Fitch Affirms Banco Macro's (Argentina) IDR at 'B-'; Outlook Negative
BUENOS AIRES, Argentina & NEW YORK -- March 20, 2013
Fitch Ratings has affirmed Banco Macro S.A.'s (BM) Viability Rating (VR) and
Long-term Issuer Default Ratings (LT IDRs) at 'b-' and 'B-', respectively. The
Rating Outlook on the Long-term IDRs is Negative. See the full list of ratings
actions at the end of this rating action commentary.
KEY RATING DRIVERS
BM's IDRs and National Scale ratings are driven by its 'b-' VR, which reflects
its strong national franchise and growth potential, its solid overall
performance, with strong profitability, healthy asset quality and sound
liquidity, and its capital position. The ratings also take into account the
volatile environment in Argentina.
BM's foreign currency (FC) IDR is at the country ceiling level, which is above
Argentina's FC Sovereign rating ('CC', with a Negative Outlook), reflecting
BM's strong local franchise and track record of sound overall performance.
Despite Argentina's FC Sovereign rating being 'CC'; Negative Outlook, both its
LC and FC Sovereign securities issued under Argentina Law, are rated 'B-' with
a Negative Outlook, the same level as BM's FC IDR.
BM's subordinated debt is rated 'CCC/RR6'/A+(arg)', which is one notch below
the bank's VR. Although the standard notching for this type of security under
Fitch's criteria 'Assessing and Rating Bank Subordinated and Hybrid
Securities' dated Dec. 5, 2012, is two notches, reflecting the notes'
increased loss severity and heightened risk of nonperformance relative to the
senior obligations, BM's subordinated debt is one notch below its VR given the
compression that arises from its low level ('b-').
The Rating Outlook on BM's LT IDRs and LT National rating is Negative, in line
with the Outlook on Argentina's Sovereign ratings, which constrain those of
BM. Downside risk to Macro's ratings mainly stem from a downgrade of the
Sovereign rating, or a significant decline in the bank's capitalization or
asset quality. Upside to Macro's ratings currently appears limited but could
stem from an upgrade of the Sovereign ratings.
Along with the strong economic growth since 2003 in Argentina, BM's
performance has been sound, based on its strong revenue generation, good asset
quality and ample liquidity. A good level of income diversification has helped
offset the increase in administrative expenses due to high inflation and the
volatility of the gains from its securities portfolio seen in the past two
years. Credit should continue to expand in 2013, albeit at a slower pace than
that seen in 2012. In this context, Fitch expects BM's overall performance to
BM's loan book has grown strongly in the past few years and its asset quality
ratios are healthy. BM's non-performing loans (NPLs) accounted for a low 1.82%
of total loans at Dec. 31, 2012, with sound loan loss reserve coverage of
191.28%. Since 2012, banks in Argentina must comply with certain rules
regarding compulsory lending that, in Fitch's view, may limit their room to
maneuver regarding credit risk management and may result in some pressure on
the industry asset quality ratios, even though the results of such measures
are too early to judge.
BM's liquidity is strong, with liquid assets that equate to 34% of total
deposits. However, Fitch is cautious about the large negative maturity
mismatch of all banks in Argentina given the short-term nature of their
liabilities and the longer tenor on their assets. However, this position
appears manageable given the bank's strong franchise and the complex set of
capital controls in place.
Its capital base is ample (Fitch Core Capital Ratio of 17.02% at Dec. 31,
2012). Fitch expects the latter trend to continue to improve in the next few
years as the restriction imposed by the Central bank of Argentina on dividend
payments will compensate for the expected continued growth of the bank.
BM is controlled by a group of Argentine individuals led by Jorge Horacio
Brito and Delfin Jorge Ezequiel Carballo, with a 43% stake. The former is also
the bank's chairman and CEO. A 31% stake is in the hands of the public pension
fund administrators after the privatization of the pension system, and the
balance is widely held by local and foreign investors. At Oct. 31, 2012, BM
was the third-largest private sector bank in Argentina by deposits and assets.
Fitch has affirmed BM's ratings as follows:
--FC and LC LT IDRs at 'B-';
--FC and LC short-term IDRs at 'B';
--Viability Rating at 'b-';
--Support at '5';
--Support Floor at 'NF';
--LT National rating at 'AA(arg)';
--Short-term National rating at 'A1+(arg)';
--USD150 million Senior bonds Class 2 at 'B-/RR4/AA(arg)';
--USD150 million subordinated debt at 'CCC/RR6/A+(arg)'.
The Rating Outlook on BM's FC and LC LT IDRs, LT National rating and the LT
National rating on its senior and subordinated bonds issuances is Negative.
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012).
Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
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