BMA: Defensive Stance Will Limit Upside Amid Post-Election Banking Uncertainty

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

Provides various banking products and services to retail and corporate customers in Argentina.

• 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 Future Earnings and Revenue Growth

Assumptions

• 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

Risks

• 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

• 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.