Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's 4Q 2021 earnings conference call. We would like to inform you that the 4Q 2021 press release is available to download at the investor relations website of Banco Macro, www.macro.com.ar/relaciones-inversores/. Also, this event is being recorded and all participants will be in a listen only mode during the company's presentation. After the company's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during this call, please press star zero to signal the operator. It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Gustavo Manriquez, Chief Executive Officer, Mr. Jorge Scarinci, Chief Financial Officer, and Mr. Nicolás Torres, IR.
Now I will turn the conference over to Mr. Nicolás Torres . You may begin your conference.
Thank you, Chad. Good morning and welcome to Banco Macro's fourth quarter 2021 conference call. Any comment we may make today may include forward-looking statements which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC and it's available at our website. Fourth quarter 2021 press release was distributed yesterday, and it's available at our website. All figures are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of the first quarter of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29, as established by the Central Bank of Argentina.
For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through December 31st, 2021. I will now briefly comment on the bank's fourth quarter 2021 financial results. Banco Macro's net income for the quarter was ARS 10.5 billion, 30% higher than the third quarter of 2021, and 120% higher than the result posted a year ago. The bank's fourth quarter 2021 accumulated ROE and ROA of 12.2% and 2.8% respectively, remain healthy and show the bank's earnings potential. In fiscal year 2021, total comprehensive income totaled ARS 27.1 billion, 26% lower than the result posted in fiscal year 2020.
Net operating income before general and administrative and personal expenses in the fourth quarter of 2021 was ARS 49.7 billion, increasing 4% or ARS 2.1 billion quarter-on-quarter due to higher net interest income and higher FX gains, which were partially offset by higher loan loss provisions. On a yearly basis, net operating income before general and administrative and personal expenses increased 5% or ARS 2.4 billion. In fiscal year 2021, net operating income before general and administrative and personal expenses totaled ARS 194.5 billion, 3% lower than the previous year. In the fourth quarter of 2021, provision for loan losses totaled ARS 2 billion, ARS 1.7 billion higher than in the previous quarter.
The bank decided to increase loan loss provisions given the uncertainty and probable adverse macroeconomic scenario arising from a non-agreement with the IMF regarding the rescheduling of Argentina's debt. On a yearly basis, provision for loan losses decreased 40% or ARS 1.3 billion. Operating income after general and administrative expenses was ARS 22.4 billion, 1% or ARS 167 million lower than in the third quarter of 2021, and 2% or ARS 511 million higher than the fourth quarter of 2020. In the quarter, net interest income totaled ARS 35.7 billion, 9% or ARS 2.9 billion higher than the result posted in the third quarter of 2021, and 9% or ARS 2.8 billion higher than the result posted one year ago.
In fiscal year 2021, net interest income was 10% lower than in fiscal year 2020 as a result of different regulations adopted by the central bank that set caps on lending rates and floors on deposit rates. In the fourth quarter of 2021, interest income totaled ARS 56.9 billion, 3% or ARS 1.9 billion higher than the third quarter of 2021 due to higher income from government securities, and 9% or ARS 5.9 billion lower than the previous year. Within interest income, interest on loans increased 8% or ARS 2.1 billion quarter-on-quarter due to a 5% increase in the average volume of private sector loans and 93 basis points increase in the average lending rate.
On a yearly basis, income from interest on loans was practically unchanged with a ARS 17 million decrease. In the fourth quarter of 2021, interest on loans represented 52% of total interest income. In fiscal year 2021, interest on loans totaled ARS 114.8 billion and decreased 11% compared to fiscal year 2020. Net income from government and private securities increased 2% or ARS 520 million quarter-on-quarter due to higher income from government securities. Compared to the fourth quarter of 2020, net income from government and private securities decreased 13% or ARS 3.8 billion.
In the fourth quarter of 2021, FX gains, including investments in derivative financing, totaled a ARS 1.6 billion gain due to the 4% Argentine peso depreciation against the U.S. dollar and the bank's long spot position. In the fourth quarter of 2021, interest expense totaled ARS 20.3 billion. A 4% or ARS 1 billion increase compared to the third quarter of 2021, and 29% or ARS 8.7 billion higher on a yearly basis. Within interest expenses, interest on deposits decreased 4% or ARS 894 million quarter-over-quarter, mainly driven by a 3% decrease in the average volume of private sector deposits, while the average interest rate paid on deposits was unchanged. On a yearly basis, interest on deposits increased 28% or ARS 8 billion.
In the fourth quarter of 2021, interest on deposits represented 96% of the bank's financial expenses. In fiscal year 2021, interest expense increased 3% compared with fiscal year 2020. In the fourth quarter of 2021, the bank's net interest margin, including FX, was 21.2% higher than the 19.1% posted in the third quarter of 2021, and then the 16.3% registered in the fourth quarter of 2020. In the fourth quarter of 2021, net fee income totaled ARS 8.8 billion, 2% or ARS 136 million higher than the third quarter of 2021. On a yearly basis, net fee income increased 3% or ARS 217 million. In fiscal year 2021, net fee income was 2% lower than the previous year.
In the fourth quarter of 2021, net income from financial assets and liabilities at fair value of the profit or loss totaled ARS 3.5 billion gain, 7% or ARS 268 million lower than the previous quarter. On a yearly basis, net income from financial assets and liabilities at fair value of the profit or loss decreased 29% or ARS 1.4 billion. In fiscal year 2021, net income from financial assets and liabilities at fair values and profit or loss was 18% higher than the fiscal year 2020, mainly due to higher income from government securities. In the quarter, other operating income totaled ARS 2 billion, increasing 2% compared to the third quarter of 2021.
On a yearly basis, other operating income decreased 6% or ARS 116 million. In the fourth quarter of 2021, Banco Macro's personnel and administrative expenses totaled ARS 15.6 billion, 5% or ARS 727 million higher than the previous quarter due to higher administrative expenses. On a yearly basis, personnel and administrative expenses decreased 4% or ARS 608 million. In fiscal year 2021, administrative expenses plus employee benefits decreased 4% compared to fiscal year 2020, showing the strict cost control policies adopted by the bank's senior management. As of the fourth quarter of 2021, the efficiency ratio reached 37.5%, improving from the 37.6% posted in the third quarter of 2021.
Expenses decreased 3%, while net interest income plus net fee income plus other operating income decreased 8%. In the fourth quarter of 2021, the results from the net monetary position totaled a ARS 15.2 billion loss, 7% or ARS 1.1 billion higher than the loss posted in the third quarter of 2021 as a consequence of higher inflation observed in the quarter, which was 93 basis points above the third quarter level, as inflation was 10.21% in the fourth quarter, up from 9.28% in the third quarter of 2021. In fiscal year 2021, Banco Macro effective tax rate was 5.8% lower than the 33.1% tax rate registered during fiscal year 2020.
It should be noted that in fiscal year 2021, the effective tax rate was affected by the implications of inflation adjustment and accounting and tax balances, and the determination of the income tax due and deferred income tax. Further information is provided in note 23 to our financial statements. In terms of loan growth, the bank's financing to the private sector totaled ARS 349 billion, increasing 4% or ARS 11.9 billion quarter-on-quarter, and decreasing 8% or ARS 32.1 billion year-on-year. Within commercial loans, overdraft stand out with an 8% or ARS 1.8 billion increase quarter-on-quarter, mostly due to loans extended to SMEs. On the consumer side, mortgages increased 13% or ARS 2.6 million, while credit card loans increased 9% or ARS 8 billion in the quarter.
In fiscal year 2021, pledged loans stand out with a 49% increase, while other loans decreased 41% as loans extended to SMEs as part of the COVID-19 relief package started to become due. It is important to mention that Banco Macro's market share over private sector loans as of December 2021, reached 6.9%. On the funding side, total deposits decreased 1% or ARS 8.7 billion quarter-on-quarter, and decreased 20% or ARS 148.9 billion year-on-year. Private sector deposits decreased 1% quarter-on-quarter, while public sector deposits decreased 5% in the quarter. The increase in private sector deposits was led by term deposits, which decreased 8% or ARS 19.8 billion quarter-on-quarter, while demand deposits increased 5% or ARS 14.6 billion.
Within private sector deposits, peso deposits increased 1%, or ARS 5.6 billion, while U.S. dollar deposits increased 16% or $182 million. As of December 2021, Banco Macro's transactional accounts represented approximately 55% of total deposits. Banco Macro's market share over private sector deposits as of December 2021 totaled 5.4%. In terms of asset quality, Banco Macro's non-performing total financial ratio reached 1.3%. The coverage ratio, measured as total allowances under expected credit losses over non-performing loans under central bank rules, improved significantly at total 209.61%.
Consumer portfolio nonperforming loans improved 65 basis points down to 1.4% from 2.5% in the previous quarter, while commercial nonperforming loans deteriorated 43 basis points in the fourth quarter of 2021, up to 0.99% from 0.57% in the previous quarter. The improvement in commercial nonperforming loans can be traced to the sale of part of the consumer loan portfolio. In terms of capitalization, Banco Macro counted an excess capital of ARS 197.8 billion, which represented a total regulatory capital ratio of 36.1% and a Tier 1 ratio of 30.9%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposits ratio reached 19%. Overall, we have accounted for another positive quarter.
We continue showing a sound financial position. Asset quality remained under control and closely monitored. We keep on working to improve more our efficiency standards, and we keep a well-itemized deposit base. At this time, we would like to take the questions you may have.
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star then one on your telephone keypad. One moment, please, for our first question. The first question will come from Ernesto Gabilondo with Bank of America. Please go ahead.
Hi, good morning, Jorge and Nicolás. Thanks for the opportunity. My first question is on the implications of the IMF agreement. How do you see this will translate into loan and deposit growth this year? What do you think will be the challenges for the year? Because you still have high rates and high inflation levels, I think that could put some pressure for real on growth and in the results of the net monetary position. Another question, I would say, related to customer risk, we saw you in the quarter you have created upfront provisions related to the uncertainty of the IMF agreement.
However, I just want to know what is the base case scenario, because I think at the end it could be accepted by Congress and there could be an IMF agreement. If that is the case, do you expect to release some of those provisions during the year, or do you expect to keep a high reserve coverage ratio? My last question is on what will be your expectations for the ROE of this year. Thank you.
Hi, Ernesto. How are you? Let me answer first your second question related to the provisions that we made in the fourth quarter. From an accounting point of view, those provisions were basically done at the end of December, and at that time there was a bit of uncertainty whether Argentina was going to reach an agreement with the IMF. Now that we are in February, reaching the end of the month, I would say that the due date is the twenty-second of March. The most probable scenario is that Argentina would reach an agreement with the IMF. If that is the case, and depending on economic conditions and how the economy evolves in 2022, we could be reverting parts of these provisions along 2022.
We have to see how the economic conditions perform in Argentina. Now answering your first question, I would say that reaching an agreement with IMF is preventing Argentina to collapse from the world. Even though the agreement would be reached in beginning of March, let's say, according to local economists, macro expectations for this year is, let's say, inflation mid- to high-50 s. GDP growth in real terms between 1.5% and 2%. In that case, and considering that scenario, we are forecasting deposits and loans growing in the area of inflation, could be slightly higher in terms of loans. In terms of rates, honestly, the Central Bank has increased interest rates in January and in February.
I would say that the central bank is going to keep on monitoring the monthly evolution of inflation before increasing again rates. We are not expecting many increases in 2022 for the moment. Could be another increase between 1 percentage points and 2 percentage points, maybe between May, June, July, but it will depend on inflation evolution. Let's say that margins could be slightly wider compared to 2021. Your third question in terms of ROE, if that is the case, we could be getting an ROE in 2022 that could be above 2021, maybe in the area of 15% or maybe in the higher teens. Again, this is very early to forecast because it depends on many issues, but for the moment, we are working with that scenario.
Thank you very much, Jorge. Just to follow up on the ROE. In 2021 full year, making the numbers, I think the ROE was at around 12%. Do you think it could be more at around 15% in this year, or it will be more 13%? And then what are the assumptions behind on the dividend? As you know, the regulator has allowed the banks to pay 20% of the accumulated earnings as of 2021. What will be embedded in your guidance of your ROE in terms of dividends?
Yes. Assuming that what I mentioned before, I mean, slightly wider margin and maybe could be reverting parts of the provisions and having loans growing slightly above inflation, et cetera, et cetera. We are forecasting that an approximately 15% ROE for 2022 could be achievable. In terms of the dividends, remember that the dividends are already taken out from the equity in the case of Banco Macro. The ROE calculation that I'm making is already considering that.
Excellent. Perfect. Thank you very much.
Welcome.
Thank you. The next question will be from Yuri Fernandes with JP Morgan. Please go ahead.
Thank you, Jorge. I have a quick one on taxes. We saw a tax provision this quarter, so if you can provide more details. I know it's very hard to forecast an effective tax rate given the inflation, but if you can give us a guidance for 2022, what to expect on effective tax rate. I have a second question regarding a sale of your consumer portfolio. You don't provide a number in the release, so I don't know if this was big, if this helped any NPLs or not. Like, I guess asset quality trends in Argentina, they have been overall okay, right? They have been overall good.
Just checking if you can provide some color on the sale of the consumer loans, why you sold, what was the size, anyway, anything you can share with us. Thank you.
How are you? Thanks for your question. In terms of taxes, basically what happened in 2021 was the difference between the fiscal balance and the accounting balance in Argentina, with inflation involved there, and that's why we reach an effective tax rate so low in 2021. I would say that if you want to forecast 2022, I would have a number more close to maybe 30% going back to normal levels. There were some difference between the fiscal and accounting balance in inflation adjustments in the bank, and that's why the reversion on taxes that happened in the fourth quarter. In terms of the sale on the consumer, was a small sale.
Basically, the bank sometimes make this type of transactions, but are small transactions, meaningless for the size of the bank. In terms of asset quality, as we have been saying, we keep a very close eyes on having the best standards in asset quality with elevated coverage ratios. The idea is to continue on that. I would say that the recovery in the economy in 2021, that was slightly above 10%, has shown that was a big recovery compared to the loss that we have in 2020 because of the pandemic. For this year, what we are forecasting, as we mentioned, real GDP growth between 1.5%-2%.
For the moment, we are not considering big changes in the behavior of the NPLs. The idea is to have this under control with similar levels of the one that we are seeing for the moment. I would say ranging below, of course, below 2% in terms of NPLs and the coverage well above the 100 level.
No, perfect, Jorge. If I may just a follow-up on asset quality. Historically, I guess you had like a 2% cost of risk in the past, and in 2021 it was very low because of all the additional provisions from 2020. As you said, like overall, like the deferral programs, overall a good asset quality, low leverage from in Argentina. Do you have any view if provisions they normalize in 2022, or given you have this [$2 billion] additional from IMF, like your base case is to still run with cost of risk below the historical level?
It will depend. I would say that we'll be running below the 2% in 2022, basically. Yes, that is what we have in mind.
Perfect. Thank you very much.
Welcome.
The next question is from Robert Gilman, a Private Investor. Please go ahead.
Hello. First of all, what is the situation with the dividend? Does it look like it will be paid too?
Good morning, Robert. In terms of the dividend situation, we are still asking the central bank for permission to pay the dividends. For the moment, there's no answer from the central bank, so we are in a wait and see position. That is all what we have for the moment.
The second question is, have you considered buying back your stock because of the surplus capital you have?
I mean, the buyback is something that the board sometimes consider. Honestly, for the moment, it's not on the table. That does not mean that could be on the table in the next month or so, but for the moment, we do not have that on the table.
Thank you.
You are welcome.
Thank you. Once again, if you would like to ask a question, please press star then one. The next question will come from Carlos Gomez with HSBC. Please go ahead.
Hello, Jorge. I also wanted to ask about the dividend. First, if we understand correctly, the Central Bank said that you could pay dividends in 12 installments, which seems quite unwieldy. I mean, is that a schedule that you might consider if there is no other option? Something a bit more rational comes along. Second, do you have clarification as to whether the dividend payments refer to the ones that you have already declared or to the ones that you might declare for 2020, for 2021? A different question on taxes. Some of your colleagues presented claims to the tax authority for tax adjustments in previous years, and they actually prevailed and received rebates for taxes already paid. Do you have pending litigation like that?
Is that something that we could expect in the future or your past tax payments are already settled? Thank you.
Hi, Carlos. How are you? In terms of dividends, yes, I mean that is what the Central Bank has been saying, that when they are approved, we have to pay that in 12 monthly installments. Again, this scenario can change if we reach an agreement with the IMF and maybe Argentina receives back between $4 billion-$5 billion. The situation could maybe change in the future. For the moment, the 12 installments in pesos are still there. For the moment, we have not received our confirmation from the Central Bank that we can pay dividends. According to the new formula, from the ARS 26 billion that we have a provision, approximately we can pay between ARS 20 billion and ARS 21 billion . Again, we still do not have the approval to pay them.
In terms of taxes, no, we do not have any tax claims pending on the local authority or in our balance. Nothing about that.
That's very clear. Thank you so much.
You're welcome, Carlos.
The next question will come from Rodrigo Nistor with AR Partners. Please go ahead.
Hi, how are you? Thank you for the opportunity of asking questions. Just first a quick follow-up on the ROE guidance or expectations of 15%, if that implies any kind of relaxation on the regulatory front?
No, honestly, it's impossible to say that regulations are going to be relaxed. Basically, what we are seeing is slightly better margin and maybe slightly better recovery on the loan book. Again, I'm saying about [ROE] 15%, so that could be, I don't know, 13%, 14%, 15%, 16%. Imagine that in Argentina to make forecasts on anything is extremely difficult. For the moment, that is what we are seeing, a slight improvement in ROE. If the case is 15%, from 12%- 15%, it's a marginal improvement. I'm not saying that we are going to double the money in 2022 compared to 2021. It's a slight or marginal improvement that we are forecasting in ROE.
We are now in February, so we have 10 months to go, and in Argentina with inflation being between 55% and 60% according to local economy. Imagine that this forecast could change in the next quarter. With the elements that we have right now, that is what we are forecasting.
Okay, thanks. A second one regarding your strategy to protect the equity from this high inflation environment you are describing. We see that the deposit base contracted in real terms by 20%. What are you doing in order to defend your equity from inflation?
What we are doing is what we can. I mean, we are lending dollars as much as we can according to local regulations, and then we have all what we can in terms of bonds tied to inflation. Basically, that is the way that we are trying to hedge the equity on this complicated scenario.
Okay. Thanks so much.
You're welcome.
Ladies and gentlemen, as there are no further questions, this concludes our question and answer session. I would like to turn the call back over to Mr. Nicolás Torres for final considerations.
Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again soon. Good day.
Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Thank you, Chad.