Banco Macro SA Q3 FY2024 earnings call

• Net income in Q3 2024 recovered from the previous quarter's loss, mainly due to higher net interest income and lower net monetary position loss as inflation eased.
• Loan growth: Total financing saw a significant increase, with commercial loans (overdraft up 46%, documents down 12%) and consumer lending (personal loans up 43%, credit card loans up 25%) showing growth.
• Deposit growth: Total deposits rose, with private sector deposits led by demand deposits increasing 28% due to the Tax Amnesty, while time deposits decreased.
• Asset quality: Remained under control, with nonperforming ratios improving.
• Capitalization: Banco Macro had excess capital with a capital adequacy ratio of 32.8% and Tier 1 ratio of 31.3%.

In the third quarter of 2024, Banco Macro's net income totaled Ps.91.3 billion, which was 293% or Ps.68.1 billion higher than the third quarter of 2023. Operating income before general, administrative and personnel expenses totaled Ps.829.2 billion, 61% or Ps.313 billion higher than the second quarter of 2024 but 25% or Ps.272.3 billion lower than the same period of last year. Net interest income totaled Ps.569.1 billion, 167% or Ps.356.1 billion higher than the second quarter of 2024 and 63% or Ps.220.9 billion higher year-on-year. Total financing reached Ps.4.55 trillion, increasing 17% or Ps.657.9 billion quarter-on-quarter and 28% or Ps.988 billion higher year-on-year. Total deposits increased 7% to Ps.516 billion or on-quarter totaling Ps.8.1 trillion and increased 30% or Ps.1.8 trillion year-on-year. Nonperforming total financial ratio was 1.15% and coverage ratio was 177.6%.

• Loan growth: Expected to finish 2024 with a real positive rate of growth between 25% and 35%, and 2025 around 40% real growth.
• ROE: 2024 ROE around 10%, 2025 low to mid-teens.
• Capital: Comfortable with excess capital to support loan growth without additional capital needs in the near term.

• Inflation and FX volatility: Can impact securities, interest rates, and margins.
• Liquidity risk: Potential withdrawal of dollar deposits below $100k could affect liquidity.
• Competition: Impact on margins, especially in dollar loans, leading to margin compression.

Q: Any updates on the prospect for loan growth in 2024, 2025 and ROE guidance?

A: 2024 loan growth expected 25%-35% real, 2025 40% real. 2024 ROE around 10%, 2025 low to mid-teens.

Q: Position on securities linked to inflation and FX, assumptions for next year?

A: Long position in inflation-linked bonds, no FX-linked bonds; inflation expectations 25%-40%, peso depreciation 15%-25% next year.

Q: Plans to raise debt in international market?

A: No plans to raise new debt in international markets.

Q: Deployment of USD deposits and margin impact?

A: Some pickup in USD loan demand in Q4, but half of USD deposits below $100k could withdraw; competition driving margin compression in USD, margins expected stable or pickup in 2025.