Grupo Supervielle SA publishes its 4Q20 and FY20 consolidated results
BUENOS AIRES – (BUSINESS WIRE) –Grupo Supervielle SA (NYSE: SUPV) (BYMA: SUPV), (“Supervielle” or the “Company”), a universal financial services group headquartered in Argentina with a nationwide presence, today announced its results for the three and twelve month periods ended. December 31, 2020.
As of 1Q20, the company began to present its results by applying hyperinflation accounting, in accordance with IFRS IAS 29 (“IAS 29”) as established by the Central Bank. For ease of comparison, figures for all quarters of 2019 have been restated applying IAS 29 to reflect the cumulative effect of the inflation adjustment for each period up to December 31, 2020. This report also includes management figures which exclude the IAS29 adjustment for 4Q20, 3Q20, 2Q20 and 1Q20 and present the figures for 4Q19 as they were previously reported under the rules of the central bank until December 31, 2019 and before the adoption of the IAS29 rule in 1Q20.
Updated details regarding Argentine government welfare, monetary and fiscal measures to mitigate the economic impact of the Covid-19 pandemic can be found on page 46.
Commenting on the fourth quarter and full year 2020 results, Patricio Supervielle, Chairman and CEO of Grupo Supervielle, said: “Our flexible business model has allowed us to adapt to the many challenges posed by the pandemic, the deep recession that followed and a changing regulatory environment. In 2020, we achieved a low double-digit ROAE adjusted for inflation and including comprehensive income. We also increased our coverage ratio throughout the year while maintaining strong levels of liquidity, despite operating in a very difficult environment. In this complex scenario, we continued to manage the credit cycle, leveraging our flexibility in an effort to balance risk and profitability. At the same time, we have been working diligently on the implementation of our transformation strategy which not only aims to drive sustainable growth as demand picks up, but to strengthen our current competitiveness.
“Throughout the quarter, we continued to be pressured on NIM, impacted by higher cost of funds resulting from the floor on interest rates on term deposits and subsidized rates on loans. We expect these conditions to continue in the near term. ”
“On our digital transformation, we are accelerating the initiatives that were already in motion, both in our digital and automatic channels, given the strong growth of the bank’s active digital customers, up 73% since the end of 2019. In addition , we have extended the complete and profound digital transformation of our activity to all the subsidiaries under the heading of three axes: i) the generation of a modern technological architecture, ii) a review of the entire infrastructure of our network branches, and iii) adding capabilities to connect with third parties and prepare for open banking. The successful implementation to date has benefited from a deep cultural transformation across the company, solidifying the adoption of agile working methodologies and a new operating model that puts the customer at the center of everything we do. .
“Over the next two years, we plan to step up investments to scale innovations and build on the progress started in 2020. In terms of branch office infrastructure, our goal is to evolve our network by improving customer experience through a blend of greater digital adoption, as well as effectively serving our customers in expanded service halls around the clock. The pilot programs we have implemented demonstrate significant improvements in the Net Promoter Score and efficiency and we plan to roll out these improvements in our branch network. We are also investing in technology to facilitate API architecture to enable integration with internal and external developers. As an example, during the first quarter of this year, we plan to integrate several new financial services via fintechs into our home banking and mobile phone channels. “
“Looking ahead, on the macro front, we see the economy starting to rebound after the 10% GDP contraction last year and against the backdrop of better external conditions, especially rising commodity prices. These have a positive impact on export activity and provide a solid basis for real GDP to post an expected recovery of over 7% in 2021. The recovery, however, remains subject to progress in the vaccination program to contain the crisis. health, the resumption of negotiations with the IMF and the regulatory framework. “
“We are convinced that the progress of our digital transformation, including the evolution of our agency model, will place Grupo Supervielle in a strong position to generate profitable growth when the demand for credit picks up,»Mr. Supervielle concluded.
Fourth Quarter 2020 and Fiscal 20 Highlights
Attributable net income of AR $ 657.4 million in 4Q20, compared to a loss of AR $ 703.7 million in 4Q19 and a profit of AR $ 957.0 million in 3Q20. Attributable net profit of AR $ 3.4 billion in FY20 compared to a net loss of AR $ 4.0 billion in FY19.
The QoQ performance in 4Q20 is explained by: i) a lower financial margin resulting from the increase in the cost of funds due to the full impact on the quarter of the increase in market interest rates and minimum rates on term deposits while loan yields remained stable impacted by lines of credit at subsidized rates, ii) lower volumes of Central Bank securities and Repo operations, and iii) higher administrative costs associated initiatives related to the acceleration of the digital transformation process. These were partially offset by: i) the drop in LLPs following the creation of Covid-19 advance provisions in previous quarters, and ii) the decrease in personnel costs despite certain non-recurring charges on severance pay and the early retirement program during the quarter.
Attributable comprehensive income of AR $ 981.1 million in 4Q20 compared to a loss of AR $ 582.9 million in 4Q19 and a gain of AR 846.8 million in 3Q20. Extended attributable profit of AR $ 3.9 billion in fiscal year 20, compared to a loss of AR $ 3.9 billion in fiscal year 19.
ROAE 7.4% in 4Q20 against -9.6% in 4Q19 and 11.0% in 3Q20. The ROAE calculated by including other comprehensive income is 11% in 4Q20. The ROAE calculated by including other comprehensive income was 11.4% in FY20.
Profit before income tax of AR $ 753.6 million in 4Q20, compared to a loss of AR $ 778.3 million in 4Q19 and a profit of AR $ 970.3 million in 3Q20. Profit before income tax of AR $ 4.1 billion in FY20, compared to a loss of AR $ 3.7 billion in FY19.
Income were down 8.0% YoY and 13.4% T / T.
Net financial income of AR $ 9.3 billion, down 15.0% year-on-year and 15.2% year-on-year. Net interest margin (NIM) of 19.5% was down 950bp yoy and 170bp in QoQ
The total NPL ratio was 3.7% in 4Q20, declining 374 bps year-on-year and 80 bps in QoQ. The decline in QoQ NPL is mainly due to the write-off of atomized consumer loans in the personal and business banking industry, reflecting the company’s credit policy of writing off loans past 270 days.
Provisions for loan losses (LLP) totaled AR $ 1.0 billion in 4Q20, down 34.4% yoy and 66.6% yoy. The level of provisioning reflects the Company’s IFRS9 expected loss models. The coverage ratio rose to 191.5%, compared to 83.0% in 4Q19 and 181.3% in 3Q20. As of December 31, 2020, non-performing secured commercial loans have increased to 80% of the total, compared to 78% as of September 30, 2020 and 58% as of December 31, 2019.
Efficiency report was 72.8% in 4Q20, compared to 79.9% in 4Q19 and 61.2% in 3Q20. Excluding non-recurring severance payments and pre-retirement charges, efficiency would have been 66.3% in 4Q20. The efficiency ratio was 64.9% in FY20, compared to 69.0% in FY19. Excluding non-recurring severance payments and pre-retirement charges, the efficiency ratio FY20 would have been 61.9% against 64.2% in FY19, while personnel costs decreased by 2% over one year.
Loan / deposit ratio 61.8%, down from 103.6% as of December 31, 2019 and 60.6% as of September 30, 2020.
Total deposits measured in comparable AR $ units at the end of 4Q20 increased 47.4% year-on-year but decreased 5.8% Q / Q to AR $ 178.6 billion. The decline in QoQ of AR $ deposits was mainly due to the strategy of reducing institutional funding given the lower market spreads, while base peso deposits remained stable.
Loans measured in comparable AR $ units at the end of 4Q20 was down 12.0% YoY and 3.6% Q / Q to AR $ 110.4 billion.
Total assets were up 22.9% year-on-year, but down 5.0% on a Q / T basis, to 249.9 billion RA as at December 31, 2020. T / T performance reflects a decrease of 3.6 % of loans as well as lower holdings of central bank instruments due to lower market spreads.
Common Equity Tier 1 ratio as of December 31, 2020, by 13.8%, compared to 14.0% as of September 30, 2020 and 11.8% as of December 31, 2019.