Grupo Supervielle(SUPV) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total assets increased by 16% sequentially and nearly 70% year-on-year, driven by larger holdings in high-margin seven-day Leliq securities [23] - Net income decreased by 17% quarter-on-quarter to ARP 589 million, but excluding a voluntary provision, it would have increased by 32% [43] - The net interest margin (NIM) for the Argentine peso loan portfolio increased by 70 basis points sequentially to 23.2%, while total NIM decreased by 120 basis points to 19.1% [33][34] Business Line Data and Key Metrics Changes - The share of consumer finance loans decreased by 100 basis points sequentially and 300 basis points year-on-year, reflecting a cautious approach in a recessionary environment [25] - Corporate loans contracted by 2% sequentially, with peso loans down 14% and U.S. dollar loans down 4.5% [28] - Retail loan growth decelerated, increasing slightly less than 1% quarter-on-quarter, while consumer finance loans contracted by 5% sequentially [28] Market Data and Key Metrics Changes - Total industry deposits in currency of origin expanded by 7% in pesos and 3% in U.S. dollars, indicating sound financial sector dynamics despite currency volatility [17] - The NPL ratio increased by 120 basis points sequentially to 5.3%, primarily due to a rise in corporate segment NPLs [38] - Market consensus expectations for inflation increased to 40% from 32%, reflecting a more cautious economic outlook [16] Company Strategy and Development Direction - The company aims to create a more efficient organization with a leaner management structure to facilitate synergies across the platform [9] - Digital transformation is a cornerstone of the company's strategy, focusing on enhancing customer experience and building brand loyalty [10] - The company maintains its loan guidance range of 21% to 31% for 2019 despite a challenging economic environment [27] Management's Comments on Operating Environment and Future Outlook - Management expects system NPLs to peak around the second quarter of the year but does not anticipate situations of the magnitude seen in the first quarter [8] - The company is proactive in managing its loan portfolio, helping companies restructure to navigate high interest rates [50] - Despite weaker macro indicators, the company demonstrates resilience and flexibility, maintaining its guidance for the year [45] Other Important Information - A significant corporate loan was fully provisioned, maintaining 100% coverage, which impacted profitability [7] - The company is undergoing a share conversion process to create a family legacy program for future continuity of shareholders [19][20] Q&A Session Summary Question: Are there any potential problematic cases expected in the following quarters regarding asset quality? - Management believes that the bulk of provisioning from the corporate portfolio was completed in the current quarter and does not expect further surprises of this magnitude going forward [49][50] Question: How are margins expected to trend for the rest of the year? - Management maintains NIM guidance for the full year, indicating that the retail portfolio's margins should increase as interest rates drop, compensating for any reductions in margins from Central Bank securities [51]