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$94.9 billion. The QoQ decrease took place towards the close of the quarter due to excess liquidity management by the Companys treasury. Average deposit volumes increased 90.4% YoY and 15.4% QoQ. AR$ 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$)||7.75||10.03||2.96||7.91||5.12|
|Average Outstanding Shares (in millions)||456.7||456.7||456.7||456.7||456.7|
|BALANCE SHEET||dec 18||sep 18||jun 18||mar 18||dec 17||QoQ||YoY||dec 18||dec 17|
|Total Loans & Leasing||80,171.5||83,378.1||75,830.0||66,479.5||60,692.9||-3.8%||32.1%|
|Attributable Shareholders Equity||17,155.6||16,220.0||15,345.4||15,114.2||14,369.6||5.8%||19.4%|
|Average Attributable Shareholders Equity1||16,547.0||15,638.9||15,044.8||14,490.1||14,188.7||5.8%||16.6%||15,530.0||9,844.9|
|Profitability & Efficiency|
|Net Interest Margin||18.5%||20.9%||19.2%||19.6%||20.0%||19.4%||20.1%|
|Net Financial Margin||20.3%||18.2%||17.4%||19.9%||20.0%||18.7%||20.5%|
|Net Fee Income Ratio||19.2%||21.4%||24.3%||22.3%||22.8%||21.6%||25.6%|
|Cost / Assets||10.3%||9.7%||10.9%||11.1%||12.6%||10.3%||12.7%|
|Liquidity & Capital|
|Loans to Total Deposits3||84.5%||85.8%||100.2%||119.7%||107.6%|
|Liquidity Coverage Ratio (LCR)4||173.4%||132.1%||139.0%||116.9%||113.9%|
|Total Equity / Total Assets||12.2%||11.1%||12.7%||15.7%||15.6%|
|Proforma Consolidated Capital / Risk weighted assets 5||14.0%||13.8%||14.5%||17.0%||19.6%|
|Proforma Consolidated Tier1 Capital / Risk weighted assets 6||12.9%||12.5%||13.1%||15.8%||17.2%|
|Risk Weighted Assets / Total Assets||73.0%||70.5%||78.8%||88.1%||81.7%|
|Allowances as a % of Total Loans||4.1%||3.5%||3.3%||2.8%||2.6%|
|Cost of Risk7||7.0%||5.9%||5.6%||4.7%||4.4%||5.8%||4.3%|
|Retail Price Index (%)8||11.5%||14.1%||8.8%||6.7%||6.1%||47.6%||24.8%|
|Avg. Retail Price Index (%)||47.3%||35.4%||27.1%||25.3%||33.8%|
|Pesos/US$ 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%|
|Active Customers (in millions)||1.8||1.9||1.9||1.9||1.9|
|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.|
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%.|
|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.|
|The decrease in the number of employees in 3Q18 reflects the reorganization process in the consumer finance business|
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