Earnings Call Transcript - GGAL Q4 2025

Operator, Operator

Good morning, ladies and gentlemen. Welcome to Grupo Financiero Galicia Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at gfgsa.com. Some of the statements made during this conference call will be forward-looking statements within the meaning of the safe harbor provisions of the U.S. federal securities laws and are subject to risks and uncertainty that could cause actual results to differ materially from those expressed. Investors should be aware of events related to the macroeconomic scenario, the financial industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Now I will turn the conference over to Mr. Pablo Firvida, Head of Investor Relations. You may begin your conference.

Pablo Firvida, Head of Investor Relations

Thank you. Good morning, everyone. I will make a short introduction, and then Gonzalo Fernández Covaro, our CFO, will have some words. Latest figures indicate that Argentina's economy grew by 4.4% on average during 2025 and the primary surplus stood at 1.4% of GDP with an overall fiscal result of 0.2% of GDP. The National Consumer Price Index recorded a 7.9% increase during the fourth quarter of 2025. Inflation for the year stood at 31.5%, significantly decelerating from the 117.8% recorded in 2024 and reaching its lowest level in 8 years. However, monthly inflation accelerated during the second half of the year and displayed a 2.8% increase in December after having reached lows of 1.5% in May and 1.6% in June. In January 2026, monthly inflation rose to 2.9%, while the year-on-year rate accelerated to 32.4%. On the monetary side, the Central Bank expanded the monetary base by ARS 0.7 trillion in the fourth quarter and by ARS 13.2 trillion over the year, bringing the year-on-year increase to 44.5% as of the end of 2025. In December 2025, the exchange rate averaged ARS 1,448 per dollar, reflecting a 29.5% year-on-year depreciation. As of January 1, 2026, both the floor and the ceiling of the exchange rate band began to adjust monthly in line with the latest available monthly inflation data. In December 2025, the average rate on peso-denominated private sector time deposits for up to 59 days stood at 26.6%, 6.4 percentage points below the December 2024 average. Private sector deposits in pesos averaged ARS 104.1 trillion in December, increasing by 10.6% during the quarter and 40.1% in the last 12 months. Time deposits rose 4.3% during the quarter and 44.8% in the year. Peso-denominated transactional deposits increased 18.3% during the fourth quarter and 35.2% in year-over-year terms. Private sector dollar-denominated deposits amounted to $36.4 billion in December 2025, increasing 11.7% during the quarter and 14.6% in the last 12 months. Peso-denominated loans to the private sector averaged ARS 87.6 trillion in December, showing a 10.4% quarterly increase and a 73% year-over-year rise. Private sector dollar-denominated loans amounted to $18.2 billion, recording a 0.5% quarterly decrease and an 83.6% annual increase. Turning now to Grupo Galicia. Net income for 2025 amounted to ARS 196 billion, 91% lower than in the previous year, which represented a 0.4% return on average assets and a 2.5% return on average shareholders' equity. Excluding integration expenses, the result would have been ARS 333 billion and the ROE 4.2%. The result was mainly due to profits from Galicia Asset Management for ARS 127 billion from Naranja X for ARS 59 billion and from Galicia Seguros for ARS 40 billion, partially offset by ARS 70 billion loss from Banco Galicia. Going to the fourth quarter, net loss amounted to ARS 84 billion as the improvement of the financial margin was more than offset by the impact of asset quality deterioration. In the quarter, Banco Galicia recorded ARS 104 billion loss, Naranja X, ARS 49 billion loss, while Galicia Asset Management and Galicia Seguros posted profits for ARS 36 billion and ARS 27 billion, respectively. This loss represented a minus 0.7% annualized return on average assets and a minus 4.3% return on average shareholders' equity. The net result from Banco Galicia for the fiscal year was negatively affected by the non-recurring expenses related to the merger with HSBC, without which it would have reported ARS 60 billion profit. In addition, during the year, the financial margin was negatively affected by changes in reserve requirement regulations and by a significant increase in interest rate, which had an impact on the cost of funding. At the same time, loan loss provisions increased significantly compared to 2024, mainly due to the increase in the retail-loan-portfolio-delinquency rates. The most relevant factors for the deterioration of asset quality were the abrupt increase in interest rates in real terms, the loss of purchasing power of customers and the disappearance of the dilution effect on the installments related to a lower level of inflation. During the quarter, the bank reported an ARS 105 billion loss, decreasing 6% as compared to the loss of the third quarter. Operating income increased, reaching ARS 164 billion, up from the ARS 6 billion recorded in the previous quarter due to higher net operating income driven by an improvement of the financial margin, offset by higher loan loss provisions, which still showed an upward trend. Average interest-earning assets reached ARS 25 trillion, 3% higher than in the previous quarter, primarily due to the increase in the average volume of dollar-denominated loans, which grew 9%. In the same period, its yield increased 130 basis points, reaching 31.4%, 39.7% in the Peso Portfolio and 8% in the Dollar Portfolio. Interest-bearing liabilities increased 4% from September 2025, amounting to ARS 22 trillion, primarily due to an increase of the dollar-denominated deposits. During this period, its cost decreased 220 basis points to 14.3%. Net interest income increased 23% when compared to the third quarter because of a 7% increase in interest income and of a 9% decrease of interest expenses. Net fee income increased 4% from the previous quarter, mainly standing out in the fees related to bundles of products and the ones of deposit accounts. Net income from financial instruments decreased 3%. Gains from FX quotation difference were 29% higher than the previous quarter, including the results from foreign currency trading and other operating income decreased 8% in the quarter. Provision for loan losses increased 42% in the quarter and 220% when compared to the fourth quarter of 2024. Deterioration was mainly focused in the retail portfolio in which NPLs rose to 14.3%, up from 3.2% recorded at the end of the previous year, particularly affecting personal loans and credit card financing. Personnel expenses reached ARS 178 billion and were 50% lower than in the previous quarter, as during that period, losses for ARS 181 billion were recorded due to the restructuring plan following the acquisition of HSBC's business in Argentina. Administrative expenses were 12% higher than in the previous quarter due to a 13% increase in taxes and a 23% increase in expenses for maintenance and repair of goods and IT. Other operating expenses increased 10%, mainly due to a 68% higher charge for other provisions. The income tax charge was positive as the pretax net income was a loss. The bank's financing to the private sector reached ARS 21 trillion at the end of the quarter, down 2% in the quarter, with peso financing decreasing 1% and dollar-denominated financing down 5%. Deposits reached ARS 26 trillion, 4% higher than the quarter before, mainly due to a 6% increase in dollar-denominated deposits. The bank's estimated market share of loans to the private sector was 14.3%, 50 basis points lower than at the end of the previous quarter, and the market share of deposits from the private sector was 16.2%, 20 basis points lower than in the third quarter of 2025. The bank's liquid assets represented 93.2% of transactional deposits and 59.4% of total deposits, similar levels to those of the previous quarter. As regards to asset quality, the ratio of non-performing loans to total financing ended the quarter at 6.9%, recording a 110 basis points deterioration compared to the 5.8% of the third quarter. As I mentioned before, the deterioration is mainly related to the personal loans and credit card financing portfolios. At the same time, the coverage with allowances reached 97.4%, down from the 101.5% recorded a quarter ago. As of the end of December 2025, the bank's total regulatory capital ratio reached 25.2%, increasing 310 basis points from the end of the third quarter, while the Tier 1 ratio was 25.1%, up 330 basis points during the same period. In summary, during the fourth quarter, the financial margin partially recovered and efficiency improved, but still asset quality and the monetary loss due to inflation had a significant impact on profitability. Despite this, Grupo Financiero Galicia was able to keep liquidity and solvency metrics at healthy levels, and we expect an improvement in profitability during 2026. Now Gonzalo Fernández Covaro will make some additional remarks. Thank you.

Gonzalo Fernández Covaro, CFO

Thank you, Pablo. Hi, everyone. Well, looking ahead, we believe Argentina is entering a phase of stability, more predictable policy framework, and renewal potential for great growth. As normalization continues and structural reforms advance, the banking system is expected to play a central role in supporting investment, productive activity, and long-term economic development. So we see positive trends for the future for the country. Talking about 2026 specifically, we see inflation a bit higher than our first estimation, now at 23%, and GDP growing at 3.7%. We're keeping our projections of 25% loan growth for the year, but we see a slower pace in the first half and accelerating in the second half, which could put some pressure on our revenues. As we said in prior calls, we expect NPLs in the bank to have their peak in March '26. So during March, we expect to see that peak, but the cost of risk, we are seeing that we already had the peak in the fourth quarter of 2025, and we started to see credit losses charged to the P&L decrease in the first quarter of 2026 in the bank. In Naranja X, we expect the same trend, but at a slower pace. We also expect to have the benefit of the restructuring made last year after the HSBC acquisition and to continue to improve our efficiency ratios and to capture those positive effects during 2026. We are keeping our ROE guidance for 2026 in the low-double-digit range, I would say, between 10% and 11%, going from low to high during the year. Regarding dividend payments, we are proposing a payment of ARS 190 billion, of which ARS 40 billion are subject to Central Bank approval as usual. So with that, I mean, we are open for questions.

Operator, Operator

Our first question comes from Mr. Brian Flores with Citi.

Brian Flores, Analyst

Gonzalo, Pablo. Gonzalo, just a quick follow-up on the 2026 guidance. So basically, you're maintaining around 25% real year-over-year growth in deposits, should be a bit lower. I think the last notion you provided was around 20%. So I just wanted to confirm if these ranges are still valid.

Gonzalo Fernández Covaro, CFO

Yes, we said deposits should be between 15% and 20%, but close to not material changes, I would say.

Brian Flores, Analyst

And then something that caught our attention here is that we saw a strong maybe revision of the growth strategy because you were growing very fast in the first 3 quarters, and you slowed down significantly in the last quarter. Just wanted to check if you have changed your focus on growth, if we should see maybe Galicia losing a bit of market share in 2026 as this asset quality is digested? Or do you think you will defend and keep it steady during 2026?

Gonzalo Fernández Covaro, CFO

No. I mean our goal is to keep market share and also try to increase it. But I would say that maybe at a slower pace, as I said before, in the first half and accelerating in the second half. In the last quarter, you saw mainly a slower pace in consumer lending. We are still in the same scenario in the first quarter. But until we see that it is the right time to accelerate again, that will be, we assume, later in the quarters. But in the whole year, we expect to really defend market share and to grow market share. In terms of commercial lending, we have been seeing some lower demand from customers. But as you know, our NPLs in the commercial portfolio and the wholesale portfolio are okay. We are working with our customers and trying to accelerate commercial lending where we see also a lot of opportunities. But to summarize the answer, the idea is to continue protecting and defending market share, but as we said, we see lower growth in the first half, I would say, and higher growth in the second half of the year.

Brian Flores, Analyst

If I may, just a very quick follow-up. So in terms of potential catalysts, do you think the recovery could come more from the macro filtering to the micro, or do you think this is more on the regulatory side than on the economic side?

Gonzalo Fernández Covaro, CFO

I would say that the macro should start accelerating impacting the micro. That's something that we haven't seen a lot last year. But we are expecting that the macro—I mean, I think it's a combination. We, of course, expect the macro to start accelerating the micro at some point, and we believe that the government should take measures to do that because it's what the country needs. From the regulatory side, we don't know what will happen, so we are not betting on changes on the regulatory side. Of course, at some point, they may come, but that's something that we cannot manage. So we are not factoring that into our strategy.

Operator, Operator

Our next question comes from Tito Labarta with Goldman Sachs.

Tito Labarta, Analyst

My question, you mentioned already provisioning levels should begin to come down in 1Q, although this quarter was a bit higher than expected, and we're still seeing that deterioration in asset quality. I guess how quickly can it come down? And what does give you that comfort that you maintain the loan growth guidance, but that credit quality should improve sufficiently to be able to grow at a faster pace in the second half of the year? Is there anything that you need to see? Or do you think it's just getting through the cycle another quarter or two and things should get better? Or any other—any risk to that?

Gonzalo Fernández Covaro, CFO

I mean, of course, that's something that we are assessing and monitoring. Anyway, still 25% is lower than the pace that we have been growing in the last year. So it's a deceleration from what we were delivering. But I mean, it's—we think that is part of the cycle, as you said. We are starting, of course, to focus on different scores and different segments, and that's where we've been focusing our growth, and that's starting to show. Of course, it's lower than what was happening in the first half of last year. But we believe that two things. First, the cycle is passing. And also, as I said to Brian before, we believe that at some point, the economy, the current economy—growth in the economy should start impacting the micro, and we should start seeing activity rebound in different sectors. We should see not in every sector, but of course, we are monitoring niches of customers and groups of customers where we will focus. So we believe that this should come. Of course, that if the economy doesn't impact the micro and we don't see growth impacting the activity, well, that would be more difficult. But we expect that this should happen, and that's why we are maintaining the growth.

Tito Labarta, Analyst

Okay. No, that's helpful. And just on the cost of risk because it was a little bit elevated. You compared to the last quarter, and you said it should, I guess, begin to improve already in 1Q. But how—can you get back to the low-double-digits, high-single-digits maybe by the end of the year? Just sort of what kind of magnitude of improvement should we expect from here on the cost of risk?

Gonzalo Fernández Covaro, CFO

Cost of risk, we are seeing to end the year at around 8%, I would say, for the 12 months of 2026. The last quarter was 12.5%. So we are expecting that—and the year was like 10%, 10.5% this year. Sorry, 2025 full-year, 12.5% in the last quarter, which is the highest, and we expect to end '26 in 8%, that would be the projection we are managing, and we started to see that in the—we made some updates to our models, the variables, as you know, you need to do every year. In the fourth quarter, that contributed also to the growth of the charges. So that's done, and we don't expect—we expect that our next update that we need to be making by the end of this year won't be increasing charges. So that also explains the peak in the last quarter.

Operator, Operator

Our next question comes from Pedro Offenhenden with Latin Securities.

Pedro Offenhenden, Analyst

I wanted to ask on cost. Should we expect some restructuring or acquisition or integration costs throughout the year, or are the one-offs largely behind that?

Gonzalo Fernández Covaro, CFO

One-offs are largely behind, as you said. We continue, of course, looking for the right size of the organization and trying to make our organization more efficient. So we may see some things here and there, but nothing material or that will be treated as one-off like last year. So from now on, everything we do is part of our normal operations. So we won't have any big impact like the ones we had last year.

Pedro Offenhenden, Analyst

And do you have some target on efficiency or administrative expenses growth for the year?

Gonzalo Fernández Covaro, CFO

I mean we expect to see a reduction of around 10% to 11% year-over-year, excluding the one-off of last year. Nevertheless, if you consider the one-off of last year, the reduction will be higher. But excluding the one-off in the expense line of last year, we see a reduction of around 10% to 11% year-over-year, and we see efficiency a bit below 40% for the year.

Operator, Operator

Our next question comes from Yuri Fernandes with JPMorgan.

Yuri Fernandes, Analyst

No, very briefly on margins. If you can help us understand a little bit of the trajectory because I guess the risk-adjusted message is clear, right? This was likely the peak, and NPLs still could deteriorate a little bit in the first quarter, but the cost of risk is lower. But I'd like to understand the margins because if your cost of risk improves, maybe we could see better risk-adjusted NIMs this year. So maybe just asking, could we see more stable or not? Like what is the view given the mix shift towards commercial lending? And then my second question is regarding—I think there are two big debates in Argentina, right? One is the ROE recovery—and the second one is growth, right? Like when will growth pick up? Like could we see more than 20% real growth or not? How confident are you on those two? Like if you were to pick just one for 2026, are you more comfortable that ROEs should recover to a more normalized level? Or are you more comfortable with growth?

Gonzalo Fernández Covaro, CFO

Okay. Let's go. I think the first question was NIMs. I mean we see—as you know, the last four quarters, we saw December NIMs recuperating. Remember that October and November were still recovering from the higher spike in interest rates of the elections period. We see for the year, around 16.5% margin for the bank. Total margin for the bank 16.4%, maybe starting a bit higher around 17% to 18% and ending in 16% during the year. But on average for the year, with the mix we are expecting, we see margins around 16.4% for the year. I mean talking about growth and ROEs, I would say that we are determined to protect our share in the market. So we are focusing a lot on— I mean, it's difficult to answer which one is more sure in an economy that is still recovering and that we still depend on the economy evolution for the growth. Of course, we need the economy to grow as expected and for the macro to impact the micro, as we were saying before, and that families should recover salaries in real terms, which we expect that to happen, but it's something that we depend on, so it cannot be guaranteed. I would say that our guidance is—we maintain the guidance because we believe we can achieve both. But of course, we depend on how the economy evolves and not having any surprises, like we had, for example, last year in the third quarter with the interest rate spike or stuff like that. I would say that it still depends on inflation. Remember that inflation accounting for Argentine banks is a big thing. The lower the inflation comes and interest rates go down, I would say that in relative terms, the higher the impact is when we compare it with other banks in the region, for example, because at some point, we may end with an inflation of 15% or 12% and still booking inflation accounting, where other countries with 8% inflation are not booking it. And if you see, it's a big portion of our P&L. So at some point, when that disappears, I would say that hopefully, in 2028, that will help the Argentine financial system to improve ROE significantly. But on top of that, I would say that we can get to ROE levels above 15% next year. So low-double-digits this year, but including inflation accounting, we can achieve above 15% next year. And after 2028, without inflation accounting, I would say that the consolidation of the higher ROEs will be easier and more stable for the banks in Argentina because you won't have that drag on the inflation accounting that, as you know, is a big burden for us. So in summary, I would say that we think that we can maintain both. But of course, in both cases, we depend on how the economy continues also in the growth in the top line, but also in the NPLs and the cost of risk that, of course, we are counting on this to continue to improve because we see the economy growing and families having enough disposable income, etc.

Yuri Fernandes, Analyst

If I may, just on the growth, just to touch on deposits. I think the guidance is 15% to 20%, right? Can you break down the dollar and pesos on this? And I don't know, like we have another tax kind of flexibilization, right? Like the dollar under the mattress kind of date. Can this be helpful for deposits to grow this year? So just checking if funding could be another part of the equation for growth.

Gonzalo Fernández Covaro, CFO

Yes. I mean regarding the dollar deposit growth, we may see something with this change in the legislation. We don't expect to be as high as the prior effect that we had with the Tax Amnesty we had between last year and the year before, but some effect it may have. Remember that today, our dollar deposits are almost half of our deposits. Our goal, of course, is to get more profits out of the dollar. So we are seeing how to get more margins on those. I mean, trying to increase the dollar lending. But as you know, we have some restrictions on who we can lend to, but that's something that we are focusing a lot on because it's increased. I don't know, Pablo, if you remember the growth divided by dollar deposits and peso deposits?

Pablo Firvida, Head of Investor Relations

It was—basically, we concentrated in the peso one around 20%. Dollars is more sensitive to the political environment, this type of legislation, as you said. And as we are not really making a good profit on dollar deposits, we really don't pay that much attention in a way. We forecast more the peso financing and funding more than the dollar one that perhaps is also—we cannot manage it as much as the peso funding. The peso was 20%, the dollar, I think it was something like 15%, but we take it as a bulk number.

Operator, Operator

Our next question comes from Mario Estrella with Itau.

Mario Estrella, Analyst

Well, I guess you already answered with the evolution for the next quarters. I believe the next quarter is going to be relatively better than 2025, going from lower ROE to higher as we move towards the end of the year, right? And I understood that the drivers for that, of course, are going to be less pressure on the cost of risk side. But because, I mean, the full quarter results, I believe they weren't that bad, I would say. So my question is, I mean, with the inflation trend that we've seen, the first quarter was more inflationary than expected. I mean, what are the downside risks that you see for your guidance if inflation keeps surprising on the upside, right? Taking into account that monetary correction loss that the fourth quarter was actually higher than in the third one, right? So that kind of shows you the potential downside risk that we can see from more inflation, right?

Gonzalo Fernández Covaro, CFO

Yes. I mean the downside, of course, as you just mentioned, is more inflation that, of course, affects our balance sheet. So that could be—that if inflation is higher than expected, that could be a downside. And I would say that we are focusing all our efforts on improving the cost of risk. As you can see easily from our results, margins are okay. I mean costs are okay. I mean efficiency, but of course, the thing that is putting some sticks in the wheel for profitability is the cost of risk. So that's the main focus we have. So I mean—and that, of course, is for the good and the bad. I mean we have a lot of room for improvement there. But also if the improvement is lower, we will see an improvement. I mean that we cannot guarantee anything, but my point is we are seeing improvement. I would say that the risk could be that the improvement is at a slower pace than expected, and that could impact results, not getting the improvements in as fast as we expect during the year. I would say that could be a downward risk that we are facing. So far, in January, we came what we are expecting. But of course, the year is long, and we depend on a lot of things on how the economy evolves, etc. So on the other hand, the top line is important. I mean even though margins are still healthy, we depend, of course, on growth and growing the top line. And of course, if we don't see the demand for lending because the economy has any deceleration or whatever, well, that could also—I would say that those two could be downward risks. It's not our base case. We are expecting that the economy should help with that. But of course, those two are downward risks. In the cost side, I think we are okay. We have done a good job in restructuring. As you know, last year, more than 2,000 people from the HSBC acquisition. Of course, we continue to look for more alternatives to continue to improve efficiency. So we continue in that work to always find and adjust the right sizing of the organization. But I think those are more predictable or manageable by us. The other two, top line and NPLs, and cost of risk. In our base case, those should come as expected. But of course, if we have a different evolution of the economy and also as we were discussing before, how the macro impacts the micro, we need to start seeing the economic activity in more sectors moves faster. Well, that could be a downward risk, of course.

Mario Estrella, Analyst

I understood that the ROE evolution for this year will be something around high-single-digits. And then in 2027, something around 15%, right? I mean, based on improvement in asset quality, right? Is that right?

Gonzalo Fernández Covaro, CFO

Yes, yes. This year, we're saying low-double-digits or high single is close. So you're right? But the idea is between 10% and 11% this year and next year, around 15% or above and to stabilize those in 2028 without inflation accounting. But what you are in the spot of what you just described, yes.

Operator, Operator

Our next question comes from Bruno Kenji with UBS.

Bruno Kenji, Analyst

It would be a follow-up regarding the recovery that you expected for results next—this year. When we look to Naranja X and lower ROE levels that we saw in those fourth quarter results, should the recovery on metrics such as NPL and cost of risk be at the same pace of the bank or could it have a little delay in terms of the recovery? And if that reflects on the ROEs, do you think that there might be a lower acceleration of loans considering the portfolio of Naranja X for the first half and then an opportunity to have a quicker recovery in the second quarter if the economies have some space for personal loans and retail when we compare that to the bank?

Gonzalo Fernández Covaro, CFO

Yes. I would say that we are seeing improvements in NPLs at Naranja X, albeit at a slower pace than the bank. Nevertheless, that we are seeing, but still expect also improving during the year. The growth scenario is similar to the bank. We are seeing also higher growth in the second half. As you know, we are still stabilizing the portfolio in Naranja, which is, of course, 100% consumer, so we don't have a commercial portfolio to go there. But we are growing, of course, selectively growing, but at a slower pace during the first months of the year, and we expect us in the bank to regain as we stabilize the portfolio to regain the growth, the faster growth. We will grow, of course, but the faster growth closer to the midterm of the year or something like that.

Operator, Operator

Our next question comes from Santiago Petri with Franklin Templeton.

Santiago Petri, Analyst

Can you help us understand in which segments are you expecting to grow this year, this 20%, 25%? Is it commercial, consumer? And within commercial, which sectors do you see that you can lend to?

Gonzalo Fernández Covaro, CFO

I mean we are growing—I mean, I would say that we were growing in the first half. Today, the mix is more 45% consumer, 55% companies in total in the bank, our mix. I would say in the first half, we are focusing a bit more on commercial. So maybe by the end of the year, we will maybe be at 60%-40%. So this year, we may see more growth in the commercial and the consumer. But of course, we are going to grow both portfolios, but more towards the commercial portfolio, mainly because in the first half, we are—as well, we are lending at a higher pace than in the consumer side, as I said before. In the commercial portfolio, of course, we are picking segments that are less affected or not affected by the change in the economy or the imports opening and everything we know that is suffering. We are strong and we are focusing a lot on the agribusiness. As you know, we are one of the main banks in that sector, and we continue to do that, and our expectations this year are to continue strongly there. We are also lending in the oil and gas sector, not just the big loans because that local banks don't have the balance sheet, but also all the supply chain and all the value chain in oil and gas. In mining, we are also making deals with supply chain in that sector. We see—we also see the automotive industry doing okay. So we are also focusing on that and part of the value chain. So we have different—we divided our wholesale operations in verticals. We have oil and gas, we have automotive, we have agribusiness, and we are going through all the value chains. We see commerce and retail commerce that at some point, some sectors are not doing that good. So we are not growing in those ones. But we are doing a very good and deep analysis in which sectors we believe are going to be the winners in these changes that the economy is doing or at least in this transition. And the sectors I mentioned are ones that we see growth, and there are others like technological and a lot of SMEs that provide services that we see them strong and that we are also helping them in the growth path. So we see room for growth in the commercial portfolio. Of course, as you know, there are sectors that are not doing good, and we have them very clear, and we are not growing in those ones.

Santiago Petri, Analyst

A follow-up, if I may. There are some conversations, or I don't know how to name it, about the possibility of banks expanding their U.S. dollar lending to non-U.S. dollar revenue-generating entities. Is this something that you see? Are you comfortable with this change in regulation?

Gonzalo Fernández Covaro, CFO

I mean, two things. Regulation could change, then we'll see if we apply or we use it or not. I mean, I would say that for us, that would be done in a very cautious way. We don't believe that going massive in lending dollars to non-dollar producers will be something safe. So of course, that will be more focused on the Commercial side, the Wholesale side. And if we have big local companies that are very strong or international, but big companies that even though they are not dollar producers, we see that they could—they are a devaluation or whatever. Well, that would be on a case-by-case basis. But we are not seeing anything massive that we will start lending massively if the regulation changes massively to non-dollar producers. So my answer would be, we will evaluate it cautiously and do it on a case-by-case basis, but nothing massive. At least is what we are seeing now with this year, with how the economy is evolving in the future. If Argentina starts being more dollarized or how the dollar starts being more important in daily trading, well, we may change our mind. But so far, our first reaction is that if this happens, we will do it on a selective basis and cautiously.

Operator, Operator

The question and answer session is over. We would like to hand the floor back to Pablo Firvida for the company's final remarks.

Pablo Firvida, Head of Investor Relations

Okay. Thank you, everybody, for attending this call. As always, we are available if you have any further questions. Good morning and good afternoon. Bye-bye.

Operator, Operator

Grupo Financiero Galicia conference is now closed. We thank you for your participation and wish you a nice day.