Banco Macro SA Q4 FY2024 earnings call

• Fourth quarter net income was up 4% from the third quarter, driven by lower net interest income, higher net fee income, etc.
• Lower inflation in the fourth quarter led to a lower loss from the net monetary position.
• Loan growth was significant, with total financial loans up 18% quarter-on-quarter and 45% year-on-year.
• The efficiency ratio in the fourth quarter was 39.4%, worse than previous quarters.

In the fourth quarter of 2024, Banco Macro's net income totaled Ps. 102.2 billion, 4% higher than the third quarter. Net interest income was Ps. 532.6 billion, 13% lower than the third quarter but 33% higher year-on-year. Net fee income was Ps. 139.9 billion, 6% higher than the third quarter. Net income from financial assets and liabilities at fair value was Ps. 134.9 billion, 21% higher than the third quarter. Provision for loan losses in the fourth quarter was Ps. 37.5 billion, 51% higher than the third quarter. Total financial loans reached Ps. 5.8 trillion, increasing 18% quarter-on-quarter and 45% year-on-year, with commercial and consumer loans showing growth.

• Macro expects GDP growth in 2025 to be 5.5%, inflation around 25%, and FX rate around $1,250 by end of 2025.
• ROE expected to range 12%-15% in 2025, driven by loan growth (60% real growth in loans), fee growth, controlling expenses, and lower inflation losses.
• Loan growth of 60% real in 2025 is expected, which may impact capital consumption and Tier 1 ratio.

• Potential deterioration in NPLs and increase in cost of risk due to loan growth.
• Competition for deposits could put upward pressure on interest rates.
• Regulatory changes affecting the banking system.

Q: What are macro expectations for 2025 in terms of interest rates, inflation, GDP growth, and FX?

A: According to the government, GDP growth in 2025 is expected to be 5.5%, inflation around 25%, and the FX rate is expected to be $1,250 by the end of 2025.

Q: What are the ROE expectations for 2025 and what are the drivers?

A: ROE is expected to range 12%-15% in 2025, driven by loan growth (60% real), fee growth, controlling expenses, and lower inflation losses.

Q: How should we think about asset quality and cost of risk in 2025?

A: NPLs may deteriorate, and the cost of risk could be above 2%, potentially reaching 2.5%.

Q: How is the weight of securities expected to evolve in 2025 and how will loan growth be funded?

A: The securities ratio is expected to decrease to ~20%, with 80% of loan growth funding coming from deposits and 20% from reducing securities.

Q: What about capital consumption and deposits strategy?

A: Capital may decrease due to loan growth, and deposits are expected to grow with potential upward pressure on interest rates.

Q: Any management changes, deposits growth, and policy rates?

A: There are upcoming management changes, deposits are expected to grow due to economic factors, and policy rates are expected to increase 3-4 percentage points by the end of 2025.