Grupo Supervielle S.A. Reports 4Q19 Consolidated Results

4Q19 Net Income of AR$1.5 billion and Comprehensive net income of AR$1.6 billion.

BUENOS AIRES, Argentina–(BUSINESS WIRE)–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 twelve-month periods ended December 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.

Fourth Quarter 2019 Highlights

  • Revenues up 39.0% year over year (YoY) and 30.6% QoQ. YoY performance supported by growth of 45.6% in Net Financial Income and 29.7% in Fee income. QoQ, driven by 45.1% increase in Net Financial Income while Net Service Fee Income was flat. 4Q19 revenues benefitted from a decrease in cost of funds following the reduction in interest rates, and from price improvements of reprofiled short term AR$ and US$ local treasury notes held by Supervielle. In the previous quarter short term treasury notes had been impacted by the debt reprofiling announced by the Argentine government in August 2019.
  • Net Financial Income of AR$7.7 billion, was up 45.6% YoY and 45.1% QoQ mainly reflects the above mentioned price improvements while NII benefitted from lower cost of funds following the decrease in market interest rates and Interest on loans benefitted from lagged repricing.
  • Net Interest Margin (NIM) of 28.6%, up 840 basis points (bps) YoY and 1,130 bps QoQ mainly reflecting: i) price improvements of reprofiled sovereign securities held by Supervielle compared to a 3Q19 NIM highly impacted by the decline in those securities prices following the reprofiling decision, ii) a 170 bps decrease in cost of funds following the decline in market interest rates together with a 12.0% decrease in the average balance of high cost interest bearing liabilities as the Company deleveraged its balance sheet, sharply reducing institutional funding, and iii) also benefitted from lagged repricing in loans. AR$ Loan portfolio NIM in the quarter was 28.3% compared to 24.2% in 3Q19. Excluding the price improvements in the quarter of reprofiled short term AR$ and US$ local treasury notes, NIM would have been 24.5%.
  • Loan loss provisions (LLP) totaled AR$1.4 billion in 4Q19, decreasing 1.1% YoY and 31.8% QoQ. During 4Q19, NPL increase was lower than in previous quarters, and well below the 3Q19 increase, explaining lower amount of provisioning. In 4Q19, a 100% collateralized commercial loan from the sugar cane sector became delinquent. The coverage ratio decreased to 83.0% from 86.1% in 3Q19. Current level of provisioning and Coverage converge to the level of provisioning and coverage required by the implementation of IFRS9 ruled by the Central Bank effective January 2020. As of December 31, 2019 collateralized non-performing commercial loans were 58% of total compared with 55% as of September 30, 2019 and 20% as of June 30, 2019. The Company expects to foreclose and divest those collaterals in the upcoming quarters.
  • Efficiency ratio was 71.3% in 4Q19 increasing 940 bps from 4Q18 and 90 bps from 3Q19. The 30.6% increase in revenues in the quarter was partially offset by a 32.2% increase in personnel, administrative and D&A expenses mainly as a result of non recurring severance and early retirement charges of AR$785 million. These non recurring charges impacted the 4Q19 Efficiency ratio by 940 bps. Since January 2019, the efficiency ratio includes the impact from IFRS16 adoption.
  • Profit before income tax of AR$1.0 billion in 4Q19 compared to a AR$903.8 million profit in 4Q18 and a AR$116.5 million loss in 3Q19. 4Q19 performance was explained by: i) higher Net Financial Income and ii) the abovementioned decrease in LLP. These were partially offset by AR$ 785 million in non recurring severance and early retirement charges.
  • Attributable Net income of AR$1.5 billion in 4Q19, increasing from AR$706.8 million in 4Q18 and AR$301.0 million in 3Q19. Income tax recorded a benefit of AR$ 437.5 million mainly from the inflation adjustment in the income tax provision.
  • ROAE of 28.4% in 4Q19 compared to 17.1% in 4Q18 and 6.2% in 3Q19. ROAA of 3.7% in 4Q19, compared to 2.0% in 4Q18 and 0.7% in 3Q19.
  • Loans to deposits ratio was 103.5% up from 84.5% as of December 31, 2018 and from 85.8% as of September 30, 2019. AR$ loans to AR$ deposits ratio was 107.6% compared to 92.9% on December 31, 2018 and 82.2% as of September 30, 2019. The ratio reflects the QoQ 13.9% increase in AR$ loans, while AR$ deposits decreased 13.0%, despite an 8.7% growth QoQ in core peso franchise deposits, following the Company’s decision to deleverage its balance sheet and year end liquidity management. As of December 31, 2019, the Liquid US$ Assets to US$ deposits ratio was 60.2% increasing 270 bps from September 30, 2019 even after the 54% outflows in US$ deposits since June 2019. As of December 31, 2019, proforma liquidity coverage ratio (LCR) was 150.3% compared to 141.7% as of September 30, 2019.
  • Total Deposits decreased 6.2% YoY and 12.8% QoQ to AR$89.0 billion due to the abovementioned deleveraging, despite growth in peso core franchise deposits. AR$ deposits rose 3.2% YoY and decreased 13.0% QoQ, while foreign currency deposits (measured in US$) decreased 52.9% YoY and 15.7% QoQ, following industry trends in the quarter.
  • Loans up 14.9% YoY and 5.3% QoQ at AR$92.2 billion. AR$ Loan portfolio rose 19.7% YoY and 13.9% QoQ. FX loans, measured in US$, declined 35.8% YoY and 19.0% QoQ. Measured in local currency FX loans up 1.7% YoY but down 15.8% QoQ. YoY and QoQ inflation was 53.8% and 11.7% respectively.
  • Total Assets up 3.8% YoY but down 8.3% QoQ, to AR$146.5 billion. QoQ performance reflects both the reduction in US$ deposits at the Central Bank following US$ deposits outflows, and the balance sheet deleverage decided in the quarter.
  • The total NPL ratio increased by 330 bps YoY and 50 bps QoQ to 7.4% in 4Q19. QoQ performance was mainly impacted by delinquent commercial loans that resulted in a 150 bps increase in Corporate Segment NPL ratio and in a higher percentage of NPLs from this business segment over the total non-performing loan portfolio, more than offsetting the 310 bps decline in Consumer Finance NPL ratio.
  • Common Equity Tier 1 Ratio (Consolidated Proforma) of 11.4% in 4Q19 compared to 11.8% as of September 30, 2019. On a proforma basis, if impacted as of December 31, 2019 by inflation adjustment to be applied effective January 1, 2020, Tier 1 ratio would have been 76 bps higher than the reported ratio, reaching 12.1%.

Commenting on fourth quarter 2019 results, Jorge Ramirez, Grupo Supervielle’s CEO, noted: “We delivered improved results during the quarter, reporting net financial income up 45% sequentially and a decline in cost of risk of 320 basis points. Importantly, we continue to see sustained asset quality improvements in our consumer finance portfolio. We are very pleased with these results given that we are operating amidst a volatile and challenging macro scenario.

Looking ahead, while some of the uncertainty has been lifted since the Presidential inauguration, there are several issues that still remain open, the most important one being the sovereign debt restructuring. These open issues continue to weigh on the overall macroeconomic climate and therefore on the financial services industry where we are not seeing yet a pick-up in loan demand despite the decline in interest rates. On a more positive note, the inflation rate in January 2020 showed an improvement compared to prior months, providing leeway to the Central Bank to continue reducing interest rates.

In this context, we continue to focus on implementing several strategic initiatives including digital transformation, enhancing the value proposition for our target segments, increasing customer acquisition and cross selling, streamlining operations and developing new products and businesses to expand our franchise. To that end, we believe we are well positioned to capture business opportunities when consumption growth resumes.

I wish to thank our customers, employees, shareholders and all stakeholders for their continued support”, concluded Mr. Ramirez.

Financial Highlights & Key Ratios

 
(In millions of Argentine Ps.)           % Change      
                   
INCOME STATEMENT 4Q19   3Q19   2Q19   1Q19   4Q18   QoQ   YoY   FY19   FY18   % Chg.
Net Interest Income

4,412.3

 

1,523.8

 

1,370.7

 

1,218.3

 

2,023.2

 

189.6%

 

118.1%

 

8,525.0

 

10,462.4

 

-18.5%

NIFFI & Exchange Rate Differences

3,245.5

 

3,754.4

 

5,189.6

 

4,259.4

 

3,235.0

 

-13.6%

 

0.3%

 

16,448.9

 

6,420.6

 

156.2%

Net Financial Income

7,657.8

 

5,278.1

 

6,560.3

 

5,477.7

 

5,258.1

 

45.1%

 

45.6%

 

24,973.9

 

16,882.9

 

47.9%

Net Service Fee Income (excluding income from insurance activities)

1,348.7

 

1,348.5

 

1,241.7

 

1,227.8

 

1,065.1

 

0.0%

 

26.6%

 

5,166.6

 

3,981.5

 

29.8%

Income from Insurance activities

266.8

 

258.1

 

217.2

 

204.0

 

180.4

 

3.4%

 

47.9%

 

946.1

 

657.6

 

43.9%

Loan Loss Provisions

-1,368.1

 

-2,007.4

 

-1,210.8

 

-1,893.0

 

-1,382.8

 

-31.8%

 

-1.1%

 

(6,479.3)

 

(4,220.6)

 

53.5%

Personnel & Administrative Expenses

-5,690.4

 

-4,265.4

 

-4,395.8

 

-3,597.7

 

-3,591.2

 

33.4%

 

58.5%

 

(17,949.3)

 

(11,843.8)

 

51.6%

Profit before income tax

1,029.8

 

-116.5

 

1,566.1

 

748.7

 

903.8

 

 

13.9%

 

3,228.0

 

3,407.9

 

-5.3%

Attributable Net income

1,466.2

 

301.0

 

1,901.5

 

589.1

 

706.8

 

387.0%

 

107.4%

 

4,257.9

 

2,567.6

 

65.8%

Attributable Comprehensive income

1,570.3

 

732.1

 

1,909.3

 

615.4

 

935.3

 

114.5%

 

67.9%

 

4,827.1

 

3,030.0

 

59.3%

Earnings per Share (AR$)

3.21

 

0.66

 

4.16

 

1.29

 

1.55

         
Earnings per ADRs (AR$)

16.05

 

3.30

 

20.82

 

6.45

 

7.75

         
Average Outstanding Shares (in millions)

456.7

 

456.7

 

456.7

 

456.7

 

456.7

         
BALANCE SHEET dec 19   sep 19   jun 19   mar 19   dec 18   QoQ   YoY      
Total Assets

146,493.1

 

159,815.8

 

166,144.7

 

163,849.3

 

141,115.5

 

-8.3%

 

3.8%

     
Average Assets1

156,563.6

 

165,375.6

 

162,952.7

 

156,054.4

 

143,525.2

 

-5.3%

 

9.1%

     
Total Loans & Leasing

92,154.9

 

87,524.6

 

82,117.7

 

81,827.1

 

80,171.5

 

5.3%

 

14.9%

     
Total Deposits

89,008.2

 

102,060.3

 

112,638.3

 

109,676.8

 

94,906.0

 

-12.8%

 

-6.2%

     
Attributable Shareholders’ Equity

21,680.0

 

20,109.7

 

19,377.6

 

17,771.0

 

17,155.6

 

7.8%

 

26.4%

     
Average Attributable Shareholders’ Equity1

20,638.5

 

19,347.7

 

18,015.9

 

17,361.2

 

16,547.0

 

6.7%

 

24.7%

     
KEY INDICATORS 4Q19   3Q19   2Q19   1Q19   4Q18       FY19   FY18  
Profitability & Efficiency                  
ROAE

28.4%

 

6.2%

 

42.2%

 

13.6%

 

17.1%

     

22.6%

 

16.5%

 
ROAA

3.7%

 

0.7%

 

4.7%

 

1.5%

 

2.0%

     

2.7%

 

2.2%

 
Net Interest Margin (NIM)

28.6%

 

17.4%

 

22.1%

 

19.1%

 

20.3%

     

21.6%

 

18.7%

 
Net Fee Income Ratio

17.4%

 

23.3%

 

18.2%

 

20.7%

 

19.2%

     

19.7%

 

21.6%

 
Cost / Assets

15.2%

 

10.9%

 

11.3%

 

9.7%

 

10.3%

     

11.8%

 

10.3%

 
Efficiency Ratio

71.3%

 

70.4%

 

62.4%

 

59.0%

 

61.9%

     

66.0%

 

61.5%

 
Liquidity & Capital                  
Total Loans to Total Deposits

103.5%

 

85.8%

 

72.9%

 

74.6%

 

84.5%

         
AR$ Loans to AR$ Deposits

107.6%

 

82.2%

 

78.5%

 

78.3%

 

92.9%

         
US$ Loans to US$ Deposits

92.1%

 

95.9%

 

60.9%

 

66.8%

 

67.5%

         
Liquidity Coverage Ratio (LCR)3

150.3%

 

141.7%

 

164.5%

 

143.9%

 

173.4%

         
Total Equity / Total Assets

14.8%

 

12.6%

 

11.7%

 

10.8%

 

12.2%

         
Capital / Risk weighted assets (Proforma Consolidated) 4

12.2%

 

12.8%

 

12.9%

 

13.2%

 

14.0%

         
Tier1 Capital / Risk weighted assets (Proforma Consolidated ) 5

11.4%

 

11.8%

 

11.9%

  12.1%6  

12.9%

         
Risk Weighted Assets / Total Assets

89.2%

 

76.7%

 

68.5%

 

67.9%

 

73.0%

         
Asset Quality                  
NPL Ratio

7.4%

 

6.9%

 

5.1%

 

5.3%

 

4.1%

         
Allowances as a % of Total Loans

6.3%

 

6.0%

 

5.5%

 

5.3%

 

4.1%

         
Coverage Ratio

83.0%

 

86.1%

 

107.7%

 

100.0%

 

100.0%

         
Cost of Risk7

6.4%

 

9.6%

 

6.0%

 

9.9%

 

7.0%

     

7.9%

 

5.8%

 
MACROECONOMIC RATIOS                  
Retail Price Index (%)8

11.7%

 

12.5%

 

9.5%

 

11.8%

 

11.5%

         
Avg. Retail Price Index (%)

52.1%

 

54.1%

 

56.3%

 

51.2%

 

46.9%

         
UVA (var)

14.3%

 

8.5%

 

12.0%

 

9.4%

 

16.2%

         
Pesos/US$ Exchange Rate

59.90

 

57.56

 

42.45

 

43.35

 

37.81

         
Badlar Interest Rate (eop)

39.4%

 

58.9%

 

47.5%

 

45.7%

 

49.5%

         
Badlar Interest Rate (avg)

48.1%

 

54.7%

 

50.9%

 

41.8%

 

50.2%

         
Monetary Policy Rate (eop)

55.0%

 

78.4%

 

62.7%

 

68.2%

 

65.4%

         
Monetary Policy Rate (avg)

65.3%

 

71.5%

 

66.8%

 

55.8%

 

59.3%

         
OPERATING DATA                  
Active Customers (in millions)

1.8

 

1.8

 

1.8

 

1.8

 

1.8

         
Access Points

316

 

317

 

318

 

316

 

317

         
Employees9

5,019

 

5,134

 

5,135

 

5,203

 

5,253

 

-2.2%

 

-4.5%

     

 

  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. This ratio includes the liquidity held at the holding company level.
  4. 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 December 31, 2019, the liquidity amounted to AR$ 645 million.
  5. 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$645 million retained at the holding company which are available for growth.
  6. During 2Q19 the Central Bank clarified an interpretation regarding deductions on Tier1 Capital related to deferred tax assets, requesting not to offset deferred tax assets and liabilities even when offsetting is required by IFRS (IAS 12) and Basel framework, hence increasing the deductions on Tier 1 Capital. If the Central Bank criteria would have been adopted in 1Q19, Common Equity Tier 1 Ratio (Consolidated Proforma) would have been 11.8%.
  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. These figures do not include temporary employees

4Q19 Earnings Call Dial-In Information

Date: Thursday February 20, 2020

Time: 12:00 PM (US ET); 2:00 PM (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=137261

Replay: From Thursday February 20, 2020, 3:00 PM ET through Thursday March 5, 2020, 11:59 PM ET. Dial-in number: +1-844-512-2921 (U.S./Canada) or +1-412-317-6671 (international). Pin number: 13697302

Contacts

Ana Bartesaghi

Treasurer and IRO

Phone 54 11 4324 8132

[email protected]

error: Content is protected !!