Grupo Supervielle SA: publishes its 4Q20 and FY20 consolidated results

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Grupo Supervielle SA (NYSE: SUPV) (BYMA: SUPV), (“Supervielle” or the “Company”), an Argentina-based universal financial services group with operations across the country, today released its results for the three and twelve month periods ended December 31, 2020.

From 1Q20, the Company began to publish results by applying hyperinflation accounting, in accordance with IFRS IAS 29 (“IAS 29”) as established by the Central Bank. For ease of comparison, figures for all quarters of 2019 have been restated applying IAS 29 to reflect the cumulative effect of the inflation adjustment for each period up to December 31, 2020. This report also includes management figures which exclude the IAS29 adjustment for 4Q20, 3Q20, 2Q20 and 1Q20 and present the figures for 4Q19 as previously published in accordance with the rules of the Central Bank until December 31, 2019 and before the adoption of the Rule IAS29 at 1Q20.

Updated details regarding social assistance, monetary and fiscal measures by the Argentine government to mitigate the economic impact of the Covid-19 pandemic are available on page 46.

Management commentary

Commenting on the fourth quarter and full year 2020 results, Patricio Supervielle, Chairman and CEO of Grupo Supervielle, said: “Our flexible business model has allowed us to adapt to the many challenges posed by the pandemic, the deep recession that followed and a changing regulatory environment. In 2020, we achieved a low double-digit ROAE adjusted for inflation and including comprehensive income. We also increased our coverage ratio throughout the year while maintaining strong levels of liquidity, despite a very difficult environment. In this complex scenario, we continued to manage the credit cycle, leveraging our flexibility in an effort to balance risk and profitability. At the same time, we have worked diligently to execute our transformation strategy which aims not only to drive sustainable growth as demand picks up, but to improve our current competitiveness. “

“Throughout the quarter, we continued to see pressure on NIM, impacted by higher cost of funds resulting from the floor in interest rates on term deposits and subsidized rates on loans. We expect these conditions to continue in the short term. ”

“On our digital transformation, we are accelerating the initiatives that were already underway, both in our digital and automatic channels, given the significant growth of the bank’s active digital clientele, up 73% since the end of 2019. For elsewhere, we have extended the complete and profound digital transformation of our company to all subsidiaries under the heading of three axes: i) the generation of a modern technological architecture, ii) a review of our entire network infrastructure d ‘branches, and iii) adding capacity to connect with third parties and prepare for open banking. The successful implementation to date has benefited from a deep cultural transformation across the company, solidifying the adoption of agile working methodologies and a new operating model that puts the customer at the center of everything. that we do.

“Over the next two years, we plan to step up investments to scale innovations and build on the progress that began in 2020. In terms of our branch infrastructure, our goal is to scale our network to scale. improving the customer experience through a mix of greater digital adoption, as well as effectively serving our customers in extended service halls around the clock. The pilot programs we have implemented show significant improvements in the Net Promoter Score and Efficiency and we plan to roll out these improvements across our branch network. We are also investing in technology to facilitate API architecture to enable integration with internal and external developers. As an example, during the first quarter of this year, we plan to integrate several new financial services via fintechs into our home and mobile banking channels. “

“Looking ahead, macroeconomically, we see the economy starting to rebound after the 10% GDP contraction last year and against the backdrop of better external conditions, especially rising commodity prices. These have a positive impact on export activity and provide a solid basis for real GDP to post an expected recovery of over 7% in 2021. The recovery, however, remains subject to progress in the vaccination program to contain the health crisis, the resumption of IMF negotiations and the regulatory framework.

“We are convinced that the progress of our digital transformation, including the evolution of our agency model, will place Grupo Supervielle in a strong position to generate profitable growth when the demand for loans picks up,»Concluded Mr. Supervielle.

Fourth Quarter 2020 and Fiscal 2020 Highlights

Attributable net income of AR $ 657.4 million in 4Q20, compared to a loss of AR $ 703.7 million in 4Q19 and a profit of AR $ 957.0 million in 3Q20. Attributable net income of AR $ 3.4 billion in FY20 compared to a net loss of AR $ 4.0 billion in FY19.

The performance of the 4Q20 QoQ is explained by: i) a lower financial margin resulting from the increase in the cost of funds due to the full impact during the quarter of the increase in market interest rates and minimum rates on term deposits while loan yields remained stable, impacted by lines of credit at subsidized rates, ii) lower volumes of central bank securities holding and repo transactions, and iii) higher administrative expenses related to initiatives related to the acceleration of the digital transformation process. These were partially offset by: i) the drop in LLPs following the creation of Covid-19 anticipatory provisions during the previous quarters, and ii) the decrease in personnel costs despite certain non-recurring charges on severance pay and the early retirement program during the quarter.

Attributable comprehensive income of AR $ 981.1 million in 4Q20, compared to a AR $ 582.9 million loss in 4Q19 and a AR $ 846.8 million gain in 3Q20. Comprehensive attributable income of AR $ 3.9 billion in FY20, compared to a loss of AR $ 3.9 billion in FY19.

ROAE 7.4% in 4Q20 against -9.6% in 4Q19 and 11.0% in 3Q20. The calculated ROAE including other comprehensive income was 11% in 4Q20. ROAE calculated including other comprehensive income was 11.4% during FY20.

Profit before income tax of AR $ 753.6 million in 4Q20, compared to a AR $ 778.3 million loss in 4Q19 and a profit of AR $ 970.3 million in 3Q20. Pre-tax profit of AR $ 4.1 billion in FY20, compared to a loss of AR $ 3.7 billion in FY19.

Income were down 8.0% yoy and 13.4% qoq.

Net Financial Result of AR $ 9.3 billion, down 15.0% year-on-year and 15.2% quarter-on-quarter. Net interest margin (NIM) of 19.5% was down 950 basis points yoy and 170 basis points in QoQ

The total NPL ratio was 3.7% in 4Q20, declining 374 basis points year-on-year and 80 basis points quarter-on-quarter. The decline in QoQ NPLs is primarily due to the write-off of atomized consumer loans in the personal and business banking segment, reflecting the Company’s credit policy of writing off loans past 270 days.

Provisions for loan losses (LLP) totaled AR $ 1.0 billion in 4Q20, down 34.4% yoy and 66.6% qoq. The level of provisioning reflects the Company’s IFRS9 expected loss models. The coverage rate increased to 191.5% from 83.0% in 4Q19 and 181.3% in 3Q20. As of December 31, 2020, non-performing guaranteed commercial loans have increased to 80% of the total, compared to 78% as of September 30, 2020 and 58% as of December 31, 2019.

Efficiency ratio was 72.8% in 4Q20, compared to 79.9% in 4Q19 and 61.2% in 3Q20. Excluding non-recurring severance payments and pre-retirement charges, Efficiency would have been 66.3% in 4Q20. The efficiency ratio was 64.9% in FY20, compared to 69.0% in FY19. Excluding non-recurring redundancy payments and pre-retirement costs, the efficiency ratio for fiscal year 20 would have been 61.9% compared to 64.2% in fiscal year 19, while personnel costs decreased by 2% year-on-year.

Loan / deposit ratio by 61.8%, down from 103.6% at December 31, 2019 and 60.6% at September 30, 2020.

Total deposits Measured in comparable AR $ units at the end of 4Q20, it was up 47.4% year-on-year but was down 5.8% quarter-on-quarter to AR $ 178.6 billion. The decline in QoQ of AR dollar deposits is mainly due to the strategy of reducing institutional funding given the lower market spreads, while base peso deposits remained stable.

Loans Measured in comparable AR $ units at the end of 4Q20, it was down 12.0% year-on-year and 3.6% quarter-on-quarter to AR $ 110.4 billion.

Total assets grew 22.9% year-on-year, but declined 5.0% quarter-on-quarter, to AU $ 249.9 billion as of December 31, 2020. Quarter-on-quarter performance reflects a 3.6% decline in loans as well as a decrease in the holdings of central bank instruments following the fall in market spreads.

Ordinary Tier 1 capital ratio as of December 31, 2020, of 13.8%, compared to 14.0% published as of September 30, 2020 and 11.8% published as of December 31, 2019.


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