Grupo Supervielle S.A.

Good morning everyone and welcome to the Grupo Supervielle second quarter 2024 earnings call. This is Ana Bartesaghi, Treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in this and 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. 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 a 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, will be available for the Q&A session. As a reminder, today's call will contain forward-looking statements based on management's current expectations and beliefs and subject to several risks and uncertainties. I refer you to the 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 situations.

Thank you, Ana. Good morning, everyone. Thank you for joining us today. Please turn to slide three for an overview of the quarter results. Our strategic actions are driving the desired results. We deployed an early mover strategy that resulted in solid loan volume growth and market share gains. Asset quality remained healthy with a record low NPL We reported return on equity of 10% for the quarter and 22% for the first half. As anticipated, neem declined during the quarter, reflecting lower spreads following the sharp and our online brokerage operations also contributed to the quarter's solid performance. Furthermore, our efforts to enhance operating efficiencies while staying closely connected to our customers continue to yield positive results. Let me spend a few minutes discussing the key drivers of our performance during the quarter. Digital adoption continues to play a key role among retail customers. Digital customers now make up 65% of our total customer base, with 56% of transactions completed through our app up from 42% a year ago, indicating strong wallet adoption while lowering our cost to serve. We've also made significant strides in our corporate and middle market customer segments, with the loan book growing sequentially by an impressive 42% in real terms as we focus on supported export-oriented value chains. We closed the quarter with higher balances of side deposits among corporate clients, leading to increased transactional volumes as we advance The leading online brokerage platform in Argentina contributed 19% of total fee income, with all key metrics showing a strong performance. Active customers doubled year-over-year, to a record high of 5%. and many more. We have 566,000 clients in July. Assets under management grew 23% sequentially in real terms, hitting the $1 billion milestone while sustaining solid transaction activity. Lastly, we are advancing in driving digital adoption and penetration in our insurance and asset management businesses. We have broadened our digital Thank you very much. Key economic highlights for the quarter include the approval and regulation of the lay the buses along with ongoing deregulation efforts achieving a fiscal surplus of plus 0.4% as of June and inflation easing faster than expected. The central bank deregulation efforts are further enhancing the business environment. While the overall macroeconomic environment is improving, some areas still require attention, including ensuring the sustainability of the central bank's 17 billion reserve increase and maintaining The international industry is seeing early improving signs of recovery as loan demand growth returns. To ensure sustainable growth, the next milestone is the lifting of the foreign exchange restrictions. Our financial results to date reflect the actions we have taken over the past few years, including new product offerings and efficiency measures together with policies established under the Malay government. As a result, we have a solid foundation in place and are well positioned to benefit as demand continues to recover. Now moving to slide five. We have been transitioning our asset base away from central bank securities to a private sector loan. This is reflected in the increasing loan to deposit ratio, which stood at 59% at quarter end, up from 32% at year end 2023. This reflects a drop in the share of central bank securities over total assets to 28% for 40% at year-end 2023, while loans increased their share by 12% points to 37% at the end of June. This trend is expected to continue during the second half of the year. In this context, we expect NIMS to normalize to historical levels and NFI to grow Over time, even with lower yields as the credit demand strengthens. As shown on slide six, our strategic move towards capturing loan demand early in the recovery allow us to expand our loan portfolio by 36% sequentially in real terms. This resulted in total market surrogate 30 basis funds sequentially and 70 basis funds year to date and, most importantly, we gained share across all products. As of June, SMEs and corporate loans accounted for 65% of our total loan portfolio, while retail loans accounted for the remaining 35%. In corporate loans, we remained focused in service in high-potential, export-oriented value chains as we leveraged our exposure to high-potential industries, including mining, agribusiness and oil and gas. We are well positioned in sectors that are leading the recovery. We are focusing on originating short-term loans to corporates and asset-backed loans to individuals together with stringent credit policies including portfolio limits according to the health of each industry to ensure an atomized loan book across industries and customers. This coupled with a strong capitalization position as well to continue to drive significant growth as demand continues to recover. No, let me turn the call to Mariano. Please go ahead.

Thank you, Patricio, and good day, everyone. Now, let's direct our attention to slide seven to take a deeper look at our performance for the first half of the year. Net income increased to over 70%, Thank you very much. as fees increased below the 272% accumulated inflation. Structural cost efficiencies contributed to a 9% year-on-year decline in costs. As I will explain in more detail and many more. Moving next to slide 8 for the discussion of our loan portfolio. As Patricio noted, we have continued to gradually shift our asset base towards a larger At the same time, we have gained share across most loan products in both our commercial and retail portfolios. With respect to mixed by portfolio type, as shown on the pie charts, corporate loans account for approximately two-thirds of our total loan portfolio. With this portfolio, short-term promissory notes stand out, increasing their share Within retail loans, credit cards accounted for 32% of the book, followed by mortgages and personal loans at 27% each, and car loans at 14% of the total retail book, where we rank second in car loan origination. As shown on slide 9, our total deposit base remained stable sequentially in real terms, although the mix changed slightly. Foreign exchange deposits increased 4% above industry trends, with the foreign exchange share over total deposits increasing 1 percentage point. As anticipated in our prior call, lower inflation and yields on peso-denominated government securities The sharp decrease in policy interest rates and lower volumes of interest-bearing liabilities drove a 30 percentage point reduction quarter-on-quarter in the host of funds in the quarter. Moving on to slide 11. Expenses declined 15% year-on-year and 8% sequentially, primarily due to the efficiencies in personal, DNA, and administrative costs On a sequential basis, however, the efficiency ratio increased from 34% in the first quarter, which benefited from a non-recurring gain in peso bonds that resulted in an exceptionally high NIP. Turning to slide 12, we closed the quarter with a CET1 ratio of slightly over 21%, declining 390 basis points sequentially. and many more. Moving on to slide 13, in the current context we are adjusting our prospects and many more. We now expect expenses to decline in We maintain our ROE expectation for the year at approximately 15%. During this transition, as we continue to shift to private sector loans from public securities, we expect to see a lower need pressure in ROE in the third quarter. Lastly, as loan growth accelerates, we anticipate closing the year with a CET1 ratio This ends our prepared remarks. We are ready to open the floor for questions. Ana, please go ahead.