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

 

November 20, 2018

 

 

 

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

 

 

 

 

BANCO MACRO S.A.

 

Interim consolidated financial statements as of June 30, 2018 together with the Reports on review of consolidated interim financial statements.

 

CONTENT

 

· Cover Sheet  
· Condensed consolidated interim balance sheet 1
· Condensed consolidated interim statement of income 4
· Condensed consolidated interim statement of other comprehensive income 6
· Condensed consolidated interim statement of changes in shareholders’ equity 7
· Condensed consolidated interim statement of cash flows 8
· Notes to the condensed consolidated interim financial statements 10
· Consolidated Exhibits 45
· Condensed separate interim balance sheet 66
· Condensed separate interim statement of income 68
· Condensed separate interim statement of other comprehensive income 70
· Condensed separate interim statement of changes in shareholders’ equity 71
· Condensed separate interim statement of cash flows 72
· Notes to the condensed separate interim financial statements 74
· Separate Exhibits 93
· Review report on condensed consolidated interim –period financial statements 1
· Review report on condensed separate interim – period financial statements 1

 

 

 

 

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

 

CORPORATE NAME: Banco Macro SA

 

REGISTERED OFFICE: Sarmiento 447 – Autonomous City of Buenos Aires

 

CORPORATE PURPOSE AND MAIN ACTIVITY: Commercial Bank

 

CENTRAL BANK OF ARGENTINA: Authorized as “Argentine private bank” under No. 285.

 

REGISTRATION WITH THE PUBLIC REGISTRY OF COMMERCE: Under No. 1154 - By-laws Book No. 2, Folio 75 dated March 8, 1967

 

BY-LAWS EXPIRY DATE: March 8, 2066

 

REGISTRATION WITH THE IGJ (SUPERINTENDENCY OF CORPORATIONS): Under No. 9777 – Corporations Book No. 119 Volume A of Sociedades Anónimas , dated October 8, 1996.

 

PERSONAL TAX IDENTIFICATION NUMBER: 30-50001008-4

 

REGISTRATION DATES OF AMENDMENTS TO BY-LAWS:

 

August 18, 1972, August 10, 1973, July 15, 1975, May 30, 1985, September 3, 1992, May 10, 1993, November 8, 1995, October 8, 1996, March 23, 1999, September 6, 1999, June 10, 2003, December 17, 2003, September 14, 2005, February 8, 2006, July 11, 2006, July 14, 2009, November 14, 2012, August 2, 2014.

 

 

 

 

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items   Notes     06/30/2018     12/31/2017     12/31/2016  
                                 
ASSETS                                
Cash and Deposits in Banks             50,309,607       35,561,574       35,986,159  
Cash             6,588,011       6,761,426       4,871,152  
Financial Entities and Correspondent Banks                                
Central Bank of Argentina             38,529,485       23,703,476       28,482,100  
Other Local and Foreign Entities             5,151,805       3,781,451       2,631,916  
Other             40,306       1,315,221       991  
Debt Securities at fair value through profit or loss     33       1,339,702       1,086,028       332,481  
Derivative Financial Instruments             42,981       8,228       9,721  
Repo Transactions             156,158       1,419,808       19,124  
Other financial assets             2,515,379       2,272,679       1,105,513  
Loans and other financing             155,620,519       132,658,674       88,390,646  
Non-financial Public Sector             2,040,789       1,865,886       1,584,960  
Other Financial Entities             3,263,286       3,239,511       1,713,170  
Non-financial Private Sector and Foreign Residents             150,316,444       127,553,277       85,092,516  
Other Debt Securities     33       43,162,644       34,703,765       20,395,499  
Financial Assets delivered as guarantee     23       7,477,082       7,638,352       3,690,694  
Investments in Equity Instruments     33       50,009       282,659       406,868  
Investment in associates and joint arrangements     6       97,795       218,947       124,268  
Property, Plant and Equipment             7,591,240       7,040,152       6,066,706  
Intangible Assets             993,753       880,683       656,178  
Deferred Income Tax Assets     12       46,821       27,762          
Other Non-financial Assets             2,204,814       2,339,869       2,097,090  
Non-current assets held for sale     8       126,645       199,890       89,648  
TOTAL ASSETS             271,735,149       226,339,070       159,370,595  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  1  

 

 

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items   Notes     06/30/2018     12/31/2017     12/31/2016  
                                 
LIABILITIES                                
Deposits             179,473,237       144,129,177       111,862,805  
Non-financial Public Sector             19,404,909       12,890,701       9,468,055  
Financial Sector             125,377       81,359       55,867  
Non-financial Private Sector and Foreign Residents             159,942,951       131,157,117       102,338,883  
Liabilities at fair value through profit or loss                     6,450          
Derivative Financial Instruments             34,151       23,107          
Repo Transactions             1,829,233       2,688,093       1,095,634  
Other Financial Liabilities             11,195,051       10,561,203       6,341,674  
Financing received from the Central Bank of Argentina and other financial entities             1,828,974       1,174,111       260,458  
Issued Corporate Bonds     28       8,125,300       4,712,216       1,684,636  
Current Income Tax Liabilities             1,781,074       3,975,320       1,749,800  
Subordinated Corporate Bonds     28       11,646,217       7,565,759       6,376,537  
Provisions     9       784,574       694,919       335,007  
Deferred Income Tax Liabilities     12       211,089       496,849       1,321,393  
Other Non-financial Liabilities             4,436,136       3,576,001       3,164,158  
TOTAL LIABILITIES             221,345,036       179,603,205       134,192,102  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  2  

 

 

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items   Notes     06/30/2018     12/31/2017     12/31/2016  
                                 
SHAREHOLDERS’ EQUITY                                
Capital Stock             669,663       669,663       584,563  
Non-capital contributions             12,428,461       12,428,461       399,499  
Adjustments to Shareholders’ Equity             4,511       4,511       4,511  
Earnings Reserved             26,403,844       20,363,386       14,384,820  
Unappropiated Retained Earnings             3,475,669       2,799,085       2,990,757  
Other Comprehensive Income             505,872       204,560       65,711  
Net Income for the period / fiscal year             6,657,832       10,065,357       6,540,832  
Net Shareholders’ Equity attributable to the owners of parent company (*)             50,145,852       46,535,023       24,970,693  
Net Shareholders’ Equity  attributable to non-controlling interests             244,261       200,842       207,800  
                                 
TOTAL SHAREHOLDERS’ EQUITY             50,390,113       46,735,865       25,178,493  

 

(*) Total Shareholders´ Equity for Consolidated and Separate Interim Balance sheet

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  3  

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items   Notes     Quarter
ended
06/30/2018
    Quarter
ended
06/30/2017
    Accumulated
from beginning
of year up to
06/30/2018
    Accumulated
from beginning
of year up to
06/30/2017
 
                               
Interest income             13,616,824       7,820,242       24,953,595       15,278,652  
Interest expense             (4,524,040 )     (2,350,374 )     (7,919,719 )     (4,626,960 )
Net interest income             9,092,784       5,469,868       17,033,876       10,651,692  
Commissions income     13       2,116,172       1,659,698       3,951,671       3,084,744  
Commissions expense             (209,558 )     (165,347 )     (394,483 )     (319,791 )
Net commissions income             1,906,614       1,494,351       3,557,188       2,764,953  
Subtotal (Net interest income + Net commissions income)             10,999,398       6,964,219       20,591,064       13,416,645  
Net Income from measurement of financial instruments at fair value through profit or loss             (46,356 )     124,524       202,893       153,865  
Loss from sold assets at amortized cost             75       31,977       (2,870 )     18,294  
Difference in quoted prices of gold and foreign currency     14       (1,012,280 )     365,253       (861,688 )     547,321  
Other operating income     15       1,375,713       1,068,177       2,679,744       2,131,560  
Provision for loan losses             (571,331 )     (466,643 )     (1,138,143 )     (829,593 )
Net Operating Income             10,745,219       8,087,507       21,471,000       15,438,092  
Employee benefits     16       (2,443,087 )     (1,861,052 )     (4,460,833 )     (3,581,467 )
Administrative expenses     17       (1,549,524 )     (1,100,488 )     (2,951,534 )     (2,113,951 )
Depreciation of Property, Plant and Equipment             (172,629 )     (131,664 )     (335,504 )     (261,710 )
Other Operating Expenses     18       (2,317,585 )     (1,587,840 )     (4,346,748 )     (2,996,648 )
Operating Income             4,262,394       3,406,463       9,376,381       6,484,316  
Income from associates and joint arrangements             145,134       29,685       220,497       70,672  
Income before tax on continuing operations             4,407,528       3,436,148       9,596,878       6,554,988  
Income tax on continuing operations     12       (1,270,766 )     (1,192,878 )     (2,895,579 )     (2,289,106 )
Net Income from continuing operations             3,136,762       2,243,270       6,701,299       4,265,882  
Net Income for the period             3,136,762       2,243,270       6,701,299       4,265,882  
Net Income for the period attributable to the owners of the Parent Company             3,115,649       2,223,509       6,657,832       4,228,757  
Net Income for the period attributable to non-controlling interests             21,113       19,761       43,467       37,125  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  4  

 

 

CONDENSED CONSOLIDATED INTERIM EARNINGS PER SHARE

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items  

Quarter

ended
06/30/2018

    Quarter
ended
06/30/2017
    Accumulated
from beginning
of year up to
06/30/2018
   

Accumulated
from beginning

of year up to
06/30/2017

 
                         
Net Profit attributable to Parent’s shareholders     3,115,649       2,223,509       6,657,832       4,228,757  
PLUS: Potential diluted earnings per common share                                
Net Profit attributable to Parent’s shareholders adjusted as per diluted earnings     3,115,649       2,223,509       6,657,832       4,228,757  
Weighted average of outstanding common shares for the period     669,663       594,321       669,663       589,469  
PLUS: Weighted average of the number of additional common shares with dilution effects                                
Weighted average of outstanding common shares for the period adjusted as per dilution effect     669,663       594,321       669,663       589,469  
Basic earnings per share     4.6526       3.7413       9.9421       7.1738  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  5  

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Items   Notes    

Quarter

ended
06/30/2018

    Quarter
ended
06/30/2017
    Accumulated
from
beginning of
year up to
06/30/2018
   

Accumulated
from
beginning

of year up to
06/30/2017

 
                               
Net Income for the period             3,136,762       2,243,270       6,701,299       4,265,882  
Foreign currency translation differences in financial statements conversion             344,455       58,793       398,114       36,267  
Foreign currency translation differences for the period             344,455       58,793       398,114       36,267  
Profits or losses for financial instruments measured at fair value through other comprehensive income (FVOCI)  (IFRS 9(4.1.2)(a)             (51,654 )     (10,889 )     (96,824 )     (13,827 )
Income for the period from financial instruments at fair value through other comprehensive income (FVOCI)             (61,725 )     (16,733 )     (123,475 )     (15,119 )
Income tax             10,071       5,844       26,651       1,292  
Total other comprehensive income that is subsequently reclassified to profit or loss             292,801       47,904       301,290       22,440  
Total Other Comprehensive Income             292,801       47,904       301,290       22,440  
Total Comprehensive Income for the period             3,429,563       2,291,174       7,002,589       4,288,322  
Total Comprehensive Income attributable to the owners of the parent Company             3,408,452       2,271,549       6,959,144       4,251,678  
Total Comprehensive Income attributable to non-controlling interests             21,111       19,625       43,445       36,644  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  6  

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

    Capital Stock     Non-capital
Contributions
          Other Comprehensive 
Income
    Earnings Reserved                          
Changes   Outstanding 
shares
    Stock
issuance
Premium
    Adjustments
to
Shareholders´
Equity
    Accumulat. 
foreign 
currency 
translation 
difference 
in Financial 
statement 
convertion
    Other     Legal     Other     Unappropiated
Retained
Earnings
    Total Equity 
net of
Controlling
Interests
    Total Equity 
net of Non-
controlling
Interests
    Total 
Equity
 
                                                                                         
Balance at the beginning of the fiscal year     669,663       12,428,461       4,511       137,148       67,412       4,994,932       15,368,454       12,864,442       46,535,023       200,842       46,735,865  
Total comprehensive income for the period                                                                                        
- Net income for the period                                                             6,657,832       6,657,832       43,467       6,701,299  
- Other comprehensive income for the period                             398,114       (96,802 )                             301,312       (22 )     301,290  
Distribution of unappropied retained earnings as approved by Shareholders´ Meeting held on April 27, 2018                                                                                        
Legal Reserve                                             1,877,755               (1,877,755 )                        
Cash dividends                                                     (3,348,315 )             (3,348,315 )     (26 )     (3,348,341 )
- Other                                                     7,511,018       (7,511,018 )                        
Balance at the end of the period     669,663       12,428,461       4,511       535,262       (29,390 )     6,872,687       19,531,157       10,133,501       50,145,852       244,261       50,390,113  

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

    Capital Stock     Non-capital
Contributions
          Other Comprehensive
Income
    Earnings Reserved                          
Changes   Outstanding 
shares
    Stock
issuance
Premium
    Adjustments
 to 
Shareholders´
Equity
    Accumulat. 
foreign 
currency 
translation 
difference in
Financial 
statement 
convertion
    Other     Legal     Other     Unappropiated
Retained
Earnings
    Total Equity
net of
Controlling
Interests
    Total Equity
net of Non-
controlling
Interests
    Total 
Equity
 
                                                                   
Balance at the beginning of the fiscal year     584,563       399,499       4,511               65,711       3,686,472       10,698,348       9,531,589       24,970,693       207,800       25,178,493  
Total comprehensive income for the period                                                                                        
- Net income for the period                                                             4,228,757       4,228,757       37,125       4,265,882  
- Other comprehensive income for the period                             36,267       (13,346 )                             22,921       (481 )     22,440  
Distribution of unappropied retained earnings as approved by Shareholders´ Meeting held on April 28, 2017                                                                                        
Legal Reserve                                             1,308,460               (1,308,460 )                        
Cash dividends                                                     (701,476 )             (701,476 )     (92.991 )     (794,467 )
- Other                                                     5,371,582       (5,424,045 )     (52,463 )             (52,463 )
Increase of Capital Stock as approved by Shareholders´ Meeting held on April 28, 2017     74,000       10,387,724                                                       10,461,724       ,       10,461,724  
Balance at the end of the period     658,563       10,787,223       4,511       36,267       52,365       4,994,932       15,368,454       7,027,841       38,930,156       151,453       39,081,609  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  7  

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos) 

 

Items   Notes     06/30/2018     06/30/2017  
                   
CASH FLOWS FROM OPERATING ACTIVITIES                        
Income for the period before Income Tax             9,596,878       6,554,988  
Adjustments to obtain cash flows from operating activities:                        
Amortization and depreciation             335,504       261,710  
Provision for loan losses             1,138,143       829,593  
Other adjustments             (2,722,482 )     592,675  
Net increase/ decrease from operating assets:                        
Debt Securities at fair value though profit and loss             (253,718 )     (493,071 )
Derivative financial instruments             (34,753 )     7,885  
Repo transactions             1,263,650       (2,033,671 )
Loans and other financing                        
Non-financial public sector             (174,905 )     1,039,760  
Other financial entities             (23,775 )     (517,962 )
Non-financial private sector and foreign residents             (23,850,184 )     (18,883,472 )
Other debt securities             24,030,305       (7,929,655 )
Financial assets delivered as guarantee             161,270       1,043,517  
Investments in equity instruments             232,650       258,595  
Other assets             (1,148,269 )     (1,519,174 )
Net increase/ decrease from operating liabilities:                        
Deposits                        
Non-financial public sector             6,514,208       1,335,928  
Financial sector             44,018       1,490  
Non-financial private sector and foreign residents             28,785,834       10,242,602  
Liabilities at fair value through profit or loss             (6,450 )        
Derivative financial instruments             11,044       217  
Repo transactions             (858,860 )     (1,095,634 )
Other liabilities             1,603,982       1,658,414  
Payments for Income Tax             (4,409,702 )     (2,551,146 )
TOTAL CASH FROM /(USED IN) OPERATING ACTIVITIES (A)             40,234,388       (11,196,411 )

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  8  

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos) 

 

Items   Notes     06/30/2018     06/30/2017  
                   
CASH FLOWS FROM INVESTING ACTIVITIES                        
Payments:                        
Acquisition of PPE, intangible assets and other assets             (659,919 )     (604,048 )
TOTAL CASH USED IN INVESTING ACTIVITIES (B)             (659,919 )     (604,048 )
CASH FLOWS FROM FINANCING ACTIVITIES                        
Payments:                        
Dividends             (3,348,315 )     (794,166 )
Non-subordinated corporate bonds             (242,604 )     (1,766,904 )
Central Bank of Argentina                     (98 )
Financing from local financial entities             (124,671 )     (331,595 )
Subordinated corporate bonds                     (206,280 )
Proceeds:                        
Issued Equity instruments                     10,461,724  
Non Subordinated Corporate Bonds             3,206,999       4,604,398  
Central Bank of Argentina             4,591       2,070  
Financing to local financial entities             174       748,697  
Other proceeds related to financing activities                     213,379  
TOTAL CASH (USED IN)/ FROM FINANCING ACTIVITIES (C)             (503,826 )     12,931,225  
EFFECT OF EXCHANGE RATE FLUCTUATIONS (D)             8,216,967       511,441  
TOTAL CHANGES IN CASH FLOWS                        
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C+D)             47,287,610       1,642,207  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FISCAL YEAR     19       41,203,545       52,070,153  
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD     19       88,491,155       53,712,360  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  9  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

1. CORPORATE INFORMATION

 

Banco Macro SA (hereinafter, the Bank), is a stock corporation (sociedad anónima), organized in the Republic of Argentina that offers traditional banking products and services to companies, including those companies operating in regional economies, as well as to individuals, strengthening in this way its goal to be a multi-services bank. In addition, through its subsidiaries, the Bank performs transactions as a trustee agent, direction and management of mutual funds and stock exchange services.

 

Macro Compañía Financiera SA was created in 1977, as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro SA. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud SA) and since August 2006, Banco Macro SA.

 

The Bank´s shares have been publicly listed on the Bolsas y Mercados Argentinos (BYMA) since November 1994, as from March 24, 2006 they are listed on the New York Stock Exchange (NYSE). Additionally, on October 15, 2015 they were authorized to list on the Mercado Abierto Electrónico SA (MAE).

 

Since 1994, Banco Macro SA’s market strategy was mainly focused on the regional areas outside the City of Buenos Aires. Following this strategy, in 1996, Banco Macro SA started the process to acquire entities and assets and liabilities during the privatization of provincial and other banks.

 

On August 22, 2018, the Board of Directors approved the issuance of these condensed consolidated interim Financial Statements.

 

2. OPERATIONS OF THE BANK

 

2.1. Agreement with the Misiones Provincial Government

 

The Bank and the Misiones Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a five-year term since January 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

 

On November 25, 1999, and December 28, 2006, extensions to such agreement were agreed upon, making it currently effective through December 31, 2019.

 

As of June 30, 2018 and December 31, 2017 and 2016, the deposits held by the Misiones Provincial Government with the Bank amounted to 4,711,719, 3,255,353 and 2,495,781(including 357,883, 333,032 and 139,610 related to court deposits), respectively.

 

2.2. Agreement with the Salta Provincial Government

 

The Bank and the Salta Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since March 1, 1996, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

 

On February 22, 2005 and August 22, 2014, extensions to such agreements were agreed upon, making it currently effective through February 28, 2026.

 

As of June 30, 2018 and December 31, 2017 and 2016, the deposits held by the Salta Provincial Government with the Bank amounted to 2,816,581, 908,270 and 1,340,738 (including 552,288, 458,550 and 370,154 related to court deposits), respectively.

 

2.3. Agreement with the Jujuy Provincial Government

 

The Bank and the Jujuy Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since January 12, 1998, as the Provincial Government’s exclusive financial agent, as well as revenue collection and obligation payment agent.

 

On April 29, 2005 and July 8, 2014, extensions to such agreement were agreed upon, making it currently effective through September 30, 2024.

 

 

 

  10  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

As of June 30, 2018 and December 31, 2017 and 2016, the deposits held by the Jujuy Provincial Government with the Bank amounted to 3,261,660, 4,649,184 and 1,580,312 (including 376,544, 320,825 and 253,622 related to court deposits), respectively.

 

2.4. Banco del Tucumán SA

 

Banco del Tucumán SA acts as an exclusive financial agent and as revenue collection and obligation payment agent of the Tucumán Provincial Government and of the Municipality of San Miguel de Tucumán, respectively.

 

The service agreement with the Tucumán Provincial Government is currently effective through the year 2021, while the agreement executed with the Municipality of San Miguel de Tucumán was automatically extended through the year 2023, as set forth in the original agreement.

 

In addition, the legislative body of the province of Tucumán, converted into law a project issued by the provincial executive power in which it was authorized the sale of the shares held by the province of Tucumán in Banco de Tucumán SA to Banco Macro SA and also the continuity as a provincial finance agent for an additional period of ten years from the expiration of the contract, and if applicable, the possibility of merging both entities.

 

On August 10, 2018, the province of Tucumán transferred to Banco Macro SA, 43,960 Class B common registered shares, with a face value of Ps. 100 each one and entitled to one vote of Banco del Tucumán SA, which is equivalent to 10% of its common stock and votes. For this transaction, the Bank paid 456,462 which will be registred in the consolidated Financial Statements in the Shareholders equity at the carrying amount while in the Separate financial statements will be registered at the purchase price method.

 

As of June 30, 2018 and December 31, 2017 and 2016, the deposits held by the Tucumán Provincial Government and the Municipality of San Miguel de Tucumán with Banco del Tucumán SA amounted to 4,416,138, 1,913,801 and 2,450,436 (including 1,500,429, 1,225,993 and 943,683 related to court deposits), respectively.

 

3. BASIS FOR THE PRESENTATION OF THESE FINANCIAL STATEMENTS AND APPLICABLE ACCOUNTING STANDARDS

 

Presentation basis

 

Applicable Accounting Standards

 

On February 12, 2014 the Central Bank, through Communiqué “A” 5541 established the general guidelines towards conversion to the IFRS issued by the International Accounting Standards Board (IASB) for preparing financial statements of the entities under its supervision, for the annual fiscal years beginning on January 1, 2018 as well as those of interim-periods.

 

Additionally, through Communiqués “A” 6114, the Central Bank set specific guidelines within the scope of such convergence process, among which it defined (i) the transitory exception to the application of section 5.5 “Impairment” of the IFRS 9 “Financial Instruments” (sections B5.5.1 to B5.5.55)) up to the fiscal years beginning as of January 1, 2020; and (ii) in order to calculate the effective interest rate of assets and liabilities so requiring it for the measurement thereof, pursuant to IFRS 9, up to December 31, 2019, the Bank may transitorily make a global estimate of the calculation of the effective interest rate on a group of financial assets or liabilities with similar characteristics which shall be applied such effective interest rate. To the date of the present condensed consolidated interim Financial Statements the Bank is in the process of determining and quantifying the effect the application of section 5.5 “Impairment” mentioned in (i) above will have. Finally, through Communiqués “A” 6323 and 6324 and supplementary rules, the Central Bank defined the minimum chart of accounts and the provisions applicable to the preparation and presentation of the financial statements of financial entities for the fiscal years beginning on January 1, 2018, respectively.

 

The accompanying condensed consolidated interim Financial Statements of the Bank were prepared pursuant to Communiqué “A” 6114 and supplementary rules of the Central Bank. Taking into account the exceptions described in the preceding paragraph, the new regulatory framework comprises the Standards and Interpretations adopted by the IASB and includes:

 

 

 

  11  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

- the IFRS;
- the International Accounting Standards (IAS); and
- the interpretations developed by the IFRS Interpretations Committee (IFRIC) or former IFRIC (SIC).

 

In the preparation of this Financial statements, the Bank further contemplated the exceptions and exemptions provided for in IFRS 1 “First-time Adoption of International Financial Reporting Standards” and those applied for the preparation of the accompanying condensed consolidated interim Financial Statements are described in the section “First-time Adoption of International Financial Reporting Standards in accordance with Communiqué “A” 6114 of the Central Bank” of this Note.

 

Up to the fiscal year ended December 31, 2017, the Bank prepared its consolidated Financial Statements in accordance with the rules and standards issued by the Central Bank. The financial information for previous fiscal years and included in the accompanying consolidated Financial Statements for comparative purposes, was modified and is disclosed in accordance with the basis described in the preceding paragraphs. The effects of changes between the standards applied as of the end of the fiscal year ended December 31, 2017 and the IFRS are explained in the reconciliations disclosed under the title “First-time Adoption to IFRS in accordance with Central Bank Communiqué “A” 6114” on this Note.

 

The accounting policies comply with the IFRS as currently approved and are applicable to the preparation of the first annual consolidated Financial Statements (December 31, 2018). in accordance with the IFRS adopted by the Central Bank though Communique “A” 6114. Notwithstanding the above, these accounting policies might change if, at the time of preparing those first annual Financial Statements in accordance with the IFRS adopted by the Central Bank though Communique “A” 6114, new standards are issued or the existing ones are modified, or the compulsory application to that date is modified, or if the Bank chooses to change its choice of any of the exemptions under IFRS 1. Generally, the Central Bank does not allow the anticipated application of any IFRS, unless it expressly states the contrary.

 

Basis for the preparation and consolidation

 

These condensed consolidated interim Financial Statements for the six-month period ended on June 30, 2018, have been prepared in accordance with the framework set forth by the Central Bank as mentioned in the previous seccion “ Applicabe accouting standards”, for which this condensed consolidated interim Financial Statements, is based on IAS 34 “Interim Financial Reporting”.

 

For the preparation of these condensed consolidated interim Financial Statements the Bank has applied the basis for the preparation and consolidation, the accounting policies and the material accounting judgements, estimates and assumptions described in the condensed consolidated interim Financial Statements for the three months period ended on March 31, 2018, already issued. In this sense, the Bank has applied the same accounting policies adopoted at the transition date.

 

These condensed consolidated interim Financial Statements include all the necessary information for an appropriate understanding, by the users thereof, of the basis for the preparation and disclosure used therein, as well as the relevant events and transactions occurred after the issuance of the last annual consolidated Financial Statements for the fiscal year ended December 31, 2017 and condensed consolidated interim Financial Statements for the three-month period ended on March 31, 2018. Nevertheless, the present condensed consolidated interim Financial Statements do not include all the information or all the disclosures required for the annual consolidated Financial Statements prepared in accordance with the IAS 1 “Presentation of Financial Statements”. Therefore, the accompanying condensed consolidated interim Financial Statements must be read together with the annual consolidated financial statements for the fiscal year ended December 31, 2017 and condensed consolidated interim Financial Statements for the three-month period ended on March 31, 2018.

 

As of June 30, 2018 and December 31, 2017 and 2016, the Bank has consolidated its Financial Statements with the Financial Statements of the following companies:

 

 

 

  12  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Subsidiaries   Principal Place of Business   Country   Main Activity
Banco del Tucumán SA   San Martín 721 – San Miguel de Tucumán – Province of Tucumán   Argentina   Banking Entity
             
Macro Securities SA (a) and (b)   Juana Manso 555 – 8th floor, Office A – Autonomous City of Buenos Aires   Argentina   Stock-Exchange Services
             
Macro Fiducia SA   Sarmiento 447 – 7th floor– Autonomous City of Buenos Aires   Argentina   Services
             
Macro Fondos SGFCISA   Juana Manso 555 – 9th floor, Office A – Autonomous City of Buenos Aires   Argentina   Direction and Management of Mutual Funds
             
Macro Bank Limited (c)   Caves Village, Building 8 Office 1 – West Bay St,, Nassau   Bahamas   Banking Entity

 

(a) Consolidates with Macro Fondos SGFCI SA (80.90% Participating and Voting Interest).

 

(b) The indirect interest of Banco Macro SA comes from Macro Fiducia SA.

 

(c) Consolidates with Sud Asesores (ROU) SA (100% Voting Interest–Equity interest 2,220).

 

The table below shows the Bank’s participating interest in the companies it consolidates as of June 30, 2018 and December 31, 2017 and 2016:

 

    Shares   Bank’s Participating Interest     Non-Controlling Interest  
Subsidiaries   Type   Number     Total Capital
Stock
    Voting
Interest
    Total Capital
Stock
    Voting
Interest
 
Banco del Tucumán SA   Common     395,341       89.932 %     89.932 %     10.068 %     10.068 %
Macro Securities SA   Common     12,776,680       99.921 %     99.932 %     0.079 %     0.068 %
Macro Fiducia SA   Common     6,475,143       98.605 %     98.605 %     1.395 %     1.395 %
Macro Fondos SGFCISA   Common     327,183       99.936 %     100.00 %     0.064 %     -  
Macro Bank Limited   Common     39,816,899       99.999 %     100.00 %     0.001 %     -  

 

Total assets, liabilities and net equity of the Bank and each of its subsidiaries as of June 30, 2018 and December 31, 2017 and 2016 are as follows:

 

As of 06/30/2018   Banco Macro
SA
    Banco del
Tucumán SA
    Other
Subsidiaries
    Eliminations     Consolidated  
                               
Assets     255,311,664       18,192,290       3,813,042       (5,581,847 )     271,735,149  
Liabilities     205,165,812       15,775,848       1,685,548       (1,282,172 )     221,345,036  
Equity attributable to the owners of the Bank                                     50,145,852  
Equity attributable to non-controlling interests                                     244,261  

 

As of 12/31/2017   Banco Macro
SA
    Banco del
Tucumán SA
    Other
Subsidiaries
    Eliminations     Consolidated  
                               
Assets     213,157,890       14,789,934       2,922,315       (4,531,069 )     226,339,070  
Liabilities     166,622,867       12,802,725       1,259,906       (1,082,293 )     179,603,205  
Equity attributable to the owners of the Bank                                     46,535,023  
Equity attributable to non-controlling interests                                     200,842  

 

 

 

  13  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

As of 12/31/2016   Banco Macro
SA
    Banco del
Tucumán SA
    Other
Subsidiaries
    Eliminations     Consolidated  
                               
Assets     148,783,028       11,548,487       2,215,093       (3,176,013 )     159,370,595  
Liabilities     123,812,335       9,489,193       1,107,074       (216,500 )     134,192,102  
Equity attributable to the owners of the Bank                                     24,970,693  
Equity attributable to non-controlling interests                                     207,800  

 

Transcription in the Books of Accounts

 

To the date of the accompanying Financial Statements, the same are in the process of being transcribed in the Bank’s Books of Account.

 

Figures expressed in thousands of Pesos

 

The accompanying consolidated Financial Statements disclose figures expressed in thousands of Argentine pesos and round the amounts in thousands of pesos to the nearest whole number, unless it expressly states the contrary.

 

Comparative information

 

The present condensed consolidated interim Balance sheet as of June 30, 2018, is presented comparatively with year-end data of the immediately preceding fiscal year, while the Statement of income and Other comprehensive income for the three-month and six-month periods ended June 30, 2018, the Statement of changes in shareholders’ equity and the Statement of cash flows and Cash equivalents for the six-month period ended June 30, 2018, are presented comparatively with data as of same period of the immediately preceding fiscal year.

 

In compliance with IFRS 1 “First-time Adoption of International Financial Reporting Standards” and since the accompanying condensed consolidated interim Financial Statements are the first ones being submitted pursuant to Communiqué “A” 6114 of the Central Bank, we include the opening Balance sheet to the transition date (December 31, 2016).

 

Unit of measure

 

IFRS require the restatement in functional currency of an entity’s financial statements when the functional currency used is that of an economy considered to be a high-inflation or a hyperinflationary economy. To achieve consistency in identifying an economic environment requiring the restatement of financial statements, IAS 29 “ Financial Reporting in Hyperinflationary Economies” establishes certain qualitative indicators and a quantitative factor, which is considered to be relevant by international practices; and it arises when the three-year cumulative inflation rate is around 100% or more; this also requires assessing whether it is not the result of a circumstantial event that may be reversed in the short term. To quantify the inflation rate, IAS 29 requires the use of a general price index reflecting the changes in the currency’s general purchasing power. In Argentina, the certified professional accountants and corporate regulators agree that the most appropriate index to such end is the internal wholesale price index (WPI) prepared by the Instituto Nacional de Estadísticas y Censos (INDEC). This consensus is driven by the fact that the WPI combines several specific indexes that altogether cover a wider basket than the remaining price indicators, and also its geographic scope includes the data gathered in different areas across the country. The three-year cumulative inflation measured based on the WPI maintained in 2017 a downward trend as compared to 2016, and the three-year cumulative inflation rate was below 100%. However, this trend was reversed during the first half of 2018 due to factors such as the exchange rate devaluation and the continuity of the public services tariffs adjustment process, as well as the unfavorable international context in terms of financing. In this scenario, the three-year cumulative inflation rate as of June 30, 2018, exceeds 100%; and the new goals reviewed by the Argentine government and other available projections indicate that this trend will not be reversed in the short term. Therefore, under IAS 29, the Argentine economy should be considered hyperinflationary as of June 30, 2018. Consequently, the entities under the Central Bank control that are required to apply the IFRSs adopted by the Central Bank through Communiqué “A” 6114 and the functional currency of which is the Argentine peso should restate their financial statements as from the first applicable period, which in the case of the Bank is July 1, 2018. However, the requirements of IAS 29 will be met provided that certain changes are made to the BCRA’s regulations on the impossibility of using the method for restating the financial statements in constant currency, pursuant to the Central Bank Communiqué “A” 3921, which resulted from Presidential Decree No. 664/2003.

 

 

 

  14  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

The requirements of IAS 29 consist in restating the financial statements so that they consider the changes in the general purchasing power of the currency to ensure they are stated in the current unit of measure as of the end of the reported period. These requirements also comprise the comparative information of the financial statements.

 

To sum up, the restating mechanism provided by IAS 29 establishes that monetary assets and liabilities will not be restated, as they are already stated in terms of the current unit of measure as of the end of the reporting period. Assets and liabilities subject to adjustments based on specific agreements will be adjusted in accordance with such agreements. There is no need to restate the non-monetary items measured at their market values as of the end of the reporting period, such as the net realization value, among others. The remaining non-monetary assets and liabilities will be restated using a general price index. Gains or losses resulting from the net monetary position will be included in net income (loss) for the reporting period.

 

As of the date of issuance of these condensed consolidated interim Financial Statements, the Bank´s Management is analyzing the requirements under IAS 29.

 

First-time adoption of IFRSs under Central Bank Communiqué “A” 6114

 

According with Central Bank Communiqué “A” 6324, below are presented reconciliations of the consolidated equity as of June 30, 2017 and the consolidated net income for the six-month and three-month periods ended on that date. The consolidated equity and the consolidated net income reconciliations for the fiscal year ended December 31, 2016 (date of transition) and 2017, were included in the condensed consolidated interim Financial Statements for the three-month period ended on March 31, 2018, already issued.

 

In preparing these reconciliations, the Bank’s Management has considered the applicable IFRSs to the presentation of the first annual consolidated Financial Statements that are the first consolidated Financial Statements presented in accordance with Central Bank Communiqué “A” 6114, for the fiscal year ending on December 31, 2018. However, items and figures included in these reconciliations could be amended. The items and figures included in these reconciliations could be amended to the extent that, upon the preparation of those first annual financial statements in accordance with IFRS adopted by the Central Bank through Communique “A” 6114, new standards are issued or current standards are amended, with mandatory or early application as of that date, or it is opted to change the selection of any of the exemptions under IFRS 1 “First-time adoption of International Financial Reporting Standards”. As a general rule, the Central Bank does not admit early application of any IFRS, unless it is specified otherwise.

 

The optional exemptios and the obligatory exceptions, chosen by the Bank, related with the non-retroactive application of certain IFRS and the main transitions adjustments, have been disclosed, in detail, in the condensed consolidated Financial Statement for the three-month period ended on March 31, 2018, already issued.

 

Reconciliations required

 

·        Reconciliation of consolidated equity as of June 30, 2017.

 

    Previous
Central Bank
Standards
    Adjustments and
Reclassifications
    Balances according
Central Bank
Communiqué “A”
6114
 
Total Assets     187,767,925       1,245,817       189,013,742  
Total Liabilities     151,940,385       (2,008,252 )     149,932,133  
Equity     35,827,540       3,254,069       39,081,609  
Net Shareholders’ Equity attributable to non-controlling interests                     151,453  
Net Shareholders´ Equity attributable to the owners of the Parent Company                     38,930,156  

 

Item   Balances as of
06/30/2017
 
According to previous Central Bank Standards     35,827,540  
Adjustments and Reclassifications:        
Debt securities and investment in equity instruments     152,662  
Loans and other financing     (310,945 )
Property, plant and equipment and investment property     4,566,397  

 

 

 

  15  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Item   Balances as of
06/30/2017
 
Adjustments and Reclassifications (contd.):        
Deferred income tax assets and liabilities     (1,097,486 )
Other non-financial assets     69,746  
Corporate bonds     59,698  
Other non-financial liabilities     (318,622 )
Other adjustments     (18,834 )
Non-controlling interest     151,453  
Total adjustments and reclassifications     3,254,069  
Net Shareholders equity according to Central Bank Communiqué “A” 6114     39,081,609  
Net Shareholders´ Equity attributable to the owners of the Parent Company     38,930,156  
Net Shareholders’ Equity attributable to non-controlling interests     151,453  

 

· Reconciliation of consolidated income and other comprehensive income for the six-month and three-month periods ended June 30, 2017,

 

Reconciliation of income for the six-month
period as of 06/30/2017
  Net income
for the
period
    Other
comprehensive
income
    Comprehensive
Income
 
According to previous Central Bank Standards     3,779,312                  
Interest income     (26,447 )                
Commisions income     28,752                  
Interest expense     28,138                  
Other operating expenses     (49,154 )                
Reclasifications of Issuance cost of shares     234,545                  
Income Tax     223,906                  
Foreign currency translation differences             36,267          
Loss from financial instruments at fair value through OCI             (13,827 )        
Other adjustment     46,830                  
Total adjustments and reclassifications     486,570       22,440          
Balance according to Central BankCommuniqué “A” 6114     4,265,882       22,440       4,288,322  
Attributable to parent company     4,228,757       22,921       4,251,678  
Attributable to non-controlling interests     37,125       (481 )     36,644  

 

Reconciliation of income for the three-month
period as of 06/30/2017
  Net income
for the
period
    Other
comprehensive
income
    Comprehensive
Income
 
According to previous Central Bank Standards     2,015,267                  
Interest income     (38,209 )                
Commissions income     (2,769 )                
Interest expense     34,548                  
Other operating expenses     (41,273 )                
Reclasifications of Issuance cost of shares     234,545                  
Income Tax     120,987                  
Foreign currency translation differences             58,793          
Loss from financial instruments at fair value through OCI             (10,889 )        
Other adjustment     (79,826 )                
Total adjustments and reclassifications     228,003       47,904          
Balance according to Central BankCommuniqué “A” 6114     2,243,270       47,904       2,291,174  
Attributable to parent company     2,223,509       48,040       2,271,549  
Attributable to non-controlling interests     19,761       (136 )     19,625  

 

 

 

  16  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

New pronouncements

 

Pursuant to Communiqué “A” 6114 of the Central Bank, as new IFRS are approved and existing IFRS are amended or revoked and, once these changes are approved through Notices of Approval issued by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCA for its Spanish acronym), the Central Bank shall issue a statement on the approval thereof for financial entities. Generally, financial entities shall not apply any IFRS in advance, except specifically authorized at the time of the approval thereof. In this case, the Bank shall adopt the following standards:

 

· IFRS 16 “Leases”: such standard eliminates the dual accounting method for lessees that distinguishes between finance leases recognized within the Financial statements and operating leases for which future lease payments are not required to be recognized, Instead, it develops a single model, within the balance sheet, which is similar to the present finance lease, As to lessor, the standard maintains the present practice –i,e,, lessors keep on classifying leases as finance and operating leases.

 

· IFRIC 12 “Uncertainty over income tax treatments”. This interpretation clarifies how to apply the recongnition and measurement requirements in IAS 12 “Income tax” when there is uncertainty over income tax treatments.

 

These standards are applicable to fiscal years beginning as of January 1, 2019. The Bank does not expect the above described standards to have a material impact on the consolidated Financial Statements.

 

4. CONTINGENT TRANSACTIONS

 

In order to meet specific financial needs of customers, the Bank’s credit policy also includes, among others, the granting of guarantees, securities, bonds, letters of credit and documentary credits. Although these transactions are not recognized in the balance sheet, since they imply a possible obligation or liability for the Bank, they expose the Bank to additional credit risk to those recognized in the balance sheet and are, therefore, an integral part of the total risk of the Bank.

 

As of June 30, 2018 and December 31, 2017 and 2016, the Bank maintains the following contingent transactions:

 

    06/30/2018     12/31/2017     12/31/2016  
                   
Overdraft and unused agreed credits     839,311       255,710       191,007  
Guarantees granted     697,621       253,350       287,497  
Liabilities for foreign trade transactions     203,399       90,274       163,308  
      1,740,331       599,334       641,812  

 

Risks related to the contingent transactions described above have been evaluated and are controlled within the framework of the Bank’s credit risk policy described in Note 41 to the condensed consolidated interim Financial Statemetns as of March 31, 2018, already issued.

 

5. FAIR VALUE QUANTITATIVE AND QUALITATIVE DISCLOSURES

 

The fair value is the amount at which an asset can be exchanged, or at which a liability can be settled, in mutual independent terms and conditions between participants of the principal market (or most advantageous market) duly informed and willing to transact in an orderly and current transaction, at the measurement date in the current market conditions whether the price is directly observable or estimated using a valuation technique under the assumption that the Bank is an ongoing business.

 

When a financial instrument is quoted in a liquid and active market, its price in the market in a real transaction provides the most reliable evidence of its fair value, Nevertheless, when there is no quoted price in the market or it cannot be an evidence of the fair value of such instrument, in order to determine such fair value, the entities may use the market value of another instrument with similar characteristics, the analysis of discounted cash flows or other applicable techniques, which shall be significantly affected by the assumptions used.

 

Notwithstanding the above, the Bank’s Management has used its best judgment to estimate the fair values of its financial instruments, any technique to perform such estimate implies certain inherent fragility level, In conclusion, the fair value may not be indicative of the net realizable value or settlement value.

 

 

 

  17  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Fair value hierarchy

 

The Bank uses the following hierarchy to determine and disclose the fair value of financial instruments, according to the valuation technique applied:

 

- Level 1: quoted prices (unadjusted) observable in active markets for identical assets or liabilities.

 

- Level 2: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are observable for the asset or liability, either directly or indirectly in the markets.

 

- Level 3: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are not based on observable market information.

 

Description   Financial assets and finacial liabilities measured at fair value on a
recurring basis as of June 30, 2018
 
    Total     Level 1     Level 2     Level 3  
                         
Financial assets                                
                                 
At fair value through profit or loss                                
Debt Securities at fair value through profit or loss     1,339,702       878,223       308,436       153,043  
Derivative Financial Instruments     42,981       8,059       34,922          
Other financial assets     226,540       164,334               62,206  
Financial Assets delivered as guarantee     72,585               72,585          
Investments in Equity Instruments     50,009       7,107               42,902  
                                 
At fair value through OCI                                
Other debt securities     39,353,988       39,353,988                  
Financial Assets delivered as guarantee     1,961,931       1,961,931                  
                                 
Total     43,047,736       42,373,642       415,943       258,151  
Financial liabilities                                
                                 
At fair value through profit or loss                                
Derivative Financial Instruments     34,151       3,650       30,501          
Total     34,151       3,650       30,501          

 

Description   Financial assets and finacial liabilities measured at fair value on a
recurring basis as of December 31, 2017
 
    Total     Level 1     Level 2     Level 3  
                         
Financial assets                                
                                 
At fair value through profit or loss                                
Debt Securities at fair value through profit or loss     1,086,028       422,868       627,319       35,841  
Derivative Financial Instruments     8,228       800       7,428          
Other financial assets     483,246       321,495               161,751  
Financial Assets delivered as guarantee     4,308               4,308          
Investments in Equity Instruments     282,659       246,885               35,774  
At fair value through OCI                                
Other financial assets                                
Other debt securities     33,766,052       33,590,407       175,645          
Financial assets delivered as guarantee     2,989,411       2,989,411                  
Investment in Equity instruments                                
                                 
Total     38,619,932       37,571,866       814,700       233,366  
                                 
Financial liabilities                                
                                 
At fair value through profit or loss                                
Liabilities at fair value through income or loss     6,450       6,450                  
Derivatives financial liabilities     23,107       7,169       15,938          
                                 
Total     29,557       13,619       15,938          

 

 

 

  18  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Description of valuation process

 

The fair value of instruments categorized as Level 1 was assessed by using quoted prices effective at the end of each reporting period or fiscal year, as applicable, in active markets for identical assets or liabilities, if representative. At present, for government and private securities, there are two principal markets in which the Bank operates, to wit: BYMA and MAE. Additionally, in the case of derivatives, both MAE and Mercado a Término de Rosario SA (ROFEX) are deemed active markets.

 

On the other hand, for certain assets and liabilities that do not have an active market, categorized as Level 2, the Bank used valuation techniques that included the use of market transactions performed under mutual independent terms and conditions, between interested and duly informed parties, provided there are any available, as well as references to the current fair value of other instrument being substantially similar, or otherwise the analysis of cash flows discounted at rates built from market information of similar instruments.

 

In addition, certain assets and liabilities included in this categorization were valued using identical price quotes of identical instruments in “less active markets”.

 

Finally, the Bank has categorized as level 3 those assets and liabilities for which there are no identical or similar transactions in the market. In order to determine the market value of these instruments, the Bank used valuation techniques based on its own assumptions, which are similar to those that would be used by any other market participant. For this approach, the Bank mainly used the cash flow discount model.

 

As of June 30, 2018, December 31, 2017 and 2016, the Bank has neither changed the techniques nor the assumptions used to estimate the fair value of the financial instruments.

 

Below is presented the reconciliation between the balances at the beginning and the end of the period of the financial assets and liabilities recognized at fair value, using the valuation techniques based on the Bank’s own assumptions, as of June 30, 2018 and December 31, 2017:

 

    Fair values using valuation techniques based on the
Bank’s own assumptions (level 3)
June 30, 2018
 
Description   Debt Securities     Other Financial 
Assets
    Investments in 
Equity 
Instruments
 
Balance at the beginning     35,841       161,751       35,774  
Transfers to Level 3                        
Transfers from Level 3                        
Profit and Loss     (16,497 )     (28,208 )     7,128  
Purchases, sales, issuance and settlement     133,699       (71,337 )        
Balance at end of period     153,043       62,206       42,902  

 

    Fair values using valuation techniques based on the
Bank’s own assumptions (level 3)
December 31, 2017
 
Description   Debt Securities     Other Financial 
Assets
    Investments in 
Equity 
Instruments
 
Balance at the beginning     45,834               15,668  
Transfers to Level 3                        
Transfers from Level 3                        
Profit and Loss     5,661               20,421  
Purchases, sales, issuance and settlement     (15,654 )     161,751       (315 )
Balance at end of year     35,841       161,751       35,774  

 

 

 

  19  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Instruments measured as level 3, include mainly debt securities and certificate of participation in financial trust, for which, the construction of fair values was obtained based on the Bank’s own assumptions that are not easily observable in the market. The most significant assumption was the placement cutoff rate of such instruments in the market at the end of the period, used to determine the actual value of cash flows.

 

Any increase (decrease) in these assumptions, considered separately, would derive in a higher or lower fair value.

 

Changes in fair value levels

 

The Bank monitors the availability of information in the market to evaluate the classification of financial instruments into the fair value hierarchy, as well as the resulting determination of transfers between levels 1, 2 and 3 at each period end.

 

As of June 30, 2018, December 31, 2017 and 2016, the Bank has not recognized any transfers between levels 1, 2 and 3 of the fair value hierarchy.

 

Financial assets and liabilities not recognized at fair value

 

Next follows a description the methods and assumptions used to determine the fair values of financial instruments no recognized at their fair value in the accompanying Financial Statements:

 

- Assets with fair value similar to the carrying amount: financial assets and liabilities that are liquid or have short-term maturities (less than three months) were deemed to have a fair value similar to the carrying amount.

 

- Fixed-rate financial instruments: The fair value of financial assets was recognized discounting future cash flows at current market rates, for each fiscal year, for financial instruments of similar characteristics. The estimated fair value of fixed-interest rate deposits was assessed discounting future cash flows by using market interest rates for deposits with similar maturities to those of the Bank’s portfolio.

 

Quoted assets and issued quoted liabilities the fair value was determined based on market prices.

 

- Other financial instruments: financial assets and liabilities that are liquid or have short-term maturities were deemed to have a fair value similar to the carrying amount. This assumption also applies to deposits in savings accounts, checking accounts and others.

 

The following table shows a comparison between the fair value and the carrying amount of financial instruments not measured at fair value as of June 30, 2018 and December 31, 2017 and 2016:

  

    06/30/2018  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     50,309,607       50,309,607                       50,309,607  
Repo transactions     156,158       156,158                       156,158  
Other financial assets     2,288,839       2,288,839                       2,288,839  
Loans and other financing     155,620,519               166,204       144,656,424       144,822,628  
Other debt securities     3,808,656       116,506       3,375,965       291,658       3,784,129  
Financial assets delivered as guarantee     5,442,566       5,442,566                       5,442,566  
      217,626,345       58,313,676       3,542,169       144,948,082       206,803,927  
Financial Liabilities                              
Deposits     179,473,237       90,433,417       89,119,285               179,552,702  
Other repo transactions     1,829,233       1,829,233                       1,829,233  
Other financial liabilities     11,195,051       9,577,911       1,619,280               11,197,191  
Financing received from the Central Bank and other financial entities     1,828,974       1,176,005       627,365               1,803,370  
Issued corporate bonds     8,125,300               7,666,548               7,666,548  
Subordinated corporate bonds     11,646,217               10,829,371               10,829,371  
      214,098,012       103,016,566       109,861,849               212,878,415  

 

 

 

  20  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

    12/31/2017  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     35,561,574       35,561,574                       35,561,574  
Repo transactions     1,419,808       1,419,808                       1,419,808  
Other financial assets     1,789,433       1,789,433                       1,789,433  
Loans and other financing     132,658,674               485,347       129,472,430       129,957,777  
Other debt securities     937,713       944,876               7,916       952,792  
Financial assets delivered as guarantee     4,644,633       4,644,633                       4,644,633  
      177,011,835       44,360,324       485,347       129,480,346       174,326,017  
Financial Liabilities                                        
Deposits     144,129,177       77,959,810       66,265,387               144,225,197  
Other repo transactions     2,688,093       2,688,093                       2,688,093  
Other financial liabilities     10,561,203       9,175,314       1,391,699               10,567,013  
Financing received from the Central Bank and other financial entities     1,174,111               1,176,397               1,176,397  
Issued corporate bonds     4,712,216               4,432,977               4,432,977  
Subordinated corporate bonds     7,565,759               7,710,790               7,710,790  
      170,830,559       89,823,217       80,977,250               170,800,467  

 

    12/31/2016  
    Carrying Amount     Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     35,986,159       35,986,159                       35,986,159  
Repo transactions     19,124       19,124                       19,124  
Other financial assets     941,219       941,219                       941,219  
Loans and other financing     88,390,646               481,628       87,807,196       88,288,824  
Other debt securities     855,832       843,708       3,223       11,677       858,608  
Financial assets delivered as guarantee     2,489,665       2,489,665                       2,489,665  
      128,682,645       40,279,875       484,851       87,818,873       128,583,599  
Financial Liabilities                                        
Deposits     111,862,805       58,773,034       53,175,424             111,948,458  
Other repo transactions     1,095,634       1,095,634                       1,095,634  
Other financial liabilities     6,341,674       5,192,168       1,152,196               6,344,364  
Financing received from the Central Bank and other financial entities     260,458               259,775               259,775  
Issued corporate bonds     1,684,636               1,622,802               1,622,802  
Subordinated corporate bonds     6,376,537               5,994,056               5,994,056  
      127,621,744       65,060,836       62,204,253               127,265,089  

 

6. INVESTMENTS IN ASSOCIATES AND JOINT ARRANGEMENTS

 

6.1 Associated entities

 

The Bank holds investments in the Macro Warrants SA. The existence of significant influence is evidenced by the representation the Bank has in the Board of Directors of the associate. In order to measure this investment, we used accounting information of Macro Warrants SA as of March 31, 2018. Additionally, the Bank has considered, when applicable, the material transactions or events occurring between March 31, 2018 and June 30, 2018.

 

 

 

  21  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

The following table presents the summarized financial information on the Bank’s investment in the Associated:

 

· Macro Warrant SA

 

Summarized Balance sheet   06/30/2018     12/31/2017     12/31/2016  
Total Assets     18,994       19,798       17,110  
Total Liabilities     4,784       3,265       3,424  
Net Shareholders’ Equity     14,210       16,533       13,686  
Proportional Interest in the entity     5 %     5 %     5 %
Carrying Amount of Investment     711       827       684  

 

As of June 30, 2018, the investment in Prisma Medios de Pagos SA was reclassificated as non-current assets held for sale (see Note 8). The following table presents summarized financial information on the Bank´s investments as of December 31, 2017 and 2016:

 

Summarized Balance sheet   31/12/2017     31/12/2016  
Total Assets     14,366,838       9,703,861  
Total Liabilities     12,492,991       8,815,774  
Net Shareholders’ Equity     1,873,847       888,087  
Proportional Interest in the entity     7,61 %     7,61 %
Carrying Amount of Investment     142,600       67,583  

 

6.2 Joint Ventures in which the Bank participates

 

The Bank participates in the following joint ventures, instrumented through Uniones Transitorias de Empresas (UTE):

 

a) Banco Macro SA – Siemens Itron Business Services SA: on April 7, 1998, the Bank executed an agreement with Siemens Itron Services SA to organize an UTE controlled on a joint basis through a 50% interest, the purpose of which is to facilitate a data processing center for the tax administration, to modernize the systems and tax collection processes of the Province of Salta and manage and recover municipal taxes and fees.

 

b) Banco Macro SA – Gestiva SA: on May 4, 2010 and August 15, 2012, the Bank executed with Gestiva SA the UTE agreement to form “Banco Macro SA – Gestiva SA – Unión Transitoria de Empresas”, under joint control, the purpose of which relates to rendering the integral processing and management services of the tax system of the Province of Misiones, the management thereof and tax collection services. The Bank holds a 5% interest in this UTE.

 

On June 27, 2018, the Bank, the Ute and the tax authority of Misiones provincial government, entered into an agreement of “termination by mutual agreement” of the adaptation agreement, without implying or modyfing the Bank´s rights and obligations as a financial agent of the province for the services rendered established in the agreement.

 

· UTE WORDLINE

 

Summarized Balance sheet   06/30/2018     12/31/2017     12/31/2016  
Total Assets     218,707       195,826       133,188  
Total Liabilities     37,918       54,646       30,362  
Net Shareholders’ Equity     180,789       141,180       102,826  
Proportional interest in the entity     50 %     50 %     50 %
Carrying Amount of Investment     90,395       70,590       51,413  

 

· Gestiva SA

 

Summarized Balance sheet   06/30/2018     12/31/2017     12/31/2016  
Total Assets     153,459       116,885       107,376  
Total Liabilities     19,677       18,319       15,616  
Net Shareholders’ Equity     133,782       98,566       91,760  
Proportional interest in the entity     5 %     5 %     5 %
Carrying Amount of Investment     6,689       4,928       4,588  

 

 

 

  22  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

7. RELATED PARTIES

 

A related party is a person or entity that is related to the Bank:

 

- has control or joint control of the Bank;

- has significant influence over the Bank;

- is a member of the key management personnel of the Bank or of a parent of the Bank;

- members of the same group;

- one entity is an associate (or an associate of a member of a group of which the other entity is a member).

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, directly or indirectly. The Bank considers as key management personnel, for the purposes of IAS 24, the members of the Board of Directors and the Senior Management member of the Risk Management Committee, Asset and Liability Committee and the Senior Credit Committee.

 

As of June 30, 2018 and December 31, 2017 and 2016, there is a total amount of 762,866, 363,543 and 305,417, respectively, as unpaid financial assistance granted by the Bank to its associates and related parties and deposits of its associates and related parties of 2,506,971, 2,796,027 and 2,337,840, respectively:

 

    Subsidiaries(1)     Associates and other related parties  
    Maximum balances
as of 06/30/2018
    Balance as of
06/30/2018
    Maximum balances 
as of 06/30/2018
    Balance as of
06/30/2018
 
Documents                     408,676       397,657  
Overdraft                     35,395       29,734  
Credit cards     567       377       48,791       43,809  
Leases     6,309       6,309       1,851       1,751  
Personal loans                     845       440  
Mortgage loans                     45,489       45,445  
Other loans     1,952,244       901,973       197,843       195,379  
Guarantees granted                     46,895       48,651  
Total assistance     1,959,120       908,659       785,785       762,866  
Deposits             345,317       2,506,971          

 

    Subsidiaries(1)     Associates and other related parties  
    Maximum balances
as of 12/31/2017
    Balance as of
12/31/2017
    Maximum balances 
as of 12/31/2017
    Balance as of
12/31/2017
 
Documents                     147,763       147,733  
Overdraft                     25,301       7,831  
Credit cards     397       389       35,203       35,203  
Leases     6,973       6,973       2,204       2,157  
Personal loans                     786       785  
Mortgage loans                     14,015       13,968  
Other loans     1,202,336       952,148       390,893       140,449  
Guarantees granted     443       443       15,462       15,417  
Total assistance     1,210,149       959,953       631,627       363,543  
Deposits             108,606               2,796,027  

  

    Subsidiaries(1)     Associates and other related parties  
    Maximum balances
as of 12/31/2016
    Balance as of
12/31/2016
    Maximum balances
as of 12/31/2016
    Balance as of
12/31/2016
 
Documents                     103,927       103,336  
Overdraft                     17,804       7,459  
Credit cards     191       191       22,057       19,573  
Leases     8,036       8,036       1,189       1,168  

 

 

 

  23  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

    Subsidiaries(1)     Associates and other related parties  
    Maximum balances
as of 12/31/2016
    Balance as of
12/31/2016
    Maximum balances
as of 12/31/2016
    Balance as of
12/31/2016
 
Personal loans                     1,388       1,362  
Mortgage loans                     10,862       10,858  
Other loans     300,187               475,957       161,287  
Guarantees granted     885       885       374       374  
Total assistance     309,299       9,112       633,558       305,417  
Deposits             134,911               2,337,840  

 

(1) These transactions are eliminated during the consolidation process,

 

Transactions generated by the Bank with its subsidiaries and other related parties to it for transactions arranged within the scope of the usual and ordinary course of business, were performed in normal market conditions, both as to interest rates and prices and as to the required guarantees.

 

As of June 30, 2018, December 31, 2017 and 2016, the income from loan transactions totaled 16,100, 54,157 and 12,617, respectively, while expense generated from deposit transactions totaled 62,489, 163,814 and 141,184, respectively.

 

The Bank does not have loans granted to Directors and other key management personnel secured with shares.

 

Total remunerations received as salary and bonus by the key management personnel as of June 30, 2018 and December 31, 2017 and 2016, totaled 52,123, 79,905 and 41,592 respectively.

 

In addition, fees received by the Directors as of June 30, 2018 and December 31, 2017 and 2016 amounted to 315,616, 468,623 and 243,704 respectively.

 

Additionally, the composition of the Board of Directors and key management personnel is as follows:

 

    06/30/2018     12/31/2017     12/31/2016  
Board of Directors     24       22       21  
SeniorManagement members of the key management personnel     15       14       14  
      39       36       35  

 

8. NON-CURRENT ASSETS HELD FOR SALE

 

On June 30, 2018 the Bank recorded as non-current assets held for sale, its investment in Prisma Medios de Pago SA for an amount of 104,249, as the Bank intends to transfer all shares within a year. Therefore the investment was valued according with IFRS 5 “Non-current assets held for sale and discontinued operations”, at the lowest of its carrying amount and the best estimation of the fair value less costs until its sale.

 

9. PROVISIONS

 

This item includes the amounts estimated to face a liability of probable occurrence, which in case it occurs, would originate a loss for the Bank.

 

Exhibit J “Changes in Provisions” presents the changes in provisions during the six-month period ended June 30, 2018.

 

 

 

  24  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

The expected terms to settle these obligations are as follows:

 

    06/30/2018                    
    Within 12
months
    Beyond 12
months
    06/30/2018     12/31/2017     12/31/2016  
                               
For administrative, disciplinary and criminal penalties             718       718       718       9,110  
Others     371,613       412,243       783,856       694,201       325,897  
                                         
      371,613       412,961       784,574       694,919       335,007  

 

In the opinion of the Management of the Bank and its legal advisors, there are no other significant effects than those disclosed in the accompanying Financial Statements, the amounts and settlement terms of which have been recognized based on the current value of such estimates, considering the probable settlement date thereof.

 

10. ANALYSIS OF FINANCIAL ASSETS TO BE RECOVERED AND FINANCIAL LIABILITIES TO BE SETTLED

 

The following tables show the analysis of the balance of financial asset and liabilities the Bank expects to recover and settle as of June 30, 2018 and December 31, 2017 and 2016:

 

06/30/2018   Without due date     Total up to 12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     50,309,607                  
Debt securities at fair value through profit or loss     5,104       292,516       1,042,082  
Derivative instruments             42,981          
Repo transactions             156,158          
Other financial assets     1,107,370       1,357,466       50,543  
Loans and other financing     1,049,649       89,644,497       64,926,373  
Other debt securities             39,204,868       3,957,776  
Financial assets delivered as guarantee     5,439,431       2,037,651          
Investment in equity instruments     50,009                  
Total Assets     57,961,170       132,736,137       69,976,774  
Liabilities                        
Deposits     92,321,452       86,987,419       164,366  
Derivative instruments             34,151          
Repo transactions             1,829,233          
Other financial liabilities             11,041,096       153,955  
Financing received from Central Bank and other financial entities             1,629,153       199,821  
Issued Corporate bonds             307,910       7,817,390  
Subordinated corporate bonds             101,537       11,544,680  
Total Liabilities     92,321,452       101,930,499       19,880,212  

 

12/31/2017   Without due date     Total up to12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     35,561,574                  
Debt securities at fair value through profit or loss             138,068       947,960  
Derivative instruments             8,228          
Repo transactions             1,419,808          
Other financial assets             1,269,085       1,003,594  
Loans and other financing             73,767,208       58,891,466  
Other debt securities             34,704,765          
Financial assets delivered as guarantee     4,644,633       2,993,719          
Investment in equity instruments     282,659                  
Total Assets     40,488,866       114,300,881       60,843,020  

 

 

 

  25  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

12/31/2017   Without due date     Total up to12
months
    Total over 12
months
 
Liabilities                        
Deposits     74,499,451       69,068,373       561,346  
Liabilities at fair value to profit or loss             6,450          
Derivative instruments             23,107          
Repo transactions             2,688,093          
Other financial liabilities             10,372,665       188,538  
Financing received from Central Bank and other financial entities             1,087,979       86,132  
Issued Corporate bonds             118,356       4,593,860  
Subordinated corporate bonds             80,004       7,485,755  
Total Liabilities     74,499,451       83,445,027       12,915,631  

 

12/31/2016   Without due date     Total up to 12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     35,986,159                  
Debt securities at fair value through profit or loss             42,269       290,212  
Derivative instruments             9,721          
Repo transactions             19,124          
Other financial assets             1,098,092       7,421  
Loans and other financing             53,059,987       35,330,659  
Other debt securities             20,395,499          
Financial assets delivered as guarantee     2,489,700       1,200,994          
Investment in equity instruments     406,868                  
Total Assets     38,882,727       75,825,686       35,628,292  
Liabilities                        
Deposits     50,613,570       60,941,747       307,488  
Repo transactions             1,095,634          
Other financial liabilities             6,227,348       114,326  
Financing received from Central Bank and other financial entities             193,845       66,613  
Issued Corporate bonds             1,684,636          
Subordinated corporate bonds             67,429       6,309,108  
Total Liabilities     50,613,570       70,210,639       6,797,535  

 

11. DISCLOSURES BY OPERATING SEGMENT

 

For management purposes the Bank’s Management has determined that it has only one operating segment related to banking business. In this sense, the Bank supervises the operating segment results for the period, in order to make decisions about resources to be allocated to the segment and assess its performance, which is measured in a consistent basis with the profit or loss in the financial statements.

 

12. INCOME TAX

 

The main items of income tax expense in the condensed consolidated interim Financial Statements are as follows:

 

    06/30/2018     06/30/2017  
    Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Current income tax expense     3,200,398       1,431,044       2,511,566       1,290,979  
Gain for deferred income tax     (304,819 )     (160,278 )     (222,460 )     (98,101 )
Income tax expense recorded in the statement of income     2,895,579       1,270,766       2,289,106       1,192,878  
Income tax gain recorded in other comprehensive income     (26,651 )     (10,071 )     (1,292 )     (5,844 )
      2,868,928       1,260,695       2,287,814       1,187,034  

 

 

 

  26  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

13. COMMISSIONS INCOME

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Performance obligations satisfied in one act (1)     3,941,446       2,110,785       3,076,762       1,557,039  
Performance obligations satisfied over certain time period     10,225       5,387       7,982       102,659  
      3,951,671       2,116,172       3,084,744       1,659,698  

 

(1) Includes mainly account maintenance fees, agreements and credit card commissions.

 

14. DIFFERENCE IN QUOTED PRICES OF GOLD AND FOREIGN CURRENCY

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Translation of foreign currency assets and liabilities to pesos     (1,315,530 )     (1,336,523 )     339,013       270,211  
Income from foreign currency Exchange     453,842       324,243       208,308       95,042  
      (861,688 )     (1,012,280 )     547,321       365,253  

 

15. OTHER OPERATING INCOME

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Services     2,108,343       1,095,438       1,759,784       836,742  
Sale of investment property and other non-financial assets     137,123       27,202       10,313       10,313  
Adjustments and interest from other receivables     80,095       40,181       26,373       15,793  
Initial recognition of loans     56,530       33,750                  
Sale of property, plant and equipment     1,450       731       1,388       821  
Other     296,203       178,411       333,702       204,508  
      2,679,744       1,375,713       2,131,560       1,068,177  

 

16. EMPLOYEE BENEFITS

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Remunerations     3,354,242       1,838,841       2,737,092       1,432,657  
Social Security Contributions     657,121       364,336       530,168       270,824  
Compensations and bonuses to employees     343,392       184,926       211,276       100,235  
Employee services     106,078       54,984       102,931       57,336  
      4,460,833       2,443,087       3,581,467       1,861,052  

 

 

 

  27  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

17. ADMINISTRATION EXPENSES

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated 
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Taxes     449,841       223,653       339,340       177,588  
Maintenance, conservation and repair expenses     374,072       207,801       254,223       132,389  
Security services     314,847       167,550       244,188       122,237  
Fees to Directors and Syndics     309,878       147,389       185,266       98,542  
Electricity and communications     237,298       121,874       165,032       83,897  
Other fees     229,507       124,424       160,039       84,429  
Leases     137,875       73,696       105,564       53,664  
Advertising and publicity     87,564       55,312       81,841       38,356  
Representation, travel and transportation expenses     53,260       30,423       36,979       20,067  
Stationary and office supplies     26,127       13,251       20,929       10,670  
Insurance     24,014       13,328       23,473       12,526  
Hired administrative services     8,043       4,527       8,473       2,599  
Other     699,208       366,296       488,604       263,524  
      2,951,534       1,549,524       2,113,951       1,100,488  

  

18. OTHER OPERATING EXPENSES

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
                         
Gross turnover tax     2,465,221       1,309,284       1,586,261       815,229  
Charges for other provisions     353,418       187,593       204,642       134,800  
Deposits Guarantee Fund contributions     132,926       68,972       99,899       50,471  
Donations     47,584       24,647       45,905       23,707  
Insurance claims     22,080       11,688       13,001       8,052  
Initial loan recognition                     48,951       41,935  
Other     1,325,519       715,401       997,989       513,646  
      4,346,748       2,317,585       2,996,648       1,587,840  

 

19. ADDITIONAL DISCLOSURES IN THE STATEMENT OF CASH FLOWS

 

The Statement of Cash Flows presents the changes in cash and cash equivalents derived from operating activities, investing activities and financing activities during the period. For the preparation of the Statement of Cash Flows the Bank adopted the indirect method for Operating Activities and the direct method for Investment Activities and Financing Activities.

 

The Bank considers as “Cash and cash equivalents” the item Cash and deposits in banks and those financial assets that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

For the preparation of the Statement of Cash Flows the Bank considered the following:

 

- Operating activities: are the normal revenue-producing activities of the Bank as well as other activities that cannot be qualified as investing or financing activities.

 

 

 

  28  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

- Investing activities: are the acquisition, sale and disposal by other means of long-term assets and other investments not included in cash and cash equivalents.

 

- Financing activities: are activities that result in changes in the size and composition of the Shareholders equity and liabilities of the Bank and that are not part of the operating or investing activities.

 

The table below presents the reconciliation between the item “Cash and cash equivalents” in the Statement of Cash Flows and the relevant accounting items of the Balance Sheet:

 

    06/30/2018     12/31/2017     06/30/2017     12/31/2016  
Cash and deposits in banks     50,309,607       35,561,574       36,414,841       35,986,159  
Debt securities at fair value             44               9,585  
Other debt securities     38,037,240       5,548,056       17,214,527       16,074,409  
Loans and other financing     144,308       93,871       82,992          
      88,491,155       41,203,545       53,712,360       52,070,153  

 

20. CAPITAL STOCK

 

The Bank’s subscribed and paid-in capital as of June 30, 2018, amounted to 669,663. Since December 31, 2014, the Bank’s capital stock has changed as follows:

 

As of December 31, 2014     594,563  
Capital stock decrease as provided by Art, 67 of Law No, 26,831 (1)     (10,000 )
Capital stock increase as approved by Shareholders´ Meeting held on April 28, 2017 (2)     85,100  
As of June 30, 2018     669,663  

 

(1) Related to capital stock decrease resulting from the lapse of three years from acquisition from September through December 2011, involving 10,000,000 own registered Class B shares of common stock for a total amount of 92,919. These shares have not been sold and the shareholders’ meeting has issued no resolution as to the application thereof. On June 25, 2015, the capital stock decrease was registered in the Public Registry of Commerce.

 

(2) Related to capital stock increase arising from (i) the issue of 74,000,000 new, common, registered, Class “B” shares with a face value of Ps. 1, each one entitled to one vote, and entitled to dividends under the same conditions as common, registered, Class “B” shares, outstanding upon issuance, formalized on June 19, 2017 and (ii) additionally, as established by the abovementioned Meeting, the international underwriters exercised the option to oversubscribed 15% of the capital stock which was formalized on July 13, 2017 through the issuance of 11,099,993 new, common, registered, Class “B” shares each one entitled to one vote and with a face value of Ps.1. On August 14, 2017, such capital increases were registered with the Public Registry of Commerce.

 

The public offering of the new shares was authorized by CNV Resolution No, 18,716 dated on May 24, 2017 and by the BCBA on May 26, 2017. As required by CNV regulations, it is advised that the funds arising from the public subscription of shares shall be used to finance its general business operations, to increase its borrowing capacity and leverage the potential acquisitions opportunities in the Argentine financial system.

 

Additionally, on August 8, 2018 the Board of Directors of Banco Macro SA, has established the terms and conditions for the acquisition of its own shares, in accordance with section 64 of Law 26,831 and CNV rules, under the following conditions:

 

(1) Maximum amount to invest: up to 5,000,000

 

(2) Maximum number of shares for own acquisition: up to 5% of the capital stock

 

(3) Maximum price to pay for shares: up to Ps. 158 per share

 

 

 

  29  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

(4) Terms in which the acquisition will take place: 30 business days, beginning from the following day in which the information is published in the Bulletin of the Buenos Aires Stock Exchange, subject to renewal or extension of the term, which will be informed to investors.

 

As mention in the preceding paragraph, until the date of issuance of these condensed consolidated interim Financial Statements, the Bank has adquired 7,149,035 common shares Class B for a face value Ps.1 for an amount of 1,030,754.

 

21. EARNINGS PER SHARE

 

Basic earnings per share were calculated by dividing net profit attributable to ordinary equity holders of the Bank by the weighted average number of ordinary shares outstanding during the period.

 

To determine the weighted average number of ordinary shares outstanding during the period the Bank used the number of ordinary shares outstanding at the beginning of the period adjusted, if applicable, by the number of ordinary shares bought back or issued during the period multiplied by the number of days that the shares were outstanding in the period, Note 19 provides a detail of the changes in the Bank’s capital stock.

 

The calculation of basic earnings per share is disclosed in the table of Earnings per share included in the condensed consolidated interim Statement of Income.

 

Dividends paid and proposed

 

Cash dividends paid during the fiscal years 2017 and 2016 to the shareholders of the Bank amount to 701,476 and 596,254, respectively, which considering the number of shares outstanding to the date of effective payment represented 1.20 and 1.10 pesos per share, respectively.

 

The Shareholders’ Meeting held on April 27, 2018 resolved to distribute cash dividends for 3,348,315, which considering the number of shares outstanding at the date of such resolution, represented 5 pesos per share. These cash dividends were paid on May 15, 2018.

 

22. DEPOSIT GUARANTEE INSURANCE

 

Law No. 24485 and Decree No. 540/1995 created the Deposit Guarantee Insurance System, which was featured as a limited, compulsory and onerous system, aimed at covering the risks of bank deposits, as subsidiary and supplementary to the deposit privilege and protection system established under the Financial Entities Act. The above mentioned legislation also provided for the organization of Sedesa with the exclusive purpose of managing the Deposit Guarantee Fund (DGF). Sedesa was organized in August 1995.

 

Banco Macro SA holds an 8.4020% interest in the capital stock of Sedesa according to the percentages disclosed by Central Bank Communiqué “B” 11681 on March 20, 2018.

 

According to the above mentioned law and decree, all deposits in pesos and foreign currency placed in participating entities in the form of checking accounts, savings accounts, fixed-term deposits or other forms of deposit that the Central Bank may determine from time to time shall be subject to the above described Deposit Guaratee Insurance System, up to the amount of 450 and that meet the requirements provided for in the Decree 540/1995 and other requirements that the regulatory Authority may from time to time determine. On the other hand, the Central Bank provided for the exclusion of the guarantee system, among others, of any deposits made by other financial entities, deposits made by persons related to the Bank and security deposits.

 

 

 

  30  

 

   

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

23. RESTRICTED ASSETS

 

As of June 30, 2018 and December 31, 2017, the followings Bank´s assets are restricted:

 

Item   06/30/2018     12/31/2017  
Debt securities at fair value through profit or loss and other debt securities                
·       Central Bank of Argentina Internal Bills in pesos, maturity 09-19-2018 as of June 30, 2018 and maturing 02-21-2018 as of December 31, 2017, for the performance of forward foreign currency transactions.     156,990       53,059  
·      Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 used as security in favor of Sedesa (1).     121,368       117,454  
·      Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 securing the regional economies Competitiveness Program – BID loan No. 3174/OC-AR.     86,851       98,541  

·      Central Bank of Argentina Internal Bills in pesos, maturing 09-19-2018 as of June 30, 2018 and maturity 02-21-2018 as of December 31, 2017, securing the operation through negotiation secured transaction Segment as the main counterparty of the MAE.

 

    50,407       9,647  
Discount bonds in pesos regulated by Argentinian legislation, maturing 2033, for minimum counterpart required for Agents to act in the new categories contemplated under Resolution No. 622/13 of the CNV.     11,580       13,139  
·      Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 securing a BID loan of Province of San Juan No. 2763/OC-AR.     7,817       8,869  
·      Discount bonds in pesos regulated by Argentinian legislation, maturing 2033 securing the sectorial Credit Program of the Province of San Juan, Production investment financing fund.     7,672       8,704  
·      Secured bonds under Presidential Decree No, 1579/2002 as security for a loan received from Banco de Inversión y Comercio Exterior SA (Bice).             4,270  
·      Other public and private securities.     26,309       26,490  
Subtotal debt securities at fair value through profit or loss and other debt securities     468,994       340,173  
                 
Other financial assets                
·      Sundry debtors – foreclosure within the scope of the claim filed by the DGR against the City of Buenos Aires for differences on gross turnover tax. Subtotal Other financial assets     827       827  
      827       827  
Loans and other financing – non financial private sector and foreign residents                
·      Interests derived from contributions made as protector (2)     113,998       113,998  
Subtotal loans and other financing – non-financial private sector and foreign residents     113,998       110,848  
                 
Financial assets delivered as a guarantee                
·      Special guarantee checking accounts opened in Central Bank for transactions related to the electronic clearing houses and similar entities.     4,821,479       4,005,730  
·      Forward purchase for repo transactions.     2,034,516       2,993,719  
·      Guarantee deposits related to credit and debit card transactions.     605,485       623,491  
·      Other guarantee deposits.     15,602       15,412  
Subtotal Financial assets delivered as a guarantee     7,477,082       7,638,352  
Other non financial assets                
·      Real property related to a call option sold.     115,888       222,023  
Subtotal Other non-financial assets     115,888       222,023  
Total     8,176,789       8,312,223  

 

 

 

  31  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

(1) As replacement for the preferred shares of former Nuevo Banco Bisel SA to secure to Sedesa the price payment and the fulfillment of all the obligations assumed in the purchase and sale agreement dated May 28, 2007, maturing on August 11, 2021.

 

(2) In order to keep tax benefits related to these contributions, they must be maintained between two and three years from the date they were made. The same correspond to the following risk funds: Risk fund of Garantizar SGR, Risk fund of Los Grobo SGR and Risk fund of Avaluar SGR as of June 30, 2018 and December 31, 2017.

 

Additionally, as of December 31, 2016, the amount of restricted assets was 4,191,090.

 

24. TRUST ACTIVITIES

 

The Bank is related to several types of trusts. The different trust agreements according to the business purpose sought by the Bank, are disclosed below:

 

24.1. Financial trusts for investment purposes

 

Debt securities include mainly prepayments towards the placement price of trust securities of the financial trusts under public offerings, made by the Bank through underwriting agreements (Consubond, Garbarino, Accicom, Secubono, Mila, Credicuotas Consumo, Credimas and Pvcred, Naldo Lombardi). The assets managed for these trusts are mainly related to securitizations of consumer loans. Trust securities are placed once the public offering is authorized by the CNV. Upon expiry of the placement period, once all trust securities have been placed on the market, the Bank recovers the disbursements made, plus an agreed-upon compensation (“underwriting Price”). If after making the best efforts, such trust securities cannot be placed, the Bank (“Underwriter”) will retain the securities subject to underwriting.

 

As of June 30, 2018 and December 31, 2017 and 2016, debt securities and certificates of participation in financial trusts administrated by the Bank for investment purpose, total to 1,029,235, 1,011,828 and 730,672, respectively.

 

According to the latest accounting information available as of the date of issuance of these condensed consolidated interim Financial Statements, the corpus assets of the trusts exceed the carrying amount in the related proportions.

 

24.2. Trusts created using financial assets transferred by the Bank

 

The Bank transferred financial assets (loans) to trusts for the purpose of issuing and selling securities for which collection is guaranteed by the cash flow resulting from such assets or group of assets. This way the funds that were originally used to finance the loans are obtained earlier.

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the date of the accompanying condensed consolidated interim Financial Statements, the assets managed through Macro Fiducia SA (subsidiary) of this type of trusts amounted to 69,806, 116,697 and 59,128, respectively.

 

24.3. Trusts guaranteeing loans granted by the Bank

 

As it is common in the Argentine banking market, the Bank requires, in some cases, that the debtors present certain assets or entitlements to receive assets in a trust as a guarantee for the loans granted. This way, the risk of losses is minimized and access to the security is guaranteed in case of the debtor's noncompliance.

 

Trusts usually act as conduits to collect cash from the debtor’s flow of operations and send it to the bank for the payment of the debtor’s loans and thus ensure compliance with the obligations assumed by the trustor and guaranteed through the trust.

 

Additionally, other guarantee trusts manage specific assets, mainly real property.

 

Provided there is no noncompliance or delays by debtor in the obligations assumed with the beneficiary, the Trustee shall not execute the guaranty and all excess amounts as to the value of the obligations are reimbursed by the Trustee to the debtor.

 

 

 

  32  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the date of the accompanying condensed consolidated interim Financial Statements, the assets managed by the Bank amounted to 490,300, 328,268 and 451,569, respectively.

 

24.4. Trusts in which the Bank acts as trustee (management)

 

The Bank, through its subsidiaries, performs management duties of the corpus assets directly according to the agreements, performing only trustee duties and has no other interests in the trust.

 

In no case shall the Trustee be liable with its own assets or for any obligation deriving from the performance as trustee, Such obligations do not imply any type of indebtedness or commitment for the trustee and they will be fulfilled only through trust assets, In addition, the trustee will not encumber the corpus assets or dispose of them beyond the limits established in the related trust agreements, The fees earned by the Bank from its role as trustee are calculated according to the terms and conditions of the agreements.

 

Trusts usually manage funds derived from the activities performed by trustors, for the following main purposes:

 

Guaranteeing, in favor of the beneficiary the existence of the resources required to finance and/or pay certain obligations, such as the payment of amortization installments regarding work or service certificates, and the payment of invoices and fees stipulated in the related agreements.

 

Promoting the production development of the private economic sector at a provincial level.

 

Being a party to public work concession agreements granting road exploitation, management, keeping and maintenance.

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the accompanying condensed consolidated interim Financial Statements, the assets managed by the Bank amounted to 3,200,292, 2,200,840 and 2,117,959, respectively.

 

25. COMPLIANCE WITH CNV STANDARDS

 

25.1 Compliance with CNV standards to act in the different agent categories defined by the CNV:

 

25.1.1 Operations of Banco Macro SA

 

Considering Banco Macro SA’s current operations, and according to the different categories of agents established by CNV General Resolution No, 622, the Bank is registered with this agency as agent for the custody of collective investment products of mutual funds (AC PIC FCI for their acronyms in Spanish language), comprehensive clearing and settlement agent and trading agent (ALyC and AN – comprehensive, for their acronyms in Spanish language), financial trustee Agent (FF for its acronym in Spanish language) and Guarantee Entity (in the process of being registered).

 

Additionally, the Bank’s shareholders’ equity exceeds the minimum amount required by this regulation, amounting to 32,000, as well as the minimum counterpart required of 11,000, which the Bank paid-in with government securities as described in Note 22 to the accompanying condensed consolidated interim Financial Statements.

 

25.1.2 Operations of Banco del Tucumán SA

 

Considering Banco del Tucumán SA’s current operations, and according to the different categories of agents established by CNV General Resolution No, 622, the Bank is registered with this agency under the following agent categories: mutual investment funds placement and distribution agent (ACyD FCI), financial trustee agent (FF) and clearing and settlement agent and trading agent (ALyC and AN – Individual).

 

Additionally, the shareholders’ equity of this Subsidiary exceeds the minimum amount required by this regulation, amounting to 3,500, as well as the minimum counterpart required of 1,750, which the subsidiary paid-in with government securities.

 

 

 

  33  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

25.1.3 Operations of Macro Securities SA

 

Considering the current operations of this Subsidiary, and according to the provisions established by CNV effective as of the approval of the General Resolution No. 622/2013 issued by such agency, the Company is registered with this agency CNV under the following categories: clearing and settlement agent, trading agent, comprehensive trading agent and mutual investment funds placement and distribution agent (ALyC, AN, AN – comprehensive and ACyD FCI).

 

Additionally, the shareholders’ equity of this Company exceeds the minimum amount required by this regulation, amounting to 18,125 as well as the minimum counterpart required of 9,000, which the Company paid-in with mutual fund units or shares.

 

25.1.4 Operations of Macro Fondos Sociedad Gerente de Fondos Comunes de Inversión SA

 

Considering the current operations of this Subsidiary and according to the provisions established by CNV effective as of the approval of the General Resolution No. 622/2013 issued by such agency, the Company is registered with the CNV as agent for the Administration of Collective Investment Products of Mutual Funds.

 

Additionally, the shareholders’ equity of this Company exceeds the minimum amount required by this regulation, amounting to 500 plus 100 per each additional Mutual Fund it administers, and the minimum countpart amounting to 1,100 and is paid-in with mutual fund units or shares.

 

25.1.5 Operations of Macro Fiducia SA

 

Considering the current operations of this Subsidiary, and according to the provisions established by CNV effective as of the approval of the General Resolution 622 issued by such agency, the Company is registered with the CNV as Financial Trustee agent and Non-Financial Trustee agent.

 

Additionally, the shareholders’ equity of this Company exceeds the minimum amount required by this regulation, amounting to 6,000, and the minimum countpart amounting to 3,000 and is paid-in with mutual fund units or shares.

 

25.2 Documents in custody

 

As a general policy, the Bank delivers for custody to third parties, the documentary support of its aged accounting and management operations, i.e. those whose date is prior to the last fiscal year-end, except for the Inventory Book, in which aging is deemed to include those with a date prior to the two fiscal years ended. In compliance with CNV General Resolution No. 629 requirements, the Bank has placed (i) the Inventory Books for fiscal years ended through December 31, 2015 included, and (ii) certain documentation supporting the economic transactions for fiscal years ended through December 31, 2017, included, under the custody of the following companies: AdeA Administradora de Archivos SA (warehouse located at Ruta 36, km 31.5, Florencio Varela, Province of Buenos Aires) and ADDOC Administración de Documentos SA (warehouse located at Avenida Circunvalación Agustín Tosco with no number, Colectora Sur, between Puente San Carlos and Puente 60 blocks, Province of Córdoba and Avenida Luis Lagomarsino 1750, formerly Ruta 8 Km 51.200, Pilar, Province of Buenos Aires).

 

25.3 As depositary of Mutual Funds

 

As of June 30, 2018 Banco Macro SA, in its capacity as Depositary Company, holds in custody the shares in Mutual Funds subscribed by third parties and assets from the following mutual funds:

 

 

 

  34  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Fund   Number of shares     Equity  
Pionero Pesos     1,264,531,571       4,994,823  
Pionero Renta Ahorro     1,524,811,495       11,329,957  
Pionero F F     140,720,374       839,993  
Pionero Renta     9,575,695       151,691  
Pionero Acciones     21,260,560       415,217  
Pionero Renta Plus     82,805,233       1,468,883  
Pionero Empresas FCI Abierto PYMES     196,578,848       526,126  
Pionero Pesos Plus     224,633,209       533,296  
Pionero Renta Ahorro Plus     642,792,339       1,095,645  
Pionero Renta Mixta I     119,555,896       164,496  
Pionero Renta Mixta II     494,755,103       742,491  
Pionero Renta Estratégico     422,791,472       421,901  
Pionero Renta Capital     50,000       50  
Pionero Argentina Bicentenario     50,000       50  
Pionero Ahorro Dólares     276,964,256       8,319,382  
Pionero Renta Global     50,000       1,443  
Pionero Renta Fija Dólares     28,233,767       816,353  
Argenfunds Renta Pesos     455,725,857       1,100,176  
Argenfunds Renta Argentina     111,145,931       361,384  
Argenfunds Ahorro Pesos     371,626,423       1,448,983  
Argenfunds Renta Privada FCI     157,163,807       704,456  
Argenfunds Abierto Pymes     98,771,168       85,691  
Argenfunds Renta Total     1,041,548,885       1,915,919  
Argenfunds Renta Flexible     446,637,628       658,134  
Argenfunds Renta Dinámica     150,250,705       203,776  
Argenfunds Renta Mixta     77,935,608       128,458  
Argenfunds Renta Global     138,538,228       200,176  
Argenfunds Renta Capital     7,234,449       215,120  
Argenfunds Renta Balanceada     208,789,752       290,291  
Argenfunds Renta Crecimiento     8,785,320       261,934  

 

26. ACCOUNTING ITEMS THAT IDENTIFY THE COMPLIANCE WITH MINIMUM CASH REQUIREMENTS

 

The items recognized by the Bank to constitute the minimum cash requirement effective for June 2018 are listed below, indicating the balances as of month-end of the related items:

 

Description   Banco Macro
SA
    Banco del
Tucumán SA
 
Cash and deposits in banks                
Amounts in Central Bank accounts     35,343,995       3,185,490  
Other debt securities                
Government securities computable for the minimum cash requierements     3,373,000          
Financial assets delivered as guarantee                
Special guarantee accounts with the Central bank     4,520,583       300,896  
Total     43,237,578       3,486,386  

 

 

 

  35  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

27. PENALTIES APPLIED TO THE FINANCIAL ENTITY AND SUMMARY PROCEEDINGS INITIATED BY THE CENTRAL BANK

 

The Central Bank Communiqué “A” 5689 requires banks to disclose in their financial statements certain information regarding summaries and sanctions received from certain regulatory authorities, regardless of the amounts involved and the final conclusions of each cause.

 

Next follows a description of the situation of Banco Macro SA and Banco del Tucumán SA as of June 30, 2018:

 

Banco Macro SA

 

Summary proceedings filed by the Central Bank

 

Criminal foreign exchange regime summary proceedings : No. 6545 dated 09/03/2015.

Reason: Alleged breach of article No, 1 subsections e) and f) of the CFEL and the Central Bank Communiqué “A” 5264, as amended and supplemented, for foreign exchange transactions with a customer without the documentation to support the genuineness of the transaction.

Proceeding filed against : Banco Macro SA and the officer responsible for Foreign Trade and Foreign Exchange (Susana Lerman, José Luis Vejo, Jorge Francisco Scarinci and Horacio Ricardo Javier Sistac, Carlos Daniel Gomez and Oscar Luis Romero).

Status : On 11/11/2015 Banco Macro SA and the individuals accused under the summary proceedings filed their defenses offering evidence and requesting their acquittal. Furthermore, through resolution dated 05/23/2016, the Central Bank decided to dismiss the motion to declare the criminal action no longer enforceable under the statute of limitations filed by Banco Macro SA and the above mentioned individuals. On 05/31/2016 the Bank filed a motion for annulment with a supplementary appeal. On 07/11/2016 the Central bank decided to dismiss such motion for annulment. Against such decision, the Bank filed a motion on 07/15/2016 reserving the right to re-edit the motion to declare the criminal action no longer enforceable under the statute of limitations before the relevant competent National Court of First Instance in Criminal Economic Matters under the situation provided for in section 9 of the CFEL. On 08/09/2016 the Bank filed its memorial due to the closing of the evidentiary stage and on 08/18/2016, filed a motion requesting the retroactive application of the more benign foreign exchange rule. On 04/12/2018 the Bank was served notice of the decision of the Central Bank which, based on the application of the more benign foreign exchange rule, declared its accusation against the individuals involved in the summary proceedings null and void and therefore ordered the closing of the proceedings.

 

Financial Summary proceedings: No. 1496 dated 02/24/2016.

Reason: deficiencies on the consolidated supervision exercised by the Bank regarding its subsidiaries, with non-compliance of internal controls.

Proceeding filed against : Banco Macro SA and the Members of the Board of Directors (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Marcos Brito, Juan Pablo Brito Devoto, Luis Carlos Cerolini, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Constanza Brito and Emanuel Antonio Alvarez Agis).

Status : pending resolution before the Central Bank. On 04/07/2016, we filed the defenses and evidence. On 05/18/2016 we requested on behalf of the accused Delfin Jorge Ezequiel Carballo the resolution of the motion for lack of standing to be sued. To date this motion is still pending resolution.

 

Penalties imposed by the Central Bank

 

Financial Summary proceedings: No. 1380 dated 03/11/2013.

Reason: Alleged excess in the assets used for guarantee purposes which should have been used for related statutory operation ratios; failure to fulfill with the limitations of deposit increase, lack of veracity in book records, neglect to present the corresponding accounting disclosure of such excess and failures according to Central Bank’s requirements. Penalty amount: 2,000.

Proceeding filed against : former Banco Privado de Inversiones SA, Directors, Supervisory Committee and Corporate Services Manager (Alejandro Manuel Estrada, Raúl Fernandez, Alejandro Carlos Estrada, Eduardo Guillermo Castro, Jorge Norberto Cerrotta, Armando Rogelio Pomar, Carlos Soulé and Baruki Luis Alberto Gonzalez).

 

 

 

  36  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Status : On 06/12/2015 the Central Bank passed Judgment No. 527, imposing fines to those responsible. On 06/25/2015 the fine was paid. On 07/10/2015 a direct appeal was filed against such resolution to CNACAF (Court of Appeals in Contentious Administrative Matters). On December 2015, the penalty amount was recovered by the Bank as a result of the guarantee provided by the sellers at the moment of acquisition of the shares of former BPI SA. On September 2015, the appeals were filed with Courtroom II, under case No. 48607/2015 of CNACAF. On 05/10/2016, Courtroom II decided to confirm the penalties imposed by the Central Bank. Upon such decision, the Bank filed an extraordinary appeal that was dismissed by the Courtroom II of the CNACAF on 08/02/2016, On 08/16/2016 a motion for reconsideration of dismissal of appeal was lodged on behalf of the Bank and of Mr. Carlos Soulé before the Argentine Supreme Court of Justice (CSJN) upon rejection of the federal extraordinary appeal, which is still pending to date.

 

Financial Summary proceedings: No. 1401 dated 08/14/2013.

Reason: alleged failure in financing to the non-financial public sector, for temporary overdrafts through checking accounts of the Municipality of Córdoba and Reconquista. Penalty amount: 2,400.

Proceeding filed against : Banco Macro SA and the members of the Board (Jorge Horacio Brito, Jorge Pablo Brito and Marcos Brito).

Status : On 03/02/2015 the Central Bank passed Resolution No. 183/15 imposing fines to the Bank, which were debited from the Bank´s account 00285 on 03/12/2015. On 03/30/2015 a direct appeal was filed with the CNACAF against such resolution. On April 2015 the appeal was presented at Courtroom IV of the CNACAF under No. 19,971/2015. On 06/23/2015 the Court informed the Central Bank about the appeal lodged by Banco Macro. On 07/13/2016 Courtroom IV of the CNACAF sustained the appeal filed by the Bank and annulled the decision imposing the fines to the Bank. The Central Bank filed an extraordinary appeal, which was answered by the Bank on 08/29/2016. On 09/06/2016 Courtroom IV of the CNACAF dismissed Central Bank’s extraordinary appeal. On 09/14/2016 the Central Bank lodged a motion for reconsideration of dismissal of the extraordinary appeal with the CSJN (Argentine Supreme Court of Justice), which is still pending resolution.

 

Penalties imposed by the Financial Information Unit (UIF)

 

File : No. 62/2009 dated 01/16/2009.

Reason : Purchase of foreign currency from April 2006 through August 2007. Penalty amount: 718.

Penalty imposed on : Banco Macro SA and those in charge of Anti-money laundering regulation compliance (Juan Pablo Brito Devoto and Luis Carlos Cerolini).

Status : The UIF passed Resolution No. 72/2011 on 06/09/2011, imposing fines to those responsible. An appeal was lodged with the CNACAF. On 10/31/2016 the Courtroom III decided the following: (i) on the one hand, as to the transactions carried out between 10/11/2006 and 08/22/2007, to declare that the punitive power of the UIF had expired at the time of the summary proceedings, rendering UIF`s Resolution 72/2011 invalid, (ii) on the other hand, as to the transactions performed from 03/05/2007 and from 04/17/2007 through 08/22/2007, to refer these proceedings again to the UIF for a new resolution readjusting the fines imposed on the Bank and Messrs. Juan Pablo Brito Devoto and Luis Carlos Cerolini. Upon such court order, both the UIF and the Bank lodged an extraordinary appeal. Such appeals were rejected by the Court on April 25, 2017. On May 10, 2017 both the Bank and the UIF filed a motion for reconsideration of dismissal of appeal before the Argentine Supreme Court which is still pending resolution.

 

File : No. 248/2014 (UIF Note Presidency 245/2013 11/26/2013) dated 07/30/2014.

Reason : Alleged deficiencies in preparing certain “Reports on suspicious transactions (ROS)” due to cases of infringement detected in certain customer files. Penalty amount: 330.

Penalty imposed on : Banco Macro SA, the members of the Board and those in charge of Anti-money laundering regulation compliance (Luis Carlos Cerolini – both as Compliance Officer and Director - and Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Emanuel Antonio Alvarez Agis, Marcos Brito and Rafael Magnanini –as Directors of Banco Macro SA-).

Status : upon notice of the summary proceedings, on 05/08/2015 the Bank filed its defense, offering evidence and requesting its acquittal. On 12/26/2016 the UIF passed Resolution 164/16 imposing fines on those responsible and issuing a favorable decision on the plea of lack of locus standi lodged by Messrs. Carballo and Magnanini. On 01/30/2017 the Bank paid the fine imposed by the UIF, due to the the non-staying effect thereof. On 03/13/2017 a Direct Appeal was filed against such resolution, and the legal action it be decided at Room III of the CNACAF, entitled “Banco Macro SA et al vs, UIF on Criminal Code – Law 25246 – Decree 290/07 sect. 25” (Court File No. 13500/2017). This court file is pending resolution.

 

 

 

  37  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Although the above described penalties do not involve material amounts, as of the date of issuance of the accompanying consolidated Financial Statements, the total amount of monetary penalties received, pending payment due to any appeal lodged by the Bank, amounts to 718 and was recognized according to the Central Bank’s Communiqués “A” 5689 and 5940, as amended and supplemented.

 

Additionally, there are pending summary proceedings before the CNV and the UIF, as described below:

 

File : No. 1480/2011 (CNV Resolution No. 17529) dated 09/26/2014.

Reason : Potential non-compliance with the obligation to inform a “Significant Event”.

Persons subject to summary proceedings : Banco Macro SA, the members of the Board, the regular members of the Supervisory Committee and the person/s responsible for Market Relations (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini, Roberto Julio Eilbaum, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Daniel Hugo Violatti, Ladislao Szekely, Santiago Marcelo Maidana and Herman Fernando Aner).

Status : on 10/28/2014 the Bank and the persons involved filed their defenses offering evidence and requesting their acquittal. On 08/03/2015 the term to produce evidence was closed and on 08/19/2015 the defendants lodged their memorials. To the date hereof this action is still pending resolution.

 

File : 2577/2014 (CNV Resolution No. 18863) dated 07/20/2017.

Reason : potential non-compliance with de provisions of section 59 of Law 19550 and paragraph 1 of Chapter 6 Section 19 of Article IV of Chapter II of CNV Rules (Revised 2013, as amended) in force at the time of the issues under analysis.

Persons subject to summary proceedings : Banco Macro SA, in its capacity as Custody Agent of Collective Investment Products of Mutual Funds, regular Directors and regular members of the Supervisory Committee (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Marcos Brito, Juan Pablo Brito Devoto, Luis Carlos Cerolini, Federico Pastrana, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Constanza Brito, Emmanuel Antonio Alvarez Agis, Alejandro Almarza, Carlos Javier Piazza and Vivian Haydee Stenghele).

Status : on 07/28/2017 the Bank and the persons subject to these summary proceedings were given notice of this action and were given 10 business days to make the relevant filing. On August 11, 2017, the Bank filed its defense requesting the nullity of the accusation, the expiration of the time limit to file the administrative criminal actions and the lack of responsibility of the people subject to these summary proceedings for the acts subject matter of this action since such supervisory obligation is not in accordance with the role of the Custody Agent. On 12/06/2017 the court held the firs preliminary hearing and the summary proceedings turned to be under the analysis of the CNV, who shall decide whether it allows for the production of evidence or directly decides on the merits of the case.

 

File : No. 137/2015 (UIF Resolution No, 136/2017) dated 12/19/2017.

Reason : alleged breach to the contents of the Code of Procedure applicable to Anti-money Laundering and Terrorism Financing as Settlement and Clearing Agent at the time of an inspection of the CNV and to the Internal Audit Process referred to in its capacity as Settlement and Clearing Agent (UIF Resolution No. 229/2011, as amended).

Persons subject to summary proceedings : Banco Macro SA, members of the management body during the period subject-matter of these summary proceedings (Jorge Horacio Brito, Jorge Pablo Brito, Juan Pablo Brito Devoto, Constanza Brito, Marcos Brito, Delfín Jorge Ezequiel Carballo, Delfín Federico Ezequiel Carballo, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Emmanuel Antonio Alvarez Agis, Nicolás Alejandro Todesca, Carlos Alberto Giovanelli, José Alfredo Sanchez, Martín Estanislao Gorosito, Roberto Julio Eilbaum, Mario Luis Vicens, Nelson Damián Pozzoli, Luis María Blaquier, Ariel Marcelo Sigal, Alejandro Eduardo Fargosi, Juan Martin Monge Varela and Luis Cerolini in his double capacity as compliance officer and member of the management body).

Status : on 03/08/2018 the Bank and the persons subject to these summary proceedings filed their defenses. Additionally, the UIF ordered the production of evidence and therefore on 03/28/2018 and 04/03/2018 official information written notices were given to the Central Bank and CNV. The evidence offered was provided; therefore, on May 21, 2018, the UIF declared that the trial stage was concluded and set the case for the closing arguments. On June 8, 2018, the Bank, the directors and the compliance officer provided their closing arguments. To date, the UIF is analyzing the file in order to issue a resolution.

 

File : No. 1208/2014 (UIF Resolution No. 13/2016) dated January 15, 2016.

Reason : Alleged failure to comply with the Anti-Money Laundering Law, as amended, and UIF Resolution No. 121/11.

 

 

 

  38  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

Persons subject to the summary proceedings : Banco Macro SA, Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Marcos Brito and Emmanuel Antonio Álvarez Agis.

Status : On May 17, 2018, the Bank and the individuals were notified about Resolution No. 13/2016, whereby the summary proceedings were opened. The proceedings began due to the Central Bank submission on May 12, 2014, of the background related to the overall inspection performed in Banco Macro SA from November 26, 2013, through January 17, 2014, by the Special Operations Oversight Management in order to evaluate the measures adopted by the Bank for the prevention of money laundering and terrorism financing. The UIF stated in the resolution that summary proceedings should be filed “to discharge any responsability that may be borne by Banco Macro SA, its Board of Directors and/or compliance officers that were holding office during the term of the alleged infringements described in the recitals hereof, so as to determine whether they committed the crime punished under section 24(1) and (2), Law No. 25,246, as amended”. On May 17, 2018, the Bank was notified about such case file. On June 15, 2018, Banco Macro SA, the members of the Board of Directors and the compliance officer filed their defense briefs. On July 2, 2018, the UIF sustained the lack of capacity to be sued of Delfín Jorge Ezequiel Carballo, discarding his responsability in this summary proceeding.

 

Banco del Tucumán SA

 

Summary proceedings filed by the Central Bank

 

Criminal Foreign Exchange Regime Summary Proceedings : No. 3078 dated 06/24/2008.

Reason : Alleged breach of Section 8 of the Criminal Foreign Exchange Regime Act, for irregularities in US dollar sale transactions of the financial intermediary established in Communiqué “B” 7174.

Proceedings filed against : Banco del Tucumán SA, manager and responsible for Operations, Treasurer and Cashiers (Francisco Carlos Bustamante, Juan Ramón Lemoine, Héctor Gaspar Taranto, Héctor Arnaldo Brito, Ana Carolina De Genova Palomar, Jorge Marcelo Albertinetti, Sergio Fabián Intile, Lorena Natalia Frías and Carla Andrea Rocha).

Status : On 12/29/2011 the Federal Judge No. 1 of Tucumán decided to declare the criminal action expired under the statute of limitations. This decision was appealed on 02/01/2012 by the District Attorney No, 1 of Tucumán. On 07/31/2013 the relevant Court of Appeals sustained such decision and the case was subsequently sent to Room I of the Court of Criminal Appeals in Cassation as a result of a Cassation Appeal filed by the District Attorney. On 05/26/2016 Room I sustained the Cassation Appeal, revoking the decision of the Federal Judge No. 1 in the case in which a new decision shall have to be issued in accordance with the ruling of Room I of the Court of Criminal Appeals in Cassation. As of June 30, 2018, (i) on June 27, 2018, the law firm became aware of Criminal Foreign Exchange Regime Summary Proceedings No. 3078 of the Central bank and was notified that, on October 22, 2012, Federal Court No. 1 of Tucumán declared the criminal action to be extinguished due to the lapse of the statute of limitations in relation to the facts punished by the foreign exchange criminal regime that gave rise to the summary proceedings; and (ii) as to the main charged person, former employee of the Bank, Francisco Carlos Bustamante, on May 24, 2018, Federal Court No. 2 decided to declare the criminal action to be barred by the statute of limitations pursuant to section 59(3) of the Criminal Code and, consequently, acquit such person. This resolution is final.

 

Penalties imposed by the Central Bank

 

Financial Summary Proceedings : No. 1349 dated 09/07/2012.

Reason : Alleged breach of the provisions of Communiqué “A” 3054, OPRAC 1-476, Exhibit, Article 2, section 2.1 and Article 3, section 3.1.2.; and Communiqué “A” 4798, OPRAC 1-613, Exhibit, Article 4, section 41., regarding the financing to the Non-Financial Public Sector, for the acquisition of secured loans without the appropriate authorization by the Central Bank. Penalty amount: 1,440.

Proceedings filed against : Banco del Tucumán SA and the members of the Board of Directors (Jorge Horacio Brito, Luis Carlos Cerolini, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Claudio Alejandro Cerezo and Waldo Camilo López).

Status : On 03/12/2014 the Central Bank issued Res, 149/14 applying the fine. On 03/19/2014 such fine was debited from the account number 00060 of the Bank. On 04/08/2014 the Bank filed a direct appeal against the resolution of the SEFyC, on behalf of the Bank and of the individuals involved in the summary proceedings, before the CNACAF, who sustained Resolution 149/14. On 11/14/2014 the Bank filed an extraordinary appeal for arbitrariness of the decision issued by the Court of Appeals. On 02/18/2015 Room III of the National and Federal Court of Appeals (CNAF for its acronym in Spanish language) dismissed the Extraordinary Appeal filed by the Bank with court costs. On 02/26/2015 the Bank lodged a motion for reconsideration of dismissal of the Extraordinary Appeal, which is still pending to date.

 

 

 

  39  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

The Bank Management and its legal advisors consider no further significant accounting effects could arise from the final outcome of the above mentioned judicial proceedings,

 

28. CORPORATE BONDS ISSUANCE

 

The corporate bond liabilities recorded by Banco Macro SA in the accompanying condensed consolidated interim Financial Statements amount to:

 

Corporate Bonds   Original value     Residual face
value as of
06/30/2018
    06/30/2018     12/31/2017  
                         
Subordinated Resettable – Class A   USD 400,000,000 (a.1)   USD 400,000,000       11,646,217       7,565,759  
Non-subordinated – Class B   Ps. 4,620,570,000 (a.2)   Ps. 4,620,570,000       4,710,409       4,712,216  
Non-subordinated – Class C   Ps. 3,207,500,000 (a.3)   Ps. 3,207,500,000       3,414,891          
Total                     19,771,517       12,277,975  

 

a.1) On April 26, 2016, the general regular shareholders’ meeting approved the creation of a Global Program for the Issuance of Medium-Term Debt Securities, in accordance with the provisions of Law No. 23,576, as amended and further applicable regulations, up to a maximum amount outstanding at any time during the term of the program of USD 1,000,000,000 (one billion US dollars), or an equal amount in other currencies, under which it is possible to issue simple corporate bonds, not convertible into shares in one or more classes. Also, on April 28, 2017, the General and Special Shareholder´s Meeting resolved to extend of the maximum amount of the abovementioned Global Program up to USD 1,500,000,000 (one thousand five hundred millions US dollars).

 

On November 4, 2016, under the abovementioned Global Program, Banco Macro SA issued Subordinated Resettable Corporate Bonds, class A, at a fixed rate of 6.750% p,a, until reset date, fully amortizable upon maturity (November 4, 2026) for a face value of USD 400,000,000 (four hundred million US dollars), under the terms and conditions set forth in the pricing supplement dated October 21, 2016, Interest is paid semiannually on May 4 and November 4 of every year and the reset date will be November 4, 2021. Since reset date, these Corporate Bonds will accrue a benchmark reset rate plus 546.3 basis point, according terms and conditions abovementioned.

 

In addition, the Bank has the option to fully redeem the issuance as the reset date and under the conditions established in the pricing supplement after that date. The Bank used the funds derived from such issuance to grant loans in accordance with Central Bank guidelines.

 

As of December 31, 2016, the recorded amount related to these corporate bonds was 6,376,537.

 

a.2) On May 8, 2017, under Global Program mention on item a.1), Banco Macro SA issued non subordinated simple corporate bonds Class B, not convertible into shares, at a fixed rate of 17.50%, fully amortizable upon maturity (May 8, 2022) for a face value of pesos 4,620,570,000 equivalent to USD 300,000,000 (three hundred million US dollars), under the terms and conditions set forth in the price supplement dated April 21, 2017. Interest is paid semiannually on November 8 and May 8 of every year, beginning on November 8, 2017.

 

In addition, the Bank may fully redeem the issuance for tax matters, but not partially. The Bank used the funds derived from such issuance to grant loans in accordance with Central Bank guidelines.

 

As of the date of issuance of these condensed consolidated interim Financial Statement, the Bank made purchases of this issuance for a face value of Ps. 644,691,000.

 

 

 

  40  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

a.3) On April 9, 2018, under Global Program mention on item a.1), Banco Macro SA issued non subordinated simple corporate bonds Class C, for a face value of pesos 3,207,500,000, at an annual variable rate equivalent to the sum of (i) Badlar private rate applicable for the related accrued period; plus (ii) applicable margin of 3.5% p.a., fully amortizable upon maturity (April 9, 2021). Interest will be paid quarterlyfor the periods due on July 9, October 9, January 9 and April 9 of every year, beginning on July 9, 2018.

 

In addition, the Bank may fully redeem the issuance for tax matters, but not partially. The Bank used the funds derived from such issuance to grant loans in accordance with Central Bank guidelines.

 

As of the date of issuance of these condensed consolidated interim Financial Statement, the Bank made purchases of this issuance for a face value of Ps, 195,000,000.

 

As of December 31, 2016 the Bank had recorded 1,684,636, related to Non-subordinated Corporate Bonds – Class 2, for a face value of USD 150,000,000.

 

Moreover, on April 27, 2018, the Shareholder´s Meeting resolved to increase the maximum amount of the Global Program for the Issuance of Corporate Bonds for a face value from USD 1,500,000,000 to USD 2,500,000,000 or an equal amount in other currencies, according to the Board of Directors opportunely determines.

 

29. ACCOUNTING ITEMS OUTSIDE THE BALANCE SHEET

 

In addition to the expressed in Note 4, the Bank recognizes different transactions outside its Balance sheet, pursuant to the Central Bank standards.

 

As of June 30, 2018, December 31, 2017 and 2016, the main balances outside the Bank’s Balance sheet position include the preferred and non-preferred guarantees received from customers, under the applicable rules in force in this matter, to secure loans transactions and other financing, the value of which totals 44,342,619, 39,247,291 and 22,116,120, respectively; the custody of government and private bonds and other assets held by third parties, the value of which totals 109,156,613, 82,906,533 and 51,936,124, respectively; checks already deposited and pending clearance amount to 1,279,844, 1,266,306 and 1,134,949, respectively and outstanding checks not yet paid amount to 2,810,633, 2,032,128 and 1,852,989, respectively.

 

30. TAX AND OTHER CLAIMS

 

30.1. Tax claims

 

The AFIP (Federal Public Revenue Agency) and tax authorities of the relevant jurisdictions have reviewed the tax returns filed by the Bank related to income tax, minimum presumed income tax and other taxes (mainly gross turnover tax). As a result, there are claims pending at court and/or administrative levels, either subject to discussion or appeal. The most significant claims are summarized below:

 

a) AFIP´s Challenges against the income tax returns filed by former Banco Bansud SA (for the fiscal years since June 30, 1995, through June 30, 1999, and of the irregular six-month period ended December 31, 1999) and by former Banco Macro SA (for the fiscal years ended since December 31, 1998, through December 31, 2000).

 

The matter under discussion that has not been resolved as yet and on which the regulatory agency bases its position is the impossibility of deducting credits that have collateral security, an issue that has been addressed by the Federal Administrative Tax Court and CSJN in similar cases, which have issued resolutions that are favorable to the Bank’s position.

 

b) Ex-officio gross turnover tax assessments in progress and/or adjustments pending resolution by the tax authorities of certain jurisdiction.

 

 

 

  41  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

c) On February 20, 2018, the AFIP required the Bank to amend the returns in connection with Employer’s Contributions for the period between November, 2012 to December, 2016, or otherwise explain the reasons why it had applied the tax rate set forth in Section 2b) of Presidential Decree No. 814/01 (text as per Section 9 of Law No. 25,453). On March 14, 2018, the Bank submitted a detailed explanation of the grounds supporting its position. As of the date hereof, the Bank has not received an answer from AFIP. In the understanding of the bank´s management and its tax and legal advisors, no amount for Employer’s Contributions should be claimed for the indicated periods.

 

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

 

30.2. Other claims

 

In addition, before merging with and into the Bank, Banco Privado de Inversiones (BPI) had a pending class action styled “Adecua v, Banco Privado de Inversiones on ordinary proceedings”, File No. 19073/2007, before Commercial Court No. 3 in and for the City of Buenos Aires, Clerk’s Office No. 5, whereby it was required to reimburse to its clients the life insurance amounts overcharged to amounts payable, as well as to reduce the amounts charged in this regard in the future; this legal proceeding was concluded upon the abovementioned merger because BPI complied in full with the terms of the court-approved agreement reached with Adecua before answering the complaint. However, in March 2013, when BPI had already been merged with and into the Bank, the trial court resolved to amend the terms of the agreement and ordered the reimbursement of amounts of money to a larger number of clients as compared to the number arising from the terms approved by the court in due time. Such resolution was appealed by the Bank as BPI’s surviving company. The appeal was dismissed by the Court of Appeals, which abrogated both the trial court decision and the court-approved agreement, thus ordering the Bank to answer the complaint. This gave rise to the filing of an extraordinary appeal against such decision, as well as the subsequent filing of a complaint for the extraordinary appeal denied. It is currently pending with the Argentine Supreme Court.

 

Moreover, the Bank is also subject to three lawsuits filed with consumers’ associations for the same purpose: a) Adecua v, Banco Macro on ordinary proceedings, File No. 20495/2007, pending with Commercial Court No. 26 in and for the City of Buenos Aires, Clerk’s Office No. 52; b) Damnificados Financieros Asociación Civil Para Su Defensa et al v, Banco Macro on summary proceedings, File No. 37729/2007, pending with Commercial Court No. 26 in and for the City of Buenos Aires, Clerk’s Office No. 52; c) Unión de Usuarios y Consumidores v, Nuevo Banco Bisel on ordinary proceedings, File No. 44704/2008, pending with Commercial Court No. 26 in and for the City of Buenos Aires, Clerk’s Office No. 52.

 

There are also other lawsuits filed by consumer protections associations in relation to the collection of certain commissions and/or financial charges and certain withholdings made by the Bank to individuals as Buenos Aires City stamp tax withholding agent.

 

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

 

31. RESTRICTION ON PROFIT DISTRIBUTION

 

a) According to Central Bank regulations, 20% of income for the year plus/less prior-year adjustments and less accumulated losses as for the prior year-end, if any, should be allocated to the Legal Reserve.

 

b) Pursuant to Law No. 25,063, dividends to be distributed in cash or in kind in excess of taxable income accumulated as of the end of the fiscal year immediately preceding the payment or distribution date shall be subject to a 35% income tax withholding as a single and definitive payment. For this purpose, income to be considered in each year will result from adding dividends or earnings from other corporations not computed in the calculation of those earnings in the same tax period(s) to the earnings determined under application of Income Tax Law, and deducting the tax paid for the tax period(s) in which the earnings, or the related proportional amount, being distributed were generated, This withholding shall not be applicable to earnings distributions payable in the fiscal years beginning as of January 1, 2018.

 

 

 

  42  

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

c) Through Communiqué “A” 6464, the Central Bank establishes the general procedure to distribute earnings. According to that procedure, earnings may only be distributed if certain circumstances are met such as no records of financial assistance from the Central Bank due to illiquidity or shortages in payments of minimum capital or minimum cash requirement deficiencies and not being subject to the provisions of sections 34 and 35 bis of the Financial Entities Act (sections dealing with tax payment and restructuring agreements and reorganization of the Bank), among other conditions listed in the abovementioned communiqué that must be met.

 

In addition, profits may only be distributed to the extent there are positive results, after deducting, on a non-accounting basis, from retained earnings and earnings reserves – other for future distribution of profits, (i) the amounts of the legal and other earnings reserves which are mandatory, (ii) all debit balances of each one of the accounting items recognized in “Other Comprehensive Income”, (iii) the income derived of the revaluation of property, plant and equipment, intangible assets and investment property, (iv) the positive net difference between the amortized cost and the fair value of government debt instruments and/or monetary regulation instruments issued by the Central Bank for those instruments recognized at amortized cost, (v) the adjustments identified by the Superintendency of Financial and Exchange Entities of the Central Bank or by the independent external auditor and that have not been recognized in the accounting records and (vi) certain franchises granted by the Central Bank. Additionally, no profit distributions shall be made out of the profit originated as a result of the first-time application of the IFRS, which profit shall be included as a special reserve, the amount of which as of June 30, 2018 is 3,475,669 and is recognized in Retained Earnings.

 

Additionally, the maximum amount to be distributed shall not be over the minimum capital excess recalculating, exclusively for these purposes, the position in order to consider the above mentioned adjustments, among other issues.

 

Finally, the Bank must verify that, after completion of the proposed profit distribution, a capital maintenance margin equal to 3.5% of risk-weighted assets is kept, apart from the minimum capital required by law, to be integrated by level-1(Con1) ordinary capital, net of deductible items (CDCOn1).

 

d) Pursuant to CNV General Resolution No. 593, the Shareholders’ Meeting in charge of analyzing the annual Financial statements will be required to decide on the application of the Bank’s retained earnings, such as the actual distribution of dividends, the capitalization thereof through the delivery of bonus shares, the creation of earningsl reserves additional to the Legal reserve or a combination of any of these applications.

 

32. CAPITAL MANAGEMENT AND CORPORATE GOVERNANCE TRANSPARENCY POLICY AND RISK MANAGEMENT

 

As financial institutions, the activities of Banco Macro SA and Banco del Tucumán SA are governed by the Financial Entities Act No. 21,526, as supplemented, and the regulations issued by the Central Bank and are exposed to intrinsic risks related to the financial industry. Moreover, they adhere to the good banking practices laid out in Central Bank Communiqué “A” 5201 (Financial Entities Corporate Governance Guidelines) as supplemented. Details explanations about the main aspects related to capital management and corporate governance transparency policy and risk management related to the Bank, are disclose in Note 41 to the condensed consolidated interim Financial Statements as of march 31, 2018, already issued.

 

Aditionally, the table below shows the minimum capital requirements measured on a consolidated basis, effective for the month of June 2018, together with the integration thereof (computable equity) as of the end of such month:

 

Description   06/30/2018  
Minimum capital requirements     17,478,311  
Computable equity     58,988,830  
Capital surplus     41,510,519  

 

 

 

  43  

 

   

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 36)

(Figures expressed in thousands of Pesos)

 

33. ADDITIONAL DISCLOSURES

 

The table below shows the amounts corresponding to the detail of Government and private debt securities as of June 30, 2018, December 31, 2017 and 2016.

 

Description   06/30/2018     12/31/2017     12/31/2016  
             
Debt securities at fair value through profit or loss                        
                         
Government debt securities     1,107,525       720,015       276,780  
Private securities     232,177       366,013       55,701  
Total debt securities at fair value through profit or loss     1,339,702       1,086,028       332,481  
                         
Other debt securities                        
                         
At fair value through OCI                        
Government debt securities     1,315,125       1,090,423       3,983,642  
Central Bank internal bills     38,038,863       32,655,908       15,132,569  
Private securities             18,583       423,456  
At amortized cost                        
Government debt securities     3,516,998       121,723       124,885  
Private securities     291,658       817,128       730,947  
Total other debt securities     43,162,644       34,703,765       20,395,499  
                         
Equity instruments                        
                         
At fair value through profit or loss     50,009       282,659       406,868  
Total equity instruments     50,009       282,659       406,868  

 

34. CHANGES IN THE ARGENTINE MACROECONOMIC ENVIRONMENT OF THE FINANCIAL AND CAPITAL SYSTEM

 

The international and local macroeconomic context generates a certain degree of uncertainty regarding its future progress as a result of the financial asstes and foreign exchange market volatility and, additionally certain political events and the level of economic growth, among other issues. At a local level, there is an increase in the prices for other relevant economic variables, such as salary costs, exchange rate, interest rates and prices of the main raw materials.

 

Therefore, the Bank’s Management permanently monitors any changes in the abovementioned situations in international and local markets, to determine the possible actions to adopt and to identify the possible impact on its financial situation that may need to be reflected in the financial statements for future periods.

 

35. EVENTS AFTER REPORTING PERIOD

 

No events occurred between the end of the reporting period and the issuance of the accompanying condensed consolidated interim Financial Statements that may materially affect the financial position or the profit and loss for the period, not disclosed in the accompanying Financial Statements.

 

36. ACCOUNTING PRINCIPLES – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

 

These Condensed consolidated interim Financial Statements are presented in accordance with the accounting framework established by the Central Bank, as mention in Note 3. These accounting standards may not conform with accounting principles generally accepted in other countries.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  44  

 

 

EXHIBIT B

 

CONSOLIDATED CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
                   
COMMERCIAL                        
                         
In normal situation     58,340,617       48,364,751       34,766,790  
With Senior “A” guarantees and counter-guarantees     3,382,479       3,822,852       2,545,541  
With Senior “B” guarantees and counter-guarantees     9,310,470       7,594,429       5,297,800  
Without Senior guarantees or counter-guarantees     45,647,668       36,947,470       26,923,449  
                         
Subject to special monitoring     297,350       299,221       27,887  
In observation                        
With Senior “A” guarantees and counter-guarantees     3,484       6,042          
With Senior “B” guarantees and counter-guarantees     71,681       66,613       18,875  
Without Senior guarantees or counter-guarantees     218,519       226,566       9,012  
In negotiation or with financing agreements                        
Without Senior guarantees or counter-guarantees     3,666                  
                         
Troubled     195,576       37,164       50,039  
With Senior “A” guarantees and counter-guarantees     450       3,441          
With Senior “B” guarantees and counter-guarantees     98,003       22,971       50,039  
Without Senior guarantees or counter-guarantees     97,123       10,752          
                         
With high risk of insolvency     171,609       144,001       137,431  
With Senior “A” guarantees and counter-guarantees     3,178       729       1,882  
With Senior “B” guarantees and counter-guarantees     129,522       86,437       61,374  
Without Senior guarantees or counter-guarantees     38,909       56,835       74,175  
                         
Irrecoverable     437       6,500       7,372  
With Senior “B” guarantees and counter-guarantees                     813  
Without Senior guarantees or counter-guarantees     437       6,500       6,559  
                         
Subtotal Commercial     59,005,589       48,851,637       34,989,519  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  45  

 

 

EXHIBIT B

(Continued)

 

CONSOLIDATED CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
                   
CONSUMER AND MORTGAGE                        
                         
Performing     98,851,176       85,407,541       55,204,350  
With Senior “A” guarantees and counter-guarantees     1,890,854       2,140,761       771,053  
With Senior “B” guarantees and counter-guarantees     10,202,180       7,272,856       2,573,886  
Without Senior guarantees or counter-guarantees     86,758,142       75,993,924       51,859,411  
                         
Low risk     1,512,066       1,050,600       555,222  
With Senior “A” guarantees and counter-guarantees     26,027       7,823       1,486  
With Senior “B” guarantees and counter-guarantees     61,503       32,681       20,699  
Without Senior guarantees or counter-guarantees     1,424,536       1,010,096       533,037  
                         
Medium risk     1,001,983       647,332       443,357  
With Senior “A” guarantees and counter-guarantees     6,231       1,447       3,188  
With Senior “B” guarantees and counter-guarantees     15,967       13,672       7,676  
Without Senior guarantees or counter-guarantees     979,785       632,213       432,493  
                         
High risk     652,016       479,925       317,466  
With Senior “A” guarantees and counter-guarantees     2,016       496       2,099  
With Senior “B” guarantees and counter-guarantees     24,385       18,106       20,486  
Without Senior guarantees or counter-guarantees     625,615       461,323       294,881  
                         
Irrecoverable     202,802       148,425       92,508  
With Senior “A” guarantees and counter-guarantees     371       18,375       18,222  
With Senior “B” guarantees and counter-guarantees     18,358       130,050       74,286  
Without Senior guarantees or counter-guarantees     184,073                  
                         
Irrecoverable according to Central Bank's rules     522       249       210  
Without Senior guarantees or counter-guarantees     522       249       210  
                         
Subtotal consumer and mortgage     102,220,565       87,734,072       56,613,113  
Total     161,226,154       136,585,709       91,602,632  

 

This exhibit disclosures the contractual figures in accordance as established by Central Bank. The conciliation with the Condensed consolidated interim balance sheet, is listed below:

 

    As of 06/30/2018     As of 12/31/2017     As of 12/31/2016  
 Loans and other financing     155,620,519       132,658,674       88,390,646  
+ Allowances for loans and other financing     3,321,929       2,666,738       1,839,422  
+ Adjustment amortized cost and fair value     261,477       298,538       244,608  
+ Private securities - Debt securities of financial trust     294,546                  
+ Corporate bonds             362,425       486,144  
Guarantees provided and contingent liabilities     1,727,683       599,334       641,812  
Total computable concepts     161,226,154       136,585,709       91,602,632  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  46  

 

 

EXHIBIT C

 

CONSOLIDATED CONCENTRATION OF LOANS AND FINANCING-FACILITIES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
Number of customers   Cutoff
balance
    % of total
portfolio
    Cutoff
balance
    % of total
portfolio
    Cutoff
balance
    % of total
portfolio
 
                                     
10 largest customers     11,404,623       7.07       10,886,705       7.97       6,363,324       6.95  
50 next largest customers     15,353,287       9.52       11,082,657       8.11       9,003,785       9.83  
100 next largest customers     9,808,121       6.08       7,511,713       5.50       5,580,023       6.09  
Other customers     124,660,123       77.33       107,104,634       78.42       70,655,500       77.13  
                                                 
Total (1)     161,226,154       100.00       136,585,709       100.00       91,602,632       100.00  

 

(1) See Exhibit B

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  47  

 

 

EXHIBIT D

 

CONSOLIDATED BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF JUNE 30, 2018

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months
and up to
6 months
    Over 6
months
and up to
12 months
    Over 12
months
and up to
24 months
    Over 24
months
    Total  
                                                 
Non-financial government sector - Central Bank     212       61,477       305,172       326,580       624,373       943,173       643,120       2,904,107  
Financial sector             1,175,694       337,751       374,487       767,441       1,018,746       55,823       3,729,942  
Non-financial private sector and foreign residents     1,127,150       46,215,878       19,031,714       19,524,021       25,839,946       35,610,346       68,217,680       215,566,735  
                                                                 
Total     1,127,362       47,453,049       19,674,637       20,225,088       27,231,760       37,572,265       68,916,623       222,200,784  

 

CONSOLIDATED BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF DECEMBER 31, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months
and up to
6 months
    Over 6
months
and up to
12 months
    Over 12
months
and up to
24 months
    Over 24
months
    Total  
                                                 
Non-financial government sector - Central Bank             51,827       225,501       183,337       543,855       982,347       876,255       2,863,122  
Financial sector             892,707       452,162       715,857       767,396       1,009,635       259,275       4,097,032  
Non-financial private sector and foreign residents     889,510       36,721,574       18,795,821       17,988,857       20,395,038       30,679,594       53,884,831       179,355,225  
                                                                 
Total     847,585       37,666,108       19,473,484       18,888,051       21,706,289       32,671,576       55,020,361       186,315,379  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  48  

 

 

EXHIBIT D

(Continued)

 

CONSOLIDATED BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF DECEMBER 31, 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
   

Over 1
month and

up to 3
months

    Over 3
months
and up to
6 months
    Over 6
months
and up to
12 months
    Over 12
months
and up to
24 months
    Over 24
months
    Total  
                                                 
Non-financial government sector - Central Bank             748,521       127,713       384,876       142,487       272,196       230,432       1,906,225  
Financial sector             404,396       516,771       488,482       389,927       255,790       74,260       2,129,626  
Non-financial private sector and foreign residents     542,275       29,757,384       13,015,559       12,247,535       13,861,833       19,345,839       25,649,597       114,420,022  
                                                                 
Total     542,275       30,910,301       13,660,043       13,120,893       14,394,247       19,873,825       25,954,289       118,455,873  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  49  

 

 

EXHIBIT F

 

CONSOLIDATED CHANGE OF PROPERTY, PLANT AND EQUIPMENT

AS OF JUNE 30, 2018

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the period        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
period
    At the
end
    Residual
value at the
end of the
period
 
                                                       
Cost measurement                                                                        
Buildings     4,479,080     50       176,574       101,574       354,502       9,386       48,523       393,639       4,160,441  
Furniture and facilities     367,151     10       15,135       1,052       135,457       3       17,864       153,318       227,916  
Machinery and equipment     1,046,209     5       227,714       110,685       570,491               96,996       667,487       495,751  
Vehicles     117,488     5       17,069       3,537       78,198       3,085       9,459       84,572       46,448  
Other     27               3       3                                       27  
Work in progress     2,076,352               618,528       34,223                                       2,660,657  
                                                                         
Total property, plant and equipment     8,086,307               1,055,023       251,074       1,138,648       12,474       172,842       1,299,016       7,591,240  

 

CONSOLIDATED CHANGE OF PROPERTY, PLANT AND EQUIPMENT

AS OF DECEMBER 31, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the fiscal year        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At the
end
    Residual
value at the
end of the
fiscal year
 
                                                       
Cost measurement                                                                        
Buildings     4,440,545     50       46,353       7,818       224,692       30,695       68,012       262,009       4,217,071  
Furniture and facilities     318,675     10       48,718       242       101,332       242       34,367       135,457       231,694  
Machinery and equipment     802,315     5       259,261       15,367       415,260       2,548       157,779       570,491       475,718  
Vehicles     97,543     5       24,883       4,938       66,666       3,800       15,332       78,198       39,290  
Other     39                       12                                       27  
Work in progress     1,215,539               913,343       52,530                                       2,076,352  
                                                                         
Total property, plant and equipment     6,874,656               1,292,558       80,665       807,950       37,043       275,490       1,046,155       7,040,152  

 

As of December 31, 2016, the deemed cost of the Bank´s buildings amounted to 4,211,760 and the adjustment for this concept up to 3,396,192.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  50  

 

 

EXHIBIT F

(Continued)

 

CONSOLIDATED CHANGE IN INVESTMENT PROPERTY

AS OF JUNE 30, 2018

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the period        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
period
    At the
end
    Residual
value at the
end of the
period
 
                                                       
Cost measurement                                                                        
Other investment properties     1,959,459     50       296,544       517,734       15,677       1,736       2,752       16,693       1,721,576  
                                                                         
Total investment property     1,959,459               296,544       517,734       15,677       1,736       2,752       16,693       1,721,576  

 

CONSOLIDATED CHANGE IN INVESTMENT PROPERTY

AS OF DECEMBER 31, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the fiscal year        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At the
end
    Residual
value at the
end of the
fiscal year
 
                                                       
Cost measurement                                                                        
Other investment properties     1,754,087     50       245,300       39,928       17,934       7,839       5,582       15,677       1,943,782  
                                                                         
Total investment property     1,754,087               245,300       39,928       17,934       7,839       5,582       15,677       1,943,782  

 

As of December 31, 2016, the deemed cost of the Bank´s buildings amounted to 2,910,087 and the adjustment for this concept up to 2,353,159. Part of this adjustment is recorded on Property, Plant and Equipment in Work in progress.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  51  

 

 

EXHIBIT G

 

CONSOLIDATED CHANGE IN INTANGIBLE ASSETS

AS OF JUNE 30, 2018

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the period        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
period
    At end     Residual
value at the
end of the
period
 
                                                       
Cost measurement                                                                        
Licenses     350,735     5       84,982       6,064       195,751               26,804       222,555       207,098  
Other intangible assets     1,403,278     5       59,234       15,465       744,713       217,427       133,106       660,392       786,654  
                                                                         
Total intangible assets     1,754,013               144,216       21,529       940,464       217,427       159,910       882,947       993,752  

 

CONSOLIDATED CHANGE IN INTANGIBLE ASSETS

AS OF DECEMBER 31, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                            Depreciation for the fiscal year        
Item   Origination
Value at
beginning
of fiscal
year
    Useful life
estimated
in years
    Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At end     Residual
value at the
end of the
fiscal year
 
                                                       
Cost measurement                                                                        
Goodwill - Bussiness combination     20,609               35,596       56,205                                          
Licenses     185,252     5       165,623       140       76,625       2       53,331       129,954       220,781  
Other intangible assets     1,060,153     5       649,649       306,524       533,211       156,867       367,032       743,376       659,902  
                                                                         
Total investment property     1,266,014               850,868       362,869       609,836       156,869       420,363       873,330       880,683  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  52  

 

 

EXHIBIT H

 

CONSOLIDATED DEPOSIT CONCENTRATION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
Number of customers   Outstanding
balance
    % of total
portfolio
    Outstanding
balance
    % of total
portfolio
    Outstanding
balance
    % of total
portfolio
 
                                     
10 largest customers     14,412,228       8.03       9,022,672       6.26       7,222,118       6.45  
50 next largest customers     9,839,787       5.48       8,056,114       5.59       7,316,128       6.54  
100 next largest customers     5,853,775       3.26       4,988,300       3.46       4,255,954       3.80  
Other customers     149,367,447       83.23       122,062,091       84.70       93,068,605       83.21  
                                                 
Total     179,473,237       100.00       144,129,177       100.00       111,862,805       100.00  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  53  

 

  

EXHIBIT I

 

CONSOLIDATED BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF JUNE 30, 2018

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months
and up to
6 months
    Over 6
months
and up to
12
months
    Over 12
months
and up to
24
months
    Over 24
months
    Total  
                                           
Deposits     151,236,711       23,781,709       4,157,159       1,592,530       78,823       10,299       180,857,231  
                                                         
From the non-financial government sector     16,034,771       3,211,918       265,095       18,193       29               19,530,006  
From the financial sector     125,377                                               125,377  
From the non-financial private sector and foreign residents     135,076,563       20,569,791       3,892,064       1,574,337       78,794       10,299       161,201,848  
                                                         
Derivative instruments     28,425       2,825       2,901                               34,151  
                                                         
Repo Transactions     1,831,112                                               1,831,112  
                                                         
Other financial institutions     1,831,112                                               1,831,112  
Other financial liabilities     11,072,448       16,902       10,113       14,944       22,148       149,960       11,286,515  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     505,194       644,278       441,244       83,913       89,444       168,174       1,932,247  
                                                         
Issued corporate bonds     206,929               589,783       824,565       1,653,749       10,277,430       13,552,456  
                                                         
Subordinated corporate bonds                     369,951       389,633       779,266       16,609,908       18,148,758  
                                                         
Total     164,880,819       24,445,714       5,571,151       2,905,585       2,623,430       27,215,771       227,642,470  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  54  

 

 

EXHIBIT I

(Continued)

 

CONSOLIDATED BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF DECEMBER 31, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months and
up to 6
months
    Over 6
months and
up to 12
months
    Over 12
months and up
to 24 months
    Over 24
months
    Total  
                                           
Deposits     122,606,290       19,818,078       2,777,820       538,046       28,735       7,852       145,776,821  
                                                         
From the non-financial government sector     11,486,433       1,149,425       319,233       1,131       17,565               12,973,787  
From the financial sector     81,359                                               81,359  
From the non-financial private sector and foreign residents     111,038,498       18,668,653       2,458,587       536,915       11,170       7,852       132,721,675  
                                                         
Liabilities at fair value through profit or loss     6,450                                               6,450  
                                                         
Derivative instruments     23,107                                               23,107  
                                                         
Repo Transactions     2,688,093                                               2,688,093  
                                                         
Other financial institutions     2,688,093                                               2,688,093  
Other financial liabilities     10,336,524       21,720       10,720       16,518       25,559       163,965       10,575,006  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     727,440       91,695       11,605       15,967       34,289       94,109       975,105  
                                                         
Issued corporate bonds                     118,044                       4,620,570       4,738,614  
                                                         
Subordinated corporate bonds                     80,260                       7,509,680       7,589,940  
                                                         
Total     136,387,904       19,931,493       2,998,449       570,531       88,583       12,396,176       172,373,136  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  55  

 

  

EXHIBIT I

(Continued)

 

CONSOLIDATED BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF DECEMBER 31, 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months and
up to 6
months
    Over 6
months and
up to 12
months
    Over 12
months and up
to 24 months
    Over 24
months
    Total  
                                           
Deposits     93,898,937       17,277,022       1,752,894       314,926       9,514       3,643       113,256,936  
                                                         
From the non-financial government sector     7,114,659       2,189,871       266,598       86,676       117               9,657,921  
From the financial sector     55,866                                               55,866  
From the non-financial private sector and foreign residents     86,728,412       15,087,151       1,486,296       228,250       9,397       3,643       103,543,149  
                                                         
 Repo Transactions     1,095,634                                               1,095,634  
                                                         
Other financial institutions     1,095,634                                               1,095,634  
Other financial liabilities     5,638,427       480,634       6,909       6,868       10,826       147,157       6,290,821  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     838,138       49,164       90,378       14,207       9,867       12,780       1,014,534  
                                                         
Issued corporate bonds             1,696,838                                       1,696,838  
                                                         
Subordinated corporate bonds                     213,978       213,978       427,955       9,763,723       10,619,634  
                                                         
Total     101,471,136       19,503,658       2,064,159       549,979       458,162       9,927,303       133,974,397  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  56  

 

 

EXHIBIT J

 

CONSOLIDATED CHANGES IN PROVISIONS

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

                Decreases                    
Breakdown   Balances at
beginning of
fiscal year
    Increases     Reversals     Charge off     06/30/2018     12/31/2017     12/31/2016  
                                           
For Administrative, disciplinary and criminal sanctions     718                               718       718       9,110  
                                                         
Other     694,201       353,418       210       263,553       783,856       694,201       325,897  
                                                         
Total Provisions     694,919       353,418       210       263,553       784,574       694,919       335,007  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  57  

 

 

EXHIBIT L

 

CONSOLIDATED FOREIGN CURRENCY BALANCES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
          Total per currency              
Items   Total Parent
company and
local branches
    US dollar     Euro     Real     Other     Total     Total  
                                           
ASSETS                                                        
Cash and deposits in banks     27,819,249       27,621,431       135,414       21,319       41,085       21,049,391       21,394,875  
Debt securities at fair value through profit or loss     230,761       230,761                               50,860       12,788  
Derivative instruments     667       667                               564          
Other financial assets     1,233,822       1,233,821                       1       875,422       376,008  
Loans and other financing     27,830,107       27,830,107                               18,771,033       10,137,360  
To the non-financial government sector     20       20                                          
Other financial intitutions     254,735       254,735                               175,116       94,834  
From the non-financial private sector and foreign residents     27,575,352       27,575,352                               18,595,917       10,042,526  
Other debt securities     1,306,606       1,306,606                               1,092,925       1,916,324  
Financial assets delivered as guarantee     581,887       579,862       2,025                       246,958       98,977  
Investments in equity instruments     5,927       5,927                               4,002       149,801  
Investments in subsidieries, associates and joint ventures                                             1       78  
                                                         
Total     59,009,026       58,809,182       137,439       21,319       41,086       42,091,156       34,086,211  
                                                         
LIABILITIES                                                        
Deposits     47,875,303       47,875,283       20                       31,150,622       23,299,436  
Non-financial government sector     2,676,038       2,676,038                               3,926,989       852,177  
Financial sector     77,408       77,408                               45,895       27,972  
Non-financial private sector and foreign residents     45,121,857       45,121,837       20                       27,177,738       22,419,287  
Other financial liabilities     2,406,006       2,339,516       63,388               3,102       1,382,688       965,308  
Financing from Central Bank and other financial Institutions     1,180,106       1,180,106                               887,321       131,361  
Issued corporate bonds                                                     1,684,636  
Subordinated corporate bonds     11,646,217       11,646,217                               7,565,759       6,376,537  
Other non-financial liabilities     24,880       24,880                               49,067       2,239  
                                                         
Total     63,132,512       63,066,002       63,408               3,102       41,035,457       32,459,517  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  58  

 

 

EXHIBIT Q

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos) 

 

    Net financial Income/
Expense
 
    Obligatory measurement  
Items   Quarter ended
06/30/2018
    Accumulated
from
beginning of
period up to
06/30/2018
 
             
For measurement of financial assets at fair value through profit or loss                
Profit or loss from government securities     38,986       93,984  
Profit or loss from private securities     20,149       50,918  
Profit or loss from derivative financial instruments                
Fowards transactions     (3,295 )        
Profit or loss from other financial assets     8,943       45,120  
From investment in equity instruments     5,293       39,925  
Loss (Profit) from sold assets liabilities at fair value     (110,462 )     (21,084 )
For measurement of financial liabilities at fair value through profit or loss                
Profit or loss from derivative financial instruments                
Fowards transactions     (5,970 )     (5,970 )
                 
Total     (46,356 )     202,893  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  59  

 

 

EXHIBIT Q

(Continued)

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Net financial Income/ Expense  
  Interest and adjustment for the aplication of the efective interest rate of financial assets measured at amortized cost   Quarter ended
06/30/2018
    Accumulated
from
beginning of
period up to
06/30/2018
 
             
Interest income                
For cash and bank deposits     1,999       4,970  
For government securities     27,090       30,127  
For debt securities     50,221       102,372  
For loans and other financing                
 Financial sector     204,521       371,391  
Non-financial private sector                
Overdrafts     961,674       1,742,250  
Mortgage loans     785,018       1,363,695  
Pledge loans     142,589       291,419  
Personal loans     5,021,197       9,596,122  
Credit cards     1,545,210       2,901,411  
Financial leases     33,844       67,702  
Other     1,680,746       3,200,244  
Cental Bank of Argentina     7,068       22,656  
Other financial institutions     38,698       58,244  
                 
Total     10,499,875       19,752,603  
                 
Interest expenses                
From deposits                
Non-financial private sector                
Saving accounts     64,207       117,841  
Time deposits and investments accounts     3,813,810       6,769,747  
For Financing received from Central Bank of Argentina and other financial institutions     21,627       35,008  
For repo transactions                
Other financial institutions     24,342       55,312  
For other financial liabilities     3,452       5,331  
For issued corporate bonds     422,246       623,074  
For subordinated corporate bonds     174,356       313,406  
                 
Total     4,524,040       7,919,719  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  60  

 

 

EXHIBIT Q

(Continued)

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Income for the period     Other comprehensive income  
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at fair value through other comprehensive income   Quarter ended
06/30/2018
    Accumulated
from beginning
of period up to
06/30/2018
    Quarter ended
06/30/2018
    Accumulated
from beginning
of period up to
06/30/2018
 
                         
From debt government securities     3,116,949       5,200,992       (61,725 )     (123,475 )
Total     3,116,949       5,200,992       (61,725 )     (123,475 )

 

    Income for the period                  
Commissions income   Quarter ended
06/30/2018
    Accumulated
from beginning
of period up to
06/30/2018
                 
                             
Commissions related to obligations     2,014,615       3,768,281                  
Commissions related to credits     25,202       43,483                  
Commissions related to loans commiments and financial guarantees     45       453                  
Commissions related to securities value     25,506       47,276                  
Commissions related to trading and foreign Exchange transactions     50,804       92,178                  
      2,116,172       3,951,671                  

 

    Income for the period                  
Commissions expenses   Quarter ended
06/30/2018
    Accumulated
from beginning
 of period up to
06/30/2018
                 
                             
Commissions related to transactions to debt securities     76       208                  
Other     209,482       394,275                  
      209,558       394,483                  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  61  

 

 

EXHIBIT Q

(Continued)

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Net financial Income/ Expense  
    Obligatory measurement  
Items   Quarter ended
06/30/2017
    Accumulated
from
beginning of
period up to
06/30/2017
 
             
For measurement of financial assets at fair value through profit or loss                
Profit or loss from government securities     81,196       83,609  
Profit or loss from private securities     13,495       18,271  
Profit or loss from other financial assets     18,089       33,122  
From investment in equity instruments     18,266       33,530  
For measurement of financial liabilities at fair value through profit or loss                
Profit or loss from derivative financial instruments                
Fowards transactions     (6,522 )     (14,667 )
Total     124,524       153,865  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  62  

 

 

EXHIBIT Q

(Continued)

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Net financial Income/
Expense
 
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at
amortized cost
  Quarter ended
06/30/2017
    Accumulated
from
beginning of
period up to
06/30/2017
 
             
Interest income                
For cash and bank deposits     775       908  
For private securities     50,702       117,522  
For loans and other financing                
Financial sector     98,928       200,110  
Non-financial private sector                
Overdrafts     622,348       1,274,095  
Mortgage loans     194,772       374,087  
Pledge loans     116,707       223,873  
Personal loans     3,394,825       6,497,132  
Credit cards     1,085,831       2,157,674  
Financial leases     24,483       45,509  
Other     977,390       1,886,615  
For repo transactions                
Cental Bank of Argentina     79,624       525,797  
Other financial institutions     6,054       13,642  
                 
Total     6,652,439       13,316,964  
                 
Interest expenses                
From deposits                
Non-financial private sector                
Saving accounts     26,153       50,124  
Time deposits and investments accounts     2,114,575       4,218,137  
For Financing received from Central Bank of Argentina and other financial institutions     7,366       12,954  
For repo transactions                
Other financial institutions     10,981       30,215  
For other financial liabilities     1,869       14,779  
For issued corporate bonds     90,201       90,201  
For subordinated corporate bonds     99,229       210,550  
                 
Total     2,350,374       4,626,960  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  63  

 

 

EXHIBIT Q

(Continued)

 

CONSOLIDATED BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of the Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Income for the period     Other comprehensive income  
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at fair value through other comprehensive income   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
    Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
 
                         
From debt government securities     1,167,803       1,961,688       (16,733 )     (15,119 )
Total     1,167,803       1,961,688       (16,733 )     (15,119 )
                                 
    Income for the period              
Commissions income   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
             
                         
Commissions related to obligations     1,569,218       2,930,387                  
Commissions related to credits     35,647       55,741                  
Commissions related to loans commiments and financial guarantees     1,148       1,663                  
Commissions related to securities value     16,597       27,426                  
Commissions related to trading and foreign Exchange transactions     37,088       69,527                  
      1,659,698       3,084,744                  
                                 
    Income for the period              
Commissions expenses   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
             
                         
Commissions related to transactions to debt securities     25       25                  
Other     165,322       319,766                  
      165,347       319,791                  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  64  

 

 

EXHIBIT R

 

VALUE CORRECTION FOR CREDIT LOSSES - CONSOLIDATED ALLOWANCES FOR UNCOLLECTIBILITY RISK

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 36)

(Figures stated in thousands of pesos)

 

    Balances
at
beginning
of the
          Decreases                    
Item   fiscal year     Increases     Reversals     Charge off     06/30/2018     12/31/2017     12/31/2016  
                                           
Other financial assets     5,131       981       33       1,231       4,848       5,131       4,147  
Loans and other financing                                                        
Other financial institutions     31,251       123       4,701               26,673       31,251       17,256  
To the non-financial private sector and foreign residents                                                        
Overdrafts     139,833       60,438       6,332       22,544       171,395       139,833       134,725  
Documents     202,505       70,533       1,359       14,890       256,789       200,750       123,881  
Mortgage loans     152,116       90,586       12,365       8,634       221,703       152,116       74,824  
Pledge loans     74,380       8,759       3,830       19,250       60,059       74,380       41,816  
Personal loans     1,207,483       718,073       267       385,004       1,540,285       1,207,470       814,696  
Credit cards     590,483       261,924       988       124,993       726,426       590,482       442,882  
Financial leases     6,486       93       875               5,704       6,487       3,994  
Other     263,338       101,693       1,798       50,338       312,895       265,107       186,842  
Other debt securities     329       2,888       329               2,888                  
                                                         
Total of allowances     2,673,335       1,316,091       32,877       626,884       3,329,665       2,673,367       1,845,063  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  65  

 

 

CONDENSED SEPARATED INTERIM BALANCE SHEET

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   06/30/2018     12/31/2017     12/31/2016  
                       
ASSETS                            
Cash and Deposits in Banks         45,389,232       32,473,987       32.992.475  
Cash         5,652,615       5,951,218       4.208.880  
Central Bank of Argentina         35,343,995       21,939,645       26.666.365  
Other Local and Foreign Entities         4,352,316       3,267,903       2.116.239  
Other         40,306       1,315,221       991  
Debt Securities at fair value through profit or loss         1,190,958       975,371       275.386  
Derivative Financial Instruments         42,314       7,664       9.721  
Repo Transactions         156,158       1,419,808       19.124  
Other financial assets         1,934,452       1,523,930       743.194  
Loans and other financing         143,296,147       122,173,846       81.475.324  
Non-financial Public Sector         2,033,133       1,865,273       1.581.955  
Other Financial Entities         4,165,259       4,191,658       1.713.170  
Non-financial Private Sector and Foreign Residents         137.097.755       116,116,915       78,180,199  
Other Debt Securities         41,369,370       33,611,201       17,974,087  
Financial Assets delivered as guarantee   22     7,134,066       7,344,011       3,462,469  
Investments in Equity Instruments         44,924       36,885       337,309  
Investment in subsidiaries, associated and joint arrangements         4,390,097       3,662,374       3,081,485  
Property, plant and equipment         7,104,731       6,586,803       5,636,685  
Intangible Assets         973,047       858,336       635,261  
Other Non-financial Assets         2,159,523       2,283,784       2,050,860  
Non-current Assets held for sale   8     126,645       199,890       89,648  
TOTAL ASSETS         255,311,664       213,157,890       148,783,028  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  66  

 

 

CONDENSED SEPARATED INTERIM BALANCE SHEET

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   06/30/2018     12/31/2017     12/31/2016  
                       
LIABILITIES                            
Deposits         165,016,459       132,716,174       102,498,623  
Non-financial Public Sector         13,876,689       9,504,522       5,964,863  
Financial Sector         125,371       81,357       55,861  
Non-financial Private Sector and Foreign Residents         151.014.399       123,130,295       96,477,899  
Liabilities at fair value through profit or loss                 6,450       -  
Derivative Financial Instruments         34,151       23,107       -  
Repo Transactions         1,829,233       2,688,093       1,095,634  
Other Financial Liabilities         10,175,697       9,808,877       5,895,687  
Financing received from the Central Bank of Argentina and other financial entities         1,828,488       1,173,840       260,266  
Issued Corporate Bonds   27     8,135,980       4,712,216       1,745,851  
Current Income Tax Liabilities         1,528,058       3,642,484       1,544,046  
Subordinated Corporate Bonds   27     11,646,217       7,565,759       6,376,537  
Provisions   9     679,820       595,995       251,366  
Deferred Income Tax Liabilities   12     201,734       416,850       1,280,028  
Other Non-financial Liabilities         4,089,975       3,273,022       2,864,297  
TOTAL LIABILITIES         205,165,812       166,622,867       123,812,335  
                             
SHAREHOLDERS’ EQUITY                            
Capital Stock         669,663       669,663       584,563  
Non-capital contributions         12,428,461       12,428,461       399,499  
Adjustments to Shareholders’ Equity         4,511       4,511       4,511  
Earnings Reserved         26,403,844       20,363,386       14,384,820  
Unappropiated Retained Earnings         3,475,669       2,799,085       2,990,757  
Other Comprehensive Income         505,872       204,560       65,711  
Net Income for the period         6,657,832       10,065,357       6,540,832  
TOTAL SHAREHOLDERS’ EQUITY         50,145,852       46,535,023       24,970,693  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  67  

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF INCOME

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   Quarter
ended
06/30/2018
    Quarter
ended
06/30/2017
    Accumulated
from
beginning of
year up to
06/30/2018
    Accumulated
from
beginning of
year up to
06/30/2017
 
                             
Interest income         12,583,775       7,026,544       22,969,474       13,730,366  
Interest expense         (4,206,052 )     (2,177,907 )     (7,343,191 )     (4,255,304 )
Net interest income         8,377,723       4,848,637       15,626,283       9,475,062  
Commissions income   13     1,952,629       1,546,230       3,655,192       2,875,596  
Commissions expense         (187,226 )     (152,398 )     (344,842 )     (290,357 )
Net commissions income         1,765,403       1,393,832       3,310,350       2,585,239  
Subtotal (Net interest income + Net commissions income)         10,143,126       6,242,469       18,936,633       12,060,301  
Net Income from measurement of financial instruments at fair value through profit or loss         (85,021 )     83,165       96,157       83,048  
Loss from sold assets at amortized cost         75       31,977       (2,870 )     18,294  
Differences in quoted prices of gold and foreign currency   14     (1,127,210 )     348,255       (1,002,687 )     528,994  
Other operating income   15     1,158,243       889,953       2,259,063       1,792,382  
Provision for loan losses         (508,939 )     (417,650 )     (1,026,020 )     (735,482 )
Net Operating Income         9,580,274       7,178,169       19,260,276       13,747,537  
Employee benefits   16     (2,214,303 )     (1,697,024 )     (4,051,480 )     (3,258,935 )
Administration expenses   17     (1,390,793 )     (978,075 )     (2,652,897 )     (1,880,233 )
Depreciation of Property, plant and equipment         (157,560 )     (120,829 )     (304,752 )     (237,244 )
Other Operating Expenses   18     (2,094,705 )     (1,424,178 )     (3,913,040 )     (2,699,933 )
Operating Income         3,722,913       2,958,063       8,338,107       5,671,192  
Income from subisdiaries, associates and joint arrangements         496,314       287,352       896,270       548,293  
Income before tax on continuing operations         4,219,227       3,245,415       9,234,377       6,219,485  
Income tax on continuing operations   12     (1,103,578 )     (1,021,906 )     (2,576,545 )     (1,990,728 )
Net Income from continuing operations         3,115,649       2,223,509       6,657,832       4,228,757  
Net Income for the period         3,115,649       2,223,509       6,657,832       4,228,757  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  68  

 

 

CONDENSED SEPARATE INTERIM EARNINGS PER SHARE

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Quarter
ended
06/30/2018
    Quarter
ended
06/30/2017
    Accumulated
from beginning
of year up to
06/30/2018
    Accumulated
from beginning
of year up to
06/30/2017
 
                         
Net Profit attributable to Parent’s shareholders     3,115,649       2,223,509       6,657,832       4,228,757  
                                 
PLUS: Potential diluted earnings per common share                                
                                 
Net Profit attributable to Parent’s shareholders adjusted as per diluted earnings     3,115,649       2,223,509       6,657,832       4,228,757  
                                 
Weighted average of outstanding common shares for the period     669,663       594,321       669,663       589,469  
                                 
PLUS: Weighted average of the number of additional common shares with dilution effects                                
                                 
Weighted average of outstanding common shares for the period adjusted as per dilution effect     669,663       594,321       669,663       589,469  
                                 
Basic earnings per share     4.6526       3.7413       9.9421       7.1738  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  69  

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   Quarter
ended
06/30/2018
    Quarter
ended
06/30/2017
    Accumulated
from
beginning of
year up to
06/30/2018
    Accumulated
from
beginning of
year up to
06/30/2017
 
                             
Net Income for the period         3,115,649       2,223,509       6,657,832       4,228,757  
Items of Other Comprehensive Income that will be reclassified to profit or loss                                    
Foreign currency translation differences in financial statements conversion         344,455       58,793       398,114       36,267  
Foreign currency translation differences for the period         344,455       58,793       398,114       36,267  
Profit or loss for financial instruments measured at fair value through OCI (IFRS 9 4.1.2)(a)         (23,164 )     (6,017 )     (61,999 )     2,570  
Income for the period from financial instruments at fair value through OCI         (33,092 )     (9,258 )     (88,570 )     3,952  
Income tax         9,928       3,241       26,571       (1,382 )
Interest in Other Comprehensive Income of associates and joint ventures accounted for using the participation method         (28,488 )     (4,736 )     (34,803 )     (15,916 )
Income for the period from interest in Other Comprehensive Income of associates and joint ventures accounted for using the participation method         (28,488 )     (4,736 )     (34,803 )     (15,916 )
Total Other Comprehensive Income that will be reclassified to profit or loss of the period         292,803       48,040       301,312       22,921  
Total Other Comprehensive Income         292,803       48,040       301,312       22,921  
Total Comprehensive Income         3,408,452       2,271,549       6,959,144       4,251,678  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  70  

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

    Capital Stock     Non-capital,
Contributions
          Other Comprehensive
Income
    Earnings Reserved                     
    Outstanding
shares
    Stock
Issuance
Premium
    Adjustments
to
Shareholders´
Equity
    Accumulat,
Foreign
Currency
translation
differences
in financial
statements
    Other     Legal     Other     Unappropiated
Retained
Earnings
    Total Equity
net of
Controlling
Interests
    Total
Equity
 
                                                             
Balance at the beginning of fiscal year     669,663       12,428,461       4,511       137,148       67,412       4,994,932       15,368,454       12,864,442       46,535,023       46,535,023  
Total comprehensive income for the period                                                                                
- Net income for the period                                                             6,657,832       6,657,832       6,657,832  
- Other comprehensive income for the period                             398,114       (96,802 )                             301.312       301,312  
- Distribution of unappropiated retained earnings as approved by Shareholders´ Meeting held on April 27, 2018                                                                                
Legal                                             1,877,755               (1,877,755 )                
Cash dividends                                                     (3,348,315 )             (3,348,315 )     (3,348,315 )
Others                                                     7,511,018       (7,511,018 )                
Balance at the end of period     669,663       12,428,461       4,511       535,262       (29,390 )     6,872,687       19,531,157       10,133,501       50,145,852       50,145,852  

 

CONDENSED SEPARATE INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

    Capital Stock     Non-capital,
Contributions
          Other Comprehensive
Income
    Earnings Reserved                     
Changes   Outstanding
shares
    Stock
Issuance
Premium
    Adjustments
to
Shareholders´
Equity
    Accumulat,
Foreign
Currency
translation
differences
in financial
statements
    Other     Legal     Other     Unappropiated
Retained
Earnings
    Total Equity
net of
Controlling
Interests
    Total
Equity
 
                                                             
Balance at the beginning of fiscal year     584,563       399,499       4,511               65,711       3,686,472       10,698,348       9,531,589       24,970,693       24,970,693  
Total comprehensive income for the period                                                                                
- Net income for the period                                                             4,228,757       4,228,757       4,228,757  
- Other comprehensive income for the period                             36,267       (13,346 )                             22,921       22,921  
- Distribution of unappropiated retained earnings as approved by Shareholders´ Meeting held on April 28, 2017                                                                                
- Legal                                             1,308,460               (1,308,460 )                
- Cash dividends                                                     (701,476 )             (701,476 )     (701,476 )
- Others                                                     5,371,582       (5,424,045 )     (52,463 )     (52,463 )
Increase of Capital Stock as approved by Shareholders´ Meeting held on April 28, 2017     74,000       10,387,724                                                       10,461,724       10,461,724  
Balance at the end of period     658,563       10,787,223       4,511       36,267       52,365       4,994,932       15,368,454       7,027,841       38,930,156       38,930,156  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  71  

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   06/30/2018     06/30/2017  
                 
CASH FLOWS FROM OPERATING ACTIVITIES                    
                     
Income for the period before Income Tax         9,234,377       6,219,485  
Adjustments to obtain cash flows from operating activities:                    
Amortization and depreciation         304,752       237,244  
Provision for loan losses         1,026,020       735,482  
Other adjustments         (3,028,200 )     133,211  
Net increase / decrease from operating assets:                    
Debt Securities at fair value though profit and loss         (215,631 )     (450,174 )
Derivative financial instruments         (34,650 )     7,885  
Repo transactions         1,263,650       (2,033,671 )
Loans and other financing                    
Non-financial public sector         (167,862 )     1,040,908  
Other financial entities         26,399       (517,962 )
Non-financial private sector and foreign residents         (22,005,852 )     (17,058,737 )
Other debt securities         24,127,743       (7,943,253 )
Financial assets delivered as guarantee         209,945       1,060,244  
Investments in equity instruments         (8,039 )     308,199  
Other assets         (1,163,749 )     (672,915 )
Net increase / decrease from operating liabilities:                    
Deposits                    
Non-financial public sector         4,372,167       1,197,702  
Financial sector         44,014       1,494  
Non-financial private sector and foreign residents         27,884,104       8,493,501  
Liabilities at fair value through profit or loss         (6,450 )        
Derivative financial instruments         11,044       217  
Repo transactions         (858,860 )     (1,095,634 )
Other liabilities         1,272,399       1,527,697  
Payments for Income Tax         (3,941,745 )     (2,251,016 )
TOTAL CASH FROM OPERATING ACTIVITIES (A)         38,345,576       (11,060,093 )

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  72  

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 2018 AND 2017

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Items   Notes   06/30/2018     06/30/2017  
                 
CASH FLOWS FROM INVESTING ACTIVITIES                    
                     
Payments:                    
Acquisition of PPE, intangible assets and other assets         (599,556 )     (559,060 )
Proceeds:                    
TOTAL CASH USED IN INVESTING ACTIVITIES (B)         (599,556 )     (559,060 )
CASH FLOWS FROM FINANCING ACTIVITIES                    
Payments:                    
Dividends         (3,348,315 )     (701,476 )
Non-subordinated corporate bonds         (242,604 )     (1,766,904 )
Financing from local financial entities         (74,671 )        
Subordinated corporate bonds                 (206,280 )
Issued equity instruments                 10,461,724  
Non-subordinated corporate bonds         3,206,999       4,604,398  
Central Bank of the Republic of Argentina         4,376       2,070  
Financing to local financial entities                 748,697  
Other proceeds related to financing activities                 213,379  
TOTAL CASH (USED IN)/ FROM FINANCING ACTIVITIES (C)         (454,215 )     13,355,608  
                     
EFFECT OF EXCHANGE RATE FLUCTUATIONS (D)         7,509,308       458,857  
                     
TOTAL CHANGES IN CASH FLOWS                    
                     
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D)         44,801,113       2,195,312  
                     
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FISCAL YEAR   19     37,302,039       47,150,300  
                     
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD   19     82,103,152       49,345,612  

 

 

Delfín Jorge Ezequiel Carballo
Chairperson

  73  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

1. CORPORATE INFORMATION

 

Banco Macro SA (hereinafter, the “Bank”) is a business corporation (sociedad anónima) organized in the Republic of Argentina that offers traditional banking products and services to companies, including those companies operating in regional economies, as well as to individuals, strengthening in this way its goal to be a multi-service bank. In addition, the Bank performs certain transactions through its subsidiaries banco del Tucumán SA, Macro Bank Limited (a company organized under the laws of Bahamas), Macro Securities SA, Macro Fiducia SA and Macro Fondos SGFCISA.

 

Macro Compañía Financiera SA was created in the year 1977 as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro SA. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud SA) and since August 2006, Banco Macro SA.

 

The Bank´s shares are publicly listed on Bolsas y Mercados Argentinos (BYMA) since November 1994 and as from March 24, 2006, they are listed on the New York Stock Exchange (NYSE). Additionally, on October 15, 2015 they were authorized to list on the Mercado Abierto Electrónico SA (MAE).

 

Since 1994, Banco Macro SA’s market strategy was mainly focused on the regional areas outside the City of Buenos Aires. Following this strategy, in 1996, Banco Macro SA started the process to acquire entities and assets and liabilities during the privatization of provincial and other banks.

 

In 2001, 2004, 2006 and 2010, the Bank acquired the control of Banco Bansud SA, Nuevo Banco Suquía SA, Nuevo Banco Bisel SA and Banco Privado de Inversiones SA, respectively. Such entities merged with and into Banco Macro SA in December 2003, October 2007, August 2009 and December 2013, respectively. In addition, during the fiscal year 2006, Banco Macro SA acquired control over Banco del Tucumán SA.

 

On August 22, 2018, the Bank’s Board of Directors approved the issuance of the accompanying condensed separate interim Financial Statements.

 

2. OPERATIONS OF THE BANK

 

Note 2 to the Condensed consolidated interim Financial Statements includes a detailed description of the agreements that relate the Bank and its subsidiary Banco del Tucumán to the provincial Governments.

 

3. BASIS FOR THE PREPARATION OF THE FINANCIAL STATEMENTS AND APPLICABLE ACCOUNTING STANDARDS

 

On February 12, 2014 the Central Bank, through Communiqué “A” 5541 established the general guidelines towards conversion to the IFRS issued by the International Accounting Standards Board (IASB) for preparing financial statements of the entities under its supervision, for the annual fiscal years beginning on January 1, 2018 as well as those of interim-periods,

 

Additionally, through Communiqué “A” 6114, the Central Bank set specific guidelines within the scope of such convergence process, among which it defined (i) the transitory exception to the application of section 5.5 “Impairment” of the IFRS 9 “Financial Instruments” (sections B5.5.1 to B5.5.55) up to the fiscal years beginning as of January 1, 2020; and (ii) that in order to calculate the effective interest rate of assets and liabilities so requiring it for the measurement thereof, pursuant to IFRS 9, transitorily up to 31 December 2019, the Bank may make a global estimate of the calculation of the effective interest rate on a group of financial assets or liabilities with similar characteristics which shall be applied such effective interest rate. To the date of the accompanying condensed separate interim Financial Statements the Bank is in the process of quantifying the effect the application of section 5.5 “Impairment” mentioned in (i) above would have. Finally, through Communiqués “A” 6323 and 6324 and supplementary provisions the BRCA defined the chart of account and the provisions applicable to the preparation and presentation of the financial statements of financial entities for the fiscal years beginning on January 1, 2018, respectively.

 

 

 

  74  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

The accounting policies comply with the IFRS presently approved through Central Bank Comunique “A” 6114 and are applicable to the preparation of the first annual consolidated Financial statements as provided for in the IFRS (December 31, 2018). Nevertheless, these accounting policies may be modified if, at the time of preparing such first annual Financial Statements under Communiqué “A” 6114, new rules or standards are issued or the current ones are amended, with compulsory application to such date, or if the Bank chooses to change the election of the exemptions under IFRS 1. As a general rule, the Central Bank does not admit the early application of any IFRS, unless it establishes any provision the contrary.

 

These condensed separate interim Financial Statements, were prepared in accordance with the framework set forth by the Central Bank as mentioned in the previous paragraphs, for which these condensed separate interim Financial Statements, are based on IAS 34 “Interim Financial Reporting”. In that sense, these condensed separate interim Financial Statements include all the necessary information for an appropriate understanding, by the users thereof, of the basis for the preparation and disclosure used therein, as well as the relevant events and transactions occurred after the issuance of the last annual separate Financial Statements for the fiscal year ended December 31, 2017 and condensed separate interim Financial Statements for the three-month period ended on March 31, 2018. Nevertheless, the present condensed separate interim Financial Statements do not include all the information or all the disclosures required for the annual separate Financial Statements prepared in accordance with the IAS 1 “Presentation of Financial Statements”. Therefore, the accompanying condensed separate interim Financial Statements must be read together with the annual separate Financial Statements for the fiscal year ended December 31, 2017 and condensed separate interim Financial Statements for the three-month period ended on March 31, 2018. Additionally, Note 3 to the condensed consolidated interim Financial Statements presents a detailed description of the basis for the presentation of such Financial Statements. All that is explained therein shall apply to the accompanying condensed separate interim Financial Statements, as well as the main accounting policies used and the relevant information of the subsidiaries.

 

Subsidiaries

 

As mentioned in Note 1, the Bank performs certain transactions through its subsidiaries.

 

Subsidiaries are all the entities controlled by the Bank. A Company controls other entity when it is exposed, or has rights, to variable returns from its continuing involvement with such other entity, and has the ability to use its power to direct the operating and financing policies of such other entity, to affect the amounts of such returns.

 

As provided under IAS 27 “Consolidated and Separate Financial Statements”, investments in subsidiaries were accounted for using the “equity method”. When using this method, investments are initially recognized at cost, and such amount increases or decreases to recognize investor’s interest in profits and losses of the entity after the date of acquisition or creation.

 

Share in profits and losses of subsidiaries and associates are recognized in the line “Income from subsidiaries, associates and joint arrangements” in the Statement of income. Ownership interest in other comprehensive income of subsidiaries is accounted for in the line “Income for the period for interest in other comprehensive income of subsidiaries, associates and joint arrangements accounted for using the participation method”, in the statement of other comprehensive income.

 

Transcription in the Books of Accounts

 

To the date of the accompanying Condensed separate interim Financial Statements, the same are in the process of being transcribed in the Bank’s Books of Account.

 

 

 

  75  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

First-time Adoption of International Financial Reporting Standards in accordance with Central Bank Communiqué “A” 6114

 

Note 3 to the condensed consolidated interim Financial Statements explains the convergence process under Central Bank Communiqué “A” 6114, The obligatory exceptions and exemptions used by the Bank in relation to not apply certain IFRS in a retrospectively way and the first time adoption adjustment, have been explained in the condensed consolidated interim Financial Statement for the three-month period ended on March 31, 2018, already issued.

 

Required reconciliations

 

· Reconciliation of equity as of June 30, 2017.

 

    Previous
Central Bank
Standards
    Adjustments and
Reclassifications
    IFRS
according
Communiqué
“A” 6114
 
Total Assets     175,528,509       1,258,465       176,786,974  
Total Liabilities     139,700,969       (1,844,151 )     137,856,818  
Net Shareholders´Equity     35,827,540       3,102,616       38,930,156  

 

Balance as of 06/30/2017   Net
Shareholders´
equity
 
According to previous Central Bank Standards     35,827,540  
Adjustments and Reclassifications:        
Debt securities and investment in equity instruments     57,490  
Loans and other financing     (298,581 )
Investment in subsidiaries, associated and joint arrangements     302,537  
Property, plant and equipment and investment property     4,251,074  
Other non-financial assets     68,093  
Deferred income tax liabilities     (1,061,256 )
Other non-financial liabilities     (288,717 )
Corporate bonds     59,698  
Other adjustments     12,278  
Total adjustments     3,102,616  
Net Shareholders equity according Communiqué “A” 6114     38,930,156  

 

· Reconciliation of separate income and other comprehensive income for the six-month and three-month periods ended June 30, 2017.

 

Reconciliation of income for the six-
month period as of 06/30/2017
  Net income
for the
period
    Other
comprehensive
income
    Comprehensive
Income
 
According to previous Central Bank Standards     3,779,312                  
Adjustments and reclasifications                        
Interest income     (49,406 )                
Commissions income     28,464                  
Interest expense     28,138                  
Other operating expenses     (48,951 )                
Reclasifications of Issuance cost of shares     234,545                  
Income Tax     218,772                  
Investment in subsidiaries, associated and joint arrangements     24,321       (15,916 )        

 

 

 

  76  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Reconciliation of income for the six-
month period as of 06/30/2018
(contd.)
  Net income
for the
period
    Other
comprehensive
income
    Comprehensive
Income
 
Foreign currency translation differences             36,267          
Income from financial instruments at fair value through OCI             2,570          
Other adjustment     13,562                  
Total adjustments and reclassifications     449,445       22,921          
Balances accordance Communiqué “A” 6114     4,228,757       22,921       4,251,678  

 

Reconciliation of income for the three-
month period as of 06/30/2017
  Net income
for the
period
    Other
comprehensive
income
    Comprehensive
Income
 
According to previous Central Bank Standards     2,015,267                  
Adjustments and reclasifications                        
Interesst income     (56,337 )                
Commissions income     (2,769 )                
Interest expense     34,548                  
Other operating expenses     (41,935 )                
Employee benefits     (48,563 )                
Investment in subsidiaries, associated and joint arrangements     14,102       (4,736 )        
Reclasifications of Issuance cost of shares     234,545                  
Foreign currency translation differences             58,793          
Income from financial instruments at fair value through OCI             (6,017 )        
Income tax     118,718                  
Other adjustment     (44,067 )                
Total adjustments and reclassifications     208,242       48,040          
Balances accordance Communiqué “A” 6114     2,223,509       48,040       2,271,549  

 

4. CONTINGENT TRANSACTIONS

 

In order to meet specific financial needs of customers, the Bank’s credit policy also includes, among others, the granting of guarantees, securities, bonds, letters of credit and documentary credits. Although these transactions are not recognized in the Balance sheet, since they imply a possible obligation or liability for the Bank, they expose the Bank to additional credit risk to those recognized in the Balance sheet and are, therefore, an integral part of the total risk of the Bank.

 

As of June 30, 2018 and December 31, 2017 and 2016, the Bank maintains the following contingent transactions:

 

    06/30/2018     12/31/2017     12/31/2016  
                   
Overdraft and unused agreed credits     826,663       255,710       191,007  
Guarantees granted     697,621       253,793       288,382  
Liabilities for foreign trade transactions     203,399       90,274       163,308  
      1,727,683       599,777       642,697  

 

 

 

  77  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Risks related to the contingent transactions described above have been evaluated and are controlled within the framework of the Bank’s credit risk policy detail in Note 41 to the condensed consolidated interim Financial Statements as of March 31, 2018, already issued.

 

5. FAIR VALUE QUANTITATIVE AND QUALITATIVE DISCLOSURES

 

Note 5 to the condensed consolidated interim Financial Statements describes the methods and assumptions used to determine the fair value, both of the financial instruments recognized at fair value as of those not accounted for at such fair value in the accompanying condensed separate interim Financial Statements. In addition, the Bank discloses the relevant information as to instruments included in Level 3 of the fair value hierarchy.

 

Below we present the reconciliation between the balances at the beginning and the end of the period of the financial assets and liabilities recognized at fair value, using the valuation technical information based on the Bank’s own assumptions, as of June 30, 2018 and December 31, 2017:

 

    Fair values using valuation techniques based on
the Bank’s own assumptions (level 3)
June 30, 2018
 
Description   Debt
Securities
    Other
Financial
Assets
    Investments in Equity
Instruments
 
Balance at the beginning     35,841       161,751       33,197  
Transfers to Level 3                        
Transfers from Level 3                        
Profit and Loss     (16,497 )     (28,208 )     6,540  
Purchases, sales, issuance and settlement     133,699       (71,337 )        
Balance at end of period     153,043       62,206       39,737  

 

    Fair values using valuation techniques based on the
Bank’s own assumptions (level 3)
December 31, 2017
 
Description   Debt
Securities
    Other
Financial
Assets
    Investments in Equity
Instruments
 
Balance at the beginning     45,834               14,741  
Transfers to Level 3                        
Transfers from Level 3                        
Profit and Loss     5,661               18,771  
Purchases, sales, issuance and settlement     (15,654 )     161,751       (315 )
Balance at end of year     35,841       161,751       33,197  

 

The following table shows a comparison between the fair value and the carrying amount of financial instruments not recognized at fair value as of June 30, 2018 and December 31, 2017 and 2016:

 

    06/30/2018  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     45,389,232       45,389,232                       45,389,232  
Repo transactions     156,158       156,158                       156,158  
Other financial assets     1,872,246       1,872,246                       1,872,246  
Loans and other financing     143,296,147               153,249       133,102,337       133,255,586  
Other debt securities     3,802,923       116,506       3,375,965       285,925       3,778,396  
Financial assets delivered as guarantee     5,099,550       5,099,550                       5,099,550  
      199,616,256       52,633,692       3,529,214       133,388,262       189,551,168  

 

 

 

  78  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

    06/30/2018  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Liabilities                              
Deposits     165,016,459       84,231,479       80,838,745               165,070,224  
Other repo transactions     1,829,233       1,829,233                       1,829,233  
Other financial liabilities     10,175,697       8,656,568       1,521,269               10,177,837  
Financing received from the Central Bank and other financial entities     1,828,488       1,176,005       626,879               1,802,884  
Issued corporate bonds     8,135,980               7,677,228               7,677,228  
Subordinated corporate bonds     11,646,217               10,829,371               10,829,371  
      198,632,074       95,893,285       101,493,492               197,386,777  

 

    12/31/2017  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     32,473,987       32,473,987                       32,473,987  
Repo transactions     1,419,808       1,419,808                       1,419,808  
Other financial assets     1,362,179       1,362,179                       1,362,179  
Loans and other financing     122,173,846               477,188       119,183,156       119,660,344  
Other debt securities     931,281       945,655                       945,655  
Financial assets delivered as guarantee     4,350,292       4,350,292                       4,350,292  
      162,711,393       40,551,921       477,188       119,183,156       160,212,265  
Financial Liabilities                                        
Deposits     132,716,174       72,265,769       60,523,556               132,789,325  
Other repo transactions     2,688,093       2,688,093                       2,688,093  
Other financial liabilities     9,808,877       8,515,027       1,299,660               9,814,687  
Financing received from the Central Bank and other financial entities     1,173,840               1,176,126               1,176,126  
Issued corporate bonds     4,712,216               4,432,977               4,432,977  
Subordinated corporate bonds     7,565,759               7,710,790               7,710,790  
      158,664,959       83,468,889       75,143,109               158,611,998  

 

    12/31/2016  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Assets                                        
Cash and deposits in Banks     32,992,475       32,992,475                       32,992,475  
Repo transactions     19,124       19,124                       19,124  
Other financial assets     743,194       743,194                       743,194  
Loans and other financing     81,475,324               477,464       79,877,385       80,354,849  
Other debt securities     841,943       841,943                       841,943  
Financial assets delivered as guarantee     2,261,440       2,261,440                       2,261,440  
      118,333,500       36,858,176       477,464       79,877,385       117,213,025  

 

 

 

  79  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

    12/31/2016  
    Carrying
Amount
    Level 1     Level 2     Level 3     Fair
Value
 
Financial Liabilities                                        
Deposits     102,498,623       54,202,915       48,367,480               102,570,395  
Other repo transactions     1,095,634       1,095,634                       1,095,634  
Other financial liabilities     5,895,687       4,823,083       1,075,294               5,898,377  
Financing received from the Central Bank and other financial entities     260,266               259,583               259,583  
Issued corporate bonds     1,745,851               1,466,612               1,466,612  
Subordinated corporate bonds     6,376,537               5,994,056               5,994,056  
      117,872,598       60,121,632       57,163,024               117,284,657  

 

6. INVESTMENTS IN ASSOCIATES AND JOINT ARRANGEMENTS

 

The Bank’s interests on associates and joint ventures are disclosed in Note 6 to the condensed consolidated interim Financial Statements.

 

7. RELATED PARTIES

 

A related party is a person or entity that is related to the Bank:

 

- has control or joint control of the Bank;

 

- has significant influence over the Bank;

 

- is a member of the key management personnel of the Bank or of a parent of the Bank;

 

- members of the same group;

 

- one entity is an associate (or an associate of a member of a group of which the other entity is a member).

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, directly or indirectly. The Bank considers as key management personnel, for the purposes of IAS 24, the members of the Board of Directors and the Senior Management member of the Risk Management Committee, Assets and Liabilities Committee and the Senior Credit Committee.

 

As of June 30, 2018 and December 31, 2017 and 2016, there is a total amount of 1,663,900, 1,358,575 and 316,742, respectively, as unpaid financial assistance granted by the Bank to its associates and related parties and deposits of its associates and related parties of 2,149,794, 2,472,648 and 2,302,098, respectively:

 

 

 

  80  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

    Subsidiaries     Associates and other related parties  
    Maximum
balances as of
06/30/2018
    Balance as of
06/30/2018
    Maximum
balances as of
06/30/2018
    Balance as of
06/30/2018
 
                         
Documents                     407,999       397,080  
Overdraft                     34,215       28,554  
Credit cards     567       377       45,224       41,355  
Leases     6,309       6,309       1,851       1,751  
Personal loans                     10       8  
Mortgage loans                     42,474       42,464  
Other loans     1,952,244       901,973       197,842       195,378  
Guarantees granted                     46,895       48,651  
Total assistance     1,959,120       908,659       776,510       755,241  
Deposits             345,317               1,804,477  

 

    Subsidiaries     Associates and other related parties  
    Maximum
balances as of
12/31/2017
    Balance as of
12/31/2017
    Maximum
balances as of
12/31/2017
    Balance as of
12/31/2017
 
                         
Documents                     147,026       147,026  
Overdraft                     25,300       7,830  
Credit cards     397       389       35,430       33,827  
Leases     6,973       6,973       2,204       2,157  
Personal loans                     18       17  
Mortgage loans                     13,559       13,526  
Other loans     952,148       952,148       140,661       140,448  
Guarantees granted     443       443       53,950       53,791  
Total assistance     959,961       959,953       418,148       398,622  
Deposits             108,606               2,364,042  

 

    Subsidiaries     Associates and other related parties  
    Maximum
balances as of
12/31/2016
    Balance as of
12/31/2016
    Maximum
balances as of
12/31/2016
    Balance as of
12/31/2016
 
                         
Documents                     99,725       99,347  
Overdraft                     17,799       7,454  
Credit cards     191       191       20,673       18,603  
Leases     8,036       8,036       1,189       1,168  
Personal loans                     647       647  
Mortgage loans                     4,759       4,759  
Other loans                     175,770       161,287  
Guarantees granted     885       885       14,532       14,365  
Total assistance     9,112       9,112       335,094       307,630  
Deposits             134,911               2,167,187  

 

 

 

  81  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

Transactions generated by the Bank with its subsidiaries and other related parties to it for transactions arranged within the scope of the usual and ordinary course of business, were performed in normal market conditions, both as to interest rates and prices and as to the required guarantees.

 

As of June 30, 2018, December, 31 2017 and 2016, the income from loan transactions totaled 201,642, 83,850 and 15,781, respectively, while income generated from deposit transactions totaled 62,318, 163,814 and 141,184, respectively.

 

The Bank does not have loans granted to Directors and other key management personnel secured with shares.

 

Total remunerations received as salary and bonus by the key management personnel as of June 30, 2018 and December 31, 2017 and 2016, totaled 41,285, 64,409 and 30,807 respectively.

 

In addition, fees received by the Directors as of June 30, 2018 and December 31, 2017 and 2016 amounted to 287,368, 421,033 and 205,822 respectively.

 

Additionally, the composition of the Board of Directors and key management personnel is as follows:

 

    06/30/2018     12/31/2017     12/31/2016  
Board of Directors     15       13       12  
Top Management members of the key management personnel     10       10       10  
      25       23       22  

 

8. NON-CURRENT ASSETS HELD FOR SALE

 

Non-current assets held for sale as of June 30, 2018 are described in Note 8 to the condensed consolidated interim Financial Statements.

 

9. PROVISIONS

 

This item includes the amounts estimated to face a liability of probable occurrence, which in case it occurs, would originate a loss for the Bank.

 

Exhibit J “Changes in Provisions” presents the changes in provisions during the six-month period ended June 30, 2018.

 

The expected terms to settle these obligations are as follows:

 

    06/30/2018                    
    Within 12
months
    Beyond 12
months
    06/30/2018     12/31/2017     12/31/2016  
                               
For administrative, disciplinary and criminal penalties             718       718       718       9,110  
Others     315,031       364,071       679,102       595,277       242,256  
      315,031       364,789       679,820       595,995       251,366  

 

In the opinion of the Management of the Bank and its legal advisors, there are no other significant effects than those disclosed in the accompanying Financial Statements, the amounts and settlement terms of which have been recognized based on the current value of such estimates, considering the probable settlement date thereof.

 

 

 

  82  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

10. ANALYSIS OF FINANCIAL ASSETS TO BE RECOVERED AND FINANCIAL LIABILITIES TO BE SETTLED

 

The following tables show the analysis of the balance of financial assets and liabilities the Bank expects to recover and settle as of June 30, 2018 and December 31, 2017 and 2016:

 

06/30/2018   No maturity     Total up to 12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     45,389,232                  
Debt securities at fair value through profit or loss     5,104       263,630       922,224  
Derivative instruments             42,314          
Repo transactions             156,158          
Other financial assets     943,036       940,873       50,543  
Loans and other financing     1,014,726       85,461,228       56,820,193  
Other debt securities             37,778,534       3,590,836  
Financial assets delivered as guarantee     5,099,550       2,034,516          
Investment in equity instruments     44,924                  
Total Assets     52,496,572       126,677,253       61,383,796  
Liabilities                        
Deposits     82,659,062       82,194,152       163,245  
Derivatives financial instruments             34,151          
Repo transactions             1,829,233          
Other financial liabilities             10,021,742       153,955  
Financing received from Central Bank and other financial entities             1,628,667       199,821  
Issued corporate bonds             307,910       7,828,070  
Subordinated corporate bonds             101,537       11,544,680  
Total Liabilities     82,659,062       96,117,392       19,889,771  

 

12/31/2017   No maturity     Total up to 12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     32,473,987                  
Debt securities at fair value through profit or loss             113,181       862,190  
Derivative instruments             7,664          
Repo transactions             1,419,808          
Other financial assets             846,983       676,947  
Loans and other financing             67,826,931       54,346,915  
Other debt securities             33,611,201          
Financial assets delivered as security     4,350,292       2,993,719          
Investment in equity instruments     36,885                  
Total Assets     36,861,164       106,819,487       55,886,052  
Liabilities                        
Deposits     69,069,176       63,100,594       546,404  
Liabilities at fair value to profit or loss             6,450          
Derivative instruments             23,107          
Repo transactions             2,688,093          
Other financial liabilities             9,625,147       183,730  
Financing received from Central Bank and other financial entities             1,006,966       166,874  
Issued corporate bonds             118,356       4,593,860  
Subordinated corporate bonds             80,004       485,755  
Total Liabilities     69,069,176       76,648,717       5,976,623  

 

 

 

  83  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

12/31/2016   No maturity     Total up to 12
months
    Total over 12
months
 
Assets                        
Cash and deposits in Banks     32,992,475                  
Debt securities at fair value through profit or loss             31,956       243,430  
Derivative instruments             9,721          
Repo transactions             19,124          
Other financial assets             739,306       3,888  
Loans and other financing             49,014,679       32,460,645  
Other debt securities             17,974,087          
Financial assets delivered as security     2,261,475       1,200,994          
Investment in equity instruments     337,309                  
Total Assets     35,591,259       68,989,867       32,707,963  
Liabilities                        
Deposits     46,192,528       56,003,619       302,476  
Repo transactions             1,095,634          
Other financial liabilities             5,784,361       111,326  
Financing received from Central Bank and other financial entities             193,618       66,648  
Issued corporate bonds             1,745,851          
Subordinated corporate bonds             67,429       6,309,108  
Total Liabilities     46,192,528       64,890,511       6,789,558  

 

11. DISCLOSURES BY OPERATING SEGMENT

 

The Bank has an approach of its banking business that is described in Note 11 to the condensed consolidated interim Financial Statements.

 

12. INCOME TAX

 

The main items of income tax expense in the condensed consolidated interim Financial Statements are as follows:

 

    06/30/2018     06/30/2017  
    Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Current income tax expense     2,791,661       1,227,018       2,208,117       1,121,961  
Gain for deferred income tax     (215,116 )     (123,440 )     (217,389 )     (100,055 )
Income tax expense recorded in the statement of income     2,576,545       1,103,578       1,990,728       1,021,906  
Income tax gain recorded in other comprehensive income     (26,571 )     (9,928 )     1,382       (3,241 )
      2,549,974       1,093,650       1,992,110       1,018,665  

 

13. COMMISSIONS INCOME

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Performance obligations satisfied in one act (1)     3,644,967       1,946,836       2,867,552       1,443,706  
Performance obligations satisfied over certain time period     10,225       5,793       8,044       102,524  
      3,655,192       1,952,629       2,875,596       1,546,230  

 

(1) Includes principally account maintenance fees, agreements and credit card commissions.

 

 

 

  84  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

14. DIFFERENCE IN QUOTED PRICES OF GOLD AND FOREIGN CURRENCY

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated
from beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Translation of foreign currency assets and liabilities to pesos     (1,446,555 )     (1,445,083 )     329,679       258,010  
Income from foreign currency Exchange     443,868       317,873       199,315       90,245  
      (1,002,687 )     (1,127,210 )     528,994       348,255  

 

15. OTHER OPERATING INCOME

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated from
beggining
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Services     1,708,754       892,328       1,456,544       688,744  
Sale of investment property and other non-financial assets     137,123       27,202       10,313       10,313  
Other adjustments and interest from other receivables     79,638       39,806       25,408       15,719  
Initial recognition of loans     49,749       29,292                  
Sale of property, plant and equipment     1,450       731       821       254  
Other     282,349       168,884       299,296       174,923  
      2,259,063       1,158,243       1,792,382       889,953  

 

16. EMPLOYEE BENEFITS

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining 
year up to 
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated from 
beggining 
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Remunerations     3,047,406       1,662,263       2,485,167       1,306,028  
Social Security Contributions     604,346       335,957       488,885       245,062  
Compensations and bonuses to employees     307,339       168,114       192,148       93,716  
Employee services     92,389       47,969       92,735       52,218  
      4,051,480       2,214,303       3,258,935       1,697,024  

 

 

 

  85  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

17. ADMINISTRATION EXPENSES

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated from 
beggining 
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Taxes     406,124       201,302       301,887       156,626  
Maintenance, conservation and repair expenses     336,298       185,454       228,781       118,700  
Security services     284,705       152,259       220,610       110,423  
Fees to Directors and Syndics     280,021       133,011       159,318       85,861  
Electricity and communications     212,692       109,198       146,401       74,441  
Other fees     211,607       114,454       147,329       78,870  
Leases     127,666       68,321       96,603       49,069  
Advertising and publicity     82,013       52,863       77,399       36,003  
Representation, travel and transportation expenses     41,190       22,375       29,198       15,991  
Stationary and office supplies     20,966       10,558       16,966       8,542  
Insurance     17,609       9,816       17,329       8,531  
Hired administrative services     2,979       2,093       5,167       715  
Other     629,027       329,089       433,245       234,303  
      2,652,897       1,390,793       1,880,233       978,075  

 

18. OTHER OPERATING EXPENSES

 

    06/30/2018     06/30/2017  
Description   Accumulated
from beggining
year up to
06/30/2018
    Quarter
ended
06/30/2018
    Accumulated from 
beggining 
year up to
06/30/2017
    Quarter
ended
06/30/2017
 
Gross turnover tax     2,149,319       1,145,035       1,401,149       719,858  
Charges for other provisions     317,921       167,968       155,645       90,230  
Deposit Guarantee Fund contributions     122,578       63,600       91,742       46,404  
Donations     40,726       21,114       39,275       20,342  
Insurance claims     21,565       11,485       12,288       7,522  
Initial loan recognition                     48,951       41,935  
Other     1,260,931       685,503       950,883       497,887  
      3,913,040       2,094,705       2,699,933       1,424,178  

 

19. ADDITIONAL DISCLOSURES IN THE STATEMENT OF CASH FLOWS

 

The Statement of Cash Flows presents the changes in cash and cash equivalents derived from operating activities, investing activities and financing activities during the period. For the preparation of the Statement of Cash Flows the Bank adopted the indirect method for Operating Activities and the direct method for Investment Activities and Financing Activities.

 

The Bank considers as “Cash and cash equivalents” the item Cash and Deposits in Banks and those financial assets that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

For the preparation of the Statement of Cash Flows the Bank considered the following:

 

 

 

  86  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

- Operating activities: are the normal revenue-producing activities of the Bank as well as other activities that cannot be qualified as investing or financing activities.

 

- Investing activities: are the acquisition, sale and disposal by other means of long-term assets and other investments not included in cash and cash equivalents.

 

- Financing activities: are activities that result in changes in the size and composition of the shareholders equity and liabilities of the Bank and that are not part of the operating or investing activities.

 

The table below presents the reconciliation between the item “Cash and cash equivalents” in the Statement of Cash Flows and the relevant accounting items of the Balance Sheet:

 

    06/30/2018     12/31/2017     06/30/2017     12/31/2016  
Cash and Deposits in Banks     45,389,232       32,473,987       33,698,812       32,992,475  
Debt securities at fair value             44               9,585  
Other debt securities     36,713,920       4,828,008       15,646,800       14,148,240  
      82,103,152       37,302,039       49,345,612       47,150,300  

 

20. CAPITAL STOCK

 

Note 20 to the condensed consolidated interim Financial Statements, presents the changes in the Bank´s capital stock.

 

21. DEPOSIT GUARANTEE INSURANCE

 

Note 22 to the condensed consolidated interim Financial Statements describes the Deposit Guarantee Insurance System and the scope thereof.

 

Banco Macro SA holds an 8.4020% interest in the capital stock according to the percentages disclosed by Central Bank Communiqué “B” 11681 issued on March 20, 2018.

 

22. RESTRICTED ASSETS

 

As of June 30, 2018 and December 31, 2017 the following Bank’s assets are restricted:

 

Item   06/30/2018     12/31/2017  
             
Debt securities at fair value through profit or loss and other debt securities                
· Central Bank of Argentina Internal Bills in pesos, maturity 19-09-2018 as of June 30, 2018 and maturity 02-21-2018 as of December 31, 2017 securing the fulfillment of the offsetting forward exchange buy and sell operations.       156,990       53,059  
· Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 used as security in favor of Sedesa (1).     121,368       117,454  
· Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 securing the regional economies Competitiveness Program – BID Loan No. 3174/OC-AR.     86,851       98,541  
· Central Bank of Argentina Internal Bills in pesos, maturity 09-19-2018 as of June 30, 2018 and maturity 02/21/2018 as of December 31, 2017 securing operations through negotiation secured transaction Segment as the main counterparty of the MAE.     50,407       9,647  
· Discount bonds in pesos regulated by Argentinean legislation, maturing 2033, for minimum counterpart required for Agents to act in the new categories contemplated under Resolution No. 622/13 of the CNV.     11,580       13,139  

 

 

 

  87  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

 

Item (contd.)   06/30/2018     12/31/2017  
             

· Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 securing BID Loan of the Province of San Juan No, 2763/OC-AR.

    7,817       8,869  
· Discount bonds in pesos regulated by Argentinean legislation, maturing 2033 securing the sectorial Credit Program of the Province of San Juan, Production investment financing fund.     7,672       8,704  

· Secured Bonds under Presidential Decree No, 1579/02 as security for a loan received from Banco de Inversión y Comercio Exterior SA (Bice).

            4,270  
· Other government and private securities.     1,499       2,331  
        Subtotal Debt securities at fair value through profit or loss and other debt securities     444,184       316,014  
                 
Other financial assets                
· Sundry debtors – foreclosure within the scope of the claim filed by the DGR against the City of Buenos Aires for differences in gross turnover tax.     827       827  
Subtotal other financial assets     827       827  
                 
Loans and other financing – Non-financial sector and foreign residents                
· Interests derived from contributions made as protector (2)     90,000       90,000  
Subtotal Loans and other financing - Non-financial private sector and foreign residents     90,000       90,000  
                 
Financial assets delivered as guarantee                
· Special guarantee checking accounts opened in Central Bank for transactions related to the electronic clearing houses and similar entities.     4,520,583       3,750,952  
· Forward purchase for repo transactions.     2,034,516       2,993,719  
· Guarantee deposits related to credit and debit card transactions.     573,688       592,890  
· Other guarantee deposits.     5,279       6,450  
Subtotal Other financial assets delivered as guarantee     7,134,066       7,344,011  
                 
Other non-financial assets                
· Real property related to call options sold     115,888       222,023  
Subtotal Other non-financial assets     115,888       222,023  
Total     7,784,965       7,972,875  

 

(1) As replacement for the preferred shares of former Nuevo Banco Bisel SA to secure to Sedesa the price payment and the fulfillment of all the obligations assumed in the purchase and sale agreement dated May 28, 2007, maturing on August 11, 2021.

 

(2) In order to keep tax benefits related to these contributions, they must be maintained between two and three years from the date they were made. The same correspond to the following risk funds: Garantizar SGR Risk Fund, Los Grobo SGR Risk Fund and Avaluar SGR Risk Fund as of June 30, 2018 and December 31, 2017.

 

Additionally, as of December 31, 2016, the amount of restricted assets was 3,877,051.

 

 

 

  88  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

23. TRUST AGREEMENTS

 

Note 24 to the condensed consolidated interim Financial Statements describes the different trust agreements according to the business purpose sought by the Bank, which may be summarized as follows:

 

1) Financial trusts for investment purposes

 

Debt securities include mainly prepayments towards the placement price of trust securities of the financial trusts under public offerings, made by the Bank through underwriting agreements (Consubond, Garbarino, Secubono, Accicom, Mila, Credicuotas Consumo, Credimas, Pvcred and Naldo Lombardi). The assets managed for these trusts are mainly related to securitizations of consumer loans. Trust securities are placed once the public offering is authorized by the CNV. Upon expiry of the placement period, once all trust securities have been placed on the market, the Bank recovers the disbursements made, plus an agreed-upon compensation (“underwriting Price”). If after making the best efforts, such trust securities cannot be placed, the Bank (“Underwriter”) will retain the securities subject to underwriting.

 

As of June 30, 2018 and December 31, 2017 and 2016 the debt securities administered by the Bank with investment purposes and certificate of participation in financial trusts total 1,023,502, 1,003,312 and 719,918, respectively.

 

According to the latest accounting information available as of the date of issuance of these condensed separate interim Financial Statements, the corpus assets of the trusts, exceed the carrying amount in the related proportions.

 

2) Trusts created using financial assets transferred by the Bank

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the date of the accompanying condensed separate interim Financial Statements, the assets managed through Macro Fiducia SA of this type of trusts amount to 69,444, 116,387 and 58,633, respectively.

 

3) Trusts guaranteeing loans granted by the Bank

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the date of the accompanying condensed separate interim Financial Statements, the assets managed by the Bank amount to 490,300, 328,268 and 451,569, respectively.

 

4) Trusts in which the Bank acts as Trustee (Management)

 

As of June 30, 2018 and December 31, 2017 and 2016, considering the latest available accounting information as of the date of the accompanying Financial Statements, the assets managed by the Bank amount to 1,413,939, 1,302,687 and 1,396,421, respectively.

 

24. COMPLIANCE WITH CNV STANDARDS

 

Considering Banco Macro SA’s current operations, and according to the different categories of agents established by CNV General Resolution 622, the Bank is registered with this agency as agent for the custody of collective investment products of mutual funds (AC PIC FCI for their acronyms in Spanish language), comprehensive clearing and settlement agent and trading agent (ALyC and AN – comprehensive, for their acronyms in Spanish language), financial trustee Agent (FF for its acronym in Spanish language ) and Guarantee Entity (in the process of being registered).

 

Additionally, the Bank’s shareholders’ equity exceeds the minimum amount required by this regulation, amounting to 32,000, as well as the minimum counterpart required of 11,000, which the Bank paid-in with government securities as described in Note 22 to the accompanying condensed separate interim Financial Statements.

In addition, Note 25.2 to the condensed consolidated interim Financial Statements presents the general policy of documents in custody, describing which information has been disclosed and delivered to third parties for custody.

 

 

 

  89  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

25. ACCOUNTING ITEMS THAT IDENTIFY THE COMPLIANCE WITH MINIMUM CASH REQUIREMENTS

 

The items recognized by the Bank to constitute the minimum cash requirement effective for June 2018 are listed below, indicating the balances as of month-end of the related items:

 

Description   Banco
Macro SA
 
       
Cash and deposits in banks        
Amounts in Central Bank accounts     35,343,995  
Other debt securities        
Government securities computable for the minimum cash requierements     3,373,000  
Financial assets delivered as guarantee        
Special guarantee accounts with the Central Bank     4,520,583  
Total     43,237,578  

 

26. PENALTIES APPLIED TO THE FINANCIAL ENTITY AND SUMMARY PROCEEDINGS INITIATED BY THE CENTRAL BANK

 

Note 27 to the condensed consolidated interim Financial Statements describes the penalties applied and the proceedings filed by the Central Bank against the Bank, classified as follows:

 

- Summary proceedings filed by the Central Bank
- Penalties applied by the Central Bank
- Penalties applied by the UIF

 

The Bank’s Management and its legal advisors consider no further significant accounting effects could arise from the final outcome of the above mentioned judicial proceedings other than those disclosed in the accompanying Financial Statements.

 

27. ISSUANCE OF CORPORATE BONDS

 

Note 28 to the condensed consolidated interim Financial Statements describes liabilities for corporate bonds recognized by the Bank as of June 30, 2018 and December 31, 2017, under the terms and conditions therein expressed.

 

The liabilities amounts for corporate bonds recorded by the Bank in these condensed separate interim Financial Statements are as follows:

 

Corporate Bonds   Original value     Residual face 
value as of 
06/30/2018
    06/30/2018     12/31/2017  
                         
Subordinated Resettable – Class A     USD   400,000,000       USD   400,000,000       11,646,217       7,565,759  
Non-subordinated – Class B     Ps.  4,620,570,000       Ps.  4,620,570,000       4,710,409       4,712,216  
Non-subordinated – Class C     Ps.  3,207,500,000       Ps.  3,207,500,000       3,425,571          
Total                     19,782,197       12,277,975  

 

Additionally, as of December 31, 2016, the Bank recognized Class A subordinated resettable corporate bonds for 6,376,537 and Class 2 non-subordinated corporate bonds for 1,745,851.

 

 

 

  90  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

28. ACCOUNTING ITEMS OUTSIDE THE BALANCE SHEET

 

In addition to the expressed in Note 4, the Bank recognizes different transactions outside its Balance sheet, pursuant to the Central Bank standards.

 

As of June 30, 2018 and December 31, 2017 and 2016, the main balances outside the Bank’s Balance sheet include the preferred and non-preferred guarantees received from customers, under the applicable rules in force in this matter, to secure the loans transactions and other financing, the value of which totals 43,174,628, 38,139,862 and 21,261,105, respectively; custody of government and private bonds and of other third-party assets, the value of which totals 88,117,824, 70,772,660 and 41,094,883, respectively; checks pending clearance amount to 1,279,844, 1,266,305 and 1,134,949, respectively and outstanding checks not yet paid amount to 2,670,988, 2,032,128 and 1,852,989, respectively.

 

29. TAX AND OTHER CLAIMS

 

29.1. Tax claims

 

Note 30.1 to the consolidated Financial Statements describes the most relevant claims pending resolution and filed by AFIP and the tax authorities of the relevant jurisdiction.

 

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

 

29.2. Other claims

 

Note 30.2 to the consolidated financial statements describes the most relevant claims pending resolution and filed by the different consumer protection associations.

 

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

 

30. RESTRICTION ON PROFIT DISTRIBUTION

 

Note 31 to the Condensed consolidated interim Financial Statements describes the main legal provisions regulating the restriction on profit distribution.

 

31. CAPITAL MANAGEMENT AND CORPORATE GOVERNANCE TRANSPARENCY POLICY AND RISKS MANAGEMENTS

 

Note 32 to the condensed consolidated interim Financial Statements describes the main guidelines of the Bank as to capital management and corporate governance transparency policy and risks management.

 

Aditionally, the table below shows the minimum capital requirements effective for the month of June 2018, together with the integration thereof (computable equity) as of the end of such month:

 

Description   06/30/2018  
Minimum capital requirements     15,975,395  
Computable equity     55,839,473  
Capital surplus     39,864,078  

 

 

 

  91  

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish – See Note 34)

(Figures expressed in thousands of Pesos)

 

32. CHANGES IN THE ARGENTINE MACROECONOMIC ENVIRONMENT OF THE FINANCIAL AND CAPITAL SYSTEM

 

The international macroeconomic environment in general and the one in which the Bank operates and its impacts are described in Note 34 to the Condensed consolidated interim Financial statements.

 

33. EVENTS AFTER REPORTING PERIOD

 

No events occurred between the end of the reporting period and the issuance of the accompanying interim Financial Statements that may materially affect the financial position or the profit and loss for the period, not disclosed in the accompanying condensed separate interim Financial Statements.

 

34. ACCOUNTING PRINCIPLES – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

 

These condensed separate interim Financial Statements are presented in accordance with the accounting framework established by the Central, as mention in Note 3. These accounting standards may not conform with accounting principles generally accepted in other countries.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  92  

 

 

EXHIBIT A

 

SEPARATE DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Holdings     Position  
    06/30/2018     12/31/2017     06/30/2018  
Name   Fair
Value
    Fair
Value
Level
    Book
balance
    Book balance     Position
without
options
    Options     Final
position
 
DEBT SECURITIES AT FAIR VALUE TROUGH PROFIT OR LOSS                                                        
                                                         
- Local                                                        
Government securities                                                        
Discount bonds denominated in pesos at 5.83% - Maturity: 12-31-2033             1       322,442       89,691       322,442               322,442  
Debt Securities of Province of Río Negro in pesos - Badlar Private + 500 basis point - Maturity: 07-06-2020             2       115,131       281,881       115,131               115,131  
Consolidation bonds in pesos  8° Serie - Maturity: 10-04-2022             1       109,230       105,882       109,230               109,230  
Federal government treasury bonds in pesos  - Maturity: 10-03-2021             1       100,390               100,390               100,390  
Par bonds denominated in pesos - Maturity: 12-31-2038             1       74,456       38,677       74,456               74,456  
Federal government bonds in pesos - Badlar Private + 200 basis point - Maturity 04-03-2022             1       55,108       292       55,108               55,108  
Consolidation bonds in pesos  6° Serie at 2% - Maturity: 03-15-2024             1       50,762       4       50,762               50,762  
Federal government bonds in US dollars 7.25% - Maturity: 04-22-2026             2       46,611               46,611               46,611  
Secured bonds in pesos - Badlar Private + 250 basis point - Maturity: 03-11-2019             1       30,462       3,012       30,462               30,462  
Federal government bonds in US dollars 8.75% - Maturity: 05-07-2024             1       30,188       8,934       30,188               30,188  
Other                     103,135       191,033       175,720               175,720  
                                                         
Subtotal local government securities                     1,037,915       719,406       1,110,500               1,110,500  
                                                         
Private securities                                                        
Debt Securities in Financial Class A Consubond 143             3       104,099               104,099               104,099  
Debt Securities in Financial Trusts Chubut Regalías Hidrocarburíferas - Maturity: 07-01-2020             3       47,874       34,932       47,874               47,874  
Securities of public service companies             3       1,070       909       1,070               1,070  
Corporate Bonds Banco de Inversión y Comercio Exterior S.A. Class 6                             98,602                          
Corporate Bonds Inversora Juramento S.A. Class 6                             80,938                          
Corporate Bonds Rombo Compañía Financiera S.A. Series 38                             40,584                          
                                                         
Subtotal local private securities                     153,043       255,965       153,043               153,043  
                                                         
TOTAL DEBT SECURITIES AT FAIR VALUE TROUGH PROFIT OR LOSS                     1,190,958       975,371       1,263,543               1,263,543  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  93  

 

 

EXHIBIT A

(Continued)

 

SEPARATE DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Holdings     Position  
    06/30/2018     12/31/2017     06/30/2018  
Name   Fair
Value
    Fair
Value
Level
    Book
balance
    Book balance     Position
without
options
  Options    Final
position
 
OTHER DEBT SECURITIES                                                  
Measured at fair value thought other comprehensive income                                                  
- Local                                                  
Government securities                                                  
International bonds of the Argentina Republic in US dollars at 7.125 - Maturity: 06-28-2117             1       66,600               66,600         66,600  
Discount bonds denominated in pesos at 5.83% - Maturity: 12-31-2033             1       7,238               7,238         7,238  
Consolidation bonds in pesos 8° Serie - Maturity: 10-04-2022                             49,726                    
Subtotal local government securities                     73,838       49,726       73,838         73,838  
                                                   
Central Bank of Argentina Bills                                                  
Central Bank of Argentina Internal Bills in pesos – Maturity: 07-18-2018             1       31,584,972       175,645       33,071,625         33,071,625  
Central Bank of Argentina Internal Bills in pesos – Maturity: 08-15-2018             1       5,032,299       777       5,507,577         5,507,577  
Central Bank of Argentina Internal Bills in pesos – Maturity: 09-19-2018             1       875,153       6,949       875,153         875,153  
Central Bank of Argentina Internal Bills in pesos – Maturity: 11-21-2018             1       103               103         103  
Central Bank of Argentina Internal Bills in pesos – Maturity: 10-17-2018             1       82               82         82  
Central Bank of Argentina Internal Bills in pesos – Maturity: 03-21-2018                             6,333,072                    
Central Bank of Argentina Internal Bills in pesos – Maturity: 01-17-2018                             6,045,824                    
Central Bank of Argentina Internal Bills in pesos – Maturity: 05-16-2018                             5,769,624                    
Central Bank of Argentina Internal Bills in pesos – Maturity: 04-18-2018                             5,626,984                    
Central Bank of Argentina Internal Bills in pesos – Maturity: 02-21-2018                             5,341,770                    
Other                             3,329,550                    
Subtotal Central Bank of Argentina Bills                     37,492,609       32,630,195       39,454,540         39,454,540  
                                                   
Total Other debt securities measured at fair value thought other comprehensive income                     37,566,447       32,679,921       39,528,378         39,528,378  
                                                   
Measured at amortized cost                                                  
- Local                                                  
Debt securities                                                  
International bonds of the Argentina Republic in pesos - Fix rate 26 - Maturity: 11-21-2020     3,375,965       2       3,395,630               3,395,630         3,395,630  
Discount bonds denominated in pesos at 5.83% - Maturity: 12-31-2033     116,506       1       121,368       117,454       121,368         121,368  
Secured bonds in pesos under Presidential Decree No. 1579/02 at 2% - Maturity: 02-04-2018                             4,270                    
                                                   
Subtotal local Debt secutities     3,492,471               3,516,998       121,724       3,516,998         3,516,998  
                                                   
Private securities                                                  
Financial Trust Underwriting Naldo Lombardi     89,064       3       89,064               89,064         89,064  
Financial Trust Underwriting Mila     72,603       3       72,603       32,955       72,603         72,603  
Financial Trust Underwriting PVCRED     60,647       3       60,647               60,647         60,647  
Financial Trust Underwriting Credicuotas Consumo     57,713       3       57,713       50,223       57,713         57,713  
Financial Trust Underwriting Accicom Préstamos Personales     5,898       3       5,898       51,041       5,898         5,898  
Financial Trust Underwriting Consubond                             360,363                    
Financial Trust Underwriting Secubono                             110,554                    
Financial Trust Underwriting Garbarino                             68,070                    
Financial Trust Underwriting Agrocap                             46,482                    
Financial Trust Underwriting Best Consumer Directo                             32,136                    
Other                             57,732                    
                                                   
Subtotal local Private securities     285,925               285,925       809,556       285,925         285,925  
                                                   
Total other debt securities measured at amortized cost                     3,802,923       931,280       3,802,923         3,802,923  
                                                   
TOTAL OTHER DEBT SECURITIES     3,778,396               41,369,370       33,611,201       43,331,301         43,331,301  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  94  

 

  

EXHIBIT A

(Continued)

 

SEPARATE DETAIL OF GOVERNMENT AND PRIVATE SECURITIES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Holdings     Position  
    06/30/2018     12/31/2017     06/30/2018  
Name   Fair
Value
    Fair
Value
Level
    Book
balance
    Book balance     Position
without
options
    Options     Final
position
 
Equity Instruments                                                        
                                                         
Measured at fair value trough profit or loss                                                        
Local                                                        
Mercado Abierto Electrónico S.A.               3       22,292       18,441       22,292                    22,292  
C.O.E.L.S.A.             3       4,826       3,048       4,826               4,826  
Sedesa             3       3,975       3,909       3,975               3,975  
Argentina Clearing S.A.             3       3,217       3,217       3,217               3,217  
Mercado a Término Rosario S.A.             3       2,569       2,569       2,569               2,569  
Sanatorio Las Lomas S.A.             3       600       404       600               600  
Proin S.A.             3       513       513       513               513  
Provincanje S.A.             3       379       271       379               379  
El Taura S.A.             3       185       185       185               185  
Argencontrol S.A.             3       179       184       179               179  
Other                     262       141       262               262  
Subtotal local                     38,997       32,882       38,997               38,997  
                                                         
Foreign                                                        
Banco Latinoamericano de Comercio Exterior S.A.             1       5,187       3,688       5,187               5,187  
Sociedad de Telecomunicaciones Financieras Interbancarias Mundiales             3       740       315       740               740  
                                                         
Subtotal foreign                     5,927       4,003       5,927               5,927  
                                                         
Total measured at fair value trough profit or loss                     44,924       36,885       44,924               44,924  
                                                         
Total Equity Instruments                     44,924       36,885       44,924               44,924  
                                                         
TOTAL GOVERNMENT AND PRIVATE SECURITIES                     42,605,252       34,623,457       44,639,768               44,639,768  

 

As of December 31, 2016, debt securities at fair value through profit or loss amounted to 275,386, Other Debt Securities to 17,974,087 and Equity instruments to 337,309.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  95  

 

 

EXHIBIT B

 

SEPARATE CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
                   
COMMERCIAL                        
                         
In normal situation     58,716,286       48,622,186       34,128,374  
With Senior “A” guarantees and counter-guarantees     3,355,302       3,795,181       2,538,782  
With Senior “B” guarantees and counter-guarantees     9,182,153       7,426,689       5,119,268  
Without Senior guarantees or counter-guarantees     46,178,831       37,400,316       26,470,324  
                         
Subject to special monitoring     293,684       298,886       27,887  
In observation                        
With Senior “A” guarantees and counter-guarantees     3,484       6,042          
With Senior “B” guarantees and counter-guarantees     71,681       66,613       18,875  
Without Senior guarantees or counter-guarantees     218,519       226,231       9,012  
                         
Troubled     195,236       37,164       50,039  
With Senior “A” guarantees and counter-guarantees     450       3,441          
With Senior “B” guarantees and counter-guarantees     98,003       22,971       50,039  
Without Senior guarantees or counter-guarantees     96,783       10,752          
                         
With high risk of insolvency     171,609       143,881       137,431  
With Senior “A” guarantees and counter-guarantees     3,178       729       1,882  
With Senior “B” guarantees and counter-guarantees     129,522       86,437       61,374  
Without Senior guarantees or counter-guarantees     38,909       56,715       74,175  
                         
Irrecoverable     437               4  
Without Senior guarantees or counter-guarantees     437               4  
                         
Subtotal Commercial     59,377,252       49,102,117       34,343,735  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  96  

 

 

EXHIBIT B

(Continued)

 

SEPARATE CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    6/30/2018     12/31/2017     12/31/2016  
                   
CONSUMER AND MORTGAGE                        
                         
Performing     86,303,182       74,624,457       48,698,468  
With Senior “A” guarantees and counter-guarantees     1,888,617       2,129,722       767,733  
With Senior “B” guarantees and counter-guarantees     9,542,256       6,847,800       2,483,434  
Without Senior guarantees or counter-guarantees     74,872,309       65,646,935       45,447,301  
                         
Low risk     1,362,407       941,697       502,812  
With Senior “A” guarantees and counter-guarantees     26,027       6,359       1,486  
With Senior “B” guarantees and counter-guarantees     60,325       31,801       20,622  
Without Senior guarantees or counter-guarantees     1,276,055       903,537       480,704  
                         
Medium risk     870,563       544,375       390,339  
With Senior “A” guarantees and counter-guarantees     6,231       1,447       3,188  
With Senior “B” guarantees and counter-guarantees     15,967       13,506       7,634  
Without Senior guarantees or counter-guarantees     848,365       529,422       379,517  
                         
High risk     541,219       397,696       268,927  
With Senior “A” guarantees and counter-guarantees     2,016       496       2,099  
With Senior “B” guarantees and counter-guarantees     23,933       18,106       20,284  
Without Senior guarantees or counter-guarantees     515,270       379,094       246,544  
                         
Irrecoverable     186,306       139,268       87,190  
With Senior “A” guarantees and counter-guarantees     371                  
With Senior “B” guarantees and counter-guarantees     18,358       17,924       16,642  
Without Senior guarantees or counter-guarantees     167,577       121,344       70,548  
                         
Irrecoverable according to Central Bank's rules     484       206       210  
Without Senior guarantees or counter-guarantees     484       206       210  
                         
Subtotal consumer and mortgage     89,264,161       76,647,699       49,947,946  
Total     148,641,413       125,749,816       84,291,681  

 

This exhibit disclosures the contractual figures in accordance as established by Central Bank. The conciliation with the condensed separated interim balance sheet, is listed below:

 

    As of 06/30/2018     As of 12/31/2017     As of 12/31/2016  
Loans and other financing     143,296,147       122,173,846       81,475,324  
+ Allowances for loans and other financing losses     3,074,940       2,470,302       1,662,752  
+ Adjustment NIIF     253,830       279,293       233,242  
+ Debt securities of financial trust - Measurement at amortized cost     288,813                  
+ Corporate bonds             226,598       277,666  
Guarantees provided and contingent liabilities     1,727,683       599,777       642,697  
Total computable concepts     148,641,413       125,749,816       84,291,681  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  97  

 

 

EXHIBIT C

 

SEPARATE CONCENTRATION OF LOANS AND FINANCING-FACILITIES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
Number of customers   Cut off
balance
    % of total
portfolio
    Cut off
balance
    % of total
portfolio
    Cut off
balance
    % of total
portfolio
 
10 largest customers     11,704,861       7.87       11,151,842       8.87       6,353,953       7.54  
50 next largest customers     15,786,059       10.62       11,488,939       9.14       8,920,400       10.58  
100 next largest customers     9,808,056       6.60       7,505,554       5.97       5,525,254       6.55  
Other customers     111,342,437       74.91       95,603,481       76.02       63,492,074       75.33  
                                                 
Total (1)     148,641,413       100.00       125,749,816       100.00       84,291,681       100.00  

 

(1) See Exhibit B

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  98  

 

  

EXHIBIT D

 

SEPARATE BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months
and up to
6 months
    Over 6
months
and up to
12 months
    Over 12
months
and up to
24 months
    Over 24
months
    Total  
Non-financial government sector - Central Bank     212       52,346       305,172       326,580       624,373       943,173       643,120       2,894,976  
                                                                 
Financial sector             2,077,667       337,751       374,487       767,441       1,018,746       55,823       4,631,915  
                                                                 
Non-financial private sector and foreign residents     1,088,888       43,444,961       17,871,178       17,951,618       22,941,106       30,813,182       58,959,566       193,070,499  
                                                                 
Total     1,089,100       45,574,974       18,514,101       18,652,685       24,332,920       32,775,101       59,658,509       200,597,390  

 

SEPARATE BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months
and up to
6 months
   

Over 6

months
and up to
12 months

    Over 12
months
and up to
24 months
    Over 24
months
    Total  
Non-financial government sector - Central Bank             51,131       219,501       183,337       543,855       982,347       876,255       2,856,426  
                                                                 
Financial sector             1,844,657       450,276       710,764       755,578       1,005,476       228,185       4,994,936  
                                                                 
Non-financial private sector and foreign residents     847,585       34,163,062       17,642,583       16,550,145       18,000,025       26,527,720       46,828,878       160,559,998  
                                                                 
Total     847,585       36,058,850       18,312,360       17,444,246       19,299,458       28,515,543       47,933,318       168,411,360  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  99  

 

 

EXHIBIT D

(Continued)

 

SEPARATE BREAKDOWN OF LOANS AND OTHER FINANCING BY TERMS

AS OF DECEMBER 31, 2016

(Translation of financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity        
Item   Matured     Up to 1
month
    Over 1
month and
up to 3
months
   

Over 3
months

and up to
6 months

    Over 6
months
and up to
12 months
   

Over 12

months

and up to
24 months

    Over 24
months
    Total  
Non-financial government sector - Central Bank             747,993       124,713       384,876       142,487       272,196       230,432       1,902,697  
                                                                 
Financial sector             403,961       453,069       486,055       384,924       239,092       52,674       2,019,775  
                                                                 
Non-financial private sector and foreign residents     512,311       27,908,295       12,322,113       11,244,077       12,270,971       16,758,463       22,362,248       103,378,478  
                                                                 
Total     512,311       29,060,249       12,899,895       12,115,008       12,798,382       17,269,751       22,645,354       107,300,950  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  100  

 

 

EXHIBIT F

 

SEPARATE CHANGE IN PROPERTY, PLANT AND EQUIPMENT

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
beginning
    Useful life               Depreciation for the period     Residual
value at
 
Item   of fiscal
year
    estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
period
    At the
end
    end of the
 period
 
Cost measurement                                                                    
Buildings     4,096,890     50     159,716       101,574       339,529       9,154       43,933       374,308       3,780,724  
Furniture and facilities     339,327     10     10,800       951       126,282               16,418       142,700       206,476  
Machinery and equipment     939,919     5     204,916       110,655       509,167               86,990       596,157       438,023  
Vehicles     109,825     5     13,365       3,502       75,696       2,767       8,434       81,363       38,325  
Work in progress     2,068,485           604,669       31,971                                       2,641,183  
                                                                     
Total property, plant and equipment     7,554,446           993,466       248,653       1,050,674       11,921       155,775       1,194,528       7,104,731  

 

SEPARATE CHANGE IN PROPERTY, PLANT AND EQUIPMENT

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
                    Depreciation for the fiscal year     Residual  
Item   beginning
of fiscal
year
    Useful life
estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At the
end
    value at
end of the
fiscal year
 
Cost measurement                                                                    
Buildings (1)     4,066,401     50     38,307       7,818       216,134       25,896       66,260       256,498       3,840,392  
Furniture and facilities     302,023     10     37,304               94,493               31,789       126,282       213,045  
Machinery and equipment     713,262     5     229,575       2,918       370,753       2,548       140,962       509,167       430,752  
Vehicles     91,142     5     23,587       4,904       65,079       3,800       14,417       75,696       34,129  
Work in progress     1,210,316           899,056       40,887                                       2,068,485  
                                                                     
Total property, plant and equipment     6,383,144           1,227,829       56,527       746,459       32,244       253,428       967,643       6,586,803  

 

As of December 31, 2016, the deemed cost of the Bank´s buildings amounted to 3,837,616 and the adjustment for this concept up to 3,081,894.

 

Delfin Jorge Ezequiel Carballo
Chairman

  101  

 

 

EXHIBIT F

(Continued)

 

SEPARATE CHANGE IN INVESTMENT PROPERTY

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
beginning
    Useful life               Depreciation for the period    

Residual

value at

 
Item   of fiscal
year
    estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
period
    At the
end
    end of the
period
 
Cost measurement                                                                    
Others investment properties     1,935,289     50     296,544       517,551       15,611       1,736       2,733       16,608       1,697,674  
                                                                     
Total investment property     1,935,289           296,544       517,551       15,611       1,736       2,733       16,608       1,697,674  

 

SEPARATE CHANGE IN INVESTMENT PROPERTY

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
                    Depreciation for the fiscal year     Residual  
Item   beginning
of fiscal
year
    Useful life
estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At the
end
    value at
end of the
fiscal year
 
Cost measurement                                                                    
Others investment properties (1)     1,726,340     50     237,381       28,432       17,879       7,784       5,516       15,611       1,919,678  
                                                                     
Total investment property     1,726,340           237,381       28,432       17,879       7,784       5,516       15,611       1,919,678  

 

As of December 31, 2016, the deemed cost of the Bank´s buildings amounted to 2,891,947 and the adjustment for this concept up to 2,353,159. Part of this adjustment is recorded on Property, Plant and Equipment in Work in progress.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  102  

 

 

EXHIBIT G

 

INDIVIDUAL CHANGE IN INTANGIBLE ASSETS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
beginning
    Useful life               Depreciation for the period     Residual
value at
 
Item  

of fiscal

year

    estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
period
    At the
end
    end of the
period
 
Cost measurement                                                                    
Licenses     312,484     5     74,080       6,064       163,527               22,510       186,037       194,463  
Other intangible assets     1,361,934     5     51,946               718,353       206,790       123,733       635,296       778,584  
                                                                     
Total intangible assets     1,674,418           126,026       6,064       881,880       206,790       146,243       821,333       973,047  

 

INDIVIDUAL CHANGE IN INTANGIBLE ASSETS

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Origination
Value at
                    Depreciation for the fiscal year     Residual  
Item   beginning
of fiscal
year
    Useful life
estimated
in years
  Increases     Decreases     Accumulated     Decrease     Of the
fiscal
year
    At the
end
    value at
end of the
fiscal year
 
Cost measurement                                                                    
Goodwill - Bussiness combination     20,609           35,596       56,205                                          
Licenses     161,335     5     151,289       140       54,331       2       43,400       97,729       214,755  
Other intangible assets     1,023,323     5     645,135       306,524       515,675       156,867       359,545       718,353       643,581  
                                                                     
Total investment property     1,205,267           832,020       362,869       570,006       156,869       402,945       816,082       858,336  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  103  

 

 

EXHIBIT H

 

SEPARATE DEPOSIT CONCENTRATION

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
Number of customers   Outstanding
balance
    % of total
portfolio
    Outstanding
balance
    % of total
portfolio
    Outstanding
balance
    % of total
portfolio
 
                                     
10 largest customers     12,510,721       7.58       8,879,036       6.69       6,187,859       6.04  
50 next largest customers     8,652,470       5.24       6,701,842       5.05       6,415,928       6.26  
100 next largest customers     5,455,304       3.31       4,617,386       3.48       3,954,135       3.86  
Other customers     138,397,964       83.87       112,517,910       84.78       85,940,701       83.84  
                                                 
Total     165,016,459       100.00       132,716,174       100.00       102,498,623       100.00  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  104  

 

 

EXHIBIT I

 

SEPARATE BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity  
Item   Up to 1
month
   

Over 1
month and

up to 3
months

   

Over 3
months
and up to

6 months

    Over 6
months
and up to
12
months
    Over 12
months
and up to
24
months
    Over 24
months
    Total  
                                           
Deposits     140,149,530       20,509,748       3,975,160       1,585,970       77,468       10,231       166,308,107  
                                                         
From the non-financial government sector     12,712,722       985,836       264,634       18,165       29               13,981,386  
From the financial sector     125,371                                               125,371  
From the non-financial private sector and foreign residents     127,311,437       19,523,912       3,710,526       1,567,805       77,439       10,231       152,201,350  
                                                         
Derivative instruments     28,425       2,825       2,901                               34,151  
                                                         
Repo Transactions     1,831,112                                               1,831,112  
                                                         
Other financial institutions     1,831,112                                               1,831,112  
Other financial liabilities     9,984,358       17,151       10,513       15,818       24,234       152,239       10,204,313  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     504,708       644,278       441,244       83,913       89,444       168,174       1,931,761  
                                                         
Issued corporate bonds     206,929               589,783       824,565       1,653,749       10,288,110       13,563,136  
                                                         
Subordinated corporate bonds                     369,951       389,633       779,266       16,609,908       18,148,758  
                                                         
Total     152,705,062       21,174,002       5,389,552       2,899,899       2,624,161       27,228,662       212,021,338  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  105  

 

 

EXHIBIT I

(Continued)

 

SEPARATE BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity  
Item   Up to 1
month
    Over 1
month and
up to 3
months
    Over 3
months and
up to 6
months
   

Over 6
months and
up to 12

months

   

Over 12

months and up

to 24 months

   

Over 24

months

    Total  
                                           
Deposits     113,423,914       17,903,144       2,517,574       525,834       27,666       7,458       134,405,590  
                                                         
From the non-financial government sector     8,897,189       419,219       242,413       963       17,565               9,577,349  
From the financial sector     81,357                                               81,357  
From the non-financial private sector and foreign residents     104,445,368       17,483,925       2,275,161       524,871       10,101       7,458       124,746,884  
                                                         
Liabilities at fair value through profit or loss     6,450                                               6,450  
                                                         
Derivative instruments     23,107                                               23,107  
                                                         
Repo Transactions     2,688,093                                               2,688,093  
                                                         
Other financial institutions     2,688,093                                               2,688,093  
Other financial liabilities     9,601,982       21,720       10,720       16,518       25,559       163,965       9,840,464  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     927,139       91,695       11,605       15,967       34,289       94,109       1,174,804  
                                                         
Issued corporate bonds                     119,044                       4,620,570       4,739,614  
                                                         
Subordinated corporate bonds                     80,260                       7,509,680       7,589,940  
                                                         
Total     126,670,685       18,016,559       2,739,203       558,319       87,514       12,395,782       160,468,062  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  106  

 

 

EXHIBIT I

(Continued)

 

SEPARATE BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF DECEMBER 31, 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Remaining terms to maturity  
Item   Up to 1
month
   

Over 1

month and
up to 3
months

    Over 3
months and
up to 6
months
    Over 6
months and
up to 12
months
    Over 12
months and up
to 24 months
    Over 24
months
    Total  
                                           
Deposits     86,801,634       15,016,867       1,669,383       311,924       8,678       3,413       103,811,899  
                                                         
From the non-financial government sector     4,904,400       851,853       209,803       86,529       117               6,052,702  
From the financial sector     55,860                                               55,860  
From the non-financial private sector and foreign residents     81,841,374       14,165,014       1,459,580       225,395       8,561       3,413       97,703,337  
                                                         
Repo Transactions     1,095,634                                               1,095,634  
                                                         
Other financial institutions     1,095,634                                               1,095,634  
Other financial liabilities     5,197,724       480,634       6,909       6,868       10,826       147,157       5,850,118  
                                                         
Financing received from the Central Bank of Argentina and other financial institutions     85,690       49,164       90,378       14,207       9,867       12,780       262,086  
                                                         
Issued corporate bonds             1,758,053                                       1,758,053  
                                                         
Subordinated corporate bonds                     213,978       213,978       427,955       9,763,723       10,619,634  
                                                         
Total     93,180,682       17,304,718       1,980,648       546,977       457,326       9,927,073       123,397,424  

 

This exhibit disclosoures contractual future cash flows that included interests and accesories to be accrued until maturity of the contracts.

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  107  

 

 

EXHIBIT J

 

SEPARATE CHANGES IN PROVISIONS

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Balances at
beginning of
          Decreases                    
Breakdown   fiscal year     Increases     Charge off     06/30/2018     12/31/2017     12/31/2016  
                                     
For Administrative, disciplinary and criminal sanctions     718                       718       718       9,110  
                                                 
Other     595,277       317,921       234,096       679,102       595,277       242,256  
                                                 
Total Provisions     595,995       317,921       234,096       679,820       595,995       251,366  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  108  

 

 

 

EXHIBIT K

 

SEPARATE COMPOSITION OF CAPITAL STOCK

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

Shares   Capital stock  
                           
          Face   Votes per   Issued        
Class   Stock number     Value   share   Outstanding     Paid in  
                                 
Registered common stock A     11,235,670     1   5     11,236       11,236  
                                 
Registered common stock B     658,427,351     1   1     658,427       658,427  
                                 
Total     669,663,021               669,663       669,663  

 

SEPARATE COMPOSITION OF CAPITAL STOCK

AS OF DECEMBER 31, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

Shares   Capital stock  
                           
          Face   Votes per   Issued        
Class   Stock number     Value   share   Outstanding     Paid in  
                                 
Registered common stock A     11,235,670     1   5     11,236       11,236  
                                 
Registered common stock B     658,427,351     1   1     658,427       658,427  
                                 
Total     669,663,021               669,663       669,663  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  109  

 

 

EXHIBIT K

(Continued)

 

SEPARATE COMPOSITION OF CAPITAL STOCK

AS OF DECEMBER 31, 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

Shares   Capital stock  
                           
              Votes per   Issued        
Class   Stock number     Face Value   share   Outstanding     Paid in  
                           
Registered common stock A     11,235,670     1   5     11,236       11,236  
                                 
Registered common stock B     573,327,358     1   1     573,327       573,327  
                                 
Total     584,563,028               584,563       584,563  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  110  

 

 

EXHIBIT L

 

SEPARATE FOREIGN CURRENCY BALANCES

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    06/30/2018     12/31/2017     12/31/2016  
    Total Parent                                      
    company and     Total per currency              
Items   local branches     US dollar     Euro     Real     Other     Total     Total  
ASSETS                                                        
Cash and deposits in banks     25,836,890       25,650,053       127,618       18,821       40,398       19,751,378       20,074,325  
Debt securities at fair value through profit or loss     201,875       201,875                               50,860       12,734  
Other financial assets     1,024,014       1,024,013                       1       681,269       333,169  
Loans an other financing     27,657,354       27,657,354                               18,651,478       10,105,068  
Other financial institutions     254,735       254,735                               175,116       94,834  
From the non-financial private sector and                                                        
foreign residents     27,402,619       27,402,619                               18,476,362       10,010,234  
Other debt securities     66,600       66,600                               46,482       937,900  
Financial assets delivered as guarantee     572,580       572,580                               240,882       95,174  
Investments in equity instruments     5,927       5,927                               4,002       3,578  
Investments in subsidieries, associates and joint ventures     1,124,246       1,124,246                               912,766       823,876  
                                                         
Total Assets     56,489,486       56,302,648       127,618       18,821       40,399       40,339,117       32,385,824  
                                                         
LIABILITIES                                                        
Deposits     46,141,940       46,141,940                               29,799,489       21,793,774  
Non-financial government sector     2,460,707       2,460,707                               3,794,318       536,942  
Financial sector     77,408       77,408                               45,895       27,972  
Non-financial private sector and foreign residents     43,603,825       43,603,825                               25,959,276       21,228,860  
Other  financial liabilities     1,963,221       1,896,731       63,388               3,102       1,182,283       876,089  
Financing from BCRA and other financial Institutions     1,180,106       1,180,106                               887,321       131,361  
Issued corporate bonds                                                     1,745,851  
Subordinated corporate bonds     11,646,217       11,646,217                               7,565,759       6,376,537  
Other non-financial liabilities     22,022       22,022                               45,920       61  
                                                         
Total Liabilities     60,953,506       60,887,016       63,388               3,102       39,480,772       30,923,673  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  111  

 

 

EXHIBIT O

 

SEPARATE DERIVATIVE FINANCIAL INSTRUMENTS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

Type of
contract
  Purpose of the
transactions
performed
  Underlying
asset
  Type of settlement   Negotiation environment or
counter-party
  Originally
agreed
weighted
monthly
average term
  Residual
weighted
monthly
average
term
  Weighted
daily
average term
settlement of
differences
  Amount  
                                   
Futures    Intermediation
- own account
  Foreign currency   Daily settlement of differences   MAE (over-the-counter
electronic market)
  1   1   1     658,347  
                                     
Futures   Intermediation
- own account
  Foreign currency   Daily settlement of differences   ROFEX (over-the-counter
electronic market) electronic market)
  2   2   1     821,073  
                                     
Forward    Intermediation
- own account
  Foreign currency   Maturity settlement of differences   Over The Counter  - Residents
in Argentina - Non-financial sector
  3   2   30     1,030,573  
                                     
Options    Intermediation
- own account
   Other   With delivery of underlying asset   Over The Counter  - Residents in Argentina - Non-financial sector   12   5         199,146  
                                     
Repo transactions   Intermediation
- own account
  Federal government securities   With delivery of underlying asset    Other markets in the country   1   1         2,212,252  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  112  

 

 

EXHIBIT Q

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Net financial Income/
Expense
 
    Obligatory measurement  
Items   Quarter ended
06/30/2018
    Accumulated
from
beginning of
period up to
06/30/2018
 
             
For measurement of financial assets at fair value through profit or loss                
Profit or loss from government securities     35,589       84,963  
Profit or loss from private securities     3,554       22,335  
Profit or loss investment in derivative financing  instruments                
Fowards transactions     (3,841 )        
Profit or loss from other financial assets     12,272       28,330  
From  investment in equity instruments     1,962       6,115  
Loss (Profit) from sold assets liabilities at fair value     (128,587 )     (39,616 )
Profit or loss from derivative financial instruments                
Fowards transactions     (5,970 )     (5,970 )
                 
Total     (85,021 )     96,157  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  113  

 

 

 

EXHIBIT Q

(Continued)

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Net financial Income/
Expense
 
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at amortized cost   Quarter ended
 06/30/2018
    Accumulated
from
beginning of
period up to
06/30/2018
 
             
Interest income                
For cash and bank deposits     1,991       4,952  
For government securities     27,090       30,127  
For debt securities     49,753       100,021  
For loans and other financing                
Financial sector     339,001       556,438  
Non-financial private sector                
Overdrafts     955,080       1,729,824  
Mortgage loans     730,301       1,264,292  
Pledge loans     138,444       282,855  
Personal loans     4,113,855       7,893,947  
Credit cards     1,425,203       2,669,474  
Financial leases     34,275       68,542  
Other     1,662,667       3,165,445  
Foreign residents                
for repo transactions                
Cental Bank of Argentina     7,068       21,248  
Other financial institutions     38,698       58,244  
                 
Total     9,523,426       17,845,409  
                 
Interest expenses                
from deposits                
Non-financial private sector                
Saving accounts     62,204       113,967  
Time deposits and investments accounts     3,499,567       6,199,003  
for financing received from Central Bank of Argentina and other financial institutions     19,885       33,098  
for repo transactions                
Other  financial institutions     24,342       55,312  
for other financial liabilities     3,452       5,331  
for issued corporate bonds     422,246       623,074  
for subordinated corporate bonds     174,356       313,406  
                 
Total     4,206,052       7,343,191  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  114  

 

 

EXHIBIT Q

(Continued)

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2018

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Income for the period     Other comprehensive income  
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at fair value through other comprehensive income   Quarter ended
06/30/2018
    Accumulated
from beginning
of period up to
06/30/2018
    Quarter ended
06/30/2018
    Accumulated
 from beginning
of period up to
06/30/2018
 
                         
From debt government securities     3,060,349       5,124,065       (33,092 )     (88,570 )
Total     3,060,349       5,124,065       (33,092 )     (88,570 )

 

    Income for the period                  
Commissions income   Quarter ended
 06/30/2018
    Accumulated
from beginning
of period up to
06/30/2018
                 
                             
Commissions related to obligations     1,852,099       3,474,039                  
Commissions related to credits     24,315       41,424                  
Commissions related to loans commiments and financial guarantees     45       453                  
Commissions related to securities value     25,366       47,098                  
Commissions related to trading and foreign Exchange transactions     50,804       92,178                  
      1,952,629       3,655,192                  

 

    Income for the period                  
Commissions Expense   Quarter ended
06/30/2018
    Accumulated 
from beginning 
of period up to 
06/30/2018
                 
                             
Commissions related to transactions to debt securities     76       208                  
Other     187,150       344,634                  
      187,226       344,842                  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  115  

 

 

EXHIBIT Q

(Continued)

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Net financial Income/ Expense  
    Obligatory measurement  
Items   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
 
             
For measurement of financial assets at fair value through profit or loss                
Profit or loss from government securities     80,121       80,121  
Profit or loss from private securities     466          
Profit or loss from other financial assets     9,318       12,316  
Loss (Profit) from sold assets at fair value     (218 )     5,278  
For measurement of financial liabilities at fair value through profit or loss                
Profit or loss from derivative financial instruments                
Fowards transactions     (6,522 )     (14,667 )
                 
Total     83,165       83,048  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  116  

 

 

EXHIBIT Q

(Continued)

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Net financial Income/ Expense  
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at amortized cost   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
 
             
Interest income                
For cash and bank deposits     772       899  
For private securities     49,841       114,789  
Financial sector     97,780       197,154  
Non-financial private sector                
Overdrafts     618,336       1,266,943  
Mortgage loans     180,576       347,769  
Pledge loans     112,511       215,994  
Personal loans     2,810,359       5,406,313  
Credit cards     989,957       1,964,639  
Financial leases     24,883       46,333  
Other     962,709       1,857,545  
for repo transactions                
Cental Bank of Argentina     33,924       431,805  
Other financial institutions     6,054       13,642  
                 
Total     5,887,702       11,863,825  
                 
Interest expenses                
From deposits                
Non-financial private sector                
Saving accounts     24,992       47,902  
Time deposits and investments accounts     1,942,239       3,846,954  
for Financing received from Central Bank of Argentina and other financial institutions     8,379       14,475  
for repo transactions                
Other  financial institutions     10,981       30,215  
for other financial liabilities     1,886       15,007  
for issued corporate bonds     90,201       90,201  
for subordinated corporate bonds     99,229       210,550  
                 
Total     2,177,907       4,255,304  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  117  

 

 

EXHIBIT Q

(Continued)

 

SEPARATE BREAKDOWN OF PROFIT OR LOSS

AS OF JUNE 30, 2017

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

    Income for the period     Other comprehensive income  
Interest and adjustment for the aplication of the efective interest rate of financial assets measured at fair value through other comprehensive income   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
    Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
 
                         
From debt government securities     1,138,842       1,866,541       (9,258 )     3,952  
Total     1,138,842       1,866,541       (9,258 )     3,952  

 

    Income for the period                  
Commissions income   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
                 
                             
Commissions related to obligations     1,455,441       2,723,096                  
Commissions related to credits     35,985       53,929                  
Commissions related to loans commiment and financial guarantees     1,148       1,663                  
Commissions related to securities value     16,568       27,381                  
Commissions related to transactions trade and foreign Exchange transactions     37,088       69,527                  
      1,546,230       2,875,596                  

 

    Income for the period                  
Commissions Expense   Quarter ended
06/30/2017
    Accumulated
from beginning
of period up to
06/30/2017
                 
                             
Commissions related to transactions to debt securities     25       25                  
Other     152,373       290,332                  
      152,398       290,357                  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  118  

 

 

 

EXHIBIT R

 

VALUE CORRECTION FOR CREDIT LOSSES - SEPARATES ALLOWANCES FOR UNCOLLECTIBILITY RISK

AS OF JUNE 30, 2018 AND DECEMBER 31, 2017 AND 2016

(Translation of Financial statements originally issued in Spanish - See Note 34)

(Figures stated in thousands of pesos)

 

   

Balances
at

beginning
of the

          Decreases                    
Item   fiscal year     Increases     Reversals     Charge off     06/30/2018     12/31/2017     12/31/2016  
                                           
Other financial assets     4,916       981               1,231       4,666       4,916       4,147  
Loans and other financing                                                        
Other financial institutions     31,251       123       4,701               26,673       31,251       17,256  
To the non-financial private sector and foreign residents                                                        
Overdrafts     138,311       60,260       6,074       22,544       169,953       138,311       133,644  
Documents     200,750       70,533       646       14,794       255,843       200,750       123,881  
Mortgage loans     146,296       88,138       12,007       8,634       213,793       146,296       70,570  
Pledge loans     73,070       8,759       3,681       19,041       59,107       73,070       40,717  
Personal loans     1,055,897       613,616       267       324,951       1,344,295       1,055,897       683,837  
Credit cards     557,682       257,777       896       124,574       689,989       557,682       406,779  
Financial leases     6,487       87       873               5,701       6,487       3,994  
Other     260,558       100,277       919       50,330       309,586       260,558       182,075  
Other debt securities             2,888                       2,888                  
                                                         
Total of allowances     2,475,218       1,203,439       30,064       566,099       3,082,494       2,475,218       1,666,900  

 

 

Delfin Jorge Ezequiel Carballo
Chairman

  119  

 

 

REVIEW REPORT ON CONDENSED CONSOLIDATED INTERIM-PERIOD FINANCIAL STATEMENTS

 

To the Directors of

 

BANCO MACRO S.A.

 

Registered office: Sarmiento 447

 

City of Buenos Aires

 

I. Report on the financial statements

 

Introduction

 

1. We have reviewed the accompanying condensed consolidated interim financial statements of BANCO MACRO S.A. (“the Bank”), and its subsidiaries which comprise: (a) the consolidated balance sheet as of June 30, 2018, (b) the consolidated statements of income and other comprehensive income for the three and six months periods ended June 30, 2018 and the statement of changes in shareholders’ equity and cash flows for the six-month period then ended, and (c) explanatory notes and other supplementary information.

 

Responsibility of the Bank’s Management and Board of Directors in connection with the financial statements

 

2. The Bank’s Management and Board of Directors are responsible for the preparation and presentation of the consolidated financial statements in accordance with the accounting framework established by the BCRA (Central Bank of Argentina), which, as mentioned in Note 3. to the accompanying financial statements, are based on the International Financial Reporting Standards (“IFRS”), and in particular for the condensed interim financial statements in the International Accounting Standard 34 "Intermediate Financial Reporting", as those standards were issued by the International Accounting Standards Board ("IASB") and adopted by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCA for its Spanish acronym) and with the only exception of section 5.5. "Impairment" of IFRS 9 "Financial Instruments", which was temporarily excluded by the BCRA from the accounting framework applicable to financial institutions. The Bank’s Management and Board of Directors and are also responsible for performing the internal control procedures that they may deem necessary to allow for the preparation of consolidated financial information of interim-period that are free from material misstatements, either due to errors or irregularities.

 

 

 

 

Auditor’s responsibility

 

3. Our responsibility is to express a conclusion on the financial statements mentioned in paragraph 1. based on our review, which was performed in accordance with the standards of the Argentine Federation of Professional Councils in Economic Sciences Technical Resolution 37 and with the “Minimum external auditing standards” issued by the BCRA, applicable to the review of interim period financial statements, and in compliance with the ethical requirements relevant to the audit of the Bank’s annual financial statements. A review of interim period financial statements consists of making inquiries, mainly of the persons in charge of accounting and financial matters, as well as applying analytical procedures and other review procedures. A review is substantially less in scope than an audit of financial statements; therefore, we cannot obtain reasonable assurance that we will become aware of all the material issues that may arise in an audit. Therefore, we do not express an audit opinion.

 

Conclusion

 

4. Based on our review, we have not become aware of anything that may lead us to believe that the financial statements mentioned in paragraph 1. have not been prepared, in all material respects, in accordance with the accounting framework established by the BCRA mentioned in paragraph 2.

 

Emphasis on certain aspects disclosed in the financial statements and other issues

 

5. We draw attention to the information contained in the following note to the consolidated financial statements mentioned in paragraph 1.:

 

(a) Note 3. “Basis for the preparation of these financial statements and applicable accounting standards”, section “Preparation basis - Applicable Accounting Standards”, in which the Bank indicates is in the process of determining and quantifying the effect on the financial statements of the application of section 5.5 "Impairment” of IFRS 9 "Financial Instruments", which was temporarily excluded by the BCRA of the accounting framework applicable to financial institutions. This issue does not change the conclusion expressed in paragraph 4., but must be taken into account by those users who use IFRS for the interpretation of the accompanying financial statements.

 

  - 2 -  

 

 

(b) Note 3. “ Basis for the preparation of these financial statements and applicable accounting standards”, section ”Preparation basis - Applicable Accounting Standards”, in which the Bank indicates that the items and figures contained in these reconciliations may be subject to change and they may only be considered final when preparing the annual financial statements for the 2018. This issue does not change the conclusion expressed in paragraph 4.

 

6. As further explained in Note 36. to the accompanying condensed consolidated interim financial statements, certain accounting practices used by the Bank to prepare the accompanying financial statements conform with the accounting framework established by the BCRA but may not conform with the accounting principles generally accepted in other countries.

 

Other issues

 

7. We have issued a separate report on the condensed separate interim financial statements of BANCO MACRO S.A. on the same date and for the same period mentioned in paragraph 1.

 

II. Report on other legal and regulatory requirements

 

8. In compliance with current legal requirements, we report that:

 

a) The financial statements mentioned in paragraph 1., as mentioned in Note 3. to them, are in process of being transcribed into the financial statements book of BANCO MACRO S.A. and, based on our review, we have not become aware of anything that may lead us to believe that these financial statements have not been prepared, in all material respects, in conformity with the applicable Argentine General Associations Law provisions and the CNV (Argentine Securities Commission) regulations.

 

b) The condensed separate interim financial statements of BANCO MACRO S.A. as of June 30, 2018 arise from the accounting books kept, in all formal respects, pursuant to current legal requirements.

 

  - 3 -  

 

 

c) As of June 30, 2018, the liabilities accrued in employee and employer contributions to the Integrated Pension Fund System, as recorded in BANCO MACRO S.A. books, amounted to Ps. 137,588,817, none of which was due as of that date.

 

City of Buenos Aires,

 

August 22, 2018

 

  PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
  C.P.C.E.C.A.B.A. Vol. 1 – Fo. 13
   
  NORBERTO M. NACUZZI
  Partner
  Certified Public Accountant (U.B.A.)
  C.P.C.E.C.A.B.A. Vol. 196 – Fo. 142

 

  - 4 -  

 

 

REVIEW REPORT ON CONDENSED SEPARATE INTERIM-PERIOD FINANCIAL STATEMENTS

 

To the Directors of

 

BANCO MACRO S.A.

 

Registered office: Sarmiento 447

 

City of Buenos Aires

 

III. Report on the financial statements

 

Introduction

 

9. We have reviewed the accompanying condensed separate interim financial statements of BANCO MACRO S.A. (“the Bank”), which comprise: (a) the separate balance sheet as of June 30, 2018, (b) the separate statements of income and other comprehensive income for the three and six months periods ended June 30, 2018 and the statement of changes in shareholders’ equity and cash flows for the six-month period then ended, and (c) explanatory notes and other supplementary information.

 

Responsibility of the Bank’s Management and Board of Directors in connection with the financial statements

 

10. The Bank’s Management and Board of Directors are responsible for the preparation and presentation of the separate financial statements in accordance with the accounting framework established by the BCRA (Central Bank of Argentina), which, as mentioned in Note 3. to the accompanying financial statements, are based on the International Financial Reporting Standards (“IFRS”), and in particular for the condensed interim financial statements in the International Accounting Standard 34 "Intermediate Financial Reporting", as those standards were issued by the International Accounting Standards Board ("IASB") and adopted by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCA for its Spanish acronym) and with the only exception of section 5.5. "Impairment" of IFRS 9 "Financial Instruments", which was temporarily excluded by the BCRA from the accounting framework applicable to financial institutions. The Bank’s Management and Board of Directors and are also responsible for performing the internal control procedures that they may deem necessary to allow for the preparation of financial information of interim-period that are free from material misstatements, either due to errors or irregularities.

 

 

 

 

Auditor’s responsibility

 

11. Our responsibility is to express a conclusion on the financial statements mentioned in paragraph 1. based on our review, which was performed in accordance with the standards of the Argentine Federation of Professional Councils in Economic Sciences Technical Resolution 37 and with the “Minimum external auditing standards” issued by the BCRA, applicable to the review of interim period financial statements, and in compliance with the ethical requirements relevant to the audit of the Bank’s annual financial statements. A review of interim period financial statements consists of making inquiries, mainly of the persons in charge of accounting and financial matters, as well as applying analytical procedures and other review procedures. A review is substantially less in scope than an audit of financial statements; therefore, we cannot obtain reasonable assurance that we will become aware of all the material issues that may arise in an audit. Therefore, we do not express an audit opinion.

 

Conclusion

 

12. Based on our review, we have not become aware of anything that may lead us to believe that the financial statements mentioned in paragraph 1. have not been prepared, in all material respects, in accordance with the accounting framework established by the BCRA mentioned in paragraph 2.

 

Emphasis on certain aspects disclosed in the financial statements and other issues

 

13. We draw attention to the information contained in the following note to the financial statements mentioned in paragraph 1.:

 

(a) Note 3. “ Basis for the preparation of these financial statements and applicable accounting standards”, in which the Bank indicates is in the process of determining and quantifying the effect on the financial statements of the application of section 5.5 "Impairment” of IFRS 9 "Financial Instruments", which was temporarily excluded by the BCRA of the accounting framework applicable to financial institutions. This issue does not change the conclusion expressed in paragraph 4., but must be taken into account by those users who use IFRS for the interpretation of the accompanying financial statements.

 

(b) Note 3. “ Basis for the preparation of these financial statements and applicable accounting standards”, in which the Bank indicates that the items and figures contained in these reconciliations may be subject to change and they may only be considered final when preparing the annual financial statements for the 2018. This issue does not change the conclusion expressed in paragraph 4.

 

  - 2 -  

 

 

14. As further explained in Note 34. to the accompanying condensed separate interim financial statements, certain accounting practices used by the Bank to prepare the accompanying financial statements conform with the accounting framework established by the BCRA but may not conform with the accounting principles generally accepted in other countries.

 

Other issues

 

15. We have issued a separate report on the condensed consolidated interim financial statements of BANCO MACRO S.A. and its subsidiaries on the same date and for the same period mentioned in paragraph 1.

 

IV. Report on other legal and regulatory requirements

 

16. In compliance with current legal requirements, we report that:

 

a) Based on our review, we have not become aware of anything that may lead us to believe that the financial statements mentioned in paragraph 1. have not been prepared, in all material respects, in conformity with the applicable Argentine General Associations Law provisions and the CNV (Argentine Securities Commission) regulations.

 

b) The financial statements mentioned in paragraph 1. as mentioned in Note 3. to them, are in progress of being transcribed to the “Inventory and Financial Statements” Books of BANCO MACRO S.A. and arise from the accounting books kept, in all formal respects, pursuant to current legal requirements.

 

c) As of June 30, 2018, the liabilities accrued in employee and employer contributions to the Integrated Pension Fund System, as recorded in the Bank’s books, amounted to Ps. 137,588,817, none of which was due as of that date.

 

  - 3 -  

 

 

d) As of June 30, 2018, as stated in Note 24. to the financial statements mentioned in paragraph 1., the Bank carries shareholder´s equity and offsetting eligible assets that exceed the minimum amounts required by applicable CNV regulations for these items.

 

City of Buenos Aires,

 

August 22, 2018

 

  PISTRELLI, HENRY MARTIN Y ASOCIADOS S.R.L.
  C.P.C.E.C.A.B.A. Vol. 1 – Fo. 13
   
  NORBERTO M. NACUZZI
  Partner
  Certified Public Accountant (U.B.A.)
  C.P.C.E.C.A.B.A. Vol. 196 – Fo. 142

 

  - 4 -  

 

 

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: November 20, 2018

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

 

 

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