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: Six months ended June 30, 2016
Filing Date: September 26, 2016
Business Overview: Macro Bank is an Argentine commercial bank authorized by the Central Bank of Argentina (BCRA). It operates as a multi-services bank offering traditional products to companies and individuals, with a strategic focus on regional areas outside Buenos Aires. The bank holds significant agreements with provincial governments (Misiones, Salta, Jujuy, Tucumán) acting as their exclusive financial agents.
Key Financial Metrics
Figures in thousands of Argentine Pesos (ARS), unless otherwise noted.
| Metric | Six Months Ended June 30, 2016 |
Six Months Ended June 30, 2015 |
|---|---|---|
| Net Income | 3,212,887 | 1,938,386 |
| Gross Intermediation Margin | 6,538,084 | 4,300,602 |
| Total Assets (Balance Sheet) | 116,280,933 | 95,478,369 |
| Total Deposits | 80,768,474 | 67,911,254 |
| Shareholders' Equity | 18,777,953 | 15,877,550 |
| Net Cash Flow from Operations | 5,265,543 | (3,461,541) |
Debt and Liquidity:
- Subordinated Corporate Bonds: 2,245,274 (USD 150 million face value).
- Non-subordinated Corporate Bonds: 1,587,413 (USD 106.4 million residual face value).
- Cash and Cash Equivalents: 24,196,634 (includes cash and short-term Central Bank instruments).
- Minimum Capital Requirement: The bank exceeded minimum capital requirements by 8,005,074 as of June 30, 2016.
Material Changes vs. Prior Period
- Profitability Surge: Net income increased by approximately 66% year-over-year, driven by a 52% increase in Gross Intermediation Margin.
- Asset Growth: Total assets grew by 21.7% compared to the prior year-end, primarily due to a significant increase in loans to the non-financial private sector and foreign residents (up 14.6% from Dec 2015) and a substantial rise in holdings of instruments issued by the Central Bank of Argentina (up 104% from Dec 2015).
- Deposit Expansion: Total deposits increased by 18.9%, with time deposits showing the most significant growth (up 17.1% from Dec 2015).
- Cash Flow Reversal: Operating cash flow swung from a net use of cash of 3.46 billion in the prior year to a net generation of 5.27 billion in the current period, largely due to net collections from deposits and securities.
Guidance, Outlook, Risks, and Contingencies
Management Commentary and Outlook:
Management notes that the international and local macroeconomic context generates uncertainty due to volatility in financial assets, foreign exchange markets, and interest rates. The bank is actively monitoring these changes to identify potential impacts on its financial situation. The bank is currently implementing a conversion process to International Financial Reporting Standards (IFRS), with full adoption expected for fiscal years beginning January 1, 2018.
Risks and Contingencies:
- Regulatory Sanctions: The bank faces several pending summaries and sanctions from the Central Bank (BCRA) and the Financial Information Unit (UIF) related to foreign exchange regime infractions and anti-money laundering procedures. As of June 30, 2016, the total amount of monetary sanctions pending payment or appeal was 8,780. Management believes no further significant accounting effects will arise beyond those already recognized.
- Legal Claims: Ongoing tax claims exist with the AFIP (Federal Public Revenue Agency) and City of Buenos Aires authorities regarding income tax and turnover tax. Additionally, there are consumer association lawsuits regarding financial fees and life insurance charges, though management believes provisions are adequate.
- Accounting Standards: Financial statements are prepared under BCRA standards, which differ from Argentine professional accounting standards and US GAAP. Notable differences exist in the valuation of government securities and the treatment of business combinations.
Key Facts for Investor Verification
- Dividend Distribution: The Shareholders' Meeting approved cash dividends of 643,019 for the fiscal year ended December 31, 2015. Payment was authorized by the Central Bank and scheduled for August 17, 2016.
- Provincial Government Exposure: The bank holds significant deposits from provincial governments (Misiones, Salta, Jujuy, Tucumán) under exclusive financial agent agreements, totaling over 9.3 billion ARS as of June 30, 2016.
- Derivative Positions: The bank maintains significant positions in derivative financial instruments, including forward transactions without delivery of underlying assets and options, with a net position of repurchase agreements at (3,603,899).
- Capital Adequacy: The bank maintains a robust capital position, with computable capital of 16,168,806 against a minimum requirement of 8,163,732.
- IFRS Transition: Investors should note that current financials do not conform to IFRS; the bank is in the implementation phase for a 2018 effective date.