Grupo Supervielle(US:SUPV)2020-05-29 19:07Financial Data and Key Metrics Changes - The company reported a sequential increase in total assets by 22%, returning to levels seen in Q3 2019, with Leliq securities now comprising 21% of total assets, up from nearly 5% in the prior quarter [41] - Comparable net financial income increased nearly 1% to AR$7.4 billion sequentially, despite a sharp decline in market interest rates [49] - Return on average equity improved to nearly 8% this quarter from negative 13% in Q4 2019 [62] Business Line Data and Key Metrics Changes - Total loans contracted by 7% sequentially, reflecting economic contraction and uncertainty, with declines in both peso and U.S. dollar-denominated loans [42] - The loan portfolio saw a 3% sequential increase in April, primarily driven by SME loans at a 24% interest rate [44] - Net service fee income rose by 15% sequentially, driven by higher deposit account fees and asset management revenues [51] Market Data and Key Metrics Changes - Economic activity in Argentina experienced a sharp contraction of nearly 12% year-on-year in March, exacerbated by the COVID-19 lockdown [32] - System liquidity remained high, with total system deposits up nearly 18%, driven by a 25% increase in peso deposits [37] - Inflation dropped to 7.8% in the quarter, with a further decline to 1.5% in April [34] Company Strategy and Development Direction - The company is focusing on digital transformation to adapt to a low-touch environment, enhancing online functionalities and ATM infrastructure [11] - There is a strong emphasis on maintaining liquidity and capitalization levels to ensure long-term sustainability amid the crisis [10] - The company aims to capture growth opportunities by focusing on cross-selling non-credit products and expanding its digital offerings [68] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding the timing of economic recovery, which is dependent on various factors including the depth of the pandemic and government measures [66] - The company is proactively monitoring its credit portfolio and expects to make provisions in the near future as visibility improves [24] - Management remains confident in the company's foundation to navigate through the crisis, highlighting strong liquidity and an experienced management team [69] Other Important Information - The company has implemented measures to support communities affected by COVID-19, including monetary donations and supplies [31] - The adoption of IFRS 9 has led to increased provisions based on expected losses, with a focus on adjusting models as the situation evolves [52][80] Q&A Session Summary Question: Loan growth perception and demand for corporate loans - Management noted an increase in loan demand from large corporates for liquidity and from SMEs due to government programs, but emphasized a selective approach to credit quality [72][75] Question: Asset quality and macro assumptions for provisions - Management indicated that macro assumptions include a projected GDP decline of 5% in real terms, with ongoing adjustments as the situation develops [80] Question: Operating cash flow implications of loan support programs - Management confirmed that while collections are deferred, liquidity levels have increased due to Central Bank measures, allowing for effective cash flow management [88][90] Question: Future expectations for margins and provisions - Management plans to increase coverage levels in anticipation of potential impacts from COVID-19, while maintaining a focus on high margins compared to the market [101][104]