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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 20-F

 

 

ANNUAL REPORT

 

PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended: December 31, 2016

 

Commission file number 001-37777

 

GRUPO SUPERVIELLE S.A.

(Exact name of Registrant as specified in its charter)

SUPERVIELLE GROUP S.A.

(Translation of Registrant’s name into English)

REPUBLIC OF ARGENTINA

(Jurisdiction of incorporation or organization)

Bartolomé Mitre 434, 5th Floor C1036AAH Buenos Aires Republic of Argentina

(Address of principal executive offices)

Alejandra Naughton Bartolomé Mitre 434, 5th Floor C1036AAH Buenos Aires Republic of Argentina Tel: 54-11-4340-3053 Email: Alejandra.Naughton@supervielle.com.ar

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class		Name of each exchange on which registered
American Depositary Shares, each representing 5 Class B shares of Grupo Supervielle S.A.		New York Stock Exchange
Class B shares of Grupo Supervielle S.A.		New York Stock Exchange*

 

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*      Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the New York Stock Exchange.

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

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The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2016 was:

 

Title of class		Number of shares outstanding
Class B ordinary shares, nominal value Ps.1.00 per share		237,039,427

 

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o    No x

 

If this report is an annual or transitional report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes o    No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:

Yes x    No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Not applicable.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. o

 

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o    Item 18 x

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No x

 

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TABLE OF CONTENTS

 

Item 1.		Identity of Directors, Senior Management and Advisors		1
Item 2.		Offer Statistics and Expected Timetable		1
Item 3.		Key Information		1
Item 3.A.		Selected Financial Data		1
Item 3.B		Capitalization and indebtedness		6
Item 3.C		Reasons for the offer and use of proceeds		6
Item 3.D		Risk Factors		6
Item 4.		Information of the Company		32
Item 4.A		History and development of the Company		37
Item 4.B		Business overview		41
Item 4.C		Organizational structure		130
Item 4.D		Property, plants and equipment		130
Item 5.		Operating and Financial Review and Prospects		156
Item 5.A		Operating Results		156
Item 5.B		Liquidity and Capital Resources		196
Item 5.C		Research and Development, patents and licenses, etc.		205
Item 5.D		Trend Information		206
Item 5.E		Off-balance sheet arrangements		207
Item 5.F		Contractual Obligations		208
Item 5.G		Safe Harbor		209
Item 6.		Directors, Senior Management and Employees		209
Item 7.		Shareholders and Related Party Transactions		232
Item 7.A.		Major Shareholders		232
Item 7.B		Related Party Transactions		233
Item 7.C		Interests of experts and counsel		236
Item 8.		Financial Information		236
Item 8.A.		Consolidated Statements and Other Financial Information		236
Item 8.B		Significant Changes		240
Item 9.		The Offer and Listing		240
Item 10.		Additional Information		241
Item 10.A.		Share capital		241
Item 10.B.		Memorandum and articles of association		241
Item 10.C		Material contracts		248
Item 10.D		Exchange Controls		248
Item 10.E		Taxation		253
Item 10.F		Dividends and paying agents		259
Item 10.G		Statement by experts		259
Item 10.H		Documents on display		259
Item 10.I.		Subsidiary Information		259
Item 11.		Quantitative and Qualitative Disclosures about Market Risk		259

 

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Item 12.		Description of Securities Other Than Equity Securities		265
Item 12.A		Debt Securities		265
Item 12.B		Warrants and Rights		265
Item 12.C		Other Securities		265
Item 12.D		American Depositary Shares		265
Item 13.		Defaults, Dividend Arrearages and Delinquencies		266
Item 14.		Material Modifications to the Rights of Security Holders and Use of Proceeds		266
Item 15.		Controls and Procedures		266
Item 16.A		Audit committee financial expert		266
Item 16.B		Code of Ethics		267
Item 16.C		Principal Accountant Fees and Services		267
Item 16.D		Exemptions from the Listing Standards for Audit Committees		267
Item 16.E.		Purchases of Equity Securities by the Issuer and Affiliated Purchasers		267
Item 16.F		Change in Registrant’s Certifying Accountant		267
Item 16.G		Corporate Governance		268
Item 16.H.		Mine Safety Disclosure		270
Item  17.		Financial Statements		270
Item  18.		Financial Statements		270
Item 19.		Exhibits		271

 

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CERTAIN DEFINED TERMS AND CONVENTIONS

 

In this annual report, we use the terms “we,” “us,” “our” and the “group” to refer to Grupo Supervielle S.A. and its consolidated subsidiaries, including Banco Supervielle S.A., unless otherwise indicated. References to “Grupo Supervielle” mean Grupo Supervielle S.A. References to the “Bank” mean Banco Supervielle S.A. and its consolidated subsidiaries. References to “Tarjeta” mean Tarjeta Automática S.A. References to “Cordial Microfinanzas” mean Cordial Microfinanzas S.A. References to “SAM” mean Supervielle Asset Management Sociedad Gerente de FCI S.A. References to “Adval” mean Adval S.A. References to “Sofital” mean Sofital S.A.F.e I.I. References to “CCF” mean Cordial Compañía Financiera S.A. References to “Supervielle Seguros” mean Supervielle Seguros S.A. References to “Espacio Cordial” or “Cordial Servicios”  mean Espacio Cordial Servicios S.A. References to “Viñas del Monte” mean Viñas del Monte S.A.

 

References to “Class B shares” refer to shares of our Class B common stock, all with a par value of Ps.1.00 per share and references to “ADSs” are to American depositary shares, each representing five Class B shares, except where the context requires otherwise.

 

The term “Argentina” refers to the Republic of Argentina. The terms “Argentine government” or the “government” refers to the federal government of Argentina, the term “Central Bank” refers to the Banco Central de la República Argentina , or the Argentine Central Bank, and the term “CNV” refers to the Argentine Comisión Nacional de Valores , or the Argentine securities regulator. “U.S. GAAP” refers to generally accepted accounting principles in the United States of America (“United States” or “U.S.”), “Argentine GAAP” refers to generally accepted accounting principles in Argentina and “Argentine Banking GAAP” refers to the accounting rules of the Central Bank. The term “GDP” refers to gross domestic product and all references in this annual report to GDP growth are to real GDP growth, the term “CPI” refers to the consumer price index and the term “WPI” refers to the wholesale price index. The term “customers” refers to individuals or entities that have at least one of our products without any requirement of customer activity during any time period. Unless the context otherwise requires, the term “financial institutions” refers to institutions regulated by the Central Bank. The term “Argentine banks” refers to banks that operate in Argentina. The term “Argentine private banks” refers to banks that are not controlled or owned by the Argentine federal government or any Argentine provincial, municipality or city government. The term “private domestically-owned banks” refers to private banks that are controlled by Argentine shareholders. The term “small businesses” refers to individuals and businesses with annual sales of up to Ps.40.0 million. The term “SMEs” refers to companies with annual sales over Ps. 40.0 million and below Ps. 200.0 million. The term “Middle-Market Companies” refers to companies with annual sales over Ps. 200.0 million and below Ps. 1.0 billion. The term “Large Corporates” refers to companies with annual sales over Ps. 1.0 billion. The term “ROAE” refers to return on average shareholders’ equity. ROAE is frequently used by financial institutions as a benchmark to measure profitability compared to peers but not as a benchmark to determine returns for investors, which is affected by multiple factors that ROAE does not consider.

 

 

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

 

Financial Statements

 

We maintain our financial books and records in Pesos and prepare our consolidated financial statements in Argentina in conformity with Argentine Banking GAAP, as these are the rules and regulations applied by the Bank, our main subsidiary. Argentine Banking GAAP differs in certain significant respects from U.S. GAAP and from Argentine GAAP. Our consolidated financial statements as of December 31, 2016 and 2015 and for each of the three years ended December 31, 2016, 2015 and 2014 have been audited, as stated in the report appearing herein, and are included in this annual report and referred to as our “audited consolidated financial statements.”  Note 35 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2016 and 2015, and for the years ended December 31, 2016, 2015 and 2014. Unless otherwise indicated, all financial information of our company included in this annual report is stated on a consolidated basis under Argentine Banking GAAP.  Our audited consolidated financial statements as of

 

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December 31, 2016 have been approved by our ordinary and extraordinary shareholders’ meeting held on April 27, 2017.

 

Currencies and Rounding

 

The terms “U.S. dollar” and “U.S. dollars” and the symbol “US$” refer to the legal currency of the United States. The terms “Peso” and “Pesos” and the symbol “Ps.” refer to the legal currency of Argentina.

 

We have translated certain of the Peso amounts contained in this annual report into U.S. dollars for convenience purposes only. Unless otherwise indicated, the rate used to translate such amounts as of December 31, 2016 was Ps.15.85 to US$1.00, which was the reference exchange rate reported by the Central Bank for U.S. dollars. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos. The U.S. dollar equivalent information presented in this annual report is provided solely for the convenience of investors and should not be construed as implying that the Peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See “Exchange Rates” for more detailed information regarding the translation of Pesos into U.S. dollars.

 

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

 

Market Share and Other Information

 

We make statements in this annual report about our competitive position and market share in, and the market size of, the Argentine banking industry. We have made these statements on the basis of statistics and other information derived from the Central Bank’s publications and other third-party sources that we believe are reliable. Although we have no reason to believe any of this information or these reports are inaccurate in any material respect, we have not independently verified the competitive position, market share and market size or market growth data provided by third parties or by industry or general publications.

 

In January 2007, the Instituto Nacional de Estadísticas y Censos (the National Statistics and Census Institute, or “INDEC”), which is the only institution in Argentina with the statutory authority to produce official nationwide statistics, modified the methodology used to calculate certain of its indices. On January 8, 2016, the Macri administration issued Decree No. 55/2016 declaring a state of administrative emergency with respect to the national statistical system and the INDEC until December 31, 2016. During this state of emergency, the INDEC suspended the publication of certain statistical data until it completed a reorganization of its technical and administrative structure capable of producing sufficient and reliable statistical information. Following the implementation of certain methodological reforms and the adjustment of macroeconomic statistics on the basis of these reforms, on June 15, 2016, the INDEC published the INDEC Report including revised GDP data for the years 2004 through 2015. As of the date of this annual report, the INDEC has resumed publishing certain revised data, including GDP, foreign trade, poverty and balance of payment statistics. As of the date of this annual report, the Argentine government has not renewed the state of administrative emergency declared by means of the Decree No. 55/2016.

 

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FORWARD-LOOKING STATEMENTS

 

This annual report contains estimates and forward-looking statements, principally in “ Item 3.D Risk Factors ”, “ Item 5.A Operating Results ”, and “ Item 4.B Business overview .” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future courses of action, events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among others:

 

(i)                          changes in general economic, financial, business, political, legal, social or other conditions in Argentina or elsewhere in Latin America or changes in either developed or emerging markets;

 

(ii)                       changes in capital markets in general that may affect policies or attitudes toward lending to or investing in Argentina or Argentine companies, including expected or unexpected turbulence or volatility in domestic and international financial markets;

 

(iii)                    changes in regional, national and international business and economic conditions, including inflation;

 

(iv)                   changes in interest rates and the cost of deposits, which may, among other things, affect margins;

 

(v)                      unanticipated increases in financing or other costs or the inability to obtain additional debt or equity financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities;

 

(vi)                   changes in government regulation, including tax and banking regulations;

 

(vii)                adverse legal or regulatory disputes or proceedings;

 

(viii)             the interpretation by judicial courts of the new Argentine Civil and Commercial Code;

 

(ix)                   credit and other risks of lending, such as increases in defaults by borrowers;

 

(x)                      fluctuations and declines in the value of Argentine public debt;

 

(xi)                   increased competition in the banking, financial services, credit card services, asset management and related industries;

 

(xii)                a loss of market share by any of our main businesses;

 

(xiii)             increase in the allowances for loan losses;

 

(xiv)            technological changes or an inability to implement new technologies, changes in consumer spending and saving habits;

 

(xv)               ability to implement our business strategy;

 

(xvi)            fluctuations in the exchange rate of the Peso; and

 

(xvii)         other factors discussed under “ Item 3.D Risk Factors ” in this annual report.

 

The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “forecast” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we do not undertake any

 

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obligation to update publicly or to revise any forward-looking statements after we distribute this annual report because of new information, future events or other factors, except as required by applicable law. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this annual report might not occur and do not constitute guarantees of future performance. Because of these uncertainties, you should not make any investment decisions based on these estimates and forward-looking statements.

 

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PART I

 

Item 1.                             Identity of Directors, Senior Management and Advisors

 

Not applicable.

 

Item 2.                             Offer Statistics and Expected Timetable

 

Not applicable.

 

Item 3.                             Key Information

 

Item 3.A.                 Selected Financial Data

 

The following tables present selected consolidated financial data for us for each of the periods indicated. You should read this information in conjunction with our audited consolidated financial statements and related notes beginning on page F-1, and the information under “ Item 5.A Operating Results ” included elsewhere in this annual report.

 

Our audited consolidated financial statements do not include any effect of inflation other than the adjustments to non-monetary assets through February 28, 2003.

 

The selected consolidated financial data as of December 31, 2016 and 2015 and for the three years ended December 31, 2016 has been derived from our audited consolidated financial statements included in this annual report. The selected consolidated financial data as of December 31, 2014, 2013 and 2012 and for the years ended December 31, 2013 and 2012 has been derived from our audited consolidated financial statements, which are not included in this annual report. Our audited consolidated financial statements as of December 31, 2016 and 2015 and for the three years ended December 31, 2016 have been audited by Price Waterhouse & Co. S.R.L., member firm of the PricewaterhouseCoopers network, independent accountants, whose audit report is included elsewhere in this annual report.

 

We maintain our financial books and records in Pesos and prepare and publish our audited consolidated financial statements in Argentina in conformity with Argentine Banking GAAP as these are the rules and regulations applied by the Bank, our main subsidiary, which differ in certain significant respects from U.S. GAAP, and from Argentine GAAP. Note 35 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014.

 

Solely for convenience, Peso amounts as of and for the year ended December 31, 2016 have been translated into U.S. dollars. The rate used to translate such amounts as of December 31, 2016 was Ps.15.85 to US$1.00, which was the reference exchange rate reported by the Central Bank for U.S. dollars. U.S. dollar equivalent information should not be construed to imply that the Peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or any other rate.

 

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		Grupo Supervielle S.A.
		Year ended December 31,
		2016			2016			2015			2014			2013			2012
		(in thousands of Pesos or U.S. dollars, as indicated, except for ratios)
Consolidated Income Statement Data
Argentine Banking GAAP:
Financial income(1)		U.S.$	681,037		Ps.	10,794,579		Ps.	6,741,744		Ps.	4,751,352		Ps.	3,045,380		Ps.	2,210,340
Financial expenses(2)		(307,032		)	(4,866,525		)	(3,386,050		)	(2,464,526		)	(1,303,916		)	(818,335		)
Gross financial margin		374,005			5,928,054			3,355,694			2,286,826			1,741,464			1,392,005
Loan loss provisions		(66,727		)	(1,057,637		)	(543,844		)	(356,509		)	(350,535		)	(209,798		)
Services fee income		222,553			3,527,516			2,835,708			2,162,820			1,765,659			1,289,651
Services fee expenses		(68,180		)	(1,080,660		)	(778,492		)	(610,341		)	(421,587		)	(254,674		)
Income from insurance activities		38,242			606,143			175,947			8,513			—			—
Administrative expenses		(382,347		)	(6,060,281		)	(4,261,402		)	(3,013,842		)	(2,287,201		)	(1,807,734		)
Income from financial transactions		117,546			1,863,135			783,611			477,467			447,800			409,450
Miscellaneous income		27,122			429,884			367,165			190,005			129,245			72,517
Miscellaneous losses		(28,955		)	(458,946		)	(213,427		)	(91,761		)	(95,734		)	(71,086		)
Non-controlling interests result		(1,398		)	(22,166		)	(16,079		)	(13,707		)	(10,556		)	(9,566		)
Income before income tax		114,314			1,811,907			921,270			562,004			470,755			401,315
Income tax		(31,583		)	(500,603		)	(247,161		)	(199,084		)	(97,765		)	(75,110		)
Net income for the fiscal period		82,731			1,311,304			674,109			362,920			372,990			326,205
U.S. GAAP:
Net income		64,135			1,016,560			630,876			290,767			382,896			N/A
		Grupo Supervielle S.A.
		As of December 31,
		2016			2016			2015			2014			2013			2012
		(in thousands of Pesos or U.S. dollars, as indicated except for ratios and operating data)
Consolidated Balance Sheet Data
Argentine Banking GAAP:
Assets
Cash and due from banks		U.S.$	515,207		Ps.	8,166,132		Ps.	6,808,591		Ps.	3,649,084		Ps.	2,662,592		Ps.	2,177,218
Government and corporate securities		148,897			2,360,044			931,881			1,008,080			483,990			229,777
Loans:		2,201,645			34,896,509			20,148,261			14,596,580			11,292,289			7,374,673
to the non-financial public sector		272			4,306			8,778			12,666			15,699			18,183
to the financial sector		29,868			473,414			181,734			3,514			36,029			63,200
To the non-financial private sector and foreign residents:
Overdrafts		196,218			3,110,097			1,634,870			993,284			679,085			488,229
Promissory Notes(3)		594,729			9,426,568			5,984,777			5,583,705			4,472,631			3,181,314
Mortgage loans		4,925			78,057			50,032			69,554			83,660			36,247
Automobile and other secured loans		4,106			65,076			104,469			168,603			225,901			219,948
Personal loans		625,656			9,916,776			6,018,601			3,631,840			2,970,622			1,509,756
Credit card loans		421,356			6,678,578			5,677,922			3,688,328			2,410,111			1,719,422
Other		353,015			5,595,356			953,574			793,192			684,219			379,876
Accrued Interest, adjustments and exchange rate differences receivable		48,830			773,961			428,600			357,844			257,689			155,074
Documented interest		(20,492		)	(324,795		)	(277,488		)	(287,605		)	(200,345		)	(110,365		)
Other unapplied charges		(110		)	(1,738		)	(295		)	(1,322		)	(1,012		)	(753		)

 

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		Grupo Supervielle S.A.
		As of December 31,
		2016			2016			2015			2014			2013			2012
		(in thousands of Pesos or U.S. dollars, as indicated except for ratios and operating data)
Allowances		(56,728		)	(899,147		)	(617,313		)	(417,023		)	(342,000		)	(285,458		)
Other receivables from financial transactions		238,025			3,772,736			2,461,813			2,263,612			1,742,721			1,737,001
Receivables from financial leases		96,393			1,527,855			1,074,977			583,846			511,880			594,338
Other assets		156,639			2,482,766			1,620,294			1,139,992			724,659			578,562
Total assets		3,356,806			53,206,042			33,045,817			23,241,194			17,418,131			12,691,569
Average Assets(4)		2,616,207			41,467,412			26,961,165			20,066,019			14,645,841			11,139,240
Liabilities and shareholders’ equity
Deposits:		U.S.$	2,264,821		Ps.	35,897,864		Ps.	23,716,577		Ps.	16,892,730		Ps.	12,819,178		Ps.	9,301,705
Non-financial public sector		163,232			2,587,253			1,182,559			1,441,506			1,018,547			701,964
Financial sector		588			9,326			250,981			150,817			100,973			65,302
Non-financial private sector and foreign residents		2,101,001			33,301,285			22,283,037			15,300,407			11,699,658			8,534,439
Checking accounts		275,164			4,361,405			3,042,376			2,622,055			2,034,593			1,602,976
Savings accounts		833,172			13,205,937			7,753,696			5,352,593			3,640,102			2,567,532
Time deposits		736,730			11,677,322			10,034,025			6,651,006			5,426,409			3,978,430
Investment accounts		23,659			375,000			664,900			75,750			144,100			40,655
Other		232,276			3,681,621			788,040			599,003			454,454			344,846
Other liabilities from financial transactions and other miscellaneous liabilities		648,145			10,273,230			6,884,700			4,586,728			3,204,585			2,370,379
Non-controlling interests		6,523			103,397			70,830			54,750			41,960			31,395
Total liabilities		2,919,489			46,274,491			30,672,107			21,534,208			16,065,723			11,703,479
Average Liabilities(4)		2,301,606			36,480,913			24,866,415			18,464,430			14,433,187			10,279,628
Shareholders’ equity		437,316			6,931,551			2,373,710			1,706,986			1,352,408			988,091
Total liabilities and shareholders’ equity		3,356,806			53,206,042			33,045,817			23,241,194			17,418,131			12,691,569
Average shareholders’ equity(4)		314,602			4,986,499			2,094,750			1,601,589			1,212,654			859,612
U.S. GAAP:
Total assets		3,439,273			54,513,169			35,122,426			26,166,663			19,531,312			N/A
Total liabilities		3,040,073			48,185,769			32,858,882			24,626,175			18,247,809			N/A
Total shareholders’ equity		399,200			6,327,400			2,263,544			1,540,488			1,283,503			N/A

 

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(1)          Includes gains related to non-deliverable forward (“NDF”) hedging transactions, which totaled Ps.0 million, Ps.228.2 million, Ps.0, Ps.86.9 million, Ps.3.4 million, and Ps.0 as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(2)          Includes expenses related to NDF hedging transactions, which totaled Ps. 39.0 million, Ps.0, Ps.96.2 million, Ps.0, Ps.0 and Ps.6.5 million as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(3)          Consists of unsecured checks and accounts receivable deriving from factoring transactions, and unsecured corporate loans which totaled Ps. 3,102.8 million, Ps.2,399.3 million, Ps.1,547.5 million, Ps.979.9 million and Ps.663.7 million as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively.

(4)          Calculated on a daily basis.

 

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Table of Contents

 

		Grupo Supervielle S.A.
		Year ended December 31,
		2016		2015		2014		2013		2012
Selected Consolidated Ratios:
Argentine Banking GAAP:
Net interest margin(1)		20.6	%	18.1	%	17.4	%	16.4	%	17.3	%
Net financial margin(2)		19.2	%	16.4	%	15.1	%	15.8	%	16.1	%
Net fee income ratio(3)		34.0	%	40.0	%	40.6	%	43.6	%	42.6	%
Efficiency ratio(4)		67.5	%	76.2	%	78.3	%	74.1	%	74.5	%
Fee income as a percentage of administrative expense		50.4	%	52.4	%	51.8	%	58.8	%	57.3	%
Return on average equity(5)		26.3	%	32.2	%	22.7	%	30.8	%	37.9	%
Return on average assets(6)		3.2	%	2.5	%	1.8	%	2.5	%	2.9	%
Basic earnings per share (in Pesos)(7)		4.10		4.42		2.92		3.00		2.61
Diluted earnings per share (in Pesos)		4.10		4.42		2.92		3.00		2.61
Basic earnings per share (in US$)		0.26		0.34		0.34		0.46		0.53
Diluted earnings per share (in US$)		0.26		0.34		0.34		0.46		0.53
Liquidity
Loans as a percentage of total deposits(8)		104.0	%	92.2	%	92.4	%	94.8	%	88.8	%
Loans as a percentage of total assets(8)		70.2	%	66.1	%	67.1	%	69.8	%	65.1	%
Liquid assets as a percentage of total deposits(9)		27.0	%	32.6	%	26.5	%	24.5	%	25.9	%
Capital
Total equity as a percentage of total assets		13.0	%	7.2	%	7.3	%	7.8	%	7.8	%
Average equity as a percentage of average assets		12.0	%	7.8	%	8.0	%	8.3	%	7.7	%
Total liabilities as a multiple of total shareholders’ equity		6.7		12.9		12.6		11.9		11.8
Tangible equity ratio(10)		12.6	%	6.5	%	6.5	%	6.7	%	6.4	%
Regulatory capital/ Risk weighted assets(11)		12.5	%	8.7	%	8.9	%	9.0	%	N/A
Tier 1 Capital / Risk weighted assets(12)		10.9	%	6.7	%	6.9	%	6.7	%	7.2	%
Tier 1 Pro forma(13)		12.3	%	6.7	%	6.9	%	6.7	%	7.2	%
LCR Pro forma(14)		128.0	%	113.1	%	71.0	%	N/A		N/A
Asset Quality
Non-performing loans as a percentage of total loans(15)		2.8	%	3.2	%	3.0	%	3.0	%	4.2	%
Allowances as a percentage of total loans		2.4	%	2.9	%	2.7	%	2.9	%	3.5	%
Allowances as a percentage of non-performing loans(15)		87.1	%	89.7	%	88.9	%	94.0	%	84.7	%
Other Data
Dividends paid to the common shares (Ps.million)		65.5		19.2		2.7		4.5		5.5
Dividends paid to the preferred shares (Ps.million)		—		6.0		4.7		3.9		3.2
Dividends per common share (Ps.)		0.2		0.1		0.0		0.0		0.0
Dividends per preferred share (Ps.)		—		1.9		2.9		2.4		2.0
Employees		4,982		4,843		4,579		4,570		4,584
Branches and sales points		320		325		322		353		357
ATMs and self-service terminals		661		649		632		588		532

 

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(1)	Net interest income divided by average interest-earning assets.
(2)	Gross financial margin divided by average interest-earning assets.
(3)	Net services fee income divided by the sum of gross financial margin and net services fee income.
(4)	Administrative expenses divided by the sum of gross financial margin, services fee income and expenses and income from insurance activities.
(5)	Net income divided by average shareholders’ equity, calculated on a daily basis and measured in local currency.
(6)	Net income divided by average assets, calculated on a daily basis and measured in local currency .
(7)	Basic earnings per share (in Pesos) are based upon the weighted average of Grupo Supervielle’s outstanding shares, which were Ps.319.8 million for the year ended December 31, 2016, Ps.151.8 million for the year ended December 31, 2015, Ps.122.9 million for the year ended

 

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	December 31, 2014, Ps.122.9 million for the year ended December 31, 2013, and Ps.123 million for the year ended December 31, 2012. In January 2016, the stock of preferred shares was converted to ordinary shares.
( 8)	Loans include loans and receivables from financial leases.
( 9)	Liquid assets include cash , securities issued by the Central Bank (LEBACs and NOBACs) and other government securities.
( 10)	(Total equity - Intangible assets)/(Total assets - Intangible assets). Intangible assets as of December 31, 2016, 2015, 2014, 2013, and 2012 amounted to Ps.285.5 million, Ps.252.0 million, Ps.216 million, Ps.197 million, and Ps.191 million, respectively.
(11)	Regulatory capital divided by risk weighted assets , taking into account operational and market risk since 2013. This ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level.
(12)	Tier 1 capital divided by risk weighted assets taking into account credit, operational and market risk since 2013.
(13)	Tier 1 Pro Forma includes the Ps.690 million funds from the IPO proceeds retained at the Grupo Supervielle level, which are available for further capital injections in its subsidiaries.
(14)	LCR ratio includes the net liquidity held at the holding company level.
(1 5)	Non -performing loans include all principal amounts of loans to borrowers classified as “3-with problems/medium risk”, “4-high risk of insolvency/high risk”, “5-uncollectible”, and “6-uncollectible, classified as such under regulatory requirements” under the Central Bank loan classification system. See “ Item 4.D Property, plants and equipment—Selected Statistical Information—Loans and Financings—Portfolio Classification .”

 

Exchange Rates

 

From April 1, 1991 until the end of 2001, Law No. 23,928 (the “Convertibility Law”) established a regime under which the Central Bank was obliged to sell U.S. dollars at a fixed rate of one Peso per U.S. dollar. On January 6, 2002, the Argentine Congress enacted Law No. 25,561 (as amended and supplemented, the “Public Emergency Law”), formally ending the regime of the Convertibility Law, abandoning over ten years of U.S. dollar-Peso parity and eliminating the requirement that the Central Bank’s reserves in gold, foreign currency and foreign currency denominated debt be at all times equivalent to 100% of the monetary base.

 

The Public Emergency Law, which has been extended on an annual basis and is in effect until December 31, 2017, granted the Argentine government the power to set the exchange rate between the Peso and foreign currencies and to issue regulations related to the foreign exchange market. The state of emergency on social matters was further extended until December 31, 2019. Following a brief period during which the Argentine government established a temporary dual exchange rate system, pursuant to the Public Emergency Law, the Peso has been allowed to float freely against other currencies since February 2002, although the Central Bank has the power to intervene by buying and selling foreign currency for its own account, a practice in which it engages on a regular basis.

 

From 2011 to 2015, the Argentine government has increased controls on exchange rates and the transfer of funds into and out of Argentina. With the tightening of exchange controls beginning in late 2011, in particular with the introduction of measures that allowed limited access to foreign currency by private companies and individuals (such as requiring an authorization of AFIP to access the foreign currency exchange market), the implied exchange rate, as reflected in the quotations for Argentine securities that trade in foreign markets, compared to the corresponding quotations in the local market, increased significantly over the official exchange rate. Most foreign exchange restrictions were lifted in December 2015, May 2016 and August 2016, reestablishing Argentine residents’ rights to purchase and remit outside of Argentina foreign currency with no maximum amount and without specific allocation or the need to obtain prior approval. As a result, since December 2015 the substantial spread between the official exchange rate and the implicit exchange rate derived from securities transactions has substantially decreased.

 

After several years of moderate variations in the nominal exchange rate, in 2012 the Peso lost approximately 14% of its value with respect to the U.S. dollar. This was followed in 2013 and 2014 by a devaluation of the Peso with respect to the U.S. dollar that exceeded 30%, including a loss of approximately 24% in January 2014. In 2015, the Peso lost approximately 52% of its value with respect to the U.S. dollar, including a 10% devaluation from January 1, 2015 to September 30, 2015 and a 38% devaluation during the last quarter of the year 2015, mainly concentrated after December 16, 2015. During 2016, the Peso lost approximately 21.9% of its value against the U.S. dollar.

 

The following table sets forth the annual high, low, average and period-end exchange rates for the periods indicated, expressed in Pesos per U.S. dollar and not adjusted for inflation. There can be no assurance that the Peso will not depreciate or appreciate again in the future. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos.

 

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		Exchange Rates
		High(1)		Low(1)		Average(1)(2)		Period-end(1)(3)
2012		4.9173		4.3048		4.5515		4.9173
2013		6.5180		4.9228		5.4789		6.5180
2014		8.5555		6.5430		8.1188		8.5520
2015		13.7633		8.5537		9.2689		13.0050
2016		16.0392		13.0692		14.7794		15.8502
October 2016		15.2250		15.1152		15.1810		15.1745
November 2016		15.8442		15.0183		15.3399		15.8442
December 2016		16.0392		15.5225		15.8296		15.8502
January 2017		16.0533		15.8083		15.9065		15.9117
February 2017		15.8350		15.3675		15.5983		15.4550
March 2017		15.6687		15.3818		15.5237		15.3818
April 2017 (through April 28)		15.4532		15.1742		15.3600		15.4268

 

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(1)          Reference exchange rate published by the Central Bank.

(2)          Based on daily averages.

(3)          The exchange rate used in our audited consolidated financial statements.

 

Item 3.B                    Capitalization and indebtedness

 

Not applicable.

 

Item 3.C                    Reasons for the offer and use of proceeds

 

Not applicable.

 

Item 3.D                    Risk Factors

 

You should carefully consider the risks described below, as well as the other information in this annual report. Our business, results of operations, financial condition or prospects could be materially and adversely affected if any of these risks occurs. In general, investors take more risk when they invest in the securities of issuers in emerging markets such as Argentina than when they invest in the securities of issuers in the United States and other more developed markets. The risks described below are those known to us and that as of the date of this annual report believe may materially affect us.

 

Risks Relating to Argentina

 

Substantially all of our operations, property and customers are located in Argentina. As a result, the quality of our assets, our financial condition and the results of our operations are dependent upon the macroeconomic, regulatory, social and political conditions prevailing in Argentina from time to time. These conditions include growth rates, inflation rates, exchange rates, taxes, foreign exchange controls, changes to interest rates, changes to government policies, social instability, and other political, economic or international developments either taking place in, or otherwise affecting, Argentina.

 

Economic and political instability in Argentina may adversely and materially affect our business, results of operations and financial condition.

 

The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth, high levels of inflation and currency devaluation. As a consequence, our business and operations have been, and could be in the future, affected from time to time to varying degrees by economic and political developments and other material events affecting the Argentine economy, such as: inflation; price controls; foreign exchange controls; fluctuations in foreign currency exchange rates and interest rates; governmental policies regarding spending and investment, national, provincial or municipal tax increases and other initiatives increasing government involvement with economic activity; civil unrest and local security concerns. You should make your own investigation into Argentina’s economy and its prevailing conditions before making an investment in us.

 

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Among other consequences, the crisis resulted in Argentina defaulting on its foreign debt obligations, introducing

 

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