Grupo Supervielle S.A. Reports 2Q16 Consolidated Results
Completes Successful Initial Public Offering;
Strengthens Capitalization to Support Growth Strategy
BUENOS AIRES, Argentina–(BUSINESS WIRE)–Grupo Supervielle S.A. (NYSE: SUPV) (BASE: SUPV) (“Supervielle” or the “Company”), a universal financial services group in Argentina with a nationwide presence, today reported unaudited results for the three and six-month periods ended June 30, 2016. All figures presented throughout this document are expressed in nominal Argentine pesos (AR$) and all financial information has been prepared in accordance with Argentine Banking GAAP.
Second Quarter 2016 Highlights
- Total gross loans, including the securitized loan portfolio, increased 42.2% YoY and 16.2% QoQ to AR$29.4 billion. Total balance sheet loans expanded at a higher rate of 49.8% YoY and 17.7% QoQ, reflecting a slowdown in securitization.
- NIM expanded 270 bps YoY to 20.4% in 2Q16, from 17.7% in 2Q15, and increased 40 bps from 20.0% in 1Q16.
- Non-performing loan ratio of 3.1% in 2Q16 compared with 3.3% in 2Q15 and 2.7% in 1Q16.
- The efficiency ratio improved to 72.1% in 2Q16 from 87.3% in 2Q15 and from 73.8% in 1Q16.
- Net income amounted to AR$167.9 million, up 361.7% YoY, but declined 3.9% QoQ. ROAE of 15.6% in 2Q16, as equity more than doubled following the capital increase from the Initial Public Offering (“IPO”) in May ’16. This compares with 7.3% in 2Q15 and 27.5% in 1Q16.
- Successful completion of global IPO in May 2016 raised US$253 million to fund growth bringing the Equity to Assets ratio to 14.6% in 2Q16, up from 6.6% in 2Q15. Proceeds from the IPO received in Argentina in local currency amounted to AR$3.4 billion.
CEO Message
Commenting on the results for the quarter, Patricio Supervielle, Grupo Supervielle’s Chairman and CEO, noted: “We began to deploy capital raised in the IPO during the quarter with the commencement of our loan growth strategy and reduction of certain higher cost debt. Our loan book expanded 16% quarter-on-quarter, above inflation and doubling system growth. Growth was largely driven by corporate loans – up 36% in the quarter as we leveraged existing client relationships and our strong value proposition. Retail loans, however, showed modest growth of 3% as clients in this segment were strongly affected by the sharp price increases in consumer goods and previously subsidized services.”
“While Consumer Finance loans were up 10% in the period, even though we maintained our conservative credit scoring standards, asset quality was affected by the contraction in consumer consumers’ disposable income as a result of the spike in inflation that negatively impacted consumer behavior. Subsequently, we quickly implemented additional collection and preventive actions to minimize further asset quality deterioration.”
“Gross financial margin was strong – up 18% quarter-on-quarter, benefiting from market deregulation initiatives and payment of high-interest debt, with NIM reaching 20.4%. We also began to see an improvement in the efficiency ratio, down 170 basis points in the quarter to 72.1%; providing strong operating leverage as we continue to grow the number of loans per branch. Profitability however, was impacted by the higher loan loss reserves.”
“Our recent global public offering, which was three times oversubscribed, is a strategic milestone for Supervielle as we continue to build on our solid foundation for market growth, leveraging our current infrastructure and over two million customer base. Proceeds from the IPO will enable us to accelerate our loan expansion and capitalize on the strong growth potential we see in our business segments – particularly SMEs, middle market, retail and consumer finance. These business segments are anticipated to further benefit from the favorable structural reforms in Argentina, the expected economic upturn and resulting increase in credit demand.”
“While we expect 2016 to remain a transition year given the current low visibility and volatility in the macroeconomic environment, economists’ consensus, and our view, is that the economy will stabilize by year-end. Additionally, it is expected that sustainable growth will resume during 2017. Reflecting the execution of our strategic growth plan, our ability to reduce funding costs, and the significant opportunity that exists to leverage our current network and client base, we expect to end the year with net income increasing between 78 – 108% as compared to 2015,” concluded Mr. Supervielle.
Financial Highlights & Key Ratios
| Supervielle | % Change | % Chg. | ||||||||||||||||||||||||||||
| (In millions of Argentine Ps.) | 2Q16 | 1Q16 | 4Q15 | 3Q15 | 2Q15 | QoQ | YoY | 1H16 | 1H15 | |||||||||||||||||||||
| INCOME STATEMENT | ||||||||||||||||||||||||||||||
| Gross Financial Margin | 1,304.4 | 1,105.6 | 1,076.9 | 854.4 | 724.0 | 18.0 | % | 80.2 | % | 2,410.0 | 1,424.4 | 69.2 | % | |||||||||||||||||
| Service Fee Income, Net | 555.3 | 538.6 | 614.0 | 533.8 | 477.4 | 3.1 | % | 16.3 | % | 1,093.9 | 909.4 | 20.3 | % | |||||||||||||||||
| Income from Insurance activities | 164.4 | 117.9 | 62.0 | 42.1 | 36.9 | 39.4 | % | 345.2 | % | 282.3 | 71.8 | 293.1 | % | |||||||||||||||||
| Loan Loss Provisions | -295.9 | -183.6 | -187.9 | -98.5 | -126.6 | 61.1 | % | 133.8 | % | -479.6 | -257.5 | 86.3 | % | |||||||||||||||||
| Administrative expenses | -1458.7 | -1299.6 | -1196.2 | -1058.7 | -1081.1 | 12.2 | % | 34.9 | % | -2758.2 | -2006.4 | 37.5 | % | |||||||||||||||||
| Income from Financial Transactions | 269.5 | 278.9 | 368.9 | 273.1 | 30.7 | -3.3 | % | 779.3 | % | 548.4 | 141.7 | 287.1 | % | |||||||||||||||||
| Net Income | 167.9 | 174.7 | 360.1 | 193.1 | 36.4 | -3.9 | % | 361.7 | % | 342.6 | 120.9 | 183.3 | % | |||||||||||||||||
| Earnings per Share (AR$) | 0.56 | 0.70 | 2.92 | 1.56 | 0.29 | – | – | 1.24 | 0.96 | – | ||||||||||||||||||||
| Earnings per ADRs (AR$) | 2.78 | 3.51 | 14.61 | 7.81 | 1.43 | – | – | 6.20 | 4.80 | – | ||||||||||||||||||||
| Outstanding Shares (in millions) | 363.8 | 249.0 | 249.0 | 124.5 | 124,5 | – | – | 363.8 | 124,5 | – | ||||||||||||||||||||
| BALANCE SHEET | ||||||||||||||||||||||||||||||
| Total Assets | 40,960.0 | 34,672.3 | 33,045.8 | 28,052.5 | 27,571.5 | 18.1 | % | 48.6 | % | 40,960.0 | 27,571.5 | 48.6 | % | |||||||||||||||||
| Average Assets1 | 38,052.6 | 33,548.1 | 30,932.2 | 27,584.3 | 25,899.9 | 13.4 | % | 46.9 | % | 35,541.7 | 24,675.8 | 44.0 | % | |||||||||||||||||
| Total Loans & Leasing | 27,409.4 | 23,283.0 | 21,855.9 | 19,956.6 | 18,301.6 | 17.7 | % | 49.8 | % | 27,409.4 | 18,301.6 | 49.8 | % | |||||||||||||||||
| Securitized Loan Portfolio | 2,039.8 | 2,057.3 | 2,784.6 | 2,506.5 | 2,412.2 | -0.8 | % | -15.4 | % | 2,039.8 | 2,412.2 | -15.4 | % | |||||||||||||||||
| Total Portfolio 2 | 29,449.2 | 25,340.2 | 24,640.6 | 22,463.2 | 20,713.8 | 16.2 | % | 42.2 | % | 29,449.2 | 20,713.8 | 42.2 | % | |||||||||||||||||
| Total Deposits | 27,652.2 | 24,346.7 | 23,716.6 | 20,651.4 | 20,119.9 | 13.6 | % | 37.4 | % | 27,652.2 | 20,119.9 | 37.4 | % | |||||||||||||||||
| Shareholders’ Equity | 5,997.0 | 2,548.4 | 2,373.7 | 2,013.6 | 1,820.5 | 135.3 | % | 229.4 | % | 5,997.0 | 1,820.5 | 229.4 | % | |||||||||||||||||
| Average Shareholders’ Equity1 | 4,302.2 | 2,537.4 | 2,338.3 | 2,106.1 | 1,986.6 | 69.6 | % | 116.6 | % | 3,426.1 | 1,946.8 | 76.0 | % | |||||||||||||||||
| KEY INDICATORS | ||||||||||||||||||||||||||||||
| Profitability & Efficiency | ||||||||||||||||||||||||||||||
| ROAE | 15.6 | % | 27.5 | % | 61.6 | % | 36.7 | % | 7.3 | % | – | – | 20.0 | % | 12.4 | % | – | |||||||||||||
| ROAA | 1.8 | % | 2.1 | % | 4.7 | % | 2.8 | % | 0.6 | % | – | – | 1.9 | % | 1.0 | % | – | |||||||||||||
| Net Interest Margin | 20.4 | % | 20.0 | % | 17.5 | % | 18.9 | % | 17.7 | % | – | – | 20.3 | % | 18.3 | % | – | |||||||||||||
| Net Fee Income Ratio | 35.6 | % | 37.3 | % | 38.6 | % | 40.3 | % | 41.5 | % | – | – | 36.3 | % | 40.8 | % | – | |||||||||||||
| Net Fee Income as a % of Administrative Expenses | 49.3 | % | 50.5 | % | 56.5 | % | 54.4 | % | 47.6 | % | – | – | 49.9 | % | 48.9 | % | – | |||||||||||||
| Efficiency Ratio | 72.1 | % | 73.8 | % | 68.2 | % | 74.0 | % | 87.3 | % | – | – | 72.9 | % | 83.4 | % | – | |||||||||||||
| Liquidity & Capital | ||||||||||||||||||||||||||||||
| Loans to Total Deposits3 | 99.1 | % | 95.7 | % | 92.2 | % | 96.7 | % | 91.0 | % | – | – | – | – | – | |||||||||||||||
| Total Equity as a % of Total Assets | 14.6 | % | 7.3 | % | 7.2 | % | 7.2 | % | 6.6 | % | – | – | – | – | – | |||||||||||||||
| Regulatory Capital/ Risk Weighted Assets4 | 13.9 | % | 9.3 | % | 8.7 | % | 8.5 | % | 8.7 | % | – | – | – | – | – | |||||||||||||||
| Proforma Consolidated Tier 1 Capital / Risk weighted assets 5 | 13.5 | % | 7.2 | % | 6.7 | % | 6.7 | % | 6.8 | % | – | – | – | – | – | |||||||||||||||
| Asset Quality | ||||||||||||||||||||||||||||||
| NPL Ratio | 3.1 | % | 2.7 | % | 3.2 | % | 3.1 | % | 3.3 | % | – | – | – | – | – | |||||||||||||||
| Allowances as a % of Total Loans | 2.6 | % | 2.3 | % | 2.9 | % | 2.7 | % | 2.8 | % | – | – | – | – | – | |||||||||||||||
| Coverage Ratio | 83.2 | % | 83.9 | % | 89.7 | % | 86.1 | % | 85.6 | % | – | – | – | – | – | |||||||||||||||
| Cost of Risk | 5.0 | % | 3.4 | % | 3.6 | % | 2.1 | % | 3.0 | % | – | – | 4.3 | % | 3.3 | % | ||||||||||||||
| MACROECONOMIC RATIOS | ||||||||||||||||||||||||||||||
| Retail Price Index (%)6 | 15.5 | % | 11.9 | % | 7.7 | % | 5.6 | % | 6.0 | % | – | – | – | – | – | |||||||||||||||
| Pesos/US$ Exchange Rate | 14.92 | 14.58 | 13.01 | 9.42 | 9.09 | – | – | – | – | – | ||||||||||||||||||||
| Badlar Interest Rate (eop) | 26.6 | % | 30.8 | % | 27.3 | % | 21.1 | % | 20.8 | % | – | – | – | – | – | |||||||||||||||
| OPERATING DATA | ||||||||||||||||||||||||||||||
| Customers (in millions) | 2.2 | 2.1 | 2.1 | 2.1 | 2.0 | |||||||||||||||||||||||||
| Access Points | 325 | 325 | 325 | 326 | 325 | – | – | – | – | – | ||||||||||||||||||||
| Employees | 4,910 | 4,884 | 4,843 | 4,714 | 4,584 | – | – | – | – | – | ||||||||||||||||||||
- Calculated on a daily basis.
- Total Portfolio: Loans and Leasing before Allowances, Including Securitized Portfolio.
- On Balance Sheet Loans/Total Deposits.
- This ratio applies only to the Bank and CCF on a consolidated basis.
- Includes $600 million Tier1 Capital retained at the holding company level available for injection in subsidiaries.
- Source: City of Buenos Aires
2Q16 Earnings Call Dial-In Information
| Hosted by: | Patricio Supervielle, Chief Executive Officer & Chairman of the Board of Directors | |
| Jorge Ramirez, Vice Chairman of the Board of Directors | ||
| Alejandra Naughton, Chief Financial Officer | ||
| Ana Bartesaghi, Treasurer & Investor Relations Officer | ||
| Date: | Tuesday, August 9, 2016 | |
| Time: | 9:00 AM (US ET); 10:00 AM (Buenos Aires Time) | |
| Dial-in Numbers: | 1-888-240-0263(U.S. and Canada), 1-913-312-0710 (International), 0-808-101-7548 (U.K), or 0800-444-8416 (Argentina) | |
| Access Code: | 5702943 | |
| Webcast: | ||
| Replay: | From Tuesday, August 9, 2016 at 12:00 pm US ET through Tuesday, August 23, 2016 at 11:59 pm US ET. | |
| Dial-in number: +1-877-870-5176 (U.S./Canada) or +1-858-384-5517 (international). | ||
| Access Code: | 5702943. | |
To obtain the full text of this earnings report and the 2Q16 earnings presentation, please click on the following link: www.gruposupervielle.com
About Grupo Supervielle S.A. (NYSE: SUPV; BCBA: SUPV)
Grupo Supervielle S.A. (“Supervielle”) is a domestic universal financial services group in Argentina and owns the fifth largest private domestically-owned bank in terms of assets. Headquartered in Buenos Aires, Supervielle offers retail and corporate banking, treasury, consumer finance, insurance, asset management and other products and services nationwide to a broad spectrum of individuals, small and medium-sized enterprises and medium to large-sized companies. With origins dating back to 1887, Supervielle operates through a multi-brand and multi-channel platform with a strategic national footprint. As of June 30, 2016, Supervielle had total assets of AR$ 41.0 billion under Argentine Banking GAAP, 325 access points and over 2 million customers. For more information, please visit www.gruposupervielle.com.
Safe Harbor Statement
This press release contains certain forward-looking statements that reflect the current views and/or expectations of Grupo Supervielle and its management with respect to its performance, business and future events. We use words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “seek,” “future,” “should” and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this release. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) changes in general economic, financial, business, political, legal, social or other conditions in Argentina or elsewhere in Latin America or changes in either developed or emerging markets, (ii) changes in regional, national and international business and economic conditions, including inflation, (iii) changes in interest rates and the cost of deposits, which may, among other things, affect margins, (iv) unanticipated increases in financing or other costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities, (v) changes in government regulation, including tax and banking regulations, (vi) changes in the policies of Argentine authorities, (vii) adverse legal or regulatory disputes or proceedings, (viii) competition in banking and financial services, (ix) changes in the financial condition, creditworthiness or solvency of the customers, debtors or counterparties of Grupo Supervielle, (x) increase in the allowances for loan losses, (xi) technological changes or an inability to implement new technologies, (xii) changes in consumer spending and saving habits, (xiii) the ability to implement our business strategy and (xiv) fluctuations in the exchange rate of the Peso. The matters discussed herein may also be affected by risks and uncertainties described from time to time in Grupo Supervielle’s filings with the U.S. Securities and Exchange Commission (SEC) and Comision Nacional de Valores (CNV). Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. Grupo Supervielle is under no obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Grupo Supervielle S.A.
Ana Bartesaghi, Treasurer & IRO
