Banco Macro (NYSE:BMA) Q4 2025 Earnings call February 26, 2026 11:00 AM ET Company ParticipantsBrian Flores - VP of Equity ResearchCarlos Gomez-Lopez - Head of EM and LatAm FinancialsErnesto Gabilondo - Director of LatAm FinancialsJorge Scarinci - CFOJuan Parma - CEOLindsey Shema - Equity Research AssociateNicolás Torres - Director of Investor RelationsYuri Fernandes - Executive DirectorConference Call ParticipantsKaio Prato - Stock AnalystMarcos Seru - Equity Research AnalystMatías Cattaruzzi - Senior Equi ...

Core Insights - The Cambodian banking sector demonstrated resilience and a strong capital base despite challenges such as external uncertainties, slowing credit growth, and border tensions [1] - The overall capital adequacy ratio and liquidity of the banking sector remain significantly above regulatory requirements, with profitability showing signs of recovery [1] Group 1: Banking Sector Performance - The non-performing loan (NPL) rate increased from 7.4% in 2024 to 8.9% in 2025, influenced by a decline in asset quality due to a weak real estate and construction sector [1] - The net NPL rate, after accounting for provisions, stands at 2.9%, indicating that risks are generally manageable [2] - The allowance coverage ratio reached 67.5%, reflecting strong risk resilience among financial institutions [2] Group 2: Capital and Liquidity - Capital adequacy ratios (CAR) for deposit-taking banks and financial institutions are at 21.9%, while non-deposit institutions have a CAR of 31.4%, both exceeding the statutory minimum of 15% [2] - The liquidity coverage ratio (LCR) is maintained at a high level of 177.3%, well above the 100% regulatory standard, ensuring sufficient short-term liquidity [2] Group 3: Credit Growth and Economic Context - Customer loans in the banking sector increased by 4.1% year-on-year, totaling $63 billion, while customer deposits rose by 14.7%, amounting to $65.7 billion [3] - The credit growth rate has significantly slowed, with a mere 3% increase in 2023, marking the lowest growth rate in the past 20 years [3] - The loan-to-GDP ratio has surpassed 170%, making Cambodia the country with the highest private debt ratio in the region [3]

Core Viewpoint - The company maintains a strong capital adequacy ratio, with a focus on serving rural areas, small and medium-sized enterprises, and urban residents while ensuring steady growth and operational efficiency [1] Capital Adequacy - As of September 30, 2025, the company's core Tier 1 capital adequacy ratio is 11.06%, Tier 1 capital adequacy ratio is 12.32%, and total capital adequacy ratio is 13.49% [1] Business Strategy - The company is committed to serving the "three rural issues" (agriculture, rural areas, and farmers), small and medium-sized enterprises, and urban residents, while also focusing on risk prevention in key areas [1] - The company aims to strengthen its internal capital accumulation through operational performance and explore diversified capital replenishment channels, including the issuance of capital supplement bonds [1]

Core Viewpoint - In a low-interest-rate environment and industry transformation, China Merchants Jinhe Life Insurance, backed by China Merchants Group and China Mobile, has achieved significant growth, entering the "trillion club" with total assets reaching 108.1 billion yuan by the end of 2025, marking an 18.4% increase year-on-year [1]. Financial Performance - The company reported a cumulative net profit of 672 million yuan in 2025, a staggering increase of 411% year-on-year, with the return on equity (ROE) rising from 2.24% to 8.69% [1][3]. - The company appears to have exited its initial loss-making phase and is now on a path of profit generation [3]. Capital Adequacy - By the end of 2025, the core solvency adequacy ratio dropped to 96.18%, down from 128.47% at the end of 2024, primarily due to rapid accumulation of business liabilities, which increased from 7.65 billion yuan to 9.53 billion yuan [3]. - The future surplus of policies included in core Tier 1 capital decreased from 1.17 billion yuan to 520 million yuan, indicating some erosion of the capital base [3]. Financial Strategy - In response to capital pressure, the company issued 1.3 billion yuan in capital supplement bonds at a low interest rate of 2.40% and redeemed 800 million yuan of old debt with a higher interest rate of 4.95%, resulting in a net increase of 500 million yuan in supplementary capital and annual interest savings of approximately 20 million yuan [3]. - The investment yield for 2025 was 5.22%, slightly lower than the previous year's 5.47%, with a clear asset allocation strategy favoring government bonds, which increased to 31.05 billion yuan [3][4]. Shareholder Changes - Beijing Zaichuan Technology Co., Ltd. plans to transfer its 3.79% stake to Chongqing Yufu Holdings Group and Chongqing Linkong Development Investment Group, introducing strong state-owned enterprise backing from Chongqing into the shareholder structure [4]. Future Challenges - Despite achieving over 100 billion yuan in assets, the company anticipates a further decline in the core solvency adequacy ratio to 83.55% in the next quarter, raising concerns about future capital pressures and the potential need for shareholder capital increases [5]. - The company is attempting to find a sustainable balance between expansion ambitions and capital constraints [5].

Financial Data and Key Metrics Changes - In 2025, Five Star Bancorp achieved a year-over-year growth in total loans held for investments of 15%, total deposit growth of 18%, net income growth of 35%, and an increase in earnings per share of 28% to $2.90 per share [5][6] - Financial highlights for the fourth quarter include $17.6 million in net income, earnings per share of $0.83, return on average assets of 1.50%, and return on average equity of 15.97% [5][6] - The net interest margin expanded 10 basis points to 3.66%, and the total cost of deposits declined by 21 basis points to 2.23% [5][6] Business Line Data and Key Metrics Changes - Loans held for investment grew by $187.7 million, or 19% on an annualized basis, in the fourth quarter, while total deposits increased by $97.6 million, or 10% on an annualized basis [6] - The commercial real estate portfolio saw significant growth, increasing by $161.4 million in the fourth quarter and $448.5 million for the year [7] Market Data and Key Metrics Changes - Non-wholesale deposits increased by $139.1 million during the fourth quarter and $738.1 million during the year, while wholesale deposits decreased by $41.4 million during the quarter and $95 million during the year [8][9] - Total non-interest-bearing deposits accounted for 26% of total deposits, with approximately 61% of deposit relationships totaling more than $5 million [9] Company Strategy and Development Direction - The company plans to further develop all business verticals while expanding into new markets, emphasizing a blend of technology and personalized service [16] - Five Star Bancorp aims to maintain a focus on innovation and service excellence, with a commitment to building deep, meaningful relationships with clients [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth pipeline for 2026, indicating that while growth may not match the previous year, a target of 10% growth on both sides of the balance sheet is achievable [24][25] - The competitive landscape for deposits is described as very competitive, with a focus on core deposit growth as a competitive advantage [23][24] Other Important Information - The company successfully reduced its balance of wholesale deposits by $95 million, or 17%, in 2025, while growing non-wholesale deposits by 25% [6][7] - A cash dividend of $0.25 per share was announced, marking the first increase since April 2023 [7] Q&A Session Summary Question: Drivers behind the acceleration in loan originations - Management noted strong performance across all verticals, particularly in food and agriculture, with seasonal factors contributing to growth [21] Question: Competitive landscape for deposits - Management acknowledged a highly competitive environment for core deposits but emphasized their business development team's effectiveness in attracting core relationships [22][23] Question: Expense growth outlook - Management indicated that expenses are expected to grow at a rate of 1.48%-1.55% of total assets in 2026, accommodating growth and regular maintenance [35][36] Question: Capital comfortability and outlook - Management expressed confidence in maintaining capital positions with a 10% growth rate, but noted that higher growth rates would necessitate a capital event in the future [44][45]

Investment Rating - The report does not explicitly state an investment rating for the company, but it highlights significant concerns regarding asset quality and capital adequacy, suggesting a cautious outlook on investment potential. Core Insights - The report revisits the operational trajectory of the company amidst declining LPR and tightening capital regulations, questioning whether previous core issues have been resolved [1] - The company faces ongoing liquidity challenges, with shareholder equity issues exacerbated by financial crises among major shareholders [3] - Asset quality remains a concern, with rising non-performing loans and a high concentration of risk in real estate [60] Company Governance - The company continues to experience liquidity issues with significant shareholder stakes being auctioned at low prices, reflecting a deteriorating confidence in the bank's equity [3] - The number of shareholders has slightly decreased, indicating potential consolidation but also ongoing challenges in shareholder confidence [3] Asset Side - As of June 2025, total assets reached 486.91 billion, primarily driven by loans and financial investments, which grew by 3.50% and 8.14% respectively [4] - The loan structure remains heavily weighted towards long-term loans, with a notable increase in short-term loans [5] Loan Quality - By the end of 2024, non-performing loans increased by 5.10% to 3.75 billion, with a non-performing loan ratio slightly decreasing to 1.53%, still above the industry average [9] - The bank's approach to classifying non-performing loans has raised concerns about the accuracy of reported asset quality [14] Investment Assets - The bank's credit loss provisions for debt investments rose by 25.12%, with a significant increase in stage three assets, indicating heightened risk exposure [22] - A high percentage of un-rated debt investments poses additional risks, particularly in the real estate sector [25] Liability Side - Total liabilities increased to 450.91 billion, with a significant reliance on deposits, which accounted for 73.55% of total liabilities [28] - The bank's dependence on high-cost deposits remains a concern, with a notable portion of its funding coming from short-term sources [29] Liquidity - Liquidity ratios have shown slight declines, indicating increased short-term repayment pressures, although still above industry averages [36] - The bank's liquidity coverage ratio improved but remains below the average for commercial banks [36] Revenue Side - Total revenue for 2024 was 8.37 billion, reflecting a slight decline, with net interest income and fee-based income both decreasing significantly [39] - Investment income saw a notable increase, contributing positively to overall revenue despite challenges in traditional income streams [44] Profitability - Net profit decreased by 5.56% to 2.85 billion, with credit impairment losses significantly impacting profitability [48] - The bank's ability to generate internal capital remains weak, raising concerns about future capital adequacy [53] Capital Adequacy - Capital adequacy ratios improved slightly due to the issuance of perpetual bonds, but core capital ratios remain below industry standards [50] - The bank's reliance on external financing for capital maintenance poses sustainability risks [53] Peer Comparison - Compared to similar-sized banks, the company ranks favorably in terms of net profit but struggles with net interest margins and asset quality [55] - In the context of regional peers, the bank's capital adequacy ratios are concerning, indicating a need for improvement [56] Summary - The company has made some progress in capital adequacy and investment performance, but significant challenges remain in asset quality and liquidity management [59] - The ongoing liquidity crisis and high-risk asset exposure suggest a cautious outlook for future performance [60]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - In 2025, the bond market may mainly rely on increased allocation by bank self - operations. The balance of China's bond market increased by 19.7 trillion in the first 11 months of 2025, and the incremental investment in self - operated bonds by the banking industry in the same period reached 14.3 trillion, accounting for 72.7% of the bond scale increment [2][31]. - Bank self - operated bond investment is mainly in interest - rate bonds, which have a significant impact on the pricing of interest - rate bonds. As of Q3 2025, the proportion of interest - rate bond holdings in bank self - operated bonds was 80.7% [36]. - The bond investment behavior of banks is mainly affected by three types of indicators: capital adequacy ratio requirements, liquidity regulatory indicators, and bank book interest rate risk indicators [3][45]. - Joint - stock banks are the main players in the secondary trading of interest - rate bonds, while the trading scale of large - state - owned banks and policy banks is relatively small. Since Q1 2023, the overall market trading activity has increased, especially significantly after 2025 [3][52]. 3. Summary by Relevant Catalogs 3.1 Bank Self - Operated Financial Investment Composition, Scale Changes, and Structural Characteristics - **Composition and Scale Changes**: As of Q3 2025, the total financial investment scale of 42 listed banks was 101.5 trillion yuan. By statement account, the FVTPL account was 13.23 trillion yuan (13.0%), the FVOCI account was 29.87 trillion yuan (29.4%), and the AC account was 58.40 trillion yuan (57.5%). By asset category as of Q2 2025, bond investment was 79.08 trillion yuan (84.46%), equity investment was 0.86 trillion yuan (0.91%), and funds and other investments were 13.07 trillion yuan (13.96%). From Q4 2023 to Q3 2025, the investment scale of the FVOCI account increased significantly, mainly due to the growth of bond investment [8]. - **Structural Characteristics**: Credit bonds are mainly placed in the FVOCI account, and interest - rate bonds are mainly placed in the AC account. Among different types of banks, the proportion of the three accounts of large - state - owned banks and joint - stock banks is relatively stable, while the proportion of the AC category of city and rural commercial banks has decreased, and the FVOCI category of city commercial banks has increased, indicating a shift from allocation to trading thinking [2][14]. 3.2 Bond Market in 2025 - In 2025, the bond market may rely on increased allocation by bank self - operations. The government issued more bonds in 2025, and the weak credit demand led banks to significantly increase their bond investment. The year - on - year growth rate of the bond investment balance of various types of banks has increased significantly, and bond investment may become the main driving force for the expansion of bank asset scale [31][33]. 3.3 Bank Bond Investment Characteristics - **Investment Portfolio**: As of Q3 2025, bank self - operated bond holdings were 96.5 trillion yuan, mainly interest - rate bonds. Interest - rate bonds accounted for 80.7%, credit bonds accounted for 11.7%, negotiable certificates of deposit accounted for 5.7%, and other bonds accounted for 1.8%. Among interest - rate bonds, treasury bonds accounted for 33.3%, local government bonds accounted for 48.3%, and policy - bank bonds accounted for 17.8% [36]. - **Pricing Influence**: As of Q3 2025, bank self - operated bond holdings accounted for 48.21% of the total bond custody, having a significant impact on the bond market pricing, but the degree of influence varies by bond type. Bank self - operated interest - rate bond holdings accounted for 63.6% of the total interest - rate bond custody, having a significant impact on pricing [44]. 3.4 Bank Bond - Allocation Indicator Constraints - **Capital Adequacy Ratio Requirements**: The risk weights of treasury bonds and policy - bank bonds are 0, the risk weights of local general bonds and special bonds are 10% and 20% respectively, and the risk weights of general corporate bonds and non - bank financial institution ordinary bonds are 75% - 100% [3][47]. - **Liquidity Regulatory Indicators**: The liquidity coverage ratio is relatively relevant to bank self - operated bond investment behavior. Treasury bonds are included in qualified high - quality liquid assets at market price, while credit bonds are given a discount coefficient according to credit ratings [47]. - **Bank Book Interest Rate Risk Indicators**: For large - state - owned banks, joint - stock banks, and Postal Savings Bank, when the maximum economic value change exceeds 15% of their Tier - 1 capital (ΔEVE > 15%), regulatory attention will be drawn [47]. 3.5 Bank Self - Operated Secondary Trading Characteristics - **Interest - Rate Bond Secondary Trading**: Joint - stock banks are the main players in the secondary trading of interest - rate bonds. The trading activity of the whole market has increased since Q1 2023, especially significantly after 2025. The trading scale of large - state - owned banks and policy banks is relatively small [3][52]. - **Credit Bond Secondary Trading**: The trading scale of credit bonds is relatively limited, and the single - quarter trading amount of bank self - operations is generally below 1 trillion yuan [54]. - **Ultra - Long - Term Interest - Rate Bond Secondary Trading**: The secondary trading of ultra - long - term interest - rate bonds in the banking system shows the characteristics of "net reduction trend remains unchanged, and selling pressure converges marginally". Different types of banks have different trading behaviors [56].

Core Insights - ICICI Bank Ltd. reported a profit after tax of INR113.2 billion ($1.3 billion) for Q3 FY26, reflecting a 4% decline year over year due to increased provisions, higher operating expenses, and treasury losses, despite growth in net interest income and solid loan growth [1][9] Financial Performance - Net interest income (NII) increased by 7.7% year over year to INR219.3 billion ($2.4 billion), with a net interest margin of 4.30%, up 5 basis points [2] - Non-interest income (excluding treasury) rose to INR75.3 billion ($837 million), marking a 12.4% year-over-year growth, while fee income grew by 6.3% to INR65.7 billion ($731 million) [2] - Operating expenses reached INR119.4 billion ($1.3 billion), up 13.2% year over year [3] Loan and Deposit Growth - As of December 31, 2025, total advances were INR14,661.5 billion ($163.1 billion), a sequential increase of 4.1%, driven by growth in domestic, retail, rural, business banking, and corporate loans [4] - Total deposits amounted to INR16,596.1 billion ($184.6 billion), reflecting a 3.2% increase from the previous quarter [4] Credit Quality - The net non-performing assets (NPA) ratio improved to 0.37%, down from 0.42% in the prior year, with recoveries and upgrades of NPAs totaling INR32.8 billion ($365 million) [5] - There were net additions of INR20.7 billion ($231 million) to gross NPA, with gross NPA additions at INR53.6 billion ($596 million) and write-offs of INR20.5 billion ($228 million) [5] Provisions and Capital Ratios - Provisions (excluding tax) increased to INR25.6 billion ($285 million) compared to INR12.3 billion ($136.8 million) in the prior-year quarter [6] - ICICI Bank's total capital adequacy ratio was 17.34%, with a Tier-1 capital adequacy of 16.46%, both exceeding minimum requirements set by the Reserve Bank of India [7]

Core Viewpoint - Suzhou Bank's capital adequacy ratios are in compliance with regulatory requirements and the group's capital planning management goals, indicating a strong financial position and proactive management strategy [1] Group 1: Capital Adequacy Ratios - As of September 2025, the group's core tier 1 capital adequacy ratio is projected to be 9.79% [1] - The tier 1 capital adequacy ratio is expected to reach 11.55% [1] - The overall capital adequacy ratio is anticipated to be 13.57% [1] Group 2: Strategic Focus - The bank is focused on future planning by closely monitoring refinancing policy requirements [1] - There is an ongoing effort to optimize the business structure to enhance capital utilization efficiency [1] - These strategies aim to effectively support sustainable high-quality business development [1]

Core Viewpoint - The Securities and Exchange Board of India has announced new regulations for investment banks, focusing on increasing capital adequacy requirements and strengthening compliance measures [1] Summary by Category Regulatory Changes - New regulations will require existing investment banks to comply within a two-year transition period [1] - Large investment banks must maintain a minimum net worth corresponding to a capital adequacy ratio of 250 million rupees by January 2027, and further increase it to 500 million rupees by January 2028 [1] - Small investment banks are required to set the threshold at 75 million rupees by January 2027, increasing to 100 million rupees by January 2028 [1]