Grupo Supervielle S.A. (NYSE: SUPV) (BYMA: SUPV), (“Supervielle” or the “Company”) a universal financial services group headquartered in Argentina with a nationwide presence, today reported results for the three-month periods ended March 31, 2019. All figures presented throughout this document are expressed in nominal Argentine pesos (AR$) and all financial information has been prepared in accordance with IFRS in compliance with the adoption ruled by the Argentine Central Bank.

First Quarter 2019 Highlights

  • Revenues up 7.3% QoQ, driven by increases of 4.2% in Net Financial Income and 15.0% in Net Service Fee Income. YoY total revenues rose 51.1% supported by growth of 51.2% in Net Financial Income and 38.6% in fee income.
  • Net Financial Income of AR$5.5 billion up 51.2% YoY and 4.2% QoQ reflecting increases in average volumes of assets and deposits. Interest on loans benefitted from additional repricing in personal loans and lagged repricing in commercial loans. Net Financial Income also includes a net gain from US$ denominated operations and securities of AR$ 211.9 million.
  • Net Interest Margin (NIM) of 19.1% down 70 bps YoY and 120 bps QoQ reflecting higher volumes invested in high-yield Central Bank 7-days Leliqs but at marginally lower-spreads. By contrast, the AR$ Loan portfolio NIM increased 70 bps in the quarter to 23.2% from 22.5% in 4Q18 driven by continuing repricing in Loans to individuals and lagged repricing in commercial loans while the average badlar rate decreased in the quarter.
  • Loan Loss Provisions increased 36.9% QoQ and Cost of Risk stood at 9.9% in 1Q19 by maintaining 100% NPL Coverage. 1Q19 LLPs include a delinquent commercial loan that was fully anticipated in FY19 guidance. Excluding a voluntary AR$462 million LLP in excess of the 25% regulatory provisioning related to the above-mentioned loan, cost of risk would have been 7.5%.
  • Efficiency ratio was 59.0% in 1Q19 unchanged YoY, but improved from 61.9% in 4Q18. QoQ performance reflects a 7.3% revenue increase, above the 2.3% increase in costos.
  • Attributable Net income of AR$589.1 million, declined 18.5% YoY, or AR$133.5 million, and 16.7% QoQ, or AR$117.7 million. Excluding the additional voluntary LLP for the above-mentioned commercial loan to maintain 100% NPL coverage, Attributable Net Income would have increased 29.5% YoY and 32.4% QoQ. ROAE of 13.6% in 1Q19 (21.6% excluding additional LLP) compares with 19.9% in 1Q18 and 17.1% in 4Q18. ROAA of 1.5% in 1Q19 (2.4% excluding additional LLP), versus 3.2% in 1Q18 and 2.0% in 4Q18.
  • Loans to deposits ratio of 74.6% in 1Q19 compared to 119.7% in 1Q18, and 84.5% in 4Q18, reflecting higher deposit base and weak loan demand.
  • Deposits increased 97.5% YoY and 15.6% QoQ to AR$109.7 billion. AR$ deposits rose 80.4% YoY and 16.0% QoQ, while foreign currency deposits (measured in US$) increased 13.8% YoY and were flat QoQ.
  • Loans up 23.1% YoY and 2.1% QoQ to AR$81.8 billion. AR$ Loan portfolio rose 11.2% YoY but fell 1.4% QoQ. FX loans, measured in US$, declined 22.4% YoY and 2.5% QoQ, but rose 67.0% YoY and 11.8% QoQ measured in local currency.
  • Total assets up 69.7% YoY and 16.1% QoQ, to AR$ 163.8 billion outpacing loan growth, mainly due to larger holdings of Central Bank securities. YoY comps also reflect higher cash regulatory minimum reserve requirements.
  • NPLs increased by 210 bps YoY and 120 bps QoQ to 5.3% in 1Q19, mainly impacted in 1Q19 by the above mentioned delinquent commercial loan. Corporate segment NPL at 3%, but excluding delinquent loan would have been 1.5%. Both Retail and Consumer Finance loans showed marginal deterioration due to a combination of lower loan portfolio origination and weaker asset quality as a result of the recession in Argentina and high inflation levels which continue to impact consumers disposable income.
  • Common Equity Tier 1 Ratio (Consolidated Proforma) of 12.1% in 1Q19.

Commenting on first quarter 2019 results, Jorge Ramirez, Grupo Supervielle's CEO, noted: “Our first quarter results were in line with our expectations, which reflects an anticipated slower first half of the year dovetailing with the macro environment. We expanded our deposit base well above system growth, achieved higher revenue generation even when comparing against a seasonally stronger fourth quarter, and maintained 100% NPL loan coverage. This performance is reflective of the strength and flexibility of our franchise which has proven over time to be resilient in periods of low credit demand and more volatile financial markets.

“In the current environment, we have heightened our focus on productivity improvements, driving synergies and striving to operate as a leaner organization. We are also strengthening our efforts on enhancing the customer journey, driving loyalty and increasing efficiencies as we make progress on our digital transformation. A key part of these initiatives is streamlining the management structure at the bank subsidiary. I am pleased that we were able to begin this reorganization during the quarter and finalizing the process early April.

“As we look to the remainder of the year, while we expect the macro environment will be further challenged as this is a presidential election year, we are maintaining our full-year guidance. In sum, as we continue to navigate the current economic scenario, we remain fully committed on further solidifying the foundation of the business and investing to better position the Company for long-term success,” concluded Mr. Ramirez.

Financial Highlights & Key Ratios

(In millions of Argentine Ps.)             % Change
 
INCOME STATEMENT   1Q19   4Q18   3Q18   2Q18   1Q18   QoQ   YoY
Net Interest Income   1,218.3   2,023.2   2,722.9   2,898.2   2,818.1   -39.8%   -56.8%
NIFFI & Exchange Rate Differences   4,259.4   3,235.0   1,663.4   716.8   805.5   31.7%   428.8%
Net Financial Income   5,477.7   5,258.1   4,386.2   3,615.0   3,623.6   4.2%   51.2%
Net Service Fee Income (excluding income from insurance activities)   1,227.8   1,065.1   1,026.9   1,004.9   884.6   15.3%   38.8%
Income from Insurance activities   204.0   180.4   183.1   145.3   148.7   13.0%   37.1%
Loan Loss Provisions   -1,893.0   -1,382.8   -1,122.5   -989.2   -726.1   36.9%   160.7%
Personnel & Administrative Expenses   -3,597.7   -3,591.2   -3,045.2   -2,760.9   -2,446.5   0.2%   47.1%
Profit before income tax   748.7   903.8   1,027.6   456.0   1,020.4   -17.2%   -26.6%
Attributable Net income   589.1   706.8   867.4   270.7   722.6   -16.7%   -18.5%
Attributable Comprehensive income   615.4   935.3   874.5   475.3   744.8   -34.2%   -17.4%
Earnings per Share (AR$)   1.29   1.55   2.01   0.59   1.58        
Earnings per ADRs (AR$)   6.45   7.75   10.03   2.96   7.91        
Average Outstanding Shares (in millions)   456.7   456.7   456.7   456.7   456.7        
BALANCE SHEET   mar 19   dec 18   sep 18   jun 18   mar 18   QoQ   YoY
Total Assets   163,849.3   141,115.5   146,122.7   120,789.0   96,569.6   16.1%   69.7%
Average Assets1   156,054.4   143,525.2   128,633.2   104,287.2   90,832.7   8.7%   71.8%
Total Loans & Leasing   81,827.1   80,171.5   83,378.1   75,830.0   66,479.5   2.1%   23.1%
Total Deposits   109,676.8   94,906.0   97,185.5   75,672.7   55,540.2   15.6%   97.5%

Attributable Shareholders’ Equity

  17,771.0   17,155.6   16,220.0   15,345.4   15,114.2   3.6%   17.6%
Average Attributable Shareholders’ Equity1   17,361.2   16,547.0   15,638.9   15,044.8   14,490.1   4.9%   19.8%
KEY INDICATORS   1Q19   4Q18   3Q18   2Q18   1Q18        
Profitability & Efficiency                            
ROAE   13.6%   17.1%   22.2%   7.2%   19.9%        
ROAA   1.5%   2.0%   2.7%   1.0%   3.2%        
Net Interest Margin (NIM)   19.1%   20.3%   18.2%   17.3%   19.8%        
Net Fee Income Ratio   20.7%   19.2%   21.4%   24.3%   22.3%        
Cost / Assets   9.7%   10.3%   9.7%   10.9%   11.1%        
Efficiency Ratio   59.0%   61.9%   59.3%   66.3%   59.0%        
Liquidity & Capital                            
Loans to Total Deposits3   74.6%   84.5%   85.8%   100.2%   119.7%        
Liquidity Coverage Ratio (LCR)4   143.9%   173.4%   132.1%   139.0%   116.9%        
Total Equity / Total Assets   10.8%   12.2%   11.1%   12.7%   15.7%        
Capital / Risk weighted assets (Proforma Consolidated) 5   13.2%   14.0%   13.8%   14.5%   17.0%        

Tier 1 Capital / Risk weighted assets (Proforma Consolidated ) 6

   12.1%   12.9%   12.5%   13.1%   15.8%        
Risk Weighted Assets / Total Assets   67.9%   73.0%   70.5%   78.8%   88.1%        
Asset Quality                            
NPL Ratio   5.3%   4.1%   3.7%   3.6%   3.2%        
Allowances as a % of Total Loans   5.3%   4.1%   3.5%   3.3%   2.8%        
Coverage Ratio   100.0%   100.0%   94.0%   89.9%   89.7%        
Cost of Risk7   9.9%   7.0%   5.9%   5.6%   4.7%        
MACROECONOMIC RATIOS                            
Retail Price Index (%)8   11.8%   11.5%   14.1%   8.8%   6.7%        
Avg. Retail Price Index (%)   51.8%   47.3%   35.4%   27.1%   25.3%        
UVA (var)   9.4%   16.2%   10.0%   7.5%   6.9%        
Pesos/US$ Exchange Rate   43.35   37.81   40.90   28.86   20.14        
Badlar Interest Rate (eop)   45.7%   49.5%   43.3%   32.7%   22.6%        
Badlar Interest Rate (avg)   41.8%   50.2%   37.1%   27.3%   22.9%        
Monetary Policy Rate (eop)   68.2%   65.4%   48.0%   35.7%   27.5%        
Monetary Policy Rate (avg)   55.8%   59.3%   65.0%   40.0%   27.3%        
OPERATING DATA                            
Active Customers (in millions)   1.8   1.8   1.9   1.9   1.9        
Access Points9   325   325   351   351   340        
Employees10   5,264   5,307   5,281   5,451   5,406   -0.8%   -2.6%
 
1.

Average Assets and average Shareholder’s Equity calculated on a daily basis

2. Total Portfolio: Loans and Leasing before Allowances. According to IFRS, this line item includes Securitized Loan Portfolio and loans transferred with recourse.
3. Loans/Total Deposits ratio was restated in previous quarters due to the inclusion in the balance sheet of the securitized and transferred loans.
4. This ratio includes the liquidity held at the holding company level.
5.

Regulatory capital divided by risk weighted assets taking into account operational and market risk. The regulatory capital ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level- The Proforma consolidated capital ratio, includes the liquidity retained at Grupo Supervielle level after the equity offering, which is available for growth. As of March 31, 2019, the liquidity amounted to Ps. 913 million.

6.

Tier 1 capital divided by risk weighted assets taking into account operational and market risk. The regulatory Tier 1 capital ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level. The Proforma Consolidated Tier 1 capital ratio includes AR$913 million retained at the holding company which are available for growth.

7. Excluding a voluntary AR$462 million LLP in 1Q19, in excess of the 25% regulatory provisioning related to a delinquent commercial loan, Cost of risk would have been 7.5%. Cost of Risk in 4Q18, excluding the AR$ 231 million additional voluntary loan loss provisions made to increase coverage, was 5.9%.
8. Source: INDEC
9. The increase in the number of Access Points in 1Q18, reflects the opening of 1 bank branches located in Neuquen and the presence in 13 Walmart Stores. The increase in the number of Access Points in 2Q18, reflects the opening of 2 bank branches and the 7 Mila commercial offices. The decrease in the number of Access Points in 4Q18, reflects the closing of certain consumer finance sales points.
10. The decrease in the number of employees in 3Q18 reflects the reorganization process in the consumer finance business
 

1Q19 Earnings Call Dial-In Information

Date:   Friday, May 10, 2019
Time: 9:00 AM (US ET); 10:00 AM (Buenos Aires Time)
Dial-in Numbers: 1-877-407-0789 (U.S. and Canada), 1-201-689-8562 (International), 0-800-444-6247 (Argentina), or 0800-756-3429 (U.K.)
Webcast:

http://public.viavid.com/index.php?id=133319

Replay:

From May 10, 2019 at 12:00 PM US ET through May 24, 2019 at 11:59 pm US ET. Dial-in number: +1-844-512-2921 (U.S./Canada) or +1-412-317-6671 (international). Pin number: 13690318