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Digital Transformation Will Expand Retail Banking In Argentina

Published
06 Dec 24
Updated
27 Aug 25
AnalystConsensusTarget's Fair Value
AR$14,852.80
48.0% undervalued intrinsic discount
04 Sep
AR$7,720.00
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1Y
-7.4%
7D
0.9%

Author's Valuation

AR$14.9k

48.0% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update27 Aug 25
Fair value Decreased 4.61%

Despite a substantial increase in projected revenue growth and a lower future P/E, the consensus analyst price target for Banco Macro has been modestly reduced from ARS15,571 to ARS15,210.


What's in the News


  • Banco Macro S.A. scheduled a Board Meeting.

Valuation Changes


Summary of Valuation Changes for Banco Macro

  • The Consensus Analyst Price Target has fallen slightly from ARS15571 to ARS15210.
  • The Consensus Revenue Growth forecasts for Banco Macro has significantly risen from 21.7% per annum to 25.3% per annum.
  • The Future P/E for Banco Macro has fallen from 23.21x to 21.23x.

Key Takeaways

  • Expanding digital banking, a retail focus, and a large presence in underserved regions fuel market share growth, increased deposits, and improved profitability.
  • Conservative risk management and Argentina's macro stabilization enhance resilience and enable stable earnings despite short-term economic volatility.
  • Tight net interest margins, rising credit risk, rapid loan expansion, intense competition, and Argentine economic volatility undermine Banco Macro's profitability and revenue stability.

Catalysts

About Banco Macro
    Provides various banking products and services to retail and corporate customers in Argentina.
What are the underlying business or industry changes driving this perspective?
  • Management is guiding for robust real loan growth of 60% in 2025 and 45% in 2026, underpinned by a youthful, growing population and rising demand for credit in Argentina, directly supporting future revenue expansion.
  • Banco Macro's strong presence in underserved regions and focus on retail and commercial customers positions it to capture market share as financial inclusion and formal economy participation increases, benefiting both deposit and loan volume growth (revenue uplift).
  • Ongoing investment in digital transformation and a retail-centric deposit base optimized for low-cost funding (especially in the interior regions) are expected to further lower the cost-to-income ratio and improve net margins over time.
  • Argentina's macro stabilization efforts (lower inflation, more controlled FX) combined with the bank's conservative risk management and excess capital (Tier 1 ratio guided at 28.75% for year-end) significantly enhance resilience-supporting sustained and more stable net earnings despite short-term asset quality volatility.
  • Sustained progress in digital banking adoption and payments (credit card fee income up 90% QoQ) is driving higher recurring fee income, and positions Macro to benefit from secular shifts toward digital and mobile banking, boosting non-interest income and profitability.

Banco Macro Earnings and Revenue Growth

Banco Macro Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Banco Macro's revenue will grow by 23.7% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 10.0% today to 19.2% in 3 years time.
  • Analysts expect earnings to reach ARS 1114.0 billion (and earnings per share of ARS 1587.59) by about September 2028, up from ARS 307.3 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting ARS1404.2 billion in earnings, and the most bearish expecting ARS855.9 billion.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.6x on those 2028 earnings, up from 16.1x today. This future PE is greater than the current PE for the US Banks industry at 12.1x.
  • Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 29.62%, as per the Simply Wall St company report.

Banco Macro Future Earnings Per Share Growth

Banco Macro Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Persistent high funding costs, driven by rising interest rates on time deposits and government reserve requirements, are expected to pressure net interest margins in the coming quarters, limiting profitability and potentially constraining net earnings.
  • Asset quality is deteriorating, especially in the consumer loan portfolio, with non-performing loans forecasted to rise to 2.5–3% of total loans as high real interest rates and inflation-adjusted salaries stress borrowers-raising loan loss provisions and reducing net income.
  • The bank's loan growth targets (60% for 2025, 45% for 2026) significantly outpace deposit growth forecasts (30% for 2025), risking increased reliance on expensive or volatile funding sources which can compress margins and elevate balance sheet risk.
  • Increasing competition from both traditional banks and non-bank lenders (such as fintechs and digital wallets) threatens Banco Macro's share of deposits and retail loan growth, which could lead to shrinking fee income and pressure on core revenues over the long term.
  • Ongoing macroeconomic volatility in Argentina, including exposure to peso depreciation, possible changes in reserve requirements, and inflation risk, could further destabilize revenue streams and increase regulatory uncertainty, directly impacting net margins and earnings stability.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of ARS14852.8 for Banco Macro based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ARS18960.0, and the most bearish reporting a price target of just ARS12688.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ARS5805.1 billion, earnings will come to ARS1114.0 billion, and it would be trading on a PE ratio of 18.6x, assuming you use a discount rate of 29.6%.
  • Given the current share price of ARS7720.0, the analyst price target of ARS14852.8 is 48.0% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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