Grupo Supervielle’s Earnings Call: Mixed Sentiment and Strategic Moves

Grupo Supervielle S.A. ((SUPV)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Grupo Supervielle S.A. presented a mixed outlook, balancing between positive strategic initiatives and financial challenges. The company highlighted achievements such as the introduction of a cluster-based strategy, significant deposit and retail loan growth, but also faced challenges like loan demand softness, an increase in the NPL ratio, and a decline in net financial income. The sentiment expressed during the call was a blend of optimism for strategic progress and caution due to financial pressures.

Introduction of Cluster-Based Strategy

Grupo Supervielle introduced a cluster-based strategy aimed at strengthening its value proposition for both retail and commercial customers. This strategic shift has resulted in retail loans now comprising over half of the total loan portfolio, a significant increase from a third a year ago.

Deposit Growth

The company reported a high single-digit sequential increase in deposits, indicating robust funding growth. This growth reflects the strength and stability of Grupo Supervielle’s financial position in the market.

Net Financial Income Growth

Customer-related net financial income saw an increase in the high teens, underscoring the strength of the company’s core franchise. This growth highlights the effectiveness of Grupo Supervielle’s customer-centric strategies.

Operational Efficiency

Grupo Supervielle demonstrated strong cost discipline by significantly reducing expenses, which showcases its ability to drive operational efficiency and maintain a lean operational structure.

Product Innovations

The company launched Argentina’s first remunerated account and a Supervielle store on the Mercado Libre platform. These innovations are designed to enhance client experience and deepen the funding base, showcasing Grupo Supervielle’s commitment to innovation.

Retail Loan Growth

Retail lending rose by an impressive 196% year-on-year, now representing nearly 52% of the total loan portfolio. This growth marks a substantial increase from 36% a year ago, indicating strong demand and strategic focus on retail lending.

Loan Demand Softness

The company experienced short-term softness in loan demand, particularly in March, attributed to external factors such as limited peso liquidity and currency volatility. This softness presents a challenge for the company’s growth trajectory.

NPL Ratio Increase

The NPL ratio increased to 2% this quarter, marking a normalization from historically low levels. This rise aligns with the rapid expansion of the retail loan book and industry trends.

Decline in Net Financial Income

Total net financial income declined by 12% quarter-over-quarter, primarily due to a sharp decline in investment portfolio net financial income. This decline poses a challenge to the company’s financial performance.

Revised Loan Growth Expectations

Grupo Supervielle revised its loan growth expectations to 50%-60%, down from over 60% previously expected. This revision reflects the current economic environment and market conditions.

Increased Cost of Risk

The cost of risk rose to 5%, reflecting higher provisions aligned with the growth in retail loans. This increase highlights the company’s cautious approach to managing credit risk.

Forward-Looking Guidance

During the first quarter of 2025, Grupo Supervielle outlined its strategic initiatives and provided detailed financial guidance. The company projects real loan growth between 50% to 60% for the full year and expects the NPL ratio to range between 2.2% to 2.5% at year-end. The cost of risk is anticipated to be between 4% and 4.5%, while NIM is expected to normalize between 18% and 20%. Operating expenses were reduced by 12% sequentially, and ROE is expected to improve progressively, reaching between 12% and 15% for the year. The CET1 ratio is projected to be between 12% to 13% by year-end, reflecting loan growth and regulatory adjustments.

In conclusion, Grupo Supervielle’s earnings call highlighted a balanced sentiment, with strategic initiatives showing promise amidst financial challenges. The company’s focus on innovation and operational efficiency is evident, yet it faces hurdles such as loan demand softness and increased NPL ratios. The forward-looking guidance provides a cautious yet optimistic outlook for the year ahead, with expectations of growth and improved financial metrics.