Grupo Supervielle S.A. ((SUPV)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Grupo Supervielle S.A. conveyed a mixed sentiment, highlighting both positive strides and looming challenges. The company reported strong loan growth and strategic initiatives that have bolstered financial performance. However, concerns over asset quality and increased provisions pose significant challenges. The anticipation of economic stabilization post-election offers potential upside, yet uncertainties linger.
Strong Loan Growth
Grupo Supervielle demonstrated robust loan growth, outpacing industry averages with a 14% sequential increase and a remarkable 71% year-on-year growth in real terms. Commercial lending surged by 23% quarter-on-quarter, while retail loans saw an impressive 130% increase year-on-year, underscoring the company’s aggressive expansion strategy.
Record U.S. Dollar Balances
The company achieved a milestone with U.S. dollar deposits reaching a record high of $943 million, marking a 154% year-on-year increase and a 16% sequential rise. This trend continued into July, with deposits exceeding $1.1 billion, reflecting strong investor confidence and currency stability.
Innovative Banking Initiatives
Grupo Supervielle made significant strides in its strategic initiatives, including the introduction of new remunerated accounts and the success of Tienda Supervielle, which surpassed 0.5 million sessions. Additionally, the enhanced Gen AI-powered WhatsApp channel facilitated over 150,000 interactions, showcasing the company’s commitment to digital transformation.
Improved Financial Performance
The company’s financial performance improved with a net income of ARS 13.6 billion in Q2, a 62% sequential increase. This was driven by higher net financial income and disciplined cost management, resulting in a 6% return on equity.
Asset Quality Concerns
Despite the positive financial indicators, asset quality remains a concern, with the non-performing loan (NPL) ratio rising to 2.7%. Retail delinquency stood at 4.5%, attributed to normalization following rapid loan growth and a lower inflationary environment.
Cost of Risk and Loan Loss Provisions
Loan loss provisions increased by 32% sequentially, reflecting heightened provisioning needs in retail loans. This led to a 70 basis point rise in the net cost of risk, reaching 5.5%.
Reduced Fee Income
Net fee income declined by 13% as banking fees remained unadjusted in Q2, coupled with a lower contribution from the brokerage business following the lifting of FX restrictions.
Decline in InvertirOnline Activity
The InvertirOnline platform experienced a decrease in active users and trading volumes, driven by reduced trading of equities and CDRs and intensified competition following FX market liberalization.
Forward-Looking Guidance
Looking ahead, Grupo Supervielle provided guidance amidst a transitional macroeconomic environment. The company forecasts real loan growth of 40% to 50% and deposit growth of 20% to 30%. They expect the net interest margin to trend between 18% and 20% and anticipate an improvement in return on equity towards year-end within a 5% to 10% range. The CET1 ratio is projected to close between 12% and 13%, with potential upside from regulatory changes.
In summary, Grupo Supervielle’s earnings call painted a picture of a company navigating through a challenging yet opportunistic landscape. While strong loan growth and strategic initiatives drive optimism, asset quality concerns and increased provisions require careful management. The forward-looking guidance suggests a cautious yet hopeful outlook as the company positions itself for future growth.