Economic Environment

Economic activity continued its downward trend in the second quarter of 2012, as the Monthly Estimator of Economic Activity (EMAE) fell for the first time since July 2009, decreasing 0.5% compared to May 2011 and accumulating a contraction of 0.8% in 2012.

Deceleration of economic activity was also evident in the Industrial Production Index (EMI) which decreased 2.7% in annual terms during the second quarter of 2012 from a 2.3% increase in the first quarter of the year and in the Construction Activity Index (ISAC) which fell 8.8% in May and accumulated a 4.6% drop in 2012.

Inflation, as measured by the official Consumer Price Index for Greater Buenos Aires (which is used to calculate the CER index, to which some sovereign bonds are linked) increased by 2.4% in the second quarter of 2012, slightly below the 2.6% registered in the previous quarter and totaling an annual rate of growth of 9.9%

The primary fiscal surplus of the national public sector was AR $ 2,725 million in the second quarter of the year, a 55.0% reduction with respect to the same quarter of 2011. As a result, the total fiscal deficit in the first half of 2012 reached AR $ 10,634 million. This deterioration of the fiscal balance was mainly due to the 32.4% increase of total public sector spending over the 27.2% rise of total public sector revenues. Social Security benefits contributes most to the increase in fiscal expending, growing 41.7% in the first six months of 2012, while transfers to private sector showed the lowest growth rate increasing only 17.8% during the same period.

Social Security contributions was the only item on the revenues side to show an above-average increase of 31%, while tax collections increased by 25.7% in the same period.

In the external sector, the accumulated trade surplus in the second quarter of 2012 reached USD 4,368 million, 3.1% higher than that recorded in the second quarter of 2011. The performance of the trade balance is the result of total exports of USD 21.364 million (-7.8%) and total imports of USD 16.997 million (-10.2%).

In the foreign exchange market, the exchange rate (BCRA reference rate) closed at AR$ 4.5253 per U.S. dollar on June 30, 2012, increasing 3.35% compared to the previous quarter.

In the second quarter of 2012, the BCRA stock of international reserves decreased by USD 943 million to USD 46,348 million as of June 30, 2012. During the second

quarter, the BCRA purchased USD 3,785 million, slightly above the purchases during the first quarter of the year.

The Badlar interest rate for private banks decreased 234 basis points in the second quarter of 2012, averaging 12.02% for the period.

Private sector loans in pesos rose 6.2% in the second quarter of 2012, while private sector deposits in pesos grew 9.9%. In contrast, private sector deposits in USD decreased by 24.2%.

The Bank

BBVA Francés maintained its solid balance structure, the best ratios in terms of asset quality and significant results in the private sector intermediation business, confirming once again the effectiveness of its implemented strategy.

Such strategy consists mainly of the continued development of the products and services the Bank’s offers designed to meet clients’ needs, focusing on the small-and medium-sized companies and retail segments, with the goal of improving its customers’ experience in every contact with the Bank.

To this end, and acknowledging the importance of the growth of small-and medium-sized companies to the development of Argentine economy, the Bank together with the “Agencia Nacional de Promoción Científica y Tecnólogica” (the Argentine National Agency for Science and Technology Development), offers financing for projects with the objective of improving the competitiveness of companies, producing goods and services through technological modernization. As a result, during the second quarter, the Bank had the highest participation in such lines of credit with terms between 3 and 5 years and with fixed interest rates between 10% and 12%.

The Bank’s specialized agribusiness segment participated in 11 national events, including Agroactiva, where it promoted the main short-and medium-term loan products available for the sector, as well as a wide range of agro-insurance services. Furthermore it announced the new benefits of the Agro BBVA Francés Lanpass credit card, including the various commercial agreements at 0% rate for the 2012-2013 campaign. In addition, the Bank also showed a wide range of special agreements to buy machinery, a special leasing Amarok line with a preferential interest rate, and invitations to participate in the Agro Entrepreneur Award prize. Registration is currently open for entrepreneurs all around the country to participate in the 23rd edition of the 2012 award; and will be open until August 10, 2012.

In foreign trade, with the aim of continuing to offer the best advisory services, and given the recent regulatory changes on imports and exports, the Bank held free, training seminars and workshops for clients, and non- clients, allowing it to strengthen relationships with them.

In the retail segment, BBVA Francés gave new impetus to its loyalty plan in the high income segment, by organizing sports, cultural and entertainment VIP events. In addition, it continues to add important benefits to its established promotions and discounts through strategic alliances: with Lan, T4F and Frávega, focusing on clients’ new needs and offering quick and easy solutions. During the quarter, the Bank’s clients had access to exclusive pre-sell and discounts for international shows, such as the upcoming presentations of Cirque du Soleil and Madonna.

BBVA Francés launched the new digital platform in order to provide easier, faster and more secure services to its clients. The new service allows customers all-time on line access to their accounts, including statements and credit card information through the Francés net.

During the second quarter of 2012, at the “1° Sesión de la Cátedra Abierta de Responsabilidad Social y Ciudadana” (1^st Session of the Social Responsibility and Citizen Master Class), held by “El Foro Ecuménico Social, the Bank presented the BBVA Francés Social Commitment, with consists of an important investment focused on environmental programs, economic stimulus for agribusiness entrepreneurs and the BBVA Francés scholarship program.

BBVA Francés also continuous it efforts to reduce school absenteeism and dropout rates, encourage integral formation of young people, improve academic achievement, support families in the education process and promote the fundamental education and personal responsibility values. To this end, the BBVA Francés Scholarships Program entered into a strategic commitment with Boca Social to grant 25 scholarships in the La Boca neighborhood; Boca Social will solicit other potential benefactors to add more scholarships and advertise the initiative in Argentina and outside the country. This initiative is added to the overall BBVA Francés Scholarships Program, which offers 1,200 scholarships across the country.

Through those actions, BBVA Francés, not only aspires to be a leader in business growth, but to fulfill its goal of being a Bank of people for people, bringing it closer to the customers, shareholders and society through its principal asset: its employees.

Presentation of Financial Information

BBVA Francés total net income as of June 30, 2012 totaled AR$ 330.9 million. Such result includes non-recurring effects originated mainly by the variations in public bond valuations.

In order to standardize the comparison with previous quarters, the analysis of the variations is made in terms of recurring results.

As of June 30, 2012, BBVA Francés had recurring net income of AR$ 320.7 million, an increase of 34.8% compared to June 30, 2011 and 8.7% compared to the first quarter of 2012.

The increase in net financial income, 54.1% and 13.8% compared to the same quarter of 2011 and to the previous quarter, respectively, was due to significant growth in the volume of intermediation with the private business sector and in the private spread.

In accordance with the Bank’s internal provisioning policy and the results of the analysis of the variables of such policy, the Bank made an adjustment to cyclical provisions in April 2012, which resulted in a 68.7%

decrease in the line item provisions for loan losses during the second quarter.

Net income from services grew 27.6% in the last twelve months and 5% compared to the previous quarter.

Administrative expenses also increased 34.5% compared to the same quarter of 2011 and 4.8% compared to the first quarter of 2012.

It is important to emphasize that, as of June 30, 2011, the line item Income/Loss from Equity Investments included the gains generated by the sale of Consolidar Seguros de Retiro S.A.

Other/income expenses registered a loss during the quarter, mainly due to higher charges on provisions for other contingencies and by the impact of the new salary

agreement signed with the labor union over unused vacation days and the adjustment of seniority bonus awards.

Net Financial Income

Net financial income showed significant increases of 75.2% and 17.8% compared to the same quarter of 2011 and to the previous quarter, respectively.

Net income from intermediation with the private sector increased 81.9% compared to the same quarter of 2011 and 19.7% compared to the first quarter of 2012, mainly

due to an increase in business volume of 20.5% in annual terms, together with improvement in the spreads. Such items were the main pillars of the steady growth in net income

Net financial income includes the non-recurring income originated by variations of public securities.

Income from Public and Private Securities

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

The price variation of such portfolio totaled a gain of AR$ 7.6 million during the quarter, whereas in the previous quarter and in the second quarter of 2011, it registered losses of AR$ 20.9 million and AR$ 66.7 million, respectively.

Net Income from Services

Net Income from services grew 27.6% and 5.0% compared to the same quarter of the previous year and to the first quarter of 2012, respectively.

Service charge income grew in both annual and quarterly terms by 28.4% and 8.6%, respectively. Such increase was driven mainly by: higher consumption in credit cards,

higher level of activity in deposits accounts and higher insurance sales.

Service charge expenses grew mainly due to the increase in promotions related to the LANPASS kilometers program and other promotions.

Administrative Expenses

Administrative expenses increased 34.5% during the last twelve months and 4.8% in the second quarter of 2012.

Personnel expenses increased 43.1% in annual terms. It is important to mention that the merger with Consolidar Comercializadors closed on July 2011; as a result there is a change in the basis of comparison. Such increase also reflects the salary increases agreed with the labor union.

General expenses increased 23.8% in the last twelve months, mainly due to higher tax charges and higher service tariffs (removal of subsidies), together with charges directly related to the higher activity level.

During the second quarter of 2012, personnel expenses remained at a similar level to that of the previous quarter; however general expenses increased. The principal variations are on electricity, communications and transportation via armored money carriers, as consequence of increased consumption. Advertisement expenses and taxes, also increased for seasonal reasons.

As of June 30, 2012, the Bank and its subsidiaries had 5,109 –employees. The branch office network totaled 270 offices, including 243 consumer branch offices and 27 branch offices specializing in the middle-market segment. Corporate banking included 7 business units grouped by industry. Complementing its distribution network, the Bank has 10 in-company branches and 2 point of sale outlets, 656 ATMs and 697 quick deposit boxes (“QDBs”).

Other Income / Expenses

Other income/expenses totaled a loss of AR$ 82.9 million during the second quarter of 2012.

Such loss was mainly due to higher charges in provisions for other contingencies, in addition to the impact of the new salary increase on the stock of unused vacations days, the adjustment of benefits due to employees for years of service and pre-paid healthcare expenses.

It is important to mention that the previous quarter included a gain corresponding to the sale of the building located at 169 Independencia Street, Ciudad Autónoma de Buenos Aires.

Income from Equity Investments

Income from equity investments sets forth net income from related companies that are not consolidated.

During the second quarter 2012, a gain of 17.5 million was recorded, mainly due to the Bank’s stake in Rombo Compañia Financiera and in Interbanking.

Total Public Sector Exposure

Exposure to the public sector’s national treasury maintained a similar level than the previous quarter. However compared to the same quarter of 2011; it decreased 27.7%, mainly due to the sale of part of the portfolio and lower valuations.

The Bank’s portfolio of BCRA bills and notes increased 13.7% during the second quarter of 2012 and 79.3% in the last twelve months.

As of June 30, 2012, public sector national treasury assets represented 5.0% of the Bank’s total assets. Total exposure to BCRA’s bills and notes net of holdings linked to reverse repo transactions, represented 9.1% 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 trusts, as well as, BCRA’s bills and notes.

Loan Portfolio

The private sector loan portfolio totaled AR$ 23.8 billion, as of June 30, 2012, increasing 29.1% in the last twelve months and 2.5% in the last quarter.

Consumer financing as well as for small-and medium size- companies led such expansion, growing in annual terms AR$ 2.8 million (35%) and AR$ 1.1 million (25%), respectively. In addition, the corporate portfolio registered an outstanding performance in the same period, increasing AR$ 1.5 million (24%).

Growth in the small-and medium-size companies segment was based on the increase in the financial loans, leasing and discounted notes, which offset the decrease in loans to finance foreign trade operations.

Growth in the retail segment was due to personal loans, credit cards and car loans. Finally, the increase in the corporate portfolio reflected higher advances and other loans.

Compared to the previous quarter, consumer financing through growth in credit cards, personal loans, and card loans showed a significant increase.

The commercial portfolio, for both small-and medium-size companies, as well as the corporate segment, maintained similar levels, with increased advances, and discounted notes, partially offsetting a decrease in loans to finance foreign trade operations.

Asset Quality

As of June 30, 2012, the asset quality ratio (non-performing loans/total loans) was 0.71%, while the coverage ratio (provisions/non-performing loans) reached 268.8%.

The loan portfolio showed signs of deterioration compared to the second quarter of 2011 and to the first quarter of 2012. However, BBVA Francés continuous to be a leader in the sector in terms of asset quality.

The following table shows the evolution of provisions for loan losses, including charges relating to transactions recorded under “Other receivables” from financial intermediation.

As previously mentioned, an adjustment resulting in a decrease was made to cyclical provisions during the quarter.

Deposits

Total deposits reached AR$ 30.0 billion as of June 30, 2012, an increase of 15% in annual terms, and maintained a similar level compared to the first quarter of 2012.

In the last twelve months, both sight accounts as well as time deposits registered growth, increasing 28.5% and 12.3%, respectively.

Sight accounts grew 7.9% compared to the previous quarter, whereas time deposits fell by 4.2% mainly due to a decline in foreign currency deposits.

Currency deposits denominated in pesos increased 28.3% in the last twelve months and 7.8% in the last quarter.

Deposits denominated in foreign currency fell 34.6% and 30.4% compared to the same quarter of 2011 and to the previous quarter, respectively.

At June 30, 2012 deposits denominated in foreign currency reached AR$ 3.7 billion (equivalent to US$ 0.8 billion), representing only 12.2% of the Bank’s total deposits.

Other Funding Sources

Other funding sources totaled AR$ 1.5 billion as of June 30, 2012, an increased compared to the same quarter of 2011 and to the previous quarter. Such growth was due to the issuances of negotiable obligations by both the Bank and PSA Finance together with higher financing lines from other banks.

In August 2011, PSA Finance issued its Series 3 Notes for AR$ 70 million, maturing on August 2013. Then, it issued its Series 5 Notes for AR$70 million, maturing in 18

months and its Series 6 Notes for AR$ 30 million, maturing in 9 months.

In addition, in January 2012, BBVA Francés issued its second series of negotiable obligations, which achieved a high level of demand and allowed the expansion of the original amount, to AR$ 148.9 million.

45.3% of the balances shown in the table below were denominated in foreign-currency at the end of the second quarter of 2012.

Capitalization

As of June 30, 2012, the Bank’s total shareholders’ equity totaled AR$ 4.4 billion, while the excess over BCRA Minimum Capital Requirements was AR$ 1.6 billon. On

the same date, the capital ratio reached 17.7% of assets adjusted to risk.

It should be noted that 516,544 ordinary shares were issued as part of the Consolidar Comercializadora merger in September 2011.