Banco Macro SA (BMA) 2015 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 3Q 2015 earnings conference call.

We would like to inform you that 3Q 2015 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. (Operator Instructions) After the Company's remarks are completed, there will be a question-and-answer session. (Operator Instructions)

It is now my pleasure to introduce your 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.

I will now turn the conference over to Ms. Ines Lanusse, IR Officer. You may begin your conference, ma'am.

Good morning and welcome to Banco Macro's third-quarter 2015 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. Third-quarter 2015 press release was distributed last Tuesday, 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 437 branches. Even though we are a universal bank, we focus on low to middle-income individuals and SMEs. Banco Macro is a financial agent for all four provinces in Argentina, Salta, Jujuy, Misiones, and Tucuman.

I will now briefly comment on the Bank's third-quarter 2015 financial results. Banco Macro's net income for the quarter was ARS1.1 billion or 12% higher than the ARS985.5 million earned one year ago, based on a higher net financial income and higher fees. On a quarter-on-quarter basis, third-quarter 2015 net income increased 34% based on higher income from the bonds and equity portfolio and higher interest from financial intermediation.

The Bank's accumulated annualized third-quarter 2015 ROE and ROA of 31.5% and 4.9% respectively remained healthy and shows the Bank's earning potential.

In the quarter, net financial income totaled ARS2.7 billion or 29% higher than the ARS2.1 billion registered one year ago. This performance can be traced to a 34% ARS1.3 billion year-on-year increase in financial income and 40% ARS645.9 million year-on-year increase in financial expenses.

Within financial income, interest on loans rose 37% year over year due to a 30 basic point increase in the average private sector lending interest rates and to a 36% growth in the average private loan portfolio.

In third-quarter 2015, interest on loans represented 77% of the total financial income. In addition, net income from government and private securities also increased 22% year over year due to the increase in market prices.

Meanwhile, within financial expenses, interest on deposits grew 36% year over year due to a 26% increase in the average volume of interest-bearing deposit of time deposit and to a 150 basic points increase in the average time deposit interest rates.

Excluding FX gains, the former combined effect resulted in an increase of the Bank's net interest margin from 15.7% as of the third quarter of 2014 to 17.3% as of the third quarter of 2015. Had we also excluded income from government and private security and guaranteed loan, including fair adjustments on the calculation, the Bank's net interest margin would have also [risen] to 15.8% compared to last year's levels of 14.5%.

The Bank's net fee income grew 20% year over year based on fee charged on deposit accounts and debit and credit card fees.

Administrative expenses rose 36% year over year, mainly due to an increase in personnel expenses, primarily higher salaries and higher other operating expenses. The increase in personnel expenses is basically due to the provision accounted for the one time payment for the Bankers Day November 2015 agreed with the unions in June. The accumulated efficiency ratio reached 48.8% in third-quarter 2015.

If this provision had been excluded, the increase in personnel expenses would have been 32% year over year, lower than the 38% year-over-year increase posted in third-quarter 2015.

In third-quarter 2015, Banco Macro effective income tax rate was 38.1% compared to 36.4% registered in third-quarter 2014.

In terms of loan growth, the Bank's financing to the private sector grew 10% quarter over quarter. On a yearly basis, the Bank's financing to the private sector increased 35% year over year, among which commercial loans for productive investments have been included. Personal loans and credit cards also grew year over year.

On the funding side, total deposits grew 8% quarter over quarter and 31% year over year. Private sector deposits grew 6% on a quarterly basis, while public sector deposits grew 16%. As of September 2015, Banco Macro transactional accounts represented approximately 47% of total deposits, and therefore the Bank's consolidated average cost of funds was 10%.

In terms of asset quality, Banco Macro's nonperforming to total financing ratio reached 1.77% improving from last year's levels of 1.85%. The coverage ratio reached 129.92%.

In terms of capitalization, Banco Macro accounted an excess capital of ARS6.5 billion, which represented a capitalization ratio of 21.8%. The Bank's aim is to make the best use of this excess capital.

The Bank's liquid asset remained appropriate. Liquid assets to total deposit ratio reached 38.2%.

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 efficiency standards. We have one of the cleanest balance sheets in Argentine's banking sector, and we keep a well-optimized deposit base.

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

Thank you. At this time we are going to open it up for questions and answers. (Operator Instructions) Catalina Araya, JP Morgan.

I just have two questions, more on the fundamentals side. First I would like to understand why fees are growing below inflation on an annual basis and I want to know what your expectations are for next year?

And then my second question is related to interest on loans which accelerated nicely, growing more in line with credit growth. Could you tell us what could we expect from this evolution on interest income going forward and do you expect interest on loans to continue growing more in line with loan growth and how do you see margins evolving? Thank you.

This is Jorge Scarinci. The first question, according -- inflation for next year, according to the estimate that we are seeing from local economies, the range is around 30%. So that is with the number or the range that we are working with our 2016 budget. In terms of your second question in terms of interest on loans going forward, I think that this line is going to perform as well or even a bit better than what's having in the past basically because going forward we are not seeing the loan to the productive lines to continue at least at low rates. If they are going to exceed, I think that rate in this line are going to be a bit more normal.

So that's why we are forecasting a better evolution of this line and of course if in the second half of the year with a more normalized macroeconomic scenario we also might see both consumer and other commercial lines also picking up.

So going forwards, we are positive on the evolution on the interest on loans and interest income. And also in terms of margins as you can see as Ines was commenting in the comments on the third-quarter numbers, when you exclude all FX gains, also bond gains, and the equity portfolio gains, you also -- there you get the net-net interest margin. You can see that the net interest margin widens in the last 12 months. So going forward we have seen stable or slightly widening margins in Banco Macro. And I think those are all your questions.

Great. Thank you. And in terms for next year, what are your expectations for loan growth?

Well, we're expecting 2016 to be split into maybe two scenarios, so two periods. The first period, six months, are going to be a bit more sluggish because we are forecasting maybe interest rates going up, and maybe in the second half to see slightly lower interest rates and also loan demand recovery. So overall we are forecasting loan demand to be ranging between 30% to 35% for the calendar-year 2016.

Great. Thank you.

Welcome.

(Operator Instructions) And showing no further questions, I would like to turn the conference back over to Ms. Ines Lanusse for final considerations.

Okay. Thanks again for your time and your interest in Banco Macro. Look forward to speaking to you again. Have a good day. Goodbye.

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