Grupo Supervielle S.A. 2026 Q2 Earnings Call

Recording in progress. Good morning, and welcome to Grupo Supervielle's second quarter 2026 earnings call.

I am Ana Bartesaghi, shareholder and IRO. Today's conference call is being recorded. For the Q&A session, please ensure your full name appears on Zoom. You can ask questions by voice or through the Q&A chat box. Speaking today are Patricio Supervielle, our Chairman and CEO, Gustavo Paco Manriquez, CEO of Banco Supervielle, and Mariano Biglia, our CFO. Diego Pizzulli, CEO of InvertirOnline, will also be available during the Q&A session. Before we begin, please note this call may include forward-looking statements. Please refer to our earnings release and SEC filings for further details. Patricio, please go ahead. Thank you, Ana.

Good morning, everyone, and thank you for joining us today. The second quarter marked our return to profitability and further progress in transforming Supervielle. Most importantly, the changes to our operating model are beginning to translate into a structurally lower cost to serve. The rightsizing program is now largely implemented and aligned to our current operating model, reflecting the full quarterly salary savings already secured. Structural return on average equity would have reached 14.4%, illustrating the earnings support provided by our leaner operating model. Our core earnings also improved. Margin benefited from funding costs declining faster than asset yields. Asset quality indicators continued to move in the right direction, with NPL formation declining for a second consecutive quarter and cost of risk improving sequentially.

While credit costs remain elevated, these trends reinforce our view that the peak is behind us and our collection, refinancing, and underwriting initiatives are beginning to produce results. With ARS credit demand still subdued, we continue to prioritize risk-adjusted returns over volume, while actively managing our funding mix and maintaining a strong liquidity position. We also made further progress across our ecosystem. The partnership with Aerolíneas Argentinas is one example of how we are strengthening the value proposition for Identité customers. At IOL invertironline, assets under custody reached $3 billion, reflecting continued traction with higher-value clients and deeper investment relationships. Overall, we enter the second half with a structurally leaner platform, improving credit trends, and a stronger foundation for disciplined, profitable growth. Paco and Mariano will expand on this shortly. Let me turn briefly to the macro backdrop to put our second quarter performance in context.

Conditions became more stable during the quarter, with sustained FX purchases since the start of the year moving net reserves into positive territory. Interest rates remain broadly stable, contributing to lower funding costs and margin recovery, while monthly inflation declined for three consecutive months. However, greater stability has not yet translated into a broad-based recovery, and peso credit demand remains subdued. Policy momentum is improving visibility, with structural reform supporting a more predictable macro environment and reserve accumulation reinforcing effect stability. Argentina is undergoing a transition toward an export and investment-led growth model. 21 RIGI projects have been approved, representing approximately $47 billion of planned investment, primarily in energy, mining, and infrastructure. This should create attractive financing opportunities across the broader value chain. Greater visibility of the government's financial plan for sovereign debt maturities in 2026 and 2027 has also reduced near-term refinancing uncertainty. Nevertheless, the recovery remains uneven.

Looking ahead, continued progress will depend on consistent policy execution and further strengthening the institutional framework. Maintaining fiscal discipline, advancing monetary normalization, and gradually removing remaining FX restrictions will be essential to reinforce confidence and contain volatility. Overall, the direction is constructive and should gradually support credit demand and asset quality. Supervielle enters this phase with gradually improving credit trends, a structurally leaner platform, and solid capital formation. Gustavo Paco Manriquez will now discuss how the bank is positioning itself to capture this opportunity through disciplined, profitable growth.

Paco, please go ahead. Thank you, Patricio, and good morning, everyone.

Turning to slide 5, I will focus on how we are managing the bank today and where we see attractive growth opportunities for the second half. On the balance sheet, prudence remains our priority. Peso loan demands were soft, and with system delinquencies still elevated, we choose not to chase volume. We maintain selective origination, grew transactional deposits across retail and corporate clients, and actively manage the funding mix. As margin normalizes, every new loan must continue to meet our risk-adjusted return thresholds. On asset quality, delinquency and cost of risks improved sequentially, although both remain elevated. The collection, refinancing, and customer outreach initiative launched in December are producing early results, while recent origination cohorts are performing meaningfully better. We will maintain this discipline as we gradually rebuild lending. On structural efficiency, the rightsizing plan is largely completed.

It reflects the work we have been doing for some time to redesign the service model without compromising service quality. Annualized personnel savings are approximately ARS 42 billion, with the full quarterly run rate benefits starting in this third quarter. Turning to growth, our focus is on expanding the loan portfolio profitability through a targeted rather than broad-based approach. In retail, we are focused on expanding and deepening relationships across three priority segments: payroll, Identité, our premium offer, and senior citizens. Our enhanced scoring capabilities allow us to identify the stronger customer and serve more of their transactional saving and credit needs through tailored products. In corporate banking, the strongest opportunities are in Vaca Muerta mining and selected regional economies, where activity in more dynamic and USD loan demand remains strong.

On partnerships, we recently reached an agreement with Flash Argentina, a company that originated within the Mercado Libre ecosystem, through which we will finance person-to-person vehicle transactions listed on Mercado Libre starting in the fourth quarter of the year. In short, we are combining a learner operating model, disciplined balance sheet management, and sharper customer selection to resume growth where we see good credit behavior and compelling economics. With that, I will hand the call over to Mariano, who will discuss our financial results and updated guidance.

Thanks. Thank you, Paco, and good day to everyone.

Turning to slide 6. Attributable net income turned positive, reaching ARS 13 billion in the second quarter, a swing of more than ARS 31 billion when compared with the loss of ARS 18 billion in the first quarter. Excluding ARS 23 billion in after-tax extraordinary severance charges, adjusted net income reached ARS 36 billion, with adjusted ROE of 12.4%. The sequential recovery was driven mainly by stronger net financial income, lower inflation adjustment, and improving credit costs. Together, these factors more than offset softer fee income and modestly higher adjusted operating expenses. Slide 7 takes this analysis one step further by illustrating the earnings capacity of our streamlined cost base.

After incorporating a full quarter of salary savings from the rightsizing actions of the second quarter, structural net income would have reached ARS 42 billion, equivalent to a structural ROE of 14.4%. Applying the same framework, structural net income for the first half would have totaled ARS 53 billion. The program reduced our workforce by 553 employees during the first half, including 262 in the second quarter. With these actions now completed, the structurally lower cost base should support continued improvement in efficiency and profitability. Turning to slide 8. Total loans declined just over 1% sequentially and increased nearly 9% year-on-year. Commercial lending edged higher, supported by US dollar loans, which grew 6% in original currency. Retail loans, in turn, declined 2%, reflecting still soft demand and our selective approach to origination.

As Paco discussed earlier, we expect retail growth to rebuild gradually as inflation declines, while maintaining disciplined credit criteria and a balanced, profitable portfolio mix. Turning to asset quality on slide 9. Our NPL ratio improved 10 basis points sequentially to 5.5%. Meanwhile, the financial system ratio deteriorated 60 basis points to 7.6%, placing our ratio 210 basis points below the industry. Quarterly NPL formation declined for the second consecutive quarter and was approximately 20% below the fourth quarter peak, with retail formation down 21%. Net cost of risk eased to 5.6% from 6% in the first quarter, reflecting the early benefits of our collections and refinancing initiatives, together with disciplined risk-adjusted origination. Importantly, recent origination cohorts continue to perform meaningfully better. Together, these trends reinforce our view that asset quality has entered a gradual improvement phase. Turning to slide 11. Net financial income reached ARS 295 billion, increasing 8% sequentially.