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, 2011 (2Q11)
Reporting Date: August 4, 2011
Currency: Argentine Pesos (Ps.)
Accounting Standard: Argentine GAAP
Key Financial Metrics
| Metric | 2Q11 Value | Unit |
|---|---|---|
| Net Income | 257.8 | Million Ps. |
| Earnings Per Share (EPS) | 0.43 | Pesos |
| Net Financial Income | 675.1 | Million Ps. |
| Net Fee Income | 362.5 | Million Ps. |
| Return on Average Equity (ROAE) | 24.7 | % (Annualized) |
| Return on Average Assets (ROAA) | 3.1 | % (Annualized) |
| Net Interest Margin | 10.8 | % |
| Efficiency Ratio | 58.8 | % |
| Total Assets | 36,555.1 | Million Ps. |
| Total Deposits | 26,460.9 | Million Ps. |
| Private Sector Financing | 19,863.8 | Million Ps. |
| Non-Performing Loans (NPL) Ratio | 1.51 | % |
| Coverage Ratio | 158.17 | % |
| Capitalization Ratio | 20.0 | % |
| Liquid Assets to Deposits | 42.4 | % |
Material Changes vs. Prior Periods
- Profitability: Net income of Ps.257.8 million was flat compared to 1Q11 (Ps.257.7 million) but increased 16% year-over-year (YoY) from 2Q10 (Ps.222.1 million).
- Revenue Growth: Net financial income rose 6% quarter-over-quarter (QoQ) and 29% YoY. Net fee income increased 8% QoQ and 50% YoY, driven by higher deposit and card fees.
- Loan Portfolio: Financing to the private sector grew 12% QoQ (Ps.2.2 billion) and 52% YoY. Notable growth included credit card loans (+24% QoQ) and overdrafts (+38% QoQ).
- Deposits: Total deposits grew 5% QoQ to Ps.26.5 billion. Transactional deposits increased 11% QoQ, while time deposits declined 4% QoQ as the bank chose not to match institutional rate hikes.
- Asset Quality: The non-performing loan ratio improved to 1.51% from 1.71% in 1Q11. The coverage ratio increased to 158.17%.
- Expenses: Administrative expenses rose 14% QoQ, primarily due to a 29% salary increase for employees effective May 1, 2011, and higher taxes.
Outlook, Risks, and Unusual Items
- Capital Management: The capitalization ratio decreased to 20.0% from 24.2% in 1Q11. This decline was attributed to a cash dividend payment of Ps.505.3 million in May 2011 and increased credit risk requirements due to loan growth. The bank maintains excess capital of Ps.2.0 billion.
- Liquidity: Liquid assets decreased 9% QoQ to Ps.11.2 billion, largely due to a 46% QoQ reduction in the LEBAC/NOBAC (government securities) portfolio. Liquid assets remain at 42.4% of total deposits.
- Income Composition: Income from government and private securities declined 25% QoQ due to a smaller portfolio. Conversely, interest on loans now represents 80% of total financial income, up from 70% in 2Q10.
- Risks and Contingencies: The filing includes standard forward-looking statement disclaimers citing risks such as inflation, interest rate fluctuations, government regulation, credit risk, and exchange rate volatility in Argentina.
- Dividends: A cash dividend of Ps.0.85 per share (USD 2.08 per ADR) was paid in May 2011.
Investor Verification Checklist
- Dividend Impact: Verify the impact of the Ps.505.3 million dividend payment on the Q2 capitalization ratio and future capital raising needs.
- Loan Growth Sustainability: Assess the sustainability of the 12% QoQ loan growth, particularly in credit cards and overdrafts, against the backdrop of rising administrative costs.
- Deposit Mix Shift: Monitor the trend of time deposits declining (-4% QoQ) versus transactional deposits (+11% QoQ) to evaluate funding stability and cost of funds.
- Asset Quality Trends: Confirm the continued improvement in the non-performing loan ratio (1.51%) and the adequacy of the 158% coverage ratio given the expanding loan book.
- Regulatory Capital: Review the 20.0% capitalization ratio against local regulatory minimums and the bank's internal targets for leverage expansion.