Deposit Interest Rates 11

Financial Sector Argentina

August 2015

Produced by:

I. Financial Sector Overview 16. Loan Portfolio Quality 1. Financial Sector Highlights 17. Government Policy 2. Economic Importance 18. Basel III – Capital Adequacy Ratio 3. Foreign Direct Investment III. Insurance Sector II. Banking Sector 1. Insurance Sector Forecast 1. Deposits & Loans Forecast 2. Insurance Sector Structure – Market Share 2. Banking Sector Structure – Market Share 3. Insurance Sector Structure – Number of Enterprises 3. Banking Sector Structure – Number of Enterprises 4. Insurance Sector Structure – Branches & Agencies 4. Banking Sector Structure – Branches and ATMs 5. Insurance Penetration & Density Rates 5. Banking Sector Descriptives 6. Insurance Sector Profitability 6. Banking Sector Profitability 7. Insurance Sector Solvency 7. Banking Sector Liquidity & Efficiency 8. Insurance Sector Efficiency 8. Deposit Base 9. Insurance Premiums Issued 9. Private Sector Local Currency Deposits 10. Insurance Premiums Issued (cont’d) 10. Deposit Interest Rates 11. Insurance Policies Issued 11. Loans 12. Insurance Claims 12. Loans (cont’d) 13. Reinsurance 13. Private Sector Loans 14. Government Policy 14. Loan Interest Rates 15. Delinquency Rates

IV. Main Players 1. Top M&A Deals 2. M&A Activity, 2014-H1’2015 3. Banco de la Nación Argentina 4. Banco de la Nación Argentina (cont’d) 5. Banco de la Provincia de Buenos Aires 6. Banco de la Provincia de Buenos Aires (cont’d) 7. Banco Santander Río S.A. 8. Banco Santander Río S.A. (cont’d) 9. Banco de Galicia y Buenos Aires S.A. 10.Banco de Galicia y Buenos Aires S.A. (cont’d) 11.BBVA Banco Francés S.A. 12.BBVA Banco Francés S.A. (cont’d) 13.Banco Macro S.A. 14.Banco Macro S.A. (cont’d) 15.HSBC Bank Argentina S.A. 16.HSBC Bank Argentina S.A. (cont’d) 17. Allianz Argentina Compañía de Seguros S.A. 18.Sancor Cooperativa de Seguros Ltda.

Overview After experiencing a strong shock during the 2001-2002 macroeconomic crisis, the financial sector in Argentina has recovered fully to expand at a CAGR of 13% between 2009 and 2014, outperforming the overall GDP growth of 4.3%. Unlike most other countries in Latin America and due to the numerous financial crises, high inflation and local currency devaluation, the Argentinean financial system remains underdeveloped. The local population tends to save in currencies different from the Argentine peso, which resulted in marked capital outflow of USD 87.2bn between 2007 and Q1 2015. These funds are being kept in safety boxes in commercial banks in the country or held in overseas accounts. As a result, the financial system is mainly transactional (fees represent an important chunk of banks’ income) and is small compared to size of the national economy. Notably, the share of total deposits and loans in the country’s GDP reached only 18.4% and 13.3%, respectively, as of December 2014. In spite of this, the financial system remains profitable, well capitalised, liquid and with adequate risk exposure. The average ROE surpassed 34% in 2014, while liquid assets represented 26.2% of total deposits and non-performing loans amounted to only 1.8% in December 2014.

Sector Structure

The main players in the banking sector are both private (domestic or foreign-owned) and state-owned banks. While the latter have a prominent position in terms of market share, mainly due to the solidly placed state-run Banco de la Nacion (given its unmatched geographical reach), private banks have proved increasingly active since 2012. Although there is no clear-cut differentiation between the public and private entities in terms of strategy and target client base, they tend to specialise in different business segments. Public banks are financial agents of the national and provincial governments and they have a strong sway in agribusiness, for example. Private banks are mostly focused on consumer financing and short-term corporate loans.

Prospects

The fact that the financial system remains underdeveloped suggests a strong growth potential should the right type of macroeconomic policies and regulatory framework be deployed by the newly appointed government, following the elections in October 2015. For this to bear fruit, a more vigilant control over inflation and more stable and predictable policies are required. This would allow entities to expand through organic growth and compete for services to reach the large unbanked population. The huge stock of assets in terms of deposits and financial investments held by Argentines overseas (approximately USD 226bn as of December 2014, equivalent to 42% of GDP, according to the official statistics provided by the National Institute of Statistics and Census of Argentina (INDEC) could prove a significant source of financing for the sector, if the local conditions become more friendly for savers.

Main Sector Indicators

2010 2011 2012 2013 2014

GDP, current prices (ARS bn) 1,810.8 2,312.0 2,765.6 3,406.3 4,412.4

GDP, current prices (USD bn) 463.1 559.8 607.8 621.6 543.4

GDP, constant prices (yoy change, %) 9.5% 8.4% 0.8% 2.9% 0.5%

Investment, constant prices (yoy change, %) 22.0% 19.4% -7.0% 3.1% -5.5%

Investment (% of GDP) 20.6% 22.7% 21.0% 21.0% 19.8%

Term deposits interest rate (Badlar, year-average) 10.1% 13.3% 13.9% 17.0% 22.6%

ARS/USD exchange rate (year-end) 3.98 4.30 4.92 6.52 8.55

Gross savings (% of GDP) 19.1% 19.7% 17.0% 18.6% 19.9%

Outstanding total deposits (ARS bn, year-end) 362.8 442.7 581.9 722.1 916.3

Outstanding total deposits (% of GDP) 17.4% 18.0% 18.4% 18.9% 18.4%

Private sector deposits in ARS (% of GDP) 9.7% 10.2% 11.5% 12.6% 12.5%

Outstanding total loans (ARS bn, year-end) 218.3 321.5 419.2 539.2 634.8

Outstanding total loans (% of GDP) 10.3% 11.7% 13.1% 13.9% 13.3%

Loans to the private sector in ARS (% of GDP) 7.6% 8.7% 10.4% 11.7% 11.4%

Non-performing loans (year-end, %) 1.8% 1.2% 1.5% 1.5% 1.8%

Source: Central Bank of Argentina, National Institute of Statistics and Census of Argentina (INDEC), Bloomberg Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 6 - Foreign Direct Investment

Net FDI In the Banking Sector (USD mn) Net FDI in the Insurance Sector (USD mn)

2,000 100 0 99 63 0 0 1,500 -64 90 -133 -100 -261 1,000 53 4 0 144 1,637 -200 1,314 -510 500 879 750 723 -300

0 0 -400 -255 -500 -500 2009 2010 2011 2012 2013 -600 Reinvested Earnings Capital Contribution Mergers & Acquisitions 2009 2010 2011 2012 2013

Comments In recent years, the foreign direct investment (FDI) in Argentina has been substantially lower than in other comparable countries in Latin America. While in the period 2009-2014 FDI in Argentina totalled USD 52bn, according to the Economic Commission for Latin America (ECLAC), in Brazil it reached USD 342bn (+6.6x). The increasingly interventionist policies and rising economic uncertainty restrained the flow of funds to the country. In the banking sector, most of the registered FDI since 2009 was composed of reinvested earnings. Particularly since 2012, when capital controls were imposed, financial entities were unable to send remittances abroad. As a result, they had no other option but to reinvest profits, resulting in overestimated FDI statistics.

Source: CEIC, Economic Commission for Latin America (ECLAC), Central Bank of Argentina Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 7 - II. Banking Sector

Outstanding Deposits Evolution (USD mn) Outstanding Loans Evolution (USD mn)

98,365 111,870 89,423 101,700 80,269 90,577 69,429 66,410 80,058 77,158

2015f 2016f 2017f 2018f 2019f 2015f 2016f 2017f 2018f 2019f

Comments

In a context of macroeconomic policy normalisation that could bring inflation down and regenerate confidence in the local currency, the financial sector is likely to have more room to expand from the current low intermediation ratios. This scenario is subject to the policy that a new government would implement, which at this time remains unknown. Higher interest rates in real terms could spur deposit expansion, which might allow banks to extend loans at longer terms. Moreover, higher activity expansion brought by an improving macroeconomic scenario could push the demand for loans. EMIS Insight estimates that deposits would expand at an 8.7% CAGR over 2015-2019, while credit would grow at a 9.1% CAGR. As a result, the deposits and loans to the private sector are expected to reach 22% and 19% of the GDP by 2019, respectively, up from 12.5% and 11.4% in 2014.

Market Share of Top 20 Largest Banks, April 2015 Comments

90% 90% 92% 87% . The main players in the Argentinean banking sector 76% are both state-owned banks and private banks. 73% 71% 70% . Among the former, Banco de la Nacion Argentina 56% 54% 50% 51% stands as the principal player, accounting for 29% of total deposits and 21% of the loans as of April 2015. Banco de la Provincia de Buenos Aires, which ranked second (10% of deposits and loans), is also a state-owned entity. . Private banks are usually divided into those with Assets Loans Deposits Net worth foreign shareholders and those with a major local Top 5 Top 10 Top 20 shareholder participation. . The combined market share of the top five banks in Top 10 Banks by Assets, April 2015 the country in terms of assets was only 54% as of Assets Loans Deposits Net Worth April 2015, well below the ratio in comparable Latin Bank (ARS bn) (ARS bn) (ARS bn) (ARS bn) American countries such as Peru (87%, May 2014), Nacion Argentina 351.6 133.2 276.7 45.9 Mexico (74%, May 2014), Chile (73%, May 2014) Provincia de Buenos Aires 111.0 63.2 98.1 8.6 and Brazil (67%, March 2014). Santander Rio 105.1 58.4 77.9 13.1 Galicia 100.6 53.1 72.2 11.1 . The banking system is characterised by the Frances 80.3 42.8 57.1 11.1 presence of a large number (more than 60) of Macro 75.2 43.1 52.6 12.3 smaller banks, with assets of less than USD 1bn. HSBC 52.2 28.8 38.6 7.1 . The relatively large number of private banks Credicoop 47.6 21.6 41.8 3.7 suggests a strong consolidation potential that can be Ciudad de Buenos Aires 46.8 29.9 37.9 5.8 Patagonia 44.4 22.8 31.2 6.0 realised in case a more friendly macroeconomic Banking Sector Total 1,252 628.0 948.0 160.0 scenario materialises.

Source: Central Bank of Argentina, EMIS Insight Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 10 - Banking Sector Structure – Number of Enterprises

Number of Certified Entities in the Financial Sector Comments

120 . Argentina ended May 2015 with a total of 80 active entities in the financial sector (of which 65 were 24 banks). 100 24 22 . The number of banks has decreased slightly in the last years (by eight entities since 2004), but the 21 21 decrease has proved to be limited so far. 18 80 18 18 . A wave of consolidation of state-run banks has taken 18 17 17 14 15 15 15 place during the 1990s, mostly during the 14 14 privatisation wave. In most cases, these banks were acquired by private entities. 60 76 . At present, the remaining state-owned banks are 75 73 mostly medium-sized provincial banks (La Pampa, 62 60 59 Cordoba) and Banco de la Ciudad de Buenos Aires 40 58 60 55 55 54 52 52 53 54 53 53 as well as the giant players Banco de la Nacion and Banco de la Provincia de Buenos Aires. . A takeover of these banks seems very unlikely in the 20 near future given that they are seen as key instruments for the implementation of the main government policies both in the crucial Buenos Aires 16 14 13 16 15 14 13 12 12 12 12 12 12 12 12 12 12 province and on a national level. 0 1999 2001 2003 2005 2007 2009 2011 2013 May-15 . A consolidation wave in the near future is more likely to take place among private banks. Public banks Private banks Non-banks entities

Source: Central Bank of Argentina, EMIS Insight Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 11 - Banking Sector Structure – Branches and ATMs

Branches and ATMs Geographic Distribution, April 2015 Comments

Limited Service Province Branches ATMs Offices . Bank services tend to be concentrated in the city of Buenos Aires 1,396 6,174 652 Buenos Aires and the province of Buenos Aires, which City of Buenos Aires 821 4,070 329 together comprise the most populous districts in Santa Fe 468 1,979 124 Argentina, encompassing more than 46% of the Cordoba 449 1,639 159 population. Other important provinces are Cordoba and Mendoza 162 755 71 Santa Fe. Entre Rios 142 542 22 . Since March 2014, the Central Bank has taken some La Pampa 109 154 11 measures to promote the penetration of bank services in Neuquen 103 282 29 less populated areas or those which are deemed relatively Chubut 101 304 15 less profitable. One of the measures is lower reserve Corrientes 96 250 28 requirements based on where the deposits are made, with Tucuman 83 469 38 higher discounts for less developed areas. For example, Rio Negro 72 348 19 in the case of local currency sight deposits, reserve Chaco 65 265 66 requirements in the city of Buenos Aires stand at 17%, Salta 65 433 29 while for the rest of the country they are 200 bps lower. In Misiones 63 363 12 the case of term deposits, reserve requirements in the city of Buenos Aires range between 13% and 0% (depending Santiago del Estero 54 213 12 on the term) and in the rest of the country they stand at San Luis 52 211 22 100 bps lower. Santa Cruz 47 193 6 San Juan 39 248 19 . The state-owned Banco de la Nacion Argentina has a Jujuy 33 245 17 wider geographical reach than any other bank, with La Rioja 29 102 11 branches in the majority of the medium-sized towns Tierra del Fuego 27 127 7 nationwide. However, in recent years many privately- owned banks such as Santander Rio and Banco Galicia Formosa 26 136 15 have taken steps to expand their presence in less Catamarca 25 122 5 serviced areas. Total 4,527 19,624 1,718

Number of Bank Accounts (mn) Number of Term Deposit Transactions (mn)

1.8 1.7 33.7 1.6 31.3 1.5 28.6 1.4 1.3 1.3 1.3 1.3 22.8 24.1 20.2 21.3 21.2 18.2 16.5 0.9 0.9 14.1 0.8 11.0 4.3 4.5 4.8 1.9 2.3 2.6 2.7 3.1 3.4 3.2 3.3 3.5 0.11 0.07 0.07 0.07 0.07 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0.05 0.05 0.06 0.07 0.07 0.06 0.06 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # of current saving accounts # of current accounts # terms deposits (wholesale) # terms deposits (retail)

Number of Credit Cards and Credit Card Owners (mn) Number of Loan Transactions (mn)

30.9 31.1 28.1 23.8 24.3 22.5 23.7 19.5 18.2 21.3 20.6 20.9 16.7 20.0 15.3 18.2 18.4 14.2 12.5 16.0 15.5 10.6 13.5 13.3 14.1 8.3 12.0 6.8 10.6 11.4 8.9 7.5 8.3 1.9 6.9 0.5 0.6 0.7 0.9 1.0 1.3 0.9 1.0 1.1 1.2 5.1 5.9 0.4 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 # credit cards # credit card owners # loans transactions (wholesale) # loans transactions (retail)

Banking Sector Profitability Banking Sector Net Profit Evolution (USD mn) 6,000

34.2% 5,000 30.6% 2,225 4,000 2,020 25.7% 27.2% 26.8% 1,462 19.8% 3,000 1,260 1,010 15.5% 2,000 452 12.0% 13.1% 3,172 3,312 407 377 2,175 2,656 1,000 402 1,613 1,902 1,078 3.6% 4.3% 948 789 1.9% 1.5% 1.6% 2.4% 2.9% 2.8% 3.1% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014 ROE ROA Private banks Publlic banks

Banking Sector Profitability (ROE) Breakdown By Ownership Comments

33.0% 29.7% . Despite being heavily transactional, the banking sector remains 28.3% 28.0% 32.1% 26.3% 27.0% 29.1% quite profitable in nominal terms. 24.5% 22.9% 25.6% 26.4% . Banks have proved flexible and adapted to the inflationary 15.3% 15.5% scenario by pushing up margins amid increasing interest rates, resulting in consistently rising ROE ratio. 12.3% 10.9% 15.2% . Net profits measured in USD terms expanded at a healthy 5.7% CAGR of 19% between 2006 and 2014. . In the present Argentine context, the financial system proves to 2006 2007 2008 2009 2010 2011 2012 2013 2014 be one of the most profitable sectors. Private State-owned

Liquid Assets (% of total deposits) Operating Margin / Recurring Expenses (%)

34.1% 85.5% 85.9% 29.8% 30.1% 84.1% 84.8% 84.9% 29.2% 83.2% 28.6% 27.6% 27.2% 80.9% 27.9% 28.0% 26.7% 26.9% 26.8% 26.8% 26.2% 23.7% 25.7% 26.0% 77.7% 24.7% 24.1% 25.2% 23.0% 25.9% 22.5% 22.1% 20.9% 19.2% 19.4%

64.2% 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Private banks Public banks May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15

Deposits / Number of Employees (ARS mn) Comments Strong deposit expansion coupled with weaker loan demand since 9.19 9.27 May 2014 has translated into swelling liquidity. Banks maintain a large percentage of deposits in reserve requirements, overnight 8.77 repos and Central Bank bonds (Lebacs), leaving the risk of a bank 8.40 run quite minor. 8.13 8.03 Given that Lebacs yields are higher than term deposit rates, 7.82 7.78 excess liquidity is being parked in these instruments for a profit. 7.66 Despite the ongoing growth in expenses (due to the high-inflation scenario and rising wages), bank entities have high efficiency ratios. In general, operating margins cover a significant amount of May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 recurring expenses (64.2% as of January 2015).

ARS Deposit Stock by Origin, USD mn (year-end) USD Deposit Stock by Origin, USD mn (year-end)

552 16,000 14 308 369 100,000 350 4,376 22,456 14,000 714 31,055 13 28,103 24,951 80,000 12,000 28 1,118 526 28,156 1,790 18 10,000 15 60,000 810 24,691 19 1,620 6 1,708 8,000 1,570 16,098 1,502 40,000 82,694 6,000 75,979 74,298 72,977 11,526 12,001 60,959 10,025 51,319 4,000 7,701 8,123 20,000 40,943 6,573 7,217 2,000 0 0 2009 2010 2011 2012 2013 2014 June 2009 2010 2011 2012 2013 2014 June 2015 2015 Private sector Public sector External sector Private sector Public sector External sector

Comments The deposits in Argentine peso constitute the only meaningful funding source for the banking sector, given the difficulties to borrow abroad (high cost and risk of currency mismatches) and the array of restrictions on cross-border loans. In part because of the rigid capital controls prevailing at the moment and due to the perception of low probability of peso devaluation before December 2015, private sector deposits in local currency expanded by 11.3% between December 2013 and June 2015. On the other hand, USD deposits decreased by 49% between 2010 and 2013, due to the deployment of capital controls and public use of USD proceeds to pay back debt. However, between June 2013 and June 2015, they rose by 22%, as a result of the increasing dollarisation of the private sector.

ARS Deposit Stock, ARS mn (year-end) ARS Deposit Evolution (yoy change, %)

800,000 50% 24,859 700,000 40% 600,000 21,739 Other 366,249 30% 500,000 17,537 281,396 Term 20% 400,000 deposits 13,582 220,255 10% 300,000 162,843 Sight 10,824 180,067 9,162 161,516 deposits 0% 200,000 107,442 7,683 126,558 81,656 96,378 Current 63,789 69,648 -10% 100,000 53,373 160,410 176,035 account 39,769 100,054 120,289 Jan-09 Jan-11 Jan-13 Jan-15 60,109 74,319 0 44,369 2009 2010 2011 2012 2013 2014 Jun-15 Current account Sight deposits Term deposits Other Total

Comments The private sector’s deposits in local currency are the most important funding source for the banking sector (78% of all ARS deposit base as of June 2015) as well as the most reliable and the least volatile. In June 2015, the ARS deposits segment recorded annual growth rates of between 31% and 39%. Sight deposits are related mainly to retail clients and their expansion is highly dependant on salaries and employment growth. As of June 2015, salaries were increasing at a 30% average annual rate, while the number of employees remained stagnant. Current account and term deposits are mostly associated with corporate clients and have a relatively short deposit tenure: 77% of them were deposited for 90 days or for shorter periods.

Interest Rates on ARS Deposits (% p.a.) Interest Rates on USD Deposits (% p.a.)

25% 2.0%

20% 1.5%

15% 1.0% 10%

0.5% 5%

0% 0.0% Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Sight Deposits Term Deposits Sight Deposits Term Deposits

Comments The interest rates on sight deposits in local currency are regulated by the Central Bank of Argentina and remain at very low levels (less than 0.2% p.a.). Term deposit interest rates in Argentine pesos depend on the relative liquidity in the financial system and they have hovered around 20% p.a. since September 2014. Given the ample spread between them, most banks encourage customers to make sight deposits using different marketing strategies, thus minimising funding costs. After the exchange rate devaluation by 18% in January 2014, interest rates on term deposits increased significantly. Since then, a lower exchange rate depreciation (less than 1% per month) resulted in stronger growth of ARS deposits, which allowed interest rates to stabilise at the current levels.

Loan Stock, USD mn (year-end) Loan Stock Evolution (yoy change, %) 100% 80,000 8,272 7,756 6,966 7,812 70,000 6,496 80% 60,000 60% 50,000 4,954

40,000 40% 4,279 75,221 74,525 66,307 68,269 68,400 30,000 20% 48,374 20,000 36,899 0% 10,000

0 -20% 2009 2010 2011 2012 2013 2014 Jun-15 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

To the private sector To the public sector To the private sector To the public sector Total

Comments Most of the loans offered by both private and state-run banks are directed to the private sector (90% as of June 2015). The rate of credit expansion has followed a downward trend since the beginning of 2014, as a result of the lower economic growth, stagnating real wages and concerns about the future economic policy of the next government, which is to take office on December 10, 2015. Higher uncertainty has put off investment decisions, which has hurt the demand for corporate loans. Moreover, consumer credit demand has shrunk due to higher inflation and lower real salaries growth. As a result of the quicker pace of foreign exchange depreciation in 2014, the outstanding loans measured in USD terms decreased by 8.6% between December 2013 and December 2014.

Outstanding Loans by Sector* (year-end)

17% 16% 17% 28% 25% 24% 23% 26% 31% 34% 33% 33% 33% 33% 35% 35%

13% 17% 33% 23% 14% 9% 28% 43% 41% 8% 11% 10% 9% 9% 8% 7% 9% 8% 12% 9% 10% 9% 8% 8% 8% 9% 9% 9% 13% 11% 18% 18% 15% 16% 16% 16% 15% 14% 15% 21% 14% 14% 12% 13% 14% 13% 7% 7% 7% 7% 7% 7% 8% 9% 10% 6% 6% 9% 12% 11% 5% 6% 17% 16% 16% 15% 16% 16% 17% 16% 16% 4% 4% 16% 15% 12% 9% 13% 8% 9% 10% 11% 7% 8% 7% 5% 5% 7% 9% 9% 10% 10% 10% 10% 10% 9% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Agriculture Industry Commerce Services Other Public sector Consumption

Comments In the past two decades, banks concentrated their efforts on consumer loans, due to the uncertain economic environment. During 1991-1999 and in line with the economic stability, the share of consumer loans averaged 22% and was higher than that of any other sector. In 2001, the public sector emerged as the most important recipient of loans. However, the 2002 government default was a watershed in terms of loan distribution. The exposure to the government plummeted, while loans for consumers reached new heights, peaking at almost 35% in December 2014. The high-inflation environment coupled with negative real interest rates, expectations for exchange rate depreciation and short tenure of deposits encouraged banks to grant short-term and profitable consumer loans.

Source: Central Bank of Argentina, EMIS Insight, - * Other includes: Fishing, Mining, Utilities (electricity, gas and water), Construction, Other nes. Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 20 - Private Sector Loans

Outstanding Loans by Type, ARS mn (year-end) Outstanding Loans by Region, March 2015

600,000 48,976 Buenos Aires Other Province North-West 46,143 11.5% 4.3% North-East 500,000 131,050 Credit card Greater 3.4% 40,927 110,737 Buenos Aires 400,000 10.5% 80,420 Consumer 138,879 Centre 17.7% 31,036 117,261 Car loans 300,000 57,609 98,484 34,187 32,677 48,978 75,385 31,299 47,502 Mortgages 200,000 43,075 22,409 West 3.4% 143,208 35,028 133,884 Documental 111,403 100,000 77,781 South 4.7% 78,063 Overdraft 47,948 56,687 66,838 0 Buenos Aires 2012 2013 2014 Jun-15 City 44.4%

Comments Loans to the private sector in pesos are divided in two main categories: loans to corporate clients (overdraft and documental) and retail credit (mortgages, car loans, consumer and credit cards). After a period of weak growth rates since early 2013, corporate credit activity picked up in the first half of 2015. This was in part due to the effects of a directed credit programme launched by the government in June 2012, under which commercial banks were required to lend up to 7.5% of their deposit base at subsidised interest rates, mostly to small and medium enterprises. Consumer and credit card loans were the main driving forces of the credit growth. Between December 2014 and June 2015 they accounted for 61% of the total loan stock growth.

Retail Loans Interest Rates (% p.a.) Wholesale Loans Interest Rates (% p.a.)

60% 35%

50% 30%

40% 25%

30% 20%

20% 15%

10% 10% Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Overdrafts Mortgages Personal Credit card Overdrafts Discounted notes Pledge loans Bills Other

Active and Passive Rate Spreads Comments

24.1% . In the context of high inflation and rising interest rates, banks have managed to maintain or increase spreads between 19.9% average deposit and loan interest rates in order to prop up 17.2% 18.1% 15.7% 16.0% 15.7% 15.4% profitability. 13.4% 13.3% 12.6% 12.3% 12.2% 12.7% 11.0% 11.4% . In 2014, the Central Bank of Argentina increasingly intervened 9.8% 9.5% 8.7% by putting caps and floors for interest rates as a way to spur 6.6% 5.4% both deposit and credit demand. For example, most rates on 4.8% 4.9% 4.4% 3.1% 3.6% 3.8% consumer loans were linked to the short-term Lebac yield, which is determined by the monetary authority. The rates on 2006 2007 2008 2009 2010 2011 2012 2013 2014 retail term deposits (up to ARS 1mn) were also linked to the Implicit active rate Implicit passive rate Spread same policy rate.

Non-Performing Loans (% of total loan portfolio) (year-end) Coverage Ratio* (year-end)

25% 210%

20% 170% 15% 130% 10% 90% 5%

50% 0%

Coverage ratio Coverage ratio (public banks) NPL (total) NPL (private banks - total) NPL (public banks - total) Coverage ratio (private banks)

Comments The 2001-2002 macroeconomic collapse led to a sharp increase in the non-performing loans (NPLs) amid strong deterioration in companies’ balance sheets and household income. However, the robust economic growth combined with employment creation and real salaries growth since 2003 have significantly diminished the probability of rising delinquency rates. Also, banks took a more cautious approach by streamlining risk, monitoring processes and enhancing selection systems, which resulted in high coverage ratios. Going forward, the expected realignment of the macroeconomic indicators during a new government taking office in December 2015 and the subsequent higher volatility could result in a gradual increase of the NPLs although both the corporate sector and households remain relatively low-leveraged.

Source: Central Bank of Argentina, EMIS Insight, - * Coverage ratio refers to total provisions as a percentage of non-performing loans Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 23 - Loan Portfolio Quality

Loan Portfolio Quality* (year-end)

4.8% 4.1% 4.2% 4.2% 2.2% 1.9% 2.7% 2.2% 2.4% 2.8% 13.6% 7.8% 16.3% 23.7% 23.0%

95.2% 96.0% 95.8% 95.8% 97.3% 97.9% 97.3% 97.5% 97.3% 97.2% 86.4% 92.2% 83.7% 76.3% 77.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Apr-15 Normal In arrears

Comments During the macroeconomic crisis of 2001-2002, credit quality deteriorated significantly with loans in arrears peaking at 23.7% of the total loan portfolio of the banking sector at the end of 2002. The economic recovery observed since 2003 has allowed banks to enhance their credit portfolio. By April 2015, the share of loans considered to be of high or medium-risk stood at only 1.3%, while defaulted loans amounted to 1.7%. Going forward, if the macroeconomic backdrop turns to be less supportive in case the new government deploys a plan to face imbalances, the credit quality could be somewhat affected. However, it is very unlikely that the ratios observed back in 2002 be witnessed again in the near future.

Central Bank of Argentina, EMIS Insight, - * In arrears includes loans that were not repaid in schedule at least 90 days after the expected date and range Source: from low risk (under surveillance) loans to irrecoverable loans Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 24 - Government Policy

Since mid-2012, the Central Bank of Argentina has taken numerous steps to increase public intervention in the banking system as a way to curb profit margins and influence the way credit is distributed among the economic sectors. In an inflationary scenario, the financial companies are relatively well-hedged against price increases, which renders them Government relatively profitable compared to other sectors and thus makes them likely targets of public intervention. Among the Intervention measures are different reserve requirements (based on the geographic location to foster banking coverage in less populated areas) and control on fee increases. Actually, banks have to ask for permission to hike different kind of fees (a sizeable part of their income) and inform clients once the permission is granted by the Central Bank.

The Central bank of Argentina has imposed caps and floors on the interest rates offered by the banks in the country. Retail Interest term deposits of up to ARS 1mn have a mandatory minimum interest rate, which is related to the short-term Lebac rate Rates Caps (currently at 26% p.a.). The factor to estimate the yield ranges from 0.91 (30 to 44 days) to 0.99 (for deposits made for 180 and Floors days or longer). Also, consumption, credit card and car loans directed at individuals have a cap, which is calculated based on the short-term Lebac cut-off yield. The factor to estimate the final interest rate goes from 1.25 to 2 for larger entities and from 1.4 to 2 for smaller banks, depending on the loan type.

In July 2015, the Central Bank of Argentina launched the seventh tranche of the Productive Credit Programme, which essentially consists of a directed credit scheme. Commercial banks are obliged to grant at least 7.5% of their deposit base to small and medium enterprises (SMEs) at a subsidised interest rate (up to 18% p.a.), which lies well below the marginal Directed funding cost of approximately 21% p.a., before considering reserve requirements costs. The scheme has a duration of six Credit months (until December 2015) and there is an option to reopen a new tranche with similar conditions in 2016. This, in effect, dents commercial banks’ margins, as they are forced to lend at a loss. The objective of the measure is to increase the investments by SMEs and, therefore, boost economic growth. However, this is being hampered by a variety of factors, such as high inflation, economic and political uncertainty, compressing margins and foreign exchange risk.

The Basel II basic indicator approach to define the capital requirements for operational risk was adopted in Argentina in 2012. In addition, the standardised approach for credit risk determination was approved. However, the standard approach to determine the risk weight which is based on exogenous ratings is not used yet. Instead, a table of risk-weighted factors Tier I is employed. Requirements The Basel III minimum coverage ratios for eligible capital were also incorporated in local regulation. As a result, the Tier 1 capital (common shares), the additional Tier 1 capital (preferred shares) and the Tier 2 capital (subordinated debt subject to write-offs or conversion to common shares) shall be issued in such a way that common equity, Tier 1 and total capital cover 4.5%, 6% and 8% of the risk-weighted assets, respectively.

Since February 2013, banks have included the Pillar II guidelines (supervisory review process) to their risk management procedures, comprising guidelines for the management of risks related to credit, liquidity, markets, interest rates, operations, securitisation, concentration, reputation and strategy. These, combined with the information requirements on Pillar II business models, constitute the inputs for the capital adequacy self-assessment (Internal Capital Adequacy Assessment Process). In order to comply with these requirements, banks started to apply internal processes to evaluate the sufficiency of their economic capital adjusted by risk profile and to determine a methodology to preserve Tier 1 capital.

The Pillar III requirements (market discipline) outline the minimum information that should be published so that market participants may assess financial institutions’ liquidity, solvency and risk management. From February 2013, the financial Pillar III institutions in Argentina are required to unveil qualitative and quantitative information based on the Basel II and Basel III standards. While the leverage ratio norms are expected to be fully put into effect by January 2018, those related to the liquidity coverage ratio are planned to be accomplished in 2019.

Insurance Premiums Issued Forecast (constant ARS mn)

250,000

200,000

150,000

100,000 202,891 168,745 138,022 50,000 98,990 111,509

0 2015f 2016f 2017f 2018f 2019f

Comments The development of the insurance market over the next five years will depend heavily on the kind of policies that the new government, which is to take office in December 2015, would apply. The last years were characterised by an increasingly interventionist public stance and growing uncertainty. In case the new government deploys a more market-friendly regulation, the insurance sector, and likewise the banking system, has a strong potential to expand, increase its penetration and density. EMIS Insight estimates that in the best case scenario, total premiums issued (measured at constant prices) would expand at a CAGR of 19.7% between 2015 and 2019 with GDP growth averaging 2.6% in the same period.

Insurance Premiums Market Share Evolution (%) Comments

63 63 65 64 60 60 60 59 61 60 62 . In recent years, the market share of the top 42 42 43 40 39 39 38 40 39 41 40 insurance companies in Argentina remained quite stable, although a mild consolidation trend could be 26 24 25 24 25 24 25 25 26 26 26 discerned.

. The ten largest insurance companies accounted for

just 42.9% of the total premiums issued as of March

Jul-13 Jul-14

Jan-13 Jan-14 Jan-15

Mar-13 Mar-14 Mar-15

Sep-12 Nov-12 Sep-13 Nov-13 Sep-14 Nov-14 May-14 May-13 2015, highlighting the strong consolidation potential Top 5 Top 10 Top 20 of the domestic market.

Top 10 Insurance Companies by Premiums, March 2015 . However, a better macroeconomic backdrop is Market Share needed for that scenario to materialise. No Insurance Company (% of total insurance premiums issued) 1 Federacion Patronal 6.5% . Other important conditions for the development and 2 Caja Generales 5.3% consolidation of the insurance market are a decline 3 Prevencion ART 5.1% 4 Galeno ART 4.9% in the inflation rate and price stability. 5 Sancor 4.5% 6 Provincia ART 4.2% . A revamp of the regulatory framework combined with 7 Nacion 3.4% 8 Allianz 3.2% higher economic and political stability are also 9 San Cristobal 3.1% desirable. 10 Asociar ART 2.8% TOP 10 42.9%

Source: National Insurance Superintendence (SSN), EMIS Insight Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 29 - Insurance Sector Structure – Number of Enterprises

Number of Insurance Enterprises (year-end) Number of Employees (thou, year-end)

4 0.3 3 3 3 4 4 30 0.3 180 2 2 0.3 0.3 3 3 3 3 0.3 0.3 Public 22 22 Public 0.2 0.2 0.3 160 22 22 22 22 0.3 5 5 25 0.2 0.2 4 4 140 4 4 20 Foreign 120 Foreign private private 100 15 80 158 157 150 153 152 152 Cooperatives 23 23 Cooperatives 21 21 22 60 10 21 40 Local private 5 Local private 20 0 0 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014

Comments

The number of enterprises in the insurance sector remained relatively stable during the last five years, with a total of 185 active companies at the end of December 2014. On the other hand, the number of employees in the sector increased by almost 17% in 2009-2014, exceeding 29,000 people. The market is highly fragmented, with the first ten entities accounting for only 43% of the insurance premiums issued as of December 2014. Even more than in the case of the banking sector, the insurance market has a strong potential for consolidation. For that to occur, improved macroeconomic conditions and a more market-friendly regulatory framework stand as prerequisites.

Source: National Insurance Superintendence (SSN), EMIS Insight Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 30 - Insurance Sector Structure – Branches & Agencies

Branches and Agencies Geographic Distribution, Dec 2014 Comments Brokerage Province Headquarters Branches Agencies . The insurance sector ended December 2014 with a City of Buenos Aires 137 5 77 total of 185 active companies with a network of 33 Buenos Aires 12 4 303 Catamarca 0 0 13 branches throughout Argentina. Cordoba 2 3 91 Corrientes 0 1 21 Chaco 0 1 23 Chubut 0 2 24 . As in many other sectors, both insurance activity and Entre Rios 3 1 40 company locations are heavily concentrated in the Formosa 0 0 5 Jujuy 2 1 15 city of Buenos Aires and the province of Buenos La Pampa 0 0 15 Aires, followed by Santa Fe and Mendoza. La Rioja 0 0 7 Mendoza 5 1 78 Misiones 1 2 26 Neuquen 0 0 36 . The insurance products in Argentina are typically Rio Negro 1 0 28 marketed by independent contractors (brokerage Salta 6 1 38 San Juan 0 0 20 agencies), which have strong local presence San Luis 0 0 15 Santa Cruz 0 0 6 throughout the country. Agencies are usually retail Santa Fe 14 1 75 brokers (unrelated to insurances companies), which Santiago del Estero 1 0 9 Tierra del Fuego 0 9 7 serve as intermediaries between the insurance Tucuman 1 1 41 companies and the end clients. Total 185 33 1,013

Insurance Penetration Rate* (% of GDP) Insurance Density Rate** (ARS per capita)

3.0% 2,500

2.5% 0.5% 0.5% 2,000 420 0.5% 0.5% 406 2.0% 0.4% 1,500 351 287 1.5% 244 2.3% 1,000 1.0% 2.1% 2.1% 2.0% 1,659 1,744 1.7% 1,396 1,204 500 1,020 0.5%

0.0% 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Property People Property People

Comments

The Argentinean insurance sector is relatively underdeveloped when compared to that in the developed economies, although it remains similar to the insurance markets in other countries in Latin America. The insurance penetration rate ranged from 2.1% to 2.8% of the country’s GDP over the period 2010-2014, recording a slight declining trend, suggesting that the regulatory hurdles and the unsupportive macroeconomic environment had dampened activity. However, when compared to the population, the insurance activity has followed an upward trend.

National Insurance Superintendence (SSN), National Institute of Statistics and Census of Argentina (INDEC), EMIS Insight, - * Total premiums issued Source: as a percentage of GDP, ** Total premiums issued per capita. Referring to property insurance and people insurance (life and pension) Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 32 - Insurance Sector Profitability

Financial Result** / Claims Paid (%) Technical* and Financial** Result / Net Worth (%)

71.1 48.7 56.3 41.7 32.8 34.1

29.0 27.9 22.0 19.3 -12.5 -10.5 -19.7 -16.9 -30.0

Mar-14 Jun-14 Sep-14 Dec-14 Mar-15

Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Financial Result / Net Worth Technical Result / Net Worth

Comments

In the context of high inflation, the technical result* remains under pressure, due to the increasing costs and claims payments, while the income (premium collection) expands at a lower pace than inflation. As a result, most insurance companies rely heavily on their financial result** in order to prop up the overall profitability. Also, inflation hampers demand for the more profitable products such as life and pension insurance, further affecting the capacity to generate higher returns.

National Insurance Superintendence (SSN), EMIS Insight, - * Difference between premiums collected and insurance losses (result specific to the Source: insurance activity), ** Financial investment policy result, excluding the insurance activity inflows and outflows Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 33 - Insurance Sector Solvency

Debt to Net Worth Ratio Cash + Investments to Debt with Insured Parties Ratio* (%)

227 2.21 223 2.14 220 2.12 2.08 216 2.06 214

Loans to Assets (%) Comments

23.4 22.9 . Solvency indicators reveal a fairly robust position of Argentine 22.7 insurance companies as of March 2015. 22.4

21.8 . If the new government decides to amend some of the regulations introduced since the end of 2011, it is estimated that there will be more scope for further improvement in the solvency ratios of the sector.

National Insurance Superintendence (SSN), EMIS Insight, - * Ratio of the highly liquid assets (cash + deposits) and investment positions (bonds + other Source: financial assets) to outstanding liabilities with insured parties Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 34 - Insurance Sector Efficiency

Number of Employees per Company Insurance Premiums Issued per Company* (ARS mn)

158 156 156 590 555 151 477 410 330 340 143 141

2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014

Insurance Premiums Issued per Employee* (ARS mn) Comments

. In the context of an almost constant number of market players, 3.73 3.57 the expanding payroll suggests increasing insurance activity, mostly between 2010 and 2012.

3.07 . Despite the growing number of employees, the efficiency, 2.72 measured as the number of premiums issued per employee, rose by almost 60% over the 2009-2014 period. 2.34 2.38

. This resulted in a 78% growth in the real (i.e. price adjusted) 2009 2010 2011 2012 2013 2014 insurance premiums issued per company for the period.

Source: National Insurance Superintendence (SSN), - * Constant prices Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 35 - Insurance Premiums Issued

Insurance Premiums Issued (ARS mn) Insurance Premiums Issued by Category, March 2015

14,000 288 2,117 209 263 199 12,000 207 2,109 2,242 186 186 1,941 169 2,007 1,986 1,898 10,000 1,918 Pension 8,000

6,000 12,098 Life 16.6% 10,442 11,078 10,866 9,875 9,563 Life 8,785 9,340 Property 4,000 81.7% 2,000 Pension 1.7% 0 Property

Comments

Unlike more mature markets, property products rather than pension or life insurance dominate the insurance sector in Argentina. As of March 2015, property insurance accounted for almost 82% of the total premiums issued, while life insurance had a 17% share, with pension insurance taking up the remaining 2%. This situation is attributable to the fact that in the midst of the 2008 international financial crisis, the government nationalised the private pension system, as a way to ensure fresh funds to the budget. As a result, the private pension insurance activity was significantly reduced, being replaced by a broad public pension scheme.

Insurance Premiums Issued* (%) Comments

Province Property Personal Total City of Buenos Aires 26.4 50.9 31.2 Buenos Aires 34.8 19.6 31.8 Catamarca 0.3 0.2 0.3 . The insurance activity in Argentina is highly Cordoba 7.7 5.7 7.3 concentrated in the city and province of Buenos Corrientes 1.0 0.9 0.9 Chaco 1.0 1.3 1.1 Aires, which accounted for 63% of the insurance Chubut 1.6 1.0 1.4 Entre Rios 2.4 1.7 2.3 premiums issued in the period between July 2013 Formosa 0.3 0.3 0.3 and June 2014. Jujuy 0.6 0.6 0.6 La Pampa 0.8 0.4 0.7 La Rioja 0.3 0.4 0.3 Mendoza 3.5 2.4 3.2 . Notably, property products prevailed in the majority Misiones 1.1 0.8 1.1 Neuquen 1.8 1.2 1.7 of the regions of the country. Rio Negro 1.5 0.9 1.3 Salta 1.1 1.8 1.2 San Juan 1.1 0.7 1.0 . Relatively wealthy areas such as the city of Buenos San Luis 0.7 0.3 0.6 Santa Cruz 0.9 0.6 0.8 Aires had a higher share of personal (life and Santa Fe 8.4 5.1 7.8 pension) insurance premiums than other Santiago del Estero 0.5 1.1 0.6 Tierra del Fuego 0.7 0.4 0.7 jurisdictions. Tucuman 1.4 2.0 1.5 Unclassified 0.3 0.0 0.2 Total 100 100 100

Source: National Insurance Superintendence (SSN), - * Insurance premiums issued between July 2013 and June 2014 Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 37 - Insurance Premiums Issued (cont’d)

Segment-wise Insurance Premiums Issued* Insurance Premiums Issued by Type of Insurance* (%)

Type of Insurance ARS mn Other 13.6% Automobiles 29,299 Workplace safety 22,889 Fire 2,774 Workplace Life 14.6% Housing 1,977 safety 27.0% Other 10,860 Property insurance 67,800 Life (collective) 10,278 Fire 3.3% Life (individual) 2,149 Accidents 2.5% Accidents 2,147 Housing 2.3% Pension 1,738 Pension 2.0% Other 710 Automobiles Personal insurance 17,021 34.5% Total 84,821

Comments Both life and pension products have a low penetration rate in Argentina. In the property insurance segment, the automotive insurance is by far the largest segment with more than a third of total insurance premium generation in the period July 2012 - June 2013. Due to many years of economic instability, stubbornly high inflation and financial crises, Argentineans avoid getting insured against long-term risks such as pension (publicly covered) and life (a product that targets the upper end of the market). Another important segment with a share of 27% in the same period, is workplace safety, which is mandatory for all employers. The latter covers risks related to the activities of the employee in the workplace or during commuting to and from the workplace.

Source: National Insurance Superintendence (SSN), - * Insurance premiums issued between July 2012 and June 2013 Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 38 - Insurance Policies Issued

Number of Property Insurance Policies Issued (thou) Number of Personal Insurance Policies Issued (thou)

6,000 3,500

5,000 3,000

4,000 2,500

3,000 2,000

2,000 1,500

1,000 1,000

0 500 Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 Q1' 2008 Q1' 2009 Q1' 2010 Q1' 2011 Q1' 2012 Q1' 2013 Fire & Housing Automobiles Transport Burglary Hail Other Life Funeral Health Personal accidents

Comments

The number of insurance policies issued in the automotive segment reveals the strong growth in car purchases in the last years. Between 2007 and 2013, new car sales expanded by 71%, reaching almost 970,000 vehicles. However, due to increasing economic difficulties, sales slowed down in 2014 and 2015 to less than 600,000 cars per year, which affected the number of insurance policies. Going forward, the development of the market is highly dependant on the economic policies that the next government will apply.

Numbers of Insurance Claims Paid Segment-wise Insurance Claims Paid, 2012 (%)

900,000 800,000 Work 0.0% 700,000 600,000 Personal 12.5% 500,000 Automobiles Transport 0.4% 400,000 69.8% Theft 0.4% 300,000 Hail 1.3% 200,000 Other 7.2% 100,000

0 Fire 8.3% Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' Q1' 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Comments

According to the latest information provided by the National Insurance Superintendence (SSN), paid claims grew at a record 33% annual pace in the first quarter of 2013, after expanding by 11.4% y/y in 2012. As the automotive segment remains the largest insurance market, and given the high event rate, almost 70% of the paid claims were related to car risk. The strong growth in car sales (+209% between 2004 and 2013) resulted in a rapid increase in the insurance claims of the segment. However, in 2014, car sales plummeted by 36% y/y, which is expected to have curbed the expansion of the claims.

Reinsurance Premiums Evolution* (% of total) Top 10 Reinsurance Companies, July 2013 – June 2014

Reinsurance Claims Fees 28.5 Reinsurance Company Premiums (ARS mn) (ARS mn) (ARS mn) 23.4 22.7 American Home 1,096.0 327.7 250.7 21.8 21.2 20.6 Mapfre Re 911.2 355.7 121.0 18.1 18.2 17.4 16.9 Punto Sur Reaseguradora 901.1 492.5 123.8 15.0 14.7 14.0 14.3 Allianz Re 871.5 397.4 132.4 12.1 10.6 11.3 Zurich Reaseguradora 729.6 540.3 61.6 8.2 7.4 7.7 7.5 7.4 Hannover Ruck 581.4 633.6 65.5 5.5 4.7 4.8 4.3 Reunion Re 423.7 126.7 60.3 3.5 4.2 4.0 3.6 Nacion Reaseguros 421.1 2,514.0 10.6 Ace American Insurance 398.0 105.5 118.5 200020012002200320042005200620072008200920102011201220132014 Scor Global 375.0 143.4 76.5 % Reinsured Premiums (Property) % Reinsured Premiums (People) Reinsurance Total 10,690 8,335 1,695

Comments The reinsurance market in Argentina remains underdeveloped. As in the banking and insurance markets, the regulations have become more stringent in recent years. Since 2011, when the Resolution 36,615 was adopted, foreign reinsurance companies are not allowed to directly take risks from local insurers unless they establish a local subsidiary. In addition, they can only cover the risks that local reinsurance companies are not able to manage. Some market players believe that the resolution further restricts the scope of the reinsurance possibilities in the country. Notably, the reinsurance capacity in Argentina was limited before the adoption of the resolution and most of the risks were reinsured overseas.

Source: National Insurance Superintendence (SSN), - * Referring to property insurance and people insurance (life and pension) Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 41 - Government Policy

The insurance activity in Argentina is regulated by the National Insurance Superintendence (SSN), a decentralised government body within the Ministry of Economy. Its main objective is to supervise and regulate the insurance and reinsurance activities in order to ensure compliance with the existing law and regulations by all market players. Among the main regulatory acts for the sector are the Law Nº 17,418 (from 1967), which sets out the general conditions and Regulation definitions to perform insurance activity in the country, including the types of insurance and the technical features of insurance contracts and policies, insurance premiums, contract execution, etc. The Law Nº 20,091 (1973) deals with the companies that are authorised to act as insurers, the permits they should obtain and their supervision. The Law Nº 22,400 (1981) regulates the activities of intermediary parties like brokers and advisors. The Law Nº 25,246 (2000) deals with the concealment and money laundering of illegal activities.

Since December 2011, when the Resolution 36,162/2011 was adopted, all insurance companies have been required to invest their entire investment portfolio in domestic assets with a ban on investing abroad. As a result, the companies were forced to divest their positions overseas and reinvest in Argentina. The measure was implemented in an effort to increase Government the supply of US dollars on the foreign exchange market amid mounting exchange rate pressure and imposition of other Intervention capital controls. In February 2014, the regulation on the investment activity of the insurance companies was modified. Since then, the insurance entities with life or property portfolios as well as the reinsurers were obliged to invest at least 18% of their assets in financial instruments issued by non-financial companies, while those with pension and labour risk portfolios at least 14% and 8% of their assets, respectively.

National At the end of 2012, the government unveiled a long-term plan, called National Strategic Insurance Plan, which was Strategic expected to be fully implemented by 2020. The plan had a more interventionist bend and attributed to the insurance sector Insurance a social role. However, the plan has not had any practical implications on the insurance activity so far. Its real execution is Plan a function of the policy towards the insurance sector to be adopted by the newly appointed government, following the elections in October 2015.

Top 15 M&A Deals in the Financial Sector* in Argentina (2014-H1’2015)

Country of Deal Value Stake Date Target Company Deal Type Buyer Buyer USD (mn) (%) 95.0 Feb-15 QBE Argentina Aseguradora de Riesgos del Trabajo SA Acquisition Grupo Werthein (Werthein Group) Argentina 100.0 (Official data) La Caja de Ahorro y Seguro SA; Caja de Seguros SA; 70.3 Aug-14 Acquisition Assicurazioni Generali SpA Italy n.a. Europ Assistance Argentina SA (Official data) 29.2 Aug-14 Banelco SA Acquisition Visa Argentina SA Argentina 100.0 (Official data) Minority stake 12.8 Jan-14 Empresa Distribuidora Sur SA (Edesur) Undisclosed investor(s) n.a. 10.9 purchase (DW estimate) Gasoducto del Pacifico SA; Gasoducto del Pacifico 9.4 Nov-14 (Argentina) SA; Innergy Holdings SA; Gasoducto del Acquisition Gasco SA Chile 30.0 (Official data) Pacifico (Cayman) Ltd 5.9 May-15 Volkswagen Credit Compania Financiera SA Acquisition Banco Bilbao Vizcaya Argentaria SA (BBVA) Spain 51.0 (Official data) Liberty Seguros Argentina SA; Liberty Compania Argentina 4.5 Mar-14 Acquisition Kranos Capital United States 100.0 de Reaseguros SA (Official data) Minority stake SA Importadora y Exportadora de la Patagonia 4.0 May-14 Tarjetas del Mar SA Argentina 40.0 purchase (La Anonima) (Official data) Minority stake 2.0 Dec-14 Los Grobo SGR Los Grobo Agropecuaria SA Argentina 24.7 purchase (Official data) Minority stake 1.4 Jun-15 BACS Banco de Credito y Securitizacion SA IRSA Inversiones y Representaciones SA Argentina 6.1 purchase (Official data) Minority stake 1.0 Mar-15 Mercado de Valores de Buenos Aires SA (Merval) Sociedad Militar Seguro de Vida (SMSV) Argentina 0.5 purchase (Official data) Minority stake 1.0 Jun-15 Mercado de Valores de Buenos Aires SA (Merval) Allaria Ledesma & Cia Argentina 0.5 purchase (Official data) 1.0 Nov-14 Comercio Interior SA Acquisition Inversora Juramento SA Argentina 65.0 (Official data) Jun-15 Boston Compania Argentina de Seguros SA Acquisition Testimonio Compania de Seguros SA Argentina n.a. 100.0 Feb-15 Fullcarga SA Acquisition PagaTodo Holdings SAPI de CV Mexico n.a. 100.0

Number and Value of Deals in Argentina’s Financial Sector Number of Deals by Deal Value, USD (%)

5 Undisclosed; 4 4 38.1% 3 3 2 99 96

17 4 12 8 0-50mn; 50.1-100mn; 52.4% Q1 Q2 Q3 Q4 Q1 Q2 9.5% 2014 2015 Value of Deals (USD mn) Number of Deals

Number of Deals by Deal Type (%) Number of Deals by Region of Investors (%)

Europe 21.1%

Minority stake North America purchase 10.5% 33.3% South America 5.3% Acquisition 66.7% Argentina 63.2%

Income Statement (Individual, ARS mn) Highlights

. Banco de la Nacion Argentina (BNA) was established

41,749 in 1891 as a state-owned bank. In a few years, it created a branch network throughout the country,

becoming the largest commercial bank in Argentina in 28,899

11,972 terms of outstanding loans and deposits.

7,608

5,141

4,449

19,260 3,830 2,786 . The main purpose of BNA is to serve as a financial agent of the federal government, and as such it 2012 2013 2014 receives government deposits and makes payments for and on behalf of the republic. Net Income Financial Revenues Service Revenues . An important goal of BNA is to serve the small and Balance Sheet (Individual, ARS mn) medium-sized enterprises, as well as the economically disadvantaged segments of the population.

. BNA has 13 branches abroad and three representative offices in Caracas (Venezuela), Beijing

(China) and Porto Alegre (Brazil).

121,172 380,191

113,453 . BNA ended 2014 with a network of 632 branches, 62 92,851

274,690 operative offices, four mobile agencies, nine 222,064

39,338 promotion points, three brokerage agencies and 1,713 26,914 19,349 ATMs throughout Argentina, and a workforce of some 17,400 people. 2012 2013 2014

Total Assets Shareholders' Equity Total Loans

Source: Company data, EMIS, Central Bank of Argentina, own calculations Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 46 - Banco de la Nación Argentina (cont’d)

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Banco Naciòn 290,684 Dec-2012 Dec-2013 Dec-2014 Banco Provincia 95,189 Number of accounts 799,363 979,176 1,217,974 Santander Rio 70,129 Number of credit cards 1,795,842 2,096,078 2,059,168 Banco Galicia 65,260 Employees 16,647 17,001 17,436 BBVA Banco Frances 51,179 ROE (%) 27.14 34.93 36.97 Banco Macro ROA (%) 2.47 3.32 4.15 48,099 Banco Credicoop 38,625 HSBC 36,987

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Other Banco Naciòn 120,658 Financial Banco Provincia 60,029 Revenues 18% Santander Rio 54,770 Banco Galicia 49,441 Interest Revenues Banco Macro 41,753 72% Services Revenues BBVA Banco Frances 40,190 11% Banco Ciudad 28,536 HSBC 26,989

Source: Company data, Central Bank of Argentina, own calculations Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 47 - Banco de la Provincia de Buenos Aires

Income Statement (Individual, ARS mn) Highlights

. Banco de la Provincia de Buenos Aires (Banco

Provincia), founded in 1822 as a state-owned bank, is 17,256 the second largest bank in Argentina in terms of

outstanding loans and deposits.

10,397

4,031

3,062

3,042

2,325 1,442

6,524 . About 80% of its loans are allocated to the 660 manufacturing sector, with a special focus on small 2012 2013 2014 and medium-sized enterprises, which are the main source of job creation in Argentina. Net Income Financial Revenues Service Revenues

Balance Sheet (Individual, ARS mn) . Banco Provincia also focuses on financing start-up companies as well as production and investment plans of the province of Buenos Aires.

. The bank is an important vehicle for the government of the province of Buenos Aires to finance projects,

which imply job creation and social inclusion.

107,330

59,178

77,749

56,094

7,891

42,833

4,873 3,423

29,252 . Banco Provincia ended 2014 with a network of 342 branches and 1,569 ATMs, and a workforce of some 2012 2013 2014 10,410 people. Total Assets Shareholders' Equity Total Loans

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Dec-14 Banco Naciòn 290,684 Branches 342 Banco Provincia 95,189 ATMs 1,569 Santander Rio 70,129 Employees 10,410 Banco Galicia 65,260 BBVA Banco Frances 51,179 Banco Macro 48,099 Dec-13 Dec-14 Jan-15 Feb-15 Mar-15 Banco Credicoop 38,625 ROE 38.19% 49.19% 40.36% 38.86% 33.08% HSBC ROA 2.10% 3.30% 2.80% 2.80% 2.40% 36,987

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Banco Naciòn 120,658 Other Loans Revenue From Banco Provincia 60,029 37% Government and Corporate Santander Rio 54,770 Securities 16% Banco Galicia 49,441 Banco Macro 41,753 Interest on Others 4% Credit Cards 3% BBVA Banco Frances 40,190 Interest: Interest on Overdraft 1% Banco Ciudad 28,536 Mortgage Loans Interest on HSBC 26,989 4% Loans 21%

Income Statement (Individual, ARS mn) Highlights

. Banco Santander Rio S.A., the Argentinean subsidiary of Spanish financial group Santander, is the leading private bank in Argentina in terms of outstanding

15,688 deposits and loans.

6,188 9,812

4,728 . The bank has five business divisions: retail banking,

3,608 3,233

2,289 small and medium enterprises (SMEs), commercial 1,954 6,800 banking, agribusiness, corporate banking. Its product portfolio includes savings and current accounts, debit 2012 2013 2014 and credit cards, consumer and commercial loans, Net Profit Financial Revenues Service Revenues insurance, mortgages, fixed-term deposits, money transfers, cash management, investment advice and Balance Sheet (Individual, ARS mn) factoring operations. About 75% of its revenues come from retail banking, with the remaining 25% deriving from the corporate and investment banking segments.

. The bank ended 2014 with 353 branches and 1,127

ATMs throughout the country.

95,298

54,937

70,615

11,956

8,983

53,226 45,049 6,693 . Banco Santander Rio is listed on the Buenos Aires 33,480 Stock Exchange, and its market capitalisation stood at 2012 2013 2014 ARS 32.1bn as of June 2015. Total Assets Shareholders' Equity Total Loans

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Banco Naciòn 290,684 Branches 276 305 327 334 353 Banco Provincia 95,189 ATMs 887 975 1,030 1,075 1,127 Santander Rio 70,129 ATMs self- 814 875 928 952 1,010 Banco Galicia 65,260 service Employees 6,160 6,458 6,495 6,608 6,971 BBVA Banco Frances 51,179 Banco Macro 48,099 Dec-12 Dec-13 Dec-14 Banco Credicoop 38,625 ROE 36.16% 30.67% 32.15% HSBC 36,987 ROA 4.22 % 3.83 % 4.02 %

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Interest on Credit Cards Other Loans Banco Naciòn 120,658 19% 18% Banco Provincia 60,029 Santander Rio 54,770 Interest on Revenue from Mortgage Government Banco Galicia 49,441 Loans 2% and Corporate Securities 12% Banco Macro 41,753 BBVA Banco Frances 40,190 Others 3% Interest on Banco Ciudad 28,536 Loans 24% Interest: Overdraft 16% HSBC 26,989

Income Statement (Individual, ARS mn) Highlights 14,657 . Banco de Galicia y Buenos Aires (Banco Galicia),

founded in 1905 by the members of the Escasany,

5,186 9,222

3,880 Ayerza and Braun families, is the banking unit of 3,158

2,878 Argentinean financial holding company Grupo

6,267 1,837 1,301 Financiero Galicia.

2012 2013 2014 . Banco Galicia is the second largest private bank in Net Income Financial Revenues Service Revenues Argentina in terms of deposits, assets and penetration of the retail banking business. Balance Sheet (Individual, ARS mn) . Its strategy is based on opening new branches in different provinces and on allocating capital to grow in terms of market share in its corporate banking area.

. Grupo Financiero Galicia is listed on the Buenos Aires

88,746 Stock Exchange, the Cordoba Stock Exchange, and

69,000

49,035

52,557 41,141

9,899 the Nasdaq Capital Market. Its market capitalisation

6,741 4,904 31,975 stood at ARS 23.6bn as of June 2015. 2012 2013 2014

Total Assets Shareholders' Equity Total Loans

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

2014 2013 2012 Banco Naciòn 290,684 Employees 12,012 12,603 13,327 Banco Provincia 95,189 Banco de Galicia y Bs. As. S.A. 5,374 5,487 5,734 Santander Rio 70,129 Regional Credit-card Companies 5,232 5,668 6,109 Banco Galicia 65,260 Compañía Financiera Argentina S.A. 1,112 1,170 1,233 BBVA Banco Frances 51,179 Sudamericana Holding S.A. 242 224 193 Galicia Administradora de Fondos S.A. 16 13 14 Banco Macro 48,099 Other Companies 36 41 44 Banco Credicoop 38,625 Branches 527 524 514 HSBC 36,987

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Banco Naciòn Interest on Other Loans 120,658 Credit Cards 18% 34% Banco Provincia 60,029 Net Revenues Santander Rio 54,770 on Debt Banco Galicia 49,441 Securities 12% Banco Macro 41,753 Interest on BBVA Banco Frances Mortgage Others 6% 40,190 Loans 2% Banco Ciudad 28,536 Interest: Interest on HSBC loans 20% Overdraft 8% 26,989

Income Statement (Consolidated, ARS mn) Highlights

. BBVA Banco Frances, founded in 1886 in Buenos Aires under the name of Banco Frances del Rio de la

Plata, is the oldest private bank in Argentina. 13,276

8,243 . BBVA Banco Frances was the fifth largest bank in

3,204 5,581

2,024 Argentina in terms of outstanding deposits, and the 1,263

4,678 sixth biggest in terms of outstanding loans as of

2,317 3,453 December 2014. 2012 2013 2014 Net Profit Financial Revenues Service Revenues . The bank ended 2014 with a network of 251 branches Balance Sheet (Consolidated, ARS mn) and 1,446 ATMs, and a workforce of some 5,600 people.

. Since December 1996, BBVA Frances has been a subsidiary of Spanish financial group Banco Bilbao Vizcaya Argentaria S.A. (BBVA), which controls 76% of its capital stock. The remaining shares are traded

74,288 on the Buenos Aires Stock Exchange, New York Stock

41,442

58,523

36,468 10,331

43,784 Exchange and Madrid Stock Exchange. Its market

7,156 5,131 27,518 capitalisation stood at USD 3.9bn at the end of June 2015. 2012 2013 2014 Total Assets Shareholders' Equity Total Loans

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Banco Naciòn 290,684 Dec-14 Banco Provincia 95,189 Branches 251 Santander Rio 70,129 ATMs 1,446 Banco Galicia 65,260 Employees 5,584 BBVA Banco Frances 51,179 Banco Macro 48,099 Dec-13 Dec-14 Jan-15 Feb-15 Mar-15 Banco Credicoop 38,625 ROE 35.75% 37.41% 30.91% 28.98% 29.78% HSBC 36,987 ROA 4.22% 4.97% 4.19% 3.96% 4.08%

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Banco Naciòn 120,658 Other Loans Revenue from 21% Government and Banco Provincia 60,029 Corporate Santander Rio 54,770 Interest on Securities 13% Credit Cards Banco Galicia 49,441 15% Banco Macro 41,753 Others 11% Interest on BBVA Banco Frances 40,190 mortgage loans 2.0% Banco Ciudad 28,536 Interest on Interest: Overdraft 16% HSBC 26,989 Loans 12%

Income Statement (Individual, ARS mn) Highlights . Banco Macro started operating as a non-banking financial institution in 1978. In 1988, it received an

13,301 authorisation to operate as a retail & wholesale bank

by the Central Bank of Argentina.

8,840

4,301 3,480

3,182 . Its main focus is on the retail banking in market areas

2,456

2,444 6,240

1,494 with low level of banking transactions and high growth potential. During the privatisation process of provincial 2012 2013 2014 banks in the 1990s, Banco Macro acquired several financial entities, creating the largest private sector Net Income Financial Revenues Service Revenues branch network in Argentina.

Balance Sheet (Individual, ARS mn) . In March 2006, the shares of Banco Macro were floated on the New York Stock Exchange (NYSE). Its market capitalisation stood at USD 3.7bn at the end of June 2015.

. Its controlling shareholders are Argentinean

68,239 entrepreneurs from the Brito family. The rest of the

39,759

53,904

11,492

35,837

43,999 8,627

6,199 shares are owned by the Sustainability Guarantee 28,789 Fund (managed by the National Social Security 2012 2013 2014 Administration), several local and foreign investment funds, institutional investors and retail investors. Total Assets Shareholders' Equity Total Loans

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Dec-14 Banco Naciòn 290,684 Branches 434 Banco Provincia 95,189 ATMs 1,272 Santander Rio 70,129 Employees 8,686 Banco Galicia 65,260 BBVA Banco Frances 51,179 Banco Macro 48,099 Dec-13 Dec-14 Jan-15 Feb-15 Mar-15 Banco Credicoop ROE 35.34% 35.36% 31.19% 31.12% 32.35% 38,625 ROA 5.10% 5.61% 5.01% 5.01% 5.22% HSBC 36,987

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Revenue from Banco Naciòn 120,658 Other Loans Government and 40% Banco Provincia 60,029 Corporate Securities 13% Santander Rio 54,770 Banco Galicia 49,441 Interest on Others 8% Banco Macro 41,753 Credit Cards 13% BBVA Banco Frances 40,190 Interest on Interest: Banco Ciudad 28,536 Mortgage Interest on Overdraft 10% Loans 3% Loans 9% HSBC 26,989

Number of Bank Branches*, December 2014

Branches 434 Macro 79% 14% 7% Banco Macro S.A.: Nacion 60% 30% 10% 632 Shareholder Structure Supervielle 48% 23% 29% 110 Others 6% Patagonia 47% 28% 25% 174 Controlling Credicoop 44% 40% 16% 256 shareholders ADS 23% 40% HSBC 40% 27% 33% 139

Santander Rio 35% 37% 28% 353 Goverment 31% ICBC 33% 35% 32% 104 BBVA Frances 33% 35% 32% 251 Galicia 29% 42% 29% 320

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Interior of Argentina Buenos Aires Province Buenos Aires City

Highlights

The government has an important participation in Banco Macro through the National Social Security Administration (ANSeS), which held a 31% equity stake as of December 2014. The expansion of Banco Macro is a result of a series of small acquisitions of regional banks, which have positioned it as the major private bank in terms of branches, with an important geographical coverage in the Northern region of the country. Banco Macro was also the sixth largest bank in Argentina in terms of outstanding deposits, and the fifth biggest in terms of outstanding loans at the end of December 2014.

Source: Company data, Central Bank of Argentina, - * Includes banks with 100 branches or more; consolidated data for Galicia, Patagonia & BBVA Frances Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 58 - HSBC Bank Argentina S.A.

Income Statement* (Individual, ARS mn) Highlights 7,716 . HSBC Bank Argentina, founded in 1903, is the

banking unit in Argentina of UK-based banking and

4,774

2,006 1,741

1,626 financial services institution HSBC.

1,347

3,822

898 863

. HSBC was the eighth largest bank in Argentina in 2012 2013 2014 terms of outstanding deposits and loans as of Net Income Financial Revenues Service Revenues December 2014.

Balance Sheet* (Individual, ARS mn) . The bank ended June 2015 with a network of 140 branches and 987 ATMs, and a workforce of some 4,170 people.

. The company provides a complete portfolio of banking, financial and insurance products and

47,141 services, including corporate, retail and investment

36,162

32,552 23,732

6,073 banking to over 1.2mn customers.

4,332

19,040

3,468 15,325

2012 2013 2014

Total Assets Shareholders' Equity Total Loans

Source: Company data, EMIS, Central Bank of Argentina, own calculations, - * FY between 1st July and 30th June Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 59 - HSBC Bank Argentina S.A. (cont’d)

Main Operating Indicators Outstanding Deposits Ranking, January 2015 (ARS mn)

Jun-15 Banco Naciòn 290,684 Branches 140 Banco Provincia 95,189 ATMs 987 Santander Rio 70,129 Employees 4,172 Banco Galicia 65,260 BBVA Banco Frances 51,179 Banco Macro Dec-13 Jun-14 Jan-15 Feb-15 Mar-15 48,099 ROE 22.48% 35.18% 14.22% 12.66% 15.31% Banco Credicoop 38,625 ROA 2.63% 4.43% 1.88% 1.69% 2.04% HSBC 36,987

Segment-wise Revenues, 2014 (%) Outstanding Loans Ranking, January 2015 (ARS mn)

Interest on Other Revenue from Banco Naciòn 120,658 Interest on Loans 10% Government and Credit Cards Corporate Securities Banco Provincia 60,029 11% 11% Santander Rio 54,770 Banco Galicia 49,441 Banco Macro 41,753 Interest on Others 18% BBVA Banco Frances 40,190 Loans 21% Banco Ciudad 28,536 Interest: HSBC 26,989 Overdraft 24%

Source: Company data, Central Bank of Argentina Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 60 - Allianz Argentina Compañia de Seguros S.A.

Income Statement (Individual, ARS mn) Highlights 142

142 . German insurance company Allianz entered Argentina

48 48

38 38 90 with the acquisition of three local peers: Plus Ultra Compania Argentina de Seguros, Colon Compania de

Seguros Generales and Compania Aseguradora

94 94

- - -

116 Argentina de Seguros Generales. In 1988, Allianz - RAS Argentina S.A. was created.

2012 2013 2014 . The company had 150,000 active customers with Net Income Technical result Finance structure result Ordinary Operational Result 170,000 insurance policies and occupied the seventh Balance Sheet (Individual, ARS mn) position in terms of insurance premiums issued in the automotive sector as of December 2014.

. Allianz is headquartered in Buenos Aires and has six additional branches in Cordoba, Rosario, Mar del

2,725 Plata, Tres Arroyos, Mendoza and Bariloche.

3,172 1,699

1,699 . In January 2015, Allianz launched a new product,

2,005 2,005

448 305 305 which offers insurance against theft of credit and debit cards, mobile phones, wallets and briefcases. 2012 2013 2014 Total Assets Shareholders' Equity Liabilities

Source: Company data, EMIS, National Insurance Superintendence (SSN), own calculations Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 61 - Sancor Cooperativa de Seguros Ltda.

Income Statement (Individual, ARS mn) Highlights

260

67 67 168

71 . Sancor Cooperativa de Seguros Ltda, founded in

1945, specialises in insurance products for work risks,

25 25

- -

193

194

- -

220 equity risks, automobiles and agribusiness.

149 149 - - . The company has 51 offices and 480 points of sale in 2012 2013 2014 Argentina, Uruguay, Paraguay, Brazil and Colombia, Net Income Technical result Finance structure result Ordinary Operational Result employing more than 2,000 people.

Balance Sheet (Individual, ARS mn) . In May 2015, Sancor acquired local medical care company Staff Medico, which has a portfolio of 300,000 associates, 50 branches, 400 service points and a network of 75,000 medical providers. The strategy of insurance companies to enter into the health insurance segment has been common in the

3,675 last five years.

5,344

1,669

2,641

3,692

1,051

776

2,778 2,002

2012 2013 2014 Total Assets Shareholders' Equity Liabilities

Source: Company data, EMIS, National Insurance Superintendence (SSN), EMIS DealWatch, own calculations Any redistribution of this information is strictly prohibited. Copyright © 2015 EMIS, all rights reserved. - 62 - Contact:

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