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J.P. Morgan on Friday upgraded Argentine banks Banco Macro (NYSE:BMA) to Neutral from Underweight and Grupo Financiero Galicia (NASDAQ:GGAL) to Overweight from Underweight on the view that an acceleration in loan growth should help boost their price multiples.
Shares of (BMA) and (GGAL) already have posted big gains this year, surging 94% and 118%, respectively. The rallies pushed up their 2025 estimated price-to-book value ratios to 1.5x (for GGAL) and 1.2X (for BMA), analyst Yuri Fernandes wrote in a note to clients.
But “we could see further upside from here as banks in Argentina reached 3-4x P/BV multiples when loan growth accelerated back in 2015-2017,” he contended.
The analyst called Galicia (GGAL) its “preferred name to play a reactivation of loan demand in Argentina. Specifically, while Galicia is the most expensive bank today, we believe it historically was more present on credit underwriting, riskier segments, has larger scale, and should benefit more from banks becoming banks again.”
Banco Macro (BMA), meanwhile, is more of a defensive play for higher inflation, given its excess liquidity and capital position, Fernandes wrote.
(GGAL) gained 2.1% and (BMA) rose 2.3% in Friday premarket trading in the U.S.
