Grupo Supervielle S A : 3T20 Transcripción

November 20, 2020

Transcript 3Q20 Earnings Conference Call

Supervielle Third Quarter 2020 Earnings Call Opening Remarks

Operator

Good morning and welcome to the Grupo Supervielle Third Quarter 2020 earnings call. A slide presentation will accompany today's webcast, which is available in the Investor section of Grupo Supervielle's investor relations website, www.gruposupervielle.com. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. As a reminder, today's conference call is being recorded.

At this time, I would like to turn the call over to Ana Bartesaghi, Treasurer and IRO. Please go ahead.

Slide 2

Ana Bartesaghi

Thank you. Good morning everyone and thank you for joining us today.

Speaking during today's call will be Patricio Supervielle, our Chairman & CEO and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandro Stengel, Second Vice-Chairman of the Board and Bank CEO and Jorge Ramírez, First-Vice Chairman of the Board. Alejandra Naughton, board member of several of Grupo Supervielle's subsidiaries will also be joining us for today's call. All will be available for the Q&A session.

Note that starting 1Q20, as per Central Bank regulations, we began reporting results applying Hyperinflation Accounting, in accordance with IFRS rule IAS 29. For ease of comparability, we have restated 2019 results, to reflect the effects of inflation adjustment. Therefore, all results in this presentation are adjusted for inflation as of September 30, 2020, unless otherwise noted.

For your convenience, our earnings report filed yesterday after market close, also includes managerial results in nominal terms as well as more details on Hyperinflation Accounting.

Before we proceed, I would like to make the following Safe Harbor statement. Today's call will contain forward-looking statements which are based on Management's current expectations and beliefs and are subject to a number of risks and uncertainties, including as a result of the COVID-19 pandemic, and I refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

I would now like to turn the call over to our Chairman, Patricio Supervielle.

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Slide 3

Patricio Supervielle. Thank you, Ana. Good morning everyone. Thank you for joining us today.

If you're following the presentation, please turn to Slide 3. Starting with our financial performance:

• We delivered double digit ROAE in real-terms this quarter, despite the continuing challenges presented by Covid-19 restrictions, a recessionary macro environment and a changing regulatory framework.
• In this context, given our flexibility we continue to balance the profitability-risk equation while managing the credit cycle, achieving satisfactory net financial margins. Despite lower loan and deposit growth, note that average peso deposits and assets increased sequentially.
• We made additional Covid-19 anticipatory provisions this quarter that increased coverage following a further in-depth top down analysis of certain industries that we believe could be highly impacted by the pandemic given the current outlook. We also continued to review our expected loss models, and are closely monitoring our loan book and risk models to adjust accordingly as the situation evolves.
• We kept our expenses below inflation levels, the result of strict cost controls, achieving a 90 basis points sequential improvement in the efficiency ratio to 61%.
• Finally, with strong liquidity and our Tier 1 Ratio expanding to 14% on an increased capital base, we are well positioned to continue to navigate this complex and rapidly changing environment.
• Turning to our strategic initiatives, we are advancing on different fronts to better position the Company to rapidly seize growth opportunities. Namely our digital transformation, the launch of IUDU, and evolving our service model in our branch network.

Slide 4

Now, let's take a closer look at our digital transformation on slide 4.

In this context, clients continue to adopt digital across our business. To give you a flavor of how this is evolving, I'll highlight some of the metrics on this slide:

• Transactions at non-automatedbanking tellers consolidated at historical low levels of 7% despite the gradual relaxation in Covid-19 related measures and significantly below the 19% of total transactions observed in 4Q19.

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• 76% of total time deposits in October were made through our digital channels, up from 70% in July and only 47% in January.
• SMEs also continued to rapidly embrace the digital adoption since July with e-checks nearly doubling while e-factoring increased by 60% during the same period.
• Finally, our online broker Invertir Online continues to deliver robust growth with new accounts up over 150% between February and October and transactions more than doubling.

Slide 5

On page 5 we outline our branch transformation initiative.

We continue to evolve our branch network by introducing additional technology to enhance the customer experience, extend service hours and productivity. This includes full self-service formats and increasing self service areas in other branches, while also broadening our service offerings to better reach SMEs.

With this initiative, we aim at increasing the number of customers operating through 24 hours self- service lobbies, improve NPS and foster digital customer acquisition.

Slide 6

Please turn to slide 6.

As announced yesterday, we have rebranded our consumer finance services subsidiary to IUDU and launched a new digital banking services platform.

This transformation aims to enhance customer experience, capture deposits, broaden our offering to address additional client needs by plugging into the Supervielle ecosystem, while driving efficiency.

In this first iteration, the App allows customers to obtain personal loans, credit cards and car loans. In a second phase, during 1H 2021, our consumer finance business will undergo a fundamental change as IUDU will start taking deposits. IUDU will also evolve in segment acquisition from its traditional middle to low-income segments to a multi segment approach.

We are also plugging-in the Supervielle ecosystem into the IUDU digital platform, starting with IUDU Pago, mobile point-of-sales, e-wallet,prepaid cards and e-bills.At a second stage, we will include Bancassurance, FX and investment platforms.

Finally, on the partnership front we will be rebranding the Walmart partnership card. At a later stage we plan to add multi-partnerships and correspondents.

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Slide 7

As you can see on slide 7, the Argentine economy continues to show some signs of recovery since the sharp drop in industrial production recorded last March and April.

Industrial production posted a sharp increase in September, extending the rebound started in May and driving annual performance into positive territory as social distancing measures continued to relax gradually. This was further supported by a number of fiscal, monetary, and credit stimulus measures. We are also seeing higher prices for agricultural commodities strengthening the trade balance.

In turn, domestic demand is expected to remain weak as labor conditions deteriorate further and services dependent on close contact continue to struggle, with consensus expectations calling for an 11.6% contraction in GDP for 2020.

October inflation figures deteriorated while the gap between the blue-chip rate and the official exchange rate continued to widen, resulting in the Central Bank raising 1-day repo rates from 19% in early October to 32% through mid-November.

Looking at 2021, we expect a recovery in GDP of around 5%, following the sharp contraction this year, along with the resumption of IMF negotiations and a series of governmental measures tending toward some fiscal restraint for 2021.

Let me now turn the call to Mariano Biglia, our CFO. Please Mariano, go ahead.

Slide 8

Mariano Biglia, Chief Financial Officer.

Thank you, Patricio. Good day everyone.

Please turn to slide 8. Total loans declined nearly 5% sequentially on weak overall demand coupled with our cautious approach to lending in the current uncertain environment. Peso loans were relatively stable, while US$ denominated loans in original currency, contracted following the overall industry trend observed in Argentina over the last year.

Preferential rate loans to provide relief in the pandemic accounted for 10% of our total loan book at quarter-end. This includes nearly 10 billion pesos at a rate of 24% granted to SMEs, of which 4 billion pesos were in short term factoring transactions

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