Banco De Galicia Y Buenos Aires S.A.U.

The stable outlook for the next 12 months on Banco Galicia mirrors that on Argentina, because we limit the ratings on the bank to those on the sovereign. At the same time, we incorporate the risks stemming from multiple distortions in the economy, as well as volatilities, which could erode the solvency and liquidity of Argentine banks. We could lower the ratings on Banco Galicia if we take a similar action on the sovereign or if the previously mentioned factors erode the bank's ability to cover its financial obligations or access dollars to pay its foreign currency debt. A deterioration in the entity's credit fundamentals wouldn't lead to an automatic downgrade because its 'b+' stand-alone credit profile (SACP) is three

...The sovereign rating on Argentina (###+/Stable/C) limits the long-term rating on Banco Galicia. We rarely rate financial institutions higher than the sovereign where they operate, because we consider it unlikely that these institutions would remain unaffected by developments in domestic economies. Well-established brand and good presence in the Argentine financial system allow the bank to maintain relatively stable operating revenue. This is despite the weak business conditions and many distortions present in the economy. However, high inflation, lower margins, and regulated fees are pressuring the banking system's profitability, including that of Banco Galicia's. Capitalization will allow to the bank to maintain its business plan despite profitability pressures. We expect Banco Galicia's risk-adjusted capital (RAC) ratio to be about 4.8% for the next 12-24 months, considering nominal credit...

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