Grupo Supervielle Q2 2025 Earnings Report

Grupo Supervielle EPS Results

• Actual EPS: $0.14
• Consensus EPS: $0.22
• Beat/Miss: Missed by -$0.08
• One Year Ago EPS: N/A

Grupo Supervielle Revenue Results

• Actual Revenue: $210.52 million
• Expected Revenue: $283.67 billion
• Beat/Miss: Missed by -$283.46 billion
• YoY Revenue Growth: N/A

Grupo Supervielle Announcement Details

• Quarter: Q2 2025
• Date: 8/13/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 14, 2025
• Conference Call Time: 9:00AM ET

Grupo Supervielle (NYSE:SUPV), a financial services holding company, provides various banking products and services in Argentina. The company operates through Personal & Business Banking, Corporate Banking, Bank Treasury, Consumer Finance, Insurance, and Asset Management and Other Services segments. It offers savings accounts, time and demand deposits, and checking accounts; various loan products, including personal, consumer, mortgage, unsecured, and car loans; overdrafts; loans with special facilities for project and working capital financing; and leasing, bank guarantees for tenants, salary advances, domestic and international factoring, international guarantees and letters of credit, payroll payment plans, credit and debit cards, and senior citizens benefit payment services, as well as financial services and investments, such as mutual funds and guarantees. The company also provides foreign trade and cash management; advisory services; treasury services; insurance products comprising life, home, personal accidents, technology, ATMs, protected bag, and protected content; and asset management and other services, as well as operates as a digital online broker. It operates through a network of bank branches, ATMs, and self-service terminals, as well as ATMs with biometric identification. The company was formerly known as Inversiones y Participaciones S.A. and changed its name to Grupo Supervielle S.A. in November 2008. Grupo Supervielle S.A. was founded in 1887 and is based in Buenos Aires, Argentina.

Grupo Supervielle Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Loan growth outpaced the industry with commercial lending up 23% q/q while retail origination moderated amid asset quality normalization.
• Positive Sentiment: US dollar deposits reached a record $943 M, up 154% y/y, gaining 100 bps in market share and reinforcing funding strength.
• Positive Sentiment: Maintained robust capital and profitability with a CET1 ratio of 13.9%, ROE at 6%, and net interest margin expanding 160 bps to 20.8%.
• Negative Sentiment: Election-year uncertainty, tight peso liquidity, and very high real interest rates present near-term headwinds to growth.
• Positive Sentiment: Strategic digital initiatives—remunerated accounts, an online marketplace, GenAI WhatsApp channels, and Invertir Online integration—are driving early client engagement.

Presentation

[Ana Bartesaghi, Chief Investor Relations Officer at Grupo Supervielle]

Good morning, everyone, and welcome to Grupo Supervielle's Second Quarter Earnings Call. I'm Ana Barteszaghi, Treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in listen only mode. To ask questions during the Q and A session, ensure your first and last name appear on the Zoom platform.

[Ana Bartesaghi, Chief Investor Relations Officer at Grupo Supervielle]

Questions can be asked by voice or through the Q and A box. Speaking today will be Patricio Supervielle, our Chairman and CEO and Mariano Viglia, our Chief Financial Officer Gustavo Paco Manriquez, Banco Supervielle's CEO and Diego Pizzoli, CEO of Inverting Online, will also be available during the Q and A session.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

Thank you, Anna. Good morning, everyone, and thank you for joining us today. We executed well amid a still transitional macro backdrop. Loan growth outpaced the industry led by strong performance in commercial lending. By contrast, we took a more cautious approach to retail origination in response to the slight deterioration in asset quality in line with industry and historical levels.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

This follows the rapid retail expansion of prior quarters and return to credit normalization. On funding, S. Dollar balances reached record levels, gaining 100 basis points in market share over the past twelve months, underscoring both our competitive position and client trust. We maintain a solid capital position with a CET1 ratio of 13.9% and delivered a 6% return on equity in real terms, further supported by disciplined cost management and improved NIM. While the macro environment still presents some near term headwinds in connection with the election related uncertainty, tight peso liquidity and high real interest rates, the broader backdrop remains supportive with public government support at nearly 50%, fiscal consolidation, ongoing deregulation and inflation trending down.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

We expect economic growth and credit expansion to resume after the October supported by structural reforms anticipated to begin in the post election period. These conditions, combined with our strategic execution and solid capital, position us to continue capturing opportunities as the credit gains momentum. On Slide four, our strategic transition towards a more credit driven balance sheet is progressing, although at a slower pace in this election year and in line with monetary policy. Loans accounted for 48% of total assets, up 25 percentage points since December 2023, while we reduced our investment portfolio by 28 percentage points to 22% of assets. This deliberate rebalancing supports private sector credit growth to benefit from the gradual recovery in economic activity.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

Our loan to deposit ratio increased to nearly 72%, while leverage stood at 6.5x, well below historical levels, providing ample capacity to continue expanding our portfolio in a disciplined, profitable way. On Slide five, I'm pleased to share that we are seeing tangible early results across the four key initiatives, which are central to how we engage clients, build loyalty and drive cross sell. First, our innovative remunerated account that we are selectively offering in line with our cluster based strategy continues to deepen primary banking relationships and expand our deposit base. Payroll linked balances increased sequentially by 27% in pesos and 18% in U. S.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

Dollars, with new payroll accounts increasing by 53% year to date. Among SMEs, checking accounts increased 14% in pesos and 43% in dollars. Second, Tienda Supervielle, our online store hosted on Mercado Libre and integrated into our app, has surpassed 5,000,000 sessions since launch. This initiative, which complements our value proposition with the Mele platform, resulted in more than 175,000 customers transacting with over 400,000 registered credit cards. This is further evidence that we are embedding ourselves in our clients' daily lives and increasing engagement beyond traditional banking.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

Third, our GenAI powered WhatsApp channel was recently enhanced with new transactional features, including credit card purchases, authorizations, transportation car reloads and mobile top ups, turning WhatsApp into a daily banking companion. Adoption is growing rapidly. In JoyEye alone, the channel registered over 150,000 interactions posting exponential growth since launch, reinforcing its role as a scalable convenient service touch point. And fourth, new synergies between the bank and Invertir Online, our leading online broker, are delivering solid results, leveraging Yoel's 1,700,000 customers to showcase banking products while preserving Yoel's core's identity as an investment platform. In just four weeks since launch, over 4,700 Invertir Online clients placed $28,000,000 in dollar term deposits at the bank with nearly one third for terms over one hundred and eighty days.

[Julio Patricio Supervielle, Chairman, CEO & Director at Grupo Supervielle]

With only 3% of Yoast clients currently banking with us, we are launching a targeted cross sell strategy with a compelling suite of products aimed at deepening relationship and expanding our retail footprint. Lastly, since adding the Yoals pattern to our mobile app just two months ago, we've seen a clear increase in investment activity among bank customers. This early outcome give us confidence that our strategy can drive engagement, diversify revenues and capture growth opportunities as Argentina embarks on a renewed expansion cycle. With that, I'll turn the call over to Mariano Biglia, who will walk you through our financial performance and perspectives for the year.

[Mariano Biglia, CFO at Grupo Supervielle]

Thank you, Patricio, and good day to all. Let's turn to slide six. Net income was 13,600,000,000.0 pesos in the second quarter, up 62% sequentially with ROE at 6%, driven by higher net financial income and lower inflation adjustment. Clients' net financial income was up 10%, supported by wider spreads on higher loan volumes, while market related net financial income benefited from gains in our treasury portfolio, growing 15% quarter on quarter. Inflation adjustment decreased 34%, reflecting the lower impact in the net monetary position from declining inflation versus the prior quarter.

[Mariano Biglia, CFO at Grupo Supervielle]

By contrast, net fee income was down 13% as banking fees were not adjusted in the quarter, though repricing is underway in the third quarter. A lower contribution from our brokerage business since the lifting of FX restrictions in line with the industry trend also impacted fee income. Expenses were up 4% as costs were seasonally lower in the prior quarter. Year to date, net fee income was up 19%, while expenses declined 11% as we continue to simplify our structure and reduce fixed costs. Loan loss provisions rose 32%, reflecting loan growth and higher risk weighting from retail lending.

[Mariano Biglia, CFO at Grupo Supervielle]

Other losses increased 40%, mainly from the sale of non core properties, while income tax benefited from a higher level of tax efficiency. Moving next to slide seven. Total loans increased 14% sequentially and 71% year on year in real terms. Growth in retail loans moderated to 2% sequentially after several quarters of strong expansion as we tightened underwriting policies in response to early signs of industry wide asset quality deterioration. Other retail products, including credit cards, mortgages, and car loans, continued to expand modestly.

[Mariano Biglia, CFO at Grupo Supervielle]

Year on year, retail loans were up 130%, accounting for 47% of our total loan book. Commercial lending was up 23% quarter on quarter, led by strong growth in foreign trade loans, promissory notes, and overdrafts as corporate activity accelerated with commercial now representing 53% of our portfolio. This rebalancing toward commercial lending reflects our disciplined credit stance, while retail remains an integral part of our strategy for the long term. Turning to slide eight. Our NPL ratio was 2.7%, in line with both historical and industry levels.

[Mariano Biglia, CFO at Grupo Supervielle]

Retail delinquency was 4.5%, reflecting credit normalization following the January year on year growth in retail loans and the impact of lower inflationary environment on repayment dynamics. The NPL ratio was a low 1.4% for corporate and SME loans. Coverage is prudent at 130%, and we continue to fine tune origination and collection strategies to preserve portfolio health. Provisions rose 32% sequentially to 44,500,000,000.0 pesos, lifting net cost of risk by 70 basis points to four point 5.5%. This was mainly due to higher provisioning needs in retail loans under our forward looking credit models.

[Mariano Biglia, CFO at Grupo Supervielle]

Importantly, delinquency levels remain fully within the assumptions embedded in our pricing, and we are adjusting origination where appropriate while continuing to fund demand in segments with the strongest risk adjusted returns. Turning to Slide nine. Total funding increased 30% year on year and 6% sequentially, supported by strong dollar deposit inflows and a growing contribution from corporate notes, which now account for 6% of total funding. Peso deposits were up 24% year on year and up 1% sequentially. US dollar deposits were up 154% year on year and 16% sequentially, setting another record high at $943,000,000 as we deepen transactional relationships with our clients.

[Mariano Biglia, CFO at Grupo Supervielle]

The positive trend continued into July with US dollar deposits exceeding 1,100,000,000.0. This solid funding base positions us to continue expanding loans while maintaining a prudent liquidity profile. The recent increase in the minimum cash requirements for money market funds, unifying reserve requirements on demand deposits across all depositors, allows us to pay the same interest rate to a corporate checking account as to a money market fund, allowing banks to compete with money market funds in attracting customers and thus improve the deposit mix. On slide 10, net interest margin expanded 160 basis points sequentially to 20.8%, supported by strong spreads in both client and market related portfolios. Total net financial income expanded 12 from the first quarter as client related net financial income increased 10% on higher spreads and loan growth, while market related net financial income rose 15% driven by better investment returns as treasury bond yields stabilized after last quarter's sharp correction ahead of the IMF agreement in April.

[Mariano Biglia, CFO at Grupo Supervielle]

As shown on the right hand chart, loan portfolio margins improved to 22.8% and investment portfolio margins to 20.1%. The peso interest spread also widened 200 basis points to 23.1%, supporting the overall NIM recovery. Turning to slide 11. Reflecting the election year and a longer transition period towards a more loan centric balance sheet into 2026, we are updating our 2025 perspectives. We now expect real loan growth between 4050%, contingent on monetary policy and regulatory developments, and a more balanced mix between retail and corporate loans.

[Mariano Biglia, CFO at Grupo Supervielle]

On deposits, we anticipate growth of 20% to 30% with continued improvements in the loan to deposit ratio. Peso deposit growth will depend on monetary policy, while we see further share gains in US dollar deposit balances. In terms of asset quality, we expect the NPL ratio to stabilize at historical levels between 33.5%, with net cost of risk at the 5% to 5.5% range, reflecting ongoing credit normalization and the higher share of retail loans. Finally, NIM is expected to trend between 1820%, slightly below 2024 levels as inflation continues to decline, leverage increases, and following restrictive monetary policy. Turning to slide 12.

[Mariano Biglia, CFO at Grupo Supervielle]

We maintain expectations of net fee income growing 10% in real terms this year, driven by higher bank fees, asset management growth, and improved insurance penetration. In brokerage, we expect to leverage new business lines to offset lower revenues of dollar MEP transactions following the lifting of FX controls. On expenses, our focus remains on driving sustained efficiencies in headcount and other costs contributing to a contraction in expenses of between 5% to 8%, driving stronger operating leverage. With this, we now expect ROE to improve toward year end to a range of 5% to 10% below our original full year guidance as transition towards a more leveraged balance sheet is longer than expected due to a tighter monetary policy and higher volatility ahead of legislative elections. This revised outlook reflects margin stabilization, stronger fee contributions in the second half, and the full impact of our cost efficiency initiatives while factoring the dynamics of an election year.

[Mariano Biglia, CFO at Grupo Supervielle]

Lastly, we now anticipate the CET1 ratio to close the year between 1213%. There is potential for upside if regulators approve Basel III operational risk treatment for group two banks in line with systemic banks, in which case our CET1 ratio would have been approximately 16.7% as of 06/30/2025. Overall, these targets reflect our disciplined and confident approach to balancing growth, profitability and capital strength as we navigate an election year and still evolving macro environment. Additional details on our quarterly performance are available in the appendix of our earnings presentation. We are ready to take your questions. Anna, please go ahead.

[Operator]

Thank you, Mariano. At this time, we will be conducting question and answer session. The The first questions come from Ernesto Gabilondo at Bank of America. Hello, good morning, Ernesto.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Good morning, Ana. Thank you. Hi, good morning, Patricio, Paco and Mariano, and good morning to all your team, and thanks for the opportunity to ask questions. My first question will be on asset quality and cost of risk. When looking to the NPL ratio, it remains still below historical peaks.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

But in terms of the cost of risk, it appears to be a little bit high. So just wondering if the peak already happened in the second quarter And how should be the trend for next year?

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

Thank you, Ernesto. It's yes, it's true. The NPL ratio in the last two quarters increased from 2% to 2.7%, which is a meaningful increase. But as you said, it remains well below historical standards. And we believe it's part of an industry wide trend with credit normalization following a very low NPL's historical NPLs.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

We believe that at this stage, the economy, what's happening is also not creating jobs. Employment is stable, but it's not creating jobs. And it's also there is also a behavioral change related to a new pattern because before there were there was inflation. And with inflation, customers would take a loan and they would expect that the installments in real terms they would dilute and this is no longer happening. So there is a learning curve for customers.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

And so but we still think that overall, the credit portfolio is healthy. And we basically, we are continually adapting underwriting standards more stringent and this is dynamic, of course, in order to make sure that our portfolio remains healthy. And by the way, also recall that we on the retail side, we mostly work with clusters that are cash flow based. That is payroll accounts where we pay the salaries and we collect the loans or senior citizens who have a historical good performance in terms of loans or car loans. So GREGOIRE sorry, I don't know if you want to add

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

yes. I would like to add two things. As Patricia mentioned, the customers suffered a big change in their behavior because they know how to work with inflation in the past, and now they are they need to understand how is the this, scheme without inflation. So this is a big change in their behavior. Also, term of management, I I took several measures, actions in order to to make change in the scores and also in the in the credit policy.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

Basically, I have a man a weekly meeting, one hour, one and a half one hour, one and a half in order to observe all the trends and all the sales and all the vintage in order to keep down the grade ratio. So we are talking several measures, and we are observing that as a weekly basis.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Thank you very much. And then just on cost to risk because that explains the NPL ratio. But then on cost to risk, how should we think about it? You mentioned it could be between 5% to 5.5%. I think it was above 6% in this quarter.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

So again, wanted to confirm if it has peaked for you? And how should we be evolving for next year? Should it be stable, deteriorating or improving after all these policy metrics that you are implementing?

[Mariano Biglia, CFO at Grupo Supervielle]

Hi, Ernesto. Let let me take that part of your question. Yes. Effectively, we expect the cost of risk to to be in a peak at this 4.5% net cost of risk for the quarter. So we expect it to range between 55.5% for the for the year.

[Mariano Biglia, CFO at Grupo Supervielle]

It should be stable within that range also into 2026. As as Patricio mentioned, that this is also a normalization of the freight portfolio, particularly the retail segment. And and then changes will be more dependent on on the mix of retail versus corporate, but we don't expect to go higher in this range.

[Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch]

Perfect. And then just my second question, it will be on your ROE expectations. But for next year, as you mentioned, for this year, it could be around 5% to 10%. But just wondering what should be the level that the ROE could be getting into next year? Just an idea of where can it go again.

[Mariano Biglia, CFO at Grupo Supervielle]

Sure. Yes. As you said, we expect ROE to range between 5% to 10% this year as the monetary policy is still very restringent, and there is some volatility ahead of the October elections. But we expect the the the monetary policy to stabilize and and interest rates go back go down again after the October elections, which are by the October. So maybe the upside in the ROE and the and resuming low growth in in high growth rates will be only for the end of this year.

[Mariano Biglia, CFO at Grupo Supervielle]

So so we will see the the benefits entering into 2026 where we expect to have an increase in ROE. It could be 15% for the year, but increasing quarter over quarter. So it's still too early to tell how we are going to be in the 2026, but we could be over that average for the year of 50%, maybe levels between 1520%.

[Operator]

So our next question comes from Brian Flores with Citi.

[Brian Flores, VP - Equity Research at Citi]

I have a a question on growth because you revised your guidance downwards. And I wanted to ask you if this has more to do with the what is happening with organic funding, which is deposits, right, you also revised downwards? Or do you think it has to do more with capital, no, your tier one ratio? Because as you saw and as we have seen, you perhaps have one of the lowest tier one ratios in the system. Of course, you mentioned there could be some regulatory tailwinds.

[Brian Flores, VP - Equity Research at Citi]

So just if you could explain a bit on what changed your risk appetite? And also on that front, on the Basel III implementation that could happen for your segment, if you have a timeline as as to when could you have this impact if, you know, there's any any provision here?

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

Well, let let me let me start. Maybe I will be complemented by by my team. But, basically, we we we are going through, at this stage, macroeconomic transition with a fist of course, with a fiscal anchor and also foreign exchange anchor. And this inflation this inflation process will continue up to next year with a very and at this stage, the monetary policy is very restrictive. While we believe that there will be a relaxation, as I think Mariano mentioned, after elections, this is, of course, having an impact this year in terms of growth because there is scarcity of funding in the system with basically with pesos particularly, not with dollar, but with pesos.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

However, we believe that there is there's gonna be an upside following elections in the sense that with the reform agenda of president Malay, there will be a new a much better business confidence, more investments, and therefore more credit demand. And in our case, what we are I think what we are doing is laying the groundwork for the for the loan recovery by what we have done in the past three months. We launched on a cluster based strategy of remunerating accounts for payroll accounts as well as SMEs. And this is showing a very strong effect driving principality with those clusters. And it is, of course, increasing the funding.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

So we are very happy with the results. We will continue. And by the way, we are about to launch in the next few weeks a joint marketing campaign with between Banco Supervielle and Invertir Online in order to make sure that we propose this remunerated I mean, this value proposition, even a stronger value proposition than the one we have today through to Invertee Online clients in order to attract funding. So looking forward, we believe that we are handling we are tackling the funding issue. Concerning the capital issue that you mentioned, we don't feel constrained with capital at this stage.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

Of course, that if conditions arise in the sense that there is a very strong loan demand next year and the market conditions are there, then it might be possible that we tap the market. We all we are looking into opportunities of tapping the market in equity as well as in debt.

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. It's important to highlight that the capital is not restricting the loan growth, for this year. The loan growth that we are projecting is is more related to to the growth in deposit and structural funding. But, also, we are looking other sources of of funding as Patricia said. And regarding you asked also about the the base of the bank regulation.

[Mariano Biglia, CFO at Grupo Supervielle]

Of course, we cannot anticipate when or whether the the Central Bank will change this regulation, but we are optimistic because we think it was not in in the the spirit of the regulation to be more punitive with group the the the second group of banks. So if they if they fix it before year end, we that that will be a a significant increase tier one ratio too.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

We are optimistic on that. Yeah.

[Brian Flores, VP - Equity Research at Citi]

No. Thank you, Mariano and Patricio. Super helpful. Wanted to make a a quick follow-up on Invertir Online. So I think this was the first quarter where not only we saw a decrease, and I think this decrease, you mentioned it in the press release, has to do with the liberalization of the effects that naturally hurts maybe some of the spreads.

[Brian Flores, VP - Equity Research at Citi]

But I think what was catching our attention here is we saw decrease in the in the active users in the platform. I know the you have here in the team, maybe who can provide a better explanation as to what has happening. But is this an increasing competition? Is this an an increase on, I don't know, promotions by other teams? Just wanted to understand why this decrease in active customers happened during the quarter. Thank you.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

Yep. Hi, Brian. So we have two factors that influenced our business in the first quarter and the second quarter also. The first one was that we saw lower trading volumes by retail customers in the Argentina stock market, mainly equities and. So that was a trend that started February, was heading down until July when reversed.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

And the other one was the the dollar map and the listing of the restriction market. So we don't see an issue in our value proposition, not in our competitors. We have a strong value proposition. We are leading in the retail market with SLA, and we are solid position there. So what we saw is some behavior of investors in Argentina, in Argentinian securities with a lot of our market since January and something that reversed now in July.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

And also, the the thing you mentioned about the diversification of of restrictions in effects, of course, we are now competing with banks for for that part of the business and affects because it was before only a business for for brokers, and now it's banks and and other institutions. But we we think it's a moving forward and looking forward, we believe that it's a good we we are optimistic about the the future on the transactions and the volumes operated because with inflation going down and the effects under control, both preconditions to to have a strong capital market, we are very well positioned to to capitalize on that. We think in this new environment that is through a transition as as we see it to a more mature capital market, we can capitalize in our not only retail business, but also in our private banking, SMEs, and institutional business that probably in this environment, we'll thrive. We believe we are very well positioned to capitalize on that.

[Brian Flores, VP - Equity Research at Citi]

No. Perfect. Super clear. Thank you.

[Operator]

Thank you, Brian.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

Thank you, Brian.

[Operator]

So our next questions come from Carlo Gomez with HSBC. Hello. Good morning, Carlos. Thank you for asking questions. Please go ahead.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Hello. Good morning, and thank you for holding the call. The first question is I would like to know how you are faring with the current volatility in interest rates that we are seeing in Argentina and the very high levels that we have seen recently. Is that first, is it material? Is it going to affect the banking system in general?

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

And how long do you think it will last? And the second, going back to the cap maybe I should ask that later. Going back to the capital, I just wanted to verify. The rules have not changed from the first to the second quarter. Right?

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

So the banks have not been able the banks of your size have not been able to use Basel III. When was that implemented? My my my point is that the decline in a 150 basis points or so in this quarter, that, I mean, that would have happened with or without the capital rules. Is that correct?

[Mariano Biglia, CFO at Grupo Supervielle]

I will ask I start from the second question because it's shorter. It's it's correct. The change in operational risk capital requirements was implemented in the first quarter. So any change in the capital ratio from the first quarter to the second quarter is not related to that. We are already giving guidance on how the capital will be with if they if that regulation equalizes the group two to the group one of systemic banks level, but it has already been implemented at the end of the first quarter.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Okay. And, again, that will be a 200 and from your description, 280 basis points uplift to your CET one if you were able to apply Basel III. That's your own calculation, I would imagine. Right?

[Mariano Biglia, CFO at Grupo Supervielle]

Correct. That's our own calculation.

[Operator]

That's something in addition to this last question. Remember in this quarter, we had dividend payment, payment. So that is included in the in what you mentioned in terms of CET1 declining from one quarter to the other one.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Very clear. Thank you.

[Operator]

Loan growth, but also we had dividend payment. Remember, we as Grupo Superviejo, we only pay once in in normally in the second quarter.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Okay. Thank you so much.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

So regarding Yeah. Your first question. I think regarding the first question is is, yes, it's basically this uplift in in interest rates has been very significant. And and, of course, it is a it it it is affecting the the monetary conditions of banks and liquidity crunch, very high real interest rates. I think they are harmful for the economy, but we believe that it's going to be transitory until elections.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

And then they will relax. Because, basically, they wanna make sure that the not only inflation goes, there is no pass through from the the the evaluation to prices. And so, basically, this is why they are they are very extremely restrictive to me. I don't know if you want to add.

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. I I I agree. This is a level of real interest rates that we have never seen, at least in in recent years. So so we firmly believe it's it's temporary. It's not a level of trade that is sustainable in the long term because it will have an impact not only the financial industry, but in the overall economy.

[Mariano Biglia, CFO at Grupo Supervielle]

So the what what we believe is that the the central bank and and the government is prioritizing the control of the volatility in the exchange rate. They prefer to have volatility in interest rates, but not in the exchange rate. It's more sensitive for inflation or for consumers ahead of the elections. Remember, in in three weeks, we have elections in the province of Buenos Aires that they are, like, a thermometer for the national elections. So this this level of interest rates could ease after after September elections or at the latest after October elections. That's at least our view.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

And what what's the rate that affects your clients? Right? Because we I mean, there have been all these changes in monetary policy. There is no set reference rate, if I understand correctly. What is the most used benchmark today?

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Is it Butler? Is it a different market interest rate? And how has that evolved relative to to to what we see in terms of monetary policy?

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. For instance, Tamar interest rate is now at 50%, and the one day interest rate is at 67%. That's, of course, well above an inflation expected for the next twelve months of 20 to 25%. So those are the rates that impact mainly in short term loans because for the long longer term loans, we are affecting increasing the interest rates. So they are not as affected as one day loans or thirty day loans.

[Mariano Biglia, CFO at Grupo Supervielle]

So it it affects mainly the the corporate side of the portfolio.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

So so so, again, your corporates, when they borrow from you, most of the contracts are based on Butler or Tamar or or what rate?

[Mariano Biglia, CFO at Grupo Supervielle]

It's it's a market interest rate, but it's it's affected mainly by by the Tamar interest rate. It's it's not that they take long term loans at variable rates. Some cases are are are like that, mainly for the ones who wish in the market for overdrafts or discounted document, the market interest rate. But, of course, it takes as a reference both both the timeout and the one day interest rate because that's that's a finding for the very short term.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

And the mark was 32 percent or so before this volatility?

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. Correct.

[Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC]

Okay. Thank you so much.

[Operator]

Thank you, Carlos. Our next question comes from Pedro Ofenhagenen with Latin Securities.

[Pedro Offenhenden, Research Analyst at Latin Securities]

Good morning. Hi, everyone, and thank you for the call. I had a question following Ernesto one on NPLs. Didn't get if you think retail NPLs have already peaked on the second Q and if you see further pressure on SMEs given the rate volatility?

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. What we are seeing, Patricia explained the dynamics of the NPLs on retail side. The the system is now so last data published as of May at 4.5% NPLs. So we are in in line with the system. We see a peak in the cost of of risk.

[Mariano Biglia, CFO at Grupo Supervielle]

The NPLs could go a bit higher as we gave in our guidance for the overall NPLs combining retail and corporates. By the year end, we expect it to range between 3% to 3.5%, whereas we are now at 2.7%. So for NPLs, therefore, be room still to provide till year end.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

But the yes, Pedro, if we if we maintain this this level of of rates, yes, we would see some pressure to to SME. Yes. Of course. But we there is a transition. It's a short period, but, yes, we are seeing some pressure to SME in turn off a working capital as basically but we we we we are thinking we hope that's a very short period.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

But if we maintain this kind of this level of of volatility or freight volatility, yes, we will see some pressure to SME segment. Also, to the corporate, no, because the one day money is very, very high. Okay?

[Pedro Offenhenden, Research Analyst at Latin Securities]

Okay. Thank you very much.

[Operator]

Thank you, Pedro. I'm sorry. Do you have any follow-up? No.

[Pedro Offenhenden, Research Analyst at Latin Securities]

No follow-up. It was clear.

[Operator]

Thank you. Thank you. I I will answer maybe we will answer first some of the q and a we have in the box, and then we have further questions on on on the audience. First one comes from Marco Seru from Malaria. It's a very technical.

[Operator]

Maybe this for you, Mariana. I would like to know how much was the charge registered under other expenses for the sale of the noncore properties.

[Mariano Biglia, CFO at Grupo Supervielle]

The net net loss registered in that line item was 5,000,000,000 pesos. So of of the total of that line item, that is a part that is is related to the sale of noncore properties.

[Operator]

Okay. And then, another from Ernesto Abilondo with Ofa on the macro and political landscape. What would be the key rates to follow? For example, the election of the province of Buenos Aires?

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

From yes. Of course, the the the election of the province of Buenos Aires is the first one in in in September to follow. And I think from from what I have read, it it it will be maybe difficult to understand the results because, maybe there will be let's say, depending, there there will be overall on the province, one result when favoring maybe La Libertadanza and maybe another result in in a in a particular district, if of the Conorbano, will, where there will be another winner. Maybe. We don't know.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

But but but, definitely, what I think will be much more powerful is, the October election where, definitely, we are seeing, that there there is a continued support for the president policies, above 50. So, this this will probably give this is what we expect, a very strong support for the second term of the mandate in but after the October elections.

[Operator]

Okay. We have another question from Fernando Savaleta, I think, with Banco Popichincha. I sent it. Hello. Good morning, Fernando. Thank you for asking questions. Please go ahead.

[Fernando Zabaleta Gonzalez, VP - international business at Banco Pichincha]

Good morning, everybody, and thank you for the call. My question go in line with with Ernesto's first question and and and this follow-up that you just comment. And it's in line with the NPL and the projections. You're still projecting 40% to 50% increase in loans. We have seen the loans increasing during the year.

[Fernando Zabaleta Gonzalez, VP - international business at Banco Pichincha]

But also, Patrice, you mentioned before that it's been a challenge to to create job for the for the government. My question go in line with how difficult or how important, I think, just ask the same question is, the election that you have. Because the last election is in October, and and and how will impact in in in your projections. And and I think it was mentioned before too how to you guys are thinking on controlling the increase of the NPL and and not to get to a to a ratio where it could be kind of difficult to manage. But it goes in line to that.

[Fernando Zabaleta Gonzalez, VP - international business at Banco Pichincha]

It's just considering that the last election is in October and and and and the country could be going different directions. How how how difficult would be or how it would change or or the the different scenarios for for you guys that you are managing or evaluating to to meet those projected 40% to 50% increase in loans? Thank you.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

First of all, I think that personally, I'm very optimistic with what as I said with the October elections in the sense that these are the important ones. But as I said, the all the the September election, province of Buenos Aires will might be difficult to understand with different difficult to understand, but the October elections is basically what will give the mandate for the second part of the government. And Millet has stated that in the second part of his government, will concentrate in fiscal reform and labor reform. And I believe that also what would happen is that there will be an uplift or liberation of the foreign exchange market for corporations after the elections. So the business climate will improve.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

We expect this, and this will drive loan demand. So I don't know if I answered your question, but maybe

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. And and also remember that these projections are based on a macro scenario where we see inflation at 28%. The interest rate at AMR that I mentioned before now jumped to 50%, but we expected as low as 25% for year end. So that that is in a scenario consistent with the good percent for the government that that will foster loan growth. Perfect.

[Fernando Zabaleta Gonzalez, VP - international business at Banco Pichincha]

Thank you. Very clear.

[Diego Pizzulli, CEO - IOL invertironline at Grupo Supervielle]

Thanks.

[Operator]

Thank you, Fernando. I think we have a follow-up from Brian Flores with Citi. Brian?

[Brian Flores, VP - Equity Research at Citi]

Team. Team, thank you very much for for the opportunity here. So just just wondering on your NIM expectation because I think you maintained at 18 to 20, And we saw the contribution from commercial loans growing significantly quarter over quarter, which obviously has to do with the conditions you're seeing in terms of asset quality on the retail side. So just could you elaborate a bit on what are you expecting in terms of contribution from retail versus corporates in that projection that you're making on NIM?

[Brian Flores, VP - Equity Research at Citi]

Is this already including, I would say, as I would say, a higher contribution, sorry, from commercial loans, or is it fifty fifty? Just wonder wondering here how's the composition by year end in your view.

[Mariano Biglia, CFO at Grupo Supervielle]

Yes, Frank. Thank thank you for your question. What we expect is to have an almost even contribution. We expect the the portfolio to to maintain this 50% for for each of the banking segment. We could see some change by the end of the year, but for the contribution to the NIM, it will be more or less balanced as we expect.

[Brian Flores, VP - Equity Research at Citi]

Okay. But but just a quick follow-up here. So if we see, for example, I don't know, worsening conditions in in retail, would you pivot and be a bit more aggressive on the commercial side, or or you will go along with the plan because, you know, penetration is still low?

[Mariano Biglia, CFO at Grupo Supervielle]

Yes. In that case, we would be, more aggressive on the commercial side, But, also, on the retail side, we have longer duration loans. So it's it's not that even in that case, if more on the credit conditions for individuals, and the the loan portfolio will not drop a sharp. And but even that in our base case scenario in our base scenario, not base case, we we expect to be adjusting our our credit policies, but allowing the the the loan portfolio to grow in a healthy manner.

[Brian Flores, VP - Equity Research at Citi]

No. Thank you. Very clear, Mariano. Thank you.

[Operator]

I have another question on the q and a box. I think we have some five minutes to take it. So first one, as the Argentinian economy stabilizes, do you see international financial institutions interested in getting into the Argentine market? Any worries, concerns?

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

I think, yes, I would say that we've seen and we've heard and we know that there are new players coming in into the market, neobanks, successful neobanks in Europe or big techs that are that are applying to become banks. So I think this is a very positive signal, first of all, for Argentina to to in terms of confidence in in in Chile's government and what his his agenda. I think so this is first the first thing, very positive. Of course, we, in our case and our challenge is to continue strengthening our competitive position to continue simplifying and digitizing our operations to make it more simpler for and agile for customers. And we I believe that what we have done in terms of remunerating accounts has been the first bank in the country to do this.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

We are anticipating what the fintechs will do when they start playing in the market. So this this is something that we believe that will will give us a good competitive position. In addition, all these international players, they they are looking to to individuals. Some of them, the bottom up maybe the bottom line of the of the pyramid, the underbank, some of them. The others, maybe another one would might be on on on on the, say, on the premium side, but on but no one at this stage is really taking care of SMEs.

[Gustavo Manriquez, CEO - Banco Supervielle at Grupo Supervielle]

So we believe in a balanced approach. We believe that the the way looking forward for us to compete is to have a balanced approach and to to to provide good services with all the SMEs, particularly the value chains of dynamic industries and make sure that we get the cash management, making sure that we provide, you know, trade finance and leasing and so on. So and this is going to be our anchor and as well as the payroll accounts. So we believe that we in this sense, we will be able to compete effectively.

[Operator]

Okay. I think we have reached the end of today q and a session. So thank you for joining us today. We appreciate your interest in our company. We we look forward to meeting more over the coming months and providing financial and business updates next quarter.

[Operator]

In the interim, we remain available to answer any questions that you may have. So have a good day.

Participants

Executives

• Ana Bartesaghi, Chief Investor Relations Officer
• Julio Patricio Supervielle, Chairman, CEO & Director
• Mariano Biglia, CFO
• Gustavo Manriquez, CEO - Banco Supervielle
• Diego Pizzulli, CEO - IOL invertironline

Analysts

• Ernesto Gabilondo, Director - LatAm Financials Bank of America at Bank of America Merrill Lynch
• Brian Flores, VP - Equity Research at Citi
• Carlos Gomez-Lopez, Head - LatAm Financial Institutions at HSBC
• Pedro Offenhenden, Research Analyst at Latin Securities
• Fernando Zabaleta Gonzalez, VP - international business at Banco Pichincha