Integrated Annual Report 2018 Financial, economic, social & environmental performance. $ Integrated Annual Report 2018 Financial, economic, social & environmental performance. Table of Contents 17 21 Annual Report Macroeconomic Context 35 41 Monetary Market The Bank & Financial System 42 57 73 Corporate Business Financial Governance Model Capital 4 Chairman’s Letter 7 Board of Directors 7 To the Shareholders 8 Banco Macro S.A. Notice of Shareholders’ Meeting 10 Branch Network 13 Correspondent Banks 119 Intellectual 81 Capital Industrial Capital 135 147 Human Social & Relational Capital Capital 163 Natural Capital 169 Dividend Distribution & Reserve Fund Creation Proposal 169 Acknowledgments 171 Exhibit I – Scope & Guidelines Used 179 Exhibit II – 2018 Corporate Governance Explanatory Report 202 GRI Content Index & 2018 Communication on Progress 213 Financial Statements 423 Minutes of the Meeting of the Supervisory Committee 424 Supervisory Committee’s Report 4 Annual Report | Banco Macro The total integral consolidated result of 16,115.4 million is 57% higher than the result of the previous year, which reflects the robustness of Banco Macro’s business, and the ability to adjust its development in a highly volatile market. Net Stockholders’ Equity grew by 16.9% reaching ARS 54,637.9 million, which evidences a clear comfortable situation. On the same level, the indicators that are usually used to measure performance in the activity also show a satisfactory evolution in the period. The Bank has broadly maintained its participation in the loan, deposit and service market, with such risk and finance management that places it among the entities with the best credit quality and liquidity ratios. The presentation of the Annual Report and Balance Sheet of Banco Macro S.A. is an excellent opportunity On the other hand, the Bank has taken significant to address those who, in one way or another, form steps in the consolidation of its business. In addition part of the Institution, in order to communicate to to progressing in the incorporation of technology to them our vision of what has been done throughout facilitate customer access to the services it provides 2018, and our expectations about the context within and improve the efficiency of the operation, especially which the business of the Entity is to develop. in the personal banking segment, it has managed to extend the financial agency agreements made with The Annual Report for the Fiscal Year 2018 abounds four provincial states, which expired in the short term. with all those aspects that are significant for an integral evaluation of management, both those The agreement with the Province of Misiones was related to economic and financial results, and other extended for ten years until the end of 2029, while the aspects also essential for the Institution, such as agreements made with the Governments of the those connected with its sustainability in the medium provinces of Salta and Jujuy, whereby the Bank must and long term, the provision of more and better provide services as a financial agent, as agent for the services to its customers, and the projection of its collection of revenues, and must fulfill payment orders actions in the communities in which it operates. concerning obligations contracted by those provinces, were extended until February 2026 and September At the economic and financial level, 2018 has been 2024, respectively. satisfactory despite a very changing and uncertain market context affected by a number of factors that Within the same framework of seeking the consolida- challenged the gradualist strategy of the Government tion of this line of business, in August 2018, the Bank and forced the authorities to request financial acquired the equity interest of the Province of assistance from the International Monetary Fund. Tucumán in Banco del Tucumán S.A., an entity that These factors include the increase in interest rates in acts as the sole financial agent of the Government of the international market, the fall in the supply of the Province, the Municipality of San Miguel de foreign currency by the agricultural sector caused by Tucumán, and the Municipality of Yerba Buena, as the drought, and the deterioration of local and well as an agent for them for the collection of their international economic expectations in relation to our revenues, and the fulfillment of orders for the payment country prevailing at the beginning of the fiscal year, of their obligations. given the divergent evolution of economic indicators compared to what was expected at the beginning of The operation was carried out within the framework of the year, with the consequent negative impact on the provincial law that authorized the sale to Banco access to voluntary credit markets. Macro S.A. of the shares held by said province, as well as the continuity of Banco del Tucumán as a provin- cial financial agent for a further 10-year period as from the expiration of the agreement and, where appropri- ate, the possibility of merging both entities, a decision that the Board of Directors of Banco Macro S.A. adopted in October 2018. Chairman’s Letter 5 On another level, the Institution that I preside has We supported the already established small- and maintained and enhanced, during fiscal year 2018, the medium-sized companies, as well as those wishing to policies that have allowed it to grow as a nationwide start their activity, by offering them tools for the financial entity that provides banking services to its development of their business plans and new projects. customers, whether they are individuals, companies, In that regard, the 2018 edition of the Program or institutions. In this regard, the Bank increased the “Naves” allowed us to reach more than 700 entrepre- nationwide coverage of its services with the acquisi- neurs who submitted 281 projects. tion of 13 branch offices, from Banco de Servicios y Transacciones, including their loan portfolio and staff. 2019 will be a year dominated by the electoral Thus, at the end of the fiscal year, the Bank has 8,965 process, which will test the ability of economic policy employees and 471 branch offices distributed through- to stabilize the value of the currency, both regarding out the country. the prices of local goods and services and in relation to other currencies. In this regard, it should be noted In turn, during Fiscal Year 2018, most of the central- that the Monetary Authority has, in my opinion, the ized services were concentrated in Torre Macro, a resources and economic policy instruments that this state-of-the-art building, already an icon of the city of transition requires, while the solvency and liquidity Buenos Aires, which will optimize management and conditions of the financial system ensure its stability, innovation, as indicated by the experience gained even if there are times of strong uncertainty. from other activities, the success of which is based on the integration of the multidisciplinary work teams After the elections, the next administration will have a that share the workplace. more balanced macroeconomic situation, as regards foreign transactions, debt service, the situation of the Innovation, and the incorporation of technologies Treasury, and the level of regulated prices. The world aimed at improving customer service and efficiency in economy should improve once the monetary harsh- conjunction with the permanent training of the Bank’s ness is reduced, and the commercial tensions, which resources, are key pillars in the management of the developed in the world in the last two years, ease. In Institution. this context, Argentina will have the opportunity to implement the reforms and policies that will allow it to The implementation of the digital strategies sched- capitalize, on behalf of its inhabitants, the natural and uled for 2018 allowed us to be ranked as the financial human resources that it possesses. Banco Macro S.A. institution with one of the best digital service offerings, will undoubtedly be the protagonist of that future. thus achieving recognition which has a high impact on customers. With the development of disruptive We thank our customers, correspondent banks, technologies, and the execution of our digital suppliers and colleague entities, shareholders, and transformation program, our goal is to anticipate the the authorities and officers of the controlling bodies for needs of our customers by providing them with the all the support received, and we want to acknowledge best experience. Over the past year, tools such as very specially the Bank’s staff, for the high degree of omnicanality, biometrics, digital onboarding or speech loyalty, cooperation and professionalism with which analytics have ceased to be projects to become they have performed their tasks. realities within the reach of those who daily operate with Banco Macro. Buenos Aires, March 8th, 2019. Worthy of special mention is the work done in the area of Social Capital. We were recognized inside and outside the country for the Bank’s operational work, and for our performance in CSR. The brand Banco Macro was highlighted as one of the two most important brands in the domestic market. We invested more than 108 million pesos in social work. One of our pillars was the financial education program “Cuentas Sanas” (Healthy Accounts), under which 329 face-to-face workshops were held throughout the Delfín Jorge Ezequiel Carballo country. As we do every year, Chairman 6 Annual Report | Banco Macro 7 Board of Directors Chairman Delfín Jorge Ezequiel Carballo Vice Chairman Jorge Pablo Brito Regular Directors Carlos Alberto Giovanelli Nelson Damián Pozzoli José Alfredo Sánchez Martín Estanislao Gorosito Constanza Brito Mario Luis Vicens Guillermo Eduardo Stanley Juan Martín Monge Varela Marcos Brito Delfín Federico Ezequiel Carballo Alejandro Eduardo Fargosi To the Shareholders In compliance with the legal and statutory provisions in force, the Board of Directors of Banco Macro S.A. (“Banco Macro” or the “Bank”) submits to the shareholders this Annual Report for the fiscal year No.