Annual and Transition Report (foreign Private Issuer) (20-f)

History and Development of the Company

Our legal name is Grupo Financiero Galicia S.A. We are a financial services holding company that was incorporated on September 14, 1999, as a sociedad anónima (which is a stock corporation) under the laws of Argentina. As a holding company we do not have operations of our own and conduct our business through our subsidiaries. Banco Galicia is our main subsidiary and one of Argentina’s largest full-service banks. Through the operating subsidiaries of Tarjetas Regionales (of which Banco Galicia owns 77%), a holding company controlled by Banco Galicia, and CFA, whose potential sale is currently the subject to the approval of local and regulatory authorities (of which Banco Galicia owns 97% and Grupo Financiero Galicia owns 3%), we provide proprietary brand credit cards throughout the “ Interior ” of the country and consumer finance services throughout Argentina. Argentines refer to the Interior as all of Argentina except for the Buenos Aires, the federal capital, and the areas surrounding the city of Buenos Aires (“Greater Buenos Aires”), i.e., the provinces, including the Buenos Aires Province but excluding the city of Buenos Aires and its surroundings. Through Sudamericana and its subsidiaries we provide insurance products in Argentina. We directly or indirectly own other companies providing financial related products as explained herein. We are one of Argentina’s largest financial services groups with consolidated assets of Ps.242,251 million as of December 31, 2016.

Our goal is to consolidate our position as one of Argentina’s leading comprehensive financial services providers while continuing to strengthen Banco Galicia’s position as one of Argentina’s leading banks. We seek to broaden and complement the operations and businesses of Banco Galicia, through holdings in companies and undertakings whose objectives are related to and/or can produce synergies with financial activities. Our non-banking subsidiaries operate in financial and related activities in which Banco Galicia either cannot participate or in which it can participate only on a limited basis due to restrictive banking regulations.

We are domiciled in Buenos Aires, Argentina. Under our bylaws, our corporate duration is until June 30, 2100. Our duration may be extended by a resolution passed at the extraordinary shareholders’ meeting. Our principal executive offices are located at Teniente General Juan D. Perón 430, Twenty-Fifth floor, (C1038AAJ), Buenos Aires, Argentina. Our telephone number is (54-11) 4343-7528.

Our agent for service of process in the United States is CT Corporation System, presently located at 111 8th Avenue, New York, New York 10011.

Organizational Structure

The following table illustrates our organizational structure as of December 31, 2016. Percentages indicate the ownership interests held.

All the companies shown in the chart are incorporated in Argentina, except for Galicia Uruguay, which is incorporated in Uruguay and which is currently not an operating financial institution.

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History

Grupo Financiero Galicia

Grupo Financiero Galicia was formed on September 14, 1999 as a financial services holding company to hold all the shares of the capital stock of Banco Galicia held by members of the Escasany, Ayerza and Braun families. Its initial nominal capital amounted to 24,000 common shares, 12,516 of which were designated as class A ordinary (common) shares (the “class A shares”) and 11,484 of which were designated as class B ordinary (common) shares (the “class B shares”).

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Following Grupo Financiero Galicia’s formation, the holding companies that held the shares in Banco Galicia on behalf of the Escasany, Ayerza and Braun families were merged into Grupo Financiero Galicia. Following the merger, Grupo Financiero Galicia held 46.34% of the outstanding shares of Banco Galicia. In addition, and due to the merger, Grupo Financiero Galicia’s capital increased from 24,000 to 543,000,000 common shares, 281,221,650 of which were designated as class A shares and 261,778,350 of which were designated as class B shares. Following this capital increase, all of our class A shares were held by EBA Holding S.A., an Argentine corporation that is 100% owned by our controlling shareholders, and our class B shares were held directly by our controlling shareholders in an amount equal to their ownership interests in the holding companies that were merged into Grupo Financiero Galicia.

On May 16, 2000, our shareholders held an extraordinary shareholders’ meeting during which they unanimously approved a capital increase of up to Ps.628,704,540 and the public offering and listings of our class B shares. All of the new common shares were designated as class B shares, with a par value of Ps.1. During this extraordinary shareholders’ meeting, all of our existing shareholders waived their preemptive rights. In addition, the shareholders determined that the exchange ratio for the exchange offer would be one class B share of Banco Galicia for 2.5 of our class B shares and one ADS of Banco Galicia for one of our ADSs. The exchange offer was completed in July 2000 and the resulting capital increase was of Ps.549,407,017. Upon the completion of the exchange offer, our only significant asset was our 93.23% interest in Banco Galicia.

On January 2, 2004, our shareholders held an extraordinary shareholders’ meeting during which they approved a capital increase of up to 149,000,000 preferred shares, each of them mandatorily convertible into one of our class B shares on the first anniversary of the date of issuance, to be subscribed for in up to US$100 million of face value of subordinated notes to be issued by Banco Galicia to its creditors in the restructuring of the foreign debt of its head office in Argentina (the “Head Office”) and its Cayman Branch, or cash. This capital increase was carried out in connection with the restructuring of Banco Galicia’s foreign debt. On May 13, 2004, we issued 149,000,000 preferred non-voting shares, with preference over the ordinary shares in the event of liquidation, each with a face value of Ps.1. The preferred shares were converted into class B shares on May 13, 2005. With this capital increase, our capital increased to Ps.1,241,407,017.

In August 2007, Grupo Financiero Galicia exercised its preemptive rights in Banco Galicia’s share issuance and subscribed for 93.6 million shares of Banco Galicia. The consideration paid for such shares consisted of: (i) US$102.2 million face value of notes due 2014 issued by Banco Galicia in May 2004, and (ii) cash. After the capital increase, Grupo Financiero Galicia held 94.66% of Banco Galicia’s shares, an increase from 93.60%.

In September 2013, Grupo Financiero Galicia announced that it had reached an agreement to merge Lagarcué S.A. and Theseus S.A. into Grupo Financiero Galicia. The consolidated financial statements prepared specifically for this merger were issued as of June 30, 2013 and the effective date of such merger was September 1, 2013.

This merger resulted in an increased ownership interest by Grupo Financiero Galicia in its principal subsidiary Banco Galicia of 25,454,193 class B shares of Banco Galicia representing 4.526585% of the total capital stock of Banco Galicia previously owned by Lagarcué S.A. and Theseus S.A.

Consequently, Grupo Financiero Galicia agreed to increase its capital stock by issuing 58,857,580 new class B shares representing 4.526585% of the outstanding capital stock of Grupo Financiero Galicia to be delivered to the shareholders of Lagarcué S.A. and Theseus S.A.

Additionally, Grupo Financiero Galicia, together with Banco Galicia and the shareholders of Lagarcué S.A. and Theseus S.A., signed a supplemental agreement governing operational issues and providing for the settlement and mutual withdrawal of any pending claims.

All documentation related to the merger of Lagarcué S.A. and Theseus S.A. into Grupo Financiero Galicia was approved at the extraordinary shareholders’ meeting of Grupo Financiero Galicia held on November 21, 2013, including the exchange ratio and the above mentioned capital increase of Ps.58,857,580 through the issuance of 58,857,580 class B shares, with a face value of Ps.1, one vote per share, entitled to participate in the profits of the financial year beginning on January 1, 2013.

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On December 18, 2013, the definitive merger agreement contemplating the merger of Lagarcué S.A. and Theseus S.A. into Grupo Galicia was registered in a public deed pursuant to the terms of paragraph 4 of article 83 of the Ley General de Sociedades (Law No. 19,550, as amended, the General Corporations Law or “Corporations Law”), and effective as of September 1, 2013. Therefore, 25,454,193 class B shares of Banco Galicia, representing 4.526585 % of its capital stock previously owned by Lagarcué S.A. and Theseus and S.A. were transferred to Grupo Financiero Galicia. As a result, Grupo Financiero Galicia owns 560,199,603 shares of Banco Galicia, representing 99.621742% of its capital stock and voting rights.

On February 25, 2014, the Board of Directors of Grupo Financiero Galicia resolved to offer to acquire all remaining shares of Banco Galicia owned by third parties, amounting to 2,123,962 shares, at an amount of Ps.23.22 per share, which was approved by the Comisión Nacional de Valores (the “National Securities Commission”, or the “CNV”) on April 24, 2014.

On February 27, 2014, by Resolution No. 17,300, the Board of the CNV consented to the merger of Lagarcué S.A. and Theseus S.A into Grupo Financiero Galicia and to the above mentioned increase in capital of Grupo Financiero Galicia.

In compliance with Argentine regulations, Grupo Financiero Galicia made all required communications and paid the amounts corresponding to the remaining shares of Banco Galicia held by third parties. On August 4, 2014, Grupo Financiero Galicia became the owner of 100% of the outstanding capital stock of Banco Galicia when the relevant unilateral declaration to acquire the remaining shares of Banco Galicia held by third parties recorded as a public deed pursuant to Article 95 of the Law No. 26,831 (the “Capital Markets Law”, in Spanish “Ley de Mercado de Capitales” ).

On April 15, 2014, the Board of Directors approved the purchase of 95% of the capital stock of Galicia Administradora de Fondos from Banco Galicia for an amount of Ps.39 million.

On January 12, 2017, Grupo Financiero Galicia together with its main subsidiary, Banco Galicia, decided to accept an offer by Mr. Julio A. Fraomeni and Galeno Capital S.A.U. to purchase 100% of Banco Galicia’s subsidiary, Compañía Financiera Argentina S.A. This transaction is subject to the approval of the certain regulatory authorities, which approvals are still pending as of the date of this annual report.

On March 31, 2017, the Board of Directors approved the sale of its stake (58.8% of the issued and oustanding shares) in its subsidiary Tarjetas del Mar S.A. (“TDM”) to Sociedad Anónima Importadora y Exportadora de la Patagonia .–CFA also sold its stake (1.2% of the issued and outstanding shares) in TDM to Federico Braun.

The consideration received for these sales is approximately US$5 million, and Banco Galicia believes that the sale will not have a significant impact on Banco Galicia’s shareholders’ equity.

Banco Galicia

Banco Galicia is a banking corporation organized as a stock corporation under Argentine law and supervised and licensed to operate as a commercial bank by the Superintendencia de Entidades Financieras y Cambiarias (Superintendency of Financial Institutions and Exchange Bureaus or the “Superintendency”).

Banco Galicia was founded in September 1905 by a group of businessmen from the Spanish community in Argentina and initiated its activities in November of that year. Two years later, in 1907, Banco Galicia’s stock was listed on the Buenos Aires Stock Exchange (“BASE”). Banco Galicia’s business and branch network increased significantly by the late 1950s and continued expanding in the following decades, after regulatory changes allowed Banco Galicia to exercise its potential and gain a reputation for innovation, thereby achieving a leading role within the domestic banking industry.

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In the late 1950s, Banco Galicia launched the equity mutual fund FIMA Acciones and founded the predecessor of the asset manager Galicia Administradora de Fondos. Beginning in the late 1960s Banco Galicia began to establish an international network mainly comprised of branches in New York and in the Cayman Islands, a bank in Uruguay and several representative offices.

In order to develop automated banking in Argentina and avoid bank disintermediation (i.e., when consumers access information or goods directly rather than through intermediaries) in the provision of electronic information and fund transfer services, in 1985, Banco Galicia established, together with four other private- sector banks operating in Argentina, Banelco S.A. to operate a nationwide automated teller system, which became the largest in the country. During the same year, Banco Galicia also acquired an interest in VISA Argentina S.A., and is currently one of the largest issuers of such cards in Argentina.

During the 1990s, Banco Galicia implemented a growth and modernization strategy directed at achieving economies of scale and increasing productivity and, therefore, heavily invested in developing new businesses, acquiring new customers, widening its product offering, developing its IT and human resources capabilities, and expanding its distribution capacity. This was comprised of traditional channels (branches) and, especially, alternative channels, including new types of branches (e.g., in-store), ATMs, banking centers, phone banking and internet banking.

As part of its growth strategy, in 1995 Banco Galicia began a new expansion phase into the Interior of Argentina where high growth potential was believed to exist. Typically the Interior is underserved relative to Buenos Aires and its surroundings with respect to access to financial services, and its population tends to use fewer banking services. Between 1995 and 1999, Banco Galicia acquired equity interests in entities and formed several non-banking companies providing financial services to individuals in the Interior through the issuance of proprietary brand credit cards. See “-Regional Credit Card Companies” below. In addition, in 1997, Banco Galicia acquired a regional bank that was merged into it, with branches located mainly in Santa Fe and Córdoba, two of the wealthiest and most populous provinces.

In order to fund its strategy, during the 1990s, Banco Galicia tapped the international capital markets for both equity and debt. In June 1993, Banco Galicia carried out its initial international public offering in the United States and Europe and, as a result, listed its American Depositary Receipts (“ADRs”) on the Nasdaq Stock Market until 2000, when Banco Galicia’s shares were exchanged for our shares. In 1991, it was the first Argentine bank to issue debt in the European capital markets and, in 1994, it was the first Latin American issuer of a convertible bond. In 1996, Banco Galicia raised equity again through a local and international public offering.

In 1996, Banco Galicia entered the bank insurance business through an agreement with ITT Hartford Life Insurance Co. for the joint development of initiatives in the life insurance business. In the same year, Banco Galicia initiated its internet presence, which evolved into a full e-banking service for both companies and individuals.

At the end of 2000, Banco Galicia was the largest private-sector bank in the Argentine market with a 9.8% deposit market share.

In 2001 and 2002, Argentina experienced a severe political and financial crisis, which had a material adverse effect on the financial system and on financial businesses as a whole, including Banco Galicia, but especially on financial intermediation activity. However, during the crisis, the provision of transactional banking services was maintained. With the normalization of the Argentine economy’s situation and the subsequent growth cycle that began in mid-2002, financial activities began to expand at high rates, which translated into high growth for the financial system as a whole, including Banco Galicia. The provision of services continued to develop, even further than prior to the crisis, and financial intermediation resumed progressively.

Beginning in May 2002, Banco Galicia began to implement a series of initiatives to deal with the liquidity shortage caused by the systemic deposit run, the unavailability of funding and other adverse effects of the 2001-2002 financial crisis. Banco Galicia significantly streamlined its operations and reduced its administrative expenses and, immediately after launching such initiatives, restored its liquidity. Also, in late 2002 and early 2003, Banco Galicia closed all of its operating units abroad or began to wind them down. In addition, Banco Galicia: (i) restructured most of its commercial loan portfolio, a process that was substantially completed in 2005, (ii)

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restructured its foreign debt, a process that began in 2002 and that was completed in May 2004, and resulted in an increase in its capitalization, and (iii) in February 2004, finalized the restructuring of its debt with the Argentine Central Bank incurred as a consequence of the 2001-2002 financial crisis.

Together with the launching of the above-mentioned initiatives, Banco Galicia began to normalize its activities, progressively restoring its customer relations and growing its business with the private sector. In 2007, Banco Galicia finalized the full repayment of its debt with the Argentine Central Bank incurred as a consequence of the 2001-2002 financial crisis. In addition, in August 2007, Banco Galicia repaid in full the notes that it had issued to restructure the debt of its New York Branch and undertook a share offering to increase its capitalization, in order to be able to support the increase in regulatory capital requirements on a bank’s exposure to the public sector and the growth of its business with the private sector.

On June 1, 2009, Banco Galicia entered into a stock purchase agreement with AIG and with AIG Consumer Finance Group Inc. for the purchase of the shares of CFA, Cobranzas y Servicios S.A. and Procesadora Regional S.A. (collectively the “CFA Group”), Argentine companies that are involved in financial and related activities.

Pursuant to Resolution No. 124, dated June 7, 2010, the Argentine Central Bank authorized the purchase of the shares of the CFA Group by Banco Galicia and Tarjetas Regionales and on August 31, 2010, through Resolution No. 299, the National Commission for the Defense of Competition ( Comisión Nacional de Defensa de la Competencia ) approved the transaction. The purchase of the shares of the CFA Group was completed by Banco Galicia (95%) and Tarjetas Regionales (5%) on June 24, 2010. The price to acquire the shares of these companies was Ps.334 million. This purchase was financed with Banco Galicia’s available cash, within its ordinary course of business. During the fiscal year ended December 31, 2011, the 5% interest held by Tarjetas Regionales was acquired by Grupo Financiero Galicia and Banco Galicia, which acquired 3% and 2% of such interest, respectively. Following such acquisition, Banco Galicia held a 97% interest in CFA.

On February 25, 2014, Grupo Financiero Galicia, which controlled 99.62% of the shares of Banco Galicia, resolved to issue an offer to acquire the 2,123,962 shares of Banco Galicia owned by third parties. On April 24, 2014, said transaction was approved by the CNV and on July 14, 2014, it was incorporated by the Argentine Superintendency of Corporations. Currently, 100% of the outstanding capital stock of Banco Galicia is owned by Grupo Financiero Galicia. See “-Grupo Financiero Galicia” above.

On January 12, 2017, Grupo Financiero Galicia together with its main subsidiary, Banco Galicia Compañía Financiera Argentina S.A., decided to accept an offer by Mr. Julio A. Fraomeni and Galeno Capital S.A.U. to purchase 100% of Banco Galicia’s subsidiary, Compañía Financiera Argentina S.A. This transaction is subject to the approval of the certain regulatory authorities, such as approval by the Argentine Central Bank, which approvals are still pending as of the date of this annual report.

The consideration to be paid in connection with the sale of Compañía Financiera Argentina S.A. is subject to certain adjustments, which may be affected by the timing of the closing of the transaction. It is currently estimated that the transaction will not have a significant impact on the Bank’s shareholders’ equity. See “-Compañía Financiera Argentina” below.

In addition, Banco Galicia requested to delist its shares from the BASE to become a privately held company. Banco Galicia’s quotation was suspended on April 30, 2014. On August 21, 2014, the CNV approved Banco Galicia’s request to delist its shares from the BASE.

On April 15, 2014, Banco Galicia sold its interest in Galicia Administradora de Fondos to Grupo Financiero Galicia for Ps.39 million.

During the third quarter of fiscal year 2014, Banco Galicia sold to VISA Argentina S.A., a company in which the Bank had a 15.9% equity interest, its equity investment in Banelco S.A., for Ps.40 million.

In September 2014, the Bank entered into a preliminary agreement to merge Galicia Cayman into the Bank, effective as of October 1, 2014. The Bank controlled 99.989% of the shares of Galicia Cayman and had an option to

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purchase the remaining 0.011%, which was owned by Cobranzas y Servicios S.A. In November 2014, the Bank’s shareholders’, through an extraordinary shareholders’ meeting, exercised the above mentioned option and approved the merger and incorporation of Galicia Cayman into the Bank, effective on October 1, 2014. This transaction resulted in the dissolution without liquidation of Galicia Cayman.

In a survey conducted in 2016 by Great Place to Work ^® , which involved more than 87,000 employees from 115 different companies, Banco Galicia was ranked fourth among the best companies to work for with more than 1,000 employees.

Restructuring of the Foreign Debt of Banco Galicia’s Head Office in Argentina and its Cayman Branch

On May 18, 2004, Banco Galicia successfully completed the restructuring of US$1,321 million of the debt of Banco Galicia’s Head Office and its Cayman Branch, consisting of bank debt (including debt with multilateral credit agencies) and bonds. This amount represented 98% of the foreign debt eligible for restructuring. As of December 31, 2014, the principal amount of old debt, the holders of which did not participate in the exchange offer was US$1 million.

Banco Galicia paid creditors who elected to participate in the cash offer and the Boden offer and issued (i) US$649 million of long-term U.S. Dollar-denominated debt instruments, of which US$465 million were Dollar-denominated notes due 2014 (referred to as the “2014 Notes”), (ii) US$400 million of medium-term Dollar-denominated debt instruments, of which US$353 million were Dollar-denominated notes due 2010 (referred to as the “2010 Notes”) and (iii) US$230 million of subordinated Dollar-denominated debt instruments, of which US$218.2 million were Dollar-denominated notes due 2019 (referred to as the “Subordinated Notes Due 2019” or the “2019 Notes”).

In January 2010, Banco Galicia paid the last amortization installment of its 2010 Notes, for a principal amount of US$34 million and in November 2010, Banco Galicia redeemed all of its 2014 Notes, for an outstanding principal amount of US$102 million.

During February 2011, Banco Galicia partially redeemed capitalized interest on its Subordinated Notes Due 2019 for US$90 million (and accrued interest thereof for US$1.4 million), which amount was capitalized between January 1, 2004 and December 31, 2010, and was originally scheduled to be paid on January 1, 2014.

In addition, in December 2011, with respect to such notes, Banco Galicia made an advance payment of interest, including both interests that capitalized from January 1, 2011 to June 30, 2011, of US$6 million, and accrued interest thereof for US$0.3 million. Such payment was originally scheduled to be made on January 1, 2014.

In January 2014, Banco Galicia paid cumulative interest accrued on these notes from July 1, 2011 to December 31, 2013 for US$29 million.

Grupo Financiero Galicia previously held a credit against Banco Galicia for a face value of US$10 million, as a result of the acquisition from third parties of subordinated loans maturing in 2019. During fiscal year 2016, Banco Galicia prepaid its Subordinated Notes due 2019 and the subordinated loans that were to mature in 2019.

Banco Galicia Uruguay S.A. and Galicia (Cayman) Ltd.

In 1983, Galicia Uruguay was established as a “Casa Bancaria” , a license that granted an offshore status, as an alternative service location for Banco Galicia’s customers. In September and October 1999, the Uruguayan government’s executive branch and the Uruguayan Central Bank, respectively, approved Galicia Uruguay’s status as a full service domestic bank.

Due to the effects of the 2001-2002 financial crisis on Galicia Uruguay, in early 2002, the Central Bank of Uruguay suspended its activities and assumed control and management of Galicia Uruguay. In December 2002, Galicia Uruguay restructured its deposits into debt maturing in 2011. On June 1, 2004, Galicia Uruguay’s license to operate as a domestic commercial bank was revoked by the Central Bank of Uruguay, but it retained the license

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from the Uruguayan government’s executive branch. Control and management of Galicia Uruguay by the Central Bank of Uruguay ended on February 22, 2007. On May 15, 2009, Galicia Uruguay made available to its clients in advance US$27 million, corresponding to the remaining balance of its restructured debt, which was initially due in September 2011. Having fulfilled its obligations, Galicia Uruguay’s shareholders resolved at a shareholders’ meeting held on June 30, 2010, to voluntarily dissolve and liquidate the company.

Furthermore, taking into consideration the financial condition and the evolution estimated in the liquidation process, shareholders decided to reduce the company’s computable capital in an amount equal to US$2.1 million through the voluntary redemption of shares, which was carried out on October 18, 2010. During 2013 and 2014, shareholders decided to carry out two new voluntary share redemptions. These redemptions were carried out for a value equal to US$2 million and US$3 million, on November 18, 2013 and September 10, 2014, respectively.

As of the date of this annual report, Galicia Uruguay was in the process of finalizing its dissolution process with the appropriate Uruguayan authorities.

Regional Credit Card Companies

In the mid-1990s, Banco Galicia made the strategic decision to target the “non-account holding” individuals market, which, in Argentina, typically includes the low and medium-low income segments of the population who live in the Interior of the country, in addition to certain parts of Greater Buenos Aires. To implement this strategic decision, in 1995 Banco Galicia began investing in non-bank companies (the “Regional Credit Card Companies”) operating in certain regions of the Interior , providing financial services to individuals through the issuance of credit cards with proprietary brands and extending credit to its customers through such cards.

In 1995, Banco Galicia made the first investment in this business by acquiring a minority stake in Tarjeta Naranja S.A. (“Tarjeta Naranja”) and in 1997 increased its ownership to 80%. This company had begun operations in 1985 in the city of Córdoba, where it marketed “Tarjeta Naranja”, its proprietary brand credit card, and had enjoyed local growth.

In 1996, Banco Galicia formed Tarjetas Cuyanas S.A. (“Tarjetas Cuyanas”), to operate in the Cuyo Region (the provinces of Mendoza, San Juan and San Luis) in partnership with local businessmen. This company launched the “Nevada Card” in May 1996 in the city of Mendoza. Also in 1996, Banco Galicia formed a new company, Tarjetas del Mar, to operate in the city of Mar del Plata and its area of influence. Tarjetas del Mar began marketing the “Mira” card in March 1997.

In early 1997, Banco Galicia purchased an interest in Comfiar S.A., a consumer finance company operating in the provinces of Santa Fe and Entre Ríos, which was merged into Tarjeta Naranja in January 2004.

In 1999, Banco Galicia reorganized its participation in this business through Tarjetas Regionales, a holding company wholly owned by Banco Galicia and Galicia Cayman, which owns the shares of Tarjeta Naranja, Comfiar S.A., Tarjetas Cuyanas, and Tarjetas del Mar. In addition, between 1999 and 2000, Tarjetas Regionales acquired Tarjetas del Sur S.A., a credit card company operating in southern Argentina. In March 2001, Tarjetas del Sur S.A. merged into Tarjeta Naranja.

During 2012, the ownership interests in Tarjetas Regionales and its operating subsidiaries were modified due to the following events:

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During May 2014, an extraordinary shareholders’ meeting of Tarjetas del Mar approved a capital increase of Ps.32 million, which was fully subscribed for by Sociedad Anónima Importadora y Exportadora de la Patagonia. As a consequence, the Bank currently holds a 58.8% equity interest in Tarjetas del Mar, while CFA holds a 1.2% equity interest and Sociedad Anónima Importadora y Exportadora de la Patagonia holds the remaining 40%.

On March 31, 2017,the Board of Directors approved the sale of its stake (58.8% of the issued and oustanding shares) in its subsidiary Tarjetas del Mar S.A. (“TDM”) to Sociedad Anónima Importadora y Exportadora de la Patagonia . CFA also sold its stake (1.2% of the issued and outstanding shares) in TDM to Federico Braun.

The consideration received for these sales is approximately US$5 million, and Banco Galicia believes that the sale will not have a significant impact on Banco Galicia’s shareholders’ equity.

It is worth to mention that Sociedad Anónima Importadora y Exportadora de la Patagonia already owned 40% of the total shares of TDM.

As of December 31, 2016, Banco Galicia held 77% of Tarjetas Regionales. In turn, Tarjetas Regionales directly and indirectly held 100% of Tarjeta Naranja and 100% of Tarjetas Cuyanas.

These companies have experienced a significant expansion of their customer bases, in absolute terms and with respect to the range of customers served, number of cards issued, distribution networks and size of operations, as well as a technological upgrade and general modernization. By mid 1995, Tarjeta Naranja had approximately 200,000 cards outstanding. As of December 31, 2016, the Regional Credit Card Companies, on a consolidated basis, had approximately 10 million issued cards and were the largest proprietary brand credit card operation in Argentina.

In terms of funding, the Regional Credit Card Companies have historically used one or more of the following third party sources of financing: merchants, bond issuances, bank loans and other credit lines, financial leases and securitizations using financial trust vehicles. This diversification has allowed the Regional Credit Card Companies to maintain and expand their business without depending excessively on one single source or provider.

The business operations of the Regional Credit Card Companies are exposed to foreign exchange rate fluctuations and interest rate fluctuations; however, they mitigate the foreign exchange rate risk in respect of their business and operation through hedging transactions and try to offset their interest rate exposure with assets that bear interest at similar floating rates. In addition, the Regional Credit Card Companies have an overall liquidity policy requiring them to maintain sufficient liquidity to cover at least three months of future operations and to formulate a cash flow projection for each upcoming year. These internal policies and practices ensure adequate working capital through which the Regional Credit Card Companies protect their operations against short-term cash shortages, allowing them to focus on expanding their business and continuously better serving their clients.

In addition, Tarjeta Naranja has exported its business model to the Dominican Republic, where it commenced operations in 2007 through a joint venture with Grupo León, and to Peru, where it commenced operations in 2011 through a joint venture with Banco de Crédito del Perú. As of the end of the second quarter of 2012, Tarjeta Naranja Dominicana S.A.’s shareholders decided to sell to Banco Múltiple León S.A. (holder of the remaining 50% interest in Tarjeta Naranja Dominicana S.A.’s capital stock) Tarjeta Naranja Dominicana S.A.’s rights related to customers and to start the liquidation of the company. Later, on October 14, 2014, Tarjeta Naranja entered into the final agreement to transfer its interest in Tarjeta Naranja Perú (a joint venture), equivalent to 24% of the capital stock of such company, to Grupo Crédito S.A. for US$900,000. As December 31, 2016, the shares were transferred.

Compañía Financiera Argentina

CFA is a financial company which operates under the Financial Institutions’ Law and other regulations set forth by the Argentine Central Bank.

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CFA is a leading financial company in Argentina in the personal loans business, providing consumer personal loans through different products. Within this framework, CFA grants unsecured personal loans within the Argentine territory, mainly through its “Efectivo Sí” offices, intermediary entities (mutuals, unions, cooperatives, etc.) and the financing of purchases through its affiliated merchants. It also issues credit cards on a limited scale.

CFA had different names before adopting its current name. It was originally formed under the name “Río de la Plata Sociedad Anónima Comercial y de Financiaciones” on August 16, 1960, and in 1977 the name was changed to “Burofinanz S.A. Compañía Financiera” (authorized by Resolution No. 424 of the Argentine Central Bank, dated December 29, 1977).

In 1992, CFA carried out its commercial activities under the name “Interbonos Compañía Financiera S.A.” (authorized by Resolution No. 284 of the Argentine Central Bank, dated June 17, 1992), as agent of the Mercado Abierto (fixed income brokerage), and later shifted its activities to personal financing, providing small loans through retail merchants for the acquisition of different consumer goods. In 1994, it created “Efectivo Sí” , which is a product aimed at satisfying the financial needs of the segment of the population characterized by limited interaction with traditional banks.

In 1995, Banco de Crédito Argentino acquired an interest in the company’s capital stock and later Banco de Crédito Argentino was acquired by BBVA Banco Francés S.A., which became the major shareholder of CFA. Subsequently, the “División Convenios” (Agreements Division) was created, which allowed CFA to enter the market of agreements with mutuals, unions, cooperatives and other intermediary organizations, and grant loans to its associates.

The Argentine Central Bank, through its Resolution No. 85 dated February 7, 1996, registered CFA’s change of denomination to “Compañía Financiera Argentina S.A.” and authorized it to operate as a financial company under the Financial Institutions’ Law, thus allowing CFA to initiate its activities on February 27, 1996.

In 1998, most of CFA’s capital stock was acquired by AIG Consumer Finance Group Inc., a company controlled by American International Group Inc. (AIG). Six years later, in 2004, the “Cuota Sí” product, aimed at financing purchases through affiliated merchants, was designed.

In June 2010, Compañía Financiera Argentina was acquired by Banco Galicia and Tarjetas Regionales, with an interest in CFA’s capital stock of 95% and 5%, respectively.

During fiscal year 2011, the 5% interest held by Tarjetas Regionales was acquired by Grupo Financiero Galicia and Banco Galicia, which acquired 3% and 2% of such interest, respectively. Following such acquisition, Banco Galicia held a 97% interest in CFA.

On January 12, 2017, the decision made by the shareholders of the Company, was to accept the offer to buy all the shares in Compañía Financiera Argentina S.A.(CFA) and in Cobranzas y Servicios S.A. such offer was made by Mr. Julio Alfredo Fraomeni and Galeno Capital S.A.U. The closing of the transaction is subject to the prior compliance with the conditions set out in the offer, such as the Argentine Central Bank’s approval.

The price offered is subject to certain adjustment variables, the effect of which may vary according to the time when the transaction is finally closed with its approval by the regulatory authorities. Notwithstanding the foregoing, the Group believe that the economic result of the transaction will not cause a significant impact on the Company’s shareholders’ equity.

Sudamericana Holding

In 1996, Banco Galicia entered the bank insurance business, through the establishment of a joint venture with Hartford Life International to sell life insurance and annuities, in which it had a 12.5% interest. In December

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2000, Banco Galicia sold its interest in this company and purchased 12.5% of Sudamericana, a subsidiary of Hartford Life International. As a result of various acquisitions, Grupo Financiero Galicia owns 87.5% of Sudamericana (with the remaining 12.5% being held by Banco Galicia) which offers life, retirement, property and casualty insurance products in Argentina through its subsidiaries Galicia Seguros S.A. (“Galicia Seguros”), which provides property, casualty and life insurance, Galicia Retiro Compañía de Seguros S.A. (“Galicia Retiro”), which provides retirement insurance and Galicia Broker Asesores de Seguros S.A. (“Galicia Broker”), an insurance broker

In addition, during fiscal year 2012 Galicia Seguros, together with other three insurance companies, created Nova Re Compañía Argentina de Reaseguros S.A., the goal of which is to increase the scope of offerings of reinsurance products in Argentina.

Galicia Administradora de Fondos

Incorporated in 1958, Galicia Administradora de Fondos manages the FIMA family mutual funds that are distributed by Banco Galicia through its multiple channels (network of branches and home banking and investment centers, among others). The company’s team is comprised of asset management professionals whose goal is to manage the FIMA family funds in order to meet the demand of individuals, companies and institutions. The assets of each fund are distributed across a variety of assets, such as bonds, negotiable obligations, trusts, shares and deposits, among others, in line with the fund’s investment objective.

On April 15, 2014, Banco Galicia sold its 95% interest in Galicia Administradora de Fondos to Grupo Financiero Galicia.

Its shareholders are Grupo Financiero Galicia, with a 95% stake, and Galicia Valores, with the remaining 5%.

Net Investment

Net Investment was established in February 2000 as a holding company (87.5% owned by Grupo Financiero Galicia and 12.5% owned by Banco Galicia) whose initial purpose was to invest in and develop businesses related to technology, communications, internet connectivity and web contents. Net Investment has performed its activities in the areas of business to business e-commerce, with the purpose of creating and exchanging synergies with Banco Galicia’s business activities.

During the 2011 fiscal year, the shareholders decided to amend the corporate purpose of Net Investment to be able to invest in additional companies in related, accessory and/or supplementary activities.

Galicia Warrants

Galicia Warrants was founded in April 1993, when it obtained the authorization from the relevant authorities to store goods and issue certificates of deposits of goods and warrants under the provisions of Law No. 9,643.

Galicia Warrants is a leading company in the deposit certificates and warrants issuance market and its main customers belong to the agricultural, industrial and agro-industrial sectors, as well as exporters and retailers. Its main objective is to enable its customers to access credit and financing, which are secured by the property kept under custody. Its shareholders are Grupo Financiero Galicia, with an 87.5% stake, and Banco Galicia, with the remaining 12.5%.

Business

Banking

Banco Galicia, our largest subsidiary, operates in Argentina and substantially all of its customers, operations and assets are located in Argentina. Banco Galicia is a bank that provides, directly or through its subsidiaries, a wide variety of financial products and services to large corporations, small and medium-sized companies, and individuals.

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Banco Galicia is one of Argentina’s largest full-service banks and is a leading provider of financial services in Argentina. According to information published by the Argentine Central Bank, as of December 31, 2016, Banco Galicia ranked second in terms of assets, deposits and loan portfolio within private-sector banks in Argentina. As of the same date, Banco Galicia also ranked first among private-sector domestic banks in terms of assets, loans and deposits. Its market share of private sector deposits and of loans to the private sector was 9.92 % and 10.12% respectively, as of the end of 2016. On a consolidated basis, as of the end of fiscal year 2016, Banco Galicia had total assets of Ps.240,058 million, total loans of Ps.137,451 million, total deposits of Ps.151,727 million, and its shareholders’ equity amounted to Ps.18,906 million.

Banco Galicia provides a full range of financial services through one of the most extensive and diversified distribution platforms amongst private-sector financial institutions in Argentina. This distribution platform, as of December 31, 2016, was comprised of 279 full service banking branches, located throughout the country, 1,872 ATMs and self-service terminals owned by Banco Galicia, phone banking and e-banking facilities. Banco Galicia’s customer base, on an unconsolidated basis, was comprised of 3.6 million customers, who were comprised of mostly individuals but who also included more than 96,000 companies. Banco Galicia has a strong competitive position in retail banking, both with respect to individuals and small- and medium-sized companies. Specifically, based on internal studies undertaken by Banco Galicia, it is estimated that Banco Galicia is one of the primary providers of financial services to individuals, one of the largest providers of credit cards, one of the primary private-sector institution serving the small- and medium-sized companies sector, and has traditionally maintained a leading position in the agriculture and livestock sectors. Banco Galicia’s primary clients are classified into two categories, the Wholesale Banking Division and the Retail Banking Division.

For a breakdown of Banco Galicia’s revenues by category of activity for the last three financial years, see Item 5.A. “Operating Results-Results by Segments-Banking.”

Wholesale Banking

The Wholesale Banking division manages and builds relationships with companies from all economic sectors and supports its business model by being closely related to its corporate customers, providing dedicated and focused services.

Large Corporations Banking

Most of the Large Corporations Banking segment is comprised of companies and/or economic groups with annual revenues of over Ps.700 million, multinational companies and listed companies.

During fiscal year 2016, Banco Galicia maintained its leading position in the Large Corporations Banking segment, serving both local and multinational companies and increasing customer acquisition rates.

Demand for longer term credit began to increase in fiscal year 2016, and Banco Galicia participated in several large transactions, which doubled its loan portfolio and also doubled the volume of payment/collection transactions as compared to fiscal year 2015.

These results were further strengthened by the implementation of a customer-oriented business model, driven by a strong focus on customer-oriented product consulting designed to maximize customer satisfaction and take advantage of increasing demand.

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Companies

The Companies segment of Wholesale Banking division continued to grow in fiscal year 2016. The Companies segment’s mission is to develop business based on three mainstays: proximity to client, client response times and benefits provided to clients.

This segment is comprised of Argentine companies in various economic sectors (except for agriculture), whose annual revenues range from Ps. 100 million to Ps. 1 billion. There are a total of 22 corporate banking centers throughout Argentina. These centers are strategically located through the country, and employ a professional team of business executives that specialize in foreign trade and treasury solutions. These centers work with our national branches in order to provide the best experience for our customers.

The Companies segment utilizes a business approach that focuses on obtaining insight into its customers’ business needs, which allows Banco Galicia to offer targeted products based on meeting its customers’ demand for specific products. During fiscal year 2016, the segment focused on improving customer service, both in its call centers and by its tellers.

The Companies segment has also targeted an increase in customer loyalty by organizing 50 events throughout Argentina. These events were designed to provide customers with updates on, among other topics, politics and the economy, foreign trade regulations and training courses in collections and payments, and human resource training.

Agricultural and Livestock Sector

Tarjeta Galicia Rural holds approximately 34% of the market share of credit-card related transactions in the agricultural sector, with a sales volume of more than Ps. 6.6 billion. More than 80 interest-free agreements with leading agricultural and livestock sector companies remained in force in fiscal year 2016.

Noteworthy among the business activities carried out in the sector during fiscal year 2016 were multiple offers to finance agricultural campaigns, including structuring of loans to best suit each producer’s needs, the financing of capital goods, such as agricultural machinery, vehicles and other investments in production tools, and the investment in the purchase and retention of female breeding stock for the growth of breeder herds through the Credit Line for Production and Financial Inclusion.

Crop loan funding in foreign currency returned in fiscal year 2016. To adapt to new market conditions, the segment launched new financial solutions, including the Tarjeta Galicia Rural + Dólares and the Tarjeta Galicia Rural Bodegas , credit cards which can be used to finance winegrowing related activities. The improved economic environment in the sector enabled the segment to offer a wide range of long-term loans for investment projects, with an emphasis on renewable and efficient energy, in addition to the possibility of settling leasing and collateral loan transactions in U.S. Dollars, thereby cementing the positive trend towards providing long term financing.

During fiscal year 2016, the fourteenth edition of the Excelencia Agropecuaria La Nación Award (La Nación-’s Agricultural Excellence Award), was awarded to Banco Galicia, and the Revista Chacra a la Gestión Solidaria del Campo Award (Chacra Magazine’s Rural Solidarity Award) and the CAPA Award for agricultural journalism were also both awarded to Banco Galicia.

As in prior fiscal years, Banco Galicia supported the research and outreach activities of Universidad Austral. The Bank also continued supporting the activities of the Fundación Producir Conservando , the activities of the Agronomy School of the University of Buenos Aires, and continued supporting the work of Asociación Argentina de Productores en Siembra Directa (Argentine Association of No-till Farming), as well as different activities promoted by Consorcios Regionales de Experimentación Agrícola (Agricultural Experimentation Regional Consortiums) and the Líderes (Leaders) training program. Banco Galicia also continued to actively participate in the advisory council of Confederaciones Rurales Argentinas (CRA) (Argentine Rural Confederations) and regional confederations, as well as to support rural societies in the interior of the country. It also cooperated with Sociedad Rural Argentina (SRA) on its 150th anniversary, and provided support to the training program for agricultural

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leaders of the Centro de Estudios e Investigación para la Dirigencia Agroindustrial (Study and Research Center for Agro-industry Management), in which Banco Galicia’s employees take part annually. Banco Galicia also maintained an active presence on the board of the Asociación Argentina del Girasol (Argentine Sunflower Association), the association of sunflower farmers, as well as cooperated with other associations for Argentina’s primary agricultural crops.

Foreign Trade

During fiscal year 2016, foreign trade volume (imports plus exports) amounted to US$14,994 million, which accounted for 12% of the Argentine trade balance. Out of the total foreign transactions, 67% were carried out through Office Banking, Banco Galicia’s corporate e-banking service. Galicia Comex, Banco Galicia’s specialized website for conducting foreign trade transactions, continued its growth, remaining a valuable market reference point.

A series of significant regulatory changes were introduced throughout fiscal year 2016, which enabled the Bank to develop training workshops allowing for the active participation of attendees, including discussions on practical case studies. Fifteen workshops were organized in different locations throughout the country with more than 800 attendees.

The Bank continued its Foreign Trade Project in fiscal year 2016. Such project is currently expected to conclude in the first quarter of 2019. Through this world-class project, Banco Galicia is replacing the technological systems that it currently uses to direct, process and manage foreign trade transactions, and is introducing and updating office banking functionalities for customers.

Capital Markets and Investment Banking

Banco Galicia’s capital markets activity is focused on corporate debt transactions and, to a lesser extent, on mergers and acquisitions and securitization transactions.

In fiscal year 2016, Banco Galicia continued to provide capital market advice and investment banking services to a variety of companies. During fiscal year 2016, the Bank organized and structured a number of transactions, including syndicated and structured loans and debt issuances, and provided advice on mergers and acquisitions, notes, short-term securities, bills and financial trusts.

Among the largest Peso-denominated transactions in which Banco Galicia participated were issuances by companies in the automotive industry, such as Fiat, Toyota and Mercedes Benz, in an aggregate amount of more than Ps. 1,000 million; companies related to Grupo Financiero Galicia, such as Tarjeta Naranja, Tarjetas Cuyanas, and CFA in an aggregate amount of more than Ps. 5,600 million; government bonds, such as those issued by the City of Buenos Aires, the Province of Buenos Aires and the Province of Neuquén, in an aggregate amount of more than Ps. 6,600 million; and debt issued by companies in the financial sector, such as Banco BICE, Banco Hipotecario, Bacs Payment Schemes Limited and Banco de la Provincia de Buenos Aires in an aggregate amount of more than Ps. 4,400 million.

Among the largest U.S. Dollar-denominated transactions in which Banco Galicia participated are issuances by Yacimientos Petrolíferos Fiscales (YPF), John Deere Ltd. and Inversiones y Representaciones Sociedad Anónima, in an aggregate amount of more than US$ 400 million.

Wholesale Banking

The Wholesale Banking division manages and builds relationships with companies from all economic sectors and supports its business model by being closely linked to its corporate customers, providing dedicated and focused services to such customers.

Across Argentina, Banco Galicia has granted multiple credit lines to companies to finance needs ranging from working capital to medium- to long-term investment projects.

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In fiscal year 2016, the Wholesale Banking division focused on simplifying transactional activities by directing operations to Office Banking and adjusting solutions to facilitate and streamline treasury management, regardless of company size. To this end, the Bank’s goals were focused on implementing various platform initiatives, including initiatives involving:

With respect to Checking accounts, the deployment of the new SAP system allowed a coordinated management of customer migration. This new tool will help swiftly and effectively manage rates by account type and by segment, perform cash pooling (centralized accounts) transactions, address offers and establish parameters by customer group based on the segment’s business strategy.

With respect to Payroll accounts, customer experience was significantly improved during 2016 and the daily management of process areas (Operations & Support) was optimized. Banco Galicia successfully deployed the first stage of the Payroll – Massive Addition Project, a significant improvement in setting up new payroll accounts, which led to a substantial reduction of complaints by companies using this service. As of December 31, 2016, more than 9,600 accounts of 1,300 companies were being processed using this new tool.

In order to streamline and facilitate the customer’s treasury management and to enhance internal efficiency, the Cobranza Integrada Galicia (Galicia Integrated Collection) service was extended to the smart self-service terminals which operate 24 hours a day, 7 days a week. Extended hours of operation resulted in increased transactions and a successful migration of teller transactions through this channel, providing customers with additional times in which they could access their accounts.

e-platform

Office Banking, Banco Galicia’s corporate e-banking service, provides a quick, dynamic and safe channel to manage the online accounts of corporate customers and continues to grow year after year.

During 2016, various improvements were made to Office Banking, with the goals of increasing efficiency, improving user experiences and increasing functionality. These improvements presented customers with the ability to self-manage their banking services by accessing their accounts via a personal, password-protected account, without having to visit a Banco Galicia branch. Additionally, new functionalities were added to the investment module (including time deposit management, primary biddings, sale and purchase of foreign currency, and scheduled transactions of Fima Mutual Funds). Banco Galicia also began to provide online consultation for loans in 2016.

The Office Express service was also launched in 2016. This express service was specifically developed for small and medium enterprise (“SME”) customers and provides a streamlined service that authorizes transactions through the Galicia Office Token app.

The positive effect of these initiatives resulted in an increase in transaction volumes by 67% as compared to the fiscal year ended December 31, 2015.

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The number of transactions that cleared through Banco Galicia’s interbanking clearing house increased by 43% as compared to the fiscal year ended December 31, 2015. As of the end of fiscal year 2016, Banco Galicia was ranked first in terms of the number of transactions consummated through its interbanking clearing house. Additionally, the number of transactions traded through the Swift channel increased by 67% as compared to the fiscal year ended December 31, 2015. Furthermore, additional functionalities were added, including the possibility to automatically make payments to the Administración Federal de Ingresos Publicos (“AFIP”).

Retail Banking

The Retail Banking Division manages Banco Galicia’s business with individuals from all income brackets, micro and smaller businesses (i.e., those businesses with annual revenues below Ps.120 million) and small retailers and professionals. Retail Banking provides a wide range of financial products and services, encompassing transactions, loans, and investments. On the transactions side, Banco Galicia offers its customers checking and savings accounts, credit and debit cards, and payroll direct deposit, among other services. Banco Galicia’s customers have access to its services through its branch network as well as through its electronic distribution channels. See “-Sales and Marketing.”

The Retail Banking Division is currently focused on (i) developing a customer-oriented culture, (ii) positioning itself as a leader in the technological transformation of the financial markets, (iii) reinforcing a multifaceted approached to customer needs in order to create a positive experience for our customers by developing a multichannel strategy designed to create the best possible customer experience, (iv) developing innovative products and services, and (v) improving each segment’s strategy in order to maintain a leading position in such segment.

The Retail Banking Division’s customer base grew 7% during 2016, reaching 2.5 million customers as of December 31, 2016.

Segments

Business and SMEs

The Business and SMEs segment continued to be ranked as a leader in terms of customer satisfaction, according to studies conducted by private consulting firms. The segment continued to focus on customer service in fiscal year 2016. The Business and SMEs segment’s customer base grew 10% during 2016, achieving a 32% market share as of December 31, 2016.

The most important business achievements were a 7% increase in payroll accounts and, at a credit level, the placement of the Financing Line for Production and Financial Inclusion for over Ps. 900 million in the Business and SMEs segment. The segment’s leading position in the issuance of the Visa Business card is also evidenced by the segment’s market share (based on information provided by Visa).

Good Businesses Meetings continued being carried out at the national level, with 7 meetings in the cities of Buenos Aires, Córdoba, Paraná, Mendoza, Mar del Plata, Resistencia and Tucumán. In 2016, more than 4,400 business people in the SMEs segment took part in these training sessions, and thousands of people watched via live broadcast.

Banco Galicia continued to have a strong presence at trade fairs, with business teams and stands at 17 exhibitions, which participation was used in order to reinforce customer loyalty in the Business and SMEs segment.

Banco Galicia remained a leader in customer satisfaction in fiscal year 2016. Using the Net Promoter Score (“NPS”) measurement system, Banco Galicia was ranked first in Micro-and Small-sized Companies, with an 18% and a 14% NPS Index, respectively. In the Micro-sized Companies category, Banco Galicia was 5 percentage points. above the second place company, and in the Small-sized Companies category it was 2 percentage points above the second place company.

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The new Office Express service and the Galicia Office Token app were implemented in fiscal year 2016, which facilitates access to e-banking for the SMEs sector, while enhancing user experience on a digital platform. As of December 31, 2016, over 9,000 users used the app to carry out transactions.

Galicia ÉMINENT

Galicia ÉMINENT is a service aimed at high-income customers. The service experienced a 28% growth rate in the number of clients in fiscal year 2016 as compared to the fiscal year ended December 31, 2015. According to surveys carried out together with other banks Galicia ÉMINENT was ranked first in terms of service as compared to other high-income services and showed a growing trend in brand recognition, while its main competitors stagnated in terms of said indicator during the same period. Galicia ÉMINENT was also ranked first in terms of customer service, with an NPS score of 41%.

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The new Galicia Conecta service helped position Banco Galicia and Galicia ÉMINENT as pioneers in the new remote customer service model. Galicia Conecta increased the number customers who use Banco Galicia as their primary bank by focusing on increasing its digital profile and enhancing the customer’s experience while significantly reducing customer service costs.

A new integral marketing campaign was recently launched to allow Galicia Conecta to fully benefit from market trends and opportunities, with the goals of continuing growth, building the portfolio and enlarging its client base by providing a highly customized service tailored to the consumer. Galicia Conecta sought to renew and set itself apart from competitors by using modern, fresh and aspirational slogans while still conveying the fundamental values of trust, respect and freedom of choice.

The new campaign was based on four pillars relevant to the target audience: Quiero Viajes, the Éminent Conecta customer service, the proximity feature “Te Conozco” (I Know You), and investment advice by financial experts.

General Income

In order to continue to build a customer-oriented organizational culture, General Income was managed by different subsegments, giving priority to increasing the number of customers who use Banco Galicia as their primary bank and focusing on the Prefer subsegment (consisting of middle-to upper middle-class customers), by improving product offerings (including the Platinum proposal for high income customers); and on the “MOVE” subsegment (consisting of young adults), by strengthening alliances with relevant brands.

The NPS system continued to be utilized to measure the performance of our massive points of contact and Online Banking segments in 2016. This allowed us to achieve the highest volume of client interactions in these segments as compared to other segments, to better listen to our customers’ needs and to be ranked first place in these two segments in terms of customer service as compared to other banking institutions.

The General Income segment experienced an interannual growth of 2%, improving the customer portfolio structure thanks to the development of indirect channels and an online sales channel, which, at the same time, made acquisition costs more efficient.

The Bank focused on customer activation and development in the youth segment, using targeted communications through new communications channels such as “Galicia Move” on Instagram, which launched in August 2016. The youth segment experienced accelerated growth through the online sales channel, which accounted for 36% of MOVE registrations (with the remaining MOVE registrations taking place on university campuses). The segment solidified the concept of a “bank without branches, 100% online” as a differential brand attribute. The Bank currently has over 100,000 MOVE customers and a presence at 17 universities.

Furthermore, the Bank worked on improving its efficiency by reviewing the profitability of channels and transferring transactions among channels, while taking into account the customers’ preferences or habits.

Private Banking

The Private Banking division offers distinctive and professional financial services to high-net worth individuals, through the management of their investments and the provision of financial advisory services. Private Banking offers its customers a wide range of domestic financial investment alternatives, such as deposits, FIMA mutual funds, government and corporate securities, and shares and trusts where the Bank acts as an arranger.

One of the Private Banking premises, in line with the Bank’s strategy to differentiate itself from competitors through the quality of its service, is the preferential treatment of its customers. In this regard, Private Banking has highly-trained officers, an investment center that operates from 8 a.m. to 6 p.m., a wide network of Éminent officers, and exclusive areas of customer service at branches on the first floor in its headquarters.

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Channels

Indirect Channels

In 2016, the Indirect Channels division continued to grow and to pursue its mission to develop internal and external channels to attract new customers and to efficiently market Consumer Banking products, with its main objective being to create a positive customer experience. The division is made up of the Retail Sales Unit (a sales force focused on cross-selling, attraction of customers that already use the Bank’s direct payroll deposit service and attraction of SMEs accounts), the Indirect Sales Channel Unit (focused on attracting new customers through entrance into new agreements with third parties), and the Commercial Planning for Telephone Banking Unit (focused on attracting customers and cross-selling through internal and external call centers).

Agreements and Payroll

The Bank continued to grow in the area salary direct deposits in fiscal year 2016, increasing the number of customers by 1%, and the total credited salaries by 39.5%, as compared to the fiscal year ended December 31, 2015, thus further consolidating its leadership position in the market.

The Bank developed relationships with more than 30 ABC1 schools, providing products focused on all of their business needs and also reached agreements with several additional organizations and associations, including the Professional Council of Economic Sciences of the Province of Buenos Aires, opening new accounts for its members, and the Association of Pediatrics of the Province of Buenos Aires, opening accounts for their 44 affiliates and assuming their collection services.

Deposits

The average balance of total retail deposits in Pesos reached Ps. 63,391 million as of December 31, 2016, with an interannual growth rate of 44%. The mix of transactional deposits and time deposits fluctuated throughout fiscal year 2016 in line with interest rate changes, and overall transactions accounted for 54% of total deposits for fiscal year 2016.

U.S. Dollar-denominated deposits grew by 431% in fiscal year 2016, reaching a total of Ps. 42,047 million as of December 31, 2016. This increase was directly driven by the Tax Amnesty Law, enacted in August 2016, which generated more than US$1,200 million in revenues.

From August 2016 to October 2016, more than 24,000 new accounts were opened due to the Tax Amnesty Law, placing the Bank at the forefront in terms of new accounts opened, while 80% of these new accounts received deposits.

The Online Banking channel increased its share of time deposits, reaching a volume of 34% of total time deposits of Banco Galicia. In addition, Office Banking offered the possibility to make time deposits online starting in June 2016, which allowed Retail SMEs to opt-in to perform such transactions via this channel.

Personal Loans

The Argentine Central Bank removed interest rate caps on personal loans in the later part of 2015, which increased credit issuances in the market. Banco Galicia experienced sustained growth in the number of personal loans granted in fiscal year 2016. The Bank experienced an increase of 66 basis points in market share (the fastest market-share growth rate as compared to its competitors) and reached Ps. 8,600 million of loans outstanding as of December 31, 2016. Banco Galicia automatically granted 80% of the loans it extended in fiscal year 2016. Additionally, in line with the Retail Banking business strategy, new specialized products and services were created in the Personal Loans segment.

The Online Banking division increased its market share by 22%, with a 271% increase as compared to the fiscal year ended December 31, 2015, and was ranked second among Banco Galicia’s sales channels .

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Cards and Promotions

The credit and debit card business continued its strong growth during 2016, with a 42% increase in purchases as compared to 2015, and over 230 million transactions conducted during the year. The Bank’s market share in the banking payment means of payment (i.e., credit and debit card business) market was 12.2% in 2016.

During fiscal year 2016, Banco Galicia issued over 478,000 primary cards and 369,000 additional cards, totaling 4.3 million authorized cards. With approximately 5,700 business agreements, Banco Galicia provides benefits to its customers at 12,000 stores across various industries throughout the country.

Consumption amounting to Ps. 5,700 million was financed through the “AHORA 12” (NOW 12 Installments) program in fiscal year 2016.

Quiero! (I Want!) Fidelity Program

Quiero!, is a program that rewards customers for using the Bank’s payment methods for purchasing products. The program continued to grow in 2016. As of December 31, 2016, Quiero! had approximately 1 million members.

The Quiero! Fidelity Program experiences greater penetration with high-income customers, who tend to spend a greater amount of money using credit cards. Also noteworthy is the program’s relatively high penetration levels with lower income customers, which we believe exists because the program provides easy access to rewards in exchange for points.

According to market research, in 2016 the Quiero! program continued to be the program with the most name recognition among consumers, both by the Bank’s own customers and those of its competitors. It was also described by such research as one of the best benefits programs in Argentina, broadly appreciated by customers who have redeemed points in exchange for rewards.

Three features of the program which were introduced in 2015 continued to grow in 2016:

The Quiero! Fidelity Program allows Banco Galicia to increase its operating efficiency by allocating resources to customers from higher-income segments as such clients receive more points as they spend more, and by mitigating the cost impact of the program on the Bank’s income statement both by increasing the customer’s usage of the card and by increasing the overall number of cardholders.

Digital

Banco Galicia continued its focus on its digital transformation in fiscal year 2016, with the aim of significantly improving the customer experience in terms of speed of service, simplicity and relevance of offerings in order to fulfill its mission of being considered among the top financial institutions in Argentina.

In 2016, the Bank continued to promote the use of digital channels, and a Digital Innovation Lab (LAB) was created with the aim of adopting the best practices of Fintech companies (companies that leverage technology to offer new financial services) by developing prototypes designed to provide more value to businesses.

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A new, technologically advanced mobile application (“app”) was launched in 2016, with included a format designed to significantly improve the customer experience, which caused an increase in downloads and usage of the app. As of December 31, 2016, 300,000 customers used the app. As of December 31, 2016, 36% of Banco Galicia’s customers who use digital channels use the app. The Bank’s sales strategy for customers and potential customers in the web and mobile environment was further developed in 2016 through the use of digital advertising and data models that result in systematic efficiency, thereby reducing conversion costs and increasing overall cost efficiency in these channels. The number of customers utilizing digital operations (both Mobile and Online Banking) reached 1,300,000, an increase of 30% as compared to the fiscal year ended December 31, 2015.

Banco Galicia was ranked the most searched bank in Argentina in 2016, and led the YouTube rankings with respect to most viewed videos posted by companies in the financial sector, accounting for 46% of total viewed videos in the financial sector for fiscal year 2016. Banco Galicia also focused on offering products through Facebook and developing new contest formats in 2016.

Branch Network

In 2016, a project to transform the Bank’s network of brick-and-mortar branches was initiated as part of the Bank’s Multichannel project, the aim of which was to develop a multi-format network to enhance efficiency in the Bank’s transformation and expansion processes by streamlining customer service in the network, utilizing new technologies and process designs and improving branch layout.

Twenty-three new branches were added to Banco Galicia’s network in fiscal year 2016: the Bank opened 10 traditional branches, 4 satellite branches, 5 “express” branches, 2 in house facilities and 2 new collection and payment centers for a total investment of Ps. 159 million.

Banco Galicia’s entire network of branches was migrated to the Centralized Operations Management model in 2016, which allows more time to develop value-add products for the customer.

With the goal of improving business productivity and performance, the Bank developed a new Comprehensive Management Approach as well as a new Customer Relationship Management (CRM) program, which the Bank believes will help improve the sales process and enhance customer satisfaction.

Furthermore, the Bank continued construction on a distribution network, which is designed to incorporate a modern design, videoconferences and other material that will contribute to increase brand awareness.

Red Galicia 24 and Self-Service Terminals

Apart from its branches, Banco Galicia uses Red Galicia 24 (Banco Galicia’s ATM and self-service terminals network), the bancogalicia.com portal, Galicia Servicios Móviles, its Retail Sales Unit, and the Commercial Planning area of its Customer Contact Center, which are service, transactional and sales channels focused on individual and corporate customers.

At the end of fiscal year 2016, Banco Galicia had 1,872 self-service pieces of equipment (942 ATMs and 930 terminals), which were distributed throughout branches, office buildings and other locations, such as gas stations, supermarkets and shopping malls.

The level of self-service transactions grew 7% in fiscal year 2016 as compared to the fiscal year ended December 31, 2015, and almost 116 million transactions were performed through ATMs and self-service terminals in 2016. The average withdrawal amount also increased by 10% in fiscal year 2016 as compared to fiscal year 2015.

During fiscal year 2016, 902 new pieces of self-service equipment were installed (153 ATMs and 749 self-service terminals), 83% of which resulted from the need for equipment renewal and 17% of which were installed to increase the number of self-service machines available for consumers. The Bank also focused on converting its ATMs in the second half of 2016 so that such machines could dispense Argentina’s new Ps.500 bills, which increased the ATMs’ loading capacity and improved quality of service.

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At December 31, 2016, all of the Bank’s self-service equipment were “smart” self-service terminals, which support envelope-free deposits and recognize and validate both cash and check deposits and payments.

Insurance

During fiscal year 2016, the Insurance segment experienced strong growth, introducing new products and experiencing growth in additional channels, which resulted in entry into more than 500,000 new insurance policies in 2016 and an increase in income of more than Ps. 120 million, as compared to fiscal year 2015. At December 31, 2016 Banco Galicia had underwritten approximately 1.6 million property and personal insurance policies.

The Insurance segment also experienced growth in existing sales channels, and focused on technological progress aimed to improve customer satisfaction and provide greater product segmentation.

As of December 31, 2016, the Bank had underwritten 55,000 policies related to unemployment insurance, and had also sold 100,000 policies related to cellular phone insurance. The Bank also experienced growth in protected sale insurance and theft insurance policies as compared to 2015. Finally, the Bank grew its sales of individual insurance products.

Banco Galicia continued strengthening its position as one of the leading banks in the marketing of insurance products in 2016, with a strong presence in most risk coverage areas.

Marketing Analytics

In 2016, Banco Galicia focused its marketing efforts through the use of the Real Time Decision (RTD) tool across its Online Banking platform, which Banco Galicia used in connection with incorporating additional products and offers to increase the number of new products used by consumers, as the tool enables automatic learning about customer preferences. Customer interest in loan and insurance offerings increased by 37% in fiscal year 2016 as compared to fiscal year 2015, which the Bank believes is a result of its marketing efforts.

As previously described, the Bank also implemented the new CRM program, which established centralized commercial actions and used predictive models and new campaigns to help improve the management of Bank employees.

Furthermore, the Bank implemented Coremetrics software in its websites as a web data capture tool and created a data lab to enable it to efficiently address problem areas within the business.

A 10% increase in open market data was made available to the Bank’s call center at a 17% lower per unit cost as compared to fiscal year 2015. Targeted communications grew 30% as compared to fiscal year 2015 and contact levels (which we use to refer to the percentage of emails or other messages sent that are read by our customers) increased by 26% in fiscal year 2016 as compared to fiscal year 2015.

Publicity and Image

Mass Media Campaigns

The Bank launched a number of mass media campaigns in 2016. “Marcos” and “Claudia” continued serve as spokespersons in commercials for Quiero! (I Want!), Quiero Viajes (Quiero Travel), personal loans, ¡Vamos los Jueves! (Let’s Go on Thursdays), and the Banco Galicia debit card. Bank’s marketing campaigns were recognized with several awards in 2016, such as the Effie Latin America, Effie Argentina, Ojo de Iberoamérica (The Eye of Latin America), the Buenos Anuncios Awards and the Jerry Goldenberg Award.

Banco Galicia remained a frontrunner in the Brand Impact Index, an index that measures the most successful commercials from a commercial standpoint, for several months throughout fiscal 2016. The Bank also experienced record levels of brand awareness in fiscal year 2016.

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Digital Communication

Banco Galicia continued its focus on its digital transformation in 2016, with the aim of encouraging customers to download its new app, focusing on online media campaigns and promoting self-service products such as tutorials through concerted communications efforts. The Bank also is the first Argentine bank to have an official, branded channel on Spotify.

Branches

The Bank focused on improving its branch image in 2016, primarily through a redesign project jointly developed by the Architecture Division and the Customer Experience Division, which focused on account signage issues, customer service, space optimization, digitally-oriented proposals, and high-impact support. The Bank plans to continue to focus on these objectives in 2017.

Consumption

Through its Regional Credit Card Companies and CFA, Banco Galicia offers financing for low- and mid-income consumer segments.

Regional Credit Card Companies (“Tarjetas Regionales”)

The companies devoted to the issuance of regional credit cards and the provision of financing transactions to consumers are subsidiaries of Banco Galicia through Tarjetas Regionales (Tarjeta Naranja and Tarjetas Cuyanas).

Through the Regional Credit Card Companies, Tarjetas Regionales is the largest non-bank credit card issuer in Argentina and one of the largest in Latin America, in each case, based on the number of credit cards issued. It is also one of the two largest merchant acquirers in Argentina and one of the largest credit card processors in Argentina. As of December 31, 2016, Tarjetas Regionales had more than 3.5 million active accounts, 10.0 million issued credit cards and more than 250,000 affiliated merchants. As of the same date, Tarjetas Regionales estimated that its market share of issued credit cards in Argentina was approximately 19.0% and of active accounts in Argentina was approximately 21.4%. As the credit card processor for all of its credit card operations, Tarjetas Regionales processes approximately 163 million transactions per year.

Tarjetas Regionales has a distinctive business model that it believes is well-suited to developing economies in Latin America and to the cultural background of its clients. Its business model of credit card issuance and related credit services focuses on the specific needs of lower- and lower-middle-income clients through personalized and attentive services using its extensive network of branches. Tarjetas Regionales’ client base is primarily in the Interior , where each of its brands has a leading presence in its coverage area. Its current expansion efforts in Argentina are focused on the Greater Buenos Aires and the Ciudad Autonoma de Buenos Aires (“CABA”).

In addition, through the Regional Credit Card subsidiaries, Tarjetas Regionales issues, operates and processes its own branded credit cards, the Tarjeta Naranja credit card and the Tarjeta Nevada credit card, which allow credit card holders to charge purchases of goods and services in the network of merchants that have agreed to accept these proprietary credit cards. As of December 31, 2016, these proprietary credit cards accounted for, on average, approximately 50% of its issued credit cards and approximately 69% in terms of its average monthly purchase volumes. Tarjetas Regionales also offers its clients international credit card brands such as Visa, MasterCard and American Express that are issued by Banco Galicia on its behalf. In addition to its credit card business, Tarjetas Regionales also extends personal loans, through the Regional Credit Card Companies, to its clients either for the account of the Regional Credit Card Companies or for the account of Banco Galicia at the election of the relevant Regional Credit Card Company. Tarjetas Regionales provides its products and services through an extensive network of 260 branches, client service centers and other points of sale strategically located in most major Argentine cities. Its branch network provides a critical service and payment interface for its clients, which allows it to provide targeted client service and form relationships with its clients and affiliated merchants.

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For a breakdown of the Regional Credit Card Companies’ revenues for the last three financial years, see Item 5.A. “Operating Results-Results by Segments-Regional Credit Cards”.

Compañía Financiera Argentina

CFA is the leading financial company in Argentina in the personal loan business. As of December 31, 2016, CFA’s assets were over Ps.5,925 million and its shareholders’ equity was Ps.1,223 million. CFA employed 1,164 people. With 57 branches and 37 points of sale throughout Argentina, CFA offers its products to 517,000 customers, who belong, in general, to the low-to-medium income segments, characterized by limited interaction with traditional banks. Such customers often seek a more simplified and quick processing regime for their loans and other banking products.

Main products:

Throughout the year, the Efectivo Sí trademark continued to be strengthened, mainly through advertising in major soccer tournaments organized by the Argentine Soccer Association.

CFA’s net income for fiscal year 2016 amounted to Ps.342 million (including the results of Cobranzas y Servicios in accordance with its 5% equity interest). At year end, its loan portfolio, net of allowances for loan losses, exceeded Ps.4,916 million, representing a 68% increase as compared to fiscal year 2015 and had strong portfolio quality ratios.

CFA’s objective is to secure, maintain and expand its leading position in the consumer finance market. During 2017, CFA expects to further grow and consolidate its customer portfolio and boost credit card circulation. With respect to financing, it will seek financing from the domestic capital market by issuing trusts and notes, and it will focus on increasing financing through time deposits at its branches.

For a breakdown of CFA’s revenues for the last financial year, see Item 5.A. “Operating Results-Results by Segments-CFA”.

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Financial Division

The Financial Banking Division of Banco Galicia includes the Commercial, Financial Institutions, Public Sector, Products, Information Management, and Support areas. Additionally, it is also responsible for the mutual funds business (FIMA), as it is the main distribution channel for FIMA mutual fund products.

Commercial Division

The Commercial Division is responsible for improving the Bank’s position in the Institutional Customer segment (which includes insurance companies and mutual funds), and acting as the investment channel for the Corporate segment.

The functions of the Commercial Division include reinforcing the cross-selling of financial products, developing new customer segments and encouraging the use of transactional products in order to promote development of commercial banking customers.

As a result of efforts made with its commercial banking customers, Banco Galicia led the NPS Indicators at a 37% NPX Index as of December 31, 2016.

The Commercial Division’s most important asset in fiscal year 2016 was Lebac, which recorded an exponential growth in trading volumes. Banco Galicia traded Ps. 301,103 million (94% Lebac biddings) in the primary market and Ps. 423,765 million (95% Lebac transactions) in the secondary market in fiscal year 2016.

The number of transactions handled by the Commercial Division increased by 73% as compared to fiscal year 2015; fiscal year 2016 started with 1,070 monthly transactions and ended with 1,852 monthly transactions, with an annual total of 17,800 transactions in fiscal year 2016.

Of note is the addition of the ANSES – Sustainability Guarantee Fund as a new customer, representing an average of Ps. 150,147 million held in its account.

Financial Institutions

The Financial Institutions Division is responsible, at an international level, for managing the Bank’s business relationships with correspondent banks, international credit agencies, official credit banks and export credit insurance companies, and, at domestic level, with banks, financial companies, exchange houses, and other entities that carry out related activities.

As in prior fiscal years, during fiscal year 2016 meetings were held with the most active foreign correspondent banks, through which the Bank channeled the different products and services offered to its customers. The growing offer of credit lines by banks in the correspondent banking segment, the International Finance Corporation (“IFC”) and the Inter-American Development Bank (“IDB”) helped the Bank meet letters of credit and standby letters of credit confirmation requests, as well as to meet its customers’ financing needs.

Additionally, under the framework of Argentina’s new policy of economic openness, Banco Galicia continued strengthening relationships and analyzing different business opportunities with multilateral agencies and official credit banks, such as the IFC, the IDB, the Netherlands Development Finance Company (the “FMO”), the Proparco, the National Economic and Social Development Bank (“BNDES”), the Andean Development Corporation (“CAF”), the German Investment Corporation (the “DEG”) and the KfW Group, among others, with the purpose of broadening the offer of mid- and long-term credit lines to finance sustainable investment projects. For example, in June 2016, the IFC approved a credit line worth US$ 130 million, and in December 2016 the IDB granted a credit line worth US$ 100 million, each with the aim of allocating such resources to provide long-term financing to SMEs to help finance sustainable energy projects in Argentina.

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Banco Galicia also re-established contacts with the main European export credit insurance companies in fiscal year 2016, such as Hermes, COFACE, SACE, and Ceste, among others, aiming to offer medium- and long-term credit lines to its customers for capital-goods imports.

Banco Galicia continued analyzing and identifying domestic business opportunities during fiscal year 2016, with the aim of forming long-term, steady relationships with such customers.

Public Sector

The Public Sector Division became part of the Financial Banking Division in January 2016, with its main responsibility being to develop the business relationship with customers that belong to the public sector segment by offering treasury solutions and comprehensive product offerings to such customers.

In order to build customer loyalty, Banco Galicia decided to establish a business presence in different strategic locations nationwide. The Public Sector team is made up of seven offices, with locations in the Autonomous City of Buenos Aires, Córdoba, Mendoza, Rosario, and Mar del Plata. A new customer service model was implemented in fiscal year 2016, which entails working closely with the Commercial division, the Banking Transaction Products division and with financial institutions’ advisors.

One of the Public Sector Division’s main initiatives during fiscal year 2016 was to set forth specific policies for Public-sector funding with the Credit and Risks Divisions. As a result of these changes, the holding and placement of fixed-income products, collections, payments, and foreign trade transactions grew exponentially, broadly exceeding budgeted targets. Accordingly, Banco Galicia continued to grow in the segment in fiscal year 2016.

Product Division

The main responsibilities of the Product Division are the management and administration of foreign currency positions, derivative instruments, government and corporate securities, all with the goal of building the Bank’s own portfolio and providing brokerage services to institutional, corporate and individual customers. The Product Division’s responsibilities also include developing and applying investment strategies, based on risk parameters determined by the board of directors of Banco Galicia. By providing comprehensive financial strategic advice, Banco Galicia was able to maintain a leadership position in capital markets in fiscal year 2016, offering debt origination and structuring aimed at debt issuers.

During fiscal year 2016, the loosening of restrictions in respect of the foreign exchange market liberalization caused a significant increase in trading volumes. In the wholesale market, the total volume traded among banks in the Mercado Abierto Electrónico (“MAE”) increased by 152% as compared to fiscal year 2015, from US$ 47,965 million to US$ 120,925 million, and the volume traded by Banco Galicia increased by 216% as compared to fiscal year 2015, from US$ 5,363 million in 2015 to US$ 16,925 million in 2016 (making it the second ranked Argentine bank as measured by trading volumes in the MAE). Banco Galicia operated a total trading volume in the futures market of US$ 5,880 in fiscal year 2016 (the second ranked Argentine bank as measured by amount of futures market trading in the MAE), and was ranked third in the Rosario Futures Exchange (“ROFEX”). Foreign trade volume transactions amounted to US$ 15,190 million in fiscal year 2016, increasing by 20% as compared to fiscal year 2015. U.S. Dollar trading transactions increased from US$ 1,007 million in fiscal year 2015 to US$ 3,098 million in fiscal year 2016.

The total volume traded in fixed income through the MAE increased by 74% as compared to fiscal year 2015, from US$ 157,205 million in fiscal year 2015 to US$ 273,949 million in fiscal year 2016. Banco Galicia remained the highest ranked Argentine bank in terms of fixed income trading volume, with an 84% increase as compared to fiscal year 2015, with US$ 42,808 million traded and a 15% market share as of December 31, 2016.

Banco Galicia maintained its position as the first place bank in terms of primary issuances in the MAE in fiscal year 2016, with a total issued notes volume of Ps. 7,720 million in fiscal year 2016. In sub-sovereign securities, the Bank fell to third place, with an issued volume of Ps. 7,738 million in fiscal year 2016, while rising one place in the ranking to fourth place in the trusts category, with an issued volume of Ps. 2,140 million in fiscal year 2016.

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Customer Experience

Banco Galicia replaced the Quality Assurance Division with the Customer Experience Division in fiscal year 2016. The goal of this important strategic decision is to increase customer satisfaction, thereby leading such customers to recommend Banco Galicia to other potential customers. The Customer Experience Division’s goals are to build a customer-oriented culture in order to provide the best customer experience based on in-depth knowledge of their financial needs, and to provide easy access to a motivated team of experts. The Customer Service Division is comprised of the following sub-divisions:

Analysis and Indicators Division

The Analysis and Indicators Division guides the process of setting NPS goals, analyzing potential weaknesses of the Bank as compared to its competitors, and the prioritization of on-going customer service initiatives. Furthermore, the area defines and leads the measurement of all the Bank’s customer indices, while also providing the Bank’s leaders with meaningful information for critical decision-making. During 2016, NPS benchmarks were improved as a result of more reliable metrics, positively impacting on the overall Key Performance Indicators (“KPIs”) of the organization.

NPS Operation Division

The NPS Operation Division is focused on designing, improving and operating an ongoing improvement system across all relevant channels and incidents, and is oriented towards all of the Bank’s segments. It is responsible for assessing, managing, distributing and following up on opportunities for improvement obtained through NPS, and organizing visits to the Bank’s network of branches. During 2016, 13 areas were visited, including 20 branches with a low NPS rating, 22 Corporate Banking Centers, and all of the points of sale locations. 272 opportunities for improvement were assessed, of which, as of December 31, 2016, 135 were completed, implemented and communicated, 31 were referred to other areas as part of strategic projects (delivery and claims), 80 were currently under development, and 26 were rejected due to their low impact nature.

Initiatives Division

The Initiatives Division is responsible for leading priority and cross-section projects to improve customer experience. Two major transformation processes were implemented during fiscal year 2016:

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Customer Vision Division

The Customer Vision Division guides the cultural development of the Bank’s management and employees, with the goal of improving the Bank’s training, recruitment and promotion practices to help create a customer-oriented culture.

Galicia Seguros

Galicia Seguros is a provider of a variety of property and casualty and life insurance products. Its most important line of business is group life insurance, including employee benefit plans and credit related insurance. With regard to property and casualty insurance products, it primarily underwrites home and ATM theft insurance. Galicia Retiro provides annuity products, and Galicia Broker is an insurance broker. In the 2012 fiscal year, Galicia Seguros, together with three other insurance companies, created Nova Re Compañía Argentina de Reaseguros S.A., which aims to increase the reinsurance offers in the Argentinean market. These companies operations are all located in Argentina.

Total insurance production of the aforementioned insurance companies amounted to Ps.3,429 million during 2016, 35% higher than the volume of premiums of the previous year (Ps.2,544 million).

This increase in insurance production was recorded mainly for Galicia Seguros, with Ps.885 million more premiums written than in the same period of the previous fiscal year. As regards Galicia Seguros’ business transactions, the focus was placed on continuing to increase the company’s turnover and sales, which in 2016 amounted to Ps.1,059 million of annualized premiums. This represented a 49% growth as compared to the previous year, thus increasing the insurance policy lapse ratio and extending the types of coverage offered by adding insurance policies in new lines of business.

Law No. 26,425 that created the Argentine Social Security Integrated System (Sistema Integrado Previsional Argentino) brought an end to pension-linked life annuities, the main product marketed by Galicia Retiro. Consequently, the company’s main objective is to efficiently administrate current business and to analyze whether or not to re-launch new voluntary individual and group retirement products.

Within the current economic framework, measures aimed at complying with the goals established in the Business Plan will continue during 2017.

Other Businesses

Galicia Administradora de Fondos

This is the company that manages the FIMA family mutual funds that are distributed by Banco Galicia through its various channels (network of branches, home banking and investment centers, among others). The company’s team is comprised of asset management professionals the goal of whom is to manage the FIMA family funds and to meet the demands of the individuals, companies and institutions the company serves.

During fiscal year 2016, the market volume for mutual funds increased 52%, primarily due to bond funds, amounting to Ps. 323,037 million as of the end of 2016. The total assets of the FIMA family mutual funds increased 105.4% from the previous fiscal year, reaching, as of December 31, 2016, a volume of Ps.37,329 million, representing a market share of 11.6%. This increase in volume took place in several customer segments, including mid-sized companies and individuals, particularly in respect of the FIMA Ahorro Pesos, FIMA Ahorro Plus, FIMA Renta en Pesos, FIMA Renta Plus and FIMA Renta Dólares I funds.

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The following funds were launched during fiscal year 2016: FIMA MIX I and FIMA Renta Dólares I. At December 31, 2016, FIMA Renta Dólares I reached US$ 141.7 million in investments. On December 28, 2016, the FIMA Renta Dólares II fund was formed, which will mainly invest in domestic bonds issued in U.S.-Dollars, thereby supplementing the Bank’s offering of U.S. Dollar-denominated funds.

During the fiscal year, Galicia Administradora de Fondos optimized the financial performance of its liquid assets. In this regard, investments were made in the same FIMA mutual funds it manages.

The outlook for 2017 foresees a continued growth in mutual funds and the development of business activity within the framework of the new Capital Markets Law.

Net Investment:

This company has performed its activities in the areas of intercompany e-commerce, with the purpose of creating and exchanging synergies with Banco Galicia’s business activities.

During the 2011 fiscal year, the shareholders of Net Investment decided to amend the corporate purpose in order to be able to invest in additional companies in related, accessory and/or supplementary activities.

For fiscal year 2017, the board of directors of Net Investment is analyzing business alternatives and opportunities.

Galicia Warrants

This company is a leading company in the deposit certificates and warrants issuance market. It has been conducting transactions since 1994, supporting medium and large companies with respect to stock custody. Galicia Warrants’ main objective is to enable its customers to access credit and financing secured by the property kept under custody. Galicia Warrants’ main customers belong to the agricultural, industrial and agro-industrial sectors, as well as exporters and retailers. In fiscal year 2016, Galicia Warrants recorded an income from services of Ps. 118.5 million and a net income of Ps.31.6 million.

For a breakdown of the other businesses’ revenues for the last three financial years, see Item 5.A. “Operating Results-Results by Segments-Other Grupo Galicia Businesses.”

Competition

Due to our financial holding structure, competition is experienced at the level of our operating subsidiaries. We face strong competition in most of the areas in which our subsidiaries are active. For a breakdown of our total revenues, for each of the past three fiscal years, for the activities discussed below (i.e., banking, regional credit cards, CFA personal loans and insurance), see Item 5.A. “Operating Results-Results by Segments.”

Banking

Banco Galicia faces significant competition in all of its principal areas of operation from foreign banks operating in Argentina (mainly large retail banks which are subsidiaries or branches of banks with global operations), Argentine national and provincial government-owned banks, private-sector domestic banks and cooperative banks, as well as non-bank financial institutions.

With respect to private-sector customers, Banco Galicia’s main competitors are large foreign banks and certain domestically-owned private-sector banks. Banco Galicia also faces competition from government-owned banks.

Banco Galicia’s estimated market share of private-sector deposits in the Argentine financial system was 9.92% as of December 31, 2016, as compared to 9.40% as of December 31, 2015 and 8.79% as of December 31, 2014.

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With respect to loans to the private sector, Banco Galicia’s Argentine market share was 10.12% as of December 31, 2016, as compared to 9.68% and 8.76% as of December 31, 2015 and December 31, 2014, respectively.

According to the information published by the Argentine Central Bank, as of October 31, 2016, Banco Galicia was the second largest private-sector bank as measured by its assets, its deposits and its loan portfolio and ranked third in terms of net worth.

Banco Galicia believes that it has a strong competitive position in retail banking, both with respect to individuals and small and medium-sized companies. Specifically, Banco Galicia believes it is one of the primary providers of financial services to individuals, the primary private-sector institution serving the small and medium-sized companies sector, and has traditionally maintained a leading position in the agriculture and livestock sector.

Argentine Banking System

As of December 31, 2016, the Argentine financial system consisted of 78 financial institutions, of which 63 were banks and 15 were financial non-bank institutions (including finance companies, credit unions and savings and loans associations). Of the 63 banks, 13 were Argentine national and provincial government-owned or related banks. Of the 50 private-sector banks, 33 were private-sector domestically-owned banks and 17 were foreign-owned banks (i.e., local branches or subsidiaries of foreign banks).

As of December 31, 2016, the top 10 banks, in terms of total deposits (excluding Argentine national and provincial government-owned banks), were: Banco Santander Río, Banco Galicia, BBVA Banco Francés, Banco Macro, Credicoop, HSBC Bank and Patagonia. Banco Galicia, Banco Macro and Credicoop are domestically-owned banks and the others are foreign-owned banks. According to information published by the Argentine Central Bank as of December 31, 2016, private-sector banks accounted for 53.1% of total deposits and 65.3% of total net loans in the Argentine financial system. As of the same date, financial institutions (other than banks) accounted for approximately 0.3% of deposits and 3.1% of net loans in the Argentine financial system.

As of December 31, 2016, the largest Argentine national and provincial government-owned or related banks, in terms of total deposits, were Banco Nación and Banco de la Provincia de Buenos Aires. Under the provisions of the Financial Institutions’ Law, public-sector banks have comparable rights and obligations to private banks, except that public-sector banks are usually chosen as depositaries for public-sector revenues and promote regional development and certain public-sector banks have preferential tax treatment. The bylaws of some public-sector banks provide that the governments that own them (both national and provincial governments) must guarantee their commitments. According to information published by the Argentine Central Bank, as of Decemberr 31, 2016, government-owned banks and banks in which the national, provincial and municipal governments had an ownership interest accounted for 46.7% of deposits and 31.6% of loans in the Argentine financial system.

Consolidation has been a dominant theme in the Argentine banking sector since the 1990’s, with the total number of financial institutions declining from 214 in 1991 to 78 as of December 31, 2016, with the ten largest banks holding 77.0% of the system’s deposits from the private sector and 70.0% of the system’s loans to the private sector as of December 31, 2016.

Foreign banks continue to have a significant presence in Argentina, despite the fact that the number of these financial institutions decreased from 39 at the end of 2001 to 17 as of December 2016, and the fact that their share of total deposits has decreased since the 2001-2002 financial crisis while the share of domestic private-sector banks has increased.

The Argentine banking sector focuses on transactional business, and lacks a robust supply of medium and long-term lending. Local financial system deposits and loans are equivalent to 24% and 13% of the Gross Domestic Product (GDP) respectively, well below those same ratios for other countries in the region.

To promote the growth of the financial system, the Argentine Central Bank (BCRA) aims to achieve low and stable inflation by reducing the money supply with positive real interest rates, as well as with other measures. In

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addition to these goals, the BCRA is implementing an agenda that focuses on full banking service use (through the offer of free savings accounts and money transfers), effective communication of the cost of all services, innovation and increased competition. To boost savings in domestic currency and long-term lending (mortgage loans in particular), the monetary authority has introduced instruments denominated in Housing Units (Unidades de Vivienda – UVAs), an instrument to adjust deposit and loans by inflation.

Regional Credit Cards

In the consumer loan market, the Regional Credit Card Companies compete with Argentine banks and other financial institutions that target similar economic segments. The main players in this segment include Banco Supervielle, Banco Columbia, Banco Comafi, Banco Credicoop, Banco Macro, Banco MasVentas, Banco Municipal de Rosario, Banco Nación (Nativa card), Banco de Córdoba (Cordobesa card), Cabal card, tarjeta shopping card and CFA (Efectivo Si). Historically, certain international banks with presence in Argentina have attempted to target consumers in these economic segments and have been, to date and for the most part, unsuccessful.

In order to compete effectively at a national and regional level, the Regional Credit Card Companies target low- to middle-income clients by offering personalized services in each region, focusing their commercial efforts mainly on medium- and low-income segments. While other Argentine credit card issuers and consumer loan providers focus on earning interest on outstanding personal loans and credit card balances, the Regional Credit Card Companies also focus on and have access to additional sources of revenues including merchant fees and commissions, which allow them to offer competitive pricing and financing terms. Furthermore, unlike other credit card issuers in Argentina, approximately 60% of the Regional Credit Card Companies’ clients pay their credit card bill through their branch network. The broad geographical reach of their distribution network, which is the second largest in Argentina, has allowed the Regional Credit Card Companies to establish a local presence in all the provinces of Argentina.

The Regional Credit Card Companies believe that their diversified and consistent funding sources, significant network of branches, robust information technology infrastructure, relationships with over 250,000 merchants and the brand recognition they enjoy provide them with a competitive edge to consolidate and expand their market share in their target market segment, making it difficult for new players to effectively compete in this market segment on a national scale.

Compañía Financiera Argentina

CFA markets all of its financial products mainly to medium- and low-income segments. CFA’s main competitors are: Banco Cetelem, Banco Columbia, Banco de Servicios y Transacciones, Cooperativa la Capital del Plata, Caja de Crédito Cuenca, Banco de Servicios Financieros, Banco Supervielle and Banco Sáenz (Frávega Group).

CFA also faces competition from certain entities which render non-regulated services, or small chains, located in less populated cities. Some big chains of retailers also offer their own financing, such as Garbarino, Frávega, Megatone and Riveiro, financed through the issuance of financial trusts.

Insurance

Sudamericana’s subsidiaries face significant competition since, as of December 2016, the Argentine insurance industry was comprised of approximately 186 insurance companies, 16 of which were dedicated exclusively to annuities. Subsidiaries of foreign insurance companies and the world’s largest insurance companies with global operations are among these companies.

During 2016, the insurance industry continued growing. Production amounted to Ps.211 billion, 37% higher than the level recorded for the period before.

Out of the total insurance production, 81% relates to property insurance, 17% relates to life and personal insurance, and 2% relates to retirement insurance.

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Within the 81% corresponding to property insurance, the automotive insurance segment continues to be the most significant segment, representing 45%, followed by the workers’ compensation segment, representing 35%.

Within the life insurance segment, the group life insurance segment is the most significant, representing 69%, followed by individual life insurance, representing 14%, and personal accident insurance, representing 12%.

As of December 31, 2016, based on internal studies undertaken by Galicia Seguros it is estimated that Galicia Seguros ranked fourth in terms of net premiums for life insurance policies underwritten and first in terms of net premiums for home insurance policies underwritten and in terms of net premiums for theft insurance policies underwritten.

Sales and Marketing

Banco Galicia markets all of its financial products and services to high-, medium- and medium- to low-income individuals, including loans, insurance and the FIMA family of mutual funds, among other products, through its branch network, which operates online in real time. Within the Bank’s branches, the sales force is specialized by type of customer and by customer segment. Banco Galicia’s sales policy encourages tellers to perform sales functions as well. Wealthy individuals who are private banking customers are served by specialized officers and a specialized network of service centers, including a head office facility.

Commercial and investment banking services to large corporations and other entities are provided in a centralized manner. Branch officers are responsible for Banco Galicia’s relationship with middle-market and small businesses and most of its agriculture and livestock sector customers. Banco Galicia has also established specialized centers that concentrate on providing service to businesses, which are distributed across the country and located in main cities of the Interior and certain customer companies’ facilities.

All of Banco Galicia’s individual and corporate customers have access to Banco Galicia’s electronic distribution channels, including its ATM and self-service terminals network, a multifunction call center, an e-banking website (www.bancogalicia.com) and a mobile banking service platform (Galicia Móvil).

Banco Galicia is the leading Argentine bank in terms of relevance on social networks. Customers use social networks as a means to talk to Banco Galicia quickly, effectively and openly. Banco Galicia consistently focuses on adapting to the variety of situations that result from the use of social media, using these opportunities as a chance to improve its relationship with its customers. Through its work on the digital platform, Banco Galicia has established an excellent reputation regarding its online services, providing not only traditional services, but also involving the use of social networks, cellular phones and transactional, informative and communicative services, with the purpose of promoting the Bank’s business and establishing effective channels of communication with its current and potential customers. Banco Galicia is customer service-oriented and assigns great importance to its customer service model, constantly seeking to improve its customer service.

Banco Galicia has a segmented marketing approach and designs marketing campaigns focused on specific segments of Banco Galicia’s customer base. Banco Galicia’s marketing strategy is also focused on the development of long-term relationships with customers based on a deep and increasing knowledge of those customers. As part of this client-oriented strategy, Banco Galicia implemented a customer relationship management technology.

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Banco Galicia considers quality of service and providing differentiating experiences to its clients as the main elements capable of distinguishing it from competitors. In order to measure these indicators, Banco Galicia periodically performs surveys, with positive results in recent years, showing high customer satisfaction and recognition.

The Regional Credit Card Companies market their products and services through a network of branches and service centers, the size of which depends on the size of the locations in which they operate. The Regional Credit Card Companies’ culture is strongly client service-oriented and assigns great importance to quality of customer service. Sales officials receive intensive training in personalized sale of the companies’ products and quality of service, given that the bulk of sales is conducted on a one-on-one basis. Quality of service at the branches is permanently monitored by third parties and availability is enhanced through extended business hours. Each of the companies has a website through which they conduct sales, receive customers’ requests (such as requests for statements, loans or increases in the credit limits assigned and new cards, among others), and provide information on and promote products. These sites include a link that allows payments to be made. In addition, Tarjeta Naranja has a website aimed at selling products associated with its primary merchants. Similarly, Tarjetas Cuyanas also has a website. Each company has a call center, through which sales, post-sales and collection functions are performed.

CFA markets its products through a network of 57 branches and 37 points of sale, located throughout Argentina. The company leads the personal loan business among financial institutions in Argentina and offers its products to customers who belong, in general, to the low-to-medium income segments, characterized by limited interaction with traditional banks. As such, CFA offers its product “ Efectivo Si Consumer Loans ” in approximately 400 active merchants, while the agreements are offered out of the branches through different channels. Such customers often seek a more simplified and quick processing regime for their loans and other banking products.

Sudamericana’s subsidiaries mainly use Banco Galicia’s, the Regional Credit Card Companies’ and CFA’s distribution networks to market their products. They also use Galicia Broker sales officers, and Sudamericana has its own telemarketing center.

Property

The following are our main property assets, as of December 31, 2016:

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As of December 31, 2016, our distribution network consisted of:

Capital Investments and Divestitures

During 2016, our capital expenditures amounted to Ps.2,827 million, distributed as follows:

During 2015, our capital expenditures amounted to Ps.1,987 million, distributed as follows:

During 2014, our capital expenditures amounted to Ps.1,170 million, distributed as follows:

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These capital expenditures were made mainly in Argentina.

During the 2012 fiscal year, Galicia Seguros invested Ps.12 million for the formation of a reinsurance company (Nova Re Compañía Argentina de Reaseguro S.A.), controlling 39% of the capital stock and voting rights of such company.

In October 2013, Galicia Seguros approved the sale of its 4% ownership interest in Nova Re Compañía Argentina de Reaseguro S.A. to Reaseguradora Patria S.A., a Mexican reassurance company. This transaction was finalized in January 2016 and Galicia Seguros continued to own 35% of Nova Re following the consummation of the sale.

As a result of a number of acquisitions of shares in the market, since December 16, 2013, Grupo Financiero Galicia increased its ownership of outstanding shares in and voting rights for its subsidiary Banco Galicia to 95%, reaching a position of nearly total control according to Argentine regulations. On December 19, 2013, Grupo Financiero Galicia announced that it had finalized the merger of Lagarcué S.A. and Theseus S.A. into Grupo Financiero Galicia, further increasing its ownership interest in Banco Galicia by 4.5% (which was previously owned by Lagarcué S.A. and Theseus S.A). As a result of the foregoing transactions, as of the year ended December 31, 2013, Grupo Financiero Galicia controlled 99.6% of the capital stock of Banco Galicia.

On February 25, 2014, Grupo Financiero Galicia resolved to issue an offer to acquire the 2,123,962 shares of Banco Galicia owned by third parties at a price of Ps.23.22 per share. On April 24, 2014, said transaction was approved by the CNV and on July 14, 2014, it was incorporated by the Argentine Superintendency of Corporations. On August 4, 2014, the above approval in respect of such acquisition was made part of the public record, and, as a consequence of this acquisition, Grupo Financiero Galicia currently owns 100% of the shares of the Bank.

On April 15, 2014, Banco Galicia sold its interest in Galicia Administradora de Fondos to Grupo Financiero Galicia, for Ps.39 million.

During May 2014, the shareholders of Tarjetas del Mar approved a capital increase of Ps.32 million, which was fully subscribed for by Sociedad Anónima Importadora y Exportadora de la Patagonia. As a result, the Bank has a 58.8% equity interest in Tarjetas del Mar, while CFA holds a 1.2% and Sociedad Anónima Importadora y Exportadora de la Patagonia holds the remaining 40%.

During the third quarter of fiscal year 2014, the Bank transferred to Visa Argentina S.A. its equity investment in Banelco S.A., for Ps.40 million.

On October 14, 2014, Tarjeta Naranja executed the final agreement to sell its equity interest in Tarjeta Naranja Perú, equivalent to 24% of the capital stock, to Grupo Crédito S.A. for US$900,000. The shares were sold as of December 31, 2014.

Investment planning

We have budgeted capital expenditures for the fiscal year ending December 31, 2017, for the following purposes and amounts:

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These capital expenditures will be made mainly in Argentina.

Management considers that internal funds will be sufficient to finance fiscal year ended December 31, 2017 capital expenditures.

Selected Statistical Information

You should read this information in conjunction with the other information provided in this annual report, including our audited consolidated financial statements and Item 5. “Operating and Financial Review and Prospects”. We prepared this information from our financial records, which are maintained under accounting methods established by the Argentine Central Bank under Argentine Banking GAAP, and do not reflect adjustments necessary to reflect the information in accordance with U.S. GAAP.

The exchange rate used in translating Pesos into Dollars, which is used in calculating the convenience translations included in the following tables is the Reference Exchange Rate published by the Argentine Central Bank, which was Ps.15.8502, Ps. 13.0050 and Ps. 8.5520 per US$1.00 as of December 31, 2016, December 31, 2015 and December 31, 2014, respectively. The exchange rate translations contained in this annual report should not be construed as representations that the stated Peso amounts actually represent or have been or could be converted into Dollars at the rates indicated or any other rate. See Item 3. “Key Information-Exchange Rate Information”.

Average Balance Sheet and Income from Interest-Earning Assets and Expenses from Interest-Bearing Liabilities

The average balances of interest-earning assets and interest-bearing liabilities, including the related interest that is receivable and payable, are calculated on a daily basis for Banco Galicia, Galicia Uruguay, Tarjetas Regionales and CFA on a consolidated basis. The average balances of interest-earning assets and interest bearing liabilities are calculated on a monthly basis for Grupo Financiero Galicia and its other non-banking subsidiaries.

Average balances have been separated between those denominated in Pesos and those denominated in Dollars. The average yield/rate is the amount of interest earned or paid during the period divided by the related average balance.

Net gains/losses on government securities and related differences in quoted market prices are included in interest earned. We manage our trading activities in government securities as an integral part of our business. We do not distinguish between interest income and market gains or losses on our government securities portfolio. The non-accrual loans balance is included in the average loan balance calculation.

The following table shows our consolidated average balances, accrued interest and nominal interest rates for interest-earning assets and interest-bearing liabilities for the fiscal year ended December 31, 2016.

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