March 9, 2021

Transcript 4Q20 Earnings Conference Call

Supervielle Fourth Quarter 2020 Earnings Call Opening Remarks

Ana Bartesaghi

Good morning everyone and welcome to the Grupo Supervielle Fourth Quarter 2020 earnings call. This is Ana Bartesaghi, Treasurer and IRO.

A slide presentation will accompany today's webinar, which is available in the Investor section of Grupo

Supervielle's investor relations website,www.gruposupervielle.com. Today's conference call is being recorded. 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.

If you want to ask a question you need to be connected to the zoom platform from any device. We will not be able to take your questions if you are connected from a phone line. Also, please make sure your name and last name appear in the zoom platform you are using. To ask a question by voice please press the "raise your hand" button located in the zoom platform. To withdraw your question press "raise your hand" again. You can also send your questions in written form via the Q&A box in the zoom platform anytime during the call. We will ask you to limit yourself to one question and a follow up and then you can raise your hand again in another round.

Slide 2

Ana Bartesaghi

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 December 31, 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.

Slide 3

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

Starting with our financial performance on slide 3 of our earnings presentation:

  • In a complex scenario, we continued to balance risk and profitability by managing the credit cycle, and excess liquidity through asset and liability management.

  • We achieved low double digit comprehensive ROAE in real-terms during the year, notwithstanding the many challenges posed by the pandemic, a recessionary macro that deepened during the year and a shifting regulatory framework. ROAE reached 9.9% for the year and was lower at 7.4% in the quarter as pressure from higher cost of funds resulting from the floor on time deposit interest rates and subsidized rates on loans resulted in a NIM contraction, while regulatory controls continued to impact fees.

  • Throughout the year we consistently increased our Coverage Ratio, which reached 192% at year-end, from 83% in the prior year-end quarter, reflecting a conservative stance on risk management. 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.

  • Excluding one-time charges related to some severance charges in the quarter, the efficiency ratio in 4Q20 was 66%. For the year, comparable efficiency, excluding non-recurring charges in both periods, improved 230 basis points to nearly 62% as we continue to keep a tight control on expenses and achieving a mid-single digit decline in personnel expenses while advancing on our transformation strategy.

  • Lastly, strong liquidity levels and a solid capital base with a TIER 1 ratio of 13.8% positions us well to advance on our initiatives.

  • Now, turning to our strategic initiatives, in parallel we have been executing our transformation strategy with the goal of driving sustainable growth as demand resumes while enhancing our current competitiveness. Specifically, this includes advancing on our digital transformation, evolving our service model in our branch network and adding API capabilities to connect to third parties. I will discuss this in more detail shortly.

Slide 3

As you can see on slide 3, sustained digital adoption continues across our business.

To give some color on the progress we are seeing, for example:

  • Monetary transactions at non-automated banking tellers declined sequentially to a historical low of 5.5%, from the 19% seen prior to the pandemic, while mobile more than doubled its share during the year accounting for 11% of transactions in the fourth quarter.

  • Adoption of E-checks was up 44% sequentially while use of e-factoring continued to grow as SMEs continue to rapidly welcome digital banking.

  • In consumer finance, new App functionalities added early in the year are being well received with mobile payments and digital onboarding expanding consistently throughout the year.

  • Lastly, we continued to see good traction at our digital online broker which saw a total of 134,000, new accounts opened during the year, more than doubling the number of accounts opened in the previous year. In turn, DART reached nearly 24,000 in the fourth quarter up from less than 11,000 in the same quarter of the prior year.

Slide 4

Now, moving on to our branch transformation initiative on page 4.

We are very encouraged with the successful results from the service model pilots we have been carrying out since last August.

This includes one pilot with a value proposition for SMEs in areas of our network where we see potential, another pilot where we are expanding self-service areas targeted to senior citizens building on our biometrics technology; and a third one which is a 100% self-service model.

These pilot programs are demonstrating significant improvements on several fronts:

  • As shown on the top right chart, transactions through human cashiers are migrating at a much faster pace to the online and automatic channels in these three pilots vis a vis our senior citizens dedicated network. In just five months, the share of transactions at human tellers fell significantly from a range according to branch location between 14% to 28% in late August, to a range of between 5 to 6% in December. For the senior citizens dedicated comparable network, in the same period the share of transactions at human tellers declined from 23% to 17%.

  • We achieved an average increase of 35 percentage points in the Net Promoter Score of these three pilots, with one location posting an even higher improvement.

  • Our newly expanded 24 hours self-service lobbies helped increase self-service transactions. Importantly, we saw a drop-in customer operating inside the branch lobby vis a vis the 24 hour lobbies, with more customers operating outside of branch service hours.

  • We are also pleased to see that our strategy to broaden our service offerings to better reach SMEs resulted in an early indication of higher performance from this Cluster.

Following these successful results, we plan to start scaling up these new formats across our branches during the year. This will include investments in construction works and IT, with an expected pay-back period of between 30 to 36 months.

Slide 5

Please turn to slide 5. During 2020 we implemented an agile at scale operating model consolidating agile methodologies and process. At the same time, we deepened the customer centric cultural transformation across the Company.

We have organized the company into Individuals, Corporates & SMEs, and Payments, with Customer Service and Omnichannel cutting across end-to-end interactions, or experiences. These sets of experiences are managed by empowered squads as part of a Tribe that works to enhance the Supervielle customer experience.

Our Agile Transformation Office aims to guarantee the alignment to the Bank's strategic objectives and to scale agility across our organization ensuring the customer centricity at all times.

This is supported by Centers of Excellence that distribute talent, resources and knowledge to each squad so that they can carry out their purpose based on the best practices of each discipline.

Slide 6

Now please turn to slide 6 for a quick overview of our Business and IT Capabilities, which is based on three pillars.

  • The first one is to Strengthen and modernize our Core banking system.

  • Our second pillar is to Speed Up Deployment of our omnichannel strategy, modern IT architecture, including APIs to accelerate transformation, connect to third parties and prepare for open banking.

  • Lastly, our third pillar, Be Prepared for the Future, includes leveraging digital marketing and AI capabilities, as well as cloud services.

During 2021 we plan to make capital investments of total of 4.2 billion pesos, of which 3.1 billion will be applied to deploy our digital transformation strategy and 1.1 billion to start scaling up the service model pilots across the branch network.

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Grupo Supervielle SA published this content on 12 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 March 2021 22:26:06 UTC.