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, 2015 (3Q15)
Reporting Date: November 10, 2015
Currency: Argentine Pesos (Ps.) in millions, unless otherwise noted.
Accounting Basis: Argentine GAAP
Key Financial Metrics
| Metric | 3Q15 Value | 2Q15 Value | 3Q14 Value |
|---|---|---|---|
| Net Income | Ps. 1,104.6 | Ps. 822.7 | Ps. 985.5 |
| Earnings Per Share (Outstanding) | Ps. 1.89 | Ps. 1.41 | Ps. 1.69 |
| Operating Result | Ps. 1,819.5 | Ps. 1,234.2 | Ps. 1,501.3 |
| Net Financial Income | Ps. 2,743.8 | Ps. 2,117.1 | Ps. 2,121.8 |
| Net Fee Income | Ps. 1,109.9 | Ps. 1,073.7 | Ps. 927.6 |
| Administrative Expenses | Ps. 1,896.1 | Ps. 1,739.3 | Ps. 1,396.6 |
| Total Assets | Ps. 95,606.5 | Ps. 88,012.8 | Ps. 72,730.3 |
| Total Deposits | Ps. 69,458.7 | Ps. 64,575.1 | Ps. 53,151.5 |
| Shareholders' Equity | Ps. 13,909.2 | Ps. 12,804.5 | Ps. 10,916.8 |
| Private Sector Financing | Ps. 56,757.5 | Ps. 51,465.4 | Ps. 41,946.1 |
Profitability and Efficiency Ratios (Accumulated Annualized)
- Return on Average Equity (ROAE): 31.5%
- Return on Average Assets (ROAA): 4.9%
- Net Interest Margin: 17.3% (15.8% adjusted excluding securities/guaranteed loans)
- Efficiency Ratio: 48.8%
- Capitalization Ratio: 21.8% (Excess capital of Ps. 6.5 billion)
- Liquid Assets to Total Deposits: 38.2%
Material Changes vs. Prior Periods
- Profitability Surge: Net income increased 34% quarter-over-quarter (QoQ) and 12% year-over-year (YoY). The operating result rose 47% QoQ and 21% YoY.
- Loan Growth: Financing to the private sector grew 10% QoQ (Ps. 5.3 billion) and 35% YoY. Growth was driven by overdrafts (+23% QoQ), documents (+11% QoQ), and mortgage loans (+10% QoQ). Consumer loans also expanded, with personal loans up 13% and credit cards up 9% QoQ.
- Deposit Expansion: Total deposits grew 8% QoQ to Ps. 69.5 billion. Private sector deposits increased 6% QoQ, while public sector deposits rose 16% QoQ.
- Income Composition: Net income from government and private securities surged 93% QoQ. Interest on loans grew 9% QoQ due to a 10% increase in average loan volume.
- Expense Pressure: Administrative expenses increased 9% QoQ, primarily due to higher personnel expenses (including a one-time union payment for Bankers Day) and other operating costs.
- Asset Quality Improvement: The non-performing to total financing ratio improved to 1.77% (down 15 basis points from 2Q15). The coverage ratio stood at 129.92%.
Outlook, Risks, and Unusual Items
- Forward-Looking Statements: The filing includes standard disclaimers regarding inflation, interest rate changes, government regulation, credit risks, and exchange rate fluctuations in Argentina.
- Regulatory Compliance: The bank satisfactorily extended loans under the productive investment program (LIP) for small and mid-sized companies (MiPyMES) as required by BCRA Communication "A" 5771.
- Capital Markets Activity: In October 2015, the Mercado Abierto Electrónico (MAE) authorized the listing of Class A and Class B ordinary shares.
- Unusual Items:
- Personnel Expenses: Included a provision for a one-time payment agreed with unions in June 2015.
- Net Other Income: Recorded a loss of Ps. 25.7 million, driven by higher contingent liabilities and donations.
- CER Adjustment: Significant volatility observed in CER (Consumer Price Index) adjustments, with income from CER adjustments increasing 1,825% QoQ.
Investor Verification Checklist
- Currency Risk: Verify the impact of Argentine Peso depreciation on USD-denominated earnings and the bank's net foreign currency position (Ps. 2.8 billion net long position).
- Government Exposure: Confirm the stability of income from government securities (LEBAC/NOBAC), which represented a significant portion of financial income.
- Regulatory Capital: Validate the 21.8% capitalization ratio against Central Bank of Argentina (BCRA) minimum requirements and stress test scenarios.
- Asset Quality Trends: Monitor the non-performing loan (NPL) ratio of 1.77% and the adequacy of the 129.92% coverage ratio in the context of local economic conditions.
- Expense Management: Assess the sustainability of the 48.8% efficiency ratio given the one-time personnel costs included in the quarter.