Grupo Supervielle S.A.

Ana Bartesaghi, Trasher and Arrow Today's conference call is being recorded. As a reminder, all participants will be in listen only mode. If you want to ask questions at the end of our presentation, you need to be connected to a Zoom platform from any device. We will not be able to answer questions if you are connected from a phone. Also, please make sure your first and last name appear in the Zoom platform you are using. You will be able to ask a question by voice or send questions in written form via the Q&A box in the Zoom platform anytime during the call. 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, Fairfax 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 certain forward-looking statements based on management's current expectations and beliefs and subject to severe risks and uncertainties. I refer to the forward-looking statements 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, please go ahead.

Thank you, Ana. Good morning, everyone. Thank you for joining us today. I will begin my presentation with slide three. In a challenging macro environment and pleased with the result we have delivered, we reported record high return on average assets. And return on average equity of 27% in real terms in the fourth quarter contributed to return on equity of 17% for the full year. Operating in a complex environment characterized by high inflation, market volatility, and weak loan demand, we prioritize profitable loan origination and asset quality while leveraging agile assets and liability management capabilities, which contributed to an unusually high NIM, which continued into January. In this context, Total assets declined 5% year-on-year, while the loan book, including off-balance sheet items, contracted 25%. Deposits, in turn, outperformed the industry as we attracted a higher share of low-cost corporate side deposits towards year-end. Asset quality improved further in quarter, with the NPL ratio reaching a record low of 1.2% by year-end. A third year, A healthier loan mix reflecting a shift in loans to middle market, corporate and payroll customers where we have reciprocity with our transactional products together with significantly lower exposure to consumer loans and tighter credit scoring during the year contributed to this improvement. During the year, we continue to develop our operating model by deepening empowerment of our customers As we move forward, becoming an increasingly digital bank, we continue to enhance our service model, improving digital, virtual, and automatic channels while transforming our branch network to deliver higher-value transactions to customers while boosting cross-selling We have a strategic position to navigate the current challenges with confidence. A strong capitalization which is fully shielded against inflation provides us with a solid foundation while our long book is exposed to highly attractive export-oriented sectors such as oil and gas, mining, and agribusiness. With this resilient framework in place, we are prepared to drive robust expansion once the economy stabilizes and resumes its growth trajectory. Now let me show you the progress we have achieved to date across different fronts of our organizations and our key priorities for the year. Enhancing the customer experience has been a key initiative which has The share of digital customers expanded by 10 percentage points to 62% by year-end. Only 13% of our customers transacted through our branches last December, reflecting digital adoption. Our digital wallet continues to gain traction with the number of transfers more than doubling to 7 million while posting increase of 10 times in QR code payments and 84% in bill payments. In this Inversión Rápida disrupted the retail value proposition In the banking industry by allowing customers to invest 24-7 in money market funds and safeguard them against inflation. This contributed to year on year increases of nine times in the number of retail clients investing in our money market funds and assets under management expanding seven times in nominal terms. As we look to the current year, We will remain focused on further increasing share of wallets from existing retail customers, prioritizing profitable products, driving high engagement and cross-sell. Now moving to the corporate segment on slide five, where we expanded the number of entrepreneurs, SMEs, and middle markets clients by 5% over the last 12 months. We are seeing and many others rolled out during the year. Notably, by year end, digital transactions by SMEs accounted for 93% of factoring, 72% of commercial unsecured loans and 52% of overdraft just months after making them available. Our efforts to capture share of wallet are also paying off as we increase cross-sell while improving NPS across all segments for the second consecutive year. The penetration of insurance policies sold to entrepreneurs and SME customers increased to 10% from 7% a year ago, while the renewal rate increased close to 90%, underscoring customer retention. We gained further share in side deposits during the year, up 43 basis points to nearly 2.4%, and continued to expand foreign exchange transactions Foreign exchange transactions are gaining over 130 basis points in market share to 4.8%. Noteworthy, we were recently recognized by Euromoney as the best trade financed Argentine bank. During the year, we will continue to work towards attracting new clients. Expanding our base of SME and middle market customers and driving loan growth as demand resumes. Additionally, we will continue to drive high penetration cash management as we pursue our goal of becoming our customers' principal bank, further contributing to expand sustainable funding. Please turn to slide six. Invertit Online, your online broker, continue to drive strong free growth We have achieved remarkable year-on-year growth across all key KPIs, underscoring our ability to attract and retain customers. Monthly active users increased by five times to over 230,000 new accounts by three times The ease of use of our app, evidenced by our high ratings 4.6 in the Play Store and 4.8 in the App Store, is a contributing factor to this growth. We are excited about the promising opportunities that lie ahead. Our primary focus for the year encompasses First, we're rolling out our crypto offering through our partnership with Ripio as we further expand access to non-traditional financial services securely and simply enabling customers to buy, sell and save the main cryptocurrencies. Second, complementing our local offering as regulations are lifted, we plan to escalate the offering of U.S. And lastly, we're also working on expanding our product offerings for SMEs. With this, let me turn the call to Mariano. Please, go ahead.

Thank you, Patricio. And good day, everyone. Please refer to slide seven for an overview of our performance for 2023. Net income increased and many more. In the last two years, the company's revenue growth was mainly driven by revenue growth combined with lower operating expenses and low-loss provisions. With respect to revenues, net financial income was up 44% I will discuss this in more detail shortly. Finally, higher taxable income resulted in a 45 billion pesos increase in the income tax charge for the year. Net financial income increased sequentially by nearly 65% to 193 billion pesos, reflecting unusually high yield on lower investment portfolio volumes, combined with low repricing and a decline in the average leverage ratios. Moving on to page 9. Service fee income, excluding insurance activities, declined nearly 6% sequentially, lagging at 53% inflation. Nevertheless, we continue to see strong performance at IOL, which accounted for 22% of Moving on to slide 10, robust NIEM contributed to further improve the efficiency ratio of 43% in the fourth quarter from 52% in the prior quarter. This sequential improvement was mainly driven by revenue growth of nearly 57% above the 16% increase in expenses Our efforts to become an increasingly digital bank have led us to enhance our service model, improve digital channels and transform our branch network. Throughout 2023, we consolidated a total of 28 branches, reducing our branch count from 183 in 2020 to 137. This consolidation, along with an additional 4% reduction in staff, has allowed us to advance digital adoption and increase the number of customers per branch by 17%. These achievements, combined with strong revenue performance, drove the improvement in our efficiency ratio. Turning to slide 11. We further strengthened our capitalization in the quarter, expanding our tier one ratio by 417 basis points, sequentially to 21% at year end. Higher capitalization was mainly driven by strong results, risk with assets growing below inflation, and tax efficiencies for the merger of U2 into the bank. Turning to slide 12. Looking ahead and from a big-picture view, President Millet remains committed to achieving fiscal surplus and introducing significant structural reforms. Following the 100 basis of devaluation in December, central bank reserves began to improve while achieving a financial and commercial surplus in January. Inflation in turn has started to decline in a recessionary context. Challenges ahead At his address to Congress on March 1st, President Milley reaffirmed his libertarian agenda and invited governors and political forces to join a national pact around ten state policies, aiming to create stable rules for the development of Argentina. Turning to slide 13, and a contraction in GDP of 3% as per the Central Bank's Market Expectations Survey published in February. The most recent survey published yesterday considers a slightly lower inflation at 210% and GDP contracting to 3.5%. Peso loans are expected to grow slightly above inflation, with credit demand recovering gradually in the second half as inflation eases and interest rate regulations are lifted. Peso deposits are anticipated to grow slightly above inflation. Again, here we expect to see a decline in the first half, more than offset by a recovery in the second half of the year as inflation recedes. In terms of asset quality, We expect the NPR ratio to remain at low levels but above the historical low reported in December as we resume growth. Cost of risk is expected to remain at 2023 levels or higher. We anticipate NIN to remain at high levels with a decrease in trend as inflation eases. In terms of fee income, the bulk of bank fees to individuals are expected to reprice in line with inflation. In terms of profitability, ROE is expected to remain strong in the first quarter as we continue to see good results from our investment portfolio as observed in January. This followed by a more challenging second quarter as we expect negative interest rates will remain. For the second half of the year, we expect ROE to benefit from lower inflation and lifting of punitive regulations. In sum, for the full year, we expect ROE of approximately 10%. Lastly, we expect strong capital levels, 100% hedge against inflation, supporting long-term sustainability. Tier 1 capital