Industry loan demand at historical lows in
recessionary context, increasing regulations and taxes, and higher
LLPs as Covid-19 rescheduling programs ended, drove net loss of
AR$318
Solid capital base with Tier 1 ratio at
14.3%
Accelerating strategic initiatives to drive
efficiencies, expand digital presence, enhance CX and
geographically diversify revenue origination
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- and six-month periods ended June
30, 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 2Q21,
1Q21, 4Q20, 3Q20 and 2Q20.
Management Commentary
Commenting on second quarter 2021 results, Patricio
Supervielle, Grupo Supervielle's Chairman & CEO, noted: “We
are committed to long-term value creation and to meet that goal we
have been implementing a sustainable transformation of our business
across Grupo Supervielle. We continue to prioritize ensuring that
our customers are well-served today and into the future as we
navigate the second Covid-19 wave and a continued challenging macro
environment.”
“Over the past three years, Argentina has experienced a
recessionary environment, further deepened by the pandemic with
loan demand dropping to historical lows and banks investing excess
liquidity in Central Bank securities. And this quarter was no
exception, with system credit demand growing below inflation
remaining at historical lows. At Supervielle, we are also keeping a
prudent approach to lending in this difficult economic
environment.”
“In addition to weak loan demand, increasing Central Bank
regulations on volumes and prices of banking assets and liabilities
continue to put significant pressure on NIM. Moreover, since the
beginning of the year, we have been facing higher turnover taxes,
mainly from the City of Buenos Aires and other Provinces. This,
together with higher administrative expenses as we advance on the
digital transformation strategy and increased loan loss provisions
reflecting our expected loss models have impacted profitability.
Importantly, our capital is hedged against inflation through real
estate investments, mortgages and sovereign bonds.”
“In this context, we are advancing our transformation agenda and
accelerating our strategic initiatives with the aim of capturing
efficiencies, diversifying revenue sources beyond Argentina, and
enhancing our service model. To achieve this, we are working on
three main fronts:”
“First, accelerating execution of the digital and channel
transformation strategy at Banco Supervielle to meet the changing
demands of our customers and capture improved efficiency in the
mid-term. Key initiatives under implementation include: executing
our IT strategy, adding APIs, a data lake and migrating to a
multi-cloud; modernizing our network to promote self-service
banking, resizing our branch network and adopting a hybrid
workplace model.”
“Second, our consumer finance subsidiary IUDU has recently
launched its mobile first retail digital savings account to attract
retail deposits and contribute to lower cost of funding. We also
expect IUDU to be adding additional financial and wellbeing
services over the next six months targeting mid-to-medium
high-income clients accessing digital services. A milestone this
quarter was the renewal of the agreement with The Narvaez Group,
the new operators of Walmart stores in Argentina.”
“Third, we are working towards growing sources beyond Argentina
starting by diversifying the reach of IOL Invertironline, our
online broker and deploying IUDU Servicios. IOL Invertironline aims
to gradually expand to several LatAm markets ex-Brazil offering US
investment products. As a first step, we have requested
authorizations from the Central Bank to operate as an online broker
in Uruguay, to deploy from there our regionalization plan. Building
on existing distribution capabilities, and financial agreements
with international providers, IUDU Servicios will deploy Wellbeing
and Health services with the B2C format in LATAM ex-Brazil.”
“We expect near-term profitability to remain impacted by overall
weak loan demand and pressure on NIMs, coupled with the required
costs and investments of the transformation strategy. Our
relentless focus and commitment to long-term value creation remains
intact, as we continue building an ecosystem to retain and enhance
the primary banking relationships with our customers by
anticipating and servicing their everyday banking and wellness
needs, while also attracting new digital clients. With a
comfortable capital position, we expect to achieve our ambitious
goals,” concluded Mr. Supervielle.
Second 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 loss of AR$318.0 million in 2Q21,
compared to net gains of AR$1.4 billion in 2Q20 and AR$210.0
million in 1Q21.
For the first half of the year, net income excluding
non-recurring severance charges in both quarters, would have
reached AR$643 million and ROAE in real terms of approximately
2.8%.
QoQ performance was explained by: i) a 1.1% increase in
financial margin, reflecting higher volumes on Central Bank Leliqs
and repo transactions, higher yield on AR$ treasury bonds, and a
slightly higher yield on peso loans, but partially offset by the
increase in cost of funds impacted by regulatory minimum rates on
time deposits, weak credit demand and mandatory credit lines
granted at subsidized rates, ii) a 0.6% increase in net fee income
following the repricing of products, and iii) a 9.6% decline in
personnel expenses. These trends were offset by: i) higher LLPs
impacted by increased retail loan delinquency since the automatic
deferrals were lifted starting on April 2021, while the Company
maintained a conservative stance and not affecting to those loans
the Covid-19 specific anticipatory provisions created in 2020, ii)
21.9% higher administrative expenses related to additional expenses
related to ongoing projects to support the Company’s Digital
Transformation and to increased taxes, and iii) higher turnover
taxes from the City of Buenos Aires and other Provinces.
ROAE was negative of 2.8% in 2Q21 compared with positive
13.2% in 2Q20 and 1.8% in 1Q21. ROAE, excluding our consumer
finance lending business was 0.2% in 2Q21, a 260-bps gap with our
as reported ROAE, which compares to similar gaps of 320 bps and 270
bps in 2Q20 and 1Q21 respectively. ROAA was negative of 0.4%
in 2Q21 compared to positive 1.8% in 2Q20 and 0.3% in 1Q21.
Loss before income tax of AR$406.6 million in 2Q21
compared to gains before income tax of AR$1.7 billion in 2Q20 and
AR$176.8 million in 1Q21.
Excluding the impact of IAS29, Profit before income tax would
have been AR$1.5 billion in 2Q21 compared to AR$2.0 billion in 2Q20
and AR$2.0 billion in 1Q21.
Net Revenues of AR$12.6 billion in 2Q21, compared to
AR$15.8 billion in 2Q20 and AR$13.1 billion in 1Q21, down 20.0% YoY
and 3.5% QoQ.
Net Financial Income of AR$11.2 billion in 2Q21 down
18.4% YoY and up 1.1% QoQ. Net Interest Margin (NIM) of
18.3% was down 530 bps YoY, and 100 bps QoQ. The AR$ NIM was 18.7%,
down 670 bps YoY but up 30 bps QoQ.
The total NPL ratio was 4.4% in 2Q21. Comparable NPL for
previous quarters, excluding the Central Bank regulatory easing on
debtor classifications amid the pandemic (adding a 60-day grace
period before loans are classified as non-performing) and the
suspension of mandatory reclassification of customers that are
non-performing with other banks, were 7.1% as of 2Q20 and 4.0% as
of 1Q21, decreasing 2,700 bps YoY but increasing 40 bps QoQ.
Reported NPL were 6.1% as of 2Q20 and 3.4% as of 1Q21.
Loan loss provisions (LLP) totaled AR$1.9 billion in
2Q21, down 45.4% YoY but up 22.1% QoQ. Loan loss provisions, net,
which includes reversed provisions, amounted to AR$1.7 billion in
2Q21 compared to AR$1.0 billion in 1Q21. The level of provisioning
reflects the Company’s IFRS9 expected loss models and the nominal
growth of the loan portfolio. The Coverage ratio was 163.9%
as of June 30, 2021. Comparable Coverage ratio excluding the
Central Bank regulatory easing o debtor classification was 108% as
of June 30, 2020 and 173% as of March 31, 2021. Reported Coverage
ratio in 2Q20 and 1Q21 was 127.1% and 205.2% respectively,
including the impact of the regulatory easing as of those
dates.
Efficiency ratio was 75.1% in 2Q21, compared to 61.8% in
2Q20 and 71.9% in 1Q21. The QoQ performance was mainly driven by a
3.5% drop in revenues while expenses remained relatively flat
(+0.8%). Excluding non-recurring severance payments and early
retirement charges, the 2Q21 and 1Q21 efficiency ratio would have
been 71.8% and 66.3% respectively.
Loans to deposits ratio of 53.4% compared to 70.4% as of
June 30, 2020 and 54.8% as of March 31, 2021.
Total Deposits measured in comparable AR$ units at the
end of 2Q21 remained flat YoY (-0.4%) and increased 2.1% QoQ to
AR$243.2 billion. AR$ deposits rose 1.4% YoY and 2.8% QoQ. The QoQ
increase in AR$ deposits was mainly driven by higher core peso
deposits due to the 50% payment of the 13th salary in June, while
institutional funding declined 3.7%. Average AR$ deposits increased
5.4% QoQ. Foreign currency deposits (measured in US$) declined 1.6%
YoY and increased 4.1% QoQ. As of June 30, 2021, FX deposits
represented 12% of total deposits, compared to 13% as of March 31,
2021.
Loans measured in comparable AR$ units at the end of 2Q21
declined 13.8% YoY and 0.6% QoQ to AR$129.8 billion.
Total Assets were down 5.7% YoY and 1.3% QoQ, to AR$321.0
billion as of June 30, 2021. The QoQ performance mainly reflect the
decline in loans, the cash payment of the amortization of a foreign
trade line in June and the cash payment of the amortization of the
US$ linked medium term note. These were partially offset by higher
holdings of Central Bank instruments and higher balance of
government bonds. Average AR$ Assets were up 6.9% or AR$17.7 bn
QoQ.
Common Equity Tier 1 Ratio as of June 30, 2021 was 14.3%
increasing 50 bps when compared to 1Q21 and 90 bps compared to June
30, 2020.
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version on businesswire.com: https://www.businesswire.com/news/home/20210825005835/en/
Ana Bartesaghi Ana.bartesaghi@supervielle.com.ar
Grafico Azioni Grupo Supervielle (NYSE:SUPV)
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