•

Level 1: quoted prices (unadjusted) observable in active markets that the Bank accesses to at the measurement day for identical assets or liabilities. The Bank considers markets as active only if there are sufficient trading activities with respect to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available at each reporting period.

•

Level 2: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are observable for the asset or liability, either directly or indirectly. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments to level 2 inputs may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs, which are significant to the entire measurement, the Bank will classify the instruments as Level 3.

•

Level 3: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are not based on observable market information.

The following tables show the hierarchy in the Bank’s financial asset and liability at fair value measurement, as of December 31, 2022 and 2021:

Categories of financial assets and liabilities as of December 31, 2022


Item	Amortized cost		Fair value through OCI		Fair value through P/L		Fair value hierarchy
Item	Amortized cost		Fair value through OCI		Fair value through P/L		Level 1		Level 2		Level 3
Financial assets
Cash and deposits in Banks
Cash		27,612,616
Financial institutions		222,464,359
Other		12,118
Debt Securities at fair value through profit or loss						211,054,112		206,559,906		3,462,342		1,031,864
Derivative financial instruments						42,899		19,193		23,706
Repo transactions
BCRA		61,929,317
Other financial assets		53,436,257				4,508,266		4,458,851				49,415
Loans and other financing
To the non-financial government sector		2,206,770
Other financial institutions		927,272
To the non-financial private sector and foreign residents
Overdraft		49,250,055
Documents		81,773,760
Mortgage loans		61,905,907
Pledge loans		9,581,277
Personal loans		142,529,651
Credit cards		190,779,144
Leases		1,386,801
Other (1)		58,260,228
Other debt securities		599,259,838		137,911,993				137,911,993
Financial assets delivered as guarantee		30,620,278
Equity instruments at fair value through profit or loss						839,458		154,475				684,983

Total financial assets		1,593,935,648		137,911,993		216,444,735		349,104,418		3,486,048		1,766,262

(1)	Includes the total allowances to the non-financial private sector and foreign residents.

Item

Amortized cost

Fair value
through OCI

Fair value
through P/L

Fair value hierarchy

Level 1

Level 2

Level 3

Financial liabilities

Deposits

From the non-financial government sector

109,952,253

From the financial sector

1,653,447

From the non-financial private sector and foreign residents

Checking accounts

159,123,762

Savings accounts

419,740,050

Time deposits and investment accounts

569,021,981

Other

35,903,576

Liabilities at fair value through profit or loss

526,027

Derivative financial instruments

2,371

Other financial liabilities

135,091,316

Financing received from BCRA and other financial entities

2,449,342

Issued corporate bonds

2,715,556

Subordinated corporate bonds

72,129,837

Total financial liabilities

1,507,781,120

528,398

Categories of financial assets and liabilities as of December 31, 2021


Item	Amortized cost		Fair value through OCI	Fair value through P/L		Fair value hierarchy
Item	Amortized cost		Fair value through OCI	Fair value through P/L		Level 1		Level 2		Level 3
Financial assets
Cash and deposits in Banks
Cash		51,862,712
Financial institutions		283,816,883
Other		12,519
Debt Securities at fair value through profit or loss					63,125,824		60,387,495		562,970		2,175,359
Derivative financial instruments					2,524		771		1,753
Repo transactions
BCRA		61,176,357
Other financial assets		64,463,931			4,033,290		3,972,863				60,427
Loans and other financing
To the non-financial government sector		4,628,089
Other financial institutions		2,941,876
To the non-financial private sector and foreign residents
Overdraft		47,516,346
Documents		82,408,943
Mortgage loans		81,213,071
Pledge loans		14,727,607
Personal loans		190,678,438
Credit cards		184,981,594
Leases		931,091
Other (1)		76,301,154


Item (contd.)	Amortized cost		Fair value through OCI		Fair value through P/L		Fair value hierarchy
Item (contd.)	Amortized cost		Fair value through OCI		Fair value through P/L		Level 1		Level 2		Level 3
Financial assets (contd.)
Other debt securities		46,832,279		510,230,657				283,454,369		226,776,288
Financial assets delivered as guarantee		34,993,147
Equity instruments at fair value through profit or loss						7,365,144		131,468				7,233,676

Total financial assets		1,229,486,037		510,230,657		74,526,782		347,946,966		227,341,011		9,469,462


Financial liabilities
Deposits
From the non-financial government sector		109,868,280
From the financial sector		1,872,336
From the non-financial private sector and foreign residents
Checking accounts		196,484,984
Savings accounts		360,846,573
Time deposits and investment accounts		447,350,444
Other		30,618,411
Liabilities at fair value through profit or loss						3,170,711		3,170,711
Derivative financial instruments						4,933				4,933
Other financial liabilities		131,278,389
Financing received from BCRA and other financial entities		852,660
Issued corporate bonds		5,825,893
Subordinated corporate bonds		81,762,819

Total financial liabilities		1,366,760,789				3,175,644		3,170,711		4,933

(1)

Includes the total allowances to the non-financial private sector and foreign residents.

Description of the valuation process

The fair value of instruments categorized as Level 1 was assessed by using quoted prices effective at the end of each fiscal year in active markets for identical assets or liabilities, if representative. Currently, for most of the government and private securities, there are two principal markets in which the Bank operates: BYMA and MAE. Additionally, in the case of derivatives, both MAE and Mercado a Término de Rosario SA (ROFEX) are deemed active markets.

On the other hand, for certain assets and liabilities that do not have an active market, categorized as Level 2, the Bank used valuation techniques that included the use of market transactions performed under mutual independent terms and conditions, between interested and duly informed parties, provided that they are available as well as references to the current fair value of another instrument being substantially similar, or otherwise the analysis of cash flows discounted at rates built from market information of similar instruments. In addition, certain assets and liabilities included in this category were valued using price quotes of identical instruments in “less active markets”.

Finally, the Bank has categorized as level 3 those assets and liabilities for which there are no identical or similar transactions in the market. For this approach, the Bank mainly used the cash flow discount model.

As of December 31, 2022 and 2021, the Bank has neither changed the techniques nor the assumptions used to estimate the fair value of the financial instruments.

Below is the reconciliation between the amounts at the beginning and at the end of the fiscal year of the financial assets and liabilities recognized at fair value categorized as level 3:


	As of December 31, 2022
Reconciliation	Debt instruments			Other financial assets			Equity instruments at fair value through profit or loss
Amount at the beginning		2,175,359			60,427			7,233,676
Transfers to Level 3
Transfers from Level 3
Profit and loss (1)		731,241			5,064			(5,689,970	)
Recognition and derecognition		(801,964	)		21,061			497,804
Monetary effects		(1,072,772	)		(37,137	)		(1,356,527	)

Amount at the end of the fiscal year		1,031,864			49,415			684,983


	As of December 31, 2021
Reconciliation	Debt instruments			Other financial assets			Equity instruments at fair value through profit or loss			Derivative financial instruments
Amount at the beginning		1,112,717			76,973			15,314,079			2,888,037
Transfers to Level 3
Transfers from Level 3
Profit and loss (1)		686,775			3,562			(2,837,282	)		(2,037,074	)
Recognition and derecognition		978,699			10,002			(43,437	)
Monetary effects		(602,832	)		(30,110	)		(5,199,684	)		(850,963	)

Amount at the end of the fiscal year		2,175,359			60,427			7,233,676

(1)

Profit and loss are recorded in “Net gain from measurement of financial instruments at fair value through profit or loss”.

Instruments measured as level 3 mainly include equity instruments at fair value through profit or loss that comprise Prisma (see note 12). As of December 31, 2021, the fair value is the final price of such shares that was determined pursuant to proceeding contractually agreed between the parties (see note 12).

As of December 31, 2022, the Bank completed the transfer of all remaining shares held in Prisma (see note 12). Additionally, the other instruments measured as level 3 include debt securities of financial trusts and corporate bonds, for which the construction of fair values was obtained based on the Bank’s own assumptions that are not easily available in the market. The most significant assumption was the placement cutoff rate of such instruments in the market at the end of the period, used to determine the actual value of cash flows.

Quantitative information about Level 3 Fair Value Measurements

Debt securities

The following table provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of the main of debt securities of financial trusts for which the Bank uses an internal model.

Fair value of

Range of inputs

Level 3 Assets

Valuation

Significant unobservable

12/31/2022

Composition

12/31/2022

technique

inputs

Range of inputs

Low

High

Unit

Provisional Debt Securities of Financial Trusts

593,120

Income approach (discounted cash flow)

Discount rate in pesos

69.99

83.83

Corporate bonds

434,678

Income approach (discounted cash flow)

Discount rate in pesos

76.98

86.47

Fair value of

Range of inputs

Level 3 Assets

Valuation

Significant unobservable

12/31/2021

Composition

12/31/2021

technique

inputs

Range of inputs

Low

High

Unit

Provisional Debt Securities of Financial Trusts

626,600

Income approach (discounted cash flow)

Discount rate in pesos

43.32

46.14

Corporate bonds

1,543,003

Income approach (discounted cash flow)

Discount rate in pesos

26.19

40.99

The table below describes the effect of changing the significant unobservable inputs to reasonably possible alternatives. Sensitivity data were calculated using a number of techniques including analyzing price dispersion of different price sources, adjusting model inputs to analyze changes within the fair value methodology.


	12/31/2022					12/31/2021
	Favorable changes		Unfavorable changes			Favorable changes		Unfavorable changes
Provisional Debt Securities of Financial Trusts		1,223		(1,176	)		300		(295	)
Corporate bonds		2,622		(2,537	)		29,777		(27,449	)

Changes in fair value levels

The Bank monitors the availability of information in the market to evaluate the classification of financial instruments into the fair value hierarchy as well as the resulting determination of transfers between levels 1, 2 and 3 at each period end.

As of December 31, 2022 and 2021, the Bank has not recognized any transfers between levels 1, 2 and 3 of the fair value hierarchy.

Financial assets and liabilities not measured at fair value

Next follows a description of the main methods and assumptions used to determine the fair values of financial instruments not recognized at their fair value in these consolidated Financial Statements:

•

Instruments with fair value similar to the carrying amount: financial assets and liabilities that are liquid or have short-term maturities (less than three months) were deemed to have a fair value similar to the carrying amount.

•

Fixed and variable rate of financial instruments: the fair value of financial assets was recognized discounting future cash flows at current market rates, for each fiscal year, for financial instruments of similar characteristics. The estimated fair value of fixed-interest rate deposits and liabilities was assessed discounting future cash flows by using estimated interest rates for deposits or placings with similar maturities to those of the Bank’s portfolio.

•

For public listed assets and liabilities, or those for which the prices are reported by certain renowned pricing providers, the fair value was determined based on such prices.

The following table shows a comparison between the fair value and the carrying amount of financial instruments not measured at fair value as of December 31, 2022 and 2021:


	12/31/2022
Composition	Carrying amount		Level 1		Level 2		Level 3		Fair value
Financial assets
Cash and deposits in Banks		250,089,093		250,089,093						250,089,093
Repo transactions		61,929,317		61,929,317						61,929,317
Other financial assets		53,436,257		53,436,257						53,436,257
Loans and other financing		598,600,865						521,939,679		521,939,679
Other debt securities		599,259,838		511,722,746		82,669,663		96,304		594,488,713
Financial assets delivered as guarantee		30,620,278		30,620,278						30,620,278

Total		1,593,935,648		907,797,691		82,669,663		522,035,983		1,512,503,337


Financial liabilities
Deposits	1,295,395,069	649,076,325		645,261,404	1,294,337,729
Other financial liabilities	135,091,316	130,781,463	4,371,904		135,153,367
Financing received from the BCRA and other financial entities	2,449,342	2,382,151	51,963		2,434,114
Issued corporate bonds	2,715,556		2,638,551		2,638,551
Subordinated corporate bonds	72,129,837		58,815,433		58,815,433

Total	1,507,781,120	782,239,939	65,877,851	645,261,404	1,493,379,194


	12/31/2021
Composition	Carrying amount		Level 1		Level 2		Level 3		Fair value
Financial assets
Cash and deposits in Banks		335,692,114		335,692,114						335,692,114
Repo transactions		61,176,357		61,176,357						61,176,357
Other financial assets		64,463,931		64,416,765						64,416,765
Loans and other financing		686,328,209						637,724,702		637,724,702
Other debt securities		46,832,279		44,550,843		1,265,887		304,156		46,120,886
Financial assets delivered as guarantee		34,993,147		34,993,147						34,993,147

Total		1,229,486,037		540,829,226		1,265,887		638,028,858		1,180,123,971


Composition	12/31/2021
Composition	Carrying amount		Level 1		Level 2		Level 3		Fair value
Financial liabilities
Deposits		1,147,041,028		650,045,751				496,348,778		1,146,394,529
Other financial liabilities		131,278,389		129,516,534		2,794,914				132,311,448
Financing received from the BCRA and other financial entities		852,660		771,790		74,752				846,542
Issued corporate bonds		5,825,893				5,128,186				5,128,186
Subordinated corporate bonds		81,762,819				67,123,964				67,123,964

Total		1,366,760,789		780,334,075		75,121,816		496,348,778		1,351,804,669