BMA Banco Macro SA

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Banco Macro SA (hereinafter, the Bank), is a stock corporation (sociedad anónima), organized in the Republic of Argentina that offers traditional banking products and services to companies, including those companies operating in regional economies, as well as to individuals, strengthening in this way its goal to be a multi-services bank. In addition, through its subsidiaries, the Bank performs transactions as a trustee agent, direction and management of mutual funds and stock exchange services.

Macro Compañía Financiera SA was created in 1977, as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro SA. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud SA) and since August 2006, Banco Macro SA.

The Bank´s shares have been publicly listed on the Bolsas y Mercados Argentinos (BYMA) since November 1994, as from March 24, 2006 they are listed on the New York Stock Exchange (NYSE). Additionally, on October 15, 2015 they were authorized to list on the Mercado Abierto Electrónico SA (MAE).

Since 1994, Banco Macro SA’s market strategy was mainly focused on the regional areas outside the City of Buenos Aires. Following this strategy, in 1996, Banco Macro SA started the process to acquire entities and assets and liabilities during the privatization of provincial and other banks.

On May 15, 2018, the Board of Directors approved the issuance of these Condensed consolidated interim financial statements.

The Bank and the Misiones Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a five-year term since January 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

On November 25, 1999, and December 28, 2006, extensions to such agreement were agreed upon, making it currently effective through December 31, 2019.

As of March 31, 2018 and December 31, 2017 and 2016, the deposits held by the Misiones Provincial Government with the Bank amounted to 4,251,480, 3,255,353 and 2,495,781(including 334,437, 333,032 and 139,610 related to court deposits), respectively.

The Bank and the Salta Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since March 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

On February 22, 2005 and August 22, 2014, extensions to such agreements were agreed upon, making it currently effective through February 28, 2026.

As of March 31, 2018 and December 31, 2017 and 2016, the deposits held by the Salta Provincial Government with the Bank amounted to 1,129,508, 908,270 and 1,340,738 (including 494,122, 458,550 and 370,154 related to court deposits), respectively.

The Bank and the Jujuy Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since January 12, 1998, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

On April 29, 2005 and July 8, 2014, extensions to such agreement were agreed upon, making it currently effective through September 30, 2024.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

As of March 31, 2018 and December 31, 2017 and 2016, the deposits held by the Jujuy Provincial Government with the Bank amounted to 2,610,479, 4,649,184 and 1,580,312 (including 376,766, 320,825 and 253,622 related to court deposits), respectively.

Banco del Tucumán SA acts as an exclusive financial agent and as revenue collection and obligation payment agent of the Tucumán Provincial Government and of the Municipality of San Miguel de Tucumán, respectively.

The service agreement with the Tucumán Provincial Government is currently effective through the year 2021, while the agreement executed with the Municipality of San Miguel de Tucumán was automatically extended through the year 2023, as set forth in the original agreement.

As of March 31, 2018 and December 31, 2017 and 2016, the deposits held by the Tucumán Provincial Government and the Municipality of San Miguel de Tucumán with Banco del Tucumán SA amounted to 3,790,426, 1,913,801 and 2,450,436 (including 1,294,894, 1,225,993 and 943,683 related to court deposits), respectively.

Preparation basis

Applicable Accounting Standards

On February 12, 2014 the Central Bank, through Communiqué “A” 5541 established the general guidelines towards conversion to the IFRS issued by the International Accounting Standards Board (IASB) for preparing financial statements of the entities under its supervision, for the annual fiscal years beginning on January 1, 2018 as well as those of interim-periods.

Additionally, through Communiqués “A” 6114, the Central Bank set specific guidelines within the scope of such convergence process, among which it defined (i) the transitory exception to the application of section 5.5 “Impairment” of the IFRS 9 “Financial Instruments” (sections B5.5.1 to B5.5.55)) up to the fiscal years beginning as of January 1, 2020; and (ii) in order to calculate the effective interest rate of assets and liabilities so requiring it for the measurement thereof, pursuant to IFRS 9, up to December 31, 2019, the Bank may transitorily make a global estimate of the calculation of the effective interest rate on a group of financial assets or liabilities with similar characteristics which shall be applied such effective interest rate. To the date of the present condensed consolidated interim financial statements the Bank is in the process of determining and quantifying the effect the application of section 5.5 “Impairment” mentioned in (i) above will have. Finally, through Communiqués “A” 6323 and 6324 and supplementary rules, the Central Bank defined the minimum chart of accounts and the provisions applicable to the preparation and presentation of the financial statements of financial entities for the fiscal years beginning on January 1, 2018, respectively.

The accompanying Condensed consolidated interim financial statements of the Bank were prepared pursuant to Communiqué “A” 6114 and supplementary rules of the Central Bank. Taking into account the exceptions described in the preceding paragraph, the new regulatory framework comprises the Standards and Interpretations adopted by the IASB and includes:

The accompanying Condensed consolidated interim financial statements are the first Financial Statements presented in accordance with Central Bank Communiqué “A” 6114. For the preparation of the present Financial Statements the Bank applied the basis for the preparation and consolidation, the accounting policies and the material accounting judgements, estimates and assumptions described in this Note. The Bank further contemplated the exceptions and exemptions provided for in IFRS 1 “First-time Adoption of International Financial Reporting Standards” and those applied for the preparation of the accompanying Condensed consolidated interim financial statements are described in the section “First-time Adoption of International Financial Reporting Standards in accordance with Communiqué 6114 of the Central Bank” of this Note.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Up to the fiscal year ended December 31, 2017, the Bank prepared its consolidated Financial Statements in accordance with the rules and standards issued by the Central Bank. The financial information for previous fiscal years and included in the accompanying consolidated Financial Statements for comparative purposes, was modified and is disclosed in accordance with the basis described in the preceding paragraphs. The effects of changes between the standards applied as of the end of the fiscal year ended December 31, 2017 and the IFRS are explained in the reconciliations disclosed under the title “First-time Adoption of International Financial Reporting Standards in accordance with Central Bank Communiqué “A” 6114” of this Note 3.

The accompanying condensed consolidated interim financial statements for the three months period ended March 31, 2018 have been prepared in accordance with IAS 34 “Interim Financial Reporting”.

These condensed consolidated interim Financial Statements include all the necessary information for an appropriate understanding, by the users thereof, of the basis for the preparation and disclosure used therein, as well as the relevant events and transactions occurred after the issuance of the last annual consolidated Financial Statements for the fiscal year ended December 31, 2017. Nevertheless, the present condensed consolidated interim Financial Statements do not include all the information or all the disclosures required for the annual consolidated financial statements prepared in accordance with the IAS 1 “Presentation of Financial Statements”. Therefore, the accompanying condensed consolidated interim Financial Statements must be read together with the annual consolidated financial statements for the fiscal year ended December 31, 2017.

The accounting policies comply with the IFRS as currently approved and are applicable to the preparation of the first annual consolidated Financial Statements in accordance with the IFRS (December 31, 2018). Notwithstanding the above, these accounting policies might change if, at the time of preparing those first annual Financial Statements in accordance with the IFRS, new standards are issued or the existing ones are modified, or the compulsory application to that date is modified, or if the Bank chooses to change its choice of any of the exemptions under IFRS 1. Generally, the Central Bank does not allow the anticipated application of any IFRS, unless it expressly states the contrary.

Transcription in the Books of Accounts

To the date of the accompanying Financial Statements, the same are in the process of being transcribed in the Bank’s Books of Account.

Figures expressed in thousands of Pesos

The accompanying consolidated Financial Statements disclose figures expressed in thousands of Argentine pesos and round the amounts in thousands of pesos to the nearest whole number, unless it expressly states the contrary.

Balance Sheet Disclosure

The Bank presents its assets and liabilities in order of liquidity. The analysis referred to the recovery of assets and settlement of liabilities during the 12 months following the reporting date (current assets and liabilities) and more than 12 months after the reporting date (non-current assets and liabilities) is disclosed in Note 19 to the accompanying condensed consolidated interim financial statements.

Financial assets and financial liabilities are generally disclosed in gross numbers in the Balance Sheet. They are only compensated and disclosed in net figures when there is a legal and unconditional right to compensate such financial assets and liabilities and the Management intends to settle them on a net basis or to realize assets and settle liabilities simultaneously.

Note also that the present condensed consolidated interim financial statements were prepare on the basis of historical amounts, except for monetary Regulation Instruments of the Central Bank and certain Federal Government Securities, which were valued at fair value through Other Comprehensive Income (OCI) and Provincial Government Securities, Corporate Bonds, Debt Securities and Certificates of Participation in Financial Trusts, listed or unlisted Securities and certain Federal Government Securities, which were valued at Fair Value Through Profit or Loss. In addition, as to derivative instruments (term and forward transactions) both assets and liabilities were valued at Fair Value through Profit or Loss.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Comparative information

The present Condensed consolidated interim balance sheet as of March 31, 2018, is presented comparatively with year-end data of the immediately preceding fiscal year, while the Statement of income and Other comprehensive income, the Statement of changes in shareholders’ equity and the Statement of cash flows and Cash equivalents for the three-month period ended March 31, 2018, are presented comparatively with data as of same period of the immediately preceding fiscal year.

In compliance with IFRS 1 “First-time Adoption of International Financial Reporting Standards” and since the accompanying Condensed consolidated interim financial statements are the first ones being submitted pursuant to Communiqué “A” 6114 of the Central Bank, we include the opening Balance sheet to the transition date (December 31, 2016).

Unit of measure

The Bank’s Financial statements recognize the changes in the peso purchasing power until February 28, 2003, when the adjustments to reflect those changes were discontinued, and as required by Presidential Decree 664/2003, Article No. 312 of General Resolution No. 7/2015 of the Superintendency of Corporations (Public Registry of Commerce), Central Bank Communiqué “A” 3921 and the General Resolution No. 441 issued by the CNV (Argentine Securities Exchange Commission).

IAS 29 “Financial Reporting in Hyperinflationary Economies” establishes that the financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, whether they are based on a historical cost approach or a current cost approach, shall be expressed in terms of the measuring unit current at the end of the reporting period, computing for such purpose the inflation produced from the acquisition date, in the case of non-monetary items carried at cost or cost less accumulated depreciation, or from the revaluation date, in the case of non-monetary items carried at amounts current on dates other than that of the balance sheet or the acquisition date. For this purpose, although the standard does not fix an absolute inflation rate at which hyperinflation is deemed to arise, it is a general practice to consider for this purpose a variation approaching or exceeding 100% cumulative inflation over three years, together with other qualitative factors regarding the macroeconomic environment.

The Bank evaluates whether the argentine peso meets the characteristics to qualify as the currency of an hyperinflationary economy following the provisions under IAS 29, and to evaluate the above mentioned quantitative factor the Bank takes into account the evolution of the internal wholesale price index (WPI) published by the Instituto Nacional de Estadísticas y Censos (INDEC), since such index is the one that best reflects the conditions required by IAS 29.

From the assumption of the current federal government, that took place on December 10, 2015, the INDEC started a reorganization process. Such Organism announced monthly inflation data measured based on the WPI starting on January 2016, without giving any specific inflation to the months of November and December 2015. To the date of approval of the accompanying Condensed consolidated interm financial statements, the last WPI published by INDEC is that for the month of March 2018 and the cumulative inflation rate for the period of three years ended that same month is approximately 95%.

Although not all necessary objective conditions are met to qualify the economy as hyperinflationary, it is necessary to consider in the interpretation of the Financial statements the fact that during the last fiscal years there have been significant variations in the prices of indicators relevant to the economy, such as wage cost, interest rate and foreign exchange rate.

Basis for Consolidation

The accompanying Condensed consolidated interim financial statements include the Financial Statements of the Bank and its subsidiaries as of March 31, 2018.

Subsidiaries are all the entities controlled by the Bank. The Bank controls other entity when it is exposed, or has rights, to variable returns from its continuing involvement with such other entity, and has the ability to use its power to direct the operating and financing policies of such other entity, to affect the amounts of such returns.

This generally happens when there is a shareholding of more than half of its shares having voting rights.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Notwithstanding the above, under certain particular circumstances, the Bank may still have control with less than a 50% participating interest or may not have the control even if it holds more than half of the shares of such other entity. Upon evaluating whether it has power over the controlled entity, and therefore controls the variation of its returns, the Bank shall consider all relevant facts and circumstances, including:

The Bank has no interests in structured entities that required to be consolidated.

Subsidiaries are completely consolidated since the date of the effective transfer of the control over the same to the Bank and consolidation ceases when the Bank loses control over the subsidiaries. The accompanying condensed consolidated interim Financial Statements include the assets, liabilities, income and each component of other comprehensive income of the Bank and its subsidiaries. Transactions between consolidated entities are completely eliminated.

Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary are equity transactions. However, if a parent company loses control of a subsidiary, it shall derecognize the assets (including any goodwill) and liabilities of the subsidiary, any non-controlling interests in the former subsidiary and other capital components, while any profit or loss derived from the transaction, event or circumstances that resulted in the loss of control shall be recognized as a profit or loss, and any investment retained in the former subsidiary shall be recognized at its fair value at the date when control is lost.

The Financial Statements of the subsidiaries have been prepared to the same dates and for the same accounting periods as those of the Bank, using uniform accounting policies consistent with those applied by the latter. In case necessary, adjustments shall be made to the Financial Statements of the subsidiaries so that the accounting policies used by the group will be uniform.

The Bank considers the Argentine peso as its functional and presentation currency. To such effect, before consolidation, the Financial statements of its subsidiary Macro Bank Limited, originally expressed in US dollars, were translated to pesos (presentation currency) using the following method:

On the other hand, non-controlling interests represent the portion of income and equity not directly or indirectly attributable to the Bank and in the accompanying Condensed consolidated intermin financial statements they are disclosed as a separate line in the Balance Sheet, the Statement of Income, the Statement of Other Comprehensive Income and the Statement of Changes in Shareholders’ Equity.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

As of March 31, 2018 and December 31, 2017 and 2016, the Bank has consolidated its Financial Statements with the Financial Statements of the following companies:

The table below shows the Bank’s participating interest in the companies it consolidates as of March 31, 2018 and December 31, 2017 and 2016:

Total assets, liabilities and net equity of the Bank and each of its subsidiaries as of March 31, 2018 and December 31, 2017 and 2016 are as follows:

The Bank’s Management considers there are no other companies or structured entities to be included in the Financial Statements as of March 31, 2018 and December 31, 2017 and 2016.

Summary of significant accounting policies

Below there is a description of the principal valuation and disclosure criteria used for the preparation of the accompanying Conndensed consolidated interim financial satements as of March 31, 2018 and December 31, 2017 and 2016:

The Bank considers the Argentine Peso as its functional and presentation currency. The assets and liabilities denominated in foreign currency, mainly in US dollars, were valued at Central Bank benchmark US dollar exchange rate effective as of the closing date of transactions on the last business day of each period or fiscal year, as applicable.

Additionally, assets and liabilities denominated in other foreign currencies were translated at the repo exchange rate communicated by the Central Bank. Foreign exchange differences were recorded in the related statements of income as “Difference in quoted prices of gold and foreign currency”.

Initial Recognition and Measurement

The purchase and sale of financial assets requiring the delivery of assets within the term generally established by the rules and regulations or the market conditions are recorded on the transaction’s trading date, i.e., on the date the Bank undertakes to acquire or sell the relevant asset.

At initial recognition, the financial assets and liabilities were recognized at fair value. Those financial assets and liabilities not recognized at fair value through profit or loss, were recognized at fair value adjusted for transactions costs directly attributable to the acquisition or issue of the financial asset or liability.

At initial recognition, the fair value of a financial instrument is generally the transaction price. Nevertheless, if part of the consideration received or paid is for something different from the financial instrument, the Bank estimates the fair value of the financial instrument. Any additional amount regarding the consideration shall be an expense or lesser income, except it meets the requirements to be recognized as any other type of asset.

Subsequent measurement – Business Model

The Bank established three categories for the classification and measurement of its financial instruments, in accordance with the Bank’s business model to manage its financial assets and the contractual cash flow characteristics thereof:

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Therefore, the bank measures its financial assets at fair value, except for those that meet the following two conditions and are measured at amortized cost:

The Bank’s business model is determined at a level that reflects how groups of financial assets are managed together to achieve a particular business objective.

The business model is not assessed on an instrument-by-instrument approach, but it should rather be determined on a higher level of aggregation and is based on observable factors such as:

The assessment of the business model is performed on the basis of scenarios that the Bank reasonably expects to occur, without taking into account the scenarios such as the so-called ‘worst case’ or ‘stress case’ scenarios. If after the initial recognition cash flows are realized in a way that is different from the Bank’s expectations, the Bank does not change the classification of the remaining financial assets held in that business model, but rather considers all relevant information to assess the newly originated or newly purchased financial assets.

Test of contractual cash flow characteristics

As part of the classification process, the Bank assessed the contractual terms of its financial instruments in order to determine if such financial instruments give rise to cash flows on specific dates which are solely payments of principal and interest on the principal amount outstanding.

For the purposes of this assessment, “principal” is defined as the fair value of the financial asset at initial recognition, provided such amount may change over the life of the financial asset, for example, if there are repayments of principal or premium amortization or discount.

The most significant elements of interest within a loan agreement are typically the consideration for the time value of money and credit risk.

In order to test contractual cash flow characteristics, the Bank applies judgment and considers relevant factors such as the currency in which the financial asset is denominated and the period for which the interest rate is set.

However, contractual terms that introduce exposure to risks or volatility in the contractual cash flows that are unrelated to a basic lending arrangement, do not give rise to contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. In such cases, financial assets are required to be measured at fair value through profit or loss.

Therefore, the financial assets and liabilities were classified pursuant to the above expressed as “Financial assets at fair value through profit or loss”, “Financial assets at fair value through other comprehensive income” or “Financial assets at amortized cost”. Such classification is disclosed in Exhibit P “Categories of Financial Assets and Liabilities”.

This category presents two subcategories: financial assets at fair value held for trading and financial assets initially designated at fair value by the Management or under section 6.7.1. of IFRS 9. The Bank’s Management, has not designated, at the beginning, financial assets at fair value through profit or loss.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

The Bank classifies the financial assets as held for trading when they have been acquired or incurred principally for the purpose of selling or repurchasing it in the near term or when they are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking.

Financial assets and liabilities at fair value through profit or loss are recognized at fair value in the Balance Sheet. Changes in fair value are recognized under the item “Net Income for measurement of financial instruments at fair value through profit or loss”, as well as income or expenses for interest and dividends pursuant to the contractual terms and conditions, or when the right to receive payment of the dividend is established.

The fair value of instruments categorized as Level 1 was assessed by using the quotes effective as of the end of each period or fiscal year, as applicable, in active markets if representative. At present, for government or private securities or bonds, there are two main markets in which the Bank operates, that are BYMA and MAE. Additionally, as for derivatives, both MAE and Mercado a Término de Rosario S.A. (ROFEX) are deemed as active markets.

On the other hand, for certain instruments that do not have a quoted price in an active market, categorized as Level 2, the Bank used valuation techniques that included the use of market transactions performed under mutual independent terms and conditions, between interested and duly informed parties, provided there are any available, as well as references to the current fair value of other instrument being substantially similar, or otherwise the analysis of cash flows discounted at rates built from market information of similar instruments.

In addition, certain assets and liabilities included in this categorization were valued using identical quoted prices of identical instruments in “less active markets”.

Finally, the Bank has categorized as level 3 those assets and liabilities for which there are no identical or similar transactions in the market. In order to determine the market value of these instruments, the Bank used valuation techniques based on its own assumptions, which are similar to those that would be used by any other market player. For this approach, the Bank mainly used the cash flow discount model.

A financial asset shall be measured at fair value through other comprehensive income if (i) the financial instrument is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and (ii) the contractual terms of the financial asset meet the determination that cash flows are solely payments of principal and interest on the principal amount outstanding.

Debt instruments at fair value through other comprehensive income are recognized in the Balance Sheet at fair value. Profits and losses derived from changes in fair value are recognized in other comprehensive income as “Profits or losses from financial instruments at fair value through other comprehensive income”. Income from interest, profit and loss from translation differences and impairment are recognized in the statement of income in the same manner as for financial assets measured at amortized cost and are disclosed as “Income from interest received”, “Difference in quoted prices of gold and foreign currency” and “Provision for loan losses”, respectively.

When the Bank has more than one investment on the same security, it must be considered that they shall be disclosed using the first in first out costing method.

On derecognition, gains and losses accumulated previously recognized in OCI are reclassified to profit or loss.

They represent financial assets held in order to collect contractual cash flows and the contractual terms of which give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

After initial recognition, these financial assets are recognized in the Balance Sheet at amortized cost using the effective interest method, less the allowance for loan losses. The effective interest method uses the rate that allows the discount of estimated future cash payments or receipts through the expected life of the financial instrument or lesser term, if applicable, to the net carrying amount of the financial asset or to the financial liability. When applying this method, the Bank identifies incremental direct costs as an integral part of the effective interest rate. For such purposes, interest is the consideration for the time value of money and for the credit risk associated with the amount of principal outstanding during a specific period of time. Income from interest and impairment are disclosed in the Statement of Income as “Income from interest received” and “Provision for loan losses”, respectively.

Changes in the allowance are presented in Exhibit R “Loss allowance – Allowance for uncollectibility risk”.

They were value at their nominal value plus the relevant accrued interest, if applicable. Accrued interests were allocated to income as “Interests income”.

These transactions were recognized in the Balance Sheet as financing granted (received), as “Repo transactions”.

The difference between purchase and sale prices of such instruments were recognized as interest accrued during the effective term of the transactions using the effective interest method and were allocated to income as “Interests income” and “Interests expense”.

Non-derivative financial assets that the Bank holds within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of which give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, loans and other financing were measured at amortized cost using the effective interest method, less the allowance for loan losses. The amortized cost was calculated taking into account any discount or premium incurred in the origination or acquisition, and origination fees or commissions, which are part of the effective interest rate. Income from interest was allocated to income as “Interests income”.

These allowances were built-up based on estimated loan losses of the credit facilities of the Bank, deriving, among other aspects, from the assessment of the compliance level of debtors and the guarantees that secure the relevant transactions taking into account the provisions of Communiqué “A” 2950 and supplementary provisions of the Central Bank and the allowance policies of the Bank.

In the case of loans with specific allowances that are repaid or generate the reversion of allowances built-up in the current period, and in case of allowances built-up in previous fiscal years that turn out to exceed those deemed necessary, such allowance excess is reversed with impact on the income for the present period.

Impairment losses are included in the Statement of Income as “Provision for loan losses” and the changes in this accounting item are disclosed in Exhibit R “Value correction for credit losses – Allowance for uncolectibility risk”. The section “Accounting judgments, estimates and assumptions” in this Note includes a more detailed description of impairment estimates.

After initial recognition, certain financial liabilities were measured at amortized cost using the effective interest method, except for derivatives that were measured at fair value through profit or loss. Interests were allocated to income as “Interests expense”.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Within other financial liabilities we included guarantees granted and eventual liabilities, which must be disclosed in the Notes to the Financial statements, when the documents supporting such credit facilities are issued and are initially recognized at fair value of the commission received, in the Balance Sheet. After initial recognition, the liability for each guarantee was recognized at the higher of the amortized commission and the best estimate of the disbursement required to settle any financial obligation arising as a result of the financial guarantee.

Any increase in the liabilities related to a financial guarantee was recognized as income. The commission received has been recognized as “Income from commissions received” in the Statement of income, based on the amortization thereof following the straight-line method over the effective term of the financial guarantee granted.

Receivables from forward transactions without delivery of underlying assets

It includes forward purchase and sale transactions of foreign currency without delivery of traded underlying asset. Such transactions were measured at the fair value of the contracts and were performed by the Bank with intermediation purposes on its own account. The originated income was allocated to income as “Net income for measurement of financial instruments at fair value through profit or loss”.

Derecognition of financial assets and liabilities

A financial asset (or, if applicable, a part of a financial asset or a part of a group of similar financial assets) shall be derecognized when: (i) the contractual rights to the cash flows from the financial asset expire, or (ii) the Bank transfers the contractual rights to receive the cash flows of the financial asset or retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows received immediately to a third party pursuant to a transfer agreement.

A transfer shall qualify for derecognition of the financial asset only if (i) the Bank has transferred substantially all the risks and rewards of ownership of the financial asset, or (ii) it has neither transferred nor retained substantially all the risks and rewards of ownership of the financial asset, but has transferred the control of the financial asset, considering that the control is transferred if, and only if, the transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer.

If the Bank neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, and has retained the control over it, the Bank shall continue to recognize such transferred asset to the extent to which it is exposed to changes in the value of the transferred asset.

On the other hand, a financial liability is derecognized when the obligation specified in the relevant contract is discharged or cancelled or expires. When there is an exchange between an existing borrower and lender of debt instruments with substantially different terms, or the terms are substantially modified, such exchange or modification shall be accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability, recognizing the difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, in profit or loss as “Other operating income”.

Reclassification of financial assets and liabilities

The Bank does not reclassify its financial assets after the initial recognition thereof, except under extraordinary circumstances when it changes its business model for managing financial assets, as a result of external or internal changes significant to the Bank’s transactions. Financial liabilities are never reclassified. As of March 31, 2018 and December 31, 2017 and 2016, the Bank has made no reclassifications.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

The Bank grants loans through financial leases, recognizing the current value of lease payments as a financial asset. The difference between the total lease receivables and the current value of financing is recognized as interest to accrue. This income is recognized during the term of the lease using the effective interest rate method, which reflects a constant rate of return and is recognized in profit or loss as “Interests income”. Losses originated for impairment are included in the Statement of income as “Provision for loan losses” and changes in this accounting item are disclosed in Exhibit R “Loss allowance– Allowance for uncolectibility risk”.

An associate is an entity over which the Bank has significant influence, i.e. the power to participate in the financial and operating policy decisions of such controlled entity, but without having the control thereof. Investments in associates were recognized through the equity method and they were initially recognized at cost. The Bank’s share in the profits or losses after the acquisition of its associates was accounted for in profits or losses, and its share in other comprehensive income after the acquisition were accounted for in other comprehensive income.

A joint arrangement is an arrangement of which the Bank and other party or parties have joint control. Under IFRS 11 “Joint Arrangements”, investments in these arrangements are classified as joint ventures or joint operations depending on the contractual rights and obligations of each investor, regardless of the legal structure of the arrangement. A joint venture is an arrangement pursuant to which the parties having joint control of the arrangement have rights to the net assets of such arrangement. A joint operation is an arrangement pursuant to which the parties having joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. The Bank has assessed the nature of its joint arrangements and determined that the same are joint ventures. Investments in joint ventures were recognized using the equity method described in the paragraph above.

The Bank chose the cost model for all kinds of assets accounted for in this accounting item, taking into account the considerations mentioned in the section “First-time Adoption of International Financial Reporting Standards in accordance with Central Bank Communiqué “A” 6114” of this Note for the real property owned by the Bank. These assets were carried at their cost less any accumulated depreciation and any accumulated impairment losses, if applicable. The historical cost of acquisition includes all expenses directly attributable to the acquisition of the assets. Maintenance and repair costs were accounted for in profits or losses as incurred. Any replacement and significant improvement of an item of property, plant and equipment is recognized as an asset only when it is likely to produce any future economic benefits exceeding the return originally assessed for such asset.

Depreciation of the items of property, plant and equipment was assessed in proportion to the estimated months of useful life, depreciating completely on the acquisition month of the assets and not on the derecognition date. In addition, at least at each financial year-end, the Bank reviews if expectations regarding the useful life of each item of property, plant and equipment differ from previous estimates, in order to detect any material changes in useful life which, if confirmed, shall be adjusted applying the relevant correction to the depreciation of property, plant and equipment accounting item.

The residual value of the assets, as a whole, does not exceed their recoverable amount.

Furthermore, the Bank is building a new corporate building in the Autonomous City of Buenos Aires. Under IAS 23 “Borrowing Costs”, this is qualifying asset and therefore all costs related to financing directly or indirectly attributable to the acquisition and construction of this asset were capitalized.

Intangible assets acquired separately were initially measured at cost. After initial recognition, they were accounted for at cost less any accumulated depreciation (for those to which finite useful lives have been allocated) and any accumulated impairment losses, if applicable.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Internally generated intangible assets, excluding capitalized development expenses, shall not be capitalized and the relevant disbursement shall be reported in the balance sheet for the period in which such expenditure is incurred.

Useful lives of intangible assets may be finite or indefinite.

Intangible assets with finite useful lives are amortized over their economic useful lives, and are reviewed in order to determine whether they had any impairment loss to the extent there is any evidence that indicates that the intangible asset may be impaired. The period and method of amortization for an intangible asset with a finite useful life are reviewed at least at the financial year-end of each reporting period. Amortization charges of intangible assets with finite useful lives are accounted for in the statement of income.

Intangible assets with indefinite useful lives are not amortized and are subject to annual tests in order to determine whether they are impaired, either individually or as part of the cash-generating unit to which such intangible assets were allocated. The Bank has not intangible assets with indefinite useful lives.

The gain or loss arising from the derecognition of an intangible asset shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset, and it shall be recognized in profit or loss when the asset is derecognized.

Development expenditure incurred in a specific project shall be recognized as intangible asset when the Bank can demonstrate all of the following:

After initial recognition of the development expenditure as an asset, such asset shall be carried at its cost less any accumulated amortization and any applicable accumulated impairment losses. Amortization shall begin when the development phase has been completed and the asset is available for use. The asset amortizes over the period in which the asset is expected to generate future benefits. Amortization is accounted for in the Statement of income. During the development phase, the asset is subject to annual tests to determine whether there is any impairment loss.

We included certain real property that the Bank holds for undetermined future use, which were recognized pursuant to IAS 40 “Investment Property”.

For this kind of property, the Bank chose the cost model described in Note 3.5 Property, plant and equipment.

An investment property is derecognized on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of the retirement or disposal.

An entity shall transfer a property to, or from, investment property when, and only when, there is a change in use. For a transfer from investment property to an item of property, plant and equipment, the property’s deemed cost for subsequent accounting is its fair value at the date of change in use. If an item of property, plant and equipment becomes an investment property the Bank recognizes the asset up to the date of change in use in accordance with the policy established for property, plant and equipment.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

The Bank reclassifies in this category non-current assets of which the carrying amount will be recovered principally through a sale transaction rather than through continuing use. The asset (or disposal group) must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups) and its sale must be highly probable.

Non-current assets classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

The Bank evaluates, at least at each fiscal year-end, whether there are any events or changes in the circumstances that may indicate the impairment of non-financial assets or whether there is any evidence that a non-financial asset may be impaired.

When there is any evidence or when an annual impairment test is required for an asset, the Bank shall estimate the recoverable amount of such asset. If the carrying amount of an asset exceeds its recoverable amount, such asset is deemed impaired and its carrying amount shall be reduced to its recoverable amount. To the date of the accompanying Condensed consolidated interim financial statements, there is no evidence of impairment of non-financial assets.

The Bank recognizes a provision if and only if the following circumstances are met: (a) the Bank has a present obligation as a result of a past event; (b) it is probable (i.e., it is more likely than not) that an outflow of resources will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation.

In order to determine the amount of provisions, the risks and uncertainties were considered taking into account the opinion of independent and internal legal advisors of the Bank. Where the effect of the time value of money is material, the provisions shall be discounted using a pre-tax rate that reflects, if applicable, current risks specific to the liability. When the discount is recognized, the effect of the provision derived from the lapse of time is accounted for as Interests expense” in the Statement of Income. Based on the analysis carried out, the Bank recognized as provision the amount of the best estimate of the expenditure required to settle the present obligation at the end of each reporting period.

The provisions accounted for by the Bank are reviewed at the end of each reporting period or fiscal year, as applicable, and adjusted to reflect the current best available estimate. In addition, provisions are recognized with specific allocation to be used only for the expenditures for which they were originally recognized.

In the event: a) the obligation is possible; or b) it is not probable that an outflow of resources will be required for the Bank to settle the obligation; or c) the amount of the obligation cannot be estimated reliably, the contingent liability shall not be recognized and shall be disclosed in the Notes. Nevertheless, when the possibility of an outflow of resources is remote, no disclosures shall be made.

Revenue from interest received and expenses for interest paid were recognized according to their accrual period, applying the effective interest method.

Revenue from interest received includes the return on fixed income investments and negotiable instruments, as well as the discount and premium on financial instruments.

Bond coupons were recognized at the time they were declared.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Commission charges and direct incremental costs related with the granting of financing facilities were deferred and recognized adjusting the effective interest rate thereof.

The commissions charged were accounted for to the extent the Bank satisfied each performance obligation undertaken in contracts with customers and in an amount that reflected the consideration to which the Bank expected to be entitled in exchange for those goods or services.

A performance obligation implies a promise in a contract with a customer to transfer: (i) a good or service (or a bundle of goods or services) that is distinct; or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

They were accounted for to the extent the Bank satisfied each performance obligation undertaken in contracts with customers and in an amount that reflected the consideration to which the Bank expected to be entitled in exchange for those goods or services, as described in the preceding section.

The loyalty program offered by the Bank consists in accumulating points generated by purchases made with the credit cards, which can be exchanged by any reward (including, among other offers, products, benefits and awards) available in the program platform.

The Bank concluded that the rewards to be granted originate a separate performance obligation. Therefore, at the end of each period or fiscal year, as the case may be, the Bank recognizes a provision for the rewards to be granted in “Other financial liabilities”.

Based on the variables that the Bank takes into account in order to estimate the (fair) value of the points granted to customers (and the relation thereof with the exchange of the Reward), it is worthwhile to mention that such estimates are subject to a significant level of uncertainty (and variation) that should be considered. These considerations are described in detail in the section “Accounting judgments, estimates and assumptions” in this Note.

Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). This tax is accounted for as part of profit or loss in the statements, except in the case of accounting items that are to be recognized directly in other comprehensive income statements. In this case, each accounting item is presented before assessing their impact on Income Tax, which is accounted for in the relevant accounting item.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

On December 29, 2017 the Argentine Executive Power passed and put into effect the Tax Reform Act which, among other things, reduces the corporate rate of income tax applicable to corporate retained earnings and impacts on the measurement of deferred tax assets and liabilities. This reduction in the corporate rate of income shall be implemented gradually over the next four years dropping from the 35% rate applicable for and including the fiscal year 2017, to a 25% rate in 2020. The effects thereof shall be considered from the deferred taxes assessed as of December 31, 2017, as follows: if reverse shall occur from January 1, 2018 and up to December 31, 2019, the applicable tax rate is 30% and if reversion shall occur from January 1, 2020 onwards, the applicable tax rate is 25%. In addition, through this tax reform the Government introduced changes in connection with the balancing tax, tax adjustment for inflation, treatment of acquisitions and investments made from January 1, 2018, tax revaluation and employer contributions among other issues.

In the fiscal year 1998, Law No. 25,063 established minimum presumed income tax for a ten-year term. At present, after subsequent extensions, and taking into account the provisions of Law No. 27,260, such tax is effective through the fiscal years ending up to and including December 31, 2018. This tax is supplementary to income tax, while the latter is levied on the taxable income for the year, minimum presumed income tax is a minimum levy assessment applicable on the potential income of certain production assets at a 1% rate. Therefore, the Bank’s tax obligation for each year will be equal to the higher of these taxes. In the case of entities subject to the Financial Entities Act, the above mentioned Law provides that such entities shall consider as taxable basis for the minimum presumed income tax 20% of their taxable assets after deducting those defined as non-taxable assets.

However, if minimum presumed income tax exceeds income tax in a given tax year, such excess may be computed as a payment on account of any income tax in excess of minimum presumed income tax that may occur in any of the following ten years, once accumulated net operating losses (NOLs) have been used.

As of March 31, 2018 and 2017, the amounts recognized for income tax exceeded those assessed for minimum presumed income tax for those same periods.

Basic earnings per share shall be calculated by dividing Net profit attributable to parent´s shareholders of the Bank by the weighted average number of ordinary shares outstanding during the period.

The Bank renders custody, administration, investment management and advisory services to third parties that originate the holding or placement of assets in the name of such third parties. These assets and the income on them are not included in the Financial Statements, since they are not owned by the Bank. The commissions derived from these activities are accounted for as “Commissions income” in the Statement of income.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Accounting judgments, estimates and assumptions

The preparation of the accompanying condensed consolidated interim financial statements requires the Bank’s Management to consider significant accounting judgments, estimates and assumptions that impact on the reported assets and liabilities, income, revenues and expenses, as well as the assessment and disclosure of contingent assets and liabilities, as of the end of the reporting period. The Bank’s reported amounts are based on the best estimate regarding the probability of occurrence of different future events and, therefore, the uncertainties associated with the estimates and assumptions made by the Bank’s Management may drive in the future to final amounts that may differ from those estimates and may require material adjustments to the reported amounts of the affected assets and liabilities.

In certain cases, the Financial Statements prepared in accordance with Central Bank Communiqué “A” 6114, require that the assets and liabilities to be recognized and/or presented at their fair value. The fair value is the amount at which an asset can be exchanged, or at which a liability can be settled, in mutual independent terms and conditions between participants of the principal market (or most advantageous market) duly informed and willing to transact in an orderly and current transaction. When prices in active markets are available, we have used them as basis for valuation. When prices in active markets are not available, the Bank estimated those values as values based on the best available information, including the use of models and other assessment techniques.

Additionally, the Central Bank allows for additional allowances for loan losses and changes in classification of debtors, as the case maybe, based on the Bank’s risk management policy. The Risk Management Committee may decide to increase the amount of the provision for loan losses by establishing additional allowances after assessing the portfolio risk, basing its decision for example in the analysis of the local and international macroeconomic conditions.

As to the customer loyalty program, the Bank estimates the fair value of the points awarded to customers under the “Macropremia” program by applying statistics techniques. The data that feed the models include assumptions regarding exchange percentages, the product combinations available for exchange in the future and customers’ preferences.

First-time adoption of IFRSs under Central Bank Communiqué “A” 6114

Communiqué “A” 6324 requires the presentation of the following reconciliations:

In preparing these reconciliations, the Bank’s Management considered the IFRSs currently approved and applicable to the presentation of the accompanying condensed consolidated interim Financial Statements that are the first consolidated Financial Statements presented in accordance with Central Bank Communiqué “A” 6114, but applying the exceptions and exemptions under IFRS 1 described below:

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

The Bank decided not to apply IFRS 3 “Business Combinations” retroactively to the acquisition of subsidiaries (that are deemed businesses), investments in associates and interests in joint ventures occurred before December 31, 2016 (date of transition). Using this exemption implies that the carrying amounts of assets and liabilities measured pursuant to the Central Bank standards, and that must be recognized in accordance to the IFRSs, are the cost thereof attributed as of the acquisition date. After the acquisition date, measurements shall be made in accordance with the Central Bank Communiqué “A” 6114. Assets and liabilities that do not qualify to be recognized as such according to the IFRSs are excluded from the opening Balance sheet. In this sense, no previous amount which would have been recognized according to the Central Bank standards was excluded and no amount which was not previously recognized has been recognized, pursuant to the Central Bank standards. IFRS 1 also establishes that the carrying amount of goodwill measured according to the Central Bank standards shall be included in the opening balance sheet, regardless of the adjustments for impairment and for recognition or derecognition of certain intangible assets that qualify or not to be recognized as such according to IAS 38 “Intangible Assets”.

Properties and properties under construction were measured in the opening balance sheet as of December 31, 2016 (date of transition) at fair value, determined on the basis of valuations made to such date by an independent valuer who holds a recognized and relevant professional qualification. The Bank chose to use these values as carrying amount at the date of transition. After the date of transition, measurement of items of property, plant and equipment and investment property were made in accordance with IAS 16 “Property, Plant and Equipment” and IAS 40 “Investment Property”, respectively. To such effect, the Bank has chosen the cost model provided for under such standards.

The Bank decided to consider at zero accumulated currency translation differences as of December

31, 2016 (date of transition), for the foreign subsidiary Macro Bank Limited.

For the presentation of the carrying amounts at the date of transition, related to the acquisition of loan portfolio, the Bank decided to go for the exemption contemplated in paragraph D of IFRS 1 and recognized prospectively the cost of transactions related to such acquisitions.

The Bank decided to apply the transitional provisions of IAS 23 and has capitalized borrowing costs in qualifying assets from December 31, 2016 (date of transition).

The Bank has not used other exemptions or exceptions available under IFRS 1.

The significant accounting judgments, estimates and assumptions made by the Bank’s Management to determine the amounts according to the IFRS as of December 31, 2016 (date of transition), and as of December 31, 2017, were consistent with those made as of the same dates according to the Central Bank standards and reflect the current conditions as of the respective dates.

The total comprehensive income of subsidiaries was attributed to the owners of the parent company and to the non-controlling interests, from December 31, 2016 (date of transition).

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Reconciliations required

Explanatory notes to the adjustments on transition to IFRS

This section includes a brief description of the main adjustments on transition to the standards established by Central Bank Communiqué “A” 6114 affecting equity as of December 31, 2016 (date of transition) and as of December 31, 2017, and the consolidated income and other comprehensive income for the three-month period ended March 31, 2017, and which arise from comparing the accounting policies applied by the Bank to the preparation of the Financial statements up to the end of the previous fiscal year ended December 31, 2017 (Central Bank) and the accounting policies applied by the Bank to the preparation of the Financial statements from the fiscal year beginning on January 1, 2018 onwards.

Debt securities

Adjustments in this accounting item arise mainly when the valuation established for each business model into which holdings were classified, differs from the valuation established by the Central Bank standards.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

In addition, the Bank carried out active repo transactions of which, under Central Bank standards, the underlying assets should be recognized as assets of the Bank. Under IFRS, these assets received from third parties do not meet the requirements to be recognized as such.

Furthermore, the Bank received security deposits which, under Central Bank standards, implied recognition of such security within this accounting item against a liability for deposits for the principal plus the agreed upon interest and the quoting difference, which was accounted for in Deposits. According to IFRS 9, these transactions neither imply the recognition of the asset nor the offset in liabilities. In addition, items accrued in favor were reclassified from “Interests expense” to “Expenses for services” within “Commissions related to security transactions”.

Additionally, Debt Securities in Financial Trusts, previously included in Other Receivables for Financial Intermediation, were recognized according to a business model in which the purpose of these holdings is principally to obtain contractual cash flows, and therefore they were measured at amortized cost, using the effective interest method. Under Central Bank standards these instruments were also measured at amortized cost.

Loans and other financing

The Bank’s loan portfolio was generated in a business model structure intended principally to receive contractual cash flows (composed of principal and interest). Under IFRS 9, the loan portfolio shall be measured at amortized cost, measuring it at the beginning at fair value, using the effective interest method, which implies that the commissions charged and the direct incremental costs related to the granting of such financing facilities shall be deferred and recognized over the term of the financing facility.

Under Central Bank standards, interests were accrued on the basis of exponential distribution in the periods in which they were generated and the commissions were charged and the direct costs were recognized at the time they were generated.

Furthermore, loan portfolio acquisitions made by the Bank were measured for in accordance with such IFRS, recognizing such acquired loan portfolios at fair value at the date of acquisition. Under Central Bank standards, these transactions were recognized at their contractual value.

Investments in equity instruments

The contributions to risk funds of Reciprocal Guarantee Companies (RGC) in which the Bank participates, do not meet the financial asset individual test, therefore they are not included in the Bank’s business model and were measured at their fair value through profit or loss.

As to those companies in which the Bank has no control or significant influence, such companies were recognized at the best approximation to the fair value through profit or loss according to IFRS 9. Under Central Bank standards, these approximations were recognized at cost, plus the nominal value of any dividends received on shares.

Non-financial assets

Under IFRS 15 “Revenue from Contracts with Customers”, the Bank included Contract Assets for commissions charged for the subscription to one of the Bank’s customer loyalty programs. In such program, the only performance obligation contemplated in the contract is the one that requires the Bank to contact its customer with a recognized airline. As consideration for this service, the Bank receives a membership fee.

Investments in associates and joint ventures

The Bank holds interests in UTEs (joint ventures), which according to IFRS 11 “Joint Arrangements” are accounted for using the equity method. Under Central Bank standards, the Bank used the proportional consolidation method.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Property, plant and equipment and investment property

For the presentation of the carrying amount to the date of transition the Bank used the exemption contemplated under “Optional exemptions”, which implied using the fair value as cost of acquisition. In order to determine such fair value, the Bank used valuations for all properties.

Since the Bank chose the cost model, the new cost of acquisition according to the IFRSs implied an increase in depreciations.

Additionally, within the item Property, plant and equipment, the Bank capitalized from the date of transition, the financing costs attributable to the construction of the new corporate building, in accordance with IAS 23.

Intangible assets

Under IAS 38, intangible assets shall be measured at cost. Under Central Bank standards, the Bank capitalized certain software costs and other organizational expenses, which according to the above mentioned IAS the Bank should have not recognized as intangible assets and, therefore, were accounted for in profit or loss for the relevant period.

Corporate Bonds

The Bank issued subordinated and unsubordinated Corporate Bonds that, according to IFRS 9, were measured at amortized cost, using the effective interest method, which implied having to account for lesser liabilities the direct placement expenses. Under Central Bank standards, such Corporate Bonds were measured in accordance with the unpaid balance of principal and accrued interest and the expenses were accounted for in profit or loss at the time they were generated.

Assets and liabilities for deferred income tax

According to IAS 12 “Income Tax”, the Bank shall recognize (i) the part of the current tax that is expected to be paid or recovered and (ii) the deferred tax that is the tax the Bank expects to settle or recover of Income Tax, for the accumulated tax losses and the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Under Central Bank standards, the Bank assessed income tax applying the rate in force to the expected taxable profit, without taking into account the effect of differences between the carrying amount and its tax base.

Other non-financial liabilities

According to IFRS 15, the Bank recognized income arising in the course of its ordinary activities so that they represent the transfer of goods or services promised to customers in exchange for an amount that reflects the consideration the Bank expects to have the right to receive in exchange for such goods or services.

In addition, and under IAS 19 “Employee Benefits”, vacations are considered as irrevocable accumulating paid absences and shall be measured at the expected cost of such absences, based on the additional amount that the Bank expects to pay for such paid absences multiplied by the number of days accumulated in favor of the employees and unused at the end of the reporting period. Under Central Bank standards, charges for paid vacations were accounted for at the time the personnel used such benefit, i.e., when vacations were paid.

Capital stock – Stock issuance premium

Under IAS 32 “Financial Instruments: Presentation”, the costs incurred by the Bank with respect to the issuance of capital stock are accounted for as a deduction of the amount of such instrument, provided they are incremental costs directly attributable to such equity transaction, which would have been avoided if such transaction had not taken place. According to Central Bank standards, the Bank recognized such costs in profit or loss.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

Foreign currency translation

Under IAS 21 “The Effects of Changes in Foreign Exchange Rates”, the Bank recognized and reclassified foreign exchange translation differences, with respect to the Bank’s interest in a foreign subsidiary. The Bank used the voluntary exemption under paragraph D of IFRS 1 “First-time Adoption of International Financial Reporting Standards” and did not recognize the translation differences accumulated as of the beginning of the date of transition.

Explanation of material adjustments in the Statement of Cash Flows

New pronouncements

Pursuant to Communiqué “A” 6114 of the Central Bank, as new IFRS are approved and existing IFRS are amended or revoked and, once these changes are approved through Notices of Approval issued by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCA for its Spanish acronym), the Central Bank shall issue a statement on the approval thereof for financial entities. Generally, financial entities shall not apply any IFRS in advance, except specifically authorized at the time of the approval thereof. In this case, the Bank shall adopt IFRS 16 “Leases” when such standard comes effective.

Such standard eliminates the dual accounting method for lessees that distinguishes between finance leases recognized within the Financial statements and operating leases for which future lease payments are not required to be recognized. Instead, it develops a single model, within the balance sheet, which is similar to the present finance lease. As to lessor, the standard maintains the present practice –i.e., lessors keep on classifying leases as finance and operating leases.

This standard is applicable to fiscal years beginning as of January 1, 2019. The Bank does not expect the above described standard to have a material impact on the consolidated Financial Statements.

In the normal course of business, the Bank arranged repo transactions. According to IFRS 9, assets involved in repurchase and reverse repurchase transactions and received from or delivered to third parties, respectively, do not qualify to be recognized or derecognized, respectively.

As of March 31, 2018, and December 31, 2017 and 2016, the Bank has agreed repurchase and reverse repurchase transactions of government and private securities for 596,528, 4,107,901 and 1,114,758, respectively. Maturity of the agreed transactions as of March 2018 shall occur during the month of April 2018. Furthermore, to the those same dates, the securities delivered to guarantee the reverse repurchase transactions total 10,325, 2,993,719 and 1,201,029, respectively, and are recorded under “Financial assets delivered as guarantee”, while securities received guarantee repurchase transactions total 653,330, 1,591,288 and 19,335, respectively and were recognized outside the balance sheet.

Profits generated by the Bank as a result of its repurchase transactions arranged during the three-month periods ended March 31, 2018 and 2017 total 33,726 and 405,469, respectively, and are accounted for in “Income from interest received”. In addition, losses generated by the Bank as a result of its reverse repurchase transactions arranged during the three-month periods ended March 31, 2018 and 2017 total 30,970 and 19,234, respectively, and were recognized in “Interests expense”.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2018

(Translation of Financial statements originally issued in Spanish – See Note 45)

(Figures expressed in thousands of Pesos)

The Bank’s Management considers there shall be no losses due to the restrictions on the above listed financial assets.

Changes in allowances for loan losses as of March 31, 2018 are disclosed in Exhibit R “Loss allowance – Allowance for uncolectibility risk” in the accompanying condensed consolidated interim Financial Statements.

The table below presents the Bank’s changes in allowances as of December 31, 2017: