Business Context and Reporting Period
Company: Macro Bank Inc. (Banco Macro S.A.)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Fourth Quarter ended December 31, 2017 (4Q17) and Full Year 2017 (FY2017)
Reporting Date: February 19, 2018
Currency: Argentine Pesos (Ps.) in millions, unless otherwise noted. Figures prepared under Argentine GAAP.
Key Financial Metrics
| Metric | 4Q17 | 3Q17 | 4Q16 | FY2017 | FY2016 |
|---|---|---|---|---|---|
| Net Income | Ps. 3,011.7 | Ps. 2,597.8 | Ps. 1,695.3 | Ps. 9,388.8 | Ps. 6,540.8 |
| Operating Result | Ps. 4,922.9 | Ps. 4,363.5 | Ps. 2,605.5 | Ps. 15,800.7 | Ps. 9,955.6 |
| Net Financial Income | Ps. 7,042.7 | Ps. 6,026.7 | Ps. 4,242.1 | Ps. 22,954.6 | Ps. 15,634.5 |
| Net Fee Income | Ps. 1,962.8 | Ps. 1,874.3 | Ps. 1,532.2 | Ps. 7,304.3 | Ps. 5,364.9 |
| Administrative Expenses | Ps. 3,660.3 | Ps. 3,195.0 | Ps. 2,814.8 | Ps. 12,863.0 | Ps. 9,970.7 |
| Private Sector Financing | Ps. 129.1 billion | Ps. 117.4 billion | Ps. 86.9 billion | N/A | N/A |
| Total Deposits | Ps. 144.2 billion | Ps. 136.6 billion | Ps. 111.9 billion | N/A | N/A |
| Shareholders' Equity | Ps. 43.1 billion | Ps. 40.1 billion | Ps. 22.1 billion | N/A | N/A |
Key Ratios (Accumulated Annualized)
- Return on Average Equity (ROAE): 28.6% (4Q17) vs. 34.1% (4Q16)
- Return on Average Assets (ROAA): 5.2% (4Q17) vs. 5.2% (4Q16)
- Net Interest Margin (NIM): 17.7% (4Q17) vs. 18.2% (4Q16)
- Efficiency Ratio: 42.5% (4Q17) vs. 47.5% (4Q16)
- Regulatory Capital Ratio (Basel III): 28.1% (4Q17) vs. 22.1% (4Q16)
- Non-Performing Financing Ratio: 1.07% (4Q17) vs. 1.14% (4Q16)
- Coverage Ratio: 183.14% (4Q17) vs. 176.51% (4Q16)
Material Changes vs. Prior Period
- Profitability Surge: Net income for 4Q17 increased 16% quarter-over-quarter (QoQ) and 78% year-over-year (YoY). Full-year 2017 net income rose 44% compared to 2016.
- Loan Growth: Financing to the private sector grew 10% QoQ and 49% YoY, reaching Ps. 129.1 billion. Growth was driven by commercial loans (Documents +20% QoQ) and consumer loans (Mortgages +29% QoQ, Credit Cards +16% QoQ).
- Deposit Expansion: Total deposits grew 6% QoQ to Ps. 144.2 billion. Private sector deposits increased 9% QoQ, while public sector deposits declined 22% QoQ.
- Expense Management: Administrative expenses rose 15% QoQ, primarily due to personnel costs (13% QoQ increase) driven by inflation adjustments. However, the efficiency ratio improved to 42.5% from 47.5% in 4Q16.
- Asset Quality: The non-performing loan ratio increased slightly to 1.07% from 1.00% in 3Q17, largely due to a specific commercial client default, though the consumer portfolio improved. The coverage ratio remains robust at 183.14%.
Guidance, Outlook, and Risks
Management Commentary: The Bank highlighted strong solvency with excess capital of Ps. 35.1 billion (243% excess over requirements). Management aims to utilize this excess capital effectively. The Bank successfully fulfilled its quota for the "Credit Line for Productive Financing and Financial Inclusion" for the second half of 2017.
Recent Events: On November 8, 2017, Gustavo Manriquez was appointed CEO and Jorge Scarinci as CFO.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers citing significant risks, including:
- High inflation and fluctuations in the Argentine peso exchange rate.
- Changes in interest rates and cost of deposits.
- Government regulation and adverse legal/regulatory disputes.
- Fluctuations in the value of Argentine public debt.
- Deterioration in regional and national economic conditions.
Investor Verification Checklist
- Currency Impact: Verify the impact of Argentine inflation and peso devaluation on the reported Ps. figures versus USD equivalents for international investors.
- Public Sector Exposure: Confirm the current status of the Bank's exposure to government securities (LEBACs) and public sector deposits, noting the 22% QoQ drop in public deposits.
- Asset Quality Trends: Monitor the commercial portfolio non-performing ratio, which rose to 0.38% in 4Q17, to ensure it does not indicate a broader trend.
- Regulatory Capital: Validate the 28.1% regulatory capital ratio against Basel III requirements and potential future capital calls.
- IFRS Adjustments: Review the IFRS equity adjustment (Ps. 3.4 billion higher than local GAAP) for a complete picture of shareholder value.