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, 2015 (2Q15)
Reporting Date: August 10, 2015
Currency: Argentine Pesos (Ps.)
Accounting Standard: Argentine GAAP
Key Financial Metrics
| Metric | 2Q15 Value | 2Q14 Value | 1Q15 Value |
|---|---|---|---|
| Net Income | Ps. 822.7 million | Ps. 732.7 million | Ps. 1,114.2 million |
| Earnings Per Share (Outstanding) | Ps. 1.41 | Ps. 1.25 | Ps. 1.91 |
| Return on Average Equity (ROAE) | 25.8% (Annualized) | 28.8% (Annualized) | 36.6% (Annualized) |
| Return on Average Assets (ROAA) | 4.0% (Annualized) | 4.3% (Annualized) | 5.9% (Annualized) |
| Net Interest Margin | 17.6% (Accumulated) | 15.2% (Accumulated) | 20.8% (Quarterly) |
| Total Assets | Ps. 88.0 billion | Ps. 72.9 billion | Ps. 81.6 billion |
| Total Deposits | Ps. 64.6 billion | Ps. 51.3 billion | Ps. 58.4 billion |
| Private Sector Financing | Ps. 51.5 billion | Ps. 39.9 billion | Ps. 48.1 billion |
| Capitalization Ratio | 22.4% | 23.2% | 23.6% |
| Non-Performing Loans (NPL) Ratio | 1.92% | 2.02% | 1.92% |
| Coverage Ratio | 131.23% | 133.07% | 131.94% |
Material Changes vs. Prior Periods
- Profitability: Net income increased 12% year-over-year (YoY) but declined 26% quarter-over-quarter (QoQ). The QoQ decline was primarily driven by a 56% drop in net income from government and private securities due to lower market prices.
- Operating Result: Operating result decreased 34% QoQ to Ps. 1.2 billion. Excluding income from government securities and guaranteed loans, the operating result would have only decreased 1% QoQ.
- Lending Growth: Financing to the private sector grew 7% QoQ (Ps. 3.4 billion). Commercial loans (prefinancing, pledge, documents) grew between 13% and 20% QoQ. Consumer loans (personal, credit cards) grew 7% to 10% QoQ.
- Deposits: Total deposits grew 11% QoQ to Ps. 64.6 billion. Private sector deposits grew 11%, driven by a 14% increase in transactional deposits.
- Expenses: Administrative expenses rose 10% QoQ and 32% YoY, largely due to retroactive salary increases agreed with unions in June 2015. The accumulated efficiency ratio deteriorated to 48.5% from 43.3% in 1Q15.
- Asset Quality: The NPL ratio remained stable at 1.92% QoQ. The coverage ratio remained robust at 131.23%.
Outlook, Risks, and Management Commentary
- Capital Position: The bank maintains a strong solvency position with excess capital of Ps. 6.1 billion (93% of requirements). Management aims to utilize this excess capital effectively.
- Liquidity: Liquid assets reached 40.2% of total deposits. The bank increased its holdings of Calls and LEBAC/NOBAC securities QoQ.
- Public Sector Exposure: Net exposure to the public sector (excluding LEBAC/NOBAC) was 4.5% of total assets, remaining below the Argentine system average of 10%.
- Regulatory Environment: The Central Bank (BCRA) increased minimum interest rates for time deposits in July 2015 and released new features for the productive investment program (LIP).
- Risks: Forward-looking statements are subject to risks including inflation, interest rate changes, government regulation, credit risk, fluctuations in Argentine public debt value, and exchange rate volatility.
Investor Verification Checklist
- Securities Income Volatility: Verify the impact of the 56% QoQ decline in government/private securities income on future earnings stability.
- Cost of Funds: Monitor the effect of the BCRA's July 2015 increase in minimum interest rates for time deposits on the bank's net interest margin.
- Efficiency Ratio: Track the trend of the efficiency ratio, which deteriorated to 48.5% YTD due to personnel cost increases.
- Asset Quality: Confirm the stability of the 1.92% NPL ratio and 131% coverage ratio amidst economic fluctuations.
- Currency Exposure: Review the net foreign currency position (Ps. 2.5 billion) and CER exposure (Ps. 383 million) for potential FX risk.