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, 2014
Filing Date: March 3, 2015
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 to companies and individuals and operates through subsidiaries including Banco del Tucumán S.A. and Macro Bank Limited. The financial statements are prepared in accordance with BCRA accounting standards, which differ in certain valuation aspects from Argentine professional accounting standards and US GAAP.
Key Financial Metrics (Stand-Alone)
Figures in thousands of Argentine Pesos (ARS)
| Metric | 2014 | 2013 |
|---|---|---|
| Total Assets | 68,239,038 | 53,903,954 |
| Total Liabilities | 56,747,221 | 45,276,523 |
| Shareholders' Equity | 11,491,817 | 8,627,431 |
| Net Income | 3,479,531 | 2,443,564 |
| Gross Intermediation Margin | 7,248,424 | 5,131,259 |
| Provision for Loan Losses | 605,169 | 500,895 |
| Cash and Cash Equivalents | 14,690,022 | 11,249,840 |
| Net Cash Flow from Operating Activities | 3,451,062 | 1,550,082 |
Material Changes vs. Prior Period
- Asset Growth: Total assets increased by approximately 26.6% (ARS 14.3 billion), driven by significant expansion in loans to the non-financial private sector and a substantial increase in holdings of instruments issued by the Central Bank of Argentina.
- Profitability: Net income rose by 42.4% to ARS 3.48 billion. This was supported by a 41.3% increase in Gross Intermediation Margin and a 364% surge in net income from government and private securities.
- Loan Portfolio: Loans to the non-financial private sector grew significantly, with personal loans increasing by 16.3% and credit card loans by 33.9% compared to 2013.
- Deposits: Total deposits increased by 24.8% to ARS 48.2 billion, with time deposits and checking accounts showing strong growth.
- Capital: Shareholders' equity grew by 33.2%, bolstered by the current year's net income and adjustments to reserves.
Outlook, Risks, and Contingencies
- Regulatory Environment: The bank is implementing a conversion plan to International Financial Reporting Standards (IFRS) mandated by the BCRA, with full adoption required for fiscal years beginning January 1, 2018.
- Legal and Regulatory Proceedings:
- Central Bank Summaries: Several summaries are pending or in process regarding alleged infractions of foreign exchange regimes, deposit limitations, and financing to the non-financial public sector.
- Sanctions: The bank has received sanctions from the Financial Information Unit (UIF) and the Central Bank related to anti-money laundering compliance and foreign currency purchases. As of the filing date, the total amount of sanctions pending payment or appeal was ARS 11,376 (thousands).
- Tax Claims: Ongoing disputes with the AFIP and City of Buenos Aires tax authorities regarding income tax and turnover tax for prior fiscal years.
- Macroeconomic Risks: Management notes uncertainty due to contractions in growth levels, volatility in financial assets, and foreign exchange market restrictions imposed by the Argentine government since 2011.
- Earnings Distribution: The Board of Directors has decided to postpone the distribution proposal for the fiscal year ended December 31, 2014, until the meeting considering the Annual Report. Distributable amounts are subject to Central Bank restrictions regarding minimum capital requirements and pending sanctions.
Investor Verification Checklist
- Accounting Standards: Verify the impact of the differences between BCRA standards and US GAAP/IFRS, particularly regarding the valuation of government securities and deferred taxes (Note 5).
- Currency Risk: Assess the exposure to Argentine Peso volatility and the impact of foreign exchange controls on the bank's liquidity and asset valuation.
- Regulatory Sanctions: Review the status of pending appeals regarding UIF and Central Bank sanctions to determine potential future cash outflows or reputational impact.
- Loan Quality: Analyze the composition of the loan portfolio, specifically the growth in credit card and personal loans, and the adequacy of the provision for loan losses (ARS 605 million).
- Capital Adequacy: Confirm compliance with minimum capital requirements, noting the excess computable capital of ARS 5.35 billion as of December 31, 2014.