Grupo Financiero Galicia(GGAL) - 2023 Q4 - Annual Report

Funding and Financial Position - As of December 31, 2023, total funding amounted to Ps.10,216,058 million, a decrease from Ps.10,488,176 million in 2022[984] - Deposits represented 56% of total funding as of December 31, 2023, down from 64% in 2022, with a 14% decrease in the deposit base[987] - Time deposits decreased significantly from Ps.2,636,766 million in December 2022 to Ps.1,160,459 million in December 2023, a reduction of Ps.1,476,307 million[987] - Outstanding debt securities as of December 31, 2023, were Ps.298,328 million, a decrease of 15% from Ps.350,982 million in 2022[989] - The total amount of financing from local financial institutions was Ps.102,023 million, with Ps.94,611 million corresponding to agreements with banks[988] - As of December 31, 2023, shareholders' equity was Ps.2,017,244 million, representing 20% of total funding[984] - The breakdown of debt securities included Ps.71,059 million in Peso-denominated debt and Ps.227,269 million in foreign currency-denominated debt[991] - Total contractual obligations as of December 31, 2023, amount to 1,636,280 million Pesos, with 1,426,799 million Pesos due in less than one year[1008] Income and Cash Flow - In fiscal year 2023, net cash generated by operating activities amounted to Ps.1,667,301 million, a decrease of 7.1% compared to Ps.1,794,287 million in 2022[1076] - Net cash used in investing activities in 2023 was Ps.81,858 million, primarily due to the acquisition of property, plant, and equipment for Ps.74,019 million[1083] - Net cash generated in financing activities in 2023 was negative at Ps.229,764 million, with significant payments of Ps.373,780 million on loans from local financial institutions[1087] - The effect of the exchange rate on consolidated cash flow in 2023 was Ps.1,034,032 million, an increase of 84.5% compared to Ps.559,889 million in 2022[1090] - Cash and cash equivalents at the end of 2023 were Ps.3,267,340 million, down from Ps.4,131,561 million at the end of 2022[1076] - The company reported a monetary loss related to cash and cash equivalents of Ps.3,253,932 million in 2023, compared to Ps.2,142,478 million in 2022[1076] - Income before taxes from continuing operations in 2023 was Ps.543,010 million, significantly higher than Ps.204,099 million in 2022[1079] - The company experienced a net increase in cash generated from net loans and other financing to the non-financial private sector of Ps.584,705 million in 2023[1079] Strategic Initiatives and Market Outlook - Banco Galicia aims to strengthen its market leadership by focusing on product quality and operational efficiency[1031] - The company anticipates an increase in financial income in 2024 due to expected real interest rate increases[1034] - Fee income is projected to rise in 2024 due to efficiencies generated in business lines, despite regulatory price limitations[1036] - The ongoing digital transformation is expected to enhance efficiency and stabilize administrative expenses compared to the previous year[1038] - Banco Galicia's liquidity and solvency levels are sufficient to cope with potential macroeconomic challenges in 2024[1039] - Naranja X faces challenges due to Argentina's economic volatility, with potential drops in transaction volumes and service revenue expected in 2024[1040] - The company aims to enhance sales and billing volumes while maintaining adequate profitability levels through strategic initiatives[1046] - Grupo Financiero Galicia plans to continue expanding its business through Banco Galicia and Naranja X's customer channels, focusing on new product offerings[1044] Governance and Compliance - The Board of Directors consists of 15 members, with 2 female and 13 male directors, reflecting a gender diversity ratio of approximately 13.3% female representation[1137] - The Audit Committee held twelve meetings during 2023, ensuring compliance with CNV and Nasdaq requirements[1140] - The Executive Committee is responsible for strategic planning and risk assessments, comprising members including Eduardo J. Escasany and Pablo Gutiérrez[1141] - The Nomination and Compensation Committee consists of 5 regular directors, including 2 independent directors, focusing on succession planning and compensation standards[1143] - The company has established a Disclosure Committee to review and approve controls on public financial disclosures, in compliance with the U.S. Sarbanes-Oxley Act[1144] - The Supervisory Committee is composed of three syndics and three alternate syndics, responsible for ensuring compliance with Argentine law and analyzing financial statements[1145] - The company has a strong emphasis on ethics and integrity, monitored by the Ethics, Conduct and Integrity Committee, chaired by independent director Miguel Maxwell[1142] - The Audit Committee includes members with extensive management experience, ensuring financial literacy and oversight of internal controls[1139] Organizational Structure and Leadership - Banco Galicia's organizational structure includes a CEO reporting to the Board of Directors, with key officers in finance, risk, and investor relations[1154] - The company has a diverse board, with no underrepresented individuals or LGBTQ+ members disclosed[1137] - The regular and alternate directors are elected for a maximum term of three years, ensuring governance accountability[1134] - The board of directors of Banco Galicia consists of seven members and three alternate directors, with terms expiring between April 2025 and April 2027[1164] - Sergio Grinenco has been the Chairman of the Board since April 2012, with his current term ending in April 2026[1166] - Raúl Héctor Seoane serves as Vice Chairman and has been with Banco Galicia since 1988, also with a term ending in April 2026[1169] - The Chief Executive Officer, Mr. Fabián Kon, has been in his position since July 2020 and previously served as the CEO of Galicia Seguros[1160] - The Chief Financial Officer & Compliance Officer, Mr. Diego Rivas, was appointed in May 2021 and has been associated with Banco Galicia since 1987[1161] - The Chief Risk Officer, Mr. Bruno Folino, has been with Banco Galicia since 1997 and was appointed to his current role in May 2021[1162] - The Investor Relations Officer, Mr. Pablo Firvida, has extensive experience in investor relations and was appointed in July 2020[1163]