Banco Macro SA (NYSE:BMA) Q3 2019 Earnings Conference Call - Final Transcript

Nov 12, 2019 • 10:00 am ET

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Banco Macro SA (NYSE:BMA) Q3 2019 Earnings Conference Call - Final Transcript

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Operator
Operator

Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Third Quarter 2019 Earnings Conference Call. We would like to inform you that the 3Q '19 press release is available to download at the Investor Relations website of Banco Macro, www.macro.com.ar/relaciones-inversores. [Operator Instructions]

It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer; Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR.

Now I will turn the conference over to Mr. Nicolas Torres. You may begin your conference.

Executive
Nicolas A. Torres

Good morning, and welcome to Banco Macro's Third Quarter '19 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC and is available at our website. Third quarter '19 press release was distributed last Friday, and it's also available at our website.

I will now briefly comment on the bank's three quarter '19 financial results. Banco Macro's net income for the quarter was ARS13.2 billion, 87% or ARS6.2 billion higher than in 2Q '19 and 243% higher than the ARS3.8 billion posted a year ago, based on an increase in net interest income and in net fee income. The bank's 3Q '19 accumulated ROE and ROA of 57.3% and 9.4%, respectively, remains healthy and show the bank's earning potential.

Recurring net income in the quarter totaled ARS15.5 billion, 99% or ARS7.7 billion higher than in the previous quarter. Recurring net operating income before general, administrative and personnel expenses for three quarter '19 was ARS26.2 billion, increasing 27% or ARS5.6 billion quarter-on-quarter and 103% higher than a year ago. Recurring operating income after general and administrative expenses and personnel expenses was ARS14.3 billion, 28% or ARS3.2 billion higher than in 2Q '19 and 160% higher than in 3Q '18.

In the quarter, net interest income totaled ARS20.1 billion, 19% or ARS3.3 billion higher than the result posted in Q2 '19 and 94% or ARS9.7 billion higher than the result posted one-year ago. This performance can be traced to a 14% quarter-on-quarter increase in interest income and a 7% increase in interest expenses. Within interest income, interest on loans increased 9% quarter-on-quarter and 30% year-on-year. In 3Q '19, interest on loans represent 45% of total interest income. Net income from government and private securities increased 27% or ARS4.1 billion quarter-on-quarter due to higher LELIQs volume and higher interest rates. Compared to 3Q '18, net income from government and private securities increased 334% or ARS14.6 billion.

In 3Q '19, FX gains, including investment in derivative financing, totaled ARS2.2 billion gain. In Q3 '19, interest expenses totaled ARS15.5 billion, 7% or ARS1 billion increase compared to 2Q '19 and 139% or ARS9 billion higher on a yearly basis. Within interest expenses, interest on deposits increased 5% or ARS614 million quarter-on-quarter, mainly driven by an increase in the average volume of time deposits