Banco Macro S.A.(BMA) - 2021 Q4 - Annual Report

Financial Performance - The consolidated net interest income for 2021 was Ps. 130,998,318, a decrease from Ps. 145,275,725 in 2020, reflecting a decline of approximately 9%[34] - The net commissions income for 2021 was Ps. 33,453,124, down from Ps. 34,256,918 in 2020, indicating a decrease of about 2%[34] - The subtotal of net interest income plus net commissions income for 2021 was Ps. 164,451,442, compared to Ps. 179,532,643 in 2020, representing a decline of approximately 8%[34] - Net income for the fiscal year was Ps. 42,573,550 in 2021, a decrease of 1.8% from Ps. 39,478,328 in 2020[37] - Total operating expenses increased to Ps. 100,902,793 in 2021, compared to Ps. 99,648,344 in 2020, reflecting a rise of 1.3%[37] - The net operating income after expenses, depreciation, and amortization was Ps. 90,358,432 in 2021, down from Ps. 105,558,547 in 2020, a decline of 14.4%[37] - The return on average equity decreased to 10.17% in 2021 from 17.84% in 2020, indicating a significant drop in profitability[39] - The liquidity ratio, measured as loans and other financings as a percentage of total deposits, increased to 61.47% in 2021 from 54.70% in 2020[39] - The total comprehensive income for the fiscal year was Ps. 42,882,603 in 2021, up from Ps. 40,956,242 in 2020, an increase of 4.7%[37] - The company reported a basic earnings per share of 66.58 in 2021, compared to 61.74 in 2020, reflecting an increase of 4.5%[37] Economic Environment - The inflation rates for the fiscal years ended December 31 were 50.94% for 2021, 36.14% for 2020, and 53.83% for 2019, indicating significant economic volatility[22] - The reference exchange rate for U.S. dollars as of December 31, 2021, was Ps. 102.75 to U.S.$1.00, impacting financial reporting and currency valuation[23] - The company considers Argentina's economy as "hyperinflationary" under IAS 29 for accounting periods ending after July 1, 2018, affecting financial statement preparation[31] - The Argentine economy has experienced significant volatility, characterized by high inflation rates, with consumer price inflation reaching 50.9% in 2021 and 3.9%, 4.7%, and 6.7% in January, February, and March 2022 respectively[71] - The fiscal deficit was Ps. 1,407,641 million in 2021, with public spending increasing to Ps. 7,733,816 million in the same year[74] - The Peso depreciated against the U.S. dollar by approximately 14.5% in 2021, with an exchange rate of Ps. 113.78 to US$1.00 as of April 19, 2022[68] - Argentina's credit ratings remain uncertain, with potential downgrades that could adversely affect the economy and the company's business operations[62] - The Argentine government has implemented exchange controls that restrict access to foreign currency, impacting the ability of companies to operate effectively[65] - High public expenditure and reliance on Central Bank monetary issuance have raised concerns about the sustainability of Argentina's fiscal policies[73] - The Argentine government restructured approximately U.S.$66.5 billion of its foreign currency global bonds in August 2020, and reached an agreement with the IMF for U.S.$44 billion in March 2022[56][59] Company Strategy and Operations - The company has integrated Fintech SGR since October 2021, indicating a strategic move towards expanding its financial technology capabilities[24] - The company plans to continue considering acquisition opportunities, although there is no assurance of successful identification or favorable terms for potential targets[115] - The bank has made forward-looking adjustments to provisions for Expected Credit Losses (ECL) due to an uncertain macroeconomic scenario related to the National Government's debt with the IMF[118] - The company faces risks from changes in market conditions, including fluctuations in interest and currency exchange rates, which could adversely affect financial condition and results of operations[120] - Cybersecurity incidents pose a material risk, with an increase in phishing cases noted, which could negatively impact reputation and customer trust[121][122] - The company has significant liquidity and capital resource requirements, and changes in liquidity conditions in the Argentine financial system could adversely affect business operations[130][131] - Compliance with anti-corruption laws is critical, as failure to do so could result in fines, penalties, and damage to reputation[133][134] - The Central Bank has restricted dividend distributions, requiring prior approval, which could affect holders of Class B shares and ADSs[137][140] - The Central Bank authorized a limited dividend distribution of up to 20% of earnings for 2022, but future extensions of this measure are uncertain[142] Market Position and Customer Base - The bank serves approximately 4.3 million retail customers and 0.09 million corporate customers, with a significant focus on low- and middle-income individuals and SMEs outside the City of Buenos Aires[165] - The bank operates the largest private-sector branch network in Argentina, with 466 branches and 1,779 ATMs, 94% of which are located outside the City of Buenos Aires[166] - The strategy includes expanding the branch network and customer base, focusing on underserved markets with strong growth potential, particularly in low- and middle-income sectors[170] - Plans to enhance corporate banking services by increasing financing options and expanding Plan Sueldo payroll services to attract more corporate clients[172] - The bank aims to grow its high-end customer base through the Selecta product suite and increase market share in credit cards[174] - The bank is committed to sustainability, focusing on financial inclusion, environmental protection, and responsible management of business impacts[178] - The bank offers a range of inclusive financial products targeting traditionally underserved sectors, including personal loans for beneficiaries of social programs and mortgage loans for low-income families[178] Workforce and Employment - The number of employees decreased to 8,005 in 2021 from 8,561 in 2020, indicating a reduction in workforce[39] - The ongoing economic instability in Argentina may slow growth in the target market of low- and middle-income individuals and small to medium-sized enterprises (PyMEs)[112] - The COVID-19 pandemic has led to a marked decline in production and consumption, adversely affecting employment levels and financial flows in Argentina[95] Customer Acquisition and Product Offering - The total number of retail customers reached 4,312,883, representing a growth of 4.5% from 2020[183] - Only 14.8% of retail customers had a personal loan and 29% had a credit card as of December 31, 2021, indicating significant potential for growth in these areas[184] - The number of retail accounts increased by 7% in 2019, 11% in 2020, and 4% in 2021, demonstrating a consistent upward trend in customer acquisition[193] - The total number of savings accounts grew from 4,469,531 in 2019 to 5,453,645 in 2021, marking an increase of approximately 22%[199] - The issuance of debit cards rose from 3,601,847 in 2019 to 4,187,155 in 2021, reflecting a growth of about 16.2%[199] - The company maintained its leadership in personal loans and retained market share in consumer products despite a challenging economic environment[207] - In 2021, the company launched a new indirect sales channel, "Rapicompra," to finance products at the point of sale, enhancing its product offering[209] - The "Adelanto Tasa 0 %" plan was introduced in 2021, allowing customers to modify loan amounts at ATMs, aimed at increasing customer engagement[210] - The company established 13 new branches as ANSES payment agencies in 2021 to improve its positioning in the pensioners segment[211] - The implementation of a new line of credit for point-of-sale purchases was highlighted, targeting underserved markets and enhancing financial inclusion[214]