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Grupo Supervielle S.A. reported a net loss of AR$664.0 million for 4Q21, compared to a net gain of AR$1.3 billion in 4Q20, primarily due to one-time early retirement charges and losses at IUDÚ. Despite the losses, the company enhanced its customer base by over 53,000 clients, reaching 1.5 million, with 80% being digital customers. Improvements included a sequential decrease of total non-performing loans to 4.3% and a reduction in funding costs. However, factors like low credit demand and rising regulations negatively impacted overall profitability.
Positive
Increased customer base by over 53,000 clients to 1.5 million in 2021.
Digital customers increased by 32% during the year.
Total non-performing loans (NPLs) improved to 4.3%, down from 5.3% in 3Q21.
Increased market share in lending year-on-year.
Reduced funding costs and improved net interest margin QoQ.
Negative
Attributable net loss of AR$664.0 million in 4Q21 compared to a net gain in 4Q20.
ROAE was negative 4.9% in 4Q21 compared to positive 9.4% in 4Q20.
Net Financial Income decreased 14.5% YoY.
Total deposits declined 6.4% QoQ.
Loan loss provisions increased 6.6% YoY.
4Q21 profitability mainly impacted by one-time early retirement charges together with losses at IUDÚ reflecting inflation and higher LLPs. Total AR$ NIM up 140 bps QoQ
BUENOS AIRES, Argentina--(BUSINESS WIRE)--
Grupo Supervielle S.A. (NYSE: SUPV; BYMA: SUPV), (“Supervielle” or the “Company”) a universal financial services group headquartered in Argentina with a nationwide presence, today reported results for the three- and twelve-month periods ended December 31, 2021.
Starting 1Q20, the Company began reporting results applying Hyperinflation Accounting, in accordance with IFRS rule IAS 29 (“IAS 29”) as established by the Central Bank. According to Central Bank regulation until December 31, 2020, the Other Comprehensive Income also reflected the result from the changes in the purchasing power of the currency results on securities classified as available for sale. Through communication "A" 7211, effective January 1, 2021, the Central Bank established that the monetary result of items measured at fair value with changes in Other Comprehensive Income should be recognized in profit or loss under the line item "Result from exposure to changes in the purchasing power”. As this change in the accounting policy was applied retrospectively to all comparative figures, figures for all quarters of 2020 have been restated applying this new rule. This report also includes Managerial figures which exclude the IAS29 adjustment for 4Q21, 3Q21, 2Q21, 1Q21 and 4Q20
Management Commentary
Commenting on fourth quarter 2021 results, Patricio Supervielle, Grupo Supervielle's Chairman & CEO, noted:
“During 2021 we made significant strides across the Company toward achieving our strategic goals. With the aim of improving ROE and driving value creation, our strategic initiatives are centered on six key pillars: enhance the customer experience, attract new customers, advance on digital transformation, drive efficiency gains, improve funding and maintain healthy asset quality.”
“Our digital transformation and innovation investments started to bear fruit during the year expanding the bank´s customer base by over 53,000 clients to 1.5 million in 2021. Over 80% of these new clients are digital, with digitized customers increasing 32% during the year.
“With regard to lending, we increased market share year-on-year. We also regained our leading market position in leasing. Our new strategic alliance with Kavak will enable us to further develop our Mobility Vertical, consolidate our leadership position in Argentina´s pre-owned car financing market, and create more customer acquisition and cross-selling opportunities.
“We have also made progress against our strategy to lower cost of funding. Our initiatives to capture greater share of wallet and become the principal bank of more customers are gaining traction. During the quarter we continued to increase our share in sight deposits, both from retail and corporate customers which together with liability management, contributed to marginally lower funding costs.
“Maintaining our focus on asset quality, total NPLs improved sequentially by 100 basis points to 4.3% in 4Q21, while our coverage ratio stood at 110%. More importantly, bank NPLs declined to 2.6% from 3.7% in the prior quarter, converging to lower pre-pandemic levels, while NPLs at IUDÚ showed a slight decrease and are expected to continue gradually decline in the coming quarters.”
“Our network transformation and branch right-sizing, along with more self-service areas and virtual hubs that enable anywhere banking and that efficiently expand our reach, have allowed us to lower operating expenses, excluding one-time early retirement personnel expenses. In addition, while NIM improved sequentially, mainly driven by a marginal improvement in the funding mix, our bottom line was negatively impacted by a challenging regulatory framework and higher taxes. Also impacting net profit were charges related to the acceleration of our strategy to capture operating efficiencies together with losses at IUDÚ resulting from the impact of inflation and higher loan loss provisions.
“We are also making significant progress transforming our IUDÚ subsidiary from a business that was previously offering personal loans and credit cards with an on-site model to a 100% digital banking platform that is taking retail deposits to lower cost of funds and offering a growing range of financial services to a broader lower-risk customer base, leveraging its position as a regulated financial entity.”
“Looking ahead, the financial services industry in Argentina continues to face significant macroeconomic and regulatory challenges, including high fiscal deficit, tax levels and inflation, along with a weakening currency, that go beyond this year. In this difficult context, we reaffirm our focus on long-term value creation, with leading indicators of our transformation confirming that we are on track to accelerate digital customer acquisition and continue to capture efficiencies. Moreover, the bank´s capital remains hedged against inflation through real estate investments, mortgages, and sovereign bonds.”
“Finally, underscoring our commitment to ESG, we will begin disclosing, in accordance with the Sustainability Accounting Standards Board (SASB), additional metrics in our 2021 Sustainability Report. The enhanced disclosure will expand on our current reporting under the Global Reporting Initiative to more broadly integrate ESG criteria in the Company´s strategic planning.”
Attributable Net loss of AR$664.0 million in 4Q21, compared to a net gain of AR$1.3 billion in 4Q20 and a net loss of AR$66.3 million in 3Q21.
In 4Q21 and FY21, net income excluding non-recurring severance charges in both periods, would have been profits of AR$1.9 million and AR$1.0 billion respectively, with ROAE in real terms at approximately 0% and 1.9%, respectively.
For FY21 the Company reported an Attributable Net loss of AR$860.4 million, compared to a net gain of AR$5.1 billion in FY20. Net Income for the year was impacted by several factors, including: i) low credit demand from the private sector, which is at historic lows, ii) increasing Central Bank regulations on volumes and prices of banking assets and liabilities impacting financial margin, iii) higher turnover tax, mainly from the City of Buenos Aires but also from other Provinces, iv) higher expenses incurred in accelerating our strategy to capture operating efficiencies, and v) an increase in loan loss provisions at IUDÚ due to the impact of the pandemic on its customers base and following the Central Bank deferral programs regulations that rescheduled loan installment maturities along 12 months.
ROAE was negative 4.9% in 4Q21 compared with positive 9.4% in 4Q20 and negative 0.5% in 3Q21.
ROAE, excluding the consumer finance lending business was negative 0.4% in 4Q21, a 450-bps gap with the reported ROAE. This compares to gaps of 450 bps and 380 bps in 3Q21 and 4Q20 respectively.
ROAA was negative 0.7% in 4Q21 compared to positive 1.3% in 4Q20 and negative 0.1% in 3Q21.
Net Financial Income of AR$13.4 billion in 4Q21 down 8.3% YoY and up 3.8% QoQ. While the Bank´s Net Financial Income increased on a stand-alone basis 5.8% QoQ to AR$12.1 billion, IUDÚ´s Net Financial Income declined 29.4% QoQ to AR$831.2. FY21 Net Financial Income was down 14.5% or AR$ 9.0 billion when compared to FY20.
Net Interest Margin (NIM) of 17.9% was down 230 bps YoY, and increased 130 bps QoQ. The AR$ NIM was 18.1%, down 180 bps YoY and up 147 bps QoQ.
The total NPL ratio was 4.3% in 4Q21 and 5.3% in 3Q21. The NPL ratio as of 4Q20 was 3.7%. As of December 31, 2021, the Bank NPL was 2.6%, while IUDÚ NPL was 19.3%.
Loan loss provisions (LLP) totaled AR$1.6 billion in 4Q21, up 6.6% YoY and 2.9% QoQ. Loan loss provisions, net, which includes reversed provisions, amounted to AR$1.3 billion in 4Q21 compared to AR$1.3 billion in 3Q21, flat QoQ.
The Coverage ratio was 109.9% as of December 31, 2021, 125.1% as of September 30, 2021, and 191.5% as of December 30, 2020. As of December 31, 2021, 78% of the commercial non-performing loans portfolio was collateralized, compared to 76% as of September 30, 2021 and 80% as of December 31, 2020.
Efficiency ratio was 76.6% in 4Q21, compared to 71.5% in 4Q20 and 74.9% in 3Q21. The QoQ performance was mainly driven by a 2.5% increase in expenses reflecting one-time severance and early retirement charges, while revenues were flat. Excluding non-recurring severance payments and early retirement charges, the 4Q21 and 3Q21 efficiency ratios would have been 69.4% and 71.4% respectively, improving sequentially. TheEfficiency ratio was 74.6% in FY21 compared to 64.3% in FY20. This reflects a 16.5% decrease in revenues, that more than offset the 3.1% decline in non-interest expenses.
Total Deposits of AR$288.5 billion decreasing 6.4% QoQ and increasing 7.0% up YoY. AR$ deposits declined 5.0% QoQ and rose 12.1% YoY. Average AR$ deposits decreased 1.5% QoQ. Foreign currency deposits (measured in US$) decreased 6.5% YoY and 12.8% QoQ. As of December 31, 2021, FX deposits represented 10.0% of total deposits.
Loans declined 3.2% YoY and 1.9% QoQ to AR$161.2 billion, while average volume of loans declined 3.0% YoY and increased 1.7% QoQ. The AR$ Loan portfolio increased 1.5% YoY and 0.8% QoQ, while the average AR$ loans increased 2.1% YoY and 5.6% QoQ.
Total Assets increased 4.0% YoY and declined 3.5% QoQ, to AR$392.2 billion as of December 31, 2021.
Common Equity Tier 1 Ratio as of December 31, 2021, was 12.7% decreasing 140 bps when compared to 3Q21 and 110 bps when compared to December 31, 2020. 4Q21 Tier 1 Capital Ratio was impacted by: i) higher deductions from Tier 1 capital on higher IT investments, ii) accelerated headcount efficiencies in the quarter impacting net results, iii) write offs that reduced the expected loss regulatory easing on capital, and iv) a 10% increase in risk weighted assets which was more than offset by inflation adjustment of capital.
