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, 2008
Filing Date: November 18, 2008
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, with significant operations through subsidiaries including Nuevo Banco Bisel S.A. and Banco del Tucumán S.A.

Key Financial Metrics (Consolidated)

All figures in thousands of Argentine Pesos (ARS), unless otherwise noted.

Material Changes vs. Prior Period

• Asset Growth: Total consolidated assets increased by approximately 19.8% (ARS 3.9 billion) compared to year-end 2007, driven by growth in loans and securities.
• Profitability: Net income for the nine-month period rose 45.7% to ARS 475.8 million, compared to ARS 326.6 million in the same period of 2007. This was supported by a 54% increase in Gross Intermediation Margin.
• Loan Portfolio: Loans to the non-financial private sector and foreign residents increased significantly, with personal loans and credit card loans showing substantial growth.
• Provisions: The provision for loan losses increased by 57% to ARS 96.9 million, reflecting a more conservative approach or higher risk assessment in the current environment.
• Share Repurchases: The bank executed a significant share repurchase program, acquiring approximately 62.9 million shares (including ADSs) for a total of ARS 339.9 million during the period.

Guidance, Outlook, Risks, and Contingencies

• Macroeconomic Environment: Management notes that global financial markets have experienced volatility and liquidity issues post-September 2008. In Argentina, stock markets have decreased, interest rates have risen, and country risk has increased. Management is assessing the impact of these conditions.
• Legal Contingencies (Amparos): The bank faces ongoing legal actions regarding the "dedollarization" of deposits (recursos de amparo). While the Supreme Court has ruled on reimbursement terms (pesos at 1.40 rate adjusted by CER), the bank has capitalized certain differences as intangible assets. Management believes no significant effects beyond those recognized are expected.
• Accounting Differences: Financial statements are prepared under BCRA rules, which differ from Argentine professional accounting standards (FACPCE) and international standards. Significant differences include the valuation of government securities, treatment of intangible assets related to court orders, and deferred tax accounting. The filing states these differences are significant but does not quantify the full impact on equity under alternative standards.
• Dividend Restrictions: Dividend distribution is subject to Central Bank authorization and restrictions related to subordinated bond agreements and liquid realized income.

Investor Verification Checklist

• Asset Valuation: Verify the valuation of government securities and Central Bank instruments, as BCRA rules differ from market value accounting required by other standards.
• Legal Exposure: Review the status of "amparo" lawsuits regarding deposit dedollarization and the adequacy of provisions for potential additional liabilities.
• Share Repurchase Impact: Confirm the final number of shares cancelled or held in treasury and the impact on earnings per share.
• Loan Quality: Analyze the increase in provisions for loan losses and the classification of loans in "troubled" or "high risk" categories (Exhibit B and Consolidated Debtors by Situation).
• Related Party Transactions: Review transactions with subsidiaries and related parties, particularly the significant financing facilities and intercompany balances.