2Q22 profitability impacted by higher loss at IUDÚ due to higher inflation and severance, lower margin due to sharp drop in government securities price in June and severance early retirement at the bank
BUENOS AIRES, Argentina, August 17, 2022–(BUSINESS WIRE)–Grupo Supervielle SA (NYSE: SUPV; BYMA: SUPV), (“Supervielle” or the “Company”), a universal financial services group headquartered in Argentina with operations throughout the country, today reported its results for the three and six-month periods ended 30 June 2022.
Effective 1Q20, the Company began reporting its results applying hyperinflation accounting, in accordance with IFRS IAS 29 (“IAS 29”) as issued by the Central Bank.
Commenting on the second quarter 2022 results, Patricio Supervielle, CEO of Grupo Supervielle, said: “We continued to make significant progress on our key strategic pillars, increasing customer acquisition and digital adoption, improving asset quality, increasing efficiency by right-sizing our operations while undertaking a major restructuring of consumer credit business and improving our financing.
We are encouraged by the progress of our customer acquisition, digitization and transformation program within our bank, with a 26% sequential increase in the total number of digital customers. Retail banking customers grew by 6%, with 65% of new customers digitally onboarded. The number of mobile app customers in June 2022 increased by 60% during the period, with the share of mobile transactions also increasing steadily, accounting for 20% of the bank’s total monetary transactions compared to 10% in the same quarter last year. last year.
Our loan portfolio stabilized during the quarter, growing slightly above inflation. The good performance of corporates and SMEs was offset by a contraction in consumer credit, as we reduced our appetite for risk in an environment of rising inflation and interest rates. We maintained overall healthy asset quality despite the challenging environment we face, with NPLs improving 50bps sequentially to 3.8% with stable coverage at 108%. Deposits, meanwhile, were up 6% sequentially, with market share of business current account deposits hitting an all-time high of nearly 2%. The total MNI was however negatively impacted by the regulatory increases in minimum interest rates on time deposits and by the sharp drop in the price of our Argentinian bond holdings.
This is a transformative year for our business, a year in which we significantly right-size our operations by effectively reducing headcount by 18% year-to-date to increase efficiency as we execute our digitization and transformation initiatives. Combined with inflationary pressures, this situation had a negative impact on operating costs.
At IUDÚ, macro assumptions have fundamentally changed since we launched this platform. In this context, we are slowing down loan origination, improving asset quality and accelerating the resizing of this activity, while integrating IUDÚ’s clientele into Banco Supervielle. While this translates into higher non-recurring expenses today, it puts us in a good position to run a more efficient operation.
As anticipated during our previous earnings call, at the end of July, we concluded the agreement to transfer our activity as a financial agent which serves the government of the province of San Luis. This represents approximately 2.4%, 3.1% and 4% of our loans, deposits and employees, respectively. With this transaction, our business model becomes more efficient as we transfer 10% of our branch network while continuing to build on the strong franchise built over the past 25 years serving the private sector in this province through five physical branches in the most densely populated regions. populated areas with our innovative virtual agencies.
At IOL invertironline, our fintech subsidiary, we recently appointed a new CEO. In line with the challenging environment facing fintechs, in addition to very restrictive regulations in Argentina, we are currently streamlining this activity to mitigate the decline in transaction volumes and fees in the current economic environment.
Looking ahead, Argentina faces significant fiscal, financial and monetary challenges that still need to be addressed. For our part, we remain fully focused on executing our strategy to further strengthen our business while cautiously monitoring market dynamics. Reflecting our continued confidence and the conviction of our Board of Directors and our management team in the execution of our strategic initiatives, the Board approved in July a share buyback program for a total of AR$2 billion. , the lower amount equivalent to 10% of our share capital, until March 2023. This initiative is supported by a liquid, well-capitalized and inflation-hedged balance sheet with a Tier 1 ratio of 13.6% at the end of the quarter, concluded Mr. Supervielle.
Second Quarter 2022 Highlights
Attributable net loss of AR$2.0 billion in 2Q22, compared to net losses of AR$521.5 million in 2Q21 and AR$442.9 million in 1Q22. The Bank, on a stand-alone basis, excluding its stake in IUDÚ, recorded an attributable net loss of AR$612.4 million versus a net gain of AR$928.4 million in 1Q22, impacted by the sharp drop in prices government securities held.
Excluding non-recurring severance payments, Supervielle would have recorded a net loss of A$1.2 billion in 2Q22, with an adjusted ROAE in real terms of around 6.8% negative, compared to 2.9% in the previous quarter. The Bank, excluding one-time severance payments, would have recorded a net loss of AR$159.6 million.
The net result for the quarter remained impacted by several factors, including: i) weak demand for private sector credit which remains at historically low levels, although 2Q22 saw a 0.6% increase in loans reversing the trend to the decline recorded since September 2021, ii) new regulations increases in minimum interest rates on time deposits, iii) higher expenses incurred to accelerate the Company’s strategy to achieve operational efficiencies at the Bank, and iv) a higher loss at IUDÚ due to increased inflation and severance payments to restructure the business. In addition, the financial margin for this quarter was impacted by the sharp drop in June in the price of government securities held by the Company and the result of the sale of part of the government securities held in the trading portfolio.
ROAE was negative by 11.2% in 2Q22, compared to 2.8% in 2Q21 and 2.5% in 1Q22.
ROAA was -1.6% in 2Q22, compared to -0.4% in 2Q21 and 0.3% in 1Q22.
Loss before income tax of AR$2.6 billion in 2Q22 compared to pre-tax losses of AR$666.8 million in 2Q21 and AR$511.0 million in 1Q22.
Net financial income AR$18.8 billion in 2Q22, up 1.5% year-on-year but down 0.4% sequentially Both quarter-over-quarter and year-over-year performance was impacted by the sharp decline in June in the price of government securities held by the company and the result of the sale of certain of the portfolio trading government securities. Excluding the impact of government securities on the margin, which amounts to AR$770 million, the net financial result would have increased by 3.7%.
Net interest margin (NIM) 18.8%, negatively impacted by regulatory increases in minimum interest rates on term deposits and the fall in the price of our Argentinian bond portfolios. On a cumulative basis, the HY22 NIM was 18.9%, up 50 basis points from the HY21 NIM.
The total NPL ratio was 3.8% in 2Q22, down 50 basis points from 1Q22. The improvement in the NPL ratio reflects low levels of delinquencies for business loans, growth in the Bank’s loan portfolio and write-offs during the quarter, primarily in the IUDÚ line of business. The NPL portfolio was down 11.5% quarter-on-quarter.
Loan Loss Provisions (LLP) totaled AR$2.8 billion in 2Q22, down 8.7% YoY, but up 20.0% QoQ. On a cumulative basis, LLP decreased by 8% in 1H22 compared to 1H21. Net provisions for loan losses were AR$2.5 billion in 2Q22, compared to AR$1.7 billion in 1Q22. The coverage rate was 108.3% as of June 30, 2022, 107.4% as of March 31, 2022 and 163.9% as of June 30, 2021.
Efficiency report was 81.4% in 2Q22, compared to 75.1% in 2Q21 and 74.2% in 1Q22.
Total deposits AR$425.4 billion, up 6.3% quarter-on-quarter and 6.7% year-on-year. AR$ deposits stood at AR$389.3 billion, up 7.0% quarter-on-quarter and 11.5% year-on-year.
Loans fell 7.4% year-on-year but increased 0.6% quarter-on-quarter in real terms to reach AR$197.0 billion. The AR$ loan portfolio stood at AR$180.2 billion, down 0.7% year-on-year but up 1.5% quarter-on-quarter.
Total assets up 3.2% over one year and 3.7% over one quarter, to reach 543.1 billion Australian dollars as of June 30, 2022.
Common Equity Tier 1 capital ratio as of June 30, 2022, was 13.6%, down 20 basis points from 1Q22 and down 70 basis points from June 30, 2021. The evolution of the Tier 1 capital ratio in 2Q22 reflects the growth of the loan portfolio above inflation and the impact of net results.
See the source version on businesswire.com: https://www.businesswire.com/news/home/20220817005771/en/