Banco Macro Announces Results for the First Quarter of 2025

Banco Macro reported a net income of Ps.45.7 billion for 1Q25, a 59% decrease compared to 4Q24, resulting in an ROAE of 3.8% and ROAA of 1.2%; however, total financing increased 22% QoQ and 97% YoY, reaching Ps.7.7 trillion, while total deposits increased 5% QoQ and 23% YoY, totaling Ps.9.6 trillion. Despite the earnings decline, Banco Macro maintains a strong solvency ratio with excess capital of Ps.3.2 trillion, a Capital Adequacy Ratio of 34.3%, and liquid assets representing 68% of total deposits.

Analysis

Banco Macro (BMA) reported a net income of Ps.45.7 billion in 1Q25, a significant 59% decrease quarter-over-quarter (QoQ) from 4Q24, translating to an annualized return on average equity (ROAE) of 3.8% and an annualized return on average assets (ROAA) of 1.2%. This decline in profitability is further evidenced by operating income (before G&A and personnel expenses) falling 9% QoQ to Ps.801 billion, and a more substantial 68% year-over-year (YoY) drop. Similarly, operating income after G&A and personnel expenses decreased 11% QoQ and 82% YoY to Ps.347.8 billion. Despite these sharp income contractions, BMA demonstrated robust balance sheet growth. Total financing surged 22% QoQ and 97% YoY to Ps.7.7 trillion, with both peso and USD financing increasing 21% and 22% QoQ respectively. Total deposits also grew, albeit at a slower pace, increasing 5% QoQ and 23% YoY to Ps.9.6 trillion; notably, peso deposits rose 15% QoQ while USD deposits declined 17% QoQ. The bank maintains a strong solvency profile, with Ps.3.2 trillion in excess capital, a 34.3% Capital Adequacy Ratio (Basel III), a 33.6% Tier 1 Ratio, and liquid assets representing 68% of total deposits. Asset quality appears stable, with a non-performing to total financing ratio of 1.44% and a coverage ratio of 163.34% in 1Q25. The overall sentiment surrounding this release is moderately negative, and an external AI analysis suggests BMA may not be among the most undervalued stocks currently.

Key Decisions for Investors

• Investors should exercise caution due to the significant quarter-over-quarter and year-over-year declines in net and operating income, despite balance sheet expansion.
• Monitor the divergence between strong solvency metrics, including high capital adequacy and liquidity, and the recent sharp deterioration in profitability in subsequent quarters.
• Consider the mixed signals from deposit growth, specifically the 17% QoQ decrease in USD deposits, as a potential indicator of shifting depositor confidence or currency dynamics.
• Further due diligence on valuation is warranted, particularly in light of external AI analysis suggesting BMA may not be a top undervalued pick, despite its recent headlines.