Net Income of AR$189 million in 1Q21
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 period ended March 31,
2021.
Starting 1Q20, the Company began reporting results applying
Hyperinflation Accounting, in accordance with IFRS rule IAS 29
(“IAS 29”) as established by the Central Bank. According to Central
Bank regulation until December 31, 2020, the Other Comprehensive
Income also reflected the result from the changes in the purchasing
power of the currency results on securities classified as available
for sale. Through communication "A" 7211, effective January 1,
2021, the Central Bank established that the monetary result of
items measured at fair value with changes in Other Comprehensive
Income should be recognized in profit or loss under the line item
"Result from exposure to changes in the purchasing power”. As this
change in the accounting policy was applied retrospectively to all
comparative figures, figures for all quarters of 2020 have been
restated applying this new rule. This report also includes
Managerial figures which exclude the IAS29 adjustment for 1Q21,
4Q20, 3Q20, 2Q20 and 1Q20.
Updated details with regard to the Argentine government’s social
aid, monetary and fiscal measures to mitigate the economic impact
of the Covid-19 pandemic can be found on page 44.
Management Commentary
Commenting on first quarter 2021 results, Patricio Supervielle,
Grupo Supervielle's Chairman & CEO, noted: “After a year into
the pandemic, we are currently navigating the second wave of
Covid-19. During this challenging time, we continue to support our
client base and ensure our teams and clients remain protected and
well-served, while closely monitoring the impact this health crisis
is having on our business.”
“In this critical context, overall system credit demand again
decelerated during the quarter with loans growing below inflation
and loans to GDP contracting during the past three years to 9.6%.
Also, since Q1 we are contending with higher turnover taxes, mainly
from -but not limited to- the City of Buenos Aires While we
continue to monitor credit risk very closely, coverage was over
205% at the end of March.”
“As anticipated, NIM remained under pressure during the quarter
impacted by weak loan demand together with regulatory caps and
floors on interest rates. During this period, we continued to
exercise liquidity management to protect our financial margin and
reinforce our strategy to protect our capital in a
high-inflationary environment. Our capital is hedged against
inflation through real estate investments, mortgages and sovereign
bonds.”
“We continued to make significant progress in our
transformation, along three fronts: i) enhancing the customer
experience including improving critical customer journeys, ii)
advancing the digital transformation of our branch network and
channels, which include 19 branches that are fully automated and,
iii) progressing on developing a modern technological architecture
with capabilities to connect to third parties.”
“At Supervielle, we expect loan growth to improve in the second
half of 2021 in line with inflation. In parallel, we are enhancing
our funding base through scaling digital accounts across our
business segments, the payments platforms IUDU Pago and MODO, as
well as our cash management business. These initiatives, together
with anticipated growth in higher margin loans, are expected to
allow us to support our financial margin.”
“On the macro front, while inflation remained high in recent
months despite soft domestic demand, the hike in global commodity
prices since mid-2020 has provided an increase in foreign currency
flows. This has allowed the Central Bank to reverse the downtrend
in international reserves and lower the risk of a near-term
currency devaluation. Despite lower than planned subsidy
reductions, the fiscal front has been strengthened by pensions and
public salary adjustments, increased taxes and export duties.
Looking ahead, while commodity prices are expected to continue to
provide additional fiscal revenue, an economic recovery remains
dependent on the pace of the rollout of the vaccination program,
the resumption of IMF negotiations that are most likely to take
place after the mid-term elections in October and the resumption of
business confidence.”
“We remain focused on our long-term objective of driving
sustainable growth. The digital transformation, including evolving
our branch and channels model across the organization enhances our
competitiveness and underpins our ability to continue to deliver
shareholder value once loan demand resumes.” concluded Mr.
Supervielle.
First quarter 2021 Highlights
Following the retrospective application of the Central Bank
communication A 7211 effective January 1, 2021, figures for all
quarters of 2020 have been restated.
Attributable Net income of AR$189.3 million in 1Q21,
compared to AR$646.7 million in 1Q20 and AR$946.2 million in
4Q20.
Excluding the impact of IAS29, Attributable Net income would
have been AR$2.9 billion in 1Q21 compared to AR$1.5 billion in 1Q20
and AR$3.9 billion in 4Q20.
QoQ performance was explained by: i) a lower financial margin
resulting from the increase in cost of funds impacted by regulatory
minimum rates on time deposits and by a higher share of remunerated
deposits, while higher yields on loans could not offset the
increase in cost of funds due to weak credit demand and credit
lines granted at subsidized rates, ii) lower average loan portfolio
and lower volumes in Central Bank Securities holdings and Repo
transactions, iii) higher turnover taxes from the City of Buenos
Aires and other Provinces, iv) higher LLPs when comparing with a
prior quarter with a low provisioning level, and v) the impact of
inflation adjustment reflecting accelerated inflation in 1Q21
compared to 4Q20 as inflation adjusted portfolio assets reprice
with a lag of 30 to 45 days. These were partially offset by lower
seasonal administrative expenses and an income tax gain.
ROAE of 1.8% in 1Q21 compared with 7.5% in 1Q20 and 9.4%
in 4Q20. ROAA of 0.3% in 1Q21 compared to 1.0% in 1Q20 and
1.3% in 4Q20.
Excluding the impact of IAS29, 1Q21 ROAA would have been 4.4%
compared to 3.5% in 1Q20 and 6.6% in 4Q20.
Profit before income tax of AR$159.3 million in 1Q21
compared to AR$1.1 billion in 1Q20 and AR$1.1 billion in 4Q20.
Excluding the impact of IAS29, Profit before income tax would
have been AR$2.0 billion in 1Q21 compared to AR$1.8 billion in 1Q20
and AR$4.2 billion in 4Q20.
Net Revenues of AR$11.8 billion in 1Q21, compared to
AR$13.0 billion in 1Q20 and AR$12.6 billion in 4Q20, down 8.9% YoY
and 6.7% QoQ.
Net Financial Income of AR$10.0 billion down 6.1% YoY and
8.8% QoQ. Net Interest Margin (NIM) of 19.3% was down 350
bps YoY, and 90 bps QoQ.
The total NPL ratio was 3.4% in 1Q21 improving 330 basis
points YoY and 30 basis points QoQ. The QoQ NPL decline was mainly
due to an improvement in non-performing corporate loans in the
quarter, while NPLs in other products to individuals had variations
in different directions that offset each other.
Loan loss provisions (LLP) totaled AR$1.4 billion in
1Q21, down 39.1% YoY but up 20.2% QoQ. The level of provisioning
reflects the Company’s IFRS9 expected loss models. The Coverage
ratio increased to 205.2% from 99.6% in 1Q20 and 191.5% in
4Q20. As of March 31, 2021, collateralized commercial loans were
41% of total, relatively stable from 43% as of December 31, 2020.
As of March 31, 2021, collateralized non-performing commercial
loans increased to 82% of total, from 80% as of December 31, 2020
and 61% as of March 31, 2020.
Efficiency ratio was 71.9% in 1Q21, compared to 64.2% in
1Q20 and 71.5% in 4Q20. The QoQ performance was mainly driven by
lower revenues while expenses declined 6.1%. Excluding
non-recurring severance payments and early retirement charges, the
1Q21 and 4Q20 efficiency ratio would have been 66.3% and 65.1%
respectively.
Loans to deposits ratio of 54.8% compared to 66.8% as of
March 31, 2020 and 61.8% as of December 31, 2020.
Total Deposits measured in comparable AR$ units at the
end of 1Q21 increased 9.1% YoY and 6.4% QoQ to AR$214.7 billion.
AR$ deposits rose 14.9% YoY and 7.7% QoQ. The QoQ increase in AR$
deposits was mainly driven by an increase in institutional funding,
while core peso deposits declined largely due to seasonality and in
line with industry performance.
Loans measured in comparable AR$ units at the end of 1Q21
declined 10.6% YoY and 5.6% QoQ to AR$117.7 billion.
Total Assets were up 4.4% YoY and 3.9% QoQ, to AR$293.3
billion as of March 31, 2021. The QoQ performance reflects higher
holdings of Central Bank instruments partially offset by the 5.6%
decrease in loans. 1Q21 Average AR$ Assets were down 2.9% or AR$6.9
bn QoQ due to liquidity management.
Common Equity Tier 1 Ratio as of March 31, 2021, of 13.8%
remaining unchanged from 4Q20 and increasing 50 bps from 13.3%
reported as of March 31, 2020.
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version on businesswire.com: https://www.businesswire.com/news/home/20210527005928/en/
IR Contact: Ana Bartesaghi Phone 54 11 4324 8132
Ana.bartesaghi@supervielle.com.ar
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