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, 2013
Filing Date: November 21, 2013
Business Overview: 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. (which merged into the parent company effective January 1, 2013).
Key Financial Metrics (Stand-Alone)
Figures in thousands of Argentine Pesos (ARS), unless otherwise noted.
| Metric | Sept 30, 2013 | Dec 31, 2012 |
|---|---|---|
| Total Assets | 50,865,616 | 43,563,888 |
| Total Liabilities | 43,191,570 | 37,364,793 |
| Shareholders' Equity | 7,674,046 | 6,199,095 |
| Net Income (9-month) | 1,490,185 | 1,067,856 |
| Gross Intermediation Margin | 3,496,318 | 2,602,250 |
| Cash and Cash Equivalents | 8,009,415 | 8,741,880 |
| Loans (Net of Allowances) | 33,559,162 | 28,788,524 |
| Deposits | 36,834,471 | 32,493,971 |
Material Changes vs. Prior Period
- Profitability Growth: Net income for the nine-month period increased by approximately 39.5% (from 1,067,856 to 1,490,185), driven by a 34.4% increase in Gross Intermediation Margin.
- Asset Expansion: Total assets grew by 16.8%, primarily due to a 16.6% increase in the loan portfolio (from 28.8B to 33.6B) and a 95% increase in holdings of instruments issued by the Central Bank of Argentina.
- Deposit Growth: Total deposits rose by 13.4%, with significant growth in time deposits (from 12.7B to 16.6B) and savings accounts.
- Cash Flow: Operating activities resulted in a net cash outflow of 884,982 for the nine months ended Sept 30, 2013, compared to an inflow of 1,472,478 in the prior year period. This was largely due to net payments for government securities and loans.
- Merger Activity: The bank completed the legal merger of Banco Privado de Inversiones S.A. retroactive to January 1, 2013, consolidating its operations.
Guidance, Outlook, Risks, and Contingencies
- Macroeconomic Environment: Management notes uncertainty regarding the international macroeconomic context and local volatility in financial asset prices, interest rates, and the exchange rate. The bank monitors these changes to assess potential effects on assets and financial position.
- Legal Actions (Court Deposits): The bank faces ongoing legal actions related to the 2001-2002 economic crisis regarding the reimbursement of dollar-denominated deposits. The bank has recorded provisions of 12,624 (stand-alone) and 20,419 (consolidated) related to Supreme Court rulings on these matters. Management believes no additional significant effects are expected beyond those recognized.
- Tax Claims: Significant tax claims exist regarding income tax returns filed prior to 2005 and turnover tax differences. Management and legal advisors believe there are no additional significant effects beyond those already recognized in the books.
- Regulatory Compliance: The bank is in the process of registering with the Argentine Securities Commission (CNV) for various agent categories (custody, placement, trustees, clearing) under new regulations. The bank currently exceeds minimum capital and liquid asset requirements.
- Accounting Standards: Financial statements are prepared under Central Bank of Argentina (BCRA) rules, which differ from Argentine professional accounting standards and US GAAP in valuation and disclosure aspects (e.g., deferred taxes, goodwill amortization, derivative valuation).
Investor Verification Checklist
- Currency and Inflation: Verify the impact of Argentine inflation and exchange rate controls (MULC) on the reported peso figures and the bank's ability to repatriate earnings.
- Accounting Differences: Review Note 5 to understand the material differences between BCRA rules and professional accounting standards, particularly regarding deferred taxes and goodwill.
- Loan Quality: Examine Exhibit B for the classification of financing facilities, specifically the increase in "High risk of insolvency" loans (from 71,126 to 189,082) and the adequacy of allowances.
- Derivative Exposure: Assess the notional value of derivative instruments (Exhibit O), particularly forward foreign currency transactions and interest rate swaps, given the volatile local currency environment.
- Related Party Transactions: Review Note 8 and Exhibit N for the extent of credit assistance and transactions with subsidiaries and related parties.