Banco Macro S.A.(BMA)2019-05-10 23:00Financial Data and Key Metrics Changes - Banco Macro's net income for Q1 2019 was ARS 7.3 billion, a 40% increase or ARS 2.1 billion higher than Q4 2018, and a 106% increase compared to ARS 3.5 billion a year ago [4] - The bank's Q1 2019 ROE and ROA were 50% and 8.4%, respectively, indicating strong earnings potential [4] - Net operating income for Q1 2019 was ARS 19.1 billion, an 18% increase or ARS 2.9 billion quarter-over-quarter and a 78% increase or ARS 8.5 billion year-over-year [6] - The efficiency ratio improved to 28.6% from 39.7% in Q4 2018 and 35.6% in Q1 2018 [16] Business Line Data and Key Metrics Changes - Net interest income totaled ARS 12.9 billion, a 5% increase or ARS 643 million higher than Q4 2018, and a 63% increase or ARS 5 billion higher than the previous year [7] - Net fee income for Q1 2019 was ARS 3.3 billion, a 2% increase from Q4 2018 and a 40% increase or ARS 951 million year-over-year [12] - Net income from financial assets and liabilities at fair value through profit or loss was ARS 2 billion, a 442% increase or ARS 1.6 billion compared to Q4 2018 [13] Market Data and Key Metrics Changes - Banco Macro's market share over private sector loans reached 7.7% as of March 2019, with total deposits growing 15% quarter-on-quarter and 82% year-on-year [17][18] - Private sector deposits grew 12% quarter-on-quarter and 80% year-on-year, with transactional accounts representing approximately 37% of total deposits [18] Company Strategy and Development Direction - The bank's strategy in Q1 2019 included selling US dollars in the spot market and investing in LELIQs, which proved to be profitable [9] - The focus is on maintaining asset quality and profitability rather than market share, leading to a conservative approach in lending [37] Management's Comments on Operating Environment and Future Outlook - Management indicated that the economic environment remains challenging, with high interest rates and a projected real GDP decline of more than 1% to 1.5% in 2019 [27] - Nonperforming loans (NPLs) are expected to remain around 2% to 2.1%, with no major deterioration anticipated [28][29] - Future loan growth is expected to be nominally below inflation, with a potential pickup in demand next year if interest rates decrease [32][34] Other Important Information - The effective income tax rate for Q1 2019 was 30.1%, down from 31% in Q4 2018 [17] - The bank's liquidity remains strong, with a liquid assets to total deposits ratio of 66% [20] Q&A Session Summary Question: Why did the bank decide to fully write off the exposure to Molca? - Management stated that the decision was made by the credit committee and the Board, despite the possibility of future recoveries [23] Question: What was the direct exposure to Molca? - The direct exposure was approximately ARS 390 million [24] Question: What is the outlook for NPL ratios in the retail portfolio? - Management noted that 93% of personal loans are tied to payrolls, and they expect NPLs to remain around 2% to 2.1% going forward [26][28] Question: What are the volume growth expectations for this year? - Management indicated that loan growth has been sluggish due to the poor economic environment, with nominal growth expected to be around 30% for the year [32][34] Question: Is the bank's strategy focused on market share or asset quality? - The strategy is focused on maintaining asset quality and profitability, even if it results in a loss of market share [37] Question: How will the recent credit card regulation impact earnings? - The impact on bottom lines is estimated to be between 2.7% and 3%, but management plans to take measures to mitigate this effect [46]