Delivered profitability with ROE at 2% in real
terms; Tier 1 Capital Ratio at 14.7%
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-months period ended March 31,
2023.
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.
In 3Q22 IUDU adopted IFRS 9 for the fiscal year beginning on
January 1, 2022, and the IFRS 9 transition date was scheduled for
January 1, 2021. For comparative purposes, and according to IAS 8,
changes in accounting policies were applied retrospectively,
therefore reported figures and applicable ratios have been
restated.
Management Commentary
Commenting on first quarter 2023 results, Patricio
Supervielle, Grupo Supervielle’s Chairman & CEO, noted: “We
started the year delivering ROE of 2% in real terms in the quarter,
despite the increasingly challenging macroeconomic and political
environment and on track to return to profitability.
Our initiatives to optimize operations and streamline our
network have achieved significant cost savings when compared with
the same period of the prior year. Key among those were personnel
expenses, which declined nearly 12% year-on-year in real terms.
Reflecting our focus on profitability, NIM increased to 21.9%
from 19.2% in the year-ago quarter driven mainly by the good
performance from our short-term central bank and government
securities portfolio, on the back of higher interest rates. This
more than offset a contraction in the credit portfolio as we
benefitted from our flexibility in managing assets and
liabilities.
Lower loan volumes together with accelerated inflation which
increased pressure on individuals´ disposable income, drove a 60
basis points sequential increase in the NPL ratio to 4.1% - a
situation we anticipated and increased provisions in the prior
quarter. In the current context, we have implemented stricter
credit scoring. Consequently, we are prioritizing cross selling of
our existing client portfolio, particularly insurance, investment
products and personal loans to payroll customers. On the corporate
front, we are focused on lending and transactional services to our
key target segments that include SMEs and Middle-Market
companies.
As we build the bank of the future, we continue to execute our
transformation strategy centered on accelerating time to market,
product market fit and apply machine learning to enhance our
customer experience. To this end, we were the first bank in
Argentina to launch a unique feature in our App which offers access
to invest in money market funds 24/5 to protect transactional funds
against inflation.
On the sustainability front, we are pleased to have recently
published our first integrated report, as compared to standalone
reports in prior years. Overall, we continue to progress on meeting
our ESG targets through 2024. Among key initiatives, we reduced our
carbon footprint by 29% last year and increased the number of
customers assessed under our Environmental and Social Risk Policy.
We are also proud to maintain our position in the BYMA
Sustainability Index for the fifth consecutive year.
As we look to the remainder of the year, we face higher
macroeconomic uncertainty, heightened regulatory risk and
volatility in a presidential electoral year. Despite this, we are
confident in our capabilities to weather the current business
conditions. Our capital base with a Tier 1 ratio at 14.7% remains
hedged against inflation, which coupled with high liquidity and
flexibility strengthens the foundation of our business for
long-term success,” concluded Mr. Supervielle.
First quarter 2023 Highlights
Attributable Net Income of AR$557.5 million in 1Q23,
compared to net losses of AR$545.2 million in 1Q22 and AR$963.6
million in 4Q22. YoY, Net Income performance reflects the result of
cost savings initiatives implemented in 2022 to optimize operations
and streamline the branch network. Nevertheless, Net Income
remained impacted by several factors, including: i) low credit
demand from the private sector which remains at historical lows,
compounded by inflation of 22% in the quarter; and ii) regulatory
minimum interest rates on time deposits.
ROAE was 2.0% in 1Q23 compared with negative 1.8% in 1Q22
and negative 3.4% in 4Q22.
ROAA was 0.3% in 1Q23 compared to negative 0.2% in 1Q22
and negative 0.5% in 4Q22.
Profit before income tax of AR$1.7 billion in 1Q23
compared to losses of AR$408.8 million in 1Q22 and AR$5.9 billion
in 4Q22. 4Q22 included one-time charges from the IUDU merger and
severance payments.
YoY performance is explained by: i) higher results on the
short-term investment portfolio on the back of higher interest
rates, ii) declines in wages and social security charges,
administrative expenses as well as severance payments; iii) a
decrease of 32.1%, or AR$1.4 billion, in loan loss provisions
mainly due to the decrease of the loan portfolio while early
delinquency in consumer finance customers had been provisioned in
previous quarter; iv) a 6.1% decrease in the loss from exposure to
inflation mainly due to the 26% decrease in net monetary assets
excluding income tax credits while inflation increased to 104.3%
YoY; and v) higher revenues from the brokerage and asset management
businesses on increased activity and assets under management. These
were partially offset by; i) higher cost of funds reflecting
interest rate increases set by the Central Bank throughout 2022 and
in 1Q23; ii) weak credit demand as loan portfolio increased below
104.3% inflation; and iii) a 20.2% or AR$935 million increase in
turnover tax due to higher yields on the Central Bank securities
and repo transactions.
Net Financial Income of AR$32.5 billion in 1Q23
decreasing 0.7% QoQ and 1.1% YoY.
Net Interest Margin (NIM) reached 21.9% compared to 19.2%
in 1Q22 and 21.6% in 4Q22.
The total NPL ratio was 4.1% in 1Q23 increasing 60 bps
increase from 3.5% in 4Q22. Of this, 40-bps is explained by the
decrease in real terms of the loan portfolio in the quarter. The
remainder impact (20 bps) reflects higher 90-days delinquency
levels in both open market and in former consumer finance
customers.
Loan loss provisions (LLPs) totaled AR$2.9 billion in
1Q23, decreasing 32.1% YoY and 25.4% QoQ.
Net loan loss provisions, equivalent to loan loss provisions net
of recovered charged-off loans and reversed allowances, amounted to
AR$2.4 billion in 1Q23 compared to AR$3.6 billion in 4Q22 and
AR$3.2 billion in 1Q22.
The Coverage ratio was 115.9% as of March 31, 2023,
135.5% as of December 31, 2022, and 141.3% as of March 31,
2022.
Efficiency ratio was 71.8% in 1Q23, compared to 74.1% in
1Q22 and 91.9% in 4Q22.
Loans to deposits ratio of 44.9% as of March 31, 2023,
compared to 48.9% as of March 31, 2022, and 44.5% as of December
31, 2022.
Total Deposits of AR$576.6 billion expanded 5.3% QoQ and
68.9% YoY in nominal terms. In real terms, total deposits decreased
13.5% QoQ and 17.3% YoY. The leverage ratio (Assets to
Shareholder´s Equity) decreased 80 bps sequentially to 6.7x from
7.5x as of December 31, 2022, and March 31, 2022, reflecting asset
and liability management.
Loans increased 55.2% YoY and 6.5% QoQ in nominal terms
to AR$259.1 billion. In real terms, gross loans decreased 12.6% QoQ
and 24.0% YoY impacted by weak credit demand driven by inflation of
22% QoQ and 104% YoY, high nominal interest rates as a result of
inflation, and weak economic activity.
Total Assets were down 16.1% YoY and 10.4% QoQ, to
AR$761.1 billion as of March 31, 2023. The YoY and QoQ performance
mainly reflect lower balances of securities issued by the Central
Bank, Repo transactions with the Central Bank and Government
securities mainly due to asset & liability management to
maximize NIM and profitability, while inflation of 104.3% YoY and
21.7% QoQ impacted loans.
Common Equity Tier 1 Ratio was 14.7% as of March 31,
2023, increasing 170 bps from 4Q22 and 90 bps from March 31, 2022.
Tier 1 Capital Ratio reflects that the expansion in Risk weighted
assets and deductions were more than offset by the inflation
adjustment of capital. The loan portfolio grew below inflation in
the quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230522005723/en/
Ana Bartesaghi ana.bartesaghi@supervielle.com.ar
Grupo Supervielle (NYSE:SUPV)
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