Macro Bank Q1 2025 Earnings Report

Macro Bank EPS Results

• Actual EPS: $0.65
• Consensus EPS: $1.76
• Beat/Miss: Missed by -$1.11
• One Year Ago EPS: N/A

Macro Bank Revenue Results

• Actual Revenue: $759.36 million
• Expected Revenue: $837.49 billion
• Beat/Miss: Missed by -$836.74 billion
• YoY Revenue Growth: N/A

Macro Bank Announcement Details

• Quarter: Q1 2025
• Date: 5/28/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 29, 2025
• Conference Call Time: 11:00AM ET

Macro Bank (NYSE:BMA) (NYSE: BMA) is the American depositary receipt program of Banco Macro S.A., one of the largest privately owned banks in Argentina. Headquartered in Buenos Aires, the institution delivers a comprehensive suite of banking solutions to retail, corporate and agricultural customers across the country. Through its extensive branch network and digital platforms, Macro Bank aims to serve diverse client segments with tailored financial products and services.

The bank’s offerings span traditional deposit accounts—including checking, savings and term deposits—alongside payment and transaction services. On the lending side, Macro Bank provides mortgage financing, consumer loans and credit card facilities, as well as commercial and small and medium enterprise (SME) credit. Additional services include mutual funds, insurance brokerage, leasing arrangements and electronic banking, enabling clients to manage accounts and investments via mobile and online channels.

Founded in 1976 under the name Banco Llao Llao, the company expanded rapidly in the late 1980s and 1990s through the acquisition of regional state banks, adopting the Macro brand in 1998. The bank launched its ADR program on the New York Stock Exchange in 2006 under the symbol BMA. Over time, Macro Bank has focused on strengthening its risk management framework, advancing digital transformation and broadening financial inclusion in Argentina’s underserved provinces.

Macro Bank Q1 2025 Earnings Call Transcript

Key Takeaways

• Banco Macro reported Q1 2025 net income of ARS 45.7 bn, a 59% decline QoQ driven by lower fair-value gains and a larger loss on the net monetary position.
• Private sector loans rose 22% QoQ (94% YoY), driving total financing up 22% QoQ and boosting market share on private loans to 9.5%.
• Total deposits climbed 5% QoQ and 23% YoY, led by an 83% surge in time deposits, with transactional accounts representing 48% of the base.
• Provision for loan losses jumped 60% QoQ and 124% YoY to ARS 66 bn, reflecting higher loan growth and increased credit risk.
• Administrative expenses and employee benefits fell 10% QoQ and 19% YoY, improving the efficiency ratio to 38.2% from 39.4%.

Presentation

[Operator]

Thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's 1Q 2025 earnings conference call. We would like to inform you that the Q1 2025 press release is available to download at the investor relations website of Banco Macro: www.macro.com.ar/relaciones-investores. Also, this event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After the company's remarks are completed, there will be a question-and-answer session. At that time, further instructions will be given. It is now my pleasure to introduce our speakers. Joining us from Argentina: Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolás Torres, IR. Now, I will turn the conference over to Mr. Nicolás Torres. You may begin your conference.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

Thank you. Good morning and welcome to Banco Macro's Q1 2025 conference call. Any comment 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 it is available at our website. The Q1 2025 press release was distributed yesterday, and it is available at our website. All figures are in ARS and have been restated in terms of the measuring unit current at the end of the reporting period. As of 2020, 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 have been restated, applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through March 31st, 2025. I will now briefly comment on the bank's Q1 2025 financial results.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the Q1 of 2025, Banco Macro's net income totaled ARS 45.7 billion. This result was 59%, or ARS 65.3 billion, lower than the fourth quarter of 2024. This result was mainly due to lower net income from financial assets and liabilities fair value to profit or loss, and the bigger loss related to the result from the net monetary position. Higher inflation was observed in the quarter, which was partially offset by higher other operating income and lower employee benefits and administrative expenses. The annualized return on average equity and the accumulated annualized return on average assets were 3.8% and 1.2%, respectively. In the Q1 of 2025, net operating income before general and administrative expenses was ARS 801 billion, 9%, or ARS 82.6 billion, lower compared to the fourth quarter of 2024 due to lower income from interest on government securities.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

On a yearly basis, net operating income before general and administrative and personal expenses decreased 68%, or ARS 1.7 trillion. In the Q1 of 2025, provision for loan losses totaled ARS 66 billion, 62%, or ARS 25.3 billion higher than the fourth quarter of 2024, given the loan growth experienced in the quarter. On a yearly basis, provision for loan losses increased 124%, or ARS 36.6 billion. In the quarter, net interest income totaled ARS 579.2 billion, ARS 1 billion higher than the fourth quarter of 2024, and 122%, or ARS 318 billion higher year-on-year. This result is due to an 8% decrease in interest expense and a 3% decrease in interest income. In the quarter, a 21% decrease in income from interest on government securities stemmed up.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the Q1 of 2025, interest income totaled ARS 866.7 billion, 3%, or ARS 22.6 billion lower than in the fourth quarter of 2024, and 22%, or ARS 247.8 billion lower than in the first quarter of 2024. Income from interest on loans and other financing totaled ARS 592.3 billion, 9%, or ARS 49.6 billion higher compared with the previous quarter, mainly due to an 18% increase in the average volume of private sector loans, which was partially offset by a 200 basis points decrease in the average lending rate. On a yearly basis, income from interest on loans decreased 18%, or ARS 132.2 billion. In the Q1 of 2025, interest on loans represented 68% of total interest income. In the Q1 of 2025, income from government and private securities decreased 21%, or ARS 71.5 billion quarter-on-quarter, mainly due to lower income from Bonos del Tesoro Nacional and inflation-adjusted bonds.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

An increase of 83%, or ARS 123 billion, compared with the same period of last year. This result is explained 93% by income from government and private securities at amortized cost, and the remaining 7% is explained by income from government securities valued at fair value of other comprehensive income. In the Q1 of 2025, income from repos totaled ARS 864 million, 79%, or ARS 382 million higher than the previous quarter, and almost 100%, or ARS 236 billion lower than a year ago. It is worth noting that as of July 22th, 2024, the central bank decided to terminate repos and replace them with LEFs, which are now issued by the Treasury. In the Q1 of 2025, FX income totaled a ARS 6.4 billion gain, 95%, or ARS 118.7 billion lower than a year ago.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the quarter, the Argentine peso depreciated 4% against the U.S. dollar, as the central bank of Argentina lowered the carloan impact from 2% per month to 1% per month effective as of February 2025. In the Q1 of 2025, interest expense totaled ARS 287.6 billion, decreasing 8%, or ARS 23.5 billion compared to the previous quarter, and 66%, or ARS 565.8 billion lower compared to the Q1 of 2024. Within interest expenses, interest on deposits represented 95% of the bank's total interest expense, decreasing 8%, or ARS 22.3 billion quarter-on-quarter due to a 274 basis points decrease in the average rate paid on deposits, while the average volume of private sector deposits increased 15%. On a yearly basis, interest on deposits decreased 67%, or ARS 547.9 billion.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the Q1 of 2025, the bank's net interest margin, including FX, was 23.2%, lower than the 24.7% posted in the Q4 of 2024 and the 26.1% posted in the Q1 of 2024. In the quarter, PING income totaled ARS 169.8 billion, 1%, or ARS 943 million lower than the Q4 of 2024. In the quarter, ATM transactions fees decreased 18%, or ARS 1.9 billion, and credit card fees decreased 2%, or ARS 635 million, which were partially offset by a 3%, or ARS 1.7 billion increase in fees charged on deposit accounts. On a yearly basis, PING income increased 29%, or ARS 38.5 billion. In the Q1 of 2025, net income from financial assets and liabilities at fair value to profit or loss totaled ARS 66.4 billion gain, decreasing 55%, or ARS 80 billion compared to the Q4 of 2024.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

This result is mainly due to lower income from government securities. On a yearly basis, net income from financial assets and liabilities at fair value to profit or loss decreased 97%, or ARS 1.9 trillion. In the quarter, other operating income totaled ARS 68.5 billion, 29%, or ARS 15.5 billion higher than the Q4 of 2024 due to higher other service-related fees, which increased 29%, or ARS 6.2 billion, and higher income from credit and debit cards. On a yearly basis, other operating income decreased 2%, or ARS 1.4 billion. In the Q1 of 2025, Banco Macro's administrative expenses plus employee benefits totaled ARS 257 billion, 10%, or ARS 27.3 billion lower than the previous quarter due to lower employee benefits, which decreased 9%, and lower administrative expenses, which decreased 11%. On a yearly basis, administrative expenses plus employee benefits decreased 19%, or ARS 58.5 billion.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the Q1 of 2025, efficiency ratio reached 38.2%, improving from the 39.4% posted in the Q4 of 2024 and deteriorating from the 14.7% posted a year ago. In the Q1 of 2025, expenses decreased 10%, while net interest income plus net PING income plus FX income and other operating income plus net income from financial assets at fair value to profit or loss decreased 7% compared to the Q4 of 2024. In the Q1 of 2025, the result from the net monetary position totaled ARS 267.1 billion loss, 11%, or ARS 27.1 billion higher than the loss posted in the previous quarter, and 81%, or ARS 1.1 trillion lower than the loss posted one year ago. Higher inflation was observed during the quarter, 54 basis points above the Q4 of 2024, up to 8.6% from 8% in the Q4 of 2024.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In the Q1 of 2025, Banco Macro's effective income tax rate was 43%, higher than the one registered in the Q4 of 2024. Further information is provided in Note 21 to our financial statements. In terms of loan growth, the bank's total financing reached ARS 7.7 trillion, increasing 22%, or ARS 1.4 trillion quarter-on-quarter, and increasing 97%, or ARS 3.8 trillion year-on-year. In the Q1 of 2025, private sector loans increased 22%, or ARS 1.3 trillion. On a yearly basis, private sector loans increased 94%, or ARS 3.6 trillion. Within commercial loans, overdrafts and others stand out with a 107%, or ARS 628.7 billion increase, and a 16%, or ARS 188.4 billion increase, respectively. Within consumer lending, almost all prior clients increased during the Q1 of 2025.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

Personal loans and credit card loans stand out with a 28%, or ARS 354.1 billion increase, and a 4%, or ARS 65.2 billion increase, respectively. In the Q1 of 2025, peso financing increased 21%, or ARS 1 trillion, while US dollar financing increased 22%, or $262 million. It is important to mention that Banco Macro's market share over private sector loans as of March 2025 reached 9.5%. On the funding side, total deposits increased 5%, or ARS 485.4 billion quarter-on-quarter, totaling ARS 9.6 trillion, and increased 23%, or ARS 1.8 trillion year-on-year. Private sector deposits increased 4%, or ARS 349.6 billion quarter-on-quarter, while public sector deposits increased 20%, or ARS 136.6 billion quarter-on-quarter. The increase in private sector deposits was led by time deposits, which increased 83%, or ARS 1.8 trillion, while demand deposits decreased 22%, or ARS 1.2 trillion quarter-on-quarter.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

Within private sector deposits, peso deposits increased 15%, or ARS 899.5 billion, while U.S. dollar deposits decreased 17%, or $497 million. As of March 2025, Banco Macro's transaction accounts represented approximately 48% of total deposits. Banco Macro's market share over private deposits as of March 2025 totaled 7.8%. In terms of asset quality, Banco Macro's non-performing total financial ratio reached 1.44%. The coverage ratio measured as total allowances under expected credit losses over non-performing loans under central bank rules reached 163.34%. Consumer portfolio non-performing loans deteriorated 37 basis points, up to 181 basis points from 144 in the previous quarter, while commercial portfolio non-performing loans improved 22 basis points in the Q1 of 2025, down to 0.66% from 0.88% in the previous quarter.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

In terms of capitalization, Banco Macro accounted an excess capital of ARS 3.2 trillion, which represented a capital adequacy ratio of 34.3% and a Tier 1 ratio of 33.6%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets total deposit ratio reached 68%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. We keep a well-optimized deposit base. Asset quality remained under control and closely monitored, and we keep on working to improve more our efficiency standards. At this time, we would like the questions that you may have.

[Operator]

Okay, at this time, we are going to open it up for questions and answers. If you would like to ask a question, please press the Q&A button at the bottom of the screen.

[Operator]

To ask a question on audio, click on "Raise Hand." You will then receive a request to activate your microphone. One moment, please, for the first question. Our first question comes from Brian Flores with Citi.

[Brian Flores, Analyst at Citi]

Hi, team. Good morning. Thank you for the opportunity to ask questions. The first one is just a quick update on guidance to see if anything has changed. We remember you discussed maybe a real loan growth of 60%, deposits at around 30%, an ROE ranging between 12% and 15%, and with a core equity Tier 1 ratio maybe at 25%, 26%. Just wanted to know if there are any updates on that. A second one just to maybe seize the opportunity on capital, right? Because you benefited from capital. You have one of the strongest positions in the system.

[Brian Flores, Analyst at Citi]

Just wanted to hear your thoughts on that, if you're going to focus completely on organic growth or if at some point inorganic growth is also an opportunity. Thank you.

[Jorge Scarinci, CFO at Banco Macro]

Good morning, Brian. This is Jorge Scarinci. On your first question, we are going to keep some of the guidance that we gave on the last quarter, and we are going to change a little bit some of them. In terms of loan growth, we continue to maintain the 60% loan growth in real terms for 2025. In deposits, we are forecasting a real growth of 45%. In terms of capital ratio, we should maybe increase a little bit our forecast. The capital ratio by the end of 2025 should be ranging in the area of 28%-29%. In terms of ROE, we are downgrading a little bit from the former conference.

[Jorge Scarinci, CFO at Banco Macro]

We expect to have between 8%-10% ROE for 2025. Of course, this is going to be or could be affected by the evolution of bond prices. This 8%-10% is considering an ordinary evolution of prices. If we see prices improving, ROE could be ranging slightly above 10%. Let's say 8%-10% is the range that we are forecasting as a normal scenario in 2025. In terms of your second question and the capital structure, yes, we know that we have the best capital in the Argentine banking sector. That is why we are speeding up in increasing organic growth as much as we can and taking advantage of loan demand. That is what we are focusing on for the moment. We believe that in the future, there will be some other opportunities, maybe for M&A.

[Jorge Scarinci, CFO at Banco Macro]

Honestly, there's nothing that we are studying right now, but we are positive that in the next couple of years or three years, the number of banks in Argentina might shrink. We are going to be on alert and trying to analyze any acquisition target that should appear in the market.

[Brian Flores, Analyst at Citi]

Thank you, Jorge. If I may just follow up on what you mentioned on deposits, is this increase because it's significant, right? It's from 30% to 45%. Is this driven by maybe looking to compete on remunerated accounts that some of your competition is doing, or what is driving these better prospects on deposit growth?

[Jorge Scarinci, CFO at Banco Macro]

The thing is that the first quarter, in terms of volume growth, both in loans and deposits, but more in deposits, were slightly ahead of expectations. That's why we are increasing that.

[Jorge Scarinci, CFO at Banco Macro]

And also because we are seeing maybe dollar deposit growth slightly stronger than what we had expected.

[Brian Flores, Analyst at Citi]

Super clear. Thank you.

[Jorge Scarinci, CFO at Banco Macro]

You're welcome, Brian.

[Operator]

Our next question comes from Ernesto Gabilondo with Bank of America.

[Ernesto Gabilondo, Analyst at Bank of America]

Thank you. Hi, good morning, Jorge and Nico. Thanks for the opportunity to ask questions. My first question will be on your macro expectations. Just wondering, what are you expecting in terms of interest rates, inflation, GDP growth, and effects for this and next year? My second question will be on operating expenses. As you mentioned in your remarks, there was a decline in the first quarter. Just wondering, how should we think about the OpEx growth this year? My second question will be on your loan-to-deposit ratio and your strong capital ratio. On your loan-to-deposit ratio, I believe it's already at 86%.

[Ernesto Gabilondo, Analyst at Bank of America]

How are you expecting the evolution of this ratio, especially considering a loan growth of 60% and that now you're expecting deposits to grow at 45%? Your capital ratio, it seems very strong. You have an excess of capital. A follow-up to the first question is if there could be M&A in the sector. This is especially considering that if we have a positive outcome on the midterm elections next October, probably it will be a good timing to do it before that. Do you think there will still be a chance to do it after that, but considering to pay higher multiples in a potential consolidation in the sector? I just wanted to hear your thoughts on that. Thank you.

[Jorge Scarinci, CFO at Banco Macro]

Hi, Ernesto. How are you? Let's start from the first question.

[Jorge Scarinci, CFO at Banco Macro]

In terms of macroeconomic expectations for GDP, we are forecasting a real growth for this year of 5% and 3% for 2026. In terms of inflation, we are expecting, according to the consensus, 30% area inflation in 2025 and 22% area inflation for 2026. In terms of interest rates, we believe that we are going to see in 2025 at least some declining trend in domestic interest rates. According to the margins, I think that these are going to be slightly positive for the margins of the sector and Banco Macro, basically because our deposits reprice faster than our loans, plus that the mix in loans that we are lending faster in consumer, that is the segment that shows the highest rates, that is going to help to maybe spank a little bit the margins along 2025.

[Jorge Scarinci, CFO at Banco Macro]

In terms of operating expenses, yes, we put some decrease in the first quarter compared to the fourth quarter of last year. If I have to assume for 2025, I would assume operating expenses to move close to inflation, right? Let's say in the area of 30%, maybe in the bottom part of the area of 30%, maybe one or two percentage points below inflation, but let's assume close to inflation for 2025. In terms of the loans-to-deposit ratio, yes, we are increasing that ratio. Also, we are increasing the other ratio that is loans as a percentage of total assets. Remember that one year ago, loans represented only 25% of total assets. In the first quarter of this year, loans represented 48% of total assets. That is a big increase.

[Jorge Scarinci, CFO at Banco Macro]

Even in the quarter, we jumped from 40% in the fourth quarter loans to assets to 48% in the current quarter. We are speeding up in terms of moving from low levels of loans as a percentage of assets, also reducing the exposure to the public sector and increasing the exposure on the private sector. Going forward, this ratio could be in the area of 90% or low 90s by the end of 2025, Ernesto. In terms of your last question, according to capital ratio, again, I have been stating this, but on the buy side of the table, we believe that we are the only ones. Honestly, it is not depending a lot on us when we are going to maybe acquire a bank or the multiples. We have to see if there is an opportunity on the table.

[Jorge Scarinci, CFO at Banco Macro]

As I mentioned before, we are not analyzing anything for the moment. We have to be patient and see when the opportunity appears. Also, I also mentioned this before, but depending on the scenario in March, April of 2026, the Board also could be considering some increase in the dividends for next year in order to maybe trim down a little bit the excess of capital that we have. That is something that is going to be considered next year, depending on macroeconomic expectations by then, if there is an opportunity of M&A. We are conscious that we do not feel that comfortable with this excess capital. The idea is to work on different strategies in order to reduce it in the most efficient way for the bank.

[Ernesto Gabilondo, Analyst at Bank of America]

Thank you very much, Jorge.

[Jorge Scarinci, CFO at Banco Macro]

Welcome, Ernesto.

[Operator]

Our next question comes from Carlos Gomez López with HSBC.

[Carlos Gomez López, Analyst at HSBC]

Hello, and thank you for taking my question. I wanted to ask you about your bond portfolio, your public securities, and we want to know how you would like to be positioned. I am thinking about what currency, what indexator do you prefer, inflation linkers, not inflation linkers. What your preference is as to how you want to have this classified, available for sale, trading, or held to maturity. Where would you like to have the bond portfolio, let's say, for the next year, and how would you contrast that to other banks? The second question is, I think that you have your CEO here for the first time, and maybe you want to introduce him to us. Thank you.

[Jorge Scarinci, CFO at Banco Macro]

Hi, Carlos, how are you? Thanks for your questions.

[Jorge Scarinci, CFO at Banco Macro]

In terms of the bond portfolio, this is a clear table in page 20 of the press release with all the exposure and the accounting slots that we have. We are working on maybe some permutative changes, but that is related to maybe reserve requirements as to move some bonds in replace of others. We want to have an available for sale level of ARS 1 billion, similar than the current level, but maybe with different bonds in order to be able to trim down this public sector exposure in order to keep on fueling the long growth that we are forecasting. In terms of exposure, for the moment, we feel comfortable having a high exposure on inflation. For the moment, we believe that is the best way to hedge the equity of the bank. In terms of the CEO, he has to step up for a second.

[Jorge Scarinci, CFO at Banco Macro]

He has a phone call, but if he comes back, we are going to introduce Juan on the call.

[Carlos Gomez López, Analyst at HSBC]

Okay, very good. I mean, it's good that what you were saying. You are, I mean, distinctly more exposed to inflation linkers. Again, for you, that is justified by the fact that you have more capital than your peers. Is that correct?

[Jorge Scarinci, CFO at Banco Macro]

Yes, that's correct.

[Carlos Gomez López, Analyst at HSBC]

Okay. Thank you very much.

[Jorge Scarinci, CFO at Banco Macro]

Carlos.

[Operator]

Once again, if you would like to ask a question, please press the Q&A button at the bottom of the screen, or to ask questions on audio, click on "Raise Hand." You will then receive a request to activate your microphone. Please hold while we pull for questions. There are no more questions at this time. This concludes the question and answer session. I will now turn over to Mr. Nicolás Torres for final considerations.

[Nicolás Torres, Head of Investor Relations at Banco Macro]

Thank you all for your interest in Banco Macro. We appreciate it. Have a good day.

Participants

Analysts

• Carlos Gomez López, Analyst at HSBC
• Jorge Scarinci, CFO at Banco Macro
• Brian Flores, Analyst at Citi
• Ernesto Gabilondo, Analyst at Bank of America
• Nicolás Torres, Head of Investor Relations at Banco Macro