Grupo Supervielle SA Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Highlights: Year of transformation; return to core purpose of financing growth. Completed digital transformation, expanded loan book, strengthened deposit base. Gained market share, maintained strong asset quality and capital ratios.
• Strategic Focus: Profitable growth, digital transformation, expanding loan book and deposit base. Shift portfolio mix to higher margin retail lending. Focus on segments like payroll, SMEs, oil & gas, mining.
• Banco Supervielle Initiatives: Sharpen strategic focus, accelerate growth, customer-centric and technology-enabled strategy. Cluster-based strategy, tailored value propositions for segments like payroll, SME, and corporate.
• Invertironline Plans: Strengthen retail and investment offerings, expand SMB and wealth management solutions, scale investment as a service, asset management, and capital markets.

Segment Performance

• Loan Book: Expanded 27% quarter-over-quarter and 107% year-on-year. Higher margin retail loans increased to 48% of total portfolio (up from 44% prior quarter and 40% a year ago).
• Deposit Base: Grew 7% sequentially; U.S. dollar deposits reached record levels, up 178% year-over-year and gained 80 basis points market share.
• Non-performing Loan Ratio: Increased slightly to 1.3% but still historical low.
• CET1 Ratio: 16.1%.
• Net Interest Margin: 25% adjusting for inflation.
• ROE: 15.7% for the year.
• Invertironline: Contributed 15% of Banco Supervielle's net income and 20% of total fee income. Ended 2024 with 1.4 million accounts, up 57% year-on-year; assets under custody $1.7 billion, up 44% year-on-year.

Guidance

• Loans: Expect to grow above 60% in real terms in 2025, with retail loans reaching 50% of total loans.
• Deposits: Anticipate expansion by ~40% in 2025, with dollar deposits continuing to grow.
• NPL Ratio: Expected to gradually increase to 2% - 2.2% by end of 2025.
• NIM: Expected to adjust downwards to 18% - 20% in 2025.
• Net Fee Income: Expected to grow above 10% supported by multiple drivers.
• ROE: Expected to be 12% - 15% in 2025, with longer-term target closer to 20%.
• Tier 1 Capital: Expected to be ~13% by year-end 2025.

Risks

• Macroeconomic Uncertainty: Impact of inflation, interest rate changes, and exchange rate fluctuations on financial performance.
• Competition: Intense competition from fintechs and other banks, which could affect market share and margins.
• Regulatory Changes: Potential regulatory changes impacting capital requirements, lending practices, and operational costs.

Question and Answer

• Q: Regarding capital consumption and Tier 1 ratio, explanation of deferred tax assets and future capital plans.
  • **A: Mariano Biglia explained deferred tax assets related to tax loss carryforwards, consumption of capital due to loan growth, and expectation of Tier 1 ratio around 13% in 2025, with potential to lower to 11% in 2026 if growth continues.
• Q: Profitability and ROE target, and asset quality coverage level.
  • **A: Patricio Supervielle mentioned ROE target of 12%-15% for 2025, with longer-term target closer to 20%. Asset quality coverage level expected to adjust as portfolio shifts to retail, with comfortable coverage level maintained.
• Q: Evolution of securities in 2025 and security to asset ratio.
  • **A: Mariano Biglia stated securities weight in balance sheet and revenues will decrease, loan to asset ratio expected to increase to ~60%, securities to asset ratio to ~20%.
• Q: Invertironline user trends and 2025 expectations.
  • **A: Diego Pizzulli explained average monthly active users grew 70% in 2024, with third quarter affected by outliers, but underlying trend positive; 2025 plans include strengthening retail offerings, expanding SMB and wealth management, and scaling capital markets activities.
• Q: Exchange rate impact and expense growth below inflation.
  • **A: Mariano Biglia discussed impact of exchange rate changes on balance sheet and operations, and explained expense growth below inflation through headcount reduction, focused strategy, and efficiency gains.