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, 2007
Filing Date: November 27, 2007
Business Overview: An Argentine commercial bank offering traditional banking products to companies and individuals, with a focus on regional areas outside Buenos Aires. The bank operates through a network of subsidiaries including Nuevo Banco Suquía S.A., Banco del Tucumán S.A., and Nuevo Banco Bisel S.A.

Key Financial Metrics (Consolidated)

Figures in thousands of Argentine Pesos (Ps.), unless otherwise noted.

Material Changes vs. Prior Period

• Asset Growth: Total consolidated assets increased by approximately 36% (Ps. 5.2 billion) compared to year-end 2006, driven primarily by loan growth and securities holdings.
• Loan Portfolio Expansion: Net loans to the non-financial private sector and foreign residents grew significantly, with personal loans increasing from Ps. 1,431,105 to Ps. 2,763,233.
• Profitability: Net income for the nine-month period rose 17.8% to Ps. 326,525, supported by a 39% increase in Gross Intermediation Margin.
• Deposit Growth: Total deposits increased by 33.7%, with time deposits showing the largest absolute increase.
• Corporate Bond Issuance: The bank issued significant non-subordinated corporate bonds (Class 2 and Class 3) totaling USD 250 million in 2007 to fund lending activities.

Guidance, Outlook, Risks, and Unusual Items

• Merger Activity: The bank completed the merger with Nuevo Banco Suquía S.A. on October 16, 2007, retroactively effective January 1, 2007. This consolidation is reflected in the financial statements.
• Accounting Standards: Financial statements are prepared under Central Bank of Argentina rules, which differ from professional accounting standards in Argentina and GAAP in other countries. Notable differences include the valuation of government-guaranteed loans and the treatment of intangible assets related to court orders ("amparos").
• Legal and Regulatory Risks:
  • Court Orders (Amparos): The bank faces ongoing litigation regarding the "pesification" of dollar-denominated deposits. The Argentine Supreme Court has issued rulings requiring reimbursement at specific exchange rates (Ps. 1.40 to USD 1) adjusted by the CER index. The bank has capitalized differences related to these orders in intangible assets and recorded provisions for potential liabilities.
  • Tax Disputes: The bank is involved in tax disputes with the Federal Public Revenue Agency (AFIP) regarding the deductibility of credits and judicial collection requirements, though management estimates no significant additional charges are likely.
• Derivatives: The bank maintains significant positions in derivative financial instruments, including forward foreign currency transactions and options on government bonds, primarily for intermediation and hedging purposes.

Key Facts for Investor Verification

• Merger Impact: Verify the full integration of Nuevo Banco Suquía S.A. and the impact on future consolidated reporting.
• Accounting Divergence: Review Note 5 for significant differences between Central Bank rules and professional accounting standards, particularly regarding the valuation of government-guaranteed loans and deferred tax assets.
• Court Deposit Liabilities: Assess the adequacy of provisions for liabilities related to Supreme Court rulings on deposit "pesification" and the recoverability of capitalized intangible assets associated with these rulings.
• Loan Quality: Monitor the "Troubled" and "Irrecoverable" loan categories, which totaled Ps. 24,495 and Ps. 15,362 respectively in the commercial portfolio as of September 30, 2007.
• Capital Structure: Confirm the status of the newly issued USD 250 million in non-subordinated corporate bonds and their impact on leverage ratios.