in Pesos
    
    Ps.
    553.1
    
    
    Ps.
    5,310.2DollarsTrading
    
    
    26.4
    
    
    
    6.3Investment
    
    
    2,608.8
    
    
    
    650.9Total Government Securities in Dollars
    
    Ps.
    2,635.2
    
    
    Ps.
    657.2Total Government Securities
    
    Ps.
    3,188.3
    
    
    Ps.
    5,967.4Total Government and Corporate Equity Securities.
    
    Ps.
    3,188.3
    
    
    Ps.
    5,967.4Corporate Debt SecuritiesPesos
    
    
    
    
    
    
    3.9Dollars
    
    
    0.3
    
    
    
    0.5Total Corporate Debt Securities
    
    Ps.
    0.3
    
    
    Ps.
    4.4Total Government and Corporate Securities
    
    Ps.
    3,188.6
    
    
    Ps.
    5,971.8
    
    
    Bogar Bonds for Ps.196.7 million, granted as collateral for the advance
from the Argentine Central Bank for the acquisition of the remaining Hedge Bond. As
of December 31, 2006, these bonds were recorded at their technical value, which is
the value accepted by the regulations of the Argentine Central Bank for assets
granted as collateral for such advance.
    
    Bogar Bonds for Ps.169.8 million, recorded at present value as
established by Communiqué A 3911 and complementary rules,
    
    Bogar Bonds for Ps.60.3 million, corresponding to an unsettled forward
sale of such bonds recorded at market value; and
    
    Discount Bonds in Pesos and GDP-Linked Units for Ps.4.9 million. Through
Communiqué A 4270, the Argentine Central Bank allowed these securities, resulting
from the debt exchange offered to restructure the defaulted sovereign foreign debt,
to be recorded at the lowest of (a) the carrying value of the tendered securities in
accordance with the prevailing valuation rules (Communiqué A 4084 item 1 v) and
item 5, and complementary rules); and (b) the total future nominal cash payments up
to maturity specified by the terms and conditions of said securities. The Banks
holdings of Discount Bonds in Pesos and GDP-Linked Units were recorded as per the
first value. This valuation will be reduced in the amount of the perceived service
payments and accrued interest will not be recognized.
 -43-




---



##### Table of Contents



Government Securities  Net Position
  As of December 31, 2006Spot
    
    SpotForward
    
    Forward
    
    purchases
    
    sales
    
    NetIn millions of pesos
    
    Holdings
    
    Purchases
    
    Sales
    
    to be settled
    
    to be settled
    
    PositionGovernment SecuritiesHeld for investment purposesDollar
    
    
    2,608.8
    
    
    
    974.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,582.8Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0
    (1)Held for trading purposesPesos
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.2Dollar
    
    
    26.4
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    15.6
    
    
    
    11.0Securities without QuotationPesos
    
    
    433.5
    
    
    
    714.1
    
    
    
    
    
    
    
    
    
    
    
    60.3
    
    
    
    1,087.3Instruments issued by the Argentine Central BankPesos
    
    
    119.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119.5Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.8
    (1)Total Government Securities
    
    
    3,188.3
    
    
    
    1,688.1
    
    
    
    
    
    
    
    0.3
    
    
    
    75.9
    
    
    
    4,832.6Corporate Equity Securities (Quoted)
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Total Government and Corporate Securities
    
    
    3,188.6
    
    
    
    1,688.1
    
    
    
    
    
    
    
    0.3
    
    
    
    75.9
    
    
    
    4,832.9
 (1)
    
    Delivered as collateral.
  
    
    The total amount of Boden 2012 Bonds (net position in Boden 2012 Bonds
including the Boden 2012 Bonds to be acquired), was Ps.3,984.2 million (face value US$
1,638.2 million). This total comprises, holdings of Boden 2012 Bonds recorded as
government securities held for investment purposes, for Ps.2,608.8 million (face value
US$ 1,107.8 million), Boden 2012 Bonds held for investment purposes, but sold under
repurchase agreements, for Ps.974.0 million (face value US$ 413.6 million), and Boden
2012 Bonds to be acquired corresponding to the Hedge Bond, for Ps.401.4 million (face
value US$ 116.8 million), recorded under Other Receivables Resulting from Financial
Intermediation. The market value of our position in Boden 2012 Bonds (face
value US$ 1,638.2 million) was Ps.3,781.9 million. Of this amount, Ps.3,395.0 million
corresponded to the received Compensatory Bond
 -44-




---



##### Table of Contents



(including interest accrued) and the difference corresponded to the Hedge Bond to be
acquired, which amount includes the amortization and interest coupons accrued and not
perceived.
    
    The market value of our position in Bogar Bonds was Ps.337.3 million.
    
    Our holdings of Lebac and Nobac were marked to market.
    
    The market value of our position in Discount Bonds in pesos (and GDP-Linked
Units) was Ps.479.7 million.
 Valuation
   
      -45-




---



##### Table of Contents



January
    
    February
    
    March
    
    April
    
    May
    
    June
    
    July
    
    August
    
    Sept.
    
    October
    
    Nov.
    
    Dec.2003
    
    
    
    
    
    
    
    
    
    
    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%.
   Remaining Maturity and Weighted-Average Yield
  -46-




---



##### Table of Contents



Maturity YieldMaturing after 1Maturing
    
    
    Year but within 5
    
    
    Maturing after 5 Years
    
    
    Maturingwithin 1 Year
    
    
    Years
    
    
    but within 10 Years
    
    
    after 10 YearsTotal Book
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    Book
    
    
    
    
    
    
    BookValue
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)
    
    
    Value
    
    
    Yield(1)(in millions of pesos)Government SecuritiesHeld for Trading and BrokeragePurposes (carried at market value)Pesos
    
    
    0.1
    
    
    
    
    
    
    
    3.4
    %
    
    
    0.1
    
    
    
    5.9
    %
    
    
    
    
    
    
    7.4
    %
    
    
    
    
    
    
    Dollars
    
    
    26.4
    
    
    
    4.4
    
    
    
    7.6
    %
    
    
    17.6
    
    
    
    7.6
    %
    
    
    4.4
    
    
    
    7.6
    %
    
    
    
    
    
    
    Held for Investment (carried at
amortized cost)Dollars
    
    
    2,608.8
    
    
    
    434.8
    
    
    
    7.6
    %
    
    
    1,739.2
    
    
    
    7.6
    %
    
    
    434.8
    
    
    
    7.6
    %
    
    
    
    
    
    
    Instrument Issued by Argentine
Central BankPesos
    
    
    119.5
    
    
    
    92.8
    
    
    
    12.1
    %
    
    
    26.7
    
    
    
    12.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Securities Without QuotationPesos
    
    
    433.5
    
    
    
    22.6
    
    
    
    5.0
    %
    
    
    110.9
    
    
    
    5.0
    %
    
    
    229.9
    
    
    
    5.0
    %
    
    
    70.1
    
    
    
    5.0
    %Total Government Securities
    
    
    3,188.3
    
    
    
    554.6
    
    
    
    8.2
    %
    
    
    1,894.5
    
    
    
    7.5
    %
    
    
    669.1
    
    
    
    6.7
    %
    
    
    70.1
    
    
    
    Corporate Debt Securities
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    10.4
    %Total Portfolio
    
    Ps.
    3,188.6
    
    
    Ps.
    554.6
    
    
    
    8.2
    %
    
    Ps.
    1,894.5
    
    
    
    7.5
    %
    
    Ps.
    669.1
    
    
    
    6.7
    %
    
    Ps.
    70.4
    
    
    
    0.1
    %
 (1)
    
    Effective yield based on December 31, 2006 quoted market values.
 Loan Portfolio
  As of December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in millions ofFebruary 28,2003, constant(in millions of pesos )

    pesos)Principal and InterestNon-Financial Public Sector
    
    Ps.
    2,690.6
    
    
    Ps.
    5,187.5
    
    
    Ps.
    4,513.7
    
    
    Ps.
    4,277.7
    
    
    Ps.
    7,634.7Local Financial Sector
    
    
    311.6
    
    
    
    128.2
    
    
    
    150.5
    
    
    
    194.7
    
    
    
    134.8Non-Financial Private Sector and Residents Abroad (1)Advances
    
    
    346.3
    
    
    
    223.6
    
    
    
    199.8
    
    
    
    219.1
    
    
    
    227.0Notes
    
    
    2,143.7
    
    
    
    1,836.9
    
    
    
    1,099.2
    
    
    
    1,280.1
    
    
    
    1,544.3Mortgage Loans
    
    
    688.0
    
    
    
    503.4
    
    
    
    623.9
    
    
    
    719.6
    
    
    
    864.0Pledge Loans
    
    
    67.1
    
    
    
    121.1
    
    
    
    92.9
    
    
    
    54.6
    
    
    
    191.5Personal Loans
    
    
    563.2
    
    
    
    258.0
    
    
    
    58.2
    
    
    
    55.2
    
    
    
    120.0Credit-Card Loans
    
    
    2,458.6
    
    
    
    1,732.1
    
    
    
    1,105.4
    
    
    
    818.8
    
    
    
    585.0Placements in Correspondent Banks
    
    
    608.0
    
    
    
    212.9
    
    
    
    379.2
    
    
    
    172.4
    
    
    
    158.3Other Loans
    
    
    794.8
    
    
    
    599.8
    
    
    
    393.9
    
    
    
    325.7
    
    
    
    251.4Accrued Interest, Adjustment and Quotation Differences
Receivable
    
    
    155.0
    
    
    
    146.8
    
    
    
    414.4
    
    
    
    523.1
    
    
    
    608.5Documented Interest
    
    
    (33.7
    )
    
    
    (14.7
    )
    
    
    (5.3
    )
    
    
    (2.5
    )
    
    
    (10.8
    )Total Non-Financial Private-Sector and Residents Abroad
    
    Ps.
    7,791.0
    
    
    Ps.
    5,619.9
    
    
    Ps.
    4,361.6
    
    
    Ps.
    4,166.1
    
    
    Ps.
    4,539.2Total Gross Loans
    
    Ps.
    10,793.2
    
    
    Ps.
    10,935.6
    
    
    Ps.
    9,025.8
    
    
    Ps.
    8,638.5
    
    
    Ps.
    12,308.7Allowance for Loan Losses
    
    
    (327.0
    )
    
    
    (427.9
    )
    
    
    (632.6
    )
    
    
    (1,177.3
    )
    
    
    (1,681.8
    )
 -47-




---



##### Table of Contents



As of December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in millions ofFebruary 28,2003, constant(in millions of pesos )

    pesos)Total Loans
    
    Ps.
    10,466.2
    
    
    Ps.
    10,507.7
    
    
    Ps.
    8,393.2
    
    
    Ps.
    7,461.2
    
    
    Ps.
    10,626.9Loans with GuaranteesWith Preferred Guarantees (2) (3)
    
    Ps.
    1,076.2
    
    
    Ps.
    838.5
    
    
    Ps.
    1,190.0
    
    
    Ps.
    1,228.8
    
    
    Ps.
    9,280.5Other Guarantees (3)
    
    
    4,103.6
    
    
    
    6,317.3
    
    
    
    5,235.8
    
    
    
    5,163.0
    
    
    
    523.0Total Loans with Guarantees
    
    Ps.
    5,179.8
    
    
    Ps.
    7,155.8
    
    
    Ps.
    6,425.8
    
    
    Ps.
    6,391.8
    
    
    Ps.
    9,803.5
 (1)
    
    Categories of above loans include:- Advances: short-term obligations drawn on by customers through overdrafts.- 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 Cards Loans: loans granted through credit cards to credit card holders.- Placements in correspondent banks: 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.
     -48-




---



##### Table of Contents



Loans by Type of Borrower
  As of December 31,2006
    
    
    2005
    
    
    2004Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total(in millions of pesos )Corporate
    
    Ps.
    1,534.7
    
    
    
    14.22
    %
    
    Ps.
    1,412.9
    
    
    
    12.92
    %
    
    Ps.
    1,271.9
    
    
    
    14.09
    %Middle-Market Companies
    
    
    2,521.9
    
    
    
    23.37
    
    
    
    1,899.9
    
    
    
    17.37
    
    
    
    1,195.2
    
    
    
    13.24Commercial Loans
    
    
    4,056.6
    
    
    
    37.59
    
    
    
    3,312.8
    
    
    
    30.29
    
    
    
    2,467.1
    
    
    
    27.33Individuals
    
    
    3,120.6
    
    
    
    28.91
    
    
    
    2,091.6
    
    
    
    19.13
    
    
    
    1,512.6
    
    
    
    16.76Financial Sector (1)
    
    
    925.4
    
    
    
    8.57
    
    
    
    343.7
    
    
    
    3.14
    
    
    
    532.4
    
    
    
    5.90Non-Financial Public Sector
    
    
    2,690.6
    
    
    
    24.93
    
    
    
    5,187.5
    
    
    
    47.44
    
    
    
    4,513.7
    
    
    
    50.01Other Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total(2)
    
    Ps.
    10,793.2
    
    
    
    100.00
    %
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    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 31,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of pesos, except percentages)Financial Sector(1)
    
    Ps.
    925.4
    
    
    
    8.57
    %
    
    Ps.
    343.7
    
    
    
    3.14
    %
    
    Ps.
    532.4
    
    
    
    5.90
    %ServicesNon-Financial Public Sector
    
    
    2,690.6
    
    
    
    24.93
    
    
    
    5,187.5
    
    
    
    47.44
    
    
    
    4,513.7
    
    
    
    50.01Comunic., Transportation Health and Others
    
    
    517.2
    
    
    
    4.79
    
    
    
    409.7
    
    
    
    3.75
    
    
    
    339.0
    
    
    
    3.76Electricity, Gas, Water Supply and Sewage
Services
    
    
    234.8
    
    
    
    2.18
    
    
    
    154.2
    
    
    
    1.41
    
    
    
    134.3
    
    
    
    1.49Other Financial Services
    
    
    35.7
    
    
    
    0.33
    
    
    
    83.5
    
    
    
    0.76
    
    
    
    46.9
    
    
    
    0.52Total
    
    
    3,478.3
    
    
    
    32.23
    
    
    
    5,834.9
    
    
    
    53.36
    
    
    
    5,033.9
    
    
    
    55.78Primary ProductsAgriculture and Livestock
    
    
    971.8
    
    
    
    9.00
    
    
    
    768.3
    
    
    
    7.02
    
    
    
    518.6
    
    
    
    5.75Fishing, Forestry and Mining
    
    
    29.8
    
    
    
    0.28
    
    
    
    11.9
    
    
    
    0.11
    
    
    
    69.3
    
    
    
    0.77Total
    
    
    1001.6
    
    
    
    9.28
    
    
    
    780.2
    
    
    
    7.13
    
    
    
    587.9
    
    
    
    6.52Consumer
    
    
    2,977.6
    
    
    
    27.59
    
    
    
    1,959.4
    
    
    
    17.92
    
    
    
    1,435.4
    
    
    
    15.90Retail Trade
    
    
    524.1
    
    
    
    4.86
    
    
    
    435.8
    
    
    
    3.99
    
    
    
    287.7
    
    
    
    3.19
 -49-




---



##### Table of Contents



As of December 31,2006
    
    
    2005
    
    
    2004% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % ofAmount
    
    
    Total
    
    
    Amount
    
    
    Total
    
    
    Amount
    
    
    Total(in millions of pesos, except percentages)Wholesale Trade
    
    
    333.7
    
    
    
    3.09
    
    
    
    189.0
    
    
    
    1.73
    
    
    
    97.5
    
    
    
    1.08Construction
    
    
    309.7
    
    
    
    2.87
    
    
    
    388.3
    
    
    
    3.55
    
    
    
    372.8
    
    
    
    4.13ManufacturingFoodstuffs
    
    
    406.1
    
    
    
    3.76
    
    
    
    386.0
    
    
    
    3.53
    
    
    
    233.9
    
    
    
    2.59Transportation Materials
    
    
    100.2
    
    
    
    0.93
    
    
    
    68.3
    
    
    
    0.62
    
    
    
    41.2
    
    
    
    0.46Chemicals and Oil
    
    
    177.4
    
    
    
    1.64
    
    
    
    24.8
    
    
    
    0.23
    
    
    
    124.6
    
    
    
    1.38Manufacturing Industries
    
    
    545.7
    
    
    
    5.06
    
    
    
    492.0
    
    
    
    4.50
    
    
    
    229.7
    
    
    
    2.54Total
    
    
    1229.4
    
    
    
    11.39
    
    
    
    971.1
    
    
    
    8.88
    
    
    
    629.4
    
    
    
    6.97Other Loans
    
    
    13.4
    
    
    
    0.12
    
    
    
    33.2
    
    
    
    0.30
    
    
    
    48.8
    
    
    
    0.53Total(2)
    
    Ps.
    10,793.2
    
    
    
    100.00
    %
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    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, 2006(in millions of pesos)Non-Financial Public Sector(1)
    
    
    1.4
    
    
    
    106.0
    
    
    
    2.7
    
    
    
    2,163.6
    
    
    
    415.3
    
    
    
    1.6
    
    
    
    2,690.6Financial Sector(1)
    
    
    306.1
    
    
    
    4.5
    
    
    
    1.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    311.7Private Sector and Residents Abroad
    
    
    4,887.0
    
    
    
    1,114.4
    
    
    
    389.7
    
    
    
    800.0
    
    
    
    364.1
    
    
    
    235.7
    
    
    
    7,790.9- Advances
    
    
    246.2
    
    
    
    97.2
    
    
    
    2.6
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    346.4- Promissory Notes
    
    
    623.1
    
    
    
    795.4
    
    
    
    184.7
    
    
    
    289.8
    
    
    
    179.8
    
    
    
    70.9
    
    
    
    2,143.7- Mortgage Loans
    
    
    23.1
    
    
    
    52.3
    
    
    
    68.2
    
    
    
    226.8
    
    
    
    153.0
    
    
    
    164.6
    
    
    
    688.0- Pledge Loans
    
    
    3.6
    
    
    
    10.0
    
    
    
    12.1
    
    
    
    35.9
    
    
    
    5.5
    
    
    
    
    
    
    
    67.1- Personal Loans
    
    
    34.3
    
    
    
    147.1
    
    
    
    120.0
    
    
    
    238.9
    
    
    
    22.9
    
    
    
    
    
    
    
    563.2- Credit-Card Loans
    
    
    2,458.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,458.6- Other Loans
    
    
    1,377.4
    
    
    
    12.4
    
    
    
    2.1
    
    
    
    8.2
    
    
    
    2.9
    
    
    
    0.2
    
    
    
    1,403.2- Accrued Interest and Quotation
Differences Receivable (1)
    
    
    155.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155.0- (Documented Interest)
    
    
    (33.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33.7
    )- (Unallocated Colletions)
    
    
    (0.6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Allowance for Loan Losses(2)
    
    
    (327.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (327.0
    )Total Loans, Net
    
    Ps.
    4,867.5
    
    
    Ps.
    1,224.9
    
    
    Ps.
    393.5
    
    
    Ps.
    2,963.6
    
    
    Ps.
    779.4
    
    
    Ps.
    237.3
    
    
    Ps.
    10,466.2
 (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.
 -50-




---



##### Table of Contents



Interest Rate Sensitivity of Outstanding Loans as of December 31, 2006
  (in millions of pesos)
    
    As a % of Total LoansVariable Rate (1)(2)Pesos
    
    Ps.
    5,625.7
    
    
    
    59.66
    %Dollars
    
    
    907.3
    
    
    
    9.62Total
    
    Ps.
    6,533.0
    
    
    
    69.28
    %Fixed Rate (2)(3)Pesos
    
    Ps.
    1,966.7
    
    
    
    20.86
    %Dollars
    
    
    929.4
    
    
    
    9.86Total
    
    Ps.
    2,896.1
    
    
    
    30.72
    %Past Due LoansPesos
    
    Ps.
    428.5
    
    
    
    4.54
    %Dollars
    
    
    52.4
    
    
    
    0.56Total
    
    Ps.
    480.9
    
    
    
    5.10
    %
 (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
     -51-




---



##### Table of Contents



Retail Credit
       Corporate Credit
    -52-




---



##### Table of Contents



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).
      -
    
    Up to Ps.3.0 million: credit granting is proposed by the line business
officers and must be approved by officers of the Corporate Credit
Department in accordance with pre-established credit authority levels.-
    
    Over Ps.3.0 million and up to Ps.5.0 million: credit granting
proposals are jointly approved by the manager of the Credit Division
and the manager of the business department to which the account
belongs.-
    
    Over Ps.5.0 million: credit granting operations must be approved by
the Board of Directors Committee, with the participation of: (i) one
or more directors; (ii) the manager of the Credit Division; and (iii)
the manager of the Wholesale Banking Division. The participation of
the managers of the business departments depends on which of these
departments manages the account subject to approval.
  Policy for Requiring Collateral
  -53-




---



##### Table of Contents



Argentine Central Banks Loan Classification and Loan Loss Provisions
 General
        -54-




---



##### 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 have enough cash flows to repay the new
debt (this option was effective until June 2006).-
    
    the reduction in the requirements for 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-accrual status in the financial system, thereby restricting this financing assistance to pre-established percentages
according to the worst situation a customer registers in the financial system.
 Loan Classification
  -55-




---



##### Table of Contents



Loan Classification
    
    Description(a)
    
    Commercial Portfolio1. Normal
    
    Borrower can easily service all financial obligations; shows strong cash flow, liquid
current financial situation, adequate financial structure, punctual payment record, capable
management, timely and precise available information and satisfactory internal controls.
Borrower is determined to be in the top 50.0% of an industry that is performing well and has a
good outlook.2. With Special Follow-Up
    
    Cash flow analysis indicates debt can be serviced, with the
possibility that if not closely observed, future payment capacity could be impaired.This category is divided into two
subcategories:(2.a). Under observation;(2.b). Under negotiation or under agreements
to refinance.3. With Problems
    
    Cash flow analysis evidences problems in normal servicing of existing debt,
such that if the problems are not solved, they may result in some loss.4. High Risk of Insolvency
    
    Cash flow analysis demonstrates that full repayment of the
borrowers obligations is highly improbable.5. Uncollectible
    
    Debts in this category are considered total losses. Although these assets
could have a possibility of recovery under certain future circumstances, lack of
collectibility is evident as of the date of analysis. Includes loans to insolvent or bankrupt
borrowers.6. Uncollectible due to Technical Reasons
    
    Loans to borrowers indicated by the Argentine Central
Bank to be in arrears to any liquidated or bankrupt financial entity. Also includes loans to
foreign banks and other financial institutions which 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.(b)
    
    Consumer Portfolio1. Normal Performance
    
    Current Loans and Loans that are up to 31 days past due on principal
and/or interest, including loans that are current.2. Inadequate Performance
    
    Debt payment is occasionally delinquent, with arrears from 32 to 90
days.3. Deficient Performance
    
    Debt is in arrears at least 91 days and up to 180 days.4. Difficult Collection
    
    Judicial proceedings demanding payment have been initiated against the
borrower, or the borrower is delinquent
 -56-




---



##### Table of Contents



Loan Classification
    
    Descriptionwith arrears greater than 180 days and up to one
year past due.5. Uncollectible
    
    Loans to insolvent or bankrupt borrowers, or borrowers subject to judicial
proceedings, with little or no possibility of collection, or in 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
    
    UnsecuredCategoryNormal/ Normal Performance
    
    
    1.0
    %
    
    
    1.0
    %With Special Follow Up and Inadequate PerformanceInadequate Performance  Under Observation
    
    
    3.0
    
    
    
    5.0Inadequate Performance  Under Negotiation or Agreement to Refinance
    
    
    6.0
    
    
    
    12.0With Problems and Deficient Performance
    
    
    12.0
    %
    
    
    25.0
    %High Risk of Insolvency and Difficult Collection
    
    
    25.0
    
    
    
    50.0Uncollectible
    
    
    50.0
    
    
    
    100.0Uncollectible Due to Technical Reasons
    
    
    100.0
    
    
    
    100.0
  General Provisions
  .
 -57-




---



##### Table of Contents



Classification of the Loan Portfolio based on Argentine Central Bank Regulations
  As of December 31, 2006Amounts Not YetDue(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    10,139.5
    
    
    
    96.23
    %
    
    
    
    
    
    
    
    
    
    Ps.
    10,139.5
    
    
    
    93.94
    %With Special Follow-up and Inadequate Performance
    
    
    374.6
    
    
    
    3.55
    
    
    
    
    
    
    
    
    
    
    
    374.6
    
    
    
    3.47With Problems and Deficient Performance
    
    
    12.2
    
    
    
    0.12
    
    
    
    30.0
    
    
    
    11.69
    
    
    
    42.2
    
    
    
    0.39High Risk of Insolvency and Difficult Collection
    
    
    10.2
    
    
    
    0.10
    
    
    
    192.7
    
    
    
    75.07
    
    
    
    202.9
    
    
    
    1.88Uncollectible
    
    
    
    
    
    
    
    
    
    
    28.8
    
    
    
    11.22
    
    
    
    28.8
    
    
    
    0.27Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    2.02
    
    
    
    5.2
    
    
    
    0.05Total
    
    Ps.
    10,536.5
    
    
    
    100.00
    %
    
    Ps.
    256.7
    
    
    
    100.00
    %
    
    Ps.
    10,793.2
    
    
    
    100.00
    %
 As of December 31, 2005Amounts Not YetDue(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    10,168.8
    
    
    
    95.22
    %
    
    
    
    
    
    
    
    
    
    Ps.
    10,168.8
    
    
    
    92.99
    %With Special Follow-up and Inadequate Performance
    
    
    384.4
    
    
    
    3.60
    
    
    
    
    
    
    
    
    
    
    
    384.4
    
    
    
    3.51With Problems and Deficient Performance
    
    
    120.4
    
    
    
    1.13
    
    
    
    206.9
    
    
    
    80.82
    
    
    
    327.3
    
    
    
    2.99High Risk of Insolvency and Difficult Collection
    
    
    6.0
    
    
    
    0.05
    
    
    
    23.0
    
    
    
    8.98
    
    
    
    29.0
    
    
    
    0.27Uncollectible
    
    
    
    
    
    
    
    
    
    
    22.8
    
    
    
    8.91
    
    
    
    22.8
    
    
    
    0.21Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    1.29
    
    
    
    3.3
    
    
    
    0.03Total
    
    Ps.
    10,679.6
    
    
    
    100.00
    %
    
    Ps.
    256.0
    
    
    
    100.00
    %
    
    Ps.
    10,935.6
    
    
    
    100.00
    %
 As of December 31, 2004Amounts Not YetDue(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    7,764.4
    
    
    
    90.53
    %
    
    
    
    
    
    
    
    
    
    Ps.
    7,764.4
    
    
    
    86.02
    %With Special Follow-up and Inadequate Performance
    
    
    562.5
    
    
    
    6.56
    
    
    
    
    
    
    
    
    
    
    
    562.5
    
    
    
    6.23With Problems and Deficient Performance
    
    
    197.1
    
    
    
    2.30
    
    
    Ps.
    251.7
    
    
    
    56.06
    %
    
    
    448.8
    
    
    
    4.97High Risk of Insolvency and Difficult Collection
    
    
    52.8
    
    
    
    0.61
    
    
    
    105.8
    
    
    
    23.56
    
    
    
    158.6
    
    
    
    1.76Uncollectible
    
    
    
    
    
    
    
    
    
    
    85.5
    
    
    
    19.04
    
    
    
    85.5
    
    
    
    0.95Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    6.0
    
    
    
    1.34
    
    
    
    6.0
    
    
    
    0.07Total
    
    Ps.
    8,576.8
    
    
    
    100.00
    %
    
    Ps.
    449.0
    
    
    
    100.00
    %
    
    Ps.
    9,025.8
    
    
    
    100.00
    %
 As of December 31, 2003Amounts Not YetDue(1)
    
    Amounts Past Due
    
    Total Loans(in millions of pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    6,531.3
    
    
    
    85.63
    %
    
    
    
    
    
    
    
    
    
    Ps.
    6,531.3
    
    
    
    75.61
    %With Special Follow-up and Inadequate Performance
    
    
    807.9
    
    
    
    10.59
    
    
    
    
    
    
    
    
    
    
    
    807.9
    
    
    
    9.35With Problems and Deficient Performance
    
    
    237.9
    
    
    
    3.12
    
    
    Ps.
    426.5
    
    
    
    42.19
    %
    
    
    664.4
    
    
    
    7.69High Risk of Insolvency and Difficult Collection
    
    
    50.4
    
    
    
    0.66
    
    
    
    245.4
    
    
    
    24.27
    
    
    
    295.8
    
    
    
    3.42Uncollectible
    
    
    
    
    
    
    
    
    
    
    324.9
    
    
    
    32.14
    
    
    
    324.9
    
    
    
    3.76Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    14.2
    
    
    
    1.40
    
    
    
    14.2
    
    
    
    0.17Total
    
    Ps.
    7,627.5
    
    
    
    100.00
    %
    
    Ps.
    1,011.0
    
    
    
    100.00
    %
    
    Ps.
    8,638.5
    
    
    
    100.00
    %
 -58-




---



##### Table of Contents



As of December 31, 2002Amounts Not YetDue(1)
    
    Amounts Past Due
    
    Total Loans(In millions of February 28, 2003, constant pesos, except percentages)Loan Portfolio ClassificationNormal and Normal Performance
    
    Ps.
    9,758.0
    
    
    
    88.02
    %
    
    
    
    
    
    
    
    
    
    Ps.
    9,758.0
    
    
    
    79.28
    %With Special Follow-up and Inadequate Performance
    
    
    940.5
    
    
    
    8.48
    
    
    
    
    
    
    
    
    
    
    
    940.5
    
    
    
    7.64With Problems and Deficient Performance
    
    
    321.5
    
    
    
    2.90
    
    
    
    556.3
    
    
    
    45.50
    %
    
    
    877.8
    
    
    
    7.13High Risk of Insolvency and Difficult Collection
    
    
    66.1
    
    
    
    0.60
    
    
    
    453.4
    
    
    
    37.09
    
    
    
    519.5
    
    
    
    4.22Uncollectible
    
    
    
    
    
    
    
    
    
    
    198.2
    
    
    
    16.21
    
    
    
    198.2
    
    
    
    1.61Uncollectible Due to Technical Reasons
    
    
    
    
    
    
    
    
    
    
    14.7
    
    
    
    1.20
    
    
    
    14.7
    
    
    
    0.12Total
    
    Ps.
    11,086.1
    
    
    
    100.00
    %
    
    Ps.
    1,222.6
    
    
    
    100.00
    %
    
    Ps.
    12,308.7
    
    
    
    100.00
    %
  Analysis of Amounts Past Due and Non-Accrual Loans
  As of December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in millions ofFebruary 28,2003, constantpesos, except(in millions of pesos, except ratios)
    ratios)Total Loans(1)
    
    Ps.
    10,793.2
    
    
    
    
    
    
    Ps.
    10,935.6
    
    
    Ps.
    9,025.8
    
    
    Ps.
    8,638.5
    
    
    Ps.
    12,308.7Non-Accrual Loans(2)With Preferred Guarantees
    
    
    40.2
    
    
    
    
    
    
    
    58.4
    
    
    
    383.7
    
    
    
    496.5
    
    
    
    610.8With Other Guarantees
    
    
    5.1
    
    
    
    
    
    
    
    6.5
    
    
    
    67.4
    
    
    
    275.8
    
    
    
    282.9Without Guarantees
    
    
    233.8
    
    
    
    
    
    
    
    317.5
    
    
    
    247.8
    
    
    
    527.0
    
    
    
    716.5Total Non-Accrual Loans(2)
    
    Ps.
    279.1
    
    
    
    
    
    
    Ps.
    382.4
    
    
    Ps.
    698.9
    
    
    Ps.
    1,299.3
    
    
    Ps.
    1,610.2Past Due Loan PortfolioNon-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Financial Private Sector and Residents AbroadAdvances
    
    
    20.9
    
    
    
    
    
    
    
    14.1
    
    
    
    29.9
    
    
    
    93.9
    
    
    
    64.9Notes
    
    
    135.2
    
    
    
    
    
    
    
    191.6
    
    
    
    253.1
    
    
    
    528.2
    
    
    
    741.0Mortgage Loans
    
    
    28.4
    
    
    
    
    
    
    
    14.6
    
    
    
    115.1
    
    
    
    211.7
    
    
    
    217.2Pledge Loans
    
    
    0.3
    
    
    
    
    
    
    
    0.5
    
    
    
    4.2
    
    
    
    28.3
    
    
    
    35.7Personal Loans
    
    
    4.1
    
    
    
    
    
    
    
    0.8
    
    
    
    4.2
    
    
    
    110.2
    
    
    
    58.6Credit-Card Loans
    
    
    62.7
    
    
    
    
    
    
    
    33.4
    
    
    
    24.9
    
    
    
    30.6
    
    
    
    100.4Placements with Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 -59-




---



##### Table of Contents



As of December 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in millions ofFebruary 28,2003, constantpesos, except(in millions of pesos, except ratios)
    ratios)Other Loans
    
    
    5.1
    
    
    
    
    
    
    
    1.0
    
    
    
    17.6
    
    
    
    8.1
    
    
    
    4.8Total Past Due Loans
    
    Ps.
    256.7
    
    
    
    
    
    
    Ps.
    256.0
    
    
    Ps.
    449.0
    
    
    Ps.
    1,011.0
    
    
    Ps.
    1,222.6Past Due LoansWith Preferred Guarantees
    
    
    28.9
    
    
    
    
    
    
    
    16.1
    
    
    
    308.0
    
    
    
    415.7
    
    
    
    449.3With Other Guarantees
    
    
    4.3
    
    
    
    
    
    
    
    4.9
    
    
    
    11.4
    
    
    
    235.6
    
    
    
    172.5Without Guarantees
    
    
    223.5
    
    
    
    
    
    
    
    235.0
    
    
    
    129.6
    
    
    
    359.7
    
    
    
    600.8Total Past Due Loans
    
    Ps.
    256.7
    
    
    
    
    
    
    Ps.
    256.0
    
    
    Ps.
    449.0
    
    
    Ps.
    1,011.0
    
    
    Ps.
    1,222.6Allowance for Loan Losses
    
    Ps.
    327.0
    
    
    
    
    
    
    Ps.
    427.9
    
    
    Ps.
    632.6
    
    
    Ps.
    1,177.3
    
    
    Ps.
    1,681.8Ratios (%)As a % of Total Loans:- Total Past Due Loans
    
    
    2.38
    
    
    
    
    
    
    
    2.34
    
    
    
    4.97
    
    
    
    11.70
    
    
    
    9.93- Past Due Loans with Preferred Guarantees
    
    
    0.27
    
    
    
    
    
    
    
    0.15
    
    
    
    3.40
    
    
    
    4.81
    
    
    
    3.65- Past Due Loans with Other Guarantees
    
    
    0.04
    
    
    
    
    
    
    
    0.04
    
    
    
    0.13
    
    
    
    2.73
    
    
    
    1.40- Past Due Unsecured Amounts
    
    
    2.07
    
    
    
    
    
    
    
    2.15
    
    
    
    1.44
    
    
    
    4.16
    
    
    
    4.88- Non-Accrual Loans (2)
    
    
    2.59
    
    
    
    
    
    
    
    3.50
    
    
    
    7.74
    
    
    
    15.04
    
    
    
    13.08- Non-Accrual Loans (2) (Excluding Interbank Loans)
    
    
    2.80
    
    
    
    
    
    
    
    3.57
    
    
    
    8.10
    
    
    
    15.35
    
    
    
    13.25Non-Accrual Loans (2) as a Percentage of Loans to
the Private Sector
    
    
    3.49
    
    
    
    
    
    
    
    6.78
    
    
    
    15.93
    
    
    
    31.16
    
    
    
    35.47Allowance for Loan Losses as a % of:- Total Loans
    
    
    3.03
    
    
    
    
    
    
    
    3.91
    
    
    
    7.01
    
    
    
    13.63
    
    
    
    13.66- Total Loans Excluding Interbank Loans
    
    
    3.27
    
    
    
    
    
    
    
    4.00
    
    
    
    7.33
    
    
    
    13.91
    
    
    
    13.84- Total Non-Accrual Loans (2)
    
    
    117.16
    
    
    
    
    
    
    
    111.90
    
    
    
    90.51
    
    
    
    90.61
    
    
    
    104.45Non-Accrual Loans with Guarantees as a Percentage
of Non-Accrual Loans (2)
    
    
    16.23
    
    
    
    
    
    
    
    16.97
    
    
    
    64.54
    
    
    
    59.44
    
    
    
    55.50Non-Accrual Loans as a Percentage of Total Past Due Loans
    
    
    108.73
    
    
    
    
    
    
    
    149.38
    
    
    
    155.66
    
    
    
    128.52
    
    
    
    131.70
 (1)
    
    Before the allowance for loan losses.(2)
    
    Non-Accrual loans are defined as those loans in the categories of: (a) consumer portfolio: defective fulfillment, difficulty in recovery,
uncollectible and uncollectible due to technical reasons; (b) commercial portfolio: with problems, high risk of insolvency, uncollectible and
uncollectible due to technical reasons.
  
    
    in the consumer portfolio: defective fulfillment, difficulty in recovery, 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 31,2006
    
    2005
    
    2004
    
    2003
    
    2002(in millions ofFebruary 28,2003, constantpesos, except(in millions of pesos)
    ratios)Interest Income
that would have
been recorded on
non-accrual loans
on which the
accrual of interest
was discontinued
    
    
    23.7
    
    
    
    45.9
    
    
    
    32.5
    
    
    
    39.9
    
    
    
    40.4Recoveries of
interest on loans
classified as
non-accrual on
which the accrual
of interest had
been discontinued
(1)
    
    
    1.2
    
    
    
    2.3
    
    
    
    1.6
    
    
    
    2.0
    
    
    
    2.0
 (1)
    
    Recorded under Miscellaneous Income.
 -60-




---



##### Table of Contents



Analysis of the Allowance for Loan Losses
  -61-




---



##### Table of Contents



Fiscal Year EndedDecember 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in millions ofFebruary 28,2003, constantpesos, except(in millions of pesos, except ratios)
    
    
    ratios)Total Loans, Average(1)
    
    Ps.
    10,851.0
    
    
    Ps.
    9,746.9
    
    
    Ps.
    11,137.9
    
    
    Ps.
    11,556.7
    
    
    Ps.
    15,262.4Allowance for Loan Losses at Beginning of Period(2)
    
    
    427.9
    
    
    
    632.6
    
    
    
    1,177.3
    
    
    
    1,681.8
    
    
    
    1,050.3Changes in the Allowance for Loan Losses during the Period (2)Provisions Charged to Income
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1
    
    
    
    1,599.5Prior Allowances Reversed
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )
    
    
    0Charge-Offs (A)
    
    
    (200.8
    )
    
    
    (174.5
    )
    
    
    (521.3
    )
    
    
    (267.3
    )
    
    
    (305.7
    )Inflation and Foreign Exchange Effect and Other Adjustments
    
    
    27.1
    
    
    
    4.9
    
    
    
    7.6
    
    
    
    (52.2
    )
    
    
    (662.3
    )Allowance for Loan Losses at End of Period
    
    Ps.
    327.0
    
    
    Ps.
    427.9
    
    
    Ps.
    632.6
    
    
    Ps.
    1,177.3
    
    
    Ps.
    1,681.8Charge to the Income Statement during the PeriodProvisions Charged to Income (2)
    
    
    105.3
    
    
    
    61.1
    
    
    
    179.3
    
    
    
    217.1
    
    
    
    1,599.5Direct Charge-Offs, Net of Recoveries (B)
    
    
    (46.4
    )
    
    
    (28.9
    )
    
    
    (101.6
    )
    
    
    (38.6
    )
    
    
    (17.2
    )Recoveries of Provisions
    
    
    (32.5
    )
    
    
    (96.2
    )
    
    
    (210.3
    )
    
    
    (402.1
    )
    
    
    0Net Charge (Benefit) to the Income Statement
    
    Ps.
    26.4
    
    
    Ps.
    (64.0
    )
    
    Ps.
    (132.6
    )
    
    Ps.
    (223.6
    )
    
    Ps.
    1,582.3Ratios (%)Charge-Offs (A+B) to Average Loans (3)
    
    
    1.42
    %
    
    
    1.49
    %
    
    
    3.77
    %
    
    
    1.98
    %
    
    
    1.89
    %Net Charge to the Income Statement to Average Loans)
    
    
    0.24
    
    
    
    (0.66
    )
    
    
    (1.19
    )
    
    
    (1.93
    )
    
    
    10.37
 (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.
 
  Allocation of the Allowance for Loan Losses
 
 -62-




---



##### Table of Contents



As of December 31,2006
    
    2005
    
    2004Amount
    
    % of  Loans
    
    Loan  Category  %
    
    Amount
    
    % of  Loans
    
    Loan  Category  %
    
    Amount
    
    % of  Loans
    
    Loan  Category  %(in millions of pesos, except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    24.93
    %
    
    
    
    
    
    
    
    
    
    
    47.44
    %
    
    
    
    
    
    
    
    
    
    
    50.01
    %Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    2.89
    
    
    
    
    
    
    
    
    
    
    
    1.17
    
    
    
    
    
    
    
    
    
    
    
    1.67Non-Financial Private
Sector and Residents
AbroadAdvances
    
    Ps.
    16.3
    
    
    
    0.15
    %
    
    
    3.21
    %
    
    Ps.
    12.3
    
    
    
    0.11
    %
    
    
    2.04
    %
    
    Ps.
    22.7
    
    
    
    0.25
    %
    
    
    2.21
    %Notes
    
    
    151.1
    
    
    
    1.40
    
    
    
    19.86
    
    
    
    186.4
    
    
    
    1.70
    
    
    
    16.80
    
    
    
    270.9
    
    
    
    3.00
    
    
    
    12.18Mortgage Loans
    
    
    25.0
    
    
    
    0.23
    
    
    
    6.37
    
    
    
    21.6
    
    
    
    0.20
    
    
    
    4.60
    
    
    
    97.6
    
    
    
    1.08
    
    
    
    6.91Pledge Loans
    
    
    0.4
    
    
    
    
    
    
    
    0.62
    
    
    
    0.5
    
    
    
    
    
    
    
    1.11
    
    
    
    3.5
    
    
    
    0.04
    
    
    
    1.03Personal Loans
    
    
    3.7
    
    
    
    0.03
    
    
    
    5.22
    
    
    
    0.9
    
    
    
    0.01
    
    
    
    2.36
    
    
    
    4.0
    
    
    
    0.04
    
    
    
    0.64Credit-Card Loans
    
    
    28.5
    
    
    
    0.26
    
    
    
    22.78
    
    
    
    14.0
    
    
    
    0.13
    
    
    
    15.84
    
    
    
    10.8
    
    
    
    0.12
    
    
    
    12.25Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    5.63
    
    
    
    
    
    
    
    
    
    
    
    1.95
    
    
    
    
    
    
    
    
    
    
    
    4.20Other
    
    
    1.0
    
    
    
    0.01
    
    
    
    8.49
    
    
    
    17.1
    
    
    
    0.16
    
    
    
    6.69
    
    
    
    32.1
    
    
    
    0.36
    
    
    
    8.90Unallocated (1)
    
    
    101.0
    
    
    
    0.95
    
    
    
    
    
    
    
    175.1
    
    
    
    1.60
    
    
    
    
    
    
    
    191.0
    
    
    
    2.12
    
    
    
    Total
    
    Ps.
    327.0
    
    
    
    3.03
    %
    
    
    100.00
    %
    
    Ps.
    427.9
    
    
    
    3.91
    %
    
    
    100.00
    %
    
    Ps.
    632.6
    
    
    
    7.01
    %
    
    
    100.00
    %
 As of December 31,2003
    
    2002Amount
    
    % of Loans
    
    Loan Category %
    
    Amount
    
    % of Loans
    
    Loan Category %(in millions of February 28, 2003, constant pesos,(in millions of pesos, except percentages)
    
    except percentages)Non-Financial Public Sector
    
    
    
    
    
    
    
    
    
    
    49.51
    %
    
    
    
    
    
    
    
    
    
    
    62.03
    %Local Financial Sector
    
    
    
    
    
    
    
    
    
    
    2.25
    
    
    
    
    
    
    
    
    
    
    
    1.09Non-Financial Private
Sector and Residents
AbroadAdvances
    
    Ps.
    78.8
    
    
    
    0.91
    %
    
    
    2.54
    
    
    Ps.
    40.1
    
    
    
    0.33
    %
    
    
    1.84Notes
    
    
    441.9
    
    
    
    5.12
    
    
    
    14.82
    
    
    
    569.0
    
    
    
    4.62
    
    
    
    12.55Mortgage Loans
    
    
    142.6
    
    
    
    1.65
    
    
    
    8.33
    
    
    
    122.1
    
    
    
    0.99
    
    
    
    7.02Pledge Loans
    
    
    22.7
    
    
    
    0.27
    
    
    
    0.63
    
    
    
    24.3
    
    
    
    0.20
    
    
    
    1.56Personal Loans
    
    
    157.6
    
    
    
    1.82
    
    
    
    0.64
    
    
    
    48.4
    
    
    
    0.39
    
    
    
    0.97Credit-Card Loans
    
    
    14.5
    
    
    
    0.17
    
    
    
    9.48
    
    
    
    55.6
    
    
    
    0.45
    
    
    
    4.75Placements in
Correspondent Banks
    
    
    
    
    
    
    
    
    
    
    2.00
    
    
    
    
    
    
    
    
    
    
    
    1.29Other
    
    
    5.6
    
    
    
    0.06
    
    
    
    9.80
    
    
    
    
    
    
    
    
    
    
    
    6.90Unallocated (1)
    
    
    313.6
    
    
    
    3.63
    
    
    
    
    
    
    
    822.3
    
    
    
    6.68
    
    
    
    Total
    
    Ps.
    1,177.3
    
    
    
    13.63
    %
    
    
    100.00
    %
    
    Ps.
    1,681.8
    
    
    
    13.66
    %
    
    
    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
  -63-




---



##### Table of Contents



Fiscal Year EndedDecember 31,2006
    
    2005
    
    2004(in millions of pesos)Charge-offs by TypeAdvances
    
    Ps.
    2.1
    
    
    Ps.
    12.5
    
    
    Ps.
    20.0NotesPromissory Notes
    
    
    155.2
    
    
    
    47.7
    
    
    
    331.3Discounted and Purchased Bills
    
    
    
    
    
    
    2.9
    
    
    
    Mortgage Loans
    
    
    6.4
    
    
    
    57.6
    
    
    
    60.5Pledge Loans
    
    
    0.2
    
    
    
    3.5
    
    
    
    20.4Personal Loans
    
    
    1.5
    
    
    
    1.1
    
    
    
    12.5Credit-Card LoansBanco Galicia
    
    
    3.0
    
    
    
    8.8
    
    
    
    5.5Regional Credit-Card Companies
    
    
    31.9
    
    
    
    22.0
    
    
    
    9.3Other Loans
    
    
    0.5
    
    
    
    18.4
    
    
    
    61.8Total
    
    Ps.
    200.8
    
    
    Ps.
    174.5
    
    
    Ps.
    521.3
    Foreign Outstandings
 
  -
    
    a Ps.1,079.7 million claim against a United Kingdom financial
institution (4.57% of our total assets), of which Ps.723.9 million
represented the right to receive Discount Bonds in connection with
agreements to repurchase such bonds entered into with such bank; and-
    
    Ps.842.1 million of placements with United States financial
institutions (3.56% of our total assets), of which Ps.608.1 million
represented an overnight placement and the remaining amount several
short-term placements.
  -
    
    a Ps.349.5 million claim against a United Kingdom financial
institution (1.36% of our total assets), of which Ps.347.8 million
represented the right to receive Boden 2012 Bonds in connection with
agreements to repurchase such bonds entered into with such bank; and-
    
    Ps.238.6 million of placements with United States financial
institutions (0.93% of our total assets), of which Ps.212.9 million
represented an overnight placement and the remaining amount several
short-term placements.
  -64-




---



##### Table of Contents



-
    
    a Ps.394.4 million claim against a United Kingdom financial
institution (1.67% of our total assets), corresponding to the right to
receive Boden 2012 Bonds in connection with agreements to repurchase
such bonds entered into with such bank; and-
    
    Ps.196.4 million of placements with United States financial
institutions (0.83% of our total assets), of which Ps.157.4 million
represented an overnight placement and the remaining amount several
short-term placements.
  Deposits
  As of December 31,2006
    
    2005
    
    2004(in millions of pesos)Current Accounts and Other Demand Deposits
    
    Ps.
    2,011.4
    
    
    Ps.
    1,657.6
    
    
    Ps.
    1,210.3Savings Accounts
    
    
    2,589.5
    
    
    
    2,213.4
    
    
    
    1,639.5Time Deposits
    
    
    5,831.5
    
    
    
    4,261.9
    
    
    
    3,527.6Other Deposits(1)
    
    
    215.6
    
    
    
    192.9
    
    
    
    298.3Plus: Interest Payable and Differences in Quotations (2)
    
    
    131.4
    
    
    
    95.9
    
    
    
    81.2Total Deposits
    
    Ps.
    10,779.4
    
    
    Ps.
    8,421.7
    
    
    Ps.
    6,756.9
 (1)
    
    Includes among other, Reprogrammed Deposits instrumented as Cedros as well as Reprogrammed Deposits under
judicial proceedings. (2) Includes the CER adjustment.
 amparo
 amparo
   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.
    2,011.4
    
    
    
    22.0
    %
    
    
    
    
    
    
    
    
    
    Ps.
    2,011.4
    
    
    
    18.9
    %Savings Accounts
    
    
    1,941.4
    
    
    
    21.3
    
    
    Ps.
    648.1
    
    
    
    42.6
    %
    
    
    2,589.5
    
    
    
    24.3Time Deposits
    
    
    5,038.9
    
    
    
    55.2
    
    
    
    792.6
    
    
    
    52.1
    
    
    
    5,831.5
    
    
    
    54.8Maturing within 30 Days
    
    
    736.9
    
    
    
    8.1
    
    
    
    133.1
    
    
    
    8.8
    
    
    
    870.0
    
    
    
    8.2
 -65-




---



##### Table of Contents



Peso-Denominated
    
    Dollar-Denominated
    
    Total% of
    
    
    
    
    
    % of
    
    
    
    
    
    % ofAmount
    
    Total
    
    Amount
    
    Total
    
    Amount
    
    Total(in millions of pesos, except percentages)Maturing after 31 Days but within 59 Days
    
    
    1,354.2
    
    
    
    14.8
    
    
    
    146.2
    
    
    
    9.6
    
    
    
    1,500.4
    
    
    
    14.1Maturing after 60 Days but within 89 Days
    
    
    825.2
    
    
    
    9.0
    
    
    
    81.9
    
    
    
    5.4
    
    
    
    907.1
    
    
    
    8.5Maturing after 90 Days but within 179 Days
    
    
    894.8
    
    
    
    9.8
    
    
    
    139.4
    
    
    
    9.2
    
    
    
    1,034.2
    
    
    
    9.7Maturing after 180 Days but within 365 Days
    
    
    822.5
    
    
    
    9.0
    
    
    
    101.3
    
    
    
    6.7
    
    
    
    923.8
    
    
    
    8.7Maturing after 365 Days
    
    
    405.3
    
    
    
    4.5
    
    
    
    190.7
    
    
    
    12.4
    
    
    
    596.0
    
    
    
    5.6Other Deposits
    
    
    135.4
    
    
    
    1.5
    
    
    
    80.2
    
    
    
    5.3
    
    
    
    215.6
    
    
    
    2.0Maturing within 30 Days
    
    
    110.2
    
    
    
    1.2
    
    
    
    79.9
    
    
    
    5.3
    
    
    
    190.1
    
    
    
    1.8Maturing 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
    
    
    25.2
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    25.5
    
    
    
    0.2Total Deposits(1)
    
    Ps.
    9,127.1
    
    
    
    100.0
    %
    
    Ps.
    1,520.9
    
    
    
    100.0
    %
    
    Ps.
    10,648.0
    
    
    
    100.0
    %
 
 (1)
    
    Only principal. Excludes the CER adjustment amparo
    Domestic Offices
    
    Foreign Offices(in millions of pesos)Time DepositsWithin 30 Days
    
    Ps.
    424.8
    
    
    
    After 31 Days but within 59 Days
    
    
    1,017.7
    
    
    
    After 60 Days but within 89 Days
    
    
    519.2
    
    
    
    After 90 Days but within 179 Days
    
    
    664.9
    
    
    
    After 180 Days but within 365 Days
    
    
    689.3
    
    
    
    After 365 Days
    
    
    362.6
    
    
    Ps.
    139.5Total Time Deposits
    
    Ps.
    3,678.5
    
    
    Ps.
    139.5Other DepositsAfter 365 Days
    
    
    
    
    
    
    0.2Total Other Deposits
    
    
    
    
    
    
    0.2Total Deposits(1)
    
    Ps.
    3,678.5
    
    
    Ps.
    139.7
 
 (1)
    
    Only principal. Excludes the CER adjustment. -66-




---



##### Table of Contents



Return on Equity and Assets
  Fiscal Year EndedDecember 31,2006
    
    2005
    
    2004(in millions of pesos, except percentages)Net Income / (Loss)
    
    Ps.
    (18.9
    )
    
    Ps.
    107.2
    
    
    Ps.
    (109.9
    )Average Total Assets
    
    
    24,614.5
    
    
    
    24,238.1
    
    
    
    22,725.9Average Shareholders Equity
    
    
    1,649.3
    
    
    
    1,569.3
    
    
    
    1,500.9Shareholders Equity at End of the Period
    
    
    1,608.5
    
    
    
    1,626.8
    
    
    
    1,519.5Net Income / (Loss) as a Percentage of:Average Total Assets
    
    
    
    
    
    
    0.59
    %
    
    
    (0.42
    )%Average Shareholders Equity
    
    
    (1.15
    )%
    
    
    6.83
    
    
    
    (7.32
    )Declared Cash Dividends
    
    
    
    
    
    
    
    
    
    
    Dividend Payout Ratio
    
    
    
    
    
    
    
    
    
    
    Average Shareholders Equity as a Percentage of Average Total Assets
    
    
    6.70
    %
    
    
    6.47
    %
    
    
    6.60
    %Shareholders Equity at the End of the Period as a Percentage of
Average Total Assets
    
    
    6.53
    
    
    
    6.71
    
    
    
    6.69
 Short-term Borrowings
  As of December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos )Short-Term BorrowingsArgentine Central Bank
    
    Ps.
    0.4
    
    
    Ps.
    0.3
    
    
    Ps.
    1.0Other Banks and International Entities (1)Lines of Credit from Domestic Banks
    
    Ps.
    134.5
    
    
    Ps.
    60.8
    
    
    Ps.
    115.2Lines of Credit from Foreign Banks
    
    
    45.4
    
    
    
    
    
    
    
    Repos with Domestic Banks
    
    
    522.9
    
    
    
    
    
    
    
    Repos with Foreign Banks
    
    
    
    
    
    
    220.5
    
    
    
    223.7Negotiable Obligations
    
    
    65.1
    
    
    
    89.7
    
    
    
    13.4Total
    
    Ps.
    768.3
    
    
    Ps.
    371.3
    
    
    Ps.
    353.3
  -
    
    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.
 -67-




---



##### Table of Contents



As of December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos, except percentages )Argentine Central BankWeighted-average interest rate at end of period
    
    
    
    
    
    
    
    
    
    
    7.0
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    0.9
    
    
    Ps.
    1.2
    
    
    Ps.
    1.0Average balances for each period
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.9Weighted-average interest rate for the period
    
    
    
    
    
    
    
    
    
    
    7.0
    %Lines of Credit from Domestic BanksWeighted-average interest rate at end of period
    
    
    9.1
    %
    
    
    7.0
    %
    
    
    5.2
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    378.7
    
    
    Ps.
    164.1
    
    
    
    185.6Average balances for each period
    
    
    142.0
    
    
    
    96.3
    
    
    
    104.2Weighted-average interest rate for the period
    
    
    8.0
    %
    
    
    5.5
    %
    
    
    5.0
    %Lines of Credit from Foreign BanksWeighted average interest rate at end of period
    
    
    6.1
    %
    
    
    
    
    
    
    Maximum balance recorded at the monthly closing dates
    
    Ps.
    45.4
    
    
    
    
    
    
    Ps.
    1,231.6Average balances for each period
    
    
    9.7
    
    
    
    
    
    
    
    456.1Weighted average interest rate for the period
    
    
    6.1
    %
    
    
    
    
    
    
    7.1
    %Repos with Domestic BanksWeighted-average interest rate at end of period
    
    
    9.3
    %
    
    
    
    
    
    
    Maximum balance recorded at the monthly closing dates
    
    Ps.
    525.9
    
    
    Ps.
    165.6
    
    
    Ps.
    150.1Average balances for each period
    
    
    101.6
    
    
    
    15.8
    
    
    
    37.9Weighted-average interest rate for the period
    
    
    7.6
    %
    
    
    4.9
    %
    
    
    2.8
    %Repos with Foreign BanksWeighted-average interest rate at end of period
    
    
    
    
    
    
    7.5
    %
    
    
    5.6
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    223.5
    
    
    Ps.
    220.6
    
    
    Ps.
    224.3Average balances for each period
    
    
    145.7
    
    
    
    216.7
    
    
    
    66.5Weighted-average interest rate for the period
    
    
    8.3
    %
    
    
    6.6
    %
    
    
    5.6
    %Negotiable ObligationsWeighted-average interest rate at end of period
    
    
    9.9
    %
    
    
    7.4
    %
    
    
    8.0
    %Maximum balance recorded at the monthly closing dates
    
    Ps.
    65.1
    
    
    Ps.
    123.2
    
    
    Ps.
    13.4Average balances for each period
    
    
    49.6
    
    
    
    79.5
    
    
    
    11.5Weighted-average interest rate for the period
    
    
    7.5
    %
    
    
    6.1
    %
    
    
    8.0
    %
 Regulatory Capital
 Ley de Sociedades Comerciales
 Banco Galicia
    -68-




---



##### Table of Contents



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
    
    
  As of December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos, except percentages)Shareholders Equity
    
    Ps.
    1,263.0
    
    
    Ps.
    1,389.2
    
    
    Ps.
    1,198.2Argentine Central Bank Minimum Capital RequirementsAllocated to Financial Assets
    
    
    597.1
    
    
    
    477.2
    
    
    
    329.9Allocated to Fixed Assets, intangible and unquoted
equity investments
    
    
    143.5
    
    
    
    138.0
    
    
    
    142.0Allocated to Market Risk
    
    
    12.3
    
    
    
    16.8
    
    
    
    62.6Allocated to Interest-Rate Risk
    
    
    61.6
    
    
    
    87.1
    
    
    
    20.2Lending to the Non-Financial Public Sector
    
    
    269.8
    
    
    
    162.4
    
    
    
    58.6Total (A)
    
    Ps.
    1,084.3
    
    
    Ps.
    881.5
    
    
    Ps.
    613.3Computable Regulatory Capital Calculated Under Argentine
Banking GAAPCore Capital
    
    
    1,395.0
    
    
    
    1,207.1
    
    
    
    1,339.9Supplemental Capital
    
    
    608.4
    
    
    
    807.5
    
    
    
    580.8DeductionsInvestments in Financial Entities
    
    
    (1.5
    )
    
    
    (1.5
    )
    
    
    (1.5
    )Organization Expenses
    
    
    (64.2
    )
    
    
    (55.6
    )
    
    
    (71.6
    )Goodwill Recorded from June 30, 1997
    
    
    (66.8
    )
    
    
    (85.9
    )
    
    
    (111.7
    )Real Estate Properties for Banco Galicias Own Use and
Miscellaneous, for which no title deed has been made
    
    
    (5.2
    )
    
    
    (3.5
    )
    
    
    (4.0
    )Other
    
    
    (6.1
    )
    
    
    (5.6
    )
    
    
    (5.9
    )Total
    
    
    (143.8
    )
    
    
    (152.1
    )
    
    
    (194.7
    )Additional Capital  Market Variation
    
    
    2.0
    
    
    
    22.7
    
    
    
    20.5Total (B)
    
    Ps.
    1,861.6
    
    
    Ps.
    1,885.2
    
    
    Ps.
    1,746.5Excess CapitalExcess over required Capital (B)-(A)
    
    Ps.
    777.3
    
    
    Ps.
    1,003.7
    
    
    Ps.
    1,133.2Excess over Required Capital as a % of Required Capital
    
    
    71.69
    %
    
    
    113.86
    %
    
    
    184.77
    %Total Capital Ratio
    
    
    15.03
    
    
    
    20.78
    
    
    
    25.11
   -69-




---



##### 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.750,000, rising to Ps.3 million for companies that offer
pension-linked life insurance. For annuity providers that do not offer life annuities, or
annuities covering disability and other work-related risks, the requirement is Ps.2 million.
For property insurance companies, the requirement is Ps.5 million, excluding the auto
insurance line of business.
 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 18% of any result up to Ps.5 million, and 16% of any result over Ps.5
million. Finally, it must add the resulting figures and 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 26%
of any result up to Ps.3.5 million, and 23% of any result over Ps.3.5 million. 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.
The latter total must be adjusted by the ratio of net claims reserves to gross claims reserves
(at least 85%), plus 0.03% of at-risk capital adjusted by the ratio of net claims reserves to
gross claims reserves (at least 50%).
  
 Government Regulation
  -70-




---



##### Table of Contents



Main Regulatory Changes since 2002
 
 
    
    ratifying the suspension of payments of Argentinas sovereign debt except for debt
with multilateral credit agencies;
    
    repealing the articles of the Convertibility Law that had established in 1991 the
fixed one-to-one peso-dollar parity, devaluing the peso and subsequently allowing the
peso to float, which resulted in an increase in such parity of approximately 240%
during 2002;
    
    tightening foreign-exchange controls and restrictions on transfers abroad, which
began to be loosened at the end of 2002;
    
    ratifying and tightening the restrictions to cash withdrawals from bank deposits
established in December 2001 (the corralito), which restrictions were lifted in
December 2002;
    
    establishing a compulsory asymmetric conversion of certain dollar-denominated
assets and liabilities into peso-denominated assets and liabilities at different
exchange rates (the asymmetric pesification), as follows:
 -
    
    private sector debt (individual and corporate dollar-denominated debt)
with financial institutions, and other creditors, was converted into
peso-denominated debt at a one-to-one exchange rate;-
    
    dollar-denominated public sector debt instruments in financial
institutions portfolios, both national and provincial, were converted into
peso-denominated instruments at an exchange rate of Ps.1.4 per US$ 1.0; and-
    
    dollar-denominated bank deposits were converted into peso-denominated
bank deposits at an exchange rate of Ps.1.4 per US$ 1.0, while public-sector, bank
and corporate debt governed by foreign law remained dollar-denominated;.
 
    
    modifying the yields of assets and the cost of liabilities pesified at the Ps.1.4
per US$ 1.0 exchange rate, establishing fixed maximum and minimum interest rates,
respectively, and establishing the adjustment of the principal of those assets and
liabilities by the variation of indexes based on the variation of prices or salaries;
    
    restructuring bank peso-denominated time deposits and dollar-denominated deposits,
above certain amounts, and establishing a repayment schedule ending in 2003 and 2005
depending on whether the deposit was originally peso or dollar-denominated (this
restructuring was known as the corralón);
    
    establishing a series of voluntary swaps of deposits in the corralito or of
Reprogrammed Deposits for government bonds, as a response to the inability of the
financial system to return deposits in accordance with their original terms and
conditions. Through Decree No. 739/03 of April 1, 2003, the corralón was eliminated;
 -71-




---



##### Table of Contents




    
    amending the charter of the Argentine Central Bank; and
    
    allocating Government bonds to financial institutions in compensation for the losses
that would otherwise arise from the asymmetric pesification. As of the date of this
annual report, the Government and the Argentine Central Bank have provided a series of
rules to determine the amount of compensation in connection with the asymmetric
pesification to which each financial institution is entitled. However, certain
situations remain that have not been contemplated by such rules, such as the provision
of compensation for the difference between the amounts paid by banks to reimburse
Reprogrammed Deposits, as a result of judicial actions from depositors (amparoclaims),
and the amounts established by the regulations.
   Foreign Exchange Market
    (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 foreign trade financing and primary issuances
of debt securities, if such securities public offering and listing in
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 constituted 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 requirement is not required, among other, for inflows
of foreign currency:
 -72-




---



##### Table of Contents



(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 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
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.
    -
    
    Access to the local foreign exchange market by non-residents (both individuals
and entities) to transfer funds abroad is permitted:
 -
    
    with no limit in the case of proceedings from the principal
amortization of government securities, recoveries from local bankruptcies and
certain other specific cases.-
    
    with a US$ 2.0 million monthly limit in the case of the aggregate
proceeds from the sale of: (i) direct investments in the private non-financial
sector in Argentina or the final disposition of such investments; and (ii) the
sale of portfolio investments made with foreign currency having entered the
local foreign exchange market no less than 180 days before. However, access to
the local foreign exchange market for the reason mentioned in clause (i) for a
monthly amount exceeding US$ 500,000 or for the reasons mentioned in clauses (i)
and (ii) for an aggregate monthly amount exceeding US$ 2.0 million, requires the
prior authorization of the Argentine Central Bank.-
    
    with a US$ 5,000 monthly limit in the cases not contemplated
above, unless authorization of the Argentine Central Bank is obtained.
 -
    
    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.-
    
    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.
 -73-




---



##### Table of Contents



mercado libre y único de cambios
 Loans to the Private Sector and Asymmetric Indexation
   Sistema
de Refinanciación Hipotecaria
 Deposits
 corralito corralito  corralón
 
 corralito corralón amparo Amparo
 Canje I Canje II
 -74-




---



##### Table of Contents



corralito corralón
 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 in financial institutions balance sheets after the
compulsory pesification of certain of their assets and liabilities. This was to be
achieved through the conversion of the peso-denominated compensatory bond into a
dollar-denominated compensatory bond and, if necessary, through 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).
      -75-




---



##### Table of Contents



For Differences Related to Amparo Claims
    -76-




---



##### Table of Contents



Argentine Banking System and Regulation
 Argentine Banking System
 i.e. sociedades anónimas i.e. bancos
cooperativos limitados
     -77-




---



##### 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
    
 -78-




---



##### Table of Contents



Supervision
    Examination by the Argentine Central Bank
   BASIC System
  - B (Bonos or ).
 - A (Auditoría or ).
 -79-




---



##### Table of Contents



- S (Supervisión or ).
 - I (Información or ).
 - C (Calificación or ).
 Legal Reserve
  Limitations on Types of Business and Computable Regulatory Capital
  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)
   i)
    
    the core capital, which includes permanent capital, non-equity contributions,
net worth adjustments, surplus reserves, audited retained earnings and, effective
October 1, 2006, long-term debt instruments, as long as such instruments fulfill
certain requirements (maturity of more than 30 years, accrual of recognized return per
year not exceeding issuer financial entitys profits, with unpaid services not being
cumulative, so that they cannot be deferred and accumulated to be paid after its
maturity date) and cannot exceed a certain core capital percentages, equal to 30% until
December 31, 2008, subject to a schedule that converges to the 15% international
standard on January 1, 2013; plusii)
    
    the supplemental capital, which may not exceed the core capital, consisting of
unaudited retained earnings (50% of profits and 100% of losses; those corresponding to
the last fiscal year can be included only when they have been audited), 50% of the
reserves on the loan portfolio classified as normal
 -80-




---



##### Table of Contents



(general reserves), subordinated debt not exceeding 50% of core capital and with a maturity
of at least 5 years, and, effective October 1, 2006, debt instruments which fulfill the
requirements to be considered as core capital but exceed the above mentioned limits, debt
instruments with residual time to maturity of less than 10 years and those for which unpaid
services are cumulative. In this case, the limit is 50% of the core capital.iii)
    
    In addition, the following items must be deducted: (i) sight deposits with
foreign banks abroad not rated as investment grade; (ii) securities deposited with
custodians not having been authorized by the Argentine Central Bank; (iii) sovereign
bonds issued by a foreign government with a rating lower than that assigned to the
Argentine sovereign bonds; (iv) share holdings in other financial institutions; (v)
unregistered real estate; (vi) goodwill; (vii) research and development expenses;
(viii) provisioning deficiencies as determined by the Financial
Superintendency.
     Treatment of Losses in Connection with Amparo Claims
  amparo amparo
  -81-




---



##### Table of Contents



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%.
   -82-




---



##### Table of Contents



Capital Adequacy Requirements
  Capitalization of Debt Instruments
  Profit Distribution
  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
    %
 -83-




---



##### Table of Contents



Without Collateral
    
    With CollateralReciprocal 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. 
 
 
 The limits on equity interests in other companies are the following:
 Limit based on a Banks RPC
    
    Limit based on Customers NetWorthCompanies with non-complementary activities
    
    
    
    
    
    
    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.    -84-




---



##### 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
  -85-




---



##### Table of Contents



Foreign Currency Position
  Deposit Insurance System
 Fondo de Garantía de los Depósitos
  -86-




---



##### Table of Contents



Priority Rights of Depositors
 
  -
    
    deposits of individuals or entities up to Ps.50,000 or the equivalent thereof in
foreign currency, enjoying this preference only one person per deposit. 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 in connection with international trade.
   Financial Institutions with Economic Difficulties
    -87-




---



##### Table of Contents



Dissolution and Liquidation of Financial Institutions
    
 Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 
 Item 5A. Operating Results
  -88-




---



##### Table of Contents



Overview
        -89-




---



##### Table of Contents



amparo
  -90-




---



##### Table of Contents



Currency Composition of Our Balance Sheet
  As of December 31,2006
    
    
    2005
    
    
    2004(In millions of pesos)AssetsIn pesos, unadjusted
    
    
    12,529.2
    
    
    
    7,977.3
    
    
    
    5,666.0In pesos, adjusted by the CER
    
    
    4,271.5
    
    
    
    10,671.5
    
    
    
    10,198.4In foreign currency (1)
    
    
    6,833.5
    
    
    
    6,807.4
    
    
    
    7,786.2Total Assets
    
    
    23,634.2
    
    
    
    25,456.2
    
    
    
    23,650.6Liabilities and Shareholders EquityIn pesos, unadjusted, including shareholders equity
    
    
    13,115.2
    
    
    
    9,350.0
    
    
    
    7,871.1In pesos, adjusted by the CER
    
    
    3,826.2
    
    
    
    9,909.4
    
    
    
    9,236.0In foreign currency (1)
    
    
    6,692.8
    
    
    
    6,196.8
    
    
    
    6,543.5Total Liabilities and Shareholders Equity
    
    
    23,634.2
    
    
    
    25,456.2
    
    
    
    23,650.6
 (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.7,308.8 million and
liabilities Ps.6,841.7 million.  
 The Argentine Economy and Financial System in 2006
     -91-




---



##### Table of Contents



-92-




---



##### Table of Contents



Inflation
  For the 12-month period ended December 31,(in percentages)
    
    2006
    
    
    2005
    
    
    2004Inflation (1)Wholesale Price Index
    
    
    7.14
    %
    
    
    10.67
    %
    
    
    7.87
    %Consumer Price Index
    
    
    9.84
    %
    
    
    12.33
    %
    
    
    6.10
    %Adjustment IndexesCER
    
    
    10.04
    %
    
    
    11.75
    %
    
    
    5.48
    %CVS (through March 31, 2004)
    
    
    
    
    
    
    
    
    
    
    5.32
    %
 (1)
    
    Source: INDEC.  Results of Operations for the Fiscal Years Ended December 31, 2006, December 31, 2005 and December
31, 2004
 
  -93-




---



##### Table of Contents



Net Income/Loss
 Fiscal Year Ended
    
    
    ChangeDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2004
    
    
    2006/2005
    
    
    2005/2004(in millions of pesos, except percentages)Consolidated Income StatementFinancial income
    
    Ps
    .2,249.8
    
    
    Ps
    .2,398.6
    
    
    Ps
    .1,391.6
    
    
    Ps
    .(148.8
    )
    
    Ps
    .1,007.0Financial expenses
    
    
    1,871.6
    
    
    
    1,845.9
    
    
    
    1,167.4
    
    
    
    25.7
    
    
    
    678.5Net financial income
    
    
    378.2
    
    
    
    552.7
    
    
    
    224.2
    
    
    
    (174.5
    )
    
    
    328.5Provision for losses on loans and other receivables
    
    
    110.9
    
    
    
    76.7
    
    
    
    190.2
    
    
    
    34.2
    
    
    
    (113.5
    )Net income from services
    
    
    672.0
    
    
    
    523.7
    
    
    
    436.3
    
    
    
    148.3
    
    
    
    87.4Administrative expenses
    
    
    974.6
    
    
    
    781.0
    
    
    
    623.9
    
    
    
    193.6
    
    
    
    157.1Minority interest
    
    
    (19.0
    )
    
    
    (34.6
    )
    
    
    (14.3
    )
    
    
    15.6
    
    
    
    (20.3
    )Income / (loss) from equity investments
    
    
    (14.4
    )
    
    
    6.7
    
    
    
    3.0
    
    
    
    (21.1
    )
    
    
    3.7Miscellaneous income / (loss), net
    
    
    144.0
    
    
    
    (64.3
    )
    
    
    98.8
    
    
    
    208.3
    
    
    
    (163.1
    )Income tax
    
    
    (94.2
    )
    
    
    (19.3
    )
    
    
    (43.8
    )
    
    
    (74.9
    )
    
    
    24.5Net income / (loss)
    
    Ps.
    (18.9
    )
    
    Ps.
    107.2
    
    
    Ps.
    (109.9
    )
    
    Ps.
    (126.1
    )
    
    Ps.
    217.1Return on average assets (1)
    
    
    0.0004
    %
    
    
    0.59
    %
    
    
    (0.42
    )%
    
    
    (0.6
    )%
    
    
    1.0
    %Return on average shareholders equity
    
    
    (1.15
    )
    
    
    6.83
    
    
    
    (7.32
    )
    
    
    (8.0
    )
    
    
    14.2
 (1)
    
    For the calculation of the return on average assets, profits or losses corresponding to
minority interests are excluded from net income.    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 due to 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.
  
    
    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.
 -94-




---



##### Table of Contents



Fiscal Year 2005 Compared to Fiscal Year 2004
  
    
    a 72.4% increase in financial income, from Ps.1,391.6 million to Ps.2,398.6 million;
    
    a 59.7% reduction in loan loss provisions, from Ps.190.2 million to Ps.76.7 million;
    
    a 20.0% increase in net income from services, to Ps.523.7 million from Ps.436.3 million; and
    
    income tax charges for Ps.19.3 million, 55.9% less than the Ps.43.8 million
corresponding to the prior fiscal year.These factors were partially offset by:
    
    a 58.1% increase in financial expenses, from Ps.1,167.4 million to Ps.1,845.9 million;
    
    a reduction in net miscellaneous income, from Ps.98.8 million to Ps.(64.3) million; and
    
    a 25.2% increase in administrative expenses, from Ps.623.9 million to Ps.781.0 million.
 Financial Income
  Fiscal Year EndedDecember 31,2006
    
    2005
    
    2004(in millions of pesos)Income on loans and other receivables resulting
from financial brokerage and premiums earned on
reverse repos
    
    Ps.
    1,149.1
    
    
    Ps.
    899.8
    
    
    Ps.
    746.3Income from government and corporate securities, net
    
    
    261.2
    
    
    
    333.1
    
    
    
    CER adjustment
    
    
    730.1
    
    
    
    1,091.8
    
    
    
    559.7Other (1)
    
    
    109.4
    
    
    
    73.9
    
    
    
    85.6Total
    
    Ps.
    2,249.8
    
    
    Ps.
    2,398.6
    
    
    Ps.
    1,391.6
 (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. Also includes CVS
adjustment in the amount of Ps.28.9 million for fiscal year 2004.
  As of December 31,2006
    
    2005
    
    2004Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageBalance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate(in millions of pesos, except rates)Interest-Earning Assets
    
    Ps.
    21,752.6
    
    
    
    8.84
    %
    
    Ps.
    21,844.2
    
    
    
    10.60
    %
    
    Ps.
    20,735.4
    
    
    
    6.06
    %Government Securities
    
    
    4,675.8
    
    
    
    6.68
    
    
    
    5,747.7
    
    
    
    11.78
    
    
    
    3,238.7
    
    
    
    (0.29
    )Loans
    
    
    10,851.0
    
    
    
    12.21
    
    
    
    9,746.9
    
    
    
    14.00
    
    
    
    11,137.9
    
    
    
    9.87Other (1)
    
    
    6,225.8
    
    
    
    4.57
    
    
    
    6,349.6
    
    
    
    4.30
    
    
    
    6,358.8
    
    
    
    2.61Interest-Bearing Liabilities
    
    Ps.
    18,894.0
    
    
    
    8.79
    %
    
    Ps.
    19,437.8
    
    
    
    9.24
    %
    
    Ps.
    18,294.0
    
    
    
    5.71
    %Current accounts
    
    
    658.8
    
    
    
    3.19
    
    
    
    615.0
    
    
    
    2.49
    
    
    
    434.0
    
    
    
    1.11Saving accounts
    
    
    1,789.3
    
    
    
    0.25
    
    
    
    1,388.0
    
    
    
    0.34
    
    
    
    1,034.5
    
    
    
    0.41Time deposits
    
    
    5,297.9
    
    
    
    7.84
    
    
    
    4,119.1
    
    
    
    5.99
    
    
    
    3,317.5
    
    
    
    4.05Argentine Central Bank (2)
    
    
    6,083.1
    
    
    
    12.65
    
    
    
    8,341.6
    
    
    
    14.11
    
    
    
    8,165.6
    
    
    
    8.56Debt securities
    
    
    3,432.4
    
    
    
    8.59
    
    
    
    3,528.6
    
    
    
    6.63
    
    
    
    3,190.6
    
    
    
    0.87Other interest-bearing liabilities
    
    
    1,632.5
    
    
    
    9.48
    
    
    
    1,445.5
    
    
    
    8.16
    
    
    
    2,151.8
    
    
    
    8.14
 -95-




---



##### Table of Contents



As of December 31,2006
    
    2005
    
    2004Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageBalance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    Rate(in millions of pesos, except rates)Spread and Net YieldInterest spread, nominal basis (3)
    
    
    
    
    
    
    0.05
    %
    
    
    
    
    
    
    1.36
    %
    
    
    
    
    
    
    0.35
    %Net yield on interest-earning assets (4)
    
    
    
    
    
    
    1.21
    
    
    
    
    
    
    
    2.38
    
    
    
    
    
    
    
    1.02Financial margin (5)
    
    
    
    
    
    
    1.74
    
    
    
    
    
    
    
    2.53
    
    
    
    
    
    
    
    1.08
 (1)
    
    Includes amounts corresponding to the Compensatory Bond and the Hedge Bond.(2)
    
    Includes the financial assistance from the Argentine Central Bank and the advance to be granted by the Argentine Central Bank for the subscription of the Hedge Bond.(3)
    
    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.(4)
    
    Net interest earned divided by average interest-earning assets. Interest rates include the CER adjustment.(5)
    
    Represents net financial income, divided by average interest-earning assets.
 Fiscal Year 2006 Compared to Fiscal Year 2005
      -96-




---



##### Table of Contents



Fiscal Year EndedDecember 31,2006
    
    2005
    
    2004(in percentages)Total Deposits
    
    
    6.18
    %
    
    
    5.93
    %
    
    
    5.18
    %Private-Sector DepositsTotal
    
    
    8.43
    
    
    
    7.96
    
    
    
    7.07Deposits in Current and Savings Accounts and Non-Restructured Time Deposits
    
    
    8.86
    
    
    
    8.39
    
    
    
    7.45Total Loans
    
    
    8.13
    
    
    
    9.80
    
    
    
    9.16Private-Sector Loans
    
    
    7.21
    %
    
    
    7.33
    %
    
    
    6.43
    %
 (*)
    
    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.
       -97-




---



##### Table of Contents



Fiscal Year 2005 Compared to Fiscal Year 2004
    -98-




---



##### Table of Contents



-99-




---



##### Table of Contents



Financial Expenses
  Fiscal Year EndedDecember 31,2006
    
    2005
    
    2004(in millions of pesos)Interest on deposits
    
    Ps.
    346.1
    
    
    Ps.
    172.3
    
    
    Ps.
    115.7Negotiable Obligations
    
    
    314.8
    
    
    
    234.1
    
    
    
    122.3Expenses from Government and Corporate Securities, Net
    
    
    
    
    
    
    
    
    
    
    7.0Contributions and taxes
    
    
    68.6
    
    
    
    48.8
    
    
    
    48.8CER adjustment
    
    
    697.7
    
    
    
    1,006.8
    
    
    
    501.8Other (1)
    
    
    444.4
    
    
    
    383.9
    
    
    
    371.8Total
    
    Ps.
    1,871.6
    
    
    Ps.
    1,845.9
    
    
    Ps.
    1,167.4
 (1)
    
    Includes accrued interest on liabilities resulting from financial brokerage with banks and
international entities and premiums payable on repos.
 Fiscal Year 2006 Compared to Fiscal Year 2005
     -100-




---



##### Table of Contents



Fiscal Year 2005 Compared to Fiscal Year 2004
   -101-




---



##### Table of Contents



-102-




---



##### Table of Contents



Net Financial Income
     Provision for Losses on Loans and Other Receivables
    Net Income from Services
  -103-




---



##### Table of Contents



Fiscal Year Ended
    
    
    % ChangeDecember 31,
    
    
    December 31,2006
    
    
    2005
    
    
    2004
    
    
    2006/2005
    
    
    2005/2004(in millions of pesos)
    
    
    (in percentages)Income fromCredit cards
    
    Ps.
    473.6
    
    
    Ps.
    361.5
    
    
    Ps.
    315.1
    
    
    
    31.0
    %
    
    
    14.7
    %Deposits accounts
    
    
    125.7
    
    
    
    102.7
    
    
    
    80.3
    
    
    
    22.4
    
    
    
    27.9Credit-related fees
    
    
    19.4
    
    
    
    19.6
    
    
    
    21.6
    
    
    
    (1.0
    )
    
    
    (9.3
    )Check collection
    
    
    18.3
    
    
    
    12.4
    
    
    
    10.1
    
    
    
    47.6
    
    
    
    22.8Collection services (taxes and utility bills)
    
    
    11.2
    
    
    
    9.5
    
    
    
    8.3
    
    
    
    17.9
    
    
    
    14.5Foreign trade
    
    
    31.9
    
    
    
    24.5
    
    
    
    19.9
    
    
    
    30.2
    
    
    
    23.1Insurance
    
    
    48.9
    
    
    
    34.4
    
    
    
    27.3
    
    
    
    42.2
    
    
    
    26.0Other (1)
    
    
    124.1
    
    
    
    81.1
    
    
    
    46.5
    
    
    
    53.0
    
    
    
    74.4Total Income
    
    Ps.
    853.1
    
    
    Ps.
    645.7
    
    
    Ps.
    529.1
    
    
    
    32.1
    %
    
    
    22.0
    %Total Expenses
    
    Ps.
    181.1
    
    
    Ps.
    122.0
    
    
    Ps.
    92.8
    
    
    
    48.4
    %
    
    
    31.5
    %Net Income from Services
    
    Ps.
    672.0
    
    
    Ps.
    523.7
    
    
    Ps.
    436.3
    
    
    
    28.3
    %
    
    
    20.0
    %
 (1)
    
    Includes fees from market making in government securities, investment banking activities, asset management, safe
deposit boxes and cash management.
 Fiscal Year 2006 Compared to Fiscal Year 2005
    Fiscal Year 2005 Compared to Fiscal Year 2004
   -104-




---



##### Table of Contents



% ChangeDecember 31,
    
    
    December 31,Credit Cards
    
    2006
    
    
    2005
    
    
    2004
    
    
    2006/2005
    
    
    2005/2004(number of credit cards, except purchases in millions of pesos)
    
    
    (percentages)Visa
    
    
    721,105
    
    
    
    578,211
    
    
    
    492,918
    
    
    
    24.7
    
    
    
    17.3Gold
    
    
    124,287
    
    
    
    102,669
    
    
    
    81,445
    
    
    
    21.1
    
    
    
    26.1International
    
    
    387,485
    
    
    
    299,269
    
    
    
    278,298
    
    
    
    29.5
    
    
    
    7.5Domestic
    
    
    198,409
    
    
    
    169,434
    
    
    
    131,106
    
    
    
    17.1
    
    
    
    29.2Business
    
    
    10,877
    
    
    
    6,839
    
    
    
    2,069
    
    
    
    59.0
    
    
    
    230.5Corporate
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    American Express
    
    
    131,660
    
    
    
    94,869
    
    
    
    89,307
    
    
    
    38.8
    
    
    
    6.2Gold
    
    
    56,563
    
    
    
    43,834
    
    
    
    37,781
    
    
    
    29.0
    
    
    
    16.0International
    
    
    75,097
    
    
    
    51,035
    
    
    
    51,526
    
    
    
    47.1
    
    
    
    (1.0
    )MasterCard
    
    
    41,271
    
    
    
    13,993
    
    
    
    3,231
    
    
    
    194.9
    
    
    
    333.1Gold
    
    
    10,437
    
    
    
    2,987
    
    
    
    474
    
    
    
    249.4
    
    
    
    530.2MasterCard
    
    
    29,765
    
    
    
    10,817
    
    
    
    2,704
    
    
    
    175.2
    
    
    
    300.0Argencard
    
    
    1,069
    
    
    
    189
    
    
    
    53
    
    
    
    465.6
    
    
    
    256.6Regional Credit-Card Companies
    
    
    3,399,375
    
    
    
    2,444,526
    
    
    
    1,905,423
    
    
    
    39.1
    
    
    
    28.3Visa
    
    
    1,068,702
    
    
    
    594,802
    
    
    
    394,619
    
    
    
    79.7
    
    
    
    50.7Mastercard
    
    
    122,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Local Brands
    
    
    2,207,990
    
    
    
    1,849,724
    
    
    
    1,510,804
    
    
    
    19.4
    
    
    
    22.4Total
    
    
    4,293,411
    
    
    
    3,131,599
    
    
    
    2,490,879
    
    
    
    37.1
    
    
    
    25.7Amount of Purchases(in millions of pesos)
    
    
    8,029.7
    
    
    
    4,943.6
    
    
    
    3,720.1
    
    
    
    62.4
    
    
    
    32.9
 Administrative Expenses
  -105-




---



##### Table of Contents



Fiscal Year Ended
    
    % ChangeDecember 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2006/2005
    
    2005/2004(in millions of pesos)
    
    (in percentages)Salaries and social security contributions
    
    Ps.
    415.4
    
    
    Ps.
    330.5
    
    
    Ps.
    242.0
    
    
    
    25.7
    %
    
    
    36.6
    %Property-related expenses
    
    
    65.1
    
    
    
    57.7
    
    
    
    55.6
    
    
    
    12.8
    
    
    
    3.8Personnel services
    
    
    46.6
    
    
    
    30.0
    
    
    
    27.0
    
    
    
    55.3
    
    
    
    11.1Advertising and publicity
    
    
    84.5
    
    
    
    68.2
    
    
    
    37.8
    
    
    
    23.9
    
    
    
    80.4Amount accrued in relation to directors and syndics compensation
    
    
    6.0
    
    
    
    5.8
    
    
    
    4.1
    
    
    
    3.4
    
    
    
    41.5Electricity and communications
    
    
    41.1
    
    
    
    31.1
    
    
    
    27.0
    
    
    
    32.2
    
    
    
    15.2Taxes
    
    
    50.5
    
    
    
    37.4
    
    
    
    40.9
    
    
    
    35.0
    
    
    
    (8.6
    )Other
    
    
    265.4
    
    
    
    220.3
    
    
    
    189.5
    
    
    
    20.5
    
    
    
    16.3Total
    
    Ps.
    974.6
    
    
    Ps.
    781.0
    
    
    Ps.
    623.9
    
    
    
    24.8
    %
    
    
    25.2
    %
 Fiscal Year 2006 Compared to Fiscal Year 2005
    Fiscal Year 2005 Compared to Fiscal Year 2004
   Income/(Loss) from Equity Investments
   -106-




---



##### Table of Contents



Miscellaneous Income/(Loss), Net
  amparo amparo amparo
 amparo
 Income Tax
    
 -107-




---



##### Table of Contents



U.S. GAAP and Argentine Banking GAAP Reconciliation
 General  Allowances for Loan Losses
   Performing Commercial and Consumer Loans
  
    
    Normal and Normal Performance
    
    Potential Risk and Improper Fulfillment
   December 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Performing Commercial Loans
    
    Ps.
    174.9
    
    
    Ps.
    2.3
    
    
    Ps.
    193.1
    
    
    Ps.
    2.1
    
    
    Ps.
    159.7
    
    
    Ps.
    1.7Performing Consumer Loans
    
    
    57.9
    
    
    
    46.7
    
    
    
    30.3
    
    
    
    22.2
    
    
    
    15.4
    
    
    
    11.1
 Non-performing Consumer Loan Portfolio
  
    
    Defective Fulfillment
    
    Difficulty in Recovery
    
    Uncollectible
 -108-




---



##### Table of Contents



December 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Non-Performing Consumer Loans
    
    Ps.
    58.9
    
    
    Ps.
    47.5
    
    
    Ps.
    48.6
    
    
    Ps.
    36.3
    
    
    Ps.
    45.3
    
    
    Ps.
    37.0
 Non-performing Commercial Loans
  
    
    With Problems
    
    High Risk of Insolvency
    
    Uncollectible
   Summary
  December 31, 2006
    
    
    December 31, 2005
    
    
    December 31, 2004High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low(in millions of pesos)Performing Commercial Loans
    
    Ps.
    174.9
    
    
    Ps.
    2.3
    
    
    Ps.
    193.1
    
    
    Ps.
    2.1
    
    
    Ps.
    159.7
    
    
    Ps.
    1.7Performing Consumer Loans
    
    
    57.9
    
    
    
    46.7
    
    
    
    30.3
    
    
    
    22.2
    
    
    
    15.4
    
    
    
    11.1Non-Performing Consumer Loans
    
    Ps.
    58.9
    
    
    Ps.
    47.5
    
    
    Ps.
    48.6
    
    
    Ps.
    36.3
    
    
    Ps.
    45.3
    
    
    Ps.
    37.0Non-Performing Commercial Loans
    
    
    291.9
    
    
    
    291.9
    
    
    
    397.9
    
    
    
    397.9
    
    
    
    379.5
    
    
    
    379.5Total
    
    Ps.
    583.7
    
    
    Ps.
    388.4
    
    
    Ps.
    669.9
    
    
    Ps.
    458.5
    
    
    Ps.
    599.9
    
    
    Ps.
    429.3Loan Loss Reserve under U.S. GAAP
    
    Ps.470.5
    
    
    Ps.533.4
    
    
    Ps.592.3
     -109-




---



##### Table of Contents




    
    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, 2006
    
    December 31, 2005
    
    December 31, 2004Loan loss reserves as a percentage of non-accrual loans
    
    
    168.58
    %
    
    
    139.49
    %
    
    
    84.75
    %Loan loss reserves as a percentage of total amounts past due
    
    
    183.29
    
    
    
    208.36
    
    
    
    131.92Loan loss reserves as a percentage of past-due unsecured amounts
    
    
    210.51
    
    
    
    226.98
    
    
    
    457.02
 Carrying Value of Secured Loans, Certain Government Securities and Receivables for Government
Securities
     Elements of
Financial Statements
 amparo amparo
 Foreign Debt Restructuring
  -110-




---



##### Table of Contents



Securitizations
   Income Tax
   Summary
  -111-




---



##### Table of Contents



Net Income (Loss)
    
    Shareholders Equity (Deficit)Argentine Banking
    
    
    
    
    
    Argentine BankingGAAP
    
    U.S. GAAP
    
    GAAP
    
    U.S. GAAP(in millions of pesos)Fiscal Year 2006
    
    
    (18.9
    )
    
    
    3,524.9
    
    
    
    1,608.5
    
    
    
    145.8Fiscal Year 2005
    
    
    107.2
    
    
    
    731.0
    
    
    
    1,626.8
    
    
    
    (2,128.3
    )Fiscal year 2004
    
    
    (109.9
    )
    
    
    (1.1
    )
    
    
    1,519.5
    
    
    
    (3,195.7
    )
  
    
    Significant losses were recognized in 2001 from the effects of several
Government actions reflected at the end of that year. With the improvement in
the Argentine economy and business environment, changes in estimated losses are
reflected in the income statement and under other comprehensive income 2004,
2005 and 2006.
    
    The Hedge Bond and the liability with the Argentine Central Bank for its
purchase are not recognized under US GAAP in 2004 and 2005, the net effect of
which varies significantly in such years, while they were recognized in 2006.
    
    The Compensatory Bond in 2005 (since this Bond was received in full in that
year) and the amounts receivable for this Bond in 2004 are reflected at market
values, with changes in values being recognized under other comprehensive
income, the effect of which varies significantly in 2004 and 2005.
    
    Much of the Argentine public-sector debt 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.
    
    Bogar Bonds and Discount Bonds 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 a
significant amount 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 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.
 
 Results by Segments
 General
   
    
    the Grupo Financiero Galicia segment showing our specific income and expenses on a
stand-alone basis, not attributable to our investments in subsidiaries, except for
goodwill amortization;
    
    the Insurance segment, corresponding to Sudamericanas consolidated results of
operations (including the 12.5% interest owned by the Bank);
    
    the Other Grupo Businesses segment representing the results of operations of Net
Investment consolidated and Galicia Warrants (in both cases, including the results of
the 12.5% interests of the Bank), and Galval; and
 -112-




---



##### Table of Contents




    
    Banco Galicias operating segments (see below).
  
    
    the geographical location of each branch or business, or unit;
    
    the similarity of the businesses conducted with or the services provided to Banco
Galicias customers; and
    
    the existence of homogeneous groups of customers to which products and services are
provided.
  Buenos Aires Metropolitan Branches
 Rest of the Country Branches
 Head Office
 Regional Credit Cards
 International
 Other Financial Businesses
 Other Equity Investments
     -113-




---



##### Table of Contents



Results by Segments for the Fiscal Year Ended December 31, 2006
 Grupo Financiero Galicia
   Insurance
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches and Rest of the Country Branches
     -114-




---



##### Table of Contents



Head Office
    amparo
 Regional Credit Cards
   -115-




---



##### Table of Contents



International
 Other Financial Businesses
 Other Equity Investments
 Results by Segments for the Fiscal Year Ended December 31, 2005
 Grupo Financiero Galicia
 Insurance .
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches and Rest of the Country Branches
   -116-




---



##### Table of Contents



Head Office
  amparo
 Regional Credit Cards
  International
 Other Financial Businesses
 -117-




---



##### Table of Contents



Other Equity Investments
 Results by Segments for the Fiscal Year Ended December 31, 2004
 Grupo Financiero Galicia
 Insurance
 Other Grupo Businesses
  Buenos Aires Metropolitan Branches and Rest of the Country Branches
     -118-




---



##### Table of Contents



Head Office
    amparo
 Regional Credit Cards
   International
 -119-




---



##### Table of Contents



Other Financial Businesses
 Other Equity Investments
 
 Consolidated Assets
  As of December 31,2006
    
    
    %
    
    
    2005
    
    
    %
    
    
    2004
    
    
    %(in millions of pesos, except percentages)Cash and due from banks
    
    Ps.
    2,294.8
    
    
    
    9.7
    
    
    Ps.
    1041.2
    
    
    
    4.1
    
    
    Ps.
    988.7
    
    
    
    4.2Government and corporate securities
    
    
    3,188.6
    
    
    
    13.5
    
    
    
    5,971.8
    
    
    
    23.3
    
    
    
    5,534.1
    
    
    
    23.4Loans
    
    
    10,514.6
    
    
    
    44.5
    
    
    
    10,555.2
    
    
    
    41.2
    
    
    
    8,438.2
    
    
    
    35.7Hedge Bond to be acquired
    
    
    401.3
    
    
    
    1.7
    
    
    
    4,155.0
    
    
    
    16.2
    
    
    
    4,732.3
    
    
    
    20.0Other receivables  Argentine Central Bank
    
    
    1,733.3
    
    
    
    7.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    5,501.6
    
    
    
    23.3
    
    
    
    3,912.5
    
    
    
    15.2
    
    
    
    3,957.3
    
    
    
    16.7Total
    
    Ps.
    23,634.2
    
    
    
    100.0
    %
    
    Ps.
    25,635.7
    
    
    
    100.0
    %
    
    Ps.
    23,650.6
    
    
    
    100.0
    %
       -120-




---



##### Table of Contents




    
    Ps.974.0 million of forward purchases of Boden 2012 Bonds in connection with
repo transactions.
    
    Ps.896.8 million recorded under Bank Premises and Equipment, Miscellaneous Assets
and Intangible Assets, excluding from the latter the deferred losses from amparoclaims.
    
    Ps.714.1 million of forward purchases of Discount Bonds in Pesos in connection with
repo transactions.
    
    Ps.571.6 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.367.3 million recorded as an intangible asset, which reflected losses 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 amparoclaims, 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.357.1 million corresponding to holdings of the participation certificate in and debt
securities of the special fund (referred to as the 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.236.7 million corresponding to participation certificates in and debt securities of
different financial trusts.
    
    Ps.206.2 million corresponding to Assets under Financial Leases.
    
    Ps.138.2 million corresponding to balances deposited at the Argentine Central Bank as
guarantees in favor of clearing houses.
 
 Exposure to the Argentine Public Sector
  As of December 31,2006
    
    
    2005(in millions of pesos)Net Position in Government Securities
    
    Ps.
    4,832.7
    
    
    Ps.
    6,041.0Trading and Investment Accounts
    
    
    164.3
    
    
    
    462.0Fiscal Credit Certificates
    
    
    
    
    
    
    34.5Boden 2012 Bonds (Compensatory Bond)
    
    
    3,582.9
    
    
    
    987.9Bogar Bonds
    
    
    366.5
    
    
    
    3,823.3Discount Bonds and GDP-Linked Units
    
    
    719.0
    
    
    
    733.3Loans
    
    Ps.
    2,846.7
    
    
    Ps.
    5,341.7Financial Sector
    
    
    107.4
    
    
    
    105.9Secured Loans
    
    
    2,739.3
    
    
    
    5,235.8Other Receivables Resulting from Financial Brokerage
    
    Ps.
    1,218.6
    
    
    Ps.
    5,031.8Boden 2012 Bonds (Hedge Bond)
    
    
    401.3
    
    
    
    4,155.0Trusts Certificates of Participation and Securities
    
    
    817.3
    
    
    
    876.8Total Assets(1)
    
    Ps.
    8,898.0
    
    
    Ps.
    16,414.5Liabilities with the Argentine Central Bank
    
    Ps.
    3,026.0
    
    
    Ps.
    8,611.9Net Exposure
    
    Ps.
    5,872.0
    
    
    Ps.
    7,802.6
 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.
  -121-




---



##### Table of Contents



Off-Balance Sheet Arrangements
   Commitments to Extend Credit, Stand-By Letters of Credit and Guarantees Granted
      December 31,2006(in millions of pesos)Commitments to extend credit
    
    Ps.
    624.8Standby letters of credit
    
    
    129.0Guarantees granted
    
    
    123.8Acceptances
    
    
    35.4
   -122-




---



##### Table of Contents



December 31,2006(in millions of pesos)Preferred counter guarantees
    
    Ps.
    32.8Other counter guarantees
    
    
    21.6
   December 31,2006(in millions of pesos)Checks drawn on the Bank
    
    Ps.
    163.0Checks drawn on other banks
    
    
    187.4Bills and other items for collection
    
    
    1,184.4
    
 Securitization of Assets
     -123-




---



##### Table of Contents



Funding
     December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos)Deposits(1) (2)
    
    Ps.
    10,779.4
    
    
    Ps.
    8,421.7
    
    
    Ps.
    6,756.9Debt(1)Argentine Central BankFinancial assistance
    
    
    2,688.7
    
    
    
    5,314.9
    
    
    
    5,707.0Advance for the acquisition of the Hedge Bond
    
    
    336.8
    
    
    
    3,296.6
    
    
    
    2,720.7International banks and credit agencies
    
    
    870.5
    
    
    
    784.6
    
    
    
    789.3Repos
    
    
    1,033.5
    
    
    
    220.5
    
    
    
    223.7Domestic financial institutions
    
    
    287.7
    
    
    
    227.9
    
    
    
    199.2Debt securities (1)
    
    
    3,676.0
    
    
    
    3,569.6
    
    
    
    3,802.5Total(1)
    
    
    8,893.2
    
    
    
    13,414.1
    
    
    
    13,442.4Shareholders Equity
    
    
    1,608.5
    
    
    
    1,626.8
    
    
    
    1,519.5Total Funding
    
    Ps.
    21,281.1
    
    
    Ps.
    23,462.6
    
    
    Ps.
    21,718.8
 (1)
    
    Includes accrued interest and exchange differences payable, as well as the CER adjustment where applicable.(2)
    
    Includes Reprogrammed Deposits with amparo claims. In 2004, also includes Cedros.
   -124-




---



##### Table of Contents




    
    Ps.118.4 million in negotiable obligations issued by the Bank in Argentina as part of the
restructuring of the liabilities of its former New York Branch, a process that took place in
2002.
    
    Ps.157.7 million in negotiable obligations issued by Galicia Uruguay to restructure its
deposits, securities that were issued either in connection with the original restructuring
or the exchange offers subsequently made by Galicia Uruguay to its customers.
    
    Ps.942.0 million and Ps.1,083.8 million in 2010 and 2014 Notes, respectively, and
Ps.777.6 million in subordinated negotiable obligations maturing in 2019, 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.30.5 million in negotiable obligations maturing in 2007, issued by Tarjeta Naranja
S.A. (III Class) in 2006.
    
    Ps.13.5 million in foreign debt past due, included in our 2004 debt restructuring, the
holders of which did not participate in such restructuring.
  -125-




---



##### Table of Contents



Ratings
     Program for Debt Issuance
  -126-




---



##### Table of Contents



Contractual Obligations
  Annual
    
    
    
    
    
    Less than
    
    1 to 3
    
    3 to 5
    
    Over 5Maturity
    
    Interest Rate
    
    Total
    
    1 Year
    
    Years
    
    Years
    
    YearsBanco Galicia:BondsFloating Rate Notes Due 2010 (1) (3) (4)
    
    
    2010
    
    
    Libor + 350 b.p.
    
    Ps.
    986.3
    
    
    Ps.
    313.4
    
    
    Ps.
    538.3
    
    
    Ps.
    134.6
    
    
    
    Step-Up Notes Due 
2014 (1) (3) (5)
    
    
    2014
    
    
    
    5.0
    %
    
    
    1,111.3
    
    
    
    27.5
    
    
    
    
    
    
    
    481.7
    
    
    
    602.1Subordinated Notes Due 
2019 (1) (6)
    
    
    2019
    
    
    
    11.0
    %
    
    
    777.6
    
    
    
    39.4
    
    
    
    
    
    
    
    
    
    
    
    738.29% Notes Due 2003 (7)
    
    
    2003
    
    
    
    9.0
    %
    
    
    19.8
    
    
    
    19.8
    
    
    
    
    
    
    
    
    
    
    
    7.875% Notes Due 2007 (2) (8)
    
    
    2007
    
    
    
    7.9
    %
    
    
    76.7
    
    
    
    76.7
    
    
    
    
    
    
    
    
    
    
    
    7th Series Floating Rate Notes Due 2007 (2) (8)
    
    
    2007
    
    
    Libor + 400 b.p.
    
    
    45.9
    
    
    
    45.9
    
    
    
    
    
    
    
    
    
    
    
    LoansFloating Rate Loans Due 
2010(1) (3) (4)
    
    
    2010
    
    
    Libor + 350 b.p.
    
    
    130.8
    
    
    
    41.5
    
    
    
    71.4
    
    
    
    17.9
    
    
    
    Floating Rate Loans Due 
2014 (1) (3) (5)
    
    
    2014
    
    
    Libor + 85 b.p.
    
    
    258.2
    
    
    
    8.3
    
    
    
    
    
    
    
    111.1
    
    
    
    138.8Floating Rate Loans Due 
2019 (1) (9)
    
    
    2019
    
    
    Libor + 578 b.p.
    
    
    42.8
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    40.4Step-Up Loans Due 
2014 (1) (3) (5)
    
    
    2014
    
    
    
    5.0
    %
    
    
    298.3
    
    
    
    7.5
    
    
    
    
    
    
    
    129.2
    
    
    
    161.6Other Financial Loans
    
    Various
    
    Various
    
    
    60.2
    
    
    
    46.6
    
    
    
    10.6
    
    
    
    3.0
    
    
    
    IFC Financial Loan
    
    Various
    
    Libor + 350 b.p.
    
    
    79.8
    
    
    
    58.9
    
    
    
    15.3
    
    
    
    2.8
    
    
    
    2.8BICE Loans (Pesos)
    
    Various
    
    CER + 4.0%
    
    
    30.8
    
    
    
    22.9
    
    
    
    7.9
    
    
    
    
    
    
    
    BICE Loans (Dollars) (10)
    
    Various
    
    
    7.2
    %
    
    
    15.5
    
    
    
    6.3
    
    
    
    9.2
    
    
    
    
    
    
    
    Short-Term Interbank Loans
    
    
    2007
    
    
    
    8.7
    %
    
    
    100.0
    
    
    
    100.0
    
    
    
    
    
    
    
    
    
    
    
    Argentine Central Bank  Financial Assistance (11)
    
    
    2011
    
    
    CER + 2.0%
    
    
    2,688.7
    
    
    
    468.6
    
    
    
    2,220.1
    
    
    
    
    
    
    
    Argentine Central Bank  Advance for the
Acquisition of the Hedge Bond (12)
    
    
    2012
    
    
    CER + 2.0%
    
    
    336.8
    
    
    
    144.3
    
    
    
    77.0
    
    
    
    77.0
    
    
    
    38.5Loan from Sedesa (13)
    
    
    2007
    
    
    Libor + 300 b.p.
    
    
    198.8
    
    
    
    198.8
    
    
    
    
    
    
    
    
    
    
    
    Peso-Denominated Loan from FFRE (14)
    
    
    2008
    
    
    CER + 8.0%
    
    
    8.7
    
    
    
    4.4
    
    
    
    4.3
    
    
    
    
    
    
    
    Dollar-Denominated Loan from FFRE (14)
    
    
    2008
    
    
    
    8.1
    %
    
    
    14.2
    
    
    
    7.1
    
    
    
    7.1
    
    
    
    
    
    
    
    Repos (Pesos) (15)
    
    
    2007
    
    
    Various
    
    
    524.5
    
    
    
    524.5
    
    
    
    
    
    
    
    
    
    
    
    Repos (Dollars) (15)
    
    
    2007
    
    
    Various
    
    
    509.0
    
    
    
    509.0
    
    
    
    
    
    
    
    
    
    
    
    Galicia Uruguay:Negotiable Obligations (16)
    
    Various
    
    Various
    
    
    158.6
    
    
    
    27.5
    
    
    
    60.7
    
    
    
    70.4
    
    
    
    Tarjetas Regionales S.A.:Financial Loans with Local Banks
    
    Various
    
    Various
    
    
    142.2
    
    
    
    120.2
    
    
    
    22.0
    
    
    
    
    
    
    
    Negotiable Obligations
    
    Various
    
    Various
    
    
    499.9
    
    
    
    151.9
    
    
    
    194.0
    
    
    
    154.0
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    Ps.
    9,115.4
    
    
    Ps.
    2,973.4
    
    
    Ps.
    3,237.9
    
    
    Ps.
    1,181.7
    
    
    Ps.
    1,722.4
 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)
    
    Issued in 2002 as part of the restructuring of the debt of the Banks former New York Branch.(3)
    
    Interest payable in cash, semiannually, on January 1 and July 1 of each year, beginning on July 1, 2004.(4)
    
    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.(5)
    
    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 11.12% is due. The rate increases 1% on January 1 of each year, until reaching 7% on January 1, 2008.(6)
    
    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.(7)
    
    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.(8)
    
    Interest payable in cash, semiannually, in February and August of each year, beginning in February 2003. Principal amortizes in three equal annual installments, beginning on August 3, 2005, until maturity.
 -127-




---



##### Table of Contents



(9)
    
    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.(10)
    
    Includes: US$2.0 million of principal at incurrence that accrue Libor+400 basis points, with principal and interests payable in 48 equal installments on the 5th of every month, beginning in November 2003 until
October 2007, and US$10.0 million of principal at incurrence accruing Libor+550 basis points, with interests payable semiannually, in May and November of each year, and. principal amortizing in 9 semiannual
installments, beginning in May 2005 until May 2009.(11)
    
    Amortization of principal adjusted by the CER. This liability was paid in full as of March 2, 2007.(12)
    
    The terms and conditions of the advance from the Argentine Central Bank to acquire the Hedge Bond were established by Decree No. 905/02. Principal adjusted by the CER amortized in 8 equal and annual installments
in August of each year, beginning in 2005, until August 2012. Interest was payable in August and February of each year, beginning in August 2002. This liability was extinguished after the close of fiscal year 2006
with the acquisition of the Hedge Bond through a swap for Secured Loans..(13)
    
    Granted in 2002 as part of the Galicia capitalization and liquidity plan.(14)
    
    FFRE : Fondo Fiduciario para la Reconstrucción de Empresas.(15)
    
    Includes premiums.(16)
    
    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 of 15% of principal, and the
remaining 7 of 10% of principal. Interest payable annually in September of each year, beginning in September 2003.
    
    Floating Rate (Libor+300 basis points, and a 7% cap) Negotiable Obligations Due 2011: principal amortizes in 3 annual installments in December of each year, beginning in December 2009, the first 2
installments of 30% of principal, and the remaining one of 40% of principal. Interest payable semiannually in June and December of each year, beginning in December 2003.
    
    2% Negotiable Obligations Due 2008: principal amortizes in 3 annual installments in December of each year, beginning in December 2006, the first 2 installments of 30% of principal, and the remaining
one of 40% of principal. Interest payable semiannually in June and December of each year, beginning in December 2003.
 
 Other Commitments
     -128-




---



##### Table of Contents



Other Commitments  Operating Leases
  In millions of pesos(1)2007
    
    
    21.02008
    
    
    25.72009
    
    
    28.62010
    
    
    31.12011
    
    
    33.92012 and after
    
    
    37.0Total
    
    Ps.
    177.3
 (1)
    
    Future lease payments include the CER adjustment until December 31, 2006, only.
 
 Critical Accounting Policies
  Allowance for Loan Losses
    Other Receivables Resulting from Financial Brokerage and Miscellaneous Receivables
  Minimum Presumed Income Tax
 -129-




---



##### Table of Contents



Goodwill
  
 U.S. GAAP  Critical Accounting Policies
  Allowance for Loan Losses
  Fair Value Estimates
     Impairment of Assets Other Than Loans
  -130-




---



##### Table of Contents



Deferred Tax Asset Valuation Allowance
      Assets Not Recognized Under U.S. GAAP
 Elements of Financial Statements
 -131-




---



##### Table of Contents



amparo amparo
 Financial Guarantees
   Securitizations
    -132-




---



##### Table of Contents



Principal Trends
 Related to the Argentine Economy and Financial System
       -133-




---



##### Table of Contents



Related to Us
           -134-




---



##### Table of Contents



amparo
 
 Item 5B. Liquidity and Capital Resources
 
 Liquidity
  
         Consolidated Cash Flows
 Statement of Cash Flows
 -135-




---



##### Table of Contents



December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos)Funds at the beginning of the fiscal year
    
    Ps.
    1,041.2
    
    
    Ps.
    988.7
    
    
    Ps.
    826.2Funds provided (used) by operating activities
    
    
    4,190.3
    
    
    
    856.0
    
    
    
    (221.1
    )- Funds provided by the sale of or proceeds from government securities
    
    
    2,962.8
    
    
    
    907.0
    
    
    
    91.6- CER adjustment
    
    
    891.9
    
    
    
    (484.8
    )
    
    
    (26.5
    )- Other
    
    
    335.6
    
    
    
    433.8
    
    
    
    (286.2
    )Funds provided (used) by investment activities
    
    
    (1,640.6
    )
    
    
    (767.5
    )
    
    
    (240.2
    )- Funds to repay debt with the Argentine Central Bank(1)
    
    
    (1,733.3
    )
    
    
    
    
    
    
    - Net increase/decrease in loans
    
    
    297.6
    
    
    
    (628.3
    )
    
    
    (112.4
    )Loans to the private sector
    
    
    (623.8
    )
    
    
    (634.9
    )
    
    
    (112.4
    )Loans to the public sector
    
    
    921.4
    
    
    
    6.6
    
    
    
    - Other
    
    
    (204.9
    )
    
    
    (139.2
    )
    
    
    (127.8
    )Funds provided (used) by financing activities
    
    
    (1,302.4
    )
    
    
    (41.4
    )
    
    
    618.3- Net increase in deposits
    
    
    1,894.3
    
    
    
    1,696.3
    
    
    
    1,415.0- Funds provided/used by repos
    
    
    934.4
    
    
    
    (259.1
    )
    
    
    261.7- Funds raised by the regional credit card companies
    
    
    418.0
    
    
    
    179.2
    
    
    
    (107.2
    )- Payments on long-term debt
    
    
    (656.5
    )
    
    
    (301.5
    )
    
    
    (207.6
    )- Payments on long-term debt by Galicia Uruguay
    
    
    (30.5
    )
    
    
    (117.0
    )
    
    
    (183.0
    )- Payments on debt with the Argentine Central Bank
    
    
    (4,034.7
    )
    
    
    (1,170.0
    )
    
    
    (453.8
    )- Other
    
    
    172.6
    
    
    
    (69.3
    )
    
    
    (106.8
    )Effect of exchange rate on cash and cash equivalents
    
    
    6.4
    
    
    
    5.4
    
    
    
    5.3Funds at the end of the fiscal year
    
    Ps.
    2,294.9
    
    
    Ps.
    1,041.2
    
    
    Ps.
    988.7
 (1)
    
    Recorded under Other Receivables Resulting from Financial Brokerage as of Dec.31, 2006.
 -136-




---



##### Table of Contents



Fiscal Year 2006
  Funds provided (used) by Operating Activities
   Funds provided (used) by investing activities
   amparo
 Funds provided (used) by financing activities
 (i)

    a Ps.1,894.3 million increase in cash generated by the increase in deposits,(ii)

    a Ps.934.4 million increase in cash generated by repo transactions (repurchase
agreements),(iii)

    a Ps.418.0 million increase in long term credit facilities, representing funds
obtained by the regional
credit-card companies,(iv)

    a Ps.687.0 million net use of cash applied to payments on long-term
liabilities, mainly corresponding to: (a) payments of interest on restructured debt for
Ps.326.2 million, (b) payments of principal amortization on the 2007 Notes for Ps.118.5
million, (c) payments by the regional credit-card companies on their negotiable
obligations for Ps.178.9 million, and (d) settlement by Galicia Uruguay of restructured
debt, for Ps.30.5 million, and(v)

    a Ps.3,856.8 million net use of cash mainly attributable to: (a) payments on
short-term borrowings, mainly on the financial assistance from the Argentine Central
Bank, for Ps.2,665.0 million (including both scheduled payments and amounts settled in
advance), and on the advance from such entity for the acquisition of the Hedge Bond for
Ps.1,369.7 million, (b) an increased extension of short-term call
 -137-




---



##### Table of Contents



loans to local banks
for Ps.75.5 million and (c) an increase in financing from the IFC for Ps.64.0 million.
  Fiscal Year 2005
 Funds provided (used) by Operating Activities
    Funds provided (used) by investing activities
  amparo
  Funds provided (used) by financing activities
     -138-




---



##### Table of Contents



Fiscal year 2004
  Funds provided by Operating Activities
   Funds provided (used) by investing activities
  amparo
 Funds provided (used) by financing activities
     -139-




---



##### Table of Contents



Banco Galicia Consolidated Liquidity Gaps
    As of December 31, 2006(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
    
    
    799.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    799.0Argentine Central Bank  Escrow Accounts
    
    
    1,632.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,632.9Overnight Placements
    
    
    608.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608.0Loans  Public Sector
    
    
    173.6
    
    
    
    2,578.9
    
    
    
    1.7
    
    
    
    
    
    
    
    2,754.2Loans  Private Sector
    
    
    5,607.0
    
    
    
    1,169.5
    
    
    
    191.4
    
    
    
    19.8
    
    
    
    6,987.7Government Securities
    
    
    1,272.8
    
    
    
    2,339.0
    
    
    
    779.1
    
    
    
    64.9
    
    
    
    4,455.8Negotiable Obligations and Corporate Securities
    
    
    3.1
    
    
    
    12.2
    
    
    
    8.7
    
    
    
    
    
    
    
    24.0Financial Trusts
    
    
    104.7
    
    
    
    266.8
    
    
    
    457.8
    
    
    
    161.9
    
    
    
    991.2Special Fund Former Almafuerte Bank
    
    
    143.9
    
    
    
    208.2
    
    
    
    
    
    
    
    
    
    
    
    352.1Assets under Financial Lease
    
    
    67.4
    
    
    
    137.0
    
    
    
    1.8
    
    
    
    
    
    
    
    206.2Other  Argentine Central Bank (1)
    
    
    1,733.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,733.3Total Assets
    
    
    12,145.7
    
    
    
    6,711.6
    
    
    
    1,440.5
    
    
    
    246.6
    
    
    
    20,544.4LiabilitiesSaving Accounts
    
    
    2,585.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,585.9Demand Deposits
    
    
    2,183.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,183.5Time Deposits
    
    
    5,666.7
    
    
    
    231.2
    
    
    
    0.1
    
    
    
    
    
    
    
    5,898.0Argentine Central Bank
    
    
    2,310.4
    
    
    
    640.8
    
    
    
    38.5
    
    
    
    
    
    
    
    2,989.7Negotiable Obligations
    
    
    563.6
    
    
    
    1,792.9
    
    
    
    784.6
    
    
    
    749.8
    
    
    
    3,890.9International Banks and Credit Agencies
    
    
    149.3
    
    
    
    358.3
    
    
    
    311.8
    
    
    
    40.4
    
    
    
    859.8Domestic Banks
    
    
    251.4
    
    
    
    39.2
    
    
    
    
    
    
    
    
    
    
    
    290.6Other Liabilities (2)
    
    
    2,398.8
    
    
    
    13.7
    
    
    
    0.2
    
    
    
    
    
    
    
    2,412.7Total Liabilities
    
    
    16,109.6
    
    
    
    3,076.1
    
    
    
    1,135.2
    
    
    
    790.2
    
    
    
    21,111.1Asset / Liability Gap
    
    
    (3,963.9
    )
    
    
    3,635.5
    
    
    
    305.3
    
    
    
    (543.6
    )
    
    
    (566.7
    )Cumulative Gap
    
    
    (3,963.9
    )
    
    
    (328.4
    )
    
    
    (23.1
    )
    
    
    (566.7
    )
    
    
    (566.7
    )Ratio of Cumulative Gap to Cumulative Liabilities
    
    
    (24.6
    )%
    
    
    (1.7
    )%
    
    
    (0.1
    )%
    
    
    (2.7
    )%Ratio of Cumulative Gap to Total Liabilities
    
    
    (18.8
    )%
    
    
    (1.6
    )%
    
    
    (0.1
    )%
    
    
    (2.7
    )%
 Principal plus CER adjustment. Does not include interest.(1)
    
    Corresponds to the proceeds from the sale of Secured Loans made in December 2006, which were applied, on January 3, 2007, to the settlement
of the same amount of financial assistance from the Argentine Central Bank. It is shown in the first bucket (as well as the liability settled
with those funds on January 3, 2007) even though the bucket that would have corresponded contractually, as of December 31, 2006, to the asset and
the liability settled is the second bucket, because these funds were actually used to settle the liability on January 3.(2)
    
    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.13.5 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.
 -140-




---



##### Table of Contents



Banco Galicia (Unconsolidated) Liquidity Management
    As of December 31, 2006(in millions of pesos)Legal Requirement
    
    Ps.
    1,856.9Excess Liquidity
    
    
    1,045.2Total Liquidity (1)
    
    Ps.
    2,902.1
 (1)
    
    Excludes cash of Galicia Uruguay, the Cayman Branch, and other related companies.
     -141-




---



##### Table of Contents



Capital
    
    As of December 31,2006
    
    
    2005
    
    
    2004(in millions of pesos, except ratios, multiples and percentages)Shareholders Equity
    
    Ps.
    1,608.5
    
    
    Ps.
    1,626.8
    
    
    Ps.
    1,519.5Shareholders Equity as a Percentage of Total Assets
    
    
    6.81
    %
    
    
    6.35
    %
    
    
    6.42
    %Total Liabilities as a Multiple of Total Shareholders Equity
    
    
    13.69
    x
    
    
    14.76
    x
    
    
    14.56
    xTangible Shareholders Equity(1) as a Percentage of Total Assets
    
    
    4.68
    %
    
    
    4.43
    %
    
    
    3.73
    %Total Capital Ratio
    
    na
    (2)
    
    na
    
    
    naExcess Capital over Required Minimum Capital
    
    na
    
    
    na
    
    
    na
 (1)
    
    Tangible shareholders equity represents shareholders equity minus intangible assets.(2)
    
    Not applicable.
 -142-




---



##### Table of Contents



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 2007Federico Braun
    
    Vice Chairman
    
    February 4, 1948
    
    Businessman
    
    September 1999
    
    December 2007Abel 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 2007Eduardo 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 2007Sergio Grinenco
    
    Alternate Director
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Alejandro Rojas Lagarde
    
    Alternate Director
    
    July 17, 1937
    
    Lawyer
    
    April 2000
    
    December 2008Luis Monsegur
    
    Alternate Director
    
    August 15, 1936
    
    Accountant
    
    April 2000
    
    December 2007
  Antonio Garcés:
 -143-




---



##### Table of Contents



Federico Braun
 Abel Ayerza
 Eduardo Escasany
 Enrique Martin
 Luis Oddone
 Pedro Richards
 Silvestre Vila Moret:
 Eduardo Zimmermann
 -144-




---



##### Table of Contents



Pablo Gutierrez
 María Ofelia Hordeñana de Escasany
 Sergio Grinenco
 Alejandro Rojas Lagarde
 Luis Monsegur
    
 Functions of Our Board of Directors
  Audit Committee
 -145-




---



##### Table of Contents



Disclosure Committee:
 
 Our Supervisory Committee
   Principal
    
    Current TermName
    
    Position
    
    Occupation
    
    EndsNorberto Corizzo
    
    Syndic
    
    Accountant
    
    December 2007Raúl Estevez
    
    Syndic
    
    Accountant
    
    December 2007Adolfo Melián
    
    Syndic
    
    Lawyer
    
    December 2007Miguel Armando
    
    Alternate Syndic
    
    Lawyer
    
    December 2007Fernando Noetinger
    
    Alternate Syndic
    
    Lawyer
    
    December 2007Horacio Tedín
    
    Alternate Syndic
    
    Lawyer
    
    December 2007
  Norberto Corizzo:
 Raúl Estevez:
 -146-




---



##### Table of Contents



Adolfo Melián:
 Miguel Armando
 Fernando Noetinger
 Horacio Tedín
 
 Compensation of Our Directors
    
 Management of Grupo Financiero Galicia
    -147-




---



##### 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 

Vice Chairman and
    
    May 30, 1942
    
    Banker
    
    September 2001
    
    December 2008Sergio Grinenco
    
    Chief Financial Officer
    
    May 26, 1948
    
    Banker
    
    April 2003
    
    December 2008Enrique M. Garda Olaciregui
    
    Director and Secretary
    
    April 29, 1946
    
    Banker
    
    April 2003
    
    December 2007Daniel A. Llambías
    
    Director
    
    February 8, 1947
    
    Banker
    
    September 2001
    
    December 2009Luis M. Ribaya
    
    Director
    
    July 17, 1952
    
    Banker
    
    September 2001
    
    December 2007Guillermo J. Pando
    
    Director
    
    October 23, 1948
    
    Banker
    
    April 2003
    
    December 2007Pablo 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. -148-




---



##### 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
 -149-




---



##### Table of Contents



Juan Carlos Fossatti
 Osvaldo Héctor Canova:
 Julio Pedro Naveyra:
 
 Functions of the Board of Directors of Banco Galicia
    Risk Management Committee
 Credit Committee
 Financial Risk Policy Committee
 -150-




---



##### Table of Contents



Systems Committee
 Audit Committee Régimen de Transparencia de la Oferta Pública
  Committee for the Control and Prevention of Money Laundering and for the Financing of
Terrorism
 Disclosure Committee
 Human Resources Committee:
 -151-




---



##### Table of Contents



Assets and Liabilities Committee (Alco):
 Customer Assistance Committee:
  
 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
 Distribution:
 -152-




---



##### Table of Contents



Credit
 Corporate Services
   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
 -153-




---



##### Table of Contents



Banco Galicias Supervisory Committee
   Year of
    
    
    
    PrincipalName
    
    Appointment
    
    Position
    
    Occupation
    
    Current Term EndsAdolfo Héctor Melián
    

    2007
    
    
    
    Syndic
    
    Lawyer
    
    December 31, 2007Norberto Daniel Corizzo
    

    2007
    
    
    
    Syndic
    
    Accountant
    
    December 31, 2007Raúl Estevez
    

    2007
    
    
    
    Syndic
    
    Accountant
    
    December 31, 2007Fernando Noetinger
    

    2007
    
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2007Miguel N. Armando
    

    2007
    
    
    
    Alternate Syndic
    
    Lawyer
    
    December 31, 2007Ricardo Adolfo Bertoglio
    

    2007
    
    
    
    Alternate Syndic
    
    Accountant
    
    December 31, 2007
  Ricardo Adolfo Bertoglio
 
 Compensation of Banco Galicias Directors and Officers
  
    
    total compensation, including salaries, variable compensation and other social
benefits for the directors that are also employees and for the technical and
administrative functions they perform, in accordance with section 25, subsection 2 of
the Banks bylaws; and
    
    compensation for the independent directors.
   -154-




---



##### Table of Contents



Employees
  As of December 31,2006
    
    
    2005
    
    
    2004Grupo
Financiero Galicia S.A.
    
    
    8
    
    
    
    8
    
    
    
    8Banco de
Galicia y Buenos Aires S.A.
    
    
    4,676
    
    
    
    4,118
    
    
    
    3,946Branches
    
    
    2,410
    
    
    
    2,121
    
    
    
    1,871Head Office
    
    
    2,266
    
    
    
    1,997
    
    
    
    2,075Galicia Uruguay
    
    
    13
    
    
    
    18
    
    
    
    19Regional Credit-Card Companies
    
    
    3,174
    
    
    
    2,586
    
    
    
    2,216Sudamericana Consolidated
    
    
    91
    
    
    
    85
    
    
    
    129Other Subsidiaries
    
    
    31
    
    
    
    34
    
    
    
    46Total
    
    
    7,993
    
    
    
    6,849
    
    
    
    6,364
  -155-




---



##### 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 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
 -156-




---



##### Table of Contents



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 Argentina
for the compensation of the chief executive officer and all other executive officers to 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).(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 that
companies have an audit committee comprised solely of independent directors and it is
equally not customary business practice in Argentina to have such a committee. 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 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
 -157-




---



##### Table of Contents



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, 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 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 ADS 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.
  
 Share Ownership
  
 Item 7. Major Shareholders and Related Party Transactions
 
 Major Shareholders
   -158-




---



##### Table of Contents



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)
    
    424,492,970 class B shares
    
    
    44.2
    
    
    
    17.9Members of the families that are shareholders
of EBA Holding S.A.
    
    102,828,011 class B shares
    
    
    10.7
    
    
    
    4.3Banco Santander Central Hispano(2)
    
    82,741,540 class B shares
    
    
    8.6
    
    
    
    3.5BBVA Consolidar AFJP S.A.(3)
    
    55,452,386 class B shares
    
    
    5.8
    
    
    
    2.3Met AFJP S.A.(4)
    
    49,707,821 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 AFJP (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 organizations is Argentina. The holding is partly in ADRs.(4)
    
    Source: Superintendencia de AFJP (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
organizations is Argentina. The holding is partly in ADRs.  -159-




---



##### Table of Contents



Name
    
    Total Shares
    
    % of Total Capital
    
    % of Total 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.
    
    102,828,011  class B shares
    
    
    8.3
    
    
    
    4.3Others:The Bank of New York (1)
    
    424,492,970 class B shares
    
    
    34.2
    
    
    
    17.9Banco 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
   -160-




---



##### Table of Contents



In millions of peso except as noted
    
    April 30, 2007
    
    December 31, 2006
    
    December 31, 2005
    
    December 31, 2004Aggregate Total Financial Exposure
    
    Ps
    .27.9
    
    
    Ps
    .19.3
    
    
    Ps
    .78.0
    
    
    Ps
    .80.7Number of Recipient Related Parties
    
    
    208
    
    
    
    205
    
    
    
    204
    
    
    
    220Individuals
    
    
    166
    
    
    
    163
    
    
    
    160
    
    
    
    175Companies
    
    
    42
    
    
    
    42
    
    
    
    44
    
    
    
    45Average Total Financial Exposure
    
    Ps
    .0.1
    
    
    Ps
    .0.1
    
    
    Ps
    .0.4
    
    
    Ps
    .0.4Single Largest Exposure
    
    Ps
    .5.7
    
    
    Ps
    .3.6
    
    
    Ps
    .19.3
    
    
    Ps
    .16.8
   
 Item 8. Financial Information
  
 Legal Proceedings
   -161-




---



##### Table of Contents



Cámara Nacional de Apelaciones en lo Comercial
    Banco Galicia
   -162-




---



##### Table of Contents



Dividend Policy and Dividends
 Dividend Policy
        -163-




---



##### Table of Contents



amparo
    Dividends
    
 Significant Changes
  -
    
    During February 2007, we repurchased part of the debt issued as part of our debt
restructuring completed in May 2004 that was instrumented as loans. We repurchased loans
maturing in 2010 and in 2014 for an aggregate residual amount of US$ 178.8 million. These
transactions were carried at market value, which
 -164-




---



##### Table of Contents



generated a US$ 6.9 million profit due to the difference between the market price and the
book value of the loans. The repurchase was funded through the sale of Boden 2012 Bonds in
the market, which generated a loss of approximately US$ 8.9 million due to the difference
between the market price and the book value of these bonds.-
    
    During the first quarter of 2007, we continued with the repayment of the financial
assistance from the Argentine Central Bank received during the 2001-2002 crisis, that was
originally due on October 2011, and have repaid the total balance of that liability which,
as of December 31, 2006 amounted to Ps.2,688.7 million. On January 3, 2007 we made a new
payment in advance for Ps.1,733.3 million on such debt, using the proceeds of the sale of
Secured Loans that took place in December 2006. During the first days of February 2007, we
paid the monthly installment due on that month according to the applicable repayment
schedule and, on March 2, 2007, we repaid the remaining balance of such financial assistance
in the amount of Ps.908.7 million.-
    
    On April 24 2007, we acquired the remaining Hedge Bond with Secured Loans for Ps.115.9
million of face value, in accordance with the direct swap alternative set forth in Decree
No. 905/02. The swap for public-sector assets, instead of the advance that had been
requested from the Argentine Central Bank, caused a Ps.32.8 million increase in the
acquisition cost of the remaining Hedge Bond. This loss was recognized in March 2007. In
addition, this acquisition generated a Ps.32.0 million loss, which was recorded during
February 2007, due to the recording at present value, in accordance with Argentine Central
Bank valuation rules, of Bogar Bonds released from their status as collateral for the
advance for the acquisition of the remaining Hedge Bond. As per Argentine Central Bank
valuation rules, under such status such bonds were recorded at their technical value. See
Item 4. Information on the CompanySelected Statistical InformationGovernment and
Corporate SecuritiesValuation.-
    
    After the close of the first quarter of fiscal year 2007, we continued with the process
of reducing our exposure to the public sector through the sale of Secured Loans for Ps.1,094
million.
 
 Item 9. The Offer and Listing
 
 Shares and ADSs
    Grupo Financiero Galicia - Class B Shares- Buenos Aires Stock Exchange (in Pesos)Average Daily VolumeHigh
    
    Low
    
    (in thousands of Class B shares)Calendar Year2002
    
    
    0.74
    
    
    
    0.12
    
    
    
    3,358.02003
    
    
    2.02
    
    
    
    0.69
    
    
    
    4,175.3
 -165-




---



##### 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)2004(1)
    
    
    2.61
    
    
    
    1.42
    
    
    
    5,571.52005
    
    
    2.81
    
    
    
    2.06
    
    
    
    4,784.62006
    
    
    2.86
    
    
    
    1.72
    
    
    
    4,045.3Two Most Recent Fiscal Years2005First Quarter
    
    
    2.81
    
    
    
    2.13
    
    
    
    6,232.6Second Quarter
    
    
    2.60
    
    
    
    2.06
    
    
    
    5,238.9Third Quarter
    
    
    2.53
    
    
    
    2.19
    
    
    
    4,050.2Fourth Quarter
    
    
    2.51
    
    
    
    2.06
    
    
    
    3,592.82006First 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 (through May 31, 2007)
    
    
    3.34
    
    
    
    3.01
    
    
    
    1,666.3Most Recent Six MonthsDecember 2006
    
    
    2.86
    
    
    
    2.41
    
    
    
    3,368.3January 2007
    
    
    2.90
    
    
    
    2.69
    
    
    
    2,163.3February 2007
    
    
    3.37
    
    
    
    2.79
    
    
    
    3,200.2March 2007
    
    
    3.24
    
    
    
    2.86
    
    
    
    2,964.1April 2007
    
    
    3.34
    
    
    
    3.20
    
    
    
    2,074.9May 2007
    
    
    3.27
    
    
    
    3.01
    
    
    
    1,316.1(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.As of June 22, 2007, the closing price of our class B shares was Ps.3.09.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
 -166-




---



##### Table of Contents



Grupo Financiero Galicia  ADSs - Nasdaq National Market / Nasdaq Capital Market (in US$)Average Daily VolumeHigh
    
    Low
    
    (in thousands of ADRs)Calendar Year2002
    
    
    3.45
    
    
    
    0.22
    
    
    
    242.82003
    
    
    6.73
    
    
    
    2.05
    
    
    
    238.12004
    
    
    8.85
    
    
    
    4.65
    
    
    
    324.22005
    
    
    9.62
    
    
    
    6.87
    
    
    
    347.32006
    
    
    9.42
    
    
    
    5.61
    
    
    
    190.2Two Most Recent Fiscal Years2005First Quarter
    
    
    9.62
    
    
    
    7.28
    
    
    
    518.5Second Quarter
    
    
    9.05
    
    
    
    6.99
    
    
    
    281.4Third Quarter
    
    
    8.90
    
    
    
    7.70
    
    
    
    262.8Fourth Quarter
    
    
    8.72
    
    
    
    6.87
    
    
    
    334.42006First Quarter
    
    
    7.84
    
    
    
    6.91
    
    
    
    237.4Second Quarter
    
    
    7.70
    
    
    
    5.70
    
    
    
    181.4Third Quarter
    
    
    6.83
    
    
    
    5.61
    
    
    
    121.7Fourth Quarter
    
    
    9.42
    
    
    
    6.60
    
    
    
    221.02007First Quarter
    
    
    11.12
    
    
    
    8.69
    
    
    
    289.3Second Quarter (through May 31, 2007)
    
    
    11.00
    
    
    
    9.89
    
    
    
    263.2Most Recent Six MonthsDecember 2006
    
    
    9.42
    
    
    
    7.89
    
    
    
    196.7January 2007
    
    
    9.74
    
    
    
    8.69
    
    
    
    176.4February 2007
    
    
    11.12
    
    
    
    9.09
    
    
    
    270.8March 2007
    
    
    10.42
    
    
    
    9.22
    
    
    
    408.0April 2007
    
    
    11.00
    
    
    
    10.42
    
    
    
    251.9May 2007
    
    
    10.79
    
    
    
    9.89
    
    
    
    273.5
   Banco Galicia  Class B Shares - Buenos Aires Stock Exchange (in Pesos)Average Daily Trading VolumeHigh
    
    Low
    
    ( in thousand Class B shares)Calendar Year2002
    
    
    1.63
    
    
    
    0.45
    
    
    
    0.962003
    
    
    3.85
    
    
    
    1.58
    
    
    
    1.062004
    
    
    5.10
    
    
    
    3.30
    
    
    
    1.222005
    
    
    4.30
    
    
    
    3.60
    
    
    
    1.962006
    
    
    4.50
    
    
    
    3.04
    
    
    
    1.56Two Most Recent Fiscal Years2005First Quarter
    
    
    4.30
    
    
    
    3.65
    
    
    
    1.34Second Quarter
    
    
    3.90
    
    
    
    3.60
    
    
    
    2.08
 -167-




---



##### Table of Contents



Banco Galicia  Class B Shares - Buenos Aires Stock Exchange (in Pesos)Average Daily Trading VolumeHigh
    
    Low
    
    ( in thousand Class B shares)Third Quarter
    
    
    4.20
    
    
    
    3.64
    
    
    
    2.05Fourth Quarter
    
    
    4.25
    
    
    
    3.85
    
    
    
    2.382006First 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 (through May 31, 2007)
    
    
    5.8
    
    
    
    5.2
    
    
    
    2.04Most Recent Six MonthsDecember 2006
    
    
    4.50
    
    
    
    3.80
    
    
    
    1.98January 2007
    
    
    4.50
    
    
    
    4.25
    
    
    
    3.69February 2007
    
    
    6.46
    
    
    
    4.35
    
    
    
    12.36March 2007
    
    
    5.40
    
    
    
    5.00
    
    
    
    2.36April 2007
    
    
    5.80
    
    
    
    5.33
    
    
    
    2.34May 2007
    
    
    5.45
    
    
    
    5.20
    
    
    
    1.77
  Banco Galicia  ADSs  Nasdaq National Market (in US$)Average Daily Trading Volume(in thousands of Class BHigh
    
    Low
    
    Shares)(1)Calendar Year2000
    
    US$ 22.44
    
    US$12.75
    
    
    1,889.97
 (1)
    
    One ADS equaled four class B shares. 
 Argentine Securities Market
  Sistema Integrado de Negociación Asistida
por Computación
  -168-




---



##### Table of Contents



Market Regulations
      -169-




---



##### Table of Contents



Item 10. Additional Information
 
 Description of Our Bylaws
 General
  sociedad anónima
 
 Outstanding Capital Stock
  As of December 31, 2006Shares
    
    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
   Voting Rights
  -170-




---



##### Table of Contents




    
    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
    Appointment of Directors and Syndics by Cumulative Voting
  -171-




---



##### Table of Contents



Compensation of Directors
    Syndics
  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.
  -172-




---



##### Table of Contents



Dividends
   -173-




---



##### Table of Contents



Capital Increases and Reductions
  Preemptive Rights
      Appraisal Rights
 -174-




---



##### Table of Contents



Whenever our shareholders approve:
    
    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
   Conflicts of Interest
  -175-




---



##### Table of Contents



Redemption or Repurchase
 sociedad anónima
  Liquidation
  Other Provisions
  
 Exchange Controls
  
 Taxation
  Argentine Taxes
 Taxation of Dividends
   -176-




---



##### Table of Contents



Taxation of Capital Gains
 
   Procurador del Tesoro
 Transfer Taxes
  Tax on Minimum Notional Income
    Personal Assets Tax
  -177-




---



##### Table of Contents



Other Taxes
  Deposit and Withdrawal of Class B Shares in Exchange for ADSs
  United States Taxes
  -178-




---



##### Table of Contents



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
  -179-




---



##### Table of Contents



Taxation of Capital Gains
    -180-




---



##### Table of Contents



Passive Foreign Investment Company Considerations
     Backup Withholding and Information Reporting
    -181-




---



##### 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
        -182-




---



##### Table of Contents



Documents on Display
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 
 General
        
 Interest Rate Risk
  -183-




---



##### Table of Contents



-184-




---



##### Table of Contents



As of December 31, 2006(1)Less than
    
    
    
    
    
    5 - 10
    
    Over 10
    
    Non-(in millions of pesos)
    
    one Year
    
    1 - 5 Years
    
    Years
    
    Years
    
    Sensitive
    
    TotalAssetsPesos  Adjustable by CER
    
    
    4,212.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,212.5Government Securities
    
    
    426.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    426.2Financial Trusts
    
    
    831.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    831.3Loans  Public Sector
    
    
    2,689.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,689.3Loans  Private Sector
    
    
    249.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249.3Assets under Financial Lease
    
    
    10.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.7Corporate Debt Securities
    
    
    5.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.7Pesos
    
    
    7,465.3
    
    
    
    559.3
    
    
    
    152.5
    
    
    
    20.2
    
    
    
    1,501.2
    
    
    
    9,698.5Cash and Due from Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,501.2
    
    
    
    1,501.2Government Securities
    
    
    94.3
    
    
    
    26.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121.0Corporate Debt Securities
    
    
    1.5
    
    
    
    2.8
    
    
    
    1.5
    
    
    
    
    
    
    
    
    
    
    
    5.8Financial Trusts
    
    
    244.7
    
    
    
    222.1
    
    
    
    39.9
    
    
    
    5.4
    
    
    
    
    
    
    
    512.1Loans  Public Sector
    
    
    64.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64.9Loans  Private Sector
    
    
    5,131.1
    
    
    
    307.7
    
    
    
    111.1
    
    
    
    14.8
    
    
    
    
    
    
    
    5,564.7Other Assets
    
    
    1,928.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,928.8Dollars
    
    
    2,272.6
    
    
    
    2,767.5
    
    
    
    662.7
    
    
    
    
    
    
    
    930.6
    
    
    
    6,633.4Cash and Due from Banks
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    930.6
    
    
    
    930.6Overnight Placements
    
    
    608.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608.0Government Securities (1)
    
    
    747.9
    
    
    
    2,528.8
    
    
    
    632.2
    
    
    
    
    
    
    
    
    
    
    
    3,908.9Corporate Debt Securities
    
    
    1.2
    
    
    
    7.3
    
    
    
    4.0
    
    
    
    
    
    
    
    
    
    
    
    12.5Loans  Private Sector
    
    
    915.5
    
    
    
    231.4
    
    
    
    26.5
    
    
    
    
    
    
    
    
    
    
    
    1,173.4Total Assets
    
    
    13,950.4
    
    
    
    3,326.8
    
    
    
    815.2
    
    
    
    20.2
    
    
    
    2,431.8
    
    
    
    20,544.4LiabilitiesPesos  Adjustable by CER
    
    
    3,737.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,737.6Time Deposits
    
    
    620.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    620.0Reprogrammed Deposits (2)
    
    
    47.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47.8Other Liabilities
    
    
    8.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.6Loans from Domestic Financial Institutions
    
    
    30.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30.7Negotiable Obligations
    
    
    40.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40.8Argentine Central Bank
    
    
    2,989.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,989.7Pesos
    
    
    10,336.4
    
    
    
    376.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    10,712.6Saving Accounts
    
    
    1,945.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,945.1Demand Deposits
    
    
    2,113.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,113.7Time Deposits
    
    
    4,469.6
    
    
    
    6.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    4,475.8Reprogrammed Deposits (2)
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4Negotiable Obligations
    
    
    74.7
    
    
    
    348.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    422.7Loans from Domestic Financial Institutions
    
    
    122.4
    
    
    
    22.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144.4Other Liabilities
    
    
    1,610.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,610.5Dollars
    
    
    2,819.6
    
    
    
    1,954.7
    
    
    
    1,096.4
    
    
    
    790.2
    
    
    
    
    
    
    
    6,660.9Saving Accounts
    
    
    640.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    640.8Demand Deposits
    
    
    69.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69.8Time Deposits
    
    
    663.3
    
    
    
    138.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    802.2Loans from Domestic Financial Institutions
    
    
    6.1
    
    
    
    9.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3Negotiable
Obligations (3)
    
    
    461.6
    
    
    
    1,431.4
    
    
    
    784.6
    
    
    
    749.8
    
    
    
    
    
    
    
    3,427.4International Banks and Credit Agencies
    
    
    149.3
    
    
    
    358.3
    
    
    
    311.8
    
    
    
    40.4
    
    
    
    
    
    
    
    859.8Other Liabilities
    
    
    828.7
    
    
    
    16.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    845.6Total Liabilities
    
    
    16,893.6
    
    
    
    2,330.8
    
    
    
    1,096.5
    
    
    
    790.2
    
    
    
    
    
    
    
    21,111.1Asset / Liability Gap
    
    
    (2,943.2
    )
    
    
    996.0
    
    
    
    (281.3
    )
    
    
    (770.0
    )
    
    
    2,431.8
    
    
    
    (566.7
    )Cumulative Gap
    
    
    (2,943.2
    )
    
    
    (1,947.2
    )
    
    
    (2,228.5
    )
    
    
    (2,998.5
    )
    
    
    (566.7
    )Ratio of Cumulative Gap to Cumulative Assets
    
    
    (21.1
    )%
    
    
    (11.3
    )%
    
    
    (12.3
    )%
    
    
    (16.6
    )%
    
    
    (2.8
    )%Ratio of Cumulative Gap to Total Assets
    
    
    (14.3
    )%
    
    
    (9.5
    )%
    
    
    (10.8
    )%
    
    
    (14.6
    )%
    
    
    (2.8
    )%Asset / Liability Gap CER
    
    
    474.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474.9Asset / Liability Gap Interest Rate Pesos
    
    
    (2,871.1
    )
    
    
    183.2
    
    
    
    152.4
    
    
    
    20.2
    
    
    
    1,501.2
    
    
    
    (1,014.1
    )Asset / Liability Gap Interest Rate Dollars (4)
    
    
    (547.0
    )
    
    
    812.8
    
    
    
    (433.7
    )
    
    
    (790.2
    )
    
    
    930.6
    
    
    
    (27.5
    )
 Principal only. Principal includes the CER adjustment. Does not include interest.(1)
    
    Includes Boden 2012 Bonds to be received corresponding to the Hedge Bond.(2)
    
    Reprogrammed deposits with amparo claims only.(3)
    
    Includes Ps. 13.5 million of past due foreign debt of the Bank included in the restructuring
process ended in May 2004, the holders of which did not participate in such restructuring.(4)
    
    Adjusted to reflect forward purchases and sales of foreign exchange without delivery of the
underlying asset, registered in memorandum accounts and other concepts not included in this
mismatch, this gap amounted to Ps.72.5 million as of December 31, 2006.
 -185-




---



##### Table of Contents



Limit on the Net Financial Income for the First Year
   Net Present Value of Assets and Liabilities
   -186-




---



##### Table of Contents



Net Present-Value/ Gap Duration Analysis and Rate-Shock Analysis
   Net present-value / gap duration analysis
  Rate shock analysis
    As of December 31, 2006Net Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    1,136.7
    
    
    Ps.
    (12.3
    )
    
    
    (1.07
    )%
    
    Ps.
    449.0
    
    
    Ps.
    25.9
    
    
    
    6.13
    %150
    
    
    1,139.7
    
    
    
    (9.3
    )
    
    
    (0.81
    )%
    
    
    442.5
    
    
    
    19.4
    
    
    
    4.59
    %100
    
    
    1,142.7
    
    
    
    (6.3
    )
    
    
    (0.55
    )%
    
    
    436.0
    
    
    
    12.9
    
    
    
    3.05
    %
 -187-




---



##### Table of Contents



As of December 31, 2006Net Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)50
    
    
    1,145.8
    
    
    
    (3.2
    )
    
    
    (0.28
    )%
    
    
    429.5
    
    
    
    6.4
    
    
    
    1.52
    %Static
    
    
    1,149.0
    
    
    
    
    
    
    
    
    
    
    
    423.1
    
    
    
    
    
    
    
    (50)
    
    
    1,152.3
    
    
    
    3.3
    
    
    
    0.29
    %
    
    
    414.4
    
    
    
    (8.7
    )
    
    
    (2.06
    )%(100)
    
    
    1,155.7
    
    
    
    6.7
    
    
    
    0.58
    %
    
    
    400.3
    
    
    
    (22.8
    )
    
    
    (5.38
    )%(150)
    
    
    1,159.1
    
    
    
    10.1
    
    
    
    0.88
    %
    
    
    392.7
    
    
    
    (30.4
    )
    
    
    (7.18
    )%(200)
    
    
    1,162.7
    
    
    
    13.7
    
    
    
    1.19
    %
    
    
    385.0
    
    
    
    (38.1
    )
    
    
    (9.01
    )%
 (1)
    
    Net interest income of the first year.
 As of December 31, 2006Net Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    146.0
    
    
    Ps.
    (1.7
    )
    
    
    (1.15
    )%
    
    Ps.
    19.6
    
    
    Ps.
    2.9
    
    
    
    17.37
    %150
    
    
    146.5
    
    
    
    (1.2
    )
    
    
    (0.81
    )%
    
    
    18.8
    
    
    
    2.1
    
    
    
    12.57
    %100
    
    
    146.9
    
    
    
    (0.8
    )
    
    
    (0.54
    )%
    
    
    18.1
    
    
    
    1.4
    
    
    
    8.38
    %50
    
    
    147.3
    
    
    
    (0.4
    )
    
    
    (0.27
    )%
    
    
    17.4
    
    
    
    0.7
    
    
    
    4.19
    %Static
    
    
    147.7
    
    
    
    
    
    
    
    
    
    
    
    16.7
    
    
    
    
    
    
    
    (50)
    
    
    148.2
    
    
    
    0.5
    
    
    
    0.34
    %
    
    
    15.9
    
    
    
    (0.8
    )
    
    
    (4.79
    )%(100)
    
    
    148.6
    
    
    
    0.9
    
    
    
    0.61
    %
    
    
    15.2
    
    
    
    (1.5
    )
    
    
    (8.98
    )%(150)
    
    
    149.0
    
    
    
    1.3
    
    
    
    0.88
    %
    
    
    14.5
    
    
    
    (2.2
    )
    
    
    (13.17
    )%(200)
    
    
    149.4
    
    
    
    1.7
    
    
    
    1.15
    %
    
    
    13.7
    
    
    
    (3.0
    )
    
    
    (17.96
    )%
 (1)
    
    Net interest income of the first year.
 As of December 31, 2006Net Non-Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    990.7
    
    
    Ps.
    (10.6
    )
    
    
    (1.06
    )%
    
    Ps.
    429.4
    
    
    Ps.
    23.0
    
    
    
    5.66
    %150
    
    
    993.2
    
    
    
    (8.1
    )
    
    
    (0.81
    )%
    
    
    423.7
    
    
    
    17.3
    
    
    
    4.26
    %100
    
    
    995.8
    
    
    
    (5.5
    )
    
    
    (0.55
    )%
    
    
    417.9
    
    
    
    11.5
    
    
    
    2.83
    %50
    
    
    998.5
    
    
    
    (2.8
    )
    
    
    (0.28
    )%
    
    
    412.1
    
    
    
    5.7
    
    
    
    1.40
    %Static
    
    
    1,001.3
    
    
    
    
    
    
    
    
    
    
    
    406.4
    
    
    
    
    
    
    
    (50)
    
    
    1,004.1
    
    
    
    2.8
    
    
    
    0.28
    %
    
    
    398.5
    
    
    
    (7.9
    )
    
    
    (1.94
    )%(100)
    
    
    1,007.1
    
    
    
    5.8
    
    
    
    0.58
    %
    
    
    385.1
    
    
    
    (21.3
    )
    
    
    (5.24
    )%(150)
    
    
    1,010.1
    
    
    
    8.8
    
    
    
    0.88
    %
    
    
    378.2
    
    
    
    (28.2
    )
    
    
    (6.94
    )%(200)
    
    
    1,013.3
    
    
    
    12.0
    
    
    
    1.20
    %
    
    
    371.3
    
    
    
    (35.1
    )
    
    
    (8.64
    )%
 (1)
    
    Net interest income of the first year.
   -188-




---



##### Table of Contents



As of December 31, 2005Net Portfolio

    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    907.1
    
    
    Ps.
    (1.2
    )
    
    
    (0.13
    )%
    
    Ps.
    348.9
    
    
    Ps.
    82.6
    
    
    
    31.00
    %150
    
    
    907.4
    
    
    
    (0.9
    )
    
    
    (0.10
    )
    
    
    328.3
    
    
    
    62.0
    
    
    
    23.30100
    
    
    907.8
    
    
    
    (0.5
    )
    
    
    (0.06
    )
    
    
    307.9
    
    
    
    41.6
    
    
    
    15.6150
    
    
    908.0
    
    
    
    (0.3
    )
    
    
    (0.03
    )
    
    
    287.4
    
    
    
    21.1
    
    
    
    7.94Static
    
    
    908.3
    
    
    
    
    
    
    
    
    
    
    
    266.3
    
    
    
    
    
    
    
    (50)
    
    
    908.6
    
    
    Ps.
    0.3
    
    
    
    0.03
    %
    
    
    245.7
    
    
    Ps.
    (20.6
    )
    
    
    (7.72
    )%(100)
    
    
    908.9
    
    
    
    0.6
    
    
    
    0.07
    
    
    
    219.2
    
    
    
    (47.1
    )
    
    
    (17.70
    )(150)
    
    
    909.2
    
    
    
    0.9
    
    
    
    0.10
    
    
    
    193.7
    
    
    
    (72.6
    )
    
    
    (27.27
    )(200)
    
    
    909.6
    
    
    
    1.3
    
    
    
    0.14
    
    
    
    169.9
    
    
    
    (96.4
    )
    
    
    (36.20
    )
 (1)
    
    Net interest income of the first year.
 As of December 31, 2005Net Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    721.8
    
    
    Ps.
    (3.5
    )
    
    
    (0.48
    )%
    
    Ps.
    61.2
    
    
    Ps.
    10.6
    
    
    
    20.95
    %150
    
    
    722.7
    
    
    
    (2.6
    )
    
    
    (0.36
    )
    
    
    58.6
    
    
    
    8.0
    
    
    
    15.81100
    
    
    723.6
    
    
    
    (1.7
    )
    
    
    (0.23
    )
    
    
    55.9
    
    
    
    5.3
    
    
    
    10.4750
    
    
    724.5
    
    
    
    (0.8
    )
    
    
    (0.11
    )
    
    
    53.2
    
    
    
    2.6
    
    
    
    5.14Static
    
    
    725.3
    
    
    
    
    
    
    
    
    
    
    
    50.6
    
    
    
    
    
    
    
    (50)
    
    
    726.2
    
    
    Ps.
    0.9
    
    
    
    0.12
    %
    
    
    47.9
    
    
    Ps.
    (2.7
    )
    
    
    (5.34
    )%(100)
    
    
    727.1
    
    
    
    1.8
    
    
    
    0.25
    
    
    
    45.2
    
    
    
    (5.4
    )
    
    
    (10.67
    )(150)
    
    
    728.0
    
    
    
    2.7
    
    
    
    0.37
    
    
    
    42.6
    
    
    
    (8.0
    )
    
    
    (15.81
    )(200)
    
    
    728.9
    
    
    
    3.6
    
    
    
    0.50
    
    
    
    39.9
    
    
    
    (10.7
    )
    
    
    (21.15
    )
 (1)
    
    Net interest income of the first year.
 As of December 31, 2005Net Non-Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    185.3
    
    
    Ps.
    2.3
    
    
    
    1.26
    %
    
    Ps.
    287.7
    
    
    Ps.
    72.0
    
    
    
    33.38
    %150
    
    
    184.7
    
    
    
    1.7
    
    
    
    0.93
    
    
    
    269.7
    
    
    
    54.0
    
    
    
    25.03100
    
    
    184.2
    
    
    
    1.2
    
    
    
    0.66
    
    
    
    252.0
    
    
    
    36.3
    
    
    
    16.8350
    
    
    183.5
    
    
    
    0.5
    
    
    
    0.27
    
    
    
    234.2
    
    
    
    18.5
    
    
    
    8.58Static
    
    
    183.0
    
    
    
    
    
    
    
    
    
    
    
    215.7
    
    
    
    
    
    
    
    (50)
    
    
    182.4
    
    
    Ps.
    (0.6
    )
    
    
    (0.33
    )%
    
    
    197.8
    
    
    Ps.
    (17.9
    )
    
    
    (8.30
    )%(100)
    
    
    181.8
    
    
    
    (1.2
    )
    
    
    (0.66
    )
    
    
    174.0
    
    
    
    (41.7
    )
    
    
    (19.33
    )(150)
    
    
    181.2
    
    
    
    (1.8
    )
    
    
    (0.98
    )
    
    
    151.1
    
    
    
    (64.6
    )
    
    
    (29.95
    )(200)
    
    
    180.7
    
    
    
    (2.3
    )
    
    
    (1.26
    )
    
    
    130.0
    
    
    
    (85.7
    )
    
    
    (39.73
    )
 (1)
    
    Net interest income of the first year.
  -189-




---



##### Table of Contents



As of December 31, 2004Net Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    949.9
    
    
    Ps.
    (1.3
    )
    
    
    (0.14
    )%
    
    Ps.
    146.8
    
    
    Ps.
    69.7
    
    
    
    90.34
    %150
    
    
    950.2
    
    
    
    (1.0
    )
    
    
    (0.11
    )
    
    
    129.2
    
    
    
    52.1
    
    
    
    67.60100
    
    
    950.5
    
    
    
    (0.7
    )
    
    
    (0.07
    )
    
    
    111.8
    
    
    
    34.7
    
    
    
    44.9750
    
    
    950.8
    
    
    
    (0.4
    )
    
    
    (0.04
    )
    
    
    94.4
    
    
    
    17.3
    
    
    
    22.43Static
    
    
    951.2
    
    
    
    
    
    
    
    
    
    
    
    77.1(50)
    
    
    951.6
    
    
    Ps.
    0.4
    
    
    
    0.04
    %
    
    
    59.9
    
    
    Ps.
    (17.2
    )
    
    
    (22.33
    )%(100)
    
    
    952.0
    
    
    
    0.8
    
    
    
    0.08
    
    
    
    42.7
    
    
    
    (34.4
    )
    
    
    (44.57
    )(150)
    
    
    952.3
    
    
    
    1.1
    
    
    
    0.12
    
    
    
    17.6
    
    
    
    (59.5
    )
    
    
    (77.21
    )(200)
    
    
    952.8
    
    
    
    1.6
    
    
    
    0.17
    
    
    
    (7.5
    )
    
    
    (84.6
    )
    
    
    (109.71
    )
 (1)
    
    Net interest income of the first year.
 As of December 31, 2004Net Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    525.7
    
    
    Ps.
    (2.3
    )
    
    
    (0.44
    )%
    
    Ps.
    37.5
    
    
    Ps.
    10.0
    
    
    
    36.36
    %150
    
    
    526.3
    
    
    
    (1.7
    )
    
    
    (0.32
    )
    
    
    35.0
    
    
    
    7.5
    
    
    
    27.27100
    
    
    526.8
    
    
    
    (1.2
    )
    
    
    (0.23
    )
    
    
    32.5
    
    
    
    5.0
    
    
    
    18.1850
    
    
    527.4
    
    
    
    (0.6
    )
    
    
    (0.11
    )
    
    
    30.0
    
    
    
    2.5
    
    
    
    9.09Static
    
    
    528.0
    
    
    
    
    
    
    
    
    
    
    
    27.5
    
    
    
    
    
    
    
    (50)
    
    
    528.6
    
    
    Ps.
    0.6
    
    
    
    0.11
    %
    
    
    25.0
    
    
    Ps.
    (2.5
    )
    
    
    (9.09
    )%(100)
    
    
    529.2
    
    
    
    1.2
    
    
    
    0.23
    
    
    
    22.5
    
    
    
    (5.0
    )
    
    
    (18.18
    )(150)
    
    
    529.7
    
    
    
    1.7
    
    
    
    0.32
    
    
    
    20.0
    
    
    
    (7.5
    )
    
    
    (27.27
    )(200)
    
    
    530.3
    
    
    
    2.3
    
    
    
    0.44
    
    
    
    17.5
    
    
    
    (10.0
    )
    
    
    (36.36
    )
 (1)
    
    Net interest income of the first year.
 As of December 31, 2004Net Non-Trading Portfolio
    
    Fair Value
    
    
    Net Interest Income(1)Change in Interest Rates in Basis Points
    
    
    
    
    
    Absolute
    
    
    
    
    
    
    
    
    
    
    Absolute(Rate Shock)
    
    Amount
    
    
    Variation
    
    
    % Change
    
    
    Amount
    
    
    Variation
    
    
    % Change(in millions of pesos, except percentages)200
    
    Ps.
    424.2
    
    
    Ps.
    1.0
    
    
    
    0.24
    %
    
    Ps.
    109.3
    
    
    Ps.
    59.7
    
    
    
    120.36
    %150
    
    
    423.9
    
    
    
    0.7
    
    
    
    0.17
    
    
    
    94.2
    
    
    
    44.6
    
    
    
    89.92100
    
    
    423.7
    
    
    
    0.5
    
    
    
    0.12
    
    
    
    79.3
    
    
    
    29.7
    
    
    
    59.8850
    
    
    423.4
    
    
    
    0.2
    
    
    
    0.05
    
    
    
    64.4
    
    
    
    14.8
    
    
    
    29.84Static
    
    
    423.2
    
    
    
    
    
    
    
    
    
    
    
    49.6
    
    
    
    
    
    
    
    (50)
    
    
    423.0
    
    
    Ps.
    (0.2
    )
    
    
    (0.05
    )%
    
    
    34.9
    
    
    Ps.
    (14.7
    )
    
    
    (29.64
    )%(100)
    
    
    422.8
    
    
    
    (0.4
    )
    
    
    (0.09
    )
    
    
    20.2
    
    
    
    (29.4
    )
    
    
    (59.27
    )(150)
    
    
    422.6
    
    
    
    (0.6
    )
    
    
    (0.14
    )
    
    
    (2.4
    )
    
    
    (52.0
    )
    
    
    (104.84
    )(200)
    
    
    422.5
    
    
    
    (0.7
    )
    
    
    (0.17
    )
    
    
    (25.0
    )
    
    
    (74.6
    )
    
    
    (150.40
    )
 (1)
    
    Net interest income of the first year.
 -190-




---



##### Table of Contents



Foreign Exchange Rate Risk
      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
    (2)
    
    
    
    
    
    
    (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.
 -191-




---



##### 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.
 Value of Foreign Currency Net Position as ofDecember 31, 2004Percentage Change in the Value of the Peso Relative to the Dollar(1)
    
    Amount
    
    
    Absolute Variation
    
    
    % Change(in millions of pesos, except percentages)40%
    
    Ps.
    1,086.8
    
    
    Ps.
    310.5
    
    
    
    40.0
    %30%
    
    
    1,009.2
    
    
    
    232.9
    
    
    
    30.020%
    
    
    931.6
    
    
    
    155.3
    
    
    
    20.010%
    
    
    853.9
    
    
    
    77.6
    
    
    
    10.0Static
    
    
    776.3
    
    
    
    
    
    
    
    (10)%
    
    
    698.7
    
    
    
    (77.6
    )
    
    
    (10.0
    )(20)%
    
    
    621.0
    
    
    
    (155.3
    )
    
    
    (20.0
    )(30)%
    
    
    543.4
    
    
    
    (232.9
    )
    
    
    (30.0
    )(40)%
    
    
    465.8
    
    
    
    (310.5
    )
    
    
    (40.0
    )
 (1)
    
    Devaluation / (Revaluation).
  
 Currency Mismatches
   -192-




---



##### Table of Contents



As of December 31, 2006Assets
    
    
    Liabilities
    
    
    Gap(In millions of pesos)Financial Assets and Liabilities
    
    
    19,136.1
    
    
    
    21,621.5
    
    
    
    (2,485.4
    )Pesos  Unadjusted
    
    
    8,101.0
    
    
    
    10,729.2
    
    
    
    (2,628.2
    )Pesos  Adjusted by CER
    
    
    4,222.9
    
    
    
    3,826.2
    
    
    
    396.7Foreign Currency
    
    
    6,812.2
    
    
    
    7,066.1
    
    
    
    (253.9
    )Other Assets and Liabilities
    
    
    4,328.8
    
    
    
    580.4
    
    
    
    3,748.4Total Gap
    
    
    23,464.9
    
    
    
    22,201.9
    
    
    
    1,263.0Adjusted for Forward Transactions Recorded in Memo AccountsFinancial Assets and Liabilities
    
    
    19,136.1
    
    
    
    21,621.5
    
    
    
    (2,485.4
    )In pesos, unadjusted, including shareholders equity
    
    
    7,625.7
    
    
    
    10,580.3
    
    
    
    (2,954.6
    )In pesos, adjusted by the CER
    
    
    4,222.9
    
    
    
    3,826.2
    
    
    
    396.7In foreign currency (1)
    
    
    7,287.5
    
    
    
    7,215.0
    
    
    
    72.5Other Assets and Liabilities
    
    
    4,328.8
    
    
    
    580.4
    
    
    
    3,748.4Total Adjusted Gap
    
    
    23,464.9
    
    
    
    22,201.9
    
    
    
    1,263.0
 (1)
    
    Adjusted for forward sales and purchases of foreign exchange made by the Bank and recorded off-balance sheet.
 Peso-denominated Assets and Liabilities Adjusted by CER
   Assets and Liabilities Denominated in Foreign Currency
   Non-adjusted Peso-denominated Assets and Liabilities
 -193-




---



##### Table of Contents



Other Assets and Liabilities
 amparo
 
 Market Risk
  i)
    
    A 95% degree of confidence.ii)
    
    VaR estimates are made for holding periods of 1 day and N days, where N is defined
as the number of days necessary to liquidate the position in each security and foreign
currency.iii)
    
    In the case of securities newly issued, 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 with similar risk and characteristics from domestic
issuers is used.
  
 Item 12. Description of Securities Other Than Equity Securities
  -194-




---



##### 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
        -195-




---



##### Table of Contents



Item 16. [Reserved]
 
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
  
 Item 16C. Principal Accountants Fees and Services
  2006
    
    2005(In thousands of pesos)Audit fees
    
    
    3,838
    
    
    
    3,177Audit related fees
    
    
    1,428
    
    
    
    819Tax fees
    
    
    407
    
    
    
    126All other fees
    
    
    114
    
    
    
    256Total
    
    Ps.
    5,787
    
    
    Ps.
    4,378
 Audit Fees
  Audit-Related Fees
  Tax Fees
 -196-




---



##### Table of Contents



All Other Fees
  Audit Committee Preapproval
  
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and affiliated Purchasers
  -197-




---



##### 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 By-laws (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
    
    English translation of form of Loan Agreement, dated March 21, 2002, by and between Seguro de
Depositos S.A. and the Bank.***4.4
    
    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).**4.5
    
    Form of Amendment No. 1 and Waiver to Restructured Loan Facility (as evidenced by the
Amendment No. 1 and Waiver to 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). ****4.6
    
    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).
 -198-




---



##### Table of Contents



Exhibit
    
    Description8.1
    
    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.
 -199-




---



##### Table of Contents



SIGNATURE
  GRUPO FINANCIERO GALICIA S.A.By:
    
    /s/ Antonio GarcésName: Antonio GarcésTitle:   Chairman of the Board, Chief Executive Officer
  -200-




---



##### 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, 2006 and 2005
    
    
    F-3Consolidated Statements of Income for the fiscal years ended December 31, 2006, 2005 and
2004
    
    
    F-6Consolidated Statements of Cash Flows for the fiscal years ended December 31, 2006,
2005 and 2004
    
    
    F-8Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended
December 31, 2006, 2005 and 2004
    
    
    F-10Notes to the Consolidated Financial Statements
    
    
    F-11
 F-1




---



##### Table of Contents



Report of the Independent Registered Public Accounting Firm
 
     
 
 F-2




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Balance Sheets
 As of December 31, 2006 and 2005
  December 31,2006
    
    
    2005ASSETSA. Cash and due from banksCash
    
    
    550,851
    
    
    
    552,495Banks and correspondents
    
    
    1,743,998
    
    
    
    488,663Ps.
    2,294,849
    
    
    Ps.
    1,041,158B. Government and corporate securitiesHoldings of investment account securities
    
    
    2,608,827
    
    
    
    650,924Holdings of trading securities
    
    
    28,566
    
    
    
    21,229Government securities without quotation
    
    
    431,753
    
    
    
    4,591,071Securities issued by the Argentine Central Bank
    
    
    119,520
    
    
    
    704,467Investments in quoted corporate securities
    
    
    339
    
    
    
    4,418Allowances
    
    
    (357
    )
    
    
    (353
    )Ps.
    3,188,648
    
    
    Ps.
    5,971,756C. LoansTo the non-financial public sector
    
    
    2,739,282
    
    
    
    5,235,869To the financial sector
    
    
    311,623
    
    
    
    128,203To the non-financial private sector and residents abroad
    
    
    7,790,689
    
    
    
    5,619,015Overdrafts
    
    
    346,135
    
    
    
    222,779Promissory notes
    
    
    2,143,706
    
    
    
    1,836,887Mortgage loans
    
    
    687,954
    
    
    
    503,397Pledge loans
    
    
    67,145
    
    
    
    121,095Consumer loans
    
    
    563,232
    
    
    
    258,015Credit card loans
    
    
    2,458,572
    
    
    
    1,732,114Other
    
    
    1,403,209
    
    
    
    812,587Accrued Interest, adjustments and quotation differences receivable
    
    
    154,960
    
    
    
    146,839Documented interest
    
    
    (33,651
    )
    
    
    (14,684
    )Unallocated collections
    
    
    (573
    )
    
    
    (14
    )Allowances
    
    
    (327,042
    )
    
    
    (427,911
    )Ps.
    10,514,552
    
    
    Ps.
    10,555,176D. Other receivables resulting from financial brokerageArgentine Central Bank
    
    
    1,878,286
    
    
    
    108,819Amounts receivable for spot and forward sales to be settled
    
    
    91,441
    
    
    
    264,170Securities receivable under spot and forward purchases to be settled
    
    
    1,464,917
    
    
    
    270,476Negotiable obligations without quotation
    
    
    26,721
    
    
    
    41,403Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    30,964
    
    
    
    709Compensation to be received from the national government
    
    
    401,335
    
    
    
    4,154,989Other
    
    
    1,570,213
    
    
    
    1,357,057Allowances
    
    
    (21,896
    )
    
    
    (35,242
    )Ps.
    5,441,981
    
    
    Ps.
    6,162,381
 The accompanying Notes are an integral part of these consolidated financial statements
 F-3




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Consolidated Balance Sheets  Continued
 As of December 31, 2006 and 2005
  December 31,2006
    
    
    2005ASSETS (Continued)E. Assets under financial leasesAssets under financial leases
    
    
    208,603
    
    
    
    193,697Allowances
    
    
    (2,428
    )
    
    
    (2,521
    )Ps.
    206,175
    
    
    Ps.
    191,176F. Equity investmentsIn financial institutions
    
    
    3,057
    
    
    
    3,088Other
    
    
    77,385
    
    
    
    113,336Allowances
    
    
    (44,867
    )
    
    
    (31,304
    )Ps.
    35,575
    
    
    Ps.
    85,120G. Miscellaneous receivablesReceivables for assets sold
    
    
    15,118
    
    
    
    85Tax on minimum presumed income  Tax credit
    
    
    218,884
    
    
    
    170,989Other
    
    
    515,805
    
    
    
    354,360Accrued interest on receivables for assets sold
    
    
    93
    
    
    
    6Other accrued interest and adjustments receivable
    
    
    82
    
    
    
    65Allowances
    
    
    (74,472
    )
    
    
    (77,626
    )Ps.
    675,510
    
    
    Ps.
    447,879H. Bank premises and equipment
    
    Ps.
    490,290
    
    
    Ps.
    484,198I. Miscellaneous assets
    
    Ps.
    271,107
    
    
    Ps.
    199,152J. Intangible assetsGoodwill
    
    
    65,165
    
    
    
    85,003Organization and development expenses
    
    
    437,631
    
    
    
    405,357Ps.
    502,796
    
    
    Ps.
    490,360K. Unallocated items
    
    
    4,381
    
    
    
    1,678L. Other Assets
    
    
    8,311
    
    
    
    5,690Total Assets
    
    Ps.
    23,634,175
    
    
    Ps.
    25,635,724
 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, 2006 and 2005
 December 31,2006
    
    
    2005LIABILITIES AND SHAREHOLDERS EQUITYM. DepositsNon-financial public sector
    
    Ps.
    63,922
    
    
    Ps.
    90,341Financial sector
    
    
    154,303
    
    
    
    6,201Non-financial private sector and residents abroad
    
    
    10,561,144
    
    
    
    8,325,118Current accounts
    
    
    1,982,765
    
    
    
    1,639,766Saving accounts
    
    
    2,442,946
    
    
    
    2,211,436Time deposits
    
    
    5,789,299
    
    
    
    4,186,018Investment accounts
    
    
    4,031
    
    
    
    158Other
    
    
    211,176
    
    
    
    192,584Accrued interest and quotation differences payable
    
    
    130,927
    
    
    
    95,156Ps.
    10,779,369
    
    
    Ps.
    8,421,660N. Other liabilities resulting from financial brokerageArgentine Central Bank
    
    
    3,025,977
    
    
    
    8,611,909Other
    
    
    3,025,977
    
    
    
    8,611,909Banks and international entities
    
    
    844,263
    
    
    
    762,055Unsubordinated negotiable obligations
    
    
    2,809,416
    
    
    
    3,052,434Amounts payable for spot and forward purchases to be settled
    
    
    1,046,181
    
    
    
    222,729Securities to be delivered under spot and forward sales to be settled
    
    
    91,329
    
    
    
    266,071Loans from domestic financial institutions
    
    
    281,055
    
    
    
    220,422Balances from forward transactions without delivery of underlying
asset to be settled
    
    
    31,635
    
    
    
    418Other
    
    
    1,566,706
    
    
    
    1,152,433Accrued interest and quotation differences payable
    
    
    128,391
    
    
    
    125,242Ps.
    9,824,953
    
    
    Ps.
    14,413,713O. Miscellaneous liabilitiesDirectors and Syndics fees
    
    
    3,255
    
    
    
    3,438Other
    
    
    219,002
    
    
    
    265,301Adjustments and accrued interest payable
    
    
    838
    
    
    
    1Ps.
    223,095
    
    
    Ps.
    268,740P. Provisions
    
    
    182,927
    
    
    
    254,351Q. Subordinated negotiable obligations
    
    
    777,617
    
    
    
    431,024R. Unallocated items
    
    
    5,734
    
    
    
    3,915S. Other Liabilities
    
    
    64,827
    
    
    
    70,046T. Minority interests
    
    
    167,185
    
    
    
    145,499Total Liabilities
    
    Ps.
    22,025,707
    
    
    Ps.
    24,008,948SHAREHOLDERS EQUITY
    
    
    1,608,468
    
    
    
    1,626,776Total Liabilities and Shareholders Equity
    
    Ps.
    23,634,175
    
    
    Ps.
    25,635,724
 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 Statements of Income
 For the fiscal years ended December 31, 2006, 2005 and 2004
  December 31,2006
    
    
    2005
    
    
    2004A. Financial incomeInterest on cash and due from banks
    
    Ps.
    874
    
    
    Ps.
    68
    
    
    Ps.
    44Interest on loans granted to the financial sector
    
    
    2,869
    
    
    
    2,823
    
    
    
    5,189Interest on overdrafts
    
    
    69,670
    
    
    
    39,957
    
    
    
    28,254Interest on promissory notes
    
    
    200,564
    
    
    
    119,017
    
    
    
    97,544Interest on mortgage loans
    
    
    69,967
    
    
    
    74,052
    
    
    
    67,935Interest on pledge loans
    
    
    12,146
    
    
    
    10,806
    
    
    
    6,706Interest on credit card loans
    
    
    281,116
    
    
    
    222,657
    
    
    
    163,054Interest on other loans
    
    
    105,813
    
    
    
    35,705
    
    
    
    26,050Interest on other receivables resulting from financial brokerage
    
    
    171,878
    
    
    
    165,895
    
    
    
    90,017Net income from government and corporate securities
    
    
    261,229
    
    
    
    333,107
    
    
    
    Net income from secured loans  Decree No. 1387/01
    
    
    194,777
    
    
    
    203,487
    
    
    
    186,038Consumer price index adjustment (CER / CVS)
    
    
    730,074
    
    
    
    1,091,832
    
    
    
    588,653Other
    
    
    148,860
    
    
    
    99,226
    
    
    
    132,101Ps.
    2,249,837
    
    
    Ps.
    2,398,632
    
    
    Ps.
    1,391,585B. Financial expensesInterest on current account deposits
    
    
    21,043
    
    
    
    15,301
    
    
    
    4,858Interest on savings account deposits
    
    
    4,105
    
    
    
    4,557
    
    
    
    4,124Interest on time deposits
    
    
    313,036
    
    
    
    142,051
    
    
    
    90,511Interest on financing from the financial sector
    
    
    5,527
    
    
    
    4,581
    
    
    
    6,146Interest on other liabilities resulting from financial brokerage
    
    
    326,462
    
    
    
    269,276
    
    
    
    172,558Other interest
    
    
    275,509
    
    
    
    334,398
    
    
    
    323,245Net loss from government and corporate securities
    
    
    
    
    
    
    
    
    
    
    7,027Consumer price index adjustment
    
    
    697,694
    
    
    
    1,006,752
    
    
    
    501,831Other
    
    
    228,237
    
    
    
    69,013
    
    
    
    57,144Ps.
    1,871,613
    
    
    Ps.
    1,845,929
    
    
    Ps.
    1,167,444C. Gross brokerage margin
    
    
    378,224
    
    
    
    552,703
    
    
    
    224,141Loan loss provisions
    
    
    110,869
    
    
    
    76,730
    
    
    
    190,232D. Income from servicesIn relation to lending transactions
    
    
    247,501
    
    
    
    185,825
    
    
    
    157,084In relation to borrowing transactions
    
    
    220,543
    
    
    
    175,907
    
    
    
    140,375Other commissions
    
    
    17,056
    
    
    
    14,898
    
    
    
    8,035Other
    
    
    367,993
    
    
    
    269,106
    
    
    
    223,558Ps.
    853,093
    
    
    Ps.
    645,736
    
    
    Ps.
    529,052E. Expenses for servicesCommissions
    
    
    80,801
    
    
    
    53,906
    
    
    
    40,899Other
    
    
    100,291
    
    
    
    68,065
    
    
    
    51,860Ps.
    181,092
    
    
    Ps.
    121,971
    
    
    Ps.
    92,759
 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  Continued
 For the fiscal years ended December 31, 2006, 2005 and 2004
  December 31,2006
    
    
    2005
    
    
    2004F. Administrative expensesPersonnel expenses
    
    
    506,632
    
    
    
    392,308
    
    
    
    296,733Directors and syndics fees
    
    
    5,989
    
    
    
    5,793
    
    
    
    4,040Other fees
    
    
    36,148
    
    
    
    32,314
    
    
    
    19,808Advertising and publicity
    
    
    84,507
    
    
    
    68,132
    
    
    
    37,796Taxes
    
    
    50,469
    
    
    
    37,349
    
    
    
    40,872Other operating expenses
    
    
    217,016
    
    
    
    187,223
    
    
    
    179,983Other
    
    
    73,803
    
    
    
    57,849
    
    
    
    44,708Ps.
    974,564
    
    
    Ps.
    780,968
    
    
    Ps.
    623,940Net Income / (Loss) from financial brokerage
    
    Ps.
    (35,208
    )
    
    Ps.
    218,770
    
    
    Ps.
    (153,738
    )G. Minority interests result
    
    Ps.
    (19,016
    )
    
    Ps.
    (34,609
    )
    
    Ps.
    (14,302
    )H. Miscellaneous incomeNet lncome from equity investments
    
    
    
    
    
    
    6,662
    
    
    
    2,990Default interests
    
    
    1,062
    
    
    
    835
    
    
    
    895Loans recovered and allowances reversed
    
    
    142,885
    
    
    
    163,608
    
    
    
    366,645Other
    
    
    151,176
    
    
    
    111,061
    
    
    
    134,348Consumer price index adjustment (CER)
    
    
    105
    
    
    
    7,341
    
    
    
    9,728Ps.
    295,228
    
    
    Ps.
    289,507
    
    
    Ps.
    514,606I. Miscellaneous lossesNet loss on long-term investments
    
    
    14,362
    
    
    
    
    
    
    
    Default interests and charges in favor of the Argentine Central Bank
    
    
    571
    
    
    
    16
    
    
    
    19Loan loss provisions for miscellaneous receivables and other provisions
    
    
    62,424
    
    
    
    99,754
    
    
    
    134,135Amortization of differences arising from court resolutions
    
    
    
    
    
    
    122,279
    
    
    
    121,010Other
    
    
    88,323
    
    
    
    124,538
    
    
    
    157,119Consumer price index adjustment
    
    
    
    
    
    
    541
    
    
    
    336Ps.
    165,680
    
    
    Ps.
    347,128
    
    
    Ps.
    412,619Net Income / (Loss) before tax
    
    
    75,324
    
    
    
    126,540
    
    
    
    (66,053
    )J. Income tax
    
    Ps.
    94,238
    
    
    Ps.
    19,302
    
    
    Ps.
    43,818Net Income / (Loss) for the fiscal year
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )Net Income / (Loss) per common share (basic and assuming full dilution)
    
    
    (0.015
    )
    
    
    0.086
    
    
    
    (0.093
    )
 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 Cash Flows
 For the fiscal years ended December 31, 2006, 2005 and 2004
  December 31,2006
    
    
    2005
    
    
    2004Cash Flow from operating activities:Net Income / (Loss) for the year
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )Adjustments to reconcile net income to net cash fromOperating activities:Depreciation of bank premises and equipment and
Miscellaneous assets
    
    
    37,550
    
    
    
    36,962
    
    
    
    41,567Amortization of intangible assets
    
    
    55,382
    
    
    
    182,713
    
    
    
    193,744Increase in allowances for loan and other losses, net of reversals
    
    
    80,863
    
    
    
    48,209
    
    
    
    69,132Equity (gain) loss of unconsolidated subsidiaries
    
    
    14,362
    
    
    
    (6,662
    )
    
    
    (3,580
    )(Gain) loss on sale of premises and equipment
    
    
    (1,261
    )
    
    
    (1,355
    )
    
    
    (391
    )Gain on trouble debt restructuring
    
    
    
    
    
    
    
    
    
    
    (141,610
    )Consumer price index adjustment (CER/CVS)
    
    
    891,866
    
    
    
    (484,834
    )
    
    
    (26,447
    )Unrealized foreign exchange (loss) / gain
    
    
    (5,914
    )
    
    
    (13,569
    )
    
    
    13,940Decrease (Increase) in government securities
    
    
    1,902,792
    
    
    
    490,050
    
    
    
    91,557Decrease (Increase) in other assets
    
    
    1,071,275
    
    
    
    476,928
    
    
    
    (75,634
    )Increase (Decrease) in other liabilities
    
    
    162,287
    
    
    
    20,321
    
    
    
    (273,297
    )Net cash provided by / (used in) operating activities
    
    Ps.
    4,190,288
    
    
    Ps.
    856,001
    
    
    Ps.
    (220,890
    )Cash Flow from investing activities:(Increase)/Decrease in loans, net
    
    
    297,601
    
    
    
    (628,259
    )
    
    
    (112,368
    )Sales of investments in other companies
    
    
    13,774
    
    
    
    
    
    
    
    Increase in deposits at the Argentine Central Bank
    
    
    (1,769,467
    )
    
    
    (30,356
    )
    
    
    (8,617
    )Additions to bank premises and equipment, miscellaneous,
and intangible assets
    
    
    (196,313
    )
    
    
    (127,252
    )
    
    
    (131,807
    )Proceeds from sales of premises and equipment
    
    
    13,838
    
    
    
    18,350
    
    
    
    12,599Net cash used in investing activities
    
    Ps.
    (1,640,567
    )
    
    Ps.
    (767,517
    )
    
    Ps.
    (240,193
    )Cash Flow from financing activities:Cash dividends paid in minority interests
    
    
    (5,280
    )
    
    
    
    
    
    
    Increase in deposits, net
    
    
    1,894,251
    
    
    
    1,696,266
    
    
    
    1,415,052Borrowings under credit facilities  long-term
    
    
    418,018
    
    
    
    179,181
    
    
    
    Payments on credit facilities  long-term
    
    
    (687,024
    )
    
    
    (418,483
    )
    
    
    (289,719
    )Decrease in short-term borrowings, net
    
    
    (3,856,813
    )
    
    
    (1,239,176
    )
    
    
    (561,018
    )(Decrease)/Increase in repurchase agreements
    
    
    934,408
    
    
    
    (259,142
    )
    
    
    261,654Repayment of principal and interest on restructured debt
    
    
    
    
    
    
    
    
    
    
    (207,639
    )Net cash (used in) / provided by financing activities
    
    Ps.
    (1,302,440
    )
    
    Ps.
    (41,354
    )
    
    Ps.
    618,330
 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  Continued
 For the fiscal years ended December 31, 2006, 2005 and 2004
  December 31,2006
    
    
    2005
    
    
    2004Increase in cash and cash equivalents, net
    
    Ps.
    1,247,281
    
    
    Ps.
    47,130
    
    
    Ps.
    157,247Cash and cash equivalents at the beginning of the year
    
    
    1,041,158
    
    
    
    988,669
    
    
    
    826,150Effect of exchange rate changes on cash and cash equivalents
    
    
    6,410
    
    
    
    5,359
    
    
    
    5,272Cash and cash equivalents at the end of the year
    
    Ps.
    2,294,849
    
    
    Ps.
    1,041,158
    
    
    Ps.
    988,669Supplemental disclosures relative to cash flows:Interest paid
    
    Ps.
    734,756
    
    
    Ps.
    516,429
    
    
    Ps.
    509,901Income tax paid
    
    Ps.
    20,074
    
    
    Ps.
    44,625
    
    
    Ps.
    528Minimum Presumed Income Tax .(*)
    
    Ps.
    30,031
    
    
    Ps.
    42,419
    
    
    Ps.
    24,886
  
 (*)
    
    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-9




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholders Equity
 For the years ended December 31, 2006, 2005 and 2004
  Inflationadjustments to
    
    Shares in
    
    
    
    
    
    
    
    
    
    (Accumulated
    
    TotalCapital
    
    Paid in
    
    Capital Stock and
    
    own
    
    Profit reserves
    
    deficit) / Retained
    
    ShareholdersStock
    
    Capital
    
    Paid in Capital
    
    portfolio
    
    Legal
    
    Other
    
    earnings
    
    EquityBalance at December
31, 2003
    
    Ps.
    1,092,407
    
    
    Ps.
    79,251
    
    
    Ps.
    1,410,048
    
    
    
    
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    (1,191,816
    )
    
    Ps.
    1,419,383Capital Increase
    
    
    149,000
    
    
    
    61,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,026Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (109,871
    )
    
    
    (109,871
    )Balance 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
    )
    
    
    Shares in own portfolio
    
    
    (1,614
    )
    
    
    
    
    
    
    (362
    )
    
    
    1,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sales of Shares in own
portfolio
    
    
    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.
    1,608,468
 The accompanying Notes are an integral part of these consolidated financial statements
 F-10




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 
 Notes to the Consolidated Financial Statements
 For the fiscal years ended December 31, 2006, 2005 and 2004
  1. Basis of Presentation.
      Issuing Company
    
    December 31, 2006
    
    December 31, 2005Banco 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
    %
    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, 2006, 2005 and 2004
      Issuing Company
    
    December 31, 2006
    
    December 31, 2005Tarjetas Cuyanas S.A.
    
    
    60.000
    %
    
    
    60.000
    %Tarjetas del Mar S.A.
    
    
    99.995
    %
    
    
    99.999
    %Tarjeta Naranja S.A.
    
    
    80.000
    %
    
    
    80.000
    %
      2. Significant Accounting Policies.
   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, 2006, 2005 and 2004
   2.1 Presentation of Financial Statements in Constant Argentine Pesos.
    2.2 Foreign Currency.
    2.3 Government and Corporate Securities.
   Valuation of Government Securities under Argentine Banking GAAP.
  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, 2006, 2005 and 2004
             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, 2006, 2005 and 2004
     National Secured Loans and Provincial Secured Bonds.
     2.4 Financial Trust Debt Securities and Certificates of Participation.
  2.5 Interest Income (Expense) Recognition.
   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, 2006, 2005 and 2004
   2.6 Allowance for Loan Losses and Provisions for Contingencies.
   2.7 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, 2006, 2005 and 2004
 2.8 Bank Premises and Equipment and Miscellaneous Assets.
      2.9 Intangible Assets.
    2.10 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, 2006, 2005 and 2004
 2.11 Minimum Presumed Income Tax and Income Tax.
     Tax credit
    
    Date of generation
    
    Probable offsetting date11,702
    
    
    2001
    
    
    
    201045,158
    
    
    2002
    
    
    
    201043,004
    
    
    2003
    
    
    
    201042,037
    
    
    2004
    
    
    
    201046,126
    
    
    2005
    
    
    
    201022,073
    
    
    2006
    
    
    
    20107,007
    
    
    2006
    
    
    
    2011
   2.12 Statements of Cash Flows.
 Statement of Cash
Flows
 2.13 Use of Estimates.
  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, 2006, 2005 and 2004
  3. Restricted Assets and Other Contingent Liabilities.
   December 31,2006
    
    
    2005Peso balances
    
    Ps.
    1,217,511
    
    
    Ps.
    758,124Foreign currency balances
    
    
    658,751
    
    
    
    418,710
  December 31,2006
    
    
    2005Funds and securities pledged under various arrangements
    
    Ps.
    562,081
    
    
    Ps.
    217,090Shares on equity investments (*)
    
    
    5,250
    
    
    
    24,094Deposits in the Argentine Central Bank, restricted
under Argentine Central Bank regulations
    
    
    1,734,969
    
    
    
    1,450Loans granted as collateral
    
    
    955,414
    
    
    
    5,483,982Loans pledged and real property granted as
collateral-Banco Galicia Uruguay S.A. (**)
    
    
    249,738
    
    
    
    497,281Total
    
    Ps.
    3.507,452
    
    
    Ps.
    6,223,897
 
 (*)
    
    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.   Aguas Cordobesas S.A.:
 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, 2006, 2005 and 2004
  Aguas Provinciales de Santa Fe S.A.
 Aguas Argentinas S.A.
 Guarantees granted for direct obligations
 4. Interest-Bearing Deposits with Other Banks.
 .
 5. Government and Corporate Securities.
   December 31,2006
    
    
    2005Government SecuritiesWith quotation:Recorded at market valueFor trading purposes:Government Bonds
    
    Ps.
    28,206
    
    
    Ps.
    20,873Other
    
    
    360
    
    
    
    356Less: Valuation allowances
    
    
    (357
    )
    
    
    (353
    )Total trading securities
    
    Ps.
    28,209
    
    
    Ps.
    20,876Recorded at amortized costIn investment accountsGovernment Bonds (Boden 2012 Bonds)
    
    
    2,608,827
    
    
    
    650,924Total securities in investment accounts
    
    Ps.
    2,608,827
    
    
    Ps.
    650,924
 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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005Securities issued by the Argentine Central BankSecurities with quotation
    
    
    119,520
    
    
    
    699,041Securities without quotation
    
    
    
    
    
    
    5,426Total Securities issued by the Argentine Central Bank
    
    Ps.
    119,520
    
    
    Ps.
    704,467Without quotationFiscal Tax Credit Certificate (*)
    
    
    
    
    
    
    34,458Government Bonds
    
    
    431,753
    
    
    
    4,556,613Total Without quotation securities
    
    
    431,753
    
    
    
    4,591,071Total government securities
    
    Ps.
    3,188,309
    
    
    Ps.
    5,967,338Corporate SecuritiesShares
    
    
    
    
    
    
    376Marketable Negotiable obligations
    
    
    339
    
    
    
    4,042Total corporate securities
    
    Ps.
    339
    
    
    Ps.
    4,418Total government and corporate securities
    
    Ps.
    3,188,648
    
    
    Ps.
    5,971,756
 
 (*)
    
    Government securities collateralized by future tax payments.  6. Loans.
     Overdrafts
 Promissory Notes
 Mortgage loans
 Pledge loans
 Credit card loans
 Consumer loans
 Others
  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, 2006, 2005 and 2004
  December 31,2006
    
    
    2005Non-financial public sector
    
    Ps.
    2,739,282
    
    
    Ps.
    5,235,869Financial sector (Argentine)
    
    
    311,623
    
    
    
    128,203Non-financial private sector and residents abroad
    
    
    7,790,689
    
    
    
    5,619,015- With preferred guarantees
    
    
    1,076,170
    
    
    
    838,540- With other guarantees
    
    
    1,307,511
    
    
    
    1,024,542- Unsecured
    
    
    5,407,008
    
    
    
    3,755,933Subtotal
    
    
    10,841,594
    
    
    
    10,983,087Allowance for loan losses (See Note 7)
    
    
    (327,042
    )
    
    
    (427,911
    )Total
    
    Ps.
    10,514,552
    
    
    Ps.
    10,555,176
  December 31,2006
    
    2005Financial services industry
    
    
    8.54
    %
    
    
    3.13
    %Public sector
    
    
    25.27
    %
    
    
    47.67
    %Agriculture and livestock
    
    
    8.96
    %
    
    
    7.00
    %Consumer
    
    
    27.46
    %
    
    
    17.84
    %
   7. Allowance for Loan Losses.
  December 31,2006
    
    
    2005
    
    
    2004Balance at beginning of year
    
    Ps.
    427,911
    
    
    Ps.
    632,619
    
    
    Ps.
    1,177,315Provision charged to income
    
    
    105,312
    
    
    
    61,071
    
    
    
    179,335Prior allowances reverse
    
    
    (32,492
    )
    
    
    (96,240
    )
    
    
    (210,284
    )Inflation and foreign exchange effect and other adjustments
    
    
    27,113
    
    
    
    4,957
    
    
    
    7,580Loans charged off
    
    
    (200,802
    )
    
    
    (174,496
    )
    
    
    (521,327
    )Balance at end of year
    
    Ps.
    327,042
    
    
    Ps.
    427,911
    
    
    Ps.
    632,619
  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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005
    
    
    2004Provisions charged to income
    
    Ps.
    105,312
    
    
    Ps.
    61,071
    
    
    Ps.
    179,335Direct charge-offs
    
    
    3,338
    
    
    
    6,068
    
    
    
    8,951Other receivables losses
    
    
    788
    
    
    
    8,430
    
    
    
    993Financial leases
    
    
    1,431
    
    
    
    1,161
    
    
    
    953Ps.
    110,869
    
    
    Ps.
    76,730
    
    
    Ps.
    190,232
   8. Other Receivables Resulting from Financial Brokerage.
  December 31,2006
    
    
    2005Preferred guarantees, including deposits with
The Argentine Central Bank (1)
    
    Ps.
    1,900,094
    
    
    Ps.
    137,379Other guarantees
    
    
    229
    
    
    
    483Unsecured (2)
    
    
    3,563,554
    
    
    
    6,059,761Less: Allowance for doubtful accounts
    
    
    (21,896
    )
    
    
    (35,242
    )Ps.
    5,441,981
    
    
    Ps.
    6,162,381
 
 (1)
    
    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 37) (2) Includes: (i)
    
    Ps. 401,335 and  Ps. 4,154,989 as of December 31, 2006 and 2005, of
Compensation to be received from the National Government.
 (ii)  Ps. 837,276 and  Ps. 279,033 of repurchase agreements of Boden 2012 Bonds as of December
31, 2006 and 2005, respectively.(iii)  Ps. 1,293,377 and  Ps. 990,359 of financial trust participation certificates as of
December 31, 2006 and 2005, respectively.
   December 31,2006
    
    
    2005Mutual funds
    
    Ps.
    32,190
    
    
    Ps.
    33.402Galtrust I
    
    
    571,582
    
    
    
    536,509Other financial trust participation certificates
    
    
    721,795
    
    
    
    453,850Accrued commissions
    
    
    8,992
    
    
    
    14,818Others
    
    
    235,654
    
    
    
    318,478Ps.
    1,570,213
    
    
    Ps.
    1,357,057
 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, 2006, 2005 and 2004
 9. Equity Investments.
  December 31,2006
    
    
    2005In Financial Institutions, complementary and
authorized activitiesBanelco S.A.
    
    Ps.
    7,868
    
    
    Ps.
    7,219Visa Argentina S.A.
    
    
    951
    
    
    
    951Mercado de Valores de Buenos Aires S.A.
    
    
    8,050
    
    
    
    8,190Banco Latinoamericano de Exportaciones S.A.
    
    
    1,522
    
    
    
    1,572Others
    
    
    2,362
    
    
    
    2,288Total equity investments in Financial Institutions,
complementary and authorized activities
    
    Ps.
    20,753
    
    
    Ps.
    20,220In Non-financial InstitutionsAguas Argentinas S.A.
    
    Ps.
    23,370
    
    
    Ps.
    23,370Inversora Diamante S.A.(*)
    
    
    
    
    
    
    12,944Inversora Nihuiles S.A.(*)
    
    
    
    
    
    
    15,750Electrigal S.A.
    
    
    5,455
    
    
    
    5,455Aguas Provinciales de Santa Fe S.A.
    
    
    10,771
    
    
    
    10,771A.E.C. S.A.
    
    
    6,139
    
    
    
    6,139Aguas Cordobesas S.A.
    
    
    8,911
    
    
    
    8,911Tradecom International N.V.
    
    
    
    
    
    
    6,683Other
    
    
    5,043
    
    
    
    6,181Total equity investments in non-financial institutions
    
    Ps.
    59,689
    
    
    Ps.
    96,204Allowances
    
    Ps.
    (44,867
    )
    
    Ps.
    (31,304
    )Total Equity investments
    
    Ps.
    35,575
    
    
    Ps.
    85,120
 
 (*)
    
    On October 18, 2006, the Bank sold to third parties the shares of Inversora Diamante S.A.
and Inversora Nihuiles S.A. for  Ps. 12,966 and  Ps. 15,777, respectively. 10. Fixed Assets and Intangible Assets.
  December 31,2006
    
    
    2005Land and buildings
    
    Ps.
    568,330
    
    
    Ps.
    558,317Furniture and fixtures
    
    
    140,734
    
    
    
    132,874Machinery and equipment
    
    
    225,327
    
    
    
    213,056Vehicles
    
    
    1,008
    
    
    
    507Others
    
    
    6,684
    
    
    
    6,424Accumulated depreciation
    
    
    (451,793
    )
    
    
    (426,980
    )Ps.
    490,290
    
    
    Ps.
    484,198
   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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005Goodwill, net of accumulated
amortization of  Ps. 187,189 and
Ps. 174,884, respectively
    
    Ps.
    65,165
    
    
    Ps.
    85,003Organization and development
expenses, net of accumulated
amortization of  Ps. 139,247 and
Ps. 187,064 respectively
    
    
    70,410
    
    
    
    57,580Legal actions related to the
payment of deposits (amparo
claims), net of accumulated
amortization of  Ps. 321,169 and
Ps. 321,169, respectively (see
Note 2.9)
    
    
    367,221
    
    
    
    347,777Ps.
    502,796
    
    
    Ps.
    490,360
    December 31,2006
    
    
    2005Investment   Other Grupo Business
    
    Ps.
    
    
    
    Ps.
    684Banking- Head Office
    
    
    45,192
    
    
    
    54,706Regional Credit Card companies
    
    
    19,973
    
    
    
    29,613Ps.
    65,165
    
    
    Ps.
    85,003
 11. Miscellaneous Assets.
  December 31,2006
    
    
    2005Construction in progress
    
    Ps.
    161,279
    
    
    Ps.
    114,652Deposits on fixed asset purchases
    
    
    30,110
    
    
    
    5,546Stationery and supplies
    
    
    5,304
    
    
    
    3,170Real estate held for sale
    
    
    14,311
    
    
    
    16,328Others
    
    
    60,103
    
    
    
    59,456Ps.
    271,107
    
    
    Ps.
    199,152
 12. Allowances and Provisions.
  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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005Allowances against asset accounts:Government and corporate securities
    
    Ps.
    357
    
    
    Ps.
    353Other receivables resulting from financial brokerage, for collection risk (a)
    
    
    21,896
    
    
    
    35,242Assets under financial leases (a)
    
    
    2,428
    
    
    
    2,521Equity investments in other companies (b)
    
    
    44,867
    
    
    
    31,304Miscellaneous receivables, for collection risk (a)
    
    
    74,472
    
    
    
    77,626Reserves for contingencies:For severance payments (c)
    
    
    2,718
    
    
    
    1,648Litigations (d)
    
    
    22.202
    
    
    
    37,218Related to commitments undertaken with public services companies (e)
    
    
    
    
    
    
    13,000Other contingencies
    
    
    131,063
    
    
    
    176,829Sundry liabilities arising from credit card activities (f)
    
    
    25,777
    
    
    
    16,909Other commitments (g)
    
    
    1,167
    
    
    
    8,747Total reserves for contingencies
    
    Ps.
    182,927
    
    
    Ps.
    254,351
 
 (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)
    
    See Note 3  Restricted Assets.(f)
    
    Reserves for rewards to be given under a credit-card reward program, for a guarantee of
credit-card receivables and for the estimated liability for the insurance of the payment of
credit-card balances in the event of the death of the credit-card holder.    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, 2006, 2005 and 2004
 13. Other Liabilities Resulting from Financial Brokerage- Argentine Central Bank.
  December 31,2006
    
    
    2005DescriptionContractual Long-term liabilities:Advance for the acquisition of national government bonds in U.S. Dollars (1)
    
    Ps.
    307,998
    
    
    Ps.
    3,057,572Argentine Central Banks financial assistance (2)
    
    
    2,681,673
    
    
    
    5,299,994Total long-term liabilities
    
    Ps.
    2,989,671
    
    
    Ps.
    8,357,566Contractual Short-term liabilities:Other Central Bank Obligations
    
    
    423
    
    
    
    319Total short-term liabilities
    
    Ps.
    423
    
    
    Ps.
    319Accrued interest (3)
    
    
    35,883
    
    
    
    254,024Ps.
    3,025,977
    
    
    Ps.
    8,611,909
 
  
 
 January 2007
    
    
    1,762,671February 2007
    
    
    29,335March 2007
    
    
    889,667Ps.
    2,681,673
 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, 2006, 2005 and 2004
 14.
    
    Other Liabilities Resulting from Financial Brokerage- Banks and International Entities,
and Loans from Domestic Financial Institutions.
  December 31,2006
    
    
    2005DescriptionBank and International EntitiesContractual long-term LiabilitiesFloating Rate Bank Loans 2010 (i)
    
    Ps.
    124,986
    
    
    Ps.
    140,720Floating Rate Bank Loans 2014 (ii)
    
    
    249,896
    
    
    
    261,877Commodity Credit Corp (C.C.C) 2014 (iii)
    
    
    290,793
    
    
    
    286,779Floating Rate Bank Loans 2019 (iv)
    
    
    40,368
    
    
    
    37,903Internacional Finance Corp. (I.F.C.)
    
    
    79,237
    
    
    
    New York Branch
    
    
    9,932
    
    
    
    19,618Other lines from foreign banks
    
    
    3,668
    
    
    
    15,158Total long-term liabilities
    
    Ps.
    798,880
    
    
    Ps.
    762,055Contractual short-term liabilities:Other lines from foreign banks
    
    
    45,383
    
    
    
    Total short-term liabilities
    
    Ps.
    45,383
    
    
    Ps.
    Total Banks and International Entities
    
    Ps.
    844,263
    
    
    Ps.
    762,055Domestic and Financial InstitutionsContractual long-term liabilities:BICE (Banco de Inversión y Comercio Exterior)
    
    
    37,135
    
    
    
    70,056Other lines from domestic banks
    
    
    109,455
    
    
    
    89,603Total long-term liabilities
    
    Ps.
    146,590
    
    
    Ps.
    159,659Contractual short-term liabilities:Other lines from credit from domestic banks
    
    
    134,465
    
    
    
    60,763Total short-term liabilities
    
    Ps.
    134,465
    
    
    Ps.
    60,763Total Domestic and Financial Institutions
    
    Ps.
    281,055
    
    
    Ps.
    220,422TOTAL
    
    Ps.
    1,125,318
    
    
    Ps.
    982,477
     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, 2006, 2005 and 2004
 (i)
    
    Ps. 124,986 of Libor plus 350 basis points loans due in 2010 with 8 biannual payments,
starting July 1st., 2006.(ii)
    
    Ps. 249,896 of Libor plus 85 basis points loans due in 2014 with biannual payments
starting January 1, 2010.(iii)
    
    Ps. 290,793 of fixed rate step-up loans due in 2014 with biannual payments, starting
in July 1, 2010. The interest rate will increase 100 basis points annually starting with 3%
in 2004, through 7% in 2008 and thereafter:(iv)
    
    Ps. 40,368 of Libor plus 578 basis points loans due in 2019 with a bullet payment.
  Contractual long-term Liabilities2007
    
    
    212,9542008
    
    
    84,6912009
    
    
    40,3812010
    
    
    143,7772011
    
    
    120,153Thereafter
    
    
    343,514Ps.
    945,470
  15. Other Liabilities Resulting from Financial Brokerage  Negotiable Obligations.
  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, 2006, 2005 and 2004
 Annual
    
    
    December 31,Negotiable Obligations (1)
    
    Maturity
    
    
    Interest Rate
    
    
    2006
    
    
    2005Contractual Long-term liabilities:9% Notes Due 2003(*)
    
    
    2003
    
    
    
    9.00
    %
    
    
    13,488
    
    
    
    19,356(Semi-annual interest, principal payable at maturity)4th Series Floating Rate Notes Due 2005
    
    
    2005
    
    
    
    4.00
    %
    
    
    
    
    
    
    2,695(Semi-annual interest, principal payable every six
months)6th Series 7.875% Notes Due 2007
    
    
    2007
    
    
    
    7.88
    %
    
    
    74,318
    
    
    
    146,795(Semi-annual interest, principal payable at maturity)7th Series Floating Rate Notes Due 2007 
Libor + 400 BP
    
    
    2007
    
    
    
    9.51
    %
    
    
    44,161
    
    
    
    87,229(Semi-annual interest, principal payable at maturity)Tarjeta Naranja Class I
    
    
    2007
    
    
    CER+1.68%
    
    
    40,781
    
    
    
    40,781(Quarterly interest, principal payable in June 2007,
September 2007 and December 2007)Banco Galicia  Note 2010  Libor +350 BP
    
    
    2010
    
    
    
    9.14
    %
    
    
    941,990
    
    
    
    1,059,917(Semi-annual interest)Banco Galicia Uruguay S.A. Unsubordinated(restructured deposits)
    
    Between 2007 and
    
    
    Between 2% and(Annual interest, principal payable every year)
    
    2011
    
    
    
    7
    %
    
    
    157,675
    
    
    
    172,935Banco Galicia  Note 2014
    
    
    2014
    
    
    
    5.00
    %
    
    
    1,083,821
    
    
    
    1,391,707(Semi  annual interest)Banco Galicia  Subordinated Note 2019
    
    
    2019
    
    
    
    11.00
    %
    
    
    777,617
    
    
    
    431,024(Semi-annual interest, principal payable at maturity)Tarjeta Naranja Class II
    
    
    2008
    
    
    
    17.00
    %
    
    
    80,150
    
    
    
    (Interest fixed, semi-annual interest- principal
payable every six months)Tarjeta Naranja Class IV
    
    
    2011
    
    
    
    15.50
    %
    
    
    307,900
    
    
    
    (Interest fixed, semi-annual interest- principal
payable every six months)Total long-term liabilities
    
    
    
    
    
    
    
    
    
    Ps.
    3,521,901
    
    
    Ps.
    3,352,439Contractual Short-term liabilities:Tarjeta Cuyanas S.A. Class XVII 
(Fixed Interest, principal payable at maturity)
    
    
    2007
    
    
    
    12.46
    %
    
    
    34,613
    
    
    
    Tarjeta Naranja Class III 
(Interest fixed, principal payable at maturity)
    
    
    2007
    
    
    
    7.00
    %
    
    
    30,519
    
    
    
    Tarjeta Naranja Class II 
(Semi-annual interest, principal payable at
maturity)
    
    
    2006
    
    
    
    11.00
    %
    
    
    
    
    
    
    41,433Tarjeta Naranja Class III 
(Bimonthly interest, principal payable in July
2006, September 2006 and November 2006)
    
    
    2006
    
    
    CER + 1.75%
    
    
    
    
    
    
    41,020Tarjeta Naranja Class IV 
(Semi-annual interest, principal payable at
maturity)
    
    
    2006
    
    
    
    6.50
    %
    
    
    
    
    
    
    27,034Tarjeta Cuyanas S.A. Class XVI 
(Quarterly Interest, principal payable at maturity)
    
    
    2006
    
    
    CER + 1.50%
    
    
    
    
    
    
    21,532Total short-term liabilities
    
    
    
    
    
    
    
    
    
    
    65,132
    
    
    
    131,019Ps.
    3,587,033
    
    
    Ps.
    3,483,458
 
 (1)
    
    Only principal, except for Subordinated Obligations which include accrued interest for  Ps.
39,435. 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, 2006, 2005 and 2004
    (i)
    
    Ps. 74,318 of fixed-rate debt and  Ps. 44,161 of floating-rate debt, corresponding to the
Banks former New York branchs restructured debt(ii)
    
    Ps. 13,488 of past due debt corresponding to 9% notes due 2003 (*)(iii)
    
    Ps. 157,675 negotiable obligations issued by Galicia Uruguay to restructure deposits, due
2008 and 2011(iv)
    
    Ps. 941,990 and  Ps. 1,083,091 of restructured foreign debt of the Bank, corresponding to 2010
Notes and 2014 Notes, respectively(v)
    
    Ps. 777,617 of debt issued as subordinated negotiable obligations, due 2019, corresponding to
the restructured foreign debt of the Bank(vi)
    
    Ps. 40,781,  Ps. 80,150 and  Ps. 307,900 of Tarjeta Naranja S.A.s negotiable obligations, due
2007, 2008 and 2011, respectively
   Past due (*)
    
    
    13,4882007
    
    
    495,0882008
    
    
    413,1532009
    
    
    379,9012010
    
    
    486,1802011
    
    
    354,351Thereafter
    
    
    1,379,740Total
    
    Ps.
    3,521,901
 
 (*)
    
    Corresponds to past due debt not yet restructured. 16. Directors and Syndics Fees.
  December 31,2006
    
    
    2005
    
    
    2004Grupo Galicia directors fees
    
    Ps.
    279
    
    
    Ps.
    210
    
    
    Ps.
    80Grupo Galicia syndics fees
    
    
    423
    
    
    
    454
    
    
    
    169Banco Galicia directors fees
    
    
    426
    
    
    
    390
    
    
    
    260Banco Galicia syndics fees
    
    
    605
    
    
    
    550
    
    
    
    425Subsidiary companies directors and syndics fees
    
    
    4,256
    
    
    
    4,189
    
    
    
    3,106Ps.
    5,989
    
    
    Ps.
    5,793
    
    
    Ps.
    4,040
 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, 2006, 2005 and 2004
  17. Contributions to the Bank Employees Social Services Institute (the ISSB).
     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, 2006, 2005 and 2004
 18. Balances in Foreign Currency.
  December 31,2006
    
    
    2005Assets:Cash and due from banks
    
    Ps.
    932,081
    
    
    Ps.
    514,267Government and corporate securities
    
    
    2,635,633
    
    
    
    657,708Loans
    
    
    1,753,911
    
    
    
    1,038,424Other receivables resulting from financial brokerage
    
    
    1,327,009
    
    
    
    4,504,840Equity investments in other companies
    
    
    3,099
    
    
    
    4,823Miscellaneous receivables
    
    
    169,530
    
    
    
    74,825Bank premises and equipment
    
    
    10,998
    
    
    
    11,362Intangible assets
    
    
    907
    
    
    
    898Miscellaneous assets
    
    
    40
    
    
    
    39In process items
    
    
    13
    
    
    
    239Other assets
    
    
    242

    
    
    
    Total
    
    Ps.
    6,833,463
    
    
    Ps.
    6,807,425Liabilities:Deposits
    
    Ps.
    1,523,622
    
    
    Ps.
    1,309,353Other liabilities resulting from financial brokerage
    
    
    4,374,748
    
    
    
    4,439,786Sundry liabilities
    
    
    15,776
    
    
    
    12,662Subordinated Negotiable Obligations
    
    
    777,617
    
    
    
    431,024Provisions
    
    
    841
    
    
    
    831In process items
    
    
    128
    
    
    
    3,219Other Liabilities
    
    
    90
    
    
    
    Total
    
    Ps.
    6,692,822
    
    
    Ps.
    6,196,875
 19. Transactions with Related Parties.
  December 31,2006
    
    
    2005
    
    
    2004Revenues recognized (*)
    
    Ps.
    22,399
    
    
    Ps.
    32,342
    
    
    Ps.
    34,162Expenses incurred
    
    
    1,762
    
    
    
    1,078
    
    
    
    959
 
 (*)
    
    Interests and adjustments from time deposits of Banco Galicia  Ps. 622 as of December 31, 2005,
interests from negotiable obligations of Banco Galicia  Ps. 21,302 and  Ps. 30,898 as of December 31,
2006 and 2005, respectively, and interest from negotiable obligations of Galicia Uruguay  Ps. 16 as
of December 31, 2006.  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, 2006, 2005 and 2004
 20. Breakdown of Captions Included in the Income Statement.
 December 31,2006
    
    
    2005
    
    
    2004Financial IncomeInterest on other receivables resulting from
financial brokerage:Interest on purchased certificates of deposits
    
    
    3,667
    
    
    
    4,367
    
    
    
    3,006Compensatory Bond
    
    
    150,737
    
    
    
    133,446
    
    
    
    69,541Additional interest on current accounts and
special accounts with the Argentine Central
Bank
    
    
    14,811
    
    
    
    16,453
    
    
    
    6,816Other
    
    
    2,663
    
    
    
    11,629
    
    
    
    10,654Ps.
    171,878
    
    
    Ps.
    165,895
    
    
    Ps.
    90,017OtherDifference in quotation of gold and foreign
currency transactions
    
    
    76,166
    
    
    
    58,734
    
    
    
    51,426Premiums on foreign currency transactions
    
    
    3,548
    
    
    
    3,865
    
    
    
    Interest on pre-export and export financing
    
    
    34,669
    
    
    
    21,501
    
    
    
    12,514Result from other credits by financial brokerage
    
    
    
    
    
    
    
    
    
    
    62,876Other
    
    
    34,477
    
    
    
    15,126
    
    
    
    5,285Ps.
    148,860
    
    
    Ps.
    99,226
    
    
    Ps.
    132,101Financial ExpensesInterest on other liabilities resulting from
financial brokerage:Discounts on negotiable obligations
    
    
    
    
    
    
    102
    
    
    
    352Interest on negotiable obligations
    
    
    225,903
    
    
    
    182,394
    
    
    
    38,956Interest on other liabilities resulting from
financial brokerage from other banks and
international entities
    
    
    100,559
    
    
    
    86,780
    
    
    
    133,250Ps.
    326,462
    
    
    Ps.
    269,276
    
    
    Ps.
    172,558Other interest:Interest on Argentine Central Bank loans
    
    
    109,459
    
    
    
    193,426
    
    
    
    Interests on financial assistance
    
    
    
    
    
    
    
    
    
    
    199,079CER adjustment on Argentine Central Bank advances
    
    
    69,156
    
    
    
    79,124
    
    
    
    56,582Other
    
    
    96,894
    
    
    
    61,848
    
    
    
    67,584Ps.
    275,509
    
    
    Ps.
    334,398
    
    
    Ps.
    323,245Other:Adjustment valuation public sector loans
    
    
    122,261
    
    
    
    
    
    
    
    Contributions to the deposit insurance system
    
    
    15,771
    
    
    
    12,059
    
    
    
    15,176Premiums on repo transactions
    
    
    34,586
    
    
    
    16,235
    
    
    
    4,423Contributions and taxes on financial income
    
    
    52,865
    
    
    
    36,700
    
    
    
    33,656Charge for impairment of loans
    
    
    
    
    
    
    
    
    
    
    3,720Other
    
    
    2,754
    
    
    
    4,019
    
    
    
    169Ps.
    228,237
    
    
    Ps.
    69,013
    
    
    Ps.
    57,144
 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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005
    
    
    2004Income from servicesOther
Commissions on credit cards
    
    
    279,598
    
    
    
    198,086
    
    
    
    167,831Safety rental
    
    
    10,007
    
    
    
    7,928
    
    
    
    6,230Insurance premiums
    
    
    39,296
    
    
    
    26,503
    
    
    
    20,865Other
    
    
    39,092
    
    
    
    36,589
    
    
    
    28,632Ps.
    367,993
    
    
    Ps.
    269,106
    
    
    Ps.
    223,558Expenses for servicesOther
Gross revenue taxes
    
    Ps.
    36,671
    
    
    Ps.
    25,269
    
    
    Ps.
    23,960Linked with credit cards
    
    
    58,342
    
    
    
    33,609
    
    
    
    21,996Other
    
    
    5,278
    
    
    
    9,187
    
    
    
    5,904Ps.
    100,291
    
    
    Ps.
    68,065
    
    
    Ps.
    51,860Administrative expensesOther operating expenses
Rentals
    
    
    28,032
    
    
    
    21,036
    
    
    
    17,141Electricity and communications
    
    
    41,104
    
    
    
    31,115
    
    
    
    27,082Amortization of organization and
development expenses
    
    
    34,904
    
    
    
    36,480
    
    
    
    47,235Depreciation of bank premises and equipment
    
    
    37,095
    
    
    
    36,450
    
    
    
    38,091Maintenance and repair expenses
    
    
    31,979
    
    
    
    27,905
    
    
    
    24,929Other operating expenses
    
    
    43,902
    
    
    
    34,237
    
    
    
    25,505Ps.
    217,016
    
    
    Ps.
    187,223
    
    
    Ps.
    179,983Miscellaneous incomeOther
Interest on miscellaneous
receivables
    
    
    58,143
    
    
    
    15,426
    
    
    
    15,461Premiums and commissions from insurance business
    
    
    59,984
    
    
    
    64,913
    
    
    
    89,315Other
    
    
    33,049
    
    
    
    30,722
    
    
    
    29,572Ps.
    151,176
    
    
    Ps.
    111,061
    
    
    Ps.
    134,348Miscellaneous lossesOther
Claims
    
    
    1,288
    
    
    
    1,303
    
    
    
    1,270Amortization of goodwill
    
    
    20,478
    
    
    
    24,574
    
    
    
    25,499Commissions and expenses on insurance business
    
    
    53,074
    
    
    
    54,476
    
    
    
    78,511Other
    
    
    13,483
    
    
    
    44,185
    
    
    
    51,839Ps.
    88,323
    
    
    Ps.
    124,538
    
    
    Ps.
    157,119
 21. Income Taxes.
   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, 2006, 2005 and 2004
 22. Shareholders Equity and Restrictions Imposed on the Distribution of Dividends.
           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, 2006, 2005 and 2004
    23. Minimum Capital.
     Computable Capital as a %Minimum Capital.
    
    Computable Capital.
    
    of Minimum Capital.December 31, 2006
    
    Ps.
    1,084,313
    
    
    Ps.
    1,861,559
    
    
    
    171.68December 31, 2005
    
    Ps.
    881,546
    
    
    Ps.
    1,885,211
    
    
    
    213.85
     24. Earnings per Share.
   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, 2006, 2005 and 2004
  25. Contribution to the Deposit Insurance System.
      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, 2006, 2005 and 2004
 26. Statements of Income and Balance Sheets.
  December 31,2006
    
    
    2005
    
    
    2004Interest income:Interest and fees on loans (*)
    
    Ps.
    1,337,273
    
    
    Ps.
    1,377,432
    
    
    Ps.
    1,133,195Interest and dividends on investment securities:Tax-exempt
    
    
    54,380
    
    
    
    185,854
    
    
    
    (5,008
    )Interest on interest bearing deposits with other banks
    
    
    874
    
    
    
    68
    
    
    
    44Interest on other receivables from financial brokerage
    
    
    272,635
    
    
    
    261,488
    
    
    
    133,150Government securities and other trading gains (loss),
net
    
    
    258,098
    
    
    
    491,404
    
    
    
    (4,337
    )Total interest income
    
    
    1,923,260
    
    
    
    2,316,246
    
    
    
    1,257,044Interest expenseInterest on deposits
    
    
    440,784
    
    
    
    266,759
    
    
    
    143,533Interest on securities sold under agreements to
repurchase
    
    
    34,586
    
    
    
    16,235
    
    
    
    4,423Interest on short-term liabilities from financial
intermediation
    
    
    60,032
    
    
    
    42,806
    
    
    
    27,543Interest on long-term liabilities from financial
intermediation (*)
    
    
    1,124,644
    
    
    
    1,470,250
    
    
    
    869,571Total interest expense
    
    
    1,660,046
    
    
    
    1,796,050
    
    
    
    1,045,070Net interest income
    
    
    263,214
    
    
    
    520,196
    
    
    
    211,974Provision for loan losses Net
    
    
    28,628
    
    
    
    (54,512
    )
    
    
    (130,651
    )Net interest income /(expense) after provision for
loan losses
    
    
    234,586
    
    
    
    574,708
    
    
    
    342,625
 
 (*)
    
    Includes CER/CVS adjustments. 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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005
    
    
    2004Non-interest income:Service charges on deposit accounts
    
    Ps.
    125,687
    
    
    Ps.
    102,606
    
    
    Ps.
    80,364Credit-card service charges and fees
    
    
    316,324
    
    
    
    253,688
    
    
    
    225,654Other commissions
    
    
    435,109
    
    
    
    325,988
    
    
    
    250,134Income from equity in other companies
    
    
    
    
    
    
    6,662
    
    
    
    2,990Premiums and commissions on
insurance business
    
    
    59,984
    
    
    
    64,913
    
    
    
    91,776Gain on Sale
of Other Investment
    
    
    93,575
    
    
    
    
    
    
    
    Other
    
    
    219,047
    
    
    
    131,410
    
    
    
    132,856Total non-interest income
    
    Ps.
    1,249,726
    
    
    Ps.
    885,267
    
    
    Ps.
    783,774Non-interest expense:Commissions
    
    
    144,240
    
    
    
    90,720
    
    
    
    65,351Salaries and social security charges
    
    
    415,406
    
    
    
    330,428
    
    
    
    241,980Fees and external administrative services
    
    
    102,799
    
    
    
    82,910
    
    
    
    62,127Depreciation of bank premises and equipment
    
    
    37,095
    
    
    
    36,450
    
    
    
    38,091Personnel services
    
    
    46,622
    
    
    
    30,018
    
    
    
    27,037Rentals
    
    
    28,032
    
    
    
    21,036
    
    
    
    17,141Electricity and communications
    
    
    41,104
    
    
    
    31,115
    
    
    
    27,082Advertising and publicity
    
    
    84,507
    
    
    
    68,132
    
    
    
    37,796Taxes
    
    
    158,352
    
    
    
    113,005
    
    
    
    113,754Amortization of organization and development expenses
    
    
    34,904
    
    
    
    36,480
    
    
    
    47,235Loss from equity in other companies
    
    
    14,362
    
    
    
    
    
    
    
    Maintenance and repair expenses
    
    
    31,979
    
    
    
    27,905
    
    
    
    24,929Minority interest
    
    
    19,016
    
    
    
    34,609
    
    
    
    14,302Commissions and expenses on insurance business
    
    
    53,072
    
    
    
    60,903
    
    
    
    80,939Amortization of Amparo claims
    
    
    
    
    
    
    122,279
    
    
    
    121,010Other Provisions and reserves
    
    
    62,424
    
    
    
    99,754
    
    
    
    134,135Other
    
    
    135,074
    
    
    
    147,691
    
    
    
    139,543Total non-interest expense
    
    Ps.
    1,408,988
    
    
    Ps.
    1,333,435
    
    
    Ps.
    1,192,452Income / (loss) before tax expense
    
    
    75,324
    
    
    
    126,540
    
    
    
    (66,053
    )Income tax expense
    
    
    (94,238
    )
    
    
    (19,302
    )
    
    
    (43,818
    )Net (loss) / income
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
    
    
     Ps.
    (109,871
    )
 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, 2006, 2005 and 2004
  December 31,2006
    
    
    2005Assets:Cash and due from banks
    
    Ps.
    2,308,819
    
    
    Ps.
    1,045,735Interest-bearing deposits in other banks
    
    
    607,998
    
    
    
    212,851Federal funds sold and securities purchased
under resale agreements or similar agreements
    
    
    204,191
    
    
    
    284,787Trading account assets
    
    
    208,188
    
    
    
    789,985Available for sale securities
    
    
    5,993,795
    
    
    
    6,605,532Loans
    
    
    10,186,582
    
    
    
    11,067,481Allowances for loan losses
    
    
    (329,562
    )
    
    
    (539,894
    )Fixed assets
    
    
    490,290
    
    
    
    484,198Compensatory and Hedge Bonds to be received
    
    
    401,335
    
    
    
    4,154,989Other assets
    
    
    3,798,049
    
    
    
    1,750,235Total assets
    
    Ps.
    23,869,685
    
    
    Ps.
    25,855,899Liabilities and Shareholders Equity:Deposits
    
    Ps.
    10,692,751
    
    
    Ps.
    8,370,590Short-term borrowing
    
    
    281,286
    
    
    
    446,125Other liabilities
    
    
    3,480,026
    
    
    
    2,380,839Long-term debt
    
    
    7,457,042
    
    
    
    12,631,719Commitments and contingent liabilities
    
    
    182,927
    
    
    
    254,351Minority interest in Consolidated Subsidiaries
    
    
    167,185
    
    
    
    145,499Common stock
    
    
    1,241,407
    
    
    
    1,241,407Other shareholders equity
    
    
    367,061
    
    
    
    385,369Total liabilities and shareholders equity
    
    Ps.
    23,869,685
    
    
    Ps.
    25,855,899
  December 31, 2006
    
    
    December 31, 2005Unrealized
    
    
    
    
    
    
    
    
    
    
    UnrealizedCarrying value
    
    
    Gains/(Losses)
    
    
    Market value
    
    
    Carrying value
    
    
    Gains/(Losses)
    
    
    Market valueBODEN 2012 Bonds 
Compensatory Bond and Hedge
Bond
    
    
    3,582,858
    
    
    
    89,441
    
    
    
    3,394,991
    
    
    
    987,951
    
    
    
    104,757
    
    
    
    876,661Fiscal Credit Certificate (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,458
    
    
    
    
    
    
    
    34,458Bogar Bonds
    
    
    426,851
    
    
    
    168,908
    
    
    
    397,660
    
    
    
    3,823,299
    
    
    
    1,531,789
    
    
    
    3,366,792GalTrust I
    
    
    571,582
    
    
    
    (7,443
    )
    
    
    355,721
    
    
    
    536,509
    
    
    
    (74,673
    )
    
    
    253,418Discount Bonds
    
    
    691,929
    
    
    
    125,251
    
    
    
    387,604
    
    
    
    705,746
    
    
    
    56,581
    
    
    
    311,655Other assets
    
    
    720,575
    
    
    
    (19,356
    )
    
    
    678,612
    
    
    
    517,569
    
    
    
    (10,204
    )
    
    
    507,365TOTAL
    
    Ps.
    5,993,795
    
    
    Ps.
    356,801
    
    
    Ps.
    5,214,588
    
    
    Ps.
    6,605,532
    
    
    Ps.
    1,608,250
    
    
    Ps.
    5,350,349
 
 (1)
    
    These instruments can be used to repay taxes, including the value-added tax 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, 2006, 2005 and 2004
  December 31, 2006Maturing 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
    
    
    3,582,858
    
    
    
    597,143
    
    
    
    2,388,572
    
    
    
    597,143
    
    
    
    Bogar Bonds
    
    
    426,851
    
    
    
    22,466
    
    
    
    110,457
    
    
    
    228,964
    
    
    
    64,964GalTrust I
    
    
    571,582
    
    
    
    
    
    
    
    63
    
    
    
    414,954
    
    
    
    156,565Discount Bonds
    
    
    691,929
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    691,929Other assets
    
    
    720,575
    
    
    
    323,876
    
    
    
    353,479
    
    
    
    37,753
    
    
    
    5,467TOTAL
    
    Ps.
    5,993,795
    
    
    
    943,485
    
    
    
    2,852,571
    
    
    
    1,278,814
    
    
    
    918,925
 27. Operations by Geographical Segment.
  December 31,2006
    
    2005
    
    2004Total revenues:(*)Republic of Argentina
    
    Ps.
    3,315,964
    
    
    Ps.
    3,196,626
    
    
    Ps.
    2,313,069Republic of Uruguay
    
    
    82,194
    
    
    
    136,240
    
    
    
    119,812Grand Cayman Island
    
    
    
    
    
    
    1,009
    
    
    
    2,362Net income (loss), net
of monetary effects
allocable to each
country:Republic of Argentina
    
    
    (64,399
    )
    
    
    4,639
    
    
    
    (76,207
    )Republic of Uruguay
    
    
    45,485
    
    
    
    99,804
    
    
    
    (33,953
    )Grand Cayman Island
    
    
    
    
    
    
    2,795
    
    
    
    289Total assets:Republic of Argentina
    
    
    23,093,931
    
    
    
    25,035,273
    
    
    
    22,927,642Republic of Uruguay
    
    
    540,244
    
    
    
    584,189
    
    
    
    707,252Grand Cayman Island
    
    
    
    
    
    
    16,262
    
    
    
    15,660Fixed assetsRepublic of Argentina
    
    
    479,184
    
    
    
    472,832
    
    
    
    477,227Republic of Uruguay
    
    
    11,106
    
    
    
    11,366
    
    
    
    11,955Miscellaneous assetsRepublic of Argentina
    
    
    271,067
    
    
    
    199,113
    
    
    
    159,994Republic of Uruguay
    
    
    40
    
    
    
    39
    
    
    
    39GoodwillRepublic of Argentina
    
    
    65,165
    
    
    
    85,003
    
    
    
    115,080Other intangible assetsRepublic of Argentina
    
    
    436,724
    
    
    
    404,459
    
    
    
    522,924Republic of Uruguay
    
    
    907
    
    
    
    898
    
    
    
    Geographical segment
assets as a percentage
of total assetsRepublic of Argentina
    
    
    97,71
    %
    
    
    97.66
    %
    
    
    96.94
    %Republic of Uruguay
    
    
    2,29
    %
    
    
    2.28
    %
    
    
    2.99
    %Grand Cayman Island
    
    
    
    
    
    
    0.06
    %
    
    
    0.07
    %
 
 (*)
    
    The caption Revenues include financial income, income from services and miscellaneous
income. 28. Financial Instruments with Off-Balance Sheet Risk.
  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, 2006, 2005 and 2004
    December 31,2006
    
    2005Commitments to extend credit
    
    Ps.
    624,847
    
    
    Ps.
    397,714Standby letters of credit
    
    
    129,021
    
    
    
    54,299Guarantees granted
    
    
    123,790
    
    
    
    223,055Acceptances
    
    
    35,353
    
    
    
    23,938
     December 31,2006
    
    2005Preferred counter-guarantees
    
    Ps.
    32,783
    
    
    Ps.
    32,788Other counter-guarantees
    
    
    21,599
    
    
    
    15,658
  December 31,2006
    
    2005Checks drawn on the Bank
    
    Ps.
    162,986
    
    
    Ps.
    110,211Checks drawn on the other Bank
    
    
    187,358
    
    
    
    193,267Bills and other items for collection
    
    
    1,184,353
    
    
    
    896,801
 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, 2006, 2005 and 2004
    29. Derivative Financial Instruments.
  Memorandum Accounts
    
    Fair ValueDecember 31,
    
    December 31,2006
    
    2005
    
    2006
    
    2005Option contracts:Written put options (1)
    
    Ps.
    175,923
    
    
    Ps.
    184,801
    
    
    Ps.
    2,592
    
    
    Ps.
    7,977
 
 (1)
    
    As established by Section 4, subsection a and Section 6 of Decree 1836/02 and Argentine
Central Bank Communiqué A 3828, 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,
Boden 2006 Bonds and Boden 2012 Bonds in exchange for their certificates.     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, 2006, 2005 and 2004
    30. Disclosure about Fair Value of Financial Instruments.
    2006
    
    2005Book Value
    
    Fair Value
    
    Book Value
    
    Fair ValueDerivative activities: (see Note 29)Liabilities
    
    Ps.
    175,923
    
    
    Ps.
    2,592
    
    
    Ps.
    184,801
    
    
    Ps.
    7,977Non derivative activities:Assets:Cash and due from banks (1)
    
    Ps.
    2,294,849
    
    
    Ps.
    2,294,849
    
    
    Ps.
    1,041,158
    
    
    Ps.
    1,041,158Government securities (2)Trading
    
    
    147,729
    
    
    
    146,362
    
    
    
    725,343
    
    
    
    725,345Without quotation Securities
    
    
    431,753
    
    
    
    402,562
    
    
    
    4,591,071
    
    
    
    3,750,597Investment
    
    
    2,608,827
    
    
    
    2,473,029
    
    
    
    650,924
    
    
    
    577,599Loans (3)
    
    
    10,514,552
    
    
    
    10,322,756
    
    
    
    10,555,176
    
    
    
    9,717,621Compensatory and Hedge Bond to be received (4)
    
    
    401,335
    
    
    
    386,890
    
    
    
    4.154.989
    
    
    
    3,792,416Others (5)
    
    
    5,305,353
    
    
    
    4,744,340
    
    
    
    2,113,060
    
    
    
    1,774,363Liabilities:Deposits (6)
    
    Ps.
    10,779,369
    
    
    Ps.
    10,754,230
    
    
    Ps.
    8,421,660
    
    
    Ps.
    8,368,522Other liabilities resulting from financial
Intermediation:Argentine Central Bank (7)
    
    
    3,025,977
    
    
    
    2,741,104
    
    
    
    8,850,986
    
    
    
    7,675,211Banks and international entities and Loans
from Domestic Financial Institutions (8) and
Negotiable obligations (9)
    
    
    4,834,673
    
    
    
    4,814,875
    
    
    
    4,580,435
    
    
    
    4,120,395Others (10)
    
    
    2,741,920
    
    
    
    2,734,267
    
    
    
    1,413,316
    
    
    
    1,403,830
 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, 2006, 2005 and 2004
  (1) Cash and due from banks:
 (2) Government securities:
 (3) Loans:
  (4) Compensatory and Hedge Bonds to be received:
 (5) Others:
 (6) Deposits:
 (7) Argentine Central Bank: 
 (8) Banks and international entities and loans from domestic 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, 2006, 2005 and 2004
  (9) Negotiable obligations:
 (10) Others:
 31. Pending events derived from the systems crisis in late 2001.
 Deposits with the financial system  Legal actions requesting protection of Constitutional
guarantees.
     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, 2006, 2005 and 2004
       Claims due to foreign exchange differences arising from the repayment of financial assistance
during foreign exchange market holidays in January 2002.
      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, 2006, 2005 and 2004
     Compensation to financial institutions.
        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, 2006, 2005 and 2004
   Situation of Banco Galicia Uruguay S.A. and Galicia (Cayman) Limited.
         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, 2006, 2005 and 2004
 32. Preferred Liabilities of the former Banco Almafuerte Coop. Ltdo.
     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, 2006, 2005 and 2004
 33. Financial Trusts.
   CONDITIONS
    
    GALTRUST I
    
    GALTRUST II
    
    GALTRUST V
    
    GALICIACREATION DATE
    
    10/13/2000
    
    12/17/2001
    
    12/17/2001
    
    04/16/2002MATURITY DATE
    
    10/10/2015
    
    12/10/2010
    
    01/10/2016
    
    05/06/2032TRUSTEE
    
    FIRST TRUST OF NEW
    
    FIRST TRUST OF NEW
    
    FIRST TRUST OF NEW
    
    BAPRO MANDATOS YYORK N.A.
    
    YORK N.A.
    
    YORK N.A.
    
    NEGOCIOS S.A.RATE (*)
    
    C.E.R. + 10% T.N.A.
    
    C.E.R. + 9.75% T.N.A.
    
    C.E.R. + 9.75% T.N.A.
    
    C.E.R. + 4%TRUST ASSETS
    
    LOANS GRANTED TO
    
    MORTGAGE LOANS
    
    MORTGAGE LOANS
    
    SECURED LOANSPROVINCIALGOVERNMENTSBALANCE AS OF
12/31/2006
    
    Ps.  571,582
    
    Ps. 7,683
    
    Ps. 16,457
    
    Ps. 58,159TOTAL TRANSFERRED
PORTFOLIO
    
    US$ 490,224 (1)
    
    US$ 61,191
    
    US$ 57,573
    
    Ps.108,000A DEBT SECURITIES
    
    F.V.   US$ 100,000
    
    F.V.   US$ 45,000
    
    F.V.   US$ 42,000
    
    B DEBT SECURITIES
    
    F.V.   US$ 200,000
    
    
    
    
    
    CERTIFICATES
OF
PARTICIPATION
    
    F.V.   US$ 200,000
    
    F.V.   US$ 16,191
    
    F.V.   US$ 15,573
    
    F.V. Ps. 108,000
 
 (1)
    
    The remaining US$ 9,776 was transferred in cash. CREDITOS
    
    CREDITOSGALICIA HIPOTECAS
    
    INMOBILIARIOS
    
    INMOBILIARIOSCONDITIONS
    
    COMERCIALES
    
    GALICIA I
    
    GALICIA IICREATION DATE
    
    02/22/2005
    
    08/17/2005
    
    10/12/2005MATURITY DATE
    
    07/12/2013
    
    03/15/2015
    
    12/15/2025TRUSTEE
    
    DEUTSCHE BANK S.A.
    
    DEUTSCHE BANK S.A.
    
    DEUTSCHE BANK S.A.RATE (*)
    
    C.E.R. + 0.05% T.N.A.
    
    MINIMUM 8 % T.N.A.
    
    MINIMUM 8 % T.N.A.AND
    
    ANDMAXIMUM 18 %
    
    MAXIMUM 18 %T.N.A.
    
    T.N.A.TRUST ASSETS
    
    COMMERCIAL
    
    MORTGAGE LOANS
    
    MORTGAGE LOANSMORTGAGE LOANSBALANCE AS OF

12/31/2006
    
    Ps. 6,892
    
    Ps. 18,776
    
    Ps. 43,347TOTAL TRANSFERRED
PORTFOLIO
    
    Ps. 29,059
    
    Ps. 91,000
    
    Ps. 150,000A DEBT SECURITIES
    
    F.V.  Ps. 24,119
    
    F.V.  Ps. 72,800
    
    F.V.  Ps. 109,000B DEBT SECURITIES
    
    
    
    
    
    CERTIFICATES
OF
PARTICIPATION
    
    F.V.  Ps. 4,940
    
    F.V.  Ps. 18,200
    
    F.V.  Ps. 41,000
 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, 2006, 2005 and 2004
 GALICIAGALICIA PERSONALES
    
    PERSONALES
    
    GALICIA PRENDASCONDITIONS
    
    II
    
    III
    
    COMERCIALES I
    
    GALICIA LEASING ICREATION DATE
    
    01/25/2006
    
    05/16/2006
    
    07/03/2006
    
    09/22/2006MATURITY DATE
    
    09/15/2007
    
    09/15/2007
    
    05/15/2009
    
    11/15/2007(ESTIMATED DATE FOR
    
    (ESTIMATED DATE
    
    (ESTIMATED DATE
    
    (ESTIMATED DATECLASS B DEBT
    
    FOR CLASS B DEBT
    
    FOR CLASS B DEBT
    
    FOR CLASS A1 DEBTSECURITIES)
    
    SECURITIES)
    
    SECURITIES)
    
    SECURITIES)11/15/2009
    
    03/15/2011
    
    02/15/2011
    
    07/15/2009(ESTIMATED DATE FOR
    
    (ESTIMATED DATE
    
    (ESTIMATED DATE
    
    (ESTIMATED DATEPARTICIPATION
    
    FOR PARTICIPATION
    
    FOR PARTICIPATION
    
    FOR CLASS A2 DEBTCERTIFICATES)
    
    CERTIFICATES)
    
    CERTIFICATES)
    
    SECURITIES)11/15/2009(ESTIMATED DATEFOR CLASS B DEBTSECURITIES)05/15/2011(ESTIMATED DATEFOR PARTICIPATIONCERTIFICATES)TRUSTEE
    
    DEUTSCHE BANK S.A.
    
    DEUTSCHE BANK S.A.
    
    DEUTSCHE BANK S.A.
    
    DEUTSCHE BANK S.A.RATE (*)
    
    THE HIGHEST RATE
    
    THE HIGHEST RATE
    
    CLASS A DEBT
    
    CLASS A DEBTBETWEEN:
    
    BETWEEN:
    
    SECURITIES,
    
    SECURITIES,BADLAR FOR TIME
    
    BADLAR FOR TIME
    
    MINIMUM 10.5%
    
    MINIMUM 10.5%DEPOSITS OF 30 TO 35
    
    DEPOSITS OF 30 TO
    
    T.N.A.
    
    T.N.A.DAYS AND OF MORE
    
    35 DAYS AND OF
    
    MAXIMUM 20% T.N.A.
    
    MAXIMUM 20% T.N.A.THAN A MILLION PESOS
    
    MORE THAN AFOR PRIVATE BANKS,
    
    MILLION PESOS FOR
    
    CLASS B DEBT
    
    CLASS B DEBTAND
    
    PRIVATE BANKS, AND
    
    SECURITIES,
    
    SECURITIES,CER VARIATION
    
    CER VARIATION
    
    MINIMUM 11.5%
    
    MINIMUM 11.5%PERCENTAGE
    
    PERCENTAGE
    
    T.N.A.
    
    T.N.A.EXPRESSED AS T.N.A.
    
    EXPRESSED AS T.N.A.
    
    MAXIMUM 21% T.N.A.
    
    MAXIMUM 21% T.N.A.UP TO A MAXIMUM OF21%TRUST ASSETS
    
    PERSONAL LOANS
    
    PERSONAL LOANS
    
    PLEDGE LOANS
    
    ASSETS UNDERFINANCIAL LEASESBALANCE AS OF 12/31/2006
    
    Ps. 21,155
    
    Ps. 13,355
    
    Ps. 12,409
    
    Ps. 20,653TOTAL TRANSFERRED
PORTFOLIO
    
    Ps. 97,367
    
    Ps. 100,000
    
    Ps. 86,623
    
    Ps. 150,000A DEBT SECURITIES
    
    F.V. Ps. 77,893
    
    F.V. Ps. 85,000
    
    F.V. Ps. 73,629
    
    F.V. Ps. 127,500B DEBT SECURITIES
    
    F.V. Ps. 9,737
    
    F.V. Ps. 7,500
    
    F.V. Ps. 6,930
    
    F.V. Ps. 12,000CERTIFICATES OF
PARTICIPATION
    
    F.V. Ps. 9,737
    
    F.V. Ps. 7,500
    
    F.V. Ps. 6,064
    
    F.V. Ps. 10,500
 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, 2006, 2005 and 2004
   Tarjeta
    
    Tarjeta
    
    Tarjetas
    
    TarjetasFinancial trust
    
    Nevada II
    
    Nevada III
    
    Cuyanas Trust I
    
    Cuyanas Trust IICreation date
    
    12/01/2004
    
    05/24/2005
    
    11/23/2005
    
    04/04/2006Maturity date
    
    07/22/2007
    
    02/25/2008
    
    11/15/2007
    
    02/15/2008Interest rate
    
    D.S.A: CER +3%Min 8% Max 15%TNA
    
    CER + Margin
    
    D.S. A: 10.95%
    
    D.S. A: 12%Min 10%D.S. B: CER +5%Min 10% Max 20%
    
    Max 20%
    
    D.S."B": 13.50%
    
    D.S.B: 13%TNATrustee
    
    Banco Patagonia
    
    Banco Patagonia
    
    Equity Trust
    
    Equity TrustS.A.
    
    S.A.
    
    Company
    
    Company(Argentina) S.A.
    
    (Argentina) S.A.Amount placed
    
    Ps. 16,000
    
    Ps. 25,000
    
    Ps. 26,784
    
    Ps. 37,680A debt securities
    
    Ps. 12,000
    
    Ps. 19.000
    
    Ps. 21,427
    
    Ps.  30,144B debt securities
    
    Ps. 2,400  **
    
    Ps. 
    
    Ps.   2,678  **
    
    Ps. 3,768Certificates of
Participation
    
    Ps. 1,600
    
    Ps. 6,000
    
    Ps. 2,679
    
    Ps. 3,768
 Tarjetas
    
    TarjetasFinancial trust
    
    Cuyanas Trust III
    
    Cuyanas Trust IVCreation date
    
    07/14/2006
    
    11/01/2006Maturity date
    
    07/15/2008
    
    11/15/2008Interest rate
    
    D.S. A: 10.87%
    
    Badlar plusdifferential marginD.S."B: 12.75%
    
    2.96%Trustee
    
    Equity Trust
    
    Equity TrustCompany
    
    Company(Argentina) S.A.
    
    (Argentina) S.A.Amount placed
    
    Ps. 22,407
    
    Ps. 68,120A debt securities
    
    Ps. 17,925
    
    Ps. 54,495B debt securities
    
    Ps. 2,241
    
    Ps. Certificates of
Participation
    
    Ps.2,241
    
    Ps.13,625
 
 (**)
    
    As of December 31, 2006, Class B Debt Securities have been fully settled.  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, 2006, 2005 and 2004
  Tarjeta
    
    TarjetaTarjeta
    
    Naranja Trust
    
    Naranja TrustFinancial trust
    
    Naranja Trust I
    
    II
    
    IIICreation date
    
    11/07/2005
    
    02/16/2006
    
    08/15/2006Maturity date
    
    05/20/2008
    
    12/20/2007
    
    09/20/2008Interest rate
    
    D.S. A: CER VAR +
    
    D.S. A: CER
    
    D.S. A:1.18% or TE + 2%
    
    VAR Maximum
    
    Caps:Maximum 18%
    
    20% Minimum
    
    Minimum 10.5%Minimum 9%
    
    10.5%
    
    nominal annualMaximum 20%D.S. B: CER VAR +
    
    D.S. B:
    
    nominal annual2.4% or TE + 3%
    
    Maximum: 21%
    
    D.S. B:Maximum 20%
    
    nominal annual
    
    Caps:Minimum of 11%
    
    
    
    Minimum 11%nominal annualMaximum 21%nominal annualAmount placed
    
    94,500
    
    80,000
    
    139,342Type of fiduciary
Debt
    
    Debt securities
    
    Debt securities
    
    Debt securitiesTrustee
    
    Equity Trust
    
    Equity Trust
    
    Equity TrustCompany
    
    Company
    
    Company(Argentina) S.A.
    
    (Argentina) S.A.
    
    (Argentina) S.A.ClassA securities
    
    Ps.80,000
    
    Ps.68,000
    
    Ps.118,441Class B securities
    
    Ps. 7,000
    
    Ps.6,000
    
    Ps.10,451Certificates of
Participation
    
    Ps. 7,500
    
    Ps.6,000
    
    Ps.10,451
   Tarjetas delFinancial trust
    
    Mar  Serie IICreation date
    
    10/17/2006Maturity date
    
    1/10/2015Interest rate
    
    D.S.:A 13%D.S.B: 14%D.S.C: 14.50%D.S.D: 15%Trustee
    
    Banco de Galicia yBuenos Aires SAAmount placed
    
    Ps. 6,000A debt securities
    
    Ps. 1,200B debt securities
    
    Ps. 1,200C debt securities
    
    Ps. 1,200D debt securities
    
    PS. 1,200Certificates of Participation
    
    Ps.1,200
 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, 2006, 2005 and 2004
   CONDITIONS
    
    HYDRO ICREATION DATE
    
    10/12/2005MATURITY DATE
    
    09/05/2017TRUSTOR
    
    CONSORCIO DE EMPRESASMENDOCINAS PARAPOTRERILLOS S.A.TRUSTEE
    
    BANCO DE GALICIA Y BS.AS. S.A.TRUST ASSETS
    
    LOANS FOR ELECTRICPOWER SUPPLY,SUBSIDIES, ROYALTIES,AND INTERESTS.RATE (*)
    
    7% T.N.A. UNTIL 09/05/06AND THEREAFTERVARIABLE T.N.A. EQUAL TOT.E.C + 5%(**)SECURITIES RECEIVED
    
    CLASS B DEBTBY THE BANK
    
    SECURITIES F/V $25,523BALANCE AS OF 12/31/2006
    
    Ps.  25,094BALANCE AS OF 12/31/2005
    
    Ps. 25,655
  EDIFICIO BOUCHARDCONDITIONS
    
    PLAZACREATION DATE
    
    12/20/2005MATURITY DATE
    
    06/29/2008TRUSTOR
    
    LUDWING INVESTMENTSS.A.TRUSTEE
    
    NACIÓN FIDEICOMISOSS.A.TRUST ASSETS
    
    LOANS TRANSFERREDRATE (*)
    
    PRIVATE BANK T.E.C. +6.25% T.N.A.(**)SECURITIES SUBSCRIBED BY THE BANK
    
    ADDITIONAL DEBTSECURITIES $10,500BALANCE AS OF 12/31/2006
    
    Ps. 11,327BALANCE AS OF 12/31/2005
    
    Ps.  10,546
 
 (*)
    
    Applicable to debt securities only.(**)
    
    T.E.C. stands for adjusted survey rate. 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, 2006, 2005 and 2004
  BG Financial Trust
  34. Segment Reporting.
   Grupo Galicia:
 Insurance:
 Other Grupo Businesses:
 Buenos Aires Metropolitan Branches:
 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, 2006, 2005 and 2004
  Rest of the Country Branches:
 Head Office:
 Regional Credit Card:
 International:
 Other Financial Businesses:
 Other Equity Investments:
 Overhead and Corporate Adjustments
 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, 2006, 2005 and 2004
  Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andGrupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    ConsolidatedGalicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalYear ended December 31, 2006:Net Financial Income
/ (Loss)
    
    
    118,407
    
    
    
    263,509
    
    
    
    176,497
    
    
    
    (436,718
    )
    
    
    157,474
    
    
    
    32,339
    
    
    
    (1,057
    )
    
    
    
    
    
    
    17,049
    
    
    
    472
    
    
    
    50,252
    
    
    
    378,224Net Income / (Loss) from
Services
    
    
    
    
    
    
    231,030
    
    
    
    147,759
    
    
    
    89,554
    
    
    
    289,798
    
    
    
    969
    
    
    
    2,732
    
    
    
    
    
    
    
    
    
    
    
    7,870
    
    
    
    (97,711
    )
    
    
    672,001Provision for Loan Losses
    
    
    
    
    
    
    18,124
    
    
    
    19,857
    
    
    
    (21,285
    )
    
    
    53,239
    
    
    
    2,121
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    38,811
    
    
    
    110,869Operating Income
    
    
    118,407
    
    
    
    476,415
    
    
    
    304,399
    
    
    
    (325,879
    )
    
    
    394,033
    
    
    
    31,187
    
    
    
    1,674
    
    
    
    
    
    
    
    17,049
    
    
    
    8,341
    
    
    
    (86,270
    )
    
    
    939,356Operating Expenses
    
    
    10,466
    
    
    
    333,739
    
    
    
    239,984
    
    
    
    102,700
    
    
    
    263,789
    
    
    
    16,582
    
    
    
    1,635
    
    
    
    
    
    
    
    11,234
    
    
    
    7,340
    
    
    
    (12,905
    )
    
    
    974,564Other Income / (Loss)
    
    
    (1,085
    )
    
    
    1,674
    
    
    
    1,718
    
    
    
    (2,811
    )
    
    
    20,666
    
    
    
    34,454
    
    
    
    2,573
    
    
    
    (16,777
    )
    
    
    6,910
    
    
    
    791
    
    
    
    81,435
    
    
    
    129,548Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,124
    )
    
    
    (6,304
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    11,415
    
    
    
    (19,016
    )Pre-tax Income / (Loss)
    
    
    106,856
    
    
    
    144,350
    
    
    
    66,133
    
    
    
    (431,390
    )
    
    
    126,786
    
    
    
    42,755
    
    
    
    2,612
    
    
    
    (16,777
    )
    
    
    12,722
    
    
    
    1,792
    
    
    
    19,485
    
    
    
    75,324Income tax provision
    
    
    45,645
    
    
    
    153
    
    
    
    70
    
    
    
    (458
    )
    
    
    55,889
    
    
    
    239
    
    
    
    399
    
    
    
    
    
    
    
    3,697
    
    
    
    864
    
    
    
    (12,260
    )
    
    
    94,238Net Income / (Loss)
    
    
    61,211
    
    
    
    144,197
    
    
    
    66,063
    
    
    
    (430,932
    )
    
    
    70,897
    
    
    
    42,516
    
    
    
    2,213
    
    
    
    (16,777
    )
    
    
    9,025
    
    
    
    928
    
    
    
    31,745
    
    
    
    (18,914
    )Net Income as a
Percentage of
Consolidated Net Income
    
    
    (324
    %)
    
    
    (762
    %)
    
    
    (349
    %)
    
    
    2,278
    %
    
    
    (375
    %)
    
    
    (225
    %)
    
    
    (12
    %)
    
    
    89
    %
    
    
    (48
    %)
    
    
    (5
    %)
    
    
    (168
    %)
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    1,981,416
    
    
    
    1,908,564
    
    
    
    993,569
    
    
    
    1,149,257
    
    
    
    448,707
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,481,513Average Deposits
    
    
    
    
    
    
    4,042,898
    
    
    
    2,592,661
    
    
    
    2,134,970
    
    
    
    
    
    
    
    357,658
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    374,280
    
    
    
    9,502,466
 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, 2006, 2005 and 2004
 Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andGrupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    ConsolidatedGalicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalYear ended December 31, 2005:Net Financial Income
/ (Loss)
    
    
    9,889
    
    
    
    158,176
    
    
    
    106,411
    
    
    
    11,344
    
    
    
    134,773
    
    
    
    107,382
    
    
    
    (1,316
    )
    
    
    
    
    
    
    17,249
    
    
    
    148
    
    
    
    8,647
    
    
    
    552,703Net Income / (Loss) from
Services
    
    
    
    
    
    
    189,877
    
    
    
    109,930
    
    
    
    69,731
    
    
    
    206,122
    
    
    
    1,254
    
    
    
    2,743
    
    
    
    
    
    
    
    (6,853
    )
    
    
    5,287
    
    
    
    (54,326
    )
    
    
    523,765Provision for Loan Losses
    
    
    
    
    
    
    14,019
    
    
    
    1,172
    
    
    
    (80,857
    )
    
    
    28,196
    
    
    
    3,634
    
    
    
    93
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110,473
    
    
    
    76,730Operating Income
    
    
    9,889
    
    
    
    334,034
    
    
    
    215,169
    
    
    
    161,932
    
    
    
    312,699
    
    
    
    105,002
    
    
    
    1,334
    
    
    
    
    
    
    
    10,396
    
    
    
    5,435
    
    
    
    (156,152
    )
    
    
    999,738Operating Expenses
    
    
    12,881
    
    
    
    251,552
    
    
    
    170,943
    
    
    
    139,545
    
    
    
    179,294
    
    
    
    18,347
    
    
    
    1,459
    
    
    
    
    
    
    
    11,641
    
    
    
    4,382
    
    
    
    (9,076
    )
    
    
    780,968Other Income / (Loss)
    
    
    (137,684
    )
    
    
    1,504
    
    
    
    893
    
    
    
    (171,976
    )
    
    
    7,693
    
    
    
    195,448
    
    
    
    3,943
    
    
    
    16
    
    
    
    12,839
    
    
    
    (2,043
    )
    
    
    31,746
    
    
    
    (57,621
    )Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,180
    )
    
    
    (3,995
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (9,433
    )
    
    
    (34,609
    )Pre-tax Income / (Loss)
    
    
    (140,676
    )
    
    
    83,986
    
    
    
    45,119
    
    
    
    (149,589
    )
    
    
    119,918
    
    
    
    278,108
    
    
    
    3,818
    
    
    
    16
    
    
    
    11,593
    
    
    
    (990
    )
    
    
    (124,763
    )
    
    
    126,540Income tax provision
    
    
    (32,383
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,807
    
    
    
    
    
    
    
    300
    
    
    
    
    
    
    
    342
    
    
    
    584
    
    
    
    (6,348
    )
    
    
    19,302Net Income / (Loss)
    
    
    (108,293
    )
    
    
    83,986
    
    
    
    45,119
    
    
    
    (149,589
    )
    
    
    63,111
    
    
    
    278,108
    
    
    
    3,518
    
    
    
    16
    
    
    
    11,251
    
    
    
    (1,574
    )
    
    
    (118,415
    )
    
    
    107,238Net Income as a
Percentage of
Consolidated Net Income
    
    
    (101
    %)
    
    
    78
    %
    
    
    42
    %
    
    
    (139
    %)
    
    
    59
    %
    
    
    259
    %
    
    
    3
    %
    
    
    
    
    
    
    10
    %
    
    
    (1
    %)
    
    
    (110
    %)
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    1,352,655
    
    
    
    1,333,721
    
    
    
    893,892
    
    
    
    801,553
    
    
    
    525,308
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,907,129Average Deposits
    
    
    
    
    
    
    2,975,161
    
    
    
    1,945,808
    
    
    
    2,077,205
    
    
    
    
    
    
    
    572,871
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,874
    )
    
    
    7,557,171
 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, 2006, 2005 and 2004
 Grupo GaliciaBuenos
    
    Rest of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OverheadAires
    
    the
    
    
    
    
    
    Regional
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    andGrupo
    
    Metropolitan
    
    Country
    
    Head
    
    Credit
    
    Interna-
    
    Financial
    
    Other Equity
    
    
    
    
    
    Other Grupo
    
    Corporate
    
    ConsolidatedGalicia
    
    Branches
    
    Branches
    
    Office
    
    Cards
    
    tional
    
    Businesses
    
    Investments
    
    Insurance
    
    Businesses
    
    Adjustments
    
    TotalYear ended December 31, 2004:Net Financial Income
/ (Loss)
    
    
    13,085
    
    
    
    93,812
    
    
    
    75,320
    
    
    
    (158,612
    )
    
    
    93,752
    
    
    
    190,407
    
    
    
    24
    
    
    
    
    
    
    
    11,889
    
    
    
    275
    
    
    
    (95,811
    )
    
    
    224,141Net Income / (Loss) from
Services
    
    
    
    
    
    
    159,087
    
    
    
    85,641
    
    
    
    54,156
    
    
    
    188,783
    
    
    
    761
    
    
    
    2,751
    
    
    
    
    
    
    
    (4,697
    )
    
    
    4,176
    
    
    
    (54,365
    )
    
    
    436,293Provision for Loan Losses
    
    
    
    
    
    
    (24,872
    )
    
    
    (22,889
    )
    
    
    (169,419
    )
    
    
    20,515
    
    
    
    86,748
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300,078
    
    
    
    190,232Operating Income / (Loss)
    
    
    13,085
    
    
    
    277,771
    
    
    
    183,850
    
    
    
    (64,963
    )
    
    
    262,020
    
    
    
    104,420
    
    
    
    2,704
    
    
    
    
    
    
    
    7,192
    
    
    
    4,451
    
    
    
    450,254
    
    
    
    470,202Operating Expenses
    
    
    13,462
    
    
    
    224,267
    
    
    
    150,609
    
    
    
    74,719
    
    
    
    125,430
    
    
    
    20,491
    
    
    
    3,442
    
    
    
    
    
    
    
    13,535
    
    
    
    5,626
    
    
    
    (7,641
    )
    
    
    623,940Other Income / (Loss)
    
    
    (2,904
    )
    
    
    4,134
    
    
    
    3,030
    
    
    
    (242,381
    )
    
    
    11,982
    
    
    
    58,449
    
    
    
    8,394
    
    
    
    154
    
    
    
    11,154
    
    
    
    (424
    )
    
    
    250,399
    
    
    
    101,987Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,893
    )
    
    
    (16,099
    )
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,687
    
    
    
    (14,302
    )Pre-tax Income / (Loss)
    
    
    (3,281
    )
    
    
    57,638
    
    
    
    36,271
    
    
    
    (252,137
    )
    
    
    125,679
    
    
    
    126,279
    
    
    
    7,659
    
    
    
    154
    
    
    
    4,811
    
    
    
    (1,599
    )
    
    
    (167,257
    )
    
    
    (66,053
    )Income tax provision
    
    
    12,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,589
    
    
    
    
    
    
    
    215
    
    
    
    
    
    
    
    565
    
    
    
    476
    
    
    
    
    
    
    
    43,818Net Income / (Loss)
    
    
    (16,254
    )
    
    
    57,638
    
    
    
    36,271
    
    
    
    (252,137
    )
    
    
    96,090
    
    
    
    126,279
    
    
    
    7,444
    
    
    
    154
    
    
    
    4,246
    
    
    
    (2,075
    )
    
    
    (167,527
    )
    
    
    (109,871
    )Net Income / (Loss) as a
Percentage of
Consolidated Net Loss
    
    
    15
    %
    
    
    (53
    %)
    
    
    (33
    %)
    
    
    230
    %
    
    
    (87
    %)
    
    
    (115
    %)
    
    
    (7
    %)
    
    
    
    
    
    
    (4
    %)
    
    
    2
    %
    
    
    152
    %
    
    
    100
    %Average Loans of private
sector
    
    
    
    
    
    
    1,000,728
    
    
    
    1,009,655
    
    
    
    718,201
    
    
    
    574,293
    
    
    
    818,296
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,121,173Average Deposits
    
    
    
    
    
    
    2,383,718
    
    
    
    1,657,770
    
    
    
    1,284,934
    
    
    
    
    
    
    
    538,327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,399
    )
    
    
    5,858,350
 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, 2006, 2005 and 2004
 35. Capital Increase.
    
        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, 2006, 2005 and 2004
 36. Prior Fiscal Year Adjustments
       Adjustment to priorAssets
    
    year resultsBogar Bonds
    
    
    61,585External Notes
    
    
    (32,673
    )CER/CVS compensation
    
    
    (71,866
    )Total
    
    
    (42,954
    )
 37. Subsequent events
     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, 2006, 2005 and 2004
        th
 38. Differences between the Argentine Central Banks regulations and Argentine GAAP in the
Autonomous City of Buenos Aires.
   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, 2006, 2005 and 2004
   Investment securities
   Compensation to be received from the national government
  Secured loans
    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, 2006, 2005 and 2004
    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 Units
  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, 2006, 2005 and 2004
 Accounting for income tax according to the deferred tax method
   39. Summary of Significant Differences between Argentine Central Bank Rules and United States
Accounting Principles.
  a.Income tax
   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, 2006, 2005 and 2004
  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 to be received 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
 December 31, 2005SFAS 109applied to
    
    
    SFAS 109 appliedArgentine GAAP
    
    
    to U.S. GAAPbalances
    
    
    adjustments
    
    
    SFAS 109Deferred tax assetsAllowance for loan losses  private sector
    
    
    138,896
    
    
    
    (1,257
    )
    
    
    137,639Compensation and Hedge Bond
    
    
    
    
    
    
    339,371
    
    
    
    339,371Amortization of intangible assets
    
    
    62,914
    
    
    
    
    
    
    
    62,914Compensation to be received related to the payment of deposits
    
    
    
    
    
    
    121,722
    
    
    
    121,722Impairment of fixed assets and foreclosed assets
    
    
    
    
    
    
    22,040
    
    
    
    22,040Debt restructure
    
    
    
    
    
    
    135,441
    
    
    
    135,441Provision for contingencies
    
    
    57,323
    
    
    
    
    
    
    
    57,323Others
    
    
    55,674
    
    
    
    (15,695
    )
    
    
    39,979Loss carry forward
    
    
    871,093
    
    
    
    
    
    
    
    871,093Total gross deferred tax assets
    
    Ps.
    1,185,900
    
    
    Ps.
    601,622
    
    
    Ps.
    1,787,522Deferred tax liabilities:Provincial public debt / Discount Bond
    
    Ps.
    334,983
    
    
    Ps.
    (294,166
    )
    
    Ps.
    40,817Liabilities
    
    
    9,831
    
    
    
    
    
    
    
    9,831Total gross deferred tax liabilities
    
    Ps.
    344,814
    
    
    Ps.
    (294,166
    )
    
    Ps.
    50,648Net deferred income tax asset before valuation allowance
    
    Ps.
    841,086
    
    
    Ps.
    895,788
    
    
    Ps.
    1,736,874Valuation allowance
    
    
    (789,257
    )
    
    
    (895,788
    )
    
    
    (1,685,045
    )Net deferred income tax
    
    Ps.
    51,829
    
    
    Ps.
    
    
    
    Ps.
    51,829
  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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005
    
    
    2004Statutory 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
    
    
    1,136,729
    
    
    
    262,616
    
    
    Ps.
    12,018Tax exempt income
    
    
    (752,120
    )
    
    
    20,377
    
    
    
    (266,452
    )Valuation allowance
    
    
    (661,725
    )
    
    
    (263,691
    )
    
    
    289,858Actual tax provision under U.S. GAAP
    
    Ps.
    (277,116
    )
    
    Ps.
    19,302
    
    
    Ps.
    35,424
    b. Commissions on loans
  c. Intangible assets
 Amortization of deferred expenses for setting up branches
  Goodwill
  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, 2006, 2005 and 2004
    Software costs
  d. Loan loss reserves
  (i) Loan charge offs and recoveries
  (ii) Loans  Non-financial national public sector
   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, 2006, 2005 and 2004
   (iii) Loans / Bonds  Non-financial provincial public sector
      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, 2006, 2005 and 2004
    (iv) Impaired Loans  Non-financial private sector and residents abroad
    December 31,2006
    
    
    2005
    
    
    2004Total impaired loans
    
    Ps.
    460,615
    
    
    Ps.
    784,439
    
    
    Ps.
    776,973Average impaired loans during the year
    
    
    586,410
    
    
    
    722,172
    
    
    
    1,421,478Total impaired loans with no allowance under U.S. GAAP
    
    
    10,262
    
    
    
    31,718
    
    
    
    35,051Cash payments received for interest on impaired loans,
Recognized as income
    
    
    342
    
    
    
    584
    
    
    
    4,341Allowance for impaired loans under SFAS 114
    
    
    291,882
    
    
    
    397,875
    
    
    
    379,484
  (v) Credit card loans
  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, 2006, 2005 and 2004
  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-73




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
        (iii) External Notes / Discount Bonds and GDP-Linked Units
  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, 2006, 2005 and 2004
    ,
   f. Items in process of collection
   g. Adjustment to prior year results
  h. Compensation related to the payment of deposits
   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, 2006, 2005 and 2004
    i. Transfers of financial assets
 Financial trust Galtrust I
     Discount real rate for:
 December 31,
    
    December 31,
    
    December 31,2006
    
    2005
    
    2004Galtrust I Class B Debt Securities
    
    
    4
    %
    
    
    2
    %
    
    
    6
    %Galtrust I Participation Certificates
    
    
    5
    %
    
    
    2
    %
    
    
    7
    %
 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, 2006, 2005 and 2004
  Financial trust Galtrust II, Galtrust V and Galicia Mortgage Loans"
    Financial Trust Secured Loans"
   BG Financial Trust
  Other transfers of financial assets accounted for as sales under U.S. GAAP
  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, 2006, 2005 and 2004
     j. Acceptances
   k. Year 2000 costs
  l. Impairment of real estate properties and foreclosed assets
 Impairment of Long-lived Assets
  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, 2006, 2005 and 2004
    m. Equity investments in other companies
    n. Guarantees
 Financial guarantee  Exchange of deposits with the financial system II
  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, 2006, 2005 and 2004
 Other Financial Guarantees
   2006Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    AmountPayments (*)
    
    
    Recourse
    
    
    LiabilityExchange of deposits with the financial system II
    
    Ps.
    175,923
    
    
    Ps.
    
    
    
    Ps.
    2,592Other Financial guarantees
    
    
    25,131
    
    
    
    2,355
    
    
    
    188Ps.
    201,054
    
    
    Ps.
    2,355
    
    
    Ps.
    2,780
 2005Estimated
    
    
    U.S. GAAPMaximum
    
    
    Proceeds
    
    
    CarryingPotential
    
    
    From collateral
    
    
    AmountPayments (*)
    
    
    Recourse
    
    
    LiabilityExchange of deposits with the financial system II
    
    Ps.
    184,801
    
    
    
    
    
    
    Ps.
    7,977Other Financial guarantees
    
    Ps.
    16,019
    
    
    Ps.
    1,685
    
    
    Ps.
    8,584Ps.
    200,820
    
    
    Ps.
    1,685
    
    
    Ps.
    16,561
 
 (*)
    
    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.   o. Minority Interest
   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, 2006, 2005 and 2004
 p. Foreign Debt Restructuring
       q. Repurchase Agreements and Reverse Repurchase Agreements (Repos and Reverse Repos)
   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, 2006, 2005 and 2004
 Consolidated net income
 December 31,2006
    
    
    2005
    
    
    2004Net income (loss) as stated
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )Prior years adjustments recorded under Argentine GAAP (Note 39 g)
    
    
    
    
    
    
    
    
    
    
    (42,954
    )Loan origination fees and costs (Note 39 b.)
    
    
    (9,855
    )
    
    
    (4,899
    )
    
    
    1,092Intangible assets (Note 39 c.):Amortization of deferred expenses for setting up of branches
    
    
    (8,607
    )
    
    
    (1,238
    )
    
    
    4,827Goodwill amortization
    
    
    18,612
    
    
    
    26,374
    
    
    
    20,988Goodwill impairment
    
    
    1,226
    
    
    
    3,703
    
    
    
    3,613Software costs
    
    
    (6,281
    )
    
    
    (1,266
    )
    
    
    (350
    )Equity investments in other companies  Impairment (Note 39 m.)
    
    
    45,442
    
    
    
    (22,117
    )
    
    
    Loss on exchange of National Public Debt (Note 39 d (ii))
    
    
    591,227
    
    
    
    144,050
    
    
    
    129,200Provincial Public Debt (Note 39 d(iii))
    
    
    1,790,197
    
    
    
    (257,013
    )
    
    
    (129,396
    )Loan impairment  private sector (Note 39 d(iv))
    
    
    (41,212
    )
    
    
    (34,820
    )
    
    
    (20,122
    )Loan impairment  credit cards (Note 39 d(v))
    
    
    (8,181
    )
    
    
    (1,946
    )
    
    
    395Transfers of financial assets (Note 39 i)
    
    
    (22,607
    )
    
    
    48,233
    
    
    
    Government Securities and other investments:Compensatory Bond received (Note 39 e (ii))
    
    
    (61,261
    )
    
    
    214,254
    
    
    
    256,117Compensatory Bond to be received (Note 39 e (ii))
    
    
    
    
    
    
    159,814
    
    
    
    176,796Hedge Bond (Note 39 e(ii))
    
    
    812,909
    
    
    
    177,915
    
    
    
    117,435Compensation related to the payment of deposits (Note 39 h)
    
    
    (19,444
    )
    
    
    103,651
    
    
    
    35,592Impairment of other available for sale securities (Note 39 e(iii))
    
    
    21,096
    
    
    
    91,095
    
    
    
    (162,771
    )GDP  Linked Units (Note 39 e(iii))
    
    
    54,940
    
    
    
    10,123
    
    
    
    Real estate properties asset amortization (Note 39 l.)
    
    
    1,395
    
    
    
    1,395
    
    
    
    1,395Recognition for the fair value of obligations assumed under
Financial guarantees issued (Note 39 n)
    
    
    11,047
    
    
    
    (4,146
    )
    
    
    62,846Year 2000 costs (Note 39 k)
    
    
    
    
    
    
    
    
    
    
    3,005Troubled Debt restructuring (Note 39 p)
    
    
    28,039
    
    
    
    (28,425
    )
    
    
    (287,304
    )Reversal of deferred taxes under Argentine GAAP (Note 39 a)
    
    
    
    
    
    
    
    
    
    
    8,394Deferred Income tax (Note 39 a)
    
    
    371,354
    
    
    
    
    
    
    
    Minimum Presumed Income Tax (Note 39 a )
    
    
    (47,895
    )
    
    
    (32,979
    )
    
    
    (87,543
    )Minority interest (Note 39 o)
    
    
    21,686
    
    
    
    32,032
    
    
    
    17,530Net income (loss) in accordance with U.S. GAAP
    
    
    3,524,913
    
    
    
    731,028
    
    
    
    (1,086
    )Average number of shares outstanding (in thousands) (Note 24)
    
    
    1,240,932
    
    
    
    1,241,407
    
    
    
    1,185,227Basic net income (loss) per share in accordance with U.S. GAAP
(Note 24)
    
    
    2.841
    
    
    
    0.589
    
    
    
    (0.001
    )Diluted net income (loss) per share in accordance with U.S. GAAP
(Note 24)
    
    
    2.841
    
    
    
    0.589
    
    
    
    (0.001
    )
 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, 2006, 2005 and 2004
 Consolidated shareholders equity
 December 31,2006
    
    
    2005Shareholders equity as stated
    
    Ps.
    1,608,468
    
    
    Ps.
    1,626,776Loan origination fees and costs (Note 39 b.)
    
    
    (11,907
    )
    
    
    (2,052
    )Intangible assets (Note 39 c.):Amortization of deferred expenses for setting up of branches
    
    
    (18,140
    )
    
    
    (9,533
    )Goodwill amortization
    
    
    73,904
    
    
    
    55,292Goodwill impairment
    
    
    (2,237
    )
    
    
    (3,463
    )Software costs
    
    
    (8,038
    )
    
    
    (1,757
    )Equity investments in other companies  Impairment (Note 39 m.)
    
    
    (14,554
    )
    
    
    (59,996
    )Loans  non Financial Public Sector  Secured loans (Note 39 d(ii))
    
    
    (277,466
    )
    
    
    (868,693
    )Loans / Bonds  non Financial Provincial Public Sector  Bogar
Bonds (Note 39 d(iii))
    
    
    (29,191
    )
    
    
    (456,507
    )Loan impairment  private sector (Note 39 d(iv))
    
    
    (31,086
    )
    
    
    10,126Loan impairment  credit cards (Note 39 d(v))
    
    
    (14,717
    )
    
    
    (6,536
    )Government securities and other investments:Compensatory and Hedge Bond received (Note 39 e(ii))
    
    
    (187,867
    )
    
    
    (111,290
    )Hedge Bond to be received (Note 39 e(ii))
    
    
    (45,431
    )
    
    
    (858,340
    )Compensation related to the payment of deposits (Note 39 h)
    
    
    (367,221
    )
    
    
    (347,777
    )Discount Bonds (Note 39 e(iii))
    
    
    (304,325
    )
    
    
    (394,091
    )GDP  Linked Units (Note 39 e(iii))
    
    
    65,063
    
    
    
    10,123Financial assets transferred (Note 39 i)
    
    
    (257,824
    )
    
    
    (293,295
    )Minority interest (Note 39 o)
    
    
    167,185
    
    
    
    145,499Impairment of real estate properties and foreclosed assets
(Note 39 l)
    
    
    (67,155
    )
    
    
    (67,155
    )Real Estate properties amortization (Note 39 l)
    
    
    5,580
    
    
    
    4,185Minimum Presumed Income Tax (Note 39 a)
    
    
    (218,884
    )
    
    
    (170,989
    )Deferred Income tax (Note 39 a)
    
    
    371,354
    
    
    
    Recognition for the fair value of obligations assumed under
financial guarantees issued (Note 39 n)
    
    
    (2,012
    )
    
    
    (13,059
    )Foreign debt restructuring (Note 39 p)
    
    
    (287,690
    )
    
    
    (315,729
    )Consolidated shareholders equity (deficit) in accordance with
U.S. GAAP
    
    Ps.
    145,809
    
    
    Ps.
    (2,128,261
    )
 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, 2006, 2005 and 2004
  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, 2003
    
    Ps.
    1,092,407
    
    
    Ps.
    86,568
    
    
    Ps.
    1,418,854
    
    
    Ps.
    29,493
    
    
    Ps.
    
    
    
    Ps.
    223,143
    
    
    Ps.
    (7,303,801
    )
    
    Ps.
    (4,453,336
    )Distribution of retained earnings:Unrealized appreciation of
available-for-sale securities, net of
tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,048,731
    
    
    
    
    
    
    
    1,048,731Capital Increase
    
    
    149,000
    
    
    
    61,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,026Net loss for the year under U.S. GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,086
    )
    
    
    (1,086
    )Balance 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 depreciation of
available-for-sale securities, net of
tax and minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,251,449
    )
    
    
    
    
    
    
    (1,251,449
    )Premium for trading of shares in own
portfolio
    
    
    
    
    
    
    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.
    145,809
 Comprehensive income
   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, 2006, 2005 and 2004
 December 31,2006
    
    
    2005
    
    
    2004Income StatementFinancial Income
    
    Ps.
    5,436,338
    
    
    Ps.
    2,958,678
    
    
    Ps.
    1,448,708Financial Expenditures
    
    
    1,843,574
    
    
    
    1,845,929
    
    
    
    1,167,444Net Financial Income
    
    
    3,592,764
    
    
    
    1,112,749
    
    
    
    281,264Provision for Loan Losses
    
    
    160,262
    
    
    
    113,496
    
    
    
    209,959Income from Services
    
    
    837,340
    
    
    
    628,968
    
    
    
    530,144Expenditures from Services
    
    
    180,408
    
    
    
    121,305
    
    
    
    92,759Administrative Expenses
    
    
    982,843
    
    
    
    770,874
    
    
    
    615,063Net Income / (Loss) from Financial Brokerage
    
    
    3,106,591
    
    
    
    736,042
    
    
    
    (106,373
    )Minority Interests
    
    
    2,670
    
    
    
    (2,577
    )
    
    
    3,228Miscellaneous Income
    
    
    326,308
    
    
    
    282,845
    
    
    
    514,606Miscellaneous Losses
    
    
    187,772
    
    
    
    265,980
    
    
    
    377,123Net Income / (Loss) before Income tax
    
    
    3,247,797
    
    
    
    750,330
    
    
    
    34,338Income Tax
    
    
    277,116
    
    
    
    (19,302
    )
    
    
    (35,424
    )Net income (loss) under U.S. GAAP
    
    
    3,524,913
    
    
    
    731,028
    
    
    
    (1,086
    )Other comprehensive income (loss):Unrealized gains (losses) on securities
    
    
    (1,251,449
    )
    
    
    336,376
    
    
    
    1,048,731Other comprehensive income (loss)
    
    
    (1,251,449
    )
    
    
    336,376
    
    
    
    1,048,731Comprehensive income
    
    Ps.
    2,273,464
    
    
    Ps.
    1,067,404
    
    
    Ps.
    1,047,645
  December 31,2006
    
    
    2005
    
    
    2004Boden 2012 Bonds  Compensatory Bond
    
    
    89,441
    
    
    
    104,757
    
    
    
    269,009Bogar Bonds
    
    
    168,908
    
    
    
    1,531,789
    
    
    
    1,010,200GalTrust I
    
    
    (7,443
    )
    
    
    (74,673
    )
    
    
    (7,335
    )Discount Bonds
    
    
    125,251
    
    
    
    56,581
    
    
    
    Other assets
    
    
    (19,356
    )
    
    
    (10,204
    )
    
    
    Accumulated other comprehensive income
    
    Ps.
    356,801
    
    
    Ps.
    1,608,250
    
    
    Ps.
    1,271,874
 F-85




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
 Concentration of risk  Total exposure to the public sector  Argentine government and
provinces
  December 31, 2006
    
    
    December 31, 2005Argentine
    
    
    
    
    
    
    ArgentineBanking
    
    
    
    
    
    
    BankingGAAP
    
    U.S. GAAP
    
    
    GAAP
    
    U.S. GAAPArgentine national
government loans
    
    Ps.
    2,846,253
    
    
    Ps.
    2,576,512
    
    
    
    Ps.
    5,341,756
    
    
    Ps.
    4,492,662Argentine provincial debt
    
    
    366,519
    
    
    
    337,328
    
    
    
    
    3,823,299
    
    
    
    3,366,792Other Argentine
public-sector receivables
    
    
    249,223
    
    
    
    221,782
    
    
    
    
    340,270
    
    
    
    320,673Galtrust I (securitization
of Provincial Loans)
    
    
    568,095
    
    
    
    355,721
    
    
    
    
    536,509
    
    
    
    253,418Compensatory bond received
    
    
    3,582,858
    
    
    
    3,394,991
    
    
    
    
    987,951
    
    
    
    876,661Bonds to be received (1) (2)
    
    
    401,335
    
    
    
    394,531
    
    
    
    
    4,154,989
    
    
    
    Other (3)
    
    
    883,280
    
    
    
    644,018
    
    
    
    
    1,229.763
    
    
    
    845,797Total
    
    Ps.
    8,897,563
    
    
    Ps.
    7,924,883
    
    
    
    Ps.
    16.414,537
    
    
    Ps.
    10,156,003
 
 (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. The above-mentioned advance was Ps. 3,296,649 as of December 31, 2005. Under
U.S.GAAP, the Hedge Bond and the related advance have been eliminated as of December 31, 2005. 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 and 2005,.(3)
    
    Includes bonds such as Fiscal Credit Certificates and other national government bonds. Risks and Uncertainties
     F-86




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
 U.S. GAAP estimates
  40. Parent only Financial Statements
  F-87




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
 Balance sheet (Parent Company only)
 December 31,2006
    
    
    2005ASSETSA. Cash and due from banksCash
    
    Ps.
    49
    
    
    Ps.
    581Banks and correspondents
    
    
    82
    
    
    
    69Ps.
    131
    
    
    Ps.
    650B. Government and corporate securitiesInvestments in quoted corporate securities
    
    
    325,335
    
    
    
    Ps.
    325,335
    
    
    Ps.
    C. LoansTo the financial sector
    
    
    14,365
    
    
    
    Ps.
    14,365
    
    
    Ps.
    D. Other receivables resulting from financial brokerageOther receivables not included in the debtor classification
Regulations
    
    
    2,484
    
    
    
    238,901Other receivables included in the debtor classification
Regulations
    
    
    13,089
    
    
    
    7,197Accrued interest receivable included in the debtor
Classification regulations
    
    
    23
    
    
    
    26Ps.
    15,596
    
    
    Ps.
    246,124F. Equity investment in other companiesIn financial institutions
    
    
    1,208,450
    
    
    
    1,316,602Other
    
    
    50,327
    
    
    
    42,117Ps.
    1,258,777
    
    
    Ps.
    1,358,719G. Miscellaneous receivablesOther accrued interest receivables
    
    
    
    
    
    
    8Other
    
    
    2,122
    
    
    
    44,644Ps.
    2,122
    
    
    Ps.
    44,652H. Bank premises and equipment
    
    
    3,014
    
    
    
    3,066J. Intangible assetsGoodwill
    
    
    
    
    
    
    684Organization and development expenses
    
    
    14
    
    
    
    19Ps.
    14
    
    
    Ps.
    703Total Assets
    
    Ps.
    1,619,354
    
    
    Ps.
    1,653,914
 December 31,2006
    
    
    2005LIABILITIES AND SHAREHOLDERS EQUITYO. Miscellaneous liabilitiesDirectors and Syndics fees
    
    Ps.
    113
    
    
    Ps.
    158Other
    
    
    10,773
    
    
    
    26,98010,886
    
    
    
    27,138Total Liabilities
    
    Ps.
    10,886
    
    
    Ps.
    27,138SHAREHOLDERS EQUITY
    
    Ps.
    1,608,468
    
    
    Ps.
    1,626,776Total Liabilities and Shareholders Equity
    
    Ps.
    1,619,354
    
    
    Ps.
    1,653,914
 F-88




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
 Statement of Income (Parent Company only)
 December 31,2006
    
    2005
    
    2004A. Financial incomeInterest on loans granted to the financial sector
    
    
    54
    
    
    
    
    
    
    
    Interest on other receivables resulting from
financial brokerage
    
    Ps.
    665
    
    
    Ps.
    9,700
    
    
    Ps.
    6,911Net income from government and corporate securities
    
    
    114,641
    
    
    
    238
    
    
    
    Consumer price index adjustment (CER / CVS)
    
    
    
    
    
    
    6
    
    
    
    9Other
    
    
    3,100
    
    
    
    279
    
    
    
    6,548Ps.
    118,460
    
    
    Ps.
    10,223
    
    
    Ps.
    13,468B. Financial expensesNet loss from government and corporate securities
    
    
    
    
    
    Ps.
    
    
    
    Ps.
    383Other
    
    
    53
    
    
    
    334
    
    
    
    Ps.
    53
    
    
    Ps.
    334
    
    
    Ps.
    383Gross brokerage margin
    
    
    118,407
    
    
    
    9,889
    
    
    
    13,085F. Administrative expensesPersonnel expenses
    
    
    2,149
    
    
    
    2,446
    
    
    
    998Directors and syndics fees
    
    
    702
    
    
    
    664
    
    
    
    249Other fees
    
    
    2,033
    
    
    
    2,762
    
    
    
    1,059Taxes
    
    
    704
    
    
    
    865
    
    
    
    9,392Other operating expenses
    
    
    613
    
    
    
    1,754
    
    
    
    1,384Other
    
    
    4,265
    
    
    
    4,390
    
    
    
    380Ps.
    10,466
    
    
    Ps.
    12,881
    
    
    Ps.
    13,462Net Income / (Loss) from financial brokerage
    
    Ps.
    107,941
    
    
    Ps.
    (2,992
    )
    
    Ps.
    (377
    )H. Miscellaneous incomeNet income on long-term investments
    
    
    
    
    
    
    215,531
    
    
    
    Loans recovered and allowances reversed
    
    
    640
    
    
    
    1,384
    
    
    
    811Other
    
    
    1,111
    
    
    
    129
    
    
    
    991Ps.
    1,751
    
    
    Ps.
    217,044
    
    
    Ps.
    1,802I. Miscellaneous lossesNet loss on long-term investments (1)
    
    
    81,238
    
    
    
    
    
    
    
    93,617Other
    
    
    1,723
    
    
    
    139,197
    
    
    
    4,706Ps.
    82,961
    
    
    Ps.
    139,197
    
    
    Ps.
    98,323Net Income / (Loss) before tax
    
    
    26,731
    
    
    
    74,855
    
    
    
    (96,898
    )J. Income tax
    
    Ps.
    45,645
    
    
    Ps.
    (32,383
    )
    
    Ps.
    12,973Net income (loss) for the period
    
    Ps.
    (18,914
    )
    
    Ps.
    107,238
    
    
    Ps.
    (109,871
    )
 
 (1)
    
    Includes the foreign currency position compensation. F-89




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
 Statement of cash flows (Parent Company only)
 December 31,2006
    
    2005
    
    2004CHANGES IN CASHCash at the beginning of the period
    
    Ps.
    650
    
    
    Ps.
    540
    
    
    Ps.
    1,164Increase / (decrease) in cash
    
    
    (519
    )
    
    
    110
    
    
    
    (624
    )Cash at end of period
    
    
    131
    
    
    
    650
    
    
    
    540Cash provided by (used in) operating activitiesLess:Operating expenses paid
    
    
    (31,146
    )
    
    
    (68,228
    )
    
    
    (9,347
    )Plus:Other operating income received
    
    
    18,387
    
    
    
    23,732
    
    
    
    10,301Cash provided by (used in) operating activities
    
    Ps.
    (12,759
    )
    
    Ps.
    (44,496
    )
    
    Ps.
    954Other sources of cashDividends
    
    
    613
    
    
    
    350
    
    
    
    438Increase in short-term investment
    
    
    11,130
    
    
    
    46,825
    
    
    
    1,030Other sources of cash
    
    
    546
    
    
    
    161
    
    
    
    32Other sources of cash
    
    Ps.
    12,289
    
    
    Ps.
    47,336
    
    
    Ps.
    1,500Other uses of cashIncrease in short-term loans
    
    
    
    
    
    
    (635
    )
    
    
    (2,223
    )Increase in fixed assets
    
    
    (42
    )
    
    
    (17
    )
    
    
    (65
    )Increase in long-term investments
    
    
    (7
    )
    
    
    (2,078
    )
    
    
    (790
    )Total other uses of cash
    
    Ps.
    (49
    )
    
    Ps.
    (2,730
    )
    
    Ps.
    (3,078
    )Increase / (decrease) in cash
    
    Ps.
    (519
    )
    
    Ps.
    110
    
    
    Ps.
    (624
    )
  New authoritative pronouncements
   F-90




---



##### Table of Contents



Grupo Financiero Galicia S.A. and Subsidiaries
 Notes to the Consolidated Financial Statements
For the fiscal years ended December 31, 2006, 2005 and 2004
    F-91




---



##### Table of Contents



Exhibit
    
    Description1.1
    
    Unofficial English language translation of the By-laws (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
    
    English translation of form of Loan Agreement, dated March 21, 2002, by and between Seguro de
Depositos S.A. and the Bank.***4.4
    
    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).**4.5
    
    Form of Amendment No. 1 and Waiver to Restructured Loan Facility (as evidenced by the
Amendment No. 1 and Waiver to 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). ****4.6
    
    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).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.