BMA Banco Macro SA

 

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 8, 2019

 

 

Commission File Number: 001-32827

 

 

MACRO BANK INC.

(Translation of registrant’s name into English)

 

 

Avenida Eduardo Madero 1182

Ciudad Autónoma de Buenos Aires C1106 ACY

Tel: 54 11 5222 6500

 

(Address of registrant’s principal executive offices)

 

 

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

 

Form 20-F

x

Form 40-F

¨

 

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

 

Yes

¨

No

x

 

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

 

Yes

¨

No

x

 

 

 

 

 

3Q19 Earnings Release

 

Banco Macro Announces Results for the Third Quarter of 2019

 

Buenos Aires, Argentina, November 8, 2019 – Banco Macro S.A. (NYSE: BMA; BCBA: BMA) (“Banco Macro” or “BMA” or the “Bank”) announced today its results for the third quarter ended September 30, 2019 (“3Q19”). All figures are in Argentine pesos (Ps.)

 

Summary

 

• The Bank’s net income totaled Ps.13.2 billion in 3Q19. This result was 87% higher than the Ps.7 billion posted in 2Q19 and 243% higher than in 3Q18. In 3Q19, the accumulated annualized return on average equity (“ROAE”) and the accumulated annualized return on average assets (“ROAA”) were 57.3% and 9.4%, respectively. In 3Q19 Recurring Net Income totaled Ps.15.5 billion increasing 99% or Ps.7.7 billion compared with the previous quarter.

 

• In 3Q19, Banco Macro’s financing to the private sector grew 10% or Ps.18.1 billion quarter over quarter (“QoQ”) totaling Ps.192.8 billion and increased 15% or Ps.24.5 billion year over year (“YoY”). In the quarter, growth was driven by commercial loans, among which Overdrafts stand out, with a 78% increase QoQ. Meanwhile within consumer loans, credit card loans increased 12% QoQ.

 

• In 3Q19, Banco Macro’s total deposits decreased 9% or Ps.25.1 billion QoQ, totaling Ps.259.2 billion and representing 79% of the Bank’s total liabilities. Private sector deposits decreased 8% or Ps.22 billion QoQ.

 

• Banco Macro continued showing a strong solvency ratio, with excess capital of Ps.60.0 billion, 26.5% regulatory capital ratio – Basel III and 18.9% Tier 1 Ratio. In addition, the Bank’s liquid assets remained at an adequate level, reaching 61% of its total deposits in 3Q19.

 

• As of 3Q19, the efficiency ratio reached 32.5%, improving from the 37.6% posted in 3Q18.

 

• In 3Q19, the Bank’s non-performing to total financing ratio was 1.9% and the coverage ratio reached 124.16%.

 

3Q19 Earnings Release Conference Call		IR Contacts in Buenos Aires:
Friday, November 12, 2019 Time: 10:00 a.m. Eastern Time | 12:00 p.m. Buenos Aires Time		Jorge Scarinci Chief Financial Officer
To participate, please dial:		Nicolás A. Torres
Argentina Toll Free:	Webcast Replay: click here	Investor Relations
(011) 3984 5677
Participants Dial In (Toll Free):	Available from 11/12/2019 through	Phone: (54 11) 5222 6682
+1 (844) 450 3847	11/26/2019	E-mail: investorelations@macro.com.ar
Participants International Dial In:
+1 (412) 317 6370		Visit our website at:
Conference ID: Banco Macro		www.macro.com.ar/relaciones-inversores
Webcast: click here

 

 

3Q19 Earnings Release

 

Disclaimer

 

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

 

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

 

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

 

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

 

 

3Q19 Earnings Release

 

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

 

Results

 

Earnings per outstanding share were Ps.20.59 in 3Q19, 87% higher than 2Q19 and 256% higher than the result posted a year ago. On a yearly basis Net Income increased 244% while Earnings per Share increased 256%, given that the average amount of shares outstanding decreased in 3Q18, 4Q18 and 1Q19 due to the Share buyback program.

 

EARNINGS PER SHARE		MACRO Consolidated															Variation
In MILLION $			3Q18			4Q18			1Q19			2Q19			3Q19			QoQ				YoY
Net income -Parent Company- (M $)			3,828			5,243			7,343			7,033			13,158			87	%			244	%
Average # of shares outstanding (M)			662			643			639			639			639			0	%			-3	%
Average #of treasury stocks (shares repurchased) (M)			7			26			30			30			14			-53	%			102	%
Book value per avg. Outstanding share ($)			76			82			93			94			117			24	%			54	%
Shares Outstanding (M)			648			641			639			639			639			0	%			-1	%
Earnings per avg.  outstanding share ($)			5.78			8.15			11.49			11.01			20.59			87	%			256	%
Book value per avg. issued ADS (USD)			18.62			22.16			21.41			22.14			20.33			-8	%			9	%
Earnings per avg. outstanding ADS (USD)			1.41			2.16			2.65			2.59			3.58			38	%			153	%

 

Banco Macro’s 3Q19 net income of Ps.13.2 billion was 87% or Ps.6.1 billion higher than the previous quarter and 243% or Ps.9.3 billion higher YoY. This result represented an accumulated ROAE and ROAA of 57.3% and 9.4% respectively.

 

In 3Q19 Recurring Net Income was Ps.15.5 billion, 99% or Ps.7.7 billion higher than the result posted in 2Q19. (See table below for recurring net income)

 

 

3Q19 Earnings Release

 

INCOME STATEMENT RECURRING		MACRO Consolidated																Variation
In MILLION $		4Q18(¹)				1Q19(²)				2Q19(³)				3Q19(4)				QoQ
Net Interest Income			12,288				12,931				16,785				20,057				19	%
Net fee income			3,259				3,310				3,391				3,753				11	%
Subtotal (Net Interest Income + Net Fee Income)			15,547				16,241				20,176				23,810				18	%
Net Income from financial instruments at fair value through P&L			364				605				133				659				395	%
Income from assets at amortized cost			1				-17				0				-1				-
Differences in quoted prices of gold and foreign currency			729				-167				333				1,497				350	%
Other operating income			413				736				817				1,071				31	%
Provision for loan losses			836				800				848				824				-3	%
Net Operating Income			16,218				16,598				20,611				26,212				27	%
Employee benefits			3,124				3,133				4,007				4,308				8	%
Administrative expenses			2,105				2,096				2,301				2,903				26	%
Depreciation and impairment of assets			215				290				317				366				15	%
Other operating expenses			2,916				3,104				2,886				4,382				52	%
Operating Income			7,858				7,975				11,100				14,253				28	%
Result from associates & joint ventures			33				26				23				17				-26	%
Result before taxes from continuing operations			7,891				8,001				11,123				14,270				28	%
Income tax			2,440				2,307				3,319				-1,263				-
Net income from continuing operations			5,451				5,694				7,804				15,533				99	%
Recurring Net Income of the period			5,451				5,694				7,804				15,533				99	%
Non recurring income/loss of the period			-208				1,649				-772				-2,374				208	%
Net Income (Recurring + Non Recurring)			5,243				7,343				7,032				13,159				87	%

 

(¹) Excluding provisions for class actions, deferred tax

(²) Excluding Prisma & Molinos Cañuelas

(³) Excluding results related to social security contributions (Employee benefits & Other Operating income), sale of real estate (Other Operating income), Prisma dividends (Result from associates & joint ventures) and Income tax

(⁴) Excluding IFRS adjustment on Government Securities, Severance Pay and provisions for class actions

 

Net operating income (before G&A and personnel expenses) was Ps.26.2 billion in 3Q19, increasing 26% or Ps.5.4 billion compared to 2Q19 and 103% or Ps.13.3 billion compared to the previous year.

 

Operating income (after G&A and personnel expenses) was Ps.11.9 billion in 3Q19, 28% or Ps.2.6 billion higher than in 2Q19 and 114% or Ps.6.3 billion higher than a year ago.

 

It is important to emphasize that this result was obtained with a leverage of 5.3x assets to equity ratio.

 

 

3Q19 Earnings Release

 

INCOME STATEMENT		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Net Interest Income			10,323				12,288				12,931				16,785				20,057				19	%			94	%
Net fee income			2,869				3,259				3,310				3,391				3,753				11	%			31	%
Subtotal (Net Interest Income + Net Fee Income)			13,192				15,547				16,241				20,176				23,810				18	%			80	%
Net Income from financial instruments at fair value through P&L			499				364				1,974				133				659				395	%			32	%
Income from assets at amortized cost			-3				1				-17				0				-1				-				-
Differences in quoted prices of gold and foreign currency			-1,244				729				-51				333				1,497				350	%			-220	%
Other operating income			1,202				413				3,114				983				1,071				9	%			-11	%
Provision for loan losses			732				836				2,154				848				824				-3	%			13	%
Net Operating Income			12,914				16,218				19,107				20,777				26,212				26	%			103	%
Employee benefits			2,720				3,124				3,133				4,916				4,428				-10	%			63	%
Administrative expenses			1,776				2,105				2,096				2,301				2,903				26	%			63	%
Depreciation and impairment of assets			187				215				290				317				366				15	%			96	%
Other operating expenses			2,693				3,213				3,104				3,950				6,636				68	%			146	%
Operating Income			5,538				7,561				10,484				9,293				11,879				28	%			114	%
Result from associates & joint ventures			12				33				26				613				17				-97	%			42	%
Result before taxes from continuing operations			5,550				7,594				10,510				9,906				11,896				20	%			114	%
Income tax			1,718				2,351				3,166				2,874				-1,263				-				-
Net income from continuing operations			3,832				5,243				7,344				7,032				13,159				87	%			243	%
Net Income of the period			3,832				5,243				7,344				7,032				13,159				87	%			243	%
Net income of the period attributable to parent company			3,828				5,243				7,343				7,033				13,159				87	%			244	%
Net income of the period atributable to minority interest			4				0				1				-1				1				-				-75	%

 

The Bank’s 3Q19 net interest income totaled Ps.20.1 billion, 19% or Ps.3.3 billion higher than in 2Q19 and 94% or Ps.9.7 billion higher YoY.

 

In 3Q19 interest income totaled Ps.35.6 billion, 14% or Ps.4.3 billion higher than in 2Q19 and 112% or Ps.18.8 billion higher than in 3Q18.

 

Income from interest on loans and other financing totaled Ps.16.1 billion, 9% or Ps.1.4 billion higher compared with the previous quarter. On a yearly basis Income from interest on loans increased 30% or Ps.3.7 billion.

 

In 3Q19 income from government and private securities increased 30% or Ps.4.5 billion QoQ and 336% or Ps.15 billion compared with the same period of last year. This result is explained 88% by income from government and private securities through other comprehensive income (Central Bank Notes) and the remaining 12% is explained by income of government and private securities at amortized cost.

 

In 3Q19 Differences foreign currency totaled a Ps.1.5 billion gain, due to the 36% argentine peso depreciation against the US dollar and the Bank’s long spot dollar position during the quarter and FX trading results (Ps.1.2 billion). It should be noted that if income from investment in derivative financing instruments is added then differences in quoted prices of gold and foreign currency in 3Q19 resulted in a Ps.2.2 billion gain.

 

 

3Q19 Earnings Release

 

DIFFERENCES IN QUOTED PRICES OF GOLD AND FOREIGN CURRENCY		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
(1) Differences in quoted prices of gold and foreing currency			-1,244				729				-51				333				1,496				349	%			-
Translation of FX assets and liabilities to Pesos			-1,759				354				-481				-129				332				-				-
Income from foreign currency exchange			515				375				430				462				1,164				152	%			126	%
(2) Net Income from financial assets and liabilities at fair value through P&L			235				-22				301				-12				735				-				213	%
Income from investment in derivative financing instruments			235				-22				301				-12				735				-				213	%
(1) +(2) Total Result from Differences in quoted prices of gold and foreign currency			-1,009				707				250				321				2,231				595	%			-

 

INTEREST INCOME		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Interest on Cash and due from Banks			5				15				31				35				86				146	%			1620	%
Interest from government securities			4,380				7,898				9,515				14,951				19,026				27	%			334	%
Interest from private securities			71				2				1				0				379				100	%			434	%
Interest on loans and other financing
To the financial sector			312				546				494				355				375				6	%			20	%
Interest on overdrafts			1,448				2,442				1,872				1,739				3,351				93	%			131	%
Interest on documents			856				1,089				1,201				1,086				961				-12	%			12	%
Interest on mortgages loans			1,101				1,795				1,310				1,673				1,471				-12	%			34	%
Interest on pledged loans			142				148				129				124				129				4	%			-9	%
Interest on personal loans			5,447				5,676				5,785				6,005				6,162				3	%			13	%
Interest on credit cards loans			1,788				2,371				2,567				2,677				2,589				-3	%			45	%
Interest on financial leases			40				57				44				43				28				-35	%			-30	%
Interest on other loans			1,211				1,447				1,124				1,029				1,018				-1	%			-16	%
Interest on Repos
From the BCRA			0				0				9				0				0				0	%			0	%
Other financial institutions			8				328				313				1,617				7				-100	%			-13	%
Total Interest income			16,809				23,814				24,395				31,334				35,582				14	%			112	%
Income from Interest on loans			12,345				15,571				14,526				14,731				16,084				9	%			30	%

 

The Bank’s 3Q19 interest expense totaled Ps.15.5 billion, increasing 7% (Ps.1 billion) compared to the previous quarter and 139% (Ps.9 billion) compared to 3Q18.

 

In 3Q19, interest on deposits represented 91% of the Bank’s total interest expense, increasing 5% or Ps.614 million QoQ. On a yearly basis, interest on deposits increased 149% or Ps.8.5 billion.

 

 

3Q19 Earnings Release

 

INTEREST EXPENSE		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Deposits
Interest on checking accounts			142				491				118				52				105				102	%			-26	%
Interest on saving accounts			91				140				97				153				113				-26	%			24	%
Interest on time deposits			5,464				10,013				10,372				13,368				13,969				4	%			156	%
Interest on other financing from BCRA and financial inst.			48				45				43				62				62				0	%			29	%
Repos
Other financial institutions			66				64				71				107				54				-50	%			-18	%
Interest on corporate bonds			406				478				452				470				787				67	%			94	%
Interest on subordinated bonds			252				267				280				311				386				24	%			53	%
Interest on other financial liabilities			17				28				31				26				49				88	%			188	%
Total financial expense			6,486				11,526				11,464				14,549				15,525				7	%			139	%
Expenses from interest on deposits			5,697				10,644				10,587				13,573				14,187				5	%			149	%

 

As of 3Q19, the Bank’s net interest margin (including FX) was 19.1%, higher than the 17.6% posted in 2Q19 and the 14% in 3Q18.

 

As of 3Q19 Net Interest Margin (excluding FX) was 18.5%, higher than the 17.5% posted in 2Q19 and the 15.2% in 3Q18. This result shows the Bank’s ability to defend its margin.

 

ASSETS & LIABILITIES PERFORMANCE (AR$)		MACRO Consolidated
In MILLON $		3Q18								4Q18								1Q19								2Q19								3Q19
Yields & rates in annualized nominal %		AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT
Interest-earning assets
Cash and Deposits in Banks			24,596				0.0	%			31,969				0.0	%			32,270				0.0	%			34,030				0.0	%			24,551				0.0	%
Goverment & Securities at fair value trhough P&L			1,114				-10.0	%			1,355				35.1	%			1,715				14.9	%			1,438				9.5	%			2,375				-23.4	%
Loans & Other Financing
Public Sector			2,112				46.2	%			2,069				69.8	%			1,401				57.0	%			952				49.7	%			1,533				66.8	%
Financial Sector			3,827				31.7	%			4,247				50.3	%			4,736				41.7	%			3,143				44.4	%			2,974				49.5	%
Private Sector			121,071				37.2	%			123,050				45.2	%			122,286				43.5	%			116,892				46.0	%			124,450				46.4	%
Other debt securities			39,796				45.4	%			52,738				60.0	%			71,886				54.1	%			92,118				64.9	%			112,092				68.7	%
Other interest-earning assets			7,033				12.5	%			8,752				23.9	%			10,259				72.7	%			16,603				43.0	%			9,614				2.8	%
Total interest-earning assets			199,549				33.1	%			224,180				41.7	%			244,553				41.9	%			265,176				46.3	%			277,589				49.3	%
Non interest-earning assets			12,709								13,107								14,266								20,860								15,991
Total Average Assets			212,258								237,287								258,819								286,036								293,580
Interest-bearing liabilities
Deposits
Public Sector			9,970				21.5	%			14,323				35.5	%			16,375				33.0	%			16,069				34.8	%			12,752				34.8	%
Financial Sector			0				0.0	%			0				0.0	%			0				0.0	%			0				0.0	%			0				0.0	%
Private Sector			94,478				20.9	%			112,920				32.0	%			122,198				29.7	%			137,077				34.4	%			146,717				34.2	%
BCRA and other financial institutions			1,155				14.4	%			492				36.3	%			898				19.4	%			513				47.7	%			510				46.7	%
Corporate bonds			7,120				22.6	%			6,359				29.8	%			6,189				29.6	%			6,161				30.6	%			6,083				51.3	%
Subordinated bonds			0				0.0	%			0				0.0	%			0				0.0	%			0				0.0	%			0				0.0	%
Other interest-bearing liabilities			586				48.7	%			453				56.1	%			723				40.4	%			1,133				38.6	%			366				46.7	%
Total int.-bearing liabilities			113,309				21.2	%			134,547				32.4	%			146,383				30.1	%			160,953				34.4	%			166,428				35.0	%
Total non int.-bearing liab. & equity			43,257								46,582								52,988								60,779								61,607
Total Average Liabilities & Equity			156,566								181,129								199,371								221,732								228,035
Assets Performance							16,660								23,554								25,293								30,590								34,497
Liabilities Performance							6,044								10,980								10,857								13,808								14,692
Net Interest Income							10,616								12,574								14,436								16,782								19,805
Total interest-earning assets							199,549								224,180								244,553								265,176								277,589
Net Interest Margin (NIM)							21.1	%							22.3	%							23.9	%							25.4	%							28.3	%

 

 

3Q19 Earnings Release

 

ASSETS & LIABILITIES PERFORMANCE (USD)		MACRO Consolidated
In MILLON $		3Q18								4Q18								1Q19								2Q19								3Q19
Yields & rates in annualized nominal %		AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT				AVERAGE BALANCE				INT
Interest-earning assets
Cash and Deposits in Banks			28,743				0.1	%			36,428				0.2	%			41,863				0.3	%			51,749				0.3	%			61,991				0.6	%
Goverment & Securities at fair value trhough P&L			275				-53.4	%			342				-9.3	%			209				34.9	%			279				8.6	%			284				18.2	%
Loans & Other Financing
Financial Sector			407				5.8	%			489				6.5	%			486				7.5	%			489				9.0	%			292				10.9	%
Private Sector			33,833				5.1	%			43,259				5.8	%			47,627				6.1	%			55,590				6.0	%			59,228				6.1	%
Other debt securities			74				10.7	%			86				9.2	%			31				13.1	%			0				0.0	%			0				0.0	%
Other interest-earning assets			1,740				0.0	%			2,162				0.2	%			2,943				-0.1	%			3,084				-0.1	%			3,357				-0.2	%
Total interest-earning assets			65,072				2.5	%			82,766				3.1	%			93,159				3.4	%			111,191				3.2	%			125,152				3.2	%
Non interest-earning assets			4,123								3,231								2,724								93								3,960
Total Average Assets			69,195								85,997								95,883								111,284								129,112
Interest-bearing liabilities
Deposits
Public Sector			412				0.0	%			534				0.0	%			873				0.0	%			1,517				0.0	%			1,818				0.0	%
Private Sector			44,096				1.6	%			53,499				1.9	%			60,155				2.0	%			71,749				2.3	%			76,150				2.1	%
BCRA and other financial institutions			1,740				3.9	%			2,455				4.5	%			2,468				4.9	%			2,117				4.7	%			2,612				5.2	%
Subordinated bonds			12,987				7.7	%			15,024				7.1	%			15,868				7.2	%			17,821				7.0	%			20,564				7.4	%
Other interest-bearing liabilities			2				0.0	%			1				0.0	%			9				0.0	%			1				0.0	%			1				0.0	%
Total int.-bearing liabilities			59,237				3.0	%			71,513				3.0	%			79,373				3.1	%			93,205				3.2	%			101,145				3.3	%
Total non int.-bearing liab.			13,381								16,873								16,378								19,027								23,812
Total Average Liabilities			72,618								88,386								95,751								112,232								124,957
Assets Performance							413								645								775								887								1,010
Liabilities Performance							442								547								606								741								832
Net Interest Income							-29								98								169								146								178
Total interest-earning assets							65,072								82,766								93,159								111,191								125,152
Net Interest Margin (NIM)							-0.2	%							0.5	%							0.7	%							0.5	%							0.6	%

 

In 3Q19 Banco Macro’s net fee income totaled Ps.3.8 billion, 11% or Ps.362 million higher than in 2Q19 and 31% or Ps.885 million higher than the same period of last year.

 

In the quarter, fee income totaled Ps.4.1 billion, 13% or Ps.470 million higher than in 2Q19. Fees charged on deposit accounts and credit card fees stand out; with a 10% and 21% increase respectively QoQ. On a yearly basis, fee income increased 37% or Ps.1.1 billion.

 

In the quarter, total fee expenses increased 39% or Ps.108 million. On a yearly basis, fee expenses increased 167% or Ps.242 million.

 

NET FEE INCOME		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
AFIP & Collection services			20				21				22				23				24				4	%			20	%
Fees charged on deposit accounts			1,408				1,594				1,528				1,450				1,599				10	%			14	%
Mutual funds & securities fees			21				16				21				94				51				-46	%			143	%
ATM transactions fees			14				16				158				180				232				29	%			1557	%
ANSES fees			9				8				8				9				8				-11	%			-11	%
Insurance fees			181				173				225				233				230				-1	%			27	%
Corporate services fees			279				317				332				404				496				23	%			78	%
Financial agent fees (Provinces)			153				170				172				210				216				3	%			41	%
Debit card fees			138				188				181				192				229				19	%			66	%
Credit card fees			642				778				757				727				883				21	%			38	%
Credit related fees			148				195				147				148				172				16	%			16	%
Total fee income			3,013				3,476				3,551				3,670				4,140				13	%			37	%
Total fee expense			145				217				241				279				387				39	%			167	%
Net fee income			2,868				3,259				3,310				3,391				3,753				11	%			31	%

 

In 3Q19 Net Income from financial assets and liabilities at fair value through profit or loss totaled Ps.659 million, increasing 395% or Ps.526 million compared to 2Q19. Profit from investment in derivative financing instruments and profit from sale of financial assets at fair value stand out with a Ps.747 million and Ps.199 million increase respectively. Income from government securities decreased Ps.367 million in 3Q19.

 

 

3Q19 Earnings Release

 

NET INCOME FROM FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Profit or loss from government securities			215				165				165				39				-328				-				-
Profit or loss from private securities			66				168				149				145				136				-6	%			107	%
Profit or loss from investment in derivative financing instruments			235				-22				301				-12				735				-				213	%
Profit or loss from other financial assets			61				65				51				49				12				-76	%			-80	%
Profit or loss from investment in equity instruments			1				4				1,401				9				0				-100	%			-100	%
Profit or loss from the sale of financial assets at fair value			-85				-16				-91				-97				102				-				-
Income from financial assets at fair value through profit or loss			493				364				1,976				133				657				394	%			33	%
Profit or loss from derivative financing instruments			6				0				-2				0				2				100	%			-67	%
Income from financial liabilities at fair value through profit or loss			6				0				-2				0				2				100	%			-67	%
NET INCOME FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS			499				364				1,974				133				659				395	%			32	%

 

In the quarter Other Operating Income totaled Ps.1.1 billion, increasing 9% or Ps.88 million compared to 2Q19. On a yearly basis Other Operating Income increased 11% or Ps.131 million.

 

OTHER OPERATING INCOME		MACRO Consolidated																				Variation
IN MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Credit and debit cards			0				0				37				55				44				-20	%			100	%
Lease of safe deposit boxes			57				62				72				80				91				14	%			60	%
Other service related fees			240				192				257				170				319				88	%			33	%
Sale of real estate and other non-financial assets			0				24				4				166				0				-100	%			0	%
Other adjustments and interest from other receivables			73				69				133				168				165				-2	%			125	%
Initial recognition of loans			47				-51				28				42				-8				-				-
Sale of property, plant and equipment			1				36				2				3				5				67	%			400	%
Others			784				81				2,581				299				455				52	%			-42	%
Other Operating Income			1,202				413				3,114				983				1,071				9	%			-11	%

 

In 3Q19 Banco Macro’s administrative expenses plus employee benefits totaled Ps.7.3 billion, 2% or Ps.114 million higher than the previous quarter. On a yearly basis administrative expenses plus employee benefits increased 63% or Ps.2.8 billion, due to higher expenses related to employee benefits (salary increases and severance pay) and other administrative expenses (including Director’s fees).

 

Employee benefits decreased 10% or Ps.488 million QoQ (the main driver for the decrease were lower social security contributions (Ps.887 million)). On a yearly basis Employee benefits increased 63% or Ps.1.7 billion.

 

As of 3Q19, the accumulated efficiency ratio reached 32.5%, improving from the 33.5% posted in 2Q19 and improving from the 37.6% posted in 3Q18. In 3Q19 expenses (employee benefits + G&A expenses + depreciation and impairment of assets) increased 2%, while income (net interest income + net fee income + differences in quoted prices of gold and foreign currency + other operating income + net income from financial assets at fair value through profit or loss – (Turnover Tax + Insurance on deposits)) increased 26% compared to 2Q19.

 

 

3Q19 Earnings Release

 

PERSONNEL & ADMINISTRATIVE EXPENSES		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Employee benefits			2,720				3,124				3,133				4,916				4,428				-10	%			63	%
Remunerations			2,076				2,350				2,299				3,004				3,156				5	%			52	%
Social Security Contributions			403				453				476				1,555				668				-57	%			66	%
Compensation and bonuses			174				235				278				276				491				78	%			182	%
Employee services			67				86				80				81				113				40	%			69	%
Administrative Expenses			1,776				2,105				2,096				2,301				2,903				26	%			63	%
Taxes			214				236				266				300				322				7	%			50	%
Maintenance, conservation fees			243				293				280				316				335				6	%			38	%
Directors & statutory auditors´fees			174				233				323				290				555				91	%			219	%
Security services			200				195				212				220				253				15	%			27	%
Electricity & Communications			154				201				208				235				242				3	%			57	%
Other professional fees			145				191				164				199				219				10	%			51	%
Rental agreemets			88				105				53				48				38				-21	%			-57	%
Advertising & publicity			81				146				51				92				103				12	%			27	%
Personnel allowances			30				32				33				40				43				8	%			43	%
Stationary & Office Supplies			17				16				18				19				27				42	%			59	%
Insurance			15				24				21				25				28				12	%			87	%
Hired administrative services			5				5				4				4				2				-50	%			-60	%
Other			410				429				463				513				736				43	%			80	%
Total Administrative Expenses			4,496				5,229				5,229				7,217				7,331				2	%			63	%
Total Employees			9,096				9,028				8,978				8,893				8,843
Branches			473				471				464				463				462
Efficiency ratio			39.1	%			35.8	%			28.6	%			38.3	%			31.1	%
Accumulated efficiency ratio			37.6	%			37.9	%			28.6	%			33.5	%			32.5	%

 

In 3Q19, Other Operating Expenses totaled Ps.6.6 billion, increasing 68% or Ps.2.7 billion QoQ. Turnover Tax and Others stand out with a 16% (Ps.284 million) increase and a 125% (Ps.2.1 billion) increase respectively QoQ. The increase in Others is related to losses in the amount of Ps.2.6 billion due to the reprofiling of short term debt (Lecaps, Lelinks, Letes, Lecer notes) announced by the Government of Argentina on August 29, 2019 and higher credit card charges and taxes. On a yearly basis Other Operating Expenses increased 146% or Ps. 3.9 billion.

 

OTHER OPERATING EXPENSES		MACRO Consolidated																				Variation
MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Turnover Tax			1,600				1,749				1,855				1,831				2,115				16	%			32	%
Other provision charges			224				527				185				236				471				100	%			110	%
Deposit Guarantee Fund Contributions			82				91				104				118				135				14	%			65	%
Donations			20				18				35				37				36				-3	%			80	%
Insurance claims			16				17				11				10				13				30	%			-19	%
Others			751				811				914				1,718				3,866				125	%			415	%
Other Operating Expenses			2,693				3,213				3,104				3,950				6,636				68	%			146	%

 

In 3Q19 Banco Macro's income tax resulted in a Ps.1.3 billion gain. During this quarter and in accordance with applicable Income Tax Law and regulations and the evolution of Consumer Price Index the Bank decided to adjust income tax by inflation.

 

 

3Q19 Earnings Release

 

Financial Assets

 

Private sector financing

 

The volume of “core” financing to the private sector (including loans, financial trust and leasing portfolio) totaled Ps.192.8 billion, increasing 10% or Ps.18.1 billion QoQ and 15% or Ps.24.5 billion YoY.

 

Within commercial loans, growth was driven by Overdrafts; with a 78% or Ps.12.3 billion increase QoQ.

 

The main growth in consumer lending was driven by credit card loans which grew 12% or Ps.3.4 million QoQ.

 

As of 3Q19, Banco Macro´s market share over private sector loans was 7.7%.

 

FINANCING TO THE PRIVATE SECTOR		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Overdrafts			16,121				16,897				11,132				15,832				28,131				78	%			74	%
Discounted documents			22,281				24,218				26,250				21,380				21,669				1	%			-3	%
Mortgages loans			12,999				12,667				12,733				12,172				12,944				6	%			0	%
Pledged loans			5,010				4,333				4,325				3,934				4,507				15	%			-10	%
Personal loans			56,691				56,413				57,095				56,459				56,200				0	%			-1	%
Credit Card loans			27,701				29,567				29,515				29,676				33,108				12	%			20	%
Others			21,091				19,717				23,393				24,766				23,633				-5	%			12	%
Interest			4,912				6,900				7,366				8,518				10,136
Total loan portfolio			166,806				170,712				171,809				172,737				190,328				10	%			14	%
Total loans in Pesos			121,837				125,374				117,783				119,172				136,488				15	%			12	%
Total loans in USD			44,969				45,338				54,026				53,565				53,840				1	%			20	%
Financial trusts			630				1,384				1,373				985				1,371				39	%			118	%
Leasing			485				446				386				335				292				-13	%			-40	%
Others			407				367				434				650				840				29	%			106	%
Total other financing			1,522				2,197				2,193				1,970				2,503				27	%			64	%
Total other financing in Pesos			1,215				1,787				1,578				1,017				1,500				47	%			23	%
Total other financing in USD			307				410				615				953				1,003				5	%			227	%
Total financing to the private sector			168,328				172,909				174,002				174,707				192,831				10	%			15	%
EOP FX (Pesos per USD)			40.8967				37.8083				43.3533				42.4483				57.5583				36	%			41	%
USD financing / Financing to the private sector			27	%			26	%			31	%			31	%			28	%

 

 

3Q19 Earnings Release

 

Public Sector Assets

 

In 3Q19, the Bank’s public sector assets (excluding LELIQs) to total assets ratio was 4.9%, higher than the 2.9% registered in the previous quarter, and higher than the 3.4% posted in 3Q18.

 

In 3Q19, a 36% or Ps.30.5 billion decrease in LELIQs securities position stands out. Banco Macro’s strategy during the quarter was to allocate excess liquidity in loans and other financial instruments.

 

In 3Q19 Other government securities increased 82% or Ps.8.7 billion.

 

PUBLIC SECTOR ASSETS		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Lebacs			651				0				0				0				1,020				0	%			57	%
Leliqs			34,260				55,070				98,918				85,344				54,898				-36	%			60	%
Other			8,770				10,333				10,901				10,630				19,346				82	%			121	%
Government securities			43,681				65,403				109,819				95,974				75,264				-22	%			72	%
Provincial loans			1,856				1,685				1,197				976				340				-65	%			-82	%
Loans			1,856				1,685				1,197				976				340				-65	%			-82	%
Purchase of government bonds			60				75				0				0				0				0	%			-100	%
Other receivables			60				75				0				0				0				0	%			-100	%
TOTAL PUBLIC SECTOR ASSETS			45,597				67,163				111,016				96,950				75,604				-22	%			66	%
TOTAL PUBLIC SECTOR LIABILITIES			0				0				0				0				0				0	%			0	%
Net exposure			45,597				67,163				111,016				96,950				75,604				-22	%			66	%
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)			10,686				12,093				12,098				11,606				19,686				70	%			84	%
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)/TOTAL ASSETS			3.4	%			3.5	%			3.1	%			2.9	%			4.9	%

 

Funding

 

Deposits

 

Banco Macro’s deposit base totaled Ps.259.2 billion in 3Q19, decreasing 9% or Ps.25.1 billion QoQ and increasing 22% or Ps.46.6 billion YoY and representing 79% of the Bank’s total liabilities.

 

On a quarterly basis, private sector deposits decreased 8% or Ps.22 billion, while public sector deposits decreased 13% or Ps.3.1 billion.

 

The decrease in private sector deposits was led by time deposits, which decreased 19% or Ps.28.4 billion, while demand deposits increased 4% or Ps.4.4 billion QoQ.

 

Within private sector deposits, peso deposits decreased 6% or Ps.9.8 billion, while US dollar deposits decreased 36% or USD765 million.

 

In line with Banco Macro’s strategy of reducing Leliq exposure during the quarter, the Bank proactively decided to reduce its peso deposit base.

 

As of 3Q19, Banco Macro´s market share over private sector deposits was 6.5%.

 

 

3Q19 Earnings Release

 

DEPOSITS		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Public sector			20,074				19,354				28,192				23,565				20,438				-13	%			2	%
Financial sector			150				148				211				244				293				20	%			95	%
Private sector			192,345				218,452				244,208				260,450				238,471				-8	%			24	%
Checking accounts			23,808				24,375				24,510				29,161				35,112				19	%			37	%
Savings accounts			64,110				68,695				66,673				78,759				77,195				18	%			47	%
Time deposits			98,431				118,034				148,833				147,678				119,235				-1	%			84	%
Other			5,996				7,348				4,192				4,852				6,929				16	%			-2	%
Total			212,569				237,954				272,611				284,259				259,202				-9	%			22	%
Pesos			140,558				166,597				187,632				191,752				178,844				-7	%			27	%
Foreign Currency (Pesos)			72,010				71,358				84,978				92,507				80,358				-13	%			12	%
EOP FX (Pesos per USD)			40.8967				37.8083				43.3533				42.4483				57.5583				36	%			41	%
Foreign Currency (USD)			1,761				1,887				1,960				2,179				1,396				-36	%			-21	%
USD Deposits / Total Deposits			34	%			30	%			31	%			33	%			31	%

 

Banco Macro’s transactional deposits represent approximately 47% of its total deposit base as of 3Q19. These accounts are low cost and are not sensitive to interest rate increases.

 

Other sources of funds

 

In 3Q19, the total amount of other sources of funds decreased 24% or Ps.21.1 billion compared to 2Q19. In 3Q19 Shareholder’s Equity increased 22% or Ps.13.6 billion due to the positive result registered in the quarter. Subordinated corporate bonds increased 38% or Ps.6.5 billion QoQ as a consequence of the argentine peso devaluation against the US dollar registered during the quarter.

 

OTHER SOURCES OF FUNDS		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Central Bank of Argentina			22				24				20				24				31				29	%			41	%
Banks and international institutions			2,389				2,568				2,345				1,743				2,660				53	%			11	%
Financing received from Argentine financial institutions			815				406				745				430				652				52	%			-20	%
Subordinated corporate bonds			16,796				15,288				17,836				17,192				23,726				38	%			41	%
Corporate bonds			6,513				6,377				6,314				6,193				6,008				-3	%			-8	%
Shareholders' equity			50,963				54,636				62,085				62,733				76,373				22	%			50	%
Total other source of funds			77,498				79,299				89,345				88,315				109,450				24	%			41	%

 

Liquid Assets

 

In 3Q19, the Bank’s liquid assets amounted to Ps.158.8 billion, showing a 16% or Ps.30 billion decrease QoQ, and a 44% or Ps.48.8 billion increase on a yearly basis.

 

In 3Q19, LELIQs own portfolio decreased 36% or Ps.30.5 billion, in line with the strategy adopted by the Bank to reduce its exposure to Central Bank Notes.

 

In 3Q19 Banco Macro’s liquid assets to total deposits ratio reached 61%.

 

LIQUID ASSETS		MACRO Consolidated																				Variation
In MILLION  $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Cash			68,919				74,766				75,309				96,427				96,609				0	%			40	%
Guarantees for compensating chambers			5,384				5,720				5,735				5,992				7,102				19	%			32	%
Call			720				405				178				990				150				-85	%			-79	%
LEBAC own portfolio			651				0				0				0				0				0	%			-100	%
Leliq own portfolio			34,260				55,070				98,918				85,344				54,898				-36	%			60	%
Total			109,934				135,961				180,140				188,753				158,759				-16	%			44	%
Liquid assets to total deposits			51.7	%			57.1	%			66.1	%			66.4	%			61.0	%

 

 

3Q19 Earnings Release

 

Solvency

 

Banco Macro continued showing high solvency levels in 3Q19 with an integrated capital (RPC) of Ps.86.8 billion over a total capital requirement of Ps.26.8 billion. Banco Macro’s excess capital in 3Q19 was 224% or Ps.60.1 billion.

 

The regulatory capital ratio (as a percentage of risk-weighted assets- RWA) was 26.5% in 3Q19, TIER1 Ratio stands at 18.9%.

 

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

 

MINIMUM CAPITAL REQUIREMENT		MACRO Consolidated																				Variation
In MILLION $		3Q18			4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Credit risk requirement			15,338				15,609				16,329				16,641				19,343				16	%			26	%
Market risk requirement			303				212				284				421				778				85	%			157	%
Operational risk requirement			4,199				4,616				5,189				5,959				6,627				11	%			58	%
Total capital requirements			19,840				20,437				21,802				23,021				26,748				16	%			35	%
Ordinary Capital Level 1 (COn1)			49,097				52,285				58,520				59,406				69,629				17	%			42	%
Deductible concepts Level 1 (COn1)			-3,186				-3,047				-3,708				-4,160				-7,807				88	%			145	%
Aditional Capital Level 1 (CAn1)			0				0				0				0				0				4	%			6	%
Capital Level 2 (COn2)			18,058				16,875				19,092				18,740				24,972				33	%			38	%
Integrated capital - RPC (i)			63,969				66,113				73,903				73,986				86,793				17	%			36	%
Excess capital			44,129				45,676				52,101				50,965				60,045				18	%			36	%
Risk-weighted assets - RWA (ii)			242,411				249,781				266,581				281,700				327,312				16	%			35	%
Regulatory Capital ratio [(i)/(ii)]			26.4	%			26.5	%			27.7	%			26.3	%			26.5	%
Ratio TIER 1 [Capital Level 1/RWA]			18.9	%			19.7	%			20.6	%			19.6	%			18.9	%
RWA - (ii): Risk Weighetd Assets, considering total capital requirements.

 

Asset Quality

 

In 3Q19, Banco Macro’s non-performing to total financing ratio reached a level of 1.9%, down from 2.12% in 2Q19, and higher than the 1.63% posted in 3Q18.

 

Consumer portfolio non-performing loans were unchanged while Commercial portfolio non-performing loans decreased 33bp in 3Q19.

 

The coverage ratio reached 124.16% in 23Q19. Write-offs over total loans totaled 0.4%.

 

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

 

ASSET QUALITY		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Commercial portfolio			69,497				71,202				68,794				72,524				88,833				22	%			28	%
Non-performing			624				917				618				575				414				-28	%			-34	%
Consumer portfolio			110,948				113,538				114,936				112,938				116,576				3	%			5	%
Non-performing			2,316				2,617				3,111				3,363				3,490				4	%			51	%
Total portfolio			180,445				184,740				183,730				185,462				205,409				11	%			14	%
Non-performing			2,940				3,534				3,729				3,938				3,904				-1	%			33	%
Commercial non-perfoming ratio			0.90	%			1.29	%			0.90	%			0.79	%			0.47	%
Consumer non-perfoming ratio			2.09	%			2.30	%			2.71	%			2.98	%			2.99	%
Total non-performing/ Total portfolio			1.63	%			1.91	%			2.03	%			2.12	%			1.90	%
Total allowances			3,853				4,161				4,446				4,573				4,847				6	%			26	%
Coverage ratio w/allowances			131.05	%			117.74	%			119.23	%			116.14	%			124.16	%
Write Offs			383				556				967				649				830				28	%			117	%
Write Offs/ Total portfolio			0.21	%			0.30	%			0.53	%			0.35	%			0.40	%

 

 

3Q19 Earnings Release

 

CER Exposure and Foreign Currency Position

 

CER EXPOSURE		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
CER adjustable ASSETS
Private sector loans (*)			6,754				6,801				6,776				6,753				6,980				3	%			3	%
Other loans			1				1				1				3				3				0	%			200	%
Total CER adjustable assets			6,755				6,802				6,777				6,756				6,983				3	%			3	%
CER adjustable LIABILITIES
Deposits (*)			835				929				348				273				199				-27	%			-76	%
Total CER adjustable liabilities			835				929				348				273				199				-27	%			-76	%
NET CER EXPOSURE			5,920				5,873				6,429				6,483				6,784				5	%			15	%
(*) Includes Loans &Time Deposits CER adjustable (UVAs)

 

 

FOREIGN CURRENCY POSITION		MACRO Consolidated																				Variation
In MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Cash and deposits in Banks			38,954				42,745				46,286				57,164				55,629				-3	%			43	%
Cash			3,351				3,287				3,031				3,367				9,746				189	%			191	%
Central Bank of Argentina			25,970				25,617				33,803				36,741				19,732				-46	%			-24	%
Other financial institutions local and abroad			9,354				13,385				9,450				17,053				26,147				53	%			180	%
Others			279				456				2				3				4				33	%			-99	%
Net Income from financial instruments at fair value through P&L			250				388				298				380				237				-38	%			-5	%
Derivatives			0				3				1				0				0				0	%			0	%
Other financial assets			1,698				1,547				1,724				1,771				2,639				49	%			55	%
Loans and other financing			45,775				46,040				54,891				54,591				54,793				0	%			20	%
Other financial institutions			567				480				513				453				193				-57	%			-66	%
Non financial private sector & foreign residents			45,208				45,560				54,378				54,138				54,600				1	%			21	%
Other debt securities			3,105				1,217				1,313				3,143				1,487				-53	%			-52	%
Guarantess received			988				929				1,756				1,241				1,713				38	%			73	%
Investment in equity instruments			7				6				7				7				10				43	%			43	%
Investment in associates and joint ventures			0				0				1				0				-1				-				-
Total Assets			90,777				92,875				106,277				118,297				116,507				-2	%			28	%
Deposits			72,011				71,358				84,978				92,507				80,358				-13	%			12	%
Non financial public sector			2,348				2,295				2,102				2,807				2,772				-1	%			18	%
Financial sector			114				100				167				163				220				35	%			93	%
Non financial private sector & foreign residents			69,549				68,963				82,709				89,537				77,366				-14	%			11	%
Derivatives			1				0				0				1				0				-100	%			-100	%
Other liabilities from financial intermediation			3,516				2,619				3,749				3,457				4,947				43	%			41	%
Non-subordinated corporate bonds			2,405				2,599				2,541				1,924				2,872				49	%			19	%
Subordinated corporate bonds			16,796				15,288				17,836				17,192				23,726				38	%			41	%
Other liabilities			40				35				43				43				61				42	%			53	%
Total Liabilities			94,769				91,899				109,147				115,124				111,964				-3	%			18	%
NET FX POSITION (Pesos)			-3,992				976				-2,870				3,173				4,543				43	%			-
EOP FX (Pesos per USD)			40.8967				37.8083				43.3533				42.4483				57.5583				36	%			41	%
NET FX POSITION (USD)			-97.6				25.8				-66.2				74.7				78.9				6	%			-

 

 

3Q19 Earnings Release

 

Relevant and Recent Events

 

·

Interest Payment Class C Peso denominated Notes. In October 2019, the Bank paid quarterly interest on Class C Peso denominated notes in the amount of Ps.457,223,242.10

 

·

Interest Payment Class A Subordinated Notes. In November 2019, the Bank paid semiannual interest on Class A Subordinated notes in the amount of USD.13,500,000.

 

·

Interest Payment Class B Peso denominated Notes. In November 2019, the Bank paid semiannual interest on Class B Peso denominated notes in the amount of Ps.252,804,212

 

·

Repurchase of Class C Peso denominated Notes. During 3Q19 the Bank repurchased Class C Peso denominated notes in the aggregate amount of Ps.227,500,000.

 

·

Repurchase of Class B peso denominated notes. During 3Q19, the Bank repurchased an aggregate amount of Ps.353,906,000 of Class B peso denominated notes.

 

·

Capital Reduction (Share Cancellation) in August 2019 the capital stock of the Bank was reduced in the amount of Ps.30,265,275 pursuant to the resolutions adopted by the Special and General Shareholders’ meeting held on April 30th, 2019.

 

·

Class B peso denominated notes cancellation. In Octobter 2019, the Bank cancelled class B peso denominated notes in the aggregate amount of Ps.501,861,000.

 

·

Merger with Banco del Tucumán. On October 11,2019 through Communication “C” 84993 the Central Bank of Argentina announced that Banco Macro had completed the merger with Banco del Tucumán.

 

·

Rating Actions. Banco Macro’s ratings downgraded. Following the downgrading of the Government of Argentina’s Bond Ratings, Fitch Ratings and Moody’s Investor Services downgraded Banco Macro’s global ratings. Particularly Banco Macro’s senior unsecured debt rating to CCC/RR4 from B/RR4, and the foreign currency subordinated debt rating to CCC-/RR6 from B-/RR6 (Fitch Ratings) and in the case of Moody’s investor services the senior unsecured debt rating to Caa2 from B2, and the foreign currency subordinated debt rating to Caa3 from B3.

 

Regulatory Changes

 

·

Inflation Adjustment. In February 2019, through Communication “A” 6651 the Central Bank of Argentina (BCRA) established that financial institutions should restate financial statements in accordance with IAS 29 starting from January 1st, 2020. As of the date of this report the Bank has quantified the effects of the application of Expected losses of IFRS 9 “Financial Instruments” and IAS 29 “Financial Reporting in Hyperinflationary Economies”. As of September 30, 2019 equity would be approximately Ps.88.7 billion, and net income for the nine months ended September 30, 2019 would be ~Ps.12.547 billion.

 

·

“Reprofiling” of Short term financial assets. On August 28th 2019, the Government of Argentina through Decree 596/2019 of the Executive Branch announced the “reprofiling” of short term debt notes, extending maturities of LECAPs (notes that capitalize interest), LETEs (USD denominated notes), LECER (inflation linked notes) and LELINKs (notes linked to USD). The above mentioned Decree established a new schedule for payments: 15% of face value on the original maturity date, 25% at 90 days from the original maturity date, and the remaining 60% 180 days after the original maturity date. In the case of LECAPs with maturities after January 1st 2020, any remaining payment will be canceled 90 days after the original maturity date.

 

Banco Macro held some of the financial assets included in the “reprofiling” announced by the Government, prior to the “reprofiling” the book value of these financial assets totaled Ps.8.5 billion and after the “reprofiling” the book value totaled Ps.5.9 billion resulting in a Ps.2.6 billion loss registered in Other operating expenses. As of September 30, 2019 the book value of these “reprofiled” financial assets totaled Ps.6 billion.

 

 

3Q19 Earnings Release

 

·

Income Tax. Inflation Adjustment. Fiscal Reform Law 27,430 as amended by Law 27,468 established the terms and conditions for inflation adjustments for tax purposes for fiscal years starting from January 2018.

 

o

Inflation adjustment will be applicable in any fiscal year in which CPI exceeds a 100% increase over the last 36 months.

 

o

Inflation adjustment will be applicable if CPI exceeds 55% for the first fiscal period, 30% for the second fiscal period, 15% for the third fiscal period.

 

o

The resulting inflation adjusted tax should be considered as follows: one third during the first fiscal year, and the rest in same proportions over the next two fiscal years.

 

·

Dividend Payments. Central Bank’s Approval. In August 2018 the Central Bank of Argentina through Communication “A” 6768 established that effective August 30, 2019 all financial institutions should get Central Bank’s approval before paying dividends. The Central Bank will consider and assess the impact of the application of I.F.R.S9 Expected Losses and Inflation accounting pursuant to communication “A” 6551.

 

·

Dividend Payments. Central Bank’s Approval. In August 2018 the Central Bank of Argentina through Communication “A” 6768 established that effective August 30, 2019 all financial institutions should get Central Bank’s approval before paying dividends. The Central Bank will consider and assess the impact of the application of I.F.R.S9 Expected Losses and Inflation accounting pursuant to communication “A” 6551.

 

·

Currency Controls. In September 2019 through Decree 609/2019 of the Executive Branch and Communication “A” 6770 the Central Bank of Argentina established currency controls:

 

o

Individuals are allowed to buy up to USD 10,000 per month. Transactions above USD 1,000 have to be made electronically and no cash transactions are allowed above that limit.

 

o

Corporates are not allowed to buy USD for saving purposes, they can still buy USD to pay imports or for servicing debt, and will need Central Bank’s approval for pre canceling debt, paying dividends abroad, transferring USD abroad.

 

o

Global Net Position (FX): the global position (on daily basis) cannot be higher than USD 2,500,000 or 4% of integrated capital (down from 5%)

 

·

Currency Controls. In October 2019 the Central Bank of Argentina through Communication “A” 6815 and effective from October 28, 2019 resolved to update and tighten the measures adopted in Communication “A” 6670 so as to lower the limit for USD purchases for individuals from USD 10,000 to USD 200 per month and sets a limit of USD 100 for cash purchases.

 

·

Reserve Requirements. On October 28, through Communication “A” 6817 the Central Bank of Argentina (BCRA) established that starting November 1st, 2019 reserve requirements on demand deposits (checking and saving accounts) could no longer be set up with Leliqs. As of this date reserve requirements for demand deposits stand at 45% (40% should be set up in cash and up to 5% can be set up with Treasury Bonds 2020)

 

 

3Q19 Earnings Release

 

QUARTERLY BALANCE SHEET		MACRO Consolidated																				Variation
IN MILLIONS $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
ASSETS
Cash and deposits in Banks			68,919				74,766				75,309				96,427				96,609				0	%			40	%
Cash			8,828				10,697				8,770				9,247				15,478				67	%			75	%
Central Bank of Argentina			50,418				50,211				57,079				70,116				54,967				-22	%			9	%
Other locan & foreign entities			9,394				13,402				9,456				17,062				26,160				53	%			178	%
Other			279				456				4				2				4				100	%			-99	%
Debt securities at fair value through profit & loss			1,760				2,635				2,964				1,980				1,496				-24	%			-15	%
Derivatives			71				17				42				17				56				229	%			-21	%
Repo Transactions			-				-				-				-				-				0	%			0	%
Other financial assets			3,309				3,000				3,170				4,100				4,080				0	%			23	%
Loans & other recievables			174,288				178,875				177,717				178,851				194,354				9	%			12	%
Non Financial Public Sector			1,943				1,776				1,304				1,105				471				-57	%			-76	%
Financial Sector			4,647				5,574				3,784				4,024				2,423				-40	%			-48	%
Non Financial private sector and foreign			167,698				171,525				172,629				173,722				191,460				10	%			14	%
Other debt securities			44,976				64,585				109,048				97,381				76,570				-21	%			70	%
Financial assets in guarantee			6,241				6,756				7,300				7,157				10,710				50	%			72	%
Investments in equity instruments			52				52				1,504				1,510				1,512				0	%			2808	%
Investments in other companies (subsidiaries and joint ventures)			85				109				124				124				135				9	%			59	%
Property, plant and equipment			7,898				9,003				9,849				10,112				10,691				6	%			35	%
Intangible assets			1,147				1,401				1,548				1,869				2,049				10	%			79	%
Deferred income tax assets			57				47				60				77				2,776				3505	%			4770	%
Other non financial assets			2,216				833				1,078				986				1,178				19	%			-47	%
Non-current assets held for sale			127				804				583				441				441				0	%			247	%
TOTAL ASSETS			311,146				342,883				390,296				401,032				402,657				0	%			29	%
LIABILITIES
Deposits			212,569				237,954				272,611				284,259				259,202				-9	%			22	%
Non Financial Public Sector			20,074				19,354				28,192				23,565				20,438				-13	%			2	%
Financial Sector			150				148				211				244				293				20	%			95	%
Non Financial private sector and foreign			192,345				218,452				244,208				260,450				238,471				-8	%			24	%
Liabilities at fair value through profit & loss			-				-				-				-				-				0	%			0	%
Derivatives			212				1				111				11				147				1236	%			-31	%
Repo Transactions			-				165				-				278				2,167				679	%			100	%
Other financial liabilities			12,795				15,319				16,622				14,833				16,711				13	%			31	%
Financig received from Central Bank and Other Financial Institutions			3,246				2,998				3,111				2,198				3,345				52	%			3	%
Issued Corporate Bonds			6,513				6,377				6,314				6,193				6,008				-3	%			-8	%
Current income tax liabilities			2,109				2,947				4,567				4,149				4,508				9	%			114	%
Subordinated corporate bonds			16,796				15,288				17,836				17,192				23,726				38	%			41	%
Provisions			798				1,046				970				1,026				1,329				30	%			67	%
Deferred income tax liabilities			132				275				404				475				1				-100	%			-99	%
Other non financial liabilities			5,011				5,875				5,662				7,682				9,137				19	%			82	%
TOTAL LIABILITIES			260,181				288,245				328,208				338,296				326,281				-4	%			25	%
SHAREHOLDERS' EQUITY
Capital Stock			670				670				670				670				639				-5	%			-5	%
Issued Shares premium			12,429				12,429				12,428				12,428				12,428				0	%			0	%
Adjustment to Shareholders' Equity			5				5				5				5				5				0	%			0	%
Reserves			23,290				21,996				21,996				34,807				34,837				0	%			50	%
Retained earnings			3,265				3,265				18,994				-211				-211				-				-
Other accumulated comprehensive income			819				543				649				658				1,141				73	%			39	%
Net income for the period / fiscal year			10,486				15,729				7,343				14,376				27,534				92	%			163	%
Shareholders' Equity attributable to parent company			50,963				54,636				62,085				62,733				76,373				22	%			50	%
Shareholders' Equity attributable to non controlling interest			3				2				3				3				3				0	%			0	%
TOTAL SHAREHOLDERS' EQUITY			50,965				54,638				62,088				62,736				76,376				22	%			50	%

 

 

 

3Q19 Earnings Release

 

INCOME STATEMENT		MACRO Consolidated																				Variation
IN MILLION $		3Q18				4Q18				1Q19				2Q19				3Q19				QoQ				YoY
Interest Income			16,809				23,814				24,395				31,334				35,582				14	%			112	%
Interest Expense			6,486				11,526				11,464				14,549				15,525				7	%			139	%
Net Interest Income			10,323				12,288				12,931				16,785				20,057				19	%			94	%
Fee income			3,013				3,476				3,551				3,670				4,140				13	%			37	%
Fee expense			144				217				241				279				387				39	%			169	%
Net Fee Income			2,869				3,259				3,310				3,391				3,753				11	%			31	%
Subtotal (Net Interest Income + Net Fee Income)			13,192				15,547				16,241				20,176				23,810				18	%			80	%
Net Income from financial instruments at Fair Value Through Profit & Loss			499				364				1,974				133				659				395	%			32	%
Result from assets at amortised cost			-3				1				-17				-				-1				-				-67	%
Difference in quoted prices of gold and foreign currency			-1,244				729				-51				333				1,497				350	%			-
Other operating income			1,202				413				3,113				983				1,071				9	%			-11	%
Provision for loan losses			732				836				2,154				848				824				-3	%			13	%
Net Operating Income			12,914				16,218				19,107				20,777				26,212				26	%			103	%
Personnel expenses			2,720				3,124				3,133				4,916				4,428				-10	%			63	%
Administrative expenses			1,776				2,105				2,096				2,301				2,903				26	%			63	%
Depreciation and impairment of assets			187				215				290				317				366				15	%			96	%
Other operating expense			2,693				3,213				3,104				3,950				6,636				68	%			146	%
Operating Income			5,538				7,561				10,484				9,293				11,879				28	%			114	%
Income from associates and joint ventures			12				33				26				613				17				-97	%			42	%
Net Income before income tax on cont. operations			5,550				7,594				10,510				9,906				9,906				0	%			78	%
Income tax on continuing operations			1,718				2,351				3,166				2,874				-1,263				-				-
Net Income from continuing operations			3,832				5,243				7,344				7,032				13,159				87	%			243	%
Net Income for the period			3,832				5,243				7,344				7,032				13,159				87	%			243	%
Net Income of the period attributable to parent company			3,828				5,243				7,343				7,033				13,158				87	%			244	%
Net income of the period attributable to non-controlling interests			4				-				1				-1				1				-				-75	%
Other Comprehensive Income			313				-276				106				10				481				4710	%			54	%
Foreign currency translation differences in financial statements conversion			454				-119				211				-35				533				-				17	%
Profits or losses from financial assets measured at fair value through other comprehensive income (FVOCI) (IFRS 9(4.1.2)(a)			-141				-157				-105				45				-52				-				-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD			4,145				4,967				7,450				7,042				13,640				94	%			229	%
Total Comprehensive Income attributable to parent Company			4,142				4,967				7,449				7,043				13,639				94	%			229	%
Total Comprehensive Income attributable to non-controlling interests			3				-				1				-1				1				-				-67	%

 

 

3Q19 Earnings Release

 

QUARTERLY ANNUALIZED RATIOS		MACRO Consolidated
		3Q18				4Q18				1Q19				2Q19				3Q19
Profitability & performance
Net interest margin			13.4	%			16.9	%			17.2	%			18.0	%			21.2	%
Net interest margin adjusted (exc. FX)			15.3	%			16.0	%			17.3	%			17.7	%			19.7	%
Net fee income ratio			20.0	%			12.0	%			23.1	%			12.3	%			10.4	%
Efficiency ratio			39.1	%			35.8	%			28.6	%			38.3	%			31.1	%
Net fee income as % of A&G Expenses			51.0	%			33.7	%			80.9	%			32.2	%			33.4	%
Return on average assets			5.4	%			6.4	%			8.4	%			7.1	%			12.4	%
Return on average equity			29.0	%			38.8	%			50.0	%			44.4	%			74.9	%
Liquidity
Loans as a percentage of total deposits			82.0	%			75.2	%			65.2	%			62.9	%			75.0	%
Liquid assets as a percentage of total deposits			51.7	%			57.1	%			66.1	%			66.4	%			61.0	%
Capital
Total equity as a percentage of total assets			16.4	%			15.9	%			15.9	%			15.6	%			19.0	%
Regulatory capital as % of APR			26.4	%			26.5	%			27.7	%			26.3	%			26.5	%
Asset Quality
Allowances over total loans			2.1	%			2.3	%			2.4	%			2.5	%			2.4	%
Non-performing financing as a percentage of total financing			1.6	%			1.9	%			2.0	%			2.1	%			1.9	%
Coverage ratio w/allowances			131.1	%			117.7	%			119.2	%			116.1	%			124.2	%
Cost of Risk			1.8	%			1.9	%			4.9	%			1.9	%			1.7	%

 

ACCUMULATED ANNUALIZED RATIOS		MACRO Consolidated
		3Q18				4Q18				1Q19				2Q19				3Q19
Profitability & performance
Net interest margin			14.0	%			14.9	%			17.2	%			17.6	%			19.1	%
Net interest margin adjusted (exc. FX)			15.2	%			15.4	%			17.3	%			17.5	%			18.5	%
Net fee income ratio			21.5	%			16.7	%			23.1	%			17.7	%			14.8	%
Efficiency ratio			37.6	%			37.9	%			28.6	%			33.5	%			32.5	%
Net fee income as % of A&G Expenses			57.2	%			44.0	%			80.9	%			52.8	%			45.6	%
Return on average assets			5.6	%			5.8	%			8.4	%			7.7	%			9.4	%
Return on average equity			27.8	%			30.7	%			50.0	%			47.0	%			57.3	%
Liquidity
Loans as a percentage of total deposits			82.0	%			75.2	%			65.2	%			62.9	%			75.0	%
Liquid assets as a percentage of total deposits			51.7	%			57.1	%			66.1	%			66.4	%			61.0	%
Capital
Total equity as a percentage of total assets			16.4	%			15.9	%			15.9	%			15.6	%			19.0	%
Regulatory capital as % of APR			26.4	%			26.5	%			27.7	%			26.3	%			26.5	%
Asset Quality
Allowances over total loans			2.1	%			2.3	%			2.4	%			2.5	%			2.4	%
Non-performing financing as a percentage of total financing			1.6	%			1.9	%			2.0	%			2.1	%			1.9	%
Coverage ratio w/allowances			131.1	%			117.7	%			119.2	%			116.1	%			124.2	%
Cost of Risk			1.7	%			1.7	%			4.9	%			3.4	%			2.8	%

 

 

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 8, 2019

 

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