Grupo Supervielle S.A. Reports 2Q18 Consolidated Results
Aug. 23, 2018
BUENOS AIRES, Argentina--(BUSINESS WIRE)--Aug 23, 2018--Grupo Supervielle S.A. (NYSE: SUPV) (BYMA: SUPV), (“Supervielle” or the “Company”) a universal financial services group headquartered in Argentina with a nationwide presence, today reported results for the three and six-month periods ended June 30, 2018. All figures presented throughout this document are expressed in nominal Argentine pesos (AR$) and all financial information has been prepared in accordance with IFRS in compliance with the adoption ruled by the Central Bank.
Second Quarter 2018 Highlights
Commenting on second quarter 2018 results, Patricio Supervielle, Grupo Supervielle's Chairman and CEO, noted: “ We are disappointed with the results for the quarter. While our macro assumptions for the year included stable foreign exchange, declining interest rates and decelerating inflation, the macro backdrop changed suddenly in the quarter resulting in a sharp currency devaluation, interest rate hikes and higher inflation that led to results well below our expectations. Despite the near-term challenges we are facing, our core business remains healthy, with asset quality in SMEs and Middle Market at historically low levels. Deposits performed well and continued to grow exceeding loan book growth.”
“During the second quarter our attributable net income declined 60% sequentially and below our expectations due to three key factors. First, our consumer finance business, which represents 11% of our loan portfolio, posted lower than anticipated margins as a result of the sharp increase in cost of funding along with higher loan loss provisions as disposable income deteriorated further due to the challenging economic conditions. While we started to tighten credit scores in this segment earlier in the year and continued to take an even more stringent approach to consumer finance lending throughout the second quarter, the drastic macro changes impacted financial results. Second, our banking business reported softer than expected margins from lagged loan repricing given the sudden and sustained rise in interest rates. This is a temporary effect as we expect this business to deliver improved performance in the coming quarters as longer-term assets are repriced to the new environment. Lastly, our trading desk had a short position on FX at the onset of the AR$ devaluation in addition to lower than anticipated trading results, which impacted our bottom line this quarter.”
“In this context we took decisive action. First, we further tightened credit standards throughout the Company. Second, we are implementing cost cutting measures. Third, we made the decision to streamline and change the management of our consumer finance operations. Effective August 24, 2018, the consumer finance units of Grupo Supervielle, which include: Cordial Compañía Financiera S.A., Espacio Cordial de Servicios S.A., Tarjeta Automática S.A., and the recently acquired car lending business Micro Lending S.A., will be led by Mr. Juan Martin Monteverdi, current CEO of Espacio Cordial de Servicios S.A. By combining the four companies under a unified leadership, we seek to drive increased operational efficiency, accelerate the offering of a wide range of consumer products, enhance customer experience, and increase cross selling. Fourth, based on the repricing dynamics of our portfolio, our banking business is anticipated to capture increased interest revenue from rate hikes.”
“However, we believe this will be insufficient to offset the weak results in the second quarter of the year, and the impact of higher cost of funds and lower loan growth in consumer finance. As a result, we are revising downwards our guidance for the year.”
“The Board, the executive team and I, remain fully focused on executing our strategy and closely monitoring economic dynamics. We are convinced of the resilience and strengths of our franchise, as well as our policies and practices and believe the growth potential for the financial sector in Argentina remains unchanged,” concluded Mr. Supervielle.
Financial Highlights & Key Ratios
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