6-K 1 tm2037749d1_6k.htm FORM 6-K

 

 

 

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 December, 2020 

 

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, 5th Floor 

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 period ended on September 30, 2020, presented on comparative basis.

 

 

 

 

 

Condensed Interim Financial Statements

 

For the nine-month period ended on 

September 30, 2020, presented on comparative basis in homogeneous currency

 

 

 

 

Contents

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION 2
CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 4
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 7
CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS 9
1.     BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES OF THE UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 11
2.     SEGMENT REPORTING 31
3.     FAIR VALUES 34
4.     RELATED PARTY TRANSACTIONS 36
5.     COMPOSITION OF THE MAIN ITEMS OF THE CONSOLIDATED COMPREHENSIVE INCOME 37
6.     DIVIDENDS 41
7.     INSURANCE 41
8.     MUTUAL FUNDS 41
9.    ADDITIONAL INFORMATION REQUIRED BY THE BCRA 42
10.  CONTRACT AS A FINANCIAL AGENT BY THE PROVINCE OF SAN LUIS 46
11.  FINANCIAL RISK FACTORS 46
12.  INTERNATIONAL FINANCING PROGRAMS 46
13.  IMPACT OF COVID-19 ON SOCIETY OPERATIONS 46
SCHEDULE A - DEBT SECURITIES AT FAIR VALUE THROUGH PROFIT OR LOSS, OTHER DEBT SECURITIES, EQUITY INSTRUMENTS 49
SCHEDULE B – CLASSIFICATION OF LOANS AND OTHER FINANCING CREDIT ACCORDING TO STATUS AND COLLATERAL RECEIVED 52
SCHEDULE C - CONCENTRATION OF LOANS AND OTHER FINANCING 54
SCHEDULE D – BREAKDOWN OF TOTAL LOANS AND OTHER FINANCING 55
SCHEDULE F - PROPERTY, PLANT AND EQUIPMENT 56
SCHEDULE G - INTANGIBLE ASSETS 57
SCHEDULE H – CONCENTRATION OF DEPOSITS 58
SCHEDULE I – BREAKDOWN OF FINANCIAL LIABILITIES FROM REMAINING TERMS 59
SCHEDULE L - ASSETS AND LIABILITIES IN FOREIGN CURRENCY 60
SCHEDULE R – LOAN LOSS RISK PROVISIONS 61
SEPARATE CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION 63
SEPARATE CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 64
EARNING PER SHARE 65
SEPARATE CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 66
SEPARATE CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 67
SEPARATE CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY 68
SEPARATE CONDENSED INTERIM STATEMENT OF CASH FLOW 69
1.     BASIS OF PREPARATION OF THE UNAUDITED SEPARATE CONDENSED INTERIM FINANCIAL STATEMENTS 70
2.     FAIR VALUES 73
3.     INVESTMENT IN SUBSIDIARIES AND ASSOCIATES 75
4.     COMPOSITION OF THE MAIN ITEMS OF THE SEPARATE STATEMENT OF COMPREHENSIVE INCOME 76
5.     RESTRICTED ASSETS 78
6.     COMPANIES UNDER SECT. 33 OF CORPORATE LAW AND OTHER RELATED COMPANIES 78
7.     LOAN AND DEBT ESTIMATED TERMS 82
8.     CAPITAL STOCK 82
9.     CASH FLOW STATEMENT AND EQUIVALENTS 83
10.  SUBSEQUENT EVENTS 83
SCHEDULE A – OTHER DEBT SECURITIES 84
SCHEDULE F - PROPERTY, PLANT AND EQUIPMENT 85
SCHEDULE G - INTANGIBLE ASSETS 86
SCHEDULE L – ASSETS AND LIABILITIES IN FOREIGN CURRENCY 87
Additional Information pursuant to Art, 12, Chapter III, Title IV of standards issued by the National Securities Commission 88
INFORMATIVE REVIEW as of september 30, 2020 91

 

 

 

 

 

 

Consolidated Condensed Interim Financial Statements

 

For the nine-month period ended on 

September 30 2020, presented on comparative basis in homogeneous currency

 

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 6 to Separate Condensed Interim Financial Statements

 

Composition of Capital Stock as of September 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 CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

As of September 30, 2020 and December 31, 2019

(Expressed in thousands of pesos in homogeneous currency)

 

ASSETS   Notes and
Schedules
  09/30/2020     12/31/2019  
Cash and due from banks   1.8 and 3     27,970,120       32,288,051  
Cash         7,239,657       10,701,634  
Financial institutions and correspondents         20,581,692       21,549,840  
    Argentine Central Bank         17,504,093       19,477,359  
    Other local and foreign financial institutions         3,077,599       2,072,481  
    Others         148,771       36,577  
Debt Securities at fair value through profit or loss   1.8, 3, 5.1 and A     4,452,384       695,213  
Derivatives   5.2 y 3     112,088       315,000  
Repo transactions   3     22,059,850       -  
Other financial assets   1.8, 5.3 and 3     6,635,237       2,564,234  
Loans and other financing   3, 5.4 and B     98,191,094       108,714,512  
To the non-financial public sector         116,977       35,307  
To the financial sector         16,893       78,903  
To the Non-Financial Private Sector and Foreign residents         98,057,224       108,600,302  
Other debt securities   3, 5.5 and A     51,131,881       13,050,125  
Financial assets in guarantee   3 and 5.6     5,165,915       6,522,526  
Current income tax assets         -       125,295  
Investments in equity instruments   3 and A     87,569       17,828  
Property, plant and equipment   F     5,449,373       4,894,097  
Investment properties   F     4,286,107       4,958,492  
Intangible assets   G     5,456,616       5,347,095  
Deferred income tax assets         2,733,623       1,600,419  
Other non-financial assets   5.7     2,395,565       1,582,850  
Inventories   5.8     60,838       54,364  
TOTAL ASSETS         236,188,260       182,730,101  

 

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

 

3

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

As of September 30, 2020 and December 31, 2019

(Expressed in thousands of pesos in homogeneous currency)

 

    Notes and
Schedules
    09/30/2020     12/31/2019  
LIABILITIES                        
Deposits     3, 5.9 and H       170,259,118       108,847,091  
 Non-financial public sector             8,114,000       6,689,417  
 Financial sector             13,574       34,361  
 Non-financial private sector and foreign residents             162,131,544       102,123,313  
Liabilities at fair value through profit or loss     3 and 5.10       189,074       231,803  
Repo transactions     3       -       391,101  
Other financial liabilities     3 and 5.11       8,355,652       11,148,581  
Financing received from the Argentine Central Bank and other financial institutions     3 and 5.12       7,647,629       11,027,517  
Negotiable Obligations Issued     3 and 9.4       4,232,918       7,443,081  
Current income tax liabilities             1,106,045       -  
Subordinated negotiable obligations     3 and 9.4       1,050,485       2,592,387  
Provisions     5.13       749,078       809,509  
Deferred income tax liabilities             164,712       577,896  
Other non-financial liabilities     5.14       10,638,831       10,056,997  
TOTAL LIABILITIES             204,393,542       153,125,963  
                         
SHAREHOLDERS' EQUITY                        
   Capital stock             456,722       456,722  
   Paid in capital             29,890,007       29,890,007  
   Capital Adjustments             2,620,076       2,620,076  
   Reserves             17,084,754       12,792,445  
   Retained earnings             (21,043,363 )     (12,697,188 )
   Other comprehensive income             286,745       105,676  
   Net income for the period/year             2,474,412       (3,587,155 )
Shareholders' Equity attributable to owners of the parent company             31,769,353       29,580,583  
Shareholders' Equity attributable to non-controlling interests             25,365       23,555  
TOTAL SHAREHOLDERS' EQUITY             31,794,718       29,604,138  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             236,188,260       182,730,101  

 

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

 

4

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 

For the nine and three-month period ended on September 30, 2020 and 2019 

(Expressed in thousands of pesos in homogeneous currency)

 

      Nine-month period ended on   Three-month period ended on 
   Notes   09/30/2020   09/30/2019   09/30/2020   09/30/2019 
Interest income  5.15   43,426,455    40,636,588    14,867,007    13,220,329 
Interest expenses  5.16   (18,339,371)   (34,180,776)   (6,477,590)   (11,087,469)
Net interest income      25,087,084    6,455,812    8,389,417    2,132,860 
Service fee income  5.19   7,747,868    8,007,631    2,555,106    2,620,475 
Service fee expenses  5.20   (2,286,056)   (2,001,999)   (814,574)   (757,435)
Income from insurance activities  7   1,112,656    1,142,299    327,042    420,121 
Net Service Fee Income      6,574,468    7,147,931    2,067,574    2,283,161 
Subtotal      31,661,552    13,603,743    10,456,991    4,416,021 
Net income from financial instruments (NIFFI) at fair value through profit or loss  5.17   2,117,614    22,016,523    1,067,825    6,301,026 
Result from assets withdrawals rated at amortized cost  5.18   (6,553,905)   -    (4,208,930)   - 
Exchange rate difference on gold and foreign currency      689,414    (1,015,846)   260,847    (891,599)
Subtotal      (3,746,877)   21,000,677    (2,880,258)   5,409,427 
Other operating income  5.21   2,766,048    2,468,301    899,646    747,714 
Result from exposure to changes in the purchasing power of the currency      4,365,222    (5,639,513)   3,529,039    (2,023,474)
Loan loss provisions      (6,955,877)   (8,068,586)   (2,723,339)   (2,872,255)
Net operating income      28,090,068    23,364,622    9,282,079    5,677,433 
Personnel expenses  5.22   12,219,311    12,372,714    4,166,883    3,768,121 
Administration expenses  5.23   6,752,969    6,764,528    2,232,476    2,198,701 
Depreciations and impairment of non-financial assets  5.24   1,591,730    1,509,749    548,519    552,676 
Other operating expenses  5.25   4,475,844    5,384,026    1,462,597    1,781,331 
Operating income      3,050,214    (2,666,395)   871,604    (2,623,396)
Income before taxes from continuing operations      3,050,214    (2,666,395)   871,604    (2,623,396)
Income tax      574,178    291,323    11,480    (282,136)
Net income for the period      2,476,036    (2,957,718)   860,124    (2,341,260)
Net income for the period attributable to owners of the parent company      2,474,412    (2,955,065)   859,614    (2,339,331)
Net income for the period attributable to non-controlling interests      1,624    (2,653)   510    (1,929)

 

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

 

5

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 

EARNING PER SHARE 

For the nine and three-month period ended on September, 30 2020 and 2019 

(Expressed in thousands of pesos in homogeneous currency)

 

   Nine-month period
ended on
   Three-month period
ended on
 
Item  09/30/2020   09/30/2019   09/30/2020   09/30/2019 
NUMERATOR                    
Net income for the period attributable to owners of the parent company   2,474,412    (2,955,065)   859,614    (2,339,331)
PLUS: Diluting events inherent to potential ordinary shares   -    -         - 
Net income attributable to owners of the parent company adjusted by dilution   2,474,412    (2,955,065)   859,614    (2,339,331)
                     
DENOMINATOR                    
                     
Weighted average of ordinary shares   456,722    456,722    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    456,722    456,722 
                     
Basic Income per share   5.42    (6.47)   1.88    (5.12)
Diluted Income per share   5.42    (6.47)   1.88    (5.12)

 

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

 

6

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME 

For the nine and three-month period ended on September, 30 2020 and 2019 

(Expressed in thousands of pesos in homogeneous currency)

 

   Nine-month period ended on   Three-month period ended on 
   09/30/2020   09/30/2019   09/30/2020   09/30/2019 
Net income for the period   2,476,036    (2,957,718)   860,124    (2,341,260)
Components of Other Comprehensive Income not to be reclassified to profit or loss                    
Income for the period from equity instrument at fair value through other comprehensive income   (1,812)   -    (695)   - 
Income tax   544    -    209    - 
Net income from equity instrument at fair value through changes in other comprehensive income   (1,268)   -    (486)   - 
Total Other Comprehensive Income not to be reclassified to profit or loss   (1,268)   -    (486)   - 
Components of Other Comprehensive Loss to be reclassified to profit or loss                    
Loss for the period from financial instrument at fair value through other comprehensive income   260,748    (3,997)   (140,855)   (283)
Income tax   (78,225)   1,199    42,279    85 
Net income from financial instrument at fair value through changes in other comprehensive income   182,523    (2,798)   (98,576)   (198)
Total Other Comprehensive Loss to be reclassified to profit or loss   182,523    (2,798)   (98,576)   (198)
Total Other Comprehensive Income   181,255    (2,798)   (99,062)   (198)
Other comprehensive income attributable to owners of the parent company   181,069    (2,794)   (98,961)   (197)
Other comprehensive income attributable to non-controlling interests   186    (4)   (101)   (1)
Total Comprehensive Income   2,657,291    (2,960,516)   761,062    (2,341,458)
Total comprehensive income attributable to owners of the parent company   2,655,481    (2,957,859)   760,653    (2,339,528)
Total comprehensive income attributable to non-controlling interests   1,810    (2,657)   409    (1,930)

 

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

 

7

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

For the nine-month period ended on September, 30 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    2,620,076    29,890,007    171,838    12,620,607    (16,284,343)   99,501    6,175    29,580,583    23,555    29,604,138 
Distribution of retained earnings by the shareholders’ meeting on April 28, 2020:                                                       
Constitution of reserves   -    -    -    -    4,759,020    (4,759,020)   -    -    -    -    - 
Dividend distribution   -    -    -    -    (466,711)   -    -    -    (466,711)   -    (466,711)
Net Income for the period   -    -    -    -    -    2,474,412    -    -    2,474,412    1,624    2,476,036 
Other comprehensive income for the period   -    -    -    -    -         -    181,069    181,069    186    181,255 
Balance at September 30, 2020   456,722    2,620,076    29,890,007    171,838    16,912,916    (18,568,951)   99,501    187,244    31,769,353    25,365    31,794,718 

 

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

 

8

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS´ EQUITY

For the nine-month period ended on September, 30 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, 2018   456,722    2,620,076    29,889,414    171,838    10,075,415    (8,924,661)   -    -    34,288,804    28,668    34,317,472 
IFRS 9 Impact Adjustments   -    -    -    -    -    (657,333)   -    -    (657,333)   (503)   (657,836)
Balance at December 31, 2018   456,722    2,620,076    29,889,414    171,838    10,075,415    (9,581,994)   -    -    33,631,471    28,165    33,659,636 
Other movements   -    -    593    -    -    -    -    -    593    105    698 
Distribution of retained earnings by the shareholders’ meeting on April 26, 2019:                                                       
Constitution of reserves   -    -    -    -    2,545,192    (2,545,192)   -    -    -    -    - 
Dividend distribution   -    -    -    -    -    (492,960)   -    -    (492,960)        (492,960)
Net Income for the period   -    -    -    -    -    (2,955,065)   -    -    (2,955,065)   (2,653)   (2,957,718)
Other comprehensive income for the period   -    -    -    -    -    -    -    (2,794)   (2,794)   (4)   (2,798)
Balance at September 30, 2019   456,722    2,620,076    29,890,007    171,838    12,620,607    (15,575,211)   -    (2,794)   30,181,245    25,613    30,206,858 

 

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

 

9

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED CONDENSED INTERIM STATEMENT OF CASH FLOWS

For the nine-month period ended on September, 30 2020 and 2019

(Expressed in thousands of pesos in homogeneous currency)

 

   09/30/2020   09/30/2019 
CASH FLOW FROM OPERATING ACTIVITIES          
           
Net income for the period before Income Tax   3,050,214    (2,666,395)
           
Adjustments to obtain flows from operating activities:          
Depreciation and impairment of non-financial assets   (1,591,730)   1,509,749 
Loan loss provisions   6,955,877    8,068,586 
Other adjustments          
- Exchange rate difference on gold and foreign currency   (689,414)   1,015,846 
- Interests from loans and other financing   (43,426,455)   (40,636,588)
- Interests from deposits and financing   18,339,371    34,180,776 
- Net income from financial instruments at fair value through profit or loss   (2,117,614)   (22,016,523)
- Result from assets withdrawals rated at amortized cost   6,553,905    - 
- Result from exposure to changes in the purchasing power of the currency   (4,365,222)   5,639,513 
- Interest on liabilities for financial leases   131,276    153,835 
- Allowances reversed   (431,199)   (449,385)
           
(Increases) / decreases from operating assets:          
Debt securities at fair value through profit or loss   (7,055,181)   26,542,679 
Derivatives   202,912    (257,223)
Repo transactions   (22,059,850)   (5,460,065)
Loans and other financing          
To the non-financial public sector   (81,670)   21,330 
To the other financial entities   62,010    47,544 
To the non-financial sector and foreign residents   46,609,192    64,363,334 
Other debt securities   (38,081,756)   2,878,187 
Financial assets in guarantee   1,356,611    (1,160,189)
Investments in equity instruments   (69,741)   7,616 
Other assets   (378,440)   (7,147,964)
           
Increases / (decreases) from operating liabilities:          
Deposits          
Non-financial public sector   1,424,583    (10,504,078)
Financial sector   (20,787)   (10,492)
Private non-financial sector and foreign residents   41,770,046    (62,767,818)
Liabilities at fair value through profit or loss   (42,729)   (504,323)
Derivatives   -    (177,250)
Repo operations   (391,101)   434,836 
Other liabilities   (1,635,622)   1,884,997 
Income Tax paid   (967,450)   (731,703)
           
Total operating activities (A)   3,050,036    (7,741,168)
           
CASH FLOW FROM INVESTING ACTIVITIES          
           
Payments:          
Purchase of PPE, intangible assets and other assets   (1,513,357)   (1,050,092)
Purchase of investments in subsidiaries   -    (219,612)

 

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

 

10

 

GRUPO SUPERVIELLE S.A.

 

CONSOLIDATED STATEMENT OF CASH FLOWS 

For the nine-month period ended on September, 30 2020 and 2019 

(Expressed in thousands of pesos in homogeneous currency)

 

   09/30/2020   09/30/2019 
CASH FLOW FROM INVESTING ACTIVITIES          
           
Collections:          
Purchase of PPE, intangible assets and other assets   46,586    89,833 
           
Total investing activities (B)   (1,466,771)   (1,179,871)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
           
Payments:          
Interest on finance lease liabilities   (1,366,164)   (355,890)
Financing received from Argentine Financial Institutions   (18,253,288)   (8,658,392)
Unsubordinated negotiable obligations   (5,936,449)   (6,846,332)
Subordinated negotiable obligations   (1,570,607)   - 
Dividends paid   (466,711)   (492,960)
           
Collections:          
Changes in the ownership of subsidiaries that do not result in loss of control   -    698 
Financing received from Argentine Financial Institutions   14,873,400    7,464,280 
Unsubordinated negotiable obligations   2,653,805    3,234,849 
Subordinated negotiable obligations   -    263,911 
           
Total Financing activities (C)   (10,066,014)   (5,389,836)
           
EFFECT OF CHANGES IN THE EXCHANGE RATE (D)   13,403,261    40,060,168 
           
NET INCREASE IN CASH AND CASH EQUIVALENTS  (A+B+C+D)   4,920,512    25,749,293 
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (NOTE 1.8)   34,232,005    88,372,255 
Result from exposure to changes in the purchasing power of the currency of cash and equivalents   (7,762,911)   (44,895,854)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (NOTE 1.8)   31,389,606    69,225,694 

 

(*) 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” 835,663, 598,984 and 672,385 corresponding to non-monetary transactions were eliminated.

 

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

 

11

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES OF THE UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

 

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. and Futuros del Sur 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 November 19, 2020.

 

1.1.Preparation basis

 

These condensed interim 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.

 

Pursuant to IAS 34, interim financial information shall include an explanation of events and transactions that have taken place as from the end of the last annual period being reported and are relevant for the understanding of changes in the financial situation, financial performance and cash flows of the Group with the purpose of relying on updated information as per the last financial statements of the fiscal year ended on December 31, 2019 ( hereinafter, “annual financial statements”). Given the aforementioned, these condensed interim financial statements do not include all the information to be required by complete financial statements prepared pursuant to International Financial Reporting Standards; hence, in virtue of a suitable understanding of the information included therein, such statements must be read jointly with annual financial statements as of December 31, 2019.

 

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

 

It is worth to be mentioned that interim condensed financial statements have been prepared by applying accounting policies and measurement criteria consistent with those applied by the Group for the preparation of annual financial statements, except for what has been set forth in Note 1.1.4.

 

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 period. 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 condensed interim financial statements preparation.

 

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 CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.1.1            Going concern

 

As of the date of these consolidated condensed interim 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.

 

1.1.2            Measuring unit

 

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

 

The Group´s interim condensed 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 condensed interim financial statements have been re-expressed as of September 30, 2020.

 

1.1.3            Comparative information

 

The information included in these condensed interim financial statements and in the aforementioned notes as of December 31, 2019 and September 30, 2019 is presented, exclusively with comparative purposes regarding the information as of September 30, 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 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 September 30, 2019 for the purpose of submitting such figures as if the new accounting policies had been in force since January 1, 2019.

 

1.1.4            Changes 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.

 

13

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

The following are changes that were made effective over the course of the quarter ended on September 30, 2020:

 

(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, 2021,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 344,8 million and 936,0 million would have been recorded in the shareholders ´equity as of September 30, 2020 and December 31, 2019 respectively.

 

   September 30, 2020   December 31, 2019 
Provisions recorded in financial statements   8,683,827    7,170,484 
Provisions pursuant to section 5.5 of IFRS 9   9,161,740    8,507,651 
Difference (*)   477,913    1,337,167 

 

(*)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 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   77,727         224,792    302,519 
Loans and other financing                    
Other Financial Entities   14,772    -    -    14,772 
NFPS and Res. Abroad   -    -    -    - 
Overdrafts   786,797    -    1,017,370    1,804,167 
Documents   928,374    -    (483,336)   445,038 
Mortgage loans   521,317    -    42,797    564,114 
Pledge loans   52,897    14,817    51,389    119,103 
Personal loans   1,232,719    12,573    (234,726)   1,010,566 
Credit Cards   775,397    -    (113,644)   661,753 
Financial Lease   93,226    -    76,664    169,890 
Others   2,654,981    -    (580,767)   2,074,214 
Debt securities   4,438    -    (90)   4,348 
Contingent commitments   449    -    (449)   - 
TOTAL   7,143,094    27,390    -    7,170,484 

 

* 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 CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

Note 1.2 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 period/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 September 30, 2020 there would be no significant impact on equity and results for the period.

 

(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;

 

15

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

(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
(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)Changes in the Financial Information 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.

 

The following sets forth changes that have not become in force as of September 30, 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.

 

16

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

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, 2021.

 

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 Entity is assessing the impact of said new standard.

 

1.2            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:

 

·    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 1.2.1 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.

 

17

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

·    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 1 Stage 2 Stage 3  
(initial recognition) (significant increase of credit risk since initial recognition) (Impaired credit)  
ECL over the next 12 months ECL during the financial instrument lifetime    

 

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

 

1.2.1. 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:

 

Individuals and Businesses

 

·Maximum delay at a financial asset level between 31 and 90 days
·Maximum situation Argentine Central Bank over 1.
·At a Client level, an Internal Behavior Score below cutting point.1

 

Corporate Banking

 

·Maximum situation Argentine Central Bank over 1.
·Hold an Internal Rating of Classification “C” (Default probability over 30%).

 

Consumer Finance

 

·Maximum delay at a financial asset level between 31 and 90 days

 

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 13) 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.

 

In this sense, such analysis has been applied in Small and Medium Size companies and E&P, such additional definition of significant risk increases for “Real State”, “Entertainment” and “Tourism & Gastronomy” activities. Such impact was measured as of June closing, though remaining activities are still under assessment in virtue of the evaluation of future impacts.

 

 

 

1 Definition of cutting point for SICR – Payroll Plan High CL PC=>400. Remaining CL=>500. | Open market High Income CL=>700. Remaining CL =>700. | Retirees: High Income CL =>610. Remaining CL =>610.

 

18

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

1.2.2. 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:

 

Entity Parameter Segment
Individual and Businesses Default Probability (DP) Personal loans (1)
Credit cards (1)
Overdrafts
Documents
Mortgage loans
Refinancing
Others
Severity (LGD) Personal loans
Credit cards
Overdrafts
Mortgage loans
Refinancing
Others

 

Entity Parameter Segment
Corporate Banking Default Probability (DP) (2) Small Companies
Medium Companies
Big Companies
Financial Sector
Severity (LGD) Overdrafts
Documents
Leasing
Unsecured loans
Others
OCIF

 

Consumer Finance(3) Default Probability (DP) Credit cards closed
Credit cards opened
Cash loan
Consumer and Directed Cash Loan
Refinancing
Consumer Loans Tarjeta Automática
Severity (LGD) Credit Cards
Loans
Refinancing

 

19

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency) 

 

(1)For personal loans and credit cards, the segment dimension is added, since there is sufficient materiality. The segments are: Retirees, High Income Open Market, High Income Salary Plan, Non High Income Open Market, Non High Income Salary Plan, Entrepreneurs and SMEs, Former Retirees and Ex Salary Plan.
(2)The segments to calculate the probability of default in Business Banking were grouped by company size in Stage 1. For stages 2 and 3, the probability of default was calculated including all the business banking segments to form a statistical materiality group enough.
(3)As of the date of these financial statements, the balances of provisions related to Cordial Compañía Financiera S.A., are established under the Minimum Provision Standards as set forth in Communication “A” 6990 of the B.C.R.A.

 

Credit risk features utilized for the abovementioned segments are the following, among others: type of financial instrument, debtor´s activity sector, activity geographical area, type of guarantee, time elapsed of submitted financial statements and other key factors to calculate expected cash flows.

 

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

 

1.2.3 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:

 

Individuals and Businesses

 

·Financial instruments delinquent after 90 days in contractual payments.

 

Corporate Banking

 

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

 

Consumer Finance

 

·Financial instruments delinquent after 90 days in contractual payments.

 

Abovementioned criteria are applied in a consistent manner to all financial instruments and are aligned with the definition of default utilized by the Bank in virtue of the administration of credit risk. Likewise, such definition is consistently applied to define DP, Exposure at Default (“hereinafter, “EAD”) and Loss Given Default (hereinafter, “LGD”).

 

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

 

ECL is measured on a 12-month basis or along the instrument´s lifetime, depending on whether a significant increase in credit risk has been recorded since initial recognition or whether an asset is considered to contain credit impairment. ECLs account for the product discounted from Default Probability (DP), Exposure at Default (EAD) and Loos Given Default (LGD), defined as follows:

 

• DP accounts for the probability of debtor´s breaching his/her financial obligation (pursuant to the “Definition of credit default and impairment” set forth in Note 1.2.3), either during the next 12 months or the remaining lifetime (DP lifetime) of the financial asset.

 

• EAD is based on the amounts the Group expects to owe at the moment of the default, during the next 12 months or the remaining lifetime (DP lifetime) of the financial asset (EAD Lifetime). For example, for a revolving commitment, the Group includes the current available balance plus any additional amount expected to become available until the current contractual limit at the moment of the default, when applicable.

 

• LGD accounts for the Group´s expectation regarding the loss amount in an exposure under default.

 

LGD changes depending on the counterparty type, the type and time elapsed of the claim and the availability of guarantees or any other credit support. LGD is expressed as a loss percentage for the exposure unit at the moment of default (EAD) and is calculated on a 12-month basis or along the instrument lifetime, where the 12-month LGD accounts for the loss percentage expected to incur if the default takes place within the next 12 months and lifelong LGD accounts for the loss percentage expected to incur if the default takes place during the remaining lifetime of the financial asset.

 

20

 

GRUPO SUPERVIELLE S.A. 

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS 

AS OF SEPTEMBER 30, 2020 

Presented on comparative basis 

(Expressed in thousands of pesos in homogeneous currency)

 

ECL is defined by projecting DP, LGD and EAD for each future month and each individual or collective exposure. These three components are multiplied and adjusted pursuant to the survival (that is, the exposure has not been pre-settled or entered into default in a previous month). The aforementioned effectively calculates ECL for each future month, which is later discounted as of submission date and is added. The discount rate utilized for the calculation of ECL accounts for the original or rough effective interest rate of such date.

 

As for the calculation of parameters utilized for the calculation of the aforementioned ECL, the Entity based its calculation on the internal model development know-how for the calculation of parameters, thus adapting the development of such models pursuant to IFRS 9.

 

The Group includes prospective economic information in its definition of DP, EAD and LGD over 12 months or Lifetime. See Note 1.2.5 for the explanation of prospective information and its consideration in the calculation of ECL.

 

1.2.5 Prospective 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 September 30, 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 1.2.1). 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.

 

The most significant assumptions utilized to calculate ECL as of September 30, 2020 are as follows:

 

Parameter  Segment  Macroeconomic
variable
  Optimistic
scenario
   Base
scenario
   Pessimistic
scenario
 
Default probability  Individuals and Businesses
Corporate banking
Consumer finance
  EMAE   124.04    120.67    115.37 

 

21

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The following are estimations assigned to each scenario as of September 30, 2020:

 

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

 

Sensitivity analysis

 

The chart below includes changes in ECL as of September 30, 2020 that would result from reasonably potential changes in the following parameters:

 

September 30, 2020  
ECL previsions   8,683,827 
Total portfolio   107,026,508 
Irregular Portfolio Coverage   181,65%
      
ECL per Scenario     
Favorable Impact   8,421,279 
High Impact   8,749,679 
      
Coverage Ratio per Scenario     
Favorable Impact   176.15%
High Impact   183.02%

 

1.2.6 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.

 

22

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

   September 30, 2020     
   Stage 1   Stage 2   Stage 3   Total 
Overdrafts   36,186,740    1,104,396    1,219,129    38,510,265 
Documents   16,883,179    293,600    222,059    17,398,838 
Mortgage loans   8,001,205    2,542,155    1,482,824    12,026,184 
Pledge loans   1,123,252    229,250    209,590    1,562,092 
Personal loans   35,133,968    1,309,816    1,148,510    37,592,294 
Individuals and Business   14,469,241    1,100,900    749,452    16,319,593 
Consumer finance   20,664,727    208,916    399,058    21,272,701 
Credit cards   31,213,670    4,294,279    623,378    36,131,327 
Individuals and Business   27,135,200    3,943,329    426,265    31,504,794 
Consumer finance   4,078,470    350,950    197,113    4,626,533 
Financial Lease   2,509,728    420,836    160,078    3,090,642 
Others   28,646,727    5,714,866    2,829,991    37,191,584 
Total   159,698,469    15,909,198    7,895,559    183,503,226 

 

1.2.7 Guarantees and other credit improvements

 

A guarantee is an instrument by means of which the Entity´s debtor or a third party is committed upon any obligation default, to be offered as support for such debt settlement. The Entity accepts a guarantee with support before a potential breach on behalf of a debtor.

 

23

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

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 guarantees, the Group relies on a specific area devoted to the review of the legal compliance and suitable instrumentation of received guarantees. In accordance with the type of guarantees, the guarantors may be natural or legal persons (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 guarantees related to financial assets considered as impaired credits since such guarantee is likely to be executed to mitigate potential credit losses.

 

1.2.8 Credit risk provision

 

Credit risk provision recognized in the period 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 period and application of provisions related to assets withdrawn from the balance sheet during the period. The following charts explain changes in the provision for credit risk between the beginning and end of the period due to the following factors:

 

   Stage 1   Stage 2   Stage 3     
   ECL at 12 months   ECL Lifetime    ECL Lifetime   Total 
Credit risk provision as of 12/31/2019   1,386,804    716,016    5,067,665    7,170,485 
Transfers:                    
From Stage 1 to Etapa 2   (87,806)   547,403    -    459,597 
From Stage 1 to Etapa 3   (16,120)   -    531,679    515,559 
From Stage 2 to Etapa 3   -    (172,861)   633,436    460,575 
From Stage 2 to Etapa 1   8,310    (59,216)   -    (50,906)
From Stage 3 to Etapa 2   -    4,804    (31,160)   (26,356)
From Stage 3 to Etapa 1   801    -    (43,136)   (42,335)
Net changes   5,367,138    1,234,277    (1,256,169)   5,345,246 
Withdrawn financial assets   (3,313,119)   (688,655)   (1,428,001)   (5,429,775)
Direct charge   (281,521)   (101,632)   (24,519)   (407,672)
Difference of quotation and other movements   39,766    91,555    170,032    301,353 
Credit risk provision as of 09/30/2020   3,104,253    1,571,691    3,619,827    8,295,771 

 

*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.

 

1.2.9 Account withdrawal policy

 

The Group withdraws, partially or as a whole, financial assets from the balance sheet, once all recovery efforts have been used up and has concluded that there are no reasonable expectations. Indicators of lack of reasonable recovery expectation include (i) the cease of execution activities and (ii) when the Bank´s recovery method is given by the guarantee execution and the value of the guarantee is not enough for a total reasonable recovery expectation.

 

24

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

The Group may withdraw financial assets from its balance sheet which are still subject to execution activities. Contractual amounts pending of collection of such withdrawn assets during the period ended on September 30, 2020 amount to 5,429,775. The Group seeks to recover amounts legally owed as a whole, but partially withdrawn in the balance sheet since there is no reasonable recovery expectation.

 

1.3.Critical accounting policies and estimates

 

The preparation of condensed interim 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:

 

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 1.1.4. (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 1.2, including the key sensitivities of the ECL to changes in these elements.

 

25

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

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 CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 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.

 

1.4.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.

 

27

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

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.

 

1.5.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.

 

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

 

Company

       

Legal Adress

 

Principal Activity

    Percentage of Participation  
   

Condition

          09/30/2020       12/31/2019   
              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   Mutual Fund     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   Clearing and settlement agent     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   Computer Services     100.00 %     100.00 %     100.00 %     100.00 %
Futuros del Sur S.A.     Controlled     03 de Febrero 515, Rosario,  Santa Fe   Clearing and settlement agent     100.00 %     100.00 %     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 09/30/20 and 12/31/2019.
(2)All the subsidiaries carry out their activities in Argentina, the local and functional currency being Argentine pesos.

 

28

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.6. 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, 2019 the following consolidated structured entities have been consolidated as of the date of these consolidated condensed interim financial statements:

 

Issuers   Financial
Trust
   

Set-up on

Due of
principal
obligation

 
Securitized
    Issued Securities
        Amount     Type     Amount     Type     Amount  
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  

 

On September 24, 2020, pursuant to the instruction issued by the only Beneficiary of the 100% of Financial Trust 21 Participation Certificate, and provisions included in the Financial Trust Contract dated on June 18, 2019, assets in trust were transferred to the Beneficiary as total payment of holdings as of such date.

 

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.

 

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

 

29

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

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 September 30, 2020:

 

   09/30/2020   12/31/2019 
Assets          
Loans   28,419    1,950,097 
Financial assets   25,511    133,098 
Other assets   730,766    356,706 
Total Assets   784,696    2,439,901 
Liabilities          
Financial liabilities   84,740    1,741,980 
Other liabilities   44,615    50,909 
Total Liabilities   129,355    1,792,889 

 

1.7.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 condensed interim 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 September 30, 2020 and December 31, 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.

 

30

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

1.8.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.

 

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  09/30/2020   12/31/2019   09/30/2019   12/31/2018 
Cash and due from banks   27,970,120    32,288,051    25,678,238    63,372,992 
Debt securities at fair value through profit or loss   1,574,015    695,213    42,977,942    23,766,021 
Money Market Funds   1,845,471    1,248,741    569,514    1,233,242 
Cash and cash equivalents   31,389,606    34,232,005    69,225,694    88,372,255 

 

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  09/30/2020   12/31/2019   09/30/2019   12/31/2018 
Cash and due from Banks                    
As per Statement of Financial Position   27,970,120    32,288,051    25,678,238    63,372,992 
As per the Statement of Cash Flows   27,970,120    32,288,051    25,678,238    63,372,992 
Debt securities at fair value through profit or loss                    
As per Statement of Financial Position   4,452,384    695,213    43,110,664    28,434,534 
Securities not considered as cash equivalents   (2,878,369)   -    (132,722)   (4,668,513)
As per the Statement of Cash Flows   1,574,015    695,213    42,977,942    23,766,021 
Money Market Funds                    
As per Statement of Financial Position – Other financial assets   6,635,237    2,564,234    2,397,378    3,227,261 
Other financial assets not considered as cash   (4,789,766)   (1,315,493)   (1,827,864)   (1,994,019)
As per the Statement of Cash Flow   1,845,471    1,248,741    569,514    1,233,242 

 

31

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

Reconciliation of financing activities at September 30, 2020 and December 31, 2019 is as follows:

 

   Balances at   Cash Flows   Other non-cash   Balances at 

Items

 

12/31/2019

   Inflows   Payments   movements   09/30/2020 
Unsubordinated Negotiable Obligations   7,443,081    2,653,805    (5,936,449)   72,481    4,232,918 
Subordinated Negotiable Obligations   2,592,387    -    (1,570,607)   28,705    1,050,485 
Financing received from the Argentine Central Bank and other financial institutions   11,027,517    14,873,400    (18,253,288)   -    7,647,629 
Lease Liabilities   1,157,328    -    (1,366,164)   1,306,346    1,097,510 
Total   22,220,313    17,527,205    (27,126,508)   1,407,532    14,028,542 

 

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.

 

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 September 30, 2019 and December 31, 2019 was modified with the purpose of showing the new organization and making it comparable to information as of September 30, 2020.

 

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

 

• Individuals and Businesses 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

 

32

 

GRUPO SUPERVIELLE S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
Presented on comparative basis
(Expressed in thousands of pesos in homogeneous currency)

 

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

 

a-Individuals and Businesses – 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 big clients.

 

c-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.

 

d-Consumer – 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-Mutual Fund Administration and Other Segments – 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., InvertirOnline S.A.U., 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 appraisal of each segment. The performance of such segments will be evaluated based on operating earnings and losses and is measured consistently with operating earnings and losses of the consolidated earnings and losses statement.

 

When a transaction is carried out between operating segments, they are taken in an independent and equitative manner, as in cases of transactions with third parties. Later, income, expenses and results from transfers between operating segments are removed from the consolidation.

 

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

 

The following chart includes information by segment as of September 30, 2020 and 2019:

 

Result by segments  Individuals
and
Businesses
   Corporate
Banking
   Treasury   Consumer   Insurance   Adm.
MF and
other
segments
   Adjustments   Total as of
09.30.2020
 
Interest income   15,083,906    8,787,840    16,840,486    2,945,298    1    35,793    (266,869)   43,426,455 
Interest expenses   (5,302,592)   (771,016)   (11,673,830)   (864,248)   -    (19,314)   291,629    (18,339,371)
Distribution of results by Treasury   2,946,747    (4,423,347)   1,476,600    -    -    -    -    - 
Net interest income   12,728,061    3,593,477    6,643,256    2,081,050    1    16,479    24,760    25,087,084 
Services Fee Income   5,142,453    477,055    31,673    1,257,899    -    1,025,663    (186,875)   7,747,868 
Services Fee Expenses   (1,622,146)   (131,061)   (29,138)   (538,412)   -    (31,950)   66,651    (2,286,056)
Income from insurance activities   -    -    -    -    962,488    -    150,168    1,112,656 
Net Service Fee Income   3,520,307    345,994    2,535    719,487    962,488    993,713    29,944    6,574,468 
Subtotal   16,248,368    3,939,471    6,645,791    2,800,537    962,489    1,010,192    54,704    31,661,552 
Net income from financial instruments at fair value through profit or loss   -    -    1,387,814    90,525    253,537    109,453    276,285    2,117,614 
Income from withdrawal of assets rated at amortized cost   -    -    (6,553,905)   -    -    -    -    (6,553,905)
Exchange rate difference on gold and foreign currency   290,067    37,763    216,862    22,473    (77)   41,504    80,822    689,414 
NIFFI And Exchange Rate Differences   290,067    37,763    (4,949,229)   112,998    253,460    150,957    357,107    (3,746,877)
Other operating income   806,551    1,542,496    122,711    223,684    7,320    137,934    (74,648)   2,766,048 
Result from exposure to changes in the purchasing power of the currency   321,259    (650,612)   5,794,499    (684,170)   (247,772)   (138,106)   (29,876)   4,365,222 
Loan loss provisions   (2,646,699)   (3,544,070)   20,750    (785,589)   -    (269)   -    (6,955,877)
Net operating income   15,019,546    1,325,048    7,634,522    1,667,460    975,497    1,160,708    307,287    28,090,068 
Personnel expenses   (9,099,862)   (819,150)   (522,385)   (1,145,484)   (203,681)   (338,147)   (90,602)   (12,219,311)
Administration expenses   (4,880,686)   (333,522)   (300,620)   (974,627)   (148,761)   (289,875)   175,122    (6,752,969)
Depreciations and impairment of non-financial assets   (1,271,767)   (97,219)   (71,390)   (89,467)   (13,693)   (6,065)   (42,129)   (1,591,730)
Other operating expenses   (2,608,148)   (987,738)   (385,749)   (396,015)   (271)   (75,184)   (22,739)   (4,475,844)
Operating income   (2,840,917)   (912,581)   6,354,378    (938,133)   609,091    451,437    326,939    3,050,214 
Result  from associates and joint ventures   -    -    -    1,924    -    3,923    (5,847)   - 
Result before taxes   (2,840,917)   (912,581)   6,354,378    (936,209)   609,091    455,360    321,092    3,050,214 
Income tax   772,247    327,870    (1,727,313)   162,388    (207,729)   (165,500)   263,859    (574,178)
Net income   (2,068,670)   (584,711)   4,627,065    (773,821)   401,362    289,860    584,951    2,476,036 
Net income for the period attributable to owners of the parent company   (2,068,670)   (584,711)   4,627,065    (773,821)   401,362    289,860    583,327    2,474,412 
Net income for the period attributable to non-controlling interest   -    -    -    -    -    -    1,624    1,624 
Other comprehensive income   51,986    36,684    92,585    -    -    -    -    181,255 
Other comprehensive income attributable to owners of the parent company   51,986    36,684    92,585    -    -    -    (186)   181,069 
Other comprehensive income attributable to non-controlling interest   -    -    -    -    -    -    186    186 
Comprehensive income for the period   (2,016,684)   (548,027)   4,719,650    (773,821)   401,362    289,860    584,951    2,657,291 
Comprehensive income attributable to owners of the parent company   (2,016,684)   (548,027)   4,719,650    (773,821)   401,362    289,860    583,141    2,655,481 
Comprehensive income attributable to non-controlling interests   -    -    -    -    -    -    1,810    1,810 

 

33

 

GRUPO SUPERVIELLE S.A.
NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020
Presented on comparative basis
(Expressed in thousands of pesos in homogeneous currency)

 

Assets by segments  Individuals
and
Businesses
   Corporate
Banking
   Treasury   Consumer   Insurance   Adm.
MF and
other
segments
   Adjustments   Total as of
09.30.2020
 
Cash and due from banks   7,035,409    305,141    20,209,808    255,225    2,053    296,496    (134,012)   27,970,120 
Debt securities at fair value through profit or loss   -    -    3,702,283    669,829    -    80,272    -    4,452,384 
Loans and other financing   48,334,228    40,469,182    3,081,055    5,747,802    731,306    49,825    (222,304)   98,191,094 
Other Assets   8,733,227    8,519,038    71,045,380    2,469,300    1,644,447    811,940    12,351,330    105,574,662 
Total Assets   64,102,864    49,293,361    98,038,526    9,142,156    2,377,806    1,238,533    11,995,014    236,188,260 
                                         
Liabilities by segments                                        
Deposits   84,815,861    14,009,785    67,453,221    4,139,651    -    -    (159,400)   170,259,118 
Financing received from the Argentine Central Bank and others financial institutions   14,372    -    7,615,468    170,518    -    51,411    (204,140)   7,647,629 
Unsubordinated Negotiable obligations   21,456    12,000    4,195,569    -    -    3,893    -    4,232,918 
Other liabilities   5,960,788    2,912,187    4,528,706    1,504,824    1,198,466    435,341    5,713,565    22,253,877 
Total Liabilities   90,812,477    16,933,972    83,792,964    5,814,993    1,198,466    490,645    5,350,025    204,393,542 

 

Result by segments  Individuals
and
Businesses
   Corporate
Banking
   Treasury   Consumer   Insurance   Adm.
MF and
other
segments
   Adjustments   Total as of
09.30.2019
 
Interest income   20,726,818    13,079,538    3,378,742    4,837,583    -    239,025    (1,625,118)   40,636,588 
Interest expenses   (8,242,500)   (3,260,000)   (21,171,320)   (3,136,410)   -    (190,750)   1,820,204    (34,180,776)
Distribution of results by Treasury   4,095,583    (5,208,773)   1,113,190    -    -    -    -    - 
Net interest income   16,579,901    4,610,765    (16,679,388)   1,701,173    -    48,275    195,086    6,455,812 
Services Fee Income   4,801,524    1,075,287    35,506    1,705,595    -    639,381    (249,662)   8,007,631 
Services Fee Expenses   (1,270,827)   (105,783)   (57,516)   (602,074)   -    (36,243)   70,444    (2,001,999)
Income from insurance activities   -    -    -    -    928,294    -    214,005    1,142,299 
Net Service Fee Income   3,530,697    969,504    (22,010)   1,103,521    928,294    603,138    34,787    7,147,931 
Subtotal   20,110,598    5,580,269    (16,701,398)   2,804,694    928,294    651,413    229,873    13,603,743 
Net income from financial instruments at fair value through profit or loss   11,055    -    21,247,827    268,409    300,040    23,236    165,956    22,016,523 
Exchange rate difference on gold and foreign currency   1,267,904    151,127    (2,458,349)   6,790    -    28,155    (11,473)   (1,015,846)
NIFFI And Exchange Rate Differences   1,278,959    151,127    18,789,478    275,199    300,040    51,391    154,483    21,000,677 
Other operating income   1,168,987    653,615    235,337    273,759    7,096    194,388    (64,881)   2,468,301 
Result from exposure to changes in the purchasing power of the currency   (1,639,633)   (1,937,111)   (409,139)   (1,069,560)   (428,626)   (276,411)   120,967    (5,639,513)
Loan loss provisions   (3,136,775)   (3,205,565)   2,391    (1,715,224)   -    (13,413)   -    (8,068,586)
Net operating income   17,782,136    1,242,335    1,916,669    568,868    806,804    607,368    440,442    23,364,622 
Personnel expenses   (9,182,653)   (931,275)   (568,264)   (1,061,482)   (158,801)   (333,568)   (136,671)   (12,372,714)
Administration expenses   (4,749,634)   (326,006)   (306,018)   (992,280)   (215,089)   (223,600)   48,099    (6,764,528)
Depreciations and impairment of non-financial assets   (1,125,801)   (121,971)   (108,174)   (98,075)   (7,872)   (5,996)   (41,860)   (1,509,749)
Other operating expenses   (2,799,682)   (1,382,581)   (439,609)   (613,764)   (1,500)   (136,904)   (9,986)   (5,384,026)
Operating income   (75,634)   (1,519,498)   494,604    (2,196,733)   423,542    (92,700)   300,024    (2,666,395)
Result from associates and joint ventures   -    -    -    4,332    -    -    (4,332)   - 
Result before taxes from continuing operations   (75,634)   (1,519,498)   494,604    (2,192,401)   423,542    (92,700)   295,692    (2,666,395)
Income tax   21,544    13,357    11,221    431,711    (201,798)   (60,743)   (506,615)   (291,323)
Net income   (54,090)   (1,506,141)   505,825    (1,760,690)   221,744    (153,443)   (210,923)   (2,957,718)
Net income for  the  period attributable to owners of the parent company   (54,090)   (1,506,141)   505,825    (1,760,690)   221,744    (153,443)   (208,270)   (2,955,065)
Net income for the period attributable to non-controlling interest   -    -    -    -    -    -    (2,653)   (2,653)
Other comprehensive income   (1,131)   (780)   (1,917)   -    (82)   -    1,112    (2,798)
Other comprehensive income attributable to owners of the parent company   (1,131)   (780)   (1,917)   -    (82)   -    1,116    (2,794)
Other comprehensive income attributable to non-controlling interest   -    -    -    -    -    -    (4)   (4)
Comprehensive income for the period   (55,221)   (1,506,921)   503,908    (1,760,690)   221,662    (153,443)   (209,811)   (2,960,516)
Comprehensive income attributable to owners of the parent company   (55,221)   (1,506,921)   503,908    (1,760,690)   221,662    (153,443)   (207,154)   (2,957,859)
Comprehensive income attributable to non-controlling interests   -    -    -    -    -    -    (2,657)   (2,657)

 

34

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Assets by segments  Individuals
and
Businesses
   Corporate
Banking
   Treasury   Consumer   Insurance   Adm. MF
and other
segments
   Adjustments   Total as of
12.31.2019
 
Cash and due from banks   9,405,973    1,250,911    20,630,775    392,725    4,139    2,960,579    (2,357,051)   32,288,051 
Debt securities at fair value through profit or loss   -    -    381,915    113,438    -    199,860    -    695,213 
Loans and other financing   51,154,872    47,049,466    4,554,310    7,094,828    555,165    37,599    (1,731,728)   108,714,512 
Other Assets   2,889,219    1,437,588    22,096,131    3,316,547    1,334,591    658,650    9,299,599    41,032,325 
Total Assets   63,450,064    49,737,965    47,663,131    10,917,538    1,893,895    3,856,688    5,210,820    182,730,101 
                                         
Liabilities by segments                                        
                                         
Deposits   77,548,433    13,008,138    19,170,716    1,993,792    -    -    (2,873,988)   108,847,091 
Financing received from the Argentine Central Bank and others financial institutions   15,415    -    11,004,447    1,161,456    -    56,277    (1,210,078)   11,027,517 
Unsubordinated Negotiable obligations   132,691    93,634    7,197,731    -    -    19,025    -    7,443,081 
Other liabilities   5,703,291    1,685,267    5,323,835    3,869,688    926,932    3,159,588    5,139,673    25,808,274 
Total Liabilities   83,399,830    14,787,039    42,696,729    7,024,936    926,932    3,234,890    1,055,607    153,125,963 

 

3.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.

 

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.

 

35

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

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 September 30, 2020 and December 31, 2019:

 

Instrument portfolio as of 09/30/2020  FV level 1   FV level 2   FV level 3 
Assets               
- Debt securities at fair value through profit or loss   4,048,772    403,612    - 
- Derivatives   112,088    -    - 
- Other financial assets   6,052,041    -    - 
- Other debt securities   1,207,134    43,532,739    - 
- Financial assets in guarantee   4,952,183    -    - 
- Investments in Equity Instruments   78,641    8,928    - 
Total Assets   16,450,859    43,945,279    - 
Liabilities               
- Liabilities at fair value through profit or loss   189,074    -    - 
- Other financial liabilities   7,624,087    -    - 
Total Liabilities   7,813,161    -    - 

 

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   497,153    193,571    4,489 
- Derivatives   315,000    -    - 
- Other financial assets   1,347,049    -    - 
- Other debt securities   8,769,544    -    - 
- Financial assets in guarantee   6,022,164    -    - 
- Investments in Equity Instruments   7,088    10,740    - 
Total Assets   16,957,998    204,311    4,489 
Liabilities               
- Liabilities at fair value through profit or loss   231,803    -    - 
- Other financial liabilities   7,333,343    -    - 
Total Liabilities   7,565,146    -    - 

 

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. As of September 30, 2020, there have been no differences regarding the transaction price.

 

36

 

GRUPO SUPERVIELLE S.A.

NOTES TO THE CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2020

Presented on comparative basis

(Expressed in thousands of pesos in homogeneous currency)

 

Fair Value of Other Financial Instruments

 

The following chart includes a comparison between the fair value and the accounting value of financial instruments not recorded at fair value as of September 30, 2020 and December 31, 2019:

 

Other Financial Instruments as of 09/30/2020  Accounting
value
   Fair value   FV Level 1   FV Level 2   FV Level 3 
Financial Assets                         
-Cash and due from Banks   27,970,120    27,970,120    27,970,120    -    - 
-Other financial assets   583,196    583,196    583,196    -      
-Loans and other financing   98,191,094    102,043,862    -    -    102,043,862 
- Repo transactions   22,059,850    22,059,850    22,059,850           
- Other Debt Securities   6,392,008    6,306,881    6,306,881    -    - 
-Financial assets in as guarantee   213,732    213,732    213,732    -    - 
    155,410,000    159,177,641    57,133,779    -    102,043,862 
Financial Liabilities                         
-Deposits   170,259,118    173,217,091    -    -    173,217,091 
- Other financial liabilities   731,565    731,565    731,565    -    - 
-Financing received from the BCRA and other financial institutions   7,647,629    7,533,147    -    -    7,533,147 
- Unsubordinated Negotiable obligations   4,232,918    4,229,026    4,229,026    -    - 
- Subordinated Negotiable Obligations   1,050,485    1,113,247    1,113,247    -