6-K 1 tm2029926-1_6k.htm FORM 6-K

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

August 31, 2020

 

 

 

Commission File Number: 001-32827

 

 

 

MACRO BANK INC.

(Translation of registrant’s name into English)

 

 

 

Avenida Eduardo Madero 1182

Ciudad Autónoma de Buenos Aires C1106 ACY

Tel: 54 11 5222 6500

 

(Address of registrant’s principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x       Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes            ¨       No             x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes            ¨       No             x

 

 

 

   

 

 

 

   

 

 

2Q20 Earnings Release

 

Banco Macro Announces Results for the Second Quarter of 2020

 

Buenos Aires, Argentina, August 31, 2020 – Banco Macro S.A. (NYSE: BMA; BYMA: BMA) (“Banco Macro” or “BMA” or the “Bank”) announced today its results for the first quarter ended June 30, 2020 (“2Q20”). All figures are in Argentine pesos (Ps.) and have been restated in terms of the measuring unit current at the end of the reporting period. As of 1Q20, the Bank began reporting results applying Hyperinflation Accounting, in accordance with IFRS IAS 29 as established by the Central Bank. For ease of comparison, figures of previous quarters of 2019 have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through June 30, 2020.

 

Summary

 

· The Bank’s net income totaled Ps.6.4 billion in 2Q20. This result was 14% lower than the result posted in 1Q20 and 111% higher than in 2Q19. In 2Q20, the accumulated annualized return on average equity (“ROAE”) and the accumulated annualized return on average assets (“ROAA”) were 23% and 5.2%, respectively.

 

· In 2Q20, Banco Macro’s financing to the private sector decreased 5% or Ps.12.2 billion quarter over quarter (“QoQ”) totaling Ps.219.4 billion and 12% or Ps.30.4 billion year over year (“YoY”). In the quarter commercial loans stand out, among which Others stand out; with a 58% increase QoQ, mainly driven by the 24% loans to SMEs.

 

· In 2Q20, Banco Macro’s total deposits increased 24% or Ps.78 billion QoQ, totaling Ps.406 billion and representing 80% of the Bank’s total liabilities. Private sector deposits increased 16% or Ps.47 billion QoQ.

 

· Banco Macro continued showing a strong solvency ratio, with an excess capital of Ps.101.8 billion, 32.1% regulatory capital ratio – Basel III and 25% Tier 1 Ratio. In addition, the Bank’s liquid assets remained at an adequate level, reaching 54% of its total deposits in 2Q20.

 

· As of 2Q20, the accumulated efficiency ratio reached 41.6%, slightly deteriorating from the 39.8% posted in 1Q20.

 

· In 2Q20, the Bank’s non-performing to total financing ratio was 1.52% and the coverage ratio improved to 210%.

 

2Q20 Earnings Release Conference Call  
    IR Contacts in Buenos Aires:
Tuesday, September 1, 2020
Time: 11:00 a.m. Eastern Time | 12:00 p.m. Buenos Aires Time
Jorge Scarinci
    Chief Financial Officer

To participate, please dial:

Argentina Toll Free:

(011) 3984 5677

Participants Dial In (Toll Free):

+1 (844) 450 3847

Participants International Dial In:

+1 (412) 317 6370

Conference ID: Banco Macro

Webcast: click here

 

 

 

Webcast Replay: click here

 

Available from 09/01/2020 through 09/15/2020

 

Nicolás A. Torres

Investor Relations

 

Phone: (54 11) 5222 6682

E-mail: investorelations@macro.com.ar

 

Visit our website at:

www.macro.com.ar/relaciones-inversores

 

2

 

 

2Q20 Earnings Release

 

Disclaimer

 

This press release includes forward-looking statements. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things: inflation; changes in interest rates and the cost of deposits; government regulation; adverse legal or regulatory disputes or proceedings; credit and other risks of lending, such as increases in defaults by borrowers; fluctuations and declines in the value of Argentine public debt; competition in banking and financial services; deterioration in regional and national business and economic conditions in Argentina; and fluctuations in the exchange rate of the peso.

 

The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this press release because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this press release might not occur and are not guarantees of future performance.

 

This report is a summary analysis of Banco Macro's financial condition and results of operations as of and for the period indicated. For a correct interpretation, this report must be read in conjunction with all other material periodically filed with the Comisión Nacional de Valores (www.cnv.gob.ar), the Securities and Exchange Commission (www.sec.gov), Bolsas y mercados Argentinos (www.byma.com.ar) and the New York Stock Exchange (www.nyse.com). In addition, the Central Bank (www.bcra.gov.ar) may publish information related to Banco Macro as of a date subsequent to the last date for which the Bank has published information.

 

Readers of this report must note that this is a translation made from an original version written and expressed in Spanish. Consequently, any matters of interpretation should be referred to the original version in Spanish.

 

3

 

 

 

  2Q20 Earnings Release

 

This Earnings Release has been prepared in accordance with the accounting framework established by the Central Bank of Argentina (“BCRA”), based on International Financial Reporting Standards (“I.F.R.S.”) and the resolutions adopted by the International Accouting Standards Board (“I.A.S.B”) and by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“F.A.C.P.E.”). As of January 2020 the Bank started reporting with the application of (i) Expected losses of IFRS 9 “Financial Instruments” and (ii) IAS 29 “Financial Reporting in Hyperinflationary Economies”. Data and figures shown in this Earnings Release may differ from the ones shown in the 20-F annual report.

 

Results

 

Earnings per outstanding share were Ps.10.01 in 2Q20, 14% lower than 1Q20 and 111% higher than the result posted a year ago.

 

EARNINGS PER SHARE  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Net income -Parent Company- (M $)   3,026    7,454    6,396    -14%   111%
Average # of shares outstanding (M)   639    639    639    0%   0%
Average #of treasury stocks (shares repurchased) (M)   43    -    -    -    -100%
Book value per avg. Outstanding share ($)   152    186    187    1%   23%
Shares Outstanding (M)   639    639    639    0%   0%
Earnings per avg.  outstanding share ($)   4.73    11.65    10.01    -14%   111%
                          
EOP FX (Pesos per USD)   42.4483    64.4700    70.4550    9%   66%
Book value per avg. issued ADS (USD)   35.81    28.85    26.54    -8%   -26%
Earnings per avg. outstanding ADS (USD)   1.11    1.81    1.42    -21%   28%

 

 

Banco Macro’s 2Q20 net income of Ps.6.4 billion was 14% or Ps.1.1 billion lower than the previous quarter and 111% or Ps.3.4 billion higher YoY. This result represented an accumulated ROAE and ROAA of 23% and 5.2% respectively.

 

Net operating income (before G&A and personnel expenses) was Ps.22.2 billion in 2Q20, decreasing 9% or Ps.2.3 billion compared to 1Q20 and increased 27% or Ps.4.7 billion compared to the previous year.

 

In 2Q20 Provision for loan losses totaled Ps.2.3 billion, 158% or Ps.1.4 billion higher than in 1Q20. This increase in loan loss provisions was explained by additional provisions made by the Bank based on estimations of the macroeconomic impact of the current Covid-19 pandemic. Three main groups showing signs of credit deterioration were included in the estimates; i) Ps.930 million related to loans with deferred installments (both commercial and consumer), ii) Ps.600 million related to refinancing of outstanding credit card balances and iii) Ps.750 million related to the 24% loans extended to SMEs, from sectors or activities which the Bank considered troubled o likely to have some trouble.

 

Operating income (after G&A and personnel expenses) was Ps.8.5 billion in 2Q20, 24% or Ps.2.7 billion lower than in 1Q20 and Ps.8.3 billion higher than a year ago.

 

It is important to emphasize that this result was obtained with a leverage of 5.2x assets to equity ratio.

 

4

 

 

  2Q20 Earnings Release

 

INCOME STATEMENT  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19    1Q20   2Q20   QoQ    YoY 
Net Interest Income   24,671    22,447    20,041    -11%   -19%
Net fee income   4,973    4,669    4,649    0%   -7%
Net Interest Income + Net Fee Income   29,644    27,116    24,690    -9%   -17%
Net Income from financial instruments at fair value through P&L   -12,671    -4,313    -2,009    -53%   -84%
Income from assets at amortized cost   -1    899    18    -98%   -1900%
Differences in quoted prices of gold and foreign currency   482    561    786    40%   63%
Other operating income   1,201    1,158    1,064    -8%   -11%
Provision for loan losses   1,187    908    2,343    158%   97%
Net Operating Income   17,468    24,513    22,206    -9%   27%
Employee benefits   7,185    4,980    5,734    15%   -20%
Administrative expenses   3,379    2,818    2,904    3%   -14%
Depreciation and impairment of assets   833    881    921    5%   11%
Other operating expenses   5,797    4,557    4,100    -10%   -29%
Operating Income   274    11,277    8,547    -24%   3019%
Result from associates & joint ventures   925    22    8    -64%   -99%
Result from net monetary postion   6,307    311    445    43%   -93%
Result before taxes from continuing operations   7,506    11,610    9,000    -22%   20%
Income tax   4,480    4,156    2,604    -37%   -42%
Net income from continuing operations   3,026    7,454    6,396    -14%   111%
                          
Net Income of the period   3,026    7,454    6,396    -14%   111%
Net income of the period attributable to parent company   3,026    7,454    6,396    -14%   111%
Net income of the period attributable to minority interest   0    0    0    -    - 

 

The Bank’s 2Q20 net interest income totaled Ps.20 billion, 11% or Ps.2.4 billion lower than in 1Q20 and 19% or Ps.4.6 billion lower YoY.

 

In 2Q20 interest income totaled Ps.29.6 billion, 9% or Ps.3 billion lower than in 1Q20 (due to lower income from interest on loans and lower income from securities) and 36% or Ps.16.4 billion lower than in 2Q19.

 

Income from interest on loans and other financing totaled Ps.18 billion, 12% or Ps.2.5 billion lower compared with the previous quarter, due to a 408 b.p. decrease in the average lending rate (down from 35.6% in 1Q20 to 31.5% in 2Q20), while the average volume of private sector loans remained unchanged. On a yearly basis Income from interest on loans decreased 17% or Ps.3.6 billion.

 

In 2Q20 income from government and private securities decreased 12% or Ps1.3 billion QoQ (due to lower income from Government securities) and decreased 56% or Ps.12.2 billion compared with the same period of last year. This result is explained 86% by income from government and private securities through other comprehensive income (Central Bank Notes) and the remaining 14% is explained by income from government and private securities at amortized cost.

 

In 2Q20 income from Repos totaled Ps.1.5 billion, Ps.1.1 billion higher than the previous quarter and 38% or Ps.900 million lower than a year ago.

 

In 2Q20 FX income totaled a Ps.786 million gain, due to the 9% argentine peso depreciation against the US dollar and the Bank’s long spot dollar position during the quarter and FX trading results (Ps.151 million). It should be noted that if income from investment in derivative financing instruments is added then differences in quoted prices of gold and foreign currency in 2Q20 resulted in a Ps.805 million gain.

 

5

 

 

  2Q20 Earnings Release

 

FX INCOME  MACRO Consolidated   Variation 
In MILLION $ (Measuring Unit Current at EOP)   2Q19   1Q20   2Q20   QoQ    YoY 
(1) Differences in quoted prices of gold and foreign currency   482    561    786    40%   63%
Translation of FX assets and liabilities to Pesos   -195    510    635    25%   - 
Income from foreign currency exchange   677    51    151    196%   -78%
                          
(2) Net Income from financial assets and liabilities at fair value through P&L   -19    38    19    -50%   - 
Income from investment in derivative financing instruments   -19    38    19    -50%   - 
                          
(1) +(2) Total Result from Differences in quoted prices of gold and foreign currency   463    599    805    34%   74%

 

INTEREST INCOME  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Interest on Cash and due from Banks   50    64    14    -78%   -72%
Interest from government securities   21,969    11,007    9,744    -11%   -56%
Interest from private securities   0    615    347    -44%   - 
Interest on loans and other financing                         
To the financial sector   522    266    249    -6%   -52%
To the public non financial sector   173    585    388    -34%   124%
Interest on overdrafts   2,547    4,280    2,862    -33%   12%
Interest on documents   1,602    1,341    913    -32%   -43%
Interest on mortgages loans   2,462    1,894    1,491    -21%   -39%
Interest on pledged loans   183    113    96    -15%   -48%
Interest on personal loans   8,817    7,016    6,973    -1%   -21%
Interest on credit cards loans   3,932    2,883    2,280    -21%   -42%
Interest on financial leases   64    23    12    -48%   -81%
Interest on other loans   1,337    2,101    2,769    32%   107%
Interest on Repos                         
From the BCRA   0    339    1,466    332%   - 
Other financial institutions   2,367    44    1    -98%   -100%
Total Interest income   46,025    32,571    29,605    -9%   -36%
                          
Income from Interest on loans   21,639    20,502    18,033    -12%   -17%

 

The Bank’s 2Q20 interest expense totaled Ps.9.6 billion, decreasing 6% (Ps.560 million) compared to the previous quarter and 55% (Ps.11.8 billion) compared to 2Q19.

 

In 2Q20, interest on deposits represented 91% of the Bank’s total interest expense, decreasing 6% or Ps.566 million QoQ, due to a 262 b.p. reduction in the average rate paid on deposits (down from 16.3% in 1Q20 to 13.6% in 2Q20). The average volume of deposits from the private sector increased 8% and did not offset the decline in interest rates. On a yearly basis, interest on deposits decreased 57% or Ps.11.3 billion.

 

6

 

 

 

  2Q20 Earnings Release

 

INTEREST EXPENSE  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Deposits                         
Interest on checking accounts   77    126    112    -11%   45%
Interest on saving accounts   224    154    123    -20%   -45%
Interest on time deposits   19,617    8,947    8,426    -6%   -57%
Interest on other financing from BCRA and financial inst.   91    23    14    -39%   -85%
Repos                         
Other financial institutions   159    70    19    -73%   -88%
Interest on corporate bonds   690    300    359    20%   -48%
Interest on subordinated bonds   457    483    498    3%   9%
Interest on other financial liabilities   39    21    13    -38%   -67%
Total financial expense   21,354    10,124    9,564    -6%   -55%
                          
Expenses from interest on deposits   19,918    9,227    8,661    -6%   -57%

 

As of 2Q20, the Bank’s accumulated net interest margin (including FX) was 22.3%, lower than the 25.2% posted in 1Q20 and higher than the 20% posted in 2Q19.

 

In 2Q20 Net Interest Margin (excluding FX) was 21.6%, lower than the 24.6% posted in 1Q20 but wider than the 19.8% posted in 2Q19.

 

In 2Q20 Net Interest Margin (Pesos) was 23%, lower than the 30.3% posted in 1Q20 and then the 24.7% in 2Q19; meanwhile Net Interest Margin (USD) was 2.3%, lower than the 3.9% posted in 1Q20 and higher than the 1.1% registered in 2Q19.

 

ASSETS & LIABILITIES PERFORMANCE (AR$)  MACRO Consolidated 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20 
   AVERAGE
BALANCE
   REAL INT RATE   NOMINAL INT. RATE   AVERAGE
BALANCE
   REAL INT RATE   NOMINAL INT. RATE   AVERAGE
BALANCE
   REAL INT RATE   NOMINAL INT. RATE 
Yields & rates in annualized nominal %                                             
Interest-earning assets                                             
Loans & Other Financing                                             
Public Sector   1,450    7.1%   47.9%   6,563    3.4%   35.9%   6,269    2.7%   24.9%
Financial Sector   5,185    1.0%   39.5%   2,232    11.5%   46.5%   2,366    16.9%   42.2%
Private Sector   246,506    -4.4%   32.1%   177,716    7.6%   41.4%   185,557    11.3%   35.4%
Other debt securities                                             
Central Bank Securities (Leliqs)   122,424    22.6%   69.3%   76,181    10.9%   45.7%   84,858    13.1%   37.5%
Government & Private Securities   9,541    -3.9%   32.8%   21,248    18.7%   55.9%   28,548    7.4%   30.6%
Repos   13,562    23.1%   70.0%   3,517    9.5%   43.8%   34,146    -3.5%   17.3%
Total interest-earning assets   398,668    5.0%   45.0%   287,457    9.3%   43.6%   341,744    9.9%   33.6%
                                              
Non interest-earning assets   72,664              95,063              102,592           
Total Average Assets   471,332              382,520              444,336           
                                              
Interest-bearing liabilities                                             
Deposits                                             
Public Sector   23,546    -2.3%   35.0%   12,223    -4.6%   25.3%   18,297    -0.3%   21.3%
Private Sector   222,284    -5.0%   31.2%   149,417    -6.9%   22.3%   178,962    -3.8%   17.0%
BCRA and other financial institutions   582    18.8%   64.1%   362    -4.4%   25.6%   397    -3.6%   17.2%
Corporate bonds   6,456    3.5%   42.9%   5,748    -7.9%   21.0%   4,836    6.8%   29.9%
Repos   1,006    18.3%   63.4%   1,212    -6.2%   23.2%   872    -10.5%   8.8%
Total int.-bearing liabilities   253,874    -4.4%   32.0%   168,962    -6.8%   22.5%   203,364    -3.2%   17.7%
                                              
Total non int.-bearing liab. & equity   78,829              98,465              129,240           
                                              
Total Average Liabilities & Equity   332,703              267,427              332,604           
                                              
Assets Performance        44,698              31,132              28,521      
Liabilities Performance        20,265              9,463              8,937      
Net Interest Income        24,433              21,669              19,584      
Total interest-earning assets        398,668              287,457              341,744      
Net Interest Margin (NIM)        24.6%             30.3%             23.0%     

 

7

 

 

  2Q20 Earnings Release

 

ASSETS & LIABILITIES PERFORMANCE USD  MACRO Consolidated 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20 
   AVERAGE   REAL INT   NOMINAL   AVERAGE   REAL INT   NOMINAL   AVERAGE   REAL INT   NOMINAL 
   BALANCE   RATE   INT. RATE   BALANCE   RATE   INT. RATE   BALANCE   RATE   INT. RATE 
Yields & rates in annualized nominal %                                             
Interest-earning assets                                             
Cash and Deposits in Banks   19,350    -33.0%   1.0%   32,446    0.3%   0.8%   40,416    13.0%   0.1%
Loans & Other Financing                                             
Public Sector   38    0.0%   0.0%   0    0.0%   0.0%   0    0.0%   0.0%
Financial Sector   506    -27.9%   8.7%   485    6.1%   6.6%   63    20.2%   6.4%
Private Sector   60,767    -28.2%   8.2%   44,383    11.7%   12.2%   36,510    26.1%   11.7%
Other debt securities                                             
Government & Private Securities   2,622    -31.4%   3.4%   2,948    1.7%   2.2%   4,131    13.5%   0.5%
Total interest-earning assets   83,283    -29.4%   6.4%   80,262    6.7%   7.2%   81,120    19.0%   5.4%
                                              
Non interest-earning assets   49,464              45,996              41,886           
Total Average Assets   132,747              126,258              123,006           
                                              
Interest-bearing liabilities                                             
Deposits                                             
Public Sector   1,559    -31.5%   3.3%   2,084    0.7%   1.2%   1,317    13.9%   0.9%
Private Sector   79,060    -31.7%   3.0%   59,582    0.5%   1.0%   47,717    14.1%   1.0%
BCRA and other financial institutions   1,940    -28.6%   7.7%   1,340    5.8%   6.3%   601    20.5%   6.7%
Subordinated bonds   19,451    -27.4%   9.4%   27,230    6.6%   7.1%   28,065    20.9%   7.1%
Total int.-bearing liabilities   102,010    -30.8%   4.3%   90,236    2.4%   3.0%   77,700    16.5%   3.2%
                                              
Total non int.-bearing liabilities   27,059              29,035              37,298           
                                              
Total Average liabilities   129,069              119,271              114,998           
                                              
Assets Performance        1,327              1,438              1,084      
Liabilities Performance        1,089              661              627      
Net Interest Income        238              777              457      
Total interest-earning assets        83,283              80,262              81,120      
Net Interest Margin (NIM)        1.1%             3.9%             2.3%     

 

 

In 2Q20 Banco Macro’s net fee income totaled Ps.4.6 billion, Ps.20 million lower than in 1Q20 and 7% or Ps.324 million lower than the same period of last year.

 

In the quarter, fee income totaled Ps.5 billion, 2% or Ps.114 million lower than in 1Q20. Corporate services fees and credit card fees, stand out; with a 25% and 9% decrease respectively QoQ. On a yearly basis, fee income decreased 7% or Ps.367 million.

 

In the quarter, total fee expense decreased 20% or Ps.94 million. On a yearly basis, fee expenses decreased 11% or Ps.43 million.

 

NET FEE INCOME  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Fees charged on deposit accounts   2,175    1,872    1,916    2%   -12%
Credit card fees   1,091    1,132    1,029    -9%   -6%
Corporate services fees   590    567    427    -25%   -28%
ATM transactions fees   252    427    413    -3%   64%
Insurance fees   341    326    334    2%   -2%
Debit card fees   272    266    300    13%   10%
Financial agent fees (Provinces)   267    252    257    2%   -4%
Credit related fees   216    160    210    31%   -3%
Mutual funds & securities fees   136    90    101    12%   -26%
AFIP & Collection services   30    25    16    -36%   -47%
ANSES fees   12    12    12    0%   0%
Total fee income   5,382    5,129    5,015    -2%   -7%
                          
Total fee expense   409    460    366    -20%   -11%
                          
Net fee income   4,973    4,669    4,649    0%   -7%

 

8

 

 

 

  2Q20 Earnings Release

 

In 2Q20 Net Income from financial assets and liabilities at fair value through profit or loss totaled a Ps.2 billion loss, improving from the Ps.4.3 billion loss posted in the previous quarter. This improvement can be traced to a lower loss related to sale of financial assets at fair value as a consequence of the inflation adjustment applied to our Leliq holdings (lower inflation was observed during 2Q20) and a Ps.616 increase in profit from government securities.

 

NET INCOME FROM FINANCIAL ASSETS AND LIABILITIES
AT FAIR VALUE THROUGH PROFIT OR LOSS
  MACRO Consolidated     Change  
In MILLION $ (Measuring Unit Current at EOP)     2Q19   1Q20   2Q20   QoQ     YoY  
Profit or loss from government securities     47     1,400     2,016     44 %   4189 %
Profit or loss from private securities     213     238     104     -56 %   -51 %
Profit or loss from investment in derivative financing instruments     -19     38     19     -50 %   -200 %
Profit or loss from other financial assets     65     -5     9     -280 %   -86 %
Profit or loss from investment in equity instruments     2     95     82     -14 %   4000 %
Profit or loss from the sale of financial assets at fair value     -12,978     -6,079     -4,239     -30 %   -67 %
Income from financial assets at fair value through profit or loss     -12,670     -4,313     -2,009     -53 %   -84 %
                                 
Profit or loss from derivative financing instruments     -1     0     0     -     -  
Income from financial liabilities at fair value through profit or loss     -1     0     0     -     -  
                                 
NET INCOME FROM FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS     -12,671     -4,313     -2,009     -53 %   -84 %

 

 

In the quarter Other Operating Income totaled Ps.1.1 billion, 8% or Ps.94 million lower than in 1Q20. On a yearly basis Other Operating Income decreased 11% or Ps.137.

 

OTHER OPERATING INCOME  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20  2Q20  QoQ   YoY 
Credit and debit cards   82   26   17   -35%  -79%
Lease of safe deposit boxes   116   141   165   17%  42%
Other service related fees   252   508   363   -29%  44%
Other adjustments and interest from other receivables   247   213   171   -20%  -31%
Initial recognition of loans   63   0   18   -   -71%
Others   441   270   330   22%  -25%
Other Operating Income   1,201   1,158   1,064   -8%  -11%

 

In 2Q20 Banco Macro’s administrative expenses plus employee benefits totaled Ps.8.6 billion, 11% or Ps.840 million higher than the previous quarter, due to higher (15%) expenses related to employee benefits (salary increases) and higher administrative expenses (3%). On a yearly basis administrative expenses plus employee benefits decreased 20% or Ps.1.9 billion.

 

During July, 2020 a 26% salary increase was agreed with the Union, which will be payable in installments, for 1Q20 and 2Q20 the increases were 7% and 6% respectively.

 

Employee benefits increased 15% or Ps.754 million QoQ (the main drivers for the increase were higher salaries and higher social security contributions (18% increases in both lines). On a yearly basis Employee benefits decreased 20% or Ps.1.5 billion. It should be noted that in 2Q19 social security contributions included a Ps.1 billion charge related to a higher social security contributions rate; if we were to exclude this non-recurring item employee benefits would have decreased 7% or Ps.641 million.

 

9

 

 

2Q20 Earnings Release

 

In 2Q20, the efficiency ratio reached 43.3%, deteriorating from the 39.8% posted in 1Q20. In 2Q20 expenses (employee benefits + G&A expenses + depreciation and impairment of assets) increased 10%, while income (net interest income + net fee income + differences in quoted prices of gold and foreign currency + other operating income + net income from financial assets at fair value through profit or loss – (Turnover Tax + Insurance on deposits)) were unchanged compared to 1Q20.

 

If we had excluded from the efficiency ratio calculation the inflation adjustment on our Leliqs holding (as per Central Bank rules shown under profit/loss from financial instruments at fair value through P&L), efficiency ratio would have been 37.2% in 2Q20 and 31.6% in 1Q20

 

PERSONNEL & ADMINISTRATIVE EXPENSES  MACRO Consolidated  Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20 2Q20  QoQ   YoY 
Employee benefits   7,185   4,980   5,734   15%  -20%
Remunerations   4,414   3,670   4,335   18%  -2%
Social Security Contributions   2,247   816   964   18%  -57%
Compensation and bonuses   405   385   344   -11%  -15%
Employee services   119   109   91   -17%  -24%
Administrative Expenses   3,379   2,818   2,904   3%  -14%
Taxes   438   406   363   -11%  -17%
Maintenance, conservation fees   465   427   459   7%  -1%
Directors & statutory auditors fees   430   319   287   -10%  -33%
Security services   323   310   299   -4%  -7%
Electricity & Communications   345   328   327   0%  -5%
Other professional fees   292   194   179   -8%  -39%
Rental agreements   70   24   27   13%  -61%
Advertising & publicity   134   61   82   34%  -39%
Personnel allowances   58   35   22   -37%  -62%
Stationary & Office Supplies   29   20   19   -5%  -34%
Insurance   34   27   38   41%  12%
Hired administrative services   1   1   0   -100%  -100%
Other   760   666   802   20%  6%
Total Administrative Expenses   10,564   7,798   8,638   11%  -18%
                      
Total Employees   8,893   8,732   8,706         
Branches   463   463   463         
Efficiency ratio   72.2%  39.8%  43.3%        
                      
Accumulated efficiency ratio   58.4%  39.8%  41.6%        

 

In 2Q20, Other Operating Expenses totaled Ps.4.1 billion, decreasing 10% or Ps.457 million QoQ. Turnover Tax and Other provision charges stand out with a 10% (Ps.248 million) decrease and a 38% (Ps.120 million) decrease respectively QoQ. On a yearly basis Other Operating Expenses decreased 29% or Ps.1.7 billion. If we were to exclude non-recurring items from 2Q19, Other Operating Expenses would have increased 40% or Ps.402 million.

 

10

 

 

  2Q20 Earnings Release

 

OTHER OPERATING EXPENSES  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20  2Q20  QoQ   YoY 
Turnover Tax   2,687   2,576   2,328   -10%  -13%
Other provision charges   354   316   196   -38%  -45%
Deposit Guarantee Fund Contributions   173   128   143   12%  -17%
Donations   54   114   22   -81%  -59%
Insurance claims   14   16   16   0%  14%
Others   2,515   1,404   1,398   0%  -44%
Other Operating Expenses   5,797   4,557   4,100   -10%  -29%

 

 

In 2Q20 the result from the net monetary position totaled a Ps.445 million gain, improving 43% or Ps.134 million from the Ps.311 million gain posted in 1Q20. This result is explained by the breakdown of monetary assets and monetary liabilities and their behavior during the quarter; monetary assets (cash, loans, and government securities) decreased while monetary liabilities (deposits) increased, and lower inflation observed during the quarter (242 b.p. below 1Q20 level, down from 7.7995% to 5.3746%) generating a positive result. On a yearly basis result from net monetary position decreased 93% or Ps.5.9 billion.

 

In 2Q20 Banco Macro's effective income tax rate was 28.9%, lower than the 35.8% effective tax rate of 1Q20.

 

Financial Assets

 

Private sector financing

 

The volume of “core” financing to the private sector (including loans, financial trust and leasing portfolio) totaled Ps.219.4 billion, decreasing 5% or Ps.12.2 billion QoQ and 12% or Ps.30.4 billion YoY.

 

Within commercial loans, Others stand out with an 30% or Ps.9 billion increase QoQ (mostly due to loans extended to SMEs at a 24% interest rate, as part of the relief package given the Covid-19 pandemic); meanwhile Overdrafts decreased 40% or Ps.13.4 billion.

 

Within consumer lending personal loans and credit card loans decreased 5% or Ps.2.9 billion and 3% or Ps.1.2 billion respectively QoQ.

 

Within private sector financing, peso financing increased Ps.244 million, while US dollar financing decreased 36% or USD232 million.

 

As of 2Q20, Banco Macro´s market share over private sector loans was 7.5%.

 

11

 

 

  2Q20 Earnings Release

 

FINANCING TO THE PRIVATE SECTOR  MACRO Consilidated   Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20  2Q20  QoQ   YoY 
Overdrafts   22,607   33,890   20,473   -40%  -9%
Discounted documents   30,534   24,138   21,850   -9%  -28%
Mortgage loans   17,417   13,446   12,969   -4%  -26%
Pledged loans   5,656   3,923   3,689   -6%  -35%
Personal loans   80,592   60,695   57,764   -5%  -28%
Credit Card loans   42,462   46,666   45,461   -3%  7%
Others   35,483   29,384   38,334   30%  8%
Interest   12,160   16,496   16,849   2%  39%
Total loan portfolio   246,911   228,638   217,389   -5%  -12%
                      
Total loans in Pesos   170,204   187,500   188,709   1%  11%
                      
Total loans in USD   76,707   41,138   28,680   -30%  -63%
Financial trusts   1,407   1,741   837   -52%  -41%
Leasing   479   207   155   -25%  -68%
Others   969   1,009   973   -4%  0%
Total other financing   2,855   2,957   1,965   -34%  -31%
                      
Total other financing in Pesos   1,490   1,940   955   -51%  -36%
                      
Total other financing in USD   1,365   1,017   1,010   -1%  -26%
                      
Total financing to the private sector   249,766   231,594   219,354   -5%  -12%
                      
EOP FX (Pesos per USD)   42.4483   64.4700   70.4550   9%  66%
                      
USD financing / Financing to the private sector   31%  18%  14%        

 

Public Sector Assets

 

In 2Q20, the Bank’s public sector assets (excluding LELIQs) to total assets ratio was 9.3%, higher than the 5% registered in the previous quarter, and higher than the 2.8% posted in 2Q19.

 

In 2Q20, a 40% or Ps.30.1 billion increase in Leliqs stands out, also in the quarter Other government securities increased 134% or Ps.29.8 billion, within Other government securities the Bank decided to invest in CER adjustable bonds and Badlar bonds.

 

12

 

 

 

  2Q20 Earnings Release

 

PUBLIC SECTOR ASSETS  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Leliqs   121,836    75,282    105,409    40%   -13%
Other   15,175    22,185    51,982    134%   243%
Government securities   137,011    97,466    157,391    61%   15%
Provincial loans   1,394    4,259    6,324    48%   354%
Loans   1,394    4,259    6,324    48%   354%
Purchase of government bonds   118    128    130    2%   10%
Other receivables   118    128    130    2%   10%
                          
TOTAL PUBLIC SECTOR ASSETS   138,523    101,853    163,845    61%   18%
                          
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)   16,687    26,571    58,436    120%   250%
                          
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)/TOTAL ASSETS   2.8%   5.0%   9.3%          

 

Funding

 

Deposits

 

Banco Macro’s deposit base totaled Ps.406 billion in 2Q20, increasing 24% or Ps.78 billion QoQ and a Ps.214 million increase YoY and representing 80% of the Bank’s total liabilities.

 

On a quarterly basis, both private sector and public sector deposits increased with a 16% or Ps.47 billion increase and a 107% or Ps.30.9 billion increase respectively.

 

The increase in private sector deposits was led by time deposits, which increased 18% or Ps.23.5 billion, while demand deposits increased 13% or Ps.20.5 billion QoQ.

 

Within private sector deposits, peso deposits increased 24% or Ps.52.3 billion, while US dollar deposits decreased 15% or USD179 million.

 

As of 2Q20, Banco Macro´s market share over private sector deposits was 6.3%.

 

DEPOSITS  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Public sector   33,518    28,778    59,669    107%   78%
                          
Financial sector   348    307    349    14%   0%
                          
Private sector   371,936    298,963    345,998    16%   -7%
Checking accounts   41,643    56,570    71,397    26%   71%
Savings accounts   112,436    100,581    106,256    6%   -5%
Time deposits   210,870    134,128    157,674    18%   -25%
Other   6,987    7,683    10,671    39%   53%
Total   405,802    328,047    406,016    24%   0%
                          
Pesos   273,741    245,958    329,118    34%   20%
Foreign Currency (Pesos)   132,061    82,089    76,898    -6%   -42%
                          
EOP FX (Pesos per USD)   42.4483    64.4700    70.4550    9%   66%
Foreign Currency (USD)   3,111    1,273    1,091    -14%   -65%
                          
USD Deposits / Total Deposits   33%   25%   19%          

 

13

 

 

  2Q20 Earnings Release

 

Banco Macro’s transactional deposits represent approximately 49% of its total deposit base as of 2Q20. These accounts are low cost and are not sensitive to interest rate increases.

 

Other sources of funds

 

In 2Q20, the total amount of other sources of funds decreased 4% or Ps.6.4 billion compared to 1Q20. In 2Q20 Shareholder’s Equity decreased 5% or Ps.6.3, due to cash dividend that was declared and approved by the Shareholders’ meeting and which has yet not been paid (Central Bank Authorization still pending, pursuant to Communication “A” 7035 Financial Institutions are not allowed to pay dividends until December 31st, 2020); also in the quarter Non-subordinated corporate bonds decreased 16% or Ps.908 million while subordinated bonds increased 2% or Ps.616 million. On a yearly basis other sources of funds increased 10% or Ps.13.5 billion.

 

OTHER SOURCES OF FUNDS  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Central Bank of Argentina   34    17    18    6%   -47%
Banks and international institutions   2,489    547    549    0%   -78%
Financing received from Argentine financial institutions   613    346    501    45%   -18%
Subordinated corporate bonds   24,543    28,036    28,652    2%   17%
Corporate bonds   8,842    5,757    4,849    -16%   -45%
Shareholders' equity   103,741    125,469    119,200    -5%   15%
Total other source of funds   140,262    160,171    153,769    -4%   10%

 

 

Liquid Assets

 

In 2Q20, the Bank’s liquid assets amounted to Ps.220.6 billion, showing a 3% or Ps.5.6 billion increase QoQ, and an 18% or Ps.48.9 billion decrease on a yearly basis.

 

In 2Q20, LELIQs own portfolio increased 40% or Ps.30.1 billion, which was partially offset by a 20% or Ps.26.1 billion decrease in cash.

 

In 2Q20 Banco Macro’s liquid assets to total deposits ratio reached 54%.

 

LIQUID ASSETS  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Cash   137,658    129,949    103,897    -20%   -25%
Guarantees for compensating chambers   8,554    9,167    11,282    23%   32%
Call   1,413    632    0    -100%   -100%
Leliq own portfolio   121,836    75,282    105,409    40%   -13%
Total   269,461    215,030    220,588    3%   -18%
                          
Liquid assets to total deposits   66.0%   66.0%   54.0%          

 

14

 

 

  2Q20 Earnings Release

 

Solvency

 

Banco Macro continued showing high solvency levels in 2Q20 with an integrated capital (RPC) of Ps.136.5 billion over a total capital requirement of Ps.34.7 billion. Banco Macro’s excess capital in 2Q20 was 294% or Ps.101.8 billion. Since the beginning of 2020 and due to inflation adjustments Equity has increased significantly leading to higher solvency levels (shown under Ordinary Capital Level 1).

 

The regulatory capital ratio (as a percentage of risk-weighted assets- RWA) was 32.1% in 2Q20; TIER1 Ratio stood at 25%.

 

The Bank’s aim is to make the best use of this excess capital.

 

MINIMUM CAPITAL REQUIREMENT  MACRO Consolidated   Change 
In MILLION $  2Q19(¹)   1Q20(²)   2Q20(²)   QoQ   YoY 
Credit risk requirement   16,641    23,808    24,046    1%   44%
Market risk requirement   421    694    1,122    62%   166%
Operational risk requirement   5,959    8,606    9,493    10%   59%
Total capital requirements   23,021    33,108    34,660    5%   51%
                          
Ordinary Capital Level 1 (COn1)   59,406    115,532    116,048    0%   95%
Deductible concepts Level 1 (COn1)   -4,160    -12,442    -10,011    -20%   141%
Capital Level 2 (COn2)   18,740    26,427    30,427    15%   62%
Integrated capital - RPC (i)   73,986    129,517    136,464    5%   84%
                          
Excess capital   50,965    96,409    101,804    6%   100%
                          
Risk-weighted assets - RWA (ii)   281,700    405,179    424,501    5%   51%
                          
Regulatory Capital ratio [(i)/(ii)]   26.0%   32.0%   32.0%          
                          
Ratio TIER 1 [Capital Level 1/RWA]   20.0%   25.0%   25.0%          

 

RWA - (ii): Risk Weighted Assets, considering total capital requirements.

(¹) Figueres are not inflation adjusted. Expressed in Pesos current at end of each quarter

(²) Figures are inflaiton adjusted. Expressed in Pesos current at EOP

 

15

 

 

  2Q20 Earnings Release

 

Asset Quality

 

In 2Q20, Banco Macro’s non-performing to total financing ratio (under Central Bank rules) reached a level of 1.52%, up from 1.36% in 1Q20, and down from the 2.12% posted in 2Q19.

 

Consumer portfolio non-performing loans deteriorated 14b.p. (up to 1.50% from 1.36%) while Commercial portfolio non-performing loans deteriorated 18 b.p. in 2Q20 (up to 1.54% from 1.36%).

 

Consumer portfolio non-performing loans ratio continues to be positively impacted by recent measures adopted by the Central Bank of Argentina in the current Covid19 pandemic context, particularly the 60 day grace period that was added to debtor classification before a loan is considered non performing and the possibility to refinance outstanding credit card balances.

 

The coverage ratio (measured as total allowances under Expected Credit Losses over Non Performing loans under Central Bank rules) improved to 210.65% in 2Q20. Write-offs over total loans totaled 0.21%.

 

The Bank is committed to continue working in this area to maintain excellent asset quality standards.

 

ASSET QUALITY  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Commercial portfolio   103,534    104,694    81,725    -22%   -21%
  Non-performing   821    1,426    1,262    -12%   54%
Consumer portfolio   161,229    142,176    157,282    11%   -2%
  Non-performing   4,801    1,934    2,366    22%   -51%
Total portfolio   264,763    246,870    239,007    -3%   -10%
  Non-performing   5,621    3,360    3,628    8%   -35%
Commercial non-perfoming ratio   0.79%   1.36%   1.54%          
Consumer non-perfoming ratio   2.98%   1.36%   1.50%          
                          
Total non-performing/ Total portfolio   2.12%   1.36%   1.52%          
                          
Total allowances   6,188    5,828    7,642    31%   23%
Coverage ratio w/allowances   110.09%   173.45%   210.64%          
Write Offs   927    550    507    -8%   -45%
Write Offs/ Total portfolio   0.35%   0.22%   0.21%          

 

16

 

 

 

  2Q20 Earnings Release

 

Expected Credit Losses (E.C.L) (I.F.R.S.9)

 

The Bank records an allowance for expected credit losses for all loans and other debt financial assets not held at fair value through profit or loss, together with loan commitments and financial guarantee contracts, in this section all referred to as ‘financial instruments’. Equity instruments are not subject to impairment under IFRS 9. The ECL allowance is based on the credit losses expected to arise over the life of the asset (the lifetime expected credit loss), unless there has been no significant increase in credit risk since origination, in which case, the allowance is based on the 12 months expected credit loss.(For further information please see our 2019 20-F)

 

The table below shows, under the E.C.L model, the allowances for credit losses with their respective classification in stages, and the impact the transition to I.F.R.S. 9 has on earnings.

 

Transition to I.F.R.S.9  (BOP Jan 1,2019)    
IN MILLION $ (Measuring Unit Current at end of 2Q20)     
Allowances under BCRA rules   7,271 
Re-measurement of financial inst.   -491 
ECL under I.F.R.S9 (Jan 2019)   6,780 

 

Expected Credit Losses (ECL) - 2020 Evolution     
ECL under I.F.R.S.9 EOP 4Q19   5,792 
ECL under I.F.R.S.9 EOP 1Q20   5,828 
12months ECL (Stage 1)   1,355 
Financial inst. with increased credit risk (Stage 2)   896 
Financial inst. considered credit impaired (Stage 3)   292 
Monetary result generated by allowances   -693 
ECL under I.F.R.S.9 EOP 2Q20   7,643 

 

17

 

 

  2Q20 Earnings Release

 

CER Exposure and Foreign Currency Position

 

CER EXPOSURE  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
CER adjustable ASSETS                         
                          
Government Securities   119    2,724    19,586    619%   16359%
                          
Loans (*)   16,807    16,588    16,413    -1%   -2%
Private sector loans   9,641    7,368    6,865    -7%   -29%
Mortgage loans (UVA adjusted)   7,166    9,217    9,545    4%   33%
Other loans   0    3    3    -    - 
Total CER adjustable assets   16,926    19,312    35,999    86%   113%
                          
CER adjustable LIABILITIES                         
Deposits (*)   371    1,283    2,238    74%   503%
UVA Unemployment fund   497    651    604    -7%   22%
Total CER adjustable liabilities   868    1,934    2,842    47%   227%
                          
NET CER EXPOSURE   16,058    17,378    33,157    91%   106%

 

(*) Includes Loans &Time Deposits CER adjustable (UVAs)

 

FOREIGN CURRENCY POSITION  MACRO Consolidated   Change 
In MILLION $ (Measuring Unit Current at EOP)  2Q19   1Q20   2Q20   QoQ   YoY 
Cash and deposits in Banks   81,607    72,259    79,980    11%   -2%
Cash   4,807    4,731    4,352    -8%   -9%
Central Bank of Argentina   52,452    32,814    34,664    6%   -34%
Other financial institutions local and abroad   24,345    34,709    40,959    18%   68%
Others   3    4    5    25%   67%
Net Income from financial instruments at fair value through P&L   543    148    34    -77%   -94%
Derivatives   0    0    0    -    - 
Other financial assets   4,670    4,283    4,103    -4%   -12%
Loans and other financing   78,183    42,076    29,628    -30%   -62%
Other financial institutions   653    75    59    -21%   -91%
Non financial private sector & foreign residents   77,530    42,001    29,569    -30%   -62%
Other debt securities   4,486    3,916    4,281    9%   -5%
Guarantees received   1,771    2,202    2,142    -3%   21%
Investment in equity instruments   10    6    7    17%   -30%
Investment in associates and joint ventures   0    0    0    -    - 
Total Assets   171,270    124,891    120,175    -4%   -30%
Deposits   132,061    82,089    76,898    -6%   -42%
Non financial public sector   3,960    3,292    3,378    3%   -15%
Financial sector   233    259    269    4%   15%
Non financial private sector & foreign residents   127,868    78,538    73,251    -7%   -43%
Other liabilities from financial intermediation   4,936    6,118    5,449    -11%   10%
Financing from the Central Bank and other fin. Inst   2,747    725    710    -2%   -74%
Subordinated corporate bonds   24,494    28,036    28,652    2%   17%
Other non financial liabilities   62    32    60    88%   -3%
Total Liabilities   164,301    117,000    111,769    -4%   -32%
                          
NET FX POSITION (Pesos)   6,969    7,892    8,406    7%   21%
EOP FX (Pesos per USD)   42.4483    64.4700    70.4550    9%   66%
NET FX POSITION (USD)   164    122    119    -3%   -27%

 

18

 

 

  2Q20 Earnings Release

 

Relevant and Recent Events

 

·Interest Payment Class C Peso denominated Notes. In July 2020, the Bank paid quarterly interest on Class C Peso denominated notes in the amount of Ps.168,089,726.31.

 

·Play Digital. In July and August Banco Macro in line with its business strategy, decided to make an irrevocable capital contribution in advance of future share subscription to the company “Play Digital S.A.” as of this date these contributions have been accepted. The Company’s purpose is to develop and market a payment solution linked to bank accounts held by financial system users in order to bring significant improvement to their payment experience. The Company’s shareholders are Banco de Galicia y Buenos Aires S.A.U., Banco BBVA Argentina S.A. and Banco Santander Río S.A. and we expect other financial entities to join us and participate progressively in the Company’s capital stock and payment solution.

 

·Covid-19: In early March 2020, the World Health Organization recognized Coronavirus (Covid-19) as a pandemic that is severely affecting almost all countries around the world. The spread of this disease globally has forced the authorities to take drastic health and financial measures to contain and mitigate its effects on health and economic activity. Particularly in the Argentine Republic, on March 19, 2020, through Decree No. 297/2020, the Government established the “social, preventive and compulsory isolation” measure until March 31, 2020, which was then extended until June 7, 2020. Along with health protection rules, tax and financial measures were taken to mitigate the impact on the economy associated with the pandemic, including public direct financial assistance measures for part of the population, the establishment of financial and fiscal facilities for both individuals and companies. As regards measures related to the Entity’s business, the BCRA established maturities extensions, froze the mortgage loan installments and encouraged banks to lend to companies at reduced rates. In addition, the distribution of dividends of the finance institutions was suspended until June 30, 2020. In addition, in the mandatory quarantine context, the BCRA ruled that financial institutions would not be able to open their branches for public service during that period and should continue to provide services to users remotely. They could also trade with each other and their clients in the exchange market remotely. During quarantine, remote trading of stock exchanges and capital markets authorized by the CNV, the custodians and capital market agents registered with the CNV was admitted. In view of the extension of mandatory quarantine, the BCRA then decided that financial institutions would open their branches from Friday, April 3, 2020 for public attention through previous appointments obtained by the Bank’s website. The Bank is developing its activities under the conditions detailed above, giving priority to the compliance of social isolation measures by its employees, with the primary objective of taking care of the public health and well-being of all its stakeholders (employees, suppliers, customers, among others). To this end, it has put in place contingency procedures and has enabled its staff to carry out their tasks remotely. From a commercial point of view, it has emphasized maintaining a close relationship with its customers, trying to respond to their needs at this difficult time, sustaining all virtual channels of care to ensure operability and good response to requirements, monitoring compliance with their business obligations and monitoring the active portfolio in order to detect possible delays in collection and set new conditions for them. Considering the size of the abovementioned situation, the Bank’s Management estimates that this situation could have an impact on its operations and the financial situation and the results of the Bank, which are under analysis, and will ultimately, depend on the extent an duration of the health emergency and the success of the measures taken and taken in

 

Regulatory Changes

 

·ATM fees. The Central Bank determined through Communication “A” 7044 that, until December 31, 2020, any operation effected through ATMs will not be subject to any charges or fees. The Central Bank also stated that all outstanding and unpaid installments on loans through September 30, 2020 will be deferred to maturity.

 

19

 

 

  2Q20 Earnings Release

 

·Reserve requirements. The Central Bank through Communication “A” 7046 overruled the consolidated calculation for reserve requirements in pesos for the periods July/August 2020 and December/January 2021.

 

·Credit card payments. The Central Bank determined that the unpaid balances of credit card financings due between September 1 and September 30, 2020 will be automatically refinanced in nine equal consecutive monthly installments beginning after a three-month grace period. Interest rates on such unpaid balances may not exceed an annual nominal rate of 40%.

 

·Minimum holding period. The CNV (National Securities Commission) through Resolution 843 established that all purchases and sales of securities in the local market with foreign settlement are to be compensated. Additionally all securities transfer from abroad and settled in foreign currency are subject to a minimum holding period of five business days.

 

·Prohibition of bank account closures. The government prohibited the closure and disabling of bank accounts and the imposition of penalties until December 31, 2020.

 

·Subsidized loans to non-SME clients. Through Communication “A” 7054 the Central Bank allowed financing at a 24% interest rate to non-SME clients, provided that the funds are used for the acquisition of machinery and equipment manufactured by SMEs. These loans are included in the reserve requirement reduction and the calculation of the Leliq daily position.

 

·USD wire transfers. The Central Bank through Communication “A” 7063 urged financial institutions to proceed with increased caution when performing USD wire transfers. Particularly the Central Bank flagged certain USD accounts as being suspicious, and established that from the second transfer received by these account in the same month, financial institutions should defer the accreditation until all suspicions are cleared.

 

·Leliq Position vs. PGNME (Net Foreign Exchange Position). The Central Bank established through Communication “A” 7077 that as of August 1, 2020, the excess net position in LELIQ can be incremented by the positive difference between: the maximum limit of the cash position within the Net positive Global Currency Position (the highest between USD 2.5 million, and 4% of the month’s regulatory capital) and the current cash position. In the case that the difference is negative, the increment in limit is zero.

 

·Time deposits minimum rate. The Central Bank ruled through Communication “A” 7078 that all non-adjustable time deposits under Ps.1 million made by individuals as of August 1, 2020 will have a minimum interest rate equivalent to the 87% (up from 79%) of the average LELIQ’s tendering during the week prior to the date in which the deposit was made. Furthermore the Central Bank established that as of September 1, 2020 financial institutions paying this interest rate will be able to increase their excess Leliq position by 13% of the average amount of time deposits of the previous month.

 

·New subsidized credit lines. The Central Bank through communication “A” 7082 established that financial institutions must grant loans at a subsidized interest rate to all companies that request them, provided that they are included in the beneficiary list that will be released by the AFIP (Internal Tax Revenue Service). The interest rate will be determined according to the year over year increase in the company’s revenues (with a maximum rate of 15%). The Fondo Nacional de Desarrollo Productivo (FONDEP) will recognize an annual nominal rate equivalent to the difference between 15% and the interest rate paid by the company, in line with the previously mentioned limits.

 

20

 

 

 

  2Q20 Earnings Release

 

QUARTERLY BALANCE SHEET   MACRO Consilidated   Changed 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20  2Q20  QoQ   YoY 
ASSETS                     
Cash and deposits in Banks   137,658   129,949   103,897   -20%  -25%
Cash   13,200   19,554   15,881   -19%  20%
Central Bank of Argentina   100,097   75,679   46,968   -38%  -53%
Other local & foreign entities   24,357   34,710   41,043   18%  69%
Other   4   6   5   -17%  25%
Debt securities at fair value through profit & loss   2,826   1,789   12,517   600%  343%
Derivatives   25   43   17   -60%  -32%
Repo Transactions   -   432   68,745   15813%  - 
Other financial assets   7,542   12,849   11,213   -13%  49%
Loans & other receivables   255,687   237,209   227,191   -4%  -11%
Non Financial Public Sector   1,552   4,430   6,488   46%  318%
Financial Sector   5,776   2,925   2,186   -25%  -62%
Non Financial private sector and foreign   248,359   229,854   218,517   -5%  -12%
Other debt securities   139,020   102,511   149,160   46%  7%
Financial assets in guarantee   10,217   10,537   13,920   32%  36%
Investments in equity instruments   2,156   1,669   1,610   -4%  -25%
Investments in other companies
(subsidiaries and joint ventures)
   177   177   149   -16%  -16%
Property, plant and equipment   28,603   29,042   28,767   -1%  1%
Intangible assets   4,053   4,159   4,123   -1%  2%
Deferred income tax assets   -   60   65   8%  - 
Other non financial assets   1,835   1,540   1,946   26%  6%
Non-current assets held for sale   1,597   2,054   2,040   -1%  28%
TOTAL ASSETS   591,396   534,020   625,360   17%  6%
                      
LIABILITIES                     
Deposits   405,802   328,047   406,016   24%  0%
Non Financial Public Sector   33,518   28,778   59,669   107%  78%
Financial Sector   348   307   349   14%  0%
Non Financial private sector and foreign   371,936   298,962   345,998   16%  -7%
Derivatives   16   169   -   -100%  -100%
Repo Transactions   396   -   1,275   -   222%
Other financial liabilities   21,177   24,747   28,792   16%  36%
Financing received from Central Bank and Other Financial Institutions   3,138   911   1,070   17%  -66%
Issued Corporate Bonds   8,842   5,757   4,849   -16%  -45%
Current income tax liabilities   5,922   10,844   7,489   -31%  26%
Subordinated corporate bonds   24,543   28,036   28,652   2%  17%
Provisions   1,484   1,673   1,614   -4%  9%
Deferred income tax liabilities   5,364   4   3,665   91525%  -32%
Other non financial liabilities   10,970   8,362   22,736   172%  107%
TOTAL LIABILITIES   487,654   408,550   506,158   24%  4%
SHAREHOLDERS' EQUITY                     
Capital Stock   670   639   639   0%  -5%
Issued Shares premium   12,428   12,430   12,430   0%  0%
Adjustment to Shareholders' Equity   39,844   39,817   39,816   0%  0%
Reserves   62,333   62,392   95,023   52%  52%
Retained earnings   -18,405   3,686   -42,222   -   - 
Other accumulated comprehensive income   -294   -949   -336   -   - 
Net income for the period / fiscal year   7,165   7,454   13,850   -66%  80%
Shareholders' Equity attributable to parent company   103,741   125,469   119,200   -5%  15%
                      
Shareholders' Equity attributable to non controlling interest   1   1   2   100%  100%
TOTAL SHAREHOLDERS' EQUITY   103,742   125,470   119,202   -5%  15%

 

21

 

 

  2Q20 Earnings Release

 

INCOME STATEMENT      Change 
In MILLION $ (Measuring Unit Current at EOP)   2Q19  1Q20  2Q20  QoQ   YoY 
Interest Income   46,025   32,571   29,605   -9%  -36%
Interest Expense   21,354   10,124   9,564   -6%  -55%
 Net Interest Income   24,671   22,447   20,041   -11%  -19%
Fee income   5,382   5,129   5,015   -2%  -7%
Fee expense   409   460   366   -20%  -11%
 Net Fee Income   4,973   4,669   4,649   0%  -7%
Subtotal (Net Interest Income + Net Fee Income)   29,644   27,116   24,690   -9%  -17%
Net Income from financial instruments  at Fair Value Through Profit & Loss   -12,671   -4,313   -2,009   -53%  -84%
Result from assets at amortised cost   -1   899   18   -98%  - 
Difference in quoted prices of gold and foreign currency   482   561   786   40%  63%
Other operating income   1,201   1,158   1,064   -8%  -11%
Provision for loan losses   1,187   908   2,343   158%  97%
Net Operating Income   17,468   24,513   22,206   -9%  27%
Personnel expenses   7,185   4,980   5,734   15%  -20%
Administrative expenses   3,379   2,818   2,904   3%  -14%
Depreciation and impairment of assets   833   881   921   5%  11%
Other operating expense   5,797   4,557   4,100   -10%  -29%
Operating Income   274   11,277   8,547   -24%  3019%
Income from associates and joint ventures   925   22   8   -64%  -99%
Result from net monetary position   6,307   311   445   43%  -93%
Net Income before income tax on cont. operations   7,506   11,610   9,000   -22%  20%
Income tax on continuing operations   4,480   4,156   2,604   -37%  -42%
Net Income from continuing operations   3,026   7,454   6,396   -14%  111%
                      
Net Income for the period   3,026   7,454   6,396   -14%  111%
Net Income of the period attributable to parent company   3,026   7,454   6,396   -14%  111%
Net income of the period attributable to non-controlling interests   -   -   -   -   - 
                      
Other Comprehensive Income   -165   -1,097   613   -   - 
Foreign currency translation differences in financial statements conversion   -265   -7   77   -   - 
Profits or losses from financial assets measured at fair value  through other comprehensive income (FVOCI)  (IFRS 9(4.1.2)(a)   100   -1,090   536   -   436%
                      
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD   2,860   6,357   7,009   10%  145%
Total Comprehensive Income attributable to parent Company   2,860   6,357   7,009   10%  145%
Total Comprehensive Income attributable to non-controlling interests   -   -   -   -   - 

 

22

 

 

  2Q20 Earnings Release

 

QUARTERLY ANNUALIZED RATIOS   MACRO Consolidated 
    2Q19   1Q20   2Q20
Profitability & performance               
Net interest margin   21.0%   25.2%   19.8%
Net interest margin adjusted (exc. FX)   20.6%   24.6%   19.1%
Net fee income ratio   21.0%   14.3%   14.7%
Efficiency ratio   72.2%   39.8%   43.3%
Net fee income as % of A&G Expenses   29.1%   36.0%   33.9%
Return on average assets   2.0%   5.9%   4.5%
Return on average equity   8.6%   24.6%   21.5%
Liquidity               
Loans as a percentage of total deposits   63.0%   72.3%   56.0%
Liquid assets as a percentage of total deposits   66.4%   66.0%   54.0%
Capital               
Total equity as a percentage of total assets   17.5%   23.5%   19.1%
Regulatory capital as % of APR   26.3%   32.0%   32.2%
Asset Quality               
Allowances over total loans   2.4%   2.5%   3.4%
Non-performing financing as a percentage of total financing   2.1%   1.4%   1.5%
Coverage ratio w/allowances   110.1%   173.5%   210,65%
Cost of Risk   1.5%   1.6%   4.1%

 

ACCUMULATED ANNUALIZED RATIOS   MACRO Consolidated 
    2Q19  1Q20  2Q20
Profitability & performance             
Net interest margin   20.0%  25.2%  22.3%
Net interest margin adjusted (exc. FX)   19.8%  24.6%  21.6%
Net fee income ratio   29.8%  14.3%  14.5%
Efficiency ratio   58.4%  39.8%  41.6%
Net fee income as % of A&G Expenses   51.0%  36.0%  34.9%
Return on average assets   2.4%  5.9%  5.2%
Return on average equity   11.5%  24.6%  23.0%
Liquidity             
Loans as a percentage of total deposits   63.0%  72.3%  56.0%
Liquid assets as a percentage of total deposits   66.4%  66.0%  54.0%
Capital             
Total equity as a percentage of total assets   17.5%  23.5%  19.1%
Regulatory capital as % of APR   26.3%  32.0%  32.2%
Asset Quality             
Allowances over total loans   2.4%  2.5%  3.4%
Non-performing financing as a percentage of total financing   2.1%  1.4%  1.5%
Coverage ratio w/allowances   110.1%  173.5%  210,65%
Cost of Risk   1.9%  1.6%  2.8%

 

23

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Date: August 31, 2020

 

  MACRO BANK INC.
     
     
  By: /s/ Jorge Francisco Scarinci
  Name: Jorge Francisco Scarinci
  Title: Chief Financial Officer