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: Nine months ended September 30, 2015
Filing Date: November 26, 2015
Business Overview: A commercial bank authorized by the Central Bank of Argentina (BCRA), operating primarily in regional areas outside Buenos Aires. The bank offers traditional banking products to companies and individuals and operates through subsidiaries including Banco del Tucumán SA and Macro Bank Limited.
Key Financial Metrics (Nine Months Ended Sept 30, 2015)
Figures in thousands of Argentine Pesos (ARS), unless otherwise noted.
| Metric | Sept 30, 2015 | Dec 31, 2014 (Balance Sheet) |
|---|---|---|
| Total Assets | 86,386,205 | 68,239,038 |
| Total Loans (Net) | 51,106,143 | 39,759,141 |
| Total Deposits | 61,335,265 | 48,214,423 |
| Shareholders' Equity | 13,909,216 | 11,491,817 |
| Net Income | 3,041,555 | N/A |
| Gross Intermediation Margin | 6,734,065 | N/A |
| Cash and Cash Equivalents | 11,753,279 | 14,690,022 |
Material Changes vs. Prior Period
- Asset Growth: Total assets increased by approximately 26.6% year-over-year (from 68.2B to 86.4B ARS), driven primarily by a 28.5% increase in the loan portfolio.
- Loan Portfolio Expansion: Loans to the non-financial private sector grew significantly, with personal loans rising from 13.5B to 17.9B ARS and credit card loans increasing from 8.5B to 10.6B ARS.
- Deposit Growth: Total deposits increased by 27.2%, with time deposits showing the largest absolute growth (from 20.4B to 28.1B ARS).
- Profitability: Net income for the nine-month period increased to 3.04B ARS, compared to 2.90B ARS for the same period in 2014. Gross Intermediation Margin rose to 6.73B ARS from 5.66B ARS.
- Provisions: The provision for loan losses increased to 499.4M ARS from 408.9M ARS in the prior year period, reflecting the expansion of the credit portfolio.
Guidance, Outlook, Risks, and Contingencies
Management Commentary & Outlook: Management notes that the international and local macroeconomic context generates uncertainty due to growth contractions, financial asset volatility, and foreign exchange market fluctuations. The bank is actively monitoring these situations to identify potential impacts on its financial position. The bank is currently implementing a conversion plan to International Financial Reporting Standards (IFRS), with full adoption expected for fiscal years beginning January 1, 2018.
Risks and Contingencies:
- Regulatory Sanctions: The bank faces several summary judgments and sanctions from the Central Bank (BCRA) and the Financial Information Unit (UIF) related to foreign exchange regime infractions and anti-money laundering compliance. As of September 30, 2015, the total amount of monetary sanctions pending payment or appeal was 11,752 ARS (thousands).
- Legal Proceedings: Ongoing tax claims exist with the Federal Public Revenue Agency (AFIP) and City of Buenos Aires authorities regarding income tax and turnover tax for prior fiscal years. Additionally, a consumer association lawsuit regarding "life insurance" charges is pending, though a settlement was previously reached and appealed.
- Accounting Differences: Significant valuation differences exist between BCRA accounting regulations and Argentine professional accounting standards, particularly regarding government securities, business combinations, and deferred taxes. These differences result in adjustments to equity and total income.
- Dividend Restrictions: Distribution of earnings is subject to Central Bank authorization and must comply with minimum capital and cash requirements. Cash dividends of 596.3M ARS were approved by shareholders but are pending Central Bank approval.
Investor Verification Checklist
- Currency Risk: Verify the impact of Argentine Peso volatility and exchange rate controls on the bank's foreign currency-denominated assets and liabilities.
- Regulatory Status: Confirm the final status of pending sanctions from the BCRA and UIF, and assess potential future fines or operational restrictions.
- Asset Quality: Review the composition of the loan portfolio, specifically the increase in personal and credit card loans, and the adequacy of the allowance for loan losses (1.23B ARS).
- Accounting Standards: Understand the reconciliation between BCRA reporting standards and IFRS/US GAAP, noting the significant valuation adjustments for government securities and goodwill.
- Liquidity Position: Assess the bank's compliance with minimum cash requirements (7.44B ARS held vs. requirements) and the net decrease in cash of 2.94B ARS during the period.