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: Second Quarter ended June 30, 2021 (2Q21)
Accounting Framework: IFRS with Hyperinflation Accounting (IAS 29) applied since 1Q20. All figures are in Argentine Pesos (Ps.) restated to the measuring unit current at the end of the reporting period.
Key Financial Metrics
- Net Income: Ps. 4.6 billion (90% increase QoQ; 50% decrease YoY).
- Earnings Per Share (EPS): Ps. 7.22 (90% increase QoQ; 50% decrease YoY).
- Profitability Ratios: Annualized Return on Average Equity (ROAE) of 7.8%; Annualized Return on Average Assets (ROAA) of 1.7%.
- Net Interest Margin (NIM): 18.8% (including FX); 18.4% (excluding FX).
- Efficiency Ratio: 38.4% (deteriorated from 35.7% in 1Q21).
- Capital & Solvency: Regulatory Capital Ratio of 38.3% (Basel III); Tier 1 Ratio of 30.9%. Excess capital totaled Ps. 167 billion.
- Liquidity: Liquid assets represented 93% of total deposits.
- Asset Quality: Non-performing financing ratio was 1.68% with a coverage ratio of 212.91%.
Material Changes vs. Prior Period
- Revenue: Net operating income decreased 5% QoQ to Ps. 39.4 billion, driven by lower net interest income (-4% QoQ) due to regulatory caps on lending rates and floors on deposit rates. Net fee income increased 3% QoQ.
- Loan Portfolio: Financing to the private sector decreased 7% QoQ (Ps. 20 billion) and 19% YoY, reflecting economic recession and pandemic effects. Commercial loans fell 13% QoQ.
- Deposits: Total deposits decreased 3% QoQ to Ps. 492.3 billion. Private sector deposits fell 1% QoQ, led by a 7% decline in time deposits.
- Asset Quality: The non-performing loan ratio rose to 1.68% from 0.92% in 1Q21. This increase is attributed to the expiration of Central Bank grace periods for pandemic-related payment deferrals, which previously masked delinquencies.
- Monetary Position: The result from the net monetary position (inflation adjustment) was a loss of Ps. 13.6 billion, a 15% improvement (lower loss) compared to 1Q21, partly due to lower inflation rates during the quarter.
Outlook, Risks, and Management Commentary
- Regulatory Environment: The Central Bank of Argentina extended the ban on dividend distribution for financial institutions until December 31, 2021. New regulations require banks to grant "Zero interest rate credits" under specific government programs.
- Credit Ratings: Moody's upgraded the local rating for Senior Unsecured Series B Notes to AAA.ar; Fitch upgraded Subordinated Series A Notes to AA+(arg).
- Risks: Significant risks include high inflation, exchange rate fluctuations, government regulation changes, and the ongoing economic impact of the Covid-19 pandemic. The bank notes that forward-looking statements are subject to these uncertainties.
- Capital Strategy: Management aims to utilize the significant excess capital (Ps. 167 billion) efficiently, though dividend payouts remain restricted by regulation.
Investor Verification Checklist
- Verify the impact of the expiration of Central Bank grace periods on future non-performing loan trends and provision requirements.
- Monitor the sustainability of the Net Interest Margin given regulatory caps on lending rates and floors on deposit rates.
- Assess the liquidity position relative to the 93% liquid assets-to-deposits ratio and the composition of government securities (Leliqs vs. other sovereign bonds).
- Confirm the timeline for the resumption of dividend distributions following the regulatory ban extension to December 2021.
- Review the exposure to CER-adjustable assets (inflation-indexed) versus liabilities to gauge sensitivity to future inflation volatility.