Banco Macro S.A.(BMA) - 2022 Q1 - Quarterly Report

Financial Performance - Net income for the fiscal year 2021 was 27,123,243 thousand pesos, a decrease of 26.3% compared to 36,782,238 thousand pesos in 2020[16]. - Basic earnings per share for 2021 were 42.4178 pesos, down from 57.5242 pesos in 2020, representing a decline of 26.2%[18]. - Total comprehensive income for the fiscal year 2021 was 28,296,932 thousand pesos, compared to 38,197,944 thousand pesos in 2020, a decrease of 25.9%[19]. - Net interest income decreased to 130,998,318 thousand pesos in 2021 from 145,275,725 thousand pesos in 2020, reflecting a decline of 9.1%[16]. - Net commissions income slightly decreased to 33,453,124 thousand pesos in 2021 from 34,256,918 thousand pesos in 2020, a decline of 2.3%[16]. - The allowance for loan losses improved significantly, decreasing to 2,455,271 thousand pesos in 2021 from 12,079,536 thousand pesos in 2020, a reduction of 79.7%[16]. - Profit from the measurement of financial instruments at fair value through profit or loss increased to 19,808,759 thousand pesos in 2021 from 16,734,723 thousand pesos in 2020, an increase of 18.4%[16]. Assets and Liabilities - Total assets as of December 31, 2021, amounted to ARS 997,701,274, a decrease of 14.14% from ARS 1,162,101,462 in 2020[12]. - Total liabilities decreased to 997,701,274 thousand pesos in 2021 from 1,162,101,462 thousand pesos in 2020, a reduction of 14.2%[15]. - Cash and deposits in banks decreased to ARS 172,332,578 from ARS 196,175,043, reflecting a decline of 12.13%[12]. - Loans and other financing decreased to ARS 352,361,199 from ARS 388,413,137, representing a reduction of 9.28%[12]. - Debt securities at fair value through profit or loss decreased significantly to ARS 32,406,588 from ARS 82,991,433, a decline of 60.91%[12]. - Non-financial private sector loans decreased to ARS 348,474,933 from ARS 380,205,763, a decrease of 8.34%[12]. - Total cash used in financing activities was 8,592,495 thousand pesos in 2021, a decrease from 10,351,273 thousand pesos in 2020[24]. - Cash and cash equivalents at the end of the fiscal year 2021 were 309,931,902 thousand pesos, down from 397,889,304 thousand pesos at the end of 2020[24]. - The company experienced a net decrease in cash and cash equivalents of 87,957,402 thousand pesos for the fiscal year 2021[24]. Equity and Retained Earnings - The company reported total equity of 238,606,410 thousand pesos at the end of the fiscal year, an increase from 223,515,580 thousand pesos at the beginning of the year[21]. - The company’s unappropriated retained earnings at the end of the fiscal year were (39,612,575) thousand pesos, reflecting accumulated losses[21]. - The company’s total controlling interests increased to 238,568,528 thousand pesos by the end of the fiscal year 2021[21]. - Equity attributable to the owners of the Bank increased to 238,568,528 thousand pesos as of December 31, 2021, up from 223,512,758 thousand pesos in 2020, reflecting a growth of about 6.5%[105]. Government Deposits - As of December 31, 2021, deposits held by the Misiones Provincial Government with Banco Macro amounted to Ps. 9,072,397, a decrease from Ps. 24,512,527 in 2020[36]. - Deposits held by the Salta Provincial Government with Banco Macro increased to Ps. 6,455,729 in 2021 from Ps. 5,701,168 in 2020[40]. - Deposits held by the Jujuy Provincial Government with Banco Macro decreased to Ps. 8,427,277 in 2021 from Ps. 16,468,955 in 2020[42]. - Deposits held by the Tucumán Provincial Government and municipalities with Banco Macro amounted to Ps. 17,504,996 in 2021, down from Ps. 21,546,127 in 2020[44]. Investments and Acquisitions - Banco Macro's interest in Play Digital SA increased to 10.020% after capital contributions totaling Ps. 253,557 in 2020 and 2021[31]. - Banco Macro acquired a 24.99% equity interest in Fintech SGR for Ps. 33,488, enhancing its control over credit access for small and medium-sized enterprises[32]. - The Bank purchased 50% of Finova SA for Ps. 50,850, aimed at developing a digital credit negotiation platform for small and medium-sized companies[33]. Accounting and Financial Reporting - The consolidated financial statements were prepared in accordance with IFRS, with adjustments for hyperinflationary effects as per IAS 29[61]. - The three-year cumulative inflation rate in Argentina exceeded 100%, necessitating the application of hyperinflation accounting standards[62]. - The inflation rate was 50.94% for the fiscal year ended December 31, 2021, compared to 36.14% for 2020[64]. - Non-monetary items carried at historical cost are restated by an index reflecting price variation, impacting income or loss related to depreciation and amortization[69]. - The Bank's management confirmed no additional companies or structured entities were included in the consolidated financial statements as of December 31, 2021[108]. Financial Instruments and Risk Management - Financial assets at fair value through profit or loss were recognized at fair value, with changes in fair value recorded under "Net gain from measurement of financial instruments at fair value through profit or loss"[135]. - The Bank's business model for financial assets is categorized into three classifications: at amortized cost, at fair value through other comprehensive income, and at fair value through profit or loss[115]. - The effective interest method is used for financial assets at amortized cost, which considers expected credit losses[144]. - The Bank measures loans and other financing at amortized cost using the effective interest method, with a loss allowance for expected credit losses (ECL) deducted[150]. - The ECL is based on credit losses expected over the lifetime of a financial asset unless there is no significant increase in credit risk, in which case a 12-month ECL is used[152]. - Financial instruments are categorized into three stages: Stage 1 (12-month ECL), Stage 2 (lifetime ECL for significant credit risk increase), and Stage 3 (lifetime ECL for credit-impaired instruments)[158][159][160]. - The Bank calculates ECL using parameters such as Probability of Default (PD), Exposure at Default (EAD), and Loss Given Default (LGD)[163][164][165]. - The Bank assesses collateral to mitigate risks, using various forms such as cash, securities, and real estate, which affects ECL calculations[188][189]. - The ECL for debt instruments measured at fair value through other comprehensive income does not reduce their carrying amount but is recognized in "Other comprehensive income"[180]. - The Bank recognizes a loss allowance for ECL based on macroeconomic variables, weighing different scenarios to adjust historical information[176][177]. Going Concern and Management Confidence - The Bank's management is confident in its ability to continue as a going concern, with no material uncertainties identified[51].