Business context and reporting period
Grupo Supervielle S.A. filed this audited Form 20-F for the fiscal year ended December 31, 2023. It is an Argentina-focused financial group, principally operating through Banco Supervielle, with banking, insurance, asset management, brokerage and other services. The filing is an annual report, not a standalone fourth-quarter report; it does not provide a clear, complete set of Q4-only financial results.
Financial statements are prepared under IFRS and restated for hyperinflation under IAS 29. Unless otherwise noted, amounts below are in pesos measured in December 31, 2023 purchasing power; comparative figures are also restated. Regulatory capital figures follow Central Bank rules and may not be comparable with IFRS figures.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Total assets, year-end | Ps.2,058.0 billion | Ps.2,166.0 billion |
| Loans and other financing, year-end | Ps.499.9 billion gross; Ps.482.5 billion net on the balance sheet | Ps.766.5 billion gross |
| Deposits, year-end | Ps.1,548.9 billion | Ps.1,705.0 billion |
| Net financial income | Ps.492.9 billion | Ps.335.9 billion |
| Net interest income | Ps.332.2 billion | Ps.269.0 billion |
| Net service fee income | Ps.83.4 billion | Ps.75.2 billion |
| Net operating revenue | Ps.457.4 billion | Ps.344.3 billion |
| Net income attributable to parent | Ps.51.6 billion profit | Ps.15.7 billion loss |
| Operating cash flow | Ps.157.9 billion provided | Ps.5.2 billion provided |
| Cash and cash equivalents, year-end | Ps.252.7 billion | Ps.169.4 billion |
Profitability improved substantially: reported ROAE was 16.8% versus negative 5.2%, ROAA was 2.5% versus negative 0.7%, net interest margin was 31.5% versus 19.6%, and the efficiency ratio improved to 54.7% from 79.9%. Net operating revenue rose 32.9%; net financial income rose 46.8%. Personnel and administrative expenses together decreased 4.6% in reported pesos.
Credit indicators improved as lending contracted. The filing reports loan-loss provisions of Ps.33.6 billion, down 23.8%, and allowances of Ps.17.4 billion. It reports year-end non-performing loans (NPLs) inconsistently: 1.2% in the selected-ratios table and 1.4% in the narrative, versus 3.7% in 2022. Coverage is also reported inconsistently, including 291.6% in the selected-ratios table and 286.0% in the narrative.
Liquidity and capital: pro forma LCR was 112.6% versus 103.5%; liquid assets were 64.1% of deposits and cash was 14.4% of deposits. The Bank’s regulatory capital ratio was 19.7%, versus 12.9%, with reported excess capital of Ps.122.4 billion. At year-end the Group had Ps.1,716.4 billion of liabilities and Ps.341.7 billion of total equity. Deposits are its principal funding source; the filing reports no outstanding subordinated notes at year-end.
Material changes versus the prior comparable period
- The Group moved from a Ps.15.7 billion attributable loss in 2022 to Ps.51.6 billion attributable profit in 2023. Management attributes the improvement primarily to stronger investment and loan yields, lower operating costs, improved fee income and lower provisions.
- Net loans declined substantially, from Ps.766.5 billion to Ps.499.9 billion gross, while deposits fell from Ps.1,705.0 billion to Ps.1,548.9 billion. Management cites weak credit demand amid high inflation and interest rates, and a deliberate shift away from consumer lending.
- Net interest margin and efficiency improved, but the loss from exposure to changes in purchasing power rose to Ps.108.9 billion from Ps.55.3 billion. Interest expense increased 60.2%, reflecting higher deposit costs and rates.
- Reported total assets decreased 5.0%, while attributable equity rose to Ps.341.4 billion from Ps.287.3 billion. The Bank’s regulatory capital and liquidity ratios also increased.
- The Bank merged IUDÚ and Tarjeta Automática into Banco Supervielle, effective January 2023, simplifying the group structure. The filing also describes branch consolidation and reductions in staffing as part of efficiency measures.
Outlook, management commentary, risks and contingencies
Management expects 2024 to remain challenging. It anticipates gradual loan-demand recovery, particularly in the second half of 2024, and expects peso lending to grow slightly above inflation. It expects NPLs to remain low but above December 2023 levels, and cost of risk to remain at or above 2023 levels. Management plans to prioritize profitability, market share, cost control, digital transformation and adequate capital and liquidity. These expectations are subject to substantial uncertainty; the filing does not provide formal numeric earnings guidance.
- Argentina exposure: The Group’s business is concentrated in Argentina and is exposed to inflation, currency depreciation, exchange controls, regulatory change, recession, fiscal and sovereign risks, and political uncertainty. Argentina’s 2023 CPI inflation was 211.4%; GDP contracted 1.6%.
- Public-sector concentration: The filing reports total direct public-sector exposure of Ps.1,033.2 billion, or 50.2% of assets, including Central Bank securities and repos. It separately reports Ps.831.8 billion of exposure to short-term Central Bank securities and repo transactions. Changes in government or Central Bank repayment capacity and policy could affect liquidity, asset values and earnings.
- Funding and margins: Deposit competition, regulated rates, changing interest rates and weak credit demand may pressure margins and earnings. The filing notes that minimum time-deposit rates were lifted in March 2024, after the reporting period.
- Tax litigation and provisions: The Group recorded a Ps.4.0 billion provision related to disputed turnover taxes on Central Bank securities and repo income. Relevant constitutional challenges remained pending. Management believes its position is supported, but adverse outcomes could require payment.
- Senior-citizen business: The Bank’s ANSES payment-agent agreement expired June 30, 2023; a new agreement was under negotiation. Management states that services to senior citizens generated 12% of Bank revenue in 2023.
- Other risks: The filing highlights credit-loss estimation uncertainty, cybersecurity and operational risks, exchange-control restrictions on dividend remittances, and restrictions on the Bank’s ability to distribute dividends. It also describes class actions and other ordinary-course proceedings, which management says are not likely to have a material adverse effect.
- Audit and controls: The independent auditor issued an unqualified opinion on the IFRS financial statements and on internal control over financial reporting. Critical audit matters included valuation of financial instruments without active markets and estimation of expected credit losses.
Most important facts for investors to verify
- Reconcile the conflicting NPL and coverage-ratio disclosures, and confirm the relevant definitions and reporting basis.
- Confirm the composition, valuation, maturity and liquidity of the Ps.1,033.2 billion public-sector exposure, including Central Bank repos and securities.
- Review the audited cash-flow statement and cash-equivalent reconciliation, given inflation restatement and large asset, deposit and repo movements.
- Track the ANSES agreement negotiations and any effect on senior-citizen customer revenue and retention.
- Monitor the turnover-tax proceedings, the Ps.4.0 billion provision and any subsequent assessments or payments.
- Assess whether the 2023 earnings recovery and improved capital ratios are sustainable as lending resumes and Argentina’s inflation, rates, exchange regime and regulations change.