In 3Q 08, Banco Macro S.A.’s (Banco Macro) top-line grew robustly, driven by healthy expansion in Net Interest Income (NII). Strong loan portfolio growth was led by private sector loans and personal loans, reflecting healthy demand during the period. Growth in NII was supported by a strong increase in noninterest income, driven by higher fee income from credit card and deposit accounts. We expect a slowdown in GDP expansion to dampen credit growth, going forward, constraining NIM and fee income. We are concerned that the economy could also be negatively impacted by ongoing political uncertainty in the country, which has already led to widespread farmers’ strikes. Nevertheless, private sector demand for credit continues to rise and inflation is easing. Moreover, the government’s ARS13.2 bn stimulus package is expected to lend further support to credit growth, going forward. Considering these factors, we view the common stock as an attractive investment opportunity at current levels.

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