Grupo Supervielle S.A. Q2 FY2025 earnings call

• Strategic transition towards a credit-driven balance sheet progressing, with loans up to 48% of assets and investment portfolio reduced. - 4 key initiatives showing early results: innovative remunerated account deepening relationships, Tienda Supervielle with over 0.5 million sessions, Gen AI-powered WhatsApp channel with rapid adoption, synergies between bank and InvertirOnline delivering solid results. - Loan-to-deposit ratio increased to nearly 72%, leverage at 6.5x.

Loan growth outpaced the industry, led by commercial lending. Loans accounted for 48% of total assets, up 25 percentage points since December 2023, while investment portfolio reduced to 22% of assets. Total loans increased 14% sequentially and 71% year-on-year in real terms. Retail loans moderated to 2% sequentially after strong expansion, while commercial lending was up 23% q-o-q. NPL ratio was 2.7%, with retail delinquency 4.5% and corporate/SME NPL 1.4%. Total funding increased 30% year-on-year and 6% sequentially, supported by dollar deposit inflows. NIM expanded 160 basis points to 20.8%.

• Expect real loan growth between 40% and 50% in 2025, contingent on monetary policy. - Anticipate deposit growth of 20% to 30%. - NPL ratio expected to stabilize at 3% to 3.5%. - NIM expected to trend between 18% and 20%. - ROE expected to improve towards year-end to 5% to 10% below original guidance. - CET1 ratio expected to close the year between 12% and 13%.

• Near-term headwinds from election-related uncertainty, tight peso liquidity, and high real interest rates. - Impact of monetary policy on growth and transition to a more leveraged balance sheet. - Volatility ahead of legislative elections affecting ROE expectations.

Q: On asset quality and cost of risk, when looking to the NPL ratio, it remains still below historical peaks. But in terms of the cost of risk, it appears to be a little bit high. So just wondering if the peak already happened in the second quarter? And how should be the trend for next year?

A: Julio Patricio Supervielle said the NPL ratio increased from 2% to 2.7% in the last 2 quarters, part of industry-wide credit normalization. Mariano Biglia said the cost of risk is expected to be in a peak at 4.5% for the quarter and range between 5% and 5.5% for the year, stable within that range into 2026.

Q: I have a question on growth because you revised your guidance downwards. And I wanted to ask you if this has more to do with what is happening with organic funding, which is deposits, right? You also revised downwards? Or do you think it has to do more with capital, your Tier 1 ratio because as you saw and as we have seen, you perhaps have one of the lowest Tier 1 ratios in the system. Of course, you mentioned there could be some regularity tailwinds. So just if you could explain a bit on what changed your risk appetite?

A: Julio Patricio Supervielle said they are going through a macroeconomic transition with fiscal and foreign exchange anchors, monetary policy restrictive. They believe growth will upside following elections with reform agenda. Mariano Biglia said capital is not restricting loan growth for this year, more related to deposit and structural funding. Regarding Basel III, optimistic Central Bank may change regulation to benefit Tier 1 ratio.