Banco Macro SA (BMA) 2012 Q3 法說會逐字稿

Good morning ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's 3Q12 earnings conference call.

We would like to inform you that 3Q12 press release is available to download at the investor relations website of Banco Macro at www.ri-macro.com.ar. Also, this event is being recorded, and all participants will be in listen-only mode during the Company's presentation. After the Company's remarks are completed, there will be a question-and-answer session. At that time, further instruction will be given. (Operator Instructions).

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

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

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

Third quarter 2012 press release was distributed yesterday, and it is also available at our website.

Banco Macro is one of the leading private banks in Argentina, with a strong presence in the interior of the country and a branch network of 427 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.

I will now briefly comment on the Bank's third quarter 2012 financial results. Banco Macro's net income for the quarter was ARS411.9 million, or 31% higher than the ARS314.2 million earned one year ago.

The Bank's quarter annualized return on equity and return on assets of [29.4% and 3.7%], respectively, remain healthy and show the Bank's earnings potential. Nevertheless, Banco Macro decided to fully amortize to amparos and accounted losses for ARS45 million. Had these one-time results been excluded, third quarter 2012 net income would have been AR456.9 million, and the result would have represented a return on equity and return on assets of [32.7% and 4.1%], respectively.

In the quarter, net financial income totaled ARS1.1 billion, or 38% higher than the ARS766.5 million registered one year ago. This performance can be traced to a 50% year-on-year increase in financial income and a 72% year-on-year increase in financial expenses.

Within financial income, interest on loans rose 52% year on year, due to our 41% growth in the average loan portfolio and a 300-basis points increase in the average lending interest rates. In the third quarter of 2012, interest on loans represented 85% of total financial income, compared to the 84% in the same quarter of last year.

On the other hand, net income from government and private securities decreased 13% year on year due to the lower income from government securities, mainly LEBACs and NOBACs, which was justified by a smaller average portfolio of these securities.

Meanwhile, within financial expenses, interest on deposits grew 88% year on year, due to a 28% increase in volume of deposits and a 350-basis points increase in the average deposits interest rates.

The [formal] combined effect resulted in an increase of the Bank's net interest margin from 10.7% in the same quarter of last year to 11.9% as of the third quarter of 2012. Had we excluded bond gains and warranty loans on the calculation, the Bank's net interest margin would have widened to a further 12.4% from last year's level of 10.4%.

The Bank's net fee income grew 23% year on year, based on deposit accounts and debit and credit card fees.

Administrative expenses rose 21% 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 23% annual average salary increase agreed with the unions back in May 2012.

The accumulated efficiency ratio reached 50.4%, much better than the 55.8% level posted as of the third quarter of 2011.

As of September 2012, Banco Macro's effective income tax rate was 38%, lower than the 43.1% posted in the second quarter of 2012.

In terms of loan growth, the Bank's financing to the private sector grew 7% (sic-see press release) quarter on quarter and 23% year on year, which continues showing some deceleration in the economy in the third quarter of this year. Personal and credit card loans also grew during the quarter.

On the funding side, total deposits grew 3% quarter on quarter and 23% year on year. Private sector deposits grew 4% on a quarterly basis, while public sector deposits slightly decreased. Within private sector deposits, an increase in peso deposits of 6% was observed, while foreign currency deposits decreased 7%.

As of September 2012, Banco Macro's transactional accounts represented approximately 42% of total deposits and, therefore, the Bank's average annualized cost of funds was 7.4%.

In terms of asset quality, Banco Macro's nonperforming to total financing ratio reached 1.6%, compared to last levels of 1.34%. The coverage ratio reached 161.4%.

In terms of capitalization, Banco Macro accounted an excess of capital of ARS2 billion, which represented a capitalization ratio of 18.5%, even though in the third quarter of 2012 the new operational risk requirement increased from 50% on the previous quarter to 75% in the current quarter. The Bank's aim is to make the best use of this excess capital.

Also, the Bank's liquidity remained healthy. Liquid assets to total deposits ratio reached 38%.

Banco Macro accounted for another positive quarter. We continue showing a solid financial position. Asset quality is 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-optimized deposit base which is one of the lowest costs of funds in Argentina's banking sector.

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

OK. And, at this time, we're going to open it up for question-and-answer. (Operator Instructions). George Chirino, Morgan Stanley. George, your line is open.

Sorry. Hi, Jorge. Just a very quick question on the outlook for 2013. What are you expecting in terms of loan growth the next year? Where do you expect to see the growth, consumer or commercial? What are you seeing in terms of expenses and margins? Thank you.

Hi, Jorge. Well, for next year, what we are forecasting right now is some recovery on the economy, compared to 2012. Mainly, this is going to be fueled by the high level of commodity prices, the forecasted high harvest for soya. Also, Brazil's economy is recovering, and that is also going to help Argentina, Argentina's economy, to recover from a sluggish 2012.

In terms of loan growth, what we are expecting is to be on the high 20%s, nominal growth.

In terms of expenses, I think that between mid- and high-20%s, also, hand in hand with what [price local consultatories imagined] for the increasing domestic prices.

On margins, we are forecasting some stability in the margins with, I would say, in our case we have around 12% net interest margin. So, for next year, we are seeing some stability around that, between plus/minus 50 basis points, there.

OK. Thank you very much, Jorge. Very clear.

Thanks.

Federico Rey, Raymond James.

(inaudible) to lend up to 5% of the deposits to SMEs, please?

Mr. Rey, if you would be so kind to repeat your question? I believe your line was muted.

Hello? Jorge?

Yes, Federico. Can you repeat your question, because I think that you was on mute?

Oh, OK. Yes, I would like if you can comment on the progress in terms of the complying with the regulation by the central bank to lend up to 5% of the deposits into SMEs? Thank you.

Hi, Federico. Well, we are on track on this. You know that this is due in the last day of December. So, we are working to fulfill with this requirement. We still have two months in order to extend these loans on the regulation set by the central bank. So, we believe that we will have no problem to comply with it.

OK. Thank you.

You're welcome.

Nicolas Chialva, Itau BBA.

Hello. Good afternoon, Jorge. Thank you for taking my question. It's regarding asset quality, which has been performing quite well through 2012. And, I'm wondering about your expectations for the near future and 2013, on loan loss provisions and [NPLs]?

Hi, Nicolas. No, we're seeing some stability, basically because, as I commented in the previous question, that we are looking forward for some recovery in the economy in 2013. So, we are seeing stability in terms of asset quality for both consumer and commercial. So, in terms of provisions for next year, we are not forecasting many changes in terms of the normalized level of provisions that we do on a quarterly basis.

And, then, let me ask you a follow-on question, because during the second quarter, you expensed some additional provisions and the mood in Argentina and in the coming performance was not that good. But, the asset quality, it did not deteriorate significantly during that quarter either. What do you attribute this sound performance to?

Well, basically, it could be because of many sectors continue to be profitable. There's liquidity in the system. And, of course, I would say that the reward for being, on a view of to continue to be [view payment], this is good basically because if you are or become a non-performing, that is bad for you in terms of your credit reward, in terms of that you become -- you have a category 3, 4, or 5 here in the credit bureau. And, of course, that increases a lot your cost for taking new debt, if you have actually to renew debt on the banking sector. In that case, it could be basically how we have a low level of probability. So, I think that a combination of all that.

OK. Thank you very much.

You're welcome.

And, there are no questions at this time. This concludes the question-and-answer session. I will now turn over to Mr. Jorge Scarinci for final considerations.

OK. At this time, I would like to thank everyone and, of course, we are available and open to additional comments or questions. So, thanks everyone. Have a good day.

And, thank you ladies and gentlemen. With this, we conclude today's presentation. We thank you for joining. You may now disconnect.