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SUPV Grupo Supervielle

Filed: 7 Jul 21, 4:05pm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

For the month of July, 2021

 

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)

 

 

 

Bartolomé Mitre 434

C1036AAH Buenos Aires

Republic of Argentina

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-F  x Form 40-F  ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes  ¨ No  x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes  ¨ No  x

 

 

 

   

 

 

GRUPO SUPERVIELLE S.A.

 

TABLE OF CONTENTS

 

Item  
1. Financial Statements for the financial year ended on December 31, 2020, presented on comparative basis.

 

   

 

 

 

 

Consolidated Financial Statements

 

For the financial year ended on

December 31, 2020, presented on comparative basis

 

   

 

 

Contents  
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 3
CONSOLIDATED INCOME STATEMENT 4
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 7
CONSOLIDATED STATEMENT OF CASH FLOWS 9
1.ACCOUNTING STANDARDS AND BASIS OF PREPARATION 11
2.SEGMENT REPORTING 44
3.INCOME TAX 47
4.FINANCIAL INSTRUMENTS 49
5.FAIR VALUES 49
6.TRANSFER OF FINANCIAL ASSETS 53
7.NON CONTROLLING INTEREST 53
8.LONG-TERM BENEFIT OBLIGATIONS 54
9.RELATED PARTY TRANSACTIONS 54
10.FINANCE LEASES 55
11. COMPOSITION OF THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CONSOLIDATED INCOME STATEMENT 57
12.DIVIDENDS 60
13.COMMITMENTS AND CONTINGENCIES 60
14.INSURANCE 60
15.ASSET MANAGEMENT AND OTHER SERVICES 61
16.ADDITIONAL INFORMATION REQUIRED BY THE BCRA 62
17.CONTRACT AS A FINANCIAL AGENT BY THE PROVINCE OF SAN LUIS 66
18.FINANCIAL RISK FACTORS 66
19.INTERNATIONAL FINANCING PROGRAMS 73
20.BUSINESS COMBINATIONS 74
21.OFFSETTING OF FINANCIAL ASSET AND LIABILITIES 74
22.CURRENT/NON-CURRENT DISTINCTION 75
23.IMPACT OF COVID-19 ON GROUP`S OPERATIONS 78
SCHEDULE A - DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS, OTHER DEBT SECURITIES, EQUITY INSTRUMENTS 80
SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING CREDIT ACCORDING TO STATUS AND COLLATERAL RECEIVED 83
SCHEDULE C - CONCENTRATION OF LOANS AND OTHER FINANCING 85
SCHEDULE D – BREAKDOWN OF TOTAL LOANS AND OTHER FINANCING 86
SCHEDULE F - PROPERTY, PLANT AND EQUIPMENT 87
SCHEDULE G - INTANGIBLE ASSETS 89
SCHEDULE H – CONCENTRATION OF DEPOSITS 90
SCHEDULE I – BREAKDOWN OF FINANCIAL LIABILITIES FROM REMAINING TERMS 91
SCHEDULE L - ASSETS AND LIABILITIES IN FOREIGN CURRENCY 92
SCHEDULE R – LOAN LOSS RISK PROVISIONS 93
SEPARATE STATEMENT OF FINANCIAL POSITION 95
SEPARATE STATEMENT OF COMPREHENSIVE INCOME 96
EARNING PER SHARE 97
SEPARATE STATEMENT OF COMPREHENSIVE INCOME 98
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 99
SEPARATE STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 100
SEPARATE STATEMENT OF CASH FLOW 101
1.ACCOUNTING STANDARDS AND BASIS OF PREPARATION 102
2.INSTRUMENTOS FINANCIEROS 110
3.FAIR VALUES 111
4.INVESTMENT IN SUBSIDIARIES AND ASSOCIATES 113
5.COMPOSITION OF THE MAIN ITEMS OF THE SEPARATE STATEMENT OF COMPREHENSIVE INCOME 114
6.RESTRICTED ASSETS 116
7.COMPANIES UNDER SECT. 33 OF CORPORATE LAW AND OTHER RELATED COMPANIES 116
8.INCOME TAX 120
9.LOAN AND DEBT ESTIMATED TERMS 121
10.CAPITAL STOCK 121
11.FINANCIAL RISK FACTORS 121
12.SUBSEQUENT EVENTS 129
SCHEDULE A – OTHER DEBT SECURITIES 130
SCHEDULE F - PROPERTY, PLANT AND EQUIPMENT 131
SCHEDULE G - INTANGIBLE ASSETS 132
SCHEDULE L – ASSETS AND LIABILITIES IN FOREIGN CURRENCY 133
INFORMATIVE REVIEW AS OF DECEMBER 31, 2020 134

 

   

 

 

 

 

Consolidated Financial Statements

 

For the financial year ended on

December 31, 2020, presented on comparative basis

 

 

1

 

GRUPO SUPERVIELLE S.A.

 

Name: Grupo Supervielle S.A.
   
Financial year: N° 42 started on January 1, 2020
   
Legal Address: 

Bartolomé Mitre 434, piso 5

Ciudad Autónoma de Buenos Aires

   
Core Business: Carry out, on its own account or third parties’ or related to third parties, in the country or abroad, financing activities through cash or instrument contributions to already-existing or to-be-set-up corporations, whether controlling such corporations or not, as well as the purchase and sale of securities, shares, debentures and any kind of property values, granting of fines and/or guarantees, set up or transfer of loans as guarantee, including real, or without it not including operations set forth by the Financial Entities Law and any other requiring public bidding.
   
Registration Number at the IGP: 212,617
   
Date of Registration at IGP: October 15, 1980
   
Amendment of by-laws (last): April 24, 2018 (Registration in progress)
   
Expiration date of the Company’s By-Laws: October 15, 2079
   
Corporations Article 33 Companies general Law   Note 7 to Separate Financial Statements

 

Composition of Capital Stock as of December 30, 2020

 

Shares  Capital Stock 
Quantity  Class N.V. $  Votes per
share
  Subscribed
in thousands
of $
  Integrated
in thousands
of $
 
 61,738,188  A: Non endorsable, common shares of a nominal value  1   5   61,738   61,738 
 394,984,134  B: Non endorsable, common shares of a nominal value  1   1   394,984   394,984 
 456,722,322             456,722   456,722 

 

 

2

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31, 2020, 2019 and January 1, 2019

(Expressed in thousands of pesos in homogeneous currency)

 

ASSETS Notes and
Schedules
 12/31/2020  12/31/2019  01/01/2019 
Cash and due from banks 1.8 and 5  36,674,869   35,945,321   70,551,282 
Cash    12,792,522   11,913,810   10,030,991 
Financial institutions and correspondents    23,730,020   23,990,794   60,498,513 
Argentine Central Bank    19,623,684   21,683,566   57,359,875 
Other local and financial institutions    4,106,336   2,307,228   3,138,638 
Others    152,327   40,717   21,778 
Debt Securities at fair value through profit or loss 1.8, 5, 11.1 and A  9,871,903   773,959   31,439,537 
Derivatives 11.2 y 5  143,944   350,679   33,349 
Reverse Repo transactions 5  22,354,735   -   - 
Other financial assets 1.8, 11.3 and 5  4,284,340   2,875,979   4,347,282 
Loans and other financing 5, 11.4 and B  105,974,985   121,028,573   163,609,714 
To the non-financial public sector    23,530   39,301   68,697 
To the financial sector    12,062   87,834   834,679 
To the Non-Financial Private Sector and Foreign residents    105,939,393   120,901,438   162,706,338 
Other debt securities 5,11.5 and A  41,264,149   14,528,311   9,212,805 
Financial assets pledged as collateral 5 and 11.6  4,904,935   7,261,332   4,203,681 
Current income tax assets    -   139,487   1,292,809 
Investments in equity instruments 5 and A  116,328   19,847   21,789 
Property, plant and equipment F  7,103,638   5,450,311   4,536,193 
Investment property F  5,997,945   5,520,143   865,687 
Intangible assets G  6,782,538   5,929,802   5,626,709 
Deferred income tax assets    3,020,783   1,781,699   1,075,226 
Other non-financial assets 11.7  1,352,880   1,762,068   3,763,756 
Inventories 11.8  70,964   60,521   146,428 
Non-current assets held for sale    -   -   5,864 
TOTAL ASSETS    249,918,936   203,428,032   300,732,111 

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements .

 

 

3

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As of December 31, 2020, 2019 and January 1, 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  Notes and
Schedules
  12/31/2020  12/31/2019  01/01/2019 
LIABILITIES            
Deposits      178,641,594   121,176,255   198,760,086 
 Non-financial public sector  5,11.9 and H   7,911,255   7,447,131   23,258,016 
 Financial sector      57,416   38,253   52,851 
 Non-financial private sector and foreign residents      170,672,923   113,690,871   175,449,219 
Liabilities at fair value through profit or loss  5 and 11.10   2,002,005   258,060   561,448 
Derivatives  11.14   1,995   -   197,328 
Repo transactions  5   -   435,401   - 
Other financial liabilities  5 and 11.11   7,529,685   12,411,386   10,833,123 
Financing received from the Argentine Central Bank and other financial institutions  5 and 11.12   5,851,412   12,276,610   16,823,037 
Unsubordinated debt securities  5 and 16.4   4,226,748   8,286,163   19,491,853 
Current income tax liabilities      1,288,267   -   1,656,517 
Subordinated debt securities  5 and 16.4   1,140,469   2,886,028   2,898,105 
Provisions  11.13   681,092   901,203   182,025 
Deferred income tax liabilities      42,005   643,354   511,920 
Other non-financial liabilities  11.15   12,146,092   11,196,159   11,346,062 
TOTAL LIABILITIES      213,551,364   170,470,619   263,261,504 
                 
SHAREHOLDERS' EQUITY                
Capital stock      456,722   456,722   456,722 
Paid in capital      28,858,170   33,275,663   33,275,003 
Capital Adjustments      2,968,586   2,968,586   2,968,586 
Reserves      -   14,241,451   11,407,964 
Retained earnings      -   (14,135,405)  (4,944,694)
Other comprehensive income      642,945   117,647   - 
Net income for the period/year      3,412,111   (3,993,474)  (5,722,657)
Shareholders' Equity attributable to owners of the parent company      36,338,534   32,931,190   37,440,924 
Shareholders' Equity attributable to non-controlling interests      29,038   26,223   29,683 
TOTAL SHAREHOLDERS' EQUITY      36,367,572   32,957,413   37,470,607 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      249,918,936   203,428,032   300,732,111 

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

4

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED INCOME STATEMENT

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  Notes  12/31/2020  12/31/2019 
Interest income  11.16   64,649,919   60,983,630 
Interest expenses  11.17   (28,574,136)  (47,531,380)
Net interest income      36,075,783   13,452,250 
Service fee income  11.20   11,493,824   11,707,556 
Service fee expenses  11.21   (3,547,939)  (3,054,959)
Income from insurance activities  14   1,671,455   1,667,287 
Net Service Fee Income      9,617,340   10,319,884 
Subtotal      45,693,123   23,772,134 
Net income from financial instruments (NIFFI) at fair value through profit or loss  11.18   3,315,582   28,536,370 
Result from derecognition of assets measured at amortized cost  11.19   (11,630,883)  - 
Exchange rate difference on gold and foreign currency      1,064,518   (441,188)
Subtotal      (7,250,783)  28,095,182 
Other operating income  11.22   3,886,203   3,742,326 
Results from exposure to changes in the purchasing power of the currency      8,035,834   (7,891,885)
Loan loss provisions      (8,755,174)  (10,524,351)
Net operating income      41,609,203   37,193,406 
Personnel expenses  11.23   18,167,844   19,283,345 
Administration expenses  11.24   10,312,494   10,310,670 
Depreciations and impairment of non-financial assets  11.25   2,407,028   2,691,218 
Other operating expenses  11.26   6,572,487   8,654,873 
Operating income / (loss)      4,149,350   (3,746,700)
Income / (loss) before taxes      4,149,350   (3,746,700)
Income tax      734,974   250,357 
Net income / (loss) for the year      3,414,376   (3,997,057)
Net income / (loss) for the year attributable to owners of the parent company      3,412,111   (3,993,474)
Net income / (loss) for the year attributable to non-controlling interests      2,265   (3,583)

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

5

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED INCOME STATEMENT

EARNING PER SHARE

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019 
NUMERATOR        
Net income / (loss) for the year attributable to owners of the parent company  3,412,111   (3,993,474)
PLUS: Diluting events inherent to potential ordinary shares  -   - 
Net income / (loss) attributable to owners of the parent company adjusted by dilution  3,412,111   (3,993,474)
         
DENOMINATOR        
         
Weighted average of ordinary shares  456,722   456,722 
PLUS: Weighted average of number of ordinary shares issued with dilution effect.  -   - 
Weighted average of number of ordinary shares issued of the period adjusted by dilution effect.  456,722   456,722 
         
Basic Income per share  7.47   (8.74)
Diluted Income per share  7.47   (8.74)

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements

 

 

6

 

GRUPO SUPERVIELLE S.A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019 
Net income / (loss) for the year  3,414,376   (3,997,057)
Components of Other Comprehensive Income not to be reclassified to profit or loss        
Revaluation of property, plant and equipment and intangibles.  687,598   158,245 
Income tax  (206,279)  (47,474)
Revaluation of property, plant and equipment and intangibles  481,319   110,771 
Net income from equity instrument at fair value through changes in other comprehensive income        
Total Other Comprehensive Income not to be reclassified to profit or loss  481,319   110,771 
Components of Other Comprehensive Loss to be reclassified to profit or loss  -   - 
Income  for the year for the year from financial instrument at fair value through other comprehensive income  69,422   9,832 
Income tax  (24,893)  (2,949)
Net income from financial instrument at fair value through changes in other comprehensive income  44,529   6,883 
Total Other Comprehensive Loss to be reclassified to profit or loss  44,529   6,883 
Total Other Comprehensive Income  525,848   117,654 
Other comprehensive income attributable to owners of the parent company  525,298   117,647 
Other comprehensive income attributable to non-controlling interests  550   7 
Total Comprehensive Income  3,940,224   (3,879,403)
Total comprehensive income attributable to owners of the parent company  3,937,409   (3,875,827)
Total comprehensive income attributable to non-controlling interests  2,815   (3,576)

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

7

 

GRUPO SUPERVIELLE S.A.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

              Other comprehensive income       
Items Capital
stock
 Capital
adjustments
 Paid in
capital
 Legal
reserve
 Other
reserves
 Retained
earnings
 Revaluation
of PPE
 Earnings or
los accrued by
financial
institutions at
FV through
profit and loss
 

Total
Shareholders´ equity
attributable to
parent company

 

Total

Shareholders´
equity attributable
to non-controlling
interest

 Total
Shareholders´
equity
 
Re-expressed Balance at December 31, 2019  456,722  2,968,586  33,275,663  191,302  14,050,149  (18,128,879) 110,771  6,876  32,931,190  26,223  32,957,413 
Absorption of negative retained earnings RG777/18 CNV        (4,417,493) (191,302) (19,316,859) 23,925,654  -  -  -  -  - 
Balance at December 31, 2019  456,722  2,968,586  28,858,170  -  (5,266,710) 5,796,775  110,771  6,876  32,931,190  26,223  32,957,413 
Distribution of retained earnings by the shareholders’ meeting on April 28, 2020:                                  
Constitution of reserves  -  -  -  -  5,796,775  (5,796,775) -  -  -  -  - 
Dividend distribution  -  -  -  -  (530,065) -  -  -  (530,065) -  (530,065)
Net Income for the year  -  -  -  -  -  3,412,111  -  -  3,412,111  2,265  3,414,376 
Other comprehensive income for the year  -  -  -  -  -  -  480,826  44,472  525,298  550  525,848 
Balance at December 31, 2020  456,722  2,968,586  28,858,170  -  -  3,412,111  591,597  51,348  36,338,534  29,038  36,367,572 

 

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

8

 

GRUPO SUPERVIELLE S.A.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos)

 

              Other comprehensive income       
Items Capital
stock
 Capital
adjustments
 Paid in
capital
 Legal
reserve
 Other
reserves
 Retained
earnings
 Revaluation
of PPE
 Earnings or
los accrued by
financial
institutions at
FV through
profit and loss
 

Total

Shareholders´ equity
attributable to
parent company

 

Total

Shareholders´ equity
attributable to
non-controlling interest

 Total
Shareholders´
equity
 
Re-expressed Balance at December 31, 2018  456,722  2,968,586  33,275,003  191,302  11,216,662  (9,935,561) -     38,172,714  30,243  38,202,957 
IFRS 9 Impact Adjustments                 (731,790)       (731,790) (560) (732,350)
Balance at December 31, 2018  456,722  2,968,586  33,275,003  191,302  11,216,662  (10,667,351) -     37,440,924  29,683  37,470,607 
Distribution of retained earnings by the shareholders’ meeting on April 26, 2019:                                  
Purchase of subsidiaries ‘shares  -  -  660  -  -  -  -  -  660  116  776 
Constitution of reserves  -  -  -  -  2,833,487  (2,833,487) -  -  -  -  - 
Dividend distribution  -  -  -  -  -  (634,567) -  -  (634,567)    (634,567)
Net Income for the year  -  -  -  -  -  (3,993,474) -  -  (3,993,474) (3,583) (3,997,057)
Other comprehensive income for the year  -  -  -  -  -     110,771  6,876  117,647  7  117,654 
Balance at December 31, 2019  456,722  2,968,586  33,275,663  191,302  14,050,149  (18,128,879) 110,771  6,876  32,931,190  26,223  32,957,413 

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

9

 

GRUPO SUPERVIELLE S.A.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019 
CASH FLOW FROM OPERATING ACTIVITIES        
         
Net income / (loss) for the year before Income Tax  4,149,350   (3,746,700)
         
Adjustments to obtain flows from operating activities:        
Depreciation and Impairment of Property, plant and   equipment  (2,407,028)  2,691,218 
Loan loss provisions  8,755,174   10,524,351 
Other adjustments        
-  Exchange rate difference on gold and foreign currency  (1,064,518)  441,188 
-  Interests from loans and other financing  (64,649,919)  (60,983,630)
-  Interests from deposits and financing received  28,574,136   47,531,380 
-  Net income from financial instruments at fair value through profit or loss  (3,315,582)  (28,536,370)
-  Result from derecognition of  financial assets measured at amortized cost  11,630,883   - 
-  Result from exposure to changes in the purchasing power of the currency  (8,035,834)  7,891,885 
-  Fair value measurement of investment properties  92,457   - 
-  Interest on liabilities for financial leases  207,035   289,286 
-  Allowances reversed  (703,329)  (678,796)
         
(Increases) / decreases from operating assets:        
Debt securities at fair value through profit or loss  (16,249,181)  33,611,922 
Derivatives  206,735   (317,330)
Reverse Repo transactions  (22,354,735)  - 
Loans and other financing        
    To the non-financial public sector  15,771   29,396 
    To the other financial entities  75,772   746,845 
    To the non-financial sector and foreign residents  70,434,455   89,277,980 
Other debt securities  (26,735,838)  (5,499,656)
Financial assets in guarantee  2,356,397   (3,057,651)
Investments in equity instruments  (48,917)  1,942 
Other assets  3,998,166   2,786,079 
         
Increases / (decreases) from operating liabilities:        
Deposits        
Non-financial public sector  464,124   (15,810,885)
Financial sector  19,163   (14,598)
Private non-financial sector and foreign residents  28,509,102   (112,971,816)
Liabilities at fair value through profit or loss  1,743,945   (303,388)
Derivatives  1,995   (197,328)
Repo transactions  (435,401)  435,401 
Other liabilities  (3,796,649)  715,793 
Income Tax paid  (1,378,825)  (1,593,465)
         
Net cash provided by / (used in) operating activities (A)  10,058,904   (36,736,947)
         
CASH FLOW FROM INVESTING ACTIVITIES        
         
Payments related to:        
Purchase of PPE, intangible assets and other assets  (4,693,293)  (1,568,190)
Purchase of liabilities and equity instruments issued by other entities  (47,564)  - 
Acquisition of subsidiaries, net of cash adquired  (7,292)  (269,497)

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

10

 

GRUPO SUPERVIELLE S.A.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the financial years ended on December 31, 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019 
CASH FLOW FROM INVESTING ACTIVITIES        
         
Collections:        
Disposals related to PPE, intangible assets and other assets  425,906   253,102 
         
Net cash used in investing activities (B)  (4,322,243)  (1,584,585)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
         
Payments:        
Interest on finance lease liabilities  (1,366,164)  (1,703,937)
Financing received from Argentine Financial Institutions  (21,298,598)  (155,072,118)
Unsubordinated debt securities  (6,785,701)  (23,641,628)
Subordinated debt securities  (1,774,264)  (1,147,619)
Dividends paid  (530,065)  (634,567)
         
Collections:        
Changes in the ownership of subsidiaries that do not result in loss of control  -   776 
Financing received from Argentine Financial Institutions  14,873,400   150,529,469 
Unsubordinated debt securities  2,653,805   11,452,531 
Subordinated debt securities  -     
         
Net cash used in financing activities (C)  (14,227,587)  (20,217,093)
         
Effects of exchange rate changes and exposure to changes in the purchasing power of money on cash and cash equivalents (D)  22,704,526   4,573,429 
         
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS  (A+B+C+D)  14,213,600   (53,965,196)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (Note 1.9)  38,109,467   98,382,223 
Result from exposure to changes in the purchasing power of the currency of cash and equivalents  (12,856,541)  (6,307,560)
 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (Note 1.9)  39,466,526   38,109,467 

 

(*) In the items “Loans and other financing - non-financial sector and foreign residents”and “Other Assets”, “Purchase of PPE,intangible asstes and other assets” and “Other liabilities” and “Purchase of PPE,intangible asstes and other assets” and “Other assets” 1,125,663, 803,901 and 876,864 corresponding to non-monetary transactions were eliminated.

 

The accompanying notes and schedules are an integral part of the Consolidated Financial Statements.

 

 

11

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.ACCOUNTING STANDARDS AND BASIS OF PREPARATION

 

Grupo Supervielle S.A. (hereinafter, "the Group"), is a company whose main activity is investment in other companies, Its main income comes from the distribution of dividends from these companies and the obtaining of income from other financial assets.

 

The consolidated financial statements of Grupo Supervielle S.A. they have been consolidated, line by line with the financial statements of Banco Supervielle S.A., Cordial Compañía Financiera S.A., Sofital S.A. F. e I.I., Tarjeta Automática S.A., Supervielle Asset Management S.A., Espacio Cordial Servicios S.A., Supervielle Seguros S.A., InvertirOnline S.A.U., InvertirOnline,Com Argentina S.A.U., Micro Lending S.A.U., Supervielle Productores Asesores de Seguros S.A., Bolsillo Digital S.A.U., Futuros del Sur S.A. and Easy Cambio S.A..

 

The main investment of the Company is its shareholding in Banco Supervielle S.A., a financial entity included in Law No. 21.526 of Financial Institutions and subject to BCRA regulations, for which the valuation and exposure guidelines used have been adopted by said Entity (see Note 1.1) in accordance with that established in Title IV, Chapter I, Section I, Article 2 of the 2013 Orderly Text of the National Securities Commission (CNV).

 

These consolidated financial statements have been approved by the Board of Directors of the Company at its meeting held on March 8, 2021.

 

1.1.Differences between the accounting framework established by the BCRA and IFRS

 

These consolidated financial statements have been prepared pursuant to: (i) provisions set by Intenational Accounting Standards N° 34, “Interim Financial Information” (IAS 34) and (ii) the accouting information framework set by the Argentine Central Bank which is based on International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and interpretations issued by the International Financial Reporting Standards Interpretation Committee with the following exceptions:

 

(i)Temporary exception of IFRS 9 “Financial Instruments” application over debt instruments of the non-financial public sector,

 

(ii)Temporary exception of the application of Section 5.5 (Value Impairment) for Group C entities, a category that includes Cordial Compañia Financiera S.A.. Therefore, provisions of the aforementioned entity are held under minimum provisions standards set by the Argentine Central Bank. See note 1.2.4 a)

 

(iii)presentation within other comprehensive income of the monetary result corresponding to items of a monetary nature that are measured at fair value with a counterpart in other comprehensive income. Communication “A” 7211 established that said monetary result must be presented within the income for the year as of 1.1.21. Had the aforementioned exposure criterion been applied at the end of the year ended December 31, 2020, the net result would have amounted to $ 3,185,980 and the Other Comprehensive Income to $ 4,163,540.

 

1.2. Preparation basis

 

These consolidated financial statements have been prepared in acoordance whith the accounting framework established by B.C.R.A. described in Note 1.1.

 

The Gruop´s Board has concluded that these consolidated financial statements reasonably express the financial position, financial performance and cash flows.

 

The preparation of financial statements requires that the Group carries out calculations and evaluations that affect the amount of incomes and expenses recorded in the year. In this sense, calculations are aimed at the estimation of, for example, credit risk provisions, useful life of property, plant and equipment, impairments and amortizations, recoverable value of assets, income tax charges and the reasonable value of certain financial instruments. Future real results may defer from calculations and evaluations as of the date of these consolidated financial statements preparation.

 

The areas that involve a greater degree of judgment or complexity or areas in which the assumptions and estimates are significant for the consolidated financial statements are described in Note 1.4.

 

As of these financial statements issuance date, such statements are pending of transcription to Inventory and Balance Sheet Book.

 

 

12

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.2.1Going concern

 

As of the date of these consolidated financial statements there are no uncertainties with respect to events or conditions that may raise doubts regarding the possibility that the Group continues to operate normally as a going concern.

 

1.2.2Measuring unit – IAS 29 (Financial reporting in hyperinflationary economies)

 

Figures included in these consolidated financial statements are expressed in thousands of Argentine pesos, unless otherwise stated.

 

The Group´s consolidated financial statements recognice changes in the currency purchasing power until August 31, 1995. As from such date, in virtue of existing economic stability conditions and pursuant to Communication “A” 2365 issued by the Argentine Central Bank, accounting measurements were not re-expressed until December 31, 2001. In virtue of Communication “A” 3702 issued by the Argentine Central Bank, the application of the method was resumed and became effective on January 1, 2002. Previous accouting measurements were considered to be expressed in the currency as of December 31, 2001.

 

Pursuant to Communication “A” 3921 issued by the Argentine Central Bank, in compliance with Decree 664/03 issued by the National Executive Power, the application of the re-expression of financial statements in homogeneous currency was interrupted as from March 1, 2003. Therefore, the Group applied said re-expression until February 28, 2003.

 

In turn, Law N° 27,468 (B.O. 04/12/2018) amended article 10° of Law N° 23,928 and its amendments, thus establishing that the abolition of all legal and regulating standards that set and authorize price indexing, monetary updating, cost changes or any other manner of re-increasing debts, taxes, prices or fees for goods, works or services does not include financial statements, regarding which the application of article 62 of the General Corporations Law N° 19,550 (T.O 1984) and its amendments shall prevail. Likewise, the aforementioned legal body set de abolition of Decree N° 1269/2002 dated on July 16, 2002 and its amendments and instructed the National Executive Power, through its controlling agencies, to set the date as from which said regulations became into effect in relation with financial statements to be submitted. Therefore, on February 22, 2019, the Argentine Central Bank issued Communication “A” 6651 which established that financial statements shall be prepared in a homogeneous currency as from January 1, 2020. Therefore, these consolidated financial statements have been re-expressed as of December 31, 2020.

 

1.2.3Comparative information

 

The information included in these consolidated financial statements and in the aforementioned notes as of December 31, 2019 and January 1, 2019 is presented, exclusively with comparative purposes regarding the information as of December 31, 2020.

 

It is worth to be mentioned that, Communication “A” 6778, issued by the Argentine Central Bank, required the retroactive application of the impairment model set forth in section 5.5 of IFRS 9 with temporary withdrawal of non-financial public sector´s debt instruments and the re-expression of financial statements pursuant to IAS 29. In virtue of the aforementioned, the Group has applied the following:

 

(i)Retroactive re-expression of figures included in the Financial Situation as of December 31, 2019 and January 1, 2019 for the purpose of submitting such figures as if the new accounting policies had been in force since January 1, 2019, and

 

(ii)Retroactive re-expression of figures included in the Income Statement, Other Comprehensive Income and Changes in the Shareholders’ Equity Statement as of December 31, 2019 for the purpose of submitting such figures as if the new accounting policies had been in force since January 1, 2019.

 

(iii)Present a third column in the statement of financial position with the balances as of January 1, 2019

 

1.2.4Changes in accounting policies and new accounting standards

 

With the approval of new IFRS, modifications or derogations of the standards in force, and once such changes are adopted through Adoption Bulletins issued by Federación Argentina de Consejos Profesionales en Ciencias Económicas (FACPCE), the Argentine Central Bank will determine the approval of such standards for financial entities. In general terms, no anticipated IFRS application shall be allowed unless upon adoption such anticipated measure is specified.

 

The following are changes that were made effective over the course of the quarter ended on December 31, 2020:

 

 

13

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

(a)Impairment of financial assets

 

Pursuant to Communication “A” 6430 and 6847 Financial Entities shall start to apply provisions on Financial Assets Impairment included in paragraph 5.5 of IFRS 9 as from fiscal years starting on 1 January, 2020, except for Non-financial Public Sector´s debt securities, which shall be temporarily excluded from the scope of said provisions. Likewise, Communication “A” 6938 issued by the Argentine Central Bank set the postponement of the application of the section targeted to “B” group Companies until January 1, 2022,a category that includes Cordial Compañía Financiera S.A.; therefore, provisions of said Entity are held under the minimum provisions regulations set by the Argentine Central Bank. It is worth mentioning that through communications "A" 7108 and 7134, the Argentine Central Bank ordered the classification of financial entities into groups "A", "B" and "C", leaving Cordial Compañía Financiera classified as Group "C" as of October 1, 2020.

 

Upon the application of impairment model included in section 5.5 of IFRS 9, a decrease of about 850 million and 1,042 million would have been recorded in the shareholders ´equity as of December 31, 2020 and 2019 respectively.

 

  12/31/2020  12/31/2019 
Provisions recorded in financial statements  7,829,857   7,982,688 
Provisions pursuant to section 5.5 of IFRS 9  9,044,555   9,471,317 
Difference (*)  1,214,698   1,488,629 

 

     (*) These balances do not include the effect of income tax

 

IFRS 9 foresees an expected credit los model, by means of which financial assets are classified in three impairment stages, based on changes in credit quality as from its initial recognition and show how a Company measures impairment loss and applies the effective interest method. Note 1.2 g) offers greater detail on how expected credit loss is measured.

 

Pursuant to Communication “A” 6778 issued by the Argentine Central Bank, Financial Entities shall apply the following in virtue of the effects of the application of section 5.5 of IFRS 9:

 

(i)utilized internal models that shall meet IFRS 9 requirements; thus, applying such models to all assets included in such regulation with temporary exception abovementioned, and

 

(ii)apply the Regulation retroactively, thus setting the transition date on January 1, 2019.

 

The following chart includes the reconciliation between uncollectibility risk provisions as of 12.31.2019 pursuant to the criteria set by the Amended Text on “Debtors Classification” and “Minimum Uncollectibility Risk Provisions” set by the Argentine Central Bank and the new uncollectibility risk provisions pursuant the expected credit loss model set by IFRS 9 with temporary exceptions above mentioned in the first paragraph:

 

Category of financial instrument Credit risk
provision
pursuant to
minimum-
provisions-related
Standards set by
the Argentine
Central Bank
  Re-measurements  Reclassifications  Credit risk
provision
pursuant to IFRS
9 (as per scope of
Communication
“A” 6847)
 
Loans and other financing                
Other financial assets  86,530       250,255   336,785 
Loans and other financing                
Other Financial Entities  16,445       -   16,445 
NFPS and Res. Abroad  -   -   -   - 
Overdrafts  875,918       1,132,608   2,008,526 
Documents  1,033,531       (538,084)  495,447 
Mortgage loans  580,367       47,645   628,012 
Pledge loans  58,889   16,495   57,210   132,594 
Personal loans  1,372,350   13,997   (261,314)  1,125,033 
Credit Cards  863,227       (126,517)  736,710 
Financial Lease  103,786       85,348   189,134 
Others  2,955,712       (646,551)  2,309,161 
Debt securities  4,941       (100)  4,841 
Contingent commitments  500       (500)  - 
TOTAL  7,952,196   30,492   -   7,982,688 

 

* Cordial Compañía Financiera S.A.´s balances of provisions are held under minimum provisions Standards pursuant to Communication “A” 6990 issued by the Argentine Central Bank.

 

 

14

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Note 1.3 includes further information on the definition of credit risk provision pursuant to the expected credit loss model set by IFRS 9 with scope set by the Argentine Central Bank.

 

(b)Re-expression by inflation of financial statements

 

Pursuant to IAS 29 “Financial Information in hyperinflationary economies”, financial statements of an entity, whose functional currency accounts for that currency of a hyperinflationary economy shall be expressed in terms of a current measurement unit as of the reporting fiscal year closing date regardless of whether such statements are based on the historical cost method or a current cost method. To such ends, in general terms, such entity shall calculate the inflation recorded as from the acquisition date or revaluation date, when applicable, in non-monetary items. Such requirements also include the comparative information of financial statements.

 

With the purpose of stating whether an economy is classified as Hyperinflationary in accordance with IAS 29, the provision sets forth a series of factors to be considered, which includes an accrued inflation rate in three years close to or higher than the 100%. That is the reason why, pursuant to IAS 29, the Argentine economy must be considered as a high inflation economy as from July 1, 2018.

 

In short, pursuant to IFRS 29 re-expression mechanism, monetary assets and liabilities shall not be re-expressed since such assets and liabilities are expressed in a measurement unit in force as of the reported period closing. Assets and liabilities subject to adjustments tied to specific agreements, shall be adjusted pursuant to such agreements. Non-monetary items measured at current values at the end of the reported period, such as the realization net value or others, shall be re-expressed. The remaining non-monetary assets and liabilities shall be re-expressed in accordance with a general price index. The loss or earning of a net monetary position shall be included in the net income of the reported period in a separate item. It is worth to be mentioned that earnings or losses over the monetary position of instruments at fair value through profit and loss in OCI is included in Other Comprehensive Income of the period/fiscal year. Upon the sale of such instruments its result is reclassified in the line “Results from sale or withdrawal of financial instruments rated at amortized cost” in the net income of the fiscal year.

 

Pursuant to Communication “A” 6651, issued by the Argentine Central Bank on February 22, 2019, financial statements shall be prepared in a constant currency as from fiscal years starting on January 1, 2020. In this sense, Communication “A” 6849 issued by the Argentine Central Bank sets the re-expression frequency of the accounting information in a homogeneous currency on a monthly basis, and the index utilized to such ends accounts for the National Consumer Index drawn up by INDEC (basis month: December 2016) and for such items with previous initial date, IPIM issued by FACPCE is utilized, pursuant to Ruling JG 517/16. Likewise, transition date, in virtue of the retroactive application has been set on January 1, 2019.

 

(c)Other Changes in the Accounting Framework set by the Argentine Central Bank

 

Pursuant to Communication “A” 6847, financial entities will be allowed to re-categorize, as from Januray 1,2020, instruments of the non-financial public sector rated at fair value through profit and loss and at fair value through profit and loss in OCI at an amortized cost criterion, while utilizing the accounting value of such date as addition value. As for instruments affected by this option, interest accrual and accessories shall be interrupted as long as the accounting value is above its fair value. Upon such measurement, the abovementioned financial instruments, at fair value as of December 31, 2020 there would be no significant impact on equity and results for the year.

 

(d)Definition of a business – Changes in accordance to IFRS 3

 

On October 22, 2018, IASB released changes, which include the definition of business with the purpose of helping entities determine whether a transaction must be recorded as a combination of business or the acquisition of an asset. Such changes:

 

(i)clarifies that, the definition of business, an acquired group of activities and assets, shall include at least a good and a substantial process that together shall contribute significantly to the capacity of developing products;

 

(ii)removes the evaluation of whether market players can replace the lack of processes or goods and continue with the production of products;

 

(iii)add explanatory guidelines and examples to help entities evaluate whether a substantial process has been acquired;

 

(iv)restrict definitions of a business or product by focusing on goods and services granted to clients and remove the reference to the capacity of reducing costs, and

 

 

15

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

(v)add an optional concentration trial that enables a simplified evaluation of whether a set of activities and acquired businesses are not a business.

 

Entities need to apply changes in transactions which acquisitions date as from the beginning of the first annual period over which it has been informed as of January 1, 2020.

 

The Group does not see any initial effect unless a combination of businesses is made effective.

 

(e)Definition of significant or relatively significant Changes to IAS 1 and IAS 8

 

On October 31, 2018, IASB released these changes with the purpose of improving the understanding of the definition of significant or relatively significant, coordinating the drawing up of the definition in IFRS and the Conceptual Framework to avoid any misunderstanding whatsoever that may stem from the different definitions, in that sense, IASB has added support requirements in IAS 1 in the definition to add importance and clarity in its application. Additionally, said board provides existing guides regarding the definition of significant and relatively significant in a single place together with the definition.

 

This change affects mainly section 7 of IAS 1, section 5 of IAS 8 and removes section 6 of IAS 8. Such change is applicable in a prospective manner to annual periods as from January 1, 2020.

 

The Group considers that such changes have no significant effect in its financial statements.

 

(f)Amendment to the Conceptual Framework

 

IASB has issued a new Conceptual Framework. Said change will not imply any changes in the accounting standards in force. However, entities that utilize the Conceptual Framework to define accounting policies for those transactions, events or situations that are not included in the accounting standards in force, apply a new Conceptual Framework as from January 1, 2020, thus evaluating whether their accounting policies are still the most suitable ones.

 

The Group considers that such changes have no significant effect in its financial statements.

 

(g)Change in the Reference Interest rate (IBOR) – Changes to IFRS 9

 

On September 26, 2019, IASB released a change that requires additional disclosures regarding the uncertainty resulting from the reform in the reference interest rate. Such release accounts for the first reaction to potential effects that IBOR reform may produce in financial statements and modifies specific cash flow coverage accounting requirements assuming that the reference interest rate is not modified as a result of such reform. These changes have become effective as from January 1, 2020 with retroactive effect.

 

The Group considers that such changes have no significant effect in its financial statements.

 

(h)Absorption of Negative Non-Allocated Income

 

In accordance with the provisions of Title IV, Chapter III, Section 3, Subsection b) of the Regulations of the Argentine Securities Commission (Restated Text 2013), the Company has made use of the option to absorb the accumulated negative results that were generated as a consequence of the inflation adjustment by application of the IAS 29, subject to the ratification of the AGM.

 

Based on the foregoing, and in accordance with the order of absorption of accumulated losses as established in such regulations, Grupo Supervielle’s Net Worth as of January 1, 2020 (transition date) is composed as follows:

 

  01/01/2020 
  Miles of $ 
Capital stock  456,722 
Capital Adjustment  2,968,586 
Issue Premium  28,858,170 
Other comprehensive income  117,647 
Total shareholders´ equity  32,401,125 

 

 

16

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

The following sets forth changes that have not become in force as of December 31, 2020:

 

(a)Sale or contribution of assets between an investor and its associate or joint Venture – changes in IFRS 10 and IAS 28.

 

IASB carried out changes specifically on IFRS 10 “Consolidated Financial Entities” and IAS 28 “Investments in associates and joint ventures”. Such changes clarify the accounting of sales or contribution of assets between the investor and its associates and joint ventures and confirm that the accounting treatment depends on whether non-monetary assets sold or contributed to the associate or joint venture account for a “business” (as defined in IFRS 3).

 

When non-monetary assets account for a business, the investor will recognize earnings or losses of the sale or contribution of assets. If assets do not account for a business, earnings or losses are recognized by the investor only up to the amount recognized by the investor in the associate or joint venture. These changes are applied with retroactive effect.

 

IASB has decided to delay the application date for this modification until the research project over the interest method is concluded.

 

The Group is evaluating the impact of the application of this new standard.

 

(b)IFRS 17 “Insurance contracts”

 

On May  18, 2017, IASB issued IFRS 17 “Insurance contracts” which provides a comprehensive framework based on principles for measurement and presentation of all insurance contracts. The new rule will supersede IFRS 4 Insurance contracts and requires that insurance contracts be measured using cash flows of existing enforcement and that income be recognized as the service is rendered during the coverage period. The standard will come into force for the fiscal years beginning as from November 1, 2023.

 

The Group is evaluating the impact of the application of this new standard.

 

c)Changes in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Reference interest rate reform (IBOR)

 

With the purpose of working out issues resulting from the implementation of the reference interest rate reform (IBOR), on August 27, the IASB released changes in standards. The most important changes are related to the accounting of financial instruments at amortized cost. Such changes require that financial entities update contractual cash flows resulting from the reference interest rate reform through the modification of the effective interest rate pursuant to paragraph B5.4.5 of IFRS 9. Therefore, no impact on income is recorded as a result of such modification. Said change shall be applied only when necessary as a direct consequence of the application of the reference interest rate reform (IBOR). IFRS 16 was also modified; thus, requiring lessees to utilize the same modification when accounting changes in leasing payments to be produced as a result of the reference interest rate reform (IBOR). Such changes will become effective as from January 1, 2021.

 

The Group is assessing the impact of said new standard.

 

1.3 Impairment of financial assets

 

The Group evaluates, based on a prospective approach, expected credit losses (“ECL”) related to financial assets rated at amortized cost or fair value with changes in another comprehensive income, the exposure resulting from loan commitments and financial guarantee contracts with the scope set by Communication “A” 6847 issued by the Argentine Central Bank.

 

The Group measures ECL of financial instruments reflecting the following:

 

(a)a probability amount, weighed and unbiased, that is defined through the evaluation of a range of possible result;

(b)the temporal value of money; and

(c)the reasonable and sustainable information available at no cost nor excessive effort on the submission date on past events, current conditions and future economic condition forecasts.

 

IFRS 9 sets forth the following “Three stages” model for the impairment based on changes in the credit quality from initial recognition:

 

 

17

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

·      If, on the submission date, the credit risk of a financial instrument has not increased significantly since its initial recognition, the Group will classify such instrument in “Stage 1”.

 

·      If a significant increase in credit risk (“SICR”) is detected, from its initial recognition, the instrument is moved to “Stage 2”, but such instrument is not deemed to contain a credit impairment.

 

·      If the financial instrument contains credit impairment, it is moved to “Stage 3”.

 

·      For financial instruments in “Stage 1”, the Bank measures ECL at an amount equivalent to the amount of expected credit loss during the useful life term of the asset that result from potential default events within the next 12 months. As for Financial Instruments in “Stage 2” and “Stage 3”, the Group measures ECL during the useful life term of the asset (hereinafter “lifetime”). Note 1.3.1 includes a description of how the Group defines when a significant increase in credit risk has occurred.

 

·      A generalized concept in the measurement of ECL pursuant to IFRS 9 shall be considered prospective information.

 

·      Financial assets with impairment on credit value, either purchased or produced, account for those financial assets which have been impaired since initial recognition. ECL of this type of financial instruments is always measured during the asset lifetime (“Stage 3”).

 

The following chart summarizes the impairment requirements pursuant to IFRS 9 (for financial assets that do not entail impairment on credit value, either purchased or produced:

 

Changes in the credit quality since initial recognition 
 
Stage 1Stage 2Stage 3 
(initial recognition)(significant increase of credit
risk since initial recognition)
(Impaired credit) 
ECL over the next
12 months
Lifetime ECL 

 

The following describes the Group´s judgements and assumptions for ECL measurement:

 

1.3.1. Significant increase in credit risk

 

The Group considers that a financial asset has experienced a significant credit risk increase when one or more than the following qualitative and quantitative criteria have been observed:

 

Personal and Business Banking

 

·Portfolios between 31 and 90 days past due

·The credit origination score has deteriorated by more than 30% with respect to the current performance score

·Score of behavior less than cut off 1

·Loans and credit cards refinanced under Decree No. 260/2020 Coronavirus (COVID-19) that were impaired at the time of refinancing. Or, loans that were not impaired at the time of refinancing, but deferred more than 5 installments.

·Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).

 

Corporate Banking

 

·Portfolios between 31 and 90 days past due

·Maximum Argentine Central Bank a situation equal to 2

·Credit Ratings C (Probability of default higher than 30%)

·Its rating deteriorated by more than two notes from its credit approval rating.

·Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).

 

 

1

Renta Higher income : Segment plan sueldo (payrroll customers) >=400, Segment Open Market >=700 y Segment Senior Citizens >=610

Rest: Segment plan sueldo (payrroll customers) >=500, Segment Open Market >=700 y Segmento Senior Citizens >=610

 

 

18

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

Consumer Finance

 

·Portfolios between 31 and 90 days past due.

·Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).

 

Sectoral Analysis – Covid-19 Risk

 

In virtue of the fact that internal impairment models do not reflect properly Covid-19 impact on the local and global economic situation (See Note 22) as historical information is utilized, a sectoral analysis has been included as additional definition of the significant risk increase.

 

In such analysis, companies’ default risk is evaluated according to the type of industry and the impact such companies have suffered in face of the current economic situation, while taking into account their features, seasonal nature, etc.

 

Finally, the different industries are classified into four types of risk. They are:

 

·Low risk

·Medium risk

·High risk

·Very high risk

 

This additional definition of a significant increase in credit risk has been applied for the SME and E&P segments, for the very high and high risk activities (only for the Single Firm portfolio):

 

Very high riskHigh risk
ConstructionMachinery & equipment
Tourism & GastronomyIron and steel industry
Real estateHome appliances
EntertainmetSports
Passenger transportTextile
Professional services 

 

1.3.2. Individual and collective evaluation basis

 

Expected losses are estimated both in a collective and individual manner.

 

The Group´s individual estimation is aimed at calculating expected losses for significantly impaired risks. In these cases, the amount of credit losses is calculated as the difference between expected cash flows discounted at the effective interest rate of the operation and the value in the books of the instrument.

 

For collective estimation of expected credit losses, instruments are distributed in groups of assets depending on credit risk features. Exposures within each group are segmented in accordance with the similar features of the credit risk, including the debtor´s payment capacity pursuant to contractual conditions. These risk features need to play a key role in the estimation of future flows of each group. Credit risk features may consider the following factors, among others:

 

EntityParameterSegment
Personal and Businesses Banking

Probability of Default

(DP)

Personal loans (1)
Credit cards (1)
Mortgage loans
Refinancing
Other financings

Loss Given Default

(LGD)

Personal loans
Credit cards
Overdrafts
Mortgage loans
Refinancing
Other financings

 

 

19

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

EntityParameterSegment
Corporate Banking

Probability of Default

(DP) (2)

Small Companies
Medium Companies
Big Companies
Financial Sector

Loss Given Default

(LGD)

Secured loans
Unsecured loans

 

Consumer Finance

Probability of Default

(DP)

Credit cards loans
Refinancing
Cash loans
Cash consumptions and directed loans
CCF Automobile Loans
Tarjeta Automatica Personal loans

Loss Given Default

(LGD)

Credit Cards
Personal loans
Refinancing
CCF Automobile Loans

 

(1)For credit cards and personal loans, the Group includes an additional layer of analysis: senior citizens, high income, open market, high income payroll, non- high income open market, non-high income payroll, Personal and Business, former senior cityzens and former payroll

 

(2)Probability of default within Corporate Banking is calculated by grouping clients based on the client size for Stage 1 facilities. For Stage 2 and Stage 3, Probability of default is calculated including all segments of Corporate Banking due to the lack of materiality to form a larger group.

 

The credit risk characteristics used to group the instruments are, among others: type of instrument, debtor's sector of activity, geographical area of activity, type of guarantee, aging of past due balances and any other factor relevant to estimating the future cash flows.

 

Grouping of financial instruments is monitored and reviewed on a regular basis by the Credit Risk and Stress Test Area.

 

1.3.3 Definition of default and impaired credit

 

The Group considers that a financial instrument is in default when such instrument entails one or more of the following criteria:

 

Personal and Businesses Banking

 

·Financial instruments delinquent after 90 days in contractual payments.

 

Corporate Banking

 

·Financial instruments delinquent more than 90 days in past due.

·Financial instruments with B.C.R.A. situation greater than or equal to 3.

·Rating C or D.

 

Consumer Finance

 

·Financial instrument more than 90 days past due.

 

These criteria are applied in a consistent manner to all financial instruments and are aligned with the internal definition of defaultused for the administration of credit risk. Likewise, such definition is consistently applied to define PD (“Probability of Default”), Exposure at Default (“EAD”) and Loss Given Default ( “LGD”).

 

 

20

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.3.4. Measurement of Expected Credit Loss – Explanation of inputs, assumptions and calculation techniques

 

ECL is measured on a 12-month or lifetime basis, depending on whether a significant increase in credit risk has been recorded since initial recognition or whether an asset is considered to be credit-impaired. ECL are the discounted product of the Probability of Default (“PD”), Exposure at default (“EAD”) and Loss Given Default (“LGD”), defined as follows::

 

·The PD represents the likelihood of a borrower defaulting on its financial obligation (pursuant to the “Definition of default and credit impaired” set forth in Note 1.3.3), either over the next 12 months or over the remaining lifetime (lifetime PD) of the obligation.

 

·EAD is based on the amounts the Group expects to be owed at the time of default, over the next 12 months (12 months EAD) or the remaining lifetime (lifetime EAD). For example, for a revolving commitment, the Group includes the current drawn balance plus any further amount that is expected to be drawn up to the current contractual limit by the time of default, should it occur.

 

·LGD represents the Group´s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, seniority of claim, availability of collateral or other type of credit support. LGD is expressed as a percentage per unit of exposure at the time of default LGD is calculated on a 12-month or lifetime basis, where 12 month LGD is the percentage of loss expected to be made if the default occurs in the next 12 months and lifetime LGD is the percentage of loss expected to be made if the default occurs over the remaining expected lifetime of the loan.

 

ECL is determined by projecting PD, LGD and EAD for each future month and each individual exposure or collective segment. These three components are multiplied and adjusted for the likelihood of survival (that is, the exposure has not been prepaid or defaulted in an earlier month). This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used inthe ECL calculation is the original effective interest rate or an approximation thereof.

 

The Entity based its calculation of the ECL parameters on internal modelsthat were adapted in order to be compliant with IFRS 9.

 

The Group includes prospective economic information in its definition of DP, EAD and LGD over 12 months or Lifetime. See Note 1.3.5 for the explanation of prospective information and its consideration in the calculation of ECL.

 

1.3.5 Forward-looking information considered in expected credit loss models

 

The evaluation of significant credit increases and the calculation of ECL include prospective information. The Group carried out a historical analysis and identifies key economic variable that affect the credit risk and expected credit losses for each portfolio.

 

Forecasts of these economic variable (“base economic scenario”) are provided on a six-month basis by the Research team of the Group and offer a better estimated outlook of the economy for the next 12 months. The impact of such economic variables on DP and LGD resulted from the statistic regression analysis to understand the impact the changes in these variables has had historically on default rates and LGD components.

 

In addition to the base economic scenario, the Research team of the Group also provides two potential scenarios together with scenario analysis. The number of other scenarios is defined in accordance with the analysis of the main products to ensure the lineal effect between the future economic scenario and related expected credit losses. The number of scenarios and its features are re-evaluated on a six-month basis, except a situation occurs in the macroeconomic framework that justifies a greater regularity.

 

As of January 1, 2020 and as of December 31, 2020, as for its portfolios, the Group concluded that three scenarios have properly captured non-lineal items. Scenario analysis are defined by means of a combination of statistic and know-how judgement analysis, taking into account the range of potential results of which each scenario is representative. The evaluation of credit risk significant increases is carried out by means of the utilization of DP lifetime in the base scenario and other scenarios, multiplied by the related analysis of each scenario, together with qualitative and quantitative and backstop indicators (See Note 1.3.1). The aforementioned is defined if the financial instrument is in Stage 1, Stage 2 or Stage 3 and, therefore, whether to register a 12-month ECL or Lifetime. As with any economic forecast, projections and probabilities of occurrence are subject to a high degree of inherent uncertainty, and therefore actual results may be significantly different than projected. The Group considers that these forecasts account for its best calculation of potential results and has analyzed the non-lineal and asymmetric impacts within the different portfolios of the Group to establish that chosen scenarios are representative of the range of potential scenarios.

 

 

21

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

The most significant assumptions utilized to calculate ECL as of December 31, 2020 are as follows:

 

 ParameterIndustry / SegmentSegmentMacroeconomic variableOptimistic scenarioBase
scenario
Pessimistic scenario
Default
probability
Personal and Businesses BankingOpen MarketInflation Rate41.34%46.79%52.43%
Private Sector Wage55.74%50.68%45.61%
Income
Payroll
Quantity of Private Sector
Employment
5928.025924.435920.84
Private Sector Wage10.19%2.65%-4.48%
Senior CitizensInflation Rate41.34%46.79%52.43%
Monthly Economic Activity
Estimator
139.56138.00136.45
Corporate bankingAllInterest Rate(3.78)%(4.63)%(5.53)%
Monthly Economic Activity
Estimator
139.56138.00136.45
Consumer financeCCFPrivate Sector Wage55.74%50.68%45.61%
Monthly Economic Activity
Estimator
139.56138.00136.45
CCF Automobile securedPrivate Sector Wage55.74%50.68%45.61%
Inflation Rate41.34%46.79%52.43%

 

 ParameterIndustry / SegmentSegmentMacroeconomic variableOptimistic scenarioBase
scenario
Pessimistic scenario
Loss Given DefaultSupervielle
Bank
AllPrivate Sector Wage55.74%50.68%45.61%
Consumer FinanceCCFPrivate Sector Wage55.74%50.68%45.61%
CCF Automobile securedPrivate Sector Loans70.49%64.09%57.68%
Private Sector Wage55.74%50.68%45.61%

 

The following are estimations assigned to each scenario as of December 31, 2020:

 

Base scenario  80%
Optimistic scenario  10%
Pessimistic scenario  10%

 

Sensitivity analysis

 

The chart below includes changes in ECL as of December 31, 2020 that would result from reasonably potential changes in the following parameters:

 

December 31, 2020
Reported ECL Allowance  8,060,595 
Gross carrying amount  115,212,232 
Reported Loss rate  191,6%
 ��   
ECL amount by scenarios    
Favorable scenario  8,009,485 
Unfavorable scenario  9,335,907 
     
Loss Rate by scenarios    
Favorable scenario  6,8%
Unfavorable scenario  7,9%
     
Coverage Ratio per Scenario    
Favorable Impact  176.15%
High Impact  183.02%

 

 

22

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.3.6 Maximum exposure to credit risk

 

The chart below includes an analysis of credit risk exposure of the financial instruments for which expected credit loss provisions are recognized. The gross amount of financial assets books included in the chart accounts for the maximum credit risk exposure of such assets.

 

  December 31, 2020    
  Stage 1  Stage 2  Stage 3  Total 
Overdrafts  12,516,187   285,078   297,364   13,098,629 
Documents  18,228,303   610,850   146,257   18,985,410 
Mortgage loans  7,894,984   2,118,357   1,044,497   11,057,838 
Pledge loans  1,227,511   312,404   352,278   1,892,193 
Personal loans  19,046,519   1,452,586   624,009   21,123,114 
Individuals and Business  15,535,247   1,425,146   510,209   17,470,602 
Consumer finance  3,511,272   27,440   113,800   3,652,512 
Credit cards  43,593,130   3,200,435   376,131   47,169,696 
Individuals and Business  38,301,754   2,633,285   240,254   41,175,293 
Consumer finance  5,291,376   567,150   135,877   5,994,403 
Financial Lease  2,817,385   217,321   152,820   3,187,526 
Others  31,936,876   3,636,401   4,502,842   40,076,119 
Total  137,260,895   11,833,432   7,496,198   156,590,525 

 

1.3.7 Collateral and other credit enhancements

 

Collateral is an instrument pledged as security for repayment of a loan, to be forfeited in the event of default. The Entity accepts collateral as security before a potential breach on behalf of a debtor occurs.

 

The Argentine Central Bank classifies these guarantees in three types: Preferred “A” (considered self-settleable), Preferred “B” (made up by mortgage or pledge loans) and remaining guarantees (mainly bank guarantees and fines).

 

In virtue of the administration of collateral, the Group relies on a specific area devoted to the review of the legal compliance and suitable instrumentation of received collateral. In accordance with the type of collateral, the guarantors may be people or companies (in the case of mortgages, pledges, fines, guarantees and liquid funds) and international top level Financial Entities (for credit letters stand by).

 

The Group monitors collateral held for financial assets considered to be credit-impaired as it becomes more likely that the Group will take possession of collateral to mitigate potential credit losses.

 

Credit Impaired loans Gross
exposure
  Allowances for loans losses  Book value  Fair value of collateral 
Overdrafts  302,868   152,155   111,620   81,482 
Financial Lease  152,820   98,234   131,345   102,255 
Documents  146,257   138,617   1,065   631 
Mortgage loans  1,044,497   249,563   534,799   480,309 
Personal loans  624,009   1,178,476   -   - 
Pledge loans  352,278   132,263   136,698   107,785 
Credit cards  389,148   277,243   1,609   1,319 
Other  4,484,321   2,684,430   2,119,714   1,450,733 
Total  7,496,198   4,910,981   3,036,850   2,224,514 

 

 

23

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.3.8 Allowances for loan loss

 

Allowances for loan losses recognized in the year is affected by a range of factors as follows:

 

·Transfers between Stage 1 and Stage 2 or 3 given financial instruments experience significant increases (or decreases) in credit risk or are impaired over the period, and the resulting “increase” between ECL at 12 months and Lifetime;

·Additional assignments for new financial instruments recognized during the period, as well as write-offs for withdrawn financial instruments;

·Impact on the calculation of ECL of changes in DP, EAD and LGD during the period, resulting from the regular updating of model inputs;

·Impact on the measurement of ECL as a result of changes in models and assumptions;

·Impact resulting from time elapsing as a consequence of the current value updating;

·Conversion to local currency for foreign-currency-denominated assets and other movements; and

·Financial assets withdrawn during the year and application of provisions related to assets withdrawn from the balance sheet during the year.

 

The following charts explain changes in the provision for credit risk between the beginning and end of the year due to the following factors:

 

  Allowance    
  Stage 1  Stage 2  Stage 3  Total 
Allowances for loan losses as of 12/31/2019  1,541,949   797,359   5,643,380   7,982,688 
Transfers:                
From Stage 1 to Etapa 2  (68,055)  770,070   -   702,015 
From Stage 1 to Etapa 3  (18,333)  -   2,348,073   2,329,740 
From Stage 2 to Etapa 3  -   (183,807)  718,285   534,478 
From Stage 2 to Etapa 1  7,004   (69,795)  -   (62,791)
From Stage 3 to Etapa 2  -   7,235   (36,953)  (29,718)
From Stage 3 to Etapa 1  (530)  -   (43,553)  (44,083)
Net changes  1,101,355   2,039,699   2,439,691   5,580,745 
Withdrawn financial assets  (766,473)  (1,631,758)  (6,257,178)  (8,655,409)
Direct charge  (627,389)  (93,531)  (36,430)  (757,350)
Exchange Differences and Others  79,458   25,784   135,666   240,908 
Allowances for loan losses as of 12/31/2020  1,248,986   1,661,256   4,910,981   7,821,223 

*Cordial Compañía Financiera S.A.´s balances of provisions are held under minimum provisions Standards pursuant to Communication “A” 6990 issued by the Argentine Central Bank.

 

  Assets Before Allowances    
  Stage 1  Stage 2  Stage 3  Total 
Assets Before Allowances as of 12/31/2019  113,892,858   6,341,521   8,776,882   129,011,261 
Transfers:                
From Stage 1 to Etapa 2  (3,209,085)  3,209,085   -   - 
From Stage 1 to Etapa 3  (1,558,494)  -   1,558,494   - 
From Stage 2 to Etapa 3  -   (853,320)  853,320   - 
From Stage 2 to Etapa 1  755,663   (755,663)  -   - 
From Stage 3 to Etapa 2  -   41,113   (41,113)  - 
From Stage 3 to Etapa 1  73,945   -   (73,945)  - 
Net changes  (15,583,223)  2,395,478   (1,091,109)  (14,278,854)
Withdrawn financial assets  (438,285)  (795,448)  (3,028,143)  (4,261,876)
Direct charge  (460,839)  (68,702)  (26,759)  (556,300)
Exchange Differences and Others  2,979,031   334,375   568,571   3,881,977 
Assets Before Allowances as of 12/31/2020  96,451,571   9,848,439   7,496,198   113,796,208 

 

 

24

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

  Assets Before Allowances   
  Stage 1  Stage 2  Stage 3  Total as of December 31,
2020
 
Promissory notes  18,228,303   610,850   146,257   18,985,410 
Unsecured corporate loans  12,407,922   793,555   2,359,458   15,560,935 
Overdrafts  2,034,612   159,552   302,868   2,497,032 
Mortgage loans  7,894,984   2,118,357   1,044,497   11,057,838 
Automobile and other secured loans  1,227,511   312,404   352,278   1,892,193 
Personal loans  19,046,519   1,452,586   624,009   21,123,114 
Credit card loans  17,420,091   1,839,515   389,148   19,648,754 
Foreign Trade Loans  9,558,036   1,585,023   1,901,861   13,044,920 
Other financings  3,270,182   725,488   163,301   4,158,971 
Other receivables from financial transactions  2,546,026   33,788   59,701   2,639,515 
Receivables from financial leases  2,817,385   217,321   152,820   3,187,526 
Subtotal  96,451,571   9,848,439   7,496,198   113,796,208 
Allowances for loan losses  (1,248,986)  (1,661,256)  (4,910,981)  (7,821,223)
Total  95,202,585   8,187,183   2,585,217   105,974,985 

 

1.3.9 Write-off policy

 

The Group writes off, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include: (i) ceasing enforcement activity and (ii) where the Group´s recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation of recovering in full.

 

The Group may write-off financial assets that are still subject to enforcement activity, The outstanding contractual amounts of such assets written off during the year ended on December 31, 2020 and 2019 amount to 7,198,080 and 5,240,360 respectively. The Group still seeks to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable expectation of recovery.

 

  12.31.2020  12.31.2019 
Balance at the beginning of the year 5,240,360  3,614,921 
Additions  5,788,119   6,113,008 
Disposals  (1,229,014)  (1,666,458)
Cash colletion  (550,119)  (631,103)
Portfolio sales  (77,117)  (61,979)
Condonation  (601,778)  (973,376)
Exchange differences and other movements  (2,601,385)  (2,821,111)
Gross carrying amount  7,198,080   5,240,360 

 

1.4 Critical accounting policies and estimates

 

The preparation of financial statements in accordance with the accounting framework established by the Argentine Central Bank requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the accounting standards established by the Argentine Central Bank to establish the Group's accounting policies.

 

The Group has identified the following areas that involve a higher degree of judgment or complexity, or areas in which the assumptions and estimates are significant for the consolidated financial statements that are essential for understanding the underlying accounting / financial reporting risks:

 

 

25

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

AS OF DECEMBER 31, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

a)            Fair value of derivatives and other financial instruments

 

The fair value of financial instruments that do not list in active markets are measured through the use of valuation techniques. Such techniques are validated and regularly reviewed by qualified independent personnel of the area that developed such techniques. All models are evaluated and adjusted before being use in order to make sure that results express current information and comparative market prices. As long as possible, models use only observable information; however, factors such as credit risk (own or counterparty), volatilities and correlations require the use of estimates. Changes in assumptions regarding such factors may impact on the fair value reported for financial instruments.

 

b)            Allowances for loan losses and advances.

 

As of January 1, 2020, the Group adopted retroactively to January 1, 2019, with the scope mentioned in Note 1.2.4. (a), section 5.5. of IFRS 9 referring to the impairment of financial assets. In this sense, the Group evaluates the expected credit losses (ECL) on a prospective basis of the credit risk associated with the financial assets measured at amortized cost, to the debt instruments measured at fair value with changes in other comprehensive income, to accounts receivable for leases, as well as commitments and guarantees granted not measured at fair value, with the exception of debt instruments of the Non-Financial Public Sector that are temporarily excluded from the provisions for impairment of financial assets, contained in section 5.5 of IFRS 9, as well as the provisions of Cordial Compañía Financiera S.A. as provided in Communication “A” 6990 of the B.C.R.A.

 

The measurement of expected credit losses is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behavior (for example, the probability that the customer will go into default and that losses will result for the Group). The explanation of the inputs, assumptions and estimation techniques used to measure the ECL is presented in more detail in Note 1.3, including the key sensitivities of the ECL to changes in these elements.

 

It should be noted that, in the application of accounting requirements to measure ECL, significant judgments are necessary, such as:

 

(i)  Determination of the criterion of significant increase in credit risk 

(ii)  Choice of appropriate models and assumptions for the measurement of ECL 

(iii) Establishment of the number and relative weight of the prospective scenarios for each portfolio segment and the associated ECL, and 

(iv)  Establishment of groups of similar financial assets for the purpose of measuring ECL.

 

c)            Impairment of Non-Financial Assets

 

Intangible assets with finite lives and property, plants and equipment are amortized or depreciated along their useful lives in a straight-line method. The Group reviews the conditions related to these assets to determine whether events and circumstances justify a review of the amortization and remaining depreciation period and whether there are factors or circumstances that imply an impairment in the value of assets that cannot be recovered.

 

The Group has applied the judgment in the identification of impairment indicators for property, plant and equipment and intangible assets. The Group has defined that there was no evidence of impairment for any period included in the consolidated Financial Statements. Given the aforementioned, no recoverable value has been calculated.

 

The evaluation process for potential impairment of an asset of indefinite useful life is subject to and require a significant judgment in many points over the course of the analysis, including the identification of its cash-generating unit, the identification and allocation of assets and liabilities to a cash-generating unit and the definition of their recoverable value. The recoverable value is compared with the carrying value in order to define the non-recoverable portion of such value. When calculating the recoverable value of the cash-generating unit in virtue of the assessment of annual or regular impairment, the Group use estimates and significant judgments on future cash flows of the cash-generating unit. Its cash flow forecasts are based on assumptions that account for the best use of its cash-generating unit.

 

Although the Group believes that assumptions and forecasts used are suitable in virtue of the information available for the administration, changes in assumptions or circumstances may require changes in the assessment. Negative changes in assumptions utilized in an impairment tests of indefinite useful life intangible assets may result in the reduction or removal of the excess of fair value over the book value, which would result in the potential recognition of the impairment.

 

The Group decided that it would not be necessary to recognize an impairment loss in indefinite useful life intangible assets under such conditions.

 

 

26

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

d)     Income tax and deferred tax

 

A significant judgment is required to determine liabilities and assets from current and deferred taxes. The current tax is measured at the amount expected to be paid to the taxation authority using the tax rates that have been enacted or substantially enacted by the end of the reporting period. The deferred tax is measured over temporary differences between tax basis of assets and liabilities and book values at the tax rates that are expected to apply when the asset is realized or the liability settled.

 

Assets from deferred tax are recognized upon the possibility of relying on future taxable earnings against which temporary differences can be used, based on the Senior Management´s assumptions regarding amounts and opportunities of future taxable earnings. Later, it is necessary to determine whether assets from deferred tax are likely to be used and set off future taxable earnings. Real results may differ from estimates, such as changes in tax legislation or the result of the final review of affidavits issued by tax authorities and tax courts.

 

Likely future tax earnings and the number of tax benefits are based on a medium term business plan prepared by the administration. Such plan is based on reasonable expectations.

 

1.5.Changes in loans and other financing

 

Under certain circumstances, the Group renegotiates or changes contractual cash flows of loans granted to clients. In these cases, the Group evaluates whether the new terms are substantially different from initial terms. The Group carries out this practice while taking into account the following:

 

(i)       If the client is in financial difficulties, the Bank evaluates whether such change only reduces contractual cash flows to amounts expected to be paid by the borrower.

(ii)      Significant extension of the term when the borrower does not have financial difficulties.

(iii)     Significant change in the interest rate.

(iv)     Change in the currency in which the loan is denominated.

(v)      Integration of guarantees or credit improvements that significantly affect the credit risk related to the loan.

 

If, after the change, the loan terms are substantially different, the Group withdraws the original financial instrument and recognizes a new asset at fair value and recalculates a new effective interest rate for such asset. Therefore, renegotiation date is considered as the initial recognition date in virtue of the calculation of impairment and the definition of a new significant increase in credit risk. However, the Group also evaluates whether the new recognized asset is considered as an impaired asset, especially when the renegotiation stemmed from the lack of payment capacity on behalf of the client. The differences in the accounting value are recognized in the results as well as losses and earnings resulting from the withdrawal of such financial asset.

 

If the terms of the loan after the change are not substantially different, the renegotiation or change will not produce the withdrawal of the financial asset, and the Group will recalculate the gross accounting value based on reviewed funds flow while recognizing a guarantee or loss from the change in results. The new gross accounting value is recalculated as the value discounted from the modified funds flow at the initial effective interest rate.

 

1.6.Consolidation

 

A subsidiary is an entity (or subsidiary), including structured entities, in which the Group has control because it (i) has the power to manage relevant activities of the subsidiary (ii) has exposure, or rights, to variable returns from its involment with the subsidiary, and (iii) has the ability to use its power over the subsidiary in order to affect the amount of the investor´s returns. The existence and the effect of the substantive rights, including substantive rights of potential vote, are considered when evaluating whether the Group has power over the other entity. For a right to be substantive, the right holder must have the practical competence to exercise such right whenever it is necessary to make decisions on the direction of the entity’s relevant activities. The Group can have control over an entity, even when it has less voting powers than those required for the majority.

 

Accordingly, the protecting rights of other investors, as well as those related to substantive changes in the subsidiary´ activities or applicable only in unusual circumstances, do not prevent the Group from having power over a subsidiary. The subsidiaries are consolidated as from the date on which control is transferred to the Group, ceasing its consolidation as from the date on which control ceases.

 

 

27

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The following chart provides the subsidiaries which are object to consolidation:

 

Percentage of Participation
         12/31/2020   12/31/2019
Company  Condition  Legal Adress Principal
Activity
 Direct   Direct and Indirect   Direct   Direct and Indirect
Banco Supervielle S.A.  Controlled  Bartolomé Mitre 434, C.A.B.A., Argentina Commercial Bank  97.10%  99.90% (1)  97.10%  99.90% (1) 
Cordial Compañía Financiera S.A.  Controlled  Reconquista 320, C.A.B.A., Argentina Financial Company  5.00%  99.90%  5.00%  99.90%
Tarjeta Automática  S.A.  Controlled  Bartolomé Mitre 434, C.A.B.A., Argentina Credit Card  87.50%  99.99%  87.50%  99.99%
Supervielle Asset  Management S.A.  Controlled  Bartolomé Mitre 434, C.A.B.A., Argentina Asset Management and Other Services  95.00%  100.00%  95.00%  100.00%
Sofital S.A.F. e I.I.  Controlled  Bartolomé Mitre 434. C.A.B.A., Argentina Real State  96.80%  100.00%  96.80%  100.00%
Espacio Cordial de Servicios S.A.  Controlled  San Martín 719/731. 1° Piso. Ciudad de Mendoza. Argentina Retail Services  95.00%  100.00%  95.00%  100.00%
Supervielle Seguros S.A.  Controlled  Reconquista 320. 1° Piso. C.A.B.A., Argentina Insurance  95.00%  100.00%  95.00%  100.00%
Micro Lending S.A.U.  Controlled  Bartolomé Mitre 434. C.A.B.A., Argentina Financial Company  100.00%  100.00%  100.00%  100.00%
InvertirOnline S.A.U.  Controlled  San Martin 323. 11° Piso. C.A.B.A., Argentina Financial Broker  100.00%  100.00%  100.00%  100.00%
InvertirOnline.Com Argentina S.A.U.  Controlled  San Martin 323. 11° Piso. C.A.B.A.,
Argentina
 Representations  100.00%  100.00%  100.00%  100.00%
Supervielle Productores Asesores de Seguros S.A.  Controlled  Reconquista 320. 1° Piso. C.A.B.A., Argentina Insurance Broker  95.20%  100.00%  95.00%  100.00%
Bolsillo Digital S.A.U.  Controlled  Bartolomé Mitre 434, C.A.B.A., Argentina Fintech  100.00%  100.00%  100.00%  100.00%
Futuros del Sur S.A.  Controlled  03 de Febrero 515, Rosario,  Santa Fe Financial Broker  100.00%  100.00%  100.00%  100.00%
Easy Cambio S.A.  Controlled  Av. Colón 2535, Mar del Plata, Buenos Aires Financial Company
  100.00%  100-00%   -   - 

 

(1)Grupo Supervielle S,A,’s direct and indirect interest in Banco Supervielle S,A votes amounts to 99.87% as of 12/31/20 and 12/31/2019.

(2)All the subsidiaries carry out their activities in Argentina, the local and functional currency being Argentine pesos.

 

Financial Statements of controlled companies are for the same period of the Group´s Financial Statements.

 

Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated.

 

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of income, statement of comprehensive income, statement of changes in shareholder’s equity and statement of financial position, respectively.

 

In accordance with the provisions of IFRS 3, the acquisition method is the one used to account for the acquisition of subsidiaries. The identifiable assets acquired and the liabilities and contingent liabilities assumed in a business combination are measured at their fair values ​​on the acquisition date.

 

 

28

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basiss

(Expressed in thousands of pesos in homogeneous currency)

 

Goodwill is measured as the difference between the net of the amounts at the acquisition date of the identifiable assets acquired, the liabilities assumed, the consideration transferred, the amount of the non-controlling interest in the acquiree and the fair value of an interest in the acquired prior to the acquisition date.

 

The consideration transferred in a business combination is measured at the fair value of the assets transferred by the acquirer, of the liabilities incurred by it with the former owners of the acquiree and of the equity interests issued by the acquirer. Transaction costs are recognized as expenses in the periods in which costs have been incurred and services have been received, except for transaction costs incurred to issue equity instruments that are deducted from equity and transaction costs incurred to issue debt deducted from their book value.

 

1.7.Consolidated Structured Entities

 

The Group has securitized certain financial instruments, mainly loans, originated by personal and pledge loans through the transfers of said instruments to financial trusts that issue multiple classes of debt securities and participation certificates.

 

Regarding the financial statements as of December 31, 2020 the following consolidated structured entities have been consolidated as of the date of these consolidated financial statements:

 

  Financial   Due of
principal
 Securitized  Issued Securities
Issuers Trust Set-up on obligation Amount  Type Amount Type Amount
Micro Lending S.A.U. III 06/08/2011 10/12/2016 $39,779  VDF TV A VDF B VN$ 31,823 CP VN$ 1,592
Micro Lending S.A.U. IV 09/01/2011 06/29/2017 $40,652  VDF TV A VDF B VN$ 32,522 CP VN$ 1,626

 

 

 

Regarding the financial statements as of December 31, 2019 the following consolidated structured entities have been consolidated as of the date of these consolidated financial statements:

 

  Financial   Due of
principal
 Securitized  Issued Securities
Issuers Trust Set-up on obligation Amount  Type Amount Type Amount
Banco Serie 97 03/27/2018 03/27/2020 $750,000  VDF TV A VN$ 712,500 CP VN$ 37,500
Cordial Compañía Financiera 20 04/08/2019 01/15/2022 $600,000  VDF VN$ 480,000 CP VN$ 120,000
Cordial Compañía Financiera 21 06/24/2019 06/15/2022 $1,000,000  VDF VN$ 780,000 CP VN$ 220,000
Cordial Compañía Financiera 22 11/13/2019 01/15/2021 $571,560  VDF VN$ 469,260 CP VN$ 102,300
Micro Lending S.A.U. III 06/08/2011 10/12/2016 $39,779  VDF TV A VDF B VN$ 31,823 CP VN$ 1,592
Micro Lending S.A.U. IV 09/01/2011 06/29/2017 $40,652  VDF TV A VDF B VN$ 32,522 CP VN$ 1,626
Micro Lending S.A.U. XVIII 12/01/2017 10/15/2022 $119,335  VDF TV A VDF TV B VN $ 89,501 CP VN$ 22,543

 

The Group controls a structured entity when it is exposed to, or holds the right to, variable returns and has the capacity to allocate returns through its power to run the activities of the entity, Structured entities are consolidated as from the date on which the control is transferred to the Group. The consolidation of such entities is ceased on the date on which such control is terminated.

 

 

29

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

As for financial trusts, the Group has evaluated the following:

 

·The purpose and design of the trust

·Identification of relevant activities

·Decision-making process on these activities

·If the rights that the Group owns allow it to direct the relevant activities of the trust

·If the Group is exposed, or is entitled to the variable results from its participation in said trust

·If the Group has the capacity to affect said results through its power over the trust

 

In accordance with the aforementioned, the Group has decided that it holds control on such financial trusts and, therefore, such structured entities have been consolidated.

 

The following chart details the assets and liabilities of Structured Entities that have been consolidated by the Group as of December 31, 2020, 2019 and January 1 2019:

 

  12/31/2020  12/31/2020  12/31/2018 
Assets                     
Loans  -   2,170,985   2,157,698 
Financial assets  -   148,174   292,925 
Other assets  -   397,110   264,215 
Total Assets  -   2,716,269   2,714,838 
Liabilities            
Financial liabilities  -   1,939,295   1,870,572 
Other liabilities  -   56,675   311,106 
Total Liabilities  -   1,995,970   2,181,678 

 

Transactions with non-controlling interest

 

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Group.

 

1.8.Foreign currency translation

 

(a)       Functional and presentation currency

 

Figures included in the consolidated financial statements as per each entity of the Group are expressed in the functional currency, that is, in the currency of the main economic setting where it operates. Consolidated financial ftatements are expressed in Argentine pesos, which is the functional currency and the reporting currency of the Group.

 

(b)       Transactions and balances

 

Transactions in foreign currency are converted in the functional currency at the reference Exchange rate released by the Argentine Central Bank and those carried out in other currencies, at the repo rate in US dollars for the reference Exchange rate released by the Argentine Central Bank. Earnings and losses in foreign currency that result in the liquidation of such transactions and the conversion of monetary assets and liabilities denominated in foreign currency at closing exchange rates, are recognized in the integral income statement, under “Difference of exchange rate in gold and foreign currency”, except when such items are deferred in the shareholders’ equity for transactions classified as cash flow hedging, when applicable.

 

As of December 31, 2020 and 2019 the balances in US dollars were converted at the reference exchange rate determined by the Argentine Central Bank. In the case of foreign currencies other than US dollars, they have been converted to this currency using the types of passes reported by the Argentine Central Bank.

 

1.9.Cash and due from banks

 

Cash and due from banks includes cash available, freely available deposits in local banks and correspondent banks abroad, which are liquid short-term instruments and have a maturity of less than three months from the date of origination.

 

 

30

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Assets recorded in cash and due from Banks are recorded at amortized cost which is close to its fair value.

 

Cash equivalents are made up by highly liquid short-term securities with three-month or shorter initial maturities, with fair value rating.

 

The composition of the cash on each of the indicated dates is detailed below:

 

Item 12/31/2020  12/31/2019  12/31/2018 
Cash and due from banks  36,674,869   35,945,321   70,551,282 
Debt securities at fair value through profit or loss  1,868,604   773,959   26,458,010 
Money Market Funds  923,053   1,390,187   1,372,931 
Cash and cash equivalents  39,466,526   38,109,467   98,382,223 

 

For their part, the reconciliations between the balances of those items considered cash equivalents in the Statement of Cash Flow and those reported in the Statement of Financial Position as of the indicated dates are set out below:

 

Items 12/31/2020  12/31/2019  12/31/2018 
Cash and due from Banks            
As per Statement of Financial Position  36,674,869   35,945,321   70,551,282 
As per the Statement of Cash Flows  36,674,869   35,945,321   70,551,282 
Debt securities at fair value through profit or loss            
As per Statement of Financial Position  9,871,903   773,959   31,439,537 
Securities not considered as cash equivalents  (8,003,299)  -   (4,981,527)
As per the Statement of Cash Flows  1,868,604   773,959   26,458,010 
Money Market Funds            
As per Statement of Financial Position – Other financial assets  4,284,340   2,875,979   4,347,282 
Other financial assets not considered as cash  (3,361,287)  (1,485,792)  (2,974,351)
As per the Statement of Cash Flow  923,053   1,390,187   1,372,931 

 

Reconciliation of financing activities at December 31, 202 and 2019 is as follows:

 

 

Balances at

  Cash Flows  Other non-cash  Balances at 
Items  12/31/2019   Cobros   Pagos   movements   12/31/2020 
Unsubordinated Debt securities  8,286,163   2,653,805   (6,785,701)  72,481   4,226,748 
Subordinated Debt securities  2,886,028   -   (1,774,264)  28,705   1,140,469 
Financing received from the Argentine Central Bank and other financial institutions  12,276,610   14,873,400   (21,298,598)  -   5,851,412 
Lease Liabilities  -   -   (1,366,164)  2,547,862   1,181,698 
Total  23,448,801   17,527,205   (31,224,727)  2,649,048   12,400,327 

 

1.10.Associated

 

Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a stake of between 20 and 50 percent of the voting rights. Investments in associates are accounted for using the equity method, and are initially recognized at cost. The book value of the associates includes the goodwill identified in the acquisition less accumulated impairment losses, if applicable. Dividends received from associated entities reduce the book value of the investment in them. Other changes subsequent to the acquisition in the Group's participation in the net assets of an associate are recognized as follows: (i) the Group's participation in the gains or losses of associates is recorded in the income statement as profit or loss. by associates and joint ventures and (ii) the Group's share in other comprehensive income is recognized in the statement of other comprehensive income and is presented separately. However, when the Group's share of losses in an associate equals or exceeds its interest in the associate, the Group will cease to recognize its share of additional losses, unless it has incurred obligations or made payments on behalf of the associate.

 

 

31

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's participation in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

 

1.11.Segment Reporting

 

An operating segment is defined as a component of an entity or a Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), and whose financial information is evaluated on a regular basis by the chief operating decision maker.

 

Operating segments are reported in a manner consistent with the internal reporting provided to:

 

(i)             Key personnel of the senior management who account for the main authority in operating decision-making processes and is responsible for allocating resources and assessing the performance of operating segments; and

 

(ii)            The Board, who is in charge of making strategic decisions of the Group.

 

1.12.Financial Instruments

 

Initial Recognition and measurement

 

Financial assets and financial liabilities are recognized when the entity becomes a party to the contractual provisions of the instrument. Purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset.

 

At initial recognition, the Group measures a financial asset or liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees and commissions. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in profit or loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments measured at fair value through other comprehensive income, as described in note 1.12, which results in an impariment loss being recognized in profit or loss when an asset is newly originated.

 

When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the Group recognizes the difference as follows:

 

-When the fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation technique that only uses data from observable markets, the difference is recognized as a gain or loss.

 

In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is either amortized over the life of the instrument until its fair value can be determined using market observable inputs, or realized through settlement.

 

Financial Assets

 

a – Debt Instruments

 

Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as loans, government and corporate bonds and, accounts receivables purchased from clients in non-recourse factoring transactions.

 

Classification

 

Pursuant to IFRS 9, the Entity classifies financial assets depending on whether these are subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss, on the basis of:

 

a)the Group’s business model for managing financial assets, and;

 

b)the cash-flows characteristics of the financial asset

 

 

32

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Business Model

 

The business model reflects how the Group manages a group of financial assets in order to generate cash flows. That is, whether the Group’s objective is solely to collect the contractual cash flows from the assets (measured at amortized cost) or is to collect both the contractual cash flows and cash flows arising from the sale of assets (measured at fair value through other comprehensive income). If neither of these is applicable, then the financial assets are classified as part of other business model and measured at fair value through profit or loss.

 

The business model of the Group does not depend on the management’s intentions for an individual instrument. Consequently, such business model is not assessed instrument by instrument, but at a higher aggregated level.

 

The Group reclassifies an instrument when and only when its business model for managing those assets has changed.

 

Therefore, this business model is not evaluated instrument by instrument, but at a higher level of aggregated portfolios and is based on observable factors such as:

 

-How the business model’s return is evaluated and how financial assets held in that business model are evaluated and reported to the Group’s key personnel.

-The risks affecting the business model’s return (and financial assets held in that business model) and, particularly, the way these risks are managed.

-How the Group’s key personnel is compensated (for instance, if salaries are based on the fair value of the assets managed or on contractual cash flows collected)

-The expected frequency, the value, moment and reasons of sales are also important aspects.

 

The evaluation of the business model is based on reasonably expected scenarios, irrespective of worst-case or stress case scenarios. If after the initial recognition cash flows are realized in a different manner from the original expectations, the Group will not change the classification of the remaining financial assets held in that business model, but it will consider such information for evaluating recent purchases or originations. An instrument’s reclassification is only made when, and only when, an entity changes its business model for managing financial assets.

 

Contractual Cash Flow Characteristics

 

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Group assesses whether the financial instruments’ cash flows represent solely payments of principal and interest. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset shall be classified and measured at fair value through profit or loss.

 

Based on the aforementioned, there are three different categories of Financial Assets:

 

i)            Financial assets at amortized cost.

 

Financial assets shall be measured at amortized cost if both of the following conditions are met:

 

(a)the financial asset is held for collection of contractual cash flows, and

 

(b)the assets’s cash flows represent solely payments of principal and interest.

 

The amortized cost is the amount at which it is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

 

ii)            Financial assets at fair value through other comprehensive income:

 

Financial assets shall be measured at fair value through other comprehensive income when:

 

(a)the financial asset is held for collection of contractual cash flows and for selling financial assets and

 

(b)the asset’s cash flows represent solely payments of principal and interest.

 

 

33

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

These instruments shall be initially recognized at fair value plus or minus transaction costs that are incremental and directly attributable to the acquisition or issue of the instrument, and subsequently measured at fair value through other comprehensive income. Gains and losses arising out of changes in fair value shall be included in other comprehensive income within a separate component of equity. Impairment gains or losses or reversal, interest revenue and foreign exchange gains and losses on the instrument’s amortized cost shall be recognized in profit or loss. At the time of sale or disposal, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to the income statement. Interest income from these financial assets is determined using the effective interest rate method.

 

iii)            Financial assets at fair value through profit or loss:

 

Financial assets at fair value through profit or loss comprise:

 

-Instruments held for trading

-Instruments specifically designated at fair value through profit or loss

-Instruments with contractual cash-flows that do not represent solely payments of principal and interest

 

These financial instruments are initially recognized at fair value and any change in fair value measurement is charged to the income statement.

 

The Group classifies a financial instrument as held for trading if such instrument is acquired or incurred for the main purpose of selling or repurchasing it in the short term, or it is part of a portfolio of financial instruments which are managed together and for which there is evidence of short-term profits or if it is a derivative financial instrument not designated as a hedging instrument. Derivatives and trading securities are classified as held for trading and are measured at fair value.

 

b – Equity Instruments

 

Equity instruments are instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets.

 

Such instruments are measured at fair value through profit and loss, except where the Group’s senior management has elected, at initial recognition, to irrevocably designate an equity investment at fair value through other comprehensive income. This option is available when instruments are not held for trading. The gains or losses of these instruments are recognized in other comprehensive income and are not subsequently reclassified to profit or loss, including on disposal. Dividends that result from such instrument will be charged to income when the Group’s right to receive payments is established.

 

Derecognition of Financial Assets

 

The Group recognizes the write-off of financial assets only when any of the following conditions are met:

 

1.The rights on the financial asset cash flows have expired; or

2.The financial asset is transferred pursuant to the requirements in 3.2.4 of IFRS 9.

 

The Group derecognizes financial assets that have been transferred only when the following characteristics are met:

 

1.The contractual rights to receive the cashflows from the assets have expired or when they have been transferred and the Group transfers substantially all the risks and rewards of ownership.

2.The Entity retains the contractual rights to receive cash flows from assets but assumes a contractual obligation to pay those cash flows to oher entities and transfers subtantially all of the risks and rewards. These transactions result in derecognition if the Group:

 

a.            Has no obligation to make payments unless it collects amounts from the assets;

b.            Is prohibited from selling or pledging the financial assets;

c.            Has an obligation to remit any cash it collects from the assets without material delay.

 

Write Off of Financial Assets

 

The Group reduces the gross carrying amount of a financial asset when it has no reasonable expectations of recovering a financial asset in its entirety of a portion thereof. A write-off constitues a derecognition event.

 

 

34

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Financial Liabilities

 

Classification

 

The Group classifies its financial liabilities as subsequently measured at amortized cost using the effective rate method, except for:

 

-Financial liabilities at fair value through profit or loss.

-Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition.

-Financial guarantee contracts and loan commitments.

 

Financial Liabilities valued at fair value through profit or loss: At initial recognition, the Group can designate a liability at fair value through profit or loss if it reflects more appropriately the financial information because:

 

-The Group eliminates or substantially reduces an accounting mismatch in measurement or recognition inconsistency; or

-if financial assets and financial liabilities are managed and their performances assessed on a fair value basis according to an investment strategy or a documented risk management; or

-if a host contract contains one or more embedded derivatives and the Group has opted for designating the entire contract at fair value through profit or loss.

 

Financial guarantee contract: A guarantee contract is a contract which requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.

 

Financial guarantee contracts and loan commitments are initially measured at fair value and subsequently measured at the higher of the amount of the loss allowance and the unaccrued premium at year end.

 

Derecognition of financial liabilities

 

The Entity derecognizes financial liabilities when they are extinguished; this is, when the obligation specified in the contract is discharged, cancelled or expires.

 

1.13.Derivatives

 

Derivatives are initially recognized at their fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value.

 

All derivative instruments are recognised as assets when their fair value is positive, and as liabilities when their fair value is negative. Any change in the fair value of derivative instruments is included in the income statement.

 

The Group has not applied hedge accounting in these consolidated financial statements.

 

1.14.Repo Transactions

 

Reverse Repo Transactions

 

According to the derecognition principles set out in IFRS 9, these transactions are treated as secured loans since the risk has not been transferred to the counterparty. Loans granted in the form of reverse repo agreements are accounted for under “Repo Transactions”, classified by counterparty and also by the type of assets received as collateral. At the end of each month, accrued interest income is charged under “Repo Transactions” with its corresponding offsetting entry in “Interest Income.” The assets received and sold by the Group are derecognized at the end of the repo transaction, and an in-kind liability is recorded to reflect the obligation to deliver the security disposed of.

 

Repo Transactions

 

Loans granted in the form of repo transactions are accounted for under “Repo Transactions”, classified by counterparty and also by the type of asset pledged as collateral. In these transactions, when the recipient of the underlying asset becomes entitled to sell it or pledge it as collateral, it is reclassified to “Financial assets pledged as collateral”. At the end of each month, these assets are measured according to the category they had before they were subject to the repo transaction, and results are charged against the applicable accounts, depending on the type of asset. At the end of each month, accrued interest expense is charged under “Repo Transactions” with its corresponding offsetting entry in “Interest-Expenses”.

 

 

35

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.15.Leases

 

Operating leases

 

Leases where the lessor retains a substantial portion of the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of lease incentives) are recognized in profit or loss on a straight-line basis over the term of the lease. In addition, the Group recognizes the associated costs such as amortization and expenses.

 

The historical cost includes expenditures that are directly attributable to the acquisition of these items and those expenses are charged to profit or loss during the lease term.

 

The depreciation applied to the leased underlying assets is consistent with the one applied to similar assets’ group. In turn, the Group applies IAS 36 for the application of identified losses

 

Finance leases

 

They have been recorded at the current value of the unearned amounts, calculated according to the conditions agreed in the respective contracts, based on the interest rate implicit in them.

 

Initial measurement

 

The Group uses the interest rate implicit in the lease to measure the net investment. This is defined in such a way that the initial direct costs are automatically included in the net investment of the lease.

 

Initial direct costs, other than those incurred by manufacturers or concessionaires, are included in the initial measurement of the net investment of the lease and reduce the amount of income recognized over the term of the lease. The interest rate implicit in the lease is defined in such a way that initial direct costs are automatically included in the net investment in the lease; there is no need to add them separately.

 

The difference between the gross amount receivable and the present value represents the finance income that is recognized over the term of the lease. Finance income from leases is recorded in profit or loss for the year. Impairment losses are recognized in income for the year.

 

1.16.Property, plant and equipment

 

Property, plant and equipment is measured at historical cost less depreciation, except for land and buildings, where the Group adopted the revaluation model. The historical cost includes expenditure that is directly attributable to the acquisition or building of these items.

 

All other property, plant and equipment were valued at acquisition or construction cost, net of accumulated depreciation and / or accumulated impairment losses, if any, except for real estate, for which the Group adopted the revaluation method. The cost includes the expenses that are directly attributable to the acquisition or construction of these items.

 

Management updates the valuation of the fair value of land, buildings, facilities and machinery (classified as property, plant and equipment), taking into account independent valuations. Management determines the value of property, plant and equipment within a range of fair value estimates and considering the currency in which the market transactions are carried out. The revaluations are carried out with sufficient regularity, in order to ensure that the book value, at all times, does not differ significantly from the fair value of each asset subject to revaluation.

 

The subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost of the item can be measured reliably. The carrying amount of an asset is derecognized when replaced.

 

Repairs and maintenance expenses are charged to profit or loss when they are incurred.

 

 

36

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The depreciation is calculated using the straight-line method, applying annual rates sufficient to extinguish the values of assets at the end of their estimated useful lives. In those cases in which an asset includes significant components with different useful lives, such components are recognized and depreciated as separate items.

 

The following chart presents the useful life for each item included in property, plant and equipment:

 

Property, plant and equipmentEstimated useful
life
Buildings50 Years
Furniture  10 Years
Machines and equipment5 Years
Vehicles5 Years
Others5 Years

 

The asset’s residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.

 

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

 

a)Result from sale

 

The results for the sale of property, plant and equipment are calculated by comparing the income obtained with the book value of the respective asset. The resulting profits or losses are recorded in the consolidated statement of comprehensive income.

 

b)Buildings- Revaluation and historical cost

 

The following table reveals the following information related to the class of assets that have been accounted for at their revalued value, as well as the book values that would have been recognized if the assets had been accounted for under a cost model:

 

       Revaluation Adjustment – OCI accumulated         
Class Appraiser Revaluation
date
  At the
Beginning of
the year
   Change of year   At the End of
the year
   Revaluation
amortization
   Carrying
amount if it
had been
recorded
under the
Cost Model
 
Buildings Tribunal de Tasaciones de
 la Nación
 CM Ingeniería en
 Valuaciones 
Serinco
 Reporte Inmobiliario
 31/12/2019  1,812,338   818,447   2,630,785   (59,048)  1,151,442 
TOTALES      1,812,338   818,447   2,630,785   (59,048)  1,151,442 

 

       Revaluation Adjustment – OCI accumulated         
Class Appraiser Revaluation
 date
  At the
Beginning of
the year
   Change of year   At the End of
the year
   Revaluation
amortization
   Carrying
amount if it
had been
recorded
under the
Cost Model
 
Inmuebles Tribunal de Tasaciones de
la Nación
CM Ingeniería en
Valuaciones
Serinco
 Reporte Inmobiliario
 31/12/2019  2,056,037   (243,699)  1,812,338   (22,997)  440,578 
TOTALES      2,056,037   (243,699)  1,812,338   (22,997)  440,578 

 

The revaluation of the land and buildings owned by the entity shows a surplus of 818,447 as of December 31, 2020 and a deficit of 243,699 as of December 31, 2019, which added to its historical cost and net of depreciation of the revaluation yields a total of 3,723,179 and 2,229,919 for this asset class, as of December 31, 2020 and 2019, respectively.

 

 

37

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

In fiscal year 2020, the sum of $ 687,598 is allocated to Other Comprehensive Income (OCI).

 

1.17.Investment properties

 

Investment properties are composed of buildings held for obtaining a rent or for capital appreciation or both, but is never occupied by the Group.

 

Investment properties are measured at its fair value, and any gain or loss arising from a change in the fair value is recognized in profit or loss. Investment properties are never depreciated. The fair value is determined using sales comparison approach prepared by the Group’s management considering a report of an independent valuation expert.

 

Investment properties under the cost approach reflect the amount that would be required to replace the service capacity of the asset. They were valued at acquisition or construction cost, net of accumulated depreciation and / or accumulated depreciation losses. The cost includes expenses that are directly attributable to the acquisition or construction of these items.

 

Movements in investment properties for the year ended December 31, 2020 and 2019 were as follows:

 

  12/31/2020  12/31/2019 
Income derived from rents (rents charged)  9,719   14,998 
Direct operating expenses of properties that generated income derived from rents  (6,637)  (13,168)
Fair value remeasurement  (92,457)  - 

 

The net result generated by the investment property as of December 31, 2020 and 2019 amounts to a loss of 89,375 and an income of 1,830 respectively, and is recognized under "Other operating income", "Administrative expenses" and "Other operating expenses". in the consolidated comprehensive income statement.

 

Gain and losses on disposals are determined by comparing proceeds with the carrying amount.

 

1.18.Intangible Assets

 

(a)Goodwill

 

Goodwill resulting from the acquisition of subsidiaries, associates or joint ventures account for the excess of the:

 

(i)consideration transferred, valued at fair value as of acquisition date
(ii)amount of any non-controlling interest in the acquired entity; and
(iii)acquisition-date fair value of any previous equity interest in the acquired entity
(iv)over the fair value of the net identifiable assets acquired.

 

Goodwill is included in the intangible assets item in the consolidated financial statement.

 

Goodwill is not subject to amortization, but it is annually tested for impairment. Impairment losses are not reverted once recorded. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Goodwill impairment is recognized when the carrying amount exceeds its recoverable amount which derives from the fair value of the cash-generating unit.

 

The fair value of the reporting unit is estimated using discounted cash flows techniques.

 

(b)Trademarks and licenses

 

Trademarks and licenses acquired separately are initially valued at historical cost, while those acquired through a business combination are recognized at their estimated fair value at the acquisition date..

 

Intangible assets with a finite useful life are subsequently carried at cost less accumulated depreciation and / impairment losses, if any. These assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.

 

 

38

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Trademarks acquired by the Group have been classified as intangible assets with an indefinite useful life. The main factors considered for this classification include the years in which they have been in service and their recognition among industry customers.

 

Intangible assets with an indefinite useful life are those that arise from contracts or other legal rights that can be renewed without a significant cost and for which, based on an analysis of all the relevant factors, there is no foreseeable limit of the period over which the asset is expected to generate net cash flows for the Group. These intangible assets are not amortized, but are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired, either individually or at the level of the cash generating unit. The categorization of the indefinite useful life is reviewed annually to confirm if it is still applicable.

 

(c)Software

 

Costs associated with software maintenance are recognized as an expense when incurred. Development, acquisition and implementation costs that are directly attributable to the design and testing of the identifiable and unique software that the Group controls are recognized as assets.

 

The development, acquisition or implementation costs initially recognized as expenses for a period are not subsequently recognized as the cost of the intangible asset. The costs incurred in the development, acquisition or implementation of software, recognized as intangible assets, are amortized by applying the straight-line method over their estimated useful lives, in a term that does not exceed five years.

 

Goodwill impairment

 

Goodwill is assigned to the Group's cash generating units on the basis of the operating segments.

 

  12/31/2020  12/31/2019  12/31/2018 
Supervielle Seguros S.A.  9,686   9,686   9,686 
Cordial Compañía Financiera S.A.  243,971   243,971   243,971 
Banco Regional de Cuyo S.A.  50,784   50,784   50,784 
InvertirOnline S.A.U. / InvertirOnline.Com Argentina S.A.U.  1,846,042   1,846,042   1,846,042 
Micro Lending S.A.U.  1,453,519   1,453,519   1,453,519 
Futuros del Sur S.A.  5,127   5,127   - 
Easy Cambio S.A.  7,292   -   - 
Otros  23,516   23,516   9,817 
 TOTAL  3,639,937   3,632,645   3,613,819 

 

The recoverable amount of a cash generating unit is determined on the basis of its value in use. These method uses cash flow projections based on approved financial budgets covering a period of five years.

 

The key assumptions are related to marginal contribution margins. These were determined on the basis of historic performances, other external sources of information and the expectations of market development.

 

The discount rates used are the respective average cost of capital ("WACC"), which is considered a good indicator of the cost of capital. For each cash generating unit, where the assets are assigned, a specific WACC was determined considering the industry, the country and the size of the business.

 

The main macroeconomic premises used are detailed below:

 

  Real  Forecast  Forecast  Forecast  Forecast  Forecast 
  2020  2021  2022  2023  2024  2025 
Inflation (end of period)  35.6%  46.8%  29.2%  19.6%  18.0%  18.0%
Inflation (average)  44.6%  41.1%  37.7%  24.3%  18.7%  18.0%
Cost of funding (average)  31.3%  40.0%  26.8%  21.5%  18.8%  18.8%
Loan’s interest rate (average)  59.4%  57.9%  54.8%  50.1%  47.6%  46.0%

 

Goodwill has been tested annually for impairment. No impairment adjustments have been determined over these assets as a result of the tests performed.

 

 

39

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The sensitivity analysis for the cash-generating unit to which the Goodwill was allocated was based on a 1% increase in the weighted average cost of capital. The Group concluded that no impairment loss would need to be recognized on the Goodwill in the segment under these conditions.

 

1.19.Inventories

 

Inventories are valued at the lower of cost and net realizable value. Cost includes the acquisition costs (net of discounts, rebates and similar), as well as other costs that have been incurred to bring the inventories to their current location and conditions to be commercialized. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of sale.

 

The inventories’ net realizable values are reviewed and adjusted if carrying amount is greater than its net realizable value at the end of each reporting period.

 

The Group establishes an allowance for obsolete inventory and low turnover rate products at the end of each year.

 

1.20.Assets held for sale

 

The assets, or groups of assets, with some directly associated liabilities, classified as held for sale in accordance with the provisions of IFRS 5 "Non-current assets held for sale and discontinued operations" will be disclosed separately from the rest of assets and liabilities.

 

An asset may be classified as held for sale if its carrying amount will be recovered primarily through a sale transaction, rather than through its continued use, and a sale is considered highly probable.

 

To apply the above classification, an asset must meet the following conditions:

 

-It must be available for immediate sale in its current conditions;
-Management must be committed to a plan to sell the asset and have started an active program to locate a buyer and complete the plan;
the asset must be actively marketed for sale at a reasonable price, in relation to its current fair value;
-the sale must be expected to be completed within 12 months from the reclassification date;
-it is unlikely that the plan will be significantly changed or withdrawn.

 

The assets, or groups of assets, possibly with some directly associated liabilities, classified as held for sale in accordance with the provisions of IFRS 5 "Non-current assets held for sale and discontinued operations", are measured at the lower of their carrying amount and fair value less costs to sell.

 

The Group will not depreciate the asset while classified as held for sale.

 

The balances of financial instruments, deferred taxes and investment properties classified as held for sale are not subject to the valuation methods detailed above.

 

1.21.Impairment of non-financial assets

 

Assets with an indefinite useful life are not subject to amortization but are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or, at least, on an annual basis.

 

Impairment losses are recognized when the carrying amount exceeds its recoverable amount. The recoverable amount of an asset is the higher of an asset’s fair value less costs of disposal and value in use. For purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

 

1.22.Trust Assets

 

Assets held by the Group in its Trustee role, are not included in the Consolidated Financial Statements. Commissions and fees earned from trust activities are included in Service fee income.

 

 

40

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.23.Offsetting

 

Financial assets and liabilities are offset and the net amount reported in the consolidated financial statement where the Group has a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously.

 

1.24.Financing received from the Argentine Central Bank and other Financial Institutions

 

The amounts owed to other financial institutions are recorded at the time the bank disburses the proceeds to the Group. Non-derivative financial liabilities are measured at amortized cost.

 

1.25.Provisions / Contingencies

 

A provision will be recognized when:

 

-an entity has a present obligation (legal or implicit) as a result of past event;
-it is probable that an outflow of resources embodying future economic benefits will be required to settle the obligation; and
-the amount can be reliably estimated.

 

An Entity will be deemed to have an implicit obligation where (a) the Group has assumed certain responsibilities as a consequence of past practices or public policies and (b) as a result, the Group has created an expectation that it will discharge those responsibilities

 

The Group recognizes the following provisions:

 

For labor, civil and commercial lawsuits: provisions are calculated based on lawyers’ reports about the status of the proceedings and the estimate about the potential losses to be afforded by the Group, as well as on the basis of past experience in this type of claims.

 

For miscellaneous risks: These provisions are set up to address contingencies that may trigger obligations for the Group. In estimating the provision amounts, the Group evaluates the likelihood of occurrence taking into consideration the opinion of its legal and professional advisors.

 

Other contingent liabilities are: i) possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group; or ii) present obligations that arise from past events but it is not probable that an outflow of resources will be required to its settlement; or whose amount cannot be measured with sufficient reliability.

 

Other contingent liabilities are not recognized. Contingent liabilities, whose possibility of any outflow in settlement is remote, are not disclosed unless they involve guarantees, in which case the nature of the guarantee is disclosed.

 

The Group does not account for positive contingencies, other than those arising from deferred taxes and those contingencies whose occurrence is virtually certain.

 

As of the date of these consolidated financial statements, the Group's management believes there are no elements leading to determine the existence of contingencies that might be materialized and have a negative impact on these consolidated financial statements other than those disclosed in Note 13.

 

1.26.Other non-financial liabilities

 

Non-financial accounts payable are accrued when the counterparty has fulfilled its contractual obligations and are measured at amortized cost.

 

 

41

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.27.Employee benefits

 

The Group approved a long-term incentive plan for members of senior management and the Board of Directors, in which participants will be entitled to receive cash payments over time if certain performance targets are met.

 

In addition, provisions are made related to early retirement plans and for benefits related to career awards. The liability related to these plans and benefits is not expected to be canceled in the next 12 months. Therefore, they are measured at the present value of future cash flows expected to be made with respect to the services provided by employees until the end of the year using the unit credit method. The level of salaries, experience and severance, as well as years of service are taken into account. Expected future payments are discounted using the market rate at the end of the fiscal year corresponding to sovereign bonds with terms and currency that match the expected flows. Remeasurements as a result of experience and changes in actuarial premises are recognized in income.

 

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

 

1.28.Debt Securities

 

Subordinated and unsubordinated Debt Securitiesissued by the Group are measured at amortized cost. Where the group buys back its own debt securities , such obligations will be derecognized from the Consolidated Financial Statements and the difference between the residual value of the financial liability and the amount paid will be recognized as financial income or expenses.

 

1.29.Assets and liabilities derived from insurance contracts

 

The Group applies IFRS 4 “Insurance Contracts” in order to recognize and measure the assets and liabilities derived from insurance contracts.

 

Assets derived from insurance contracts

 

An insurance contract is a contract under which the Group (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.

 

Once a contract has been classified as an insurance contract, it remains an insurance contract for the rest of its term, even if the insurance risk is significantly reduced during this period, unless all rights and obligations are extinguished or expired.

 

The insurance contracts offered by the Group include property insurance that covers combined family insurance, theft and similar risks, property damage, personal accidents, among other risks. They also include temporary life insurance contracts.

 

Total premiums are recognized on the date of issuance of the policy as an account receivable. At the same time, a reserve for unearned premiums representing premiums for risks that have not yet expired is recorded as a liability. Unearned premiums are recognized as income during the contract period, which is also the coverage and risk period. The book value of insurance accounts receivable is reviewed for impairment whenever events or circumstances indicate that the book value may not be recoverable. The impairment loss is recorded in the income statement.

 

Liabilities derived from insurance contracts

 

Debt with insured

 

The insurance claims reserves represent debts with insured people for claims reported to the company and an estimate of the claims that have already been incurred but that have not yet been reported to the company (IBNR). The reported claims are adjusted on the basis of technical reports received from independent appraisers.

 

 

42

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Debts with reinsurers and co-insurers

 

The Group mitigates the risk for some of its insurance businesses through co-insurance or reinsurance contracts in other companies. In the case of co-insurance, the Group associates with another company to cover a risk assuming only a percentage of it and also the premium. In reinsurance, the risk is transferred to another insurance company both proportionally (as a percentage of the risk) and not proportionally (excess loss is covered above a certain limit). The reinsurance agreements assigned do not exempt the Group from its obligations to the insured.

 

Coinsurance and reinsurance liabilities represent balances owed under the same conditions and the amounts payable are estimated in a manner consistent with the contract that gave rise to them.

 

Debts with producers

 

They represent liabilities with insurance agents originated in the commissions for the insurance operations that they originate for the Group companies. The balances of the current accounts with these entities are also included.

 

Technical commitments

 

The current risk reserve regularizes the premiums to be collected based on the incurred but not reported risks.

 

1.30.Capital

 

The accounts that make up this item are expressed in currency that has not considered the variation of the price index since February 2003, except for the item "Capital Stock", which has been kept at its nominal value.

 

Common shares are recognized in shareholders´ equity and carried at nominal value.

 

1.31.Reserves and Dividend distribution

 

Pursuant to provisions set by the Argentine Corporations law, the Group and its subsidiaries, other than Banco Supervielle and Cordial Compañía Financiera, are required to appropriate 5% of the net income for the fiscal year to the legal reserve until such reserve is equal to 20% of Capital stock, plus the balance of the Capital Adjustment account.

 

As concerns Banco Supervielle and Cordial Compañía Financiera, according to the regulations set forth by the Argentine Central Bank, 20% of net income for the fiscal year, net of previous years’ adjustments, if any, is required to be appropriated to the legal reserve. Notwithstanding the aforementioned, in appropriating amounts to other reserves, Financial Institutions are required to comply with the provisions laid down by the Argentine Central Bank in the revised text on distribution of dividends described in Note 16.6.

 

The distribution of dividends to the Group’s shareholders is recognized as a liability in the consolidated financial statements for the fiscal year in which dividends are approved by the Group’s Shareholders.

 

1.32.Revenue Recognition

 

Financial income and expense is recognized in respect of all debt instruments in accordance with the effective interest rate method, pursuant to which all gains and losses which are an integral part of the transaction effective interest rate are deferred.

 

The results that are included within the effective rate include expenditures or income related to the creation or acquisition of a financial asset or liability, such as compensation received for the analysis of the client's financial condition, negotiation of the terms of the instrument, the preparation and processing of the documents necessary to conclude the transaction and the compensations received for the granting of credit agreements that are expected to be used by the client. The Group records all its non-derivative financial liabilities at amortized cost, except those included in the caption "Liabilities at fair value through profit or loss", which are measured at fair value.

 

It should be noted that the commissions that the Group receives for the origination of syndicated loans are not part of the effective rate of the product, being these recognized in the Statement of Income at the time the service is provided, as long as the Group does not withhold part of it or this is kept in the same conditions as the rest of the participants. The commissions received by the Group for the negotiations in the transactions of a third party are not part of the effective rate either, these being recognized at the time they are perfected.

 

IFRS 15 establishes the principles that an entity must apply to account for income and cash flows from contracts for the sale of goods or services to its customers.

 

 

43

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The amount to be recognized will be that which reflects the payment to which it is expected to be entitled for the services provided.

 

The income from the Group's services is recognized in the income statement in accordance with the fulfillment of performance obligations, thus deferring those income related to customer loyalty programs, which are provisioned based on the fair value of the point and its redemption rate, until they are exchanged by the client and can be recognized in the results of the year.

 

Below is a summary of the main commissions earned by the Group:

 

CommissionFrecuency of revenue
recognition
Account maintenanceMonthly
Safe deposit boxesSemi-annual
Issuing BankEvent driven
Credit Card renewalAnnual
Check managementEvent driven

 

Income from investment property rentals is recognized in the consolidated statement of comprehensive income based on the straight-line method over the term of the lease, in accordance with the provisions of note 1.15.

 

1.33.Income tax

 

Income tax expense for the year includes current and deferred tax. Income tax is recognized in the consolidated statements of income, except for items required to be recognized directly in other comprehensive income. In this case, the income tax liability related to such items is also recognized in such statement.

 

Current income tax expense is calculated on the basis of the tax laws enacted or substantially enacted as of the date of the Statement of Financial Position in the countries where the Company and its subsidiaries operate and generate taxable income. The Group periodically assesses the position assumed in tax returns in connection with circumstances in which the tax regulation is subject to interpretation. The Group sets up provisions in respect of the amounts expected to be required to pay to the tax authorities.

 

Deferred income tax is recognized, using the deferred tax liability method, on temporary differences arising from the carrying amount of assets and liabilities and their tax base. However, the deferred tax arising from the initial recognition of an asset or liability in a transaction other than a business combination which, at the time of the transaction does not affect income or loss for accounting or tax purposes, is not recorded. Deferred income tax is determined using tax rates (and laws) enacted as of the date of the Financial Statements and that are expected to be applicable when the deferred tax assets are realized or the deferred tax liabilities are settled.

 

Deferred income tax assets are recognized only to the extent future tax benefits are likely to arise against which the temporary differences can be offset.

 

The Group recognizes a deferred tax liability for taxable temporary differences related to investments in subsidiaries and affiliates, except that the following two conditions are met:

 

·the Group controls the timing on which temporary differences will be reversed; and
·such temporary differences are not likely to be reversed in the foreseeable future.

 

Deferred income tax assets and liabilities are offset when a legal right exists to offset current tax assets against current tax liabilities and to the extent such balances are related to the same tax authority of the Group or its subsidiaries, where tax balances are intended to be, and may be, settled on a net basis..

 

1.34.Earnings per share

 

Basic earnings per share are calculated by dividing net income attributable to the Group’s shareholders by the weighted average number of common shares outstanding during the year.

 

Diluted earnings per share are calculated by dividing the net income for the year by the weighted average number of common shares issued and dilutive potential common shares at year end. Since the Company has no dilutive potential common shares outstanding, there are no dilutive earnings per share amounts.

 

 

44

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

2.SEGMENT REPORTING

 

The Group determines operating segments based on performance reports which are reviewed by the Board and key personnel of the Senior Management and updated upon changes.

 

With the purpose of implementing a strategic vision focused on the individual client and Small and Medium Size Companies that require and values closeness and digital service models, the Retail Banking sector turned into a new area of Individuals and Businesses Banking.

 

In this sense, Small and Medium Size Companies clients and the loan portfolio have been transferred from the Corporate Division to the Individuals and Businesses area. Such change became effective on Junuary 1, 2020. The comparative information as of December 31, 2019 was modified with the purpose of showing the new organization and making it comparable to information as of December 31, 2020.

 

As from January 1, 2020, the Bank´s clients receive the following services:

 

Individuals and Businesses Banking Segment:

 

-Small companies, individuals and companies that record anual sales of up to 100,000
-“Small and Medium Size Companies”, companies that record anual sales of over 100,000 up to 700,000

 

Corporate Baking Segment:

 

-Megras that record anual sales over 700,000 up to 2,500,000
-Big Companies. Grandes companies that record anual sales of over 2,500,000

 

TheGroup considers the business for the type of products and services offered, identifying the following operating segments:

 

a-Personal and Business Banking– Includes a wide range of financial products and services targeted to small comoanies, included in Entrepreneours & SMSs, and high income people identified with so-called Identité proposal. Likewise, the Bank offers services and products targeted to retirees and pensioneers.
b-Corporate Banking – Includes advisory services at a corporate and financial level, as well as the administration of assets and loans targeted to corporate clients.
c-Bank Treasury – This segment is in charge of the assignment of liquidity of the Entity in accordance with the different commercial areas´ needs and its own needs, Treasury implements financial risk administration policies of the Bank, administers trading desk operations, distributes financial products, such as negotianle securities and develops business with the financial sector clients and whole sale non-financial sector clients.Consumer – Includes loans and other credit products targeted to middle and lower-middle income sectors and non-financial products and services.
d-Consumer Finance– Includes loans and other credit products targeted to middle and lowed-middle income sectors and non-financial products and services.
e-Insurance: Includes insurance products, with a focus on life insurance, to targeted customers segments
f-Asset Management and Other Services– Includes MFs administered by the Group. Includes also assets, liabilities and results of Micro Lending S.A.U., Invertir Online.Com Argentina S.A.U. and InvertirOnline S.A.U, Easy Cambio S.A., Bolsillo Digital S.A.U and Futuros del Sur S.A.

 

Operating results of the different operating segments of the Group are reviewed individually with the purpose of taking decisions over the allocation of resources and the performance analysis of each segment. The performance of such segments will be evaluated based on operating income and is measured consistently with operating income/(expenses) of the consolidated income statement.

 

Transaction between segments are carried out at arm´s length. Income, expenses and results from transfers between operating segments are eliminated in consolidation.

 

The Group does not present information by geographical segments because there are no operating segments in economic environments with risks and rewards that are significantly different.

 

 

45

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The following chart includes information by segment as of December 31, 2020 and 2019:

 

Result by segments Personal
and
Business
Banking
 Corporate
Banking
 Bank
Treasury
 Consumer
Finance
 Insurance Asset Management and
Other Services
 Adjustments Total as of
12.31.2020
 
Interest income  22,014,538  12,970,575  25,570,031  4,433,064  1  42,118  (380,408) 64,649,919 
Interest expenses  (8,181,916) (1,073,707) (18,395,101) (1,367,357) -  (22,335) 466,280  (28,574,136)
Distribution of results by Treasury  3,409,620  (6,389,960) 2,980,340  -  -  -  -  - 
Net interest income  17,242,242  5,506,908  10,155,270  3,065,707  1  19,783  85,872  36,075,783 
Services Fee Income  7,464,407  672,282  59,634  2,133,202  -  1,584,304  (420,005) 11,493,824 
Services Fee Expenses  (2,453,402) (192,364) (59,759) (762,313) -  (50,423) (29,678) (3,547,939)
Income from insurance activities  -  -  -  -  1,454,204  -  217,251  1,671,455 
Net Service Fee Income  5,011,005  479,918  (125) 1,370,889  1,454,204  1,533,881  (232,432) 9,617,340 
Subtotal  22,253,247  5,986,826  10,155,145  4,436,596  1,454,205  1,553,664  (146,560) 45,693,123 
Net income from financial instruments at fair value through profit or loss  -  -  2,315,048  143,465  353,513  162,716  340,840  3,315,582 
Income from withdrawal of assets rated at amortized cost  -  -  (11,599,109) -  -  -  (31,774) (11,630,883)
Exchange rate difference on gold and foreign currency  379,276  52,605  423,261  37,771  (98) 73,132  98,571  1,064,518 
NIFFI And Exchange Rate Differences  379,276  52,605  (8,860,800) 181,236  353,415  235,848  407,637  (7,250,783)
Other operating income  1,592,173  1,578,797  263,311  364,549  10,498  209,585  (132,710) 3,886,203 
Result from exposure to changes in the purchasing power of the currency  524,511  (1,056,358) 10,416,258  (1,083,197) (381,065) (253,720) (130,595) 8,035,834 
Loan loss provisions  (4,327,078) (3,340,522) (4,061) (1,083,001) -  (512) -  (8,755,174)
Net operating income  20,422,129  3,221,348  11,969,853  2,816,183  1,437,053  1,744,865  (2,228) 41,609,203 
Personnel expenses  (13,284,682) (1,271,081) (930,606) (1,713,808) (317,809) (531,780) (118,078) (18,167,844)
Administration expenses  (7,431,135) (508,923) (462,356) (1,463,065) (264,086) (452,096) 269,167  (10,312,494)
Depreciations and impairment of non-financial assets  (1,924,361) (144,156) (108,498) (135,823) (20,761) (10,497) (62,932) (2,407,028)
Other operating expenses  (3,834,147) (1,255,328) (736,478) (602,436) (1,826) (102,244) (40,028) (6,572,487)
Operating income  (6,052,196) 41,860  9,731,915  (1,098,949) 832,571  648,248  45,901  4,149,350 
Result  from associates and joint ventures  -  -  -  6,161  -  -  (6,161) - 
Result before taxes  (6,052,196) 41,860  9,731,915  (1,092,788) 832,571  648,248  39,740  4,149,350 
Income tax  1,615,781  88,157  (2,598,189) 181,775  (294,523) (254,802) 526,827  (734,974)
Net income  (4,436,415) 130,017  7,133,726  (911,013) 538,048  393,446  566,567  3,414,376 
Net income for  the  period attributable to owners of the parent company  (4,436,415) 130,017  7,133,726  (911,013) 538,048  393,446  564,302  3,412,111 
Net income for the period attributable to non-controlling interest  -  -  -  -  -  -  2,265  2,265 
Other comprehensive income  145,096  76,432  315,836  -  -  -  (11,516) 525,848 
Other comprehensive income attributable to owners of the parent company  145,096  76,432  315,836  -  -  -  (12,066) 525,298 
Other comprehensive income attributable to non-controlling interest  -  -  -  -  -  -  550  550 
Comprehensive income for the period  (4,291,319) 206,449  7,449,562  (911,013) 538,048  393,446  555,051  3,940,224 
Comprehensive income attributable to owners of the parent company  (4,291,319) 206,449  7,449,562  (911,013) 538,048  393,446  552,236  3,937,409 
Comprehensive income attributable to non-controlling interests  -  -  -  -  -  -  2,815  2,815 

 

Assets by segments Personal
and
Business
Banking
 Corporate
Banking
 Bank
Treasury
 Consumer
Finance
 Insurance Asset
Management and
Other
Services
 Adjustments Total as of
12.31.2020
 
Cash and due from banks  12,345,694  533,467  23,288,860  238,350  2,176  399,895  (133,573) 36,674,869 
Debt securities at fair value through profit or loss  -  -  8,827,214  1,034,836  -  9,853  -  9,871,903 
Loans and other financing  52,474,975  42,240,378  5,823,214  7,387,494  592,067  49,403  (2,592,546) 105,974,985 
Other Assets  8,569,275  8,324,470  59,244,268  2,889,984  1,254,830  1,079,317  16,035,035  97,397,179 
Total Assets  73,389,944  51,098,315  97,183,556  11,550,664  1,849,073  1,538,468  13,308,916  249,918,936 
                          
Liabilities by segments                         
Deposits                         
Financing received from the Argentine Central Bank and others financial institutions  93,834,062  16,184,803  65,197,484  3,561,745  -  -  (136,500) 178,641,594 
Unsubordinated Debt securities  15,011  -  5,794,777  2,529,652  -  47,288  (2,535,316) 5,851,412 
Other liabilities  23,896  12,588  4,190,264  -  -  -  -  4,226,748 
Total Liabilities  7,481,326  2,073,534  5,859,468  2,016,065  857,130  580,052  5,964,035  24,831,610 
   101,354,295  18,270,925  81,041,993  8,107,462  857,130  627,340  3,292,219  213,551,364 

 

 

46

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Result by segments Personal and
Business
Banking
  Corporate
Banking
  Bank
Treasury
  Consumer
Finance
  Insurance  Asset
Management
and
Other
Services
  Adjustments  Total as of
12.31.2019
 
Interest income  30,299,716   19,478,945   6,132,454   6,909,734   -   303,685   (2,140,904)  60,983,630 
Interest expenses  (11,995,095)  (4,676,394)  (28,791,269)  (4,350,249)  -   (182,092)  2,463,719   (47,531,380)
Distribution of results by Treasury  5,561,129   (8,244,969)  2,683,840   -   -   -   -   - 
Net interest income  23,865,750   6,557,582   (19,974,975)  2,559,485   -   121,593   322,815   13,452,250 
Services Fee Income  7,153,210   1,532,939   50,267   2,715,230   -   868,490   (612,580)  11,707,556 
Services Fee Expenses  (1,979,204)  (166,561)  (66,517)  (1,171,833)  -   (41,409)  370,565   (3,054,959)
Income from insurance activities  -   -   -   -   1,398,033   -   269,254   1,667,287 
Net Service Fee Income  5,174,006   1,366,378   (16,250)  1,543,397   1,398,033   827,081   27,239   10,319,884 
Subtotal  29,039,756   7,923,960   (19,991,225)  4,102,882   1,398,033   948,674   350,054   23,772,134 
Net income from financial instruments at fair value through profit or loss  13,964   -   27,334,563   331,348   526,305   132,899   197,291   28,536,370 
Exchange rate difference on gold and foreign currency  2,601,282   281,748   (3,381,094)  11,166   1,679   29,577   14,454   (441,188)
NIFFI And Exchange Rate Differences  2,615,246   281,748   23,953,469   342,514   527,984   162,476   211,745   28,095,182 
Other operating income  1,660,667   857,889   466,186   571,724   10,190   212,318   (36,648)  3,742,326 
Result from exposure to changes in the purchasing power of the currency  (2,143,659)  (2,532,581)  (534,910)  (1,605,792)  (974,964)  (475,643)  375,664   (7,891,885)
Loan loss provisions  (4,318,311)  (4,078,945)  31,810   (2,210,257)  -   51,352   -   (10,524,351)
Net operating income  26,853,699   2,452,071   3,925,330   1,201,071   961,243   899,177   900,815   37,193,406 
Personnel expenses  (14,363,517)  (1,412,159)  (886,187)  (1,740,329)  (255,296)  (414,831)  (211,026)  (19,283,345)
Administration expenses  (7,109,858)  (464,220)  (421,634)  (1,589,636)  (359,381)  (360,971)  (4,970)  (10,310,670)
Depreciations and impairment of non-financial assets  (2,089,898)  (273,511)  (107,738)  (136,548)  (12,751)  (9,014)  (61,758)  (2,691,218)
Other operating expenses  (4,635,429)  (2,306,727)  (693,363)  (865,702)  (1,673)  (135,505)  (16,474)  (8,654,873)
Operating income  (1,345,003)  (2,004,546)  1,816,408   (3,131,144)  332,142   (21,144)  606,587   (3,746,700)
Result  from associates and joint ventures  -   -   -   4,570   -   -   (4,570)  - 
Result before taxes from continuing operations  (1,345,003)  (2,004,546)  1,816,408   (3,126,574)  332,142   (21,144)  602,017   (3,746,700)
Income tax  (7,382)  (9,104)  (24,573)  797,441   (301,677)  (117,296)  (587,766)  (250,357)
Net income  (1,352,385)  (2,013,650)  1,791,835   (2,329,133)  30,465   (138,440)  14,251   (3,997,057)
Net income for  the  period attributable to owners of the parent company  (1,352,385)  (2,013,650)  1,791,835   (2,329,133)  30,465   (138,440)  17,834   (3,993,474)
Net income for the period attributable to non-controlling interest  -   -   -   -   -   -   (3,583)  (3,583)
Other comprehensive income  1,974   1,393   3,513   -   110,772   -   2   117,654 
Other comprehensive income attributable to owners of the parent company  1,974   1,393   3,513   -   110,772   -   (5)  117,647 
Other comprehensive income attributable to non-controlling interest  -   -   -   -   -   -   7   7 
Comprehensive income for the period  (1,350,411)  (2,012,257)  1,795,348   (2,329,133)  141,237   (138,440)  14,253   (3,879,403)
Comprehensive income attributable to owners of the parent company  (1,350,411)  (2,012,257)  1,795,348   (2,329,133)  141,237   (138,440)  17,829   (3,875,827)
Comprehensive income attributable to non-controlling interests  -   -   -   -   -   -   (3,576)  (3,576)
                                 

 

Assets by segments Personal and
Business
Banking
  Corporate
Banking
  Bank
Treasury
  Consumer
Finance
  Insurance  Asset
Management
and
Other
Services
  Adjustments  Total as of
12.31.2019
 
Cash and due from banks  10,471,379   1,392,602   22,967,633   437,209   4,608   3,295,926   (2,624,036)  35,945,321 
Debt securities at fair value through profit or loss  -   -   425,174   126,287   -   222,498   -   773,959 
Loans and other financing  56,949,123   52,378,783   5,070,179   7,898,463   618,048   41,858   (1,927,881)  121,028,573 
Other Assets  3,216,482   1,600,424   24,599,171   3,692,214   1,485,761   733,256   10,352,871   45,680,179 
Total Assets  70,636,984   55,371,809   53,062,157   12,154,173   2,108,417   4,293,538   5,800,954   203,428,032 

 

 

47

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Liabilities by segments                        
Deposits  86,332,383   14,481,577   21,342,192   2,219,629   -   -   (3,199,526)  121,176,255 
Financing received from the Argentine Central Bank and others financial institutions  17,161   -   12,250,927   1,293,014   -   62,652   (1,347,144)  12,276,610 
Unsubordinated Debt securities  147,721   104,240   8,013,021   -   -   21,181   -   8,286,163 
Other liabilities  6,349,306   1,876,158   5,926,868   4,308,010   1,031,927   3,517,477   5,721,845   28,731,591 
Total Liabilities  92,846,571   16,461,975   47,533,008   7,820,653   1,031,927   3,601,310   1,175,175   170,470,619 

 

3.INCOME TAX

 

On December 21, 2019, the National Executive enacted Income Tax Law 27,541. This law has introduced several changes to the previous income tax treatment. Some of the key changes involved in the reform include:

 

Article 27 of the Law stipulates that the inflation adjustment, positive or negative, corresponding to the first and second fiscal year beginning on January 1, 2019, should allocate a sixth (1/6) in that fiscal period and the remaining five sixth (5/6), in equal parts, in the next five (5) immediate fiscal periods.

 

In turn, it is clarified that said provision does not preclude the allocation of the remaining thirds corresponding to previous periods, calculated in accordance with the previous version of article 194 of the Income Tax Law.

 

Article 48 of the Law 27,541 establishes that until the fiscal years beginning as of January 1, 2021 inclusive, the tax rate will be thirty percent (30%) -Dividends or distributed profits will be 7%.

 

The following table reconciles the statutory income tax rate in Argentina to the Group´s effective tax rate as of December 31, 2020 and 2019:

 

  12/31/2020  12/31/2019 
Current income tax  (1,105,459)  (324.684)
Income tax – deferred method  1,609,262   524.618 
Income tax allotted in the Income Statement  503,803   199.934 
Income tax allotted in Other comprehensive income  231,171   50.423 
Total Income Tax Charge  734,974   250.357 

 

The following is a reconciliation between the income tax charged to income as of December 31, 2020 and 2019, that which would result from applying the current tax rate on the accounting profit

 

  12/31/2020  12/31/2019 
Income before taxes  4,149,350   (3,746,700)
Tax rate  30%  30%
Income for the year at tax rate  1,244,805   (1,124,010)
Permanent differences at tax rate:        
Contribution SGR  (325,110)  (346,218)
Investment property revaluations  32,122   - 
Valuation of mutual funds  (5,305)  (20,085)
Tax inflation adjustment  55,764   1,511,989 
Adjustment DDJJ 2019  (17,127)  14,449 
Corrections to the deferred  (570,021)  - 
Non-deductible results  319,846   214,232 
Income tax  734,974   250,357 

 

3.1Deferred tax

 

The net position of the deferred tax is as follows:

 

  12/31/2020  12/31/2019 
Deferred tax assets  3,020,783   1.781,699 
Deferred tax liability  (42,005)  (643,354)
Net assets by deferred tax  2,978,778   1.138,345 

 

 

48

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Deferred tax assets / (liabilities) are summarized as follows:

 

Item Balance at
12/31/2019
  (Charge)/Credit
to Income
  (Charge)/Credit
to OCI
  Balance at
12/31/2020
 
Shelters  17,393   75,948   -   93,341 
Organization and development expenses  (67,115)  (167,222)  -   (234,337)
Intangible assets  (861,167)  (20,331)  -   (881,498)
Investments  (24,626)  (18,373)  -   (42,999)
Others  (8,337)  1,481   -   (6,856)
Retirement plans  114,991   849   -   115,840 
Forecasts of eventual commitments  505   4,701   -   5,206 
Loan Loss Reserves  797,965   1,141,120   -   1,939,085 
Property, plant and equipment  (1,292,660)  264,071   (206,279)  (1,234,868)
Shareholding  -   (1,444)  814   (630)
Foreign Currency  (83,709)  65,665   (24,834)  (42,878)
Sale and replacement  38,114   -   -   38,114 
Provisions  249,024   (125,743)  -   123,281 
Loan origination costs  938   -   -   938 
Loans to employees  -   295,424   -   295,424 
Staff rewards  -   91,325   -   91,325 
Inflation adjustment credit  2,032,364   490,706   -   2,523,070 
Bankruptcies  224,665   (27,445)  -   197,220 
Total  1,138,345   2,070,732   (230,299)  2,978,778 

 

Item Balance at
12/31/2019
  (Charge)/Credit
to Income
  (Charge)/Credit
to OCI
  Balance at
12/31/2020
 
Shelters  25,420   (8,027)  -   17,393 
Miscellaneous Goods  2,892   (2,892)  -   - 
Financial Trusts  (31,705)  31,705   -   - 
Organization and development expenses  (72,412)  5,297   -   (67,115)
Intangible assets  (426,795)  (434,372)  -   (861,167)
Investments  (11,081)  (10,597)  (2,948)  (24,626)
Others  5,820   (14,157)  -   (8,337)
Retirement plans  120,440   (5,449)  -   114,991 
Forecasts of eventual commitments  1,173   (668)  -   505 
Loan Loss Reserves  1,499,025   (701,061)  -   797,964 
Property, plant and equipment  (800,147)  (445,039)  (47,474)  (1,292,660)
Shareholding  -   -   -   - 
Foreign Currency  (171,599)  87,891   -   (83,708)
Sale and replacement  66,561   (28,447)  -   38,114 
Provisions  22,545   226,479   -   249,024 
Loan origination costs  -   938   -   938 
Inflation adjustment credit  -   2,032,364   -   2,032,364 
Bankruptcies  333,167   (108,502)  -   224,665 
Total  563,304   625,463   (50,422)  1,138,345 

 

The net position of the deferred tax is as follows:

 

  12/31/2020 
Deferred taxes to be recovered in more than 12 months  2,694,402 
Deferred taxes to be recovered in 12 months  1,628,438 
Subtotal – Deferred tax assets  4,322,840 
Deferred taxes to be paid in more than 12 months  1,320,927 
Deferred taxes to be paid in 12 months  23,135 
Subtotal – Deferred tax liabilities  1,344,062 
Total Net Assets by deferred Tax  2,978,778 

 

According to the analysis carried out by the Group, it is considered that the assets detailed above meet the requirements to consider them recoverable and thus carry out the corresponding recognition.

 

 

49

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

4.FINANCIAL INSTRUMENTS

 

Financial instruments held by the Group as of December 31, 2020 and 2019:

 

Financial Instruments as of 12/31/2020 Fair value
through profit or
loss
  Amortized
Cost
  Fair value
through
OCI
  Total 
Assets            
- Cash and due from banks  -   36,674,869   -   36,674,869 
- Debt securities at fair value through profit or loss  9,871,903   -   -   9,871,903 
- Derivatives  143,944   -   -   143,944 
- Reverse Repo transactions  -   22,354,735   -   22,354,735 
- Other financial assets  3,407,010   877,330   -   4,284,340 
- Loans and other financing  -   105,974,985   -   105,974,985 
- Other debt securities  34,534,781   6,729,368   -   41,264,149 
- Financial assets pledged as collateral  4,687,488   217,447   -   4,904,935 
- Investments in Equity Instruments  86,923   -   29,405   116,328 
Total Assets  52,732,049   172,828,734   29,405   225,590,188 
Liabilities                
- Deposits  -   178,641,594   -   178,641,594 
- Liabilities at fair value through profit or loss  2,002,005   -   -   2,002,005 
- Derivates  1,995   -   -   1,995 
- Other financial liabilities  7,326,629   203,056   -   7,529,685 
- Financing received from the Argentine Central Bank and other financial institutions  -   5,851,412   -   5,851,412 
- Unsubordinated debt securities  -   4,226,748   -   4,226,748 
-Subordinated debt securities  -   1,140,469   -   1,140,469 
Total Liabilities  9,330,629   190,063,279   -   199,393,908 

 

Financial Instruments as of 12/31/2019 Fair value
through profit or
loss
  Amortized
Cost
  Fair value
through
OCI
  Total 
Assets            
- Cash and due from banks  -   35,945,321   -   35,945,321 
- Debt securities at fair value through profit or loss  773,959   -   -   773,959 
- Derivatives  350,679   -   -   350,679 
- Other financial assets  1,499,630   1,376,349   -   2,875,979 
- Loans and other financing  -   121,028,573   -   121,028,573 
- Other debt securities  -   4,765,437   9,762,874   14,528,311 
- Financial assets pledged as collateral  6,704,298   557,034   -   7,261,332 
- Investments in Equity Instruments  7,890   -   11,957   19,847 
Total Assets  9,336,456   163,672,714   9,774,831   182,784,001 
Liabilities                
- Deposits  -   121,176,255   -   121,176,255 
- Liabilities at fair value through profit or loss  258,060   -   -   258,060 
- Repo transactions  -   435,401   -   435,401 
- Other financial liabilities  8,163,994   4,247,392   -   12,411,386 
- Financing received from the Argentine Central Bank and other financial institutions  -   12,276,610   -   12,276,610 
- Unsubordinated debt securities  -   8,286,163   -   8,286,163 
-Subordinated debt securities  -   2,886,028   -   2,886,028 
Total Liabilities  8,422,054   149,307,849   -   157,729,903 

 

5.FAIR VALUES

 

Fair value is defined as the amount by which an asset may be exchanged or a liability may be settled, in an arm’s length orderly transaction between knowledgeable principal market participants (or more advantageous) at the date of measurement of the current market conditions regardless of whether such price is directly observable or estimated utilizing a valuation technique under the assumption that the Group is a going concern.

 

When a financial instrument is sold in a liquid and active market, its settled price in the market in a real transaction provides the best evidence of its fair value. When a stipulated price is not settled in the market or when it cannot be an indicator of a fair value of the instrument, in order to determine such fair value, another similar instrument’s fair value may be used, as well as the analysis of discounted flows or other applicable techniques. Such techniques are significantly allocated by the assumptions used.

 

 

50

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The Group classifies the fair values of the financial instruments into 3 levels, according to the quality of the data used for their determination.

 

Fair Value level 1: The fair value of financial instruments traded in active markets (such as publicly-traded derivatives, debt securities or available for sale) is based on market quoted prices as of the date of the reporting period. If the quote price is available and there is an active market for the instrument, it will be included in Level 1.

 

Fair Value level 2: The fair value of financial instruments which are not traded in active markets, such as over-the-counter derivatives, is determined using valuation techniques that maximize the use of observable market data and rely the least possible on the Group’s specific estimates. If all significant inputs required to fair value a financial instrument are observable, such instrument is included in level 2.

 

Fair Value level 3: If one or more significant inputs are not based on observable market data, the instrument is included in level 3.

 

The portfolio of financial instruments held by the Group is detailed below, as of December 31, 2020 and 2019:

 

Instrument portfolio as of 12/31/2020 FV level 1  FV level 2  FV level 3 
Assets         
- Debt securities at fair value through profit or loss  9,632,732   239,171   - 
- Derivatives  143,944   -   - 
- Other financial assets  3,407,010   -   - 
- Other debt securities  6,353,196   28,181,585   - 
- Financial assets pledged as collateral  4,687,488   -   - 
- Investments in Equity Instruments  86,923   29,405   - 
Total Assets  24,311,293   28,450,161   - 
Liabilities            
- Liabilities at fair value through profit or loss  2,002,005   -   - 
- Derivatives  1,995         
- Other financial liabilities  7,326,629   -   - 
Total Liabilities  9,330,629   -   - 

 

Instrument portfolio as of 12/31/2019 FV level 1  FV level 2  FV level 3 
Assets         
- Debt securities at fair value through profit or loss  768,961   -   4,998 
- Derivatives  350,679   -   - 
- Other financial assets  1,499,630   -   - 
- Other debt securities  9,762,874   -   - 
- Financial assets pledged as collateral  6,704,298   -   - 
- Investments in Equity Instruments  7,890   11,957   - 
Total Assets  19,094,332   11,957   4,998 
Liabilities            
- Liabilities at fair value through profit or loss  258,060   -   - 
- Other financial liabilities  8,163,994   -   - 
Total Liabilities  8,422,054   -   - 

 

Below is shown the reconcilation of the financial instruments classiffied as Fair Value Level 3:

 

FV level 3 12/31/2019 Transfers Additions Disposals P/L 12/31/2020 
Assets             
- Debt securities at fair value through profit or loss  4,996  -  -  4,996  -         - 

 

The Group’s policy is to recognize transfers between fair value levels only at end of period. The transfers were produced by the classification as Level 3 of the financial instruments with lack of observable prices.

 

 

51

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Valuation Techniques

 

Valuation techniques to determine fair values Level 2 and Level 3 include the following:

 

-Market or quoted prices for similar instruments.
-The estimated present value of instruments.

 

The valuation technique to determine fair value Level 2 is based on inputs other than the quoted price included in Level 1 that are readily observable for the asset or liability (i.e., prices).

 

For Level 3, the Group uses valuation techniques through spot rate curves which calculate the yield upon market prices.

 

These valuation techniques are detailed below:

 

-    Interpolation model: It consists of the determination of the value of financial instruments that do not have a market price at the closing date, based on quoted prices for similar assets (both in terms of issue, currency, and duration) in the active markets ( MAE, Bolsar or secondary) through the linear interpolation of them. This technique has been used by the Entity to determine the fair value of the instruments issued by the BCRA and Treasury Bills without quotation at the end of this period.

-    Performance Curve Model under Nelson Siegel: This model proposes a continuous function to model the trajectory of the instant forward interest rate considering as a domain the term comprised until the next interest and / or capital payment. It consists in the determination of the instrument’s price estimating volatility through market curves. The Entity has used this model to estimate prices in debt securities or financial instruments with variable interest rate.

 

The principal inputs considered by the Group for its determination of fair values ​​under the linear interpolation model are:

 

-    Instrument prices that were quoted between the date the curve is estimated and the settlement date of the latest payment available.

-    Implicit rates in the last available tender.

-    Only instruments that have been traded with a 24-hour settlement are considered.

-    If the same instrument has been listed on MAE (“Mercado Abierto Electrónico”) and Bolsar, only the market price that has been traded in the market with higher volume is considered

-    The yield curve is standardized based on a set of nodes, each of which has an associated expiration date.

-    Instruments denominated in US dollars are converted at the exchange rate on the date the instrument is negotiated.

 

Likewise, for the determination of fair values under the Nelson Siegel model, the main data and aspects considered by the Entity were:

 

-    The Spot rate curves in pesos + BADLAR and the Spot rate curve in US dollars are established based on bonds predefined by Financial Risk Management.

-    The main source of prices for Bonds is MAE, without considering those corresponding to operations for own portfolio.

-    The portfolio of bonds used as input is changed with every issuance.

 

The Group periodically evaluates the performance of the models based on indicators which have defined tolerance thresholds.

 

Under IFRS, the estimated residual value of an instrument at inception is generally the transaction price.

 

In the event that the transaction price differs from the determined fair value, the difference will be recognized in the income statement proportionally for the duration of the instrument.

 

Fair Value of Other Financial Instruments

 

The following describes the methodologies and assumptions used to determine the fair values of financial instruments not recorded at their value in these financial statements:

 

-    Assets whose fair value is similar to book value: For financial assets and liabilities that are liquid or have short-term maturities (less than three months), the book value is considered to be similar to fair value.

-    Fixed rate financial instruments: The fair value of financial assets was determined by discounting future cash flows at the current market rates offered, for each year, for financial instruments with similar characteristics. The estimated fair value of deposits with a fixed interest rate was determined by discounting future cash flows through the use of market interest rates for deposits with maturities similar to those of the Group's portfolio.

-    For listed assets and the quoted debt, fair value was determined based on market prices.

 

 

52

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The following chart includes a comparison between the fair value and the accounting value of financial instruments not recorded at fair value as of December 31, 2020 and 2019:

 

Other Financial Instruments as of 12/31/2020 Accounting
value
  Fair value  FV Level 1  FV Level 2  FV Level 3 
Financial Assets               
-Cash and due from Banks  36,674,869   36,674,869   36,674,869   -   - 
-Other financial assets  877,330   877,330   877,330   -   - 
-Loans and other financing  105,974,985   112,402,330   -   -   112,402,330 
- Repo transactions  22,354,735   22,354,735   22,354,735   -   - 
- Other Debt Securities  6,729,368   6,729,368   6,729,368   -   - 
-Financial assets pledged as collateral  217,447   217,447   217,447   -   - 
   172,828,734   179,256,079   66,853,749   -   112,402,330 
Financial Liabilities                    
-Deposits  178,641,594   179,320,910   -   -   179,320,910 
- Other financial liabilities  203,056   203,056   203,056   -   - 
-Financing received from the BCRA and other financial institutions  5,851,412   5,607,016   -   -   5,607,016 
- Unsubordinated Debt securities  4,226,748   4,226,748   4,226,748   -   - 
- Subordinated Debt securities  1,140,469   1,192,293   1,192,293   -   - 
   190,063,279   190,550,023   5,622,097   -   184,927,926 

 

Other Financial Instruments as of 12/31/2019 Accounting
value
  Fair value  FV Level 1  FV Level 2  FV Level 3 
Financial Assets               
-Cash and due from Banks  35,945,321   35,945,321   35,945,321   -   - 
-Other financial assets  1,376,349   1,376,349   1,376,349   -   - 
-Loans and other financing  121,028,573   125,967,144   -   -   125,967,144 
- Other Debt Securities  4,765,437   4,878,150   4,878,150   -   - 
-Financial assets pledged as collateral  557,034   557,034   557,034   -   - 
   163,672,714   168,723,998   42,756,854   -   125,967,144 
Financial Liabilities                    
-Deposits  121,176,255   121,178,487   -   -   121,178,487 
-Other financial liabilities  4,247,392   4,247,392   4,247,392   -   - 
-Repo transactions  435,401   435,401   435,401   -   - 
-Finances received from the BCRA and other financial institutions  12,276,610   11,950,528   -   -   11,950,528 
- Unsubordinated Debt securities  8,286,163   8,286,163   8,286,163   -   - 
- Subordinated Debt securities  2,886,028   3,223,964   3,223,964   -   - 
   149,307,849   149,321,935   16,192,920   -   133,129,015 

 

Fair Value of Equity instruments

 

The following are the equity instruments measured at Fair Value throughin profit or loss as of December 31, 2020 and 2019:

 

  12/31/2020  12/31/2019 
Grupo Financiero Galicia S.A.  74,881   7,890 
Pampa Holding S.A  8,286   - 
Loma Negra S.A.  3,179   - 
Others  785   - 
Total  87,131   7,890 

 

 

53

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The following are the equity instruments measured at Fair Value through in Other Comprehensive Income as of December 31, 2020 and 2019:

 

Detail 12/31/2020  12/31/2019 
Mercado Abierto Electrónico S.A.  4,610   6,276 
Seguro de Depósitos S.A  1,614   2,197 
Compensador Electrónica S.A.  919   1,251 
Provincanje S.A.  271   370 
Cuyo Aval Sociedad de Garantía Recíproca  1,436   1,428 
Argencontrol S.A.  125   170 
Los Grobo Sociedad de Garantía Recíproca  73   95 
IEBA S.A.  61   83 
Otras Sociedades de Garantía Recíproca  134   86 
Total  9,243   11,956 

 

Detail Fair value
12/31/2019
  Income through
OCI
  Fair value
12/31/2020
 
Mercado Abierto Electrónico S.A.  6,276   (1,666)  4,610 
Seguro de Depósitos S.A  2,197   (583)  1,614 
Compensador Electrónica S.A.  1,251   (332)  919 
Provincanje S.A.  370   (99)  271 
Cuyo Aval Sociedad de Garantía Recíproca  1,428   8   1,436 
Argencontrol S.A.  170   (45)  125 
Los Grobo Sociedad de Garantía Recíproca  95   (22)  73 
IEBA S.A.  83   (22)  61 
Otras Sociedades de Garantía Recíproca  86   48   134 
Total  11,956   (2,713)  9,243 

 

6.TRANSFER OF FINANCIAL ASSETS

 

When the Group transfers financial assets under an agreement that meets all requirements to derecognize such assets, the difference between the carrying amount of those assets and the amount received as consideration is charged to income.

 

(a)Transfers that do not qualify for derecognition

 

The following is a detail of the financial assets transferred by the Group that continue to be recognized in its consolidated financial statements as of December 31, 2020 and 2019:

 

  12/31/2020  12/31/2019 
Securitized Personal Loans      
Asset        -   2,197,444 
Liabilities  -   1,156,889 
Transfers of receivables with recourse        
Asset  -   41,116 
Liabilities  -   - 

 

(b)Transfers of financial assets that qualify for derecognition

 

The Group makes, in certain opportunities, non-recourse portfolio sales. In these cases, the Group has not retained any substantial risk or reward regarding the transferred portfolio, and therefore, such portfolio meets derecognition requirements.

 

7.NON CONTROLLING INTEREST

 

The movements in the Group's significant non-controlled interests as of December 31, 2020 and 2019, were as follows:

 

  12/31/2020  12/31/2019 
Balance at the beginning  26,223   29,683 
Participation in profit for the year  2,265   (3,583)
Participation in OCI for the year  550   7 
Share premium in subsidiaries  -   116 
Balance at closing  29,038   26,223 

 

 

54

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

8.LONG-TERM BENEFIT OBLIGATIONS

 

As of December 31, 2020 and 2019, the balances recorded for long-term benefits amounted to 1,146,516 and 947,536, respectively. The amount for the year recognized as an expense in respect of staff retirement benefits as of December 31, 2020 and 2019 was 447,850 and 739,182, respectively.

 

The evolution during the exercises is detailed below:

 

  12/31/2020  12/31/2019 
Balance at the beginning  947,536   396,082 
Discharges from the exercise  557,291   741,121 
Benefits paid to participants  (358,311)  (189,667)
Balance at closing  1,146,516   947,536 

 

9.RELATED PARTY TRANSACTIONS

 

Related parties are considered to be all those entities that directly, or indirectly through other entities, control over another, are under the same control or may exercise significant influence over the financial or operational decisions of another entity.

 

The Group controls another entity when it has power over the financial and operating decisions of other entities and in turn obtains benefits from it. On the other hand, the Group considers that it has joint control when there is an agreement between the parties regarding the control of a common economic activity.

 

Finally, those cases in which the Group has significant influence is due to the power to influence the financial and operating decisions of another entity but not being able to exercise control over them. For the determination of such situations, not only the legal aspects are observed but also the nature and substance of the relationship.

 

Additionally, related parties are considered to be the key personnel of the Group's Management (members of the Board and managers of the Group and its subsidiaries), as well as the entities over which key personnel may exercise significant influence or control.

 

Controlling Entity

 

Mr. Julio Patricio Supervielle is the main shareholder of the Groups, with registered address on Bartolomé Mitre 434, 5th floor, Autonomous City of Buenos Aires. Julio Patricio Supervielle´s interest in the capital and votes of the Group as of December 31, 2020 and 2019 amounts to the 35.12% and 57.89%, respectively.

 

Remuneration of key personnel

 

The remuneration received by the key personnel of the Group as of December 31, 2020 and 2019 amounts to 628.7 million and 480.8 million respectively.

 

Transactions with related parties

 

The financings, including those that were restructured, were granted in the normal course of business and on substantially the same terms, including interest rates and guarantees, as those in force at the time to grant credit to non-related parties. Likewise, they did not imply a risk of bad debts greater than normal nor did they present any other type of unfavorable conditions.

 

The following table presents the aggregate amounts of total consolidated financial exposure of the Bank to related parties, the number of recipients, the average amounts and the single largest exposures as of December 31, 2020 and 2019:

 

  As of December 31,
2020
  As of December 31,
2019
 
Aggregate total financial exposure  242,271   1,311,056 
Number of recipient related parties  80   95 
(a) Individuals  71   86 
(b) Companies  9   10 
Average total financial exposure  3,028   18,729 
Single largest exposure  933,426   1,120,671 

 

 

55

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

10.FINANCE LEASES

 

10.1 The Group as lessee

 

(i)The following table shows the carrying amount in the statement of financial position:

 

  12/31/2020  12/31/2019 
Right-of-use asset        
Land and buildings  2,146,928   2,047,262 
Lease liability        
Current  660,694   637,103 
Non-current  521,004   651,311 
Total  1,181,698   1,288,414 

 

(ii)The following table shows the amounts charged in the income statement:

 

Items 12/31/2020 
Right-of-use assets – Depreciation  780,397 
Interest expenses on lease liabilities (Other operating expenses)  207,035 

 

(iii)Lease activities:

 

The Group leases several branches. Rental agreements are generally made for fixed periods of 1 to 3 years, but may have extension options as described in (iv) below.

 

Contracts may contain lease components or not. The Group assigns consideration in the contract to the lease and non-lease components based on their independent relative prices. However, for the leases of real estate for which the Group is a lessee, it has chosen not to separate the lease components and those that are not, and instead counts them as a single lease component.

 

Lease terms are negotiated individually and contain a wide range of different terms and conditions. Lease agreements do not impose other obligations to do or not do, other than the leased assets owned by the lessor. Leased assets cannot be used as collateral for obtaining loans.

 

Until 2018, Property, Plant and Equipment leases were classified as operating leases. As of January 1, 2019, leases are recognized as a right-of-use asset by registering a liability as a counterparty on the date on which the leased asset is available for use by the Entity.

 

Assets and liabilities arising from leases are initially measured based on the present value. Lease liabilities include the net present value of the following lease payments:

 

·fixed payments (including fixed payments in substance), less any incentives receivable;

·variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

·amounts expected to be payable by the Group under residual value guarantees;

·the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and

·payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.

 

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

 

Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be easily determined, which is generally the case with leases in the Group, the lessee's incremental borrowing rate is used, which is the rate that the individual lessee would have to pay to borrow the necessary funds to obtain an asset of similar value to the asset by right of use in a similar economic environment with similar terms, security and conditions.

 

To determine the incremental interest rate, the Group:

 

·whenever possible, uses the external financing recently received as a starting point, adjusted to reflect changes in financing conditions since the external financing was received.

 

 

56

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

·uses a rate determination approach that begins with a risk-free interest rate adjusted for credit risk for leases that the Entity already has for those cases in which it does not have recent third-party financing, and

·makes specific adjustments for the lease, for example, term, currency and guarantee.

 

The Group is exposed to possible future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they become effective. When adjustments to lease payments based on an index or rate become effective, the lease liability is reassessed and adjusted against the right-of-use asset.

 

Lease payments are allocated between capital and financial cost. The financial cost is charged to income during the lease period to produce a constant periodic interest rate on the remaining balance of the liability for each period.

 

The right-of-use assets are measured at cost comprising the following:

 

·the amount of the initial measurement of the lease liability;

·any lease payment made at or before the commencement date, less any lease incentives received;

·any initial direct costs, and

·an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

 

The right-of-use assets are generally depreciated during the shortest useful life of the asset and the lease term in a linear fashion.

 

Payments associated with short-term leases of equipment and all leases of low-value assets are recognized linearly as an expense in income. Short-term leases are leases with a lease term of 12 months or less and that does not contains a purchase option. Low-value assets include computer equipment and small items of office furniture.

 

(iv) Extension and termination options

 

Extension and termination options are included in several property leases. These are used to maximize operational flexibility in terms of managing the assets used in operations. Most of the extension and termination options maintained are exercisable only by the Group and not by the respective lessor.

 

10.2 The Group as lessor

 

The following is a breakdown of the maturities of the Group's financial and operating leases receivables and of the current values as of December 31, 2020 and 2019:

 

Financial Lease Receivables 12/31/2020  12/31/2019 
Up to 1 year  1,982,763   2,427,517 
More than a year up to two years  1,099,924   1,589,089 
From two to three years  634,899   906,151 
From three to five years  355,885   574,487 
More than five years  14,429   27,744 
Total  4,087,900   5,524,988 
Unearned financial income  (1,196,789)  (1,186,636)
Net investment in the lease  2,891,111   4,338,352 

 

The balance of allowance for loan losses related to finance leases amounts to 252,961 and 111,708 as of December 31, 2020 and 2019.

 

Operating Lease Receivables 12/31/2020  12/31/2019 
Up to 1 year  16,067   22,744 
More than a year up to two years  13,766   21,418 
From two to three years  9,202   18,438 
From three to five years  -   12,528 
Total  39,035   75,128 

 

 

57

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

11.COMPOSITION OF THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CONSOLIDATED INCOME STATEMENT

 

   12/31/2020   12/31//2019   01/01/2019 
11.1 Debt securities at fair value through profit or loss            
Goverment securities  8,864,640   768,967   7,632,295 
Corporate securities  401,671   4,992   130,690 
Securities issued by the Argentine Central Bank  605,592   -   23,676,552 
   9,871,903   773,959   31,439,537 
11.2 Derivatives            
Debtor balances related to forward operations in foreign currency to be settled in pesos  143,415   350,679   5,275 
Debtor balances related to forward operations in foreign currency  529   -   28,074 
   143,944   350,679   33,349 
11.3 Other financial assets            
Participation Certificates in Financial Trusts  40,855   41,648   84,320 
Investments in Asset Management and Other Services  1,528,987   747,738   1,441,064 
Other investments  535,684   523,622   606,364 
Receivable from spot sales peading settlament  1,078,244   188,679   8,633 
Several debtors  832,131   809,898   1,315,848 
Miscellaneous debtors for credit card operations  203,809   516,154   808,739 
Miscellaneous debtors for collections  64,630   48,240   82,314 
   4,284,340   2,875,979   4,347,282 
11.4 Loans and other financing            
To the non-financial public sector  23,530   39,307   68,697 
To the financial sector  12,062   87,841   705,558 
Overdrafts  2,494,262   7,621,574   10,472,759 
Promisory notes  31,372,798   26,712,017   29,986,883 
Mortgage loans  10,412,719   10,778,278   11,219,491 
Automobile and other secured loans  1,777,956   1,660,828   3,542,573 
Personal loans  20,426,406   22,184,437   39,804,302 
Credit cards loans  19,094,080   17,634,809   18,782,816 
Foreign trade Loans  9,858,309   24,710,532   28,227,113 
Receivables from financial leases  2,891,110   4,338,377   7,006,810 
Others  7,611,753   5,260,573   13,792,712 
   105,974,985   121,028,573   163,609,714 
11.5 Other debt securities            
Goverment securities  13,078,920   5,746,397   9,148,602 
Securities issued by the Argentine Central Bank  28,181,585   8,769,584   - 
Others  3,644   12,330   64,203 
   41,264,149   14,528,311   9,212,805 
11.6 Financial assets pledged as collateral            
Special guarantees accounts in the Argentine Central Bank  3,710,757   2,887,173   2,843,836 
Deposits in guarantee  1,194,178   4,374,159   1,359,845 
   4,904,935   7,261,332   4,203,681 
             
11.7 Other non-financial assets            
Other Miscellaneous assets  603,701   1,124,745   821,905 
Loans to employees  235,259   359,305   373,086 
Payments in advance  321,958   18,474   350,759 
Works of art and collector's pieces  32,343   47,032   33,434 
Retirement Plan  143,252   205,805   267,925 
Assets acquired through financial leases  -   -   1,897,303 
Other non-financial assets  16,367   6,707   19,344 
   1,352,880   1,762,068   3,763,756 
             
11.8  Inventories            
Electronics  56,282   29,614   128,265 
Home and Health care  16,110   10,529   19,899 
Tools and Workshop Equipment  259   22,121   438 
Obsolescence Reserve  (1,687)  (1,743)  (2,174)
   70,964   60,521   146,428 
             
11.9 Deposits            
Non-financial sector  7,911,255   7,447,131   23,258,016 
Financial sector  57,416   38,253   52,851 
Current accounts  16,891,003   14,819,309   14,486,996 
Savings accounts  102,845,465   54,445,823   99,155,172 
Time deposits and investments accounts  46,113,056   40,457,410   58,226,125 
Others  4,823,399   3,968,329   3,580,926 
   178,641,594   121,176,255   198,760,086 
             
11.10 Liabilities at fair value through profit and loss  2,002,005   258,060   241,261 
Liabilities for transactions in local currency  -   -   320,187 
Liabilities for transactions in foreign currency  2,002,005   258,060   561,448 
             
11.11 Other financial liabilities            
Amounts payable for spot transactions pending  settlement  1,362,541   2,986,677   1,157,326 
Collections and other operations on behalf of third parties  4,952,137   7,112,817   7,423,271 
Fees accrued to pay  5,423   366   76,123 
Financial guarantee contracts  19,832   20,786   76,592 
Liabilities associated with the transfer of financial assets not derecognised  -   970,923   1,897,303 
Lease liability  1,181,698   1,288,420   152,547 
Others  8,054   31,397   49,961 
   7,529,685   12,411,386   10,833,123 
             
11.12 Financing received from the Argentine Central Bank and other financial institutions            
Financing received from local financial institutions  645,206   1,278,545   2,611,318 
Financing received from international institutions  5,206,206   10,998,065   14,211,719 
   5,851,412   12,276,610   16,823,037 
11.13 Provisions            
Restructuring Provision  -   680,700   - 
Eventual commitments  8,634   -   2,505 
Unused Balances Credit Cards  206,812   -   - 
Charges to be paid to National Social Security Administration  225,387   -   - 
Other contingencies  240,259   220,503   179,520 
   681,092   901,203   182,025 
             
11.14 Derivatives            
Credit balances related to foreign currency forward transactions payable in pesos  1,995   -   197,328 
   1,995   -   197,328 
             
11.15 Other non-financial liabilities            
Payroll and social securities  5,500,933   5,418,349   4,633,094 
Sundry creditors  3,660,784   3,216,302   3,469,684 
Tax payable  1,802,458   295,066   2,391,566 
Social security payment orders pending settlement  894,809   1,869,651   464,508 
Revenue from contracts with customers (1)  188,665   297,448   260,544 
Contribution to the deposit guarantee fund  92,864   90,481   95,895 
Other  5,579   8,862   30,771 
   12,146,092   11,196,159   11,346,062 

 

 

58

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

(1)Deferred income resulting from contracts with customers includes the liability for the customers’ loyalty program. The Group estimates the value of the points assigned to customers through the application of a mathematical model that considers assumptions about redemption rates, the fair value of points redeemed based on the combination of available products, and customer preferences, as well as the expiration of not redeemed points. As of December 31, 2020,2019 and 2018, the amounts of 188,665, 262,069 and 260,546, respectively, have been recorded for the points not redeemed or expired.

 

The following table shows the estimated use of the liability recorded as of December 31, 2020:

 

  Maturity    
Item Up to 12
months
  Up to 24
months
  More than 24
months
  Total 
Revenue from contracts with customers  88,352   46,692   53,621   188,665 

 

11.16 Interest Income

 

  12/31/2020  12/31/2019 
Interest on overdrafts  2,678,469   6,217,172 
Interest on promissory notes  6,226,382   8,002,945 
Interest on personal loans  14,173,544   17,584,460 
Interest on corporate unsecured loans  5,981,812   8,360,682 
Interest on credit card loans  3,818,628   6,555,201 
Interest on mortgage loans  3,994,607   5,148,348 
Interest on automobile and other secured loan  738,403   943,454 
Interest on foreign trade loans  1,453,129   2,356,094 
Interest on financial leases  704,408   1,537,851 
Interest on public and private securities measured at amortized cost  20,474,483   3,187,574 
Others  4,406,054   1,089,849 
Total  64,649,919   60,983,630 

 

11.17 Interest Expenses

 

  12/31/2020  12/31/2019 
Interest on current accounts deposits  6,325,123   8,182,612 
Interest on time deposits  19,574,998   27,030,920 
Interest on other financial liabilities  2,285,959   10,472,760 
Interest from financing from financial sector  100,834   373,163 
Others  287,222   1,471,925 
Total  28,574,136   47,531,380 

 

11.18 Net income from financial instruments at fair value through profit or loss

 

  12/31/2020  12/31/2019 
Income from corporate and government securities  2,999,989   2,086,171 
Income from securities issued by the Argentine Central Bank  135,491   25,478,678 
Derivatives  180,102   971,521 
Total  3,315,582   28,536,370 

 

11.19 Result from derecognition of assets measured at amortized cost

 

  12/31/2020  12/31/2019 
Result from derecognition or sale of government securities  201,122   - 
Result from exposure to changes in the purchasing power of the currency on government securities  (11,832,005)  - 
Total  (11,630,883)         - 

 

11.20 Service fee income

 

  12/31/2020  12/31/2019 
Commissions from deposits accounts  4,627,421   4,777,932 
Commissions from credit and debit cards  3,413,407   3,944,787 
Commissions from loans operations  164,852   401,369 
Others Commissions  3,131,296   2,401307 
Others  156,848   182,161 
Total  11,493,824   11,707,556 

 

 

59

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

11.21 Service fee expenses

 

  12/31/2020  12/31/2019 
Commissions paid  3,469,516   2,955,834 
Export and foreign currency operations  78,423   99,125 
Total  3,547,939   3,054,959 

 

11.22 Other operating income

 

  12/31/2020  12/31/2019 
Loans recovered and allowances reversed  703,329   678,796 
Insurance commissions  51,525   92,967 
Rental from safety boxes  340,303   390,561 
Commissions from trust services  9,638   35,778 
Returns of risk funds  1,215,745   235,093 
Sale of fixed assets  133,983   - 
Adjustment of various credits  145,020   258,582 
Default interests  212,927   573,061 
Others  1,073,733   1,477,488 
Total  3,886,203   3,742,326 

 

11.23 Personnel expenses

 

  12/31/2020  12/31/2019 
Payroll and social securities  16,674,343   16,902,762 
Others expenses  1,493,501   2,380,583 
Total  18,167,844   19,283,345 

 

11.24 Administrative expenses

 

  12/31/2020  12/31/2019 
Directors´ and statutory auditors’fees  341,473   382,327 
Professional fees  3,043,173   1,385,391 
Advertising and publicity  688,664   737,956 
Taxes  1,857,380   2,000,527 
Maintenance, security and services  2,822,887   2,351,755 
Rent  71,894   70,446 
Others  1,487,023   3,382,268 
Total  10,312,494   10,310,670 

 

11.25 Depreciation and impairment of non-financial assets

 

  12/31/2020  12/31/2019 
Depreciation of property, plant and equipment  523,212   928,664 
Depreciation of other non-financial assets  234,143   145,582 
Depreciation of intangible assets  869,276   609,799 
Depreciation of right-of-use assets  780,397   772,179 
Impairment of other-non financial assets  -   234,994 
Total  2,407,028   2,691,218 

 

11.26 Other operating expenses

 

  12/31/2020  12/31/2019 
Promotions related with credit cards  525,355   695,109 
Turnover tax  3,950,539   5,104,596 
Fair value on initial recognition of loans  195,459   273,505 
Contributions made to deposit insurance system  215,115   224,350 
Adjustments of loan and credit card balances  96,381   176,670 
Fraud  36,858   79,812 
Interest on finance lease liabilities  207,035   289,286 
Coverage services  13,599   25,648 
Contributions to Guarantee Fund Deposits  289,814   332,127 
Charge for bad debts of various loans and for other provisions  561,811   197,711 
Shareholders personal property tax  5,948   680,703 
Others  474,573   575,356 
Total  6,572,487   8,654,873 

 

 

60

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

12.DIVIDENDS

 

On April 28, 2020, the Shareholders’ General Meeting approved the following distribution of retained earnings for the year ended on December 31, 2019:

 

*            Dividend distribution (530,065)

*            Other reserve: 5,796,775

 

13.COMMITMENTS AND CONTINGENCIES

 

International Financial Reporting Standards result in a contingent liability consisting of (i) a possible obligation, arising from past events, the existence of which must be confirmed by the occurrence of one or more future events of an uncertain nature, which are not have under the control of the Group or (ii) a present obligation that has not been probable or whose amount cannot be measured or estimated with sufficient reliability.

 

The provisions recorded are detailed below

 

  12/31/2020  12/31/2019  01/01/2019 
Legal issues  32,557   44,992   63,838 
Labor lawsuits  59,263   38,184   59,920 
Tax  113,303   106,030   28,147 
Unused Balances Credit Cards  206,812   -   - 
Deceased ANSES  225,387   -   - 
Judicial Deposits  22,328   21,465   20,553 
Eventual commitments  8,634   500   2,505 
Restructuring Provision  -   680,703   - 
Others  12,808   9,329   7,062 
Total  681,092   901,203   182,025 

 

14.INSURANCE

 

14.1 Assets and liabilities related to insurances activities

 

The assets and liabilities related to insurance contracts are detailed below, as of the indicated dates:

 

  12/31/2020  12/31/2019 
Assets related to insurance contracts (Loans and other financing)        
Receivables premius  590,044   618,048 
Commissions receivables  2,023   - 
Total  592,067   618,048 
         
Liabilities related to insurance contracts (Other non-financial liabilities)        
Debt with insured  136,124   185,380 
Debt with reinsurers  11,731   55,239 
Debt with co-insurers  -   2,317 
Debt with producers  183,809   204,734 
Technical commitments  221,719   236,877 
Outstanding claims paid by re-insurance companies (regularizer)  (9,059)  (655)
Total  544,324   683,892 

 

 

61

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

   12/31/2020   12/31/2019 
Debt with insured        
Property insurance        
Direct administrative insurance  18,158   15,305 
Direct insurance in mediation  25   1,089 
Claims settled to pay  293   1,199 
Claims occurred and not reported - IBNR  9,794   20,093 
Life insurance        
Direct administrative insurance  64,506   56,181 
Direct insurance in judgments  1,418   1,687 
Direct insurance in mediation  886   2,500 
Claims settled to pay  19,164   27,526 
Claims occurred and not reported - IBNR  21,880   59,800 
Total  136,124   185,380 
         
Debt with producers        
Producers currenct account  39,274   38,456 
Commisions for premiums receivable  144,535   166,278 
Total  183,809   204,734 
         
Technical commitments        
Course and similar risk        
Premiums and surcharges  221,714   236,824 
Premium insufficiency  5   53 
Total  221,719   236,877 

 

14.2 Income from insurances activities

 

The composition of the item “Result for insurance activities” as of December 31, 2020 and 2019 is as follows:

 

Items 12/31/2020  12/31/2019 
Accrued premiums  2,300,856   2,647,100 
Accrued claims  (308,798)  (369,043)
Production expenses  (320,603)  (610,770)
Total  1,671,455   1,667,287 

 

15.ASSET MANAGEMENT AND OTHER SERVICES

 

As of December 31, 2020 and 2019, Banco Supervielle S.A. is the depository of the Asset managed by Supervielle Asset Management S.A. In accordance with CNV General Resolution No. 622/13, below are the portfolio, net worth and number of units of the Mutual Funds mentioned earlier.

 

Asset Management and Other Portfolio  Net Worth  Number of Units 
Services 12/31/2020  12/31/2019  12/31/2020  12/31/2019  12/31/2020  12/31/2019 
Premier Renta C.P. Pesos  36,297,562   19,102,978   36,260,237   19,073,740   12,597,963,038   3,958,398,573 
Premier Renta Plus en Pesos  168,089   148,593   162,743   145,942   11,899,481   10,250,999 
Premier Renta Fija Ahorro  1,721,266   633,632   1,709,665   625,555   59,317,777   12,851,475 
Premier Renta Fija Crecimiento  73,983   63,880   73,386   63,519   3,983,791   3,688,485 
Premier Renta Variable  188,342   226,525   185,576   223,267   6,689,975   6,982,580 
Premier FCI Abierto Pymes  941,245   762,874   917,368   761,157   119,588,138   91,559,624 
Premier Commodities  259,125   28,642   255,128   18,506   25,702,973   2,596,034 
Premier Capital  192,336   175,700   191,253   175,237   36,842,932   36,057,519 
Premier Inversión  736,703   184,279   713,499   184,185   1,576,391,366   442,160,447 
Premier Balanceado  1,196,216   849,326   1,195,336   848,551   253,733,905   249,317,925 
Premier Renta Mixta  3,559,642   181,413   3,151,517   181,266   1,072,064,209   76,562,093 
Premier Renta Mixta en USD  112,768   177,270   112,768   176,618   2,083,508   2,815,589 
Premier Performance en USD  526,115   617,918   521,839   616,532   7,724,190   9,312,208 
Premier Global USD  490,472   951,503   489,973   948,567   5,444,411   11,338,023 

 

 

62

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

16.ADDITIONAL INFORMATION REQUIRED BY THE BCRA

 

16.1 CONTRIBUTION TO THE DEPOSIT INSURANCE SYSTEM

 

Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.

 

Through Decree No. 1127/98 dated September 24, 1998, the National Executive Branch established the maximum coverage limit of the guarantee system, applicable to demand or time deposits, in pesos and/or foreign currency. Until February 28, 2019, such limit amounts to 450, pursuant to Communication “A” 5943. As from March 1, 2019, such limit amounted to 1,000 pursuant to Communication “A” 6654. As from May 1, 2020, the new limit amounts to $ 1,500, pursuant to Communication “A” 6973.

 

This regime does not include deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by persons directly or indirectly related to the entity, deposits of securities, acceptances or guarantees, and those set up after July 1, 1995 at an interest rate higher than that periodically set forth by the Argentine Central Bank on the basis of the daily survey carried out by that agency (*). Excluded from the regime are also the deposits whose ownership was acquired through endorsement and placements offering incentives additional to the interest rate. The system has been implemented through the creation of the so-called “Deposit Guarantee Fund" (F.G.D.), which is managed by the company Seguros de Depósitos S.A. (SEDESA) and whose shareholders are the Central Bank and the financial institutions in the proportion determined for each of them by that agency on the basis of contributions made to such fund.

 

(*) Enforced on January 20, 2019, pursuant to provision “A” 6435, such exclusions are as follows: Sight deposits with agreed-upon rates exceeding reference rates and term deposits and investments exceeding 1.3 times such rate. Reference rates are released on a regular basis by the Argentine Central Bank in accordance with a mobile average of the last five banking business days of passive rates that may arise for term deposits of up to 100 (or its equivalent in other currencies) from the survey to be carried out by said institution.

 

16.2 RESTRICTED ASSETS

 

As of December 31, 2020 and 2019 Grupo Supervielle’s following assets are restricted:

 

Detail 12/31/2020  12/31/2019 
Other receivables from financial transactions        
Special guarantee accounts in the Argentine Central Bank  3,710,757   2,887,162 
   3,710,757   2,887,162 
         
Miscellaneous Receivables        
Trust guarantee deposits  -   5,173 
Guarantee deposits for currency forward transactions  601,248   2,865,356 
Guarantee deposits for credit cards transactions  421,942   432,118 
Guarantee deposits for repo transactions  -   32,510 
Other guarantee deposits  160,820   215,866 
   1,184,010   3,551,023 

 

16.3 COMPLIANCE OF PROVISIONS ISSUED BY THE NATIONAL SECURITIES COMMISSION

 

Pursuant to General Ruling N° 629 issued by the National Securities Commission, supporting documentation of our accounting and administration operations for the financial years 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and until September 30, 2020, the accounting books since September 2012 up to date and all corporate books are safeguarded in the registered headquarters.

 

 

63

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Any other documentation or book, older than the date specified above for each case, is safeguarded by the firm AdeA S.A., whose warehouse is located on Ruta Provincial N°36, Km 31,500, Bosques, Partido de Florencio Varela, Buenos Aires Province.

 

16.4 ISSUANCE OF DEBT SECURITIES

 

Banco Supervielle S.A.

 

Unsubordinated Debt Securities

 

Global Program for the Issuance of Medium-Term Securities for up to N/V USD 2,300,000 of Banco Supervielle S.A.

 

On September 22, 2016, the Shareholders' meeting No. 117, resolved to approve the creation of a Global Program for the financial trusts for up to a maximum outstanding amount of USD 800,000. The Program was authorized by the National Securities Commission through Resolution No. 18,376 dated November 24, 2016. On March 6, 2018, the Shareholders' meeting, resolved to approve the extension of the Program for up to a maximum outstanding amount of USD 2,300,000. The Program was authorized by the National Securities Commission through Resolution No. 19,470 dated April 16, 2018.

 

Frequent issuer regime registration CNV

 

On August 6, 2018, the Board of Directors resolved to request the National Securities Commission (the “CNV”) to register the Bank as a frequent issuer of debt securities .. Said request was authorized by the CNV through Resolution No. 19,958 dated December 27, 2018. The Bank is registered with the CNV as a frequent issuer of debt securities under No. 03. At the board meeting of the company on March 7, 2019, it was resolved to approve the Bank's ratification in the Frequent Issuer Regime and at the Board meeting on December 2, 2019 it was resolved to allocate the maximum amount of USD 300,000 corresponding to the Global Issuance Program of Debt securities for up to USD 2,300,000, with the bank in the process of reducing the maximum amount of said Program. The CNV approved said ratification through Resolution DI-2020-11-APN-GE #CNV dated February 11, 2020.

 

On June 12, 2020, the Board of Directors of Banco Supervielle SA, approved the issuance of a Class G Non-Subordinated Negotiable Obligation for an amount that will not exceed in its N/V USD 30,000,000 set within the Global Program of Debt Securities. It was also approved to modify the terms of said issuance, so that the Issue Amount is up to USD 50,000,000 and without prejudice to the fact that the Debt securities are denominated in USD dollars, they may be integrated and payments under them can be made in pesos. The bidding period ended on June 25, 2020.

 

As of December 31, 2020 and 2019, the amounts outstanding and the terms corresponding to outstanding unsubordinated debt securities were as follows:

 

The following describes issuances in force as of December 31, 2020 and 2019:

 

Issuance   Nro. of            Book Value 
date Currency Class Amount  Amortization Term Maturity date Rate 12/31/2020  12/31/2019 
02/09/17 $ A  4,150,140  50% on 2-9-2020 and 50% at maturity on 8-9-2020 42 08/09/2020 Floating Badlar of Private Banks + 4.50%. with a minimum 18% nominal annual  -   5,179,248 
12/22/17 $ C  659,750  3 installments:
12-22-2020 33.33%.
06-22-2021 33.33%. and upon maturity 33.34%.
 48 12/22/2021 Floating Badlar + 4.25%  444,327   908,288 
02/14/18 $ E  1,607,667  3 equal and consecutive annual installments. 1° 02-14-21 60 02/14/2023 Floating Badlar of Private Banks + 4.05%  1,579,563   2,177,447 
06/30/20 u$s G  30,000,000  Quarterly: 12-22-20, 06-22-21, 06-30-21 12 06/30/2021 2% Nominal Annual  2,202,858   - 
                Total  4,226,748   8,264,983 

 

The outstanding amount of the Class A Debt securities was reduced on October 17, 2018 by a nominal value in pesos of $ 618,030 and on January 23, 2019 by a nominal value in pesos of $ 254,925. Thus resulting in the total amount of circulation in pesos of $ 3,895,215.

 

 

64

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Subordinated debt securities

 

Program for the issuance of Debt securities for up to N/V $ 750,000 (increased to N/V $ 2,000,000) of Banco Supervielle S.A.

 

As of March 25, 2013, the Bank’s Extraordinary General shareholders’ meeting, approved the creation of a Global Program for the issuance of debt securities for up to a maximum outstanding amount of $750,000. On April 15, 2016, the Ordinary and Extraordinary Shareholders' meeting approved the increase the maximum outstanding amount of the Program to $2,000,000 or its equivalent in foreign currency, passed by Resolution N° 18,224 from the National Securities Commission on September 22, 2016.

 

The following chart provides the main terms and conditions of issuances underway as of December 31, 2020 and 2019:

 

Issuance            Maturity    Book Value 
date Currency Class Amount  Amortization Term date Rate  12/31/2020  12/31/2019 
08/20/2013 U$S III  22,500  100% at mat, 84 Months 08/20/20  7%  -   1,780,980 
11/18/2014 U$S IV  13,441  100% at mat, 84 Months 11/18/21  7%  1,140,469   1,105,048 
Total                    1,140,469   2,886,028 

 

Micro Lending S.A.U.: Program for the Issuance of Debt securities

 

The following is a detail of the issues in effect as of December 31, 2020 and 2019:

 

Class Issuance
Date
 Maturity
Date
 FV (in
thousands)
  Rate 12/31/2020  12/31/2019 
Clase III 10/04/2017 10/05/2020  35,000  Floating BADLAR + 7,0%  -   21,180 
Total           -   21,180 

 

16.5 FINANCIAL TRUSTS

 

The detail of the financial trusts in which The Entity acts as Trustee or as Trustee is summarized below:

 

As Trustee:

 

Banco Supervielle S.A.

 

Below is a detail of financial trusts:

 

Below is a detail of the Guarantee Management trust where the Bank acts as a trustee as of December 31, 2020:

 

Financial trustIndenture
executed on
Due of principal obligationOriginal
principal
amount
Principal
balance
BeneficiariesSettlers
Fideicomiso de Administración Interconexión 500 KV ET Nueva San Juan - ET Rodeo Iglesia09/12/2018The Term of this Trust Fund Contract will be in force over 24 months as from 09/12/2018, or until the expiration of liabilities through Disbursements (Termination Date”). 30 days (thirty days) after the maturity of this Trust Agreement without the parties’ having agreed upon an Extension Commission, the Trustor of the trust account shall receive USD 6,000 (six thousand US Dollars) at the exchange rate in force in Banco Supervielle as a fine.--Those initially mentioned in Exhibit V (DISERVEL S.R.L., INGENIAS S.R.L, GEOTECNIA (INV. CALVENTE), NEWEN INGENIERIA S.A., INGICIAP S.A., MERCADOS ENERGETICOS, DISERVEL S.R.L.) and providers of works, goods and services included in the Project to be assigned by the Trustee with prior consent of the TrustorInterconexion Electrica Rodeo S.A.

 

 

65

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

As of 09/30/2020, Banco Supervielle S.A. as Trustee, is undergoing a negotiation process for the Contract “Extension Commission”. On 10/07/2020, the Trustor accepted the extension commission and the Bank accepted the request for the extension of the Trust contract sent by IERSA on 09/16/2020.

 

Micro Lending Financial Trust

 

The following are financial trusts where Micro Lending S.A.U acts as settler:

 

Financial

Trust

Set-up on

Securitized

Amount

Issued Securities
TypeAmount AmountTypeAmount
III06/08/2011$ 39,779VDF TV AVN$ 31,823VDF BVN $ 6,364CPVN $ 1,592
Vto: 03/12/13Vto: 11/12/13Vto: 10/12/16
IV09/01/2011$ 40,652VDF TV AVN$ 32,522VDF BVN $ 6,504CPVN $ 1,626
Vto: 06/20/13Vto: 10/20/13Vto: 06/29/17

 

16.6  RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF DIVIDENDS

 

Pursuant to regulations set by the Argentine Central Bank, 20% of the profits for the year, net of possible prior year adjustments, where applicable, are to be allocated to the Legal Reserve.

 

Pursuant to the amended text on distributions of dividends, financial entities shall comply with a series of requirements, as follows: i) They shall not be subject to the provisions of Sections 34 and 35 bis of the Financial Institutions Law; ii) No liquidity assistance loans shall have been granted to them; iii) they shall be in compliance with information regimes; iv) they shall not record shortfalls in the compiled minimum capital (without computing for such purposes the effects of the individual exemptions granted by the Superintendence of Financial and Foreign Exchange Institutions) or minimum cash, v) they shall have complied with additional capital margin when applicable.

 

The entities not facing any of these situations may distribute dividends in accordance with provisions set forth in said amended text, provided the entity´s liquidity or solvency is not jeopardized.

 

It is worth to be mentioned that pursuant to Communication “A” 6464 issued by the Argentine Central Bank, until March 31, 2020, financial entities, which, for the purpose of determining the distributable result, have not applied the additional on capital margins shall rely on previous authorization issued by the SEFyC.

 

On August 30, 2019 and with the purpose of stabilizing the exchange market, the Argentine Central Bank issued Communication “A” 6768, pursuant which financial entities shall rely on the previous authorization of Exchange and Financial Entities Superintendence before distributing its income. Over the course of such authorization process, the Central Bank will assess, among other items, potential effects of the application of international accounting standards pursuant to Communication “A” 6430 (Paragraph 5.5 of IFRS 9 – Detriment of financial assets value) as well as the effects of the re-expression of financial statements pursuant to Communication “A” 6651.

 

On March 19, 2020 the Argentine Central Bank issued Communication “A” 6939 by means of which the suspension of income distribution of financial entities was made effective until June 30, 2020.

 

Later, on June 4, 2020, through Communication “A” 7035, the Argentine Central Bank extended such suspension until December 31, 2020.

 

16.7  ACCOUNTS IDENTIFYING MINIMUM CASH INTEGRATION COMPLIANCE

 

As of December 31, 2020 and 2019, the minimum cash reserve was made up as folllows:

 

Item 12/31/2020  12/31/2019 (*) 
Current accounts in the Argentine Central Bank  9,586,497   8,554,797 
Sight accounts in the Argentine Central Bank  10,288,224   7,909,938 
Special guarantee accounts in the Argentine Central Bank  3,521,513   1,975,535 
Special accounts for previous credit payment  -   1,836 
Total  23,396,234   18,442,106 

(*) Historical values without inflation adjustment

 

It is worth mentioning that on those dates, the Group was in compliance with minimum cash integration requirements.

 

 

66

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

17.CONTRACT AS A FINANCIAL AGENT BY THE PROVINCE OF SAN LUIS

 

On January 17, 2017, Banco Supervielle S.A. received a communication from the Ministry of Public Treasury of the Province of San Luis giving notice of the termination of the Financial Agent Contract that Banco Supervielle has with the Province, effective as of February 28, 2017. The communication also states that, without prejudice to the exercise of the right to terminate the contract, the Province may continue to operate with the Bank until a new financial agent is selected.

 

Since February 2017, the Bank has continued rendering financial services to the Government of San Luis Province and its employees.

 

On June 7, 2018, the Province ratified said agreement over a 12-month period, thus regularizing the Bank´s role as exclusive payment agent, which has not been interrupted since 20 years ago. Such agreement has been renewed several times and according to the last renewal signed, it expires on November 30, 2020.

 

In January 2019, the government of San Luis Province disclosed the terms and conditions of the auction to be held by the Province for the new financial agent agreement. The Bank submitted its offer on March 15, 2019. Only two offers were submitted. On December 6, 2019, the Government of San Luis issued Decree N°8589 by means of which the auction was closed without assigning such financial agent agreement.

 

As of these financial statements, the Bank continues rendering financial services to the government of San Luis province and its employees.

 

18.FINANCIAL RISK FACTORS

 

Comprehensive Risk Management is a key discipline for financial institutions. The Group intends to create, through its subsidiaries, a solid and efficient organization in risk management, the framework for an optimal use of its capital and to identify business opportunities in the markets and geographic regions in which it operates, seeking the best risk-reward balance for its shareholders. The risk management framework is communicated to the entire organization and strives to strike a balance between a strong risk culture and being an innovative company, focused on its customers and recognized for its agile, easy and friendly operating style.

 

The Company's Board of Directors considers that its criteria and guidelines regarding risk management are a key part of its Corporate Governance. The risks to which the Group is exposed are inherent to the financial industry, such as credit, the market, interest rate, liquidity, operational risk, reputation and strategic risk. In addition, the Group is exposed to the risk of securitization, given its leadership role on this issue.

 

Financial risk factors

 

Credit risk

 

The Integral Risk Committee approves credit risk strategies and policies submitted in accordance with recommendations provided by the Integral Risk Corporate Department, the Credit Corporate Department and commercial sectors and in compliance with regulations set by the Argentine Central Bank. The credit strategy and policy is aimed at the development of commercial opportunities within the framework and conditions of the Group´s business plan, while keeping suitable caution levels in face of the risk.

 

Policies and procedures enable the definition of accurate aspects aimed at the deployment of the Group´s Strategy related to the administration of credit risk; among them, the Group´s criteria to grant loans, credit benefits and powers, types of products and the way in which the structure is organized, among other aspects. Likewise, the Group relies on an integral risk policy where aspects related to general key risk governance as well as specific manuals and procedures that include, among others, all relevant regulations issued by the Argentine Central Bank.

 

The Group´s credit risk management policies are applied to corporate and individuals. To such ends, a customer segmentation has been defined for Corporate Banking and Personal and Business Banking.

 

The Group focuses on supporting companies belonging to sectors with potential, and successful in their activity. Within the range of credit products offered for the business segment, the Group aims to develop and lead the factoring and leasing market, as well as to be a benchmark in foreign trade.

 

 

67

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Within Corporate Banking, we seek a solid proposal for medium and large companies’ market, seeking to maintain proximity with clients through service centers, agreements with clients throughout their value chain, and providing agile responses through existing credit processes.

 

Regarding Personal and Business Banking, in addition to payroll and senior citizens segments, special focus is placed on Entrepreneurs and SMEs, SMEs as well as the Banks´s Identité segment.

 

In the case of CCF, the focus is consumer finance, fundamentally in granting personal loans, credit cards and car loans.

 

The area of Capital Markets and Structuring targets the trust business segment; placement of assets in the capital market through financial trusts and debt securities, own and of third parties; and for its part, the area of Treasury and Finance has the Trading Desk within its scope. Among traded products are: interbank call, REPO transactions, corporate call, securities from public sector and monetary policy instruments of the Central Bank, acquisition of consumer portfolios, third-party financial trusts, negotiation of financial derivatives (futures, rate swaps, etc.), among others.

 

The Group is willing to carry out a strategy that enable it to address its contractual commitments, both under normal market conditions and adverse situations. Therefore, the Group relies on scoring and rating models to estimate probability of default (PD) for the different client portfolios. As for risk appetite framework, the Group relies on cut-offs for each risk-based segment that express the maximum risk to be assumed in terms of probability of default.

 

In addition to PD parameters, the Group relies on estimates of exposure at default (EAD) and loss given default (LGD) parameters with the purpose of estimating Group’s allowance for loan losses and the necessary economic capital to face unexpected losses that may arise due to credit risk.

 

The Group is aimed at keeping a diversified and atomized portfolio, in order to minimize risk concentration. To such ends, loan originationand client portfolio profiles are adjusted to each different circumstance. To this end, the entity has an indicators dashboard linked to the appetite for credit and concentration risk. The evolution of the NPL, Coverage and Cost of Risk indicators is monitored in relation to target limits established according to risk appetite and the strategy determined in the entity's business plan. Likewise, there is a portfolio limits scheme that measures balance concentration by debtor or economic group, the concentration of the main debtors, concentration by value chain, economic activities, portfolio by risk level based on the facility risk rating. and the exposure in foreign currency both at a total level and by product type.

 

Credit Risk Measurement Models

 

The Entity relies on models aimed at estimating the distribution of potential credit losses in its credit portfolio, which depend on defaults by the counterparties (PD – Probability of Default), as well as the assumed exposure to such defaults (EAD –Exposure At Default) and the recoveries of each defaulted loan (LGD – Loss Given Default).

 

Based on the aforementioned, the Group has developed a Risk-Adjusted Return on Capital (RAROC) model.

 

Regarding CCF, it also has estimates of the aforementioned parameters related to credit risk and a monitoring model of the RAROC Measurement metric.

 

The Group has deepened its work on the expected loss methodologies under IFRS 9, focusing on methodological improvements in the estimation of parameters (PD, EAD and LGD), aligning the definition of the parameters to the credit process. The forward looking model has been redesigned including more variables and openings. Likewise, effects resulting from the pandemic have been evaluated and incorporated into the expected loss calculation.

 

Allowances for loan losses calculation

 

Based on the results of the PD (probability of default), EAD (exposure at the time of default) and LGD (loss in the event of default) estimates, the associated statistical forecast is calculated.

 

Allowances for loan losses calculation is based on models that analyzes the Group’s own portfolio information to estimate, in global terms, the average value of the loss distribution function over an annual term (expected credit loss). The expected credit loss is determined based on PD, EAD, and LGD loss factors.

 

 

68

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Economic Capital Calculation

 

The economic capital for credit risk is the difference between the portfolio’s value at risk (according to the confidence level for individuals of 99.9% and for companies of 99%) and the expected credit losses.

 

The Group relies on economic capital models for credit risk (one for individuals and another for companies). Such quantitative models include the exacerbation of capital by concentration risk and Securitization Risk. In the economic capital calculation models a one year holding period is used, except from factoring exposures where a six month holding period is used.

 

Counterparty Risk Management

 

The Group relies on a Counterparty’s Risk Map approved by the Credit Committee where the following limits are defined for each counterparty according to the Group’s risk appetite: credit exposure and settlement limits, foreign exchange settlement risk, securities settlement risk and Repo transactions settlement risk, among other.

 

Regarding the economic capital for the counterparty’s risk, it is included in the Economic Capital Quantitative Model for Credit Risk.

 

Impairment of Financial Instruments

 

Those credits classified as irrecoverable are eliminated from assets, recognizing them in off-balance sheet accounts. Their balance as of December 31, 2020 and 2019 amounts to 7,198,080 and 5,240,360 respectively.

 

Market risk

 

Group defines Market Risk as the risk resulting from deviations in the trading portfolio value as a result of market fluctuations during the period required for the settlement of portfolio positions.

 

The Risk Department’s measurement, control and follow-up perimeter covers those operations where certain loss risk in the Group ´s shareholders equity value is assumed, as a result of changes in market factors. Such risk results from the variation in risk factors under evaluation (interest rate, exchange rate, market price of equity instruments and options), as well as liquidity risk in the different products and markets where the Group operates.

 

According to its business strategy, Banco Supervielle is the component of the Group with the greatest exposure to this risk. On the other hand, Cordial Compañía Financiera has a minimum exposure to market risk and associated with liquidity management purposes. That is why market risk controls present a greater level of detail and emphasis on Banco Supervielle's trading portfolio.

 

With the purpose of measuring the risk of positions homogeneously and therefore, setting a limit and threshold structure to support management and control schemes, Banco Supervielle uses the VaR model (Value at Risk), which defines the maximum expected loss to be recorded in a financial asset portfolio in normal market conditions, within a certain period of time and at a pre-established confidence level. Indicators obtained from this enable the Group to identify a potential market risk and take preventive measures.

 

Market risk management is focused on the trading portfolio managed by the Trading desk, although there is also a broader control including managed positions with liquidity management objectives. For this reason, in terms of the broader trading portfolio, the controls are limited to the exposure to the assumed risk, measured using the VaR methodology, in relation to the regulatory capital (RC). In addition, a control is carried out on the VaR by group of assets, thus limiting the risk that the Entity can assume in each group of assets considered in isolation. The objective is to incorporate an element of alert to credit events or break in the correlations between groups of assets, events that may escape the consideration of a diversified VaR.

 

The controls over the Trading desk are more exhaustive. Approved strategies and policies are reflected in what is known internally as a unified Risk Map document, where detailed operations enabled by the Trading desk can be explained in detail. In the same document the entire framework of controls that translate the risk appetite with which the Entity is willing to operate is exposed. In this way, limitations are established on the open position in certain financial instruments, VaR limit on the diversified portfolio, maximum allowable loss amount before executing the stop loss policy and conditions that could lead to the execution of a stop strategy gain. The entire control scheme is complemented by action plans that must be implemented once a violation occurs within the limits established therein.

 

 

69

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The exposure to the Group's exchange rate risk at the end of the year by currency type is detailed below:

 

  Balances as of 12/31/2020  Balances as of 12/31/2019 
Currency 

Monetary

Financial Assets

  

Monetary Financial

Liabilities

  

 

Derivatives

  

Net

Position

  

Monetary

Financial

Assets

  

Monetary

Financial

Liabilities

  

Derivatives

  Net
Position
 
US Dollar  41,990,008   35,304,336   529   6,686,201   50,991,646   50,143,529   -   848,117 
Euro  973,974   785,018   -   188,956   807,436   783,009   -   24,427 
Others  293,119   6,208   -   286,911   199,363   5,028         -   194,335 
Total  43,257,101   36,095,562   529   7,162,068   51,998,445   50,931,566   -   1,066,879 

 

Financial assets and liabilities are presented net of derivatives, which are disclosed separately. Derivative balances are shown at their Fair Value at the closing price of the respective currency.

 

The table above includes only Monetary Assets and Liabilities, since investments in equity instruments and non-monetary instruments does not generate foreign exchange risk exposure.

 

A sensitivity analysis was performed considering reasonably possible changes in foreign exchange rates in relation to the Group's functional currency. The percentage of variation used in this analysis is the same the Group used in its Business Plan and Projections.

 

     12/31/2020     12/31/2019 
Currency Variation  P/L  Equity  Variation  P/L  Equity 
US Dollar  40.20%  2,687,853   2,687,853   31.9%  270,549   270,549 
   (40.20)%  (2,687,853)  (2,687,853)  (31.9)%  (270,549)  (270,549)
Euro  40.20%  75,960   75,960   31.9%  7,793   7,793 
   (40.20)%  (75,960)  (75,960)  (31.9)%  (7,793)  (7,793)
Other  40.20%  115,338   115,338   31.9%  61,993   61,993 
   (40.20)%  (115,338)  (115,338)  (31.9)%  (61,993)  (61,993)
Total  40.20%  2,879,151   2,879,151   31.9%  340,335   340,335 
   (40.20)%  (2,879,151)  (2,879,151)  (31.9)%  (340,335)  (340,335)

 

Sensitivity Analysis

 

It is important to note that within the daily report provided to the trading desk for the monitoring of the exposure to assumed risk, the Financial Risk Management makes a comparison between the profitability obtained and the implicit risk for each asset. When using a diversified VaR methodology, it is important to provide information related to the contribution that each asset in the portfolio makes to the aggregate VaR measurement, and fundamentally if this asset generates risk diversification or not. That is why, within the variables included in the daily report, the VaR component of each asset is included, thus allowing a sensitivity analysis on the impact of each asset on the total risk.

 

With the aim of improving the assumed risk analysis through the use of alternative measurement metrics, the Group recognizes the change in market conditions on exposure to risk through an adjustment to the volatilities used in the VaR calculation. According to the methodology used, the returns of assets registered in more recent dates have a greater incidence in the calculation of volatilities. In parallel, the Entity performs a measurement and monitoring of the assumed risk through the application of an expected shortfall methodology, analyzing the universe of unexpected losses located in the distribution queue beyond the critical point indicated by VaR.

 

Economic capital calculation

 

Banco Supervielle adopts the diversified Parametric VaR methodology for the calculation of market risk economic capital, both at a consolidated and individual level. It should be noted that in the case of Cordial Compañía Financiera, according to the provisions established by the Argentine Central Bank, its Board of Directors has chosen to quantify its needs for economic capital by applying a simplified methodology. According to this methodology, the aggregate economic capital arises from the following expression:

 

EC = (1,05 x MC) + max [0; ΔEVE – 15 % x bS)]

 

Where, EC: economic capital according to profile’s risk (ICAAP).

 

MC: Minimum capital requirement in accordance with Argentine Central Bank regulations.

 

 

70

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

ΔEVE (Economic Value): measure of interest rate risk calculated according to the Standardized Framework bS (Basic Shareholders’ equity) : Tier 1 capital.

 

Interest Rate Risk

 

Interest Rate Risk is the risk derived from the likelihood that changes in the Group’s financial condition occur as a result of market interest rate fluctuations, having effect on its financial income and economic value. The following are such risk factors:

 

üDifferent terms maturity and interest rate re-adjustment dates for assets, liabilities and off balance sheet items.

üForecast, evolution and volatility of local interest rates and foreign interest rates.

üThe basis risk that results from the unsuitable correlation in the adjustment of assets and liabilities interest rates for instruments that contain similar revaluation features;

 

The Group’s interest rate risk management model, includes the analysis of interest rates gaps. Such analysis enables the basic explanation of the financial statement structure as well as the detection of interest rate risk concentration along the different terms. Special attention focuses on the accumulated gap during the first ninety days, as it is the holding period used when evaluating exposure to interest rate risk in each of the entities and due to its relevance when evaluating actions that may modify the structural balance positioning.

 

The interest rate risk management is aimed at keeping the Group’s exposure within those levels of risk appetite profile validated by the Board upon changes in the market interest rates.

 

To such ends, the interest rate risk management relies on the monitoring of two metrics:

 

üMVE – VaR Approach: measures the difference between the economic values estimated given the interest rate market curve and said value estimated given the interest rate curve resulting from the simulation of different stress scenarios. The Group uses this approach to calculate the economic capital for this risk.

üNIM – EaR Approach: measures changes in expected accruals over a certain period of time (12 months) upon an interest rate curve shift resulting from a different stress situation simulation practices.

 

With the publication of Communication "A" 6397, the Argentine Central Bank presented the applicable guidelines for the treatment of interest rate risk in the investment portfolio. The regulation makes a distinction between the impact of fluctuations in interest rate levels on the underlying value of the entity's assets, liabilities and off-balance sheet items (economic value or MVE), and the alterations that such movements in the interest rate may have on sensitive income and expenses, affecting net interest income (NII). This same criterion had already been adopted by Banco Supervielle, so that the new regulations implied a readaptation of the management model to the suggested measurement methodology, maintaining some criteria and incorporating others.

 

As established by the regulator, both Banco Supervielle and Cordial Compañia Financiera must use the Standardized Framework described in point 5.4. of the Communication "A" 6397 for the measurement of the impact on the economic value of the entities (ΔEVE) of six proposed disturbance scenarios. These scenarios include parallel movements in the curves of market interest rates upwards or downwards, flattening or steepening of the slope of these curves, as well as an increase or decrease in short-term interest rates. A base curve of market interest rates is considered for each of the significant currencies in the financial statement of each entity. According to the applicable regulation, Banco Supervielle has to use an internal measurement system (SIM) for measurement based on results (ΔNIM). This requirement is not applicable to Cordial Compañía Financiera. It is important to highlight that Banco Supervielle, which has not been qualified by the Argentine Central Bank as having a local systemic importance (D-SIB), is not legally bound to have its own internal measurement system (SIM) for the measurement based on economic value (ΔEVE).

 

Beyond the regulatory provisions, it is important to note that both Banco Supervielle and Cordial Comapñia Financiera have been working with internal measurement systems (SIM) to measure the impact of rate fluctuations, both on economic value (ΔEVE) and on results (ΔNIM). The development of these systems included the definition of assumptions for the determination of the maturity flow of different lines of assets and liabilities without defined maturity or with implicit or explicit options of behavior.

 

During 2020 an important methodological change was implemented, since the Entity decided to align itself with the provisions of the Standardized Framework in relation to assets and liabilities with Units of Purchasing Power (UVA) adjustment and stopped considering them as susceptible to interest rate risk in the risk calculation with its internal measurement systems (SIM).

 

 

71

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Following good practices in risk management and with the aim of ensuring the goodness of fit of the internal models used, a backtesting methodology was developed applicable to the results obtained with the interest rate risk measurement tool (approach MVE-VaR). Specifically, an evaluation of the discount rates projected in the critical scenario is carried out.

 

Improvements were made to the dynamic rate GAP measurement tool, allowing various sensitivity exercises to be carried out in a year characterized by a changing context and numerous regulations that altered financial margins.

 

Economic Capital Calculation

 

As a first step to calculate economic capital, Banco Supervielle calculates its exposure to interest rate risk from the MVE-EaR (economic value) approach of its internal measurement system (SIM), using a holding period of three months (90 days) and a confidence level of 99%. This quantitative model includes the exacerbation of capital by securitization risk. The result obtained is compared with the worst result of the alterations proposed in the six scenarios proposed by the Standardized Framework, with the resulting economic capital being the worst of both measurements (SIM and Standardized Framework).

 

In the case of Cordial Compañía Financiera, as mentioned above, the Entity's Board of Directors has chosen to quantify its needs for economic capital by applying a simplified methodology. With regard to interest rate risk, the Group measures the impact of fluctuations in market interest rates on the economic value based on the application of the Standardized Framework. In the event that the worst ΔEVE of the six scenarios proposed by the regulation exceeds 15% of the basic net worth (capital level one) of the Entity, the sum of the economic capital calculated according to the simplified methodology would be increased by said excess.

 

The exposure to interest rate risk is detailed in the table below. It presents the residual values and average rate ​​of the assets and liabilities, categorized by date of renegotiation of interest or expiration date, the lowest.

 

 Term in days    
  Up to 30  From 30 to 90  from 90 to 180  from 180 to 365  More than 365  Total 
                   
Assets and Liabilities To 12/31/2020
Total Financial Assets  94,212,108   23,283,810   21,884,220   13,991,605   76,333,380   229,705,123 
Total Financial Liabilities  (110,298,588)  (23,704,722)  (5,066,130)  (1,500,505)  (69,482,671)  (210,052,616)
Net Amount  (16,086,480)  (420,912)  16,818,090   12,491,100   6,850,709   19,652,507 

 

 Term in days    
  Up to 30  From 30 to 90  from 90 to 180  from 180 to 365  More than 365  Total 
                   
Assets and Liabilities To 12/31/2019
Total Financial Assets  57,417,639   20,427,549   15,594,538   16,684,376   69,002,031   179,126,133 
Total Financial Liabilities  (68,842,995)  (18,271,575)  (6,965,625)  (9,086,825)  (60,866,894)  (164,033,914)
Net Amount  (11,425,356)  2,155,974   8,628,913   7,597,551   8,135,137   15,092,219 

 

The table below shows the sensitivity to a reasonably possible additional variation in interest rates for the next year, taking into account the composition as of December 31, 2020. Variations in rates were determined considering the scenarios set by Communication "A" 6397 for the calculation of the Interest Rate Risk in the Investment Portfolio. The parameters taken as a base and or budgeted by the Bank for fiscal years 2020 and 2019 and the changes are considered reasonable possible based on the observation of market conditions:

 

  12/31/2020 12/31/2019
Concepto 

Additional

variation in the

interest rate

 

Increase /

(decrease) in the

income statement

  

Additional

variation in the

interest rate

 

Increase /

(decrease) in the

income statement

 
Decrease in the interest rate 4% ARS; 2% USD  (433,698) 4% ARS; 2% USD  (486,558)
Increase in the interest rate 4% ARS; 2% USD  430,992  4% ARS; 2% USD  354,392 

 

If the market interest rates for instruments denominated in pesos decreased by 4 percentage points and f 2 percentage points for those denominated in US dollars, net income for the year would decrease by 433,698 and 486,558 as of the end of December 31, 2020 and 2019 respectively. On the contrary, if the interest rates increased in equal measure, net income for the year would increase by 430,992 and 354,392 respectively.

 

 

72

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Liquidity Risk

 

The Group defines Liquidity Risk as the risk of assuming additional financing expenses upon unexpected liquidity needs. Such risk results from the difference of sizes and maturities between the Group’s assets and liabilities. Such risks involve the following:

 

üFunding Liquidity Risk means the risk to obtain funds at normal market cost when needed, based on the market’s perception of the Group.

üMarket Liquidity Risk means the risk resulting from the Group’s incapacity to offset an asset position at market price, as a consequence of the following two key factors:

   
·Assets are not liquid enough,

·Changes in the markets where those assets are traded.

 

Liquidity and concentration indicators of funding sources are used to determine the tolerance to this risk, starting from the most restrictive definitions to the most comprehensive ones.

 

The following are the main core metrics used for liquidity risk management:

 

üLCR (Liquidity Coverage Ratio): measures the relation between high quality liquid assets and total net cash outflows over a 30-day period. The Group estimates this indicator on a daily basis, having met during the year the minimum value established by law, as well as that established internally based on their risk appetite.

üNet Stable Funding Ratio (NSFR): measures the ability of the Group to fund its activities with sufficiently stable sources to mitigate the risk of future stress situations arising from its funding. The Group calculates this indicator on a daily basis, having complied with the minimum value required by the regulator and that that established internally based on its risk appetite.

üCoverage of Remunerated Accounts and Pre-Payable Term Deposits this indicator is aimed to reduce funding dependence of unstable sources in non-liquid scenarios.

 

In addition, the Assets and Liabilities Committee performs a daily monitoring of some follow-up metrics . Such indicators are used to analyze the main components of LCR while assessing the Group’s liquidity condition and warning upon trend changes that may affect the guidelines set by the risk appetite policy. Additionally, within these monitoring indicators, Committee assess for the availability of liquid assets to respond to an eventual withdrawal of more volatile deposits, such us remunerated sight accounts and deposits of the public sector in foreign currency.

 

During 2020 the local financial market operated with high levels of liquidity due to the impact of restrictions on mobility, the consequent drop in the level of economic activity and the strong monetary issue faced by the Central Bank of Argentina to cover the needs of assistance to the sectors affected by the COVID-19 pandemic. This strong initial growth of the monetary base had its correlation in the use of LELIQ and Pasive Repo by the monetary authority as an absorption mechanism. In line with the aforementioned, Banco Supervielle experienced strong growth in demand balances, both for retail and institutional clients. The latter, with their correlate in loans to the Central Bank of Argentina via LELIQ and / or Repo, counteracted the positive effect of growth in retail balances and put pressure on the LCR, which was effectively managed throughout the year, staying within comfort values established by the Board of Directors.

 

Liquidity in dollars strengthened throughout the year. On the one hand, the strong drop in deposits that began in August 2019 gradually diminished until reaching a reversal and slightly positive monthly variations towards the end of 2020. This was combined with an active management of loan collections in dollars, which is reflected in a significant fall in balances on this line of the balance sheet.

 

Economic capital calculation

 

The Group relies on the following elements that ensure the suitable management of this type of risk:

 

üBroad liquidity indicators dashboard, to monitor liquidity levels. Each indicator relies on its relevant threshold and limit, which are monitored on a daily basis by the Risk Area (sending due warnings upon violation cases), on a byweekly basis by the Assets and Liabilities Committee (ALCO) and on a monthly basis by the Integral Risk Committee. Likewise, a weekly report is drawn up and sent to members of the Integral Risk Committee, ALCO and the Board.

 

 

73

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

üIndicators that measure the concentration of funding sources, establishing the Group’s risk appetite.

 

üDevelopment and monitoring of new liquidity coverage and leverage indicators set by the Argentine Central Bank in compliance with Basle III route map.

 

üDifferent liquidity risk follow-up tools have been added, including a disaggregate assessment of contractual term mismatches and funding concentration reports, by counterparty, product and significant currency. The accuracy of the information required for such reports contributed to the improvement of our Risk Management Information System (MIS).

 

üThe liquidity coverage ratio is used to assess the Group’s capacity to meet liquidity needs over a 30-day period within a stress scenario described by the Argentine Central Bank. The follow-up of this indicator is carried out on a daily basis, keeping the Group’s liquidity director and officials updated on its evolution.

 

üPermanent monitoring of limit and threshold compliance in virtue of the stable funding ratio (NSFR).

 

üIndividual stress tests, carried out on a daily basis upon an eventual critical scenario of a sudden withdrawal of deposits and its impact on the minimum cash position and LCR.

 

üIntraday liquidity monitoring tools as indicated above.

 

üRegarding contingency plans, the Group follows a policy that ensures the application of its guidelines in stress tests, according to the decision taken by ALCO Committee and Integral Risk Committee.

 

The Risk management framework described herein enables a suitable liquidity condition; therefore, the Group considers the economic capital estimation unnecessary to cover such risk, as long as the Group’s solvency should not be affected once the stress tests contingency plan have been implemented.

 

Below is an analysis of the assets and liabilities maturities, determined based on the remaining period as of December 31, 2020 until the contractual maturity date, based on undiscounted cash flows:

 

As of 12/31/2020 

Less than 1

month

  

From 1 to 6

months

  

From 6 to 12

months

  

From 1 to 5

years

  

More than 5

years

  Total 
TOTAL ASSETS  106,974   51,892   16,565   62,649   33,851   271,931 
TOTAL LIABILITIES  121,539   21,223   8,925   18,478   5,548   175,713 

 

19.INTERNATIONAL FINANCING PROGRAMS

 

In December 2017, Banco Interamericano de Desarrollo (BID) granted Banco Supervielle S,A, a loan (tranche A) for USD 40,000,000, USD 35,000,000 of which are settled over a three-year term and the remaining USD 5,000,000 over a five-year term, In June 2018, the Bank was granted a loan (tranche B) for USD 93,500,000, USD 40,000,000 are settled over a year term and the remaining USD 53,500,000 are settled over ywo years and a half. As of December 31, 2020, Tranche B was canceled in its entirety, and the USD 35,000,000 of Tranche A.

 

In turn, in September 2019, the Entity was granted a senior non-guaranteed syndicated loan for USD 80,000,000 (eighty million US Dollars) at a three-year term and a Libor interest rate +3,40% by the FMO, the Dutch development bank, as organizer, and Proparco, a subsidiary of the French Development Agency, Such funds were immediately allocated among Small and Medium Size Companies Clients of our portfolio who run their businesses in regional exporting economies in different sectors. During the month of November 2020, the first capital installment for USD 20,000,000 was paid.

 

It is worth to be mentioned that such agreement is subject to the compliance of certain financial covenants, certain “do and do not do” conditions as well as certain reporting requirements.

 

As of December 31, 2019, the Entity did not meet the non-performing loan ration nor the coverage.Therefore, on January 29, 2020, the Entity started the process to receive a waiver with BID, which was made effective on February 18, 2020. As a result of such waiver, BID waives its right to accelerate such debt resulting from the breach in non-performing loan ratios and coverage ratios over a period that started on October 1, 2019 and finished in December 31, 2019, Likewise, on April 16, 2020 new exemptions were requested thus extending the agreed terms until April 30, 2020.

 

 

74

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

On August 11, 2020, a new amendment was agreed that extends the agreed deadlines from May 1, 2020 to December 31, 2020.

 

As of December 31, 2020 the Bank was in compliance with the financial covenants of both loans.

 

20.BUSINESS COMBINATIONS

 

-EASY CAMBIO S.A.

 

On October 16, 2020, the Group acquired 100% of the capital stock of Easy Cambio S,A, for a total price of $13,7 millons, a company authorized by the Central Bank of the Argentine Republic as Exchange Agent, in order to expand the offer of financial services provided to individual clients throughout the country,

 

The amounts recognized as of the date of acquisition for each main class of assets acquired and liabilities assumed are(expressed in the currency of the acquisition date):

 

  Fair Value 
Cash and Due from Banks  6,474 
Other Assets  1,240 
Miscellaneous obligations  (28)
Net identifiable assets acquired  7,686 
     
Consideration of the acquisition:    
- Amount paid net of expenses  14,978 
Net cash flow used - investment activities  14,978 
     
Goodwill  7,292 

 

The goodwill determined is attributable to the synergies that exist between the Easy Cambio S,A, business, and that of the Group. If the acquisition had occurred on January 1, 2020, Grupo Supervielle's net result would have been 3,411,124.

 

21.OFFSETTING OF FINANCIAL ASSET AND LIABILITIES

 

A financial asset and a financial liability shall be offset and the net amount presented in the statement of financial position when, and only when, the Group fulfill with paragraph 42 of IAS 32, and currently has a legally enforceable right to set off the recognized amounts; and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

 

In addition, the Group has master netting arrangement that not satisfies the offsetting criteria but creates a right of set-off that becomes enforceable and affects the realization or settlement of individual financial assets and financial liabilities only following a specified event of default or in other circumstances not expected to arise in the normal course of business.

 

As of December 31, 2020 and 2019, the amount of assets and liabilities subject to a master netting arrangement not offset is as follows:

 

  

 

  

 

  Net in Financial  

Amounts subject to a master netting

arrangement not offset

    
12/31/2020 Gross
amount (a)
  Amount
offset (b)
  Statements
(c) = (a) – (b)
  

Financial asset /

(Financial liability)

  Collateral  Net amount 
Credit cards transactions  -   -   -   (3,143,567)  487,207   (2,656,360)
Derivatives instruments 103,093  40,322  143,415  -  -  - 
Total  103,093   40,322   143,415   (3,143,567)  487,207   (2,656,360)

 

 

75

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

     Net in
Financial
  Amounts subject to a master netting
arrangement not offset
   
12/31/2019 Gross
amount (a)
  Amount
offset (b)
  Statements
(c) = (a) – (b)
  Financial asset /
(Financial liability)
  Collateral  Net amount 
Credit cards transactions  -   -   -   (3,115,913)  827,175   (2,288,738)
Derivatives instruments  423,353   (72,673)  350,680   -   -   - 
Total  423,353   (72,673)  350,680   (3,115,913)  827,175   (2,288,738)

 

     Net in
Financial
  Amounts subject to a master netting
arrangement not offset
   
01/01/2019 Gross
amount (a)
  Amount
offset (b)
  Statements
(c) = (a) – (b)
  Financial asset /
(Financial liability)
  Collateral  Net amount 
Credit cards transactions  -   -   -   (3,317,186)  1,109,154   (2,208,032)
Total  -   -   -   (3,317,186)  1,109,154   (2,208,032)

 

22.CURRENT/NON-CURRENT DISTINCTION

 

The group has adopted the presentation of all assets and liabilities in order of liquidity due to this presentation provides information that is reliable and more relevant.

 

The amounts expected to recover or cancel assets and liabilities as of December 31, 2020 and 2019 and January 1, 2019 are set out below, considering:

 

a) those expected to be recovered or canceled within the following twelve months after the reporting period, and

b) those expected to be recovered or canceled after twelve months after that date.

 

 

76

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019  01/01/2019 
  12 months  More than
12 months
  Total  12 months  More than
12 months
  Total  12 months  More than
12 months
  Total 
ASSETS                                    
Cash and due from banks  36,674,869   -   36,674,869   35,945,321   -   35,945,321   70,551,282   -   70,551,282 
    Cash  12,792,522   -   12,792,522   11,913,810   -   11,913,810   10,030,991   -   10,030,991 
    Argentine Central Bank  19,623,684   -   19,623,684   21,683,566   -   21,683,566   57,359,875   -   57,359,875 
    Other local financial institutions  4,106,336   -   4,106,336   2,307,228   -   2,307,228   3,138,638   -   3,138,638 
    Others  152,327   -   152,327   40,717   -   40,717   21,778   -   21,778 
Debt Securities at fair value through profit or loss  9,871,903   -   9,871,903   773,959   -   773,959   31,439,537   -   31,439,537 
Derivatives  143,944   -   143,944   350,679   -   350,679   33,349   -   33,349 
Reverse Repo transactions  22,354,735   -   22,354,735   -   -   -   -   -   - 
Other financial assets  4,284,340   -   4,284,340   2,875,979   -   2,875,979   4,347,282   -   4,347,282 
Loans and other financing  75,732,012   30,242,973   105,974,985   85,382,991   35,645,582   121,028,573   80,257,621   83,352,093   163,609,714 
To the non-financial public sector  12,632   10,898   23,530   9,552   29,749   39,301   15,761   52,936   68,697 
To the financial sector  12,062   -   12,062   44,739   43,095   87,834   750,131   84,548   834,679 
To the Non-Financial Private Sector and Foreign residents  75,707,318   30,232,075   105,939,393   85,328,700   35,572,738   120,901,438   79,491,729   83,214,609   162,706,338 
Other debt securities  29,240,741   12,023,408   41,264,149   14,049,153   479,158   14,528,311   2,736,867   6,475,938   9,212,805 
Financial assets in guarantee  4,904,935   -   4,904,935   7,261,332   -   7,261,332   4,197,176   6,505   4,203,681 
Current income tax assets  -   -   -   139,487   -   139,487   1,283,027   9,782   1,292,809 
Investments in equity instruments  19,954   96,374   116,328   -   19,847   19,847   -   21,789   21,789 
Property, plant and equipment  -   7,103,638   7,103,638   -   5,450,311   5,450,311   -   4,536,193   4,536,193 
Investment Property  -   5,997,945   5,997,945   -   5,520,143   5,520,143   -   865,687   865,687 
Intangible assets  -   6,782,538   6,782,538   -   5,929,802   5,929,802   -   5,626,709   5,626,709 
Deferred income tax assets  451,540   2,569,243   3,020,783   364,030   1,417,669   1,781,699   9,651   1,065,575   1,075,226 
Otros activos no financieros  717,343   635,537   1,352,880   1,027,543   734,525   1,762,068   370,845   3,392,911   3,763,756 
Inventories  70,964   -   70,964   60,521   -   60,521   146,428   -   146,428 
Other non-financial assets  -   -   -   -   -   -   5,864   -   5,864 
TOTAL ASSETS  184,467,280   65,451,656   249,918,936   148,230,995   55,197,037   203,428,032   195,378,929   105,353,182   300,732,111 

 

 

77

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

  12/31/2020  12/31/2019  01/01/2019 
  12 months  More than
12 months
  Total  12 months  More than
12 months
  Total  12 months  More than
12 months
  Total 
LIABILITIES                                    
Deposits  178,641,219   375   178,641,594   121,174,620   1,635   121,176,255   198,578,765   181,321   198,760,086 
Non-financial public sector  7,911,255   -   7,911,255   7,447,131   -   7,447,131   23,258,016   -   23,258,016 
Financial sector  57,416   -   57,416   38,253   -   38,253   52,851   -   52,851 
Non-financial private sector and foreign residents  170,672,548   375   170,672,923   113,689,236   1,635   113,690,871   175,267,898   181,321   175,449,219 
Liabilities at fair value through profit or loss  2,002,005   -   2,002,005   258,060   -   258,060   561,448   -   561,448 
Derivatives  1,995   -   1,995   -   -   -   197,328   -   197,328 
Repo Transactions  -   -   -   435,401   -   435,401   -   -   - 
Other financial liabilities  6,815,543   714,142   7,529,685   11,648,366   763,020   12,411,386   10,465,839   367,284   10,833,123 
Financing received from the Argentine Central Bank and other financial institutions  5,521,544   329,868   5,851,412   11,827,975   448,635   12,276,610   14,993,485   1,829,552   16,823,037 
Unsubordinated debt securities  3,155,866   1,070,882   4,226,748   5,830,503   2,455,660   8,286,163   4,508,759   14,983,094   19,491,853 
Current income tax liability  1,288,267   -   1,288,267   -   -   -   1,656,517   -   1,656,517 
Subordinated debt securities  1,140,469   -   1,140,469   1,790,228   1,095,800   2,886,028   54,743   2,843,362   2,898,105 
Provisions  42,181   638,911   681,092   9,076   892,127   901,203   24,379   157,646   182,025 
Deferred income tax liability  42,005   -   42,005   643,354   -   643,354   201,980   309,940   511,920 
Other non-financial liabilities  10,325,369   1,820,723   12,146,092   8,907,109   2,289,050   11,196,159   9,646,214   1,699,848   11,346,062 
TOTAL LIABILITIES  208,976,463   4,574,901   213,551,364   162,524,692   7,945,927   170,470,619   240,889,457   22,372,047   263,261,504 

 

 

78

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

23.IMPACT OF COVID-19 ON GROUP`S OPERATIONS

 

The Group operates in a complex economic context which main variables have been featured by strong volatility at a national and international level.

 

The pandemic outbreak in March 2020 produced by Covid-19 has had significant consequences globally, most countries implemented a series of unprecedented restrictions.The different sanitary restricting measures produced, to a greater or lesser extent, an almost immediate impact on economies which witnessed the quick fall of production and activity indicators. Accordingly, most governments implemented fiscal aid packages to sustain part of the population’s income and reduce the risk of breaches in payment chains; thus, avoiding a financial and economic crisis as well as companies´ bankruptcies, Argentina was not the exception and the Government took action in the wake of the pandemic,

 

The Argentine economy was in a recessive process and the pandemic outbreak in March 2020 turned the scenario even more complex. The country is expected to close 2020 with activity fall,

 

The following are the main local indicators:

 

GDP estimated fall (EMAE) as of December 2020 amounted to a 10,0%,

Accrued inflation between January 1, 2020 and December 31, 2020 amounted to a 36,1% (Consumer Price Index - CPI),

Between January 1, 2020 and December 31, 2020, the peso recorded a 40% depreciation against the USD, according to the Exchange rate released by Banco de la Nación Argentina,

The monetary authority implemented additional Exchange restrictions which, in turn, affected the foreign currency value in existing alternative markets for certain Exchange operations restricted in the official market,

 

These measures, aimed at restricting the access to the exchange market with the purpose of containing the demand of dollars, entail the Argentine Central Bank´s prior authorization request for certain operations; thus, the following operations impact for the society:

 

Payment of dividends and earnings to non-residents

Payment of financial loans granted to non-residents: those companies that register scheduled capital maturities between 10/15/2020 and 03/31/2021 shall submit a capital refinancing program of at least the 60%, with new external indebtedness and an average life of two years and shall be allowed to acquire only the equivalent to the 40% of agreed-upon capital commitments

Payment of debt securities issuance with public registration

Payment of indebtedness among residents in foreign currency

 

Additionally, the exchange regime mandated the registration and settlement of funds resulting from the following operations and concepts in local currency:

 

Exports of goods and services

Collection of prefinancings, advances and post-financing of exports of goods

Exports of services

Disposal of non-produced non-financial assets

Disposal of external assets

 

Such exchange restrictions, or those to be issued, might affect the Group's capacity to access the Mercado Único y Libre de Cambios (MULC) for the acquisition of necessary foreign currency to address financial obligations, Assets and liabilities in foreign currency as of December 30, 2020 have been estimated in accordance with MULC´s quotations in place,

 

Likewise, in October 2020, the Government launched a set of measures aimed at contributing with the development of exportable goods and promoting the local market and construction industry,

 

 

79

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

With the purpose of mitigating the economic crisis, the Argentine Central Bank issued the following set of pre-emptive measures:

 

•     Communication “A” 6937 reduced the restriction over the maximum position in liquidity bills of the Argentine Central Bank (LELIQ) with the purpose of making liquidity available and encouraging credit line provisions for Small and Medium Size Companies at a preferential rate (Not exceeding 24% annually). Communication “A” 7054 modified the standards on Minimum Cash” due to the authorization of financing lines at a 24% subsidized rate, which includes a special tranche for investments in national capital goods and another tranche with minimum requirements for companies that have not had access to banking loans. As from July 1, 2020, “Medium and Small Size Clients” are included in the item of “Decrease of minimum cash demand in average in pesos” provided such funds are allocated in the acquisition of machinery and equipment produced for national Small and Medium Size companies, among other modifications, As of the date of these financial statements issuance, loans of 24% rates and 0% rates have been granted for 10,7 billion and 819 million respectively. As from October 16, 2020, through Communication “A” 7140, regulations on “Financing line for productive investments of Small and Medium Size companies were enforced,

 

•     Communications “A” 6942 and “A” 6949, determined the postponement of the maturity of loans granted by local financial institutions that would become effective on March 20 and April 12, and cancelled any punitive interest over unpaid balances in loans granted by financial entities. Communication “A” 7044 and “7107” extended maturities for loans granted by local financial entities until December 31, 2020 and unpaid installments are deferred until such loan’s life termination. Through Communication “A” 7181 it was extended until March 31, 2021,

 

•      Communication “A” 6939 suspended, until June 30, 2020, the distribution of dividends for financial entities, Such measure was extended through Communication “A” 7035 until December 31, 2020. Through Communication “A” 7181 it was extended until March 31, 2021,

 

•      Communication “A” 6945 established that, until June 30, 2020, any operation carried out through ATMs shall not be subject to any charge or commission. Communication “A” 7107 extended such term until December 31, 2020, Through Communication “A” 7181 it was extended until March 31, 2021,

 

•      Communications “A” 6964 and 7095 automatically refinanced unpaid balances of credit card financing to be registered between April 1, 2020 and April 30, 2020 and between September 1, 2020 and September 30, 2020 respectively. Such balances have been refinanced over a year term with three-month grace period in 9 monthly equal and consecutive installments. Likewise, pursuant to Communication “A” 6993, the Argentine Central Bank established a zero-interest-rate financing policy, applicable only to eligible clients to be defined by the Federal Administration of Public Revenues (AFIP) in the future. Additionally, through Communication “A” 7082 opened the possibility of granting “Zero Culture Rate Loans” at 24 months under a 12-month grace period. Communication “A” 7111 extended delinquency days for 1, 2, and 3 categories over a 60-day term, Such measure is applicable until December 31, 2020. Through Communication “A” 7181 it was extended until March 31, 2021,

 

•      Decree 312/2020, issued by the Argentine Central Bank, suspended the closing of bank accounts. Decree 544/2020, issued on June 19, 2020, extends until December 31, 2020 the suspension of the obligation of closing bank accounts and the application of disqualification pursuant to Article 1° of Law N° 25,730, as well as the application of fines .

 

•      Communication “A” 6980 established that non-adjustable term deposits under ARS 1 million made up by individuals as from April 20, 2020, will entail a minimum rate of 70% of the LELIQ average auction. Communication “A” 7018 extended the scope of such measures over all term deposits regardless of their minimum amount. Later, Communication “A”7027 increased the minimum rate equivalent to 79% LELIQ average auction. And, as from August 1, 2020, an additional increase from such 79% to an 87% was set for term deposits of individuals exceeding the ARS 1 million,

 

The volatile and uncertain context remains as of the issuance of these financial statements,

 

The Group's Board of Directors monitors the evolution of variables that may affect its business; thus, defining the course of action and identifying any potential impact on its equity and financial situation. The Group's financial statements must be read in virtue of said circumstances.

 

 

80

 

GRUPO SUPERVIELLE S.A.

(Expressed in thousands of pesos in homogeneous currency)

 

SCHEDULE A - DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS, OTHER DEBT SECURITIES, EQUITY INSTRUMENTS

 

As of December, 31 2020 and 2019 and January 1, 2019:

 

  HOLDING  POSITION 
Items 

Level of fair

value

  

Book

value

12/31/2019

  

Book

value

12/31/2020

  

Book

value

01/01/2019

  

Without

options

  Options  Final Position 
DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS                            
Argentine                            
Government Securities                            
Treasury Bill $ adj CER Mat. 05/21/21  1   2,779,504   -   -   2,779,504   -   2,779,504 
Treasury Bonus linked U$S 11/30/21  1   789,538   -   -   789,538   -   789,538 
Treasury Bonus linked U$S 04/29/22  1   774,667   -   -   774,667   -   774,667 
Treasury Bill $ VR mat.01/29/21  1   476,999   -   -   476,999   -   476,999 
Argentine National Bonus $ Badlar+200 04/03/22  1   474,334   -   -   474,334   -   474,334 
Treasury Bonus BONCER 2% $ 2026  1   397,557   -   -   397,557   -   397,557 
Argentine National Bonus $ Mat 10/17/23  1   361,028   -   -   361,028   -   361,028 
Treasury Bonus $ Aj CER 1.50% Mat.03/25/24  1   332,965   -   -   332,965   -   332,965 
Treasury Bonus $ Aj CER 1.40% Mat.03/25/23  1   292,883   -   -   292,883   -   292,883 
Treasury Bill $ VR Mat.03/31/21  1   265,125   -   -   265,125   -   265,125 
Treasury Bonus Linked USD  4% Mat 08/05/2021  1   429,244   -   -   429,244   -   429,244 
Argentine National Bonus 2.5% $ 07/22/2021 (TC21)  1   5,407   -   -   5,407   -   5,407 
Bocon – Consolidation Bonus $ 8 serie (PR15)  1   4,447   -   -   4,447   -   4,447 
Treasury Bill      -   -   6,905,401   -   -   - 
Others  1   1,480,942   642,679   726,895   (521,063)  -   (521,063)
                             
Central Bank Bills                            
Liquidity Central Bank Bills Mat. 01/07/2021  1   298,179   -   -   298,179   -   298,179 
Liquidity Central Bank Bills Mat. 01/26/2021  1   292,413   -   -   292,413   -   292,413 
Liquidity Central Bank Bills Mat. 12/31/2021  1   15,000   -   -   15,000   -   15,000 
Liquidity Central Bank Bills Mat      -   -   23,676,552   -   -   - 
                             
Corporate Securities                            
ON Ypf S.A Cl.5 $ Mat.01/24/21 CG  2   167,276   -   -   167,276   -   167,276 
ON Telecom Arg $ CL.7 Mat.12/10/23  1   162,500   -   -   162,500   -   162,500 
ON Telecom Arg $ CL.6 Mat.12/10/21  2   71,895   -   -   71,895   -   71,895 
Vcp Pyme Catalinas Coop.3 $ Mat.04/12/20  3   -   3,530   -   -   -   - 
ON Quickfood Clase 9 $ Vto. 11/24/22  3   -   1,464   -   -   -   - 
Others  1       126,286   130,689   -   -   - 

 

 

81

 

GRUPO SUPERVIELLE S.A.

(Expressed in thousands of pesos in homogeneous currency)

 

  HOLDING  POSITION 
Items 

Level of fair

value

  

Book

value

12/31/2019

  

Book

value

12/31/2020

  

Book

value

01/01/2019

  

Without

options

  Options  Final Position 
Total Debt Securities at Fair value through profit or loss      9,871,903   773,959   31,439,537   7,869,898   -   7,869,898 
OTHER DEBT SECURITIES                            
Measured at fair value through profit or loss                            
Argentine                            
Government Securities                            
Treasury Bonus vinc al U$S 29/04/22  1   4,800,600   -   -   4,800,600   -   4,800,600 
Treasury Bonus $ Aj CER 1.50% Mat.03/25/24  1   526,331   -   -   526,331   -   526,331 
Treasury Bonus $ Aj CER 1.40% Mat.03/25/23  1   313,172   -   -   313,172   -   313,172 
Treasury Bonus $ Aj CER 1.20% Mat 03/18/22  1   250,000   -   -   250,000   -   250,000 
Treasury Bonus $ Aj CER 1.30% Mat.09/20/22  1   126,689   -   -   126,689   -   126,689 
Treasury Bonus Nat $ Adj CER 05/08/21  1   103,747   -   -   103,747   -   103,747 
Treasury Bonus BONCER 2% $ 2026  1   100,395   -   -   100,395   -   100,395 
Treasury Bonus $Adj CER 1.50% Mat.03/25/24  1   68,607   -   -   68,607   -   68,607 
Treasury Bonus Nat $ Badlar 05/08/21  1   63,623   -   -   63,623   -   63,623 
Treasury Bonus Nat T2V1      129,325   -   -   129,325   -   129,325 
Treasury Bonus Nat  TV22      622,300   -   -   622,300   -   622,300 
Treasury Bill $ 172D Adj. Cer Mat. 05/21/21 (X21Y1)      32,395   -   -             
                             
Centrak Bank Bills                            
Liquidity Central Bank Bills Mat. 01/19/21  2   9,806,030   -   -   9,806,030   -   9,806,030 
Liquidity Central Bank Bills Mat.01/05/21  2   3,979,284   -   -   3,979,284   -   3,979,284 
Liquidity Central Bank Bills Mat.01/21/21  2   3,914,420   -   -   3,914,420   -   3,914,420 
Liquidity Central Bank Bills Mat.01/07/21  2   3,673,231   -   -   3,673,231   -   3,673,231 
Liquidity Central Bank Bills Mat.01/26/21  2   3,407,758   -   -   3,407,758   -   3,407,758 
Liquidity Central Bank Bills Mat.01/28/21  2   3,400,862   -   -   3,400,862   -   3,400,862 
Liquidity Central Bank Bills Mat.01/07/20  2   -   7,400,401   -   -   -   - 
Liquidity Central Bank Bills Mat.01/08/20  2   -   1,249,822   -   -   -   - 
Liquidity Central Bank Bills Mat.01/03/20  2   -   739,603   -   -��  -   - 
Liquidity Central Bank Bills Mat.01/06/20  2   -   339,021   -   -   -   - 
Others  2   -   33,983   -   -   -   - 
                             
Corporate Securities                            
Others  1   32   44   67   32   -   32 
                             
Measured at amortized cost                            
Argentine                            
Government Securities