SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

August 7, 2019

 

 

 

Commission File Number: 001-32827

 

 

 

MACRO BANK INC.

(Translation of registrant’s name into English)

 

 

 

Avenida Eduardo Madero 1182

Ciudad Autónoma de Buenos Aires C1106 ACY

Tel: 54 11 5222 6500

(Address of registrant’s principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes ¨ No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes ¨ No x

 

 

 

2Q19 Earnings Release

  

Banco Macro Announces Results for the Second Quarter of 2019

 

Buenos Aires, Argentina, August 7, 2019 – Banco Macro S.A. (NYSE: BMA; BCBA: BMA) (“Banco Macro” or “BMA” or the “Bank”) announced today its results for the second quarter ended June 30, 2019 (“2Q19”). All figures are in Argentine pesos (Ps.)

 

Summary

 

• The Bank’s net income totaled Ps.7.0 billion in 2Q19. This result was 4% lower than the Ps.7.3 billion posted in 1Q19 and 124% higher than in 2Q19. In 2Q19, the accumulated annualized return on average equity (“ROAE”) and the accumulated annualized return on average assets (“ROAA”) were 47% and 7.7%, respectively. In 2Q19 Recurring Net Income totaled Ps.7.8 billion increasing 37% or Ps.2.1 billion compared with the previous quarter.

 

• In 2Q19, Banco Macro’s financing to the private sector grew Ps.705 million quarter over quarter (“QoQ”) totaling Ps.174.7 billion and increased 16% or Ps.23.8 billion year over year (“YoY”). In the quarter, growth was driven by commercial loans, among which Overdrafts and Others stand out, with a 41% and 6% increase QoQ.

 

• In 2Q19, Banco Macro’s total deposits grew 4% or Ps.11.7 billion QoQ, totaling Ps.284.3 billion and representing 84% of the Bank’s total liabilities. Private sector deposits grew 7% or Ps.16.2 billion QoQ.

 

• Banco Macro continued showing a strong solvency ratio, with excess capital of Ps.51.0 billion 26.3% regulatory capital ratio – Basel III and 19.6% Tier 1 Ratio. In addition, the Bank’s liquid assets remained at an adequate level, reaching 66.4% of its total deposits in 2Q19.

 

• As of 2Q19, the efficiency ratio reached 33.5%, improving from the 38.7% posted in 2Q18.

 

• In 2Q19, the Bank’s non-performing to total financing ratio was 2.12% and the coverage ratio reached 116.1%.

 

2Q19 Earnings Release Conference Call IR Contacts in Buenos Aires :
   
Thursday, August 8, 2019 Jorge Scarinci
Time: 12:00 p.m. Eastern Time | 1:00 p.m. Buenos Aires Time Chief Financial Officer
     
To participate, please dial:    
Argentina Toll Free: Webcast Replay:   click here Nicolás A. Torres
(011) 3984 5677   Investor Relations
Participants Dial In (Toll Free): Available from 08/08/2019 through  
+1 (844) 450 3847 08/22/2019 Phone: (54 11) 5222 6682
Participants International Dial In:   E-mail: investorelations@macro.com.ar
+1 (412) 317 6370    
Conference ID: Banco Macro   Visit our website at:
Webcast: click here   www.macro.com.ar/relaciones-inversores

 

1
2Q19 Earnings Release

 

Disclaimer

 

This press release includes forward-looking statements. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things: inflation; changes in interest rates and the cost of deposits; government regulation; adverse legal or regulatory disputes or proceedings; credit and other risks of lending, such as increases in defaults by borrowers; fluctuations and declines in the value of Argentine public debt; competition in banking and financial services; deterioration in regional and national business and economic conditions in Argentina; and fluctuations in the exchange rate of the peso.

 

The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this press release because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this press release might not occur and are not guarantees of future performance.

 

This report is a summary analysis of Banco Macro's financial condition and results of operations as of and for the period indicated. For a correct interpretation, this report must be read in conjunction with all other material periodically filed with the Comisión Nacional de Valores (www.cnv.gob.ar), the Securities and Exchange Commission (www.sec.gov), Bolsas y mercados Argentinos (www.byma.com.ar) and the New York Stock Exchange (www.nyse.com). In addition, the Central Bank (www.bcra.gov.ar) may publish information related to Banco Macro as of a date subsequent to the last date for which the Bank has published information.

 

Readers of this report must note that this is a translation made from an original version written and expressed in Spanish. Consequently, any matters of interpretation should be referred to the original version in Spanish.

 

2
2Q19 Earnings Release

   

This Earnings Release has been prepared in accordance with the accounting framework established by the Central Bank of Argentina (“BCRA”), based on International Financial Reporting Standards (“I.F.R.S.”) and the resolutions adopted by the International Accouting Standards Board (“I.A.S.B”) and by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“F.A.C.P.E.”) with the exception of (i) Expected losses of IFRS 9 “Financial Instruments” and (ii) IAS 29 “Financial Reporting in Hyperinflationary Economies” both temporarily excluded by the Central Bank of Argentina from the applicable accounting framework for Financial Institutions. Data and figures shown in this Earnings Release may differ from the ones shown in the 20-F annual report which shows the impact of the application of I.F.R.S 9 and IAS 29.

 

Results

 

Earnings per outstanding share were Ps.11.01 in 2Q19, 4% lower than 1Q19 but 137% higher than the result posted a year ago. On a yearly basis Net Income increased 126% while Earnings per Share increased 137%, given that the average amount of outstanding shares decreased in 3Q18, 4Q18 and 1Q19 due to the Share buyback program.

 

EARNINGS PER SHARE   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Net income -Parent Company- (M $)     3,116       3,828       5,243       7,343       7,033       -4 %     126 %
Average # of shares outstanding (M)     670       662       643       639       639       0 %     -5 %
Average #of treasury stocks (shares repurchased) (M)     0       7       26       30       30       0 %     100 %
Book value per avg. Outstanding share ($)     75       76       82       93       94       1 %     25 %
Shares Outstanding (M)     670       648       641       639       639       0 %     -5 %
Earnings per avg. outstanding share ($)     4.65       5.78       8.15       11.49       11.01       -4 %     137 %
                                                         
Book value per avg. issued ADS (USD)     26.06       18.62       22.16       21.41       21.41       0 %     -18 %
Earnings per avg. outstanding ADS (USD)     1.61       1.41       2.16       2.65       2.59       -2 %     61 %

 

Banco Macro’s 2Q19 net income of Ps.7.0 billion was 4% or Ps.312 million lower than the previous quarter and 124% or Ps.3.9 billion higher YoY. This result represented an accumulated ROAE and ROAA of 47% and 7.7% respectively.

 

In 2Q19 Recurring Net Income was Ps.7.8 billion, 37% or Ps.2.1 billion higher than the result posted in 1Q19. (See table below for recurring net income)

 

3
2Q19 Earnings Release

 

 

INCOME STATEMENT RECURRING   MACRO Consolidated     Variation  
In MILLION $   4Q18     1Q19(¹)     2Q19(²)     QoQ  
                         
Net Interest Income     12,288       12,931       16,785       30 %
Net fee income     3,259       3,310       3,391       2 %
Subtotal (Net Interest Income + Net Fee Income)     15,547       16,241       20,176       24 %
Net Income from financial instruments at fair value through P&L     364       605       133       -78 %
Income from assets at amortized cost     1       -17       0       -  
Differences in quoted prices of gold and foreign currency     729       -167       333       -  
Other operating income     529       736       817       11 %
Provision for loan losses     836       800       848       6 %
Net Operating Income     16,218       16,598       20,611       24 %
Employee benefits     3,124       3,133       4,007       28 %
Administrative expenses     2,105       2,096       2,301       10 %
Depreciation and impairment of assets     215       290       317       9 %
Other operating expenses     3,213       3,104       2,886       -7 %
Operating Income     7,561       7,975       11,100       39 %
Result from associates & joint ventures     33       26       23       -12 %
Result before taxes from continuing operations     7,594       8,001       11,123       39 %
Income tax     2,352       2,307       3,319       44 %
Net income from continuing operations     5,243       5,694       7,804       37 %
                                 
Net Income of the period     5,243       5,694       7,804       37 %

 

(¹) Excluding Prisma & Molinos Cañuelas

(²) Excluding results related to social security contributions (Employee benefits & Other Operating income), sale of real estate (Other Operating income), Prisma dividends (Result from associates & joint ventures) and Income tax

 

Net operating income (before G&A and personnel expenses) was Ps.20.8 billion in 2Q19, increasing 9% or Ps.1.7 billion compared to 1Q19 and 93% or Ps.10 billion compared to the previous year.

 

Operating income (after G&A and personnel expenses) was Ps.9.3 billion in 2Q19, 11% or Ps.1.2 billion lower than in 1Q19 and 118% or Ps.5.1 billion higher than a year ago.

 

It is important to emphasize that this result was obtained with a leverage of 6.4x assets to equity ratio.

 

4
2Q19 Earnings Release

  

INCOME STATEMENT   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Net Interest Income     9,093       10,323       12,288       12,931       16,785       30 %     85 %
Net fee income     2,681       2,869       3,259       3,310       3,391       2 %     26 %
Subtotal (Net Interest Income + Net Fee Income)     11,774       13,192       15,547       16,241       20,176       24 %     71 %
Net Income from financial instruments at fair value through P&L     -46       499       364       1,974       133       -93 %     -389 %
Income from assets at amortized cost     0       -3       1       -17       0       -       -  
Differences in quoted prices of gold and foreign currency     -1,012       -1,244       729       -51       333       -       -  
Other operating income     600       1,202       413       3,114       983       -68 %     64 %
Provision for loan losses     571       732       836       2,154       848       -61 %     49 %
Net Operating Income     10,745       12,914       16,218       19,107       20,777       9 %     93 %
Employee benefits     2,443       2,720       3,124       3,133       4,916       57 %     101 %
Administrative expenses     1,550       1,776       2,105       2,096       2,301       10 %     48 %
Depreciation and impairment of assets     173       187       215       290       317       9 %     83 %
Other operating expenses     2,317       2,693       3,213       3,104       3,950       27 %     70 %
Operating Income     4,262       5,538       7,561       10,484       9,293       -11 %     118 %
Result from associates & joint ventures     145       12       33       26       613       2258 %     323 %
Result before taxes from continuing operations     4,407       5,550       7,594       10,510       9,906       -6 %     125 %
Income tax     1,271       1,718       2,351       3,166       2,874       -9 %     126 %
Net income from continuing operations     3,136       3,832       5,243       7,344       7,032       -4 %     124 %
                                                         
Net Income of the period     3,136       3,832       5,243       7,344       7,032       -4 %     124 %
Net income of the period attributable to parent company     3,116       3,828       5,243       7,343       7,033       -4 %     126 %
Net income of the period attributable to minority interest     20       4       0       1       -1       -       -  

 

The Bank’s 2Q19 net interest income totaled Ps.16.8 billion, 30% or Ps.3.9 billion higher than in 1Q19 and 85% or Ps.7.7 billion higher YoY.

 

In 2Q19 interest income totaled Ps.31.3 billion, 28% or Ps.6.9 billion higher than in 1Q19 and 130% or Ps.17.7 billion higher than in 2Q18.

 

Income from interest on loans and other financing totaled Ps.14.7 billion, 1% or Ps.205 million higher compared with the previous quarter. On a yearly basis Income from interest on loans increased 42% or Ps.4.4 billion.

 

In 2Q19 income from government and private securities increased 57% or Ps.5.4 billion QoQ and 376% or Ps.11.8 billion compared with the same period of last year. This result is explained 96% by income from government and private securities through other comprehensive income (Central Bank Notes) and the remaining 4% is explained by income of government and private securities at amortized cost.

 

In 2Q19 Differences foreign currency totaled a Ps.333 million gain, due to the 2% argentine peso appreciation against the US dollar and the Bank’s long spot dollar position during most of the quarter and FX trading results (Ps.461 million). It should be noted that if income from investment in derivative financing instruments is added then differences in quoted prices of gold and foreign currency in 2Q19 resulted in a Ps.321 million gain.

 

5
2Q19 Earnings Release

  

DIFFERENCES IN QUOTED PRICES OF
GOLD AND FOREIGN CURRENCY
  MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
(1) Differences in quoted prices of gold and foreign currency     -1,012       -1,244       729       -51       333                  
Translation of FX assets and liabilities to Pesos     -1,336       -1,759       354       -481       -129       -       -90 %
Income from foreign currency exchange     324       515       375       430       462       7 %     43 %
                                                         
(2) Net Income from financial assets and liabilities at fair value through P&L     -3       235       -22       301       -12               300 %
Income from investment in derivative financing instruments     -3       235       -22       301       -12       -       300 %
                                                         
(1) +(2) Total Result from Differences in quoted prices of gold and foreign currency     -1,015       -1,009       707       250       321       28 %        

 

INTEREST INCOME   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Interest on Cash and due from Banks     2       5       15       31       35       13 %     1650 %
Interest from government securities     3,144       4,380       7,898       9,515       14,951       57 %     376 %
Interest from private securities     50       71       2       1       0       -100 %     -100 %
Interest on loans and other financing                                                        
To the financial sector     205       312       546       494       355       -28 %     73 %
Interest on overdrafts     962       1,448       2,442       1,872       1,739       -7 %     81 %
Interest on documents     727       856       1,089       1,201       1,086       -10 %     49 %
Interest on mortgages loans     785       1,101       1,795       1,310       1,673       28 %     113 %
Interest on pledged loans     142       142       148       129       124       -4 %     -13 %
Interest on personal loans     5,021       5,447       5,676       5,785       6,005       4 %     20 %
Interest on credit cards loans     1,545       1,788       2,371       2,567       2,677       4 %     73 %
Interest on financial leases     34       40       57       44       43       -2 %     26 %
Interest on other loans     954       1,211       1,447       1,124       1,029       -8 %     8 %
Interest on Repos                                                        
From the BCRA     7       0       0       9       0       -100 %     -100 %
Other financial institutions     39       8       328       313       1,617       417 %     4046 %
Total Interest income     13,617       16,809       23,814       24,395       31,334       28 %     130 %
                                                         
Income from Interest on loans     10,375       12,345       15,571       14,526       14,731       1 %     42 %

 

The Bank’s 2Q19 interest expense totaled Ps.14.6 billion, increasing 27% (Ps.3.1 billion) compared to the previous quarter and 222% (Ps.10 billion) compared to 2Q18.

 

In 2Q19, interest on deposits represented 93% of the Bank’s total interest expense, increasing 28% or Ps.3 billion QoQ. On a yearly basis, interest on deposits increased 250% or Ps.9.7 billion.

 

6
2Q19 Earnings Release

 

INTEREST EXPENSE   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Deposits                                                        
Interest on checking accounts     0       142       491       118       52       -56 %     100 %
Interest on saving accounts     64       91       140       97       153       58 %     139 %
Interest on time deposits     3,814       5,464       10,013       10,372       13,368       29 %     250 %
Interest on other financing from BCRA and financial inst.     22       48       45       43       62       44 %     182 %
Repos                                                        
Other financial institutions     24       66       64       71       107       51 %     346 %
Interest on corporate bonds     422       406       478       452       470       4 %     11 %
Interest on subordinated bonds     174       252       267       280       311       11 %     79 %
Interest on other financial liabilities     4       17       28       31       26       -16 %     550 %
Total financial expense     4,524       6,486       11,526       11,464       14,549       27 %     222 %
                                                         
Expenses from interest on deposits     3,878       5,697       10,644       10,587       13,573       28 %     250 %

 

As of 2Q19, the Bank’s net interest margin (including FX) was 17.6%, higher than the 17.2% posted in 1Q19 and the 14.4% in 2Q18.

 

As of 2Q19 Net Interest Margin (excluding FX) was 17.5%, higher than the 17.3% posted in 1Q19 and the 15.2% in 2Q18. This result shows the Bank’s ability to defend its margin.

 

ASSETS & LIABILITIES PERFORMANCE   MACRO Consolidated  
In MILLION $   2Q18           3Q18           4Q18           1Q19     2Q19  
Yields & rates in annualized
nominal %
  AVERAGE
    INT     AVERAGE
    INT     AVERAGE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT  
Interest-earning assets                                                                                
Cash and Deposits in Banks     35,267       0.0 %     54,563       0.0 %     69,490       0.1 %     75,216       0.2 %     87,393       0.2 %
Government & Securities at fair value through P&L     950       -2.0 %     1,695       -1.0 %     2,201       25.7 %     2,388       20.4 %     2,126       14.0 %
Loans & Other Financing                                                                                
Public Sector     1,937       32.2 %     2,167       45.1 %     2,112       68.5 %     1,430       55.9 %     1,016       46.6 %
Financial Sector     3,624       21.5 %     4,235       15.0 %     4,747       45.6 %     5,222       38.5 %     3,632       39.6 %
Private Sector     145,809       27.7 %     155,050       30.3 %     166,486       34.8 %     170,112       33.1 %     172,673       33.2 %
Other debt securities     40,265       31.3 %     42,518       43.4 %     54,356       59.0 %     73,142       53.5 %     94,276       63.7 %
Other interest-earning assets     9,260       1.7 %     9,705       2.2 %     11,650       13.5 %     13,922       50.6 %     20,891       32.0 %
Total interest-earning assets     237,112       23.0 %     269,933       24.9 %     311,042       30.8 %     341,432       31.0 %     382,007       33.1 %
                                                                                 
Non interest-earning assets     10,792               11,456               11,894               13,268               15,315          
Total Average Assets     247,904               281,389               322,936               354,700               397,322          
                                                                                 
Interest-bearing liabilities                                                                                
Deposits                                                                                
Public Sector     14,500       8.4 %     16,987       12.6 %     21,996       23.1 %     17,248       31.3 %     17,586       31.8 %
Financial Sector     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %
Private Sector     143,473       10.2 %     167,919       12.4 %     199,275       18.8 %     183,154       20.7 %     211,086       23.4 %
BCRA and other financial institutions     1,058       7.6 %     2,886       8.9 %     2,924       9.8 %     3,329       8.9 %     2,592       13.3 %
Corporate bonds     7,746       21.9 %     7,120       22.6 %     6,359       29.8 %     6,189       29.6 %     6,161       30.6 %
Subordinated bonds     9,474       7.5 %     12,987       7.7 %     15,024       7.0 %     15,868       7.2 %     17,821       7.0 %
Other interest-bearing liabilities     348       35.0 %     540       48.3 %     392       64.4 %     626       46.0 %     1,022       42.4 %
Total int.-bearing liabilities     176,599       10.4 %     208,439       12.5 %     245,970       18.7 %     226,414       20.7 %     256,268       23.0 %
                                                                                 
Total non int.-bearing liab. & equity     71,305               72,950               76,966               128,286               141,054          
                                                                                 
Total Average Liabilities & Equity     247,904               281,389               322,936               354,700               397,322          
                                                                                 
Assets Performance             13,593               16,958               24,152               26,096               31,524  
Liabilities Performance             4,599               6,568               11,617               11,567               14,667  
Net Interest Income             8,994               10,390               12,535               14,529               16,857  
Total interest-earning assets             237,112               269,933               311,042               341,432               382,007  
Net Interest Margin (NIM)             15.2 %             15.3 %             16.0 %             17.3 %             17.7 %

 

In 2Q19 Banco Macro’s net fee income totaled Ps.3.4 billion, 2% or Ps.81 million higher than in 1Q19 and 26% or Ps.710 million higher than the same period of last year.

 

In the quarter, fee income totaled Ps.3.7 billion, 3% or Ps.119 million higher than in 1Q19. Fees on collection services and fees related to transferable securities stand out, with a 20% and 348% increase respectively QoQ. On a yearly basis, fee income increased 27% or Ps.779 million.

 

7
2Q19 Earnings Release

  

In the quarter, total fee expenses increased 16% or Ps.38 million. On a yearly basis, fee expenses increased 33% or Ps.69 million.

 

NET FEE INCOME   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Fee charged on deposit accounts     1,275       1,414       1,529       1,515       1,418       -6 %     11 %
Debit and credit card fees     851       766       864       1,106       1,108       0 %     30 %
Fees on collection services     326       346       382       401       482       20 %     48 %
Insurance fees     193       217       235       225       233       4 %     21 %
Fees on private securities     108       118       123       138       150       9 %     39 %
Fees related to transferable securities     25       20       16       21       94       348 %     276 %
Other fees related to foreign trade     51       70       81       74       94       27 %     84 %
Other     62       62       246       71       91       28 %     47 %
Total fee income     2,891       3,013       3,476       3,551       3,670       3 %     27 %
                                                         
Total fee expense     210       144       217       241       279       16 %     33 %
                                                         
Net fee income     2,681       2,869       3,259       3,310       3,391       2 %     26 %

 

In 2Q19 Net Income from financial assets and liabilities at fair value through profit or loss totaled Ps.133 million, decreasing 93% or Ps.1.8 billion compared with 1Q19. It should be noted that 1Q19 positive result was driven by the mark to market of the remaining 49% stake in Prisma Medios de Pago (now shown under Investments in equity instruments) and that it was not observed in 2Q19.

 

NET INCOME FROM FINANCIAL ASSETS AND LIABILITIES
AT FAIR VALUE THROUGH PROFIT OR LOSS
  MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Profit or loss from government securities     39       215       165       165       39       -76 %     0 %
Profit or loss from private securities     20       66       168       149       145       -3 %     625 %
Profit or loss from investment in derivative financing instruments     -3       235       -22       301       -12       -       300 %
Profit or loss from other financial assets     9       61       65       51       49       -4 %     444 %
Profit or loss from investment in equity instruments     6       1       4       1,401       9       -99 %     50 %
Profit or loss from the sale of financial assets at fair value     -111       -85       -16       -91       -97       7 %     -13 %
Income from financial assets at fair value through profit or loss     -40       493       364       1,976       133       -93 %        
                                                         
Profit or loss from derivative financing instruments     -6       6       0       -2       0       -       -  
Income from financial liabilities at fair value through profit or loss     -6       6       0       -2       0       -       -  
                                                         
NET INCOME FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS     -46       499       364       1,974       133       -93 %        

 

In the quarter Other Operating Income increased Ps.983 million, decreasing 68% or Ps.2.1 billion compared with 1Q19. It is worth mentioning that during 1Q19 Other Operating Income increased due to the sale of the 51% stake in Prisma something that it is not observed during 2Q19. In 2Q19 Sale of real estate and other non-financial assets increased Ps.161 million due to the sale of two properties. On a yearly basis Other Operating Income increased 64% or Ps.383 million.

 

8
2Q19 Earnings Release

  

OTHER OPERATING INCOME   MACRO Consolidated     Variation  
IN MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Credit and debit cards     0       0       0       37       55       49 %     100 %
Lease of safe deposit boxes     51       57       62       72       80       11 %     57 %
Other service related fees     232       240       192       257       170       -34 %     -27 %
Sale of real estate and other non-financial assets     27       0       24       4       166       4050 %     515 %
Other adjustments and interest from other receivables     40       73       69       133       168       26 %     320 %
Initial recognition of loans     34       47       -51       28       42       50 %     24 %
Sale of property, plant and equipment     1       1       36       2       3       50 %     200 %
Others     215       784       81       2,581       299       -88 %     39 %
Other Operating Income     600       1,202       413       3,114       983       -68 %     64 %

 

In 2Q19 Banco Macro’s administrative expenses plus employee benefits totaled Ps.7.2 billion, 38% or Ps.2 billion higher than the previous quarter. On a yearly basis administrative expenses plus employee benefits increased 81% or Ps.3.2 billion, due to higher expenses related to employee benefits (salary increases and higher social security contributions) and others (for further information please see note on page 17).

 

Employee benefits increased 57% or Ps.1.8 billion QoQ. On a yearly basis Employee benefits increased 101% or Ps.2.5 billion. The main drivers for the increase were higher social security contributions (Ps.1.1 billion) and salary increases agreed with the Union.

 

As of 2Q19, the accumulated efficiency ratio reached 33.5%, deteriorating from the 28.6% posted in 1Q19 and improving from the 38.7% posted in 2Q18. In 2Q19 expenses (employee benefits + G&A expenses + depreciation and impairment of assets) increased 37%, while income (net interest income + net fee income + differences in quoted prices of gold and foreign currency + other operating income + net income from financial assets at fair value through profit or loss – (Turnover Tax + Insurance on deposits)) increased 2% compared to 1Q19.

 

PERSONNEL & ADMINISTRATIVE EXPENSES   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Employee benefits     2,443       2,720       3,124       3,133       4,916       57 %     101 %
Remunerations     1,839       2,076       2,350       2,299       3,004       31 %     63 %
Social Security Contributions     364       403       453       476       1,555       227 %     327 %
Compensation and bonuses     185       174       235       278       276       -1 %     49 %
Employee services     55       67       86       80       81       1 %     47 %
Administrative Expenses     1,550       1,776       2,105       2,096       2,301       10 %     48 %
Taxes     224       214       236       266       300       13 %     34 %
Maintenance, conservation fees     208       243       293       280       316       13 %     52 %
Directors & statutory auditors´ fees     147       174       233       323       290       -10 %     97 %
Security services     168       200       195       212       220       4 %     31 %
Electricity & Communications     122       154       201       208       235       13 %     93 %
Other professional fees     124       145       191       164       199       21 %     60 %
Rental agreements     74       88       105       53       48       -9 %     -35 %
Advertising & publicity     55       81       146       51       92       80 %     67 %
Personnel allowances     31       30       32       33       40       21 %     29 %
Stationary & Office Supplies     13       17       16       18       19       6 %     46 %
Insurance     13       15       24       21       25       19 %     92 %
Hired administrative services     5       5       5       4       4       0 %     -20 %
Other     366       410       429       463       513       11 %     40 %
Total Administrative Expenses     3,993       4,496       5,229       5,229       7,217       38 %     81 %
                                                         
Total Employees     8,949       9,096       9,028       8,978       8,893                  
Branches     455       473       471       464       463                  
Efficiency ratio     41.9 %     39.1 %     35.8 %     28.6 %     38.3 %                
                                                         
Accumulated efficiency ratio     38.7 %     37.6 %     37.9 %     28.6 %     33.5 %                

 

9
2Q19 Earnings Release

  

In 2Q19, Other Operating Expenses totaled Ps.4 billion, with Turnover Tax and Others standing out with a 1% (Ps.24 million) decrease and a 88% (Ps.804 million) increase respectively QoQ. The increase in Others is related to charges and penalties on social security contributions (for further information please see page 17 “Relevant and Recent Events”) In 2Q19 Other Operating Expenses increased 27% or Ps.846 million. On a yearly basis Other Operating Expenses increased 70% or Ps. 1.6 billion.

 

OTHER OPERATING EXPENSES   MACRO Consolidated     Variation  
MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Turnover Tax     1,309       1,600       1,749       1,855       1,831       -1 %     40 %
Other provision charges     188       224       527       185       236       28 %     26 %
Deposit Guarantee Fund Contributions     69       82       91       104       118       13 %     71 %
Donations     25       20       18       35       37       6 %     48 %
Insurance claims     12       16       17       11       10       -9 %     -17 %
Others     714       751       811       914       1,718       88 %     141 %
Other Operating Expenses     2,317       2,693       3,213       3,104       3,950       27 %     70 %

 

In 2Q19 Banco Macro's effective income tax rate was 29%, compared to 30.1% in 1Q19. The lower effective tax rate is explained by the reduction in statutory tax rates included in the latest tax reform bill approved by Congress (Law 27.430/2017). As of January 2018 statutory tax rate was reduced from 35% to 30% and starting from January 2020 statutory tax rate will be further reduced to 25%.

 

Financial Assets

 

Private sector financing

 

The volume of “core” financing to the private sector (including loans, financial trust and leasing portfolio) totaled Ps.174.7 billion, increasing Ps.705 million QoQ and 16% or Ps.23.9 billion YoY.

 

Within commercial loans, growth was driven by Overdrafts and Other loans; with a 41% and 6% increase QoQ respectively.

 

The main growth in consumer lending was driven by credit card loans and mortgage loans which grew 1% or Ps.161 million and 4% or Ps.597 million respectively QoQ.

 

As of 2Q19, Banco Macro´s market share over private sector loans was 7.7%.

 

10
2Q19 Earnings Release

  

FINANCING TO THE PRIVATE SECTOR   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Overdrafts     11,182       16,933       18,049       11,703       16,467       41 %     47 %
Discounted documents     20,010       22,995       25,160       27,419       22,430       -18 %     12 %
Mortgages loans     12,957       14,843       15,853       16,781       17,378       4 %     34 %
Pledged loans     4,424       5,057       4,367       4,403       3,997       -9 %     -10 %
Personal loans     56,316       57,737       57,517       58,205       57,564       -1 %     2 %
Credit Card loans     27,939       27,614       29,430       29,515       29,676       1 %     6 %
Others     16,115       21,627       20,336       23,783       25,225       6 %     57 %
Total loan portfolio     148,943       166,806       170,712       171,809       172,737       1 %     16 %
                                                         
Financial trusts     509       630       1,384       1,373       985       -28 %     94 %
Leasing     523       485       446       386       335       -13 %     -36 %
Others     850       407       367       434       650       50 %     -24 %
Total financing to the private sector     150,825       168,328       172,909       174,002       174,707       0 %     16 %

 

Public Sector Assets

 

In 2Q19, the Bank’s public sector assets (excluding LELIQs) to total assets ratio was 2.9%, lower than the 3.1% registered in the previous quarter, and higher than the 2.7% posted in 2Q18.

 

In 2Q19, a 14% or Ps.14 billion decrease in LELIQs securities position stands out.

 

PUBLIC SECTOR ASSETS   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Lebacs     40,001       651       0       0       0       0 %     -100 %
Leliqs     0       34,260       55,070       98,918       85,344       -14 %     100 %
Other     5,233       8,770       10,333       10,901       10,630       -2 %     103 %
Government securities     45,234       43,681       65,403       109,819       95,974       -13 %     112 %
Provincial loans     1,973       1,856       1,685       1,197       976       -18 %     -51 %
Loans     1,973       1,856       1,685       1,197       976       -18 %     -51 %
Purchase of government bonds     60       60       75       0       0       0 %     -100 %
Other receivables     60       60       75       0       0       0 %     -100 %
                                                         
TOTAL PUBLIC SECTOR ASSETS     47,267       45,597       67,163       111,016       96,950       -13 %     105 %
                                                         
TOTAL PUBLIC SECTOR LIABILITIES     0       0       0       0       0       0 %     0 %
                                                         
Net exposure     47,267       45,597       67,163       111,016       96,950       -13 %     105 %
                                                         
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)     7,266       10,686       12,093       12,098       11,606       -4 %     60 %
                                                         
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)/TOTAL ASSETS     2.7 %     3.4 %     3.5 %     3.1 %     2.9 %                

 

11
2Q19 Earnings Release

  

Funding

 

Deposits

 

Banco Macro’s deposit base totaled Ps.284.3 billion in 2Q19, growing 4% or Ps.11.7 billion QoQ and 58% or Ps.104.8 billion YoY and representing 84% of the Bank’s total liabilities.

 

On a quarterly basis, private sector deposits grew 7% or Ps.16.2 billion, while public sector deposits decreased 16% or Ps.4.6 billion.

 

The increase in private sector deposits was led by demand deposits, which grew 18% or Ps.16.7 billion QoQ. In addition, time deposits decreased 1% or Ps.1.2 billion QoQ.

 

Within private sector deposits, peso deposits increased 6% or Ps.9.4 billion, while US dollar deposits increased 11% or USD202 million.

 

As of 2Q19, Banco Macro´s market share over private sector deposits was 7%.

 

DEPOSITS   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Public sector     19,405       20,074       19,354       28,192       23,565       -16 %     21 %
                                                         
Financial sector     125       150       148       211       244       16 %     95 %
                                                         
Private sector     159,943       192,345       218,452       244,208       260,450       7 %     63 %
Checking accounts     21,226       23,808       24,375       24,510       29,161       19 %     37 %
Savings accounts     53,507       64,110       68,695       66,673       78,759       18 %     47 %
Time deposits     80,250       98,431       118,034       148,833       147,678       -1 %     84 %
Other     4,960       5,996       7,348       4,192       4,852       16 %     -2 %
Total     179,473       212,569       237,954       272,611       284,259       4 %     58 %
                                                         
Pesos     131,598       140,558       166,597       187,632       191,752       2 %     46 %
Foreign Currency (Pesos)     47,875       72,010       71,358       84,978       92,507       9 %     93 %
Foreign Currency (USD)     1,659       1,761       1,887       1,960       2,179       11 %     31 %

 

Banco Macro’s transactional deposits represent approximately 42% of its total deposit base as of 2Q19. These accounts are low cost and are not sensitive to interest rate increases.

 

Other sources of funds

 

In 2Q19, the total amount of other sources of funds decreased 1% or Ps.1 billion compared to 1Q19. In 2Q19 Shareholder’s Equity increased 1% or Ps.648 million due to the positive result registered in the quarter and the cash dividend payment (Ps.6.4 billion), also Subordinated corporate bonds decreased 4% or Ps.644 million QoQ as a consequence of the argentine peso appreciation against the US dollar registered during the quarter.

 

OTHER SOURCES OF FUNDS   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Central Bank of Argentina     16       22       24       20       24       20 %     50 %
Banks and international institutions     1,180       2,389       2,568       2,345       1,743       -26 %     48 %
Financing received from Argentine financial institutions     633       815       406       745       430       -42 %     -32 %
Subordinated corporate bonds     11,646       16,796       15,288       17,836       17,192       -4 %     48 %
Corporate bonds     8,125       6,513       6,377       6,314       6,193       -2 %     -24 %
Shareholders' equity     50,146       50,963       54,636       62,085       62,733       1 %     25 %
Total other source of funds     71,746       77,498       79,299       89,345       88,315       -1 %     23 %

 

12
2Q19 Earnings Release

  

Liquid Assets

 

In 2Q19, the Bank’s liquid assets amounted to Ps.188.8 billion, showing a 5% or Ps.8.6 billion increase QoQ, and a 101% or Ps.95 billion increase on a yearly basis.

 

In 2Q19, Cash increased 28% or Ps.21.1 billion while LELIQs own portfolio decreased 14% or Ps.13.6 billion.

 

In 2Q19 Banco Macro’s liquid assets to total deposits ratio reached 66.4%.

 

LIQUID ASSETS   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Cash     50,310       68,919       74,766       75,309       96,427       28 %     92 %
Guarantees for compensating chambers     4,822       5,384       5,720       5,735       5,992       4 %     24 %
Call     620       720       405       178       990       456 %     60 %
LEBAC own portfolio     38,039       651       0       0       0       0 %     -100 %
Leliq own portfolio     0       34,260       55,070       98,918       85,344       -14 %     100 %
Total     93,791       109,934       135,961       180,140       188,753       5 %     101 %
                                                         
Liquid assets to total deposits     52.3 %     51.7 %     57.1 %     66.1 %     66.4 %                

 

Solvency

 

Banco Macro continued showing high solvency levels in 2Q19 with an integrated capital (RPC) of Ps.74 billion over a total capital requirement of Ps.23 billion. Banco Macro’s excess capital in 2Q19 was 221% or Ps.51 billion.

 

The regulatory capital ratio (as a percentage of risk-weighted assets- RWA) was 26.3% in 2Q19, TIER1 Ratio stands at 19.6%.

 

The Bank’s aim is to make the best use of this excess capital.

 

MINIMUM CAPITAL REQUIREMENT   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Credit risk requirement     13,185       15,338       15,609       16,329       16,641       2 %     26 %
Market risk requirement     450       303       212       284       421       48 %     -7 %
Operational risk requirement     3,843       4,199       4,616       5,189       5,959       15 %     55 %
Total capital requirements     17,478       19,840       20,437       21,802       23,021       6 %     32 %
                                                         
Ordinary Capital Level 1 (COn1)     48,527       49,097       52,285       58,520       59,406       2 %     22 %
Deductible concepts Level 1 (COn1)     -2,646       -3,186       -3,047       -3,708       -4,160       12 %     57 %
Additional Capital Level 1 (CAn1)     21       0       0       0       0       -1 %     -99 %
Capital Level 2 (COn2)     13,087       18,058       16,875       19,092       18,740       -2 %     43 %
Integrated capital - RPC (i)     58,989       63,969       66,113       73,903       73,986       0 %     25 %
                                                         
Excess capital     41,511       44,129       45,676       52,101       50,965       -2 %     23 %
                                                         
Risk-weighted assets - RWA (ii)     213,679       242,411       249,781       266,581       281,700       6 %     32 %
                                                         
Regulatory Capital ratio [(i)/(ii)]     27.6 %     26.4 %     26.5 %     27.7 %     26.3 %                
                                                         
Ratio TIER 1 [Capital Level 1/RWA]     21.5 %     18.9 %     19.7 %     20.6 %     19.6 %                

 

RWA - (ii): Risk Weighted Assets, considering total capital requirements.

 

13
2Q19 Earnings Release

  

Asset Quality

 

In 2Q19, Banco Macro’s non-performing to total financing ratio reached a level of 2.12%, up from 2.03% in 1Q19, and 1.38% posted in 2Q18.

 

Consumer portfolio non-performing loans increased 27bp while Commercial portfolio non-performing loans decreased 11bp in 2Q19.

 

The coverage ratio reached 116.14% in 2Q19. Write-offs over total loans totaled 0.35%.

 

The Bank is committed to continue working in this area to maintain excellent asset quality standards.

 

ASSET QUALITY   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Commercial portfolio     59,006       69,497       71,202       68,794       72,524       5 %     23 %
Non-performing     368       624       917       618       575       -7 %     56 %
Consumer portfolio     102,221       110,948       113,538       114,936       112,938       -2 %     10 %
Non-performing     1,857       2,316       2,617       3,111       3,363       8 %     81 %
Total portfolio     161,226       180,445       184,740       183,730       185,462       1 %     15 %
Non-performing     2,225       2,940       3,534       3,729       3,938       6 %     77 %
Total non-performing/ Total portfolio     1.38 %     1.63 %     1.91 %     2.03 %     2.12 %                
                                                         
Total allowances     3,322       3,853       4,161       4,446       4,573       3 %     38 %
Coverage ratio w/allowances     149.30 %     131.05 %     117.74 %     119.23 %     116.14 %                
Write Offs     386       383       556       967       649       -33 %     68 %
Write Offs/ Total portfolio     0.24 %     0.21 %     0.30 %     0.53 %     0.35 %                

 

14
2Q19 Earnings Release

  

CER Exposure and Foreign Currency Position

 

CER EXPOSURE   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
CER adjustable ASSETS                                                        
Private sector loans (*)     6,522       6,754       6,801       6,776       6,753       0 %     4 %
Other loans     1       1       1       1       3       200 %     200 %
Total CER adjustable assets     6,523       6,755       6,802       6,777       6,756       0 %     4 %
                                                         
CER adjustable LIABILITIES                                                        
Deposits (*)     737       835       929       348       273       -22 %     -63 %
Total CER adjustable liabilities     737       835       929       348       273       -22 %     -63 %
                                                         
NET CER EXPOSURE     5,786       5,920       5,873       6,429       6,483       1 %     12 %

(*) Includes Loans &Time Deposits CER adjustable (UVAs)

 

FOREIGN CURRENCY POSITION   MACRO Consolidated     Variation  
In MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Cash and deposits in Banks     27,819       38,954       42,745       46,286       57,164       24 %     105 %
Cash     1,803       3,351       3,287       3,031       3,367       11 %     87 %
Central Bank of Argentina     20,866       25,970       25,617       33,803       36,741       9 %     76 %
Other financial institutions local and abroad     5,110       9,354       13,385       9,450       17,053       80 %     234 %
Others     40       279       456       2       3       50 %     -93 %
Net Income from financial instruments at fair value through P&L     231       250       388       298       380       28 %     65 %
Derivatives     1       0       3       1       0       -100 %     -100 %
Other financial assets     1,233       1,698       1,547       1,724       1,771       3 %     44 %
Loans and other financing     27,830       45,775       46,040       54,891       54,591       -1 %     96 %
Other financial institutions     255       567       480       513       453       -12 %     78 %
Non financial private sector & foreign residents     27,575       45,208       45,560       54,378       54,138       0 %     96 %
Other debt securities     1,307       3,105       1,217       1,313       3,143       139 %     140 %
Guarantees received     582       988       929       1,756       1,241       -29 %     113 %
Investment in equity instruments     6       7       6       7       7       0 %     17 %
Investment in associates and joint ventures     0       0       0       1       0       0 %     0 %
Total Assets     59,009       90,777       92,875       106,277       118,297       11 %     100 %
Deposits     47,875       72,011       71,358       84,978       92,507       9 %     93 %
Non financial public sector     2,676       2,348       2,295       2,102       2,807       34 %     5 %
Financial sector     77       114       100       167       163       -2 %     112 %
Non financial private sector & foreign residents     45,122       69,549       68,963       82,709       89,537       8 %     98 %
Derivatives     0       1       0       0       1       100 %     100 %
Other liabilities from financial intermediation     2,406       3,516       2,619       3,749       3,457       -8 %     44 %
Non-subordinated corporate bonds     1,180       2,405       2,599       2,541       1,924       -24 %     63 %
Subordinated corporate bonds     11,646       16,796       15,288       17,836       17,192       -4 %     48 %
Other liabilities     26       40       35       43       43       0 %     65 %
Total Liabilities     63,133       94,769       91,899       109,147       115,124       5 %     82 %
                                                         
NET FX POSITION (Pesos)     -4,124       -3,992       976       -2,870       3,173                  
NET FX POSITION (USD)     -142.9       -97.6       25.8       -66.2       74.7                  
15
2Q19 Earnings Release

   

Relevant and Recent Events

 

· Cash Dividend Payment. On May 14 th , 2019 pursuant to the resolutions adopted by the General and Special Shareholders’ Meeting and the Board of Directors’ Meeting, both held on the 30th day of April 2019, the Bank paid to the shareholders registered in the Bank’s Stock Ledger up to May 13, 2019, the cash dividend on the amount of Ps.6,393,977,460 (i.e., Ps.10 per share representing 1,000% of the outstanding capital stock of Ps.639,397,746).

 

· Social Security Contributions. In November 2012, pursuant to Section 2 of the Decree No. 814/01 of the Executive Branch, Banco Macro started paying social security contributions at a 17% tax rate instead of 21% tax rate.

 

The aforementioned Decree established that private sector employers and the ones set forth in Section 1 of Law 22,016 should pay social security contributions at a unique and discounted tax rate of 16% (then increased to 17%)

 

Banco Macro fell under the scope of the aforementioned Decree, by means of the State Participation as established in Law 19,950 (Argentine Corporations Law) and amended in Law 27,430 (Tax Reform Law). The Federal Government of Argentina, through the National Pension Fund ANSES-FGS has been a shareholder of Banco Macro since the nationalization of Private Pension Funds Administrators funds in 2008. As of June 30, 2019 ANSES-FGS ownership represented 27.49% of the Bank’s capital stock and through the exercise of its voting rights ANSES-FGS has appointed Directors and Supervisory Committee members.

 

On February 20, 2018, the AFIP required the Bank to justify and explain the reasons why it had applied the reduced tax rate set forth in Section 2 of Decree No. 814/01 of the Executive Branch. On March 14, 2018, the Bank submitted a detailed explanation of the grounds supporting its position.

 

After several proceedings and having heard Banco Macro’s arguments, the AFIP resolved to consult with the Ministry of Treasury & Finance. On April 3rd 2019 the Ministry of Treasury & Finance decided to consult with the Office of the Attorney General of the Treasury of Argentina and requested his intervention in the matter. As of the date hereof, the Bank has not been informed of any decision taken by the Office of the Attorney General of the Treasury of Argentina.

 

Notwithstanding the pending decision by the Office of the Attorney General of the Treasury of Argentina the Bank has resolved to enter a payment plan for the period November 2012 to March 2019, as established by AFIP General Resolution No. 4477/2019. The aforementioned payment plan consists of 60 installments, a significantly lower interest rate than the prevailing one for tax or social contributions obligations and a reduction in fines and penalties, resulting in an economic and financial benefit for the Bank given than even in a scenario were an appeal would still be pending the Bank would have had to fully pay the amounts claimed by AFIP for the period November 2012 to March 2019 and eventually get the restitution of the amounts paid plus a 6% interest rate in accordance with the prevailing legal frame at the time.

 

The Bank’s Management and its legal counsel consider no further significant accounting effects could arise from the final outcome of the above mentioned proceedings other than those disclosed in the accompanying consolidated financial statements.

 

· Interest Payment Class C Peso denominated Notes. In July 2019, the Bank paid quarterly interest on Class C Peso denominated notes in the amount of Ps.432,834,091.97

 

16
2Q19 Earnings Release

  

Regulatory Changes

 

· Inflation Adjustment. In February 2019, through Communication “A” 6651 the Central Bank of Argentina (BCRA) established that financial institutions should restate financial statements in accordance with IAS 29 starting from January 1 st , 2020. As of the date of this report the Bank has quantified the effects of the application of Expected losses of IFRS 9 “Financial Instruments” and IAS 29 “Financial Reporting in Hyperinflationary Economies”. As of June 30, 2019 equity would be approximately Ps.72.589 billion, and net income for the six months ended June 30, 2019 would be ~Ps.4.8 billion.

 

· Reserve Requirements. In July 2019, through Communication “A” 6728 the Central Bank of Argentina (BCRA) reduced reserve requirements for time deposits by 3 percentage points, effective from July 1 st , 2019.

 

· Reserve Requirements. In July 2019, through Communication “A” 6738 the Central Bank of Argentina (BCRA) modified reserve requirements and how financial institutions should meet them. This is effective for the aggregated July/August position in line with the new monetary base target established by the Monetary Policy Committee of the Central Bank of Argentina.

 

17
2Q19 Earnings Release

  

QUARTERLY BALANCE SHEET   MACRO Consolidated     Variation  
IN MILLIONS $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
ASSETS                                                        
Cash and deposits in Banks     50,310       68,919       74,766       75,309       96,427       28 %     92 %
Cash     6,588       8,828       10,697       8,770       9,247       5 %     40 %
Central Bank of Argentina     38,530       50,418       50,211       57,079       70,116       23 %     82 %
Other local & foreign entities     5,152       9,394       13,402       9,456       17,062       80 %     231 %
Other     40       279       456       4       2       -50 %     -95 %
Debt securities at fair value through profit & loss     1,340       1,760       2,635       2,964       1,980       -33 %     48 %
Derivatives     43       71       17       42       17       -60 %     -60 %
Repo Transactions     156       -       -       -       -       0 %     -100 %
Other financial assets     2,515       3,309       3,000       3,170       4,100       29 %     63 %
Loans & other receivables     155,620       174,288       178,875       177,717       178,851       1 %     15 %
Non Financial Public Sector     2,041       1,943       1,776       1,304       1,105       -15 %     -46 %
Financial Sector     3,263       4,647       5,574       3,784       4,024       6 %     23 %
Non Financial private sector and foreign     150,316       167,698       171,525       172,629       173,722       1 %     16 %
Other debt securities     43,163       44,976       64,585       109,048       97,381       -11 %     126 %
Financial assets in guarantee     7,477       6,241       6,756       7,300       7,157       -2 %     -4 %
Investments in equity instruments     50       52       52       1,504       1,510       0 %     2920 %
Investments in other companies (subsidiaries and joint ventures)     98       85       109       124       124       0 %     27 %
Property, plant and equipment     7,591       7,898       9,003       9,849       10,112       3 %     33 %
Intangible assets     994       1,147       1,401       1,548       1,869       21 %     88 %
Deferred income tax assets     47       57       47       60       77       28 %     64 %
Other non financial assets     2,204       2,216       833       1,078       986       -9 %     -55 %
Non-current assets held for sale     127       127       804       583       441       -24 %     247 %
TOTAL ASSETS     271,735       311,146       342,883       390,296       401,032       3 %     48 %
                                                         
LIABILITIES                                                        
Deposits     179,473       212,569       237,954       272,611       284,259       4 %     58 %
Non Financial Public Sector     19,405       20,074       19,354       28,192       23,565       -16 %     21 %
Financial Sector     125       150       148       211       244       16 %     95 %
Non Financial private sector and foreign     159,943       192,345       218,452       244,208       260,450       7 %     63 %
Liabilities at fair value through profit & loss     -       -       -       -       -                  
Derivatives     34       212       1       111       11       -90 %     -68 %
Repo Transactions     1,829       -       165       -       278       100 %     -85 %
Other financial liabilities     11,195       12,795       15,319       16,622       14,833       -11 %     32 %
Financing received from Central Bank and Other Financial Institutions     1,829       3,246       2,998       3,111       2,198       -29 %     20 %
Issued Corporate Bonds     8,125       6,513       6,377       6,314       6,193       -2 %     -24 %
Current income tax liabilities     1,781       2,109       2,947       4,567       4,149       -9 %     133 %
Subordinated corporate bonds     11,646       16,796       15,288       17,836       17,192       -4 %     48 %
Provisions     785       798       1,046       970       1,026       6 %     31 %
Deferred income tax liabilities     211       132       275       404       475       18 %     125 %
Other non financial liabilities     4,437       5,011       5,875       5,662       7,682       36 %     73 %
TOTAL LIABILITIES     221,345       260,181       288,245       328,208       338,296       3 %     53 %
                                                         
SHAREHOLDERS' EQUITY                                                        
Capital Stock     670       670       670       670       670       0 %     0 %
Issued Shares premium     12,429       12,429       12,429       12,428       12,428       0 %     0 %
Adjustment to Shareholders' Equity     5       5       5       5       5       0 %     0 %
Reserves     26,404       23,290       21,996       21,996       34,807       58 %     32 %
Retained earnings     3,476       3,265       3,265       18,994       -211       -       -  
Other accumulated comprehensive income     506       819       543       649       658       1 %     30 %
Net income for the period / fiscal year     6,658       10,486       15,729       7,343       14,376       96 %     116 %
Shareholders' Equity attributable to parent company     50,146       50,963       54,636       62,085       62,733       1 %     25 %
                                                         
Shareholders' Equity attributable to non controlling interest     244       3       2       3       3       0 %     -99 %
TOTAL SHAREHOLDERS' EQUITY     50,390       50,965       54,638       62,088       62,736       1 %     25 %

 

18
2Q19 Earnings Release

  

INCOME STATEMENT   MACRO Consolidated     Variation  
IN MILLION $   2Q18     3Q18     4Q18     1Q19     2Q19     QoQ     YoY  
                                           
Interest Income     13,617       16,809       23,814       24,395       31,334       28 %     130 %
Interest Expense     4,524       6,486       11,526       11,464       14,549       27 %     222 %
Net Interest Income     9,093       10,323       12,288       12,931       16,785       30 %     85 %
Fee income     2,891       3,013       3,476       3,551       3,670       3 %     27 %
Fee expense     210       144       217       241       279       16 %     33 %
Net Fee Income     2,681       2,869       3,259       3,310       3,391       2 %     26 %
Subtotal (Net Interest Income + Net Fee Income)     11,774       13,192       15,547       16,241       20,176       24 %     71 %
Net Income from financial instruments at Fair Value Through Profit & Loss     -46       499       364       1,974       133       -93 %     -  
Result from assets at amortised cost     -       -3       1       -17       -       -       0 %
Difference in quoted prices of gold and foreign currency     -1,012       -1,244       729       -51       333       -       -  
Other operating income     600       1,202       413       3,113       983       -68 %     64 %
Provision for loan losses     571       732       836       2,154       848       -61 %     49 %
Net Operating Income     10,745       12,914       16,218       19,107       20,777       9 %     93 %
Personnel expenses     2,443       2,720       3,124       3,133       4,916       57 %     101 %
Administrative expenses     1,550       1,776       2,105       2,096       2,301       10 %     48 %
Depreciation and impairment of assets     173       187       215       290       317       9 %     83 %
Other operating expense     2,317       2,693       3,213       3,104       3,950       27 %     70 %
Operating Income     4,262       5,538       7,561       10,484       9,293       -11 %     118 %
Income from associates and joint ventures     145       12       33       26       613       2258 %     323 %
Net Income before income tax on cont. operations     4,407       5,550       7,594       10,510       9,906       -6 %     125 %
Income tax on continuing operations     1,271       1,718       2,351       3,166       2,874       -9 %     126 %
Net Income from continuing operations     3,136       3,832       5,243       7,344       7,032       -4 %     124 %
                                                         
Net Income for the period     3,136       3,832       5,243       7,344       7,032       -4 %     124 %
Net Income of the period attributable to parent company     3,116       3,828       5,243       7,343       7,033       -4 %     126 %
Net income of the period attributable to non-controlling interests     20       4       -       1       -1       -       -  
                                                         
Other Comprehensive Income     292       313       -276       106       10       -91 %     -97 %
Foreign currency translation differences in financial statements conversion     344       454       -119       211       -35       -       -  
Profits or losses from financial assets measured at fair value through other comprehensive income (FVOCI) (IFRS 9(4.1.2)(a)     -52       -141       -157       -105       45       -       -  
                                                         
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD     3,428       4,145       4,967       7,450       7,042       -5 %     105 %
Total Comprehensive Income attributable to parent Company     3,408       4,142       4,967       7,449       7,043       -5 %     107 %
Total Comprehensive Income attributable to non-controlling interests     20       3       -       1       -1       -       -  

 

19
2Q19 Earnings Release

  

QUARTERLY ANNUALIZED RATIOS   MACRO Consolidated  
    2Q18     3Q18     4Q18     1Q19     2Q19  
Profitability & performance                                        
Net interest margin     13.5 %     13.4 %     16.9 %     17.2 %     18.0 %
Net interest margin adjusted (exc. FX)     15.2 %     15.3 %     16.0 %     17.3 %     17.7 %
Net fee income ratio     19.2 %     20.0 %     12.0 %     23.1 %     12.3 %
Efficiency ratio     41.9 %     39.1 %     35.8 %     28.6 %     38.3 %
Net fee income as % of A&G Expenses     45.7 %     51.0 %     33.7 %     80.9 %     32.2 %
Return on average assets     5.1 %     5.4 %     6.4 %     8.4 %     7.1 %
Return on average equity     25.1 %     29.0 %     38.8 %     50.0 %     44.4 %
Liquidity                                        
Loans as a percentage of total deposits     86.7 %     82.0 %     75.2 %     65.2 %     62.9 %
Liquid assets as a percentage of total deposits     52.3 %     51.7 %     57.1 %     66.1 %     66.4 %
Capital                                        
Total equity as a percentage of total assets     18.5 %     16.4 %     15.9 %     15.9 %     15.6 %
Regulatory capital as % of APR     27.6 %     26.4 %     26.5 %     27.7 %     26.3 %
Asset Quality                                        
Allowances over total loans     2.1 %     2.1 %     2.3 %     2.4 %     2.5 %
Non-performing financing as a percentage of total financing     1.4 %     1.6 %     1.9 %     2.0 %     2.1 %
Coverage ratio w/allowances     149.3 %     131.1 %     117.7 %     119.2 %     116.1 %
Cost of Risk     1.5 %     1.8 %     1.9 %     4.9 %     1.9 %

 

ACCUMULATED ANNUALIZED RATIOS   MACRO Consolidated  
    2Q18     3Q18     4Q18     1Q19     2Q19  
Profitability & performance                                        
Net interest margin     14.4 %     14.0 %     14.9 %     17.2 %     17.6 %
Net interest margin adjusted (exc. FX)     15.2 %     15.2 %     15.4 %     17.3 %     17.5 %
Net fee income ratio     18.2 %     21.5 %     16.7 %     23.1 %     17.7 %
Efficiency ratio     38.7 %     37.6 %     37.9 %     28.6 %     33.5 %
Net fee income as % of A&G Expenses     47.0 %     57.2 %     44.0 %     80.9 %     52.8 %
Return on average assets     5.7 %     5.6 %     5.8 %     8.4 %     7.7 %
Return on average equity     27.2 %     27.8 %     30.7 %     50.0 %     47.0 %
Liquidity                                        
Loans as a percentage of total deposits     86.7 %     82.0 %     121.1 %     65.2 %     62.9 %
Liquid assets as a percentage of total deposits     52.3 %     51.7 %     57.1 %     66.1 %     66.4 %
Capital                                        
Total equity as a percentage of total assets     18.5 %     16.4 %     15.9 %     15.9 %     15.6 %
Regulatory capital as % of APR     27.6 %     26.4 %     26.5 %     27.7 %     26.3 %
Asset Quality                                        
Allowances over total loans     2.1 %     2.1 %     2.3 %     2.4 %     2.5 %
Non-performing financing as a percentage of total financing     1.4 %     1.6 %     1.9 %     2.0 %     2.1 %
Coverage ratio w/allowances     149.3 %     131.1 %     117.7 %     119.2 %     116.1 %
Cost of Risk     1.6 %     1.7 %     1.7 %     4.9 %     3.4 %

 

20
 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Date: August 7, 2019

  MACRO BANK INC.  
       
  By: /s/ Jorge Francisco Scarinci  
  Name: Jorge Francisco Scarinci  
  Title: Chief Financial Officer  

 

 

 

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