| MINIMUM CAPITAL REQUIREMENTS |
34 . MINIMUM CAPITAL REQUIREMENTS The Central Bank requires financial institutions to maintain minimum capital amounts measured as of each month's closing, The minimum capital is defined as the greater of (i) the basic minimum capital requirement, which is explained below, or (ii) the sum of the credit risk, operational risk and market risk, Financial institutions (including their domestic Argentine and international branches) must comply with the minimum capital requirements both on an individual and a consolidated basis. The following table sets forth information regarding excess capital and selected capital and liquidity ratios of the Bank: As stated above under "Presentation of Financial and Other Information", we have prepared our audited consolidated financial statements for 2023, 2022 and 2021 under IFRS, Minimum capital requirement has been prepared in accordance with the rules of the Argentine Central Bank, which is not comparable to data prepared under IFRS. | | | | | | | | | | Year ended December 31,(2) | | | | 2023 | | 2022 | | 2021 | | | | | (in thousands of Pesos except percentages and ratios) | | Calculation of excess capital: | | | | | | | | Allocated to assets at risk | | 51,149,308 | | 20,729,624 | | 12,957,481 | | Allocated to Bank premises and equipment, intangible assets and equity investment assets | | 10,474,161 | | 3,747,910 | | 2,035,689 | | Market risk | | 2,658,844 | | 1,693,962 | | 965,159 | | Public sector and securities in investment account, | | 272,202 | | 625,570 | | 34,489 | | Operational risk | | 21,891,498 | | 8,188,453 | | 4,805,957 | | Required minimum capital under Central Bank rules | | 86,446,013 | | 34,985,519 | | 20,798,775 | | Basic net worth | | 264,420,324 | | 77,619,877 | | 42,938,440 | | Complementary net worth | | — | | 2,600,170 | | 1,564,272 | | Deductions | | (55,583,242) | | (25,063,540) | | (11,770,286) | | Total capital under Central Bank rules | | 208,837,082 | | 55,156,507 | | 32,732,426 | | Excess capital | | 122,391,069 | | 20,170,988 | | 11,933,651 | | Credit Risk Weighted Assets (1) | | 756,569,592 | | 303,351,644 | | 181,430,487 | | Risk Weighted Assets (1) | | 1,058,040,330 | | 428,238,464 | | 254,513,436 | | Selected capital and liquidity ratios: | | | | | | | | Regulatory capital/credit risk weighted assets | | 27.6 | % | 18.2 | % | 18.4 | % | Regulatory capital/risk weighted assets | | 19.7 | % | 12.9 | % | 12.9 | % | Average shareholders’ equity as a percentage of average total assets | | 14.5 | % | 12.2 | % | 12.5 | % | Total liabilities as a multiple of total shareholders’ equity | | 6.3x | | 8.3x | | 7.5x | | Cash as a percentage of total deposits | | 14.4 | % | 8.7 | % | 11.1 | % | Liquid assets as a percentage of total deposits (3) | | 64.1 | % | 46.0 | % | 49.2 | % | Tier 1 Capital / risk weighted assets | | 19.7 | % | 12.3 | % | 12.2 | % |
| (1) | Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets, and credit risk weighted assets, Operational risk weighted assets and market risk weighted assets are calculated by multiplying their respective required minimum capital under Central Bank rules by 12.5, Credit Risk Weighted Assets is calculated by applying the respective credit risk weights to our assets, following Central Bank rules, |
| (2) | Nominal values without inflation adjustment, |
| (3) | Liquid assets include cash, securities issued by the Central Bank, and Repo transactions with the Central Bank. This ratio does not consider other government securities held by the Company to set Minimum Reserve Requirements. |
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