Grupo Supervielle Reports 3Q24 and 9M24 Results

Rhea-AI Summary

Grupo Supervielle (NYSE: SUPV) reported 3Q24 net income of AR$8.9 billion with ROAE at 4.9%, while 9M24 net income reached AR$89.8 billion with ROAE at 16.4%. The company's loan book expanded 15% sequentially and 60% year-to-date in real terms. Net Interest Margin normalized to 25%, while fee income grew 28% sequentially. The NPL ratio remained stable at 0.8%, with cost of risk decreasing to 2.4%. The company maintains its 15% ROE guidance for FY2024. Total deposits increased 31.3% QoQ to AR$2,751.5 billion, while loans grew 28.6% QoQ to AR$1,605.4 billion. The Common Equity Tier 1 Ratio stood at 19.2% as of September 30, 2024.

Positive

• Loan book expanded 60% year-to-date in real terms
• Fee income increased 28% sequentially
• NPL ratio remained at historic low of 0.8%
• Cost of risk decreased to 2.4%
• 9M24 ROAE reached 16.4%, up from 12.9% in 9M23
• Foreign currency deposits increased 201.5% YoY to US$801.1 million
• Strong CET1 ratio of 19.2%

Negative

• 3Q24 Net Income decreased to AR$8.9 billion from AR$29.3 billion in 3Q23
• ROAE declined to 4.9% in 3Q24 from 18.5% in 3Q23
• Net Financial Income decreased 29.4% QoQ
• Efficiency ratio worsened to 64.3% in 3Q24 from 51.7% in 3Q23

Insights

Financial Analyst

This earnings report shows mixed signals. While AR$89.8 billion in 9M24 net income represents significant growth from 9M23, Q3 profitability declined substantially with ROAE dropping to 4.9% from 10.4% in Q2. However, several positive indicators emerge:

• Loan portfolio expanded 60% year-to-date in real terms
• NPL ratio remains exceptionally low at 0.8%
• Strong deposit growth with FX deposits up 90.2% QoQ
• Robust capital position with CET1 at 19.2%

The normalization of NIMs to 25% and higher efficiency ratio of 64.3% warrant attention, but the bank's market share gains and strong asset quality provide a solid foundation for future growth.

Market Research Analyst

The Argentine banking sector shows promising signs of recovery with real-term loan growth for the first time in 7 years. With credit penetration below 6% of GDP, Supervielle is well-positioned to capitalize on market expansion opportunities. The company's digital transformation through IOL platform (580,000 active clients, up 14%) and strategic focus on export-oriented value chains demonstrate forward-thinking adaptation to market needs. The appointment of experienced CEO Gustavo Manriquez signals preparation for anticipated market growth as Argentina's economic reforms progress.

3Q24 Net Income at AR$8.9 billion with ROAE at 4.9%

9M24 Net Income reached AR$89.8 billion and ROAE at 16.4%

Confirm 15% ROE Guidance for FY2024

BUENOS AIRES, Argentina--(BUSINESS WIRE)-- Grupo Supervielle S.A. (NYSE: SUPV; BYMA: SUPV), (“Supervielle” or the “Company”) a universal financial services group headquartered in Argentina with a nationwide presence, today reported results for the three and nine-month period ended September 30, 2024.

Starting 1Q20, the Company began reporting results applying Hyperinflation Accounting, in accordance with IFRS rule IAS 29 (“IAS 29”) as established by the Central Bank.

Management Commentary

Commenting on third quarter 2024 results, Patricio Supervielle, Grupo Supervielle’s Chairman & CEO, noted: “Growth momentum continued into 3Q24, with our loan book expanding 15% sequentially and 60% year-to-date in real terms, underscoring solid credit demand. As anticipated, Net Interest Margin adjusted to a normalized 25%, aligned with current market conditions. Fee income remained strong - up 28% sequentially - driven by banking, asset management, and online brokerage operations, further supported by an 11% increase in insurance income. Moreover, our disciplined risk management approach further enhanced our solid performance. Combined, these factors resulted in a cumulative ROE of 16% for the first nine months of 2024 and 5% in the quarter. While profitability bottomed out in 3Q24, we are seeing a rebound in the fourth quarter and are on track to deliver our full-year ROE guidance of 15%.

Since initiating our early-mover strategy for targeted credit expansion in March 2024, we’ve captured a significant market share, with our loan portfolio increasing 60-basis points year-to-date. Despite slower growth this quarter, we maintained gains across all key products, including corporate loans, personal loans, credit cards, and car loans. Additionally, we retained our position as the second-largest bank in car loan origination and saw meaningful contributions from retail loans, including personal loans and auto loans, bolstering NIM. In deposits, market share increased by 60 bps year-to-date, including an 80-bps growth in U.S. dollar-denominated deposits.

In terms of asset quality, the NPL ratio remained stable at a historic low of 0.8% amid ongoing loan growth. This quarter, cost of risk decreased to 2.4%, underscoring the effectiveness of our focus on middle-market and corporate segments, payroll, and asset-backed loans, positioning us well for growth in a gradually improving macro environment.

IOL continues to reinforce its position as the leading online brokerage platform in the country and contributing 21% of our total fee income this quarter. Active clients reached a record 580,000 marking a 14% increase with transaction volumes up 22% sequentially, reflecting the strong appeal of our integrated digital services. Additionally, IOL is complementing Banco Supervielle playing a key role in channeling corporate debt issuances to its retail customer base. This quarter, assets under management reached the US$ 1.2 billion mark, and we are proud to have recently opened IOL’s 1.5 millionth client account – a significant milestone in our growth trajectory.

I am also pleased to welcome Gustavo Manriquez as CEO of Banco Supervielle, effective October 1. With Gustavo’s over a decade of experience leading one of the largest banks in Argentina together with deep international experience, he brings invaluable expertise as we enter a new era for Argentina. His guidance will drive the bank through its next growth phase, realizing the full potential of the Supervielle ecosystem, unlocking the value of the franchise and further expanding our contribution to the country’s economic progress and transformation.

Wrapping up, 2024 represents a turning point for Argentina’s financial system, with the industry experiencing real-term loan growth since June for the first time in 7 years, driven by easing inflation and lower interest rates. Despite this progress, credit penetration remains low at under 6% of GDP, highlighting significant potential for future growth. Looking ahead to 2025, we expect the government’s continued efforts to reduce inflation, sustain fiscal surpluses, and advance deregulation across multiple sectors to stimulate broader economic activity and further drive credit demand across the private sector.

In this context, we see attractive opportunities to deepen our market presence by leveraging our diverse product offerings and digital solutions to enhance client engagement and drive growth, positioning Supervielle as a key player in the country’s recovery. This strategy is further strengthened by our foothold in export-oriented value chains and enabled by our solid capital base,” concluded Mr. Supervielle.

Third quarter 2024 Highlights

PROFITABILITY

Attributable Net Income of AR$8.9 billion in 3Q24, compared to net gains of AR$29.3 billion in 3Q23 and AR$19.2 billion in 2Q24.

Net Income was AR$89.8 billion in 9M24, compared to AR$58.3 billion in the same period of 2023.

ROAE was 4.9% in 3Q24 compared to 18.5% in 3Q23 and 10.4% in 2Q24. The Company reconfirms the 15% ROAE target ROAE for FY24. 9M24 ROAE reached 16.4% compared to 12.9% in 9M23

ROAA was 1.0% in 3Q24 compared to 2.9% in 3Q23 and 2.3% in 2Q24. 9M24 ROAA was 3.4% compared to 1.9% in 9M23.

Profit before income tax of AR$10.7 billion in 3Q24 compared to AR$47.0 billion in 3Q23 and AR$34.6 billion in 2Q24. Profit before income tax reached AR$141.6 billion in 9M24 increasing from AR$93.3 billion in 9M23.

QoQ performance is mainly explained by a 29.4%, or AR$67.0 billion, decrease in Net Financial income driven by the decline in inflation reducing yields on government securities and loans, partially offset by a reduction in the cost of funds. The asset portfolio continues to shift toward a larger share of private-sector loans, reducing the Company’s investment portfolio. A 1.8%, or AR$ 2.2 billion, increase in personnel & administrative expenses and D&A also impacted QoQ performance. Excluding severance payments and early retirement charges related to the Company’s efficiency plan, administrative expenses and D&A would have decreased 4.1% sequentially. This was partially offset by: i) a 31.2%, or AR$20.7 billion, decrease in the loss from exposure to inflation given the deceleration in inflation to 12% in 3Q24 from 18% in 2Q24; ii) a 25.0%, or AR$9.7 billion, increase in Net Fee Income, driven by the repricing of bank fees in a declining inflationary environment, including improved brokerage and asset management fee revenues, which together represented 33% of total fee income; iii) a 34.6%, or AR$11.8 billion, decrease in other expenses as the previous quarter recorded higher turnover tax and higher provisions to execute several strategic initiatives; and iv) a 22.4%, or AR$3.1 billion, decrease in LLPs reflecting solid credit quality with the NPL ratio remaining historic lows.

Revenues (net financial income + net fee income – turnover tax) amounted to AR$196.2 billion in 3Q24, compared to AR$254.5 billion in 3Q23 and AR$247.2 billion in 2Q24. 9M24 revenues increased 30.7%, or AR$200.4 billion, compared to 9M23.

Net Financial Income reached AR$160,988.1 billion in 3Q24, reflecting decreases of 31.6% YoY and 29.4% QoQ. Lower inflation reduced the impact of inflation-linked instruments in the Company’s investment and loan portfolio, while a stable rate environment and Central Bank adjustments lowered Peso assets’ yields, normalizing monetary policy and reducing the high spreads from previous quarters.

9M24 Net Financial Income was AR$ 786.6 billion, up 30.0% from AR$ 604.9 billion in 9M23. Adjusted Net Financial Income was AR$ 533.7 billion, up 10.0% from AR$ 485.2 billion in 9M23.

Net Interest Margin (NIM) stood at 24.8%, amid both lower inflation and monetary policy rate, which reduced yields on assets, funding costs and spreads. This compares to NIM of 29.2% in 3Q23 and 36.3% in 2Q24.

The total NPL ratio was 0.8% in 3Q24, improving by 90 basis points YoY from 1.7% and remaining flat QoQ. The QoQ and YoY performances reflect loan portfolio growth and stable credit risk.

Loan loss provisions (LLPs) totaled AR$10.3 billion in 3Q24, decreasing 23.4% YoY and 21.5% QoQ. Net loan loss provisions, equivalent to loan loss provisions net of recovered charged-off loans and reversed allowances, amounted to AR$10.6 billion in 3Q24 compared to AR$13.9 billion in 3Q23 and AR$13.6 billion in 2Q24. The Coverage Ratio was 281.7% as of September 30, 2024, compared to 182.8% as of September 30, 2023, and 302.9% as of June 30, 2024.

Efficiency ratio was 64.3% in 3Q24, increasing from 51.7% in 3Q23 and 50.9% in 2Q24. Excluding severance payments and early retirement charges related to the Company’s efficiency program, the efficiency ratio would have been 60.5%. 9M24 Efficiency ratio was 46.1%, improving from 60.9% in 9M23.

Loans to Deposits Ratio was 58.3% as of September 30, 2024, compared to 39.6% as of September 30, 2023, and 59.5% as of June 30, 2024.

Total Deposits amounted to AR$2,751.5 billion and increased 183.9% YoY and 31.3% QoQ in nominal terms compared to industry growth of 181.8% YoY and 26.6% QoQ. In real terms, total deposits decreased 8.1% YoY but increased 17.1% QoQ. Total private sector deposits decreased 0.6% YoY but increased 18.1% QoQ in real terms following the industry trend.

Foreign currency deposits (measured in US$) amounted to US$ 801.1 million, increasing 201.5% YoY and 90.2% QoQ, while industry FX deposits increased 110.3% YoY and 75.9% QoQ.

Total Assets increased 6.7% QoQ and 0.2% YoY, reaching AR$3,997.6 billion as of September 30, 2024.

The leverage ratio (Assets to shareholders’ equity) decreased 80 bps YoY to 5.4x from 6.2x as of September 30, 2023, and increased 30 bps QoQ from 5.1x as of June 30, 2024. This remains significantly below the 8x reached in 2018, underscoring the substantial room for growth.

Loans grew 318.6% YoY, 222.3% year-to-date, and 28.6% QoQ in nominal terms, reaching AR$1,605.4 billion. In real terms, gross loans increased 35.5% YoY, 59.9% year-to-date, and 14.7% QoQ, while industry loans rose 13.6% YoY, 28.8% year-to-date, and 26.2% QoQ. Year-to-date, the total loan portfolio gained 60 bps in market share (based on the monthly average daily balance of system loans).

Common Equity Tier 1 Ratio (CET1) as of September 30, 2024, was 19.2% increasing 240 bps YoY and decreasing 210 bps when compared to the reported CET1 as of June 30, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241125179087/en/

Grupo Supervielle Investor Relations

ir-gruposupervielle@gruposupervielle.com.ar

Source: Grupo Supervielle S.A.

FAQ

What was Grupo Supervielle's (SUPV) net income in Q3 2024?

Grupo Supervielle reported a net income of AR$8.9 billion in Q3 2024.

What is SUPV's ROE guidance for full-year 2024?

Grupo Supervielle confirmed its ROE guidance of 15% for FY2024.

How much did SUPV's loan book grow in 2024 year-to-date?

The loan book expanded 60% year-to-date in real terms as of Q3 2024.

What was SUPV's NPL ratio in Q3 2024?

The NPL ratio remained stable at 0.8% in Q3 2024.