Grupo Supervielle S.A. Reports 1Q18 Consolidated Results - Grupo Supervielle (NYSE:SUPV)

1Q18 Attributable Comprehensive Income up 139% YoY and 58% QoQ.

Grupo Supervielle S.A. SUPV SUPV, ("Supervielle" or the "Company") a universal financial services group headquartered in Argentina with a nationwide presence, today reported results for the three-month period ended March 31, 2018. All figures presented throughout this document are expressed in nominal Argentine pesos (AR$) and all financial information has been prepared in accordance with IFRS in compliance with the first adoption ruled by the Central Bank. In order to facilitate the analysis and comparison, the Company includes under Appendix I the description of principal differences between previous BCRA GAAP and IFRS, along with the impacts on different line items of financials statements and ratios.

First Quarter 2018 Highlights

Total gross loans, increased 61.6% YoY and 9.5% QoQ to AR$66.5 billion.
Attributable Comprehensive Income of AR$744.8 million, up 138.7% YoY, and 57.6% QoQ. ROAE of 20.6% in 1Q18 higher than 18.0% in 1Q17 and 13.3% in 4Q17. ROAA of 3.3% in 1Q18, increasing by 120 bps YoY and 110 bps QoQ.
Attributable Net income of AR$722.6 million, up 147.6% YoY, and 54.5% QoQ.
NIM of 19.6% in 1Q18, increased by 10 bps YoY and contracted by 40 bps QoQ.
Efficiency ratio improved to 59.0% in 1Q18 compared with 71.1% in 1Q17, and 67.6% in 4Q17.
Non-performing loan ratio increased by 10bps at 3.2% in 1Q18 from 4Q17 and 1Q17, while allowances as a percentage of non-performing loans increased to 89.7% in 1Q18 from 85.2% in 1Q17 and 88.0% in 4Q17. 1Q18 presented consumer behavior seasonality largely similar to that observed in prior years.
Proforma Consolidated Common Equity Tier 1 Ratio of 15.8% in 1Q18, down from 18.4% in 4Q17 reflecting the initial IFRS adjustments (the restated 4Q17 proforma consolidated Tier1 ratio is 17.2%) and loan growth in the loan portfolio. AR$4.3 billion remained at the holding level for future capital injections. Equity to Asset ratio of 15.7% in 1Q18 compared to 11.3% at March 2017 and 15.6% at December 2017.

CEO Message

Commenting on first quarter 2018 results, Patricio Supervielle, Grupo Supervielle's Chairman and CEO, noted: "The momentum continued from 2017 into the first quarter as we again posted strong results that underscore our profitable growth strategy. This was evident with loan growth up 10% QoQ and 62% YoY exceeding financial system growth, with operating leverage driving further efficiency improvements. Our diversified deposit base increased 43% YoY, again exceeding industry growth and remained stable sequentially following robust growth in 4Q17. As a point of reference, system deposits grew 11% in the first quarter of 2018. Furthermore, our competitive retail deposits have proven a key aspect in our ability to mitigate the impact of increases in funding costs."

"Our focus on high margin SMEs and attention to their unique needs continued to drive lending in the corporate segment and was the main driver of loan expansion this quarter. With 45% of this portfolio collateralized and benefits to a more competitive export environment, this portfolio remains a strong credit. By contrast, during the quarter we took a more conservative approach to growing our consumer finance business given increasing inflation and hikes in utilities prices, as we have previously discussed. We remain confident in the long-term growth prospects of this segment."

"The acquisition of MILA announced during the quarter positions us well to continue capturing the attractive growth potential we see in the auto financing market, both in new and previously owned cars, and obtain synergies from the integration. New and previously owned car sales are robust growth segments, and their financing are new asset classes for Supervielle, and another example of how we are executing on our growth strategy which enhances cross-selling opportunities across our Company."

"We adopted IFRS in the current quarter and reported an increase in Attributable Comprehensive Income of 139% YoY and 58% QoQ, despite the typically seasonally lower first half in our industry. Looking ahead, we believe that despite current economic and currency headwinds, the long-term growth story for the financial sector in Argentina remains intact. In the current context, which is one that we have successfully navigated in the past, we remain focused on healthy loan growth, mitigating risk and enhancing efficiency and profitability. We believe we can achieve results within the range of the guidance previously set out. Given the rapidly changing macroeconomic scenario, we are consistently closely monitoring the macro variables and how that impacts our guidance," concluded Mr. Supervielle.

Financial Highlights & Key Ratios


(In millions of Argentine Ps.)											% Change
INCOME STATEMENT	1Q18		4Q17		3Q17		2Q17		1Q17		QoQ		YoY
Net Interest Income	2,818.1		2,562.0		2,124.8		1,950.2		1,926.5		10.0	%	46.3	%
Net Service Fee Income (excluding income from insurance activities)	891.0		846.5		844.8		868.4		740.1		5.3	%	20.4	%
Income from Insurance activities	148.7		148.3		108.0		112.8		110.0		0.3	%	35.2	%
Loan Loss Provisions	-726.1		-606.3		-518.9		-442.8		-360.8		19.8	%	101.2	%
Personnel & Administrative Expenses	-2,446.5		-2,604.5		-2,121.4		-2,060.1		-1,935.2		-6.1	%	26.4	%
Profit before income tax	1,020.4		651.1		737.4		666.9		456.0		56.7	%	123.8	%
Attributable Net income	722.6		467.6		555.2		505.2		291.8		54.5	%	147.6	%
Attributable Comprehensive income	744.8		472.6		560.0		533.8		312.0		57.6	%	138.7	%
Earnings per Share (AR$)	1.58		1.02		1.43		1.39		0.80
Earnings per ADRs (AR$)	7.91		5.12		7.17		6.94		4.01
Average Outstanding Shares (in millions)	456.7		456.7		387.3		363.8		363.8
BALANCE SHEET	mar 18		dec 17		sep 17		jun 17		mar 17		QoQ		YoY
Total Assets	96,569.6		92,202.4		81,557.9		69,684.3		63,152.9		4.7	%	52.9	%
Average Assets¹	90,832.7		85,498.9		73,226.9		64,741.4		60,784.9		6.2	%	49.4	%
Total Loans & Leasing	66,479.5		60,692.9		53,154.2		44,536.2		41,148.7		9.5	%	61.6	%
Total Deposits	55,540.2		56,408.7		47,170.8		42,817.0		38,817.0		-1.5	%	43.1	%
Attributable Shareholders' Equity	15,114.2		14,369.6		14,032.8		7,490.6		7,126.4		5.2	%	112.1	%
Average AttributableShareholders' Equity¹	14,490.1		14,188.7		10,824.9		7,419.5		6,946.3		2.1	%	108.6	%
KEY INDICATORS	1Q18		4Q17		3Q17		2Q17		1Q17
Profitability & Efficiency
ROAE	20.6	%	13.3	%	20.7	%	28.8	%	18.0	%
ROAA	3.3	%	2.2	%	3.1	%	3.3	%	2.1	%
Net Interest Margin	19.6	%	20.0	%	19.6	%	21.5	%	19.5	%
Net Financial Margin	19.9	%	20.0	%	19.8	%	20.6	%	20.5	%
Net Fee Income Ratio	22.3	%	22.8	%	25.2	%	27.8	%	27.3	%
Cost / Assets	11.1	%	12.6	%	12.0	%	13.1	%	13.2	%
Efficiency Ratio	59.0	%	68.2	%	63.5	%	65.7	%	71.1	%
Liquidity & Capital
Loans to Total Deposits³	119.7	%	107.6	%	112.7	%	104.0	%	106.0	%
Liquidity Coverage Ratio (LCR)⁴	116.9	%	113.9	%	122.6	%	126.5	%	125.9	%
Total Equity / Total Assets	15.7	%	15.6	%	17.2	%	10.7	%	11.3	%
Proforma Consolidated Capital / Risk weighted assets ⁵	17.0	%	19.6	%	20.7	%	13.0	%	13.4	%
Proforma Consolidated Tier1 Capital / Risk weighted assets ⁶	15.8	%	18.4	%	19.5	%	11.6	%	12.0	%
Risk Weighted Assets / Total Assets	88.1	%	80.1	%	85.2	%	88.2	%	83.0	%
Asset Quality
NPL Ratio	3.2	%	3.1	%	3.1	%	3.0	%	3.1	%
Allowances as a % of Total Loans	2.8	%	2.6	%	2.5	%	2.6	%	2.5	%
Coverage Ratio	89.7	%	88.0	%	85.2	%	85.9	%	85.2	%
Cost of Risk	4.7	%	4.4	%	4.5	%	4.4	%	3.9	%
MACROECONOMIC RATIOS
Retail Price Index (%)⁷	6.7	%	6.1	%	5.1	%	5.4	%	6.1	%
UVA (var)	6.9	%	4.9	%	4.3	%	7.1	%	4.6	%
Pesos/US$ Exchange Rate	20.14		18.77		17.32		16.60		15.38
Badlar Interest Rate (eop)	22.6	%	23.3	%	21.8	%	20.1	%	19.1	%
Badlar Interest Rate (avg)	22.9	%	22.5	%	20.8	%	19.6	%	19.8	%
TM20 (eop)	22.6	%	23.7	%	22.8	%	20.9	%	19.8	%
TM20 (avg)	23.4	%	23.4	%	21.6	%	20.3	%	20.3	%
OPERATING DATA
Active Customers (in millions)	1.9		1.9		1.9		1.9		1.8
Access Points ⁸	340		326		324		321		325
Employees	5,406		5,320		5,222		5,146		5,049		1.6	%	7.1	%

1.		Average Assets and average Shareholder´s Equity calculated on a daily basis
2.		Total Portfolio: Loans and Leasing before Allowances. According to IFRS, this line item includes Securitized Loan Portfolio and loans transferred with recourse.
3.		Loans/Total Deposits ratio was restated in previous quarters due to the inclusion in the balance sheet of the securitized and transferred loans.
4.		This ratio includes the liquidity held at the holding company level.
5.		Regulatory capital divided by risk weighted assets taking into account operational and market risk. The regulatory capital ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level- The Proforma consolidated capital ratio, includes the liquidity retained at Grupo Supervielle level after the equity offering, which is available for growth. As of March 31, 2018, the liquidity amounted to Ps. 4.3 billion. This ratio has not been restated for 2017 quarters.
6.		Tier 1 capital divided by risk weighted assets taking into account operational and market risk. The regulatory Tier 1 capital ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level. The. Proforma Consolidated Tier 1 capital ratio includes the liquidity retained at Grupo Supervielle level after the equity offering, which is available for growth. As of March 31, 2018, the liquidity amounted to Ps. 4.3 billion. This ratio has not been restated for 2017 quarters.
7.		Source: INDEC
8.		The increase in the number of Access Points in 1Q18, reflects the opening of 1 bank branches located in Neuquen and the presence in 13 Walmart Stores.

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