Q1 2022 Banco Macro SA Earnings Call
[music].
Good morning, ladies and gentlemen, and thank you for waiting at this time, we would like to welcome everyone to Banco Macros first quarter 2022 earnings conference call. We would like to inform you that <unk> 22 press release is available to download at the Investor Relations.
Site of Banco macro www dot macro dotcom dot a our forward slash relay shield Naas dash.
Dash.
In base Souris forward Slash also this event is being recorded and all participants will be in listen only mode. During the Companys presentation. After the company's remarks are completed there will be a question and answer session at that time further instructions will be given should any participant need.
Assistance during this call. Please press star zero to signal the operator.
It is now my pleasure to introduce our speakers joining us from Argentina are Mr. Gustavo men re case, Chief Executive Officer, Mr. Jorge Guardiancy, Chief Financial Officer, and Mr. Nicolas Torres.
They are now I will turn the conference over to Mr. Nicolas Torres.
You may begin your conference.
Thank you Dave.
Good morning, and welcome to Banco Macros first quarter 2022 conference call.
Any comment we may make today may include forward looking statements, which are subject to various conditions and these are not 20-F, which was filed to the SEC any type of available at our website.
First quarter 2022 press release distributed yesterday and he total available at our website.
All figures are in Argentine pesos and had been restated in terms of the measuring unit at the end of the reporting period.
After the year 2020, the bank began reporting results applying hyperinflation accounting in accordance with Ias 29, that's published by the Central Bank of Argentina.
In comparison to previous quarters had been restated applying ias 29 reflect the accumulated pik.
Inflation adjustment for each period through March 31, 2022.
I will now briefly comment on the bank's first quarter 'twenty two financial results.
Net income for the quarter was 6 billion pesos, 51% lower than the fourth quarter of 2021 about 77% higher than the result posted one year ago.
The bank's first quarter 'twenty to analyze our ROA and ROE.
9% to 2%, respectively remains healthy and shows the banks earnings potential.
Net operating income before general administrative and personnel expenses in the first quarter of 2022 was $64 2 billion pesos. It's one 5 billion versus higher quarter on quarter due to higher income from financial instruments for baidu to perfect the less higher FX gains and lower loan loss provisions.
On a yearly basis net operating income increased 11% or $6 4 billion pesos due to higher net interest income and higher net beans.
Operating income after general administrative and personnel expenses was $36 5 billion pesos, 41% from $10 6 million pesos higher than in the previous quarter, and 24% or $7 2 billion pesos higher than in the first quarter 2021.
In the quarter, netting income totaled $41 9 billion pesos, 1% 498 million pesos higher than the result posted in the fourth quarter of 2021, and 13% 5 billion bushel higher than there was almost one year ago. As a result of different regulations set by the central bank that had caps on lending rates in Florida.
Got it breaks.
In the first quarter of 2020 to interest income totaled $68 8 billion pesos, 4% or $2 8 million pesos higher than in the fourth quarter of 2021, and 2% or $1 1 billion pesos lower than the previous year.
We're getting interest income interest on loans decreased 1% or 494 million pesos quarter on quarter due to a 4% decrease in the average volume of private sector loans, which was partially compensated by a 202 basis points increase in the average lending rate.
Interest income decreased 2% or 798 million pesos year on year.
In the first quarter of 2020 interest on loans represented 49% of total interest income.
Net income from government and private securities increased 16% or $4 8 billion pesos quarter on quarter due to higher income from government securities.
Burdened the first quarter of 2021 net income from government and private securities increased 8% to 5 billion pesos.
In the first quarter of 2022 income from breakfast to total 432 million pesos, 78%, a 1.5 billion pesos lower than the previous quarter and 87% a $2 8 billion pesos lower than the result posted a year ago.
In the first quarter of 2022, FX gains, including investment in everybody financing totaled $3 1 billion pesos gain 66%, a 1.2 billion, but it is higher than the fourth quarter of 2021, and 63% of one 2 billion pesos higher than the previous year due to the bank's lung butter precision and the peso depreciation during the quarter.
In the first quarter of 2020 to interest expenses totaled $26 9 billion pesos.
The 9% or $2 3 billion pesos increased compared to the fourth quarter of 2021 and decreased 18% or 6 million pesos on a yearly basis.
Within interest expense interest on deposits increased 10% or $2 3 million pesos quarter on quarter, mainly driven by a 217 basis point increase in the average interest rate paid on deposits, while the average volume of private sector deposits increased 1%.
On a yearly basis interest on deposits decreased 18% or 505 billion pesos.
In the first quarter of 2022 interest on deposits represented 96% of the bank's financial expenses.
The first quarter of 2022 of the banks net interest margin, including FX was 22, 8% higher than the $19, 1% posted in the fourth quarter of 2021, and 17, 4% versus the first quarter of 2021.
In the first quarter of 2022 net fee income totaled $10 2 billion pesos 48 days.
Million pesos higher than the fourth quarter of 2021 and on a yearly basis net fee income increased 11% or 1 billion pesos.
In the first quarter of 2022 net income from financial assets and liabilities.
Fair value loss totaled $6 4 billion pesos gain 57% or $2 3 million pesos higher than in the previous quarter. This increase is mostly related to higher income from investment in equity instruments.
On a yearly basis net income from financial assets and liabilities for everybody at the broker loss decreased 9% or 627 million pesos.
In the quarter other operating income totaled $3 3 billion pesos, 42% are men, having 59 million pesos higher compared to the fourth quarter of 2021.
Yearly basis, other operating income increased 28% or 700.
104 million basis.
In the first quarter of 2022, non clinical personal initiative expenses totaled $15 3 billion basis, 15% or $2 8 billion, but slower than the previous quarter, especially on expenses decreased 13%, while administrative expenses decreased 19%.
On a yearly basis personnel expenses decreased 7% or $1 2 billion pesos, showing the strict cost control policies by the bank's senior management.
I thought the first quarter of 2022 efficiency ratio reached 29, 6% improving from the 37, 4% posted in the fourth quarter of 2021.
I mean, the first quarter of 2022 expenses decreased 14%, while net interest income plus fee income and other operating income increased 9% compared to the previous quarter.
In the first quarter of 2022 the results from the mid point that position totaled $28 9 billion pesos, plus 64% or $11 3 million pets is higher than the loss posted in the fourth quarter of 'twenty to 'twenty. One you do higher inflation observed in the quarter with 586 basis points above the fourth quarter Don.
Hello.
16, 1% from 10 21 in the previous quarter.
In the first quarter of 2020 to Banco macros effective tax rate was 21% and more information is provided in note 20 in our financial statements.
In terms of loan growth the banks financing to the private sector totaled $371 8 billion pesos decreasing 8% from $33 3 billion peso support on water and 8% or $30 5 billion pesos lower year on year as a consequence.
We can only be met with.
Within commercial our nose.
Those documents and other standouts with F 'twenty and at 29% decrease respectively.
Meanwhile, within consumer lending personal loans decreased 3% with grid car loans.
2%.
What didn't private sector financing basically financing decreased 8% or $32 2 billion pesos, while he is doing refinancing decreased 13% or $23 million.
It is important to mention that Banco macros market share over private sector loans as of March 2020 to reach 7%.
On the funding side total deposits totaled so it's kind of two.
207, 5 billion pesos and decreased 1% from $5 9 billion basis quarter on quarter, and 4% or 31 7 billion pesos year on year.
But sector deposits decreased 3% quarter on quarter, while public sector deposits increased 20% quarter on quarter.
The increase in private sector deposits was led by demand deposits, which decreased 10% or $33 6 million versus quarter on quarter, while time deposits increased 6%.
$15 9 billion pesos.
Within private sector deposits. So deposits reached 1% Fortunately 3 billion pesos, while he is not on deposits decreased 16% or $173 million.
As of March 2020 to Banco macros transactional accounts represented approximately 49% of total blockage.
Banco macros market share over private sector deposits.
<unk> 2022 totaled five 6%.
In terms of asset quality, but my personal performance to total financial ratio, which 164% coverage ratio measured by total allowances under expected credit losses over a nonperforming loans and the central Bank rules.
163, 2%.
Consumer portfolio nonperforming loans improved five basis points down to 135% from one 4% in the previous quarter, while the commercial portfolio nonperforming loans did you read 177 basis points in the first quarter of 2002 after 2.77% from 90.
99% in the previous quarter, mainly due to a strategic SME clients.
Signs of credit deterioration.
In terms of capitalization Banco macro accounted an excess got about $236 3 billion pesos, which represented a total capital ratio of 38, 5% and a tier one ratio of 33, 7%.
It should be noted the percent of the resolutions adopted degenerate and special shareholders meeting held on April 32022, and sanction granted by the spring Convention.
The idea of the Central Bank of Argentina.
And communicated last night 12. Unfortunately, the best solutions are adopted by the board of directors at its meeting held yesterday.
722, the bank will pay a cash dividend in the amount of $9 9 billion pesos equivalent to 15 44 pesos per share and that corresponds two installments one defeat.
The bank's aim is to make the best use of this excess capital the bank's liquidity remained more than appropriate liquid assets to total deposit ratio reached.
93%.
Overall, we have accounted for another positive quarter, we continue showing a solid financial position asset quality remain under control and closely monitor will keep on working to improve our efficiency standards and we'll keep that well at a nice deposit base.
We would like to take the questions you may have.
At this time, we're going to open it up for questions and answers. If you would like to ask a question. Please press star one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two one moment. Please for the first question.
Your first question comes from one recall day.
With Scotiabank. Please go ahead with your question.
Hi, Thank you for taking my question Michael.
My question is related to the profitability outlook for the rest of the year.
Do you think that we have reached a bottom in terms of the I really nutrition adjusted terms in the first Q 'twenty to 2022.
Of course inflation is expected to decelerate.
But so that's just kill profitability coming in the rest of the year, but on the hand.
You had I think could benefit from the Prisma sale in this quarter and also a sizable gain ethics games.
So that that would be my first question relates to the profitability outlook for the rest of the year.
Yeah.
Hi, This is jorge screens, you're answering how are you.
It is.
Not very easy to forecast what will happen in terms of profitability for the year.
Regarding that we are having and the.
They'd be inflationary subsidiary Tito at least has been accelerating in the first four months of over the year.
According to some local economies the range for inflation for the year goes from 65 to 75.
And so I would say going forward.
Cory will depends on.
How the economy also Ebola, we think is going to be positive at plus two a broken model in terms of are we at times.
We believe that could be could be kind of a bottom. So we are forecasting a are we adjusted by inflation.
And to be ranging between 10 10.
10 to 12.
So that then in 'twenty, two but again it depends on many issues many variables.
Not a clear picture to forecast profitability in Argentina.
At least.
That's helpful and one follow up if I may. So you mentioned that now inflation is expected to be from like 65% to 75. This year, so with that in mind, how do you see loan growth evolving our loan growth for the full year in 2022.
And if you can comment on where you think that consumer laws are going to continue outperforming commercial launch or how should we think about the dynamics in terms of consumer versus commercial launch.
Okay.
Well the focus for the 65 to 75 is not from us from local economy.
But.
Regarding your question in terms of loans.
Pro forma for this year, we believe that the loan book is going to be slightly below inflation.
And maybe two to three percentage points below the inflation for the year, we believe that the competition.
That consumer growth would it be maybe outpacing.
Commercial loans.
In 2022.
That's good thank you for the comment and I understand it.
Make sense in this context.
Thanks.
Okay.
Our next question comes from Carlos Gomez with HSBC. Please go ahead with your question.
Hello, Good morning, and thank you for the presentation.
Hum.
My first question refers to your exposure to the public sector.
Like all the banks, who have been increasingly.
Getting more involved.
Ingalls team.
The Central Bank.
The bonds and the.
Carbon paper.
Is there a limit that you want to say it as to how much exposure do you want to have two one or the other.
And difficult given that you have accumulated all these capital gains knowing you get to use for it.
Loans have actually been declining for the last two years.
Maybe it particularly you spoke a couple of them might be to repurchase the stake that <unk> has in the company.
Who do you see that approaching them and you seem to have any possibility of success. Thank you.
Okay.
Hi, Carlos how are you good to hear from you.
I'm on the first question in terms of exposure to the public sector.
Yeah.
You know that.
Well you commented on that that's all the banks here, maybe increasing that exposure.
Yeah.
From a regulatory point of view, we can go up to 75% of our equity in terms of lending to the treasury.
That is not including lending to the central Bank.
So for them.
I would say March we were slightly above.
About 65% in terms of our.
I was closer to the treasury.
But it's very important to where etsy is very important to differentiate that.
Between Central Bank Treasury.
Yeah.
When you look back you know what.
Our history, the Central Bank never defaulted key in Argentina, So for us are different right.
So in terms of Eh.
How we split the exposure to the central Bank and the Treasury.
Yeah, we are up to the Max that we can go in terms of the Central Bank again from a regulatory point of view, we can have.
The exact number of leaks.
The number of time deposits that we have on the previous months.
So in that sense, we are at the maximum.
These little by little we want to switch from their weeks from the treasury to the Central bank as much as we can so going forward. They D. I used to maybe slightly reduce the exposure to the treasury.
In terms of your second question honestly, we haven't approached Dion says in terms of maybe buying back debt exposure.
Yeah.
When we did that in the past many years ago.
Once.
We believe that at these prices.
Not be reasonable for them to sell but honestly as far as I know and we have an appropriate time to to us if they are maybe willing to sell.
So that's.
That's the answer there.
Okay. Thank you very much.
What does that tell us.
Our next question comes from Rodrigo This tour with our partners. Please go ahead with your question.
Hi, good morning, and thank you for the presentation.
In this scenario, 70% or higher inflation for the year.
What what's the bank's strategy sheet too many mice.
But on your email and protect your equity.
Yeah.
Yeah.
I don't know that he will cover you.
<unk>.
That is what we try to do every single day.
It is.
<unk> see because you know that.
There are not many instruments, where we can allocate that liquidity in order to protect the equity.
And also we saw the regulation from the Central Bank that puts some caps on for example.
How long ago that we can go up to zero right now so what.
What we are trying to do is to go may be as far as we can in terms of dollars.
Through basically some a bullet bonds that there are in the market.
And then on the on the inflation adjusted and bonds issued by the Treasury, but is not where east E. C again.
All the banks Gaba a net positive.
Monetary position on when you judge that by inflation you have a monthly.
As you have noticed in our P&L on hold towards similar to other banks. So it is not very easy to jamali guy or to change it.
I believe the competition all.
That's a net positive and monetary position so.
We have to deal with that is not an easy task here in Argentina with that level of inflation with some cops on regulatory issues that where we can allocate the money.
Thank you I have a quick follow up.
Given that you have companies in funding costs remain trade demand remains very weak and it was mentioned before the exposure to the public sector. Maybe in simple language. If you will and so if you hear a reference rate ex nagel that will upset or significantly.
Do you see a negative impact of inflation you have that.
Mine.
Okay.
Yeah.
Yeah, I think that's.
We need to have some.
Maybe higher nominal rates, but because the current level of rates are negative in real terms.
But apart from that.
Because on the of the floor rates that we are imposed to pay on.
Time deposits the margins here are.
Really narrow so.
In order to build on this.
The inflationary environment, we not also need maybe higher normally the rates, but also maybe some wider margins.
Not only in terms of rates.
Okay. Thank you.
Awesome.
Wake on radio.
Our next question comes from.
Nicolas Riva with Bank of America. Please go ahead with your question.
Thanks, very much for taking my questions.
So my first question. If you can comment on your liquidity in dollars. So you got a page in the press release, where you talk about the foreign currency position on I see.
46 million vessels or I'll be more than $400 million.
So a lot of the policy.
And abroad, if you can't come in with multiple studies show them offshore.
And and also so you recently paid the peso linked bond, which was payable in doing our sort of equivalent I think it was about $30 million.
Do you have any other relevant golar liabilities for the rest of the VCR for 2020 three.
Aside from the coupon payments on the 26 ish.
And then finally on the 20 <unk> did you buyback any any of the 26 in the first quarter and is that something that you would consider doing and if you do would you need approval from the central bank to buy back some of the 26th.
Yeah.
Yeah.
You could ask how are you now in terms of all the liquidity in dollars that you you know that we have 100% liquidity I mean.
In terms of the deposit that we have in dollars they are backing either.
Refinance to export that are at a very low level and then.
Deposits at the Central Bank.
And so that is completely hedged in terms of the other dollars I mean, those are the commercial or the old or the ones that you mentioned before.
Financial dollars I mean, when you look at the 26 to 400 Emilio go ahead, and probably as a liability the hundred the $400 million.
Those hard deposit abroad in the correspondent banks.
So 100% liquidity in in both commercial and financial dollars would have been.
Maintaining these levels.
For many years.
Are willing to continue maintaining them.
In terms of.
Second question, Yes, we pay the peso linked bonds and we do not have any important.
Do you payments on 222 apart from the coupon of the 2026.
On your third question no. We haven't bought any 2026 on yes, we will have in the case that we were interested we have to ask for permission to the central Bank.
Awesome. Thanks, so much and just one follow up on the first time since then.
About $400 million offshore that new car, but that's basically we served for the mature 26, you can use basically the proceeds from the 26% reserve for that.
Yes, I mean money is fungible, but in this case, we have $400 million abroad.
As a counterpart of the $400 million liability that you've got 126, yes, sorry.
Perfect. Thanks very much.
Youre welcome Nicolas.
Again, if you have a question. Please press Star then one our next question comes from Robert Gilman.
He's a private investor. Please go ahead with your question.
My first question is the dividends that have been paid how much would that be a U S dollars.
Dividend payments.
Yeah.
Hi, Robert how are you what we are going to send it to the our depositary bank debt.
They are going to the bulk of the dollars in the account. So we will depends on the exchange rate to the day that they received.
The money so honestly I cannot say you right now exactly the amount of dollars.
Yeah.
My second question is due on June two.
Okay.
But in the near future.
Yes.
These are the first six installments that we have paid no together under our other six installments more that are going to come one per month in the next six months.
Thank you.
You all like umbrella.
There are no questions at this time. This concludes the question and answer session I will now turn.
The conference over to Mr. Nicols Torres for final considerations.
Great.
Thank you all for your interest in Banco macro we appreciate your time and look forward to speaking with you again have a good day. Thank you Dave.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Oh, Thanks [laughter].
Yeah.
Okay.