Banco Macro (BMA)

Total return at 5 years: 16.9%/year = 14.4% appreciation + 2.6% dividend. The target price ($153) is ex-dividend; the $14 in dividends collected over 5 years are added separately.

By both methods, the value today (DCF $273 · Multiples $135) exceeds the market price ($78).

Today — with margin of safety: at $78 trades ~41.9% below its value discounted to today (~$135) — the wide discount we require (≥38%, equivalent to a ~15% annual return); the risk is covered by the margin, not the rate.

At 5 years — Muy infravalorado: the target price ($153) plus dividends yield above the required average return (10%) — the business compounds.

The bridge: the return at 5 years comfortably exceeds the risk-free rate (4.5%) — and the discount reaches the required margin of safety.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($78) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The market discounts less growth (-14.8%/year) than we project (12.0%/year) → if the base case holds, there is margin: perception is more pessimistic than the estimated reality.

That growth implies ~ARS 281.2 bn of owner earnings in year 5 (vs ~ARS 1,106.9 bn of our base case). It recalculates if the DCF assumptions are edited.

A bank is valued on equity (P/E × common earnings + price/tangible book), not EV: deposits and debt are funding. It returns capital via dividend + buyback —the buyback reduces the share count, so earnings per share grow faster than aggregate earnings—. Total return adds the dividend collected along the way. In edit mode, the metric, shares, dividend, and exit multiple can be adjusted.

Equity-level model: equity is valued by normalized earnings and a multiple, because at a bank deposits and negotiable obligations are funding for the business, not capital structure to be subtracted again. Year 0 is the fiscal year ended December 31, 2025, not a rolling twelve-month window: under IAS 29 each filing restates the series to the currency of its own period-end, so chaining quarters from different filings mixes units of measure. All amounts are in pesos of December 2025, the currency in which the 20-F homogenizes the three fiscal years it presents. Year 0 for earnings is not the reported attributable net income of Ps. 289.5 billion: it is the normalized generating capacity of Ps. 628.1 billion, which comes from applying a return on equity of 12.0% —a ratio, neutral to the restatement unit— to closing equity of Ps. 5,234.5 billion. That 12.0% sits between the annualized return for the first half of 2026, near 11.3% on reported earnings, and the 14.3% the company itself reports for the second quarter excluding the restructuring charge; it is set above the half-year average because the trend within the half is upward —second-quarter earnings were 39% higher than the first quarter's, with the loss on monetary position easing as quarterly inflation fell from 9.44% to 6.77%— and below the adjusted quarterly figure because one quarter is not a trend. There is no numeric guidance: the August 19, 2026 press release publishes results and subsequent events, and includes no company-issued projections for the fiscal year; the gap is disclosed and the path is anchored to the reported quarterly results. The ADR count path is flat and identical across the three scenarios: the company reports no buyback program and only mentions 23,107 Class B shares in treasury. The conversion to dollars happens once, at the close of the cascade, at the ADR's implied parity, which represents ten Class B shares.

Today's multiple compresses on its own going forward as the metric per share grows (accelerated by the buyback, which reduces the share count). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—. Total return adds the dividend collected; the required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $153 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $78, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $153 in 5 years plus $14 of dividends collected (the dividend adds to the return, not to the price) and a required return of 4.5% annually, the maximum to pay today is $135. Against the current market price ($78), the margin of safety is 41.9% (trades below the maximum → there is margin) and the total return at that price would be 16.9% annually.

• Entry multiple. The ADR trades at 13× on normalized earnings of Ps. 628.1 billion.
• Exit multiple. 12 times, just above the center of the archetype's 10-to-15 band and practically equal to the entry multiple: the return does not depend on a multiple expansion.
• Base quality. The base is normalized rather than reported: it rests on a 12.0% return on equity being sustainable, against 5.55% for the fiscal year and 13.4% for the latest quarter.

• Cash generation. Operating cash flow for fiscal year 2025 was Ps. 555.2 billion against Ps. 2,633.8 in 2024: at a bank, that line is dominated by balance-sheet redeployment and does not measure generating capacity.
• Sustained return on capital. Normalized return on tangible equity is 12.4%, above the 10% bar but in the middle of the band, and the three-year reported series runs from 32.63% to 5.55%.
• Reinvestment runway. Capital surplus of Ps. 4.1 trillion over the requirement and system-wide private credit at 21.1% of GDP: there is capital and there is a market to put it in.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

A bank's drivers are volume times spread: the loan portfolio multiplied by the intermediation margin, minus the cost of risk. At Banco Macro, the series that decides the result is not revenue growth but delinquency, which in two years rose from 1.06% to 4.08% in stage 3 and pushed the provision for loan losses to Ps. 538.4 billion. Regulatory capital measures the opposite: how much growth capacity remains unused, and the decline from 35.39% to 28.0% over three years is the surplus starting to be deployed. The two series of return and margin have to be read against disinflation, which compresses the inflationary component of the net interest margin without the business shrinking.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-dic-2025): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Balance-sheet growth. Total financing fell 5% real year over year to Ps. 11.69 trillion, though it rose 3% in the quarter; deposits rose 4% year over year.
• Market deepening. System-wide private credit rose from 19.3% to 21.1% of GDP in a year, from very low levels.
• Earnings growth. Net operating income before expenses fell for two consecutive years in real terms due to disinflation; the latest quarter's figure is already growing 1% year over year.

• Recurrence and predictability. Deposit base of Ps. 13,690.6 billion and 6.36 million retail customers; the business is recurring but earnings are highly sensitive to the local macroeconomic cycle.
• Differentiated product. Credit and deposits are undifferentiated products; differentiation comes from the provincial network and the exclusive financial agency contracts.
• Pricing power. Limited and declining: the net interest margin fell from 25.3% to 24.0% between the first and second quarters of 2026, and disinflation structurally compresses the spread.
• Operating leverage. The efficiency ratio stood at 33.9%, the same as a year earlier, despite closing 89 branches and cutting headcount 8%: the savings have not yet reached earnings.
• Behavior in a downturn. Weak: return on equity fell from 32.63% to 5.55% over two fiscal years, with delinquency tripling.

• ✓Capital adequacy (CET1)CET1 28.0% (+20.0pp above the minimum)
• ✓Reserve coverage (allowance / loan book)6.07% of the loan book
• !Value creation (ROTCE − 10% bar)+2pp
• ✓Funding (deposit base)Deposits $13,690.6 bn

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

ⓘ Has a loan book: credit health (delinquency, coverage, normalized CECL, RoA/RoE) is evaluated separately, not with corporate solvency.

• Capital. Capital adequacy ratio of 28% and Tier 1 capital of 28% against a reference minimum of 8%, with a surplus of Ps. 4.1 trillion.
• Liquidity. Liquid assets of Ps. 10.98 trillion, equal to 74% of deposits, and leverage of 4.1 times equity.
• Portfolio quality. Delinquency of 6.25% on total financing and 8.42% in consumer, with coverage of the non-performing portfolio at 95.39%, below 100%.
• Funding concentration. Deposits are 76% of total liabilities and 45% of them are low-cost transactional accounts insensitive to rate.

How cash comes in and how it is deployed. In green, the business's own cash (the owner-FCF it generates and reinvests); in gray, the float and credit — customer and funding money, which is not the shareholder's.

The bank funds itself with its own earnings: deposits, negotiable obligations and subordinated debt are operating funding, not shareholder capital. The distribution approved in April 2026 was Ps. 138,956.5 million, paid in three equal monthly installments between May and July 2026. Against reported fiscal year 2025 income that is a payout ratio of 47.80%, the figure the 20-F itself publishes alongside 92.27% in 2024 and 50.05% in 2023; against normalized earnings of Ps. 628.1 billion it equals around 22%, and it is this latter figure that forms the basis on which retention is modeled going forward. The stated assumption is that the bank does not raise the dividend in the same proportion as earnings are normalized, subject to approval by resolution and in the monthly installments the Central Bank requires. There is no buyback program: the company only mentions 23,107 Class B shares in treasury, within the legal 10% limit. The two 2026 transactions have a published price —US$75,000,000 for Micro Sistemas, already disbursed, and shareholders' equity to be determined plus US$2,000,000 for Banco Sáenz, pending approval— but they fall outside the window of the year-0 capital allocation cascade and are not assigned a share of the projected payout.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Alignment. The significant shareholders have effective control through a guarantee trust and an individual holding; the percentage breakdown was not incorporated and is disclosed as a gap.
• Capital allocation. Track record of growth by acquisition —provincial privatizations, Banco Itaú Argentina— and two new transactions in 2026 subject to regulatory approval, with the price of one of them not disclosed.
• Return of capital. No buyback program; only 23,107 Class B shares in treasury. The Ps. 138,956.5 million distribution approved in April 2026 was paid in full in three installments between May and July.
• Candor. The press release explicitly separates the restructuring charges and publishes the adjusted and reported returns separately, along with the two delinquency definitions.

• Motivated seller from earnings that fell short: return on equity for fiscal year 2025 was 5.55% against 32.63% two years earlier, and the result carries Ps. 538.4 billion of provision for loan losses and a Ps. 90,302.6 million increase in compensation and bonuses for early retirements and severance, two line items that sink the accounting result without destroying the franchise.
• Missing buyers by domicile and by accounting: a company that operates entirely in Argentina trades in New York, with inflation-adjusted restated statements that make figures across different filings incomparable and discourage coverage.
• There is an ongoing corporate transaction, but it does not anchor the price the way a merger absorbing the issuer would: on March 20, 2026, the bank agreed together with Fintech Digital LLC to acquire 100% of Banco Sáenz S.A., subject to Central Bank approval, with Banco Macro as the buyer and not the target. There is no guidance cut —the company publishes no guidance— nor any contingency disclosed in the documents reviewed.
• The last reported quarter shows earnings 39% above the prior one, with the loss on monetary position easing as quarterly inflation fell from 9.44% to 6.77%, and a return on equity of 13.4% reported and 14.3% adjusted that is already well above the 5.55% for the fiscal year.

The discount has an identifiable positive source —reported earnings collapsed due to two separable line items— and at the same time a warning: portfolio deterioration is real and has not yet visibly peaked, with delinquency rising from 5.40% to 6.25% within the second quarter itself. The opportunity, if it exists, is that the market may be extrapolating the peak in the cost of risk and the accounting compression of the margin as if both were permanent.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at +4%/year (+21% total): the margin of safety protects the downside. The bull (+27%/year, +226% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• Sovereign risk. Public-sector assets equal 25.9% of total assets, and the filing states that income generation depends on the public sector's ability to repay.
• Credit cycle. Delinquency tripled in a year and rose 85 basis points within the second quarter of 2026 itself.
• Currency and exchange controls. The business generates pesos and the ADR is priced in dollars; the filing states that controls could be reimposed, including the forced conversion of dollar-denominated obligations into pesos.
• Corporate governance. The significant shareholders can decide the board, mergers, issuances and dividend policy without agreement from the rest.
• Provincial contract expirations. The financial agency agreements with four provinces expire on a staggered basis between 2026 and 2034 and are renewable but not automatic.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  A narrow moat and ROTCE 12% above the 10% bar, with a +42% margin → a quality business at a good price.

• Peter Lynch Growth at a reasonable price (GARP)

  A fast grower growing 12% at a PEG of 1.1 → cheap for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Not applicable — the Magic Formula excludes financials and regulated businesses (EBIT/EV does not capture the operating leverage).

• Howard Marks Perception vs reality + cycle

  The price discounts -15% vs our 12%: perception is more pessimistic than reality, with an identified source of the discount.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor +0%/yr, bull-scenario ceiling +25%/yr over 5y and a +42% margin → capital protected, asymmetry in your favor.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: efficient scale, cost advantage, switching costs, intangibles → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  Justifying the price requires discounting -15%, within what we project (12%) — the story squares with the numbers.