BUENOS AIRES (Dow Jones)–Argentine bank Banco Macro SA (BMA, BMA.BA) said Thursday that its second-quarter net profit rose 16% from a year earlier as a consumer spending spree underpinned strong demand for credit.
Net profit was 257.8 million pesos ($62.1 million), or ARS0.43 per local share, up from ARS222.1 million, or ARS0.37 per share, in the second quarter of 2010, the bank said in a filing with the Buenos Aires Stock Exchange.
The government has forecast economic growth of 8.2% this year thanks to government spending, low unemployment, and good prices for Argentina’s exports.
Banco Macro’s net financial margin–the difference between what the bank pays on its deposits and earns on its loans and securities holdings–jumped 36% on the year to ARS675.1 million in the quarter. Net fee income rose 50% to ARS362.5 million.
But loan loss provisions more than doubled to ARS62 million, while income taxes rose to ARS148.9 million from ARS72.3 million.
Meanwhile, administrative expenses rose 34% to ARS610 million due to a higher wage and employee benefits bill.
Labor unions extracted wage hikes of nearly 30% this year, which have more than compensated for annual inflation–which most private sector economists say is above 20%.
Banco Macro said that in its case the bank union won a 29% annual wage increase effective May 1. The agreement included a 20% increase retroactively applied to the previous four months, of which a portion was already paid during that period.
Banco Macro said its deposit base rose 24% on the year at ARS26.46 billion at the end of June, of which nearly 76% corresponded to private sector deposits.
Loans to the private sector, which represent the vast bulk of the bank’s overall credit portfolio, increased 52% on the year to ARS19.82 billion led by growth in credit card and personal loans.
Asset quality continued to improve, with non-performing loans as a percentage of total loans dropping to 2.5% at the end of June from 3.2% a year earlier.
Banco Macro reported a risk weighted capitalization ratio of 20% at the end of the quarter, well above the regulatory minimum.
Shares of Banco Macro fell 7.9% to close at ARS13.35 as the benchmark Merval index dropped 6% amid Thursday’s bloodbath in major foreign stock exchanges.
-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, ken.parks@dowjones.com
Source: online.wsj.com