Banco Macro SA (BMA) 2013 Q1 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 first quarter 2013 earnings conference call.

We would like to inform you that the first quarter 2013 press release is available to download at the Investor Relations website of Banco Macro, www.ri-macro.com.ar. Also, this event is being recorded and all participants will be in a 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 instructions 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; and 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's first quarter 2013, conference call. Any comment we will 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 also available at our website. First quarter 2013 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 428 branches. Even though we are a universal bank, we focus on low to middle-income individuals and SMEs. Banco Macro is a financial agent of four provinces in Argentina; Salta, Jujuy, Misiones and Tucuman.

I will now briefly comment on the Bank's first quarter 2013 financial results. Banco Macro's net income for the quarter ARS457.9 million or 41% higher than the ARS323.8 million earned one year ago. The Bank's annualized first quarter 2013 ROAE and ROAA of 28.4% and 3.7% respectively remained healthy and showed the Bank's earnings potential. In the quarter net financial income totaled ARS1.2 billion or 31% higher than the ARS892.5 million registered one year ago.

This performance can be traced to a 31% year-on-year increase in financial income and a 31% year-on-year in financial expenses. Within financial income interest on loans rose 33% year-on-year due to a 25% growth in the average loan portfolio. And a 111 basis point increase in the average lending interest rates. In the first quarter of 2013, the interest on loans represented 86% of the total financial income compared to 85% in the first quarter 2012.

On the other hand net income from government and private securities decreased 13% year-on-year due to lower income from government securities which was certified by a smaller average portfolio of these securities. Meanwhile within financial expenses interest on deposits grew 29% year-on-year, due to a 24% increase in the average volume of deposits and a 67% increase in the average time deposits interest rates, and on a combined basis, resulted in an increase of the Bank's net interest margin from 11.6% in the first quarter of 2012 to 12.9% in the first quarter of 2013.

Had we excluded bond gains and warranty loans on the calculation, the Bank's net interest margin would have widened to a further 13.2% from last year's level of 11.7%.

The Bank's net fee income grew 18% year-on-year, based on fees on deposits including checking and savings accounts, debit and credit card fees and other fees.

Administrative expenses rose 28% year-on-year, mainly due to an increase in personnel expenses and higher other 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 and due to the provision for the 2013 future salaries increases. The accumulated efficiency ratio reached 50.9%, similar level than 50.6% [was] in the first quarter of 2012.

As of March 2013, Banco Macro's effective income tax rate was 38.7%, compared to [43.6%] registered as of March 2012.

In terms of loan growth the Bank's financing to the private sector grew 5% quarter-on-quarter and 29% year-on-year, among which commercial loans for productive investments have been included. Personal loans and credit card loans also grew during the quarter.

On the funding side, total deposits grew 8% quarter-on-quarter and 19% year-on-year. Private sector deposits grew 7% on a quarterly basis and private sector deposits also grew 11%. Within private sector deposits, an increase in peso deposit of 8% was observed, while foreign currency deposit slightly decreased.

As of March 2013, Banco Macro's transactional accounts represented approximately 44% of total deposits, and therefore, the Bank's average annualized cost of funds was 8%.

In terms of asset quality, Banco Macro's nonperforming to total financing ratio reached 1.72% from last year's levels of 1.57%, the coverage ratio reached 166.2%.

In terms of capitalization, Banco Macro accounted an excess of capital of ARS2.5 billion, which represented a capitalization ratio of 20.2%, despite the new Capital Requirement regulations were applied. The Bank's aim is to make the best use of this excess capital of course.

The Bank's liquidity remains healthy. Liquid assets to total deposit ratio reached 32.7%. Banco Macro accounted for another positive quarter. We continued 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 with one of the lowest cost of funds in Argentina's banking sector.

So, at this time we'll like to take the questions that you may have.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). Alonso Aramburo, BTG Pactual.

I have one question regarding the NIM, it's been expanding consistently the last few quarters, just wondering what's your -- what your expectations are for the rest of the year, if you think that trend can continue or if you see a little more stable NIM in going forward.

And regarding the rest of the year we are seeing stability in the margins basically, when we talk about stability is plus-minus 50 basis points around the 12.9% or 13% level that we have but that is our forecast for the rest of the year. We are not seeing the NIM expanding a lot, not even decreasing, stability for the rest of the 2013.

Okay. Thank you for that. And can you give us a sense of how you're moving your asset yields and on your loans, have you been repricing those, I mean, we assume (inaudible) it's a little bit higher than in previous quarters, I mean is that a trend you're seeing in the market or how you're seeing those moving?

Well, that's basically depending on the mix on our assets and I think that in the previous quarters we used to have a bit more of a liquidity outstanding and then we move to other financial instruments like maybe a bit more of sovereign bonds in pesos with variable rate and also more personal loans in the mix of our loan portfolio. So that is also something that might put the asset yield or the loans yield upwards.

Okay, thank you. And can you remind us this year's expectations you have for rate increases.

Well, season for rate increases are taking place in this month, I don't know exactly when they are going to finish but our feeling is that the percentage would be between 20% to 22% with salary increase, approximately.

Great, thank you.

Welcome.

Chris Delgado, JP Morgan.

Just given the growth in Argentina I wanted to get a sense of how asset quality will evolve this year. You guys have given increase across 2012 and it's stabilized this quarter. So just wanted to get your thoughts on that?

Since last year we were forecasting some slight deterioration in asset quality, mainly because of the maturity of the loans that we were extending in 2011 were going to take place in 2012 and 2013 plus the deterioration in the economy that we were forecasting. I think that Banco Macro has been doing a great job in terms of keeping a close eye in asset quality. We will continue to do that it's one of the main goals of the Board of Directors of Banco Macro.

Going forward we expect this slight deterioration to continue, but of course at reasonable levels. We are not seeing a spike in terms of past-due loans, but the performance is going to be tied to the performance of the economy mainly. So going forward we continue to see this slight deterioration, but again manageable levels and of course we have a very attractive and high coverage ratio to take considerations of these increasing parts -- and the potential increasing past-due loans.

Okay. So about 10 - 20 basis points to the h all right, then, (inaudible) this year, yes.

Yes, honestly, we have to quantify that as in 10 to 12 basis points, a quarter in the end of the year, the trend is slightly upwards.

Okay, great. Thanks.

Welcome.

(Operator Instructions). Luis Guzman, Santander.

I would like to ask a question regarding the development of dividends and required -- want to see the loans from SME to SME to consumer last year we were talking about regulatory imposing high requirement in order to pay dividends and also to require opportunity of the funds to be allocated into loans and I would like to ask if this was already allocated on the loans and what's your expectations for dividend?

Well, the first part of the question in terms of extending loans to the SMEs and also corporate, basically through the regulation that the Central Bank put -- applying first 5% of private sector deposit that's due in December 2012 and the additional 5% of private sector deposit that will due in June 2013. Yes, of course we are complying with that, of course we comply with the first 5% to 10% and we are in the role -- extending loans in order to comply on the limit that is going to be established or that we will be due in by June 2013. Yes and of course those loans are included in the first quarter balance sheet that we released yesterday.

In terms of the dividend, again the tougher regulation established by the Central Bank two years ago, they are or they continue in place. Honestly going forward, we don't know if those regulations are going to be changed. But of course banks in Argentina needs more than 75% excess over the required capital to pay cash dividends. For the moment we do not get to that level, we are at the level of 59%, but of course the idea of Banco Macro is to work towards that target and to pay dividends as soon as possible. But we are working in that direction. We still don't know where we are going to be above the 75%, maybe next year maybe the following, but still don't know.

Okay. Thank you very much.

Welcome.

Arthur Barnard, [Zel-Tech Asset Management], please go ahead.

My questions been answered. Thank you very much.

(Operator Instructions) I'm showing no further questions, at this time I would like to turn the conference back over to Mr. Jorge Scarinci for any final consideration.

Okay. Thanks everyone for your interest in Banco Macro and have a good day. Bye-bye.

The conference has now concluded. Thank you for attending today's presentation, you may now disconnect.