Grupo Supervielle SA Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Profitability: Achieved a record high ROE of nearly 34% in real terms, driven by a high net interest margin of 62% and improved efficiencies.
• Strategic Initiatives:
  • SMEs/Corporate: Scaled the virtual hub service model, targeted export-oriented value chains, and aimed to improve the Net Promoter Score.
  • Retail: Digital client base expanded, with 24/7 features performing well, and the human banking retail relationship model aimed to enhance satisfaction.
  • Asset Diversification: Shifted towards private sector loans, reducing holdings in central bank repos.
• Efficiency: Efficiency ratio improved to 34%, down from 43% in the prior quarter, driven by revenue growth and cost reductions.

Segment Performance

• Corporate/SMEs: Corporate loans accounted for 64% of the total loan book. Promissory notes made up 52% of the corporate portfolio, overdraft 26%, and foreign trade 15%. The company focused on attracting new clients, scaling the virtual hub service model, and targeting export-oriented value chains like oil, gas, mining, and agri business.
• Retail: Digital client base was 64% of total clients, up 2 percentage points sequentially and 7 percentage points year-over-year. Retail transactions via digital wallet increased. Credit cards formed 33% of the retail book, followed by mortgages (32%), personal loans (24%), and car loans (9%).

Guidance

• Loan Growth: Expect loan book to grow in real terms starting in Q2, with double-digit real growth possible this year and higher growth next year.
• Inflation/Interest Rates: Anticipates inflation to be 160% this year and 60% next year. Interest rates to decrease in line with declining inflation.
• ROE: Full-year ROE guidance at around 15%, with Q2 expected to be challenging due to lower rates but improving in the second half of the year.

Risks

• Regulatory Risks: Pending removal of foreign exchange restrictions and other regulations that are restricting economic growth and impacting the financial sector.
• Economic Uncertainties: Impact of inflation and interest rate changes on loan growth and profitability, as well as uncertainties in the economic recovery.

Question and Answer

• Q: What are the loan growth expectations and macro assumptions?

A: Patricio and Mariano discussed loan growth starting in Q2, with GDP expected to decrease this year but recover next year. Inflation is forecasted to decline from 50% in Q1 to 20% in H2, and interest rates are expected to decrease.

• Q: How will the ROE evolve throughout the year?

A: Q2 is expected to be challenging due to lower rates, but ROE is anticipated to improve in the second half of the year, with full-year guidance at around 15%.

• Q: How is the company competing with digital competitors and prioritizing segments?

A: Focus on digital wallet development, initially targeting SMEs, then retail. Competing with fintechs via digital services and products like the 'Industria Rapida' service.

• Q: What about central bank exposure and loan-to-deposit ratio?

A: The company is reducing central bank exposure, and the loan-to-deposit ratio is expected to increase to historical levels as loans grow faster than deposits.

• Q: What's the outlook for mortgage lending and regulation?

A: High demand for mortgages, but pending removal of foreign exchange restrictions and other regulations to boost mortgage lending and overall economic growth.