BMA

Business Context and Reporting Period

Company: Macro Bank Inc. (Banco Macro S.A.)
Filing Type: Form 6-K (Foreign Private Issuer)
Reporting Period: Fiscal year ended December 31, 2009
Filing Date: February 24, 2010
Business Overview: A commercial bank authorized by the Central Bank of Argentina (BCRA), operating primarily in regional areas outside Buenos Aires. The bank offers traditional banking products and services to companies and individuals. It operates through subsidiaries including Banco del Tucumán S.A. and Macro Bank Limited (Bahamas).
Accounting Basis: Financial statements are prepared in accordance with BCRA rules, which differ in certain valuation and disclosure aspects from professional accounting standards effective in Argentina and US GAAP.

Key Financial Metrics (Consolidated)

All figures in thousands of Argentine Pesos (ARS), unless otherwise noted.

Material Changes vs. Prior Period

• Profitability: Net income increased by approximately 13.9% (from 660,050 to 751,930), driven by a significant rise in Gross Intermediation Margin (39.1% increase) and a reduction in the provision for loan losses (33.6% decrease).
• Asset Growth: Total assets grew by 19.7%, primarily due to increases in loans to the non-financial private sector and a substantial expansion in holdings of instruments issued by the Central Bank of Argentina.
• Loan Portfolio: Total loans (net of allowances) increased slightly to 11,096,807 from 11,279,958. However, the composition shifted, with a notable decrease in loans to the non-financial government sector (from 744,507 to 206,484) offset by growth in personal loans and credit cards.
• Deposits: Total deposits increased by 17.6% to 18,592,866, with significant growth in time deposits and checking accounts from the non-financial private sector.
• Merger Impact: The 2008 comparative figures were restated to reflect the retroactive merger of Nuevo Banco Bisel S.A. into Banco Macro S.A., effective January 1, 2009.

Guidance, Outlook, Risks, and Contingencies

• Outlook: Management notes that while global financial markets showed signs of stabilization in early 2009, the Argentine economy faced volatility. The bank monitors macroeconomic changes to identify potential impacts on financial statements.
• Legal Contingencies (Court Orders): Significant litigation exists regarding the "dollarization" of deposits following the 2001 economic crisis. The Argentine Supreme Court ruled that deposits switched to pesos must be reimbursed at the 1.40-to-1 exchange rate adjusted by the CER (Benchmark Stabilization Coefficient). The bank has capitalized certain differences related to these court orders as intangible assets and recorded provisions for estimated additional effects. Management believes no significant effects beyond those recognized are expected.
• Tax Claims: The bank is involved in various tax disputes with federal and provincial authorities regarding income tax and turnover tax assessments. Management believes the outcomes will not have significant effects beyond amounts already recognized.
• Accounting Differences: The filing highlights material differences between BCRA rules and professional accounting standards, particularly regarding the valuation of government securities, goodwill treatment in business combinations, and deferred tax recognition. Under professional standards, assets and liabilities would differ significantly from the reported BCRA figures.
• Dividend Restrictions: Distribution of earnings is subject to BCRA authorization and restrictions, including requirements to maintain minimum capital and specific reserves for subordinated bond interest payments.

Key Facts for Investor Verification

• Accounting Standards: Verify the impact of the differences between BCRA rules and professional accounting standards (Note 5), which could materially alter asset values and equity if US GAAP or IFRS were applied.
• Government Exposure: Assess the risk associated with the significant reduction in loans to the non-financial government sector and the valuation of government securities held in "special investment accounts."
• Legal Provisions: Review the adequacy of provisions related to the "court deposits dollarization" litigation and the capitalized intangible assets associated with these rulings.
• Merger Integration: Confirm the full integration and financial impact of the Nuevo Banco Bisel S.A. merger, which was retroactively applied to 2008 comparatives.
• Capital Structure: Note the capital stock reductions approved in 2009 and the specific restrictions on dividend distributions imposed by the Central Bank.