Grupo Supervielle S.A.

Good morning. Good morning, everyone, and welcome to the Grupo Supervielle Third Quarter 2021 and News Call. We apologize for the delay. This is Ana Bartesaghi, Pressure, and IRO. A slide presentation will accompany today's webinar, which is available in the Investor section of Grupo Supervielle's Investor Relations website. Today's conference call is being recorded. As a reminder, all participants Thank you very much. Thank you very much. To ask a question by voice, please press the raise your hand button located in the Zoom platform and press raise your hand again to withdraw your question. You can also send questions in written form via the Q&A box in the Zoom platform anytime during the call. We will ask you to limit yourselves to one question and a follow-up and then you can raise your hand again in another round. Speaking during today's call will be Patricio Supervielle, our Chairman and CEO, Atilio Herrera-Maini, Board Member, Leading Grupo Supervielle Sustainability Strategy, and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandra Spengler, Second Vice Chairman of the Board and Bank CEO, and Jorge Ramirez, First Vice Chairman of the Board, Alejandra Lawton, Board Member of Several Fruit Post Supervielle subsidiaries, will also be joining us for today's call. All will be available for the Q&A session. As a reminder, today's call will contain forward-looking statements which are based on management, current expectations, and beliefs, and are subject to a number of risks and uncertainties, including as a result of the COVID-19 pandemic. And I refer you to a forward-looking statement section of our earnings beliefs and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Today, Mariano Biglia, our CFO, will start the call discussing our performance as a reporter and our near-term outlook. Patricio Supervielle, our chairman and CEO, will follow with an update on our mid-term strategic issues. Afterward, Atilio Maria Dell'Oro Maini will provide an overview of the key elements of our ESG transition goals. Mariano Biglia, Chief Financial Officer.

Thank you, Ana. Good morning, everyone, and thank you for joining us today. Please turn to slide four of our earnings presentation. While we saw a rebound in economic activity to pre-pandemic levels this quarter, We continue to operate under challenging market conditions, with high inflation, negative real interest rates, and industry loans at historical lows and growing below inflation. In addition, central bank regulations continue to waive anonymity. We delivered sequentially improved results, reporting an attributable loss of 60 million pesos in 3rd June 2021 compared to 348 million pesos in the prior quarter. Thank you very much. Thank you very much. Patricio will provide shortly an update of our progress on our digital and channel transformation agenda, followed by Atilio who will present our key ESG milestones and goals. Now please turn to slide 5. We expanded our loan book by 5% frequently, growing above industry levels and recovering market share. Long growth was mainly driven by higher mandatory credit lines to SMEs, which rose to a final of nearly 20 billion pesos, accounting for over 30% of total loans this quarter, from a final of 14 billion pesos in the prior quarter. Short-term financing to corporate also contributed to long growth, along with strong origination in personal loans which reached a record high in October. U.S. dollar loans in original currency in turn declined 10% sequentially. Now, moving to funding on slide 6. The loan-to-deposit ratio remained relatively stable quarter-on-quarter at 53% with liquidity at solid levels. As deposits increased in the high single-digit sequentially, Driven mainly by institutional funding from liquidity management and corporate checking accounts. Core deposits were stable quarter-on-quarter. Dollar deposits in original currency were up 1.5% sequentially, accounting for slightly over 11% of total deposits. Turning to slide 7. Mint contracted 2 percentage points to 17 from 19% in the second quarter. While GDP growth returns to pre-pandemic levels allowing us to capture stand-alone growth, overall credit demand remains weak. This, together with a lower yield on inflation-linked mortgaged loans, given the exaggeration in the price index and regulatory controls, continues to exert pressure on me. Turning to asset quality on slide 8. Our strong underwriting and collection policies, together with improved economic conditions, allowed us to reduce a portion of the COVID-19 specific provisions created last year. As a result, download provisions declined to $1.4 billion from $2 billion in the prior quarter. In turn, cost of risk net improved to 3.5% from 5.7% in the second quarter. At quarter end, COVID-19 Antibody Provisions amounted to 1.6 billion pesos versus 2.4 billion as of June 30. Our total provisioning ratio stood at 6.6% in September, above the previous level of 6.4% posted in January 2020. The total NPR ratio for the quarter In Greek, training basis points sequentially to 5.5% but declined after peaking to 5.5% in July. The sequential increase was mainly driven by the consumer finance segment. As anticipated, we saw an increase in delinquency and installments were due after the expiration of the grace period, with the consumer finance and PR ratio reaching a peak of nearly 31% as quarter end. Concerning delinquency, we have tightened our credit policies as we do so that new originated loans have a fair rating. To another extent, NTL also increased to 5.1% from 2.2% at the bank's personal loan segment after the expiration of the great period and the mandatory reclassification of customers performing with Supervielle but not performing with other banks. By contrast, corporate SMEs and bank credit cards posted a sequential improvement in MPS ratios. Slide 9. Although cadence remains suspended due to sustained and immediate disability, on slide 9, we share our views on the main drivers of our business for the remainder of the year and 2022. Starting with respect to the remuneration loans, We expect to see growth in line or below inflation in 2021, both commercial and consumer loans, and above inflation in 2022. We also expect to end the year with deposits growing above inflation, fostered by effects of restrictions, and to a lower extent by interest rate growths and time deposits. We expect deposits to continue growing above inflation, driven by the same trend. With respect to assets quality, as anticipated, NPL speaks this quarter and are expected to remain stable or decline in following quarters. We don't expect coverage to decline as COVID-19 provisions are used for rebirth. Cost of risk, in turn, is expected to be below 2020 and 2019 levels, but in line with historical levels of 5-6%. In terms of margins, for the remainder of the year and 2022, We expect means to remain pressured by higher cost of funds resulting from the impact of the plural interest rates on time deposits and subsidized return loans. This would be partially offset by higher inflation together with credit demand anticipated to gradually pick up from historical loans. Personal and administrative expenses are likely to grow with inflation. while also reflecting additional restructuring costs and expenses as well as health care deficiencies from the execution of our digital and channel presiding. Higher turnover taxes and the extension of the turnover tax reach to the VIX and repos in the city of Buenos Aires will continue to negatively impact expenses. At the same time, the INICAP is expected to grow in line with inflation. Finally, we continue to expect capital and liquidity Thank you, Mariano. You heard Mariano present our financial results and views for the remainder of the year in 2022.

In this challenging context, we remain fully focused on advancing on our transformation strategy. Starting with the transformation of our branch channels, using best-in-class technologies to facilitate self-service banking and expand SME reach to the vision of everywhere and anytime banking. First, Digitized customers have increased consistently over the past two years and were up 76% since March last year. Second, keeping a strong focus on the customer experience, we recently deployed an upgraded version of the bank's mobile app, rated 4.4 in the Play Store and 4.3 in the App Store. Third, With the successful performance of our Virtual Hub MVPs for individuals in the province of France and Greece, we are starting to scale this hybrid model to other regions and segments and expanding our footprint while offering a superior customer experience combining the strength of our face-to-face approach with the high efficiency of our Virtual Hub. This also allows us to expand our footprint through our national territory with our leading branches. And fourth, in the past four months, we modernized and expanded services to SMEs and related segments in 11 branches that were previously solely dedicated to senior citizens. And we expect to convert four additional branches to multi-segment format before year end. Now please turn to slide 11. At the same time, we have been introducing technological innovation at our senior stages and branches, facilitated in self-service banking for this customer segment, which was the least advanced in terms of digital adoption. Let me share some examples of the success of these initiatives. To allow for extended banking hours and higher efficiencies, we enlarged our 24-hour lobbies The number of biometric cash dispensers located in these lobbies. As of September, cash dispensers in our 24-hour lobbies accounted for 53% of total cash dispensers up for around 24% before the pandemic and nearly 40% a year ago. As a result, the number of transactions as human traders declined sharply We are also seeing continuous adoption of our digital app dedicated to seeing the system through 90 days locked in customers through the app, increasing over 144% when compared to first year 2020. Please turn to slide 12. As you can see, We are also advancing on the right-sizing of our branch network. The introduction of best-in-class technologies to extend service hours, facilitating self-service banking in some branches while converting others to full service format is allowing us to enhance customer service and productivity. As a result, we closed one branch in second quarter and plan to close another 16 between the remainder of 2021 and next year, subject to central bank authorization. These initiatives have allowed us to lower headcount by nearly 6% year on year. Please now turn to slide 13. Our IT infrastructure strategy includes creating an API environment to accelerate service development and Time2Market to transform our customer journey. In the first nine months of the year, we added a total of 95 APIs and plan to add another 153 by the end of 2022. We are also advancing on the implementation of a data lake to become a data-driven enterprise while migrating technology to a hybrid multi-cloud to provide the flexibility to grow efficiently. By October 20, 20% of our technology was already migrated to the cloud and we expect to reach 30% by year end. With 70% of our technology anticipated to be migrated to the cloud by the end of year 2024. Please now turn to page 14. We are also making progress. On deploying our growth strategy for UDO and UDO Servicios. Next week, we are formally launching UDO mobile retail digital savings account that will enable us to grow our account base and attract low-cost funding at this subsidiary. After a successful soft launch in last August, UDO has already opened 230,000 accounts among current customers. Yudu Clients also have access to a wide range of digital banking services, insurance and wellness offerings and we will continue adding new features and services in the coming months. We also have made progress in our goal of diversifying revenue origination beyond Argentina by deploying well-being and health services under the B2C or B2B2C format in certain countries in Latin We are in this sense advancing with Grupo Asistir and Europe Assistance to implement in second quarter 2022 B2C well-being and health services in Paraguay. The offering will consist of health, dentistry, pharmacy, medical emergency, and veterinary services. Services will be marketed through the YouDo Wellness Marketplace which will host a variety of wellness services on the one platform offering customers a simple and convenient and seamless experience. Additional information on the progress of our digital KPIs and a more detailed description of all these initiatives and timelines can be found at the back of our earnings call presentation. In summary, we will While we saw improved activity in the water, near-term profitability is expected to remain impacted by overall weak credit demand, pressure, and needs, together with the constant investments required to continue building our ecosystem and execute our transformation strategy. This strategy allows us to retain and enhance our current customer relationships while attracting new digital clients and driving operational increases in the longer term when demand resumes. Now before opening the call to Q&A, let me turn the call to Atilio Dell'Oro, one of our board members and responsible for leading our ESG strategy who will provide an update of our initiatives and ambitions on this front. Atilio, please go ahead.