Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Grupo Supervielle SA (NYSE:SUPV) achieved significant loan book expansion, with a 27% quarter-over-quarter increase and a 1107% year-on-year growth, surpassing industry growth rates.
• The company's digital transformation strategy, initiated in 2020, has been successfully completed, enhancing operational agility and positioning Grupo Supervielle SA (NYSE:SUPV) as a tech-driven institution.
• Retail loans, which offer higher margins, increased to 48% of the total portfolio, up from 40% a year ago, indicating a strategic shift towards more profitable segments.
• Grupo Supervielle SA (NYSE:SUPV) maintained a strong capital position with a CET1 ratio of 16.1%, supporting continued growth and strategic initiatives.
• The company's digital brokerage platform, IOL, saw a 57% increase in accounts and a 70% rise in average monthly active users, reinforcing its leadership in Argentina's digital brokerage market.

Negative Points

• The non-performing loan ratio increased slightly to 1.3%, although it remains within historically low levels.
• Net interest margins are expected to adjust downwards to 18-20% in 2025 due to lower inflation and increasing leverage, potentially impacting profitability.
• The competitive environment is intensifying, with expectations of declining spreads as interest rates decrease.
• Grupo Supervielle SA (NYSE:SUPV) anticipates a gradual increase in the NPL ratio to 2-2.2% in 2025, reflecting increased lending activity and a more balanced loan mix.
• Operating expenses are expected to grow below inflation, which may challenge the company in managing costs effectively while supporting loan growth of 60% in real terms.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with SUPV.

Q: Could you explain the capital consumption due to loan growth and the deferred tax assets' impact on your capital? Also, what is your target tier one capital ratio? A: (Mariano, CFO) The capital consumption is partly due to recognizing deferred tax assets related to tax loss carryforwards from a previous merger. These assets are deducted from the capital position, impacting the tier one ratio. We are comfortable operating at a 12-13% tier one ratio, and if growth continues, we might consider adding capital in 2026.

Q: How do you see the competitive environment and spreads evolving in 2025? A: (Mariano, CFO) As inflation decreases, interest rates will likely follow, putting pressure on spreads. However, we are shifting our portfolio towards higher-margin retail loans, which should help maintain spreads. We expect corporate spreads to remain stable but at a lower interest rate level.

Q: Considering the shift towards retail, what is your long-term ROE target, and how do you view asset quality? A: (Mariano, CFO) We aim for a long-term ROE closer to 20%, gradually increasing profitability through loan portfolio expansion and fee income growth. Regarding asset quality, we expect NPLs to stabilize at 2-2.2% by year-end, with coverage levels remaining above 100%.

Q: How do you expect the securities portfolio to evolve in 2025, and what are your projections for the loan-to-asset and security-to-asset ratios? A: (Mariano, CFO) We anticipate a decrease in the securities portfolio's weight as we shift towards a higher loan portfolio weight. The loan-to-asset ratio should increase to around 60%, while the securities portfolio may decrease to about 20%.

Q: What are your expectations for deposit growth relative to loan growth in 2025? A: (Mariano, CFO) We expect solid growth in both loans and deposits, but loans will likely grow faster. For deposits to match loan growth, we would need significant monetary base expansion or increased foreign currency deposits, which we are optimistic about due to our competitive strategies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.