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: Fiscal year ended December 31, 2013
Filing Date: March 11, 2014
Business Overview: A commercial bank operating in Argentina, offering traditional banking products to companies and individuals. The bank operates through a network of 401 branches and several subsidiaries, including Banco del Tucumán S.A. and Macro Bank Limited. The financial statements are prepared in accordance with Central Bank of Argentina (BCRA) rules and Argentine professional accounting standards.
Key Financial Metrics (Year Ended Dec 31, 2013)
| Metric | 2013 (Thousands of Pesos) | 2012 (Thousands of Pesos) |
|---|---|---|
| Total Assets | 53,903,954 | 43,570,203 |
| Total Loans (Net) | 35,837,417 | 28,801,317 |
| Total Deposits | 38,647,204 | 32,494,242 |
| Net Income | 2,443,564 | 1,493,618 |
| Net Income Before Tax | 3,656,564 | 2,253,618 |
| Shareholders' Equity | 8,627,431 | 6,199,095 |
| Cash and Cash Equivalents | 11,249,840 | 8,819,683 |
| Subordinated Corporate Bonds | 981,142 | 740,192 |
Note: All figures are in thousands of Argentine pesos. The 2012 comparative figures have been restated to reflect the retroactive merger of Banco Privado de Inversiones S.A.
Material Changes vs. Prior Period
- Profitability Surge: Net income increased by approximately 63.6% year-over-year, rising from Ps. 1.49 billion to Ps. 2.44 billion. Net income before tax grew by 62.2%.
- Asset Growth: Total assets expanded by 23.7%, driven primarily by a 24.4% increase in the loan portfolio (net of allowances).
- Deposit Expansion: Total deposits grew by 18.9%, with significant increases in time deposits and checking accounts from the non-financial private sector.
- Merger Impact: The financial statements for 2012 were restated to include the merger of Banco Privado de Inversiones S.A., effective retroactively from January 1, 2013. This consolidation increased capital stock and adjusted equity accounts.
- Provisions: The provision for loan losses decreased to Ps. 500.9 million in 2013 from Ps. 560.4 million in 2012, despite the growth in the loan book.
Guidance, Outlook, Risks, and Contingencies
Management Commentary & Outlook: Management notes that the international and local macroeconomic context generates uncertainty due to growth contractions and volatility in financial assets and the foreign exchange market. Following December 31, 2013, there was a strong appreciation of foreign currency and a rise in interest rates. Management is monitoring these situations to determine potential impacts on future financial statements.
Risks and Contingencies:
- Legal Actions (Crisis of 2001): The bank faces ongoing legal actions related to the 2001 economic crisis, specifically regarding the reimbursement of deposits denominated in foreign currency. The bank has recorded provisions of Ps. 14.2 million (stand-alone) and Ps. 23.3 million (consolidated) related to court deposit dollarization rulings. Management believes no additional significant effects are expected beyond recognized amounts.
- Tax Claims: Significant ongoing claims exist with the AFIP (Federal Public Revenue Agency) and City of Buenos Aires tax authorities regarding income tax and turnover tax for fiscal years prior to 2005. The bank believes its position is supported by favorable court resolutions in similar cases.
- Consumer Lawsuits: A lawsuit filed by the consumer association "ADECUA" regarding "life insurance" charges was settled in 2010, but a judge ordered an adjustment to the reimbursement performance in 2013, which the bank has appealed.
- Regulatory Proceedings: The bank and its directors have been notified of proceedings by the Central Bank and the Financial Information Unit (UIF) regarding regulatory breaches by customers. These are being challenged administratively and/or in court.
Investor Verification Checklist
- Merger Accounting: Verify the retroactive restatement of 2012 figures due to the merger with Banco Privado de Inversiones S.A. and the impact on capital stock and equity.
- Foreign Exchange Exposure: Review Exhibit L for the breakdown of assets and liabilities in foreign currencies, given the noted volatility and appreciation of the dollar post-year-end.
- Legal Provisions: Assess the adequacy of provisions for the "Crisis of 2001" deposit lawsuits and ongoing tax disputes with AFIP and local authorities.
- Loan Quality: Analyze the classification of debtors (Exhibit B) and the trend in allowances for loan losses relative to the rapid expansion of the loan portfolio.
- Capital Adequacy: Confirm compliance with minimum capital requirements (Excess amount reported as Ps. 3.8 billion) and restrictions on earnings distribution imposed by the Central Bank.