Banco Macro (BMA) Q3 2025: Loan Loss Provisions Surge 424% as Asset Quality Peaks
Banco Macro’s Q3 2025 results reflected a sharp deterioration in asset quality and profitability, with loan loss provisions up 424% year-on-year and net interest margin compressed to 18.7%. Management signaled that non-performing loans are peaking, with normalization expected in coming quarters, while excess capital and liquidity provide strategic flexibility for growth and potential M&A. The bank reaffirmed its ROE guidance despite a challenging environment, betting on loan growth and margin recovery to stabilize results in 2026.
Summary
- Provision Spike Signals Credit Cycle Turning Point: Loan loss provisions soared and NPLs peaked, pressuring earnings and margins.
- Efficiency and Margin Compression Underscore Cost Pressures: Administrative and early retirement expenses weighed on operating leverage.
- Capital Buffer Enables Strategic Flexibility: Excess capital positions BMA for loan growth and potential M&A as macro conditions improve.
Performance Analysis
Banco Macro posted a 33.1 billion peso net loss in Q3 2025, driven by a combination of sharply higher loan loss provisions, margin compression, and increased administrative expenses. Provision for loan losses rose 45% quarter-over-quarter and 424% year-over-year, reflecting a surge in non-performing loans (NPLs) across both consumer and commercial portfolios. Net interest income fell 7% sequentially, as a 27% rise in interest expense outpaced modest growth in interest income, and net interest margin (NIM) dropped to 18.7% from 23.5% in Q2.
Income from government and private securities fell 24% from the prior quarter and 52% year-over-year, while net fee income also declined 7% sequentially. Administrative expenses, including a 20% jump in employee benefits (mainly early retirement provisions), further pressured results. Despite these headwinds, loan growth remained robust at 3% quarter-over-quarter and 69% year-over-year, with private sector loans accounting for the majority of the expansion. Deposit growth outpaced loans, with total deposits up 5% sequentially, supporting liquidity ratios above 67%.
- Loan Loss Provisions Dwarf Prior Periods: Provisions rose to 156.8 billion pesos, reflecting peak credit stress and elevated NPLs.
- Net Interest Margin Squeezed: NIM fell to 18.7% as funding costs surged and asset yields lagged repricing.
- Efficiency Ratio Deteriorates: The ratio worsened to 39.1% from 35.9% in Q2, highlighting cost absorption challenges.
Asset quality deterioration and margin pressure defined the quarter, but management expects stabilization as credit costs peak and macro conditions normalize. The bank’s strong capital and liquidity profile remain key offsets to current profitability headwinds.
Executive Commentary
"First, in terms of the delinquency rate, we were expecting not such that amount of provisions that finally we have to post. That's a consequence, as you also saw in the other banks that also released results on the past week. That was a kind of increase, almost peak, in terms of NPLs."
Jorge Iscarinzi, Chief Financial Officer
"We continue showing a solid financial position. We keep a well-atomized deposit base. Asset quality remain under control and closing monitor. And we keep on working to improve more our efficiency standards."
Nicolás Torres, Head of Investor Relations
Strategic Positioning
1. Asset Quality Management and Credit Cycle Navigation
Management confirmed that NPLs are peaking between Q3 and Q4 2025, with cost of risk expected to decline from 6.5% in Q3 to approximately 5% in 2026. The bank proactively tightened consumer credit standards earlier in the year, aiming to contain further deterioration. Coverage ratios remain robust at 121%, providing a defensive buffer as the cycle turns.
2. Margin and Revenue Recovery Roadmap
BMA expects net interest margins to rebound to Q2 levels in Q4 as funding costs normalize and loan repricing takes hold. For 2026, management guides for NIM near 20%, with a gradual decline toward mid-teens in 2027 as competition and macro stability compress spreads. Fee income and trading gains remain volatile, but a rebound in bond portfolio performance is anticipated in Q4.
3. Capital Allocation and Growth Strategy
With a capital adequacy ratio of 29.9% and a tier 1 ratio of 29.2%, BMA is positioned to pursue both organic loan growth and opportunistic M&A. Management targets real loan growth of 35% in 2026, with a balanced focus on commercial and consumer lending, reflecting Argentina’s low banking penetration. The board remains open to buybacks if valuation and market conditions warrant, though current share price levels have paused repurchases.
4. Cost Structure and Efficiency Initiatives
Administrative expenses remain a watchpoint, with early retirement provisions adding one-off costs in Q3. Management is working to improve the efficiency ratio, but acknowledges that normalization will depend on revenue recovery and cost discipline as the credit cycle stabilizes.
5. Liquidity and Funding Flexibility
Liquidity ratios above 67% and a diversified deposit base support confidence in funding stability. The bank has multiple tools—bond portfolio, domestic and international issuance—to address any shortfall, and expects deposit growth of 25% in real terms in 2026, driven by positive real interest rates and improving macro sentiment post-election.
Key Considerations
This quarter marked an inflection point for Banco Macro’s credit cycle and operational leverage, with management focused on navigating through peak asset quality stress while leveraging a strong capital and liquidity base for future growth.
Key Considerations:
- Credit Cost Normalization Path: Peak NPLs and provisions are expected to subside, with cost of risk forecast to improve in 2026.
- Margin Rebound Dependent on Funding Costs: NIM recovery hinges on stabilization of deposit rates and effective loan repricing.
- Efficiency Ratio Under Pressure: Early retirement and administrative costs highlight the need for ongoing cost control and process optimization.
- Capital Deployment Optionality: High capital ratios provide scope for loan growth, M&A, or resumed buybacks, depending on market opportunities.
- Macro Environment Remains Volatile: Inflation, currency moves, and policy changes continue to shape funding and asset quality outlooks.
Risks
Persistent macro volatility in Argentina, including inflation, currency depreciation, and policy shifts, could prolong asset quality pressures or delay margin recovery. The bank’s earnings remain sensitive to bond portfolio performance and further one-off costs from restructuring or workforce adjustments. While capital and liquidity are strong, a slower than expected economic recovery or renewed credit deterioration would challenge the current growth and profitability targets.
Forward Outlook
For Q4 2025, Banco Macro guided to:
- Net interest margin recovery to near Q2 2025 levels
- Stabilization of NPLs and cost of risk at Q3 levels
For full-year 2025, management maintained guidance:
- ROE in the area of 8%
Management highlighted several factors that will shape the outlook:
- Loan growth expected to remain robust, with 35% real expansion targeted for 2026
- Deposit growth forecast at 25% in real terms, supporting liquidity and funding flexibility
Takeaways
Banco Macro’s Q3 2025 results underscore the late-stage credit cycle in Argentina, with peak provisions and margin compression dominating the quarter. The bank’s ability to maintain capital strength and guide for stabilization positions it for recovery as macro conditions improve.
- Credit Cycle Inflection: Q3 marked a peak in asset quality deterioration, with provisions and NPLs expected to stabilize in Q4 and improve through 2026.
- Margin and Efficiency Recovery: Management is betting on margin normalization and cost containment to restore profitability, though risks remain from macro volatility and further restructuring costs.
- Capital Optionality: Strong capital and liquidity provide levers for growth, M&A, or resumed buybacks, but deployment will depend on market and regulatory conditions in 2026 and beyond.
Conclusion
Banco Macro’s Q3 2025 highlighted the pressures of a challenging credit environment, but also the bank’s resilience through strong capital and liquidity. As asset quality stabilizes and margins recover, BMA is positioned to capitalize on growth opportunities in a recovering Argentine banking sector.
Industry Read-Through
BMA’s Q3 results provide a window into the broader Argentine banking sector’s late-cycle dynamics: rising NPLs, elevated provisions, and margin compression are sector-wide phenomena. The normalization of asset quality and margin stabilization will be key themes for peers, while capital-rich banks are best positioned to seize growth and consolidation opportunities as macro conditions improve. Sector investors should watch for further cost discipline, deposit competition, and the pace of loan demand recovery, as these factors will differentiate winners as the credit cycle turns.