BFR Bbva Banco Frances S.A.

Economic Environment

In December 2015, after assuming office, the new Argentine National Government declared “a Statistic Emergency” as a consequence of inconsistencies detected in the information provided by the national statistics agency (Instituto Nacional de Estadistica y Censos o INDEC). This measure involves the suspension of the release of new economic figures, such as CPI, GDP, etc by the INDEC. As a result, several indicators in the following paragraphs show delays in the information provided.

In case of economic activity, no data was issued for the fourth quarter of 2015.

The latest information issued by INDEC of the National and Urban Consumer Price Index (IPC-NU), corresponding to October, 2015, measured accumulated inflation of 11.9% for the January - October period; and 14.3% compared to October 2014. The consumer price index calculated by the Department of Statistics and Census, an agency of the Ministry of Finance of Autonomous City of Buenos Aires (CPI-CABA), , was used to substitute the IPC-NU in the CER (adjustment coefficient based in the CPI, used to index several bonds). In the fourth quarter 2015, the IPC-CABA increased by 7.7% compared to the same quarter of 2014, and 26.9% year-over-year.

The national public sector fiscal balance showed a primary deficit of AR$ 11.1 billion during October and November (latest available information of the fourth quarter), a decrease of 24.8% compared to the deficit of AR$ 14.8 billion reached in the same period of the previous year.

Primary public sector spending rose 28.3 % and public sector revenues showed an increase, of 32.7 % during the same period.

During the period, Interest payments increased by 68.8% and the total deficit reached AR$ 26.9 billion, an increase of 11.5 % compared to the same period in 2014.

In the fourth quarter, tax revenues increased by 29.8% year-over-year. Income tax grew by 39.3% while export duties remained weak falling 19% in the same period.

The latest trade balance data published correspond to October 2015, which recorded a surplus of USD 0.3 billion. This result is 42.7% lower than that for October 2014, reflecting USD 5.2 billion of exports (-12.8% yoy) and USD 4.9 billion of imports (-10.4% yoy). Accumulating the last 12 months the result reached a surplus of USD 2.4 billion (-65.0% yoy).

In the FX market, the exchange rate (BCRA reference rate) closed at AR$ 13.005 per U.S. dollar on December 31, 2015, increasing 38.5% compared to the AR$ 9.41 rate registered on September 30, 2015 and 52.6% compared to the fourth quarter of 2014. The significant increase in the exchange rate is the result of the suspension of restrictions to operate in the foreign exchange market.

In the fourth quarter of 2015, the BCRA’s stock of international reserves decreased USD 7.7 billion, closing the period at USD 25,563 billion. During the quarter, the Central Bank sold USD 6 billion

in the FX market. The BCRA maintained the bilateral currency swap deal signed with the People’s Bank of China.

The Badlar interest rate for private banks increased 323 b.p. in the fourth quarter of 2015, averaging 24.2% compared to a 20.9% average in the third quarter of 2015.

During the fourth quarter, private sector loans in pesos increased 12.5% compared to the third quarter of 2015, while private sector loans in dollars fell 22.8%.

Total deposits in pesos in the financial system increased by 11.2% in the fourth quarter of 2015 compared to previous quarter. In the same period, private sector deposits denominated in pesos increased by 9.4% and those denominated in dollars increased 30.7%.

The Bank

During 2015 BBVA Francés set as its main goal, to be the bank preferred by its clients. The Bank worked intensively on improving the quality of each point of contact with users, strived to differentiate itself from its competitors and building the best team.

The recognition the Bank received from several interest groups is evidence of all the work carried out during the year. Under the framework of the new Merco Talento Ranking, organized by the international consultant “Análisis e Investigación”, BBVA Francés was included among the ten most important companies in the category of talent makers and bearers. It is worthwhile noting that the Bank is the leader of this category among the companies of the financial sector and climbed six positions compared to 2014.

For the third year in a row BBVA Francés was distinguished by its clients achieving the best Net Recommendation Index (Mejor Indice de Recomendación Neta or IRENE in Spanish). It particularly improved in the high value segment, climbing from 5th to 2nd place. This syndicated study is conducted annually and compares the recommendation and satisfaction levels of customers with the service provided by a group of peers.

In addition, BBVA Francés placed 9th on the Great Place to Work 2015 ranking of the best companies to work in (category: companies with more than 1,000 employees in Argentina). The bank improved one position compared to its ranking in 2014 demonstrating its commitment to workplace environment quality.

The Bank’s commercial actions continued to be a fundamental part of its strategy by which it aims to improve capillarity and client cross-sell.

The new app, Francés GO, was the main channel through which BBVA Francés advertised its promotions and discounts, available not only for clients but also for non-customers. During the summer the Bank offered a great variety of benefits at the top tourist spots of the country.

BBVA Francés also ratified the alliance with LAN through which it offers benefits and discounts to exchange LANPASS km to fly around Argentina and the world.

Under the framework of the “Futbol Non Stop” campaign the Bank offered a client and an employee the unique experience of travelling to Japan and attending the FIFA Club World Cup to support River Plate. The campaign rewards purchases with Visa and Master Card credit cards with the chance to participate in raffles for exclusive events.

BBVA Francés continued working in the high value segment and opened a Premium Space at San Telmo branch.

In December 2015 the 26th Edition of the Agro Entrepreneur Prize took place with the participation of 27 entrepreneurs from the provinces of Buenos Aires, Chubut, Córdoba, Entre Ríos, La Pampa, Mendoza, Santa Fe, Santiago del Estero, Tucuman, and the Autonomous City of Buenos Aires. The award was given to an agro engineer from Lago Puelo, Chubut.

Regarding social responsibility, during the period, 45 more students were benefited under the framework of the BBVA Francés Scholarships for inclusion program which reached a total of 1,452 scholarship holders by the end of the year.

Celebrating the Program’s 10th Anniversary, BBVA Francés organized “Diplomáticos por la Educación” (in English “Diplomats for Education”) and visited the educational center “Fe y Alegria” in the province of Salta, along with the Spanish ambassador to Argentina and the Spanish economic and commercial advisor. In addition, the Bank handed certificates to those students who had successfully completed the scholarship program.

Moreover, BBVA Francés is currently sponsoring the fifth edition of the jazz festival “San Isidro Jazz and more” along with the lyrical singing program “From Colon to the whole country”. The main purpose of these sponsorships is to advertise the “BBVA Francés Scholarships for inclusion” program.

During the quarter the BBVA Francés Foundation was part of the 12th edition of “The Museums Night” with the Museo Líbero Badií, National Historical Monument. The event is organized by the General Board of Museums, a public office that depends on the Ministry of Culture of the City of Buenos Aires.

Presentation of Financial Information

During the fourth quarter of 2015, the Bank’s net income totaled AR$ 1,188.3 million, 45.9% and 19.1% above the results of the previous year and the third quarter of 2015, respectively.

Net financial income increased 44.4% annually and 22.7% compared to the third quarter of 2015. Said variation is mainly explained by higher income from the public bonds portfolio.

Provisions for loan losses grew 29.7% compared to the same quarter of 2014 and 71.5% in the quarter,

mainly as a consequence of the strong growth in the loan portfolio (that increased the volume of provisions for loan losses) and as a result of higher non-performing loans.

During the second quarter of 2015, the Bank has implemented a redefinition of the charges generated by credit and debit card operations, from administrative expenses to service charge expenses, in line with the standards applied in the industry.

Normalized net income from services increased by 12.3% compared to the same quarter of 2014 and maintained a similar level compared to the previous quarter.

Administrative expenses increased 38.4% compared to the same quarter of 2014 and 14.8% during the fourth quarter of 2015.

Finally, other income/expenses registered a gain of AR$ 1.8 million, mainly due to higher recovered loans partially offset by provisions for other contingencies.

Net Financial Income

Net financial income increased 44.4% and 22.7%, compared to the same quarter of 2014 and to the previous quarter, respectively.

Higher volumes of intermediation with the private sector partially offset the increase in the funding cost, mainly due to the increase in bank deposit guarantee insurance, the effect of the application of minimum interest rates to time deposits and faster growth of deposits over loans.

As a result net income from intermediation with the private sector remained at a similar level compared to 2014 and showed a 5.6% increase during the quarter.

Income from the public bonds portfolio registered significant gains, both compared to the same quarter of 2014 and during the quarter. The variations in the valuation of public securities originated a gain of AR$ 382.1 million during the quarter under analysis compared to gains of AR$ 100.2 million and AR$ 1.7 million recorded during the fourth quarter of 2014 and the previous quarter, respectively.

The line item “Others” which reflects the results from Forward operations, registered a significant increase compared to the same quarter of 2014 and during the quarter.

Income from Public and Private Securities

The Bank has the discretion to mark-to-market its total public bonds portfolio; because of that, such income includes the unrealized losses/gains from variations in the valuations of the portfolio.

Net Income from Services

As previously mentioned, during the second quarter of 2015, the Bank implemented a redefinition of charges generated by credit and debit card operations, which partially explains the variations during the period.

Not taking into account such redefinition, net income from services would have increased 12.3% compared to the fourth quarter of 2014 and did not register significant variations during the quarter under analysis.

In the annual comparison, service charge income grew 27.5% boosted by higher charges on deposit accounts, higher consumption with credit cards together with those fees generated by PSA Finance.

Service charge expenses include the redefined charges and those related to promotions associated with the LANPASS kilometers program.

Similar behavior explains the quarterly variations.

Administrative Expenses

Administrative expenses increased 27.8% annually and 14.8% compared to the previous quarter. Not considering the redefinition, such increases would have been 38.4% and 14.8%, respectively.

Personnel expenses grew 40.2% in the last twelve months mainly due to the increase in wages as agreed with the labor union and a higher number of employees due to the internalization of resources. In the quarterly comparison, personnel expenses grew 18.7% due to the payment of a fixed amount agreed with the union.

General expenses increased 36% in the last twelve months and 9.9% during the quarter under analysis,

without taking into account the effect of the redefinition.

Both, the annual and quarterly comparisons of the Bank’s expenses reflected higher taxes and depreciation expenses in connection with the improvement works carried out in the Bank’s headquarters and branches together with the ATM renewal plan and the impact of an increase in prices and a higher level of activity.

As of December 31, 2015, the Bank and its subsidiaries had 5,784 employees. The branch office network totaled 285 attention-to-clients units, including 251 consumer branch offices and 34 branch offices specializing in the middle-market segment and institutions. Corporate banking is divided by industry: Consumer, Heavy Industries and

Energy. Complementing its distribution network, the Bank has 14 in-company branches, 1 point of sale

outlets and 1 point of attention express, 694 ATM’s and 797 self-service terminals (ATS).

Other Income / Expenses

Other income/expenses totaled a gain of AR$ 1.8 million during the fourth quarter of 2015 mainly due to higher recovered loans partially offset by provisions for other contingencies.

Income from Equity Investments

Income from equity investments sets forth net income from related companies that are not consolidated. During the fourth quarter of 2015 a gain of AR$ 46.9 million was recorded, mainly due to BBVA Frances’ stake in Rombo Compañia Financiera.

Total Public Sector Exposure

Exposure to the public sector’s National Treasury increased 16.1% during 2015 and 27.4% during the quarter, mainly due to bonds purchases and revaluation of the portfolio.

The Bank’s portfolio of BCRA bills and notes grew 39.4% in the last twelve months and maintained a similar level compared to the third quarter of 2015, in accordance to the liquidity policy implemented by the Bank.

As of December 31, 2015, the public sector’s National Treasury assets represented 3.3% of the Bank’s total assets. Total exposure to the BCRA’s bills and notes net of holdings linked to reverse repo transactions, represented 10% of the Bank’s total assets.

Total exposure to the public sector includes public debt of the National Treasury through public securities, guaranteed loans and trustees, as well as the BCRA’s bills and notes.

Loan Portfolio

The private sector loan portfolio totaled AR$ 56.5 billion as of December 31, 2015, growing 36.5% in the last twelve months and 13.2% during the quarter.

During 2015, consumer loans registered remarkable growth, increasing its portfolio by 42.4%. Such increase was mainly due to credit cards with an increase of 59.8%, whereas car loans increased at a slower pace of 23.6% and personal loans of 20.6%.

Commercial loans grew 29.3% annually mainly due to the performance of loans to SMEs. It is important to mention that management of the line of credit for the productive investment for micro, small and medium-sized companies was instrumental in placing loans and leasing, reaching the target established for the year.

Compared to the previous quarter, growth was led by an 18% increase in the retail portfolio, whereas commercial loans improved by 7.3%.

Asset Quality

BBVA Francés has maintained a leadership position in terms of risk.

The asset quality ratio (non-performing loans/total loans) was 0.64% as of December 31, 2015 while the coverage ratio (provisions/non-performing loans) reached 300.62%.

The following table shows the evolution of provisions for loan losses, including charges relating to

transactions recorded under “Other receivables” from financial intermediation.

Deposits

Total deposits reached AR$ 76.9 billion as of December 31, 2015, an increase of 49.4% in the last twelve months and 21.6% during the quarter.

During the year, time deposits grew 59.9% while sight accounts grew 43.8%.

During the fourth quarter, time deposits grew 19.2% while sight accounts grew 24.7%.

Deposits denominated in pesos grew 31.3% annually and 13.9% during the fourth quarter. Foreign currency denominated deposits increased significantly compared both to the same quarter of 2014 and to the previous quarter.

By the end of December 31, 2015 deposits denominated in foreign currency reached AR$ 12.6 billion (equivalent to US$ 965.9 million), representing 16.3% of the Bank’s total deposits.

Other Funding Sources

Other funding sources totaled AR$ 3.8 billion as of December 31, 2015, registering an increase of 51.0% compared to the previous year and 31.1% during the quarter.

During the year, the Bank issued five placements of its Negotiable Obligations (Bonds) for a total amount of AR$ 835.7 billion.

By the end of the quarter, the Negotiable Obligations’ principal plus interest totaled AR$ 1,902.6 billion, of which 95% correspond to the Bank’s issuances and the rest to PSA Finance.

Financing lines from other banks increased both, compared to December 2014 and to the previous quarter mainly due to higher export financing.

As of December 31, 2015, 75.1% of the outstanding lines from other banks are denominated in foreign currency.

Capitalization

As of December 31, 2015, the Bank’s total shareholders’ equity totaled AR$ 13.7 billion;

representing an excess of AR$ 6.6 billion over the BCRA capital requirements. On the same date, the capital ratio reached 15.5% of assets adjusted to risk.