Banco Macro S.A. (BMA) Q4 2022 Earnings Call Transcript

Banco Macro S.A. (NYSE:BMA) Q4 2022 Earnings Conference Call February 24, 2023 11:00 AM ET

Company Representatives

Gustavo Manriquez - Chief Executive Officer

Jorge Scarinci - Chief Financial Officer

Nicolas Torres - Investor Relations

Conference Call Participants

Ernesto Gabilondo - Bank of America

Brian Flores - Citibank

Yuri Fernandes - JP Morgan

Carlos Gomez - HSBC

Rodrigo Nistor - Latin Securities

Operator

Good greeting ladies and gentlemen and convey you for waiting. At this clip we would for illustration to invited everyone to Banco Macro's Fourth Quarter 2022 Earnings Conference Call. We would for illustration to pass you that nan 4Q 2022 property merchandise is disposable to download astatine nan Investor Relations website of Banco Macro, www.macro.com.ar/relaciones-inversores.

Also, this arena is besides being recorded and each participants will beryllium successful a listen-only mode during nan company’s presentation. [Operator Instructions].

It is now my pleasance to present our speakers. Joining america from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer, Mr. Nicolas Torres, IR.

Now, I would for illustration to move nan convention complete to Mr. Nicolas Torres. You whitethorn statesman your conference.

Nicolas Torres

Thank you, Gary. Good morning, and invited to Banco Macro's 4th fourth 2022 convention call. Any comments we whitethorn make coming whitethorn see forward-looking statements, which are taxable to various conditions, and these are outlined successful our 20-F, which was revenge to nan SEC and is disposable astatine our website.

Fourth 4th 2022 property merchandise was distributed yesterday and it’s besides disposable astatine our website. All figures are successful Argentine pesos and person been restated successful position of nan measuring portion existent astatine nan extremity of nan reporting period.

As of nan first 4th of 2020, nan slope began reporting results applying hyperinflation accounting successful accordance pinch IFRS IAS 29 arsenic established by the Central Bank of Argentina. For easiness of comparison, figures of erstwhile quarters person been restated applying IAS 29 to bespeak nan cumulated effect of nan ostentation accommodation for each play done December 31, 2022. I will now concisely remark connected nan bank's 4th fourth 2022 financial results.

Banco Macro's nett income for nan 4th was Ps.16.6 billion, 59% higher than nan 3rd 4th of 2022 and 19% little than nan consequence posted a twelvemonth ago. The bank's 4th fourth 2022 ROE and ROA of 16.9% and 3.3% respectively remained patient and showed nan bank's net potential. In fiscal twelvemonth 2022, full broad income totaled Ps.37.5 billion, which was 32% little than nan consequence posted successful fiscal twelvemonth 2021.

Net operating income earlier general, administrative and unit expenses for nan 4th fourth of 2022 was Ps.131.3 billion, decreasing 8% aliases Ps.11.3 cardinal quarter-on-quarter owed to little income from financial instruments astatine adjacent worth to profit and loss.

On a yearly basis, nett income earlier wide and administrative and individual expenses accrued 36% aliases Ps.34 billion.

In fiscal twelvemonth 2022 nett operating income earlier general, administrative and individual expenses totaled Ps.498.2 billion, which was 36% higher than nan erstwhile year. In nan 4th fourth of 2022, proviso for indebtedness losses totaled Ps.2.5 billion, which was Ps.861 cardinal higher than successful nan erstwhile quarter. On a yearly ground provisions for indebtedness losses decreased 34% to Ps.1.3 billion.

Operating income aft wide and administrative and individual expenses was Ps.78.2, 11% aliases Ps.10 cardinal little than successful nan 4th fourth of 2022, and 79% aliases Ps.34.5 cardinal higher than successful nan 4th fourth of 2021.

In nan quarter, nett liking income totaled Ps.83.6 billion, 12% aliases Ps.9.1 cardinal higher than nan consequence posted successful nan 3rd 4th of 2022 and 20% aliases Ps.14 cardinal higher than nan consequence posted 1 twelvemonth ago.

In fiscal twelvemonth 2022 nett liking income was 20% higher than successful fiscal twelvemonth 2021 arsenic a consequence of different regulations adapted by nan cardinal slope that group caps connected lending rates inflow connected deposit rates. In nan 4th fourth of 2022 liking income totaled Ps.198.6 billion, 23% aliases Ps.37.7 cardinal higher than successful nan 3rd 4th of 2022, owed to higher income from authorities activities and was 79% aliases Ps.87.8 cardinal higher than nan erstwhile year.

Within liking income, liking connected loans accrued 7% aliases Ps.4.5 cardinal quarter-on-quarter owed to a 570 ground points summation successful nan mean lending rate. On a yearly basis, income from liking connected loans was 21% aliases Ps. 12 cardinal higher. In nan 4th fourth of 2022 liking connected loans represented 35% of full liking income. In fiscal twelvemonth 2022 liking connected loans totaled Ps. 251 cardinal and accrued 12% compared to fiscal twelvemonth 2021.

Net income from authorities and backstage securities accrued 34% aliases Ps.30.7 cardinal quarter-on-quarter owed to higher income from authorities securities. Compared to nan 4th fourth of 2021, nett income from authorities and backstage securities accrued 144% aliases Ps.71.9 billion.

In nan 4th fourth of 2022, FX gains including investments successful [inaudible] financing totaled a Ps.30.6 cardinal summation owed to a 20% argentine peso depreciation against nan U.S. dollar and nan bank’s indebtedness dollar position.

In nan 4th fourth of 2022 liking disbursal totaled Ps.150 billion, which was 33% aliases Ps.28.6 cardinal higher compared to nan 3rd 4th of 2022 and 179% aliases Ps.73.8 cardinal higher connected a yearly basis.

Within liking expenses, liking connected deposits accrued 34% to Ps.28.5 cardinal quarter-on-quarter, chiefly driven by a 10% summation successful nan mean measurement of backstage assemblage deposits, while nan mean liking rates paid connected deposits accrued 860 ground points. On a yearly ground liking connected deposits accrued 187% aliases Ps.73.8 billion.

In nan 4th fourth of 2022 liking connected deposits represented 98% of nan bank's financial expense. In fiscal twelvemonth 2022 liking disbursal accrued 67% compared to fiscal twelvemonth 2021. In nan 4th fourth of 2022 nan bank’s nett liking margin, including FX was 32.7%, which was higher than nan 28.1% posted successful nan 3rd 4th of ‘22 and nan 21.2 registered successful nan 4th fourth of 2021.

In nan 4th fourth of 2022, nett interest income totaled Ps.17 billion, 2% aliases Ps. 361 cardinal higher than successful 3rd 4th of 2022. On a yearly basis, nett interest income was unchanged from a twelvemonth ago. In fiscal twelvemonth 2022 nett interest income was 4% higher than successful nan antecedently year.

In nan 4th fourth of 2022 nett income from financial assets and liabilities, nan adjacent worth to profit and nonaccomplishment totaled Ps.3.3 cardinal loss, which was Ps.32 cardinal little than nan erstwhile quarter, chiefly owed to our bonds.

In fiscal twelvemonth 2022, nett income from financial assets and liabilities astatine adjacent worth to profit aliases nonaccomplishment was 24% higher than successful nan fiscal twelvemonth 2021, chiefly owed to higher income from authorities securities. In nan quarter, different operating income totaled Ps.5.7 billion, expanding 31% compared to nan 3rd 4th of 2022. On a yearly basis, different operating income accrued 49% aliases Ps.1.9 billion.

In nan 4th fourth of 2022, Banco Macro's unit and administrative expenses totaled Ps.29.2 billion, 4% aliases Ps.1.2 cardinal little than nan erstwhile quarter, owed to little worker benefits which were partially offset by higher administrative expenses. On a yearly basis, unit and administrative expenses decreased 4% to Ps.1.2 billion.

In fiscal twelvemonth 2022 administrative expenses positive worker benefits accrued 1% compared to fiscal twelvemonth 2021, showing nan strict costs power argumentation adopted by nan bank’s elder management.

As of nan 4th fourth of 2022, nan ratio ratio reached 28.6%, improving from nan 29.1% posted successful nan 3rd 4th of 2022. And successful nan 4th fourth of 2022, expenses accrued 3%, while nett liking income positive nett interest income positive different operating income accrued 33%.

In nan 4th fourth of 2022 nan results from nan nett monetary acquisition totaled Ps.56.9 cardinal loss, which was 70% aliases Ps.11.4 cardinal little than nan nonaccomplishment posted successful nan 3rd 4th of 2022 arsenic a consequence of little inflation. This was 468 ground points beneath nan 3rd 4th of 2022. Inflation successful nan 4th was 17.3% compared to 22% successful nan 3rd 4th of 2022.

In fiscal twelvemonth 2022, Banco Macro's effective taxation complaint was 31.1%, higher than nan 5.8% taxation complaint registered during fiscal twelvemonth 2021. It should beryllium noted that successful fiscal twelvemonth 2021 effective taxation complaint was affected by nan implications of ostentation accommodation connected accounting and taxation balances and nan determination of nan income taxation owed and deferred income tax. More accusation is provided successful Note 25 to our financial statements.

In position of indebtedness growth, nan bank's financing to nan backstage assemblage totaled Ps.596.4 billion, expanding Ps.2 cardinal quarter-on-quarter and decreasing 12% aliases Ps.83.3 cardinal year-on-year. Within commercialized loans, overdraft guidelines retired were astatine 2% aliases Ps.1.1 cardinal alteration quarter-on-quarter. On nan user side, in installments paper loans accrued 6% aliases Ps.10 cardinal successful nan quarter, while individual loans and mortgages decreased 7% and 4% respectively.

In fiscal twelvemonth 2022, in installments paper loans guidelines retired pinch a 3% increase, while individual loans decreased 25%. It is important to mention that Banco Macro's marketplace stock of nan backstage assemblage loans arsenic of December 2022 reached 7.4%.

On nan backing side, full deposits decreased 2% aliases Ps.23.5 cardinal quarter-on-quarter and accrued 13% aliases Ps.148.3 cardinal year-on-year. Private assemblage deposits accrued 2% quarter-on-quarter, while nationalist assemblage deposits decreased 30% quarter-on-quarter. The summation successful backstage assemblage deposits was led by request deposits, which accrued 5% from Ps.27.6 cardinal quarter-on-quarter, while clip deposits decreased 2% aliases Ps.9 billion. Within backstage assemblage deposits, peso deposits decreased 4% aliases Ps.41.7 billion, while U.S. dollar deposits decreased 7% for $72 million.

As of December 2022, Banco Macro's transactional accounts represented astir 45% of full deposits. Banco Mace's marketplace stock pinch backstage assemblage deposits arsenic of December 2022 totaled 6.3%. In position of plus quality, Banco Macro's nonperforming to full financial ratio reached 1.25%. The sum ratio measured arsenic full allowances nether expected in installments losses complete non-performing loans nether nan Central Bank rules improved and totaled 151.7%.

Consumer portfolio non-performing loans improved 14 ground points, down to 1.1% from 1.23% successful nan erstwhile quarter, while commercialized portfolio nonperforming loans deteriorated 52 ground points successful nan 4th fourth of '22, which was up to 195% from 143% successful nan erstwhile quarter.

In position of capitalization, Banco Macro accounted successful excess superior of Ps.410 billion, which represented a full regulatory superior ratio of 39.9% and a Tier 1 ratio of 36.6%. The bank's purpose is to make nan champion usage of this excess capital. The bank's liquidity remained much than appropriate. Liquid assets to full deposit ratio reached 95%.

Overall, we person accounted for different affirmative quarter. We proceed showing a coagulated financial position. Asset value remains nether power and closing monitor. We’ll support connected moving to amended much our ratio standards, and we support a well-optimized deposit base.

At this clip we would for illustration to return nan questions you whitethorn have.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility is from Ernesto Gabilondo pinch Bank of America. Please spell ahead.

Ernesto Gabilondo

Hi! Good morning, Jorge and Nicolas. Thanks for nan opportunity. My first mobility is connected nan governmental and macro outlook. Can you springiness america immoderate colour connected who are nan imaginable statesmanlike candidates? How are nan first polls looking?

And past connected nan macro outlook, liking rates and ostentation are good supra Macro’s administration. So conscionable wondering if location is simply a affirmative statesmanlike outcome, really accelerated nan caller authorities would beryllium capable to hole specified precocious variables and of people to debar a dense depreciation of nan currency.

Then my 2nd mobility is connected indebtedness growth. So really should we deliberation astir indebtedness maturation this twelvemonth considering nan precocious level of inflation? And past my past mobility is connected your expected ROE for ‘23. How should we deliberation astir it if liking rates commencement to inclination down astatine immoderate constituent during nan 2nd half of nan year? Thank you.

Jorge Scarinci

Hi Ernesto! Good morning. This is Jorge Scarinci. On nan governmental outlook, I deliberation it's a spot early. Honestly, location are galore names that could beryllium candidates, but nan superior elections are successful August. Until past aliases astatine slightest until May we tin perceive a bunch of names floating astir arsenic a candidate. But I deliberation that aft May, we are going to person a shorter lead of imaginable candidates. So honestly, I don't cognize if it is worthy spending clip correct now talking astir what could beryllium nan candidate, because again, nan database is going to beryllium overmuch narrower than each nan names that we are seeing look successful nan press.

In position of nan macro expectations, we judge that successful 2023 and according to backstage consultants, ostentation is going to stay astatine akin levels than nan level of 2022. And successful position of liking rates, we are not forecasting successful nan short word immoderate benignant of activity connected liking rates. Honestly, for nan infinitesimal we are not seeing a diminution successful liking rates successful nan 2nd half for nan moment.

And successful position of indebtedness maturation successful 2023, besides according to nan statement of nan market, GDP is going to beryllium astir level successful existent position and truthful we are expecting almost nary maturation successful existent position successful loans. So it's going to beryllium a akin inflation.

In position of anticipation for ROE, we would for illustration to support nan 10% area arsenic a benignant of a forecast for this year. If we are not having immoderate unusual event, we deliberation that we could execute it without immoderate problem.

Ernesto Gabilondo

Perfect! Thank you very much, Jorge.

Jorge Scarinci

You’re invited Ernesto.

Operator

The adjacent mobility is from Brian Flores pinch Citibank. Please spell ahead.

Brian Flores

Hi Jorge and Nicolas, convey you for nan opportunity. I person 2 connected my side. The first 1 is, I wanted to understand a spot amended nan mechanics of nan mark-to-market successful authorities securities. I was conscionable funny astir it because we saw – that during nan 4th you saw nan liking income from these securities going up, chiefly successful statement pinch what we saw successful nan 3rd quarter, but we saw a very different result regarding nan mark-to-market. So just, tin you punctual america really this works? And past I'll inquire a 2nd mobility aft this. Thank you.

Jorge Scarinci

Hi Brian! How are you? Yes, it's a spot complicated. There are 2 aliases 3 different places successful nan income connection wherever you person nan income from securities, but successful nan liking income side, location you person for illustration nan accrued interests. In different statement you person portion of nan enslaved portfolio that is exposed to our mark-to-market system.

So we person for illustration 2 different – see, for 1 that is that you accrued nan income, and connected nan different statement it’s beneath nan nett income. There you put nan quality betwixt nan accrued income and mark-to-market, and besides we person immoderate mark-to-market bonds that nan consequence of that is put connected nan – it’s connected – clasp connected 1 sec. It’s beneath nan nett liking income line, that is nett income from financial instruments astatine adjacent value. So it's a spot complicated, but income from activities are dispersed each complete nan income connection successful different accounts.

Brian Flores

Okay, perfect! But my mobility is, is this mark-to-market done mechanically aliases is this thing you cannot determine to do astatine a definite constituent successful time, conscionable because for illustration during nan 3rd 4th we saw very different things pinch grades going up. So conscionable wondering if this is thing you do periodically aliases do you – this is simply a much deterministic thing.

Jorge Scarinci

I mean, if you're talking astir nan diminution betwixt nan 3rd 4th and 4th fourth successful this statement of nett income from financial instruments astatine adjacent value, that is mark-to-market, only that, yeah. There were nett summation successful prices successful those bonds that we person astatine mark-to-market, that's it, yeah. The mark-to-market is mechanical, yes.

Brian Flores

That is perfect, okay. And past conscionable for nan 2nd question, you – we spot you person a very precocious superior ratio. Just wondering, person you heard immoderate updates from nan regulator regarding nan support to administer you cognize higher dividends?

Jorge Scarinci

We expect to person news connected that beforehand successful nan coming 2 aliases 3 weeks successful position of nan allowance to administer dividends. Again, for nan infinitesimal nary news, but we deliberation that we mightiness person immoderate news earlier of people nan shareholders meeting. So successful nan adjacent mates of months – a mates of weeks, we should person immoderate news.

Brian Flores

That is perfect! Thank you.

Jorge Scarinci

You're welcome, Brian.

Operator

The adjacent mobility is from Yuri Fernandes pinch JP Morgan. Please spell ahead.

Yuri Fernandes

Hi! Hello! Thank you. I person a follow-up regarding securities here. I conjecture you cognize it's nan astir applicable gross statement for you, right. Like we’re checking loans, for illustration indebtedness revenues. They are only 30%, 35% of nan gross financial income, truthful securities are nan large chunk and they besides person tradables aliases nan you cognize mark-to-mark for illustration nan OCI, it's beautiful relevant, right.

So my mobility is, location is simply a mobility that rates proceed to move up successful Argentina. I deliberation nan IMS, they had nan hopes that we could spot affirmative existent rates successful Argentina. I really don't cognize if that's imaginable aliases not. There is besides a you cognize adaptive discussion, but my mobility is, if rates proceed to move overmuch higher, is that bully for you? Like tin you reprise quickly those portfolios aliases I don't know, mark-to-mark whitethorn wounded you, for illustration – again, I'm trying to conscionable understand for illustration successful a much agelong benignant of question, what is nan sensitivities done nan lead, right. If nan lead goes done a level 80, 90, really that impacts market? Thank you.

Jorge Scarinci

Hi Yuri! Let's opportunity that making a summary connected your question, yes, if location is an summation successful liking rate, we person a affirmative effect connected our P&L. Basically we person a chunk of – a overmuch higher chunk of money aliases liquidity that we tin reprise faster than our deposit base.

Yuri Fernandes

Thank you.

Jorge Scarinci

You’re welcome.

Operator

The adjacent mobility is from Carlos Gomez pinch HSBC. Please spell ahead.

Carlos Gomez

Hello Jorge! Hello Nicolas! Thank you very overmuch for having nan telephone and taking nan question. I mean, we are going to do different electoral rhythm and usually we person expectations that things tin change. There will beryllium a caller argumentation going forward. How would you comparison you cognize nan commencement of 2023 pinch nan commencement of 2015, 8 years ago, erstwhile we were successful a akin situation? How – what do you deliberation is much affirmative and what you deliberation is much antagonistic compared to that point? Thank you.

Jorge Scarinci

Thank you, Carlos. How are you? I deliberation that is simply a bully question. Of course, it's a different script successful 2015. I deliberation that nan quality of Mauricio Macri’s governmental fig was wholly caller and location was a spot of affirmative expectations connected his Presidency, and of people nan world I deliberation that was overmuch different past than nan world that we person today.

Today I would opportunity that moreover though location are immoderate affirmative expectations connected a alteration of government, I deliberation that everyone knows that nan caller authorities will person little clip than what Mauricio Macri had, successful bid to effort to group up each nan reforms and measures. And I deliberation that nan ostentation situation successful Argentina coming is overmuch higher than nan 1 that we had successful 2015. The level of reserves successful nan cardinal slope is overmuch shorter aliases smaller now compared to 2015. So I deliberation it is – location you person nan quality and coincidences.

I deliberation that – coming I deliberation that nan script is simply a spot overmuch harder for nan caller management than what Mauricio Macri had successful 2015. I deliberation that nan timing and of people nan world, nan region are wholly different. Expectations connected nan caller management is different than Mauricio Macri had successful 2015. So I deliberation it's a spot tougher for nan coming government.

Carlos Gomez

Okay, and fto maine put it this way. The past clip successful nan past cycle, each nan banks, you cognize [inaudible] I deliberation they needed capital, they person superior relations. Are you correct now much inclined to sphere superior for nan early request aliases to administer it if you are allowed by nan Central Bank?

Jorge Scarinci

I mean, we deliberation that we person a large excess, truthful we would for illustration possibly to administer portion of that. But we deliberation astatine nan aforesaid clip that could beryllium successful nan early a clip of possibilities for much attraction successful nan banking assemblage successful Argentina. So we want to besides person immoderate excess capital. It’s nan caller opportunity for an M&A transaction. But we are conscious that nan level of superior that we person correct now is, it's astir nan level that we would desire successful a much normalized economical scenario.

Carlos Gomez

Thank you very overmuch Jorge.

Jorge Scarinci

You're invited Carlos.

Operator

[Operator Instructions] The adjacent mobility is from Rodrigo Nistor pinch Latin Securities. Please spell ahead.

Rodrigo Nistor

Hi! Thank you for taking my question. Can you talk Banco Macro’s existent strategy pinch regards to exporting to nan nationalist assemblage and nan Central Bank? I mean fixed nan upcoming elections, do you expect to make immoderate changes connected this strategy? And past if – are you consenting to widen aliases to bargain treasury instruments that mature beyond nan 2023 elections day aliases do you for illustration to instrumentality to for illustration to [inaudible] that was successful nan table. Thank you.

Jorge Scarinci

Hi Rodrigo! We deliberation that we accommodate our strategy depending connected nan economical cycle, and for nan infinitesimal I deliberation that this script of precocious level of ostentation pinch a debased request from nan backstage assemblage put america successful a benignant of a compulsory based connected immoderate nationalist assemblage assets. But of course, going guardant if nan economical script improves, of people we are going to spell backmost and attraction much connected nan backstage assemblage indebtedness demand, that is our halfway business and we want to proceed growing.

In position of nan information – connected nan maturities connected our information portfolio, fundamentally what we scope is nan output that we tin get successful possibly shorter aliases longer. We deliberation that we are assigned a very debased probability of immoderate benignant of problem pinch nan peso debt, pinch this authorities and pinch nan adjacent government. So we consciousness comfortable pinch nan level of information and related to nan treasury and past to nan Central Bank that we have. But we judge that going forward, successful a much – successful a amended economical scenario, nan level of vulnerability that you astir apt said is going to beryllium overmuch smaller. But we consciousness comfortable pinch that level that we person correct now.

Rodrigo Nistor

Great! Thank you very much.

Jorge Scarinci

You’re welcome.

Operator

There are nary much questions astatine this time. This concludes nan question-and-answer session. I will now move nan telephone backmost complete to Mr. Nicolas Torres for his last considerations.

Nicolas Torres

Thank you each for your liking successful Banco Macro. We admit your clip and look guardant to speaking pinch you again. Good day!

Operator

The convention is now concluded. Thank you for attending today's presentation. You whitethorn now disconnect.