BMA

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, 2012
Filing Date: November 19, 2012
Business Overview: Macro Bank is an Argentine commercial bank offering traditional banking products to companies and individuals, with a strategic focus on regional areas outside Buenos Aires. The bank operates through several subsidiaries, including Banco del Tucumán S.A. and Banco Privado de Inversiones S.A.

Key Financial Metrics (Nine Months Ended Sept 30, 2012)

Note: All figures are in thousands of Argentine Pesos. The filing includes both stand-alone and consolidated statements; consolidated figures include subsidiaries such as Banco del Tucumán S.A. and Macro Bank Limited.

Material Changes vs. Prior Period

• Profitability: Net income increased by approximately 28.7% compared to the nine-month period ended September 30, 2011 (from Ps. 829,668 to Ps. 1,067,856).
• Asset Growth: Total consolidated assets grew by 16.0% year-over-year, driven by expansion in loans and securities.
• Loan Portfolio: Loans to the non-financial private sector increased significantly, with personal loans rising from Ps. 7,490,051 to Ps. 8,596,006 (stand-alone) and credit card loans increasing from Ps. 2,851,876 to Ps. 3,610,338.
• Provisions: The provision for loan losses increased substantially from Ps. 153,399 in the prior period to Ps. 369,870 (stand-alone), reflecting higher risk provisioning.
• Deposits: Total deposits grew by 17.5% (stand-alone), with time deposits showing the largest absolute increase.

Guidance, Outlook, Risks, and Unusual Items

• Accounting Standards: The financial statements are prepared in accordance with Central Bank of Argentina (BCRA) rules, which differ from Argentine professional accounting standards and U.S. GAAP. Notable differences include the valuation of government securities, treatment of goodwill, and deferred tax accounting. If professional accounting standards were applied, shareholders' equity would have decreased by approximately Ps. 124,405.
• Legal and Regulatory Risks: The bank faces ongoing legal actions related to the 2001-2002 economic crisis ("recursos de amparo"), specifically regarding the reimbursement of dollar-denominated deposits converted to pesos. The bank has recorded provisions for these court orders.
• Macroeconomic Environment: Management notes uncertainty due to international macroeconomic conditions, volatility in financial assets, and complex foreign exchange regulations in Argentina.
• Dividends: Cash dividends of Ps. 505,312 were distributed during the period. Future distributions are subject to Central Bank authorization and capital adequacy requirements.
• Derivatives: The bank maintains significant positions in derivative financial instruments, including forward foreign currency transactions, interest rate swaps, and options on government bonds (BODEN), primarily for hedging and intermediation purposes.

Key Facts for Investor Verification

• Currency Risk: Verify the impact of Argentine Peso volatility and foreign exchange controls on the bank's reported earnings and asset valuations.
• Accounting Adjustments: Review Note 5 to understand the quantitative differences between BCRA reporting standards and professional accounting standards, particularly regarding equity and income.
• Loan Quality: Monitor the "Troubled" and "High risk of insolvency" loan categories in Exhibit B, which increased in absolute terms compared to the prior year.
• Government Exposure: Assess the concentration of deposits and loans related to provincial governments (Misiones, Salta, Jujuy, Tucumán) and the associated credit risk.
• Capital Adequacy: Confirm compliance with BCRA minimum capital requirements, especially given the significant increase in loan loss provisions.