Banco Macro S.A. (BMA) Earnings

Management highlights

### Overall Financial Performance - Q2 2026 net income reached 206.8 billion pesos, up 39% quarter-on-quarter and 4% year-on-year, driven by higher fair value gains on financial instruments, lower loan loss provisions, and a reduced loss from net monetary position. - Adjusted net income (excluding 14.2 billion pesos in after-tax restructuring costs) was 221 billion pesos, with an adjusted annualized ROE of 14.3%, up 4.4 percentage points from Q1 2026. Reported annualized ROE was 13.4%. - Net operating income before administrative expenses hit 1.29 trillion pesos, down 2% quarter-on-quarter and up 1% year-on-year. The efficiency ratio held steady at 33.9% year-on-year. - Total deposits reached 14.7 trillion pesos, down 1% quarter-on-quarter and up 4% year-on-year, representing 76% of total liabilities, with an average annual interest cost below 20%. - The bank maintains a strong balance sheet, with a Tier 1 capital ratio of 28% (well above the 11.5% regulatory requirement), liquid assets equal to 74% of deposits, and a loan-to-deposit ratio of 79%. ### Efficiency and Restructuring Progress - The bank continued executing its network restructuring plan, closing 18 branches in Q2 2026, ending the quarter with 402 branches (89 fewer than Q2 2025). Headcount decreased to 8,180 employees, down 1% quarter-on-quarter and 8% year-on-year. - After-tax restructuring expenses for the quarter totaled 14.2 billion pesos, consistent with prior period impacts. The bank targets 370 branches and fewer than 8,000 employees by the end of 2026. ### 2030 Strategic Plan Execution - The five-year strategic plan launched in December 2025 is in its first year of execution, built on four core pillars: simplicity, cross-sell, customer service enabled by data/AI/technology, and digital plus human service. - Key Q2 2026 milestones include: near-completion of a unified new retail banking app with simplified digital onboarding; launch of extended weekend operating hours for commercial clients; rollout of Argentina's first large-scale airline-style customer loyalty program to convert non-primary customers to primary banking relationships; implementation of relationship-based customer pricing; preparation for the launch of a new Banco Macro private banking offering, including a specialized private banking training academy for employees; and scaled deployment of artificial intelligence across banking operations, a first-of-its-kind scale implementation in Argentina that creates competitive differentiation.

Guidance

- **Full Year 2026 Adjusted ROE**: Management upwardly revised the full-year 2026 adjusted ROE target from 8% to 12%. Reported ROE will be lower due to ongoing restructuring expenses. - **Loan Growth**: The prior 15-20% real loan growth guidance was withdrawn, and replaced with a new downward revised guidance of 2-5% real total loan growth for 2026. The revision reflects pre-electoral economic uncertainty and higher domestic interest rates in Q3 2026. - **Net Interest Margin**: Management maintains that full-year 2026 net interest margin will come in above the prior guidance of 20%, with relative stability expected over the second half of 2026. - **Deposit Growth**: Full-year 2026 real deposit growth guidance was revised downward to 10% real growth. Peso deposits are expected to grow slower than inflation, while U.S. dollar deposits are expected to grow slightly faster than peso deposits. - **Asset Quality**: Management targets a Stage 3 (NPL) loans ratio well below 4% by the end of 2026. The bank expects to maintain total NPL coverage ratio above 90%, with Stage 3 loan coverage remaining well above 100% through year-end. - **Long-Term 2030 Target**: Management guidance targets a sustainable nominal ROE of ~20% by 2030, assuming Argentina achieves single-digit inflation by that time.

Segment performance

Banco Macro reports two core lending segments: consumer lending and commercial lending. As of Q2 2026, the total gross credit portfolio reached 12.6 trillion pesos, with consumer lending representing 29% of the gross portfolio and commercial lending representing 71% of the gross portfolio. Total lending grew 3% quarter-on-quarter, driven primarily by commercial lending growth, while consumer lending grew more moderately. On a year-on-year basis, total financing decreased 5%. In terms of asset quality: Commercial NPLs improved to 0.9% in Q2 2026, down from 1.3% in Q1 2026, and remains well below the system average of 3.5%. Consumer NPLs increased to 8.4% in Q2 2026, up from 6.9% in Q1 2026, but still remains below the system average of 12.8%. Overall reported NPL ratio for the bank was 6.25% as of June 2026, below the system-wide 7.7% NPL rate reported in May 2026.

Risks & headwinds

- Macroeconomic and political risk: 2026 is a pre-electoral year in Argentina, and increasing political uncertainty as the election approaches is expected to lead to higher market and economic volatility, with potential impacts on credit demand, asset quality, and deposit stability. - Asset quality pressure: System-wide asset quality remains under pressure, with ongoing deterioration in consumer NPLs, and a slight pick-up in deterioration in the corporate portfolio. Consumer segment NPLs have risen sequentially for two consecutive quarters as sluggish consumption and high unemployment limit consumer repayment capacity. - Margin compression: As inflation and interest rates decline in Argentina's ongoing stabilization process, net interest margins are expected to compress over the medium term, partially offset by expected volume growth from an expanding financial system. - Demand weakness: Mass consumption and automobile sectors are seeing weak credit demand, with no meaningful pickup expected in the second half of 2026, limiting overall loan growth. Consumer loan demand is expected to remain sluggish through the end of 2026 due to stagnant real wages. - Valuation risk: Banco Macro shares, along with most Argentine assets, have seen significant valuation declines year-to-date, driven by both global market volatility and local pre-electoral uncertainty.

Analyst Q&A

• Q: How do you expect NPLs and the coverage ratio to evolve in H2 2026, following the sequential rise in NPLs and narrowing of coverage this quarter? /

  A: System-wide asset quality continued to deteriorate in Q2, with consumer NPLs worsening at a slower pace than Q1, and a slight pickup in corporate portfolio deterioration. Management distinguishes between bank-specific customer risk and mandatory regulatory NPL classification that includes contagion from customer defaults at other institutions; bank-specific Stage 3 NPLs are 4.1%, well below the headline 6.25% total ratio. Management expects Stage 3 NPLs to remain well below 4% by end-2026, with Stage 3 coverage remaining well above 100%. Total coverage is expected to stay above 90% for the full year.

• Q: What is your updated view on loan growth after the central bank relaxed U.S. dollar lending rules, and how does this change your prior growth guidance? /

  A: The revised full-year 2026 real loan growth guidance is 2-5%, down from the prior 15-20% target, due to higher domestic interest rates and pre-electoral uncertainty that has dampened demand. The new relaxation of U.S. dollar lending rules (allowing banks to lend up to 15% of U.S. dollar deposits to non-dollar earning companies) is expected to deliver modest additional portfolio growth, but is not large enough to offset broader demand weakness.

• Q: What are the key levers to hit your 2030 sustainable ROE target, and what is your target ROE for 2030? /

  A: Management's target for sustainable nominal ROE by 2030 is ~20%, assuming Argentina reaches single-digit inflation by that time. The three core levers are: 1) Outgrow the market to gain market share, with volume growth offsetting expected medium-term margin compression from falling inflation and rates; 2) Grow fee income from new lines of business including insurance, wealth management, and private banking, which are not exposed to net interest margin compression; 3) Continue efficiency improvements from branch and headcount reductions, with cost savings used to fund strategic investments in growth areas while keeping the efficiency ratio stable.

• Q: What is your outlook for consumer loan growth and consumer credit health, given rising consumer NPLs and sluggish economic conditions? /

  A: Consumer sentiment and demand are currently sluggish, and no meaningful pickup in consumer loan growth is expected for the remainder of 2026, with growth only expected to match inflation. If inflation continues to cool, real wages will likely recover, enabling a consumer demand recovery in 2027. Management has tightened consumer credit policy since mid-2025, and over 50% of the current personal loan portfolio is from post-restriction vintages, which have much better credit quality. This internal action is helping stabilize NPL trends even before macro conditions improve.

• Q: Do you see share buybacks as an option given the recent sharp decline in your share price? /

  A: Share buyback programs remain on the table as an option to deploy excess capital. The board of directors regularly evaluates potential buybacks based on market conditions, and the bank has executed buybacks in the past, so this remains a possible path forward if conditions warrant it.