Grupo Supervielle Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 28, 2025

There are 9 speakers on the call.

Operator

Good morning, everyone, and welcome to Grupo Supervielle's First Quarter Earnings Call. I'm Ana Bartesai, Treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in listen only mode. Speaking today will be Patricio Supervielle, our Chairman and CEO and Mariano Viglia, our CFO Gustavo Paco Manrique, Banco Supervielle's CEO and Deo Pizzoli, CEO of Invertir Online, will also be available during the Q and A session.

Operator

Good morning, everyone. We begin, I'd like to remind you that today's call may include forward looking statements, which are based on management's current expectations and beliefs and subject to risks and uncertainties. For more details, refer to the forward looking statements section in our earnings release and recent SEC filings. Patricio, please go ahead.

Speaker 1

Thank you, Anna. Good morning, everyone, and thank you for joining us today. In first quarter twenty twenty five, we introduced a cluster based strategy to strengthen the value proposition across both retail and commercial customers to gain principality with our clients and attract new ones. Loan growth increased modestly sequentially as we experienced some short term softness in loan demand, particularly in March. This was largely due to external factors including limited peso liquidity, currency volatility and caution ahead of the IMF milestone agreement.

Speaker 1

Reflecting our strategic focus, retail continued to lead now comprising over half of our total loan portfolio up from just a third over a year ago, underscoring our emphasis on high margin more resilient segments. On the funding side, deposits increased high single digits sequentially. Asset quality remains solid, our NPL ratio rose this quarter and is aligned with industry levels driven by the rapid expansion of our retail loan book and remains below historical levels and well within risk adjusted pricing thresholds. Customer related net financial income increased in the high teens, highlighting the strength of our core franchise, while market volatility wave on invested portfolio NIM. On the cost side, we maintain discipline, strongly reducing expenses and demonstrating our ability to drive operational efficiency.

Speaker 1

In an environment with many moving parts, we delivered a mid single digit ROE in real terms. Mariano will discuss our financial performance in more detail shortly. Argentina continued to its agenda of intense deregulation measures. Inflation continues to decelerate while maintaining fiscal surplus. Foreign exchange restrictions lifted for individuals and continue to be gradually deregulated for corporations.

Speaker 1

The strong show for the government in the recent CABA legislative elections demonstrate political support for the military government and is contributing to improve consumer confidence. Turning to Slide four, as shared with during our fourth quarter call, we finalized our strategic roadmap during this first quarter and began executing initiatives to position Supervielle as a differentiated player, blending the strength of traditional banking with the agility of fintechs. At the heart of our strategy is meeting evolving customer expectations through simplicity, personalization and convenience built on our resilient financial platform. We've already made progress on several high impact initiatives. In April, we launched Argentina's First remunerated account, allowing payroll and SME clients to earn daily interest in peso and U.

Speaker 1

S. Dollars. This product enhance the client experience while deepening our funding base and reinforcing our role as a primary bank. We're encouraged by the early response of our clients. Early this month, we launched Tinder Super Villas in the MercadoLivre platform, a bank novelty, fully integrated into our mobile app.

Speaker 1

This marks a new step in our vision of our Super App, providing customers a seamless platform to manage their financing, shop and invest. Our new AI powered customer interaction via WhatsApp enables real time intuitive support while retaining the option to access human assistance embodying our tech and touch approach. Lastly, the bank launched an investment platform, enabling its customers to conduct investment transactions powered by Investe Online, YOL, delivering a frictionless experience and an avenue for higher fee growth. This initiative reinforce our competitive position, and we are well positioned to support our clients and deliver long term value for shareholders as Argentina enters a new phase of growth. With that, I'll turn the call over to Mariano Viglia, who will walk you through our financial performance and perspectives for the year.

Speaker 2

Thank you, Patricio, and good day to all. Starting with slide five, total loans were up 3% sequentially and doubled year over year in real terms. Growth this quarter was almost entirely driven by retail lending, which rose 196% year on year and now represents nearly 52% of our total loan portfolio, up from 36% a year ago and 48% at year end. This intentional shift toward higher margin retail products continues to support profitability and deepen customer engagement. Commercial lending was up 58 year on year, but contracted slightly sequentially, reflecting softer demand from corporate clients amid tighter peso liquidity and cautious macro backdrop.

Speaker 2

That said, our market share remained stable, and we are well positioned to reaccelerate in commercial lending as demand recovers. Turning to page six, within retail loans, personal loans stood out, up 29% quarter on quarter and more than quadrupling versus the first quarter of last year. Card loans followed, rising 12% sequentially and growing nearly six fold year on year. In turn, credit cards rose 5% quarter on quarter and nearly doubled year on year. On the commercial side, loans declined 4% sequentially, mainly reflecting a decline in dollar denominated loan demand in a context of strong volatility in anticipation of the lifting of FX contracts.

Speaker 2

Moving on to page seven. As anticipated, our NPL ratio reached 2% this quarter, primarily reflecting rapid expansion in retail loans. While this marks a normalization from historically low levels, it remains in line with industry benchmarks and consistent with our risk pricing. The coverage ratio at 153% continues to reflect a prudent buffer. By segment, delinquency in the retail portfolio increased to 2.8%, while SME and corporate loans stood at 1.3%.

Speaker 2

Importantly, all levels remain within our expected range. Cost of risk rose to 5%, reflecting higher provisions aligned with retail loan growth in line with our expected credit loss models. As these loans gain share, we are actively refining our origination and collection models to sustain asset quality and protect returns. In our retail portfolio, we prioritize credit quality and long term relationship value. Currently, 53% of loans to individuals are tied to payroll and pension accounts, segments associated with lower risk and stronger retention.

Speaker 2

Notably, 88% of personal loans and over half of credit card volume is sourced from these clients, underscoring the strength of this channel. Additionally, 57% of retail loans extended to the open market are fully collateralized, mainly through car loans, supporting disciplined growth and enhanced credit quality. With respect to commercial loans, 27% of this book is secured by tangible guarantees and three quarters of nonperforming exposures are collateralized. Our exposure remains well diversified, with the top 10 corporate clients representing just 8% of total loans. Moving to slide seven, client related net financial income rose 17% sequentially, reflecting the momentum in retail lending.

Speaker 2

Loan portfolio NIM improved 60 bps to 21.3% in the period, also benefiting from the growing share of higher yield products and a lower funding cost base. In contrast, a correction in bond valuations triggered by renewed FX volatility, together with a more restrictive monetary policy, resulted in a sharp decline in the investment portfolio net financial income. As a result, total net financial income declined 12% quarter over quarter. These trends reflect the resilience of our client franchise and validate our strategic shift towards diversified sources of income. Now please turn to Slide 10.

Speaker 2

In the context of a transition year, we are slightly adjusting our loan, NPL and cost of risk targets for the full year. Starting with loans. Dollar denominated lending declined nearly 10 sequentially, while peso loans rose 6%, broadly in line with industry trends. For the full year, we now expect to deliver real loan growth between 50% to 60% contingent on monetary policy. This compares to our prior perspective of over 60% growth.

Speaker 2

Retail loans are expected to remain above 50% of the portfolio. In terms of funding, peso deposits were up 12% sequentially, while dollar denominated deposits were practically flat. We continue to expect 40% growth in total deposits for the full year, supported by a rising share of dollar balances and a strong traction in remunerated accounts, while peso deposits remain sensitive to monetary policy. On asset quality, we now expect the NPL ratio to range between 2.2% to 2.5% at year end, up from our original expectation of two percent and two point two percent, reflecting a higher weight of retail loans. Net cost of risk expectations now range between 4% to 4.5% compared to our prior range of 3.7% to 4% on higher share of retail loans.

Speaker 2

We also expect NIM to continue to normalize in the 18% to 20% range as inflation continues to ease, leverage gradually increases and the mix shifts toward dollar denominated loans and deposits. Turning to slide 11, we continue to expect fee income to grow by at least 10% in real terms in 2025. As discussed in our prior call, we anticipate fee income to be driven by higher net bank and brokerage fees, along with higher penetration of investment and insurance products across our client base. On the cost side, operating expenses were down 12% sequentially and 17% year on year, reflecting our focus on driving real term reductions through workforce optimization and other initiatives. We expect this to further strengthen operating leverage as we continue to cut costs and drive revenue growth.

Speaker 2

As a result, we continue to expect ROE to improve progressively, reaching between 1215% for the year, reflecting margin stabilization, stronger fee contribution and the benefits of structural efficiencies. We also maintained our year end CET1 ratio expectations of 12% to 13%, factoring loan growth and regulatory adjustments. In sum, we remain focused on disciplined execution, balancing growth, efficiency and capital preservation. We are closely monitoring the macro and regulatory landscape and are confident in our ability to navigate the evolving context and seize emerging opportunities. Finally, additional details on our quarterly performance are available on the appendix of our earnings presentation.

Speaker 2

With that,

Speaker 3

Thank you, Mariano. At this time, we will be conducting the question and answer session. To ask a question, please press the raise your hand button and press it again to withdraw your question. You can also send your questions in written form via the Q and A. We will ask you to limit The first question comes from Ernesto Avedondo with Bank of America.

Speaker 3

My

Speaker 4

question will be on asset quality. We noted the NPL ratio normalized to 2%. But at the same time, we also saw an important increase in provision charges and cost of risk. So can you elaborate if there is any trouble corporate and in which sector? For example, any color in the agriculture sector?

Speaker 4

And how should we think about the evolution of the cost of risk throughout the year, especially as it was, I think, 5.2% in the first quarter, but you're expecting to be the guidance for the full year between 4% to 4.5%? Thank you.

Speaker 5

Thank you, Ernesto, for your question. First of all, I have to say that there is what we are seeing is a normalization of the the the credit in in the market. And what you see, the the NPLs are coming to, let's say, a more normal level from very low levels previously. So and we are very comfortable with with our risk controls, and individuals and enterprises, they they are generally still very low in debt in in in the in in Argentina. And, so, so this this is a normalization.

Speaker 5

What you this increase of NPL that you saw in the quarter is relates to the growth of the loan portfolio, particularly on the retail sector. But please, Mariano, do you want to answer more specifically?

Speaker 2

Sure. Thank you, Ernesto, for your question. Regarding the NPL, as Patricio said, we are seeing a normalization. And also, our portfolio is balancing more towards the retail segment. So that's why we are also seeing an increase in NPLs and an increase in the cost of risk.

Speaker 2

Regarding our guidance for the full year, we are slightly increasing the guidance for NPL. We've got a guidance from in the range of 2% to 2.2%. Now we are in in the in the range of 2.2 to 2.5. And that's basically because of this of the composition of the portfolio leaning more towards retail. So so that's also what what will make the the cost of risk also to range more between four and point 4.5% instead of 3.7 to 4% we had previously.

Speaker 2

So there's there's not we we are not seeing any problems on the agricultural sector or or the corporate side. If you see the evolution of the NPL on the corporate, it's quite stable compared to the previous quarter. We know we have news from some corporates in the last months of last year, but we are seeing a good behavior on that on that portfolio.

Speaker 6

And, Mehta, sorry, in the page five, you can see that one year ago, we have 64% for commercial loans and 36% from retail loans. And now this quarter, we have 52% for individual loans, personal loans and 48% for commercial loans. So that's different compositions, explain the figures that you are seeing today.

Speaker 5

Sorry, nice to also to complement. When you look, for instance, for unsecured loans for individuals in terms of personal loans, the bulk is on payroll accounts or pensioners. So we are very confident on that. And also, if it is an open market, also the bulk of the loans is car loans, which are basically secured by the loan by the car itself. So we're pretty comfortable on that also.

Speaker 5

Thank you.

Speaker 4

Perfect. Thank you. So just a follow-up in terms of cost of risk because I believe it was around 5%, the cost of risk in the first quarter, but you are guiding for the full year between 4% to 4.5%. The worst of the cost of risk already happened in the first quarter, and it should be improving throughout the rest of the year. As you were saying, the bulk is in payroll loans, pension years and in auto loans.

Speaker 4

Is is that is that what we should expect?

Speaker 2

Yes. Correct. The the net cost of risk was 4.8. So it's slightly above the the range for the full year. So so we should see the the cost of risk improving in following quarters and having the full year within that range.

Speaker 6

We are working on improve the cost of rigs going forward. So, yes, we are keeping the up front, the 44.5% of cost But we are working on new measures in order to keep the numbers in that level.

Speaker 4

Perfect. Thank you very much.

Speaker 3

Thank you, Ernesto. So our next question comes from Brian Flores with Citi.

Speaker 7

I have a question on capital because you might have the lowest position among incumbents. And in the last twelve months, you have consumed around 10 percentage points of Tier one, which comes to around two fifty bps per quarter. So you are already at two fifty bps. You are already, I mean, at 15, which means that to go to the 12% to 13% range you were saying by the end of the year, you will need to be consuming significantly less than you had. So a question on your risk appetite.

Speaker 7

Should we continue seeing the aggressive growth we have seen? And should we expect you to defend the market share you have gained? I know, Patrizio, in the report, you mentioned the 40 bps market share gain you had in the last months. So should we continue to see you, I would say, aggressively defending or pursuing more market share? Or should we see a bit more, I would say, caution on origination?

Speaker 7

And if you could expand on which segments, that also would be great.

Speaker 5

First of all, we what happened is that in the fourth quarter of last year, we anticipated market growth that maybe there was a catch up in the first quarter of this year from the rest of the banks. So this was an anticipation. But our risk appetite has not changed. It is as I said, previously, we are starting from very low levels of debts for corporations and and individuals, and this is we we believe that is a great opportunity for the financial system looking forward, with with inflation continue to go down and also, expected and some at some time also nominal rates to go down. So that would be very positive for the for the credit side.

Speaker 5

And regarding portfolio mix, in order to sustain what you mentioned, to sustain capital levels, it's essential to also to gradually mix the change the mix of the portfolio from corporates to individuals. Paco recently mentioned just mentioned the change that occurred from first from beginning of last year till now in terms of giving more weight for retail loans. And this should continue gradually to increase the ratio of retail loans in order to defend the return on equity. Additionally, PACCO is also has implemented stringent measures in terms of cost controls that you can see in continue to see this in the first quarter, both in personnel and general admin expenses and more rush and also been more, let's say, very high discipline also on the investment side for technology, more focus. And finally, I believe that there is a challenge for the entire financial industry, which is expanding the leverage of the financial industry.

Speaker 5

And because the leverage is very low and so we will be looking forward to expand our leverage to to in in order to sustain the return on equity. I hope I have given you the answer you questions. I don't know if you want to No. Great.

Speaker 7

So just to summarize, we understand based on on your presentation, as you mentioned, NIMs should continue coming down, asset quality perhaps a bit more pressure, but within control. So basically, what you're saying is perhaps a lower risk density helping the ratio, but also more leverage also helping achieving better levels of ROE. Just to summarize, this is a correct picture in 2025?

Speaker 5

Yes. I think it is correct.

Speaker 2

Yes. That that's correct, Brian. The range of tier one capital ratio that we gave is consistent with the rest of the projections of loan growth, basically, and the other measures.

Speaker 7

Thank you.

Speaker 3

Thank you, Brian.

Speaker 2

Thank you, Brian.

Speaker 3

We have another question. It comes now from Carlo Gomez from HSBC. Hello. And

Speaker 8

as always, thank you for the very detailed presentation of your results. I had a question on the deposit side. You mentioned that you have a 12% increase quarter on quarter. But when I look at Page 17 of your presentation, I see that that is mostly on the wholesale side. Now you expect 40% increase in deposits in real terms in the year.

Speaker 8

What makes you think that you can achieve that rate of growth, and what alternatives of fine for funding do you think you can you can count on? Thank you.

Speaker 5

Let me give you briefly a general answer, then Paco will will complement. Basically, we there is there has been if you look if you would put context to what happened in the last few years in the financial industry in Argentina, there was an issue of disintermediation, particularly because with the we we we had repressive financial repressive, let's say, measures from the central that hindered taking deposits in the banks. And what happened is a large chunk of of of the savings of the of the transactional funding, sorry, of enterprises and individuals, they went into money market accounts. These money market accounts finally ended, and they continue to end, or they come to the banks as remunerated accounts, which according to Basel rules, this can only fund securities. But so the challenge is to increase CASA deposits.

Speaker 5

And this is exactly what we are tackling. Banco Supervielle is has is, I think, the first bank really to to take seriously this issue and tackling the issue of gaining gaining principality and and making sure that individuals and the enterprises, they start depositing in our bank. And I would like to if you can explain what we did.

Speaker 6

Yes. Basically, launched early April, basically, it's a remunerated account for the payroll customer. Also, as you saw in the presentation, we have a huge focus on the payroll accounts customers sector, basically. And we have excellent results in order to can can we see the the balances of those customers? Basically, they are more stable and also increase the balances against the previous month.

Speaker 6

So we launched, as Patricio mentioned, we launched a very disruptive and different product for the market for comparing to other clients. Basically, in order to compete directly to the vintage with the vintage. So we have excellent results as one month that we as when we launch, but I think it's a an strategic response for the challenge that we have for the year, for the whole whole year in order to reach the the goals that we define. So I I feel confident about that because we have a very huge and very hard strategic plan in place.

Speaker 5

If I I might complement the the challenge and the the goal that PACCO has set for the bank is to pay the cost of these remunerated accounts with reduction of expenses. So this is pure value creation for the bank. In addition, let me tell you that if you look at international experiences, there has been already other place like this in the market. For instance, Cuenta Naranja of ING Direct in Spain in 1999 was very successful. Also, have another example in Chile now in the last four years, Banco Consortium is another successful example of what we are trying to do.

Speaker 5

And are very confident on that. Thank Excellent.

Speaker 8

Can you tell us how much you are paying for the remunerated account? And can you give us the starting point? Like how many salary accounts you have now? And what would be a good outcome for you by the end of the year?

Speaker 6

We are paying 32% annually, the interest rate. And we have half as today, half of our customer base are in this new product, Cuentarum Reada. We are attracting the help of the other part, and we are launching through our sales force and throughout all the branches. We are selling the new product for the customers and also for the SME segment. Also because we also because we don't sell it, we launched also remunerated account for the SME segment, not only for the payroll services, also with SME.

Speaker 6

So we launched this Cuentaramunerada for the whole ecosystem, for the company and for the employees. And basically, we have of the customer has, set the, and we are looking for the another 50%. And, also, we launched a very, very intensive incentive for all our branches and Salesforce in order to sell this product for the open market in Argentina.

Speaker 8

And one final clarification. When you say that half have accepted so these are clients that before did not have a remunerated account, and therefore, they will be pure CASA. Now they keep, the account, but now you are paying 32% on it. Right? I mean, the initial impact should be higher interest expense.

Speaker 8

Should I understand that that way?

Speaker 5

It's a high interest expense, but at the same time, it's a high interest, but at the same as we said, we will compensate this with cost reduction. But let me there was another factor that I tried to explain before is that if you see the behavior of a typical individual, what they do with the transactional monies is they invest in money markets. And this is this is not a cash deposit because these money markets, as I said, they come as remunerated accounts, and it's not it's not cash deposit. So what we are trying is to change the the behavior. Behavior.

Speaker 5

The money was getting out of the banks, the the whole financial system, and going to to money market accounts to money market funds. So this this is this is a structural play, and, we we believe do you understand? So it's so, basically, what we are increasing balances, not only paying more, of course, of the people who are who are staying with us, but also we are increasing the balances of our our own clients because we are changing their behavior. I hope that's clear.

Speaker 8

No. The strategy is clear.

Speaker 6

Yeah. Carlos Carlos, to be clear, we don't we don't we don't expect no. We we don't have or will have more cost or financial cost for this initiative. We will cover thus additional cost with additional expense cuts.

Speaker 8

Very clear. Thank you.

Speaker 2

Yes. And it's also important to highlight, Carlos, that for individuals, we pay on their balances on savings account for payroll customers up to MXN 1,000,000 of balance, is very competitive compared with banks that don't pay anything and with also with with fintechs. And also some of them have have that in it. So that's why also the the cost is also contained.

Speaker 5

So that No.

Speaker 6

Very good point. Because if the customer remains more balances, we earn money on that part of the balance.

Speaker 3

And for SMEs, it's not that way.

Speaker 5

No. So there's a ceiling. As mentioned, Mariano, there's a ceiling on what we remunerate, a 1,000,000 pesos, basically.

Speaker 6

No. No. We can send the this scheme if if

Speaker 5

Above 1,000,000, we do not remunerate. This is for the case of individuals. In the case of of corporations, of of SMEs, it's different. It's basically what we before remunerating, they need to have a balance with no up to a certain amount of

Speaker 6

$2,525,000,000.

Speaker 5

20 5 million with no remuneration above that, we remunerate. So it's a different it's a different structure. Is 80.

Speaker 6

80. K. So a difference of rate?

Speaker 5

The rate is in is 18%. Yes. It's different rate.

Speaker 8

Very clear. Thank you.

Speaker 3

Thank you, Carlos. I think we have a couple of questions in the q and a box. One is from comes from with at cap securities. We have two questions. Maybe we'll to with the with the two questions at the same time.

Speaker 3

Net interest margin dropped sharply to 19.2% from 61.8 in first q twenty four and twenty four point nine in 04/2024. What were the main drivers of this compression, and do you expect a recovery in NIMs going forward? And then it's mostly coming from from the NIM compression. Net income, it says, fell 74% q on q and '89 year on year with raw return on equity at 3.5. What are management's updated expectations for full year return on it?

Speaker 5

I would like Mariano to answer this question. But first, I'd like to say that in the first quarter, we what happened also or what affected the NIM in the net interest margins were terror let's say, deterioration of the prices of the the the securities, government securities. And this this has has to do with, as you know, there were uncertainties during the during, particularly March, March and April also, related to the the the creation of reserves and the expectation of an IMF agreement. So this affected the prices and this affected what you see there. Afterwards, there was a change, but this is not, of course, reflected in the first Q.

Speaker 5

It was a positive change. But so please, you want to complement?

Speaker 2

Sure, Patricio. Well, when you compare to first Q twenty twenty four, also, if you compare quarter to quarter, the main driver is the lower NIM on the investment portfolio. First q twenty four was completely extraordinary. You see an NIM of more than 60%. You know it's not sustainable.

Speaker 2

And in fact, we saw that decreasing quarter over quarter during last year, where we have extraordinary extraordinary results mainly from the investment portfolio, but also in an environment of much higher interest rates and much higher inflation. Then when you compare it quarter on quarter, although inflation was similar, you see if you see the the chart we showed on on page nine, the decrease in in NIM is only the investment portfolio. And and that is related to mainly to to the volatility that that we saw in the first quarter twenty five with with low results from from the treasury positions. But the the loan portfolio NIM remained stable, and in fact, it increased slightly. This also explains why we are migrating, and we started doing that since a year ago, migrating the asset compositions from treasury securities or central bank securities to loans.

Speaker 2

So so that's the those are the main drivers.

Speaker 3

Then I think we have another question from the audience. How do you see the impact of the recent government measures to allow nondeclared dollars to be used in the economy?

Speaker 5

I I think it's well, it's yet we need to see it because there are certain details, particularly on the fiscal certain aspects of this what the government intends to do that needs to passes through congress because it implies taxes tax regulation. But, I mean, I think it's positive in the sense that there will be there are they want to put incentives on consumption and incentives of usages of of dollars that today, the individual individuals they have in safe deposits deposits. This is these are measures to favor the the, let's say, the middle income segment of the of the country. And and, of course, I think it is very positive. At the same time, it is posit it is possible that there will be changes in the regulations of the central bank in terms of as as you know, probably what the money that is not is not given in loan in your in dollar loans to to corporations, basically, is deposited to Central Bank with no interest.

Speaker 5

I believe that there will be a change on that side. And that change in order to, to adapt it more to international levels. And and therefore, provide a a higher or better value proposition for say for for for saving for savings in dollars. So these these measures that you mentioned, we probably complemented. I think I expect they would be probably complemented also, with a change in regulation that by remunerating our deposit of the central somehow.

Speaker 5

I this is my expectation.

Speaker 3

And we have another question from Brian Flores. Brian, please go ahead.

Speaker 7

Team. Thank you for the follow-up. Just a quick question, if you could remind us a bit on the density of risk weights. And particularly, I think Mariano made a very interesting comment. Of course, and I think the system is shifting from public securities, which we understand have a risk weight of zero to, in your case, a a bit more exposure on the retail side.

Speaker 7

So just can you remind us of the ranges bit of of risk density? I think, if I'm not mistaken, it's anywhere between 50 to a 50. But then on the retail side, wherever you are focusing on, maybe with guarantees, this could be lower. Just to understand a bit more on the technical side. Thank you.

Speaker 2

Yeah. So, well, basically, treasury securities, most of treasuries, I think they don't have capital requirements or is very low. It's more related to market risk. But on those pressures on the investment portfolio, they do have credit risk weighted assets. So so capital requirements, it's not completely zero.

Speaker 2

But, of course, as as we migrate to the loan portfolio, there there are higher capital requirements because risk weighted assets increase. And, also, when you increase the the leverage because there you are directly increasing assets, not only changing the composition. The density, the the the the normal rule is 100%. There are some exceptions or or waivers for certain for certain loans, mainly to individuals, which could be lower to 75%. For instance, in certain mortgage loans or certain credits for for consumption, They can go to to 75.

Speaker 2

And to one hundred and fifth 50 is more related with nonperforming loans with certain unsecured nonperforming loans, but that is not a very material balance sheet. That that's at least a brief very brief summary. I don't know if I answered your question.

Speaker 7

Yes. You did, Mariano. Thank you. Very helpful.

Speaker 3

Thank you. Thank you, Brian. And we have now a second question from Carlo Gomez Lopez with HSBC. Carlos, you can you can answer now.

Speaker 2

Yes. The question.

Speaker 8

Thank you so much. Just to follow-up on the capital question. There was a change in regulation. You referred to it in your presentation. I think it's 1.4%, but it's not that's a reduction in in your capital ratio because of the change of regulation or or an increase because in some of the banks, I had I had seen that the impact was favorable, not this favorable.

Speaker 8

So if you could clarify what the change of regulation is, how much it affects you? And going back to the target 12%, thirteen % by the end of the year, I mean, obviously, you continue to grow very fast. What is the minimum that you would consider acceptable going into the following year? And would it be reasonable to expect that at some point, you may tap the market for more equity if growth continues to be favorable?

Speaker 5

Okay. Last the the last part of the question, we we are comfortable with with with with the capital levels. And, but, of course, if, there is a huge if we continue to see a huge, increase in demand of loans as for 2026. And and the market is the it is possible that we might we might have the market for for for capital. This is this is we are looking into this, but it's not in our plans as of today.

Speaker 5

But, do you want to complement on on answering this?

Speaker 2

Yes. Sure, Carlos. Regarding the first part of your question, it's correct. As we said in the in the presentation, the changes in regulation for mainly for operational risk because there were also changes in capital for credit risk, but the the most important for us is the one of operational risk that made the tier one ratio decreased by 1.4%, and that is related to an increase in the risk weighted assets. It's not a higher deduction or less capital, but it's it's an increase in the risk weighted assets because it increases the capital requirements for operational risk.

Speaker 8

And that is that is permanent?

Speaker 2

The the change is permanent or although we are, having some discussions with the central bank because it it affected, in in in a more punitive way, the small the medium sized entities, I I I would say. There is, like, a waiver for the smallest one. The the entities with systemic risk, they they can adopt Basel III, and and the most punitive is in the middle where we are. So we are expecting the the central bank to review that and allow us to adopt com complete Basel III. If that doesn't change, it will be permanent, but it should decrease over time because what the regulation change is that we have to adjust for inflation all the past revenues, which are the base for the calculation of the operational risk.

Speaker 2

And if you go back to years with very high inflation, revenues are very high because they need to compensate for inflation. So the operational, risk weighted assets become very important in the capital requirements. So that should decrease over time because inflation decreases and and revenues decreases.

Speaker 8

Very you know, that's very clear. And and, again, the the and I know you are comfortable today, but what is the level at which you are not comfortable? The 12%, eleven %, ten %. What is the absolute minimum that you would like to to run the bank by?

Speaker 2

For us, we we feel comfortable with an eight 11% tier one ratio. On top of that, as we always say, we can add tier two, which right now we don't have as we didn't need it in the past. So in the last years, we didn't have any tier two. All our capital is c t one. We call we could add the tier two if there's the opportunity, and we will we feel comfortable with with 11% or more.

Speaker 2

And and in fact, it would be an efficient use of capital.

Speaker 8

So again, it's 11% tier one or 11% total that you are targeting?

Speaker 2

11% tier tier one.

Speaker 8

11 percent tier one.

Speaker 2

Okay. Yes. And and always remember that the minimum capital requirement is 810.5% if we want to pay dividends, although, we are not paying dividends from the bank. We just received dividends from the insurance and the asset manager subsidiary.

Speaker 8

Very clear. Thank you.

Speaker 3

Thank you, Carlos, and thank you all. We have reached the end of today's Q and A session. I'm sorry. I see there is another a new question in the in the Q and A box. Mean, Ignacio I'm sorry, from IMBERTIN and MOLSA.

Speaker 3

You for taking my question. The question is regarding the NIM of 18 to 20 estimated for 2025. Could you break down that in terms of rates on assets and liabilities? What levels of rates are you estimating on assets and the funding? Thanks so much.

Speaker 2

Let let me tell you about the the reference interest rate. And from there, it's a starting point for pricing assets, which, of course, they are very different regarding the segment and the product, but we see the the reference interest rate to stay stable the the next few months and then to decrease. As inflation decreases, I think the the interest rates will naturally decrease, but particularly seeing the lifting of capital controls, we think, we will see a positive real interest rates. So the the path that we see for inflationary interest rate is a decrease in inflation and a a decrease in interest rate a few months from now, not immediately. So so that will lead to positive interest rates that that will be translated, of course, to both loans and time deposits.

Speaker 2

From that is that we will price our our our assets and liabilities.

Speaker 3

K. Now, yes, we have reached the end of today's q and a session and earnings call. Thank you for joining us today. We appreciate your interest in the company, and we look forward to meeting more of you over the incoming weeks and months. I'm providing financial and business update new quarter next quarter.

Speaker 3

We remain available to answer any questions that you may have, and have a good day.

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Key Takeaways

  • Grupo Supervielle doubled its loan portfolio year-on-year in real terms, driven by a shift to retail lending which now accounts for over 50% of total loans, up from 36% a year ago.
  • Deposits grew high single digits sequentially (12% in peso), bolstered by the launch of a remunerated account for payroll and SME clients paying 32% p.a., deepening the bank’s funding base.
  • The NPL ratio rose to around 2%—normalizing from historically low levels but still in line with industry benchmarks—and coverage remains at 153%, with full-year NPL guidance of 2.2–2.5% and cost of risk of 4–4.5%.
  • Client net financial income increased ~17% sequentially and loan-portfolio NIM improved 60 bps to 21.3%, offset by volatility in the investment portfolio; Q1 ROE was mid-single digit in real terms, with year-end ROE targeted at 12–15%.
  • The bank rolled out fintech innovations—Argentina’s first remunerated account, “Tinder Super Villas” on MercadoLibre, AI-powered WhatsApp support and an Invierte Online investment platform—to advance its Super App strategy and boost fee income.
AI Generated. May Contain Errors.
Earnings Conference Call
Grupo Supervielle Q1 2025
00:00 / 00:00