RESULTS OF OPERATIONS

The following discussion of our results of operations is for the bank as whole and without reference to any operating segments. We do not manage the bank by segments or divisions or by customer categories, by products and services, by regions, or by any other segmentation for the purpose of allocating resources or assessing profitability.

We consider total loans to the private sector and the level of our average total deposits to be key measures of our core business. Total loans to the private sector grew by 33% from Ps.2,209.0 million as of December 31, 2004 to Ps.2,948.8 million as of December 31, 2005 (including Nuevo Banco Suquía). As of December 31, 2006, our private sector loans increased by 87% from Ps.2,948.8 million to Ps.5,525 million, of which Ps.1,223 million were loans from Banco del Tucumán and Nuevo Banco Bisel. The level of our private sector deposits grew by 27% from Ps.4,504.8 million as of December 31, 2004 to Ps.5,734.4 million as of December 31, 2005 (including Nuevo Banco Suquía), due to the return of deposits to the financial system and to organic growth. As of December 31, 2006, our private sector deposits grew 53% to Ps.8,770 million compared to Ps.5,737.4 million as of December 31, 2005. In addition, we experienced a dramatic increase in our public sector deposits as a result of the substantial fiscal surpluses experienced by the four provincial governments for whom we act as financial agent.

Banco Macro also improved the quality of its credit portfolio. Banco Macro continued to improve its asset quality ratios and has among the highest quality assets of any Argentine bank. The ratio of non-performing financing to total financing was 1.98% as of December 2006 including the 2006 acquisitions as compared to 7.94% as of 2004.

	Year ended December 31,
	2004			2005 (including Nuevo Banco Suquía)			2006 (including the 2006 acquisitions)
	(in thousands of pesos except for ratios)
Commercial Portfolio		2,501			2,503			4,097
Irregular Commercial Portfolio		164			133			65
Consumer Portfolio		898			1,574			3,351
Irregular Consumer Portfolio		106			75			82
Total Portfolio		3,399			4,077			7,448
Total Irregular Portfolio		270			208			147
Irregular/Total Portfolio Ratio		7.94	%		5.10	%		1.98	%
Total Provisions		225			266			230
Coverage Ratio		83.33	%		127.88	%		156.34	%

Banco Macro is using new sources of funding to prepare for potential changes in the Argentine loan market over the long-term.

The Bank maintains a high liquidity ratio. The ratio was 61.9% as of December 31, 2006 including the 2006 acquisitions. This was above the average of the financial system as a whole and and an increase compared to 58.6% as of December 31, 2005 including Nuevo Banco Suquía. In December 2006, Banco Macro received US$150 million from a bond issuance and part of these funds remain as liquid assets until they are applied as loans.

YEAR ENDED DECEMBER 31, 2006 COMPARED TO YEAR ENDED DECEMBER 31, 2005 AND YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

The disclosure includes consolidated comparisons and, in some cases, also comparisons for 2005 against 2004 of Banco Macro without Nuevo Banco Suquía and comparisons for 2006 against 2005 of Banco Macro without the 2006 acquisitions of Nuevo Banco Bisel and Banco del Tucumán in order to permit period-to-period comparisons, considering that Nuevo Banco Suquía was acquired in December 2004 and Banco del Tucumán was acquired in May 2006 and Nuevo Banco Bisel was acquired in August of 2006.

The following table sets forth certain components of our income statement for the years ended December 31, 2004, 2005 and 2006. Our results of operations in 2004 include results from Nuevo Banco Suquía only from December 22, 2004 to year-end. Our results of operations for 2006 include results for Banco del Tucumán from May 5, 2006 and Nuevo Banco Bisel from August 11, 2006 through year end.

	Year ended December 31,
	2004			2005			2005 without NBS ⁽¹⁾			2006⁽²⁾			2006 without 2006 acquisitions(3)
	(in thousands of pesos)
Financial income		427,891			749,850			497,278			1,155,259			993,345
Financial expenses		(133,204	)		(303,176	)		(218,160	)		(394,949	)		(350,621	)
Gross intermediation margin		294,687			446,674			279,118			760,310			642,724
Provision for loan losses		(36,467	)		(70,309	)		(60,399	)		(59,773	)		(48,872	)
Service charge income		154,425			303,141			190,154			452,620			389,121
Service charge expenses		(24,963	)		(59,510	)		(33,106	)		(93,323	)		(84,160	)
Administrative expenses		(254,936	)		(443,026	)		(306,757	)		(652,457	)		(552,376	)
Net other income		60,930			119,818			227,751			97,102			151,810
Income before income tax		193,676			296,788			296,761			504,479			498,247
Income tax		(699	)		(34,042	)		(34,042	)		(76,961	)		(73,961	)
Minority interest		—			(27	)		—			(3,220	)		12
Net income		192,977			262,719			262,719			424,298			424,298

__________________

(1)

Results of Nuevo Banco Suquía are included in “Net other income.”

(2)

Results for 2006 include the results of Banco del Tucumán from May 5, 2006 and Nuevo Banco Bisel from August 11, 2006.

(3)

The results of Banco del Tucumán and Nuevo Banco Bisel are included in “Net Other Income.”

Our consolidated net income for 2006 was Ps.424.3 million, which was a 62% increase over 2005. Our consolidated net income for 2005 increased 36% to Ps.262.7 million from Ps.193.0 million for 2004.

Financial Income

Our financial income increased 54% on a consolidated basis in 2006 as compared to 2005. Our financial income increased 75% on a consolidated basis in 2005 as compared to 2004. The components of our financial income for the years ended December 31, 2004, 2005 and 2006 were as follows:

	Year ended December 31,
	2004		2005		2005 without NBS		2006		2006 without 2006 acquisitions
	(in thousands of pesos)
Interest on cash and due from banks		1,570		7,861		3,075		11,682		11,408
Interest on loans to the financial sector		3,327		6,325		4,626		16,720		13,786
Interest on overdrafts		25,970		53,953		27,020		120,040		96,186
Interest on mortgage loans		6,887		29,655		11,036		48,506		44,733
Interest on pledge loans(1)		1,641		26,160		6,491		43,038		39,427
Interest on credit card loans		6,011		18,233		12,012		30,969		27,992
Interest on documents(2)		11,523		32,157		16,998		56,988		42,823
Interest on other loans(3)		61,763		121,062		99,271		259,801		230,064
Interest on other receivables from financial intermediation		5,611		15,115		15,115		15,050		13,876
Income from government and private securities, net		156,794		156,158		133,376		324,178		262,875
Indexation by benchmark stabilization coefficient (CER)(4)		91,435		185,421		93,620		84,951		76,928
Indexation by salary variation coefficient (CVS)		508		1,987		700		1,947		1,944
Income from guaranteed loans(5)		14,600		28,625		19,523		29,898		26,656
Other(6)		40,251		67,138		54,415		111,491		104,647
Total financial income		427,891		749,850		497,278		1,155,259		993,345

__________

(1)

Includes primarily secured car loans.

(2)

Includes factoring, check cashing advances and loans with promissory notes.

(3)

Includes interest on loans not classified under prior headings.

(4)

Includes CER accrued for all the assets subject to adjustment by CER.

(5)

Includes loans to the Argentine government that were issued in exchange for federal and provincial government bonds.

(6)

Principally foreign exchange gains from our net asset position in U.S. dollars and results from leasing activity.

2006 and 2005. Our financial income increased 54% on a consolidated basis and 32% without the 2006 acquisitions. Interest on loans increased 100% on a consolidated basis and 72% without the 2006 acquisitions due to a higher volume of loans to the private sector. We continue to exhibit high rates of growth as loans to the private sector increased 87% as of December 31, 2006 as compared to December 31, 2005. Thus, the share of our total financial income from private sector loans increased from 38% to 48% on both a consolidated basis and when measured without the 2006 acquisitions. The main drivers of this growth have been overdrafts, which grew 155%, consumer loans, which grew 200%, credit cards loans, which grew 107% and medium-term loans structured for our corporate customers recorded in “Other,” which grew 45% during 2006.

Income from government and private securities climbed 108% on a consolidated basis and 68% without the 2006 acquisitions mainly driven by LEBAC/NOBAC results, which increased 78%. Also in this period we had a one-time gain of Ps.8 million, relating to our sale of an interest in the Puerto Madero Siete trust.

Indexation by CER decreased 54% on a consolidated basis and 58% without the 2006 acquisitions due to the fact that secured bonds have been marked to market since January 2006 and the decreasing volume of loans and bonds adjusted by CER. Additionally, inflation for the twelve months ended December 31, 2006 was lower than the same period in 2005 (inflation of 9.84% during 2006 compared to 12.3% during 2005).

Without including the 2006 acquisitions, our other income increased 56%, or Ps.38 million, during 2006 as compared to the same period in 2005. On a consolidated basis, our other income increased 66%, or Ps.44 million, during 2006 as compared to 2005. This increase is principally due to higher income from leasing activity and higher interests from foreign trade activity.

2005 and 2004. Our financial income increased 75% on a consolidated basis and 18% without Nuevo Banco Suquía. Interest income increased 147% on a consolidated basis and 55% without Nuevo Banco Suquía due to a higher volume of loans to the private sector. We continue to exhibit high rates of organic growth as loans to the private sector (other than overnight loans to highly rated companies that we use for liquidity management) increased 68% as of December 31, 2005 as compared to December 31, 2004. Thus, the share of our total financial income from private sector loans increased from 27% to 38% on a consolidated basis and to 35% without Nuevo Banco Suquía. The main drivers of this growth have been medium-term loans structured for our corporate customers recorded in “Other,” which grew 89% during 2005, consumer loans, which grew 86%, and credit cards loans, which grew 130%.

On the other hand, income from government and private securities fell 0.4% on a consolidated basis and 15% without Nuevo Banco Suquía mainly driven by LEBAC results, which dropped 27% as a result of decreasing maturities and interest rates, which fell from an average of 16% in 2004 to 7% in 2005. In addition, we recorded a loss of Ps.20 million as a result of marking to market the BODEN 2012 received in 2005.

Interest on other receivables from financial intermediation increased 169% on a consolidated basis as the interest rate paid by the Central Bank for liquidity requirements for deposits rose from an average of 0.8% in 2004 to 2.5% in 2005.

Indexation by CER increased 104% on a consolidated basis and 3% without Nuevo Banco Suquía due to higher inflation of 12.3% during 2005 compared to 5.48% in 2004. Nuevo Banco Suquía has generated significant revenues from guaranteed loans and government bonds.

Finally, income from guaranteed loans increased 96% on a consolidated basis and 36% without Nuevo Banco Suquía as a result of increasing volumes mainly during the first six months of 2005, which averaged Ps.472 million during the first six months of 2005 compared to Ps.341 million during the same period of 2004.

Financial expenses

Financial expenses increased 30% on a consolidated basis and 16% without the 2006 acquisitions in 2006 as compared to 2005 and increased 128% on a consolidated basis and 66% without Nuevo Banco Suquía in 2005 as compared to 2004. The components of our financial expenses for the years ended December 31, 2004, 2005 and 2006 were as follows:

	Year ended December 31,
	2004		2005		2005 Without NBS		2006		2006 Without 2006 acquisitions
	(in thousands of pesos)

Interest on checking accounts		2,335		2,647		1,455		9,475		8,665
Interest on savings accounts		3,161		4,302		2,306		6,736		5,976
Interest on time deposits		49,253		106,486		74,032		233,697		209,629
Interest on financing from the financial sector		79		980		775		802		802
Interest on other liabilities from financial intermediation(1)		9,959		13,839		13,799		14,672		14,604
Other interest(2)		9,646		13,288		6,801		14,427		12,665
Net loss from options		5		1,017		1,017		371		371
Indexation by CER(3)		25,336		117,048		80,544		55,732		46,633
Other(4)		33,430		43,569		37,431		59,037		51,276
Total financial expenses		133,204		303,176		218,160		394,949		350,621

__________

(1)

Includes lines of credit from other banks, repurchase agreements and liquidity assistance from the Central Bank.

(2)

Includes subordinated corporate bonds issued by us.

(3)

Includes CER accrued for all the liabilities subject to adjustment by CER.

(4)

Includes deposits in the form of government securities and CEDROs.

2006 and 2005. Financial expenses increased 30% on a consolidated basis and 16% without the 2006 acquisitions. The composition of financial expenses changed substantially, due to a sharp increase in interest rates and a decrease in indexation by CER.

The growth of financial expenses is mainly explained by interest on time deposits, which grew 120% and 97% on a consolidated basis and without the 2006 acquisitions, respectively. This growth originated in two factors: the higher prevailing interest rates in line with the increase in interest rates in the financial system as a whole (for time deposits in pesos, the interest rate was 6% in December 2005 and more than 8% in December 2006) and the increasing volume of deposits, which grew 53% during 2006.

Indexation by CER fell 52% on a consolidated basis, due to a decrease in CER-adjusted deposits, mostly owned by institutional investors and also due to lower inflation during 2006.

2005 and 2004. Financial expenses increased 128% on a consolidated basis and 66% without Nuevo Banco Suquía. Without Nuevo Banco Suquía, the growth of financial expenses is mainly explained by indexation by CER and by interest on time deposits. Indexation by CER grew due to both increasing CER-adjusted deposits, mostly owned by institutional investors (which averaged Ps.135 million in December 2004 and Ps.528 million in December 2005), and higher inflation during 2005.

Interest on time deposits increased because of higher prevailing interest rates (for time deposits in pesos, the interest rate was 3.98% in December 2004 and more than 6% in December 2005) and the increasing volume of time deposits, which grew 24% during 2005.

Provision for loan losses

2006 and 2005. Provision for loan losses decreased 15% on a consolidated basis for 2006 compared to 2005 and 30% without the 2006 acquisitions, in connection with the asset quality improvement.

2005 and 2004. Provision for loan losses increased 93% on a consolidated basis for 2005 compared to 2004. The consolidated total increase of Ps.34 million is a result primarily of the expansion of our private sector lending, which totaled Ps.24 million in 2005 for Banco Macro and Ps.10 million for the incorporation of Nuevo Banco Suquía.

Service charge income

The following table provides a breakdown of our service charge income by category for the years ended December 31, 2004, 2005 and 2006:

	Year ended December 31,
	2004		2005		2005 Without NBS		2006		2006 Without 2006 Acquisitions
	(in thousands of pesos)
Service charges on deposit accounts		99,537		199,970		116,103		297,256		248,200
Debit and credit card income		23,277		22,959		19,107		50,360		43,925
Other fees related to foreign trade		5,789		10,630		5,089		11,607		10,818
Credit-related fees		7,867		19,171		12,090		35,962		30,171
Capital markets and securities activities		788		1,666		722		2,085		2,041
Lease of safe-deposit boxes		2,816		5,712		2,926		8,814		7,767
Fees related to guarantees		675		570		419		5,876		5,837
Other(1)		13,676		42,463		33,698		40,660		40,362
Total service charge income		154,425		303,141		190,154		452,620		389,121

__________

(1)

Includes insurance income.

2006 and 2005. Service charge income increased 49% on a consolidated basis primarily due to the increase in the volume of our operations and the acquisitions of 2006. The main drivers were fees related to deposits, which grew 48% and represent 66% of total service charge income, fees related to debit and credit cards, which grew 119% and fees related to lending activities, which grew 74%.

2005 and 2004. Service charge income increased 96% on a consolidated basis primarily due to the increase in the volume of our operations. Fees related to deposits represent 66% of total service charge income for both 2004 and 2005. As of December 31, 2005, service charge income includes provincial government agent fees (Ps.19 million), insurance fees (Ps.11 million) and credit card fees (Ps.18 million), among others.

Service charge expenses

Service charge expense in 2006 increased 57% on a consolidated basis and 41% without the 2006 acquisitions, as compared to 2005, mainly due to higher credit card and debit card processing fees, other service fees and taxes. Service change expenses in 2005 increased 138% on a consolidated basis and 36% without Nuevo Banco Suquía, as compared to 2004, mainly due to higher revenues from fees for the use of credit and debit cards, ATMs, foreign trade and exchange operations and leasing services. Net service charge income grew 18% on a consolidated basis and 25% without the 2006 acquisitions in 2006 and 88% on a consolidated basis and 23% without Nuevo Banco Suquía in 2005.

Administrative expenses

The components of our administrative expenses for the years ended December 31, 2004, 2005 and 2006 are reflected in the following table:

	Year ended December 31,
	2004		2005		2005 Without NBS		2006		2006 Without 2006 Acquisitions
	(in thousands of pesos)
Personnel expenses		132,575		254,821		162,682		396,338		327,729
Directors and statutory auditors fees		5,861		14,142		12,702		14,362		13,167
Other professional fees		16,773		26,104		23,081		39,670		37,215
Advertising and publicity		12,048		22,668		16,978		31,866		29,719
Taxes		3,353		5,808		5,112		9,008		6,802
Bank premises and equipment depreciation		16,773		19,218		15,810		29,231		23,735
Amortization of organization and development expenses		13,595		12,588		12,068		13,262		12,290
Maintenance, conservation and repair expenses		11,504		17,649		12,179		25,209		21,881
Security services		10,086		16,366		11,278		25,002		20,855
Electric power and communications		9,206		17,164		10,961		23,647		18,091
Lease payments		4,514		9,889		4,726		14,124		12,127
Insurance		4,079		3,973		3,097		5,255		4,663
Stationery and office supplies		3,837		7,979		5,905		8,310		7,900
Other		10,732		14,657		9,877		17,173		16,202
Total administrative expenses		254,936		443,026		306,757		652,457		552,376

2006 and 2005. Administrative expenses increased 47% on a consolidated basis and 25% without the 2006 acquisitions, mainly due to personnel expenses which grew 55% on a consolidated basis and 29% without the 2006 acquisitions. This increase in personnel expenses is attributed to salary adjustments and to the increase in the number of employees as a result of the 2006 acquisitions.

2005 and 2004. Administrative expenses increased 74% on a consolidated basis mainly due to personnel expenses. In the case of Banco Macro, salary increases were partially offset by a small decrease in personnel. The acquisition of Nuevo Banco Suquía increased the number of personnel by approximately 70%, partially offset by lower average salaries. We maintained a policy of controlling expenses while continuing to consolidate the operations of Banco Macro and Nuevo Banco Suquía.

Net other income

Net other income decreased 19% or Ps.23 million in 2006 in comparison with 2005 as a result of two main factors: (1) a Ps.16 million increase in credit recoveries and (2) an increase in other losses of Ps.39 million, due to non-recurring expenses related to ADS offering and Notes issuance. Net other income increased 97% (or Ps.59 million) on a consolidated basis in 2005 in comparison to 2004.

During 2005, we reached a final settlement with the Central Bank as to the total amount of BODEN 2012 we received. Since the final amount of compensation was Ps.11 million higher than the estimates we had recorded on December 31, 2004, we recorded Ps.11 million as a gain. Additionally, we reached several agreements with past due debtors, mainly of Nuevo Banco Suquía (some of whom were regular clients of Banco Macro), and we improved collections for Nuevo Banco Suquía. All of this resulted in a reversal of Ps.12 million of provisions. In addition, Nuevo Banco Suquía had a gain of Ps.20 million on reversal of a provision in respect of an exchange for secured bonds from the city of Córdoba. Until December 2004, this loan was highly provisioned in accordance with the Central Bank’s requirements in the pre-privatization period and our initial estimates.

In 2004, we recorded a provision of Ps.42 million to reflect the possibility that we may have to make a payment in respect of a liability that we contended was pesified.

Income tax

During 2006, we accrued income tax of Ps.77 million, compared to Ps.34 million recorded in 2005. During 2004, we had a tax loss carry forward for income tax purposes. As a result, only income taxes for our subsidiaries, primarily Macro Securities S.A. Socieded de Bolsa, have been recorded. Based on Decree 1035/06 dated August 14, 2006, which stated that pesification and CER adjustments on guaranteed loans should be treated on an accrual basis, and considering that during the prior year the computable net operating loss was used, the Bank and its subsidiaries included a higher income tax provision in 2006.

	MACRO BANK INC.


	By:	/s/ Luis Cerolini
	Name:	Luis Cerolini
	Title:	Attorney-in-fact