Grupo Supervielle S.A. Reports 2Q17 Consolidated Results

August 9, 2017

2Q17 Net Income up 245% YoY and 52% QoQ

Net income, excluding non-recurring items, doubled YoY and 22% QoQ driven by NIM growth and higher efficiency

BUENOS AIRES, Argentina–(BUSINESS WIRE)– Grupo Supervielle S.A. (NYSE: SUPV) (BASE: SUPV), (“Supervielle” or the “Company”) a universal financial services group headquartered in Argentina with a nationwide presence, today reported unaudited results for the three and six-month periods ended June 30, 2017. 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 2017 Highlights

Net income of AR$579.7 million, up 245.2% YoY, and 51.8% QoQ. ROAE of 31.2% in 2Q17. This compares with ROAE of 15.6% in 2Q16 and 21.8% in 1Q17. ROAA of 3.6% in 2Q17, compared to 1.8% in 2Q16 and 2.6% in 1Q17.
Total gross loans, including the securitized loan portfolio, increased 51.3% YoY and 8.3% QoQ to AR$44.6 billion. Total balance sheet loans grew 54.5% YoY and 6.4% QoQ.
NIM of 19.8% in 2Q17, contracting by 60 bps YoY and improving 110 bps QoQ. The AR$ NIM on the Company’s Loan Portfolio (excluding foreign trade and US$ loans), which concentrates 83% of the portfolio, rose 260 bps YoY to 23.9% in 2Q17, despite the decline in the BADLAR interest rate.
Non-performing loan ratio decreased 20 bps to 2.9% in 2Q17 from 3.1% in 2Q16 while remained unchanged from 1Q17.
The efficiency ratio improved to 65.0% in 2Q17 compared with 72.1% in 2Q16, and 67.5% in 1Q17.
Proforma Consolidated Common Equity Tier 1 Ratio of 11.6% in 2Q17 compared to 13.5% in 2Q16 and 12.0% in 1Q17. Equity to Asset ratio of 11.7% in 2Q17 compared to 14.6% in 2Q16 and 11.3% in 1Q17.

CEO Message

Commenting on second quarter results, Patricio Supervielle, Grupo Supervielle’s Chairman and CEO, noted: “We reported strong results this quarter, underscoring our focus on executing on our profitable growth strategy and more than doubling net income year-on-year to AR$580 million. Net income, excluding non recurring items, increased an impressive 202% year-on-year and 22% quarter-on-quarter. NIM expansion and fee growth, along with efficiency gains were the main drivers behind this robust performance.”

“Economic activity posted a strong pick-up in the quarter, with inflation trending down, while consumption continues to lag behind as is usual in a recovery cycle. In this context, we continued to drive profitable growth expanding higher-margin loans while attracting low cost deposits. At the same time, we maintain a vigilant focus on credit risk, with total NPLs improving YoY and stable QoQ, despite the seasonally higher delinquency rates in consumer finance experienced in the first half of the year. Asset quality tends to normalize during the second half.”

“Providing an outstanding product offering and quality service to our customers is at the core of our business and we were pleased to be named `Best Bank in Argentina’ at this year’s Euromoney Awards for Excellence. This award is a reflection of our commitment to offer the best banking experience to our customers through a customized value proposition for our different client segments while developing an integral relationship with our customers.”

“Looking ahead, we remain optimistic in Argentina’s economic recovery which we expect will boost higher growth in loan demand. This, along with our solid performance to-date and the seasonality of our business where, results accelerate towards the second half of the year, leads us to increase our loan growth and net income guidance for 2017. We are also closely monitoring credit risk while pursuing profitable growth as we continue to drive operating leverage as we maximize the opportunities we see in our core businesses – SMEs, middle market, retail and consumer finance.”

Financial Highlights & Key Ratios


(In millions of Argentine Ps.)											% Change

INCOME STATEMENT	2Q17		1Q17		4Q16		3Q16		2Q16		QoQ		YoY		1H17		1H16		% Chg.
Gross Financial Margin	2,133.2		1,927.8		1,951.6		1,566.4		1,304.4		10.7	%	63.5	%	4,061.0		2,410.0		68.5	%
Service Fee Income, Net	861.7		757.0		717.5		635.4		555.3		13.8	%	55.2	%	1,618.7		1,093.9		48.0	%
Income from Insurance activities	112.8		110.0		129.9		194.0		164.4		2.5	%	-31.4	%	222.8		282.3		-21.1	%
Loan Loss Provisions	-396.0		-342.6		-316.7		-261.4		-295.9		15.6	%	33.8	%	-738.6		-479.6		54.0	%
Administrative expenses	-2,020.8		-1,886.1		-1,805.8		-1,496.3		-1,458.7		7.1	%	38.5	%	-3,906.9		-2,758.2		41.6	%
Income before Income Tax	793.4		567.6		669.3		624.3		278.8		39.8	%	184.6	%	1,361.1		518.3		162.6	%
Net Income	579.7		381.9		532.3		436.4		167.9		51.8	%	245.2	%	961.6		342.6		180.7	%
Earnings per Share (AR$)	1.6		1.1		1.5		1.2		0.6		51.8	%	186.6	%
Earnings per ADRs (AR$)	8.0		5.3		7.3		6.0		2.8		51.8	%	186.6	%
Outstanding Shares (in millions)	363.8		363.8		363.8		363.8		363.8		0.0	%	0.0	%

BALANCE SHEET	jun 17		mar 17		dec 16		sep 16		jun 16		QoQ		YoY
Total Assets	67,183.2		64,519.0		53,206.0		44,433.7		40,960.0		4.1	%	64.0	%
Average Assets¹	63,692.5		59,578.5		51,421.4		43,174.3		37,881.6		6.9	%	68.1	%
Total Loans & Leasing	42,345.9		39,803.7		37,338.8		31,751.7		27,409.4		6.4	%	54.5	%
Securitized Loan Portfolio	2,226.0		1,361.3		1,483.9		1,512.8		2,040.4		63.5	%	9.1	%
Total Portfolio ²	44,571.9		41,165.1		38,822.7		33,264.5		29,449.9		8.3	%	51.3	%
Total Deposits	42,831.6		38,826.8		35,897.9		30,417.2		27,652.2		10.3	%	54.9	%
Shareholders’ Equity	7,827.6		7,313.4		6,931.6		6,413.5		5,997.0		7.0	%	30.5	%
Average Shareholders’ Equity¹	7,432.6		7,009.0		6,807.9		6,114.3		4,306.4		6.0	%	72.6	%

KEY INDICATORS	2Q17		1Q17		4Q16		3Q16		2Q16						1H17		1H16		% Chg.
Profitability & Efficiency
ROAE	31.2	%	21.8	%	31.3	%	28.6	%	15.6	%					26.6	%	20.0	%
ROAA	3.6	%	2.6	%	4.1	%	4.0	%	1.8	%					3.1	%	1.9	%
Net Interest Margin	19.8	%	18.7	%	20.9	%	20.5	%	20.4	%					19.3	%	20.3	%
Net Financial Margin	17.7	%	17.7	%	20.4	%	18.7	%	18.4	%					17.7	%	18.0	%
Net Fee Income Ratio	31.4	%	31.0	%	30.3	%	34.6	%	35.6	%					31.2	%	36.3	%
Net Fee Income as a % of Administrative Expenses	48.2	%	46.0	%	46.9	%	55.4	%	49.3	%					47.1	%	49.9	%
Efficiency Ratio	65.0	%	67.5	%	64.5	%	62.5	%	72.1	%					66.2	%	72.9	%
Liquidity & Capital
Loans to Total Deposits³	98.9	%	102.5	%	104.0	%	104.4	%	99.1	%
Liquidity Coverage Ratio (LCR)⁴	126.5	%	125.9	%	128.0	%	104.1	%	137.3	%
Total Equity / Total Assets	11.7	%	11.3	%	13.0	%	14.4	%	14.6	%
Proforma Consolidated Capital / Risk weighted assets ⁵	13.0	%	13.4	%	13.8	%	14.3	%	15.4	%
Proforma Consolidated Tier1 Capital / Risk weighted assets ⁶	11.6	%	12.0	%	12.3	%	12.6	%	13.5	%
Risk Weighted Assets / Total Assets	88.2	%	83.0	%	92.4	%	101.2	%	98.5	%
Asset Quality
NPL Ratio	2.9	%	2.9	%	2.8	%	3.0	%	3.1	%
Allowances as a % of Total Loans	2.6	%	2.5	%	2.4	%	2.5	%	2.6	%
Coverage Ratio	88.0	%	87.0	%	87.1	%	83.7	%	83.2	%
Cost of Risk	4.2	%	3.9	%	3.9	%	3.7	%	5.0	%					4.0	%	4.2	%
MACROECONOMIC RATIOS
Retail Price Index (%)⁷	5.6	%	7.1	%	6.2	%	2.7	%	15.5	%
Pesos/US$ Exchange Rate	16.60		15.38		15.85		15.26		14.92
Badlar Interest Rate (eop)	20.1	%	19.1	%	19.9	%	22.2	%	26.6	%
OPERATING DATA
Customers (in millions)	2.3		2.2		2.2		2.2		2.2
Access Points ⁸	324		321		325		325		325		0.9	%	-0.3	%
Employees	5,146		5,049		4,982		4,911		4,910		1.9	%	4.8	%

1.		Avg. total Assets and avg. shareholder´s equity calculated on a daily basis
2.		Total Portfolio: Loans and Leasing before Allowances, Including Securitized Portfolio.
3.		On Balance Sheet Loans/Total Deposits.
4.		This ratio includes the liquidity held at the holding company level.
5.		Regulatory capital divided by risk weighted assets taking into account operational and market risk. This Proforma consolidated capital ratio applies only to the Bank and CCF on a consolidated basis and includes the liquidity resulting from the IPO proceeds retained at the Grupo Supervielle level, which are available for further capital injections in its subsidiaries. As of June 30, 2017, the liquidity amounted to Ps. 805 million.
6.		Tier 1 capital divided by risk weighted assets taking into account operational and market risk. This Proforma Consolidated Tier 1 capital ratio applies only to the Bank and CCF on a consolidated basis and includes the liquidity resulting from the IPO proceeds retained at the holding company level, which are available for further capital injections in its subsidiaries. As of June 30, 2017, the liquidity amounted to Ps. 805 million.
7.		Source: City of Buenos Aires
8.		The increase in the number of Access Points as of the date of this report reflects the opening of 1 bank branch located in San Justo (Buenos Aires Province) and 2 banking payment and collection centers.