Banco Macro SA (BMA) 2012 Q1 法說會逐字稿

(audio in progress) After the Company's remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. (Operator Instructions)

It is now my pleasure to turn the conference call over to -- it is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Pablo Brito, member of Executive Committee; Mr. Guillermo Goldberg, Deputy General Manager; Mr. Jorge Scarinci, Finance and IR Manager; and other members of the bank's management team.

Now, I will turn the conference over to Mr. Jorge Scarinci, Finance and IR Manager. You may begin your conference.

Good morning, and welcome to Banco Macro first quarter 2012 conference call. Any comments that we may make today may include forward-looking statements which are subject to varying conditions, and these are outlined in our 20-F which was filed to the SEC and is available at our website.

First quarter 2012 press release was distributed yesterday and is also available at our website.

Banco Macro is one of the leading private banks in Argentina, with some presence in the interior of the country and a branch network of 417 branches. Even though we are a universal bank, we focus on low- to middle-income individuals and SMEs. Banco Macro is the financial agent of four provinces in Argentina -- Salta, Jujuy, Misiones, and Tucuman.

Now, I will briefly comment on the bank's first quarter 2012 financial results.

Banco Macro's net income for the quarter was ARS323.8 million, or 26% higher than the ARS257.7 million earned one year ago.

The bank's annualized first quarter 2012 return on equity and return on assets of 26.4% and 3.2%, respectively, remain healthy and shows the bank's earnings potential.

Nevertheless, Banco Macro's accounted additional provisions of ARS51 million in the quarter. Had these provisions been excluded, first quarter 2012 net income would have been ARS374.8 million, representing 30.5% return on average equity and 3.7% on a return on average assets.

In the quarter, net financial income totaled ARS892.5 million, or 40% higher than the ARS636.1 million registered one year ago. This performance can be traced to our 56% year-on-year increase in financial income, and 83% year-on-year increase in financial expenses.

Within financial income, interest on loans rose 79% year on year, due to the 48% growth in the loan portfolio and a 300-bp increase in the average lending rates. In the first quarter of 2012, interest on loans represented 85% of total financial income, compared to the 74% in the first quarter of 2011.

On the other hand, income from government and private securities decreased 35% year on year, due to a smaller bond portfolio owned by Banco Macro.

Meanwhile, within financial expenses, interest on deposits grew 100% year on year, due to a 30% increase in volume of deposits and an approximately 500-bp increase in the average deposit interest rates.

The [former[ combined effect resulted in an increase of the bank's net interest margin from 10.2% in the first quarter of 2011 to 11.7% in the first quarter of 2012. Had we excluded bond gains and warranty loans on the calculation, the bank's net interest margin would have been widened to farther 11.8% from last year's level of 9.4%.

The bank's net fee income grew 40% year on year based on deposit accounts, credit cards, and loan-related fees.

Administrative expenses rose 30% year on year, mainly due to an increase in personnel expenses and higher operating expenses. The increase in personnel expenses can be traced to the 29% annual salary increase agreed with the unions back in May 2011. On the contrary, in this quarter, the decrease in personnel expenses was driven by the provision for the payment of bonuses, ARS56 million, and the one-time Banker's Day of ARS8.3 million payment which were both accounted in the previous quarter. In addition, during the first quarter of 2012, other charges and extra provisions for future salaries increases were accounted.

The efficiency ratio reached 50.6%, a much better level than the 54.8% level posted one year ago.

As of March 2012, Banco Macro's effective income tax rate was 40.6%, above the 36.6% posted one year ago. This increase was based on the additional provisions for loan losses made in the quarter which cannot be deducted from taxable income and, therefore, the accountable income was lower than the tax income.

In terms of loan growth, the bank's financing to the private sector grew 4% quarter on quarter and 48% year on year, continuing to show some deceleration in the economy in the first quarter of the year. Commercial and consumer lending were pretty active during the quarter.

On the funding side, total deposits grew 12% quarter on quarter and 30% on a yearly basis. Private sector deposits grew 31% year on year, on the back of 44% growth in time deposits and 22% growth in transactional accounts. As of March 2012, Banco Macro's transactional accounts represented approximately 43% of total deposits and, therefore, the bank's average annualized cost of funds was 7.3%.

In terms of asset quality, Banco Macro's non-performing to total financing ratio improved to 1.57%, from last year's level of 1.71%. However, on a quarterly basis, NPL slightly deteriorated from the previous quarter's 1.49% level. Banco Macro decided to account for additional provisions of ARS51 million in the quarter to those required by the central bank and to comply with the provisioning policies established internally.

The coverage ratio reached 160.7%.

In terms of capitalization, Banco Macro accounted an excess of capital of ARS2.2 billion, which represented a capitalization ratio of 18.3%. The bank continues to support growth through the best use of capital.

The bank's liquidity remained healthy. Liquid assets to total deposits ratio reached 43.9%.

Banco Macro accounted for another positive quarter. We continued showing a solid financial position, asset quality under control and closely monitored. We continue working to improve more our efficiency standards. We have one of the cleanest balance sheets in Argentina's banking sector. And, we keep a well-(inaudible) deposit base with one of the lowest cost of funds in Argentina's banking sector.

So, at this time, Operator, we would like to take the questions that people may have. Thanks.

At this time, we're going to open it up for question and answers. (Operator Instructions) Saul Martinez, J.P. Morgan.

Hi. Good morning, Jorge. A couple of questions. First, as you mentioned, you increased your provisioning above and beyond what the central bank guidelines call for, and you also, sequentially, you also increased, at least quarter on quarter, you increased your liquidity position, I guess from ARS10.4 billion to over ARS14 billion. Just curious what the logic was there? Are you expecting the conditions to worsen in the future, and you're taking a conservative stance ahead of that? If you could just walk us through what the logic was, what seems like, you know, a pretty conservative stance on those two items?

And, then, a more mundane question is, you know, what your expectations are for asset quality, NPLs, and provisioning levels, maybe as a percentage of average loans, going forward this year? Thanks.

Hi, Saul. Well, basically, the increase in the provisioning is based on, well, you know this, that we grew last year at 52% our loan book. That was a huge increase. And, combined with the lower increase that we are having this year in terms of loan growth and the deceleration that the market is expecting on the economy, that's why we are increasing some of this provisioning, just to basically be aware of what could be happening in the future. There is a slight deterioration in asset quality, that we have been mentioning this, that would be the effect of the combined issues that I mentioned before -- the lower loan growth that we are having this year, combined with the big increase that we had last year, plus the deceleration of the economy.

And, increasing liquidity is based that, in the quarter, deposits grew faster than loans. And, that is an easy thing to see. Of course, the first quarter of the year is a seasonally low quarter here in Argentina. We saw [SME] loan demand in the first quarter. And, that's basically why we built up more liquidity.

And, again, we continue to see lower GDP growth this year than the previous year and, therefore, lower loan demand this year.

In terms of asset quality trends going forward, again, we think that asset quality standards would slightly deteriorate along the year. And, the idea is to closely monitor the NPL portfolio, and depending on that, we could be provisioning some additional provisions in the future, or not. That will depends on the behavior on the NPLs, behavior of the economy, and the behavior of loan demand. So, that which is going to be monitored in the future.

Are you seeing any signs now that credit quality is deteriorating, as you've seen the economy really start to decelerate now?

No. When you look at our numbers, it's pretty clear in the press release, the deterioration that we've seen in the first quarter was very, very small. But, well, we have to be careful of what could be happening going forward, because this is a year where the economy is going to grow around 3% in real terms, compared to the almost 7% that it grew last year. So, we have to be, consider that also.

All right. Thanks a lot, Jorge.

You're welcome.

(Operator Instructions) Federico Rey, Raymond James.

Yes. Hi. Good morning. I have a question regarding the income tax. My question is, if you decide not to create excess provisions during the next quarters, the effective income tax rate would decline to the typical 30%, 35%, right?

Yes. Hi, Federico. Yes. Basically, the increase in the income tax rate was because of the additional provisions. So, if in the case that we do not have additional provisions in the coming quarters, the effective income tax rate should be going down to levels of around 35%.

OK. Thank you.

You're welcome.

(Operator Instructions) There are no questions at this time. This concludes the question-and-answer session. I will now turn the conference over to Mr. Jorge Scarinci for final consideration.

OK. I want to thank everyone for your interest in Banco Macro. Of course, we appreciate your time, and look forward to speaking with you soon. Have a good day. Thanks.

Thank you. This concludes today's conference call. You may now disconnect.