Grupo Supervielle SA (SUPV) Q3 2021 Earnings Call Transcript

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Grupo Supervielle SA (SUPV -0.17%)
Q3 2021 Earnings Call
Nov 18, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Good morning, everyone, and welcome to the Grupo Supervielle Third Quarter 2021 Earnings Call. We apologize for the delay. This is Ana Bartesaghi, Treasurer and IRO. A slide presentation will accompany today's webinar, which is available in the Investors' section of the Grupo Supervielle Investor Relations website.

Today's conference call is being recorded. [Operator Instructions] There will be an opportunity for you to ask questions at the end of today's presentation.If you want to ask a question, you need to be connected to a Zoom platform from any device. We will not be able to take your questions if you are connected from a phone line. Also, please make sure your name and last name appear in the Zoom platform you are using.

To ask a question by voice, please press the raise your hand button located in the Zoom platform and press raise your hand again, to withdraw your question. You can also send questions in written form via the Q&A box in the Zoom platform anytime during the call. We will ask you to limit yourself to one question and a follow-up and then you can raise your hand again in another round.

Speaking during today's call will be Patricio Supervielle, our Chairman and CEO; Atilio Dell-Oro Maini, Board Member, leading Grupo Supervielle [Indecipherable] Strategy; and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandro Stengel, Second Vice Chairman of the Board and Bank CEO; and Jorge Ramirez, First Vice Chairman of the Board; Alejandra Naughton, Board Member of several of Grupo Supervielle's subsidiaries will also be joining us for today's call. All will be available for the Q&A session.

As a reminder, today's call will contain forward-looking statements which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, including as a result of the COVID-19 pandemic, and I refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

Today, Mariano Biglia, our CFO, will start the call discussing our performance for the quarter and our near-term outlook. Patricio Supervielle, our Chairman and CEO, will follow with an update on our mid-term strategic initiatives. Afterwards, Atilio Dell'Oro Maini will provide an overview of the key elements of our ESG strategy and goals.

Mariano Biglia, Chief Financial Officer.

Mariano Biglia -- Chief Financial Officer

Thank you, Ana. Good morning, everyone, and thank you for joining us today. Please turn to Slide 4 of our earnings presentation. While we saw a rebound in economic activity to pre-pandemic levels this quarter, we continued to operate under challenging market conditions with high inflation, negative real interest rates and industry loans at historical lows and growing below inflation. In addition, Central Bank regulations continue to weigh on NIM.

We delivered sequentially improved results, reporting an attributable loss of ARS60 million in third Q '21 compared to ARS348 million in the prior quarter. This was mainly driven by lower loan loss provisions, reflecting our strong underwriting and collection policies, along with the pickup in economic activity.

Lower operating expenses also contributed to this performance, where we continue to resize our branch network, accelerate efficiencies and executing our digital and channel transformation strategy. Our comparable efficiency ratio, excluding nonrecurring severance payments and early retirement charges, improved to 71% this quarter from 72% in the second quarter, also significantly impacted by a lower revenue base.

Looking at the first nine months of the year and excluding nonrecurring charges, expenses were down nearly 7% year-on-year. We also maintained a solid capital base with Tier 1 ratio of 14.1% at quarter-end and a strong liquidity to navigate the current environment and implement our strategic transformation. Patricio will provide shortly an update of our progress on our digital and channel transformation agenda, followed by Atilio, who will present our key ESG milestones and goals.

Now please turn to Slide 5. We expanded our loan book by 5% sequentially, growing above industry levels and recovering market share. Loan growth was mainly driven by higher mandatory redline to SMEs, which rose to a balance of nearly ARS20 billion accounted for over 30% of total loans this quarter from the balance of ARS14 billion in the prior quarter. Short-term financing to corporate also contributed to loan growth, along with strong origination in personal loans, which reached a record high in October. U.S. total loans in original currency, in turn, declined 10% sequentially.

Now moving to funding on Slide 6. The loan-to-deposit ratio remained relatively stable quarter-on-quarter at 53% with liquidity at solid levels, as deposits increasing to high single digit sequentially, driven mainly by institutional funding from liquidity management and corporate checking accounts. Core deposits were stable quarter-on-quarter. Total deposits in original currency were up 1.5% sequentially, accounting for slightly over 11% of total deposits.

Turning to Slide 7. NIM contracted 2 percentage points to 17% from 19% in the second quarter. While GDP growth returned to pre-pandemic levels, allowing us to capture some loan growth, overall credit demand remains weak. This, together with a lower yield on inflation-linked mortgages loans, given the de-acceleration in the price index and regulatory controls continue to exert pressure on NIMs.

Turning to asset quality on Slide 8. Our strong underwriting and collection policies, together with improved economic conditions, allowed us to release a portion of the COVID-19 specific provisions created last year. As a result, loan loss provisions declined to ARS1.4 billion from ARS2 billion in the prior quarter. In turn, cost of risk net improved to 3.5% from 5.7% in the second quarter. At quarter end, COVID-19 anticipatory provisions amounted to ARS1.6 billion versus ARS2.4 billion as of June 30. Our total provisioning ratio stood at 6.6% in September, above the pre-pandemic level of 6.4% posted in January 2020.

The total NPL ratio for the quarter increased 20 basis points sequentially to 5.5%, but declined after peaking to 5.5% in July. The sequential increase was mainly driven by Consumer Finance segment. As anticipated, we saw an increase in delinquency as installments were due after the expiration of the grace period, with the consumer finance NPL ratio reaching a peak of nearly 21% at quarter-end.

To contain delinquency, we have tightened our credit policies as we do so that new originated loans have a better rating. To a lesser extent, NPLs also increased to 5.1% from 2.2% at the Bank's Personal Loan segment after the expiration of the grace periods and the mandatory reclassification of customers performing with Supervielle, but nonperforming with other banks. By contrast, corporate SMEs and bank credit cards posted a sequential improvement in NPL ratios.

Slide 9. Although guidance remains suspended due to sustained immediate visibility on Slide 9, we share our views on the main drivers of our business for the remainder of the year and 2022. Starting with peso-denominated loans, we expect to see growth in line or below inflation in 2021, both commercial and consumer loans and above inflation in 2022. We also expect to end the year with deposits growing above inflation, fostered by FX restrictions and to a lower extent, by interest rate floors and time deposits. We expect deposits to continue growing above inflation driven by the same trends.

With respect to asset quality, as anticipated, NPLs peaked this quarter and are expected to remain stable or decline in the following quarters. We also expect coverage to decline as COVID-19 provisions are used for reverse. Cost of risk, in turn, is expected to be below 2020 and 2019 levels, but in line with historical levels of 5% to 6%.

In terms of margins for the remainder of the year and 2022, we expect NIMs to remain pressured by higher cost of funds resulting from the impact of the floor on interest rates on time deposits and subsidized rates on loans. This would be partially offset by higher inflation, together with credit demand anticipated to gradually pick up from historical lows.

Personnel and administrative expenses are likely to grow with inflation, while also reflecting additional restructuring costs and expenses as well as headcount efficiencies from the execution of our digital and channel resizing. Higher turnover taxes and the extension of the turnover tax reached [Indecipherable] and repos in the City of Buenos Aires will continue to negatively impact expenses. At the same time, the income is expected to grow in line with inflation. Finally, we continue to expect capital and liquidity to remain at comfortable levels supporting long-term sustainability. As noted earlier, 100% of our capital is hedged against inflation.

Now let me call -- turn the call to Patricio Supervielle, who will provide an update on our strategic initiatives. Patricio, please go ahead.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Thank you, Mariano. You heard Mariano present our financial results and views for the remainder of the year and 2022. In this challenging context, we remain fully focused on advancing on our transformation strategy. Starting with the transformation of our branch channels, using best-in-class technologies to facilitate self-service banking and expand SME reach, with the vision of everywhere and anytime banking.

First, digitized customers have increased consistently over the past two years and were up 76% since March last year. Second, keeping a strong focus on the customer experience, we recently deployed an upgraded version of the Bank's mobile app, rated 4.4 in the Play Store and 4.3 in the App Store.

Third, with the successful performance of our Virtual Hub MVPs for individuals in the province of Banco San Luis, while starting to scale this hybrid model to other regions and segments, and expanding our footprint while offering a superior customer experience, combining the strength of our face-to-face approach with a high efficiency of our virtual hub. This also allowed us to expand our footprint through our national territory with our leading branches.

And fourth, in the past four months, we modernized and expanded services to SMEs and related segments in 11 branches that were previously solely dedicated to senior citizens and expect -- we expect to convert four additional branches to multi-segment format before year-end.

Now please turn to Slide 11. At the same time, we have been introducing technological innovation at our senior citizen branches facilitating self-service banking for this customer segment, which was the least advanced in terms of digital adoption. Let me share some examples of the success of these initiatives. To allow for extended banking hours and higher efficiencies, we enlarged our 24-hour lobbies, increasing the number of biometric cash dispensers located in these lobbies.

As of September, cash dispensers in our 24-hour lobbies accounted for 53% of total cash dispenses, up around 24% before the pandemic and nearly 40% a year ago. As a result, the number of transactions at human tellers declined sharply to 2% of total transactions from 11% a year ago and 22% before the pandemic. We are also seeing continued adoption of our digital app dedicated to senior citizens, with 90 days lock in customers through the app, increasing over 144% when compared to first Q '20.

Please turn to Slide 12. As you can see, we are also advancing on the rightsizing of our branch network. The introduction of best-in-class technologies to extend service hours, facilitating self-service banking in some branches, while converting others to full service format is allowing us to enhance customer service and productivity. As a result, we closed one branch in the second quarter and plan to close another 16 between the remainder of 2021 and next year, subject to Central Bank authorization. These initiatives have allowed us to lower headcount by nearly 6% year-on-year.

Please now turn to Slide 13. Our IT infrastructure strategy includes creating an API environment to accelerate service development and time to market to transform our customer journeys. During the first nine months of the year, we added a total of 95 APIs and plan to add another 153 by the end of 2022. We are also advancing on the implementation of a data lake to become a data-driven enterprise while migrating technology to a hybrid multi-cloud to provide the flexibility to grow efficiently. By October -- by about October, 20% of our technology was already migrated to the cloud, and we expect to reach 30% by year-end, with 70% of our technology anticipated to be migrated to the cloud by the end of year 2024.

Please now turn to Page 14. We are also making progress on deploying our growth strategy for IUDU and IUDU Servicios. Next week, we are formally launching IUDU mobile retail digital savings account that will enable us to grow our client base and attract low-cost funding at this subsidiary. After a successful soft launch in last August, IUDU has already opened 230,000 accounts among current customers. IUDU clients also have access to a wide range of digital banking services, insurance and wellness offerings. And we will continue adding new features and services in the coming months.

We also have made progress in our goal of diversifying revenue origination beyond Argentina by deploying wellbeing and health services under the B2C or B2B2C format in certain countries in LatAm, excluding Brazil. We are, in this sense, advancing with Grupo Asistir and Europe assistance to implement in second quarter 2022, B2C wellbeing and health services in Paraguay. The offering will consist of health, dentistry, pharmacy, medical emergency and veterinary services.

Services will be marketed through the IUDU wellness marketplace, which will host a variety of wellness services under one platform, offering customers a simple and convenient and seamless experience. Additional information on the progress of our digital KPIs and more detailed description of all these initiatives and timeline can be found in the back of our earnings call presentation.

In summary, we will -- while we saw improved activity in the quarter, near-term profitability is expected to remain impacted by overall weak credit demand, pressure on NIMs, together with the cost and investments required to continue building our ecosystem and execute our transformation strategy. This strategy positions us to retain and enhance our customer relation -- our current customer relationships while attracting new digital clients and driving operational efficiencies longer term, when demand resumes.

Now before opening the call to Q&A, let me turn the call to Atilio Dell'Oro, one of our Board members and responsible for leading our ESG strategy, who will provide an update of our initiatives and ambitions on this front.

Atilio, please go ahead.

Atilio Maria Dell'Oro Maini -- Board Member

Thank you, Patricio. At Grupo Supervielle, we understand the need for more long-term and more sustainable view of shareholder value creation. Until not long ago, a more philanthropic vision prevailed in our corporate social responsibility model. As of 2019, CSR is integrated into the Group's core business through a responsible management model, oriented toward sustainability. CSR is no longer a goal contribution per year to NGOs. It is a way of doing business. We believe that how, not just what, matters in the business value creation process.

In this new phase, we have assumed a commitment to grow sustainably, protecting the environment and pursuing our business strategy in a socially responsible manner. We believe that enhanced disclosure of nonfinancial information such as environmental, social and governance-related factors satisfies the growing demand for an alignment of corporate financial performance with the Company's performance in nonfinancial factors. To develop our ESG strategy, we have defined our pillars and commitments shown on Slide 15.

In Slide 16, we present our ESG recent and most relevant highlights. In terms of our environmental responsibility, we work to reduce the impact of our operations on the environment by implementing a responsible environmental management system. We have been measuring our carbon footprint since 2019, and we compensate our greenhouse emissions to protect forest ecosystems. Renewable energy represents 14.4% of total energy consumption in our budgets. In addition, we have implemented a plastic waste management program to eliminate single-use plastics, and we have reduced paper consumption by 46% compared with 2019. Note that 75% of the paper consumed internally is responsibly sourced paper to protect forest ecosystems.

In connection with social responsibility, we focus on financial education, which is the gear shift of financial inclusion. More than 88,000 senior citizens clients attended digital literacy and financial education programs conducted in alliance with 21 universities in seven provinces and the City of Buenos Aires. 95% of transactions are conducted through our digital and automated channels.

Diversity is also a key aspect of our social responsibility. In 2021, we launched a comprehensive program to promote a diverse and inclusive work culture. We also work on more than 26 corporate financial programs, with focus on education, childhood, senior people and civic strengthening initiatives.

With respect to our responsibility with good governance, we believe a robust corporate finance is key for guaranteeing a sustainable business model over the long term. Ernst & Young recently conducted a risk regulatory assessment and verified 97% compliance with the inventory of obligations applicable to Grupo Supervielle. The area of compliance, monitors the correction, prevention program and our whistleblowing hotline allows employees, suppliers and clients to report any malpractice, unlawful or unethical behavior.

We have defined quantifiable metrics for our sustainability initiatives. On Slide 17, you will see the key and most prevalent ESG goals for 2024. In relation to our environmental responsibility, we have set the following goals: we will continue to measure our carbon footprint, setting a goal of 6% reduction and 50% carbon compensation to protect millenary forests. And on the other hand, a target of 45% of our total portfolio screened and analyzed through our environmental and social risk policy.

With respect to our social responsibility, we have set the following goals: 33% of women in senior executive positions by 2024 and 120,000 people attending our financial education programs.

Finally, our responsibility with good governance goals include publishing fully integrated sustainability report by 2023, prepared according with the global reporting initiative. And in addition, we aim to have 100% of our strategic suppliers submitting a self-evaluation form assessing compliance with our policies related to human rights, diversity and governance practice.

Questions and Answers:

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Thank you, Atilio. At this time, we will be conducting the question and answer session. [Operator Instructions] The first question comes from Ernesto Gabilondo of Bank of America. Please go ahead, Ernesto.

Ernesto Gabilondo -- Bank of America -- Analyst

Thank you, Ana. Good morning, Patricio, Mariano, Atilio, good morning, everyone. Thank you for your presentation and for the opportunity. My first question is on the political outlook in Argentina, after the mid-term elections, I would like to know which do think are the key challenges ahead? And if you think there are like potential key dates that we should be following? So that's my first question.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Well, first of all, there was a clear win of the opposition. And what I believe that -- I mean, the President has announced that in December, this December, they will present a multiyear economic program in order to have the approval of Congress. And what we expect, I mean we know that there is a deadline with the IMF. So there is short time frame for the government to negotiate this multiyear plan in order to make it -- to have more sustainable fiscal policies, FX -- more realistic also FX levels in order to enhance export-oriented industries and to strengthen the reserves of the Central Bank.

I -- what is not yet really clear is whether there is a clear line in the government in order to make this, let's say, a commitment for this economic plan. We will see. This is -- it's going to be an interesting period. But I think also the attitude -- what is important is the attitude of the IMF, whether they will, let's say, allow for sort of a muddle through economic policy until 2023 or they will be strict in the sense that they want to have lessening of expenditures, public expenditures and reduction of subsidies and so on. So this is, I think, the -- what we are looking for. I don't know if you want to add something, Alejandro, on that.

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

I think you've hit on most of the points, Patricio. As you said, it's key to understand what the scope and the depth of the agreement with the IMF will be. And going back to Ernesto's question, as to date, I think that you should follow carefully these talks to be able to establish when an agreement is reached.

Ernesto Gabilondo -- Bank of America -- Analyst

Thank you so much.Perfect. Thank you so much. Then just a second question on the fintech competitive landscape. I would appreciate if you can share with us who you see as the main players. The one I have on top of my mind is Uala. And how do you think IIUDU and your new digital initiatives are against the other fintechs?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Okay. I think that I mean, Uala basically is focusing on providing solutions for people who don't have bank accounts and they are giving a value proposition on that. And -- but the main problem is that they don't have deposits. Now, this is the reason why now they are applying for a banking license. In order to reach scale in Argentina, you need to have a license to get deposits. And you can see this, for instance, if you look at the size of the funds that were collected by the Mercado Pago in relation to the fund industry is nearly irrelevant, and they've been working on this.

So this is an extreme example that the -- let's say, only working with transactionality as a fintech player in Argentina is not -- they don't -- they are not able to reach -- they need to have, let's say, a bank license in order to become a player in Argentina because of the restrictions we have in Argentina.

In the case of IUDU, IUDU is transforming itself from a consumer finance operation fully -- almost fully focused in providing financial services, credit card and personal loans to people, customers who come to Chango -- to the Walmart Changomas supermarket stores toward now to a full digital service. And we -- our main goal now will be to attract deposits, retail deposits. And this will have a significant impact for us to -- I believe, to lower our cost of funds and to have a much more sustainable business. And I hope -- and I think it will impact a lot in the overall net income revenue of -- on capital creation of Grupo Supervielle.

I don't know if you want to add something on the fintech, Alejandro?

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

I think you mentioned the key issue of funding and access to funding. I also think that IUDU has done a terrific job at enhancing customer experience and putting together a very superior product offering. And I think those two things, combined with the strength of the funding capability, will make a very strong positioning in the market in the next quarters.

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Our next question comes from Gabriel Nobrega at Citi. Good morning, Gabriel. Please go ahead.

Gabriel D. Nobrega -- Citi -- Analyst

Sorry about that. I was having some technical difficulties. My first question is actually on loan demand. If you could elaborate further, what's driving the some higher demand which we are seeing? I know that you're saying in your press release that it's due to the government programs focused on SMEs. But I just wanted to understand if you think that we are at an inflection point, where loan demand isn't going to start increasing? And then how are you going to be able to control your adverse selection in this scenario? And I'll ask a second question afterwards.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Okay. We -- I mean, Gabriel, it's real that we are in a very low point of loan demand, credit loan demand. And we believe that it has mainly to do with the lack of business confidence and also consumer confidence. So we need these signals to reignite the loan demand. Having said that, there are certain particular enterprises that are export oriented, and they continue to perform well in the economy, and they are asked -- I mean, they -- we continue to serve them with different lines of credit, particularly pre-export financing.

Also, there are enterprises that take advantage of subsidized loans to take leasing lines, where we are very strong in leasing in order to replace equipment. And for individuals, it's -- I think it's the same problem, very lack -- I mean lack of appetite for loan demand. What we see eventually is an interest in car financing because people see in Argentina to take cars to be a protection of value. So used car financing is driving certain number of loans at the bank level and also IUDU. I don't know if you want to add on that, Alejandro?

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

Basically, I would mention that what we've seen during most of the pandemic, until there was a turning point in which the economy started to pick up, was that the working capital of most of SMEs and corporates have been going down. So there is an effect of replenishing working capital as the economy picks up, and that's basically what we are supporting.

In terms of the adverse selection, which I believe is the second part of your question, we are focusing on -- first on our own clients and helping them take off and regain much of the economic activity. And in many sectors, we're seeing that the level of economic activity is back to pre-pandemic levels and in some sectors, even beyond that. So the first focus is on clients that we know, on sectors which we've operated on and the value chains that we've worked in. The other focus is really supporting a pickup in some export-oriented sectors, for example, meat packing which are really picking up and are showing good progress, too. So we believe that there is significant room for growth from, as Atilio pointed out, very low credit penetration levels.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

In addition, in order to control, let's say, credit risk, also a large -- substantial part of our -- for instance, in the case of individuals, a substantial part of our personal loans are given to individuals that collect their salaries in the bank. It's around 70% of all personal financing in -- is with the -- debiting their accounts at the bank. So these also lowers, let's say, an adverse selection. And for enterprises, for corporations, I also said, in addition, to complement to what Alejandro mentioned, is that we continue to do a lot of cash flow-based financing, which is by itself, it's a way of controlling risks. But inflection point, I think we need to wait a truly inflection point. I think we will reach it in 2023 with a political change. This is my opinion.

Gabriel D. Nobrega -- Citi -- Analyst

All right. That's very clear. And actually, I have a follow-up from the previous question on the fintech landscape. I understand you talked about Uala. And what I wanted to understand is that you show this that you have around 500,000 digital customers. But when you compare with Uala, they already issued more than 2 million on prepaid cards. So I wanted to understand here, is there a strategy from you to some growth lower the number of clients maybe try to monetize them faster? Or are you still aiming at adding clients in a faster manner in the coming quarters?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Yes. What mainly that you have to bear in mind when you look at these figures, Gabriel, is when these operations are making money or not and how long we will take to monetize all this customer acquisition. What we've seen in financial services is just recruiting clients is not enough to able to have a sustainable strategy of attack. This is why we emphasized in our strategy the ability of having the right funding, particularly in the Argentine environment; and secondly, trying to have a principle or an integral relationship in cross-selling several products.

We approach this segment with this more comprehensive view. And we aim absolutely at having this relationship of several products with the right funding to be able to drive growth. We believe that the cost-to-income proportion would be much better and that the leverage we can have on our capital over the deposit base that we will capture will allow us to scale adequately with a very efficient model.

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Thank you, Gabriel. Our next questions come from Rodrigo Nistor from AR Partners. Please go ahead.

Rodrigo Nistor -- AR Partners -- Analyst

Good morning. I have a question regarding the income tax rate, if you could explain further reasons behind the high effective tax rate? And what should we expect going forward? And then I have a follow-up.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Mariano, do you want to go on that, please?

Mariano Biglia -- Chief Financial Officer

Yes. I can comment on that, Rodrigo. For the income tax rate, we have two main sources that increased the effective tax rate. The statutory income tax rate is 35%, but there are centering differences between the statutory income statement and the income segment for tax return. The main differences arise from the value of fixed assets acquired before 2017. That difference are permanent. So they create an increasing cost as the income for income tax purposes is higher than our profit before income tax, in our statutory income statement.

And second and probably more important, has to do with deferred tax assets and tax gross carry forward, which they are not -- according to the income tax law, they are not adjusted and they are -- they don't accrue any interest. So we have mainly at IUDU, we have ARS1.2 billion in deferred tax assets and tax loss carryforwards. And these assets lose value over time with inflation. So that loss of value as it relates to income tax according to IFRS is recognized in the income tax line item. So that increases the chart in the income tax line item and creates, in turn, a higher effective tax rate.

Both the tax have a larger impact when profit before income tax is lower than we have, as last year, the profit different income tax of ARS4 billion. This impact would already increase effective tax rates, maybe from 35% to 40%. But when profit before income tax is lower, it has a great impact and turn it up to 100% eventually.

Rodrigo Nistor -- AR Partners -- Analyst

Thank you. And then if I may have a more strategic question, maybe to Patricio. I would like to know briefly what makes him more enthusiastic about the future of the industry and what concerns you the most about today's Argentina banking system?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Well, I think that the financial industry is bearing, let's say, the cost of the -- an economy which is not in equilibrium. And the -- what -- of course, what worries me is that let's say, main business, which is providing loans to the private sector, has diminished over the last three years and you can see this in the loan-to-deposit ratio, which is a minimum in historic levels. And I think it reflects what is happening in the financial industry as a whole. There's lack of demand. And also there's another aspect, which also worries me is there is lack of savings.

So it's -- and the lack of savings, it has also to do with the absolute lack of confidence in our currency. We have a confidence problem. We need to get clear signals for investments, clear signals for deregulation, clear signals for export industries, clear signals for having an equilibrium in the monetary -- I mean, in monetary policies in order to have a currency that -- I mean, that basically gets to lower inflation.

Rodrigo Nistor -- AR Partners -- Analyst

The part of enthusiastic.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Pardon me?

Rodrigo Nistor -- AR Partners -- Analyst

The first question was, what makes you enthusiastic?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

What makes me enthusiastic is basically -- I mean, my enthusiasm, I think, has to -- basically is related to, let's say, if -- I think if there is a -- what we have seen on the political side now is that -- I think, is that a request of the society to have a more pro-market political economy. And I hope that they will -- I mean, the government will hear this request of the society to have a more pro-market stance.

Rodrigo Nistor -- AR Partners -- Analyst

Thank you very much.

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Thank you, Rodrigo. Our next question comes from Juan Recalde at Scotiabank. Good morning, Juan. Go ahead.

Juan Recalde -- Scotiabank -- Analyst

Hi, good morning, everyone. Thank you for taking my question. I have two questions. One is related to NIM and the second one related to the international expansion. So in terms of NIM, you mentioned that you expect NIM pressure to continue, given the low loan demand and regulations. So my question there is does this quarter reflect the full regulatory pressure? Or can we expect NIM to go down in the coming quarters? And related to that, how is the bank working to limit the NIM pressure?

And the second question, related to international expansion, can you help us understand the strategy for expanding outside Argentina? Are there any goals that you can share with us? And also, can the bank free -- can the group freely move capital outside the country with the current regulations?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Okay. Okay. Let's first answer the -- about the NIMs. Mariano will help, but simply, I would like to state that there is a pressure -- there's a continuous pressure of NIMs and mainly to do with the punitive regulations of the Central Bank, but also it has a lot to do with the lack of demand of loans. When loans resumes, it will help us definitely to, let's say, to have better NIMs. But do you want to answer the first question on NIMs, Mariano?

Mariano Biglia -- Chief Financial Officer

Sure, Patricio. Juan, well, in effect, this quarter, we are seeing the full impact of Central Bank regulations and also an adverse macroeconomic environment. So, we have very negative interest rates with the leagues paying 31% [Phonetic] interest rate, repos 36.5%, and that compares with an inflation of more than 50% in the last 12 months. So this leads also to a very low operating demand and in that environment we have regulated floors for time deposits because we would normally lower the interest rate that we pay on time deposits. So remain positive spread. So it's a very challenging environment, and we will see definitely the full impact of it in this quarter. But as you can see, we have the lowest NIM in the last five quarters.

So regarding the second part of your question, what we can do to sustain and increase that NIM in the future. We aim to grow in deposits, not regulated time deposits, but on mainly, for instance, in savings accounts and corporate current accounts. We have increased the average volume of corporate current accounts. This quarter, we are seeing that also in the first month of the fourth quarter. So that is very important. Also then, we need to increase our loan portfolio as credit demand resumes.

We've seen in the last quarters, particularly the 3Q, we see a -- we saw a growth of 5% in real terms. And so we gained a bit of market share there. It's still in the SMEs programs, the subsidized loans that are mandatory. So it doesn't have a -- still a very large positive income in NIM. But it's still a long road where we replace Central Bank instruments by loans to the private sector and that's what we intend to do in the future. And we expect 2022 to be a year where we resume growth above inflation, and that will lead us to increase NIMs.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

In terms of the international expansion that we want to pursue beyond that -- I mean, recreating revenues beyond Argentina, at IUDU Servicios, which is basically a platform to deliver health services and also services -- wellbeing services to individuals, we will start deploying -- we've reached agreement with two companies, Europe Assistance and Asystel is an Argentine company that provides health services. And Europe Assistance is more geared to wellbeing services in the home of an individual. So with both companies, we reached an agreement to start deploying in Paraguay as of the -- in the second quarter of 2022. And basically, what they are doing is they will be funding, they will be providing commercial -- I mean, commercial funding, which is it's -- this is basically -- we will use this funding in order to deploy digital marketing in order to attract customers. And it's going to be like our first beachhead in Latin America, beyond Argentina. And from there on, we plan to continue to go to other countries.

It's a business that -- I mean, our goal -- the goal in IUDU Servicios is that in three years from now to -- let's say, to have 200,000 customers in five countries. So this will give us let's say, 1 million customers in three years, this is what we plan to get. And this is basically -- just to give you an idea, in Argentina, with the same lines of businesses, we already have 320,000 customers that we developed providing these services. So we believe that we can reach that and get revenues beyond Argentina.

Then for InvertirOnline, InvertirOnline is -- we are working on a business plan. We already said that we requested our authorization in the Central Bank of Uruguay to presume regional -- to provide regional investment services for -- in Latin America, excluding Brazil, for -- particularly for the providing services or investment services in the U.S. market. And so we are working on the technology -- technological platform to deliver this in -- from Uruguay, from -- with this license of -- broker license in Uruguay. And in addition to -- in order to start our deployment, we already have secured around $5 million that are already in a holding out of Argentina. This is basically dividends that were paid from InvertirOnline Argentina, and they were paid and basically, they are in holding outside of Argentina. We will start growing this -- with this capital.

Juan Recalde -- Scotiabank -- Analyst

That's helpful. Thank you.

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Thank you, Juan. Our next question comes Alejandra Aranda from Itau. Hello, good morning Alejandra.

Alejandra Aranda -- Itau BBA -- Analyst

Hi, good morning and thank you for the opportunity. I have two questions, if I may. The first one is related to the costs. I mean I was positively surprised by the performance this quarter. And given that the outlook is challenging on the income side, I was wondering what to expect going forward, especially given the rightsizing that you've been doing.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Okay. Do you want to go on that Mariano? [Speech Overlap]

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

I think I can start on that and Mariano can correct. Hello Alejandra, we see lots of opportunities for enhancing our efficiency. Many have been triggered by the acceleration of the adoption of digital and automated channels throughout our branch network. The others come from the digital transformation process we've been discussing over the large quarters, and all these boiled down to a reduction in the total amount of headcount we need to operate and a reduction in the total amount of branches. We also see opportunities on the revenue side because the digital capabilities are giving us an opportunity to expand our footprint without actually having to deploy a physical branch network. So this combination is helping, as you've noticed, and we foresee this trend to continue throughout 2022.

Alejandra Aranda -- Itau BBA -- Analyst

Okay. But in terms of a level of efficiencies that we should be looking out for the next couple of quarters?

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

Well, you've seen a 6% increase -- sorry, decrease in headcount. And I think that we will probably be around that level moving forward.

Alejandra Aranda -- Itau BBA -- Analyst

Okay. Okay.

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Yes, Alejandra, also to complement what Alejandro said also at IUDU, IUDU is also in the middle of a huge transformation from a consumer finance company where business was done mainly in the traffic of supermarkets and toward a digital banking full digital banking service. And that entails a change of the way we do business, even in the -- for instance, the case of supermarket, the people that are in the supermarket, we will foster a much more, let's say the way clients they interact will be much more digital. And so this -- we will see in 2022, a substantial efficiency in terms of headcount also at IUDU because of this transformation that we are working on. And so you will see this in overall Grupo Supervielle, we have a significant reduction of headcount in 2022, besides the bank.

Alejandra Aranda -- Itau BBA -- Analyst

Thank you. If I may follow up on that. I mean there's a huge demand for digital jobs and digital native workers. How are you seeing the market there? How are you competing with the fintechs and also with the so-called blue labor with other companies from abroad coming and taking the opportunity to hire people the blue chip swap?

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

All right. It's a very good question, Alejandra, you need to ask on retention of talent, basically.

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

You're quite right, Alejandra. It's becoming more and more challenging. And yes, we are competing with fintechs, with big techs and also with international companies that are hiring Argentine talent for work abroad. So it is becoming challenging. What we've done is basically first, focus on the key areas where we're getting most attrition. This is basically digital talent, as you pointed out. We're working there on value proposition. And there are several aspects of the way that we work and the ability to address different needs that our workforce has under these challenging times. So part of it has to do with adjusting the way we work at workplace.

Second, as I mentioned before, the value proposition, adjusting it to market and keeping track on these changes, but also introducing other different alternatives in the way in which we compensate and in the way that we motivate. Some of these are basically out of focus groups that we do with the teams and also require a greater involvement in the digital transformation of some of the seniors of the organization to help the new talent navigate. So we think that this problem would actually become greater over time because the transformation we're doing at Supervielle is getting more and more visibility. So, we are getting prepared for it, and we are having so far, good success in retaining some of the cases that have been got forward, but it is getting tougher going forward.

Alejandra Aranda -- Itau BBA -- Analyst

Okay, thank you. May I do a third one?

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Yes, sure.

Alejandra Aranda -- Itau BBA -- Analyst

Short one. What's the minimum level that you feel comfortable in terms of coverage?

Mariano Biglia -- Chief Financial Officer

Yes, I can comment on that. As you know, we work with expected loss models according to IFRS. So just now, like a magic percentage you'd like to, let's say, 100% or 150%. It will depend on the loan portfolio, the mix of that portfolio, the outlook looking forward, that's also a component of expected loss. That is the forward-looking part of the model. So we are comfortable with the level we have right now. We think it's adequate as we thought it was adequate to have a larger coverage in the past, where we had less visibility and also the automatic rescaling was in place.

So looking forward, I would expect to probably decrease coverage as we feel comfortable using the COVID-specific provisions that we created during last year. Last quarter, we had ARS2.4 billion COVID-specific provisions, now they decreased to ARS1.6 million, and that should decrease in the futures, of course, always that the situation gets back to normal.

Alejandra Aranda -- Itau BBA -- Analyst

Okay, thank you.

Mariano Biglia -- Chief Financial Officer

You're welcome.

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Thank you, Alejandra for your questions as well. We have reached today's question-and-answer session. Thank you for joining us today. Thank you for the interest in our company. We look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, we remain available to answer any questions that you may have. Thank you, and stay safe and healthy.

Duration: 66 minutes

Call participants:

Ana Bartesaghi -- Treasurer and Investor Relations Officer

Mariano Biglia -- Chief Financial Officer

Julio Patricio Supervielle -- Chairman of the Board and Chief Executive Officer

Atilio Maria Dell'Oro Maini -- Board Member

Emerico Alejandro Stengel -- Second Vice Chairman of the Board, Chief Executive Officer of Banco Supervielle

Ernesto Gabilondo -- Bank of America -- Analyst

Gabriel D. Nobrega -- Citi -- Analyst

Rodrigo Nistor -- AR Partners -- Analyst

Juan Recalde -- Scotiabank -- Analyst

Alejandra Aranda -- Itau BBA -- Analyst

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