banco cmf s.a. · 2018-08-06 · bank name: banco cmf s.a. registered office: macacha güemes 150...

Banco CMF S.A. Financial statements as of December 31, 2017, and 2016, jointly with the Independent Auditors’ Report and the Statutory Audit Committee’s Report

Bank name: Banco CMF S.A. Registered office: Macacha Güemes 150 – Buenos Aires Expiration of articles of incorporation: June 20, 2077

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. JOSÉ A. BENEGAS LYNCH Chairman

BALANCE SHEET

AS OF DECEMBER 31, 2017, AND 2016

(Translation of financial statements originally issued in Spanish – See note 22) (Figures stated in thousands of Argentine pesos)

2017 2016 ASSETS

A. CASH AND CASH EQUIVALENTS – On hand 34,859 33,746 – Due from Banks and correspondents

BCRA (Central Bank of Argentina) (1) Local other Foreign

1,177,268

631 30,843

980,549

502 156,729

------------ ------------ 1,243,601 1,171,526 ------------ ------------ B. GOVERNMENT AND PRIVATE SECURITIES (Exhibit A)

– Holdings booked at market value – Holdings booked at amortized cost

189,238 12,689

36,313 41,268

– Instruments issued by the BCRA 506,127 29,082 ------------ ------------ 708,054 106,663 ------------ ------------ C. LOANS (Exhibits B, C and D)

– To the financial sector Interfinancing loans (granted call) 70,871 138,612 Accrued interest, adjustments, and foreign exchange and quoted price differences receivable 16,413 11,847

– To the nonfinancial private sector and foreign residents Overdrafts 975,726 329,899 Notes 1,507,415 828,032 Mortgage loans 34,025 177,500 Pledged loans 30,625 11,700 Personal loans 862,784 1,153,561 Other 858,815 629,788 Accrued interest, adjustments, and foreign exchange and quoted price differences receivable 67,912 71,621

Unearned discount (58,177) (43,643) --------------- --------------- 4,366,409 3,308,917

--------------- --------------- Less: Allowances (Exhibit J) (149,478) (107,189)

--------------- --------------- 4,216,931 3,201,728 --------------- ---------------

(1) Includes the accounts in Argentine pesos No. 00319 held by Banco CMF S.A. at the BCRA, for 11,500 used for complying with the minimum statutory guarantee required under CNV General Resolution No. 622 (See note 6.)


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2017 2016

D. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION – Central Bank of Argentina 44,977 33,159 – Amounts receivable from spot and forward sales pending settlement 780,431 - – Securities and foreign currency receivable from spot and forward

purchases pending settlement 997,521 604,333

– Unlisted corporate bonds (Exhibits B, C and D) 17 4,965 – Receivables from forward transactions without delivery of underlying

asset 2,159 5,340

– Other not covered by debtor classification standards (Note 5.a) 906,592 77,570 – Other covered by debtor classification standards (Exhibits B, C and D) 62 -

-------------- -------------- 2,731,759 725,367 -------------- --------------

Less: Allowances (Exhibit J) - (50) -------------- -------------- 2,731,759 725,317 -------------- -------------- E. RECEIVABLES FROM FINANCIAL LEASES (Exhibits B, C and D)

– Receivables from financial leases 100,358 30,016 – Accrued interest and adjustments 1,352 333 -------------- -------------- 101,710 30,349 -------------- -------------- Less: Allowances (Exhibit J) (1,021) (334)

-------------- -------------- 100,689 30,015 -------------- -------------- F. INVESTMENTS IN OTHER COMPANIES (Exhibit E)

– In financial institutions 524,574 421,461 – Other 303,745 201,030

-------------- -------------- 828,319 622,491

-------------- --------------


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2017 2016 G. OTHER RECEIVABLES

– Other (Note 5.b) 51,397 31,527 --------------- --------------- 51,397 31,527 --------------- --------------- Less: Allowances (Exhibit J) (178) (187)

--------------- --------------- 51,219 31,340

--------------- --------------- H. BANK PREMISES AND EQUIPMENT (Exhibit F) 19,365 20,712 --------------- --------------- I. OTHER ASSETS (Exhibit F) 83,419 89,661 --------------- --------------- J. INTANGIBLE ASSETS - - --------------- ---------------

Total assets 9,983,356 5,999,453 ========= =========


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2017 2016

LIABILITIES L. DEPOSITS (Exhibits H and I)

– Financial sector 970 1,194 – Nonfinancial private sector and foreign residents

Checking accounts 501,110 273,684 Savings accounts 2,501,846 1,045,001 Time deposits 1,756,086 1,412,152 Investment accounts 125,640 115,774 Other 171 56,299 Accrued interest, adjustments, and foreign exchange and quoted price differences payable 20,387 8,344

-------------- --------------- 4,906,210 2,912,448 --------------- --------------- M. OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

– Central Bank of Argentina Other (Exhibit I) 1 1

– International Banks and institutions (Exhibit I) 861,986 392,461 – Non-subordinated corporate bonds (Note 9) (Exhibit I) 766,500 750,000 – Amounts payable for spot and forward purchases pending settlement 954,919 549,286 – Securities and foreign currency to be delivered from spot and forward

sales pending settlement 796,217 -

– Financing received from Argentine financial institutions (Exhibit I) Interfinancing loans (call received) 229,000 128,000 Other financing from local institutions 48,584 - Accrued interest payable 704 256

– Receivables from forward transactions without delivery of underlying asset

8,261

4,854 – Other (Exhibit I) 136,859 37,367 – Accrued interest, adjustments, and foreign exchange and quoted

price differences payable (Exhibit I)

18,625 23,448

--------------- --------------- 3,821,656 1,885,673 --------------- --------------- N. OTHER LIABILITIES

– Fees - 8,911 – Other (Note 5.c) 103,934 100,613

-------------- --------------- 103,934 109,524 --------------- ---------------

O. PROVISIONS (Exhibit J) - - --------------- ---------------

Total liabilities 8,831,800 4,907,645 --------------- --------------- SHAREHOLDERS’ EQUITY (as per related statement) 1,151,556 1,091,808 --------------- ---------------

Total liabilities and shareholders’ equity 9,983,356 5,999,453 ======== ========


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2017 2016

MEMORANDUM ACCOUNTS

DEBIT-BALANCE CONTINGENT Guarantees received (Note 1.5.q) 4,440,274 3,584,172 Contingent debit-balance contra accounts 621,354 413,952 CONTROL Receivables classified as irrecoverable 32,208 15,811 Other (Note 5.d) 4,247,374 1,078,092 Control debit-balance contra accounts 98,216 88,879 DERIVATIVES Notional value of forward transactions without delivery of underlying asset (Exhibit O) (Note 10)

546,104

611,580 Derivatives debit-balance contra accounts 96,293 594,383 TRUST ACTIVITY Trust funds (Note 15) 132,000 - CREDIT-BALANCE CONTINGENT Other guarantees provided covered by debtor classification standards (Exhibits B, C and D)

367,501

339,100 Other covered by debtor classification standards (Exhibits B, C and D)

253,853

74,852 Contingent credit-balance contra accounts 4,440,274 3,584,172 CONTROL Checks to be credited 98,218 88,879 Control credit-balance contra accounts 4,279,582 1,093,903 DERIVATIVES Notional value of forward transactions without delivery of underlying asset (Exhibit O) (Note 10)

96,293

594,383 Derivatives credit-balance contra accounts 546,104 611,580 TRUST ACTIVITY Trust activity credit-balance contra accounts 132,000 -

The accompanying notes 1 through 22 to the financial statements and exhibits A through F, H through L, N and O are an integral part of these financial statements.


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STATEMENTS OF INCOME FOR THE FISCAL YEARS

ENDED DECEMBER 31, 2017 AND 2016

(Translation of financial statements originally issued in Spanish - See note 22) (Figures stated in thousands of Argentine pesos)

2017 2016 A. FINANCIAL INCOME

– Interest on loans to the financial sector 244 572 – Interest on overdrafts 169,679 184,117 – Interest on notes 688,483 703,973 – Interest on mortgage loans 25,397 70,585 – Interest on pledged loans 3,780 9,837 – Interest on other loans 20,410 43,258 – Interest on other receivables from financial intermediation 321 42 – Interest on financial leases 13,018 7,453 – Net income from government and private securities – Adjustment under CER clause

71,317 - 89,323

206 – Difference in quoted prices of gold and foreign currency - 40,459 – Other 46,571 13,184

------------ ------------ 1,039,220 1,163,009 ------------ ------------ B. FINANCIAL EXPENSE

– Interest on checking-account deposits (125,337) - – Interest on savings-accounts deposits (761) (238) – Interest on time deposits (123,750) (254,479) – Interest on interfinancing loans (call received) (33,540) (26,663) – Interest on other financing from financial institutions (24,621) (11,354) – Interest on other liabilities from financial intermediation (134,849) (127,227) – Other interest (7,079) (10,035) – Net financial expense from government and private securities - (15,246) – Contribution to deposit guarantee fund (3,924) (5,056) – Difference in quoted prices of gold and foreign currency (42,707) - – Other (Note 5.e) (160,141) (202,240)

------------ ------------ (656,709) (652,538) ------------ ------------ GROSS INTERMEDIATION MARGIN - GAIN 382,511 510,471

------------ ------------ C. PROVISION FOR LOAN LOSSES (77,103) (32,766)

------------ ------------ D. SERVICE-CHARGE INCOME

– Related to loans 47,244 30,579 – Related to deposits 26,599 23,367 – Other commissions 22,756 15,667 – Other (Note 5.f) 54,645 59,386

------------ ------------ 151,244 128,999

------------ ------------


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2017 2016

E. SERVICE-CHARGE EXPENSE

– Commissions (626) (113) – Other (Note 5.g) (12,974) (12,352)

------------ ------------ (13,600) (12,465) ------------ ------------ F. ADMINISTRATIVE EXPENSES

– Personnel expenses (259,333) (214,279) – Directors' and statutory auditors' fees (54,122) (71,295) – Other fees (45,661) (38,038) – Advertising (151) (412) – Taxes (21,659) (19,030) – Depreciation of Bank premises and equipment (3,218) (2,181) – Amortization of organization and development costs (3,123) (702) – Other operating expenses (21,185) (18,070) – Other (19,005) (19,464)

------------ ------------ (427,457) (383,471) ------------ ------------

NET INCOME FROM FINANCIAL INTERMEDIATION – GAIN 15,595 210,768

------------ ------------ G. OTHER INCOME

– Income from long-term investments 178,229 114,838 – Punitive interest 352 1,004 – Recovered loans and allowances reversed 18,429 2,240 – Other 7,408 2,277

------------ ------------ 204,418 120,359

H. OTHER EXPENSE ------------ ------------

– Charge for uncollectibility of other receivables, and other allowances - (78) – Depreciation and loss of other assets (3,615) (2,834) – Other (Note 5.h) (4,843) (4,579)

------------ ------------ (8,458) (7,491) ------------ ------------ NET INCOME BEFORE INCOME TAX 211,555 323,636 ------------ ------------ I. INCOME TAX (1,810) (49,768) ------------ ------------ NET INCOME FOR THE FISCAL YEAR

209,745 273,868

====== ======



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STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE FISCAL YEARS ENDED DECEMBER 31, 2017 AND 2016

(Translation of financial statements originally issued in Spanish – See note 22)

(Figures stated in thousands of Argentine pesos)

2017 2016

Appropriated retained

earnings Unappropriated

Changes Capital stock

Legal reserve

Other

Retained earnings Total Total

1. Balance at beginning of year 323,900 239,401 - 528,507 1,091,808 1,027,937

2. Distribution of unappropriated retained

earnings, as approved by the General Shareholders’ Meeting held on April 4, 2017, and April 14, 2016:

– Reserves - 54,774 323,736 (378,510) - - – Cash dividends (1) (2) - - - (150,000) (150,000) (210,000)

3. Other changes - - - 3 3 3

4. Net income for the year - - - 209,745 209,745 273,868

----------- ----------- ----------- ----------- ------------ ------------

5. Balance at end of year 323,900 294,175 323,736 209,745 1,151,556 1,091,808 ======= ======= ======= ======= ======== ========

(1) The General and Special Shareholders’ Meeting held on April 20, 2015, and April 14, 2016, appointed 130,000 and

80,000 for a cash dividend distribution. The BCRA authorized the distribution through a note dated August 29, 2016. The Board of Directors Meeting held on January 21, 2016, and September 1, 2016, decided to make these dividends available for shareholders on those dates.

(2) The General and Special Shareholders’ Meeting held on April 04, 2017, appointed 150,000 for a cash dividend distribution. The BCRA authorized the distribution through a note dated July 18, 2017. Finally, the Board of Directors Meeting held on July 19, 2017, decided to make these dividends available for shareholders.

The accompanying notes 1 through 22 to the financial statements and exhibits A through F, H through L, N

and O are an integral part of these financial statements.


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STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED DECEMBER 31, 2017 AND 2016



2017 2016 Changes in cash flows (*)

Cash at beginning of year 1,171,526 599,510

Cash at end of year 1,243,601 1,171,526 ------------- ------------- Net increase in cash 72,075 572,016 ========= ========= Causes of changes in cash

Operating activities

− Net collections/ (payments): − Government and private securities (167,130) (153,763) − Loans

- Financial sector 63,419 (86,503) - Nonfinancial private sector and foreign residents (217,668) 247,766

− Other receivables from financial intermediation (1,538,024) (53,218) − Receivables from financial leases (57,656) 42 − Deposits

- Financial sector (224) (806) - Nonfinancial private sector and foreign residents 1,733,135 696,323

− Other liabilities from financial intermediation - Financial sector financing 769,234 283,046

- Interfinancing loans (call received) 67,908 (33,585) - Other (except for liabilities included in Financing Activities) 100,332 17,173

− Collections from service-charge income 151,244 128,999 − Payments from service-charge expense (3,013) (3,435) − Administrative expenses paid (300,168) (260,767) − Payment of organization and development costs (3,123) (702) − Net collections from punitive interest 352 1,004 − Other payments related to other income and expense (219,793) (186,343) − Payment of income tax (11,879) (97,497)

------------- ------------- Net cash flows provided by operating activities 366,946 497,734 ------------- -------------


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2017 2016 Investing activities − Net bank premises and equipment payments (1,875) (8,218) − Collections/ (Payments) for other assets, net 7,599 (14,308) − Dividend collections from other companies 30,691 - − Other payments from investing activities (58,290) (86,065) ----------- ----------- Net cash flows used in investing activities (21,875) (108,591) ----------- ----------- Financing activities – Net collections/ (payments) for:

− Non-subordinated corporate bonds (127,591) 352,414 − Financing received from financial institutions in Argentina Payment of dividends 47,302 -

– Financing received from financial institutions in Argentina Payment of dividends (150,000) (210,000) ----------- -----------

Net cash flows (used in)/ provided by financing activities (230,289) 142,414 ----------- ----------- Financial income and holding gains from cash and cash equivalents (including interest) (42,707) 40,459 ----------- ----------- Net increase in cash 72,075 572,016 ========= =========

(*) “Cash” was defined as “Cash and cash equvalents”.



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NOTES TO THE FINANCIAL STATEMENTS



1. SIGNIFICANT ACCOUNTING POLICIES

These financial statements, which arise from the Bank’s books of accounting, are stated in thousands of Argentine pesos, and have been prepared in accordance with the accounting standards established by the BCRA (Central Bank of Argentina).

The main valuation and disclosure methods are detailed below.

1.1. Consolidated financial statements

As required by BCRA, the Bank discloses “Chart I” as supplementary information containing the consolidated financial statements with its subsidiaries, Eurobanco Bank Ltd., Metrocorp Valores S.A. and CMF Asset Management S.A.U. 1.1.a) Procedure to include the performance of the subsidiary Eurobanco Bank Ltd. Eurobanco Bank Ltd. is a financial institution established in the Bahamas, 99% of which is owned by Banco CMF S.A. It is mainly engaged in the purchase and sale of sovereign debt and corporate securities subject to public offer, short-term financing transactions and investments in low-risk financial assets in international markets. These transactions are funded through its own capital and deposits received. The financial statements of the foreign subsidiary were adjusted to the professional accounting standards effective in the City of Buenos Aires and BCRA regulations. Such financial statements, originally stated in US dollars, were converted into Argentine pesos following the procedures detailed below:

− Assets and liabilities were converted following the method under 1.5.a).

− The capital assigned and irrevocable contributions were computed at the amounts provided by the shareholders converted into Argentine pesos at the foreign exchange rate then effective, and booked by such bank in its books.

− Retained earnings were determined based on the difference between assets, liabilities and the capital assigned, converted into Argentine pesos as previously described.

− The amounts included in the statement of income were converted into pesos following the method under 1.5.a). The difference between the sum of the amounts thus obtained and income (loss) for each year (difference between retained earnings at beginning of year and retained earnings at end of year) was charged in the stand-alone and consolidated financial statements under “Other income – Income (loss) from long-term investments” and “Financial income – Difference in the quoted price of gold and foreign currency”, respectively.

1.2. Comparative information As required by BCRA standards, the financial statements for the year ended December 31, 2017, are presented comparatively with those of the prior year.


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1.3. Unit of measurement

The Bank’s financial statements recognize the changes in the peso purchasing power until March 1, 2003, when the adjustments to reflect those changes were discontinued, as provided for by the Argentine professional accounting standards effective in Buenos Aires City and the requirements established by Presidential Decree No. 664/2003, section 312 of IGJ (Argentine regulatory agency of business associations) General Resolution No. 7/2015, BCRA Communiqué “A” 3921, and CNV (Argentine Securities Commission) General Resolution No. 441. However, the existence of significant changes as those found over the last fiscal years in connection with the prices of the relevant economic variables affecting the Bank’s business, such as salary costs, the interest rate and the exchange rate may affect the accompanying financial statements, so these changes should be taken into account when interpreting the financial position, income (loss) and cash flows presented by the Bank in these financial statements. The INDEC (Argentine statistics and census institute) published the monthly inflation rate measured based on the wholesale domestic price index for January 2016 and did not issue the specific inflation for November and December 2015. The last wholesale price index as of the date of these financial statements was published in December 2017 and the accumulated inflation rate for the 3-year period then ended based on the INDEC’s official data stands at about 77%.

1.4. Significant accounting judgements, estimates and assumptions Preparing the financial statements in accordance with the abovementioned standards requires that the Bank’s Board of Directors make and consider significant judgements, estimates and assumptions that affect the reported figures for assets and liabilities, revenues and expenses, as well as the assessment and disclosure of contingent assets and liabilities as of the date of those statements. In this sense, the uncertainty related to the estimates and assumptions adopted could result in outcomes that could differ from those estimates and require material adjustments to the reported figures of the assets and liabilities affected.

1.5. Main valuation methods used

The main valuation and disclosure methods used to prepare the financial statements are:

a) Assets and liabilities denominated in foreign currency:

The assets and liabilities denominated in US dollars were valued at BCRA reference exchange rate effective for US dollars at the end of transactions of the last business day. Additionally, assets and liabilities denominated in other foreign currencies were converted at the repurchase rate communicated by the BCRA’s dealing room. Foreign exchange differences were charged to the related statements of income.

b) Government securities booked at market value: They were valued at quoted prices or present values reported by BCRA as of period end, plus coupons pending collection. Investments in foreign currency were converted into pesos as provided for by the method described in note 1.5.a). Any quoted price and present value differences were charged to the related statements of income.

c) Government securities booked at amortized cost: According to BCRA Communiqué “A” 5506, they were valued at their cost of addition increased by the accrued internal rate of return. Investments in foreign currency were converted into pesos as provided for by the method described in note 1.5.a). Quoted price differences were charged to the related statements of income.


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d) Instruments issued by the BCRA – Holdings with volatility published by the BCRA (own

portfolio and repurchase transactions): They were valued at the closing quoted price. Quoted price differences were charged to the related statements of income.

e) Instruments issued by the BCRA – Holdings without volatility published by the BCRA (own portfolio and repurchase transactions): They were valued at the initial cost increased by the internal rate of return (IIR), in conformity with the issuance terms thereof. The accruals of the IRR mentioned above were charged to the related statements of income.

f) Unlisted corporate bonds: Valued at the initial cost plus accrued interest through year-end applying the internal rate of return exponentially in conformity with the issuance terms thereof. The accruals of the IRR mentioned above were charged to the related statements of income.

g) Interest accrual: Interest was accrued according to exponential distribution, except for interest on interbank transactions for maturity terms no longer than 92 days, which were accrued for according to linear distribution.

h) Other receivables from financial intermediation, loans, deposits, other liabilities from financial intermediation involving government securities, securities and foreign exchange receivables and payables under spot transactions pending settlement and forward transactions: They were valued at present value, at the quoted price of reference foreign exchange rate reported by the BCRA for each security or foreign currency on the last business day, as the case may be. Any present value, quoted price and/or foreign exchange rate differences were charged to the related statements of income.

i) Other receivables from financial intermediation – Amounts receivable for spot and forward transactions pending settlement: They were valued in accordance with the prices agreed upon for each transaction, considering the premiums accrued as of the end of the last applicable business day. The accrued premiums were charged to the related statements of income.

j) Other liabilities from financial intermediation – Amounts payable for spot and forward transactions pending settlement: They were valued in accordance with the prices agreed upon for each transaction, considering the premiums accrued as of the end of the last applicable business day. The accrued premiums were charged to the related statements of income.

k) Other receivables from financial intermediation – Certificates of participation and unlisted financial trust debt securities: They were valued at cost increased exponentially applying the IRR. The accruals of the IRR mentioned above and quoted price differences were charged to the related statements of income.


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l) Receivables from financial leases:

According to BCRA Communiqué “A” 5047, as supplemented, they were stated at the discounted value of the sum of minimum installments pending collection (excluding contingent installments), of the net book value previously agreed upon and of purchase options, in view of the finance lease agreements under which the Bank is the lessor. The discounted value is calculated by applying the imputed interest rate of each lease agreement.

The current financial lease agreements do not account for significant amounts with regard to the total financing facilities granted by the Bank. Furthermore, their characteristics are normal for these kinds of transactions. These transactions are atomized between the Bank’s customers and there are no automatic renewal clauses or preestablished contingent installments.

m) Allowance for loan losses and provision for contingent commitments: The loan loss provision was booked based on the estimated uncollectibility risk of the Bank’s credit assistance, which results from assessing borrowers’ compliance and the guarantees supporting the related transactions in conformity with BCRA Communiqué “A” 2950, as supplemented, and the Bank’s allowance-setting policies.

n) Equity interests in other companies:

- Subsidiaries, noncontrolled companies in Argentina and others: valued by the equity method.

- Subsidiaries abroad - Eurobanco Bank Ltd.: valued by the equity method and translated into pesos by the method described in note 1.1.a).

- Non-controlled companies in Argentina:

– Garantizar S.G.R.: They were valued at the contribution value plus interest accrued net of

the related collections for the year, if applicable.

– Acindar S.G.R.: They were valued at the contribution value plus interest accrued net of the related collections for the year, if applicable.

o) Bank premises and equipment and other assets:

Valued at acquisition cost restated as mentioned in note 1.3, less the related accumulated depreciation, calculated proportionately to the estimated useful life in months. The residual value of bank premises and equipment, and other assets, taken as a whole, does not exceed the recoverable value of such assets.

p) Non-subordinated corporate bonds: Valued according to the principal amount owed, plus accrued interest. Those accruals were charged to the related statements of income.

q) Memorandum accounts – Guarantees received: They were valued according to the amount of the guarantee received, capped by the amount of the customer’s debt or the appraisal value of the guarantee, as the case may be, as of year-end. Moreover, as of December 31, 2017, and 2016, the Bank has additional guarantees for 1,332,422 and 640,074, respectively, which are not part of the balance in the account as of such date. These additional guarantees are recorded separately in the Bank’s books.


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r) Severance pays:

The Bank charges severance pay to expenses directly.

s) Forward transactions without delivery of the underlying asset: They were valued at the quoted price of the underlying assets, effective on the last business day. Quoted price differences were charged to the related statements of income. For OTC transactions - Residents in Argentina – Nonfinancial sector, differences between the amount agreed and the benchmark foreign exchange rate were charged to the accounts “Amounts pending settlement of forward transactions without delivery of the underlying asset” in assets or liabilities, as the case may be.

t) Shareholders-equity accounts: They are restated as explained in note 1.3, except for the “Capital stock” account, which has been maintained at its nominal value.

u) Income-statement accounts: The accounts comprising monetary transactions (financial income (expense), service-charge income (expense), provision for loan loss, administrative expenses, etc.) were computed at their historical values on a monthly accrual basis. The accounts disclosing the effect on income of the sale, retirement, or consumption of non-monetary assets were computed based on the values of such assets. Income (loss) from equity interests in subsidiaries were computed on the basis of such companies’ income (loss).

2. INCOME TAX AND MINIMUM PRESUMED INCOME TAX. TAX REFORM (LAW NO. 27,430)

a) The Bank calculates income tax by applying the effective 35% rate to taxable income for each year, without considering the effect of temporary differences between book and taxable income.

Minimum presumed income tax was established during fiscal 1998 by Law No. 25,063 for ten fiscal years. Currently, after successive extensions and based on Law No. 27,260, such tax is effective for the fiscal years ending up to and including December 31, 2018. This tax is supplementary to income tax since, while the latter is applied on taxable income, minimum presumed income tax is a minimum levy applied on the potential income of certain productive assets and liabilities at 1% so that the Bank’s tax obligation shall be the higher of both taxes. For the case of institutions governed by Financial Institutions Law, Law No. 25,063 provides that they shall consider a tax base equivalent to 20% of the assets that would be taxable under general regulations, after deducting those assets defined as non-computable.

However, should minimum presumed income tax exceed income tax in a given tax year, such excess may be computed as payment on account of any income tax excess over minimum presumed income tax that could occur in any of the ten subsequent tax years once all the NOLs have been used. As of December 31, 2017, and 2016, the Bank estimated an income tax charge of 1,810 and 49,768, respectively, and no minimum presumed income tax is required to be assessed for the years then ended.


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b) On December 29, 2017, the Federal Government passed Administrative Order No. 1112/2017, regulating

Tax Reform Law 27,430, which had been enacted by the Argentine Congress on December 27, 2017. The law was published in the Official Bulletin1 on the same date it was passed. The outstanding elements of this reform are summarized below:

(i) Reduction of the income tax corporate rate and additional tax on the distribution of dividends

The 35% corporate income tax rate remains effective through the year ended December 31, 2017, which will be reduced by 30% during the two tax years beginning as from January 1, 2018, and by 25% during the tax years beginning as from January 1, 2020. The effects of this decrease are included in the calculation of deferred tax assets and liabilities disclosed in notes 3 and 4. The corporate income tax rate reduction is supplemented by the application of a tax on the distribution of dividends of local individuals and foreign beneficiaries, which shall be withheld and pay to tax authorities by the Bank as a single and final payment upon the payment of dividends. This additional tax shall account for 7% or 13%, depending on whether the dividends distributed refer to income earned during a tax year in which the Bank was subject to a 30% or 25% rate, respectively. For this purpose, it is irrefutably considered that the dividends made available refer, first of all, to the retained earnings with more aging.

(ii) Equalization tax

According to Law No. 25,063, the payment of dividends exceeding retained tax earnings at the end of the year that is immediately prior to the date of such payment gives rise to the obligation to withhold 35% income tax on such surplus as a single and final payment. Such withholding shall not apply to dividends related to income accrued for the tax years beginning as from January 1, 2018 (see note 18.b.)).

(iii) Tax revaluation

Law No. 27,430 allows for a one-time revaluation for tax purposes of certain assets owned by the taxpayer and existing at the end of the first tax year closed after December 29, 2017, the effective date of the law, and then adjusting the revalued assets to the percentage variations in the domestic wholesale price index provided by the INDEC in accordance with the tables furnished by the AFIP for that purpose. Exercising this option results in the payment of a special tax on all revalued assets, pursuant to the rates set for each type of asset, and grants the right of deducting from the income tax assessment a depreciation amount including the fee related to the revaluation amount. Those opting to revalue their assets in accordance with Law No. 27,430 shall (i) waive the filing of any court or administrative proceeding to claim, for tax purposes, the application of adjustment procedures of any kind until the end of the first year elapsed after the effective date of such law, and (ii) abandon all the actions and rights invoked in proceedings filed in relation to tax years closed previously. In addition, calculating the amortization of the revaluation amount or its inclusion as a disposal cost in assessing income tax shall imply, for the tax year in which such calculation is made, a waiver of all adjustment claims. The Company’s Board of Directors will evaluate the final dispositions determined by the Regulatory Decree not yet issued by the Executive Power of The Nation to decide whether or not to exercise the option of tax revaluation.

(iv) Employer contributions

A progressive reduction of the 21% rate is set for employer contributions accruing as from February 1, 2018. According to the reduction schedule, the rate shall be 20.70% in 2018, 20.40% in 2019, 20.10% in 2020, and 19.80% in 2021, and will be stabilized at 19.50% for the employer contributions accruing as from January 1, 2022.

1 Argentine government daily publishing enacted acts, decrees, administrative orders, as well as resolutions of federal government and municipal agencies, and judicial documents requiring publication, etc. Under Argentine law, legal provisions become effective and binding once they have been published in this Bulletin for some specified time as provided by the related statute.


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In addition, a threshold will be deducted from the tax base to which the abovementioned rates were to be applied; such threshold will be progressively applied: ARS 2,400 in 2018, ARS 4,800 in 2019, ARS 7,200 in 2020, ARS 9,600 in 2021, and ARS 12,000 from January 1, 2022. This amount will be adjusted as from January 2019, based on the consumer price index to be provided by the INDEC.

3. DIFFERENCES BETWEEN BCRA STANDARDS AND PROFESSIONAL ACCOUNTING STANDARDS EFFECTIVE IN THE CITY OF BUENOS AIRES, ARGENTINA

Professional accounting standards effective in the City of Buenos Aires differ in certain valuation and disclosure aspects from the BCRA’s accounting standards. The differences between such standards identified and considered material in connection with these financial statements by the Bank are identified below: Valuation aspects

a) Holdings of government securities: These holdings and financing are valued in accordance with specific regulations issued by the Argentine Government and the BCRA, establishing, among other issues, the use of present values, technical values and asset balancing accounts. In relation to these holdings, the Bank’s particular situation is as follows: Instruments issued by the BCRA – Holding at amortized cost: The Bank and its subsidiaries apply the valuation method specified in note 1.5.c) on the holdings booked in this account. As of December 31, 2017, and 2016, the Bank booked 781 and 29,082, respectively, allocated under this account. According to the effective Argentine professional accounting standards, such securities should be stated at market value. Had this valuation method been applied, the Bank’s assets as of those dates would have decreased by about 17 and 384, respectively, whereas income for the fiscal years then ended would have increased by about 367 and decreased by about 384, respectively.

b) Income tax: As mentioned in note 2.a), the Bank assesses income tax by applying the effective rate to the estimated taxable income disregarding the effect of differences between book and taxable income. According to professional accounting standards, income tax should be booked following the deferred tax method, according to which (i) in addition to the current tax payable, either a receivable (if certain conditions are met) or a payable is recognized for deferred taxes related to the tax effect of the temporary differences between the book and tax valuation of assets and liabilities, and (ii) a tax expense (income) is recognized in relation to the portion involving the current tax expense (income) as well as the one involving the deferred tax expense (income), resulting from the creation and reversal of the abovementioned temporary differences in the year. Under professional accounting standards, a deferred tax asset is recognized when there are unused NOLs or tax credits that can be deducted from future taxable income, provided they are probable. Had the deferred tax method been applied, as of December 31, 2017, and 2016, the Bank should have booked deferred assets in the amounts of 29,600 and 31,604, respectively, and income for the fiscal years then ended would have decreased by about 2,004 and increased by about 9,964, respectively (see note 2.b.i.)).

Had the professional accounting standards been applied, the Bank's shareholders' equity as of December 31, 2017, and 2016, would have increased by about 29,583 and 31,220, respectively. Therefore, income for the years ended December 31, 2017, and 2016, would have decreased by about 1,637 and increased by about 9,580, respectively. Disclosure standards

a) The Bank has not classified its assets and liabilities into current and noncurrent based on the point in time

the former are expected to be turned into cash or cash equivalents and based on the point in time in which the latter become due and payable, as required by professional accounting standards in effect.


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b) There are differences between the disclosure required by current professional accounting standards and

the disclosure made by the Bank regarding the Bank’s income statement items, such as the lack of breakdown of operating expenses by duty or the method adopted by the Bank for disclosing financial income (expense) and holding gains (losses), as this statement is prepared according to specific standards applicable to financial institutions.

c) There are differences between the disclosure required by current professional accounting standards and that made by the Bank on cash flows disclosed in the statement of cash flows, such as the lack of segregation of interest collected and paid by the Bank, as such statement is prepared under specific standards applicable to financial institutions.

d) The Bank has presented the information specifically established by BCRA regulations as supplementary information. This regulation does not contemplate all disclosure requirements contained in current Argentine professional accounting standards, such as the disclosure of the maturity terms for all receivables and payables, along with interest or adjustment rates and information on related parties, among others.

4. IMPLEMENTATION PLAN FOR THE CONVERGENCE TOWARDS THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) On February 12, 2014, the BCRA issued Communiqué "A" 5541 establishing the general guidelines for the process of convergence with the IFRS (International Financial Reporting Standards) issued by the IASB (International Accounting Standards Board), for preparing financial statements of the banks under its supervision for the fiscal years beginning on or after January 1, 2018, as well as the related interim periods.

Moreover, through BCRA Communiqué “A” Nos. 6114 and 6430, as supplemented, the BCRA established specific guidelines within this convergence process, among which it was defined transitorily through December 31, 2019, (i) the exception to the application of section 5.5 “Impairment in value” of IFRS 9 “Financial Instruments”, and (ii) that in order to calculate the effective deposit and lending rates required for measurement purposes pursuant to IFRS 9, the effective interest rate of a group of financial assets or liabilities with similar application may be calculated globally Finally, BCRA Communiqué “A” Nos. 6323 and 6324 defined the minimum chart of accounts and the provisions applicable to the preparation and presentation of the financial statements of the financial institutions beginning as from January 1, 2018, respectively.

Therefore, the Bank is currently going through the convergence process towards IFRS under the scope defined by BCRA Communiqué “A” No. 6114, and the date of transition established is January 1, 2017, pursuant to IFRS 1 “First-time Adoption of International Financial Reporting.” In agreement with BCRA Communiqué “A” No. 6206 and considering the guidelines established in Communiqué “A” No. 6114, below we disclose the reconciliation of the amounts assessed according to BCRA accounting standards for assets, liabilities, shareholders’ equity and income as of December 31, 2017, and for the year then ended, and the amounts obtained for these items as a result of applying IFRS.

FOR THE FISCAL YEAR ENDED 12/31/2017

Accounts BCRA IFRS adjustment IFRS amount

Assets 9,983,356 126,611 10,109,967 Cash 1,243,601 - 1,243,601 Government and private securities 708,054 (27,144) 680,910 Loans 4,216,931 (15,045) 4,201,886 Other receivables from financial intermediation 2,731,759 (132,406) 2,599,353 Receivables from financing leases 100,689 526 101,215


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Individual charts:

Investments in other companies 828,319 (155,525) 672,794 Other receivables 51,219 - 51,219 Bank premises and equipment 19,365 301,205 320,570 Other assets 83,419 - 83,419 Intangible assets - - - Items pending allocation - - - Other assets - 155,000 155,000 Other assets under IFRS 10 - - -

Liabilities 8,831,800 (104,404) 8,727,396 Deposits 4,906,210 - 4,906,210 Other liabilities from financial intermediation 3,821,656 (159,033) 3,662,623 Other liabilities 103,934 18,208 122,142 Provisions - - - Subordinated corporate bonds - - - Items pending allocation - - - Third-party interests - - - Other liabilities - 36,421 36,421 Other liabilities under IFRS 10 - - -


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Consolidated charts:

FOR THE FISCAL YEAR ENDED 12/31/2017


Assets 12,975,931 127,136 13,103,067 Cash 3,097,956 - 3,097,956 Government and private securities 1,383,823 (27,144) 1,356,679 Loans 4,439,380 (15,045) 4,424,335 Other receivables from financial intermediation 3,592,716 (132,406) 3,460,310 Receivables from financing leases 100,689 526 101,215 Investments in other companies 196,634 (155,000) 41,634 Other receivables 55,735 - 55,735


Net income (loss) for the year 209,745 (82,259) 127,486 Financial income 1,039,220 (5,085) 1,034,135 Financial expense (656,709) 1,329 (655,380) Provision for loan losses (77,103) - (77,103) Service-charge income 151,244 1,423 152,667 Service-charge expenses (13,600) - (13,600) Administrative expenses (427,457) (8,371) (435,828) Other 195,960 (115,375) 80,585 Income tax (1,810) 43,820 42,010 Other comprehensive income - 80,717 80,717 Changes in the revaluation surplus of bank premises and equipment, and intangible assets - - -

Accumulated actuarial gains (losses) for defined post-employment benefit plans - - -

Foreign exchange differences on conversion of financial statements - 80,717 80,717

Gain (losses) from hedging instruments – Cash flow hedging - - -

Gain (losses) from hedging instruments – Hedging for the net investment abroad - - -

Gain (losses) from financial instruments at market value with changes in OCI (points 5.7.5 and 4.1.2A of IFRS 9)

- - -

Amount of change in the fair value attributable to changes in the credit risk of the liability (point 5.7.7.a of IFRS 9)

- - -

Total comprehensive income (loss) for the year 209,745 (1,542) 208,203

Accounts BCRA First-time

IFRS adjustment

IFRS adjustment IFRS amount

Shareholders’ equity attributable to the parent company’s owners

1,151,556 232,557 (1,542) 1,382,571

Capital, contributions and reserves 941,811 - - 941,811 Other comprehensive income - - 80,717 80,717 Unappropriated retained earnings (accumulated losses)

209,745 232,557 (82,259) 360,043


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Bank premises and equipment 24,380 301,205 325,585 Other assets 83,419 - 83,419 Intangible assets 1,199 - 1,199 Items pending allocation - - - Other assets - 155,000 155,000 Other assets under IFRS 10 - - -

Liabilities 11,824,375 (110,525) 11,713,850 Deposits 7,209,507 - 7,209,507 Other liabilities from financial intermediation 4,485,041 (159,032) 4,326,009 Other liabilities 123,185 18,208 141,393 Provisions - - - Subordinated corporate bonds - - - Items pending allocation - - - Third-party interests 6,642 (6,642) - Other liabilities - 36,941 36,941 Other liabilities under IFRS 10 - - -


Net income (loss) for the year 209,745 (82,259) 127,486 Financial income 1,273,015 (5,085) 1,267,930 Financial expense (659,308) 1,329 (657,979) Provision for loan losses (80,301) - (80,301) Service-charge income 169,201 1,423 170,624 Service-charge expenses (15,195) - (15,195) Administrative expenses (474,608) (8,371) (482,979) Other 26,850 (115,370) (88,520) Income tax (29,909) 43,815 13,906 Other comprehensive income - 80,717 80,717 Changes in the revaluation surplus of bank premises and equipment, and intangible assets - - -

Accumulated actuarial gains (losses) for defined post-employment benefit plans - - -

Foreign exchange differences on conversion of financial statements - 80,717 80,717

Gain (losses) from hedging instruments – Cash flow hedging - - -

Gain (losses) from hedging instruments – Hedging for the net investment abroad - - -

Gain (losses) from financial instruments at market value with changes in OCI (points 5.7.5 and 4.1.2A of IFRS 9)

- - -

Amount of change in the market value attributable to changes in the credit risk of the liability (point 5.7.7.a of IFRS 9)

- - -

Total comprehensive income (loss) for the year 209,745 (1,542) 208,203


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The items and amounts included in these reconciliations may change because, when the financial statements are first prepared in accordance with IFRS, other standards may be issued or the current ones may be amended, which may be subject to mandatory or early application admissible as of such date, or the choice related to any of the exceptions provided by IFRS 1 may change, or the Bank may conduct more accurate calculations and adjustments than those performed for the purposes of these reconciliations. Therefore, the items and figures contained in this reconciliation may only be considered final upon the preparation of the annual financial statements for the fiscal year when IFRS are adopted for the first time with the scope defined by BCRA Communiqué “A” Nos. 6144 and 6324, as supplemented. In addition, pursuant to BCRA regulations, the special reserve to be set up by virtue of the first-time adoption of IFRS may not be distributed, and may only be reversed to be converted into equity or to absorb potential negative items of unappropriated retained earnings. Below is a brief explanation of the main adjustments and reclassifications arising from the abovementioned transition to IFRS:

Valuation and disclosure methods The main valuation and disclosure methods followed in the preparation of their reconciliation for the fiscal year ended December 31, 2017, were: Recognition of income and expenses:

a) Recognition of income and expenses:

- Interest income and expenses, and similar ones: Income and expenses are recognized using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument. The calculation includes transaction costs, commissions and others items paid or received that are an integral part of the effective interest rate.

b) Financial Instruments: Initial recognition and subsequent measurement:

Under IFRS 9 ”Financial Instruments", the financial assets are classified based on the entity's business model for managing financial assets and the asset's contractual cash flow characteristics. Thus, the Group measured the financial assets at fair value, except for those earmarked for obtaining contractual cash flows, which were valued at amortized cost.

Accounts BCRA First-time IFRS adjustment

IFRS adjustment

IFRS amount

Shareholders’ equity attributable to the parent company’s owners 1,151,556 232,557 (1,542) 1,382,571

Capital, contributions and reserves 941,811 - - 941,811 Other comprehensive income - - 80,717 80,717 Unappropriated retained earnings 209,745 232,557 (82,259) 360,043 Shareholders’ equity attributable to noncontrolling interests 6,642 - 4 6,646

Total comprehensive income (loss) attributable to:

Total comprehensive income attributable to parent’s owners 207,053

Total comprehensive income attributable to noncontrolling interests 1,150


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– Loans and other receivables

They are related to the nonderivative financial assets kept by the Group under a business model aimed at obtaining contractual cash flows, the contractual conditions of which give rise to specific dates and cash flows that are solely payments of principal and interest on the principal amounts outstanding. After the initial recognition, loans and other receivables were valued at amortized cost using the effective interest rate method less the loan loss provision pursuant to BCRA standards. Loans and other receivables were booked when the funds were disbursed to customers. The guarantees granted and similar items were initially recognized at the market value of the commission earned under “Other liabilities” in the reconciliation. After the initial recognition, the liability for each guarantee was booked at the highest value between the amortized commission and the best estimate of the expense incurred to settle any financial payable arising from the financial guarantee, considering the exception mentioned in point 5.5 of IFRS 9 as established in Communiqué "A" No. 6144.

– Finance leases

Under IFRS 16, the Group is required to classify leases as operating or finance leases. Therefore, the Group classified the agreement as a finance lease that transfers substantially all the risks and rewards of the ownership of the leased asset, and the account receivable of the net investment in the lease, which is recognized and disclosed as a loan. – Financial liabilities All the financial liabilities were valued at amortized cost using the effective interest rate method.

c) Assets and liabilities in foreign currency: The Bank considers the Argentine peso as the functional and reporting currency. The transactions in foreign currency are converted to the functional currency of the Group companies at the exchange rate effective on the date of the transactions.

d) Purchases and sales with repurchase agreements (repos):

Purchases (sales) of financial instruments with the nonoptional repurchase commitment at a determined price (repos) are booked in the reconciliation as financing facilities granted (received) based on the nature of the related debtor (creditor) in “Loans” or "Financing facilities received from financial institutions" accounts. The difference between the purchase and sale prices of those instruments is booked as interest, which is accrued over the effective term of transactions using the effective interest rate method.

e) Bank premises and equipment, and other The Bank’s premises and equipment are mainly subject to IAS 16 “Property, Plant and Equipment.” It defines two valuation methods: the cost method and the valuation method. Due to the application of the exemption by virtue of IFRS 1, the Bank opted, on transition date, to measure real property at market value and used this market value as the deemed cost on such date. An independent appraiser assessed the fair value of the Bank’s real property. The rest of the investment properties held by the Entity will be valued at cost since they are assets for collateral and others assets that were not subject to improvements or changes. They will be held at initial cost pursuant to the provisions of IAS 40.


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f) Intangible assets:

Intangible assets comprise the costs of acquiring and implementing systems development projects, which were measured at cost less the accumulated amortization as from the beginning of the activities and impairment in value, if applicable.

g) Income tax:

Current income tax charge is the amount of income tax payable (or recoverable) in respect of the taxable income (tax loss) for the fiscal year, and any adjustment to the amount payable or receivable with respect to the prior years. It is measured by applying the income tax rates established by enacted laws or substantively enacted as of year-end (see note 2.) Deferred tax liabilities are recognized with respect to the temporary differences between the carrying amount of an asset and liability used for filing the accounting information and the amounts used for tax purposes. Reasons for the adjustments/reclassifications arising from the application of IFRS – Government and private securities

The Bank’s Financial Committee defined the portfolios of investment, and the Board of Directors decided the business model for each portfolio. The financial assets related to government and private securities were adjusted to reflect the market values of the portfolio valued “at market value through profit or loss” and at “amortized cost” for the portfolios used to maintain their investment income or because they are related to liabilities valued at amortized cost.

– Loans, other receivables from financial intermediation and receivables from finance leases

They were adjusted according to the effective interest rate method, commissions and incremental expenses related to the financing granted.

– Other receivables from financial intermediation

The assets related to purchases (sales) of financial instruments with the nonoptional repurchase commitment at a determined price (repos) are booked in the reconciliation as financing granted (received) based on the nature of the related debtor (creditor) in “Financing received from financial institutions.” The difference between the purchase and sale prices of these instruments is booked as interest, which is accrued during the term of the transactions using the effective interest rate method.

– Investments in other companies

Foreign subsidiary: (i) assets and liabilities were converted at the exchange rate effective as of the end of the quarter; (ii) income was converted at the average exchange rate of each month, and (iii) the difference was charged to other comprehensive income. Local subsidiaries: Interests in investment companies were adjusted at market value considering the recoverable value thereof. The Bank also adjusted the intangible assets not allowed by IFRS. Other companies: They were stated at market value.

– Bank premises and equipment and other assets:

They were valued at amortized cost considering the attributable cost as the revaluation at market value at the beginning of the period of convergence. The Bank estimated the residual value of the asset and the recoverable value at the end of such period, which was depreciated by the straight-line method.


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– Intangible assets

Intangible assets comprise the costs of acquiring and implementing systems development projects in a local subsidiary and are adjusted to IFRS in case of applicable.

– Other liabilities from financial intermediation – Proprietary corporate bonds

They were adjusted to reflect the effective interest rate calculation and the financial expenses incurred throughout the liability were prorated.

– Other guarantees granted, on agreements on checking account

Assets and liabilities items were adjusted, as the case may be, to reflect the market value of the commission earned.

– Accrual of vacations days not taken Pursuant to IAS 19 “Employee Benefits”, vacation is considered as accumulated irrevocable compensated absences, and will be measured at the expected cost of such absences as the additional amount that the entity expects to pay as a result of the unused days accrued by the employees for the fiscal year ended December 31, 2017.

5. BREAKDOWN OF MAIN ACCOUNTS As of December 31, 2017, and 2016, the breakdown of “Other”, with amounts exceeding 20% of the total related item, is as follows:

2017 2016 A) Other receivables from financial intermediation – Other not

covered by debtor classification standards:

− Certificates of participation in financial trusts 863,600 67,726 − Unlisted financial trusts debt securities 38,690 - − Unlisted corporate bonds purchased 4,032 9,512 − Unaccrued premiums on repurchase agreements 270 332

------------ ------------ 906,592 77,570

======= ======= B) Other receivables – Other:

− Income tax prepayment 32,617 23,437 − Advance payments 7,523 5,529 − Security deposit 6,244 150 − Sundry receivables 2,695 1,725 − Leases receivable 1,733 246 − Other tax prepayments 548 438 − Other 37 2

----------- ----------- 51,397 31,527 ====== ======


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F) Service-charge income - Other:

− Commissions for check collection 12,690 12,054 − Commissions for foreign exchange transactions 12,496 13,199 − Commissions for foreign-trade transactions 11,066 10,202 − Commissions from electronic transfers 4,865 4,320 − Commissions for financial advisory services 4,248 10,010 − Commission for custody of government securities 2,165 1,611 − Commission for bidding letters 1,427 3,102 − Commission for performance as agent bank 860 2,614 − Other commissions 4,828 2,274

------------ ----------- 54,645 59,386 ======= ====== G) Service-charge expenses - Other:

− Turnover tax 10,587 9,030 − Market fees for futures transactions 2,238 - − Other commissions - 2,900 − Other 149 422

------------ ----------- 12,974 12,352 ======= ====== H) Other expense – Other:

− Donations 2,680 748 − Turnover tax 1,214 230 − Loss 381 252 − Other 568 3,349 ----------- ---------

4,843 4,579

====== =====

2017 2016 C) Other liabilities – Other:

− Salaries and payroll taxes payable 37,091 46,112 − Other withholdings payable 27,527 9,649 − Sundry payables 14,353 13,824 − Taxes payable net of prepayments 11,135 9,061 − VAT debit 8,847 7,870 − Withholdings on salaries to be paid over 4,981 5,325 − Tax on bank account transactions - 8,772

----------- ------------ 103,934 100,613 ====== =======

D) Memorandum accounts – Debit-balance accounts – Control – Other:

− Checks and securities in custody 4,130,373 1,039,113 − Checks and securities to be collected 117,001 38,979

--------------- -------------- 4,247,374 1,078,092 ======== ========

E) Financial expense - Other: − Premiums on repurchase agreements with the financial sector 89,687 127,307 − Turnover tax 70,454 74,933

------------ ----------- 160,141 202,240

======= ======


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6. COMPLIANCE WITH REQUIREMENTS TO ACT AS SETTLEMENT AND CLEARING

AGENT AND NEGOTIATION AGENT – COMPREHENSIVE On September 5, 2013 the CNV issued General Resolution N ° 622. Considering Banco CMF S.A.´s current operations, and based on the various agent categories established by such resolution, on January 16, 2014, the Bank requested the final registration of the following agent categories with such agency: negotiation agent (AN), and settlement and clearing agent and negotiation agent - Comprehensive (ALyC and AN - Comprehensive). Finally, on September 19, 2014, the CNV ordered Banco CMF S.A.’s inclusion in the registry kept by such organization as “Settlement and clearing agent and Negotiation agent – Comprehensive” No. 63 ALyC and AN – Comprehensive, regulated by Chapter II in Title VII of the Regulations (NT2013). Moreover, under interpretation criteria No. 65 of the CNV, the agents were given a new deadline until September 30, 2016, for adjusting their operations to the new regulatory requirements. Subsequently, through interpretation criterion No. 67 of the CNV, the deadline established to meet such requirement was December 31, 2016. Finally, through interpretation criterion No. 68 of the CNV, the deadline was set again to December 30, 2017. In this regard, as provided in items 4 and 5 of Exhibit I, Chapter I, Title VI and sections 20 and 22 of Chapter II, Title VII of CNV regulations (N.T. 2013), it is reported that the Bank’s equity exceeds the minimum shareholders’ equity required by such regulation, which amounts to 15,000, as well as the required minimum liquid assets, which stands at 7,500. Since the Bank is registered as a financial trustee as mentioned in note 13, it is required to have a minimum shareholders’ equity of 6,000. Since it is also registered as a settlement and clearing agent, comprehensive category, and custody agent of mutual funds collective investment products, the Bank should have a minimum shareholders’ equity equal to the amount resulting from adding to the minimum shareholders’ equity required for the highest category 50% of each of the remainder minimum shareholders’ equity required for the other categories. In turn, the agent should have an amount equal to the addition of all the minimum statutory guarantees required for the categories requested. As of the date of issuance of these financial statements, the Bank should maintain an additional minimum shareholders’ equity for the trust activity performed of 3,000 and an additional minimum statutory guarantee of 3,000. Besides, the Bank is registered as a custody agent of mutual funds collective investment products as mentioned in note 14; therefore, it is required to have a minimum shareholders’ equity of 1,000 plus 500 for each fund under its custody. Since it is also registered as a settlement and clearing agent, comprehensive category, and custody agent of mutual funds collective investment products, the Bank should have a minimum shareholders’ equity equal to the amount resulting from adding to the minimum shareholders’ equity required for the highest category 50% of each of the remainder minimum shareholders’ equity required for the other categories. In turn, the agent should have an amount equal to the addition of all the minimum statutory guarantees required for the categories requested. The Company is also required to have an additional minimum statutory guarantee of 500. The abovementioned minimum statutory guarantees are made up with assets available in BCRA account No. 00319 in Argentine pesos for 11,500 booked under “Financial institutions and BCRA correspondents - Checking account denominated in Argentine pesos.”


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7. TRANSACTIONS WITH COMPANIES UNDER SECTION 33, LAW NO. 19,550

(SUBSIDIARIES AND AFFILIATES) The balance sheet amounts and income (loss) as of December 31, 2017, and 2016, regarding the transactions with subsidiaries, are: 2017 2016 Assets - Loans

Metrocorp Valores S.A. 18 - Assets - Other receivables from financial intermediation

Metrocorp Valores S.A. 163,390 1,130 Liabilities - Deposits CMF Asset Management S.A.U. 21 3,361 Metrocorp Valores S.A. 89,605 19,298 Liabilities - Other receivables from financial intermediation Metrocorp Valores S.A. 94,210 2,431 Memorandum accounts – Control accounts – Other Metrocorp Valores S.A. 314 1,089 Financial income Metrocorp Valores S.A. 15 82 Financial expense Metrocorp Valores S.A. 20,267 476 Service-charge income Metrocorp Valores S.A. 660 660 CMF Asset Management S.A.U. 333 - Other income Metrocorp Valores S.A. 29 18 CMF Asset Management S.A.U. 30 -

8. DEPOSIT GUARANTEE INSURANCE SYSTEM Law No. 24,485 and Presidential Decree No. 540/1995 created a limited and mandatory Deposit Guarantee Insurance System for valuable consideration designed to provide coverage for risks inherent in bank deposits, as a subsidiary and supplementary protection to the one offered by the system of bank deposit privileges and protection created by Financial Institutions Law.

Such law created the company SEDESA for the exclusive purpose of managing the deposit guarantee fund, the shareholders of which, as amended by Presidential Decree No. 1292/96, shall be the BCRA with at least one share, and the trustees of the trust agreement created by financial institutions in the proportion established by the BCRA based on their contributions to the deposit guarantee fund. Such company was created in August 1995. The Bank's equity interest therein is 0.1920% according to the percentages determined by BCRA Communiqué “B” 11491 dated March 1, 2017.


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This system shall cover the deposits in Argentine pesos and foreign currency with the participating institutions as checking accounts, savings accounts, time deposits or any other modes determined by the BCRA, as long as they meet the requirements under Presidential Decree No. 540/1995 and any others established by the enforcement agency. The system will not include: (a) financial institutions’ deposits with other intermediaries, including the time deposits acquired through secondary negotiation; (b) deposits made by persons related, either directly or indirectly, to the bank, according to BCRA current or future regulations; (c) time deposits of securities, acceptances or guarantees; d) deposits made after July 1, 1995, for which the interest rate agreed upon exceeded by two annual percentage points the BCRA deposit rate for equivalent time deposits, effective on the date before the day the deposit was made; the BCRA is empowered to modify the such reference rate; and (e) other deposits that the enforcement authority may exclude in the future.

9. CORPORATE BONDS On September 1, 2012, the Bank’s Special General Shareholders’ Meeting approved a global program for the issuance of nonconvertible corporate bonds pursuant to Law No. 23,576, as supplemented, and the CNV regulations for a maximum outstanding amount at any time of up to a face value of ARS 500,000,000 or its equivalent in other currencies. On September 28, 2012, through Resolution No. 16,923, the CNV authorized the Bank to join the public offering system and create a program to list publicly nonconvertible corporate bonds, the main terms and conditions of which are included in the Program’s offering circular dated October 3, 2012. Its summarized version was published in the Daily Bulletin of the Buenos Aires Stock Exchange on the same date. As part of the abovementioned program, the Bank issued corporate bond classes No. 1 through 10. As of the date of these financial statements, the principal and interest related to classes No. 1 through 7 were repaid in full, in accordance with the issuance terms thereof. On September 8, 2015, the Bank’s Special General Shareholders Meeting approved the increase in the amount for the global program for the issuance of short-, medium- or long-term, subordinated or non-subordinated, secured or unsecured corporate bonds nonconvertible into shares and denominated in Argentine pesos for a maximum outstanding amount of ARS 500,000,000 (or its equivalent in other currencies) to ARS 1 billion (or its equivalent in other currencies), and the extension of the term of the program for five more years or the longer term provided for by applicable regulations. On November 5, 2015, through Resolution No. 17,868, the CNV authorized this increase in the amount and the term of the global program, the main terms and conditions of which are included in the program’s offering circular dated November 26, 2015. Its summarized version was published in the daily bulletin of the Buenos Aires Stock Exchange on the same date.

On July 29, 2016, the CNV approved the pricing supplement of class No. 8 (not convertible into shares) corporate bonds with a variable rate (BADLAR for private banks +2.94% - base annual rate), for a total face value of ARS 200,000,000, and the issue was made effective on August 10, 2016, with a maturity date of February 10, 2018, and with interest payable quarterly in arrears, as from the issuance date. The abovementioned funds, net of issuance expenses, were used to grant loans pursuant to BCRA regulations. The terms and conditions of the corporate bonds were approved by the Special Shareholders’ Meeting on September 08, 2015, and by the Board of Directors in its meeting held on September 16, 2016, and published in the Buenos Aires Stock Exchange Bulletin on July 29, 2016. After the closing, on February 14, 2018, the sixth period of interest and final amortization was paid.


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On December 7, 2016, the CNV approved the pricing supplement of class no. 9 of simple corporate bonds (not convertible into shares) with a variable rate (BADLAR for private banks +3.50%, annual base; however, it was established that, in the first period of interest accrual, the interest rate to be paid shall not be lower than the minimum interest rate of 24.75%), for a total face value of up to ARS 250,000,000, the issue of which was made effective on December 20, 2016, maturing on September 21, 2018, and with interest payable quarterly in arrears as from the issuance date. The abovementioned funds, net of issuance expenses, were used to grant loans pursuant to BCRA regulations. The terms and conditions of the corporate bonds were approved by the Special Shareholders’ Meeting on December 7, 2016, and by the Board of Directors in its meeting held on October 25, 2016. The corporate bond supplement was published in the Buenos Aires stock exchange bulletin on December 7, 2016. On December 15, 2017, the CNV approved the pricing supplement of classes Nos. 10 and 11 of simple corporate bonds (not convertible into shares) with a variable rate (simple mathematical average of the interest rate for certificates of deposit equal to or higher than ARS 20 million for periods ranging between 30 and 35 days for Argentine private banks published by the BCRA during the period that begins on the seventh business day prior to the beginning of each interest accrual period and ends on the seventh business day prior to the date of payment of the related interest, including the first day but excluding the last) plus a cutoff margin of 3.50%, annual base; however, it was established that in the first interest accrual period, the interest rate to be paid shall not be lower than the minimum interest rate of 28.80%) for a total face value of up to ARS 250,000,000. The issuance of Class No. 10 was made effective on December 22, 2017, for a total face value of ARS 316,500,000, maturing on June 24, 2019, and with interest payable quarterly in arrears as from the issuance date. The abovementioned funds, net of issuance expenses, were used to grant loans pursuant to BCRA regulations. The terms and conditions of the corporate bonds were approved by the Special Shareholders’ Meeting on December 7, 2016, and by the Board of Directors in its meeting held on November 21, 2017. The corporate bond supplement was published in the Buenos Aires stock exchange bulletin on December 15, 2017. As of December 31, 2017, and 2016, the principal amount of the non-subordinated corporate bonds issued totaled 766,500 and 750,000, respectively, and interest totaled 11,491 and 20,733, respectively. After year-end, on February 8, 2018, the CNV approved the pricing supplement of classes Nos. 12 and 13 of simple corporate bonds (not convertible into shares) with a variable rate (simple mathematical average of the interest rate for certificates of deposit equal to or higher than ARS 20 million for periods ranging between 30 and 35 days for Argentine private banks published by the BCRA during the period that begins on the seventh business day prior to the beginning of each interest accrual period and ends on the seventh business day prior to the date of payment of the related interest, including the first day but excluding the last) plus a cutoff margin of 3.00% and 3.50%, annual base, for Class No. 12 and No. 13, respectively; however, it was established that in the first interest accrual period, the interest rate to be paid for both classes shall not be lower than the minimum interest rate of 26.75%) for a total face value of up to ARS 400,000,000. The issuance of Class No. 12 was made effective on February 19, 2018, for a total face value of ARS 250,000,000, maturing on August 19, 2019, and with interest payable quarterly in arrears as from the issuance date. In addition, the issuance of Class No. 13 was made effective on February 19, 2018, for a total face value of ARS 150,000,000, maturing on February 19, 2021, and with interest payable quarterly in arrears as from the issuance date. The abovementioned funds, net of issuance expenses, were used to grant loans pursuant to BCRA regulations. The terms and conditions of the corporate bonds were approved by the Special Shareholders’ Meeting on December 7, 2016, and by the Board of Directors in its meeting held on January 9, 2018. The corporate bond supplement was published in the Buenos Aires stock exchange bulletin on February 08, 2018.


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10. DERIVATIVE FINANCIAL INSTRUMENTS

a) As of December 31, 2017, the Bank carries out repurchase agreements of government securities

(“Argentine Government bond in US dollars. Maturity 01/26//2022 (A2E2)”; “Argentine Government bond in US dollars 8.75% 2024 (AY24D)”; “Argentine Government bond in US dollars Step UP. Maturity 2033 (DICY)”; “Argentine Government bond $ 2033”; “Argentine Government bond (DICP)”, and " Treasury bills in US dollars - LTDD) and “Internal Bills of BCRA in Argentine pesos” for 370,545. Such transactions are booked under the “Other liabilities from financial intermediation – Amounts payable for spot and forward purchase pending settlement” account. In addition, as of that date, the market value of the securities traded amounted to 414,603 and are booked in the “Other receivables from financial intermediation - Securities and foreign currency receivables from spot and forward purchases pending settlement” account. In addition, as of December 31, 2017, the Bank carries out repurchase agreements internal bills of BCRA for 153,094. This transaction is booked under the “Other receivables from financial intermediation – Amounts receivable from spot and forward sales pending settlement” account. In addition, as of that date, the market value of the security traded amounted to 170,387 and is booked in the “Other liabilities from financial intermediation - Securities and foreign currency to be delivered from spot and forward sales pending settlement” account. In addition, as of December 31, 2016, the Bank has in place repurchase agreements of government securities (“Argentine Government bond in pesos at Badlar +250 basis points. Maturity 2019”; “Argentine Government bond at 7.625%. Maturing 2046”; “Argentine Government bond in US dollars at 7% Bonar X”; “Argentine Government bond in US dollars 8.75% Maturity 2024”, and “Argentine treasury bonds in Argentine pesos. Maturity 10/03/2021 (Bonte 2021)”), as well as the internal bills of BCRA in Argentine pesos for 511,007. These transactions are booked under the “Other liabilities from financial intermediation – Amounts payable for spot and forward purchases pending settlement” account. In addition, as of that date, the market value of the securities traded amounted to 566,459 and were booked in the “Other receivables from financial intermediation - Securities and foreign currency, receivable from spot and forward purchases pending settlement” account. The Bank’s net losses from its repo transactions during the fiscal years ended December 31, 2017, and 2016, amount to 69,759 and 125,500, respectively, and are allocated under the “Financial expense – other” account.

b) As of December 31, 2017, the Bank booked forward foreign currency purchase transactions in the account “Memorandum accounts – Debit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 546,104 and forward foreign currency sale transactions in the account “Memorandum accounts – Credit balance – Derivatives – ‘Notional’ value of forward transactions without delivery of underlying asset” for 96,293.

On the other hand, as of December 31, 2016, the Bank recorded forward foreign currency purchase transactions in the account “Memorandum accounts – Debit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 611,580 and forward foreign currency sale transactions in the account “Memorandum accounts – Credit balance – Derivatives – ‘Notional’ value of forward transactions without delivery of underlying asset” for 594,383. The Bank’s net losses from its transactions involving the purchase and sale of futures in foreign currency agreed during the fiscal years ended December 31, 2017, and 2016, amount to 15,008 and 4,610, respectively, and are allocated under “Financial income – Other” and “Financial expense – Other”, respectively.


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11. MINIMUM CASH AND MINIMUM CAPITAL REQUIREMENTS

11.1. Accounts identifying compliance with the minimum cash requirement:

The items computed by the Bank to constitute the minimum cash requirement for December 2017 are listed below, indicating the balances of the related accounts:

Item Amount as of 12/31/2017

In Argentine pesos

In foreign currency

Cash: − Amounts in BCRA accounts 500,000 677,268 − Other checking accounts computable for minimum

cash requirements

631

- Other receivables from financial intermediation: − Special guarantee accounts with the BCRA (1) 43,100 1,877

(1) Restricted assets: Related to special guarantee checking accounts opened with the BCRA for

transactions related to electronic clearing houses and similar entities.

11.2. Minimum capital requirement The table lists the minimum capital requirements related to credit risk, market risk and operational risk measured on an individual basis, as well as the payments (computable equity), in conformity with the BCRA regulations applicable to December 2017.

Item 12/31/2017 Computable capital 659,700 Minimum capital requirement Market risk 4,630 Operational risk 26,018 Credit risk 429,079 Excess amount 199,973

12. RESTRICTED ASSETS As of December 31, 2017, the Bank has 5,844 (ARS 1, 150 and USD 250) deposited with MAE (electronic over-the-counter market) account No. 273 as security required to operate through the negotiating segment for secured transactions and MAE is the central counterparty in trading session CPC1.

The Bank issued initial guarantees to operate on Mercado a Término de Rosario S.A. (ROFEX) for ARS 400, which are deposited in a bank account on such market. In addition, as of December 31, 2017, the Bank has deposited in the custody account No. 33976 held by Mercado a Término de Rosario S.A. (ROFEX) “Treasury bills in US dollars, maturity 06/15/2018 (LTDJ8)” for 1,925; “Treasury bills in US dollars, maturity 05/24/18” for 2,480; “Treasury bills in US dollars, maturity 10/26/2018” for 4,193; “Treasury bills in US dollars, maturity 09/28/2018” for 4,912 and “Argentine Government bond in US dollar at 8.75% 2024 (AY24D) Dollar Linked” for 35,104 to secure the current forward transactions in foreign currency carried out on such market that are effective as of year-end.


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The “Investments in other companies” account includes restricted assets for 120,000 and 35,000 for contributions made as the protector member of the Garantizar S.G.R. and Acindar Pymes S.G.R. risk funds, respectively.

13. RISK MANAGEMENT POLICY

Risk management structure: The Board of Directors is the ultimate body responsible for identifying, evaluating or measuring, understanding the nature and level of the risk assumed by the Bank, mitigating it and controlling it. However, there are separate and independent areas in charge of managing and controlling risks. In the minutes of the meeting held by the Board of Directors on January 30, 2012, it approved the Comprehensive Risk Management Policy, which is used to outline and establish clearly the guidelines for managing Banco CMF S.A.'s risks in a comprehensive manner in conformity with BCRA Communiqué "A" 5230, which was in effect then and which fully agreed with the definitions provided by BCRA Communiqué “A” 5398, as amended and supplemented. Such policy is reviewed on an annual basis for the purpose of keeping it updated and reflecting the changes in the Bank’s risk profile. It was last updated in April 2017. The Bank’s Board of Directors has been working on strengthening its corporate governance structure. This is in line with the framework of fostering an increasingly stronger internal control culture and implementing decision-making processes based on a clear assignment and segregation of duties between business areas and those performing control duties. General Management is responsible for putting into practice the procedures that allow the strategy and policies approved by the Board of Directors to be implemented, developing processes that identify, evaluate, monitor, control and mitigate the risks incurred by the Bank and implementing appropriate internal control systems and monitoring their effectiveness, reporting to the Board of Directors on a regular basis on whether objectives are being achieved. In 2012, the Board of Directors created a Comprehensive Risk Management Unit that reports directly to General Management. Its main role is to follow up on risk, provide assistance in the design of policies and procedures, verify compliance and alert the Comprehensive Risk Management Committee or the area in charge on those risks that may require additional controls. It also gathers information related to the level of exposure of the different types of risks and reports to General Management and the Comprehensive Risk Management Committee, proposing and monitoring related actions plans. Together with the Accounting and Reporting System Management, it conducts the stress tests set in accordance with the formally approved methodology and documents the contingency plans to cover the risks that exceed the limits established by the Board of Directors. The organizational structure has the necessary characteristics for the risk management strategy defined by the Board of Directors to be implemented effectively and it assigns the responsibility of managing each risk to a specific person in the Bank, according to the risk volume, characteristics and profile. This structure is made up of different committees. The Board of Directors supervises and monitors the administration of business transaction risks on an ongoing basis. Risk management strategies are approved by the Board of Directors and updated regularly so as to reflect the changes in the Bank’s risk profile. The Bank's control systems contemplate the implementation of ongoing monitoring mechanisms and procedures. It is the internal audit area's job to evaluate the internal control systems and make recommendations for improvements, including the activities related to comprehensive risk management.


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Under BCRA Communiqué “A” No. 5042, as amended and supplemented, internal control is defined as a process carried out by the Board of Directors, Management and other members of a financial institution designed to provide reasonable assurance regarding the achievement of goals in the following categories: - Effectiveness and efficiency of operations. - Reliability of the accounting information. - Compliance with applicable laws and regulations. The Bank considers that the control environment establishes the operating mode of the Bank and it impacts on the control awareness of its different members. Some of the issues that make up the control environment include integrity, ethical values and skills of the Bank’s personnel; Management’s style and its way of operating; the way in which Management assigns authority and responsibility, organizes and develops its staff and the attention and management provided by the Board of Directors. Every bank is faces with a variety of risks from external and internal sources, which need to be evaluated. The risk evaluation refers to the procedures and mechanisms established at the Bank to identify and analyze major risks resulting from changes in the economic, financial, regulatory and operating conditions related to achieving the Bank’s business objectives. The Bank’s main risk areas are: - Credit risk, also comprising the country risk, the counterparty credit risk, the securitization risk and the

residual risks - Liquidity risk - Market risk - Interest rate risk - Operational risk - Concentration risk - Reputational risk - Strategic risk Credit risk:

The credit risk refers to the possibility of incurring losses as a result of a debtor’s or counterparty’s failure to comply with their contractual obligations. The Entity established a quality review process for credits in order to identify any possible changes in the solvency of the counter-party in advance, including regular guarantee reviews. Credit limits are established by the credit rating system, which rates the risk of each counter-party. The quality review process allows the Bank to evaluate the potential loss as a result of the risks to which it is exposed and to take the necessary measures. Such quality review process starts with the first contact of the potential customer with the Bank. Firstly, the Credit Risk area visits the customer and requests the essential information to start the risk assessment. If applicable, the customer is visited for a second time requesting the supplementary information deemed necessary to analyze risk. After the decision on the link, the limit of the agreement and mode of the transaction are decided. The members of the Board of Directors set the limits under which the Bank should operate, they approve credit assistance, the rating of debtors and the allowance to be set if the loan is larger than 2.5% of computable equity. Periodically, based on the amount of the debt, customers are reviewed. Such review is disclosed in a report including adjustments related to the economic and financial situation and prospects of the customer. For customers holding debt representing: (i) 5% of the Bank’s computable equity, the review is performed on a quarterly basis; (ii) from 1% to 5% of the computable equity the review is performed twice a year; and (iii) smaller than 1% or equivalent to ARS 1 million the review is performed once a year. The whole portfolio has been reviewed as of each fiscal year-end.

In addition, financing transactions are analyzed by the Credit Committee, the operating policies of which are described in the Bank’s procedures manual considering: (i) timeliness of the meeting; (ii) necessary attendees to authorize different types of financing; (iii) authorization levels necessary to approve overruns on allowed caps; (iv) other procedures.


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On the other hand, in the light of each financing agreement, the Operating department analyzes compliance with the operating ratios on credit diversification, grading (establishing credit limits based on the customers’ net worth) concentration and subsidiaries. Counterparty credit risk is the risk that one of the transaction parties fails to comply with the obligation to deliver cash or the agreed-upon items (for example, securities or foreign currency), thus giving rise to an economic loss, if the transactions have a positive balance when the noncompliance occurs. This type of risk entails a potential loss for both transaction parties. Most of Banco CMF S.A.’s transactions are carried out through the “delivery versus payment” mode, whereby the Bank only delivers the agreed-upon items if the counterparty also complies with its obligation. In addition, the system managing those transactions reserves 10% of the amount of each transaction as a possible price difference. Certain limits have been defined with regard to the counterparties with which the Bank operates. As regards the securitization risk, although Banco CMF S.A. does not securitize its own portfolio as an alternative financing source, it does purchase certificates of participation in financial trusts whereby the underlying asset is made up of consumer loans. Banco CMF S.A. has no retained securitization positions. The calculation of the minimum capital required to address unexpected losses is made in accordance with the regulations related to the minimum capital required for financial institutions. Residual risks are those arising from credit risk coverage techniques; for example, those applied when obtaining possession or selling a guaranteed asset is not possible and the guarantor refuses to pay or there is a delay in payment, or if the documents related to the guaranteed asset are ineffective. In these cases, Banco CMF S.A. has reduced its exposure to residual credit risk, as it has defined strict processes and controls upon assessing and performing a follow-up on the lifecycle of the guarantees securing each transaction, and it also requests the Bank’s Legal Affairs Department’s assistance for conducting the assessment. In addition, during the last few years, efforts and resources have been invested in an aim to improve the technological tools for following up on secured assets. The Board of Directors has defined limits in connection with the minimum secured portfolio that the Bank should have. Country risk can be defines as the risk of losses in investments and receivables that individuals, companies and governments may experience as a result of economic, political and social events occurring abroad. In this regard, Banco CMF S.A. is exposed to the country risk through foreign trade transaction guarantors, who (by policy of Banco CMF S.A.) should be “Investment Grade” or higher to minimize risks. The volumes and amounts of the transactions exposed to country risk are low.

Liquidity risk:

The liquidity risk is the risk that the Bank will not be able to meet its payment obligations efficiently at maturity under regular and stress circumstances without affecting its daily transactions or its financial position. To limit this risk, the Board of Directors has agreed on the diversity of financing sources. Apart from its deposits base, Management manages assets considering liquidity and it controls expected cash flows and the availability of first guarantees, which could be used to secure additional financing, if necessary. The Bank has a sundry assets portfolio with high level of sale that are readily available should flows be interrupted suddenly. Also, the Bank obtained credit lines to which it accesses to meet its liquidity needs. In addition, it makes contributions to the Deposit Guarantee Insurance System, created by Law No. 24,485 and Presidential Decree No. 540/1995 and limited and mandatory for valuable consideration designed to provide coverage for risks inherent in bank deposits, as a subsidiary and supplementary protection to the one offered by the system of bank deposit privileges and protection created by Financial Institutions Law (see note 8.) The most important issue is related to maintaining the Bank’s leverage ratio below the Argentine Financial System median.


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In addition, financial institutions should maintain a portion of their cash in liquid and reserve assets to cover cash withdrawals by their customers. In order to minimize the risk of public deposits with the financial system, the BCRA assesses that reserve assets may not be under a minimum value dependent upon the amount of deposits received by the intermediary. The minimum effect is a percentage of resources that the financial intermediaries who attract the public need to maintain frozen. They may keep these reserves in cash in their accounts or in accounts with the BCRA. The minimum cash requirement percentage is not the same for all the types of deposit (savings accounts, checking accounts, CD, etc.). This percentage varies based on whether the deposit is more or less liquid (see note 11.) Moreover, as from 2012, corporate bonds with a 18-month maturity term began to be issued, improving the term structure for financing and generating more stable, longer term funding sources. Banco CMF S.A. uses the liquidity gap tool to monitor the maturities of its performing and nonperforming portfolio. The liquidity gap is a method consisting of projecting and allocating funds to assets, liabilities, equity accounts –such as dividends– and off-balance sheet transactions –such as derivatives– to various horizons or time bands. On the basis of that projection, the fund flow gap between the various assets, liabilities and off-balance sheet accounts may be determined for each band. The gap analysis between inflows and outflows in the different time bands allows calculating the amount of funds required for each period. To such end, the gap to be analyzed may be a single gap, that is, that related to a specific band, or the accumulated gap, which considers the aggregate of the previous gaps, whether positive or negative. Limits have been set in connection with accumulated gaps. In addition, the Board of Directors considers that asset management represents its main tool for mitigating the liquidity risk; therefore, it creates performing portfolios over very-short periods with identified and mostly self-liquidating flows. The low debt-to-equity ratio also mitigates this risk. Exhibits I and D attached hereto show the maturity of the Bank's financial liabilities on the basis of the contractual repayment obligations and the maturities of its financial assets as of December 31, 2017, respectively. However, the Bank expects many customers no to request the settlement of their deposits on the first date on which the Bank may be made to pay; therefore, the schedule does not reflect the expected cash flows indicated by the history of the withholdings of the Bank's deposits. Market risk: Market risk is the risk that the fair value or future cash flows of financial instruments on or off the balance sheet fluctuate owing to changes in market variables related to interest rates, exchange rates and the prices of bonds and shares. The Bank has a control and mitigation process in place for this risk and incorporates the analysis of the sensitiveness of the changes in market indicators, incorporating it within the minimum cash requirements in order to determine the minimum cash requirements to operate. As part of market risk, the foreign exchange risk is the risk that the value of a financial instrument will fluctuate owing to changes in the foreign currency exchange rate. The Board of Directors established limits on the currency’s position. Moreover, BCRA Communiqué “A” 6233, as amended and supplemented, limited the net foreign currency overall position to 30% of the computable equity for the prior month or the institution’s own liquid resources, whichever is lower.

Positions are controlled on a daily basis and the natural hedging strategy (match of loans and deposits) guarantee that the positions are maintained within the limits established. In addition, under current regulations currencies are treated as securities within the considerations to establish the market risk requirement; thus the sensitivity analysis of its fluctuation is considered in the minimum cash requirements to operate.


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The trading portfolio is made up of positions in financial instruments that are part of the bank’s equity for the purpose of trading them or hedging other items in that portfolio. A financial instrument may be charged to the trading portfolio –for the purpose of the market risk capital requirement– if its trading is not subject to any restriction or if it is possible to obtain a full hedging of the instrument. In addition, the portfolio shall be managed actively and the positions shall be valued on a daily basis and accurately. The positions held for trading purposes are those held for sale on a short-term basis or for the purpose of obtaining benefits as a result of price variations in the short term, either actual or expected variations, or through price arbitrage. They include both the positions held for its own benefit and those acquired as a result of the provision of services to customers or the “market creation.” Banco CMF S.A. has clearly defined policies and processes to determine which exposure should be included into or excluded from the trading portfolio in order to calculate its capital requirement and thus ensure that the criteria set in these standards for the trading portfolio are met. Interest rate risk: Interest rate risk arises from the possibility of changes in the Bank’s financial position as a result of fluctuations in interest rates, adversely affecting the Bank’s net financial income and its economic value. The Board of Directors established limits on the exchange rate gaps for the periods considered. Positions are monitored on a daily basis. As from 2013, the minimum capital requirement related to the interest rate risk is no longer considered for the calculation of the minimum capital requirements, in accordance with Communiqué “A” 5369. In addition, as from 2014, the minimum capital requirement for interest rate risk was rendered effective through Communiqué “A” No. 5580. However, Banco CMF S.A. keeps calculating the capital requirement for this type of risk, and also keeps managing it in accordance with the policy, framework and process approved by the Board of Directors. Banco CMF S.A. managed the maturity of its liabilities to reduce the current interest rate position gap in each time band and mitigate the interest rate risk. To such end, the Bank set up its assets plus liabilities structure as planned, issued corporate bonds and reduced shorter-term funding sources. In addition, Banco CMF S.A. makes its own capital requirement calculation related to the interest rate risk based on the impact that a parallel shift in its curve may have on the Entity’s equity. Operational risk: Operational risk is the loss risk resulting from failures in internal processes, human error or errors in the information systems or external events. When controls fail, operational risks may have legal or regulatory impacts or lead to a financial loss. The Bank cannot expect to eliminate all operational risks but it is in a position to manage risks through a risk identification and control framework and responding to those possible risks through the appropriate mitigating factors. Controls include effective function segregation, reconciliation procedures, appropriate authorization and access, staff evaluation and training procedures, including the involvement of the internal audit sector. Identification is based on process self-evaluation tasks, in which the individuals in charge evaluating the different activities contemplate their likelihood of generating losses. The risk associated with information systems, information technology and the related resources is part of the operational risk whereby the Technological Risk Management will be part of the Comprehensive Operational Risk Management. Additionally, in compliance with BCRA requirements, the Bank carried out tasks related to the risk self-assessment and the follow-up of mitigation plans.


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Concentration risk Concentration risk is reflected in the disclosures or disclosure groups showing similar characteristics –for example, those related to the same debtor, counterparty, geographical area, or economic sector, or those covered by the same type of guaranteed asset– capable of creating losses considerable enough to affect the financial institution’s strength or capability to maintain its main operations, or a significant change in the Entity’s risk profile. Risk concentration usually occurs in connection with assets, liabilities, and off-balance sheet items. Asset concentration mainly affects the Bank’s solvency, as it may give rise to significant losses due to the risk not being diversified enough; therefore the viability of its business plan could be threatened, as well as its medium- and long-term projections.

As regards liabilities concentration, the concentration of the Bank’s depositors and their financing sources could also adversely affect the Bank’s liquidity in the event of a trust crisis related to the financial system, which may give rise to a bank run or a lack of credit. The off-balance items will affect the Bank in the manners described above, depending on whether they are related to assets or liabilities. Banco CMF S.A.’s credit concentration is limited to the credit risk diversification and concentration limits defined by BCRA regulations, which are managed by the Bank’s Credit Risk Management and the Credit Committee and monitored by the Comprehensive Risk Management Unit. In addition, Banco CMF S.A. has set up limits in connection with credit risk concentration in accordance to the customers’ activities and types of products offered; these indicators are monitored on a monthly basis by the Credit Risk Management and by the Comprehensive Risk Management Unit. In addition, the Bank has also defined models for calculating the capital required to mitigate possible impacts on the Bank’s solvency arising from the concentration of active products and activity branches. Furthermore, we believe that the concentration of deposits and financing mainly affects the Bank’s liquidity. Deposit concentration is a characteristic inherent of Banco CMF S.A.’s business and of the wholesale financial institutions having similar characteristics, so it was included in the “Liquidity risk management framework”. Banco CMF S.A.’s Board of Directors and Management has always closely assessed and controlled the concentration risk by developing and implementing permanent mitigation strategies. In this regard, the main mitigating factor for returning deposits when and as due in the event that customers decided to make a significant withdrawal is the type of guaranteed assets. Banco CMF S.A. creates performing portfolios over very-short periods with identified and mostly self-liquidating flows. Historically, between 30% and 40% of the portfolio falls due within 30 days, representing about 60% of total liabilities, reflecting a positive accumulated gap (loans less deposits) in the 180- to 360-day horizon, a situation that would allow the Bank to return all liabilities. The “short” duration of the assets and the high liquidity makes the liabilities concentration risk a known, managed, and properly monitored risk mitigated by the Bank’s Board of Directors. Another very important goal for mitigating the deposit concentration risk is working with a low leverage level. In addition, Banco CMF S.A.’s leverage measured as total liabilities to equity does not exceed 5 points in average for 2017, which is much lower than the average for the Argentine financial sector, which stands at around 7 points. Another way of reducing the concentration of liabilities is diversifying the funding sources; that is why Banco CMF S.A. has issued listed corporate bonds with an 18-month term and has obtained funding sources from multilateral credit agencies.


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Reputation risk: Banco CMF S.A. defines reputational risk as that associated to a negative perception on the financial Entity (whether grounded or not) by customers, counterparties, investors, debtholders, market analysts and other relevant market participants which could adversely affect its capacity of maintaining or creating new business relationships and continue accessing funding sources, and which could also impact its liquidity in the event that people’s trust and its capacity of attracting funds were affected. Banco CMF S.A. considers that reputational risk is highly related to the main risks faced by the Bank (operational, liquidity, market, interest rate, credit and concentration risk). In other words, the loss risk resulting from the lack of adjustment or possible failures in internal processes or from the actions carried out by the Bank or its information systems, or events beyond the Bank’s control may cause a negative impact on the Bank’s reputation. In addition, an event that damages reputation may give rise to credit, liquidity, interest rate or market risks. Banco CMF S.A. is a single-branch Argentine-owned bank, the main business of which focuses on providing high quality financial services to medium- and large-sized companies. The Bank’s main goal is to lead the corporate banking sector; it has a professional organization allowing it to provide a differential and customized service, as well as obtaining an in-depth knowledge on the market sectors and their customers. Having comprehensive knowledge of the customers, their businesses and needs provides added value and encourages a durable relationship. In this context, and considering the low public exposure of its shareholders, directors and employees, as well as the high internal control levels currently in place at the Bank, Banco CMF S.A.’s Board of Directors considers that the computable capital meets the capital that may be required if an event adversely affecting the Bank’s reputation should happen. Strategic risk: The strategic risk is that arising from an improper business strategy or an adverse change in the projections, parameters, objectives and other functions supporting such strategy. Currently, the General Management prepares the business plan and projections, with the aid of the Management Control area. This plan spans two years and both qualitative and quantitative estimates are defined for this horizon at the individual and consolidated levels. The Business and Projection Plan is subject to the Board of Directors approval to be filed with the BCRA. Afterwards, and on a monthly basis, the Management Control area follows up on the projections and the departures therefrom, explaining what caused them and proposing action plans putting them back on track. As regards quantitative projections, Banco CMF S.A.’s strategy is developed on the following 6 pillars, which are essential for its management. This are considered to be the most relevant indicators of Risk Management as regards compliance with the Bank’s strategy: (i) loan performance, (ii) liquidity level, (iii) profitability and solvency, (iv) efficiency, (v) indebtedness, (vi) capital planning. Although the business plan includes estimates at a higher level of disaggregation, Banco CMF S.A. understands that the fluctuations in the context (economic, political, regulatory, etc.) could lead to changes in the estimates detailed without these being considered a departure from the Bank’s overall strategy. However if any of the six fundamental pillars described above differ significantly from the amounts approved at the beginning of the fiscal year, such situation would pose a risk to the achievement of the Bank’s strategy and, therefore, Banco CMF S.A. will set up a capital reserve to face unexpected losses related to this risk.


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Final considerations The risk is inherent to the Bank’s activities but it is manager through an a continuous identification, measurement, and control process subject to the risk limits approved by the Board of Directors and other effective internal controls. This risk management process is fundamental for the Bank’s ongoing profitability and each of the persons working at the Bank is accountable for mitigating the risks related to their functions. According to Communiqué "A 5398, as amended and supplemented, the Bank has developed the frameworks and processes for managing each one of the risks described above, with a description of the strategy, policy, organizational structure and risk management responsibilities, and listing the factors that affect each type of risk, the risk indicators used for monitoring purposes, the limits and thresholds set by the Board of Directors and the reports drafted to follow up on the risks. The Comprehensive Risk Management Unit has designed a monthly risk monitoring report, called Risk Management Panel, which is made available to General Management, the Comprehensive Risk Management Committee and the Board of Directors, made up of a series of indicators designed to monitor and follow up on the significant risks of the Bank and its subsidiaries. This report is presented when the Comprehensive Risk Management Committee session is held, which takes place every month and during which a record is made of all relevant issues addressed in minutes that are transcribed into an officially-stamped book. Every year, Banco CMF S.A. conducts its comprehensive stress tests, which are defined according to its “Stress tests methodology” and develops its contingency plans based on the results obtained, so as to lessen the impact that those risks could have on the Bank’s solvency and liquidity. These tests are also taken as a basis for reviewing the transaction limits and thresholds for each of the defined risk indicators. Moreover, Banco CMF S.A. has complied with the definitions of Basel III regarding the preparation of the capital self-assessment report as regards Communiqué “A” 6133 and related regulations. The latest capital self-assessment report by Banco CMF S.A. was issued on March 29, 2017, and covers the management of the Bank’s main risks as of December 31, 2016. The report for 2017 is currently being prepared. It is important to note that as of December 31, 2017, there were no significant findings in the results of the comprehensive risk monitoring activities with regard to the tolerance limits and thresholds set by the Board of Directors which could not be explained by the normal course of the Bank’s and its subsidiaries’ business, so they entailed no material risks for it. During fiscal 2017, the Bank did not use any of its contingency plans to mitigate the main risks.

14. CORPORATE GOVERNANCE TRANSPARENCY POLICY CMF is a single-branch Argentine-owned bank, the main business of which focuses on providing high quality financial services to medium- and large-sized companies. Since January 30, 2012, the Board of Directors-approved Corporate Governance Code has been in force at the Bank. Its purpose is to formalize and guide the structure and working order of its corporate departments in the interest of the Bank, its shareholders, depositors, customers, employees and the public in general. In compliance with the provisions set forth in the Code, it has been reviewed and updated, and those amendments were approved by the Bank’s Board of Directors. Banco CMF S.A.’s corporate governance system includes its Code, the revised text of the Bank’s Bylaws, the Regulations of the Bank’s Committees and its procedure manuals. Its structure is made up of: (i) Board of Directors, (ii) General Management, (iii) Comprehensive Risk Management Unit; (iv) Information Asset Protection, (v) Legal Affairs Department, (vi) Project Management, (vii) Bank departments and (viii) Committees: IT and Systems Committee, Information Asset Protection Committee, Financial Committee, Credit Committee, Human Resources and Ethics Committee, Corporate Governance and Compliance Committee, Money Laundering and Terrorism Financing Control and Prevention Committee, Audit Committee, Comprehensive Risk Management Committee, Foreign Trade and Exchange Committee.


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The Board of Directors is made up of four members, as set forth by the shareholders’ meeting, who are chosen for three-year periods with the possibility of being reelected. This number of directors is proportional to the Bank’s size, complexity, economic importance and risk profile. They promote and guarantee an objective and independent judgment for making decisions in the Entity´s best interest and in line with corporate objectives, avoiding and preventing potential conflicts of interest or decisions contrary to the Bank’s interests. As established in Law No. 19,550 on Argentine Business Associations, individuals who have been involved in activities competing with the Bank may not be Directors without the express authorization of the Shareholders’ Meeting; this notwithstanding the provision in section 272 of the abovementioned law, which sets forth that when directors have an interest that is contrary to that of the company, they should let the Board of Directors and the statutory auditors know and refrain from participating in deliberations, under penalty of incurring the liability of section 59 of the law. Individuals falling under the disqualifications and incompatibilities set forth in Law No. 19,550 on Argentine Business Associations and in Law No. 21,526 on Financial Institutions may not form part of the Board of Directors either. The background information of the selected Directors is submitted to the BCRA for its respective approval. Pursuant to the provisions of Communiqué “A” 5201, as amended, the Bank has prescribed a Framework for the Self-Assessment of the Board of Directors as a collective body and on an individual level, the purpose of which is to analyze the fundamental aspects of its performance, such as those related to Corporate Governance (roles and responsibilities, strengths and weaknesses, the organization achieving its strategic goals) and to identify opportunities for improvement. On a yearly basis, Banco CMF S.A. conducts a self-assessment of its Board of Directors through closed questionnaires. The members of the Board of Directors fill in both the questionnaire assessing the performance of the Board of Directors as a whole and that related to their individual performance. Once both of them have been filled, they are sent in a closed envelope to the Comprehensive Risk Management Unit to be discussed by the Corporate Governance Committee, and finally, in the annual Shareholders’ Meeting. The abovementioned Corporate Governance Code protects and defends a clear separation between administration and management so that each area can perform its role with maximum effectiveness. The members of the Board of Directors are responsible for the general strategy, control and surveillance, and should not interfere with and/or influence the actions of General Management. The General Management appointed by the Board of Directors is responsible for putting into practice the procedures that allow the strategy and policies approved by the Board of Directors to be implemented, developing processes that identify, evaluate, monitor, control and mitigate the risks incurred by the Bank and implementing appropriate internal control systems and monitoring their effectiveness, reporting to the Board of Directors on a regular basis on whether objectives are being achieved. The Business, Credit Risk, IT, Financial Institutions, Operating, Accounting and Reporting, Finance, Administrative and Investment departments report to General Management. The Bank has a structure of specialized committees that is in keeping with its size, complexity, economic importance and risk profile. AUDIT COMMITTEE Its role is to support the Board of Director’s management in implementing and supervising the Bank’s internal control. It has its own set of regulations, which form part of the Bank’s Corporate Governance System. The Audit Committee is made up, at least, by two members of the Board of Directors appointed by the latter having wide experience in business, finance, accounting and internal control issues, and also by the Bank’s Internal Audit Head.


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INFORMATION ASSETS PROTECTION COMMITTEE This is a multidisciplinary formal body for the protection of information assets, with the purpose of establishing mechanisms to be used by the Information Assets Protection Department’s management and control with a comprehensive approach of the security required (physical and logical) and appropriate for each technological environment and information resources. Its mission is to determine the procedure for addressing incidents, policy exceptions and promote awareness and training throughout the organization, pursuant to the guidelines set forth in BCRA Communiqué “A” 4609, as supplemented. The Information Asset Protection Committee is made up of a member of the Board of Directors, the General Manager, the Systems Manager, the Information Asset Protection Head, the Comprehensive Risk Management Unit head and the Internal Auditor (who will only provide advisory services in their area of competence). IT AND SYSTEMS COMMITTEE This formal body makes decisions on the different issues that contribute towards the support behind Banco CMF’s business regarding IT, in accordance with the guidelines established by BCRA Communiqué “A” 4609, as supplemented (IT risks). The committee is made up of: a Director, General Manager, the Systems Manager, the Information Asset Protection Area head and key users. Other users not entitled to participate or vote also attend to these meetings. HUMAN RESOURCES AND ETHICS COMMITTEE It plans and consolidates the potential development of human resources, assesses the evolution and adjustment of the structure in terms of its strategic plans, analyzes the promotion of its human resources, its compensation policy and accompanies the organization through hits change processes. The Human Resources and Ethics Committee is made up of: two Directors, the General Manager, the Administrative Manager, the Financial Institution Manager and the Operations Manager. CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE It ensures the actions of its administrators and personnel abide by and are in compliance with the management strategies duly approved by the Board of Directors. It also makes sure the Bank has the proper means with which to comply with internal and external regulations. The Corporate Governance and Compliance Committee are made up of: two Directors, the General Manager, the Administrative Manager and the Comprehensive Risk Management Head. FINANCIAL COMMITTEE Its purpose is to be the formal decision-making body regarding financial matters and on the different supporting issues of Banco CMF’s business. The committee is made up of: two Directors, the General Manager, the Financial Manager, the Business Manager, the Financial Institution Manager and the Comprehensive Risk Management Head. CREDIT COMMITTEE This is the formal decision-making body regarding credit policies. The Committee is made up of two members of the Board of Directors, the General Manager, the Financial Institution Manager and the Credit Risk Manager. The Comprehensive Risk Management Head may attend the committee but is not entitled to participate or vote.


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ANTI-MONEY LAUNDERING AND TERRORISM CONTROL AND PREVENTION FINANCING COMMITEE The Bank has a Money Laundering and Other Illegal Activities Control and Prevention Committee aimed at supporting the Compliance Officer in adopting the policies and procedures required for the proper operation of the money laundering and terrorism financing prevention system. The committee is made up of: two Directors, the Money Laundering Control and Prevention Head, the General Manager and the Administration Manager. In addition, the Operations Manager and the Financial Institution Manager may attend the Committee but are not entitled to participate or vote. COMPREHENSIVE RISK MANAGEMENT COMMITTEE This committee focuses on the comprehensive management process of all significant risks and ensures that current policies and strategies on this matter which have been approved and set by the Board of Directors are complied with. This Committee is made up by three Directors, the General Manager, the Comprehensive Risk Management Unit Head, the Credit Risk Manager, the Finance Manager, the Accounting and Reporting Manager, the Business Manager, the Operations Manager and the Financial Institution Manager. FOREIGN TRADE AND EXCHANGE COMMITTEE This is the formal body for defining the policies and guidelines for foreign trade processes under BCRA regulations. It control and reviews SWIFT code submission requests to and from other countries. This Committee is made up by two Directors, the General Manager, the Financial Institution Manager, the Business Manager, Foreign Trade, the Legal Affairs Department Head and the Comprehensive Risk Management Unit Head. The Bank’s capital and voting structure is as follows: Benegas Lynch, Jose Alberto: 53.6%; Tiphaine, Miguel: 32.9%, Orgoroso, Ricardo Juan: 7.5%, and Prieto, Marcos: 6%. Out of the four shareholders making up 100% of Banco CMF S.A.’s capital stock, three are directors of the Bank and the remaining one is a shareholder acting as general manager. There is one director who is not a shareholder. None of the four Bank Directors performs managerial functions. Banco CMF S.A. offers a wide array of products meeting the customer’s specific financing needs. Below are some of the main products offered:

• Discount of notes • Credit lines for working capital financing • Amortizable term loan • Prefinancing of exports, imports, letters of credit and collections • Contracts for works or services • Financing to the agricultural sector • Capital leases • Financing of consumer goods

Banco CMF S.A. is a controlling entity under section 33, Argentine Business Associations Law (see note 7.). It holds a 99% interest in the capital stock of Eurobanco Bank Ltd. and a 99% interest in the capital stock of Metrocorp Valores S.A. It also holds 100% in the capital stock of CMF Asset Management S.A.U.

• Eurobanco Bank Ltd.: See note 1.1.a).


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• Metrocorp Valores S.A has been trading on Mercado de Valores de Buenos Aires S.A. since 1992. In

2015, it obtained a membership in the ROFEX (forward market of Rosario) and operates therein since then. It executes customer orders involving private and government securities. It was created with the purpose of generating its own business and serving Banco CMF customers both directly and indirectly in the capital markets field.

On September 19, 2014, the approvals from the CNV were received in connection with the related requests for Metrocorp Valores S.A. and Banco CMF S.A. to be registered as Settlement and Clearing Agent and Comprehensive Negotiation Agent. Metrocorp Valores S.A. was registered under 55 and Banco CMF S.A. was registered under number 63.

• CMF Asset Management S.A.U.: mutual funds managing company. Authorized as per public instrument No. 453 dated September 1, 2016. Four mutual funds were created as of the date of these financial statements: Fundcorp Perfornance, Fundcorp Performance Plus, Fundcorp Long Performance and Fundcorp Long Performance Plus.

The Bank’s administrators and main executives are subject to the conflict of interest rules established in the Bank’s Corporate Governance Code, its Code of Conduct and its Code of Ethics.

Banco CMF S.A.’s Board has established the business conducts and those applicable to the various activities carried out by its employees and Directors in its Code of Ethics and its Code of Conduct. This was established in the understanding that there is no stable, organized and with a future not based on ethical, moral and lawful principles. These Codes will cover all Bank employees and Directors, as well as all the human resources of all its subsidiaries. The last update of Banco CMF S.A.’s Code of Ethics was approved by the Bank’s Board of Directors on December 15, 2017. The Code of Conduct was approved by the Board of Directors’ Meeting held on February 7, 2017. Section 8 of the Bank’s Corporate Governance Code establishes the guidelines for dealing with conflicts of interest. These guidelines have been defined in order to safeguard against any conflicts of interest, including potential ones, with regard to its activities and commitments with other organizations, which include sanctions and refraining from making decisions whenever there is a conflict of interest. To foster good corporate governance, Banco CMF S.A. is committed to appropriately disclosing information that is relevant to decision-making to depositors, investors, shareholders and the public in general. In this sense, the Bank promotes transparency to improve communication with the different groups of interest, generate confidence for investors, improve management and enhance the corporate reputation against third parties in general. It therefore publishes the following information on its website www.bancocmf.com.ar and/or in the accompanying annual financial statements:

• Structure of the Board of Directors, Senior Management and Committee members; • List of the main shareholders; • Organizational structure (organization chart, committees); • Letter to the Shareholders and complete annual financial statements with the notes, exhibits and

statutory auditor’s and external auditor’s reports; • Credit rating agencies’ reports; • Corporate governance regulatory framework (principles of corporate governance, management

strategy for main risks, code of ethics); • Code of Conduct.

http://www.bancocmf.com.ar


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Banco CMF S.A. has Human Resources policies covering all employees. In 2012, the Bank implemented a performance evaluation process for all employees. The performance of the personnel is directly evaluated by the Manager or area head. The performance evaluations are conducted every year, contemplating at least: Basic performance competences (common to all officials), technical and business competences (specific to each management/area), and leading competences (only evaluated in the case of managers and area heads with personnel reporting to them). The evaluations are dealt with in the Human Resources and Ethics Committee and submitted to the Board of Directors for discussion and approval purposes. The compensation policies and practices are consistent with the Bank’s culture, long-term objectives and strategy. Banco CMF S.A.’s policies do not include paying variable compensation subject to income (loss) and, although performance evaluations are carried out, there is no process in place for reviewing compensation on the basis of such evaluations. In 2015, Banco CMF S.A. developed the personnel incentives policy to establish a formal framework for granting extraordinary bonuses to personnel in keeping with the definitions established by the BCRA in Communiqué "A” 5599. The last update was approved by the Bank’s Board of Directors on May 9, 2017.

15. TRUST AGREEMENTS

The Bank acts as the trust agent and underwriter of the financial trust entitled “Agrocap I” by virtue of the trust agreement of June 30, 2017, date on which the formalities for authorizing the public offering were initiated with the CNV. On July 6, 2017, through Resolution No. 18,837, the CNV established that the Bank be registered as Financial Trustee No. 64 with the CNV registry governed by section 7, Chapter IV, Title V of the regulations (as revised in 2013, and as amended). In no case shall the trustee be liable with its own assets or for an obligation deriving from the performance as trustee. Such obligations do not imply any type of indebtedness or commitment for the trustee and they will be fulfilled only through trust assets. Moreover, the trustee will not charge the corpus assets or dispose of them beyond the limits established in the related trust agreements. The commissions earned by the Bank due to its performance as trust agent are calculated under the terms and conditions of the related agreements. The corpus assets are (a) receivables; (b) all the amounts from the collection of receivables, and (c) the proceeds of the investments in liquid funds available.The assets managed by the Bank amount to 132,000 as of December 31, 2017.

16. MUTUAL FUNDS On May 24, 2017, the CNV, through Resolution No. 18,707, established that the Bank be registered with the CNV registry as custody agent of mutual funds collective investment products (“Agente de custodia de productos de inversión colectiva de fondos comunes de inversión”) No. 25.

On August 1, 2017, the Fundcorp Performance and Fundcorp Performance Plus funds started to operate, and the Bank acts as the custody agent of mutual funds collective investment products.


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As of December 31, 2017, the Bank, in its capacity as mutual fund depository, held in custody the mutual fund shares subscribed by Fundcorp Performance for 904,349 and Fundcorp Performance Plus for 53,827, according to the following breakdown:

Fund

Shareholders’ equity Number of mutual

fund shares Fundcorp Performance 905,560 812,513 Fundcorp Performance Plus 1,037,757 54,892

As of the date of issuance of these financial statements, the two mutual funds Fundcorp Long Performance and Fundcorp Long Performance Plus were set, but are still not operating.

17. SITUATION OF THE FINANCIAL AND CAPITAL MARKETS

The international and local macroeconomic context generates a certain degree of uncertainty regarding its future progress as a result of the political events and economic growth levels, among other issues. In addition, on local level, although we cannot assure it is a definitive trend, the volatility of government and private securities, interest rates and the exchange rate has decreased. There is also an increase in the prices of other relevant economic variables, such as salary costs and the prices of the main raw materials.

Therefore, the Bank’s Management permanently monitors the change of the abovementioned situations in international markets and at the local level, to determine the possible actions to adopt and to identify the possible impacts on its financial situation that may need to be reflected in the financial statements for future periods.

18. RESTRICTION ON EARNINGS DISTRIBUTION

a) According to BCRA provisions, 20% of earnings for the year plus/minus prior-year income (loss) adjustments and minus accumulated losses as of the end of the prior year, if any, shall be allocated to the legal reserve. Consequently, the following Shareholders’ Meeting shall allocate 41,949 of unappropriated retained earnings to that reserve.

b) Under Law No. 25,063, dividends generated through December 31, 2017, to be distributed, in cash or in kind, in excess of taxable income accumulated as of the end of the fiscal year immediately preceding the payment or distribution date shall be subject to a 35% income tax withholding as a single and definitive payment.

c) To such end, the earnings to be considered in each fiscal year will result from adding to the earnings assessed on the basis of general Income Tax Law provisions the dividends or earnings from other stock corporations not computed upon determining such earnings in the same tax period(s), and deducting the tax paid for the tax period(s) giving rise to the earnings being distributed or the related proportional portion (see note 2.b.ii)).

d) Through Communiqué “A” 6013, the BCRA established the general procedure to distribute earnings. This procedure establishes that earnings may only be distributed with the BCRA’s express authorization, provided that banks have no outstanding financial assistance from such agency related to illiquidity, have no outstanding amounts related to capital or minimum cash requirements, have not been subject to certain material penalties imposed by specific regulators and/or have not implemented corrective measures, among other prior conditions that should be met, which are specified in the abovementioned communiqué.


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In addition, earnings may only be distributed provided that there is income after deducting on a nonaccounting basis from the unappropriated retained earnings and from the optional reserve for future distribution of earnings; the amounts related to the legal, statutory and/or special reserves that should be set; the net positive difference between the book amount and the market value or present value reported by the BCRA, as the case may be, of the BCRA’s government debt instruments not valued at market price, and the amounts capitalized in connection with court claims related to deposits, among other items. Besides, the maximum amount to be distributed may not exceed the minimum capital requirement considering, exclusively for this purpose, 100% of the capital requirement for operating risk. Finally, the Bank shall verify whether, after the proposed distribution of earnings, it maintains a capital margin equal to 2.5% of risk-weighted assets, which is added to the minimum capital requirement established by regulations and should be paid-in through Level 1 common stock (COn1), net of deducible items (CDCOn1).

e) According to CNV General Resolution No. 593, the shareholders’ meeting in charge of analyzing the annual financial statements will be required to establish a specific use for the Company’s retained earnings, whether through the actual distribution of dividends, the creation of voluntary reserves apart from the legal reserve or a combination of any of these applications.

19. SAFEKEEPING OF DOCUMENTATION, PUBLIC COMPANIES - CNV GENERAL RESOLUTION NO. 629/2014 AND NO. 632/2014 On August 14, 2014, and September 18, 2014, the CNV issued General Resolutions No. 629/14 and 632/14 (the “Resolutions”), respectively, which establish that issuer companies should archive the documentary support for their management and accounting transactions in appropriate spaces ensuring their preservation and inalterability. The Bank’s criterion is to deliver to third parties for safekeeping certain documentary support regarding its management and accounting transactions of a certain age, understood to be of dates prior to the last completed fiscal year. To comply with the requirements established in the Resolutions, the Bank entrusts Iron Mountain S.A., domiciled in Av. Amancio Alcorta 2482, Buenos Aires City, with the abovementioned documentation for safekeeping. Based on the information provided by the hired company, the documentation received was deposited in its warehouses located in: (I) Parque Patricios plant: (Av. Amancio Alcorta 2482, Buenos Aires City), (II) Barracas plant: (Azara 1245, Buenos Aires City), and (III) Ezeiza Plant: (San Miguel de Tucumán 601 – Ezeiza.) Furthermore, the Bank entrusts the archiving of certain management and accounting records and documents of a certain age, as indicated previously, to ADDOC Administración de Documentos S.A., domiciled at Avenida Del Libertador 5.936, Piso 5° “B”, Buenos Aires City, which has a warehouse located in Av. Luis Lagomarsino 1750 (former RN 8 Km 51,200), Pilar, Buenos Aires Province. The Bank keeps the documentation given for safekeeping to the abovementioned companies available to the CNV at all times and in its registered place of business.

20. PENALTIES IMPOSED ON THE BANK AND SUMMARY PROCEEDINGS INITIATED BY

THE BCRA On January 8, 2015, the BCRA issued Communiqué “A” 5689 requesting the disclousure in the financial statement of all administrative and/or disciplinary penalties and all criminal penalties ordered by a trial court ruling that were imposed or initiated by the BCRA, the UIF (Financial Information Unit), the CNV and the SSN (Argentine insurance regulatory agency), as well as information on the summary proceedings initiated by the BCRA, regardless of its significance. To date, the Bank does not have administrative and/or disciplinary penalties or criminal penalties ordered by a trial court.


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21. FINANCIAL STATEMENTS PUBLICATION

Under Communiqué “A” 760, the BCRA's prior intervention is not required for the publication of these financial statements.

22. ACCOUNTING PRINCIPLES – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

These financial statements were prepared in conformity with the accounting standards established by the BCRA. Certain accounting practices applied by the Bank may not conform to accounting principles generally accepted in other countries.

JOSÉ A. BENEGAS LYNCH

Chairman


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JOSÉ A. BENEGAS LYNCH Chairman

EXHIBIT “A” BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES



2017 2016 2017

Name

Caja de Valores

identification

Market value

or present value

Book balance

Book balance

Position without

options (1) Options Final

position (2) Government securities booked at market value In Argentina

Argentine Goverment Bond in US dollars at 8.75%. Maturity 2014. 5,458 - 78,157 4,330 - - - Argentine Government bond in US dollars Step UP. Maturity 2033 (DICY) 40,791 - 50,285 - - - - Argentine Government bond in pesos. Maturity 2033 (DICP) 45,696 - 19,250 - - - - Argentine Government bond in US dollars at 5.625%. Maturity 2022 (A2E2) 92,583 - 13,525 - - - - Argentine Treasury Bond in Argentine pesos. Maturity 06/21/2020 (TJ20) 5,327 - 10,771 - - - - Treasury bills in US dollars. Maturity 09/28/2018 (L2DS8) 5,237 - 4,912 - - - - Treasury bills in US dollars. Maturity 10/26/2018 (L2DO8) 5,240 - 4,193 - - - - Treasury bills in US dollars. Maturity 11/16/2018 (L2DN8) 5,241 - 3,442 - - - - Treasury bills in US dollars. Maturity 05/24/2018 (LTDY8) 5,221 - 2,480 - - - - Treasury bills in US dollars. Maturity 06/15/2018 (LTDJ8) 5,225 - 1,925 - - - - Treasury bills in US dollars. Maturity 03/18/2018 (LTDM8) 5,235 - 298 - 298 - 298 Argentine Treasury Bond in Argentine con ajuste por C.E.R 2,50% Maturity 2021 (TC21P) 5,315 - - - (13) - (13) Argentine Government Bonds in US dollars 7%. Maturity 04/17/17 5,436 - - 23,688 - - - Argentine Government Bond 7.625% Reg. S. in US dollars. Maturity 2046 91,661 - - 6,810 - - - Argentine Government Bond in Argentine pesos at variable rate +250 basis points. Maturity 03/11/19 5,454 - - 1,377 - - - Argentine Treasury Bond in Argentine pesos. Maturity 03/10/2021 5,318 - - 80 - - - Argentine Treasury Bond in Argentine pesos 16%. Maturity 10/17/23 5,319 - - 28 - - -

--------- --------- --------- --------- --------- --------- Subtotal at market value - 189,238 36,313 285 - 285

--------- --------- --------- --------- --------- ---------

Government securities booked at amortized cost In Argentina

Buenos Aires debt settlement bond maturing in 2018 32,665 6,519 6,519 24,793 6,519 - 6,519 Treasury bills in US dollars. Maturity 08/10/2018 (LTDG8) 5,220 3,683 3,683 - - - - Treasury bills in US dollars. Maturity 06/29/2018 (L2DJ8) 5,228 2,487 2,487 - - - - Class 6 Buenos Aires City public-debt security in US dollars, CG Dollar Linked

32,311

-

-

15,050

-

-

-

Class 2 S.2 Treasury bills of the Province of Neuquen maturing on 06/06/18 CG 32,829 - - 1,425 - - -

--------- --------- --------- --------- --------- --------- Subtotal booked at amortized cost 12,689 12,689 41,268 6,519 - 6,519

--------- --------- --------- --------- --------- --------- Instruments issued by the BCRA BCRA bills at market value

Internal Lebac in Argentine pesos. Maturing on 01/17/2018 273 ( I17E8) 46,821 - 259,670 - 197,354 - 197,354 Internal Lebac in Argentine pesos. Maturing on 06/21/2018 (I21J8) 46,827 - 25,275 - 75 - 75 Internal Lebac in Argentine pesos. Maturing on 08/15/2018 (I15G8) 46,829 - 19,576 - - - - Internal Lebac in Argentine pesos. Maturing on 03/21/2018 273 (I21M8) 46,823 - 9,487 - 51 - 51 Internal Lebac in Argentine pesos. Maturing on 07/18/2018 273 (I18L8) 46,828 - 9,294 - 1,205 - 1,205 Internal Lebac in Argentine pesos. Maturing on 02/21/2018 280 (I21F8) 46,822 - 7,926 - - - - Internal Lebac in Argentine pesos. Maturing on 05/16/2018 273 ( I16Y8) 46,825 - 3,731 - - - - - --------- ----------- --------- ----------- --------- ---------- Subtotal at market value - 334,959 - 198,685 - 198,685

--------- ----------- --------- ----------- --------- ----------


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EXHIBIT “A” (contd.)

BREAKDOWN OF GOVERNMENT AND PRIVATE SECURITIES AS OF DECEMBER 31, 2017, AND 2016



2017 2016 2017

Name

Caja de Valores

identification

Market value

or present value

Book balance

Book

balance

Position without

options (1)

Options

Final position

(2)

Instruments issued by the BCRA (contd.)

BCRA bills - Repurchase agreements Internal Lebac in Argentine pesos. Maturing on 05/16/2018 (I16Y8) 46,825 - 100,749 - 84 - 84 Internal Lebac in Argentine pesos. Maturing on 08/15/2018 (I15G8) 46,829 - 69,638 - 81 - 81 Subtotal BCRA bills – for repurchase agreements --------- --------- --------- --------- --------- ---------

- 170,387 - 165 - 165

--------- --------- --------- --------- --------- ---------

BCRA bills booked at amortized cost Internal Lebac in Argentine pesos. Maturing on 09/19/2018 (I19S8) 46,830 - 781 - 781 - 781 Internal Lebac in Argentine pesos. Maturing on 01/04/2017 (IO4E7) 46,790 - - 26,158 - - - Internal Lebac in Argentine pesos. Maturing on 01/18/2017 (I183E) 46,796 - - 2,536 - - - Internal Lebac in Argentine pesos. Maturing on 01/19/2017 (I19L7) 46,814 - - 388 - - -

--------- --------- --------- --------- --------- --------- Subtotal booked at amortized cost - 781 29,082 781 - 781 --------- --------- --------- --------- --------- ---------

Subtotal instruments issued by the BCRA - 506,127 29,082 199,631 - 199,631 --------- --------- --------- --------- --------- --------- TOTAL GOVERNMENT SECURITIES - 708,054 106,663 206,435 - 206,435 ------------- ------------ -------- ------------ ------------ ------------ TOTAL GOVERNMENT AND PRIVATE SECURITIES - 708,054 106,663 206,435 - 206,435 ======= ======= ====== ======= ======= =======

(1) Holdings 708,054 + Loans 73,004 + Spot and forward purchases pending settlement whether or not related to

repurchase agreements 922,424

- Deposits (1,054,685) - Spot and forward sales pending settlement whether or not related to reverse repos (442,362) Financing received from financial institutions in Argentina - ------------- 206,435 ======== (2) Position without options 206,435

+ Call option purchases - + Put option sales - - Call option sales - - Put option purchases - ------------- 206,435 ========


- 53 -


EXHIBIT “B” FINANCING-FACILITIES CLASSIFICATION

BY SITUATION AND GUARANTEES RECEIVED AS OF DECEMBER 31, 2017, AND 2016



2017

2016

CORPORATE PORTFOLIO

Performing 3,912,314 2,481,940

With “A” preferred guarantees and counter-guarantees 129,501 154,206 With “B” preferred guarantees and counter-guarantees 132,195 198,806 Without preferred guarantees or counter-guarantees 3,650,618 2,128,928

Subject to special monitoring 16,864 36,215

In observation 16,864 14,772 With “A” preferred guarantees and counter-guarantees 1,514 1,387 With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 15,350 13,385 In negotiation or under refinancing agreements - 21,443 With “A” preferred guarantees and counter-guarantees - 2,421 With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees - 19,022

Troubled - -

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees - -

With high risk of insolvency - -


Irrecoverable 39,159 -

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees 4,870 - Without preferred guarantees or counter-guarantees 34,289 -

Irrecoverable according to BCRA regulations - -

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees - - -------------- --------------

TOTAL 3,968,337 2,518,155 -------------- --------------


- 54 -


EXHIBIT “B” (contd.)

2017 2016 CONSUMER AND HOME-MORTGAGE PORTFOLIO Performing 923,247 1,090,352

With “A” preferred guarantees and counter-guarantees 1,247 1,532 With “B” preferred guarantees and counter-guarantees 6,530 3,572 Without preferred guarantees or counter-guarantees 915,470 1,085,248

Low risk 175,867 91,452

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees 165 689 Without preferred guarantees or counter-guarantees 175,702 90,763

Medium risk 13,192 52,626

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 13,192 52,626

High risk 8,751 5,222

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - 69 Without preferred guarantees or counter-guarantees 8,751 5,153

Irrecoverable 58 270

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 58 270

Irrecoverable according to BCRA regulations 100 106

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 100 106 ------------- -------------

TOTAL 1,121,215 1,240,028 ------------- ------------- GRAND TOTAL (1) 5,089,552 3,758,183

======== ========

(1) Including (before allowances): − Loans 4,366,409 3,308,917 − Other receivables from financial intermediation – Unlisted corporate

bonds and Other covered by debtor classification standards 79 4,965 − Receivables from financial leases 101,710 30,349 − Memorandum accounts – Contingent - Other guarantees given

covered by debtor classification standards 367,501 339,100 − Memorandum accounts – Contingent - Other covered by debtor

classification standards 253,853 74,852 ------------- ------------- 5,089,552 3,758,183

======== ========


- 55 -


EXHIBIT “C”

FINANCING-FACILITIES CONCENTRATION AS OF DECEMBER 31, 2017, AND 2016



2017 2016

Number of customers Outstanding

balance % of total portfolio

Outstanding balance

% of total portfolio

10 largest customers 830,872 16% 704,826 19% 50 next largest customers 1,856,085 36% 1,163,522 31% 100 next largest customers 1,139,910 23% 612,267 16% Rest of customers 1,262,685 25% 1,277,568 34% -------------- ----------- -------------- ----------- Total (1) 5,089,552 100% 3,758,183 100% ======== ====== ======== ======

(1) See (1) in Exhibit B.


- 56 -


EXHIBIT “D”

FINANCING BREAKDOWN BY TERM AS OF DECEMBER 31, 2017



Terms remaining to maturity

Item Matured

Up to 1 month

From 1 to 3 months

From 3 to 6 months

From 6 to 12 months

From 12 to 24

months Over 24 months

Total

Financial sector - 36,064 8,803 13,265 15,913 11,602 1,772 87,419

Nonfinancial private sector and foreign residents

72,196

1,642,423 1,146,294 937,319 684,450 442,482 76,969 5,002,133

----------

------------ ------------ ------------ ------------ ----------- ----------- -------------

TOTAL 72,196

1,678,487 1,155,097 950,584 700,363 454,084 78,741 5,089,552 (1) ---------- ------------ ------------ ------------ ------------ ----------- ----------- -------------

(1) See (1) in Exhibit B.


- 57 -


Chairman

EXHIBIT “E”BREAKDOWN OF INVESTMENTS IN OTHER COMPANIES



Item Shares Amount

Caja de Valores identification Name Class

Unit face value

Votes per share

Number 2017 2016

In financial institutions, supplementary and authorized

activities

− Subsidiaries – In Argentina

1130653312152 − Metrocorp Valores S.A. Common ARS 500 1 6,491,430 133,019 100,233 1130715403435 − CMF Asset Management S.A.U. Common ARS 1 1 5,000,000 6,370 5,000

---------- ---------- Subtotal in Argentina 139,389 105,233 ---------- ---------- – Abroad

9900319BS0056 − Eurobanco Bank Ltd. Common USD 1 1 2,970,000 524,574 421,461 ---------- ---------- Subtotal abroad 524,574 421,461 ---------- ---------- − Non- subsidiaries – In Argentina

1130688331761 − Garantizar S.G.R. (1) Common ARS 1 1 400 127,471 80,000 1130709377295 − Acindar Pymes S.G.R. (2) Common ARS 1 1 20 36,088 15,000

---------- ---------- Subtotal noncontrolled 163,559 95,000 ---------- ---------- Total in financial institutions, supplementary and authorized

activities

827,522 621,694

---------- ---------- In other companies − Non- subsidiaries – In Argentina

1133628189159 − Mercado Abierto Electrónico S.A. Common ARS 1,200 1 1 425 425 1130682415513 − SEDESA Common ARS 1 1 1,028 2 2 1130525698412 − Mercado a Término de Buenos Aires S.A. Common ARS 66,712 1 1 334 334 1130656685790 − Olivares de Cuyo S.A. Common ARS 10 5 7,291 36 36

---------- ---------- Subtotal noncontrolled 797 797 ---------- ---------- Total investments in other companies 797 797 ----------- ----------- Total investments in other companies 828,319 622,491 ======= =======

(1) On December 7, 2016, the Bank’s Board of Directors approved an investment of up to 100,000 in Garantizar S.G.R. To carry out that investment, the Bank became a protector member and acquired 400 Class “B” shares with a face value of ARS 1 each. On December 22 and 29, 2016, contributions of 70,000 and 10,000 were made, respectively. Then, on October 20, 2017, the Bank's Board of Directors approved a new investment, and on November 29, 2017, a contribution for 40,000 was made. The contributions are deemed to have restricted availability (see note 12.)

(2) On December 7, 2016, the Bank’s Board of Directors approved an investment of up to 50,000 in Acindar Pymes S.G.R. To carry out that investment, the Bank became a protector member and acquired 20 Class “B” shares with a face value of ARS 1 each and one vote per share. On December 22, 2016, a contribution in the amount of 15,000 was made. Then, on October 20, 2017, the Bank's Board of Directors approved a new investment, and on November 29, 2017, a contribution for 20,000 was made. The contributions are deemed to have restricted availability (see note 12.)


- 58 -


Chairman

EXHIBIT “

BREAKDOWN OF INVESTMENTS IN OTHER COMPANIES



Information on the issuer Item Data from latest financial statements

Caja de Valores identification Name Main business activity

Period-end/year-end date Capital

Shareholders’ equity

Income (loss) for

the period /

year In financial institutions, supplementary

and authorized activities

− Subsidiaries – In Argentina

1130653312152 − Metrocorp Valores S.A. Negotiation, settlement and clearing agent and comprehensive negotiation agent, pursuant to Law No. 26,831 and CNV regulations

31/12/17 6,557 133,828 65,967

1130715403435 − CMF Asset Management S.A.U. Performance of activities carried out

by mutual fund managing companies in the whole Argentine territory

31/12/17 5,000 6,370 1,370

– Abroad

9900319BS0056 − Eurobanco Bank Ltd. Financial institution 31/12/16 47,533 425,718 83,714 Non- subsidiaries

– In Argentina

1130688331761 − Garantizar S.G.R. Mutual guarantee institution 30/06/17 24,070 4,900,011 43,204 1130709377295 − Acindar Pymes S.G.R. Mutual guarantee institution 30/06/17 425 955,929 1,573

In other companies − Non- subsidiaries – In Argentina

1133628189159 − Mercado Abierto Electrónico S.A. Over-the-counter securities market 30/09/17 242 465,625 1,164 1130682415513 − SEDESA Bank deposit insurance 30/09/17 1,000 47,459 613 1130525698412 − Mercado a Término de Buenos Aires S.A. Forward securities market 30/09/17 26,864 240,073 23,444 1130656685790 − Olivares de Cuyo S.A. Farming 30/09/16 16,162 17,344 (16,898)


- 59 –


EXHIBIT “F”

CHANGES IN BANK PREMISES AND EQUIPMENT AND OTHER ASSETS AS OF DECEMBER 31, 2017, AND 2016



Depreciation for the

year

Item

Net book values at beginning

of year Increases

Decreases Transfers

Years of useful life assigned Amount

Net book values at

end of year

BANK PREMISES AND EQUIPMENT

− Buildings 10,520 - - - 50 (283) 10,237 − Machinery and

equipment

10,192 2,947

(1,076) - 5 (2,935) 9,128 ---------- ------- -------- ------ -------- ---------- Total 20,712 2,947 (1,076) - (3,218) 19,365 ====== ===== ===== ==== ====== ======

OTHER ASSETS − Works of art 131 - - - - - 131

− Assets under lease 2,235 - (699) - 50 (50) 1,486

− Foreclosed Assets 18,347 - (2,039) - 50 (931) 15,377 − Other assets

68,948 111

-

- 5 (2,634) 66,425 --------- ------- -------- ------ --------- --------- Total 89,661 111 (2,738) - (3,615) 83,419 ===== ==== ====== ==== ====== ======


- 60 –


EXHIBIT “H”

DEPOSITS CONCENTRATION AS OF DECEMBER 31, 2017, AND 2016



2017 2016 Number of customers

Outstanding

balance % of total portfolio

Outstanding balance

% of total portfolio

10 largest customers 2,212,965 45% 1,249,706 43% 50 next largest customers 1,932,080 39% 1,162,982 40% 100 next largest customers 510,899 10% 351,835 12% Other customers 250,266 6% 147,925 5% ------------- ---------- ------------- ---------- Total 4,906,210 100% 2,912,448 100% ======== ===== ======== =====


- 61 –


EXHIBIT “I”

BREAKDOWN BY MATURITY TERMS OF DEPOSITS, OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION AND NON-SUBORDINATED CORPORATE BONDS

AS OF DECEMBER 31, 2017


Terms remaining to maturity

Item Up to 1 month

From 1 to 3 months

From 3 to 6 months

From 6 to 12 months

From 12 to 24 months

Over 24 months

Total

Deposits 3,950,730 370,980 491,744 92,756 - - 4,906,210

Other liabilities from financial intermediation

BCRA - Other 1 - - - - - 1 International banks and institutions 21,368 335,495 228,184 283,237

- -

868,284

Non-subordinated corporate bonds - 211,491 250,000 - 316,500 -

777,991

Financing received from financial institutions in Argentina 230,133 - 4,764 6,986 36,834 -

278,717

Other 27,172 - 407 - - 109,687 137,266

------------ ----------- ---------- ----------- ----------- ----------- ------------- Total 4,229,404 917,966 975,099 382,979 353,334 109,687 6,968,469

======== ======= ====== ======= ======= ======= ========


- 62 –


EXHIBIT “J”

CHANGES IN ALLOWANCES AND PROVISIONS FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2017


Decreases

Description

Balance at beginning of

year Increases Reversals

Aplications

Balance at end of year

ALLOWANCES – Loans – For

uncollectibility risk

107,189 76,327 (1) 18,193 15,845 149,478 − Other receivables from

financial intermediation – For uncollectibility risk and impairment in value

50 - 50 -

- – Receivables from

financial leases - For uncollectibility risk

334 687 - - 1,021 – Other receivables – For

uncollectibility risk

187 - 9 - 178 ------------- ----------- ------------- ------------- -------------

TOTAL

107,760 77,014 18,252 15,845 150,677

======= ======= ======= ======= ======= PROVISIONS – Other contingencies - - - - - ------------- ----------- ------------- ------------- -------------

TOTAL - - - - - ======= ======= ======= ======= =======

(1) Booked based on the estimated uncollectibility risk of the loan portfolio and the guarantees supporting the related transactions, and

taking into account BCRA Communiqué “A” 2950, as supplemented (including the amendments introduced by Communiqué “A” 3918, as supplemented), and the Bank’s allowance-setting policies.


- 63 –


EXHIBIT “K”

CAPITAL STRUCTURE AS OF DECEMBER 31, 2017



Shares Capital stock

Class Number Votes per

share Issued and outstanding Paid-in

Common registered 323,900,000 5 323,900 323,900

======= =======


- 64 –


EXHIBIT “L”

FOREIGN CURRENCY BALANCES AS OF DECEMBER 31, 2017, AND 2016



2017

ITEMS Head Office Total US dollar Pound sterling Euro Yen Swiss Franc

Other 2016 ASSETS Cash 736,065 736,065 735,655 26 380 - - 4 888,417 Government and private securities 165,387 165,387 165,387 - - - - - 49,878 Loans 833,573 833,573 831,210 - 2,363 - - - 470,421 Other receivables from financial

intermediation 708,631 708,631 708,631 - - - - - 344,896 Investments in other companies (1) 524,574 524,574 524,574 - - - - - 421,461 Other receivables 4,814 4,814 4,814 - - - - - 2 ------------- ------------- -------------- -------- ----------- --------- --------- -------- ----------- TOTAL 2,973,044 2,973,044 2,970,271 26 2,743 - - 4 2,175,075 ======= ======= ======== ===== ====== ===== ===== ===== ======= LIABILITIES Deposits 1,450,191 1,450,191 1,450,191 - - - - - 1,205,892 Other liabilities from financial

intermediation 1,424,322 1,424,322 1,421,589 - 2,733 - - - 432,215 Other liabilities 450 450 450 - - - - - 1,383 -------------- ------------- -------------- -------- ----------- --------- --------- -------- ----------- TOTAL 2,874,963 2,874,963 2,872,230 - 2,733 - - - 1,639,490 ======== ======== ======== ===== ====== ===== ===== ===== ======= MEMORANDUM ACCOUNTS Debit-balance Contingent 178,374 178,374 178,374 - - - - - 179,392 Control 2,255,578 2,255,578 2,171,761 - 83,817 - - - 205,345 Trust activities 132,000 132,000 132,000 - - - - - - -------------- --------------- --------------- -------- ----------- --------- --------- -------- ----------- TOTAL 2,565,952 2,565,952 2,482,135 - 83,817 - - - 384,737 ======== ======== ========= ===== ====== ===== ===== ===== ======= Credit-balance Contingent 266,072 266,072 212,637 - - - - 53,435 77,029 ----------- ----------- ----------- -------- ----------- --------- --------- -------- ----------- TOTAL 266,072 266,072 212,637 - - - - 53,435 77,029 ====== ====== ====== ===== ====== ===== ===== ===== ======

(1) This item is not part of the global net position in foreign currency according to the provisions of Communiqué “A” 4350, as

amended and supplemented.


- 65 –


EXHIBIT “N”

CREDIT ASSISTANCE TO RELATED PARTIES



2017 2016 Status

Item Normal Total Total

1. Loans 70,165 70,165 65,624

Overdrafts

- Without preferred guarantees or counter-guarantees 8,590 8,590 8,002

Notes

- Without preferred guarantees or counter-guarantees - - 20

Other loans

- With “A” preferred guarantees and counter-guarantees

29,519 29,519 34,589

- Without preferred guarantees or counter-guarantees

32,056 32,056 23,013

2. Contingent obligations 500 500 500 3. Investments in other companies 663,999 663,999 526,730 --------------- ---------- ---------- Total 734,664 734,664 592,854 ========== ========= ====== Allowances 702 702 656 ========== ========= ======


- 66 –


EXHIBIT “O”

DERIVATIVE FINANCIAL INSTRUMENTS AS OF DECEMBER 31, 2017



Type of agreement

Purpose of the

transactions

Underlying assets

Type of settlement

Negotiation environment or counter-party

Originally agreed-upon

weighted monthly

average term

Residual weighted monthly average

term

Weighted daily average term of

settlement of differences

Amount Repo transactions

Intermediation – own account

Argentine Government securities

With delivery of underlying

asset

MAE

-

-

1

338,680

Repo transactions


Others-Instruments issued by the BCRA


asset

MAE

-

-

1

31,865

Repo transactions


Others-Instruments issued by the BCRA


asset

MAE

-

-

1

153,094

Forward Intermediation

– own account Foreign

currency Maturity


OTC - Residents in Argentina – Nonfinancial

sector

3

2

74

61,955

Future Intermediation


currency Daily


ROFEX

4

3

1

34,338

Future Intermediation


currency Daily


ROFEX

3

4

1

459,743

Forward Intermediation – own account

Foreign currency

Maturity settlement of differences

OTC - Residents in Argentina – Nonfinancial

sector

5 3 75 86,361


- 67 –


SCHEDULE “I”

CONSOLIDATED FINANCIAL STATEMENTS WITH SUBSIDIARIES

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2017, AND 2016



2017 2016 ASSETS

A. CASH AND CASH EQUIVALENTS

– On hand 34,864 33,746 – Due from Banks and correspondents

Central Bank of Argentina 1,177,268 980,549 Local other 703 590 Foreign 1,885,121 1,840,006

--------------- --------------- 3,097,956 2,854,891 --------------- --------------- B. GOVERNMENT AND PRIVATE SECURITIES

– Holdings booked at market value 375,138 77,237 – Holdings booked at amortized cost 238,990 199,340 – Instruments issued by the BCRA 525,766 32,117 – Investments in listed private securities 243,929 228,281 -------------- --------------

1,383,823 536,975 -------------- --------------

C. LOANS (Exhibit I) – To the financial sector

Interfinancing loans (granted call) 70,871 138,612 Accrued interest, adjustments, and foreign exchange and quoted price differences receivable 16,413 11,847

– To the nonfinancial private sector and foreign residents Overdrafts 975,708 329,899 Notes 1,507,415 828,032 Mortgage loans 34,025 177,500 Pledged loans 30,625 11,700 Personal loans 862,784 1,153,561 Other 1,081,805 808,234 Accrued interest, adjustments, and foreign exchange and quoted price differences receivable 69,636 74,411 Unearned discount (58,177) (43,643)

-------------- -------------- 4,591,105 3,490,153 -------------- -------------- Less: Allowances (151,725) (109,001)

-------------- -------------- 4,439,380 3,381,152 -------------- --------------


- 68 –


SCHEDULE “I” (contd.)

2017 2016

D. OTHER RECEIVABLES FROM FINANCIAL INTERMEDIATION

– Central Bank of Argentina 44,977 33,159 – Amounts receivable from spot and forward sales pending settlement 1,205,262 418,963 – Securities and foreign currency receivable from spot and forward

purchases pending settlement 1,233,854 824,081 – Unlisted corporate bonds (Exhibit I) 17 10,359 – Receivables from forward transactions without delivery of underlying

asset 2,159 4,365 – Other not covered by debtor classification standards 1,002,592 77,570 – Other covered by debtor classification standards

(Exhibit I) 105,725 207,914 ------------- ------------- 3,594,586 1,576,411 ------------- -------------

Less: Allowances (1,870) (846) ------------- ------------- 3,592,716 1,575,565 ------------- ------------- E. RECEIVABLES FROM FINANCING LEASES (Exhibit I)

– Receivables from finance leases 100,358 30,016 – Accrued interest and adjustments 1,352 333 ------------- ------------- 101,710 30,349

------------- ------------- Less: Allowances (1,021) (334)

------------- ------------- 100,689 30,015 ------------- ------------- F. INVESTMENTS IN OTHER COMPANIES

– Other 196,634 100,701 ------------- -------------

196,634 100,701 ------------- ------------- G. OTHER RECEIVABLES

– Other 55,913 37,009 ------------- ------------- 55,913 37,009 ------------- -------------

Less: Allowances (178) (187) ------------- ------------- 55,735 36,822 ------------- -------------


- 69 –



2017 2016

H. BANK PREMISES AND EQUIPMENT 24,380 26,149

--------------- --------------- I. OTHER ASSETS 83,419 89,661

--------------- --------------- J. INTANGIBLE ASSETS 1,199 1,946

--------------- --------------- Total assets 12,975,931 8,633,877 ======== ========


- 70 –



2017 2016

LIABILITIES

L. DEPOSITS – Financial sector 970 1,194 – Nonfinancial private sector and foreign residents

Checking accounts 497,855 266,652 Savings accounts 3,562,638 2,690,773 Time deposits 3,003,185 1,766,233 Investment accounts 125,640 115,774 Other 166 56,299 Accrued interest, adjustments, and foreign exchange and quoted price differences payable 19,053 8,380

--------------- --------------- 7,209,507 4,905,305 --------------- --------------- M. OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION

– Central Bank of Argentina Other 1 1

– International Banks and institutions 861,986 392,461 – Non-subordinated corporate bonds 746,500 750,000 – Amounts payable for spot and forward purchases pending settlement 1,118,363 744,991 – Securities and foreign currency to be delivered under spot and forward

sales pending settlement 1,202,653 225,078

– Financing received from financial institutions in Argentina Interfinancing loans (call received) 229,000 128,000 Other financing from local financial institutions 48,584 - Accrued interest payable 704 256

– Payables from forward transaction without delivery of underlying asset 8,261 2,423 – Other 250,506 249,609 – Accrued interest, adjustments, and foreign exchange and quoted price

differences payable 18,483 23,448 --------------- --------------- 4,485,041 2,516,267 --------------- --------------- N. OTHER LIABILITIES

− Fees - 8,911 − Other 123,185 106,318

--------------- --------------- 123,185 115,229 --------------- --------------- O. PROVISIONS - - --------------- ---------------

Liabilities subtotal 11,817,733 7,536,801 --------------- --------------- P. MINORITY INTERESTS IN SUBSIDIARIES 6,642 5,268 --------------- ---------------

Total liabilities 11,824,375 7,542,069 ======== ======== SHAREHOLDERS' EQUITY 1,151,556 1,091,808 --------------- ---------------

Total liabilities and shareholders’ equity 12,975,931 8,633,877 ========= ========


- 71 –


SCHEDULE “I”

(contd.)

2017 2016 MEMORANDUM ACCOUNTS

DEBIT-BALANCE CONTINGENT Guarantees received 4,620,791 3,729,153 Contingent debit-balance contra accounts 621,354 413,952 CONTROL Receivables classified as irrecoverable 32,208 15,811 Other 16,628,272 7,959,849 Control debit-balance contra accounts 98,218 88,879 DERIVATIVES Notional value of call options purchased 95,748 37,288 Notional value of put options purchased - 11,095 Notional value of forward transactions without delivery of underlying asset 729,162 548,179 Derivatives debit-balance contra accounts 376,919 690,824 TRUST ACTIVITY Trust funds 148,814 327,395 CREDIT-BALANCE CONTINGENT Other guarantees given covered by debtor classification standards (Exhibit I) 367,501 339,100 Other covered by debtors classification standards (Exhibit I) 253,853 74,852 Contingent credit-balance contra accounts 4,620,791 3,729,153 CONTROL Checks to be credited 98,218 88,879 Control credit-balance contra accounts 16,660,480 7,975,660 DERIVATIVES Notional value of call options sold 97,568 33,041 Notional value of put options sold - 11,095 Notional value of forward transactions without delivery of underlying asset 279,351 646,688 Derivatives credit-balance contra accounts 824,910 596,562 TRUST ACTIVITY Trust activity credit-balance contra accounts 148,814 327,395

Notes 1 through 5 and Exhibit I to the consolidated financial statements are an integral part of these financial statements.


- 72 –



CONSOLIDATED FINANCIAL STATEMENTS WITH SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017

PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR


2017 2016 A. FINANCIAL INCOME

– Interest on loans to the financial sector 11,426 1,869 – Interest on overdrafts 169,664 184,048 – Interest on notes 688,483 703,973 – Interest on mortgage loans 25,397 70,585 – Interest on pledged loans 3,780 9,837 – Interest on other loans 34,862 51,789 – Interest on other receivables from financial intermediation 19,748 42 – Interest on financial leases 13,018 7,453 – Net income from government and private securities 193,322 123,312 – Net income from options 15,658 8,503 – Difference in quoted prices of gold and foreign currency 40,256 120,225 – Adjustments under CER clause - 206 – Other 57,401 44,783

------------- ------------- 1,273,015 1,326,625 ------------- ------------- B. FINANCIAL EXPENSE

– Interest on checking-account deposits (125,337) - – Interest on savings-account deposits (10,184) (2,903) – Interest on certificates of deposit (144,206) (255,093) – Interest on interbank loans received (33,540) (26,663) – Interest on other financing from financial institutions (24,641) (11,356) – Interest on other liabilities from financial intermediation (134,707) (126,751) – Other interest (6,991) (10,082) – Net expenses from options (15,627) (8,503) – Contribution to deposit guarantee fund (3,924) (5,056) – Other (160,151) (202,639) ------------- -------------

(659,308) (649,046) ------------- ------------- GROSS INTERMEDIATION MARGIN - GAIN 613,707 677,579

------------- ------------- C. PROVISION FOR LOAN LOSSES (80,301) (34,917)

------------- -------------


- 73 –


SCHEDULE “I”(contd.)

2017 2016 D. SERVICE-CHARGE INCOME

– Related to loans 47,244 30,579 – Related to deposits 26,599 23,367 – Other commissions 24,042 17,171 – Other 71,316 68,632

------------ ------------ 169,201 139,749 ----------- ------------

E. SERVICE-CHARGE EXPENSE – Commissions (626) (113) – Other (14,569) (12,986)

------------ ------------ (15,195) (13,099) ------------ ------------ F. ADMINISTRATIVE EXPENSES

– Personnel expenses (270,319) (224,541) – Directors' and statutory auditors' fees (54,162) (71,295) – Other fees (59,894) (49,472) – Advertising (151) (412) – Taxes (24,641) (28,110) – Depreciation of Bank premises and equipment (4,642) (2,707) – Amortization of organization and development costs (5,587) (702) – Other operating expenses (21,252) (18,089) – Other (33,960) (29,397)

------------ ------------ (474,608) (424,725) ------------ ------------

NET INCOME FROM FINANCIAL INTERMEDIATION - GAIN 212,804 344,587 ------------ ------------ G. LOSS ON MINORITY INTERESTS IN SUBSIDIARIES (1,683) (1,154) ------------ ------------ H. OTHER INCOME

– Income from long-term investments 9,426 2,192 – Punitive interest 352 1,004 – Recovered loans and allowances reversed 20,600 4,204 – Other 7,354 2,266

----------- ----------- 37,732 9,666 ------------ ------------


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2017 2016

I. OTHER EXPENSE – Charge for uncollectibility of other receivables, and other allowances - (78) – Depreciation and loss of other assets (3,615) (2,834) – Other (5,584) (10,351)

------------ ------------ (9,199) (13,263) ------------ ------------

NET INCOME BEFORE INCOME TAX 239,654 339,836 ------------ ------------

INCOME TAX (29,909) (65,968) ------------ ------------

NET INCOME FOR THE FISCAL YEAR 209,745 273,868 ======= =======

Notes 1 through 5 and Exhibit I to the consolidated financial statements

are an integral part of these financial statements.


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CONSOLIDATED FINANCIAL STATEMENTS WITH SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2017 PRESENTED COMPARATIVELY WITH THE PRIOR FISCAL YEAR



2017 2016 Changes in cash flows (*)

Cash at beginning of year 2,854,891 2,090,195 Cash at end of year 3,097,956 2,854,891 --------------- --------------- Net increase in cash 243,065 764,696 ========= ========= Causes of changes in cash Operating activities − Net collections/ (payments):

− Government and private securities (111,992) (319,223) − Loans

- Financial sector 74,601 (85,206) - Nonfinancial private sector and foreign residents (247,283) 271,308

− Other receivables from financial intermediation (1,425,159) (5,166) − Receivables from finance leases (57,656) 42 − Deposits

- Financial sector (224) (806) - Nonfinancial private sector and foreign residents 2,013,784 1,057,046

− Other liabilities from financial intermediation - Financial sector financing 648,832 170,009 - Interfinancing loans (call received) 67,908 (33,585) - Other (except for obligations included in Financing Activities) 1,761 50,045

− Collections from service-charge income 169,201 139,749 − Payments from service-charge expense (4,608) (4,069) − Administrative expenses paid (402,771) (298,648) − Organization and development costs (4,840) (2,648) − Net collections from punitive interest 352 1,004 − Other payments related to other income and expense (165,368) (171,248) − Payment of income tax (21,655) (144,791) --------------- --------------- Net cash flows provided by operating activities 534,883 624,873 --------------- --------------- Investing activities − Net bank premises and equipment payments (2,877) (13,842) − Net collections/ (payments) for other assets 7,599 (14,308) − Dividend collections from other companies 811 1,060 − Other payments from investing activities (87,318) (95,142) --------------- --------------- Net cash flows used in investing activities (81,785) (123,292) --------------- ---------------


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2017 2016 Financing activities − Net (payments) collections

− Non-subordinated corporate bonds (147,591) 352,890 − Financing received from financial institutions in Argentina 47,302 -

– Payment of dividends (150,000) (210,000) --------------- ---------------

Net cash flows (used in) provided by financing activities (250,289) 142,890 --------------- --------------- Financial income and holding gains from cash and cash equivalents (including interest) 40,256 120,225 --------------- --------------- Net increase in cash 243,065 764,696 ========= =========

(*) “Cash” was defined as “Cash and cash equivalents”.

Notes 1 through 5 and Exhibit I to the consolidated financial statements are an integral part of these financial statements.


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Signed for identification purposes with our report dated 02-20-2018 MARCOS PRIETO PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. JOSÉ A. BENEGAS LYNCH General Manager C.P.C.E.C.A.B.A. Vol. 1 – Fo. 13 Chairman CELESTE DACUNTO

SCHEDULE “I”

(contd.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

WITH SUBSIDIARIES AS OF DECEMBER 31, 2017


(Figures stated in thousands of Argentine pesos) 1. SIGNIFICANT ACCOUNTING POLICIES AND CONSOLIDATED COMPANIES

Under BCRA procedures, Banco CMF S.A. has made a line-by-line consolidation of its balance sheets as of December 31, 2017, and 2016, and the statements of income and cash flows for the years then ended, with those of Metrocorp Valores S.A., Eurobanco Bank Ltd. and CMF Asset Management S.A.U.

Banco CMF S.A.’s interests on such companies are:

Shares Percentage of

Company

Class

Number Capital stock Votes

Activity Metrocorp Valores S.A. Common 6,491,430 99% 99% Negotiation, settlement

and clearing agent and comprehensive negotiation agent, pursuant to Law No. 26,831 and CNV regulations

Eurobanco Bank Ltd. Common 2,970,000 99% 99% Financial institution CMF Asset Management S.A.U.

Common 5,000,000 100% 100% Managing agent in charge of mutual funds collective investment products

2. CONSOLIDATED VALUATION METHODS

The subsidiaries’ financial statements were prepared based on methods similar to those applied by Banco CMF S.A. to prepare its financial statements as regards assets and liabilities valuation and disclosure, income (loss) measurement and restatement procedures.


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Signed for identification purposes with our report dated 02-20-2018 MARCOS PRIETO PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. JOSÉ A. BENEGAS LYNCH General Manager C.P.C.E.C.A.B.A. Vol. 1 – Fo. 13 Chairman CELESTE DACUNTO


As of December 31, 2017, and 2016, Eurobanco Bank Ltd.’s financial statements, originally stated in US dollars, were adjusted to the professional accounting standards effective in Argentina and those established by the BCRA, in accordance with the preceding paragraph, and converted into pesos following the method described under note 1.1.a) to Banco CMF S.A.’s stand-alone financial statements. In addition to note 1.5 to Banco CMF S.A.’s stand-alone financial statements, the valuation criteria used to prepare the consolidated financial statements are as follows:

a) Listed private securities:

- Debt securities: valued at the last effective quoted price for each security, net of estimated selling expenses, plus amortization and interest coupons due and pending collection. Quoted price differences were charged to the related statements of income. Investments in foreign currency were converted into pesos according to the method described in note 1.5.a) to Banco CMF S.A’s stand-alone financial statements.

- Shares: valued at the last effective quoted price for each security as of period-end, net of estimated selling expenses, plus cash dividends approved by the issuer and pending collection. Quoted price differences were charged to the related statements of income.

b) Options:

Call options purchased and put options sold: Valued at the listed price of the security traded on the related market, effective on the last business day, net of estimated selling expenses. Call options purchased and put options sold: Valued at the option exercise price.

c) Intangible assets: They were valued at acquisition cost, less the related accumulated amortization.

3. RESTRICTED ASSETS In addition to the issues mentioned in note 12. to the stand-alone financial statements, the Bank holds through its subsidiary, Metrocorp Valores S.A., a “Internal Lebac in Argentine pesos” maturing on 05/16/2018 for 242,513 and 234,176, which are deposited in account No. 16.170 held by the Bank in Mercado a Término de Rosario S.A. (ROFEX) as security to operate on such market and conduct forward transactions, respectively. In addition, through its subsidiary Metrocorp Valores S.A., the Bank has restricted assets for 30,000 related to contributions made as the protector member of Acindar Pymes S.G.R. risk fund.


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Signed for identification purposes with our report dated 02-20-2018 MARCOS PRIETO PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. JOSÉ A. BENEGAS LYNCH General Manager C.P.C.E.C.A.B.A. Vol. 1 – Fo. 13 Chairman CELESTE DACUNTO ert JOSÉ A. BENEGAS LYNCH

Chairman ified Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. Vol. 315 – Fo. 130

SHEDULE “I” (contd.)

4. TRUST AGREEMENTS AND OTHER INTERMEDIATION TRANSACTIONS

Eurobanco Bank Ltd. Acts as trust agent placing funds received from third parties. According to each trust agreement, such parties appoint the Bank as their trust agent and instruct it to deliver and pay the related amounts to money related to the deposits made to the lender. They also require such delivery and payments to be made to the lender or that the Bank place funds in its own name but on the exclusive account of depositors at their own risk. As of December 31, 2017, and 2016, Eurobanco Bank Ltd. performed trust transactions amounting to USD 896,000 and USD 20,656,000, respectively. Additionally, Eurobanco Bank Ltd. acts as intermediary in loan transactions (“Participation Agreement”) between third parties, including leading banks and Bank customers. According to the agreements for such transactions, the Bank collects the funds related to financing and transfers them to the related beneficiaries, based on the agreed-upon terms. The risks of loss related to the amounts involved in such transactions are fully assumed by the end beneficiaries of the loans. As of December 31, 2016, Eurobanco Bank Ltd. held items in custody for the transactions mentioned in the previous paragraph for USD 20,022,000.

5. DERIVATIVE FINANCIAL INSTRUMENTS

As of December 31, 2017, the Bank recorded forward foreign currency purchase transactions in the account “Memorandum accounts – Debit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 729,162 and forward foreign currency sale transactions in the account “Memorandum accounts – Credit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 279,351. As of December 31, 2016, the Bank recorded forward foreign currency purchase transactions in the account “Memorandum accounts – Debit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 548,179 and forward foreign currency sale transactions in the account “Memorandum accounts – Credit balance – Derivatives, Account – ‘Notional’ value of forward transactions without delivery of the underlying asset” for 646,688.


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Signed for identification purposes with our report dated 02-20-2018 MARCOS PRIETO PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. JOSÉ A. BENEGAS LYNCH General ANALÍA C. BRUNET JOSÉ A. BENEGAS LYNCH

Chairman On behalf of Statutory Audit Committee Partner Certified Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. Vol. 315 – Fo. 130


EXHIBIT “I” FINANCING-FACILITIES CLASSIFICATION

CONSOLIDATED BY STATUS AND GUARANTEES RECEIVED AS OF DECEMBER 31, 2017 AND 2016



2017 2016 CORPORATE PORTFOLIO Performing 4,242,221 2,876,386

With “A” preferred guarantees and counter-guarantees 218,991 155,170 With “B” preferred guarantees and counter-guarantees 132,195 198,806 Without preferred guarantees or counter-guarantees 3,891,035 2,522,410

Subject to special monitoring 16,864 36,215

In observation 16,864 14,772 With “A” preferred guarantees and counter-guarantees 1,514 1,387 With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 15,350 13,385 In negotiation or under refinancing agreements - 21,443 With “A” preferred guarantees and counter-guarantees - 2,421 With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees - 19,022

Troubled - -


With high risk of insolvency - -


Irrecoverable 39,159 -

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees 4,870 - Without preferred guarantees or counter-guarantees 34,289 -

Irrecoverable according to BCRA regulations - -

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees - - -------------- --------------

TOTAL 4,298,244 2,912,601 -------------- --------------


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Signed for identification purposes with our report dated 02-20-2018 MARCOS PRIETO PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L. JOSÉ A. BENEGAS LYNCH General ANALÍA C. BRUNET JOSÉ A. BENEGAS LYNCH

Chairman On behalf of Statutory Audit Committee Partner Certified Public Accountant (U.B.A.) C.P.C.E.C.A.B.A. Vol. 315 – Fo. 130


EXHIBIT “I” (contd.)

2017 2016 CONSUMER AND HOME-MORTGAGE PORTFOLIO

Performing 923,699 1,090,450

With “A” preferred guarantees and counter-guarantees 1,247 1,532 With “B” preferred guarantees and counter-guarantees 6,530 3,572 Without preferred guarantees or counter-guarantees 915,922 1,085,346

Low risk 175,867 91,452

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees 165 689 Without preferred guarantees or counter-guarantees 175,702 90,763

Medium risk 13,192 52,626

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 13,192 52,626

High risk 8,751 5,222

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - 69 Without preferred guarantees or counter-guarantees 8,751 5,153

Irrecoverable 58 270

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 58 270

Irrecoverable according to BCRA regulations 100 106

With “A” preferred guarantees and counter-guarantees - - With “B” preferred guarantees and counter-guarantees - - Without preferred guarantees or counter-guarantees 100 106 ------------- -------------

TOTAL 1,121,667 1,240,126 ------------- ------------- GRAND TOTAL (1) 5,419,911 4,152,727

========== ==========

(1) Including (before allowances): − Loans 4,591,105 3,490,153 − Other receivables from financial intermediation – Unlisted corporate

bonds and Other covered by debtor classification standards 105,742 218,273 − Receivables from financial leases 101,710 30,349 − Contingent - Other guaranties given covered by debtor classification

regulations 367,501 339,100 − Contingent - Other covered by debtor classification standards 253,853 74,852

------------- ------------- 5,419,911 4,152,727

========= =========


EARNINGS DISTRIBUTION PROPOSAL

FOR THE FISCAL YEAR

ENDED DECEMBER 31, 2017


UNAPPROPRIATED RETAINED EARNINGS: 209,745

- TO LEGAL RESERVE (20% OF 209,745): 41,949 SUBTOTAL 167,796 DISTRIBUTABLE AMOUNT 167,796


Chairman

banco cmf s.a. · 2018-08-06 · bank name: banco cmf s.a. registered office: macacha güemes 150...

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