Grupo Supervielle S.A.

Good morning everyone and welcome to the Grupo Supervielle second quarter 2022 earnings call. This is Ana Bartesaghi, Treasurer 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 will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you want to ask a question, you need to be connected to a Zoom platform from any device. We will not be able to take your questions if you are connected from a phone line. Also, please make sure your name and last name appear in the Zoom platform you are using. Speaking during today's call will be Patricio Supervielle, our chairman and CEO, and Mariano Biglia, our chief financial officer. Also joining us is Alejandro Stengel, First Vice Chairman of the Board and CEO of Banco Supervielle. 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's 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 release 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. Patricio Supervielle, our chairman and CEO, will start the call discussing our key highlights for the quarter and updates on our transformation initiatives. Afterwards, Mariano Biglia will take a deeper look at our performance and near-term perspectives. And after that, we will open the floor for questions. Patricio, go ahead.

Thank you, Ana. Good morning, everyone. Thank you for joining us today. Please turn to slide four of our earnings presentation. We are navigating an increasingly challenging macroeconomic environment in Argentina and worldwide. Accelerated inflation reaching three digits together with rising interest rates have driven long demand to historical lows while the government's crowding out is in full force. We have taken immediate actions to adjust to this context, implementing a major Restructuring of Udo, our consumer finance business, with the goal of running a more efficient operation. And I will discuss this in more detail shortly. Simultaneously, we continue to make significant advances on our key strategic pillars, increasing customer acquisition and digital adoption, improving asset quality, and we are transforming our network and significantly right-sizing our bank and brokerage operations to drive efficiency while improving funding. Our bottom line in this quarter was negatively impacted by headcount reductions to capture efficiencies at both UDO and the bank as we prioritized long-term value creation over short-term profitability. The sharp drop in the price of our government security holdings in June, together with significantly high inflation, low credit demand, and increased regulatory flaws on interest rates on time deposits, also impacted results. As a result, we reported a loss of 2 billion pesos in the quarter, excluding non-recurring Mariano will provide more color on our financial performance on this shortly. While Argentina faces important fiscal, financial and monetary challenges that have not yet been addressed, We remain fully committed on building a more efficient, profitable and scalable operation while monitoring market dynamics. Reflecting our conviction in the value of securities of Supervielle's assets and the potential of our business, last July the Board approved a share repurchase program for a total of 2 billion pesos or the lower amount equivalent to 10% of our capital stock through March 2023. This initiative is supported by a liquid and well-capitalized balance sheet. Turning to page five, let me now review the progress on the initiatives under each of the six strategic pillars designed to improve return on equity. Starting with customer experience and acquisition, this quarter, we added 89,000 new retail customers. 65% were onboarded digitally while 30% are payroll customers. Note that 50% of these digitally onboarded retail customers took credit card loans. Corporate customers in turn increased nearly 1% sequentially and close to 7% year-on-year. We're also very pleased with the sustained progress in digital adoption with digital bank customers up 26% sequentially and 89% when compared to the same quarter of last year. Equally encouraging is the 60% sequential increase in mobile app customers achieved this quarter. We saw good traction in senior citizens' mobile app customers which were also up 12% sequentially and 72% year-on-year. As a result, the share of mobile transactions doubled 20% of total monetary transactions up from 10% in the same quarter of last year. Combined online and mobile channels accounted for 41% of total monetary transactions. We remain focused on customer acquisition, digital onboarding, and cross-selling. as part of our initiatives to further enhance the customer experience and increase share of wallet. We have also taken meaningful steps this quarter with respect to our efficiency pillar. Several right-sizing initiatives across our operations have enabled us to reduce our headcount by 18% year to date. This was driven by workforce declines of 6% at the bank, 75% at UDO and 29% at Invertir Online. Starting with UDO, last year we launched the UDO fully digital financial services platform aimed at attracting low-cost deposits and scaling the business with the goal of reverting the negative impact this operation has had over return on equity over the past years. Unfortunately, annual inflation levels accelerating to nearly 100% have made the consumer finance business extremely challenging and therefore we decided to rapidly change course. In this context, we are integrating the entire Udo customer base to Banco Supervielle, drastically reducing the operational costs. At the same time, we have slowed down loan origination, focusing on improving asset quality. While this is resulting in higher severance charges this year, it is a significant step in running a more efficient operation. At Yol Invertir Online, our fintech subsidiary, we recently appointed a new CEO. The difficult context faced today by fintechs worldwide, together with the highly restrictive regulations in Argentina, have negatively impacted trading volumes and fees. To mitigate this, we are currently re-evaluating unit economics in this new environment and streamlining this operation, including the headcount reduction implemented this month.

Now, moving to efficiencies at the bank.