Good morning everyone and welcome to Grupo Supervielle's First Quarter Earnings Call. I'm Ana Bartesaghi, Treasurer and IRO. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. Speaking today will be Patricio Supervielle, our Chairman and CEO; Mariano Biglia, our CFO; Gustavo Manriquez, CEO of Banco Supervielle; and Diego Pizzulli, CEO of invertironline, will also be available during the Q&A session. Before we begin, I'd like to remind you that today's call may include forward-looking statements which are based on management's current expectations and beliefs and subject to risks and uncertainties. For more details, refer to the forward-looking statements section in our earnings release and recent SEC filings. Patricio, please go ahead.

Thank you, Ana. Good morning, everyone, and thank you for joining us today. In the first quarter of 2025, we introduced a cluster-based strategy to strengthen the value proposition across both retail and commercial customers to gain principal with our clients and attract new ones. Loan growth increased modestly sequentially, as we experienced some short-term softness in loan demand, particularly in March. This was largely due to external factors including limited peso liquidity, currency volatility, and caution ahead of the IMF milestone agreement. Reflecting our strategic focus, retail continued to lead, comprising over half of our total loan portfolio, up from just a third over a year ago, underscoring our emphasis on higher margin, more resilient segments. On the funding side, deposits increased high single digits sequentially. As equity remains solid, our NPL ratio rose this quarter and is aligned with industry levels driven by the rapid expansion of our retail loan book and remains below historical levels as well within suggested pricing thresholds. Customer-related net financial income increased in the high teens, highlighting the strength of our core franchise, while market volatility weighed on invested portfolio income. On the cost side, we maintained discipline, strongly reducing expenses and demonstrating our ability to drive operational efficiency. In an environment with many moving parts, we delivered a mid-single-digit ROE in real terms. Mariano will discuss our financial performance in more detail shortly. Argentina continued its agenda of intense deregulation measures. Inflation continues to decelerate while maintaining a fiscal surplus. Foreign exchange restrictions were lifted for individuals and continue to be gradually deregulated for corporations. The strong showing for the government in the recent CABA legislative elections demonstrates political support for the Milei government and is contributing to improved consumer confidence. Turning to Slide 4. As shared during our fourth quarter call, we finalized our strategic roadmap during this first quarter and began executing initiatives to position Supervielle as a differentiated player, blending the strength of traditional banking with the agility of fintech. At the heart of our strategy is meeting evolving customer expectations through simplicity, personalization, and convenience built on a resilient financial platform. We've already made progress on several high-impact initiatives. In April, we launched Argentina's first remunerated account allowing payroll and SME clients to earn daily interest in Peso and U.S. dollars. This product enhanced the client experience while deepening our funding base and reinforcing our role as a primary bank. We are encouraged by the early response from our clients. Early this month, we launched Tienda Supervielle on the Mercado Libre platform, a bank novelty fully integrated into our mobile app. This marks a new step in our vision for our Super app, providing customers a seamless platform to manage their financing, shop, and invest. Our new AI-powered customer interactions via WhatsApp enable real-time intuitive support while retaining the option to access human assistance, embodying our tech and touch approach. Lastly, the bank launched an investment platform to enable its customers to conduct investment transactions powered by invertironline, IOL, delivering a frictionless experience and an avenue for higher fee growth. This initiative reinforces our competitive position, and we are well positioned to support our clients and deliver long-term value for shareholders as Argentina enters a new phase of growth. With that, I'll turn the call over to Mariano Biglia, who will walk you through our financial performance and perspectives for the year.

Thank you, Patricio, and good day to all. Starting with Slide 5. Total loans were up 3% sequentially and doubled year-over-year in real terms. Growth this quarter was almost entirely driven by retail lending, which rose 196% year-on-year and now represents nearly 52% of our total loan portfolio, up from 36% a year ago and 48% at year-end. This intentional shift toward higher-margin retail products continues to support profitability and deepen customer engagement. Commercial lending was up 58% year-on-year but contracted slightly sequentially, reflecting softer demand from corporate clients amid tighter peso liquidity and a cautious macro backdrop. That said, our market share remains stable, and we are well positioned to reaccelerate in commercial lending as demand recovers. Turning to Page 6. Within retail loans, personal loans stood out, up 29% quarter-on-quarter and more than quadrupling versus the first quarter of last year. Car loans followed, rising 12% sequentially and growing nearly sixfold year-on-year. In turn, credit cards rose 5% quarter-on-quarter and nearly doubled year-on-year. On the commercial side, loans declined 4% sequentially, mainly reflecting a decline in dollar-denominated loan demand in a context of strong volatility in anticipation of the lifting of FX contracts. Moving on to Page 7. As anticipated, our NPL ratio reached 2% this quarter, primarily reflecting rapid expansion in retail loans. While this marks a normalization from historically low levels, it remains in line with industry benchmarks and consistent with our risk pricing. The coverage ratio at 153% continues to reflect a prudent buffer. By segment, delinquency in the retail portfolio increased to 2.8%, while SME and corporate loans stood at 1.3%. Importantly, all levels remain within our expected range. Cost of risk rose to 5%, reflecting higher provisions aligned with retail loan growth in line with our expected credit loss models. As these loans gain share, we are actively refining our origination and collection models to sustain asset quality and protect returns. In our retail portfolio, we prioritize credit quality and long-term relationship value. Currently, 53% of loans to individuals are tied to payroll and pension accounts, segments associated with lower risk and stronger retention. Notably, 88% of personal loans and over half of credit card volume is sourced from these clients, underscoring the strength of this channel. Additionally, 57% of retail loans extended to the open market are fully collateralized, mainly through car loans, supporting disciplined growth and enhanced credit quality. With respect to commercial loans, 27% of this book is secured by tangible guarantees, and three-quarters of nonperforming exposures are collateralized. Our exposure remains well diversified, with the top 10 corporate clients representing just 8% of total loans. Moving to Slide 7. Client-related net financial income rose 17% sequentially, reflecting the momentum in retail lending. Loan portfolio NIM improved 60 basis points to 21.3% in the period, also benefiting from the growing share of higher-yield products and a lower funding cost base. In contrast, the correction in bond valuations triggered by renewed FX volatility, together with a more restrictive monetary policy, resulted in a sharp decline in the investment portfolio net financial income. As a result, total net financial income declined 12% quarter-over-quarter. These trends reflect the resilience of our client franchise and validate our strategic shift towards diversified sources of income. Now please turn to Slide 10. In the context of a transition year, we are slightly adjusting our loan NPL and cost of risk targets for the full year. Starting with loans. Dollar-denominated lending declined nearly 10% sequentially, while peso loans rose 6%, broadly in line with industry trends. For the full year, we now expect to deliver real loan growth between 50% to 60%, contingent on monetary policy. This compares to our prior perspective of over 60% growth. Retail loans are expected to remain above 50% of the portfolio. In terms of funding, peso deposits were up 12% sequentially, while dollar-denominated deposits were practically flat. We continue to expect 40% growth in total deposits for the full year, supported by a rising share of dollar balances and a strong traction in remunerated accounts, while peso deposits remain sensitive to monetary policy. On asset quality, we now expect the NPL ratio to range between 2.2% to 2.5% at year-end, up from our original expectation of 2% to 2.2%, reflecting a higher weight of retail loans. Net cost of risk expectations now range between 4% to 4.5% compared to our prior range of 3.7% to 4% on a higher share of retail loans. We also expect NIM to continue to normalize in the 18% to 20% range as inflation continues to ease, leverage grading increases, and the mix shifts toward dollar-denominated loans and deposits. Turning to Slide 11. We continue to expect fee income to grow by at least 10% in real terms in 2025. As discussed in our prior call, we anticipate fee income to be driven by higher net bank and brokerage fees, along with higher penetration of investment and insurance products across our client base. On the cost side, operating expenses were down 12% sequentially and 17% year-on-year, reflecting our focus on driving real-term reductions through workforce optimization and other initiatives. We expect this to further strengthen operating leverage as we continue to cut costs and drive revenue growth. As a result, we continue to expect ROE to improve progressively, reaching between 12% and 15% for the year, reflecting margin stabilization, stronger fee contribution, and the benefits of structural efficiencies. We also maintain our year-end CET1 ratio expectations of 12% to 13%, factoring in loan growth and regulatory adjustments. In sum, we remain focused on disciplined execution, balancing growth, efficiency, and capital preservation. We are closely monitoring the macro and regulatory landscape and are confident in our ability to navigate the evolving context and seize emerging opportunities. Finally, additional details on our quarterly performance are available in the Appendix of our earnings presentation.

Thank you Ana. Hi, good morning Patricio, Mariano and team. My question will be on asset quality. We noted the NPL ratio normalized to 2%. But at the same time, we also saw an important increase in provision charges and cost of risk. So can you elaborate if there is any trouble with corporate loans, particularly in the agriculture sector? And how should we think about the evolution of the cost of risk throughout the year, especially as it was, I think 5.2% in the first quarter, but you are expecting the guidance for the full year to be between 4% to 4.5%. Thank you.

Thank you, Ernesto, for your question. First of all, I have to say that what we are seeing is a normalization of credit in the market. The NPLs are coming to a more normal level from very low levels previously. We are very comfortable with our risk controls and individuals and enterprises; they are generally still very low indebted in Argentina. So this is a normalization. The increase in NPL that you saw in the quarter relates to the growth of the loan portfolio, particularly in the retail sector. But please, Mariano, do you want to answer more specifically?

Sure. Thank you, Ernesto for your question. Regarding the NPL, as Patricio said, we are seeing a normalization. Our portfolio is balancing more towards the retail segment. That's why we also are seeing an increase in NPLs and an increase in the cost of risk. Regarding our guidance for the full year, we are slightly increasing the guidance for NPL. We have the guidance from in the range of 2% to 2.2%. Now we are in the range of 2.2% to 2.5%. That's basically because of the composition of the portfolio leaning more towards retail. We are not seeing any problems in the agricultural sector or the corporate side. If you see the evolution of the NPL in corporate loans, it is quite stable compared to the previous quarter. We know we had news from some corporates in the last month of last year, but we are seeing good behavior in that portfolio.

Ernesto, sorry, on Page 5, you can see that one year ago, we had 64% for commercial loans and 36% from retail loans. Now this quarter we have 52% for individual loans or personal loans and 48% for commercial loans. So that different composition explains the figures that you are seeing today.

Sorry to add, but when examining unsecured loans for individuals, especially personal loans, most of them are tied to payroll accounts or pensioners, which gives us a lot of confidence. Additionally, in an open market scenario, the majority of the loans consist of car loans that are secured by the vehicles themselves, which also makes us feel quite secure. Thank you.

Perfect. Thank you. So just a follow-up in terms of cost of risk because I believe it was around 5% in the first quarter, but you are guiding for the full year between 4% to 4.5%. The worst of the cost of risk already happened in the first quarter, and it should be improving throughout the rest of the year, as you were saying the bulk is in payroll loans, pensioners, and auto loans. Is that what we should expect?

Yes, correct. The net cost of risk was 4.8%. So it is slightly above the range for the full year. We should see the cost of risk improving in the following quarters and having the full year within that range.

We are working on improving the cost of risk going forward. So yes, we are keeping the 4.5% of cost of risk. We are working on new measures in order to keep the numbers at that level.

Perfect. Thank you very much.

So our next question comes from Brian Flores with Citi. Please go ahead.

Hi, team. Good morning. I have a question on capital because you might have the lowest position among incumbents and in the last 12 months, you have consumed around 10 percentage points of Tier 1, which comes to around 250 basis points per quarter. So you are already at 15%, which means that to go to the 12% to 13% range you're saying by the end of the year, you need to be consuming significantly less than you had. So a question on your risk appetite. Should we continue seeing the aggressive growth we have seen? And should we expect you to defend the market share you have gained? I know Patricio, in the report, you mentioned the 40 basis points market share gain you had in the last months. So should we continue to see you, I would say, aggressively defending or pursuing more market share? Or should we see a bit more, I would say, caution on origination? And if you could expand on which segments that also would be great. Thank you.

First of all, what happened is that in the fourth quarter of last year, we anticipated market growth that might have had a catch-up in the first quarter of this year from the rest of the banks. So this was an anticipation. But our risk appetite has not changed. As I said previously, we are starting from very low levels of debt for corporations and individuals, and we believe that this is a great opportunity for the financial system looking forward with inflation continuing to go down and also expected at some time also nominal rates to go down. This would be very positive for the credit side. Regarding the portfolio mix, in order to sustain what you mentioned about defending capital levels, it is essential to also gradually change the mix of the portfolio from corporates to individuals. Paco just mentioned the change that occurred from the beginning of last year until now in terms of giving more weight to retail loans. This should continue to gradually increase the ratio of retail loans in order to defend the return on equity. Additionally, Paco has implemented stringent measures in terms of cost controls which you can continue to see in the first quarter, both in personnel and general and administrative expenses, while being very disciplined on the investment side for technology, focusing more efficiently. Lastly, I believe that there is a challenge for the entire financial industry, which is expanding the leverage of the financial industry because the leverage is very low. We will be looking forward to expand our leverage to sustain the return on equity. I hope I have given you the answer to your question.

No great. So, just to summarize, we understand, based on your presentation, as you mentioned, NIMs should continue coming down. Asset quality, perhaps a bit more pressured, but within control. So basically, what you are saying is perhaps a lower risk density helping the ratio, but also more leverage also helping achieve better levels of ROE. Just to summarize, this is a correct picture in 2025?

Yes, I think it is correct.

Yes, that's correct, Brian. The range of Tier 1 capital ratio that we gave is consistent with the rest of the projections of loan growth basically, and the other measures.

Thank you Brian. We have another question. It comes now from Carlos Gomez-Lopez from HSBC. Hello good morning Carlos, thank you for asking questions. Please go ahead.

Thank you good morning. As always thank you for the detailed presentation of your results. I have a question on the deposit side. You mentioned that you had a 12% increase quarter-on-quarter. But when I look at Page 17 of your presentation, I see that, that is mostly on the wholesale side. Now you expect a 40% increase in deposits in real terms in the year. What makes you think that you can achieve that rate of growth? And what alternatives for funding do you think you can count on? Thank you.

Let me provide a general answer first, and then Paco will add to it. In recent years, the financial industry in Argentina faced issues of disintermediation due to restrictive measures from the Central Bank, which affected banks' ability to take deposits. A significant amount of savings and transactional funding flowed into money market accounts. These accounts have gradually transitioned to banks as interest-bearing accounts, which under Basel regulations can only be used to fund securities. The key challenge is to boost CASA deposits. Banco Supervielle has been proactive in addressing this issue by encouraging individuals and businesses to deposit their funds with us.

Yes. Basically, we launched early April, Cuenta Remunerada. It is a remunerated account for payroll customers. As you saw in the presentation, we have a huge focus on payroll account customers basically. We have excellent results in order to see the balances of those customers. They are usually more stable and also increase their balances against the previous months. So we launched, as Patricio mentioned, a very disruptive product for the market compared to other banks in order to compete directly. So we have excellent results just one month after the launch. It's a strategic response to the challenge we have for the year. I feel confident about this as we have a very comprehensive and robust strategic plan in place.

I might also complement. The challenge and the goal that Paco has set for the bank is to cover the cost of these remunerated accounts with a reduction of expenses. This is pure value creation for the bank. If you look at international experiences, there have been other players like this in the market. For instance, Cuenta Naranja of ING Direct in Spain in 1999 was very successful. Another example in Chile is Banco Consorcio, which has been successful in the last four years. We are very confident about that.

Can you tell us how much you are paying for the remunerated account? And can you give us the starting point, how many salary accounts you have now? And what would be a good outcome for you by the end of the year?

We are paying a 32% annual interest rate. I can say that half of our customer base is now in this new product, Cuenta Remunerada. We are attracting the other half. We are launching this through our sales force and throughout all the branches, also for the SME segment. We launched this Cuenta Remunerada for the whole ecosystem of companies and employees. I believe we can achieve an additional 50% growth with intense incentives for our branches and sales teams to keep attracting customers for this product in Argentina.

And one final clarification. When you said that half have accepted so these are clients that previously did not have a remunerated account, and therefore, they will be pure CASA. Now they keep the account, but now you are paying 32% on it right? I mean the initial impact should be higher interest expense. Should I understand that correctly?

It's a high interest expense, but at the same time, we will compensate for this with cost reduction. Another factor lying behind is that typically, the transactional money was moving out of banks into money market accounts. So we are trying to change that behavior to bring that money back into banks. This is a structural play. Thus, we believe this is creating value because we are not only retaining clients who would have left but also increasing the balances of our clients by changing their behavior. I hope that's clear.

Carlos, to clarify, we don't have or will have more cost or financial costs for these initiatives. We will cover those additional costs with additional expense cuts.

It's also important to highlight, Carlos, that for individuals, we pay their balances on savings accounts for payroll customers up to ARS1 million, which is very competitive compared with banks that don't pay anything and also with fintechs. This is why the cost is also controlled.

Very good point because if the customer maintains more balances, we earn money on that part.

And for SMEs, it's not the same.

No. There is a ceiling; as mentioned, Mariano, there is a ceiling on what we remunerate, up to ARS1 million basically. Above ARS1 million, we do not remunerate. This is for the case of individuals. In the case of corporations or SMEs, it's different. Before remunerating, they need to have a balance of up to a certain amount of ARS25 million with no remuneration; above that, we remunerate it. So it's a different structure.

Thank you, Carlos. I think we have a couple of questions in the Q&A box. One comes from Matia Catarusi with ATCAP Securities. We have two questions. Maybe we can go with two questions at the same time. Net interest margin dropped sharply to 19.2% from 61.8% in the first quarter of '24 and 24.9% in '24. What were the main drivers of this compression? And do you expect a recovery in NIMs going forward? And mainly due to the NIM compression, net income fell 74% Q-on-Q and 89% year-on-year with return on equity at 3.5%. What are management's updated expectations for full year return on equity?

I would like Mariano to answer this question. But first, I would like to say that in the first quarter, what happened or affected the NIM was a deterioration of prices of government securities. This has to do with uncertainties during March and April related to the creation of reserves and the expectation of an IMF agreement. This impacted prices, and you can see that effect on the first quarter. Afterward, there was a positive change; however, it is not reflected in the first quarter's figures. Please, do you want to complement?

Sure, Patricio. When you compare to the first quarter of '24, also if you compare quarter-on-quarter, the main driver is a lower NIM on the investment portfolio. The first quarter of '24 was extraordinary, with over 60% NIM. It was not sustainable. In fact, we saw that decreasing quarter-on-quarter last year, where we had extraordinary results mainly from the investment portfolio, but also in an environment of much higher interest rates and inflation. Comparing quarter-on-quarter, although inflation was similar, the decrease in NIM relates mostly to the investment portfolio—and that is primarily due to the volatility we saw in the first quarter of '25 with low results from treasury positions. However, the loan portfolio NIM remains and in fact increased slightly. This explains why we are migrating our asset compositions from treasury securities or central bank securities to loans. Those are the main drivers.

I think we have another question from the audience. How do you see the impact of the recent government measures to allow non-declared dollars to be used in the economy?

I think it's—well, yet we need to see it because there are certain details, particularly on fiscal—certain aspects of what the government intends to do that need to pass to Congress since it implies tax regulation. It is positive in the sense that they want to create incentives for consumption and for using dollars that individuals have in safe deposits. These measures aim to favor the middle-income segment of the country. Of course, I think this is very positive. At the same time, it's possible that there will be changes in the regulations of the Central Bank, as you know. Probably, the money that is not given in dollar loans to corporations is basically deposited at the Central Bank with no interest. I believe that there will be a change in that to adapt it more to international levels and thus provide a higher or better value proposition for savings in dollars. So, these measures that you mentioned will probably be complemented by changes in regulation and by remunerating deposits somehow. This is my expectation.

And we have another question from Brian Flores. Brian, please go ahead.

Hi, team, thank you for the follow-up. Just a quick question. Could you remind us a bit on the density of risk weights? I think Mariano made an interesting comment, and I think the system is shifting from public securities, which we understand have a risk weight of 0, to, in your case, a bit more exposure on the retail side. So just can you remind us of the ranges of risk density? I think if I'm not mistaken, it's anywhere between 50 to 150. But then on the retail side, wherever you are focusing on, maybe with guarantees, this could be lower? Just to understand a bit more on the technical side. Thank you.

Yes. So, basically, treasury securities, most of the treasuries don't have capital requirements or it's very low. It's more related to market risk. The capital requirements for those treasuries in the investment portfolio do have credit risk-weighted assets. So capital requirements are not completely 0. But of course, as we migrate to the loan portfolio, there are higher capital requirements because risk-weighted assets increase. When you increase the leverage, you are directly increasing assets, not just changing the composition. The normal risk density is 100%. There are some exceptions or waivers for certain loans, mainly to individuals which would be lower to 75%, for instance in certain mortgage loans or certain credits for consumption, they can go to 75%. And 150 is more related to non-performing loans with certain unsecured nonperforming loans, but that is not very material in the balance sheet. That's at least a very brief summary. I don't know if I've answered your question.

You did. That was very helpful.

Thank you, Brian. We have another question from Carlos Gomez-Lopez from HSBC.

Just a follow-up on the capital question. There was a change in the regulation. You referred to it in your presentation. I think it's 1.4%. But that's a reduction in your capital ratio because of the change in regulation or an increase? Because in some of the banks, I have seen that the impact was favorable, not this favorable. So, if you could clarify what the change of regulation is, how would it affect you? And going back to the target of 12%, 13% by the end of the year, I mean, obviously, you continue to grow very fast. What is the minimum that you would consider acceptable going into the following year? And would it be reasonable to expect that at some point, you may tap the market for more equity if growth continues to be favorable?

The last part of the question, we are comfortable with the capital levels. If we continue to see a huge increase in demand for loans in 2026 and the market is there, it is possible that we might need the market for capital. We are looking into this, but it's not in our plans as of today. But do you want to complement on answering this?

Yes, sure, Carlos. Regarding the first part of your question, it is correct. As we said in the presentation, the changes in regulation or mainly for operational risk resulted in a 1.4% decrease in the Tier 1 ratio. This relates to an increase in risk-weighted assets. It's not a higher deduction or less capital, but it is an increase in risk-weighted assets due to higher capital requirements for operational risk.

That is permanent?

The change is permanent, although we are having some discussions with the Central Bank because it has affected medium-sized entities in a more punitive way. A waiver applies for the smallest entities, while the entities with systemic risk can adopt Basel III. The conditions are more punitive in the middle, where we are. We expect the Central Bank to review that and allow us to adopt the complete Basel III. If that doesn't change, it will be permanent but should decrease over time because the regulation change requires us to adjust for inflation on the past revenues, which are the basis for calculating operational risk. If you return to years with very high inflation, revenues are often very high to compensate for inflation. Thus, operational risk-weighted assets will significantly impact capital requirements. This should decrease over time as inflation decreases and revenues decrease.

That's very clear. And again, I know you are comfortable today, but what is the level at which you are not comfortable? The 12%, 11%, 10%? What is the absolute minimum that you would like to run the bank?

For us, we feel comfortable with an 11% Tier 1 ratio. On top of that, as we always say, we can add Tier 2, which right now we don't have as we didn't need it in the past. In the last year, we didn't have any Tier 2. All our capital is CET1. We could add Tier 2 if there is the opportunity, feeling comfortable with 11% or more. In fact, it would be an efficient use of capital.

So it's 11% Tier 1 or 11% total that you are targeting?

11% Tier 1. Yes. Remember that the minimum capital requirement is 8% and 10.5% if we want to pay dividends, although we are not paying dividends from the bank. We just received dividends from the insurance and the asset manager subsidiary.

Very good. Thank you.

Thank you, Carlos, and thank you all. We have reached the end of today's Q&A session. I see there is a new question in the Q&A box. Thank you for taking my question. The question is regarding the NIM of 18% to 20% estimated for 2025. Could you break that down in terms of rates on assets and liabilities? What levels of rates are you estimating on assets and the funding? Thank you so much.

Let me tell you about the reference interest rate. From there, it is a starting point for pricing assets, which, of course, are very different regarding the segment and the product. We see the reference interest rate to stay stable in the next few months and then decrease. As inflation decreases, we think the interest rates will naturally decrease. But particularly in the environment of capital controls, we think we will see positive real interest rates. Therefore, the path that we see is a decrease in inflation and a decrease in interest rates, but not immediately. So that will lead to positive interest rates that will be translated, of course, to both loans and deposits. That is how we will price our assets and liabilities.

Okay. Now, yes, we have reached the end of today's Q&A session and earnings call. Thank you for joining us today. We appreciate your interest in the company, and we look forward to meeting more of you over the coming weeks and months and providing a financial and business update next quarter. We remain available to answer any questions that you may have, and have a good day.