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BMA Banco Macro

Filed: 13 Aug 21, 2:06pm

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

August 12, 2021

 

 

 

Commission File Number: 001-32827

 

 

 

MACRO BANK INC.

(Translation of registrant’s name into English)

 

 

 

Av. Eduardo Madero 1182

Buenos Aires C1106ACY

Tel: 54 11 5222 6500

(Address of registrant’s principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

 Form 20-FxForm 40-F¨ 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

 Yes¨Nox 

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

 Yes¨Nox 

 

 

 

 

 

 

 

BANCO MACRO SA

 

Condensed interim financial statements as of March 31, 2021 together with the reports on review of interim financial statements.

 

CONTENT

 

·Cover Sheet

·Condensed consolidated interim statement of financial position

·Condensed consolidated interim statement of income

·Condensed consolidated interim statement of other comprehensive income

·Condensed consolidated interim statement of changes in shareholders’ equity

·Condensed consolidated interim statement of cash flows

·Notes to the condensed consolidated interim financial statements

·Consolidated exhibits

·Condensed separate interim statement of financial position

·Condensed separate interim statement of income

·Condensed separate interim statement of other comprehensive income

·Condensed separate interim statement of changes in shareholders’ equity

·Condensed separate interim statement of cash flows

·Notes to the condensed separate interim financial statements

·Separate exhibits

 

 

 

 

CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

 

CORPORATE NAME: Banco Macro SA

 

REGISTERED OFFICE: Avenida Eduardo Madero 1182 – Autonomous City of Buenos Aires

 

CORPORATE PURPOSE AND MAIN ACTIVITY: Commercial bank

 

CENTRAL BANK OF ARGENTINA: Authorized as “Argentine private bank” under No. 285.

 

REGISTRATION WITH THE PUBLIC REGISTRY OF COMMERCE: Under No. 1154 - By-laws Book No. 2, Folio 75 dated March 8, 1967

 

BY-LAWS EXPIRY DATE: March 8, 2066

 

REGISTRATION WITH THE IGJ (SUPERINTENDENCY OF CORPORATIONS): Under No. 9777 – Corporations Book No. 119 Volume A of Sociedades Anónimas, dated October 8, 1996.

 

PERSONAL TAX IDENTIFICATION NUMBER: 30-50001008-4

 

REGISTRATION DATES OF AMENDMENTS TO BY-LAWS:

 

August 18, 1972, August 10, 1973, July 15, 1975, May 30, 1985, September 3, 1992, May 10, 1993, November 8, 1995, October 8, 1996, March 23, 1999, September 6, 1999, June 10, 2003, December 17, 2003, September 14, 2005, February 8, 2006, July 11, 2006, July 14, 2009, November 14, 2012, August 2, 2014, July 15, 2019.

 

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION  
AS OF MARCH 31, 2021 AND DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

Items Notes Exhibits 03/31/2021  12/31/2020 
ASSETS            
Cash and Deposits in Banks 6    153,515,086   146,802,082 
Cash      23,650,502   28,715,643 
Central Bank of Argentina      75,836,106   56,470,730 
Other Local and Foreign Entities      54,022,725   61,609,765 
Other      5,753   5,944 
Debt Securities at fair value through profit or loss 6 and 36    38,381,177   62,104,306 
Derivative Financial Instruments 6        8,169 
Repo transactions 6    12,889,942   44,527,970 
Other financial assets 5, 6 and 8 R  17,466,957   21,332,617 
Loans and other financing 5 and 6 B, C, D and R  265,030,865   290,658,051 
Non-financial Public Sector      3,289,730   4,083,029 
Other Financial Entities      2,662,581   2,058,729 
Non-financial Private Sector and Foreign Residents      259,078,554   284,516,293 
Other Debt Securities 5, 6 and 36 R  212,608,497   236,210,623 
Financial Assets delivered as guarantee 6 and 26    13,741,529   16,143,638 
Equity Instruments at fair value through profit or loss 6, 10 and 36    2,056,466   1,878,426 
Investment in associates and joint arrangements 7    246,946   230,317 
Property, plant and equipment   F  38,866,440   38,821,315 
Intangible Assets   G  5,817,669   5,765,184 
Deferred Income Tax Assets      56,409   71,374 
Other Non-financial Assets 8    2,566,469   2,521,168 
Non-current assets held for sale      2,548,823   2,550,683 
TOTAL ASSETS      765,793,275   869,625,923 

 

Jorge Pablo Brito
Vice Chairperson

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION  
AS OF MARCH 31, 2021 AND DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

Items Notes Exhibits 03/31/2021  12/31/2020 
LIABILITIES            
Deposits 6 H and I  457,286,997   552,047,687 
Non-financial Public Sector      55,361,116   83,094,302 
Financial Sector      693,670   786,621 
Non-financial Private Sector and Foreign Residents      401,232,211   468,166,764 
Derivative Financial Instruments 6 I  6   260 
Repo Transactions 6 I      698,695 
Other Financial Liabilities 6 and 12 I  49,875,306   55,590,785 
Financing received from the Central Bank of Argentina and other financial institutions 6 I  1,149,238   1,038,153 
Issued Corporate Bonds 6 and 31 I  5,054,192   5,565,079 
Current Income Tax Liabilities      4,730,066   5,811,794 
Subordinated Corporate Bonds 6 and 31 I  38,149,077   38,743,184 
Provisions 11 J and R  1,391,706   1,473,497 
Deferred Income Tax Liabilities      8,095,367   7,106,143 
Other Non-financial Liabilities 12    30,024,381   34,289,045 
TOTAL LIABILITIES      595,756,336   702,364,322 
SHAREHOLDERS’ EQUITY            
Capital Stock 23    639,413   639,413 
Non-capital contributions      12,429,781   12,429,781 
Adjustments to Shareholders’ Equity      58,523,016   58,523,016 
Earnings Reserved      124,040,951   124,040,951 
Unappropriated Retained Earnings      (29,642,958)  (57,157,399)
Other Comprehensive Income 3    1,857,190   1,269,287 
Net Income for the period/ fiscal year      2,187,364   27,514,441 
Net Shareholders’ Equity attributable to controlling interest      170,034,757   167,259,490 
Net Shareholders’ Equity attributable to non-controlling interests      2,182   2,111 
TOTAL SHAREHOLDERS’ EQUITY      170,036,939   167,261,601 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES      765,793,275   869,625,923 

      
The notes 1 to 40 to the condensed consolidated interim financial statements and the exhibits B to D, F to J, L, Q and R are an integral part of the condensed consolidated interim financial statements. 
 

 

Jorge Pablo Brito
Vice Chairperson

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

Items Notes Exhibits Quarter ended
03/31/2021
  Quarter ended
03/31/2020
 
Interest income   Q  45,095,499   44,092,562 
Interest expense   Q  (21,266,412)  (13,706,256)
Net Interest income      23,829,087   30,386,306 
Commissions income 16 Q  6,528,383   6,943,328 
Commissions expense   Q  (599,927)  (622,297)
Net Commissions income      5,928,456   6,321,031 
Subtotal (Net Interest income + Net Commissions income)      29,757,543   36,707,337 
Loss from measurement of financial instruments at fair value through profit or loss   Q  4,561,519   2,347,764 
Profit from sold or derecognized assets at amortized cost      59,624   1,216,086 
Differences in quoted prices of gold and foreign currency 17    1,216,270   759,511 
Other operating income 18    1,649,087   1,567,815 
Allowance for loan losses 5    (2,406)  (1,228,851)
Net Operating Income      37,241,637   41,369,662 
Employee benefits 19    (7,257,751)  (6,741,859)
Administrative expenses 20    (3,414,702)  (3,815,019)
Depreciation and amortization of fixed assets   F and G  (1,287,931)  (1,192,610)
Other Operating Expenses 21    (6,357,009)  (6,166,840)
Operating Income      18,924,244   23,453,334 
Income from associates and joint arrangements 7    23,034   29,453 
Loss on net monetary position      (14,442,665)  (8,252,484)
Income before tax on continuing operations      4,504,613   15,230,303 
Income tax on continuing operations 15.c)    (2,317,178)  (5,625,860)
Net Income from continuing operations      2,187,435   9,604,443 
Net Income for the period      2,187,435   9,604,443 
Net Income for the period attributable to controlling interest      2,187,364   9,604,341 
Net Income for the period attributable to non-controlling interest      71   102 

 

Jorge Pablo Brito
Vice Chairperson

 

 

 

CONSOLIDATED EARNINGS PER SHARE
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

Items Quarter ended
03/31/2021
  Quarter ended
03/31/2020
 
Net Profit attributable to Parent’s shareholders  2,187,364   9,604,341 
PLUS: Potential diluted earnings per common share        
Net Profit attributable to Parent’s shareholders adjusted as per diluted earnings  2,187,364   9,604,341 
Weighted average of outstanding common shares for the period  639,413   639,398 
PLUS: Weighted average of the number of additional common shares with dilution effects        
Weighted average of outstanding common shares for the period adjusted as per dilution effect  639,413   639,398 
Basic earnings per share (in pesos)  3.4209   15.0209 

 

Jorge Pablo Brito
Vice Chairperson

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

 Items  Notes   Exhibits   Quarter ended
03/31/2021
   Quarter ended
03/31/2020
 
Net Income for the period          2,187,435   9,604,443 
Items of Other Comprehensive Income that will be reclassified to profit or loss                
Foreign currency translation differences in financial statements conversion          (96,699)  (10,115)
Foreign currency translation differences for the period          (96,699)  (10,115)
Profit or losses for financial instruments measured at fair value through other comprehensive income (FVOCI) (IFRS 9(4.1.2)(a))          684,602   (987,224)
Profit or losses for the period from financial instruments at fair value through other comprehensive income (FVOCI)      Q   317,195   (1,867,251)
Adjustment for reclassification of the period          638,617   570,910 
Income tax  15.c)      (271,210)  309,117 
Total Other Comprehensive Income/ (Loss) that is subsequently reclassified to profit or loss          587,903   (997,339)
Total Other Comprehensive Income/ (Loss)          587,903   (997,339)
Total Comprehensive Income  for the period          2,775,338   8,607,104 
Total Comprehensive Income attributable to controlling interest          2,775,267   8,607,002 
Total Comprehensive Income attributable to non-controlling interest          71   102 

 

The notes 1 to 40 to the condensed consolidated interim financial statements and the exhibits B to D, F to J, L, Q and R are an integral part of the condensed consolidated interim financial statements.

 

Jorge Pablo Brito
Vice Chairperson

 

 

 CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2021
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

     Capital stock   Non- capital
contributions
     Other comprehensive
income
  Earnings Reserved             
 Changes  Notes   Outstanding
shares
   In
treasury
   Additional
paid-in
capital
   Adjustments
to
Shareholders’
Equity
   Accumulative
foreign
currency
translation
difference in
financial
statements
conversion
   Other
(1)
   Legal   Other   Unappropriated
Retained
Earnings (1)
   Total
Controlling
Interests
   Total Non-
Controlling
Interests
  

 Total

Equity

 
Restated amount at the beginning of the fiscal year     639,413      12,429,781   58,523,016   1,022,571   246,716   36,247,343   87,793,608   (29,642,958)  167,259,490   2,111   167,261,601 
Total comprehensive income for the period                                                    
- Net income for the period                                      2,187,364   2,187,364   71   2,187,435 
- Other comprehensive income/ (loss) for the period                      (96,699)  684,602               587,903       587,903 
Amount at the end of the period      639,413       12,429,781   58,523,016   925,872   931,318   36,247,343   87,793,608   (27,455,594)  170,034,757   2,182   170,036,939 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

     Capital stock   Non-capital
Contributions
     Other comprehensive
income
  Earnings Reserved             
 Changes  Notes   Outstanding
shares
  In
treasury
   Additional
paid-in
capital
   Adjustments
to
Shareholders’
Equity
   Accumulative
foreign
currency
translation
difference in
financial
statements
conversion
   Other
(1)
   Legal   Other   Unappropriated
Retained
Earnings (1)
   Total
Controlling
Interests
   Total Non-
Controlling
Interests
  

 Total

Equity

 
Restated amount at the beginning of the fiscal year     639,413      12,429,781   58,523,016   887,181   (677,300)  23,699,388   60,763,027   4,979,523   161,244,029   2,158   161,246,187 
Total comprehensive income for the period                                                    
- Net income for the period                                      9,604,341   9,604,341   102   9,604,443 
- Other comprehensive income/ (loss) for the period                      (10,115)  (987,224)              (997,339)      (997,339)
Amount at the end of the period      639,413       12,429,781   58,523,016   877,066   (1,664,524)  23,699,388   60,763,027   14,583,864   169,851,031   2,260   169,853,291 

 

(1) Amount at the beginning of the fiscal year were adjusted in accordance with Communication “A” 7211. See also Note 3 section “New standards adopted in the fiscal year”.

 

The notes 1 to 40 to the condensed consolidated interim financial statements and the exhibits B to D, F to J, L, Q and R are an integral part of the condensed consolidated interim financial statements.

 

Jorge Pablo Brito
Vice Chairperson

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

 Items  Notes   03/31/2021   03/31/2020 
CASH FLOWS FROM OPERATING ACTIVITIES           
Income for the period before Income Tax      4,504,613   15,230,303 
Adjustment for the total monetary effect of the period      14,442,665   8,252,484 
Adjustments to obtain cash flows from operating activities:            
Amortization and depreciation      1,287,931   1,192,610 
Allowance for loan losses      2,406   1,228,851 
Difference in quoted prices of foreign currency      (7,011,058)  (4,133,437)
Other adjustments      14,277,055   5,848,568 
Net increase / (decrease) from operating assets:            
Debt Securities at fair value through profit and loss      23,723,129   6,349,727 
Derivative financial instruments      8,169   19,019 
Repo transactions      31,638,028   1,088,411 
Loans and other financing            
Non-financial public sector      793,299   3,922,505 
Other financial entities      (603,852)  2,117,365 
Non-financial private sector and foreign residents      25,370,943   11,269,983 
Other debt securities      (2,343,855)  (46,704,033)
Financial assets delivered as guarantee      2,402,109   2,147,818 
Equity instruments at fair value through profit or loss      (178,040)  103,316 
Other assets      3,801,202   (8,292,544)
Net increase / (decrease) from operating liabilities:            
Deposits            
Non-financial public sector      (27,733,186)  11,953,679 
Financial sector      (92,951)  (67,831)
Non-financial private sector and foreign residents      (66,934,553)  27,980,810 
Derivative financial instruments      (254)  (953,457)
Repo transactions      (698,695)  (1,541,610)
Other liabilities      (7,751,162)  (4,801,896)
Payments for Income Tax      (1,706,005)  (2,239,091)
TOTAL CASH FROM OPERATING ACTIVITIES (A)      7,197,938   29,971,550 

 

Jorge Pablo Brito
Vice Chairperson

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

 Items  Notes   03/31/2021   03/31/2020 
CASH FLOWS FROM INVESTING ACTIVITIES           
Payments:            
Acquisition of PPE, intangible assets and other assets      (1,291,047)  (1,137,639)
TOTAL CASH USED IN INVESTING ACTIVITIES (B)      (1,291,047)  (1,137,639)
CASH FLOWS FROM FINANCING ACTIVITIES            
Payments:            
Dividends            
Acquisition or redemption of equity instruments            
Non subordinated corporate bonds      (228,334)  (512,443)
Central Bank of Argentina      (180)  (15,930)
Financing from local financial entities          (1,997,918)
Subordinated Corporate Bonds          (33,239)
Other payments related to financing activities      (140,509)  (198,124)
Proceeds:            
Financing to local financial entities      152,510     
TOTAL CASH USED IN FINANCING ACTIVITIES (C)      (216,513)  (2,757,654)
EFFECT OF EXCHANGE RATE FLUCTUATIONS (D)      10,499,338   6,987,870 
MONETARY EFFECT ON CASH AND CASH EQUIVALENTS (E)      (35,437,989)  (19,131,905)
NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D+E)      (19,248,273)  13,932,222 
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FISCAL YEAR  22   297,749,280   226,649,768 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD  22   278,501,007   240,581,990 

 

The notes 1 to 40 to the condensed consolidated interim financial statements and the exhibits B to D, F to J, L, Q and R are an integral part of the condensed consolidated interim financial statements.

 

Jorge Pablo Brito
Vice Chairperson

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

1.CORPORATE INFORMATION

 

Banco Macro SA (hereinafter, the Bank), is a stock corporation (sociedad anónima), organized in the Argentine Republic that offers traditional banking products and services to companies, including those companies operating in regional economies as well as to individuals, thus strengthening its goal to be a multiservice bank. In addition, through its subsidiaries, the Bank performs transactions as a trustee agent, manager and administrator of mutual funds and renders stock exchange services and electronic payments services.

 

Macro Compañía Financiera SA was created in 1977, as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro SA. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud SA) and since August 2006, Banco Macro SA.

 

The Bank’s shares have been publicly listed on Bolsas y Mercados Argentinos (BYMA) since November 1994; and as from March 24, 2006 they are listed on the New York Stock Exchange (NYSE). Additionally, on October 15, 2015, they were authorized to be listed on the Mercado Abierto Electrónico SA (MAE).

 

Since 1994, Banco Macro SA’s market strategy was mainly focused on the regional areas outside the Autonomous City of Buenos Aires (CABA, for its acronym in Spanish). Following this strategy, in 1996, Banco Macro SA started the process to acquire entities and assets and liabilities during the privatization of provincial and other banks.

 

On July 17, August 26, October 15, 2020 and March 4, 2021, the Bank made irrevocable capital contributions in advance of future share subscription to the company Play Digital SA of 16,250, 27,250, 61,689 and 19,505 (not restated), respectively. On July 23, August 26, and October 15, 2020, the Extraordinary Shareholders’ Meeting of Play Digital SA accepted the irrevocable capital contributions and gave its approval to the Bank to subscribe 16,250,000, 26,634,046 and 58,017,400 common, registered shares, with a face value of Ps. 1. On December 15, 2020, the Extraordinary Shareholders’ Meeting of Play Digital SA decided a new capital stock increase. Thus, on December 16, 2020 the Bank subscribed new 18,276,059 common, registered shares with a face value of Ps. 1 for an amount of 20,727. As a consequence, the Bank’s interest in Play Digital SA amounted to 9.9545%. Initially, the shareholders’ were Banco de Galicia y Buenos Aires SAU, Banco BBVA Argentina SA, Banco Santander Río SA and Banco Macro SA. Subsequently, other banks were accepted as shareholders together with the abovementioned. Moreover, on May 12, 2021 the Bank made a new irrevocable capital contribution in advance for future share subscription for an amount of 108,136. The company’s purpose is to develop and market a payment solution linked to bank accounts held by financial system users in order to bring significant improvement to their payment experience.

 

On May 27, 2021, the Board of Directors approved the issuance of these condensed consolidated interim financial statements.

 

2.OPERATIONS OF THE BANK

 

2.1.Agreement with the Misiones Provincial Government

 

The Bank and the Misiones Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a five-year term since January 1, 1996, as the Provincial Government’s exclusive financial agent as well as revenue collection and obligation payment agent.

 

On November 25, 1999, December 28, 2006 and October 1, 2018 extensions to such agreement were agreed upon, making it currently effective through December 31, 2029.

 

As of March 31, 2021 and December 31, 2020, the deposits held by the Misiones Provincial Government with the Bank amounted to 16,671,200 and 18,343,261 (including 891,077 and 913,303, related to court deposits), respectively.

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

2.2.Agreement with the Salta Provincial Government

 

The Bank and the Salta Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since March 1, 1996, as the Provincial Government’s exclusive financial agent as well as revenue collection and obligation payment agent.

 

On February 22, 2005, and August 22, 2014, extensions to such agreements were agreed upon, making it currently effective through February 28, 2026.

 

As of March 31, 2021 and December 31, 2020, the deposits held by the Salta Provincial Government with the Bank amounted to 3,739,103 and 4,266,309 (including 1,398,705 and 1,401,669, related to court deposits), respectively.

 

2.3.Agreement with the Jujuy Provincial Government

 

The Bank and the Jujuy Provincial Government entered into a special-relationship agreement whereby the Bank was appointed, for a ten-year term since January 12, 1998, as the Provincial Government’s exclusive financial agent as well as revenue collection and obligation payment agent.

 

On April 29, 2005 and July 8, 2014, extensions to such agreement were agreed upon, making it currently effective through September 30, 2024.

 

As of March 31, 2021 and December 31, 2020, the deposits held by the Jujuy Provincial Government with the Bank amounted to 11,753,198 and 12,324,079 (including 1,396,469 and 1,319,762, related to court deposits), respectively.

 

2.4.Agreement with the Tucumán Provincial Government

 

The Bank acts as an exclusive financial agent and as revenue collection and obligation payment agent of the Tucumán Provincial Government, the Municipality of San Miguel de Tucumán and the Municipality of Yerba Buena. The services agreements with the Provincial and Municipalities Governments are effective through years 2031, 2023 and 2025, respectively.

 

As of March 31, 2021 and December 31, 2020, the deposits held by the Tucumán Provincial Government, the Municipality of San Miguel de Tucumán and the Municipality of Yerba Buena with the Bank amounted to 15,452,294 and 16,123,439 (including 3,860,483 and 3,994,846, related to court deposits), respectively.

 

Additionally, as of March 31, 2021 and December 31, 2020, the Bank granted loans to the Tucumán Provincial Government for an amount of 2,598,296 and 3,231,151, respectively.

 

3.BASIS FOR THE PREPARATION OF THESE FINANCIAL STATEMENTS AND APPLICABLE ACCOUNTING STANDARDS

 

Presentation basis

 

Applicable Accounting Standards

 

These condensed consolidated interim financial statements of the Bank were prepared in accordance with the accounting framework established by Central Bank of Argentina (BCRA, for its acronym in Spanish) in its Communiqué “A” 6114 as supplementary. Except for the exceptions established by the BCRA which are explained in the following paragraph, such framework is based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCE, for its acronym in Spanish). The abovementioned international standards include the IFRS, the International Accounting Standards (IAS) and the interpretations developed by the IFRS Interpretations Committee (IFRIC) or former IFRIC (SIC).

 

10 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

The transitory exceptions and regulatory guidelines established by BCRA to the application of effective IFRS, that have affected the preparation of these condensed consolidated interim financial statements are as follows:

 

a)According to Communiqué “A” 6114, as supplementary, and in the convergence process through IFRS, the BCRA established that since fiscal years beginning on January 1, 2020 included, financial institutions defined as “Group A” by BCRA rules, in which the Bank is included, begin to apply section 5.5 “Impairment” of the IFRS 9 “Financial Instruments” (sections B5.5.1 to B5.5.55), except for the temporary exclusion for the debt securities of the non-financial public sector established by BCRA Communiqué “A” 6847. As of the date of issuance of these condensed consolidated interim financial statements, the Bank is in the process of quantifying the effect of the full application of the mentioned standard.

 

b)Additionally, the Bank received on March 12 and 22, 2021 and April 29, 2019 Memorandums from the BCRA, which established specifics guidelines related to the measurement of the Bank’s holding in Prisma Medios de Pago SA as explained in note 10. Considering such guidelines, the Bank adjusted the fair value previously determined. As of the date of issuance of these condensed consolidated interim financial statements, the Bank is in the process of quantifying the difference over such fair value and the fair value calculated according to IFRS, which could be material.

 

Except for what was mentioned in the previous paragraphs, the accounting policies applied by the Bank comply with the IFRS as currently approved and are applicable to the preparation of these condensed consolidated interim financial statements in accordance with the IFRS as adopted by the BCRA through Communiqué “A” 7183. Generally, the BCRA does not allow the anticipated application of any IFRS, unless otherwise expressly stated.

 

Basis for the preparation and consolidation

 

These condensed consolidated interim financial statements as of March 31, 2021, have been prepared in accordance with the accounting Framework established by the BCRA as mentioned in the previous section “Applicable accounting standards” which, particularly for condensed consolidated interim financial statements, is based on IAS 34 “Interim Financial Reporting”.

 

For the preparation of these condensed consolidated interim financial statements, in addition to sections “measuring unit” and “new standards adopted in the fiscal year” of this note, the Bank has applied the basis for the preparation and consolidation, the accounting policies and the material accounting judgements, estimates and assumptions described in the consolidated financial statements for the fiscal year ended on December 31, 2020, already issued.

 

These condensed consolidated interim financial statements include all the necessary information for an appropriate understanding, by the users thereof, of the basis for the preparation and disclosure used therein as well as the relevant events and transactions occurred after the issuance of the last annual consolidated financial statements for the fiscal year ended on December 31, 2020, already issued. Nevertheless, the present condensed consolidated interim financial statements do not include all the information or all the disclosures required for the annual consolidated financial statements prepared in accordance with the IAS 1 “Presentation of Financial Statements”. Therefore, these condensed consolidated interim financial statements must be read together with the annual consolidated financial statements for the fiscal year ended December 31, 2020, already issued.

 

As of March 31, 2021 and December 31, 2020, the Bank has consolidated into its financial statements the financial statements of the following companies:

 

SubsidiariesPrincipal Place of BusinessCountryMain Activity
Macro Securities SA (a) and (b)Av. Eduardo Madero 1182 – CABAArgentinaStock exchange services
    

 

Macro Fiducia SA

Av. Leandro N. Alem 1110– 1st floor. CABAArgentinaServices
    
Macro Fondos SGFCISAAv. Eduardo Madero 1182– 24th floor, Office B–. CABAArgentinaManagement and administration of mutual funds
    
Macro Bank Limited (c)Caves Village, Building 8 Office 1 – West Bay St., NassauBahamasBanking entity
    
Argenpay SAUAv. Eduardo Madero 1182 – CABAArgentinaElectronic payments services

 

(a)Consolidated with Macro Fondos SGFCI SA (80.90% equity interest and voting rights).
(b)The indirect interest of Banco Macro SA is held through Macro Fiducia SA.

 

11 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

(c)Consolidated with Sud Asesores (ROU) SA (100% voting rights – Equity interest 23,329).

 

As of March 31, 2021 and December 31, 2020, the Bank’s equity interest and voting rights in the companies it consolidates is as follows:

 

  Shares Bank’s interest  Non-controlling interest 
Subsidiaries Type Number  Total capital stock  Voting
rights
  Total capital stock  Voting
Rights
 
Macro Securities SA Common  12,776,680   99.925%  99.932%  0.075%  0.068%
Macro Fiducia SA Common  46,935,318   99.046%  99.046%  0.954%  0.954%
Macro Fondos SGFCISA Common  327,183   99.939%  100.00%  0.061%    
Macro Bank Limited Common  39,816,899   99.999%  100.00%  0.001%    
Argenpay SAU (*) Common  241,200,000   100.00%  100.00%        

 

(*) On May 3, 2021, Banco Macro SA made an irrevocable capital contribution in cash for an amount of 100,000.

 

Total assets, liabilities and Shareholders’ equity of the Bank and all its subsidiaries as of March 31, 2021 and December 31, 2020 are as follows:

 

As of 03/31/2021 

Banco Macro

SA

 Macro Bank Limited Macro Securities SA Macro
Fiducia SA
 

Argenpay

SAU

 Eliminations Consolidated 
Assets  746,144,409  7,628,417  18,767,908  99,177  333,399  (7,180,035) 765,793,275 
Liabilities  576,109,652  4,890,639  16,744,527  6,005  155,048  (2,149,535) 595,756,336 
Equity attributable to the owners of the Bank  170,034,757  2,737,778  1,915,857  93,172  178,351  (4,925,158) 170,034,757 
Equity attributable to non-controlling interests        107,524        (105,342) 2,182 

 

As of 12/31/2020 Banco Macro
SA
 Macro Bank Limited Macro Securities SA Macro
Fiducia SA
 Argenpay
SAU
 Eliminations Consolidated 
Assets  847,107,467  8,541,281  21,762,542  99,849  397,296  (8,282,512) 869,625,923 
Liabilities  679,847,977  5,599,143  19,877,014  6,076  191,708  (3,157,596) 702,364,322 
Equity attributable to the owners of the Bank  167,259,490  2,942,138  1,798,727  93,773  205,588  (5,040,226) 167,259,490 
Equity attributable to non-controlling interests        86,801        (84,690) 2,111 

 

Transcription into books

 

As of the date of issuance of these condensed consolidated interim financial statements, the same are in the process of being transcribed into the Books of Accounts of Banco Macro SA.

 

Figures expressed in thousands of pesos

 

These condensed consolidated interim financial statements disclose figures expressed in thousands of Argentine pesos in terms of purchasing power as of March 31, 2021, and are rounded up to the nearest amount in thousands of pesos, unless otherwise expressly stated (see section “Measuring unit” of this note).

 

Comparative information

 

The condensed consolidated interim statement of financial position as of March 31, 2021, is presented comparatively with year-end data of the immediately preceding fiscal year, while the statement of income, the statement of other comprehensive income, the statement of changes in shareholders’ equity and the statement of cash flows and cash equivalents for the three-month period ended on that date, are presented comparatively with data as of the same periods of the immediately preceding fiscal year.

 

12 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

The figures related to comparative information have been restated to consider the changes in the general purchasing power of the functional currency and, as a result, are stated in terms of the measuring unit current at the end of the reporting period (see the following section “Measuring unit”).

 

Measuring unit

 

These condensed consolidated interim financial statements have been restated for the changes in the general purchasing power of the functional currency (Argentine pesos) of the Bank, as of March 31, 2021, as established by IAS 29 “Financial Reporting in Hyperinflationary Economies” and considering, in addition, specifics rules established by BCRA through Communiqués “A” 6651, 6849, as amendments, which established to apply this method, on a mandatory basis, from fiscal years beginning on January 1, 2020, included and determined as the transition date on December 31, 2018.

 

According to IFRS, the restatement of financial statements is needed when the functional currency is the currency of a hyperinflationary economy. To achieve consistency in identifying an economic environment of that nature, IAS 29 establishes (i) certain qualitative indicators, not limited to, consisting of analyzing the general population behavior, prices, interest rates and wages with changes to a price index and the loss of purchasing power, and (ii) as quantitative characteristic, which is the most used condition in practice, to test if a three-year cumulative inflation rate is around 100% or more. Due to miscellaneous macroeconomic factors, the three-year inflation rate exceeds that figures and the Argentine government goals and other available estimates also indicate that this trend will not be reversed in the short term.

 

The restatement was applied as if the economy had always been hyperinflationary; using a general price index that reflects changes in general purchasing power. To apply the restatement, a series of indexes were used, as prepared and published on a monthly basis by the Argentine Federation of Professional Councils on Economic Sciences (FACPCE, for its acronym in Spanish), which combines consumer price index (CPI) on a monthly basis published by the Argentine Institute of Statistics and Censuses (INDEC, for its acronym in Spanish) since January 2017 (baseline month: December 2016) with the wholesale prices indexes published by the INDEC until that date. For the months of November and December 2015, for which the INDEC did not publish the wholesale price index (WPI) variation, the CPI variation for CABA was used.

 

Considering the abovementioned indexes, the inflation rate was 12.95% and 7.80% for the three-month periods ended March 31, 2021 and 2020, respectively, and 36.14% for the fiscal year ended on December 31, 2020.

 

Below is a description of the restating mechanism provided by IAS 29 and the restatement process for financial statements established by BCRA Communiqué “A” 6849, as supplementary:

 

Description of the main aspects of the restatement process for statements of financial position:

 

(i)Monetary items (the ones that are already stated in terms of the current measuring unit) are not restated because they are already expressed in terms of the monetary unit current at the end of the reporting period. In an inflationary period, an entity holding monetary assets generates purchasing power loss and holding monetary liabilities generates purchasing power gain, provided that the assets and liabilities are not linked to an adjustment mechanism that offsets, in some extend such effects. The net gain or loss on a monetary basis is included in profit or loss for the period.

 

(ii)Assets and liabilities subject to adjustments based on specific agreements is adjusted in accordance with such agreements.

 

(iii)Non-monetary items stated at current cost at the end of the reporting period, are not restated for presentation purposes in the statement of financial position, but the adjustment process must be completed to determine, in terms of constant measurement unit, the income or loss produced by holding these non-monetary items.

 

13 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

(iv)Non-monetary items carried at historical cost or at current cost at some earlier date before the reporting date, are restated by an index that reflects the general level of price variation from the acquisition or revaluation date to the closing date, proceeding then to compare the restated amounts of those assets with their recoverable amounts. Income or loss for the period related to depreciation of property, plant and equipment and amortization of Intangible Assets and other non-monetary cost are determined over the new restated amounts.

 

(v)When an entity capitalizes borrowing cost in the non-monetary assets, the part of the borrowing cost that compensates for the inflation during the same period is not capitalized.

 

(vi)The restatement of non-monetary assets in terms of a current measurement unit at the end of the reporting period, without an equivalent adjustment for tax purposes generates a taxable temporary difference and a deferred income tax liability is recognized and the contra account is recognized as profit or loss for the period. When, beyond the restatement, there is a revaluation of non-monetary assets, the deferred tax related to the restatement is recognized in profit or loss for the period and deferred tax related to the revaluation is recognized in other comprehensive income for the period.

 

Description of the main aspects of the restatement process for statements of income and other comprehensive income:

 

(i)Income and expenses are restated from the date the items were recorded, except for those income or loss items that reflect or include, in their determination, the consumption of assets measured at the currency purchasing power from a date prior to that which the consumption was recorded, which is restated using as a basis the acquisition date of the assets related to the item, except for income or losses arising from comparing the two measurements at currency purchasing power of different dates, for which it requires to identify the compared amounts, to restate them separately and to repeat the comparison, with the restated amounts.

 

(ii)The gain or loss from monetary position will be classified based on the item that generated it and will be separately disclosed reflecting the inflationary effects over such items.

 

Description of the main aspects of the restatement process for the statements of changes in shareholders’ equity:

 

(i)As the transition date (December 31, 2018), the Bank has applied the following procedures:

 

(a)The components of equity, except the ones mentioned below, were restated from the dates the components were contributed or otherwise arose according to BCRA Communiqué “A” 6849, for each item.

 

(b)Earnings reserved, including the special reserve for the first time application of IFRS, were stated at nominal value at the transition date (legal amount not restated).

 

(c)The unappropriated retained earnings were determinated as a difference between the restated net asset at the transition date and the other components of equity, restated as disclosed in the abovementioned paragraphs.

 

(d)The accumulated balances of other comprehensive income were recalculated in terms of measuring unit current at the transition date.

 

(ii)After the transition date restatement abovementioned in (i), all equity’s components are restated by applying a general price index as mentioned before from the beginning of the period and each variation of those components is restated from the contribution date or from the moment it was produced by any other way, and the accumulated OCI balances are redetermined according to the items that generated.

 

Description of the main aspects of the restatement process for the statement of cash flows:

 

(i)All items are restated in terms of the measuring unit current at the end of the reporting period.

 

(ii)The monetary gain or losses generated by cash and cash equivalents are separately disclosed in the statement of cash flows after the cash flow from operating investment activities and financing activities, in a separate and independent line, under the description “Monetary effect on cash and cash equivalent”.

 

14 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,

unless otherwise expressly stated)

 

Reclassification of financial assets and liabilities – Changes in business model

 

During July and August 2020, the Bank’s management decided to update the objective related to holdings of Federal Government Treasury Bonds adjusted by CER 2.5% (maturity 07/22/2021) which at the closing date of these condensed consolidated interim financial statements they were in the Bank’s portfolio. These holdings were reclassified from fair value through profit or loss business model to fair value through Other Comprehensive Income (OCI) business model due to the trend context of government debt renegotiation and the issuance of new domestic debts, the volatilities of debt securities prices that created a scenario in which it was not clear that the cash flows of these holdings will be obtained through their negotiation, instead could be also generated by holding them to maturity.

 

The effective interest rates at the reclassification date were 31.45% and 33.31%, respectively. The interest income recognized in the statement of income since the reclassification date amounted to 1,306,905 and 1,332,241, respectively.

 

New standards adopted in the fiscal year

 

For the fiscal year beginning on January 1, 2021 the following amendment to accounting framework of the BCRA is effective:

 

Disclosures of the monetary effect generated by the application of financial statements restatement procedures (Communiqué “A” 7211):

 

From this fiscal year the Bank began to record in the statement of income of the period the accrued monetary effect of the monetary assets measured at fair value through OCI. As a consequence, at the beginning of this fiscal year, the related unappropriated retained earnings were adjusted as a prior period earning adjustment (AREA, for its acronym in Spanish) in order to include the monetary effect of the abovementioned assets that would have been recorded in OCI as of such date.

 

The amendment amounts in the statement of income and other comprehensive income and in the statement of changes in the shareholders’ equity for the three-month period ended March 31, 2020, as a consequence of what was abovementioned explained, are detailed bellow:

 

  Before amendment – restated  Amendment  After amendment – restated 
Statement of income            
(Loss) / Income from measurement of financial instruments at fair value through profit or loss  (5,838,992)  8,186,756   2,347,764 
Income / (Loss) on net monetary position  421,475   (8,673,959)  (8,252,484)
             
Statement of other comprehensive income            
Profit or losses for financial instruments measured at fair value through other comprehensive income  (2,354,454)  487,203   (1,867,251)
             
Statement of changes in the shareholders’ equity            
Unappropriated retained earnings  15,081,170   (497,306)  14,583,864 
Other comprehensive income – Other  (2,161,830)  497,306   (1,664,524)

 

New pronouncements

 

Pursuant to Communiqué “A” 6114 of the BCRA, as new IFRS are approved and existing IFRS are amended or revoked and, once these changes are approved through the notices of approval issued by FACPCA, the BCRA shall issue a statement on the approval thereof for financial entities. Generally, financial institutions shall not apply any IFRS in advance, except as specifically authorized at the time of the adoption thereof.

 

15 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

The new and amended standards and interpretation that are issued, but not yet effective, up to the date of issuance of these condensed consolidated interim financial statements are disclosed below. The Bank intends to adopt these standards, if applicable, when they come effective.

 

a)Amendments to IFRS 3 - Reference to the Conceptual: the amendments are intended to replace a reference to a previous version of the IASB’s Conceptual Framework with a reference to the current version issued in March 2018 without significantly changing its requirements. The amendments add an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets” or IFRIC 21 “Levies”, if incurred separately. The exception requires entities to apply the criteria in IAS 37 or IFRIC 21, respectively, instead of the Conceptual Framework, to determine whether a present obligation exists at the acquisition date. At the same time, the amendments add a new paragraph to IFRS 3 to clarify that contingent assets do not qualify for recognition at the acquisition date. This amendment is applicable as of January 1, 2022. The Bank does not expect this standard to have a material impact on the financial statements.

 

b)Amendments to IAS 16 - Property, Plant and Equipment (PP&E): proceeds before Intended Use. The amendment prohibits entities from deducting from the cost of an item of PP&E, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. This amendment is applicable as of January 1, 2022. The Bank does not expect this standard to have a material impact on the financial statements.

 

c)Amendments to IAS 37 - Onerous Contracts – Costs of Fulfilling a Contract: the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a ‘directly related cost approach’. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract. The impact of these amendments on Entities that previously applied the incremental cost approach, is that they will see provisions increase to reflect the inclusion of costs related directly to contract activities, whilst entities that previously recognized contract loss provisions using the guidance from the former standard, IAS 11 Construction Contracts, will be required to exclude the allocation of indirect overheads from their provisions. This amendment is applicable as of January 1, 2022. The Bank does not expect this standard to have a material impact on the financial statements.

 

d)Annual improvement cycle (2018-2020): the following is a summary of the amendments from the 2018-2020 annual improvements cycle:

 

·IFRS 1 First-time Adoption of International Financial Reporting – Subsidiary as a first-time adopter: the amendment permits a subsidiary that elects to apply paragraph D16(a) of IFRS 1 to measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS. This amendment is also applied to an associate or joint venture that elects to apply paragraph D16(a) of IFRS 1. This amendment is applicable as of January 1, 2022.

 

·IFRS 9 Financial Instruments Fees in the ’10 per cent’ test for derecognition of financial liabilities: the amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of them original financial liability. These fees include only those paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. This amendment is applicable as of January 1, 2022.

 

·IFRS 16 “Leases” Illustrative examples - Lease incentives: the amendment removes the Example 13 accompanying IFRS 16 of payments from the lessor relating to leasehold improvements. This removes potential confusion regarding the treatment of lease incentives when applying IFRS 16.

 

The Bank does not expect this standard to have a material impact on the financial statements.

 

16 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

e)Amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 – Disclosures to accounting policies: the amendments require that an entity discloses its material accounting policies, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policies and examples of when an accounting policy likely. Therefore, a guidance with explanations and examples denominated “four-step materiality process” was developed. This amendment is applicable as of January 1, 2023. The Bank does not expect this standard to have a material impact on the financial statements.

 

f)Amendments to IAS 8 “Accounting policies, changes in accounting estimates and Errors” – Definition of Accounting Estimates: the amendments clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The amended standard clarifies that the effects on an accounting estimate of a change in an input or a change in a measurement technique are changes in accounting estimates if they do not result from the correction of prior period errors. The previous definition of a change in accounting estimate specified that changes in accounting estimates may result from new information or new developments. Therefore, such changes are not corrections of errors. This amendment is applicable as of January 1, 2023. The Bank does not expect this standard to have a material impact on the financial statements.

 

4.CONTINGENT TRANSACTIONS

 

In order to meet specific financial needs of customers, the Bank’s credit policy also includes, among others, the granting of guarantees, securities, bonds, letters of credit and documentary credits. The Bank is also exposed to overdrafts and unused agreed credits on credit cards of the Bank. Since they imply a contingent obligation for the Bank, they expose the Bank to credit risks other than those recognized in statement of financial position and they are, therefore, an integral part of the total risk of the Bank.

 

As of March 31, 2021 and December 31, 2020, the Bank maintains the following maximum exposures to credit risk related to this type of transactions:

 

  03/31/2021  12/31/2020 
Undrawn commitments of credit cards and checking accounts  104,877,997   107,554,116 
Guarantees granted (1)  1,411,129   1,448,926 
Overdraft and unused agreed commitments (1)  1,162,756   585,781 
Letters of credit      1,003,772 
   107,451,882   110,592,595 
Less: Allowance for expected credit losses (ECL)  (19,894)  (19,435)
Total  107,431,988   110,573,160 

 

(1)Includes transactions not covered by BCRA debtor classification standard. For Guarantee granted, it includes an amount of 156,675 and 182,836 as of March 31, 2021 and December 31, 2020, respectively. For Overdraft and unused agreed commitments, it includes an amount of 148,815 and 92,195 as of March 31, 2021 and December 31, 2020, respectively.

 

Risks related to the contingent transactions described above have been evaluated and are controlled within the framework of the Bank’s credit risk policy, described in note 41 to the consolidated financial statements as of December 31, 2020, already issued.

 

5.LOSS ALLOWANCE FOR EXPECTED CREDIT LOSSES ON CREDIT EXPOSURES NOT MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

 

The Bank recognizes a loss allowance for expected credit losses on all credit exposures not measured at fair value through profit or loss, like debt instruments measured at amortized cost, debt instruments measured at fair value through other comprehensive income, loan commitments and financial guarantee contracts (not measured at fair value through profit or loss), contract assets and lease receivables.

 

17 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Note 6 discloses financial assets measured at fair value on a recurring basis and financial assets not recognized at fair value. This classification is made pursuant to the expressed in note 3 “Basis for the preparation of these financial statements and applicable accounting standards” for the annual consolidated financial statements as of December 31, 2020, already issued. Additionally, note 6 explains the information related to the valuation process.

 

Moreover, considering the temporary exclusion established by BCRA mentioned in note 3 “Applicable accounting standards” the Bank applies the impairment requirements for the recognition and measurement of a loss allowance for financial assets measured at amortized cost or at fair value through other comprehensive income, except for public sector exposures. In addition, the Bank applies the impairment requirements for guarantees granted, undrawn commitments of credit cards and checking accounts, letter of credits, which are not recognized in the consolidated statement of financial position.

 

For the purpose of assessing the Bank’s credit risk exposure and identifying material credit risk concentration, disclosures regarding to credit risk of financial assets and items not recognized in the statement of financial position, are as follows:

 

5.1 Loans and other financing measured at amortized cost

 

According to the nature of the information to be disclosed and the loans characteristic, the Bank groups them as follows:

 

  03/31/2021  12/31/2020 
Loans and other financing  274,894,228   301,978,880 
Collective assessment  200,698,055   218,063,378 
Individual assessment  74,196,173   83,915,502 
Less: Allowance for ECL (*)  (9,863,363)  (11,320,829)
   265,030,865   290,658,051 

 

(*) As explain in note 3, ECL are not calculated to public sector exposures.

 

As is explained in note 41.1.3 “Adjustment for expected losses due to COVID-19 pandemic” to the consolidated financial statements as of December 31, 2020, already issued, the Bank make a special adjustment prospectively. As of March 31, 2021 and December 31, 2020 such adjustment amounted to 3,492,088 and 3,990,358, respectively.

 

The following table shows the credit quality and the debt balance to credit risk, based on the Bank’s credit risk rating system and the year-end stage classification, taking into account the several guidelines related to flexible conditions for credit established by the BCRA to moderate the pandemic effects generated by COVID-19. The amounts are presented gross of the impairment allowances.

 

    03/31/2021 
Internal rating grade Range PD Stage 1  Stage 2  Stage 3  Total  % 
Performing    252,381,510   8,891,395       261,272,905   95.04%
High grade 0.00%-3.50%  204,557,282   38,482       204,595,764   74.42%
Standard grade 3.51%-7.00%  33,408,432   1,993,885       35,402,317   12.88%
Sub-standard grade 7.01%-33.00%  14,415,796   6,859,028       21,274,824   7.74%
Past due but not impaired 33.01%-99.99%  1,119,208   9,319,145       10,438,353   3.80%
Impaired 100%          3,182,970   3,182,970   1.16%
Total    253,500,718   18,210,540   3,182,970   274,894,228   100%
     92.22%  6.62%  1.16%  100%    

 

18 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

    12/31/2020 
Internal rating grade Range PD Stage 1  Stage 2  Stage 3  Total  % 
Performing    280,295,854   9,789,984       290,085,838   96.06%
High grade 0.00%-3.50%  230,000,892   40,075       230,040,967   76.18%
Standard grade 3.51%-7.00%  36,044,334   2,094,130       38,138,464   12.63%
Sub-standard grade 7.01%-33.00%  14,250,628   7,655,779       21,906,407   7.25%
Past due but not impaired 33.01%-99.99%  896,868   7,573,852       8,470,720   2.81%
Impaired 100%          3,422,322   3,422,322   1.13%
Total    281,192,722   17,363,836   3,422,322   301,978,880   100%
     93.12%  5.75%  1.13%  100%    

 

5.1.1 Loans on an individual assessment

 

The table below shows the credit quality and the debt balance to credit risk of commercial loans based by grade on the Bank’s internal credit rating system, PD range and period-end stage classification. The Bank’s internal credit rating systems and the evaluation and measurement approaches are explained in note 41 section “credit risk” to the consolidated financial statements as of December 31, 2020, already issued.

 

    03/31/2021 
Internal rating grade Range PD Stage 1  Stage 2  Stage  3  Total  % 
Performing    67,695,906   2,952,291       70,648,197   95.22%
High grade 0.00%-3.50%  64,583,653           64,583,653   87.04%
Standard grade 3.51%-7.00%  2,163,142   1,480,718       3,643,860   4.91%
Sub-standard grade 7.01%-33.00%  949,111   1,471,573       2,420,684   3.26%
Past due but not impaired 33.01%-99.99%  266,910   2,512,499       2,779,409   3.75%
Impaired 100%          768,567   768,567   1.04%
Total    67,962,816   5,464,790   768,567   74,196,173   100%
     91.60%  7.37%  1.04%  100%    

 

     12/31/2020 
Internal rating grade Range PD  Stage 1   Stage 2   Stage 3   Total   % 
Performing    76,763,483   3,141,908       79,905,391   95.22%
High grade 0.00%-3.50%  72,609,780   917       72,610,697   86.53%
Standard grade 3.51%-7.00%  3,097,336   1,643,094       4,740,430   5.65%
Sub-standard grade 7.01%-33.00%  1,056,367   1,497,897       2,554,264   3.04%
Past due but not impaired 33.01%-99.99%  420,930   1,824,095       2,245,025   2.68%
Impaired 100%          1,765,086   1,765,086   2.10%
Total    77,184,413   4,966,003   1,765,086   83,915,502   100%
     91.98%  5.92%  2.10%  100%    

 

5.1.2 Loans on a collective assessment

 

The table below shows the credit quality and the debt balance to credit risk of loans portfolio under collective assessment, by grade of credit risk classification based on the Bank’s internal credit rating system, PD range and period-end stage classification. The Bank’s internal credit rating systems and the evaluation and measurement approaches are explained in note 41 section “credit risk” to the consolidated financial statements as of December 31, 2020, already issued.

 

19 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

    03/31/2021 
Internal rating grade Range PD Stage 1  Stage 2  Stage 3  Total  % 
Performing    184,685,604   5,939,104       190,624,708   94.98%
High grade 0.00%-3.50%  139,973,629   38,482       140,012,111   69.77%
Standard grade 3.51%-7.00%  31,245,290   513,167       31,758,457   15.82%
Sub-standard grade 7.01%-33.00%  13,466,685   5,387,455       18,854,140   9.39%
Past due but not impaired 33.01%-99.99%  852,298   6,806,646       7,658,944   3.82%
Impaired 100%          2,414,403   2,414,403   1.20%
Total    185,537,902   12,745,750   2,414,403   200,698,055   100%
     92.45%  6.35%  1.20%  100%    

 

    12/31/2020 
Internal rating grade Range PD Stage 1  Stage 2  Stage 3  Total  % 
Performing    203,532,371   6,648,076       210,180,447   96.39%
High grade 0.00%-3.50%  157,391,112   39,158       157,430,270   72.19%
Standard grade 3.51%-7.00%  32,946,998   451,036       33,398,034   15.32%
Sub-standard grade 7.01%-33.00%  13,194,261   6,157,882       19,352,143   8.88%
Past due but not impaired 33.01%-99.99%  475,938   5,749,757       6,225,695   2.85%
Impaired 100%          1,657,236   1,657,236   0.76%
Total    204,008,309   12,397,833   1,657,236   218,063,378   100%
     93.55%  5.69%  0.76%  100%    

 

5.2 Other debt securities at amortized cost

 

For corporate bonds issued by the Bank’s customers, PD and LGD parameters calculated for loan exposures of those customers were used. The corporate bonds’ EAD is considered equal to the debt balance, because there is not available information of such instrument´s behavior when it defaulted.

 

For financial trusts at amortized cost, the criteria that was used in the calculation of ECL is based on credit risk ratings given by a credit rating agency for each types of debt securities that compose each financial trust. That is, the factor to be used will vary in relation to the holding debt securities (A or B). It is assumed that the EAD is equal to the debt balance.

 

The table below shows the exposures gross of impairment allowances by stages:

 

  03/31/2021 
  Stage 1  Stage 2  Stage 3  Total  % 
Corporate bonds  214,048         214,048   58.52%
Financial trust  151,698           151,698   41.48%
Total  365,746           365,746   100%
   100%          100%    

 

  12/31/2020 
  Stage 1  Stage 2  Stage 3  Total  % 
Corporate bonds  412,663         412,663   68.67%
Financial trust  188,283           188,283   31.33%
Total  600,946           600,946   100%
   100%          100%    

 

The related ECL for corporate bonds as of March 31, 2021 and December 31, 2020 amounted to 677 and 1,394, respectively. The ECL related to financial trusts as of March 31, 2021 and December 31, 2020 amounted to 91 and 123, respectively.

 

20 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

5.3 Government securities at amortized cost or fair value through OCI

 

This group includes federal government securities, provincial or Central Bank instruments measured at amortized cost or fair value through OCI. For these assets, an individual assessment of the related parameters was performed. However, under domestic standards and according to Communiqué “A” 6847, no ECL was calculated for these instruments.

 

A detail of these investments and their characteristics are disclosed in note 36.

 

5.4Other financial assets

 

The table below shows the exposures gross of impairment allowances by stages:

 

  03/31/2021 
  Stage 1  Stage 2  Stage 3  Total  % 
Other financial assets  17,486,753         17,486,753   100%
Total  17,486,753           17,486,753   100%
   100%          100%    

 

  12/31/2020 
  Stage 1  Stage 2  Stage 3  Total  % 
Other financial assets  21,353,997         21,353,997   100%
Total  21,353,997           21,353,997   100%
   100%          100%    

 

The ECL related to these types of instruments amounted to 19,796 and 21,380 as of March 31, 2021 and December 31, 2020, respectively, including the ECL related to the payments to be collected for transaction mentioned in note 10.

 

In exhibit R “Value adjustment for credit losses – Allowance for uncollectibility risk” are also disclosed the ECL movements by portfolio and products.

 

6.FAIR VALUE QUANTITATIVE AND QUALITATIVE DISCLOSURES

 

The fair value is the amount at which an asset can be exchanged, or at which a liability can be settled, in mutual independent terms and conditions between participants of the principal market (or the most advantageous market) who are duly informed and willing to transact in an orderly and current transaction, at the measurement date under the current market conditions whether the price is directly observable or estimated using a valuation technique under the assumption that the Bank is an ongoing business.

 

When a financial instrument is quoted in a liquid and active market, its price in the market in a real transaction provides the most reliable evidence of its fair value. Nevertheless, when there is no quoted price in the market or it cannot be an evidence of the fair value of such instrument, in order to determine such fair value, the entities may use the market value of another instrument with similar characteristics, the analysis of discounted cash flows or other applicable techniques, which shall be significantly affected by the assumptions used.

 

Notwithstanding the above, the Bank’s Management has used its best judgment to estimate the fair values of its financial instruments; any technique to perform such estimate implies certain inherent fragility level.

 

Fair value hierarchy

 

The Bank uses the following hierarchy to determine and disclose the fair value of financial instruments, according to the valuation technique applied:

 

21 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

-Level 1: quoted prices (unadjusted) observable in active markets that the Bank accesses to at the measurement day for identical assets or liabilities. The Bank considers markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available at each reporting period.

 

-Level 2: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are observable for the asset or liability, either directly or indirectly. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments to level 2 inputs may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, the Bank will classify the instruments as Level 3.

 

-Level 3: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are not based on observable market information.

 

The following tables show the hierarchy in the Bank’s financial asset and liability at fair value measurement, as of March 31, 2021 and December 31, 2020:

 

 Financial assets and financial liabilities measured at fair value on
a recurring basis as of March 31, 2021
 
Description Total  Level 1  Level 2  Level 3 
Financial assets                
At fair value through profit or loss                
Debt Securities at fair value through profit or loss  38,381,177   38,214,378   52,240   114,559 
Other financial assets  955,215   925,165       30,050 
Equity instruments at fair value through profit or loss  2,056,466   10,305       2,046,161 
                 
At fair value through OCI                
Other debt securities  183,488,655   110,201,192   73,287,463     
Total  224,881,513   149,351,040   73,339,703   2,190,770 
Financial liabilities                
At fair value through profit or loss                
Derivatives financial instruments      6         
Total      6         

 

Description Financial assets and financial liabilities measured at fair value on
a recurring basis as of December 31, 2020
 
  Total  Level 1  Level 2  Level 3 
Financial assets                
At fair value through profit or loss                
Debt Securities at fair value through profit or loss  62,104,306   61,676,835   7   427,464 
Derivative financial instruments  8,169       8,169     
Other financial assets  683,864   654,294       29,570 
Equity instruments at fair value through profit or loss  1,878,426   11,131       1,867,295 
                 
At fair value through OCI                
Other debt securities  201,062,024   130,367,428   70,694,596     
Financial assets delivered as guarantee  785,868   785,868         
Total  266,522,657   193,495,556   70,702,772   2,324,329 

 

22 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

 Financial assets and financial liabilities measured at fair value on a
recurring basis as of December 31, 2020
 
Description Total  Level 1  Level 2  Level 3 
Financial liabilities                
At fair value through profit or loss                
Derivatives financial instruments  260   260       
                 
Total  260   260         

 

Description of valuation process

 

The fair value of instruments categorized as Level 1 was assessed by using quoted prices effective at the end of each period or fiscal year, as applicable, in active markets for identical assets or liabilities, if representative. Currently, for most of the government and private securities, there are two principal markets in which the Bank operates: BYMA and MAE. Additionally, in the case of derivatives, both MAE and Mercado a Término de Rosario SA (ROFEX) are deemed active markets.

 

On the other hand, for certain assets and liabilities that do not have an active market, categorized as Level 2, the Bank used valuation techniques that included the use of market transactions performed under mutual independent terms and conditions, between interested and duly informed parties, provided that they are available as well as references to the current fair value of another instrument being substantially similar, or otherwise the analysis of cash flows discounted at rates built from market information of similar instruments.

 

In addition, certain assets and liabilities included in this category were valued using price quotes of identical instruments in “less active markets”.

 

Finally, the Bank has categorized as level 3 those assets and liabilities for which there are no identical or similar transactions in the market. To determine the market value of these instruments the Bank used valuation techniques based on own assumptions and independent appraisers’ valuations. For this approach, the Bank mainly used the cash flow discount model.

 

As of March 31, 2021 and December 31, 2020, the Bank has neither changed the techniques nor the assumptions used to estimate the fair value of the financial instruments.

 

Below is the reconciliation between the amounts at the beginning and at the end of the period, of the financial instruments recognized at fair value categorized as level 3:

 

  As of March 31, 2021 
Description Debt securities  Other financial
assets
  Equity
instruments at
fair value through
profit or loss
 
Amount at the beginning  427,464   29,570   1,867,295 
Transfers to Level 3            
Transfers from Level 3            
Profit and loss  28,421       393,239 
Recognition and derecognition  (307,431)  4,047     
Monetary effects  (33,895)  (3,567)  (214,373)
Amount at the end of the period  114,559   30,050   2,046,161 

 

23 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

  As of December 31, 2020 
Description Debt securities  Other financial
assets
  Equity
instruments at
fair value through
profit or loss
 
Amount at the beginning  1,253,355   35,370   2,347,824 
Transfers to Level 3            
Transfers from Level 3            
Profit and loss  234,707   10,698   150,985 
Recognition and derecognition  (894,085)  (7,348)  19,328 
Monetary effects  (166,513)  (9,150)  (650,842)
Amount at the end of the fiscal year  427,464   29,570   1,867,295 

 

Quantitative information about Level 3 fair value measurements

 

The following table provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of substantially all of Level 3 principal assets measured at fair value on a recurring basis for which the Bank uses an internal model (with the exception of the Bank’s holding in Prisma Medios de Pago SA for the reasons described in note 10).

 

  Fair value of      Range of inputs 
  Level 3
Assets
  Valuation Significant
unobservable
 03/31/2021 
  03/31/2021  Technique Inputs Range of inputs 
         Low  High  Unit 
Debt Securities of Financial Trusts Provisional  112,022  Income approach (discounted cash flow) Discount rate in pesos  42.73   48.28   %

 

  Fair value of      Range of inputs 
  Level 3
Assets
  Valuation Significant
unobservable
 12/31/2020 
  12/31/2020  Technique Inputs Range of inputs 
         Low  High  Unit 
Debt Securities of Financial Trusts Provisional  424,805  Income approach (discounted cash flow) Discount rate in pesos  43.84   47.60   %

 

The table below describes the effect of changing the significant unobservable inputs to reasonable possible alternatives. Sensitivity data were calculated using a number of techniques including analyzing price dispersion of different price sources, adjusting model inputs to analyze changes within the fair value methodology.

 

  03/31/2021  12/31/2020 
  Favorable
changes
  Unfavorable
changes
  Favorable
changes
  Unfavorable
changes
 
Debt Securities of Financial Trusts Provisional  131   (128)  508   (496)

 

Changes in fair value levels

 

The Bank monitors the availability of information in the market to evaluate the classification of financial instruments into the fair value hierarchy as well as the resulting determination of transfers between levels 1, 2 and 3 at each period end.

 

As of March 31, 2021 and December 31, 2020, the Bank has not recognized any transfers between levels 1, 2 and 3.

 

24 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Financial assets and liabilities not recognized at fair value

 

Next follows a description of the main methods and assumptions used to determine the fair values of financial instruments not recognized at their fair value in these condensed consolidated interim financial statements:

 

-Instruments with fair value similar to the carrying amount: financial assets and liabilities that are liquid or have short-term maturities (less than three months) were deemed to have a fair value similar to the carrying amount.

 

-Fixed and variable rate of financial instruments: the fair value of financial assets was recognized discounting future cash flows at current market rates for each period or fiscal year, as applicable, for financial instruments of similar characteristics. The estimated fair value of fixed-interest rate deposits and liabilities was assessed discounting future cash flows by using estimated interest rates for deposits or placings with similar maturities to those of the Bank’s portfolio.

 

-For public listed assets and liabilities, or those for which the prices are reported by certain renown pricing providers, the fair value was determined based on such prices.

 

The following table shows a comparison between the fair value and the carrying amount of financial instruments not measured at fair value as of March 31, 2021 and December 31, 2020:

 

  03/31/2021 
  Carrying
amount
  Level 1  Level 2  Level 3  Fair
Value
 
Financial assets                    
Cash and deposits in banks  153,515,086   153,515,086           153,515,086 
Repo transactions  12,889,942   12,889,942           12,889,942 
Other financial assets  16,511,742   16,511,742           16,511,742 
Loans and other financing  265,030,865           242,862,341   242,862,341 
Other debt securities  29,119,842   404,520   28,750,409   140,106   29,295,035 
Financial assets delivered as guarantee  13,741,529   13,741,529           13,741,529 
   490,809,006   197,062,819   28,750,409   243,002,447   468,815,675 
Financial liabilities                    
Deposits  457,286,997   230,701,491       226,438,839   457,140,330 
Other financial liabilities  49,875,306   48,441,049   1,431,315       49,872,364 
Financing received from the BCRA and other financial entities  1,149,238   515,765   626,250       1,142,015 
Issued corporate bonds  5,054,192       4,016,109       4,016,109 
Subordinated corporate bonds  38,149,077       29,240,560       29,240,560 
   551,514,810   279,658,305   35,314,234   226,438,839   541,411,378 

 

  12/31/2020 
  Carrying
amount
  Level 1  Level 2  Level 3  Fair
Value
 
Financial assets                    
Cash and deposits in banks  146,802,082   146,802,082           146,802,082 
Repo transactions  44,527,970   44,527,970           44,527,970 
Other financial assets  20,648,753   20,648,753           20,648,753 
Loans and other financing  290,658,051           271,041,096   271,041,096 
Other debt securities  35,148,599   11,927,565   25,087,193   167,540   37,182,298 
Financial assets delivered as guarantee  15,357,770   15,357,770    ��      15,357,770 
   553,143,225   239,264,140   25,087,193   271,208,636   535,559,969 

 

25 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

  12/31/2020 
  Carrying
amount
  Level 1  Level 2  Level 3  Fair
Value
 
Financial liabilities                    
Deposits  552,047,687   274,546,497       277,187,045   551,733,542 
Repo transactions  698,695   698,695           698,695 
Other financial liabilities  55,590,785   54,080,889   1,503,741       55,584,630 
Financing received from the BCRA and other financial entities  1,038,153   365,823   661,501       1,027,324 
Issued corporate bonds  5,565,079       4,654,562       4,654,562 
Subordinated corporate bonds  38,743,184       32,873,522       32,873,522 
   653,683,583   329,691,904   39,693,326   277,187,045   646,572,275 

 

7.INVESTMENTS IN ASSOCIATES AND JOINT ARRANGEMENTS

 

7.1 Associates entities

 

a)Macro Warrants SA

 

The Bank holds an investment in the associate Macro Warrants SA. The existence of significant influence is evidenced by the representation the Bank has in the Board of Directors of the associate. In order to measure this investment, the Bank used accounting information of Macro Warrants SA as of December 31, 2020. Additionally, the Bank has considered, when applicable, the material transactions or events occurring between January 1, 2021 and March 31, 2021.

 

The following table presents the summarized financial information on the Bank’s investment in the associate:

 

Summarized statement of financial position 03/31/2021  12/31/2020 
Total assets  60,297   66,556 
Total liabilities  10,370   13,718 
Shareholders’ equity  49,927   52,838 
Proportional Bank’s interest  5%  5%
Investment carrying amount  2,496   2,642 

 

As of March 31, 2021 and 2020, the investment carrying amount in the net income for the periods amounted to 147 and 10 (both loss), respectively.

 

b)Play Digital SA

 

As explain in note 1, the Bank holds an investment in the associate Play Digital SA. The existence of significant influence is evidenced by the representation the Bank has in the Board of Directors of the associate.

 

The following table presents the summarized financial information on the Bank’s interest in the associate:

 

Summarized statement of financial position 03/31/2021  12/31/2020 
Total assets  759,204   745,338 
Total liabilities  127,874   98,968 
Shareholders’ equity  631,330   646,370 
Proportional Bank’s interest  9.9545%  9.9545%
Investment carrying amount  62,846   64,343 
Contribution made in March 2021 (see note 1)  19,505     
   82,351   64,343 

 

As of March 31, 2021, the investment carrying amount in the net income for the period amounted to 1,497 (loss).

 

26 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

7.2 Joint ventures

 

The Bank participates in the following joint ventures, implemented through Uniones Transitorias de Empresas (UTE, for its acronym in Spanish):

 

a)Banco Macro SA – Wordline Argentina SA Unión transitoria: on April 7, 1998, the Bank executed an agreement with Siemens Itron Services SA to organize an UTE controlled on a joint basis through a 50% interest, the purpose of which is to facilitate a data processing center for the tax administration, to modernize the systems and tax collection processes of the Province of Salta and manage and recover municipal taxes and fees.

 

The following table presents the summarized financial information on the Bank’s investment in the UTE:

 

Summarized statement of financial position 03/31/2021  12/31/2020 
Total assets  430,625   437,722 
Total liabilities  106,498   111,142 
Shareholders’ equity  324,127   326,580 
Proportional Bank’s interest  50%  50%
Investment carrying amount  162,063   163,290 

 

As of March 31, 2021 and 2020, the investment carrying amount in the net income for the periods amounted to 24,682 and 31,190, respectively.

 

b)Banco Macro SA – Gestiva SA Unión transitoria: on May 4, 2010 and August 15, 2012, the Bank executed with Gestiva SA the UTE agreement to form “Banco Macro SA – Gestiva SA – Unión Transitoria de Empresas”, under joint control, the purpose of which is to render the integral processing and management services of the tax system of the Province of Misiones, the management thereof and tax collection services. The Bank holds a 5% interest in this UTE.

 

On June 27, 2018, the Bank, the UTE and the tax authorities of the Misiones provincial government entered into an agreement of “termination by mutual agreement” of the adaptation agreement, without implying or modifying the Bank’s rights and obligations as a financial agent of the province for the services provision established in the agreement. As of March 31, 2021 and December 31, 2020, according to the above-mentioned, the remaining investment amounted to 36 and 42, respectively.

 

8.OTHER FINANCIAL AND NON-FINANCIAL ASSETS

 

The breakdown of the other financial and non-financial assets as of March 31, 2021 and December 31, 2020 is as follows:

 

Other financial assets 03/31/2021  12/31/2020 
Sundry debtors (see note 10)  7,991,613   8,348,012 
Receivables from spot sales of foreign currency pending settlement  7,140,416   9,533,624 
Receivables from other spot sales pending settlement  998,493   1,945,145 
Private securities  955,215   683,864 
Receivables from spot sales of government securities pending settlement  188,197   625,694 
Other  212,819   217,658 
Subtotal  17,486,753   21,353,997 
Allowances  (19,796)  (21,380)
   17,466,957   21,332,617 

 

27 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Other non-financial assets 03/31/2021  12/31/2020 
Investment property (see Exhibit F)  1,102,683   1,107,137 
Advanced prepayments  856,960   526,591 
Tax advances  403,954   682,525 
Other  202,872   204,915 
   2,566,469   2,521,168 

 

Disclosures related to allowance for ECL are detailed in note 5 “Loss allowance for credit losses on credit exposures not measured at fair value through profit or loss”.

 

9.RELATED PARTIES

 

A related party is a person or entity that is related to the Bank:

 

-has control or joint control of the Bank;

 

-has significant influence over the Bank;

 

-is a member of the key management personnel of the Bank or of the parent of the Bank;

 

-members of the same group;

 

-one entity is an associate (or an associate of a member of a group of which the other entity is a member).

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, directly or indirectly. The Bank considers as key management personnel, for the purposes of IAS 24, the members of the Board of Directors and the senior management members of the Risk Management Committee, the Assets and Liabilities Committee and the Senior Credit Committee.

 

As of March 31, 2021 and December 31, 2020, amounts balances related to transactions generated with related parties are as follows:

 

  Information as of March 31, 2021 
  Main subsidiaries (1)             
  Macro Bank
Limited
  Macro
Securities
SA
  Macro
Fondos
SGFCISA
  Argenpay
SAU
  Associates  Key
management
personnel (2)
  Other related
parties
  Total 
ASSETS                                
Cash and deposit in banks  737                           737 
Other financial assets                          180,656   180,656 
Loans and other financing  (3)                                
Overdraft                      40,739   365,544   406,283 
Credit Cards                      48,321   33,196   81,517 
Lease      354                   4,745   5,099 
Personal loans                      7,715       7,715 
Mortgage loans                      202,807       202,807 
Other loans      796,823                   1,348,559   2,145,382 
Other receivables for financial intermediation                          9,519   9,519 
Guarantee granted                          1,143,584   1,143,584 
Total Assets  737   797,177               299,582   3,085,803   4,183,299 
                                 
LIABILITIES                                
Deposits  7   761,296   144,562   16,263   41,919   625,540   6,915,292   8,504,879 
Other financial liabilities                      202   12,652,801   12,653,003 
Other non-financial liabilities                          9,747   9,747 
Total Liabilities  7   761,296   144,562   16,263   41,919   625,742   19,577,840   21,167,629 

 

(1)These transactions are eliminated during the consolidation process.

(2)Includes close family members of the key management personnel.

(3)The maximum financing amount for loans and other financing as of March 31, 2021 for Macro Securities SA, Key management personnel and other related parties amounted to 797,856, 368,731 and 3,322,728, respectively.

 

28 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

  Information as of December 31, 2020 
  Main subsidiaries (1)             
  Macro Bank Limited  Macro Securities SA  Macro Fondos SGFCISA  Argenpay SAU  Associates  Key management personnel (2)  Other related parties  Total 
ASSETS                                
Cash and deposit in banks  761                           761 
Repo transaction      866,785                       866,785 
Other financial assets                          167   167 
Loans and other financing  (3)                                
Documents                          1,726   1,726 
Overdraft                      36,997   459,061   496,058 
Credit Cards                      51,188   12,428   63,616 
Lease      1,168                   5,900   7,068 
Personal loans                      13,160       13,160 
Mortgage loans                      95,076       95,076 
Other loans      803,973                   429,773   1,233,746 
Guarantee granted                          939,431   939,431 
Total Assets  761   1,671,926               196,421   1,848,486   3,717,594 
                                 
LIABILITIES                                
Deposits  8   758,389   147,532   64,356   48,953   701,047   4,266,496   5,986,781 
Other financial liabilities      17,638               183   13,343,974   13,361,795 
Other non-financial liabilities                          12,903   12,903 
Total Liabilities  8   776,027   147,532   64,356   48,953   701,230   17,623,373   19,361,479 

 

(1)These transactions are eliminated during the consolidation process.

(2)Includes close family members of the key management personnel.

(3)The maximum financing amount for loans and other financing as of December 31, 2020 for Macro Securities SA, Key management personnel and other related parties amounted to 807,599, 1,126,532 and 5,278,683 respectively.

 

Profit or loss related to transactions generated during the three-month periods ended March 31, 2021 and 2020 with related parties are as follows:

 

  Information as of March 31, 2021 
  Main subsidiaries (1)             
  Macro Bank Limited  Macro Securities SA  Macro Fondos SGFCISA  Argenpay SAU  Associates  Key management personnel (2)  Other related parties  Total 
INCOME / (LOSS)                                
Interest income      771               22,407   345,654   368,832 
Interest expense      (1,966)                 (3,450)  (12,509)  (154,978)  (172,903)
Commissions income      3,977   28       46   3   3,850   7,904 
Commissions expense                      (11)  (131)  (142)
Other operating income  1   3,010                   6   3,017 
Administrative expense                          (37,724)  (37,724)
Other operating expense                          (16,411)  (16,411)
                                 
Income / (loss)  1   5,792   28       (3,404)  9,890   140,266   152,573 

 

(1)These transactions are eliminated during the consolidation process.

(2)Includes close family members of the key management personnel.

 

29 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

  Information as of March 31, 2020 
  Main subsidiaries (1)             
  Macro Bank Limited  Macro Securities SA  Macro Fondos SGFCISA  Argenpay SAU  Associates  Key management personnel (2)  Other related parties  Total 
INCOME / (LOSS)                                
Interest income      1,979               49,774   228,496   280,249 
Interest expense                  (2,140)  (847,279)  (36,401)  (885,820)
Commissions income      153   80       13   43   1,889   2,178 
Other operating income  1           1           6   8 
Administrative expense                          (45,951)  (45,951)
Other operating expense                          (22,062)  (22,062)
Income / (loss)  1   2,132   80   1   (2,127)  (797,462)  125,977   (671,398)

 

(1)These transactions are eliminated during the consolidation process.

(2)Includes close family members of the key management personnel.

 

Transactions generated by the Bank with its related parties for transactions arranged within the course of the usual and ordinary course of business were performed in normal market conditions, both as to interest rates and prices and as to the required guarantees.

 

The Bank does not have loans granted to directors and other key management personnel secured with shares.

 

Total remunerations received as salary and bonus by the key management personnel as of March 31, 2021 and 2020, totaled 115,573 and 66,954, respectively.

 

In addition, fees received by the Directors as of March 31, 2021 and 2020 amounted to 574,440 and 835,400, respectively.

 

Additionally, the composition of the Board of Directors and key management personnel of the Bank and its subsidiaries is as follows:

 

  03/31/2021  12/31/2020 
Board of Directors  22   22 
Senior managers of the key management personnel  12   11 
   34   33 

 

10.EQUITY INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS – PRISMA MEDIOS DE PAGO SA

 

On January 21, 2019, the Bank, together with the other shareholders, accepted a purchase offer made by AI ZENITH (Netherlands) B.V. (a company related to Advent International Corporation) for the acquisition of 1,933,051 common shares of par value Ps.1 each and entitled to one vote, representing 4.6775 % of its share capital, equivalent to 51% of the Bank’s capital stock in such company.

 

On February 1, 2019, the Bank completed the transfer of such shares for a total purchase price of (in thousands) USD 64,542 out of which the Bank received on the date hereof (in thousands) USD 38,311 and the payment of the balance for an amount of (in thousands) USD 26,231 shall be deferred for 5 years as follows: (i) 30% of such amount in Pesos adjusted by Unit of Purchasing Power (UVA, for its acronym in Spanish) at a 15% nominal annual rate; and (ii) 70% in US Dollars at a 10% nominal annual rate. The purchase price is guaranteed by the issuance of notes in favor of the Bank and pledges of the transferred shares.

 

During July 2019, the process to determine the final selling price of the shares of Prisma Medios de Pago SA was completed and the final price was (in thousands) USD 63,456. The difference arising from a final price lower than the estimated price was deducted from the price balance, therefore there was no need for the Bank to return any amounts received. All other payment conditions were not modified and remain in full force and effect under the terms described in this note.

 

30 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

The amounts receivable, in pesos and US dollars, are recorded in the item “Other financial assets”.

 

The remaining holding of the Bank in Prisma Medios de Pago SA (equivalent to 49%), is recorded in “Equity instruments at fair value through profit or loss” determined from valuations performed by independent experts, which was adjusted in less, according to Memorandums issued by the BCRA. As of March 31, 2021 the valuation was adjusted by Memorandums dated March 12 and 22, 2021 while, as of December 31, 2020, as required by a Memorandum dated April 29, 2019.

 

In addition, sellers retained the usufruct (dividends) of the shares sold to be reported by Prisma for the year ended December 31, 2018, which were collected on April 26, 2019, and have the possibility to execute a put for the non-sold shares of this transaction (49%) and the buyer has the obligation to buy them, on an specific term established on the agreement, according to specifics clauses. Besides the proportion applicable to the buyer of the dividends to be reported for the following fiscal years –with the buyer’s commitment to voting in favor of the distribution of certain minimum percentages– will be used to create a guarantee trust to repay the deferred price amount through the concession by the buyer and Prisma of a usufruct over the economic rights of the shares in favor of such trust.

 

On February 22, 2021 the Bank collected cash dividends for an amount of 446,296 which 226,854 were applied to decrease the receivable generated by the financing granted to AI ZENITH (Netherlands) B.V, for the purchase of Prisma Medios de Pago SA´s shares.

 

11.PROVISIONS

 

This item includes the amounts estimated to face a liability of probable occurrence, which if occurring, would originate a loss for the Bank.

 

Exhibit J “Changes in Provisions” presents the changes in provisions, as of March 31, 2021 and December 31, 2020.

 

The expected terms to settle these obligations are as follows:

 

  03/31/2021       
  Within 12
months
  Beyond 12
Months
  03/31/2021  12/31/2020 
For administrative, disciplinary and criminal penalties      718   718   811 
Letters of credits, guarantees and other Commitments (1)  19,894       19,894   19,435 
Commercial claims in progress (2)  534,592   223,941   758,533   778,378 
Labor lawsuits  64,266   160,727   224,993   257,252 
Pension funds - reimbursement  34,142   59,482   93,624   100,359 
Other  87,142   206,802   293,944   317,262 
   740,036   651,670   1,391,706   1,473,497 

 

(1)These amounts correspond to the ECL calculated for contingent transactions which are mentioned in note 4.

(2)See also note 33.2.

 

In the opinion of the Management of the Bank and its legal counsel, there are no other significant effects than those disclosed in these condensed consolidated interim financial statements, the amounts and settlement terms of which have been recognized based on the current value of such estimates, considering the probable settlement date thereof.

 

31 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

12.OTHER FINANCIAL AND NON-FINANCIAL LIABILITIES

 

The breakdown of other financial and non-financial liabilities as of March 31, 2021 and December 31, 2020 is as follows:

 

Other financial liabilities 03/31/2021  12/31/2020 
Credit and debit card settlement - due to merchants  18,400,938   19,431,927 
Amounts payable for other spot purchases pending settlement  15,124,058   17,515,392 
Amounts payable for spot purchases of foreign currency pending settlement  7,178,669   9,544,489 
Payment orders pending settlement foreign exchange  2,832,416   3,471,163 
Collections and other transactions on account and behalf others  2,176,071   1,596,639 
Finance leases liabilities  1,278,142   1,327,792 
Amounts payable for spot purchases of government securities pending settlement  675,944   475,025 
Other  2,209,068   2,228,358 
   49,875,306   55,590,785 

 

Other non-financial liabilities 03/31/2021  12/31/2020 
Dividends payables (see note 34)  16,579,990   18,727,584 
Salaries, bonuses and payroll taxes payables  4,783,629   5,545,739 
Withholdings  4,282,537   4,672,286 
Taxes payables  2,297,805   2,020,038 
Miscellaneous payables  1,210,181   1,611,523 
Retirement pension payment orders pending settlement  256,396   462,581 
Fees payables  40,032   568,886 
Other  573,811   680,408 
   30,024,381   34,289,045 

 

13.ANALYSIS OF FINANCIAL ASSETS TO BE RECOVERED AND FINANCIAL LIABILITIES TO BE SETTLED

 

The following tables show the analysis of financial assets and liabilities the Bank expects to recover and settle as of March 31, 2021 and December 31, 2020:

 

03/31/2021 Without due date  Total up to 12 months  Total over 12 months 
Assets            
Cash and deposits in banks  153,515,086         
Debt securities at fair value through profit or loss      30,816,180   7,564,997 
Repo transactions      12,889,942     
Other financial assets  2,164,720   10,535,125   4,767,112 
Loans and other financing (1)  617,479   176,903,199   87,510,187 
Other debt securities      167,342,216   45,266,281 
Financial assets delivered as guarantee  13,741,529         
Equity instruments at fair value through profit or loss  2,056,466         
Total assets  172,095,280   398,486,662   145,108,577 
Liabilities         
Deposits  225,927,530   231,346,496   12,971 
Derivative financial instruments      6     
Other financial liabilities      49,039,765   835,541 
Financing received from the BCRA and other financial institutions      1,126,317   22,921 
Issued corporate bonds      2,676,496   2,377,696 
Subordinated corporate bonds      1,355,077   36,794,000 
Total liabilities  225,927,530   285,544,157   40,043,129 

 

32 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

12/31/2020 Without due date  Total up to  12 months  Total over 12 months 
Assets            
Cash and deposits in banks  146,802,082         
Debt securities at fair value through profit or loss      59,330,325   2,773,981 
Derivative financial instruments      8,169     
Repo transactions      44,527,970     
Other financial assets  2,293,671   14,311,036   4,727,910 
Loans and other financing (1)  707,026   201,147,394   88,803,631 
Other debt securities      210,337,194   25,873,429 
Financial assets delivered as guarantee  15,357,770   785,868     
Equity instruments at fair value through profit or loss  1,878,426         
Total assets  167,038,975   530,447,956   122,178,951 
Liabilities         
Deposits  269,259,068   282,764,424   24,196 
Derivative financial instruments      260     
Repo transactions      698,694     
Other financial liabilities      54,713,368   877,417 
Financing received from the BCRA and other financial institutions      994,585   43,568 
Issued corporate bonds      2,879,402   2,685,677 
Subordinated corporate bonds      725,487   38,017,697 
Total liabilities  269,259,068   342,776,220   41,648,555 

 

(1)The amounts included in “without due date”, are related to the non-performing portfolio.

 

14.DISCLOSURES BY OPERATING SEGMENT

 

For management purposes the Bank’s Management has determined that it has only one operating segment related to the banking business. In this sense, the Bank supervises the operating segment income (loss) for the period in order to make decisions about resources to be allocated to the segment and assess its performance, which is measured on a consistent basis with the profit or loss in the financial statements.

 

15.INCOME TAX

 

a)Inflation adjustment on income tax

 

Tax Reform Law 27430, amended by Laws 27468 and 27541, established the following, regarding to inflation adjustment on income tax for the fiscal years beginning on January 1, 2018.

 

i)Such adjustment will be applicable in the fiscal year in which the variation of the IPC will be higher than 100% for the thirty-six months before the end of the tax period.

ii)Regarding to the first, second and third fiscal year after its effective date, this procedure will be applicable if the variation of the abovementioned index, calculated from the beginning until the end of each of those fiscal years exceeds 55%, 30% and 15% for the first, second and third fiscal year of application, respectively.

iii)The positive or negative inflation adjustment, as the case may be, corresponding to the first, second and third fiscal years beginning on January 1, 2018, shall be allocated one third in the fiscal year for which the adjustment is calculated and the remaining two thirds in equal parts in the following two immediate fiscal years.

iv)The positive or negative inflation adjustment, corresponding to the first and second fiscal years beginning on January 1, 2019, shall be allocated one sixth to the fiscal year in which the adjustment is determined and the remaining five sixth in the following immediate fiscal years.

 

33 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

v)For fiscal years beginning on January 1, 2021, 100% of the adjustment may be deducted in the year in which it will be determined.

 

As of March 31, 2021 and December 31, 2020, all the conditions established by the income tax Law to practice the inflation adjustment are met and the current and deferred income tax was recognized, including the effects of the application of the inflation adjustment on income taxes established by Law (see section d) of this note).

 

b)Income tax rate

 

The Law No. 27541 (see note 42) suspends, up to fiscal years beginning on January 1, 2021 included, the income tax rate reduction that had established the Law 27430, setting up for the suspended period a rate of 30%.

 

c)The main items of income tax expense in the condensed consolidated interim financial statements are as follows:

 

  03/31/2021  03/31/2020   
Current income tax expense  1,103,235   5,696,746  (*) 
Loss / (profit) for deferred income taxes  1,004,189   (259,728)  
Monetary effects  209,754   188,842   
Income tax loss recorded in the statement of income  2,317,178   5,625,860   
Income tax loss / (profit) recorded in other comprehensive income  271,210   (309,117)  
   2,588,388   5,316,743   

 

(*) See point d) of this note.

 

d)As decided by the Board of Directors in the meeting dated May 11, 2020, considering certain case-law on the subject assessed by its legal and tax advisors, on May 26, 2020, the Bank filed with the Administración Federal de Ingresos Públicos (AFIP, for its acronym in Spanish) its annual income tax return considering the total effect of the inflation adjustment on income tax (see section a) iv) of this note). As a result, the current income tax determined by Banco Macro SA for fiscal year 2019 amounted to 7,002,124 (not restated). The same criterion has been applied to determine the annual income tax report for 2020, which generated an accrued income tax for Banco Macro SA for such fiscal year that amounted to 9,933,210 (not restated).

 

In addition, on October 24, 2019 Banco Macro SA filed to AFIP-DGI two requests for the recovery of payments established by the first paragraph of section 81 Law 11683, in order to obtain the return of the amounts of 4,782,766 and 5,015,451 (not restated), paid to the tax authority as income tax for the fiscal years 2013 to 2017 and 2018, respectively, due to the impossibility to apply the inflation adjustment method established by the Income Tax Law (before the amendments include by Laws 27430 and 27468, for the fiscal years 2013 to 2017, and as per 2019 and amendments, for the fiscal year 2018), plus the related compensatory interest (files SIGEA Nº 19144-14224/2019 and 19144-14222/2019). As the regulatory authority has not resolved the abovementioned claims, on August 7, 2020 the Bank filed, under the terms of the second paragraph of section 81 Law 11683, the requests for the recovery of payment to the Federal Civil and Commercial Court of Appeal which are in process at Court Nº 8 and 2, respectively (Files 11285/2020 and 11296/2020).

 

On December 19, 2019 the AFIP notified the beginning of an income tax audit for the period 2018, and on May 3, 2021, the Bank became aware that the same regulatory agency began an income tax audit for the periods 2013 to 2017, both included.

  

34 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

16.COMMISSIONS INCOME

 

Description 03/31/2021  03/31/2020 
Performance obligations satisfied at a point in time        
Commissions related to obligations  3,494,359   3,759,900 
Commissions related to credit cards  2,214,415   2,365,712 
Commissions related to insurance  431,032   440,233 
Commissions related to trading and foreign exchange transactions  149,292   111,794 
Commissions related to securities value  128,892   121,055 
Commissions related to loans and other financing  22,106   22,534 
Commissions related to financial guarantees granted  122   187 
         
Performance obligations satisfied over certain time period        
Commissions related to credit cards  78,587   108,790 
Commissions related to trading and foreign exchange transactions  9,053   12,424 
Commissions related to loans and other financing  271   90 
Commissions related to obligations  183   608 
Commissions related to financial guarantees granted  71   1 
   6,528,383   6,943,328 

 

17.DIFFERENCES IN QUOTED PRICES OF GOLD AND FOREIGN CURRENCY

 

Description 03/31/2021  03/31/2020 
Translation of foreign currency assets and liabilities into pesos  1,094,168   689,849 
Income from foreign currency exchange  122,102   69,662 
   1,216,270   759,511 

 

18.OTHER OPERATING INCOME

 

Description 03/31/2021  03/31/2020 
Services  678,537   953,195 
Other receivables for financial intermediation  308,230     
Adjustments and interest from other receivables  209,762   230,381 
Adjustments from other receivables with CER clauses  59,893   57,621 
Initial recognition of loans  2,998     
Sale of property, plant and equipment  1,708   47 
Other  387,959   326,571 
   1,649,087   1,567,815 

 

19.EMPLOYEE BENEFITS

 

Description 03/31/2021  03/31/2020 
Remunerations  5,232,284   4,968,362 
Payroll taxes  1,177,853   1,103,869 
Compensations and bonuses to employees  690,908   520,650 
Employee services  156,706   148,978 
   7,257,751   6,741,859 

 

35 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

20.ADMINISTRATIVE EXPENSES

 

Description 03/31/2021  03/31/2020 
Maintenance, conservation and repair expenses  582,102   578,257 
Taxes  541,361   548,849 
Armored truck, documentation and events  516,875   492,818 
Electricity and communications  398,549   443,878 
Security services  376,745   418,720 
Software  317,963   285,695 
Other fees  254,178   261,970 
Fees to directors and syndics  104,902   432,834 
Advertising and publicity  57,741   82,383 
Insurance  45,551   36,885 
Leases  31,184   32,518 
Representation, travel and transportation expenses  28,942   47,549 
Stationery and office supplies  19,907   27,664 
Hired administrative services  2,490   917 
Other  136,212   124,082 
   3,414,702   3,815,019 

 

21.OTHER OPERATING EXPENSES

 

Description 03/31/2021  03/31/2020 
Turnover tax  3,496,184   3,487,340 
For credit cards  1,300,019   1,188,595 
Charges for other provisions  398,528   428,428 
Deposit guarantee fund contributions  224,920   172,645 
Taxes  92,561   178,308 
Interest on lease liabilities  41,262   46,667 
For administrative, disciplinary and criminal penalties  30,673     
Loss from sale or impairment of investments in properties and other non-financial assets  23,271   1,887 
Insurance claims  10,789   20,972 
Donations  743   154,275 
Other  738,059   487,723 
   6,357,009   6,166,840 

 

22.ADDITIONAL DISCLOSURES IN THE STATEMENT OF CASH FLOWS

 

The statement of cash flows presents the changes in cash and cash equivalents derived from operating activities, investing activities and financing activities during the period. For the preparation of the statement of cash flows, the Bank adopted the indirect method for operating activities and the direct method for investment activities and financing activities.

 

The Bank considers as “Cash and cash equivalents” the item Cash and deposits in banks and those financial assets that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

 

36 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

For the preparation of the statement of cash flows the Bank considered the following:

 

-Operating activities: the normal revenue-producing activities of the Bank as well as other activities that cannot qualify as investing or financing activities.

-Investing activities: the acquisition, sale and disposal by other means of long-term assets and other investments not included in cash and cash equivalents.

-Financing activities: activities that result in changes in the size and composition of the shareholders’ equity and liabilities of the Bank and that are not part of the operating or investing activities.

 

The table below presents the reconciliation between the item “Cash and cash equivalents” in the statement of cash flows and the relevant accounting items of the statement of financial position:

 

  03/31/2021  12/31/2020  03/31/2020  12/31/2019 
Cash and deposits in banks  153,515,086   146,802,082   175,915,334   154,820,545 
Debt Securities at fair value through profit or loss          44,729     
Other debt securities  124,525,996   150,471,977   64,162,100   71,368,706 
Loans and other financing  459,925   475,221   459,827   460,517 
   278,501,007   297,749,280   240,581,990   226,649,768 

 

23.CAPITAL STOCK

 

The Bank’s subscribed and paid-in capital as of March 31, 2021, amounted to 639,413. Since December 31, 2018, the Bank’s capital stock has changed as follows:

 

  Capital stock issued
and paid-in
  Issued
outstanding
  In treasury 
As of December 31, 2018  669,663   640,715   28,948 
Own shares acquired (1)      (1,317)  1,317 
Capital stock decrease (2)  (30,265)      (30,265)
Capital stock increase (3)  15   15     
As of March 31, 2021 and December 31, 2020 and 2019  639,413   639,413     

 

(1)Related to the repurchase of the Bank’s own shares under the programs established by the Bank’s Board of Directors on August 8, 2018, October 17, 2018 and December 20, 2018 with the purpose of reducing share price fluctuations, minimizing possible temporary imbalances between market supply and demand.

 

The Program dated on August 8, 2018, established, that the maximum amount of the investment amounted to 5,000,000 and the maximum numbers of shares to be acquired were equivalent to 5% of the capital stock. At the end of this program the Bank had acquired 21,463,005 common, registered, Class B shares with a face value of Ps. 1 each one entitled with one vote for an amount of 8,750,634 (nominal value:3,113,925).

 

The Program dated on October 17, 2018, established the start over of the repurchase of the Bank’s own shares, with the pending use of funds of the abovementioned Program, already expired. At the end of this program, the Bank had acquired 6,774,019 common, registered, Class B shares with a face value of Ps. 1 each one entitled with one vote for an amount of 2,492,309 (nominal value: 995,786).

 

The Program dated on December 20, 2018, established that the maximum amount of the investment amounted to 900,000 and the maximum numbers of shares to be acquired were equivalent to 1% of the capital stock. At the end of this program the Bank had acquired 2,028,251 common, registered, Class B shares with a face value of Ps. 1 each one entitled with one vote for an amount of 705,399 (nominal value: 298,196) of which, as of December 31, 2018 were settled 711,386 common shares for an amount of 232,659 (nominal value: 98,353), and in January 2019 were settled 1,316,865 common shares for an amount of 472,739 (nominal value: 199,843).

 

37 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

AS OF MARCH 31, 2021 

(Translation of Financial statements originally issued in Spanish – See Note 40) 

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

(2)Related to capital stock decrease approved by the Shareholders’ Meeting of Banco Macro SA held on April 30, 2019 for an amount of 30,265, equivalent to 30,265,275 common, registered, Class B shares with a face value of Ps. 1 each one entitled with one vote, equivalent to all the own shares acquired mentioned in (1). On August 14, 2019 the Bank was notified that the capital stock decrease was registered at the Public Registry of Commerce.

 

(3)Related to the capital stock increase through the issuance of 15,662 common, registered, Class B shares with a face value of Ps. 1 each one entitled with one vote, approved by Shareholders’ Meeting mentioned in (2), due to the merger effects between Banco Macro SA and Banco del Tucumán SA. On October 29, 2019 the Bank was notified that the capital stock increase was registered at the Public Registry of Commerce.

 

24.EARNINGS PER SHARE. DIVIDENDS

 

Basic earnings per share were calculated by dividing net profit attributable to common shareholders of the Bank by the weighted average number of common shares outstanding during the period.

 

To determine the weighted average number of common shares outstanding during the period, the Bank used the number of common shares outstanding at the beginning of the period adjusted, if applicable, by the number of common shares bought back or issued during the period multiplied by the number of days that the shares were outstanding in the period. Note 23 provides a breakdown of the changes in the Bank’s capital stock.

 

The calculation of basic earnings per share is disclosed in the table of Earnings per share included in the consolidated statement of income. See additionally note 34 and the Earning distribution proposal.

 

Dividends paid and proposed

 

The Shareholders’ Meeting held on April 30, 2020, resolved to distribute cash dividends for 12,788,268 (not restated), which considering the number of shares outstanding at the date of such resolution, represented 20 pesos per share (not restated). According to Communiqué “A” 7035, the Central Bank extended the suspension of payment on earning distributions up to December 31, 2020. Afterwards, through Communiqué “A” 7181, such suspension was extended up to June 30, 2021. As a consequence, the Shareholders’ Meeting held on October 21, 2020, resolved to distribute a supplementary cash dividend which will be calculated by multiplying the dividend of 20 pesos per share already approved by the Shareholders’ Meeting held on April, 30 2020, by the coefficient obtained after dividing the most recent CPI published by the INDEC and informed by such entity to the date on which the BCRA issues its authorization for the payment, by the CPI for the month of April 2020. The aggregate amount to be distributed for this purpose may not exceed the amount of 3,791,722 (not restated).

 

In addition, the Shareholders’ Meeting held on April 30, 2021, resolved to distribute cash dividends or dividends in kind, in this case, measured at market value, or any combination of both alternatives for an amount of 10,000,426 (not restated) which considering the number of shares outstanding at the date of such resolution, represented 15.64 pesos per share (not restated), subject to prior authorization of BCRA which has not yet informed its decision regarding the requested authorization for the dividends distribution mentioned in the previous paragraph. For further information see also note 34.

 

25.DEPOSIT GUARANTEE INSURANCE

 

Law No. 24485 and Decree No. 540/1995 created the Deposit Guarantee Insurance System, which was featured as a limited, compulsory and onerous system, aimed at covering the risks of bank deposits, as subsidiary and supplementary to the deposit privilege and protection system established under the Financial Entities Law. The above- mentioned legislation also provided for the incorporation of Sedesa with the exclusive purpose of managing the Deposit Guarantee Fund (DGF). Sedesa was incorporated in August 1995.

 

Banco Macro SA holds an 8.4180% interest in the capital stock of Sedesa according to the percentages disclosed by BCRA Communiqué “B” 12152 on April 14, 2021.

 

38 

 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

All deposits in pesos and foreign currency placed in participating entities in the form of checking accounts, savings accounts, certificates of deposits or other forms of deposit that the BCRA may determine from time to time shall be subject to the abovementioned Deposit Guarantee Insurance System up to the amount of 1,500 which must meet the requirements provided for in Presidential Decree 540/1995 and other requirements that the regulatory authority may from time to time determine. On the other hand, the BCRA provided for the exclusion of the guarantee system, among others, of any deposits made by other financial entities, deposits made by persons related to the Bank and securities deposits.

 

26.RESTRICTED ASSETS

 

As of March 31, 2021 and December 31, 2020, the following Bank’s assets are restricted:

 

Item 03/31/2021  12/31/2020 
Debt securities at fair value through profit or loss and other debt securities        
· Discount bonds in pesos regulated by Argentine legislation, maturing 2033 used as security in favor of Sedesa (1).  157,378   165,430 
· Federal Government Treasury Bonds in pesos adjusted by CER 1%, maturing 2021, securing the sectorial Credit Program of the Province of San Juan. Production investment financing fund.  68,540   69,105 
· Federal Government Treasury Bonds in pesos adjusted by CER 1%, maturing 2021 securing the regional economies Competitiveness Program – IDB loan No. 3174/OC-AR.  44,104   44,467 
· Discount bonds in pesos regulated by Argentine legislation, maturing 2033 for minimum statutory guarantee account required for Agents to act in the new categories contemplated under Resolution No. 622/2013, as amended, of the CNV  35,381   37,191 
· Federal Government Treasury Bonds in pesos adjusted by CER 1%, maturing 2021 for the contribution to the Guarantee Fund II in BYMA according to section 45 Law 26831 and supplementary regulations established by CNV standards (NT 2013, as amended)  5,960   3,605 
· Federal Government Treasury letters at discount in pesos maturity 01-29-2021, securing the transaction of MAE Futuro Garantizado CPC2      22,139 
   Subtotal debt securities at fair value through profit or loss and other debt securities  311,363   341,937 
         
Other financial assets        
· Mutual fund shares for minimum statutory guarantee account required for Agents to act in the new categories contemplated under Resolution No. 622/13, as amended, of the CNV  110,339   116,626 
· Sundry debtors – Other  4,898   12,943 
· Sundry debtors – attachment within the scope of the claim filed by the DGR against the CABA for differences on turnover tax  827   934 
   Subtotal Other financial assets  116,064   130,503 
         
Loans and other financing – non-financial private sector and foreign residents        
· Interests derived from contributions made as contributing partner (2)   260,000   293,678 
   Subtotal loans and other financing  260,000   293,678 

 

39 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Item (contd.) 03/31/2021  12/31/2020 
Financial assets delivered as a guarantee        
· Special guarantee checking accounts opened in the BCRA for transactions related to the electronic clearing houses and similar entities.  11,952,491   13,600,375 
· Guarantee deposits related to credit and debit card transactions  1,525,894   1,488,572 
· For securities forward contracts      785,868 
· Other guarantee deposits  263,144   268,823 
   Subtotal Financial assets delivered as a guarantee  13,741,529   16,143,638 
         
Other non-financial assets        
· Real property related to a call option sold  244,150   244,453 
   Subtotal Other non-financial assets  244,150   244,453 
Total  14,673,106   17,154,209 

 

(1)As replacement for the preferred shares of former Nuevo Banco Bisel SA to secure to Sedesa the price payment and the fulfillment of all the obligations assumed in the purchase and sale agreement dated May 28, 2007, maturing on August 11, 2021.

 

(2)As of March 31, 2021 and December 31, 2020 it is related to the risk fund Fintech SGR and Garantizar SGR. In order to keep tax benefits related to these contributions, they must be maintained between two and three years from the date they were made.

 

Moreover, on November 9, 2020 the Bank paid 14,847 for a call option which gives right to increase up to 24.99% the Bank’s interest in the capital stock of Fintech SGR.

 

27.TRUST ACTIVITIES

 

The Bank is related to several types of trusts. The different trust agreements according to the business purpose sought by the Bank are disclosed below:

 

27.1.Financial trusts for investment purposes

 

Debt securities include mainly prepayments towards the placement price of provisional trust securities of the financial trusts under public and private offerings (Red Surcos and Secubono). The assets managed for these trusts are mainly related to securitizations of consumer loans. Trust securities are placed once the public offering is authorized by the CNV. Upon expiry of the placement period, once all trust securities have been placed on the market, the Bank recovers the disbursements made, plus an agreed-upon compensation. If after making the best efforts, such trust securities cannot be placed, the Bank will retain the definitive trust securities.

 

In addition, the Bank’s portfolio is completed with financial trusts for investment purposes, trust securities of definitive financial trusts in public and private offering (Secubono) and certificates of participation (Arfintech).

 

As of March 31, 2021 and December 31, 2020, debt securities and certificates of participation in financial trusts for investment purposes, total 293,770 and 642,658, respectively.

 

According to the latest accounting information available as of the date of issuance of these condensed consolidated interim financial statements, the corpus assets of the trusts exceed the carrying amount in the related proportions.

 

27.2.Trusts created using financial assets transferred by the Bank (securitization)

 

The Bank transferred financial assets (loans) to trusts for the purpose of issuing and selling securities for which collection is guaranteed by the cash flow resulting from such assets or group of assets. Through this way the funds that were originally used by the Bank to finance the loans are obtained earlier.

 

40 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

As of March 31, 2021 and December 31, 2020, considering the latest available accounting information as of the date of these condensed consolidated interim financial statements, the assets managed through Macro Fiducia SA (subsidiary) of this type of trusts amounted to 6,641 and 7,501, respectively.

 

27.3.Trusts guaranteeing loans granted by the Bank

 

As it is common in the Argentine banking market, the Bank requires, in some cases, that the debtors present certain assets or entitlements to receive assets in a trust as a guarantee for the loans granted. This way, the risk of losses is minimized and access to the security is guaranteed in case of the debtor's non-compliance.

 

Trusts usually act as conduits to collect cash from the debtor’s flow of operations and send it to the Bank for the payment of the debtor’s loans and thus ensure compliance with the obligations assumed by the trustor and guaranteed through the trust.

 

Additionally, other guarantee trusts manage specific assets, mainly real property.

 

Provided there is no non-compliance or delays by debtor in the obligations assumed with the beneficiary, the trustee shall not execute the guarantee and all excess amounts as to the value of the obligations are reimbursed by the trustee to the debtor.

 

As of March 31, 2021 and December 31, 2020, considering the latest available accounting information as of the date of these condensed consolidated interim financial statements, the assets managed by the Bank amounted to 2,147,274 and 2,328,686, respectively.

 

27.4.Trusts in which the Bank acts as trustee (management)

 

The Bank, through its subsidiaries, performs management duties of the corpus assets directly according to the agreements, performing only trustee duties and has no other interests in the trust.

 

In no case shall the Trustee be liable with its own assets or for any obligation deriving from the performance as trustee. Such obligations do not imply any type of indebtedness or commitment for the trustee and they will be fulfilled only through trust assets. In addition, the trustee will not encumber the corpus assets or dispose of them beyond the limits established in the related trust agreements. The fees earned by the Bank from its role as trustee are calculated according to the terms and conditions of the agreements.

 

Trusts usually manage funds derived from the activities performed by trustors, for the following main purposes:

 

-Guaranteeing, in favor of the beneficiary the existence of the resources required to finance and/or pay certain obligations, such as the payment of amortization installments regarding work or service certificates, and the payment of invoices and fees stipulated in the related agreements.

 

-Promoting the production development of the private economic sector at a provincial level.

 

-Being a party to public work concession agreements granting road exploitation, management, keeping and maintenance.

 

As of March 31, 2021 and December 31, 2020, considering the latest available accounting information as of these condensed consolidated interim financial statements, the assets managed by the Bank amounted to 10,724,216 and 10,488,994, respectively.

 

41 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

28.COMPLIANCE WITH CNV REGULATIONS

 

28.1 Compliance with CNV standards to act in the different agent categories defined by the CNV:

 

28.1.1 Operations of Banco Macro SA

 

Considering Banco Macro SA’s current operations, and according to the different categories of agents established by CNV rules (as per General Resolution No. 622/2013, as amended), the Bank is registered with this agency as agent for the custody of collective investment products of mutual funds (AC PIC FCI, for their acronyms in Spanish) – Depositary company comprehensive clearing and settlement agent and trading agent (ALyC and AN – comprehensive, for their acronyms in Spanish), financial trustee agent (FF, for its acronym in Spanish) and Guarantee Entity (in the process of being registered).

 

Additionally, the Bank’s shareholders’ equity as of March 31, 2021 stated in UVAs amounted to 2,364,220,759 and exceeds minimum amount required by this regulation for the different categories of agents in which the Bank is registered, amounting to 1,420,350 UVAs as of that date, and the minimum statutory guarantee account required of 710,175 UVAs, which the Bank paid-in with government securities as described in note 26 and the cash deposits in BCRA accounts 000285 and 80285 belonging to the Bank.

 

28.1.2 Operations of Macro Securities SA

 

Considering the current operations of this subsidiary, and according to the provisions established by CNV effective as of the approval of General Resolution No. 622/2013, as amended, issued by such agency, such Company is registered under the following categories: clearing and settlement agent, trading agent, comprehensive trading agent and mutual investment funds placement and distribution agent (ALyC , AN – comprehensive and ACyD FCI).

 

Additionally, the shareholders’ equity of such Company as of March 31, 2021 stated in UVAs amounted to 26,178,980 and exceeds the minimum amount required by this regulation, amounting to 470,350 UVAs and the minimum statutory guarantee account required a minimum of 50% of the minimum amount of Shareholders’ equity, which the Company paid-in with mutual fund shares. Moreover, the agents “ACyD FCI” are required to have a minimum Shareholder’s equity up to 2,500,000.

 

28.1.3 Operations of Macro Fondos Sociedad Gerente de Fondos Comunes de Inversión SA

 

Considering the current operations of this subsidiary, and according to the provisions established by CNV effective as of the approval of General Resolution No. 622/2013, as amended, issued by such agency, such Company is registered as agent for the Administration of Collective Investment Products of Mutual Funds.

 

Additionally, the shareholders’ equity of this Company as of March 31, 2021 stated in UVAs amounted to 7,853,459 and exceeds the minimum amount required by this regulation, amounting to 150,000 UVAs plus 20,000 UVAs per each additional mutual fund it manages. The minimum statutory guarantee account required a minimum of 50% of the minimum amount of Shareholders’ equity, which the Company paid-in with mutual fund shares.

 

28.1.4 Operations of Macro Fiducia SA

 

Considering the current operations of this subsidiary and according to the provisions established by CNV effective as of the approval of General Resolution 622/2013, as amended, issued by such agency, such Company is registered as financial trustee agent and non-financial trustee agent.

 

42 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Additionally, the shareholders’ equity of such Company as of March 31, 2021 and December 31, 2020 stated in UVAs amounted to 1,134,380 and exceeds the minimum amount required by General resolution No. 795 established in 950,000 UVAs. The minimum statutory guarantee account requires a minimum of 50% of the minimum amount of Shareholders’ equity, which the Company paid-in with mutual fund shares. The CNV through General resolution No. 825, decided that the 50% of the amounts required as of March 31, 2021 and December 31, 2020, shall be credited and the Shareholders’ equity may not be less than 6,000.

 

28.2 Documents in custody

 

As a general policy, the Bank delivers for custody to third parties the documentary support of its aged accounting and management operations, i.e. those whose date is prior to the last fiscal year-end, except for the Inventory Book, in which aging is deemed to include those with a date prior to the two fiscal years ended. In compliance with CNV General Resolution No. 629 requirements, the Bank has placed (i) the Inventory Books for fiscal years ended through December 31, 2017 included, and (ii) certain documentation supporting the economic transactions for fiscal years ended through December 31, 2017, included, under the custody of the following companies: AdeA Administradora de Archivos SA (warehouse located at Ruta 36, km 31.5, Florencio Varela, Province of Buenos Aires) and ADDOC Administración de Documentos SA (warehouse located at Avenida Circunvalación Agustín Tosco with no number, Colectora Sur, between Puente San Carlos and Puente 60 blocks, Province of Córdoba and Avenida Luis Lagomarsino 1750, formerly Ruta 8 Km 51.200, Pilar, Province of Buenos Aires).

 

28.3 As depositary of mutual funds

 

As of March 31, 2021 Banco Macro SA, in its capacity as depositary company, holds in custody the shares in mutual funds subscribed by third parties and assets from the following mutual funds:

 

Funds Number of shares  Equity 
Pionero Acciones  9,645,120   303,407 
Pionero Ahorro Dólares  3,640,369   313,207 
Pionero Argentina Bicentenario  376,227,891   964,614 
Pionero Capital  1,193,660,878   1,223,629 
Pionero Empresas FCI Abierto Pymes  252,686,616   1,514,960 
Pionero FF  59,199,679   1,021,758 
Pionero Gestión  1,027,842,662   1,194,454 
Pionero Pesos  655,575,317   6,197,690 
Pionero Pesos Plus  6,716,488,653   38,136,132 
Pionero Renta  70,181,934   3,885,929 
Pionero Renta Ahorro  128,028,796   2,686,972 
Pionero Renta Ahorro Plus  739,747,979   3,469,403 
Pionero Renta Estratégico  725,686,467   2,206,371 
Pionero Renta Fija Dólares  2,734,359   180,614 
Pionero Renta Mixta I  17,087,131   78,050 
Argenfunds Abierto Pymes  2,890,923,725   6,295,624 
Argenfunds Ahorro Pesos  183,080,826   1,853,237 
Argenfunds Liquidez  5,439,870,581   9,444,144 
Argenfunds Renta Argentina  7,985,175   29,027 
Argenfunds Renta Balanceada  343,539,636   1,571,269 
Argenfunds Renta Capital  22,444,352   2,113,479 
Argenfunds Renta Crecimiento  24,608,202   2,144,361 
Argenfunds Renta Dinámica  8,522   4 
Argenfunds Renta Fija  167,604,258   2,654,569 
Argenfunds Renta Flexible  1,143,775,354   3,958,743 
Argenfunds Renta Global  8,983,257   35,401 
Argenfunds Renta Mixta  192,540   16 
Argenfunds Renta Mixta Plus  353,432   25,971 
Argenfunds Renta Pesos  113,268,246   806,900 

 

43 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Funds (contd.) Number of shares  Equity 
Argenfunds Renta Total  833,924,833   916,535 
Argenfunds Renta Variable  276,458,840   4,892 
Argenfunds Retorno Absoluto  567,057,771   1,171,413 

 

29.ACCOUNTING ITEMS THAT IDENTIFY THE COMPLIANCE WITH MINIMUM CASH REQUIREMENTS

 

The items recognized by the Bank to constitute the minimum cash requirement effective for March 2021 are listed below, indicating the amounts as of month-end of the related items:

 

Description Banco Macro
SA
 
Cash and deposits in banks    
Amounts in BCRA accounts  75,836,106 
     
Other debt securities    
Liquidity letters of Central Bank of Argentina computable for the minimum cash requirements  51,391,514 
Government securities computable for the minimum cash requirements  19,544,240 
     
Financial assets delivered as guarantee    
Special guarantee accounts with the BCRA  11,952,491 
Total  158,724,351 

 

30.PENALTIES APPLIED TO THE ENTITY AND SUMMARY PROCEEDINGS INITIATED BY THE BCRA

 

BCRA Communiqué “A” 5689, as supplemented and amended, requires financial institutions to disclose in their financial statements certain information regarding summaries and penalties received from certain regulatory authorities, regardless of the amounts involved and the final conclusions of each case.

 

Next follows a description of the situation of Banco Macro SA as of March 31, 2021:

 

Summary proceedings filed by the BCRA

 

Financial summary proceedings: No. 1496 dated 02/24/2016. Penalty amount: 30,608.

 

Reason: control observations over subsidiaries.

 

Proceeding filed against: Banco Macro SA and the Members of the Board of Directors (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Marcos Brito, Juan Pablo Brito Devoto, Luis Carlos Cerolini, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Constanza Brito and Emanuel Antonio Alvarez Agis).

 

Status: pending resolution before the BCRA. On 04/07/2016, we filed the defenses and evidence. On 05/18/2016 we requested on behalf of Mr. Delfín Jorge Ezequiel Carballo the resolution of the motion for lack of standing to be sued. On 09/09/2020 – notified on 02/22/2021, the BCRA filed Resolution No. 132/20 which acquitted Delfín Jorge Ezequiel Carballo and imposed a fine to the Bank and other responsible directors. On 03/01/2021 the Bank paid the fines. On 03/15/2021 the Bank filed a direct appeal against such resolution to the BCRA, which will be decided at Courtroom I of the Federal Civil and Commercial Court of Appeals (CNACAF, for its acronym in Spanish).

 

Penalties imposed by the Financial Information Unit (UIF)

 

File: No. 62/2009 dated 01/16/2009.

 

Reason: observations on the purchase of foreign currency from April 2006 through August 2007. Penalty amount: 718.

 

Penalty imposed on: Banco Macro SA and those in charge of anti-money laundering regulation compliance (Juan Pablo Brito Devoto and Luis Carlos Cerolini).

 

44 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Status: the UIF passed Resolution No. 72/2011 on 06/09/2011, imposing fines to those responsible. After successive remedies filed by the Bank, part of the fines were dismissed in relation to statute-barred periods, and the decision became final on 06/25/2019; therefore, the case file will be submitted to the UIF to readjust fines to the open period. As of the date, is pending that UIF readjust the fines related to transactions performed during the period beginning on 3/5/2007 and since 4/17/2007 to 8/22/2007 according to Courtroom III resolution of CNACAF dated 10/31/2016.

 

File: No. 248/2014 (UIF Note Presidency 245/2013 11/26/2013) dated 07/30/2014.

 

Reason: alleged deficiencies in preparing certain “Reports on suspicious transactions (ROS)” due to cases of infringement detected in certain customer files. Penalty amount: 330.

 

Penalty imposed on: Banco Macro SA, the members of the Board and those in charge of anti-money laundering regulation compliance (Luis Carlos Cerolini – both as Compliance Officer and Director - and Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Emanuel Antonio Alvarez Agis, Marcos Brito and Rafael Magnanini –as Directors of Banco Macro SA).

 

Status: on 12/26/2016 the UIF passed Resolution No. 164/16 imposing fines on those responsible and issuing a favorable decision on the plea of lack of capacity to be sued lodged by Messrs. Carballo and Magnanini. Against such resolution, the Bank and the individual responsibles filed direct appeals, which will be decided at Room III of the CNACAF. Such appeals were dismissed through a final sentence dated 07/18/2019. The term to file the federal extraordinary appeal against such resolution is already running. On 08/15/2019, the Bank filed a federal extraordinary appeal which was dismissed through resolution dated 09/26/2019. Against such resolution, on 10/03/2019 the Bank filed an appeal to Argentine Supreme Court (CSJN, for its acronym in Spanish), which is pending resolution from CSJN.

 

Although the above described penalties do not involve material amounts, as of the date of issuance of these condensed consolidated interim financial statements, the total amount of monetary penalties received, pending payment due to any appeal lodged by the Bank, amounts to 718 and was recognized according to the BCRA Communiqués “A” 5689 and 5940, as amended and supplemented.

 

Additionally, there are pending summary proceedings before the CNV and the UIF, as described below:

 

File: No. 1480/2011 (CNV Resolution No. 17529) dated 09/26/2014.

 

Reason: potential non-compliance with the obligation to inform a “Significant Event”.

 

Persons subject to summary proceedings: Banco Macro SA, the members of the Board, the regular members of the Statutory Audit Committee and the person/s responsible for market relations (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini, Roberto Julio Eilbaum, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Daniel Hugo Violatti, Ladislao Szekely, Santiago Marcelo Maidana and Herman Fernando Aner).

 

Status: on 10/28/2014 the Bank and the persons involved filed their defenses offering evidence and requesting their acquittal. On 08/03/2015 the term to produce evidence was closed and on 08/19/2015 the defendants lodged their memorials. On 03/04/2021, the Board of Directors of CNV, filed a resolution dismissing the nullity and imposing a fine to the Bank jointly and severally with its Directors at the moment when the facts where investigated. Against such resolution, on 05/03/2021 a direct appeal was filed.

 

File: 2577/2014 (CNV Resolution No. 18863) dated 07/20/2017.

 

Reason: potential non-compliance with de provisions of section 59, Law 19550, and paragraph 1 of Chapter 6 Section 19 of Article IV of Chapter II of CNV Rules (Revised 2013, as amended) in force at the time of the issues under analysis.

 

Persons subject to summary proceedings: Banco Macro SA, in its capacity as custody agent of collective investment products of mutual funds, regular directors and regular members of the Statutory Audit Committee (Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Marcos Brito, Juan Pablo Brito Devoto, Luis Carlos Cerolini, Federico Pastrana, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Constanza Brito, Emmanuel Antonio Alvarez Agis, Alejandro Almarza, Carlos Javier Piazza and Vivian Haydee Stenghele).

 

45 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

Status: On May 22, 2019, the CNV (Argentine Securities Commission) issued Resolution No. 80/2019, whereby a warning penalty was imposed on the persons subject to the summary proceedings (except for Delfín J. E. Carballo and Federico Pastrana, as to whom the lack of capacity to be sued was sustained). On 6/7/2019, the Bank, its directors and statutory auditors filed a direct remedy requesting the abrogation of the penalty. The file was submitted to the CNACAF Courtroom II, which issued the resolution for the commencement of proceedings on 19/09/2019. The CNV has answered the served of the direct appeals filed by the Bank and Argenfunds. On 02/12/2021 the file moved to analyze in order to issue a final decision.

 

File: No. 137/2015 (UIF Resolution No. 136/2017) dated 12/19/2017.

 

Reason: alleged breach to the contents of the Code of Procedure applicable to Anti-money Laundering and Terrorism Financing as Settlement and Clearing Agent at the time of an inspection of the CNV and to the Internal Audit Process referred to in its capacity as comprehensive settlement and clearing agent (UIF Resolution No. 229/2011, as amended).

 

Persons subject to summary proceedings: Banco Macro SA, members of the Management Body during the period that is the subject matter of these summary proceedings (Jorge Horacio Brito, Jorge Pablo Brito, Juan Pablo Brito Devoto, Constanza Brito, Marcos Brito, Delfín Jorge Ezequiel Carballo, Delfín Federico Ezequiel Carballo, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Emmanuel Antonio Alvarez Agis, Nicolás Alejandro Todesca, Carlos Alberto Giovanelli, José Alfredo Sanchez, Martín Estanislao Gorosito, Roberto Julio Eilbaum, Mario Luis Vicens, Nelson Damián Pozzoli, Luis María Blaquier, Ariel Marcelo Sigal, Alejandro Eduardo Fargosi, Juan Martin Monge Varela and Luis Cerolini in his double capacity as Compliance Officer and member of the Management Body).

 

Status: on 04/23/2019, UIF passed Resolution No. 41, whereby it imposed fines to responsibles. Against such resolution, the Bank, its Board of Directors and its Statutory audits filed a direct appeal on 06/12/2019, requesting a repeal of the penalty imposed. Such appeal is in process at CNACAF. The file was submitted to Courtroom V of CNACAF that received the proceedings on 06/21/2019. The direct appeal filed was notified to UIF on 12/3/2019. On 02/19/2020, the UIF answered the mentioned served and after that the file was passed to the Public Attorney. On 07/29/2020, the case file returned from the Public Prosecutor's Office to be analyzed by the court in order to issue a decision. On 05/11/2021, the Courtroom V of the CNACAF issued a sentence dismissing the direct appeal filed by the Banco Macro SA and against that on 05/26/2021, this Bank filed a federal extraordinary appeal.

 

File: No. 1208/2014 (UIF Resolution No. 13/2016) dated 1/15/2016.

 

Reason: alleged failure to comply with the Anti-Money Laundering Law, as amended, and UIF Resolution No. 121/11.

 

Persons subject to the summary proceedings: Banco Macro SA, Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Juan Pablo Brito Devoto, Jorge Pablo Brito, Luis Carlos Cerolini, Alejandro Macfarlane, Carlos Enrique Videla, Guillermo Eduardo Stanley, Constanza Brito, Marcos Brito and Emmanuel Antonio Álvarez Agis.

 

Status: on 05/17/2018 UIF passed resolution No. 13/2016, whereby it filed the summary proceedings related to observations over an overall inspection performed by BCRA. On 06/15/2018, the responsibles filed their defenses. On 7/2/2018, the UIF sustained the lack of capacity to be sued of Delfín Jorge Ezequiel Carballo, discarding his responsibility in this summary proceeding. The proceedings were opened to the production of evidence and closing of the evidence stage; on September 2018 the defendants lodged their memorial. On 01/08/2021 UIF filed Resolution No. 80 which imposed a fine to the Bank and the other responsibles. On 01/26/2021 through BCRA account, the fine was paid for an amount of 60. On 03/02/2021, against such resolution a direct appeal to CNACAF was deducted. The proceeding will be decided at Room IV of such jurisdiction.

 

File: No. 379/2015 (UIF Resolution No. 96/2019) dated 09/17/2019.

 

Reason: alleged failure to comply with the Anti-Money Laundering Law, as amended, and UIF Resolution No. 121/11.

 

Persons subject to the summary proceedings: Banco Macro SA, Jorge Horacio Brito, Delfín Jorge Ezequiel Carballo, Jorge Pablo Brito, Marcos Brito, Juan Pablo Brito Devoto, Carlos Enrique Videla, Alejandro Macfarlane, Guillermo Eduardo Stanley, Emanuel Antonio Alvarez Agis, Constanza Brito and Luis Carlos Cerolini.

 

46 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

Status: On 10/02/2019, Banco Macro SA and the individual responsables were passed of the initiation of the proceedings. On 10/31/2019, the Bank and the individuals subject to summary proceedings filed their defense. To date, the plea filed in relation to the statute of limitations has not been resolved yet, and no initial notification has been issued yet. On 01/07/2020, the party hearing the summary proceedings considered the defense filed and deferred the motion to dismiss for lack of capacity to be sued and statute of limitations upon issuing an opinion about the substance of the case. The administrative terms were suspended due to the social and preventive lockdown declared in the country due to Covid-19 pandemic (DNU 297/2020), until 11/29/2020, included. On 11/30/2020, terms were resumed (DNU 876/2020).

 

The Bank’s Management and its legal counsel consider no further significant accounting effects could arise from the final outcome of the above mentioned judicial proceedings.

 

31.CORPORATE BONDS ISSUANCE

 

The corporate bond liabilities recorded by Banco Macro SA in these condensed consolidated interim financial statements amount to:

 

Corporate Bonds Original value  Residual face value
as of 03/31/2021
  03/31/2021  12/31/2020 
Subordinated Resettable – Class A  USD   400,000,000(a.1)   USD  400,000,000   38,149,077   38,743,184 
Non-subordinated – Class B  Ps.  4,620,570,000 (a.2)    Ps. 2,889,191,000   2,534,934   2,745,686 
Non-subordinated – Class C  Ps.  3,207,500,000 (a.3)    Ps. 2,413,000,000   2,519,258   2,819,393 
Total           43,203,269   44,308,263 

 

a.1) On April 26, 2016, the general regular shareholders’ meeting approved the creation of a Global Program for the Issuance of Medium-Term Debt Securities, in accordance with the provisions of Law No. 23576, as amended and further applicable regulations, up to a maximum amount outstanding at any time during the term of the program of USD 1,000,000,000 (one billion US dollars), or an equal amount in other currencies, under which it is possible to issue simple corporate bonds, not convertible into shares in one or more classes. Also, on April 28, 2017, the General and Special Shareholder’ Meeting resolved to extend the maximum amount of the abovementioned Global Program up to USD 1,500,000,000 (one thousand five hundred millions US dollars).

 

On November 4, 2016, under the abovementioned Global Program, Banco Macro SA issued Subordinated Resettable Corporate Bonds, class A, at a fixed rate of 6.750% p.a. until reset date, fully amortizable upon maturity (November 4, 2026) for a face value of USD 400,000,000 (four hundred million US dollars), under the terms and conditions set forth in the pricing supplement dated October 21, 2016. Interest is paid semiannually on May 4 and November 4 of every year and the reset date will be November 4, 2021. Since reset date, these Corporate Bonds will accrue a benchmark reset rate plus 546.3 basis points, according to the abovementioned terms and conditions.

 

In addition, the Bank has the option to fully redeem the issuance as the reset date and under the conditions established in the pricing supplement after that date. The Bank used the funds derived from such issuance to grant loans in accordance with BCRA guidelines.

 

a.2) On May 8, 2017, under the Global Program mentioned on item a.1), Banco Macro SA issued non-subordinated simple corporate bonds Class B not convertible into shares, at a fixed rate of 17.50%, fully amortizable upon maturity (May 8, 2022) for a face value of pesos 4,620,570,000 equivalent to USD 300,000,000 (three hundred million US dollars), under the terms and conditions set forth in the price supplement dated April 21, 2017. Interest is paid semiannually on November 8 and May 8 of every year, beginning on November 8, 2017.

 

In addition, the Bank may fully redeem the issuance for tax matters, but not partially. The Bank used the funds derived from such issuance to grant loans in accordance with BCRA guidelines.

 

On October 17, 2018 and October 16, 2019 the Board of Directors decided to pay off these corporate bonds for a face value of pesos 1,229,518,000 and pesos 501,861,000, respectively, equivalent to the amount of purchases made as those dates.


47 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

As of the date of issuance of these condensed consolidated interim financial statements the Bank made purchases of this issuance for a face value of pesos 511,495,000, with a remaining outstanding face value of pesos 2,377,696,000.

 

a.3) On April 9, 2018, under the Global Program mention on item a.1), Banco Macro SA issued non-subordinated simple corporate bonds Class C, for a face value of pesos 3,207,500,000, at an annual variable rate equivalent to the sum of (i) Badlar private rate applicable for the related accrued period; plus (ii) applicable margin of 3.5% p.a., fully amortizable upon maturity (April 9, 2021). Interest will be paid quarterly for the periods due on July 9, October 9, January 9 and April 9 of every year, beginning on July 9, 2018.

 

In addition, the Bank may fully redeem the issuance for tax matters, but not partially. The Bank used the funds derived from such issuance to grant loans in accordance with BCRA guidelines.

 

In addition, on October 16, 2019 and January 29, 2020, the Board of Directors decided to pay off these corporate bonds for a face value of pesos 750,500,000 and pesos 44,000,000, respectively.

 

On April 9, 2021, the Bank cancelled the total principal and interest for a face value of 2,413,000,000.

 

The Shareholder´s Meeting held on April 27, 2018, resolved to increase the maximum amount of the Global Program for the Issuance of Corporate Bonds for a face value from USD 1,500,000,000 to USD 2,500,000,000 or an equal amount in other currencies, as determinated by the Board of Directors in due time. During the meeting held on April 10, 2019 the Board of Directors decided to use the maximum amount of the Global Program for the Issuance of Corporate Bonds approved on April 27, 2018, i.e., U$S 1,000,000,000 (one billon US dollars) or an equal amount in other currencies or value units, for the issuance of Corporate Bonds under CNV frequent issuers system.

 

32.OFF BALANCE SHEET TRANSACTIONS

 

In addition to note 4, the Bank maintains different off balance sheet transactions, pursuant to the BCRA standards. Below are the amounts of the main off Balance sheet transactions as of March 31, 2021 and December 31, 2020:

 

Item 03/31/2021  12/31/2020 
Custody of government and private securities and other assets held by third parties  222,415,096   208,316,732 
Preferred and other collaterals received from customers (1)  85,018,370   95,416,854 
Outstanding checks not yet paid  8,348,037   8,512,312 
Checks already deposited and pending clearance  4,769,399   4,313,524 

 

(1)Related to collaterals used to secure loans transactions and other financing, under the applicable rules in force in this matter.

 

33.TAX AND OTHER CLAIMS

 

33.1.Tax claims

 

The AFIP and tax authorities of the relevant jurisdictions have reviewed the tax returns filed by the Bank related to income tax, minimum presumed income tax and other taxes (mainly turnover tax). As a result, there are claims pending at court and/or administrative levels, either subject to discussion or appeal. The most significant claims are summarized below:

 

a)AFIP’s challenges against the income tax returns filed by former Banco Bansud SA (for the fiscal years since June 30, 1995, through June 30, 1999, and of the irregular six-month period ended December 31, 1999) and by former Banco Macro SA (for the fiscal years ended since December 31, 1998, through December 31, 2000).

 

48 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

The matter under discussion that has not been resolved as yet and on which the regulatory agency bases its position is the impossibility of deducting credits that have collateral security, an issue that has been addressed by the Federal Administrative Tax Court and CSJN in similar cases, which have issued resolutions that are favorable to the Bank’s position.

 

b)Ex-officio turnover tax assessments in progress and/or adjustments, as a withholding agent and over municipal fees, pending resolution by the tax authorities of certain jurisdictions.

 

The Bank’s Management and its legal counsel consider no further significant accounting effects could arise from the final outcome of the above-mentioned proceedings other than those disclosed in these condensed consolidated interim financial statements.

 

33.2.Other claims

 

In addition, before merging with and into the Bank, Banco Privado de Inversiones SA (BPI) had a pending class action styled “Adecua v. Banco Privado de Inversiones on ordinary proceedings”, File No. 19073/2007, pending with Commercial Court No. 3 in and for the CABA, Clerk’s Office No. 5, whereby it was required to reimburse to its clients the life insurance amounts overcharged to amounts payable as well as to reduce the amounts charged in this regard in the future; this legal proceeding was concluded upon the abovementioned merger because BPI complied in full with the terms of the court-approved agreement reached with Adecua before answering the complaint. However, in March 2013, when BPI had already been merged with and into the Bank, the trial court resolved to amend the terms of the agreement and ordered the reimbursement of amounts of money to a larger number of clients as compared to the number arising from the terms approved by the court in due time. Such resolution was appealed by the Bank as BPI’s surviving company. The appeal was dismissed by the Court of Appeals, which abrogated both the trial court decision and the court-approved agreement, thus ordering the Bank to answer the complaint. This gave rise to the filing of an extraordinary appeal against such decision as well as the subsequent filing of a complaint for the extraordinary appeal denied. It is currently pending with the Argentine Supreme Court.

 

Moreover, the Bank is also subject to three class actions initiated by consumers’ associations for the same purpose, all of them currently pending with Commercial Court No. 7 in and for the CABA, Clerk’s Office No. 13: a) Adecua v, Banco Macro on ordinary proceedings, File No. 20495/2007; b) Damnificados Financieros Asociación Civil Para Su Defensa et al v, Banco Macro on summary proceedings, File No. 37729/2007; c) Unión de Usuarios y Consumidores v. Nuevo Banco Bisel on ordinary proceedings, File No. 44704/2008. Regarding the actions mentioned in a) and b), on February 1, 2021, an agreement was reached and filed for court-approval effects. On such agreement, the Bank assumed to reimburse to its clients and former clients under the agreement, the 75% (seventy five percent) of the difference between the premium collected for life insurance over the debt balance of several products, and the amount that results for applying 2.45 per thousand on the assured amounts for the period between May 2, 2004, and July 31, 2011, both included, plus interest at the current rate of Banco de la Nación Argentina until the final approval of the agreement. On March 16, 2021, the agreement was approved by the Court. On April 8, 2021, the Bank completed the first stage of the approved agreement, while the rest of it will be fulfilled during the next 8 months.

 

There are also other class actions initiated by consumer protection associations in relation to the collection of certain commissions and/or financial charges or practices and certain withholdings made by the Bank to individuals as CABA stamp tax withholding agent.

 

49 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

Furthermore, in other case the Bank was challenged for charging credit card users until December 2014 a commission for “purchase limit excess” that consisted of a percentage over the purchase limit excess amount. It was styled “User and Consumer Union et. al v. Banco Macro SA on summary proceedings” [Unión de Usuarios y Consumidores y otro c/ Banco Macro SA s/ Sumarísimo], file No. 31958/2010, pending with Commercial Court No. 1 in and for the CABA, Clerk’s Office No 1. On 03/15/2019 a court order was passed against the Bank from a trial court that ordered the reimbursement for all the collected amounts plus VAT and interest. Although this court decision was appealed, the Entity understands that there is a low probability that a favorable ruling shall be obtained from the trial court, as the Entity became aware of that the Court of Appeals approved related actions against other two banks, an agreement was reached and filed for court-approval effects on 11/03/2020. On such agreement, the Bank compromised to reimburse to credit card users for the period from August 2007 to December 2014, the amounts collected over the abovementioned concepts plus VAT over such commissions and interest calculated at the average current rate for Documents transactions in force at the Banco de la Nación Argentina. On August 26, 2020, the agreement was approved by the judge. On October 28, 2020, the first stage of the agreement was fulfilled while the second stage will be fulfilled in the next 12 months.

 

The Bank’s Management and its legal counsel consider no further significant accounting effects could arise from the final outcome of the above-mentioned proceedings other than those disclosed in these condensed consolidated interim financial statements.

 

34.RESTRICTION ON DIVIDENDS DISTRIBUTION

 

a)According to BCRA regulations, 20% of Banco Macro SA income for the year, without including Other comprehensive income, for the year plus/less prior-year adjustments and less accumulated losses as for the prior year-end, if any, should be allocated to the legal retained earnings.

 

b)Through Communiqué “A” 6464, the BCRA establishes the general procedure to distribute earnings. According to that procedure, earnings may only be distributed if certain circumstances are met, such as no records of financial assistance from the BCRA due to illiquidity or shortages in payments of minimum capital or minimum cash requirement deficiencies and not being subject to the provisions of sections 34 and 35 bis of the Financial Entities Law (sections dealing with tax payment and restructuring agreements and reorganization of the Bank), among other conditions listed in the abovementioned communiqué that must be met. In addition, as established by BCRA Communiqué “A” 6768, the earnings distribution approved by the Shareholders’ Meeting of the Bank could only be formalized once the Superintendence of Financial and Foreign Exchange Institutions assesses the potential effects of the application of IFRS according to Communiqué “A” 6430 (section 5.5 IFRS 9 “Impairment”), the reduction of the lower loss allowances and a higher computable equity (RPC, for its acronym in Spanish) as a consequence of the application of Communiqué “A” 6946 section 2, as amended, for payroll financing to microenterprises and the restatement of financial statements according to Communiqué “A” 6651 in accordance with accounting standards established by Communiqué “A” 6847 and the guidelines to apply the restatement procedures established by Communiqué “A” 6849.

 

In addition, profits may only be distributed to the extent that the financial institution has positive results, after deducting, on a non-accounting basis, from retained earnings and the optional reserves for the future distribution of profits, (i) the amounts of the legal and other earnings reserves which are mandatory, (ii) all debit amounts of each one of the accounting items recognized in “Other Comprehensive Income”, (iii) income from of the revaluation of property, plant and equipment, intangible assets and investment property, (iv) the positive net difference between the amortized cost and the fair value of government debt instruments and/or monetary regulation instruments issued by the BCRA for those instruments recognized at amortized cost, (v) the adjustments identified by the Superintendence of Financial and Exchange Entities of the BCRA or by the independent external auditor and that have not been recognized in the accounting records and (vi) certain franchises granted by the BCRA. Additionally, no profit distributions shall be made out of the profit originated as a result of the first-time application of the IFRS, which was created a special reserve, and its balance as of March 31, 2021 was 8,221,884 (nominal value: 3,475,669).

 

The Bank must verify that, after completion of the earning distribution, a capital maintenance margin equal to 3.5% of risk-weighted assets is kept, apart from the minimum capital required by law, to be integrated by Tier 1(Con1) ordinary capital, net of deductible items (CDCOn1).


50 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

In addition, through Communiqué “A” 7181, the BCRA established the suspension of earning distribution of financial entities up to June 30, 2021.

 

c)Pursuant to CNV General Resolution No. 622, the Shareholders’ Meeting in charge of analyzing the annual financial statements will be required to decide on the application of the Bank’s retained earnings, such as the actual distribution of dividends, the capitalization thereof through the delivery of bonus shares, the creation of earnings reserves additional to the Legal earnings retained or a combination of any of these applications.

 

In compliance with the abovementioned the General regular Shareholders’ Meeting held on April 30, 2020, approved cash dividends distribution (the Dividend) for 12,788,268 (not restated), that represents 20 pesos per action (not restated) at the General regular Shareholders date, and delegated into the Board of Directors to establish the effective date that the cash dividends will be available to the shareholders, according to their holdings. The abovementioned cash dividends distribution is pending resolution for the BCRA, considering, in addition, what was established by Communiqué “A” 7181 abovementioned.

 

On October 21, 2020, the Extraordinary Shareholders Meeting was celebrated and it resolved to approve a supplementary cash dividend (the Supplementary Dividend) in order to increase the dividend amount decided by General regular Shareholders’ Meeting held on April 30, 2020. The Supplementary Dividend will be calculated by multiplying the dividend by the coefficient obtained after dividing the most recent CPI published by INDEC and informed by such entity to the date on which BCRA issues its authorization for the payment of the Dividend and the Supplementary Dividend, by the CPI for the month of April 2020. The difference arising between the amounts obtained after the above described calculation and the Dividend shall determine the amount of the Supplementary Dividend. The aggregate amount to be distributed as Supplementary Dividend may not exceed the amount of 3,791,722 (not restated), which will be derecognized from the voluntary reserve for future distributions of earnings.

 

In addition, the Shareholders’ Meeting held on April 30, 2021, after decided what is explained in the following paragraph, resolved to distribute cash dividends or dividends in kind, in this case measured at market value, or any combination of both alternatives (the Dividend) for an amount of 10,000,426 (not restated) which represents 15.64 pesos per share (not restated) at the date of the Shareholders’ Meeting and it was delegated to the Board of Directors the powers to determine when such dividends shall be made available to the shareholders in proportion to their respective shareholdings. The dividends distribution is pending authorization by the BCRA, considering also what was established by Communiqué “A” 7181 abovementioned.

 

Taking into account that at the end of the fiscal year ended December 31, 2020, the Bank had negative unappropriated retained earnings for 50,602,847 (figure stated in terms of purchasing power as of December 31, 2020), and personal property tax on business corporation for 311,944, the abovementioned Shareholders’ Meeting, decided to apply them as follows (figures stated in terms of purchasing power as of December 31, 2020):

 

a)30,268,993 to the net income for the fiscal year 2020;

b)442 to the voluntary reserve; and

c)20,645,356 to the voluntary reserve for future distributions of earnings.

 

35.CAPITAL MANAGEMENT, CORPORATE GOVERNANCE TRANSPARENCY POLICY AND RISK MANAGEMENT

 

As financial institution, Banco Macro SA is governed by the Financial Entities Law No. 21526, as supplemented, and

 

the regulations issued by the BCRA and, is exposed to intrinsic risks related to the financial industry. Moreover, the Bank adheres to the good banking practices laid out in BCRA Communiqué “A” 5201 (Financial Entities Corporate Governance Guidelines). Detailed explanations about the main aspects related to capital management, corporate governance transparency policy and risk management related to the Bank, are disclosed in note 41 to the consolidated financial statements as of December 31, 2020, already issued.

 

51 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021,
unless otherwise expressly stated)

 

Additionally, the table below shows the minimum capital requirements measured on a consolidated basis, effective for the month of March 2021, together with the integration thereof (computable equity) as of the end of such month:

 

 

Description 03/31/2021 
Minimum capital requirements  43,518,619 
Computable equity  200,963,545 
Capital surplus  157,444,926 

 

36.ADDITIONAL INFORMATION

 

The table below shows the amounts corresponding to the detail of Government and private debt securities as of March 31, 2021 and December 31, 2020.

 

Description 03/31/2021  12/31/2020 
Debt securities at fair value through profit or loss        
Government securities  38,214,378   61,676,835 
Private securities  166,799   427,471 
Total debt securities at fair value through profit or loss  38,381,177   62,104,306 
         
Other debt securities        
At fair value through OCI        
Central Bank internal bills  121,861,491   145,342,995 
Government securities  58,962,659   50,590,047 
Government securities – Foreign  2,664,505   5,128,982 
Total at fair value through OCI  183,488,655   201,062,024 
         
At amortized cost        
Government securities  28,754,864   34,549,170 
Private securities  364,978   599,429 
  Total at amortized cost  29,119,842   35,148,599 
Total other debt securities  212,608,497   236,210,623 
         
Equity instruments        
At fair value through profit or loss  2,056,466   1,878,426 
Total equity instruments  2,056,466   1,878,426 

 

37.CHANGES IN THE ARGENTINE MACROECONOMIC ENVIRONMENT AND FINANCIAL AND CAPITAL MARKETS

 

During the second half of 2019, in a political context of federal general elections which gave rise to a change in the federal authorities, a significant volatile period began for the market values of government and private financial instrument and a process of rescheduling maturities and swaps of certain government debt instruments started. In addition, material increases were observed in the country risk and in the exchange rate between the Argentinian peso and US dollar.

 

During 2020, among other regulations, relevant modifications to the tax regulation system were introduced, including changes in the income tax, withholdings related to foreign exchange transactions and for the acquisition of foreign currency for hoarding purposes, and were also established material restrictions to the exchange market access.

 

At the same time, the government’s debt restructuring process continued under domestic and foreign legislation which includes the undergoing negotiation with the International Monetary Funds.

 

Particularly, regarding to the price of Us dollar, since the end of 2019, the gap between the official price of the US dollar -used mainly for foreign trade- and the alternative values that arise through the stock market operation and also with respect to the unofficial value, began to widen around 55% as of the date of issuance of these condensed consolidated interim financial statements.


52 

 

 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

Although, at the end of issuance of these condensed consolidated interim financial statements certain volatility levels abovementioned have been decreased, the local and international macroeconomic context generates certain degree of uncertainty regarding its future progress, and also considering the effect mentioned in note 38, mainly related to the level of the global economic recovery.

 

Therefore, the Bank’s Management permanently monitors any changes in the abovementioned situations in international and local markets, to determine the possible actions to adopt and to identify the possible impact on its financial situation that may need to be reflected in the future financial statements.

 

38.EFFECTS OF THE CORONAVIRUS (COVID-19) OUTBREAK

 

In early March 2020, the World Health Organization recognized Coronavirus (Covid-19) as a pandemic. This emergency situation over public health was worldwide expanded and several countries have taken different measures to contain the effects. This situation and the measures adopted have materially affected the international economy activity with different impacts on several countries and business lines.

 

Particularly in the Argentine Republic, on March 19, 2020, through Decree No. 297/2020, the Government established the "social, preventive and compulsory isolation" which, after several extends and amendments, which as of the date of issuance of these condensed consolidated interim financial statements, is still effective in some urban agglomerations and some communes of the Argentinian provinces, while in other cities it was making flexible into “social, preventive and compulsory distancing”.

 

Along with health protection rules, tax and financial measures were taken to mitigate the impact on the economy associated with the pandemic, including public direct financial assistance measures for part of the population, the establishment of financial and fiscal facilities for both individuals and companies. As regards measures related to the financial institutions, the BCRA established maturities extensions, froze the mortgage loan installments and encouraged banks to lend to companies at reduced rates. In addition, as explained in note 34, the distribution of dividends of the finance institutions was suspended until June 30, 2021.

 

In addition, in the mandatory quarantine context, the BCRA ruled that financial institutions would not be able to open their branches for public service during that period and should continue to provide services to users remotely. They could also trade with each other and their clients in the exchange market remotely. During quarantine, remote trading of stock exchanges and capital markets authorized by the CNV, by the custodians and capital market agents registered with the CNV was admitted.

 

In view of the extension of mandatory quarantine, the BCRA then decided that financial institutions would open their branches from Friday, April 3, 2020 for public attention through previous appointments obtained by the Bank's website.

 

The Bank is developing its activities under the conditions detailed above, giving priority to the compliance of social isolation measures by its employees, with the primary objective of taking care of the public health and well-being of all its stakeholders (employees, suppliers, customers, among others). To this end, it has put in place contingency procedures and has enabled its staff to carry out their tasks remotely. From a commercial point of view, it has emphasized maintaining a close relationship with its customers, trying to respond to their needs at this difficult time, sustaining all virtual channels of care to ensure operability and a good response to requirements, monitoring compliance with their business obligations and monitoring the active portfolio in order to detect possible delays in collection and set new conditions for them.

 

Considering the size of the abovementioned situation, the Bank's Management estimates that this situation could have an impact on its operations and the financial situation and the profit or loss of the Bank, which are under analysis, and will ultimately depend on the extent and duration of the health emergency and the success of the measures taken and taken in the future.

 

53 

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless otherwise expressly stated)

 

39.EVENTS AFTER REPORTING PERIOD

 

No other significant events occurred between the end of the period and the issuance of these condensed consolidated interim financial statements that may materially affect the financial position or the profit and loss for the period, not disclosed in these condensed consolidated interim financial statements.

 

40.ACCOUNTING PRINCIPLES – EXPLANATION ADDED FOR TRANSLATION INTO ENGLISH

 

These condensed consolidated interim financial statements are presented in accordance with the accounting framework established by the BCRA, as mentioned in note 3. These accounting standards may not conform with accounting principles generally accepted in other countries.

 

Jorge Pablo Brito
Vice Chairperson

54 

 

 

EXHIBIT B

 

CONSOLIDATED CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  03/31/2021  12/31/2020 
COMMERCIAL        
In normal situation  72,257,898   82,191,388 
With senior “A” collateral and counter-collateral  4,002,157   3,830,967 
With senior “B” collateral and counter-collateral  10,237,921   10,957,526 
Without senior collateral or counter-collateral  58,017,820   67,402,895 
         
Subject to special monitoring  2,897,091   3,386,041 
In observation        
With senior “A” collateral and counter-collateral  164   382 
With senior “B” collateral and counter-collateral  2,114,058   2,406,161 
Without senior collateral or counter-collateral  782,869   689,107 
In negotiation or with financing agreements        
With senior “B” collateral and counter-collateral      153,707 
Without senior collateral or counter-collateral      136,684 
         
Troubled  88,254   93,133 
Without senior collateral or counter-collateral  88,254   93,133 
         
With high risk of insolvency  98,355   96,192 
With senior “B” collateral and counter-collateral  84,562   88,372 
Without senior collateral or counter-collateral  13,793   7,820 
         
Irrecoverable  570,475   589,464 
With senior “A” collateral and counter-collateral  58,046   59,976 
With senior “B” collateral and counter-collateral  464,635   480,100 
Without senior collateral or counter-collateral  47,794   49,388 
         
Subtotal Commercial  75,912,073   86,356,218 

 

Jorge Pablo Brito

Vice Chairperson

55 

 

 

EXHIBIT B

(Continued)

 

CONSOLIDATED CLASSIFICATION OF LOANS AND OTHER FINANCING

BY SITUATION AND COLLATERAL RECEIVED

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  03/31/2021  12/31/2020 
CONSUMER AND MORTGAGE        
Performing  199,366,935   217,386,320 
With senior “A” collateral and counter-collateral  17,256,579   22,118,890 
With senior “B” collateral and counter-collateral  16,554,639   18,483,095 
Without senior collateral or counter-collateral  165,555,717   176,784,335 
Low risk  528,925   84,023 
With senior “A” collateral and counter-collateral  84,016   5,653 
With senior “B” collateral and counter-collateral  11,083   62 
Without senior collateral or counter-collateral  433,826   78,308 
Low risk - in special treatment  8,834   11,903 
Without senior collateral or counter-collateral  8,834   11,903 
Medium risk  685,769   242,538 
With senior “A” collateral and counter-collateral  39,979   5,127 
With senior “B” collateral and counter-collateral  25,684   33,914 
Without senior collateral or counter-collateral  620,106   203,497 
High risk  240,819   422,773 
With senior “A” collateral and counter-collateral  22,177   23,649 
With senior “B” collateral and counter-collateral  38,097   53,469 
Without senior collateral or counter-collateral  180,545   345,655 
Irrecuperable  868,256   926,221 
With senior “A” collateral and counter-collateral  10,273   12,683 
With senior “B” collateral and counter-collateral  244,854   270,872 
Without senior collateral or counter-collateral  613,129   642,666 
Subtotal consumer and mortgage  201,699,538   219,073,778 
Total  277,611,611   305,429,996 

 

This exhibit discloses the contractual figures as established by the BCRA. The conciliation with the condensed consolidated interim statement of financial position is listed below:

 

  03/31/2021  12/31/2020 
Loans and other financing  265,030,865   290,658,051 
+ Allowances for loans and other financing  9,863,363   11,320,829 
+ Adjustment  amortized cost and fair value  136,826   152,577 
+ Debt securities of financial trust - Measured at amortized cost  151,698   188,283 
+ Corporate bonds  214,048   412,663 
- Interest and other accrued items receivable from financial assets with impaired credit value  (53,584)  (65,855)
Guarantees provided and contingent liabilities  2,268,395   2,763,448 
Total computable ítems  277,611,611   305,429,996 

 

Jorge Pablo Brito

Vice Chairperson

56 

 

 

EXHIBIT C

 

CONSOLIDATED CONCENTRATION OF LOANS AND FINANCING FACILITIES

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  03/31/2021  12/31/2020 
Number of customers Cut off
balance
  % of total
portfolio
  Cut off
balance
  % of total
portfolio
 
10 largest customers  26,779,102   9.65   34,117,009   11.17 
50 next largest customers  26,235,589   9.45   26,554,588   8.69 
100 next largest customers  14,158,125   5.10   15,425,880   5.05 
Other customers  210,438,795   75.80   229,332,519   75.09 
                 
Total  (1)  277,611,611   100.00   305,429,996   100.00 

 

(1) See reconciliation in Exhibit B

 

Jorge Pablo Brito

Vice Chairperson

57 

 

 

EXHIBIT D

 

CONSOLIDATED BREAKDOWN OF LOANS AND OTHER FINANCING BY TERM

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

      Remaining terms to maturity    
Item  Matured  Up to 1
month
  Over 1
month and
up to 3
months
  Over 3
months and
up to 6
months
  Over 6
months and
up to 12
months
  Over 12
months and
up to 24
months
  Over 24
months
  Total 
Non-financial government sector     407,493  522,373  687,460  1,167,750  2,194,034     4,979,110 
Financial sector     1,302,900  347,989  334,136  1,005,147  3,597     2,993,769 
Non-financial private sector and foreign residents                         
   1,451,659  93,015,337  38,082,712  42,759,734  42,333,831  53,221,826  88,078,630  358,943,729 
                          
Total  1,451,659  94,725,730  38,953,074  43,781,330  44,506,728  55,419,457  88,078,630  366,916,608 

 

CONSOLIDATED BREAKDOWN OF LOANS AND OTHER FINANCING BY TERM

AS OF DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

      Remaining terms to maturity    
Item  Matured  Up to 1 month  Over 1
month and
up to 3
months
  Over 3
months
and up to
6 months
  Over 6
months and
up to 12
months
  Over 12
months and
up to 24
months
  Over 24
months
  Total 
Non-financial government sector     271,158  801,727  815,660  1,471,439  2,530,383  536,735  6,427,102 
Financial sector     82,641  413,529  612,756  379,785  1,135,981     2,624,692 
Non-financial private sector and foreign residents  1,479,289  106,814,963  34,736,423  47,376,579  55,922,986  53,163,978  86,512,816  386,007,034 
                          
Total  1,479,289  107,168,762  35,951,679  48,804,995  57,774,210  56,830,342  87,049,551  395,058,828 

 

This exhibit discloses the contractual future cash flows that include interest and charges to be accrued until maturity of the contracts.

 

Jorge Pablo Brito

Vice Chairperson

58 

 

 

EXHIBIT F

 

CONSOLIDATED CHANGE OF PROPERTY, PLANT AND EQUIPMENT

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Original               Residual 
  value at Total life       Depreciation for the period value at the 
  beginning of estimated in         For the   end of the 
Item fiscal year years Increases Decrease Accumulated Decrease period At the end period 
Cost                   
Real property  34,422,211 50  15,640     2,818,978     177,205  2,996,183  31,441,668 
Furniture and facilities  4,507,596 10  21,378     2,039,030     105,039  2,144,069  2,384,905 
Machinery and equipment  6,203,535 5  78,644  80  3,903,511  80  244,097  4,147,528  2,134,571 
Vehicles  967,002 5  12,224  35,586  792,102  30,454  20,164  781,812  161,828 
Other  3,044          3,015     4  3,019  25 
Work in progress  947,130    479,055                 1,426,185 
Right of use real property  2,344,997 5  136,064  434  1,018,111     145,258  1,163,368  1,317,258 
Total property, plant and equipment  (1)  49,395,515    743,005  36,100  10,574,747  30,534  691,767  11,235,979  38,866,440 

 

CONSOLIDATED CHANGE OF PROPERTY, PLANT AND EQUIPMENT
AS OF DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Original               Residual 
  value at Total life       Depreciation for the fiscal year value at the 
  beginning of estimated in         For the   end of the 
Item fiscal year years Increases Decreases Accumulated Decrease fiscal year At the end fiscal year 
Cost                           
Real property  33,684,778 50  765,928  28,495  2,134,810  13,662  697,830  2,818,978  31,603,233 
Furniture and facilities  4,159,888 10  348,591  883  1,621,036  30  418,024  2,039,030  2,468,566 
Machinery and equipment  5,491,469 5  712,186  120  2,919,019  51  984,543  3,903,511  2,300,024 
Vehicles  946,518 5  91,426  70,942  773,052  65,879  84,929  792,102  174,900 
Other  3,012    32     2,991     24  3,015  29 
Work in progress  1,343,254    525,373  921,497              947,130 
Right of use real property  1,881,003 5  596,955  132,961  465,764  37,792  589,592  1,017,564  1,327,433 
Total property, plant and equipment  47,509,922    3,040,491  1,154,898  7,916,672  117,414  2,774,942  10,574,200  38,821,315 

 

(1) During the fiscal year 2021, this item observed transfers from property, plant and equipment and/or intangible assets.

 

Jorge Pablo Brito

Vice Chairperson

59 

 

 

 

EXHIBIT F

(Continued)

 

CONSOLIDATED CHANGE IN INVESTMENT PROPERTY

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

   Original
Value at
  Useful life        Depreciation for the period   Residual
value at the
 
Item beginning of
fiscal year
  estimated in
years
  Increases  Decreases  Accumulated  Decrease  For the
period
  At the end  end of the
period
 
Cost                                   
Rented properties  248,744   50   1      40,838      695   41,533   207,212 
Other investment properties  956,578   50           57,347      3,760   61,107   895,471 
Total investment property  1,205,322       1       98,185      4,455   102,640   1,102,683 

 

 

CONSOLIDATED CHANGE IN INVESTMENT PROPERTY

AS OF DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Original
Value at 
  Useful life         Depreciation for the fiscal year   Residual
value at the
 
Item beginning of
fiscal year
  estimated in
years
  Increases  Decreases  Accumulated  Decrease  For the
fiscal year
  At the end  end of the
fiscal year
 
Cost                                    
Rented properties  248,743   50   1       38,058       2,780   40,838   207,906 
Other investment properties  947,656   50   79,294   70,372   43,863   9   13,493   57,347   899,231 
Total investment property (1)  1,196,399       79,295   70,372   81,921   9   16,273   98,185   1,107,137 

 

(1) During the fiscal year 2020, this item observed transfers to and from property, plant and equipment.

 

Jorge Pablo Brito

Vice Chairperson

60 

 

 

 

EXHIBIT G

 

CONSOLIDATED CHANGE IN INTANGIBLE ASSETS

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Original
Value at
beginning
  Useful life        Depreciation for the period  Residual
value at
 
Item of fiscal
year
  estimated
in years
  Increases  Decreases  Accumulated  Decrease  For the
period
  At the
end
  the end of
the period
 
Cost                           
Licenses  3,105,622   5   325,684   12,016   1,611,066   547   171,708   1,782,227   1,637,063 
Other intangible assets  9,747,613   5   329,979       5,476,985       420,001   5,896,986   4,180,606 
Total intangible assets (1)  12,853,235       655,663   12,016   7,088,051   547   591,709   7,679,213   5,817,669 

 

CONSOLIDATED CHANGE IN INTANGIBLE ASSETS

AS OF DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Original
Value at
beginning
  Useful life        Depreciation for the fiscal year  Residual
value at
the end
of the
 
Item of fiscal
year
  estimated
in years
  Increases  Decreases  Accumulated  Decrease  For the
fiscal year
  At the
end
  fiscal
year
 
Cost                           
Licenses  2,512,933   5   592,689       1,030,106   1   580,961   1,611,066   1,494,556 
Other intangible assets  7,841,851   5   1,907,108   1,346   3,877,881   1,345   1,600,449   5,476,985   4,270,628 
Total intangible assets  10,354,784       2,499,797   1,346   4,907,987   1,346   2,181,410   7,088,051   5,765,184 

 

(1) During the fiscal year 2021, this item was transferred from Property, Plant and equipment.

 

Jorge Pablo Brito

Vice Chairperson

61 

 

 

EXHIBIT H

 

CONSOLIDATED DEPOSIT CONCENTRATION

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

   03/31/2021   12/31/2020 
  Outstanding   % of total   Outstanding   % of total 
Number of customers  balance   portfolio   balance   portfolio 
10 largest customers  51,479,225   11.26   105,724,447   19.15 
50 next largest customers  32,726,948   7.16   52,053,026   9.43 
100 next largest customers  20,196,619   4.42   23,609,291   4.28 
Other customers  352,884,205   77.16   370,660,923   67.14 
Total  457,286,997   100.00   552,047,687   100.00 

 

Jorge Pablo Brito

Vice Chairperson

 

62 

 

 

EXHIBIT I

 

CONSOLIDATED BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Remaining terms to maturity    
Item Up to 1
month
  Over 1
month and
up to 3
months
  Over 3
months
and up to 6
months
  Over 6
months
and up to
12 months
  Over 12
months
and up to
24 months
  Over 24
months
  Total 
Deposits  412,161,028   43,815,883   4,526,068   818,688   17,047   2,394   461,341,108 
                             
From the non-financial government sector  51,637,859   3,680,623   483,163   2,544           55,804,189 
From the financial sector  693,670                       693,670 
From the non-financial private sector and foreign residents  359,829,499   40,135,260   4,042,905   816,144   17,047   2,394   404,843,249 
                             
Derivative instruments  6                       6 
                             
Other Financial Liabilities  48,426,741   150,377   251,419   219,012   298,569   538,412   49,884,530 
                             
Financing received from the Central Bank of Argentina and other financial institutions  821,714   217,762   59,990   42,456   25,392   2,169   1,169,483 
                             
Issued corporate bonds  2,541,842   208,048       208,048   2,585,744       5,543,682 
                             
Subordinated corporate bonds      1,241,797       1,241,798   2,731,219   47,718,876   52,933,690 
                             
Total  463,951,331   45,633,867   4,837,477   2,530,002   5,657,971   48,261,851   570,872,499 

 

This exhibit discloses contractual future cash flows that include interests and accessories to be accrued until maturity of the contracts.

 

Jorge Pablo Brito

Vice Chairperson

 

63 

 

 

EXHIBIT I

(Continued)

 

CONSOLIDATED BREAKDOWN OF FINANCIAL LIABILITIES

FOR RESIDUAL TERMS

AS OF DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

   Remaining terms to maturity     
Item  Up to 1 month   Over 1 month and up to 3 months   Over 3 months and up to 6 months   Over 6 months and up to 12 months   Over 12 months and up to 24 months   Over 24 months   Total 
Deposits  496,879,864   50,882,679   6,304,712   3,417,297   39,316   2,470   557,526,338 
From the non-financial government sector  76,664,882   6,279,024   1,018,806   2,404           83,965,116 
From the financial sector  786,621                       786,621 
From the non-financial private sector and foreign residents  419,428,361   44,603,655   5,285,906   3,414,893   39,316   2,470   472,774,601 
                             
Derivative instruments  47   213                   260 
                             
Repo transactions  700,748                       700,748 
                             
Other financial institutions  700,748                       700,748 
                             
   Other Financial Liabilities  54,077,805   150,989   142,144   358,286   298,862   580,978   55,609,064 
                             
Financing received from the Central Bank of Argentina and other financial institutions  473,771   225,308   230,508   91,156   45,286   6,465   1,072,494 
                             
Issued corporate bonds  236,462       3,119,871   234,996   2,920,674       6,512,003 
                             
Subordinated corporate bonds          1,283,097   1,283,098   2,822,053   49,305,910   54,694,158 
                             
Total  552,368,697   51,259,189   11,080,332   5,384,833   6,126,191   49,895,823   676,115,065 

 

This exhibit discloses contractual future cash flows that include interests and accessories to be accrued until maturity of the contracts.

 

Jorge Pablo Brito

Vice Chairperson

64 

 

 

EXHIBIT J

 

CONSOLIDATED CHANGES IN PROVISIONS

AS OF MARCH 31, 2021

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

   Amounts at
beginning of
       Decreases   Monetary
effects
generated
for
     
Item  fiscal year   Increases   Reversals   Charge off   provisions    03/31/2021 
Provisions for eventual commitments  19,435   2,798           (2,339)  19,894 
For Administrative, disciplinary and criminal penalties  811   30,673       30,673   (93)  718 
Other  1,453,251   395,730       308,683   (169,204)  1,371,094 
Total Provisions  1,473,497   429,201       339,356   (171,636)  1,391,706 

 

CONSOLIDATED CHANGES IN PROVISIONS

AS OF DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Amounts at
beginning of
     Decreases  Monetary
effects
generated
for
    
Item fiscal year  Increases  Reversals  Charge off  provisions  12/31/2020 
Provisions for eventual commitments  26,560   8,892       9,060   (6,957)  19,435 
For Administrative, disciplinary and criminal penalties  1,104               (293)  811 
Other  2,238,231   1,267,345   9   1,424,458   (627,858)  1,453,251 
Total Provisions  2,265,895   1,276,237   9   1,433,518   (635,108)  1,473,497 

 

Jorge Pablo Brito

Vice Chairperson

 

65 

 

 

EXHIBIT L

 

CONSOLIDATED FOREIGN CURRENCY AMOUNTS

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(Translation of the Financial statements originally issued in Spanish – See Note 40)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  03/31/2021  12/31/2020 
  Total parent
company
and local
  Total per currency    
Items branches  US dollar  Euro  Real  Other  Total 
ASSETS                  
Cash and deposits in banks  117,240,237   116,631,099   427,406   19,501   162,231   119,414,470 
Debt securities at fair value through profit or loss  38,091   38,091               6,729 
Other financial assets  5,651,375   5,651,375               5,621,935 
Loans and other financing  24,452,975   24,428,382   24,593           26,307,700 
Other financial institutions  23,556   23,556               23,980 
From the non-financial private sector and foreign residents  24,429,419   24,404,826   24,593           26,283,720 
Other debt Securities  3,936,177   3,936,177               6,653,268 
Financial assets delivered as guarantee  1,806,277   1,799,798   6,479           2,058,428 
Equity Instruments at fair value through profit or loss  12,240   12,240               13,133 
TOTAL ASSETS  153,137,372   152,497,162   458,478   19,501   162,231   160,075,663 
                         
LIABILITIES                        
Deposits  82,879,949   82,879,886   63           87,087,087 
Non-financial government sector  4,089,201   4,089,201               4,742,307 
Financial sector  633,643   633,643               648,228 
Non-financial private sector and foreign residents  78,157,105   78,157,042   63           81,696,552 
Other financial liabilities  18,455,399   18,299,093   136,055       20,251   20,838,793 
Financing from Central Bank and other financial Institutions  603,877   579,224   24,653           530,442 
Subordinated corporate bonds  38,149,077   38,149,077               38,743,184 
Other non-financial liabilities  25,974   25,974               22,941 
TOTAL LIABILITIES  140,114,276   139,933,254   160,771       20,251   147,222,447 

 

Jorge Pablo Brito

Vice Chairperson

 

66 

 

 

 

  EXHIBIT Q
   
CONSOLIDATED  BREAKDOWN  OF STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Net financial Income/ (Loss) 
  Mandatory measurement 
Items Quarter ended 03/31/2021  Quarter ended 03/31/2020 
For measurement of financial assets at fair value through profit or loss        
Gain from government securities  4,042,374   1,895,653 
Gain from private securities  162,416   322,785 
Gain from derivative financial instruments        
Forward transactions      51,369 
Loss from other financial assets  (11,981)  (7,933)
Gain from equity instruments at fair value through profit or loss  398,378   128,960 
Loss from sales or decreases of financial assets at fair value (*)  (29,668)  (43,070)
TOTAL  4,561,519   2,347,764 

 

(*) Net amounts of reclassifications of instruments classified at fair value through other comprehensive income that were derecognized or charged during the period.

 

Jorge Pablo Brito
Vice Chairperson

67 

 

 

  EXHIBIT Q
  (Continued)
   
CONSOLIDATED  BREAKDOWN  OF STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

  Net financial Income/(Loss) 
Interest and adjustment for the application of the effective interest rate of financial assets measured at amortized cost Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Interest income        
for cash and bank deposits  2,628   86,903 
for government securities  2,374,545   2,429,310 
for debt securities  103,184   832,892 
for loans and other financing        
Non-financial public sector  461,654   1,207,566 
Financial sector  168,024   359,321 
Non-financial private sector        
Overdrafts  1,696,782   5,379,407 
Documents  1,383,928   1,815,777 
Mortgage loans  3,053,831   2,563,720 
Pledge loans  110,646   151,998 
Personal loans  9,246,202   9,498,057 
Credit cards  2,714,706   3,902,785 
Financial leases  21,832   32,041 
Other  3,475,204   2,842,509 
for repo transactions        
Central Bank of Argentina  2,077,895   459,345 
Other financial institutions  14,424   59,659 
TOTAL  26,905,485   31,621,290 
Interest expenses        
for deposits        
Non-financial private sector        
Checking accounts  (726,618)  (171,642)
Saving accounts  (230,686)  (207,853)
Time deposits and investments accounts  (19,188,851)  (12,111,607)
for Financing received from Central Bank of Argentina and other financial institutions  (43,579)  (31,506)
for repo transactions        
Other financial institutions  (54,518)  (93,574)
for other financial liabilities  (5,369)  (30,012)
Issued corporate bonds  (352,310)  (406,325)
for subordinated corporate bonds  (664,481)  (653,737)
TOTAL  (21,266,412)  (13,706,256)

 

Jorge Pablo Brito
Vice Chairperson

68 

 

 

    EXHIBIT Q
    (Continued)
     
CONSOLIDATED  BREAKDOWN  OF STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31,  2021, except that indicated otherwise)

 

Interest and adjustment for the application of the effective interest rate of financial assets measured at fair value through other comprehensive income

 Income for the period  Other comprehensive income  Income for the period  Other comprehensive income 
 Quarter ended 03/31/2021  Quarter ended 03/31/2021  Quarter ended 03/31/2020  Quarter ended 03/31/2020 
From debt government securities  18,190,014   317,195   12,471,272   (1,867,251)
Total  18,190,014   317,195   12,471,272   (1,867,251)

 

  Income for the period 
Commissions income Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Commissions related to obligations  3,494,542   3,760,508 
Commissions related to credits  22,377   22,624 
Commissions related to loans commitments and financial guarantees  193   188 
Commissions related to securities value  128,892   121,055 
Commissions for credit cards  2,293,002   2,474,502 
Commissions for insurances  431,032   440,233 
Commissions related to trading and foreign exchange transactions  158,345   124,218 
Total  6,528,383   6,943,328 

 

  Loss for the period 
Commissions expenses Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Commissions related to trading and foreign exchange transactions  (11,736)  (29,914)
Commissions paid ATM exchange  (414,012)  (376,958)
Checkbooks commissions and compensating cameras  (108,679)  (117,882)
Commissions credit cards and foreign trade  (65,500)  (97,543)
Total  (599,927)  (622,297)

 

Jorge Pablo Brito
Vice Chairperson

69 

 

 

          EXHIBIT R
            
 VALUE ADJUSTMENT FOR CREDIT LOSSES - CONSOLIDATED ALLOWANCES FOR UNCOLLECTIBILITY RISK
AS OF MARCH 31, 2021
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

     Movements between stages of period       
        ECL of remanent life of financial asset       
Item Balances at
beginning of
the fiscal year
  ECL of the next
12 months
  Financial
instruments
with a
significant
increase in
credit risk
  Financial
instruments with
impairment
  Effect monetary
generated for
provisions
  03/31/2021 
Other financial assets  21,380   905           (2,489)  19,796 
Loans and other financing  11,320,829   (877,581)  492,573   218,853   (1,291,311)  9,863,363 
Other financial institutions  18,764   (1,164)          (2,104)  15,496 
To the non-financial private sector
and foreign residents
                        
Overdrafts  774,557   (37,135)  219,618   (481,586)  (76,387)  399,067 
Documents  603,868   (63,407)  (12,926)  (3,302)  (65,935)  458,298 
Mortgage loans  850,479   (4,288)  59,319   3,119   (99,948)  808,681 
Pledge loans  151,747   (6,089)  7,038   5,606   (17,675)  140,627 
Personal loans  3,214,345   65,067   177,110   254,291   (389,246)  3,321,567 
Credit cards  3,827,827   (507,234)  9,000   386,587   (434,316)  3,281,864 
Financial leases  11,351   52   117   (1,899)  (1,231)  8,390 
Other  1,867,891   (323,383)  33,297   56,037   (204,469)  1,429,373 
Eventual commitments  19,435   3,165   (361)      (2,345)  19,894 
Other debt securities  1,517   (600)          (149)  768 
TOTAL OF ALLOWANCES  11,363,161   (874,111)  492,212   218,853   (1,296,294)  9,903,821 

 

 VALUE ADJUSTMENT FOR CREDIT LOSSES - CONSOLIDATED ALLOWANCES FOR UNCOLLECTIBILITY RISK
AS OF DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 40)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)
            

     Movements between stages of period       
        ECL of remanent life of financial asset       
Item Balances at
beginning of
the fiscal year
  ECL of the next
12 months
  Financial
instruments
with a
significant
increase in
credit risk
  Financial
instruments with
impairment
  Effect monetary
generated for
provisions
  12/31/2020 
Other financial assets  15,849   12,784           (7,253)  21,380 
Loans and other financing  7,795,959   4,751,788   2,274,529   (539,226)  (2,962,221)  11,320,829 
Other financial institutions  42,439   (14,743)          (8,932)  18,764 
To the non-financial private sector
and foreign residents
                        
Overdrafts  1,186,761   15,358   1,425   (24,293)  (404,694)  774,557 
Documents  564,805   156,645   95,270   (34,991)  (177,861)  603,868 
Mortgage loans  589,024   118,594   341,121   4,437   (202,697)  850,479 
Pledge loans  198,448   27,802   8,104   (19,483)  (63,124)  151,747 
Personal loans  2,825,426   1,032,375   564,190   (265,523)  (942,123)  3,214,345 
Credit cards  1,219,523   2,444,591   908,226   (83,050)  (661,463)  3,827,827 
Financial leases  8,229   (2,197)  (891)  8,729   (2,519)  11,351 
Other  1,161,304   973,363   357,084   (125,052)  (498,808)  1,867,891 
Eventual commitments  26,560   6,006   (6,145)  394   (7,380)  19,435 
Other debts securities  2,979   299           (1,761)  1,517 
TOTAL OF ALLOWANCES  7,841,347   4,770,877   2,268,384   (538,832)  (2,978,615)  11,363,161 

 

Jorge Pablo Brito
Vice Chairperson

70 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF FINANCIAL POSITION  
AS OF MARCH 31, 2021 AND DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes  Exhibits 03/31/2021  12/31/2020 
ASSETS              
Cash and Deposits in Banks  6     136,034,911   129,328,037 
Cash        23,649,278   28,714,605 
Central Bank of Argentina        75,836,106   56,470,730 
Other Local and Foreign Entities        36,543,774   44,136,758 
Other        5,753   5,944 
Debt Securities at fair value through profit or loss  6  A  37,152,391   60,075,788 
Derivative Financial Instruments  6         8,169 
Repo transactions  6     12,889,942   45,394,755 
Other financial assets  5, 6 and 8  R  15,272,112   18,436,481 
Loans and other financing  5 and 6  B, C, D and R  264,880,785   290,734,113 
Non-financial Public Sector        3,289,730   4,083,029 
Other Financial Entities        2,662,581   2,058,729 
Non-financial Private Sector and Foreign Residents        258,928,474   284,592,355 
Other Debt Securities  5 y 6  A and R  209,538,002   230,577,703 
Financial Assets delivered as guarantee  6 and 25     13,647,125   16,051,734 
Equity Instruments at fair value through profit or loss  6 and 10  A  2,056,325   1,878,283 
Investment in subsidiaries, associates and joint arrangements  7     5,262,536   5,341,235 
Property, plant and equipment     F  38,839,504   38,790,574 
Intangible Assets     G  5,815,821   5,763,209 
Other Non-financial Assets  8     2,275,876   2,230,399 
Non-current assets held for sale        2,479,079   2,496,987 
TOTAL ASSETS        746,144,409   847,107,467 

 

Jorge Pablo Brito
Vice Chairperson

71 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF FINANCIAL POSITION  
AS OF MARCH 31, 2021 AND DECEMBER 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes  Exhibits 03/31/2021  12/31/2020 
LIABILITIES              
Deposits  6  H and I  453,766,472   547,935,484 
Non-financial Public Sector        55,361,116   83,094,302 
Financial Sector        693,670   786,621 
Non-financial Private Sector and Foreign Residents        397,711,686   464,054,561 
Derivative Financial Instruments  6  I  6   260 
Repo Transactions  6  I      698,695 
Other Financial Liabilities  6 and 12  I  34,062,148   37,534,304 
Financing received from the Central Bank of Argentina and other financial entities  6  I  1,148,993   1,037,900 
Issued Corporate Bonds  6 and 30  I  5,054,192   5,565,079 
Current Income Tax Liabilities  0     4,574,963   5,634,911 
Subordinated Corporate Bonds  6 and 30  I  38,149,077   38,743,184 
Provisions  11  J and R  1,391,706   1,473,497 
Deferred Income Tax Liabilities        8,095,367   7,106,143 
Other Non-financial Liabilities  12     29,866,728   34,118,520 
TOTAL LIABILITIES        576,109,652   679,847,977 
SHAREHOLDERS’ EQUITY              
Capital Stock  23  K  639,413   639,413 
Non capital contributions        12,429,781   12,429,781 
Adjustments to Shareholders’ Equity        58,523,016   58,523,016 
Earnings Reserved        124,040,951   124,040,951 
Unappropriated Retained Earnings        (29,642,958)  (57,157,399)
Other Comprehensive Income accumulated  3     1,857,190   1,269,287 
Net Income for the period / fiscal year        2,187,364   27,514,441 
TOTAL SHAREHOLDERS’ EQUITY        170,034,757   167,259,490 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES        746,144,409   847,107,467 

 

The notes 1 to 38 to the condensed separate interim financial statement and the exhibits A to D, F to L, O, Q and R are an integral part of the condensed separate interim financial statement.

 

Jorge Pablo Brito
Vice Chairperson

72 

 

 

CONDENSED SEPARATE STATEMENT OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes  Exhibits Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Interest income     Q  45,048,006   44,055,330 
Interest expense     Q  (21,268,378)  (13,706,256)
Net Interest income        23,779,628   30,349,074 
Commissions income  16  Q  6,442,846   6,854,272 
Commissions expense     Q  (555,796)  (617,770)
Net Commissions income        5,887,050   6,236,502 
Subtotal (Net Interest income + Net Commissions income)        29,666,678   36,585,576 
Loss from measurement of financial instruments at fair value through profit or loss     Q  4,506,293   2,160,970 
Profit from sold or derecognized assets at amortized cost        59,624   1,216,086 
Differences in quoted prices of gold and foreign currency  17     1,145,728   727,337 
Other operating income  18     1,352,486   1,421,976 
Allowances for loan losses  5         (1,228,846)
Net Operating Income        36,730,809   40,883,099 
Employee benefits  19     (7,134,517)  (6,610,040)
Administrative expenses  20     (3,364,725)  (3,760,969)
Depreciation and amortization of fixed assets     F and  G  (1,281,450)  (1,185,833)
Other Operating Expenses  21     (6,312,348)  (6,144,228)
Operating Income        18,637,769   23,182,029 
Income from subsidiaries, associates and joint arrangements        122,883   152,638 
Loss on net monetary position        (14,323,468)  (8,169,766)
Income before tax on continuing operations        4,437,184   15,164,901 
Income tax on continuing operations  15.b)    (2,249,820)  (5,560,560)
Net Income from continuing operations        2,187,364   9,604,341 
Net Income for the period        2,187,364   9,604,341 

 

Jorge Pablo Brito
Vice Chairperson

73 

 

 

 

SEPARATE EARNINGS PER SHARE
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Net Profit attributable to Parent’s shareholders  2,187,364   9,604,341 
PLUS: Potential diluted earnings per common share        
Net Profit attributable to Parent’s shareholders adjusted as per diluted earnings  2,187,364   9,604,341 
Weighted average of outstanding common shares for the period  639,413   639,398 
PLUS: Weighted average of the number of additional common shares with dilution effects        
Weighted average of outstanding common shares for the period adjusted as per dilution effect  639,413   639,398 
Basic earnings per share (in pesos)  3.4209   15.0209 

 

Jorge Pablo Brito
Vice Chairperson

74 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes  Exhibits Quarter ended 03/31/2021  Quarter ended 03/31/2020 
Net Income for the period        2,187,364   9,604,341 
Items of Other Comprehensive Income that will be reclassified to profit or loss              
Foreign currency translation differences in financial statements conversion        (96,699)  (10,115)
Foreign currency translation differences for the period        (96,699)  (10,115)
Profit or losses for financial instruments measured at fair value through OCI (IFRS 9(4.1.2)(a))        783,080   (720,221)
Profit or losses for the period for financial instruments at fair value through OCI     Q  415,776   (1,600,691)
Adjustment for reclassification of the period        638,514   571,353 
Income tax  15.b)    (271,210)  309,117 
Interest in Other Comprehensive Income of associates and joint ventures accounted for using the participation method        (98,478)  (267,003)
Losses for the period from interest in Other Comprehensive Income of associates and joint ventures accounted for using the participation method        (98,478)  (267,003)
Total Other Comprehensive Income / (Loss) that will be reclassified to profit or loss for the period        587,903   (997,339)
Total Other Comprehensive Income / (Loss)        587,903   (997,339)
Total Comprehensive Income        2,775,267   8,607,002 

 

The notes 1 to 38 to the condensed separate interim financial statement and the exhibits A to D, F to L, O, Q and R are an integral part of the condensed separate interim financial statement.

 

Jorge Pablo Brito
Vice Chairperson

75 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2021
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

    Capital stock Non- capital contributions     Other comprehensive income  Earnings Reserved       
Changes Notes Outstanding shares  In treasury  Additional paid-in capital  Adjustments to Shareholders’ Equity  Accumulative foreign currency translation difference in financial statements conversion  Other (1)  Legal   Other  Unappropriated Retained Earnings (1)  

Total

Equity

 
Restated amount at the beginning of the fiscal year   639,413     12,429,781  58,523,016  1,022,571  246,716  36,247,343   87,793,608  (29,642,958) 167,259,490 
Total comprehensive income for the period                                 
- Net income for the period                            2,187,364  2,187,364 
- Other comprehensive income/ (loss) for the period               (96,999) 684,602            587,903 
Amount at the end of the period   639,413     12,429,781  58,523,016  925,872  931,318  36,247,343   87,793,608  (27,455,594) 170,034,757 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

    Capital stock Non- capital contributions     Other comprehensive income  Earnings Reserved       
Changes Notes Outstanding shares  In treasury  Additional paid-in capital  Adjustments to Shareholders’ Equity  Accumulative foreign currency translation difference in financial statements conversion  

Other

  Legal   Other  Unappropriated Retained Earnings  

Total

Equity

 
Restated amount at the beginning of the fiscal year   639,413     12,429,781  58,523,016  887,181  (677,300) 23,699,388   60,763,027  4,979,523 161,244,029 
Total comprehensive income for the period                                 
- Net income for the period                            9,604,341  9,604,341 
- Other comprehensive income/ (loss) for the period               (10,115) (987,224)           (997,339)
Amount at the end of the period   639,413     12,429,781  58,523,016  877,066  (1,664,524) 23,699,388   60,763,027  14,583,864 169,851,031 

 

(1) Amount at the beginning of the fiscal year were adjusted in accordance with Communication “A” 7211. See also Note 3 to the condensed consolidated interim financial statements section “New standards adopted in the fiscal year”.

 

The notes 1 to 38 to the condensed separate interim financial statement and the exhibits A to D, F to L, O, Q and R are an integral part of the condensed separate interim financial statement.

 

Jorge Pablo Brito
Vice Chairperson

76 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes 03/31/2021  03/31/2020  
CASH FLOWS FROM OPERATING ACTIVITIES           
Income for the period before Income Tax    4,437,184   15,164,901  
Adjustment for the total monetary effect of the period    14,323,468   8,169,766  
Adjustments to obtain cash flows from operating activities:           
Amortization and depreciation    1,281,450   1,185,833  
Allowance for loan losses        1,228,846  
Difference in quoted prices of foreign currency    (5,573,643)  (3,733,627) 
Other adjustments    11,832,840   5,428,102  
Net increase / (decrease) from operating assets:           
Debt Securities at fair value through profit and loss    22,923,397   5,849,539  
Derivative financial instruments    8,169   19,019  
Repo transactions    32,504,813   1,088,411  
Loans and other financing           
   Non-financial public sector    793,299   3,922,505  
   Other financial entities    (603,852)  2,117,365  
   Non-financial private sector and foreign residents    25,614,787   11,302,308  
Other debt securities    (2,441,803)  (46,963,130) 
Financial assets delivered as guarantee    2,404,609   2,147,688  
Equity instruments at fair value through profit or loss    (178,042)  103,276  
Other assets    3,193,655   (6,458,276) 
Net increase / (decrease) from operating liabilities:           
Deposits           
   Non-financial public sector    (27,733,186)  11,953,679  
   Financial sector    (92,951)  (67,831) 
   Non-financial private sector and foreign residents    (66,342,875)  19,079,026  
Derivative financial instruments    (254)  (953,457) 
Repo transactions    (698,695)  (1,541,610) 
Other liabilities    (5,500,601)  (5,855,364) 
Payments for Income Tax    (1,647,382)  (2,202,584) 
TOTAL CASH FROM OPERATING ACTIVITIES (A)    8,504,478   20,984,385  

 

Jorge Pablo Brito
Vice Chairperson

77 

 

 

CONDENSED SEPARATE INTERIM STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2021 AND 2020
(Translation of the Financial statements originally issued in Spanish – See Note 38)
(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, except that indicated otherwise)

 

Items Notes  03/31/2021  03/31/2020 
CASH FLOWS FROM INVESTING ACTIVITIES            
Payments:            
Acquisition of PPE, intangible assets and other assets      (1,256,901)  (1,107,498)
TOTAL CASH USED IN INVESTING ACTIVITIES (B)      (1,256,901)  (1,107,498)
CASH FLOWS FROM FINANCING ACTIVITIES            
Payments:            
Non subordinated corporate bonds      (228,334)  (512,443)
Central Bank of Argentina      (180)  (15,930)
Financing from local financial entities          (1,997,937)
Other payments related to financing activities      (138,434)  (195,168)
Proceeds:            
Financing to local financial entities      152,488     
TOTAL CASH USED IN FINANCING ACTIVITIES (C)      (214,460)  (2,721,478)
             
EFFECT OF EXCHANGE RATE FLUCTUATIONS (D)      9,061,923   6,588,060 
MONETARY EFFECT ON CASH AND CASH EQUIVALENTS (E)      (32,869,670)  (18,618,987)
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D+E)      (16,774,630)  5,124,482 
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FISCAL YEAR  22   274,671,032   220,404,390 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD  22   257,896,402   225,528,872 

 

The notes 1 to 38 to the condensed separate interim financial statement and the exhibits A to D, F to L, O, Q and R are an integral part of the condensed separate interim financial statement.

 

Jorge Pablo Brito
Vice Chairperson

78 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

1.CORPORATE INFORMATION

 

Banco Macro SA (hereinafter, the “Bank”) is a business corporation (sociedad anónima) organized in the Republic of Argentina that offers traditional banking products and services to companies, including those companies operating in regional economies as well as to individuals, thus strengthening its goal to be a multiservice bank. In addition, the Bank performs certain transactions through its subsidiaries Macro Bank Limited (a company organized under the laws of Bahamas), Macro Securities SA, Macro Fiducia SA, Macro Fondos SGFCISA and Argenpay SAU.

 

Macro Compañía Financiera SA was created in 1977 as a non-banking financial institution. In May 1988, it received the authorization to operate as a commercial bank and it was incorporated as Banco Macro SA. Subsequently, as a result of the merger process with other entities, it adopted other names (among them, Banco Macro Bansud SA) and since August 2006, Banco Macro SA.

 

The Bank’s shares are publicly listed on Bolsas y Mercados Argentinos (BYMA) since November 1994 and as from March 24, 2006, they are listed on the New York Stock Exchange (NYSE). Additionally, on October 15, 2015 they were authorized to be listed on the Mercado Abierto Electrónico SA (MAE).

 

Since 1994, Banco Macro SA’s market strategy was mainly focused on the regional areas outside the Autonomous City of Buenos Aires (CABA, for its acronym in Spanish). Following this strategy, in 1996, Banco Macro SA started the process to acquire entities and assets and liabilities during the privatization of provincial and other banks.

 

In 2001, 2004, 2006 and 2010, the Bank acquired the control of Banco Bansud SA, Nuevo Banco Suquía SA, Nuevo Banco Bisel SA and Banco Privado de Inversiones SA, respectively. Such entities merged with and into Banco Macro SA in December 2003, October 2007, August 2009 and December 2013, respectively. In addition, during the fiscal year 2006, the Bank acquired control over Banco del Tucumán SA, which was merged with Banco Macro SA in October 2019.

 

On July 17, August 26, October 15, 2020 and March 4, 2021, the Bank made irrevocable capital contributions in advance of future share subscription to the company Play Digital SA, which were accepted for the Extraordinary Shareholder’s Meeting of that company. Additionally, on December 15, 2020, the Extraordinary Shareholder’s Meeting approved a capital stock increase. Thus, the Bank subscribed new shares on December 16, 2020. Moreover, on May 12, 2021, the Bank made a new irrevocable capital contribution in advance of future share subscription for an amount of 108,136 (see note 1 to the condensed consolidated interim financial statements).

 

On May 27, 2021, the Bank’s Board of Directors approved the issuance of these condensed separate interim financial statements.

 

2.OPERATIONS OF THE BANK

 

Note 2 to the condensed consolidated interim financial statements includes a detailed description of the agreements that relate the Bank with the provincial and municipalities governments.

 

3.BASIS FOR THE PREPARATION OF THESE FINANCIAL STATEMENTS AND APPLICABLE ACCOUNTING STANDARDS

 

Applicable Accounting Standards

 

These condensed separate interim financial statements of the Bank were prepared in accordance with the accounting framework established by Central Bank of Argentina (BCRA, for its acronym in Spanish), in its Communiqué “A” 6114 as supplementary. Except for the exceptions established by the BCRA which are explained in the following paragraph, such framework is based on International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the Argentine Federation of Professionals Councils in Economic Sciences (FACPCE, for its acronym in Spanish). The abovementioned international standards include the IFRS, the International Accounting Standards (IAS) and the interpretations developed by the IFRS Interpretations Committee (IFRIC) or former IFRIC (SIC).

 

79 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

The transitory exceptions and regulatory guidelines established by BCRA to the application of effective IFRS, that have affected the preparation of these condensed separate interim financial statements are as follows:

 

a)According to Communiqué “A” 6114, as supplementary, and in the convergence process through IFRS, the BCRA established that since fiscal years beginning on January 1, 2020 included, financial institutions defined as “Group A” by BCRA rules, in which the Bank is included, begin to apply section 5.5 “Impairment” of the IFRS 9 “Financial Instruments” (sections B5.5.1 to B5.5.55), except for the temporary exclusion for the debt securities of the non-financial public sector established by BCRA Communiqué “A” 6847. As of the date of issuance of these condensed separate interim financial statements, the Bank is in the process of quantifying the effect of the full application of the mentioned standard.

 

b)Additionally, the Bank received on March 12 and 22, 2021 and April 29, 2019 Memorandums from the BCRA, which established specifics guidelines related to the measurement of the Bank’s holding in Prisma Medios de Pago SA as explained in note 10. Considering such guidelines, the Bank adjusted the fair value previously determined. As of the date of issuance of these condensed separate interim financial statements, the Bank is in the process of quantifying the difference over such fair value and the fair value calculated according to IFRS, which could be material.

 

Except for what was mentioned in the previous paragraphs, the accounting policies applied by the Bank comply with the IFRS as currently approved and are applicable to the preparation of these condensed separate interim financial statements in accordance with the IFRS as adopted by the BCRA through Communiqué “A” 7183. Generally, the BCRA does not allow the anticipated application of any IFRS, unless otherwise expressly stated.

 

Note 3 to the condensed consolidated interim financial statements presents further detailed descriptions of the basis for the presentation of such financial statements and the main accounting policies used and the relevant information of the subsidiaries. All that is explained therein shall apply to these condensed separate interim financial statements.

 

Subsidiaries

 

As mentioned in note 1, the Bank performs certain transactions through its subsidiaries.

 

Subsidiaries are all the entities controlled by the Bank. An entity controls another entity when it is exposed, or has rights, to variable returns from its continuing involvement with such other entity and has the ability to use its power to direct the operating and financing policies of such other entity, to affect the amounts of such returns.

 

As provided under IAS 27 “Consolidated and Separate Financial Statements”, investments in subsidiaries were accounted for using the “equity method”, established in IAS 28 “Investment in associates and joint ventures”. When using this method, investments are initially recognized at cost, and such amount increases or decreases to recognize investor’s interest in profits and losses of the entity after the date of acquisition or creation.

 

Shares in profits and losses of subsidiaries and associates are recognized under “Income / (loss) from associates and joint ventures” in the statement of income. Ownership interest in other comprehensive income of subsidiaries is accounted for under “Income / (loss) for the period in other comprehensive income of associates and joint ventures accounted for using the participation method”, in the statement of other comprehensive income.

 

Transcription into books

 

As of the date of issuance of these condensed separate interim financial statements, the same are in the process of being transcribed into the Books of Accounts of Banco Macro SA.

 

Reclassification of financial assets and liabilities – Changes in business model

 

During July and August 2020, the Bank’s management decided to update the objective related to holdings of Federal Government Treasury Bonds adjusted by CER 2.5% (maturity 07/22/2021) which at the closing date of these condensed separate interim financial statements they were in the Bank’s portfolio. For further information see note 3 section “Reclassification of financial assets and liabilities – Changes in business model” to the condensed consolidated interim financial statements.

 

New standards adopted

 

New standards adopted are described in note 3 to the condensed consolidated interim financial statements.

 

New pronouncements

 

New pronouncements are described in note 3 to the condensed consolidated interim financial statements.

 

80 

 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

4.CONTINGENT TRANSACTIONS

 

In order to meet specific financial needs of customers, the Bank’s credit policy also includes, among others, the granting of guarantees, securities, bonds, letters of credit and documentary credits. The Bank is also exposed to overdrafts and unused agreed credits on credit cards of the Bank. Since they imply a contingent obligation for the Bank, they expose the Bank to credit risks other than those recognized in statement of financial position and they are, therefore, an integral part of the total risk of the Bank. These transactions are detailed in note 4 to the condensed consolidated interim financial statements.

 

Risks related to the contingent transactions described above have been evaluated and are controlled within the framework of the Bank’s credit risk policy, described in note 41 to the consolidated financial statements as of December 31, 2020, already issued.

 

5.LOSS ALLOWANCE FOR EXPECTED CREDIT LOSSES ON CREDIT EXPOSURES NOT MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS

 

In note 5 to the condensed consolidated interim financial statements, are detailed the allowances recognized by the Bank under this concept.

 

In addition, in exhibit R “Value adjustment for credit losses – Allowance for uncollectibility risk” are also disclosed the Expected Credit Losses (ECL) movements by portfolio and products.

 

6.FAIR VALUE QUANTITATIVE AND QUALITATIVE DISCLOSURES

 

Note 6 to the condensed consolidated interim financial statements describes the methods and assumptions used to determine the fair value, both of the financial instruments recognized at fair value as of those not accounted for at such fair value in these condensed separate interim financial statements. In addition, the Bank discloses the relevant information as to instruments included in Level 3 of the fair value hierarchy.

 

Even though the Bank’s Management has used its best judgment to estimate the fair values of its financial instruments, any technique to perform such estimate implies certain inherent fragility level.

 

Fair value hierarchy

 

The Bank uses the following hierarchy to determine and disclose the fair value of financial instruments, according to the valuation technique applied:

 

-Level 1: quoted prices (unadjusted) observable in active markets that the Bank accesses to at the measurement day for identical assets or liabilities. The Bank considers markets as active only if there are sufficient trading activities with regards to the volume and liquidity of the identical assets or liabilities and when there are binding and exercisable price quotes available at each reporting period.

-Level 2: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are observable for the asset or liability, either directly or indirectly. Such inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical instruments in inactive markets and observable inputs other than quoted prices, such as interest rates and yield curves, implied volatilities, and credit spreads. In addition, adjustments to level 2 inputs may be required for the condition or location of the asset or the extent to which it relates to items that are comparable to the valued instrument. However, if such adjustments are based on unobservable inputs which are significant to the entire measurement, the Bank will classify the instruments as Level 3.

-Level 3: Valuation techniques for which the data and variables having a significant impact on the determination of the fair value recognized or disclosed are not based on observable market information.

 

81 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

The following tables show the hierarchy in the Bank’s financial asset and liability at fair value measurement, as of March 31, 2021 and December 31, 2020:

 

Description Financial assets and financial liabilities measured at fair value on
a recurring basis as of March 31, 2021
 
  Total  Level 1  Level 2  Level 3 
Financial assets                
At fair value through profit or loss                
Debt Securities at fair value through profit or loss  37,152,391   37,037,832       114,559 
Other financial assets  30,050           30,050 
Equity instruments at fair value through profit or loss  2,056,325   10,164       2,046,161 
                 
At fair value through OCI                
Other debt securities  180,418,160   107,130,697   73,287,463     
                 
Total  219,656,926   144,178,693   73,287,463   2,190,770 

 

Financial liabilities                
At fair value through profit or loss                
Derivatives financial instruments  6   6         
Total  6   6         

 

Description Financial assets and financial liabilities measured at fair value on
a recurring basis as of December 31, 2020
 
  Total  Level 1  Level 2  Level 3 
Financial assets                
At fair value through profit or loss                
Debt Securities at fair value through profit or loss  60,075,788   59,648,324       427,464 
Derivative financial instruments  8,169       8,169     
Other financial assets  29,570           29,570 
Equity instruments at fair value through profit or loss  1,878,283   10,988       1,867,295 
                 
At fair value through OCI                
Other debt securities  195,429,104   124,734,508   70,694,596     
Financial assets delivered as guarantee  785,868   785,868         
Total  258,206,782   185,179,688   70,702,765   2,324,329 

 

Financial liabilities                
At fair value through profit or loss                
Derivatives financial instruments  260   260         
Total  260   260         

 

Below is the reconciliation between the amounts at the beginning and the end of the period for the financial assets recognized at fair value, categorized as level 3:

 

  As of March 31, 2021 
Description Debt
securities
  Other
financial
assets
  Investments
in equity
instruments
 
Amount at the beginning  427,464   29,570   1,867,295 
Transfers to Level 3            
Transfers from Level 3            
Profit and loss  28,421       393,239 
Recognition and derecognition  (307,431)  4,047     
Monetary effects  (33,895)  (3,567)  (214,373)
Amount at the end of the period  114,559   30,050   2,046,161 

 

82 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

  As of December 31, 2020 
Description Debt
securities
  Other
financial
assets
  Investments
in equity
instruments
 
Amount at the beginning  1,253,355   35,370   2,347,824 
Transfers to Level 3            
Transfers from Level 3            
Profit and loss  234,707   10,698   150,985 
Recognition and derecognition  (894,085)  (7,348)  19,328 
Monetary effects  (166,513)  (9,150)  (650,842)
Amount at the end of the fiscal year  427,464   29,570   1,867,295 

 

In note 6 to the condensed consolidated interim financial statements, are detailed the valuation techniques and significant unobservable inputs used in the valuation of assets at Level 3.

 

Changes in fair value levels

 

The Bank monitors the availability of information in the market to evaluate the classification of financial instruments into the fair value hierarchy as well as the resulting determination of transfers between levels 1, 2 and 3 at each period end.

 

As of March 31, 2021 and December 31, 2020, the Bank has not recognized any transfers between levels 1, 2 and 3 of the fair value hierarchy.

 

Financial assets and liabilities not recognized at fair value

 

The following table shows a comparison between the fair value and the carrying amount of financial instruments not recognized at fair value as of March 31, 2021 and December 31, 2020:

 

  03/31/2021 
  

Carrying

amount

  Level 1  Level 2  Level 3  Fair
value
 
Financial assets                    
Cash and deposits in banks  136,034,911   136,034,911           136,034,911 
Repo transactions  12,889,942   12,889,942           12,889,942 
Other financial assets  15,242,062   15,242,062           15,242,062 
Loans and other financing  264,880,785           242,862,341   242,862,341 
Other debt securities  29,119,842   404,520   28,750,409   140,106   29,295,035 
Financial assets delivered as guarantee  13,647,125   13,647,125           13,647,125 
   471,814,667   178,218,560   28,750,409   243,002,447   449,971,416 
                     
Financial liabilities                    
Deposits  453,766,472   227,387,291       226,232,550   453,619,841 
Other financial liabilities  34,062,148   32,630,071   1,431,315       34,061,386 
Financing received from the BCRA and other financial entities  1,148,993   515,765   626,005       1,141,770 
Issued corporate bonds  5,054,192       4,016,109       4,016,109 
Subordinated corporate bonds  38,149,077       29,240,560       29,240,560 
   532,180,882   260,533,127   35,313,989   226,232,550   522,079,666 

 

  12/31/2020 
  Carrying
amount
  Level 1  Level 2  Level 3  Fair
Value
 
Financial assets                    
Cash and deposits in banks  129,328,037   129,328,037           129,328,037 
Repo transactions  45,394,755   45,394,755           45,394,755 
Other financial assets  18,406,911   18,406,911           18,406,911 
Loans and other financing  290,734,113           271,041,096   271,041,096 
Other debt securities  35,148,599   11,927,565   25,087,193   167,540   37,182,298 
Financial assets delivered as guarantee  15,265,866   15,265,866           15,265,866 
   534,278,281   220,323,134   25,087,193   271,208,636   516,618,963 

 

83 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

  12/31/2020 
  Carrying
amount
  Level 1  Level 2  Level 3  Fair
Value
 
Financial liabilities                    
Deposits 547,935,484  270,647,481    276,973,918  547,621,399 
Repo transactions  698,695   698,695           698,695 
Other financial liabilities  37,534,304   36,029,097  1,503,741       37,532,838 
Financing received from the BCRA and other financial entities  1,037,900   365,823   661,248       1,027,071 
Issued corporate bonds  5,565,079       4,654,562       4,654,562 
Subordinated corporate bonds  38,743,184       32,873,522       32,873,522 
   631,514,646   307,741,096   39,693,073   276,973,918   624,408,087 

 

7.INVESTMENTS IN ASSOCIATES AND JOINT ARRANGEMENTS

 

The Bank’s interests on associates and joint ventures are disclosed in note 7 to the condensed consolidated interim financial statements.

 

8.OTHER FINANCIAL AND NON-FINANCIAL ASSETS

 

The breakdown of other financial and non-financial assets as of March 31, 2021 and December 31, 2020 is as follows:

 

Other financial assets 03/31/2021  12/31/2020 
Receivables from spot sales of foreign currency pending settlements  7,140,416   9,533,624 
Sundry debtors (see note 10)  7,720,426   8,051,315 
Receivables from spot sales of government securities pending settlements  188,197   625,694 
Private securities  30,050   29,570 
Other  212,819   217,658 
Subtotal  15,291,908   18,457,861 
Allowances  (19,796)  (21,380)
   15,272,112   18,436,481 

 

Other non-financial assets 03/31/2021  12/31/2020 
Investment property (see Exhibit F)  869,497   873,341 
Advanced prepayment  852,572   514,995 
Tax advances  397,359   678,823 
Other  156,448   163,240 
   2,275,876   2,230,399 

 

Disclosures related to allowance for ECL are detailed in note 5 “Loss allowance for credit losses on credit exposures not measured at fair value through profit or loss”.

 

9.RELATED PARTIES

 

A related party is a person or entity that is related to the Bank:

 

-has control or joint control of the Bank;

-has significant influence over the Bank;

-is a member of the key management personnel of the Bank or of a parent of the Bank;

-members of the same group;

-one entity is an associate (or an associate of a member of a group of which the other entity is a member).

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, directly or indirectly. The Bank considers as key management personnel, for the purposes of IAS 24, the members of the Board of Directors and the senior management members of the Risk Management Committee, the Assets and Liabilities Committee and the Senior Credit Committee.

 

84 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

As of March 31, 2021 and December 31, 2020, amount balances related to transactions generated with related parties are as follows:

 

  Information as of March 31, 2021 
  Main subsidiaries             
  Macro Bank
Limited
  Macro
Securities SA
  Macro
Fondos
SGFCISA
  Argenpay SAU  Associates  Key
management
personnel (1)
  Other
related
parties
  Total 
ASSETS                                
                                 
Cash and deposits in banks  737               737 
Loans and other financing  (2)                                
Overdraft                      40,739   365,544   406,283 
Credit cards                      48,321   27,305   75,626 
Lease      354                   4,745   5,099 
Personal loans                      7,715       7,715 
Mortgage loans                      202,807       202,807 
Other loans      796,823                   1,348,559   2,145,382 
Other receivables for financial intermediation                          9,519   9,519 
Guarantees granted                          1,143,584   1,143,584 
                                 
Total Assets  737   797,177               299,582   2,899,256   3,996,752 
LIABILITIES                                
                                 
Deposits  7   761,296   144,562   16,263   41,919   576,193   4,223,735   5,763,975 
Other financial liabilities                      182   189   371 
Other non-financial liabilities                          9,747   9,747 
                                 
Total Liabilities  7   761,296   144,562   16,263   41,919   576,375   4,233,671   5,774,093 
                                 

(1)Includes close family members of the key management personnel.

(2)The maximum financing amount for loans and other financing as of March 31, 2021 for Macro Securities SA, Key management personnel and other related parties amounted to 797,856, 360,610 and 3,322,728, respectively.

 

  Information as of December 31, 2020 
  Main subsidiaries                 
   Macro Bank
Limited
   Macro
Securities
SA
   Macro
Fondos
SGFCISA
   Argenpay
SAU
   Associates   Key
management
personnel (1)
   Other
related
parties
   Total 
ASSETS                                
                                 
Cash and deposits in banks  761                           761 
Repo transactions      866,785                       866,785 
Loans and other financing (2)                                
Documents                          1,726   1,726 
Overdraft                      36,997   459,061   496,058 
Credit cards                      51,188   5,572   56,760 
Lease      1,168                   5,900   7,068 
Personal loans                      13,160       13,160 
Mortgage loans                      95,076       95,076 
Other loans      803,973                   429,773   1,233,746 
Guarantees granted                          939,431   939,431 
                                 
Total Assets  761   1,671,926               196,421   1,841,463   3,710,571 
                                 
LIABILITIES                                
                                 
Deposits  8   758,389   147,532   64,356   48,953   561,038   896,575   2,476,851 
Other financial liabilities      17,638               168   9,451   27,257 
Other non-financial liabilities                          12,903   12,903 
                                 
Total liabilities  8   776,027   147,532   64,356   48,953   561,206   918,929   2,517,011 

 

(1)Includes close family members of the key management personnel.

(2)The maximum financing amount for loans and other financing as of December 31, 2020 for Macro Securities SA, Key management personnel and other related parties amounted to 807,599, 1,115,738 and 5,278,683, respectively.

 

85 

 

 

NOTES TO THE CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

(Translation of Financial statements originally issued in Spanish – See Note 38)

(Figures stated in thousands of pesos in terms of purchasing power of Argentine pesos as of March 31, 2021, unless expressly stated)

 

Profit or loss related to transactions generated during the three-month periods ended March 31, 2021 and 2020 with related parties are as follows:

 

  Information as of March 31, 2021 
  Main subsidiaries                 
   Macro Bank
Limited
   Macro
Securities
SA
   Macro
Fondos
SGFCISA
   Argenpay SAU   Associates   Key
management
personnel (1)
   Other
related
parties
   Total 
INCOME / (LOSS)               
                                 
Interest income      771               22,407   205,219   228,397 
Interest expense      (1,966)          (3,450)  (11,498)  (154,979)  (171,893)
Commissions income      3,977   28       46   2   3,850   7,903 
Commissions expense                      (11)  (131)  (142)
Other operating income  1   3,010                   6   3,017 
Administrative expense                          (37,724)  (37,724)
Other operating expense                          (16,411)  (16,411)