Grupo Supervielle S.A. (SUPV) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: strong loan growth and NIM expansion are positive, but increased loan loss provisions and a rising NPL ratio are concerning. The Q&A section reveals uncertainties around NPL trends and cost of risk, with management providing vague responses on key issues. Although some strategic initiatives are promising, the revised growth guidance and macroeconomic challenges temper optimism. Overall, the sentiment remains neutral as positive elements are balanced by risks and uncertainties.
Key Financial Performance
Net Income ARS 13.6 billion in Q2 2025, up 62% sequentially. This increase was driven by higher net financial income and lower inflation adjustment.
Return on Equity (ROE) 6% in real terms, supported by disciplined cost management and improved net interest margin (NIM).
Client Net Financial Income Up 10%, supported by wider spreads on higher loan volumes.
Market-Related Net Financial Income Grew 15% quarter-on-quarter, benefiting from gains in the treasury portfolio.
Inflation Adjustment Decreased 34%, reflecting the lower impact in the net monetary position from declining inflation versus the prior quarter.
Net Fee Income Down 13% as banking fees were not adjusted in the quarter, though repricing is underway in the third quarter.
Expenses Up 4% as costs were seasonally lower in the prior quarter. Year-to-date, expenses declined 11% as the company simplified its structure and reduced fixed costs.
Loan Loss Provisions Rose 32%, reflecting loan growth and higher risk weighting from retail lending.
Total Loans Increased 14% sequentially and 71% year-on-year in real terms. Retail loans were up 130% year-on-year, while commercial lending was up 23% quarter-on-quarter.
Non-Performing Loan (NPL) Ratio 2.7%, in line with both historical and industry levels. Retail delinquency was 4.5%, while the NPL ratio for corporate and SME loans was 1.4%.
Provisions Rose 32% sequentially to ARS 44.5 billion, lifting net cost of risk by 70 basis points to 5.5%.
Total Funding Increased 30% year-on-year and 6% sequentially, supported by strong dollar deposit inflows and a growing contribution from corporate notes.
U.S. Dollar Deposits Up 154% year-on-year and 16% sequentially, setting a record high at $943 million.
Net Interest Margin (NIM) Expanded 160 basis points sequentially to 20.8%, supported by strong spreads in both client and market-related portfolios.
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Operating Highlights
Innovative remunerated account: Selective offering in line with cluster-based strategy, deepening primary banking relationships and expanding deposit base. Payroll-linked balances increased sequentially by 27% in pesos and 18% in U.S. dollars, with new payroll accounts increasing by 53% year-to-date.
Tienda Supervielle: Online store hosted on Mercado Libre, integrated into the app, surpassed 0.5 million sessions since launch. Over 175,000 customers transacted with more than 400,000 registered credit cards.
Gen AI-powered WhatsApp channel: Enhanced with new transactional features like credit card purchase authorizations, transportation card reloads, and mobile top-ups. Registered over 150,000 interactions in July alone, showing exponential growth.
Synergies with InvertirOnline: Leveraging IOL's 1.7 million customers to showcase banking products. In four weeks, over 4,700 clients placed $28 million in dollar term deposits, with nearly 1/3 for terms over 180 days.
Loan growth: Loans accounted for 48% of total assets, up 25 percentage points since December 2023. Commercial lending grew 23% quarter-on-quarter, while retail loans grew 2% sequentially.
Funding growth: U.S. dollar deposits reached $943 million, up 154% year-on-year and 16% sequentially. Peso deposits grew 24% year-on-year and 1% sequentially.
Cost management: Disciplined cost management led to a 4% increase in expenses sequentially, but year-to-date expenses declined 11%.
Loan-to-deposit ratio: Increased to nearly 72%, providing capacity for disciplined portfolio expansion.
Strategic transition to credit-driven balance sheet: Loans now account for 48% of total assets, with a reduction in the investment portfolio to 22% of assets. This supports private sector credit growth.
Cross-sell strategy with InvertirOnline: Targeted strategy to deepen relationships and expand retail footprint, leveraging IOL's customer base.
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Risk or Challenges
Election-related uncertainty: The macro environment presents near-term headwinds due to election-related uncertainty, tight peso liquidity, and high real interest rates, which could impact economic growth and credit expansion.
Asset quality deterioration: There is a slight deterioration in asset quality, particularly in retail loans, leading to increased loan loss provisions and higher risk weighting from retail lending.
Regulatory and monetary policy risks: The transition towards a more loan-centric balance sheet is slower than expected due to tighter monetary policy and regulatory developments, which could impact loan growth and profitability.
Inflation and repayment dynamics: Lower inflationary environment is affecting repayment dynamics, particularly in retail loans, contributing to higher delinquency rates.
Fee income pressure: Net fee income declined 13% in the quarter due to unadjusted banking fees and lower contributions from the brokerage business, impacting overall revenue.
Cost of risk increase: Loan loss provisions rose 32%, increasing the net cost of risk to 5.5%, driven by higher provisioning needs in retail loans.
NPL ratio stabilization challenges: The NPL ratio is expected to stabilize at historical levels of 3% to 3.5%, but ongoing credit normalization and a higher share of retail loans pose challenges.
Election year volatility: Higher volatility ahead of legislative elections is prolonging the transition towards a more leveraged balance sheet, impacting financial performance.
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Guidance & Outlook
Economic Growth and Credit Expansion: Expected to resume after the October 26 elections, supported by structural reforms anticipated to begin in the post-election period.
Loan Growth: Real loan growth expected between 40% and 50% for 2025, contingent on monetary policy and regulatory developments, with a balanced mix between retail and corporate loans.
Deposit Growth: Anticipated growth of 20% to 30%, with continued improvement in the loan-to-deposit ratio. Peso deposit growth will depend on monetary policy, while further share gains in U.S. dollar deposit balances are expected.
Asset Quality: NPL ratio expected to stabilize at historical levels between 3% and 3.5%, with net cost of risk in the 5% to 5.5% range, reflecting ongoing credit normalization and a higher share of retail loans.
Net Interest Margin (NIM): Expected to trend between 18% and 20%, slightly below 2024 levels, as inflation continues to decline, leverage increases, and restrictive monetary policy persists.
Net Fee Income: Expected to grow 10% in real terms for 2025, driven by higher bank fees, asset management growth, and improved insurance penetration.
Expenses: Anticipated contraction of 5% to 8%, driven by sustained efficiencies in headcount and other costs, contributing to stronger operating leverage.
Return on Equity (ROE): Expected to improve towards year-end to a range of 5% to 10%, below the original full-year guidance, due to a longer transition towards a more leveraged balance sheet and tighter monetary policy.
CET1 Ratio: Expected to close the year between 12% and 13%, with potential upside to approximately 16.7% if regulators approve Basel III operational risk treatment for Group 2 banks.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the trend in the NPL ratio and cost of risk, and how is the company addressing it?
A:The NPL ratio increased from 2% to 2.7% in the last two quarters, which is still below historical standards. The company attributes this to industry-wide credit normalization and changes in customer behavior due to inflation. Measures include adapting underwriting standards, weekly monitoring of trends, and focusing on cash flow-based clusters like payroll accounts and senior citizens.
Q:Has the cost of risk peaked, and what is the outlook for next year?
A:The cost of risk is expected to peak at 4.5% net cost of risk for the quarter and range between 5% and 5.5% for the year. It is expected to remain stable within this range into 2026, with changes depending on the mix of retail versus corporate loans.
Q:What are the ROE expectations for next year?
A:ROE is expected to range between 5% to 10% this year due to stringent monetary policy and election-related volatility. Post-elections, ROE is expected to increase, potentially reaching 15% for the year 2026, with levels between 15% and 20%.
Q:Why was growth guidance revised downwards, and what is the impact of funding and capital constraints?
A:Growth guidance was revised due to macroeconomic transitions, restrictive monetary policy, and scarcity of peso funding. The company is addressing funding issues through cluster-based strategies and marketing campaigns. Capital is not currently a constraint, but market conditions may lead to equity or debt market tapping if loan demand increases.
Q:What caused the decrease in active users on the InvertirOnline platform?
A:The decrease was due to lower trading volumes in the Argentine market and the liberalization of FX restrictions, which increased competition from banks. The company remains optimistic about future transactions and volumes as inflation decreases and the FX stabilizes.
Q:How is the company managing the impact of high interest rate volatility in Argentina?
A:The company views the high real interest rates as temporary, expected to ease post-elections. The rates are currently affecting short-term loans, particularly in the corporate segment, but are not sustainable long-term.
Q:Have retail NPLs peaked, and what is the outlook for SMEs given rate volatility?
A:Retail NPLs may not have peaked, with overall NPLs expected to range between 3% to 3.5% by year-end. SMEs are under pressure due to rate volatility, but this is expected to be a short-term issue.
Q:What are the NIM expectations and the contribution from retail versus corporate loans?
A:NIM is expected to remain at 18% to 20%, with an even contribution from retail and corporate loans. If retail conditions worsen, the company may pivot to focus more on the commercial side.
Q:Do international financial institutions show interest in entering the Argentine market?
A:Yes, new players like neobanks and big techs are entering the market, indicating confidence in the government's policies. The company plans to strengthen its competitive position by focusing on SMEs and payroll accounts.
Q:Review of Unclear Management Responses
A:Management avoided directly answering questions about the specific timeline for Basel III implementation and its impact, as well as the exact implications of the Buenos Aires elections on their projections. They also provided vague responses regarding the sustainability of high interest rates and their precise impact on the banking system.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI WhatsApp
Adoption channel
Ana Ines
Argentina expansion
Bartesaghi Bender
Bender Chief
BofA Securities
Brian Flores
CEO Chief
Carlos Gomez
Chief Financial
Chief Investor
Citigroup Inc
Division Carlos
Division Fernando
ET Grupo
Ernesto María
Financial Officer
InvertirOnline
Research Division
Unidentified
activity
app
backdrop
basis point
capital position
credit card
election
engagement
launch
percentage point
peso dollar
relationship
SUPV Transcript
Grupo Supervielle S.A. (SUPV) Q3 2025 Earnings Call Transcript
Unknown11-26
The earnings call highlights several negative factors: rising NPL ratio, significant decline in NIM, net loss, and regulatory uncertainties. The Q&A reveals optimism for future growth but lacks specific details, and management's vague responses on key issues add uncertainty. Despite some positive elements like deposit growth and potential long-term ROE improvement, the immediate financial challenges and lack of clear guidance suggest a negative short-term market reaction.
Grupo Supervielle S.A. (SUPV) Q2 2025 Earnings Call Transcript
Unknown8-19
The earnings call presents a mixed picture: strong loan growth and NIM expansion are positive, but increased loan loss provisions and a rising NPL ratio are concerning. The Q&A section reveals uncertainties around NPL trends and cost of risk, with management providing vague responses on key issues. Although some strategic initiatives are promising, the revised growth guidance and macroeconomic challenges temper optimism. Overall, the sentiment remains neutral as positive elements are balanced by risks and uncertainties.
Grupo Supervielle S.A. (NYSE:SUPV) Q1 2025 Earnings Call Transcript
Unknown5-30
The earnings call presents mixed signals. Basic financial performance shows modest loan growth and a rise in deposits, but NPL ratios increased, indicating risk. Product development efforts like the remunerated account and AI integration are positive, but market volatility and regulatory risks persist. The Q&A section reveals management's optimism but also avoidance of specific issues. The absence of a share buyback program and uncertain economic conditions further temper expectations. Overall, these factors suggest a neutral stock price movement in the short term.
Grupo Supervielle S.A. (SUPV ) Q1 2025 Earnings Call Transcript
Unknown5-28
The earnings call highlights strong retail loan growth and improved NIM, but concerns about rising NPL ratios and cost of risk persist. The Q&A revealed management's evasiveness on sector-specific issues, particularly in agriculture. Although there is optimism in deposit growth and new product launches, economic and regulatory uncertainties loom. The lack of a share buyback program and a decline in net financial income further temper optimism. Given these mixed signals, the stock price is likely to remain stable, resulting in a neutral sentiment.
SUPV Slides
SUPV Report
Frequently Asked Questions
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