Grupo Supervielle S.A.

Good morning, everyone, and welcome to Grupo Superviel's second quarter earnings call. I'm Manu Artezaghi, treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. To ask questions during the Q&A session, ensure your first and last name appear on the Zoom platform. Questions can be asked by voice or through the Q&A box. Speaking today will be Patricio Superviel, our chairman and CEO, and Mariano Biglia, our chief financial officer. Gustavo Paco Manriquez, Banco Superviel CEO, and Diego Pizzulli, CEO of Invertir Online, will also be available during the Q&A session.

Thank you, Ana. Good morning, everyone, and thank you for joining us today. We executed well amid a still transitional macro backdrop. Loan growth outpaced the industry led by strong performance in commercial lending. By contrast, we took a more cautious approach to retail origination in response to the slight deterioration in asset quality in line with industry and historical levels. This follows the rapid retail expansion of prior quarters and return to credit normalization. On funding, U.S. dollar balances reached record levels, gaining 100 basis points in market share over the past 12 months, underscoring both our competitive position and client trust. We maintained a solid capital position with a CD1 ratio of 13.9% and delivered a 6% return on equity in real terms. further supported by discipline, cost management and improved NIM. While the macro environment still presents some near-term headwinds in connection with the election-related uncertainty, tight peso liquidity and high real interest rates, The broader backdrop remains supportive, with public government supported nearly 50%, fiscal consolidation, ongoing deregulation, and inflation trending down. We expect economic growth and credit expansion to resume after the October 26 elections, supported by structural reforms anticipated to begin in the post-election period. These conditions, combined with our strategic execution in solid capital, position us to continue capturing opportunities as the credit gains momentum. On slide 4, our strategic transition towards a more credit-driven balance sheet is progressing, although at a slower pace in this election year and in line with monetary policy. Loans accounted for 48% of total assets, up 25 percentage points since December 2023, while we reduced our investment portfolio by 28% percentage points to 22% of assets. This deliberate rebalancing supports private sector credit growth to benefit from the gradual recovery in economic activity. Our loan-to-deposit ratio increased to nearly 72% while leverage stood at 6.5 times, well below historical levels, providing ample capacity to continue expanding our portfolio in a disciplined, profitable way. On slide five, I'm pleased to share that we are seeing tangible early results across the four key initiatives which are central to how we engage clients, build loyalty and drive cross-sell. First, our innovative remunerated account that we are selectively offering in line with our cluster-based strategy continues to deepen primary banking relationships and expand our deposit base. Payroll-linked balances increase sequentially by 27% in pesos and 18% in U.S. dollars, with new payroll accounts increasing by 53% year-to-date. Among SMEs, checking accounts increased 14% in pesos and 43% in dollars. Second, Tienda Superviel, our online store, hosted on Mercado Libre and integrated into our app, has surpassed half a million sessions since launch. This initiative, which complements our value proposition with the Merli platform, resulted in more than 175,000 customers transacting with over 400,000 registered credit cards. This is further evidence that we are embedding ourselves in our clients' daily lives and increasing engagement beyond traditional banking. Third, our GenAI-powered WhatsApp channel was recently enhanced with new transactional features, including credit card purchases, authorizations, transportation card reloads, and mobile top-ups, turning WhatsApp into a daily banking companion. Adoption is growing rapidly. In July alone, the channel registered over 150,000 interactions, posting exponential growth since launch, reinforcing its role as a scalable, convenient service touchpoint. And fourth, new synergies between the bank and InvertinOnline are leading online brokers. are delivering solid results, leveraging Yale's 1.7 million customers to showcase banking products while preserving Yale's core identity as an investment platform. In just four weeks since launch, over 4,700 InvertionLand clients placed $28 million in dollar-time deposits at the bank with nearly one-third for terms over 180 days. With only 3% of your clients currently banking with us, we are launching a targeted cross-sell strategy with a compelling suite of products aimed at deepening relationships and expanding our retail footprint. Lastly, since adding the Yoast button to our mobile app just two months ago, we've seen a clear increase in investment activity among bank customers. These early outcomes give us confidence that our strategy can drive engagement, diversify revenues and capture growth opportunities as Argentina embarks on a renewed expansion cycle. With that, I'll turn the call over to Mariano Biglia, who will walk you through our financial performance and perspectives for the year.

Thank you, Patricio, and good day to all. Let's turn to slide 6. Net income was 13.6 billion pesos in the second quarter, up 62% sequentially, with ROE at 6%, driven by higher net financial income and lower inflation adjustment. Clients' net financial income was up 10%, supported by wider spreads on higher loan volumes, while market-related net financial income benefited from gains in our treasury portfolio, growing 15% quarter-no-quarter. Inflation adjustment decreased 34%, reflecting the lower impact in the net monetary position from declining inflation versus the prior quarter. By contrast, net fee income was down 13%, as banking fees were not adjusted in the quarter though repricing is underway in the third quarter. A lower contribution from our brokerage business since the lifting of FX restrictions in line with the industry trend also impacted fee income. Expenses were up 4% as costs were seasonally lower in the prior quarter. Year to date, Net fee income was up 19%, while expenses declined 11%, as we continued to simplify our structure and reduce fixed costs. Loan loss provisions rose 32%, reflecting loan growth and higher risk weighting from retail lending. Other losses increased 40%, mainly from the sale of non-core properties, while income tax benefited from a higher level of tax efficiencies. Moving next to slide 7. Total loans increased 14% sequentially and 71% year on year in real terms. growth in retail loans moderated to 2% sequentially after several quarters of strong expansion as we tightened underwriting policies in response to early signs of industry-wide asset quality deterioration. Other retail products, including credit cards, mortgages, and car loans, continued to expand modestly. Year on year, retail loans were up 130%, accounting for 47% of our total loan book. Commercial lending was up 23% quarter-on-quarter, led by strong growth in foreign trade loans, promissory notes, and overdrafts as corporate activity accelerated with commercial now representing 53% of our portfolio. This rebalancing toward commercial lending reflects our disciplined credit stance while retail remains an integral part of our strategy for the long term. Turning to slide eight, our MPL ratio was 2.7%, in line with both historical and industry levels. Retail delinquency was 4.5%, reflecting credit normalization following the 130% year-on-year growth in retail loans and the impact of lower inflationary environment on repayment dynamics. The MPL ratio was a low 1.4% for corporate and SME loans. Coverage is prudent at 130% and we continue to fine tune origination and collection strategies to preserve portfolio health. Provisions rose 32% sequentially to 44.5 billion pesos, lifting net cost of risk by 70 basis points to 5.5%. This was mainly due to higher provisioning needs in retail loans under our forward-looking credit models. Importantly, the living currency levels remain fully within the assumptions embedded in our pricing, and we are adjusting origination where appropriate, while continuing to fund demand in segments with the strongest risk-adjusted returns. Turning to slide 9, Total funding increased 30% year-on-year and 6% sequentially, supported by strong dollar deposit inflows and a growing contribution from corporate notes, which now account for 6% of total funding. Peso deposits were up 24% year-on-year and up 1% sequentially. US dollar deposits were up 154% year-on-year and 16% sequentially, setting another record high at $943 million as we deepen transactional relationships with our clients. The positive trend continued into July, with US dollar deposits exceeding $1.1 billion. This solid funding base positions us to continue expanding loans while maintaining a prudent liquidity profile. The recent increase in the minimum cash requirements for money market funds, unifying reserve requirements on demand deposits across all depositors, allows us to pay the same interest rate to a corporate checking account as to a money market fund, allowing banks to compete with money market funds in attracting customers and thus improve the deposit mix. On slide 10, net interest margin expanded 160 basis points sequentially to 20.8%, supported by strong spreads in both client and market-related portfolios. Total net financial income expanded 12% from the first quarter as client-related net financial income increased 10% on higher spreads and long growth, while market-related net financial income rose 15%, driven by better investment returns as Treasury bond yields stabilized after last quarter's sharp correction ahead of the IMF agreement in April. As shown on the right-hand charts, loan portfolio margins improved to 22.8% and investment portfolio margins to 20.1%. The peso interest spread also widened 200 basis points to 23.1%, supporting the overall lean recovery. Turning to slide 11, reflecting the election year and a longer transition period towards a more loan-centric balance sheet into 2026, we are updating our 2025 perspectives. We now expect real loan growth between 40 and 50% contingent on monetary policy and regulatory developments, and the more balanced mix between retail and corporate loans. On deposits, we anticipate growth of 20% to 30%, with continued improvements in the loan-to-deposit ratio. Peso deposits growth will depend on monetary policy, while we see further share gains in U.S. dollar deposit balances. In terms of asset quality, we expect the NPL ratio to stabilize at historical levels between 3% and 3.5%, with net cost of risk at the 5% to 5.5% range, reflecting ongoing credit normalization and the higher share of retail loans. NIM is expected to trend between 18% and 20%, slightly below 2024 levels, as inflation continues to decline, leverage increases and following restrictive monetary policy. Turning to slide 12, we maintain expectations of net fee income growing 10% in real terms this year, driven by higher bank fees, asset management growth, and improved insurance penetration. In brokerage, we expect to leverage new business lines to offset lower revenues of total net transactions, following the lifting of FX controls. On expenses, our focus remains on driving sustained efficiencies in headcount and other costs, contributing to a contraction in expenses of between 5% to 8%, driving stronger operating leverage. With this, we now expect ROE to improve toward year-end to a range of 5% to 10% below our original full-year guidance, as transition towards a more leveraged balance sheet is longer than expected due to a tighter monetary policy and higher volatility ahead of legislative elections. This revised outlook reflects margin stabilization, stronger fee contributions in the second half, and the full impact of our cost efficiency initiatives, while factoring the dynamics of our election year. Lastly, we now anticipate the CEG1 ratio to close the year between 12 and 13%. There is potential for upside if regulators approve Basel III operational risk treatment for Group 2 banks in line with systemic banks, in which case our CET1 ratio would have been approximately 16.7% as of June 30, 2025. Overall, these targets reflect our disciplined and confident approach to balancing growth, profitability, and capital strength as we navigate an election year and its still evolving macroenvironment. Additional details on our quarterly performance are available in the appendix of our earnings presentation. We are ready to take your questions. Anna, please go ahead.