Grupo Supervielle’s 2024 Annual Report: Growth Amid Regulatory Nuances

Grupo Supervielle S.A. (NYSE: SUPV) recently filed its 2024 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission (SEC), marking a critical step in its regulatory compliance for international shareholders. The filing, which adheres to full International Financial Reporting Standards (IFRS), provides insight into the bank’s financial health and strategic direction amid Argentina’s evolving economic landscape. Here’s what investors need to know.

Key Financial Highlights

The report underscores robust growth in loans and deposits, while navigating challenges such as inflation moderation and regulatory differences between local and international accounting standards.

1. Revenue and Net Income:
2. Net Income rose 11.9% year-over-year (YoY) to ARS 125.2 billion in FY2024, driven by disciplined cost management and loan portfolio expansion.
3. Revenue remained stable at ARS 1,129.3 billion, a marginal 0.5% dip from FY2023, reflecting the bank’s focus on sustainable income streams over volatile market-driven gains.

1. Loan and Deposit Growth:
2. Total Loans surged 343.9% YoY (nominal terms) to ARS 2,211.2 billion, with real growth of 106.5% YoY, outpacing industry averages. Retail lending now accounts for 48% of total loans, up from 40% in 2023, signaling a strategic shift toward higher-margin segments.

3. Deposits grew 104.9% YoY to ARS 3,173.5 billion, with U.S. dollar deposits surging 178% YoY, a testament to client trust in the bank’s stability.

4. Capital Strength:

5. The Common Equity Tier 1 (CET1) ratio stood at 16.1%, well above regulatory minimums, despite dipping 490 basis points YoY. This reflects strong capital adequacy and room for future growth.

Strategic Priorities: Digital Expansion and Cross-Selling

Grupo Supervielle emphasized its commitment to leveraging digital platforms and cross-selling opportunities to drive long-term growth:

• IOL invertironline: The bank’s flagship digital brokerage platform now serves 1.6 million customers, with US$1.7 billion in Assets Under Custody (AUC). Integrating this customer base with banking services could unlock significant revenue synergies.
• High-Growth Sectors: Management highlighted opportunities in oil & gas, mining, and retail lending, where Supervielle aims to capitalize on Argentina’s economic recovery.
• Efficiency Gains: The efficiency ratio improved to 49.3% in FY2024 (from 54.7% in FY2023), though quarterly volatility (e.g., a spike to 64% in 4Q2024 due to one-time costs) underscores the need for sustained cost discipline.

Governance and Leadership Updates

The 2024 Annual General Meeting (AGM) saw key changes to the board:
- New Director Appointment: Gabriel Coqueugniot, a seasoned financial executive with experience at Banco Quilmes and Jackson Family Wines, joined the board to replace resigning member José María Orlando. His expertise in capital markets and international finance signals a focus on global investor engagement.
- Leadership Stability: Key figures like Chairman Julio Patricio Supervielle and First Vice-Chairman Atilio Dell’Oro Maini were re-elected, ensuring continuity. Independent directors now constitute 40% of the board, aligning with stricter governance standards.

Challenges and Risks

1. Regulatory Complexity:
2. The Form 20-F filing highlights discrepancies between local BCRA standards (which permit exceptions to IFRS) and SEC requirements. Investors must monitor how these differences impact reported earnings.

3. Argentina’s macroeconomic volatility, including inflation and currency fluctuations, remains a risk.

4. Cost Management:

5. While the full-year efficiency ratio improved, quarterly spikes (e.g., 64% in 4Q2024) due to severance costs and marketing expenses suggest execution challenges.

6. Loan Quality:

7. The non-performing loan (NPL) ratio rose to 1.3% in 4Q2024, up from 0.8% in the prior quarter, though the bank attributes this to a single collateralized loan. Sustaining low NPLs will be critical as loan growth accelerates.

Conclusion: A Resilient Player with Upside Potential

Grupo Supervielle’s 2024 results demonstrate its ability to navigate a challenging environment through strategic loan growth, digital innovation, and capital discipline. Key positives include:

• Strong Balance Sheet: A 16.1% CET1 ratio and 69.7% loans-to-deposits ratio indicate ample liquidity and resilience.
• Revenue Diversification: Retail lending’s growing share (48%) and cross-selling opportunities with IOL invertironline’s 1.6 million customers position the bank to sustain growth.
• Improved Efficiency: The full-year efficiency ratio dropped to 49.3%, aligning with the bank’s target to reduce costs by 5 percentage points annually.

However, investors should remain cautious about Argentina’s macroeconomic risks and regulatory reporting nuances.

Final Take: Grupo Supervielle’s fundamentals suggest it is well-positioned for medium-term growth, particularly if it can leverage its digital assets and maintain loan quality. While geopolitical and inflationary risks linger, the bank’s strong capitalization and strategic focus make it a compelling play on Argentina’s financial sector recovery.

Data as of December 31, 2024.