Grupo Financiero Galicia (BYMA/NASDAQ:GGAL) posted a net gain of ARS 11.6 billion in 2Q19, 316% y/y and 28% higher q/q. As it is usually the case, such result is mostly attributable to its stake in Banco Galicia, which obtained a profit of ARS 10.1 billion (415% YoY; 29% QoQ).
Turning to Banco Galicia’s result, net financial income dropped 83% (-55% QoQ) in 2Q19, due to a stagnant credit market and higher funding costs, especially in the case of certificates of deposits. This way, the financial margin from the commercial banking business remains on a negative trend.
Securities income, in contrast, continued its upward trend, and today accounts for nearly half of the bank’s financial income, amounting to over ARS 17.5 billion (+ARS 16.1 billion YoY; 15% QoQ). This was the result of a larger position in Central Bank Leliqs and higher yields on these securities.
The above-mentioned performance reflects a credit market that remains stagnant. While deposits showed no growth in the last quarter, private-sector credit fell 2%. In terms of asset quality, the ratio of non-performing loans to total credit stood at 4.6% as of June 2019 (2.3% in 2Q18; 3.9% in 1Q19), with loan-loss coverage of 108%.