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Banco Macro Q2 profit soars 124% on securities investments

Banco Macro SA's second-quarter profit more than doubled from a year earlier as the Argentine bank continued to reap benefits from investments in government securities.

The Buenos Aires-based bank posted net income of about 7.03 billion Argentine pesos for the second quarter, up 124% from 3.14 billion pesos in the prior-year period. Earnings per average outstanding share improved to 11.01 pesos from 4.65 pesos.

Consolidated net interest income jumped 85% year over year to 16.79 billion pesos from 9.09 billion pesos, while net fee income surged 26% to 3.39 billion pesos from 2.68 billion pesos.

Banco Macro said its net interest margin, including foreign exchange adjustments, reached 17.6% in the second quarter, up from 17.2% in the linked quarter and 14.4% in a year-ago period. Excluding FX, the NIM rose to 17.5% from 17.3% in the first quarter and 15.2% a year earlier.

The company added that income from government and private securities increased by 11.8 billion pesos, or 376%, in the second quarter from the prior-year period, driven by gains from central bank notes. The bank made use of a similar strategy in the first quarter, selling U.S. dollars in the spot market and investing the local currency proceeds in short-term Treasury notes called Leliq. Those notes carried interest rates in excess of 60% as of the second-quarter end.

The company booked 848 million pesos in provisions for loan losses during the quarter, up 49% from 571 million pesos a year ago. The bank's ratio of nonperforming loans to total financing was 2.12% in the second quarter, rising from 2.03% in the linked quarter and 1.38% a year earlier.

Administrative expenses totaled 2.30 billion pesos, increasing 48% from 1.55 billion pesos a year earlier, while other operating expenses ticked 70% higher to 3.95 billion pesos.

Banco Macro's core financing to the private sector, which includes loans, financial trust and the leasing portfolio, totaled 174.7 billion pesos at the end of June after growing 16% during the previous 12 months. The company's market share of private-sector loans was 7.7% at the close of the second quarter.

Return on average equity improved to 47.0% in the second quarter from 27.2% a year ago, while return on average assets rose to 7.7% from 5.7%.

As of Aug. 7, US$1 was equivalent to 45.67 Argentine pesos.