Grupo Supervielle S.A. Reports 4Q18 Consolidated Results

4Q18 Attributable Comprehensive Income up 98%
YoY and 7% QoQ while Net Income rose 51% YoY and decreased 19% QoQ
reflecting mainly the decision to achieve 100% NPL Coverage goal one
year earlier than target

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, 2018. All figures
presented throughout this document are expressed in nominal Argentine
pesos (AR$) and all financial information has been prepared in
accordance with IFRS in compliance with the adoption ruled by the
Argentine Central Bank.

Fourth Quarter 2018 Highlights

  • Attributable Comprehensive Income of AR$935.3 million, up 97.9% YoY
    and 7.0% QoQ. ROAE of 22.6% in 4Q18 above 13.3% in 4Q17 and 22.4% in
    3Q18. ROAA of 2.6% in 4Q18, up 40 bps YoY and down 10 bps QoQ.
  • Attributable Net income of AR$706.8 million, up 51.2% YoY and down
    18.5% QoQ. In 4Q18, AR$231 million (AR$ 162 million after tax)
    additional voluntary loan loss provisions (LLP) were made to increase
    the Coverage Ratio to 100.0% from 94.0% in 3Q18. Excluding the
    additional voluntary LLP, Attributable Net Income in 4Q18 would have
    been AR$ 868.5 million, flat QoQ.
  • Net Financial Income of AR$5.3 billion up 56.5% YoY and 19.9 % QoQ
    reflecting increases in average volumes of assets and deposits,
    together with higher average interest rates, partly mitigating the
    higher cost of funding and higher volumes of non-remunerated minimum
    reserve requirements.
  • Net financial margin (NFM) of 20.3% expanded by 30 bps YoY and 210 bps
    QoQ. Net interest margin (NIM) was 18.5%, down 150 bps YoY and 240 bps
    QoQ. NFM expansion combines higher yields from the Loan Portfolio as
    it continued to reprice and from higher Central Bank notes’ rates in
    the AR$ Investment portfolio. This was partially offset by higher cost
    of funds.
  • Efficiency ratio improved to 61.9% in 4Q18 from 68.2% in 4Q17 and
    weakened from 59.3% in 3Q18. QoQ performance reflects consecutive
    salary increases throughout 4Q18 for a total increase of 19.6% while
    operating revenues were up 14.6%.
  • Loans to deposits ratio was 84.5% in 4Q18 compared to 107.6% in 4Q17,
    and 85.8% in 3Q18.
  • Deposits increased 68.2% YoY and decreased 2.3% QoQ to AR$94.9
    billion. The QoQ decrease took place towards the close of the quarter
    due to excess liquidity management by the Company’s treasury. Average
    deposit volumes increased 90.4% YoY and 15.4% QoQ. AR$ deposits rose
    50.2% YoY and decreased 2.1% QoQ, while foreign currency deposits
    (measured in U$S) increased 10.4% YoY and 5.0% QoQ.
  • Loans rose 32.1% YoY and decreased 3.8% QoQ to AR$80.2 billion. AR$
    Loan portfolio up 22.0% YoY and 1.1% QoQ. Foreign currency loans
    decreased 14.7% YoY and 8.4% QoQ, but measured in local currency rose
    71.7% YoY and decreased 15.4% QoQ.
  • Total assets increased 53.0% YoY to AR$ 141.1 billion outpacing loan
    growth, mainly due to larger holdings of Central Bank securities
    (Leliqs) coupled with higher levels of regulatory minimum reserve
    requirements. QoQ, total assets decreased 3.4% due to excess liquidity
    management as mentioned above, although average assets in the quarter
    were up 11.6% QoQ.
  • NPL increased by 100 bps YoY and 40 bps QoQ to 4.1% in 4Q18, due to a
    combination of lower loan portfolio origination and a deterioration in
    asset quality following the current recession in Argentina in 3Q18 and
    4Q18 and the increase in inflation which impacted consumers disposable
    income.
  • NPL Coverage ratio reached 100%, one year in advance of our original
    goal, up 1,200bps YoY and 600 bps QoQ.
  • Cost of risk was 7.0% in 4Q18. Excluding the additional AR$ 231
    million voluntary loan loss provisions made to increase coverage to
    100% in 4Q18, cost of risk would have remained unchanged from 5.9% in
    3Q18.
  • Proforma Consolidated Common Equity Tier 1 Ratio of 12.9% in 4Q18, up
    40 bps from 12.5% in 3Q18. AR$927 million remained at the holding
    level for future capital injections.

Commenting on fourth quarter and fiscal year 2018 results, Jorge
Ramirez, Grupo Supervielle’s CEO, noted: 
“We are satisfied with
the results achieved in full year 2018 as we were able to meet our
annual profitability guidance while reaching 100% NPL coverage goal, one
year ahead of plan.
This, which resulted in cost of risk higher
than originally planned, was achieved despite macro conditions far worse
than originally anticipated.

“Importantly, we have a very strong franchise and time over time we
have been able to demonstrate the resiliency and flexibility of our
business model as we successfully navigate through periods of low credit
demand and challenging macro and financial scenarios.
We expect
our franchise to get even stronger over time as we move forward with our
digital transformation process.

“As we look to the current year, we are cautiously optimistic.
We expect the macro environment to remain challenging in the first
half and then gradually improving.
Adding further uncertainty
will be the upcoming Presidential elections.
This just adds
another bump in the road for us to navigate through. In this context,
our focus remains on healthy loan origination and credit quality. We
have the franchise well positioned and are confident with our ability to
resume growth in a healthier macro environment.

“I would like to thank the Supervielle employees for all their hard
work during the past year,” concluded Mr. Ramirez.

Financial Highlights & Key Ratios

                   
(In millions of Argentine Ps.) % Change
INCOME STATEMENT     4Q18   3Q18   2Q18   1Q18   4Q17   QoQ   YoY   FY18   FY17   % Chg.
Net Interest Income     2,023.2   2,722.9   2,898.2   2,818.1   2,552.7   -25.7%   -20.7%   10,462.4   8,554.2   22.3%
NIFFI & Exchange Rate Differences     3,235.0   1,663.4   716.8   805.5   807.4   94.5%   300.7%   6,420.6   2,445.7   162.5%
Net Financial Income     5,258.1   4,386.2   3,615.0   3,623.6   3,360.1   19.9%   56.5%   16,882.9   10,999.9   53.5%
Net Service Fee Income (excluding income from insurance activities)     1,065.1   1,026.9   1,004.9   884.6   783.7   3.7%   35.9%   3,981.5   3,237.0   23.0%
Income from Insurance activities     180.4   183.1   145.3   148.7   148.3   -1.5%   21.7%   657.6   479.0   37.3%
Loan Loss Provisions     -1,382.8   -1,122.5   -989.2   -726.1   -606.3   23.2%   128.1%   -4,220.6   -1,928.8   118.8%
Personnel & Administrative Expenses     -3,591.2   -3,045.2   -2,760.9   -2,446.5   -2,604.5   17.9%   37.9%   11,843.8   8,721.2   35.8%
Profit before income tax     903.8   1,027.6   456.0   1,020.4   651.4   -12.0%   38.7%   3,407.9   2,511.8   35.7%
Attributable Net income     706.8   867.4   270.7   722.6   467.6   -18.5%   51.2%   2,567.6   1,819.8   41.1%
Attributable Comprehensive income     935.3   874.5   475.3   744.8   472.6   7.0%   97.9%   3,030.0   1,878.4   61.3%
Earnings per Share (AR$)     1.55   2.01   0.59   1.58   1.02                    
Earnings per ADRs (AR$)     7.75   10.03   2.96   7.91   5.12                    
Average Outstanding Shares (in millions)     456.7   456.7   456.7   456.7   456.7                    
BALANCE SHEET     dec 18   sep 18   jun 18   mar 18   dec 17   QoQ   YoY   dec 18   dec 17    
Total Assets     141,115.5   146,122.7   120,789.0   96,569.6   92,202.4  

-3.4%

  53.0%            
Average Assets1     143,525.2   128,633.2   104,287.2   90,832.7   85,498.9   11.6%   67.9%   117,967.9   70,857.8    
Total Loans & Leasing     80,171.5   83,378.1   75,830.0   66,479.5   60,692.9   -3.8%   32.1%            
Total Deposits     94,906.0   97,185.5   75,672.7   55,540.2   56,408.7   -2.3%   68.2%            
Attributable Shareholders’ Equity     17,155.6   16,220.0   15,345.4   15,114.2   14,369.6   5.8%   19.4%            
Average Attributable Shareholders’ Equity1     16,547.0   15,638.9   15,044.8   14,490.1   14,188.7   5.8%   16.6%   15,530.0   9,844.9    
KEY INDICATORS     4Q18   3Q18   2Q18   1Q18   4Q17           FY18   FY17    
Profitability & Efficiency                                          
ROAE     22.6%   22.4%   12.6%   20.6%   13.3%           19.5%   19.1%    
ROAA     2.6%   2.7%   1.8%   3.3%   2.2%           2.6%   2.7%    
Net Interest Margin     18.5%   20.9%   19.2%   19.6%   20.0%           19.4%   20.1%    
Net Financial Margin     20.3%   18.2%   17.4%   19.9%   20.0%           18.7%   20.5%    
Net Fee Income Ratio     19.2%   21.4%   24.3%   22.3%   22.8%           21.6%   25.6%    
Cost / Assets     10.3%   9.7%   10.9%   11.1%   12.6%           10.3%   12.7%    
Efficiency Ratio     61.9%   59.3%   66.3%   59.0%   68.2%           61.5%   67.0%    
Liquidity & Capital                                          
Loans to Total Deposits3     84.5%   85.8%   100.2%   119.7%   107.6%                    
Liquidity Coverage Ratio (LCR)4     173.4%   132.1%   139.0%   116.9%   113.9%                    
Total Equity / Total Assets     12.2%   11.1%   12.7%   15.7%   15.6%                    
Proforma Consolidated Capital / Risk weighted assets 5     14.0%   13.8%   14.5%   17.0%   19.6%                    
Proforma Consolidated Tier1 Capital / Risk weighted assets 6     12.9%   12.5%   13.1%   15.8%   17.2%                    
Risk Weighted Assets / Total Assets     73.0%   70.5%   78.8%   88.1%   81.7%                    
Asset Quality                                          
NPL Ratio     4.1%   3.7%   3.6%   3.2%   3.1%                    
Allowances as a % of Total Loans     4.1%   3.5%   3.3%   2.8%   2.6%                    
Coverage Ratio     100.0%   94.0%   89.9%   89.7%   88.0%                    
Cost of Risk7     7.0%   5.9%   5.6%   4.7%   4.4%           5.8%   4.3%    
MACROECONOMIC RATIOS                                          
Retail Price Index (%)8     11.5%   14.1%   8.8%   6.7%   6.1%           47.6%   24.8%    
Avg. Retail Price Index (%)     47.3%   35.4%   27.1%   25.3%               33.8%        
UVA (var)     16.2%   10.0%   7.5%   6.9%   4.9%           46.9%   22.5%    
Pesos/US$ Exchange Rate     37.81   40.90   28.86   20.14   18.77           37.8   18.8    
Badlar Interest Rate (eop)     49.5%   43.3%   32.7%   22.6%   23.3%           49.5%   23.3%    
Badlar Interest Rate (avg)     50.2%   37.1%   27.3%   22.9%   22.5%           34.3%   20.6%    
TM20 (eop)     51.7%   44.1%   33.9%   22.6%   23.7%           51.7%   23.7%    
TM20 (avg)     53.4%   38.7%   28.6%   23.4%   23.4%           36.0%   21.4%    
OPERATING DATA                                          
Active Customers (in millions)     1.8   1.9   1.9   1.9   1.9                    
Access Points9     344   368   368   340   326                    
Employees10     5,307   5,281   5,451   5,406   5,320   0.5%   -0.2%            
1.   Average Assets and average Shareholder´s Equity calculated on a
daily basis
2. Total Portfolio: Loans and Leasing before Allowances. According to
IFRS, this line item includes Securitized Loan Portfolio and loans
transferred with recourse.
3. Loans/Total Deposits ratio was restated in previous quarters due to
the inclusion in the balance sheet of the securitized and
transferred loans.
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. The regulatory capital ratio
applies only to the Bank and CCF on a consolidated basis and does
not include the liquidity held at the holding company level- The
Proforma consolidated capital ratio, includes the liquidity
retained at Grupo Supervielle level after the equity offering,
which is available for growth. As of December 31, 2018, the
liquidity amounted to Ps. 927 million. This ratio has not been
restated for 2017 quarters.

6. Tier 1 capital divided by risk weighted assets taking into account
operational and market risk. The regulatory Tier 1 capital ratio
applies only to the Bank and CCF on a consolidated basis and does
not include the liquidity held at the holding company level. The.
Proforma Consolidated Tier 1 capital ratio includes the liquidity
retained at Grupo Supervielle level after the equity offering, which
is available for growth. As of September 30, 2018, the liquidity
amounted to Ps.927 million. 4Q17 Tier 1 ratio as reported previous
IFRS adoption was 18.4%.
7. Cost of risk in 4Q18, excluding the AR$ 231 million additional
voluntary loan loss provisions made to increase coverage, was 5.9%.
8. Source: INDEC
9. The increase in the number of Access Points in 1Q18, reflects the
opening of 1 bank branches located in Neuquen and the presence in 13
Walmart Stores. The increase in the number of Access Points in 2Q18,
reflects the opening of 2 bank branches and 24 Mila branches. The
decrease in the number of Access Points in 4Q18, reflects the
closing of certain consumer finance sales points.

10.

 

The decrease in the number of employees in 3Q18 reflects the
reorganization process in the consumer finance business

Contacts

IR Contact:
Ana Bartesaghi
Treasurer and IRO
Phone 54 11
4324 8132

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