Banco Macro: Trading at Low P/E Levels Despite Strong Earnings

| About: Banco Macro (BMA)

The Argentine bank Banco Macro (NYSE:BMA) reported AR$184.1 mln Net Income in 4Q'08, up 9% from 4Q'07 and 13% from the previous quarter. In spite of a strong solvency ratio, with AR$1.8 bln (US$493 mln) in excess capital, which implies a 22.9% capitalization ratio, the company is trading at a Price-to-earnings ratio as low as 3.4.

In a time when confidence is low, the bank attracted AR$2.2 bln in new capital. As a result Total Deposits grew 16% year-on-year, amounting to AR$15.8 bln and representing 81% of the bank's liabilities as of the end of 2008.

Net Financial Income arrived at AR$567 mln in the last quarter, up strongly from AR$359 mln in 4Q'07, and AR$367 mln in 3Q'08. The most significant variables in this regard were 'Income from Government and Private Securities', up AR$100 mln from 3Q, as well as Forex variations, which had a positive effect AR$42 mln higher than in 3Q. In addition, the company reported AR$112 mln in 'Other Financial Income'.

In addition, the company states that they in October 2008 decided to account for bonds pursuant to the 'Special Investment Account', in line with a Central Bank communication, valuing these bonds at cost plus yield. If these bonds were marked to market, net income would have decreased by AR$31.6 mln.

Following a share buy back program launched in January 2008, the bank had repurchased 83.3 million ordinary class B shares, including ADRs. This transaction totaled AR$410.3 mln. The total number of BMA shares outstanding are 684 million (68.4 million ADRs).

The company informs in its 4Q'08 financial statement that the Board of Directors will propose at the next shareholder's meeting a cash dividend of AR$150 mln.

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Tagged: , Foreign Regional Banks, Argentina, Earnings
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