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: Third Quarter ended September 30, 2014 (3Q14)
Reporting Date: November 10, 2014
Currency: Argentine Pesos (Ps.)
Accounting Standard: Argentine GAAP
Key Financial Metrics
| Metric | 3Q14 Value | 2Q14 Value | 3Q13 Value |
|---|---|---|---|
| Net Income | Ps. 985.5 million | Ps. 732.7 million | Ps. 571.9 million |
| Earnings Per Share (Ps.) | 1.69 | 1.25 | 0.98 |
| Operating Result | Ps. 1,501.3 million | Ps. 1,068.3 million | Ps. 987.8 million |
| Net Financial Income | Ps. 2,121.8 million | Ps. 1,722.2 million | Ps. 1,550.0 million |
| Net Fee Income | Ps. 927.6 million | Ps. 828.0 million | Ps. 606.4 million |
| Administrative Expenses | Ps. 1,396.6 million | Ps. 1,314.2 million | Ps. 1,029.5 million |
| Total Assets | Ps. 72,730.3 million | Ps. 72,858.7 million | Ps. 56,732.3 million |
| Total Deposits | Ps. 53,151.5 million | Ps. 51,278.3 million | Ps. 41,774.0 million |
| Financing to Private Sector | Ps. 41,946.1 million | Ps. 39,911.9 million | Ps. 37,113.5 million |
| Shareholders' Equity | Ps. 10,916.8 million | Ps. 9,931.2 million | Ps. 7,674.0 million |
Key Ratios (Accumulated Annualized)
- Return on Average Equity (ROAE): 38.4%
- Return on Average Assets (ROAA): 5.8%
- Net Interest Margin: 15.7%
- Efficiency Ratio: 44.6%
- Capitalization Ratio: 24.7%
- Liquid Assets to Total Deposits: 43.0%
- Non-Performing to Total Financing: 1.85%
- Coverage Ratio: 138.69%
Material Changes vs. Prior Periods
- Profitability Surge: Net income increased 35% quarter-over-quarter (QoQ) and 72% year-over-year (YoY). Operating results rose 41% QoQ and 52% YoY.
- Loan Growth: Financing to the private sector grew 5% QoQ (Ps. 2.0 billion). Commercial pledge loans and overdrafts grew 12% and 10% respectively. Consumer personal loans rose 7%.
- Deposit Expansion: Total deposits grew 4% QoQ to Ps. 53.1 billion. Private sector deposits increased 2% QoQ, while public sector deposits grew 11%.
- Expense Management: Administrative expenses rose 6% QoQ, driven by personnel costs (including one-time payments). However, the accumulated efficiency ratio improved to 44.6% from 50.9% in 3Q13.
- Asset Quality Improvement: The non-performing loan ratio decreased to 1.85% from 2.02% in 2Q14. The coverage ratio improved to 138.69%.
- Capital Strength: Excess capital reached Ps. 5.7 billion, representing a 24.7% capitalization ratio, well above regulatory minimums.
Outlook, Risks, and Unusual Items
Management Commentary and Outlook
Management highlighted strong solvency and liquidity, with liquid assets at 43% of total deposits. The bank aims to utilize its excess capital effectively, including building a portfolio of shares from listed companies. The bank successfully met new Central Bank (BCRA) limits on net global foreign currency positions (Communication "A" 5627).
Risks and Contingencies
- Forward-Looking Statements: Results may differ due to inflation, interest rate changes, government regulation, credit risks, fluctuations in Argentine public debt value, and exchange rate volatility.
- Regulatory Changes: New BCRA communications established minimum interest rates for time deposits (Communication "A" 5640) and adjusted foreign currency position limits.
- Capital Reduction: The bank announced a capital stock reduction of 10 million Class B common shares following the expiration of a 3-year holding period for repurchased shares.
Unusual Items
- Personnel Expenses: Included a one-time payment of Ps. 34 million and Ps. 30 million for Bankers Day, contributing to the QoQ rise in administrative expenses.
- FX Valuation: Income from differences in quoted prices of gold and foreign currency increased 134% QoQ due to higher valuation of dollar-adjustable government securities.
Investor Verification Checklist
- Currency Impact: Verify the impact of Argentine Peso inflation and exchange rate fluctuations on the reported Ps. figures and USD equivalents (ADS).
- Public Sector Exposure: Confirm the bank's exposure to government securities (LEBAC/NOBAC) and the sustainability of yields given the 19% QoQ increase in government securities.
- Regulatory Compliance: Review the implications of BCRA Communication "A" 5627 (FX position limits) and "A" 5640 (minimum deposit rates) on future margins.
- Asset Quality Trends: Monitor the non-performing loan ratio (1.85%) and coverage ratio (138.69%) to ensure stability in the commercial and consumer portfolios.
- Capital Utilization: Assess the bank's strategy for deploying its Ps. 5.7 billion excess capital, particularly regarding equity investments in listed companies.