Economic Environment

The high level of consumption and an increase in investment continue to boost the economic activity. The EMAE indicator (The Monthly Estimator of Economic Activity) grew 8.3% compared to the same quarter of the previous year.

During the third quarter of 2010, fiscal revenues increased 37% compared to the same quarter of the previous year. The recovery was aided by the improvement in economic activity and the contribution of the export tax, following the record harvest recorded, while VAT and Income Tax grew below average in the same period.

The primary fiscal surplus of the national public sector was AR$ 9,865 million; an increase of 544% compared to the third quarter of 2009. The improvement was due to the positive performance of tax collection and other fiscal resources such as transfers received from Central Bank, while primary spending grew 34.5% in annual terms during the third quarter of 2010.

Inflation, as measured by the Consumer Price Index (which is used to calculate the CER adjustment for some sovereign assets) accumulated 2.3% during the third quarter of 2010.

The BCRA intervention in the FX market was a net purchase of US$3,578 million during the quarter. The exchange rate (according to the BCRA) closed at AR$3.96 per U.S. dollar, an increase of 0.7 % compared to June 30, 2010.

The international reserve stock reached US$51,125 million, increasing US$1,885 million during the third quarter.

The Badlar rate at private banks was 10.4% at the end of the quarter and remained stable during the period.

Total deposits in the financial system increased 6.7 % on average in the third quarter of 2010, while private sector deposits grew by 8.4%.

Private sector loans showed an increase of 8.1% during the third quarter, in BBVA Banco Frances the increase was 12.7%, growing its market share in such period.

The Bank

The Bank continues to develop, in accordance with its strategic plan, a range of products and services tailored to the needs of each client, with special emphasis on the retail segment and on the small and medium-sized companies segment.

During this quarter, BBVA Banco Frances launched the first leasing of the market aimed to individuals, in order to finance the acquisition of 0 km automobiles. The new line offers significant discounts in the price and options of different terms (36, 48 or 60 months).

These range of products, is added to an important number of actions that the Bank has been carrying out during the year, mainly in credit cards. Among the most relevant, the agreements with LAN for its frequent flyer program and the alliance formed with Time for Fun, which allows all BBVA Banco Frances clients to gain access to the best shows with exclusive advantages. These added values to methods of payment product are generating a significant increase in the clients’ portfolio.

The Bank also reached a strategic agreement with BMW Group Argentina to offer car loans and leasing, for the acquisition of automobiles and new and second-hand Mini brand automobiles to companies and individuals. These lines are offered at competitive rates and with terms until 60 months.

Moreover, in the middle market segment, continuing its support to the agricultural segment, the Bank relaunched the credit card product, benefiting clients with 0 percent financing with an important number of suppliers.

In terms of liabilities, the Bank continued to expand the new investment vehicle, DIVa (variable rate deposits), adding new adjusted variables such as commodities, stock market index and currencies.

Presentation of Financial Information

At the end of the third quarter of 2010, net income totaled AR$ 437.3 million, this result includes non-recurring effects originated by the improvement in the valuation of public bonds.

The following “pro forma” table presents the non-recurring earnings.

Net financial income, without taking into account the extraordinary impact originated by the increase in public bonds valuations totaled AR$ 487.4 million, a 12.5% increase compared to the previous quarter. The increase reached 14.4% compared to recurring financial income of the third quarter of 2009.

Is important to highlight that during the third quarter of 2009, non-recurring income generated by the public bonds portfolio had also been registered.

The increase in the net interest margin is mainly due to the sustained growth of net income from the private sector loan portfolio.

At September 30, 2010, provisions for loan losses recorded an increase of 16.2% and 10.3% compared to the previous quarter and to the same quarter of 2009 (considering the recurring charge only), respectively, as a consequence of the application of generic provisions, because of the increase in the loan portfolio. Meanwhile the specific provisions continued the decreasing trend.

Net income from services grew 10.7% during the quarter and 12.4% during the last twelve months, showing a large volume of activity.

At the end of September 30, 2010, administrative expenses grew 25.8% as compared with the previous quarter and 43.1% during the last twelve months.

The important growth on the fiscal cost is a logic consequence of the strong increase on the public bonds valuation.

Net Financial Income

As previously mentioned, net financial income included non-recurring income originated by the increase in the public bonds valuation.

The significant development of the private financial margin, consequence of the further intermediation volume, mainly

reflected in the retail and middle-market segments, together with a low cost of funds, resulted in an increase of the private net financial income of 13.5% during the quarter, and 32.9% in comparison with the same quarter of 2009.

Such earnings added to the income, generated by the public bond portfolio, producing significant growth of the financial margin.

Income from Public and Private Securities

During the third quarter of 2010, income from public and private securities showed strong growth due to the extraordinary increase in their valuation.

As previously mentioned, both, trading account and fixed income portfolio made a significant contribution to this result.

The results from Central Bank bills and notes showed a reduction of 19.4% with respect to the previous quarter, while

reflecting an increase of 20.4% in comparison with the income generated through the third quarter of 2009.

A similar result was evidenced in the earnings from the portfolio available for sale, reflecting not only the improvement on the valuation but also an increase on the volume in relation with the same quarter of the previous year.

Finally, the CER adjustment decreased 22.2% compared to the previous quarter, mainly due to a reduction of the index.

Net Income from Services

At September 30, 2010, net income from services totaled AR$ 275.9 million, an increase of 10.7% compared to the prior quarter and of 12.4% during last twelve months.

A higher volume of activity generated higher fees in the quarter especially for deposit services, credit card and insurance.

Furthermore, services charge expenses from promotions associated with cards decreased.

Meanwhile, the increase compared with the third quarter of 2009, is explained by higher income related to credit cards and from deposits services. Offset by higher services charge expenses from promotions associated with credit and debit cards consumption.

Administrative expenses grew 43.1% during the last twelve months; meanwhile the variation compared with the previous quarter reached 25.8%.

This variation occurred mainly in personnel expenses; charges derived from the voluntary retirement plan were accounted for during the quarter.

The increase in general expenses during the quarter was caused by higher advertising and promotions expenses, partially offset by fewer taxes, as a

consequence of the payment of cash dividends -for fiscal year 2009- made the previous quarter, which represented higher bank transactions tax.

Compared to the same quarter of 2009, personnel expenses increased due to the labor agreement signed in 2010, and due to the previously mentioned voluntary retirements plan.

In addition, general expenses also grew as a result of the increase in commercial activity, higher level of investment related to changing branch offices image and to the effect of inflation.

As of September 30, 2010, the Bank and its subsidiaries (except the Consolidar Group) had 4,321 employees. The branch office network totaled 271 offices, including 240 consumer branch

offices, 27 branch offices specialized in the middle-market segment, 14 in-company branches, 4 branch offices for large corporate and institutional clients and 2 points of sale.

Other Income / Expenses

Other income/expenses totaled a gain of AR$31.7 million during the third quarter of 2010, mainly due to the recovered of provisions for other fiscal contingencies.

Income from Equity Investments

Income from equity investments sets forth net income from related companies that are not consolidated. During the third quarter of 2010, a gain of AR$18.5 million was recorded, mainly due to BBVA Banco Frances’ stake in the Consolidar Group.

Total Public Sector Exposure

As of September 30, 2010, total exposure to public sector national treasury debt maintained similar level than in recent periods, however the effect of the increase in its valuations resulted in an increase of 20.4% during this quarter. It is relevant to note that the relative weight of public assets is diminishing as a consequence of the increase in other assets, mainly the growth of loans to the private sector.

The Bank’s portfolio of Central Bank bills and notes grew up to 12.8% during the third quarter of the year.

As of September 30, 2010 public sector national treasury assets represented 9.7% of total assets. Whereas, the exposure of the portfolio of BCRA bills and notes reached 7.6% of the Bank’s total assets.

Total exposure to the public sector includes public debt of the national treasury through public securities, guaranteed loans and trustees, and also, the BCRA bills and notes.

Loan Portfolio

The private sector loan portfolio totaled AR$ 13,138 million at September 30, 2010, increasing 12.7%, compared with the previous quarter, and 31.0% compared to the same quarter in 2009.

During the third quarter, all segments of the market recorded a large expansion on their loan portfolio.

Compared with the quarter ended September 30, 2009, the performance of the private sector loan portfolio showed an increase of 31.0%, mainly as a consequence of the high growth in the consumption segment, where, once more, credit card, personal loans and car loans led this expansion. Discounted notes and financial loans showed the same behavior for the middle market and corporate segments.

Asset Quality

BBVA Banco Frances’ risk policy allows it to continue to exhibit solid asset quality and coverage ratios, while maintaining its leading position in the Argentine Financial System.

As of September 30, 2010, the Bank’s asset quality ratio (nonperforming loans over total loans) was 0.6%, and its coverage ratio (provisions over of non-performing loans) reached 432.5%.

Asset quality continued to improve compared to the previous quarter as well as to the same quarter of 2009.

The following table shows the performance of provisions for loan losses, including charges relating to transactions recorded under Other Receivables from financial intermediation.

Deposits

As of September 30, 2010, total deposits amounted to AR$ 21,651 million, increasing 7.9% compared to the end of the previous quarter and increasing 20.5% in the last twelve months.

It is important to highlight that current account balances include transitory deposits.

Consequently, excluding such transitory deposits, current and saving accounts grew 28.1% in the last twelve months, representing 56.4% of the total recurrent deposits at the end of September 30, 2010.

Time deposits increased 6.9% and 9.6% compared with the previous quarter and with the third quarter of 2009, respectively.

In terms of currency, deposits denominated in pesos, grew 10.7% in the third quarter of 2010 and 25.6% in the last twelve months.

Whereas, recurrent deposits denominated in foreign currency increased 8.3% during the quarter ended September 30, 2010, and 13.0% compared with the same quarter of 2009.

Moreover, recurrent deposits in foreign currency, excluding the effect of the Argentine Peso devaluation, increased 7.5% in the quarter and 9.7% in the last twelve months.

As of September 30, 2010, recurrent deposits in foreign currency reached AR$ 4,753 million (equivalent to US$ 1,200 million), representing 21.9% of total recurrent deposits of the Bank.

Other Funding Sources

Other funding sources increased their balances by 151.9% during the quarter and 218.4% in the last twelve months.

The increase, both, in comparison with the previous quarter and with the same quarter of 2009 is due to an increase in dollar funding lines, intended mainly to finance imports.

However, 39.0% of the balances shown in the table below were foreign currency denominated at the end of the third quarter of 2010.

Capitalization

Total shareholder’s equity of the Bank reached AR$3,295 million as of September 30, 2010; whereas the excess of capital over the BCRA requirements was AR$ 1,425 million.

By that time, capital ratio reached 19.3% of risk-weighted assets.

Unrealized valuation difference by the third quarter of 2010 achieved AR$ 34.2 million, as a result of the improvement in the valuation of public bonds labeled as “available for sale”.