financial statements as of june 30, 2016 - banco patagonia€¦ · · 2016-09-15financial...

Translation from the original prepared in Spanish for publication in Argentina

Financial statements as of June 30, 2016 jointly with the Independent auditors ’ report on review of interim

financial statements and the Supervisory Audit Comm ittee ’s report


BANCO PATAGONIA S.A.

FINANCIAL STATEMENTS AS OF June 30, 2016

CONTENTS

Page

Independent auditors’ report on review of interim financial statements

Cover page ............................................................................................................................... 1

Statements of financial position ............................................................................................... 2

Statements of income............................................................................................................... 7

Statements of changes in shareholders’ equity ....................................................................... 9

Statements of cash floes and cash equivalents ....................................................................... 10

Notes to the financial statements ............................................................................................. 12

Exhibit A - Breakdown of government and corporate securities ........................................... 46

Exhibit B - Financing facilities classified by status and guarantees received ...................... 48

Exhibit C - Financing-facilities concentration..... ................................................................... 50

Exhibit D - Financing facilities broken down by term............................................................. 51

Exhibit E - Breakdown of investments in other companies ................................................... 52

Exhibit F - Changes in property, plant and equipment and miscellaneous assets ............... 54

Exhibit G - Breakdown of intangible assets ........................................................................... 55

Exhibit H - Deposits concentration ........................................................................................ 56

Exhibit I - Breakdown by term of deposits, other liabilities from financial intermediation and subordinated corporate bonds .................................................................... 57

Exhibit J - Changes in allowances and provisions ............................................................... 58

Exhibit K - Capital structure ................................................................................................... 59

Exhibit L - Balances in foreign currency .............................................................................. 60

Exhibit N - Credit assistance to related parties .................................................................... 61

Exhibit O - Derivative financial instruments ........................................................................... 62

Consolidated financial statements. .......................................................................................... 63

Reporting summary

Supervisory Audit Committee’s Report on interim financial statements


Independent auditors’ report on review of interim financial statements

To the President and Directors of

Banco Patagonia S.A.

Registered office: Av. de Mayo 701, Floor 24

Taxpayer Identification No. [C.U.I.T.] No. 30-50000661-3 City of Buenos Aires Report on the financial statements

We have examined the accompanying interim financial statements of Banco Patagonia S.A. (“ the Bank” ), which include the statement of financial position as of June 30, 2016, the statements of income, changes in shareholders’ equity and cash flows and cash equivalents for the six-month period then ended, Notes 1 to 26, and Exhibits A, B, C, D, E, F, G, H, I, J, K, L, N and O. We have also examined the accompanying consolidated financial statements of Banco Patagonia S.A. and its subsidiaries, which include the consolidated statement of financial position as of June 30, 2016, and the consolidated statements of income and cash flows and cash equivalents for the six-month period then ended, Notes 1 to 8, and Exhibit 1, which are presented as supplementary information.

The figures and other information as of December 31, 2015 and for the six-month period ended June 30, 2015 are an integral part of the financial statements mentioned above, and are presented for the purpose of being construed solely in relation to the figures and other information for the current interim period.

Board of Directors’ and Management responsibility for the financial statements

The Board of Directors and Management are responsible for the preparation and fair presentation of the accompanying interim financial statements in accordance with the accounting standards established by the Argentine Central Bank (“BCRA” ). This responsibility includes designing, implementing and maintaining any such internal control as the Board of Directors and Management determine is necessary for the financial statements to be free from material misstatement.

Auditors’ responsibility and scope of the review

Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We conducted our review in accordance with the standards set forth by Technical Resolution No. 37 of the Argentine Federation of Professional Councils of Economic Sciences (FACPCE) and the “Minimum Standards applicable to External Audits” set forth by the BCRA for the review of interim financial statements. In accordance with such standards, a review is limited primarily to the performance of analytical and other review procedures applied to financial data included in the interim financial statements and inquiries of personnel responsible for the preparation thereof. A review is substantially less in scope than an audit conducted in accordance with auditing standards in force, and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the interim financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements do not present fairly, in all material respects, the financial position of the Bank as of June 30, 2016, the results of its operations, the changes in shareholders’ equity and cash flows and cash equivalents for the six-month period then ended, as well as the financial position of the Bank with its subsidiaries as of June 30, 2016, the consolidated results of its operations and consolidated cash flows and cash equivalents for the six-month period then ended, in conformity with accounting standards established by the BCRA.


Emphasis paragraph

Without modifying our conclusion, we draw users’ attention to the information presented in Note 3 to the accompanying stand-alone financial statements, where it is stated that such financial statements have been prepared by the Bank’s Board of Directors and Management in compliance with the accounting standards set forth by the BCRA, which differ in terms of certain valuation and presentation criteria from the professional accounting standards in force in the City of Buenos Aires, Argentina, described in Note 3.

Report on other legal and regulatory requirements

In compliance with legal provisions in force, we report that:

1. The accompanying stand-alone interim financial statements have been transcribed into the Inventory Book, and arise from the Bank’s accounting records, which, in their formal aspects, are kept pursuant to the legal provisions in force. The information systems used to generate the information included in the financial statements are kept under the security and integrity conditions based on which they were duly authorized;

2. As of June 30, 2016, the Bank records the minimum shareholders’ equity and counterparty required by the Argentine Securities Commission (CNV), as mentioned in Note 15 to the stand-alone accompanying financial statements;

3. the accompanying consolidated financial statements have been transcribed into the Inventory Book and prepared by the Bank’s Board of Directors and Management, in their significant aspects, in compliance with consolidation standards set forth by Communications “A” 2227 and 2349 of the BCRA, which are disclosed in notes 1 to 8 to such consolidated financial statements;

4. as of June 30, 2016, there is no evidence of noncompliance with the significant aspects of the monetary and technical regulations set forth by the BCRA in relation to information provided to the BCRA on consolidated bases;

5. we read the reporting summary (sections “Highlights”, “Comparative consolidated financial position items”, “Comparative consolidated profit or loss items”, "Comparative consolidated statement of cash flows", “Ratios” and “Additional information required by section 12 of chapter III, title IV of CNV regulations”), based on which, as far as it relates to our area of responsibility, we have no observations; and

6. as of June 30, 2016, the accrued liability for retirement and pension contributions payable to the Argentine Pension Fund System arising from the accounting records of amounted to $ 67,529,358, no amounts being due as of that date.

City of Buenos Aires, August 8, 2016.

KPMG Reg. de Asoc. Prof. CPCECABA Tº 2 Fº 6 Marcelo A. Castillo Partner Public Accountant (UBA) Tº CLXIX Fº 52


Marcelo A. Iadarola Juan D. Mazzón João Carlos de Nobrega Pecego Executive manager of Administration Superintendent President

Accounting and Taxation Finance, Administration and Public area

Signed for identification purposes with our report dated 08/08/2016

By Supervisory Committee


KPMG C.P.C.E.C.A.B.A. T° 2 F° 6

Mónica M. Cukar Regular Supervisory Auditor

Certifed Public Accountant (UBA) C.P.C.E.C.A.B.A. T° 147 F° 66

Marcelo A. Castillo (Partner) Certifed Public Accountant (UBA)

C.P.C.E.C.A.B.A. Tº CLXIX Fº 52 1


Legal address:

Avenida de Mayo 701, Floor 24 – City of Buenos Aires – Argentina

Main business activity: commercial bank Taxpayer identification No. [C.U.I.T.] : 30 - 50000661 - 3

Incorporation date: May 4, 1928

Registration with the Public Registry of Commerce

of the City of Buenos Aires

Date Of the articles of incorporation: 9/18/1928

Of the latest amendment: 12/7/2011

Book Stock Corporations Book: 57

Number: 30114

Expiry of articles of incorporation: August 29, 2038

Fiscal year No. 93

Beginning date: January 1, 2016 Closing date: December 31, 2016

Capital structure (Note 8 and Exhibit K)

Number and characteristics of shares In Argentine pesos

Subscribed Paid in

719,145,237 registered, common shares, with a nominal value of ARS 1, and entitled to one vote

each 719,145,237 719,145,237

Information required by the BCRA (Central Bank of A rgentina)

Name of the undersigned auditor: Marcelo A. Castillo

Professional firm: KPMG

Report for the the six-month period ended June 30, 2016 8 – (quarterly closing – Unqualified conclusion)

Translation from the original prepared in Spanish for publication in Argentina BANCO PATAGONIA S.A.

STATEMENT OF FINANCIAL POSITION AS OF 6/30/2016 AND 12/31/15

(amounts stated in thousands of pesos)











ASSETS 6/30/2016 12/31/2015

A. Cash and due from banks Cash on hand 2,103,033 2,886,310 Financial institutions and correspondents 6,353,284 6,380,493 BCRA 5,599,513 5,545,163 Other in Argentina 391 410 Other abroad 753,380 834,920 8,456,317 9,266,803 B. Government and corporate securities (Exhibit A) Holdings carried at fair market value 2,023,531 2,707,449 Holdings carried at cost plus yield 286,421 156,876 Instruments issued by the BCRA 6,723,934 9,370,782 Investments in listed corporate securities 139 205 9,034,025 12,235,312 C. Loans To the nonfinancial government sector (Exhibits B, C and D) 672,236 474,123 To the financial sector (Exhibits B, C and D) 1,787,748 1,353,720

Interbank loans (call options granted) 415,000 465,390 Other financing facilities granted to local financial institutions 1,270,105 823,773 Accrued interest, adjustments and listed-price differences receivable 102,643 64,557

To the nonfinancial private sector and foreign residents (Exhibits B, C and D) 34,073,759 30,776,333 Overdrafts 7,066,365 6,629,956 Notes 13,645,150 13,238,649 Mortgage loans 26,204 30,781 Consumer 4,202,323 3,968,399 Credit cards 6,199,531 5,325,367 Other 2,502,266 1,230,247 Accrued interest, adjustments and listed-price differences receivable 545,961 457,909 (Documented interest) (114,041) (104,975) (Allowances) (Exhibit J) (1,214,134) (1,205,725) 35,319,609 31,398,451














ASSETS – Continued 6/30/2016 12/31/2015

D. Other Receivables from Financial Intermediation BCRA 824,236 635,313 Amounts receivable from spot sales to be settled and forward sales 977,323 2,741,930 Securities and foreign currency from spot sales to be settled and forward sales 861,330 40,746 Unlisted corporate bonds (Exhibits B, C and D) 81,414 94,624 Unsettled amounts of forward transactions without delivery of underlying asset 7,575 15,374 Other not covered by Debtor Classification Standards 40,191 19 Other covered by debtor classification standards (Exhibits B, C and D) 21,663 20,195 Accrued interest and adjustments receivable covered by Debtor Classification Standards (Exhibits B, C and D) 24 99 (Allowances) (Exhibit J) (4,439) (3,940) 2,809,317 3,544,360 E. Receivables from Finance Leases Receivables from finance leases (Exhibits B, C and D) 1,337,602 1,290,518 Accrued interest and adjustments receivable (Exhibits B, C and D) 12,743 11,652 (Allowances) (Exhibit J) (18,594) (17,428) 1,331,751 1,284,742 F. Investments in other companies (Exhibit E) In financial institutions 1,063,282 934,808 Other 134,249 112,052 1,197,531 1,046,860 G. Miscellaneous Receivables Other (Note 5) 777,173 597,190 Other accrued interest and adjustments receivable 527 512 (Allowances) (Exhibit J) (9,148) (10,699) 768,552 587,003 H. Property, plant and equipment (Exhibit F) 454,397 357,677 I. Miscellaneous assets (Exhibit F) 230,582 221,500

J. Intangible assets (Exhibit G) Organization and development expenses 18,493 25,409 18,493 25,409 K. Items pending allocation 3,165 3,037

TOTAL ASSETS 59,623,739 59,971,154














LIABILITIES 6/30/2016 12/31/2015

L. Deposits (Exhibits H and I) Nonfinancial government sector 4,478,474 2,791,670 Financial sector 10,111 31,678 Nonfinancial private sector and foreign residents 37,370,149 38,828,106 Checking accounts 6,930,237 5,991,598 Savings accounts 11,726,332 10,755,434 Time deposit 16,828,920 20,409,674

Investment accounts 6,672 303,845 Other 1,271,982 954,941 Accrued interest, adjustments and listed-price differences payable 606,006 412,614 41,858,734 41,651,454 M. Other liabilities from financial intermediation BCRA (Exhibit I) 16,366 20,572 Banks and international organizations (Exhibit I) 1,722,723 2,329,770 Unsubordinated corporate bonds (Note 9) (Exhibit I) 332,200 332,200 Amounts to be paid for spot purchases to be settled and forward purchases 809,455 36,042 Securities and foreign currency to be delivered under spot sales to be settled and forward sales

1,052,834 3,044,763

Financing facilities received from local financial institutions (Exhibit I) 108,817 58,056 Interbank loans 108,600 58,000 Accrued interest payable 217 56

Unsettled amounts of forward transactions without delivery of underlying asset 11,077 898,448 Other (Exhibit I) (Note 5) 2,778,975 2,716,599 Accrued interest, adjustments and listed-price differences payable (Exhibit I) 52,618 39,988 6,885,065 9,476,438 N. Miscellaneous liabilities

Dividends payable (Note 17) 52,728 - Fees 2,815 3,064 Other (Note 5) 1,473,444 1,017,829 1,528,987 1,020,893 O. Allowances (Exhibit J) 137,173 137,618 Q. Items pending allocation 9,075 3,230

TOTAL LIABILITIES 50,419,034 52,289,633

SHAREHOLDERS ’ EQUITY (as per related statements) 9,204,705 7,681,521

TOTAL LIABILITIES AND SHAREHOLDERS ’ EQUITY 59,623,739 59,971,154














MEMORANDUM ACCOUNTS 6/30/2016 12/31/2015

DEBIT BALANCE Contingent Loans obtained (unused amounts) 8,955 164,100 Guarantees received 14,022,022 12,584,945 Other not covered by debtor classification standards 558 558 Contingent debit-balance contra accounts 2,334,766 1,998,901 16,366,301 14,748,504 Control Receivables classified as irrecoverable 586,995 603,085 Other (Note 5) 31,893,182 25,892,724 Control debit-balance contra accounts 5,017,127 4,062,634 37,497,304 30,558,443 Derivatives Notional value of forward transactions without delivery of underlying asset

(Exhibit O and Note 11) 1,700,516 6,761,078 Derivative debit-balance contra accounts 2,922,751 6,765,460

4,623,267 13,526,538 Trust activity (Note 12) Trust funds 2,027,641 1,521,669

2,027,641 1,521,669

DEBIT-BALANCE MEMORANDUM ACCOUNTS 60,514,513 60,355,154














MEMORANDUM ACCOUNTS – Continued 6/30/2016 12/31/2015

CREDIT BALANCE Contingent Loans granted (unused amounts) covered by debtor classification standards (Exhibits B, C and D) 1,474,894 1,183,005 Other guarantees provided covered by debtors classification standards (Exhibits B, C and D) 100,835 91,457 Other guarantees provided not covered by debtors classification standards 111,780 85,639 Other covered by debtors classification standards (Exhibits B, C and D) 415,476 371,810 Other not covered by debtor classification standards 231,781 266,990 Contingent credit-balance contra accounts 14,031,535 12,749,603 16,366,301 14,748,504 Control Checks and securities to be credited 1,051,528 678,932 Other 3,965,599 3,383,702 Control credit-balance contra accounts 32,480,177 26,495,809 37,497,304 30,558,443 Derivatives Notional value of forward transactions without delivery of underlying asset

(Exhibit O and Note 11) 2,922,751 6,765,460 Derivatives credit-balance contra accounts 1,700,516 6,761,078 4,623,267 13,526,538 Trust activity Trust activity credit-balance contra accounts 2,027,641 1,521,669 2,027,641 1,521,669

TOTAL CREDIT-BALANCE MEMORANDUM ACCOUNTS 60,514,513 60,355,154

The accompanying notes 1 to 26, exhibits A to L, N and O are an integral part of these financial statements.


STATEMENT OF INCOME For the six-month period ended 6/30/2016 and 6/30/2 015












BREAKDOWN 6/30/2016 6/30/2015

A. FINANCIAL INCOME Interest on loans to the financial sector 211,453 86,491 Interest on overdrafts 1,162,357 721,176 Interest on notes 1,530,682 1,052,905 Interest on mortgage loans 1,873 2,523 Interest on credit card loans 631,745 475,671 Interest on other loans 888,331 693,831 Interest on other receivables from financial intermediation 759 418 Interest on finance leases 142,185 98,047 Net income from government and corporate securities 1,868,923 1,037,111 Income from secured loans – Presidential Decree No. 1387/01 117 153 Adjustments under CER clause 3,442 1,368 Gold and foreign currency quoted price difference 270,002 132,136 Other 201,801 86,866 6,913,670 4,388,696 B. FINANCIAL EXPENSE Interest on savings-account deposits 2,088 1,543 Interest on time deposits 2,781,242 1,604,237 Interest on interbank loans received (call options received) 15,664 12,378 Interest on other financing facilities from financial institutions 31,054 9,477 Interest on other liabilities from financial intermediation 57,076 33,193 Other interest 33,701 49,147 Adjustments under CER clause 19 23 Contribution to the deposit guarantee fund (Note 14) 87,772 100,402 Other 385,956 223,280 3,394,572 2,033,680 GROSS INTERMEDIATION MARGIN 3,519,098 2,355,016 C. CHARGE FOR LOAN LOSSES (Exhibit J) 158,863 156,475 D. REVENUE FROM SERVICES Related to lending transactions 407,838 313,993 Related to borrowing transactions 608,719 474,530 Other fees 95,218 53,658 Other (Note 5) 374,548 231,329 1,486,323 1,073,510


STATEMENT OF INCOME For the six-month period ended 6/30/2016 and 6/30/2 015












BREAKDOWN - Continued 6/30/2016 6/30/2015

E. Service-charge expense Fees 110,848 70,805 Other (Note 5) 405,347 235,745 516,195 306,550 G. ADMINISTRATIVE EXPENSES Personnel expenses 1,437,540 977,855

Directors and supervisory auditors’ fees 37,342 29,180

Other professional fees 39,738 31,962 Advertising 57,209 38,691 Taxes 125,644 99,846 Depreciation of property, plant and equipment (Exhibit F) 26,266 17,343 Organization expenses amortization (Exhibit G) 6,916 6,657 Other operating expenses 309,891 224,937 Other 188,466 124,286 2,229,012 1,550,757

NET INCOME (LOSS) FROM FINANCIAL INTERMEDIATION 2,1 01,351 1,414,744 I. OTHER EARNINGS Income from long-term investments 196,317 146,229 Punitive interest 8,761 5,436 Receivables recovered and allowances reversed 89,483 51,455 Other 64,013 49,558 358,574 252,678 J. OTHER LOSSES Punitive interest and charges payable to the BCRA 18 9 Charge on uncollectibility of miscellaneous receivables, and other allowances (Exhibit J) 8,163 12,489 Losses and depreciation of miscellaneous assets (Exhibit F) 159 185 Other (Note 5) 26,673 18,453 35,013 31,136

NET INCOME BEFORE INCOME TAX 2,424,912 1,636,286 L. INCOME TAX (Note 1.6.s) 849,000 568,627

NET INCOME FOR THE PERIOD 1,575,912 1,067,659



STATEMENT OF CHANGES IN SHAREHOLDERS ’ EQUITY For the six-month period ended

6/30/2016 and 6/30/2015 (amounts stated in thousands of pesos)











Changes Capital stock (1)

Non-capitalized

contributions Additional

paid-in capital

Appropriated retained earnings

Unappropriated

retained earnings

(2)

Total as of 6/30/2016

Total as of 6/30/2015

Legal Optional

Balances at beginning of year

719,265 217,191 1,406,883 2,932,649 2,405,533 7,681,521 6,320,596

Capital Stock reduction registered with the Supervisory Board of Companies on 3/29/16 (3)

(120) - - - 120 - -

Distribution of unappropriated retained earnings approved by the

Annual General Shareholders’ Meeting held on 4/27/16

- Legal reserve - - 481,107 - (481,107) - -

- Optional reserve – Future distribution of earnings

- - - 1,871,698 (1.871,698) - -

- Cash dividends - - - - (52,728) (52,728) (1,044,608)

Net income for the period - - - - 1,575,912 1,575,912 1,067,659

Balances at period-end 719,145 217,191 1,887,990 4,804,347 1,576,032 9,204,705 6,343,647


(1) See Note 8.1. (2) See note 17 (3) See Note 8.4.


STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS For the six-month period ended












Changes in cash and cash equivalents (Note 2) 6/30/2016 6/30/2015

Cash at beginning of year 9,266,803 6,360,072

Cash at period-end 8,456,317 5,708,851

Net decrease in cash (810,486) (651,221) Causes of changes in cash and cash equivalents Operating activities

Net collections / (payments) of: Government and corporate securities 2,270,781 (2,458,260) Loans 591,309 2,073,257

- To the financial sector (222,599) (445,252) - To the nonfinancial government sector (194,671) 14,426 - To the nonfinancial private sector and foreign residents 1,008,579 2,504,083 Other Receivables from Financial Intermediation 1,727,828 (2,573,975) Receivables from Finance Leases 93,263 (184,653) Deposits (2,857,007) 4,714,722 - From the financial sector (21,567) (169,820) - From the nonfinancial government sector 1,686,804 221,854 - From the nonfinancial private sector and foreign residents (4,522,244) 4,662,688

Other Liabilities from Financial Intermediation (148,723) (944,269)

- Financial sector or interbank loans (call options received) 35,097 (227,263) - Other (except for the obligations included under financing activities) (183,820) (717,006)

Collections related to revenues from services 1,477,949 1,068,505

Payments related to service-charge expenses (516,487) (305,886)

Administrative expenses paid (2,128,689) (1,690,378)

Payments of organization and development expenses - (1,029)

Net collections of punitive interest 8,743 5,427

Collection of dividends from other companies 45,690 18,497

Other payments related to other earnings and expenses (92,019) (87,416)

Net payments of other operating activities (280,243) (237,127)

Income tax paid (516,784) (519,722) Net cash flows used in operating activities (324,389) (1,122,307)


STATEMENT OF CASH FLOWS AND CASH EQUIVALENTS For the six-month period ended












6/30/2016 6/30/2015

Investing activities

Net payments of property, plant, and equipment (120,562) (32,400)

Net payments of miscellaneous assets (6,845) (23,490)

Net cash flows used in investing activities (127,407) (55,890)

Financing activities

Net collections / (payments) of:

Unsubordinated corporate bonds (42,471) (336,704)

BCRA (5,000) (5,000)

Banks and international organizations (638,156) 689,883 Net cash flows (used in) provided by financing acti vities (685,627) 348,179

Financial and holding gain-loss on cash and cash eq uivalents (including interest and monetary gain (loss) 326,937 178,797

Net decrease in cash (810,486) (651,221)




NOTES TO FINANCIAL STATEMENTS FOR THE SIX-MONTH PER IOD ENDED JUNE 30, 2016 COMPARATIVELY PRESENTED












NOTE 1: Basis for presentation of financial state ments

These financial statements have been prepared in conformity with the accounting standards established by the BCRA, and arise from the Bank’s accounting records, which are kept in accordance with effective legal requirements and regulations. 1.1 Consolidated financial statements

As required by BCRA rules, the Bank presents as supplementary information the consolidated financial statements with its subsidiaries GPAT Compañía Financiera S.A., Patagonia Valores S.A., Patagonia Inversora S.A. Sociedad Gerente de F.C.I. and Banco Patagonia (Uruguay) S.A. I.F.E.

1.2 Comparative information

Under BCRA rules, the Statement of Financial Position as of June 30, 2016, and the related exhibits are presented comparatively with prior year-end data, while the Statements of Income, Changes in Shareholders' Equity and Cash Flows and cash equivalents for the six-month period ended June 30, 2016 are presented comparatively with those for the same period of the prior fiscal year.

1.3 Figures stated in thousands of Argentine pesos

The amounts presented in these financial statements are stated in thousands of Argentine pesos as required by BCRA “CONAU 1 - 111” (Communication “A” 3359).

1.4 Reporting currency

The Bank’s financial statements recognize the changes in the currency purchasing power through February 28, 2003, being discontinued from that date, as required by Presidential Decree No. 664/2003, CNV General Resolution No. 441 and BCRA Communication “A” 3921. However, the existence of significant variations as those noted in the most recent periods in the prices of the relevant variables of the economy, such as the salary cost, the interest rates and the exchange rates, may also impact the Bank’s financial position and income/loss. Accordingly, such variations should be considered in the interpretation of the financial position, the results of operations and cash flows disclosed by the Company in these financial statements.














1.5 Use of accounting estimates

In preparing the financial statements, in certain cases, the Bank’s Management is required to make estimates to determine the book value of assets and liabilities, as well as the exposure thereof, at each reporting date. The Bank’s recorded amounts are based on the best estimate regarding the probability of occurrence of different future events and, therefore, the final amount may differ from such estimates, which may have a positive or negative impact on future periods.

1.6 Main valuation and disclosure criteria

The main valuation and disclosure criteria applied to the preparation of the financial statements as of June 30, 2016, and comparative figures (see note 1.2) are the following: a) Assets and liabilities in foreign currency

Assets and liabilities denominated in US dollars have been valued at the benchmark exchange rate set by the BCRA through BCRA Communication “A” 3500 for the US dollar at the close of the last trading day of each period or fiscal year, as applicable. In addition, assets and liabilities denominated in other foreign currencies, different from the US dollar, were converted at the exchange rates published by the BCRA at each fiscal year- or period-end, as applicable. Foreign exchange differences were recognized in profit or loss for each period.

b) Government and corporate securities

1. Holdings carried at fair market value

They were stated at quoted prices prevailing on the Buenos Aires securities and exchange market (MERVAL) or the Electronic Over-the-counter market (MAE), or at present values reported by the BCRA as of June 30, 2016 and December 31, 2015, plus the coupons pending collection. Quoted prices and present values differences were recognized in profit or loss for each period.

2. Holdings carried at cost plus yield

As of June 30, 2016 and December 31, 2015, they were stated at acquisition cost, increased by the accrual of the internal rate of return, net of the offset account, as appropriate and, at the same time, compared with the present values calculated by the Bank.














In accordance with the provisions of Communication "A" 5506, the Bank opted to state the Argentine Bond for Economic Development (BAADE) at cost, increased based on the internal rate of return. As of June 30, 2016 and December 31, 2015, such holdings were stated by following the same criterion. The accrual of the internal rate of return was recognized in profit or loss for each period.

3. Instruments issued by the BCRA

a) Holdings with volatility published by the BCRA (own portfolio and earmarked for repo transactions): they were valued in accordance with the last prevailing quoted price for each instrument as of June 30, 2016 and December 31, 2015. Quoted price differences were recognized in profit or loss for each period.

b) Holdings without volatility published by the BCRA (own portfolio and earmarked for

repo transactions): they were valued at acquisition cost increased based on the internal rate of return as of June 30, 2016 and December 31, 2015. The internal rate of return accruals mentioned above were recognized in profit or loss for each period.

4. Investments in listed corporate securities

They were stated at quoted prices prevailing at the MERVAL as of June 30, 2016 and December 31, 2015. Quoted price differences were recognized in profit or loss for each period.

c) Credit assistance to the nonfinancial government sector

Mainly including amounts actually disbursed but not yet collected plus adjustments, quoted price differences and interest accrued receivable at each period or fiscal year, as applicable.

d) Interest accrual Interest has been accrued on the basis of compounding, except for foreign trade transactions, savings account balances and overdraft balances, which have been accrued by applying the simple interest method. The Bank decided directly to interrupt the accrual of interest whenever loans are in default (generally, with delays over 90 days) and the recoverability of principal loaned and accrued interest is uncertain. Interest accrued until the interruption is deemed part of the outstanding balance upon determining the amount of the loan loss allowances. Subsequently, interest is only recognized based on collection, once the receivable for previously accrued interest has been settled.














e) Accrual of the adjustment by CER

As of June 30, 2016 and December 31, 2015, some assets and liabilities have been adjusted by applying CER.

f) Loans and deposits of government securities

They were valued according to the effective quoted prices for each security at the end of each fiscal period or year, as applicable, plus the related accrued interest. Quoted price differences were recognized in profit or loss for each period.

g) Allowance for loan losses, contingent commitments and other contingencies

1. Allowance for loan losses and contingent commitments

The allowance for loan losses was set up based on the estimated uncollectibility risk of the Bank’s credit facilities, which results from assessing the borrowers’ performance and the guarantees supporting the related transactions in conformity with BCRA Communication “A” 2950, as supplemented.

2. Allowance for other contingencies:

It includes the amounts estimated by the Bank’s Management necessary to bear likely contingencies that, if verified, will result in a loss for the Bank.

h) Other Receivables from Financial Intermediation

1. Amounts receivable from spot sales to be settled and forward sales

They were valued at the prices agreed upon for each transaction, plus the related premiums accrued at the end of each fiscal period or year, as applicable. These premiums were recognized in profit or loss for each period.

2. Securities and foreign currency from spot sales to be settled and forward sales

a. Listed: they were valued at the quoted prices prevailing for each security at MERVAL or MAE at the end of each fiscal period or year, as applicable. Quoted price differences were recognized in profit or loss for each period.














b. Unlisted: they were valued at cost, increased by applying the internal rate of return

at the end of each fiscal period or year, as applicable. The related accrual was recognized in profit or loss for each period.

3. Unlisted corporate bonds

They were valued at cost, increased by applying the internal rate of return.

4. Other not covered by Debtor Classification Standards – Financial Trusts

They were valued at cost adjusted by CER, where applicable, and increased by applying the internal rate of return.

i) Receivables from Finance Leases

In accordance with BCRA Communication “A” 5047 as supplemented, they were valued at the discounted value of the addition of minimum installments pending collection (except for any contingent installments), the residual value previously agreed and the purchase options, for the financial lease agreements in which the Bank acts as a lessor. The discounted value is calculated by applying the imputed interest rate of each lease agreement. As of June 30, 2016 and December 31, 2015, the characteristics of the current lease agreements are those usually prevailing for this kind of transactions, and there is no differentiating issue of any kind compared with the transactions generally agreed on the Argentine financial market. These transactions are atomized among the Bank’s customers and there are no pre-established contingent installments or automatic renewal clauses.

j) Investments in other companies

As of June 30, 2016 and December 31, 2015, the equity interests in other companies were valued as follows: 1. Subsidiaries

Banco Patagonia (Uruguay) S.A.I.F.E.: at the amount calculated by the equity method at the end of each fiscal period or year, as applicable, converted into Argentine pesos, as described in note 1.6.a).














Patagonia Valores S.A. and Patagonia Inversora S.A. Sociedad Gerente de Fondos Comunes de Inversión: by the equity method at the end of each fiscal period or year, as applicable. GPAT Compañía Financiera S.A.: by the equity method at the end of each fiscal period or year, as applicable. As of June 30, 2015, the related amount was net of the negative goodwill, resulting from the difference between the acquisition cost and the equity method value at the time of acquisition. Goodwill amortization was calculated based on a term not shorter than 60 months, subject to a full-month of addition amortization, whereas the disposal month is not amortized.

2. Other companies

At cost, restated by applying the procedure described in note 1.4. or by the equity method, whichever lower, considering each company’s latest available financial statements.

k) Property, plant and equipment, and miscellaneous assets

These assets were recorded at cost, restated following the procedure described in note 1.4. Depreciation was calculated based on the months of useful life. The assets were fully depreciated in the month of addition, but were not depreciated in the month of disposal. The residual value of property, plant and equipment, taken as a whole, does not exceed the recoverable value of such assets.

l) Other miscellaneous assets

These assets were recorded at cost, restated following the procedure described in note 1.4. Depreciation, when appropriate, was calculated based on the months of useful life. The assets were fully depreciated in the month of addition, but were not depreciated in the month of disposal. The residual value of these assets, taken as a whole, does not exceed their recoverable value.














m) Intangible assets

1. Differences from court deposits dollarization - Not deductible from computable equity –

Original value

As required by BCRA Communication “A” 4686, dated July 4, 2007, this includes the difference between the equivalent value in pesos, considering the court deposits in the currency in which they were made, and the book value of such deposits made in foreign currency which, as of January 5, 2002, fell within the scope of Law 25561 and Presidential Decree No. 214/02. As of June 30, 2016 and December 31, 2015, the amount recorded is 1,726, and according to the criterion adopted by the Bank, it was fully amortized and recognized in profit or loss.

2. Organization and development expenses

Leasehold improvement expenses incurred by the Bank were recorded. These expenses were recorded at cost, restated following the procedure described in note 1.4., less the related accumulated amortization. Expense amortization is calculated based on the useful life stated in months, which shall not exceed 60 monthly installments as from each capitalization, subject to a full month of addition amortization, whereas the disposal month is not amortized. As of June 30, 2016 and December 31, 2015, the residual value of “Organization and development expenses” amounts to 18,493 and 25,409, respectively.

n) Other Liabilities from Financial Intermediation 1. Unsubordinated corporate bonds

They were stated at nominal value plus accrued interest at the end of each fiscal period or year, as applicable. (See Note 9).

2. Amounts to be paid for spot purchases to be settled and forward purchases

They were valued at the prices agreed upon for each transaction, plus the related premiums accrued at the end of each fiscal period or year, as applicable. These premiums were recognized in profit or loss for each period.














3. Securities and foreign currency to be delivered under spot sales to be settled and

forward sales

a. Listed: they were valued at the quoted prices prevailing for each security at MERVAL or MAE at the end of each fiscal period or year, as applicable. Quoted price differences were recognized in profit or loss for each period.

b. Unlisted: they were valued at cost, increased by applying the internal rate of return

at the end of each fiscal period or year, as applicable. The related accrual was recognized in profit or loss for each period.

o) Items pending allocation

It includes items that, due to administrative organization reasons or the special nature of the relationship with third parties, were not directly allocated to the related accounts.

p) Equity accounts

Capital stock remained at its original value.

q) Memorandum accounts - Derivatives

Forward transactions without delivery of underlying asset: they were valued according to the effective price quoted on the MAE or Rosario’s Security Market (ROFEX), depending on the scope of the agreement at the end of each fiscal period or year. Quoted price differences were recognized in profit or loss for each period.

r) Statement of income

The accounts comprising monetary transactions occurred in each period (financial income (expenses), revenues from services, service-charge (expenses), uncollectibility charge, administrative expenses, etc.) were recorded at their historical amounts on a monthly accrual basis. The accounts reflecting the effect on income (loss) of the sale, disposal, or consumption of nonmonetary assets were computed based on the values of those assets. Income (loss) from interests in subsidiaries was computed based on the income (loss) of those companies.














s) Income taxes and minimum presumed income tax

The Bank calculates income tax by applying the effective 35% rate to taxable income for each fiscal period/year, without considering the effect of temporary differences between income for accounting and tax purposes. It also assesses minimum presumed income tax, which was established by Law No. 25063 for a ten-year term for fiscal years ended on or after December 31, 1998. At present, after successive extensions, such tax is effective through December 31, 2019. This tax is supplementary to the income tax because, whereas the latter is levied on taxable income for the year, minimum presumed income tax is a minimum levy on the potential income of certain productive assets at a 1% rate. Therefore, the Bank’s tax liability will be represented by the highest of the two taxes. In the case of institutions governed by the Financial Institutions Law, the abovementioned law sets forth that they shall consider as taxable income 20% of their taxable assets, after deducting those assets defined as non-computable. However, should minimum presumed income tax exceed income tax in a given fiscal year, such excess may be computed as a credit towards future income taxes occurring in any of the next ten fiscal years, once the accumulated tax loss have been used. As of June 30, 2016, and 2015, the Bank assessed the income tax expense based on taxable income of 849,000 and 568,627, respectively, which were recorded under “Miscellaneous liabilities” and recognized in profit or loss for each period under “Income tax”. Those amounts exceeded minimum presumed income tax amounts for each period; therefore, no provision was recorded in this regard.

t) Severance pay

The Bank directly expenses severance payments.














NOTE 2: Statement of cash flows and cash equivale nts

The statements of cash flows and cash equivalents as of June 30, 2016 and 2015 explain the changes in cash and cash equivalents and for such purpose, only the total amount included under “Cash and due from banks” was considered cash. Additionally, there are no transactions related to investment or financing activities which have an impact on cash and which should be disclosed as a result of their significance.

NOTE 3: Main differences between BCRA standards and professional accounting standards effective in Buenos Aires City

The professional accounting standards effective in the City of Buenos Aires, Argentina, differ in certain valuation and disclosure criteria from BCRA accounting standards. The main differences between such criteria identified by the Bank and considered material to these financial statements are further described below: 3.1. Valuation criteria The Bank’s main differences in valuation criteria as of June 30, 2016 and December 31, 2015,

are as follows:

Adjustments to stand-alone financial statements (as per professional accounting standards)

Equity Income/loss

Item Increase/(Decrease) Income/(Loss)

6/30/2016 12/31/2015 6/30/2016 6/30/2015 a) Government and corporate securities carried at

cost plus yield 18,289 (17,539) 35,828 9,429

b) Acquisition of GPAT Compañía Financiera S.A. 1,072 940 132 (7,326) c) Deferred income tax (assets) 479,725 425,380 54,345 43,623 d) Derivative financial instruments - - - (163) e) Investments in other companies 22,112 19,452 2,660 220

TOTAL 521,198 428,233 92,965 45,783














Adjustments to the consolidated financial statements (as per professional accounting standards)

Equity Income/loss

Item Increase/(Decrease) Income/(Loss)

6/30/2016 12/31/2015 6/30/2016 6/30/2015 a) Government and corporate securities carried at

cost plus yield 18,316 (17,539) 35,855 9,942

b) Acquisition of GPAT Compañía Financiera S.A. 1,072 940 132 (7,326) c) Deferred income tax (assets) 501,810 444,832 56,978 43,330 d) Derivative financial instruments - - - (163)

TOTAL 521,198 428,233 92,965 45,783

a) Government and corporate securities carried at cost plus yield

As of June 30, 2016 and December 31, 2015, the Bank recorded under “Government and corporate securities – Instruments issued by the BCRA” holdings valued pursuant to note 1.6.b) 2 and 1.6.b) 3.b), respectively. Following that criterion, it recorded BCRA bills under “Other receivables from financial intermediation – BCRA”.

According to professional accounting standards, these assets should be stated at current values.

b) Business combinations- Acquisition of GPAT Compañía Financiera S.A.

Under the standards set forth by the BCRA, business acquisitions are recorded at the book value of the acquired company. Consequently, the difference between the cost of investment and its equity value in the books of the acquirer is recorded as positive goodwill (when the cost of investment is higher than the equity value) or negative goodwill (when the cost of investment is lower than the equity value), as applicable. If goodwill is negative, BCRA Communication “A” 3984 establishes specific amortization methods; the maximum annual amortization allowed is 20%. According to professional accounting standards, business combinations are recorded based on the current values of the acquired company’s identifiable net assets. Consequently, the difference between the cost of investment and the identifiable net asset measurement value is recorded as a positive or negative goodwill, as applicable. If goodwill is negative, such goodwill will be recognized in profit or loss in accordance with the changes in the specific circumstances that brought about such negative goodwill.














c) Deferred income tax

The Bank assesses income tax by applying the effective rate to the estimated taxable income for each fiscal period or year, disregarding the effect of temporary differences between income for accounting purposes and income for tax purposes. In accordance with professional accounting standards, the income tax should be recorded by applying the deferred tax method, which consists in recognizing (as a receivable or payable) the tax effect of temporary differences between the valuation of assets and liabilities for accounting and tax purposes, and, subsequently, recognizing them to profit or loss for the periods in which such differences are reversed, having duly considered the likelihood of using such tax losses in the future, if applicable.

d) Derivative financial instruments

As of June 30, 2015, the Bank recorded the effects of interest rate swap agreements. Under professional accounting standards, derivative financial instruments should be measured at their net realizable value, which, in this case, may be estimated by using mathematical models that reflect the way in which the parties to these agreements set prices and include reliable data. Thus, the fair value applicable to swap rights or obligations can be estimated.

e) Investments in other companies

The subsidiary GPAT Compañía Financiera S.A. prepares its financial statements pursuant to BCRA rules, which differ from the professional accounting standards.

Had professional accounting standards been applied, the Bank’s shareholders’ equity would have increased by 521,198 and 428,233, respectively, at the stand-alone and consolidated levels, as of June 30, 2016 and December 31, 2015. In addition, income/loss for the periods ended June 30, 2016 and 2015 would have increased by 92,965 and 45,783, respectively, at the stand-alone and consolidated levels.














3.2 Disclosure criteria

a) The Bank does not disclose segment information or earnings per share. b) The Bank does not classify its assets and liabilities as current and noncurrent based on

the point in time at which the assets are expected to be turned into cash or cash equivalents and based on the point in time at which the liabilities become payable, as required by current professional accounting standards.

c) There are differences between the disclosure required by professional accounting

standards and that conducted by the Bank regarding the cash flows disclosed in the statements of cash flows, as these financial statements are prepared in conformity with specific standards applicable to financial institutions.

d) As supplementary information (exhibits), the Bank presents the information specifically

required by the BCRA, which does not consider all disclosure requirements of professional accounting standards.

NOTE 4: Adoption of International Financial Reporti ng Standards (IFRS) According to the provisions of BCRA Communication “A” 5541, the Bank is in the process of adoption of the IFRS issued by the International Accounting Standards Board (IASB). IFRS will be effective for annual accounting periods beginning on or after January 1, 2018, and for the interim accounting periods of such annual periods. Therefore, as from the first quarterly period of fiscal year 2018, financial institutions shall prepare and present their financial statements for publication in accordance with IFRS. Such financial statements will include the opinion of the external auditor, and will be used by financial institutions for all legal and corporate purposes.

At a meeting held on March 30, 2015, the Bank’s Board of Directors approved the “Implementation Plan for Convergence to IFRS”, which was filed with the BCRA on March 31, 2015. On December 4, 2015, the BCRA issued Communication “A” 5844 that provides for the requirements to be met by the financial institutions in order to present the adjusting entries for the reconciliation of its assets and liabilities with those arising from applying the IFRS. In compliance with the frequency required by the BCRA rules, at the meeting held on March 28, 2016, the Bank’s Board of Directors became aware of the information relating to the rate of progress with the transition, which was filed with the BCRA on March 31, 2016, together with the reconciliation of assets and liabilities as of December 31, 2015. Additionally, at the meeting held on July 25, 2016, the Bank's Board of Directors got to know the degree of progress of the convergence plan as of June 30, 2016.














To the date of issuance of these financial statements, the Bank is carrying out the Implementation Plan, the development of which is subject to the specific rules issued by the BCRA.

NOTE 5: Breakdown of items in “Other ” accounts with amounts exceeding 20% of the related total account balance Statement of financial position items 6/30/2016 12/31/2015

A. Miscellaneous receivables

Security deposits (Note 6) 292,247 252,681 Advance payments 165,792 102,262 Sundry receivables 118,099 62,007 Other 201,035 180,240

777,173 597,190 B. Other liabilities from financial intermediation

Credit and debit card consumption charges payable 1,085,522 926,528 Foreign trade payment orders 528,844 530,233 Tax withholdings payable 424,414 604,262 Social security payment orders 127,265 57,437 Collections and other transactions on behalf of others 111,606 116,269 Other 501,324 481,870

2,778,975 2,716,599 C. Miscellaneous liabilities

Taxes payable 816,621 394,995 Payroll, social security contributions and withholdings

payable 448,752 404,513

Sundry payables 163,507 163,799 Other 44,564 54,522

1,473,444 1,017,829 D. Memorandum accounts – Debit-balance control

accounts

Other checks and securities in custody 30,955,763 25,120,170 Checks and securities to be debited 669,887 470,110 Checks and securities to be collected 267,532 302,444

31,893,182 25,892,724














As of June 30, 2016 an

NOTE 6: Restricted assets

As of June 30, 2016 and December 31, 2015, the Bank held the following restricted assets:

Item 6/30/2016 12/31/2015 Other Receivables from Financial Intermediation

- BCRA - Special guarantee accounts for transactions related to electronic clearing houses 656,292 393,039

- BCRA - Financial trusts under guarantee of forward transactions 167,944 201,628

- Security deposits for repurchase agreements 60,163 4,032 Total Other Receivables From Financial Intermediati on 884,399 598,699

Income-statement items 6/30/2016 6/30/2015

E. Service -charge income Insurance 179,587 87,753 Lease of safe-deposit boxes 51,414 42,594 Credit cards 48,625 41,102 Capital market 16,896 6,621 Other 78,026 53,259

374,548 231,329

F. Service -charge expense Credit card expenses 233,838 117,412 Turnover tax 106,817 73,782 ATM expenses 60,035 41,862 Other 4,657 2,689 405,347 235,745

G. Other losses

Expenses for recovery of receivables 6,917 6,343 Turnover tax 3,195 3,421 Donations 1,863 841 Social security charges 617 75 Other 14,081 7,773 26,673 18,453














Item 6/30/2016 12/31/2015

Miscellaneous Receivables - Security deposits – Credit and debit card managers 167,882 139,522

- Government securities – IADB loan – Global Credit Program for micro-, small- and medium-sized enterprises

111,780 85,639

- Security deposits – Legal claims 3,674 3,674

- Security deposits –Attachments 5,409 5,409

- Security deposits – Other 3,502 18,437 Total Miscellaneous Receivables 292,247 252,681

TOTAL 1,176,646 851,380

NOTE 7: Transactions with Companies included in se ction 33, Companies Law (No. 19550)

The following table shows the Bank’s receivables from/payables to its subsidiaries and affiliates, and its parent company as of June 30, 2016 and December 31, 2015:

6/30/2016 12/31/2015

Patagonia Valores S.A. Miscellaneous receivables – Sundry receivables 120 180 Deposits – Checking accounts 59 169

Deposits – Special checking account 108 3,641

Memorandum accounts – Checks and securities in custody 672 14,766 As of December 31, 2015, checks and securities in custody delivered to Patagonia Valores S.A. in the amount 3,286 are recorded.

Patagonia Inversora S.A. Sociedad Gerente de F.C.I. 6/30/2016 12/31/2015 Deposits – Checking accounts 239 491

Memorandum accounts – Checks and securities in custody 81,140 60,571

Banco Patagonia (Uruguay) S.A. I.F.E. Deposits – Checking accounts 4 -

Deposits – Special checking account 14 17

Memorandum accounts – Checks and securities in custody 831,558 1,088,648

Memorandum accounts – Guarantees received 52,116 44,633














6/30/2016 12/31/2015 GPAT Compañía Financiera S.A.

Loans – Interbank loans - (call options sold) 235,190 300,429

Loans – Other loans to local financial institutions – Discounted notes

53,789 75,711

Loans – Other loans to local financial institutions – Other loans 140,842 -

Other receivables from financial intermediation – Unlisted corporate bonds

16,210 -

Deposits – Checking accounts 1,603 -

Other liabilities from financial intermediation – Accrued commissions payable

1,458 1,749

Memorandum accounts – Checks and securities in custody 29,884 -

Banco do Brasil S.A. Cash and cash equivalents – Financial institutions and correspondents

59,365 70,733

Deposits – Checking accounts 711 24,651

Other liabilities from financial intermediation – Banks and international organizations

1,107,945 1,726,619

Memorandum accounts – Guarantees received 176,802 221,085

Memorandum accounts – Checks and securities in custody 22,002 2

Memorandum accounts – Guarantees granted 28,408 44,762 The Bank’s income (losses) as of June 30, 2016 and 2015 resulting from transactions with its subsidiaries and affiliates and its parent company is as follows:

6/30/2016 6/30/2015 Patagonia Valores S.A.

Financial expenses – Income (loss) on Corporate Bonds - 317

Revenue from services – Commissions 2 1 Other earnings 616 680

Patagonia Inversora S.A. Sociedad Gerente de F.C.I.

Revenue from services – Commissions 1 1 Other earnings 153 47

Banco Patagonia (Uruguay) S.A. I.F.E. Revenue from services – Commissions 1 2














6/30/2016 6/30/2015 GPAT Compañía Financiera S.A.

Financial income – Interest on loans to the Financial Sector 56,399 1,754

Financial income – Interest on overdrafts 21 4

Financial income – Income (loss) on Corporate Bonds 3,463 1,468

Financial expenses – Interest on interbank loans to local entities 60 1,603

Revenue from services – Commissions 6,656 3,368

Service-charge expense – Commissions 7,609 5,542 Other earnings 1,353 1,299

Banco do Brasil S.A.

Financial expenses – Interest on other loans from financial institutions

24,946 7,461

Revenue from services – Commissions - 4

Service-charge expense – Commissions 113 - Other earnings 457 290

The Bank’s ownership interest in subsidiaries is disclosed in note 1 to the consolidated financial statements.

NOTE 8: Capital stock

1. Capital structure

The Bank’s capital stock is made up of 719,145,237 shares, comprising 22,768,818 Class "A" shares and 696,376,419 Class "B" shares, all of them registered, common shares with a nominal value of ARS 1, and one vote per share. Class “A” shares represent the ownership interest held by the Province of Río Negro, whereas Class “B” shares account for the ownership interest held by private capital. As from April 12, 2011, the Bank's controlling shareholder is Banco do Brasil S.A., which holds an ownership interest that accounts for 58.9731% of the total capital stock.














2. Call and put options

On April 12, 2011, under the Stock Purchase Agreement entered into between Banco do Brasil S.A. and the group of former controlling shareholders of the Bank (Sellers), both parties signed a Shareholders' Agreement whereby, among other rights and duties, the parties granted certain call and put options to be exercised as from the third anniversary of such date, so that Banco do Brasil S.A. may acquire the ownership interest held by the Sellers in the Bank, at the strike price equivalent to the US dollar price per share established in the Offering.

3. Treasury stock acquisition plan On March 26, 2012, the Bank's Board of Directors decided to implement a plan for the repurchase of treasury stock on the Argentine market in accordance with section 68, Law 17811 (included by Executive Decree 677/01) and CNV rules, up to the maximum amount of 3,452, with a limit of 1,000,000 registered, common class “B” shares, one vote per share, with a nominal value of ARS 1 each. The term for the acquisition thereof was one hundred and eighty calendar days as from March 27, 2012. On September 25, 2012, the Bank’s Board of Directors resolved to extend its effective term until March 22, 2013. Before the expiration of the aforementioned plan, the Bank purchased common shares, whose nominal values were 119,500, in the amount of 394. The due date for the sale of the shares acquired, as set forth in section 67 of Law 26831, is three years as from their acquisition, unless an extension of this term is decided at the Shareholders’ Meeting.

4. Capital stock reduction

On December 14, 2015, the Board of Directors of the Bank became duly aware of the capital stock reduction in the amount of 119,500 Class “B”, registered, common shares with a nominal value of ARS 1, one vote per share, which were in portfolio and had been acquired in accordance with section 68 of Law No. 17811, as mentioned in paragraph 3 of this note. Finally, on March 29, 2016, the Supervisory Board of Companies registered such reduction under number 4679 of Book 78 of Stock Companies.














NOTE 9: Global Program for the Issue of Corporate Bonds The Annual Shareholders’ Meeting of Banco Patagonia S.A., held on April 26, 2012, approved the creation of a Global Program for the Issue of Simple Corporate Bonds, outstanding at any time, in the maximum amount of USD 250,000,000 or its equivalent in other currencies. The Program has a duration of 5 years as from CNV’s authorization or for the maximum term that may be established by future applicable regulations; in that case, the Board of Directors of Bank may decide to extend the effective term thereof. In addition, the Bank’s Board of Directors decided that the funds from Corporate Bonds issued under such Program shall be used for one or more of the purposes under section 36, Law No. 23576, and BCRA Communication “A” 3046, or as established in applicable regulations, depending on the related pricing appendix. Under the abovementioned program, on December 3, 2012, the Bank issued Class 1, 1st Series of the simple corporate bonds with a nominal value of 200,000,000 maturing within 18 months and amortized in a single payment on the maturity date. This series accrued interest at a floating annual rate equivalent to the “Private BADLAR Rate” plus a spread rate of 4%, payable quarterly in arrears. The series final maturity was on June 3, 2014. On November 1, 2013, the Bank issued Class II Corporate Bonds with a nominal value of ARS 300,000,000, for an 18-month term and amortized in a single payment on the expiration date. This series accrued interest at a floating annual rate equivalent to the “Private BADLAR Rate” plus a spread rate of 3.9%, payable quarterly in arrears. The series final maturity was on May 4, 2015. As of March 31, 2014, the Bank’s Board of Directors approved the issuance of Class III Corporate Bonds in the maximum amount of 350,000,000 (nominal value) to be conducted under the Global Program for the Issuance of Simple Corporate Bonds in force. Subsequently, on January 26, 2015, the Bank’s Board of Directors approved the update of the Corporate Bond Issuance Prospectus under the Global Program for the Issuance of Simple Corporate Bonds, extending the maximum amount of issuance of Class III Corporate Bonds up to 500,000,000 (nominal value), such extension was approved by the CNV on July 8, 2015. Finally, on July 21, 2015, the Bank issued Class III corporate bonds with a nominal value of ARS 332,200,000, for an 18-month term and amortized in a single payment on the expiration date. During the first nine months, accrual of interest will be at an annual fixed rate of 25.50% and, for the following nine months, at an annual floating rate equivalent to the “Private BADLAR Rate” plus a spread of 3.75%, payable quarterly in arrears. As of June 30, 2016 and December 31, 2015, principal plus accrued interest relating to Class III corporate bonds is recorded in “Other liabilities from financial intermediation” in the amount of 353,936 and 348,678, respectively.














NOTE 10: Financial agent of the Province of Río Neg ro

Under Law No. 2929 of the Province of Río Negro, and the agreement signed on May 27, 1996, the Bank acted as a financial agent of the Provincial Government, being in charge of the banking duties set forth in article1.2 of the aforementioned agreement. On February 28, 2006, such agreement expired, which remained effective up to December 31, 2006, through successive extensions, under the same terms and conditions as those of the abovementioned agreement. Finally, through bidding process No. 1/2006 conducted by the Department of Finance, Public Works and Services of the Province of Río Negro, the Bank was awarded the financial agent duties, and on December 14, 2006, the Río Negro Province Banking and Financial Services Agreement was signed for a 10-year term as from January 1, 2007. Such duties do not include the obligation to provide financial aid to the Province of Río Negro under conditions other than those consistent with the private banking nature of this bank.

NOTE 11: Derivative financial instruments

As of June 30, 2016 and December 31, 2015, the Bank held the following derivative financial instruments:

a) Forward transactions - Futures: They include forward purchases and sales of foreign currency without delivery of the underlying asset traded on MAE or ROFEX. They are valued at their quoted prices prevailing in the market they were traded on, at the end of each fiscal period or year, as applicable, and are performed by the Bank for the purposes of intermediation on its own account. As of June 30, 2016 and 2015, the Bank recorded income/loss in the amount of 141,725 and (55,173) arising from transactions in foreign currency.

b) Foreign currency forward transactions with clients – Forwards: They include forward

purchases and sales of foreign currency without delivery of the underlying asset, traded on the private market. They are valued at their quoted price prevailing in the MAE at the end of each fiscal period or year, as applicable, and are performed by the Bank for the purposes of intermediation on its own account. As of June 30, 2016 and 2015, the Bank recorded loss/income in the amount of (11,825) and 77,366, respectively.

c) Reverse repurchase and repurchase agreements: These transactions are valued as

mentioned in note 1.6.h)1. and 2. and 1.6.n)2. and 3., and are performed by the Bank for the purposes of intermediation on its own account. As of June 30, 2016 and 2015, the Bank recorded earnings in the amount of 23,649 and 57,095, respectively.














NOTE 12: Trust activities

The Bank executed a number of agreements with other companies, whereby it was appointed trustee of certain financial trusts. The assets held in trust were mainly loans. As of June 30, 2016, the Bank manages the following financial trusts subject to public offering:

Financial trust Trustor Date of agreement

Assets as of 3/31/2016 Assets held in trust

Equity as of

3/31/2016

Banco Piano XXXVI Banco Piano S.A. 10/20/2014 (*) 227 Consumer loans -

Banco Piano XXXVII Banco Piano S.A. 3/17/2015 14,754 Consumer loans 6,614

Banco Piano XXXVIII Banco Piano S.A. 6/29/2015 40,830 Consumer loans 7,283

CMR Falabella LI CMR Falabella 5/21/2015 (**) 3,556 Loans resulting from the

use of credit cards

-

CMR Falabella LII CMR Falabella 6/24/2015 (**) 292 Loans resulting from the

use of credit cards

-

CMR Falabella LIII CMR Falabella 8/10/2015 60,778 Loans resulting from the

use of credit cards

-

CMR Falabella LI CMR Falabella 9/21/2015 56,077 Loans resulting from the

use of credit cards

-


use of credit cards

-


use of credit cards

-

CMR Falabella LVII CMR Falabella 3/16/2016 215,686 Loans resulting from the

use of credit cards

-

Fava XXXIV Favacard S.A. 7/8/2015 (**) 1,730 Loans arising from the use of

credit cards -

Fava XXXIV Favacard S.A. 10/1/2015 25,990 Loans arising from the use of

credit cards 17,013

Fava XXXIV Favacard S.A. 2/18/2016 102,414 Loans arising from the use of

credit cards 21,630

Lucaioli XIII Casa Humberto Lucaioli S.A. 11/19/2015 (*) 1,169 Consumer loans -

Lucaioli XIV Casa Humberto Lucaioli S.A. 1/28/2016 41,965 Consumer loans 10,831

Minicreditos I Ribeiro S.A.C.I.F.A. e l. 3/7/2016 151,395 Consumer loans 45,631

Serie Ribeiro LXXIII Ribeiro S.A.C.I.F.A. e I. 10/30/2014 (*) 2,545 Consumer loans -














Financial trust Trustor Date of agreement

Assets as of 3/31/2016 Assets held in trust

Equity as of

3/31/2016

Serie Ribeiro LXXIV Ribeiro S.A.C.I.F.A. e I. 12/15/2014 (*) 5,219 Consumer loans -

Serie Ribeiro LXXV Ribeiro S.A.C.I.F.A. e I. 2/20/2015 (*) 6,185 Consumer loans -

Serie Ribeiro LXXVI Ribeiro S.A.C.I.F.A. e I. 3/17/2015 (*) 4,878 Consumer loans -

Serie Ribeiro LXXVII Ribeiro S.A.C.I.F.A. e l. 5/12/2015 25,659 Consumer loans 23,063

Serie Ribeiro LXXVIII Ribeiro S.A.C.I.F.A. e l. 6/16/2015 38,030 Consumer loans 25,875

Serie Ribeiro LXXIX Ribeiro S.A.C.I.F.A. e l. 7/30/2015 34,961 Consumer loans 18,744

Serie Ribeiro LXXX Ribeiro S.A.C.I.F.A. e l. 9/8/2015 68,551 Consumer loans 30,590

Serie Ribeiro LXXXI Ribeiro S.A.C.I.F.A. e l. 10/16/2015 87,685 Consumer loans 32,081

Serie Ribeiro LXXXII Ribeiro S.A.C.I.F.A. e l. 11/30/2015 83,475 Consumer loans 26,048

Serie Ribeiro LXXXIII Ribeiro S.A.C.I.F.A. e l. 12/16/2015 73,370 Consumer loans 22,415

Serie Ribeiro LXX Ribeiro S.A.C.I.F.A. e l. 1/25/2016 142,205 Consumer loans 34,957

Serie Ribeiro LXX Ribeiro S.A.C.I.F.A. e l. 2/24/2016 183,380 Consumer loans 40,245

Tarjeta Sáenz VI Banco Sáenz S.A. 5/23/2014 (**) 986 Consumer loans -

Tarjeta Sáenz VII Banco Sáenz S.A. 3/16/2015 59,139 Consumer loans 38,330

Tarjeta Sáenz VIII Banco Sáenz S.A. 9/1/2015 132,028 Consumer loans 35,935

Total 2,027,641 437,285

(*) As per financial statements for liquidation purposes as of 3/31/2016 (**) As per financial statements for liquidation purposes as of 2/29/2016














Public financial trusts authorized by the CNV, the financial statements of which are required after 6/30/2016:

Financial trust Trustor Date of agreement Assets held in trust

CMR Falabella LVIII CMR Falabella 4/20/2016 Loans arising from the use of credit

cards

Minicreditos II Ribeiro S.A.C.I.F.A. e I. 5/6/2016 Consumer loans

Serie Ribeiro LXXXVI Ribeiro S.A.C.I.F.A. e I. 4/15/2016 Consumer loans

Serie Ribeiro LXXXVII Ribeiro S.A.C.I.F.A. e I. 6/8/2016 Consumer loans

Tarjeta Sáenz IX Banco Sáenz S.A 3/18/2016 Consumer loans

Fava XXXVII Favacard S.A. 6/28/2016 Loans arising from the use of credit cards

Private financial trusts


Metro Pedro López e Hijos S.A. 9/10/2002 Real property located in the City of Buenos Aires and the Province of

Mendoza Trusts under management


Concesionarios Mercedes - Benz Concesionarios Mercedes - Benz 8/12/2014

Monthly contributions associated with the sales of trucks and certain

automobiles Financial trusts in escrow


Bogar Clase I Serie II Province of Río Negro 6/11/2009 Percentage of the daily provincial tax revenues

Bogar Clase II Serie I Province of Río Negro 12/26/2003 Percentage of the daily provincial tax revenues

Bogar Clase II Serie II Province of Río Negro 6/11/2009 Percentage of the daily provincial tax revenues

Bogar Clase II Serie III Province of Río Negro 7/30/2013 Percentage of the daily provincial tax revenues














The Bank acts as a trustee of the abovementioned trusts, and in no case will it meet the obligations assumed in executing these trusts with its own assets; these obligations will only be satisfied with and up to the amount of the assets held in trust and the proceeds therefrom. In addition, the trustee shall not encumber the assets held in trust or dispose of them beyond the limits established in the related trust agreements. The commissions earned by the Bank upon fulfilling its trustee’s duties are calculated under the terms of the related agreements.

NOTE 13: Custodian agent of Mutual funds As of June 30, 2016, the Bank, in its capacity as Custodian agent of mutual funds, keeps the custody of shares subscribed by third parties and assets in the following Mutual Funds:

Name Deposits

Other

Total

assets

Shareholders ’ Equity

Lombard Renta en Pesos Fondo Común de Inversión 840,803 163,151 1,003,954 1,003,926 Lombard Capital F.C.I. 31,689 4,516,628 4,548,317 4,490,340 Fondo Común de Inversión Lombard Renta Fija 912 261,177 262,089 261,098 Fondo Común de Inversión Lombard Pesos Plus 56,873 - 56,873 56,871 Fondo Común de Inversión Lombard Ahorro 6,650 - 6,650 6,650 Fondo Común de Inversión Lombard Abierto Plus 5 1,088,762 1,088,767 1,088,754 Fondo Común de Inversión Lombard Acciones Líderes 1 3,245 3,246 3,207

TOTAL 936,933 6,032,963 6,969,896 6,910,846 NOTE 14: Deposit Guarantee Insurance System

Law No. 24485 and Decree No. 540/95 created a limited and mandatory Deposit Guarantee Insurance System for valuable consideration to provide coverage for risks inherent in bank deposits, supplementary to the bank deposit privileges and protection system established by the Financial Institutions Law. Such law provided for the creation of Seguros de Depósitos S.A. (SEDESA) for the sole 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 executed 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 4.8991% according to the percentages informed by the BCRA in Communication “B” 11250, dated April 4, 2016.














As of June 30, 2016, this system shall cover the deposits in Argentine pesos and foreign currency with the participating institutions, such as checking accounts, savings accounts, time deposits, investments, payroll account, social security contributions account, basic accounts, free of charge and special accounts, the tied-up funds of the accounts above or any other determined by the BCRA up to the amount of 450, subject to certain exclusions determined by such organization. As of June 30, 2016 and 2015, the contributions made have been recorded in “Financial expenses – Contributions to the deposit guarantee fund” in the amount of 87,772 and 100,402, respectively.

NOTE 15: CNV requirement to act as Over-the-counter Broker

Pursuant to the provisions established by the CNV in General Resolution No. 622/13, as amended, a breakdown of the minimum capital and cash contra-account requirements for each broker category is as follows:

Role Minimum capital

Cash contra-account

requirements Settlement and clearing agent and comprehensive trading agent.

15,000 7,500

Custodian agent of mutual funds (1). 2,250 2,250

Financial and Non-financial trust 3,000 3,000

Total 20,250 12,750

(1) See note 13

As of June 30, 2016, the Bank’s capital exceeds CNV's requirements and the minimum cash

contra-account required is made up of funds deposited with the BCRA in current account No. 034 of Banco Patagonia S.A.














NOTE 16: Minimum cash and capital requirements

1. Minimum cash

The following table shows the items recorded by the Bank as minimum cash requirements, as provided for by the related BCRA rules, as of June 30, 2016 and December 31, 2015:

Item 6/30/2016 12/31/2015 Cash and due from banks BCRA - Current account 5,599,513 5,545,163 Other Receivables from Financial Intermediation BCRA - Special guarantee accounts 656,292 393,039

TOTAL 6,255,805 5,938,202

2. Minimum capital requirements

The Bank’s minimum capital requirements as of June 30, 2016 and December 31, 2015 is as follows:

Item 6/30/2016 12/31/2015 Minimum capital requirements (A) 5,008,150 3,997,990 Credit risk 3,208,443 2,873,674 Operational risk 980,718 845,987 Market risk – Securities 101,364 176,709 Market risk - Currencies 102,207 60,675 Additional requirements: see Note 21 615,418 40,945 Payment (B) 8,093,281 6,702,581

SURPLUS (B-A) 3,085,131 2,704,591 NOTE 17: Distribution of earnings

BCRA Communication “A” 5072, 5485, and supplementary provisions, set forth the general procedure for the distribution of earnings. According to such procedure, a distribution may only be made with the express authorization of the BCRA, provided that there are no records of financial assistance from that entity due to illiquidity or shortfalls as regards minimum capital requirements or minimum cash requirements, among other previous conditions that must be met.














Additionally, earnings may only be distributed as long as a positive balance remains after deducting –on an off-balance sheet basis– the amounts of the mandatory legal reserves and those set forth by the by-laws, the positive net difference between the carrying amount of government securities and/or monetary regulation instruments governed by the BCRA, with no published volatility or present value published by the BCRA, and the value determined by the Bank, from unappropriated retained earnings.

BCRA Communication “A” 5273 introduced adjustments to the standards related to the distribution of earnings, in which, it is established that the maximum amount to be distributed shall not exceed the surplus minimum paid-in capital considering, exclusively, for these purposes, an incremental 75% adjustment to the requirement and deducting the adjustments previously mentioned.

On November 10, 2015, through Communication “A” 5827, the BCRA stated that the financial institutions shall have a capital margin reserve on its assets weighed according to risk to be set up exclusively with level 1 ordinary capital net of deductible items. The capital margin reserve shall be gradually set up over a period of 4 years until the definitive level thereof is reached in January 2019.

Based on the aforementioned, the Annual Shareholders’ Meeting held on April 27, 2016 approved the following distribution of earnings, subject to the prior authorization of the BCRA.

- Legal Reserve 481,107

- Optional Reserve for future distribution of earnings 1,871,698 - Cash dividends 52,728 Total 2,405,533 Subsequently, on June 9, 2016, the BCRA issued Communication “A” 5985, by which it eliminated as a condition for the approval of the distribution of earnings the 75% increase in the capital requirements established by Communication 5827. Furthermore, the BCRA included as a condition for the distribution of earnings that banks shall not record fines over than 25% of the most recent RPC reported, or disqualification, suspension, prohibition or revocation imposed in the last 5 years by the BCRA, UIF or CNV deemed as significant, except when correction actions have been implemented at the satisfaction of the Foreign Exchange and Financial Institutions Regulatory Agency (SEFyC) of the BCRA. Accordingly, the Shareholders’ Meeting held on July 25, 2016 resolved to increase the dividends in cash by 1,662,533, to reach the total amount requested of 1,715,261. The additional amount shall be allocated from the Option Reserve for future distribution of earnings, timely created for such purposes. To the date of issuance of these financial statements, the payment of cash dividends is pending authorization by the SEFyC of the BCRA.














Under the provisions of Law No. 25063, dividends distributed in cash or in kind, in excess of accumulated taxable income determined at the end of the fiscal year immediately prior to the date of payment or distribution will be subject to a 35% withholding tax rate as a one-off payment. The amount of income to be considered in each fiscal year shall be that resulting from deducting the amount of taxes paid for the year or years in which such income, or the relevant proportionate amount thereof, was originated or distributed plus dividends or earnings from other stock companies not considered when determining such income in the same fiscal periods. Such distribution of dividends is not subject to the previously mentioned withholding because it does not exceed the earnings determined based on the application of the referred regulations.

NOTE 18: Sanctions imposed on financial institution s and administrative proceedings filed by the

BCRA

On January 8, 2015, the BCRA issued Communication “A” 5689 whereby it established that financial institutions shall recognize and report the administrative, disciplinary and criminal sanctions imposed by the BCRA, the UIF, the CNV or the SSN, with judgment rendered in a court of original jurisdiction. All the sanctions shall be taken into account, and an allowance shall be set up for 100% of each sanction, which shall be kept until the payment is made or a final judgment is rendered. As of June 30, 2016, the Bank set up an allowance for the following proceedings: - Exchange proceedings No. 4969 notified on April 17, 2012; ruling passed on July 4, 2015 by the

Court in Economic Criminal Matters No. 6, Court Clerk’s Office No 12: on charges of the lack of authorization by the BCRA for the sale of foreign currency to a client in excess of the monthly limit of USD 2,000,000. The persons subject to these proceedings are Banco Patagonia S.A., Ariel Aranda, David Rodríguez, and Santiago Miñana. The sanction imposed was appealed, leading to the suspension thereof.

- Exchange proceedings No. 4974 notified on April 25, 2012; ruling passed on July 4, 2015 by the

Court in Economic Criminal Matters No. 6, Court Clerk’s Office No 12: on charges of the failure to make the restricted deposit established by BCRA Communication "A" 4359 in connection with the purchase of bills held by an individual residing in the country in excess of the monthly limit of USD 2,000,000. The persons subject to the proceedings are Banco Patagonia S.A., David Rodríguez, and Ariel Aranda. The sanction imposed was appealed, leading to the suspension thereof.














As of June 30, 2016 and December 31, 2015, the Bank set up a provision in the amount of 34 to bear both sanctions. In addition, during the fiscal year ended December 31, 2015, a sanction was imposed and paid in relation to the following proceedings: - Financial proceedings No. 1384 notified on April 12, 2014: on charges of noncompliance with

minimum security requirements established by Communication “A” 4778 of the BCRA. The persons against which proceedings have been filed are Banco Patagonia S.A., Jorge Guillermo Stuart Milne, Ricardo Alberto Stuart Milne, Emilio Carlos Gonzalez Moreno, Carlos Alberto Giovanelli, Carlos González Taboada, Marcos Daniel Croceri and José Luis De La Torre. These proceedings also introduced charges relating to the outdated filing of documentation on the appointment of the Bank’s authorities. The persons subject to these proceedings were Banco Patagonia S.A. and Jorge Guillermo Stuart Milne.

On April 1, 2015, the SEFyC issued Resolution No. 286 whereby it established the sanctions set forth by subsection 3, section 41 of Law No. 21526. Fines of 500 were imposed on Banco Patagonia S.A. and Jorge Guillermo Stuart Milne and fines of 400 were imposed on the remaining persons. Such fines were paid on April 15, 2015 and recorded pursuant to Communication "A" 5689.

The proceedings file by the BCRA that are still in process are as follows: - Exchange proceedings No. 4783 notified on October 28, 2011: on charges of the failure to make

the restricted deposit established by Communication "A"4359 in connection with 30% of a transaction performed by a non-resident to bring foreign currency into the country under Investments made by Non-residents applied to the purchase of real property. The persons subject to these proceedings are Banco Patagonia S.A., Juan Jorge Laguzzi, and Osvaldo Coloccini.

- Financial proceedings No. 1438 notified on April 14, 2015: on charges of the outdated filing of a

report relating to an exchange transaction and its improper registration with the Exchange Transactions Reporting Regime. The persons subject to these proceedings are Banco Patagonia S.A., Adrián Pablo Gómez, Rubén Miguel Iparraguirre, and Jorge Rubio.

- Exchange proceedings No. 6297 notified on April 20, 2015: on charges of performing an

exchange transaction without the prior authorization by the BCRA, in breach of Communication “A” 5377 of the BCRA. The persons subject to these proceedings are Banco Patagonia S.A., Pablo Reverter, and Jorge Rubio. On April 6, 2016, the Court of Original Jurisdiction in Economic Criminal Matters acquitted the charges agaist the persons subject to the proceedings.














- Financial proceedings No. 1447 notified on July 14, 2015: on charges of service of office as

Director without authorization from the BCRA, noncompliance with the obligation to report the appointment of a new Director, and late filing of documentation on the appointment of new authorities. The persons subject to these proceedings are Banco Patagonia S.A., Jorge Guillermo Stuart Milne, Renato Luiz Belineti Naegele, Héctor Osvaldo Rossi Camilion, Alberto Mario Tenaillon, and María Lucía Denevi Artola.

Notwithstanding the foregoing, the Bank estimates that the impact on equity from the proceedings referred to above will not be significant. Afterwards, through the provisions of Communication “A” 5940 dated April 1, 2016, BCRA set forth that the financial institutions having allowances recorded for the sanctions mentioned above at such date shall analyze, based on the attorney’s letters in force, whether they meet the conditions to be fully or partially recorded. In case of sanctions not meeting the conditions for the allowance to be set up, the Bank shall reverse such balances and recognize them in “Adjustments to prior-year profit or loss” or in the other expenses account: “Expenses from administrative, disciplinary and criminal sanctions”, as applicable. For sanctions pending payment not meeting the conditions for the allowance to be set up, the next Shareholders’ Meeting shall set up a special reserve in the amount of the sanctions imposed for which no allowance has been set up, provided the Bank has unappropriated retained earnings. If the balance is not sufficient, the Special reserve shall be set up to the extent the unappropriated retained earnings are generated.














NOTE 19: Credit facilities for production and finan cial inclusion

Communication "A" 5319, issued by the BCRA on July 5, 2012, established the terms and conditions of a credit facility called "Credit Facility for Productive Investment", oriented to the financing of investment projects for specific purposes, effective until December 31, 2012 and successively renewed up to December 31, 2015. The amount to be allocated by each entity and the applicable interest rate were stated by the referred body. On December 31, 2015, through Communication “A” 5874, the BCRA resolved to approve the rules about “Credit facilities for production and financial inclusion” in force as from January 4, 2016 to June 30, 2016. The eligible financial institutions shall maintain a financing balance, at least, equivalent to 14% of the peso-denominated deposits of the non-financial private sector, calculated on the monthly average of daily balances for November 2015. The maximum fixed annual nominal interest rate accounts for 22% (except for certain financing). For transactions with clients that do not qualify for MiPyMEs, a floating interest rate will be applied. Financing shall be denominated in pesos and, upon disbursement, it shall have an average term of or in excess of 24 months. According to a basic criterion, the total term cannot be shorter than 36 months. The Bank has met the objectives established for each limit as from the creation of the credit facility. As of June 30, 2016 and December 31, 2015, the amounts recorded in this credit facility amount to 5,094,018 and 4,311,467, respectively.

Finally, on May 17, 2016, the BCRA issued Communication “A” 5975, by which it renewed the effective term of this credit facility up to December 31, 2016. The eligible financial institutions shall maintain a financing balance, at least, equivalent to 15.5% of the peso-denominated deposits of the non-financial private sector, calculated on the monthly average of daily balances for May 2016. The maximum fixed annual nominal interest rate accounts for 22% (except for certain financing).

NOTE 20: Capital Markets Law On December 27, 2012, the Capital Markets Law No. 26831, regulated by Executive Decree No. 1023/13, issued on July 29, 2013, became effective. This Law considers the comprehensive reform of the current public offering system (Law No. 17811) which came in force on January 28, 2013.














Through the provisions of General Resolution No. 622/13 dated September 9, 2013, and subsequent administrative criteria, the CNV adapted its regulations to respond to new circumstances for the purposes of securing the regular performance of the various agents operating in the Capital Market, with the aim of ensuring compliance with the principles established in the new Capital Market Law. The Bank was registered with the CNV for the purposes of acting in the following capacities: - Financial and non-financial trustee: authorized through Resolution No. 17418, issued by the

CNV on August 8, 2014. - Mutual fund custodian: authorized through Order No. 2081 of the CNV dated September 18,

2014. - Settlement and clearing agent and comprehensive trading agent: authorized through Order

No. 2095 of the CNV dated September 19, 2014.

NOTE 21: Compliance with technical ratios

In June 2015, the SEFyC notified the Bank about an excess in the limit on the credit rating technical ratio in the amount of 53,647 between May 2014 and October 2014 and in the amount of 27,297 between January 2013 and June 2015. In addition, during certain days of the period ranging from January to June 2016, the Bank recorded an excess of the credit limit requirements in the amount of 382,982. The excess referred to above gave rise to an increase in the minimum capital requirements in an amount equivalent to 150% of the highest amount of the excess recorded in those periods, and for the months during which the excess was maintained, and, additionally, once the excess was corrected, for a number of months equivalent to the number of periods during which the excess occurred and was not timely reported by the Bank. (See Note 16.2). To the date of issuance of these financial statements, no such events have taken place.

NOTE 22: Transactions with directors No transactions falling under the provisions of section 271 of the Companies Law (No. 19550) have been identified.














NOTE 23: Custody of the Bank ’s Documentation

Pursuant to the provisions of General Resolution No. 629 issued by the CNV on August 14, 2014, it is informed that the Bank has entrusted the custody of supporting documentation related to accounting transactions and other management documentation, not included in article 5 a.3), Section I, Chapter V, Title II of the CNV Rules (2013 consolidated text and amendments), to the third parties listed below:

The Bank keeps a detail of the documents entrusted to such custodians for review by the controlling bodies at its registered office.

NOTE 24: Compliance with provisions set forth by La w No. 25738

Banco Patagonia S.A. is a stock company organized under the laws of Argentina, the shareholders of which limit their liability to the paid-in shares subscribed in accordance with Law No. 19550. Therefore, in compliance with Law No. 25738, we report that neither the foreign majority shareholders nor the local or foreign shareholders are liable, in excess of such paid-in shares, for the obligations arising from the transactions performed by the Bank.

NOTE 25: Publication of financial statements

Under Communication “A” 2813 and supplementary BCRA rules, the BCRA’s prior involvement is not required for the publication of these financial statements.

Company Responsible for the Deposit

Address

AdeA Administradora de Archivos S.A. Route 36 - Km. 31.5 - Florencio Varela – Province of Buenos Aires

Iron Mountain Argentina S.A.

Amancio Alcorta 2482 – City of Buenos Aires Saraza 6135 – City of Buenos Aires Azara 1245 - City of Buenos Aires San Miguel de Tucumán 601 - Carlos Spegazzini – Province of Buenos Aires














NOTE 26: Subsequent events

Except for the events described in Note 17, no other events or transactions have occurred from period-end to the date of issuance of these financial statements that would have a material effect on the financial position of the Bank or the results of its operations as of June 30, 2016.

NOTE 27: Explanation added for the purposes of tra nslation into English

These financial statements are presented on the basis of the BCRA’s standards and, except for the effect of the matters mentioned in note 3, in accordance with the professional accounting standards in force in the City of Buenos Aires, Argentina. Certain accounting practices applied by the Bank that comply with the standards of the BCRA and with the professional accounting standards in force in the City of Buenos Aires, Argentina may not conform with generally accepted accounting principles in other jurisdictions. The effects of the differences, if any, between the professional accounting principles in force in the City of Buenos Aires and the accounting principles generally accepted in the jurisdictions in which the enclosed financial statements are to be used have not been estimated. Accordingly, these statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in the countries - other than Argentina - in which such statements are to be used (taking into account the effect of the matters mentioned in note 3).













EXHIBIT “A”

BREAKDOWN OF GOVERNMENT AND CORPORATE SECURITIES AS OF 6/30/2016 AND 12/31/2015


Name Identification

Holding

Position without

options (1)

Final position

Market value or present value

Book balances

as of as of

6/30/2016

Book balances

as of as of

12/31/2015 Government securities at fair market value

- Argentine Government Bonds - private BADLAR + 250.B.P. 2019 5,454 - 414,928 488,183 548,442 548,442 - Argentine Treasury Bonds Maturity July 2016 5,463 - 393,057 388,036 393,057 393,057 - Argentine Government Bonds - private BADLAR + 200.B.P. 2016 5,459 - 317,924 424,448 371,001 371,001 - Argentine Government Bond USD-related 1,75% Maturity 2016 5,461 - 254,150 - 254,150 254,150 - Argentine Government Bonds - private BADLAR + 200.B.P. 2017 5,460 - 165,026 227,237 220,201 220,201 - Discount bond + negative value GDP $ 45,696 - 135,471 26,266 300,612 300,612 - Argentine Treasury Bonds Maturity May 2017 5,477 - 106,340 - 106,340 106,340 - Argentine Government Bonds in USD 2017 5,436 - 64,805 85,931 (2,533) (2,533) - Argentine Government Bonds - private BADLAR + 300.B.P. 2017 5,467 - 46,644 101,866 63,106 63,106 - Consolidation Bond – 8th Series 2,571 - 41,861 96,317 41,861 41,861 - Other - - 83,325 869,165 44,677 44,677

Total government securities at fair market value 2,023,531 2,707,449 2,340,914 2,340,914

Government securities at cost plus yield

- Argentine Bond for Economic Development 5,456 126,074 128,353 111,885 128,353 128,353 - Argentine Treasury Bills, Maturity 11/7/2016 5,179 71,063 76,566 - 76,566 76,566 - Treasury Bills of the province of Entre Ríos, 4th. Series, Class A 32,744 23,981 23,829 - 23,829 23,829 - Debt securities of the Province of Buenos Aires, 1st Series, Class 1 32,655 22,518 20,886 - 20,886 20,886 - Debt securities of the Province of Entre Ríos, 2nd. Series, Maturity 2017 32,549 16,117 15,743 15,809 15,743 15,743

- Treasury Bills, 2nd. Series Class B Maturity 11/25/2016 32,688 5,501 5,483 - 5,483 5,483 - Debt securities of the City of Buenos Aires, Class 7 51,118 5,104 5,083 5,088 5,083 5,083 - Debt securities of the province of Entre Ríos, 1st. Series, Maturity 2017 32,524 4,141 4,038 5,093 4,038 4,038 - Debt securities of the province of Chubut, Class 2 32,487 3,730 3,620 7,286 3,620 3,620 - Debt securities of the Province of Entre Ríos in USD, 2nd. Series 32,307 2,479 2,331 7,312 2,331 2,331 - Other - - 489 4,403 489 489

Total Government securities at cost plus yield 286,421 156,876 286,421 286,421

(1) It includes “Holdings" plus “Deposits offered as security” “Loans" and “Spot purchases to be settled and forward purchases” less “Deposits” and “Spot sales to be settled and forward sales”.












EXHIBIT “A” BREAKDOWN OF GOVERNMENT AND CORPORATE SECURITIES

AS OF 6/30/2016 AND 12/31/2015 (amounts stated in thousands of pesos)

Name Identification

Holding

Position without

options (1)

Final position

Market value or present value

Book balances

as of as of

6/30/2016

Book balances

as of as of

12/31/2015

Instruments issued by the BCRA

- BCRA Bills - At fair market value - 382,661 3,169,837 426,345 426,345 - BCRA Bills- Maturity 7/20/2016 46,763 - 232,194 - 232,194 232,194 - BCRA Bills- Maturity 1/11/2017 46,760 - 113,576 - 157,260 157,260 - BCRA Bills- Maturity 1/18/2017 46,761 - 27,051 - 27,051 27,051 - BCRA Bills- Maturity 7/6/2016 46,728 - 9,840 - 9,840 9,840 - Other - - - 3,169,837 - -

- BCRA Bills – From repo transactions - 529,714 2,713,861 - - - BCRA Bills- Maturity 1/11/2017 46,760 - 480,516 - - - - BCRA Bills- Maturity 7/13/2016 46,732 - 49,198 - - - - Other - - 2,713,861 - -

- BCRA Bills – At cost plus yield - 5,811,559 3,487,084 6,133,480 6,133,480 - BCRA Bills- Maturity 7/13/2016 46,732 - 1,383,870 - 1,482,718 1,482,718 - BCRA Bills- Maturity 8/3/2016 46,775 - 1,082,886 - 1,248,088 1,248,088 - BCRA Bills- Maturity 7/27/2016 46,768 - 708,539 - 708,539 708,539 - BCRA Bills- Maturity 8/10/2016 46,708 - 487,486 - 487,486 487,486 - BCRA Bills- Maturity 2/1/2017 46,773 - 343,289 - 343,289 343,289 - BCRA Bills- Maturity 7/27/2016 46,694 - 293,343 - 293,343 293,343 - BCRA Bills- Maturity 1/4/2017 46,790 - 262,672 - 262,672 262,672 - BCRA Bills- Maturity 8/31/2016 46,769 - 285,460 - 285,460 285,460 - BCRA Bills- Maturity 7/6/2016 46,774 - 217,552 - 199,648 199,648 - BCRA Bills- Maturity 8/17/2016 46,714 - 170,187 - 208,625 208,625 - Other - - 576,275 3,487,084 613,612 613,612

Total Instruments Issued by the BCRA 6,723,934 9,370,782 6,559,825 6,559,825

Investments in listed corporate securities

- Equity securities – Argentina 139 139 205 139 139 - Carboclor S.A. 927 139 139 205 139 139

Total Investments in listed corporate securities - 139 205 139 139

Total Government and Corporate Securities 9,034,025 12,235,312 9,187,299 9,187,299

(1) It includes “Holdings" plus “Deposits offered as security” “Loans" and “Spot purchases to be settled and forward purchases” less “Deposits” and “Spot sales to be settled and forward sales”.













EXHIBIT “B”

FINANCING FACILITIES CLASSIFIED BY STATUS AND GUARA NTEES RECEIVED AS OF 6/30/2016 AND 12/31/2015


Commercial loan portfolio 6/30/2016 12/31/2015

Performing 27,385,192 24,523,414

- With “A” preferred guarantees and counter-guarantees 1,045,029 914,857

- With “B” preferred guarantees or counter-guarantees 2,504,306 2,898,288

- Without preferred guarantees or counter-guarantees 23,835,857 20,710,269 Subject to special monitoring 291,164 190,110 In observation 27,842 54,778

- With “B” preferred guarantees or counter-guarantees 25,028 50,507

- Without preferred guarantees or counter-guarantees 2,814 4,271 In negotiation or under refinancing agreements 263, 322 135,332


- Without preferred guarantees or counter-guarantees 16,817 7,739 Troubled 11,006 8,429


- Without preferred guarantees or counter-guarantees 8,328 5,807 With high risk of insolvency 16,363 84,968

- With “A” preferred guarantees and counter-guarantees - 1,250

- With “B” preferred guarantees or counter-guarantees - 68,649

- Without preferred guarantees or counter-guarantees 16,363 15,069 Irrecoverable 83,182 41,291

- With “A” preferred guarantees and counter-guarantees 300 300


- Without preferred guarantees or counter-guarantees 21,528 27,797

Total commercial loan portfolio 27,786,907 24,848,212













EXHIBIT “B”



Consumer and/or home loan portfolio 6/30/2016 12/31 /2015

Performing 11,665,731 10,383,688

- With “A” preferred guarantees and counter-guarantees 72,277 61,780


- Without preferred guarantees or counter-guarantees 11,354,004 10,077,879 Low risk 196,206 149,762



- Without preferred guarantees or counter-guarantees 194,002 145,577 Medium risk 61,524 43,661

- With “A” preferred guarantees and counter-guarantees 256 -

- With “B” preferred guarantees or counter-guarantees 806 160

- Without preferred guarantees or counter-guarantees 60,462 43,501 High risk 193,814 155,940




- With “B” preferred guarantees or counter-guarantees 869 16

- Without preferred guarantees or counter-guarantees 73,242 86,171 Irrecoverable according to BCRA regulations 101 86 - Without preferred guarantees or counter-guarantees 101 86

Total consumer and/or home loan portfolio 12,191,48 7 10,819,324

Total 39,978,394 35,667,536













EXHIBIT “C”

FINANCING FACILITIES CONCENTRATION AS OF 6/30/2016 AND 12/31/2015 (amounts stated in thousands of pesos)

Financing

Number of customers 6/30/2016 12/31/2015

Outstanding amount

% of total portfolio

Outstanding amount


10 largest customers 4,496,222 11,25% 4,537,958 12,72%

50 next largest customers 7,515,502 18,80% 6,621,208 18,56%


Rest of customers 22,634,912 56,61% 20,163,499 56,54%

Total 39,978,394 100,00% 35,667,536 100,00%













EXHIBIT “D”

FINANCING FACILITIES BROKEN DOWN BY TERM AS OF 6/30 /2016 (amounts stated in thousands of pesos)

Item

Matured

Terms remaining to maturity

1 month 3 months 6 months 12 months 24 months Over 24 months Total

Nonfinancial government sector

- 29,603 174 12,812 141,875 33,824 456,937 675,225

Financial sector - 622,463 295,515 158,693 339,312 388,801 69,682 1,874,466

Nonfinancial private sector and foreign residents

751,368 16,390,842 4,624,489 3,625,834 2,682,101 1,833,037 7,521,032 37,428,703

Total 751,368 17,042,908 4,920,178 3,797,339 3,163,288 2,255,662 8,047,651 39,978,394













EXHIBIT “E”

BREAKDOWN OF INVESTMENTS IN OTHER COMPANIES AS OF 6/30/2016 AND 12/31/2015


Identification

Name

Shares and/or Units Amount

Class Face value per unit

Votes per

share Amount 6/30/2016 12/31/2015

In financial institutions, supplementary and

authorized activities – Subsidiaries – In Argentina

30678564822 GPAT Compañía Financiera S.A. Common $ 1 1 85,968,713 880,515 780,171 30654325126 Patagonia Valores S.A. Common $ 1 1 13,862,507 28,401 26,055 30608298815 Patagonia Inversora S.A. Sociedad Gerente de F.C.I. Common $ 1 1 13,317,233 102,233 82,349 Subsidiaries – Abroad 00034UY0117 Banco Patagonia (Uruguay) S.A. I.F.E. Common USD 100 1 50,000 182,493 154,398 Non-subsidiaries – In Argentina 30598910045 Prisma Medios de Pago S.A. Common $ 0,0001 1 847,503 1,323 1,323 33663293309 Provincanje S.A. Common $ 1 1 600,000 484 484 30682415513 Seguro de Depósitos S.A. Common $ 1 1 48,991 493 493 30690783521 Interbanking S.A. Common $ 1 1 149,556 779 779 30525698412 Mercado a Término de Buenos Aires S.A. Common $ 66.712 1 1 73 73 33628189159 Mercado Abierto Electrónico S.A. Common $ 1.200 1 4 65 65 30542421289 Bolsa de Comercio de Mar del Plata S.A. Common $ 1 5 106 56 56 30688964306 Argencontrol S.A. Common $ 1 1 48,906 53 53 30692264785 Compensadora Electrónica S.A. Common $ 1 1 42,478 74 74 30710903812 Banelsip S.A. Common $ 1 1 375 1 1 Other Common 12 15 Non-subsidiaries - Abroad 00034US0001 Banco Latinoamericano de Exportaciones S.A. Class B w/NV 1 5,033 255 222 00034US0001 Banco Latinoamericano de Exportaciones S.A. Preferred w/NV 1 125 19 17 30590221275 S.W.I.F.T. Common € 1 1 1 1 49 42 In other companies – Non-subsidiaries – In

Argentina

30605114969 Sanatorio Las Lomas S.A. Common $ 1 1 52,979 47 84 30577350813 Miralejos S.A.C.F. y Agropecuaria Preferred $ 1 - 105,738 106 106

Total Investments in Other Companies 1,197,531 1,046,860













EXHIBIT “E”

BREAKDOWN OF INVESTMENTS IN OTHER COMPANIES AS OF 6/30/2016 AND 12/31/2015


Information on the issuer – Latest financial statement information

Name Main business activity Year-end date Capital Shareholders ’ Equity

Income/loss for the year

In financial institutions, supplementary and authorized activities – Subsidiaries – In Argentina

GPAT Compañía Financiera S.A. Financial company 12/31/2015 86,837 788,051 208,027 Patagonia Valores S.A. Agente de Liquidación y Compensación y

Agente de Negociación Integral. 12/31/2015

13,863 26,055 2,361

Patagonia Inversora S.A. Soc. Gte. F.C.I. Mutual funds management 12/31/2015 13,317 82,349 46,388 Subsidiaries – Abroad Banco Patagonia (Uruguay) S.A. I.F.E. Foreign bank 12/31/2015 74,600 177,130 9,071 Non-subsidiaries – In Argentina Prisma Medios de Pago S.A. Credit card issuing company 5/31/2015 15,000 432,442 371,110 Provincanje S.A. Clearing house of provincial banks 12/31/2015 7,200 6,046 234

Seguros de Depósitos S.A. Deposit insurance fund resource administration 12/31/2015 1,000 41,747 13,808

Interbanking S.A. Interbank transfer services 12/31/2015 1,346 383,370 317,632

Mercado a Término de Buenos Aires S.A. Performance bond and settlement of agreements of miscellaneous assets

6/30/2015 26,864 106,396 27,649

Mercado Abierto Electrónico S.A. Coordination of securities trading 12/31/2015 242 85,710 48,325 Bolsa de Comercio de Mar del Plata S.A. Coordination of securities trading 12/31/2015 13 24,500 9,459

Argencontrol S.A. Agent in charge of settling capital market transactions

12/31/2015 700 3,267 987

Compensadora Electrónica S.A. Electronic clearing account network management 12/31/2015 1,000 15,726 11,852

Banelsip S.A. Payment and/or collection electronic service 12/31/2015 30 2,104 2,069 Non-subsidiaries - Abroad Banco Latinoamericano de Exportaciones S.A. Foreign bank 12/31/2015 3,641,140 12,639,963 1,352,312 S.W.I.F.T. Interbank telecommunication service 12/31/2015 1,561,581 5,493,876 276,170 In other companies – Non-subsidiaries – In Argentina

Sanatorio Las Lomas S.A. Medical services center 6/30/2015 8,889 49,938 6,763 Miralejos S.A.C.F y Agropecuaria Poultry farming 6/30/2015 57,082 36,914 -43,763












EXHIBIT “F”

CHANGES IN PROPERTY, PLANT AND EQUIPMENT, AND MISCE LLANEOUS ASSETS AS OF 6/30/2016 AND 12/31/2015


Item

Residual values at

beginning of fiscal period,

restated

Additions

Retirements

Changes in allowances

and provisions

Depreciation for the period Residual

value as of 6/30/2016 Years of

useful life Amount

Property, plant and equipment (1)

Real property 220,312 34,357 - - 50 2,838 251,831

Furniture and fixtures 50,059 14,248 - - 10 4,196 60,111

Machinery and equipment 79,284 71,478 128 - 5 17,916 132,718

Vehicles 7,906 3,060 29 - 5 1,291 9,646

Other 116 - - - 5 25 91

Total 357,677 123,143 157 - 26,266 454,397

Miscellaneous assets (1)

Works in progress 15 20,475 - - - - 20,490

Prepayments for the purchase of assets 55,206 15,231 48,890 - - - 21,547

Works of art 1,121 161 25 2,230 - - 3,487

Leased out assets 1,947 - - - 50 31 1,916

Stationery and office supplies 7,049 3,776 4,847 - - - 5,978

Other miscellaneous assets 156,162 469,304 448,211 37 50 128 177,164

Total 221,500 508,947 501,973 2,267 159 230,582

(1) See note 1.6.k) and 1.6.l)













EXHIBIT “G”

BREAKDOWN OF INTANGIBLE ASSETS AS OF 6/30/2016 AND 12/31/2015


Item (1)

Residual value at

beginning of year

Additions

Amortization for the period Residual

value as of 6/30/2016

Years of useful life assigned

Amount

Organization and development expenses 25,409 - 5 6,916 18,493

Total 25,409 - 6,916 18,493

(1) See note 1.6.m) 2.













EXHIBIT “H” DEPOSITS CONCENTRATION AS OF 6/30/2016 AND 12/31/15


Number of customers 6/30/2016 12/31/2015

Outstanding amount


Outstanding amount


10 largest customers 6,121,508 14,62% 6,217,709 14,93%



Rest of customers 28,626,456 68,39% 25,619,316 61,51%

Total 41,858,734 100,00% 41,651,454 100,00%













EXHIBIT “I” BREAKDOWN BY TERM OF DEPOSITS AND

OTHER LIABILITIES FROM FINANCIAL INTERMEDIATION AS OF 6/30/2016


Item Terms remaining to maturity

1 month 3 months 6 months 12 months 24 months Over 24 months Total

Deposits 35,565,661 3,665,936 1,814,285 811,904 948 - 41,858,734

Other Liabilities from Financial Intermediation

- BCRA

4,699 1,667 2,500 5,000 2,500 - 16,366

- Banks and International Organizations

203,708 675,013 614,746 - - 229,256 1,722,723

- Unsubordinated corporate bonds

- - - 332,200 - - 332,200

Financing facilities received from local financial institutions

108,817 - - - - - 108,817

- Other 2,827,130 367 555 991 1,540 1,010 2,831,593

Total Other liabilities from financial intermediation 3,144,354 677,047 617,801 338,191 4,040 230,266 5,011,699

TOTAL 38,710,015 4,342,983 2,432,086 1,150,095 4,988 230,266 46,870,433












EXHIBIT “J” CHANGES IN ALLOWANCES AND PROVISIONS


Breakdown

Balance at beginning of

period, restated

Increase in constant currency

Decrease in constant currency Balances as

of 6/30/2016 Reversals Uses

Deducted from assets

Loans – for uncollectibility risk and impairment in value 1,205,725 155,575 51,000 96,166 1,214,134

Other receivables from financial intermediation – for uncollectibility risk and impairment in value

3,940 1,365 - 866 4,439

Receivables from financial leases – for uncollectibility risk and impairment in value

17,428 1,923 - 757 18,594

Miscellaneous receivables – for uncollectibility risk

10,699 10 1,561 - 9,148

Total 1,237,792 158,873 52,561 97,789 1,246,315

Included in liabilities

Contingent commitments 250 - - 250 -

Other contingencies 137,334 8,153 312 8,036 137,139

Administrative, disciplinary and criminal sanctions

34 - - - 34

Total 137,618 8,153 312 8,286 137,173












EXHIBIT “K” CAPITAL STRUCTURE

AS OF 6/30/2016 (amounts stated in thousands of pesos)

Shares (1) Capital stock

Class Amount Votes per

share

Issued Paid in (1)

Outstanding

Class “A” shares of common stock 22,768,818 1 22,769 22,769

Class “B” shares of common stock 696,376,419 1 696,376 696,376

Total 719,145,237 719,145 719,145

(1) See Note 8.












EXHIBIT “L”

BALANCES IN FOREIGN CURRENCY AS OF 6/30/2016 AND 12/31/15


ITEMS

Head office and branches

in Argentina

Total as of 6/30/2016 Euro US dollar Pound

sterling Swiss franc Yen Other Total as of

12/31/2015

ASSETS

Cash and due from banks 2,840,959 2,840,959 126,495 2,684,563 2,299 1,502 4,791 21,309 4,208,826

Government and corporate securities 588,320 588,320 - 588,320 - - - - 1,479,352

Loans 5,111,773 5,111,773 3,316 5,108,457 - - - - 2,896,891

Other Receivables from Financial Intermediation

160,552 160,552 - 160,552 - - - - 53,431

Receivables from finance leases

290 290 - 290 - - - - 1,032

Investments in other companies 182,816 182,816 49 182,767 - - - - 154,679

Miscellaneous Receivables 458 458 7 443 - - - 8 708

Items pending allocation - - - - - - - - 1

Total 8,885,168 8,885,168 129,867 8,725,392 2,299 1,502 4,791 21,317 8,794,920

LIABILITIES

Deposits 4,821,176 4,821,176 85,628 4,735,548 - - - - 3,205,680

Other Liabilities from Financial Intermediation 2,753,888 2,753,888 18,973 2,719,630 909 402 13,695 279 3,218,351

Miscellaneous Liabilities 146 146 - 146 - - - - 108

Total 7,575,210 7,575,210 104,601 7,455,324 909 402 13,695 279 6,424,139

MEMORANDUM ACCOUNTS

Debit-balance

Contingent 4,855,638 4,855,638 129,289 4,726,349 - - - - 5,022,390

Control 6,449,417 6,449,417 47,805 6,401,612 - - - - 6,750,230

Total 11,305,055 11,305,055 177,094 11,127,961 - - - - 11,772,620

Credit-balance

Contingent 689,743 689,743 3,552 686,191 - - - - 675,307

Control 7,343 7,343 1,569 5,774 - - - - 42,812

Total 697,086 697,086 5,121 691,965 - - - - 718,119











C.P.C.E.C.A.B.A. Tº CLXIX Fº 52

62

EXHIBIT “N” CREDIT ASSISTANCE TO RELATED PARTIES


Item Performing Total

6/30/2016 12/31/2015

1. Loans 509,324 509,324 424,209

Overdrafts 2,416 2,416 4,440

- Without preferred guarantees or counter-guarantees 2,416 2,416 4,440

Notes 123,665 123,665 113,465

- With “B” preferred guarantees or counter-guarantees

3,886 3,886 3,642


Consumer 2,015 2,015 1,146


Credit cards 5,276 5,276 4,763


Other 375,952 375,952 300,395


2. Other Receivables from Financial Intermediation 16,210 16,210 -

3. Contingent obligations 205,322 205,322 35,120

4. Investments in other companies 1,193,641 1,193,641 1,042,974

Total 1,924,497 1,924,497 1,502,303

Allowances 5,255 5,255 4,242












63

EXHIBIT “O”

DERIVATIVE FINANCIAL INSTRUMENTS AS OF 6/30/2016


Type of contract

Purpose of transactions

Underlying asset

Type of settlement

Negotiation environment or counter-

party

Weighted average term

Amount Originally agreed

- in months -

Residual - in months -

Calculation of differences - in days -

Futures Intermediation on own account

Foreign currency

Daily settlement of differences

MAE 3 2 1 2,883,216

Futures Intermediation on own account

Foreign currency

Daily settlement of differences

ROFEX 6 4 1 895,651

Forwards Intermediation on own account

Foreign currency

Upon maturity of differences

Negotiation between Parties -

Residents in Argentina –

Non-financial sector

3 2 75 844,400

Repo transactions

Intermediation on own account

Argentine government securities

Delivery of underlying

asset MAE - - 1 1,204,888












CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Art. 33 – Law No. 19550) AS OF 6/30/2016 AND 12/31/15


ASSETS 6/30/2016 12/31/2015

A. Cash and due from banks Cash on hand 2,104,367 2,887,536 Financial institutions and correspondents 6,796,468 6,718,775

BCRA 5,688,712 5,678,629 Other in Argentina 8,561 3,732 Other abroad 1,099,195 1,036,414

8,900,835 9,606,311 B. Government and corporate securities Holdings carried at fair market value 2,256,416 2,883,490 Holdings carried at cost plus yield 286,421 156,876

Instruments issued by the BCRA 6,778,182 9,370,782 Investments in listed corporate securities 148 214

9,321,167 12,411,362 C. Loans To the nonfinancial government sector (Exhibit 1) 672,236 474,123 To the financial sector (Exhibit 1) 1,411,716 1,053,291

Interbank loans (call options granted) 180,000 165,390 Other financing facilities granted to local financial institutions 1,140,025 823,739 Accrued interest, adjustments and listed-price differences receivable 91,691 64,162

To the nonfinancial private sector and foreign residents (Exhibit 1) 36,810,265 32,848,208 Overdrafts 7,244,863 6,743,064 Notes 13,645,150 13,238,649 Mortgage loans 26,204 30,781 Car loans 2,518,570 1,929,335 Consumer 4,202,323 3,968,399 Credit cards 6,199,531 5,325,367 Other 2,502,266 1,230,247 Accrued interest, adjustments and listed-price differences receivable 585,399 487,341 (Documented interest) (114,041) (104,975) (Allowances) (1,264,748) (1,239,782) 37,629,469 33,135,840














ASSETS – Continued 6/30/2016 12/31/2015

D. Other Receivables from Financial Intermediation BCRA 824,236 635,313 Amounts receivable from spot sales to be settled and forward sales 977,323 2,741,930 Securities and foreign currency from spot sales to be settled and forward sales 861,330 40,746 Unlisted corporate bonds (Exhibit 1) 88,189 132,570 Unsettled amounts of forward transactions without delivery of underlying asset 7,575 52,859 Other not covered by Debtor Classification Standards 122,002 79,162 Other covered by Debtor Classification Standards (Exhibit 1) 273,676 214,555 Accrued interest and adjustments covered by Debtors Classification Standards (Exhibit 1)

426 726

(Allowances) (10,547) (8,192) 3,144,210 3,889,669 E. Receivables from Finance Leases Receivables from financial leases (Exhibit 1) 1,337,602 1,290,518 Accrued interest and adjustments receivable (Exhibit 1) 12,743 11,652 (Allowances) (18,594) (17,428) 1,331,751 1,284,742 F. Investments in Other Companies In financial institutions 274 239 Other 5,679 5,712 5,953 5,951 G. Miscellaneous Receivables Other 836,304 644,998 Other accrued interest and adjustments receivable 527 512 (Allowances) (9,240) (10,794) 827,591 634,716 H. Property, plant and equipment 463,805 366,903 I. Miscellaneous assets 230,582 221,500 J. Intangi ble assets Organization and development expenses 18,493 25,409 18,493 25,409 K. Items pending allocation 3,165 3,037

TOTAL ASSETS 61,877,021 61,585,440














LIABILITIES 6/30/2016 12/31/2015

L. Deposits Nonfinancial government sector 4,478,474 2,791,670 Financial sector 8,508 31,678 Nonfinancial private sector and foreign residents 37,963,495 39,227,777 Checking accounts 6,929,935 5,990,938 Savings accounts 11,726,210 10,751,776 Time deposit 16,828,920 20,409,674

Investment accounts 6,672 303,845 Other 1,865,752 1,358,930 Accrued interest, adjustments and listed-price differences payable 606,006 412,614 42,450,477 42,051,125 M. Other liabilities from financial intermediation BCRA 16,366 20,572 Banks and international organizations 1,722,723 2,329,770 Unsubordinated corporate bonds 1,266,379 1,058,525 Amounts to be paid for spot purchases to be settled and forward purchases 809,455 36,042 Securities and foreign currency to be delivered under spot sales to be settled and forward sales

1,052,834 3,044,763

Financing facilities received from local financial institutions 385,570 201,556 Interbank (call options received) 263,600 58,000 Other financing facilities from local financial institutions 121,600 143,500 Accrued interest payable 370 56 Unsettled amounts of forward transactions without delivery of underlying asset 11,077 910,938 Other 2,991,161 2,870,792 Accrued interest, adjustments and listed-price differences payable 90,360 57,724 8,345,925 10,530,682 N. Miscellaneous liabilities

Dividends payable 52,728 - Fees 2,815 3,064 Other 1,660,102 1,165,718 1,715,645 1,168,782 O. Provisions 142,302 142,221 Q. Items pending allocation 9,075 3,230 Minority interests in consolidated institution s and companies 8,892 7,879

TOTAL LIABILITIES 52,672,316 53,903,919

SHAREHOLDERS ’ EQUITY 9,204,705 7,681,521

TOTAL LIABILITIES AND SHAREHOLDERS ’ EQUITY 61,877,021 61,585,440














MEMORANDUM ACCOUNTS 6/30/2016 12/31/2015

DEBIT BALANCE Contingent Loans obtained (unused amounts) 8,955 164,100 Guarantees received 16,632,035 14,616,370 Other not covered by debtor classification standards 558 558 Contingent debit-balance contra accounts 2,509,297 2,216,382 19,150,845 16,997,410 Control Receivables classified as irrecoverable 601,906 616,388 Other 33,117,509 27,263,478 Control debit-balance contra accounts 5,017,127 4,062,634 38,736,542 31,942,500 Derivatives Notional value of forward transactions without delivery of underlying asset 1,700,516 6,927,278 Derivative debit-balance contra accounts 2,922,751 6,813,935 4,623,267 13,741,213

Trust activity Trust funds 2,027,641 1,521,669

2,027,641 1,521,669

DEBIT-BALANCE MEMORANDUM ACCOUNTS 64,538,295 64,202,792














MEMORANDUM ACCOUNTS – Continued 6/30/2016 12/31/2015

CREDIT BALANCE Contingent Loans granted (unused amounts) covered by debtor classification (Exhibit 1) 1,474,894 1,183,005 Loans granted (unused amounts) covered by debtor classification standards (Exhibit 1) 153,593 165,234 Other guarantees provided not covered by debtor classification standards 233,553 229,343 Other covered by debtor classification standards (Exhibit 1) 415,476 371,810 Other not covered by debtor classification standards 231,781 266,990 Contingent credit-balance contra accounts 16,641,548 14,781,028 19,150,845 16,997,410 Control Checks and securities to be credited 1,051,528 678,932 Other 3,965,599 3,383,702 Control credit-balance contra accounts 33,719,415 27,879,866 38,736,542 31,942,500 Derivatives Notional value of forward transactions without delivery of underlying asset

Notional value of forward transactions without delivery of underlying asset 2,922,751 6,813,935 Derivatives credit-balance contra accounts 1,700,516 6,927,278 4,623,267 13,741,213 Trust activity Trust activity credit-balance contra accounts 2,027,641 1,521,669 2,027,641 1,521,669

TOTAL CREDIT-BALANCE MEMORANDUM ACCOUNTS 64,538,295 64,202,792

The accompanying notes 1 to 8 and Exhibit 1 are an integral part of these consolidated financial statements.


Marcelo A. Iadarola Juan D. Mazzón João Carlos de Nobrega Pecego

Executive manager of Administration Superintendent President Accounting and Taxation Finance, Administration and Public area









69

CONSOLIDATED STATEMENTS OF INCOME (ART. 33 – LAW NO. 19550) For the six-month period ended 6/30/2016 and 6/30/2 015


BREAKDOWN 6/30/2016 6/30/2015

A. FINANCIAL INCOME Interest on loans to the financial sector 155,054 84,737 Interest on overdrafts 1,180,253 733,035 Interest on notes 1,530,682 1,052,905 Interest on mortgage loans 1,873 2,523 Interest on car loans 301,547 186,748 Interest on credit card loans 631,745 475,671 Interest on other loans 888,331 693,831 Interest on other receivables from financial intermediation 2,132 1,036 Interest on finance leases 142,185 98,047 Net income from government and corporate securities 1,893,512 1,063,482 Income from secured loans – Presidential Decree No. 1387/01 117 153 Adjustments under CER clause 3,442 1,368 Gold and foreign currency quoted price difference 298,354 133,663 Other 201,801 86,866 7,231,028 4,614,065 B. FINANCIAL EXPENSE Interest on savings-account deposits 2,088 1,543 Interest on time deposits 2,781,242 1,604,237 Interest on interbank loans received (call options received) 34,340 11,125 Interest on other financing facilities from financial institutions 53,451 16,240 Interest on other liabilities from financial intermediation 168,089 124,826 Other interest 33,701 49,147 Adjustments under CER clause 19 23 Contribution to the deposit guarantee fund 87,772 100,402 Other 408,609 235,636 3,569,311 2,143,179 GROSS INTERMEDIATION MARGIN 3,661,717 2,470,886 C. CHARGE FOR LOAN LOSSES 181,223 161,843 D. REVENUE FROM SERVICES Related to lending transactions 469,392 333,310 Related to borrowing transactions 607,420 474,416 Other fees 95,218 53,645 Other 492,993 335,704 1,665,023 1,197,075












CONSOLIDATED STATEMENTS OF INCOME (ART. 33 – LAW NO. 19550) For the six-month period ended 6/30/2016 and 6/30/2 015


BREAKDOWN 6/30/2016 6/30/2015

E. Service-charge expense Fees 102,967 66,030 Other 441,478 255,145 544,445 321,175 G. ADMINISTRATIVE EXPENSES Personnel expenses 1,468,422 999,402

Directors and supervisory auditors’ fees 37,962 29,612

Other professional fees 47,598 36,618 Advertising 58,428 38,736 Taxes 130,553 103,318 Depreciation of property, plant and equipment 26,918 17,768 Organization expenses amortization 6,916 6,657 Other operating expenses 321,888 231,395 Other 191,784 126,188 2,290,469 1,589,694

NET INCOME (LOSS) FROM FINANCIAL INTERMEDIATION 2,3 10,603 1,595,249 MINORITY INTEREST (1,014) (1,030) I. OTHER EARNINGS Income from long-term investments 45,649 25,954 Punitive interest 13,095 9,002 Receivables recovered and allowances reversed 93,299 55,086 Other 69,449 47,892 221,492 137,934 J. OTHER LOSSES Punitive interest and charges payable to the BCRA 18 9 Charge for uncollectibility of miscellaneous receivables, and other allowances 8,714 12,526 Losses and depreciation of miscellaneous assets 159 185 Other 27,377 18,843 36,268 31,563

NET INCOME BEFORE INCOME TAX 2,494,813 1,700,590

L. INCOME TAX 918,901 632,931

NET INCOME FOR THE PERIOD 1,575,912 1,067,659













71

CONSOLIDATED STATEMENTS OF CASH FLOWS AND CASH EQUI VALENTS (ART. 33 – LAW NO. 19550)

For the six-month period ended 6/30/2016 and 6/30/2 015 (amounts stated in thousands of pesos)

Changes in cash and cash equivalents 6/30/2016 6/30/2015

Cash at beginning of year 9,606,311 6,600,443

Cash at period-end 8,900,835 6,305,716

Net decrease in cash (705,476) (294,727) Causes of changes in cash and cash equivalents Operating activities

Net collections / (payments) of: Government and private securities 2,184,909 (2,299,900) Loans 262,778 2,370,300

- To the financial sector (203,371) (272,404) - To the nonfinancial government sector (194,554) 14,426 - To the nonfinancial private sector and foreign residents 660,703 2,628,278 Other receivables from financial intermediation 1,760,618 (2,468,878) Receivables from finance leases 93,263 (184,653) Deposits (2,664,936) 4,870,136 - From the financial sector (23,170) (160,657) - From the nonfinancial government sector 1,686,804 221,854 - From the nonfinancial private sector and foreign residents (4,328,570) 4,808,939

Other liabilities from financial intermediation (102,992) (1,026,588)

- Financial sector or interbank loans (call options received) 171,574 (256,059) - Other (except for the obligations included under financing activities) (274,566) (770,529)

Collections related to revenues from services 1,635,298 1,185,733

Payments related to service-charge expenses (544,446) (321,189)

Administrative expenses paid (2,162,328) (1,748,292)

Punitive interest collections/(payments) 13,077 (1,029)

Collections of organization and development expenses - 8,993

Collection of dividends from other companies 45,690 18,497

Other payments related to other earnings and expenses (99,437) (102,067)

Net payments of other operating activities (301,774) (251,787)

Income tax paid (572,685) (579,156) Net cash flows used in operating activities (452,965) (529,880)












72

CONSOLIDATED STATEMENTS OF CASH FLOWS AND CASH EQUI VALENTS

(ART. 33 – LAW NO. 19550) For the six-month period ended 6/30/2016 and 6/30/2 015


6/30/2016 6/30/2015

Investing activities

Net payments of property, plant, and equipment (121,320) (32,842)

Net payments of miscellaneous assets (6,845) (23,490)

Net cash flows used in investing activities (128,165) (56,332)

Financing activities Net collections / (payments) of:

Unsubordinated Corporate Bonds 185,420 (717,194)

BCRA (5,000) (5,000)

Banks and international organizations (638,156) 689,883 Financing facilities received from local financial institutions (21,900) 130,000 Net cash flows (used in) provided by financing acti vities (479,636) 97,689

Financial and holding gain/loss on cash and cash eq uivalents (including interest and monetary gain (loss) 355,290 193,796

Net decrease in cash (705,476) (294,727)



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS WITH SUBSIDIARIES FOR THE SIX-MONTH PERIOD

ENDED JUNE 30, 2016 (ART. 33 – LAW No. 19550) (stated in thousands of pesos)











NOTE 1: Significant accounting policies related to the information

Banco Patagonia S.A. has prepared the consolidated financial statements in accordance with the criteria established by BCRA Communication “A” 2227 and supplementary rules. To such effect, as of June 30, 2016 and December 31, 2015, it has consolidated the statement of financial position and Exhibit 1 “Financing facilities classified by status and guarantees received”, and as of June 30, 2016 and 2015, the statements of income and cash flows, with the financial statements of the following companies:

Company Shares Percentage of

Class Amount Total capital stock Possible votes

Patagonia Valores S.A. Common

stock 13,862,667 99,99% 99,99%

Patagonia Inversora S.A. Sociedad Gerente Fondos Comunes de Inversión

Common stock 13,317,237 99,99% 99,99%

Banco Patagonia (Uruguay) S.A. I.F.E. Common stock 50,000 100,00% 100,00%

GPAT Compañía Financiera S.A. Common

stock 86,837,083 99,00% 99,00%

Banco Patagonia S.A.’s Board of Directors considers that no other companies are required to be included in the consolidated financial statements as of June 30, 2016.














74

NOTE 2: Accounting methods used The consolidated financial statements have been prepared based on the information included in the stand-alone financial statements of each one of the companies being consolidated, which were substantially prepared based on methods similar to those used by the Bank to prepare its financial statements. For the purposes of reporting the accounting methods used, please refer to the notes to the following financial statements:

Company Financial statements as of Date of issuance Note

Banco Patagonia S.A. 6/30/2016 8/8/2016 1

Patagonia Valores S.A. 6/30/2016 8/8/2016 1

Patagonia Inversora S.A. Sociedad Gerente Fondos Comunes de Inversión

6/30/2016 8/8/2016 1

Banco Patagonia (Uruguay) S.A. I.F.E. 6/30/2016 7/15/2016 3

GPAT Compañía Financiera S.A. 6/30/2016 8/8/2016 1

NOTE 3: Restricted assets

The companies included in these consolidated financial statements held the following restricted assets: Banco Patagonia S.A. See note 6 to Banco Patagonia S.A.’s stand-alone financial statements. Patagonia Valores S.A. As of June 30, 2016 and December 31, 2015, the Company holds one share in Mercado de Valores S.A. as security for the transactions performed thereby, valued at restated cost in the amount of 2,064. Patagonia Inversora S.A. Sociedad Gerente de Fondos Comunes de Inversión As of June 30, 2016, and December 31, 2015, the Company has no restricted assets.














75

Banco Patagonia (Uruguay) S.A. I.F.E. As of June 30, 2016 and December 31, 2015, the Bank keeps with the Central Bank of Uruguay a deposit in the amount of 7,460 and 6,503, respectively, related to the mandatory settlement of assets in the Republic of Uruguay, in accordance with section 221 of the Consolidation of Rules on Regulation and Control of the Financial System of the Central Bank of Uruguay. GPAT Compañía Financiera S.A. As of June 30, 2016 and December 31, 2015, GPAT Compañía Financiera S.A. held the following restricted assets:

Item 6/30/2016 12/31/2015 Loans

- Chattel mortgages on cars 121,773 143,704 Total loans(*) 121,773 143,704

(*) Related to a guarantee for the assignment of credit in relation to the loan taken out from Banco Galicia S.A. In the original amount of 150,000 within the framework of BCRA Communication “A” 5771 - Credit Facility for Productive Investment.

NOTE 4: Derivative financial instruments

Banco Patagonia S.A. See note 11 to Banco Patagonia S.A.’s stand-alone financial statements. GPAT Compañía Financiera S.A. As of December 31, 2015, GPAT Compañía Financiera S.A. held forward transactions involving forward purchases and sales of foreign currency without delivery of the underlying asset, traded on the private market. They are valued at their quoted prices prevailing in the MAE at period-end, and are performed by the Bank for the purposes of intermediation on its own account. As of June 30, 2016, GPAT Compañía Financiera S.A. recognized losses in the amount of 2,336.














76

NOTE 5: Transformation of Banco Patagonia (Uruguay) S.A.I.F.E. into “Bank ” as per Uruguayan Law No. 15322

On May 9, 2011, the Board of Directors of Banco Patagonia (Uruguay) S.A.I.F.E. approved the entity’s transformation into a “Bank” under the term of the Uruguayan Law No. 15332 and requested the authorization thereof to the Ministry of Economy and Finance of Uruguay and the Central Bank of Uruguay. To the date of issuance of these financial statements, those authorizations are still pending approval.

NOTE 6: Sanctions imposed and proceedings filed by the BCRA

On January 8, 2015, the BCRA issued Communication “A” 5689 whereby it established that financial institutions shall recognize and report the administrative, disciplinary and criminal sanctions imposed by the BCRA, the UIF, the CNV or the SSN, with judgment rendered in a court of original jurisdiction. All the sanctions shall be taken into account, and an allowance shall be set up for 100% of each sanction, which shall be kept until the payment is made or a final judgment is rendered. Banco Patagonia S.A. See Note 18 to the stand-alone financial statements of Banco Patagonia S.A.

GPAT Compañía Financiera S.A. As of June 30, 2016, GPAT Compañía Financiera S.A. has not received any notice of administrative, disciplinary or criminal sanctions, or any proceedings.

NOTE 7: Capital Markets Law On December 27, 2012, Capital Markets Law No. 26831, regulated by Executive Decree No. 1023/13, issued on July 29, 2013, became effective. This Law considers the comprehensive reform of the current public offering system (Law No. 17811) which came into force on January 28, 2013. Finally, through General Resolution No. 622/13 issued on September 9, 2013, and subsequent administrative criteria, the CNV adjusts its rules to respond to new circumstances, for the purposes of securing the normal performance of the various agents operating in the Capital Market, with the aim of ensuring compliance with the principles established in the new Capital Market Law.














77

Banco Patagonia S.A. The Bank was registered with the CNV for the purposes of acting in the following capacities:

- Financial and non-financial trustee: authorized through Resolution No. 17418, issued by the

CNV on August 8, 2014.

- Mutual fund custodian: authorized through Order No. 2081 of the CNV dated September 18, 2014.

- Settlement and clearing agent and comprehensive trading agent: authorized through Order No. 2095 of the CNV dated September 19, 2014.

Patagonia Valores S.A. - Settlement and clearing agent and comprehensive trading agent: authorized through Order

No. 2114 of the CNV dated November 11, 2014.

Patagonia Inversora S.A. Sociedad Gerente de Fondos Comunes de Inversión - Management Agent of Mutual Funds: authorized by CNV Provision No. 2013, dated August 7,

2014. Besides, the Management of Banco Patagonia S.A. and its subsidiaries follow up the scope and contents of the amendments mentioned in the above paragraphs, in order to identify and determine a potential impact on their financial position, which should be disclosed in the financial statements for to future periods.

NOTE 8: Distribution of earnings


See Note 17 to the stand-alone financial statements of Banco Patagonia S.A. Patagonia Valores S.A. The Annual Shareholders’ Meeting held on April 26, 2016 for fiscal year ended December 31, 2015, approved the following distribution of earnings:

Legal Reserve 118 Optional Reserve – Future distribution of earnings 2,243

Total 2,361














78

Patagonia Inversora S.A. Sociedad Gerente de Fondos Comunes de Inversión S.A. The Annual Shareholders’ Meeting held on April 26, 2016 for fiscal year ended December 31, 2015, approved the following distribution of earnings:

Legal reserve 297 Optional Reserve – Future distribution of earnings 46,091

Total 46,388 GPAT Compañía Financiera S.A. The Annual Shareholders’ Meeting held on April 26, 2016 for fiscal year ended December 31, 2015, approved the following distribution of earnings:

Legal reserve 41,605 Optional Reserve – Future distribution of earnings 166,421

Total 208,026












79

EXHIBIT “1” (Art. 33 – Law No. 19550)



Commercial loan portfolio 6/30/2016 12/31/2015

Performing 27,231,597 24,435,947

- With “A” preferred guarantees and counter-guarantees 1,045,029 914,857


- Without preferred guarantees or counter-guarantees 23,682,262 20,622,802 Subject to special monitoring 291,164 190,110 In observation 27,842 54,778


- Without preferred guarantees or counter-guarantees 2,814 4,271 In negotiation or under refinancing agreements 263,322 135,332


- Without preferred guarantees or counter-guarantees 16,817 7,739 Troubled 11,006 8,429


- Without preferred guarantees or counter-guarantees 8,328 5,807 With high risk of insolvency 16,363 84,968

- With “A” preferred guarantees and counter-guarantees - 1,250

- With “B” preferred guarantees or counter-guarantees - 68,649





Total commercial loan portfolio 27,633,312 24,760,745












80

CONTINUED

EXHIBIT “1” (Art. 33 – Law No. 19550)

FINANCING FACILITIES CLASSIFIED BY STATUS AND GUARANTEES RECEIVED AS OF 06/30/16 AND 12/31/15


Consumer and/or home loan portfolio 6/30/2016 12/31 /2015

Performing 14,323,078 12,472,960

- With “A” preferred guarantees and counter-guarantees 72,277 61,780


- Without preferred guarantees or counter-guarantees 11,558,533 10,206,036 Low risk 325,537 204,666



- Without preferred guarantees or counter-guarantees 201,337 149,064 Medium risk 82,172 52,761



- Without preferred guarantees or counter-guarantees 62,358 44,542 High risk 209,660 166,263




- With “B” preferred guarantees or counter-guarantees 1,075 258


Irrecoverable according to BCRA regulations 281 135

- With “B” preferred guarantees or counter-guarantees 30 -

- Without preferred guarantees or counter-guarantees 251 135

Total consumer and/or home loan portfolio 15,017,50 4 12,984,947

Total General 42,650,816 37,745,692


Reporting summary for the six-month period ended June 30, 2016


REPORTING SUMMARY FOR THE SIX-MONTH PERIOD

ENDED JUNE 30, 2016







1

a) Relevant aspects:

At the end of the 2Q2016, Banco Patagonia recorded Assets in the amount of $ 59,623.7 million, Loans (net of allowances) in the amount of $ 35,319.6 million, Deposits in the amount of $ 41,858.7 million, and a Shareholders’ Equity of $ 9,204.7 million. At the consolidated level, it recorded Assets in the amount of $ 61,877.0 million, Loans (net of allowances) in the amount of $ 37,629.5 million, and Deposits in the amount of $ 42,450.5 million.

Net income for the first half of 2016 totaled 1,575.9 million, with a ROE of 37.3% (return on average equity), and a ROA of 5.1% (return on average assets).

Loans granted to the non-financial private sector on a consolidated basis amounted to $ 36,810.3 million, accounting for an increase of 46.1% compared to 2015 ($ 25,195.7 million).

Consolidated total deposits amounted to ARS 42,450.5 million, which accounts for an increase of 22.9% compared to 2Q15 ($ 34,544.5 million).

Regarding portfolio quality ratios, the non-performing portfolio ratio is 1.1%, and coverage with provisions on the non-performing loan portfolio was 269.9%.

The consolidated liquidity ratio was 42.9% (liquid assets on total deposits). In addition, the minimum consolidated capital is $ 3,804.5 million in excess of the amount required by BCRA regulations. The annual and extraordinary Shareholders’ Meeting dated April 27, 2016 approved the payment of $52.7 million as cash dividends for fiscal year 2015. Subsequently, on June 9, 2016, the BCRA issued Communication “A” 5985, by which it introduced adjustments to the regulatory framework of the “Distribution of earnings” , enabling to increase the amounts that may be distributed in cash. Accordingly, the Shareholders’ Meeting held on July 25, 2016 resolved to increase the dividends in cash by 1,662.5 million, to reach the total amount requested of 1.715.2 million. Both requests are subject to the prior authorization of the BCRA. As of June 30, 2016, Banco Patagonia S.A. employs 3,422 people, and has a wide network made up of 199 customer desks all over the country, distributed in the capital and major cities of each province.



ENDED JUNE 30, 2016







b) Comparative consolidated financial position Information on the six-month periods ended June 30, 2016, 2015, 2014, 2013, and 2012:

Consolidated Statement of Financial Position In Millions of Pesos 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

Cash and due from banks 8,900.8 6,305.7 5,151.1 3,890.2 2,824.1

Government and corporate securities 9,321.2 13,383.3 5,726.9 2,354.3 2,112.3

Loans 37,629.5 25,115.4 21,725.6 18,207.3 13,519.2

To the nonfinancial government sector 672.2 158.9 244.2 249.0 162.8

To the financial sector 1,411.7 862.1 562.2 567.7 395.3

To the nonfinancial private sector 36,810.3 25,195.7 21,945.9 18,009.2 13,246.9

(Allowances) (1,264.7) (1,101.3) (1,026.7) (618.6) (285.8) Other receivables from financial intermediation

3,144.2 3,847.8 2,193.4 1,392.1 1,010.0

Receivables from finance leases 1,331.8 1,295.9 937.1 770.1 487.1

Other assets 1,549.5 1,037.5 832.4 683.9 587.1

Total Assets 61,877.0 50,985.6 36,566.5 27,297.9 20,539.8

Deposits 42,450.5 34,544.5 24,879.2 19,765.3 14,713.6

To the nonfinancial government sector 4,478.5 3,213.4 3,502.9 2,442.3 1,922.7

To the financial sector 8.5 7.8 13.6 22.9 21.3

To the nonfinancial private sector 37,963.5 31,323.3 21,362.7 17,300.1 12,769.6

Other liabilities from financial intermediation 8,345.9 7,822.0 5,060.0 2,932.5 2,249.8

Other liabilities 1,875.9 2,275.5 1,214.7 714.1 686.0

Total liabilities 52,672.3 44,642.0 31,153.9 23,411.9 17,649.4

Shareholders ’ Equity 9,204.7 6,343.6 5,412.6 3,886.0 2,890.4

Total Liabilities+ Shareholders ’ Equity 61,877.0 50,985.6 36,566.5 27,297.9 20,539.8



ENDED JUNE 30, 2016







c) Comparative consolidated statement of income

Information on the six-month periods ended June 30, 2016, 2015, 2014, 2013, and 2012:

Consolidated Statement of Income

In Millions of Pesos 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

Financial Income 7,231.0 4,614.1 4,573.7 2,185.4 1,537.2

Financial Expenses 3,569.3 2,143.2 2,032.6 1,064.2 582.0

Gross Intermediation Margin 3,661.7 2,470.9 2,541.1 1,121.2 955.2 Charge for Loan Losses 181.2 161.8 136.2 134.0 71.3

Service-charge Income 1,120.6 875.9 719.5 617.6 448.8

Administrative Expenses 2,290.5 1,589.7 1,152.9 889.1 698.7

Net Operating Income 2,310.6 1,595.3 1,971.5 715.7 634.0 Other Earnings / (Expenses) 184.2 105.3 10.2 131.9 39.4 Income before Income Tax 2,494.8 1,700.6 1,981.7 847.6 673.4 Income Tax 918.9 632.9 713.7 328.4 265.4

Net Income for the period 1,575.9 1,067.7 1,268.0 519.2 408.0

d) Comparative consolidated statement of cash flows Information on the six-month periods ended June 30, 2016, 2015, 2014, 2013, and 2012:

Consolidated Statement of Cash Flows

In Millions of Pesos 6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

Funds used in operating activities (453.0)

(529.8)

(1,474.5)

(873.4)

(166.8)

Cash flows (used in)/provided by investment activities

(128.2)

(56.3)

(12.5)

6.1

(13.9)

Cash flows (used in)/provided by financing activities

(479.6)

97.6

(358.5)

(20.5)

483.7

Financial and Holding gains/losses on Cash and Cash Equivalents

355.3

193.8

1,046.9

159.2

90.2

Total cash flows (used) provided in the period (705.5) (294.7) (798.6) (728.6) 393.2



ENDED JUNE 30, 2016







4

e) Summary of statistical data

Summary of statistical data

6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012 Number of term deposit transactions – Individuals

90,275 74,509 36,337 36,569 36,724

Number of term deposit transactions – Entities 3,223 3,188 2,927 3,021 2,568 Number of loan transactions – Individuals 942,783 915,093 963,883 1,046,695 1,040,243 Number of loan transactions – Entities 99,056 93,145 36,646 41,921 33,329 Number of customer desks 199 175 174 170 160 Number of automatic teller machines (ATMs) 556 540 500 485 424 Number of self-service terminals (SSTs) 343 324 281 250 213 Payroll 3,422 3,307 3,247 3,237 3,184



ENDED JUNE 30, 2016







5

f) Main indicators

Breakdown Banco Patagonia - Consolidated

6/30/2016 6/30/2015 6/30/2014 6/30/2013 6/30/2012

Profitability Ratios Return on average assets (1) 5.1% 4.7% 7.1% 3.8% 4.1% Return on average shareholders’ equity (2) 37.3% 31.9% 47.9% 28.4% 31.5% Service and Financial Margin Ratios Total financial margin (net financial income / Average Assets) 11.9% 10.9% 14.2% 8.3% 9.5% Margin on net services (net service-charge income / Average Assets)

3.6% 3.9% 4.0% 4.6% 4.5%

Total margin (total revenues / average assets) (3) 15.6% 14.8% 18.2% 12.8% 14.0% Net service-charge income on net total income (3) 23.4% 26.2% 22.1% 35.5% 32.0%

Shareholders ’ Equity Rations Shareholders' equity on total assets 14.9% 12.4% 14.8% 14.2% 14.1% Financial standing (shareholders' equity on total liabilities) 17.5% 14.2% 17.4% 16.6% 16.4% Total liabilities as a multiple of shareholders' equity 5.7 7.0 5.8 6.0 6.1 RPC on risk-weighted assets (4) 15.1% 15.1% 15.9% 19.3% 20.9% Portfolio Quality Ratio Non-performing portfolio on financing (before allowances) (5) 1.1% 1.6% 1.9% 1.3% 1.0% Allowances on non-performing financing portfolio (5) 269.9% 236.7% 223.0% 226.4% 197.3% Efficiency Ratio Administrative expenses on total net income (3) 47.9% 47.5% 35.4% 51.1% 49.8% Revenues from services on administrative expenses 48.9% 55.1% 62.4% 69.5% 64.2% Liquidity Ratios Liquid Assets on deposits (6) 42.9% 57.0% 43.7% 31.6% 33.6% Loans (net of allowances) on assets 60.8% 49.3% 59.4% 66.7% 65.8% Deposits on liabilities 80.6% 77.4% 79.9% 84.4% 83.4% Loans on deposits 88.6% 72.7% 87.3% 92.1% 91.9% Fixed assets to equity (7) 7.7% 7.0% 6.2% 8.5% 9.9%

(1) Defined as the quotient between income for the year / annualized period and average assets calculated according to

monthly balances. (2) Defined as the quotient between income for the year / annualized period and average shareholders' equity calculated

according to monthly balances.

(3) Total net income defined as the addition of financial income and revenues from services, net.

(4) RPC means computable equity.

(5) Non-performing portfolio is defined as loans classified as 3 – 4 – 5 and 6 condition.

(6) Defined as the quotient between the addition of cash and cash equivalents and government and corporate securities and total deposits.

(7) Defined as the quotient between the addition of fixed, sundry and intangible assets and shareholders' equity.



ENDED JUNE 30, 2016







6

g) Outlook Banco Patagonia goes on developing its strategy for 2016, promoting business growth in all clients’ segments. The progress of significant strategic projects in the technology area, process and management improvement will provide the capabilities required for business development, service level and customer loyalty of Banco Patagonia's target segments, making it one of the main private banks in Argentina. The permanent growth of the network of branches and customer service channels enable the Bank to provide assistance to clients all around the country. The balance between the business growth and risk management, as well as the adequate funding structure, minimization of the nonperforming portfolio and efficient resource management will go on working as the baselines of the comprehensive management of Banco Patagonia. In the local context, attention is fouced on the evolution of two key indicators: the inflation rate and the economic activity index, on the understanding that Argentina has been able to make structural improvements in the foreign exchange market, opening up its market. .



ENDED JUNE 30, 2016







7

Additional information required by section 12 of ch apter III, title IV of CNV regulations (General Resolution No. 622/13)

1. General background on the Company's business

a) Specific and significant legal regimes that entail the contingent loss or acquisition of legal benefits.

None.

b) Significant amendments to the company's business or other similar circumstances occurring during the periods included in the financial statements that affect their comparability to prior-year financial statements, or that might affect their comparability to financial statements to be published in the future.

None.

2. Classification of loan (financing) and debt (deposits and liabilities) balances as per their

maturities.

See Exhibit D – “Financing facilities broken down by term” and Exhibit I – “Breakdown by term of deposits and other liabilities from financial intermediation” to Banco Patagonia S.A.’s stand-alone financial statements.

3. Classification of loans (financing) and debts (deposits and liabilities) to disclose their financial

effects

Item In thousands of pesos

Local currency Foreign currency

Kind

With interest clause

CER Adjustment Clause

With no interest clause



Financing

Loans 33,765,008 17,436 - 5,111,773 - -

Other Receivables from Financial Intermediation

1,223,643 - 824,202 237,973 7,609 861,330

Receivables from Finance Leases 1,350,055 - - 290 - -

Miscellaneous Receivables 198,945 - 629,699 - 8,187 -

TOTAL 36,537,651 17,436 1,453,901 5,350,036 15,796 861,330



ENDED JUNE 30, 2016







8

Item In thousands of pesos

Local currency Foreign currency

Kind


CER Adjustment Clause




Deposits and Liabilities

Deposits 28,521,147 - 8,514,506 5,354,937 59,887 -

Other Liabilities from Financial Intermediation

2,507,445 - 2,378,185 1,767,042 640,419 1,052,834

Miscellaneous Liabilities - - 1,711,318 - 4,327 -

TOTAL 31,028,592 - 12,604,009 7,121,979 704,633 1,052,834

4. Breakdown of ownership interest and votes in companies under section 33 of Law No. 19550 and

debit and/or credit balances per company.

See Exhibit E – “Breakdown of investments in other companies”, and Note 7 - Transactions with Companies included in section 33, Law No. 19550 to Banco Patagonia S.A.’s stand-alone financial statements.

5. Trade receivables or loans with directors, supervisory auditors, members of the supervisory audit

committee, and relatives up to and including the second degree

In thousands of pesos Financing 6/30/2016

Maximum Financing

Directors and relatives 1,992 2,176 Supervisory auditors and relatives 130 136

TOTAL 2,122 2,312

Such financial aid is represented by loans in pesos, granted under similar terms and conditions as those applied to the other clients of the Bank, with no monetary adjustment clause.

6. Physical count of inventories Frequency and scope of physical counts of inventories.

Not applicable.

7. Investments in other companies exceeding the limits established in section 31, Law No. 19550,

and plans to regularize the situation.

None.



ENDED JUNE 30, 2016







9

8. Recoverable value Criteria followed to assess the significant "recoverable value" of inventories,

fixed assets, and other assets, used as a limit to their valuation for accounting reporting purposes.

To assess the "recoverable value", the Bank considers the net realizable value based on the condition of assets.

9. Insurance taken in relation to tangible assets.

Property insured In thousands of pesos Risk Amount

insured Book value

Cash, checks, and securities Fraud, theft, security deposit boxes, and transportation 208,880 -

Buildings, machines, equipment, furniture, fixtures, and works of art Fire, vandalism, and earthquake 2,678,193 488,196

Cars All risk and third-party insurance 16,750 9,646

Aircraft Liability, medical, and bodily injury insurance 775,840 -

Furniture, computers, signs, and telephony Transportation of goods 61,172 -

10. Negative and positive contingencies

a) Items considered to calculate the allowances, the balances of which considered either individually or as a whole, exceed two percent (2%) of the shareholders' equity

See Note 1.6.g) “Allowance for loan losses, contingent commitments and other contingencies” to Banco Patagonia S.A.’s stand-alone financial statements.

b) Contingencies as of the date of the financial statements the likelihood of occurrence of which

is not remote, and the financial effects of which have not been recorded, stating whether lack of accounting is based on the likelihood of occurrence or on any difficulties in quantifying its effects.

None.

11. Irrevocable contributions for future subscriptions Status of procedures aimed at capitalization.

None.



ENDED JUNE 30, 2016







10

12. Unpaid cumulative dividends on preferred shares.

None.

13. Conditions, circumstances, or terms for the removal of restrictions on the distribution of

unappropriated retained earnings.

See Note 17 – “Distribution of earnings” to Banco Patagonia S.A.’s stand-alone financial statements.


SUPERVISORY AUDIT COMMITTEE’S REPORT ON INTERIM FINANCIAL STATEMENTS

To the Shareholders and Directors of


Legal address: Av. de Mayo 701, Floor 24

Taxpayer Identification No. [C.U.I.T.] No. 30-50000661-3 City of Buenos Aires

Report on the financial statements

We have examined the accompanying interim financial statements of Banco Patagonia S.A. (“ the Bank” ), which include the statement of financial position as of June 30, 2016, the statements of income, changes in shareholders’ equity and cash flows for the six-month period then ended, Notes 1 to 26, and Exhibits A to L, N and O. We have also examined the accompanying consolidated financial statements of Banco Patagonia S.A. and its subsidiaries, which include the consolidated statement of financial position as of June 30, 2016, and the consolidated statements of income and cash flows for the six-month period then ended, Notes 1 to 8, and Exhibit 1, which are presented as supplementary information.

The figures and other information as of December 31, 2015 and for the six-month period ended June 30, 2015 are an integral part of the financial statements mentioned above, and are presented for the purpose of being construed solely in relation to the figures and other information for the interim period.

Board of Directors’ and Management responsibility for the financial statements

The Board of Directors and Management are responsible for the preparation and fair presentation of the accompanying interim financial statements in accordance with the accounting standards established by the Argentine Central Bank (“BCRA” ), and for such internal control as the Board of Directors and Management determine is necessary to enable the preparation of financial statements that are free from material misstatement.

Supervisory Audit Committee’s responsibility

Our responsibility is to express a conclusion on the accompanying interim financial statements based on our review. We performed this examination in accordance with supervisory audit rules in force. These rules require that the abovementioned documents be examined according to effective auditing standards. We have not performed any management control operations, and thus we have not reviewed the management, financing and marketing criteria and resolutions, which are the exclusive responsibility of the Board of Directors. To perform our professional task on the documents mentioned in paragraph 1, we have reviewed the audit conducted by the firm KPMG, in their capacity as external auditors, who issued their report on August 8, 2016, in accordance with the standards set forth by Technical Resolution No. 37 of the Argentine Federation of Professional Councils of Economic Sciences (“FACPCE” ) and the “Minimum Standards applicable to External Audits” set forth by the BCRA for the review of interim financial statements. In accordance with such standards, a review is limited primarily to the performance of analytical and other review procedures applied to financial data included in the interim financial statements and inquiries of personnel responsible for the preparation thereof. A review is substantially less in scope than an audit conducted in accordance with auditing standards in force, and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the interim financial statements.


Conclusion

Based on our review, and on the report dated August 8, 2016, issued by Marcelo A. Castillo (Partner of KPMG, member firm of KPMG International), nothing has come to our attention that causes us to believe that the accompanying interim financial statements are not presented fairly, in all material respects, in accordance with accounting standards set forth by the BCRA.

Other accounting matters

Without modifying our conclusion, we draw users’ attention to the information presented in Note 3 to the accompanying stand-alone financial statements, where it is stated that such financial statements have been prepared by the Bank’s Board of Directors and Management in compliance with the accounting standards set forth by the BCRA, which differ in terms of certain valuation and presentation criteria from the professional accounting standards in force in the City of Buenos Aires, Argentina, described in Note 3.

Report on other legal and regulatory requirements

In compliance with legal provisions in force, we report that:

1. The accompanying interim financial statements have been transcribed into the Inventory Book, and arise from the Bank’s accounting records, which, in their formal aspects, are kept pursuant to the legal provisions in force;

2. In exercise of our legal supervision duties, during the six-month period ended June 30, 2016, we have performed the remaining procedures set forth in section 294 of Law 19550 that we considered necessary in accordance with the circumstances and, in this respect, we have no observations to make.

3. As of June 30, 2016, the Bank records the minimum shareholders’ equity and counterparty required by the Argentine Securities Commission (CNV), as mentioned in Note 15 to the stand-alone accompanying financial statements;

City of Buenos Aires, August 8, 2016.

By Supervisory Committee Mónica M. Cukar Regular Supervisory Auditor Public Accountant (UBA) C.P.C.E.C.A.B.A. T° 147 F° 66

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