Banco Macro S.A.(BMA)2019-03-11 19:08Financial Data and Key Metrics Changes - Banco Macro's net income for Q4 2018 was ARS 5.2 billion, a 37% increase or ARS 1.4 billion higher than Q3 2018 and also 37% higher than ARS 3.1 billion from a year ago, driven by increases in net interest income and net fee income [5][6] - The bank's return on equity and return on assets for Q4 2018 were 30.7% and 5.8%, respectively, indicating strong earning potential [5] - For fiscal year 2018, net income totaled ARS 15.8 billion, a 55% increase from ARS 10.1 billion in fiscal year 2017 [6] Business Line Data and Key Metrics Changes - Net interest income for Q4 2018 was ARS 4.3 billion, a 19% increase from Q3 2018 and 66% higher year-over-year, attributed to a 128% increase in interest income and a 276% increase in interest expenses [7][8] - Net fee income for Q4 2018 totaled ARS 3.1 billion, a 38% increase year-over-year, while for fiscal year 2018, it reached ARS 11.1 billion, a 31% increase from fiscal year 2017 [14] - Other operating income increased by 54% quarter-over-quarter and 69% year-over-year [15] Market Data and Key Metrics Changes - The bank's financing to the private sector grew by 2% quarter-over-quarter and 36% year-over-year, with a market share of 7.9% in private sector loans as of December 2018 [19] - Total deposits grew by 12% quarter-over-quarter and 65% year-over-year, with private sector deposits increasing by 14% quarter-over-quarter and 67% year-over-year [19][20] Company Strategy and Development Direction - Banco Macro aims to maintain a strong focus on asset quality control, especially in light of the economic downturn in Argentina, and plans to be cautious with lending in 2019 [24][32] - The bank is monitoring M&A opportunities but currently has no official deals on the table, preferring to wait for favorable conditions post-elections [35] Management's Comments on Operating Environment and Future Outlook - Management indicated that the NPL ratio is expected to stabilize in the first half of 2019, with a potential improvement by the end of the year, forecasting a range of 1.5% to 1.7% [24][25] - The economic outlook for 2019 is cautious, with expectations of negative real GDP growth, leading to conservative lending practices [32] Other Important Information - The bank's efficiency ratio improved to 37.9% in fiscal year 2018, better than the 40% in fiscal year 2017, reflecting a 38% increase in expenses and a 45% increase in income [18] - As of December 2018, the bank's nonperforming to total financing ratio was 1.91%, with a coverage ratio of 117.74% [21] Q&A Session Summary Question: Coverage of NPLs and outlook for NPL ratio - Management acknowledged the decrease in NPL coverage to slightly above 100% and indicated a target range of 120% to 140% by year-end, with expectations of stability in the NPL ratio around 1.9% in the first half of 2019 [23][24] Question: Financial instruments results and liquidity management - Management clarified that income from securities is classified under interest income, and they plan to continue investing excess liquidity in short-term instruments [29][30] Question: Guidance for net interest income and M&A activity - Management expects loan growth to align with inflation rates of 30% to 32% and remains open to M&A opportunities but currently has no active deals [35][36]