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, 2016
Filing Date: March 29, 2017
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 SA and Macro Bank Limited. Shares are listed on the Buenos Aires Stock Exchange (BCBA), the New York Stock Exchange (NYSE), and the Mercado Abierto Electrónico (MAE).
Key Financial Metrics (Year Ended Dec 31, 2016)
All figures in thousands of Argentine Pesos (ARS), unless otherwise noted.
| Metric | 2016 | 2015 |
|---|---|---|
| Total Assets | 144,421,205 | 95,478,369 |
| Total Loans (Net) | 81,043,677 | 56,825,267 |
| Total Deposits | 102,496,946 | 67,911,254 |
| Financial Income | 26,037,903 | 18,017,212 |
| Financial Expense | 12,240,427 | 8,090,777 |
| Gross Intermediation Margin | 13,797,476 | 9,926,435 |
| Net Income (Fiscal Year) | 6,540,832 | 5,009,889 |
| Shareholders' Equity | 22,105,898 | 15,877,550 |
| Cash and Cash Equivalents | 34,815,058 | 18,907,789 |
| Subordinated Corporate Bonds | 6,407,840 | 1,957,618 |
Material Changes vs. Prior Period
- Asset Growth: Total assets increased by approximately 51% year-over-year, driven primarily by a 43% increase in the loan portfolio and a 51% increase in deposits.
- Profitability: Net income rose 31% to 6.54 billion ARS. The Gross Intermediation Margin increased by 39% to 13.8 billion ARS.
- Capital Structure: Significant issuance of Subordinated Resettable Corporate Bonds (Class A) in November 2016 totaling USD 400 million (approx. 6.4 billion ARS), increasing subordinated debt by 227%.
- Liquidity: Cash and cash equivalents nearly doubled, increasing from 18.9 billion ARS to 34.8 billion ARS.
- Loan Composition: Personal loans and credit card loans saw substantial growth, reflecting expansion in consumer banking.
Guidance, Outlook, Risks, and Contingencies
- Accounting Standards: Financial statements are prepared under BCRA standards, which differ from Argentine professional accounting standards and US GAAP. The bank is in the process of implementing International Financial Reporting Standards (IFRS) effective for fiscal years beginning January 1, 2018.
- Macroeconomic Environment: Management notes uncertainty regarding the Argentine macroeconomic context, including volatility in interest rates and exchange rates, though volatility decreased in late 2016. Significant peso depreciation occurred in December 2015.
- Regulatory and Legal Contingencies:
- Central Bank Summaries: Several summaries regarding foreign exchange regime infractions and anti-money laundering procedures are pending or in process. Some have been dismissed or statute-barred, while others remain under appeal.
- Penalties: The bank has recorded provisions for administrative, disciplinary, and criminal sanctions totaling 9,110 thousand ARS pending payment or appeal.
- Tax Claims: Ongoing disputes with AFIP and City of Buenos Aires tax authorities regarding income tax deductions and turnover tax on compensation bonds.
- Earnings Distribution: The Board has postponed the proposal for earnings distribution until the meeting considering the Annual Report. Distribution is subject to Central Bank authorization and maintenance of minimum capital and cash requirements.
Investor Verification Checklist
- Currency Impact: Verify the impact of Argentine Peso volatility and exchange rate fluctuations on the reported ARS figures and the bank's foreign currency exposure.
- Accounting Differences: Review Note 5 for adjustments required to reconcile BCRA standards with Argentine professional accounting standards and potential IFRS impacts.
- Regulatory Status: Monitor the status of pending Central Bank summaries and penalties, particularly those related to foreign exchange and anti-money laundering compliance.
- Capital Adequacy: Confirm the bank's compliance with minimum capital requirements (currently exceeding requirements by 16.2 billion ARS) and the implications of the new subordinated bond issuance.
- Loan Quality: Assess the adequacy of loan loss allowances (1.65 billion ARS) against the growing loan portfolio and the classification of debtors (Exhibit B).