Banco Macro SA (BMA) 2014 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 2014 earnings conference call. We would like to inform you that the 1Q 2014 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 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; Mr. Jorge Scarinci, Finance and IR Manager; Ines Lanusse, IR Officer; and other members of the Bank's management team.

Now I will turn the conference over to Mrs. Ines Lanusse, IR Officer. You may begin your conference.

Good morning and welcome to Banco Macro's first quarter 2014 conference call. Any comment 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.

First quarter 2014 press release was distributed last Thursday 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 429 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 2014 financial results. Banco Macro's net income for the quarter was ARS1.2 billion or 159% higher than the ARS457.9 million earned 1 year ago. In the quarter, net financial income totalled ARS2.5 billion or 111% higher than the ARS1.2 billion registered one year ago. This performance can be traced to a 91% year-on-year increase in financial income and 65% year-on-year increase in financial expenses.

Within financial income, interest on loans rose 62% year-on-year (technical difficulty) loan portfolio. And 500.7 basis points increase in the average private lending interest rates.

In first quarter 2014, interest on loans represented 69% of the total financial income compared to the 86% in first quarter 2013.

On the other hand, net income from government and private securities increased 169% year-on-year due to higher income from government securities especially LEBAC and NOBAC and higher volumes also of LEBAC and NOBAC.

Also in this quarter, income from guaranteed loans and in CER adjustments increased 101% (technical difficulty) established by the Central Bank.

Income from foreign currency also increased 555% year-on-year due to higher FX position revaluation caused by a faster depreciation of the Argentine peso.

Last, other financial income increased 349% year-on-year mainly due to higher income from on shore forward foreign currency transactions.

Meanwhile, within financial expenses, interest on deposits grew 67% year-on-year due to a 19% increase in the average volume of time deposits and a 577 basis points increase (technical difficulty) combined effect resulted in an increase of the Bank's net interest margin from 12.9% at the third quarter 2013 to 15.7% at the third quarter 2014.

Had we excluded [one gains] on guaranteed loans from the calculation, the Bank's net interest margin would have been 15% from last year's levels of 13.2%. The banks net fee income grew 35% year-on-year mainly driven by fees charged from deposits accounts and debit and credit card fees.

Administrative expenses rose 39% year-on-year due to an increase in personnel expenses, namely higher salaries, higher professional fees, and other operating expenses. The increase in personnel expenses is based on the provision accounted for 2014 future salary increases and to the effective payment for salary increases (inaudible) 29% salary increase as we agreed with the unions on April 2014.

The accumulated efficiency ratio reached 38%, largely improving for the 50.9% level posted in -- as of first quarter 2013.

As of March 2014, Banco Macro's effective income tax rate was 36.9%, compared to 38.7% registered as of March 2013.

In terms of loan growth, the Bank's financing to the private sector grew 1% quarter-on-quarter and 20% year-on-year among which commercial loans for productive investments have been included. Credit card and personal loans also grew year-on-year.

On the funding side, total deposits grew 8% quarter-on-quarter and 20% year-on-year. Private sector deposits grew 7% on a quarterly basis and public sector deposits also grew 14%. Also on quarterly basis, within private sector deposits, an increase in peso on foreign currency deposits was observed of 6% and 15% respectively.

As of March 2014, Banco Macro's transactional accounts represented approximately 43% of total deposits, and therefore the Bank's average annualized cost of funds was 12.4%.

In terms of asset quality, Banco Macro's non-performing to total financing ratio reached 1.88%, on last year's levels of 1.72%. The coverage ratio reached 137.21%.

In terms of capitalization, Banco Macro accounted an excess capital of ARS4.9 billion, which represented a capitalization ratio of 22.7%. The Bank's aim is to make the best use of this excess capital.

The Bank's liquidity remained sound. Liquid asset to total deposits ratio reached 40.3%.

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 the Argentine banking sector, and we keep a well-optimized deposit base, with one of the lowest cost of funds in Argentine banking sector.

At this time, we would like to take the questions you may have.

(Operator Instructions). Santiago Ruiz, Raymond James.

How do you see loan growth by year end growing and how do you see the NPLs?

Hi Santiago this is Jorge Scarinci answering. In terms of loan growth for this year we are forecasting loans on the range between 15% to 20% depending on the reaction on the economy on this downward trend on the [interest rate] that is going on in the last 15 days. So that's the way that we are forecasting for 2014.

In terms of NPLs, we continue to see a slight deterioration reaching maybe our ratio between 2.5% to 2.7% by the end of the year.

(Operator Instructions) Alonso Aramburo, BTG Pactual.

Can you comment a little of margins, how do you see your margin to evolve given the changing interest rates recently in Argentina?

And second, you mentioned that you declared a dividend, do you have any news from the Central Bank regarding the possibility of paying the dividend?

In terms of margins, the trend that we are seeing for the next -- for the second quarter is a slight contraction in margins basically what we are seeing is a [interest rate] going down and [of course] we're going to account for these commercial loans on this productive line with [our] relatively low rate and that will be impacting our margins.

In terms of dividends, yes, the dividends were approved. We are waiting for the approval of the Central Bank. There's no clean deadline for that, so whenever we have any news we will communicate that but it's in the Central Bank's hands.

(Operator Instructions). As there are no further questions at this time, this concludes the question and answer session. I will now turn the call back over to Mr. Jorge Scarinci for final considerations.

Okay everyone, thanks for your time. Thanks for joining Banco Macro and look forward to seeing you soon. Bye, bye.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.