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

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

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

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

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, ~~2017~~2020 was:

~~Table of Contents~~


Item 12.	Description of Securities Other Than Equity Securities	~~269~~ 334

Item 12.A	Debt Securities	~~269~~ 334

Item 12.B	Warrants and Rights	~~269~~ 334

Item 12.C	Other Securities	~~269~~ 334

Item 12.D	American Depositary Shares	~~269~~ 334

PART II	337

Item 13.	Defaults, Dividend Arrearages and Delinquencies	~~270~~ 337

Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	~~270~~ 337

Item 15.	Controls and Procedures	~~270~~ 337
Item 16. [ Reserved]		338

Item 16.A	Audit committee financial expert	~~272~~ 338

Item 16.B	Code of Ethics	~~272~~ 338

Item 16.C	Principal Accountant Fees and Services	~~272~~ 339

Item 16.D	Exemptions from the Listing Standards for Audit Committees	~~273~~ 339

Item ~~16.E.~~	16.E Purchases of Equity Securities by the Issuer and Affiliated Purchasers	~~273~~ 340

Item 16.F	Change in Registrant’s Certifying Accountant	~~273~~ 340

Item 16.G	Corporate Governance	~~273~~ 340

Item ~~16.H.~~	16.H Mine Safety Disclosure	~~276~~ 346

Item 17.	Financial Statements	~~276~~ 346

Item 18.	Financial Statements	~~276~~ 347

Item 19. Exhibit Index	~~Exhibits~~347	~~277~~

~~Table of Contents~~INTRODUCTION

~~CERTAIN DEFINED TERMS AND CONVENTIONS~~Certain Defined Terms and Conventions

In this annual report, we use the terms “we,” “us,” “our” and the “Group” to refer to Grupo Supervielle S.A. and its consolidated subsidiaries, including Banco Supervielle S.A., unless otherwise indicated. References to “Grupo Supervielle” mean Grupo Supervielle S.A. References to the “Bank” mean Banco Supervielle S.A. and its consolidated subsidiaries. References to “Tarjeta” mean Tarjeta Automática S.A. References to ~~“Cordial Microfinanzas” mean Cordial Microfinanzas S.A. References to~~ “SAM” mean Supervielle Asset Management ~~S.A. References to “Adval” mean Adval~~ S.A. References to “Sofital” mean Sofital S.A.F.e I.I. References to “CCF” mean Cordial Compañía Financiera S.A., which has filed to change its name to IUDÚ Compañía Financiera S.A. References to “Supervielle Seguros” mean Supervielle Seguros S.A. References to “Espacio Cordial” or “Cordial Servicios” mean Espacio Cordial Servicios S.A. References to ~~“Viñas~~“InvertirOnline” mean InvertirOnline S.A.U. and InvertirOnline.com Argentina S.A.U. References to “MILA” mean Micro Lending S.A.U. References to “Supervielle Productores Asesores de Seguros” mean Supervielle Productores Asesores de Seguros S.A. References to “Supervielle Agente de Negociacion” mean Futuros del ~~Monte”~~Sur S.A. References to “Bolsillo Digital” mean ~~Viñas del Monte~~Bolsillo Digital S.A.U. References to “Easy Cambio” mean Easy Cambio S.A.

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

The term “Argentina” refers to the Republic of Argentina. The terms “Argentine ~~government”~~government,” the “government” or the ~~“government”~~“Government” refers to the ~~federal government~~Federal Government of Argentina, the term “Central Bank” refers to the Banco Central de la República Argentina, or the Argentine Central Bank, and the term “CNV” refers to the Argentine Comisión Nacional de Valores, or the Argentine securities and capital markets regulator. ~~“U.S. GAAP”~~The term “ByMA” refers to ~~generally accepted accounting principles in~~ the ~~United States of America (“United States” or “U.S.”),~~exchange Bolsas y Mercados Argentinos S.A. The term “MAE” refers to the exchange Mercado Abierto Electrónico S.A. The term “Argentine Capital Markets Law” refers to Law No. 26,831, as amended and supplemented. The term “Argentine Negotiable Obligations Law” refers to Law No. 23,576, as amended and supplemented. The term “AGCL” refers to Argentine General Corporations Law No. 19,550, as amended and supplemented. The term “Argentine Productive Financing Law” refers to Law No. 27,440.

“Argentine GAAP” refers to generally accepted accounting principles in Argentina and “Argentine Banking GAAP” refers to the accounting rules of the Central Bank. “IFRS” refers to the International Financial Reporting Standards, as issued by the International Accounting Standards Board (“IASB”).

The term “GDP” refers to gross domestic product and all references in this annual report to GDP growth are to real GDP growth, the term “CPI” refers to the consumer price index and the term “WPI” refers to the wholesale price index.

iii

The term “customers” refers to individuals or entities that have at least one of our products without any requirement of customer activity during any time period. The term “active customer” refers to customers that had activity in the previous 90 days.

Unless the context otherwise requires, the term “financial institutions” refers to institutions regulated by the Central Bank. The term “Argentine banks” refers to banks that operate in Argentina. The term “Argentine private banks” refers to banks that are not controlled or owned by the Argentine ~~federal government~~Federal Government or any Argentine provincial, municipality or city government. ~~The term “private domestically-owned banks” refers to private banks that are controlled by Argentine shareholders.~~

For information upfrom January 1, 2018 to December 31, 2017, the term “small businesses” refers to individuals and businesses with annual sales of up to Ps.40.0 million, the term “SMEs” refers to individuals and businesses with annual sales over Ps.40.0 million and below Ps.200.0 million, the term “middle-market companies” refers to companies with annual sales over Ps.200.0 million and below Ps.1.0 billion and the term “large corporates” refers to companies with annual sales over Ps.1.0 billion. For information since January 1, 2018, the term “small businesses” refers to individuals and businesses with annual sales up to Ps.70.0 million, the term “SMEs” refers to individuals and businesses with annual sales over Ps.70.0 million and below Ps.550.0 million, the term “middle-market companies” refers to companies with annual sales over Ps.550.0 million and below Ps.2.0 billion ~~amd~~and the term “large corporates” refers to companies with annual sales over Ps.2.0 billion. ~~The~~For information from January 1, 2019 to December 31, 2020, the term ~~“ROAE”~~“small businesses” refers to ~~return on average shareholders’ equity. ROAE is frequently used by financial institutions as a benchmark~~individuals and businesses with annual sales up to ~~measure profitability compared~~Ps.100 million, the term “SMEs” refers to ~~peers but not as a benchmark~~individuals and businesses with annual sales over Ps.100 million and below Ps.700 million, the term “middle-market companies” refers to ~~determine returns for investors, which is affected by multiple factors that ROAE does not consider.~~

~~PRESENTATION OF FINANCIAL AND OTHER INFORMATION~~companies with annual sales over Ps.700 million and below Ps.2.5 billion and the term “large corporates” refers to companies with annual sales over Ps.2.5 billion. For information since January 1, 2021, the term “small businesses” refers to individuals and businesses with annual sales up to Ps.300 million, the term “SMEs” refers to individuals and businesses with annual sales over Ps.300 million and below Ps.1.5 billion, the term “middle-market companies” refers to companies with annual sales over Ps.1.5 billion and below Ps.3 billion and the term “large corporates” refers to companies with annual sales over Ps.3 billion.

Presentation of Financial ~~Statements~~and Other Information

~~We maintain~~Financial Statements

This annual report contains our financial books and records in Pesos and prepare our consolidated financial statements in Argentina in conformity with Argentine Banking GAAP, as these are the rules and regulations applied by the Bank, our main subsidiary. Argentine Banking GAAP differs in certain significant respects from U.S. GAAP and from Argentine GAAP. Ouraudited consolidated financial statements as of December, ~~31, 2017~~2020 and 2016 and for each of the three years ended December 31, 2017, 2016 and 2015 have been audited, as stated in the report appearing herein, and are included in this annual report and referred to as our “audited consolidated financial statements.” Note 35 to our audited consolidated financial statements provides a description of the principal differences between Argentine

~~Table of Contents~~

~~Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2017 and 2016,~~2019, and for the years ended December 31, 2020, 2019 and 2018 (our “audited consolidated financial statements”), which have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina, a member firm of PricewaterhouseCoopers, an independent registered public accounting firm (“Price Waterhouse & Co.”), whose report is included herein.

We have prepared our audited consolidated financial statements under IFRS for the first time for our financial year ended December 31, 2018, with a transition date of January 1, 2017.

“Financial Reporting in Hyperinflationary Economies” (IAS 29) requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be measured in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. This requirement also includes the comparative information in financial statements. Our audited consolidated financial statements are stated in the measurement unit current as of December 31, 2020.

In order to conclude whether an economy is categorized as highly inflationary, IAS 29 outlines a series of factors to be considered, including the existence of an accumulated inflation rate in three years that is approximate or exceed 100%. As of July 1, 2018, Argentina reported a cumulative three-year inflation rate higher than 100% and therefore financial information published as from that date must be adjusted for inflation in accordance with IAS 29. Therefore, we have applied IAS 29 to our audited consolidated financial statements.

Effective January 1, 2019, we adopted IFRS 16 “Leases” using the simplified retrospective approach, so that the cumulative impact of the adoption was recognized in retained earnings at the beginning of the year starting on January 1, 2019, and the comparative figures were consequently not modified. Accordingly, certain comparisons between periods may be affected. See Note 7 to our audited consolidated financial statements for a more comprehensive discussion of the effects of the adoption by the Group of this and other new standards.

We are subject to the provisions of Article 2 – Section I – Chapter I of Title IV: Periodical Reporting Requirements of the rules issued by the CNV according to General Resolution No. 622/2013, as amended and supplemented (the “CNV Rules”) and we are required to present our financial statements in accordance with the valuation and disclosure criteria set forth by the Argentine Central Bank. The Argentine Central Bank, through Communications “A” 5541, as amended, set forth a convergence plan towards the application of IFRS as issued by the IASB and the interpretations issued by the International Financial Reporting Standards Committee (“IFRIC”), for entities under its supervision, effective for fiscal years beginning on or after January 1, 2018. The convergence plan had two exceptions to the application of IFRS: (i) item 5.5 (Impairment) of IFRS 9 “Financial Instruments,” and (ii) IAS 29 “Financial Reporting in Hyperinflationary Economies,” both of which were waived until January 1, 2020, at which time entities will be required to apply the provisions of IFRS in full. Through Communications “A” 6847 and 6938, the Argentine Central Bank excluded the financial instruments of the public sector from the requirement of IFRS 9 and carried over the first exception for financial entities within groups “B” and “C,” as these are defined by the Central Bank,until January 1, 2022. We presented our local financial statements under these rules on March 8, 2021.

Our consolidated financial statements contained in this annual report differ in certain material respects from our financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019, 2018 and 2017 ~~2016~~prepared in accordance with Argentine Banking GAAP and ~~2015.~~ filed with the CNV.

Unless otherwise indicated, all financial information of our company included in this annual report is stated on a consolidated basis under ~~Argentine Banking GAAP. Our audited~~IFRS and presented in terms of the measuring unit current at the end of the latest reporting period.

Overview of IAS 29

Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a highly inflationary economy, as mentioned above, should be reported measured in terms of the measuring unit current as of the date of the financial statements. All the amounts included in the statement of financial position which are not stated in terms of the measuring unit current as of the date of the financial statements should be restated adjusted applying the general price index. All items in the statement of income should be stated in terms of the measuring unit current as of the date of the financial statements, applying the changes in the general price index occurred from the date on which the revenues and expenses were originally recognized in the financial statements.

Adjustment for inflation in the initial balances has been calculated considering the indexes based on the price indexes published by the National Institute of Statistics and Census (Instituto Nacional de Estadística y Censos or “INDEC,” per its initials in Spanish).

The principal inflation adjustment procedures are the following:

Monetary assets and liabilities that are recorded in the current currency as of the financial position’s closing date are not restated because they are already stated in terms of the currency unit current as of the date of the financial statements.

Non-monetary assets and liabilities are recorded at cost as of the financial position date, and equity components are restated applying the relevant adjustment ratios.

All items in the consolidated income statement are restated applying the relevant conversion factors, as described in Note 1.1.2 to our consolidated financial statements ascontained in this annual report.

The effect of ~~December 31, 2017~~inflation in the Group’s net monetary position is included in the consolidated income statement, in the item “Results from exposure to changes in the purchasing power of money.”

Comparative figures have been ~~approved by our ordinary and extraordinary shareholders’ meeting held on April 24, 2018.~~adjusted for inflation following the procedure explained in the previous bullets.

Upon initially applying inflation adjustment, the equity accounts were restated as follows:

○

Capital stock was restated as from the date of subscription or the date of the most recent inflation adjustment for accounting purposes, whichever is later.

○

The resulting amount was included in the “Results from exposure to changes in the purchasing power of money” account.

○

Consolidated Statement of Comprehensive Income were restated as from each accounting allocation.

○

The legal reserve and other reserves in the statement of income were not restated as of the initial application date.

Certain Financial Data

The term “ROAE” refers to return on average shareholders’ equity, calculated based on daily averages. The term “ROAA” refers to return on average assets, calculated based on daily averages. ROAE and ROAA are frequently used by financial institutions as benchmarks to measure profitability compared to peers but not as benchmarks to determine returns for investors, which is affected by multiple factors that ROAE and ROAA do not consider.

Currencies and Rounding

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

We have translated certain of the Peso amounts contained in this annual report into U.S. dollars for convenience purposes only. Unless otherwise indicated, the rate used to translate such amounts as of December 31, ~~2017~~2020 was ~~Ps.18.7742~~Ps.84.15 to U.S.$1.00, which was the reference exchange rate reported by the Central Bank for U.S. dollars as of December ~~29, 2017.~~30, 2020. The Federal Reserve Bank of New York does not report a noon buying rate for Pesos. The U.S. dollar equivalent information presented in this annual report is provided solely for the convenience of investors and should not be construed as implying that the Peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. ~~See “~~~~Exchange Rates~~~~” for more detailed information regarding~~The reference exchange rate reported by the ~~translation~~Central Bank was Ps.93.34 per U.S.$1.00 as of ~~Pesos into U.S. dollars.~~April 27, 2021.

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

Market Share and Other Information

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

vii

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

~~Table of Contents~~Forward-Looking Statements

~~FORWARD-LOOKING STATEMENTS~~

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

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

(i)

the ongoing Novel Coronavirus 2019 (“COVID-19”) pandemic and government measures to contain the virus, which have disrupted and continue to disrupt economic activity globally and in Argentina;

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

(ii)

changes in general economic, financial, business, political, legal, social or other conditions in Argentina, including the performance of the Fernández administration, or elsewhere in Latin America or changes in either developed or emerging markets;

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

(iii)

the effects of the Argentine government’s ongoing restructuring of the country’s sovereign debt with the International Monetary Fund (“IMF”);

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

(iv)

fluctuations in the exchange rate of the Peso and inflation;

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

(iv)

changes in foreign exchange regulations and exchange control measures implemented by the Central Bank and the Argentine government;

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

(vi)

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

~~(vii)~~ ~~adverse legal or regulatory disputes or proceedings;~~

(vii)

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

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

(viii)

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

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

(ix)

changes in government regulation, including tax and banking regulations;

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

(x)

adverse legal or regulatory disputes or proceedings;

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

(xi)

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

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

(xii)

exposure to Argentine government liabilities and fluctuations and declines in the value of Argentine public debt;

~~(xiii)~~ ~~increase in the allowances for loan losses;~~

(xiii)

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

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

(xiv)

a loss of market share by any of our main businesses;

(xv)

increase in the allowances for loan losses;

~~(xv)~~ ~~ability to implement our business strategy;~~viii

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

(xvi)

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

(xvii)

ability to implement our business strategy; and

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

(xviii)

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

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

~~iii~~

~~Table of Contents~~

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

~~Table of Contents~~PART I

~~PART I~~

~~Item 1.~~~~Identity of Directors, Senior Management and Advisors~~

Item 1.

Identity of Directors, Senior Management and Advisors

Not applicable.

~~Item 2.~~~~Offer Statistics and Expected Timetable~~

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

Item 3.

Key Information

~~Item 3.~~~~Key Information~~

Item 3.A

Selected Financial Data

~~Item 3.A.~~~~Selected Financial Data~~

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

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

The selected consolidated statement of income data for the years ended December 31, 2020, 2019, 2018 and 2017 and the selected consolidated statement of financial position data as of December 31, ~~2017~~2020 and ~~2016 and for the three years in the period ended December 31, 2017 has~~2019 have been derived from our audited consolidated financial statements included in this annual report. The selected consolidated financial data as of December 31, 2015, 2014 and 2013 and for the years ended December 31, 2014 and 2013 has been derived from our audited consolidated financial statements,report which ~~are not included in this annual report. Our audited consolidated financial statements as of December 31, 2017 and 2016 and for the three years ended December 31, 2017~~ have been audited by Price Waterhouse & Co. S.R.L., member firm of PricewaterhouseCoopers an independent registered public accounting firm. The selected consolidated statement of income data for the ~~PricewaterhouseCoopers network, independent accountants, whose audit report is~~year ended December 31, 2017 and the selected consolidated statement of financial position data as of December 31, 2018 and 2017 have been derived from our audited consolidated financial statements that are not included ~~elsewhere~~ in this annual report.

~~We maintain our financial books and records in Pesos and prepare and publish our audited~~Our consolidated financial statements were prepared and presented in ~~Argentina in conformity~~accordance with ~~Argentine Banking GAAP as these are the rules and regulations~~IFRS. We applied by the Bank, our main subsidiary, which differ in certain significant respects from U.S. GAAP, and from Argentine GAAP. Note 35 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2017 and 2016 andIFRS for the ~~years ended December 31, 2017, 2016 and 2015.~~

On February 12, 2014, the Central Bank, through Communication “A” 5541, established the general guidelines towards conversion to International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) for preparing financial statements of the entities under its supervision with the temporary exception of paragraph 5.5 “Impairment” of IFRS 9 “Financial Instruments” (IFRS as issued by the IASB as adopted by the Central Bank). Note 33 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and IFRS, as they relate to us, and a reconciliation to IFRS of shareholders’ equity as of December 31, 2017 and January 1, 2017 and of net incomefirst time for the year ended December 31, 2018, with a transition date of January 1, 2017.

Our consolidated financial statements are presented in Argentine Pesos which is our functional currency.

IAS 29 establishes the conditions under which an entity shall restate its financial statements if it is located in an economic environment considered hyperinflationary. This standard requires that the financial statements of an entity that reports in the currency of a highly inflationary economy shall be stated in terms of the measuring unit current at the closing date of the latest reporting period, regardless of whether they are based on a historical cost approach or a current cost approach. To this end, in general terms, the inflation rate must be computed in the non-monetary items as from the acquisition date or the revaluation date, as applicable. These requirements also comprise the comparative information of the financial statements. Accordingly, the following selected consolidated financial data is stated in the measuring unit current as at December 31, 2020.

Solely for convenience of the reader, we have translated certain Peso amounts as of and for the year ended December 31, ~~2017 have been translated~~2020 into U.S. ~~dollars. The rate used to translate such amounts as of December 31, 2017 was Ps.18.7742 to U.S.$1.00, which was~~dollars at the reference exchange rate reported by the Central Bank ~~for U.S. dollars~~ as of December ~~29, 2017.~~31, 2020 which was Ps.84.15 to U.S.$1.00. U.S. dollar equivalent information should not be construed to imply that the Peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or any other rate.

Grupo Supervielle S.A.

Year ended December 31,

2017

2017

2016

2015

2014

2013

(in thousands of Pesos or U.S. dollars, as indicated)

Consolidated Income Statement Data

Argentine Banking GAAP:

Financial income(1)

U.S.$
825,317

Ps.
15,494,671

Ps.
10,794,579

Ps.
6,741,744

Ps.
4,751,352

Ps.
3,045,380

Financial expenses(2)

(329,936
)
(6,194,288
)
(4,866,525
)
(3,386,050
)
(2,464,526
)
(1,303,916
)
Gross financial margin

495,381

9,300,383

5,928,054

3,355,694

2,286,826

1,741,464

Loan loss provisions

(96,951
)
(1,820,169
)
(1,057,637
)
(543,844
)
(356,509
)
(350,535
)
Services fee income

264,899

4,973,272

3,527,516

2,835,708

2,162,820

1,765,659

Services fee expenses

(79,676
)
(1,495,848
)
(1,080,660
)
(778,492
)
(610,341
)
(421,587
)
Income from insurance activities

25,517

479,061

606,143

175,947

8,513

—

Administrative expenses

(446,923
)
(8,390,622
)
(6,060,281
)
(4,261,402
)
(3,013,842
)
(2,287,201
)
Income from financial transactions

162,248

3,046,077

1,863,135

783,611

477,467

447,800

Miscellaneous income

29,074

545,842

429,884

367,165

190,005

129,245

Miscellaneous losses

(20,053
)
(376,480
)
(458,946
)
(213,427
)
(91,761
)
(95,734
)
Non-controlling interests result

(314
)
(5,897
)
(22,166
)
(16,079
)
(13,707
)
(10,556
)
Income before income tax

170,955

3,209,542

1,811,907

921,270

562,004

470,755

Income tax

(41,146
)
(772,483
)
(500,603
)
(247,161
)
(199,084
)
(97,765
)
Net income for the fiscal period

129,809

2,437,059

1,311,304

674,109

362,920

372,990

U.S. GAAP:

Net income

88,812

1,697,481

1,025,868

676,076

301,514

398,815

Grupo Supervielle S.A.

As of December 31,

2017

2017

2016

2015

2014

2013

(in thousands of Pesos or U.S. dollars, as indicated)

Consolidated Balance Sheet Data

Argentine Banking GAAP:

Assets

Cash and due from banks

U.S.$
592,807

Ps.
11,129,475

Ps.
8,166,132

Ps.
6,808,591

Ps.
3,649,084

Ps.
2,662,592

Government and corporate securities

817,400

15,346,036

2,360,044

931,881

1,008,080

483,990

Loans:

2,927,122

54,954,373

34,896,509

20,148,261

14,596,580

11,292,289

to the non-financial public sector

1,737

32,607

4,306

8,778

12,666

15,699

to the financial sector

22,337

419,366

473,414

181,734

3,514

36,029

To the non-financial private sector and foreign residents:

Overdrafts

192,650

3,616,843

3,110,097

1,634,870

993,284

679,085

Promissory Notes(3)

825,316

15,494,647

9,426,568

5,984,777

5,583,705

4,472,631

Mortgage loans

82,548

1,549,765

78,057

50,032

69,554

83,660

Automobile and other secured loans

16,710

313,724

65,076

104,469

168,603

225,901

Personal loans

789,283

14,818,163

9,916,776

6,018,601

3,631,840

2,970,622

Credit card loans

424,308

7,966,037

6,678,578

5,677,922

3,688,328

2,410,111

Other

623,635

11,708,248

5,595,356

953,574

793,192

684,219

Accrued Interest, adjustments and exchange rate differences receivable

74,450

1,397,740

773,961

428,600

357,844

257,689

Documented interest

(44,161
)
(829,086
)
(324,795
)
(277,488
)
(287,605
)
(200,345
)
Other unapplied charges

(4
)
(83
)
(1,738
)
(295
)
(1,322
)
(1,012
)
Allowances

(81,686
)
(1,533,598
)
(899,147
)
(617,313
)
(417,023
)
(342,000
)
Other receivables from financial transactions

349,490

6,561,396

3,772,736

2,461,813

2,263,612

1,742,721

Grupo Supervielle S.A.

As of December 31,

2017

2017

2016

2015

2014

2013

(in thousands of Pesos or U.S. dollars, as indicated)

Receivables from financial leases

134,184

2,519,201

1,527,855

1,074,977

583,846

511,880

Other assets

184,338

3,460,797

2,482,766

1,620,294

1,139,992

724,659

Total assets

5,005,341

93,971,278

53,206,042

33,045,817

23,241,194

17,418,131

Average Assets(4)

3,707,170

69,599,142

41,467,412

26,961,165

20,066,019

14,645,841

Liabilities and shareholders’ equity

Deposits:

U.S.$
3,008,758

Ps.
56,487,027

Ps.
35,897,864

Ps.
23,716,577

Ps.
16,892,730

Ps.
12,819,178

Non-financial public sector

328,731

6,171,661

2,587,253

1,182,559

1,441,506

1,018,547

Financial sector

836

15,702

9,326

250,981

150,817

100,973

Non-financial private sector and foreign residents

2,679,191

50,299,664

33,301,285

22,283,037

15,300,407

11,699,658

Checking accounts

302,532

5,679,805

4,361,405

3,042,376

2,622,055

2,034,593

Savings accounts

1,575,513

29,578,994

13,205,937

7,753,696

5,352,593

3,640,102

Time deposits

693,233

13,014,886

11,677,322

10,034,025

6,651,006

5,426,409

Investment accounts

13,582

255,000

375,000

664,900

75,750

144,100

Other

94,330

1,770,979

3,681,621

788,040

599,003

454,454

Other liabilities from financial transactions and other miscellaneous liabilities

1,189,289

22,327,956

10,273,230

6,884,700

4,586,728

3,204,585

Non-controlling interests

612

11,497

103,397

70,830

54,750

41,960

Total liabilities

4,198,660

78,826,480

46,274,491

30,672,107

21,534,208

16,065,723

Average Liabilities(4)

3,196,853

60,018,357

36,480,913

24,866,415

18,464,430

14,433,187

Shareholders’ equity

806,681

15,144,798

6,931,551

2,373,710

1,706,986

1,352,408

Total liabilities and shareholders’ equity

5,005,341

93,971,278

53,206,042

33,045,817

23,241,194

17,418,131

Average shareholders’ equity(4)

510,317

9,580,785

4,986,499

2,094,750

1,601,589

1,212,654

U.S. GAAP:

Total assets

5,086,829

95,501,145

54,513,168

35,122,426

26,166,663

19,531,312

Total liabilities

4,346,180

81,596,047

48,014,492

32,858,882

24,626,175

18,247,809

Total shareholders’ equity

740,649

13,905,098

6,498,676

2,263,544

1,540,488

1,283,503

~~(1)~~ ~~Includes gains related to non-deliverable forward (“NDF”) hedging transactions, which totaled Ps.0 million, Ps.0 million, Ps.228.2 million, Ps.0, and Ps.86.9 million,~~Our consolidated financial statements contained in this annual report differ in certain material respects from our financial statements as of December 31, ~~2017, 2016, 2015, 2014~~2020 and ~~2013, respectively.~~

~~(2)~~ ~~Includes expenses related to NDF hedging transactions, which totaled Ps.71.3 million, Ps. 39.0 million, Ps.0, Ps.96.2 million,~~2019 and ~~Ps.0, as of December 31, 2017, 2016, 2015, 2014 and 2013, respectively.~~

~~(3)~~ Consists of unsecured checks and accounts receivable deriving from factoring transactions, and unsecured corporate loans which totaled Ps.5,238.4 million, Ps.3,102.8 million, Ps.2,399.3 million, Ps.1,547.5 million and Ps.979.9 million as of December 31, 2017, 2016, 2015, 2014 and 2013, respectively.

~~(4)~~ ~~Calculated on a daily basis.~~

Grupo Supervielle S.A.

Year ended December 31,

2017

2016

2015

2014

2013

Selected Consolidated Ratios:

Argentine Banking GAAP:

Net interest margin(1)

19.1
%
20.6
%
18.1
%
17.4
%
16.4
%
Net financial margin(2)

17.8
%
19.2
%
16.4
%
15.1
%
15.8
%
Net fee income ratio(3)

29.8
%
34.0
%
40.0
%
40.6
%
43.6
%
Efficiency ratio(4)

63.3
%
67.5
%
76.2
%
78.3
%
74.1
%
Fee income as a percentage of administrative expense

47.2
%
50.4
%
52.4
%
51.8
%
58.8
%
Return on average equity(5)

25.4
%
26.3
%
32.2
%
22.7
%
30.8
%
Return on average assets(6)

3.5
%
3.2
%
2.5
%
1.8
%
2.5
%
Cost/Assets

12.1
%
14.6
%
15.8
%
15.0
%
15.6
%
Basic earnings per share (in Pesos)(7)

6.20

4.10

4.42

2.92

3.00

Diluted earnings per share (in Pesos)

6.20

4.10

4.42

2.92

3.00

Basic earnings per share (in U.S.$)

0.33

0.26

0.34

0.34

0.46

Diluted earnings per share (in U.S.$)

0.33

0.26

0.34

0.34

0.46

Liquidity

Loans as a percentage of total deposits(8)

104.5
%
104.0
%
92.2
%
92.4
%
94.8
%
Loans as a percentage of total assets(8)

62.8
%
70.2
%
66.1
%
67.1
%
69.8
%
Liquid assets as a percentage of total deposits(9)

45.9
%
27.0
%
32.6
%
26.5
%
24.5
%
LCR Pro forma(14)

113.9
%
128.0
%
113.1
%
71.0
%
N/A

Capital

Total equity as a percentage of total assets

16.1
%
13.0
%
7.2
%
7.3
%
7.8
%
Average equity as a percentage of average assets

13.8
%
12.0
%
7.8
%
8.0
%
8.3
%
Total liabilities as a multiple of total shareholders’ equity

5.2

6.7

12.9

12.6

11.9

Tangible equity ratio(10)

15.8
%
12.6
%
6.5
%
6.5
%
6.7
%
Regulatory capital/ Risk weighted assets(11)

13.9
%
12.5
%
8.7
%
8.9
%
9.0
%
Regulatory capital/ Risk weighted assets Pro forma

19.6
%
13.8
%
8.7
%
8.9
%
9.0
%
Risk weighted assets/total assets

80.1
%
92.4
%
103.8
%
113.3
%
113.3
%
Tier 1 Capital / Risk weighted assets(12)

12.6
%
10.9
%
6.7
%
6.9
%
6.7
%
Tier 1 Pro forma(13)

18.4
%
12.3
%
6.7
%
6.9
%
6.7
%

Asset Quality

Non-performing loans as a percentage of total loans(15)

2.8
%
2.8
%
3.2
%
3.0
%
3.0
%
Allowances as a percentage of total loans

2.6
%
2.4
%
2.9
%
2.7
%
2.9
%
Cost of risk(16)

4.2
%
4.0
%
3.1
%
2.9
%
3.8
%
Allowances as a percentage of non-performing loans(15)

91.8
%
87.1
%
89.7
%
88.9
%
94.0
%

Other Data

Dividends paid to the common shares (Ps. million)(17)

243.7

65.5

19.2

2.7

4.5

Dividends paid to the preferred shares (Ps. million)

—

—

6.0

4.7

3.9

Dividends per common share (Ps.)

0.5

0.2

0.1

0.0

0.0

Dividends per preferred share (Ps.)(18)

—

—

1.9

2.9

2.4

Employees

5,320

4,982

4,843

4,579

4,570

Branches and sales points(19)

326

320

325

322

353

ATMs and self-service terminals(19)

704

661

649

632

588

~~(1)~~ ~~Net interest income divided by average interest-earning assets.~~

~~(2)~~ ~~Gross financial margin divided by average interest-earning assets.~~

~~(3)~~ ~~Net services fee income divided by the sum of gross financial margin and net services fee income.~~

~~(4)~~ ~~Administrative expenses divided by the sum of gross financial margin, services fee income and expenses and income from insurance activities.~~

~~(5)~~ ~~Net income divided by average shareholders’ equity, calculated on a daily basis and measured in local currency.~~

~~(6)~~ ~~Net income divided by average assets, calculated on a daily basis and measured in local currency.~~

~~(7)~~ ~~Basic earnings per share (in Pesos) are based upon the weighted average of Grupo Supervielle’s outstanding shares, which were Ps.392.8 million~~ for the ~~year~~years ended December 31, 2020, 2019, 2018 and 2017 ~~Ps.319.8 million for the year ended December 31, 2016, Ps.151.8 million for the year ended~~

~~December 31, 2015, Ps.122.9 million for~~ ~~the year ended December 31, 2014~~prepared in accordance with Argentine Banking GAAP and ~~Ps.122.9 million for the year ended December 31, 2013. In January 2016, the stock of preferred shares was converted to Class B shares.~~

(~~8) Loans include loans and receivables from financial leases.~~

(~~9) Liquid assets include cash, securities issued by the Central Bank (~~~~Las Letras del Banco Central~~ ~~(LEBAC) and NOBACs) and other government securities.~~

(10) (Total equity - Intangible assets)/(Total assets - Intangible assets). Intangible assets as of December 31, 2017, 2016, 2015, 2014 and 2013 amounted to Ps.324.5 million, Ps.285.5 million, Ps.252.0 million, Ps.216.0 million and Ps.197.0 million, respectively.

(11) Regulatory capital divided by risk weighted assets taking into account operational and market risk since 2013. This ratio applies only to the Bank and CCF on a consolidated basis and does not include the liquidity held at the holding company level.

(1~~2) Tier 1 capital divided by risk weighted assets taking into account credit risk, operational and market risk since 2013.~~

~~(13)~~ As of December 31, 2017 and December 31, 2016, Tier 1 Pro Forma includes Ps.4.3 billion and Ps.805.0 million, respectively, from the IPO proceeds retained at the Grupo Supervielle level, which are available for further capital injections in its subsidiaries.

~~(14)~~ ~~LCR ratio includes the net liquidity held at the holding company level.~~

(15) Non-performing loans include all principal amounts of loans to borrowers classified as “3-with problems/medium risk”, “4-high risk of insolvency/high risk”, “5-uncollectible”, and “6-uncollectible, classified as such under regulatory requirements” under the Central Bank loan classification system. See “ ~~Item 4.D Property, plants and equipment—Selected Statistical Information—Loans and Financings—Portfolio Classification~~.”

~~(16)~~ ~~Loan Loss Provisions divided by Average Loans.~~

~~(17)~~ ~~Dividend in relation~~filed with the ~~result of each year, declared and paid in the following year.~~

~~(18)~~ ~~In January 2016, all shares of preferred stock were converted to Class B shares. No dividends on the preferred shares were paid in 2017 or 2016.~~

~~(19)~~ ~~As of the date of this annual report, we have 340 branches and aales points and 714 ATMs and self-service terminals.~~CNV.

	For the year ended December 31,
	2020						2019			2018			2017
	US$			Ps.			Ps.			Ps.			Ps.

	(in thousands of Pesos or U.S. dollars, as indicated)
Consolidated Income Statement Data IFRS:
Interest income		768,909			64,699,880			60,983,625			63,700,230			46,628,865
Interest expenses		(339,633	)		(28,578,388	)		(47,531,377	)		(36,468,510	)		(17,402,793	)
Net interest income		429,276			36,121,492			13,452,248			27,231,720			29,226,072
Net income from financial instruments at fair value through profit or loss		39,403			3,315,582			28,536,382			13,215,705			7,425,590
Result from derecognition of assets measured at amortized cost		7,808			657,019			—			—			—
Exchange rate difference on gold and foreign currency		12,651			1,064,545			(441,191	)		2,359,639			823,288
Net Income from Financial instruments and Exchange Rate Differences		59,862			5,037,146			28,095,191			15,575,344			8,248,878
Net Financial Income		489,138			41,158,638			41,547,439			42,807,064			37,474,950
Services fee income		136,595			11,493,824			11,707,556			12,414,260			12,699,146
Services fee expense		(42,169	)		(3,548,269	)		(3,054,954	)		(2,970,070	)		(2,555,920	)
Income from insurance activities		19,864			1,671,455			1,896,923			1,777,345			1,883,790
Net Service Fee Income		114,290			9,617,010			10,549,525			11,221,535			12,027,016
Subtotal		603,428			50,775,648			52,096,964			54,028,599			49,501,966
Result from exposure to changes in the purchasing power of the currency		(50,987	)		(4,290,328	)		(7,296,543	)		(12,597,117	)		(5,426,822	)
Other operating income		44,916			3,779,451			3,751,037			5,180,332			3,849,342
Loan loss provisions		(102,384	)		(8,615,060	)		(10,533,018	)		(10,846,363	)		(8,446,636	)
Net operating income		494,973			41,649,711			38,018,440			35,765,451			39,477,850
Personnel expenses		(216,018	)		(18,176,866	)		(19,283,346	)		(18,384,833	)		(18,296,158	)
Administration expenses		(122,628	)		(10,318,557	)		(10,310,666	)		(11,729,051	)		(10,300,797	)
Depreciations and impairment of non-financial assets		(28,606	)		(2,407,028	)		(2,470,504	)		(905,545	)		(1,302,619	)
Other operating expenses		(78,136	)		(6,574,779	)		(8,656,215	)		(9,030,424	)		(8,705,568	)
Operating income (loss)		49,585			4,172,481			(2,702,291	)		(4,284,402	)		872,708
Income / (Loss) before taxes		49,585			4,172,481			(2,702,291	)		(4,284,402	)		872,708
Income tax		(7,983	)		(671,707	)		(229,663	)		(2,117,088	)		(2,454,435	)
Net income / (loss) for the year		41,602			3,500,774			(2,931,954	)		(6,401,490	)		(1,581,727	)
Net income / (loss) for the year attributable to parent company		41,591			3,499,882			(2,929,201	)		(6,341,497	)		(1,579,864	)
Net income / (loss) for the year attributable to non–controlling interest		11			892			(2,753	)		(59,993	)		(1,863	)
Total other comprehensive income		9,551			803,693			(65,123	)		505,922			98,184
Other comprehensive income attributable to parent company		9,542			802,914			(64,940	)		505,396			98,157
Other comprehensive income attributable to non–controlling interest		9			779			(183	)		526			27
Total comprehensive income (loss)		51,155			4,304,467			(2,997,077	)		(5,895,568	)		(1,483,543	)
Total comprehensive income attributable to parent company		51,135			4,302,796			(2,994,141	)		(5,836,101	)		(1,481,707	)
Total comprehensive income attributable to non–controlling interest		20			1,671			(2,936	)		(59,467	)		(1,836	)

~~Exchange Rates~~2

	As of December 31,
	2020				2019		2018		2017
	US$		Ps.		Ps.		Ps.		Ps.

Assets	(in thousands of Pesos or U.S. dollars, as indicated)
Cash and due from banks		435,853		36,674,869		35,945,335		70,551,281		34,314,675
Cash		152,029		12,792,522		11,913,814		10,030,991		9,396,947
Financial institutions and correspondents		283,824		23,882,347		24,031,521		60,520,290		24,917,728
Argentine Central Bank		233,213		19,623,684		21,683,569		57,359,874		21,798,801
Other local financial institutions		48,801		4,106,336		2,307,232		3,138,638		2,963,937
Others		1,810		152,327		40,720		21,778		154,990
Debt Securities at fair value through profit or loss		117,320		9,871,903		773,961		31,649,050		35,263,386
Derivatives		1,711		143,944		350,680		33,349		83,227
Reverse Repo transactions		265,669		22,354,735		—		—		10,358,041
Other financial assets		50,927		4,285,221		2,854,686		3,556,206		5,002,814
Loans and other financing		1,252,542		105,395,186		119,817,347		161,696,402		182,430,239
To the non-financial public sector		280		23,530		39,307		68,697		100,825
To the financial sector		143		12,062		87,841		834,679		1,228,000
To the non-financial private sector and foreign residents		1,252,119		105,359,594		119,690,199		160,793,026		181,101,414
Other debt securities		485,590		40,859,975		14,238,340		9,028,655		1,109,742
Financial assets pledged as collateral		58,291		4,904,935		7,261,336		4,203,681		4,023,577
Current income tax assets		—		—		139,487		1,239,937		377,930
Inventories		843		70,964		60,521		146,429		327,349
Investments in equity instruments		1,382		116,328		19,848		21,789		144,256
Property, plant and equipment		84,421		7,103,638		5,448,454		4,573,357		4,315,378
Investment property		71,281		5,997,945		5,520,143		865,687		601,210
Intangible assets		80,605		6,782,538		5,919,425		5,677,261		962,156
Deferred income tax assets		39,407		3,315,885		2,275,175		1,721,119		2,423,044
Non-current assets held for sale		—		—		—		5,864		—
Other non-financial assets		16,080		1,352,880		1,795,477		1,861,081		1,473,232
Total Assets		2,961,922		249,230,946		202,420,215		296,831,148		283,210,256
Average Assets		3,046,602		256,356,321		272,626,702		325,617,464		264,967,571

Liabilities
Deposits		2,123,021		178,641,594		121,176,255		198,760,086		174,422,352
Non-financial public sector		94,019		7,911,255		7,447,131		23,258,016		19,083,497
Financial sector		682		57,416		38,253		52,851		48,552
Non-financial private sector and foreign residents		2,028,320		170,672,923		113,690,871		175,449,219		155,290,303
Liabilities at fair value through profit or loss		23,792		2,002,005		258,060		561,448		—
Derivatives		24		1,995		—		197,328		—
Repo transactions		—		—		435,401		—		—
Other financial liabilities		89,475		7,528,889		12,409,984		8,936,807		12,093,554
Financing received from the Argentine Central Bank and other financial institutions		69,550		5,852,292		12,276,610		16,823,037		10,902,349
Unsubordinated debt securities		50,232		4,226,748		8,286,163		19,491,854		26,558,104
Current income tax liability		15,310		1,288,267		—		1,657,148		2,550,755
Subordinated debt securities		13,554		1,140,469		2,886,028		2,898,105		2,120,799
Provisions		8,094		681,092		921,696		182,024		247,873
Deferred income tax liabilities		499		42,005		689,268		467,760		62,426
Other non—financial liabilities		144,347		12,146,102		11,175,664		11,319,599		11,755,332
Total Liabilities		2,537,898		213,551,458		170,515,129		261,295,196		240,713,544
Average Liabilities		2,637,774		221,955,479		240,835,009		286,553,885		231,009,734
Shareholders’ Equity		424,024		35,679,488		31,905,086		35,535,952		42,496,712
Shareholders’ equity attributable to owners of the parent company		423,687		35,651,135		31,878,404		35,506,450		42,031,151
Shareholders’ equity attributable to non-controlling interests		337		28,353		26,682		29,502		465,561
Total Liabilities And Shareholders’ Equity		2,961,922		249,230,946		202,420,215		296,831,148		283,210,256
Average Shareholders’ Equity		408,828		34,400,841		31,791,694		39,063,579		33,957,837

From April 1, 1991 until the end of 2001, Law No. 23,928 (the “Convertibility Law”) established a regime under which the Central Bank was obliged to sell U.S. dollars at a fixed rate of one Peso per U.S. dollar. On January 6, 2002, the Argentine Congress enacted Law No. 25,561 (as amended and supplemented, the “Public Emergency Law”), formally ending the regime of the Convertibility Law, abandoning over ten years of U.S. dollar-Peso parity and eliminating the requirement that the Central Bank’s reserves in gold, foreign currency and foreign currency denominated debt be at all times equivalent to 100% of the monetary base.3

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

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

After several years of moderate variations in the nominal exchange rate, in 2012 the Peso lost approximately 14.0% of its value with respect to the U.S. dollar. This was followed in 2013 and 2014 by a devaluation of the Peso with respect to the U.S. dollar that exceeded 30.0%, including a loss of approximately 24.0% in January 2014. In 2015, the Peso lost approximately 52.0% of its value with respect to the U.S. dollar, including a 10.0% devaluation from January 1, 2015 to September 30, 2015 and a 38.0% devaluation during the last quarter of the year 2015, mainly concentrated after December 16, 2015. In 2016 and 2017, the Peso lost approximately 21.9% and 18.4% of its value against the U.S. dollar, respectively. In the first two months of 2018, the Peso lost approximately 7.1% of its value against the U.S. dollar.

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

Exchange Rates

High(1)

Low(1)

Average(1)(2)

Period-end(1)(3)

2013

6.5180

4.9228

5.4789

6.5180

2014

8.5555

6.5430

8.1188

8.5520

2015

13.7633

8.5537

9.2689

13.0050

2016

16.0392

13.0692

14.7794

15.8502

2017

18.8300

15.1742

16.5665

18.7742

October 2017

17.6775

17.3217

17.4528

17.6713

November 2017

17.6700

17.3307

17.4925

17.3845

December 2017

18.8300

17.2600

17.7001

18.7742

2018

January 2018

19.6500

18.4100

19.0200

19.6500

February 2018

20.1600

19.4700

19.8409

20.1150

March 2018

20.3875

20.1433

20.2378

20.1433

April 2018 (through April 25, 2018)

20.2595

20.1450

20.1955

20.2595

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

~~(2)~~ ~~Based on daily averages.~~

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

~~Item 3.B~~~~Capitalization and indebtedness~~

Item 3.B

Capitalization and indebtedness

Not applicable.

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

Item 3.C

Reasons for the offer and use of proceeds

Not applicable.

~~Item 3.D~~~~Risk Factors~~

Item 3.D

Risk Factors

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

Risks Relating to Argentina

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

The ongoing COVID-19 pandemic and government measures to contain the virus adversely affected, and could continue to affect, our business and results of operations, and, as conditions continue to evolve in 2021, we cannot accurately predict the ultimate impact on us.

~~Economic~~In December 2019, COVID-19, a novel strain of coronavirus (SARS-COV-2) causing a severe acute respiratory syndrome, was reported to have surfaced in Wuhan, China. COVID-19 has since spread across the world, including Argentina, and ~~political instability~~on March 11, 2020, the World Health Organization declared COVID-19 a pandemic. As of April 27, 2020, around 2.9 million cases had been confirmed in Argentina, along with a death toll of approximately 62,000. In response, countries have adopted extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, requiring closures of non-essential businesses, instructing residents to practice social distancing, issuing stay at home orders, implementing quarantines and similar actions. The ongoing pandemic and these extraordinary government measures have disrupted global economic activity and resulted in significant volatility in global financial markets. According to the IMF estimates, the global economy declined 3% in 2020. In turn, Latin America’s economy is estimated to have decreased 5.2%, while Argentina’s GDP declined 9.9% according to INDEC. The outbreak of COVID-19 has caused significant social, business, economic and market disruption globally. While the long-term impact on the global economy and financial markets is still uncertain, it is expected to be significant, although the accelerated vaccination programs, could lead to a fast global recovery in 2021.

The Argentine government adopted and continues to adopt multiple measures in response to the COVID-19 pandemic, including a nationwide mandatory lockdown that began on March 19, 2020 and was extended until November 6, 2020, and the mandatory shutdown of businesses not considered essential, including bank offices, which extended until mid-April 2020. As of the date of this annual report, banks are considered essential businesses and are permitted to open to provide most services to clients, in each case with prior appointment, provided that certain health and safety requirements are complied with. At the same time, in order to mitigate the economic impact of the COVID-19 pandemic and mandatory lockdown and shutdown of non-essential businesses, the Argentine government has adopted social aid, monetary and fiscal measures. On December 29, 2020, the Argentine government started a national vaccination program initially targetted to health professionals. Several vaccines against COVID-19 have been approved for their administration in Argentina, including Sinopharm, Sputnik V and AstraZeneca. After a period of relaxation of the aforementioned restrictive measures and following a large rise in the number of infections in the previous weeks, on April 8, 2021 the government announced a national night-time curfew and additional restrictions.

We cannot assure you whether these measures will be sufficient to contain a severe second wave spread of the virus and prevent a more severe health crisis in Argentina, and if the government will be able to prevent a new economic downturn in 2021, following the economic recovery experienced in the second half of 2020 and first months of 2021.

Some of the measures adopted by the Argentine government adversely affected, and could continue to affect, financial institutions, such as our Group. These temporary measures have included: (i) postponement of loan payments without punitive interests, (ii) deferral of unpaid loan installments from April 2020 to March 2021, (iii) prohibiting banks to charge fees for ATM transactions, (iv) freezing mortgage payments and suspending foreclosures, (v) the automatic refinancing of credit card payments and reduction of the maximum interest rates that can be charged on credit cards, (vi) imposing a minimum interest rate to be paid on time deposits, (vii) imposing the grant of loans to SMEs at subsidized rates, and (viii) forbidding bank account closures. Additionally, some of the government measures were aimed at encouraging bank lending, such as (i) limitations on banks’ holdings of notes from the Central Bank (LELIQ), in order to make liquidity available and encourage the provision of credit lines to SMEs, (ii) lowering of reserve requirements on loans to households and SMEs, and (iii) the easing of bank loan classification rules (providing an additional 60 days of non-payment before a loan is required to be classified as non-performing). Some of these measures have been lifted and other softened in the first months of 2021, although the majority of them continue in effect. Moreover, banks dividend distributions are currently suspended until June 30, 2021, and employees’ layoffs are prohibited until at least May 31, 2021. For more information on regulations in connection with the COVID-19 pandemic and their impact on our Group, see “Item 4.B.—Business Overview—Argentine Banking Regulations – Government Measures in Response to the Ongoing COVID-19 Pandemic” and “Item 5.A Operating Results – The Ongoing COVID-19 Pandemic.” Although these measures may help attenuate the economic impact on the Argentine economy overall, they had and may continue to have a negative impact on our business and results of operations.

The ongoing COVID-19 pandemic and government measures taken to contain the spread of the virus have adversely affected, and ~~materially~~could continue to affect, our business and results of operations. Since early stages of the pandemic outbreak, we have transitioned a significant part of our workforce to work remotely, which continues as of the date of this annual report, and which may exacerbate certain risks to our business, including an increased reliance on information technology resources, increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information. Moreover, we faced and could continue to face various risks arising from the economic impact of the pandemic and government measures, such as (i) a higher risk of impairment of our assets, (ii) lower as a consequence of the temporary restrictions on charging certain fees to customers, and as a result of lower interest rates on loans promoted by the Central Bank and minimum interest rates imposed on deposits, (iii) a possible significant increase in loan defaults and credit losses, with a consequent increase in loan loss provisions, and (iv) a decrease in credit demand and in our business activity in general, particularly new retail lending. During 2020 we have updated and enhanced our expected loss models and have created provisions related to COVID-19, thereby increasing our coverage ratio; however, it is still uncertain how a further spread of the virus could impact in the economy and the ability of our customers to pay their obligations.

We are continuing to monitor the impact of the ongoing COVID-19 pandemic across our businesses. The ultimate impact of the pandemic on our business, results of operations and financial ~~condition.~~condition remains highly uncertain and will depend on future developments outside of our control, including the intensity and duration of the pandemic, whether new variants of the COVID-19 arise, and the government measures in response of the COVID-19 pandemic, including the vaccination program. To the extent the COVID-19 pandemic adversely affects our business, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Our business is largely dependent upon macroeconomic, political, regulatory and social conditions in Argentina.

Substantially all of our operations, properties and customers are located in Argentina and, as a result, our business is to a large extent dependent upon macroeconomic, political, regulatory and social conditions prevailing in Argentina. Developments in economic, political, regulatory and social conditions in Argentina, and measures taken by the Argentine government, have had and are expected to continue to have a significant impact on our business, results of operations and financial condition. Argentina is an emerging market and investing in such markets generally carries additional risks.

The Argentine economy has experienced significant volatility in ~~recent~~past decades, ~~characterized by~~including multiple periods of low or negative growth and high levels of inflation and currency ~~devaluation. As~~depreciation. According to restated information released by Argentina’s National Statistics Institute (Instituto Nacional de Estadística y Censos or “INDEC” per its acronym in Spanish), Argentina’s real GDP grew by 2.7% in 2015, decreased by 2.1% in 2016, grew by 2.7% in 2017, decreased by 2.5% in 2018, decreased by 2.2% in 2019. In 2020, Argentina’s GDP decreased by 9.9%, due in large part to the effects of the ongoing COVID-19 pandemic.

Argentine economic conditions are dependent on a ~~consequence, our business~~variety of factors, including the following: (i) domestic production, international demand and ~~operations~~prices for Argentina’s principal commodity exports; (ii) the competitiveness and efficiency of domestic industries and services; (iii) the stability and competitiveness of the Argentine peso against foreign currencies; (iv) the rate of inflation; (v) the government’s fiscal deficits; (vi) the government’s public debt levels; (vii) foreign and domestic investment and financing; and (viii) governmental policies and the legal and regulatory environment. Government policies and regulation –which at times have been implemented through informal or de facto measures and ~~could~~have been subject to radical shifts– that have had a significant impact on the Argentine economy in the past, have included, among others: (i) monetary policy, including exchange controls, capital controls, high interest rates and a variety of measures to curb inflation; (ii) restrictions on exports and imports; (iii) price controls; (iv) mandatory wage increases or prohibition of dismissals; (v) taxation; and (vi) government intervention in the private sector.

Legislative mid-term elections in Argentina will take place in October 2021, by virtue of which one third of the seats in the senate, and half of the seats in the house of representatives, will be up for election. Political uncertainty in Argentina regarding the policies that may be adopted in the future ~~be, affected from time~~by the government could lead to ~~time to varying degrees by economic~~further volatility and adversely affect Argentina’s economy.

We cannot assure you that developments in Argentina will not affect macroeconomic, political, ~~developments~~regulatory or social conditions in the country and, ~~other material events affecting~~consequently, affect our business, result of operations and financial condition.

If the current levels of inflation continue or increase, the Argentine economy ~~such as: inflation; price controls; foreign exchange controls; fluctuations~~and our financial position and business could be adversely affected.

In the past, inflation has materially undermined the Argentine economy and Argentina’s ability to create conditions that would permit growth. High inflation may also undermine Argentina’s competitiveness abroad and lead to a decline in ~~foreign currency exchange rates~~private consumption which, in turn, could also affect employment levels, salaries and interest ~~rates; governmental policies~~

~~regarding spending~~rates. Moreover, a high inflation rate could undermine confidence in the Argentine financial system, reducing the Peso deposit base and ~~investment, national, provincial~~negatively affecting long-term credit markets.
The INDEC reported a cumulative variation of the CPI of 47.6% for 2018, 53.8% for 2019 and 36.1% for 2020. According to the market expectations survey published by the Central Bank, this tendency is expected to persist, as expectations for 2021 CPI are around 46%.
There can be no assurances that inflation rates will not continue to escalate in the future or ~~municipal tax increases and other initiatives increasing government involvement with economic activity; civil unrest and local security concerns. You should make your own investigation into~~that the measures adopted or that may be adopted by the administration to control inflation will be effective or successful. Inflation remains a challenge for Argentina. Significant inflation could have a material adverse effect on Argentina’s economy and in turn could increase our costs of operation, in particular labor costs, and may negatively affect our business, financial condition and results of operations.
Fluctuations in the value of the Argentine Peso could adversely affect the Argentine economy.
Fluctuations in the value of the Peso continue to affect the Argentine economy. Since January 2002, the Peso has fluctuated significantly in value. Persistent high inflation, together with formal and de facto exchange controls, have resulted in the past in an overvalued official exchange rate. Compounded by the effects of exchange controls and restrictions on foreign trade, highly distorted relative prices have resulted in the loss of competitiveness of Argentine production, impeded investment and caused economic stagnation. In 2015, the Peso lost approximately 52% of its ~~prevailing conditions before making an investment~~value with respect to the U.S. Dollar, including a 37.3% depreciation during the last quarter of 2015, mainly concentrated in ~~us.~~the month of December when the former administration eased exchange restrictions. In 2016, 2017, 2018, 2019 and 2020, the Peso depreciated 8%, 15.6%, 50.7%, 36.6% and 29%, respectively, with respect to the U.S. Dollar. As of April 27, 2021, the exchange rate was Ps.93.34 per U.S. Dollar.
The depreciation of the Peso may have a negative impact on the ability of certain Argentine businesses to service their foreign currency denominated debt, lead to inflation, significantly reduce real wages and jeopardize the stability of businesses whose success depends on domestic market demand, and also adversely affect the Argentine government’s ability to honor its foreign debt obligations. In turn, a significant appreciation of the Peso against the U.S. Dollar also presents risks for the Argentine economy, including the possibility of a reduction in exports as a consequence of the loss of external competitiveness. Any such appreciation could also have a negative effect on economic growth and employment and reduce tax revenues in real terms.
8
The Argentine government’s ability to obtain financing from the international loan and capital markets may be limited or costly, which may impair its ability to implement reforms and foster economic growth.
The Argentine government has defaulted on its sovereign debt instruments several times in the past. The most recent financial difficulty to meet its foreign financial obligations occurred in 2019/2020, in the midst of restructuring negotiations with private creditors. As a result, the Argentine government may not have access to international financing, or its access may be costly, may would limit its ability to make investments and foster economic growth. Additionally, companies in the country’s private sector may also have difficulty accessing international financing at reasonable costs or at all, as has occurred on prior occasions.

During 2001 and 2002, Argentina went through a period of severe political, economic and social crisis. Among other consequences, the crisis resulted in Argentina defaulting on its foreign debt obligations, introducing emergency measures and numerous changes in economic policies that affected utilities, financial institutions, and many other sectors of the economy. Argentina also suffered a significant real devaluation of the Peso, which in turn caused numerous Argentine private sector debtors with foreign currency exposure to default on their outstanding debt. After recovering significantly from the 2001-2002 crisis, the pace of growth of Argentina’s economy diminished, suggesting uncertainty as to whether the growth experienced between 2003 and 2011 was sustainable. Economic growth was initially fueled by a significant devaluation of the Peso, the availability of excess production capacity resulting from a long period of deep recession and high commodity prices. In spite of the growth following the 2001-2002 crisis, the economy has suffered a sustained erosion of direct investment and capital investment. The global economic crisis of 2008 led to a sudden economic decline in Argentina during 2009, accompanied by inflationary pressures, devaluation of the Peso and a drop in consumer and investor confidence. Real GDP growth recovered in 2010 and 2011, with GDP increasing to 9.5% and 8.4%, respectively. However, GDP growth slowed to 0.8% in 2012 and then grew by 2.3% in 2013. According to the revised calculation of the 2004 GDP published by INDEC on June 24, 2016, GDP increased 8.9% in 2005, 8.0% in 2006, 9.0% in 2007, 4.1% in 2008 and decreased 5.9% in 2009. In 2010 and 2011, GDP grew 10.1% and 6.0%, respectively and decreased 1.0% in 2012. GDP grew 2.4% in 2013, contracted 2.5% in 2014, grew 2.6% in 2015 and decreased 2.2% in 2016. However, during 2017, Argentina’s real GDP increased by 2.9% compared to 2016, according to the information published by INDEC on March ~~21, 2018.~~
Economic conditions in Argentina from 2012 to 2015 included increased inflation, continued demand for wage increases, a rising fiscal deficit and limitations on Argentina’s ability to service its restructured debt in accordance with its terms due to its ongoing litigation with holdout creditors. In addition, beginning in the second half of 2011, an increase in local demand for foreign currency caused2020, the Argentine government initiated discussions with various groups of creditors to ~~strengthen~~discuss a path for Argentina’s debt sustainability. With respect to Argentina’s international bonds, in April 2020, the Argentine executive branch approved the restructuring of certain eligible global bonds issued under foreign laws for up to U.S.$65 billion. On August 31, 2020, the Argentine government announced that it had obtained the consents required to exchange 99% of the aggregate principal amount outstanding of all series of eligible bonds, following which the exchange was consummated.
On August 18, 2020, the Argentine government offered holders of its foreign currency bonds governed by Argentine law to exchange ~~controls, most~~such bonds for new bonds, in terms that were equitable to the terms of ~~which were eased~~the invitation made to holders of foreign law-governed bonds. On September 18, 2020, Argentina announced that holders representing 99.4% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the local exchange offer had participated. As a result of the exchange offer, the average interest rate paid by Argentina’s foreign currency bonds governed by Argentine law was lowered to 2.4%, compared to an average interest rate of 7.6% prior to the exchange.
Notwithstanding the foregoing, despite the renegotiation efforts carried out by the ~~Macri Administration. See “—~~~~The implementation~~Argentine government during 2020, since September 2020, bond prices have dropped, and the probability of default derived from prices of credit default swaps on Argentine sovereign bonds is around 95% over a ten-year term as of the date of this annual report.
In addition, in June 2018, the Argentine government and the IMF signed a three-year, U.S.$50 billion loan agreement, as further amended to U.S.$57.1 billion through 2021 (the “IMF 2018 Agreement”). Following an IMF report in February 2020 stating that Argentina’s debt may not be sustainable, the Argentine government requested to begin discussions with the IMF to renegotiate the IMF 2018 Agreement. As of the date of this annual report, negotiations with the IMF are ongoing.
We cannot assure you that Argentina will be able to favorably complete the restructuring of its sovereign indebtedness with respect to the IMF 2018 Agreement. In addition, due to past or future defaults on its indebtedness, we cannot assure you that Argentina will have access to international financing in the future, on favorable terms or at all. If Argentina is not able to access financing, it may not be able to foster economic growth and invest in the country. As a result, we cannot assure you that private companies in Argentina will have access to financing on favorable terms or at all, which could adversely affect our business, financial condition and results of ~~new~~operations.
9
The maintenance or implementation of additional exchange controls regulations, restrictions on transfers abroad and capital inflow restrictions could limit the availability of international credit and could threaten the financial system, which may adversely affect the Argentine ~~economy~~economy.
In the past, the Argentine government has increased controls on the sale of foreign currency, limiting transfers of funds abroad. Measures taken by the Argentine government significantly curtailed access to the official foreign exchange market and, as a result, ~~our business~~an unofficial U.S. Dollar trading market developed in which the Peso-U.S. Dollar exchange rate differed substantially from the official Peso-U.S. Dollar exchange rate. While the former administration had initially eliminated foreign exchange restrictions in 2016, in September 2019, in response to significant capital flight from the country, the Argentine Central Bank imposed restrictions on foreign exchange transactions, which were effective until December 31, 2019. Following the change in government in December 2019, the Fernández administration has extended the measures, and established further restrictions, including a new tax (impuesto PAIS.”) on certain transactions involving the purchase of foreign currency by Argentine residents.

~~Since 2007, the INDEC has experienced a process of institutional and methodological reforms that have given rise to controversy~~The current exchange controls apply with respect to access to the ~~reliability~~foreign exchange market by residents for savings and investment purposes abroad, the payment of external financial debts abroad, the ~~information that it produces including inflation, GDP~~payment of dividends in foreign currency abroad, payments of imports and ~~unemployment data. Reports published by~~exports of goods and services, and the ~~International Monetary Fund (“IMF”) state that their staff uses alternative measures~~obligation to repatriate and settle the proceeds from exports of ~~inflation~~goods and services for macroeconomic surveillance, including data produced by private sources, which have shown inflation rates considerably higher than those published by the INDEC since 2007. The IMF has also censured Argentina for failing to make sufficient progress, as required under the Articles of Agreement of the IMF, in adopting remedial measures to address the quality of official data, including inflation and GDP data. In February 2014, the INDEC released a new inflation index, known as National Urban Consumer Price Index (~~Indice de Precios al Consumidor Nacional Urbano~~) that measures prices on goods across the country and replaces the previous index that only measured inflation in the urban sprawl of the City of Buenos Aires. Even though the new methodology brought inflation statistics closer to those estimated by private sources, material differences between official inflation data and private estimates remained in 2015. On January 2016, based on its determination that INDEC had failed to produce reliable statistical information, the Macri administration declared a state of administrative emergency for the national statistical system and INDEC until December 31, 2016, which was not renewed. As consequence of the declaration of emergency, the INDEC ceased publishing certain statistical data until June 16, 2016, when it resumed publishing inflation rates, and began to release revised data, including GDP, poverty, foreign trade and balance of payments statistics,Pesos, among others. For further information, see “Item 10.D – Exchange Controls”.~~See “—~~~~If the current levels of inflation continue, the Argentine economy and our financial position and business could be adversely affected~~.”

~~After recovering significantly from the 2001-2002 crisis, the pace of growth of Argentina’s economy diminished, suggesting uncertainty as~~It is not possible to ~~whether the growth experienced between 2003~~anticipate for how long these measures will be in force or if additional restrictions will be imposed. The Argentine government could maintain or impose new exchange controls, restrictions and ~~2011 was sustainable. Economic growth was initially fueled by~~take other measures in response to capital flight or a significant ~~devaluation~~depreciation of the Peso, which could in turn limit access to the ~~availability~~international capital markets and affect the Argentine economy. In addition, such evolving exchange control restrictions and measures may result in Argentine Central Banks’s information requests, enforcement actions and penalties due to diverging interpretations of ~~excess production capacity resulting from~~foreign exchange regulatoins.
As a ~~long period of deep recession and high commodity prices. In spite~~related matter, the international reserves deposited with the Argentine Central Bank have fluctuated significantly. The international reserves of the ~~growth following~~Argentine government amounted to U.S.$39.4 billion as of December 30, 2020. Future measures taken by the
~~2001-2002 crisis,~~ Argentine government could further reduce the ~~economy suffered a sustained erosion~~level of ~~direct investment and capital investment. The global economic crisis of 2008 led to a sudden economic decline~~international reserves deposited with the Argentine Central Bank in ~~Argentina during 2009, accompanied by inflationary pressures, devaluation of~~ the ~~Peso and a drop in consumer and investor confidence.~~future.

Economic conditions in Argentina from 2012 to 2015 included increased inflation, continued demand for wage increases, a rising fiscal deficit and limitations on Argentina’s ability to service its restructured debt in accordance with its terms due to its ongoing litigation with holdout creditors. In addition, ~~beginning in~~since the ~~second half~~imposition of ~~2011, an increase in local demand for foreign currency caused~~exchange controls, the Argentine government to strengthen its foreign exchange controls. However, as of the issuance of Communication “A” 6037 by the Central Bank, which became effective on August 9, 2016, the government eliminated the monthly caps to the acquisition of foreign currency for non-specific purposes (~~Atesoramiento~~). During 2014, 2015, 2016 and 2017 the government imposed price controls on certain goods and services to control inflation. These price controls will remain in effect until April 2018, but as of the date of this annual report, there is uncertainty regarding what other specific actions will be taken to control inflation.
~~Presidential and Congressional elections in Argentina took place on October 25, 2015, and a runoff election (ballotage)~~difference between the ~~two leading Presidential candidates was held on November 22, 2015,~~official exchange rate, which ~~resulted in Mr. Mauricio Macri being elected President of Argentina. The Macri administration assumed office on December 10, 2015.~~
~~Since assuming office, the Macri administration has implemented several significant economic~~is currently used for both commercial and ~~policy reforms, including those related to foreign~~financial operations, and other informal exchange the INDEC, financial policy, foreign currency-denominated bonds, foreign trade reforms, amendment to the Capital Markets Law, Tax Amnesty Law, correction of monetary imbalances, retiree program, fiscal policy, national electricity state of emergency and reforms, tariff increases and increase in minimum income.
Congressional elections were held in October 22, 2017 and President Macri’s governing coalition obtained the largest share of votes at the national level. However, even when the number of coalition members in Congress increased (holding in the aggregate 107 of a total of 257 seats in the House of Representatives and 24 of a total of 72 seats in the Senate), it still lacks a majority in either chamber of the Argentine Congress and,rates that arise implicitly as a result ~~some~~of certain operations commonly carried out in the capital market (dollar “MEP” or ~~all~~“contado con liquidación”), have broadened deeply during 2020 creating a gap of approximately 60% with the ~~Macri administration’s reforms aimed~~official exchange rate as of April 27, 2021.
10
The Argentine government could maintain a single official exchange rate or create multiple exchange rates for different types of transactions, substantially modifying the applicable exchange rate at ~~improving~~which we acquire currency for different purposes. Furthermore, existing or future measures could undermine the ~~economy and investment environment (including the reduction of the fiscal deficit, reduction of the inflation rate and fiscal and labor reforms, among others) may not be implemented,~~Argentine government’s public finances, which could adversely affect the continued improvement of the economy and investment environment. Any lack of ability of the Macri administration to adequately implement its measures as a consequence of the lack of sufficient political support could adversely affect the economy and the financial situation of Argentina, and, in turn our business, our financial and patrimonial situation and our results of operations. Argentina’s economy, has undergone a significant slowdown, and any further decline in Argentina’s rate of economic growth could adversely affect our business, financial condition and results of operations. On the other hand, on November 16, 2017, the Argentine government, the governors of the majority of the Argentine provinces, including the Province of Buenos Aires, and the Head of Government of the City of Buenos Aires entered into an agreement pursuant to which, guidelines were established in order to harmonize the tax structures of the different provinces and the City of Buenos Aires. Among other commitments, the provinces and the City of Buenos Aires agreed to gradually reduce the tax rates applicable to stamp tax and turnover tax within a five-year period, and withdraw their judicial claims against the Argentine government in connection with the federal co-participation regime. In exchange for this, the Argentine government, among other commitments, agreed to (i) compensate the provinces and the City of Buenos Aires (provided they enter into the agreement) for the effective reduction of its resources in 2018, resulting from the proposed elimination of section 104 of the Income Tax Law, quarterly updating such compensation in the following years, and (ii) issue a 11-year bond whose funds generate services for Ps.5,000 million in 2018 and Ps.12,000 every year starting from 2019, to be distributed among all the provinces, with the exception of the Province of Buenos Aires and the City of Buenos Aires, according to the effective distribution coefficients resulting from the federal co-participation regime. The provincial governments which took part in this agreement have committed to file, within the next 30 days after the execution of the agreement, the necessary draft bills for its implementation and authorize their respective executive branches to ensure its fulfilment. This agreement is effective in those provinces where their respective legislative branches have passed it. On December 22, the Argentine Congress passed the projects on fiscal consensus and fiscal liability (“~~Consenso Fiscal~~~~” and “~~~~Ley de~~ ~~Responsabilidad Fiscal~~~~”, respectively), with some amendments.~~
On November 13, 2017, the Argentine government submitted a draft bill to Congress concerning a series of amendments to the Capital Markets Law, the Mutual Funds Law No. 24,083 and the Argentine Negotiable Obligations Law, among others. Furthermore, the bill provides for the amendment of certain tax provisions, regulations relating to derivatives and the promotion of a financial inclusion program. As of the date of this annual report the draft bill is under consideration by the Argentine Congress and has not yet been approved.
On December 27, 2017, the Argentine Congress approved a tax reform that came into force on December 29, 2017 as Law No. 27,430 (the “Tax Reform Law”). The reform is intended to eliminate certain of the existing complexities and inefficiencies of the Argentine tax regime, diminish tax evasion, increase the coverage of income tax as applied to individuals and encourage investment while sustaining its medium and long term efforts aimed at restoring fiscal balance. The reform is part of a larger program announced by President Macri intended to increase the competitiveness of the Argentine economy (including by reducing the fiscal deficit) as well as employment, and diminish poverty on a sustainable basis. The main aspects of the Tax Reform Law include: (i) interest and capital gains realized by individuals that are Argentine tax residents on sales of real estate (subject to certain exceptions, including a primary residence exemption) acquired after the enactment of the bill will be subject to tax at the rate of 15%, calculated on the acquisition cost adjusted for inflation; (ii) income obtained from currently exempt bank deposits and sales of securities (including government securities) by individuals that are Argentine tax residents will be subject to tax at the rate of (a) 5% in the case of those denominated in pesos, subject to fixed interest rate and not indexed, and (b) 15% for those denominated in a foreign currency or indexed; income obtained from the sales of shares made on a stock exchange will remain exempt, subject to compliance with certain requirements; (iii) corporate income tax will initially decline to 30% in 2019 and 2020 and to 25% starting in 2021 and withholding taxes will be assessed on certain dividends or distributed profits bringing the total effective tax rate on corporate profits to 35%; (iv) social security contributions will be gradually increased to 19.5% starting in 2022, in lieu of the differential scales currently in effect; (v) the percentage of tax debits and credits that can be credited towards income tax will be gradually increased over a five year period, from the current 17% for credits to 100% for credits and debits; and (vi) holders of notes issued by the federal government, the provinces and municipalities of Argentina and the City of Buenos Aires that are not Argentine tax residents will be exempt from Argentine income taxes on interest and capital gains to the extent such beneficiaries do not reside in or channel their funds through non-cooperating jurisdictions. The non-cooperating jurisdictions list will be prepared and published by the executive branch. Short-term notes issued by the Central Bank (LEBACs) are outside the scope of these exemptions applicable to non-Argentine residents. The aforementioned amendments have been in force since January 1, 2018.
On January 10, 2018, the Macri administration issued Emergency Decree No. 27/2018 aimed at simplifying, expediting and promoting efficiency in the procedures within administrative entities and agencies, avoiding any unnecessary bureaucracy and expenses. The decree modifies and simplifies regulatory frameworks related to companies, transportation, trademark and patent procedures, transportation, digital signature, access to credit and work promotion.
As of the date of this annual report, the impact that these measures have had and any future measures taken by the Macri administration will have on the Argentine economy as a whole and the financial sector in particular cannot be predicted. We believe that the effect of the planned liberalization of the economy will be positive for our business by stimulating economic activity but it is not possible to predict such effect with certainty and such liberalization could also be disruptive to the economy and fail to benefit or harm our business.
Inflation, any decline in GDP and/or other future economic, social and political developments in Argentina, over which we have no control, may adversely affect our financial condition or results of operations.
A decline in international demand for Argentine products, a lack of stability and competitiveness of the Peso against other currencies, a decline in confidence among consumers and foreign and domestic investors, a higher rate of inflation and future political uncertainties, among other factors, may affect the development of the Argentine economy, which could lead to reduced demand for our services and adversely affect our business, financial condition and results of operations.
~~If the current levels of inflation continue, the Argentine economy and our financial position and business could be adversely affected.~~
Argentina has confronted inflationary pressures since 2007. According to INDEC data, the CPI grew 9.5% in 2011, 10.8% in 2012, 10.9% in 2013, 24.0% in 2014 and 11.9% in the ten-month period ended October 31, 2015. The INDEC did not publish the CPI for the period between November 2015 and April 2016, and resumed publishing inflation rates using its new methodology for calculating CPI starting in June 2016, reporting increases of 4.2%, 3.1%, 2.0%, 0.2%, 1.1%, 2.4%, 1.6% and 1.2% during the months of May, June, July, August, September, October, November and December 2016, respectively.
According to unrevised INDEC data, the WPI increased 14.6% in 2010, 12.7% in 2011, 13.1% in 2012, 14.8% in 2013, 28.3% in 2014 and 10.6% in the ten-month period ended October 31, 2015. The INDEC did not publish the WPI for the last two months of 2015, and resumed publishing WPI data in May 2016, reporting that the WPI grew 34.5% in 2016.
The Argentine government declared a state of administrative emergency of the national statistical system and the INDEC —the official agency in charge of the system- until December 31, 2016 through Decree No. 55/2016, which was not renewed. During the implementation of rearrangement measures of its technical and administrative structure, the INDEC used official CPI figures and other statistics published by the Province of San Luis and the City of Buenos Aires. Despite the INDEC reforms, there is uncertainty as to (i) whether the official data will be sufficiently corrected, (ii) in what timeframe such data will be corrected and (iii) what effects these reforms will have on the Argentine economy. The Macri administration released an alternative CPI index based on data from the City of Buenos Aires and the Province of San Luis. According to the available public information based on data from the City of Buenos Aires, CPI grew 26.6% in 2013, 38.0% in 2014, 26.9% in 2015, 41.0% in 2016 and 26.1% in 2017, while according to the data of the Province of San Luis, CPI grew 31.9% in 2013, 39.0% in 2014, 31.6% in 2015, 31.4% in 2016 and 24.3% in 2017.
On June 15, 2016, the INDEC resumed publishing inflation rates -which was previously suspended due to the state of administrative emergency on the national statistical system. The INDEC reported an increase of 4.2% in CPI for May 2016, while the CPI measured by the Argentine Congress reported an increase of 3.5%. Additionally, the INDEC published revised GDP data for the years 2005 through 2015, registering differences of up to 20 points between the original information reported by the prior administration and the revised information.
According to CPI figures of the INDEC, inflation was 16.9% between May and December 2016. The INDEC reported a cumulative variation of the CPI of 24.8% for 2017, while the CPI measured by the Argentine Congress registered an increase of 24.6%. The CPI variation was of 1.8%, 2.4% and 2.3% for the months of January, February and March 2018, respectively, compared to the previous month.
Also, on September 26, 2016, the Central Bank presented the inflation targeting regime, a system that seeks to offer a predictable and stable unit of value for inflation. In accordance with the data published by the Central Bank, the original year-on-year inflation targets were 12% to 17% for 2017; from 8% to 12% by 2018; and from 3.5% to 6.5% by 2019. However, on December 27, 2017, the Central Bank updated its inflation target regime by adopting the inflation targets set by the Ministry of the Treasury for the next three years, including targets of 15% for 2018, 10% for 2019 and 5% by the end of 2020.
In the past, inflation has materially undermined the Argentine economy and the government’s ability to generate conditions that fostered economic growth. In addition, high inflation or a high level of volatility with respect to the same may materially and adversely affect the business volume of the financial system and prevent the growth of intermediation activity levels. This result, in turn, could adversely affect ~~the level of economic activity and employment.~~
A high inflation rate also affects Argentina’s competitiveness abroad, real salaries, employment, consumption and interest rates. A high level of uncertainty with regard to these economic variables, and a general lack of stability in terms of inflation, could lead to shortened contractual terms and affect the ability to plan and make decisions. This may have a negative impact on economic activity and on the income of consumers and their purchasing power, all of which could materially and adversely affect our ~~financial position, results of operations and business. The Argentine~~
~~government’s adjustments to electricity and gas tariffs, as well as the increase in the price of gasoline have impacted prices creating additional inflationary pressures.~~
The Macri administration has announced its intention to reduce the primary fiscal deficit as a percentage of GDP and to reduce the government’s dependence on financing from the Central Bank. If structural inflationary imbalances cannot be addressed and current levels of inflation persist, it could adversely affect the Argentine economy and financial situation.
Inflation rates could escalate in the future. There is uncertainty regarding the effects that the measures adopted, or that may be adopted in the future, by the Argentine government to control inflation may have. See “—~~Government intervention in the Argentine economy could adversely affect our results of operations or financial condition~~.”
If the high levels of inflation continue, the Argentine economy may be considered hyperinflationary for purposes of IAS 29, which could have an impact on our audited consolidated financial statements and other financial information, and we may need to adjust or restate our audited consolidated financial statements and other information.
On February 12, 2014, the Central Bank, through Communication “A” 5541, established the general guidelines towards conversion to IFRS as issued by the International Accounting Standards Board (IASB) for preparing financial statements of the entities under its supervision. We are in a convergence process towards such standards, which will be mandatory as from fiscal year starting on January 1, 2018. International Accounting Standard 29 (IAS 29), which is applicable to IFRS, but not to Argentine Banking GAAP, requires that financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, whether based on the historical cost method or on the current cost method, be stated in terms of the measuring unit current at the end of the reporting period. IAS 29 does not establish a set inflation rate beyond which an economy is deemed to be experiencing hyperinflation. However, hyperinflation is commonly understood to occur when changes in price levels are close to or exceed 100% on a cumulative basis over the prior three years, along with the presence of several other macroeconomic-related qualitative factors. Despite the high inflation rates in Argentina in recent years, we conducted an analysis pursuant to the criteria set forth in IAS 29, and based solely on such internal review we do not currently believe that Argentina qualifies as a hyperinflationary economy for any of the years included in this annual report. We reassess inflation data periodically to determine whether this belief continues to be applicable. However, certain macroeconomic indicators have experienced a significant annual variation, a fact that must be considered when evaluating and interpreting our results of operations and financial condition as reflected in our audited consolidated financial statements included in this annual report.
Although we do not believe the current rate of inflation rises to the level required for Argentina to be considered a hyperinflationary economy under IAS 29, if inflation rates continue to escalate in the future, the Peso may qualify as a currency of a hyperinflationary economy, in which case our audited Consolidated Financial Statements and other financial information as from the IFRS transition date (as defined below), may need to be adjusted or restated by applying a general price index and expressed in the measuring unit (i.e., the hyperinflationary currency) current at the end of each reporting period. We cannot determine at this time the impact that this would have on ourbusiness, results of operations and financial condition.

The Argentine government’s ability to obtain financing from international markets is limited, which may impair its ability to implement reforms and foster economic growth, which may negatively impact our financial condition or cash flows.
In 2005 and 2010, Argentina conducted exchange offers to restructure part of its sovereign debt that had been in default since the end of 2001. As a result of these exchange offers, Argentina restructured over 92% of its eligible defaulted debt. In April 2016, the Argentine government settled U.S.$4.2 billion outstanding principal amount of untendered debt.
As of the date of this annual report, litigation initiated by bondholders that have not accepted Argentina’s settlement offer continues in several jurisdictions, although the size of the claims involved has decreased significantly. ~~As of September 30, 2017, the amount of the Argentine government’s non-restructured debt was of approximately U.S.$107.1 million based on the most recent publicly available data.~~
~~Although the vacating of the~~ ~~pari passu~~ injunctions removed a material obstacle to access to capital markets by the Argentine government, as evidenced by successful bond issuances in April 2016 and January 2017, future transactions may be affected as litigation with holdout bondholders continues, which in turn could affect the Argentine government’s ability to implement certain expected reforms and foster economic growth, which may have a direct impact on our ability to access international credit markets, thus affecting our ability to finance our operations and growth.
~~Fluctuations in the value of the Peso could adversely affect the Argentine economy, and consequently our results of operations or financial condition.~~
Fluctuations in the value of the Peso may also adversely affect the Argentine economy, our financial condition and results of operations. Since January 2002, the Peso has fluctuated significantly in value. The devaluation of the Peso in real terms in 2002 had a negative impact on the ability of certain Argentine businesses to honor their foreign currency-denominated debt, and also led to very high inflation initially and significantly reduced real wages. The devaluation has also negatively impacted businesses whose success is dependent on domestic market demand, and adversely affected the Argentine government’s ability to honor its foreign debt obligations. If the Peso depreciates significantly in real terms, all of the negative effects on the Argentine economy related to such devaluation could also have adverse consequences for our business. A substantial increase in the value of the Peso against the U.S. dollar also represents risks for the Argentine economy since it may lead to a deterioration of the country’s current account balance and the balance of payments. After several years of moderate variations in the nominal exchange rate, in 2012 the Peso lost approximately 14.4% of its value with respect to the U.S. dollar. This was followed in 2013 and 2014 by a devaluation of the Peso with respect to the U.S. dollar that exceeded 32.5% in 2013 and 31.2% in 2014, including a loss of approximately 24.0% in January 2014. In 2015, the Peso lost approximately 52.0% of its value with respect to the U.S. dollar from January 1, 2015 to September 30, 2015 a 38.0% devaluation during the last quarter of the year, mainly concentrated after December 16, 2015. In 2016 and 2017, the Peso lost approximately 21.9% and 18.4% of its value against the U.S. dollar, respectively. In the first three months of 2018, the Peso lost approximately 7.3% of its value against the U.S. dollar.
In addition, the administration of former President Cristina Fernández de Kirchner adopted numerous measures to control directly or indirectly foreign trade and the foreign exchange market. From 2011 until President Macri assumed office, the Argentine government adopted increasingly stringent exchange controls, most of which have been eliminated by the Macri administration.
Any foreign exchange regulations to be issued and any modification resulting therefrom of the exchange rate between the Peso and the U.S. dollar may prevent or limit us from offsetting the risk derived from our exposure to the U.S. dollar and, accordingly, we cannot predict the impact of these changes on our financial condition and results of operations.
During its financial crisis in 2001 and 2002, Argentina experienced social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. During this crisis, the Argentine government adopted several measures to curb social unrest, including the devaluation of the Peso and a forced restructuring of financial liabilities with the banking system. Future policies of the Argentine government may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new foreign exchange controls, changes in taxation and/or export duties and changes in laws and policies affecting foreign trade and investment. The implementation of any such future policies or significant protests resulting therefrom could destabilize the country and adversely and materially affect the Argentine economy and, in turn, our business, financial condition and results of operations.
The implementation in the future of new exchange controls, restrictions on transfers abroad and capital inflow restrictions could limit the availability of international credit and could threaten the financial system, which may adversely affect the Argentine economy and, as a result, our business.
In 2001 and 2002, following a run on the financial system triggered by the public’s lack of confidence in the continuity of the convertibility regime that resulted in massive capital outflows, the Argentine government imposed exchange controls and transfer restrictions, substantially limiting the ability of companies to retain foreign currency or make payments abroad. Although several of such exchange controls and transfer restrictions were subsequently suspended or terminated, in June 2005 the federal government issued a decree that established new controls on
capital inflows, which resulted in a decrease in the availability of international credit for Argentine companies, including a requirement that, for certain funds remitted into Argentina, an amount equal to 30.0% of the funds must be deposited into an account with a local financial institution as a U.S. dollar deposit for a one-year period without any accrual of interest, benefit or other use as collateral for any transaction.
~~In addition, from 2011 until President Macri assumed office, the~~ Argentine government increased controls on the sale of foreign currency and the acquisition of foreign assets by local residents, limiting the possibility of transferring funds abroad. Together with regulations established in 2012 that subjected certain foreign exchange transactions to prior approval by Argentine authorities or the Central Bank, the measures taken by the previous administration significantly curtailed access to the foreign exchange market (~~Mercado Libre de Cambios~~ or “MLC”) by individuals and private sector entities. In response, an unofficial U.S. dollar trading market developed in which the peso-U.S. dollar exchange rate differed substantially from the official peso-U.S. dollar exchange rate. For more information on foreign exchange restrictions see “Exchange Controls.”
Notwithstanding the measures recently adopted by the Macri administration eliminating a significant portion of the foreign exchange restrictions that developed under the Kirchner administration, in the future the Argentine government or the Central Bank could reintroduce exchange controls and impose restrictions on capital transfers, such measures may negatively affect Argentina’s international competitiveness, discouraging foreign investments and lending by foreign investors or increasing foreign capital outflow which could have an adverse effect on economic activity in Argentina, and which in turn could adversely affect our business and results of operations and our ability to make payments under the Notes.
The Argentine economy ~~may~~could be adversely affected by economic ~~developments~~events in other markets and by more general “contagion” effects, which could have a material adverse effect on Argentina’s economic growth, and consequently, could adversely affect our business, financial condition and results of operations.markets.

Argentina’s economy isremains vulnerable to external shocks that could be caused by adverse ~~developments affecting~~ ~~its principal trading partners.~~regional or global developments. A significant decline in the economic growth of any of Argentina’s major trading partners (including Brazil, ~~which is currently undergoing a recession,~~ the European Union, China and the United States) could have a material adverse impact on Argentina’s balance of trade and adversely affect Argentina’s economy. In addition, Argentina may be affected by economic and market conditions in markets worldwide, as was the case in 2008, when the global economic crisis led to a sudden economic decline in Argentina in 2009. In 2018, emerging market economies were affected by the change in the U.S. monetary policy, resulting in the unwinding of investments and increased volatility in the value of their currencies, including the Argentine Peso.
In the past, emerging market economies have been affected by changes in U.S. monetary policy, at times resulting in the unwinding of investments and increased volatility in the value of their currencies. If interest rates rise significantly in developed economies, including the United States, emerging market economies, including Argentina, could find it more difficult and expensive to borrow capital and refinance existing debt, which would negatively affect their economic growth. ~~In 2017, there were increases in exports of 13.7%~~
The ongoing COVID-19 pandemic has had, and continues to Chile, 0.2% to MERCOSUR (Brazil, Paraguay, Uruguay and Venezuela), 1.2% to NAFTA countries (United States, Canada and Mexico), while there was a decline of 1.6% in exports to China, each as compared to the same period in 2016. Declining demand for Argentine exports could have, a ~~material adverse effect~~significant impact on ~~Argentina’s economic growth.~~the global economy and the economies of countries across Latin America, the full impact of which cannot be accurately predicted at this time.

Argentina could be adversely affected by negative economic or financial developments in other countries, which in turn may have an adverse effect on our financial condition and results of operations. In addition, a slowdown in economic activity in Argentina would substantially affect our business.
Since 2015, the Brazilian economy, Argentina’s largest export market and the principal source of imports, has experienced heightened negative pressure due to the uncertainties stemming from the ongoing political crisis, including the impeachment of Brazil’s president, which resulted in the Senate of Brazil removing Ms. Dilma Rousseff from office for the rest of her term on August 31, 2016. Mr. Michel Temer, who previously held office as vice president of Brazil, subsequently took office until the end of the presidential period. Nevertheless in 2017, the Brazilian economy recorded an estimated growth of 1.1% after two years of recession. A further deterioration of economic conditions in Brazil may reduce demand for Argentine exports and increase demand for Brazilian imports. While the impact of Brazil’s downturn on Argentina or our operationscountries. We cannot ~~be predicted, we cannot exclude the possibility~~assure you that ~~the Brazilian political and economic crisis could have further negative impact on the Argentine economy and our operations.~~
~~In addition, financial and securities markets in Argentina have been influenced by economic and market conditions~~developments in other markets ~~worldwide. Although economic~~will not affect macroeconomic, political or social conditions ~~vary from country~~in Argentina and, consequently, our business, results of operations and financial condition.
Government or labor pressure to ~~country, investors’ perceptions of events occurring in other countries have in the past substantially affected, and~~grant salary increases and/or additional benefits may continue to substantially affect, capital flows into, and investments in securities from issuers in, other countries, including Argentina. International investors’ reactions to events occurring in one market sometimes demonstrate a “contagion” effect in which an entire region or class of investment is disfavored by international investors.
The Argentine financial system and securities markets could be also adversely affected by events in developed countries’ economies, such as the United States and Europe. On June 23, 2016, the United Kingdom voted in favor of the United Kingdom exiting the European Union (“Brexit”). As of the date of this annual report, it is uncertain how Brexit may impact the relationship between the United Kingdom and the European Union, as the commercial terms under which the effective withdrawal of the United Kingdom from the European Union, which was officially notified on March 29, 2017, and its completion is currently scheduled for March 2019, remain subject to negotiation. The effects of the Brexit vote and the perceptions as to the impact of the withdrawal of the United Kingdom from the European Union may adversely affect business ~~activity and economic and market~~ conditions in the United Kingdom, the Eurozone and globally, and could contribute to instability in global financial and foreign exchange markets. In addition, Brexit could lead to additional political, legal and economic instability in the European Union.
On November 8, 2016, elections were held in the United States and a new administration took office on January 20, 2017. The results of the presidential election have created significant uncertainty about the future relationships between the United States and other countries, including with respect to the trade policies, treaties, government regulations and tariffs that could apply to trade between the United States and other nations. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets.
Changes in social, political, regulatory and economic conditions in the United States of or in the laws and policies governing foreign trade could create uncertainty in the international markets and could have a negative impact on emerging market economies, including the Argentine economy. Also, if these countries fall into a recession, the Argentine economy would be impacted by a decline in its exports, particularly of its main agricultural commodities. All of these factors could have a negative impact on Argentina’s economy and, in turn, our business, financial condition and results of operations.
~~Any of these factors could depress economic activity and restrict our access to suppliers and could have a material adverse effect on our business, financial condition and results of operations.~~
~~Government measures, as well as pressure from labor unions, could require salary increases or added benefits, all of which could increase the company’s operating costs.~~country.

In the past, the Argentine government has passed laws and regulations forcing privately owned companies to maintain certain wage levels and provide added benefits ~~for~~to their employees. Additionally, both public and private sector employers have been subject to ~~strong~~significant pressure from the workforce and trade unions to grant salary increases and ~~certain worker~~other benefits. The Argentine government has increased the minimum monthly salaries on numerous opportunities. In addition, the Argentine government has arranged other measures to mitigate the impact of inflation and exchange rate fluctuation in wages, or the consequences of the ongoing COVID-19 pandemic.
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Labor relations in Argentina are governed by specific legislation, such as ~~labor~~Labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be conducted. ~~Every~~Most industrial or commercial ~~activity is~~activities are regulated by a specific collective bargaining agreement that groups together companies ~~together according to~~by industry ~~sectors~~ and by trade unions. While the process of negotiation is standardized, each chamber of industrial or commercial activity ~~separately~~ negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity. In the banking activity, salaries are established on an annual basis through negotiations between the chambers that represent the banks and the banking employees’ trade union. The National Labor Ministry mediates between the parties and ultimately approves the annual salary increase to be applied in the banking activity. Parties are bound by the final decision once it is approved by the labor authority and must observe the established salary increases for all employees that are represented by the ~~banking~~respective union and to whom the collective bargaining agreement applies.

~~In addition, each company is entitled, regardless of union-negotiated mandatory salary increases, to give its employees additional merit increase or variable compensation scheme.~~
Argentine employers, both in the public and private sectors, have experienced significant pressure from their employees and labor organizations to increase wages and to provide additional employee benefits. Due to the high levels of inflation, employees and labor organizations are demanding significant wage increases. In June 2017, the National Labor Ministry resolved to increase the minimum salary to Ps.10,000 in three stages: an increase (i) to Ps.8,860 in July 2017, (ii) to Ps.9,500 in January 2018 and (iii) to Ps.10,000 in July 2018.
Due to high levels of inflation, employers in both the public and private sectors are experiencing significant pressure from unions and their employees to further increase salaries. On February 14, 2018, the INDEC published new data regarding the evolution of private and public-sector salaries. The total salaries index registered a growth of 27.5% during 2017, as a result of the 26.5% increase in the registered sector and an increase of 31.5% in the non-registered private sector.
~~In the future,~~We cannot assure you that the Argentine government ~~could take new~~will not adopt future measures requiring ~~salary increases~~ that employers increase salaries and/or ~~additional~~employee benefits, ~~for workers, and the labor force and~~prohibition of dismissals, duplication of severance payments or that our employees and/or labor unions ~~may apply~~will not pressure for such ~~measures.~~measures themselves. Any such increase ~~in wage or worker benefit~~ could result in ~~added costs~~an increase in our operating expenses and, ~~reduced results of operations for Argentine companies, including us. Such added costs could~~therefore, adversely affect our ~~business, financial condition,~~ results of ~~operations and our ability to make payments under the notes.~~operations.

Government intervention in the Argentine economy could ~~adversely affect our results of operations or financial condition.~~undermine business and investor confidence.

The ~~two terms~~Argentine government exercises substantial control over the economy and may increase its level of ~~President Fernández de Kirchner’s administration~~intervention in certain areas of the economy, including through the regulation of market conditions and prices.
In the past, the Argentine government has increased ~~its direct~~ state intervention in the ~~Argentine~~ economy, including ~~the implementation of~~through expropriation and nationalization measures, price controls and exchange ~~controls.~~
Incontrols and restrictions on capital flows. For example, in 2008, the ~~Fernández de Kirchner~~ administration absorbed and replaced the former private pension system for a public ~~“pay as you go”~~“pay-as-you-go” pension system. As a result, all resources administered by the private pension funds, including significant equity interests in a wide range of listed companies, ~~were transferred to a separate fund (~~~~Fondo de Garantía de Sustentabilidad~~~~, or “FGS”) to be~~have since been administered by ~~the National Social Security Administration (~~~~Administración Nacional de la Seguridad Social~~, or “ANSES”). The dissolution of the private pension funds and the transfer of their financial assets to the FGS have had important repercussions on the financing of private sector companies. Debt and equity instruments which previously could be placed with pension fund administrators are now entirely subject to the discretion of the ANSES. Since it acquired equity interests in privately owned companies through the process of replacing the pension system, the ANSES is entitled to designate government representatives to the boards of directors of those entities. Pursuant to Decree No. 1,278/12, issued by the Executive Branch on July 25, 2012, the ANSES’s representatives must report directly to the Ministry of Public Finance are subject to a mandatory information-sharing regime, under which, among other obligations, they must immediately inform the Ministry of Public Finance of the agenda for each Board of Directors’ meetings and provide related documentation.
In April 2012, the Fernández de Kirchner administration decreed the removal of directors and senior officers of YPF S.A. (“YPF”), the country’s largest oil and gas company, which was controlled by the Spanish group Repsol, and submitted a bill to2014, the Argentine ~~Congress to expropriate shares held by Repsol representing 51% of the shares of YPF. The Argentine Congress approved the bill in May 2012 through the passage of Law~~government enacted law No. ~~26,741,~~26,991, which ~~declared the production, industrialization, transportation and marketing of hydrocarbons to be activities of public interest and fundamental policies of Argentina, and empowered~~enables the Argentine government to ~~adopt~~intervene in certain markets when it considers that any ~~measures necessary~~party to ~~achieve self-sufficiency~~the market is trying to impose prices or supply restrictions in ~~hydrocarbon supply. In February 2014,~~ the Argentine government and Repsol announced that they had reached an agreement on the terms of the compensation payable to Repsol for the expropriation of the YPF shares. Such compensation totaled U.S.$5 billion payable by delivery of Argentine sovereign bonds with various maturities. The agreement, which was ratified by Law No. 26,932, settled the claim filed by Repsol before the International Centre for Settlement of Investment Disputes (“ICSID”).
~~Law No. 26,991 (the “Supply Law”) became effective on September 28, 2014. The Supply Law~~market. This law applies to all economic processes linked to goods, facilities and services which, either directly or indirectly, satisfy basic needs of the population ~~(“Basic Needs Goods”~~(so-called “basic needs goods”), and grants broad ~~delegations of~~ powers to ~~its~~the relevant enforcing agency (Secretariat of Commerce) to become involved in such processes. ~~It also empowers~~In addition, in August 2020, the ~~enforcing agency~~executive branch issued Decree No. 690/2020 which, among other measures, amends the current legal framework to ~~order~~(i) declare information and communications technology services and access to telecommunications networks as essential and strategic public services, (ii) establish new rules regarding the ~~sale, production, distribution and/or delivery~~pricing of ~~Basic Needs Goods throughout the country in case of~~such services, and (iii) declare mobile telephone services a ~~shortage of supply.~~public service.

In ~~February 2015, the Fernández de Kirchner administration sent~~addition, as a bill to Congress in order to revoke certain train concessions, return the national rail network to state control and provide powers to review all concessions currently in force. The bill was enacted on May 20, 2015 as Law No. 27,132.
In September 2015, the Argentine government, through Resolution No. 646/2015 issued by the CNV, modified the valuation criteria applicable to securities traded outside of Argentina that comprise asset management portfolios. The resolution established that such securities must be valued at the currency in which they were issued to the extent such currency is the currency in which payments are made. The purchaser exchange rate applicable to financial transfers set by the Central Bank must be used to make such valuation. Resolution No. 646/2015 led to an accounting change in the valuation of mutual funds.
~~During 2014, 2015, 2016 and 2017 the Argentine government imposed price controls on certain goods and services to control inflation. These price controls will remain in effect until May 2018, but as~~result of the ~~date of this annual report, there is uncertainty regarding what other specific actions will be taken to control inflation.~~ ~~Actions taken~~public health emergency declared by the Argentine government ~~concerning~~due to the ongoing COVID-19 pandemic, several measures have been adopted to limit the impact on the Argentine economy, including ~~decisions with respect to interest rates, taxes, price controls, salary increases, provision~~freezing rent prices and public services tariffs, and the prohibition of ~~additional employee benefits, foreign exchange controls, and potential changes~~work dismissals, among others.
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In the future, the level of intervention in the foreign exchange market, have had and could continue to have a material adverse effect on Argentina’s economic growth. In turn, these actions could affect our financial condition and results of our operations. Moreover, any additional Argentine government policy established in response to or to preempt social unrest could adversely and materially affect the economy ~~and therefore our business.~~
In December 2017, the Congress passed Law No. 27,426 which modifies the method of calculating increases in social security benefits, and Law No. 27,430 which introduced reforms to the general tax law.
~~It is widely reported by private economists that expropriations, price controls, exchange controls and other direct involvement~~ by the Argentine government ~~in the economy have had an adverse impact on the level of investment in Argentina, the access of Argentine companies to international capital markets and~~may continue or increase, which may adversely affect Argentina’s ~~commercial and diplomatic relations with other countries. If the level of government intervention in the economy continues or increases, the Argentine~~ economy and, in turn, our business, results of operations and financial ~~condition could be adversely affected.~~condition.

High public expenditure could result in long lasting adverse consequences for the Argentine economy, which in turn could adversely affect our business, financial condition and results of operations.

During the last years, ~~of the Fernández de Kirchner administration,~~ the Argentine government has substantially increased public ~~expenditure, resorting~~expenditures, and has resorted regularly to the Central Bank and to the ANSES to source part of its funding requirements. In light of increasingly tight public finances, the Fernández de Kirchner administration adopted certain measures to finance its public expenditures such as revising its subsidy policies (particularly those related to energy, electricity and gas, water and public transportation) and implementing an expansionary monetary policy. These policies have led to high inflation and, therefore, adversely affected, and could further adversely affect, consumer purchasing power and economic activity.

~~However, since assuming office, the Macri administration has taken steps to mitigate the increase in its fiscal deficit~~In 2018, 2019, and ~~reduce the current level of the fiscal deficit, including a process of comprehensive review of the contracts of~~2020, public sector ~~employees, as well as~~expenditure increased approximately 22.4%, 37.2% and 52.7%, respectively, and the ~~elimination of subsidies to public services and other fiscal measures, which reduced the primary fiscal deficit by approximately 1.8% of GDP in December 2015 and reported~~government achieved a primary fiscal deficit of ~~4.6%~~2.4%, 0.4% and 6.5% of GDP, respectively, according to the Ministry of Treasury. Primary fiscal deficit for 2020 was partly explained by a decrease in ~~2016, mostly due~~Argentine government income (equivalent to ~~taxes collected under~~0.7% of GDP) and an increase in public expenditure (equivalent to 3.5% of GDP). Additionally, the ~~Tax Amnesty Law program in~~economic impact of the ~~last two months of 2016.~~COVID-19 pandemic has also required and may continue to require the Argentine government to increase public spending.

~~As of~~We cannot assure you that the ~~date of this annual report, although the~~ Macri administration is currently reviewing certain public sector contracts as well as the elimination of public service subsidies, there is uncertainty as to what additional actions the Macri administrationArgentine government will take with respect to public expenditure and its financing. For 2017, the government pursued a fiscal deficit target of 4.2% of GDP, while achieving a primary fiscal deficit of 3.9% of GDP, below such target. The government’s 2018 target for a primary fiscal deficit is 3.2% of GDP, with deficit targets of 0.6% in the first quarter, 1.6% in the second quarter and 2.2% in the third quarter. The Macri administration’s ultimate aim is to achieve a balanced primary budget by 2019, reaching a primary fiscal deficit of 2.2% of the GDP. If the Macri administration were tonot seek to finance its deficit by ~~increasing~~gaining access to the liquidity available in the local financial institutions. In that case, government initiatives that increase the exposure of local financial institutions to the public sector could affect our liquidity and assets quality and have a negative effect on clients’ confidence in the financial system.
A decrease in international prices for the main commodities exported by Argentina could negatively affect Argentina’s economic condition.
Argentina’s reliance on the export of certain commodities, particularly soybeans and its by products, corn and wheat, has made the country more vulnerable to fluctuations in their prices. A decrease in commodity prices may adversely affect the Argentine government’s fiscal revenues and the Argentine economy as a whole. Given its reliance on such agricultural commodities, the country is also vulnerable to weather events—such as 2018’s drought—that may negatively affect the production of such commodities, reducing fiscal revenues and the inflow of US Dollars.
If the international prices for agricultural commodities decrease, Argentina’s economy could be ~~affected, and as~~adversely affected. In addition, a ~~consequence, impact negatively on clients’ confidence.~~
~~A continuing~~ decline in international prices for ~~Argentina’s main commodity exports could have an adverse effect on Argentina’s economic growth, which could adversely affect our business, financial condition and results of operations.~~
Argentina’s financial recovery from the 2001-2002 crisis occurred in a context of price increases for Argentina’s commodity exports. High commodity prices contributed to the increase in Argentine exports since the third quarter of 2002 and to high government tax revenues from export withholdings. Consequently, the Argentine economy has remained relatively dependent on the price of its main agricultural ~~products, primarily soy. This dependence has rendered the Argentine economy more vulnerable to commodity prices fluctuations.~~
~~A continuing decline in the international prices of Argentina’s main commodity exports~~commodities could have a negative impact on the ~~levels of government~~government’s tax revenues, ~~and the government’s~~including its ability to ~~service~~repay its ~~sovereign~~ debt, and ~~could either generate recessionary or inflationary pressures, depending~~ on the ~~government’s reaction. Either~~availability of ~~these results would~~foreign currency. Moreover, agriculture production— which represent an important source of Argentina’s export income— could be negatively affected due to adverse climate conditions. Any such developments may adversely ~~impact~~affect Argentina’s economy and, ~~therefore,~~as a result, our business, results of operations and financial condition. As of the date of this annual report, the Macri administration has eliminated export taxes on many agricultural products and reduced the export taxes on soy from 35.0% to 30.0%. While the measure was intended to encourage exports, reductions in export taxes in the future, unless replaced with other sources of revenues, may negatively impact on the Republic’s public finances.

~~The Macri administration~~In order to counterbalance and diversify its reliance on agricultural commodities as well as to add an additional source of revenue, Argentina has ~~begun to implement significant measures to solve the current energy sector crisis, but the eventual outcome of such measures is unknown, and could~~ ~~affect our business, financial condition and results of operations.~~
~~Economic policies since the 2001-2002 crisis have had an adverse effect~~been focused on Argentina’s energy sector. The failure to reverse the freeze on electricity and natural gas tariffs imposed during the 2001-2002 economic crisis created a disincentive for investments in the energy sector. Instead, the Argentine government sought to encourage investment by subsidizing energy consumption. This policy proved ineffective and operated to further discourage investment in the energy sector and caused production ofincreasing its oil and gas ~~and electricity generation, transmission and distribution to stagnate while consumption continued to rise. To address energy shortages starting~~exports. A long-term decrease in ~~2011, the Argentine government engaged in increasing imports of energy, with adverse implications for the trade balance and~~ the international ~~reserves~~price of oil would negatively impact the ~~Central Bank.~~
In response to the growing energy crisis, the Macri administration declared a state of emergency with respect to the national electricity system, which ended on December 31, 2017. The state of emergency allows the Argentine government to take actions designed to stabilize the supply of electricity. In this context, subsidy policies were reexamined and new electricity tariffs went into effect on February 1, 2016 with varying increases depending on geographical location and consumption levels. Additionally, the Ministry of Energy and Mining issued Resolution No. 6/16 increasing the electricity tariff as of February 1, 2016. This Resolution was later complemented by Resolution No. 7/16 which, among other things, determined the requirements needed to be fulfilled in order to apply for a social tariff (~~tarifa social~~) which exempts its beneficiaries from paying the electricity tariff up to a total consumption of 150Kwh per month and establishes a special price scheme for those beneficiaries who exceed this amount.
~~Additionally, the Macri administration announced the elimination of a portion of subsidies to natural gas and adjustment to natural gas rates. As a result, average electricity~~country’s oil and gas ~~prices have already increased~~prospects and ~~could increase further. However, certain of the government’s initiatives relating to the energy and gas sectors were challenged~~result in ~~Argentine courts and resulted~~a decrease in ~~judicial injunctions or rulings against the government’s policies, which were later lifted.~~
~~The Macri administration has taken steps and announced measures to address the energy sector crisis while taking into consideration the implications of~~foreign investment in these price increases for the poorest segments of society, approving subsidized tariffs for users that satisfy certain requirements. A failure to address the negative effects on energy generation, transportation and distribution in Argentina with respect to both the residential and industrial supply, resulting in part from the pricing policies of the prior administrations, could weaken confidence in and adversely affect the Argentine economy and financial condition, lead to social unrest and political instability, and adversely affect our results of operations. There can be no assurance that the measures adopted by the Macri administration to addresssectors.
~~the energy crisis will not continue to be challenged in the local courts and/or will be sufficient to restore production of energy in Argentina within the short or medium term.~~13
Failure to adequately address actual and perceived risks of institutional deterioration and corruption may adversely affect Argentina’s economy and financial condition, which in turn could adversely affect our business, financial condition and results of operations.

A lack of a solid institutional framework and corruption have been identified as, and continue to be a significant problem for Argentina. In Transparency International’s ~~2017~~2020 Corruption Perceptions Index survey of 180 countries, Argentina was ranked ~~85, improving~~78, down from ~~the~~66 in previous survey in ~~2016.~~2019. In the World Bank’s Doing Business ~~2018~~2020 report, Argentina ranked ~~117~~126 out of 190 countries, down from ~~116~~119 in ~~2017.~~2019.

Recognizing that the failure to address these issues could increase the risk of political instability, distort decision-making processes and adversely affect Argentina’s international reputation and ability to attract foreign investment, the former Macri administration ~~has~~ announced several measures aimed at strengthening Argentina’s institutions and reducing corruption. These measures include the reduction of criminal sentences in exchange for cooperation with the government in corruption investigations, increased access to public information, the seizing of assets from corrupt officials, increasing the powers of the Anticorruption Office (Oficina Anticorrupción) and the passing of a new public ethics law, among others. The current Argentine ~~government’s~~administration’s ability and determination to implement these initiatives taken by the former administration is still uncertain, as it would require, among other things, the involvement of the judicial branch, which is independent, as well as legislative support from ~~opposition~~opposing parties.

In addition, certain senior executive officers and directors of companies operating in the Argentine energy, infrastructure, oil and gas and other sectors, are currently facing judicial investigations in Argentina relating to payments allegedly made to government officials.
These investigations may have an adverse impact on the ability of the companies involved and their affiliates to access financing, on their ability to participate in significant projects and ultimately on their financial condition and results of operations.
However, we do not consider potential losses that could arise from our exposure to the individuals and the companies involved in the investigations to be material.
We cannot predict for how long the corruption investigations will continue, or the effects on the different sectors in the Argentine economy.
Risks Relating to the Argentine Financial System

The stability of the Argentine financial system depends upon the ability of financial institutions, including Banco Supervielle, the ~~Bank,~~main subsidiary of Grupo Supervielle, to retain the confidence of depositors.

The measures implemented by the Argentine government in late 2001 and early 2002, in particular the restrictions imposed on depositors to withdraw money freely from banks and the pesification and restructuring of their deposits, resulted in losses for many depositors and undermined their confidence in the Argentine financial system.
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Although the financial system has seen a recovery in the amount of deposits since then, this trend may not continue and the deposit base of the Argentine financial system, including the deposit base of our main subsidiary, the Bank, could be negatively affected in the future by adverse economic, social and political events. Furthermore, the Argentine financial system growth strongly depends on deposit levels, due to the small size of its capital markets and the absence of foreign investments during the previous years. Recently, numerous local financial entities, such as the Bank, have accessed the global financial markets for funding through the placement of debt securities, on satisfactory terms, but this trend may not last and there is uncertainty as to whether the current availability of funds from the international markets will continue in coming years.
Although liquidity levels are currently reasonable, no assurances can be given that these levels will not be reduced in the future due to adverse economic conditions that could negatively affect the Bank’s business.

If, in the future, depositor confidence further weakens and the deposit base contracts, such loss of confidence and contraction of deposits will have a substantial negative impact on the ability of financial institutions, including the Bank, to operate as financial intermediaries. If the Bank is not able to act as a financial intermediary and otherwise conduct its business as usual, the results of its operations could be adversely affected or limited, affecting its ability to distribute dividends to us, which in turn could affect our results of operations and financial condition.

The growth and profitability of Argentina’s financial system partially depend on the development of medium and long-term ~~funding.~~funding sources.

In recent years, the Argentine financial system grew significantly in nominal terms. Loans to the private sector grew by approximately 30.8% in 2013, 20.3% in 2014, 37.1% in 2015, 31.4% in 2016 and 51.7% 2017, for the financial system as a whole.
Since most term deposits (more than 95%) are short-term deposits with a ~~term~~maturity of less than three months, a substantial portion of the loans have very short maturity, and there is a small portion of medium- and/or long-term credit lines.
The uncertainty about the ~~level of~~ability to reduce inflation in the future and whether the Macri administration will be able to continue the declining trend observed in previous months and meet the inflation targets announces, is a principal obstacle preventing a faster recovery of Argentina’s private sector long-term lending and thus the financial system size. This uncertainty has had, and may continue to have, a significant impact on both the supply of, and demand for, long-term loans as borrowers try to hedge against inflation risk by borrowing at fixed rates while lenders hedge against inflation risk by offering loans at floating rates.

If longer-term financial intermediation activity does not grow, the ability of financial institutions, including us, to generate profits will be negatively affected.

Our asset quality and that of other financial institutions may deteriorate if the Argentine private sector is affected by economic events in Argentina or international macroeconomic conditions.
As a result of Argentina’s current macroeconomic environment, including the economic recession since 2018, high interest rates in 2018 and 2019, high inflation and depreciation of the Peso, the capacity of many Argentine private sector debtors to repay their loans has deteriorated significantly, materially affecting the asset quality of financial institutions, including the Bank and CCF. Furthermore, due to the ongoing COVID-19 pandemic and the government measures taken to contain the spread of the virus, since mid-March 2020 economy activity has been disrupted and Argentina GDP declined by 9.9% in 2020. The measures taken by the Argentine government to address the effects of the current macroeconomic environment may not be sufficient to offset the significant impacts of Argentina’s economic recession and the COVID-19 pandemic. Consequently, if customers are not able to repay their loans the quality of the Bank’s and CCF’s assets may further deteriorate and loan loss provisions may increase, which could, in turn, adversely affect our results of operations and financial condition.
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Increased competition and consolidation in the banking and financial industry could adversely affect our operations.

We expect competition in the banking and financial sector to continue to increase. Such increased competition in the banking and financial sector could reduce prices and margins and the volume of operations and our market share. Therefore, our results of operations could be adversely affected.

Enforcement of creditors’ rights in Argentina may be limited, costly and lengthy.

In the past, in order to protect debtors affected by the economic crisis in ~~2001-2002,~~2001 and 2002, the Argentine government adopted measures in the beginning of 2002 that suspended proceedings to enforce creditors’ rights upon debtor default, including mortgage foreclosures and bankruptcy petitions. More recently, in connection with the ongoing COVID-19 pandemic, the Argentine administration has suspended mortgage foreclosures until March 31, 2021. For more information on regulations in connection with the COVID-19 pandemic, see “Item 4.B.—Business Overview—Argentine Banking Regulations – Government Measures in Response to the Ongoing COVID-19 Pandemic.”

~~Although such measures have been rescinded, in the future they could be reinstated, or the government could take other measures that limit creditors’ rights.~~ Any such measures, ~~limiting~~and any other measures which may limit the ability of creditors, including us, to bring legal actions to recover unpaid loans or restricting creditors’ rights generally could have a material adverse effect on the financial system and on our business.

The Consumer Protection Law and the Credit Card Law may limit some of the rights afforded to us and our subsidiaries.

The application of the Argentine Consumer Protection Law No. 24,240 ~~as supplemented or amended~~ (the “Consumer Protection Law”), which establishes a number of rules and principles for the protection of ~~consumers. Although~~consumers, and the Consumer Protection Law does not contain specific provisions for its enforcement in relation to financial activities, it contains general provisions that might be used as grounds to uphold such enforcement, as it has been previously interpreted in various legal precedents. Moreover, the new Argentine Civil and Commercial Code has captured the principles of the Consumer Protection Law and established their application to banking agreements. Additionally, Law No. 25,065 (as amended by Law No. 26,010 and Law No. 26,361, the “Credit Card Law”) ~~also~~, which sets forth several mandatory regulations designed to protect credit card ~~holders.~~
~~The application of both the Consumer Protection Law and the Credit Card Law~~holders, by administrative authorities and courts at the federal, provincial and municipal levels has increased. Moreover, administrative and judicial authorities have issued various rules and regulations aimed at strengthening consumer protection. In this context, the Central Bank issued ~~Communication “A” 5460, as supplemented and amended, granting~~regulations with respect to the protection of financial services customers, which grants broad protection to financial services customers, ~~limiting~~and limits fees and charges that financial institutions may validly collect from their clients.
In addition, the Argentine Supreme Court ~~issued the~~ ~~Acordada~~ ~~32/2014, creating~~created the Public Registry of Collective Proceedings ~~for the purpose of registering~~to register collective proceedings (such as class actions) filed with national and federal courts. In the event that we or our subsidiaries are found ~~to be~~ liable for violations of any of the provisions of the Consumer Protection Law or the Credit Card Law, the potential penalties could limit some of our rights or our
subsidiaries’ ~~rights. For~~rights, for example, ~~reducing our or~~with respect to their ability to collect payments due from services and financing provided ~~us and~~by the Bank or its subsidiaries, which could adversely affect our ~~or their~~ financial results of operations.
On September 18, 2014, a new pre-judicial service of dispute resolution was created by Law No. 26,993, in order for consumers and providers to resolve any dispute within the course of 30 days, including fines for companies that do not attend to the hearings.

Furthermore, the rules that govern the credit card business provide for variable caps on the interest rates and fees that financial entities may charge to clients and ~~the fees that they may charge merchants. Moreover, general legal provisions exist pursuant~~merchants, and enable courts to ~~which courts could~~ decrease the interest rates and fees agreed upon by the parties ~~on the grounds that~~if they are deemed excessively high. A change in the applicable law or ~~the existence of~~ court decisions ~~that lower~~lowering the cap on interest rates and fees ~~that clients and merchants may be charged~~ would reduce the Bank’s and CCF’s revenues, ~~and therefore~~which could negatively affect our consolidated results.
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Class actions against financial institutions for an ~~indeterminate~~undetermined amount may adversely affect the profitability of the financial system and of the ~~Bank, specifically.~~Bank.

Certain public and private organizations have initiated class actions against financial institutions in Argentina, including the Bank. See “Item 8.A Consolidated Statements and Other Financial ~~Information—Legal Proceedings~~Information.” The Argentine National Constitution and the Consumer Protection Law contain certain provisions regarding class ~~actions. However,~~actions, although their guidance with respect to procedural rules for ~~instituting and trying~~ class action cases is limited. ~~Nonetheless,~~ Argentine courts have admitted class actions in ~~certain cases, including~~ various lawsuits against financial entities related to “collective interests” such as alleged overcharging on products, interest rates and advice in the sale of public securities. Recently, some of these lawsuits have been settled by the parties out of court. These settlements have typically involved an undertaking by the financial institution to adjust the fees and charges. If class action plaintiffs were to prevail against financial institutions, their success could have an adverse effect on the financial industry and on our business.

In the future, court and administrative decisions may increase the degree of protection afforded to our debtors and other customers or be favorable to the claims brought by consumer groups or associations. This could affect the ability of financial institutions, including us, to freely determine charges, fees or expenses for their services and products, therefore affecting their business and results of operations.

We operate in a highly regulated environment, and our operations are subject to regulations adopted, and measures taken, by several regulatory agencies.

Financial institutions are subject to significant regulation relating to functions that historically have been determined by the Central Bank, the Financial Information Unit (Unidad de Información Financiera or “UIF”) and the CNV. The number of these regulations have increased in connection with the ongoing COVID-19 pandemic. See “Item 4.B.—Business Overview—Argentine Banking Regulations – Government Measures in Response to the Ongoing COVID-19 Pandemic.” These regulations include: (i) minimum capital requirements; (ii) mandatory reserve requirements; (iii) requirements for investments in fixed rate assets; (iv) lending limits and other ~~regulatory authorities.~~ credit restrictions, including mandatory allocations; (v) limits and other restrictions on fees; (vi) reduction of the period for the financial institutions to deposit the amount of sales made with credit cards in the corresponding accounts of the sellers; (vii) limits on the amount of interest banks can charge or pay, or on the period for capitalizing interest; (viii) accounting and statistical requirements; (ix) restrictions on dividends; (x) limits on market share; (xi) reporting or controlling regimes as agents or legally bound reporting parties; and (xii) changes in the deposit insurance regime.
We have no control over governmental regulations or the rules governing all aspects of our operations. The Central Bank may penalize our main subsidiary, the Bank, as well as our subsidiary CCF, in case of any breach of applicable regulations. Similarly, the CNV, which authorizes our securities offerings and regulates the public markets in Argentina, has the authority to impose sanctions on us and our Board of Directors for breaches of corporate governance. In addition, pursuant to Law No. 26,831, the CNV may appoint supervisors with veto powers over resolutions of our Board of Directors and may temporarily remove our Board of Directors, when, as determined by the CNV, minority shareholders’ or bondholders’ interests or rights have been infringed upon. The Financial Information Unit (~~Unidad de Información Financiera~~ or “UIF”) regulates matters relating to anti-money laundering and has the ability to monitor compliance with any such regulations by financial institutions and, eventually, impose sanctions. Any such regulatory agencies could initiate proceedings against us, our shareholders or directors and, accordingly, impose sanctions on us or any of our subsidiaries.
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In addition to regulations specific to our industry, we are subject to a wide range of federal, provincial and municipal regulations and supervision generally applicable to businesses operating in Argentina, including laws and regulations pertaining to labor, social security, public health, consumer protection, the environment, competition and price controls.
Specifically, a series of new regulations were enacted from the beginning of 2012 until President Macri assumed office, incorporating new requirements and restrictions for financial institutions, including: (i) mandatory credit lines
for productive purposes, with a maximum interest rate established by regulation; (ii) rules limiting the reference interest rate for personal loans and car loans granted to retail customers that are not considered a micro, small or medium size company; (iii) a prior authorization requirement with respect to the introduction of new fees for new products and/or services offered and to increase existing fees; (iv) rules limiting minimum rates applicable to term deposits made by individuals; and (v) rules limiting the ability of financial institutions to receive remuneration or profits from any insurance product that customers are obligated to purchase as a condition for accessing financial services. However, on December 17, 2015, the limits imposed on interest rates applicable to transactions referred to in items (ii) and (iv) were eliminated and financial entities and their customers may now freely agree upon such interest rates. See “~~Item 4.B Business overview—Argentine Banking Regulation—Interest Rate and Fee Regulations~~.”
In 2012, the Central Bank increased the capital requirements for financial institutions following the Basel II standard as well as several other measures related to Basel III, including with respect to capital, leverage and liquidity. In addition, since January 2016, pursuant to Communication “A” 5827 issued by the Central Bank, there are additional capital margin requirements, composed of a capital conservation margin and a countercyclical margin. Pursuant to these regulations, the capital conservation margin is 2.5% of the amount of risk weighted assets, or RWA, and in the case of entities considered by the Central Bank to be systemically important, or D-SIB, the margin will be increased to 3.5% of RWA. The countercyclical margin must be within a range of 0% to 2.5% of RWA. Pursuant to Communication “A” 5938, as amended and supplemented, the applicable countercyclical margin is currently 0%. See “~~Item 4.B Business overview—Argentine Banking Regulation—Minimum Capital Requirements~~.”
In July 2016, by means of Communication “A” 6013, as amended by Communication “A” 6464, the Central Bank eliminated the requirement to maintain a certain regulatory capital threshold after the distribution of dividends by financial institutions.
The Central Bank has also imposed restrictions on the positive foreign currency net global position of financial institutions, which have been modified several times, to prevent the Central Bank’s foreign currency reserves from further decreasing. As of the date of this annual report, the positive foreign currency net global position, calculated by using monthly averages of daily balances, may not exceed 25% of the lesser of the financial institution’s RPC (as defined below) computed for the relevant preceding month or the financial institution’s own liquid assets for the preceding month. For a more detailed description of changes, see “~~Item 4.B Business overview—Argentine Banking Regulation—Foreign Currency Net Global Position~~.”
The absence of a stable regulatory framework orin Argentina for financial institutions and the imposition of measures that ~~may~~ affect the profitability of financial institutions and limit the ~~capacity to hedge~~possibility of covering their positions against currency fluctuations ~~could~~ result ~~in significant limits to~~may limit the decisions that financial ~~institutions’ decisions, such as~~institutions, including the Bank and CCF, ~~regarding~~can make on asset ~~allocation. In turn, this could cause uncertainty and negatively~~allocation, which may adversely affect ~~our~~ future financial activities and ~~results~~our result of operations. ~~In addition, existing or future legislation and regulation could require material expenditures or otherwise have a material adverse effect on our consolidated operations.~~
In addition, pursuant to Communication “A” 5785, as amended by Communication “A” 5813”, sanctions imposed by the Central Bank, the UIF, the CNV and/or the National Superintendency of Insurance on financial institutions and/or their authorities, may result in the revocation of their licenses to operate as financial institutions. Such revocation may occur when, in the opinion of the Board of Directors of the Central Bank, there was a material change in the conditions deemed necessary to maintain such license, including those relating to the suitability, experience, moral character or integrity of (i) the members of a financial institution’s Board of Directors (directors, counselors or equivalent authorities), (ii) its shareholders, (iii) the members of its supervisory committee and (iv) others, such as its managers.
Even though the Macri administration has taken steps towards increasing the flexibility of the regulatory framework for the financial entities, including the elimination of several restrictions adopted by the previous government as described above, thereThere can be no assurances that new and tighter regulations will not be implemented in the future, which could cause uncertainty and could negatively affect our future financial activities and results of operations. Also, the imposition of measures that may affect the profitability of financial institutions and limit the capacity to hedge against currency fluctuations could result in significant limits to financial institutions’ decisions, such as the
~~Bank and CCF, regarding asset allocation.~~ In addition, existing or future legislation and regulation ~~could~~may require us to make material expenditures ~~or otherwise have a~~to avoid any material adverse effect on our consolidated operations.

We are exposed to compliance risks.
Due to the nature of our activities, we are exposed to certain compliance risks. We must comply with regulations regarding customer conduct, market conduct, the prevention of money laundering and the financing of terrorist activities, the protection of personal data, the restrictions established by national or international sanctions programs and anti-corruption laws (including the U.S. Foreign Corrupt Practices Act of 1977 and the UK Bribery Act of 2010), the violations of which could lead to very significant penalties. As part of our business, we directly or indirectly, through third parties, deals with entities whose employees are considered to be government officials. Our activities are also subject to complex customer protection and market integrity regulations.
Although we have adopted multiple policies, procedures, internal control systems and other measures to manage compliance risk, it is dependent on its employees and external suppliers for the implementation of these policies, procedures, systems and other measures, and it cannot guarantee that these are sufficient or that our employees or other persons related to us or our business partners, agents and/or other third parties with a business or professional relationship do not circumvent or violate current regulations or our ethics and compliance regulations, acts for which such persons could be held ultimately responsible and/or that could damage our reputation. In particular, acts of misconduct by any employee, and particularly by senior management, could erode trust and confidence and damage our reputation among existing and potential clients and other stakeholders. Actual or alleged misconduct by the Bank in any number of activities or circumstances, including operations, employment-related offenses such as sexual harassment and discrimination, regulatory compliance, the use and protection of data and systems, and the satisfaction of client expectations, and actions taken by regulators or others in response to such misconduct, could lead to, among other things, sanctions, fines and reputational damage, any of which could have a material adverse effect on the Bank’s business, financial condition and results of operations.
We may not be able to prevent third parties from using the banking network in order to launder money or carry out illegal or inappropriate activities. Moreover, financial crimes continually evolve and emerging technologies, such as cryptocurrencies and blockchain, could limit our ability to track the movement of funds. Additionally, in adverse economic conditions, it is possible that financial crime attempts will increase significantly.
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If there is a breach of the applicable regulations or the Banks’s ethics and compliance regulations or if the competent authorities consider that the Bank does not perform the necessary due diligence inherent to its activities, such authorities could impose limitations on our activities, the revocation of our authorizations and licenses, and economic penalties, in addition to having significant consequences for our reputation, which could have a significant adverse impact on our business, financial condition and results of operations. Furthermore, we from time to time conduct investigations related to alleged violations of such regulations and ethics and compliance regulations, and any such investigation or any related procedure could be time consuming and costly, and its results difficult to predict.
In 2020 the COVID-19 outbreak has led in many countries to new specific regulations, mainly focused on consumer protection measures. The difficulties associated with the need to adapt the Bank’s systems to these new regulations quickly along with the fact that the majority of our employees have been working remotely could pose new compliance risks. Likewise, despite the existing controls in place, the increase in remote account opening driven by the pandemic could increase money laundering risks. Additionally, criminals are continuing to exploit the opportunities created by the pandemic across the globe and increased money laundering risks associated with counterfeiting of medical goods, investment fraud, cyber-crime scams and exploitation of economic stimulus measures put in place by governments. Increased strain on our communications surveillance frameworks could in turn raise our market conduct risk.
Exposure to multiple federal, provincial ~~and~~and/or municipal legislation and regulations could adversely affect our business or results of operations.
Argentina has a federal system of government with 23 provinces and one autonomous city (Buenos Aires), each of which, under the Argentine national constitution, has full power to enact legislation concerning taxes and other matters. Likewise, within each province, municipal governments have broad powers to regulate such matters. Due to the fact that our branches are located in multiple provinces, we are also subject to multiple provincial and municipal legislation and regulations. Although we have not experienced any material adverse effects from this, future developments in provincial and municipal legislation concerning taxes, provincial regulations or other matters may adversely affect our business or results of operations.
~~Future governmental measures or regulations may adversely affect the economy and the operations of financial institutions.~~

The Argentine government has historically exercised significant influence over the economy and financial ~~institutions, in particular, have operated in a highly regulated environment. Laws and regulations currently governing~~institutions. In the ~~economy or the banking sector may continue to change in the future, and any changes may adversely affect our business, financial condition and results of operations.~~
~~Several~~past, several different bills to amend the Argentine Financial Institutions Law No. 21,526 (the “FIL”) have been put forth for review by the Argentine Congress, seeking to amend different aspects of the FIL, including the qualification of financial services as a public service, an increase in governmental regulations affecting the activities of financial entities and initiatives to make financial services more widely available. A
Laws and regulations currently governing the economy and the banking sector may continue to change in the future, and any changes may adversely affect our business, financial condition and results of operations. In particular, a thorough amendment of the FIL would have a substantial effect on the banking system as a whole. If ~~any~~ such a bill iswere passed, or any other amendment to the FIL isbe made, the subsequent changes in banking regulations may have adverse effects on financial institutions in general, and on our business, financial conditions and results of operations.

~~The amendment~~In addition, Argentina has a federal system of ~~the Central Bank’s Charter~~government with 23 provinces and the ~~Convertibility Law~~Autonomous City of Buenos Aires, each of which, under the Argentine national constitution, has full power to enact legislation concerning taxes and other matters. Likewise, within each province, municipal governments have broad powers to regulate such matters. Due to the fact that our branches are located in multiple provinces, we are also subject to multiple provincial and municipal legislation and regulations. Future developments in provincial and municipal legislation concerning taxes, provincial regulations or other matters may adversely affect our business or results of operations.
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As an example of the aforementioned, in the second half of 2020 and after the suspension of the 2017 fiscal consensus in late 2019, certain Argentine ~~economy.~~
~~On March 22, 2012,~~provinces (Córdoba, San Luis, Buenos Aires and the ~~Argentine Congress passed Law No. 26,739, which amended~~City of Buenos Aires) raised the ~~charter~~tax rate on gross income tax for banks. Additionally, in October 2020, the City of Buenos Aires also eliminated a tax exemption on interest income received from LELIQs (short-term debt instruments issued by the Central Bank ~~and the Convertibility Law. This new law amended the objectives~~as part of ~~the Central Bank (as established in~~ its ~~charter) and removed certain provisions previously in force. Pursuant to the terms of the new law, the Central Bank will focus on promoting~~ monetary and financial stability as well as development with social equity. In addition, the concept of “freely available reserves” was eliminated, granting the Argentine government access to additional reserves to pay debt. Further, this new law provides that the Central Bank may set the interest rate and terms of loans granted by financial institutions.policy).

~~Regarding~~In January 2021, a legal action was filed against the ~~reserves, if~~Autonomous City of Buenos Aires in order to declare Laws No. 6,382 and No. 6,383 unconstitutional, which seek to burden the ~~government were~~returns derived from securities, bonds, bills, certificates of participation (equity) and other instruments issued or to utilize such Central Bank’s reserves to make payments on its public debt or finance public spending, this may result in increased inflation, which would hinder economic growth. In addition, a decreasebe issued in the ~~Central Bank’s reserves could adversely affect~~future by the Argentine Central Bank with turnover tax. Such legal action was filed under File No. CAF 18156/2020 (“ADEBA Asociación Civil de Bancos Argentinos y otros c/GCBA y otro s/Proceso de Conocimiento”) by the Association of Banks and most of its members. The Argentine Central Bank has filed a legal action for the same purpose.
If financial intermediation activity volumes relative to GDP are not restored to higher levels, the capacity of financial institutions, including the Bank, our main subsidiary, to generate profits may be negatively affected.
As a result of the 1999-2002 financial crisis, as a result of which the Argentine economy fell 18.4%, the volume of financial intermediation activity dropped dramatically: private sector credit plummeted from 24% of GDP in December 2000 to 7.7% in June 2004 and total deposits as a percentage of GDP fell from 31% to 23.2% during the same period. The depth of that crisis and the effect it had on depositors’ confidence in the financial system created uncertainty regarding its ability to act as an intermediary between savings and credit. Although in some recent years private credit relative to GDP grew, since 2018 credit contracted in real terms. Furthermore, the ratio of the total financial system’s private-sector deposits and loans to GDP remains low when compared to international levels and continues to be lower than the periods prior to the 1999-2002 crisis and also from prior years, especially in the case of private-sector deposits and loans, which amounted to 18.6% and 9.6% of GDP, respectively, as of December 31, 2020.
There is no assurance that financial intermediation activities will continue in a manner sufficient to reach the necessary volumes and businesses to provide financial institutions, including the Bank, with sufficient capacity to ~~withstand and overcome the effects of an economic crisis (either domestic or international), negatively affecting economic growth and,~~generate income, which may, in turn, impact our ~~consolidated results and~~ results of operations.

Argentine financial institutions, including the Bank, continue to have exposure to public sector debt, including securities issued by the Argentine Central Bank, and its repayment capacity, which in periods of economic recession, may negatively affect their results of operations.
To some extent, the value of the assets held by Argentine financial institutions, as well as their income generation capacity, is dependent on the public sector’s creditworthiness, which is in turn dependent on the Argentine and the provincial government’s ability to promote sustainable long-term economic growth, generate tax revenues and control public spending.
Argentine financial institutions usually hold public sector debt issued by the national, provincial and municipal governments and securities – generally short term – issued by the Central Bank as part of their portfolios. As of December 31, 2020, the exposure of the financial institutions to the public sector represented 10.3% of total assets and their holdings of short-term securities issued by the Central Bank represented 25.8% of total assets. As of December 31, 2020, our exposure to the public sector amounted to Ps.21.9 billion, representing 8.8% of our total assets as of that date and our exposure to short term securities issued by the Central Bank and Repo transactions with Central Bank amounted to Ps.51.1 billion or 20.4% of our total assets as of such date.
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By virtue of Executive Decrees No. 596/2019 and No. 609/2019, the maturity date of short-term public sector debt securities (“Letes,” “Lecaps,” “Lelink” and “Lecer”) was extended to February 2020. Afterwards, through Decree No. 346/2020, the Argentine government further extended the maturity date of certain “Letes” to December 31, 2020. In February 2020, through Joint Resolution 6/2020, certain “Lecaps” and “Letes” which had already been reprofiled pursuant to the aforementioned Executive Decrees No. 596/2019 and 609/2019 were subsequently exchanged by peso-denominated treasury bills (“Lebads”) maturing on September 18, 2020. On April 5, 2020, the Argentine government issued the Decree No. 346/2020, by which the repayment of Argentine law-governed U.S. dollar-denominated notes was postponed, including the abovementioned “Letes.” Our holdings of “Letes” and “Lecaps” were affected as a result of the aforementioned restructuring measures of Argentine law-governed sector public debt adopted by the Argentine government.
In addition to the public sector debt restructuring process, the Argentine government also launched an exchange offer with the aim of refinancing its foreign law-denominated external indebtedness, which was successfully concluded in August 2020. For more information on the restructuring, see “Item 5.A—Operating Results—The Argentine Economy and Financial System—Argentina’s Sovereign Debt Restructuring.”
Should the public sector fail to fulfill its commitments in due time and proper form, this could have a negative adverse effect on our business, financial situation and results of operations. Moreover, failure by the Argentine government to successfully carry out the restructuring of its debt with the IMF may further affect the public sector’s creditworthiness and negatively affect the Bank’s exposure to public sector debt and therefore its results.
Risks Relating to Our Business

Due to our exposure to middle and lower-middle-income individuals and SMEs, the quality of our consolidated loan portfolio is more susceptible to economic downturns and recessions.

Our consolidated loan portfolio is ~~concentrated in~~exposed to the segments of SMEs and middle and lower-middle-income individuals, which are more vulnerable to economic recessions than large corporations and higher income individuals. The quality of our portfolio of loans to SMEs and to individuals is therefore dependent to a large extent
on domestic and international economic conditions. Consequently, we may experience higher levels of past due amounts, which could result in higher provisions for loan losses. ~~See “~~~~Item 4.D Property, plants and equipment—Selected Statistical Information~~.”

The loan portfolio of the Personal & Business Banking segment, which includes individuals and small business with annual sales of up to Ps.100 million and SMEs with annual sales over Ps.100 million and below Ps. 700 million, represented approximately 51% of the consolidated loan portfolio (net of provisions) as of December 31, 2020, while the loan portfolio of the Consumer Finance Segment represented approximately 7% of the consolidated loan portfolio. Within the 51% share of the Personal & Business Banking Segment, 42% corresponds to individuals, while 9% corresponds to Small Businesses & SMEs. Morover, loans to lower-risk payroll and pension clients accounted for 72% of our total loans to individuals at the bank level. If the economy in Argentina experiences a significant downturn, this could materially and adversely affect the liquidity, businesses and financial condition of our customers, which may in turn cause us to experience higher levels of past due loans, thereby resulting in higher provisions for loan losses and subsequent write-offs. This may materially and adversely affect the credit quality of our loan portfolio, our asset quality, our results of operations and our financial condition.

We may continue to seek potential acquisitions, but we may not be able to complete such acquisitions or successfully integrate businesses that we acquire.

In the past, in addition to organic growth, we have significantly expanded our business through acquisitions. We expect to continue considering acquisition opportunities that we believe may add value and are compatible with our business strategy.

In this respect, we may not be able to continue to identify opportunities or consummate acquisitions leading to economically favorable results orand we cannot assure you that any future acquisition will, if required, be authorized by the Central Bank, which would limit our ability to implement ~~an important component of~~ our growth strategy. In addition, in the event that an acquisition opportunity is identified and authorized, successful integration of the acquired business entails significant risks, including compatibility of operations and systems, unexpected contingencies, employee retention, compliance, customer retention, and delays in the integration process.

Changes in market conditions and any associated risks, including interest rate and currency exchange volatility, could materially and adversely affect our consolidated financial condition and results of operations.

We are directly and indirectly affected by changes in market conditions. Market risk, or the risk that values of assets and liabilities or revenues will be adversely affected by variations in market conditions, including interest rate and currency exchange volatility, is inherent in the products and instruments associated with our operations, including loans, deposits, long-term debt and short-term borrowings.

In particular, our results of operations depend to a great extent on our net financial income. Net ~~interest~~financial income represented ~~62.0%~~85.8% of our net ~~financial income~~operating revenue in 2020 and ~~services income fee~~88.0% in ~~2015, 66.0% in 2016 and 70.2% in 2017.~~2019. Changes in market interest rates could affect the interest rates earned on our interest-earning assets differently from the interest rates paid on our interest-bearing liabilities, leading to a reduction in our net ~~interest~~financial income or a decrease in customer demand for our loan or deposit products. In addition, increases in interest rates could result in higher debt service obligations for our customers, which could, in turn, result in higher levels of delinquent loans or discourage customers from borrowing. Interest rates are highly sensitive to many factors beyond our control, including the minimum reserve policies of the Central Bank, regulation of the financial sector in Argentina, domestic and international economic and political conditions and other factors.

Any changes in interest rates and currency exchange rates could adversely affect our business, our future financial performance and the price of our securities.
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Reduced spreads between interest rates on loans and those on deposits, ~~without corresponding increases in lending volumes,~~ could adversely affect the Bank’s and CCF’s profitability.

Historically, the Argentine financial system witnessed a decrease in spreads between the interest rates on loans and deposits as a result of ~~a decrease in inflation or~~ increased competition in the banking ~~sector.~~sector and the Argentine government’s tightening of monetary policy in response to inflation concerns. The interest rate spreads of the Bank and CCF follow the same trend. If
Since the 2018 devaluation of the Peso and the acceleration of the inflation ~~reduces, competition continues~~rate, the Central Bank raised interest rates, ending the margin contraction trend that had been taking place in the previous years. Since late December 2019, the Central Bank has resumed a process of rate reduction, and inflation expectations have been reduced slightly, although they remain high. Moreover, amid the COVID-19 outbreak, the Central Bank imposed minimum interest rates paid on time deposits, imposed maximum interest rates on credit cards financing, and established some credit lines to be granted to SMEs at preferential interest rates, pressuring margins downwards. In turn, if in the future the Central Bank is successful in reducing the pace of inflation, it could result in a renewed pressure on banking spreads.
Moreover, a change in the composition of the source of funding, which is currently heavily weighted by non-interest-bearing deposits, could also put downward pressure on margins. A change in the composition of the source of funding could result from lower interest rates, higher demand of credit and therefore a need to increase the amount of time deposits or ~~increases~~other types of bearing interest liabilities. Further reduction in spreads could have a material adverse effect on our business, results of operation and financial condition. We cannot guarantee that interest rate spreads ~~decrease, without corresponding~~will remain attractive unless increases in ~~the~~our volume of ~~the Bank’s loans such decrease could adversely affect our consolidated results of operations and financial condition.~~lending.
We are a holding company and we conduct our business through our subsidiaries. Our ability to invest in our business developments will depend on our subsidiaries’ ability to pay dividends to us.

As a holding company, we conduct our operations through our subsidiaries, the largest of which is the Bank. Consequently, we do not operate or hold substantial assets, except for equity investments in our subsidiaries and temporary liquidity. Except for such assets, our ability to invest in our business developments and to repay obligations is subject to the funds generated by our subsidiaries and their ability to pay cash dividends. In the absence of such funds, we may have to resort to financing options at unappealing prices, rates and conditions. Additionally, such financing could be unavailable when we may need it.

Each of our subsidiaries is a separate legal entity and due to legal or contractual restrictions, as well as to their financial condition and operating requirements, they may not be able to distribute dividends to us. Our ability to develop our business, meet our payment obligations and pay dividends to our shareholders could be limited by restrictions preventing our subsidiaries from paying us dividends. Investors should take such restrictions into account when analyzing our investment developments and our ability to cancel our obligations.
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Our estimates and established reserves for credit risk and potential credit losses may prove to be insufficient, which may materially and adversely affect our asset quality and our financial condition and results of operations.

~~A number~~Pursuant to the implementation of IFRS 9, our ~~products expose us to~~subsidiaries, particularly the Bank and CCF, establish reserves for potential credit risk ~~including consumer loans, commercial loans~~ and ~~other receivables. Changes~~losses related to changes in the ~~income~~ levels of ~~our~~ income of debtors/borrowers, ~~increases in the~~increased rates of inflation, ~~rate~~increased levels of non-performing loans or an increase in interest ~~rates could~~rates. In this process, our subsidiaries rely on several models that estimate the distribution of possible losses arising out of the loan portfolio to calculate expected losses. The Bank’s models estimate distribution of possible loan portfolio losses, which depend on counterparties’ default (probability of default (PD)), as well as the exposure assumed with them (EAD—Exposure at the time of default) and the proportion of each unfulfilled loan that the entity is able to recover (Loss in the event of default (LGD)). Based on these parameters, the expected loss (PE) and economic capital are estimated. At the same time, we assess expected credit losses on a forward-looking basis, incorporating the impact of updated macroeconomic scenarios in the variables which we consider affect credit risk.
The pandemic and the nation-wide lockdown established by the Argentine government since March 20, 2020 have had a significant negative ~~effect~~impact on the ~~quality~~Argentine economy and resulted in increased morosity levels in the financial system. The Central Bank has established several measures in favor of ~~our loan portfolio, causing us~~creditors, including an automatic rescheduling program on unpaid loans installments maturing between the months of April 2020 and March 2021. Despite the measures taken by the Argentine government in order to ~~increase provisions for loan losses~~mitigate the negative impact, production and ~~resulting in reduced profits or in losses.~~consumption have decreased significantly, impacting employment levels and financial flows, among others and the extent of such impact and its effects are still uncertain, and therefore difficult to measure.

We estimate and establish reserves for credit risk and potential credit losses. This process involves subjective and complex judgments, including projections of economic conditions and assumptions on the ability of our borrowers to repay their loans.
~~Overall, if~~If we are unable to effectively control the level of non-performing or poor credit quality loans in the future, or if our loan loss reserves are insufficient to cover future loan losses, our asset quality and our financial condition and results of operations may be materially and adversely affected.

The Bank’s revenues from its business with senior citizens could decrease or cease to grow if the ~~Bank’s~~ agreement with ANSES is terminated or not renewed.

Since 1996, the Bank has acted as one of the paying agents of social security payments to senior citizens on behalf of the government pursuant to an agreement with ANSES. In December ~~2014, pursuant to Resolution No. 648/14, ANSES renewed its agreement with the paying agents for a six-year period. In December 2017,~~2020, the Bank made payments on behalf of ANSES to approximately ~~1,123,000~~960,000 senior citizens and beneficiaries. Offering this service to senior citizens allows the Bank ready access to a pool of potential consumers of financial services. The Bank derives an important part of its revenues ~~(35.0%~~(18% as of December 31, ~~2017)~~2020) from the sale of financial services ~~through~~to senior ~~citizens dedicated branches.~~citizens. The ~~Bank’s~~ agreement with ANSES ~~provides~~is an agreement that ~~it will continue in effect as long as~~must be signed by any bank that intends to pay pensions or benefits on behalf of ANSES. The current agreement with ANSES expires on June 30, 2021 and negotiations between the ~~parties continue performing their obligations for a six-year term.~~banks and ANSES to renew the agreement have already started. In addition, ANSES has the right to terminate the agreement with a 90 ~~days~~day prior notice.

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The termination of the agreement with ANSES ~~a decision by ANSES not to renew the agreement in December 2020,~~ or ANSES’s failure to add new senior citizens to the payment service could have a negative effect on our business and results of operations.

Since short-term deposits are one of our main sources of funds, a sudden shortage of short-term deposits could cause an increase in costs of funding, affect our liquidity ratios and have an adverse effect on our revenues.
Deposits are one of our primary sources of funding, representing 60.1% of our total liabilities as of December 31, 2017. A significant portion of our assets has longer maturities, resulting in a mismatch between the maturities of liabilities and the maturities of assets. If a substantial number of our depositors withdraw their sight deposits or do
~~not roll over their time deposits upon maturity, our liquidity position, results of operations and financial condition may be materially and adversely affected~~. In the event of a sudden or unexpected shortage of funds in the banking system, money markets in which we operate may not be able to maintain levels of funding without incurring high funding costs or the liquidation of certain assets. If this were to happen, we may be unable to fund our liquidity needs at competitive costs and our results of operations and financial condition may be materially adversely affected.
Because our main subsidiary, the Bank, as well as CCF, are financial institutions, any insolvency proceeding against them would be subject to the powers of and intervention by the Central Bank, which may limit remedies otherwise available and extend the duration of the proceedings.
Under Argentine law, the liquidation and commencement of bankruptcy proceedings against financial institutions, until their banking license has been revoked by the Central Bank, may only be commenced by the Central Bank. If the Bank and/or CCF are unable to pay their debts as they come due, the Central Bank would intervene and revoke their respective banking and “compañía financiera” licenses, and file a bankruptcy petition before a commercial court. If the Central Bank intervenes, the reorganization proceeding could take longer and it is likely that the shareholders’ remedies would be restricted. During any such process, the Central Bank would have to consider its interests as a regulator and, as a result, could prioritize the claims of other creditors and third parties against the Bank and/or CCF. As a result of any such intervention, shareholders may realize substantially less on the claims than they would in a regular bankruptcy proceeding in Argentina, the United States or any other country.
Our controlling shareholder has the ability to direct our business, and potential conflicts of interest could arise.

Our controlling shareholder, Julio Patricio Supervielle, directly or beneficially owned as of April ~~27, 2018, 126,738,188~~29, 2021, 61,738,188 Class A shares and ~~37,030,422~~98,684,713 Class B shares. Virtually all decisions made by shareholders will continue to be directed by our controlling shareholder. He may, without the concurrence of the remaining shareholders, elect a majority of our directors, effect or prevent a merger, sale of assets or other business acquisition or disposition, cause us to issue additional equity securities, effect a redemption of shares, effect a related party transaction and determine the timing and amounts of dividends, if any. According to our bylaws, a two-thirds vote by our Class A shares is required, regardless of the percentage of our total capital they represent, in order for us to duly resolve a merger with another company, a voluntary dissolution, our relocation abroad, and the fundamental change in our corporate purpose. Mr. Supervielle’s interests may conflict with your interests as a holder of Class B shares or ADSs, and he may take actions that might be desirable to him but not to other shareholders.

Early termination of CCF’s business agreement with the current owners of Walmart, Grupo De Narváez, and the potential change of the Walmart brand could have an adverse effect on our revenue.

In April 2000, CCF ~~(formerly~~ ~~GE Compañía Financiera~~) and Walmart entered into a commercial agreement pursuant to which CCF became the sole provider of financial services for Walmart’s customers in Argentina. The agreement was renewed in 2005, in 2010, in 2014, and more recently in ~~December 2014. Such agreement is key~~May 2020.
On November 6, 2020, Walmart Inc. agreed to ~~CCF’s overall performance. This~~sell its business in Argentina to Grupo de Narváez, a well-known name in Argentina conducting several retail businesses in the country. Although Grupo De Narváez has not been in the supermarket business in Argentina in recent years, they have been building retail capabilities in other countries in the region.
The current agreement expires inon August ~~2020~~31, 2021 and, while ~~it contains an option for~~a renewal is currently being negotiated with Grupo De Narváez, it may not be renewed on the same terms or at all. ~~In addition, the agreement is subject under certain conditions to voluntary termination by Walmart Argentina.~~ The decision by ~~Walmart Argentina~~Grupo De Narváez not to renew ~~or to terminate~~ the agreement could negatively affect our expected benefit from this alliance and could result in a material adverse effect on CCF’s financial condition and results of operations.
As of July 1, 2018, the Peso qualifies as a currency of a hyperinflationary economy, and the Group is required to apply inflationary adjustments to its financial statements, which adjustments could adversely affect its financial statements, results of operations and financial condition.

~~Differences~~In June 2018, the International Practices Task Force categorized Argentina as a country with a projected three-year cumulative inflation rate greater than 100%. Pursuant to IAS 29 (Financial Reporting in Hyperinflationary Economies), the ~~accounting standards between Argentina~~financial statements of entities whose functional currency is that of a hyperinflationary economy must be restated in a suitable general price index to control for the effects of changes. Argentine companies applying IFRS are required to apply IAS 29 to their financial statements for periods ending on and after July 1, 2018. In addition, certain ~~countries with highly developed capital markets,~~regulatory authorities, such as the ~~United States, may make it difficult to compare our audited consolidated~~CNV, have required that financial statements submitted to the CNV for the periods ended on and ~~reported earnings with companies in other countries and the United States.~~
~~Except as otherwise described herein, we prepared our 2017 audited consolidated financial statements~~after December 31, 2018 to be restated for inflation in accordance with IAS 29.
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To determine the ~~Central Bank regulations, which differ in certain significant respects from U.S. GAAP~~indexation for tax purposes, Law No. 27,468 substituted the WPI for CPI and ~~from Argentine GAAP. As a result, except for~~modified the standards triggering tax indexation procedures. From January 1, 2021, the tax indexation procedure is triggered under similar standards as those set forth by IAS 29.
We cannot predict the full impact of the application of such tax indexation procedures and the related adjustments on our ~~net income and our shareholders’ equity as of and for the years ended December 31, 2017 and 2016 which have been reconciled with U.S. GAAP, our audited consolidated~~ financial statements ~~are not directly comparable to those~~or the effects of ~~banks in the United States. Implementation~~such tax indexation procedures on our business, results of ~~IFRS in Argentina took place for the fiscal years beginning on January 1, 2018.~~operations and financial condition.
Cybersecurity events could negatively affect our reputation, our financial condition and our results of operations.

We depend on the efficient and uninterrupted operation of internet-based data processing, communication and information exchange platforms and networks, including those systems related to the operation of our ATM network. We have access to large amounts of confidential financial information and control substantial financial assets belonging to our customers as well as to us. In addition, we provide our customers with continuous remote access to their accounts and the possibility of transferring substantial financial assets by electronic means. Accordingly, cybersecurity is a material risk for us. Cybersecurity incidents, such as computer break-ins, phishing, identity theft and other disruptions could negatively affect the security of information stored in and transmitted through our computer systems and network infrastructure and may cause existing and potential customers to refrain from doing business with us.

In addition, contingency plans in place may not be sufficient to cover liabilities associated with any such events, and we do not have insurance to cover cyber risks and breaches. Our operational systems and networks have been, and will continue to be, subject to an increasing risk of continually evolving cybersecurity or other technological risks.
Although we intend to continue ~~to implement~~implementing security technology devices and ~~establish~~establishing operational procedures to prevent such damage, it is possible that not all of our systems are entirely free from vulnerability and these security measures will not be successful. If any of these events occur, it could damage our reputation, entail serious costs and affect our transactions, as well as our results of operations and financial condition.

Our business is highly dependent on properly functioning information technology systems and improvements to such systems.

Our business is highly dependent on the ability of our information technology systems and the ~~third party~~third-party managers of such systems to effectively manage and process a large number of transactions across numerous and diverse markets and products in a timely manner. In addition, we provide our customers with continuous remote access to their accounts and the possibility of transferring substantial financial assets by electronic means. The proper functioning of our financial control, risk management, accounting, customer service and other data processing systems is critical to our business and our ability to compete effectively. Our business activities may be materially disrupted if there were a partial or complete failure of any of our information technology systems communication networks. Such failures could be caused by, among other things, software bugs, computer virus attacks or intrusions, phishing, identity theft or conversion errors due to system upgrading. In addition, any security breach caused by unauthorized access to information or systems, or intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, could have a material adverse effect on our business, results of operations and financial condition.
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Our ability to remain competitive and achieve further growth will depend in part on our ability to upgrade our information technology systems and increase our capacity on a timely and ~~cost effective~~cost-effective basis. Any substantial failure to improve or upgrade information technology systems effectively or on a timely basis could materially affect us.

We are susceptible to fraud, unauthorized transactions and operational errors.

As with other financial institutions, we are susceptible to, among other things, fraud by employees or outsiders, unauthorized transactions by employees and other operational errors (including clerical or record keeping errors and errors resulting from faulty computer or telecommunications systems). Given the high volume of transactions that may occur at a financial institution, errors could be repeated or compounded before they are discovered and remedied. In addition, some of our transactions are not fully automated, which may further increase the risk that human error or employee tampering will result in losses that may be difficult to detect quickly or at all. Losses from fraud by employees or outsiders, unauthorized transactions by employees and other operational errors could have a material adverse effect on us.
Our policies and procedures may not be able to detect money laundering and other illegal or improper activities fully or on a timely basis, which could expose us to fines and other liabilities.

We are required to comply with applicable anti-money laundering laws, anti-terrorism financing laws and other regulations. These laws and regulations require us, among other things, to adopt and enforce “know your customer” policies and procedures and to report suspicious or large transactions to the applicable regulatory authorities. While we have adopted policies and procedures aimed at detecting and preventing the use of banking networks for money laundering activities and by terrorists and terrorist-related organizations and individuals generally, such policies and procedures may not completely eliminate instances where they may be used by other parties to engage in money laundering and other illegal or improper activities. If we fail to fully comply with applicable laws and regulations, the relevant government authorities to which they report have the power and authority to impose fines and other penalties. In addition, our businesses and reputation could suffer if customers use our financial institutions for money laundering or illegal or improper purposes. As of the date of this annual report, we have not been subject to material fines or other penalties, and we have not suffered business or reputational harm, as a result of any money laundering activities in the past.
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~~You may not be able to effect service of process within the United States upon us, our directors and officers and certain advisors.~~
All of our directors and all our officers and certain advisors named herein reside in Argentina or elsewhere outside the United States. As a result, you may not be able to effect service of process within the United States upon such persons.
Risks Relating to Our Class B Shares and the ADSs

Holders of our Class B shares and the ADSs may not receive any dividends.

We are a holding company and our ability to pay dividends depends on the cash flow and distributable income of our operating ~~subsidiaries, particularly the Bank.~~subsidiaries. We and our subsidiaries are subject to contractual, legal and regulatory requirements affecting our ability to pay dividends.
In particular, dividend distribution by the Bank is subject to the requirements established by the rules of the Central Bank, as amended from time to time. Pursuant to such regulations, dividend distributions shall be admitted as long as none of the following circumstances ~~apply(i)~~apply: (i) the financial institution is subject to a liquidation procedure or the mandatory transfer of assets ordered by the Central Bank in accordance with section 34 or 35 bis of the FIL; (ii) the financial institution is receiving financial assistance from the Central Bank; (iii) the financial institution is not in compliance with its reporting obligations to the Central Bank; (iv) the financial institution is not in compliance with minimum capital requirements (both on an individual and consolidated basis and excluding any individual franchise granted by the Superintendency) and with minimum cash reserves (on average), whether in Pesos, foreign currency or securities issued by the public sector; (v) if the average minimum cash reserve is lower than the amount of cash required by the latest reported position or the pro forma position after making the dividend payment; and/or (vi) if the financial institution did not comply with the applicable Additional Capital Margins (as defined below). Financial institutions that comply with all of the above mentioned conditions may distribute dividends up to an amount equal to: (i) the positive balance of the account “unappropriated earnings” (resultados no asignados) at the end of the fiscal year, plus (ii) voluntary reserves for future payments of dividends, minus (iii) voluntary reserves and mandatory statutory reserves registered as of that date and other items, such as (a) 100% of the debit balance of each of the items recorded under “Other accumulated comprehensive ~~income”,~~income,” (b) the result from the revaluation of property, plant, equipment and intangible assets and investment properties, (c) the net positive balance of the book-value and the market-value of certain public debt securities and Central Bank notes that the financial institution owns that are not marked to market, (d) unrecorded adjustments of asset value informed by the Superintendency of Financial and Exchange Entities (Superintendencia de Entidades Financieras y Cambiarias, or “Superintendency”) or mentioned by external auditors on their report, and (e) individual exemptions for asset valuation granted by the Superintendency.

In addition, financial entities may not distribute profits with the profit arising from the application of IFRS for the first time, and must set up a special reserve that can only be canceled for capitalization or to absorb any negative
balances from the item “Unassigned Results.” See “Item 4.B Business overview—Argentine Banking Regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution.”
In 2016 and 2017, we received the following dividend payments in cash from our subsidiaries: (i) Ps.73.0 million in 2017 and Ps.61.3 million in 2016 from SAM, (ii) Ps. Ps.23.1 million and Ps.42.3 million in 2017 and 2016 from Espacio Cordial, and (iv) Ps.150 million and Ps.76.8 million in 2017 and 2016 from Supervielle Seguros, and (v) Ps.0 million and Ps.6.5 million in 2017 and 2016 from Sofital. We did not receive dividend payments from the Bank or our other subsidiaries during 2017 and 2016.

Although distribution of dividends to us by the Bank has been authorized by the Central Bank in the past, it is possible that in the future the Central Bank may limit the Bank’s ability to distribute dividends approved by its shareholders at the annual ordinary shareholders’ meeting without its prior consent, or such authorization may not be for the full amount of distributable dividends.
~~Changes in the Argentine tax laws may adversely affect the results~~ By virtue of ~~our operations and the tax treatment of our Class B shares and/or the ADSs for the period prior to December 31, 2017.~~
On September 23, 2013, Law No. 26,893, which amended the Income Tax Law, was enacted. According to the amendments, the distribution of dividends by an Argentine corporation was subject to income tax at a rate of 10.0%, unless such dividends were distributed to Argentine corporate entities (the “Dividend Tax”).
The Dividend Tax was repealed by Law No. 27,260, enacted on June 29, 2016, and consequently no income tax withholding is applicable on the distribution of dividends in respect of both Argentine and non-Argentine resident shareholders, except when dividends distributed are greater than the income determined according to the applicationCommunication “A” 7181 of the ~~Income Tax Law, accumulated~~Central Bank, dividend distributions by financial entities is currently suspended at the fiscal year immediately preceding the year on which the distribution is made. In such case, the excess is subject to a rate of 35%, for both Argentine and non-Argentine resident shareholders. This treatment applies only to dividends to be distributed at any time out of retained earnings accumulatedleast until ~~the end of the last fiscal year starting before January 1, 2018.~~June 30, 2021.
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However, pursuant to Law No. 27,430, dividends to be distributed out of earnings accrued in fiscal years starting on or after January 1, 2018, and other profits paid in cash or in kind —except for stock dividends or quota dividends—by companies and other entities incorporated in Argentina referred to in the Income Tax Law, Sections 69 (a)(1), (2), (3), (6), (7) and (8), and Section 69(b) to Argentine resident individuals and foreign beneficiaries will be subject to income tax at a 7% rate on profits accrued during fiscal years starting January 1, 2018 to December 31 2019, and at a 13% rate on profits accrued in fiscal years starting 1 January 2020 and onwards. If dividends are distributed to Argentine corporate taxpayers (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of foreign entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina), no dividend tax should apply. See “~~Item 10.E Taxation—Material Argentine Tax Considerations~~.”
~~In addition, capital gains realized from the disposal of shares and other securities, including securities representing shares and deposit certificates, are subject to capital gains tax.~~
Law No. 27,430 established that as from January 1, 2018, capital gains realized by Argentine resident individuals from the disposal of shares and ADSs are exempt from capital gains tax in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares are traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV.
Such law also provides that the capital gains tax applicable to non-residents for transactions entered into until December 30, 2017 is still due, although no taxes will be claimed to non-residents with respect to past sales of Argentine shares or other securities traded in CNV’s authorized markets (such as ADSs) as long as the cause of the non-payment was the absence of regulations stating the mechanism of tax collection at the time the transaction was closed. General Resolution (AFIP) 4.227, which will come into effect on April 26, 2018, stipulates the procedures
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~~Table of Contents~~
~~through which the income tax should be paid to the AFIP. The payment of capital gains tax applicable for transactions entered into before December 30, 2017 is due on June 11, 2018.~~
In addition, Law No. 27,430 and Decree 279/2018, maintain the 15% capital gains tax (calculated on the actual net gain or a presumed net gain equal to 90% of the sale price) on the disposal of shares or securities by non-residents. However, non-residents are exempt from the capital gains tax on gains realized from the sale of (a) Argentine shares in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares were traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV; and (b) depositary shares or depositary receipts issued abroad, when the underlying securities are shares (i) issued by Argentine companies, and (ii) with authorization of public offering. The exemptions will only apply to the extent the foreign beneficiaries reside in, or the funds used for the investment proceed from, jurisdictions considered as cooperating for purposes of the exchange of tax information.
In case the exemption is not applicable and, to the extent foreign beneficiaries do not reside in, or the funds do not arise from, jurisdictions not considered as cooperative for purposes of fiscal transparency, the gain realized from the disposition of shares would be subject to Argentine income tax at a 15% rate on the net capital gain or at a 13.5% effective rate on the gross price. In case such foreign beneficiaries reside in, or the funds arise from, jurisdictions not considerd as cooperative for purposes of fiscal transparency, a 35% tax rate on the the net capital cagin or at a 31.5% effective rate on the gross price should apply.
Therefore, holders of our Class B shares or the ADSs, are encouraged to consult their tax advisors as to the particular Argentine income tax consequences of owning our Class B Shares or the ADSs. See “~~Item 10.E Taxation—Material Argentine Tax Considerations~~.”
Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds offor any sale of, the Class B shares underlying the ADSs.

Since the beginning of December 2001 until President Macri assumed office, the Argentine government implemented monetary and foreign exchange control measures that included restrictions on the withdrawal of funds deposited with banks and on the transfer of funds abroad, including dividends, without prior approval by the Central Bank, most of which were eliminated by the Macri administration.
~~Although the transfer of funds abroad by local companies~~Exchange controls currently in order to pay annual dividends only to foreign shareholders and the depositary for the benefit of the ADS holders based on approved audited financial statements no longer requires Central Bank approval, other exchange controlsplace could impair or prevent the conversion of anticipated dividends, distributions, or the proceeds from any sale of Class B shares, as the case may be, from Pesos into U.S. dollars and the remittance of the U.S. dollars abroad. In particular, with respect to the ~~proceeds of~~dividends and distributions on any sale of Class B shares underlying the ADSs, as of the date of this annual report, the conversion from Pesos into U.S. dollars and the remittance of such U.S. dollars abroad is ~~not~~ subject to prior Central Bank approval, ~~provided~~which may not be granted. Access to the free foreign ~~beneficiary~~exchange market (“MLC,” as per its Spanish acronym) to pay dividends to non-resident shareholders is ~~either a natural or legal person residing in or incorporated and established in jurisdictions, territories or associated states that are considered “cooperators for~~granted subject to the ~~purposes of fiscal transparency.” If such requirement is not met, prior Central Bank approval will be required.~~following conditions:
○ Maximum amounts: the total amount of transfers made through the MLC for payment of dividends to non-resident shareholders may not exceed the 30% of the total value of the capital contributions made in the relevant local company that entered and settled through the MLC as of January 17, 2020. The total amount paid to non-resident shareholders shall not exceed the corresponding amount denominated in Argentine Pesos determined by the shareholders’ meeting to be distributed as dividends.
○ Minimum Period: access to the MLC will only be granted after a period of not less than thirty (30) calendar days has elapsed as from the date of the settlement of the last capital contribution that is taken into account for determining the aforementioned 30% cap.
○ Documentation requirements: dividends must be the result of closed and audited balance sheets. When requesting access to the MLC for this purpose, evidence of the definitive capitalization of capital contributions must be provided or, in lack thereof, evidence of filing of the process of registration of the capital contribution before the Public Registry shall be provided. In this case, evidence of the definitive capitalization shall be provided within 365 calendar days from the date of the initial filing with the Public Registry. If applicable, the external assets and liabilities reporting regime set forth by Communication “A” 6401 of the Central Bank (the “External Assets and Liabilities Reporting Regime”) shall have been complied with.

The Argentine government could reinstate restrictive measures in the future. In such a case, the depositary for the ADSs may be prevented from converting Pesos it receives in Argentina for the account of the ADS holders. If this conversion is not possible, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the ~~depositary~~Depositary (as defined in “Item 12.D American Depositary Shares.”) cannot convert or reinvest the foreign currency, you may lose some or all of the value of the dividend distribution. Also, if payments cannot be made in U.S. dollars abroad, the repatriation of any funds collected by foreign investors in Pesos in Argentina may also be subject to restriction. Moreover, available mechanisms to receive dividends in U.S. dollars may involve a significantly higher implicit exchange rate. See “Item 10.D Exchange Controls—Other Regulations—Sale of Foreign ~~Currency~~Curency to Non-residents.”
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We are traded on more than one market and this may result in price variations; in addition, investors may not be able to easily move shares for trading between such markets.

In addition to the trading of our ADSs in the United States and countries other than Argentina, our Class B shares are traded in Argentina. Trading in the ADSs or our Class B shares on these markets will take place in different currencies (U.S. dollars on the New York Stock Exchange (“NYSE”) and Pesos on ~~the~~ ~~Bolsas y Mercados Argentinos S.A.~~ ~~(“ByMA”))~~ByMA), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Argentina). The trading prices of these securities on these two markets may differ due to these and other factors. Any decrease in the price of our Class B shares on the ByMA could cause a decrease in the trading price of the ADSs on the NYSE. Investors could seek to sell or buy our shares to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the ADSs available for trading on the other exchange. In addition, holders of ADSs will not be immediately able to surrender their ADSs and withdraw the underlying Class B shares for trading on the other market without effecting necessary procedures with the ~~depositary.~~Depositary. This could result in time delays and additional cost for holders of ADSs.

Under Argentine Corporate Law, shareholder rights may be fewer or less well defined than in other jurisdictions.

Our corporate affairs are governed by our bylaws and by the ~~Argentine Corporate Law,~~AGCL, which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States (such as Delaware or New York), or in other jurisdictions outside Argentina. Thus, your rights or the rights of holders of our Class B shares under the ~~Argentine Corporate Law~~AGCL to protect your or their interests relative to actions by our Board of Directors may be fewer and less well defined than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets may not be as highly regulated or supervised as the U.S. securities markets or markets in some of the other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well defined and enforced in Argentina than in the United States, or other jurisdictions outside Argentina, putting holders of our Class B shares and the ADSs at a potential disadvantage.

Holders of our Class B shares and the ADSs located in the United States may not be able to exercise preemptive rights.

Under the ~~Argentine Corporate Law,~~AGCL, if we issue new shares as part of a capital increase, our shareholders may have the right to subscribe to a proportional number of shares to maintain their existing ownership percentage. Rights to subscribe for shares in these circumstances are known as preemptive ~~rights.~~rights, pursuant to the AGCL. In addition, shareholders are entitled to the right to subscribe for the unsubscribed shares remaining at the end of a preemptive rights offering on a pro rata basis, which are known as accretion rights. Upon the occurrence of any future increase in our capital stock, United States holders of Class B shares or ADSs will not be able to exercise the preemptive and related accretion rights for such Class B shares or ADSs unless a registration statement under the Securities Act is effective with respect to such Class B shares or ADSs or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to those Class B shares or ADSs. We may not file such a registration statement, or an exemption from registration may not be available. Unless those Class B shares or ADSs are registered or an exemption from registration applies, a U.S. holder of our Class B shares or ADSs may receive only the net proceeds from those preemptive rights and accretion rights if those rights can be sold by the ~~depositary;~~Depositary; if they cannot be sold, they will be allowed to lapse. Furthermore, the equity interest of holders of Class B shares or ADSs located in the United States may be diluted proportionately upon future capital increases.
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~~Non-Argentine companies that own our Class B shares directly and not as ADSs may not be able to exercise their rights as shareholders unless they are registered in Argentina.~~
~~Under Argentine law, foreign companies that own shares in an Argentine corporation are required to register with the~~ ~~Inspección General de Justicia~~ (Superintendency of Legal Entities, or the “IGJ”), in order to exercise certain shareholder rights, including voting rights. If you own Class B shares directly (rather than ADSs) and you are a non-Argentine company and you are not registered with the IGJ, your ability to exercise your rights as a holder of our Class B shares may be limited.
Your voting rights with respect to the ADSs are limited by the terms of the deposit agreement.

Holders may exercise voting rights with respect to the Class B shares underlying ADSs only in accordance with the provisions of the deposit agreement. There are no provisions under Argentine law or under our bylaws that limit ADS holders’ ability to exercise their voting rights through the depositary with respect to the underlying Class B shares, except if the depositary is a foreign entity and it is not registered with the ~~IGJ,~~Inspección General de Justicia (“IGJ”), and in this case, the depositary is registered with the IGJ. However, there are practical limitations upon the ability of ADS holders to exercise their voting rights due to the additional procedural steps involved in communicating with such holders. For example, Argentine Capital Markets Law ~~No. 26,831~~ requires us to notify our shareholders by publications in certain official and private newspapers of at least 20 and no more than 45 days in advance of any shareholders’ meeting. ADS holders will not receive any notice of a shareholders’ meeting directly from us. In accordance with the deposit agreement, we will provide the notice to the ~~depositary,~~Depositary, which will in turn, if we so request, as soon as practicable thereafter provide to each ADS holder:

·                  ~~the notice of such meeting;~~
○ the notice of such meeting;

·                  ~~voting instruction forms; and~~
○ voting instruction forms; and

·                  ~~a statement as to the manner in which instructions may be given by holders.~~
○ a statement as to the manner in which instructions may be given by holders.

To exercise their voting rights, ADS holders must then provide instructions to the ~~depositary~~Depositary on how to vote the shares underlying ADSs. Because of the additional procedural step ~~involving~~involves the ~~depositary,~~Depositary, the process for exercising voting rights will take longer for ADS holders than for holders of Class B shares.

Except as described in this annual report, holders will not be able to exercise voting rights attaching to the ADSs.

The relative volatility and illiquidity of the Argentine securities markets may substantially limit your ability to sell Class B shares underlying the ADSs at the price and time you desire.

Investing in securities that trade in emerging markets, such as Argentina, often involves greater risk than investing in securities of issuers in the United States. The Argentine securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets in the United States, and is not as highly regulated or supervised as some of these other markets. There is also significantly greater concentration in the Argentine securities market than in major securities markets in the United States. As of December 31, ~~2017,~~2020, the ten largest ~~Argentine~~ companies in terms of market capitalization represented approximately ~~80%~~65% of the aggregate market capitalization of ByMA. Accordingly, although you are entitled to withdraw the Class B shares underlying the ADSs from the ~~depositary~~Depositary at any time, your ability to sell such shares at a price and time at which you wish to do so may be substantially limited. Furthermore, if exchange controls ~~are~~ imposed by the Central Bank ~~these~~ could have the effect of further impairing the liquidity of the ByMA by making it unattractive for non-Argentines to buy shares in the secondary market in Argentina. See “Item 10.D Exchange Controls.”
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Substantial sales of our Class B shares or the ADSs could cause the price of the Class B shares or of the ADSs to decrease.

We have shareholders that own a substantial amount of our Class B shares or ADSs. If such shareholders decide to sell a substantial amount of our Class B shares or the ADSs, or if the market perceives they intend to sell a substantial amount of our Class B shares or the ADSs, the market price of our Class B shares or the ADSs could drop significantly.

Our shareholders may be subject to liability for certain votes of their securities.

Our shareholders are not liable for our obligations. Instead, shareholders are generally liable only for the payment of the shares they subscribe. However, shareholders who have a conflict of interest with us and who do not abstain from voting may be held liable for damages to us, but only if the transaction would not have been approved without such shareholders’ votes. Furthermore, shareholders who willfully or negligently vote in favor of a resolution that is
subsequently declared void by a court as contrary to ~~Argentine Corporate Law~~the AGCL or our bylaws may be held jointly and severally liable for damages to us or to other third parties, including other shareholders.

Item 4.Information of the Company
~~Recent Political and Economic Developments in Argentina~~
Presidential and congressional elections in Argentina took place in October and November 2015, resulting in Mr. Mauricio Macri being elected President of Argentina. The Macri Administration assumed office on December 10, 2015. Since assuming office, the Macri Administration has announced and executed several significant economic and policy reforms and transactions, including:
~~INDEC reforms~~~~. On January 8, 2016, based on its determination that the~~ ~~Instituto Nacional de Estadísiticas y Censos~~ (the National Statistics and Census Institute, or “INDEC”) had failed to produce reliable statistical information, particularly with respect to consumer price index (“CPI”), gross domestic product (“GDP”), poverty and foreign trade data, the current administration declared the national statistical system and the INDEC in a state of administrative emergency through December 31, 2016. As of the date of this annual report, the INDEC has published certain revised data, including the CPI, foreign trade and balance of payment statistics. On June 29, 2016, the INDEC published INDEC Report including revised GDP data for the years 2004 through 2015 (the “2016 Revised INDEC Report”). On September 22, 2016, the INDEC resumed publication of its essential goods and services basket assessment. On November 9, 2016, the International Monetary Fund (“IMF”) Executive Board lifted its censure on Argentina, noting that Argentina had resumed the publication of data in a manner consistent with its obligations under the Articles of Agreement of the IMF. In March 2017, the INDEC published preliminary estimated GDP data for 2016, which shows a 2.3% GDP contraction compared to 2015. On September 21, 2017, GDP for the first quarter of 2017 increased by 1.1% compared to the last quarter of 2016, and 0.3% with respect to the same period in 2016, while according to the same source GDP for the second quarter of 2017 increased by 0.7% compared to the first quarter of 2017, and 2.7% with respect to the same period in 2016. See “Risk Factors—Risks Related to Argentina—Some national and international economic agents have expressed their concerns about the accuracy of the INDEC’s CPI and other economic data published by INDEC in the past.”
~~Foreign exchange reforms.~~ The current administration eliminated substantially all of the restrictions, including certain currency controls, that were imposed under the previous administration. These reforms are expected to provide greater flexibility and easier access to the foreign exchange market (MLC). On August 8, 2016, the Central Bank issued Communication “A” 6037 as amended, which eliminated certain additional foreign exchange restrictions that were still in effect and established new foreign exchange rules, including:

~~the reestablishment of Argentine residents’ rights to purchase and remit foreign currency outside of Argentina without limit and without specific allocation (~~~~atesoramiento~~);
the effective elimination of a mandatory, non-transferable and non-interest bearing deposit in connection with certain transactions involving foreign currency inflows by reducing the amount of the deposit from 30% of such transactions to 0%;
the elimination of the requirement to transfer and settle the proceeds from new foreign financial indebtedness incurred by the foreign financial sector, the non-financial private sector and local governments through the MLC; and
the elimination of the mandatory minimum stay period, applicable to the proceeds of any new financial indebtedness and renewal of existing indebtedness incurred by residents, held by foreign creditors and transferred through the MLC.
On May 19, 2017, the Central Bank eliminated most of the foreign exchange restrictions then in place by means of Communication “A” 6244, effective as of July 1, 2017. In addition, on November 1, 2017, President Macri enacted Decree No. 893/17 which partially repealed Decrees No. 2,581/64, No. 1,555/86 and No. 1,638/01, and eliminated the obligation of Argentine residents to transfer to Argentina and sell in the MLC the proceeds of their exports of goods. On November 10, 2017, the Central Bank issued Communication “A” 6363, that eliminated all restrictions
applicable to Argentine residents related to the transfer and sale of proceeds in the MLC resulting from the export of goods. Furthermore, on December 26, 2017, by virtue of Communication “A” 6401, the Central Bank replaced the reporting regimes set forth by Communications “A” 3602 and “A” 4237 with a new, unified regime applicable for information as of December 31, 2017. The unified reporting regime involves an annual statement whose filing is mandatory for every person whose total flow of funds or balance of assets and liabilities is or exceeds U.S.$1 million during the previous calendar year.
~~Foreign trade reforms~~. The Kirchner and Fernández de Kirchner administrations imposed export duties and other restrictions on several sectors, particularly the agricultural sector. The current administration eliminated export duties on wheat, corn, beef, mining, oil, and regional products, and reduced the duty on soybean exports by 5%, from 35% to 30%. Further, a 5% export duty on most industrial exports was also eliminated. With respect to payments for imports of goods and services to be performed abroad, the current administration eliminated the restrictions on access to the MLC. Importers were offered short-term debt securities issued by Argentina to be used to repay outstanding commercial debt for the import of goods. In addition, the import system was modified by the replacement of the ~~Declaraciones Juradas Anticipadas de Importación~~ system with a new import procedure that requires certain filings and import licences for certain goods (including textiles, footwear, toys, domestic appliances and automobile parts), which, unlike the previous system, does not contemplate discretionary federal government approval of payments for the import of products through the MLC. By Decree No. 893/2017, published in the Official Gazette on November 2, 2017, the Argentine government repealed article 1 of Decree No. 2581/1964, article 10 of Decree No. 1555/1986 and Decree No. 1638/2001. This action eliminated the obligation of Argentine exporters to repatriate and settle for Pesos in the MLC foreign currency proceeds derived from the export of goods. On January 2, 2017, the Argentine government enacted a further reduction of the export duties rate set for soybean and soybean products, setting a monthly 0.5% cut on the export duties rate beginning on January 2018 and until December 2019. In addition, importers were offered short-term debt securities issued by the Argentine government to repay outstanding commercial debt for the import of goods.
~~Fiscal policy.~~ The current administration took steps to anchor the fiscal accounts, to reduce the primary fiscal deficit and achieved a primary fiscal deficit of 4.6% of GDP in 2016 through the elimination of subsidies and the reorganisation of certain expenditures and the generation of increased revenue through the tax amnesty. The 2018 budget bill of the federal government projects a fiscal deficit representing 3.2% of GDP in 2017.
~~Correction of monetary imbalances~~. The current administration announced the adoption of an inflation targeting regime in parallel with the floating exchange rate regime and set inflation targets for the next four years. The Central Bank has increased sterilisation efforts to reduce excess monetary imbalances and raised Peso interest rates to offset inflationary pressure. Since January 2017, the Central Bank started to use the seven-day repo reference rate as the anchor of its inflation targeting regime. Short term notes issued by the Central Bank (“LEBACs”) would be used to manage liquidity. On December 28, 2017, the Central Bank announced its inflation targets for 2018, 2019 and 2020. The inflation target for 2018 is 15%, an increase from the Central Bank’s previous target range of 8%-12% for the same year. Inflation targets for 2019 and 2020 are 10% and 5%, respectively.
~~National electricity state of emergency and reforms~~. Following years of very limited investment in the energy sector, as well as the continued freeze on electricity and natural gas tariffs since the 2001-2002 economic crisis, Argentina began to experience energy shortages in 2011. In response to the growing energy crisis, the current administration declared a state of emergency with respect to the national electricity system, which will remain in effect until December 31, 2017. The state of emergency allowed the Argentine government to take actions designed to ensure the supply of electricity to the entire country, such as instructing the Ministry of Energy and Mining to design and implement, with the cooperation of all federal public entities a coordinated programme which guarantees the quality and safety of the electric system. Pursuant to Resolution No. 6/2016 of the Ministry of Energy and Mining and Resolution No. 1/2016 of the National Electricity Regulator (~~Ente Nacional Regulador de la Electricidad~~ or “ENRE”), the current administration announced the elimination of a portion of the energy subsidies and a substantial increase in electricity tariffs. Consequently, the average price of electricity has increased and could increase further. By correcting tariffs, modifying the regulatory framework and reducing the government’s role as an active market participant, the current administration sought to correct distortions in the energy sector and stimulate investment. However, certain governmental initiatives were challenged in the Argentine courts and resulted in judicial injunctions or rulings limiting the government’s initiatives.
During 2016, lower court injunctions suspended in certain provinces and cities end-user electricity tariff increases implemented as of February 1, 2016, and instructed the Ministry of Energy and Mining and the ENRE to conduct a non-binding public hearing prior to sanctioning any such increases. On October 28, 2016, a non-binding public hearing was conducted by the Ministry of Energy and Mining and ENRE to present tariff proposals submitted by distribution companies covering the greater Buenos Aires area (approximately 15 million inhabitants) for the 2017-2021 period in the framework of the Integral Tariff Review (as defined below). On December 14, 2016, eight non-binding public hearings (in Buenos Aires, Mendoza, Neuquén, Mar del Plata, Formosa, Santiago del Estero and Puerto Madryn) were conducted by the Ministry of Energy and Mining and ENRE to present tariff proposals for electricity transmission at the national and regional level and the seasonal reference prices of capacity and energy in the wholesale electricity market, as well as a proposal to reduce subsidies for the 2017-2021 period.
~~Tariff increases~~. With the aim of encouraging companies to invest and improve the services they offer and enabling the Argentine government to assist those in need, the current administration has begun updating the tariffs for electricity, transportation, gas and water services (the “Integral Tariff Review”). Each of the announced tariff increases includes the ~~tarifa social~~ (social tariff), which is designed to provide support to vulnerable groups, including beneficiaries of social programmes, retirees and pensioners that receive up to two minimum pensions, workers that receive up to two minimum salaries, individuals with disabilities, individuals registered in the ~~Monotributo~~ Social programme, domestic workers and individuals receiving unemployment insurance. Subsequent modifications to these announced tariff increases were made, including a 20% discount on the regular distribution price for 400 designated energy-intensive companies that purchase electricity directly from distributors.
~~On August 18, 2016, the Supreme Court of Argentina in “~~~~Centro de Estudios para la Promoción de la Igualdad y la Solidaridad v/ Ministerio Federal de Energía y Mineria~~~~”, affirmed lower court injunctions suspending end-user gas tariff increases sanctioned as of April 1, 2016, and instructed the Ministry of Energy and Mining and the National Gas Regulator (~~~~Ente Nacional Regulador del Gas~~ or “ENARGAS”) to conduct a non-binding public hearing prior to sanctioning any such increases. On September 16, 2016, a non-binding public hearing was conducted by the Ministry of Energy and Mining and ENARGAS to submit (i) transitional tariffs for transportation and distribution of natural gas at the national level in the framework of the Integral Tariff Review for the period 2017-2021, (ii) a new set of gas prices at the Point of Entry to the Transportation System (“PIST”) and (iii) a proposal to reduce subsidies for the period 2016-2022. Between October 2 and October 7, 2016, public hearings were also conducted at the national level with regard to tariff proposals for gas transportation and distribution throughout the country for the period 2017-2021 in the framework of the Integral Tariff Review.
On October 6 and October 7, 2016, after conducting non-binding public hearings, the Ministry of Energy and Mining and ENARGAS published a new end-user gas tariff scheme. The scheme establishes a two tariff schedule for private residences, establishing lower tariffs for units that decreased consumption compared to the same period in the previous year by at least 15%.
On October 11, 2016, the Ministry of Energy and Mining (a) expanded the amount of eligible beneficiaries of social tariffs to include retirees and pensioners that receive pensions equal to up to two minimum salaries, certain war veterans and medically dependent customers, and (b) decreed that institutions that perform activities of public interest would be entitled to residential rates.
In June 2017, an administrative court of the city of La Plata issued an injunction suspending the increases in electricity tariffs for customers located within the Province of Buenos Aires pursuant to a petition filed by the provincial Ombudsman, Guido Lorenzino. As of the date of this annual report, the injunction has been appealed and the decision is pending.
The year-on-year increase in the price of energy in the wholesale electricity market for end-users, which excludes transportation and distribution costs and accounts for approximately 45% of the tariff to end-users in the City of Buenos Aires, totalled 233% (from Ps.96/MWh to Ps.320/MWh on average), while the increase in the price of natural gas for end-users was 68% (from Ps.37/MMBtu to Ps.62/MMBtu on average).
~~Increase in transport tariffs~~. In January 2018, the Macri administration announced increases in public transport tariffs in the city of Buenos Aires and the Greater Buenos Aires area to be rolled out between January and February 2018.
~~Corporate Criminal Liability Law~~ (~~Ley de Responsabilidad Penal Empresaria~~). On July 5, 2017, the Chamber of Deputies approved a bill providing for the criminal liability of corporate entities for criminal offenses against public administration and cross-border bribery committed by, among others, its shareholders, attorneys-in-fact, directors, managers, employees, or representatives. A company found liable under this bill may be subject to various sanctions, including, among others, fines ranging from 1% to 20% of its annual gross income and the partial or total suspension of its activities for up to ten years. In addition, the bill proposes to extend the criminal liability under the Argentine Criminal Code to cases of bribery committed outside Argentina by Argentine citizens or companies domiciled in Argentina. On September 27, 2017 the Senate approved the draft bill with modifications designed to reduce in part the impact of the statute, for instance by eliminating the inapplicability of the statute of limitations to certain of the criminal offenses originally proposed in the draft (the statute of limitations now has been set at six years). Further, the draft bill as modified by the Senate reduces the amount of fines originally proposed for criminal offenses that are not subject to a statute of limitations. On November 8, 2017, Congress passed the bill including those amendments as Law No. 27,401, which came into force on March 1, 2018.
~~Increase in minimum income thresholds~~. In December 2016, the Congress approved an increase in the minimum income threshold by approximately 23%, from Ps.25,000 to Ps.30,670 for married workers with two children and from Ps.18,880 to Ps.23,185 for single workers. The minimum income threshold will be subject to automatic adjustment going forward, by reference to increases in the average wages paid to public sector employees. The Congress also passed modifications to the income tax brackets to take into account the impact of inflation in recent years.
~~Draft bill for the development of the Argentine capital markets.~~ On November 13, 2017, the executive branch submitted to Congress a draft bill that aims to develop the Argentine domestic capital markets. The draft bill provides for the amendment and update of the Argentine Capital Markets Law, the Mutual Funds Law and the Argentine Negotiable Obligations Law, among others. Furthermore, the bill provides for the amendment of certain tax provisions, regulations relating to derivatives and the promotion of a financial inclusion programme. On November 22, 2017, the draft was approved by the Chamber of Deputies of the Argentine Congress and was sent to the Senate for its signoff. However, as of the date of this annual report, the National Economy and Investment Commission of Senate has not reached an agreement on the proposed bill.
~~Project to Amend the Labor System~~. The Macri administration published a project to amend the labor system. The project’s main purpose is to improve the efficiency and productivity of different productive sectors, increase employment, attract investment and reduce employment costs. This project is expected to be considered by Congress in 2018.
~~Pension Reform Law~~ (~~Ley de Reforma Previsional~~). On December 28, 2017, Congress passed the Pension Reform Law, with the goal of improving the sustainability and predictability of Argentina’s pension program, while still protecting the most vulnerable persons. To that effect, the Pension Reform Law modified the basic formula for the periodic adjustment of retirements, pensions and the Universal Child Allowance ~~(Asignación Universal por Hijo~~). Under the pre-existing regime, the periodic adjustments occur twice a year, in March and September, and were based on the variation in certain tax revenues of ANSES (with a 50% weighting) and the change in the average wage, based on the greater of the ~~Remuneración Imponible Promedio de los Trabajadores Estables~~ (“RIPTE”), an index published by the Ministry of Labor that measures the salary increases of state employees, or the data published by INDEC (with a 50% weighting). Beginning in March 2018, the adjustments will be quarterly on the basis of a system that combines the variation of inflation (with a 70% weighting) and the RIPTE index (with a 30% weighting). The law also guarantees a one-time supplemental payment to beneficiaries of the Universal Basic Benefit (~~Prestación Básica Universal~~~~) who have established 30 years or more of service with effective contributions, so that the beneficiary’s pension is equivalent to eighty-two percent (82%) of the value of the minimum living wage.~~
The Pension Reform Law also modified Section 252 of the Labor Law by establishing that employers may request employees who have reached 70 years of age to initiate retirement proceedings (compared to age 65 under the prior regimen). The employer must maintain the employment relationship until the earlier of (i) one year or (ii) until de employee obtains the benefit. Notwithstanding the foregoing, male employees may exercise their right to request pension benefits at age 65 and female employees may exercise such right at age 60. Public sector employees are excluded from the foregoing provision.
To mitigate the adverse impact of the transition from the previous adjustment regime to the formula approved by Congress on certain beneficiaries, on December 20, 2017, President Macri granted a special one-time Ps.750 subsidy to pensioners who receive less than Ps.10,000 per month and meet certain age and years of service requirements under the law. Beneficiaries of non-contributory pensions for old age or disability who receive less than Ps.10,000 per month and those who meet the requirements of the Universal Pension for the Elderly (~~Pensión Universal para el Adulto Mayor~~) were also granted a one-time subsidy of Ps.375. Finally, the presidential measure provided a one-time subsidy of Ps.400 to beneficiaries of the Universal Child Allowance and/or the Universal Pregnancy Allowance (~~Asignación Universal por Embarazo~~).
~~Tax on Financial Transactions (Impuesto al Cheque)~~~~. On December 27, 2017, the National Congress extended the tax on financial transactions through 2022, and earmarked amounts collected for the Argentine Integrated Pension System.~~
~~Tax Reform (Reforma Tributaria).~~ On December 27, 2017, the National Congress also approved a series of reforms intended to eliminate certain of the existing complexities and inefficiencies of the Argentine tax regime, diminish evasion, increase the coverage of income tax as applied to individuals and encourage investment while sustaining Argentina’s medium and long term efforts aimed at restoring fiscal balance. The reforms will gradually come into effect over the next five years. The fiscal cost of the reform is estimated at 0.3% of GDP. The reforms form part of a larger program announced by President Macri intended to increase the competitiveness of the Argentine economy (including by reducing the fiscal deficit) and employment, and diminish poverty on a sustainable basis. The main aspects of the tax reform are the following:
Interest and capital gains derived from the sale or disposition of bonds issued by the federal government, the provinces and municipalities of Argentina and the City of Buenos Aires obtained by Argentine tax residents (individuals and undivided estates located in Argentina) will be subject to income tax at a rate of (a) 5%, in the case of Peso-denominated securities that do not include an indexation clause, and (b) 15%, in the case of Peso-denominated securities with an indexation clause or foreign currency denominated securities; gains realized by Argentine tax residents (individuals and undivided estates located in Argentina) from the sale of equity securities on a stock exchange will remain exempt, subject to compliance with certain requirements.
Holders of notes issued by the federal government, the provinces and municipalities of Argentina and the City of Buenos Aires that are not Argentine tax residents will be exempt from Argentine income taxes on interest and capital gains to the extent such beneficiaries do not reside in or channel their funds through non-cooperating jurisdictions. The non-cooperating jurisdictions list will be prepared and published by the executive branch. Short-term notes issued by the Central Bank (LEBACs) are outside the scope of these exemptions applicable to non-Argentine residents.
~~The aforementioned amendments have been in force since January 1, 2018.~~
~~Corporate income tax was reduced to 30% for the fiscal year commencing January 1, 2018, and will be further reduced to 25% for fiscal years commencing on or after January 1, 2020.~~
~~The tax reforms also provide for other amendments regarding social security contributions, tax administrative procedures law, criminal tax law, tax on liquid fuels and excise taxes.~~
~~Decree of de-bureaucratization and simplification~~. On January 10, 2018, the Macri administration issued Emergency Decree No. 27/2018 aimed at simplifying, expediting and promoting efficiency in the procedures within administrative entities and agencies, avoiding any unnecessary bureaucracy and expenses.
~~Fiscal Consensus~~~~. On December 22, 2017, the Chamber of Deputies passed into law the Fiscal Agreement (“~~~~Pacto Fiscal”~~~~), also known as the Fiscal Consensus (“~~~~Consenso Fiscal~~”). This law was based on an agreement signed on November 16, 2017 between the Argentine government and representatives from 23 out of Argentina’s 24 provinces, with the goal of implementing measures that favor sustained growth in economic activity, productivity and employment. The Fiscal Consensus includes a commitment to lowering distortive taxes by 1.5% of GDP over the next five years, a waiver of lawsuits against the Argentine government and a Ps.20,000 million payment to the province of Buenos Aires (which will increase over the next five years) as a partial and progressive solution to the conflict related to the Fondo del Conurbano Bonaerense (Buenos Aires Metropolitan Area Fund). The Fiscal
Consensus also set the basis for other policy reforms that were implemented by the Macri Administration in December 2017, such as the tax reform, the pension system reform and the Fiscal Responsibility Law (“~~Ley de Responsabilidad Fiscal~~~~”).~~
Item 4.AHistory and development of the Company

We are a financial group with a long-standing presence in the Argentine financial system and a leading competitive position in certain attractive market segments. We are controlled by Julio Patricio Supervielle. We trace our history back ~~almost~~more than 130 years, when the Supervielle family, predecessors of our controlling shareholder, first entered the Argentine financial services industry in 1887. Below is a brief history of our company, including the participation of the Supervielle family.
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Supervielle y Cía. Banqueros

The predecessors of our controlling shareholder emigrated from France in the second half of the 19^th century and established L.B. Supervielle y Cía. Banque Francaise (later Banco de Montevideo S.A.) in Montevideo, Uruguay. In 1887, they established Supervielle y Cía. Banqueros (a subsidiary of L.B. Supervielle y Cía. Banque Francaise) in Buenos Aires. Supervielle y Cía. Banqueros offered demand deposits, time deposits, savings accounts, securities trading orders, purchases and sales of foreign currency and drafts and letters of credit payable in European financial centers. Luis Bernardo Supervielle managed the bank until his death in 1901, whereupon the bank’s management
transferred to his son, Luis Supervielle, and subsequently to Esteban Barón, son-in-law of Luis Bernardo Supervielle, who in 1905 became president of Supervielle y Cía. Banqueros. Mr. Barón managed the bank from 1905 until 1930, and subsequently served on the board of the bank as an ~~Honorary President~~honorary president until 1964. Mr. Barón’s son, Andrés Barón, joined the bank in 1925 and took over its general management in 1930, also becoming chairman of the board of the bank in 1940. He carried out these functions until 1964, and then served on the board of the bank as an ~~Honorary President.~~honorary president.

On December 30, 1940, Banco Supervielle de Buenos Aires S.A., a bank controlled by the Barón and Supervielle families, acquired the assets and liabilities of Supervielle y Cía. Banqueros and listed its shares on the Buenos Aires Stock Exchange. Esteban Barón and his son, Andrés Barón Supervielle, continued to manage the operations of this bank until 1964.

In 1964, Société Générale (Paris) acquired a majority of the capital stock of Banco Supervielle de Buenos Aires S.A. from the Baron and Supervielle families, transforming it into a universal bank with 60 branches and a significant presence in the corporate market. Following the acquisition of control by Société Générale, the Supervielle family had no role in the management of Banco Supervielle. In 1997, Banco Supervielle de Buenos Aires S.A. created Société Générale Asset Management Sociedad Gerente de FCI S.A. OnIn March ~~20,~~ 2000, the name Banco Supervielle de Buenos Aires S.A. was changed to Banco Société Générale S.A.
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Banco Banex S.A.

In 1969, Jules Henri Supervielle, the father of Julio Patricio Supervielle, our controlling shareholder, and cousin of the Supervielle family members who had owned and managed Banco Supervielle de Buenos Aires S.A. until 1964, founded Exprinter de Finanzas S.A., which became Exprinter Banco S.A. in 1991. On July 15, 1996, Exprinter Banco S.A. acquired 100% of the capital stock of Banco San Luis S.A. ~~in 1996~~ pursuant to a public bidding process organized by its owner, the Province of San Luis. ~~On July 25, 1996, the Province of San Luis entered into a financial agency agreement with Banco San Luis S.A. (the “~~~~Contrato de Vinculación~~~~”), pursuant to which the Province designated Banco San Luis as its financial agent.~~ The acquisition ~~of Banco San Luis S.A. by Exprinter Banco S.A.~~ was part of a strategic plan aimed at growing in the interior of the country and penetrating the ~~middle and lower-middle-income individual consumer~~retail and the SMEs segments. In 1998, Exprinter Banco S.A. and Banco San Luis S.A. merged to create Banco San Luis ~~S.A.-Banco~~S.A. Banco Comercial Minorista, and was later renamed Banco Banex S.A. On December 15, 2006, the government of the Province of San Luis extended the term of this financial agency agreement until 2021. On September 6, 2016, Banco Supervielle and the Province of San Luis, pursuant to the their commitment to enhance the economic development of the Province of San Luis, amended said agreement. On January 17, 2017, the Province of San Luis notified us of its decision to exercise its right to terminate the agreement, as of February 28, 2017 .

Creation of Holding Company

Grupo Supervielle was incorporated in the City of Buenos Aires ~~on October 8,~~in 1979, under the name Inversiones y Participaciones S.A., ~~acquiring~~changing the name to Grupo Supervielle S.A. in November 2008.

Acquisition of Banco Société Générale S.A. by Banco Banex S.A.

OnIn March 3, 2005, the Central Bank approved the purchase by Banco Banex S.A. of a majority stake in Banco Société Générale S.A., Supervielle Asset Management Sociedad Gerente de FCI S.A. and ~~Sofital S.A.F.e I.I.~~Sofital. Upon consummation of this acquisition, Banco Société Générale S.A.’s corporate name was changed to Banco Supervielle S.A. At the time of the purchase, the total assets of Banco Banex S.A. were ~~61.34%~~61.3% of the total assets of Banco Societé Générale S.A.

Merger of Banco Banex S.A. and Banco Supervielle S.A.

OnIn July 1, 2007, with the prior approval of the Central Bank, Banco Banex S.A. merged into the Bank.
Acquisition of Banco Regional de Cuyo S.A.

OnIn September ~~19,~~ 2008, the Bank finalized the acquisition of 99.94% of the capital stock of Banco Regional de Cuyo S.A. ~~On September 30, 2010, the Central Bank approved the merger of~~The Banco Regional de Cuyo S.A. merged with and into the ~~Bank. The merger was completed on~~Bank in November 1, 2010.

Acquisition of Tarjeta Automática S.A.

In December 2007, we acquired 51% of Tarjeta’s capital stock. The remaining 49% was held by Acalar S.A., an Argentine sociedad anónima ~~100%~~wholly owned by the Coqueugniot family (Gabriel A. Coqueugniot, Cecilia B. Coqueugniot, Mónica I. Coqueugniot, and Diana I. Coqueugniot), in equal parts. Following several stock transfers that took place in 2009 and 2010, ~~Tarjeta’s capital stock is,~~ as of the date of this annual report Tarjeta’s capital stock is held 87.5% by Grupo Supervielle, 10.0% by the Bank, and 2.5% by CCF.
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Acquisition of CCF

~~Acquisition of Cordial Compañía Financiera (formerly known as “GE Compañía Financiera S.A.”)~~
OnIn July 6, 2010, Grupo Supervielle and the Bank agreed to acquired 100% of ~~GE Compañía Financiera S.A. (“GE Compañía Financiera”),~~CCF, a financial services company that specialized in credit cards, personal loans and the distribution of certain third-party insurance products. ~~The transaction was approved by the Central Bank on June 29, 2011. On~~In August 1, 2011, the purchase was completed through a stock transfer in which 5% and 95% of the total shares were transferred to Grupo Supervielle and the Bank, respectively.

Through a strategic alliance with Walmart Argentina, ~~Cordial Compañía Financiera~~CCF has exclusive rights to promote and sell financial and credit products in Walmart Argentina stores nationwide through August ~~2020.~~31, 2021. In November 2020, Walmart Argentina sold the entire operation to Grupo De Narváez, which has not adversely affected the agreement since the strategic partnership with the new shareholder is maintained and negotiations to renew the agreement have already started.

We acquired ~~GE Compañía Financiera~~CCF to further our strategy of increasing our market share in the Argentine banking and financial services industry through the strategic purchase of financial services companies and financial institutions.

OnIn August 1, 2011, the shareholders of CCF approved its change of corporate name from GE Cordial Compañía Financiera ~~approved the name change~~S.A. to Cordial Compañía ~~Financiera.~~Financiera S.A. On ~~August 29, 2011,~~November 2, 2020, the ~~IGJ authorized~~change of its corporate name to IUDÚ Compañía Financiera S.A. was approved, although as of the date of this annual report such change of corporate name ~~change.~~is pending registration.

Creation of Espacio Cordial Servicios S.A.

~~For business strategy purposes and with the intention of furthering our goods and services business plan, on~~In October 2, 2012, the Board of Directors created a new entity called ECM S.A., which was later renamed Espacio Cordial Servicios S.A.
~~Espacio~~ Cordial Servicios was created to sell non-financial products and services, such as: insurance plans and coverage, tourism packages, health insurance and health services, electric appliances and furniture, insurance mechanisms and plans and alarm systems. ~~Espacio Cordial deals with insurance services that can be delegated or assigned to third parties by insurance companies, such as Supervielle Seguros, in accordance with laws and regulations~~ ~~as of the date of this annual report.~~

Acquisition of Supervielle Seguros S.A. (formerly known as Aseguradores de Créditos del Mercosur S.A.)

OnIn February 5, 2013, we and Sofital accepted an offer for the acquisition of 100% of the ~~purchase~~ shares of an insurance company named Aseguradores de Créditos del Mercosur S.A.~~, which on October 30, 2013 was renamed Supervielle Seguros S.A.~~
~~On May 14, 2013, the National Superintendency of Insurance (~~~~Superintendencia de Seguros de la Nación~~~~) approved the transfer of the company’s shares. As a result, on~~ In June 6, 2013, 95% of the shares of Aseguradores de Créditos del Mercosur S.A. were transferred to us and the remaining 5% of the shares were transferred to Sofital.
~~Sale of Adval~~ In October 2013, Aseguradores de Créditos del Mercosur S.A. was renamed Supervielle Seguros S.A.

OnSuccessful IPO in May 30, 2014, Grupo Supervielle S.A. and Sofital S.A. entered into an agreement for the sale of 100% of the shares of Adval S.A. to CAT Technologies S.A. The purchase price is scheduled to be paid in installments due between July 2014 and July 2019. Under this agreement, as of ~~December 31, 2015, Grupo Supervielle and Sofital held credits with CAT Technologies S.A. of Ps.2.3 million and Ps.0.1 million, respectively.~~2016

~~Successful IPO on May 19, 2016~~
Since May 19, 2016, the ordinary Class B shares of Grupo Supervielle S.A. ~~have been~~are listed on ByMA, and its American Depositary Shares (“ADSs”), representing five ordinary ~~class~~Class B shares, ~~have been~~are listed in the NYSE under the ~~symbol SUPV. Additionally,~~ticker “SUPV.” At the time, Grupo Supervielle made an initial public offer of its Class B shares in Argentina and of its ADSs in the international ~~market in~~markets for an aggregate amount of U.S.$323 million. Through the offering, Grupo Supervielle placed 146,625,087 ordinary Class B shares, of which 137,095,955 were placed internationally in the form of ~~ADSs, and of which~~ADSs. In the offering, 114,807,087 were newly issued ordinary Class B shares ~~and~~while 31,818,000 were ~~outstanding.~~
~~Sale of Cordial Microfinanzas S.A.~~
~~On March 20, 2017, Grupo Supervielle and the Bank accepted an offer from Ciudad Microempresas~~sold pursuant to ~~purchase~~ ~~Grupo Supervielle’s and the Bank’s shares of Cordial Microfinanzas. Ciudad Microempresas is~~ a company owned by Corporación Buenos Aires Sur and Banco de la Ciudad de Buenos Aires. The decision to sell Cordial Microfinanzas was based on our need to focus our resources in designated strategic segments.secondary offering.
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~~Grupo Supervielle and the Bank transferred on~~ ~~March 31, 2017 all their shares of Cordial Microfinanzas to Ciudad Microempresas as detailed below:~~
~~(i)~~             ~~Grupo Supervielle S.A.: 12,219,472 shares, which represented 87.5% of total capital stock of Cordial Microfinanzas; and~~
~~(ii)~~          ~~Banco Supervielle S.A.: 1,745,632 shares, which represented 12.5% of total capital stock of Cordial Microfinanzas.~~
As of December 31, 2016, Cordial Microfinanzas operated through 5 branches, had a total loan portfolio of Ps. 192 million, and held assets representing 0.39% of the total assets of Grupo Supervielle. Its contribution to the net income of Grupo Supervielle in 2016 was 0.78%.
Cordial Microfinanzas was created in 2007 by Grupo Supervielle to service the microfinance market in Argentina and with the objective of providing technical and financial assistance to micro-entrepreneurs to meet the needs related to their productive, commercial and service activities, thereby contributing to the development of their entrepreneurial capacity.
Capitalization of an in-kind contribution and resulting capital stock increase

At the ordinary and extraordinary shareholders’ meeting of Grupo Supervielle held on April 27, 2017, the shareholders of Grupo Supervielle approved the capitalization of an in-kind contribution of 7,672,412 shares of common stock of Sofital ~~S.A.F. e I.I. with a par value of Ps.1 and one vote per share~~ made by Mr. Julio Patricio Supervielle and an increase of the capital stock of Grupo Supervielle ~~of up to Ps.8,032,032,~~ through the issuance of up to 8,032,032 new Class B ~~shares with par value Ps.1 and one vote per share, at a subscription price of Ps.49.91 per share.~~shares. In connection with the capital increase, a total of 7,494,710 new Class B shares were subscribed as follows: on July 18, 2017, 4,321,208 were issued to Mr. Julio Patricio Supervielle in return for the in-kind contribution, representing ~~57.66%~~57.7% of the total capital increase, and 3,173,502 Class B shares were issued to existing shareholders of Grupo Supervielle who exercised their preemptive and accretion rights with respect to the capital increase, representing ~~42.34%~~42.3% of the total capital increase.
~~Sale of shares of Viñas del Monte S.A.~~

On May 26, 2017, Grupo Supervielle, Sofital S.A.F. e I.I. and Mr. Julio Patricio Supervielle completed the transfer of their shareholdings in Viñas del Monte S.A., which were sold for an aggregate amount of U.S.$1,500,000. Grupo Supervielle transferred a total of 904,142 common, registered, non-endorsable shares to Ramón Francisco Federico and Guillermo Héctor Federico; Sofital S.A.F. Sofital S.A.F. e I.I. transferred a total of 47,000 common, registered, non-endorsable common shares to Ramón Francisco Federico and Guillermo Héctor Federico; and Mr. Julio Patricio Supervielle transferred a total of 2,618 common, registered, non-endorsable shares to Ramón Francisco Federico and Guillermo Héctor Federico.
Successful completion of follow-on and capital increase

In September 2017, Grupo Supervielle ~~S.A.~~ made an increase of ~~the~~ capital stock through ~~a global~~an offer of Class B ~~shares at a price of U.S.$4.0 per share. The global offer consisted of an international offer in United States and other countries outside of Argentina and a local offer in Argentina.~~shares. Simultaneously with the ~~global~~ offer, Grupo Supervielle made an offer of preemptive and accretive rights of Class B shares to existing shareholders. As a result of the offer, Grupo Supervielle issued a total of 85,449,997 new Class B shares for a total of U.S.$344.0 ~~million, including the base offer and the additional shares.~~million.

~~Creation of Adquisición y Desarrollo S.A.~~
On December 18, 2017, our Board of Directors approved the creation of Adquisición y Desarrollo S.A. to sell credit and non-credit product and services through new indirect channels. As of the date of this annual report, Adquisición y Desarrollo S.A. has not been registered with the IGJ.
~~Offer for the acquisition of the capital stock of Micro Lending S.A.~~
On April 6, 2018, the Board of Directors of Grupo Supervielle approved to issue an offer for the acquisition of 4,000,000 ordinary, nominative, non-endorsable shares of Ps.1 par value and entitled to one vote per share, representing 100% of the share capital of Micro Lending S.A. (“MILA”) for a total price of U.S.$20 million subject to price adjustment. MILA specializes in car financing, particularly for used cars. As of the date of this annual report, ~~the acquisition is expected to close in the second quarter of 2018, and remains subject to certain customary conditions precedent.~~
Creation of Fideicomiso Financiero Fintech Supervielle I

On February 16, 2018, the Board of Directors approved the creation of ~~Finterch~~Fideicomiso Financiero Fintech Supervielle I ~~(“Fideicomiso Financiero”)~~ to invest in financial technology (fintech) and insurance technology (insurtech) start up projects for an amount up to U.S.$3 million. The Fideicomiso Financiero Fintech Supervielle I has made investments with minor participations in the following start up projects since its creation: 123Seguro, Increase, Avancargo, Blended and more recently in March 2021, SixClovers.

~~Executive offices~~Acquisition of Micro Lending S.A.U.

On April 6, 2018, Grupo Supervielle approved an offer to acquire 100% of the share capital of Micro Lending S.A.U. (“MILA”). MILA specializes in car financing, particularly for used cars. On May 2, 2018, Grupo Supervielle closed the acquisition of MILA.
Acquisition of the capital stock of InvertirOnline S.A.U. and InvertirOnline.com Argentina S.A.U.
On May 24, 2018, we acquired the capital stock of the online trading platform InvertirOnline (“InvertirOnline”), through the purchase of both InvertirOnline S.A.U. and InvertirOnline.com Argentina S.A.U.
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Conversion of Class A shares
On April 24, 2019, and as per the request of Mr. Julio Patricio Supervielle, the Board of Directors of Grupo Supervielle authorized the conversion of 65,000,000 Class A shares, with a par value of Ps.1.00each and entitled to five votes per share, held by Mr. Supervielle, into Class B shares, with a par value of Ps.1.00 each and entitled to one vote per share, in the the terms of article 6 (b) our bylaws. On May 9, 2019, the aforementioned conversion was approved by the CNV.
Creation of Bolsillo Digital S.A.U.
On June 12, 2019, Bolsillo Digital S.A.U. was created. This company is a Fintech which was introduced in the fast-growing industry of means of payment, which designs and develops products and services for payment processing, offering solutions to businesses and individuals, facilitating their integration into the digital payments system. We are the sole shareholder of Bolsillo Digital S.A.U.
Bolsillo Digital carries out its main activity today as a provider of payment services, actively participating in the growth of Grupo Supervielle’s business. Bolsillo Digital also seeks to promote digitization, reduce the use of cash and promote financial inclusion by providing more opportunities to merchants, professionals, SMEs and entrepreneurs.
Acquisition of deautos.com by Espacio Cordial de Servicios S.A.
On June 18, 2019, Espacio Cordial de Servicios S.A. acquired deautos.com, a platform of new and pre-owned cars and one of the leading sites in its category with more than 10 years in the market.
Through this acquisition, the Consumer Finance Segment of Grupo Supervielle seeks to continue enhancing the customer experience through digital transformation, widening the offering of consumer products and increasing cross selling to drive higher efficiency and profitability.
The acquisition of deautos.com platform allows us to create an innovative and disruptive business model in the online car market powered by MILA’s relationship with agencies and dealers, provide a new car digital platform experience for users, integrating and simplifying the financial offer, insurance and services of the segment.
Creation of Supervielle Productores Asesores de Seguros S.A. (“Supervielle Broker de Seguros”)
On December 21, 2018, Supervielle Broker de Seguros was created, which has the exclusive purpose of carrying out the insurance intermediation activity, promoting the contracts of life insurance, wealth and pension insurance premiums, and advising customers and potential customers. Grupo Supervielle owns more than 99% of its share capital, directly and indirectly. Supervielle Productores Asesores de Seguros S.A began operating in the second half of 2019.
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Acquisition of Futuros del Sur S.A. (in the process of being renamed Supervielle Agente de Negociacion S.A.U.)
On December 18, 2019, Supervielle acquired 100% of the share ownership of brokerage firm Futuros del Sur S.A., seeking to broaden the investment and financial services it provides to institutional and corporate customers and also drive efficient and profitable cross selling. Futuros del Sur S.A. is in the process of being renamed Supervielle Agente de Negociación S.A.U.
Acquisition of Easy Cambio S.A.
In October 2020, Grupo Supervielle acquired Easy Cambio S.A., a foreign exchange broker authorized by the Central Bank. Through this acquisition we seek to broaden our offer of financial services by allowing individual customers countrywide to operate in the FX markets by using the latest technologies available.
Executive Offices
Our principal executive offices are located at Bartolomé Mitre 434, 5th ~~floor,~~ Buenos Aires, Argentina. Our general telephone number is +54-11-4340-3100. Our website is http://www.gruposupervielle.com. Information contained or accessible through our website is not incorporated by reference in, and should not be considered part of, this annual report.

We file reports, including our annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Any filings we make electronically with the SEC are available to the public over the Internet at the SEC’s web site at http://www.sec.gov.
Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, New York, New York, 10011.

Item 4.BBusiness ~~overview~~
Overview
We own the fourth largest Argentine private domestically-owned bank in terms of assets. We maintain a strong geographic presence in the City of Buenos Aires and the Greater Buenos Aires metropolitan area, which is Argentina’s most commercially significant and highly populated area, and we are leaders in terms of our banking
network in some of Argentina’s most dynamic regions, including Mendoza and San Luis. The Bank, which consolidated with Cordial Compañía Financiera S.A. (“CCF”), is our main asset, comprising 98.3% of our total assets, and has a history of strong growth. Between the 2015 and 2017 period, our loan portfolio grew at a CAGR of 47.7%, as compared to an average of 39.9% for the private financial system in Argentina for the same period (excluding public banks). As of December 31, 2017, we served over two million customers, and our assets totaled Ps.94.0 billion (approximately U.S.$5.0 billion), in addition to Ps.14.7 billion (approximately U.S.$780.6 million) of assets managed by SAM. As of December 31, 2017, the Bank and CCF accounted for 90.8% and 7.3% of our total assets, respectively. In 2017, our loan and financial leasing portfolios (before loan loss provisions and including our securitized loan portfolio) grew 55.7%. In the same period, loans to the private sector in the Argentine financial system grew 51.7%.
The table below shows the evolution of our loan and financial leasing portfolios, our securitized loan and leasing portfolios and non-performing loans and coverage ratios on a quarterly basis between December 31, 2016 and December 31, 2017 and the annual variations (in percentages) of such portfolios between December 31, 2016 and December 31, 2017.

As of
December 31,

As of
September 30,

As of
June 30,

As of
March 31,

As of
December 31,

Year on Year

2017

2016

Variation(1)

(in thousands of Pesos, except percentages)

Total Loans

54,954,373

47,835,751

39,371,973

37,093,363

34,896,509

57.5
%
Receivables from financial leases

2,519,201

2,219,887

1,877,238

1,693,673

1,527,855

64.9
%
Total Loans & Receivables from financial leases(2)

57,473,574

50,055,638

41,249,211

38,787,036

36,424,364

57.8
%
Securitized loan portfolio

1,295,322

1,841,286

2,143,002

1,288,220

1,413,427

(8.4
)%
Total

58,768,896

51,896,924

43,392,213

40,075,256

37,837,791

55.3
%
NPL

2.8
%
2.8
%
2.9
%
2.9
%
2.8
%

Coverage ratio

91.8
%
88.9
%
88.0
%
87.0
%
87.1
%

~~(1)~~                                 ~~Variation of portfolio balances between December 31, 2016 and December 31, 2017.~~
~~(2)~~                                 ~~Includes loan loss provisions and excludes our securitized loan portfolio.~~
The table below shows the evolution of our total deposits and unsubordinated negotiable obligations on a quarterly basis between December 31, 2016 and December 31, 2017 and annual variations (in percentages) of such deposits and unsubordinated negotiable obligations between December 31, 2016 and December 31, 2017.

As of
December 31,

As of
September 30,

As of
June 30,

As of
March 31,

As of
December 31,

Year on

2017

2016

Year Variation(1)

(in thousands of Pesos, except percentages)

Total Deposits

56,487,027

47,181,898

42,831,613

38,826,752

35,897,864

57.4
%
Unsubordinated Negotiable Obligations

8,307,202

7,116,718

6,701,967

6,580,070

1,966,936

322.3
%
Total Deposits & Unsubordinated Negotiable Obligations

64,794,229

54,298,616

49,533,580

45,406,822

37,864,800

71.1
%
~~(1)~~                                 ~~Variation of total deposits and unsubordinated negotiable obligations between December 31, 2016 and December 31, 2017.~~
As of December 31, 2017, we served over 2 million customers, and our assets totaled Ps.94.0 billion (approximately U.S.$5.0 billion), in addition to Ps.14.7 billion (approximately U.S.$780.6 million) of assets managed by SAM. As of December 31, 2017, the Bank and CCF accounted for 90.8% and 7.3% of our total assets, respectively.
~~As of December 31, 2017 and December 31, 2016,~~ ~~according to calculations performed based on Central Bank and other third-party information, our share for the products or segments was as follows:~~
·                  ~~Personal loans (advanced by the Argentine private financial system): our market share as of December 31, 2017 was 6.9%, compared to a 7.0% market share as of December 31, 2016;~~
·                  Leasing (made by the Argentine private financial system): a 15.2% market share as of December 31, 2017, compared to a market share of 12.7% (and greater than 13.1% when taking into account our securitized leasing portfolio) as of December 31, 2016;
·                  ~~Our factoring market share of the Argentine private financial system as of December 31, 2017, was 7.5% compared to a 6.9% market share as of December 31, 2016; and~~
·                  ~~MasterCard credit cards for which billing statements were issued (latest available information): a 9.8% market share as of December 31, 2017, compared to a 9.2% market share as of December 31, 2016;~~
~~Based on information published by ANSES, we made 14.1% of all social security payments to senior citizens in Argentina in 2017, compared to 14.7% in 2016.~~
We offer diverse financial products and services that are specifically tailored to cover the different needs of our customers through a multi-brand and multi-channel platform. We have developed a multi-brand business model to differentiate the financial products and services we offer to a wide spectrum of individuals, small businesses, SMEs, middle-market companies and large corporates in Argentina. As of the date of this annual report, our infrastructure supports our multi-channel distribution strategy with a strategic national footprint through 340 access points (compared to 326 access points as of December 31, 2017), which include 180 bank branches (compared to 179 bank branches as of December 31, 2017), 78 of these bank branches are fully dedicated to serve senior citizens, 19 banking payment and collection centers, and 80 CCF sales points located in Walmart supermarkets (compared to 67 sales points in Walmart supermarkets as of December 31, 2017), Tarjeta’s 61 consumer finance sales points and through other retailers, and 521 ATMs and 193 self-service terminals.
As of December 31, 2017, the Bank’s loan portfolio to branches ratio, which we calculate by dividing the total amount of loans outstanding at the end of the period by the number of branches at the end of such period, was Ps.300.8 million, compared to Ps.191.5 million as of December 31, 2016 and Ps.120.5 million as of December 31, 2015. Based on the Peso amounts of the loan portfolios reported by the following Argentine private banks in their respective financial statements as of December 31, 2017, the loan portfolio to branches ratio of (i) Banco Macro S.A. was Ps.298.8 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.532.1 million and (iii) BBVA Banco Francés S.A. was Ps.503.9 million. The loan portfolio to branches ratio as of December 31, 2016 of (i) Banco Macro S.A. was Ps.194.8 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.379.1 million and (iii) BBVA Banco Francés S.A. was Ps.309.3 million. The loan portfolio to branches ratio as of December 31, 2015 for (i) Banco Macro S.A. was Ps.138.3 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.287.3 million, (iii) BBVA Banco Francés S.A. was Ps.227.5 million and (iv) the Argentine private banks was Ps.190.4 million. According to publicly available information provided by the Central Bank, as of December 31, 2017, the loan portfolio to branches ratio for all Argentine private banks was Ps.363.8 million.
~~Building on our banking sector expertise,~~ we identify cross-selling opportunities and offer targeted products to our customers at each point of contact. For example, as of the date of this annual report, we acted as the exclusive on-site provider of financial services to Walmart Argentina customers at 80 of Walmart Argentina’s approximately 108 supermarkets located in 21 provinces.

~~As of December 31, 2017 and December 31, 2016, on a consolidated basis, we had:~~
·                  Approximately 1.9 million active retail customers (including 1.4 million active retail customers of the Bank and approximately 0.5 million active retail customers of our other subsidiaries), 18,860 small businesses and 4,873 SMEs, Middle-Market Companies and Large Corporates as of December 31, 2017, compared to approximately 1.8 million active retail customers (including 1.4 million active retail customers of the Bank and approximately 0.4 million active retail customers of our other subsidiaries), 16,078 small businesses and 4,587 SMEs, Middle-Market Companies and Large Corporates as of December 31, 2016;
·                  ~~Ps.94.0 billion in total assets as of December 31, 2017, compared to Ps. 53.2 billion in total assets as of December 31, 2016;~~
·                  Ps.56.0 billion in loans to the private sector and Ps.2.5 billion in financial leases as of December 31, 2017, compared to Ps. 35.3 billion in loans to the private sector and Ps. 1.5 billion in financial leases as of December 31, 2016;
·                  ~~Ps.1.4 billion in securitized loan portfolio as of December 31, 2017, compared to Ps. 1.4 billion in securitized loan portfolio as of December 31, 2016;~~
·                  Ps.56.5 billion in deposits, including Ps.6.2 billion from the non-financial public sector, Ps.15.7 million from the financial sector and Ps.50.3 billion from the non-financial private sector as of December 31, 2017, compared to Ps. 35.9 billion in deposits, including Ps. 33.3 billion from the non-financial private sector, Ps. 9.3 million from the financial sector and Ps. 2.6 billion from the non-financial public sector as of December 31, 2016;
·                  ~~Ps. 15.1 billion in shareholders’ equity as of December 31, 2017, compared to Ps. 6.9 billion in shareholders’ equity as of December 31, 2016; and~~
·                  ~~5,320 employees as of December 31, 2017, compared to 4,982 employees as of December 31, 2016.~~
~~In our cross-selling segments we had:~~
·                  ~~Ps.14.7 billion (approximately U.S.$780.6 million) in assets under management through Supervielle Asset Management Sociedad Gerente de FCI S.A. as of December 31, 2017;~~
·                  ~~Ps.789.6 million in gross written premiums (approximately U.S.$42.1 million) calculated as December 31, 2017, through Supervielle Seguros S.A. for the twelve-month period ended December 31, 2017;~~
·                  Ps.390.5 million in net revenue (approximately U.S.$42.1 million) through Espacio Cordial Servicios S.A., our retail company selling non-financial products and services for the twelve-month period ended December 31, 2017.
We have developed a segmentation strategy of our customer base to target the specific needs of each category of customers. Our business model has allowed us to deliver sustained levels of growth and profitability, that accelerated since our 2016 initial public offering (“IPO”) and capital raise executed in May 2016 and later the follow-on equity offering in September 2017.
~~The following charts set forth the breakdown of our loan portfolio by segment, and of the specific customer categories in our corporate banking and retail banking segments as of December 31, 2017.~~
~~(1)~~                                 As of December 31, 2017, SMEs refers to individuals and businesses with annual sales between Ps.40.0-200.0 million, middle market refers to individuals and businesses with annual sales between Ps.200.0-1,000.0 million and large refers to individuals and businesses with annual sales over Ps.1.0 billion.
~~The following charts set forth the breakdown of our deposits by type of account and customer category as of December 31, 2017.~~
Between 2015 and 2017, our loan portfolio grew at a CAGR of 47.7%, as compared to 39.9% for the Argentine private financial system (excluding public banks). Our ROAE was 30.8%, 22.7%, 32.2%, 26.3% and 25.4% for the fiscal years ended December 31, 2013, 2014, 2015, 2016 and 2017, compared to an average ROAE of 26.5%, 29.6%, 28.9%, 27.5% and 25.0% for the Argentine private financial system over the same periods. We achieved net interest margins of 16.4%, 17.4%, 18.1%, 20.6% and 19.1% for the fiscal years ended December 31, 2013, 2014, 2015, 2016 and 2017, which compares favorably to averages for Argentine private financial system of 12.5%, 14.3%, 19.8%, 14.9% and 13.4% for the fiscal years ended December 31, 2013, 2014, 2015, 2016 and 2017, respectively. As of December 31, 2017, we accounted for 5.1% of all loans and leasing held by Argentine private financial sector (excluding public banks) and 4.4% of all deposits maintained with the Argentine private financial sector, compared to 4.0% and 3.5%, respectively, in 2013.
Our technology-based sales model enhances our ability to offer customers efficient, high quality service. The Bank has made significant investments in its ATMs and self-service terminal network, more than doubling the network from 2010 to 2017. We were the first bank in Argentina to use biometrics technology as part of our distribution channels. We also have technology scoring systems that allow for an efficient credit-related decision-making process.
~~Segments~~
~~We conduct our operations through the following segments:~~
·                  ~~Retail Banking~~
·                  ~~Corporate Banking~~
·                  ~~Treasury~~
·                  ~~Consumer Finance~~
·                  ~~Insurance~~
·                  ~~Asset Management & Other Services~~
~~Products and Services~~
~~We offer our products and services in Argentina’s main regions and cities through our main operating subsidiaries, which include:~~
·                  ~~Banco Supervielle S.A. a universal commercial banking institution,~~
·                  ~~Cordial Compañía Financiera S.A., a consumer financing company,~~
·                  ~~Tarjeta Automática S.A., consumer financing company and distribution network,~~
·                  ~~Supervielle Seguros S.A., an insurance company,~~
·                  ~~Supervielle Asset Management Sociedad Gerente de FCI S.A., an asset management company, and~~
·                  ~~Espacio Cordial de Servicios S.A., a retail company selling non-financial products and services.~~
~~Organizational structure~~
~~The following diagram illustrates our organizational structure as of the date of this annual report. Percentages indicate the ownership interest held.~~
~~The following information is related to our subsidiaries and investees as of the date of this annual report:~~
~~Subsidiary~~
~~Country of~~
~~Incorporation/ Residence~~
~~Banco Supervielle S.A.~~
~~Argentina~~
~~Cordial Compañía Financiera S.A.~~
~~Argentina~~
~~Supervielle Seguros S.A.~~
~~Argentina~~
~~Supervielle Asset Management S.A.~~
~~Argentina~~
~~Tarjeta Automática S.A.~~
~~Argentina~~
~~Sofital S.A.F.e I.I~~
~~Argentina~~
~~Espacio Cordial de Servicios S.A.~~
~~Argentina~~
~~Our Competitive Strengths~~
We have achieved a strong competitive position in our core products (personal loans, factoring, leasing and social security payments to senior citizens), as well as a strong presence in certain geographical regions in Argentina.
~~We have developed a leading position in the Argentine market in a number of attractive products to different customer segments.~~Overview

We are ~~leaders in the Argentine market in the following areas:~~
·~~Retail Customers.~~ ~~We maintain leading positions in attractive retail banking and consumer financing segments, offering~~ a variety of products, from personal loans and credit cards to social security payment services to senior citizens. As of December 31, 2017, we had approximately 1.9 million retail customers, accounting for Ps.37.9 billion (approximately U.S.$2.0 billion) in deposits. As of December 31, 2017, loans to retail customers of the Bank and of CCF represented 6.9% of the Argentine financial private system market for personal loans, which ranked fifth out of 65 private financial institutions in Argentina. Based on information published by ANSES, in 2017, the Bank made 14.1% of all monthly social security payments to senior citizens (who collect their payments on a monthly basis). Additionally, we are the largest private issuer of Mastercard credit cards with billing statements and the exclusive on-site provider of financial services ~~to Walmart~~platform in Argentina ~~customers,~~ with a ~~contract extended through August 2020, renewable at expiration subjet to renegotiation with Walmart Argentina.~~
·~~Corporate Customers~~~~. We are also a~~ leading provider of specially tailored financial services and products to the corporate sector, with a particular focus on SMEs and middle-market companies. As of December 31, 2017, we had a 15.2% market share in leasing, ranking first out of 50 private banks in Argentina, according to our estimates based on Central Bank information. As of December 31, 2017, we had a 7.5% market share in factoring in terms of Argentine financial market.
·~~Capital Markets.~~ ~~We have a leading~~competitive position in ~~Argentine capital markets, which we have developed~~certain market segments that are strategic for our Group. Our philosophy focuses on agility as a key part of our ~~funding strategy. In 2017, we had a 19% share in bank asset securitization and a 5.12% share in~~work culture, with the ~~overall Argentine asset securitization market according to~~client at the center of all our own estimates based on Central Bank and CNV information. In 2017, we had Ps.5.3 billion (approximately U.S.$ 283.9 million) in securitization and bond issuances for us and our subsidiaries, and Ps.2.6 billion (approximately U.S.$139.8 million) in securitization and bond issuances for third parties. Since our IPO and after the expansion of our capital base, we have reduced securitization of our originated assets, and intend to take advantage of our capital markets capabilities and expertise to serve corporate customers in connection with capital markets transactions.
~~Solid sources of funding~~
We have access to diversified, competitive and stable sources of funding. Our low-cost demand deposit base comprises 55.3% of our funding base (33.0% savings accounts and 18.7% checking accounts and 3.6% other accounts as of December 31, 2017). We use medium-term debt securities and securitization operations of consumer loans among our funding strategies. Additionally, our consolidated pro forma Tier I ratio was 18.4% as of December 31, 2017 and we have maintained excess liquidity for future capital injections to our subsidiaries in order to fund our growth strategy.
~~Creation of value for shareholders~~actions through the ~~implementation~~generation of ~~prudent financial risk management policies~~profitable value propositions and ~~the primary focus on the intermediation activities.~~
We have generated value and strong growth, while managing financial risks under policies designed to protect our capital and liquidity. In the past, in addition to our organic growth, we have successfully acquired and integrated strategic businesses. We have consistently limited our exposure to the non-financial public sector and limited term, currency and other mismatches in our assets and liabilities. We have high proportion of loans over total assets and we derive our net income primarily from financial intermediation activities rather than from trading or financial investments, which has resulted in more stable sources of income and reduced the exposure of our earnings to market volatility.
~~Access to multiple customer segments through differentiated brands and channels positions us to capture future growth in the Argentine financial system.~~
We target a broad spectrum of socioeconomic segments and companies of varying sizes using a multi-brand model to offer a wide range of financial services. The Bank offers customized financial products and services to corporate clients in SMEs and middle-market companies, as well as to high net worth and middle-income individuals and to middle and lower-middle-income senior citizens. CCF and Tarjeta focus their products and services on the middle and lower-middle-income segments of the urban population. Our multi-brand model allows us to access segments of the population that are underserved and we believe offer growth opportunities.
~~We consistently seek to leverage the strong cross-selling potential of our multi-brand and multi-channel business model and our stable pool of over two million customers.~~
Through our multi-brand and multi-channel approach, we are able to cross-sell and create synergies across our segments. Bancassurance specifically allows us to cross-sell value added insurance products in compliance with the regulations of the National Superintendency of Insurance (~~Superintendencia de Seguros de la Nación~~~~) and of the Central Bank, as applicable.~~ ~~We offer an attractive platform for cross-selling certain credit cards and loans through 141 consumer finance points of sale (compared to 128 consumer finance points of sale as of December 31, 2017).~~ We cross-sell non-financial services and products such as insurance products and plans, tourism packages, health insurance and health services, electric appliances and furniture, and alarm systems through Espacio Cordial and our senior citizens’ dedicated branches.
~~We believe our investment in developing a strategic national footprint positions us to capture profitable growth and benefit from economies of scale.~~
Through the Bank, we have a focused presence in Argentina’s major regions and cities. Through our consumer finance business, we have presence in all the provinces of Argentina. Through our current infrastructure, we serve our customers through 340 access points (compared to 326 access points as of December 31, 2017), including branches, bank branches fully dedicated to serve senior citizens, 19 banking payment and sales and collection centers, consumer finance, branches and access points within Walmart stores, Tarjeta’s 61 consumer finance sales points and through other retailers, and 521 ATMs and 193 self service terminals, our call center and home banking and mobile services. The Bank has an important presence in the City of Buenos Aires and the Greater Buenos Aires metropolitan area (where approximately 15.6 million or 39% of Argentina’s population resides), through 112 branches, and CCF has 26 sales points within Walmart locations in the City of Buenos Aires and Greater Buenos Aires (compared to 21 sales points within Walmart locations as of December 31, 2017). The Bank is also one of the most active players in the Cuyo region, which includes the Province of Mendoza, San Juan and San Luis where it operates through 50 branches and 17 collection centers. The Bank has approximately 281,000 customers in Mendoza and approximately 227,000 in San Luis. CCF has seven sales points in the Cuyo region. We offer consumer finance services through our Tarjeta distribution platform mainly in the Patagonia region, where we rely on 20 branches and 41 sales and collection centers. Given the strength of our network in commercially significant and high income regions in Argentina, we believe we are well positioned to benefit from economies of scale by leveraging our existing network and growing our revenues without significant investments in additional expansion of our platform.
~~Long-standing presence in Argentina’s financial sector, committed indirect controlling shareholder and experienced Board of Directors and management team.~~promoting digital adoption.

Through our main subsidiary, the Bank, we trace our origins to the banking house Supervielle y Cía. Banqueros, established in 1887. Our long-standing presence in Argentina’s financial sector has allowed us to establish strong long-term relationships with our customer base, build a reputation for personalized customer service and establish the Supervielle brand as a recognized household name in the Argentine banking industry for both individuals and corporations, as well as in the securitization and corporate bond segments of the local capital markets. Our controlling shareholder has a strong commitment to the Argentine financial system. Julio Patricio Supervielle is the Chairman of the Board of Directors and ~~our~~the CEO of Grupo Supervielle and has led Grupo Supervielle for over 1620 years. During his tenure, we have experienced growth in terms of net worth, assets, deposits and our network, and we have successfully completed some of our most significant acquisitions. We rely on a Board of Directors whose members collectively have extensive experience in retail and commercial banking, a deep understanding of local business
sectors and strong capabilities in risk management, finance, capital markets, M&A and corporate governance. In addition, our ~~stable~~ senior management team is comprised of seasoned officials and experts in their fields that foster a business culture of high performance.
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Our subsidiaries are: Banco Supervielle, which is the 8th largest private bank in Argentina in terms of loans; the consumer finance division made up of CCF, a digital banking services platform; Tarjeta Automática, a distribution network for consumer finance mainly in southern Argentina; MILA, a company specialized in the financing of auto loans; Espacio Cordial, a retail non-financial products, assistance, services and tourism; Supervielle Seguros, an insurance company; Supervielle Productores Asesores de Seguros, an insurance broker; Supervielle Asset Management, a mutual fund management company; InvertirOnline.com, a broker specialized in online trading; Bolsillo Digital S.A.U., a company that provides payment solutions to retailers with Mobile POS and mobile wallet products through its IUDÚ PAGO brand; Futuros del Sur (in the process of registering the change of its name by Supervielle Agente de Negociación) which is a brokerage firm aimed at institutional and corporate customers, and Easy Cambio S.A., a currency exchange broker. The portfolio of companies in our Group is completed by a company whose main activity is the holding of shares in the same companies of Grupo Supervielle, Sofital S.A.F.e I.I.

As of December 31, 2020, our infrastructure is supported by a strategic presence through 302 access points, which include 185 bank branches, 13 bank sales and collection centers and 79 CCF sales points located within Walmart Supermarkets; 20 Tarjeta Automática branches, 5 MILA branches (added to its network of 579 related agencies), 457 ATMs, 221 self-service terminals and 256 Supervielle own-experience ATMs with integrated biometrics and not requiring the use of a password or plastic card. Moreover, we offer banking solutions through our digital channels, applications and solutions developed for different business segments, and also offer products and services through our digital attackers’ platforms to clients located countrywide.
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During 2020, we continued to expand our ecosystem, and served more than 1.9 million active customers.
Note. (i) Loans and Deposits Market share: Banco Supervielle Market Share among Argentine Private banks. (ii) Insurance Market share among the insurance lines we underwrite.
Financial Services
We own the eighth largest Argentine private bank in terms of loans. Through the bank, we serve 1.4 million individual active customers, around 21,000 Small Business, 2,000 SMEs and 2,300 Corporates and we maintain a competitive leading position in certain strategic segments.
According to calculations based on Central Bank and other third-party information, our share for the following products is as follows:
Personal loans (advanced by the Argentine private financial system): our market share as of September 30, 2020 was 7.4%, compared to a 7.0% market share as of December 31, 2019;
Leasing (made by the Argentine private banks): a 18.7% market share as of September 30, 2020, compared to a market share of 19.9% as of December 31, 2019;
Our factoring market share of the Argentine private financial system as of December 31, 2020 was 8.7%, compared to a 9.5% market share as of December 31, 2019; and
MasterCard credit cards with a 9.2% market share as of December 31, 2020, compared to a 9.3% market share as of December 31, 2019.
Additionally, based on the latest information published by ANSES, we made 10.8% of all social security payments to senior citizens in Argentina in September 2020, compared to 11.2% in June 2019.
40
Through the Bank, we maintain a strong geographic presence in the City of Buenos Aires and the Greater Buenos Aires metropolitan area, which is Argentina’s most commercially significant and highly populated area, and we are leaders in terms of our banking network in some of Argentina’s most dynamic regions, including Mendoza and San Luis.
We have a leading position in both the Provinces of Mendoza and San Luis, in which we have 200,000 and 195,000 active customers, respectively. According to calculations based on Central Bank information, as of December 31, 2020 in these Provinces we had a market share of loans to private sector of 21.7% and 53.8%, respectively, and a market share of deposits from private sector of 10.9% and 63.3% respectively.
Regarding our consumer finance business, during 2020 CCF consolidated its digital transformation with the launching of IUDÚ, an innovative digital financial services platform available at Google Play and App Store. CCF’s business model is based on providing financing solutions to specific target groups, mainly medium-to-low-income population (segments C2 and C3), and is currently consolidating in the field of comprehensive financial services through the development of new accounts deposits and investment and to a wider customer segment, offering a personalized and omnichannel experience.
The launching of the IUDÚ platform was a key player in the transformation of the industry, expanding digital proposals based on an innovative app, with 100% digital onboarding to apply for personal loans, credit cards and carry out all transactions personally, such as checking purchases made and managing payments. In the near future, customers will also have access to a comprehensive and complete offer of digital banking products and services.
The omnichannel concept enables CCF to be present countrywide, and it is currently settled in 22 provinces through 99 points of sales of its 2 main marketing channels: Walmart financial services and Tarjeta Automática, and the digital channel through the web, the social media and Google Play and App Store apps: Walmart Tarjeta App, Carta App and IUDÚ.
Finally, through the Fideicomiso Financiero Supervielle I, our corporate venture capital fund that focuses on creating incremental business opportunities for our subsidiaries, we made strategic investments in several fintechs and insurtechs start ups, including (i) Increase, a financial solutions platform for stores and businesses; (ii) Avancargo, a company that uses technology to facilitate cargo freight contracts to match demand and supply; and (iii) Blended, a comprehensive school management platform for kinder, primary and high school levels.
Insurance
The insurance business is continuously adapting its products to the needs of our customers throughout their lives. We have access to customers through our distribution networks and aim to further develop our bancassurance distribution model by expanding the variety of insurance products offered.
Supervielle Seguros sells insurance policies it underwrites such as personal accidents, protected bag, life, home, broken bones, among others, through our distribution network and the digital channels. In turn, Supervielle Productores Asesores de Seguros has continued focusing in 2020 on entrepreneurs and small businesses and SMEs, offering advisory services to customers and adding value to our comprehensive product proposal.
41
Moreover, with the vision to create incremental business opportunities for our companies, we invested in 123Seguro, an online car insurance broker, through our corporate venture capital fund.
As of December 31, 2020, we have issued 500,000 gross written premiums reaching as of December 31, 2020, 1.76% market share among the insurance lines we underwrite.
Investments & Savings solutions
We offer investments and savings solutions to our customers through a wide range of products. Through Supervielle Asset Management, we have 15 mutual funds designed to meet customers’ particular investment objectives and risk profiles. As of December 30, 2020, assets under management reached Ps. 38.8 billion increasing 70% from December 2019.
On the other hand, we own InvertirOnline, a digital online broker that offers brokerage and savings and investment services based on an agile, simple, transparent and innovative platform, suitable for the profile of each client. Through this value proposition we follow a purpose of reinventing the way of investing to boost people's income and savings. The online platform ranks 2nd in the local ByMA exchange ranking on Equity, CEDEARs (Certificado de Depósito Argentinos) and options trading, and it has an 8% market share in these assets. In 2020, 134,000, new accounts were opened, more than doubling the number of accounts opened in the previous year. DART (Daily Average Revenue Trades) reached nearly 20,500 in 2020 up from less than 5,600 in 2019. Additionally, in 2020 we acquired Easy Cambio S.A. seeking to expand the offer of financial services to individual clients located countrywide, allowing them to make FX exchanges by using the latest technologies available. Finally, we contribute to improve financial education with around 23,000 participants attending financial courses education offered by InvertirOnline Academy in 2020.
Payments
In June 2020, we launched IUDÚ PAGO, a payment facilitator app through which companies and individuals with commercial activity are offered the possibility of charging with debit and credit cards, through mPOS and payment link. The value proposition is currently integrated with virtual wallet products, such as “Sube” charging, Prepaid Card (to make subscriptions, extraction and purchases) and cell phone recharge.
Moreover, we joined Play Digital S.A. (“Modo”, the systemic payment solution for banks in Argentina) as shareholder, with the aim of expanding the offer of financial services to our clients throughout the country, integrating technologies that facilitate the use of our applications on mobile devices, allowing them to operate in the digital market for payments and transfers through a systemic solution of the highest quality standard.
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Automotive
The acquisition of deautos.com platform in 2019 allowed us to create an innovative and disruptive business model in the online car market powered by our existing MILA’s relationship with agencies and dealers, providing a new car digital platform experience for users, integrating and simplifying the financial offer, insurance and services. As of December 31, 2020 we have granted 15,000 auto loans.
Housing
We offered housing solutions to our customers, through different value propositions, such as mortgage loans and rental guarantees. As of December 31, 2020, we ranked the fifth largest private bank in terms of mortgages with a 7% UVA mortages market share.
Non financial services and products: Retail and Leisure, and Medical plans
Building on our banking sector expertise, we identify cross-selling opportunities and offer targeted products to our customers at each point of contact though our brands Cordial and Tienda Supervielle marketplace which was used to sell home appliances, technology, home and furniture, sport products, wellness and beauty, and tourism among others. In 2020, we sold more than 29,000 retail and leisure products, and as of December 31, 2020 we had 310,000 active medical plans.
As of December 31, 2020 and 2019 on a consolidated basis, we had:
Ps.249.2 billion in total assets as of December 31, 2020, compared to Ps. 202.4 billion in total assets as of December 31, 2019;
Ps.113.8 billion in loans as of December 31, 2020, compared to Ps.129.0 billion in loans as of December 31, 2019;
Ps.178.6 billion in deposits as of December 31, 2020, including Ps.7.9 billion from the non-financial public sector, Ps.57.4 million from the financial sector and Ps.170.7 billion from the non-financial private sector compared to Ps.121.2 billion in deposits as of December 31, 2019, including Ps.7.4 billion from the non-financial public sector, Ps.38.3 million from the financial sector and Ps.113.7 billion from the non-financial private sector;
Ps.35.7 billion in attributable shareholders’ equity as of December 31, 2020 compared to Ps.31.9 billion in attributable shareholders’ equity as of December 31, 2019; and
5,021 employees as of December 31, 2020, compared to 5,084 employees as of December 31, 2019.
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Our Subsidiaries
The following information is related to our subsidiaries as of the date of this annual report:
Subsidiary Jurisdiction of
incorporation Name under which the
subsidiary does business
Banco Supervielle S.A. Argentina Supervielle
Cordial Compañía Financiera S.A. (in the process of being renamed as IUDÚ Compañia Financiera S.A.) Argentina
Walmart Servicios Financieros
IUDÚ
Pesos Ya
Tarjeta Automática S.A. Argentina Carta Automática
Pesos Ya
Supervielle Seguros S.A. Argentina Supervielle Seguros
Supervielle Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión S.A. Argentina Supervielle Asset Management
Espacio Cordial de Servicios S.A. Argentina Cordial
Micro Lending S.A.U. Argentina MILA
InvertirOnline S.A.U. Argentina invertirOnline
InvertirOnline.com Argentina S.A.U. Argentina invertirOnline.com
Supervielle Productores Asesores de Seguros S.A. Argentina Supervielle Broker de Seguros
Futuros del Sur S.A. (in the process of being renamed Supervielle Agente de Negociación S.A.U.) Argentina N/A
Bolsillo Digital S.A.U. Argentina IUDÚ PAGO
Easy Cambio S.A. Argentina N/A
Sofital S.A.F. e I.I. Argentina N/A
Banco Supervielle S.A.
We own 97.10% of the share capital of the Bank and Sofital owns 2.79%. The Bank is a universal commercial bank and our largest subsidiary. The Bank accounted for 96.2% of our total assets as of December 31, 2020. The Bank operates in Argentina, and substantially all of its customers, operations and assets are located in Argentina. It offers a wide variety of financial products and services to retail, corporate and institutional customers.
According to the Central Bank, as of September 30, 2020, the Bank ranked 8^th in terms of total loans, 10^th in terms of deposits, and 10^thin terms of total assets among private banks in Argentina. In 2020, the Bank continued to be a leader among private banks with respect to the payment of federal benefits to senior citizens in terms of the number of payments made. The Bank is also one of the leading providers among private banks of (i) factoring services in Argentina with a 8.7% share as of December 31, 2020 and (ii) leasing services, with a market share estimated to be around 19% as of September 30, 2020.
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As of December 31, 2020, the Bank on a consolidated basis had total assets for Ps.240.7 billion, a total loan portfolio of Ps.104.7 billion and total deposits for Ps.178.8 billion, and its shareholders’ equity totaled Ps.27.7 billion.
For information regarding banking business performance, see Personal & Business, Banking, Corporate Banking and Bank Treasury segments information under the section “Segment Reporting”.
Cordial Compañía Financiera S.A. (which has filed to change its name to IUDÚ Compañia Financiera S.A.)
In August 2011, we purchased CCF, a financial services division of General Electric in Argentina. CCF had been operating for more than ten years in the Argentine market with financial products such as credit cards, personal loans, consumer loans and a wide range of insurance products.
Since 2000, through an agreement with Walmart Argentina, CCF has had exclusive rights to promote and sell financial and credit products to Walmart Argentina customers nationwide, including Changomas stores. The Walmart Argentina agreement grants CCF access, on an exclusive basis, to a distribution channel that includes Walmart Argentina and Changomas stores located throughout Argentina and all future stores to be opened by Walmart Argentina during the term of the agreement. On July 6, 2010, CCF renewed the Walmart Argentina agreement through August 31, 2015 and in December 2014, CCF renewed the agreement again, through August 31, 2020. On May 19, 2020, the expiration date of the agreement was extended until August 31, 2021, and the parties thereto committed to make their best efforts to negotiate a new marketing contract. On November 6, 2020, Walmart Inc. agreed to sell its business in Argentina to Grupo de Narváez, a well-known name in Argentina conducting several retail businesses in the country. Although the Narvaez Group has not been in the supermarket business in Argentina in recent years, they have been building retail capabilities in other countries in the region. A renewal of the agreement and partnership with the retailer is currently being negotiated.
In 2020, CCF consolidated its digital transformation with the launching of IUDÚ, an innovative digital financial services platform available at Google Play and App Store. CCF’s business model is based on providing financing solutions to specific target groups, mainly C2 and C3, and is currently consolidating in the field of comprehensive financial services through the development of new accounts deposits and investment and to a wider customer segment, offering a personalized and omnichannel experience.
The Bank owns 95% of CCF’s ordinary shares and Grupo Supervielle owns directly the remaining 5%. As of December 31, 2020, CCF had total assets of Ps.10.7 billion, net shareholders’ equity of Ps.2.9 billion and a personal loan portfolio, credit card and car loan on balance of Ps.7.3 billion.
For information regarding CCF business performance see Consumer Finance segment information under the section “Segment Reporting”.
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Tarjeta Automática S.A.
Tarjeta consists of a network of branches created in 1996 with a strong positioning in the Patagonia region. At present it has 20 own branches in 9 provinces. In December 2012 CCF began to market loans and credit cards under “$YA” and “Carta Automática” brands through Tarjeta branch channel which supplements the consumer finance division network. CCF’s commercial strategy in this channel is to offer a wide ranche of financial services and insurance.
The channel’s objective is to reach the leadership in the Patagonia region through a differential proposal: services similar to those of a bank but with an approach similar to that of a regional financial entity. To meet the demand of our customers the network focuses on the marketing of loans as the gateway.
Grupo Supervielle owns 87.50% of Tarjeta’s ordinary shares, the Bank owns the 10.0% of such shares and CCF owns the remaining 2.5%.
For information regarding Tarjeta business performance see Consumer Finance segment information under the section “Segment Reporting”.
Espacio Cordial de Servicios S.A.
Espacio Cordial was created in October 2012 and began operating in December 2012. The company was created to sell various types of goods and services related to insurance, tourism, health care plans and/or services and other goods and services set forth in its corporate by-laws.
We own 95% of the share capital of Cordial and Sofital owns the remaining 5%. Directly and indirectly we own 100% of total shares of Cordial.
As a result of the corporate restructuring conducted in August 2018, Cordial Servicios became part of the Consumer Finance segment of Grupo Supervielle.
In June 2019, the company purchased Deautos.com, a new and second-hand vehicle purchase and sale platform, one of the leading sites in its category with over 10 years in the market. The aim was to create a digital vehicle ecosystem, integrating and simplifying the offer of services and increasing the synergy with other Grupo Supervielle companies to deliver a higher customer experience through the best market offers.
For information regarding Cordial business performance see Consumer Finance segment information under the section “Segment Reporting”.
Micro Lending S.A.U.
MILA is a company devoted to originating car financing loans and was acquired by Grupo Supervielle on May 2, 2018. We own 100% of the share capital of MILA.
Currently MILA is ranked as one of the top five players in the new car financing market with 2.9% market share and achieved the second position in the used car financing market with 10.4% market share. Regarding its distribution channel, MILA sells its products through 579 active dealers that allow the company to have presence in the whole country.
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Supervielle Seguros S.A.
In June 2013, we and Sofital purchased 100% of the shares of Supervielle Seguros (formerly known as Aseguradores de Créditos del Mercosur S.A. with no operations at the date of the acquisition). Supervielle Seguros began operations in October 2014.
For information regarding Supervielle Seguros business performanc,e see Insurance segment information under the section “Segment Reporting during”.
Supervielle Productores Asesores de Seguros S.A.
In December 21, 2018, we created Supervielle Broker de Seguros S.A. The company has the exclusive corporate purpose of carrying out the insurance intermediation activity, promoting the contract of life insurance, wealth and pension insurance premiums, and advising customers and potential customers. Grupo Supervielle directly owns 95% of its share capital (and indirectly owns 99.999987% of its share capital). The company was renamed Supervielle Productores Asesores de Seguros S.A and began operation in the second half of 2019.
For information regarding Supervielle Productores Asesores de Seguros business performance, see Insurance segment information under the section “Segment Reporting”.
Supervielle Asset Management S.A.
We own 95% of the share capital of SAM and Sofital owns the remaining 5%. Directly and indirectly we own 100% of total shares of SAM.
Through SAM, we have become a player in the mutual funds market with the “Premier” funds family.
For information regarding SAM business performance, see Asset Management & Others segment information under the section “Segment Reporting”.
InvertirOnline and InvertirOnline.com
InvertirOnline.com is a digital online broker that offers brokerage and savings and investment services based on an agile, simple, transparent and innovative platform, suitable for the profile of each client. Through this value proposition we follow a purpose of reinventing the way of investing to boost people’s income and savings. We own 100% of the share capital of InvertirOnline and InvertirOnline.com.
For information regarding InvertirOnline business performance, see Asset Management & Others segment information under the section “Segment Reporting”.
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Bolsillo Digital S.A.U.
On June 12, 2019 we created Bolsillo Digital S.A.U. This company is a fintech in the fast-growing industry of means of payment that designs and develops products and services for payment processing and offers solutions to businesses and individuals to facilitate their integration into the digital payment system.
Bolsillo Digital carries out its main activity today as a provider of payment services, actively participating in the growth of Grupo Supervielle’s business. Bolsillo Digital also seeks to promote digitization, reduce the use of cash and promote financial inclusion by providing more opportunities to merchants, professionals, SMEs and entrepreneurs.
Bolsillo Digital’s vision is to contribute to the development of a payments and collections ecosystem within Grupo Supervielle, where customers can find solutions for issuance, acquisition, wallet, collection, electronic payments, e-commerce, among others.
In June 2020, Bolsillo Digital launched an application under the brand “IUDÚ PAGO” through which companies and individuals with commercial activity are offered the possibility of charging with debit cards and credit, through mPOS and payment link. The value offer is currently integrated with virtual wallet products, such as the transportation card “SUBE” charging, Prepaid Card (to make subscriptions, withdrawals, and purchases) and cell phone recharge.
Futuros del Sur S.A. (in process of changing its corporate name to Supervielle Agente de Negociación S.A.U.)
On December 18, 2019, Grupo Supervielle acquired 100% of the capital stock of Futuros del Sur S.A., a trading agent registered with the CNV, the Argentine Securities Commission. Through this acquisition we seeked to expand the financial and investment services to institutional and corporate customers and increase cross selling in an efficient and profitable way.
While in 2020 Futuros del Sur focused on proprietary trading transactions, the objective for 2021 is to boost trading operations and provide brokerage services to institutional customers.
Easy Cambio S.A.
In October 2020, we acquired 100% of the ordinary shares of Easy Cambio S.A., a foreign exchange broker authorized by the Central Bank. With this acquisition we seek to broaden our offer of financial services by allowing individual customers countrywide to operate in the FX markets using the latest technologies available for this purpose.
Sofital S.A.F. e I.I.
Sofital S.A.F. e I.I. is a sociedad anónima whose main activity consists of holding participations in other companies. As of the date of this annual report, Sofital holds 2.7944% of the capital stock of the Bank, a 5.0% of the capital stock of Cordial Servicios, 5.0% of the capital stock of Supervielle Seguros, 5.0% of the capital stock of SAM and 4.759% of Supervielle Productores Asesores de Seguros S.A.
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Our Vision and Strategy

The Argentine market is one of the least penetrated financial systems in Latin America, with a fragmented, competitive landscape. We believe the Argentine market has significant ~~underutilized~~underused financial infrastructure, in the form of checking and savings accounts, but also good mobile and internet penetration levels. This situation presents a number of growth opportunities asonce the ~~country continues its stabilization process.~~economy rebounds. We believe we are positioned to capture these growth opportunities given the advancements on our digital transformation, our focus on a differentiated customer experience, our evolving branch model and online platforms and our product ~~offerings, extensive distribution network and leading technology.~~offerings.

~~We plan~~Even though 2020 was a challenging year, including as a result of the ongoing COVID-19 pandemic, we remained focused on executing our strategy to ~~continue focusing on becoming the premier bank for certain specific customer segments including high net worth customers, senior citizens, middle~~transform our company into a modern, leading edge, cost efficient player and ~~lower-income populations, entrepreneurs~~position our business to serve consumer's evolving needs and small businesses, SMEs and middle market companies. We aim to achieve this objective through multiple brands, by delivering customized value propositions in retail banking, corporate banking, treasury, consumer financing, insurance and asset management and other services. We intend to differentiate by reducing time- to-cash and with agile and robust processes. We will strive to capture increased efficiency and synergies derived from cross sell, customer loyalty and payroll customers from our corporate banking segment.aspirations.

~~We believe~~Increasingly, customers want and expect to engage with us anytime from anywhere. Our digital strategy is aimed at answering that demand and we have ~~the capabilities required to be successful, including, among others,~~ a long-standing reputation; a strong franchise of 2 million customers; an extensive distribution network; a strong digital footprint; stable, atomized and diversified funding; a prudent risk management track record; and a strong culture based on shared values: leadership, innovation, simplicity, efficiency, commitment and respect.three-prongued approach:

1) The transformation of our core businesses, including banking, consumer finance, insurance and asset management businesses, to drive customer experience, agility and efficiencies.
We believe that our holistic approach to mortgage underwriting exemplifies our strengths. We are seeking to become one of the market leaders in this segment, by, for example, forging alliances with real estate developers, offering customers a competitive value proposition and having an exclusivity agreement with Zona Prop, a popular online real estate website.
2) Developing digital attackers to broaden access to financial services, which includes:
a. IUDÚ, our new digital platform which is refocusing our strategy in the consumer finance business and will allow acquisition of multisegment clients with full digital financial services; and
b. Invertir Online, which during the past years has consolidated its leading position as an online retail broker while looking ahead, our goal is to scale the business and to further enhance the customer experience. By fostering the financial education of our clients, we also seek to enable them to boost their savings by investing in a wide range of financial products through a simple and intuitive platform.
3) Continue developing the Supervielle ecosystem by building traffic from financial services into new platforms enhancing and deepening customer engagement.

The “Superate” advertising campaign launched in 2017 aims to continue differentiating our positioning by focusing on the potential for personal and collective lifestyle improvements and financial well-being among our customers. The campaign highlights that our mortgages, personal loans, SME loans, platform services and personal attention are tailored to our customers’ needs, and thereby become important tools for our customers to realize their goals.
~~The~~Our key ~~components of our strategy~~strategic pillars are as follows:

~~Increase~~1.        Customer Experience
2.        Efficiency
3.        Funding
4.        Customer Acquisition
5.        Digital Transformation
6.        Asset Quality
The unprecedented COVID-19 global health crisis accelerated significantly the adoption of digitalization in the new low touch economy confirming our ~~market presence among attractive customers through an effective segmentation strategy and strengthened value proposition~~strategic vision.

We ~~seek~~are accelerating the initiatives on digital transformation that were already in motion, both in our digital and automatic channels. Moreover, we have extended the thorough and profound digital transformation of our business across all subsidiaries under the rubric of three axes: i) the generation of a modern technological architecture, ii) the evolution of our bank branch model, and iii) the addition of capabilities to ~~increase revenues through cross-selling enabled by big data~~connect to third parties and ~~CRM:~~prepare for open banking. The successful implementation to date has benefitted from a deep cultural transformation across the Group, consolidating the adoption of agile working methodologies and a new operating model that places the customer at the center of all we do.

~~High net worth customers~~:During 2020 we implemented an agile at scale operating model consolidating agile methodologies and process. At the same time, we deepened the customer centric cultural transformation across our Group. We ~~successfully launched~~have organized the ~~Identité brand in 2014~~company into Individuals, Corporates & SMEs, and Payments, with ~~an attractive value proposition designed~~Customer Service and Omnichannel cutting across end-to-end interactions, or experiences. These sets of experiences are managed by empowered squads as part of a tribe that works to ~~capture and monetize~~enhance the ~~high net worth~~Supervielle customer ~~segment. That value proposition includes a wide range of components like premium credit cards, loyalty programs and exclusive events for customers. To reach high net worth individuals,~~experience. Our Agile Transformation Office aims to guarantee the ~~bank leverages three key assets: a premium, differentiated brand, a highly trained workforce and an excellent branch network in high income neighborhoods.~~
~~Senior citizens~~: We intend to maintain our leadership position in the senior citizen segment, providing unique services and benefits catered to its specific needs. Leveraging our network of fully dedicated branches we seek to expand our credit card and personal loan business, finance travel packages and consumer goods and services, and distribute insurance products, including life, burial, health, personal accident insurance and home insurance. This segment is adopting technology rapidly, which we anticipate will increase efficiency of service delivery.
~~Middle and lower-middle-income population~~: This segment has one of the lowest banking penetration rates in Latin America and represents an important opportunity to attract new customers. CCF’s exclusivity agreements with Walmart Argentina and Hipertehuelche Supermarkets position us to reach this segment with a powerful value proposition, particularly consumer finance loans and credit cards. This customer base also offers opportunities for cross-selling of other banking products. Additionally, we continuously analyze opportunities for new product launches to serve this segment, as well as opportunities to forge new alliances with other retailers.
~~Entrepreneurs and Small Businesses~~: We aim at continuing expanding our market share within our customer base of entrepreneurs and small businesses. We intend to leverage our branch network as a primary means of attracting business and focus on building our customized cash management services.
~~SMEs~~: Our aim is to become the premier bank for SMEs by deploying outstanding transactional and cash management services. We intend to develop strategic partnerships with key industry players to provide financial services through direct lending or factoring transactions to their critical providers and suppliers along their value chains. We will target specific opportunities and customers in the agroindustry sector, energy, infrastructure, construction and other specific sectors. With respectalignment to the ~~agri-industrial sector, we strive~~Group’s strategic objectives and to ~~deepen~~scale agility across our ~~existing relationships with leading industry players, providing financing~~organization ensuring the customer centricity at all times. This is supported by centers of excellence that distribute talent, resources and knowledge to each squad so that they can carry out their customer base. In San Luis, Mendoza, and Tucumán, where we have a well-established distribution base, we intend to continue targeting clients and value chains related to their main regional economies. With respect to the wine industry, we seek to continue developing partnerships with premium wine producers and key industry suppliers. With respect to the energy and infrastructure sectors, we target SMEs and middle-market companies along the supply chains of oil and gas (exploration and production), renewable energy projects and medium and large construction companies.
~~Middle markets and large corporate customers~~: We intend to offer a full range of products and services, including financial advisory, transactional services, treasury management, short, medium and long term financing to the middle market and large corporate customers that we have historically targeted. We aim to achieve this goal through quick decision-making with respect to our credit evaluation process, personal attention, increasing transactional services (such as check maintenance, payroll management, payments to suppliers and tax payment services) and building upon our cash management products, payroll management and other products that translate into higher balances of immediately available deposits. As we follow a customized approach across the value chain, suppliers and clients of our large corporate customers will be another source of SMEs client origination for the bank.
~~Leverage our proximity to customers through our extensive distribution network of branches and sales points to provide a superior customer experience~~
We have a direct presence in Argentina’s major regions and cities. The Bank has a particularly important presence in the Greater Buenos Aires metropolitan area and the Cuyo region, which includes the provinces of Mendoza, San Juan and San Luis. Given the geographical concentration of our network in commercially significant and high-income regions in Argentina, we believe we are well positioned to benefit from economies of scale by growing our revenues without significant investments in additional platform expansion.
~~We intend to selectively expand the bank’s network of branches~~~~, emphasizing services for high net worth and upper-middle income individuals, small businesses and SMEs, with a focus~~purpose based on the ~~City~~best practices of ~~Buenos Aires and the Greater Buenos Aires metropolitan area.~~each discipline.
~~We intend to grow the number of hub and spoke sales units specialized in leasing, foreign trade financing and cash management services.~~
~~We intend to build upon our leadership position in retail and corporate banking services in the provinces of Mendoza and San Luis~~. We plan to continue our partnerships with premium retail stores and shopping outlets to obtain differentiated discounts and benefits for our retail customers, relying on our existing network, which is the largest in the region.
~~We aim to increase our access to non-banking customers~~~~, by developing partnerships with key medium-sized retailers across the country to provide banking services along the lines of our existing alliance with Walmart Argentina.~~
~~We plan to continue to expand our dedicated sales force~~ ~~with a focus on new entrepreneurs, small businesses and payroll services, to drive revenues and cross-selling ratios.~~
~~We intend to seek new strategic partnerships in the agribusiness sector~~ to provide financial services to leading national and international players catered to their customer base. We plan to broaden our offering of commodity warrants and livestock leasing, leveraging our strong market leadership in San Luis and Córdoba, in the north of Argentina.
~~Continue capitalizing on synergies by developing new businesses to increase our share of wallet~~
Our two million customers provide a base from which to expand our share of wallet and increase customer loyalty. The Bancassurance business allows us to cross-sell historically profitable and low-claims products to our existing customer base. We have access through our distribution networks and aim to further develop our Bancassurance distribution model by expanding the variety of insurance products offered by Supervielle Seguros. Espacio Cordial allows us to reach our clients with a wide variety of non-financial products and services, including travel and home appliance financing and health services.
~~Grow our balance sheet while maintaining our conservative risk management policies~~

Over the ~~past 15~~next two years, we ~~have differentiated ourselves from our competition by systematically securitizing assets, becoming~~plan to step-up investments to scale innovations and advance on the ~~leader~~progress started in ~~Argentine capital markets in this segment. Since our IPO and after the expansion~~2020. In terms of our ~~capital base, we have reduced securitization~~bank branch infrastructure, our goal is to evolve our network by improving the client experience driven by a mix of higher digital adoption, as well as effectively serving our ~~originated assets relative to our total assets, and~~customers in expanded 24-hour service lobbies. Pilot programs we have been ~~growing systematically above industry growth levels.~~
~~Our conservative financial policies based on a diversified deposit base, low portfolio concentration, short term high liquidity~~implementing are demonstrating significant improvements in the Net Promoter Score and ~~low interest rate, term and currency mismatches have allowed us to build a strong franchise in retail and corporate banking. Since the IPO, we increased our deposits following the pace of loan growth,~~efficiency and we ~~will continue~~plan to cross-sell to retail and consumer customers and attract cash management deposits from corporate clients. We also intend to continue to access long-term funding from the international capital markets as the Bank did in February 2017 through the issuance of a Peso denominated 3.5 years floating rate note for the equivalent amount of U.S.$300 million.
~~Continue to improve~~roll out these enhancements across our ~~efficiency by focusing on innovation and technology~~branch network.

We ~~will seek~~are developing our IT capabilities based on three pillars. The first one is to ~~increase commercial productivity by optimizing sales time using online~~strengthen and ~~mobile~~modernize our Core banking ~~sales and collection centers, streamlining risk assessment and CRM technology. We also plan~~system. Our second pillar is to ~~continue working~~speed up the deployment of our omnichannel strategy, with ~~world-class business intelligence tools~~a modern IT architecture including APIs to ~~increase sales productivity~~accelerate transformation and to ~~improve relationships with clients through better predictive sales actions~~connect to third parties preparing for open banking. Lastly, our third pillar is to be prepared for the future and ~~communications.~~includes leveraging digital marketing and artificial intelligence capabilities, as well as cloud services.

~~Our strong culture of innovation supports our constantly keeping abreast of customer needs and global trends, creating and efficiently implementing solutions focused on local customer preferences.~~
~~We intend to expand our digital banking channel and online banking platform.~~ Our goal is to offer ~~an outstanding~~our banking customers a human banking experience that combines the use of technology with our staff assistance to provide our customers the best of both worlds.
Our consumer finance subsidiary as part of the digital transformation, launched a new digital banking services platform with the goal of becoming the most complete range of digital banking services offering a comprehensive customer experience. This transformation that integrates the physical and digital channels, aims to enhance customer experience, capture deposits, broaden our offering to address additional client needs by plugging into the Supervielle ecosystem, while driving efficiency. In its first iteration, the App allows customers to obtain personal loans, credit cards and car loans. In a second phase, during 2021, our consumer finance business will undergo a fundamental change as IUDÚ will start taking deposits. IUDÚ will also evolve in segment acquisition from its traditional middle to low-income segments to a multi segment approach.

Sustainability
At Grupo Supervielle we are committed to our ~~clients. We intend to continue increasing the number of active online users~~employees, customers and migrating our services to digital channels, which we expect will allow us to increase low-cost distribution and convert service centers into full bank branches. We also intend to continue launching mobile banking applications, which will enable “one click” payment and “one click” loan functionalities, with anytime and everywhere financial services and provide alerts and messages to customers in ordercommunities to achieve ~~cost efficiencies through low-cost~~a sustainable growth while protecting the environment and acting with social ~~network advertising.~~
responsibility. We ~~have significantly improved~~integrate the ~~digital experience~~sustainability strategy to our business model and promote a responsible culture among our employees. We report on our non-financial performance in a clear and transparent way, in connectionwith environmental, social and corporate governance (ESG) factors.
In 2020 Grupo Supervielle defined its 2021-2023 Sustainability Agenda that consolidates a responsible management model oriented towards sustainability and establishes a strategy that puts people, the environment and ethics and transparency (ESG) at the center and integrates its relationships with all stakeholders (customers, employees, suppliers, community and governments). Some of the initiatives developed during 2020 within our priority lines of action: In environmental matters, we continue working to reduce the impact of our ~~factoring product line, cash~~operations on the environment through the implementation of a responsible environmental management ~~and payroll services, and introduced “iFactus,”~~system. We were the first ~~portal providing electronic factoring services and “e-Factoring,” an electronic platform which allows~~Argentine bank to obtain the Sustainable Generator User Certification for ~~check scanning and electronic delivery~~the installation of solar panels in the Caballito branch, whose surpluses are turned over to the ~~bank for immediate deposit, custody or discounting,~~public electricity grid. We supply our corporate headquarters and the building on Reconquista street 100% with ~~deferred physical delivery.~~renewable energy from a wind source and we continue to measure greenhouse gases resulting from activities to calculate the 2020 Carbon Footprint and Energy Intensity. In social matters, we seek to be an agent of change that creates sustainable social value and generates a positive impact on our clients, employees and communities. In 2020, a multidisciplinary team was formed to define the organization’s Diversity and Equity strategy in a participatory manner, with the understanding that a diverse and inclusive environment inspires creativity and innovation and contributes to attracting and retaining human talent.

We ~~expect~~continue to promote social investment with an impact on innovative projects related to education, childhood, the ~~future~~elderly and institutional strengthening, and in actions that promote culture and the arts. In terms of ~~financial services~~corporate governance, we continue to operate in accordance with the highest standards of corporate governance, promoting transparency, ethical behavior, respect for the principle of legality and the sustainability of our activities and those of our value chain. In 2020, the Institutional Investor publication recognized Grupo Supervielle as the second Best ESG in Latin America in the Financial / Banks category. For its part, ByMA (Argentine Stock Exchanges and Markets) together with the IDB (Inter-American Development Bank) and with the academic endorsement of the Earth Institute of Columbia University, presented in February 2021 the rebalancing of the Sustainability Index. After this rebalancing, Grupo Supervielle continues to be ~~marked by a transformation towards a digital business model.~~part of the ByMA Sustainability Index for the third consecutive year since its launch in December 2018. The ~~challenge~~index allows us to identify and highlight the leading companies in Environmental, Social, Sustainable Development and Corporate Governance matters (ESG-D, for organizations is to optimize the technological innovation of traditional banking to attract new consumers of financial services, with the aim of creating the bank of tomorrow, today. During 2017, Banco Supervielle’s Digital Innovation Team worked on the following services and disruptive technologies: Digital On Boarding; Mobile Corporate Banking; Face Biometrics and the new Cordial Compañia Financiera Application (Digital Acquisition Process)its initials in English).

~~Business Segments~~Likewise, knowing that we had to be more united than ever in this health emergency to accompany and be at the side of those who need us most, during 2020 we aligned with different initiatives in the fight against COVID-19, supporting projects of organizations to respond to the needs arising from the pandemic in the communities where we operate with donations of food, artificial respirators and other medical supplies, the delivery of tablets so that low-income students could continue their virtual classes and contributions together with other companies for the construction of modules extra-hospital primary care to care for patients affected by COVID-19.
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The following are additional commitments of the Group in terms of sustainability:

• Customers
We extended the use of financial products and services (financial inclusion) to those who already have an account with Grupo Supervielle, facilitating the adoption of new digital tools and promoting financial education.
• Employees
We create opportunities to promote employees’ growth and potential, and foster a diverse and inclusive work culture that values individuals for who they are and what they contribute.
• Community
We promote social investment with impact on projects related to education, minors, the elderly and institutional strengthening, and actions that promote culture and the arts.
• Corporate Governance
We do business pursuant to the highest corporate governance standards, promoting transparence, ethical behavior, respect of the principle of legality and sustainability of our activities and those of our value chain.
• Respect of the Principle of Legality
We regularly review the degree of compliance with applicable laws and regulations and we take the actions required to correct deviations.
Business Segments
We conduct our operations through the following business segments:
•               Personal & Business Banking;
•               Corporate Banking;
•               Bank Treasury;
•               Consumer Finance;
•               Insurance; and
•               Asset Management and Other Services.
52
The following table sets forth the breakdown of our net revenue and net income by segment for the periods indicated.

For the year ended December 31, 2017

As of December 31, 2020
Segment

Net Revenue

Percentage

Net Income

Percentage

Net Revenue Percentage Net (Loss) / Income

(in thousands of Pesos)

Retail Banking

7,200,565

56.8
%
681,019

36.3
%
(in thousands of Pesos)
Personal & Business Banking 20,347,486 42.5 % (6,356,053 )
Corporate Banking

1,660,577

13.1
%
538,216

28.7
%
6,313,237 13.2 % (179,912 )
Treasury

426,137

3.4
%
47,746

2.5
%
Consumer Financing

2,320,345

18.3
%
179,440

9.6
%
Bank Treasury 13,119,934 27.4 % 9,125,276
Consumer Finance 4,379,944 9.1 % (577,540 )
Insurance

469,671

3.7
%
205,614

11.0
%
1,816,291 3.8 % 538,047
Asset Management & Other Services

601,584

4.7
%
223,554

11.9
%
Asset Management and Other Services 1,915,081 4.0 % 401,036
Total Allocated to Segments

12,678,879

100.0
%
1,875,590

100.0
%
47,891,973 100.0 % 2,950,854
Adjustments(1)

577,989

561,470

Adjustments⁽¹⁾ 88,347 549,028
Total Consolidated

13,256,868

2,437,059

47,980,320 100.0 % 3,499,882

~~(1)~~         Includes financial expenses incurred by Grupo Supervielle at the holding level in connection with its funding arrangements the net interest income received from the investment of liquity at the holding company, as well as transactions between segments.
(1) Includes financial expenses incurred by Grupo Supervielle at the holding level in connection with its funding arrangements, the net interest income received from the investment of liquidity at the holding company, as well as transactions between segments.

~~The following graphs set forth the breakdown of our net revenue and net income by segment before adjustments as of December 31, 2017~~.
The following table sets forth the breakdown of our assets by segment as of December 31, ~~201~~7.2020.

As of December 31, 2020

As of December 31, 2017

Personal and Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services
Adjustments⁽¹⁾
Consolidated Total

Retail
Banking

Corporate
Banking

Bank
Treasury

Consumer
Finance

Insurance

Asset
Mgmt &
Other
Services

Adjustments(1)

Consolidated
Total

(in thousands of Pesos)

(in thousands of Pesos)
Assets

Cash and due from banks

2,799,066

260,107

8,000,292

74,143

3,012

340

(7,485
)
11,129,475

12,345,695 533,466 23,288,859 238,350 2,176 399,895 (133,572 ) 36,674,869
Government and corporate securities

—

—

15,255,201

—

87,832

3,003

—

15,346,036

Loans

20,868,845

27,605,696

2,302,233

6,093,736

—

—

(1,916,137
)
54,954,373

Other receivables from financial transactions

(4,251
)
506,331

4,570,399

794,727

330,864

315,115

48,211

6,561,396

Receivables from financial leasing

439,189

2,080,012

—

—

—

—

—

2,519,201

Debt Securities at fair value through profit or loss - - 8,827,214 1,034,836 - 9,853 - 9,871,903
Loans and other financings 52,474,545 42,240,034 5,823,189 6,808,494 592,067 49,403 (2,592,547 ) 105,395,185
Other assets

379,155

10,893

244,148

522,328

111,323

285,235

1,907,715

3,460,797

8,569,274 8,324,469 58,840,094 3,063,890 1,254,830 1,080,197 16,156,233 97,288,987
Total Assets

24,482,004

30,463,039

30,372,273

7,484,934

533,031

603,693

32,304

93,971,278

73,389,514 51,097,969 96,779,356 11,145,570 1,849,073 1,539,348 13,430,114 249,230,944

~~(1)~~         Includes elimination of inter-segment loans and assets not directly allocated to a single segment, such as unlisted equity investments, miscellaneous receivables, premises and equipment, miscellaneous assets and intangible assets.

As of December 31, 2017

Retail
Banking

Corporate
Banking

Bank
Treasury

Consumer
Finance

Insurance

Asset Mgmt
& Other
Services

Adjustments(1)

Consolidated
Total

(in thousands of Pesos)

Securitized Portfolio

549,743

—

—

745,579

—

—

—

1,295,322

Loan portfolio on Balance

21,308,034

29,685,708

2,302,233

6,093,736

—

—

(1,916,137
)
57,473,574

Total Assets

21,857,777

29,685,708

2,302,233

6,839,315

—

—

(1,916,137
)
58,768,896

(1) Includes elimination of inter-segment loans and assets not directly allocated to a single segment, such as unlisted equity investments, miscellaneous receivables, premises and equipment, miscellaneous assets and intangible assets.

The following table sets forth the breakdown of our ~~customers and~~ active customers ~~from~~as of December 31, ~~2016 to December 31, 2017.~~2020 and 2019.

As of December 31, 2017

As of September 30, 2017

As of June 30, 2017

As of March 31, 2017

As of December 31, 2016

Active Customers
As of December 31,

Total
Customers

Active
Customers

Total
Customers

Active
Customers

Total
Customers

Active
Customers

Total
Customers

Active
Customers

Total
Customers

Active
Customers

2020 2019
Retail Banking

1,930,750

1,433,187

1,876,093

1,386,025

1,850,582

1,375,338

1,833,793

1,385,745

1,810,281

1,391,199

Personal & Business Banking 1,393,971 1,402,562
Individuals 1,371,106 1,380,550
Entrepreneurs 20,854 22,012
SMEs 2,011 N/A
Corporate Banking

4,873

4,873

4,662

4,662

4,569

4,569

4,647

4,647

4,587

4,587

2,304 4,981
Consumer Finance

463,416

463,416

460,231

460,231

450,157

450,157

441,789

441,789

434,495

434,495

Consumer Finance (IUDÚ+ MILA) 410,580 372,168
InvertirOnline 80,024 51,829
Total

2,399,039

1,901,476

2,340,986

1,850,918

2,305,308

1,830,064

2,280,229

1,832,181

2,249,363

1,830,281

1,886,879 1,831,540

~~Retail~~Personal & Business Banking segment

The ~~Bank~~Bank’s Personal and Business Banking segment offers ~~its retail customers~~ a wide ~~range~~array of ~~banking~~financial products ~~including~~and services designed to meet the needs of individuals and entrepreneurs and small businesses: personal loans, ~~short term~~mortgage loans, unsecured loans, loans with special facilities for project and work capital financing, leasing, bank guarantee for tenants, salary advances, ~~secured~~car loans, domestic and international factoring, international guarantees and letters of credit, payroll ~~services through Plan Sueldo,~~payment plan (planes sueldo), credit cards, debit cards, savings accounts, time deposits, ~~and~~ checking accounts, ~~as well as financing~~and financial services and investments such as mutual funds, insurance ~~coverage,~~and guarantees, and ~~benefits payments to~~ senior citizens benefit payments. In 2020 the offer of a wide array of financial products and ~~pensioners, among others.~~services continued, in line with the needs of our customers. On January 1, 2020 our SMEs portfolio was effectively transferred from our Corporate Banking segment to the Personal and Business Banking segment, previously named Retail segment.
~~The Bank has~~
53
To promote digital transformation, we focused on ~~automatic channels that provide~~development and strengthening of autonomous management channels. Precipitated by the COVID-19 context, the digital customers segment grew by 60%, due to the need of a greater ~~functionality~~agility, which improved the perception of their relationship with the Bank. The evolution of the service model continues to evolve and we are aiming to achieve maximum efficiency and the best service in ~~face-to-face and digital automatic platforms, with a view to expediting transactions and generating new sales channels~~each contact.

~~Products~~In 2020 the self-management model continued to improve with the deployment and ~~services are tailored to the needs~~improvement of the ~~different segments~~Caja Rápida machines, which are cash dispenser with ~~which the bank works,~~ biometric identification that requires no card or password.~~focused on continuous improvement of customers’ experience. Two of our more strategic segments are the small companies, grouped in~~ ~~Emprendedores & Pymes~~ ~~(Entrepreneurs & Small Businesses), and high net worth customers, which we refer to as our Identité segment. Additionally, products and services are offered to meet the needs of senior citizens.~~

~~In 2017,~~Accompanying the ~~size of the mortgage market in Argentina increased by 113%. We believe mortgages represent a greenfield opportunity. We are among the top 5 private banks in Argentina,~~growth in terms of ~~market size,~~digital transformation, the development of the Agile methodology continued as a way of working in the ~~mortgage market,~~organization. Interaction and communication gave members a comprehensive view of the needs and restrictions so as to establish clear targets, design the best actions and favor the speed of implementation of required changes.
The service model continued changing, striking a balance between maximum contact efficiency (through autonomous management channels and personalized services) and service levels required by each customer profile and each strategic segment of Banco Supervielle. The pandemic challenged the implementation of a new service model. Looking after our employees and customers’ health, operative and sanitary protocols were defined and implemented in Service Centers, which changed according to ~~private estimates, with about 10% of new mortgages lent~~the different regulations issued by ~~private banks after just one year. Through~~ the ~~offer of mortgages, we expect to gain new customers~~Government and ~~to cross sell existing customers by building long-term~~the local and ~~loyal relationships.~~national regulatory bodies.

~~The~~ ~~service model is customized~~Based on the assessment of their distinctive features, their needs and specific requirements, the Bank’s customers are grouped in four strategic groups which are further described below: (i) SMEs customers, composed of natural persons engaged in commercial activities, small one-person ventures and small and medium sized companies with a billing lower than Ps.700 million per year, (ii) Identité customers, which gathers natural personas belonging to ~~strategic~~serial ACB1 segments, ~~while~~(iii) mass affluent, which includes individual customers with no commercial activities (not included in the operations model fosters a commercial and personal approach to customers, an enhanced approach. The bank has also developed a service model integrating new technologies and digital platforms to accelerate processes and improve customers’ experience, tailored to each profile.
~~As of December 31, 2017, the Retail Banking segment had Ps.21.9 billion of outstanding loans and financial leases (including securitized loan portfolio)~~Identité segment), and contributed with Ps.7.2 billion to our consolidated net revenues (56.8% of our net revenues before adjustments) and with Ps.681.0 million to our consolidated net income (36.3% of total segments’ net income before adjustments).We conduct our Retail Banking operations(iv) senior citizens customers, which includes senior citizens who are paid their pension benefits through the Bank.

~~Our Retail~~Personal & Business Banking ~~services are~~segment – retail customers:
• Mass Affluent customers. To accelerate the growth of the customer portfolio, the customer acquisition strategy added a new digital onboarding platform, becoming the second most important channel following Plan Sueldo. In that sense a new set of digital communications was designed as part of the customer first 90-day journey, with digital setting and early activation through an aligned value proposition. Besides, the benefits proposition was strengthened through debit cards and digital platforms. As a result of the lockdown that began in March, the implementation precipitated of digitalization actions that were already part of our strategy to provide our customers a prompt response to their needs while they were not allowed to go to the bank. We rapidly adapted to solve efficiently the payment of Emergency Family Income (IFE) to 350,000 customers. We carried out commercials to promote the use of debit cards in place of cash. The Contact Center Interactive Voice Response (the “IVR”) tree was redesigned to meet the needs of new customers and to set priorities taking into account all segments.

• Identité customers (High Net Worth Customers). We offer our high net worth customers exclusive services. In 2020 lead generation in this segment continued in new niches: alliances with ABC1 schools, synergy with SMEs and a referral program focused on digital self-management.
The value proposition was reinforced and adapted to the new context, with incremental benefit for Plan Sueldo customers in order to improve the positioning of that subsegment, such as alliances with Rappi and Pedidos Ya, online theater with Teatrix and additional 5% discounts for Plan Sueldo customers on special dates (Mother’s Day and Christmas).
• Senior Citizens. Since 1996, the Bank has acted as one of the paying agents of social security payments to senior citizens on behalf of the government pursuant to an agreement with ANSES. We believe the bank remains the private bank with the largest presence in this segment, with 980,000 ANSES beneficiaries including pensions and social assistance plans.
In 2020, due to the ~~customer segments discussed below.~~pandemic, actions were taken in furtherance of the customers’ health and their transactional needs. More than 300,000 debit cards were delivered by courier to those customers who did not have an active debit card. We adapted our service model, with 100 Cajas Rápidas (cash dispensers with biometrical identification) placed at the lobby of our branches that operate during extended hours from 5 a.m. to 9 p.m. seven days a week and a withdrawal limit of Ps.80,000 (until March 2020 only 4 of these cash dispensers were placed in lobbies). Thus, our senior citizen customers or their designees could make cash withdrawals during non-bank hours. In order to get our senior citizen customers acquainted with digital tools and reduce their attendance to the bank, we communicated through mass media the implementation of the “Supervielle Jubilados” app, through which customers may provide proof of life by means of face recognition remotely, check payment dates and download the payment slip. Thus, over 130,000 customers downloaded the app. As a result of these actions in 2020, the NPS of the senior citizens segment increased 8 points against the previous year.

·Products offered to Individuals:~~Entrepreneurs~~
• Loans.
55
The bank offers offers personal, car loans, mortgage loans, overdrafts, salary advances and ~~Small Businesses.~~ guarantees for tenants.
Credit rating processes were improved, and alternative sales channels were developed in line with the context imposed by the pandemic, mobility restrictions and social distancing. The ~~Bank considers small businesses to be fundamental drivers for strengthening~~offer of ~~productivity in the Argentine economy. For this reason, the Bank redefined its approach~~self-managed personal loans through ATMs and Cajas Rápidas (cash dispensers with biometrical identification) increased, and a loan functionality was added to the ~~small business segment in~~IVR due to the increased number of incoming calls to the call center. In order to ~~develop~~improve customer experience, the ~~necessary tools~~loan origination process was redesigned both for the Supervielle Móvil app and ~~services~~for online banking. These developments resulted in an annual 661% increase of personal loans originated through alternative channels as compared to help small businesses grow and to respond to their needs with convenient and simple solutions. We service small businesses through our Retail Banking segment and SMEs and Middle-Market Companies through our corporate banking segment.the previous year.
• Deposits.

In ~~order to enhance strategic sub-segments,~~line with the ~~Bank worked on lead generation~~lockdown imposed by the government and with our customer centric culture, operations through digital channels were improved, with 70.3% of operations made through those channels, and with a 53% increase in time deposits in the different ~~sources, including agreements with small business associations and a presence at specific franchises and transportation events. Together~~segments.
• Means of Payments. In 2020 the Means of Payment Experience established the strategic pillars for the development of the business: i) enhance the bank’s positioning in the industry, ii) acquire new debit and credit card customers, iii) participate in the system’s integration as shareholders of MODO, iv) act as an acquirer and enhance the business aggregator (Bolsillo Digital), and v) create a vision for the B2B Payments and Collections ecosystem.
In line with these ~~actions,~~definitions, focus was made on the ecosystem’s products, with the following milestones:
1.  Main Visa license, that enables a business transformation with new ~~tools~~economic opportunities, thus generating efficiency.
2.  Integration of Grupo Supervielle to MODO, through Banco Supervielle and IUDÚ, as a response of the financial system to the payments business. MODO will be a central pillar of our strategy of adoption of digital channels by individual customers.
3. Launching of Bolsillo Digital, as a first step towards the role of acquirer with focus on the Cuyo region. Agreements were ~~implemented to improve response speed to customers. Protocols for referral towards different channels were also implemented to improve efficiency.~~entered into with the Municipalities of Mendoza and Las Heras, with companies owned by the government of San Luis (Sol Puntano and Mercado Municipal) and with Círculo Odontológico de Mendoza.
• Plan Sueldo. During 2020 the Bank continued with the restructuring of product operation, aimed at attaining high efficiency standards both in onboarding and in cross sell and in customer profitability. New agile methodology services were implemented to support the registration of the process of new agreements.
56
Personal & Business Banking segment – Businesses
• SMEs customers. We continued working on the generation of target leads through the digital channels, offering a value proposition to strategic subsegments, developing networks for customer contact and generation with SMEs and participating in specific events related to economy, finance and investment. We also worked on the installation of support lines for SMEs.

Development of the differentiated service model continued ~~to include over 79% of the branches and over 91% of the Retail Banking segment’s customers.~~at service centers. The Bank ~~focused~~relied on ~~two~~ specific executive profiles for assistance of its customers, offering specialized services to larger SMEs and streamlined services to smaller ~~SMEs.~~
Focus was also placed on obtaining a deeper knowledge of a company’s lifecycle and its needs at different stages. To that end, two value propositions were developed, addressed at franchises and transportation market niches, and offering companies an adequate proposal for their needs inSMEs, which promotes the ~~different stages of their development. In addition, we continue to develop new value propositions for other new sub-segments.~~
·~~High Net Worth Customers.~~ We offer our high net worth customers exclusive services such as priority access to our branches with minimal waiting time, concierge services, exclusive back offices for conducting banking activities, dedicated customer service representatives at the call center, a remote investment center and dedicated locations at our branches.
A new lead generation scheme was developed that adds attractive benefits for prospective customers and combines welcome credit card benefits, such as promoting early activation and exclusive benefits in
~~supermarkets, gas stations, and restaurants, in addition to interest-free financing for the purchase of airline tickets.~~
The Bank continued to focus on our relationship with customers through promotions that encourage product placement. The development of credit approval platforms for credit cards and personal loans through digital channels continued throughout the year.
~~Taking into account the needs and requirements of customers, the face-to-face service model expanded to 60% of the branches, reaching 82% of the Retail Banking segment’s customers.~~
·~~Senior Citizens.~~ The Bank facilitates ANSES payments to more than 1 million beneficiaries per month, including retirees, pensioners and social plans, and it believes it is the private bank with the largest presence in this segment.
In 2017, the Bank continued offering products and services addressing the needs of senior citizens, while further improving its value proposition and service model, particularly through Caja Rápida (cash dispenser with biometric identification) in its service centers.
With these new dispensers, the Bank aims at providing a streamlined and innovative service, reducing waiting times significantly and introducing to its senior citizen customers new forms of interacting with the Bank. At December 31, 2017, there were 124 Cajas Rápidas, covering 79% of the network.
·~~Middle-Income~~ ~~Persons~~. ~~In 2017, digital and alternative channels were developed to ease migration for the customers of this segment. To that end, new functionalities were added to Home Banking, Mobile and Contact Centers.~~
~~The Bank focuses on providing a streamlined service in line with the customer needs as well as on enhancing the service model as regards product acquisition and placement.~~
~~The comprehensive proposal for the Retail Banking segment is aimed at optimizing service channels, satisfying customers’ expectations and becoming our customers’ first choice bank.~~
~~The Bank’s focus on payroll customers has yielded a significant increase~~growth of the customer base ~~in this category~~while maintaining at the same time a differentiated service level.

~~Through our Retail Banking segment, we offer retail customers~~Specific Subsegments. Customized Value Proposition. In the second quarter of 2020, a ~~wide range of products~~ ~~and services as described below.~~
~~Packages of banking services.~~ ~~As of December 31, 2017,~~value proposition was introduced for the Bank maintained more than 2.5 million savings accounts and more than 88,000 checking accounts. In 2017, the Bank serviced more than 791,000 product bundles for senior citizens, more than 173,000 Plan Sueldo (“Payroll”) accounts and more than 49,000 product bundles for high net worth customers. During 2017, the Bank encouraged bancarization at all levels, promoting streamlined transactions and enhancing the use of automatic channels. Campaigns were carried out to open savings accounts with debit cards for youth scholarships and social inclusion programs, which reached over 80,000 people. Likewise, the Bank offers bank accounts for minors to encourage the early development of savings habits and allowing for early contact with future generations of economically active individuals.
~~In line with the development of strategic segments, the Bank assessed the specific needs of customers~~Education subsegment, focused on private schools (all levels), with a ~~view to designing products and services packages that meet the requirements of each sub-segment in order to actively support the development of customers and their community.~~
~~Investments~~. In line with the tax amnesty law implemented in 2017, the Bank developed special services addressed to financial customers, which resulted in deposits of U.S.$127.0 million. With a focus on the efficiency of operations, the Bank continued strengthening and developing autonomous channels for comprehensive management of investment operations. Time deposits through digital channels exceeded Ps.4.3 billion. A specific ~~function was~~
implemented in Homebanking for the management of bonds and stock holdings. A high percentage of time deposits, mutual fund transactions and share purchases and sales were made through automatic channels. Exchange transactions were consolidated during 2017 due to the extension of transaction hours, with an increase of 40% in the use of digital channels for exchange transactions. However, based on the principle of maintaining direct contact with strategic segment customers, the Bank created the Comprehensive Investment Center, and trained staff to provide personal advice to customers and instill in them the confidence necessary to attract their whole investment portfolio. During 2017, share and mutual fund portfolios managed by the Bank recorded an 86% and 167% increase, respectively.
~~Insurance.~~ The Bank has continued to grow in the insurance business. During 2017, the Bank launched products such as insurance on mortgages and other secured loans. Developments were made in sales through digital channels, including simulators that allow customers to assess which service is in line with their profile, to customize our product.
~~Loans~~~~. The Bank offers personal loans, short-term advances and salary advances to payroll customers. The placement of personal loans was boosted by a renewed~~ offer ~~and special facilities in line with the needs of each segment,~~ together with the ~~sales through~~partners of the digital ~~channels implemented during the year. Accordingly,~~ecosystem. The propositions introduced in 2017 (Franchise and ~~with a view to further enhancing the placement of personal loans, the~~ ~~Código de descuento~~ ~~product was relaunched in the province of Mendoza, with a renewed commercial proposal.~~
~~Our mortgages strategy focuses on inflation adjusted credit lines. These are denominated in~~ ~~unidades de valor adquisitivo~~ ~~(“UVA”), an inflation adjusted unit that allows capital loans to be adjusted daily. As a result, interest rates are set in real terms~~Transportation) and ~~currently range between 5.9% and 8.4%, depending on the type of mortgage and the customer segment.~~2018 (Health) continued consolidating.

The UVA was introduced by the Central Bank in September 2016. Since then, mortgages with low monthly installments are more accessible to clients, and a higher number of clients at lower income levels can access larger loans. According to the respective regulations, monthly credit payments cannot exceed 30% of the individual’s monthly salary.
During 2017, in view of the widening of the market following the implementation of the UVA Mortgage Loans, commercial management focused on the development of a new, highly competitive product, with no cap restrictions and a maximum term of 30 years, managed by an outsourced center, which accounted for placements amounting to Ps.1.5 billion.
~~Credit Cards~~. As of December 31, 2017, the Bank maintained approximately 717,130 Visa and MasterCard accounts. Over the course of 2017, the Bank added nearly 60,000 new credit card customers. During 2017, the Bank moved forward in the process of card renewal by the implementation of the CHIP technology, which will reduce skimming.
The Bank also worked in the implementation of the new OnBoarding digital platform, which will act as a contact point for non-customers and will enhance and streamline sales processes through merchants and sales points and web channels where customers may apply for credit cards using self-service solutions. The Bank maintained a strong focus on store adherence. With focus on efficiency, the processes and documents required for store admission were unified and updated. In a second stage, and with focus on experience, manual processes were replaced by digital templates.
Total deposits from the ~~Retail~~Personal and Banking segment as of December 31, ~~2017~~2020 amounted to ~~Ps.37.9 billion (U.S.$2.0 billion), a 45.4% increase from the Ps.26.0 billion recorded as of December 31, 2016.~~Ps.93.8 billion. Retail ~~branch deposits and Senior Citizens~~customers deposits continued to represent a high portion of total peso deposits. In ~~2017,~~2020, retail ~~branch~~customer deposits ~~plus Senior Citizen deposits~~in Pesos represented ~~53.8%~~37% of total ~~deposits compared to 60% in 2016.~~pesodeposits.
Corporate Banking

In ~~2017~~2020, the network’s area of influence was expanded with the opening of three new branches. These openings were intended to consolidate the Bank’s presence in areas with a high density of stores and to achieve full coverage in commercial corridors where SMEs are established.
Additionally, 2017 featured substantial changes in Service Centers, modernizing daily operations and meeting the needs of the elderly. With the development of automatic solutions for queries and cash withdrawals that include biometric identification, the Bank has paved the way for future generations of retired customers.
~~Corporate Banking~~
~~The~~ Bank, through its corporate banking segment, ~~generally works~~worked with ~~SMEs,~~ middle-market companies and large ~~corporates.~~corporates with annual billing exceeding Ps.700 million in 2020. On January 1, 2020 our SMEs portfolio was effectively transferred from our Corporate Banking segment to the Retail Banking segment. The customer service model is ~~based on regionalization. Services~~formed in turn by three commercial managements:
(1) AMBA Corporate Banking which deals with companies operating in the city of Buenos Aires, Greater Buenos Aires.
(2) Provinces Corporate Banking which deals with the commercial relations in the Provinces of Mendoza, Córdoba, Tucumán, San Juan, Neuquén and Santa Fé.
(3) Mutual Guarantee Companies “MGC” Division which operates at the headquarters in the City of Buenos Aires.
As of December 31, 2020, the Corporate Banking segment had Ps.42.2 billion of outstanding loans and other financings, and contributed almost 13% of our net operating revenues before adjustments.
57
The objective is to ~~SMEs~~become the first choice transactional bank for our customers and ~~medium-large companies~~increase profitability.
We strongly believe that providing high quality customer services is one of the main drivers for generation of new businesses and support of our business relations. Our business and support officers are highly skilled and play a critical role in the ~~City of Buenos Aires and its vicinities are provided through~~relationship with companies. Therefore, we have various service points in regional branches ~~located~~ in the most densely populated ~~areas,~~ industrial ~~areas~~ and ~~areas with~~ commercial ~~activity. The Bank believes that its proximity to its corporate banking customers gives it a competitive advantage.~~areas. Communication, assistance, negotiation and operational teams are centralized in Corporate Banking nodes.

Focus was also placed on risk management, using RAROC tools in order to strike a balance between profitability and portfolio quality ratios.
Wine Division: the Bank’s Wine Division continues consolidating its position as a benchmark in the wine industry, remaining the only Argentine bank among the top 20 to have an expert team to deal with the sector.
The wine division provides services to grape producers, vineyards and suppliers of raw materials and related capital assets, taking part in the different parts of the Value Chain.
Mutual Guarantee Societies (MGS): As of December ~~31, 2017,~~2020, the ~~corporate banking segment had Ps.29.7 billion~~Mutual Guarantee Societies system was made up of ~~outstanding loans~~51 entities (45 Mutual Guarantee Societies and ~~financial leases,~~6 Official Guarantee Funds). Banco Supervielle operates with 27 of these entities (22 MGS and ~~contributed with Ps.1.7 billion to our consolidated net revenues (13.1%~~5 Guarantee Funds) which represent 53% of ~~our net revenues before adjustments) and with Ps.538.2 million to our~~the total ~~net income (28.7% of total segments’ net income before adjustments).~~
The main financial and transactional products and services that the Bank’s corporate banking segment offers are factoring, leasing, employee payroll services (through which it offers solutions to meet its customers’ working capital needs), foreign trade and cash management and transaction services. In addition, the Bank’s corporate banking segment also offers checking account short-term advances, factoring, secured and unsecured loans, ~~Sociedad de~~~~Garantía Recíproca~~ (SGR)-guaranteed loans, pledge loans, supplier payment services, check custody services, armored transportation services, collections services, corporate credit cards, pension services, deposit accounts (including time deposits and short-term deposits).
~~The following sets forth additional information on the main products and services offered by our corporate banking segment:~~
~~Leasing.~~ Banco Supervielle’s leasing product maintained a high level of market acceptance, with over 1,100 contracts for a volume exceeding Ps.2.1 billion in 2017. As of December 31, 2017, we had a 15.2% market share in leasing in terms of private banks in Argentina.
~~During 2017, with a view to maintaining leadership and~~companies in the ~~search for excellence in customer service, the leasing back office was established focusing on optimizing the response to, customers. For this purpose, the commercial team was restructured~~sector. The bank also remained its leading position in the ~~Branch Channel (dedicated to Large Companies, SMEs~~sector, and ~~Retail Banking) and the Vendor Channel (intended to increase penetration in the Vendor channel).~~
~~Factoring (check discounting, invoices and work certificates)~~. The Bank participates in the check discounting market by offering three categories of products: (i) with recourse, where the customer who discounts the check with the Bank assumes the insolvency risk, (ii) first loss, where the customer assumes part of the insolvency risk, and (iii) non-recourse, where the Bank assumes all insolvency risk. Corporate banking factoring transactions represented 17.1% of the Bank’s loan portfolio as of December 31, 2017, and the Bank estimated that its share of the factoring market of Argentine financial system as of December 31, 2017 was ~~approximately 7.5%, according to the most recent publicly available information published by the Central Bank.~~
In 2017, the Bank continued promoting E-Factoring, which allows, by means of installed readers, images of the checks to be received and cashed or deposited, streamlining their processing and reducing time and cost.
~~Foreign Trade~~. The Bank is an active participant in foreign trade financing and offer personalized advice regarding technical, commercial and regulatory matters related to foreign trade. The Bank draws on a trained staff to advise customers on foreign trade, foreign exchange transactions, international transfers, credit assistance in connection with products offered, and operating issues.
During 2017, exchange regulations affecting foreign trade continued to be eased, which led to a more agile settlement process. In addition, the year was characterized by a significant growth of financing related to foreign trade, especially in the second half of the year, reaching a historic record of financing transactions in U.S. dollars.
The E-Comex channel, which allows importer and/or exporter customers to make inquiries regarding on-going transactions and manage their payments and/or collections through the Home Banking of Corporate Banking, continued to be consolidated. 59% of the Bank’s total foreign trade related transactions were settled through this channel.
The Bank remains the only bank in the Argentine financial system to operate in the International Factoring market, through FCI (formerly called Factor Chain International), the largest and most prestigious chain of factoring companies.
~~By mid-December 2017, the Bank established a customer service center called “Contacto Comex”, staffed by a team of experts fully dedicated to responding to E-Comex inquiries from customers.~~
~~Cash Management and Transaction Services~~. The Banks offers a range of products and services designed to assist in the corporate administration process, including payments to suppliers, electronic banking, payments and collections, cash management and armored transportation. Supplier payment services ensure timely payment, optimize the use of customers’ funds and simplify our customers’ administrative tasks. The various payment options are designed to meet each company’s needs and include short-term advances based on deferred payment checks, with their respective statements and tax payment receipts, as well as transfers and payments against revolving credit facilities. Additionally, the Bank offers a convenient integrated check issuance, delivery and discounting service. Under various collection agreements entered into with service providers and public sector agencies, the Bank offers a comprehensive invoice and tax collection service using tellers, as well as a range of electronic payment options. Moreover, in the event that a company is paid for its products or services by credit card or voucher, the Bank serves as a payor bank for the major brands in the market, which enables credit card or voucher payments to be credited to the company’s account with us.
As members of the Red Interbanking (a network comprised of Argentina’s major financial institutions), the Bank offers an electronic communications system which enables our customers to optimize their banking transactions. The Bank’s corporate customers can connect to the service from their personal computers at any time and review their accounts at any member bank, send us messages, transfer funds, make electronic wage payments, supplier payments and tax payments, and display market data. The Bank offers different electronic products for each segment of its corporate clientele, for example, Datanet Plus, Datanet Manager and InterPYME. Datanet Plus and Manager target SMEs, middle-market companies and large corporates and InterPYME is a product designed for small businesses. The Bank processes online transfers, allowing debit and credit transactions to be settled automatically and to be reflected in the relevant accounts in real time.
The Bank offers corporate electronic home banking services, which allows customers to access their bank accounts and information regarding our primary products and services online without having to leave their offices. People and businesses can access their account balance information and monitor account activity, factoring transactions, payments, deferred checks in custody and the status of checks written through the supplier payments service. Customers can also check the status of payments to leasing and foreign trade transactions, request checkbooks, carry out account transfers, pay paychecks, suppliers and corporate credit card bills, access electronic payment services for foreign trade services and discount checks remotely through the e-Factoring service with the electronic platform.
~~Sociedad de Garantía Recíproca (Mutual Guarantee Agents~~ ~~- “SGRs”). In 2017, the Bank remained the market leader, operating with 82% of the MGSs authorized in the country (28 out of 34 authorized SGRs and Guarantee Funds). The Bank is~~ recognized as the ~~bank of the SGRs~~“MGS’s Bank” by the Argentine Chamber of Guarantee Societies and Funds (Cámara Argentina de Sociedades y Fondos de Garantíasor Casfog), by other banks and by the ~~Ministry~~Supervisory Authority (Ministry of Production/~~Sepyme, the authority that supervises SGRs~~Sepyme).

Value Chains: In ~~addition, during 2017,~~2020 we worked in the ~~Bank launched certain~~development of value chain financing, ~~facilities secured by an SGR and addressed to SMEs that are~~as part of our objective to achieve comprehensive relations with each of our customers, developing value ~~chains of~~propositions for large companies ~~(e.g., wineries), in~~that generate new businesses with their suppliers and customers. To that end, a general business model was developed which design contemplates a procedure for the ~~City~~bank’s commercial operations, also applicable to other subsidiaries of ~~Buenos Aires as well as in certain provinces.~~Grupo Supervielle.
~~Wines Division~~~~. During 2017, the Wines Division of Banco Supervielle continued implementing its strategy~~Products offered to ~~become a specialized financial advisor to the wine industry.~~Corporate Customers:
• Loans: a renewed offer of special facilities was developed to suit the needs of the different corporate segments together with sales in digital and in-person channels, enhancing services such as invoice discounting, ECHEQs, overdrafts and financial loans.
• Leasing: With the focus on financing capital goods for SMEs, the financial leasing, operational leasing and sale & lease back products continue being offered through the bank’s branches and business centers under a specialized service model that provides advice and enhances the use of this financing tool that has tax benefits. During the first half of 2020 placement of this product was slowed by the economic context and the pandemic that affected the investment in capital goods. During the second half, due to subsidized production and investment loans, the placement rate of this product recovered and maintained its market leadership, with almost 200 agreements allocated mainly to the oil and mining industry, the sector of medical supplies and equipment and technology, among other.
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• Foreign Trade:The Bank is an active participant in foreign trade financing and offers personalized advice regarding technical, commercial and regulatory matters related to foreign trade. The Bank has a trained staff that allows it to advise customers on foreign trade, foreign exchange transactions, international transfers, credit assistance in connection with products offered, and operating issues.
• Cash Management:The Bank’s Cash Management area provides end-to-end services, with technical and commercial advice throughout the process, ensuring a prompt and agile implementation and that the products are available for use from the start. Remote check readers and ECHEQs are aimed at digitalizing treasury operations of companies, thus eliminating the need to go to the bank and generating positive value experiences. Electronic checks or ECHEQs were implemented following a regulation of the Central Bank and are in use since July 2019. As a result of the exponential growth in the use of electronic checks, other functionalities were developed to cover businesses’ needs, such as the possibility to issue up to 1,500 ECHEQS at the same time.
Omnichannel Service Model
• Digital Banking – Personal: In 2020, the Digital Banking area adopted a mixed building strategy with new products, digital processes and specific experiences tailored to the needs of the different segments and changing functionalities to a new UX to generate new resources for customers. Technological improvements were developed that increased stability and scalability of the digital ecosystem, with new business variables monitoring, control and measurement tools. As a result, and boosted by the COVID-19 context, the number of active customers increased by 60%.
• Customers’ Digital Onboarding: In 2020, the Onboarding platform consolidated as a tool for lead generation. In order to promote financial inclusion and attraction of sight deposits, free-of-charge savings accounts were offered to meet the need of an increasing number of people for bank products through a digital process and to pay IFE benefits. A functionality was implemented for online customer activation through biometrics validation, strengthening the platform’s security and reducing the risk of phishing.
• Supervielle Jubilados App: The “Supervielle Jubilados” app provides senior citizens solutions to their recurring needs, such as information on check payment date and payment receipt, ATM cash withdrawal without using a debit card.
• Supervielle App: The App is used for a 100% digital registration to Online Banking without the need to go to the bank or an ATM, and also for activation/change of the SMS password required for online transactions.
• Online Banking – Personal: We enhanced the mobile experience including new functionalities such as stop debit for payment of credit card balances, follow up of card delivery and new simplified experience for cash withdrawal without using a debit card.
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• Online Banking – Business: Channel management procedures turned to digital and customer self-managed without delivery of any physical documents to the Bank.
• E-Channels: In 2020 we continued improving the self-management model with the implementation and strengthening of Caja Rápida (cash dispenser with biometric identification), with 100 Cajas Rápidas placed at lobbies so that customers may during non-bank hours and even during the weekend.
• Contact Center: The Contact Center manages queries and complaints by and sales to customers by phone, e-mail and social media. During the year improvements continued in automatic banking aimed at reducing online time and enhancing customer experience and quality of response, and increasing sales.
• Investment Center: Operates since September 2017 within the Telephone Banking department and is formed by a Team of Experts on Capital Markets who provide advice on and manage the transactions of customers in all Bank segments.
• Branch Network: We conducted 3 MVP in service centers to test the new lobby (now known as Espacio 24). In this new space, which is open 7 days a week, customers may use cash dispensers with and without fingerprint recognition, make deposits, transfers, payment of taxes, print of salary payment slip and statements of account and of credit cards. The 132 m2 Espacio24 is larger than the previous 22 m2 lobby. We also changed the internal service system of the automatic banking equipment located within Espacio 24, which allowed promptly solving any inconvenience with devices and thus improve availability/uptime. These developments generated a 35% increase in customer NPS regarding the involved branches.
Bank Treasury segment

The Bank’s target market consists of wine estates with high added value products, that focus mainly on the export market. However, Banco Supervielle continued supporting all industry players, from leading grape producers to major wine estates as well as suppliers of wine manufacturing and bottling supplies.
The Bank’s strategy targets participants in the entire value chain of wine production, from grape producers through wineries. This broad based strategy also allows us to develop our Retail Banking products with these customers.
~~Customized Value Proposition~~
~~1. Franchises.~~ ~~The~~ Bank has introduced innovative loan models including franchise system variables to support the growth of entrepreneurship in Argentina through a professional system. The Bank finances up to 40% of the initial investment (capped at Ps.800,000 for new franchisees), offering preferential rates and a 6-month grace period on principal payments.
~~2. Transportation.~~ The Bank has developed products for the cargo transportation segment activities and the value chain that enhances the growth of entrepreneurs and SMEs in general. For example, one of the attributes deemed key for a value proposition for this segment is the prompt response for the approval of loans for expansion of their truck fleet. The Bank has implemented single-day approvals of preferential rate financing for secured loans and leasing for the purchase of trucks and/or semitrailers. This allows SMEs to face new business opportunities and plan their activities more accurately.
~~Treasury~~
~~The~~ Treasury segment is primarily responsible for the allocation of the Bank’s liquidity according to the needs of the ~~Retail~~Personal and Business Banking segment, the ~~corporate~~Corporate banking segment and its own needs. The Bank Treasury segment implements the Bank’s financial risk management policies, manages the Bank’s trading desks, distributes treasury products such as debt securities, and develops businesses with wholesale financial and non-financial clients. In 2017, this segment contributed Ps.426.1 million to the our consolidated net revenues (3.4% of total segments’ net revenues) and Ps.47.7 million of net income (2.5% of total segments’ net income). Below is a description of the services offered under this segment:

~~Treasury~~. Trading Desk and Institutional Sales
The Bank’s trading desks trade financial assets on a proprietary and third-party basis, sell financial products, and implement the Asset and Liability Management Committee (“ALCO”) decisions, within the board’s policies, regarding the Bank’s liquidity and financial risk management policies. The Bank’s trading operations include money market instruments, which include institutional investor deposits, public debt instruments, Central Bank debt notes, foreign exchange, stocks, futures, swaps and repos. Trades develop within the limits of a comprehensive risk map which sets limits on counterparty risk and on long and short positions for each asset class, depending on volatility, traders’ seniority level, and other factors. The risk map also determines stop-loss policies. Banco Supervielle managed to grow in volume in all products operated, including foreign currency, public and private securities, stocks and derivatives. The Bank managed to position itself as one of the benchmarks of the market among institutional investors in all types of operations. ~~This shows a great presence in the Argentine market in terms of financial products.~~
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Correspondent Banking. The substantial increase in foreign credit facilities during 2016 continued in 2017, with the clear support of international banks, which resulted in new and significant credit facilities both for foreign trade and for working capital.
~~International banks also offered 5-year loans, disbursements of which were made during the second half of 2017.~~
Additionally, the international factoring operation allowed the Bank to play an active role in the market as the only Argentine bank that promotes a non-traditional foreign trade product and is a member of Factors Chain International.
~~Capital Markets~~. The Bank’s capital markets department is responsible for structuring and placing debt and securitization instruments, primarily financial trusts, both for third parties and for all our subsidiaries. The Bank is one of the leading entities in the Argentine capital markets, with a 7.8% market share in Argentina in the year ended December 31, 2017.

During ~~2017, the Bank acted~~2020, commercial relationships were maintained with foreign banks both as ~~arranger~~to financing of foreign trade transactions and ~~underwriter~~to guarantees and letters of securitizations for Ps.4.1 billion, Ps.2.5 billion of which corresponded to six issues of Banco Supervielle and Cordial Compañía Financiera and Ps.1.6 billion of which corresponded to eight third party issues.credit.

During 2017 the Bank acted as arranger of negotiable obligations for Ps.8.6 billion, Ps.2.8 billion of which corresponded to five local market issues of Banco Supervielle and Cordial Compañía Financiera, Ps.4.8 billion to foreign market issues of Banco Supervielle, and Ps.1.0 billion to five third party issues.
Public Sector and Intermediaries. On January 17, 2017, the Province of San Luis notified the Bank of its decision to terminate, effective as of February 28, 2017, the Financial Agency Agreement. The Financial Agency Agreement had been renewed twice and was due to expire in 2021. The government of the Province of San Luis has indicated that it will invite banks, including the Bank, to participate in the selection of a new financial agent. The Province has not yet released the terms and conditions of the auction to be held by the Province for the new financial agency agreement. As of the date of this annual report, the Bank continues to provide financial services to the provincial government of the Province of San Luis and its employees in spite of the termination of the Financial Agency Agreement.

The Bank has maintained a presence in the Province of San Luis ~~since 1996. After acquiring Banco de San Luis in 1996, the Bank was appointed~~for almost 25 years, acting as exclusive paying agent for the government of the Province of San Luis to provide financial agency and tax collection services to the Province and serving as payor bank for provincial government employees. On January 17, 2017, the Province of San Luis notified the Bank of its decision to exercise its right to terminate the financial agency agreement, effective as of February 28, 2017. Since February 2017, the Bank has continued to provide financial services to the Provincial government of the Province of San Luis and ~~serve~~its employees despite the termination of the financial agency agreement. On June 7, 2018, the Province of San Luis ratified an agreement signed with the Bank for a term of 12 months formalizing its role as ~~payor bank~~exclusive paying agent which the Bank has continued to ~~provincial government employees.~~provide since the termination of the financial agency agreement with the Province in February 2017. This agreement was renewed several times mostly every three months, the latter was renewed on March 1, 2021 and until June 1, 2021.

As of the date of this annual report, the Bank continues to provide financial services to the government of the Province of San Luis and its employees.
Also, on May 23, 2018, the Municipality of the city of San Luis appointed the Bank as financial agent for a term of 2 years, agreement which was renewed in May 2020 for 2 additional years. With the appointment by the City of San Luis, the Bank became financial agent for all the municipalities in the Province.
The Bank has a private sector business franchise in the Province of San Luis ~~as well~~ and provides full banking services to individual consumers and SMEs and middle-market companies. Further, the Bank provides its corporate customers in the Province of San Luis with a wide range of financial services and has a primary focus on infrastructure and construction projects.

As of December 31, ~~201~~7,2020, the Bank’s exposure in the Province of San Luis was as follows:

~~As of December 31, 2017~~
~~(in thousands of Pesos, except for ratios and operating data)~~
~~Loans~~
As of December 31, 2020
(in thousands of Pesos, except for ratios and operating data)
Loans
Banco Supervielle Total Loan Portfolio
~~58,839.5~~
98,251
Payroll loan to the Province of San Luis employees
~~685~~
1,822
Payroll loans to the Province of San Luis employees / Banco Supervielle Total Loan Portfolio
1
1.9
%
Loans to the provincial government
—
-
Deposits
Consolidated Total Deposits
~~60,757.8~~
175,216
Deposits made by the Province of San Luis
~~4,821~~
703
Deposits made by the Province of San Luis / Consolidated Total Deposits
8
0.4
%
Net Revenue
Related Net Revenue / Banco Supervielle’s Consolidated Net Revenue
3
1.4
%
Operating Data
Employees
~~332~~
238
Branches
22
20
Senior Citizen Service Center
3
3
ATM’s & Self Service Terminals
~~130~~
148

Of the Bank’s approximately ~~227,000~~195,000 active customers in San Luis, it offers payroll services to about ~~24,000~~34,000 employees that were covered by the services provided under the ~~Financial Agency Agreement.~~
~~Consumer Financing~~financial agency agreement.

~~Through~~In addition to the services rendered in San Luis, the Bank works with the public sector in municipalities in the provinces of Mendoza, San Juan, Cordoba, and Buenos Aires. It also works with some national universities.
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Capital Markets and Structuring
The Bank’s Capital Markets and Structuring department objective is to originate and structure financing products for the Argentine corporate capital markets. The idea is to provide financial advice services which allow both its customers and Grupo Supervielle and its subsidiaries to optimize their financial resources and capital structure in order to maximize the profitability of their operations.
The sector is mainly focused on the structuring of financial trusts and syndicated credit facilities, in the organization and placement of negotiable obligations and in equity capital markets transactions and mergers and acquisitions, with a view to providing a comprehensive advice on each product, generating long term relationships with customers and investors.
During 2020, the capital market was featured by the uncertainty generated by the impact of the COVID-19 pandemic. However, Banco Supervielle maintained its presence in the debt market and collaborated with its clients in the issuance of negotiable instruments, which totaled Ps. 30.9 billion. Some of such clients are frequent issuers such as YPF S.A., Vista Oil & Gas, Rizobacter Argentina S.A., Telecom Argentina S.A., San Miguel S.A, among other.
The bank successfully carried out the placement of SMEs secured and unsecured financial instruments, becoming one of the major players in this segment. In 2020 we participated in the placement of four SMEs negotiable obligations and three SMEs Financial Trusts. As regards placement of own and related parties’ instruments, we acted as arranger and dealer of Banco Supervielle Class G Negotiable Obligations for U.S.$30,000,000.
As regards the financial trusts market, Banco Supervielle acted as arranger and dealer of the following trusts: Unicred Cheques Serie 8 and Unicred Factoring Series XI, R.G. Albanesi Series XI and Concepción Series II. The Bank also acted as dealer and manager of the closed-end mutual fund “Adblick Ganadería Fondo Común de Inversión Cerrado Agropecuario.”
As regards Mergers & Acquisitions, the Bank acted as exclusive financial advisor of wineries Bodega Dante Robino S.A. and Cavas del Perdriel S.A. and their shareholders for the sale of said companies to Cervecería y Maltería Quilmes. During 2020 the sector also provided advisory support to various companies regarding Assessments and Mergers & Acquisitions.
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Consumer Finance
The Consumer Finance business of Grupo Supervielle is developed through its subsidiaries CCF and Tarjeta ~~we offer~~Automática S.A, MILA and Espacio Cordial de Servicios. MILA and Espacio Cordial were annexed to this segment in 2018.
CCF started operations in August 2011, when Grupo Supervielle acquired GE Money, the financial services division of General Electric in Argentina.
During 2020, CCF consolidated its digital transformation with the launching of IUDÚ, an innovative Digital Financial Services platform available at Google Play and App Store.
Its business model is based on providing financing solutions to specific target groups, mainly C2 and C3, and is currently consolidating in the field of comprehensive financial services through the development of new accounts deposits and investment and to a wider customer segment, offering a personalized and omnichannel experience.
As from the launching of IUDÚ the company extended the digital proposal through an innovative app, 100% digital onboarding (customers may request personal loans, credit cards and ~~consumer credit for goods~~self-manage all bank transactions on the mobile). This proposal will continue improving during 2021 with the launching of new products and with easier and faster ways to ~~middle~~deal with personal finance and ~~lower-middle-income underserved banking segments focusing its operations~~promote financial education with tools that help customers’ decision making process.
Business model is based on two ~~key tenets:~~main pillars: i) accessibility, flexible customer centric proposals adapted to the omnichannel concept; and ii) diversification: tailored products to meet customers’ needs in every stage of their life with customized offers and value propositions for each cluster.
The omnichannel concept enables the company to be present countrywide, and it is currently settled in 22 provinces through 99 points of sales of its 2 main marketing channels: Walmart financial services and Tarjeta Automática as well as the digital channel through the web, the social media and Google Play and App Store apps: Walmart Tarjeta App, Carta App and IUDÚ.
As a result of the pandemic, during 2020 CCF mainly focused on the care of its customers and employees, guaranteeing certain levels of services during the lockdown, while continued to focus on the business growth and strengthening and on the implementation of its strategic pillars, which were:

(i)      ~~Accessibility: flexible proposals~~            a structural transformation towards an agile and horizontal structure, with the customer at the center of the organization. The design of an agile organization was based on customers’ lifecycle and the three main tribes that are focused on ~~the client~~customer acquisition, loyalty and ~~adapted~~delinquency/close in order to ~~the multichannel concept.~~generate a better customer experience in these instances;

(ii)          ~~Diversification:~~a digital transformation both at an internal and external level, with the launching of IUDÚ in November 2020, with a 100% digital onboarding for personal loans and credit cards. The company will continue growing and developing to offer a wider array of digital financial services;
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(iii)            customer segments were extended, focused not only on mid and low socio-economic level customers but also on mid socio-economic level customers;
(iv)            new products were added to the value proposition, that ~~satisfy~~will enable the ~~needs~~development of ~~customers~~retail franchise deposits;
(v)            the application assessment process reengineering continued to provide flexibility and speed to credit policy implementation while maintaining said policy at ~~each stage~~prudent risk levels;
(vi)             changes were implemented to the origination policy to maintain repayment capacity, mainly of ~~their lives with personalized offerings~~those segments mostly affected by the macroeconomic situation resulting from the pandemic;
(vii)            work continued on screening strategy implementation, collection management tool optimization and ~~differential value proposals depending~~review of predictive models to guarantee collection levels. Implementation of ERP- SAP S4 HANA and of the new financial CORE software began;
(viii)            the funding structure was modified achieving a cost reduction and implementing hedging instruments in case of rate variations;
(ix)             product cross selling increased;
(x)             the structure was tailored to the new situation and expenses were cut down;
(xi)            focus was placed on ~~the different clusters to which they belong.~~portfolio quality, reducing exposure.

Cordial Servicios. During 2020 Cordial continued operating in the already developed direct and indirect channels. The ~~Consumer Financing~~ ~~segment’s loan portfolio totaled approximately Ps.6.8 billion (U.S.$364.3 million)~~direct channel continued developing through sales points located at ~~December 31, 2017 (including~~service branches of Banco Supervielle throughout the ~~securitized loan portfolio).~~country, trading mainly home appliances, health care plans, security plans, prepaid services and tourism. The home appliances category strategy during 2020 continued looking for stocks optimization and product mix under the motto: “Primer precio, Primera marca” Best price for a leading brand. The Services and Assistance category continued developing in partnership with Walmart, with 100 additional sales points.

~~For~~During 2020, as regards indirect channels, the ~~year ended December 31, 2017, Consumer Financing contributed Ps.2.3 billion~~telephone channel continued to ~~our consolidated net revenues (18.3% of our net segments’ revenues) and Ps.179.4 million of net income (9.6% of total segments’ net income).~~
~~As of December 31, 2017,~~ ~~CCF offered the following products:~~
~~Personal Loans~~~~. CCF offers cash loans to individuals at a fixed interest rate. In 2017, CCF granted more than 182,000 personal loans, amounting to Ps.3.8 billion in the balance of personal loans.~~
~~Credit Cards.~~ CCF’s credit card is a financial tool through which its clients can make purchases in the network of businesses that accept MasterCard and obtain cash advances, pursuant to limitations set forth by CCF. Marketingbe used for the ~~CCF credit card is carried out in permanent marketing spaces located in Walmart Argentina stores, Hipertehuelche~~sale of prepaid health care services. The digital channel, through Tienda Supervielle Marketplace, was used to sell home appliances, technology, home and ~~Tarjeta’s branches. CCF has exclusive rights~~furniture, sports, wellness and beauty, toys, perfumes, tires and accessories. As regards the tourism category, it continued offering its products through Tienda Supervielle and the integration to ~~promote~~the Rewards program of Banco Supervielle, as the main vertical portal for flights and ~~sell financial and credit products in Walmart Argentina stores nationwide through August 2020.~~
~~Private Label Credit Cards.~~ CCF’s private label credit cards are credit cards that may only be used in Pesos and at the business through which they were issued. These private label credit cards aim to increase customer loyalty and generate incremental sales for the business. As of the date of this annual report, Walmart Argentina is the only business that offers a private label credit card.
~~Insurance~~ ~~and other non-financial products~~. CCF offers personal accident insurance, protected bag insurance for personal property contained in a bag, backpack, wallet, fanny pack or other bag that is either lost or stolen, health insurance, unemployment insurance, total protection, household assistance, extended warranty, protected technology, and home on behalf of the insurance companies with which CCF has an agreement.
~~Consumer Loans.~~ ~~CCF offers lines of credit for the purchase of specific products.~~hotels.

The ~~agreement~~services and assistance category continued developing the digital channel with the sale of health care plans through a strong online strategy in the social media and developing digital self-management products for the companies of the consumer division and the launching of new digital products such as ~~exclusive provider~~“Doctor en línea” Online doctor and “Veterinario en línea” Online vet.
In 2019, Cordial acquired DeAutos.com. During 2020 the focus of ~~financial~~the business was on the integration of the services ~~to Walmart’s customers in its stores is in force until August 2020, pursuant~~platform related to the ~~third consecutive renewal~~purchase of ~~this agreement executed in December 2014. This is~~ the ~~fourth consecutive period in which this agreement has been in effect.~~car.
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During 2020, 18,300 home appliances and 100,000 service plans were sold.

~~Insurance~~MILA. In 2020, the Company granted car loans for a total of Ps.1,205 million in a total of 4,698 operations. This represented a year-on-year growth of 107% in terms of Ps., and 42% in number of operations.

The aforementioned performance occurred in an economic environment that presented a sharp drop in the sale of vehicles, both new and used. With respect to the previous year, patents fell 26%, while transfers fell 12%; new cars financing decreased 34%, and the decline in pre-owned cars financing was 22%.
Insurance
The Insurance business of Grupo Supervielle is developed through its subsidiaries Supervielle Seguros and Supervielle Productores Asesores de Seguros. Through Supervielle Seguros, Grupo Supervielle offers insurance products, primarily personal accidents insurance, protected bag insurance, ~~and life insurance. All insurance products are offered to all our customers. Supervielle Seguros offers credit related and others insurance to satisfy the needs of our customers as well.~~
In 2017, our insurance operations through Supervielle Seguros contributed Ps.469.7 million to our consolidated net revenues (3.7% of our net segments’ revenues) and Ps.205.6 million of net income (11.0% of our segments’ net income).
~~Supervielle Seguros began issuing its policies in October 2014 starting with a few non-credit related insurance products, such as “protected bag” insurance and “personal accident” insurance.~~
By the end of year 2015, Supervielle Seguros began issuing credit-related policies. Supervielle Seguros’s business substantially grew since then, partly because of the growth of the loans and credit card portfolio balances and partly because of the migration of some of the portfolio previously booked in a third party insurance company.
In March 2016, the Central Bank issued a new resolution, effective as of September 1, 2016, which prohibits financial institutions from charging individuals any fee and/or charge associated with credit related insurance policies. This resolution also specifies that financial institutions must purchase life insurance and ~~total~~integral insurance policies for entrepreneurs and ~~permanent disability insurance for debit balances for their clients. As a result, since September 1, 2016~~ ~~the Bank and CCF assume these risks by self-insuring and no longer contract new credit related insurances.~~
In 2017, Supervielle Seguros began offering home, protected technology, protected contents, total protection and broken bones policies in addition to personal accidents, protected bag, temporary life and debtor’s credit life insurance policies.
~~Supervielle Seguros~~SMEs. This business is continuously offering new products to the different customer segments of Grupo Supervielle companies: high net worth individuals (Identité), senior citizens, Entrepreneurs and SMEs, customers of the consumer finance and corporate and medium and large entities segments.
~~Supervielle Seguros focuses on the marketing of insurance policies~~carried out through the networks of the Bank and ~~CCF,~~IUDÚ and the digital channel, as well as onthe issuance of credit related insurance and other insurance ~~intended to meet~~aimed at satisfying the needs of our different channels and ~~customers.~~clients. In 2020, the insurance business segment began a process of digital transformation and carried out some sales pilot tests in the digital channel for both life insurance and home insurance.

~~Though~~Supervielle Productores Asesores de Seguros began operating in the ~~current organizational structure remains flexible,~~second half of 2019. In 2020 the business gained momentum, focused on ~~critical strategic~~entrepreneurs and ~~control duties, supporting~~SMEs and in middle-market and large companies. This allows an improvement in risk management, offering advisory services to customers and adding value to the ~~remaining processes with core areas~~comprehensive proposal of Grupo Supervielle and with the advice of independent specialists through the implementation of services agreements, the company began during this year with the survey of processes to determine the investments required in technology and infrastructure, with a view to optimizing its processing capacity.Supervielle.

In ~~2017,~~ 2020, Supervielle Seguros consolidated its offers in the following products:

Protected Bag Insurance. Protected bag insurance is insurance for personal property contained in a bag, backpack, wallet, fanny pack or other bag that is either lost or stolen. Protected bag insurance can cover items such as cellular phones, makeup, planners, lost documents, keys and locks. In addition, protected bag insurance may cover a certain amount of charges from fraudulent credit card use as a result of a lost or stolen bag.

Personal Accident Insurance. Personal accident insurance covers policy holders in the event that they suffer an accident, subject to certain exclusions.

Life Insurance. Supervielle Seguros markets its life insurance products to the Bank’s senior citizen customers and sells its products through its own sales force that works within the Bank’s service center network. The basic life insurance product includes coverage for death, and customers can add varying degrees of coverage for accidents, serious and terminal illnesses and transplants.

~~Life Insurance and Total and Permanent Disability Insurance for Debit Balances~~. In the third quarter of 2015, Supervielle Seguros began to offer an insurance product that covers debit balances in the event of death or total and permanent disability. However, as mentioned above, since September 1, 2016, Banco Supervielle and CCF assume these risks by self-insuring and no longer contract new credit related insurances.
Home Insurance. Home insurance coverage includes fire insurance (building and content), theft of content, theft and damage of appliances, glass breakage, civil liability, personal accident coverage for domestic staff and home assistance service in cases of emergencies.
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Technology Insurance. Technology insurance covers theft or accidental damage as a result of theft of electronic equipment (includes notebooks, cell phones, tablets, smartphones, cameras and GPSs). In case of theft or accidental damage as a result of theft, the cost of the stolen property or the cost of repair will be compensated up to the maximum insured amount (once the repair invoice is provided).

~~Protected Bag Insurance~~~~. Protected bag insurance covers theft and accidental damage in relation with purchases paid with Walmart card, Mastercard Walmart card and Carta Mastercard card.~~
ATM Insurance. ATM insurance covers robbery at ATMs, death at the time of the assault and reimbursement of the costs of stolen documentation.

Protected Content. Protected content insurance covers theft and accidental damage of the personal effects that are inside a vehicle.

Broken Bones. The broken bones insurance covers death as result of an accident up to the amount of the insured capital. A certain amount will be paid in the event of quadriplegia or paraplegia, according to the respective insurance plan and once such condition has been verified by a medical audit. This insurance also covers the simple breakage of bones produced as an immediate consequence of an accident.

Integral insurance product for entrepreneurs and SME: Integral insurance product for entrepreneurs and SMEs completes the offer of services for our priority segment entrepreneurs and SMEs, with the particularity that is fully processed by Supervielle Seguros.
Supervielle Seguros ~~has experienced a trend of growth in~~reported gross written premiums ~~reporting Ps.182.0~~of Ps596.6 million in the first quarter of ~~2017, Ps.188.8~~2020, Ps.570.2 million in the second quarter of ~~2017, Ps.186.7~~2020, Ps.532.4 million in the third quarter of ~~2017~~2020 and ~~Ps. 232.1~~Ps.573.0 million in the fourth quarter of ~~2017.~~2020.

The following table sets forth the breakdown of Supervielle Seguros’s gross written premiums per quarter as of December 31, ~~2017.~~2020.

Gross written premiums by product

(in millions of ~~Pesos)~~Pesos)

% Change

4th
quarter
2017

3rd
quarter
2017

2nd
quarter
2017

1st
quarter
2016

4th
quarter
2016

4th quarter
2017 vs.
3rd quarter
2017

4th quarter
2017 vs.
4th quarter
2016

4th quarter 2020 3rd quarter 2020 2nd quarter 2020 1st quarter 2020 4th quarter 2019
Life insurance and total permanent disability insurance for debit balances

35.7

48.9

64.3

82.4

103.4

(27.0
)%
(65.5
)%
0.2 0.3 0.6 1.2 1,3
Mortgage Insurance 35.0 37.2 38.2 37.9 38,8
Personal Accident Insurance

17.6

17.1

16.0

13.8

13.2

3.2
%
32.9
%
27.5 27.4 27.0 31.1 36,5
Protected Bag Insurance

36.3

35.3

33.7

27.9

28.0

2.7
%
29.9
%
67.4 72.8 81.3 79.1 77,9
Broken Bones

6.7

6.2

6.5

0.1

—

8.9
%
—

17.2 16.4 18.6 21.1 21,5
Others

7.0

0.5

0.4

—

—

1,346.3
%
—

11.1 10.2 9.0 12.2 12,1
Home Insurance

28.0

3.1

—

—

—

809.1
%
—

77.4 71.4 72.4 89.1 79,5
Technology Insurance

10.8

1.6

—

—

—

564.2
%
—

28.5 24.6 21.4 33.1 28,6
ATM Insurance

5.9

1.5

—

—

—

290.7
%
—

20.9 24.5 23.8 25.2 34,1
Mortgage Insurance

2.8

0.2

0.3

—

—

1,300.0
%
—

Life Insurance

81.3

72.4

67.7

57.8

54.4

12.3
%
49.5
%
287.7 247.6 278.0 266.5 290,7
Total

232.1

186.7

188.8

182.0

199.0

24.3
%
16.6
%
573.0 532.4 570.2 596.6 620,9
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Asset Management and Other Services

Grupo Supervielle offers a variety of other services to its customers, including mutual fund products through Supervielle Asset Management. Since May 2018, Supervielle also offers products and services through InvertirOnline S.A.U. Since the MILA acquisition, the new portfolio of used car loans and its respective results are recorded under Consumer Finance segment. MILA portfolio outstanding at the moment of the acquisition and its respective results are recorded under Asset Management ~~& Other Services~~and Others segment.
SAM

~~We also offer mutual fund services through SAM,~~ ~~and non financial services and products through Espacio Cordial.~~
~~In 201~~7, these additional operations contributed Ps.601.6 million to our consolidated net revenues (4.7% of our segments’ net revenues before adjustments) and Ps.223.6 million of net income (11.9% of our segments’ net income before adjustments).
~~In 2017, SAM recorded Ps.113.2 million of net income, compared to Ps.77.4 million and Ps.81.8 million for years ended December 31, 2016 and 2015, respectively.~~
~~SAM’s assets under management amounted to Ps.14.7 billion as of December 31, 2017, compared to Ps.10.0 billion and Ps.5.9 billion as of December 31, 2016 and 2015, respectively.~~
~~As of December 31, 2017, SAM had approximately 12,000 customers.~~
~~The following graph sets forth the breakdown of SAM’s assets under management as of December 31, 2017~~.
Mutual Funds. SAM offers mutual funds services designed to meet customers’ particular investment objectives and risk profiles through its Premier funds family. As of December30, 2020, assets under management reached Ps. 38.8 billion increasing 70% from December 2019.
As of December 31, ~~2017,~~2020, SAM had ~~U.S.$780.6 million of assets under management.~~approximately 5,747 customers.

The PREMIER family of funds consists of 15 mutual funds: a ~~Fixed Time Deposit~~Money Market Fund ~~(Money Market~~ (Premier Renta ~~CP in Pesos)~~Corto Plazo en Pesos), ~~five~~two Argentina short-term fixed income funds in Pesos (Premier Renta Plus, Premier Renta Fija Ahorro ~~Premier Capital,~~ ), six Argentina fixed income and mixed income funds in Pesos (Premier Renta Fija Crecimiento, ~~and~~Premier Capital, Premier Commodities, Premier Inversión, Premier Balanceado y Premier Renta Mixta), two Argentina fixed income funds in U~~.S. dollars)~~US dollars (Premier Renta Mixta en Dólares and Premier Performance), a variable income fund (Premier Renta Variable), an ~~Investment Fund~~investment fund in SME securities (Premier FCI Abierto PyMEs) ~~and three Mixed Income Funds, that invest in agricultural commodities derivatives~~a fixed income LatAm fund (Premier ~~Commodities Agrarios~~Global Dólares) and ~~in combined portfolios of negotiable securities in Pesos, U.S. dollars and futures contracts~~ a closed mutual fund (~~Premier Inversión and Premier Balanceado~~Adblick Ganadería)).
~~Fixed~~ income funds offer the possibility to invest in short and medium term private and public debt assets. The Mutual Fund Premier Renta Plus portfolio is mainly made up of Lebacs and Provincial Bills, Mutual Fund Premier Renta Fija Ahorro invests in Lebacs, time deposits and negotiable obligations, Mutual Fund Premier Renta Fija Crecimiento is made up of short and medium term public and private debt assets and Mutual Fund Premier Capital invests in financial assets computable for the insurance companies’ investment regulations. The portfolio of Mutual Fund Premier Renta Mix in U.S. dollars is made up of fixed income assets denominated in U.S. dollars issued by the Argentine government, provincial governments and companies.

The ~~placement~~money market fund showed an increase of ~~these products is made by~~118%, mainly due to the ~~Bank primarily through its commercial channels, by SAM~~investments of corporate and ~~by brokerage firms. In~~institutional customers, representing 74% of the managed funds in December ~~2014, SAM began~~2020, as compared to ~~offer its fund investment services to customers through the Bank’s corporate home banking service. This service broadens SAM’s channels of distribution and offers clients a high quality service.~~79% in December 2019.

In ~~2018,~~2020 SAM ~~plans to broaden its products to take advantage of new opportunities expected to be introduced by~~launched the ~~new Capital Markets Law.~~
~~Retail Sales~~~~. Espacio Cordial sells various types of goods and services through~~FCI Cerrado Adblick Livestock, as a ~~wide range of distribution channels, with~~differentiated investment alternative that focuses on a ~~focus on cross-selling to our banking customers.~~
~~During 2017, we continued doing business and growing~~specific market in ~~already developed direct and indirect channels. In~~ the direct channel, we continued to grow through points of sale located at the Bank’s senior citizens dedicated branches throughout Argentina, mainly selling home appliances, health care plans, safety plans, prepaid services and tourist packages. Using indirect channels, we offered prepaid health services and the sale of electronic and home appliances by telephone and home appliances. We also offered through Tienda Supervielle technology products, home related products, furniture, sport products, clothing, well being and beauty related products, toys, perfumes and accessories.real economy.

~~Likewise, in 2017,~~ InvertirOnline.com~~we implemented new sales channels for all goods~~
InvertirOnline is a digital online broker that offers brokerage and savings and investment services ~~categories. In the tourism category, we launched our online channel through Tienda Supervielle Viajes with a competitive offer for hotels, flights, trains, travel assistance~~based on an agile, simple, transparent and experiences such as the 2018 FIFA World Cup. In the services category, we sold health care plans in the digital channel through a strong online strategy in social media and, in the electronic category, we entered into agreements with strategic partnersinnovative platform, suitable for the ~~marketing~~profile of ~~such goods on~~each client. Through this value proposition we follow a purpose of reinventing the way people investso as to help people boost their ~~networks.~~income and savings.

~~In partnership with~~ ~~CCF~~During 2020 InvertirOnline mapped and ~~Emilio Luque, a retail~~addressed the automation needs of the platform to obtain business scalability: deposits and wholesale supermarket chain, in December 2017, the electronic sector, fully managed by Cordial Servicios, was opened at the Salta branch of such company. This is the first step of Emilio Luque’s branch expansion planwithdrawal processes were improved as well as the ~~kick-off~~onboarding automatic opening of accounts, the ~~first expansion project~~end-to-end process was automated and market integrations were made more efficient, for a prompt processing of ~~Cordial Servicios on third party networks intended~~all transactions.
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In 2020, APIs were made available to ~~attract~~the public, offering an array of products to our new customers, fostering financial inclusion and making it possible for ~~Grupo Supervielle.~~a larger number of people to obtain revenues from their savings.

~~Our~~ ~~health care products and services offers were also enhanced. In~~2020 was an iconic year for InvertirOnline Academy. As a result of an increased demand of financial education the ~~case of home and technology, categories and~~ number of ~~goods were doubled,~~students increased by 300% year-on-year. Due to the increased demand the team grew to consolidate the InvertirOnline Academy business unit which comprises the areas of product development, marketing and ~~the tire and car accessories category was created in Tienda Supervielle. In relation with services, we launched a new kinesiology plan and we designed custom plans for the different customer segments.~~content.

~~In 2017, Espacio Cordial sold approximately 102,943 electronic products~~The company ranks 2nd in the local ByMA ranking on Equity, CEDEARs (Certificado de Depósito Argentinos) and ~~approximately 146,000 service plans.~~options trading, and it has an 8% market share in these assets.

In ~~2017, net revenues from Espacio Cordial amounted to Ps.390.5 million (U.S.$20.8 million) compared to Ps.152.2 million in 2016.~~
~~For 2018, the objective of Cordial Servicios is to increase income in the 78 existing points of sale and at the already developed and recently implemented indirect sales channels.~~
~~Corporate Social Responsibility~~
Grupo Supervielle has become an important part of the Argentine financial system with a high potential of visibility in its social investments. Its social commitment has been growing steadily as its clients continue to increase their expectations regarding the social impact of its projects. Grupo Supervielle has a strong regional presence which allows it to participate in social actions, particularly in places and areas of poor social investment.
~~The strategic objectives of CSR are as follows:~~
~~(i) Be perceived not just as a profitable and innovative bank but also as an agent of change and creator of sustainable social value;~~
~~(ii) Develop an innovative and transformative strategy with concrete, measurable and high-impact actions;~~
~~(iii) Synergize CSR initiatives with local communities in which the bank has commercial activity; and~~
~~(iv) Build a collaborative and co-responsible organizational culture through programs designed in alliance with NGOs and Corporate Volunteering actions.~~
~~The CSR strategic plan is developed through 20 programs grouped in four core axis:~~
~~(i) Senior Citizens: Programs for senior citizens aim to promote active and healthy aging, social participation and the prevention of dependency.~~
~~(ii) Childhood: Programs for children help fight child poverty and malnutrition.~~
~~(iii) Education: Education programs promote opportunities through education.~~
~~(iv) Institutional Strengthening: Programs designed to contribute to the strengthening of public institutions and the construction of a long-term public agenda.~~
In 2017, Grupo Supervielle published its annual edition of the Sustainability Report covering 2016. The sustainability Report is prepared based on the guidelines and standards of the Global Reporting Initiative (“GRI”) and is available on the Banco Supervielle website.
~~Our Subsidiaries~~
~~Banco Supervielle S.A.~~
~~We own~~ 96.8% of the share capital of the Bank and Sofital owns 3.1%. The Bank is a universal commercial bank and our largest subsidiary. When consolidated with CCF, the Bank accounted for 98.2% of our total assets as of December 31, 2017. During the last fifteen years, the Bank experienced significant growth while efficiently managing risks, including those posed by the 2001-2002 crisis and the 2008 international economic downturn. The Bank operates in Argentina, and substantially all of its customers, operations and assets are located in Argentina. It offers a wide variety of financial products and services to retail and corporate customers.
According to the Central Bank, as of December 31, 2017, the Bank ranked ninth in terms of deposits, eighth in terms of total loans and ninth in terms of total assets among private banks in Argentina. As of such date, the Bank ranked fourth in terms of deposits and in terms of total assets among domestically-owned private banking groups. In 2017, the Bank continued to be a leader among private banks with respect to the payment of federal benefits to senior citizens ~~in terms of~~2020, 134,000, new accounts were opened, more than doubling the number of ~~payments made. The Bank is also one of the leading providers of (i) factoring services in Argentina, with a 7.5%~~accounts opened in the ~~financial system as of December 31, 2017 and (ii) leasing services, with a market share estimated to be above 15.2% as of December 31, 2017.~~previous year. In turn, DART (Daily Average Revenue Trades) reached nearly 20,500 in 2020 up from less than 5,600 in 2019.

As of December 31, ~~2017, the Bank on a consolidated basis~~2020, InvertirOnline had total assets of Ps.92.4 billion, a total loan portfolio (including the securitized loan portfolio) of Ps.60.3 billion and total deposits of Ps.60.8 billion, and its shareholders’ equity totaled Ps.10.0 billion.
~~Cordial Compañía Financiera S.A.~~80,024 active customers located country-wide.

~~The Bank owns 95% of CCF’s common shares and Grupo Supervielle owns the remaining 5%. As of December 31, 201~~Easy Cambio S.A.7, CCF had total assets of Ps.7.0 billion, net shareholders’ equity of Ps.1.6 million and a personal loan portfolio and credit card loan on balance of Ps.6.2 billion (including the securitized loan portfolio, the total loan portfolio and credit card loans amounted to Ps.7.4 billion) and approximately 393,000 active credit cards issued.

In ~~August 2011, we purchased CCF, a company formerly known as GE Compañía Financiera~~October, Grupo Supervielle acquired Easy Cambio S.A., a foreign exchange broker authorized by the Central Bank. With this acquisition the Group seeks to broaden our offer of financial services ~~division of General Electric. GE Compañía Financiera had been operating~~by allowing individual customers countrywide to operate the FX markets using the latest technologies available for ~~more than ten years in the Argentine market with financial products such as credit cards, personal loans, consumer loans and a wide range of insurance products.~~this purpose.

Since 2000, through an agreement with Walmart Argentina, CCF has had exclusive rights to promote and sell financial and credit products to Walmart Argentina customers nationwide, including Changomas stores. The Walmart Argentina agreement grants CCF access, on an exclusive basis, to a distribution channel that includes 108 Walmart Argentina and Changomas stores located throughout Argentina and all future stores to be opened by Walmart Argentina during the term of the agreement. On July 6, 2010, CCF renewed the Walmart Argentina agreement through August 31, 2015 and in December 2014, CCF renewed the agreement again, through August 2020. This new extension of the agreement is expected to foster the expansion of CCF’s business and the development of large, long term projects that are expected to bolster the growth of both parties to the agreement.
CCF specializes in specific credit products and financial consumer services. Its business model is based on offering financial products to mainly the middle and lower-middle-income sectors and is focused on two fundamental pillars:
i) ~~Accessibility~~~~: Convenient services centered on the customer and adapted to the concept of multi-channel banking.~~
~~ii)~~ ~~Diversification~~~~: Products that satisfy the customers’ needs in every stage of life with personalized offers and differentiated value propositions.~~
~~The concept of multi-channel banking requires CCF to have a presence everywhere in Argentina, including each of the 23 provinces, which it does through 116 branches and three main channels of distribution:~~
·                  Walmart Financial Services: Through this channel, CCF offers loans, credit card origination and insurance through an exclusive agreement with Walmart Argentina, reaching approximately 390,000 customers.
·                  Tarjeta Branches: Through this channel, CCF offers financing to middle and lower-middle-income customers. This service has a strong presence in the Patagonia region and reaches approximately 54,000 customers.
·                  “Tu Crédito Hipertehuelche”: Through this channel, CCF offers loans, credit card origination and insurance through an exclusive agreement with Hipertehuelche Supermarkets, reaching approximately 20,000 customers.
~~To secure its market presence and to maximize customer satisfaction and prospects, CCF owns financial service stands in all medium and large Walmart Argentina locations and has a total of~~ 80 sales and services points (compared to 67 sales and services points as of December 31, 2017). In smaller Walmart Argentina locations, CCF has developed a customer sales and services model through exclusive technology that does not require on-site presence.
Since 2014, CCF has been an exclusive financial services provider of customers of Hipertehuelche Supermarkets in the 16 stores Hipertehuelche has in the Argentine Patagonia. In these stores, CCF’s has a financial services stand where it offer its products. Hipertehuelche is a home improvement and construction products retail chain.
~~For the~~ ~~year ended December 31, 2017, CCF was the first private issuer of MasterCard credit cards with account summary in Argentina.~~
~~Tarjeta Automática S.A.~~
~~Tarjeta was founded in 2002 to offer credit services to a segment of customers to whom banking services were not previously available. Its operations are concentrated primarily on granting~~ ~~personal loans. In 2007, we acquired Tarjeta.~~
~~Tarjeta has 20 public service branches and 41 stands at retail chains. The highest concentration of Tarjeta branches is in Patagonia.~~
~~Supervielle Seguros S.A.~~
In June 2013, Grupo Supervielle and Sofital purchased 100% of the shares of Supervielle Seguros (formerly known as Aseguradores de Créditos del Mercosur S.A.). Supervielle Seguros began operations in October 2014.
Supervielle Seguros began issuing its first policies in October 2014 starting with a few non-credit related insurance products, such as protected bag insurance and personal accident insurance. By the end of 2015, it began issuing credit-related policies substantially growing its business since then, partly through the growth of the loans and credit card portfolio balances and partly through the migration of some of the portfolios previously booked in a third party
~~insurance company.~~ A Central Bank resolution issued in March, 2016 and effective September 1, 2016, prohibits financial institutions from charging individuals any fee and/or charge associated with credit related insurance policies. This resolution also specifies that financial institutions must purchase life insurance on debit balances or alternatively, self-insure the risk of death and permanent total disability of their clients. As a result, since September 1, 2016, both Banco Supervielle and CCF are self-insured against these risks and only contract new credit related insurances for mortgages loans. We intend to continue to expand this business and launch new insurance products previously offered to our customers by other insurance companies.
In parallel with the consolidation of its non-credit related insurance business, Supervielle Seguros plans to advance its products, adapt to the needs of its distribution channels and clients and evaluate how to incorporate the business into the credit-related businesses.
~~Supervielle Asset Management S.A.~~
Through SAM, we have become a player in the mutual funds market with the “Premier” funds family. In November 2014, Standard & Poor’s published its “FundStar Ranking,” which ranks mutual funds based on relative strengths compared to other mutual funds with similar long-term investment strategies. Premier Fixed-Income Savings Fund and Premier Income Fund Qualified received the highest rating of five stars and Premier Equity Fund received four stars.
~~As of~~ December 31, 2017, SAM managed 11 mutual funds and had U.S.$780.6 million of funds under management. Based on data from the Argentine Association of Mutual Funds, we estimate that we have a market share of approximately 2.63% of the mutual fund industry in Argentina and that SAM is ranked 13 out of 46 managers in the market.
~~Espacio Cordial de Servicios S.A.~~
Espacio Cordial was created in October 2012 and began operating in December 2012. The business was created to sell various types of goods and services, including those related to insurance, tourism, health plans and services.
~~Sofital S.A.F. e I.I.~~
~~Sofital S.A.F. e I.I. is a~~ ~~sociedad anónima~~ ~~whose main activity consists of holding participations in other companies.~~
A~~s of the date of this annual report, Sofital holds 3.1% of the capital stock of the Bank and 5.0% of the capital stock of SAM.~~
An in-kind capital contribution by Mr. Julio Patricio Supervielle of 7,672,412 non-endorsable ordinary registered shares of Sofital S.A.F. e I.I. to Grupo Supervielle was approved at a shareholders’ meeting of Grupo Supervielle dated April 27, 2017. The capitalization of such capital contribution was approved by the CNV and registered by the IGJ on February 28, 2018.
~~Investments in and Divestments of Grupo Supervielle in its Subsidiaries~~
On February 5, 2013, we accepted an offer for the acquisition of 95% of the purchase shares of Aseguradores de Créditos del Mercosur S.A. (which was later renamed Supervielle Seguros). On May 14, 2013, the National Superintendency of Insurance approved the transfer of the company’s shares. As a result, on June 6, 2013, 95% of the shares of Aseguradores de Créditos del Mercosur S.A. were transferred to us and the remaining 5% was transferred to Sofital.
On May 30, 2014, Sofital and Grupo Supervielle entered into an agreement for the sale of 100% of the shares of Adval to CAT Technologies S.A. The purchase price is scheduled to be paid in installments due between July 2014 and July 2019. As of December 31, 201~~5, Grupo Supervielle recorded a credit of Ps.2.3 million and Sofital S.A. a credit of Ps.0.1 million.~~
~~On February 25, 2014, the shareholders of Supervielle Seguros voted to increase the share capital by an amount of Ps.5,000,000 in proportion to their holdings to be integrated in cash and in kind.~~
On November 26, 2014, our Board of Directors decided to make a capital contribution to Supervielle Seguros for an amount of Ps.12,462,232.05. The capital contribution did not change our stake in Supervielle Seguros. The increase in share capital of Supervielle Seguros is pending the approval of the Superintendency of Insurance.
~~On April 29, 2016, we and the Bank made capital contributions to CCF for a total amount of Ps.25.0 million.~~
On May 31 and June 3, 2016, we made capital contributions to the Bank for Ps.2.2 billion. On September 22, 2016, the Bank held an Extraordinary Shareholders’ meeting in which it resolved to capitalize said contributions by increasing the capital stock by Ps.182.1 million with an issue premium of Ps.2.0 billion.
On May 31 and June 16, 2016, we made capital contributions to CCF for Ps.14.0 million. On October 24, 2016, CCF held an Extraordinary Shareholders’ meeting by which it resolved to accept such contributions for the total amount of Ps.305.0 million under the terms established in the respective agreements for the irrevocable capital contribution, to increase the capital stock in the amount of Ps.31.4 million increasing it from Ps.73.0 million to Ps.104.4 million, and issue 31,370,057 ordinary, non-endorsable nominative shares with a nominal value of Ps.1 each and entitled to one vote per share.
On February 17, 2017, we and the Bank made capital contributions to CCF for Ps.100.0 million. On March 9, 2017, CCF held an Extraordinary Shareholders’ meeting by which it resolved to accept such contributions and increase the capital stock in the amount of Ps.19.5 million, from Ps.104.4 million to Ps.123,7 million, and issue 19,348,722 ordinary, non-endorsable nominative shares with a nominal value of Ps. 1 each and entitled to one vote per share.
On March 20, 2017, both our Board of Directors and the Bank’s Board of Directors, accepted an offer from Ciudad Microempresa, to acquire 100% of the shares of Ciudad Microfinanzas. The offer was subject to the compliance of certain conditions, and the transaction was closed on March 31, 2017 when the conditions were met. Grupo Supervielle sold its 12,219,472 shares, representating 87.5% of the total capital stock, and Banco Supervielle sold its 1,745,632 shares, representing 12.5% of the total capital stock.
~~On March~~ ~~27, 2017, we made a capital contribution to the Bank for Ps 95.0 million.~~
On May 26, 2017, Grupo Supervielle, Sofital S.A.F. e I.I. and Mr. Julio Patricio Supervielle completed the transfer of their shareholdings in Viñas del Monte S.A., which were sold for an aggregate amount of U.S.$1,500,000. Grupo Supervielle transferred a total of 904,142 common, registered, non-endorsable shares to Ramón Francisco Federico and Guillermo Héctor Federico; Sofital S.A.F. Sofital S.A.F. e I.I. transferred a total of 47,000 common, registered, non-endorsable common shares to Ramón Francisco Federico and Guillermo Héctor Federico; and Mr. Julio Patricio Supervielle transferred a total of 2,618 common, registered, non-endorsable shares to Ramón Francisco Federico and Guillermo Héctor Federico.
On July 24, 2017, Grupo Supervielle and the Bank made an irrevocable capital contribution in advance of future capital increases to CCF for an amount of Ps.2.5 million and Ps.47.5 million, respectively.
On September 20, 2017, Grupo Supervielle, the Bank and CCF made an irrevocable capital contribution in advance of future capital increases to Tarjeta Automática for an amount of Ps.131.3 million, Ps.15.0 million and Ps.3.8 million, respectively.
On November 24, 2017, Grupo Supervielle made an irrevocable capital contribution to the Bank for an amount of Ps.2.6 billion. On same date, the Bank held an ordinary shareholders’ meeting by which it resolved to accept such contributions and increase the capital stock in the amount of Ps.105.5 million.
On December 13, 2017, Grupo Supervielle and the Bank made an irrevocable capital contribution in advance of future capital increases to CCF for an amount of Ps.30.0 million and Ps.570.0 million, respectively.
On January 16, 2018, Grupo Supervielle and the Bank made an irrevocable capital contribution in advance of future capital increases to CCF for an amount of Ps.19.0 million and Ps.361.0 million respectively. On January 24, 2018, CCF held an ordinary shareholders’ meeting by which it resolved to accept the contributions received on July 24, 2017, December 12, 2017 and January 16, 2018, and increase the capital stock in the amount of Ps.56.751 million.
On April 6, 2018, the Board of Directors of Grupo Supervielle approved to issue an offer for the acquisition of 4,000,000 ordinary, nominative, non-endorsable shares of Ps.1 par value and entitled to one vote per share, representing 100% of the share capital of MILA for a total price of U.S.$20 million subject to price adjustment. MILA specializes in car financing, particularly for used cars. ~~The acquisition is expected to close in the second quarter of 2018 subject to certain customary conditions precedent.~~
~~On April, 19, 2018, the shareholders’ meeting of the Bank approved the capitalization of the capital contribution commited by us for an amount of Ps.861 million.~~
Market Area

We maintain a strong geographic presence in the City of Buenos Aires and the Greater Buenos Aires metropolitan area, which is Argentina’s most commercially significant and highly populated area, and we are leaders in terms of our banking network in some of Argentina’s most dynamic regions, including Mendoza and San Luis.

City of Buenos Aires. The City of Buenos Aires is the capital of Argentina and the center of commerce and seat of the ~~national government in Argentina. Based on the publicly available information released by region, the~~Argentine government. The City of Buenos Aires ~~had a GDP per capita in 2005 of approximately U.S.$40,000 and~~has a population of ~~approximately~~ 2.9 million (approximately 7.2% of Argentina’s overall population). as of December 31, 2020 and is the richest city of Argentina. As of December 31, ~~2017,~~2020, the unemployment rate in the City of Buenos Aires ~~increased to 5.9% from 5.7% as of December 31, 2016.~~was 7.2%. In terms of the banking sector, there are ~~843~~829 bank branches (out of a total of ~~4,497~~4,599 bank branches in Argentina) in the City of Buenos Aires. ~~As of June 30, 2016, according to the last available information, the city accounts for 47% of total deposits and 53% of loans in Argentina.~~

Province of Buenos Aires. The Province of Buenos Aires, which includes the Greater Buenos Aires metropolitan area, is an agricultural center focused primarily on the production of soy, wheat, corn and other agricultural products. ~~Based on the most recent publicly available information released by region, the~~The Province of Buenos Aires had ~~a GDP per capita in 2005 of approximately Ps.12,000 and~~ a population of approximately 15.6 million (approximately 38.9% of Argentina’s overall population). as of December 31, 2020 and concentrates a high portion of the agricultural activity. As of December 31, ~~2017,~~2020, the unemployment rate in the Province of Buenos Aires ~~decreased~~increased to ~~8.4%~~12.6% from ~~8.5%~~10.0% as of December 31, ~~2016.~~2019. During the last decade, agricultural production has been strong as a result of high commodity prices which has contributed to Argentina’s economic growth. It is expected that agriculture production will continue to be a key driver of economic growth in Argentina in the coming years. In terms of the banking sector, there are ~~1,449~~1,492 bank branches (out of a total of ~~4,497)~~4,599) bank branches in Argentina) in the Province of Buenos Aires. ~~As of June 30, 2017, according to the last available information, the region accounted for 23% and 18% of total deposits and loans in Argentina, respectively.~~
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Mendoza. The Province of Mendoza is located in the Cuyo region and is the center of the wine industry in Argentina. ~~Based on the most recent publicly available information released by region,~~ Mendoza ~~had a GDP per capita in 2005 of approximately Ps.13,000 and~~has a population of approximately 1.7 million (approximately 4.3% of Argentina’s overall population). as of December 31, 2020. As of December 31, ~~2017,~~2020, the unemployment rate in Mendoza ~~decreased~~increased to ~~2.7%~~10.6% from ~~3.3%~~7.3% as of December 31, ~~2016.~~2019. In terms of the banking sector, there are ~~173~~174 bank branches (out of a total of ~~4,497~~4,599 bank branches in Argentina) in Mendoza. ~~As of June 30, 2016, according to the last available information, the city accounts for 2% of total deposits and loans in Argentina.~~

San ~~Luis~~Luis.. The Province of San Luis is located in the Cuyo region. The primary industries in the Province of San Luis are agricultural production and tourism. Based on the most recent publicly available information released by region, the Province of San Luis had a GDP per capita in 2005 of approximately Ps.13,000 and a population of approximately 0.4 million (approximately 1.1% of Argentina’s overall population). As of December 31, ~~2017,~~2020, the unemployment rate in the Province of San Luis ~~decreased~~increased to ~~1.2%~~4.9% from ~~3.6%~~2.9% as of December 31, ~~2016.~~2019. In terms of the banking sector, there are 5147 bank branches (out of a total of ~~4,497~~4,599 bank branches in Argentina) in the Province of
San Luis. ~~As of June 30, 2016, according to the last available information, the Province of San Luis accounts for 0.5% and 0.3% of each of total deposits and loans in Argentina respectively.~~

Distribution Network

Our infrastructure supports our multi-channel distribution strategy with a strategic national footprint through ~~340~~302 access points, ~~(compared to 326 access points as of December 31, 2017),~~ which include ~~180~~185 bank branches, ~~(compared to 179 bank branches as of December 31, 2017), 78 of these bank branches are fully dedicated to serve senior citizens, 19~~13 banking payment and collection centers, 8079 CCF sales points located in Walmart supermarkets, ~~(compared to 67 sales points in Walmart supermarkets~~20 consumer finance branches of Tarjeta, 5 MILA’s customer support offices, network of 579 car dealers and 457 ATMs, 221 self-service terminals and 256 Supervielle own-experience ATMs with biometric identification and without the use of a password or card.
The following table shows the detail of our distribution network:
Distribution Network
As of December 31,
2020
Banco Supervielle S.A. Branches 185
Banco Supervielle S.A. Sales and Collection Centers 13
Tarjeta Automática S.A. Branches 20
CCF Sales Points 79
Micro Lending S.A.U. 5
ATMs 457
Self-service Terminals 221
Supervielle own-experience ATMs with biometric identification 256
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Deposits
The following charts set forth the breakdown of our deposits by type of account and customer category as of December 31, ~~2017), 61 consumer financing branches~~2020.
Our main source of ~~Tarjeta and other points of sale and 521 ATMs and 193 self-service terminals.~~funds is the Bank’s deposit base.

~~As of December 31, 2017, the Bank’s loan portfolio to branches ratio, which we calculate by dividing the~~
Non- or low-cost demand total ~~amount of loans outstanding at the end~~deposits (including private and public-sector deposits) comprised 35.0% of the ~~period by the number~~Group’s total deposits base (24.3% of ~~branches at the end~~savings accounts and 10.7% of ~~such period, was Ps.300.8 million, compared to Ps.191.5 million~~checking accounts) as of December 31, ~~2016 and Ps.120.5 million~~2020. Non- or low-cost demand deposits represented 49 % of total deposits as of December 31, ~~2015. Based on the Peso amounts~~2019.
Retail customer deposits in pesos represented 37% of ~~the loan portfolios reported by the following Argentine private banks in their respective financial statements~~total deposits as of December 31, ~~2017, the loan portfolio to branches ratio~~2020, while wholesale and institutional deposits in pesos represented 43.5% of (i) Banco Macro S.A. was Ps.298.8 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.532.1 million and (iii) BBVA Banco Francés S.A. was Ps.503.9 million. The loan portfolio to branches ratio as of December 31, 2016 of (i) Banco Macro S.A. was Ps.194.8 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.379.1 million and (iii) BBVA Banco Francés S.A. was Ps.309.3 million. The loan portfolio to branches ratio as of December 31, 2015 for (i) Banco Macro S.A. was Ps.138.3 million, (ii) Banco de Galicia y Buenos Aires S.A. was Ps.287.3 million, (iii) BBVA Banco Francés S.A. was Ps.227.5 million and (iv) the Argentine private banks was Ps.190.4 million. According to publicly available information provided by the Central Bank, as of December 31, 2017, the loan portfolio to branches ratio for all Argentine private banks was Ps.363.8 million.total deposits in pesos.

~~The following table and map show the geographical distribution of branches, senior citizens dedicated branches and sales and collection centers, except otherwise indicated:~~
~~Distribution Network~~

As of December 31, 2017

As of the date
of this annual report

Banco Supervielle S.A. Branches(1)

179

180

Banco Supervielle S.A. Sales and Collection Centers

19

19

Tarjeta Automática S.A. Branches

20

20

Tarjeta Automática S.A. Sales and Collection Centers

41

41

Cordial Compañía Financiera Sales Points

67

80

ATMs

518

521

Self-service Terminals

186

193

(1)           In February and March 2017, the Central Bank approved our request to convert the remaining senior citizen service centers into full bank branches. As a result, as of the date of this annual report, we have 180 bank branches.
~~Deposits~~
The following tables compare the composition of the Bank’s (on a consolidated basis) total ~~liabilities and deposits~~funding with those of all Argentine private banks’ in each case as of December 31, ~~2017:~~2020:

Year ended December 31, 2017

Liabilities

Banco Supervielle

Private Banks

(in millions of Pesos)

%

(in millions of Pesos)

%

Deposits

60,758

73.7

1,374,702

75.6

Other Liabilities

21,646

26.3

442,967

24.4

Total

82,404

100

1,817,669

100

Year ended December 31, 2017

Deposits Breakdown

Banco Supervielle

Private Banks

(in millions of Pesos)

%

(in millions of Pesos)

%

Checking accounts

5,700

9.4

238,408

17.3

Saving Accounts

29,579

48.7

595,372

43.3

Time deposits

17,259

28.4

413,838

30.1

Other deposits

8,220

13.5

127,084

9.2

Total

60,758

100

1,374,702

100

Year ended December 31, 2020
Liabilities and Shareholders equity Banco Supervielle Private Banks
(in millions of Pesos) % (in millions of Pesos) %
Deposits 178,641.6 71.7 % 4,744,543.4 70.8 %
Other Liabilities 70,589.3 28.3 % 1,958,721.0 29.2 %
Total 249,230.9 6,703,264.4

Due to the importance of the franchise of our deposit network, retail plus senior citizens deposits continued to account for a significant portion of total deposits. As of December 31, 2017, retail plus senior citizens deposits represented 54% of total deposits, compared to 60% as of December 31, 2016.
Year ended December 31, 2020
Deposits Breakdown Banco Supervielle Private Banks
(in millions of Pesos) % (in millions of Pesos) %
Checking accounts 16,891.0 9,5 % 1,009,139.8 21,3 %
Saving Accounts⁽¹⁾ 102,845.5 57,6 % 1,805,636.3 38,1 %
Time deposits 46,113.1 25,8 % 1,349,726.1 28,4 %
Other deposits 12,792.0 7,2 % 580,041.2 12,2 %
Total 178,641.6 4,744,543.4
(1) Includes special checking accounts
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Loan Portfolio —– General Overview

Each loan category in our loan portfolio faces different risks. We have established underwriting policies, standards and pricing mechanisms designed to mitigate the risks posed by each loan category. ~~Our loan portfolio has grown significantly since 2001.~~ As of December 31, ~~2017,~~2020, we had a loan portfolio ~~(including the securitized loan portfolio)~~ of ~~Ps.60.3~~Ps.110.4 billion (equivalent to U.S.$~~3.2~~1.3 billion converted to U.S. dollars at the reference exchange rate as of December 31, ~~2017), compared to December 31, 2001, when we had a~~2020).
The following charts set forth the breakdown of our loan portfolio by segment, and of ~~Ps.92.9 million (equivalent to U.S.$92.9 million, converted to U.S. dollars at~~ the ~~reference exchange rate~~specific customer categories in our corporate banking and retail segments as of December 31, ~~2001).~~2020.

(1)       As of December 31, 2020, the term “small businesses” refers to individuals and businesses with annual sales up to Ps.100 million, the term “SMEs” refers to individuals and businesses with annual sales over Ps.100 million and below Ps.700 million, the term “middle-market companies” refers to companies with annual sales over Ps.700 million and below Ps.2.5 billion and the term “large corporates” refers to companies with annual sales over Ps.2.5 billion.
Underwriting Policies

Our policies require that most loans only be approved for borrowers that are able to provide proof of a source of repayment and demonstrate an ability to service existing and future debt. Our underwriting procedures for all loan types require consideration of the borrower, including with respect to the borrower’s financial condition, cash flow, the management skills and industry of our corporate customers, and the economic environment surrounding the issuance of any given loan.

We generally expect customers to repay loans with unencumbered cash available to them. A significant part of our loan portfolio is secured, and we assess the quality and liquidity of collateral before we grant any secured loan.
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Interest Rate Terms

We price loans: (i) on both a fixed rate and floating rate basis; (ii) over different terms; and (iii) based upon different rate indices. Our pricing structures are consistent with our interest rate risk management policies and procedures. For more information on these policies and procedures, See “—Credit Risk Management.”

Loans to individuals (personal loans, credit card loans, car loans and mortgages) are priced only on a fixed rate ~~basis, while~~basis. UVA Mortgage loans and some UVA car loans principal is adjusted for inflation. Loans to small businesses and SMEs are priced on both a fixed rate and floating rate basis as follows:

·
Fixed rate: promissory notes (checking and invoice discounts, work certificates for government projects and warrants), overdrafts, foreign trade loans, automobile, personal loans and mortgages with adjustable principal, based on inflation.

·
Floating rate: automobile and other secured loans, receivables from financial leases.

·
Both rates: corporate unsecured loans.

Risks

Below we list our loan categories from lowest risk to highest risk in terms of repayment ability and historical default rates:
1.              ~~Promissory notes (checking and invoice discounts and warrants)~~

2.              ~~Receivables from financial leases~~
(1) Promissory notes (with recourse to the assignor), Warrants - Commodities

3.              ~~Foreign trade loans~~
(2) Foreign trade loans

4.              ~~Mortgage loans~~
(3) Mortgage loans

5.              ~~Corporate unsecured loans~~
(4) Receivables from financial leases

6.              ~~Overdrafts~~
(5) Promissory notes (without recourse to the assignor), Warrants – Others

7.              ~~Automobile and other secured loans~~
(6) Automobile and other secured loans

8.              ~~Personal loans and credit card loans (from the Retail Banking segment)~~
(7) Corporate credit cards

9.              ~~Personal loans and credit card loans (from the Consumer Financing segment)~~
(8) Corporate unsecured loans

(9) Overdrafts
(10) Personal loans and credit card loans (from the Personal and Business Banking segment)
(11) Personal loans and credit card loans (from the Consumer Finance segment)
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Summary of Loan Portfolio Categories

Promissory notes (factoring and check discounting and warrants)

Factoring and check discounting. Check discounting is used to finance working capital needs for businesses that have a diversified accounts receivable portfolio and customers or parties that issue checks and have a favorable credit history. Most of our check discounting transactions are with recourse to the assignor (i.e., we secure repayment with a pledge over an assignment of the borrower’s cash flow). However, some of our check discounting transactions are without recourse to the assignor, in which case we only have recourse to the endorser of the check. With respect to our operations with recourse, we evaluate the creditworthiness of both the assignor and the endorser of the check, specifically assessing each party’s payment history, credit history and legal history by requiring a variety of documents to ~~aid~~help us in our underwriting process. We accept checks that are issued in the ordinary course of business from the customer with a payment date generally no longer than 180 days.

Warrants. Warrants are granted to finance working capital needs for producers or sellers of commodities or non-commodities such as sugar, soy, wheat, corn, sunflower, peanuts, cotton and yerba ~~mate and tobacco.~~mate. We take collateral in respect of the warrants for at least 20% to 35% in excess of the value of the products, depending on the type of product. The most significant risk we face when extending warrant financing relates to the quality and preservation of the underlying assets. To mitigate this risk, we select third-party companies to assess and monitor the value and quality of the underlying products. We establish maximum warranty amounts ranging from ~~Ps.5.0~~U.S.$ 5.0 million to ~~Ps.40.0~~U.S.$ 40.0 million depending on the type of product. We set interest rates for our warrants based on the term of the warrant and the quality of the underlying product.

Foreign trade loans
Foreign trade loans are granted to finance exports and imports through pre-financing and financing loans for exports, international factoring and letters of credit for imports.
In the case of pre-financing and financing loans for exports, we analyze the repayment ability of both the borrower and its foreign client. Specifically, we ensure that the credit line that we grant is tailored to the borrower’s historical export levels and projected export levels (based on contracts, purchase orders and other documentation). We generally grant pre-financing and financing loans for exports with terms ranging from 90 to 180 days, depending on the transaction and such loans are solely denominated in U.S. dollars. Interest rates for pre-financing and financing loans for exports depend on the term of the loan and range from 1.5% to 7.5%.
In the case of letters of credit for imports, we face a risk that we will have to pay for the imports in the event that the borrower defaults. To mitigate this risk, we ensure that the loan is granted once the merchandise to be imported can be shipped and the relevant shipment documentation can be issued. Generally, the term of our letters of credit do not exceed one year. We receive a fee for the letters of credit we issue instead of charging interest.
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Mortgage loans
The Bank grants inflation adjusted mortgage loans. The Bank sets a fixed interest rate but the remaining capital is adjusted on a monthly basis according to the UVA monthly evolution. Therefore, the loan has index-linked capital payments (the value of the capital and the installment is updated by inflation). The Bank evaluates the creditworthiness of the client based on credit and legal track records, a minimum credit score and income level. The loan is granted based on a loan-to-value ratio up to 75% of the property value (with a unlimited maximum amount). The terms of the mortgage loans are from 12 months to 360 months.
Receivables from financial leases

Our financial leases are granted for financing acquisitions of capital assets, industrial equipment, road equipment and automobiles. The terms of these loans are typically between 18 and 60 months, varying based on the type of product or equipment and the useful life of such product or equipment.

The primary source of repayment for this product is cash flows from the borrower, and, therefore, we evaluate the borrower’s repayment ability before granting such loans. We also evaluate the type of asset for which the financial lease is granted in the event the borrower is unable to repay the loan. If the borrower is unable to repay the loan, we may sell the asset to recover all or part of the outstanding amount of the loan.

The primary risk associated with our financial leases is that the borrower may default on the loan and the collateral may be insufficient to recover the outstanding amount of the loan. We mitigate this risk by: (i) granting financial leases in respect of new assets that have historically shown adequate resale values, (ii) requiring a down payment of
10% to 30% (depending on the repayment ability of the customer); and (iii) for certain types of assets, requiring a commitment from the supplier of the asset to buy or find a buyer for the asset in the event of the borrower’s default. We set floating or fix interest rates for our financial leases based on prevailing market rates.

~~Mortgage~~Automobile and other secured loans

We grant secured loans to finance automobile purchases. The ~~Bank grants inflation adjusted mortgage loans. The Bank sets~~maximum amount of our automobile loans is Ps.3,100,000 with a ~~fixed interest rate but~~maximum term of 60 months. Before granting this automobile and other secured loans, we evaluate a customer’s ability to meet monthly payment obligations by taking into account the ~~remaining capital is adjusted on a monthly basis according to the UVA monthly evolution. Therefore, the loan has index-linked capital payments (the value of the capital~~prospective borrower’s earnings, minimum credit rating and ~~the installment is updated by inflation). The Bank evaluates the creditworthiness of the client based on credit~~financial and legal track records, a minimum credit score and income level. The loan is granted based on a loan-to-value ratio up to 75% of the property value (with a unlimited maximum amount). The terms of the mortgage loans are from 12 months to 360 months.
~~Foreign trade loans~~
~~Foreign trade loans are granted to finance exports and imports through pre-financing and financing loans for exports, international factoring and letters of credit for imports.~~
~~In the case of pre-financing and financing loans for exports, we analyze the repayment ability of both the borrower and its foreign client. Specifically, we ensure~~background. We also require that the ~~credit line that we grant is tailored to~~vehicle serve as collateral in the ~~borrower’s historical export levels and projected export levels (based on contracts, purchase orders and other documentation).~~event of a payment default by the borrower. We ~~generally grant pre-financing and financing loans for exports with terms ranging from 90 to 180 days, depending on the transaction and such loans are solely denominated in U.S. dollars. Interest~~set interest rates ~~for pre-financing and financing loans for exports depend~~based on the term of the automobile loan and ~~range~~a loan-to-value ratio ranging from 2%50% to ~~7.5%.~~75% of the value of the vehicle at the time of sale.

In the case of letters of credit for imports, we face a risk that we will have to pay for the imports in the event that the borrower defaults. To mitigate this risk, we ensure that the loan is granted once the merchandise to be imported can be shipped and the relevant shipment documentation can be issued. Generally, the term of our letters of credit do not exceed one year. We receive a fee for the letters of credit we issue instead of charging interest.Corporate unsecured loans

~~Corporate unsecured loans~~
Corporate financial loans. Our corporate financial loans finance short term working capital needs of up to one year or ~~medium term~~medium-term working capital needs of up to three years for businesses that require monthly or periodic amortization. These loans are granted to customers with annual revenues in excess of ~~Ps.50~~Ps.300 million. We evaluate the customer’s repayment ability using the general criteria and analysis for corporate customers. We also analyze the following factors: the shareholders and management of the borrower, the financial and economic environment, regulatory risk and projected cash flow for the entire period during which the loan will be outstanding to ensure that the borrower will be able to comply with the scheduled payments under the loan. We take into account the potential effects that economic variables such as exchange rate volatility and inflation could have on projected cash flow. We set either a floating or fixed interest rate for our corporate financial loans based on the creditworthiness of the borrower’s business and the term of the loan.
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Loans to small businesses. Our loans to small businesses are originated at the Bank’s branches based on a policy that requires adequate credit and legal history, a minimum credit score and a certain level of revenues. Our loans to small businesses finance the working capital needs of businesses with annual revenues of up to ~~Ps.50~~Ps.300 million. The maximum loan assistance that we provide is ~~Ps.725,000~~Ps.25 million for unsecured loans and ~~Ps.725,000~~Ps.25 million for factoring services. Our general policy is that our small business loan portfolio be composed 50% of unsecured loans and 50% of secured loans and factoring transactions. The Bank’s branches may grant up to ~~Ps.150,000~~Ps.3.2 million of unsecured loans and ~~Ps.150,000~~Ps.9.3 million of factoring transactions, and any excess amount must be evaluated by the Bank’s specialized credit analysis unit. We set either a floating or fixed interest rate for our loans to small businesses based on the creditworthiness of the borrower’s business and the term of the loan. The interest rates for our loans to small business are generally higher than the interest rates for our corporate financial loans reflecting the difference in size and revenues of the businesses.
Overdrafts

We grant overdrafts to businesses to finance working capital needs and ordinary course business activity. We assess whether the borrower has the ability to meet its payment obligations over a maximum 180-day period, placing an emphasis on the borrower’s line of business. Businesses with operations that do not produce short-term revenues or with cyclical operations generally must seek other types of financing. We are able to anticipate a customer’s ability to repay overdrafts by analyzing daily accounts payable, accounts receivable, credits and fluctuations. We set interest rates for our overdrafts on a monthly basis.

~~Automobile and other secured loans~~
We grant secured loans to finance automobile purchases. The maximum amount of our automobile loans is Ps.1,500,000 with a maximum term of 60 months. Before granting this automobile and other secured loans, we evaluate a customer’s ability to meet monthly payment obligations by taking into account the prospective borrower’s earnings, minimum credit rating and financial and legal background. We also require that the vehicle serve as collateral in the event of a payment default by the borrower. We set interest rates based on the term of the automobile loan and a loan-to-value ratio ranging from 40% to 80% of the value of the vehicle at the time of sale.
Personal loans and credit card loans ~~(from~~(within the ~~Retail~~Personal and Business Banking segment)

Our ~~Retail~~Personal and Business Banking segment originates loans based on scoring systems and policies specifically tailored to our Plan Sueldo services, pension and retiree services and general clientele. For a detailed discussion of the Bank’s credit application process, credit monitoring and review process and the risks associated with personal loans and credit card loans, See “” —Credit Risk Management—Banco Supervielle S.A.”

Retail banking in Argentina is heavily regulated, including with respect to maximum interest rates and fees. See “Item 4.B Business overview—Argentine Banking Regulation—Interest Rate and Fee Regulations.” We tailor our policies related to issuing and granting loans and credit to comply with these regulations.
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Personal loans and credit card loans ~~(from~~(within the Consumer ~~Financing~~Finance segment)

The personal and consumer loans offered by CCF and Tarjeta are unsecured products for personal use and are offered to the middle and lower-middle-income sectors. Due to the nature of these products, our pricing structure is high compared to the Argentine financial system. ~~To be approved for such loans, these customers must provide proof of an available means of repayment and they typically but do not always have credit history.~~
To mitigate the risks associated with personal and consumer loans, the initial term of any such loan is limited during the first loan, and performing borrowers may receive offers to extend the terms of the loans.

One of the principal sales channels for personal and consumer loans is through telemarketing typically targeting credit card customers or customers that took out a loan previously with CCF, Tarjeta or another company and performed in accordance with the terms of such loan.

The maximum amount of our personal and consumer loans is ~~Ps.200,000,~~Ps.0.2 million, while the average loan ~~is Ps.22,900.~~as of December 31, 2020 was Ps.65,000. The average term of our personal and consumer loans ~~is 18~~as of December 31, 2020 was 35 months, with a maximum of 6084 months. The loans are granted at a fixed rate and are paid back in monthly installments and amortized based on the French amortization system, which consists of equal monthly installments amortized in a manner in which (i) interest payments are higher at the beginning of the loan and decrease over the life of the loan, while (ii) principal payments are lower at the beginning of the loan and increase over the life of the loan.

Credit Risk Management

We define credit risk as the risk that arises from losses and/or a decline in the value of our assets as a result of our borrowers or counterparties defaulting on or not complying with their obligations. Credit risk includes any event that may cause a decline in the present value of ~~our loans,~~a loan, but does not necessarily require the counterparty’s default.
This risk also encompasses liquidity risk, which exists whenever a financial transaction cannot be completed or generate liquidity in accordance with an agreement. The magnitude of credit risk losses hinges upon two factors:

·
the amount of exposure at the time of the default; and

·
the amounts recovered by the Bank based on the payments received from the borrower and the execution of risk mitigation policies, such as guarantees that may limit losses.

With regard to risk appetite, the Credit Risk ~~Management~~management is the process that leads to the identification, measurement or evaluation, mitigation and monitoring or follow-up of the risk, as considered in the entire credit cycle, since its origin until collection, recovery or loss, and in case of non-compliance. Likewise, the definition of the Bank’s risk appetite is generated through the development and monitoring of indicators, with their respective thresholds and limits for Credit Risk.

Our credit risk management policies also monitor concentration risk. This risk arises when the concentration of exposure has the capacity to generate enough losses (relating to results of operations, minimum capital requirements, assets or global risk levels) to impact the entity’s financial strength or capacity to maintain its operations and significantly change the entity’s risk profile. In 2020 we developed and implemented a portfolio limits policy to fix maximum portfolio concentration ratios based on economic sectors and customer credit rating. Economic sectors were classified as Very High, High, Mid and Low, according to their risk perception. These sectors are regularly monitored to confirm or change the classification according to their evolution.

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The Board of Directors approves credit risk policies and strategies presented by the Risk Management Committee, in consultation with the Credit team, the Legal Affairs team and the Corporate Banking team, and in accordance with Central Bank regulations. The Bank’s credit risk policies and strategies seek to develop commercial opportunities and business plans, while maintaining a prudent level of risk. The credit policy is tailored to corporations and individuals from every segment.

The pillars of the Bank’s credit policy are based on an analysis of the client’s cash flow and its repayment capacity. ~~Regarding corporate clients, the~~
The Bank focuses on supporting companies belonging to sectors with great potential which tend to be successful in their activity. Within the range of credit products offered for the corporate business segment, the Bank aims to develop and lead the factoring ~~products,~~and leasing market, as well as being leader in foreign trade.
Within the ~~Plan Sueldo~~ corporate banking segment, we seek to have a solid proposal for the SMEs and middle-market companies seeking to maintain proximity with customers through customer service centers, agreements with customers throughout their value chain and providing agile responses through existing credit processes.
With regard to individuals, in addition to the payroll customers and senior ~~citizen~~citizens, the retail banking ~~services. In addition,~~is specially focused on entrepreneurs and SMEs as well as the ~~Bank grants short and long term financing for specific products (such as leasing and secured transactions).~~
Identité customers We believe that loan portfolio diversification is a staple of the Bank’s credit risk management objective of distributing risk appropriately by economic segment, client type and loan amount. The same importance is given to the risk mitigation mechanisms that ensure adequate risk coverage, such as the use of credit instruments in the corporate segment that cover substantial amounts of the loan. Finally, we continuously use early detection processes to monitor the performance of the loan portfolio.

Credit Risk Measuring Models

The Bank relies on several models that estimate the distribution of possible losses arising out of the loan portfolio to calculate expected losses and minimum capital requirements. These models include:

·~~Credit risk measurement models.~~ The Bank’s models estimate distribution of possible loan portfolio losses, which depend on counterparties’ default (probability of default (“PD”)), as well as the exposure assumed with them (EAD -
• Credit risk measurement models. The Bank’s models estimate distribution of possible loan portfolio losses, which depend on counterparties’ default (probability of default (“PD”)), as well as the exposure assumed with them (EAD—Exposure at the time of default) and the proportion of each unfulfilled loan that the Entity is able to recover (Loss in the event of default (“LGD”)). Based on these parameters, the expected loss (“PE”) and economic capital are estimated. As a result of this, a methodological and developmental plan has been developed in order to calculate the Risk Adjusted Return (“RAROC”) at Banco Supervielle in order to optimize the management linked to Credit Risk.
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• Expected Losses Calculation. This is calculated based on the results of the PD, EAD and LGD models. The expected loss calculation analyzes portfolio information to estimate the average value of loss distributions for a one year time horizon in the case of performing loans and for a lifetime horizon in the case of underperforming or non-performing loans.
• Minimum Capital Requirement Calculation. This is represented by the difference between the portfolio’s risk value and expected losses within a 99.9% confidence interval for individuals and 99.0% confidence interval for corporate customers. We have two minimum capital requirement models (one for corporate customers and one for individuals), which include the economic capital required for our concentration risk and securitization risk.
Grupo Supervielle assesses on a forward-looking basis the expected credit losses associated to its financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, loan commitments and financial guarantee contracts that are not measured at fair value.
For the purposes of estimating the impairment amount, and in accordance with its internal policies, Grupo Supervielle classifies its financial instruments (financial assets, commitments and guarantees) measured at amortized cost or fair value through other comprehensive income in one of the following categories:
Normal Risk (“Stage 1”): includes all instruments that have not experienced a significant increase in credit risk since initial recognition and is not purchased or originated credit impaired.
Normal risk under watchlist (“Stage 2”): includes all instruments that, have experienced significant increases in credit risk since initial recognition but are not yet deemed credit-impaired.
Doubtful Risk (“Stage 3”): includes financial instruments, overdue or not, which are considered to be credit impaired. Likewise, loan commitments or financial guarantees whose payment is probable and their recovery doubtful are considered to be in Stage 3.
Significant increase in credit risk
Grupo Supervielle considers a financial instrument to have experienced a significant increase in credit risk when any of the following conditions exist:
Individuals and Businesses
1. Portfolios between 31 and 90 days past due
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2. The credit application score has deteriorated by more than 30% with respect to the current performance score
3. Score of behavior less than accepted cut off
4. Loans and cards with facilities under Financial Services regulations within the framework of the health emergency provided by Decree No. 260/2020 Coronavirus (COVID-19) that were impaired at the time of refinancing. Or, loans that were not impaired, but deferred more than 5 installments.
Corporate Banking
1. Portfolios between 31 and 90 days past due
2. Maximum Argentine Central Bank a situation equal to 2
3. Credit Ratings C (Probability of default higher than 30%)
4. Its rating deteriorated by more than two notes from its credit approval rating.
Consumer Finance: 1. Portfolios between 31 and 90 days past due.
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 as historical information is utilized, a sectoral analysis has been included as additional definition of the significant risk increase.
In such analysis, companies’ default risk is evaluated according to the type of industry and the impact such companies have suffered in face of the current economic situation, while taking into account their features, seasonal nature, etc.
Finally, the different activities that make up the Bank’s portfolio are classified into four types of risk. They are:
1. Low risk
2. Medium risk
3. High risk
4. Very high risk
On this occasion, this additional definition of a significant increase in risk has been applied for the SME and E&P segments, for the very-high and high risk activities (only for the single firm portfolio):
Very high risk High risk
Construction Machinery & equipment
Tourism & Gastronomy Iron and steel industry
Real estate Home appliances
Entertainment Sports
Passenger transport Textile
Professional services
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The evaluation of significant credit increases and the calculation of ECL include prospective information. Grupo Supervielle carried out a historical analysis and identified key economic variable that affect the credit risk and expected credit losses for each portfolio. Forecasts of these economic variables (“base economic scenario”) are provided on a six-month basis by the research team at the Bank 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 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.
Grupo Supervielle considers the following variables for estimating expected credit losses on the different scenarios:
Parameter Segment Macroeconomic Indicators
Probability of Default Personal and Business Banking
Inflation
Wage increase
Private employment
Monthly Economic Activiy Estimator
Corporate Banking
Real Badlar Rate
Monthly Economic Activiy Estimator
Consumer Finance
Wage increase
Inflation
Monthly Economic Activiy Estimator
Loss Given Default All Wage increase
Atomization of the loan portfolio
As a result of ~~this,~~our risk management policies, we have a ~~methodological~~diversified and ~~developmental plan has been developed in order to calculate~~atomized portfolio, where the ~~Risk Adjusted Return (“RAROC”) at Banco Supervielle in order to optimize~~top 10, 50 and 100 borrowers represent 17%, 30% and 36%, respectively of the ~~management linked to Credit Risk.~~Loan portfolio.
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Atomization of the loan portfolio
Loan portfolio atomization 4Q20 3Q20 2Q20 1Q20 4Q19
%Top10 17 % 18 % 18 % 16 % 16 %
%Top50 30 % 33 % 35 % 33 % 32 %
%Top100 36 % 38 % 42 % 39 % 40 %
Loan Portfolio breakdown by economic activity
Ps. Change QoQ Business Sector 4Q20 Share 3Q20 Share
(In millions)
6,927 Families and individuals 47.2 % 44.0 %
1,781 Agribusiness 14.3 % 13.6 %
750 Food & Beverages 9.2 % 9.2 %
(1,285) Construction & Public works 4.1 % 5.6 %
343 Retailer 1.9 % 1.7 %
(301) Wine 2.7 % 3.2 %
1,146 Utilities 3.8 % 3.0 %
(172) Financial 2.6 % 2.9 %
(2.130) Oil, Gas & Mining 0.3 % 2.4 %
(55) Transport 1.2 % 1.4 %
(269) Chemicals & plastics 1.2 % 1.6 %
(361) Automobile 1.0 % 1.4 %
70 Machinery & Equipment 1.0 % 1.0 %
1,006 Others 9.5 % 9.3 %
Collateralized Loan Portfolio

·~~Expected Losses Calculation.~~ ~~This is calculated based on the results~~As of December 31, 2020, 43% of the ~~PD, EAD~~total commercial loan portfolio was collateralized, while 80% of the commercial non-performing loans portfolio was collateralized (compared to 58% as of December 31, 2019).
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Loan portfolio collaterall Entrepreneurs & Small Businesse SMEs & Middel Market Large Total
Collateralized Portfolio 50 % 45 % 42 % 43 %
Unsecured Portfolio 50 % 55 % 58 % 57 %
Regarding the Personal and ~~LGD models. The expected loss calculation analyzes~~Business Banking portfolio, ~~information~~loans to ~~estimate~~payroll and pension clients as of December 31, 2020, represented 71.8% of the ~~average value of loss distributions for a one year time horizon~~total loan portfolio to individuals in the ~~case of performing loans and for a lifetime horizon in the case of underperforming or non-performing loans.~~
·~~Minimum Capital Requirement Calculation.~~ This is represented by the difference between the portfolio’s risk value and expected losses within a 99.9% confidence interval for individuals and 99.0% confidence interval for corporate customers. We have two minimum capital requirement models (one for corporate customers and one for individuals), which include the economic capital required for our concentration risk and securitization risk.segment.

~~Country Risk Management~~Credit Policy

Country risk arises from losses in investments or loans to individuals, corporations or governments, due to adverse changes in a foreign country’s economic, political or social environment. The risk is present in loans granted to non-residents, loans in which the borrower’s or its guarantor’s solvency is significantly tied to the another country’s circumstances, investments made abroad and contracts with foreign service providers.
a) Banco Supervielle S.A.

We believe that the Bank has an adequate framework in place to manage this risk, given the complexity of its operations and its exposure to country risk. The Bank has no significant exposure to country risk except for credit lines with correspondents and international factoring. Country risk is a special consideration when granting credit lines and is analyzed on a case by case basis.
~~We have a Credit~~ House Limit committee which is composed of at least three members of our Board of Directors, one of whom is the Chairman of the Board. The CEO of the Bank, the Chief Credit Risk Officer (“CCRO”) and the Bank’s heads of Retail Banking and/or Corporate Banking and/or Global Markets, are also members. The CCRO acts as chairman of the committee.
The Credit House Limit Committee is the highest authority in our and our subsidiaries’ credit risk decision-making structure with respect to assessing situations in which any credit approval limit is exceeded.
~~Banco Supervielle S.A.~~
The Bank’s Board of Directors sets its credit policy and risk limits, with information from its risk department and the various commercial banking units and in compliance with Central Bank regulations. The credit policy is aimed at taking advantage of business opportunities within the scope and terms of the Bank’s business action plan, while maintaining prudent levels of exposure to counterparty risk. The Bank’s credit policy focuses on companies and individuals of all segments~~, with a special focus on small businesses, entrepreneurs and SMEs.~~
~~The pillars of the Bank’s credit policy include:~~
·                  ~~maintaining independence between the risk management function and the business and management team;~~
·                  ~~maintaining a highly professional corporate structure around risk management;~~
·                  ~~keeping the Board of Directors and senior management involved in risk management decision-making;~~
·                  ~~ensuring that risks are consistent with the risk appetite framework and subject to ongoing monitoring; and~~
·                  ~~propose limits for credit risk tolerance to be approved by the Board of Directors.~~
Credit Application Process

The credit approval process is designed to facilitate an accurate risks analysis, expedient decisions and complete support information.

Potential customers are interviewed and asked to submit documentation to efficiently evaluate risk. The ~~risk area~~Credit department performs a risk evaluation using computer software and issues an opinion on the requested assistance. If credit assistance is deemed feasible, the customer’s application is submitted for approval at the appropriate level, pursuant to credit authority guidelines and depending on the facility amount requested, the term and security.
Applications by prospective retail customers are analyzed using an electronic application. Prospective corporate customers are evaluated on a case-by-case basis. There are no pre-approved lines of credit, except for individuals who may obtain a pre-approved line of credit based on their maximum debt burden ratio.

Credit Monitoring and Review Process

It is the Bank’s policy to continually track and monitor risk in order to anticipate or ~~foresee~~foresee changes in the macroeconomic environment and anomalies that may affect the course of customers’ activities and the repayment of loans. The ~~Management and~~ Credit ~~Administration Department~~Risk department traces alert indicators for signals that may affect credit collection. Signals could be late payments of more than 30 days, alerts from credit bureaus, lawsuits from third parties, customers or suppliers and bounced checks. Action plans are in place to anticipate or mitigate potential nonperformance situations. The Credit ~~and~~ Risk ~~Departments~~department tracks alert indicators by:

·
analyzing loan portfolio evolution;

·
verifying compliance with credit regulatory requirements;

·
reviewing the factoring portfolio on a daily basis by operation, maturity, concentration, direct and indirect risk;
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·
verifying and analyzing customer arrears;

·
detecting market alerts, customer behavior in the market and the financial system, lawsuits, etc.;

·
proposing action plans;

·
involving the ~~Corporate Forum and the Small Enterprises Forum;~~
senior credit committee or junior credit committee as applicable;

·
reporting customer alerts to officials and managers; and

·
establishing allowances for estimated loan losses.

Credit Approval Process

The following chart describes the levels of approval for the different types of loans:

Credit Approval Limit
(in millions of Pesos)

Unsecured

Secured
House Limit (Senior Committee + Board of Director’s Chairman)

Total
Maximum Approval Limit
Credit Approval Committee Corporate Banking

Senior Committee (Credit Manager + Commercial Coordinator Manager + CEO + Credit Coordinators + One Member of the Board of Directors)

300

300

Coordinating Officers Committee (Credit + Corporate Banking)

80

140

Regional Committee (Credit Manager or Credit Officers + Commercial Manager)

40

70
Retail Financing

Small Businesses (Retail Credit Manager + Commercial Manager)

25

35

Small Businesses (Retail Credit Manager or Credit Supervisors)

25

35

Retail Automatic credit analysis process

1.5

—

Retail Manual credit analysis process

—

10
Credit Approval Limit
(in millions of Pesos)
Unsecured Secured

Total Maximum
Approval Limit
Senior Committee Chief Credit Officer (as Chairman of the Committee); Chairman;
CEO (as Vice chairman of the Committee);
COO;
Chief Risk Officer;
Credit Executive Manager middle-market & corporates; Credit Executive Manager SMEs;
Head of Corporate Banking;
Manager of SMEs business
Head of Treasury and Global Markets;

Limitless

Limitless
Junior Committee
Chief Credit Officer (as Chairman of the Committee);
COO;
Head of Corporate Banking;
Head of Treasury and Global Markets;
Manager of SMEs business;
Credit Executive Manager middle-market & corporates;
Credit Executive Manager SMEs;
Executive Manager Corporate Banking Bs Aires and Interior;

600

600
Manager 300 300
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Credit Approval Limit
(in millions of Pesos)
Unsecured Secured

Total Maximum
Approval Limit
Team Leaders 120 120

Relationship officers 25 25

·                  ~~The Risk Management Committee has the following responsibilities regarding credit policies:~~
·                  ~~Approves credit retail policies and oversees correct implementation and compliance with such policies.~~
·                  ~~Defines credit evaluation criteria, including the cut-off points concerning scoring models, minimum income levels required and others.~~
·                  ~~Monitors the evolution of the credit portfolio.~~
Recovery Process

The Bank’s Recovery Area handles the collection of past due credits. Collections are handled by different units for individual and corporate customers.

With respect to individual customers, the Recovery Area begins a collection process when credits become past due by three days. The recovery team issues automatic notice actions from the ~~3rd~~3^rd to the ~~7th~~8^th past due days in order to warn the customers. After this period, the collection of the overdue credit is handled by a third-party collection agency. After 90150 days, the Recovery Area determines whether the past due credit should be sent to a different collection agency or it made subject to legal proceedings.

In the case of corporate ~~customers,~~clients and SMEs, payment defaults are analyzed on a case-by-case basis, taking into consideration the ~~size of the~~ loan amount and the number of days in arrears, among other factors. However, generally, past due credits of corporate customers enter the collection process after 90 days. For financial leasing customers, the collection process begins after a credit is past due by 60 days. The Recovery Department ~~may engage~~can participate in ~~extra-judicial~~out-of-court and judicial settlement negotiations and approve debtor payment proposals ~~by debtors of~~in amounts for up to ~~Ps.1~~Ps.10 million.

The Corporate Forum meets every month to review the past due credits after 35 days, while the Retail SME Forum meets biweekly to review the outstanding dues after 15 days. This process allows the Corporate Recovery department to manage risk earlier, and also to take actions such as refinancing a loan, reducing the interest or using a guarantee.
b) CCF and Tarjeta

The Corporate and Retail SME Forum, jointly with the Corporate Recovery department, can submit proposals to the Coordinating Officers Committee on how to address loan defaults that are outside their scope.
~~CCF and Tarjeta~~
~~To evaluate a prospective customer and detect possible fraud,~~In 2020, CCF and Tarjeta ~~maintain a centralized credit analysis~~made progress with the reengineering of the application assessment process ~~for issuing credit cards~~to update its processes and ~~granting personal loans.~~assessment systems. This reengineering allowed CCF and Tarjeta ~~use an Experian decision engine, which combines automatic~~a faster and more flexible implementation of its credit policy. The new evaluation ~~processes (including scorecards,~~process simplified the application load and improved controls using the information available in the credit ~~bureaus (such as Equifax), negative file, maximum exposure, installment~~bureaus. It will seek to ~~income ratios~~deepen the control automation strategy, minimizing risks while providing a more agile service to our clients. Likewise, a new admission scoring model has been developed and ~~line assignment) with digitalized documentation controls performed by~~work will continue to improve the ~~underwriting team. This process also features different parameters~~internal behavior scoring model used in cross-selling activities and conclude a better model for ~~determining exposure~~the evaluation of new and ~~maximum risk per applicant, including point of sale, channel, product, incorporation process, risk level, among others.~~existing clients without sufficient seniority.

In addition, each branch is categorized by risk level based on its portfolio’s behavior trends per score range. A cut off by level is determined accordingly. These classifications are updated and validated regularlythe same period, changes have been implemented in origination policies to ensure ~~their accuracy.~~
~~CCF~~the ability to repay loans in all segments and Tarjeta periodically perform a risk analysis of their entire respective customer bases, evaluating payment behavior and exposure level, and using this information to offer better credit options for existing services and new products and services.
Collection efforts are managed internally at the early stages of delinquency and are tailored to each customer’s risk level and behavior. CCF and Tarjeta conduct collection actions using an Avaya predictive dialer and applying different communication channels such as call centers, virtual messaging, SMS, letters and telegrams. After 180 days past due, collection efforts are outsourced to third-party collection agencies.
~~Information Technology and Operations~~
~~During 2017, the Information Technology and Operations Department was restructured to boost existing capacity, and adapt the functions scheme to its strategy.~~
A three-year strategic plan was developed, based on three pillars: adapting our information technology to our strategic business projects, developing the existing technological capabilities based on the improvement opportunities and guidelines associated with the Bank’s strategy; and defining and executing IT specific strategic plans which pave the way for advancesespecially in ~~areas such as technological infrastructure, applications, service operation, quality and governance.~~
The strategic business projects that called for IT initiatives were grouped into the following programs: Cash Management, Digital Banking, Senior Citizens Banking, Commercial Platform and Business Intelligence. During 2017, the Bank fully implemented the redesign of Individual Homebanking, Corporate Homebanking and Supervielle Mobile customer experience. The Bank also fully adapted the biometric identification systemthose most exposed to the ~~provisions of ANSES Resolution No. 648. A Wi-Fi connectivity system was installed in many Service Centers,~~macroeconomic situation generated by the Comprehensive Customer Platform was optimized as well as processes to improve customer experience, commercial users and economic benefits. The Bank’s IT and Operations Department also completed initiatives relating to our loan origination process (Entrepreneurs and SMEs), cash management plans, customer identification and referral at the Service Center level and other aspects of our business.
Projects for the evolution of current capacities focused on the Bank’s strategy and the improvements resulting from the analysis of the operating model maturity, with a view to ensuring an efficient operating model and to positioning the IT area as Digital Bank enabler.
~~Centralized Operations~~
pandemic. In 2017, important measures were adopted in furtherance of the Bank’s continued efforts to improve operating efficiency and service quality to internal and external customers, reduce expenditure and search for innovative processes, in compliance with local and international practices in an adequate internal control environment.
~~The Bank consolidated the operations of the Identité Service Centers to render a focused service intended to improve customer satisfaction.~~
~~Transaction load and sales management processes were automated, eliminating manual processes and optimizing productivity and reducing expenses.~~
~~CCF~~
~~CCF~~ has implemented improvements in its technological infrastructure in telecommunications, datacenter and end user devices, to improve the availability and performance of the services offered to the business. In 2017, projects were developed and implemented to continue offering an agile, simple and cordial service, emphasizing statements via email, launching a mobile application for consultation of credit card status and making improvements in interactive voice response via phone in order to provide a better customer experience and expand self-management.
~~CCF’s initiatives for the short and medium term include~~ projects relating to technological infrastructure, especially, improvements to increase perimeter security and updates of the call center platform. At the same time, there is a plan to support the business in the implementation of “Embozado en Tienda” (to produce the physical credit card plastic on the spot); the development of a new origination model, and to continue innovating the mobile application by adding more functionalities.
~~In 2017, CCF created the consumer IT unit aiming at a transformation of IT by introducing the concept of customer experience and generating a comprehensive vision of their needs.~~
~~Digital Innovation Unit~~
In 2016, we created the Digital Innovation Unit. We believe that ongoing technological evolution has given rise to a digital revolution which has had a profound impact in the financial system. Changes in customer preferences could result in profound changes in the banking industry in the future. Our Digital Innovation Unit aims at establishing a deep and dynamic research process for the creation of value for new generations and profiles of users. The Digital Innovation Unit participates in the development of new tools (products or services).
We expect the future of financial services to be marked by a migration to a digital business model. The challenge for organizations is to optimize the technological innovation of traditional banking to attract new consumers of financial services,addition, with the aim of ~~creating~~improving the ~~bank~~assessment of ~~tomorrow today. During 2017, therefore, Banco Supervielle’s Digital Innovation Team worked~~repayment capacity, an internally developed income inference model has been incorporated that improved those provided by the credit bureaus.
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However, the management of credit policies was included in the ~~following services and disruptive technologies:~~Integral Risk Committee, securing a more encompassing view of the assessment of said policies.

~~Digital On Boarding~~~~: Customers are accustomed to accessing digital services to satisfy their needs~~Collections management is carried out by a specialized team and desire a consistent experience in their use. With this in mind, we worked on digital platform in Argentina to purchase financial products. With a redesigned and simplified process, starting from registration,is carried out with specific processes for each instance defined by the ~~platform will allow users to become customers in only two steps and have immediate access to tailor-made products and services.~~company.

~~Mobile Corporate Banking~~~~: In pursuit~~During 2020 CCF and Tarjeta continued working from collections on the review of ~~offering innovative digital technologies~~sweep strategies, optimization of collection tools and review of predictive models to ~~our corporate customers, in 2018 we launched the Corporate Mobile application. This application supplements the omnichannel portfolio~~achieve a better approach to clients with non-compliance with their obligations, achieving a more assertive and ~~offers quick and convenient access to all the functionalities and financial services that we offer.~~
~~Face Biometrics~~: We believe that technological advances in the financial system should not be detrimental to its security. Our Digital Innovation team is dedicated to providing customers with simpler and more secure access to their financial services and information. In particular, we have begun developing facial recognition capabilities in order to allow customers to access digital channels through biometric identification software.
~~New Cordial Compañia Financiera Application~~ (Digital Acquisition Process): We released a new version of the Mobile application for Walmart and Carta Automática customers, adding additional digital services, such as the acquisition of new products.
~~Competition~~effective management.

Information Security
The Information Security Area is responsible for the information assets protection and for the implementation and maintenance of the security policy established by the Bank’s Board of Directors.
The guidelines for management of the Bank’s information security generally take into account the provisions of Communications “A” 4609, “A” 6375 and companion provisions of the Central Bank which are the framework for the management of matters related to the protection of IT assets and the management of Operational and Technological risk.
Management of Information Security includes: strategy, policies, practices, procedures and organization structure which Banco Supervielle must rely on to identify, analyze, assess, measure, mitigate and monitor cybersecurity risks.
2020 was highly challenging for the Information Security Department. The following three large events had an impact on management actions:
1. The Covid-19 pandemic had a strong impact on the Bank’s existing operating scheme Initially, the team focused on operational changes, facilitating remote access – VPN – to most of the personnel and setting up new security and communication equipment options to provide support to this new work model.
2. The exponential growth of cyberattacks by expert hackers. As a result of the pandemic, the use of digital channels and remote work increased, companies at global and local level were affected by major cyberattacks. To face such situation we launched different actions to protect our technological infrastructure – antivirus upgrades, ethical hackings, vulnerability detection process upgrades, etc. - and our customers. Three material actions were: a) hiring of a Threat Intelligence service, to proactively detect attacks against its key executives, data leaks, infrastructure attacks, etc.; b) hiring of a cyberinsurance at Grupo Supervielle level, in addition to the Bank’s comprehensive insurance against digital attacks; and c) expansion of the protection shield for service denial attacks for internet apps.
3. Acceleration process related to Digital Transformation and IT Department transformation. Several actions and tasks were carried out to join the transformation process: creation of a Cybersecurity Center of Excellence interacting with squads, tribes and COEs that were created; definition of the Golden Rules to govern the actions of squads in respect of cybersecurity aspects; and the establishment of OKRs – Objetive & Key Results – which guided the actions of the Cybersecurity COE.
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Competition
Retail Banking, Corporate Banking and Treasury

The Argentine financial system remains highly fragmented compared to the rest of Latin America.

~~In 1999,~~As of September 30, 2020, the Argentine financial system had ~~116~~79 financial ~~entities. This number decreased to 100 in 2002 and 89 in 2005. As of December 31, 2017, this number decreased to 77,~~entities, of which 6264 were banks, ~~(13~~of which 13 were public and ~~49 private).~~51 privates. In terms of ownership, ~~in 1999 Argentine and foreign entities each held 41.3%~~as of ~~the Argentine banks while the remaining 17.3% of the banks were held by the public sector. As of December 31, 2017,~~September 30, 2020, while the participation of the public sector was ~~21.0%~~20.3%, the portion of banks controlled by Argentine entities represented ~~53.2%~~54.7% and the portion of banks controlled by foreign entities represented ~~25.8%~~25.0%.

~~In 1999, there were 17 financial companies, nine of which were controlled by Argentine entities and eight of which were controlled by foreign entities, and seven credit unions.~~ As of ~~December 31, 2017,~~September 30, 2020, the number of financial companies was ~~14, five~~15, six of which were controlled by Argentine entities and nine of which were controlled by foreign ~~entities,~~entities.
Digital Banking
In recent years, following the main global trends, digital banking began to develop in Argentina. As of December 31, 2020, the main digital banks were: Wilobank, Brubank, Rebanking, Openbank, Naranja and Banco del Sol. The main features of each are outlined below:
(1) Wilobank offers credit cards even to unbanked people. It operates with a virtual card that will replace Mastercard Contactless. (2) Brubank offers savings accounts in Pesos and U.S. dollars and loans and transfers from an app. It uses contactless technology and allows purchases made with debit card to be paid in installments, allowing the partition of the expenses. (3) Rebanking aims at the lowest economic sectors with a corresponding banking offer. (4) Openbank, owned by the Santander Group, offers savings accounts, credit cards, loans and facilitates investments. In Spain it already has more than one million customers. (5) Naranja, owned by Banco Galicia, has more than 1 million of digital users. This company developed an app that enables merchants and professionals billing by using a dongle. (6) Banco del Sol was launched in July 2020 and is owned by Sancor Seguros.
Consumer Finance
CCF offers its products primarily to the middle and lower middle income sectors. CCF’s main competitors can be divided into two groups: (1) those that are not subject to Central Bank oversight such as Tarjeta Naranja, Tarjetas Cuyanas and Credial, and (2) those that are subject to Central Bank oversight such as Compañía Financiera Argentina and Banco Columbia.
With respect to its Walmart Argentina private label credit card, CCF’s primary competitors in terms of the types of products offered are Tarjeta CENCOSUD (issued at Jumbo and Easy and used in Jumbo, Easy, Disco, Vea and Blaisten), Tarjeta Carrefour (issued and used exclusively at Carrefour) and Tarjeta Coto (issued and used exclusively at Coto). However, CCF was the first to also issue an open MasterCard credit card, therefore operating in the banking and retail sectors. Currently, Tarjeta CENCOSUD is the only ~~one~~other competitor with a similar strategy. In addition, CCF is the sole provider of in store personal cash loans and consumer loans that may be granted and used immediately at the retail stores.
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Tarjeta’s competitors vary in terms of region and type of product. Competitors in the lending space include Compañía Financiera Argentina (Efectivo Si), Banco Comafi, Banco Columbia, Credifacil, Credil, Corefin and Empresur. In terms of the credit ~~union remained.~~card space, Tarjeta’s main competitors are Banco Nacion Argentina and other provincial Banks in each of the provinces where it operates, Tarjeta Naranja, followed by smaller regional competitors.
MILA is a financial company focused on car financing solutions that had been providing products in the Argentine market for almost 15 years. MILA’s main competitors can be divide into two groups: (1) those that are banks or financial companies such as Santander, ICBC, BBVA, MG Group and HSBC, and (2) those that are financial institutions owned by car manufacturers such as Renault Credit, Fiat Credito and Peugeot Finance. MILA’s main product is car loan with pledge that helps to maintain a low risk level portfolio.
Mutual Funds
With respect to the mutual fund market, based on the Chamber of Mutual Funds information we estimate our market share was 2.10% as of December 31, 2020, and that SAM is ranked 21 out of 52 managers in the industry. Our main competitors are Galicia Administradora de Fondos S.A.S.G.F.C.I., Macro Fondos S.G.F.C.I.S.A., ICBC Investments S.A.S.G.F.C.I., Francés Administradora de Inversiones S.A.G.F.C.I., Itaú Asset Management S.A.S.G.F.C.I., HSBC Administradora de Inversiones S.A.S.G.F.C.I., BNP Paribas Asset Management Arg S.A.S.G.F.C.I. and Santander Río Asset Management G.F.C.I.S.A.
Online trading broker
InvertirOnline is our digital online broker. According to ByMA information InvertirOnline ranks 2nd in the local ByMA ranking on Equity, CEDEARs (Certificado de Depósito Argentinos) and options trading, and it has an 8% market share in these assets. Our main competitors are other local participants, mainly Bull Market, Balanz and PPI (Portfolio Personal).
Competitive Framework

We were one of the top 10 private banks in the Argentine financial system with respect to loans, deposits, assets and equity as of ~~December 31, 2017,~~September 30, 2020, as presented in the following ~~tables:~~tables (figures are expressed in original currency and not adjusted for inflation):

As of December 31, 2017

Total Assets

(in millions of Pesos)

Share of Total (%)

Banco Santander Río S.A.

332,926.8

16.1
%
Banco de Galicia y Buenos Aires S.A.

299,710.8

14.5
%
Banco Macro S.A.(1)

225,514.8

10.9
%
BBVA Banco Francés S.A.

221,165.6

10.7
%
HSBC Bank Argentina S.A.

126,371.1

6.1
%
ICBC S.A.

109,628.0

5.3
%
Credicoop Cooperativo Limitado

103,839.4

5.0
%
Banco Patagonia S.A.

93,718.0

4.5
%
Banco Supervielle SA

88,808.8

4.3
%
Citibank N.A.

69,785.2

3.4
%
Banco Hipotecario S.A.

58,974.8

2.8
%
Nuevo Santa Fe

49,222.0

2.4
%
Itau Argentina

45,215.7

2.2
%
Comafi

29,526.4

1.4
%
Banco de San Juan S.A.

27,686.0

1.3
%
Others

190,447.7

9.2
%
Total Private Banks

2,072,541.1

As of September 30, 2020

Total Assets

(in millions
of Pesos)

Share of
Total (%)
Banco Santander Río S.A. 899,223,2 14.7 %
Banco de Galicia y Buenos Aires S.A. 862,438,9 14.1 %
Banco Macro S.A. 716,293,1 11.7 %
87
As of September 30, 2020

Total Assets

(in millions
of Pesos)

Share of
Total (%)
BBVA Banco Francés S.A. 580,182,7 9.5 %
Credicoop Cooperativo Limitado 385,135,2 6.3 %
HSBC Bank Argentina S.A. 373,919,1 6.1 %
Citibank N.A. 332,150,5 5.4 %
ICBC S.A. 320,912,5 5.2 %
Banco Patagonia S.A. 267,325,2 4.4 %
Banco Supervielle S.A. 222,436,0 3.6 %
Nuevo Santa Fe 165,823,0 2.7 %
Itau Argentina 147,102,9 2.4 %
Banco Hipotecario S.A. 142,987,7 2.3 %
Others 705,156,9 11.5 %
Total Private Banks 6,121,086,9 100.0 %

As of December 31, 2017

Total Loans

(in millions of Pesos)

Share of Total (%)

Banco Santander Río S.A.

166,220.7

15.5
%
Banco de Galicia y Buenos Aires S.A.

158,817.4

14.8
%
Banco Macro S.A.(1)

132,952.4

12.4
%
BBVA Banco Francés S.A.

123,705.6

11.5
%
HSBC Bank Argentina S.A.

65,921.2

6.2
%
ICBC S.A.

60,661.0

5.7
%
Banco Patagonia S.A.

56,337.7

5.3
%
Banco Supervielle SA

50,776.8

4.7
%
Credicoop Cooperativo Limitado

46,379.3

4.3
%
Banco Hipotecario S.A.

31,909.0

3.0
%
Nuevo Santa Fe

27,526.8

2.6
%
Citibank N.A.

26,457.1

2.5
%
Itau Argentina

22,895.6

2.1
%
Banco Comafi S.A.

16,486.1

1.5
%
Nuevo Banco de entre Rios S.A.

11,853.4

1.1
%
Otros

72,909.7

6.8
%
Total Private Banks

1,071,809.8

As of December 31, 2017

Total Deposits

(in millions of Pesos)

Share of total (%)

Banco Santander Río S.A.

234,037.3

17.0
%
Banco de Galicia y Buenos Aires S.A.

200,884.4

14.6
%
BBVA Banco Francés S.A.

153,962.7

11.2
%
Banco Macro S.A.(1)

143,636.5

10.4
%
Credicoop Cooperativo Limitado

89,049.7

6.5
%
HSBC Bank Argentina S.A.

85,860.2

6.2
%
Banco Patagonia S.A.

68,685.4

5.0
%
ICBC S.A.

64,952.7

4.7
%
Banco Supervielle SA

60,057.4

4.4
%
Nuevo Santa Fe

36,163.5

2.6
%
Citibank N.A.

33,928.6

2.5
%
Itau Argentina

29,903.1

2.2
%
Banco Hipotecario S.A.

21,006.3

1.5
%
Banco de Santiago del Estero S.A.

20,891.1

1.5
%
Nuevo Banco de entre Rios S.A.

20,889.5

1.5
%
Otros

110,976.4

8.1
%
Total Private Banks

1,374,884.8

~~Source:~~Source: Central ~~Bank.~~
~~(1)~~         ~~Includes Banco del Tucumán S.A.~~
~~(2)~~         ~~Includes 33 private banks with assets below Ps.27 billion, as of December 31, 2017.~~Bank

As of September 30, 2020

Total Loans

(in millions
of Pesos)

Share of
Total (%)
Banco de Galicia y Buenos Aires S.A. 385,490.7 19.4 %
Banco Santander Río S.A. 333,404.0 16.8 %
Banco Macro S.A. 236,798.7 11.9 %
BBVA Banco Francés S.A. 234,900.5 11.9 %
ICBC S.A. 111,927.5 5.6 %
HSBC Bank Argentina S.A. 110,413.7 5.6 %
Banco Patagonia S.A. 92,718.4 4.7 %
Banco Supervielle S.A. 86,400.1 4.4 %
Credicoop Cooperativo Limitado 56,723.1 2.9 %
Itau Argentina 54,401.9 2.7 %
Nuevo Santa Fe 41,473.7 2.1 %
Citibank N.A. 40,211.8 2.0 %
Banco Hipotecario S.A. 38,260.3 1.9 %
Others 159,031.4 8.0 %
Total Private Banks 1,982,155.80 100.0 %
~~When consolidated with CCF, we~~
Source: Central Bank
As of September 30, 2020

Total Deposits

(in millions
of Pesos)

Share of
total (%)
Banco Santander Río S.A. 684,273.6 15.8 %
Banco de Galicia y Buenos Aires S.A. 616,450.8 14.2 %
Banco Macro S.A. 480,826.8 11.1 %
BBVA Banco Francés S.A. 398,187.4 9.2 %
Credicoop Cooperativo Limitado 290,609.4 6.7 %
HSBC Bank Argentina S.A. 267,515.2 6.2 %
Citibank N.A. 240,585.7 5.5 %
ICBC S.A. 205,974.1 4.7 %
Banco Patagonia S.A. 193,308.1 4.5 %
Banco Supervielle S.A. 166,278.9 3.8 %
Nuevo Santa Fe 129,728.9 3.0 %
Itau Argentina 105,453.5 2.4 %
Banco Hipotecario S.A. 79,575.4 1.8 %
Others 478,171.30 11.0 %
Total Private Banks 4,336,939.10 100.0 %
Source: Central Bank
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We were one of the top five private banks in the Argentine financial system with respect to personal loans as of ~~December 31, 2017,~~September 30, 2020, as presented in the following ~~table:~~table (figures are expressed in original currency and not adjusted for inflation):

As of December 31, 2017

As of September 30, 2020

Personal Loans

Personal Loans

(in millions of Pesos)

Share of total (%)

Banco Macro S.A.(1)

47,376.7

22.4
%

(in millions
of Pesos)

Share of
total (%)
Banco Macro S.A 60,609.8 24.4 %
Banco de Galicia y Buenos Aires S.A.U. 31,583.2 12.7 %
BBVA Banco Francés S.A. 21,992.1 8.9 %
Banco Santander Río S.A.

29,382.2

13.9
%
21,076.1 8.5 %
Banco de Galicia y Buenos Aires S.A.(2)

22,288.7

10.5
%
BBVA Banco Francés S.A.

16,318.5

7.7
%
Banco Supervielle SA(3)4)

14,579.4

6.9
%
Banco Supervielle S.A.⁽¹⁾ 18,365.5 7.4 %
Nuevo Banco de Santa Fe

9,686.9

4.6
%
13,188.5 5.3 %
Banco Patagonia S.A.

8,731.1

4.1
%
7,289.0 2.9 %
Nuevo Banco de Entre Rios 7,257.5 2.9 %
ICBC S.A. 5,320.0 2.1 %
HSBC Bank Argentina S.A.

7,087.3

3.4
%
4,703.8 1.9 %
Banco Hipotecario S.A.

6,262.2

3.0
%
4,475.5 1.8 %
ICBC S.A.

5,907.1

2.8
%
Nuevo Banco de Entre Rios

5,493.2

2.6
%
Others

38,316.8

18.1
%
52,106.5 21.0 %
Financial Private System

211,430.2

247,967.5 100.0 %

~~Source:~~Source: Central ~~Bank.~~Bank
(~~1)         Includes Banco del Tucumán S.A.~~
(~~2)         Consolidated with Compañía Financiera Argentina S.A.~~
~~(3)~~         ~~Does not include securitized personal loan portfolio~~
~~(4)~~         ~~Consolidated with CCF.~~
(1) Consolidated with CCF

We were one of the top five private banks in the Argentine financial system with respect to leasing, as presented in the following table as of ~~December 31, 2017:~~September 30, 2020 (figures are expressed in original currency and not adjusted for inflation):

As of December 31, 2017

As of September 30, 2020

Leasing

Leasing

(in millions of Pesos)

Share of total (%)

(in millions
of Pesos)

Share of
total (%)

Banco Comafi S.A. 4,451.40 30.7 %
Banco Supervielle SA

2,519.20

15.2
%
2,711.60 18.7 %
Banco Comafi S.A.

2,293.20

13.8
%
Banco de Galicia y Buenos Aires S.A. 1,946.90 13.4 %
BBVA Banco Francés S.A.

2,273.80

13.7
%
1,417.50 9.8 %
Banco de Galicia y Buenos Aires S.A.

1,872.60

11.3
%
HSBC Bank Argentina S.A.

1,363.0

8.2
%
1,059.30 7.3 %
Credicoop Cooperativo Limitado 684.8 4.7 %
ICBC S.A. 466.9 3.2 %
Itau Argentina 326.6 2.2 %
Banco Santander Río S.A. 281.1 1.9 %
Banco Patagonia S.A.

1,361.70

8.2
%
270.5 1.9 %
Credicoop Cooperativo Limitado

919.7

5.5
%
Banco Santander Río S.A.

903.2

5.4
%
ICBC S.A.

852.5

5.1
%
Citibank N.A.

766.5

4.6
%
Others

1,488.9

9.0
%
905.70 6.2 %
Total Private Banks

16,614.3

14,522.30 100.0 %

Source: Central Bank
~~(1)~~         ~~Does not include securitized leasing portfolio.~~89
The Bank, when consolidated with CCF, ranked ~~first~~second among private banks in the Argentine financial system with respect to MasterCard active accounts as of December 31, ~~2017~~2020 as presented in the following table:

As of December 31, 2020
MasterCard active
accounts with
billing statement
1 Banco de Galicia y Buenos Aires S.A 11.3 %
2 Banco Supervielle S.A.⁽¹⁾ 9.2 %
3 BBVA Banco Francés S.A. 9.0 %
4 Banco Macro S.A. 5.8 %
5 Banco Patagonia S.A 5.5 %
6 HSBC Bank Argentina S.A. 4.6 %
7 Industrial and Commercial Bank of China (Argentina) S.A. 3.9 %
8 Banco Itaú Argentina S.A 1.7 %
9 Banco Columbia S.A. 1.7 %
10 Banco Comafi S.A. 1.2 %

As of December 31, 2017

MasterCard active accounts with billing statement

1

Banco Supervielle S.A.(1)

9.8
%
2

Banco de Galicia y Buenos Aires S.A

8.0
%
3

Banco Macro S.A.

6.9
%
4

BBVA Banco Francés S.A.

6.9
%
5

HSBC Bank Argentina S.A.

5.7
%
6

Banco Patagonia S.A

4.3
%
7

Industrial and Commercial Bank of China (Argentina) S.A.

3.5
%
8

Banco Itaú Argentina S.A

2.9
%
9

Banco Columbia S.A.

2.4
%
10

Banco Comafi S.A.

1.2
%
~~Source:~~Source: First Data Cono Sur S.R.L.
~~(1)~~         ~~Consolidated with CCF.~~
Until our IPO in May 2016, the Bank ranked first among private banks in the Argentine financial system with respect to the origination of all bank asset securitization in the Argentine market. Since the IPO we significantly reduced the number of our own securitizations. The Bank’s market share as of the periods indicated, are shown in the following table:

As of December 31, 2017

Bank asset securitization

(in millions of Pesos)

Share of total (%)

Banco Sáenz S.A.

169

4.4
%
Banco Supervielle S.A

736

19.1
%
Banco BICA S.A

1,406

36.4
%
BST S.A.

975

25.2
%
Banco Comafi S.A

573

14.8
%
Total

3,862

100.0
%
~~Source:~~ ~~Company estimates based on data from the CNV.~~
~~We were one of the top ten companies in the Argentine capital markets with respect to the origination of total asset securitizations as of the periods indicated, as shown in the following table:~~

As of December 31, 2017

Total Securitizations

(in millions of Pesos)

Share of total (%)

Grupo Electrónica Megatone

8,762

17.7
%
Grupo Garbarino

4,578

9.3
%
Grupo Frávega

4,283

8.7
%
Grupo Carsa

4,253

8.6
%
Grupo Supervielle

2,534

5.1
%
Grupo Cencosud

2,270

4.6
%
Vicentín S.A.I.C.

2,177

4.4
%
Ribeiro S.A.C.I.F.A. e l.

1,790

3.6
%
CMR Falabella S.A.

1,641

3.3
%
Grupo Comafi

1,640

3.3
%
~~Source:~~ ~~Company estimates based on data from the CNV.~~
(1) Consolidated with CCF

The Bank faces a high degree of competition in virtually all core financial products with respect to pricing (interest rate or fee) and term. The Bank’s strategy in the face of this competition is to maintain aggressive business policies, differentiate itself with respect to product offering and customer service, and redesign processes for greater sales productivity.

Notwithstanding this competitive challenge, our strategy for growth, both organic and through acquisitions, has resulted in a~~n 133.4%%~~an increase in our financial system market share (excluding public banks) since 2005 according to the Central Bank. ~~Throughout this period, we gained some of the market share lost by several of our larger competitors.~~
The following graph shows the Bank’s loan market share on a consolidated basis since 2001.

~~Source:~~Source: Central Bank.
90
Taking into consideration total loan portfolio and receivables from financial leases portfolio, total loans and leasing market share was ~~5.1%~~4.6% as of December 31, ~~2017.~~2020.

The graph below shows a comparison of the Bank’s loan portfolio CAGR as of December 31, 2020 compared to the average loan portfolio CAGR of Argentine private Banks and the private financial system (excluding public banks).

Source: Central Bank. Figures are expressed in Pesos in original currency and not adjusted for inflation. Past 3- years average inflation was 45.8%.

~~Source: Central Bank.~~
The graph below shows a comparison of the Bank’s loan portfolio growth compared to the average loan portfolio growth of the Argentine financial system.

Source: Central Bank. Figures are expressed in Pesos in original currency and not adjusted for inflation.
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The table below shows the inflation rates over the past 10 years:
December 31,
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Inflation in consumer prices –INDEC (%) 9.5 10.8 10.9 23.9 26.9⁽¹⁾ 41.0 24.8 47.6 53.8 36.1
Source:
Information from 2011 to 2015: City of Buenos Aires.
Information since 2017: Indec

~~Source: Central Bank.~~
~~Consumer Financing~~
CCF offers its products primarily to the middle and lower-middle-income sectors. CCF’s main competitors can be divided into two groups: (1) those that are not subject to Central Bank oversight such as Provencred, Tarjeta Naranja, Tarjetas Cuyanas, Credial and Tarjeta Shopping and (2) those that are subject to Central Bank oversight such as Compañía Financiera Argentina and BST CrediLogros.
With respect to its Walmart Argentina private label credit card, CCF’s primary competitors in terms of the types of products offered are Tarjeta Más (issued at Jumbo and Easy and used in Jumbo, Easy, Disco, Vea and Blaisten), Tarjeta Carrefour (issued and used exclusively at Carrefour) and Tarjeta Coto (issued and used exclusively at Coto). However, unlike its competitors, CCF was the first to also issue an open MasterCard credit card, allowing CCF to operate in the banking and retail sectors. Currently, Tarjeta Más is the only other competitor with a similar strategy. In addition, CCF is the sole provider of in-store personal cash loans and consumer loans that may be granted and used immediately at the retail stores.
Tarjeta’s competitors vary in terms of region and type of product. Competitors in the lending space include Compañía Financiera Argentina, BST CrediLogros, Banco Columbia, Credil, Corefin and Empresur. In terms of the credit card space, Tarjeta’s main competitor is Tarjeta Naranja, followed by regional competitors such as Nevada and Credimas.
With respect to the products offered through the Hipertehuelche channel, even though there are no financial companies dedicated solely to the construction sector, CCF’s competitors include CETELEM, Cuota sí (CFA), DIRECTO and Cuota YA. However, these competitors do not operate in the Patagonia region where Hipertehuelche operates, and are competitors only with respect to the types of products offered.
~~Mutual Funds~~
~~With respect to the mutual fund market, based on third party sources we estimate our market share is~~ 2.63% and that SAM is ranked thirteenth out of 43 managers in the industry. Our main competitors are Galicia Administradora de Fondos S.A.S.G.F.C.I., Macro Fondos S.G.F.C.I.S.A., ICBC Investments S.A.S.G.F.C.I., Francés Administradora de Inversiones S.A.G.F.C.I., Itaú Asset Management S.A.S.G.F.C.I., HSBC Administradora de Inversiones S.A.S.G.F.C.I., BNP Paribas Asset Management Arg S.A.S.G.F.C.I. and Santander Río Asset Management G.F.C.I.S.A.
Argentine Banking Regulation
Overview

Founded in 1935, the Central Bank is the principal monetary and financial authority in Argentina. Its mission is to promote monetary and financial stability, employment and economic development with social equity. It operates pursuant to its charter, which was amended in 2012 by Law No. 26,739 and the provisions of the FIL. Under the terms of its charter, the Central Bank must operate independently from the Argentine government.

Since 1977, banking activities in Argentina have been regulated primarily by the FIL, which empowers the Central Bank to regulate the financial sector. The Central Bank regulates and supervises the Argentine banking system through the Superintendency. The Superintendency is responsible for enforcing Argentina’s banking laws, establishing accounting and financial reporting requirements for the banking sector, monitoring and regulating the lending practices of financial institutions and establishing rules for participation of financial institutions in the foreign exchange market and the issuance of bonds and other securities, among other functions.

The powers of the Central Bank include the authority to fix the monetary base, set interest rates, establish minimum capital, liquidity and solvency requirements, regulate credit, approve bank mergers, approve certain capital increases and transfers of stock, grant and revoke banking licenses, and to authorize the establishment of branches of foreign financial institutions in Argentina and the extension of financial assistance to financial institutions in cases of temporary liquidity or solvency problems.

The Central Bank establishes ~~different~~certain technical ratios that must be observed by financial entities, ~~with respect~~such as ration related to levels of solvency, liquidity, the maximum ~~credits~~credit that may be granted per customer and foreign exchange ~~asset~~assets and liability positions.

In addition, financial entities need the authorization from the Central Bank ~~for the disposition of their assets,~~forcertain actions, such as opening or changing branches or ATMs, acquiring share interests in other financial or non-financial corporations and establishing liens over their assets, among others.

As ~~the~~ supervisor of the financial system, the Central Bank requires financial institutions to submit information on a daily, monthly, quarterly, semiannual and annual basis. These reports, which include balance sheets and income statements, information related to reserve funds, use of deposits, classifications of portfolio quality (including details on principal debtors and any allowances for loan losses), compliance with capital requirements and any other relevant information, allow the Central Bank to monitor the business practices of financial entities. In order to confirm the accuracy of the information provided, the Central Bank is authorized to carry out inspections.
92
If the Central Bank’s rules are not complied with, various sanctions may be imposed by the Superintendency, depending on the level of infringement. These sanctions range from a notice of non-compliance to the imposition of fines or, in extreme cases, the revocation of the financial entity’s operating license. Additionally, non-compliance with certain rules may result in the compulsory filing of specific adequacy or restructuring plans with the Central Bank. These plans must be approved by the Central Bank ~~in order for~~to permit the financial institution to ~~continue to operate.~~remain in business.
Banking Regulation and Supervision

Central Bank Supervision

Since September 1994, the Central Bank has supervised the Argentine financial institutions on a consolidated basis. Such institutions must file periodic consolidated financial statements that reflect the operations of ~~headquarters,~~head offices or parent companies, as well as those of their branches in Argentina and abroad, and of their significant subsidiaries, whether domestic or foreign. Accordingly, requirements in relation to liquidity and solvency, minimum capital, risk concentration and loan loss provisions, among others, should be calculated on a consolidated basis.

Permitted Activities and Investments

The FIL governs any individuals and entities that ~~serve as~~perform habitual financial ~~intermediaries~~intermediation and, as such, are part of the financial system, including commercial banks, investment banks, mortgage banks, financial companies, savings and loan companies for residential purposes and credit unions. Except for commercial banks, which are authorized to conduct all financial activities and services that are specifically established by law or by regulations of the Central Bank, the activities that may be carried out by Argentine financial entities are set forth in the FIL and by related Central Bank regulations. Commercial banks are allowed to perform any and all financial activities ~~to the extent~~inasmuch as such activities are not forbidden by law. Some of the activities permitted for commercial banks include the ability to (i) receive deposits from the public in both local and foreign currency; (ii) underwrite, acquire, place or negotiate debt securities, including government securities, in both exchange and over-the-counter (“OTC”) markets (subject to prior approval by the CNV, if applicable); (iii) grant and receive loans; (iv) guarantee customers’ debts; (v) conduct foreign currency exchange transactions; (vi) issue credit cards; (vii) act, subject to certain conditions, as brokers in real estate transactions; (viii) carry out commercial financing transactions; (ix) act as registrars of mortgage bonds; (x) participate in foreign exchange transactions; and (xi) act as fiduciary in financial trusts. In addition, pursuant to the FIL and Central Bank Communication “A” 3086, as amended, commercial banks are authorized to operate commercial, industrial, agricultural and other types of companies that do not provide supplemental services to the banking services (as defined by applicable Central Bank regulations) to the extent that the commercial bank’s interest in such companies does not exceed 12.5% of its voting stock or 12.5% of its capital stock. Nonetheless, if the aforementioned limits were to be exceeded, the bank should (i) request Central Bank’s authorization; or (ii) give notice of such situation to the ~~referred authority,~~Central Bank, as the case may be. However, even when commercial banks’ interests do not reach such percentages, they are not allowed to operate such companies if (i) such interest allows them to control a majority of votes at a shareholders’ or ~~Board~~board of ~~Directors’~~directors’ meeting, or (ii) the Central Bank does not authorize the acquisition.
93
Furthermore, ~~in respect~~according to the rules regarding “Complementary Services of ~~supplementary services, pursuant to Communication “A” 5700,~~the Financial Entities and Allowed Activities,” as amended, ~~by Communication “A” 6241 and “A” 6342 issued on May 16 and October 13, 2017, respectively,~~ commercial banks are authorized to operate in local or foreign companies that have one or two of the exclusive corporate purposes listed in section 2.2 of Communication “A” 5700, as amended by Communication “A” 6342, in which the commercial bank’s interest either exceeds 12.5% of such companies’ voting stock or allows the commercial bank to control a majority of votes at a shareholders’ or board of directors’ meeting. IfThe financial entities shall give notice to the Superintendency if the corporate purposes of such companies include ~~two~~any of the corporate purposes listed in section 2.2 of ~~Communication “A” 5700, the authorization of the Central Bank is required.~~that rule.

Under Central Bank ~~regulations,~~rules regarding to “Financial Entities Minimum Capital,” the ~~total amount of the investments~~holdings of a commercial bank in the capital stock of third parties, including ~~interests~~participations in ~~Argentine~~ mutual ~~investment~~ funds, ~~may~~shall not exceed ~~50%~~60% of the Computable Equity Liability (“RPC,” as per its acronym in Spanish) of such ~~bank’s regulatory capital (~~~~Responsabilidad Patrimonial Computable~~~~, or “RPC”).~~commercial bank. In addition, the total amount of a commercial bank’s ~~investments in the following, taken~~holdings, considered as a ~~whole:~~whole, in (i) unlisted ~~stock,~~shares, excluding ~~interests~~holdings in companies that provide complementary services ~~that are supplementary~~ to the ~~finance business~~financial activity and ~~interests~~holdings in state-owned companies that provide public services, (ii) listed ~~stock~~shares and ~~interests in~~ mutual ~~funds~~fund shares that do not ~~give rise to~~trigger minimum capital requirements on ~~the basis of~~a market risk bases, and (iii) ~~listed stock~~publicly traded shares that ~~does~~do not have a ~~“largely publicly~~“market price available ~~market price,~~to the general public,” is limited to 15% of such commercial bank’s RPC. ToFor this ~~effect,~~purpose, a given ~~stock’s~~ market price of the shares is considered to be ~~“largely publicly available”~~“available to the general public” when market rates that measure the daily ~~quotations~~volume of significant transactions are available, and the sale of such ~~stock~~shares held by ~~the~~such bank would not ~~significantly~~materially affect the ~~stock’s quotation.~~share price.
Operations and Activities that Banks Are Not Permitted to Perform

Section 28 of the FIL prohibits commercial banks from: (a) creating liens on their own assets without prior approval from the Central Bank, (b) accepting their own shares as collateral, (c) conducting transactions with their own directors or managers and with companies or persons related thereto under terms that are more favorable than those regularly offered in transactions with other clients, and (d) carrying out commercial, industrial, agricultural or other activities without prior approval of the Central Bank, except those considered ~~financial~~financially related activities under Central Bank regulations. Notwithstanding the foregoing, banks may own shares in other financial institutions with the prior approval of the Central Bank, and may own shares or debt of public services companies, if necessary to obtain those services.

Liquidity and Solvency Requirements

Since 1994, the Central Bank supervision of financial institutions has been carried out on a consolidated basis. Therefore, all the documentation and information filed with the Central Bank, including financial statements, must show the operations of each entity’s parent company and all of its branches (in Argentina and abroad), the operations of significant subsidiaries and, as the case may be, of other companies in which such entity holds stock. Accordingly, all requirements relating to liquidity, minimum capital, risk concentration and bad debts’ reserves, among others, are calculated on a consolidated basis.
94
Legal Reserve

~~According~~Pursuant to the FIL, ~~rules and Central Bank regulations, financial institutions~~we are required to maintain a ~~Legal Reserve to~~legal reserve which must be funded with no more than 20% and no less than 10% of ~~their~~ yearly income. Notwithstanding the aforementioned, pursuant to Central Bank rules, we are required to maintain a legal reserve which is funded with 20% of our yearly income determined in accordance with such rules. This reserve can only be used during periods in which a financial institution has incurred losses and has exhausted all other reserves. If a financial institution does not comply with the required legal reserve, it is not allowed to pay dividends to its shareholders. For further information, please see “~~Item 5.~~ Operating and Financial Review and ~~Prospects—Item 5.A~~ Prospects–Operating Results.”

Non-liquid Assets

Since February 2004, non-liquid assets (computed on the basis of their closing balance at the end of each month, and net of those assets that are deducted to compute the regulatory capital) plus the financings granted to a financial institution’s related parties (computed on the basis of the highest balance during each month for each customer) cannot exceed 100% of the Argentine regulatory capital of the financial institution, except for certain particular cases in which it may exceed up to 150%.

Non-liquid assets consist of miscellaneous assets and receivables, bank property and equipment, assets securing obligations, except for ~~swap,~~swaps, futures and derivative transactions, certain intangible assets and equity investments in unlisted companies or listed shares, if the holding exceeds 2.5% of the issuing company’s equity. Non-compliance with the ratio produces an increase in the minimum capital requirements equal to 100% of the excess on the ratio.

Unless otherwise indicated, the regulations described in this section should be applied to financial information of the banks calculated in accordance with Central Bank rules.
Minimum Capital Requirements

The Central Bank requires financial institutions to maintain minimum capital amounts measured as of each month’s closing. The minimum capital is defined as the greater of (i) the basic minimum capital requirement, which is explained below, or (ii) the sum of the credit risk, operational risk and market risk. Financial institutions (including their domestic Argentine and international branches) must comply with the minimum capital requirements both on an individual and a consolidated basis.
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The following table sets forth information regarding excess capital and selected capital and liquidity ratios of the Bank, consolidated with CCF:

Year ended December 31,

2017

2016

2015

(in thousands of Pesos, except percentages and ratios)

Calculation of excess capital:

Allocated to assets at risk

4,710,391

3,178,270

2,082,489

Allocated to Bank premises and equipment, intangible assets and equity investment assets

191,549

172,154

102,252

Market risk

121,155

45,385

30,741

Interest rate risk

—

—

—

Public sector and securities in investment account

131,109

78,472

16,739

Operational risk

1,016,501

713,227

512,948

Required minimum capital under Central Bank regulations

6,170,705

4,187,508

2,745,169

Basic net worth

9,903,099

5,706,639

2,597,534

Complementary net worth

913,256

778,885

662,679

Deductions

(386,192
)
(338,671
)
(291,653
)
Total capital under Central Bank regulations

10,430,163

6,146,853

2,968,560

Excess capital

4,259,458

1,959,345

223,391

Selected capital and liquidity ratios:

Regulatory capital/risk weighted assets(1)

13.9
%
12.5
%
8.7
%
Average shareholders’ equity as a percentage of average total assets

10.5
%
11.2
%
9.5
%
Total liabilities as a multiple of total shareholders’ equity

8.2x

7.8x

10.9x

Cash as a percentage of total deposits

18.2
%
22.6
%
28.5
%
Liquid assets as a percentage of total deposits

42.4
%
26.6
%
31.2
%
Tier 1 Capital / Risk weighted assets

12.6
%
10.9
%
6.7
%
~~(1)~~         Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets, and credit risk weighted assets. Operational risk weighted assets and market risk weighted assets are calculated by multiplying their respective required minimum capital under Central Bank regulations by 12.5. Credit Risk Weighted Assets is calculated by applying the respective credit risk weights to our assets, following Central Bank regulations.

As stated above under “Presentation of ~~December 31, 2017, Banco Supervielle’s~~Financial and Other Information,” we have prepared our audited consolidated financial statements for 2020, 2019 and 2018 under IFRS. Minimum capital requirement has been prepared in accordance with the rules of the Argentine Central Bank, which is not comparable to data prepared under IFRS.

Year ended December 31,⁽²⁾

2020 2019 2018

(in thousands of Pesos except percentages and ratios)
Calculation of excess capital:
Allocated to assets at risk 9,047,140 7,164,842 6,090,341
Allocated to Bank premises and equipment, intangible assets and equity investment assets 1,350,035 826,133 370,233
Market risk 551,765 251,739 301,724

Public sector and securities in investment account 27,651 11,472 96,882
Operational risk 3,233,793 2,349,952 1,486,516
Required minimum capital under Central Bank rules 14,210,384 10,604,138 8,345,696
Basic net worth 30,242,263 16,991,091 11,847,865
Complementary net worth 1,090,865 1,033,734 1,163,939
Deductions (7,028,227 ) (2,999,716 ) (867,798 )
Total capital under Central Bank rules 24,304,901 15,025,109 12,144,006
Excess capital 10,094,517 4,420,971 3,798,310
Selected capital and liquidity ratios:
Regulatory capital/credit risk weighted assets⁽¹⁾ 19.30 % 15.60 % 15.30 %
Average shareholders’ equity as a percentage of average total assets 11.20 % 10.40 % 9.90 %
Total liabilities as a multiple of total shareholders’ equity 7.5 x 7.1 x 9.4 x
Cash as a percentage of total deposits 20.3 % 28.7 % 35.1 %
Tier 1 Capital / Risk weighted assets 14.00 % 11.60 % 11.90 %
(1) Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets, and credit risk weighted assets. Operational risk weighted assets and market risk weighted assets are calculated by multiplying their respective required minimum capital under Central Bank rules by 12.5. Credit Risk Weighted Assets is calculated by applying the respective credit risk weights to our assets, following Central Bank rules.
(2) Nominal values without inflation adjustment.
The Common Equity Tier 1 ratio on a consolidated basis with CCF, was 12.6%, compared to 10.9% at December 31, 2016. Including the Ps.4.3 billion funds from the follow-on equity offering proceeds retained at the holding company, Grupo Supervielle, which are available for further capital injections in its subsidiaries, the consolidated proforma TIER1 Capital ratioRatio as of December 31, ~~2017 stood at 18.41%. Supervielle’s Tier1 ratio coincides with CET1 ratio.~~
~~As of December 31, 2017, the Bank’s total capital ratio on a consolidated basis with CCF~~2020, was ~~13.9%~~13.8%, compared ~~to 12.5%~~to11.8% reported as of December 31, ~~2016. Including~~2019.
The increase in 2020 includes the ~~funds retained at~~initial IAS29 adjustment on non-monetary assets, together with Central Bank regulatory easing on excess provisions amid the ~~holding company (Grupo Supervielle) level after~~COVID-19 pandemic that allows banks to consider as Tier 1 Common Equity, the ~~follow-on equity offering~~difference between the expected loss provisions recorded following IFRS9, and the balance of ~~Grupo Supervielle, which are available for further capital injections into its subsidiaries,~~provisions as of November 30, 2019 under the ~~consolidated pro-forma total capital ratio~~previous accounting framework.
The Total Capital Ratio as of December 31, ~~2017~~2020, was ~~19.6%~~.14.4%, compared to 12.1% reported as of December 31, 2019.

The capital composition to be considered in order to determine compliance with minimum capital requirements is the financial institution’s RPC ~~(Communication “A” 5580~~,(Central Bank rules regarding to “Financial Entities Minimum Capital,” as amended).
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~~Minimum capital requirements of commercial banks acting as custodians of securities representing investments of the~~ ~~Fondo de Garantía de Sustentabilidad del Sistema Integrado Previsional Argentino~~ ~~and/or as registrar of mortgagesecurities must comply with an extra 0.25% of the value of securities in custody and/or mortgage securities and must be invested in Argentine public bonds or monetary regulation instruments.~~
Basic Minimum Capital

The basic minimum capital requirement varies depending on the type of financial institution and the jurisdiction in which the financial institution’s headquarter is registered, with ~~Ps.26~~Ps. 26 million for banks under category I and II (Ps.12 million for other financial entities under this category), and ~~Ps.15~~Ps. 15 million for banks under category III to VI (Ps.8 million for other financial entities under this category).

Category
Banks
~~Banks~~
Other Entities ^(*)
I and II
Ps.26 million
Ps.12 million
III to VI
Ps.15 million
Ps.8 million
(*) Except credit entities.

~~(*)~~         ~~Except credit entities.~~
~~Additionally, financial entities located in ports and airports must comply with Category I requirements and those entities engaged~~Financial institutions directly involved in foreign trade ~~transactions~~operations must comply with the requirements ~~applicable to~~established for banks ~~under such~~in the respective category.

~~Notwithstanding the foregoing, the regulatory capital~~Regulatory Capital of ~~commercial banks acting as custodians of securities representing investments of the~~ ~~Fondo de Garantía de Sustentabilidad del Sistema Integrado Previsional Argentino~~
~~must be equal to or exceed the greater of Ps.400 million or an amount equivalent to 1% of the total book value of the securities in custody.~~
~~Description of Argentine~~Financial Institutions: Tier 1 and Tier 2 Capital Regulations

Argentine financial institutions must comply with guidelines similar to those adopted by the Basel Committee on Banking Regulations and Supervisory Practices, as amended in 1995 (the “Basel Rules”). In certain respects, however, Argentine banking regulations require higher ratios than those set forth under the Basel Rules.

The Central Bank takes into consideration a financial institution’s RPC in order to determine compliance with capital requirements. ~~Pursuant to Communications “A” 5369 and “A” 5580, as amended and supplemented,~~ RPC consists of Tier 1 capital (Basic Net Worth) and Tier 2 capital (Complementary Net Worth).

Tier 1 Capital
Tier 1 capital consists of (i) ~~ordinary capital level~~common equity tier 1 (“COn1”), (ii) deductible items from ~~ordinary capital level~~the common equity tier 1 (CDCOn1), (iii) additional ~~capital level~~equity tier 1 (“CAn1”), and (iv) deductible ~~items~~concepts from additional capital level 1 (CDCAn1).

COn1 Capital
COn1 includes the following net worth items: (i) capital stock (excluding preferred stock), (ii) non-capitalized capital contributions (excluding share premium), (iii) adjustments to shareholders’ equity, (iv) earnings reserves (excluding the special reserve for debt instruments), (v) unappropriated earnings, (vi) other results either positive or negative, in the following terms:

(i) capital stock (excluding preferred stock),
·                  ~~with respect to results from prior fiscal years,~~
(ii) non-capitalized capital contributions (excluding share premium),
(iii) adjustments to shareholders’ equity,
(iv) earnings reserves (excluding the special reserve for debt instruments),
(v) unappropriated earnings,
(vi) other results either positive or negative, in the following terms:
100% of net earnings or losses recorded until the last quarterly financial statements with limited review report, corresponding to the last full fiscal year and in respect of which the auditor has not issued the audit report;

·
100% of net earnings or losses for the current year as of the date of the most recent audited quarterly financial statements;
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·
50% of profits or 100% of losses for the most recent audited quarterly or annual financial statements; and

·
100% of losses not shown in the financial statements, arising from quantification of any facts and circumstances reported by the auditor;

~~(vii) Other comprehensive results:~~
(vii) other comprehensive income:

~~(a)~~         ~~100% of the results registered in the following items belonging to the account “Other comprehensive cumulative results” for the most recent audited quarterly or annual financial statements:~~
(a) 100% of the results recorded in the following items belonging to the account “Other comprehensive cumulative results” for the most recent audited quarterly or annual financial statements:

·
Revaluation of property, plant, and equipment and ~~intangible assets;~~

·                  ~~Gains~~
intangibles; gains or losses ofon financial instruments at fair value with changes in other comprehensive income.

~~(b)~~         100% of the debtor balance of each of the items recorded under “Other comprehensive cumulative results” not mentioned in the preceding item, for the most recent audited quarterly or annual financial statements,
(b) 100% of the debit balance of each of the items recorded in other comprehensive income not mentioned in section (a). The recognition of these concepts, registered in accounts of other comprehensive income or other accumulated comprehensive income, as appropriate, will be made in accordance with the terms of points 8.2.1.5. or 8.2.1.6., as the case may be of Central Bank’s rules regarding “Financial Entities Minimum Capital.”

(viii) share premiums of the instruments included in COn1, and
(viii) share premiums of the instruments included in COn1, and, in the case of consolidated entities, (ix) minority shareholdings (common shares issued by subsidiaries subject to consolidated supervision and belonging to third parties, if certain criteria are met).
(ix) in the case of consolidated entities, minority shareholdings (ordinary shares issued by subsidiaries subject to consolidated supervision and belonging to third parties, if certain criteria are met).

In order for the shares to fall under COn1, at the time of issuance, the financial entity must not generate any expectation that such shares will be reacquired, redeemed or amortized, and the contractual terms must not contain any clause that might generate such an expectation.
For the purpose of determining the RPC, financial institutions included in Group A must compute as COn1 the positive difference between the higher of the accounting allowance stipulated in point 5.5 of IFRS 9 and the regulatory allowance calculated in accordance with the rules on “Establishment of minimum provisions for loan losses” or the accounting provision corresponding to the balance as of November 30, 2019.
Deductible Concepts
The above-mentioned ~~items~~concepts will be considered without certain deductions pursuant to subsection 8.4.1 and 8.4.2 (as applicable) of ~~the~~ Central Bank ~~Communication “A” 5580.~~rules regarding “Financial Entities Minimum Capital,” as amended.
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~~Items~~
Concepts deductible from COn1 include, among other things: (a) positive balances resulting from the application of income tax withholdings above 10% of the previous months of basic net ~~worth;~~worth and balances in favor from deferred tax assets; (b) deposits maintained in a corresponding account with a foreign financial institutions that are not rated as “investment grade,” (c) debt securities not held by the relevant financial institutions, except in the case of securities registered by or in custody of the Central Bank (CRYL), Caja de Valores S.A., or Clearstream, Euroclear and the Depository Trust Company, (d) securities issued by foreign governments whose credit rating is ~~at least~~less than ‘investment grade’ according to Communication “A” 5671; (e) subordinated debt instruments issued by other financial institutions; (f) ~~certain credits related to the application of tax deferrals;~~shareholders; (g) ~~shareholders; (h)~~ real property added to the assets of the financial entity and with respect to which the title deed is not duly recorded at the pertinent Argentine real property registry, except where such assets shall have been acquired in a court-ordered auction sale; (h) intangible assets; (i) ~~goodwill; (j) organization and development costs; (k)~~ items pending allocation, debtor balances and other; ~~(l)~~(j) certain assets, as required by the Superintendency resulting from differences between carry amount and the fair value of assets or actions taken to distort or disguise the true nature or scope of operations; ~~(m)~~(k) those required by the Superintendency; (l) any deficiency relating to the minimum loan loss provisions required by the Superintendency; ~~(n)~~(m) equity interests in companies that have the following activities: (i) financial assistance through leasing or factoring agreements, (ii) transitory equity acquisitions in other companies in order to further their development to the extent the ultimate purpose is selling such interest after development is accomplished, and (iii) credit, debit and similar cards emissions; (n) the ~~issuance~~excess to the limits set forth for secured assets on Section 3 of ~~credit or debit cards as provided by Communication “A” 5700 (75% deductible as~~the rules on “Affectation of ~~June 2017 and 100% deductible as of June 2018);~~Restricted Assets” (o) ~~excess in the granting of asset-backed guaranties, according to Central Bank’s regulations; (p)~~ the highest balance of that month’s financial assistance granted during the month, where the advance payments set forth in Section 3.2.5 of the rules on “Lending to the non-financial public ~~sector, when certain conditions~~sector” surpass the authorized limit and/or are ~~met; (q) earnings~~not settled within the terms established therein; (p) income from sales ~~related~~relating to ~~securitizations under certain circumstances; (r)~~securitization transactions, as applicable, pursuant to the provisions of Sections 3.1.4., 3.1.5.1. and 3.1.5.2., and from portfolio sales or assignments with recourse. This deduction can be applied as long as the credit risk still persists and to the extent in which the capital requirement for the underlying exposures or the sold or assigned portfolio with recourse is maintained; (q) in the case of liabilities from derivatives accounted for at fair value, unrealized gains ~~and~~or losses ~~related to derivative transactions~~ due to changes in the financial institution’s credit risk ofwill be deductible. The deduction will be limited to the financial ~~institution; (s) losses from derivatives under certain circumstances and (t)~~institution’s own credit risk adjustments only plus or minus, as the case may be); such adjustments may not be offset against adjustments for counterpart risk; (r) equity interests in ~~other Argentine or foreign~~ financial institutions subject to consolidated oversight, except where not permitted due to the existence of deductible amounts; or in the case of foreign financial institutions. In these cases, the deductions will be the net amount of the allowance for impairment and, when controlled financial institutions subject to the provisions of Section 8.2.1.6., item iii) are involved, the deductions will be 50% of the net amount of profits derived by these entities on a ~~consolidated supervision.~~proportional basis to their respective interests.
CAn1 Capital

CAn1 includes certain debt instruments of financial entities not included under COn1 ~~and~~that meet the regulatory criteria established in section 8.3.2 of ~~Communication “A” 5580 (as~~the rules regarding “Financial Entities Minimum Capital,” as amended and ~~supplemented),~~supplemented, and share premiums resulting from instruments included in CAn1. Furthermore, in the case of consolidated entities, it includes instruments issued by subsidiaries subject to consolidated supervision and belonging to third parties, pursuant to applicable regulatory requirements.
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The concepts mentioned in the previous points will be reduced, if applicable, by the deductible concepts provided in point 8.4.2 of the rules regarding “Financial Entities Minimum Capital,” as amended and supplemented, which are described below.

Moreover, debt instruments included under CAn1 must comply with the following requirements:

·                  ~~Must be totally subscribed and paid in full.~~
(1) Must be totally subscribed and paid in full.

·                  Subordinated to depositors, unsecured creditors and to the subordinated debt of the financial entity. The instruments must contemplate that in the case of the entity’s bankruptcy and once all debts with all the other creditors are satisfied, its creditors shall have priority in the distributions of funds only and exclusively with respect to the shareholders (irrespective of their class), with the express waiver of any general or special privilege.
(2) Must be subordinated to depositors, unsecured creditors and to the subordinated debt of the financial entity. The instruments must contemplate that in the case of the entity’s bankruptcy and once all debts with all the other creditors are satisfied, its creditors shall have priority in the distributions of funds only and exclusively with respect to the shareholders (irrespective of their class), with the express waiver of any general or special privilege.

·                  ~~Must not be insured or guaranteed by the issuer or a related entity, and with no agreement improving, either legally or economically, the payment priority in the case of the entity’s bankruptcy.~~
(3) Must not be insured or guaranteed by the issuer or a related entity, and with no agreement improving, either legally or economically, the payment priority in the case of the entity’s bankruptcy.

·                  They shall not contemplate any type of capital payment, except in the case of liquidation of the financial entity. Provisions gradually increasing remuneration or other incentives for anticipated amortization are not allowed.
(4) They shall not contemplate any type of capital payment, except in the case of liquidation of the financial entity. Provisions gradually increasing remuneration or other incentives for anticipated amortization are not allowed.

·                  After 5 years as from the issuance date, the financial entity can buy back the debt instruments if: (i) it has the previous authorization of the Superintendency, (b) the entity does not create any expectations regarding the exercise of the purchase option, and (c) the debt instrument is replaced by a RPC of equal or greater value sustained by its revenue capacity, or if it is demonstrated that once the purchase option is exercised its RPC significantly exceeds at least by 20% of the minimum capital requirements.
·                                          Any capital repayment requires previous authorization from the Superintendency. In the case of a capital repayment, the financial entity must not create any market expectations regarding the granting of such authorization.
(5) After five (5) years as from the issuance date, the financial entity can buy back the debt instruments if: (i) it has the prior authorization of the Superintendency, (ii) the entity does not create any expectations regarding the exercise of the purchase option, and (iii) the debt instrument is replaced by a RPC of equal or greater value sustained by its revenue capacity, or if it is demonstrated that once the purchase option is exercised its RPC significantly exceeds at least by 20% of the minimum capital requirements.

·                                          ~~The financial entity can pay dividends/interest coupons at any time. The included dividends/interest coupons shall not have periodic adjustments because of the financial entity’s credit risk.~~
(6) Any capital repayment requires previous authorization from the Superintendency. In the case of a capital repayment, the financial entity must not create any market expectations regarding the granting of such authorization.

(7) The financial entity can pay dividends/interest coupons at any time, and at its sole discretion, which shall not be considered a default in itself and shall not grant bondholders the right to claim the conversion of their notes into ordinary shares. Furthermore, there shall be no restrictions to the financial entity, except with respect to dividend distribution to the shareholders.
·                                          ~~Debt instruments should not have been bought by the financial entity or any other entity over which the financial entity has control or significant influence.~~100
(8) The payment of dividends/interest coupons shall be carried out through the noting of distributable entries, in the terms of the regulations on “Results Distribution” (Section III of the Central Bank’s regulations).

(9) The included dividends/interest coupons shall not have periodic adjustments because of the financial entity’s credit risk.
·                                          ~~Debt instruments should not have been bought with direct or indirect financing from the financial entity and they shall not contain elements that make re-capitalization difficult.~~
(10) They should not have been bought by the financial entity or any other entity over which the financial entity has control or significant influence.
(11) They should not have been bought with direct or indirect financing from the financial entity.
(12) They shall not contain elements that make re-capitalization difficult.

Instruments considered liabilities must absorb losses once a pre-established triggering event takes place. The instruments must do so through their conversion into ~~common~~ordinary shares and a mechanism assigning final losses to the instrument with the following effects:
(a) Reduction of debt represented by the instrument in the event of winding-up of the entity;
(b) Reduction of the amount to be repaid in case a call option is exercised;
(c) Total or partial reduction of the dividends/interest coupon payments of the instrument.
Complementary Net Worth (PNc): Tier 2 ~~capital consists of~~
Tier 2 Capital includes (i) certain debt instruments of financial entities which are not included in Tier 1 ~~capital~~Capital and ~~which~~ meet the regulatory criteria established in section 8.3.3 of ~~Communication “A” 5580 (as~~the Central Bank rules regarding “Financial Entities Minimum Capital” as amended and ~~supplemented),~~supplemented, (ii) share premium from instruments included in Tier 2 ~~capital,~~Capital, and (iii) loan loss provisions on the loan portfolio of debtors classified as being in a “normal situation” pursuant to Central Bank ~~regulations~~rules on debtor classification and on financings with class “A” preferred securities not exceeding 1.25% of the assets measured for credit risk. Additionally, in the case of consolidated entities, it includes (iv) debt instruments issued by subsidiaries subject to a consolidated supervision and belonging to third parties, if they meet the criteria in order to be included under complementary net worth.

The above-mentioned ~~items~~concepts will be considered minus deductible ~~items~~concepts pursuant to section 8.4.2 of ~~Communication “A” 5580 (as~~the Central Bank rules regarding “Financial Entities Minimum Capital,” as amended and ~~supplemented) issued by the Central Bank,~~supplemented, which is described below.

Moreover, debt instruments included under complimentary net worth must comply with the following requirements:

·
Must be totally subscribed and paid in full.
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·                                          ~~Subordinated~~
Must be subordinated to depositors, unsecured creditors and the subordinated debt of the financial entity.

·
Must not be insured or guaranteed by the issuer or a related entity, and ~~has~~with no agreement ~~in place to improve~~improving either legally or economically the payment priority in ~~the~~ case of the entity’s ~~bankruptcy either legally or economically.~~
bankruptcy.

·
Maturity: (i) original maturity date within no less than 5five (5) years, (ii) clauses considering gradually increasing remuneration or other incentives for anticipated amortization are not allowed, and (iii) from the beginning of the last five years of life of the indebtedness, the computable amount will be diminished by 20% of its nominal issuance value. After 5five (5) years as from the issuance date, the financial entity can buy back the debt instruments with the previous authorization of the Superintendency, and if the entity does not create any expectations regarding the exercise of the purchase option. The debt instrument must be replaced by an RPC of equal or greater value sustained by its revenue capacity, or if it is demonstrated that once the purchase option is exercised its RPC significantly exceeds at least in a 20% of the minimum capital requirements.

·
The investor shall not be entitled to accelerate the repayment of future projected payments, except in the case of bankruptcy or liquidation.

·
They cannot incorporate dividends/coupons with periodic adjustments linked to the financial entity’s credit risk.

·
They should not have been bought by the financial entity or any other entity over which the financial entity has control or significant influence.
·
They should not have been bought with direct or indirect financing from the financial entity.
They should not contain elements that affect re-capitalization.
Additionally, instruments included in Tier 2 capital and CAn1, shall meet the following conditions in order to assure their loss-absorbency capacity:

a)                                      Their terms and conditions must include a provision pursuant to which the instruments must absorb losses��either through a release from debt or its conversion into ordinary capital—once a triggering event has occurred, as described hereunder.
(a) Their terms and conditions must include a provision pursuant to which the instruments must absorb losses–either through a release from debt or its conversion into ordinary capital–once a triggering event has occurred, as described hereunder.

b)                                     ~~If the holders receive compensation for the debt release performed, it should be carried out immediately and only in the form of common shares, pursuant to applicable regulations.~~
(b) If the holders receive compensation for the debt release performed, it should be carried out immediately and only in the form of ordinary shares, pursuant to applicable regulations.

(c) The financial entity must have been granted the authorization required for the immediate issuance of the corresponding ordinary shares in the case of a triggering event, as described below.
c)                                      ~~The financial entity must have been granted the authorization required for the immediate issuance of the corresponding common shares in the case of a triggering event, as described below.~~102
Triggering events of regulatory provisions described above are: (i) when the solvency or liquidity of the financial entity is threatened and the Central Bank rejects the ~~regularization~~amnesty plan submitted or revokes its authorization to function, or authorizes restructuring protecting depositors (whichever occurs first), or (ii) upon the decision to capitalize the financial entity with public funds.

The Bank has issued three series of subordinated notes, ~~all~~only one of which ~~are~~is outstanding as of the date of this annual report. The series issued ~~in 2013~~ and 2014 ~~comply~~complies with all the requirements described above. ~~However, the series issued in November 2010 is not in compliance with the requirements because it was issued prior to the effectiveness of Communication “A” 5580.~~ See “Item 5.B Liquidity and Capital Resources—Financings—Bank —– Foreign currency-denominated Subordinated ~~Notes~~Notes..” On February 9, 2017, under the Bank’s global program of simple negotiable obligations, not convertible into shares, for a nominal value of up to U.S.$2,300 million (previously, U.S.$800 million) (or its equivalent in other currencies or units of value), the Bank issued Class A Negotiable Obligations, which constitute unsubordinated senior obligations, and therefore are not computable for the purpose of calculating the RPC.

Further criteria regarding the eligibility of items included in the RPC calculation must be followed pursuant to the regulatory requirements of minority and other computable instruments issued by subsidiaries, subject to consolidated supervision by third parties. A minority shareholding may be included in COn1 of the financial entity if the original instrument complies with the requirements established for its qualification as ~~common~~ordinary shares regarding the RPC.

Deductible ~~items~~concepts applied to the different capital ~~levels:~~levels
(i) Investments in computable instruments under the financial entity’s RPC not subject to consolidated supervision when the entity owns up to 10% of the issuer’s ordinary capital according to the following criteria: (i) investments include direct, indirect or synthetic interests; (ii) investments include the acquired net position; (iii) securities issued are placed within five (5) business days; and (iv) the investments in capital instruments that do not satisfy the criteria to be classified as COn1 (Common Capital Tier 1), AT1 (Additional Capital Tier 1) or PNc (Supplementary Capital) of the financial institution shall be regarded as COn1 –common equity shares, for the purposes of this regulatory adjustment. If the aggregate amount of these interests in the capital of financial institutions, companies providing services supplementary to the financial industry and insurance companies – which individually represent less than 10% of the COn1 of each issuer – exceeds 10% of the COn1 of the financial entity, net of applicable deductions, the amount over such 10% shall be deducted from each capital tier in accordance with the following formula: i) Amount to be deducted from COn1: aggregate excess amount over 10% multiplied by the proportion represented by the COn1 holdings over the aggregate equity interests; ii) Amount to be deducted from CAn1: aggregate excess amount over 10% multiplied by the proportion represented by the CAn1 over the aggregate equity interests. iii) Amount to be deducted from PNc: aggregate excess amount over 10% multiplied by the proportion represented by the PNc holdings over the aggregate equity interest. If the financial institution does not have enough capital to make the deduction pertaining to a particular capital tier, the remaining amount shall be deducted from the next higher level. Amounts below the threshold, which are not deducted, are weighted based upon the risk or are taken into account in the calculation of the market risk requirement, as applicable.
103
(ii) Investments in instruments computed as regulatory capital of financial institutions and companies rendering services supplementary to the financial industry, not subject to consolidated supervision and insurance companies, when the institution holds more than 10% of the common equity of the issuer, or when the issuer is a subsidiary of a financial institution, shall be subject to the following criteria: i) The investments include direct, indirect and synthetic interests. For these purposes, indirect interest means an investment by a financial institution in another financial institution or company not subject to consolidated oversight, which in turn has an interest in another financial institution or company not consolidated with the first one. A synthetic interest means an investment made by a financial institution in an instrument the value of which is directly related with the equity value of another financial institution or company not subject to consolidated supervision; ii) The net acquired position is included, i.e., the gross acquired position less the position sold in the same underlying exposure, when this has the same duration than the acquired position or its residual life is at least one year; iii) The holding of securities underwritten to be sold within a five business day term may be excluded; iv) Investments in capital instruments that do not satisfy the criteria to be classified as COn1, CAn1 or PNc of the financial institution shall be regarded as Con1, common equity shares, for the purposes of this regulatory adjustment. The amount of these interests, taking into account the applicable type of instrument, shall be deducted from each of the applicable capital tiers of the financial institution. If the financial institution does not have enough capital to make the deduction pertaining to a particular capital tier, the remaining amount shall be deducted from the next higher level.
(iii) Own repurchased instruments that satisfy the criteria for being included in CAn1 or PNc must be deducted from the applicable capital tier.
Limits

Investments in computable instruments under the financial entity’s RPC are not subject to consolidated supervision when the entity owns up to 10% of the issuer’s ordinary capital according to the following criteria: (i) investments include direct, indirect or synthetic interests; (ii) investments include the acquired net position; (iii) securities issued to be placed within 5 business days. When the holdings in other financial entity’s capital (individually representing less than 10% of each issuer’s COn1) exceed 10% of the COn1 of the financial entity, net of deductions, the amount over 10% must be deducted from each one of the capital levels according to the following formula:
·                  ~~Amount to be deducted from COn1: the amount exceeding 10% multiplied by the proportion of holdings of COn1 over total capital interests.~~
·                  ~~Amount to be deducted from CAn1: the amount exceeding 10% multiplied by the proportion of holdings of CAn1 over total capital interests.~~
·                  ~~Amount to be deducted from complementary net worth: the amount exceeding 10% multiplied by the proportion that represents the holdings of complementary net worth over total capital interests.~~
Investments in computable instruments under the financial entity’s RPC are not subject to consolidated supervision when the entity owns up to 10% of the issuer’s ordinary capital or when the issuer is a subsidiary of a financial
entity according to the following criteria: (i) investments include direct, indirect or synthetic interests; (ii) investments include the acquired net position; and (iii) securities issued to be placed within 5 business days.
~~Limitations~~
~~Communication “A” 5580 (as~~Central Bank rules regarding “Financial Entities Minimum Capital,” as amended and ~~supplemented)~~supplemented, establishes minimum thresholds regarding capital integration: (i) for COn1, the amount resulting from multiplying the capital risk weighted assets (“RWA”) by 4.5%; (ii) for the basic net worth, the amount resulting from multiplying the RWA by 6% and (iii) for the RPC, the amount resulting from multiplying the RWA by 8%. It is important to note that the RWA calculation results from multiplying the required minimum capital under Central Bank ~~regulations~~rules by ~~12.5.~~12.5%. The ~~failure to comply~~lack of compliance with any of these limitations is considered an infringement of the minimum capital integration requirements.

Pursuant to Communication “A” ~~5867,~~5889, as amended from time to time, RWA shall be calculated as follows:

RWA = RWAc + [(MR+OR) x 12.5]

Where:

RWAc: credit risk weighted assets
~~RM:~~ MR: minimum capital requirement for market risk
OR: minimum capital requirement for operational risk
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Economic Capital

~~Communication “A” 5398 of the~~ Central Bank rules regarding “Financial Entities Risk Management Guidelines,” as amended and supplemented, requires financial institutions to have an integrated global internal process in place to assess the adequacy of their economic capital based on their risk profile (the “Internal Capital Adequacy Assessment Process” or “ICAAP”), as well as a strategy aimed at maintaining their regulatory capital. If, as a result of this internal process, it is found that the regulatory capital is insufficient, financial institutions must increase regulatory capital based on their own estimates to meet the regulatory requirement.

The economic capital of financial institutions is the amount of capital required to pay not only unexpected losses arising from exposure to credit, operational and market risks, but also those arising from other risks to which the financial institution may be exposed.

Financial institutions must demonstrate that their internal capital targets are well-funded and adequate in terms of their general risk profile and operations. The ICAAP should take into consideration all material risks to which the institution is exposed. To this end, institutions must define an integral process for the management of credit, operational, market, interest rate, liquidity, securitization, graduation, reputational and strategic risks and use stress tests to assess potential adverse scenarios that may affect their regulatory capital.

The ICAAP must include stress tests supplementing and validating any other quantitative or qualitative approach employed by the institution in order to provide the Board of Directors and senior management with a deeper understanding of the interaction among the various types of risk under stress conditions. In addition, the ICAAP must consider the short- and long-term capital needs of the institution and ensure the prudent accumulation of excess capital during positive periods of the economic cycle.

The capital level of each entity must be determined in accordance with its risk profile, taking external factors such as the economic cycle effects and political scenario.
Pursuant to Communication “A” 5398, the main elements of a strict capital evaluation include:

~~a) Policies and procedures to guarantee that the entity identifies, quantifies and informs all the important risks.~~
(a) Policies and procedures to guarantee that the entity identifies, quantifies and informs all the important risks.

~~b) A process which relates economic capital with the current level of risk.~~
~~c) A process which sets forth capital sufficiency objectives related to the risk, taking a strategic approach from the entity and its business plan into consideration.~~
(b) A process which relates economic capital with the current level of risk.

(c) A process which sets forth capital sufficiency objectives related to the risk, taking a strategic approach from the entity and its business plan into consideration.
~~d) An internal process of controls, tests and audits, with the objective to guarantee that the general risk management process is exhaustive.~~
(d) An internal process of controls, tests and audits, with the objective to guarantee that the general risk management process is exhaustive.

The required amount of capital of each institution shall be determined based on its risk profile, taking into consideration other external factors such as the effects of the economic cycle and the economic scenario.
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Communication “A” 6534 which replaced Communication “A” 6459, provides guidelines for the calculation of economic capital, depending on the type of financial entity. Entities considered within Group A pursuant to Central Bank rules shall use their internal models to quantify the needs of economic capital with relation to its risk profile. Conversely, Group B or Group C entities may opt for a simplified calculation methodology. Such option must be approved by the board of directors of such entity.

Group B or Group C entities which have opted for the simplified methodology shall apply the following expression:
EC = (1.05 x MC) + max [0; ρ EVE – 15 % x bNW)]
Where:
EC: economic capital MC: minimum capital requirements EVE: measure of risk calculated according to a standardized framework forseen in section 5.4 of Communication “A” 6534 bNW: basic net worth (tier 1 capital)
Requirements Applicable to Dividend Distribution

The Central Bank has imposed restrictions on the payment of dividends, substantially limiting the ability of financial institutions to distribute such dividends ~~without its prior consent.~~
~~By means~~subject to compliance with the rules set forth in the “Restated Regulations on Dividend Distributions” of ~~Communication “A” 6464,~~ the Central Bank, ~~amended~~under the criterion that the amount to be distributed cannot affect the institution’s liquidity and ~~restated its regulations regarding dividend distributions by financial institutions. Pursuant to such regulations, dividend distributions~~solvency, which shall be ~~admitted as long as none~~verified by the satisfaction of ~~the following circumstances apply:~~certain requirements, on a consolidated basis.

1)Such regulations provides that the ~~financial institution is subject to a liquidation procedure or~~payment of dividends (other than dividends on ordinary shares), the ~~mandatory transfer~~acquisition of ~~assets ordered by~~treasury shares, the ~~Central Bank~~payment on other tier 1 equity instruments (as determined in accordance with ~~section 34~~ the provisions set forth in the rules on “Minimum capital of financial institutions”) and/or ~~35 bis~~the payment of financial incentives (bonuses) to personnel – in this case, subject to the ~~FIL;~~public order labor regulations (legal, statutory and contractual) governing the financial institutions’ relationships with their personnel– shall be subject to these rules.

~~2) the financial institution is receiving financial assistance from the Central Bank;~~
~~3) the financial institution is not in compliance with its reporting obligations to the Central Bank and;~~
4) the financial institution is not in compliance with minimum capital requirements (both on an individual and consolidated basis and excluding any individual franchise granted by the Superintendency) and with minimum cash reserves (on average), whether in Pesos, foreign currency or securities issued by the public sector.
~~5) if the average minimum cash reserve is lower than the amount of cash required by the latest reported position or the pro forma position after making the dividend payment; and/or~~
~~6) if the financial institution did not comply with the applicable Additional Capital Margins (as defined below).~~
~~Financial institutions that comply with all of the above-mentioned conditions~~Institutions may distribute dividends up to ~~an amount equal to: (i)~~ the positive ~~balance~~amount derived from the off-balance sheet calculation set forth herein, without exceeding the limits set forth in these rules.
To such effect, the registered balances, as of ~~the account “unappropriated earnings” (~~~~resultados no asignados~~~~) at~~ the end of the fiscal year ~~plus (ii)~~to which they belong, in the account “Unassigned Results” (Resultados no asignados) and in the voluntary ~~reserves~~reserve for future ~~payments~~distributions of dividends ~~minus (iii) voluntary reserves~~shall be computed, deducting the amounts – recorded on the same date – of the legal and ~~mandatory~~ statutory reserves registered as of that date and other items, such as (a) 100% of the debit balance of each of the items recorded under “Other accumulated comprehensive income”, (b) the result from the revaluation of property, plant, equipment and intangible assets and investment properties, (c) the net positive balance of the book-value– whose creation is mandatory – and the market-value of certain public debt securities and Central Bank notes that the financial institution owns that are not marked to market, (d) unrecorded adjustments of asset value informed by the Superintendency or mentioned by external auditors on their report, and (e) individual exemptions for asset valuation granted by the Superintendency.following concepts:
1. 100% of the negative balance of each of the concepts recorded under the line “Other comprehensive retained earnings.”
2. The result derived from the revaluation of property, plant and equipment and intangible assets and investment properties.
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3. The net positive difference resulting from the calculation at amortized cost and the fair market value recorded by the financial institution in connection with sovereign bonds and/or currency regulation instruments issued by the Central Bank for such instruments valued at amortized cost.
4. The asset valuation adjustments notified by the Superintendency – whether accepted or not by the institution– that are pending registration and/or those indicated by the external audit that have not been accounted.
5. The individual deductibles – regarding asset valuation – established by the SEFyC, including the adjustments derived from the failure to consider agreed adjustment plans.
6. The resulting lower provisions and higher RPC from the treatment established on point 2 of Central Bank’s Communication “A” 6946 (as amended) for financing MiPyMEs for the payment of salaries.

In addition, financial entities may not distribute ~~profits with~~earnings out of the ~~profit arising~~incokme derived from the first application of IFRS, ~~for the first time,~~ and must set up a special reserve ~~that~~which can only be canceled for capitalization or to absorb ~~any~~possible negative balances from the item “Unassigned results.”

~~In addition, for financial institutions that are branches of foreign financial institutions,~~The amount to be distributed, which shall not exceed the ~~Superintendency will consider~~limits set forth by the Central Bank, shall not compromise the liquidity and solvency of ~~their headquarters~~the institution. This requirement shall be considered satisfied once it has been verified that there are no integration defects in the minimum capital position – whether individual and consolidated – as of the ~~markets~~end of the fiscal year to which the unappropriated retained earnings pertain or in ~~which they operate.~~the last closed position, whichever has the lesser integration excess, recalculating them together (for such purpose only) with the following effects based on the data relevant as of each such date:
1. Those arising after deducting the concepts set forth above in points 1 to 5, if applicable, from the assets.
2. The failure to consider the deductibles established by the SEFyC affecting the requirements, integrations and minimum capital position.
3. The deduction of the amounts relating to the following concepts from the unappropriated retained earnings:
○ the amount to be distributed and, if applicable, the amount allocated to the creation of the reserve to repay debt instruments, capable of integrating the regulatory capital;
○ positive balances due to the application of the minimum presumed income tax – net of allowances for impairment – that have not been deducted from the basic shareholders’ equity, in accordance with the provisions set forth in rules on “Minimum capital of financial institutions”; and
○ adjustments made in accordance with points 1 to 5 above.
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4. The failure to consider the limit set forth in paragraph 7.2. of the rules on “Minimum capital of financial institutions.”
The distribution of earnings shall only be admitted if none of the following events occurs:
○ the institution is subject to the provisions of article 34 “Regularization and Recovery” and article 35 bis “Institution’s restructuring for the purpose of safeguarding loans and deposits” of the FIL;
○ the institution has received financial assistance from the Central Bank under section 17 of its Charter, due to illiquidity;
○ the institution is delayed or in breach of the reporting regime set forth by the Central Bank;
○ the institution records minimum capital integration deficits – whether individually or consolidated – (without computing the effects of the individual deductibles established by the SEFyC);
○ the integration of the average minimum cash – in Pesos, in foreign currency or in sovereign securities – is smaller than the requirement applicable to the last closed position or the projected position, taking into account the effect of the earnings distribution;
○ the institution has failed to comply with the additional capital margins applicable in accordance with Section 4.
As from January 2020, in order to recalculate the minimum capital position set under Section 3 of the rules on “Dividends Distribution,” financial institutions of the Company “B” shall enforce Section 5.5 about Impairment from the IFRS Financial Instrument No. 9.

~~Pursuant~~The aforementioned regulation contemplated transitory provision, effective until March 31, 2020, pursuant to ~~Communication “A” 5580,~~which those financial institutions which, in order to determine distributable earnings, have not increased the ~~minimum regulatory capital has to account~~ranges of COn1 net of deductions (CDCOn1) set forth in 1 percentage point, must obtain the prior authorization of the SEFyC for the ~~requirement~~distribution of ~~counterparty risk capital for securitizations for every ongoing transaction at the time of determination.~~
Central Bank’s Communication “A” 5689, as amended by Communication “A” 6324, dated January 8, 2015, set forth that financial entities shall make an accounting entry for and provide information about any administrative
and/or disciplinary penalties, and adverse criminal judgments issued by courts, which were applied or filed by the Central Bank, the UIF, the CNV and the National Insurance Superintendence (SSN). The amount corresponding to the accounting entry shall include all of the penalties and a provision for 100% of each penalty must be made. Such provisions must be maintained until payment is made or a final judgment is issued. According to Central Bank Communication “A” 5707, as amended by Central Bank Communication “A” 5827, if dividends are to be distributed, this amountearnings. This requirement shall also be ~~deducted~~applicable to the payment of financial services applicable to the issue of debt securities.
Unless otherwise indicated, the regulations explained in this section are applied to financial information of the banks calculated in accordance with Argentine Banking GAAP. IFRS differs in certain significant respects from Argentine Banking GAAP.
On March 19, 2020, in the ~~distributable amount. In April 2016,~~midst of the coronavirus’ outbreak crisis, the Central Bank issued Communication “A” ~~5940,~~6939, as amended from time to time, by virtue of which ~~amended provisions~~the distribution of ~~Communication “A” 5689. Pursuant to such Communication, the~~dividends by financial entities ~~that,~~was temporarily suspended until June 30, 2021.
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Moreover, in accordance with the FX Regulations, the access to the ~~date thereof, have an amount for these items registered in the account “Provisions —~~MLC to pay dividends to non-resident shareholders is subject to certain requirements. For ~~administrative, disciplinary~~more information, please see “Item 10.D Exchange Controls – Payments of dividends and ~~criminal penalties,~~corporate profits.” must analyze, according to the enforcing legal reports, if each such penalty meets the conditions for its total or partial accountable registration, according to the provisions in the “Accounts Plan and Manual” (which set forth that penalties must be probable and that their amount can be reasonably estimated).

~~In January 2015,~~ Capital Conservation Buffer
Communication “A” ~~5694~~5827 of the Central Bank ~~also established~~establishes that those entities considered domestic systemically important (D-SIB) must take into account an extra minimum capital requirement equivalent to 1% of the total risk-weighted assets which they must comply with using exclusively ordinary capital level 1 (Con1) according to the schedule described under “—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution” (currently, RWA is calculated by multiplying the required minimum capital under Central Bank regulations by 12.5). According to Central Bank Communication “A” 5707, as amended by Central Bank Communication “A” 5827, if dividends are to be distributed, this requirement becomes effective immediately.
~~Pursuant to Central Bank Communication “A” 5827, as amended by Communication “A” 6213, as of January 1, 2016,~~ financial entities ~~are required to establish~~shall maintain a capital conservation margin in addition to ~~their~~the minimum capital requirements for the purpose of accumulating their own resources, which they will be able to use if they incur losses, thus reducing the risk of non-compliance with minimum capital requirements (“Additional Capital Margins”). The higher the use of such marginal amounts, the higher the percentage of profits that financial entities will be required to withhold in order to ~~restore~~ensure the accrual of owned resources to cope with eventual losses, reducing the non-compliance risk.
Financial entities considered D-SIBs or globally systemically important (“G-SIBs”), shall have a capital level that ~~margin. Additionally,~~permits a greater capacity for loss absorption, by virtue of negative externalities that the effects of insolvency of such entities or their foreign holdings could create in the financial system and the economy.
The conservation capital ~~preservation~~ margin shall be 2.5% of the ~~entity’s RWA,~~amount of RWA. In cases of entities considered systemically important, the margin will be increased to 3.5% of the amount of capital risk weighted assets. These margins can be increased once again, according to the counter-cycle margin. The conservation capital margin, increased in ~~addition to applicable minimum capital requirements. In~~ the case of ~~financial~~ entities ~~qualified as systematically significant~~considered systemically important, must be integrated exclusively with Common Equity Tier 1 (COn1), net from deductible concepts (CDCOn1).
When such margin is used, the entities must raise capital with new capital contributions, or reduce future distributions.
The dividend distribution shall be limited whenever the level and composition of the computable asset liability, even when it complies with the minimum capital requirements, is within the range of the capital ~~preservation~~conservation margin. This limitation reaches solely the dividend distribution, but not the operation of the entity. Entities shall be able to operate normally when levels of Con1 are within the range of conservation margin. When the coefficient of Common Equity Tier 1 (Con1 as percentage of RWA) is within the range of margins conservation of capital, the restriction to the results distribution shall be increased whenever the coefficient of Con1 comes close to the minimum required in section 8.5.1 of regulations over “Minimum Capital for Financial Entities.” The following table shows the maximum percentages of dividend distribution, according to the compliance with the conservation margin presented:
Coefficient of Common Equity Tier 1 (COn1) net of deductions
(CDcon1) – as percentage of RWA -
Financial Entities – That are not categorized as D-SIBs or G-SIBs- D-SIBs and G-SIBs Financial
Entities Minimum coefficient of capital conservation – as percentage of dividend distribution -
4.5 – 5.13 4.5 – 5.38 100
> 5.13 – 5.75 > 5.38 – 6.25 80
> 5.75 – 6.38 >6.25 – 7.13 60
> 6.38 – 7.0 > 7.13 – 8 40
> 7 > 8 0
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Currently, the minimum limits required by the regulations are:
COn1/RWA: 4.5%
NWb/RWA: 6.0%
RPC/RWA: 8.0%
COn1 must be used in the first place to satisfy the minimum capital requirement of 4.5% of RWA. Subsequently, and in the event the total does not have enough Additional Tier 1 (CAn1) or Tier 2 Capital (PNc), the COn1 shall also be applied to meet requirements of 6% and 8% of Tier 1 Capital and total capital. Only the remaining COn1, if any, can be computed to satisfy the applicable conservation margin, increased in function of the counter-cycle margin, if applicable.
Any entity that desires to exceed the dividend distribution limits shall finance this distribution by new contributions of COn1 in the excess amount.
In order to determine the RPC Group “A” financial institutions shall compute as COn1 the positive difference between the accounting provision set forth by point 5.5 of IFRS 9, and the higher of the regulatory provision as calculated by the “Minimum Provision Requirement for Uncollectability Risk” Central Bank rules and the accounting provision corresponding to the balance as of November 30, 2019.
The Central Bank also establishes the counter-cycle margin in order to allow the financial entities’ capital levels to correspond to the accumulative systematic risk associated with an excessive credit expansion and the macro-financial context. When the Central Bank considers that the credit growth is excessive, creating an increase in systematic risk, it can establish, with a twelve-month advanced notice, the obligation to constitute a counter-cycle margin within a range of 0% to 2.5% of RWA. This margin can be reduced or cancelled by the Central Bank when it considers that the systematic risk has been diminished.
Financial entities with international activity shall consider the geographic location of their credit exposure with local and foreign residents of the private sector and calculate the counter-cycle margin as the mean between the required margins in foreign jurisdictions. This includes all credit exposure to private sectors subject to the requirement of credit risk capital.
In order to determine which jurisdiction corresponds to each exposure, the principle of ultimate risk shall be applied. Pursuant to this principle, one must identify the jurisdiction where the guarantor of the risk resides. The counter-cycle margin shall be ~~3.5%~~observed by means of ~~their respective RWA (the “Capital Conservation Buffer”)~~an increase in the conservation capital margin and shall be satisfied exclusively with Common Equity Tier 1, net of deductible concepts (CDCOn1).

Credit Risk

The minimum capital requirement in respect of counterparty risk (“CRC”) shall be calculated with the items included, which must be computed on the basis of the balances as of the last day of each month (capital, interests, premiums, restatements – by the CER – and price differences, as appropriate, net of the non-recoverability and devaluation risks provisions and of accumulated depreciation and amortization attributable to them and other regularizing accounts, without deducting 100% of the minimum amount required for the non-recoverability risk provision in the portfolio corresponding to debtors classified as in a “Normal Situation” – points 6.5.1 and 7.2.1 of the rules on “Classification of Debtors”- and financings secured by preferential guarantees “A”).
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The minimum capital requirement in respect of counterparty risk must be calculated ~~by dividing~~applying the sum of each item’s daily balance by the amount of days corresponding to the month. Pursuant to Communication “A” 6128, as of January 1, 2017, the minimum capital requirement for credit risk will be calculated as follows:following equation:

CRC = (k x 0.08 x RWAc) + INC

Variable “k” is determined by the rating (1 is the strongest, 5 is the weakest) assigned to the financial entity by the Superintendency, pursuant to the following scale:
Rating

K Factor

1

1

2

1.03

3

1.08

4

1.13

5

1.19

For the purposes of the calculation of the capital requirement, the rating will be that of the third month after the month of the most recent rating informed to the entity. For so long as no notice is given, the “k” factor will be equal to 1.03.
~~RWAc: These are credit risk weighted assets, calculated by adding the following:~~
~~A x p + PFB x CCF x p + no DvP + (DVP + RCD+ INC(fractioning)) x 12.5~~
Variable “A” refers to computable assets/exposures; “PFB” is computable items which are not registered on the balance sheet (“off balance sheet items”); “CCF” the conversion credit factor; and “p” refers to the weighting factor, expressed on a per unit basis.
In addition, “no DvP” refers to transactions that do not involve delivery against payment. The amount is determined by the addition of the amounts arrived at by applying the weighting factor (p) on the relevant transactions.
“DvP” refers to failed delivery against payment transactions (for purposes of these rules, failed payment against payment (PvP) transactions are also included). The amount is determined by the addition of the amounts arrived at by multiplying the current positive exposure by the applicable capital requirement.
~~“RCD” refers to requirements for counterparty risk in over-the-counter (“OTC”) transactions.~~
~~“INC(fractioning)” means the incremental minimum capital requirements based on any excess over the following limits:~~
·                  ~~equity interest held in companies: 15%~~
·                  ~~total equity interests held in companies: 60%~~
The established maximum limits will be applied on the financial entity’s computable regulatory capital for the last day before the relevant date, as prescribed in the rules on “Credit risk fractioning.”
“INC” incremental minimum capital requirements based on any excess in the fixed assets and other ratios, the limitations established under “Credit risk fractioning” rules, and the limitations derived from the credit risk degree.
~~Each type of asset is weighted according to the level of risk assumed to be associated with it. In broad terms, the weights assigned to the different types of assets are:~~
~~Type of Asset~~
~~Weighting (%)~~
~~Cash and cash equivalents~~
Cash held in treasury, in transit (when the financial institution assumes responsibility and risk for transportation), in ATMs, in checking accounts and in special accounts with the Central Bank, gold coins or bars
0
~~Cash items in the process of collection, cash in armored cars and in custody at financial institutions~~
20
~~Exposure to governments and central banks~~
~~To the Central Bank denominated and funded in Pesos~~
0
~~To the public non-financial sector denominated and funded in Pesos, including securitized exposures~~
0
~~To the public non-financial sector arising from financing granted to social security beneficiaries or public employees (with discount code)~~
0
~~To the public non-financial sector and the Central Bank. Other~~
~~100~~
~~To other sovereign states or their central banks and other foreign public non-financial sector institutions~~
~~100~~
~~To the Bank for International Settlements, the IMF, the European Central Bank and the European Community~~
0
~~Exposure to the Multilateral Development Banks (MDB)~~
The International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the Inter-American Development Bank (IDB), the European Investment Bank (EIB), the Asian Development Bank (ADB), the African Development Bank (AFDB), the European Investment Fund (EIF), the Nordic Investment Bank (NIB), the Caribbean Development Bank (CBD), the Islamic Development Bank (IDB) and the European Council Development Bank (ECDB)
0
~~Other~~
~~100~~
~~Exposure to local financial institutions~~
~~Denominated and funded in Pesos arising from transactions with an initial contractual term of up to 3 months~~
20
~~Other~~
~~100~~
~~Exposure to foreign financial institutions~~
~~100~~
~~Exposure to local and foreign companies and other entities - including national foreign exchange~~
~~100~~
~~Type of Asset~~
~~Weighting (%)~~
entities, insurance companies, brokerage houses and other companies considered non-financial private sector entities pursuant to the provisions of Section 1 of the regulations governing the “Financing of the non-financial public sector”
~~Exposures included in the retail portfolio~~
Loans to individuals (provided that installments of loans granted by the institution do not exceed, at the time of the agreements, 30% of borrower’s income) and to Micro, Small- and Medium-Sized Companies (“MiPyMEs”)
75
~~Other~~
~~100~~
~~Exposures guaranteed by reciprocal guaranty companies (sociedades de garantía recíproca) or public security funds registered with the registries authorized by the Central Bank~~
50
��
~~Primary mortgages and mortgages of any ranking on residential homes, to the extent the entity is the mortgagee~~
~~If credit facility does not exceed 75% of the appraised value of such real property~~
~~- Sole, permanently-occupied family home~~
35
~~- Other~~
50
~~On the amount exceeding 75% of the appraised value of such real property~~
~~100~~
~~Primary mortgages and~~ ~~mortgages~~ ~~of any ranking other than on residential homes, to the extent the entity is the mortgagee~~
~~Up to 50% of the lower of the real property market value or 60% of the mortgage loan~~
50
~~On the remaining portion of the loan~~
~~100~~
~~Delinquent loans over 90 days~~
~~Weighting varies according to the loan and specific provisions Created~~
~~50-150~~
~~Interests in companies~~
~~150~~
~~Exposures to central counterparty~~ ~~entities~~ ~~(CCP)~~
0
~~Other assets and / or items off the~~ ~~balance~~ ~~sheet~~
~~100~~
Minimum capital requirements also depend on the CAMELBIG rating (1 is the strongest, 5 is the weakest) assigned by the Superintendency, which also determines the “k” value. This rating system complies with international standards and provides a broad definition of the performance, risks and perspectives of financial entities. Financial entities have to adjust their capital requirements according to the following “k” factors:

CAMELBIG Rating

K Factor

K Factor
1

1.00

1.00
2

1.03

1.03
3

1.08

1.08
4

1.13

1.13
5

1.19

1.19
For the purposes of the calculation of the capital requirement, the rating will be that of the third month after the month of the most recent rating informed to the entity. For so long as no notice is given, the “k” factor will be equal to 1.03.
RWAc: stands for capital risk weighted assets, calculated by applying the following formula:
A * p + PFB * CCF * p + no DvP+ (DVP + RCD + INC significant holding in other companies) * 12.50
Where:
Variable “A” refers to eligible assets/exposures;
“PFB” are eligible items which are not registered on the balance sheet;
“CCF” the conversion credit factor; and
“p” refers to the weighting factor, expressed on a per unit basis.
“DvP” refers to failed delivery against payment transactions (for purposes of these rules, failed payment against payment (PvP) transactions are also included). The amount is determined by the addition of the amounts arrived at by multiplying the current positive exposure by the applicable capital requirement.
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In addition, “no DvP” refers to transactions that do not involve delivery against payment. The amount is determined by the addition of the amounts arrived at by applying the weighting factor (p) on the relevant transactions.
“RCD” refers to requirements for counterparty risk in OTC transactions.
“INC” incremental minimum capital requirements based on any excess in the fixed assets and other ratios, the limitations established under the “Major Exposure to Credit Risk Regulations.”
“INC(investments in companies)” means the incremental minimum capital requirements based on any excess over the following limits:
equity interest held in companies: 15%
total equity interests held in companies: 60%
The established maximum limits will be applied on the financial entity’s computable regulatory capital for the last day before the relevant date, as prescribed in the rules on “Credit Risk Fractioning.”
Each type of asset is weighted according to the level of risk assumed to be associated with it. In broad terms, the weights assigned to the different types of assets are:
Type of Asset Weighting (%)
Cash and cash equivalents
Cash held in treasury, in transit (when the financial institution assumes responsibility and risk for transportation), in ATMs, in checking accounts and in special accounts with the Central Bank, gold coins or bars 0
Cash items in the process of collection, cash in armored cars and in custody at financial institutions 20
Exposure to governments and central banks
To the Central Bank denominated and funded in Pesos 0
To the public non-financial sector denominated and funded in Pesos, including securitized exposures 0
To the public non-financial sector arising from financing granted to social security beneficiaries or public employees (with discount code) 0
To the public non-financial sector and the Central Bank. Other. To other sovereign states or their central banks.
AAA to AA- 0
A+ to A- 20
BBB+ to BBB- 50
BB+ to B- 100
Below B- 150
Unrated 100
Entities of the non-financial public sector from other sovereigns, pursuant ot the credit rating assigned to the respective sovereign 0
AAA to AA- 20
A+ to A- 50
BBB+ to BBB- 100
BB+ to B- 100
Below B- 150
Unrated 100
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Type of Asset Weighting (%)
To the Bank for International Settlements, the IMF, the European Central Bank and the European Community 0
To the non-financial public sector of the provinces, municipalities and/or the Autonomous City of Buenos Aires arising from the acquisition of sovereign bonds issued in Pesos by the central administration, when they do not have any one of the guarantees described in the regulations on “Financing to Non-Financial Public Sector,” pursuant to the credit rating assigned to the respective jurisdiction
AAA to AA- 20
A+ to A- 50
BBB+ to BBB- 100
BB+ to B- 150
Below B- 200
Unrated 200
Exposure to the Multilateral Development Banks (MDB)
The International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), the Inter-American Development Bank (IDB), the European Investment Bank (EIB), the Asian Development Bank (ADB), among others. 0
Other
AAA to AA- 20
A+ to A- 50
BBB+ to BBB- 50
BB+ to B- 100
Below B- 150
Unrated 50
Exposure to local financial institutions
Denominated and funded in Pesos arising from transactions with an initial contractual term of up to 3 months 20
Other. The weighting percentage to be applied will be the one for one category less favorable than the one assigned to the exposures with the Argentina government in foreign currency, as provided for the Exposure to the public non-financial sector and the Central Bank, with a maximum of 100%, except for the case in which the grade was less than B-, in which case the weighting percentage will be 150%.
Exposure to foreign financial institutions, pursuant to the credit rating assigned to the sovereign of their jurisdiction of incorporation.
AAA to AA- 20
A+ to A- 50
BBB+ to BBB- 100
BB+ to B- 100
Below B- 150
Unrated 100
Exposure to companies and other legal entities in the country and abroad, including exchange institutions, insurance companies and stock exchange entities 100
Exposures included in the retail portfolio
Loans to individuals (provided that installments of loans granted by the institution do not exceed, at the time of the agreements, 30% of borrower’s income) and to Micro, Small- and Medium-Sized Companies (“MiPyMEs”). 75
Other 100
Exposures guaranteed by reciprocal guaranty companies (sociedades de garantía recíproca) or public security funds registered with the registries authorized by the Central Bank 50
First mortgageloans on residential homes property or mortgage loans with any order of preference provided that the institution remains the creditor, irrespective of the order of preference, to the extent that the mortgaged property
If credit facility does not exceed 75% of the appraised value of such real property
- Sole, permanently-occupied family home 35
- Other 50
On the amount exceeding 75% of the appraised value of such real property 100
First mortgageloans on other than residential home property or mortgage loans with any order of preference provided that the institution is also the creditor of senior loans
Up to 50% of the lower of the real property market value or 60% of the mortgage loan. 50
On the remaining portion of the loan. 100
Past due loans over 90 days
Weighting varies according to the loan and specific provisions Created 50-150
Equity holdings 150
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Type of Asset Weighting (%)
Securitization exposures, failed DvP transactions, non-DvP transactions, exposures to central counterparty institutions (CCP) and derivative transactions not included in said exposures. *
Exposures to individuals or companies originated in credit card purchases made in installments of travel tickets to foreign destinations and other touristic services abroad (lodging, car rental), either made directly to the service provider or through a travel agency or web platform 1250
Other assets and off-balance categories 100
* They receive a special treatment.

Excluded items include: (a) securities granted for the benefit of the Central Bank for direct obligations; (b) deductible assets pursuant to RPC ~~regulations;~~regulations and (c) financings and securities granted by branches or local subsidiaries of foreign financial entities by order and on account of their headquarters of foreign branches or the foreign controlling entity, to the extent: (i) the foreign entity has an investment grade rating, (ii) the foreign entity is subject to regulations that entail consolidated fiscalization, (iii) in the case of finance operations, they shall be repaid by the local branch or subsidiary exclusively with funds received from the aforementioned foreign intermediaries; and (iv) in the case of guarantees granted locally, they are in turn guaranteed by their foreign branch headquarters or the foreign controlling entity and foreclosure on such guaranty may be carried out immediately and at the sole requirement of the local entity.

Credit Risk Regulation – Large Exposures
General Overview
Communication “A” 6599 of the Central Bank, as amended and restated by Communication “A” 6620, effective as of January 1, 2019, abrogated credit risk fractioning regulations (except for the provisions related to the non-financial public sector), and replaced the former regime by regulating “large exposures to credit risk.” The system seeks to limit the maximum loss that a financial entity may suffer upon the occurrence of an unexpected default of a counterparty or group of connected counterparties who do not belong to the non-financial public sector, therefore affecting its solvency. The regulations regarding the exposures to credit risk must be applied at all times with every counterparty of the entity.
In this regard, the regulations have established the concept of group of connected counterparties, which applies to all cases in which one of the counterparties of a financial entity have direct or indirect control over the rest or in those cases in which financial difficulties experimented by one of the counterparties causes a strong likelihood that its subsidiaries may struggle financially as well. According to the regulation, upon the detection of the existence of a group of connected counterparties by the financial entity, such group shall be considered as a single counterparty and the sum of the exposures to credit risk that a financial entity possesses with all the individual counterparties comprehended in that group shall be subject to the information and disclosure requirements provided in section 2.
One of the main aspects of Communication “A” 6599 is the introduction of the concept of large exposure to credit risk in Argentine banking regulations, which is defined as the sum of all values of exposure of a financial entity with a counterparty or group of connected counterparties when it is equal or above 10% of the Tier 1 Capital registered by the financial entity the immediately preceding month of its calculation.
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However, the determination of the values of exposure to risk recognize the following exceptions:
Intraday interbank exposures;
Exposures of financial entities with qualifying central counterparties, as defined by the Central Bank rules on minimum capital;
Exposures with the Central Bank; and
Exposures with the Argentine non-financial public sector.
Regarding the information regime, the Central Bank has established that the financial entities shall inform the Superintendency of all the values of exposure to credit risk before and after the application of mitigation techniques, detailing:
Exposures to risk with a value equal or above 10% of Tier 1 Capital of the financial entity;
Every other exposure to risk which value is equal or above 10% of the Tier 1 Capital of the financial entity, without applying credit risk mitigation techniques;
Excluded exposures to risk which values are equal or above 10% of the financial entity’s Tier 1 Capital; and
The financial entity’s 20 largest applicable exposures to risk, regardless of its value in relation with the financial entity’s Tier 1 Capital.
Limits
On the one hand, Communication “A” 6620 sets at 15% the limit of exposure with a counterpart of the non-financial private sector. Nevertheless, the limit will be increased by 10 percentage points for the part of the exposures that are covered by preferred collaterals. Additionally, it sets special limits for operating with financial institutions in the country and abroad (the general rule sets it at 25%). In the case of foreign financial institutions that do not have an international risk rating included in the “investment grade” category, the maximum limit is 5%.
On the other hand, Communication “A” 6599 sets the global limit of exposure to risk with respect to affiliate counterparties at 20%. In the case of stock held in an investment portfolio, the sum of all the values of exposure to risk corresponding to the total stocks not related to the portfolio shall not exceed 15% (holdings in public services companies or companies dedicated to complementary services to financial activities are excluded). The total limit of stocks and holdings shall be the sum of all the values of exposure to risk corresponding to the total amount of stock in an investment or negotiation portfolio plus the credits for forward operations and sureties entered into in authorized Argentine markets shall not exceed 50%.
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Minimum controls to exposures of affiliates
The regulations set forth three stages for the control of the financial entity’s affiliates exposure:
(1) Reports for the entity’s management:
Report by the CEO;
Report by the supervisory committee; and
Acknowledgment of the reports by the entity’s management.
(2) Evidence of the affiliation to the financial entity: the personnel responsible for the analysis and resolution of the credit operations shall expressly register whether or not the client is affiliated with the financial entity.
(3) Affidavit evidencing affiliation: affiliated clients shall file an affidavit stating if they belong to the lending entity or if its relationship with such entity implies the existence of a controlling influence.
Interest Rate Risk

Until January 1, 2013, financial entities had to comply with minimum capital requirements regarding interest rate risk. These requirements ~~are~~were intended to capture the sensitivity of assets and liabilities to changes in the interest rates. Communication “A” 5369 removed all ~~of these~~rules and regulations regarding minimum capital ~~requirements.~~requirements for interest rate risk. Notwithstanding this change, financial entities must continue to calculate the interest rate risk and remain subject to the Superintendency’s supervision. Communication “A” 6534, dated July 3, 2018 established that the interest rare risk shall be measured through the calculation of the Investment Portfolio Interest Rate (RTICI).
Market Risk

Minimum capital requirements for market risks are computed as a function of the market risk of financial entities’ portfolios, measured as their VaR. The regulation includes those assets traded on a regular basis in open markets and excludes those assets held in investment accounts, which must meet counterparty and interest rate risk minimum capital requirements.

There are five categories of assets. Domestic assets are divided into equity and public bonds/Central Bank debt instruments, the latter being classified in two categories based on whether their modified duration is less than or more than 2.5 years. Foreign equity and foreign bonds comprise two other categories and are also classified according to their duration, the latter of which is also broken up into two separate categories based on whether their modified duration is less than or more than 2.5 years. The fifth category is made up of foreign exchange positions, which are differentiated based on currency.
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Overall capital requirements in relation to market risk are based on the sum of the five amounts of capital necessary to cover the risks arising from each category of assets.

Market risk minimum capital requirements must be met daily. Information must be reported to the Central Bank on a monthly basis. Since May 2003, the U.S. dollar has been included as a foreign currency risk component for the calculation of the market risk requirement and all assets and liabilities denominated in U.S. dollars are taken into account.

Pursuant to Communication “A” 5867, market risk will be defined as the possibility of incurring losses in on- and off-balance sheet recorded positions as a result of adverse changes in market prices. The market risk minimum capital requirement ~~will be~~is the arithmetic sum of the minimum capital requirement for interest rate (trading portfolio), stock (trading portfolio), exchange rate, commodities and options ~~risks.~~risks (trading portfolio). To meet this capital requirement, entities must apply a “Standard Measurement Method” based on an aggregate of components that separately capture the specific and general market risks for securities positions.

General considerations. Risks subject to this minimum capital requirement include risks derived from positions in instruments —– such as securities and derivatives —– recorded as part of the trading portfolio, and risks from foreign currency and commodities positions recorded, indistinctly, as part of the investment or trading portfolio. For the purpose of the above accounting recording, the trading portfolio of financial entities comprises positions in financial instruments included among an entity’s assets for purposes of trading or of providing hedging to other items contained in the portfolio. Pursuant to Communication “A” ~~5867,~~6690, a financial instrument may be accounted for as part of the trading portfolio —– for purposes of meeting the minimum capital requirement for market risk —– if such instrument may be traded free from any restriction or if the instrument may be hedged in full. Also, the portfolio must be actively managed, and its positions must be valued on a daily basis and with the required accuracy. Positions kept for trading purposes are those positions that the entity intends to sell in the short term or from which it intends to derive a profit as a result of changes, either actual or expected, in short-term prices, or by means of arbitrage activities. They include both positions that the entities keep for their own use and those they purchase in the course of services performed for customers or “market making’ ~~activities”.~~activities.” Financial entities must calculate the minimum capital requirement for the counterparty credit risk involved in ~~over-the-counter~~OTC transactions involving derivatives and securities financing transactions, ~~(SFT) —~~ such as repo transactions (repo agreements), recorded as part of the trading portfolio on a separate and additional basis to the calculation of capital requirements for general market risk and specific market risk of the underlying securities. For this purpose, entities will be required to apply the methods and weighting factors usually applicable when those transactions are recorded as part of the investment portfolio. Entities must have clearly defined policies and procedures in place, designed to determine the exposures that are to be included into or excluded from the trading portfolio in order to calculate their minimum capital requirement for market risk. On the other hand, the investment portfolio will include all securities held by the entity which are not included in the trading portfolio.

The minimum capital requirement for exchange rate risk will apply to the total position in each foreign currency. The minimum capital requirement for securities will be computed in respect of the instruments accounted for as part of the trading portfolio, which must be valued prudently (marked to market or marked to model). Instruments whose yield is determined in relation to CER must be considered fixed-rate securities. Whether recorded as part of the
trading or of the investment portfolio, items to be deducted for purposes of calculating the RPC will be excluded from the calculation of the market risk minimum capital requirement.
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Minimum capital requirement for interest rate ~~risk:~~risk. The minimum capital requirement for interest rate risk must be calculated in respect of any debt securities and other instruments accounted for as part of the trading portfolio, including any non-convertible preferred shares. This capital requirement is calculated by adding two separately calculated requirements: first, the specific risk involved in each instrument, either a short or a long position, and second, the general market risk — related to the effect of interest rate changes on the ~~portfolio — a~~portfolio. A set off of the long and short positions held in different instruments will be allowed.

Minimum capital requirement for positions in stock. The capital requirement for the risk of holding equity positions in the trading portfolio applies to both long and short positions in ordinary shares, convertible debt securities that function like shares and any call or put options for shares, as well as any other instrument with a market behavior similar to that of shares, excluding non-convertible preferred shares, which are subject to the minimum capital requirement for interest rate described in the preceding paragraph. Long and short positions in the same security may be computed on a net basis.

Minimum capital requirement for exchange rate risk. The capital requirement for exchange rate risk establishes the minimum capital required to hedge the risk involved in maintaining positions in foreign currency, including gold. To calculate the capital requirement for exchange rate risk, entities must first quantify its exposure in each currency, and then estimate the risks inherent in the combination of long and short positions in different currencies.

Minimum capital requirement for commodities risk. The capital requirement for commodities risk establishes the minimum capital required to hedge the risk involved in maintaining positions in commodities – but gold. The calculation of the capital requirement shall express every commodity position in terms of the standard measure unity, and following the rules set forth in Communication “A” 6690.
Minimum capital requirement for positions in options. The calculation of the capital requirement for the risk involved in positions in options may be based on the “simplified method” set forth in Communication “A” ~~5889~~6690 if the entity only purchases ~~options —~~options; provided that the market value of all the options in its portfolio does not exceed 5% of the entity’s RPC for the previous month, —, or if its positions in sold options are hedged by long positions in options pursuant to exactly the same contractual terms. In all other cases, the entity must use the alternative ~~(“delta~~“delta plus”) method, ~~also contemplated~~provided for in the regulation.

As from the effective date of Communication “A” 5867 and until August 31, 2016, financial entities were required to calculate the market risk minimum capital requirement in accordance with the method set forth in Communication “A” 5867 and also on an off-balance sheet basis, pursuant to the method in effect as of December 31, 2015, and to consider, for purposes of determining the minimum capital requirement, the result of the method involving the highest amount of the market risk capital requirements. After August 31, 2016, only the method set forth in Communication “A” 5867 is applicable.
Consequences of a Failure to Meet Minimum Capital Requirements

In the event of non-compliance with capital requirements by an existing financial institution, Central Bank Communication “A” 6091, as amended, provides the following:

(i) non-compliance reported by the institutions: the institution must meet the required capital no later than the end of the second month after the date of non-compliance or submit a restructuring plan within thirty (30) calendar days after the end of the month in which such non-compliance was reported. In addition, non-compliance with minimum capital requirements will entail a number of consequences for the financial institution, including a prohibition to open branches in Argentina or in other countries, establish representative offices abroad, or own equity in foreign financial institutions, as well as a prohibition to pay cash dividends. Moreover, the Superintendency may appoint a representative, who shall have the powers set forth by the FIL.
~~(i)~~~~non-compliance reported by the institutions~~: the institution must meet the required capital no later than the end of the second month after becoming non-compliant or submit a restructuring plan within 30 calendar days following the last day of the month in which such non-compliance occurred. In addition, non-compliance with minimum capital requirements will entail a number of consequences for the financial institution, including prohibition from opening branches in Argentina or in other countries, establishing representative offices abroad, or owning equity in foreign financial institutions, as well as a prohibition from paying cash dividends. Also, the Superintendency may appoint a delegate, who shall have the powers set forth by the FIL.118
(ii) Non-compliance detected by the Superintendency: the institution may challenge the non-compliance determination within thirty (30) calendar days after being served notice by the Superintendency. If no challenge is made, or if the defense is dismissed, the non-compliance determination will be deemed to be final and the procedure described in the previous item will apply.

~~(ii)~~~~Non-compliance identified by the Superintendency~~: the institution must file its defense within 30 calendar days after being served notice by the Superintendency. If no defense is filed, or if the defense is disallowed, the non-compliance will be deemed to be final, and the procedure described in item (i) confirm will apply.
Furthermore, pursuant to Communication “A” 5867, as amended by “A” 5889, among others, if a financial institution fails to meet market risk daily minimum capital requirements, except for any failure to meet the requirements on the last day of the month, calculated as a sum of VaR of included assets or derived from the calculation of capital requirements for interest rate, exchange rate and stock risks the financial institution must replace its capital or decrease its financial position until such requirement is met, and has up to ten (10) business days from the first day on which the requirement was not met to meet the requirement. If the financial institution fails to meet this requirement after ten (10) business days, it must submit a regularization and reorganization plan within the following five (5) business days and may become subject to an administrative proceeding initiated by the Superintendency.

Operational Risk

The regulation on Operational Risk (“OR”) recognizes the management of OR as a comprehensive practice separated from that of other risks, given its importance. OR is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The definition includes legal risk but excludes strategic and reputational risk.

Financial institutions must establish a system for the management of OR that includes policies, processes, procedures and the structure for their adequate management. This framework must also allow the financial entity to evaluate capital sufficiency.

Seven OR event types are defined, according to internationally accepted criteria:

·
internal fraud;

·
external fraud;

·
employment practices and workplace safety;

·
clients, products and business practices;

·
damage to physical assets;
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·
business disruption and system ~~failures,~~failures; and

·
execution, delivery and process management.

Financial entities are charged with implementing an efficient OR management system following the guidelines provided by the Central Bank. A solid system for risk management must have a clear assignment of responsibilities within the organization of financial entities. Thus, the regulation describes the roles prepared by each level of the organization in managing of OR (such as the roles of the Board of Directors, senior management and the business units of the financial institution).

A financial institution’s size and sophistication, and the nature and complexity of its products and processes, and the extent of the transaction determines the type of “OR Unit” required. For small institutions, this unit may even consist of a single person. This unit may functionally respond to the senior management (or similar) or a functional level with risk management decision capacity that reports to that senior management.

An effective risk management will contribute to prevent future losses derived from operational events. Consequently, financial entities must manage the OR inherent in their products, activities, processes and systems. The OR management process comprises:

a)                                     Identification and assessment: the identification process should consider both internal and external factors that could adversely affect the development of the processes and projections done according to the business strategies defined by the financial institution. Financial entities should use internal data, establishing a process to register frequency, severity, categories and other
~~relevant aspects of the OR loss events. This should be complemented with other tools, such as self-risk assessments, risk mapping and key risk indicators.~~
(a) Identification and assessment: the identification process should consider both internal and external factors that could adversely affect the development of the processes and projections created according to the business strategies defined by the financial institution. Financial entities should use internal data, establishing a process to register frequency, severity, categories and other relevant aspects of the OR loss events. This should be complemented with other tools, such as self-risk assessments, risk mapping and key risk indicators.

b)                                     Monitoring: an effective monitoring process is necessary for quickly detecting and correcting deficiencies in the policies, processes and procedures for managing OR. In addition to monitoring operational loss events, banks should identify forward-looking indicators that enable them to act upon these risks appropriately.
(b) Monitoring: an effective monitoring process is necessary for quickly detecting and correcting deficiencies in the policies, processes and procedures for managing OR. In addition to monitoring operational loss events, banks should identify forward-looking indicators that enable them to act upon these risks appropriately.

c)                                      Control and mitigation: financial entities must have an appropriate control system for ensuring compliance with a documented set of internal policies, which involve periodic reviews (at least annually) of control strategies and risk mitigation, and adjust these as necessary.
(c) Control and mitigation: financial entities must have an appropriate control system for ensuring compliance with a documented set of internal policies, which involve periodic reviews (to occur at least annually) of control strategies and risk mitigation, and adjust these as necessary.

Pursuant to Communication “A” 5282, as amended by Communications “A” 6091 and “A” 6638, among others, the minimum capital requirements regarding OR are equal to 15% of the annual average positive gross income of the last 36thirty-six (36) months.
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The OR formula is as follow:

The variables in the OR formula are defined as follows:

·                  Cro~~: the capital requirement for operational risk.~~
• C_ro: the capital requirement for operational risk.

·                  α:
α: 15%.

·
n: the number of twelve-month consecutive terms with positive IB, based on the 36 months preceding the month of calculation. The maximum value of n is 3.

·
IBt: gross income from twelve-month consecutive terms, provided that it is a positive figure, corresponding to the 36 months preceding the month of calculation.

Gross income (ingresos brutos) (“IB,” as per its acronym in Spanish) is defined as the sum of (a) financial and service income ~~minus~~net of financial and service expenses and (b) ~~other income minus other expenses.~~sundry gains net of sundry losses.

The following items are excluded from items (a) and (b) above:

~~(i)~~                                   ~~expenses derived from the creation or elimination of reserves during previous fiscal years and recovered credits during the fiscal year that were written off in previous fiscal years;~~
(i) expenses derived from the creation or elimination of reserves during previous fiscal years and recovered credits during the fiscal year that were written off in previous fiscal years;

~~(ii)~~                                ~~profits or losses from holding equity in other financial institutions or companies, if these were deductible from RPC;~~
(ii) profits or losses from holding equity in other financial institutions or companies, if these were deductible from RPC;

~~(iii)~~                             ~~extraordinary or unusual gains (~~~~i.e.~~~~, those arising from unusual and exceptional events that resulted in gains) including income from insurance recovery; and~~
(iii) extraordinary or unusual gains (i.e., those arising from unusual and exceptional events that resulted in gains) including income from insurance recovery; and

(iv) gains from the sale of classified species and measures at amortized cost of fair value with changes in other integral gains.
~~(iv)~~                            ~~gains from the sale of financial public sector notes, as set forth under the Central Bank regulations (“~~~~Valuación de instrumentos de deuda del sector público no financiero y de regulación monetaria del Banco Central de la República Argentina~~~~”).~~121
New financial institutions must comply, in their first month, with an OR minimum capital requirement equivalent to 10% of the aggregate requirements determined for credit and market risks, in the latter case, for the positions on the last day of that month. As from the second and up to the thirty-sixth month, the monthly capital requirement will be equivalent to 10% of the average requirements determined for the months elapsed until, and including, the calculation period based on a consideration of the risks referred to in the preceding ~~paragraph.~~ paragraph, in accordance with the following formula:
For every t-month:
CRCt: the capital requirement for credit risk.
RMP,t: the capital requirement for market risk for the last day of such t-month.
n: the number of months preceding the month of calculation, inclusive. 2≤ n ≤ 36.
From the thirty-seventh month onwards, the monthly requirement is calculated based on the OR formula.

Minimum Cash Reserve Requirements

The minimum cash reserve requirement requires that a financial institution keeps a portion of its deposits or obligations readily available and not allocated to lending ~~transactions. Pursuant to Communication “A” 3498 (as~~transactions and it is included in the Central Bank “Rules of Minimum Cash,” as amended and ~~supplemented) as of March 1, 2002, the minimum cash requirement includes deposits and obligations for other financial intermediation transactions (overnight and fixed term transactions).~~supplemented.

Minimum cash requirements are applicable to demand and time deposits and other liabilities arising from financial intermediation denominated in Pesos, foreign currency, or government and corporate securities, and any unused balances of advances in checking accounts under ~~formal~~ agreements not containing any clauses that permit the bank to discretionally and unilaterally revoke the possibility of using such balances.

Minimum cash reserve obligations exclude (i) amounts owed to the Central Bank, (ii) amounts owed to domestic financial institutions (excluding special deposits related to inflows of funds —– Decree No. 616/2005), (iii) amounts owed to foreign banks (including their head offices, entities controlling domestic institutions and their branches) in connection with foreign trade financing facilities and with multilateral development banks, (iv) cash purchases pending settlement and forward purchases, (v) cash sales pending settlement and forward sales (whether or not related to repurchase agreements), (vi) overseas correspondent banking operations, ~~and~~ (vii) demand obligations for money orders and transfers from abroad pending settlement to the extent that they do not exceed a 72seventy-two (72) business hour term as from their ~~deposit.~~deposit, and (viii) demand obligations with business for the sales made by credit card and/or for the purchase.

The liabilities subject to these requirements are computed on the basis of the effective principal amount of the transactions, including differences in rates (either negative or positive), excluding interest accrued, past due, or to become due on the aforementioned liabilities, provided they were not credited to the account of, or made available to, third parties, and, in the case of fixed ~~term~~-term deposit of UVA and UVIs, the accrued amount resulting from the increment of the value of such unit.
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The basis on which the minimum cash reserve requirement is computed is the ~~monthly~~ average of the daily balances of the ~~liabilities~~liabilities:
registered at the end of each day during the period prior to the one of its integration, in the case the liabilities are denominated in Pesos; or
registered at the end of each day during the calendar month, ~~except for~~in the ~~period ranging from December~~case of ~~a year to February~~liabilities denominated in foreign currency, or government and corporate securities.
The averages shall be obtained by dividing the aggregate of the ~~next year, period~~daily balances into the total amount of the days of each period. Those days in which itno movements are registered shall ~~be applied on a quarterly average.~~ repeat the balance corresponding to the immediately preceding Business Day.
Such requirement shall be complied with on a separate basis for each currency and/or security and/or instrument under monetary regulation in which the liabilities are denominated.

The table below shows the percentage rates that should be applied to determine the required minimum cash reserve requirement for financial institutions, depending on whether: (i) the financial entities are included in Group “A,” as provided by Section 4 of the regulations on “Authorities of financial entities” (Autoridades de entidades financieras), and/or branches or subsidiaries of foreign banks are classified as systemically important (G-SIB) not included in that group; or (ii) the remaining financial entities. Section 4 of the regulations on “Authorities of financial entities” of the Central Bank classifies the financial entities in: (a) Group “A” which includes those entities in which the amount of their assets is greater than or equal to 1% of the total of the assets of the financial system (for the purposes of calculating this indicator, the average of the assets corresponding to the months of July, August and September of the previous year will be considered, according to the data that arise from the corresponding information regime); (b) Group “B” which includes those entities in which the amount of their assets do not exceed 1% and greater than or equal to 0.25% of the total of the total of the assets of the financial system; and (c) Group “C” which includes those institutions whose deposits do no exceed 0.25% of the total of the assets of the financial system and/or, being Group B institutions, the ratio between their deposits and their RPC is reless than 100%. The following fees arise from Communication “A” 6991:
Rate %
Group A and G-SIB Group B and Group C
Item Pesos Foreign Currency Pesos Foreign Currency
1- Checking account deposits and demand deposits opened at credit cooperatives 45 20
2- Savings account, salary/social security accounts, special accounts (except for deposits included on items 7 and 11), and other demand deposits and liabilities, pension and social security benefits credited by ANSES pending collection and immobilized reserve funds for liabilities covered by these regulations 45 25 20 25
3- Unused balances of advances in checking accounts under executed overdraft agreements 45 20
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Rate %
Group A and G-SIB Group B and Group C
Item Pesos Foreign Currency Pesos Foreign Currency
4- Deposits in checking accounts of non-bank financial institutions, computed for purposes of meeting their required minimum cash reserve 100 100
5- Time deposits, liabilities under “acceptances,” (including responsibilities for sale or transfer of credits to agents different from financial institutions), stock-exchange repos (cautions and stock exchange passive repos), constant-term investments, with an option for early termination or for renewal for a specified term and variable income, and other fixed-term liabilities, except deposits included in the following items 7, 10 y 12 of this table, securities (including negotiable obligations), according to their outstanding term:
(i) Up to 29 days 32 23 11 23
(ii) From 30 days to 59 days 22 17 7 17
(iii) From 60 days to 89 days 4 11 2 11
(iv) From 90 days to 179 days — 5 — 5
(v) From 180 days to 365 days — 2 — 2
(vi) More than 365 days — — — —
6- Liabilities owed due to foreign facilities (not including those instrumented by term deposits, unless they are made by residents abroad linked to the entity pursuant to Section 2 of the rules on “Large Exposures to Credit Risk,” nor the acquisition of debt securities, to which they must apply the requirements provided in the previous point)
(i) Up to 29 days 23 23
(ii) From 30 days to 59 days 17 17
(iii) From 60 days to 89 days 11 11
(iv) From 90 days to 179 days 5 5
(v) From 180 days to 365 days 2 2
(vi) More than 365 days — —
7- Demand and time deposits made upon a court order with funds arising from cases pending before the court, and the related immobilized balances 15
(i) Up to 29 days 29 15 10 15
(ii) From 30 days to 59 days 22 15 7 15
(iii) From 60 days to 89 days 4 15 2 15
(iv) More than 90 days — 15 — 15
8- Special deposits related to inflows of funds. Decree 616/2005 100 100
9- Time deposits in nominative, non-transferable Peso-denominated certificates, belonging to public sector holders, with the right to demand early withdrawal in less than 30 days from its setting up 32 11
10- Deposits and term investments —including savings accounts and securities (including Notes)— in UVIs and UVAs, according their outstanding term
(i) Up to 29 days 7 7
(ii) From 30 days to 59 days 5 5
(iii) From 60 days to 89 days 3 3
(iv) More than 90 days 0 0
11- Labor Work Fund for Construction Industry Workers, denominated in UVA 7 7
12- Deposits and fixed term investments created in the name of minors for funds they receive freely — — — —
13- Deposits in Pesos in demand accounts that constitute the assets of mutual funds (money market) — —
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In the case of transactions in ~~Peso, will depend on the category under which~~Pesos, when the jurisdiction of the main office where the transaction takes place, according to what is established in Central Bank’s regulations regarding “Categorization of locations for financial entities”, belongs to the categories II to VI, the rates foreseen for demand deposits will be reduced by 2 percentage points and for term placements by 1 percentage point up to a minimum of zero. In both cases, it does not include the impositions in securities. The deferred impositions in Pesos arranged remotely (i.e. through home banking, web time deposits, etc.) will receive the same treatment as those captured in the categories II to VI.
Financial entities included in Group “A” and branches or subsidiaries of G-SIB not included in that group may integrate the period and daily requirement in Pesos with “National Treasury Bonds in Pesos at a fixed rate due November 2020” and “National Treasury Bonds in pesos at a fixed rate due May 2022” in up to:
- 5 percentage points of the rates provided in point 1, point 2 (in Pesos), point 3, point 9, and sections (i) and (ii) of points 5 and 7 (both in Pesos); and
- 2 percentage points of the rates provided in sections (iii) of points 5 and 7 (both in Pesos).
Financial entities included in Group “A” and branches or subsidiaries of G-SIB not included in that group may integrate the period and daily requirement in Pesos with LELIQ and/or NOBAC in up to:
- 16 percentage points of the rates provided in section (i) of point 5 (in Pesos) and 9;
- 13 percentage points of the rates provided by section (ii) of point 5 (in Pesos);
- 3 percentage points of the rates provided by seciton (i) and (ii) of point 10 and 11; and
- 2 percentage points of the rates provided by section (iii) of point 5.
Financial entities not included in the last paragraph in up to
- 3 percentage points of the rates provided by sections (i) and (ii) of point 5, point 9, sections (i) and (iii) of point 10 and point 11; and
- 2 percentage points of the rates provided in section (iii) of point 5.
In order to be admitted the integration with “National Treasury Bonds in Pesos at a fixed rate due November 2020,” “National Treasury Bonds in pesos at a fixed rate due May 2022,” LELIQ and/or NOBAC as described above, they must be valued at market prices and be deposited in Sub-account 60, minimum cash enabled in the “Central Registry and Settlement of Public Liabilities and Financial Trusts—CRyL” (Central de Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros).
125
The minimum cash requirement will be reduced:
(2) in accordance with the participation in the total of financing operations to the non-financial private sector in Pesos in the entity of financing to MiPyMEs in the same currency;
Participation, in the total of financing operations
to MiPyMES with respect of total of financing
operations to the non-financial private sector, in
the institution Reductions (over the total of the concepts included in Pesos) %
Less than 4 0.00
From 4 to less than 6 0.75
From 6 to less than 8 1.00
From 8 to less than 10 1.25
From 10 to less than 12 1.50
From 12 to less than 14 1.75
From 14 to less than 16 2.00
From 16 to less than 18 2.20
From 18 to less than 20 2.40
From 20 to less than 22 2.60
From 22 to less than 24 2.80
From 24 to less than 26 3.00
From 26 to less than 28 3.20
From 28 to less than 30 3.40
30 or more than 30 3.60
Calculations will consider the mobile average balance at the end of the last 12 months prior to the low report of the financings in Pesos (Loans and Credits for Financial Leases) granted to MiPyMEs in respect of the total of such financings to the non-financial private sector of the institution.
(3) Depending on the granting of financing under the “Ahora 12” Program (the implementation of the Consumer Promotion Program and the Production of Goods and Services named “Ahora 12” was created by Joint Resolution 671/2014 and 267/2014 of the former Ministry of Economy and Public Finance and the Ministry of Industry), in an amount equivalent to 20% of the sum of the financing in Pesos that the entity grants:
(i) whose destination is the acquisition of goods and services included in the aforementioned resolution and its complementary regulations; or
(ii) to non-financial companies issuing credit cards at an annual interest rate of up to 17%, insofar as these companies are part of the “Ahora 12” Program.
Effective from March 1, 2020, Communication “A” 6916 increased the 20% decrease of the requirement for “Ahora 12,” to 35% of the aggregate financings in Pesos granted by the relevant institution until September 30, 2020, and 50% of the aggregate financings in Pesos granted from October 1, 2020. Additionally, effective from March 19, 2020, Communication “A” 6937 set the limit of the deduction at 6% over the items in Pesos subject to the Central Bank Rules of Minimum Cash.
126
(4) Depending on the cash withdrawals made through institution ATMs. The requirement will be reduced by the amount calculated on the basis of the monthly average of total daily cash withdrawals from ATMs, corresponding to the prior month, located in the institution’s operational houses, according to the jurisdiction in which is located, in accordance with the provisions of the “Locations for Financial Institutions Categorization Rules.”
For this purpose, the included ATMs are those that – at least – allow users to make cash withdrawals regardless of the institution in which they are customers and the network managing such equipment and that –on a monthly average, computing business and non-business days – have remained accessible to the public for at least ten hours a day.
(5) In the case of financial entities included in Group “A,” the requirement will be reduced by an amount equivalent to the 30% of the aggregate of all financing in Pesos to MiPyMEs – in accordance with the definition contained in the “Determination of the Status of Micro, Small or Medium-Sized Enterprises Rules”- agreed at a maximum interest of:
(a) 40% fixed nominal per annum until and including February 16, 2020 (which may continue to be counted until its termination).
(b) 35% fixed nominal per annum from February 17, 2020.
For this purpose, the average monthly balance of the financings granted the period before the requirement was calculated that meets the above conditions shall be included. This deduction may not exceed 2% of the items in Pesos subject to the requirement, on average, of the month prior to the calculation.
The financings calculated for this item 4 deduction cannot be included for the determination of the item 1 above deduction.
(6) In accordance with the special treatment provided for financings under Decree No. 260/2020. The requirement will be reduced by an amount equivalent to 40% of the sum of the financings in pesos agreed to an annual rate of up to 24% with the following objectives:
(a) MiPyMEs if at least 50% of such financings are allocated to working capital.
(b) Providers of human health services if they provide hospitalization in the framework of the health emergency as provided by Decree No. 260/2020.
(c) Non-MiPyMEs clients that agree such financings for the acquisition of machines and equipment produced by local MiPyMEs.
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This deduction may not exceed 4% of the concepts in Pesos subject to demand on average of the month immediately previous of the month of computation, and can be extended up to 6% in the case of the following financings agreed as from July 1, 2020:
- Clients that received the assistance provided for in point (5) a. above, up to the total amount equivalent to the monthly wage bill (without the supplementary annual salary) to be paid by the applicant;
- Clients that did not received such special assistance.
(7) In accordance with the special treatment provided for under Decree No. 332/2020. The requirement will be reduced by an amount equivalent to:
(a) 60% of the amount of the “Zero Interest-Rate Credits,” “Loans at Subsidized Rate for Companies” and “Zero Interest-Rate Culture Credits” agreed under the framework of Decree No. 322/2020 (as amended) and disbursed until November 5, 2020;
(b) 24% of the “Loans at Subsidized Rate for Companies” disbursed until November 6, 2020, at a nominal annual rate of 27%;
(c) 7% of the “Loans at Subsidized Rate for Companies” disbursed as of November 6, 2020 at a nominal annual rate of 33%.
(8) In the case of financings to MiPyMEs not informed at the Financial System’s Debtors Center (Central de Deudores del Sistema Financiero), the requirement will be reduced by an amount equivalent to 40% of the financings in pesos to MiPyMEs agreed at a nominal annual rate of 24% measured on a monthly average of daily balances from the previous month.
(9) In the case of financings included in the “Line of financings for the productive investments of MiPyMEs,” the requirement will be reduced by an amount equivalent to 14% of the financings foreseen in point 4.1. of such line of credits, provided such financings are agreed at an annual nominal interest rate of up to 30%, measured on a monthly average of daily balances from the previous month.
The financings computed for the deduction provided in points 1 and 4-7 can only be computed in one of the above-mentioned points. In addition, the financings computed for the deduction provided in points 4, 5 and 7 shall (i) continue to be computed for the corresponding deduction their monthly average daily balances for the financings provided before October 15, 2020, inclusive; (ii) be voluntary and may not be counted against the deductions of points 4, 5 and 7.
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Whenever there is an excessive concentration of liabilities (in holders and/or terms), which implies a significant risk with respect to the individual liquidity of the financial institution and/or has a significant negative effect on the systemic liquidity, additional minimum cash may be set on the liabilities included in the financial entity ~~falls (Communication “A” 6195) and Communication “A”6080):~~and/or those complementary measures that are deemed pertinent.

Rate %

Category I

Categories II to VI

Item

Pesos

Foreign
Currency

Pesos

Foreign
Currency

1-
Checking account deposits

20

18

2-
Savings account, basic account and free universal account

20

25

18

25

3-
Legal custody accounts, special accounts for savings clubs, salary/social security accounts, special checking accounts for legal entities and social security savings accounts

20

25

18

25

4-
Other demand deposits and liabilities, pension and social security benefits credited by ANSES pending collection and immobilized reserve funds for liabilities covered by these regulations

20

25

18

25

5-
Unused balances of advances in checking accounts under executed overdraft agreements

20

18

6-
Deposits in checking accounts of non-bank financial institutions, computed for purposes of meeting their required minimum cash reserve

100

100

Rate %

Category I

Categories II to VI

Item

Pesos

Foreign
Currency

Pesos

Foreign
Currency

7-
Time deposits, liabilities under acceptances, repurchase agreements (including responsibilities for sale or transfer of credits to agents different from financial institutions), stock-exchange repos (cautions and stock exchange passive repos), constant-term investments, with an option for early termination or for renewal for a specified term and variable income, and other fixed-term liabilities, except rescheduled deposits included in the following items 11, 12, 13 and 14 of this table:

(i) Up to 29 days

14

23

13

23

(ii) From 30 days to 59 days

10

17

9

17

(iii) From 60 days to 89 days

5

11

4

11

(iv) From 90 days to 179 days

1

5

0

5

(v) From 180 days to 365 days

—

2

—

2

(vi) More than 365 days

—

0

—

0

8-
Liabilities owed due to foreign facilities (not executed by means of time deposits or debt securities)

—

—

9-
Securities (including Notes)

(i) Up to 29 days

14

23

14

23

(ii) From 30 days to 59 days

10

17

10

17

(iii) From 60 days to 89 days

5

11

5

11

(iv) From 90 days to 179 days

1

5

1

5

(v) From 180 days to 365 days

—

2

—

2

(vi) From 365 days

—

—

—

—

10-
Liabilities owing to the Trust Fund for Assistance to Financial and Insurance Institutions

—

—

11-
Demand and time deposits made upon a court order with funds arising from cases pending before the court, and the related immobilized balances

13

15

13

15

12-
Special deposits related to inflows of funds. Decree 616/2005

100

100

13-
Time deposits in nominative, non-transferable Peso-denominated certificates, belonging to public sector holders, with the right to demand early withdrawal in less than 30 days from its setting up

16

15

14-
Deposits and term investments —including savings accounts and securities (including Notes)— in UVIs and UVAs

(i) Up to 29 days

7

—

6

—

(ii) From 30 days to 59 days

5

—

4

—

(iii) From 60 days to 89 days

3

—

2

—

(iv) More than 90 days

—

—

—

—

15- Deposits and fixed term investments created in the name of minors for funds they receive freely

—

—

—

—

Likewise, the minimum cash requirement may be increased due to non-compliance with the rules on the “Credit Line for productive investment.”

In addition to the abovementioned requirements, the reserve for any defect in the application of resources in foreign currency net of the balances of cash in the entities, in custody in other entities, in transit and in Transporters of Securities, for a certain month, shall be applied to an amount equal to the minimum cash requirement of the corresponding currency for each month.

The minimum cash reserve must be set up in the same currency or securities or debt instruments for monetary regulation to which the requirement applies, and may include the following:

1.              ~~Accounts maintained by financial institutions with the Central Bank in Pesos.~~
(1) Accounts maintained by financial institutions with the Central Bank in Pesos.

2.              ~~Accounts of minimum cash maintained by financial institutions with the Central Bank in U.S. dollars, or other foreign currency.~~
(2) Accounts of minimum cash maintained by financial institutions with the Central Bank in U.S. dollars, or other foreign currency.

3.              ~~Special guarantee accounts for the benefit of electronic clearing houses and to cover settlement of credit card and ATM transactions and immediate transfer funds.~~
(3) Special guarantee accounts for the benefit of electronic clearing houses and to cover settlement of credit card, vouchers, and ATM transactions and immediate transfer funds.

4.              ~~Checking accounts maintained by non-bank financial institutions with commercial banks for the purpose of meeting the minimum reserve requirement.~~
(4) Checking accounts maintained by non-bank financial institutions with commercial banks for the purpose of meeting the minimum reserve requirement.

(5) Special accounts maintained with the Central Bank for transactions involving social security payments by the ANSES.
5.              ~~Special accounts maintained with the Central Bank for transactions involving social security payments by the ANSES.~~
6.              ~~Minimum cash sub-account 60, authorized in the Registration and Settlement Central for Public Debt and Financial Trusts — CRYL (“~~~~Central de Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros~~ ~~— CRYL”) for public securities and securities issued by the Central Bank at their market value.~~
(6) Minimum cash sub-account 60, authorized in the Registration and Settlement Central for Public Debt and Financial Trusts – CRYL (“Central de Registro y Liquidación de Pasivos Públicos y Fideicomisos Financieros – CRYL”) for public securities and securities issued by the Central Bank at their market value.

These eligible items are subject to review by the Central Bank and may be changed in the future.
The Central Bank makes interest payments on reserve requirements up to the legal cash requirement level established for term transactions. Reserves in excess of that requirement will not be compensated.
Compliance on public bonds and time deposits must be done with holdings marked to market and of the same type, only in terms of monthly status. Holdings must be deposited in special accounts at the Central Bank.

Compliance with the minimum cash reserve requirement will be measured on the basis of the monthly average of the daily balances of eligible items maintained during the ~~month~~period to which the minimum cash reserve refers by dividing the aggregate of such balances by the total number of days in the relevant period. The compensation of deficit positions with surplus positions corresponding to different requirements will not be accepted.
129
The aggregate balances of the eligible items referred to above, maintained as of each daily closing, may not, on any one day during the ~~month,~~period, be less than ~~50%~~25% of the total required cash reserve, ~~excluding the requirement for incremental deposits,~~ determined for the next preceding ~~month,~~period, recalculated on the basis of the requirements and items in force in the month to which the cash reserves ~~relate.~~relate, without considering the effects of the application of the provisions of section “1.7 Transfers” of the “Minimum Cash” rules. The daily minimum required is ~~70%~~50% when a deficit to the admitted transfer margin occurs in the previous ~~month.~~period.

Any deficiencies in meeting the required minimum cash reserve and the daily minimum reserve in Pesos, in foreign currency, or securities or debt instruments for monetary regulation are subject to a penalty in Pesos, equal to ~~twice~~1.5 times the ~~private banks’ Buenos Aires Deposits~~average nominal interest rate of ~~Large Amount Rate (“BADLAR”) rate for deposits in Pesos for~~the shorter term peso denominated LELIQs auction published on the last business day of the relevant period or, if not available, the last one available.
LELIQ global daily position
Pursuant to Communication “A” 7054 of the Central Bank, the LELIQ global daily position of the banks is subject to the following restrictions:
(1)
From April 17, 2020, until April 30, 2020, it shall not surpass 90% of the exceeding holdings registered as of March 19, 2020.
(2) it shall not surpass, on monthly averages of daily balances, the percentages as set forth in the following table and according to the financings computed on the previous period:
Limits to the net position excess (as a percentage of the exceeding holdings registered as of March 19, 2020)
Financings as a
percentage of potential
credit to MiPyMEs from May 1, 2020 from July 1, 2020 from September 1, 2020
100% 90 85 85
< 100 % up to 75 % 85 80 70
< 75 % up to 50 % 80 75 65
< 50% up to 25 % 75 70 60
< 25% 70 65 55
For the purposes of this scheme, the “potential credit to MiPyMEs” shall be calculated as follows:
(a) From July 1, 2020, to August 31, 2020, it will be the sum of:
(i) 10% of the LELIQs holdings exceeding those admitted for the integration of the minimum cash requirement in Pesos provided in point 1.3.16 of the “Minimum Cash” rules, registered as of March 19, 2020; and
130
(ii) The amount of the decrease of the requirement provided in point 1.5.5. of the “Minimum Cash” rules or the 4% of the concepts subject to the requirement, whichever is lower.
(b) Form September 1, 2020, it will be the sum of:
(i) 15% of the LELIQs holdings exceeding those admitted for the integration of the minimum cash requirement in pesos provided in point 1.3.16 of the “Minimum Cash” rules, registered as of March 19, 2020; and
(ii) The amount of the decrease of the requirement provided in point 1.5.5. of the “Minimum Cash” or the 6% of the concepts subject to the requirement, whichever is lower, plus the 40% of the monthly average of daily balances of the previous period of financing charged to the “Credit line for the productive investment of MiPyMEs”.
As from June 1, 2020, for financial institutions that raise deposits at the minimum deposit rate set out in point 1.11.11.(ii) of the “Deposits and Term Investments” rules, the limit for their net position excess of LELIQ shall be in the amount equivalent to 18% of the deposits and term investments in Pesos constituted by the non-financial private sector.
As from August 1, 2020, the limit for their net position excess of LELIQ shall be increased by the amount resulting from the positive difference between the limit for the cash position between the greater of U.S.$2,500,000 or 4% of the RPC of the immediately preceding month, and the monthly average of daily observed cash position balances, or zero if negative, for the same month. This position may not exceed the amount resulting from multiplying the percentage corresponding to the computation month (according to the table below) by the increase verified during March 2021:
Computation month Extension limit
April 2021 80 %
May 2021 50 %
June 2021 15 %
July 2021 0 %
August 2021 100 %
September 2021 100 %
October 2021 100 %
November 2021 100 %
December 2021 65 %
January 2022 30 %
From February 2022 0 %
131
As from September 1, 2020, for financial institutions that raise deposits at the minimum deposit rate set out in point 1.11.11.(i) of the “Deposits and Term Investments” rules, the limit for their net position excess of LELIQ shall be in the amount equivalent to 13% of such deposits, measured regarding the monthly average of balance of the immediately preceding month.

~~Any deficiencies~~From May 11, 2020 until June 30, 2020, financial institutions shall reduce their net position excess of LELIQ by an additional 1% of the excess holding recorded as of March 19, 2020. The financial institutions shall decrease their excess net position as they collect LELIQ payments.
From July 1, 2020, the net position excess shall be reduced following the next chart:
Reached Percentage Reduction of the net position excess
100 % 1%
< 100 % up to 75 % 1.5%
< 75 % up to 50 % 2%
< 50% up to 25 % 2.5%
< 25% 3%
Where “Reached percentage” means the sum of (i) the reduction in ~~meeting~~ the ~~required~~LELIQ position established in the first paragraph of point 8 of the Communication “A” 7054; (ii) the decrease in the minimum cash ~~reserve~~requirement in Pesos provided in point 1.5.7 of the “Minimum Cash” rules; and (iii) the amount equivalent to 40% of the monthly average of daily ~~minimum reserve in foreign currency are subject~~balances of the previous period of financing affected to ~~a penalty equal to twice~~ the ~~private banks’ BADLAR rate for deposits in U.S. dollars or twice the 30-day U.S. dollar LIBOR rate~~“Credit line for the ~~last business day~~productive investment of ~~the month (whichever is higher)~~MiPyMEs”.

~~Minimum cash requirements may decrease:~~From October 2, 2020, inclusive, financial institutions shall reduce the net position excess by an amount equivalent to 20% of the net position excess of LELIQ recorded in monthly average daily balances in September of 2020.

1.              ~~according to the participation~~Financial institutions that, as of and including November 13, 2020, hold a percentage of time deposits in ~~total financing to~~Pesos constituted by the non-financial private sector with respect to total deposits in ~~pesos in the micro, small and medium-sized enterprise (“MiPyMES”);~~Pesos by that sector of less than 10% - measured on a monthly average of daily balances, considering only capital without interest or adjustments- may not:

- Acquire LELIQ for their net position excess; nor
2.              ~~based on cash withdrawals made through ATMs of the entity;~~
- Carry out 7-day swap transactions with the Central Bank.

3.              ~~depending on the accreditations made by the National Social Security Administration (ANSES) for the payment of social security benefits;~~
4.              ~~depending on the granting of financing to MiPyMES from section 1.1.14 of Section 1, Chapter XVIII, LISOL of Central Bank regulations;~~
5.              depending on the granting of financing under the “Ahora 12” Program. The implementation of the Consumer Promotion Program and the Production of Goods and Services named “Ahora 12” was created by Joint Resolution 671/2014 and 267/2014 of the former Ministry of Economy and Public Finance and the Ministry of Industry. Minimum cash requirements may increase with a defect in the application of credit quotas to clients other than MiPyMEs. Minimum foreign cash requirements may decrease in the event of a relaunching of LEBAC’s (Central Bank bills) subscriptions.
Internal Liquidity Policies of Financial Institutions

Liquidity Coverage Ratio

Pursuant to the Central Bank’s regulations on the liquidity coverage ratio (the “LCR”), financial institutions must adopt management and control policies that ensure the maintenance of reasonable liquidity levels to efficiently manage their deposits and other financial commitments and must comply with the liquidity coverage ratio established thereunder, under a 30-day stress test ~~scenario with a 30 day horizon.~~scenario. Such policies should establish procedures for evaluating the liquidity of the institutions in the framework of prevailing market conditions to allow them to revise projections, take steps to eliminate liquidity constraints and obtain sufficient funds, at market terms, to maintain a reasonable level of assets over the long term. Such policies should also address (i) the concentration of assets and liabilities in specific customers, (ii) the overall economic situation, likely trends and the impact on credit availability, and (iii) the ability to obtain funds by selling government debt securities ~~and~~and/or own assets.
132
The organizational structure of the entity must place a specific unit or person in charge of managing liquidity and assign levels of responsibility to the individuals who will be responsible for managing the ~~liquidity coverage ratio (“LCR”),~~LCR, which will require daily monitoring. The participation and coordination of the entity’s top management authority (e.g., a CEO) will be necessary.

In addition, financial institutions must designate a director or advisor who will receive reports at least weekly, or more frequently if circumstances so require, such as when changes in liquidity conditions require new courses of action to safeguard the entity. In the case of branches of foreign financial institutions the reports must be delivered to the highest authority in the country.

Appointed officers and managers will be responsible for managing the liquidity policy that, in addition to monitoring the LCR, includes taking the necessary steps to comply with minimum cash requirements.

Financial institutions must report the list of such officers and directors, as well as any subsequent changes, to the Superintendency within 10ten (10) calendar days from the date of any such change.
Liquidity Parameters

In addition to the LCR, there are other parameters that are used as systematic tools of control. These policies contain specific information regarding cash flows, balance structure and available underlying assets free of charge. These parameters, along with the LCR, offer basic information to evaluate the liquidity risk. The included parameters are:

·
gaps in contractual terms;

·
funding concentration;

·
available assets free of restrictions;

·
LCR for relevant currency; and

·
market-related monitoring tools.

Additionally, Communication “A” 6209, as amended, sets forth that financial institutions must have an adequate stock of high-quality liquid assets (“HQLA”) free of any restrictions which can be immediately converted into cash in order to cover their liquidity needs during a period of 30 days in case of a stress scenario. Also, financial institutions must carry out their own stress tests so as to determine the liquidity level they should maintain in other scenarios, considering a period higher than 30 calendar days.
133
The LCR must be equal to or greater than 1 (that is to say, the stock of HQLA must not be lower than the total net cash outlays) in the absence of a financial stress scenario. If this is not the case, the LCR may fall below 1.

The Central Bank describes how to categorize a stress scenario, taking into account the following: the partial loss of retail deposits; the partial loss of wholesale non-guaranteed funding capacity; the partial loss of guaranteed funding; additional fund outlays due to situations contractually provided for as a consequence of a significant decline in the
financial institution’s credit quality; market volatility increases that have an effect on the quality of guarantees or on the potential future exposure of positions in derivatives; the unforeseen use of credit and liquidity facilities compromised and available but not used that the financial institution may have granted to its clients; and/or the need that the financial institution may experience to repurchase debt or to comply with non-contractual obligations so as to mitigate its reputational risk.

~~Pursuant to Communication “A” 5724, for implementing the above, the financial institutions must consider the following schedule:~~
~~Period~~
~~Ratio~~
~~January 2016 to December 2016~~
~~0.70~~
~~January 2017 to December 2017~~
~~0.80~~
~~January 2018 to December 2018~~
~~0.90~~
~~As of January 2019~~
~~1.00~~
The LCR calculation must be made on a permanent basis and informed to the Central Bank on a monthly basis.

The HQLA can only be made up of the following portfolio assets (consider as Tier 1 (An1)) at the day of the calculation. In order to calculate the LCR, the related assets include, among others, cash in hand, in transit, in armored transportation companies and ATMs; deposits with the Central Bank; certain national public bonds in Pesos or in foreign currency; securities issued or guaranteed by the International Payments Bank, the ~~International Monetary Fund,~~IMF, the European Central Bank, the European Union or Multilateral Development Banks that comply with certain conditions and debt securities issued by other sovereign entities (or their central banks).

Net Stable Funding Ratio

~~Recently, the Central Bank introduced~~The purpose of the net stable funding ratio (“NSFR”)~~, effective as of January 1, 2018. The purpose of this ratio (which complements the LCR)~~ is to ~~encourage that long-term assets be financed~~allow financial institutions to finance their activities with sufficiently stable ~~resources and, in this way,~~sources to mitigate the risk of ~~eventual tense~~future stress situations ~~in funding.~~derived from their funding requirements. By requiring financial institutions to maintain a stable funding profile ~~in relation~~relative to the ~~composition~~breakdown of their ~~assets~~off-balance sheetassets and ~~off-balance sheet operations,~~transactions, the NSFR limits ~~excessive~~the strong dependence on ~~short-term~~short term wholesale funding, promotes a better assessment of ~~the funding risk of the items on and off~~ balance sheet and off-balance sheet items funding risk, and favors ~~the stability~~funding sources stability. The definitions of the ~~sources~~components of ~~funds.~~the NSFR are similar to those set forth in the “Liquidity Coverage Ratio” regulations, unless otherwise expressly set forth herein.

The NSFR is defined as the ~~quotient between the~~ available amount of stable funding ~~(MDFE) and~~relative to the required amount of stable funding, ~~(MRFE):~~
~~NSFR: MDFE / MRFE~~
~~Where:~~
~~MDFE:~~where: AASF (Available Amount of Stable Funding) is ~~part of~~ the capital and liabilities of the financial ~~entity~~institution – calculated in the manner set forth in Section 2 – that are expected to be available ~~for~~over a ~~period~~one -year term. RASF (Required Amount of ~~one year; and it~~Stable Funding) is calculated based on the general characteristics of the funding sources that financial institutions have that affect their stability, such as the contractual maturity of their liabilities and the different propensities to withdraw funds that have different providers of anchoring.
~~MRFE:~~ the amount of funding necessary ~~during this~~for such period ~~which is a function~~– calculated in the manner set forth in Section 3 – based on its liquidity and remaining life of the ~~liquidity and residual term of the entity’s~~institution’s assets and of its off-balance sheet ~~commitments; and it is calculated taking into account the general characteristics of the liquidity risk profile of the assets and of the off-balance-sheet exposures of the financial institution.~~obligations.

The NSFR ~~must~~shall be at all times be greater than or equal to ~~one.~~1 (NSFR > 1). It shall be supplemented with the assessment made by the Superintendency. The Superintendency may ~~require~~demand the ~~entity~~institution to adopt stricter standards ~~in order~~ to reflect its funding risk profile, also taking into account ~~for that purpose~~ the ~~evaluation that has been~~assessment made ~~of compliance~~in connection with the ~~rules on “Guidelines~~“Risk Management Guidelines for ~~risk management~~Financial Institutions” in ~~financial institutions” in terms of liquidity by~~connection with the ~~entity.~~institution’s liquidity.
~~Entities must~~134
The Financial Institutions shall observe the NSFR at all times and report it on a quarterly basis to the ~~Superintendency quarterly through the information regime established for this purpose.~~Superintendency.

~~Credit Risk Regulation~~
The regulations on credit risk establish standards in order to reduce such risk without significantly eroding average profitability. There are three types of ratios that limit a lender’s risk exposure, namely: risk concentration limits, limits on transactions with customers on the basis of the institution’s capital and credit limits on the basis of the customer’s net worth.
~~Risk concentration~~~~: regulations include the concept of risk concentration, defined as the sum of loans that individually exceed 10% of the financial institution’s RPC. Total operations may not exceed, at any time:~~
·                  ~~three times the institution’s RPC for the previous month, without considering the operations involving local financial institutions;~~
·                  ~~five times the institution’s RPC for the previous month, on total financings; and/or~~
·                  ~~ten times the institution’s RPC for the previous month, for second tier commercial banks when taking into account transactions with other financial institutions.~~
The three times and five times limits listed above are increased to four times and six times the institution’s RPC for the previous month, respectively, whenever increases are allocated to provide assistance to trusts or fiduciary funds from the non-financial public sector.
Loans (other than inter-bank loans) that exceed 2.5% of the financial institution’s RPC must be recommended by senior management and approved by the institution’s Board of Directors or similar authority.
~~Diversification of risk~~: Financial institutions must ensure that their loan portfolio is diversified among the highest possible number of individuals or companies and across all economic sectors to avoid a concentration of risk arising from a small group of individuals or companies or related to a specific sector that could significantly affect the institution’s assets.
~~Degree of risk~~: In the case of credit limits based on the customers’ net worth, as a general rule the financial assistance cannot exceed 100% of the customer’s net worth. The basic margin may be increased by an additional 200% provided such additional margin does not exceed 2.5% of the financial institution’s RPC as of the last day of the second month prior to the date of the financing and the increase is approved by the Board of Directors of the relevant financial institution.
~~Limits on Credit Assistance~~
~~Maximum individual limits on credit assistance for non-related clients are calculated as a percentage of the financial institution’s RPC.~~
~~Maximum limits for credit assistance to non-financial public sector are as follows:~~
~~Transactions with the non-financial public sector~~
~~Maximum limit (*)~~
~~i) Transactions with the national public sector~~
50
%
~~ii) Transactions with each provincial jurisdiction or the City of Buenos Aires~~
10
%
~~iii) Transactions with each municipal jurisdiction~~
3
%
~~(*)~~ Individual limits will be increased by 15% when the increase is applied to financial assistance granted to trusts or fiduciary funds, subject to certain conditions and related to the financing of public sector or the inclusion of debt instruments issued by them.
~~Globally, lending to the public sector cannot exceed 75% of the institution’s RPC. Monthly credit assistance to the public sector cannot exceed 35% of a financial institution’s assets.~~
~~Maximum limits for credit assistance to the non-financial private sector of the country and non-financial sector abroad are as follows:~~
~~Transactions with the non-financial private sector of the country and non-financial sector abroad~~
~~Maximum limit~~
i)
~~For each borrower~~
~~a) Unsecured financings~~
15
%
~~b) Total financings (secured or unsecured) and/or collateralized obligations including financings guaranteed by third parties~~
25
%
~~ii)~~
~~For each Reciprocal Guarantee Company (RGC) (including affiliates) or public guarantee fund~~
25
%
~~iii)~~
~~For each export credit insurance company~~
15
%
~~Maximum limits for credit assistance to the financial sector of the country are as follows:~~

Taker

Transactions with the financial sector of the country

Lender

Rated 1, 2 or 3

Rated 4 or 5

i)
Financing by a financial institution that is not a second tier commercial bank to a local financial institution

Rated 1, 2 or 3

25
%
25
%

Rated 4 or 5

25
%
0
%
ii)
Financing by a financial institution that is a second tier commercial bank

Rated 1, 2 or 3

100
%
100
%

Rated 4 or 5

100
%
0
%
*This limit can be divided in two segments, with and without collateral, in each case by 25% subject to compliance with certain requirements.
~~Maximum limits for credit assistance to the financial sector abroad are as follows:~~
~~Transactions with the financial sector abroad~~
~~Maximum limit~~
i)
~~Investment grade banks~~
25
%
~~ii)~~
~~Non-investment grade banks~~
5
%
The allocation of margins for exposure to counterparty credit risk in derivative contracts is done on the basis of risk-sensitive measures and the features of each particular type of transaction (type of contract, frequency of marking to market, volatility of the asset). Transactions to be included are forwards, futures and options on shares and public bonds, and Central Bank debt instruments for which volatility is published, purchase and sale options on such assets, and swaps.
~~Limits for Affiliated Individuals~~
The aggregate amount of relevant transactions with affiliated companies or individuals may not exceed at any time the limits of the financial institution’s net worth as of the last day of the month prior to the month of calculation, according to the following general rules:
·                  in the case of local financial institutions which have transactions that are subject to consolidation by the lender or borrower, when the entity receiving financial assistance (i) has received a grade 1 rating by the Superintendency, the financial institution can provide assistance in an amount up to 100% of its computable net worth; or (ii) has received a grade 2 rating by the Superintendency, general financial assistance can be provided for an amount up to 10% of the financial institution’s computable net worth; and additional assistance in an amount up to 90% of said computable net worth as long as loans and other credit facilities mature within 180 days;
·                  ~~in the case of local financial institutions not included in (i) above, the financial institution can provide assistance in an amount up to 10% of its computable net worth; and~~
·                  in the case of other related local companies that exclusively provide complementary services to the activity performed by the financial institution, as well as related foreign banks rated “investment grade,” such companies may receive assistance in an amount of up to 10% of the computable net worth of the financial institution which grants assistance.
~~If the financial institution has a rating of 4 or 5, financial assistance to a related person or company cannot be granted, except in certain special situations.~~
Finally, the total, non-excluded amount of financial assistance provided to, and the shareholder participation in the related individuals and companies by a financial institution cannot exceed 20.0% of the institution’s Argentine regulatory capital, except when the applicable limit is 100.0%.
~~Under Central Bank regulations, a person is “related” to a financial institution (and thus part of the same “economic group”):~~
·                  ~~if the financial institution directly or indirectly controls, is controlled by, or is under common control with, such person;~~
·                  if the financial institution or the person that controls the financial institution and such person has or may have common directors to the extent such directors, voting together, will constitute a simple majority of each board; or
·                  ~~as an exception, determined by the Board of Directors of the Central Bank (pursuant to a proposal from the Superintendency).~~
~~In turn, control by one person over another is defined under such regulations as:~~
·                  ~~holding or controlling, directly or indirectly, 25.0% or more of the voting stock of the other person;~~
·                  ~~having held 50% or more of the voting stock of the other person at the time of the last election of directors;~~
·                  holding, directly or indirectly, any other kind of participation in the other person (even if it represents a participating interest below the abovementioned percentages) so as to be able to prevail in its shareholders’ or Board of Directors’ meetings; or
·                  when the Board of Directors of the Central Bank, pursuant to a proposal from the Superintendency, determines that a person is exercising a controlling influence, directly or indirectly, in the direction or policies of another person.
~~The regulations contain several non-exclusive factors to be used in determining the existence of such controlling influence, including, among others:~~
·                  ~~the holding of a sufficient amount of the other person’s capital stock as to exercise influence over the approval of such person’s financial statements and payment of dividends;~~
·                  ~~representation on the other person’s Board of Directors;~~
·                  ~~significant transactions between both persons;~~
·                  ~~transfers of directors or senior officers between both persons;~~
·                  ~~technical and administrative subordination by one person to the other; and~~
·                  ~~participation in the creation of policies of the financial institution.~~
~~Interest rate and fee regulations~~
~~Maximum lending rates~~Leverage Ratio

Pursuant to Communication “A” ~~5590, which was in force from June 2014 to December 2015,~~6431, effective as of March 1, 2018, the Central Bank ~~established limits~~incorporated a ratio to ~~lending rates applicable~~limit the leverage of financial institutions in order to ~~consumer financing~~avoid the adverse consequences of an abrupt reduction in leverage in the supply of credit and the economy in general, and reinforce the minimum capital requirement with ~~respect to personal loans~~a minimum capital requirement simple and ~~pledge loans granted to retail customers, that are~~ not ~~considered as MiPyMEs.~~based on risk.

~~Pursuant~~The leverage ratio, which must be greater than or equal to ~~these limits, two groups~~3%, arises from the following expression:
Ratio (as %) = Measure of ~~institutions were defined: (i) financial entities with non-financial private sector deposits in Pesos, taking into account~~capital / Measure of exposure where the ~~average~~measure of capital will be the basic net worth, and the measure of the ~~three months prior~~exposure will be the sum of (i) the exposures in the asset (excluding the items corresponding to ~~April 2014, equal to or higher than 1% of the total non-financial private sector deposits of the financial system (Group I)~~derivatives and Securities Financing Transactions (SFT)), (ii) ~~all other financial institutions (Group II).~~
In the case of institutions falling under Group I, the Central Bank would publish on a monthly basis the maximum interest rates that these financial institutions were authorized to apply to each financing disbursed and/or restructured. The maximum interest rates wereexposures by derivatives, (iii) exposures for SFT transactions, and (iv) off-balance-sheet items. Both measures must be calculated based on the ~~product~~closing balances of multiplying the most recent “reference interest rate” (as published by the Central Bank and based on the simple average of the cut-off rates applicable to Central Bank bills for a term closest to 90 days, two months before the disbursement) by the following multiples: (i) in respect of pledge loans: 1.25; (ii) in respect of overdrafts, credit card loans and mortgages on housing assigned to financial institutions by third parties, as receivables in respect to trusts where trust assets were constituted by them, and as collateral for granting loans: 2.00; and (iii) in respect of personal loans: 1.45.each quarter.

~~In the case of Group II, the multiples used were as follows (i) in respect of pledge loans: 1.40; (ii) in respect of overdrafts, credit card loans~~Interest rate and mortgages on housing assigned to financial institutions by third parties, as receivables in respect to trusts where trust assets were constituted by them, and as collateral for granting loans: 2.00; and (iii) in respect of personal loans: 1.80.fee regulations
Maximum lending rates

On December 17, 2015, the Central Bank issued Communication “A” 5853 (as amended by Communication “A” 5891, among others), pursuant to which the provisions that established maximum interest rates applicable to the lending transactions ~~described above~~ ceased to have effect in respect of any new transactions conducted as from and including such date. In addition, Communication “A” 5853 established the basic requirement that compensatory interest rates be freely agreed upon among financial institutions and their customers in accordance with established provisions under applicable statutory regulations, such as Central Bank ~~regulations~~rules which state the maximum interest rate applicable to credit card facilities. Also, the punitive fee in addition to compensatory interest will be freely agreed upon among financial institutions and their customers.
Regulations set forth that the fixed-rate loan agreements shall not contain clauses that allow their modification under certain circumstances, unless those modifications come from decisions taken by the competent authority and the variable-rate loan contracts must clearly specify the parameters that will be used for its determination and periodicity of variation.

With respect to transactions ~~conducted~~linked to credit cards:
• in those granted by financial institutions, the rate may not exceed more than 25% of the average of the interest rates applied by the entity, during the immediately preceding month, weighted by the corresponding amount of personal loans without in rem security interests granted in the same period;
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• in those granted by other issuing entities, the rate may not exceed the simple average of the system’s rates for open market personal loan operations (general customers) by more than 25%, with no in rem security interest, published by the Central Bank on a monthly basis, prepared on the basis of information corresponding to the second previous month, taking into account the provisions of the preceding point.
Punitive fees in credit cards linked financing transactions, may not exceed more than 50% to the compensatory interest rate that the issuer charges for the financing of outstanding debt of credit cards.
Zero interest-rate financings policy
By means of Communication “A” 6993, dated April 24, 2020, with the purpose of containing the impact the ongoing COVID-19 pandemic, the Central Bank established a zero interest-rate financing policy, applicable only to the eligible clients to be later determined by AFIP to whom the financial institutions may grant credit card financings to be paid in at least 12 equal and consecutive installments after a ~~regulated rate, any non-compliance identified until December 31, 2015~~6-month grace period. In regards to these loans, the minimum cash requirement will be ~~addressed pursuant~~reduced in accordance with the provisions of Decree No. 332/2020 (as amended and restated). Additionally, companies which are granted a zero interest-rate loan may not, until full repayment: (i) access the foreign exchange market to carry out operations corresponding to the ~~rules~~formation of external assets, remittance of family aid and derivatives; and, (ii) sell securities with settlement in effect as of December 16, 2015. For any non-compliance identified as from January 1, 2016, the rules established by Communication “A” 5849 will be applicable. Communication “A” 5849 establishes the procedure for reimbursing customers any amounts charged by financial institutions in excess of the applicable maximum lending rate.foreign currency or transfer them to other depositary entities (contado con liquidación).

Minimum term deposit rates

Pursuant to Communication “A” 5640, which was in effect from October 2014 to December 2015, the Central Bank established minimum interest rates applicable to term deposits made by individuals (in a principal amount equal to or lower than the amount covered by ~~Seguro de Depósitos S.A.~~ ~~(“SEDESA”) at the time) (~~~~i.e.~~, deposits not exceeding Ps.350,000). Communication “A” 5659, issued on October 31, 2015, increased the monthly contribution that banks were required to set aside each month to fund the Deposits Guarantee Fund (“~~Fondo de Garantía de los Depósitos~~~~”) from 0.015% to 0.060% of the monthly average of the daily deposits balance. On April 7, 2016, the Central Bank issued Communication “A” 5943, as~~5853 (as amended ~~and supplemented~~ by Communication “A” 6462, pursuant to which the monthly contribution rate reverted back to 0.015% of the monthly average of the daily deposits balance, and as of May 1, 2016, the amount covered was extended to Ps.450,000.
The interest rate applicable to such deposits could not be lower than the result of multiplying the most recent “reference borrowing rate” (as published by the Central Bank and based on the simple average of the cut-off rates applicable to Central Bank bills for a term closest to 90 days, two months before the withdrawal of the deposits) by
the following multiple, depending on the original term of each deposit: (a) from 30 to 44 days: 0.91, (b) from 45 to 59 days: 0.93 and (c) from 60 to 119 days: 0.97, (d) from 120 to 179 days: 0.98 and (e) over 180 days: 0.99.
~~On December 17, 2015, the Central Bank issued Communication “A” 5853, pursuant to which~~5891, among others) the provisions that established minimum interest rates applicable to the term deposits ~~described above~~ ceased to have effect in respect of any new transactions conducted as from and including such date. The remuneration for ~~fixed-rate~~ deposits and term investments will be established at a rate freely agreed upon among the ~~parties.~~parties according to the applicable rules for each type of operation.

With respect to transactions conducted at a regulated rate, any non-compliance identified on or before December 31, 2015 will be addressed pursuant to the rules in effect as of December 16, 2015. For any non-compliance identified as from January 1, 2016, the rules established by Communication “A” 5849 will be applicable. Communication “A” 5849 established the procedure by which financial institutions must pay customers any amounts due as a result of non-compliance with the applicable minimum term deposit rates.Fees

~~Fees~~
~~On October 6, 2013, the~~ Central Bank ~~issued Communication “A” 5460, granting~~regulations grant broad protection to financial services ~~customers.~~customers since 2013. The protection includes, among other things, the regulation of fees and commissions charged by financial institutions for services provided. Fees and charges must represent a real, direct and demonstrable cost and should be supported by a technical and economic justification. It is worth noting that Communication “A” 5514 sets forth an exception to the enforcement of Communication “A” 5460 for certain credit agreements that have pledges as collateral and are issued before September 30, 2018.

On June 10, 2014, the Central Bank issued Communications “A” 5591 and “A”5592, through which established new rules regarding fees and charges for basic financial products and services. Beginning on the effective date of the rule, financial institutions must have prior authorization from the Central Bank to implement increases to the cost of those services. The rule also specifically defines which financial services are considered basic.
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On December 23, 2014, the Central Bank issued Communication “A” 5685 amending Communication “A” 5460, setting forth that any increase in commissions of new products or services must have the prior authorization of the Central Bank.

On August 21, 2015, the Central Bank issued Communication “A” 5795, ~~(as~~as amended and supplemented by several regulations, including but not limited to Communication “A” ~~5828)~~5828, establishing additional rules aimed at protecting financial services customers by reinforcing regulations that prohibit financial institutions from charging fees and commissions related to insurance products that financial services customers purchase as accessories of financial services, regardless of whether it is a customer request or a condition set by the financial institution to access the financial service. In this regard, beginning on November 13, 2015, financial institutions may not receive remunerations or profits from such insurance products or receive remunerations or profits, directly or indirectly, from insurance companies with respect to such products.

Furthermore, Communication “A” 5828 creates a distinction between “life insurance on debit balances” and “other insurance,” establishing for the former that financial institutions cannot charge users any fee and/or charge associated with such kind of insurance. Financial institutions must purchase life insurance on debit balances with coverage for death or permanent total disability with respect to financings granted to human beings. Alternatively, they can self-insure the risks of death and permanent total disability of financial services clients. In both cases, coverage must fully cover the amount due in case of death or total permanent disability of the beneficiary.

On March 21, 2016, the Central Bank issued Communication “A” 5927 (as supplemented by Communication “A” 5928) that established new rules aimed at protecting the financial ~~users.~~user and an increase of the banking services use. In this regard, beginning on April 1, 2016, the electronic transfers ordered or received by clients categorized as financial services customers ~~who make electronic transfers~~ will not be charged with fees or commissions. ~~Clients~~For clients that do not meet ~~such~~this category, ~~(such~~ as ~~certain companies) that make~~companies, transfers of funds of up to Ps.250,000, ordered or received by electronic means, will not be charged fees or commissions. Communication “A” 5927 also established that immediate transfers of funds of up to Ps.100,000 per day and ~~per~~ account can be made via ~~the internet (home banking)~~home banking every day of the year.
On March 21, 2016, the Central Bank issued Communication “A” 5928, pursuant to which all ~~savings~~saving accounts ~~will~~shall be free, including the use of the corresponding debit card. In this regard, all existing ~~and new savings~~saving accounts ~~will now~~shall be free of ~~charge. Saving~~charge, as well as for new clients. The saving accounts ~~will~~shall not ~~face minimum~~have amount ~~requirements~~limits, or any charge related to their creation, maintenance or ~~renewal.~~renovation. In addition, pursuant to such regulation, commissions could be increased up to 20%, but ~~clients~~such increase must be ~~notified of such increase 60~~informed to the client sixty (60) days in advance. Furthermore, as of September 1, 2016 commissions’ caps ~~on commissions will be~~are eliminated, but financial institutions will have to ~~notify~~inform their customers ~~regarding~~in advance about the commissions that other financial entities ~~will be~~are charging.

~~Lastly, through~~Central Bank issued Communication “A” 6212, effective as of April 1, 2017, ~~the Central Bank issued a scheme to gradually reduce, on an annual basis,~~ which reduces credit card and debit card sales ~~commissions. In this regard,~~commissions on a gradual annual plan. Pursuant to Communication “A” 6212, the maximum credit card sales commission rate for 2017 is 2.0% and for 2018, 2019, 2020 and 2021 and after, will be 1.85%, 1.65%, 1.50% and 1.30%, respectively. The maximum debit card sales commissions for 2017 is 1.0% and for 2018, 2019, 2020 and 2021 and after, will be 0.90%, 0.80%, 0.70% and 0.60%, respectively.
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~~Mandatory extension of credit facilities for productive investments~~
On ~~July 5, 2012,~~April 17, 2019, the Central Bank issued Communication “A” ~~5319, mandating~~6681, pursuant to which it ruled that banks will not be allowed to charge fees or commissions to SMEs for over-the-counter cash deposits.
Later, on March 26, 2020, through Communication “A” 6945 (as amended by Communications “A” 6957, “A” 6963, “A” 7009, “A” 7044, “A” 7107 and lastly by Communication “A” 7181 dated December 17, 2020), the Central Bank determined that until March 31, 2021, any operation effected through ATMs would not be subject to any charges or fees.
Maximum term for payments to commerces and providers
By virtue of Communication “A” 6680, effective as of May 1, 2019, the Central Bank established a maximum term of ten business days for financial entities to ~~extend~~deposit payments to commerces and providers for sales made via credit ~~facilities for productive investments (the “2012 Quota”), according~~cards or purchase cards, calculated from the sale date. Furthermore, financial entities shall not charge any fee or interest related to ~~the terms and conditions described therein. Subsequently,~~such payment term, nor block this payment mechanism in any way.
Nevertheless, by virtue of Communication “A” 6680, the Central Bank issued Communication “A” 5380 and “A” 5449 (the “2013 Quota”), “A” 5516 and “A” 5600 (the “2014 Quota”), “A” 5681 and “A” 5771 (the”2015 Quota”),”A” 5874 and “A” 5975 (the “2016 Quota”), “A” 6084 and “A” 6259 (the “2017 Quota”) and “A” 6352 (the “2018 Quota”), establishing new regulations applicable to credit facilities for productive investments (the “Quota”). The 2012 Quota, the 2013 Quota, the 2014 Quota, the 2015 Quota, the 2016 Quota and the 2017 Quota are not cumulative and must be complied with, independently, in each year. Financial Institutions subject to this regime are those operating as financial agents of the national, provincial, City of Buenos Aires and/or municipal governments and/or those whose participation in the deposits of the non-financial private sector in Pesos, are equal to or greater than 1% of the total deposits in the financial system. Through Communication “A” 6352 issued on November 3, 2017, the Central Bank started to gradually reduce the percentage of these facilities, until its complete elimination scheduled in December 2018.
~~2014 Quota~~
Financial entities included in the 2014 quota must extend credit facilities for an amount equivalent to 5% of the nonfinancial private sector deposits in Pesos, calculated according to the balance resulting as of the end of November 2013, for the first tranche, and for an amount equal to at least 5.5% of deposits of non-financial private sector deposits in Pesos, calculated according to the balance resulting as of the end of May 2014, for the second tranche.
The maximum interest rate for the first tranche is 17.50% and for the second tranche is 19.50% fixed per annum for at least the first 36 months. After the completion of this period, if the financing continues, institutions may apply a variable rate that may not exceed the total BADLAR rate in Pesos plus 300 basis points.
The 2014 Quota must target 100% of the credit facilities rendered to micro, small- and medium-sized enterprises. The credits granted must be denominated in Pesos and, at the time of disbursement of the funds, must have a weighted average life equal to or greater than 24 months and shall mature beyond 36 months. Financing under the first tranche must be granted by June 30, 2014. Financing under the second tranche must be granted by December 31, 2014.
The maximum interest rate for the second semester of 2014 Quota is 19.50% fixed per annum for at least the first 36 months. After the completion of this period, if the financing continues, institutions may apply a variable rate that may not exceed the total BADLAR rate in Pesos plus 300 basis points.
~~2015 Quota~~
Financial entities included in the 2015 Quota must extend credit facilities in the first tranche for an amount equal to at least 6.5% of deposits of non-financial private sector deposits in Pesos, calculated according to the average
balances of November 2014, and in the second tranche for an amount equal to at least 7.5% of deposits of non-financial private sector deposits in Pesos, calculated according to the average balances of May 2015.
The maximum interest rate for the 2015 Quota was established at a fixed 19% per annum for the first tranche and at a fixed 18% per annum for the second tranche, for at least the first 36 months. After the completion of this period, if the financing continues, institutions may apply a variable rate that may not exceed the BADLAR rate in Pesos plus 150 basis points for the first tranche and BADLAR rate in Pesos plus 50 basis points for the second tranche.
The 2015 Quota must target 80% of the credit facilities rendered to micro, small- and medium-sized enterprises. The remaining 20% can target enterprises that exceed the maximum established for their area of activity in the rules on “micro-, small- and medium- sized enterprises” and that the total exports do not exceed the 20% of total sales of the last financial year. The credits granted must be denominated in Pesos and, at the time of disbursement of the funds, must have a weighted average life equal to or greater than 24 months and shall mature beyond 36 months. All financing under the 2015 Quota must be granted by December 31, 2015.
~~2016 Quota~~
~~Central Bank Communication “A” 5874, as amended, sets forth the following guidelines for the 2016 Quota:~~
Financial entities acting as financial agents for the national, provincial, Autonomous City of Buenos Aires’ and/or municipal governments and/or whose share in the non-financial private sector deposits in Pesos in the financial system is equal to or greater than 1%, based on the simple average of daily balances of the non-financial private sector deposit in Pesos for the previous calendar six-month period, will be required to extend credit facilities equivalent to at least 14% of the non-financial private sector deposits in Pesos, calculated on the basis of the monthly average of daily balances in November 2015 and, as of July 1, 2016, to at least 15.5% of the non-financial private sector deposits in Pesos, calculated on the basis of the monthly average of daily balances in May 2016.
In the case of entities falling within the above scope whose share of total non-financial private sector deposits in Pesos is lower than 0.25% (calculated as described in the preceding paragraph) the percentage to be applied will be not less than 8% - and not less than 9%excluded from ~~July 1, 2016, to December 31, 2016.~~
~~Not less than 75% of the 2016 Quota must be allocated to credit facilities intended for micro-, small- and medium- sized enterprises.~~
~~Communication “A” 5874 and “A” 5975 established the type of financing which may be considered eligible to be computed as part of the 2016 Quota, which includes the following:~~
~~(i)~~                      Financing of investment projects (meaning financing extended for the purchase of capital goods and/or the construction of facilities necessary for the production of goods and/or services and for the commercialization of goods and/or services; financing of working capital for investment projects for up to an amount equivalent to 20% of the total project amount; the purchase of real estate, provided the financing amount does not exceed 70% of the value attributable to the constructions built on the land; financing for the purchase of motor vehicles and machinery, provided that the purchase transaction be carried out at the selling price applied to cash transactions; among others);
~~(ii)~~                   Discount of deferred payment checks, certificates of public works (or any documentation that may replace them) and invoices and promissory notes for customers that are micro-, small- and medium- sized enterprises for up to an amount equivalent to 30% of the first tranche of the 2016 Quota, and for the whole quota of the second tranche of the 2016 Quota;
~~(iii)~~                Inclusion, by means of an assignment or discount, of financing facilities provided to users of financial services, or of receivables in respect of trusts whose trust assets consist — primarily — of such financing provided by financial entities not included within the scope of the ~~above mentioned rules, with a total nominal annual financial cost not exceeding 27%, for~~provisions disclosed by Communication “A” 6680 the ~~financings granted as of October 31, 2016, and 21% for the financings granted as of November 1, 2016, which may amount to up to 5% of the 2016 Quota;~~
~~(iv)~~               ~~Microcredit extended to micro entrepreneurs that meet certain requirements (including that, either individually~~ credit and/or as a family group, they do not have revenues exceeding two adjustable minimum living wages and are not registered as value added tax, income tax and personal assets tax payers with AFIP). On a supplemental basis, micro entrepreneurs may be granted loans for the purchase ~~of consumption goods or services;~~
~~(v)~~                  Loans extended to natural persons at an interest rate of up to a nominal annual 22% for the first year and as from the second year, if the above rate is not maintained, at a variable interest rate equivalent to the Peso BADLAR rate charged by private banks, plus 150 basis points. The proceeds of these loans must be used directly for the purchase of a sole family dwelling for the respective family group, and must be implemented by means of a collateral assignment of rights in the trusts created for the construction of those properties , subject to certain conditions. This type of financing may collectively amount to up to 10% of the 2016 Quota;
~~(vi)~~               ~~Mortgage loans extended~~cards issued to individuals for the purchase, construction or enlargement of dwellings, at an interest rate of up to a nominal annual 22% for the first year and as from the second year, if the above rate is not maintained, at a variable interest rate equivalent to the Peso BADLAR rate charged by private banks, plus 150 basis points. These loans may collectively amount to up to 10% of the 2016 Quota;
~~(vii)~~            ~~Assistance provided to natural persons and/~~or legal entities ~~in areas where an emergency situation prevails as~~that are intended for the payment of purchases with a ~~result of natural disasters. This assistance may amount~~deferred term or more than one month related to ~~up to 15% of the 2016 Quota; and~~their productive activity, i.e. agricultural o distribution activities.

~~(viii)~~         Financing extended by financial entities that do not fall within the scope of these rules and/or to companies that provide financial assistance through capital lease transactions, provided the proceeds of such transactions are applied to funds, as of the effective date of the legal regulation, to provide financing to MIPyMEs for the purchase of motor vehicles and/or machinery at prices not exceeding cash transaction prices (~~i.e.~~, list price, net of any general discounts) and pursuant to the conditions of the 2016 Quota. The proceeds must be used within a term of 10 business days between the date when financial assistance is received from the financial entity and the date the funds are used for lending to MiPyMEs (Communication “A” 5929); and
~~(ix)~~               Financing extended to financial institutions regarding assistance mentioned in item (vii) and incorporations made from that assistance if granted by financial institutions. The entity which provides financing or its assignee, may compute such assistance, for which a report from the external auditor is required;
~~(x)~~                  Working capital financing to MiPyME, extended as of August 1, 2016, for working capital allocated to livestock farming (e.g., for the purchase and/or production of cattle, sheep, pigs, poultry, apiculture, etc.), dairy farming or other productive activities carried out in regional economies within the scope of section 2.2.9. of the “Minimum loan loss provisions” regulations, for up to an amount equivalent to 10% of the 2016 Quota; and
~~(xi)~~               ~~Financing to non-financial institutions that issue credit cards and have joined the “Ahora 12” program.~~
~~(xii)~~            The maximum interest rate to be applied, except for the financing facilities described in items (iii), (v) and (vi) above, will be a nominal annual fixed rate of 22% for the financings granted as of October 31, 2016, and of 17% for the financings granted as of November 1, 2016. In the case of financings restated in purchasing power units, CER adjustable (UVA), the maximum interest rate will be a nominal annual fixed rate of 1%. The rate will be free for transactions with customers who do not meet the conditions of a micro-, small- or medium-sized enterprise.
Financing facilities must be denominated in Pesos and have — at the time of disbursement — an average maturity period equal to or longer than 24 months, based on weighted principal maturities, and the total maturity period must not be less than 36 months. Financing facilities described in item (i) above and to be used for working capital purposes must have an effective weighted average maturity period equal to or longer than 24 months. The discount transactions contemplated in items (ii) and (iii) will not be subject to a minimum maturity period requirement. The mortgage loans referred to in item (vi) must have a minimum maturity period of 10 years. The working capital financing facilities for MiPyMEs described in item (ix) must have an effective weighted average maturity period equal to or longer than 18 months.
~~The entities may make up this portfolio with loans extended on a joint basis with other entities, in the relevant proportion.~~
~~In case early pre-payment is accepted, only debtors will be entitled to such pre-payment right.~~
~~2017 Quota~~
~~As of January 1, 2017, and up to June 30, 2017, f~~inancial entities included in the 2017 Quota must maintain a balance of comprised financings, equal to at least 18% of the non-financial private sector deposits in Pesos, calculated on the basis of the monthly average of daily balances in November 2016.
In the case of entities falling within the above scope whose share of total non-financial private sector deposits in Pesos is lower than 0.25% (calculated as described in the preceding paragraph) the percentage to be applied will be no less than 10% from January 1, 2017 to June 30, 2017. According to Communication “A” 6217, at least 75% of the 2017 Quota must be granted to MiPyMEs and/or financial services customers.
With respect to the second half of 2017, the financial entities reached must maintain, from July 1, 2017 until December 31, 2017, a balance of comprised financings equal to at least 18% of private sector deposits in Pesos, calculated on the basis of the monthly average daily balances from May 2017. For the case of financial entities whose participation in deposits in the non-financial private sector in Pesos amounts to less than 0.25%, the percentage to apply, from July 1, 2017 and until December 31, 2017, will not be less than 10%, and must also be at least 75% of the 2017 Quota must be granted to MiPyME and/or financial services customers.
~~2018 Quota~~
The financial entities reached must maintain, in each of the months in 2018, a balance of comprised financings equal to at least the amount that arises from applying the percentages provided in the following table to the monthly average daily balances of November 2017 of total non-financial private sector deposits in Pesos:
~~Months of 2018~~
~~Percentage~~
~~January~~
~~16.50~~
%
~~February~~
~~15.00~~
%
~~March~~
~~13.50~~
%
~~April~~
~~12.00~~
%
~~May~~
~~10.50~~
%
~~June~~
~~9.00~~
%
~~July~~
~~7.50~~
%
~~August~~
~~6.00~~
%
~~September~~
~~4.50~~
%
~~October~~
~~3.00~~
%
~~November~~
~~1.50~~
%
~~December~~
~~0.00~~
%
~~For financial entities whose total non-financial private sector deposits in Pesos is less than 0.25%, the applicable percentage to apply will be derived from the table below:~~
~~Months of 2018~~
~~Percentage~~
~~January~~
~~9.17~~
%
~~February~~
~~8.33~~
%
~~March~~
~~7.50~~
%
~~April~~
~~6.66~~
%
~~May~~
~~5.83~~
%
~~June~~
~~5.00~~
%
~~July~~
~~4.17~~
%
~~August~~
~~3.33~~
%
~~September~~
~~2.50~~
%
~~October~~
~~1.66~~
%
~~November~~
~~0.83~~
%
~~December~~
~~0.00~~
%
Loans and Housing Units

The Central Bank has adopted measures for taking deposits and extending loans expressed in a special measuring unit adjustable by the CER. These special units are referred to as Adjustable Purchase Value Units (Unidades de Valor Adquisitivo Actualizables, or “UVAs”).

In addition, Law No. 27,271 provides for the adjustment of deposits and loans by reference to the construction index, expressed in a special measuring unit referred to as Housing Units (Unidades de Vivienda or “UVI”)
Consequently, UVAs and UVIs coexist and may be used both with respect to bank loans and deposits.

The initial value of the UVI was Ps.14.05 (the same as the UVA), representing the cost of construction of one thousandth square meter of housing as of March 31, ~~2016~~.2016. As of ~~March 22, 2018,~~April 29, 2021, the value of UVI and UVA are ~~22.67~~Ps.77.60 and ~~22.49,~~Ps.74.75, respectively.

Both units are amended based on the indices published by the INDEC and the Central Bank on their websites.
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Foreign Exchange System

~~During~~On September 1, 2019, with the ~~first quarter~~purpose of ~~2002,~~strengthening the normal functioning of the economy, fostering a prudent administration of the exchange market, reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy, the Argentine government ~~established certain~~reinstated exchange controls. The new controls apply to access to the foreign exchange ~~controls~~market by residents for savings and ~~restrictions.~~
~~On February 8, 2002, Decree No. 260 was issued, establishing as~~investment purposes abroad, the payment of ~~February 11, 2002~~external financial debts abroad, the ~~MLC system through which all foreign exchange transactions must be traded at exchange rates to be freely agreed upon.~~
~~On such date, the Central Bank issued Communications “A” 3471 and “A” 3473, which stated that the sale and purchase~~payment of dividends in foreign currency ~~can only be performed with entities authorized by~~abroad, payments of imports of goods and services, and the ~~Central Bank~~obligation to ~~operate in~~repatriate and settle for Pesos the ~~foreign exchange. Item 4~~proceeds from exports of ~~Central Bank Communication “A” 3471 stated that the sale of foreign currency in the local exchange market shall in all cases be against Peso bills.~~goods and services, among others.

~~Since January 2, 2003, there have been further modifications to the restrictions imposed by the Central Bank.~~ For further information ~~see~~on this topic, please refer to “Item ~~10.D~~D – Exchange Controls.”

~~As of mid-December 2015, there have been significant changes to the legal framework applicable to the foreign exchange market aiming at granting greater flexibility to foreign exchange transactions.~~
These changes, initially contemplated under Communication “A” 5850, Communication “A” 5899 and Communication “A” 5955, among others, allowed those entities authorized to operate in the exchange market to engage in foreign currency arbitrage and exchange transactions with their customers. In addition, these regulations made it less burdensome for residents to access the foreign exchange market in order to acquire external assets, and for the repatriation by non-residents of both portfolio and direct investment.
Effective as of August 9, 2016, the Central Bank continued to establish more flexible rules for foreign exchange transactions, for example through the issuance of Communication “A” 6037, followed by Communication “A” 6244 which resulted in a simplification of the rules that had been in place since 2002.
The new regulations provide that foreign exchange transactions may be performed under a sworn statement detailing the subject matter of the transaction; insofar no specific requirements apply to the transaction, and eliminated the obligation to produce documents supporting each foreign exchange transaction.
In addition, transactions involving the creation of external assets by residents are no longer limited by a specific amount, and regulations restricting market access to transactions involving derivative instruments with foreign counterparties have been suppressed. The new regulations also provided greater flexibility to the requirements needed to engage in exchange transactions during extended schedule hours.
Foreign Currency Lending Capacity

The Regulations on the allocation of deposits in foreign currencies, (including Communication “A” ~~4851~~6428 as ~~amended,~~amended), establish that the lending capacity from foreign currency deposits, ~~including U.S. dollar-denominated deposits~~must be applied in the corresponding deposit currency to ~~be settled in Pesos, must fall under one of~~ the following categories:

a.              ~~pre-financing and financing of exports to be made directly or through principals, trustees or other brokers, acting on behalf of the owner of the merchandise;~~
(b) pre-financing and financing of exports to be made directly or through principals, trustees or other brokers, acting on behalf of the owner of the merchandise;

b.              financing for manufacturers, processors or collectors of goods, provided they refer to non-revocable sales agreements with exporters for foreign currency-denominated prices (irrespective of the currency in which such transaction is settled), and they refer to exchangeable foreign-currency denominated goods listed in local or foreign markets, broadly advertised and easily available to the general public;
(c) other financing of exports which have a flow of future income in foreign currency and verify, in the year prior to granting the financing, a billing in foreign currency for an amount that is reasonably related to that financing;

c.               financing for manufacturers of goods to be exported, as final products or as part of other goods, by third-party purchasers, provided that such transactions are secured or collateralized in foreign currency by third-party purchasers;
(d) financing to producers, processors or goods collectors, provided that:

d.              financing of investment projects, working capital or purchase of any kind of goods—including temporary imports of commodities—that increase or are related to the production of goods to be exported, including syndicated loans, whether granted by local or foreign financial institutions;
(i) they have sale contracts for the sale of their goods to an exporter, with a fixed price or fixed in foreign currency -independently of the currency in which the operation is settled- and in the case of fungible goods with quotation, in foreign currency, normal and customary in local or foreign markets, with wide diffusion and easy access to public knowledge;

(ii) its main activity is the production, processing and / or collection of fungible goods with quotation, in foreign currency, normal and usual in foreign markets, widely disseminated and easy access to public knowledge, and it is found, in the year prior to the granting of financing, a total billing of these goods for an amount that is reasonably related to that activity and its financing; and also operations aimed to finance service providers directly used in exporting process of goods (such as those provided at port terminals, international loading and unloading services, leasing containers or port warehouses, international freights ). This, provided it is verified that the flow of future income linked to sales to exporters registers a periodicity and magnitude that it is enough for the cancellation of the financing and it is verified, in the year prior to the granting of the financing, a billing to exporters for an amount that is reasonably related to that activity and its financing.
e.               ~~financing for commercial clients or commercial loans considered as consumer loans, with the purpose of importing capital goods, whenever they help to increase goods production for the domestic market;~~139
(e) financing for manufacturers of goods to be exported, as final products or as part of other goods, by third-party purchasers, provided that such transactions are secured or collateralized in foreign currency by third-party purchasers;

f.                debt securities or financial trust participation certificates whose underlying assets are loans made by the financial entities in the manners set forth in (a) to (d) above (excluding syndicated loans);
(f) financing of suppliers of goods and/or services that are part of the production process of fungibles goods with quotation, in foreign currency, normal and usual in local or foreign markets, widely disseminated and easy access to public knowledge, provided they have firm sales contracts for those goods and/or services in foreign currency and/or on said goods;

g.               foreign currency debt securities or financial trust participation certificates, publicly listed under an authorization by the CNV, whose underlying assets are securities bought by the fiduciary and guaranteed by reciprocal guarantee companies or public guarantee funds, in order to finance export transactions;
(g) financing of investment projects, working capital and/or acquisition of all kinds of goods, including temporary imports of inputs, which increases or are linked to the production of exporting products. Even though the total income of the exporting companies does not come from their exports, the financing may be imputed when the cash flow in foreign currency from their exports, is enough for its cancelation;

h.              ~~financings for purposes other than those mentioned in (a) to (d) above, included under the IDB credit program (“Préstamos BID N° 119/OC-AR”), not exceeding 10% of the lending capacity;~~
(h) financings to commercial portfolio clients and loans granted for consumption or housing purposes-according to the provisions established in the rules on “Classification of debtors,” whose destination is the importation of capital goods (“BK” in accordance with the Mercosur’s Common Nomenclature established in Annex I to Decree No. 690/02 and other complementary provisions), which increase the production of merchandise destined for the domestic market;

i.                  ~~inter-financing loans (any inter-financing loans granted with such resources must be identified);~~
(i) foreign currency debt securities or financial trust participation certificates including other payment rights specifically recognized on trust agreements whose underlying assets are loans made by the financial entities in the manners set forth in (a) to (d) above and first sentence of (f), or documents in which cash flows in Pesos or foreign currency have been assigned to the trustee, in foreign currency credit agreements, under the terms and conditions set forth in items mentioned before;

j.                 ~~Central Bank bills denominated in dollars;~~
(j) financings for purposes other than those mentioned in (a) to (d) above, included under the IDB credit program (“Préstamos BID N° 119/OC-AR”), not exceeding 10% of the lending capacity;

k.              direct investments abroad by companies that reside in Argentina, that seek the development of productive activities of non-financial goods and/or services, either through contributions and/or purchases of shares in companies, to the extent that they are constituted in countries or territories considered cooperators for the purposes of fiscal transparency according to the provisions of article 1 of Decree No. 589/13 as amended; and
(k) inter-financing loans;

l.                  financing of investment projects, including working capital, that allow the increase of production in the energy sector and have firm sales contracts and/or endorsements or guarantees in foreign currency.
(l) Central Bank bills (Letras y Notas) denominated in dollars;

(m) direct investments abroad by companies that reside in Argentina, that seek the development of productive activities of non-financial goods and/or services, either through contributions and/or purchases of shares in companies, to the extent that they are constituted in countries or territories considered cooperators for the purposes of fiscal transparency according to the provisions of article 1 of Decree No. 589/13 as amended;
Communication “A” 5534 as amended, provides a specific formula in order to calculate the financial institution’s capacity to lend money in foreign currency for imports (relating to items (d) and (e), and, as applicable items (f) to (h) of the foregoing paragraph).
(n) financing of investment projects, including working capital, that allow the increase of production in the energy sector and have firm sales contracts and/or endorsements or guarantees in foreign currency.
140
(o) national treasury bills in foreign currency, up to an amount equivalent to one third of the total of the applications made in accordance with the provisions of this section;
(p) financing of investment projects for bovine cattle, including their working capital, without exceeding 5% of deposits in foreign currency of the entity;
(q) financing of foreign importers for the acquisition of goods and / or services produced in the country, either directly or through credit lines to foreign banks; and
(r) Financing of local residents that are secured by letters of credit (“stand-by letters of credit”) issued by foreign banks or multilateral development banks that comply with the provisions of point 3.1. of regulations on “Credit assessments,” requiring for that purpose an international rating of investment grade risk, to the extent that such letters of credit are unrestricted and that the accreditation of the funds is made immediately at the simple request of the beneficiary entity.

The lending capacity shall be determined for each foreign currency raised, resulting from the aggregate of deposits and inter-financial loans received, which have been reported by the granting financial institution as coming from its foreign currency deposit lending capacity net of the minimum cash requirement on deposits, and such determination being made on the basis of the monthly average of daily balances recorded during each calendar month. Any defect in the application shall give rise to an increase in the minimum cash requirement in the relevant foreign currency.
General Exchange Position

The general exchange position (“GEP”) includes all the liquid external assets of the institution, such as gold, currency and foreign currency notes reserves, sight deposits in foreign banks, investments in securities issued by ~~OECD~~Organization for Economic Co-operation and Development (OECD) members’ governments with a sovereign debt rating not below “AA,” certificates of time deposits in foreign institutions (rated not less than “AA”), ~~and~~ correspondents’ debit and credit ~~balances.~~balances and third parties funds pending of settlement. It also includes purchases and sales of these assets already arranged and pending settlement involving foreign exchange purchases and sales performed with customers within a term not exceeding two (2) business ~~days.~~days and correspondent balances for third-party transfers pending settlement. It does not include, however, foreign currency notes held in custody, ~~correspondent balances for third-party transfers pending settlement,~~ term sales and purchases of foreign currency or securities nor direct investments ~~abroad (Communication “A” 4646 and “A” 4814).~~abroad.

Pursuant to Communication “A” 6244, as amended, which entered into force on July 1, 2017, entities can freely determine the level and use of their ~~GEP. In this regard, the aforementioned~~GEP, thus allowing such entities ~~are allowed~~ to manage their ~~foreign currency~~exchange positions, both ~~in terms of~~regarding the composition of their assets, ~~and~~as well as the possibility ~~of entering and exiting~~to maintain or transfer their holdings inout of the country, with ~~their consequent~~its subsequent impact on the reserves.

~~In addition,~~Furthermore, the aforementioned ~~Communication provided~~regulation establishes that the entities ~~authorized to operate in foreign exchange may also~~shall carry out arbitrage and foreign exchange ~~transactions,~~operations, to the extent that the counterparty is a branch or agency ~~abroad~~ of local official banks, a foreign financial ~~entity wholly~~institution, total or majority ~~owned by~~ownership of an entity in foreign states, a foreign financial or exchange entity that is not incorporated in countries or territories ~~pursuant to~~where the Recommendations of the Financial Action Task Force, or a foreign company dedicated to the ~~purchase and sale~~trading of banknotes from different countries and / or precious metals in coins or bars of good delivery and whose head office is located in a member country of the Basel Committee for Banking Supervision.
141
Further changes to the GEP regulation have been introduced by Communications “A” 6770 and 6780. Prior approval by the Central Bank is required to increase the ownership of foreign currency from the higher of the average foreign currency owned in August 2019 and at the closure of August 31, 2019. Moreover, the institutions are not permitted to buy securities on the secondary market with liquidation on foreign currency.

Foreign Currency Net Global Position

~~All~~The foreign currency net global position shall consider all assets, liabilities, commitments and other instruments and ~~operations from~~transactions through financial intermediation in foreign currency ~~and~~ or linked to ~~the variations of the exchange~~exchamge rate ~~are included in the net global position,~~movement, including cash ~~and term~~forward transactions and other ~~derivatives agreements,~~derivative contracts, deposits in foreign currency ~~deposits~~ in accounts ~~maintained~~opened with the Central Bank, gold, ~~positions,~~position, the Central Bank monetary regulation instruments in foreign currency, subordinated debt in foreign currency and debt ~~securities issued~~instruments in foreign currency.

~~It also includes~~Forward transactions under master agreements executed in authorized domestic markets paid by settlement of the ~~term transactions carried out within a framework agreement regarding markets authorized by the CNV with the settlement by difference mode,~~net amount without delivery of the underlying asset ~~traded.~~are also included. Likewise, certificates or notes issued by financial trusts and claims under common trusts are also included in the relevant proportion, provided that the underlying assets are denominated in foreign currency. The value of the position in currencies other than U.S. dollars shall be expressed in that currency, at the respective exchange rate published by the Central Bank.
Decreases in foreign currency assets due to the pre-cancellation of local financing to private sector customers, can only offset the foreign currency net global position up to the original term of maturity with the net increase in holdings of National Treasury securities in foreign currency. At the original maturity of local financing in foreign currency, it may be offset with the purchase of any foreign currency assets computable at the foreign currency net global position.

Deductible assets ~~for~~when determining a bank’s RPC, ~~and any~~Argentine government bonds linked to the growth of the GDP, the included ~~items recorded by~~concepts that the financial entity registers in its ~~foreign~~ branches abroad and the loan agreements in Pesos with variable remuneration based on the variation in the price of the U.S. dollars that are not covered by the term investments with viariable remuneration based on the U.S. dollar are excluded from the ratio.

~~Two ratios are considered in the Foreign Currency Net Global Position:~~Limits

Negative Foreign Currency Net Global Position (liabilities exceeding assets): the limit is 30% of the RPC of the immediately preceding month (Communication “A” 6781).
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Positive Foreign Currency Net Global Position

~~Pursuant~~(assets exceeding liabilities): This daily position (daily balance converted to ~~Communication “A” 6128, as~~Pesos at the reference exchange rate of ~~January 1, 2017 this position~~the immediately preceding month) cannot exceed ~~25%~~5% of the RPC of the immediately preceding month.

Positive Foreign Currency Net Global Position
~~Pursuant to~~ ~~Communication “A” 6128 of the Central Bank, as of January 1, 2017~~ in Cash: this daily position ~~(monthly average of the daily~~(daily balance converted to Pesos at the reference exchange ~~rate)~~rate of the immediately preceding month) cannot exceed ~~25%~~the higher of U.S.$ 2,500,000 or the 4% of the ~~lesser of the~~ RPC or the entity’s own liquid assets (own liquid assets meaning the RPC surplus over fixed assets and other concepts to be computed in accordance with Central Bank regulation related to the “Fixed assets and other concepts ratio”) of the immediately preceding month.
~~Excesses~~
As of June 18, 2018 the Central Bank allows that the Positive Foreign Currency Net Global Position may reach up to ~~such position will be~~30% of the RCP, while the total excess over the general limit originates only as a result of:
(a) increase in the position in U.S. treasury bills in U.S. dollars with respect to those held as of June 15, 2018;
(b) position in national treasury bills in U.S. dollars as of June 15, 2018, maintained as excess admitted to the current limit as of that date; and/or
(c) increase in the position in national treasury bills linked to U.S. dollars with respect to those held as of May 13, 2019.
As provided by Communication “A” 7093, it includes national treasury bills denominated in foreign currency that the institutions receive in exchange for National Treasury Bills – under Law 27,556 – that they have imputed to this point on the Business Day immediately preceding the day on which they are delivered in exchange.
The excesses of these ratios are subject to a charge ~~equivalent~~equal to 1.5 times the average nominal interest rate of the ~~Lebac in Pesos (Central Bank bills). The charges~~shorter term Peso-denominated LELIQs auction published on the last business day of the relevant period or, if not ~~entered in time and form will be~~available, the last one available for a shorter term. Charges not paid when due are subject to ~~an interest equivalent~~a charge equal to one and a half times the ~~rate that arises from adding 50% to the rate applicable to those~~charge established for excesses.

In addition to the ~~aforementioned charges, the~~above-mentioned charge, sanctions ~~established~~set forth in ~~Section~~section 41 of the ~~Financial Institutions Act may be applied~~FIL shall apply (including ~~attention call,~~caution, warning, ~~fines,~~fine, temporary or permanent disqualification ~~for the use~~to dispose of ~~the bank~~a banking current account, temporary or permanent disqualification to act as promoters, founders, directors, administrators, members of ~~the supervisory boards, trustees,~~surveillance committees, comptrollers, liquidators, managers, auditors, ~~partners~~partner or shareholders, and ~~revocation of the authorization to operate)~~license revocation).

~~Rosario Futures Index (“ROFEX”) U.S. dollar futures state of emergency~~
On December 14, 2015, Argentina Clearing S.A. and Mercado a Término de Rosario S.A. resolved, through Communication 657 (subject to the CNV’s express approval, which was subsequently granted): (i) to declare a state of emergency with respect to any open positions as of such date involving U.S. dollar futures contracts maturing prior to June 2016 and entered into after September 29, 2015; and (ii) to provide, in respect of any open purchased positions as of such date involving U.S. dollar futures maturing prior to and including June 2016, the following remedies: (a) the original transaction price was adjusted by adding Ps.1.25 per U.S. dollar for those transactions opened from and including September 30, 2015 to and including October 27, 2015; (b) the original transaction price was adjusted by adding Ps.1.75 per U.S. dollar for those transactions opened as of October 28, 2015.
The adjustments referred to in the preceding paragraph were applied by registering a sale transaction at the original transaction price and a simultaneous purchase at the original price plus the amount indicated in items (a) and (b) above, which caused a novation of the transactions involved into new transactions at the new established price.
For the purposes of complying with registration requirements involving the relevant ROFEX and Argentina Clearing S.A. transactions, the Central Bank was registered as counterparty to such transactions.
~~Assignment of foreign exchange positions by financial and foreign exchange entities~~
On December 17, 2015, Communication “A” 5852 provided that financial entities authorized to deal in exchange transactions and foreign exchange entities were required to sell to the Central Bank their respective positive foreign currency positions at closing on December 16, 2015, valued at the reference exchange rate of such date, and then repurchase them in full. The repurchase transaction could be effected on December 17, 18 or 21, 2015, at the reference exchange rate prevailing on the day of the repurchase.
In particular, an open purchase position in U.S. dollar futures traded on ROFEX and having had its original price adjusted as provided under Item II) of Communication 657 of Argentina Clearing and Mercado a Término de Rosario S.A. was required to be sold to the Central Bank at the adjusted original price resulting from the enforcement of such Communication, and then repurchased in full at the reference exchange rate prevailing on the day of the repurchase.
For the purpose of exercising the repurchase date option contemplated in the first paragraph, an entity was required to submit a letter signed by its president or chief local officer to the General Operations Sub-department before 10:00 a.m. of the selected day, expressly stating the decision it had adopted.
If an entity failed to exercise the option contemplated in the first paragraph or to comply with any of the formal requirements set forth above, the repurchase was to be completed on December 22, 2015 at the reference exchange rate prevailing on such date.
The notion of “foreign currency position” referred to above was determined as follows: (i) for foreign exchange bureaus, agencies and offices: their general exchange position; and (ii) for financial entities authorized to deal in foreign exchange transactions: their net global foreign currency position, less any net assets corresponding to their liabilities in foreign-currency denominated government securities, based on the currency in which the respective financial services were paid (either a foreign currency or U.S. dollar-linked Argentine Pesos).
~~If the determined foreign currency position was negative, no sale to the Central Bank and repurchase was required.~~
On December 18, 2015, the Bank carried out the above-mentioned repurchase at the reference exchange rate established for such date. In addition, on December 22, 2015, CCF carried out the above-mentioned repurchase at the reference exchange rate established for such date.
Fixed Assets and Other Items

The Central Bank determines that the fixed assets and other items maintained by the financial entities must not exceed 100% of the entity’s RPC.

Such fixed assets and other items include the following:

·
Shares of local ~~companies~~companies;
143
Miscellaneous receivables;

·                  ~~Miscellaneous receivables~~
·
Property and ~~equipment~~
equipment; and

·
Other ~~assets~~
assets.

The calculation of such assets will be effected according to the month-end balances, net of devaluations, accumulated amortizations and allowances for loan losses.

Non-compliance with the ratio produces an increase in the minimum capital requirements equal to 100% of the excess on the ratio.

Credit Ratings

Since November 28, 2014, Communication “A” 5671, as amended by Communication “A” ~~6162,~~6558, supersedes the provisions issued by the Central Bank containing ratings requirements assigned by a local risk rating company. Where provisions require certain international ratings, the criteria set forth by Communication “A” 5671 govern.

The provisions of Communication “A” 5671 are basic guidelines to properly assess the credit risk that financial institutions must observe when implementing Central Bank ~~regulations~~rules including the requirement of a particular rating and do not replace the credit assessment that each financial institution must make to their counterparts. International credit ratings that refer to these provisions shall be issued by rating agencies that have a code of conduct based on the “Principles of the Code of Conduct for Agents Rate Risk” issued by the International Organization of Securities Commissions (“IOSCO”).

Annex II of Communication “A” 5671 provides a table regarding the new qualification requirements for financial institutions. This table classifies the credit ratings requirements for different transactions.

Debt Classification and Loan Loss Provisions

Credit Portfolio

The regulations on debt classification are designed pursuant to Central Bank rules, which differ from IFRS to establish clear guidelines for identifying and classifying the quality of assets, as well as evaluating the actual or potential risk of a lender sustaining losses on principal or interest, in order to determine (taking into account any loan security) whether the provisions against such contingencies are adequate. Banks must classify their loan portfolios into two different categories: (i) consumer or housing loans and (ii) commercial loans. Consumer or housing loans include housing loans, consumer loans, credit-card financings, loans of up to ~~Ps.5 million~~Ps.14,528,000 to micro-credit institutions and commercial loans of up to ~~Ps.5 million~~Ps.72,640,000 with or without preferred guarantees. All other loans are considered commercial loans. Consumer or housing loans in excess
of ~~Ps.5 million,~~Ps.72,640,000, the repayment of which is linked to the evolution of its productive or commercial activity, are classified as commercial loans.
144
At the entity’s option, financing of a commercial nature of up to ~~Ps.5 million,~~Ps.72,640,000, whether or not such financing has preferred guarantees, may be grouped together with credits for consumption or housing, in such case they will receive the treatment provided for the latter. If a customer has both kinds of loans (commercial and consumer or housing loans), the consumer or housing loans will be added to the commercial portfolio to determine under which portfolio they should be classified based on the amount indicated. In these cases, the loans secured by preferred guarantees shall be considered to be at 50% of its face value.

Under the current debt classification system, each customer, as well as the customer’s outstanding debts, are included within one of six sub-categories. The debt classification criteria applied to the consumer loan portfolio are primarily based on objective factors related to customers’ performance of their obligations or their legal standing, while the key criterion for classifying the commercial loan portfolio is each borrower’s paying ability based on their future cash flow.

Commercial Loans Classification

The principal criterion ~~by which~~used to evaluate a loan pertaining to the commercial portfolio is its borrower’s ability to repay, ~~it,~~ whose ability is mainly measured by such borrower’s future cash flow. Pursuant to Central Bank ~~regulations,~~rules, commercial loans are classified as follows:

Classification
Criteria
~~Normal Situation~~
Performing
Borrowers ~~for whom there is no doubt as to~~that demonstrate their ability to comply with their payment obligations.
High repayment capacity.
Subject to special Monitoring/Under observation
Borrowers that, among other criteria, are up to 90 days past due and, although considered to be able to meet all their financial obligations, are sensitive to changes that could compromise their ability to honor debts absent timely corrective measures.
⁽¹⁾
Subject to special Monitoring/Under negotiation or refinancing agreement
Borrowers who are unable to comply with their obligations as agreed with the bank and, therefore, formally state, within 60 calendar days after the maturity date, their intention to refinance such debts. The borrower must enter into a refinancing agreement with the bank within 90 calendar days (if up to two lenders are involved) or 180 calendar days (if more than two lenders are involved) after the payment default date. If no agreement has been reached within the established deadline, the borrower must be reclassified to the next category according to the indicators established for each level.
~~Troubled~~
With Special Treatment
Borrowers who are unable to comply with their obligations as agreed with the bank performed their first new agreement in the year and payed at least the first payment.
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Classification Criteria
Troubled Borrowers with difficulties honoring their financial obligations under the loan on a regular basis, which, if uncorrected, may result in losses to the bank.
With high risk of insolvency
Borrowers who are highly unlikely to honor their financial obligations under the loan.
Irrecoverable
Loans classified as irrecoverable at the time they are reviewed (although the possibility might exist that such loans might be collected in the future). The borrower will not meet its financial obligations with the financial institution.
~~Irrecoverable according to Central Bank’s Rules~~
(a) A borrower that has defaulted on its payment obligations under a loan for more than 180 calendar days according to the corresponding report provided by the Central Bank, which includes: (1) financial institutions liquidated by the Central Bank, (2) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process, (3) financial institutions whose licenses have been revoked by the Central Bank and find themselves subject to judicial liquidation or bankruptcy proceedings and (4) trusts in which SEDESA is a beneficiary; or (b) certain kinds of foreign borrowers (including banks or other financial institutions that are not subject to the supervision of the Central Bank or similar authority of the country in which they are incorporated) that are not classified as “investment grade” by any of the rating agencies approved by the Central Bank.
(1). In March and April 2020, the Central Bank regulatory easing on debtor classifications amid the pandemic added a 60-days grace period (totaling 150 days) before loans are classified as non-performing. In March 25, 2021, through Communication A7245, the Central Bank established a gradual transition in the definition of debtors for clients who chose to postpone the payment of installments, maturing since April 1, 2021. Financial entities and other obligated parties must increase the grace period to classify their debtors in levels 1, 2 and 3, both for the commercial portfolio and for the consumer or housing portfolio, according to the following schedule: i) Until March 31, 2021, in 60 days, ii) Until May 31, 2021, in 30 days, and iii) As of June 1, 21, financial entities must classify their debtors according to the general debtor classification.
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Consumer and Housing Loans Classification

The principal criterion used in the assessment of loans in the consumer and housing portfolio is the ~~length of the~~ duration of the default ofon such loans. Under the Central Bank ~~regulations,~~rules, consumer and housing borrowers are classified as follows:

Classification
Criteria
~~Criteria~~⁽²⁾
Performing
~~Performing~~
If all payments on loans are current or less than 31 calendar days overdue and, in the case of checking account overdrafts, less than 61 calendar days overdue.
Low Risk
Loans upon which payment obligations are overdue for a period of more than 31 and up to 90 calendar days.
With Special Treatment
Borrowers who are unable to comply with their obligations as agreed with the bank performed their first new agreement in the year and payed at least the first payment.
Medium Risk
Loans upon which payment obligations are overdue for a period of more than 90 and up to 180 calendar days.
High Risk
Loans in respect of which a legal action seeking collection has been filed or loans having payment obligations overdue for more than 180 calendar days, but less than 365 calendar days.
Irrecoverable
~~Borrowers who are highly unlikely to honor their financial obligations under the loan.~~
~~Non-recoverable loans~~
Loans in which payment obligations are more than one year overdue or the debtor is insolvent or in bankruptcy or liquidation.
~~Irrecoverable loans Central Bank’s rules~~
~~Same criteria as for commercial loans in the Irrecoverable according to Argentine Banking GAAP.~~

~~Minimum Credit Provisions~~(2). In March and April 2020, the Central Bank regulatory easing on debtor classifications amid the pandemic added a 60-days grace period before loans are classified as non-performing and as a result each risk classification criteria added 60 days before a debtor is considered in each of these categories. In March 25, 2021, through Communication A7245, the Central Bank established a gradual transition in the definition of debtors for clients who chose to postpone the payment of installments maturing since April 1, 2021. Financial entities and other obligated parties must increase the grace period to classify their debtors in levels 1, 2 and 3, both for the commercial portfolio and for the consumer or housing portfolio, according to the following schedule: i) Until March 31, 2021, in 60 days, ii) Until May 31, 2021, in 30 days, and iii) As of June 1, 21, financial entities must classify their debtors according to the general debtor classification.
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Allowances for Loan Losses

The ~~following minimum credit provisions are required to be made by Argentine banks in relation to~~Group recognises the ~~credit portfolio category:~~
Category

With Preferred
Guarantees

Without Preferred
Guarantees

“Normal”

1
%
1
%
“Under observation” and “Low risk”

3
%
5
%
“Under negotiation or refinancing agreement”

6
%
12
%
“With problems” and “Medium Risk”

12
%
25
%
“With high risk of insolvency” and “High Risk”

25
%
50
%
“Irrecoverable”

50
%
100
%
“Irrecoverable by technical decision”

100
%
100
%
~~The Superintendency may require additional provisioning if it determines that the current level is inadequate.~~
Financial institutions are entitled to record allowances for loan losses in amounts larger than those required by the Argentine Banking GAAP. In such cases and despite the existence of certain exceptions, recording a larger allowance for a commercial loan, to the extent the recorded allowance amount falls into the next credit portfolio category set forth by Argentine Banking GAAP, shall automatically result in the corresponding debtor being recategorized accordingly.
~~Minimum Frequency for Classification Review~~
Financial institutions are required to develop procedures for the analysis of credit facilities assuring an appropriate evaluation of a debtor’s financial situation and a periodic revision of such situation taking into consideration objective and subjective conditions of all the risks taken. The procedures established have to be detailed in a manual
called “Manual of Procedures for Classification and Allowances” which must be made available for the Superintendency to review at any time. The classification analysis shall be duly documented. The classification review must include (i) clients whose outstanding credit (in Pesos and in foreign currency) exceeds the lesser of 1% of the financial institution’s RPC corresponding to the prior month and Ps.4.0 million and (ii) at least 20% of the financial institution’s total active credit portfolio, which, if applicable, shall be completed by incorporating clients whose total indebtedness is less than the limits described in (i) in this sentence.
In the case of commercial loans, the applicable regulations also require a minimum frequency of review. Such review must take place: (i) quarterly for clients with indebtedness equal to or greater than 5% of the financial entity’s RPC for the prior month and (ii) semi-annually for clients whose indebtedness is (x) greater than the lesser of 1% of the financial entity’s RPC for the prior month and Ps.4.0 million, and (y) lesser than 5% of the financial entity’s RPC for the prior month. At the end of the second quarter, the full review under points (i) and (ii) should cover no less than 50% of the financial institution’s commercial loan portfolio and, if less, it shall be completed by incorporating customers (in descending order) whose total indebtedness is less than the limits described in (ii)(x) of the preceding sentence.
In addition, financial institutions have to review the rating assigned to a debtor in certain instances, such as when another financial institution reduces the debtor classification in the “Credit Information Database” and grants 10% or more of the debtor’s total financing in the financial system. Only one-level discrepancy is allowed in relation to the information submitted by financial institutions to the “Credit Information Database” and the lower classification awarded by at least two other banks and total lending from such banks account for 40% or more of the total informed; if there is a greater discrepancy, the financial institution will be required to reclassify the debtor.
~~Allowances for Loan Losses~~
~~The~~ allowance for loan losses ~~is maintained~~under the expected credit losses method included in ~~accordance with applicable regulatory requirements~~IFRS 9. The most significant judgements of the ~~Central Bank. Increases~~model relate to defining what is considered to be a significant increase in credit risk, determining the ~~allowance~~life of revolving facilities, and in making assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions. A high degree of uncertainty is involved in making estimations using assumptions that are ~~based on~~highly subjective and very sensitive to the level of growth of the loan portfolio, as well as on the deterioration of the quality of existing loans, while decreases in the allowance are based on regulations requiring the write-off of non-performing loans classified as irrecoverable after a certain period of time and on decisions of the management to write off non-performing loans evidencing a very low probability of recovery.risk factors.

In Note 1.11 of our audited consolidated financial statements, provides more detail of how the expected credit loss allowance is measured.
Priority Rights of Depositors

Under Section 49 of the FIL, in the event of judicial liquidation or bankruptcy of a bank all depositors, irrespective of the type, amount or currency of their deposits, will be senior to the other remaining creditors (such as shareholders of the bank), with exceptions made for certain labor liens (section 53 paragraphs “a” and “b”) and for those creditors backed by a pledge or mortgage, in the following order of priority: (a) deposits of up to ~~Ps. 450,000~~Ps.50,000 per person (including all amounts such person deposited in one financial entity), or its equivalent in foreign currency, (b) all deposits of an amount higher than ~~Ps.450,000,~~Ps.50,000, or its equivalent in foreign currency, and (c) the liabilities originated in commercial lines granted to the financial institution and which directly affect international commerce. Furthermore, pursuant to section 53 of the FIL, as amended, Central Bank claims have absolute priority over other claims, except for pledged or mortgaged claims, certain labor claims, the depositors’ claims pursuant to section 49, paragraph e), points i) and ii), debt granted under section 17, paragraphs (b), (c) and (f) of the Central Bank’s Charter (including discounts granted by financial entities due to a temporary lack of liquidity, advances to financial entities with security interest, assignment of rights, pledges or special assignment of certain assets) and debt granted by the Banking Liquidity Fund backed by a pledge or mortgage.

The amendment to section 35 bis of the FIL Law by Law No. 25,780 sets forth that if a bank is in a situation where the Central Bank may revoke its authorization to operate and become subject to dissolution or liquidation by judicial resolution, the Central Bank’s Board of Directors may take certain actions. Among ~~this~~these actions, in the case of excluding the transfer of assets and liabilities to financial trusts or other financial entities, the Central Bank may totally or partially exclude the liabilities mentioned in section 49, paragraph e), as well as debt defined in section 53, giving effect to the order of priority among creditors. Regarding the partial exclusion, the order of priority of point e) section 49 must be followed without giving a different treatment to liabilities of the same grade.
Mandatory ~~Deposit Insurance System~~deposit insurance system

Law No. 24,485 passed on April 12, 1995, as amended, created a Deposit Insurance System, or ~~“SSGD”,~~“SSGD,” which is mandatory for bank deposits, and delegated the responsibility for organizing and implementing the system to the Central Bank. The SSGD is a supplemental protection to the privilege granted to depositors by means of Section 49 of the FIL, as mentioned above.
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The SSGD has been implemented through the establishment of a Deposit Guarantee Fund, or ~~“FGD”,~~“FGD,” managed by a private-sector corporation called ~~SEDESA.~~Seguro de Depósitos Sociedad Anónima, (Deposit Insurance Corporation, or “SEDESA”). According to Decree No. 1292/96, the shareholders of SEDESA are the government through the Central Bank and a trust set up by the participating financial institutions. These institutions must pay into the FGD a monthly contribution determined by Central Bank ~~regulations.~~rules. The SSGD is financed through regular and additional contributions made by financial institutions, as provided for in Central Bank Communication “A” 4271, dated December 30, 2004.

The SSGD covers deposits made by Argentine individuals and legal entities in ~~Argentine~~Pesos or foreign currency and maintained in accounts with the participating financial institutions, including checking accounts, savings accounts, and time deposits up to the amount of ~~Ps.350,000,~~Ps.1,500,000, as set forth by Central Bank Communication “A” ~~5659, dated October 31, 2014, as amended. Pursuant to Communication “A” 5943,~~6973 of the Central ~~Bank set the guarantee amount for these deposits as of May 1, 2016 at Ps.450,000.~~Bank.

Effective payment on this guaranty will be made within 30thirty (30) business days after revocation of the license of the financial institution in which the funds are held; such payments are subject to the exercise of the depositor’s priority rights described above.

In view of the circumstances affecting the financial system, Decree No. 214/2002 provided that SEDESA may issue registered securities for the purpose of offering them to depositors in payment of the guarantee in the event it should not have sufficient funds available.

The SSGD does not cover: (i) deposits maintained by financial institutions in other financial institutions, including certificates of deposit bought in the secondary market, (ii) deposits made by persons directly or indirectly affiliated with the institution, (iii) time deposits of securities, acceptances or guarantees, (iv) any transferable time deposits that have been transferred by endorsement, (v) ~~immobilized balances from deposits and other excluded operations, and (vi)~~ any deposits in which the agreed-upon interest rate is higher than the reference interest rates periodically released by the Central Bank for time deposits, with the exception of those arranged in Pesos at the minimum nominal rate, and ~~demand deposit account~~they shall also be excluded if these interest rate ceilings are distorted by additional incentives or rewards, and (vi) immobilized balances from deposits and ~~available amounts from overdue deposits or closed accounts.~~excluded transactions.

Pursuant to Communication “A” ~~5710,~~5943, every financial institution is required to contribute to the FGD a monthly amount of ~~0.06%~~0.015% of the monthly average of daily balances of deposits in local and foreign currency, as determined by the Central Bank.

When fixed term deposits in U.S. dollars of the private non-financial sector are used to purchase Central Bank bills denominated in U.S. dollars, financial institutions must contribute 0.015% of the monthly average of daily balances of the net position of such bills. Prompt contribution of such amounts is a condition precedent to the continuing operation of the financial institution. The first contribution was made on May 24, 1995. The Central Bank may require financial institutions to advance the payment of up to the equivalent of two years of monthly contributions and debit the past due contributions from funds of the financial institutions deposited with the Central Bank. The Central Bank may require additional contributions by certain institutions, depending on its evaluation of the financial condition of those institutions. ~~Communication “A” 5943, set the monthly contribution to the FDG at 0.015%.~~
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When the contributions to the FGD reach the greater of Ps.2 billion or 5.0% of the total deposits of the system, the Central Bank may suspend or reduce the monthly contributions, and reinstate them when the contributions subsequently fall below that level.
Government Measures in Response to the Ongoing COVID-19 Pandemic
The Argentine government and the Central Bank issued a series of preventive measures to contain the spread of COVID-19 and mitigate its economic impact. In this regard, on March 19, 2020, the Executive Branch declared a nationwide lockdown from March 20, 2020 through March 31, 2020, which was extended several times until November 6, 2020, when the country shifted towards a “social distancing” phase, instead of a strict lockdown.
In this context, the Central Bank issued a series of Communications within the framework of Decree No. 297/2020, as amended, of the Government of Argentina, by which it determined that: (i) financial institutions shall open to the public only with prior appointment and provide its services remotely; (ii) financial institutions shall restrain the use of enclosed areas to a maximum of 50% of their capacity; (iii) financial institutions shall adopt all necessary measures to secure the sufficient supply of cash in ATMs and the continuity of operations related to cash withdrawals at out-of-bank withdrawal points; and (iv) money exchange houses shall only open for the purchase of foreign currency, the sale of currency of bordering countries and certain arbitrages.
On a different note, by means of Communication “A” 7181, as amended, the Central Bank suspended until June 30, 2021, the distribution of dividends by financial entities. For more information, please see “Argentine Banking Regulations— Requirements applicable to dividend distribution.”
Through Communication “A” 6945, as amended, the Central Bank determined that until March 31, 2021, any operation effected through ATMs will not be subject to any charges or fees.
Moreover, by means of Communication “A” 6993, dated April 24, 2020, the Central Bank established a zero interest-rate financings policy, applicable only to the eligible clients to be determined in the future by the AFIP.
By virtue of Communication “A” 7025, as amended, the Central Bank determined that the unpaid balances of credit card financings due between April 13 and April 30, 2020, shall be automatically refinanced in nine equal consecutive monthly installments beginning after a 3-month grace period. Interest rates on such unpaid balances may not exceed an annual nominal rate of 43% when the amount financed by such concept is lower than Ps.200,000. Additionally, the unpaid balances of credit card financings due between September 1 and September 30, 2020, shall be automatically refinanced in nine equal consecutive monthly installments beginning after a 3-month grace period. Interest rates on such unpaid balances may not exceed an annual nominal rate of 40%. For more information, see “Argentine Banking Regulations— Credit Card Interest Rate.”Furthermore, by means of Communication “A” 7181 the Central Bank extended until March 31, 2021, the following provisions: (i) unpaid installments corresponding to maturities of credit assistance not covered by the Law of Credit Cards granted by financial institutions and operating as from April 1, 2020, may only accrue compensatory interest a the contractually stipulated rate; and (ii) the increase of up to 60 days the period of non-payment before a loan is required to be classified as non-performing for levels 1, 2 and 3 pursuant to Central Bank rules on debtor classification and the suspension of the mandatory reclassification of debtors provided in sections 6.6 and 7.3 of such rules. Moreover, it establishes that financial institutions shall provide the means so that in all ATMs operated by them in the country, individuals and legal entities may withdraw, per day and in a single withdrawal, up to Ps.15,000, without any distinction between customers and non-customers, regardless of the type of demand account on which the corresponding transaction is made and of the financial institution and/or ATM network to which it belongs.
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Additionally, on March 25, 2020, the Executive Branch issued Decree No. 312/2020, as amended and supplemented from time to time, by means of which both the obligation to close and inhibit checking accounts, as well the imposition of penalties, were suspended until December 31, 2020. Furthermore, Decree No. 319/2020, as amended and supplemented from time to time, established the freezing of mortgage payments if the mortagaged property is the only and permanent residence of the debtor, until January 31, 2021. The Decree also resolved the freezing of mortgage and UVA pledge loans (créditos prendarios) and the suspension of mortgage foreclosures until January 31, 2021. For more information, please see “Item 3.D—Risk Factors—Risks related to the Argentine financial system—Our asset quality and that of other financial institutions may deteriorate if the Argentine private sector does not fully recover.”
Other measures
Classification of Debtors: On March 19, 2020, the Central Bank issued Communication “A” 6938, as amended from time to time, by which new rules regarding the criteria for debtor classification and provisioning are to be adopted until March 31, 2021. These rules provide an additional 60 days period of non-payment before a loan is required to be classified as non-performing, and include all financings to commercial portfolio clients and loans granted for consumption or housing purposes. In March 25, 2021, through Communication A7245, the Central Bank established a gradual transition in the definition of debtors for clients who chose to postpone the payment of installments, a benefit was not renewed from the due date at the end March 31, 2021. Financial entities and other obligated parties must increase the grace period to classify their debtors in levels 1, 2 and 3, both for the commercial portfolio and for the consumer or housing portfolio, according to the following schedule: i) Until March 31, 2021, in 60 days, ii) Until May 31, 2021, in 30 days, and iii) As of June 1, 21, financial entities must classify their debtors according to the general debtor classification.
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Facilities and Government Guarantees to Finance Payment of Salaries: Decree 326/2020 created a fund of specific application within the FOGAR (acronym in Spanish for Fondo de Garantías Argentino), with the aim of backing financings provided to SMEs by financial entities in order to pay salaries. Simultaneously, the Central Bank set limitations on banks’ holdings of notes from the Central Bank (LELIQ), in order to make liquidity available and encourage the provision of credit lines to SMEs.On March 26, 2020, the Central Bank also issued Communication “A” 6946, by means of which the facilities granted at a preferential rate (not more than 24% per year) within the framework of Communication “A” 6937 (as amended by Communications “A” 6943, “A” 7006 and “A” 7157) to SMEs and households may be deducted from reserve requirements, considering 130% of its amount when its proceeds are for the payment of salaries and the granting entity is the agent of payment of those salaries. These assistances will be provisioned in the financial statements until their cancellation based on the classification of the small and medium-sized company at the time of granting. The amounts of: a) the reduction of the provisions by application of this measure; b) the reduction of the provisions due to the suspension of the application of the expected credit losses criterion for Group B entities; and c) the increase in the RPC due to the positive difference between the provisions according to IFRS and according to the regulatory framework of the Central Bank for Group A entities, must be subtracted from the calculation to determine the distributable profit.
Remote shareholders and board of directors meetings: By means of CNV’s General Resolution No. 830/2020, dated March 3, 2020, publicly offered entities are allowed to hold remote shareholders and board of directors meetings, via electronic means, even if their respective bylaws do not provide for this, respecting the minimum requirements to ensure the integrity of the vote of each participant and the presence of all shareholders and members, respectively. At the first face-to-face meeting after the lockdown period, the shareholders’ meeting shall, with the quorum and the majority for the reform of the bylaws, approve any meetings that have been held remotely.
Time deposits minimum rate. Communication “A” 6980 established that non-adjustable term deposits under ARS 1 million made up by individuals as from April 20, 2020, will entail a minimum rate of 70% of the LELIQ average auction, Communication “A” 7018 extended the scope of such measures over all term deposits regardless of their minimum amount, Later, Communication “A”7027 increased the minimum rate equivalent to 79% LELIQ average auction, And, as from August 1, 2020, an additional increase from such 79% to an 87% was set for term deposits of individuals exceeding the Ps. 1 million. Since November 13, 2020 Central Bank stated an additional increase on the minimum interest rate to be paid to retail Time Deposits below Ps. 1 million, to 37%, and 34% for the rest of time deposits. For more information, see “Liquidity and Solvency Requirements - Minimum Cash Reserve Requirements - LELIQ global daily position”
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Securities-guaranteed transactions prohibition. By means of Communication “A” 6978, the Central Bank forbid financial institutions to guarantee transactions via securities (caución bursátil).
Deposit Insurance System. Pursuant to Communication “A” 6973, the Central Bank raised the amount covered by the Deposit Insurance System to Ps.1,500,000.
Credit line for productive investment of MiPyMEs.
Pursuant to Communication “A” 7140, the Central Bank approved the rules for a “Credit line for productive investment of MiPyMEs” (líneas para el financiamiento productivo) destined to the acquisition of capital goods, and/or the construction of facilities necessary for the production of goods and/or services, and the commercialization of goods and/or services, with a maximum annual nominal rate from 30% to 35%. For these credit line, financial institutions are required to maintain a regulatory quota equal to 7.5% of their non-financial private sector deposits (measured in terms of the monthly average of daily balances as of September 2020) until March 31, 2021.On January 6, 2021, through Communication “A” 7197, the central bank ruled that the 65% amount of credit lines granted to finance working capital needs from SMEs disbursed since October 16, 2020 may be applied to achieve the abovementioned 30% of total origination of the 30% interest rate credit line. On February 25, 2021, through Communication “A” 7227, the central bank increased from 65% to 100% the amount of credit lines granted to fund working capital needs from SMEs disbursed since October 16, 2020 that can be applied to achieve the required origination of the 30% interest rate credit line. In addition, through Communication “A” 7240, the Central Bank ruled that the balance of credit lines to SMEs shall be equivalent to (i) a minimum quota of 7.5% of the average balance of deposits from private sector as of September 2020, for the 2020 quota, and (ii) a minimum quota of 7.5% of the average balance of deposits from private sector as of March 1, 2021. The 2020 quota was in force between October 16, 2020 and March 31, 2021, whereas the 2021 quota will be in force from April 1, 2021 until September 30, 2021.
Solidary and Extraordinary Contribution. By means of Decree 42/2021 the Government of Argentina regulated the Solidary and Extraordinary Contribution Law, which establishes a one-time extraordinary and mandatory contribution for resident individuals and undivided estates, at the country or abroad, whose total value of assets exceed the amounts specified in the Law.
Other restrictions
Pursuant to the FIL, financial institutions cannot create any kind of rights over their assets without the Central Bank’s authorization. Furthermore, in accordance with section 72 of Capital Markets Law, publicly offered companies are forbidden to enter into transactions with their directors, officers or affiliates in terms more favorable than arms-length transactions.
Capital Markets

Commercial banks are authorized to subscribe for and sell shares and debt securities. At present, there are no statutory limitations as to the amount of securities for which a bank may undertake to subscribe. However, under Central Bank ~~regulations,~~rules, underwriting of debt securities by a bank would be treated as “financial assistance” and, accordingly, until the securities are sold to third parties, such underwriting would be subject to limitations.

~~Law 26,831 (the “Capital~~The Argentine Capital Markets ~~Law”),~~Law introduced substantial changes to regulations governing markets, stock exchanges and the various agents operating in capital markets, in addition to certain amendments to the CNV’s powers. On September 9, 2013, the CNV published the CNV Rules supplementing the Capital Markets Law. The CNV Rules have been in force since September 18, 2013.
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One of the most significant modifications introduced by the Argentine Capital Markets Law and the CNV Rules is that agents and markets must comply with the CNV’s requirements for applying for an authorization to operate, as well as registration requirements. It further provides that each category of agent must meet minimum net worth and liquidity requirements.

Additionally, under the Capital Markets Law, the self-regulation of markets was eliminated, and authorization, supervision, control, as well as disciplinary and regulatory powers, are conferred to the CNV regarding all capital market players.

The Argentine Productive Financing Law modified the Argentine Capital Markets Law and other related laws, and introduced some important changes such as, among others:
reestablished certain markets self-regulation (which had been eliminated by the Argentine Capital Markets Law);
eliminated the powers granted to the CNV allowing it to appoint observers and intervene a company’s board of directors without first obtaining a court order;
introduced several changes in the internal organization of the CNV and in the appointment of its board, such as allowing the president of the CNV to have a decisive vote in case of tie in the decision making of the board and adopt urgent resolutions together with two directors in case of exceptional circumstances prevent the assemblies from taking place;
empowered the CNV to regulate the private placement of negotiable securities so that these do not qualify as “public offers”;
as long as a mandatory offer is not required in cases where the buyer acquires control or more than 50% of voting rights shares of a company listed, either directly or indirectly;
modified some antiquated provisions related to the mutual fund system (such as the solidarity between the asset management company and the custodian, and the double registration of guidelines for investment in the CNV and in the Public Registry of Commerce);
created a “legal microsystem” for capital markets where certain provisions of the Civil and Commercial Code or Argentine Contest and Bankruptcy Law were not applicable;
promoted the financing of MiPyMes through the regulation of the issuance of electronic invoices with powers to easily execute them against the debtor and subject to negotiation or discount in the capital markets;
promoted mortgage financing by improving the regulation of mortgage bills and the securitization of mortgages;
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empowered the CNV to rule crowfunding for entrepreneurs and the promotion of “financial inclusion” through programs and development plans; and
allowed legal entities incorporated abroad to participate, through a representative duly authorized, at the shareholders’ meetings of the companies authorized by the CNV to make public offerings of their shares, without the need for additional registration.
TM20

Beginning October 5, 2017, the Central Bank has begun to publish on a daily basis a survey of the average interest rates paid by Banks for their fixed-term deposits of over Ps.20 million, for terms of between 30 and 35 days (the “TM20”), in order to reflect the behavior of wholesale depositors.

A TM20 denominated in U.S. dollars will also be published for deposits for the same term that are for U.S.$ dollars 20 million or more.

The information published by the Central Bank is broken down by public vs. private banks, both for operations in Pesos and foreign currencies.

Buenos Aires Deposits of Large Amount Rate (“BADLAR)”
Interest rate paid for time deposits of more than Ps. 1 million, by the average of financial entities. (Buenos Aires Deposits of Large Amount Rate)
The information published by the Central Bank is broken down by total financial system and private banks.
Minimum interest rate on time deposit rates
Pursuant to Communication “A” 5853 (as amended by Communication “A” 5891, among others) the provisions that established minimum interest rates applicable to the term deposits ceased to have effect in respect of any new transactions conducted as from and including such date.
Central Bank Repo Transactions- Interest Rate
In the passive Repo transactions, the bank that carries it out receives financing from the Central Bank. Sell a security for cash and then buy back that security. Interest rate paid by the Central Bank depends on the type of deposit, the currency, the term, the amount, among others.
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Financial Institutions with Economic Difficulties

The FIL provides that any financial institution, including a commercial bank, ~~operating at less than certain required technical ratios and minimum net worth levels,~~(i) with its solvency impaired, in the judgment of the Central ~~Bank adopted~~Bank; (ii) recording deficiencies on the minimum cash reserve requirement during the periods established by ~~members representing~~ the ~~majority of~~Central Bank; (iii) recording repeated failures to comply with the ~~Board of Directors, with impaired solvency~~various limits or ~~liquidity~~technical relations established; or ~~in any of~~(iv) that could not maintain the ~~other circumstances listed in Section 44 of the FIL,~~minimum asset liability required for its particular class, location or characteristics, must (upon request from the Central Bank and in order to avoid the revocation of its license) prepare a restructuring plan (plan de regularización y saneamiento~~, or a restructuring plan.~~). The plan must be submitted to the Central Bank on a specified date, ~~not~~no later than 30thirty (30) calendar days ~~after~~from the date on which a request to that effect is made by the Central Bank. ~~Upon~~If the ~~institution’s failure~~institution fails to submit, secure regulatory approval of, or comply with, a restructuring plan, the Central Bank will be empowered to revoke the institution’s license to operate as ~~such.~~such, without prejudice to the application of the penalties provided for in the aforementioned law.

~~Furthermore,~~The Central Bank may appoint overseers with veto power, require the provision of guarantees and limit or forbid the distribution or remittance of profits, temporarily admit exceptions to the relevant limits and technical relations, exempt or defer the payment of charges and/or fines as provided by the Financial Institutions Law.
The Central Bank’s charter authorizes the ~~Central Bank~~ Superintendency to fully or partially suspend, exclusively subject to the approval of the President of the Central Bank, the operations of a financial institution for a term of 30thirty (30) days if the liquidity or solvency thereof ~~are~~is adversely affected. Such term could be renewed for up to 90ninety (90) additional days, with the approval of the Central Bank’s Board of Directors. During such suspension term an automatic stay of claims, enforcement actions and precautionary measures is triggered, any commitment increasing the financial institution’s obligations shall be null and void, and debt acceleration and interest accrual shall be suspended.

Institution restructuring to safeguard credit and bank deposits
If ~~per~~a financial institution meets the Central Bank’s criteria ~~a financial institution~~and is ~~undergoing a situation which, under~~found to be in any of the ~~FIL, would authorize~~situations set forth in Section 44 of the ~~Central Bank to revoke its license to operate as such,~~FIL, the Central Bank may ~~before considering such~~authorize the restructuring of the financial institution in defense of depositors, prior to revocation ~~order a~~of the authorization to operate. The restructuring plan ~~of restructuring that~~ may consist of ~~a series of measures,~~certain steps, including, among others:
·
adoption of a list of measures to capitalize or increase the capital of the financial institution;

·
revoke the approval granted to the shareholders of the financial institution to hold interests therein;

·                  ~~restructure~~
exclusion or transfer assets and liabilities;

·                  ~~grant temporary exemptions~~
judicial intervention of the institution, displacing the statutory administrative authorities, and determine the capabilities needed to comply with ~~technical regulations or payment of charges and penalties arising from such flawed compliance; or~~
the assigned function.

·                  ~~appoint a delegate or auditor (“~~~~interventor~~~~”) that may prospectively replace the Board of Directors of the financial institution.~~
Revocation of the License to Operate as a Financial Institution

The Central Bank may revoke the license to operate as a financial institution (a) at the request of the legal or statutory authorities of the institution; (b) in ~~case~~the cases contemplated by the Argentine Civil and Commerce Code or in the laws governing its existence as a ~~restructuring plan fails or is not deemed feasible, or local laws and regulations are violated, or~~legal entity; (c) when, to the judgment of the Central Bank, the affections to the solvency and/or liquidity of the ~~financial~~ institution ~~is affected, or significant changes occur~~cannot be solved through a regularization and sanitation program; (d) in the ~~institution’s condition since~~rest of the ~~original authorization was granted, or if any decision~~cases provided by the ~~financial institution’s legal or corporate authorities concerning its dissolution is adopted, among other circumstances set forth in the~~ FIL. ~~In addition, pursuant to Communication “A” 5785, sanctions imposed by the Central Bank, the UIF, the CNV and/or the National Superintendency of Insurance (~~~~Superintendencia de Seguros de la Nación~~) on financial institutions and/or their authorities, may result in the revocation of their licenses to operate as financial institutions. Such revocation may occur when, in the opinion of the Board of Directors of the Central Bank, there was a material change in the conditions deemed necessary to maintain such license, including those relating to the suitability, experience, moral character or integrity of (i) the members of a financial institution’s Board of Directors (directors, counselors or equivalent authorities), (ii) its shareholders, (iii) the members of its supervisory committee and (iv) others, such as its managers. For such purposes, the Superintendency also takes into consideration information that it receives from, and/or sanctions imposed by, equivalent foreign agencies or authorities. When weighing the significance of the sanctions, the Superintendency takes into account the type of sanctions, the underlying reason for such sanctions and the amount of sanctions imposed on the financial institution. Additionally, the Superintendency factors in the degree of participation in the events leading up to the sanction, the economic effects of the violation, the degree of damage caused to third parties, the economic benefit that the sanctioned party received from the violation, the sanctioned party’s operating volume, its liability and the title or function that such party holds.
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~~Once the license to operate as a financial institution has been revoked, the financial institution will be liquidated.~~
Liquidation of Financial Institutions

As provided in the FIL, the Central Bank must notify the revocation decision to a competent court, ~~of the revocation decision,~~ which will then determine who will liquidate the entity: the corporate authorities (extrajudicial liquidation) or an independent liquidator appointed by the court for that purpose (judicial liquidation). The court’s decision will be based on whether ~~or not~~ there isare sufficient ~~assurance~~assurances that the corporate authorities are capable of carrying out such liquidation ~~properly.~~properly, prior authorization of the Central Bank and in the cases provided by subsections a) and b) of section 44 of the FIL.

Bankruptcy of Financial Institutions

According to the FIL, financial institutions are not allowed to file their own bankruptcy petitions. In addition, the bankruptcy shall not be adjudged until the license to operate as a financial institution has been revoked.

Once the license to operate as a financial institution has been revoked, a court of competent jurisdiction may adjudge the former financial institution in bankruptcy, or a petition in bankruptcy may be filed by the Central Bank or by any creditor of the bank, in this case after a period of 60sixty (60) calendar days has elapsed since the license was revoked.
Once the bankruptcy ~~of a financial institution~~ has been adjudged, provisions of the Bankruptcy Law ~~(as defined below)~~No. 24,522 (the “Bankruptcy Law”) and the FIL shall be applicable; provided however that in certain cases, specific provisions of the FIL shall supersede the provisions of the Argentine Bankruptcy Law (i.e. priority rights of depositors).

Merger ~~Consolidation~~ and Transfer of Goodwill

Merger ~~consolidation~~ and transfer of goodwill may be arranged between entities of the same or different type and will be subject to the prior approval of the Central Bank. The new entity or the buyer must submit a financial-economic structure profile supporting the project in order to obtain authorization from the Central Bank.

Financial System Restructuring Unit

The Financial System Restructuring Unit was created to oversee the implementation of a strategic approach ~~for~~towards those ~~banks benefiting~~that benefit from assistance provided by the Central Bank. This unit is in charge of rescheduling maturities, determining restructuring strategies and action plans, approving transformation plans, and accelerating repayment of the facilities granted by the Central Bank.
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~~Anti-Money Laundering~~ ~~Regulation~~
Holding Companies

On June 28, 2019, the Central Bank ruled, through Communication “A” 6723, with effect from January 1, 2020, that Group “A” financial institutions (in accordance with the “Financial Institutions Authorities” rules) which are controlled by non-financial institutions (as in our case in relation with the Bank) shall comply with the Minimum Capital requirements (please see “Argentine Banking Regulation—Liquidity and Solvency Requirements—Minimum Capital Requirements”), the Major Exposure to Credit Risk regulations (please see “Argentine Banking Regulation—Credit Risk Regulation—Large Exposures”), the Liquidity Coverage Ratio (please see “Argentine Banking Regulation—Internal Liquidity Policies of Financial Institutions—Liquidity Coverage Ratio) and the Net Stable Funding Ratio (please see “Argentine Banking Regulation—Liquidity Parameters—Net Stable Funding Ratio”) on a consolidated basis comprising the non-financial holding and all its subsidiaries (excluding insurance companies and non-financial subsidiaries).
Additionally, Group “A” financial institutions may not grant direct or indirect financial assistance of any kind to its holding company whenever it is a non-financial institution.
Fintech regulations
The Central Bank has recently issued Communications “A” 6885 (as amended and restated by Communication “A” 7175), by means of which it began to regulate certain aspects of Fintech operations. Through these communications, it defined Payment Service Provider (“PSP”) as those non-financial entities in retail payments, performing under the global framework of the payment system, such as offering payment accounts to order and/or receive payments.
On January 30, 2020, the Central Bank issued Communication “A” 6885, by means of which it consolidated the rules for the operation of PSPs and established a specific registry for them. Particularly, Communication “A” 6885 forbids entities to operate as PSP if (i) they are not properly incorporated in Argentina; (ii) they are incorporated as a stock exchange, clearing chamber or agent under the CNV Rules; or (iii) if its capital, right votes, administrative or inspection body are integrated by people disqualified for performing financial activities in Argentina by the FIL, condemned by crimes against property, the public administration, the economic and financial order or public faith, privacy violations, illicit association or by section 1.b of the Foreign Exchange Criminal Regime. Shareholdings acquired on stock exchanges that do not reach the threshold of 20% of the capital or voting rights are exempt from the provisions of point (iii).
Regarding the registry, Communication “A” 6885 commands that all PSPs that offer payment account must register with the “Registry of Payment Service Providers that Offer Payment Accounts.” Additionally, all PSPs shall comply with a reporting regime to be further regulated by the Central Bank.
Regarding the management of the funds, the regulation provided that all funds credited to payment accounts offered by PSPs shall be (i) available at all times, for an amount at least equivalent to the one credited in the payment account; (ii) deposited in Pesos, in on-sight accounts in Argentine financial entities; and (iii) on an independent on-sight account from the one used for trading for own account (e.g.: creditor or salary payments).
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Any breach of the rules as set on the abovementioned communication is submitted to the sanctions of the FIL.
Gender Parity Requirements
On September 3, 2020, by means of Communication “A” 7100, the Central Bank amended the rules on “Guidelines for Corporate in Financial Institutions” (Lineamientos para el gobiernos societario en entidades financieras) to include a requirement of gender parity.
By virtue of such Communication, the Central Bank suggested to financial institutions to consider the progressive incorporation of women on new appointments and/or renewals, until gender parity is achieved. In this regard, the Central Bank defined gender parity as the guideline that aims at equalizing the participation of men and women in labor decision-making spaces, ensuring the right to equal opportunities and non-discrimination on the bases of gender.
Anti-Money ~~Laundering/Combating the~~Laundering and Terrorism Financing ~~of Terrorism (“AML/CFT”)~~Regime

The concept of money laundering is generally used to denote transactions ~~intended to introduce criminal proceeds~~aimed at introducing funds from illicit activities into the institutional system and thus to transform ~~profits~~gains from illegal activities into assets of a seemingly legitimate ~~origin.~~source.

Terrorist financing is the act of providing funds for terrorist activities. This may involve funds raised from legitimate sources, such as personal donations and profits from businesses and charitable organizations, as well as from criminal sources, such as drug trade, weapons and other goods smuggling, fraud, kidnapping and extortion.

On April 13, 2000, the ~~Argentine~~National Congress passed Law No. 25,246, as(subsequently amended ~~including by Laws No. 26,087; 26,119; 26,268, 26,683, 26,734, 26,831~~ and ~~26,860 (the “Anti-Money Laundering~~complemented, the “AML/ CFT Law”), which ~~defines~~created at the national level the Anti- Money Laundering and Terrorism Financing Regime (“AML/CFT Regime”), criminalizing money laundering, creating and designating the UIF as ~~a type of crime. In addition,~~ the ~~law, which supersedes several sections~~enforcement authority of the ~~Argentine criminal code established severe penalties~~regime, and establishing the legal obligation for ~~anyone participating in any such criminal activity~~various public and ~~created~~private sector entities and professionals to provide information and cooperate with the ~~UIF, establishing an administrative criminal system. Following the enactment of Law No. 27, 260 and its complementary Decree No. 895/2016, the~~UIF.
The UIF is ~~now~~a decentralized agency that operates with autonomy and financial independency under ~~the supervision of~~ the Ministry of Economy, and ~~Public Finance (currently~~its mission is to prevent and deter the ~~Ministry~~crimes of ~~Treasury).~~
~~On June 1, 2011, the Argentine Congress passed Law No. 26,683, amending several sections of the Argentine Criminal Code and Law No. 25,246. This law included~~ money laundering as an autonomous crime separating it from the crime of concealment. It also modified the integration of the UIF, establishing more restrictive rules for the appointment of its agents; expanded the UIF’s powers by allowing its agents to request reports from both private and ~~public entities; and provided that the UIF may seize unlawfully obtained funds and property without a court order.~~terrorist financing.

The main purpose of the Anti-Money Laundering Law is to prevent money laundering. In line with internationally accepted practice, it does not attribute responsibility for controlling these criminal transactions only to government agencies, but also assigns certain information-gathering duties to diverse private sector entities such as banks, stockbrokers, brokerage houses and insurance companies.
~~On December 22, 2011, the Argentine Congress passed Law No. 26,734 (the “Countering Financing of Terrorism Law”), which includes terrorism financing as a crime.~~
~~Below is a summary of~~following are certain provisions ~~regarding the provisions of~~relating to the AML/CFT ~~regime set forth~~Regime established by the ~~Anti-Money Laundering~~AML/ CFT Law and ~~Combating Financing of Terrorism Laws, as amended~~its amending and ~~supplemented by other rules and regulations,~~complementary provisions, including regulations issued by the UIF ~~the Central Bank,~~and the CNV and ~~other regulatory entities. Investors are advised to~~the Central Bank. It is recommended that investors consult their own legal ~~counsel~~advisors and to read the ~~Anti-Money Laundering and Combating Financing of Terrorism Laws~~AML/ CFT Law and its ~~statutory~~complementary regulations. ~~The UIF is~~
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Money laundering and terrorist financing in the ~~agency responsible for the analysis, treatment and transmission of information, with the aim of preventing money laundering resulting from different~~
~~crimes and the financing of terrorism. The~~ Argentine Criminal Code
(a) Money laundering
Section 303 of the Argentine Criminal Code (the “ACC”) defines money laundering as a crime committed ~~by any~~whenever a person ~~who exchanges,~~converts, transfers, manages, sells, ~~levies, disguises~~encumbers, conceals or in any other way ~~commercializes goods obtained through a crime,~~puts into circulation in the market, property derived from an unlawful act, with the possible consequence that the origin of the original ~~assets~~property or the ~~substitute thereof appear to come from~~subordinate property acquires the appearance of a lawful ~~source, provided that their value exceeds Ps.300,000, whether such amount results from one~~origin, either in a single act or ~~more related transactions. The penalties established are~~by the ~~following:~~repetition of various acts linked to each other. Section 303 of the ACC establishes the following penalties:

~~(i)~~
(i) If the amount of the operation exceeds Ps.300,000, imprisonment for a term of three (3) to ten (10) years and fines of two to ten times the amount of the operation shall be imposed. This penalty will be increased by one third of the maximum and half of the minimum, when:
(a) the person performs the act on an habitual basis or as a member of an illicit association constituted for the continuous commission of acts of this nature;
(b) the person is a public official who committed the act in the exercise or on the occasion of his/her functions. In this case, he/she shall also be subject to a penalty of special disqualification of three to ten years. The same penalty shall be imposed to anyone who has acted in the exercise of a profession or occupation requiring special qualification.
(ii) Anyone who receives money or other property from a criminal offense for the purpose of applying them in an operation as described above, which gives them the possible appearance of a lawful origin, shall be punished with imprisonment for a term of six (6) months to three (3) years.
(iii) If the value of the goods does not exceed Ps. 300,000, the penalty shall be imprisonment for a term of six months to three years.
(b) Penalties for legal persons
Furthermore, Section 304 of the ACC provides that when the criminal acts have been committed in the name of, or with the intervention of, or for the benefit of a legal person, the following sanctions shall be imposed to the entity jointly or alternatively:
(i) fine of two (2) to ten (10) times the value of the property subject to the offense;
(ii) total or partial suspension of activities, which in no case shall exceed ten (10) years;
(iii) debarment for public tenders or bidding processes or any other State-related activities, which in no case shall exceed ten (10) years;
(iv) dissolution and liquidation of the legal person when it was created for the sole purpose of committing the offense, or such acts constitute the main activity of the entity;
(v) loss or suspension of any State benefit that it may have;
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(vi) publication of an extract of the condemnatory sentence at the expense of the legal entity.
In order to calibrate these sanctions, the Court will take into account the failure to comply with internal rules and procedures, the omission of vigilance over the activity of the authors and participants; the extent of the damage caused, the amount of money involved in the ~~transaction;~~commission of the offense, the size, nature and economic capacity of the legal entity. In the cases in which it is essential to maintain the operational continuity of the entity, or of a public work, or particular service, the sanctions of suspension of activities or dissolution and liquidation of the legal person shall not be applicable.

~~(ii)~~                                  the penalty provided in section (i) shall be increased by one third of the maximum and a half of the minimum, when (a) the person carries out the act on a regular basis or as a member of an association or gang organized with the aim of continuously committing acts of a similar nature, and (b) the person is a governmental officer who carries out the act in the course of his duties;
~~(iii)~~                               ~~if the value of the assets does not exceed Ps.300,000, the penalty shall be imprisonment for six (6) months to three (3) years.~~
The Argentine Criminal Code also punishes any person who receives money or other assets from a criminal source with the purpose of applying them to a transaction, making them appear to be from a lawful source.
(c) Terrorism financing

Section 306 of the ~~Argentine Criminal Code (as amended by Law No. 26,734) defines terrorism~~ACC criminalizes the financing ~~as a crime~~of terrorism. This offense is committed by any person who directly or indirectly collects or provides property or money, with the intention ~~that they be~~of it being used, or ~~knowing~~in the knowledge that ~~they~~it will be used, in ~~whole~~full or in part: (a) to finance the commission of the crime established in Section 41 quinquies; (b) by an organization that commits or attempts to commit the crimes established in Section 41 quinquies; (c) by a person who commits, attempts to commit or participates in any way in the commission of the crimes established in Section 41 quinquies.
(i) to finance the commission of acts which have the aim of terrorising the population or compelling national public authorities or foreign governments or agents of an international organisation to perform or refrain from performing an act (according to section 41.5 of the ACC);
(ii) by an organisation committing or attempting to commit crimes for the purpose set out in (i);
(iii) by an individual who commits, attempts to commit or participates in any way in the commission of offenses for the purpose set out in (i).
The penalty is imprisonment for a term of five (5) to fifteen (15) years and ~~fines from~~a fine of two (2) to ten (10) times the amount of the ~~transaction.~~operation. Likewise, the same penalties shall apply to legal persons as described for the crime of money laundering.
Reporting Subjects obliged to inform and collaborate with the UIF
The AML/CFT Law, in line with international AML/CFT standards, not only designates the UIF as the agency in charge of preventing money laundering and terrorism financing, but also establishes certain obligations to various public and private sector entities and individuals, which are designated as Reporting Subjects (“Sujetos obligados”), which are legally bound to inform and collaborate with the UIF.

In ~~line~~accordance with ~~internationally accepted practices,~~ the ~~Anti-Money Laundering~~AML/ CFT Law does not merely assign responsibility for controlling these criminal transactions to government agencies, but also assigns certain duties to various private sector entities such as banks, stockbrokers, brokerage houses and ~~insurance companies, which become legally bound reporting parties. These duties basically consist of information-capturing functions.~~
~~According to~~ the ~~Anti-Money Laundering Law,~~regulations complementing it, the following persons, among others, are ~~subject to report to~~Reporting Subjects before the UIF: (i) financial institutions and insurance companies; (ii) exchange agencies and individuals or legal entities authorized by the Argentine Central Bank to operate in the purchase and sale of foreign currency in the form of cash or checks drawn in foreign currency or by means of credit or debit cards or in the transfer of funds within Argentina or abroad; (iii) broker-dealers, companies managing investment funds, over-the-counter market agents, and intermediaries engaged in the purchase, lease, or borrowing of securities; (iv) armored transportation services companies and companies or concessionaires rendering postal services that carry out foreign currency transfers or remittance of different types of currency or notes; (v) governmental organizations, such as the Central Bank, the Argentine Tax Authority, the National Superintendency of Insurance (~~Superintendencia de Seguros de la Nación~~), the CNV and the IGJ; (vi) professionals in economics sciences and notaries public; and (vii) individuals and legal entities acting as trustees of any kind and individuals or legal entities related directly or indirectly to trust accounts, trustees and trustors under trust agreements.

(i) banks, financial entities and insurance companies;
Individuals and entities subject to the Anti-Money Laundering Law must comply with some duties that include: (i) obtaining documentation from their customers that irrefutably evidences their identity, legal status, domicile, and other data stipulated in each case (know your customer policy); (ii) reporting any suspicious event or transaction (which according to the customary practices of the field involved, as well as to the experience and competence of the parties who
(ii) exchange agencies and natural and legal persons authorized by the Central Bank to intervene in the purchase and sale of foreign currency with funds in cash or checks issued in foreign currency or through the use of debit or credit cards or in the transfer of funds within or outside the national territory;
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(iii) settlement and clearing agents, trading agents; natural and/or legal persons registered with the CNV acting in the placement of investment funds or other collective investment products authorized by such agency; crowdfunding companies, global investment advisors and the legal persons acting as financial trustees whose trust securities are authorized for public offering by the CNV, and the agents registered by the above mentioned controlling agency that intervene in the placement of negotiable securities issued within the framework of the above mentioned financial trusts;
(iv) government organizations such as the Central Bank, the Federal Public Revenue Administration (“AFIP,” as per its acronym in Spanish), the Superintendence of Insurance of the Nation (“SSN,” as per its acronym in Spanish), the CNV and the IGJ; and
(v) professionals in the area of economic sciences and notaries public.
The Reporting Subjects have the duty to inform, are those transactions attempted or consummated that, having been previously identified as unusual transactions by the legally bound reporting party, or have no economic or legal justification or are unusually or unjustifiably complex, whether performed on a single occasion or repeatedly (regardless its amount); and (iii) abstaining from disclosing to customers or third parties any act performed in compliance with the Anti-Money Laundering Law. Within the framework of analysis of a suspicious transaction report, the aforementioned individuals and entities cannot refrain from disclosing to the UIF any information required from it by claiming that such information is subject to bank, stock market or professional secret, or legal or
contractual confidentiality agreements. The AFIP shall only disclose to UIF the information in its possession when the suspicious transaction report has been made by such entity and refers to the individuals or entities involved directly with the reported transaction. In all other cases the UIF shall request that the federal judge holding authority in a criminal matter order the AFIP to disclose the information in its possession.following duties:

(i) obtaining from clients’ documents that indisputably prove their identity, legal status, domicile and other information, concerning their operations needed to accomplish the intended activity (know your customer policy);
~~Argentine financial institutions must comply with all applicable anti-money laundering regulations as provided by the Central Bank, the UIF, and, if applicable, the CNV. In this regard,~~
(ii) conduct due diligence procedure on their clients and report any suspicious operation or fact (which, in accordance with the usual practices of the area involved, as well as the experience and competence of the Reporting Subjects, are operations that are attempted or completed which were previously identified as unusual operations by the regulated entity, as well as any operation without economic or legal justification or of unusual or unjustified complexity, whether performed in isolated or repeated manner, regardless of the amount); and
(iii) refraining from disclosing to the client or third parties the actions being conducted in compliance with the AML/ CFT Law. Within the framework of suspicious operation report analysis, Reporting Subjects shall not object disclosure to UIF of any information required from them alleging that such information is subject to banking, stock market or professional secrecy or confidentiality agreements of a legal or contractual nature.
Pursuant to Annex I of Resolution No. ~~229/2014~~154/2018 of the UIF (which establishes the supervision and inspection mechanism of the UIF), both the Central Bank and the CNV are considered “Specific Control ~~Organs.”~~ Agencies”(“Órganos de Contralor Específico”). In such capacity, they must ~~cooperate~~collaborate with the UIF in the evaluation of ~~the~~ compliance with ~~the anti—money laundering proceedings~~AML/CFT procedures by the ~~legally bound reporting parties~~Reporting Subjects subject to their control. ~~In that respect,~~For these purposes, they are entitled to supervise, monitor and inspect these entities. Denial or obstruction of inspections by the Reporting Subjects may result in administrative penalties by the UIF and criminal penalties.
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The Central Bank and the CNV must also comply with the AML/CFT regulations established by the UIF, including the reporting of suspicious transactions. In turn, Reporting Subjects regulated by these agencies are subject to UIF Resolutions No. 30/2017 and 21/2018, respectively. Such regulations provide guidelines that such entities shall adopt and ~~if necessary,~~apply to ~~implement certain corrective measures~~manage, in accordance with their policies, procedures and ~~actions.~~controls, the risk of being used by third parties for criminal purposes of money laundering and financing of terrorism.

Essentially, the aforementioned regulations (the consolidated texts of which were subsequently approved by UIF Resolution ~~121/2011~~No. 156/18), change the formal regulatory compliance approach to a risk-based approach (“RBA”), based on the revised recommendations issued by the ~~UIF, as amended (“Resolution 121”~~Financial Action Task Force (the “FATF”)~~, was applicable~~ in 2012, in order to ~~financial entities subject~~ensure that the implemented measures are proportional to the ~~FIL,~~identified risks. Therefore, the Reporting Subjects shall identify and evaluate their risks and, based on this, adopt measures for the management and mitigation of such risks, in order to entities subject to the Law No. 18,924, as amended, and to individuals and legal entities authorized by the Central Bank to intervene in the purchase and sale of foreign currency through cash or checks issued in foreign currency or through the use of credit or payment cards, or in the transfer of funds within or outside the national territory. Resolution No. 229/2011 of the UIF, as amended or supplemented by Resolutions No. 52/2012 and 140/2012 (“Resolution 229”), was applicable to brokers and brokerage firms, companies managing common investment funds, agents of the over-the-counter market, intermediaries in the purchase or leasing of securities affiliated with stock exchange entities with or without associated markets, and intermediary agents registered on forwards or option markets. Resolution 121 and Resolution 229 regulated, among other things, the obligation to collect documentation from clients and the terms, obligations and restrictions for compliance with the reporting duty regarding suspicious money laundering and terrorism financing transactions and set forth general guidelines in connection with the client’s identification (including the distinction between occasional and regular clients), the information to be requested, the documentation to be filed and the procedures to detect and report suspicious transactions.
~~The main duties established by such resolutions were the following: (a) to create a manual establishing the mechanisms and procedures to be used to~~more effectively prevent money laundering and ~~terrorism financing; (b) to appoint a member~~terrorist financing. Likewise, the provisions of the Board of Directors as compliance officer; (c) to implement periodic audits; (d) to offer personnel training; (e) to create a record of detected unusual (as such term is explained below) and suspicious operations; (f) to implement technological tools to allow for the development of efficient control systems for the prevention of money laundering and terrorism financing; (g) to implement measures to allow persons obliged under Resolution 121 and Resolution 229 to electronically consolidate the transactions carried out with clients, and to develop electronic tools to identify certain behaviors and observe possible suspicious transactions, requesting information and, if applicable, supporting documents from its customers; and (h) to adopt reinforced identification methods applicable to customers with specific features as provided by applicable regulations. Entities covered by Resolution 121 and Resolution 229, as legally bound reporting parties, had to report any money laundering suspicious activity to the UIF within 150 calendar days of its occurrence (or attempt) and any terrorism financing suspicious activity before a 48-hour period of its occurrence (or attempt) has elapsed. In addition, pursuant to UIF Resolution No. ~~3/2014, within~~4/17 established the ~~maximum 150 calendar day period, entities covered by Resolution 121~~possibility of conducting special due diligence procedures with respect to clients supervised abroad (formerly called “international investors”) and ~~Resolution 229 had to report any money laundering suspicious activity~~local clients who are Reporting Subjects to the ~~UIF within 30 calendar days as of the day on which any such activity is qualified as suspicious by such legally bound reporting party.~~UIF.

~~Reporting parties must also fulfil other requirements, including but not limited to: (a) put together a manual outlining~~Asset Freezing Regime
Decree No. 918/2012 establishes the ~~mechanisms~~procedures for the freezing of assets linked to terrorism financing, and the creation and maintenance procedures (including the inclusion and removal of suspected persons) for registries created in ~~place to comply~~accordance with the applicable anti-money laundering law and the rules handed down by the UIF; (b) appoint a Compliance Officer who must necessarily be a member of the Board and who shall watch for the adherence to and implementation of the procedures and obligations set forth in the applicable rules and regulations; (c) set up a “money laundering control and prevention committee” to plan for, coordinate and watch for compliance with the policies laid down by the entity’s Board of Directors, (d) arrange for periodical and independent audits of the global anti-money laundering program; and (e) embrace risk analysis policies and develop a written record of the risk analysis and management actions taken in connection with the reported suspicious operations.relevant United Nations Security Council’s resolutions.

~~In August 2016,~~Additionally, UIF Resolution No. ~~94/2016 established that legally bound reporting parties under Resolution 121 could apply simplified due diligence measures for customer identification when opening a savings account (~~~~i.e.~~~~, presentation of ID, PEP declaration and checking that~~29/2013, regulates the ~~holder in the lists of terrorists and/or terrorist~~
organizations) in cases where the client met certain specified requirements. According to the resolution, the simplified identification measures did not release the legally bound reporting party from the duty of monitoring the operations carried out by such customer. Also, in case any of the requirements stated in the resolution could not be verified, the legally bound reporting parties had to apply the identification measures set out in Resolution 121.
~~Additionally, following the guidelines~~implementation of Decree No. 918/2012 ~~described below, the UIF’s Resolution No. 29/2013 regulated~~and establishes: (i) the ~~method of reporting~~procedure to report suspicious transactions of terrorism financing and the persons obligated to do so, and (ii) the administrative freezing of assets procedure on natural or legal persons or entities designated by the United Nations Security Council pursuant to Resolution 1267 (1999) and subsequent, or linked to criminal actions under Section 306 of the Argentine Criminal Code, both prior to the report issued pursuant to UIF Resolutions No. 121 and 229, and as mandated by the UIF after receiving such report.

~~On January 11, 2017,~~In order to help the Reporting Subjects to fulfill these duties, Executive Decree No. 489/2019 created the Public Registry of Persons and Entities linked to acts of Terrorism and its Financing (RePET, for its acronym in Spanish), which is an official database that includes the consolidated list of the United Nations Security Council.
Politically Exposed Persons
Resolution No. 134/2018 of the UIF ~~published~~(amended by Resolutions No. 15/2019 and 128/2019), establishes the rules that Reporting Parties must follow regarding clients that are Politically Exposed Persons (PEPs).
Following the aforementioned RBA, Resolution ~~No. 4/17 (“Resolution 4/17”), which allows~~134/2018 establishes that Reporting Parties must determine the ~~legally bound reporting parties detailed in subsections 1, 4~~level of risk at the time of beginning or continuing the contractual relationship with a PEP, and ~~5 of section 20 of Law No. 25,246, as amended (i.e., financial entities subject~~must take due diligence measures, adequate and proportional to the ~~FIL, brokers~~associated risk and ~~brokerage firms, companies managing common investment funds, agents~~the operation or operations involved.
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In addition, the UIF has issued the Guide for the management of ~~the over-the-counter market, intermediaries~~risks of money laundering and financing of terrorism in ~~the purchase or leasing of securities affiliated with stock exchange entities with or without associated markets, and intermediary agents registered on forwards or option markets),~~relation to ~~apply special due diligence identification measures~~customers (and ultimate beneficiaries) that are PEPs, which sets up guidelines for Reporting Parties in order to ~~foreign and national investors (which must~~ comply with the ~~requirements established by~~ Resolution 4/17 to qualify) to Argentina when at-distance opening special investment accounts. The special due diligence regime shall not exempt the legally bound reporting parties of Resolution 4/17 from monitoring and supervising the transactions performed during the course of the commercial relationship, according to a risk-based approach.No. 134/2018.

Resolution 4/17 also regulates the due diligence measures between legally bound financial reporting parties. It requires that when the opening of the accounts is requested by settlement and clearing agents, or the “ALyCs,” the local financial entity will have complied with current anti-money laundering and counter terrorist financing regulations after performing due diligence with respect to the ALyCs. The ALyCs shall be responsible for performing due diligence with respect to its customers. Resolution 4/17 expressly establishes that, even though the financial entities are not responsible for performing due diligence with respect to the ALyCs’ customers, they are not exempt from monitoring and supervising the transactions performed by their clients (the ALyCs) during the course of the commercial relationship, according to a risk-based approach.CNV Regulations

The ~~Central Bank and the~~ CNV must also comply with anti-money laundering regulations set forth by the UIF, including reporting suspicious transactions. In particular, the Central Bank must comply with UIF Resolution No. 12/2011, as supplemented by,Rules stipulate, among other ~~resolutions, Resolutions No. 1/2012 and No 92/2012, which, among other things, sets forth~~provisions, that the Central Bank’s obligation to evaluate the anti-money laundering controls implemented by Argentine financial institutions (with the limitation of access to the reports and records of suspicious operations, which are, as explained above, confidential and subjectreporting subjects under its control shall only to the UIF’s supervision), and lists examples of what circumstances should be specifically considered in order to establish whether a particular transaction may be considered unusual and eventually qualified as suspicious.
Central Bank regulations require Argentine banks to take certain minimum precautions to prevent money laundering and terrorism financing. Each institution must have an anti-money laundering committee, formed by a member of the Board of Directors, the officer responsible for AML/CFT matters (~~Oficial de Cumplimiento~~~~) and an upper-level officer for financial intermediation and foreign exchange matters (~~~~i.e.~~, with sufficient experience and knowledge on such matters and decision-making powers). Additionally, as mentioned, each financial institution must appoint a member of the Board of Directors as the person responsible for money laundering prevention, in charge of centralizing any information the Central Bank may require on its own initiative or at the request of any competent authority and reporting any suspicious transactions to the UIF. Notwithstanding the officer’s role as a liaison with the UIF, all board members have personal, joint, several and unlimited responsibility for the entity’s compliance with its reporting duties with the UIF. In addition, this officer will be responsible for the implementation, tracking and control of internal procedures to ensure compliance with the regulations in financial institutions and its subsidiaries.
In this regard, the guidelines issued by the Central Bank to detect unusual, suspicious or terrorist financing money laundering transactions require reporting suspicious transactions, based on the legally bound reporting party’s resources and the type of analysis carried out. In particular, the following circumstances, among others, should be
~~considered: (a) the amounts, types, frequency and nature of~~perform the operations ~~carried out~~provided for under the public offering system when these operations are performed or ordered by the clients that are not related to their economic background and activity; (b) unusually high amounts, the complexity and the unusual modalities of the operations carried out by the clients; (c) when clients refuse to provide datapersons constituted, domiciled or ~~documents required by the entities or when the information supplied by them is detected to be altered; (d) when the client does not comply with the applicable rules~~resident in the matter; (e) when the client exhibits an unusual disregard for the risks assumed and/or the costs of the transactions are inconsistent with the economic profile of the transaction; (f) when the transactions involvecountries, domains, jurisdictions, territories or associated states ~~that are~~not considered ~~“cooperators~~to be non-cooperative or high risk by the FATF.
Similarly, they establish the payment modalities and control procedures for the purpose of fiscal transparency” according to the provisions of Article 1 of Decree 589/2013, (g) when several different entities report the same address, or when the same persons represent or are authorized signatories of several different entities, without any economic or legal reason, with special consideration for any of the companies or organizations included in the list contained in section 2(b) of Decree No. 589/2013 whose main activity involved offshore transactions; (h) when the transactions involved are of similar nature, amount, modality or simultaneity, implying that they could have been fragmented into several small-volume transactions, in order to evade the procedures for detecting and/or reporting operations; (i) continued gains or losses on repeated transactions between the same parties; or (j) when there is evidence of the illegal origin, management or destinationreception and delivery of funds ~~used in operations, for which the legally bound reporting party does not have an explanation.~~from and to clients.

~~Furthermore, pursuant~~Central Bank Rules
Pursuant to Communication “A” ~~5738 (as~~6399 of the Central Bank, as amended and supplemented, including without limitation, by Communication “A” ~~6060)~~6709, Reporting Subjects must keep - for a period of 10 years - written records of the ~~Central Bank, Argentine financial institutions must comply with certain additional “know your~~procedure applied in each case for the discontinuation of a client’s operations. Among these records, they shall keep a copy of any notification sent to the customer ~~policies.” In this sense, pursuant to such Communication, under no circumstance may new commercial relationships be initiated if~~requesting further information and/or documentation, the ~~“know your customer policies”~~corresponding notices of receipt and the ~~risk management legal standards have not been complied with. In addition, in respect of~~documents identifying the existing clients: if the “know your customer policies” could not be complied with, the Argentine financial institution must carry out an analysis based on risk, in order to assess the continuation of operations with such client. The criteria and procedure must be describedofficials who took part in the financial entity’s risk management internal handbook regarding money laundering regulations. If the Argentine financial institution must discontinue operations with such client, it must do it in accordance with Central Bank’s regulations for each type of product. Furthermore, pursuant to this Communication, Argentine financial entities must keep the documentation related to the discontinuance for 10 years and include in their prevention manuals the detailed procedures to initiate and discontinue operations with clientsdecision, in accordance with the ~~above-mentioned additional “know your customer policies” implemented.~~respective procedural manuals.

Tax Amnesty System
The ~~CNV Rules include a specific chapter regarding “Prevention~~voluntary system of Money Laundering and the Financing of Terrorism” and state that the persons set forth therein (Negotiation Agents, Clearing and Settlement Agents (which are stockbrokers), Distribution and Placement Agents, Manager and Custody Agents of Collective Investment Funds, Brokerage Agents, Collective Depositary Agents, issuers with respect to capital contributions, irrevocable capital contributions for future capital increases or significant loans that have been made in its benefit, specifically with respect to the identity of contributors and/or creditors and the origin and legality of the funds so contributed or loaned) are to be considered legally bound to reportdeclaration under the Anti-Money Laundering Law, and therefore must comply with all the laws and regulations in force in connection with anti-money laundering and terrorism financing, including resolutions issued by the UIF, presidential decrees referring to resolutions issued by the United Nations Security Council in connection with the fight against terrorism and the resolutions (and its annexes) issued by the Ministry of Foreign Affairs. In addition, CNV Rules impose certain restrictions in connection with payment arrangements (limiting, among other things, the cash amount that the entities set forth therein could receive or pay per day and per client, to Ps.1,000) and impose certain reporting obligations.
In addition, the CNV Rules establish that the above-mentioned entities shall only be able to carry out any transactions contemplated under the public offering system, when such transactions are carried out or ordered by persons organized, domiciled or resident in dominions, jurisdictions, territories or associated States included in the cooperating countries list contained in Executive Decree No. 589/2013, section 2(b). When such persons are not included in such list and in their home jurisdiction qualify as registered intermediaries in an entity under control and supervision of a body that carries out similar functions to those carried out by the CNV, they will only be allowed to carry out such transactions if they provide evidence indicating that the relevant securities and exchange commission in their home jurisdiction has signed a memorandum of understanding for cooperation and exchange of information with the CNV.
Regarding terrorism financing, Decree No. 918/2012 established the procedures for the freezing of assets linked to terrorism financing (including automatic freezing), and the creation and maintenance procedures (including the inclusion and removal of suspected persons) for registries created in accordance with the relevant United Nations Security Council’s resolutions.
On February 17, 2016, the “National Coordination Program for the Prevention of Asset Laundering and the Financing of Terrorism” was created by Executive Decree No. 360/2016 as an instrument of the Ministry of Justice and Human Rights. This Program was assigned the duty to reorganize, coordinate and strengthen the national system for the prevention of money laundering and the financing of terrorism, taking in consideration the specific risks that might have an impact on Argentine territory and the global demand for a more effective compliance with international obligations and recommendations established under United Nations Conventions and the standards of the Financial Action Task Force (FATF). These duties will be performed and implemented through a National Coordinator appointed for this purpose. Also, applicable statutory rules were modified, and it was established that the Ministry of Justice and Human Rights will be the Argentine government’s central authority in charge of the inter-institutional coordination among all public and private agencies and entities with competent jurisdiction on this matter, while the UIF will retain the ability to perform operating coordination activities at the national, provincial and municipal levels in relation to matters strictly inherent in its jurisdiction as a financial intelligence agency.
~~Additionally, through the enactment of~~Tax Amnesty Law No. 27,260 and its ~~supplemental~~Regulatory Decree No. 895/~~2016,~~16 (jointly the “Tax Amnesty System”) established that the information voluntarily submitted under such system may be used for the investigation and punishment of the crimes of money laundering and financing of terrorism. For such purpose, the UIF ~~was granted~~has the ~~right~~power to ~~provide~~communicate information to other public ~~entities who also have~~ intelligence or investigation ~~rights, insofar as the sharing of this information has been previously authorized by the president~~agencies, based on a previous resolution of the ~~UIF as long as~~UIF’s President and provided that there ~~is reasonable,~~are serious, precise and ~~serious evidence~~concordant indications of the commission of ~~any~~money laundering and/or terrorism financing crimes. Furthermore, the AFIP remains obliged to report to the UIF suspicious operations detected within the framework of the ~~crimes contemplated under the Anti-Money Laundering Law. The entities receiving the communications of the UIF providing this~~Tax Amnesty System and to provide it with all information ~~will be subject~~required by it, not being able to the confidentiality obligations of Section 22 of the Anti-Money Laundering Law, and will be subject to the criminal penalties of such law if they breach their duty of confidentiality and reveal secret information.
In June 2017, the UIF published Resolution No. 30-E/17, which abrogated Resolution 121 and set the new guidelines that financial and foreign exchange entities must follow as legally bound financial reporting parties under the Anti-Money Laundering Law, based on the revised FATF recommendations of 2012, in order to adopt a risk-based approach. Resolution No. 30-E/17, effective as of September 15, 2017 (except for a few provisions, which are set to become effective on March and June 2018), determines the minimum compliance elements that must be included in a system for the prevention of money laundering and terrorist financing, such as the process of customer due diligence, training programs, operations monitoring, reporting of suspicious operations and non-compliance normative, among others.oppose fiscal secrecy.

Resolution No. 30 provides that financial entities, such as us, are required to take certain actions embracing a Risk-Based Approach, aimed at identifying and assessing their respective risk exposure to money laundering and terrorism Corporate Criminal Liability Lawfinancing, in respect of their customers, countries and geographic areas, products and services, operations or distribution channels, including without limitation, reporting to the UIF the operations it considers suspicious of Money Laundering / Financing of Terrorism within 15 calendar days, as of the date on which the entity qualifies the transaction as suspicious. Likewise, the reporting date may not exceed 150 calendar days as of the date of the suspected or attempted operation. The term for the report of a suspicious operation of financing of terrorism will be 48 hours, computed from the date of the operation performed or attempted..

~~Recently, the Resolution~~The Corporate Criminal Liability Law No. ~~21/2018 (“Resolution 21”) was published which replaces the~~27,401 sets forth a criminal liability regime ~~imposed by Resolution 229 and amends the Resolution No. 140/2012 regarding publicly offered financial trusts, their trustees, trustors and individuals or~~applicable to legal entities involved in certain corruption offenses directly or indirectly related to them, in order to adjust to the recommendations of the FATF and implement a risk-based approach. Resolution 21 is applicable to the parties indicated in Section 20 of the Anti-Money Laundering Law, subsection 4): Broker-dealers and stockbrokers, mutual fund management companies, electronic open market agents, and all those intermediaries in the purchase, lease or loan of securities that operate under scope of stock exchanges with or without attached markets; and subsection 5); the intermediary agents enrolled in the markets, futures and options whatever their purpose, including the liquidation and compensation agents, the negotiation agents and the collective investment products management agents of mutual funds. The legal entities referred to in subsection 22) of Section 20 of the Anti-Money Laundering Law that act as financial fiduciaries whose fiduciary securities have authorization of public offering of the CNV are also included under the scope of Resolution 21.
Under Resolution 21, the clients will be categorized according to the risk implied (low, medium or high), which will allow for the application of differentiated due diligence measures while permitting that simplified due diligence measures are executed with respect to clients and stockholders of foreign funds (to the extent they comply with the applicable conditions of their country of origin), thus easing the identification process without weakening the prevention system. Within this framework, individuals are enabled to implement reputable technological platforms that allow carrying out long-distance procedures, without the need to file documentation in person, without it affecting the fulfillment of the applicable requirements.
For an extensive analysis of the money laundering regime in effect as of the date of this annual report, investors should consult legal counsel and read Title XIII, Book 2 of the Argentine Criminal Code and any regulations issued by the UIF, the CNV and the Central Bankcommitted in their ~~entirety. For such purposes, interested~~name, on their behalf or in their interest and from which a benefit may arise. The individual offenders may be employees or third parties ~~may visit~~— even unauthorized third parties, provided that the ~~websites of~~company ratified the Argentine Ministry of Economy, at www.minhacienda.gob.ar, the Argentine Ministry of Public Finance, at www.minfinanzas.gob.ar, the UIF, at www.uif.gov.ar, the CNV, at www.cnv.gob.ar, or the Central Bank, at www.bcra.gob.ar. The information found on such websites is not a part of this annual report.act, even tacitly.
164
~~Item 4.C~~~~Organizational structure~~
Item 4.C Organizational structure

The following diagram illustrates our organizational structure as of the date of this annual report. Percentages indicate the ownership interest held.

The following information is related to our subsidiaries and investees as of the date of this annual report:

Subsidiary
~~Country~~Jurisdiction of ~~Incorporation/ Residence~~
incorporation
Name under which the subsidiary does
business
Banco Supervielle S.A.
Argentina
Supervielle
Cordial Compañía Financiera S.A.
(renamed as IUDÚ Compañia Financiera S.A. with registration pending)
Argentina
Walmart Servicios Financieros Servicios Financieros Pesos Ya, IUDÚ
Tarjeta Automática S.A.
Argentina Carta Automática  Pesos Ya
Supervielle Seguros S.A.
Argentina
Supervielle Seguros
Supervielle Asset Management S.A.
Sociedad Gerente de Fondos Comunes de Inversión S.A.
Argentina
Supervielle Asset Management
~~Tarjeta Automática S.A.~~
~~Argentina~~
~~Sofital S.A.F.e I.I.~~
~~Argentina~~
Espacio Cordial de Servicios S.A.
Argentina
Cordial
Sofital S.A.F. e I.I. Argentina N/A
Micro Lending S.A.U. Argentina MILA
InvertirOnline S.A.U. Argentina InvertirOnline
InvertirOnline.com Argentina S.A.U. Argentina InvertirOnline
Supervielle Productores Asesores de Seguros S.A. Argentina N/A
Futuros del Sur S.A. (in the process of being renamed Supervielle Agent de Negociacion S.A.U.) Argentina N/A
Bolsillo Digital S.A.U. Argentina N/A
Easy Casa de Cambio S.A, Argentina N/A
~~Item 4.D~~~~Property, plants and equipment~~
165
Item 4.D Property, plants and equipment

The Bank owns ~~4,346~~7,854 square meters of office space at Reconquista 330 and at San Martin 344 in Buenos Aires and ~~San Martín/Espejo in~~ Mendoza, for management, administrative and other commercial purposes and for central area personnel. The Bank also owns 15,046 square meters for retail branch properties in Mendoza, Córdoba, San Luis and Buenos Aires ~~(including 13,001 squares meters of the properties acquired from the financial trust), 1,322~~631 square meters of land in the City of San ~~Luis and the City of Mendoza and 2,832 square meters of properties not related to our core business.~~Luis.

~~In November 2007 Banco Supervielle securitized certain strategic located branches through the transfer of such properties to a real estate trust~~ “Renta Inmobiliaria I” (the “Supervielle Renta Inmobiliaria Financial Trust”) which issued multiple classes of bonds and certificates of participation in the local capital market. Its initial value was U.S.$14.3 million. The Bank leased the branches from the financial trust and paid a monthly rental since then.
Following the securitization terms and conditions, in November 2016, the Bank exercised its priority right to buy all or part of the properties from the Supervielle Renta Inmobiliaria Financial Trust, before these properties were divested by the trustee.
~~As a consequence, on December 14, 2016, the Bank acquired at market price, all of the properties from the financial trust,~~ using their franchise value, for a total amount of Ps.329.8 million. Subsequently, the Supervielle Renta Inmobiliaria Financial Trust was terminated and the securities were paid back to its holders including the gain on sale of those properties as they were valued at historical acquisition cost.
~~As we had relevant holdings in the securities issued by the~~ Supervielle Renta Inmobiliaria Financial Trust, we recognized a gain in income from our participation in securization trusts of Ps.137.7 million, a turnover tax of Ps.9.6 million in financial expenses and income tax of Ps.35.7 million.
Supervielle Seguros owns 1,~~954~~1,954 square meters of office space located at Reconquista 330 in Buenos Aires.

The rest of our administrative buildings and offices (including our headquarters), ~~branches, senior citizens dedicated~~ branches, sales and collection centers and storage properties are leased pursuant to arm’s length agreements.

We sublease from the Bank the offices where our headquarters are located at Bartolomé Mitre 434, 5th ~~Floor,~~ City of Buenos Aires.

Selected Statistical Information

You should read this information in conjunction with our audited consolidated financial statements and related notes, and the information under “Item 5.A Operating Results” included elsewhere in this annual report. We prepared this information from our financial ~~records,~~statements, which are ~~maintained~~prepared in conformity with ~~Argentine Banking GAAP,~~IFRS. For further information, see Notes 1.1 and ~~do not reflect adjustments necessary~~2 to ~~reflect the information in accordance with U.S. GAAP.~~our audited consolidated financial statements.

Average Balance Sheets, Interest ~~Earned~~earned on Interest-earning Assets and Interest Paid on Interest-bearing Liabilities

The average balances of our interest-earning assets and interest-bearing liabilities, including the related interest that is receivable and payable, are calculated on a daily basis.

Average balances have been separated between those denominated in Pesos and those denominated in U.S. dollars. The nominal interest rate is the amount of interest earned or paid during the period divided by the related average balance.
The following tables show average balances, interest amounts and nominal rates for our interest-earning assets and interest-bearing liabilities for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015.~~2018.

Year ended December 31,

2017

2016

2015

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

ASSETS

Interest-earning assets

Investment portfolio

Government and corporate securities

Pesos

313,110

81,137

25.9
%
165,383

33,260

20.1
%
197,733

13,932

7.0
%
Dollars

1,786,243

437,561

24.5
%
597,712

145,409

24.3
%
306,386

119,440

39.0
%
Total

2,099,353

518,698

24.7
%
763,096

178,669

23.4
%
504,119

133,372

26.5
%
Participation in our securitization trusts(1)

Pesos

817,612

148,627

18.2
%
1,277,081

362,241

28.4
%
1,348,974

283,428

21.0
%
Dollars

1,240

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Total

818,852

148,627

18.2
%
1,277,081

362,241

28.4
%
1,348,974

283,428

21.0
%
Securities issued by the Central Bank

Pesos

5,282,857

1,318,422

25.0
%
1,846,240

673,993

36.5
%
707,491

257,274

36.4
%
Dollars

—

—

0.0
%
106,696

49,838

46.7
%
1,716

—

0.0
%
Total

5,282,857

1,318,422

25.0
%
1,952,936

723,831

37.1
%
709,207

257,274

36.3
%
Total Investment Portfolio

Pesos

6,413,579

1,548,186

24.1
%
3,288,704

1,069,494

32.5
%
2,254,198

554,634

24.6
%
Dollars

1,787,483

437,561

24.5
%
704,408

195,247

27.7
%
308,102

119,440

38.8
%
Total

8,201,062

1,985,747

24.2
%
3,993,113

1,264,742

31.7
%
2,562,300

674,074

26.3
%
Loans and financings:

Promissory notes(2)

Pesos

6,190,479

1,395,622

22.5
%
3,811,989

1,086,442

28.5
%
3,165,116

837,789

26.5
%
Dollars

221,412

8,063

3.6
%
25,772

882

3.4
%
12,530

675

5.4
%
Total

6,411,891

1,403,685

21.9
%
3,837,761

1,087,324

28.3
%
3,177,646

838,464

26.4
%
Overdrafts

Pesos

3,262,587

1,162,911

35.6
%
2,509,796

996,571

39.7
%
1,638,881

594,315

36.3
%
Dollars

63

—

0.0
%
—

0.0
%
—

—

0.0
%
Total

3,262,650

1,162,911

35.6
%
2,509,796

996,571

39.7
%
1,638,881

594,315

36.3
%
Loans to the financial sector

Pesos

494,945

89,845

18.2
%
240,611

73,754

30.7
%
28,977

9,173

31.7
%
Dollars

13,943

306

2.2
%
—

—

0.0
%
—

—

0.0
%
Total

508,888

90,151

17.7
%
240,611

73,754

30.7
%
28,977

9,173

31.7
%
Mortgage loans

Pesos

457,344

109,801

24.0
%
40,766

8,999

22.1
%
59,344

10,014

16.9
%
Dollars

—

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Total

457,344

109,801

24.0
%
40,766

8,999

22.1
%
59,344

10,014

16.9
%
Automobile and other secured loans

Pesos

157,946

30,916

19.6
%
78,980

17,271

21.9
%
133,740

32,678

24.4
%
Dollars

—

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Total

157,946

30,916

19.6
%
78,980

17,271

21.9
%
133,740

32,678

24.4
%
Corporate unsecured loans

Pesos

4,041,754

1,076,056

26.6
%
2,418,252

819,097

33.9
%
1,769,763

561,635

31.7
%
Dollars

—

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Total

4,041,754

1,076,056

26.6
%
2,418,252

819,097

33.9
%
1,769,763

561,635

31.7
%
Personal loans

Pesos

12,443,671

6,104,346

49.1
%
7,884,433

3,631,979

46.1
%
5,170,131

2,144,410

41.5
%
Dollars

—

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Total

12,443,671

6,104,346

49.1
%
7,884,433

3,631,979

46.1
%
5,170,131

2,144,410

41.5
%
Credit Card Loans

Pesos

6,124,034

1,802,651

29.4
%
5,399,079

1,733,539

32.1
%
4,108,877

1,289,162

31.4
%
Dollars

241,143

62

0.0
%
145,684

67

0.0
%
84,161

224

0.3
%
Total

6,365,177

1,802,713

28.3
%
5,544,763

1,733,606

31.3
%
4,193,038

1,289,386

30.8
%

Year ended December 31,

2017

2016

2015

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Receivables from financial leases

Pesos

1,772,213

440,811

24.9
%
1,310,083

359,116

27.4
%
834,193

207,296

24.8
%
Dollars

191,606

14,040

7.3
%
7,606

471

6.2
%
2,958

115

3.9
%
Total

1,963,819

454,851

23.2
%
1,317,689

359,587

27.3
%
837,151

207,411

24.8
%
Total Loans excl. Foreign trade and U$S loans

Pesos

34,944,973

12,212,959

34.9
%
23,693,989

8,726,768

36.8
%
16,909,022

5,686,472

33.6
%
Dollars

668,167

22,471

3.4
%
179,062

1,420

0.8
%
99,649

1,014

1.0
%
Total

35,613,140

12,235,430

34.4
%
23,873,051

8,728,188

36.6
%
17,008,671

5,687,486

33.4
%
Foreign Trade Loans and U$S loans

Pesos

—

—

0
%
—

—

0.0
%
—

—

0.0
%
Dollars

7,218,244
��
361,112

5.0
%
2,375,825

130,047

5.5
%
645,829

42,975

6.7
%
Total

7,218,244

361,112

5.0
%
2,375,825

130,047

5.5
%
645,829

42,975

6.7
%
Total Loans

Pesos

34,944,973

12,212,959

34.9
%
23,693,989

8,726,768

36.8
%
16,909,022

5,686,472

33.6
%
Dollars

7,886,411

383,583

4.9
%
2,554,887

131,467

5.1
%
745,478

43,989

5.9
%
Total

42,831,384

12,596,542

29.4
%
26,248,876

8,858,235

33.7
%
17,654,500

5,730,461

32.5
%
Other receivables from financial transactions(3)

Pesos

1,642,667

391,933

23.9
%
692,438

218,755

31.6
%
159,750

35,164

22.0
%
Dollars

1,236

239

19.3
%
1,625

187

11.5
%
143,294

18,408

12.8
%
Total

1,643,903

392,172

23.9
%
694,063

218,942

31.5
%
303,044

53,572

17.7
%
Total interest-earning assets

Pesos

43,001,219

14,153,078

32.9
%
27,675,131

10,015,018

36.2
%
19,322,972

6,276,271

32.5
%
Dollars

9,675,130

821,383

8.5
%
3,260,920

326,901

10.0
%
1,196,874

181,837

15.2
%
Total

52,676,349

14,974,461

28.4
%
30,936,051

10,341,919

33.4
%
20,519,846

6,458,108

31.5
%
Non interest-earning assets

Cash and due from banks

Pesos

6,506,050

4,804,565

3,339,803

Dollars

4,609,488

2,149,089

1,000,228

Total

11,115,538

6,953,654

4,340,031

Unlisted equity Investments

Pesos

1,580

7,806

5,973

Dollars

6

1

1

Total

1,586

7,807

5,974

Premises and equipment and miscellaneous and intangible assets and unallocated items

Pesos

1,297,229

1,022,713

878,180

Dollars

—

—

—

Total

1,297,229

1,022,713

878,180

Allowance for loan losses

Pesos

(1,061,319
)

(705,117
)

(510,429
)

Dollars

(85,189
)

(30,459
)

(17,879
)

Total

(1,146,508
)

(735,576
)

(528,308
)

Other assets

Pesos

4,987,001

2,929,059

1,635,717

Dollars

667,947

353,385

109,725

Total

5,654,948

3,282,444

1,745,442

Total non interest-earning assets

Pesos

11,730,541

8,059,026

5,349,245

Dollars

5,192,252

2,472,016

1,092,075

Total

16,922,793

10,531,042

6,441,320

Total Assets

Pesos

54,731,760

35,734,156

24,672,217

Dollars

14,867,382

5,732,937

2,288,948

Total

69,599,142

41,467,093

26,961,165

Year ended December 31,

2017

2016

2015

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

LIABILITIES

Interest-bearing liabilities

Special checking accounts

Pesos

4,139,446

633,945

15.3
%
—

—

0.0
%
—

—

0.0
%
Dollars

1,178,635

3,751

0.3
%
—

—

0.0
%
—

—

0.0
%
Total

5,318,081

637,696

12.0
%
—

—

0.0
%
—

—

0.0
%
Time deposits

Pesos

12,567,904

2,299,676

18.3
%
11,646,092

3,071,579

26.4
%
8,950,016

2,221,941

24.8
%
Dollars

1,325,298

8,382

0.6
%
806,650

10,282

1.3
%
337,459

2,807

0.8
%
Total

13,893,202

2,308,058

16.6
%
12,452,742

3,081,861

24.7
%
9,287,475

2,224,748

24.0
%
Borrowings from other financial institutions and unsubordinated negotiable obligations

Pesos

7,262,083

1,835,753

25.3
%
2,332,394

734,321

31.5
%
1,530,080

420,682

27.5
%
Dollars

701,896

24,345

3.5
%
217,832

7,390

3.4
%
121,831

2,994

2.5
%
Total

7,963,979

1,860,098

23.4
%
2,550,226

741,711

29.1
%
1,651,911

423,676

25.6
%
Subordinated Loans and negotiable obligations

Pesos

—

—

0.0
%
—

—

0.0
%
—

—

0.0
%
Dollars

1,319,046

128,237

9.7
%
1,285,162

128,027

10.0
%
800,088

81,282

10.2
%
Total

1,319,046

128,237

9.7
%
1,285,162

128,027

10.0
%
800,088

81,282

10.2
%
Total interest-bearing liabilities

Pesos

23,969,433

4,769,374

19.9
%
13,973,486

3,805,899

27.2
%
10,480,095

2,642,623

25.2
%
Dollars

4,524,875

164,715

3.6
%
2,309,644

145,699

6.3
%
1,259,378

87,083

6.9
%
Total

28,494,308

4,934,089

17.3
%
16,288,130

3,951,598

24.3
%
11,739,473

2,729,706

23.3
%
Low and non-interest bearing liabilities and stockholders’ equity

Savings accounts

Pesos

8,991,324

2,569

0.0
%
6,192,384

740

0.1
%
4,616,801

4,556

0.1
%
Dollars

3,848,201

1,133

0.0
%
1,238,934

3,899

0.1
%
286,894

274

0.1
%
Total

12,839,525

3,702

0.0
%
7,431,318

4,639

0.1
%
4,903,695

4,830

0.1
%
Demand deposits

Pesos

6,721,340

6,541,618

4,766,900

Dollars

2,762,491

601,764

99,828

Total

9,483,831

7,143,382

4,866,728

Special checking accounts

Pesos

—

1,749,023

1,117,708

Dollars

—

—

—

Total

—

1,749,023

1,117,708

Other liabilities

Pesos

7,024,815

4,618,267

3,117,904

Dollars

2,154,935

878,693

171,114

Total

9,179,750

5,496,961

3,289,018

Non-controlling interest result

Pesos

20,944

120,803

67,500

Dollars

—

—

—

Total

20,944

120,803

67,500

Stockholders’ equity

Pesos

9,580,785

4,986,499

2,094,750

Dollars

—

—

—

Total

9,580,785

4,986,499

2,094,750

Total low and non-interest- Bearing Deposits

Pesos

32,339,208

22,459,572

14,663,855

Dollars

8,765,627

2,719,391

557,836

Total

41,104,835

25,178,963

15,221,691

Year ended December 31,

2017

2016

2015

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

Average Balance

Interest Earned/
(Paid)

Average Nominal
Rate

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Pesos

56,308,640

36,438,058

25,143,950

Dollars

13,290,502

5,029,035

1,817,214

Total

69,599,142

41,467,093

26,961,165

Year ended December 31,
2020 2019 2018
Average Balance Interest Earned Average Nominal Rate Average Balance Interest Earned Average Nominal Rate Average Balance Interest Earned Average Nominal Rate

(in thousands of Pesos)
ASSETS
Interest-Earning Assets
Investment Portfolio
Government and Corporate Securities 14,065,519 6,519,284 46.3 % 15,420,527 2,690,992 17.5 % 17,298,975 5,646,651 32.6 %
Pesos 13,003,292 5,347,276 41.1 % 9,671,162 4,087,735 42.3 % 9,581,398 2,312,125 24.1 %
Dollars 1,062,227 1,172,008 110.3 % 5,749,365 (1,396,743 ) -24.3 % 7,717,577 3,334,526 43.2 %
Securities Issued by the Central Bank 47,584,764 17,864,302 37.5 % 41,141,175 25,478,678 61.9 % 31,310,188 12,934,405 41.3 %
Pesos 47,584,764 17,864,302 37.5 % 41,141,175 25,478,678 61.9 % 31,310,188 12,934,405 41.3 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
166
~~(1)~~         ~~Includes senior and subordinated bonds and participation certificates.~~
~~(2)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
~~(3)~~         ~~Includes overnight deposit and unlisted corporate bonds.~~
Year ended December 31,
2020 2019 2018
Average Balance Interest Earned Average Nominal Rate Average Balance Interest Earned Average Nominal Rate Average Balance Interest Earned Average Nominal Rate
Total Investment Portfolio 61,650,283 24,383,587 39.6 % 56,561,702 28,169,670 49.8 % 48,609,163 18,581,056 38.2 %
Pesos 60,588,056 23,211,578 38.3 % 50,812,337 29,566,413 58.2 % 40,891,586 15,246,530 37.3 %
Dollars 1,062,227 1,172,009 110.3 % 5,749,365 -1,396,743 -24.3 % 7,717,577 3,334,526 43.2 %
Loans
Loans to the Financial Sector 210,337 55,079 26.2 % 756,381 258,444 34.2 % 1,908,745 517,405 27.1 %
Pesos 169,972 52,551 30.9 % 663,560 249,330 37.6 % 1,906,925 517,402 27.1 %
Dollars 40,365 2,528 6.3 % 92,821 9,114 9.8 % 1,820 3 0.1 %
Overdrafts 6,633,775 2,678,469 40.4 % 9,537,781 6,217,172 65.2 % 14,336,208 6,807,778 47.5 %
Pesos 6,633,427 2,678,469 40.4 % 9,536,568 6,217,172 65.2 % 14,335,383 6,807,778 47.5 %
Dollars 348 — 0.0 % 1,213 — 0.0 % 825 — 0.0 %
Promissory notes 14,838,492 6,226,382 42.0 % 12,720,435 8,002,945 62.9 % 23,025,238 8,539,123 37.1 %
Pesos 14,558,215 6,200,225 42.6 % 11,412,336 7,892,654 69.2 % 21,174,772 8,445,396 39.9 %
Dollars 280,277 26,157 9.3 % 1,308,099 110,291 8.4 % 1,850,466 93,727 5.1 %
Mortgage loans 10,646,858 3,994,607 37.5 % 11,186,422 5,148,348 46.0 % 10,088,261 4,123,314 40.9 %
Pesos 10,646,858 3,994,607 37.5 % 11,186,422 5,148,348 46.0 % 10,088,261 4,123,314 40.9 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
Automobile and Other Secured Loans 1,591,768 738,403 46.4 % 2,513,711 943,454 37.5 % 4,113,190 1,030,844 25.1 %
Pesos 1,591,768 738,403 46.4 % 2,513,711 943,454 37.5 % 4,113,190 1,030,844 25.1 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
Personal Loans 21,244,137 14,173,544 66.7 % 31,223,272 17,584,460 56.3 % 53,574,163 22,887,135 42.7 %
Pesos 21,244,137 14,173,544 66.7 % 31,223,272 17,584,460 56.3 % 53,574,163 22,887,135 42.7 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
Corporate Unsecured Loans 17,479,098 5,981,812 34.2 % 14,778,530 8,360,682 56.6 % 18,789,319 6,322,241 33.6 %
Pesos 17,479,098 5,981,812 34.2 % 14,778,530 8,360,682 56.6 % 18,789,319 6,322,241 33.6 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
Credit Card Loans 16,077,757 3,818,628 23.8 % 16,664,402 6,555,201 39.3 % 23,149,022 7,147,139 30.9 %
Pesos 15,851,660 3,818,598 24.1 % 15,976,411 6,554,938 41.0 % 22,400,293 7,147,027 31.9 %
Dollars 226,097 30 0.0 % 687,991 263 0.0 % 748,729 112 0.0 %
Receivables from Financial Leases 3,686,050 704,408 19.1 % 6,043,733 1,537,851 25.4 % 8,578,770 1,929,148 22.5 %
Pesos 1,570,351 530,528 33.8 % 3,383,514 1,328,411 39.3 % 6,366,391 1,745,122 27.4 %
Dollars 2,115,699 173,880 8.2 % 2,660,219 209,440 7.9 % 2,212,379 184,026 8.3 %
Total Loans excl. Foreign trade and U.S.$.loans 92,408,272 38,371,333 41.5 % 105,424,667 54,608,557 51.8 % 157,562,916 59,304,127 37.6 %
Pesos 89,745,486 38,168,738 42.5 % 100,674,324 54,279,449 53.9 % 152,748,697 59,026,259 38.6 %
Dollars 2,662,786 202,595 7.6 % 4,750,343 329,108 6.9 % 4,814,219 277,868 5.8 %
Foreign Trade Loans and U.S.$.loans 20,168,862 1,453,129 7.2 % 34,697,331 2,356,094 6.8 % 45,057,190 2,448,435 5.4 %
Pesos — — 0.0 % — — 0.0 % — — 0.0 %
Dollars 20,168,862 1,453,129 7.2 % 34,697,331 2,356,094 6.8 % 45,057,190 2,448,435 5.4 %
Total Loans 112,577,134 39,824,462 35.4 % 140,121,996 56,964,650 40.7 % 202,620,106 61,752,562 30.5 %
Pesos 89,745,486 38,168,738 42.5 % 100,674,324 54,279,450 53.9 % 152,748,698 59,026,259 38.6 %
Dollars 22,831,648 1,655,724 7.3 % 39,447,672 2,685,200 6.8 % 49,871,408 2,726,303 5.5 %
Repo transactions 16,983,342 4,345,360 25.6 % 1,336,898 812,483 60.8 % 343,295 106,665 31.1 %
Pesos 16,983,342 4,345,360 25.6 % 1,336,898 812,483 60.8 % 343,295 106,665 29.1 %
Dollars — — 0.0 % — — 0.0 % — — 0.0 %
Total Interest-Earning Assets 191,210,759 68,553,409 �� 35.9 % 198,020,596 85,946,803 43.4 % 251,572,564 80,440,283 32.0 %
Pesos 167,316,884 65,725,677 39.3 % 152,823,559 84,658,346 55.4 % 193,983,579 74,372,729 38.3 %
Dollars 23,893,875 2,827,732 11.8 % 45,197,037 1,288,457 2.9 % 57,588,985 6,067,555 10.5 %
Non Interest-Earning Assets
Cash and due from banks 40,910,473 54,570,757 57,845,323
Pesos 21,105,609 26,072,400 31,455,373
Dollars 19,804,864 28,498,357 26,389,950
Unlisted equity investments — 54 —
Pesos — — —
Dollars — 54 —
Premises and equipment and miscellaneous and intangible assets and unallocated items 16,025,586 10,944,181 7,864,232
Pesos 16,025,586 10,944,181 7,864,232
Dollars — — —
Allowance for loan losses (8,608,629 ) (8,646,608 ) (11,231,884 )
Pesos (7,304,691 ) (7,409,734 ) (10,631,700 )
Dollars (1,303,938 ) (1,236,874 ) (600,184 )
Other assets 16,818,132 17,737,722 19,567,229
Pesos 15,327,665 15,537,411 17,365,406
Dollars 1,490,467 2,200,311 2,201,823
167
Year ended December 31,
2020 2019 2018
Average
Balance Interest
Earned Average
Nominal
Rate Average
Balance Interest
Earned Average
Nominal
Rate Average
Balance Interest
Earned Average
Nominal
Rate
Total Non Interest-Earning Assets 65,145,562 74,606,106 74,044,900
Pesos 45,154,169 45,144,258 46,053,310
Dollars 19,991,393 29,461,848 27,991,590
Total Assets 256,356,321 272,626,702 325,617,464
Pesos 212,471,053 197,967,817 240,036,889
Dollars 43,885,268 74,658,885 85,580,575
Year ended December 31,
2020 2019 2018
Average
Balance Interest
Paid Average
Nominal
Rate Average
Balance Interest
Paid Average
Nominal
Rate Average
Balance Interest
Paid Average
Nominal
Rate

(in thousands of Pesos)
LIABILITIES
Interest-Bearing Liabilities
Special Checking Accounts 40,167,184 6,325,123 15.7 % 34,264,473 8,182,612 23.9 % 46,333,913 10,655,607 23.0 %
Pesos 31,600,583 6,301,439 19.9 % 20,274,728 8,132,562 40.1 % 35,382,052 10,612,368 30.0 %
Dollars 8,566,601 23,684 0.3 % 13,989,745 50,050 0.4 % 10,951,861 43,239 0.4 %
Time Deposits 71,509,506 19,574,998 27.4 % 63,863,152 27,030,920 42.3 % 58,737,757 13,602,673 23.2 %
Pesos 66,111,639 19,496,600 29.5 % 55,979,526 26,926,870 48.1 % 49,386,677 13,487,119 27.3 %
Dollars 5,397,867 78,398 1.5 % 7,883,626 104,050 1.3 % 9,351,080 115,554 1.2 %
Borrowings from Other Financial Institutions and Unsub Negotiable Obligations 15,418,939 2,386,793 15.5 % 29,484,398 10,845,924 36.8 % 50,509,247 11,482,209 22.7 %
Pesos 5,698,909 1,946,980 34.2 % 18,602,268 10,268,598 55.2 % 36,698,752 10,946,102 29.8 %
Dollars 9,720,030 439,813 4.5 % 10,882,130 577,326 5.3 % 13,810,495 536,107 3.9 %
Subordinated Loans and Negotiable Obligations 2,127,211 142,010 6.7 % 3,000,495 186,086 6.2 % 2,854,918 181,802 6.4 %
Pesos — — 0.0 % — — 0.0 % — — 0.0 %
Dollars 2,127,211 142,010 6.7 % 3,000,495 186,086 6.2 % 2,854,918 181,802 6.4 %
Total Interest-Bearing Liabilities 129,222,840 28,428,924 22.0 % 130,612,518 46,245,542 35.4 % 158,435,835 35,922,291 22.7 %
Pesos 103,411,131 27,745,019 26.8 % 94,856,522 45,328,030 47.8 % 121,467,481 35,045,589 28.9 %
Dollars 25,811,709 683,905 2.6 % 35,755,996 917,512 2.6 % 36,968,354 876,702 2.4 %
Low and Non-Interest Bearing Deposits 106,950,133 110,738,381 140,552,268
Savings Accounts 39,485,774 41,579 0.1 % 43,817,323 88,960 0.2 % 53,812,473 86,501 0.2 %
Pesos 27,852,328 38,450 0.1 % 22,705,198 82,889 0.4 % 29,910,562 80,166 0.3 %
Dollars 11,633,446 3,129 0.0 % 21,112,125 6,071 0.0 % 23,901,911 6,335 0.0 %
Checking Accounts 27,297,175 32,656,585 40,405,883
Pesos 25,448,014 20,570,858 23,569,617
Dollars 1,849,161 12,085,727 16,836,266
Other Liabilities 25,792,498 33,431,814 33,313,021
Pesos 22,563,103 26,990,818 29,969,221
Dollars 3,229,395 6,440,996 3,343,800
Non-Controlling Interest Result 157,192 316,768 586,673
Pesos 157,192 316,768 586,673
Dollars - - -
Stockholders’ equity 34,400,841 31,791,694 39,063,579
Pesos 34,400,841 31,791,694 39,063,579
Dollars - - -
Total Low and Non-Interest Bearing Deposits 127,133,480 142,014,184 167,181,629
Pesos 110,421,478 102,375,336 123,099,652
Dollars 16,712,002 39,638,848 44,081,977
Total Liabilities and Stockholders’ equity 256,356,320 272,626,702 325,617,464
Pesos 213,832,609 197,231,858 244,567,133
Dollars 42,523,711 75,394,844 81,050,331
168
Changes in Interest Income and Interest Expense; Volume and Rate Analysis

The following tables allocate, by currency of denomination, changes in our interest income and interest expense. The changes are segregated for each major category of interest-earning assets and interest-bearing liabilities into amounts attributable to changes in the average volume and changes in their respective nominal interest rates for the year ended December 31, ~~2017~~2020 compared to the year ended December 31, ~~2016~~2019, and for the year ended December 31, ~~2016~~2019 compared to the year ended December 31, ~~2015.~~2018. We have calculated volume variances based on movements in average balances over the period and rate variance based on changes in interest rates on average interest-earning assets and average interest-bearing liabilities. We have allocated variances caused by changes in both volume and rate to volume. As stated above under “Presentation of Financial and Other Information,” we have prepared our audited consolidated financial statements for 2020, 2019 and 2018 under IFRS.

Year ended
December 31,

2017/2016

2016/2015

Increase (Decrease) Due to Changes in

Increase (Decrease) Due to Changes in

Volume

Rate

Net Change

Volume

Rate

Net Change

(in thousands of Pesos)

ASSETS

Interest-earning assets

Investment portfolio

Government and corporate securities

Pesos

38,281

9,596

47,877

(6,506
)
25,834

19,328

Dollars

291,144

1,007

292,152

70,873

(44,904
)
25,969

Total

329,425

10,603

340,029

64,367

(19,070
)
45,297

Participation in our securitization trusts(1)

Pesos

(83,523
)
(130,091
)
(213,614
)
(20,392
)
99,206

78,813

Dollars

—

—

—

—

—

—

Total

(83,523
)
(130,091
)
(213,614
)
(20,392
)
99,206

78,813

Securities issued by the Central Bank

Pesos

857,663

(213,234
)
644,429

415,715

1,004

416,719

Dollars

—

(49,838
)
(49,838
)
49,036

802

49,838

Total

857,663

(263,072
)
594,591

464,751

1,806

466,557

Total Investment Portflolio

Pesos

754,320

(275,628
)
478,692

336,424

178,437

514,860

Dollars

265,128

(22,814
)
242,314

109,848

(34,041
)
75,807

Total

1,019,447

(298,442
)
721,005

446,272

144,396

590,668

Loans and financings:

Promissory notes(2)

Pesos

536,222

(227,042
)
309,180

184,363

64,290

248,653

Dollars

7,124

57

7,181

453

(246
)
207

Total

543,347

(226,986
)
316,361

184,816

64,044

248,860

Overdrafts

Pesos

268,324

(101,984
)
166,340

345,816

56,440

402,256

Dollars

—

—

—

—

—

Total

268,324

(101,984
)
166,340

345,816

56,440

402,256

Loans to the financial sector

Pesos

46,168

(30,077
)
16,091

64,872

(291
)
64,581

Dollars

306

—

306

—

—

—

Total

46,474

(30,077
)
16,397

64,872

(291
)
64,581

Mortgage Loans

Pesos

100,014

788

100,802

(4,101
)
3,086

(1,015
)
Dollars

—

—

—

—

—

—

Total

100,014

788

100,802

(4,101
)
3,086

(1,015
)
Automobile and other secured loans

Pesos

15,457

(1,812
)
13,645

(11,975
)
(3,432
)
(15,407
)
Dollars

—

—

—

—

—

—

Total

15,457

(1,812
)
13,645

(11,975
)
(3,432
)
(15,407
)
Corporate unsecured loans

Pesos

432,233

(175,274
)
256,959

219,653

37,809

257,462

Dollars

—

—

—

—

—

—

Total

432,233

(175,274
)
256,959

219,653

37,809

257,462

Personal loans

Pesos

2,236,572

235,795

2,472,367

1,250,348

237,221

1,487,569

Dollars

—

—

—

—

—

—

Total

2,236,572

235,795

2,472,367

1,250,348

237,221

1,487,569

Credit card Loans

Pesos

213,395

(144,284
)
69,112

414,259

30,119

444,377

Dollars

25

(30
)
(5
)
28

(185
)
(157
)
Total

213,420

(144,313
)
69,107

414,287

29,933

444,220

Year ended
December 31,

Year ended December 31,

2017/2016

2016/2015

2020/2019 2019/2018

Increase (Decrease) Due to Changes in

Increase (Decrease) Due to Changes in

Volume

Rate

Net Change

Volume

Rate

Net Change

Increase (Decrease) Due to Changes in
Receivables from financial leases

Volume Rate Net Change Volume Rate Net Change

(in thousands of Pesos)
ASSETS
Interest-Earning Assets
Investment Portfolio
Government and Corporate Securities (3,801,298 ) 7,629,591 3,828,293 516,096 (3,471,756 ) (2,955,660 )
Pesos

114,948

(33,253
)
81,695

130,449

21,370

151,820

1,370,254 (110,714 ) 1,259,541 37,941 1,737,670 1,775,611
Dollars

13,483

86

13,569

288

68

356

(5,171,553 ) 7,740,305 2,568,752 478,155 (5,209,425 ) (4,731,271 )
Total

128,430

(33,167
)
95,264

130,737

21,438

152,176

Total Loans excl. Foreign Trade and U$S loans

Securities Issued by the Central Bank 2,419,056 (10,033,432 ) (7,614,376 ) 6,088,318 6,455,955 12,544,272
Pesos

3,932,119

(445,929
)
3,486,190

2,498,981

541,315

3,040,296

2,419,056 (10,033,432 ) (7,614,376 ) 6,088,318 6,455,955 12,544,272
Dollars

16,449

4,602

21,051

630

(224
)
406

- - - - - -
Total

3,948,568

(441,327
)
3,507,241

2,499,611

541,091

3,040,702

Foreign Trade Loans and U$S Loans

Total Investment Portfolio (1,382,242 ) (2,403,841 ) (3,786,083 ) 6,604,414 2,984,199 9,588,613
Pesos

—

—

—

—

—

—

3,789,311 (10,144,146 ) (6,354,835 ) 6,126,259 8,193,624 14,319,883
Dollars

242,255

(11,190
)
231,065

94,696

(7,624
)
87,072

(5,171,553 ) 7,740,305 2,568,752 478,155 (5,209,425 ) (4,731,271 )
Total

242,255

(11,190
)
231,065

94,696

(7,624
)
87,072

Loans
Loans to the Financial Sector (155,889 ) (47,476 ) (203,365 ) (458,256 ) 199,294 (258,961 )
Pesos (152,603 ) (44,176 ) (196,780 ) (467,190 ) 199,118 (268,072 )
Dollars (3,285 ) (3,300 ) (6,585 ) 8,935 176 9,111
Overdrafts (1,172,241 ) (2,366,462 ) (3,538,702 ) (3,128,490 ) 2,537,884 (590,606 )
Pesos (1,172,241 ) (2,366,462 ) (3,538,702 ) (3,128,490 ) 2,537,884 (590,606 )
Dollars - - - - - -
Promissory Notes 1,243,882 (3,020,444 ) (1,776,562 ) (6,797,329 ) 6,261,151 (536,178 )
Pesos 1,339,804 (3,032,233 ) (1,692,429 ) (6,751,601 ) 6,198,859 (552,741 )
Dollars (95,922 ) 11,789 (84,133 ) (45,729 ) 62,292 16,563
Mortgage loans (202,439 ) (951,302 ) (1,153,742 ) 505,408 519,625 1,025,034
Pesos (202,439 ) (951,302 ) (1,153,742 ) 505,408 519,625 1,025,034
Dollars - - - - - -
Automobile and Other Secured Loans (427,679 ) 222,628 (205,051 ) (600,322 ) 512,931 (87,390 )
Pesos (427,679 ) 222,628 (205,051 ) (600,322 ) 512,931 (87,390 )
Dollars - - - - - -
Personal Loans (6,657,824 ) 3,246,908 (3,410,916 ) (12,587,673 ) 7,284,999 (5,302,674 )
Pesos (6,657,824 ) 3,246,908 (3,410,916 ) (12,587,673 ) 7,284,999 (5,302,674 )
Dollars - - - - - -
Corporate Unsecured Loans 924,206 (3,303,076 ) (2,378,870 ) (2,269,030 ) 4,307,471 2,038,441
Pesos 924,206 (3,303,076 ) (2,378,870 ) (2,269,030 ) 4,307,471 2,038,441
Dollars - - - - - -
Credit Card Loans (30,113 ) (2,706,459 ) (2,736,572 ) (2,635,668 ) 2,043,730 (591,938 )
Pesos (30,052 ) (2,706,287 ) (2,736,340 ) (2,635,645 ) 2,043,556 (592,089 )
Dollars (61 ) (171 ) (233 ) (23 ) 174 151
Receivables from Financial Leases (657,311 ) (176,132 ) (833,443 ) (1,135,857 ) 744,560 (391,297 )
Pesos (612,560 ) (185,323 ) (797,883 ) (1,171,116 ) 754,404 (416,711 )
Dollars (44,752 ) 9,192 (35,560 ) 35,259 (9,844 ) 25,415
Total Loans excl. Foreign trade and U.S.$.loans (7,135,408 ) (9,101,816 ) (16,237,223 ) (29,107,217 ) 24,411,647 (4,695,570 )
Pesos (6,991,387 ) (9,119,325 ) (16,110,712 ) (29,105,658 ) 24,358,848 (4,746,810 )
Dollars (144,020 ) 17,509 (126,511 ) (1,559 ) 52,798 51,239
Foreign Trade Loans and U.S.$.loans (1,046,749 ) 143,785 (902,965 ) (703,478 ) 611,136 (92,341 )
Pesos - - - - - -
Dollars (1,046,749 ) 143,785 (902,965 ) (703,478 ) 611,136 (92,341 )
Total Loans

(8,182,157 ) (8,958,031 ) (17,140,188 ) (29,810,695 ) 25,022,783 (4,787,912 )
Pesos

3,932,119

(445,929
)
3,486,190

2,498,981

541,315

3,040,296

(6,991,387 ) (9,119,325 ) (16,110,712 ) (29,105,658 ) 24,358,848 (4,746,810 )
Dollars

259,317

(7,201
)
252,116

93,107

(5,629
)
87,478

Total

4,191,437

(453,130
)
3,738,306

2,592,088

535,686

3,127,774

Other receivables from financial transactions(3)

Pesos

226,720

(53,542
)
173,178

168,287

15,304

183,591

Dollars

(75
)
127

52

(16,303
)
(1,918
)
(18,221
)
Total

226,645

(53,415
)
173,230

151,984

13,386

165,370

Total interest-earning assets

Pesos

5,044,306

(906,246
)
4,138,060

3,022,461

716,285

3,738,747

Dollars

544,543

(50,061
)
494,482

206,917

(61,853
)
145,064

Total

5,588,849

(956,307
)
4,632,542

3,229,378

654,433

3,883,811

LIABILITIES

Special checking accounts

Pesos

633,945

—

633,945

—

—

—

Dollars

3,751

—

3,751

—

—

—

Total

637,696

—

637,696

—

—

—

Time deposits

Pesos

168,673

(940,576
)
(771,903
)
711,072

138,566

849,638

Dollars

3,280

(5,180
)
(1,900
)
5,981

1,494

7,475

Total

171,953

(945,756
)
(773,803
)
717,052

140,060

857,113

Borrowings from other financial institutions and unsubordinated negotiable obligations

Pesos

1,246,156

(144,724
)
1,101,432

252,597

61,042

313,639

Dollars

16,790

165

16,955

3,257

1,139

4,396

Total

1,262,946

(144,559
)
1,118,387

255,854

62,181

318,035

Subordinated Loan

Pesos

—

—

—

—

—

—

Dollars

3,294

(3,084
)
210

48,323

(1,578
)
46,745

Total

3,294

(3,084
)
210

48,323

(1,578
)
46,745

Total interest-bearing liabilities

Pesos

1,987,972

(1,024,497
)
963,475

952,501

210,775

1,163,276

Dollars

80,639

(61,623
)
19,016

66,254

(7,638
)
58,616

Total

2,068,611

(1,086,120
)
982,491

1,018,755

203,137

1,221,892

Low & Non-Interest Bearing Deposits and Saving accounts

Pesos

800

(2,130
)
(1,330
)
992

(1,649
)
(657
)
Dollars

768

(375
)
393

569

(103
)
466

Total

1,568

(2,505
)
(937
)
1,561

(1,752
)
(191
)
169
Year ended December 31,
2020/2019 2019/2018

Increase (Decrease) Due to Changes in
Volume Rate Net Change Volume Rate Net Change
Dollars (1,190,770 ) 161,294 (1,029,476 ) (705,037 ) 663,934 (41,102 )
Repo transactions 4,003,302 (470,424 ) 3,532,878 603,850 108,694 712,543
Pesos 4,003,302 (470,424 ) 3,532,878 603,850 108,694 712,543
Dollars - - - - - -
Total Interest-Earning Assets (4,178,855 ) (9,428,455 ) (13,607,310 ) (29,206,845 ) 25,131,477 (4,075,368 )
Pesos (2,988,086 ) (9,589,749 ) (12,577,834 ) (28,501,808 ) 24,467,542 (4,034,266 )
Dollars (1,190,770 ) 161,294 (1,029,476 ) (705,037 ) 663,934 (41,102 )
LIABILITIES
Interest-Bearing Liabilities
Time Deposits 2,243,484 (4,100,972 ) (1,857,489 ) (6,048,955 ) 3,575,960 (2,472,995 )
Pesos 2,258,477 (4,089,600 ) (1,831,123 ) (6,059,823 ) 3,580,017 (2,479,806 )
Dollars (14,993 ) (11,372 ) (26,365 ) 10,868 (4,057 ) 6,811
Borrowings from Other Financial Institutions and Unsub Negotiable Obligations 2,951,900 (10,407,822 ) (7,455,922 ) 3,151,877 10,276,370 13,428,247
Pesos 2,988,003 (10,418,272 ) (7,430,270 ) 3,171,245 10,268,506 13,439,751
Dollars (36,103 ) 10,450 (25,653 ) (19,368 ) 7,864 (11,504 )
Subordinated Loans and Negotiable Obligations (4,460,896 ) (3,998,235 ) (8,459,130 ) (10,144,757 ) 9,508,472 (636,286 )
Pesos (4,408,313 ) (3,913,306 ) (8,321,619 ) (9,989,400 ) 9,311,897 (677,504 )
Dollars (52,583 ) (84,929 ) (137,512 ) (155,357 ) 196,575 41,218
Total Interest-Bearing Liabilities 734,488 (18,507,029 ) (17,772,542 ) (13,041,836 ) 23,360,802 10,318,966
Pesos 838,167 (18,421,179 ) (17,583,012 ) (12,877,979 ) 23,160,420 10,282,441
Dollars (103,679 ) (85,851 ) (189,530 ) (163,857 ) 200,382 36,525
Low and Non-Interest Bearing Deposits
Special Checking Accounts 4,556 (51,937 ) (47,381 ) (27,107 ) 29,565 2,459
Pesos 7,106 (51,545 ) (44,439 ) (26,304 ) 29,027 2,723
Dollars (2,549 ) (392 ) (2,942 ) (802 ) 538 (264 )

~~(1)~~         ~~Includes senior and subordinated bonds and participation certificates.~~
~~(2)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
~~(3)~~         ~~Includes overnight deposits and unlisted corporate bonds.~~
Interest-earning Assets: Net Interest Margin and Spread

The following table analyzes, by currency of denomination, our levels of average interest-earning assets and net interest income, and illustrates the comparative margins and spreads for each of the years indicated.

Year ended December 31,

Year ended
December 31,

2020 2019 2018

2017

2016

2015

(in thousands of Pesos, except percentages)

(in thousands of Pesos, except percentages)
Average interest-earning assets(1)(2)

Pesos

43,001,219

27,675,131

19,322,972

167,316,884 152,823,559 193,983,579
Dollars

9,675,130

3,260,920

1,196,874

23,893,875 45,197,037 57,588,985
Total

52,676,349

30,936,051

20,519,846

191,210,759 198,020,596 251,572,564
Net interest earned

Pesos

9,381,135

6,205,220

3,629,092

37,942,208 39,247,426 39,246,974
Dollars

655,535

180,462

94,480

2,140,699 364,875 5,177,793
Total

10,036,670

6,385,682

3,723,572

40,082,907 39,612,301 44,424,767
Net Interest Margin

Pesos

21.8
%
22.4
%
18.8
%
22.7 % 25.7 % 20.2 %
Dollars

6.8
%
5.5
%
7.9
%
9.0 % 0.8 % 9.0 %
Weighted average yield(3)

19.1
%
20.6
%
18.1
%
Weighted average yield⁽³⁾ 21.0 % 20.0 % 17.7 %
Yield Spread

Pesos

18.4
%
17.3
%
14.9
%
18.1 % 16.8 % 15.1 %
Dollars

6.5
%
5.9
%
9.5
%
10.0 % 1.2 % 9.1 %
Weighted interest spread(4)

16.5
%
16.8
%
15.0
%
Gross Yield

Pesos

32.9
%
36.2
%
32.5
%
Dollars

8.5
%
10.0
%
15.2
%
Weighted interest spread⁽⁴⁾ 19.0 % 16.8 % 15.0 %
170
Year ended December 31,
2020 2019 2018
Gross Yield
Pesos 39.3 % 55.4 % 38.3 %
Dollars 11.8 % 2.9 % 10.5 %

~~(1)~~         Includes all loans, leasing agreements and investments (including public and private bonds, Central Bank notes and securitization securities) and other receivables from financial intermediation that earn interest.
~~(2)~~         ~~These figures represent daily averages.~~
~~(3)~~         ~~Takes into account the average interest earned on interest-earning assets and is weighted in accordance with the volume of each asset.~~
~~(4)~~         ~~Takes into account the average interest earned on interest-earning assets, net of average interest paid on interest-bearing liabilities.~~
(1) Includes all loans, leasing agreements and investments (including public and private bonds and Central Bank notes) and other receivables from financial intermediation that earn interest.
(2) These figures represent daily averages.
(3) Takes into account the average interest earned on interest-earning assets and is weighted in accordance with the volume of each asset.
(4) Takes into account the average interest earned on interest-earning assets, net of average interest paid on interest-bearing liabilities.

Investment Portfolio

We own, manage and trade a portfolio of securities issued by the Argentine government, the Central Bank, and other public sector and corporate issuers. ~~We also hold senior and subordinated bonds and participation certificates in financial trusts created in connection with our securitization transactions.~~ The following table sets out our investments in Argentine and other governments and corporate securities, ~~including holdings in senior and subordinated bonds and participation certificates in financial trusts~~ as of December 31, ~~2017, 2016~~2020 and ~~2015~~2019 by type and currency of denomination.

Year ended December 31,

2017

2016

2015

(in thousands of Pesos)

LISTED GOVERNMENT SECURITIES

Holdings of Trading Securities

LOCAL

In Pesos:

Argentine sovereign bonds in Pesos maturity 2020

7,288

—

—

Argentine sovereign bonds in Pesos maturity 2019

—

33,161

—

Argentine sovereign bonds in Pesos maturity 2018

—

20,511

—

Argentine sovereign bonds in Pesos maturity 2017

—

3,270

—

National Treasury Bonds maturity 09/30/2016 (BONAC)

—

—

6,345

National Treasury Bonds maturity 05/09/2016 (BONAC)

—

—

10,145

National Treasury Bonds maturity 2016 (BONAR)

—

—

6,150

Consolidated bonds

—

—

1,027

Securities denominated in Pesos discount

—

158

—

Secured government bonds in Pesos (Decree 1579/02) 2018

4

—

7

Others

—

—

—

In Foreign Currency:

Treasury Bills in dollars

1,051,554

—

—

Year ended December 31,

2017

2016

2015

(in thousands of Pesos)

Argentine sovereign bonds in dollars 8.28% maturity 2033

—

—

8,446

Argentine sovereign bonds in dollars 8.75% maturity 2024

53,571

—

183

Argentine sovereign bonds in dollars 8% maturity 2020 BONAR XX

65,915

14

—

Argentine sovereign bonds in dollars 7% maturity 2017

—

20

—

Argentine sovereign bonds in dollars 7.5% maturity 04 2026

8,636

—

—

Securities denominated in dollars discount maturity 2033

—

155

—

Argentine sovereign bonds in dollars 0.75%, maturity 2017 (BONAD)

—

—

56,505

Argentine sovereing bonds in dollars 1.75% maturity 2016 (BONAD)

—

—

13

Argentine sovereign bonds in dollars 7% maturity 2017 (BONAR X)

—

—

54,025

Argentine sovereign bonds in dollars 2.40% maturity 2018

—

42,815

79,203

Argentine sovereign bonds in dollars 4% maturity 2016 (BAADE)

—

—

7,579

Argentine sovereign bonds in dollars 0.75% maturity 2017

—

25,137

—

Others

228

2

—

Total listed government securities

1,187,196

125,243

229,628

UNLISTED GOVERNMENT SECURITIES

In Forign Currency:

Treasury Bills in dollars, maturity 2017

505,149

818,853

—

Argentine sovereign bonds in U.S. dollars 9% maturity 2018

437

—

—

Others

3,003

—

—

Total unlisted government securities

508,589

818,853

—

SECURITIES ISSUED BY THE ARGENTINE CENTRAL BANK

Listed

Central Bank Bills in Pesos

13,611,524

336,785

645,218

Unlisted

Central Bank Bills in Pesos

103

1,077,268

46,028

Total securities issued by the Argentine Central Bank

13,611,627

1,414,053

691,246

INVESTMENTS IN LISTED CORPORATE SECURITIES

LOCAL

Others

38,624

1,895

11,008

Total investments in listed corporate securities

38,624

1,895

11,008

Total government and corporate securities

15,346,036

2,360,044

931,881

PARTICIPATION IN SECURITIZATION TRUSTS(1)

Financial trusts debt securities — senior

99,969

100,644

664,933

Financial trusts debt securities — subordinated

—

—

167

Financial trusts participation certificates

470,238

530,607

706,956

Total

570,207

631,251

1,372,056

12/31/2020 12/31/2019
Debt Securities at fair value through profit or loss
LOCAL
Government securities
Debt securities in Pesos maturity May 21, 2021 2,779,504 -
Treasury bonds in dollars maturity November 11, 2021 789,538 -
Treasy bonds maturity April 29, 2022 774,667 -
Debt securities in Pesos maturity January 29, 2021 476,999 -
Argentine sovereign bonds in Pesos maturity April 3, 2022 474,334 -
Treasury bonds maturity 2026 397,557 -
Treasury bonds maturity October 17, 2023 361,028 -
Treasury bonds in Pesos 1.5% March 25, 2024 332,965 -
Treasury bonds in Pesos 1.4% March 25, 2023 292,883 -
Debt securities maturity March 31, 2021 265,125 -
Treasury bonds in dollars 4% maturity August 5, 2021 429,244 -
Treasury bonds 2.5% maturity July 22, 2021 5,407 -
Debt securities in Pesos 8 serie (PR15) 4,447 -
Debt securities maturity September 13, 2019 - 215,497
Debt securities maturity November 15, 2019 - 171,963
Cupón Lecap S30G9 60% $ maturity February 26, 2020 - 30,848
Treasury bond in Pesos maturity June 21, 2020 - 10,518
Argentine sovereign bonds in dollars 5,625% maturity 2022 (A2E2) - 5,375
Argentine sovereign bonds in dollars 8% 2020 (AO20) - 6,077
Argentine sovereign bonds in dollars 8.75% 2024 (AY24) - 10,972
Bono Discount in Pesos maturity 2033 (DICP) 2,899
Argentine sovereign bonds in Pesos 2.5% maturity July 22, 2021 (TC21) - 20,406
Boncer 2020 (TC20) - 18,368
T.D. Pcia de Buenos Aires in Pesos maturity April 12, 2025 (PBA25) - 11,018
Bocon consolidation bond in Pesos 8 serie (PR15) - 25,644
Others 1,480,942 113,096
-
Securities issued by the Central Bank -
Liquidity Central Bank bills maturity January 7, 2021 298,179 -
Liquidity Central Bank bills maturity January 26, 2021 292,413 -
Liquidity Central Bank bills maturity December 31, 2021 15,000 -

Corporate Securities
On Ypf S.A. in Pesos maturity January 24, 2021 167,276 -
On Telecom in Pesos maturity December 10, 2023 162,500 -
On Telecom in Pesos maturity December 10, 2021 71,895 -
171
12/31/2020 12/31/2019
On Quickfood Clase 9 maturity November 24, 2022 - 1,464
Others - 129,817

Total debt securities at fair value through profit or loss 9,871,903 773,962
OTHER DEBT SECURITIES
Measure at fair value through changes in Other Comprehensive Income
LOCAL
Government securities
Treasury bonds in dollars maturity April 29, 2022 4,800,600 -
Treasury bonds in Pesos maturity March 25, 2024 526,331 -
Treasury bonds in Pesos maturity March 25, 2023 313,172 -
Treasury bonds in Pesos maturity March 18, 2022 250,000 -
Treasury bonds in Pesos maturity September 20, 2022 126,689 -
Treasury bonds maturity August 5, 2021 103,747 -
Treasury bonds maturity BONCER 2% 2026 100,395 -
Treasury bonds in Pesos 1.5% March 25, 2024 68,607 -
Treasury bonds in Pesos August 5, 2021 63,623 -
Treasury bonds T2V1 129,325 -
Treasury bonds TV22 218,126 -
Debt securities in Pesos maturity May 21, 2021 32,395 -

Securities issued by the Central Bank
Liquidity Central Bank bills maturity January 19, 2021 9,806,030 -
Liquidity Central Bank bills maturity January 5, 2021 3,979,284 -
Liquidity Central Bank bills maturity January 21, 2021 3,914,420 -
Liquidity Central Bank bills maturity January 7, 2021 3,673,231 -
Liquidity Central Bank bills maturity January 26, 2021 3,407,758 -
Liquidity Central Bank bills maturity January 28, 2021 3,400,862 -
Liquidity Central Bank bills maturity January 7, 2020 7,400,401
Liquidity Central Bank bills maturity January 8, 2020 1,249,822
Liquidity Central Bank bills maturity January 3, 2020 739,603
Liquidity Central Bank bills maturity January 6, 2020 339,021
Liquidity Central Bank bills maturity January 2, 2020 33,983

Corporate Securities
Others 32 44

Measure at amortized cost
LOCAL
Public bonds
Treasury bonds in Pesos maturity May 21, 2022 5,584,160 -
Treasury bonds in Pesos maturity April 3, 2022 253,422 -
Treasury bonds in Pesos T2V1 104,196 -
Treasury bonds maturity November 21, 2020 - 4,206,973
Others - 261,063

Securities issued by the Central Bank
Others - -

Corporate bonds
Others 3,571 7,429
Total other debt securities 40,859,976 14,238,339
Investments in equity instruments
Measured at fair value through profit and loss
LOCAL
Grupo Financiero Galicia SA 74,881 7,891
Pampa Energía S.A. 8,286 -
Loma Negra S.A. 3,179 -
Otros 785 -
~~(1)~~         ~~Included within “other receivables from financial transactions”. Consists mainly of participations in financial trusts created pursuant to our own securitization transactions.~~172
12/31/2020 12/31/2019
Measured at fair value through changes in Other Comprehensive Income
LOCAL
Others 29,197 ⁽¹⁾ 11,957

Total investments in equity instruments 116,328 19,848
Total 50,848,207 15,032,149

As(1)  Includes an equity investment in Play Digital SA. of ~~December 31, 2017, we held securities issued~~Ps. Thousands 19,954. The Company owns 3.487% of the shares of Play Digital S.A. Play Digital S.A. is a company fully owned by most banks operating in Argentina. It developed and launched MODO in late 2020 as a way to send and receive money with people you know, using their mobile phone numbers as ID without the ~~Central Bank~~need for a ~~total~~CBU (uniform banking key), alias account number or CVU (uniform virtual key). In the beggining of ~~approximately Ps.13.6 billion, in terms of market value and book value. These amounts exceeded 10% of our shareholders’ equity as of such dates and represented 14.5% of our total assets.~~
~~Remaining Maturity of Investment Portfolio~~
The following table analyzes the remaining maturities of our investment portfolio (including our holdings in senior and subordinated bonds and participation certificates in financial trusts) as of December 31, 2017 based on their terms when issued.

Maturing

Within
1 year

After 1
year but
within 5
years

After 5
years but
within 10
years

After 10
years

Total
Amount
as of
December
31, 2017

(Book value in thousands of Peso, except percentages)

LISTED GOVERNMENT SECURITIES

Holdings of Trading Securities

LOCAL

In Pesos:

Argentine sovereign bonds in Pesos maturity 2020

—

7,288

7,288

Secured government bonds in Pesos (Decree 1579/02) 2018

4

—

—

—

4

Others

—

—

—

—

—

In Foreign Currency:

Treasury Bills in dollars

1,051,554

—

—

—

1,051,554

Argentine sovereign bonds in dollars 8.75%, maturity 2024

—

—

53,571

—

53,571

Argentine sovereign bonds in dollars 8%, maturity 2020 BONAR XX

—

65,915

—

—

65,915

Argentine sovereign bonds in dollars 7,5% maturity 04 2026

—

8,636

—

—

8,636

Others

—

101

—

127

228

Total listed government securities

1,051,558

81,940

53,571

127

1,187,196

UNLISTED GOVERNMENT SECURITIES

In Pesos:

Social Security Consolidation Bonds

—

—

—

—

—

GDP Bonds Linked Securities in Pesos 2035

—

—

—

—

—

Consolidation bonds in dollars 5th Series

—

—

—

—

—

In Foreign Currency:

GDP Bonds linked securities USD 2035

—

—

—

—

—

Treasure letters in dollars

505,149

—

—

—

505,149

Argentine sovereign bonds in dollars 9 % maturity 2018

437

—

—

—

437

Others

3,003

—

—

—

3,003

Total unlisted government securities

508,589

—

—

—

508,589

SECURITIES ISSUED BY THE ARGENTINE CENTRAL BANK

Listed

Central Bank Bills in Pesos

13,611,524

—

—

—

13,611,524

Central Bank Notes in Pesos

—

—

—

—

—

Unlisted

Central Bank Bills in Pesos

103

—

—

—

103

Central Bank Notes in Pesos

—

—

—

—

—

Total securities issued by the Argentine Central Bank

13,611,627

—

—

—

13,611,627

INVESTMENTS IN LISTED CORPORATE SECURITIES

LOCAL

Others

38,624

—

—

—

38,624

Total investments in listed corporate securities

38,624

—

—

—

38,624

Total government and corporate securities

15,210,398

81,940

53,571

127

15,346,036

PARTICIPATION IN SECURITIZATION TRUSTS(1)

Financial trusts debt securities — senior

97,890

2,079

—

—

99,969

Financial trusts debt securities — subordinated

—

—

—

—

—

Financial trusts participation certificates

—

470,238

—

—

470,238

Total

97,890

472,317

—

—

570,207

Weighted average yield

29.3
%
42.1
%
83.2
%
76.0
%

~~(1)~~         ~~Included within “other receivables from financial transactions”. Consists mainly of participations in financial trusts created pursuant~~2021 also added a Peer to ~~our own securitization transactions.~~
~~Loan and Financing Portfolio~~
~~The following table analyzes our loan and financing portfolio by type as of December 31, 2017, 2016, 2015, 2014 and 2013.~~

Grupo Supervielle S.A.

As of
December 31,

2017

2016

2015

2014

2013

(in thousands of Pesos)

Loans and financings

To the non-financial public sector

32,607

4,306

8,778

12,666

15,699

To the financial sector

419,366

473,414

181,734

3,514

36,029

To the non-financial private sector and foreign residents:

Overdrafts

3,616,843

3,110,097

1,634,870

993,284

679,085

Promissory notes(1)(2)

14,665,561

9,101,773

5,707,289

5,296,100

4,272,286

Mortgage loans

1,549,765

78,057

50,032

69,554

83,660

Automobile and other secured loans

313,724

65,076

104,469

168,603

225,901

Personal loans

14,818,163

9,916,776

6,018,601

3,631,840

2,970,622

Credit card loans

7,966,037

6,678,578

5,677,922

3,688,328

2,410,111

Foreign trade loans and U.S. dollar loans

11,215,752

5,311,475

618,410

591,887

530,186

Others

1,890,153

1,056,104

763,469

557,827

410,710

Less: allowance for loan losses

(1,533,598
)
(899,147
)
(617,313
)
(417,023
)
(342,000
)
Total loans

54,954,373

34,896,509

20,148,261

14,596,580

11,292,289

Other receivables from financial transactions(3)

Unlisted corporate bonds

66,619

29,166

14,243

191,372

145,718

Others

955,649

669,119

423,640

243,246

107,028

Plus: accrued interest and adjustment receivables

—

1

1

1

1

Less: allowances

(10,326
)
(5,807
)
(5,944
)
(5,221
)
(4,439
)
Total other receivables from financial transactions

1,011,942

692,479

431,940

429,398

248,308

Receivables from financial leases

2,544,557

1,543,109

1,090,368

590,960

519,197

Less: Allowances for receivables from financial leases

(25,356
)
(15,254
)
(15,391
)
(7,114
)
(7,317
)
Total receivables from financial leases

2,519,201

1,527,855

1,074,977

583,846

511,880

Total financing

58,485,516

37,116,843

21,655,178

15,609,824

12,052,477

~~(1)~~         Consists of unsecured checks and accounts receivable deriving from factoring transactions, and unsecured corporate loans that totaled Ps.5,238.4 million, Ps.3,102.8 million, Ps.2,399.3 million, Ps.1,547.5 million and Ps.979.9 million as of December 31, 2017, 2016, 2015, 2014 and 2013, respectively.
~~(2)~~         ~~The Bank purchases promissory notes at less than face value. Documented interest~~Merchant solution for payments through a QR code. MODO is the difference between face value and the price paid for the promissory notes, plus accrued interest, and represents the income that will accrue during the life of the promissory note. The face value of the promissory note is listed under the item “Promissory notes.”
~~(3)~~         ~~Includes only line-items within other receivables from financial transactions that are considered financings under Argentine Banking GAAP.~~
~~As of December 31, 2017, our loan and financing portfolio (net of allowances for loan losses) amounted to Ps.58.5 billion,~~ a 57.6% increase when compared to December 31, 2016, driven by a 58.4% increase in loans to the non financial private sector compared to a 51.7% increase of the Argentine financial system as a whole (which includes private banks, public banks and other financial institutions). If we also consider the loan portfolio outstanding in each of the financial trusts created in connection with our securitizations, the annual increase in our loan and financing portfolio was 55.3%. Loans to the financial and non financial public sector as of December 31, 2017 amounted to Ps.452.0 million, Ps.25.4 million lower than the Ps.477.7 million outstanding as of December 31, 2016.
Loan and financing portfolio, including the loan portfolio outstanding in each of the financial trusts created in connection with our securitizations, is not a measure defined by Argentine Banking GAAP. This measure represents our loan and financing portfolio as of each period end derived from our balance sheet plus the loan portfolio outstanding in each of the financial trusts created in connection with our securitizations for the same periods. The measure is an important indicator of our loan origination and administration capacity. The loan portfolio outstanding in all of the financial trusts created in connection with our securitizations totaled Ps.1.3 billion, Ps.1.4 billion and Ps.2.7 billion as of December 31, 2017, 2016 and 2015, respectively. These measures have inherent limitations, such as the lack of comparability, the absence of a standard defining how to perform calculations so that these
calculations are uniformly applied and the fact that they are not audited. To mitigate these limitations, we have procedures in place to calculate these measures using the appropriate Argentine Banking GAAPstandalone app or ~~other regulations. Although these measures are frequently used~~it can be embedded in the ~~evaluation of performance, they have~~banking apps and intends to become a strong player in the ~~above mentioned limitations as analytical tools, and should not be considered in isolation, or as a substitute for, analysis of results as reported under Argentine Banking GAAP.~~digital payment segment.

The following table sets ~~forth information describing variations in our~~out the weighted average yield for each range of maturities, to debt securities that are not held at fair value:
Grupo Supervielle S.A.
As of December 31, 2020
Debt securities that are not held at fair value Within 1 year
After 1 year
through
5 years

After 5
year
through
10 years
After 10
years Total
Weighted average yield 30.8 % (18.5 )% - - (17.7 )%
The weighted average yield was calculated as the sum of each bond’s returns divided by the sum of each bond’s average holding considering their remaining maturity.
The following table sets out the aggregate book value of securities from a single issuer that exceeds 10% of Grupo Supervielle Shareholder´s Equity:
Single Issuer 12/31/2020 %Shareholder´s Equity
Argentine government 21,194,737 59 %
Central Bank 28,787,177 81 %
49,981,914
Loans and other Financing
Our loan and other financing portfolio ~~taking into account the impact~~are included in Note 26. Loans and The Other Financing of ~~transfers to~~our audited consolidated financial ~~trusts created in connection with our securitizations as of the dates indicated below:~~

Grupo Supervielle S.A.

As of December 31,

2017

2016

2015

2014

2013

(in thousands of Pesos)

Total loan and financing portfolio (net of allowances for loan losses)

58,485,516

37,116,843

21,655,178

15,609,824

12,052,477

Personal loan portfolio outstanding in each of the financial trusts (net of allowances for loan losses)(1)

1,423,852

1,367,117

2,465,621

2,613,915

2,176,414

Receivables from financial leases outstanding in each of the financial trusts (net of allowances for receivables from financial leases)(1)

(128,530
)
46,310

244,922

444,341

304,145

Total financing including loan and financing portfolio outstanding in each of our financial trusts

59,780,838

38,530,270

24,365,721

18,668,080

14,533,036

statements.
173
~~(1)~~ Net of allowances for loan losses and allowances for receivables from financial leases, which together totaled Ps.128.5, Ps.70.4 million, Ps.74.1 million, Ps.68.1 million and Ps.83.0 million for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, respectively.
Maturity Composition of the Loan and Other Financing ~~Portfolio~~

The following table analyzes our loan and other financing ~~portfolio~~ as of December 31, ~~2017~~2020 by type and by the time remaining to maturity. Loans and other financings are stated before deduction of allowances for loan losses.

Maturing

Within 1 year

After 1 year
through 5 years

After 5 years

Total
amount as of
December 31, 2017

(in thousands of Pesos except percentages)

Loans

To the non-financial public sector

5,976

26,631

—

32,607

To the financial sector

341,685

77,681

—

419,366

To the non-financial private sector and foreign residents:

—

—

—

Promissory notes(1)

12,985,730

1,679,831

—

14,665,561

Overdrafts

3,616,843

—

—

3,616,843

Mortgage loans

3,867

6,402

1,539,496

1,549,765

Automobile and other secured loans

284,083

29,641

—

313,724

Personal loans

6,399,231

8,317,398

101,534

14,818,163

Credit card loans

7,580,914

385,123

—

7,966,037

Foreign trade loans and U.S. dollar loans

6,479,097

4,678,069

58,586

11,215,752

Other loans

1,466,291

417,342

6,520

1,890,153

Total loans

39,163,717

15,618,118

1,706,136

56,487,971

Percentage of total loan portfolio

69.3
%
27.7
%
3.0
%
100.0
%

Other receivables from financial transactions

Unlisted corporate bonds

1,150

65,469

—

66,619

Others

316,984

638,665

—

955,649

Plus: accrued interests and adjustments receivable included in the debtor classification regulation

—

—

—

—

Total other receivables from financial transactions

318,134

704,134

—

1,022,268

Percentage of total loan portfolio

31.1
%
68.9
%
0.0
%
100.0
%

Total receivables from financial leases

929,260

1,609,311

5,986

2,544,557

Percentage of total portfolio of receivables from financial leases

36.5
%
63.3
%
0.2
%
100.0
%
Grupo Supervielle S.A.
Maturing as of December 31, 2020
Within 1
year
After 1
year
through
5 years

After 5
year
through
15 years
After 15
years Total

(in thousands of Pesos except percentages)
Loans and other financing

To the non-financial public sector 12,631 10,899 — — 23,530
To the financial sector 12,062 — — — 12,062
To the non-financial private sector and foreign residents:
Overdrafts 2,494,262 — — — 2,494,262
Promissory notes 27,798,404 2,103,495 1,470,899 — 31,372,798
Mortgage loans 1,458,636 341,445 1,216,141 7,396,497 10,412,719
Automobile and other secured loans 980,672 797,284 — — 1,777,956
Personal loans 4,271,810 15,122,254 453,249 93 19,847,406
Credit card loans 19,091,874 2,206 — — 19,094,080
Foreign trade loans and U.S. dollar loans 1,808,630 7,164,744 884,935 — 9,858,309
Others 14,838,916 1,179,779 16,973 — 16,035,668
Receivables from financial leases 1,331,896 1,552,995 6,219 — 2,891,110
Total loans and other financing 74,099,793 28,275,101 4,048,416 7,396,590 113,819,900

~~(1)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
Interest Rate Sensitivity

The following table analyzes the amount of our loan and other financing portfolio ~~as of December 31, 2017 by type of~~due after one year at fixed and variable interest rate. Loans and financings are stated before deduction of allowances for loan losses.

As of December 31, 2017

Loans

Other receivables from
financial transactions(1)

Receivables from
financial leases

Total

(in thousands of Pesos)

Variable rate

Ps.

2,420,476

17,314

401,359

2,839,149

Foreign currency

—

—

6,168

6,168

Sub Total

2,420,476

17,314

407,527

2,845,317

Fixed rate

Ps.

41,759,893

991,222

1,825,797

44,576,912

Foreign currency

12,307,602

13,732

311,233

12,632,567

Sub Total

54,067,495

1,004,954

2,137,030

57,209,479

Total

56,487,971

1,022,268

2,544,557

60,054,796

Grupo Supervielle S.A.
Amount due after one year at
Fixed interest rate Variable interest rate Total

(in thousands of Pesos except percentages)
Loans and other financing

To the non-financial public sector — 10.899 10.899
To the financial sector — — —
To the non-financial private sector and foreign residents:
Overdrafts
Promissory notes 2,654,185 920,209 3,574,394
Mortgage loans 5,746,791 3,207,292 8,954,083
Automobile and other secured loans 616,052 181,232 797,284
Personal loans 15,563,159 12.437 15,575,596
Credit card loans 2,206 — 2,206
Foreign trade loans and U.S. dollar loans 8,049,679 — 8,049,679
Others 1,196,752 — 1,196,752
Receivables from financial leases 1,231,356 327,858 1,559,214
Total loans and other financing 35,060,180 4,659,927 39,720,107

~~(1)~~         ~~Includes only line-items within other receivables from financial transactions that are considered financings under Argentine Banking GAAP.~~
~~Loans and Financings — Portfolio Classification~~
The following table presents our loan and other financing portfolio, before the deduction for allowances for loan losses, using the classification system of the Central Bank in effect at the end of each year indicated:

Grupo Supervielle S.A.

Year ended December 31,

2017

%

2016

%

2015

%

2014

%

2013

%

(in thousands of Pesos, except percentages)

Loan portfolio categories

Normal situation (1)

53,804,419

95.2
%
34,057,394

95.1
%
19,613,596

94.5
%
14,192,413

94.5
%
11,038,865

94.9
%
Subject to special monitoring-under observation- in negotiation or subject to refinancing agreements/low risk (2)

1,062,117

1.9
%
726,232

2.0
%
470,003

2.3
%
357,393

2.4
%
233,641

2.0
%
With problems/ medium risk (3)

772,064

1.4
%
498,572

1.4
%
264,492

1.3
%
176,231

1.2
%
152,207

1.3
%
High risk of insolvency/ high risk (4)

816,289

1.4
%
494,126

1.4
%
364,649

1.8
%
256,510

1.7
%
187,607

1.6
%
Uncollectible (5)

31,536

0.1
%
18,533

0.1
%
52,533

0.3
%
30,668

0.2
%
21,729

0.2
%
Uncollectible, classified as such under regulatory requirements (6)

1,546

0.0
%
799

0.0
%
301

0.0
%
387

0.0
%
242

0.0
%
Total loans

56,487,971

100
%
35,795,656

100.0
%
20,765,574

100.0
%
15,013,603

100.0
%
11,634,289

100.0
%

Other receivables from financial transactions portfolio categories

Normal situation (1)

910,419

89.1
%
648,582

92,9
%
407,884

93.1
%
422,043

97.1
%
243,131

96.2
%
Subject to special monitoring-under observation- in negotiation or subject to refinancing agreements/low risk (2)

44,922

4.4
%
20,568

2.9
%
13,022

3.0
%
4,587

1.1
%
3,718

1.5
%
With problems/ medium risk (3)

25,321

2.4
%
12,822

1.8
%
6,048

1.4
%
2,532

0.6
%
1,980

0.8
%
High risk of insolvency/ high risk (4)

37,862

3.7
%
14,746

2.1
%
7,902

1.8
%
3,822

0.9
%
3,066

1.2
%
Uncollectible (5)

3,720

0.4
%
1,562

0.2
%
3,028

0.7
%
1,633

0.4
%
850

0.3
%
Uncollectible, classified as such under regulatory requirements (6)

24

0.0
%
6

0.0
%
—

0.0
%
1

0.0
%
2

0.0
%
Total Other receivables from financial transactions

1,022,268

100
%
698,286

100.0
%
437,884

100.0
%
434,619

100.0
%
252,747

100.0
%

Categories of receivables from financial leases

Normal situation (1)

2,486,954

97.7
%
1,510,245

97.9
%
1,065,057

97.7
%
567,063

96.0
%
489,224

94.2
%
Subject to special monitoring-under observation- in negotiation or subject to refinancing agreements/low risk (2)

36,687

1.4
%
18,114

1.2
%
12,113

1.1
%
12,715

2.6
%
20,285

3.9
%
With problems/ medium risk (3)

6,125

0.1
%
5,331

0.3
%
1,674

0.2
%
6,010

1.0
%
3,099

0.6
%
High risk of insolvency/ high risk (4)

13,767

0.5
%
9,386

0.6
%
10,987

1.0
%
1,098

0.2
%
6,045

1.2
%
Uncollectible (5)

1,024

0.0
%
33

0.0
%
537

—

4,074

0.7
%
544

0.1
%
Uncollectible, classified as such under regulatory requirements

—

0.0
%
—

0.0
%
—

0.0
%
—

0.0
%
—

0.0
%
Total receivables from financial leases

2,544,557

100
%
1,543,109

100.0
%
1,090,368

100.0
%
590,960

100.0
%
519,197

100.0
%
~~(1)~~Current loans and loans up to 31 days past due on principal or interest. Borrower can readily service all financial obligations: shows strong cash flow, liquid current financial situation, adequate financial structure, punctual payment record, capable management, timely and precise available information and satisfactory internal controls. Borrower is determined to be in the top 50.0% of an industry that is performing well and has a good outlook.
~~(2)~~Debt payment is occasionally delinquent, with arrears from 31 to 90 days. Under observation: cash flow analysis indicates that, at the time made, the customer is able to honor all financial commitments. However, there are potential situations that, unless timely controlled or corrected, may affect the customer’s future payment capacity. Under negotiation or with refinancing agreements includes customers that, upon their inability to pay their obligations on agreed upon conditions, state their intention to refinance their debts within 60 days computed from the date of their default in payment.
~~(3)~~Debt is in arrears at least 91 days and up to 180 days. Cash flow analysis evidences difficulties in servicing of debt on agreed terms, such that if the problems are not solved, they may result in some loss.
~~(4)~~Judicial proceedings demanding payment have been initiated against the borrower, or the borrower is delinquent with arrears greater than 180 days and up to one year. Cash flow analysis demonstrates that full repayment of the borrower’s obligations is highly improbable.
~~(5)~~Loans to insolvent or bankrupt borrowers, or borrowers subject to judicial proceedings, with little or no possibility of collection, or in arrears in excess of one year. Loans in this category are considered total losses. Although these assets could have a possibility of recovery under certain future circumstances, lack of collectability is evident as of the date of analysis.
~~(6)Loans to borrowers indicated by the Central Bank to be more than 180 days in arrears to any liquidated or bankrupt financial entity.~~
Amounts Past Due ~~and Non-accrual~~ Loans and Other Financing

The following table analyzes ~~our non-accrual loan and other financing portfolio, by type of loan as of the dates indicated, as well as~~ amounts past due in our loan and other financing portfolio, by type of loan and other financing as of the dates indicated.
The past due loans listed in the table below include loans of the Bank, Tarjeta, Espacio Cordial, CCF and ~~CCF~~MILA past due more than 90 ~~days and Cordial Microfinanzas loans past due more than 30~~ days.

Our policy for placing Bank and CCF loans on non-accrual status is prescribed by Central Bank regulations, which consider both quantitative and qualitative factors. Loans are deemed either “With problems/Medium risk,” “High risk of insolvency/High risk” or “Uncollectible.” Loans deemed “With problems/Medium risk” are those loans to individuals that are in arrears at least 91 days and up to 180 days, or those loans to businesses for which cash flow analysis suggests problems in normal servicing of existing debt, such that if the problems are not resolved, we may incur some loss. Loans deemed “High risk of insolvency/High risk” are (i) those of borrowers against whom judicial proceedings have been initiated for payment, (ii) those whose borrowers are delinquent with arrears greater than 180 days and up to one year, and (iii) those for which cash flow analysis suggests that full repayment of the borrower’s obligations is highly improbable. Lastly, loans deemed “Uncollectible” are those (i) to insolvent or bankrupt borrowers, or borrowers subject to judicial proceedings, with little or no possibility of collection, or (ii) those in arrears in excess of one year. Loans in the “Uncollectible” category are considered total losses.

Grupo Supervielle S.A.

Year ended December 31,

2017

2016

2015

2014

2013

(in thousands of Pesos)

Non-Accrual Loans

To the non-financial private sector and foreign residents

Overdrafts

53,285

32,840

35,388

28,044

25,936

Promissory notes(1)

20,266

20,423

17,709

22,349

4,903

Unsecured corporate loans

34,389

24,313

36,125

10,159

13,472

Mortgage loans

—

4,473

207

403

1,018

Automobile and other secured loans

675

888

3,237

7,228

7,480

Personal loans

1,022,771

658,513

336,448

241,946

189,309

Credit card loans

458,846

282,414

244,396

152,331

119,772

Foreign Trade Loans

767

—

3,810

—

2,627

Other Loans

30,436

17,400

13,530

8,840

6,129

Total Non-Accrual Loans

1,621,435

1,041,264

690,850

471,300

370,645

Other receivables from financial transactions

Others

66,927

9,597

8,103

4,762

3,344

Total Non-Accrual Other receivables from financial transactions

66,927

9,597

8,103

4,762

3,344

Receivables from financial leases

20,916

14,750

13,198

11,182

9,688

Total Non-Accrual receivables from financial leases

20,916

14,750

13,198

11,182

9,688

Total Non-Accrual Financings

1,709,278

1,065,611

712,151

487,244

383,677

Non-Accrual Financings

With Preferred Guarantees

25,006

25,747

17,698

23,849

25,488

With Other Guarantees

—

—

—

—

—

Without Guarantees

1,684,272

1,039,864

694,352

463,299

358,172

Total Non-Accrual Financings

1,709,278

1,065,611

712,151

487,244

383,677

Grupo Supervielle S.A.

Year ended December31,

2017

2016

2015

2014

2013

(in thousands of Pesos)

Past Due Loans

To the non-financial private sector and foreign residents

Overdrafts

44,700

51,259

4,413

34,044

13,048

Promissory notes(1)

19,204

23,695

50,026

23,128

6,793

Unsecured corporate loans

51,364

46,789

141,557

36,397

15,476

Mortgage loans

—

6,141

47

5,685

957

Automobile and other secured loans

80

857

1,060

6,309

6,207

Personal loans

994,693

558,722

123,072

204,569

166,708

Credit card loans

309,950

202,698

256,475

115,312

95,504

Foreign trade loans

1,307

2,562

47,476

25,461

5,476

Other loans

32,941

13,102

36,629

8,434

5,088

Total Past Due Loans

1,454,238

905,825

660,755

459,339

315,257

Other receivables from financial transactions

Others

3,456

8,322

1,946

2,870

1,857

Total Past Due Other receivables from financial transactions

3,456

8,322

1,946

2,870

1,857

Receivables from financial leases

42,312

21,602

113,375

19,168

9,593

Total Past Due Financings

1,500,006

935,749

776,076

481,377

326,707

Past Due Financings

With Preferred Guarantees

65,418

70,901

119,075

70,821

24,792

Without Guarantees

1,434,588

864,848

657,001

410,556

301,915

Total Past Due Financings

1,500,006

935,749

776,076

481,377

326,707

~~(1)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
Grupo Supervielle S.A.
Year ended December 31,
2020 2019
Past Due
Loans and other Financing
To the non-financial private sector and foreign residents
Overdrafts 279,875 1,561,082
Promissory notes 145,140 335,371
Mortgage loans 517,280 1,017,494
Automobile and other secured loans 182,886 41,376
Personal loans 165,187 1,495,352
Credit card loans 149,913 736,149
Foreign trade loans 1,812,301 3,157,785
Other loans 513,524 878,013
Receivables from financial leases 95,994 366,414
Total Past Due Loans and other financing 3,862,100 9,589,036
Past Due Financings
With Preferred Guarantees 2,280,213 3,393,969
Without Guarantees 1,581,887 6,195,067
Total Past Due Financings 3,862,100 9,589,036

~~Risk Element — Interest~~
The following table analyzes the gross interest income that would have been recorded in the year ended December 31, 2017 if the loans had been current in accordance with their original terms and had been outstanding throughout the period or since origination, if held for part of the period, as well as the amount of interest income on those loans that was included in net income for the period.
~~As of December 31, 2017~~
~~(in thousands of Pesos)~~
~~Interest income that would have been recorded on non-accrual loans on which the accrual of interest was discontinued~~
~~180,181~~
~~Interest on loans classified as non-accrual included in net income~~
~~112,969~~
Analysis of the Allowance for Loan Losses

The ~~Central Bank’s regulations require financial institutions to classify certain consumer or housing loans in excess~~analysis of ~~Ps.5.0 billion as commercial loans, and allow financial institutions to classify certain commercial loans of up to Ps.5.0 billion as consumer and housing loans. See “~~~~Argentine Banking Regulation—Liquidity and Solvency~~~~Requirements—Debt Classification and Loan Loss Provisions—Credit Portfolio~~.” As of December 31, 2017 we did not hold any consumer or housing loans in excess of Ps.5.0 billion classified as commercial loans and we held commercial loans for less than Ps.5.0 billion for which we applied the consumer and housing loan classification for a total amount of Ps.4.3 billion. The estimated impact derived from the application of this classification on our loan loss provisions and allowance for loan losses for the year ended December 31, 2017 was an increase of Ps.6.5 million in both items.
~~The table below sets forth annual variations in~~ the allowances for loan losses ~~for the years ended December 31,~~ ~~2017, 2016, 2015, 2014~~are included in Note 1.11 and ~~2013.~~26 of our audited consolidated financial statements. See “” Item 5.A Operating Results—Critical Accounting Policies—Allowances for Loan ~~Losses~~Losses”.~~” Amounts below include~~
The following table analyses the ratio of allowances for loans ~~leasing and other receivables from financial transactions.~~losses to total loans:

Grupo Supervielle S.A.

Year ended December 31,

2017

2016

2015

2014

2013

(in thousands of Pesos)

Balance at the beginning of the year

920,208

638,648

429,358

353,756

295,691

Provisions charged to income

1,820,169

1,057,637

543,844

356,509

350,535

Write-offs and reversals(1)

(1,194,018
)
(776,077
)
(334,554
)
(280,907
)
(296,985
)
Other adjustments

23,575

—

—

—

4,515

Balance at the end of year

1,569,934

920,208

638,648

429,358

353,756

Provisions net of write-offs and reversals

1.5
%
1.1
%
1.2
%
0.6
%
0.6
%

Provisions charged to income

Promissory notes(2)

63,519

58,557

2,228

33,143

18,218

Unsecured corporate loans

37,305

34,929

31,089

15,163

10,764

Overdrafts

40,755

67,737

27,392

17,752

14,967

Mortgage loans

14,253

2,348

58

219

984

Automobile and other secured loans

3,499

1,512

941

3,928

5,831

Personal loans

1,091,171

542,792

265,770

140,817

138,146

Credit cards loans

403,312

231,421

185,849

126,429

112,726

Foreign Trade Loans

59,942

67,737

1,820

4,497

3,483

Other financings

46,363

14,943

8,507

4,179

34,213

Other receivables from financial transactions

42,750

11,453

5,957

6,366

4,508

Receivables from financial leases

17,300

24,208

14,233

4,016

6,695

1,820,169

1,057,637

543,844

356,509

350,535

Write-offs and reversals

Promissory notes(2)

(22,167
)
(40,049
)
(6,858
)
(18,328
)
(14,477
)
Unsecured corporate loans

(13,019
)
(39,488
)
(4,403
)
(9,191
)
(8,315
)
Overdrafts

(23,682
)
(32,948
)
(10,895
)
(9,721
)
(8,658
)
Mortgage loans

—

—

(294
)
(369
)
(601
)
Automobile and other secured loans

(1,098
)
(2,636
)
(2,608
)
(4,293
)
(8,538
)
Personal loans

(759,000
)
(372,784
)
(186,248
)
(142,797
)
(135,489
)
Credit cards loans

(311,091
)
(254,072
)
(108,206
)
(79,733
)
(101,030
)
Foreign Trade Loans

—

—

—

(3,842
)
(1,202
)
Other financings

(19,208
)
(14,393
)
(3,852
)
(2,857
)
(9,016
)
Other receivables from financial transactions

(38,893
)
(7,291
)
(5,234
)
(5,558
)
(3,191
)
Receivables from financial leases

(5,860
)
(12,416
)
(5,956
)
(4,218
)
(6,468
)

(1,194,018
)
(776,077
)
(334,554
)
(280,907
)
(296,985
)

Grupo Supervielle S.A.
Year ended December 31,
2020 2019
Allowances for loan losses 8,424,714 9,192,129
Loans and other financing 113,819,900 129,009,477
Allowances as a percentage of Loans 7.40 % 7.13 %
The following table analyzes the ratio of net charge-offs to average loans, disclosed by loan category.
Grupo Supervielle S.A.
As of December 31,
2020 2019
Average Write-offs and
reversals Net Charge-
offs/average
loans Average Write-offs
and
reversals Net Charge-
offs/average
loans
Loans:
Promissory notes 14,838,492
(162,941
)
(1.10
)% 12,720,435 (211,120 ) (1.66 )%
Unsecured corporate loans 17,479,098
(859,602
)
(4.92
)% 14,778,530 (499,400 ) (3.38 )%
Overdrafts 6,633,775
(1,367,271
)
(20.61
)% 9,537,781 (153,128 ) (1.61 )%
Mortgage loans 10,646,858
(696,219
)
(6.54
)% 11,186,422 - -
Automobile and other secured loans 1,591,768
(138,895
)
(8.73
)% 2,513,711 (288,416 ) (11.47 )%
Personal loans 21,244,137
(1,756,618
)
(8.27
)% 31,223,272 (3,506,136 ) (11.23 )%
Credit card loans 16,077,757
(1,043,963
)
(6.49
)% 16,664,402 (1,233,452 ) (7.40 )%
Foreign Trade Loans 20,168,862
(253,669
)
(1.26
)% 34,697,331 (906,628 ) (2.61 )%
Loans to the Financial Sector 210,337
-

-
756,381 - -
Receivables from financial leases 3,686,050
(98,666
)
(2.68
)% 6,043,733 (48,365 ) (0.8 )%
Total 112,577,134 (6,377,843 ) (5.67 )% 140,121,996 (6,846,644 ) (4.89 )%
175
~~(1)~~         Consists of decreases in the allowance for loan losses when the loan for which the allowance was created is no longer on our balance sheet because it has been written-off, or because it has been collected, in which case the allowance is reversed. Loans are 100% provisioned before being written off.
~~(2)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
Allocation of the Allowance for Loan Losses and Other Financing

The ~~following table allocates the allowance~~allocation of allowances for loan and other financing losses by category of loans are included in Note 1.11 and ~~sets forth the percentage distribution~~26 of ~~the total allowances~~our audited consolidated financial statements. See “Item 5.A Operating Results—Critical Accounting Policies—Allowances for ~~each of the years ended December 31,~~ ~~2017, 2016, 2015, 2014 and 2013. Amounts below include allowances for loans, leasing and other receivables from financial transactions.~~Loan Losses”.

Grupo Supervielle S.A.

Year ended
December 31,

2017

2016

2015

2014

2013

Amount

% of Total
Financing

% of
Financing
Category

Amount

% of Total
Financing

% of
Financing
Category

Amount

% of Total
Financing

% of
Financing
Category

Amount

% of Total
Financing

% of
Financing
Category

Amount

% of Total
Financing

% of
Financing
Category

(in thousands of Pesos, except percentages)

Loans:

Promissory notes(1)

107,661

7
%
7
%
74,272

8.1
%
8.3
%
53,627

8.4
%
8.7
%
54,891

12.8
%
13.2
%
42,726

12.1
%
12.5
%
Unsecured corporate loans

70,816

5
%
5
%
41,020

4.5
%
4.6
%
50,545

7.9
%
8.2
%
22,387

5.2
%
5.4
%
17,660

5.0
%
5.2
%
Overdrafts

66,997

4
%
4
%
47,237

5.1
%
5.3
%
43,902

6.9
%
7.1
%
26,601

6.2
%
6.4
%
19,888

5.6
%
5.8
%
Mortgage loans

14,598

1
%
1
%
2,203

0.2
%
0.2
%
815

0.1
%
0.1
%
1,016

0.2
%
0.2
%
1,295

0.4
%
0.4
%
Automobile and other secured loans

3,475

0
%
0
%
993

0.1
%
0.1
%
2,535

0.4
%
0.4
%
4,244

1.0
%
1.0
%
5,147

1.5
%
1.5
%
Personal loans

837,490

53
%
55
%
446,552

48.6
%
49.7
%
225,616

35.3
%
36.5
%
149,508

34.8
%
35.9
%
122,147

34.5
%
35.7
%
Credit card loans

236,937

15
%
15
%
158,166

17.2
%
17.6
%
212,423

33.3
%
34.4
%
135,790

31.6
%
32.6
%
113,075

32.0
%
33.1
%
Foreign Trade Loans

31,595

2
%
2
%
33,777

3.7
%
3.8
%
11,212

1.8
%
1.8
%
8,055

1.9
%
1.9
%
8,868

2.5
%
2.6
%
Other financings:

164,029

10
%
11
%
94,627

10.3
%
10.5
%
16,638

2.6
%
2.7
%
14,531

3.4
%
3.5
%
11,194

3.2
%
3.3
%
Total Loans

1,533,598

98
%
100
%
899,147

97.7
%
100.0
%
617,313

96.7
%
100.0
%
417,023

97.1
%
100.0
%
342,000

96.7
%
100.0
%
Other receivables from financial transactions

10,326

1
%
100
%
5,807

0.6
%
100.0
%
5,944

0.9
%
100.0
%
5,221

1.2
%
100.0
%
4,439

1.3
%
100.0
%
Receivables from financial leases

25,356

2
%
100
%
15,254

1.7
%
100.0
%
15,391

2.4
%
100.0
%
7,114

1.7
%
100.0
%
7,317

2.1
%
100.0
%
Total

1,569,280

100
%
100
%
920,208

100.0
%
100.0
%
638,648

100.0
%
100.0
%
429,358

100.0
%
100.0
%
353,756

100.0
%
100.0
%
~~(1)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~
Loans and Other Financing Portfolio by Economic Activity

The table below analyzes our loan and other financing portfolio according to the borrower’s main economic activity as of December 31, ~~2017, 2016, 2015, 2014~~2020 and ~~2013. Amounts below include allowances for loans, leasing and other receivables from financial transactions.~~2019.

Grupo Supervielle S.A.

As of December 31,

2017

2016

2015

2014

2013

Loan
Portfolio

% of Loan
Portfolio

Loan
Portfolio

% of Loan
Portfolio

Loan
Portfolio

% of Loan
Portfolio

Loan
Portfolio

% of Loan
Portfolio

Loan
Portfolio

% of Loan
Portfolio

(in thousands of Pesos, except percentages)

Oils and oilseeds

147,262

0.2
%
31,452

0.1
%
40,392

0.18
%
35,021

0.22
%
90,159

0.73
%
Agriculture, crops and fruit

3,000,710

5.0
%
1,217,849

3.2
%
780,888

3.50
%
1,008,363

6.29
%
752,418

6.06
%
Manufactured foodstuff, cattle beef

977,564

1.6
%
611,499

1.6
%
373,955

1.68
%
260,980

1.63
%
272,804

2.20
%
Household items, sales / Trading

657,475

1.1
%
744,842

2.0
%
162,113

0.73
%
127,949

0.80
%
308,531

2.49
%
Automotive vehicles and car parts

1,495,123

2.5
%
360,406

0.9
%
267,917

1.20
%
522,760

3.26
%
300,554

2.42
%
Sugar

684,014

1.1
%
256,371

0.7
%
117,589

0.53
%
185,419

1.16
%
113,845

0.92
%
Foreign and local banks

415,393

0.7
%
127,058

0.3
%
—

—

22,801

0.14
%
108,422

0.87
%
Alcoholic beverages

146,884

0.2
%
260,210

0.7
%
135,636

0.61
%
104,815

0.65
%
38,592

0.31
%
Civil construction

1,190,588

2.0
%
745,777

2.0
%
590,772

2.65
%
253,976

1.58
%
180,836

1.46
%
Road works and specialized construction

3,424,009

5.7
%
1,772,852

4.7
%
1,090,153

4.89
%
630,765

3.93
%
307,690

2.48
%
Cooperatives and small financial institutions

3,222,067

5.4
%
1,171,755

3.1
%
339,852

1.52
%
311,261

1.94
%
344,283

2.78
%
Private and public mail services

19,122

0.0
%
42,326

0.1
%
36,510

0.16
%
48,718

0.30
%
51,203

0.41
%
Cattle raising

199,030

0.3
%
221,898

0.6
%
116,047

0.52
%
85,763

0.53
%
68,659

0.55
%
Leather

120,995

0.2
%
89,509

0.2
%
73,699

0.33
%
90,456

0.56
%
49,776

0.40
%
Electricity and gas distribution

1,135,089

1.9
%
315,947

0.8
%
66,588

0.30
%
108,440

0.69
%
47,162

0.38
%
Home appliances, audio and video devices, production and importation

236,584

0.4
%
371,177

1.0
%
61,281

0.27
%
121,088

0.75
%
165,025

1.34
%
Hydrocarbon extraction and production

358,217

0.6
%
400,658

1.1
%
12,610

0.06
%
138,053

0.86
%
88,623

0.71
%
Families and individuals(1)

28,483,212

47.4
%
19,222,165

50.5
%
13,733,797

61.60
%
7,804,466

48.66
%
5,981,333

48.21
%
Hypermarkets and supermarkets

1,550,732

2.6
%
1,324,768

3.5
%
391,316

1.76
%
580,535

3.62
%
349,912

2.82
%
Machines and tools — Production, sale and/or lease

606,425

1.0
%
963,616

2.5
%
183,052

0.82
%
122,331

0.76
%
85,910

0.69
%
Motorcycles, parts and accessories

—

0.0
%
—

0.0
%
—

0.0
%
—

0.0
%
—

0.0
%
Paper and cardboard

274,312

0.5
%
141,229

0.4
%
70,663

0.32
%
52,404

0.33
%
45,642

0.37
%
Plastic - Manufactures

824,191

1.4
%
265,851

0.7
%
309,765

1.39
%
247,564

1.55
%
273,101

2.20
%
Metal products

155,878

0.3
%
55,185

0.1
%
56,168

0.25
%
59,907

0.37
%
47,547

0.38
%
Pharmaceutical products and laboratories

519,605

0.9
%
517,629

1.4
%
243,158

1.09
%
203,976

1.27
%
137,143

1.11
%
Chemical products

392,089

0.7
%
146,341

0.4
%
68,864

0.31
%
156,895

0.98
%
26,652

0.21
%
Waste collection and recycling

384,648

0.6
%
294,848

0.8
%
273,732

1.23
%
88,991

0.55
%
59,604

0.48
%
Corporate services

629,859

1.0
%
318,056

0.8
%
88,831

0.40
%
72,080

0.45
%
64,989

0.53
%
Health services

360,065

0.6
%
142,107

0.4
%
59,358

0.27
%
101,869

0.64
%
67,961

0.55
%
Mineral extraction and production

1,245,624

2.1
%
555,825

1.5
%
69,567

0.31
%
58,143

0.36
%
62,169

0.50
%
Telecommunications

15,569

0.0
%
2,964

0.0
%
5,402

0.02
%
9,988

0.06
%
12,441

0.10
%
Textile industry

551,755

0.9
%
159,865

0.4
%
250,000

1.12
%
258,411

1.61
%
235,666

1.90
%
Cargo transportation

791,186

1.3
%
447,220

1.2
%
322,362

1.45
%
330,371

2.06
%
230,617

1.86
%
Wine industry

1,026,849

1.7
%
662,557

1.7
%
396,564

1.78
%
369,166

2.30
%
274,601

2.21
%
Real estate agencies

243,297

0.4
%
93,432

0.2
%
42,974

0.19
%
88,897

0.55
%
28,578

0.23
%
Other(2)

4,569,374

7.6
%
3,985,806

10.5
%
1,462,251

6.56
%
1,376,560

8.59
%
1,133,785

9.14
%
Total

60,054,796

100.0
%
38,037,051

100.0
%
22,293,826

100
%
16,039,182

100
%
12,406,233

100
%
Grupo Supervielle S.A.
As of December 31,
2020 2019
Loan Portfolio % of
Loan
Portfolio Loan Portfolio % of
Loan
Portfolio
Oils and oilseeds 301,306 0.3 % 369,929 0.3 %
Agriculture, crops and fruit 8,653,540 7.6 % 4,630,592 3.6 %
Manufactured foodstuff, cattle beef 5,964,922 5.2 % 3,828,409 3.0 %
Household items, sales / Trading 55,153 0.0 % 260,500 0.2 %
Automotive vehicles and car parts 1,867,051 1.6 % 2,183,272 1.7 %
Sugar 800,801 0.7 % 937,725 0.7 %
Foreign and local banks 6,993 0.0 % 17,431 0.0 %
176
Grupo Supervielle S.A.
As of December 31,
2020 2019
Loan Portfolio % of
Loan
Portfolio Loan Portfolio % of
Loan
Portfolio
Alcoholic beverages 153,474 0.1 % 188,613 0.1 %
Civil construction 2,882,721 2.5 % 7,737,737 6.0 %
Road works and specialized construction 3,050,097 2.7 % 5,484,757 4.3 %
Cooperatives and small financial institutions 3,036,833 2.7 % 3,422,565 2.7 %
Private and public mail services 14,576 0.0 % 3,041 0.0 %
Cattle raising 2,230,886 2.0 % 1,532,355 1.2 %
Leather 278,235 0.2 % 371,082 0.3 %
Electricity and gas distribution 2,248,071 2.0 % 2,211,296 1.7 %
Home appliances, audio and video devices, production and importation 46,034 0.0 % 93,687 0.1 %
Hydrocarbon extraction and production 136,343 0.1 % 14,468 0.0 %
Families and individuals⁽¹⁾ 52,387,897 46.0 % 55,256,170 42.8 %
Hypermarkets and supermarkets 215,243 0.2 % 346,550 0.3 %
Machines and tools – Production, sale and/or lease 1,052,603 0.9 % 1,363,134 1.1 %
Motorcycles, parts and accessories 16,619 0.0 % 39,185 0.0 %
Paper and cardboard 621,134 0.5 % 846,167 0.7 %
Plastic - Manufactures 679,697 0.6 % 1,038,702 0.8 %
Metal products 946,221 0.8 % 1,035,589 0.8 %
Pharmaceutical products and laboratories 663,466 0.6 % 925,670 0.7 %
Chemical products 1,209,859 1.1 % 1,255,847 1.0 %
Waste collection and recycling 1,176,850 1.0 % 1,173,923 0.9 %
Corporate services 1,533,389 1.3 % 1,603,473 1.2 %
Health services 943,942 0.8 % 731,739 0.6 %
Mineral extraction and production 420,698 0.4 % 6,059,654 4.7 %
Telecommunications 23,257 0.0 % 42,424 0.0 %
Textile industry 2,059,225 1.8 % 2,584,154 2.0 %
Cargo transportation 1,468,977 1.3 % 2,747,917 2.1 %
Wine industry 3,891,847 3.4 % 4,797,597 3.7 %
Real estate agencies 203,337 0.2 % 286,998 0.2 %
Other⁽²⁾ 12,578,603 11.1 % 13,587,124 10.5 %
Total 113,819,900 100.0 % 129,009,476 100.0 %

~~(1)~~
(1) Loans for personal consumption.
(2) Includes all other industries. None of such industries exceeds 1% of the total loan and other financing portfolio.
~~(2)~~         ~~Includes all other industries. None of such industries exceeds 1% of the total loan and other financing portfolio.~~
Composition of Deposits

The following table sets out the composition of each category of deposits by currency of denomination that exceeded 10% of average total deposits at December 31, ~~2017, 2016~~2020 and ~~2015.~~2019.

Year ended December 31,

2017

2016

2015

Average
balance

Average
nominal
rate

Average
balance

Average
nominal
rate

Average
balance

Average
nominal
rate

(in thousands of Pesos, except percentages)

Deposits in domestic bank offices by local depositors

Non-interest-bearing checking accounts

Average

Pesos

6,721,317

0.0
%
6,541,551

0.0
%
4,766,849

0.0
%
Dollars

2,762,491

0.0
%
601,764

0.0
%
99,828

0.0
%
Total

9,483,808

0.0
%
7,143,315

0.0
%
4,866,677

0.0
%
Savings accounts

Average

Pesos

8,988,542

0.0
%
6,189,649

0.1
%
4,622,839

0.1
%
Dollars

3,840,462

0.1
%
1,237,333

0.1
%
286,579

0.1
%
Total

12,829,004

0.1
%
7,426,982

0.1
%
4,909,418

0.1
%
Special checking accounts

Average

—

—

—

—

Pesos

4,139,446

15.3
%

Dollars

1,178,635

0.3
%
—

—

—

—

Total

5,318,081

12.0
%
—

—

—

—

Time deposits

Average

Pesos

12,567,532

15.4
%
11,645,642

26.4
%
8,952,849

24.8
%
Dollars

1,325,298

0.31
%
806,650

1.3
%
337,459

0.1
%
Total

13,892,830

12.1
%
12,452,292

24.7
%
9,290,308

24.0
%
Deposits in domestic bank offices by foreign depositors

Non-interest-bearing checking accounts

Average

Pesos

23

67

51

Dollars

—

—

—

Total

23

67

51

Savings accounts

Average

Pesos

2,782

2,735

1,416

Dollars

7,739

1,601

315

Total

10,521

4,336

1,731

Time deposits

Average

Pesos

372

450

331

Dollars

—

—

—

Total

372

450

331

Grupo Supervielle S.A.
As of December 31,
2020 2019
Average balance Average nominal
rate Average balance Average nominal
rate
Deposits in domestic bank offices by local depositors
Non-interest-bearing current accounts
Average
Pesos 21,376,584 0.0 % 20,618,478 0.0 %
Dollars 1,553,331 0.0 % 12,085,727 0.0 %
Total 22,929,915 0.0 % 32,704,205 0.0 %
177
Grupo Supervielle S.A.
As of December 31,
2020 2019
Average balance Average nominal
rate Average balance Average nominal
rate
Savings accounts
Average
Pesos 23,415,124 0.2 % 22,697,435 0.4 %
Dollars 9,765,110 0.0 % 21,083,238 0.0 %
Total 33,180,234 0.1 % 43,780,673 0.2 %
Special checking accounts
Average
Pesos 28,465,672 22.2 % 20,322,938 43.3 %
Dollars 7,196,109 0.3 % 15,652,362 0.3 %
Total 35,661,781 17.8 % 35,975,300 24.6 %
Time deposits
Average
Pesos 55,951,934 35.0 % 56,897,721 48.8 %
Dollars 4,534,312 1.80 % 7,883,327 1.3 %
Total 60,486,246 32.5 % 64,781,048 43.1 %
Grupo Supervielle S.A.
As of December 31,
2020 2019
Average balance Average nominal
rate Average balance Average nominal
rate

(in thousands of Pesos, except percentages)
Deposits in domestic bank offices by foreign depositors
Non-interest-bearing current accounts
Average
Pesos 236 640
Dollars — —
Total 236 640
Savings accounts
Average
Pesos 2,603 7,761
Dollars 7,208 28,889
Total 9,811 36,650
Time deposits
Average
Pesos 5,218 3,549
Dollars — 300
Total 5,218 3,849
2020 2019

(in thousands of Pesos)
Uninsured deposits 106,943,143 63,762,654
Maturity of Deposits
178
The following table sets forth information regarding the maturity of our time deposits exceeding ~~Ps.100,000~~the SEDESA insurance limit at December 31, ~~2017.~~2020.

AtGrupo Supervielle S.A.
As of December 31, ~~2017~~
2020
(in thousands of Pesos)
Time Deposits
~~Within~~ 3 months
or less;
~~13,936,903~~
29,538,334
~~After~~Over 3 months ~~but within~~through 6 ~~months~~
months;
~~4,715,336~~
370,964
~~After~~Over 6 months ~~but within~~through 12 ~~months~~
months;
~~71,206~~
44,692
Over 12 months
~~190~~
-
Total Time ~~Deposits(1)~~Deposits⁽¹⁾
~~18,723,635~~
29,953,990

~~(1)~~
(1) Only principal. Excludes the CER and UVA adjustment.
Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.

The maximum amount for this insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency was set at $1,000 as from March 1, 2019 and increased to 1,500 as of May 1, 2020.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to Banco Supervielle, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up at an interest rate exceeding the one established regularly by the Argentine Central Bank.
Short-term Borrowings

The table below shows our short-term borrowings as of the dates indicated.

Grupo Supervielle S.A.
As of December 31,

At December 31,

2020 2019

2017

2016

2015

Amount Annualized Rate Amount Annualized Rate

Amount

Annualized
Rate

Amount

Annualized
Rate

Amount

Annualized
Rate

(in thousands of Pesos, except percentages)

(in thousands of Pesos, except percentages)
International banks and Institutions:

Total amount outstanding at the end of the reported period

2,778,102

3.3
%
671,668

3.0
%
128,188

4.2
%
5,197,265 3.7 % 10,989,572 5.3 %
Average during period

692,553

3.5
%
200,863

3.5
%
125,731

2.8
%
24,109,289 5.7 % 8,634,472 18.9 %
Maximum monthly average

1,770,080

634,370

264,735

53,204,310 12,106,024

Financing received from Argentine financial institutions:

Total amount outstanding at the end of the reported period

232,856

20.6
%
940,258

28.5
%
618,775

31.9
%
625,374 30.2 % 1,262,803 19.2 %
Average during period

746,603

22.8
%
1,023,259

30.1
%
398,927

28.8
%
838,737 35.3 % 1,813,934 67.0 %
Maximum monthly average

1,637,914

1,212,061

585,775

1,077,821 2,384,732

Other(1)

Total amount outstanding at the end of the reported period

2,608,214

0.0
%
2,233,734

0.0
%
1,709,103

0.0
%
9,128,391 0.0 % 13,101,974 0.0 %
Average during year

2,618,507

0.0
%
1,898,011

0.0
%
1,477,502

0.0
%
8,817,649 0.0 % 6,658,250 0.0 %
Maximum monthly average

2,886,849

2,167,350

1,988,276

10,759,551 8,631,666

Unsubordinated Corporate Bonds

Total amount outstanding at the end of the reported period

795,647

26.2
%
1,172,341

24.6
%
831,848

28.9
%
4,147,234 34.3 % 7,771,113 26.4 %
Average during year

503,994

29.1
%
1,146,906

29.7
%
599,742

26.3
%
5,111,119 26.5 % 13,301,234 34.1 %
Maximum monthly average

1,733,866

1,390,135

831,848

7,061,815 15,495,508

~~(1)~~         ~~Includes mainly collections and other transactions on behalf of third parties, miscellaneous (payment orders abroad) and social security payment orders pending settlement.~~
(1) Includes mainly collections and other transactions on behalf of third parties, miscellaneous (payment orders abroad) and social security payment orders pending settlement.
179
Return on Equity and Assets

The following table presents certain selected financial information and ratios for the dates indicated.

Year ended December 31,

2017

2016

2015

(in thousands of Pesos, except percentages)

Net Income

2,437,059

1,311,304

674,109

Average total assets(1)

69,599,142

41,467,412

26,961,165

Average shareholders’ equity

9,580,785

4,986,499

2,094,750

Shareholders’ equity at the end of the period

15,144,798

6,931,551

2,373,710

Net income as a percentage of:

Average total assets

3.5
%
3.2
%
2.5
%
Average shareholders’ equity

25.4
%
26.3
%
32.2
%
Declared cash dividends

243,706

65,500

25,162

Dividend payout ratio

10.0
%
5.0
%
3.7
%
Average shareholders’ equity as a percentage of average total assets

13.8
%
12.0
%
7.8
%
~~(1)~~         ~~Calculated on a daily basis.~~
Grupo Supervielle S.A.
As of December 31,
2020 2019 2018
Net Income for the year attributable to owners of the parent company 3,499,882 (2,929,201 ) (6,341,497 )
Average total assets⁽¹⁾ 256,356,321 272,626,702 325,617,464
Average shareholders’ equity 34,400,841 31,791,694 39,063,579
Shareholders’ equity at the end of the period attributable to owners of the parent company 35,651,135 31,878,404 35,506,450
Net income as a percentage of:
Average total assets 1.4 % (1.1 %) (1.9 %)
Average shareholders’ equity 10.2 % (9.2 %) (16.2 %)
Declared cash dividends 341,000 530,065 634,568
Dividend payout ratio⁽²⁾ 9.7 % (18.1 %) (10.0 %)
Average shareholders’ equity as a percentage of average total assets 13.4 % 11.7 % 12.0 %

(1) Calculated on a daily basis.
(2) Calculated by dividing dividend paid in the year by net income for the year attributable to owners of the parent company under IFRS. As mentioned in Note 25 to our audited consolidated financial statements, dividends are paid based on distributable retained earnings calculated in accordance with the rules of the Argentine Central Bank. As of December 31, 2020, 2019 and 2018, the dividend payout ratio considering those rules would be 10.0%, 10.0% and 11.8%, respectively.
Minimum Capital Requirements

Our main subsidiary, the Bank, is required to satisfy minimum capital requirements. The following table sets forth the Bank and CCF’s consolidated minimum capital requirements set by the Superintendency as of the dates indicated.

Year ended December 31,

2017

2016

2015

(in thousands of Pesos)

Calculation of excess capital:

Allocated to assets at risk

4,710,391

3,178,270

2,082,489

Allocated to Bank premises and equipment, intangible assets and equity investment assets

191,549

172,154

102,252

Market risk

121,155

45,385

30,741

Interest rate risk

—

Public sector and securities in investment account

131,109

78,472

16,739

Operational Risk

1,016,501

713,227

512,948

Required minimum capital under Central Bank regulations

6,170,705

4,187,508

2,745,169

Basic net worth

9,903,099

5,706,639

2,597,534

Complementary net worth

913,256

778,885

662,679

Deductions

(386,192
)
(338,671
)
(291,653
)
Total capital under Central Bank regulations

10,430,163

6,146,853

2,968,560

Excess capital

4,259,458

1,959,345

223,391

Credit Risk Weighted Assets(1)

60,939,300

39,678,311

25,248,691

Risk Weighted Assets(1)

75,301,392

49,168,958

34,314,613

Selected capital and liquidity ratios:

Regulatory capital/risk weighted assets

13.9
%
12.5
%
8.7
%
Tier 1 Capital / Risk Weighted assets

12.6
%
10.9
%
6.7
%
Average shareholders’ equity as a percentage of average total assets

10.5
%
11.2
%
9.5
%
Total liabilities as a multiple of total shareholders’ equity

8.2
x
7.8
x
10.9
x
Cash as a percentage of total deposits

18.2
%
22.6
%
28.5
%
Liquid assets as a percentage of total deposits(2)

42.4
%
27.0
%
32.6
%
~~(1)~~         ~~Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets,~~As stated above under “Presentation of Financial and ~~credit risk weighted assets. Operational risk weighted assets~~Other Information,” we have prepared our audited consolidated financial statements for 2020, 2019 and ~~market risk weighted assets are calculated by multiplying their respective required minimum~~2018 under IFRS. Minimum capital ~~under~~requirements have been prepared in accordance with the rules of the Argentine Central Bank, ~~regulations by 12.5. Credit Risk Weighted Assets~~which is ~~calculated by applying the respective credit risk weights~~not comparable to ~~our assets, following Central Bank regulations.~~data prepared under IFRS.

December 31,
2020 2019 2018
Calculation of excess capital:
Allocated to assets at risk 9,047,140 7,164,842 6,090,341
Allocated to Bank premises and equipment, intangible assets and equity investment assets 1,350,035 826,133 370,233
Market risk 551,765 251,739 301,724
Interest rate risk — — —
Public sector and securities in investment account 27,651 11,472 96,882
Operational Risk 3,233,793 2,349,952 1,486,516
Required minimum capital under Central Bank regulations 14,210,384 10,604,138 8,345,696
Basic net worth 30,242,263 16,991,091 11,847,865
Complementary net worth 1,090,865 1,033,734 1,163,939
Deductions (7,028,227 ) (2,999,716 ) (867,798 )
Total capital under Central Bank regulations 24,304,901 15,025,109 12,144,006
Excess capital 10,094,517 4,420,971 3,798,310
~~(2)~~         ~~Liquid assets include cash and securities issued by the Central Bank (LEBACs and NOBACs).~~180
December 31,
2020 2019 2018
Credit Risk Weighted Assets⁽¹⁾ 125,991,581 96,585,712 79,580,781
Risk Weighted Assets⁽²⁾ 173,834,352 129,638,218 101,933,777
Selected capital and liquidity ratios:
Regulatory capital/credit risk weighted assets 19.3 % 15.6 % 15.3 %
Regulatory capital/risk weighted assets 14.0 % 11.6 % 11.9 %
Average shareholders’ equity as a percentage of average total assets 11.2 % 10.4 % 9.9 %
Total liabilities as a multiple of total shareholders’ equity 7.5 7.1 9.4
Cash as a percentage of total deposits 20.3 % 28.7 % 35.1 %
Liquid assets as a percentage of total deposits⁽²⁾ 21.1 % 21.1 % —
Tier 1 Capital / Credit Risk Weighted assets 18.4 % 14.5 % 13.8 %
Tier 1 Capital / Risk Weighted assets 13.4 % 10.8 % 10.8 %

(1) Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets, and credit risk weighted assets. Operational risk weighted assets and market risk weighted assets are calculated by multiplying their respective required minimum capital under Central Bank regulations by 12.5. Credit Risk Weighted Assets is calculated by applying the respective credit risk weights to our assets, following Central Bank regulations.
(2) Liquid assets include cash and securities issued by the Central Bank (LEBACs and NOBACs).
As of December 31, ~~2017,~~2020, the Bank’s Tier 1 capital ratio on a consolidated basis with CCF was ~~12.6%,~~13.4% compared to ~~10.9%~~10.8% as of December 31, ~~2016.~~2019. Including the ~~funds retained at~~liquidity held by the holding company (Grupo Supervielle) ~~level after the follow-on equity offering of Grupo Supervielle,~~, which are available for further capital injections into its subsidiaries or for investments for further growth, the consolidated pro-forma Tier 1 capital ratio as of December 31, ~~2017~~2020 was ~~18.4%~~13.8%. The bank’s ~~Tier1~~Tier 1 ratio coincides with CET 1 ratio.

As of December 31, ~~2017,~~2020, the Bank’s total capital ratio on a consolidated basis with CCF was 13.9% compared to ~~12.5%~~11.6% as of December 31, ~~2016.~~2019. Including the funds ~~retained at~~held by the holding company (Grupo Supervielle) ~~level after the follow-on equity offering of Grupo Supervielle,~~ which ~~are available for further capital injections into its subsidiaries,~~could be used to fund our growth strategy, the consolidated pro-forma total capital ratio as of December 31, ~~2017~~2020 was ~~19.6%~~14.0%.

Item 5. Operating and Financial Review and Prospects
~~Item 5.~~~~Operating and Financial Review and Prospects~~
Item 5.A Operating Results

~~Item 5.A~~~~Operating Results~~
This section contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in ~~“Forward-looking~~“Forward-looking Statements,” ~~“Item~~“Item 3.D Risk Factors,” and the matters set forth in this annual report generally.

This discussion should be read in conjunction with our audited consolidated financial statements which are included elsewhere in this annual report.
181
Financial Presentation

Our audited consolidated financial statements are prepared in accordance with ~~Argentine Banking GAAP. Argentine Banking GAAP differs in certain significant respects from U.S. GAAP and from Argentine GAAP. Note 35 to our~~IFRS as issued by the IASB. We adopted IFRS for the first time for the year ended on December 31, 2018, with a transition date of January 1, 2017.
Our audited consolidated financial statements ~~provides~~are presented by applying “Financial reporting in hyperinflationary economies” (IAS 29). During 2018, Argentina met the criteria to be considered a ~~description~~hyperinflationary economy as inflation exceeded 100% in the last three years on a cumulative basis, together with other characteristics of the ~~principal differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP~~economic environment that indicate the existence of ~~net income and shareholders’ equity as of December 31, 2017 and 2016 and~~hyperinflation. Accordingly, financial statements were restated for the ~~years ended December 31, 2017, 2016 and 2015.~~
~~On February 12, 2014, the Central Bank, through Communication “A” 5541, established~~changes in the general ~~guidelines towards conversion to International Financial Reporting Standards (“IFRS”) as issued~~pricing power of the functional currency, using the consumer pricing index (CPI) published by the International Accounting Standards Board (“IASB”) for preparing financial statements of the entities under its supervision with the temporary exception of paragraph 5.5 “Impairment” of IFRS 9 “Financial Instruments” (IFRS as issued by the IASB as adopted by the Central Bank). Note 33 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and IFRS, as they relate to us, and a reconciliation to IFRS of shareholders’ equity as of December 31, 2017 and January 1, 2017 and of net income for the year ended December 31, 2017.INDEC.

Our segment disclosure for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 is presented on a basis that corresponds with our internal reporting structure and is consistent with the manner in which our Board of Directors regularly evaluates the components of our operations in deciding how to allocate resources and in assessing the performance of our business.

We measure the performance of each of our business segments primarily in terms of net income (i.e., net ~~revenues—~~revenues–or financial income and service fee income, net of financial expenses and service fee ~~expenses—~~expenses–after deducting loan loss provisions and administrative costs directly attributable to the segment). Net income excludes the financial expenses incurred by Grupo Supervielle at the holding level in connection with its funding arrangements (although substantially all the proceeds of such arrangements have been contributed as capital to the subsidiaries through which the segments are operated), as well as transactions between segments, which are reflected under “Adjustments.”
~~We operate~~
In 2020 we operated our business ~~along~~through the following segments:

·~~Retail~~
• Personal and Business Banking: Through the Bank, we offer our ~~retail~~ customers a full range of financial products and services, including personal loans, mortgage loans, deposit accounts, purchase and sale of foreign exchange and precious metals and credit cards, among others. Since January 1, 2020, our SMEs portfolio was transferred from the Corporate Banking segment to the Personal and Business Banking segment (previously named Retail Banking segment).
• Corporate Banking: Through the Bank, we offer large corporations and middle-market companies a full range of products, services and financial assessment including factoring, leasing, foreign trade finance and cash management. Since January 1, 2020, our SMEs portfolio was effectively transferred from the Corporate Banking segment to the Personal and Business Banking segment.
• Treasury: It is primarily responsible for the allocation of the Bank’s liquidity according to the needs of the Personal and Business Banking segment, the Corporate Banking segment and its own needs. The Treasury segment implements the Bank’s financial risk management policies, manages the Bank’s trading desk, distributes treasury products such as debt securities, and develops businesses with wholesale financial and non-financial clients.
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• Consumer Finance: Through CCF and Tarjeta Automática, Supervielle offers credit card services and loans to the middle and lower-middle-income sectors. In November 2020, CCF launched IUDÚ, a digital banking services platform which joined the Grupo Supervielle ecosystem to participate in the transformation of the financial services industry. Product offerings also include consumer loans, credit cards and insurance products through an exclusive agreement with Walmart Argentina and through Tarjeta Automática branch network. Moreover, through Espacio Cordial, Supervielle offers non-financial products and services. Since the MILA acquisition, its new portfolio of used car loans and its respective results are recorded under Consumer Finance segment.
• Insurance: Through Supervielle Seguros, Grupo Supervielle offers insurance products, primarily personal accidents insurance, protected bag insurance, life insurance and integral insurance policies for entreprenuers and SMEs. In 2018 the company incorporated the marketing of special multiple peril policies focused on the entrepreneurs and SMEs segment. Supervielle Seguros is continuously offering new products to the different customer segments of Grupo Supervielle companies: high net worth individuals (Identité), senior citizens, entrepreneurs and SMEs, customers of the Consumer Finance and Corporate Banking segments. Since 2019, Supervielle Broker de Seguros operates under this segment.
• Asset Management and Other Services: Grupo Supervielle offers a variety of other services to its customers, including mutual fund products through Supervielle Asset Management. Since its acquisition in May 2018, Supervielle also offers products and services through InvertirOnline S.A.U. Also, since MILA acquisition, the MILA portfolio outstanding at the moment of the acquisition and its respective results are recorded under Asset Management and Others segment, while the new portfolio of used car loans and its respective results are recorded under the Consumer Finance segment.
New Standards and Interpretations issued by the IASB adopted by Grupo Supervielle:
Below is a list of New Standards and Interpretations issued by the IASB adopted by Grupo Supervielle.
(a) Definition of a business – Changes in accordance to IFRS 3
(b) Definition of significant or relatively significant - Changes to IAS 1 and IAS 8
(c) Amendment to the Conceptual Framework
See Note 1.1.3 to our audited consolidated financial statements for a more comprehensive discussion of the effects of the adoption of these new standards.
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The Ongoing COVID-19 Pandemic
In December 2019, a novel strain of coronavirus (SARS-COV-2) was reported to have surfaced in Wuhan, China. COVID-19 has since spread across the world, including to Argentina, and on March 11, 2020 the World Health Organization declared COVID-19 a pandemic. In response, countries around the world, including Argentina, have adopted extraordinary measures to contain the spread of the virus, including imposing travel restrictions and closing borders, requiring closures of non-essential businesses, instructing residents to practice social distancing, issuing stay at home orders, implementing quarantines and similar actions. The ongoing pandemic and these extraordinary government measures have been disrupting global economic activity and resulted in significant volatility in global financial markets.
According to recent IMF estimates released in April, 2021, as a result of the COVID-19 pandemic, the global economy contracted sharply by 3.0% in 2020. In addition, according to the IMF, Latin America’s economy contracted by 5.2% in 2020, with a forecast for Brazil’s economy to having contracted by 5.3% (Brazil being the main trading partner of Argentina). As regards Argentina, according to the INDEC information, the country’s economy contracted by 9.9% in 2020. For 2021, the IMF estimates a rebound in the economic growth, with the global economy is expected to expand 5.8%, while Latin America is expected to grow 3.4%. See “Item 5.D—Trend Information.”
The Argentine government has adopted multiple measures in response to the COVID-19 pandemic, including a nationwide mandatory lockdown that began on March 19, 2020 and was extended several times, until November 6, 2020 when the country shifted towards a “social distancing” phase, instead of a strict lockdown. The government has also required the mandatory shutdown of businesses not considered essential until late June approximately, depending on the province.
At the same time, in order to mitigate the economic impact of the COVID-19 pandemic and mandatory lockdown and shutdown of non-essential businesses, the Argentine government has adopted social aid, monetary and fiscal measures, including the following:
-
Closure of bank branches. On March 20, 2020, the Central Bank determined that bank branches in Argentina should remain closed. From April 3 until April 10, 2020, branches were allowed to open with limited hours, only for the attention of beneficiaries of pension schemes and certain retirement benefits and beneficiaries of aid programs funded by the ANSES. During this period, the rest of the banking activities were performed only through digital means. Beginning on April 13, 2020, financial entities have been allowed to reopen only for a limited number of services, and only by prior appointment, with teller services initially restricted to pensioners and social plan beneficiaries, provided that certain health and security requirements are complied with. Additionally, beginning on April 20, 2020, the Central Bank has allowed the provision of teller services exclusively for deposits in, and withdrawals from, foreign currency accounts. Most recently, through Communication “A” 7270, the Central Bank encouraged financial institutions to provide further banking services through online gateways and established that attention to the public must not exceed 50% of the branches’ capacity.
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-
Postponement of loan payments. The Central Bank postponed payments on loans maturing during the national lockdown period, and suspended the accrual of punitive interests on loans with maturity between April 1 and June 30, 2020. This rule was extended three consecutive times, first, through Communication “A” 7044 to those loans maturing between July and September 31, 2020, then through Communication “A” 7107, this was extended to those loans maturing between October and December 31, 2020 and then through Communication “A” 7181 to those loans maturing between January and March 31, 2021.
- Mortgage loan installments and mortgage foreclosures. The Argentine government established the freezing of amortization payments for mortgage loans if the mortgaged property is the only and permanent residence of the debtor, until September 30, 2020. The decree also resolved the freezing of UVA car loans and the suspension of mortgage foreclosures until September 30, 2020. The debit balance resulting from the freezing of the installment increases may be paid in three consecutive monthly installments, upon request by the borrower. On September 25, 2020, the Argentine government through the Decree 767/2020 extended these measures until January 31, 2021, and stated that housing mortgage l enders adopt between February 2021 and until July 31, 2022, a plan to make those installments frozen at March 2020 UVA value, to converge again to actual UVA. These measures were subsequently extended by virtue of Decree 66/2021 until March 31, 2021. Although these restrictions are no longer in force as of the date of this annual report, Communication “B” 12123 and Communication “A” 7270 established that financial institutions must enable an instance to consider the situation of those customers in which the installment of the UVA loan to be paid exceeds 35% of their income.
- ATM fees. The Central Bank determined that, until March 31, 2021, any operation effected through ATMs was not subject to any charges or fees.
-
Credit card payments. The Central Bank determined that the unpaid balances of credit card financings due between April 13 and April 30, and between September 1 and September 30, 2020 will be automatically refinanced in nine equal consecutive monthly installments beginning after a 3-month grace period. Interest rates on such unpaid balances may not exceed an annual nominal rate of 43% -for balances due between April 13 and April 30- and of 40% -for balances due between September 1 and September 30- if the amount we financed for this concept, considering each credit card account, does not exceed Ps. 200,000.
- Prohibition of bank account closures. The government prohibited the closure and disabling of bank accounts and the imposition of penalties until December 31, 2020.
-
Time deposits minimum rate. Communication “A” 6980 established that non-adjustable term deposits under Ps. 1 million made by individuals as of April 20, 2020 will have a minimum interest of 70% of the LELIQ average auction, Communication “A” 7018 extended the scope of these measures over all term deposits regardless of their minimum amount. Subsequently, Communication “A”7027 increased the minimum rate equivalent to 79% LELIQ average auction, and, as from August 1, 2020, an additional increase from such 79% to an 87% was set for term deposits of individuals exceeding the Ps. 1 million. Since November 13, 2020, the Central Bank provided for an additional increase in the minimum interest rate to be paid in respect of retail time deposits below Ps. 1 million, to 37%, and 34% for the rest of time deposits.
-
Family emergency income and extraordinary subsidies. The government established (i) a stipend of Ps.10,000, for the months of April, June and August 2020, for people who are unemployed or working informally, and self-employed workers who are not currently generating or receiving other income; (ii) an extraordinary subsidy of Ps.3,000, for the months of April and June 2020, for beneficiaries of pension schemes and certain retirement benefits; and (iii) an extraordinary subsidy of Ps.5,000 from April 2020 until October 2020, for healthcare workers.
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-
Prohibition of dismissals and suspensions. The government prohibited dismissals of employees until May 31, 2021.
- Labor market emergency assistance program. The government created a fund of specific application within the FOGAR (acronym in Spanish for Fondo de Garantías Argentino), with the aim of backing financings provided to SMEs by financial entities in order to pay salaries.
Additionally, some of the government measures are aimed at encouraging bank lending, such as:
- Credit lines at preferential interest rates:
● The Central Bank promoted loans granted at a 24% preferential interest rate, to assist SMEs with payroll payments and working capital needs. The Central Bank also allowed financial institutions to deduct a portion of the amount of loans granted from the minimum reserve requirements. The Argentine government by means of Decree 326/2020 created a fund of specific application within the FOGAR (acronym in Spanish for Fondo de Garantías Argentino), with the aim of backing financings provided to SMEs by financial entities in order to pay salaries. On October 15, 2020, through Communication “A” 7140, the Central Bank established that this credit line applied only for ATP. On November 5. 2020, through Communication “A” 7157, the Central Bank cancelled the obligation to grant financing to SMEs within the framework of the Emergency Work Assistance Program and Production (ATP).
●
On October 15, 2020, through Communication “A” 7140, the Central Bank promoted two new credit lines at a preferential rate for companies, in addition to the existing 24% credit line to SMEs. The two new credit lines are: (i) a 30% interest rate credit line to fund capital goods acquisitions and investments in the construction sector; and (ii) a credit line to finance working capital needs from SMEs (líneas para el financiamiento productivo). The 30% interest rate credit line shall represent 30% of total origination under this rule. On January 6, 2021, through Communication “A” 7197, the Central Bank ruled that the 65% amount of credit lines granted to finance working capital needs of SMEs disbursed since October 16, 2020 may be applied to achieve the abovementioned 30% of total origination of the 30% interest rate credit line. On February 25, 2021, through Communication “A” 7227, the Central Bank increased from 65% to 100% the amount of credit lines granted to fund working capital needs of SMEs disbursed since October 16, 2020 that can be applied to achieve the required origination of the 30% interest rate credit line. In addition, through Communication “A” 7240, the Central Bank ruled that the balance of credit lines to SMEs shall be equivalent to (i) a minimum quota of 7.5% of the average balance of deposits from the private sector as of September 2020, for the 2020 quota, and (ii) a minimum quota of 7.5% of the average balance of deposits from the private sector as of March 1, 2021. The 2020 quota was in force between October 16, 2020 and March 31, 2021, whereas the 2021 quota will be in force from April 1, 2021 until September 30, 2021.
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●
Through Communication “A” 6993, the Central Bank provided for the zero interest rate financing program granted through credit cards in subsequent three disbursements to some eligible customers. These loans have a 12-month tenor and a six-month grace period. The FOGAR will guarantee these loans and the Fondo Nacional de Desarrollo Productivo (FONDEP) will recognize a 15% annual nominal rate to financial institutions on disbursed financings. This program was extended until September 30, 2020. Subsequently, the zero interest rate program was extended to culture loans, with a tenor of 24 months and a 12-month grace period. The 0% interest rate included in the initial program was changed in the current program, to an interest rate of 27% or 33% which depends on the level of year-on-year sales variation as impacted by the pandemic.
-
Limitations on holding Central Bank notes. Simultaneously with the creation of the fund within the FOGAR, the Central Bank set limitations on banks’ holdings of notes from the Central Bank (LELIQ), in order to make liquidity available and encourage the provision of credit lines to SMEs.
-
Reserve requirements. The Central Bank established that the facilities granted at a preferential rate to SMEs and households may be deducted from reserve requirements:
●
40% (total balance granted to SMEs at 24% interest rates) to those loans granted until October 15, 2020;
●
40% but only if the loan beneficiaries belong to sectors considered eligible for the ATP and that after March 19 did not import final consumer goods (except medical products or supplies) to those loans granted since October 15, 2020; and
●
24% of loans granted to SMEs at 27% interest rates and 7% of loans granted to SMEs at 33% to those loans since November 6, 2020.
-
Classification of Debtors: The Central Bank established new rules regarding the criteria for debtor classification and provisioning until September 30, 2020. These rules provide an additional 60 days period of non-payment before a loan is required to be classified as non-performing, and include all financings to commercial portfolio clients and loans granted for consumption or housing purposes In March 25, 2021, through Communication “A” 7245, the Central Bank established a gradual transition in the definition of debtors for clients who chose to postpone the payment of installments, a benefit was not renewed from the due date at the end March 31, 2021. Financial entities and other obligated parties must increase the grace period to classify their debtors in levels 1, 2 and 3, both for the commercial portfolio and for the consumer or housing portfolio, according to the following schedule: (i) until March 31, 2021, in 60 days, (ii) until May 31, 2021, in 30 days, and (iii) as of June 1, 2021, financial entities must classify their debtors according to the general debtor classification.
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In addition, by means of Communication “A” 6939, as amended and supplemented, the Central Bank suspended, until June 30, 2021, the distribution of dividends by financial entities, including the Bank.

·~~Corporate~~For more information, see “Item 4.B.—Business Overview—Argentine Banking~~: Through~~ Regulations—Government Measures in Response to the Bank, we offer large corporations, medium-sized companies and small businesses a full range of products, services and financial assessment including factoring, leasing, foreign trade finance and cash management.Ongoing COVID-19 Pandemic.”

·~~Treasury~~~~: The Treasury Segment is primarily responsible for~~
Since early March 2020, our management has been actively monitoring the ~~allocation~~evolution of the ~~Bank’s liquidity according~~ongoing COVID-19 pandemic and taking actions to mitigate the impact it may have on our business. Measures have been taken rapidly as the situation continued to evolve, focusing mainly in protecting our employees and customers and ensuring the continuity of our operations. On March 13, 2020, even before the nationwide lockdown was declared, we implemented a protocol by which a significant part of our workforce (including elder employees and pregnant women) started to work remotely. We have allocated additional resources to the ~~needs~~provision of laptops for such employees, and ~~opportunities~~have made investments in new VPN licenses to enhance the security of working remotely. Remote work may nonetheless exacerbate certain risks to our business, including an increased reliance on information technology resources, increased risk of phishing and other cybersecurity attacks, and increased risk of unauthorized dissemination of sensitive personal information. Since the very beginning of the ~~retail, corporate banking and treasury segments. The Treasury Segment implements the Bank’s financial risk management policies, manages the Bank’s trading desk, distributes treasury products,~~pandemic, we have also taken other measures such as ~~debt securities,~~the incorporation of medical personnel to our crisis management teams, the monitoring of COVID-19 positive cases, online psychological assistance for employees, and ~~develops businesses with wholesale financial~~online yoga and ~~non-financial clients.~~
·~~Consumer Finance~~~~: Through CCF~~gym classes. During 2020 we launched Workplace, our internal social network that allows our employees to work together online. We provided more virtual training as well as flexible work options. Our cultural transformation, was reinforced by a campaign that has garnered several awards and ~~Tarjeta,~~a new competencies model. In September 2020, we ~~offer credit card services~~launched a new model organized around experiences, tribes and ~~loans to the middle and lower-middle-income sectors. Through an exclusive agreement with Walmart Argentina, our offer~~centers of ~~products includes consumer loans, credit cards and insurance products.~~
·~~Insuranc~~e: Supervielle Seguros began issuing its first insurance policies in October 2014 starting with a few non-credit related insurance products, such as protected bag insurance and personal accident insurance. Byexcellence. In March 2021, we have decided that until the end of ~~2015, it began issuing credit-related policies substantially growing its business since then, partly through the growth~~winter season (i.e., September 2021), our central areas employees will continue to work remotely. As of the ~~loans and credit card portfolio balances and partly through~~date of this annual report, approximately 90% of our central areas employees are working remotely.
Leveraging on the ~~migration~~progress we have made since 2018 on the digital transformation of ~~some~~our operations, which focuses on an enhanced customer experience, since the beginning of the ~~portfolios previously booked~~COVID-19 pandemic crisis in Argentina, with the main goal of protecting the health and safety of our customers, specially senior citizens (which are a ~~third party insurance company. A Central Bank resolution~~significant portion of our customers’ base and are more vulnerable to the effects of the virus), we have been encouraging our customers to use our available digital channels. At the same time, we launched the Human Banking campaign, enhancing a work culture to make life easier for our customers and teams, even during a pandemic, combining a human approach with technology to protect and include everyone. We started by adding new functionalities to the first app in the market designed for senior citizens in Argentina and set up dedicated phone assistance so they could operate from home. In April 2020, we issued and delivered debit cards for all senior citizens who receive their social security payments through our bank. We expanded the 24-hour banking areas in ~~March, 2016~~our lobbies, adding new self-service equipment and ~~effective September 1, 2016, prohibits financial institutions from charging individuals any fee and/~~additional space to allow for social distancing and greater comfort. We also relocated our ATMs dedicated to Supervielle’s customers, which use biometric technology to allow senior citizens to withdraw cash anytime, day or ~~charge associated with credit related insurance policies. This resolution~~night, by simply scanning their fingerprint. We trailblazed in the market, increasing withdrawal limits so that senior citizens could take out their monthly social security payment all at once. In addition, we helped 678,000 people access their COVID government relief payments. We also specifies that financial institutions must purchase life insurance on debit balances or alternatively, self-insure the risk of death and permanent total disability of their clients. As a result, since September 1, 2016, both the Bank and CCF are self-insured against these risks and only contract new credit related insurances for mortgages loans. We intend to continue to expand this business and launch new insurance products previously offered tohelped our customers by ~~other insurance companies..~~providing a platform of tutorials that explain common transactions step by step. By adding value to virtual channels, we achieved growth: we increased over 175,000 the number of our digital customers, we increased the number of card-free ATM withdrawals and reduced in-person banking appointments. In less than a month, we expanded our contact center to offer enhanced customer service.

·~~Asset Management & Other Services~~~~: We also offer~~The SMEs segment was particularly impacted by the pandemic, and with a ~~a variety of other services, including mutual fund products through Supervielle Asset Management~~view to assisting them under these circumstances we adapted processes and ~~non-financial~~ products, and ~~services through Espacio Cordial. Until March 31, 2017,~~manages all commercial teams to maintain service quality and comply with all regulatory provisions. We renovated our branches to provide personalized service in private, safe spaces and exclusive spaces for commercial customers, including a waiting area. Through our Business On Boarding, we ~~offered microcredit financing through Cordial Microfinanzas. On March 31, 2017,~~also made it possible for commercial customers to open new accounts online. In addition, we witnessed the prompt adoption of digital means such as e-checks and e-factoring. We have made available loans promoted by the Central Bank at preferential interest rates, to assist them with payroll payments and working capital needs. We have also launched specific credit lines for SMEs in the health and the transportation sectors. As of December 31, 2021, the Bank ~~sold our shares~~has granted loans at preferential interest rate for an approximate amount of ~~Cordial Microfinanzas to Ciudad Microempresas.~~Ps. 10.7 billion, reaching 11% of the credit portfolio at the close of 2020.

We also worked to have a positive impact on our community. During the pandemic, (i) we provided 290,000 meals to food banks, (ii) we donated Ps.13 million in medical equipment and food supplies, 500 food baskets and cleaning supplies to foundations assisting different neighborhoods in the capital city and The greater Buenos Aires area, and we sent masks, hand sanitizer, gloves and medical equipment to different healthcare centers, and (iii) we joined the Mendoza Business Council in the #SeamosUno campaign and donated two mobile healthcare clinics.
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We face various risks arising from the economic impact of the pandemic and related government measures which are difficult to predict accurately at this time. These risks include (i) a higher risk of impairment of our assets, (ii) lower margins as a consequence of the temporary restrictions on charging certain fees to customers, and as a result of lower interest rates on loans promoted by the Central Bank, and minimum interest rates imposed on deposits, (iii) a possible significant increase in loan defaults and credit losses, with a consequent increase in loan loss provisions, and (iv) a decrease in credit demand and in our business activity in general, particularly new retail lending. During 2020 we have updated and enhanced our expected loss models and have created provisions related to COVID-19, thereby increasing our coverage ratio; however, it is still uncertain how a further spread of the virus could impact in the economy and the ability of our customers to pay their obligations.
We are continuing to monitor the impact of the ongoing COVID-19 pandemic across our businesses and will take and implement all possible actions to preserve health of our employees and to ensure continuity of our operations. Grupo Supervielle will continue focusing on improving efficiency while keeping its differentiated strategy to capture growth, remaining flexible under this particularly volatile and challenging scenario. The ultimate impact of the pandemic on our business, results of operations and financial condition remains highly uncertain and will depend on future developments outside of our control, including the intensity and duration of the pandemic, whether new variants of the COVID-19 arise, and the government measures in response of the COVID-19 pandemic, including the vaccination program.
See “Item 3. Key Information—D. Risk Factors.—Risk Factors—Risks Relating to Argentina—The ongoing COVID-19 pandemic and government measures to contain the virus adversely affected and could continue to affect our business and results of operations, and, as conditions evolve in 2021, we cannot accurately predict the ultimate impact on us.”
The Argentine Economy and Financial System

Introduction

~~According~~During 2020, according to recent ~~International Monetary Fund (“IMF”)~~ estimates of the IMF, the world economy fell by 3.5% as a result of the crisis caused by the COVID-19 pandemic. The first cases were reported in China by late 2019 and the number escalated in the first two months of 2020. After February 2020, the virus disseminated worldwide (the first case in Argentina was reported on March 3). By April 25 2021, 820.7 million cases have been confirmed worldwide, with a death toll of 3.1 million As of the same date, in Argentina over 2.8 million cases have been confirmed with a death toll of 61,000.
As a result, as of December 2020 the world gross product recorded a negative growth for the first time since 2009, when it had fallen by 0.08%. This performance is ~~estimated~~mainly explained by the GDP decrease by 4.9% and 2.4% in developed countries and emerging countries, respectively. Throughout 2020, world economies were seriously affected by the need to ~~have grown by 3.6% in 2017, an improvement over~~implement restrictions on mobility as a way to stop the ~~3.2% growth~~virus. Specifically, during March and April the most significant collapses were recorded in ~~2016. This greater economic~~the activity level, concurrently with the greatest phase of COVID-19 expansion isworldwide.
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During 2020, the ~~result~~behavior of ~~an estimated growth~~the currencies of ~~4.6%~~Argentina’s trade partners was heterogeneous. Half of them suffered a nominal currency depreciation, with the Brazilian Real depreciating by 20%. In contrast, the euro recorded a 9% appreciation and the Yuan 7%. In real terms, the Peso appreciated by 2.6% on average in ~~emerging market countries~~the year and ~~2.2% in developing market countries, and occurred in a context of accelerated growth in world trade (4.2% compared~~depreciated by 0.2% year-on-year according to ~~2.4% in 2017 and 2016, respectively).~~the Multilateral Real Exchange Rate Index prepared by the Central Bank.

~~After~~Commodities were highly affected by the ~~change~~health crisis in 2020. As of ~~administration in Argentina in late 2015, several corrective measures were put in place~~April 2020, commodities accumulated a drop of 24.7% with respect to December 2019 as a result of the ~~Argentine economy.~~global uncertainty caused by the spread of the virus. Then, with the gradual reopening of the economies and world trade, prices of commodities recovered and, as of December 2020, they were 28.2% above April’s minimum. As a result, prices accumulated 3.5% year on year fall against the close of 2019 and 12.4% as compared to the average of each year. In ~~2017,~~contrast, the ~~administration introduced further structural financial and economic reforms. The first measures adopted included~~prices of commodities exported by Argentina, measured by the ~~tax amnesty implemented~~commodities price index prepared by ~~late 2016. The Argentine~~the Central Bank ~~continued implementing its inflation goals and, despite failing~~grew by 17.7% year-on-year, while they only increased by 0.4% as compared to ~~reach~~ the ~~goal initially proposed~~annual average.
In Argentina, macroeconomic conditions in 2020 was mainly marked by the ~~Ministry~~health crisis that had a strong impact on the activity level, especially in April when the Mandatory Preventive Social Confinement (ASPO) was established to reduce mobility and control the spread of ~~Finance~~the virus. Thus, in ~~2016, managed~~an attempt to ~~materially reduce~~moderate the ~~inflation rate~~.impact of confinement on the economy, Argentina, like most of the countries in the world, was forced to engage in a fiscal expansion, which highly increased the fiscal deficit. In turn, considering the lack of access to international financial markets, and although Argentina finally reached an agreement for its debt restructuring in September 2020, such deficit was mostly funded through currency issuance, which generated an additional pressure on the different economic variables.

The Argentine Economy

Beginning in December 2001 and for most of 2002, Argentina experienced one of the most severe crises in its history which nearly left its economy at a standstill and deeply affected its financial sector. Between 2004 and 2009, the Argentine economy and the financial sector recovered considerably. Since 2009, the Argentine economy has shown increased ~~volatility, with years of practically no growth (2009, 2012 and 2014), and years of~~volatility. Macroeconomic conditions in 2020 were mainly marked by the health crisis that had a strong ~~(2010 and 2011) or slow (2013) growth.~~
In January 2007, the INDEC, which is the only institution in Argentina with the statutory authority to produce official nationwide statistics, modified the methodology used to calculate certain of its indices. On January 8, 2016, the Macri administration issued Decree No. 55/2016 declaring a state of administrative emergency with respect to the national statistical system and the INDEC until December 31, 2016. During this state of emergency, the INDEC suspended the publication of certain statistical data until it completed a reorganization of its technical and administrative structure to be capable of producing sufficient and reliable statistical information. Following the implementation of certain methodological reforms and the adjustment of macroeconomic statisticsimpact on the basis of these reforms, on June 15, 2016, the INDEC published the INDEC Report, including revised GDP data for the years 2004 through 2015. As of the date of this annual report, the INDEC has resumed publishing certain data, including inflation rates, GDP, foreign trade, poverty and balance of payment statistics among others.activity levels.

The table below includes certain economic indicators in Argentina for the years indicated:

December 31,

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

GDP real growth (%)**

8.0

9.0

4.1

(5.9
)
10.1

6.0

(1.0
)
2.4

(2.5
)
2.6

(2.2
)
2.9
(4)
Primary fiscal balance (excludes interest) (as a % of GDP)

2.9

2.5

2.5

1.2

1.4

0.2

(0.2
)
(0.7
)
(0.9
)
(2.7
)
(4.3
)*
3.9

Total public debt (as a % of GDP)**

70.6

62.1

53.8

55.4

43.5

38.9

40.4

43.5

44.7

53.5

54.2

53.7
(2)
Trade balance (in million U.S.$)**

12,393

11,273

12,577

16,886

11,382

9,020

12,008

1,521

3,178

(2,969
)
2,124

(8,471
)
Total deposits (as a % of GDP)**

23.3

22.4

20.1

15.8

22.4

20.8

22.2

22.2

21.1

22.8

23.5

23.1
(6)
Loans to the private sector (as a % of GDP)

10.4

11.9

11.2

8.4

11.8

13.2

14.2

14.7

12.9

13.7

13.1

15.4
(6)
Unemployment rate-end year- (%)

8.7

7.5

7.3

8.4

7.3

6.7

6.9

6.4

6.9

5.9
(3)
7.6

7.2
(5)
Inflation in consumer prices —Dec./Dec. - CPI INDEC (%)

9.8

8.5

7.2

7.7

10.9

9.5

10.8

10.9

23.9

26.9
(1)
41.0
(1)
24.8

Average nominal exchange rate (in Ps. Per U.S.$)

3.07

3.12

3.16

3.73

3.91

4.13

4.55

5.48

8.12

9.27

14.78

16.57

December 31,
2018 2019 2020
GDP real growth (%) (2.2 ) (2.2 ) (9.9 )
Primary fiscal balance (excludes interest) (as a % of GDP) (2.4 ) 0.4 ⁽²⁾ 6.5
Total public debt (as a % of GDP) 86.1 90.2 104.5
Trade balance (in million U.S.$) (3,700 ) 15,991 12,528
Total deposits (as a % of GDP) ⁽¹⁾ 27.3 14.7 18.6
Loans to the private sector (as a % of GDP) ⁽¹⁾ 14.6 9.8 9.6
Unemployment rate-end year- (%) 9.1 8.9 11.7
Inflation in consumer prices –Dec./Dec. - CPI INDEC (%) 47.6 53.8 36.1
Average nominal exchange rate (in Ps.Per U.S.$) 28.09 48.24 84.15

Source: INDEC, Central Bank and City of Buenos ~~Aires.~~Aires

(1) Company estimates based on Central Bank information
~~(1)Based on most recent publicly available information published by the City of Buenos Aires. See “~~~~Item 3.D—Risk Factors—If the current levels of inflation continue, the Argentine economy and our financial position and business could be adversely affected~~.”
(2) Company estimates based on information published by the Ministry of Economy
~~(2)As of June 30, 2017~~190
~~(3)As of September 30, 2015.~~
~~(4)For the fiscal year 2017.~~
~~(5)As of December 31, 2017.~~
~~(6)Annual estimate of GDP for 2017~~
**~~These figures are calculated in accordance with the latest methodological reforms and adjustments for macroeconomic statistics as of the date of this annual report.~~
~~***~~These figures are calculated in accordance with the latest methodological reforms and the adjustments for macroeconomic statistics as of the date of this annual report. It does not include funds transferred from the Central Bank and from the Treasury.
~~n/a means not available.~~
In ~~2013, Argentina’s real GDP grew 2.4% as compared to 2012, as domestic demand in 2013 helped to offset weak demand for Argentina’s exports.~~
In 2014, Argentina’s GDP contracted by 2.5% as compared to 2013, reflecting the impact of the deceleration of growth in developing economies on Argentina’s exports, growing uncertainty in the financial sector and fluctuations in foreign exchange rates.
In 2015, Argentina’s GDP increased by 2.5%, reflecting a recovery in consumption due to an improvement in the labor market and investment. GDP growth in 2015 was primarily driven by a 3.8% increase in gross investment, resulting from a 5.2% increase in total durable equipment of production and a 2.3% increase in construction, as well as a 4.0% increase in total consumption due to a 6.8% increase in public sector consumption and a 3.5% increase in private sector consumption.
~~In 2016,~~2018, Argentina’s GDP decreased ~~2.2%~~by 2.5%. ~~Imports of goods~~As regards quarterly evolution, the economic activity recorded a positive year-on-year growth rate only in the first quarter (4.1%) and ~~services increased by 5.7% while investments~~then negative rates in ~~durable equipment for production decreased by 5.1%. Exported goods~~the second (-3.8%), third quarter (-3.7%) and ~~services, however, increased by 3.7%~~in the fourth quarter (-6.2%).

In ~~2017,~~2019, Argentina’s GDP ~~recovered~~decreased by ~~2.9%~~2.2% recording (5.8)%, ~~recording 0.6%~~0.0%, ~~3.0%, 3.8%~~1.7% and ~~3.9%~~(1.1)% year-on-year growth rates for the four quarters of the year, respectively.

~~During 2016,~~In 2020, Argentina’s GDP decreased by 9.9% recording (5.2)%, (19.0)%, (10.1)% and (4.3)% year-on-year growth rates for the Macri administration introduced structural reforms in the financial and economic sectors. It was a transitional year in which macroeconomic corrections were made, such as the agreement reached with Argentina’s holdout creditors and the returnfour quarters of the Argentine government to the international debt market, the elimination of duties, the normalization of the INDEC, the adoption of energy efficiency measures and the universalization of benefits. The Central Bank adopted monetary measures that supported macroeconomic changes by strengthening the position of international reserves and by using a system of inflation targets. During 2017, the outcome of the mid-term legislative elections paved the way for the structural and social security reform law, which provides for a change in the calculation of pensions and for the possibility that employees work for an additional five years beyond the pension eligibility age. In addition, a tax agreement between the federal government and all provinces (except for San Luis) and the City of Buenos Aires was entered into to reduce taxation, and the Tax Reform Law was passed by Congress in the last session of 2017. Further, utility rates were adjusted, allowing the government to materially reduce subsidies. On December 27, 2017, the Central Bank adopted the inflation targets set by the Ministry of the Treasury for the next three years, ~~including targets of 15% for 2018, 10% for 2019 and 5% by the end of 2020, adjusting the pace of reduction announced in 2017 by one year.~~year, respectively.

Foreign Trade and Foreign Exchange Market

During ~~2017,~~2020, the trade balance accumulated a surplus of U.S.$12,530 million, resulting in a worsening over the positive result of U.S.$15,953 million reached in 2019, although trade surpluses were recorded in two consecutive years after six years of negative results. The trade balance dynamics is the result of a low activity level, with 13.8% in imports, below 2019 percentage. In summary, the worst performing imports in 2020 were fuels and lubricants (-40.6%) and vehicles and automobiles (-31.7%). On the other hand, exports also showed a poor performance with U.S.$~~8.5 billion deficit, compared~~54,885 million, down to 15.7% against 2019, with a ~~U.S.$2.0 billion surplus~~drop of 30.9% in ~~2016. While exports remained stable compared to 2016, imports increased by 19.7%. Exports recorded reductions~~industrial manufacturing and of 16.5% in ~~all sectors except for industrial manufactured goods, which grew by 9.1%. Imports grew in all sectors, except for fuel, which recorded a 3% drop. The imports of vehicles increased by 40%.~~fuels and energy.

~~International~~In 2020, as well as in 2019, a decrease was recorded in international reserves of U.S.$5,438 million, ending the year with a stock of U.S.$39,410 million. During the year, financial reserves recorded a fall of U.S.$4,190 million from September to November, amidst a context of uncertainty in which financial exchange rates substantially accelerated and higher restrictions were established on the purchase of foreign currency. In the last month of 2020, uncertainty decreased, which allowed the Central Bank ~~grew~~to purchase U.S. dollars and restore the international reserve stock by U.S.$~~15.7 billion, ending 2017 at~~758 million. In terms of components, the fall in reserves throughout 2020 was mainly due to the sale of foreign currency for U.S.$~~55.1 billion.~~4,169 million and payment to international agencies for U.S.$2,547 million. The international reserve dynamics benefited from the debt restructuring carried out in September, which enabled Argentina to stop payments of foreign debt services during 2020.

The ~~Nominal Exchange Rate~~nominal exchange rate ended ~~2017~~2020 at ~~Ps.18.80 to~~ U.S.$~~1.00, an 18.4% increase from December 31, 2016. While~~ 84.15, which meant a rise of the U.S. dollar value during the year of U.S.$24.25 or a peso devaluation of approximately 29%. The exchange rate dynamics throughout the year was stable under a controlled depreciation scheme implemented by the Central Bank ~~did not directly intervene~~which, on average, was in line with monthly inflation rates recorded during the year. During 2020 exchange restrictions imposed by late 2019 were tightened, which increased the gap between the official exchange rate and financial exchange rates. In fact, the blue-chip swap (arising from the difference in the quotation of Argentine stocks measured in pesos and in US dollars) reached 108% above the official exchange ~~market~~rate in any significant manner during most of the year, it did influence the Peso/U.S. dollar exchange value by the end of the year by reducting in the interest rates of medium term Letras del Banco Central (“LEBAC”), which encouraged a demand for US dollars.
~~Labor Market~~
~~In 2017, wages in Argentina increased by 27.5%~~October as a result of the tightening of the exchange controls established by mid-September.

Labor Market
In 2020, salaries showed a ~~26.5%~~year-on-year growth of 33%. Private sector registered employees’ salaries increased by 34.3% and in the non-registered private sector the increase was of 39%. In turn, the increase in the ~~total~~public sector was much lower, with a 26.8% increase.
The employment level was affected by the health crisis, recording a decrease despite the measures adopted by the Argentine Government seeking to maintain occupation levels, which included the prohibition of dismissals without cause and the payment of two severance payments in case of non-prohibited dismissals. In this context, according to data until November, a fall was recorded of 219,000 registered work positions, due to a drop of 212,000 in the number of registered ~~employees and~~workers. In contrast, the ~~31.5% increase~~number of workers under the ~~private sector non-registered employees. The wages of private sector~~ ~~registered employees~~Small Taxpayers’ Simplified Scheme grew by ~~27.3% and those of~~25,000, evidencing a deterioration in the ~~public sector grew by 25.0%. In all cases, wages grew above inflation.~~employment quality.
~~The~~
On the other hand, unemployment rates of the first, second and third quarters were 10.4%, 13.1% and ~~fourth~~11.7%, respectively, averaging 11.7% in the first three quarters of ~~2017 stood at 9.2%, 8.7%, 8.3% and 7.2%,~~ ~~respectively, averaging 8.4% in 2017. There was a slight decrease of 40 basis points in~~ the year. The average unemployment rate showed an increase of 161 basic points as compared to the ~~fourth~~first three quarters of 2019 (10.1% in 2019 against 11.7% in 2020). In addition, the activity rate went from 47.2% in the third quarter of ~~2017~~2019 to 42.3% in ~~comparison with that of~~ the ~~fourth~~third quarter of ~~2016.~~2020.

Fiscal Balance
The Argentine public sector recorded in 2020 a primary deficit without extraordinary revenues of $1,749,957.3 million (approximately 6.4% of the GDP) while the financial deficit was $2,292,830.5 million (8.3% of the GDP). These figures were due to a 23% year-on-year growth in total revenues (9.6 % below the inflation rate) as a result of the low activity level and a 63.5% increase in expenses (20 % above the inflation rate). Most expenses resulted from the aid provided to moderate the impact of ASPO. In fact, the Ministry of Economy estimated that the expense for the extraordinary measures adopted on account of the pandemic was of 3.5% of the GDP while the income on revenues worsened the fiscal result by 0.7% of the GDP.

In ~~February 2017,~~effect, social benefits grew by 68% against 2019, approximately 11% of which were used for IFE and the ~~Minister~~Labor and Production Assistance Program (ATP). On the other hand, during 2020, utilities rates were temporarily frozen, which accelerated such expense. In fact, expenses for subsidies grew by 105.9%, with energy subsidies recording the highest rise (129.9%).
In 2020, Ps.542,873 million were paid as interest, a 25% drop against 2019, representing 11.2% of the ~~Treasury, Nicolás Dujovne, announced fiscal account targets for 2017~~total revenues of the Argentine public sector (18.4% in 2019). The decrease in interest payments resulted mostly from the discontinuation of foreign debt service payments as from May and the subsequent debt restructuring which led to non- payment of such expenses during 2020.

As in 2019, ~~which include~~one of the critical aspects was the lack of access to financing by the Argentine Treasury. As aforesaid, a large portion of the primary deficit ~~goals~~had to be financed through monetary issue. In fact, the financial aid of ~~a 1% reduction per year~~the Central Bank in 2020 amounted to Ps.2,014,702 million, which represented 88% of the year’s financial deficit- More precisely, Temporary Advances totaled Ps.407,720 million (16% higher than in 2019) while the transfers of profits amounted to Ps.1,606,982 million (a 687% increase). On the other hand, in 2020 the Argentine government secured financing in the ~~fiscal deficit: 4.2%~~domestic market for approximately Ps.424,000 million in October, when the Argentine Treasury issued two Dollar Linked securities for Ps.250,000 million.
Argentina’s Sovereign Debt Restructuring
The Fernández administration has successfully restructured its foreign law-governed dollar-denominated debt, with an adhesion (of 93.55%, which due to the collective action clauses raised the restructuring to 99%), by September, 2020.
On August 17, 2020, Argentina amended the invitation to incorporate bondholders’ feedback and on August 31, 2020 it announced that it had obtained bondholders’ consents required to exchange and or modify 99.01% of ~~GDP~~the aggregate principal amount outstanding of all series of eligible bonds invited to participate in ~~2017, 3.2%~~the exchange offer. The invitation settled on September 4, 2020. As a result of ~~GDP in 2018~~the invitation, the average interest rate paid by Argentina’s foreign currency external bonds was lowered to 3.07%, with a maximum rate of 5.0%, compared to an average interest rate of 7.0% and ~~2.2%~~maximum rate of ~~GDP in 2019. The primary deficit goal~~8.28% prior to the invitation. In addition, the aggregate amount outstanding of ~~1.2% in~~Argentina’s foreign currency external bonds was reduced by 1.9% and the average maturity of such bonds was extended.
Regarding Argentine law-governed debt, on April 5, 2020, ~~was announced in~~the Argentine government enacted Decree No. 346/2020 (i) deferring the payments of principal and interest on certain of its foreign currency bonds governed by Argentine law until December ~~2017. According to~~31, 2020, or until such earlier date as the Ministry of Economy may determine, taking into account the ~~Treasury, the fiscal deficit for 2017 was 3.9%~~degree of GDP, exceeding the proposed objectives. To reduce the fiscal deficit, the government increased utilities rates, mainly of electricity and gas. A new Pension Law and a Tax Reform Law passed in December 2017 provide, among other things, for a reduction in income tax rates for companies that reinvest their profits and changes to the income tax treatment applicable to financial income, and reduction of employer contributions. Changes will be deployed over five years. During 2017, fiscal revenues increased by 23.0%, while expenses fiscal increased by 22.0%. Reduction in economic subsidies ((22)% since December 2016), in particularadvance in the ~~energy sector, contributed~~process designed to ~~fulfilling~~restore the ~~fiscal targets~~sustainability of ~~2017.~~Argentina’s public debt, and (ii) authorizing the Ministry of Economy to conduct liability management transactions or exchange offers, or to implement restructuring measures affecting foreign currency bonds governed by Argentine law which payments have been deferred pursuant to such Decree.

~~The government managed to secure funding in domestic and international debt markets, issuing bonds both in Pesos and in~~On August 18, 2020, Argentina offered holders of its foreign currency ~~while~~bonds governed by Argentine law to exchange such bonds for new bonds, in terms that were equitable to the ~~country risk (measured~~terms of the invitation made to holders of foreign law-governed bonds. On September 18, 2020, Argentina announced that holders representing 99.4% of the aggregate principal amount outstanding of all series of eligible bonds invited to participate in the local exchange offer had participated. As a result of the exchange offer, the average interest rate paid by ~~J.P. Morgan’s EMBI index + Arg.) strongly fell 103 basis points~~Argentina’s foreign currency bonds governed by Argentine law was lowered to 2.4%, compared to an average interest rate of 7.6% prior to the exchange. In addition, the exchange offer extended the average maturity of such bonds.
See “Item 3.D—Risk Factors—Risks Relating to Argentina—The Argentine government’s ability to obtain financing from ~~453~~the international loan and capital markets may be limited or costly, which may impair its ability to implement reforms and foster economic growth”

Monetary Policy
During 2020, the Central Bank announced changes in the monetary program intended to implement a more relaxed monetary policy, especially as from March, with the outbreak of the pandemic and its impact on the economy. As access to the debt market was restricted, the monetary entity was forced to provide financial aid to the Treasury throughout the year as described above. Concurrently, a drop in interest rates was recorded which, according to the Central Bank, sought to provide liquidity to households and companies during the health emergency. In this regard, the monetary policy interest rate (interest rate of Liquidity Bills) was at 38% by ~~late 2016~~early March, evidencing a fall of 17% against December 2019.
Then, after overcoming the most critical stage of the crisis, the Central Bank began a process to ~~350 by late 2017. This reduction came along with~~harmonize interest rates intended to encourage and protect savings in legal tender both from inflation and exchange rates through the construction of a ~~spread reduction from 91 basis points at~~peso-denominated interest rate curve. Thus, the performance of borrowing rates increased and the monetary policy interest rate went down to 36%, although later it went up to 38% again and remained there until the end of ~~2016~~the year. In turn, as part of its monetary policy, the Central Bank began to ~~only 22 basis points by~~assign more relevance to seven-day reverse repurchase transactions, which ended the ~~end of 2017 in Emerging Risk (measured by J.P. Morgan’s EMBI index + Arg.).~~year with a 36.5% rate.

Inflation

Argentina has faced and continues to face inflationary pressures. From 2011 to date, Argentina experienced increases in inflation as measured by CPI and WPI that reflected the continued growth in the levels of private consumption and economic activity (including exports and public and private sector investment), which applied upward pressure on the demand for goods and services.

On January 8, 2016, based on its determination that the INDEC had failed to produce reliable statistical information, particularly with respect to CPI, GDP and foreign trade data, as well as poverty and unemployment rates, former President Macri declared a state of administrative emergency for the national statistical system and the INDEC until December 31, 2016. The INDEC suspended publication of certain statistical data pending reorganization of its technical and administrative structure to recover its ability to produce reliable statistical information. The INDEC published official CPI figures published by the City of Buenos Aires and the Province of San Luis for reference for the first four months of 2016. In June 2016, the INDEC began publishing an official inflation rate using its new methodology for calculating the CPI.

According to the available public information based on data from the City of Buenos Aires, CPI grew 38.0% in 2014, 26.9% in 2015, 41.0% in 2016 and 26.1% in 2017, while according to the data of the Province of San Luis, CPI grew 31.9% in 2013, 39.0% in 2014, 31.6% in 2015, 31.4% in 2016 and 24.3% in 2017.
The INDEC reported an increase of 4.2% in CPI for May 2016, while the CPI measured by the Argentine Congress reported an increase of 3.5%. Based on the most recent information published by the INDEC, the CPI for the months of July, August, September, October, November and December 2016 registered variations of 2.0%, 0.2%, 1.1%, 2.4%, 1.6% and 1.2%, respectively, compared to the respective prior month. According to INDEC’s CPI, inflation was 16.9% for the period from May to December 2016.

On July 11, 2017, the INDEC started to publish a national CPI (the “National CPI”). The National CPI is based on a survey conducted by INDEC and several provincial statistical offices in 39 urban areas encompassing each of the Republic’s provinces. Results are not reported by the provinces, but on a national level and for six statistical regions: the Greater Buenos Aires Metropolitan area (which is the CPI that resumed publication in June 2016), the Cuyo region, the Northeast region, the Northwest region, the Central (Pampeana) Region and the Southern (Patagonia) region. ~~The inflation rate for June, July, August, September and October, November and December 2017 and January and February~~
~~2018 published by the INDEC using the National CPI methodology was 1.2%, 1.7%, 1.4%, 1.9%, 1.5 %, 1.4%, 3.1%,~~ ~~1.8% and 2.4%, respectively.~~ For the period of January through December ~~2017,~~2019, accumulated inflation using the National CPI was ~~24.6%.~~53.8% compared to 47.6% for 2018. In the past, the Argentine government has implemented programs to control inflation and monitor prices for essential goods and services, including attempts to freeze the price of certain supermarket products, and price support arrangements agreed between the Argentine government and private sector companies in several industries and markets that did not address the structural causes of inflation and failed to reduce inflation. Adjustments approved by the Argentine government in electricity and gas tariffs, as well as the increase in the price of gasoline have been passed through to prices, creating additional inflationary pressures.

The National CPI is prepared in accordance with current international standards and classifies individual consumption by purpose, previously used in the preparation of the former CPI. The adoption of the National CPI brings Argentina’s statistical practice in line with the OECD guidelines as well as the methodology followed by the statistical divisions of several international organizations, including the United Nations, World Bank, ~~International Monetary Fund,~~IMF, Economic Commission for Latin America and the Caribbean, and the Inter-American Development Bank.

According to the INDEC, in ~~2017,~~2020 inflation was ~~24.8%, above~~36.1% while the core inflation rate ~~target by~~(excluding regulated and seasonal goods prices) was 39.4%, as compared to the ~~currency authority, which~~53.8% rate and 56.7% core inflation rate in 2019. This accounts for a decrease of 17.7 and 17.4 percentage points, respectively, with regard to the 2019 inflation rate. Inflation was ~~between 12%~~more or less volatile during 2020. While starting the year at low levels of inflation -in the Argentine context- on April and March it reached its lowest level, 1.5% of increase, and on June it steadily continue to ~~17%. On~~grow until December, ~~27, 2017,~~when it reached its highest level, of 4.0%.
The greatest year-on-year price increases were recorded in the ~~Central Bank adopted the inflation targets set by the Ministry~~northeastern region of the ~~Treasury for~~country (42.2%), northwestern region of the ~~next three years, including targets~~country (38.1%), Pampa region (37.9%) Cuyo region (37.8%) and Patagonia region, the lowest recorded, (32.3%) while in the City of ~~15% for 2018, 10% for 2019~~Buenos Aires and ~~5% by~~Greater Buenos Aires inflation was below the ~~end of~~average (34.1%).
As regards inflation components in 2020, adjusting the pace of reduction announced in 2017 by one year. In the past, the Argentine government implemented programs to control inflation and monitor prices for essential goods and services, including attempts to freeze the prices of ~~certain supermarket products, and price support arrangements agreed between~~goods increased by 43% while prices of services increased by 22.2%. As in previous years, such increase was due to the ~~Argentine government and private sector companies~~strong peso devaluation, as the rise in ~~several industries and markets.~~the exchange rate impacts more on goods than on services due to the tradable nature of goods, with the addition of a strong increase in monetary issuance.

During periods of high inflation, effective wages and salaries tend to fall and consumers adjust their consumption patterns to eliminate unnecessary expenses. The increase in inflationary risk may erode macroeconomic growth and further limit the availability of financing, causing a negative impact on our operations. See “Item 3.D—Risk Factors—Risks Relating to Argentina—If the current levels of inflation continue or increase, the Argentine economy and our financial position and business could be adversely affected.”

~~Inflation increases also have a negative impact on our administrative expenses, in particular our payroll and social security charges.~~The Financial System

The ~~Financial System~~COVID-19 pandemic affected the financial market throughout 2020, as in most of the countries worldwide. In Argentina, banks remained closed from March 20 to April 3, and as from that date they opened only gradually, first for senior citizens and beneficiaries of ANSES financed assistance programs, and as of April 13 for all customers, by prior appointment and for limited transactions.

At the same time, to mitigate the economic impact of the COVID-19 pandemic, the Central Bank adopted various measures applicable to banks, such as: (i) deferral of loan repayment during the first days of the lockdown, (ii) no charges for ATM transactions, (iii) automatic 12-month refinancing of unpaid balances of credit cards due in April and September 2020 at a 43% and 40% interest rate, respectively, (iv) automatic rescheduling of unpaid loan installments due as of April 2020 and throughout 2020 and until March 31, 2021, (v) no closing of accounts by banks, (vi) minimum interest rate payable by financial entities for time deposits, (vii) flexibilization of criteria for debtor classification and allowance for bad debts, and (viii) no dividend distribution by financial entities until June 2021.
As in 2019, the financial system liquidity management remained high. In fact, the broad liquidity ratio (including not only cash but also Central Bank instruments and the 2022 Argentine Treasury Bonds recorded as reserve requirements) of the banks in aggregate reached 62.1% of deposits in November 2020, recording an increase of 3.3% as compared to the prior year. At the same time, the financial system liquidity remained high, ending at 78.2% in 2020, which showed a 20.3% increase as compared to 2019.

In ~~2015,~~addition, solvency ratios in the financial system continued to be historically high. The regulatory capital adequacy ratio of the sector totaled 23.3% of the risk weighted assets (RWA), according to the December data, which represents an excess adequacy of almost two times (177%) that stipulated by applicable regulations, and 208% higher if we consider only private financial entities.
In 2020 private sector total deposits in the financial system increased by ~~Ps.375.0 billion, representing a 38.3% increase from 2014, as reported~~64.1% (20.6% above inflation rate), closing the year at $6,125,392 million. By currency, deposits in Pesos ended the year at Ps. 4,876,109 million, increasing by ~~the Central Bank. Public sector~~85,2% (36% in real terms), while deposits in US dollars measured in Pesos slightly increased by ~~Ps.33.6 billion~~15,3% (16.5% below price increase) totaling $1,249,283 million, while the same deposits measured in ~~2015, representing~~US dollars dropped by 18% as a ~~13.1% increase from 2014. Non-financial~~result of the outflow recorded following the uncertainty during September and October following the rise of financial exchange rates. By type of deposit in the private sector ~~deposits increased by Ps.337.3 billion~~ in ~~2015, representing a 47.2%~~Pesos, the increase from 2014, primarily driven by a Ps.263.5 billion increase, or a 40.7% increase in Peso deposits. Further, in 2015, foreign currency deposits increased by Ps.78.8 billion or 101.8%. In terms of Peso deposits, the most significant were time deposits, which increased by Ps.159.0 billion or 56.1% from 2014, followedwas led by savings accounts ~~registering~~(+105.3% in nominal terms and 50.8% in real terms%) and, to a ~~Ps.57.7 billion increase or 32.8% increase from 2014, and~~lesser extent, by checking accounts ~~which increased by Ps.42.0 billion or 25.2% from 2014.~~(+82.7% in nominal terms and 34.2% in real terms) and time deposits (79.3% in nominal terms and 32% above the inflation rate).

~~The Central Bank reported that~~ Additionally, total ~~loans increased by Ps.245.6 billion in 2015, representing a 36.9% increase from 2014. Non-financial~~ private sector loans recorded a year-on-year increase of 28.5% on average (-5.6% in real terms) and totaled Ps. 3,226,630 million. Private sector loans in Pesos grew by 49.4%, 9.7% above the inflation rate after the poor performance in 2019. At product level, a great dispersal was observed: documents increased by ~~Ps.223.9 billion or 37.1% from 2014. This increase was mainly due to an increase~~120.4% (61.9% in ~~loans denominated in Pesos, which~~real terms) while cards grew by ~~Ps.208.5 billion or 37.0% from 2014, while foreign currency~~58.6% (16.5% above the inflation rate). Mortgage loans ~~increased by Ps.10.5 billion or 37.0%. The total amount~~recorded a slight decrease of Peso loans increased in almost every category. With respect to loans to businesses, overdrafts increased by Ps.21.9 billion or 33.7% and secured loans increased by Ps.54.6 billion or 39.5%. With respect to consumer credit, credit card loans increased by Ps.65.7 billion or 54.2%0.1% (26.6% below the inflation rate), and personal loans grew by ~~Ps.44.0 billion or 37.4%~~10.3% (19% in real terms). ~~Finally, mortgages and pledge loans each registered an~~The significant increase of ~~Ps.7.4 billion, representing an increase~~documents was due to the financing to SMEs and MiPyMe credit lines, at subsidized rates for payroll payments during the health emergency, within the framework of ~~15.4% and 22.6%, respectively.~~
~~In 2016, total deposits~~ ~~increased by Ps.613.1 billion, representing~~ a ~~45.2% increase from 2015, as reported~~countercyclical behavior of credit policy promoted by the Central Bank. ~~Public sector deposits increased by Ps.145.4 billion in 2016, representing a 50.2% increase~~

Argentine Financial System Statistics from 2015. Non-financial private sector deposits increased by Ps.463.4 billion in 2016, representing a 44.0% increase from 2015, primarily driven by a Ps.243 billion increase, or a 26.7% increase in Peso deposits and by Ps.231.3 billion in 2016, representing a 44.0% increase in foreign currency deposits. In terms of Peso deposits, the most significant were savings
~~accounts, registering a Ps.97.5 billion~~ ~~increase or 41.8% increase from 2015 followed by checking accounts, which increased by Ps.80.2 billion or 38.6% from 2015 and time deposits, which increased by Ps.54.6 billion or 12.3% from 2015.~~
~~The Central Bank reported that total loans~~ ~~increased by Ps.257.0 billion in 2016, representing a 28.3% increase from 2015. Non-financial private sector loans increased by Ps.266.2 billion or 32.5% from 2015. This increase was mainly due~~2011 to an increase in foreign currency loans, which grew by Ps.105.2 billion or 272.6% from 2015, while loans denominated in local currency increased by Ps.147.3 billion or 19.2%. The total amount of Peso loans increased in almost every category. With respect to loans to businesses, overdrafts increased by Ps.14.5 billion or 16.6% and secured loans increased by Ps.9.2 billion or 4.8%. With respect to consumer credit, credit card loans increased by Ps.46.7 billion or 24.6% and personal loans grew by Ps.60.1 billion or 37.3%. Finally, mortgages and pledge loans each registered an increase of Ps.5.7 and Ps.13.1 billion, representing an increase of 10.4% and 32.7%, respectively.
~~In 2017, total deposits~~ increased by Ps.477.4 billion, representing a 24.3% increase from 2016, as reported by the Central Bank. Public sector deposits increased by Ps.19.6 billion in 2017, representing a 4.5% increase from 2016. Non-financial private sector deposits increased by Ps.452.5 billion in 2017, representing a 29.8% increase from 2016, primarily driven by a Ps.294.8 billion increase, or a 25.5% increase in Peso deposits and by Ps.182.9 billion increase, or a 47.2% increase in foreign currency deposits. In terms of Peso deposits, the most significant were savings accounts, registering a Ps.144.9 billion increase or 43.8% increase from 2016 followed by time deposits, which increased by Ps.107.2 billion or 21.5% from 2016 and checking accounts, which increased by Ps.29.8 billion or 10.3% from 2016.
~~The Central Bank reported that non-financial private sector loans increased by Ps.~~546.7 billion or 51.7% from 2016. This increase was mainly due to an increase in foreign currency loans, which grew by Ps.134.1 billion or 93.3% from 2016, while loans denominated in local currency increased by Ps.413.3 billion or 45.2%. The total amount of Peso loans increased in every category. With respect to loans to businesses, overdrafts increased by Ps.18.2 billion or 17.9% and secured loans increased by Ps.88.2 billion or 43.9%. With respect to consumer credit, credit card loans increased by Ps.56.4 billion or 23.8% and personal loans grew by Ps.130.7 billion or 59.1%. Finally, mortgages and pledge loans each registered an increase of Ps.68.8 and Ps.35.1 billion, representing an increase of 112.6% and 65.8%, respectively.
Throughout 2016, the new authorities of the Central Bank pursued monetary stability through a monetary policy with inflation targets, financial stability focused on the development and the deepening of the domestic financial system and the adoption of measures that promote bankarization, financial inclusion, and the use of electronic means of payment.
Beginning in January 2017, the Central Bank implemented a scheme of inflation targets with annually decreasing objectives, originally until 2019, which uses the 7-day repo reference rate as the anchor of its inflation targeting regime. The Central Bank determined a “rates corridor”, defined by the spread between active and passive repo rates, from which the monetary policy rate is derived. The inflation target range for 2016 was between 20.0%-25.0% and for 2017 it was set between 12.0%-17.0%. In 2017, however, inflation failed to subside as expected, and the monetary policy rate was increased to quicken the pace of deceleration and minimize the impact of the upcoming adjustments to regulated prices (electricity and gas). On December 27, 2017, the Central Bank adopted the inflation targets set by the Ministry of the Treasury for the next three years, including targets of 15% for 2018, 10% for 2019 and 5% by the end of 2020, adjusting the pace of reduction announced in 2017 by one year.
~~According to the Central Bank, ROAA was~~ 3.0% in 2017, as compared to 3.7% in 2016, and ROAE for the financial system was 24.9% in 2017, as compared to 29.7% in 2016. Further, the Central Bank indicated that the interest rate margin decrease was 10.4% of assets in 2017, as compared to 11.4% of assets in 2016. Net income from services represented 3.6% of assets in 2017, as compared to 3.8% of assets in 2016. Loan loss provisions resulting from the increase in private loan delinquencies totaled 1.0% of assets in 2017, as compared to 0.8% of assets in 2016.
~~The following table shows average loans to the private sector in Argentina calculated on a daily basis:~~

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in millions of Pesos)

(in percentages)

Loans

Overdrafts

111,454.8

101,672.3

80,424.9

9.6
%
26.4
%
Promissory notes

226,346.0

179,359.5

153,542.2

26.2
%
16.8
%
Mortgage loans

82,527.2

55,750.3

49,973.0

48.0
%
11.6
%
Automobile and other secured loans

69,654.1

43,695.2

35,310.8

59.4
%
23.7
%
Personal loans

281,342.9

184,777.1

137,856.6

52.3
%
34.0
%
Credit cards

242,480.7

194,295.1

137,645.7

24.8
%
41.2
%
U$S loans

206,525.9

92,786.4

35,206.3

122.6
%
163.6
%
Others

42,836.6

36,678.8

43,141.8

16.8
%
(15.0
)%
~~Source: Central Bank.~~2020.

The following table shows the ~~average deposits from the private sector in Argentina calculated on a daily basis:~~

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in millions of Pesos)

(in percentages)

Deposits

Checking accounts

434,781.2

340,292.6

290,072.2

27.8
%
17.3
%
Savings accounts

359,059.8

255,201.8

202,278.1

40.7
%
26.2
%
Time deposits

693,892.0

581,081.0

452,483.5

19.4
%
28.4
%
Private sector

1,603,057.3

1,170,012.2

832,231.7

37.0
%
40.6
%
~~Source: Central Bank.~~
~~The following table shows the average BADLAR rate calculated on a daily basis:~~

Year ended December 31,

2017

2016

2015

BADLAR Rate

23.25
%
19.88
%
27.25
%
TM20

23.69
%
NA

NA

~~Source: Central Bank.~~
~~Argentine Financial System Statistics from 2005~~2011 to ~~2017.~~
~~The following table shows the 2005 to 2017~~2020 evolution of major ~~balance sheet~~financial statements items for the financial system:

December 31,

December 31,

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020⁽¹⁾

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

(in millions of Pesos)

(in millons of Pesos)
Assets

221,962

258,384

297,963

346,762

387,381

510,304

628,381

790,026

1,004,775

1,340,548

1,847,314

2,645,673

3,468,783

628,381 790,026 1,004,775 1,340,548 1,847,314 2,645,673 3,468,783 5,531,805 6,733,723 9,929,924
Liabilities

195,044

225,369

261,143

305,382

339,047

452,752

558,264

699,205

883,086

1,172,335

1,620,451

2,348,461

3,067,587

558,264 699,205 883,086 1,172,335 1,620,451 2,348,461 3,067,587 4,921,168 5,836,745 8,435,324
Shareholders’ equity

26,918

33,014

36,819

41,380

48,335

57,552

70,117

90,820

121,689

168,213

226,863

297,212

401,196

70,117 90,82 121,689 168,213 226,863 297,212 401,196 610,637 896,979 1,494,600
Capital, contributions, reserves

37,440

36,859

37,930

38,571

39,538

41,204

44,587

59,395

73,219

89,307

126,264

212,157

311,814

44,587 59,395 73,219 89,307 126,264 212,157 311,814 389,773 562,788 1,697,285
Retained earning

(10,522
)
(3,845
)
(1,172
)
2,809

8,797

16,348

25,530

31,426

48,471

78,907

100,600

85,055

89,382

25,53 31,426 48,471 78,907 100,6 85,055 89,382 220,864 334,190 202,685
Loans

84,171

103,668

132,157

154,719

169,868

230,127

332,317

433,925

563,344

649,206

886,046

1,136,954.6

1,691,214

332,317 433,925 563,344 649,206 886,046 1,136,954.6 1,691,214 2,278,387 2,728,821 3,211,778
Non-financial public sector

25,836

20,874

16,772

17,083

20,570

25,907

31,346

39,951

48,438

51,470

75,254

52,25

37,738

31,346 39,951 48,438 51,47 75,254 52,25 37,738 49,351 104,130 83,685
Financial sector

2,450

4,962

5,030

4,793

4,052

5,018

9,263

10,299

13,049

10,729

13,199

26,426

44,306

9,263 10,299 13,049 10,729 13,199 26,426 44,306 61,653 58,154 56,964
Non-financial private sector

55,885

77,832

110,355

132,844

145,247

199,202

291,708

383,674

501,857

604,062

819,174

1,085,655

1,655,049

291,708 383,674 501,857 604,062 819,174 1,085,655 1,655,049 2,254,399 2,721,077 3,263,673
Provisions

(4,930
)
(3,728
)
(4,089
)
(4,744
)
(5,824
)
(6,232
)
(7,173
)
(9,596
)
(13,117
)
(17,054
)
(21,581
)
(27,952
)
(45,879
)
(7,173) (9,596) (13,117) (17,054) (21,581) (27,952) (45,879) 87,016 154,540 192,545
Deposits

136,492

170,898

205,550

236,217

271,853

376,344

462,517

595,764

752,422

979,388

1,355,353

1,969,029

2,445,998

462,517 595,764 752,422 979,388 1,355,353 1,969,029 2,445,998 4,085,244 4,838,130 7,354,985
Non-financial public sector

34,019

45,410

48,340

67,151

69,143

115,954

129,885

163,691

202,434

256,996

291,104

441,890

457,657

129,885 163,691 202,434 256,996 291,104 441,89 457,66 864,851 763,188 1,296,526
Non-financial private sector

100,809

123,431

155,048

166,378

199,278

257,595

328,463

427,857

544,331

720,645

1,062,590

1,521,687

1,981,988

328,463 427,857 544,331 720,645 1,062,590 1,521,687 1,981,988 3,207,397 4,056,973 6,036,052

Source: Central ~~Bank~~Bank. Figures are expressed in original currency, not adjusted for inflation.
(1) Figures as of September 30, 2020.
The table below shows the evolution of the number of financial institutions in the system:

December 31,

December 31,

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2011 2012 2013 2014 2015 2016 2017 2018 2019
2020⁽¹⁾
Banks

71

72

67

67

66

64

64

65

66

65

62

63

62

64 65 66 65 62 63 62 63 63 64
Public banks

13

12

12

12

12

12

12

12

12

12

13

13

13

12 12 12 12 13 13 13 13 13 13
Private banks

58

60

55

55

54

52

52

53

54

53

49

50

49

52 53 54 53 49 50 49 50 50 51
Private argentine capital banks

34

35

33

33

32

32

31

33

34

33

32

33

33

31 33 34 33 32 33 33 34 34 35
Foreign capital domestic banks

12

13

12

12

12

11

12

11

11

11

10

10

9

12 11 11 11 10 10 9 9 9 9
Foreign financial institution branch banks

11

11

9

9

9

9

9

9

9

9

7

7

7

9 9 9 9 7 7 7 7 7 7
Financial companies

16

16

16

15

15

14

14

14

15

15

15

14

14

14 14 15 15 15 14 14 14 15 15
Credit unions

2

2

2

2

2

2

2

2

1

1

1

1

1

2 2 1 1 1 1 1 1 0 0
Total financial institutions

89

90

85

84

83

80

80

81

82

81

78

78

77

80 81 82 81 78 78 77 78 78 79

Source: Central ~~Bank~~Bank. Figures are expressed in original currency, not adjusted for inflation.
(1) Figures as of September 30, 2020.
197

~~The graph below shows the evolution of loans and deposits growth in Argentina:~~
~~Source: Central Bank~~
The graph below shows the evolution of the private sector loans portfolio composition in Argentina:

Source: Central Bank. Figures are expressed following Argentine Banking GAAP. Until December 31, 2019 did not apply IFRS 9 provisions. Figures are expressed in original currency and not adjusted for inflation. Since January 2020, Central Bank figures are expressed applying the provisions set forth in Law No. 27,429.

The graph below shows the evolution of non-performing loan ratios in Argentina:

Source: Central Bank. Figures are expressed following Argentine Banking GAAP. Until December 31, 2019 did not apply IFRS 9 provisions. Figures are expressed in original currency and not adjusted for inflation. 2020 information is impacted by i) the relief program ruled by the Central Bank amid the pandemic which allowed debtors to reschedule their loan payments originally maturing between April 2020 and March 2021, together with the automatic rescheduling of unpaid credit card balances due April and September 2020, and ii) the Central Bank regulatory easing on debtor classifications amid the pandemic (adding a 60-days grace period before loans are classified as non-performing) and the suspension of mandatory reclassification of customers that are non-performing with other banks, but performing with Supervielle introduced in 1Q20 and extended until June 30, 2021.

The following graph shows the evolution of non-performing loans coverage, measured as allowances over non-performing loans:

Source: Central Bank. Figures are expressed following Argentine Banking GAAP. Until December 31, 2019 did not apply IFRS 9 provisions. Figures are expressed in original currency and not adjusted for inflation. 2020 information is impacted by i) the relief program ruled by the Central Bank amid the pandemic which allowed debtors to reschedule their loan payments originally maturing between April 2020 and March 2021, together with the automatic rescheduling of unpaid credit card balances due April and September 2020, and ii) the Central Bank regulatory easing on debtor classifications amid the pandemic (adding a 60-days grace period before loans are classified as non-performing) and the suspension of mandatory reclassification of customers that are non-performing with other banks, but performing with Supervielle introduced in 1Q20 and extended until June 30, 2021.

The following graphs show the evolution of ROAA and ROAE in Argentina:

Source: Central Bank. Figures are expressed following Argentine Banking GAAP. Until December 31, 2019 did not apply IFRS 9 provisions. Figures are expressed in original currency and not adjusted for inflation. Since January 2020, Central Bank figures are expressed applying hyperinflation accounting.

Source: Central Bank. Figures are expressed following Argentine Banking GAAP. Until December 31, 2019 did not apply IFRS 9 provisions. Figures are expressed in original currency and not adjusted for inflation. Since January 2020, Central Bank figures are expressed applying hyperinflation accounting.

Since January 2020, Central Bank figures are expressed applying hyperinflation accounting, in accordance to IFRS rule IAS 29. The following table shows ROAE and ROAA adjusted for inflation as of Dicember 31, 2020:
Financial System Private Banks
ROAA 2.2 2.4
ROAE 15.1 15.1
The table below shows the inflation rates over the past 10 years:
December 31,
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Inflation in consumer prices –INDEC (%) 9.5 10.8 10.9 23.9 26.9⁽¹⁾ 41.0 24.8 47.6 53.8 36.1
Source:
Information from 2011 to 2015: City of Buenos Aires.
Information since 2017: Indec
The following tables show market share of Argentine banks in terms of assets, loans and deposits as of ~~December 31, 2017~~September 30, 2020 according to the Central Bank:

Market Share of Assets Market Share of Loans
Banco de la Nación Argentina S.A. 18.8 % Banco de la Nación Argentina S.A. 16.8 %
Banco Santander Río S.A. 9.1 % Banco de Galicia y Buenos Aires S.A. 12.0 %
Banco de Galicia y Buenos Aires S.A. 8.7 % Banco Santander Río S.A. 10.4 %
Banco de la Provincia de Buenos Aires 8.6 % Banco de la Provincia de Buenos Aires 8.3 %
Banco Macro S.A. 7.2 % Banco Macro S.A. 7.4 %
BBVA Banco Francés S.A. 5.8 % BBVA Banco Francés S.A. 7.3 %
Credicoop Cooperativo Limitado 3.9 % Banco de la Ciudad de Buenos Aires 3.7 %
HSBC Bank Argentina S.A. 3.8 % ICBC S.A. 3.5 %
Banco de la Ciudad de Buenos Aires 3.5 % HSBC Bank Argentina S.A. 3.4 %
Citibank N.A. 3.3 % Banco Patagonia S.A. 2.9 %
ICBC S.A. 3.2 % Banco Supervielle S.A. 2.7 %
Banco Patagonia S.A. 2.7 % Banco de la Provincia de Córdoba S.A. 2.3 %
Banco de la Provincia de Córdoba S.A. 2.4 % Credicoop Cooperativo Limitado 1.8 %
Banco Supervielle S.A. 2.2 % Itau Argentina 1.7 %
Nuevo Santa Fe 1.7 % BICE SA 1.5 %

Market Share of ~~Assets~~
Deposits
Banco de la Nación Argentina S.A.
~~20.5~~
20.7
%
~~Banco Santander Río S.A.~~
~~9.6~~
%
Banco de la Provincia de Buenos Aires
~~8.8~~
9.8
%
Banco Santander Río S.A.
9.3 %
Banco de Galicia y Buenos Aires S.A.
~~8.6~~
8.4
%
Banco Macro S.A.
6.5 %
BBVA Banco Francés S.A.
~~6.4~~
5.4
%
~~Banco Macro S.A.~~
Credicoop Cooperativo Limitado
~~6.1~~
4.0
%
~~HSBC Bank Argentina S.A.~~
~~3.6~~
%
Banco de la Ciudad de Buenos Aires
~~3.3~~
3.9
%
~~ICBC~~HSBC Bank Argentina S.A.
~~3.2~~
3.6
%
~~Credicoop Cooperativo Limitado~~
Citibank N.A.
~~3.0~~
3.3
%
~~Banco Patagonia~~ICBC S.A.
~~2.7~~
2.8
%
~~Banco Supervielle SA~~
~~2.6~~
%
~~Citibank N.A.~~
~~2.0~~
%
Banco de la Provincia de Córdoba ~~S.A~~
S.A.
~~1.9~~
2.8
%
Banco ~~Hipotecario~~Patagonia S.A.
~~1.7~~
2.6
%
Banco Supervielle S.A. 2.3 %
Nuevo Santa Fe 1.8 %

~~Market Share of Loans~~
~~Banco de la Nación Argentina S.A.~~
~~13.9~~
%
~~Banco Santander Río S.A.~~
~~9.8~~
%
~~Banco de la Provincia de Buenos Aires~~
~~9.8~~
%
~~Banco de Galicia y Buenos Aires S.A.~~
~~9.4~~
%
~~BBVA Banco Francés S.A.~~
~~7.3~~
%
~~Banco Macro S.A.~~
~~7.2~~
%
~~HSBC Bank Argentina S.A.~~
~~3.9~~
%
~~Banco de la Ciudad de Buenos Aires~~
~~3.8~~
%
~~ICBC S.A.~~
~~3.6~~
%
~~Banco Patagonia S.A.~~
~~3.3~~
%
~~Banco Supervielle SA~~
~~3.0~~
%
~~Credicoop Cooperativo Limitado~~
~~2.7~~
%
~~Banco de la Provincia de Córdoba S.A~~
~~1.9~~
%
~~Banco Hipotecario S.A.~~
~~1.9~~
%
~~Nuevo Santa Fe~~
~~1.6~~
%
~~Market Share of Deposits~~
~~Banco de la Nación Argentina S.A.~~
~~23.2~~
%
~~Banco de la Provincia de Buenos Aires~~
~~10.6~~
%
~~Banco Santander Río S.A.~~
~~9.6~~
%
~~Banco de Galicia y Buenos Aires S.A.~~
~~8.2~~
%
~~BBVA Banco Francés S.A.~~
~~6.3~~
%
~~Banco Macro S.A.(1)~~
~~5.4~~
%
~~Credicoop Cooperativo Limitado~~
~~3.6~~
%
~~Banco de la Ciudad de Buenos Aires~~
~~3.6~~
%
~~HSBC Bank Argentina S.A.~~
~~3.5~~
%
~~Banco Patagonia S.A.~~
~~2.8~~
%
~~ICBC S.A.~~
~~2.7~~
%
~~Banco Supervielle SA~~
~~2.5~~
%
~~Banco de la Provincia de Córdoba S.A~~
~~2.3~~
%
~~Nuevo Santa Fe~~
~~1.5~~
%
~~Citibank N.A.~~
~~1.4~~
%
Source: Central Bank.

With respect to the distribution network, as of ~~December 31, 2017,~~September 30, 2020, the financial system had ~~4,497~~4,599 branches, ~~6,358~~8,282 self-service terminals and ~~14,707~~17,294 ATMs, with coverage throughout Argentina.

The table below shows the distribution of the network by jurisdiction as of ~~December 31, 2017.~~September 30, 2020.

Jurisdiction

Branches

ATMs

Self-Service
Terminals

City of Buenos Aires

843

2,534

1,575

Buenos Aires

1,449

4,578

1,766

Catamarca

22

84

19

Córdoba

437

1,518

450

Corrientes

77

267

52

Chaco

65

317

53

Chubut

69

258

82

Entre Ríos

132

475

182

Formosa

26

129

14

Jujuy

34

189

76

La Pampa

73

172

26

La Rioja

27

105

24

Mendoza

173

494

261

Misiones

65

287

103

Neuquén

80

276

84

Río Negro

75

254

118

Salta

69

328

134

San Juan

40

186

73

San Luis

51

175

70

Santa Cruz

48

169

52

Santa Fe

477

1,224

912

Santiago del Estero

54

230

41

Tucumán

87

367

145

Tierra del Fuego

24

91

46

Total

4,497

14,707

6,358

Jurisdiction Branches ATMs Self-Service Terminals
City of Buenos Aires 829 2677 1888
Buenos Aires 1492 5206 2803
Catamarca 21 180 27
Córdoba 460 1745 544
Corrientes 81 392 70
Chaco 68 406 73
Chubut 71 282 92
Entre Ríos 130 543 206
Formosa 29 165 20
Jujuy 35 225 87
La Pampa 73 228 28
La Rioja 28 167 35
Mendoza 174 675 331
Misiones 67 344 137
Neuquén 85 367 99
Río Negro 81 310 149
Salta 72 398 155
San Juan 39 223 88
San Luis 47 190 80
Santa Cruz 51 219 65

Jurisdiction Branches ATMs Self-Service Terminals
Santa Fe 486 1533 1042
Santiago del Estero 58 282 51
Tucumán 97 425 164
Tierra del Fuego 25 112 48
Total 4599 17294 8282
Presentation of Financial Statements in ~~Pesos. Inflation~~.Pesos; Inflation.

Historically, inflation in Argentina has played a significant role in influencing the economic conditions in Argentina and, in turn, the operations and financial results of companies operating in Argentina, such as Grupo Supervielle.

Argentina has faced and continues to face inflationary pressures. From 2011 to date, Argentina experienced increases in inflation as measured by the ~~wholesale price index~~ WPI that reflected the continued growth in the levels of private consumption and economic activity (including exports and public and private sector investment), which applied upward pressure on the demand for goods and services.

During periods of high inflation, effective wages and salaries tend to fall and consumers tend to accelerate their consumption patterns and also eliminate unnecessary expenses. The increase in inflationary risk may erode macroeconomic growth and further limit the availability of financing, causing a negative impact on our operations.
However, the government expects to reduce the current level of inflation promoting monetary stability and introducing a program for the systematic and sustainable lowering of inflation. WPI decreased to 19% from 35% in 2017.

IAS 29 requires that financial statements of any entity whose functional currency is the currency of a hyperinflationary economy, be stated in terms of the measuring unit current at the end of the reporting period. IAS 29 does not establish a set inflation rate beyond which an economy is deemed to be experiencing hyperinflation. However, hyperinflation is commonly understood to occur when changes in price levels are close to or exceed 100% on a cumulative basis over the last three years, along with other several macroeconomic-related qualitative factors.
~~Despite the high inflation rates in Argentina in recent years, we conducted an analysis pursuant to the~~ Following this criteria, set forth in IAS 29 and we have determined that Argentina does not qualify as a hyperinflationary economy for any of the years included in our audited consolidated financial statements included in this annual report. Once we have completed our transition to IFRS, if we determine that Argentina qualifies as a hyperinflationary economy, we may need to restate our audited consolidated financial statements and other financial information. In making our determination, we considered the lack of objective data available regarding the CPI; the existence of other qualitative and quantitative indicators, such as the program established by the Argentine Central Bank to foster monetary stability that aims to induce a systematic and sustainable low inflation rate, the alternative WPI, according to which the inflation rate was below 100% in the three-year cumulative period ended December 31, 2017; and that the market has evidenced a strong downward trend in inflation rates during December 2017. We believe that our analysis and conclusion is consistent with that of most public entities in Argentina. We reassess inflation data periodically to determine whether this conclusion continues to be applicable. See “Item 3.D. Risk Factors—Risks Relating to Argentina—~~If the high levels of inflation continue, the~~ Argentine economy ~~may~~must be considered hyperinflationary ~~for purposes of~~according to IAS 29 ~~which could~~starting July 1, 2018. As a consequence, financial statements for the year ended on December 31, 2020 have ~~an impact on our audited~~been stated in terms of the measuring unit current at the consolidated financial ~~statements and other financial information, and we may need to adjust or restate our audited consolidated financial statements and other information.”~~
Notwithstanding the foregoing, certain macroeconomic indicators have experienced a significant annual variation, a fact that must be considered when evaluating and interpreting our results of operations and financial condition as reflected in our audited consolidated financial statements included in this annual report. See “Item 3.D. Risk Factors—Risks Relating to Argentina—Economic and political instability in Argentina may adversely and materially affect our business, results of operations and financial condition.”statement date.

The following table shows the rate of inflation, as measured by the variations in the WPI and the CPI, according to INDEC and the evolution of the reference stabilization coefficient (“CER,” per its Spanish acronym) index and UVA used to adjust the principal of certain of our assets and liabilities, for the periods indicated. The accuracy of the measurements of INDEC is in doubt, and the actual CPI and WPI for periods prior to January 2016 could be substantially higher than those indicated by INDEC. On January 8, 2016, Decree No. 55/2016 was issued by the Argentine government declaring a state of administrative emergency on the national statistical system and on the official agency in charge of the system, the INDEC, until December 31, 2016. Following the declared emergency, the INDEC ceased publishing statistical data until it rearranged its technical and administrative structure. During the implementation of these reforms, however, INDEC used official CPI figures and other statistics published by the Province of San Luis and the City of Buenos Aires. Despite these expected reforms, there is uncertainty as to whether official data will be sufficiently corrected and within what time period such data will be corrected, and what effect these reforms will have on the Argentine economy. According to the most recent publicly
available information based on data from the City of Buenos Aires, as shown in the second table below, CPI grew 26.6% in 2013, 38.0% in 2014, 26.9% in 2015, 41.0% in 2016 and 26.1% in 2017. According to the INDEC’s CPI figures, inflation was 16.9% between May and December 2016. The INDEC reported a cumulative variation of the CPI of 24.8% for 2017, while the CPI measured by the Argentine Congress registered an increase of 24.6%. The CPI variation was of 1.8% for the month of January 2018, compared to the previous month. For information on INDEC figures see “Item 3.D. Risk Factors—Risks Relating to Argentina—Economic and political instability in Argentina may adversely and materially affect our business, results of operations and financial condition” and “Item 3.D. Risk Factors—Risks Relating to Argentina—If the current levels of inflation continue, the Argentine economy and our financial position and business could be adversely affected.”

Year ended December 31,

2017

2016

2015

(in percentages)

Price Indices:(1)

WPI

18.8
%
34.5
%(***)
10.6
%(*)
CPI

24.8
%(**)
16.9
(****)
11.9
%(*)
Adjustment Index:

CER

22.6
%
35.72
%
15.09
%
UVA

21.15
%
17.26
%
—

~~(1)  Source: INDEC.~~
~~(2)  Source: Acquisition Value Unit (~~~~Unidad de Valor Adquisitivo~~~~) (the base value as of March 31, 2016 was Ps.14.05).~~
*  Through October 31, 2015, the last day on which such information was reported by INDEC.
**  Calculated based on the National CPI method used by INDEC, which replaced the previous CPI in February 2014.
***  The INDEC did not publish the WPI for the last two months of 2015, and resumed publishing WPI data in May 2016, reporting that the WPI grew 34.5% in 2016
****  The INDEC did not publish the CPI for the last two months of 2015, and resumed publishing CPI data in May 2016, reporting that the CPI grew 16.9% between April and December 2016

Year ended December 31,

2017

2016

2015

2014

(in percentages)

Price Index:

City of Buenos Aires CPI*

26.1
%
41.0
%
26.9
%
38.0
%
* Calculated based on the Macri administration’s alternative CPI index based on data from the City of Buenos Aires.
Year ended December 31,
2020 2019 2018

(in percentages)
Price Indices:⁽¹⁾
WPI 35.4% 58.5% 73.5%
CPI 36.1% 53.8% 47.6%
Adjustment Index:
CER 36.14% 51.6% 47.2%
UVA⁽²⁾ 36.18% 51.84% 46.86%

(1) Source: INDEC, Central Bank
(2) UVAs are inflation adjusted units introduced in September 2016.

Currency Composition of ~~Our Balance Sheet~~our Consolidated Financial Statements

The following table sets forth our assets and liabilities denominated in Pesos, in Pesos adjusted by the CER and ~~UVA and~~ in foreign currency, at the dates indicated.

As of December 31,

2017

2016

2015

(in thousands of Pesos)

Assets

In Pesos

71,109,253

43,704,277

30,171,309

In Pesos, adjusted by CER and UVAs(1)

1,629,912

504

1,545

In Foreign Currency(2) (3)

21,232,113

10,501,261

2,872,963

Total Assets

93,971,278

53,206,042

33,045,817

Liabilities and Shareholders’ Equity

In Pesos, Unadjusted, Including Shareholders’ Equity

75,837,484

43,192,571

30,177,605

In Pesos, Adjusted by CER and UVAs(1)

10,296

4,193

2,737

In Foreign Currency(3) (4)

18,123,498

10,009,278

2,865,475

Total Liabilities and Shareholders’ Equity

93,971,278

53,206,042

33,045,817

Grupo Supervielle S.A.
As of December 31,
2020 2019 2018

(in thousands of Pesos)
Assets
In Pesos, unadjusted 194,194,787 130,554,531 195,968,897
In Pesos, adjusted by the CER 10,869,019 14,797,146 11,768,021
In Foreign Currency⁽¹⁾ 44,167,140 57,068,538 89,094,230
Total Assets 249,230,946 202,420,215 296,831,148
Liabilities and Shareholders’ Equity
In Pesos, unadjusted, including Shareholders’ Equity 211,275,734 148,754,789 211,492,958
In Pesos, Adjusted by the CER 1,454,201 1,979,758 175,360
In Foreign Currency⁽¹⁾ 36,501,011 51,685,668 85,162,830
Total Liabilities and Shareholders’ Equity 249,230,946 202,420,215 296,831,148

~~(1)~~   ~~UVAs (~~~~unidades de valor adquisitivo~~~~) are inflation adjusted units introduced in September 2016.~~
(1) Converted into Pesos based on the reference exchange rates reported by the Central Bank for December 31, 2020 (U.S.$ 1.00 to Ps.84.15), December 31, 2019 (U.S.$ 1.00 to Ps.59.895) and December 31, 2018 (U.S.$ 1,00 to Ps.37.8083).
(~~2)   As of December 31, 2017, includes Ps.20,773.2 million in U.S. dollars, Ps.338.9 million in euros~~
Critical Accounting Policies and Ps.120.1 million in other foreign currency. As of December 31, 2016, includes Ps.10,302.9 million in U.S. dollars, Ps.126.0 million in euros and Ps.72.3 million in other foreign currency. As of December 31, 2015, includes Ps.2,780.9 million in U.S. dollars, Ps.32.8 million in euros and Ps.59.3 million in other foreign currency.
~~(3)~~   Converted into Pesos based on the reference exchange rates reported by the Central Bank for December 31, 2017 (U.S.$1.00 to Ps.18.7742), December 31, 2016 (U.S.$1.00 to Ps.15.8502) and December 31, 2015 (U.S.$1.00 to Ps.13.0050).
(4)   As of December 31, 2017, includes Ps.17,822.4 million in U.S. dollars, Ps.299.7 million in euros and Ps.1.4 million in other foreign currency. As of December 31, 2016, includes Ps.9,875.7 million in U.S. dollars, Ps.132.4 million in euros and Ps.1.1 million in other foreign currency. As of December 31, 2015, includes Ps.2,836.7 million in U.S. dollars, Ps.27.5 million in euros and Ps.1.3 million in other foreign currency.Estimates

~~Critical Accounting Policies~~
~~In the~~The preparation of our ~~audited~~ consolidated financial statements~~, we have relied on variables and assumptions derived from historical experience and various other factors that we deemed reasonable and relevant. Although we review these estimates and assumptions~~ in accordance with IFRS requires the ~~ordinary course~~use of ~~business, the presentation of our financial condition and results of operation often~~certain critical accounting estimates. It also requires ~~our~~senior management to make ~~judgments regarding~~judgements in applying the ~~effects~~accounting standards to define the our accounting policies.
We identified the following areas which involve a higher degree of ~~matters that~~judgement or complexity, or areas where assumptions and estimates are ~~inherently uncertain on~~material for our consolidated financial statements which are essential to understand the ~~carrying~~underlying accounting/financial reporting risks:
a- Fair value of derivatives and other instruments
The fair value of ~~our assets~~financial instruments not listed in active markets is determined using valuation techniques. Such techniques are validated and ~~liabilities~~reviewed periodically by qualified personnel independent from the area which developed them. All models are assessed and ~~consequently, our~~adjusted before being put into use in order to ensure that results reflect current information and comparable market prices. As long as possible, models rely on observable inputs only; however, certain factors such as as implicit rates in the last available tender for similar securities and spot rate curves, require the use of ~~operations.~~estimates. Changes in the assumptions of these factors may affect the reported fair value of financial instruments.

b- Allowances for loan losses

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our ~~audited consolidated financial statements~~.
In order to provide an understanding about how management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, we summarize our main critical accounting policies under Argentine banking GAAP.
~~Allowances for Loan Losses~~
The Bank and CCF record allowances for loan losses with respect to their portfolios in accordance with the rules established by the Central Bank. Under such regulations, the loan portfolio is divided into two classes: consumer and commercial. For consumer portfolio management, the minimum allowance for loan losses is calculated primarily based on past due status. For each of the classes, customers are allocated within one of six categories taking into consideration credit quality and the fulfillment of their obligations. Please see “~~Item 4.B Business overview—~~~~Argentine Banking Regulation~~~~.” In addition, the quality of guarantee backing the relevant loan must be considered in each case.~~
Determining the loan loss reserve requires judgment and estimates from management. To classify its commercial loan portfolio, the Bank and CCF must consider the borrower’s ability to repay the debt in terms of such borrower’s estimated cash flow, the quality of its cash management, its present and projected financial situation, his or her payment history and ability to service debt, the borrower’s internal information and control systems and inherent risks in the sector in which the borrower conducts business.
Tarjeta and Espacio Cordial maintain allowances for loan losses in accordance with their internal policies, which do not differ significantly from those established by the Central Bank. Until the date of its sale, Cordial Microfinanzas maintained allowances for loan losses in accordance with its internal policies, which did not differ significantly from those established by the Central Bank. ~~For more information regarding the balances of~~We recognize the allowance for loan losses ~~see Note 7~~under the expected credit losses method included in IFRS 9. The most significant judgements of the model relate to ~~our audited consolidated financial statements.~~
~~Allowances for Doubtful Accounts for Other Receivables from Financial Transactions~~defining what is considered to be a significant increase in credit risk, determining the life of revolving facilities, and ~~Miscellaneous Receivables~~
~~Our receivables from financial transactions~~in making assumptions and ~~our miscellaneous receivables are exposed~~estimates to ~~losses due to uncollectible accounts.~~incorporate relevant information about past events, current conditions and forecasts of economic conditions. The ~~allowance for doubtful accounts corresponding to financial transactions and miscellaneous receivables is determined on an account-by-account basis considering factors such as~~impact of the ~~borrower’s financial condition, past payment history, guarantees and past-due status.~~ ~~Future adjustments to the allowances may be necessary if future~~forecasts of economic conditions ~~differ substantially from the assumptions used in the assessment for each period.~~
~~In the case of our securitized portfolio, allowances for loan losses with respect to securitizations~~ are ~~maintained at the trust level, pursuant to Central Bank regulations. We then record our participations in loan securitizations~~determined based on the ~~trust’s equity value. No additional allowances for participations~~weighted average of three internally developed macroeconomic scenarios that take into consideration the our´s economic outlook as derived through forecast macroeconomic variables, which include inflation rate, monthly economic activity estimator and private sector wage.A high degree of uncertainty is involved in ~~loan securitizations~~making estimations using assumptions that are ~~required in~~highly subjective and very sensitive to the risk factors
Note 1.11 of our ~~audited~~ consolidated financial ~~statements.~~statements provides more detail of how the expected credit loss allowance is measured.

c- Impairment of Non-Financial Assets
~~For more information regarding~~
Intangible assets with definite useful life and property, plant and equipment are amortized or depreciated on a straight-line basis during their estimated useful life. The Group monitors the ~~balances~~conditions associated with these assets to determine whether the events and circumstances require a review of the ~~allowance for doubtful accounts, see Note 13 to our audited consolidated financial statements.~~
~~Accrued Litigation~~
~~In the normal course of business, we~~remaining amortization or depreciation term and whether there are ~~a party to lawsuits of various types. We disclose in our~~ ~~audited consolidated financial statements~~ ~~contingent liabilities with respect to existing~~factors or potential claims, lawsuits and other legal proceedings and record an accrual for litigation when it is probable that future costs will be incurred and these costs can be reasonably estimated. These accruals are based on the specific circumstances of each claim, the evolution of recent developments and the evaluation of our legal advisors. Changes to the accrual amounts may be needed if subsequent events differ substantially from the assumptions usedindicating impairment in the ~~assessment for each period. There were no changes to assumptions or methods used to establish accruals from year to year for litigation.~~
~~U.S. GAAP—Critical Accounting Policies~~
~~Additional information in connection with critical accounting policies for U.S. GAAP purposes is described as follows.~~
~~Allowance for Loan Losses~~
~~Under U.S. GAAP, the loan losses reserve should be in amounts adequate to cover inherent losses in the loan portfolio at the respective balance sheet dates. Specifically:~~
~~a) Loans considered impaired in accordance with ASC 310-10 are valued at the present~~ value of the expected future cash flows discounted at the loan’s effective contractual interest rate, except that as a practical expedient a creditor may measure impairment based on a loans observable market price or at the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. Under ASC 310-10, a loan is considered impaired when, based on current information, it is probable that the borrower will be unable to pay contractual interest or principal payments as scheduled in the loan agreement. ASC 310-10 applies to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment, loans carried at the lower of cost or fair value, debt securities, and leases.
b) In addition, following ASC 450-20, the amount of losses incurred in the homogeneous loan pools is estimated based on the number of loans that will default and the loss in the event of default. Using modeling methodologies, the Group estimates the number of homogeneous loans that will default based on the individual loans’ attributes aggregated into pools of homogeneous loans with similar attributes. This estimate is based on the Group’s historical experience with the loan portfolio. The estimate is adjusted to reflect an assessment of environmental factors not yet reflected in the historical data underlying the loss estimates, such as changes in real estate values, local and national economies, underwriting standards and the regulatory environment. The probability of default on a loan is based on an analysis of the movement of loans with the measured attributes from either current or any of the delinquency categories to default over a twelve-month period.
~~Many factors can affect Grupo Supervielle’s estimates of allowance for loan losses, including volatility of default probability, migrations and estimated loss severity.~~
~~A 10% decrease in the expected cash flows of significant impaired loans individually analyzed, could result in an additional impairment of approximately Ps.3.0 million.~~
~~A 10% increase in the historical loss ratios for loans collectively analyzed could result in an additional impairment of approximately Ps.196.0 million.~~
These sensitivity analyses do not represent management’s expectations of the deterioration in risk ratings or the increases in loss rates but are provided as hypothetical scenarios to assess the sensitivity of the allowance for loan and lease losses to changes in key inputs. We believe the risk ratings and loss severities currently in use are appropriate and represent management’s expectations about the credit risk inherent in its loan portfolio.
Determining the allowance for loan losses requires significant management judgments and estimates including, among others, identifying impaired loans, determining customers’ ability to pay and estimating the fair value of underlying collateral or the expected future cash flows to be received. Actual events are likely to differ from the estimates and assumptions used in determining the allowance for loan losses.
~~Fair Value Hierarchy~~
~~ASC 820-10, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.~~
ASC 820-10 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
·                  ~~Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical~~ assets ~~or liabilities in active markets.~~
·                  Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
~~Inputs include the following:~~
~~a) Quoted prices for similar assets or liabilities in active markets;~~
~~b) Quoted prices for identical or similar assets or liabilities in non-active markets;~~
~~c) Pricing models whose inputs are observable for substantially the full term of the asset or liability; and~~
~~d) Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means~~
·                  ~~Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.~~
~~A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.~~
~~Determination of Fair Value~~
~~The Group identified and categorized different assets and liabilities measured at fair value in accordance with the requirements of FASB ASC 820.~~
Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models that use primarily market-based or independently-sourced market parameters,
including interest rate yield curves, option volatilities and currency rates. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, the Group’s creditworthiness, liquidity and unobservable parameters that are applied consistently over time.
The Group believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
~~Impairment of Assets Other Than Loans~~
Certain assets, such as goodwill and equity investments are subject to an impairment review. Asset impairment charges require considerable judgment and are recorded when market value declines below the carrying value, for declines other-than-temporary, or where the cost of the asset is deemed towhich might not be recoverable.

~~Under U.S. GAAP, goodwill is not subject to amortization, but is subject to at least an annual assessment~~We have applied the judgment in the identification of impairment indicators for ~~impairment. The Group analyzes qualitative factors to determine whether it is more likely than not~~property, plant and equipment and intangible assets. We have defined defined that ~~the fair value~~there was no evidence of ~~a reporting unit is less than its carrying amount, including goodwill.~~
~~Goodwill~~ impairment exists when the fair value of the reporting unit to which the goodwill is allocated is not enough to cover the book value of its assets and liabilities and the goodwill. The fair value of the reporting unit is estimated using discounted cash flow techniques. The sustained value of the majority of the goodwill is supported ultimately by revenue from credit-card business,for any period included in ~~“Consumer Finance” reporting unit.~~our consolidated financial statements. Given the aforementioned, no recoverable value has been calculated.

The evaluation ~~methodology~~process for potential impairment of an asset of indefinite useful life is ~~inherently complex~~subject to and ~~involves~~require a significant ~~management~~ 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, we 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 ~~estimates and assumptions. These estimates involve many assumptions, including the expected results of the reporting unit, an assumed discount rate and an assumed growth rate for the reporting~~its cash-generating unit.

~~The Group has reviewed goodwill~~Although we believe 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 astests of ~~December 31, 2017 and 2016 and no impairment was recorded.~~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.

~~Deferred Tax Asset Valuation Allowance~~We decided that it would not be necessary to recognize an impairment loss in indefinite useful life intangible assets under such conditions.
204
d- Structured Entities
Assessing whether the Group controls a structured entity requires management to make, judgments.

~~Under U.S. GAAP, FASB ASC 740 “Income Taxes,” income taxes~~Management assesses its exposure to risks and rewards, as well as its ability to make decisions and direct the relevant activities of such structured entity. Structured entities controlled by the Group are recognized using the asset and liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and their respective tax basis. Deferred tax assets are also recognized if it is more likely than not those assets will be realized.
~~Deferred tax assets and liabilities are measured using enacted tax rates expected~~subject to ~~apply to taxable income in the years in which those temporary differences are expected to be recorded or settled.~~consolidation. The effect of a change in tax rates is recognized in income statement in the period when enacted. A valuation allowance is recognized for that component of net deferred tax assets which is “more likely than not” that it will not be realized. Under this pronouncement, an enterprise must use judgment in considering the relative impact of negative and positive evidencefollowing elements were used to determine if the Group controls a ~~valuation allowance is needed or not.~~structured entity:

~~Securitizations~~
• The ~~Group has securitized certain of its personal, pledge~~purpose and ~~credit card loans originated by the Bank and CCF on their behalf through the transfers of such loans to special purpose trusts which issues multiple classes of bonds and certificates of participation.~~
~~Under U.S. GAAP, FASB ASC 810 “Consolidation” addresses consolidation of variable interest entities, as defined in the rules, which have certain characteristics.~~
~~The methodology for evaluating trust and transactions under the VIE requirements includes the following two steps:~~
1)             ~~Determine whether the entity meets the criteria to qualify as a VIE and;~~
2)             ~~Determine whether the Group is the primary beneficiary of a VIE.~~
~~In performing the first step the significant factors and judgments that were considered in making the determination as to whether an entity is a VIE includes:~~
·                  ~~The~~ design of the ~~entity, including the nature~~trust
• Identification of ~~its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;~~
·                  ~~The nature of the involvement with the entity;~~
·                  ~~Whether control of the entity may be achieved through arrangements that do not involve voting equity;~~
·                  ~~Whether there is sufficient equity investment at risk to finance the~~relevant activities of the ~~entity and;~~trust
·                  ~~Whether parties other than the equity holders have the obligation to absorb expected losses or the right to received residual returns.~~• Decision-making process on these activities
~~For each VIE identified, the Group performs the second step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and criteria:~~
·                  ~~Whether~~• If the Group has the power to direct the relevant activities ~~that most significantly impact~~of the ~~VIE’s economic performance and;~~trust
• If the Group is exposed to, or has rights to, variable returns from its involvement with the trust
• If the Group has the ability to affect those returns through its power over the trust
e- Income tax and deferred tax
A significant level of judgment is required to determine current and deferred tax assets and liabilities. Current income tax is measured at the amount expected to be paid while deferred income tax is measured based on the temporary differences between the carrying amount of assets and liabilities and their tax base, at the rates expected to be in force at the time of reversal of such differences.

·                  ~~Whether~~A deferred tax asset is recognized when future taxable income is expected to exist to offset such temporary differences, based on management’s assumptions about the ~~Group absorb~~amounts and timing of such future taxable income. Then, management needs to determine whether deferred tax assets are likely to be used and offset against future taxable income. Actual results may differ from these estimates, for instance, due to changes in the ~~majority~~applicable tax laws or the outcome of the ~~VIE’s expected losses or the Group receive a majority~~final review of the ~~VIE’s expected residual returns.~~tax returns by the tax authorities and tax courts.

~~Under FASB ASC 810, financial trusts were considered variable interest entities. The Group was deemed~~Future taxable income and the number of tax benefits likely to be available in the ~~primary beneficiary~~future are based on a medium-term business plan prepared by management on the basis of ~~these trusts and, therefore, the Group included them in its consolidated financial statements.~~reasonable expectations.

Results of Operations for the Years Ended December 31, ~~2017, 2016~~2020 and ~~2015~~2019

We discuss ~~below: (i)~~below our results of operations for the year ended December 31, ~~2017~~2020 as compared with our results of operations for the year ended December 31, ~~2016; and (ii)~~2019. We expressly state that our results of operations for the year ended December 31, ~~2016~~2019 as compared with our results of operations for the year ended December 31, ~~2015.~~
~~Guidelines Towards Conversion~~2018 is hereby incorporated by reference to ~~IFRS~~“Item 5.A - Operating Results
On February 12, 2014, the Central Bank, through Communication “A” 5541, established the general guidelines towards conversion to IFRS as issued by the International Accounting Standards Board (IASB) for preparing financial statements” of the ~~entities under its supervision with the temporary exception of paragraph 5.5 “Impairment” of IFRS 9 “Financial Instruments” (IFRS as issued by the IASB as adopted by the Central Bank).~~
According to such convergence process, IFRS have been adopted for the fiscal year beginning on January 1, 2018 and IFRS transition date pursuant to IFRS 1 “First-time Adoption of IFRS” was scheduled for January 1, 2017.
IFRS 1, First Time Adoption of International Financial Reporting Standards, is the guidance that is applied during preparation of a company’s first IFRS-based financial statements. IFRS 1 was created to help companies transition to IFRS and provides practical accommodations intended to make first-time adoption cost-effective. It also provides application guidance for addressing difficult conversion topics.
The key principle of IFRS 1 is full retrospective application of all IFRS standards that are effective as of the closing balance sheet or reporting date of the first IFRS financial statements. IFRS 1 requires companies to (i) identify the first IFRS financial statements; (ii) prepare an opening balance sheet at the date of transition to IFRS; (iii) select accounting policies that comply with IFRS and to apply those policies retrospectively to all of the periods presented in the first IFRS financial statements; (iv) consider whether to apply any of the optional exemptions from retrospective application; (v) apply the mandatory exceptions from retrospective application; and (vi) make extensive disclosures to explain the
~~transition to IFRS. Exemptions provide limited relief for first-time adopters, mainly in areas where the information needed to apply IFRS retrospectively may be most challenging to obtain.~~
~~The Bank will present consolidated financial statements under IFRS as issued by the IASB, as adopted by the Central Bank for the first time in its consolidated financial statements~~Form 20-F for the year ended December 31, ~~2018,~~ ~~which will include comparative financial statements for~~2019 filed by us with the ~~year ended December 31, 2017. The Bank will present unaudited consolidated interim financial statements~~Securities and Exchange Commission under ~~IFRS as issued by~~ the IASB, as adopted by the Central Bank for the first time in its unaudited consolidated interim financial statements for the three months ended March 31, 2018, which will include comparative financial statements for the three months ended March 31, 2017. Note 33 to our audited consolidated financial statements provides a description of the principal differences between Argentine Banking GAAP and IFRS, as they relate to us, and a reconciliation to IFRS of shareholders’ equity as of December 31, 2017 and January 1, 2017 and of net income for the year ended December 31, 2017. The figures shown in that note may be subject to change and may only be considered definitive when audited consolidated financial statements for fiscal year 2018 are released.
~~Results of Operations for the Years Ended December 31, 2017, 2016 and 2015~~file number 001-37777.

We discuss below: (i) our results of operations for the year ended December 31, 2017 as compared with our results of operations for the year ended December 31, 2016; and (ii) our results of operations for the year ended December 31, 2016 as compared with our results of operations for the year ended December 31, 2015.Selected Ratios
2020 2019 2018
SELECTED RATIOS
Return on average equity ⁽¹⁾ 10.2 % (9.2 )% (16.2 )%
Return on average assets ⁽²⁾ 1.4 % (1.1 )% (1.9 )%
Net Interest Margin ⁽³⁾ 21.5 % 21.0 % 17.0 %

2020 2019 2018
Net Fee Income Ratio ⁽⁴⁾ 18.9 % 20.2 % 20.8 %
Efficiency Ratio ⁽⁵⁾ 64.4 % 60.2 % 55.3 %
Cost/assets ⁽⁶⁾ 12.1 % 11.8 % 9.5 %
Basic earnings per share (in Pesos) ⁽⁷⁾ 7.7 (6.4 ) (13.9 )
Diluted earnings per share (in Pesos) N/A N/A N/A
Basic earnings per share (in U.S.$.) ⁽⁸⁾ 0.1 (0.1 ) (0.2 )
Diluted earnings per share (in U.S.$.) ⁽⁸⁾ N/A N/A N/A
Liquidity and Capital
Loans to Total Deposits ⁽⁹⁾ 63.7 % 106.5 % 86.6 %
Total Equity / Total Assets 14.3 % 15.7 % 12.0 %
Pro forma Consolidated Capital / Risk weighted assets ⁽¹⁰⁾ 14.4 % 12.1 % 14.0 %
Pro forma Consolidated Tier1 Capital / Risk weighted assets ⁽¹⁰⁾ 13.8 % 11.3 % 12.9 %
LCR Pro forma⁽¹⁰⁾ 111.4 % 150.3 % 173.4 %
Risk Weighted Assets/Assets ⁽¹⁰⁾ 69.7 % 64.0 % 34.3 %
Asset Quality
Non-performing loans as a percentage of Total Loans 3.7 % 7.4 % 4.1 %
Allowances as a percentage of Total Loans 7.4 % 7.1 % 6.0 %
Cost of risk ⁽¹¹⁾ 7.7 % 7.5 % 5.4 %
Cost of risk, net ⁽¹²⁾ 7.1 % 7.1 % 5.1 %
Coverage Ratio⁽¹³⁾ 208.8 % 96.0 % 147.2 %
Other Data
Dividends paid to ordinary shares (Ps.million) 530,065 634,568 687,687
Dividends paid to the preferred shares (Ps.million) — — —
Dividends per common share (Ps.) 1.2 1.4 1.5
Dividends per preferred share (Ps.) — — —

(1) Attributable comprehensive income divided by average shareholders’ equity, calculated on a daily basis and measured in local currency.
(2) Attributable Comprehensive Income divided by average assets, calculated on a daily basis and measured in local currency.
(3) Net interest income + Net income from financial instruments at fair value through profit or loss + Result from derecognition of assets measured at amortized cost + Exchange rate differences on gold and foreign currency, divided by average interest-earning assets. Since 2019, the Net Interest Margin ratio (“NIM”) also includes the exchange rate differences and net gains or losses from currency derivatives representing more accurately our financial margin and spreads. This ratio coincides with the net financial margin ratio published in previous years (now renamed as NIM).
(4) Net services fee income + Income from insurance activities divided by the sum of Net interest income + Net income from financial instruments at fair value through profit or loss + Result from derecognition of assets measured at amortized cost + Exchange rate differences on gold and foreign currency, net Services fee income, Income from insurance activities, etc.
(5) Personnel, Administrative expenses and Depreciation & Amortization divided by the sum of Net interest income + Net income from financial instruments at fair value through profit or loss + Result from derecognition of assets measured at amortized cost + Exchange rate differences on gold and foreign currency, net Services fee income, Income from insurance activities and Other net operating income.
(6) Administration expenses divided by average assets, calculated on a daily basis.
(7) Basic earnings per share (in Pesos) are based upon the weighted average of Grupo Supervielle’s outstanding shares, which were Ps456.7 million for the year ended December 31, 2020, and Ps.456.7 million for the years ended December 31, 2019 and 2018.
(8) Peso amounts have been translated into U.S. dollars at the reference exchange rate reported by the Central Bank as of December 31, 2020 which was Ps.84.15 to U.S.$1.00.
(9) Loans and Leasing before allowances divided by total deposits.
(10) For the calculation of these line items, see “Item 4.B – Business Overview – Banking Regulation and Supervision.” Proforma ratios include the liquidity retained at the holding company (Grupo Supervielle) level, which are available for future capital injections to our subsidiaries in order to fund our growth strategy.
(11) Loan loss provisions divided by average loans, calculated on a daily basis.
(12) Loan loss provisions including recovered loan loss provisions divided by average loans, calculated on a daily basis.
(13) Allowances for loan losses divided by non-performing loans.

Attributable Comprehensive Income and Attributable Net Income

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos)

(in percentages)

Consolidated Income Statement

Argentine Banking GAAP

Financial Income

15,494,671

10,794,579

6,741,744

43.5
%
60.1
%
Financial Expenses(1)

(6,194,288
)
(4,866,525
)
(3,386,050
)
27.3
%
43.7
%
Gross Financial Margin

9,300,383

5,928,054

3,355,694

56.9
%
76.7
%

Loan Loss Provisions

(1,820,169
)
(1,057,637
)
(543,844
)
72.1
%
94.5
%

Services Fee Income

4,973,272

3,527,516

2,835,708

41.0
%
24.4
%
Services Fee Expense

(1,495,848
)
(1,080,660
)
(778,492
)
38.4
%
38.8
%
Net Services Fee Income

3,477,424

2,446,856

2,057,216

42.1
%
18.9
%

Income from Insurance Activities

479,061

606,143

175,947

(21.0
)%
244.5
%
Administrative Expenses

(8,390,622
)
(6,060,281
)
(4,261,402
)
38.5
%
42.2
%

Income from Financial Transactions

3,046,077

1,863,135

783,611

63.5
%
137.8
%

Miscellaneous Income

545,842

429,884

367,165

27.0
%
17.1
%
Miscellaneous Losses

(376,480
)
(458,946
)
(213,427
)
(18.0
)%
115.0
%
Miscellaneous Income / (Loss), Net

169,362

(29,062
)
153,738

682.8
%
(118.9
)%

Non-controlling Interest Result

(5,897
)
(22,166
)
(16,079
)
73.4
%
37.9
%
Income before income tax

3,209,542

1,811,907

921,270

77.1
%
96.7
%
Income Tax

(772,483
)
(500,603
)
(247,161
)
54.3
%
102.5
%
Net income for the period

2,437,059

1,311,304

674,109

85.9
%
94.5
%
Return on Average Assets(1)

3.5
%
3.2
%
2.5
%

Return on Average Shareholders’ Equity(2)

25.4
%
26.3
%
32.2
%

~~(1)  Includes losses related to NDF hedging transactions, which totaled Ps.0 million as of December 31, 2017 and Ps.0 million as of December 31, 2016 and Ps.228.2 million as of December 31, 2015.~~
~~(2)  Net income, divided by average assets, calculated on a daily basis.~~
~~(3)  Net income, divided by average shareholder equity, calculated on a daily basis.~~
~~The following table shows our yields on interest-earning assets and cost of funds:~~

As of December 31,

2017

2016

2015

Average
Balance

Rate

Average
balance

Rate

Average
balance

Rate

(in thousands of Pesos, except rates)

Interest-Earning Assets

Investment Portfolio(1)

8,201,062

24,2
%
3,993,113

31.4
%
2,562,300

26.3
%
Loans

42,831,384

29.4
%
26,248,876

33.7
%
17,654,501

32.5
%
Other receivables from financial transactions(2)

1,643,903

23.9
%
694,063

31.5
%
303,044

17.7
%
Interest-Bearing Liabilities

Checking and Savings accounts

12,839,525

0.0
%
7,431,318

0.1
%
4,903,695

0.1
%
Special checking accounts(3)

5,318,081

12.0
%
—

0.0
%
—

0.0
%
Time deposits

13,893,201

16.6
%
12,452,742

24.7
%
9,287,475

24.0
%
Borrowings from other financial institutions and unsubordinated negotiable obligations

7,963,979

23.4
%
2,550,226

29.1
%
1,651,911

25.6
%
Subordinated loans and negotiable obligations

1,319,046

9.7
%
1,285,162

10.0
%
800,088

10.2
%
Spread and Net Yield

Interest spread, nominal basis

16.5
%

16.8
%

15.0
%
Net interest margin`

19.1
%

20.6
%

18.1
%
~~(1)~~         ~~Includes securities issued by our securitization trusts and held by us, instruments issued by the Central Bank (LEBACs, NOBACs, and BOPOMs) and other government and corporate securities.~~
~~(2)~~         ~~Includes overnight deposits and unlisted corporate bonds.~~
~~(3)~~         ~~Special checking accounts refers to checking accounts for institutions which are allowed to pay interest.~~
Grupo Supervielle S.A.

As of December 31,
Change December 31,
2020 2019 2020/2019
Ps. Ps. %
Consolidated Income Statement Data
Interest income 64,699,880 60,983,625 6.1 %
Interest expenses (28,578,388 ) (47,531,377 ) (39.9 )%
Net interest income 36,121,492 13,452,248 168.5 %
Net income from financial instruments at fair value through profit or loss 3,315,582 28,536,382 (88.4 )%
Result from derecognition of assets measured at amortized cost 657,019
Exchange rate difference on gold and foreign currency 1,064,545 (441,191 ) (341.3 )%
NIFFI and Exchange Rate Differences 5,037,146 28,095,191 (82.1 )%
Net Financial Income 41,158,638 41,547,439 (0.9 )%
Commissions income 11,493,824 11,707,556 (1.8 )%
Commissions expense (3,548,269 ) (3,054,954 ) 16.1 %
Income from insurance activities 1,671,455 1,896,923 (11.9 )%
Net Service Fee Income 9,617,010 10,549,525 (8.8 )%
Sub Total 50,775,648 52,096,964 (2.5 )%
Other operating income 3,779,451 3,751,037 0.8 %
Result from exposure to changes in the purchasing power of the currency (4,290,328 ) (7,296,543 ) 41.2 %
Loan loss provisions (8,615,060 ) (10,533,018 ) (18.2 )%
Net Operating Revenue 41,649,711 38,018,440 9.6 %
Personnel expenses (18,176,866 ) (19,283,346 ) (5.7 )%
Administration expenses (10,318,557 ) (10,310,666 ) 0.1 %
Depreciations and impairment of premises and equipment (2,407,028 ) (2,470,504 ) (2.6 )%
Other operating expenses (6,574,779 ) (8,656,215 ) (24.0 )%
Operating income 4,172,481 (2,702,291 ) N.R.
Results before taxes from continuing operations 4,172,481 (2,702,291 ) N.R.
Income tax (671,707 ) (229,663 ) 192.5 %
Net Income for the year 3,500,774 (2,931,954 ) (219.4 )%
Net income for the year attributable to parent company 3,499,882 (2,929,201 ) (219.5 )%
Net income for the year attributable to non-controlling interest 892 (2,753 ) (132.4 )%
Total Other Comprehensive Income 803,693 (65,123 ) -1334.1 %
Other comprehensive income attributable to parent company 802,914 (64,940 ) -1336.4 %
Other comprehensive income attributable to non-controlling interest 779 (183 ) -525.7 %
Total Comprehensive Income 4,304,467 (2,997,077 ) (243.6 )%
Total comprehensive income attributable to parent company 4,302,796 (2,994,141 ) (243.7 )%
Total comprehensive income attributable to non-controlling interest 1,671 (2,936 ) (156.9 )%
Return on Average Shareholders’ Equity 10.2 % (9.2 )%
Return on Average Assets 1.4 % (1.1 )%

~~Net~~Attributable comprehensive income ~~for 2017~~in 2020 amounted to ~~Ps.2.4~~a Ps.4.3 billion gain, as compared to a Ps.3.0 billion loss in 2019.
Attributable net income ~~of Ps.1.3~~in 2020 amounted to a Ps.3.5 billion gain, as compared to a Ps.2.9 billion loss in ~~2016.~~2019.

ROAA and ROAE were ~~3.5%~~1.4% and ~~25.4%~~10.2%, respectively, ~~for 2017,~~in 2020, as compared to ~~3.2%~~(1.1%) and ~~26.3%~~(9.2%), respectively, ~~during 2016. For 2015, ROAA was 2.5% and ROAE was 32.2%. In the period ended December 31, 2017, ROAE reflected the temporary dilution that resulted from the capital raised~~ in our follow-on equity offering on September 12, 2017 (including the subsequent exercise of the green shoe). This resulted in a Ps.5.6 billion increase in the shareholder’s equity which fully impacted the fourth quarter of 2017, but only 15 days of the third quarter of 2017. Results in 2017 included (i) non-recurring net gains from the sale of Viñas del Monte and other non-strategic properties, and (ii) a Ps.50 million net loss due2019.

2020 compared to ~~impact of the appreciation of the Peso against the U.S. dollar between pricing and settlement of the Ps.4,768,170,000 global term note issued by the Bank in February 2017.~~2019

In 2016, ROAE reflected the temporary dilution that resulted from the capital raised in our IPO on May 19, 2016. Results in 2016 included a Ps.92.4 million net gain from the termination of the Supervielle Renta Inmobiliaria Financial Trust.
The following table sets forth net income by quarter for the four quarters in 2017 and 2016. In general, our net income in the second half of the year is higher than in the first half, mainly due to the seasonality of economic activity plus the effect of the monthly cumulative increase of our assets in nominal terms and the fact that the salary increases agreed upon between us and the banking employees’ trade union during the second quarter are applied retroactively to the first quarter. This year, fourth quarter of 2017 reflects the 5.3% increase in salaries applied retroactively for the full year to catch up with 2017 inflation following the trigger clause included in the banking union 2017 wage increase agreement.
~~Quarter~~
~~(in millions of Pesos)~~
~~First Quarter 2016~~
~~174.7~~
~~Second Quarter 2016~~
~~167.9~~
~~Third Quarter 2016~~
~~436.4~~
~~Fourth Quarter 2016~~
~~532.3~~
~~First Quarter 2017~~
~~381.9~~
~~Second Quarter 2017~~
~~579.7~~
~~Third Quarter 2017~~
~~624.1~~
~~Fourth Quarter 2017~~
~~851.4~~
~~2017 Compared to 2016~~
~~During 2017, net~~2020, attributable comprehensive income amounted to ~~Ps.2.4~~a Ps.4.3 billion ~~a Ps.1.1 billion increase~~gain, compared to ~~net income of Ps.1.3~~a Ps.3.0 billion loss in ~~2016.~~2019.

The main factors explaining the ~~increase~~performance improvement were:

·
a ~~Ps.3.4~~Ps.3.0 billion ~~increase~~decrease in ~~gross financial margin,~~result from exposure to ~~Ps.9.3~~changes in the purchasing power of the currency to Ps.4.3 billion in 2020, compared to Ps.7.3 billion in 2019;
a Ps.2.1 billion decrease in Other expenses, net to Ps.2.8 billion from ~~Ps.5.9~~Ps.4.9 billion
in 2019;

·
a ~~Ps.1.0~~Ps.1.9 billion ~~increase~~decrease in ~~net services fee income,~~Loan Loss Provisions to ~~Ps.3.5~~Ps.8.6 billion from ~~Ps.2.4~~Ps.10.5 billion ~~and~~
in 2019;

·
a ~~net miscellaneous~~Ps.1.2 billion decrease in personnel and administrative expenses and Depreciation and Amortization (D&A) to Ps.30.9 billion from Ps.32.1 billion in 2019; and
a Ps.803.7 million gain ~~of Ps.169.4 million, as~~in other comprehensive income compared to ~~a net miscellaneous~~Ps.65.1 million loss ~~of Ps.29.1 million.~~
in 2019.

These factors were partially offset by:

·
a ~~Ps.2.3 billion increase~~Ps.707.0 million decrease in ~~administrative expenses,~~net services fee income, to ~~Ps.8.4~~Ps.7.9 billion from ~~Ps.6.1~~Ps.8.7 billion
in 2019;

·
a Ps.762.5 increase in loan loss provisions to Ps.1.8 billion from Ps.1.1 billion, reflecting the growth of the loan portfolio, a deterioration in asset quality mainly in the consumer finance segment as well as increased loan loss provisions required by the aging of delinquent loans as from previous quarters, and the 470-basis point increase in the coverage ratio to 91.8%,
·                  ~~a Ps.271.9~~Ps.442.0 million increase in income tax expenses to ~~Ps.772.5~~Ps.671.7 million from ~~Ps.500.6~~Ps.229.7 million ~~and~~
in 2019;

·
a ~~Ps.127.1~~Ps.388.8 million decrease in net financial income, to Ps.41.2 billion from Ps.41.5 billion in 2019; and
a Ps.225.5 million decrease in income from insurance activities, to ~~Ps.479.1 million~~Ps.1.7 billion from ~~Ps.606.1 million.~~Ps.1.9 billion in 2019
Net Financial Income (Net Interest Income (NII), Net Income from Financial Instruments (NIFFI) and Exchange Rate Differences on Gold and Foreign Currency)

~~2016 Compared to 2015~~Net Financial Income

~~During 2016, net~~Net financial income in 2020 amounted to ~~Ps.1.3~~Ps.41.2 billion and net interest margin (NIM) was 21.5%, compared to Ps.41.5 billion, and 21.0%, respectively, in 2019.
NIM in 2020 reflects (i) a higher proportion of average Peso Interest Earning Assets on total average Interest Earning Assets. NIM in Ps. decreased to 22.6% form 28.2% mainly due to higher proportion of average balance of Ps. investment portfolio on total average Peso Interest Earning Assets compared to 2019 reflecting higher average holdings in Central Bank LELIQs and Repo transactions to take advantage of higher spreads as average cost of funds decreased 1,500 bps. Loan portfolio NIM in Pesos increased by 170 bps to 25.9% from 24.2% mainly due to the decrease in cost of fund, partially offset by weak credit demand, higher credit cards volumes related to government sponsored programs, “Ahora 12” and “Previaje,” iii) lower yields on loans following the decrease in market interest rates and also due to credit lies granted to SMEs at preferential interest rates. Since April 2020, the Central Bank ruled a minimum floor on interest rates paid on time deposits reducing the deceleration of the Cost of Funds along the year.

Breakdown Net Interest Income, NIFFI, Result from derecognition of assets measured at amortized cost and Exchange Rate Differences
Grupo Supervielle S.A.
As of December 31,
2020 2019 Change
$ $ %
Net Interest Income 36,121,492 13,452,248 168.5 %
NIFFI, Result from derecognition of assets measured at amortized cost and Exchange Rate differences 5,037,146 28,095,191 (82.1 %)
Total 41,158,638 41,547,439 (0.9 %)
NIM by currency
Grupo Supervielle S.A.
As of December 31,
2020 2019

(in percentages)
Net Interest Margin Breakdown
Total NIM 21.5 % 21.0 %
Ps.NIM 22.6 % 28.2 %
U.S.$NIM 13.9 % (3.4 )%
Loan Portfolio NIM 21.6 % 18.7 %
Ps.NIM 25.9 % 24.2 %
U.S.$NIM 4.4 % 4.8 %
Investment Portfolio NIM 23.1 % 18.6 %
Ps.NIM 21.7 % 28.5 %
U.S.$NIM 101.2 % (68.7 )%
Since 2019, the NIM also includes the exchange rate differences and net gains or losses from currency derivatives representing more accurately our financial margin and spreads. This ratio coincides with the net financial margin ratio published until 2018 (now renamed as NIM).

Net Interest Income
Net interest income in 2020 totaled Ps.36.1 billion, a ~~Ps.637.2 million~~168.5% increase ~~compared~~from the Ps.13.5 billion recorded in 2019. Year-on-year comparisons were impacted by the change in the business model and therefore in the classification and accounting methodology for all new Central Bank Securities and sovereign bonds acquired by the Group in 2020. In 2020, yield from investments in Central Bank securities has been recorded in NII following the Fair value through other comprehensive income methodology. Previously, when those securities were classified as Held for trading securities, yields from those investments were recorded in NIFFI following the Fair value through profit or loss accounting methodology while deposits to ~~net income of Ps.674.1 million~~fund those marginal investments were reflected in ~~2015.~~Net Interest Income.

~~The main factors explaining~~Excluding the ~~increase were:~~results from Central Bank and government securities, Net Interest Income was impacted by the weak credit demand in 2020, volumes on government sponsored purchasing programs at a subsidized rate, and a decline in the commercial loan portfolio yield impacted by government sponsored credit lines granted to SMEs at a preferential interest rate and floor rates on Time Deposits since April 2020. This was partially offset by the 1,340 bps decrease in Cost of funds following the decrease in the average market interest rates.

·                  ~~a Ps.2.6 billion increase in gross financial margin, to Ps.5.9 billion from Ps.3.4 billion,~~i) Interest Income

·Interest income in 2020 totaled Ps.64.7 billion, a ~~Ps.389.6 million~~6.1% increase from the Ps.61.0 billion recorded in ~~net services fee~~2019, primarily due to yields from investments in Central Bank securities at fair value through other comprehensive income ~~to Ps.2.4 billion~~recorded in NII as available for sale while in previous year yields from ~~Ps.2.1 billion, and~~
·                  ~~a Ps.430.2 million increase~~investments in ~~income from insurance activities, to Ps.606.1 million from Ps.175.9 million.~~
~~These factors~~Central Bank securities were recorded in NIFFI following the fair value through profit or loss accounting methodology. This was partially offset ~~by:~~
·                  ~~a Ps.1.8 billion increase~~by the 19.7% decrease in ~~administrative expenses, to Ps.6.1 billion from Ps.4.3 billion,~~
·                  ~~a Ps.513.8 million increase~~average balance of loans, while interest on loans decreased 528 basis points following the decrease in ~~loan loss provisions to Ps.1,1 billion from Ps.543.8 million,~~
·                  ~~a Ps.253.4 million increase in income tax, to Ps.500.6 million from Ps.247.2 million,~~market interest rates and
·                  ~~a Ps.29.1 million loss in other income, compared to other net gains of Ps.153.7 million in 2015.~~
~~Financial Income~~ loans granted at subsidized and/or preferential rates under the government sponsored programs.

Our ~~financial~~interest income was comprised of the following:

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos)

(in percentages)

Interest on loans to the financial sector

90,151

73,754

9,173

22.2
%
704.0
%
Interest on overdrafts

1,162,911

996,570

594,315

16.7
%
67.7
%
Interest on promissory notes

1,403,685

1,087,323

838,464

29.1
%
29.7
%
Interest on mortgage loans

109,801

8,998

10,014

1120.3
%
(10.1
)%
Interest on automobile and other secured loans

30,916

17,271

32,678

79.0
%
(47.1
)%
Interest on personal loans

6,104,346

3,631,979

2,144,410

68.1
%
69.4
%
Interest on corporate unsecured loans

1,076,056

819,097

561,635

31.4
%
45.8
%
Interest on credit cards loans

1,802,713

1,733,606

1,289,386

4.0
%
34.5
%
Interest on foreign trade loans

361,112

130,047

42,975

177.7
%
202.6
%
Interest on leases

454,851

359,588

207,411

26.5
%
73.4
%
Interest on other receivables from financial transactions

392,172

218,942

56,762

79.1
%
285.7
%
Income from government and corporate securities(1)

518,698

157,396

131,058

229.5
%
20.1
%
Income from participation in our securitization trusts(2)

148,627

362,242

282,553

(59.0
)%
28.2
%
Income from securities issued by the Central Bank(1)

1,318,422

734,096

257,274

79.6
%
185.3
%
Exchange rate differences of gold and foreign currency(3)

250,759

367,436

44,735

(31.8
)%
721.4
%
Other(4)

269,451

96,234

238,901

180.0
%
(59.7
)%
Total

15,494,671

10,794,579

6,741,744

43.5
%
60.1
%
Grupo Supervielle S.A.
Year ended December 31,
2020 2019 2020/2019
Ps. Ps. %
Interest on overdrafts 2,678,469 6,217,172 (56.9 %)
Interest on promissory notes 6,226,382 8,002,944 (22.2 %)
Interest on personal loans 14,173,544 17,584,460 (19.4 %)
Interest on corporate unsecured loans 5,981,812 8,360,682 (28.5 %)
Interest on credit cards loans 3,818,628 6,555,201 (41.7 %)
Interest on mortgage loans 3,994,607 5,148,348 (22.4 %)
Interest on automobile and other secured loans 738,403 943,454 (21.7 %)
Interest on foreign trade loans 1,453,129 2,356,094 (38.3 %)
Interest on leases 704,408 1,537,851 (54.2 %)
Interest on government and corporate securities measured at amortized cost 20,524,157 -
Other 4,406,339 4,277,419 (3.0 %)
Total 64,699,880 60,983,625 (6.1 %)

~~(1)~~         ~~Includes interest and variations in fair value.~~
~~(2)~~         Includes interest on and changes in the fair value of senior and subordinated bonds issued by our securitization trusts and held by us, as well as variations in the book value of participation certificates issued by such trusts. Income derived from participation certificates (but not from senior and subordinated bonds) is not subject to income tax, which is deducted at the financial trusts’ level. Allowances for loan losses are also maintained at the trust level following Central Bank regulations.
~~(3)~~         ~~Includes exchange rate differences, both from foreign currency trading and from the net holdings of assets and liabilities.~~
~~(4)~~         ~~Includes premiums on repo transactions, which totaled Ps.180.1 million for the year ended December 31, 2017 and Ps.13.6 million for the year ended December 31, 2016.~~
The following table sets forth our yields on interest-earning assets:

Year ended December 31,

2017

2016

2015

Average
Balance

Average
Nominal
Rate

Average
Balance

Average
Nominal
Rate

Average
Balance

Average
Nominal
Rate

(in thousands of Pesos, except percentages)

Interest-Earning Assets

Investment Portfolio

Government and corporate securities

2,099,353

24.7
%
763,096

23.4
%
504,119

26.5
%
Participation in our securitization trusts

818,852

18.2
%
1,277,081

28.4
%
1,348,974

21.0
%
Securities issued by the Central Bank.

5,282,857

25.0
%
1,952,936

37.1
%
709,207

36.3
%
Total Investment Portfolio

8,201,062

24.2
%
3,993,113

31.7
%
2,562,300

26.3
%
Loans

Loans to the financial sector

508,888

17.7
%
240,611

30.7
%
28,977

31.7
%
Overdrafts

3,262,650

35.6
%
2,509,796

39.7
%
1,638,881

36.3
%
Promissory notes(1)

6,411,891

21.9
%
3,837,761

28.3
%
3,177,646

26.4
%
Mortgage loans

457,344

24.0
%
40,766

22.1
%
59,344

16.9
%
Automobile and other secured loans

157,946

19.6
%
78,980

21.9
%
133,740

24.4
%
Personal loans

12,443,671

49.1
%
7,884,433

46.1
%
5,170,131

41.5
%
Corporate unsecured loans

4,041,754

26.6
%
2,418,252

33.9
%
1,769,763

31.7
%
Credit cards loans

6,365,177

28.3
%
5,544,763

31.3
%
4,193,038

30.8
%
Receivables from financial leases

1,963,819

23.2
%
1,317,689

27.3
%
837,151

24.8
%
Total loans excl. Foreign trade and U.S. dollar loans

35,613,140

34.4
%
23,873,051

36.6
%
17,008,671

33.4
%
Foreign Trade Loans and U.S. dollar loans

7,218,244

5.0
%
2,375,825

5.5
%
645,829

6.7
%
Total Loans

42,831,384

29.4
%
26,248,876

33.7
%
17,654,501

32.5
%
Other receivables from financial transactions

1,643,903

23.9
%
694,063

31.5
%
303,044

17.7
%
Total Interest-Earning Assets

52,676,349

28.4
%
30,936,051

33.4
%
20,519,845

31.5
%
Net repo transactions

(374,483
)

262,985

145,246

Total Interest-Earning Assets with Repo transactions

52,301,866

31,199,036

20,665,090

Grupo Supervielle S.A.
Year ended December 31,
2020 2019
Average
Balance Average
Nominal
Rate Average
Balance Average
Nominal
Rate
Interest-Earning Assets
Investment Portfolio
Government and Corporate Securities 14,065,519 42.8 % 15,420,527 17.5 %
Securities Issued by the Central Bank 47,584,764 37.5 % 41,141,175 61.9 %
Total Investment Portfolio 61,650,283 38.7 % 56,561,702 49.8 %
Loans
Loans to the Financial Sector 210,337 26.2 % 756,381 34.2 %
Overdrafts 6,633,775 40.4 % 9,537,781 65.2 %
Promissory Notes 14,838,492 42.0 % 12,720,435 62.9 %
Mortgage loans 10,646,858 37.5 % 11,186,422 46.0 %
Automobile and Other Secured Loans 1,591,768 46.4 % 2,513,711 37.5 %
Personal Loans 21,244,137 66.7 % 31,223,272 56.3 %
Corporate Unsecured Loans 17,479,098 34.2 % 14,778,530 56.6 %
Credit Card Loans 16,077,757 23.8 % 16,664,402 39.3 %
Receivables from Financial Leases 3,686,050 19.1 % 6,043,733 25.4 %
Total Loans excl. Foreign trade and U.S.$.loans 92,408,272 41.5 % 105,424,667 51.8 %
Foreign Trade Loans and U.S.$.loans 20,168,862 7.2 % 34,697,331 6.8 %
Total Loans 112,577,134 35.4 % 140,121,996 40.7 %
Repo transactions 16,983,342 25.6 % 1,336,898 60.8 %
Total Interest-Earning Assets 191,210,759 35.6 % 198,020,596 43.4 %

~~(1)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~

~~Our financial income includes net income derived from our participation in financial trusts created in connection with our securitization transactions.~~
From time to time, each of the Bank and CCF and prior to 2013, Tarjeta as well transfer portions of their loan portfolio, mainly personal loans, to special purpose financial trusts that fund the purchase of these loans by issuing securities, most of which are sold to third parties, thereby creating an additional source of funding for operations. Before the IPO, loan securitization was part of our self-funded strategy. However, since the IPO we have reduced substantially the securitization made by the Bank, although we continued to follow this strategy at CCF.
In the case of the securitization transactions carried out by the Bank and CCF, the trustee typically issues senior bonds, subordinated bonds and participation certificates (equivalent to equity), and the Bank places these bonds in the Argentine capital markets. Generally, the Bank and CCF, as settlors of the trust, retain the balance of the subordinated bonds and the participation certificates that are not purchased by investors, as well as some senior bonds. The Bank and CCF generally retain servicing rights with respect to the loan portfolio transferred to the financial trusts. The payment obligations of these securities are secured by the trust assets consisting of the portfolio of the loans transferred and any reserved fund established by the Bank or CCF for such purpose. We have no exposure to such trusts beyond the senior and subordinated debt and the participation certificates that we hold.
~~For more information regarding our securitization transactions see “~~~~Item 5.B Liquidity and Capital Resources—Funding—Securitization Transactions~~.”
~~2017 Compared to 2016~~
~~Financial income in 2017 totaled Ps.15.5~~ billion, a 43.5% increase from the Ps.10.8 billion recorded in 2016. This increase was primarily the result of an increase in average interest-earning assets (including repo transactions) following the IPO and the follow-on equity offering in September 2017 and Ps.173.2 million increase in other financial income to Ps.269.5 million from Ps.96.2 million recorded in 2016.
The average balance of ~~our interest-earning assets totaled Ps.52.7~~ ~~billion in 2017, representing a 70.3% increase from Ps.30.9 billion in 2016. This increase was mainly a result of (i) a 49.2% increase in the average balance of our total loan portfolio~~loans excluding foreign trade loans and U.S. ~~dollar~~dollars loans ~~to Ps.35.6~~totaled Ps.92.4 billion in ~~2017~~2020, representing a 12.3% decrease from ~~Ps.23.9~~Ps.105.4 billion in 2016, (ii) a 203.8% increase in the average foreign trade and U.S. dollar loan portfolio to Ps.7.2 billion in 2017, from Ps.2.4 billion in 2016, (iii) a 105.4% increase in the average balance of our total investment portfolio to Ps.8.2 billion in 2017, from Ps. 4.0 billion in 2016, and (iv) a Ps.173.2 million increase in other financial income.
2019. The ~~increase~~decrease in the average balance of our total loan portfolio (excluding foreign trade loans and U.S. dollar loans) ~~was~~is mainly explained by the following changes in ~~our balance sheet. First, the~~ average balance ofportfolio: (i) 32.0% or Ps.10.0 billion decrease in personal loans, ~~increased~~(ii) 30.4% or Ps.2.9 billion decrease in overdraft, and (iii) 39.0% or Ps.2.4 billion decrease in receivable from financial leases. These were partially offset by ~~57.8~~%, representing the increase in the average balance of personal loans when deducting therefrom the portfolio of personal loans that was securitized during 2017 and 2016, as applicable. The average amount of securitized personal loans was higher during 2017 when compared to 2016. If no personal loans had been securitized during 2017 and 2016, the increase in the average balance of personal loans would have been 80.5%, which is higher than the estimated 52.3% average increase recorded by the Argentine financial system in the same period. In addition to the increase in our average balance of personal loans, our total loan portfolio was also impacted by a 67.1%,18.3% or ~~Ps.2.6 billion, increase in promissory notes, a 67.1%, or Ps.1.6~~Ps. 2.7 billion increase in corporate unsecured loans ~~a 49.0%,~~and 16.7% or Ps.646.1 million, increase in receivables from financial leases, a 1,021.9%, or Ps.416.6 million increase in mortgages, a 30.0%, or Ps.752.9 million, increase in overdrafts and a 14.8%, or Ps.820.4 million, increase in credit cards.
~~The~~ ~~203.8%, or Ps.4.8~~Ps. 2.1 billion increase in ~~the average balance of our foreign trade loans and U.S. dollar loans outperformed industry growth and represented 13.7% of the total average loan portfolio.~~promissory notes.

~~The~~ ~~105.4~~% increase in the average balance of our total investment portfolio was primarily due to increases in the average balances of the following securities after the IPO and our follow-on equity offering, which provided us with additional liquidity: (i) securities issued by the Central Bank, which increased to Ps.5.3 billion in 2017, from Ps.2.0 billion in 2016 and (ii) other governmentInterest on public and corporate securities ~~which increased~~measured at amortized cost amounted to ~~Ps.2.1~~Ps.20.5 billion in ~~2017,~~2020. This line item mainly reflects results from ~~Ps.763.1 million~~investments in ~~2016.~~
securities ~~The~~ ~~80.5~~% increase in the average balance of our personal loans in 2017 was driven by growth both in the consumer finance segment and in the Retail Segment and reflects a higher level of contribution of these types of loansheld to securitization trusts compared with the same period of 2016. The growth in both segments was mainly due to the issuance by CCF of financial trusts to fund loan growth. The average amount of securitized personal loans was higher during 2017 when compared to 2016. Nevertheless, as of December 31, 2017, the total amount of securitized personal loan portfolio was lower than the balance registered as of December 31, 2016.maturity or available for sale.

~~The average yield on interest-earning assets was~~ ~~28.4% in 2017, a 500 basis point decrease from 33.4% recorded in 2016.~~ The average interest rate on total loans (excluding foreign trade loans and U.S. dollar loans) decreased to ~~34.4%~~41.5% in ~~2017~~2020 from ~~36.6%~~51.8% in 2016, driven by lower average interest rates in corporate segment products and credit cards, which was partially offset by higher average interest rates on personal loans. Lower average interest rates on corporate segment products is the result of declining market interest rates, which directly impact corporate segment rates.2019. Average BADLAR decreased ~~520~~1,970 basis points in ~~2017~~2020 to 29.7% compared to ~~2016.~~48.7% in 2019.

An increase in foreign trade and U.S. dollar-denominated loans, promissory notes and receivables from financial leases reflect the growth achieved in our corporate segment portfolio since the IPO and follow-on equity offering. The IPO, the follow-on equity offering and subsequent capital contributions to the Bank allowed it to have a higher
capital base to increase its loans to its corporate customers. The increase in the average balance of personal loans was driven by growth both in the consumer finance segment and in the retail segment.
~~The average yield on our total investment portfolio decreased 746 basis points to~~ ~~24.2~~% in 2017, driven by decreased yields on securities issued by the Central Bank due to lower interest rates in Peso-denominated instruments. In 2016, the increase in yield of participation in our securitization trusts registered a net gain from the termination of the Supervielle Renta Inmobiliaria Financial Trust. This was partially offset by higher returns on government and corporate securities.
~~2016 Compared to 2015~~
Financial income in 2016 totaled Ps.10.8 billion, a 60.1% increase from the Ps.6.7 billion recorded in 2015. This increase was primarily the result of an increase in the average balance of our interest-earning assets due to the deployment of the capital raised in the IPO in May 2016, an increase of 195 basis points in the average yields of such assets after the removal by the Central Bank authorities in mid-December 2015 of interest rates caps and floors that had been in place during 2015 and the net gain on the termination of the Supervielle Renta Inmobiliaria Financial Trust. For an explanation of the termination of the Supervielle Renta Inmobiliaria Financial Trust and the related net gains, see “~~Item 4.D Property, Plants and Equipment.~~”
~~The average balance of interest-earning assets totaled Ps.30.9 billion in 2016, representing a 50.8% increase from Ps.20.5 billion in 2015.~~ This increase was mainly a result of (i) a 40.4% increase in the average balance of our total loan portfolio (excluding our foreign trade and U.S. dollar loan portfolio) to Ps.23.9 billion in 2016, from Ps.17.0 billion in 2015, (ii) a 267.9% increase in the average balance of our foreign trade and U.S. dollar loan portfolio to Ps.2.4 billion in 2016, from Ps.645.8 million in 2015 and (iii) a 55.8% increase in the average balance of our total investment portfolio increasing to Ps.4.0 billion in 2016 from Ps.2.6 billion in 2015.
~~The~~ ~~increase~~ in the average balance of our total loan portfolio (excluding foreign trade loans and U.S. dollar loans) was mainly explained by: (i) a 52.6% increase in the average balance of personal loans (compared to a 34% increase of those loans registered by the Argentine financial system), (ii) a 32.2% increase in the average balance of credit card loans, (iii) a 36.6% increase in the average balance of corporate unsecured loans, (iv) a 53.1% increase in the average balance of overdrafts (compared to a 26.5% increase registered by the Argentine financial system) and (v) a 57.4% increase in the average balance of receivables from financial leases.
~~The~~ ~~267.9% increase~~ ~~in the average balance of foreign trade loans and U.S. dollar loans reflects the growth achieved in our corporate segment portfolio since the IPO.~~
~~The 55.8% increase in the average balance of our total investment portfolio was primarily due to a~~ ~~175.4~~% increase in the average balance of our holdings of Central Bank securities due to the investment of a portion of the IPO proceeds, and a 51.4% increase in the average balance of our holdings of government and corporate securities, which represent 2% of our total average interest earning assets.
~~The~~ ~~52.6~~% increase in the average balance of personal loans in 2016 was driven by growth both in the consumer finance segment and in the retail segment and reflects a lower level of contribution of these loans to securitization trusts in 2016 compared to 2015. Had the pace of securitization remained even, the increase in the average balance of personal loans in 2016 would have been approximately 27%. This 27% is lower than the estimated 34% average increase recorded by Argentine financial system in the same period.
~~The average yield on interest-earning assets was 33.4~~% in 2016, a 195 basis point increase from 31.5% in 2015. The average interest rate on total loans (excluding foreign trade loans and U.S. dollar loans) increased to 36.6% in 2016 from 33.4% in 2015, reflecting an increase in the average interest rate on personal loans and overdrafts, and a higher incidence of personal loans and overdrafts in our loan portfolio, which bear a higher interest rate than other assets in the average portfolio.
The average nominal rate on our investment portfolio (which includes our income from participations in our securitization trusts) increased to 31.4% in 2016 from 26.3% in 2015, primarily due to an increase in the average
~~nominal rate on participations in our securitization trusts and further impacted by the net gain on the termination of the Supervielle Renta Inmobiliaria Financial Trust.~~ ~~For an explanation of the termination of the Supervielle Renta Inmobiliaria Financial Trust and the related net gains, see “~~~~Item 4.D Property, Plants and Equipment.~~”
Financial income for 2016 includes a Ps.367.4 million gain from exchange rate differences of gold and foreign currency, compared to a gain of Ps.44.7 million from such exchange rate differences in 2015 (excluding gains related to NDF hedging transactions).
Other financial income decreased by 59.7% to Ps.96.2 million in 2016 from Ps.238.9 million in 2015, as the results for the year 2015 included particular hedging transactions of Ps.228.2 million, entered into to protect our capital against an expected devaluation of the Peso in the fourth quarter of 2015, which materialized in December 2015.
~~Financial~~ii) Interest Expenses

Our ~~financial~~Interest expenses were ~~composed~~comprised of the following:

Year ended December 31,

Change December 31,

As of December 31, Change December 31,

2017

2016

2015

2017/2016

2016/2015

2020 2019 2020/2019

(in thousands of Pesos)

(in percentages)

Ps. Ps. %

Interest on savings accounts

3,702

4,639

4,830

(20.2
)%
(4.0
)%
Interest on special checking accounts

637,696

—

—

100.0
%
0.0
%
6,325,123 8,182,612 (22.7 %)
Interest on time deposits

2,308,058

3,070,847

2,224,748

(24.8
)%
38.0
%
19,574,998 27,030,921 (27.6 %)
Interest on other liabilities from financial transactions

1,651,228

359,126

266,760

359.8
%
34.6
%
2,285,959 10,472,760 (78.2 %)
Interest on financing from the financial sector

208,869

382,588

156,915

(45.4
)%
143.8
%
100,834 373,163 (73.0 %)
Interest on subordinated loans and negotiable obligations

128,237

128,027

81,282

0.2
%
57.5
%
Other(1)

1,256,498

921,297

651,515

36.4
%
41.4
%
Other 291,474 1,471,921 (80.2 %)
Total

6,194,288

4,866,525

3,386,050

27.3
%
43.7
%
28,578,388 47,531,377 (39.9 %)

~~(1)~~                                 ~~Includes mainly turnover tax and payments~~Interest expenses for 2020 totaled Ps.28.6 billion, a 39.9% decrease from Ps.47.5 billion for 2019. This decrease was due to the ~~deposit guarantee fund.~~
~~The following table shows our cost of funds:~~

Year ended December 31,

2017

2016

2015

Average
Balance

Average
Nominal
Rate

Average
Balance

Average
Nominal
Rate

Average
Balance

Average
Nominal
Rate

(in thousands of Pesos, except percentages)

Interest-bearing liabilities

Special Checking Accounts

5,318,081

12.0
%
—

0.0
%
—

0.0
%
Ps. Time Deposits

4,139,446

15.3
%
—

0.0
%
—

0.0
%
Foreign Exchange Time deposits

1,178,635

0.3
%
—

0.0
%
—

0.0
%
Time Deposits

13,893,202

16.6
%
12,452,742

24.7
%
9,287,475

24.0
%
Ps. Time Deposits

12,567,904

18.3
%
11,646,092

26.3
%
8,950,016

24.8
%
Foreign Exchange Time deposits

1,325,298

0.6
%
806,650

1.3
%
337,459

0.8
%
Borrowings from other financial institutions and unsubordinated negotiable obligations

7,963,979

23.4
%
2,550,226

29.1
%
1,651,911

25.6
%
Subordinated loans and negotiable obligations

1,319,046

9.7
%
1,285,162

10.0
%
800,088

10.2
%
Total interest-bearing liabilities

28,494,308

17.3
%
16,288,130

24.2
%
11,739,473

23.3
%
Low & Non-Interest Bearing Deposits

Savings accounts

12,839,525

0.0
%
7,431,318

0.1
%
4,903,695

0.1
%
Ps. Savings Accounts

8,991,324

0.0
%
6,192,384

0.1
%
4,616,801

0.1
%
Foreign Exhnage Savings Accounts

3,848,201

0.0
%
1,238,934

0.1
%
286,894

0.1
%
Demand Deposits

9,483,831

7,143,382

4,866,728

Ps. Checking Accounts

6,721,340

6,541,618

4,766,900

Foreign Exchange Checking Accounts

2,762,491

601,764

99,828

Special Checking Accounts

—

1,749,023

1,117,708

Ps. Special Checking Accounts

—

1,749,023

1,117,708

Foreign Exchange Special Checking Accounts

—

—

—

Total low & non interest-bearing deposits

22,323,356

14,574,700

9,770,423

Total Interest-bearing liabilities & low & non-interest bearing deposits

50,817,664

9.7
%
30,862,830

12.8
%
21,509,896

12.7
%
~~The following table sets forth interest bearing deposits by denomination:~~

Year ended December 31,

2017

2016

2015

Average
Balance

Interest
Paid

Average
Nominal
Rate

Average
Balance

Interest
Paid

Average
Nominal
Rate

Average
Balance

Interest
Paid

Average
Nominal
Rate

(in thousands of Pesos, except percentages)

Savings accounts

Pesos

8,991,324

(2,569
)
0.0
%
6,192,384

(3,899
)
0.1
%
4,616,801

(4,556
)
0.1
%
Dollars

3,848,201

(1,133
)
0.0
%
1,238,934

(740
)
0.1
%
286,894

(274
)
0.1
%
Total

12,839,525

(3,702
)
0.0
%
7,431,318

(4,639
)
0.1
%
4,903,695

(4,830
)
0.1
%
Special checking accounts

Pesos

4,139,446

(633,945
)
15.3
%
—

—

0.0
%
—

—

0.0
%
Dollars

1,178,635

(3,751
)
0.3
%
—

—

0.0
%
—

—

0.0
%
Total

5,318,081

(637,696
)
12.0
%
—

—

0.0
%
—

—

0.0
%
Time deposits

Pesos

12,567,904

(2,299,676
)
18.3
%
11,646,092

(3,060,566
)
26.4
%
8,950,016

(2,221,941
)
24.8
%
Dollars

1,325,298

(8,382
)
0.2
%
806,650

(10,282
)
1.3
%
337,459

(2,807
)
0.8
%
Total

13,893,202

(2,308,058
)
16.6
%
12,452,742

(3,070,848
)
24.7
%
9,287,475

(2,224,748
)
24.0
%
Total by currency

Pesos

25,698,673

(2,936,190
)
11.4
%
17,838,476

(3,064,465
)
17.2
%
13,566,817

(2,226,497
)
16.4
%
Dollars

6,352,134

(13,266
)
0.2
%
2,045,584

(11,022
)
0.5
%
624,353

(3,081
)
0.5
%

Total Deposits

32,050,807

(2,949,456
)
9.2
%
19,884,060

(3,075,487
)
15.5
%
14,191,170

(2,229,578
)
15.7
%
~~2017 Compared to 2016~~
~~Financial expenses for 2017 totaled Ps.6.2~~ ~~billion, a 27.3% increase from Ps.4.9 billion for 2016. This increase was attributable to a 74.9% increase in the average balance of our interest-bearing liabilities offset by a 700~~1,340 basis points decrease in the average ~~nominal~~ rate of interest bearing liabilities rate, although minimum floor on interest rates on time deposits reduced the decrease in Cost of Funds along the year, while the average balance of interest-bearing liabilities decreased 1.1% and ~~by a 53.2% increase in~~the average balance of total low orand non-interest bearing ~~deposits.~~deposits decreased 12.7% or Ps. 9.7 billion to Ps.66.8 billion.

Other financial expenses in ~~2017~~2020 totaled ~~Ps.1.3~~ ~~billion~~,Ps.291.5 million, compared to ~~Ps.921.3 million~~Ps.1.5 billion in 2016. This was mainly due to the increase in turnover tax expense resulting from higher financial income and the cost of forward transactions carried out to balance the foreign exchange position partially offset by a reduction in the monthly contribution rate that banks are required to pay to fund the Deposits Guarantee Fund.2019.

The following table sets forth our yields on interest-bearing liabilities:
Grupo Supervielle S.A.
As of December 31,
2020 2019
Average
Balance Average
Nominal
Rate Average
Balance Average
Nominal
Rate
Interest-Bearing Liabilities
Special Checking Accounts 40,167,184 15.7 % 34,264,474 23.9 %
Ps. Savings Accounts 31,600,583 19.9 % 20,274,728 40.1 %
Fx Savings Accounts 8,566,601 0.3 % 13,989,746 0.4 %
Time Deposits 71,509,505 27.4 % 63,863,152 42.3 %
Ps. Time Deposits 66,111,639 29.5 % 55,979,526 48.1 %
Fx Time Deposits 5,397,866 1.5 % 7,883,626 1.3 %
Borrowings from Other Financial Instruments and Unsubordinated Negotiable Obligations 15,418,940 15.5 % 29,484,398 36.8 %
Subordinated Loans and Negotiable Obligations 2,127,211 6.7 % 3,000,494 6.2 %

Grupo Supervielle S.A.
As of December 31,
2020 2019
Average
Balance Average
Nominal
Rate Average
Balance Average
Nominal
Rate
Total Interest-Bearing Liabilities 129,222,840 22.0 % 130,612,518 35.4 %
Low and Non-Interest Bearing Deposits
Savings Accounts 39,485,774 0.1 % 43,817,323 0.2 %
Ps. Savings Accounts 27,852,328 0.1 % 22,705,198 0.4 %
Fx Savings Accounts 11,633,446 0.0 % 21,112,125 0.0 %
Checking Accounts 27,297,175 32,656,585
Ps. Checking Accounts 25,448,014 20,570,858
Fx Checking Accounts 1,849,161 12,085,727
Total Low and Non-Interest Bearing Deposits 66,782,949 76,473,908
Total Interest-Bearing Liabilities and Low and Non-Interest Bearing Deposits 196,005,789 14.5 % 207,086,426 22.4 %
Average balance of our interest-bearing liabilities in ~~2017~~2020 totaled ~~Ps.28.5~~Ps.129.2 billion,, compared to ~~Ps.16.3~~Ps. 130.6 billion in ~~2016. This increase~~2019. The Ps.1.4 billion decrease was ~~mainly due~~explained by: i) a 47.7% decrease to (i) a Ps.5.3 billion average balance of interest-bearing special checking accounts which mainly grew since January 2017 when the Central Bank allowed banks to pay interest on the amounts deposited in these accounts, and a (ii) 212.3% increase to Ps.8.0Ps.14.1 billion in the average balance of our borrowings from other financial institutions, ~~and medium-term negotiable obligations reflecting the issuance of~~ii) a ~~Ps.4,768,170,000 global term note by the Bank in February 2017 along with medium-term bonds issuances~~12.0% increase to Ps.71.5 billion in the ~~local capital markets by both the Bank~~average balance of time deposits and ~~CCF.~~iii) a Ps.5.9 billion or 17.2% increase in average balance of interest-bearing special checking accounts to Ps.40.2 billion from Ps.34.3 billion.

Average balance of our low or non-interest-bearing deposits in ~~2017~~2020 totaled ~~Ps.22.3~~Ps.66.8 billion,, compared to ~~Ps.14.6~~Ps.76.5 billion in ~~2016.~~2019. This ~~increase~~decrease was mainly due to (i) a ~~72.8% increase to Ps.12.8~~59.4% or Ps. 19.7 billion decrease in ~~the average~~Average balance of ~~savings accounts, and (ii) a 32.8% increase~~our U.S. dollar low or non-interest-bearing deposits, while Average balance of our Ps. low or non-interest-bearing deposits increased 23.2% or Ps. 10.0 billion to ~~Ps.9.5 billion in non-interest bearing checking accounts.~~Ps. 53.3 billion.

Out of our total average interest-bearing deposits of ~~Ps.32.0~~Ps.151.2 billion in ~~2017, Ps.6.4~~2020, Ps.25.6 billion were U.S. dollar-denominated deposits and ~~Ps.25.7~~Ps.125.6 billion were Peso-denominated, compared to ~~Ps.2.0~~Ps.43.0 billion and ~~Ps.17.8~~Ps.99.0 billion, respectively, in ~~2016.~~2019.
Out of our total average non-interest-bearing deposits of ~~Ps.9.5~~Ps.27.3 billion for ~~2017, Ps.2.8~~2020, Ps. 1.8 billion were U.S. dollar-denominated deposits and ~~Ps.6.7~~Ps.25.4 billion were Peso-denominated deposits, compared to ~~Ps.601.8 million~~Ps.12.1 billion and ~~Ps.6.5~~Ps.20.6 billion, respectively, in ~~2016.~~2019.

The average rate paid on interest-bearing liabilities and low or non-interest-bearing deposits for ~~2017~~2020 was ~~9.7%~~14.5%, ~~310~~780 basis points below the ~~12.8%~~22.4% average rate for ~~2016.~~2019. For ~~2017,~~2020, Peso-denominated time deposits accrued interest at an average rate of ~~18.3%~~29.5%, ~~800~~1,860 basis points below the ~~26.3%~~48.1% average interest rate accrued in ~~2016, which is consistent with the decrease in the average BADLAR in 2017 compared with 2016.~~2019. In ~~2017,~~2020, U.S. dollar-denominated time deposits accrued interest at an average rate of ~~0.6%~~1.5%, 7020 basis points ~~below~~above the 1.3% average interest rate accrued in ~~2016.~~2019.

Our average balance of borrowings from other financial institutions and unsubordinated negotiable obligations in ~~2017,~~2020 was ~~Ps.8.0~~Ps.15.4 billion, compared to ~~Ps.2.6~~Ps.29.5 billion in ~~2016.~~2019. The average cost of borrowings from other financial institutions and unsubordinated negotiable obligations decreased ~~570~~2,130 basis points to ~~23.4%~~15.5% in ~~2017,~~2020, from ~~29.1%~~36.8% in ~~2016. This was partially offset by a 53.2% increase~~2019, reflecting the decline in the ~~average balance of our low cost savings accounts and non-interest-bearing checking accounts.~~Badlar rate.

Our average balance of subordinated loans and subordinated negotiable obligations in ~~both~~ ~~2017 and 2016~~2020 was ~~Ps.1.3 billion.~~Ps.2.1 billion, compared to Ps.3.0 billion in 2019. The average rate of subordinated negotiable obligations (denominated in U.S. dollars or U.S. ~~dollar linked)~~dollar-linked) was ~~9.7%~~6.7% in ~~2017,~~2020, compared to ~~10.0%~~6.2% in ~~2016.~~2019.

~~2016 Compared to 2015~~The following table sets forth interest bearing deposits by denomination:
Grupo Supervielle S.A.
As of December 31,
2020 2019
Average
Balance Interest
Paid Average Nominal Rate Average
Balance Interest
Paid Average Nominal Rate
Savings accounts
Pesos 27,852,328 38,450 0.1 % 22,705,198 82,889 0.4 %
Dollars 11,633,446 3,129 0.0 % 21,112,126 6,071 0.0 %
Total 39,485,774 41,579 0.1 % 43,817,323 88,960 0.2 %
Special checking accounts
Pesos 31,600,583 6,301,439 19.9 % 20,274,728 8,132,562 40.1 %
Dollars 8,566,601 23,684 0.3 % 13,989,746 50,049 0.4 %
Total 40,167,184 6,325,123 15.7 % 34,264,473 8,182,612 23.9 %
Time deposits
Pesos 66,111,639 19,496,600 29.5 % 55,979,526 26,926,870 48.1 %
Dollars 5,397,867 78,398 1.5 % 7,883,626 104,051 1.3 %
Total 71,509,506 19,574,998 27.4 % 63,863,152 27,030,920 42.3 %
Total by currency
Pesos 125,564,549 25,836,489 20.6 % 98,959,451 35,142,321 35.5 %
Dollars 25,597,914 105,211 0.4 % 42,985,498 160,171 0.4 %
Total Deposits 151,162,464 25,941,700 17.2 % 141,944,949 35,302,492 24.9 %
iii) Net Income from financial instruments, Result from recognition of assets measured at amortized cost and Exchange rate differences

~~Financial expenses~~Net income from financial instruments at fair value through profit or loss, result from derecognition of assets measured at amortized cost and exchange rate differences for ~~2016~~2020 totaled ~~Ps.4.9~~Ps.5.0 billion, compared to Ps.28.1 billion recorded in 2019. Year-on-year comparisons were impacted by the change in the classification and therefore accounting methodology for all new Central Bank Securities and sovereign bonds acquired by the Company in 2020. In 2020, yield from investments in Central Bank securities has been recorded in NII following the Fair value through other comprehensive income methodology. Previously, when those securities were classified as Held for trading securities, yields from those investments were recorded in NIFFI following the Fair value through profit or loss accounting methodology while deposits to fund those marginal investments were reflected in Net Interest Income.

Income from government and corporate securities totaled Ps. 3.0 billion a ~~43.7%~~43.8% increase from ~~Ps.3.4~~Ps. 2.1 billion in 2019. This was due to 42.8% yield on these securities compared to 17.5% in 2019, while average balance decreased 8.8%.
Grupo Supervielle S.A.
As of December 31,
2020 2019
Ps. Ps.
Net income from financial instruments at fair value through profit or loss
Income from government and corporate securities 2,999,989 2,086,183
Income from securities issued by the Central Bank 135,491 25,478,678
Term operations 180,101 971,521
Total 3,315,582 28,536,382
Result from derecognition of assets measured at amortized cost 657,019 -
Exchange rate difference on gold and foreign currency 1,064,545 (441,191 )
Total 5,037,146 28,095,191
Grupo Supervielle S.A.
As of December 31.
2020 2019
Ps. Ps.
Financial income from U.S. dollar operations 1,285,180 (425,223 )
NIFFI 854,571 (595,047 )
U.S. dollar Government Securities 674,470 (1,566,568 )
Term Operations 180,101 971,521
Interest Income 430,609 169,824
U.S. dollar Government Securities 430,609 169,824
Exchange rate differences on gold and foreign currency 1,064,545 (441,191 )
Total (Loss) Income from U.S. dollar operations 2,349,725 (866,414 )
Total income from U.S. dollar operations for ~~2015.~~2020 totaled Ps.2.3 billion gain, compared to Ps.866.4 million loss recorded in 2019. This ~~increase was attributable~~is mainly explained by, trading gains from US$ linked government securities, gains on foreign currency position due to the long FX position of the Bank’s treasury and, to a ~~43.5% increase~~lesser extent, FX trading spreads across all customers segments. 2019 loss reflected the mark to market accounting of short-term U.S. dollar local treasury notes held by us following the debt reprofiling announced by the Argentine government in August 2019. Between October and December 2019, these instruments partially recovered the ~~average balance of interest-bearing liabilities and low or non-interest bearing deposits, (including a 49.2% increase~~initial decline in low cost savings accounts and non-interest bearing checking accounts) and a 10 basis points increase in the average nominal rates of total interest-bearing liabilities and low or non-interest bearing deposits.
Other financial expenses in 2016 totaled Ps.921.3 million, compared to Ps.651.5 million in 2015. This increase was mainly due to an increase in turnover tax to Ps.698.5 million in 2016 from Ps.431.9 million in 2015, and increase on premium on forward transactions to Ps.124.7 million from Ps.36.5 million. These increasesprices. Also, these were partially offset by ~~a decrease~~higher foreign currency trading with retail and institutional customers.
iv) Result from exposure to changes in ~~monthly payments~~the purchasing power of money

Result from exposure to changes in the ~~deposit guarantee fund from 0.060% to 0.015%~~purchasing power of the ~~monthly average~~currency for 2020 totaled a Ps.4.3 billion loss, from the Ps.7.3 billion loss recorded in 2019. This reflects the loss in the purchasing power of the ~~daily deposits balance~~currency to ~~Ps.87.6 million, compared to Ps.180.7 million~~which our net monetary assets are exposed as a result of the 36.1% and 53.8% increase in ~~2015, pursuant to Communication “A” 5943, as amended~~consumer price index in 2020 and ~~supplemented by Communication “A” 6462.~~2019, respectively, together with a lower proportion of net monetary assets in 2020 than in 2019.
216
Loan Loss Provisions

~~Average balance of interest-bearing liabilities~~Throughout 2020, we updated and ~~low or non-interest bearing deposits totaled Ps.30.9 billion, compared~~enhanced our expected loss models to ~~Ps.21.5 billion in 2015. This increase was mainly due to: (i) a 49.2% increase in~~adjust for the ~~average balance of low~~current economic outlook, included additional macroeconomic variables and ~~non-interest bearing deposits~~updated its top-down analysis on specific industries that could continue to ~~Ps.14.6 billion from Ps.9.8 billion, (ii) a 34.1% increase in the average balance of time deposits~~ ~~(primarily Peso-denominated time deposits)~~, to Ps.12.5 billion from Ps.9.3 billion (the average balance of Pesos time deposits increased by 30.1% to Ps.11.6 billion and the average balance of U.S. dollar time deposits increased by 139.0% to Ps.806.7 million) (iii) a 54.4% increase in borrowings from other financial institutions and the issuance of unsubordinated negotiable obligations to Ps.2.6 billion from Ps.1.7 billion. The increases in low or non-interest bearing deposits together with lower increases in time deposits, reflects our ability to reduce certain high-interest bearing liabilities through the utilization of the IPO proceeds.
Out of our total average interest-bearing deposits of Ps.19.9 billion for 2016, Ps.2.0 billion were U.S. dollar-denominated deposits and Ps.17.8 billion were Peso-denominated, compared to Ps. 624.4 million and Ps.13.6 billion, respectively, in 2015.
Out of our total average non interest-bearing deposits of Ps.7.1 billion for 2016, Ps.601.8 million were U.S. dollar-denominated deposits and Ps.6.5 billion were Peso-denominated, compared to Ps.99.8 million and Ps.4.8 billion respectively in 2015.
The average rate paid on interest-bearing liabilities and low or non-interest bearing deposits was 12.8%, 10 basis points above the 12.7% average rate for 2015. Peso-denominated time deposits accrued interest at an average rate of 26.3%, 150 basis points above the 24.8% average interest rate accrued in 2015, which is consistent with the increase in the average BADLAR rate during 2016. U.S. dollar-denominated time deposits accrued interest at an average rate of 1.3%, 50 basis points above the 0.8% average interest rate accrued in 2015. Our average balance of borrowings from other financial institutions and unsubordinated negotiable obligations in 2016 was Ps.2.6 billion, compared to Ps.1.7 billion in 2015. The average cost of borrowings from other financial institutions and unsubordinated negotiable obligations increased ~~350 basis points to 29.1% from 25.6% in 2015. This was partially offset by a 49.2% increase in the average balance of low or non-interest bearing deposits.~~
Our average balance of subordinated loans and subordinated negotiable obligations in 2016 was Ps.1.3 billion, compared to Ps.800.1 million in 2015. The average rate of subordinated negotiable obligations (denominated in U.S. dollars or U.S. dollar linked) was 10.0% and 10.2% for 2016 and 2015, respectively.
~~Gross Financial Margin~~
~~2017 Compared to 2016~~
~~Gross financial margin for 2017 amounted to Ps.9.3~~ ~~billion and the net interest margin was 19.1%, compared to Ps.5.9 billion and 20.6%, respectively, for 2016. Net financial margin ratio stood at 17.8% in 2017 compared to 19.2% in 2016.~~
~~Average interest spread for 2017 was~~ ~~16.5%, compared to 16.8% for 2016.~~
~~This performance is further explained~~be highly impacted by the ~~following factors: (i) higher average volumes in~~COVID-19 pandemic. As of December 31, 2020, the ~~loan portfolio surpassing the~~ ~~42.1~~% growth in total loans to the private sector, (ii) the increase in average volumes of receivables from financial transactions due to the temporary investment of a portion of the funds from our equity follow-on to accelerate the use of tax loss carry-forwards from previous fiscal-years, (iii) higher volumes on trading investments, (iv) the reduction in cost of funds following the 520 basis points decrease in the average BADLAR rate to 20.6% in 2017 due to the strong retail deposit franchise (low or non-interest-bearing deposits increased 53.1%) and the utilization of follow-on proceeds rather than interest-bearing deposits to partially fund loan growth. These increases were partially offset by a reduction in interest earned on assets.
In addition, certain extraordinary events explain this performance: (i) non-recurring net gains from the sale of Viñas del Monte and other non-strategic properties and (ii) a Ps.50 million net loss due to impact of the appreciation of the Peso against the U.S. dollar between pricing and settlement of the Ps.4,768,170,000 global term note issued by the Bank in February 2017. In 2016, gross financial margin included a Ps.128.1 million gains from the termination of the Supervielle Renta Inmobiliaria Financial Trust.
~~The table below provides further information about NIM breakdown corresponding to the investment portfolio, loan portfolio excluding Foreign Trade and U.S.$ loans, and the loan portfolio.~~

Year ended December 31,

2017

2016

(in percentages)

Net Interest Margin breakdown

Total NIM

19.1
%
20.6
%
Ps. NIM

21.8
%
22.4
%
U.S.$ NIM

6.8
%
5.5
%
Loan Portfolio NIM

20.0
%
21.0
%
Ps. NIM

23.9
%
23.1
%
U.S.$ NIM

3.1
%
0.7
%
Investment Portfolio NIM

14.8
%
18.9
%
Ps. NIM

13.0
%
18.8
%
U.S.$ NIM

22.8
%
23.2
%
~~(1)           Includes mainly U.S. dollar-denominated financial leases.~~

Interest Rates

2017

2016

BADLAR Interest Rate (eop)

23.3
%
19.9
%
BADLAR Interest Rate (avg)

20.6
%
25.8
%
TM20 (eop)

23.7
%
NA

TM20 (avg)

21.4
%
NA

NIM decreased 150 basis points year on year, with loan portfolio NIM decreasing 100 basis points. By contrast Pesos loan portfolio NIM increased 80 basis points, while higher share of U.S. dollar denominated loans within the loan and investment portfolios, explained part of the decrease.
~~2016 Compared to 2015~~
~~Gross financial margin for 2016 amounted to Ps.5.9 billion and the net interest margin was 20.6%, compared to Ps.3.4 billion and 18.1%, respectively, for 2015.~~
The improvement of gross financial margin for 2016 was mainly due to: (i) a 50.8% increase in the average balance of interest earning assets while average interest bearing liabilities including low or non-interest bearing deposits rose 42.5%, or Ps.9.4 billion (including a 49.2% increase or Ps.4.8 billion in low cost savings accounts and non-interest bearing checking accounts) and (ii) 195 basis points increase in the average interest rate earned on assets while interest paid on interest bearing liabilities and low or non-interest bearing deposits increased 10 basis points.
This performance is further explained by the following factors: (i) higher average volumes in the loan portfolio due to the deployment of the capital raised in IPO in May 2016, (ii) the removal by the Central Bank authorities in mid-December 2015 of interest rates caps and floors thatGroup had been in place during most of 2015, (iii) the replacement of certain high-interest bearing liabilities with IPO proceeds, (iv) a reduction commencing April 7, 2016, in the monthly contribution rate banks are required to pay to fund the Deposits Guarantee Fund from 0.06%, to 0.015% returning to the original monthly average of the daily deposits balance and (v) a Ps.128.1 million income from the termination of the Supervielle Renta Inmobiliaria Financial Trust. F~~or an explanation of the termination of the Supervielle Renta Inmobiliaria Financial Trust and the related net gains, see “~~~~Item 4.D Property, Plants and Equipment.~~” This was partially offset by (i) a significant rise in the BADLAR rate and the consequent increase in cost of funds, mainly for the consumer finance business, and (ii) higher regulatory reserve requirements set by the Central Bank in June 2016, up 3% for time deposits and 5% for current accounts.
~~Loan Loss Provisions~~
~~2017 Compared to 2016~~COVID-19 specific anticipatory provisions.

Loan loss provisions totaled ~~Ps.1.8~~Ps.8.6 billion in ~~2017, a 72.1% increase~~2020, an 18.2% decrease compared to ~~Ps.1.1~~Ps.10.5 billion in ~~2016, mainly~~2019. Provisions in 2019, had been impacted due to ~~(i) an~~the challenging macroeconomic environment since 2018, and certain commercial loans that became delinquent along the year 2019.
Loan loss provisions include the expected losses for each portfolio and segment, based on past performance and current conditions as of the financial statements date. The increase in delinquency also requires expected losses to be measured for the whole life of each loan, ~~portfolio, including an increase in non-performing~~instead of accounting for expected losses during a 12-month period. This increases significantly the probability of default for loans ~~(ii) our decision to increase our non-performing loan coverage ratio to 91.8% in December 2017 from 87.1%~~with a maturity of more than 1 year. For further information, see “Item 4.D – Selected Statistical Information—Amounts past due loans and (iii) the deterioration in the quality of assets mostly in the consumer finance segment. Asset quality deterioration in the consumer finance segment was due to salary adjustments resulting from collective bargaining agreements below the annual inflation rate in 2017 along with increases in public services tariffs, which impacted the population segment’s disposable income.other financing.”

~~While higher delinquency rates experienced~~In response to the COVID-19 pandemic and in order to mitigate the ~~first months~~economic impact, the Argentine government has adopted social aid, monetary and fiscal measures. Among those measures, the Central Bank established rules regarding the criteria for debtor classification and provisioning until December 31, 2020, then these rules were extended through Communication “A” 7181 until March 31, 2021. These rules provide an additional 60-day period of non-payment before a loan is required to be classified as non-performing and include all financings to commercial portfolio clients and loans granted for consumption or housing purposes. At the same time, the Central Bank ruled the suspension of the ~~year~~mandatory reclassification of debtors who are ~~typically expected~~delinquent in other banks. At the same time, the Central Bank ruled several relief programs which allowed debtors to ~~improve throughout~~reschedule their loan payments originally maturing between April 2020 and March 2021, together with the ~~year as the beginning~~automatic rescheduling of ~~the year salary bargaining agreements catch up with inflation improving consumers’ disposable income~~unpaid credit card balances due April and their ability to pay their bills, this behavior has been changing since 2016 and improvement has not been as fast as in previous years, changing the pattern and seasonality observed in prior years. Salary adjustments resulting from collective bargaining agreements below the annual inflation rate in 2016, along with increases in public services tariffs in 2016 and 2017, impacted the disposable income of the population in the Consumer Finance Segment causing consumer sentiment to lag behind economic recovery as consumers remain more cautious about resilient inflation levels and higher tariffs. In turn, consumers in this segment are repaying loans at a slower pace.
~~Notwithstanding the above, these increases come along with a higher gross intermediation margin in the Consumer Finance Segment.~~September 2020.

The percentage of the irregular loan portfolio in both 2016 and 2017 was 2.8%. NPL ratios improved in the retail segment and remained stable in the corporate segment. Combined, these segments accounted for 88.0% of the total loan portfolioCoverage ratio increased to 208.8% from 96% as of December 31, ~~2017.~~2019. The increase in coverage starting from the first quarter of 2020 reflects provisions made in advance of potential deterioration arising from the COVID-19 impacts and the weak macro environment, and benefits from the Central Bank regulatory easing, in place since first quarter of 2020.

The ~~consumer finance segment~~total NPL ratio ~~increased to 15.4% in December 2017 from 10.7% in 2016 mainly as a result of an increase in the personal loans NPL ratio to 21.4% as of December 31, 2017 from 14.6% as of December 31, 2016.~~
~~Retail loans showed an NPL ratio of 2.6% as of December 31, 2017, decreasing from~~was 3.7% as of December 31, ~~2016. This was mainly driven~~2020, decreasing by 374 bps from 7.4% as of December 31, 2019. In 2020, NPL benefitted from the above-mentioned relief programs ruled by the Central Bank amid the pandemic and the Central Bank regulatory easing on debtor classifications.
NPL ratio reflects: i) a 200 bps decrease in ~~the personal loans~~Corporate Segment NPL, ii) a 227 bps decrease in Personal and Business Banking Segment NPL, and iii) a 1,280 bps decrease in Consumer Finance Segment. All segments’ NPL ratio ~~to 2.5% in December 2017,~~benefit from ~~3.7% in December 2016, along with a 30 basis points decrease~~the above-mentioned relief programs implemented by the Central Bank amid the pandemic outbreak. Also, Personal & Business Banking Segment NPL and Consumer finance Segment NPL, benefit from the regulatory easing on debtor classification since March 2020. The Consumer Finance segment NPL ratio improvement also reflects the measures taken by the Company in the past two years in terms of tightening credit scoring standards and making changes in the collection process.
217
As above mentioned, starting April 2020, the Argentine Central Bank established certain automatic Deferral Programs amid the COVID-19 pandemic, both for credit cards ~~NPL ratio to 3.4% in December 2017.~~and for loans:

~~2016 Compared to 2015~~Credit Cards:

~~Loan loss provisions totaled Ps.1.1 billion~~a. Through Communication “A” 6964 the Central Bank ruled that all unpaid balances of credit card statements due between April 13 and April 30, 2020, should be automatically rescheduled in ~~2016,~~nine equal consecutive monthly installments beginning after a ~~94.5% increase compared to Ps.543.8 million~~3-month grace period. Interest rates on such unpaid balances should not exceed an annual nominal rate of 43%.
b. Through Communication “A” 7095, the Central Bank determined that the unpaid balances of credit card financings due between September 1 and September 30, 2020 should be automatically rescheduled in ~~2015, mainly due to~~nine equal consecutive monthly installments beginning after a 3-month grace period. Interest rates on such unpaid balances may not exceed an annual nominal rate of 40%.
Loans:
Through Communication “A” 6949, the ~~growth~~Central Bank rescheduled unpaid payments on loans maturing between April 1 and June 30, 2020 and suspended the accrual of punitive interests on loans. Any unpaid installment is automatically rescheduled after the final maturity of the loan ~~portfolio~~ and at the ~~deterioration in asset quality experienced in~~same interest rate of the ~~second quarter~~loan. This disposition affects all loans to individuals and companies and all products such as personal loans, mortgage loans, car loans, leasing, etc. This rule was extended three consecutive times, first, through Communication “A” 7044 to those loans maturing between July and September 31, 2020, then through Communication “A” 7107, this was extended to those loans maturing between October and December 31, 2020 and recently through Communication “A” 7181 to those loans maturing between January and March 31, 2021.
As of ~~2016, mostly in our Consumer Finance Segment when the business was impacted by the challenging and volatile economy which resulted in a significant contraction~~December 31, 2020, 11% of ~~consumers’ disposable income. The increase in the allowance of loan losses due to this deterioration was partially offset by the increase in the Corporate~~total loan portfolio ~~which~~ has ~~lower delinquency rates. Allowances as a percentage of non-performing loans decreased~~been subject to 87.1% from 89.7% in the previous year. The NPL ratio decreased to 2.8% in 2016 from 3.2% in 2015 due to the growth of the Corporate Loan portfolio. In March 2016, the Bank changed its write-off policy, in the retail segment moving to write-off at 270 days delinquency from 360 days.an automatic rescheduling.

1) Ps.10.4 billion of loans maturing between April and December 30, 2020, were automatically rescheduled following Central Bank regulations, representing approximately 15% of total loans subject to automatic deferral.
Asset quality in the consumer finance customers deteriorated in the second quarter of 2016 although our conservative credit scoring standards remained unchanged. This segment was impacted in that quarter by the challenging and volatile economy which significantly contracted consumers’ disposable income. The increases in public service tariff and in transportation fares caused a spike in inflation in April and May 2016, while unions’ salary increase agreements were delayed towards the end of the quarter, which impacted consumers’ ability to pay their loan installments.
Deferral of Loan Installments (% of total loans subject to deferral) As of December, 2020
Individuals 12 %
Commercial loans 15 %
Consumer finance 39 %
Total 15 %
Total Amount Rescheduled Ps.10.4 billion
218
2) Ps.1.8 billion credit card balances have been deferred following Central Bank Communications “A” 6964 and “A” 7095.
Deferral of Credit Card Balance (As of December, 2020)
PS. (in millions)
Individuals 1,205
Consumer finance 600
Total 1,805

In an effort to mitigate the seasonal increase in delinquency rates in the first half of every year, which then tends to decline as salary bargaining agreements catch up with inflation, we quickly strengthened our collection practices and implemented preventive actions while maintaining our conservative credit scoring standards. As a result, lagged delinquency in 2016 began to decrease in July but remained at a higher level than the previous year. Lagged delinquency measures the real delinquency of the portfolio, without taking into account disbursements made in recent months. The delinquency on any one bucket is matched with the portfolio that originated such delinquency. Thus, the delinquency ratio for the portfolio in the 30-180 delinquency bucket as of December 2017, is calculated using in the denominator the portfolio outstanding as of June 2017.
~~The following tables show the~~See changes in ~~our~~ loan loss provisions ~~for the periods indicated:~~

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos)

(in percentages)

Balance at the beginning of the year

920,208

638,648

429,358

44.1
%
48.7
%
Provisions charged to income

1,820,169

1,057,637

543,844

72.1
%
94.5
%
Write-offs and reversals(1)

(1,194,018
)
(776,077
)
(334,554
)
53.9
%
132.0
%
Other adjustments

23,575

—

—

100.0
%
0.0
%
Balance at the end of year

1,569,934

920,208

638,648

70.6
%
44.1
%
Percentage of provisions net of write-offs and reversals

1.5
%
1.1
%
1.2
%

Provisions charged to income

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos)

(in percentages)

Promissory notes(2)

63,519

58,557

2,228

8.5
%
2,528.2
%
Unsecured corporate loans

37,305

34,929

31,089

6.8
%
12.4
%
Overdrafts

40,755

67,737

27,392

(39.8
)%
147.3
%
Mortgage loans

14,253

2,348

58

507.0
%
3,948.3
%
Automobile and other secured loans

3,499

1,512

941

131.4
%
60.7
%
Personal loans

1,091,171

542,792

265,770

101.0
%
104.2
%
Credit cards loans

403,312

231,421

185,849

74.3
%
24.5
%
Foreign Trade Loans

59,942

67,737

1,820

(11.5
)%
3,621.8
%
Other financings

46,363

14,943

8,507

210.3
%
75.7
%
Other receivables from financial transactions

42,750

11,453

5,957

273.3
%
92.3
%
Receivables from financial leases

17,300

24,208

14,233

(28.5
)%
70.1
%
Total

1,820,169

1,057,637

543,844

72.1
%
94.5
%
Write-offs and reversals

Promissory notes

(22,167
)
(40,049
)
(6,858
)
(44.7
)%
484.1
%
Unsecured corporate loans

(13,019
)
(39,488
)
(4,403
)
(67.0
)%
796.8
%
Overdrafts

(23,682
)
(32,948
)
(10,895
)
(28.1
)%
202.4
%
Mortgage loans

—

—

(294
)
0.0
%
(100.0
)%
Automobile and other secured loans

(1,098
)
(2,636
)
(2,608
)
(58.3
)%
1.1
%
Personal loans

(759,000
)
(372,784
)
(186,248
)
103.6
%
100.2
%
Credit cards loans

(311,091
)
(254,072
)
(108,206
)
22.4
%
134.8
%
Foreign Trade Loans

—

—

—

0.0
%
0.0
%
Other financings

(19,208
)
(14,393
)
(3,852
)
33.5
%
273.6
%
Other receivables from financial transactions

(38,893
)
(7,291
)
(5,234
)
433.4
%
39.3
%
Receivables from financial leases

(5,860
)
(12,416
)
(5,956
)
(52.8
)%
108.5
%
Total

(1,194,018
)
(776,077
)
(334,554
)
53.9
%
132.0
%
~~(1)~~         ~~Consists~~in Note 26. Loans and Other Financing of ~~decreases in the allowance for loan losses when the loan for which the allowance was created is no longer in~~ our ~~balance sheet because it has been written-off, or because it has been collected, in which case the allowance is reversed. Loans are always 100% provisioned before being written off.~~
~~(2)~~         ~~Consists of unsecured checks and accounts receivable deriving from factoring transactions.~~audited consolidated financial statements.

Troubled debt restructured loans, which typically have a higher probability of delinquency, did not represent a significant share of our total loan portfolio and, therefore, did not have a material impact on our total allowances for loan losses in these periods.
Net Services Fee Income

Our net services fee income was comprised of:

Year ended
December 31,

Change
December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos)

(in percentages)

Income from

Deposit Accounts

1,434,344

925,300

683,888

55.0
%
35.3
%
Loan Related

182,025

151,331

125,625

20.3
%
20.5
%
Credit and Debit Cards

1,514,963

1,188,288

772,865

27.5
%
53.8
%
Insurances

231,572

234,573

399,790

(1.4
)%
(41.3
)%
Check Administration Commission

252,491

178,644

122,601

41.3
%
45.7
%
Safe Deposit Box

128,431

91,062

74,760

41.0
%
21.8
%
Receivables from financial leases

126,741

78,213

67,369

62.0
%
16.1
%
Financial agent for the Province of San Luis(1)

671

49,888

72,839

(98.7
)%
(31.5
)%
Payments to retirees

30,544

27,892

25,572

9.5
%
9.1
%
Mutual funds management

204,818

139,941

80,234

46.4
%
74.4
%
Foreign transactions commissions

173,535

123,036

69,547

41.0
%
76.9
%
Other

693,137

339,348

340,618

104.3
%
(0.4
)%
Total income(2)

4,973,272

3,527,516

2,835,708

41.0
%
24.4
%
Expenses from

Commissions paid(3)

768,386

532,282

450,857

44.4
%
18.1
%
Turnover tax

375,447

274,927

129,857

36.6
%
111.7
%
Promotions related to credit cards

257,715

212,730

148,882

21.1
%
42.9
%
Exports and foreign currency transactions

19,039

11,782

9,016

61.6
%
30.7
%
Other

75,261

48,939

39,880

53.8
%
22.7
%
Total expenses(2)

1,495,848

1,080,660

778,492

38.4
%
38.8
%
Net services fee income

3,477,424

2,446,856

2,057,216

42.1
%
18.9
%
As of December 31,
2020 2019 Change
(In thousands of Pesos, except percentages)
Deposit Accounts 4,627,421 4,777,932 (3.2 %)
Credit cards commissions 3,413,407 3,944,787 (13.5 %)
Loan Related 164,852 401,370 (58.9 %)
Other commissions 3,288,144 2,583,467 (27.3 %)
Total Services fee income 11,493,824 11,707,556 (1.8 %)
Exports and foreign currency transactions (78,423 ) (99,114 ) (20.9 %)
Services fee paid (3,469,846 ) (2,955,840 ) (17.4 %)
Total Services fee expenses (3,548,269 ) (3,054,954 ) (16.1 %)
Income from insurance activities 1,671,455 1,896,923 (11.9 %)
Net Service Fee Income 9,617,010 10,549,525 (8.8 %)
(1)
Throughout 2020, the Central Bank ruled certain restrictions on fee repricing.
On ~~January 17, 2017,~~February 19, 2020, through Communication “A” 6912, the ~~Province~~Central Bank stated that financial institutions should not communicate fee increases nor new fees to users of ~~San Luis notified Banco Supervielle~~financial services for 180 business days.
In response to the COVID-19 pandemic established the following measures:
(i) on March 26, 2020, through Communication “A” 6945, the Central Bank stated that until June 30, 2020, any transaction through ATMs would not be subject to any charges or fees. Later on, this ruling was extended three consecutive times, first until September 30, then until December 31, 2020 and then until March 31, 2021, and (ii) on November 5, 2020, through Communication “A” 7158, the Central Bank ruled that financial entities should not communicate repricing of ~~its decision to terminate, as of February 28, 2017, the Amended Financial Agency Agreement. See “~~~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~.”
(~~2)   Includes~~ fees on certain products related to ~~securitization transactions, foreign trade~~Saving Accounts and ~~miscellaneous commissions, among others.~~Credit Cards until February 2021.
~~(3)   Includes marketing costs, ATM insurance and charges related to payment services and credit and debit cards, among others.~~219
~~2017 Compared to 2016~~
Net services fee income (excluding income from insurance activities) totaled ~~Ps.3.5~~ Ps.7.9 billion in ~~2017, a 42.1% increase~~2020, an 8.2% decrease compared to ~~Ps.2.4~~Ps.8.7 billion in ~~2016.~~2019.

The ~~increase~~decrease in our services fee income was driven mainly by (i) an increase in deposit account commissions, (ii) an increase in income from credit and debit cards and (iii) an increase in other fees. These increases were partially offset by a decrease in fees paid to us for services provided as financial agent for the Province of San Luis.by:

Service charges on deposit accounts are comprised principally of maintenance and transaction fees on checking and savings accounts. These fees increased to Ps.1.4 billion in 2017 from Ps.925.3 million in 2016, as a result of the increase in the volume of checking accounts and savings accounts, products packages, as well as an increase in fees charged per account after the deregulation of the commissions by the Central Bank.
(i) a decrease in fees from credit and debit cards impacted by the decline in the amount of transactions made with credit and debit cards, together with the reduction in credit cards and debit cards merchant discount rates (“MDR”) set for 2020. Pursuant to Communication “A” 6212, effective as of April 1, 2017, the Central Bank issued a program to gradually reduce MDR on an annual basis. The maximum MDR for credit cards in 2019 was 1.65%, while since January 1, 2020 it was reduced to 1.50%. The maximum debit card sales commissions for 2019 was 0.80% while since January 1, 2020 is 0.7%;

~~Credit and debit card fees increased to Ps.1.5 billion in 2017, from Ps.1.2 billion in 2016, reflecting higher business volumes as well as an increase in fee pricing~~ of certain items (excluding MDR (as defined below)) as per current Central Bank regulations, which offset the reduction in credit card and debit card merchant discounted rates (“MDR”). MDR are commissions charged by the issuer of credit and debit cards on the amount of credit and debit card transactions. The maximum MDR for 2017 was 2.0%, compared to 3% for 2016, and the maximum debit card sales commissions for 2017 was 1.0%, compared to 1.5% for 2016.
(ii) a decrease in loan related fees reflecting the weak credit demand and some regulatory restrictions on charging fees since the pandemic outbreak; and

On March 21, 2016, the Central Bank eliminated prior authorization requirements to charge fees for new products and other fee increases. As part of a transition schedule, a 20.0% increase in all banking charges was authorized starting on June 1, 2016. Since September 2016, further increases in banking charges may be implemented without requiring the prior authorization of the Central Bank.
Pursuant to Communication “A” 6212, effective as of April 1, 2017, the Central Bank issued a program to gradually reduce MDR on an annual basis. In this regard, the maximum MDR for 2017 was 2.0%, declining 1.85% since January 1, 2018 and dropping to 1.65%, 1.50% and 1.30% in 2019, 2020 and 2021 and after, respectively. The maximum debit card sales commissions for 2017 was 1.0%, and has been 0.90% since January 1, 2018, declining to 0.80%, 0.70% and 0.60%, in 2019, 2020 and 2021 and after, respectively.
~~Other commissions~~ ~~increased to Ps.693.1 million in 2017, from Ps.339.3 million in 2016, mainly due to higher commissions charged on health plans and higher sales of products offered by Espacio Cordial.~~
~~During 2017, our check administration commissions increased to Ps.252.5 million compared to Ps.178.6 million during 2016. This increase was mainly due to an increase in our level of activity.~~
Insurance fees decreased to Ps.231.6 million in 2017 from Ps.234.6 million in 2016. The following regulations issued by the Central Bank have impacted on this decrease in insurance fees: (i) Communication “A” 5795 issued on August 21, 2015, reinforcing regulations prohibiting financial institutions from charging fees and commissions related to insurance products purchased by clients as accessories of other financial services. As of November 13, 2015, financial institutions are prohibited from receiving fees from insurance companies as the result of the sale of such insurance products. (ii) Communication “A” 5927 issued by Central Bank on March 21, 2016, and effective as of September 1, 2016, prohibits financial institutions from charging clients charges resulting from credit-related insurance policies. This regulation also states that financial institutions must purchase life insurance on debit
balances or alternatively, self-insure the risk of death or permanent disability of their clients. Since then, both the Bank and CCF self-insure these risks and only contract new credit-related insurances for mortgages loans.
Financial agent fees charged to the Province of San Luis declined to Ps.671.0 thousand in 2017 from Ps.49.9 million in 2016. On October 10, 2016, the Bank relinquished its right to receive an “agency” fee from the Province of San Luis, followed by the termination by the Province of San Luis of the Financial Agency Agreement, effective as from February 28, 2017.
(iii) a decrease in deposit account commissions (comprised principally of maintenance and transaction fees on checking and savings accounts) impacted by the above-mentioned limitation to increase fees since February 2020. This was partially offset by an increase in other operations related fees and other fees due to Asset Management and brokerage fees.

Services fee ~~expense~~expenses increased ~~38.4%~~16.1%, to ~~Ps.1.5~~Ps.3.5 billion in ~~2017 from Ps.1.1~~2020, compared to Ps.3.1 billion in 2016, primarily due to (i) higher commissions paid due to higher business volume, (ii) a 36.6%, or Ps.100.5 million increase in turnover tax, and (iii) a 21.1%, or Ps.45.0 million increase in promotions related to credit cards issued by the bank and CCF.
~~2016 Compared to 2015~~
~~Net services fee income totaled Ps.2.4 billion in 2016, a 18.9% increase compared to Ps.2.1 billion in 2015.~~
~~The increase in our services fee income was driven mainly by an increase in income from credit and debit cards and deposit account commissions and was partially offset by a decrease in insurance fees.~~
Service charges on deposit accounts are comprised principally of maintenance and transaction fees on checking and savings accounts. These fees increased to Ps.925.3 million in 2016 from Ps.683.9 million in 2015, as a result of the increase in the volume of checking accounts and savings accounts, bundling of products as well as an increase in fees charged per account, following the fees deregulation by the Central Bank.
Credit and debit card fees increased to Ps.1.2 billion in 2016 from Ps.772.9 million for 2015, mainly due to increased activity in the use of credit cards, as well as an increase in fee pricing. On March 21 2016, the Central Bank eliminated prior authorization requirements to charge fees for new products and other fee increases. As a transition, a 20% increase in all banking charges was authorized starting June 1, 2016, and eliminated from September onwards.
~~Insurance fees decreased to Ps.234.6 million in 2016 from Ps.399.8 million in 2015, primarily as a result of the following regulatory changes introduced by the Central Bank:~~
·                  Central Bank Communication ‘‘A’’ 5795 issued on August 21, 2015 reinforcing regulations that prohibit financial institutions from charging fees and commissions related to insurance products that financial services customers purchase as accessories to financial services, regardless of whether it is a customer request or a condition set by the financial institution to access the financial service. As a result, since November 13, 2015, financial institutions may not receive remunerations or profits from such insurance products or receive remunerations or profits, directly or indirectly, from insurance companies with respect to such products.
·                  Central Bank resolution issued in March, 2016 and effective September 1, 2016, prohibiting financial institutions from charging individuals any fee and/or charge associated with credit related insurance policies. This resolution also specifies that financial institutions must purchase life insurance on debit balances or alternatively, self-insure the risk of death and permanent total disability of their clients. As a result, since September 1, 2016 Banco Supervielle and CCF self-insure these risks and no longer contract new credit related insurances.
Financial Agent fees charged to the Province of San Luis declined to Ps.49.9 million in 2016 from Ps. 72.8 million in 2015. In the third quarter of 2016, Banco Supervielle relinquished its right to receive an “agency” fee from the Province of San Luis for any services rendered as financial agent of the Province commencing July 1, 2016.
~~Services fee expense increased 38.8%, to Ps.1.1 billion in 2016 from Ps.778.5 million in 2015,~~2019, primarily due to higher commissions paid, ~~an increase in expenses~~while fees paid on exports and ~~promotions related to credit cards of the Bank and higher turnover taxes.~~foreign currency transactions decreased 20.9%, or Ps.20.7 million.
Income from insurance activities

~~This line item includes~~Income from insurance activities amounted to Ps.1.7 billion in 2020, reflecting a 11.9% decrease from the Ps.1.9 billion recorded in 2019, reflecting very low levels of sales in branches amid the pandemic restrictions. Gross written premiums ~~net~~measured in the unit at the end of ~~insurance reserves and production costs, from our insurance company’s operations. Supervielle Seguros began issuing its first policies~~the reporting period were down 6.3% in ~~October 2014 starting with a few~~2020, while non-credit related ~~insurance products, such as protected bag insurance and personal accident insurance. By year end 2015, it began issuing credit-related~~ policies substantially growing its business since then, partly through the growth of the loans and credit card portfolio balances and partly through the migration of some of the portfolio previously booked in a third party insurance company. However, due to the regulatory matters described in the “Net Service Fee Income” section, since September 1, 2016 both Banco Supervielle and CCF are self-insuring against these risks and and only contract new credit related insurances for mortgages loans.decreased 5.1%.

~~Administrative~~Personnel and Administration Expenses

The following table sets forth the components of our administrative expenses:

Year ended December 31,

Change December 31,

2017

2016

2015

2017/2016

2016/2015

(in thousands of Pesos, except percentages)

Personnel expenses

5,475,680

3,859,525

2,767,111

41.9
%
39.5
%
Directors’ and statutory auditors’ fees

80,862

73,894

59,475

9.4
%
24.2
%
Other professional fees(1)

426,204

286,507

186,586

48.8
%
53.6
%
Advertising and publicity

272,769

226,350

165,413

20.5
%
36.9
%
Taxes(2)

615,896

452,081

268,520

36.2
%
68.4
%
Depreciation of premises and equipment

118,594

81,558

56,637

45.4
%
44.0
%
Amortization of other intangibles

128,875

111,284

92,431

15.8
%
20.4
%
Other(3)

1,271,742

969,082

665,229

31.2
%
47.5
%
Total

8,390,622

6,060,281

4,261,402

38.5
%
42.2
%
As of December 31,
2020 2019 Change

(In thousands of Pesos, except percentages)

Salaries and social charges 16,682,917 16,902,763 (1.3 %)
Other personnel expenses 1,493,949 2,380,583 (37.2 %)
Total Personnel expenses 18,176,866 19,283,346 (5.7 %)
Directors’ and statutory auditors’ fees 341,532 382,328 (10.7 %)
Other professional fees 3,043,958 1,385,391 119.7 %
Advertising and publicity 688,705 737,956 (6.7 %)
Taxes 1,857,970 2,000,527 (7.2 %)
Maintenance, security and services 2,823,341 2,351,755 20.1 %
Leases 72,050 70,446 2.3 %
Other 1,491,001 3,382,263 (55.9 %)
Total Administration Expenses 10,318,557 10,310,666 0.1 %
Total Personnel and Administration Expenses 28,495,423 29,594,012 (3.7 %)
220
~~(1)~~         ~~Includes audit, legal and other professional services.~~
~~(2)~~         ~~Includes tax on debits and credits, safety and hygiene tax and stamp tax.~~
~~(3)~~         ~~Includes leases, security service expenses, maintenance, insurance, electricity, among others.~~
~~2017 Compared to 2016~~
In ~~2017, administrative~~2020 personnel expenses ~~totaled Ps.8.4~~amounted to Ps.18.2 billion, reflecting a ~~38.5% increase compared to Ps.6.1~~5.7% decrease from the Ps.19.3 billion recorded in ~~2016. This increase was primarily due to an increase in personnel expenses, which grew~~2019 mainly explained by ~~41.9% to Ps.5.5 billion in 2017, from Ps.3.9 billion in 2016, and non-personnel expenses, which grew by 32.5% in 2017 to Ps.2.9 billion from Ps.2.2 billion in 2016.~~
~~Personnel administrative expenses amounted to Ps.5.5 billion in 2017, reflecting a 41.9% increase from the Ps.3.9 billion recorded in 2016. This increase was due to (i) a 23.5% increase~~1.2% reduction in the ~~average salary of the Bank’s personnel,~~employee base resulting from the ~~collective bargaining agreement between Argentine banks and the labor union reached in the first quarter~~streamlining of 2017, this agreement determined a 19.5% increase for expected inflation during 2017, an additional increase of approximately 4.0% as a recognition of inflation during 2016; (ii) a 5.3% additional rise in the average salary applied retroactivelyoperations implemented since ~~January 2017, as catch up for 2017 inflation and (iii)~~2019, while salary increases ~~(not at the same level as the banking labor union) implemented at CCF, Tarjeta, Supervielle Seguros, SAM~~performed in line with inflation levels. Excluding non-recurring severance and ~~Espacio Cordial during last twelve months.~~early retirement charges recorded in other personnel expenses in 2020 and in 2019, personnel expenses would have decreased 1.7%.

The number of ~~the~~ our employees ~~increased~~was 5,021 compared to ~~5,320~~5,084 as of December 31, ~~2017, from 4,982 as of December 31, 2016.~~2019. See “Item 6. Directors, Senior Management and Employees—Employees—~~Compensation~~Compensation..”

~~Non-personnel administrative~~Administration expenses ~~amounted to Ps.2.9~~totaled Ps.10.3 billion in ~~2017, reflecting a 32.5% increase from the Ps.2.2~~2020, remaining flat compared to Ps.10.3 billion recorded in ~~2016.~~2019. This ~~increase~~performance was ~~mainly associated with~~primarily due to (i) ~~an increase~~ ~~in taxes reflecting higher taxes on real estate, security service expenses and maintenance as well as higher tax charge on debit and credit accounts, (ii)~~ an increase in other professional fees (including audit, legal and other professional fees) to ~~Ps.426.2 million~~Ps.3.0 billion in ~~2017~~2020 from ~~Ps.286.5 million~~Ps.1.4 billion in ~~2016,~~2019 which includes additional expenses on ongoing projects to support our digital transformation, and ~~(iii)~~(ii) a ~~31.2%, or Ps.302.7~~Ps.471.6 million increase in other ~~expenses~~
~~including leases, security service expenses, maintenance, insurance and electricity, among others, which amounted to Ps.1.3 billion in 2017.~~
~~2016 Compared to 2015~~
In 2016, administrative expenses totaled Ps.6.1 billion, a 42.2% increase compared to Ps.4.3 billion recorded in 2015. This increase was primarily due to an increase in personnel expenses, which grew by 39.5% to Ps.3.9 billion in 2016 from Ps. 2.8 billion in 2015. This increase was mainly the result of the combination of (i) an increase in average salary of 33.0% for the Bank’s personnel, in line with the collective bargaining agreement between Argentine banks and the labor union and salary increases by our other subsidiaries during 2016, but with lower increases than the banking labor union, (ii) the payment of an extraordinary amount in December 2016 under the agreement reached between Argentine banks and the labor unions and the payment of higher performance bonuses in connection with higher loan origination.
~~The number of our employees increased to 4,982 in 2016 from 4,843 in 2015 due to the growth of our subsidiaries, mainly the Bank. See “~~~~Item 6. Directors, Senior Management and Employees—Employees—Compensation~~.”
Non-personnel administrative expenses amounted to Ps.2.2 billion in 2016, reflecting a 47.3% increase from the Ps.1.5 billion recorded in 2015. This increase was mainly associated with an increase in taxes to Ps. 452 million in 2016 from Ps. 269 million in 2015, reflecting higher turnover tax and a one-time tax charge on debit and credit account transfers on the IPO proceeds and an increase in other professional fees (including audit, legal and other professional fees) to Ps.286.5 million in 2016 from Ps.186.6 million in 2015.
~~Other~~ expenses including leases, security service expenses, maintenance ~~insurance~~ and electricity, among ~~others,~~others. These were offset by Ps. 1.9 billion decrease in Other expenses to Ps.1.5 billion from Ps. 3.4 billion, a 7.1% or Ps.142.6 million decrease in taxes which amounted to ~~Ps.969~~Ps.1.9 billion in 2020, and a 6.7% or Ps.49.3 million decrease in advertising and publicity which amounted to Ps.688.7 million in ~~2016 reflecting a 47.5% increase from the Ps. 665 million recorded in 2015.~~2020.

~~Miscellaneous Income/(Loss)~~In 2020, the efficiency ratio was 64.4%, ~~Net~~decreasing 350 basis points from 2019. This decrease was primarily explained by a 3.6% decrease in total personnel, administration expenses and D&A, while revenues increased 1.7%.

~~2017 Compared to 2016~~
~~We had miscellaneous income, net of Ps.169.4 million for 2017, compared to miscellaneous loss, net of Ps.29.1 million in 2016. This was due to~~ ~~the sale of non-core properties and lower expenses related to the agreement with the ANSES related to senior citizen payments.~~
~~2016 Compared to 2015~~Other Income/(Expenses), Net

We had ~~miscellaneous loss,~~other expenses, net of ~~Ps.29.1 million~~Ps.2.8 billion for ~~2016,~~2020, compared to ~~miscellaneous gains,~~Ps.4.9 billion in 2019. This line item mainly includes turnover taxes and other expenses that in 2019 had been impacted by a provision to execute several strategic initiatives in different business segments and losses from investment properties.
221
Other Comprehensive Income, net of ~~Ps.153.7~~tax
Other comprehensive income, net of tax totaled Ps.803.7 million in ~~2015.~~2020 compared to a net loss of Ps.65.1 million in 2019. This ~~decrease was~~reflects mainly ~~due to higher charges derived from~~ the ~~agreement with~~difference between the ~~ANSES related to senior citizen payments~~amortized cost and ~~was partially offset by higher loan recovery~~the market value of financial instruments held for investments and ~~disaffected provisions (provisions reversed or disaffected due to~~ the ~~recovery or payment~~revaluation of ~~the past due loan). Additionally, other income included a non-recurring Ps.85.9 million gain from the sale of non-core properties in the Province of Mendoza.~~properties.

Income Tax

The corporate income tax rate in Argentina for fiscal years 2017, 2016 and 2015 was 35%. As per the Central Bank’s accounting regulations until December 2017, Grupo Supervielle did not recognize deferred tax credits or liabilities in its main subsidiaries (the Bank and CCF). Accordingly, the effective tax rate could vary from quarter to quarter not only for non-taxable income or non-deductible expenses, but also due to the timing in which those results are recognized for tax purposes. As per the tax reform passed by Congress in December 2017 and the amendment to Income Tax Law No. 20,628 (the “Income Tax Law”) passed in December 2019, the corporate tax rate ~~will be~~declined to 30% ~~for fiscal years 2018 and 2019 and 25%~~from 35% starting in fiscal year ~~2020.~~2018, and should decline to 25% in fiscal year 2022, while a withholding tax on dividends was created with a rate of 7% since 2018 and 13% commencing fiscal year 2022. In addition, through the adoption of ~~International Financial Reporting Standards~~IFRS effective January 1, 2018, ~~we will start recording income tax recognizing~~the Company began to recognize deferred tax assets and ~~liabilities, which should result in an effective tax rate closer to the statutory tax rate.~~liabilities.

Additionally, as income tax is paid by each subsidiary on an individual basis, tax losses in one legal entity cannot be offset by tax gains in another legal entity.
The abovementioned tax reform allowed the deduction of losses arising from exposures to changes in the purchasing power of the currency, only if inflation as measured by the CPI issued by the INDEC would exceed the following thresholds applicable for each fiscal year: 55% in 2018, 30% in 2019 and 15% in 2020. For ~~example, at~~2021 and subsequent periods, inflation must exceed 100% in 3 years on a cumulative basis in order to deduct inflation losses. In 2018 the ~~holding company, financial expenses could~~55% threshold was not be
~~offset with taxable~~met, but in 2019 inflation widely exceeded 30%. Therefore, the income tax provision since 2019 considers the losses arising from exposures to changes in the purchasing power of the currency, which significantly lowered the income tax expense for the current year.
For income tax return purposes, one sixth (1/6) of the inflation losses that arose in the 2019 fiscal year were deductible in 2019, while ~~having debt securities outstanding~~the remaining five sixths (5/6) will be deductible in each of the subsequent 5 years, commencing 2020. Accordingly, one sixth (1/6) of the inflation losses reduced the 2019 income tax provision, while the other five sixths (5/6) created a deferred tax asset. Regarding 2020, one sixth (1/6) of the inflation losses arising in the 2020 fiscal year is deductible in 2020, while the remaining five sixths (5/6) will be deductible in each of the subsequent 5 years. Accordingly, one sixth (1/6) of the inflation losses reduce the current income tax provision, while the other five sixths (5/6) create a deferred tax asset.
In 2020, the income tax charge amounted to Ps.671.7 million compared to Ps.229.7 million in 2019. Permanent differences between inflation adjustment for tax purposes and ~~no material source of taxable income. Income from proceeds from equity offerings temporarily retained at the holding company,~~according to IAS 29 may ~~allow Grupo Supervielle to more than offset financial expenses paid through this vehicle and use tax credits still existing from previous years,~~arise, which ~~in turn are expected to lower~~increase or decrease the effective tax rate.
222
~~2017 Compared to 2016~~
The income tax charge in 2017 was Ps.772.5 million compared to Ps.500.6 million charged in 2016. The increase was due to an increase in pre-tax income, which was partially offset by a lower effective tax rate due to the deduction of higher provisions for loan losses. The effective tax rate could vary in interim periods not only for non-taxable income or non-deductible expenses, but also due to the time during which those results are recognized for tax purposes.
~~2016 Compared to 2015~~
The income tax charge for 2016 was Ps.500.6 million compared to Ps.247.2 million charged in 2015. The increase was due to higher pre-tax income, and the increase in the effective tax rate (which is equal to income tax charge divided by pre-tax income). This increase was mainly the result of having fewer financial trusts effective during 2016, which pay income tax at the trust level and reduce the income tax paid at the company level.
~~On December 14, 2016, the Bank acquired at market price, all of the properties from the~~ Supervielle Renta Inmobiliaria Financial Trust, using their franchise value, for a total amount of Ps.329.8 million. Subsequently, the Supervielle Renta Inmobiliaria Financial Trust was terminated and the securities were paid back to its holders including the gain on sale of those properties as they were valued at historical acquisition cost. As we had relevant holdings in the securities issued by the Supervielle Renta Inmobiliaria Financial Trust, we recognized a gain in income from our participation in securization trusts of Ps.137.7 million, a turnover tax of Ps.9.6 million in financial expenses and income tax of Ps.35.7 million. For an explanation of the termination of the Supervielle Renta Inmobiliaria Financial Trust and the related net gains, see “~~Item 4.D Property, Plants and Equipment.~~”
~~Argentine Banking GAAP and U.S. GAAP Reconciliation~~
Our audited consolidated financial statements are prepared in accordance with Argentine Banking GAAP, which differ in certain significant respects from U.S. GAAP. Note 35 to our audited consolidated financial statements included elsewhere in this annual report provides a description of the significant differences between Argentine Banking GAAP and U.S. GAAP, as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015.
~~The principal differences between Argentine Banking GAAP and U.S. GAAP as they relate to us, are the following:~~
·                        ~~the accounting for loan origination fees and expenses;~~
·                        ~~differences in the accounting of business combinations;~~
·                        ~~the accounting for computer software obtained or developed for internal use;~~
·                        ~~the accounting for loan loss reserves;~~
·                        ~~the accounting for transfers of financial assets;~~
·                        ~~the accounting for certain investments in marketable securities;~~
·                        ~~the accounting for vacations;~~
·                        ~~the accounting for derivative instruments;~~
·                        ~~the accounting of customers loyalty programs;~~
·                        ~~the accounting for deferred income taxes;~~
·                        ~~the accounting of financial guarantees;~~
·                        ~~the accounting of special termination arrangements;~~
·                        ~~the accounting of credit card loans-imputed interest; and~~
·                        ~~the effect on non-controlling interest of the foregoing reconciling items.~~
Net income under Argentine Banking GAAP for the years ended December 31, 2017 and 2016 was approximately Ps.2,437.1 million and Ps.1,311.3 million, respectively, as compared to net income of approximately Ps.1,697.5 million and Ps.1,025.9 million, respectively, under U.S. GAAP.
Shareholders’ equity under Argentine Banking GAAP as of December 31, 2017 and 2016 was Ps.15.1 billion and Ps.6.9 billion, respectively, as compared to Ps.13.9 billion and Ps.6.5 billion, respectively, under U.S. GAAP.
See Note 35 to our audited consolidated financial statements as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015 for a discussion of these differences, the effect on our results of operations and financial position and certain other disclosures required under U.S. GAAP.
Results by Segments

Our results by segments for the years ended December 31, ~~2017, 2016~~2020 and ~~2015~~2019 are shown in Note ~~35.e)~~3 to our audited consolidated financial statements.

The table below sets forth information regarding the financial statements and the results of our personal and business banking (former retail banking segment), corporate banking, bank treasury, consumer finance, insurance and asset management &and other services business segments for the years ended December 31, ~~2017, 2016~~2020 and ~~2015.~~2019.

As of December 31, 2017

(in thousands of Pesos)

Retail
Banking

Corporate
Banking

Bank
Treasury

Consumer
Finance

Insurance

Asset Mgmt
& Other
Services

Adjustments

Consolidated
Total

Financial income

6,186,492

3,719,565

2,261,049

3,032,272

96,017

49,354

149,922

15,494,671

Financial expenses

(1,816,992
)
(449,607
)
(3,017,638
)
(1,370,932
)
(1,789
)
(1,071
)
463,741

(6,194,288
)
Distribution of Income (Expenses) for Treasury Funds(1)

1,172,277

(2,313,053
)
1,140,776

—

—

—

—

—

Gross financial margin

5,541,777

956,905

384,187

1,661,340

94,228

48,283

613,663

9,300,383

Services Fee Income

2,835,892

806,289

64,768

1,284,466

—

561,712

(579,855
)
4,973,272

Services Fee Expenses

(1,177,104
)
(102,617
)
(22,818
)
(625,461
)
—

(8,411
)
440,563

(1,495,848
)
Net Service Fee Income

1,658,788

703,672

41,950

659,005

—

553,301

(139,292
)
3,477,424

Income from Insurance Activities

—

—

—

—

375,443

—

103,618

479,061

Net Revenue

7,200,565

1,660,577

426,137

2,320,345

469,671

601,584

577,989

13,256,868

Loan Loss Provisions

(737,284
)
(153,312
)
(3,642
)
(924,499
)
—

—

(1,432
)
(1,820,169
)
Direct costs

(3,934,851
)
(359,172
)
(116,792
)
(1,149,235
)
(154,366
)
(264,494
)
(28,260
)
(6,007,170
)
Indirect costs

(1,599,491
)
(546,087
)
(237,874
)
—

—

—

—

(2,383,452
)
Income from financial transactions

928,939

602,006

67,829

246,611

315,305

337,090

548,297

3,046,077

Miscellaneous Income / (Expenses)

98,907

28,591

1,451

16,939

1,184

3,220

19,070

169,362

Non-controlling interests result

—

—

—

—

—

—

(5,897
)
(5,897
)
Income Before Income Tax

1,027,846

630,597

69,280

263,550

316,489

340,310

561,470

3,209,542

Income tax

(346,827
)
(92,381
)
(21,534
)
(84,110
)
(110,875
)
(116,756
)
—

(772,483
)
Net income

681,019

538,216

47,746

179,440

205,614

223,554

561,470

2,437,059

Grupo Supervielle S.A.
For the year ended December 31, 2020
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Interest income 22,032,597 12,981,215 25,591,006 4,433,064 - 42,406 (380,408 ) 64,699,880
Interest expenses (8,181,916 ) (1,073,707 ) (18,395,101 ) (1,367,357 ) - (26,587 ) 466,280 (28,578,388 )
Distribution of Income (Expense) for Treasury Funds(1) 3,409,620 -6,389,960 2,980,340 - - - - -
Net interest income 17,260,301 5,517,548 10,176,245 3,065,707 - 15,819 85,872 36,121,492
Net income from financial instruments (NIFFI) at fair value through profit or loss - - 2,315,048 143,465 353,513 162,716 340,840 3,315,582
Result from derecognition of assets measured at amortized cost - - 688,793 - - - (31,774 ) 657,019
Exchange rate difference on gold and foreign currency 379,276 52,605 423,261 37,771 (98 ) 73,159 98,571 1,064,545
NIFFI and Exchange Rate Differences 379,276 52,605 3,427,102 181,236 353,415 235,875 407,637 5,037,146
Net Financial Income 17,639,577 5,570,153 13,603,347 3,246,943 353,415 251,694 493,509 41,158,638
Services fee income 7,464,407 672,282 59,634 2,133,202 - 1,584,304 (420,005 ) 11,493,824
Services fee expense (2,453,402 ) (192,364 ) (59,759 ) (762,313 ) - (50,754 ) (29,677 ) (3,548,269 )
Income from insurance activities - - - - 1,454,204 - 217,251 1,671,455
Net Service Fee
Income 5,011,005 479,918 (125 ) 1,370,889 1,454,204 1,533,550 (232,431 ) 9,617,010
Subtotal 22,650,582 6,050,071 13,603,222 4,617,832 1,807,619 1,785,244 261,078 50,775,648
Result from exposure to changes in the purchasing power of money (1,078,519 ) (1,274,193 ) (269,124 ) (887,134 ) (381,065 ) (253,338 ) (146,955 ) (4,290,328 )
Other operating income 1,531,510 1,518,644 253,278 364,527 10,498 233,704 (132,710 ) 3,779,451
Loan loss provisions (4,365,418 ) (3,370,120 ) (4,097 ) (886,996 ) - 11,571 - (8,615,060 )
Net Operating Income 18,738,155 2,924,402 13,583,279 3,208,229 1,437,052 1,777,181 -18,587 41,649,711
Personnel expenses (13,284,682 ) (1,271,081 ) (930,606 ) (1,713,808 ) (317,809 ) (540,802 ) (118,078 ) (18,176,866 )
Administration expenses (7,431,135 ) (508,923 ) (462,356 ) (1,463,065 ) (264,086 ) (458,159 ) 269,167 (10,318,557 )
Depreciations and impairment of non-financial assets (1,924,361 ) (144,156 ) (108,498 ) (135,823 ) (20,761 ) (10,497 ) (62,932 ) (2,407,028 )
Other operating expenses (3,834,606 ) (1,255,478 ) (736,566 ) (602,415 ) (1,826 ) (103,867 ) (40,021 ) (6,574,779 )
Subtotal (7,736,629 ) (255,236 ) 11,345,253 (706,882 ) 832,570 663,856 29,549 4,172,481
Income for subsidiaries and joint ventures - - - 6,456 - - (6,456 ) -
Income/(loss) before   taxes (7,736,629 ) (255,236 ) 11,345,253 (700,426 ) 832,570 663,856 23,093 4,172,481
Income tax 1,380,576 75,324 (2,219,977 ) 122,886 (294,523 ) (262,820 ) 526,827 (671,707 )
Net loss for the year (6,356,053 ) (179,912 ) 9,125,276 (577,540 ) 538,047 401,036 549,920 3,500,774
Net income (loss) for the year attributable to owners of the parent company (6,356,053 ) (179,912 ) 9,125,276 (577,540 ) 538,047 401,036 549,028 3,499,882
Net income (loss) for the year attributable to non-controlling interest - - - - - - 892 892
223
Grupo Supervielle S.A.
For the year ended December 31, 2020
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Other Comprehensive Income 220,150 115,969 479,208 - - - (11,634 ) 803,693
Other comprehensive income attributable to parent company 220,150 115,969 479,208 - - - (12,413 ) 802,914
Other comprehensive income attributable to non-controlling interest - - - - - - 779 779
Comprehensive Income (Loss) (6,135,903 ) (63,943 ) 9,604,484 (577,540 ) 538,047 401,036 538,286 4,304,467
Comprehensive income (loss) for the year attributable to owners of the parent company (6,135,903 ) (63,943 ) 9,604,484 (577,540 ) 538,047 401,036 536,615 4,302,796
Comprehensive income (loss) for the year attributable to non-controlling interest - - - - - - 1,671 1,671

~~(1) These amounts are calculated based on the funds that segments use or provide and net to zero in the consolidation process.~~

As of December 31, 2016

(in thousands of Pesos)

Retail
Banking

Corporate
Banking

Bank
Treasury

Consumer
Finance

Insurance

Asset Mgmt
& Other
Services

Adjustments

Consolidated
Total

Financial income

4,482,498

2,920,526

1,589,736

1,769,292

52,916

119,960

(140,349
)
10,794,579

Financial expenses

(1,916,534
)
(374,446
)
(1,703,934
)
(1,028,048
)
(1,066
)
(50,284
)
207,787

(4,866,525
)
Distribution of Income (Expenses) for Treasury Funds(1)

1,307,621

(1,918,789
)
611,168

—

—

—

—

—

Gross financial margin

3,873,585

627,291

496,970

741,244

51,850

69,676

67,438

5,928,054

Services Fee Income

2,306,782

559,866

46,545

931,082

—

261,703

(578,462
)
3,527,516

Services Fee Expenses

(996,626
)
(63,472
)
(9,113
)
(433,721
)
—

(1,150
)
423,422

(1,080,660
)
Net Service Fee Income

1,310,156

496,394

37,432

497,361

—

260,553

(155,040
)
2,446,856

Income from Insurance Activities

—

—

—

—

476,349

—

129,794

606,143

Net Revenue

5,183,741

1,123,685

534,402

1,238,605

528,199

330,229

42,192

8,981,053

Loan Loss Provisions

(550,715
)
(153,078
)
(9,265
)
(338,869
)
—

(5,710
)
—

(1,057,637
)
Direct costs

(2,790,068
)
(213,622
)
(94,259
)
(839,258
)
(139,227
)
(228,613
)
8,840

(4,296,207
)
Indirect costs

(1,188,127
)
(399,202
)
(176,745
)
—

—

—

—

(1,764,074
)
Income from financial transactions

654,831

357,783

254,133

60,478

388,972

95,906

51,032

1,863,135

Miscellaneous Income / (Expenses)

(130,372
)
24,500

(2,973
)
8,177

—

93,990

(22,384
)
(29,062
)
Non-controlling interests result

—

—

—

—

—

—

(22,166
)
(22,166
)
Income Before Income Tax

524,459

382,283

251,160

68,655

388,972

189,896

6,482

1,811,907

Income tax

(161,897
)
(45,109
)
(88,258
)
(973
)
(136,570
)
(65,123
)
(2,673
)
(500,603
)
Net income

362,562

337,174

162,902

67,682

252,402

124,773

3,809

1,311,304

~~(1) These amounts are calculated based on the funds that segments use or provide and net to zero in the consolidation process.~~

As of December 31, 2015

(in thousands of Pesos)

Retail
Banking

Corporate
Banking

Bank
Treasury

Consumer
Finance

Insurance

Asset Mgmt
& Other
Services

Adjustments

Consolidated
Total

Financial income

2,917,135

1,906,335

693,726

1,050,944

22,840

71,084

79,680

6,741,744

Financial expenses

(1,514,611
)
(350,635
)
(921,029
)
(529,309
)
(320
)
(30,609
)
(39,537
)
(3,386,050
)
Distribution of Income (Expenses) for Treasury Funds(1)

664,487

(1,119,721
)
455,234

—

—

—

—

—

Gross financial margin

2,067,011

435,979

227,931

521,635

22,520

40,475

40,143

3,355,694

Services Fee Income

1,953,001

391,853

23,891

573,838

—

126,596

(233,471
)
2,835,708

Services Fee Expenses

(581,199
)
(41,309
)
(6,126
)
(272,132
)
—

(1,047
)
123,321

(778,492
)
Net Service Fee Income

1,371,802

350,544

17,765

301,706

—

125,549

(110,150
)
2,057,216

Income from Insurance Activities

—

—

—

—

130,607

—

45,340

175,947

Net Revenue

3,438,813

786,523

245,696

823,341

153,127

166,024

(24,667
)
5,588,857

Loan Loss Provisions

(299,135
)
(72,108
)
—

(166,326
)
—

(6,275
)
—

(543,844
)
Direct costs

(2,076,291
)
(158,438
)
(57,676
)
(638,493
)
(68,183
)
(141,958
)
(84,853
)
(3,056,186
)
Indirect costs

(812,083
)
(272,994
)
(120,139
)
—

—

—

—

(1,205,216
)
Income from financial transactions

251,304

282,983

67,881

18,522

84,944

17,791

60,186

783,611

Miscellaneous Income / (Expenses)

12,610

73,601

5,117

47,893

91

75,023

(60,597
)
153,738

Non-controlling interests result

—

—

—

—

—

—

(16,079
)
(16,079
)
Income Before Income Tax

263,914

356,584

72,998

66,415

85,035

92,814

(16,490
)
921,270

Income tax

(42,137
)
(68,139
)
(21,711
)
(6,734
)
(30,953
)
(33,285
)
(44,202
)
(247,161
)
Net income

221,777

288,445

51,287

59,681

54,082

59,529

(60,692
)
674,109

Grupo Supervielle S.A.
For the year ended December 31, 2020
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Assets
Cash and due from banks 12,345,695 533,466 23,288,859 238,350 2,176 399,895 (133,572 ) 36,674,869
Debt Securities at fair value through profit or loss - - 8,827,214 1,034,836 - 9,853 - 9,871,903
Loans and other financing 52,474,545 42,240,034 5,823,189 6,808,494 592,067 49,403 (2,592,546 ) 105,395,186
Other assets 8,569,274 8,324,469 58,840,094 3,063,890 1,254,830 1,080,197 16,156,234 97,288,988
Total Assets 73,389,514 51,097,969 96,779,356 11,145,570 1,849,073 1,539,348 13,430,116 249,230,946
Liabilities
Deposits 93,834,062 16,184,803 65,197,484 3,561,745 - - (136,500 ) 178,641,594
Financing received from the Argentine Central Bank and other financial institutions 15,011 - 5,794,778 2,529,652 - 48,169 (2,535,318 ) 5,852,292
Unsubordinated negotiable Obligations 23,896 12,588 4,190,264 - - - - 4,226,748
Other Liabilities 7,481,326 2,073,534 5,859,467 2,016,065 857,130 579,256 5,964,046 24,830,824
Total Liabilities 101,354,295 18,270,925 81,041,993 8,107,462 857,130 627,425 3,292,228 213,551,458

Grupo Supervielle S.A.
For the year ended December 31, 2019
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Interest income 30,299,712 19,478,944 6,132,453 6,834,394 - 303,685 (2,065,563 ) 60,983,625
Interest expenses (11,995,094 ) (4,676,394 ) (28,791,267 ) (4,274,907 ) - (182,092 ) 2,388,377 (47,531,377 )
Distribution of Income (Expense) for Treasury Funds(1) 6,447,537 (9,131,377 ) 2,683,840 - - - - -
Net interest income 24,752,155 5,671,173 (19,974,974 ) 2,559,487 - 121,593 322,814 13,452,248
Net income from financial instruments (NIFFI) at fair value through profit or loss 13,964 - 27,334,575 331,348 526,305 132,899 197,291 28,536,382
Exchange rate difference on gold and foreign currency 2,601,295 281,750 (3,381,111 ) 11,166 1,679 29,577 14,453 (441,191 )
224
Grupo Supervielle S.A.
For the year ended December 31, 2019
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
NIFFI and Exchange Rate Differences 2,615,259 281,750 23,953,464 342,514 527,984 162,476 211,744 28,095,191
Net Financial Income 27,367,414 5,952,923 3,978,490 2,902,001 527,984 284,069 534,558 41,547,439
Services fee income 7,153,209 1,532,939 50,267 2,433,057 - 868,490 (330,406 ) 11,707,556
Services fee expense (1,979,198 ) (166,561 ) (66,517 ) (889,658 ) - (41,409 ) 88,389 (3,054,954 )
Income from insurance activities - - - - 1,627,670 - 269,253 1,896,923
Net Service Fee
Income 5,174,011 1,366,378 (16,250 ) 1,543,399 1,627,670 827,081 27,236 10,549,525
Subtotal 32,541,425 7,319,301 3,962,240 4,445,400 2,155,654 1,111,150 561,794 52,096,964
Result from exposure to changes in the purchasing power of money (2,439,672 ) (2,243,877 ) (535,746 ) (1,141,796 ) (1,204,601 ) (475,643 ) 744,792 (7,296,543 )
Other operating income 1,665,517 860,383 467,542 568,593 10,190 212,318 (33,506 ) 3,751,037
Loan loss provisions (4,555,505 ) (4,302,282 ) 33,553 (1,760,136 ) - 51,352 - (10,533,018 )
Net Operating Income 27,211,765 1,633,525 3,927,589 2,112,061 961,243 899,177 1,273,080 38,018,440
Personnel expenses (14,363,518 ) (1,412,159 ) (886,187 ) (1,740,329 ) (255,296 ) (414,832 ) (211,025 ) (19,283,346 )
Administration expenses (7,109,852 ) (464,220 ) (421,634 ) (1,592,780 ) (359,381 ) (360,971 ) (1,828 ) (10,310,666 )
Depreciations and impairment of non-financial assets (1,891,160 ) (247,501 ) (97,492 ) (136,548 ) (12,751 ) (9,014 ) (76,038 ) (2,470,504 )
Other operating expenses (4,635,433 ) (2,306,728 ) (693,363 ) (865,702 ) (1,673 ) (135,505 ) (17,811 ) (8,656,215 )
Subtotal (788,198 ) (2,797,083 ) 1,828,913 (2,223,298 ) 332,142 (21,145 ) 966,378 (2,702,291 )
Income for subsidiaries and joint ventures - - - 4,570 - - (4,570 ) -
Income/(loss) before   taxes (788,198 ) (2,797,083 ) 1,828,913 (2,218,728 ) 332,142 (21,145 ) 961,808 (2,702,291 )
Income tax 7,210 8,894 24,010 736,962 (301,677 ) (117,294 ) (587,768 ) (229,663 )
Net loss for the year (780,988 ) (2,788,189 ) 1,852,923 (1,481,766 ) 30,465 (138,439 ) 374,040 (2,931,954 )
Net income (loss) for the year attributable to owners of the parent company (780,988 ) (2,788,189 ) 1,852,923 (1,481,766 ) 30,465 (138,439 ) 376,793 (2,929,201 )
Net income (loss) for the year attributable to non-controlling interest - - - - - - (2,753 ) (2,753 )
Other Comprehensive Income (50,447 ) (35,598 ) (89,847 ) - 110,770 - (1 ) (65,123 )
Other comprehensive income attributable to parent company (50,447 ) (35,598 ) (89,847 ) - 110,770 - 182 (64,940 )
Other comprehensive income attributable to non-controlling interest - - - - - - (183 ) (183 )
Comprehensive Income (Loss) (831,435 ) (2,823,787 ) 1,763,076 (1,481,766 ) 141,235 (138,439 ) 374,039 (2,997,077 )
Comprehensive income (loss) for the year attributable to owners of the parent company (831,435 ) (2,823,787 ) 1,763,076 (1,481,766 ) 141,235 (138,439 ) 376,975 (2,994,141 )
Comprehensive income (loss) for the year attributable to non-controlling interest - - - - - - (2,936 ) (2,936 )
Grupo Supervielle S.A.
For the year ended December 31, 2019
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Assets
Cash and due from banks 10,471,392 1,392,602 22,967,633 437,209 4,608 3,295,926 (2,624,035 ) 35,945,335
Debt Securities at fair value through profit or loss - - 425,175 126,287 - 222,499 - 773,961
225
Grupo Supervielle S.A.
For the year ended December 31, 2019
(in thousands of Pesos)
Personal & Business Banking Corporate Banking Bank Treasury Consumer Finance Insurance Asset Management and Other Services Adjustments Consolidated Total
Loans and other financing 56,863,126 52,299,847 5,064,985 6,857,365 618,048 41,858 (1,927,882 ) 119,817,347
Other assets 3,216,481 1,600,424 24,308,991 4,050,457 1,485,761 733,256 10,488,202 45,883,572
Total Assets 70,550,999 55,292,873 52,766,784 11,471,318 2,108,417 4,293,539 5,936,285 202,420,215
Liabilities
Deposits 86,332,384 14,481,577 21,342,195 2,224,661 - - (3,204,562 ) 121,176,255
Financing received from the Argentine Central Bank and other financial institutions 17,161 - 12,250,927 1,293,014 - 62,652 (1,347,144 ) 12,276,610
Unsubordinated negotiable Obligations 147,721 104,240 8,013,021 - - 21,181 - 8,286,163
Other Liabilities 6,347,903 1,876,158 5,926,868 4,348,891 1,031,927 3,517,477 5,726,877 28,776,101
Total Liabilities 92,845,169 16,461,975 47,533,011 7,866,566 1,031,927 3,601,310 1,175,171 170,515,129
~~(1)~~
(1) These amounts are calculated based on the funds that segments use or provide and net to zero in the consolidation process.
Personal and Business Banking

~~Below is~~Attributable comprehensive income in 2020 recorded a ~~discussion of our results of operations by segments for the years ended December 31, 2017, 2016 and 2015.~~Ps.6.1 billion loss, compared to a Ps.831.4 million loss in 2019,

~~Retail~~The main factors explaining the performance were:
i) a Ps.9.7 billion or 35.5% decrease in Net Financial Income mainly due to weak credit demand and lower interest earned on loans following the decrease in market interest rates, and lower income on foreign currency trading reflecting the restrictions on FX transactions. These were partially offset by a decrease in interest expenses, following the decrease in market interest rates, and
ii) a Ps.163.0 million or 3.2% decrease in Net Service Fee income. On February 19, 2020, through Communication “A” 6912, the Central Bank stated that financial institutions should not communicate fee increases nor new fees to users of financial services for 180 business days. Then, in response to the Covid-19 pandemic established the following measures: i) on March 26, 2020, through Communication “A” 6945, the Central Bank stated that until June 30, 2020, any transaction through ATMs would not be subject to any charges or fees. Later on, this ruling was extended three consecutive times, first until September 30, then until December 31, 2020 and then until March 31, 2021, and ii) on November 5, 2020, through Communication “A” 7158, the Central Bank ruled that financial entities should not communicate repricing of fees on certain products related to Saving Accounts and Credit Cards until February 2021.
These were partially offset by
iii) a 4.2% or Ps.190.1 million decrease in Loan Loss Provisions. Loan loss provisions include the expected losses for each portfolio and segment, based on past performance and current conditions as of the financial statements date. Delinquency requires expected losses to be measured for the whole life of each loan, instead of accounting for expected losses during a 12-month period. This increases significantly the probability of default for loans with a maturity of more than one year. 2020 NPL ratio benefitted from:(i) the relief program ruled by the Central Bank amid the pandemic, allowing debtors to defer their loan payments originally maturing between April 2020 and March 2021, together with the automatic rescheduling of unpaid credit card balances due April and September 2020, and ii) the Central Bank regulatory easing on debtor classifications amid the pandemic (adding a 60-days grace period before loans are classified as non-performing) and the suspension of mandatory reclassification of customers that are non-performing with other banks, but performing with Supervielle which was introduced in 1Q20 and was extended until March 31, 2021,
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iv) a 55.8% or Ps.1.4 billion decrease in the loss in the purchasing power of the currency to which our net monetary assets are exposed as a result of the 36.1% increase in consumer price index in 2020, compared to a 53.8% increase in 2019,
v) a 3.1% or Ps.724.4 million decrease in Personnel, Administrative and D&A expenses, and
vi) a tax gain of Ps. 1.4 billion in 2020.
In 2020, the Personal & Business Banking segment’s loan and financing portfolio totaled approximately Ps.52.5 billion compared to Ps.56.9 billion in 2019. In 2020, retail deposits amounted to Ps.93.8 billion, a 20.2% decrease from the Ps.86.3 billion in 2019.

~~Net~~Corporate Banking
Attributable comprehensive income ~~attributable~~in 2020 recorded a Ps.63.9 million loss, compared to a Ps.2.8 billion loss in 2019
The main factors explaining the ~~Retail Banking segment in 2017 was Ps.681.0~~performance improvement were:
(a) a 21.7% or Ps.932.2 million decrease in Loan Loss Provisions. Loan loss provisions include the expected losses for each portfolio and segment, based on past performance and current conditions as of the financial statements date. Throughout 2020, the Company updated and enhanced its expected loss models to adjust for the current economic outlook, included additional macroeconomic variables and updated its top-down analysis on specific industries that could continue to be highly impacted by the Covid-19 pandemic. But in 2019 the corporate segment had been significantly impacted by the increase in delinquency ratios mainly due to the economic downturn in Argentina. As of December 31, 2020, collateralized commercial loans were 43% of total, and collateralized non-performing commercial loans increased to 80% of total, from 58% as of December 31, 2019. Corporate loans showed an NPL ratio of 6.7% as of December 31, 2020, decreasing from 9.2% as of December 31, 2019, benefitted from the above-mentioned relief programs implemented by the Central Bank amid the pandemic outbreak,
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(b) a 43.2% or Ps.969.7 million decrease in the loss in the purchasing power of the currency to which our net monetary assets are exposed as a result of the 36.1% increase in consumer price index in 2020, compared to a 53.8% increase in 2019,
(c) a 9.4% or Ps.199.7 million decrease in Personnel, Administrative expenses and D&A,
(d) Other income, net of Ps. 263 million gain, compared to Ps.1.5 billion loss in 2019, and
(e) a Ps.116 million gain in other comprehensive income, reflecting the revaluation of properties in Ps. to adjust to market value at each revaluation date.
These were partially offset by: i) a ~~87.8% increase from the Ps.362.6 million in 2016,~~ ~~which in turn was Ps.140.8~~Ps.382.8 million or ~~63.5% higher~~ ~~than~~6.4% decrease in Net Financial Income mainly due to weak credit demand and lower interest earned on loans following the ~~Ps.221.8 million~~decrease in ~~2015. The increase in 2017 resulted mainly from (i) a 43.1% or Ps.1.7 billion increase in gross intermediation margin, (ii) a 26.6% or Ps.348.6 million increase in net services fee~~market interest rates and by government sponsored credit lines granted to SMEs at preferential rates, and lower income ~~and (iii) net miscellaneous income of Ps.98.9 million~~
~~compared to net miscellaneous loss of Ps.130.4 million in 2016. This was~~on foreign currency trading. These were partially offset by a ~~39.1%~~decrease in interest expenses, following the decrease in market interest rates, and ii) a Ps. 886.5 million or ~~Ps.1.6 million increase~~64.9% decrease in ~~administrative expenses and a 33.9% or Ps.186.6 million increase in loan loss provisions.~~Net Service Fee income reflecting lower credit origination.

~~Net revenues attributable~~In 2020 the corporate banking segment’s loan and financing portfolio totaled Ps.42.2 billion compared to ~~the Retail Banking segment in 2017 were Ps.7.2 billion, a 38.9% increase from the Ps.5.2~~Ps.52.3 billion in ~~2016, which~~2019 reflecting lower credit demand following the recession recorded in ~~turn was~~2020.
In 2020 corporate deposits amounted to Ps.16.2 billion, compared to Ps.14.5 billion in 2019.
Treasury
Attributable comprehensive income in 2020 recorded a Ps.9.6 billion gain, compared to Ps.1.7 billion ~~or 50.7% higher than the Ps.3.4 billion~~gain in ~~2015. The increase in 2017~~2019.
This performance is ~~mainly~~ explained by (i) a ~~43.1% growth~~Ps.9.6 billion increase in ~~gross~~net financial ~~margin, as a consequence of the combination of increases in loan volumes and interest rates on personal loans and mortgages, coupled with lower cost deposits,~~income, and (ii) a ~~26.6%~~49.8% decrease or Ps.266.6 million loss from exposure to changes in the purchasing power to Ps.269.1 million.
These were partially offset by: (i) Ps.2.2 billion charge in income tax compared to Ps.23.8 million gain in 2019, (ii) a Ps.255.7 million increase in other expenses net ~~services fee~~to Ps.483.3 million, (iii) a Ps.16.1 million decrease to Ps.0.1 million in Net Service Fee Income, and (iv) a 6.9% or Ps. 96.6 million increase in Personnel, Administrative Expenses and D&A.
In 2020 net financial income totaled Ps.13.6 billion, an increase of Ps.9.6 billion from Ps.4.0 billion in 2019. This increase was mainly due to higher ~~fees on credit~~income from holdings of securities issued by the Central Bank and ~~debit cards reflecting~~Repo Transactions with the Central Bank due to higher ~~business~~ volumes of these securities and transactions respectively. 2019 had reflected a loss from mark to market accounting of short-term Pesos and U.S. dollars treasury notes held by us following the debt reprofiling announced by the Argentine government in August 2019.
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In 2020, yield from investments in Central Bank securities has been recorded in NII following the Fair value through other comprehensive income methodology. Previously, and until October 2019 when those securities were classified as ~~well as an increase~~Held for trading securities, yields from those investments were recorded in ~~fee pricing which more than offset~~NIFFI following the ~~reduction~~Fair value through profit or loss accounting methodology while deposits to fund those marginal investments were reflected in ~~credit card and debit card discount rates. The maximum MDR in the fourth quarter of 2017 was 2.0%, and the maximum debit card sales commissions in the fourth quarter of 2017 was 1.0%.~~Net Interest Income.

~~Loan~~Consumer Finance
Attributable comprehensive income in 2020 recorded a Ps.577.5 million loss ~~provisions amounted~~compared to ~~Ps.737.3~~a Ps.1.5 billion loss in 2019.
The main factors explaining this performance were:
(i) a Ps.873.1 million decrease in loan loss provisions to Ps.887.0 million from Ps.1.8 billion in 2019. This reflects the measures taken by us in the past two years in terms of tightening credit scoring standards and making changes in the collection process, following the peaks observed in the second quarter of 2018. Loan loss provisions include the expected losses for each portfolio and segment, based on past performance and current conditions as of the financial statements date. The increase in delinquency also requires expected losses to be measured for the whole life of each loan, instead of accounting for expected losses during a 12-month period. This increases significantly the probability of default for loans with a maturity of more than one year,
(ii) a Ps.344.9 million increase in net financial income to Ps.3.2 billion, compared to Ps.2.9 billion in 2019. This increase was mainly due to a 19.8% increase to Ps.3.1 billion in net interest income as a result of the decrease in the cost of funds following the decline in market interest rates, while net income from financial instruments and exchange rate differences recorded a Ps.181.2 million gain in 2020, compared to a Ps.342.5 million gain in 2019,
(iii) a Ps.254.7 million decrease in the loss from exposure to changes in the purchasing power of money to Ps.887.1 million compared to Ps.1.1 billion loss in 2019. This reflects the loss in the purchasing power of the currency to which our net monetary assets are exposed as a result of the 36.1% and 53.8% increase in the consumer price index in 2020 and 2019 respectively, and
(iv) a 4.5% or Ps.157.0 million decrease in personnel, administrative and D&A expenses to Ps.3.3 billion from Ps.3.5 billion.
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These were partially offset by a 11.2% or Ps.172.5 million decrease in Net Fee Income. On February 19, 2020, through Communication “A” 6912, the Central Bank stated that financial institutions should not communicate fee increases nor new fees to users of financial services for 180 business days. Then, in response to the COVID-19 pandemic, the Central Bank established through Communication “A” 7158, that financial entities should not communicate repricing of fees on certain products related to saving accounts and credit cards until February 2021.
The Consumer Finance NPL ratio was 4.7% in 2020, declining from 17.2% in 2019. The NPL improvement benefitted from: (i) the Central Bank regulatory easing amid the pandemic on debtor classifications (adding a 60 days grace period before the loan is classified as NPL) which was introduced in the first quarter of 2020 and was extended until March 31, 2021, and (ii) the relief programs ruled by the Central Bank amid the pandemic, allowing debtors to defer their loan payments originally maturing between April 2020 and March 2021, together with the automatic rescheduling of unpaid credit card balances due April 2020 and September 2020. Moreover, NPL improvement reflects the measures taken by the Company since first quarter of 2018 to enhance asset quality following the peaks observed in 2018.
Insurance
Attributable comprehensive income totaled Ps.538.0 million in ~~2017, Ps.186.6~~ ~~million higher than the Ps.550.7~~2020 compared to Ps.141.2 million in ~~2016, which~~2019. This was due to a Ps. 823.5 million decrease in ~~turn was Ps.251.6~~the net loss from exposure to changes in the purchasing power of the currency to Ps.381.1 million compared to a net loss of Ps.1.2 billion in 2019. Net Service Fee Income decreased Ps.173.5 million to Ps.1.5 billion in 2020 from Ps.1.6 billion in 2019. This performance reflects very low levels of sales in bank branches amid the pandemic restrictions, a higher ~~than~~accident rate since relaxation of the ~~Ps.299.1~~lockdown and also due to higher claims paid.
Asset Management and Other Services
Attributable Comprehensive Income recorded a Ps.401.0 million gain in ~~2015.~~ 2020 compared to Ps.138.4 million loss in 2019.
The increase in ~~loan loss provisions in 2017 is mainly explained by the growth in the loan portfolio and an increase in the coverage ratio.~~
~~Direct costs increased~~ ~~41.0~~% or Ps.1.1 billion to Ps.3.9 billion in 2017, compared to Ps.2.8 billion in 2016, which was in turn 34.4% higher or Ps.713.8 million than in 2015. The increase in 2017 was due to higher personnel and operational expenses, as a consequence of vendors’ and unions’ adjustment of rates and salaries to inflation.
In 2017, the retail banking segment’s loan portfolio totaled approximately Ps.21.3 billion (U.S.$1.1 billion), and Ps.21.9 billion (U.S.$1.2 billion) including the securitized loan portfolio. Retail loans posted an NPL ratio of 2.6% ~~in 2017, improving from 3.7% in 2016. This~~2020 was mainly driven by ~~a decrease in the Personal Loans NPL ratio to 2.5% along with a 30 basis points decrease in the credit cards NPL ratio to 3.4%. In March 2016, the Bank changed~~ ~~its write-off policy, moving to write-off at 270 days delinquency from 360 days.~~
~~In 2017, retail deposits amounted to Ps.37.9 billion (U.S.$2.0 billion), a 45.8% increase from the Ps.26.0 billion in 2016. In 2017, retail deposits represented 67.0% of total deposits.~~
As of December 31, 2017, the Bank maintained approximately 2.5 million savings accounts and 88,000 checking accounts. In 2017, the Bank also serviced more than 791,000 product bundles for senior citizens, over 173,000 Plan Sueldo (“Payroll”) accounts and more than 49,000 product bundles for high net worth customers.
~~The following graph shows the total loan portfolio (with and without the securitized portfolio) breakdown of the Retail Banking segment for each of the quarters indicated.~~
~~Corporate Banking~~
~~Net income attributable to the corporate banking segment in 2017, was Ps.538.2~~ ~~million, Ps.201.0 million higher than Ps.337.2 million in 2016, which in turn was Ps.48.7 million higher than Ps.288.4 million in 2015. The increase in 2017 resulted mainly from~~ (i) ~~higher gross intermediation margin (52.5%~~Ps.85.4% or ~~Ps.329.6 million), (ii) a 41.8% or Ps.207.3~~Ps.706.5 million increase in net service fee income ~~(iii) miscellaneous income~~to Ps.1.5 billion in 2020, mainly due to higher activity in the asset management industry together with higher revenues from InvertirOnline, and (ii) a 46.7% decrease in the loss from exposure to changes in the purchasing power of ~~Ps.28.6~~the currency to Ps.253.3 million ~~compared to a Ps.24.5 million income in 2016 and (iv) loan loss provisions of Ps.153.3 million as compared to Ps.153.1~~from Ps.475.6 million in ~~2016. This was~~2019. These were partially offset by ~~(i) a 47.7%~~the 28.6% or ~~Ps.292.4~~Ps.224.6 million increase in personnel, administrative and D&A expenses ~~to support business growth~~ and ~~(ii) a 104.8%~~11.4% or ~~Ps.47.3 million increase in income tax.~~
Net revenues attributable to the corporate banking segment in 2017 were Ps.1.7 billion, 47.8% or Ps.536.9 million higher than Ps.1.1 billion in 2016, which in turn was 42.9% or Ps.337.2 million higher than Ps.786.5 million in 2015. The increase in 2017 was primarily due to the 52.5% increase in gross financial margin reflecting (i) higher loan volume and (ii) a 41.8% growth in net services fee income, largely driven by deposit account commissions and check administration commission.
~~Loan loss provisions amounted to Ps.153.3 million in 2017, as compared to Ps.153.1 million recorded in 2016, which in turn was 112.3% higher than the Ps.72.1 million recorded in 2015.~~
Direct costs increased 68.1% or Ps.145.6 million to Ps.359.2 million in 2017, compared to Ps.213.6 million in 2016, which in turn was 34.8% higher compared to Ps.158.4 million in 2015. The increase in 2017 was due to higher personnel and operational expenses, as a consequence of vendors’ and unions’ adjustment of rates and salaries to inflation.
In 2017, the corporate banking segment’s loan portfolio (including loans and receivables from financial leasing) totaled approximately Ps.29.7 billion (U.S.$1.6 billion), as we leveraged our higher capital base to increase the average loan size per client. Including the securitized portfolio, total loans amounted to Ps.29.7 billion (U.S.$1.6 billion), a 62.5% increase compared to 2016.
The corporate banking segment’s total deposits in 2017 amounted to Ps.5.0 billion (U.S.$264.2 million), a 68.5% increase from Ps.3.0 billion in 2016 to fund loan growth together with the utilization of the funds received from the equity offering. Corporate deposits decreased to 8.8% of total deposits in 2017 from 21.0% in 2016.
~~The following graph shows the total loan portfolio (with and without the securitized portfolio) breakdown of the corporate banking segment for each of the quarters indicated.~~
~~Treasury~~
~~Net income attributable to the Treasury Segment in 2017 was Ps.47.7~~ ~~million, Ps.115.2 million lower than the Ps.162.9 million recorded in 2016, which in turn was Ps.111.6 million higher than the Ps.51.3 million recorded in~~
~~2015. The 70.7% decline in net income in 2017 is explained by a 22.7% or Ps.112.8~~Ps.32.3 million decrease in ~~gross intermediation margin and a 30.9% or Ps.83.7 increase in administrative expenses while net service fee income increased 12.1% or a Ps.4.5 million.~~Net Financial Income.

Net revenues attributable to the treasury segment in 2017 were Ps.426.1 million, Ps.108.3 million lower than the Ps.534.4 million recorded in 2016, which in turn was Ps.288.7 million higher than the Ps.245.7 million recorded in 2015. This decrease in 2017 was due to the 22.7% decrease in gross financial margin driven by a year-end negative mark-to-market of a LEBAC time deposit from the holding company in the Bank. This negative impact in the Treasury segment nets out in the consolidated financial statements of the holding company as a result of corresponding a positive mark-to-market impact at the holding company. In addition, in 2016 net income registered a net gain from the termination of the Supervielle Renta Inmobiliaria Financial Trust.Adjustments

The treasury segment’s government and corporate securities portfolio amounted to Ps.15.3 billion in 2017, a 578.8% increase from Ps.2.2 billion recorded in 2016 reflecting higher holdings of securities issued by the Central Bank. Direct costs amounted to Ps.116.8 in 2017, compared to Ps.94.3 million in 2016, compared to Ps.57.7 million in 2015.
~~Consumer Financing~~
~~Net income attributable to the consumer financing segment in 2017 was Ps.179.4~~ million, Ps.111.8 million higher than the Ps.67.7 million in 2016, which in turn was Ps.8.0 million higher than the Ps.59.7 million recorded in 2015. The increase in 2017 was mainly driven by the 87.3% increase in net revenues, which in turn offset higher loan loss provisions following the asset quality deterioration in this segment and the increase the coverage ratio in the non-performing loan portfolio to 65.2% as of December 31, 2017 compared with 58.6% as of December 31,2016.
Net revenues attributable to the consumer finance segment in 2017 were Ps.2.3 billion, Ps.1.1 billion higher than the Ps.1.2 billion in 2016, which in turn was Ps.415.3 million higher than the Ps.823.3 million recorded in 2015. Annual increases of 124.1% in gross intermediation margin and 32.5% in net service fee income were the main drivers behind the growth in net revenues in 2017.
Loan loss provisions amounted to Ps.924.5 million in 2017, Ps.585.6 million higher than the Ps.338.9 million in 2016, which was in turn Ps.172.5 million higher than the Ps.166.3 million for 2015. The increase in 2017 was due to the growth of the loan portfolio, which included an increase in non-performing loans, (ii) our decision to increase our non-performing loan coverage ratio from 58.6% in 2016 to 65.2% in 2017 and (iii) the deterioration in asset quality due to salary adjustments resulting from collective bargaining agreements below the annual inflation rate in 2017 along with increases in public services tariffs both in 2016 and 2017, which impacted the consumers’ disposable income.
Direct costs increased 36.9% or Ps.310.0 million to Ps.1.1 billion in 2017, compared to Ps.839.3 million in 2016, which in turn were 31.4% higher than the Ps.638.5 million recorded in 2015. The increase in 2017 was due to higher personnel and operational expenses as a consequence of vendors’ and unions’ adjustment of rates and salaries to inflation.
The consumer financing segment’s loan portfolio totaled approximately Ps.6.1 billion (U.S.$324.6 million) at December 31, 2017. Including the securitized loan portfolio, total loans amounted Ps.6.8 billion (U.S.$364.3 million) increasing 49.0% in 2017, from Ps.4.6 billion registered in 2016.
~~The following graph shows the total loan portfolio (with and without the securitized portfolio) breakdown of the consumer dinancing segment for each of the quarters indicated.~~
~~Insurance~~
~~Net income attributable to the insurance segment in 2017 was Ps.205.6 million, compared to Ps.252.4 million in 2016 and Ps.54.1 million in 2015.~~
Net revenues attributable to the insurance segment in 2017 were Ps.469.7 million, compared to Ps.528.2 million in 2016 and Ps.153.1 million in 2015. Supervielle Seguros began issuing its first policies in October 2014 starting with a few non-credit related insurance products, such as protected bag insurance and personal accident insurance. By the end of 2015, it began issuing credit-related policies substantially growing its business since then, partly through the growth of the loans and credit card portfolio balances and partly through the migration of some of the portfolios previously booked in a third party insurance company. However, since September 1, 2016, both Banco Supervielle and CCF are self-insuring these risks and and only contract new credit related insurances for mortgages loans. We intend to continue to expand this business and launch new insurance products previously offered to our customers by other insurance companies.
~~Income from insurance activities amounted to Ps.375.4 million in 2017, compared to Ps.476.3 million in 2016 and Ps.130.6 million in 2015.~~
~~Direct costs were Ps.154.4 million in 2017, compared to Ps.139.2 million in 2016 and Ps.68.2 million in 2015.~~
~~Asset Management & Other Services~~
~~Until March 31, 2017, we offered microcredit financing through Cordial Microfinanzas. On March 31, 2017, we and~~ ~~the Bank sold our shares of Cordial Microfinanzas to Ciudad Microempresas.~~
Net income attributable to the asset management & other services segment in 2017 was Ps.223.6 million, Ps.98.8 million higher than the Ps.124.8 million recorded in 2016, which was in turn Ps.65.2 million higher than the Ps.59.5 million recorded in 2015.
Net revenues attributable to the asset management & other services segment in 2017 were Ps.601.6 million, Ps.271.4 million or 82.2% higher than Ps.330.2 million in 2016, which was in turn 99% higher than Ps.166.0 million in 2015.
The increase in net revenues in 2017 was mainly driven by the increase in net services fee income, which amounted to Ps.553.3 million in 2017, 112.4% higher than the Ps.260.6 million recorded in 2016, which in turn was 107.5% higher than the Ps.125.6 million recorded in 2015. The increase in service fee income in 2017 was mainly driven by increased volume in mutual fund management and in Espacio Cordial fee income. This increase reflects the successful cross-selling initiatives to leverage our compelling financial product offering both through the asset management business and the non-financial products and services sold by Espacio Cordial.
Direct costs increased 15.7% or Ps.35.9 million in 2017, compared Ps.228.6 million in 2016, which in turn increased 61.0% or Ps.86.7 million compared to Ps.142.0 million in 2015. The increase in 2017 and 2016 was mainly due to inflation and an increase in salaries due to an increase in the number of employees. See “~~Item 4.B Business Overview~~.”
~~Adjustments~~
~~Financial expenses and other results~~Results incurred by Grupo Supervielle at the holding level, and transactions between segments, are not allocated to any particular segment for internal reporting purposes and are disclosed under “Adjustments” to reconcile the total of each line item with the amounts appearing in our statement of income.
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Inter-segment transactions offset each other and do not impact total direct earnings on a consolidated basis. Other results not allocated to segments totaled ~~gains of Ps.561.5~~an attributable comprehensive income recorded a Ps.536.6 million gain in ~~2017, gains of Ps.3.8~~2020 compared to Ps.377.0 million gain in ~~2016, and losses of Ps.60.7 million in 2015.~~2019.

~~Financial income of Grupo Supervielle at the holding level in 2017 were higher than in 2016 mainly due to the investment of the funds retained at the holding level after the IPO in May 2016.~~
~~Financial expenses of Grupo Supervielle at the holding level in 2017 were lower than in 2016 mainly due to a significant decrease in the amount outstanding of debt.~~
~~Below we present a summary of items recorded by Grupo Supervielle at the holding level, as well as by Sofital, excluding inter-segment transactions, as of December 31, 2017 and 2016:~~

As of December 31, 2017

As of December 31, 2016

(in thousands of Pesos)

Grupo Supervielle

Sofital

Grupo Supervielle

Sofital

Financial income

642,305

2,024

188,345

399

Financial expenses

(26,045
)
—

(129,642
)
(69
)
Gross financial margin

616,260

2,024

58,703

330

Services Fee Income

62,906

—

45,941

—

Services Fee Expenses

3,145

—

—

—

Net Service Fee Income

59,761

—

45,941

—

Net Revenue

676,021

2,024

104,644

330

Loan Loss Provisions

—

(1,432
)
—

—

Direct costs

(125,255
)
(1,615
)
(63,912
)
(681
)
Income from financial transactions

550,766

(1,023
)
40,733

(351
)
Consolidated Assets

The structure and main components of our consolidated assets as of the dates indicated were as follows:

As of December 31,

2017

2016

2015

Amount

%

Amount

%

Amount

%

(in thousands of Pesos, except percentages)

Cash and due from banks

11,129,475

11.8
%
8,166,132

15.3
%
6,808,591

20.6
%
Investment Portfolio

Government and corporate securities

1,734,409

1.8
%
945,991

1.8
%
240,635

0.7
%
Participation in our securitization trusts

570,207

0.6
%
631,251

1.2
%
1,371,889

4.2
%
Securities issued by the Central Bank

13,611,627

14.5
%
1,414,053

2.7
%
691,246

2.1
%
Loans and financing portfolio

60,054,796

63.9
%
38,037,051

71.5
%
22,293,826

67.5
%
Other assets (1)

6,870,764

7.3
%
4,011,564

7.5
%
1,639,630

5.0
%
Total

93,971,278

100.0
%
53,206,042

100.0
%
33,045,817

100.0
%
~~(1)~~         ~~Includes mainly other receivables from financial transactions, equity investments, miscellaneous receivables, bank premises and equipment, miscellaneous assets, and intangible assets.~~
As of December 31,
2020 2019
Amount % Amount %

(in thousands of Pesos, except percentages)
Cash and due from banks 36,674,869 14.7 % 35,945,335 17.8 %
Debt Securities at fair value through profit or loss 9,871,903 4.0 % 773,961 0.4 %
Loans and financing portfolio 105,395,186 42.3 % 119,817,347 59.2 %
Other debt securities 40,859,975 16.4 % 14,238,340 7.0 %
Other assets⁽¹⁾ 56,429,013 22.6 % 31,645,232 15.6 %
Total 249,230,946 100.0 % 202,420,215 100.0 %

(1) Includes mainly other receivables from financial transactions, equity investments, miscellaneous receivables, bank premises and equipment, miscellaneous assets, and intangible assets.
Of our ~~Ps.94.0~~Ps.249.2 billion total assets as of December 31, ~~2017, Ps.92.3~~2020, Ps.239.7 billion, equivalent to ~~98.2%~~96.2% of the total, corresponded to the Bank and CCF. As of December 31, ~~2017,~~2020, our total direct exposure to the non-financial public sector amounted to ~~Ps.1.8 billion. Our exposure to the non financial public sector~~Ps.72.7 billion which is primarily composed of our holdings of government securities, ~~which as of December 31, 2017 amounted to Ps.1.7 million.~~securities issued by the Central Bank and Repo Transactions with the Central Bank.

~~Item 5.B~~~~Liquidity and Capital Resources~~
Item 5.B Liquidity and Capital Resources

Our main source of liquidity is the Bank’s deposit base. ~~The Bank,~~ CCF ~~and Tarjeta~~ also securitize portions of ~~their~~its loan portfolios to generate liquidity for ~~their~~its operations. The Bank and CCF also ~~receives~~receive deposits and interbank calls and ~~issues~~issue short-term debt securities in the Argentine capital markets for financing. Additionally, long-term financing and capital contributions enable us to cover most of our liquidity requirements.
231
Consolidated Cash Flows

The table below summarizes the information from our consolidated statements of cash flows for the three years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, which is also discussed in more detail below:

Year ended December 31,

2017

2016

2015

(in thousands of Pesos)

Funds at the beginning of the financial year

9,688,554

7,616,502

4,046,180

Funds provided by (used in) Operating activities

6,961,692

(294,347
)
2,449,838

Government and corporate securities

1,811,290

(947,998
)
744,287

Net increase in loans

(10,134,238
)
(5,136,826
)
(568,136
)
Net increase in deposits

17,593,799

9,105,413

4,612,863

Net operating income from services

4,014,670

3,156,633

2,138,642

Administrative expenses

(7,537,254
)
(5,340,482
)
(3,608,264
)
Other

1,213,425

(1,131,087
)
(869,554
)

Funds provided by (used in) investing activities

(4,099,484
)
(477,264
)
(188,834
)
Net payments in bank premises and equipment and miscellaneous assets

(320,981
)
(458,733
)
(184,545
)
Payments for purchases of equity interests in other companies

33,112

(21
)
—

Other

(3,811,615
)
(18,510
)
(4,289
)

Funds provided by financing activities

11,869,581

2,387,086

870,687

Funds provided (used in) by unsubordinated negotiable obligations

5,288,294

371,069

638,722

Funds (used in) subordinated negotiable obligations

(1,058,813
)
(123,811
)
(74,684
)
Funds provided by (used in) banks and international entities

1,871,168

(1,116,049
)
330,650

Capital increase

5,841,688

3,301,137

—

Payment of dividends

(65,500
)
(25,503
)
(7,385
)
Other

(7,256
)
(19,757
)
(16,616
)

Effect of exchange rate on cash and cash equivalents

1,001,522

456,577

438,631

Funds at the end of the financial year

25,421,865

9,688,554

7,616,502

Grupo Supervielle S.A.
As of December 31,
2020 2019 2018
Net loss for the year 3,500,774 (2,931,954 ) (6,401,490 )
Adjustments to obtain flows from operating activities:
Income tax 671,707 229,663 2,117,088
Depreciations and impairment of assets 2,407,028 2,470,504 905,545
Loan loss provisions 8,615,060 10,533,018 10,846,363
Exchange rate difference on gold and foreign currency (1,064,545 ) 441,191 (2,359,639 )
Interest income (64,699,880 ) (60,983,625 ) (63,700,230 )
Interest expenses 28,578,388 47,531,377 36,468,510
Net income from financial instruments at fair value through profit or loss (3,315,582 ) (28,536,382 ) (13,215,705 )
Fair value of Investment property 92,457 173,076 (301,426 )
Result from exposure to changes in the purchasing power of the currency 4,290,328 7,296,543 12,597,117
Interest over Leases liabilities 207,035 289,288 —
Asset retirements measured at amortized cost (657,019 ) — —
Loans recovered and allowances reversed (572,480 ) (678,796 ) (665,561 )
(Increases) / decreases from operating assets:
Debt securities at fair value through profit or loss (3,704,499 ) 33,730,615 13,361,338
Derivatives 206,736 (317,331 ) 49,878
Repo transactions (22,354,735 ) — 10,358,040
Loans and other financing —
To the non-financial public sector 15,777 29,390 32,129
To the other financial entities 75,779 746,839 393,321
To the non-financial sector and foreign residents 69,862,241 87,397,438 73,827,816
Other debt securities (26,621,635 ) (5,209,685 ) (7,918,913 )
Financial assets in guarantee 2,356,401 (3,057,655 ) (180,104 )
Investments in equity instruments (48,916 ) 1,941 122,467
Other assets (578,668 ) 3,051,066 (9,736,045 )
Increases / (decreases) from operating liabilities:
Deposits
Non-financial public sector 464,124 (15,810,885 ) 4,174,518
Financial sector 19,163 (14,598 ) 4,299
Private non-financial sector and foreign residents 28,504,851 (113,144,888 ) (16,309,593 )
Derivatives 1,995 (197,328 ) 197,328
Repo operations (435,401 ) 435,401 -
Liabilities at fair value with changes in results 1,743,945 (303,388 ) 561448
Other liabilities (3,796,035 ) 713,438 995,641
Income Tax paid (1,272,880 ) (1,102,703 ) (2,932,952 )
NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES (A) 22,491,514 (37,218,430 ) 43,291,188
CASH FLOWS FROM INVESTING ACTIVITIES
Net payments related to:
Purchase of PPE, intangible assets and other assets (4,724,074 ) (1,516,436 ) (5,978,681 )
Purchase of liabilities and equity instruments issued by other
entities (47,564 ) — (376,258 )
Purchase of investments in subsidiaries (7,292 ) (269,496 ) (3,849,461 )
Collections:
Disposals related to PPE, intangible assets and other assets 425,906 10,920 908,416
NET CASH USED IN INVESTING ACTIVITIES (B) (4,353,024 ) (1,775,012 ) (9,295,984 )
CASH FLOW OF FINANCING ACTIVITIES
Payments:
Changes in investments in subsidiaries that do not result in control loss — 772 (1,252 )
Operating Leases (1,366,164 ) (1,703,937 ) -
Unsubordinated negotiable obligations (6,785,701 ) (155,072,118 ) (143,192,966 )
Financing received from Argentine Financial Institutions (21,297,718 ) (23,641,629 ) (15,818,913 )
Subordinated negotiable obligations (1,774,264 ) (1,147,619 ) (27,195 )
Dividends (530,065 ) (634,568 ) (687,687 )
232
Grupo Supervielle S.A.
As of December 31,
2020 2019 2018
Collections:
Changes in the subsidiaries’ participation without change of control — — —
Unsubordinated negotiable obligations 2,653,805 11,452,532 8,752,664
Financing received from Argentine Financial Institutions 14,873,400 150,529,472 149,113,655
Subordinated obligations — —
Contributions from shareholders — —
NET CASH (USED IN)/ PROVIDED BY FINANCING ACTIVITIES (C) (14,226,707 ) (20,217,095 ) (1,861,694 )
EFFECTS OF EXCHANGE RATE CHANGES AND EXPOSURE TO CHANGES IN THE PURCHASING POWER OF MONEY ON CASH AND CASH EQUIVALENTS (D) 10,375,405 32,802,331 32,132,480
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C+D) 14,287,188 (26,408,206 ) 64,265,990
RESULT FROM EXPOSURE TO CHANGES IN THE PURCHASING POWER OF THE CURRENCY OF CASH AND EQUIVALENTS (12,853,555 ) (33,941,124 ) (32,132,480 )
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 38,032,893 98,382,223 66,248,712
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 39,466,526 38,032,893 98,382,223

Management believes that cash flows from operations and available cash and cash equivalent balances will be sufficient to fund our financial commitments and capital expenditures for ~~2018.~~2021.
Cash Flows from Operating Activities

~~2017 Compared to 2016~~
In ~~2017,~~2020, operating activities ~~provided Ps.7.0~~used Ps.22.5 billion of net cash, compared to ~~Ps.294.3 million~~Ps.37.2 billion of net cash ~~used~~provided in ~~2016.~~2019. Net ~~increase~~decrease in loans to the non-financial sector amounted to ~~Ps.10.1~~Ps.69.9 billion in ~~2017,~~2020, compared to ~~an increase~~a decrease of ~~Ps.5.1~~Ps.87.4 billion in ~~2016.~~2019. Net operating income from ~~services increased~~debt securities and derivatives decreased to ~~Ps.4.0~~Ps. 1.8 billion in ~~2017~~2020 from ~~Ps.3.2~~Ps.33.2 billion in ~~2016.~~2019. Net ~~increase~~decrease in deposits amounted to ~~Ps.17.6~~Ps.29.0 billion in ~~2017,~~2020, compared to a net increase of ~~Ps.9.1~~Ps.129.0 billion in 2016. Administrative expenses increase to Ps.7.5 billion in 2017, compared to Ps.5.3 billion in 2016. Our holding of marketable securities provided Ps.1.8 billion in 2017 compared to Ps. 948.0 million used in 2016.2019.
233
~~2016 Compared to 2015~~
In 2016, operating activities used Ps.2.4 billion of net cash, compared to Ps.2.3 billion of net cash provided in 2015. Net increase in loans increased to Ps.6.7 billion in 2016 from Ps.683.9 million in 2015. Net operating income from services increased to Ps.2.2 billion in 2016 from Ps.1.8 billion in 2015. Net increase in deposits increased to Ps.9.1 billion in 2016 from Ps.4.6 billion in 2015. Administrative expenses increased to Ps.4.9 billion in 2016 compared to Ps.3.4 billion in 2015 and our holding of marketable securities used Ps.918.4 million in 2016 from Ps.787.8 million provided in 2015.
Cash Flows from Investing Activities

~~2017 Compared to 2016~~
In ~~2017~~,2020, we used ~~Ps.4.1 million~~Ps.4.4 billion of net cash in our investing activities, compared to ~~Ps.477.0 million~~Ps.1.8 billion of net cash used in ~~2016.~~2019. In ~~2017,~~2020, funds used mainly in ~~investing activities~~intangible assets and others were partially offset by the sale of four office units and parking spaces located at Avenida L. N. Alem 1035, the sale of a non-core property for Ps.30.2 million and, to a lesser extent, the sale of Cordial Microfinanzas in the first quarter of 2017. While in 2016, funds used in investing activities were mainly explained by the acquisition at market price all of the properties from the financial trust, given their franchise value, for a total amount of Ps.329.8 million.Ps.4.6 billion.

~~2016 Compared to 2015~~Cash Flows from Financing Activities

In ~~2016, we used Ps.477.3 million of net cash in our investing activities, compared to Ps.188.8 million of~~2020, net cash used in 2015. The increase in investment activities in 2016 is primarily explained by the increase in payments for bank premises, equipment and miscellaneous assets to Ps.458.7 million in 2016 (the Bank acquired at market price, all of the properties from the financial trust, given their franchise value, for a total amount of Ps.329.8 million), compared to the Ps.184.5 million in 2015 (including the acquisition for a total of Ps.165 million of four office units and parking spaces located at Avenida L. N. Alem 1035 and Ps.85.9 million from the sale of properties not related to our core business in the Province of Mendoza).
~~For an explanation of the acquisition of the properties from the financial trust and the subsequent cancellation of the trust, see “~~~~Item 4.D Property, Plants and Equipment.~~”
~~Cash Flows from Financing Activities~~
~~2017 Compared to 2016~~
In ~~2017, net cash provided by~~ financing activities ~~totaled Ps.11.9~~was Ps.14.2 billion, compared to ~~Ps.2.4~~Ps.20.2 billion ~~of net cash provided for financing activities~~ in ~~2016.~~2019.

In ~~2017,~~2020, net funds used to make payments ~~under~~of unsubordinated negotiable obligations totaled Ps.5.3 billion due to the placement of the Ps.4,768,170,000 global bond, compared to Ps.371.1 million used for financing activities in 2016. Funds used to make payments under subordinated negotiable obligations totaled Ps.1.1 billion in 2017, compared to Ps.123.8 million used for financing activities in 2016. Funds borrowed from foreign financial institutions to increase
~~our financing with respect to foreign exchange related loans totaled~~ ~~Ps.1.9 million in 2017, compared to Ps.1.1 million used in 2016.~~
~~2016 Compared to 2015~~
~~In 2016, net cash provided by financing activities totaled Ps.2.4~~was Ps.18.6 billion, compared to ~~Ps.870.7 million of net cash provided for financing activities~~Ps.12.2 billion used in ~~2015. In 2016,~~2019. Net funds used to make payments ~~on our unsubordinated negotiable obligations totaled Ps.371.1 million compared to Ps.638.7 million that were used for financing activities in 2015; we used Ps.123.8 million to make payments under~~of subordinated negotiable obligations was Ps.1.8 billion in 2020, compared to ~~Ps.74.7 million used for financing activities in 2015; and funds used by banks and international entities totaled~~ Ps.1.1 billion used in 2019. Net collection from Argentine financial institutions was Ps.8.1 billion in 2020, compared to ~~Ps.330.7~~Ps.4.5 billion net payments in 2019. In 2020 and 2019, net cash used in dividends payments was Ps.530.1 million ~~provided in 2015.~~and Ps.634.6 million, respectively.
234
Funding

~~Funding~~
Deposits

Our major source of funding is the Bank’s significant deposit base comprised of checking and savings accounts and time deposits. The following table presents the composition of our consolidated deposits as of December 31, ~~2017, 2016~~2020 and ~~2015:~~2019:

As of December 31,

2017

2016

2015

(in thousands of Pesos)

From the non-financial public sector

6,171,661

2,587,253

1,182,559

% of deposits

10.9
%
7.2
%
5.0
%
From the financial sector

15,702

9,326

250,981

% of deposits

0.0
%
0.0
%
1.1
%
From the non-financial private sector and foreign residents

Checking accounts

5,679,805

4,361,405

3,042,376

% of deposits

10.1
%
12.1
%
12.8
%
Savings accounts

18,239,186

10,783,229

6,465,123

% of deposits

32.3
%
30.0
%
27.3
%
Special checking accounts

11,339,808

2,422,708

1,288,573

% of deposits

20.1
%
6.7
%
5.4
%
Time deposits

13,014,886

11,677,322

10,034,025

% of deposits

23.0
%
32.5
%
42.3
%
Investment accounts

255,000

375,000

664,900

% of deposits

0.5
%
1.0
%
2.8
%
Others

1,328,837

3,510,701

567,477

% of deposits

2.4
%
9.8
%
2.4
%
Interest and differences in exchange rates payable

442,142

170,920

220,563

% of deposits

0.8
%
0.5
%
0.9
%
Total

56,487,027

35,897,864

23,716,577

~~2017 Compared to 2016~~

As of December 31,

2020

2019

(in thousands of Pesos, except percentages)
From the non-financial public sector 7,911,255 7,447,131
% of deposits 4.4 % 6.1 %
From the financial sector 57,416 38,253
% of deposits 0.0 % 0.0 %
From the non-financial private sector and foreign residents
Checking accounts 16,891,003 16,499,716
% of deposits 9.5 % 13.6 %
Savings accounts 43,414,117 40,009,355
% of deposits 24.3 % 33.0 %
Special checking accounts 59,431,348 12,719,215
% of deposits 33.3 % 10.5 %
Time deposits 46,113,056 32,483,536
% of deposits 25.8 % 26.8 %
Investment accounts 227,191 5,628,596
% of deposits 0.1 % 4.6 %
Others 3,457,400 4,052,648
% of deposits 1.9 % 3.3 %
Interest and differences in exchange rates payable 1,138,809 2,297,805
% of deposits 0.6 % 1.9 %
Total 178,641,595 121,176,255

Total deposits increased ~~57.4%~~47.4% in ~~2017. The Bank’s~~2020. Total deposits from the non-financial ~~public~~private sector increased ~~138.5%~~50.1% to represent ~~11%~~95.5% of our total deposits as of December 31, ~~2017. As of December 31, 2017, CCF had deposits of Ps.704.8 million.~~
As a result of the importance of our sizeable deposit network franchise, retail branch deposits plus senior citizen deposits continued to represent a high share of total deposits. As of December 31, 2017, retail branch deposits plus senior citizen deposits represented 53.8% of total deposits compared to 59.6% as of December 31, 2016.
2020. Total ~~deposits from the private sector increased 51.0% in 2017, above the 26.7% increase in deposits from the private sector in the Argentine financial system as a whole~~ ~~in 2017. Private sector deposits in savings accounts, time deposits, checking accounts and special checking accounts increased 69.1%, 11.5%, 30.2% and 368.1% respectively, in 2017.~~
As of December 31, 2017, savings accounts denominated in Pesos, which represented 68% of total savings accounts (excluding special checking accounts) increased 67.4% when compared to savings accounts denominated in Pesos as of December 31, 2016. The remaining 32% was represented by U.S. dollar-denominated savings accounts, which increased 73.7% when compared to savings accounts denominated in U.S. dollars.
~~2016 Compared to 2015~~
~~Total deposits increased 51.4% in 2016 accompanying higher loan origination due to the capital deployment after the IPO. The Bank’s~~ deposits from the non-financial public sector increased ~~118.8%,~~6.5% to represent ~~7.2%~~4.5% of our total deposits as of December 31, ~~2016.~~2020.

~~As a result of the importance of our sizeable deposit network franchise, retail~~Private sector checking accounts, saving accounts deposits, ~~continued to represent a high portion~~time deposits and special checking accounts increased 2.4%, 8.5%, 42.0% and 367.3%, respectively, in 2020.
Retail customer deposits in Pesos represented 37% of total ~~deposits. As of December 31, 2016, retail~~ deposits ~~represented 60% of total deposits compared to 54%~~ as of December 31, ~~2015.~~2020. Wholesale and institutional deposits in Pesos declined to 43.5% of total deposits in Pesos from 46.9% as of September 30, 2020.

~~Total deposits from~~Financings
Banco Supervielle S.A.
Global Program for the ~~private sector increased 49.4% in~~Issuance of Medium-Term Notes for up to U.S.$2.3 billion
On September 22, 2016, ~~above~~ the ~~43.9% increase in deposits from~~Shareholders’ meeting No. 117, resolved to approve the ~~private sector~~creation of a Global Program for the Issuance of Negotiable Obligations for up to a maximum outstanding amount of U.S.$800,000,000. The Program was authorized by the CNV through Resolution No. 18,376 dated November 24, 2016. On March 6, 2018, the Shareholders’ meeting, resolved to approve the extension of the Program for up to a maximum outstanding amount of U.S.$2,300,000,000. The Program was authorized by the CNV through Resolution No. 19,470 dated April 16, 2018.
235
Frequent issuer regime registration CNV
On August 6, 2018, the Board of Directors resolved to request the CNV to register the Bank as a frequent issuer of negotiable obligations. Said request was authorized by the CNV through Resolution No. 19,958 dated December 27, 2018. The Bank is registered with the CNV as a frequent issuer of Negotiable Obligations under No. 03. At the board meeting of the company on March 7, 2019, it was resolved to approve the Bank’s ratification in the ~~Argentine financial system as a whole. Private sector deposits grew~~Frequent Issuer Regime and at the Board meeting on December 2, 2019 it was resolved to allocate the maximum amount of U.S.$300,000,000 corresponding to the Global Issuance Program of Negotiable Obligations for up to U.S.$2,300,000,000, with the bank in ~~savings accounts and time deposits, which increased 70.3% and 16.4%, respectively, in 2016.~~the process of reducing the maximum amount of said Program. The CNV approved said ratification through Resolution DI-2020-11-APN-GE #CNV dated February 11, 2020.

~~The performance~~On June 12, 2020, the Board of Directors of Banco Supervielle SA, approved the issuance of its Class G Non-Subordinated Negotiable Obligation for an amount that will not exceed in ~~private sector deposits~~its N/V U.S.$30,000,000 set within the Global Program of Negotiable Obligations. It was ~~due~~also approved to (~~i) 179.2% increase in sight deposits~~modify the terms of said issuance, so that the Issue Amount is up to U.S.$50,000,000 and without prejudice to the fact that the Negotiable Obligations are denominated in U.S. dollars, mainly resulting from the first tranche of the Tax Amnesty Program which totaled the equivalent amount of Ps.2.7 billion as of December 2016, or near U.S.$170 million, compared to Ps.90 million, or U.S.$6 million as of September 2016, (ii) 70.3%, ~~or Ps.5.5 billion increase~~they may be integrated and payments under them can be made in ~~savings accounts, (iii) 43.4%, or Ps.1.3 billion in checking accounts, and (iv) 16.4%, or Ps.1.6 billion in time deposits.~~pesos. The bidding period ended on June 25, 2020.

As of December 31, ~~2016, savings accounts denominated~~2020, and 2019, the amounts outstanding and the terms corresponding to outstanding unsubordinated negotiable obligations were as follows (with figures expressed in ~~Ps., which represent 78%~~thousands of ~~total savings accounts, increased 45.8% compared~~Pesos):
Class Issue Date Maturity Date Annual Interest Rate 12/31/2020 12/31/2019
Banco Supervielle Class A 02/09/2017 08/09/2020 Badlar + Spread 4.5% - 5,179,248
Banco Supervielle Class C 12/22/2017 12/22/2021 Badlar + Spread 4.25% 444,327 908,288
Banco Supervielle Class E 02/14/2018 02/14/2023 Badlar + Spread 4.05% 1,579,563 2,177,446
Banco Supervielle Class G 06/30/2020 06/30/2021 2% Annual Nominal 2,202,858 -
Total 4,226,748 8,264,982
236
Program for the issuance of notes for up to ~~2015. The remaining 22% was represented by U.S. dollar denominated savings accounts, which increased 239.4%.~~nominal value Ps.750 million (increased to Ps.2 billion)

~~Securitization Transactions~~
~~In 2017, the Bank and CCF transferred loans to securitization trusts in an aggregate amount of Ps.2.5 billion and these trusts issued trust securities for an aggregate amount of Ps.2.5 billion.~~ As of ~~December 31, 2017, CCF and~~March 25, 2013, the ~~Bank held shares in trusts through senior debt securities and certificates of participation for Ps.45.1 million and Ps.466.6 million, respectively.~~
As a result of these securitizations, CCF and the Bank retained interests in the trusts through senior bonds and participation certificates in the amount of Ps.45.1 million and Ps.466.6 million as of December 31, 2017, respectively. CCF and the Bank retained interests in the trusts through senior bonds, subordinated bonds and participation certificates in the amount of Ps.100.6 million, Ps.0 million and Ps.530.6 million as of December 31, 2016 and Ps.509.7 million, Ps.36.3 million and Ps.707.0 million as of December 31, 2015, respectively.
Our holdings of participation certificates issued by trusts in Pesos are valued at their equity value estimated at the end of each fiscal year, following each trust’s audited consolidated financial statements. Our holdings of debt securities issued by trusts are valued based on principal plus accrued interest. Each trust records allowances for loan losses for the securitized loan portfolio in accordance with Central Bank regulations. Although historically we have not experienced losses on our participation certificates in, or subordinated debt securities issued by, financial trusts created to securitize loans, we cannot assure you that we will not incur such losses in the future.
~~Financings~~
~~Grupo Supervielle - Global Corporate Notes~~
~~At our ordinary and extraordinary~~Bank’s Extraordinary General shareholders’ meeting, ~~held on April 19, 2016, our shareholders~~ approved the creation of a ~~new global notes program~~Global Program for the issuance of ~~short, medium and/or long-term notes of~~Negotiable Obligations for up to a ~~total~~maximum outstanding amount of ~~Ps. 1,000,000,000 (or its equivalent in other currencies).~~
As of December 31, 2017, Grupo Supervielle had one series of notes outstanding under its short, medium and/or long-term global notes program. This series was our Series XIII Peso-denominated notes due January 31, 2019. These notes were issued on January 31, 2014 in the aggregate principal amount of Ps. 23.1 million. The Series XIII notes earn interest at a floating rate of BADLAR — Private Banks plus 6.25%. As of December 31, 2017, Ps.22.9 million was outstanding under the notes.
The proceeds from the placement of the notes were used in accordance with Article 36 of the Law of Negotiable Obligations for the payment of financial liabilities and working capital needs in Argentina.
~~Bank —Peso-denominated Notes~~
~~At the Bank’s~~U.S.$750,000,000. On April 15, 2016, ~~ordinary shareholders’~~the Ordinary and Extraordinary Shareholders’ meeting ~~the Bank’s shareholders voted~~approved to increase ~~its Peso-denominated global notes program from Ps.750.0 million~~the maximum outstanding amount of the Program to ~~Ps.2.0 billion (or~~$2,000,000,000 or its equivalent in foreign ~~currency).~~currency, passed by Resolution N° 18,224 from the CNV on September 22, 2016.

~~On October 12, 2016,~~The following chart provides the ~~Bank issued unsubordinated “Series VI” notes in an aggregate principal amount~~main terms and conditions of ~~Ps.422.0 million at a floating rate of BADLAR — Private Banks plus 3.50% that were repaid in October 2017.~~
~~Bank~~ ~~— Foreign currency-denominated Notes~~
~~On November 11, 2010, the Bank issued 11.375% U.S.$50 million “Series I” subordinated notes due November 11,~~ ~~2017. Interest payments on the Series I notes are payable twice a year. These notes are governed by New York law. On November 13, 2017, the notes matured and were repaid in full.~~
On August 20, 2013, the Bank issued 7.0% U.S.$22.5 million “Series III” subordinated notes due August 20, 2020. Interest payments on the Series III notes are payable biannually and payments commenced on February 20, 2014. These notes are governed by Argentine law. As issuances underway as of December 31, ~~2017, the Series III notes were recorded~~2020 and 2019 (figures expressed in ~~the~~ ~~“Subordinated Negotiable Obligations” line item in an amount outstanding~~thousands of ~~Ps.431.7 million~~.pesos):
Book Value
Issuance date Currency Class Amount Amortization Term Maturity date Rate 12/31/2020 12/31/2019
08/20/2013 US$ III 22,500 100% at mat, 84 Months 08/20/20 7 % - 1,780,980
11/18/2014 US$ IV 13,441 100% at mat, 84 Months 11/18/21 7 % 1,140,469 1,105,048
Total 1,140,469 2,886,028
Cordial Compañía Financiera S.A. (renamed as IUDÚ Compañia Financiera S.A., with registration pending)

On November 18, 2014, the Bank issued 7.0% U.S.$13.4 million “Series IV” subordinated notes due November 18, 2021. Interest payments on the Series IV notes are payable biannually and payments commenced on May 18, 2015. These notes are governed by Argentine law. As of December 31, 2017, the Series IV notes were recorded in the “Subordinated Negotiable Obligations” line item in an amount outstanding of Ps.254.2 million.
On November 15, 2016, the Bank issued 3.5% Ps.269.1 million “Series VII” unsubordinated notes due November 17, 2017. Interest payments on the Series VII notes are payable biannually and payments commenced on February 17, 2017. These notes are governed by Argentine law. On November 17, 2017, the notes matured and were ~~repaid in full~~.
Global Program for the Issuance of ~~Medium Term Securities~~Negotiable Obligations for up to U.S.$~~2.3 billion (previously, U.S.$800 million)~~500.000.000

On ~~September~~March 22, ~~2016,~~2017, the ~~Bank’s general ordinary and extraordinary~~ shareholders’ meeting ~~approved~~No.45 of CCF resolved to approve the creation of a ~~global program~~Global Program for the ~~issuance~~Issuance of ~~notes~~Negotiable Obligations for anup to a maximum outstanding ~~maximum~~ amount of U.S.$~~800,000,000.~~500,000,000. The ~~program~~Program was authorized by the CNV ~~on November 24, 2016,~~Board through Resolution No. ~~18,376.~~
On November 23, 2016, the Bank issued Series “A” notes issued for Ps. 4.8 billion at a BADLAR plus 450 basis points interest rate due 2020, with interest payable on a quarterly basis. As of December 31, 2017, the abovementioned notes were recorded in the “Other receivables from financial transactions — Unsubordinated Notes” line item in an amount of Ps.4.7 billion.
On November 29, 2017, the Bank issued Series “B” notes issued for Ps.629.0 million at a TM20 plus 325 basis points interest rate due 2019, with interest payable on a quarterly basis. As of December 31, 2017, the abovementioned notes were recorded in the “Other receivables from financial transactions — Unsubordinated Notes” line item in an amount of Ps.625.3 million.
On November 29, 2017, the Bank issued Series “C” notes issued for Ps.659.7 million at a BADLAR plus 425 basis points interest rate due 2021, with interest payable on a quarterly basis. As of December 31, 2017, the
~~abovementioned notes were recorded in the “Other receivables from financial transactions — Unsubordinated~~ ~~Notes” line item in an amount of Ps.655.8 million.~~
~~On February 14, 2018, the Bank issued two new series of notes under the program, in accordance with the~~ ~~following:~~
(i) “Series D” notes in an aggregate principal amount of Ps.748.9 million at a quarterly rate of BADLAR Private Banks Rate plus a nominal annual 3.50% due August 14, 2019. However, during the first interest payment period, the series D notes will pay a minimum annual interest rate of 26.75%.
(ii) “Series E” notes in an aggregate principal amount of Ps.1.6 billion at a quarterly interest rate of BADLAR Private Banks Rate plus a nominal annual 4.05% due February 14, 2023. However, during the first, second, and third interest payment periods, the series E notes will pay a minimum annual interest rate of 26.25%.
On March 6, 2018, the Bank’s shareholders’ meeting resolved, among other things, to increase the amount of the program from U.S.$800.0 million (or its equivalent in other currencies) to U.S.$2.3 billion (or its equivalent in other currencies) and to modify the program’s general terms and conditions to allow specifically for the issuance within its framework of series of notes denominated in UVI or in UVA.
~~Bank - Foreign Trade Programs~~
~~On April 25, 2007, we entered into a trade facility with the IFC for a maximum amount of U.S.$~~18,650 dated May 10, ~~million, which entitles us to request IFC guarantees to secure certain of our trade-related obligations and trade-related obligations of third parties, such as stand-by letters of credit. In May~~ 2014, the amount under the facility was increased to U.S.$20 million and in November 2015 it was increased again to U.S.$30 million. As of December 31, 2017, our obligations, including principal and interests, under this facility totaled U.S.$19.3 million.
In addition, on May 27, 2009, we entered into an Issuing Bank Agreement and a Confirming Bank Agreement with the Inter-American Development Bank, under the IDB’s Trade Finance Facilitation Program for a maximum amount of U.S.$10 million. Pursuant to these agreements, we may request IDB credit guarantees and confirm IDB credit guarantees received by third parties. In September 2012, the amount under the facility was increased to U.S.$15 million. Our aggregate current exposure under the facilities may not exceed U.S.$15 million, which will be used to cover the risks inherent in the confirmation of letters of credit, promissory notes, bid performance bonds and other similar instruments used in foreign trade operations. As of December 31, 2017, there were no operations with coverage of the IDB under the Issuing Bank Agreement.
Obligations under the Issuing Bank Agreement and the Confirming Bank Agreement include the preparation of reports at regular intervals and abiding by certain financial ratios related to solvency, credit risk, restricted assets, and exposure to foreign currency and interest rate risk.
~~CCF — Notes~~2017.

As of December 31, ~~2017, CCF~~2020, and 2019, Cordial Compañía Financiera S.A. had ~~the following series of notes outstanding under its Ps.500 million Global Program:~~no negotiable obligations outstanding.

Date of
issuance

Currency

Amount
outstanding as
of issuance date

Amount outstanding as
of December 31, 2017
(in thousands of Pesos)

Rate

Maturity
date

Series XI

October 25, 2016

Pesos

200,000,000

200,000

Floating + 3.57%
(BADLAR Private Banks)

April 25, 2018

Series XIII

December 23, 2016

Pesos

151,428,571

151,429

Floating + 4%
(BADLAR Private Banks Rate)

June 23, 2018

Date of
issuance

Currency

Amount
outstanding as
of issuance date

Amount outstanding as
of December 31, 2017
(in thousands of Pesos)

Rate

Maturity
date

Series XIV

May 11, 2017

Pesos

558,000,000

555,396

Floating + 3.50%
(BADLAR - Private Banks)

May 11, 2019

Series XV

August 24, 2017

Pesos

413,500,000

411,410

Floating + 3.75%
(BADLAR - Private Banks)

February 23, 2019

Series XVI

November 22, 2017

Pesos

535,500,000

532,308

Floating + 4.25%
(TM20)

November 22, 2019

MicroLending S.A.U.

AsOn June 22, 2017, the shareholders’ meeting of ~~December 31, 2017, we held in our portfolio negotiable obligations: (i) Class XI issued by CCF~~MicroLending S.A.U. resolved to approve the issuance of Negotiable Obligations for ~~the~~up to a maximum outstanding amount of ~~Ps.200 million, (ii) Class XIII issued~~Ps.35,000,000. The issuance was authorized by ~~CCF for~~ the amount of Ps.151.4 million, (iii) Class XIV issued by CCF for the amount of Ps.555.4 million, (iv) Class XV issued by CCF for the amount of Ps.411.4 million and (v) Class XVI issued by CCF for the amount of Ps.532.3 million.CNV Board through Resolution RESFC-2017-18946-APN dated September 20, 2017.

As of December 31, ~~2017,~~2020 and 2019 the amounts outstandings and the terms corresponding to outstanding unsubordinated negotiable obligations were as follows (in millions of ~~CCF totaled Ps.1.9 billion.~~
~~CCF — Syndicated Loans~~
On June 22, 2015, CCF entered into a loan contract called “Syndicated Loan IV” with the banks set forth in the table below for Ps.110.0 million bearing interest at a floating rate of BADLAR — Private Banks + 5.5 basis points. ~~The loan was paid in December 12, 2016, after 12 installments. Interest payments are made monthly. Banco de Servicios y Transacciones S.A. is administrative agent under this loan.~~Ps.):

~~Bank~~
Class
~~Share of Syndicated Loan~~
~~(Pesos)~~
Issue Date
Maturity Date Annual Interest Rate 12/31/2020 12/31/2019
~~Banco de Servicios y Transacciones S.A.~~
Micro Lending Class III
~~22,500,000~~
10/04/2017
~~Banco de la Ciudad de Buenos Aires~~
10/05/2020
~~30,000,000~~
~~BACS Banco de Crédito y Securitización S.A.~~
Badlar + Spread 7%
~~20,000,000~~
~~Banco Mariva S.A.~~
-
~~15,000,000~~
~~Banco Industrial S.A.~~
21,181
~~10,000,000~~
~~Banco Sáenz~~
~~7,500,000~~
~~Banco Meridian S.A.~~
~~5,000,000~~
237
On May 18, 2016, CCF entered into a loan contract called “Syndicated Loan V” with the banks set forth in the table below for Ps.335.0 million bearing interest at a floating rate of BADLAR — Private Banks + 5.5 basis points. On April 3, 2017, the loan was repaid in full. Banco Santander Río S.A. was administrative agent under this loan.
~~Bank~~
~~Share of Syndicated Loan~~
~~(Pesos)~~
~~Banco Santander Río S.A~~
~~100,000,000~~
~~Banco de la Pampa S.E.M.~~
~~15,000,000~~
~~Banco de la Provincia de Córdoba S.A.~~
~~30,000,000~~
~~Banco Hipotecario S.A.~~
~~60,000,000~~
~~BACS Banco de Crédito y Securitización S.A.~~
~~30,000,000~~
~~Banco de San Juan S.A~~
~~20,000,000~~
~~Banco Macro S.A.~~
~~100,000,000~~
Consolidated Capital

The table below shows information on our shareholders’ equity as of the dates indicated.

Year ended December 31,

Grupo Supervielle S.A.

2017

2016

2015

As of December 31,

(in thousands of Pesos, except percentages)

2020 2019 2018
Shareholders’ equity

15,144,798

6,931,551

2,373,710

Average shareholders’ equity(1)

9,580,785

4,986,499

2,094,750

Shareholders’ equity as a percentage of total assets

16.1
%
13.0
%
7.2
%

(in thousands of Pesos, except percentages)
Shareholders’ equity at the end of the period attributable to owners of the parent company 35,651,135 31,878,404 35,506,450
Average shareholders’ equity⁽¹⁾ 34,400,841 31,791,694 39,063,579
Shareholders’ equity attributable to owner of the parent company as a percentage of total assets 14.3 % 15.8 % 12.0 %
Average shareholders’ equity as a percentage of average total assets

13.8
%
12.0
%
7.8
%
13.4 % 11.7 % 12.0 %
Total liabilities as a multiple of total shareholders’ equity

5.2
x
6.7
x
12.9
x
6.0 5.3 7.4
Tangible shareholders’ equity(2) as a percentage of Total Tangible Assets

15.8
%
12.6
%
6.5
%
Tangible shareholders’ equity⁽²⁾ as a percentage of Total Tangible Assets 11.9 % 13.2 % 10.3 %

(1) Calculated on a daily basis.
~~(1)~~         ~~Calculated on a daily basis.~~
~~(2)~~         ~~Tangible shareholders’ equity represents shareholders’ equity minus intangible assets.~~
(2) Tangible shareholders’ equity represents shareholders’ equity minus intangible assets.

The table below shows information on the Bank and CCF’s consolidated computable regulatory capital, and minimum capital requirements as of the dates indicated.

Grupo Supervielle S.A.
As of December 31, ⁽¹⁾

As of December 31,

2020 2019 2018
Total Capital

2017

2016

2015

Tier 1 Capital

Paid in share capital common stock

744,386

638,283

456,140

829,564 829,564 771,965
Share premiums

4,647,818

2,058,921

8,064

6,898,635 6,898,635 5,481,234
Disclosed reserves and retained earnings

3,173,755

2,248,406

1,630,958

(4,786,695 ) 5,351,399 4,602,483
Non-controlling interests

78,582

32,743

14,199

346,732 125,955 63,044
IFRS Adjustments 366,192 1,001,756 (472,796 )
Capital Adjustments 22,680,725 - -
^{Expected Credit Losses} 2,210,136 - -
100% of results

1,088,388

531,223

358,898

1,585,872 2,247,147 1,133,354
50% of positive results

170,170

197,063

129,275

312,738 536,635 268,581
Sub-Total: Gross Tier I Capital

9,903,099

5,706,639

2,597,534

30,443,899 16,991,091 11,847,865
Tier 2 Capital
General provisions/general loan-loss reserves 50% 1,090,865 871,395 784,727
Subordinated term debt - 162,339 379,212
Sub-Total: Tier 2 Capital 1,090,865 1,033,734 1,163,939
Deduct:

All Intangibles

312,589

281,112

249,375

2,548,881 754,238 406,460
Pending items

40,798

30,693

23,488

90,951 25,611 96,480
Other deductions

32,805

26,866

18,790

4,566,118 2,219,867 364,858
Total Deductions

386,192

338,671

291,653

7,205,950 2,999,716 867,798
Sub-Total: Tier I Capital

9,516,907

5,367,968

2,305,881

Tier 2 Capital

General provisions/general loan-loss reserves 50%

588,073

389,142

221,563

Subordinated term debt

325,183

389,743

441,116

Sub-Total: Tier 2 Capital

913,256

778,885

662,679

Total Capital

10,430,163

6,146,853

2,968,560

24,328,814 15,025,109 12,144,006
Credit Risk weighted assets(1)

60,939,300

39,678,311

25,248,691

Risk weighted assets(2)

75,301,392

49,168,958

34,314,613

Credit Risk weighted assets⁽²⁾ 126,312,275 96,585,712 79,580,781
Risk weighted assets⁽³⁾ 174,954,402 129,638,218 101,933,777
Tier 1 Capital / Credit risk weighted assets 18.4 % 14.5 % 13.8 %
Tier 1 Capital / Risk weighted assets

12.6
%
10.9
%
6.7
%
13.3 % 10.8 % 10.8 %
Regulatory Capital / Credit risk weighted assets 19.3 % 15.6 % 15.3 %
Regulatory Capital / Risk weighted assets

13.9
%
12.5
%
8.7
%
13.9 % 11.6 % 11.9 %

(1) Nominal value without inflation adjustment.
(2) Credit Risk weighted assets is calculated by applying the respective credit risk-weights to our assets, following Central Bank regulations. It does not include market risk or operational risk.
(3) Risk weighted assets is calculated by multiplying the operational risk and market risk by 12.5 and adding the credit risk weighted assets.
238
~~(1)~~         ~~Credit risk weighted assets is calculated by applying the respective credit risk-weights to our assets, following Central Bank regulations. It does not include market risk or operational risk.~~
~~(2)~~         ~~Risk weighted assets is calculated by multiplying the operational risk and market risk by 12,5 and adding the credit risk weighted assets.~~
Capital Expenditures

In the course of our business, our capital expenditures are mainly related to infrastructure and organizational and IT system development. In general terms, our capital expenditures are not significant when compared to our total assets.

We expect that capital expenditures in ~~2018~~2021 will be related to infrastructure, IT systems development and properties. We anticipate to fund such capital expenditures with cash flow from operating activities.

~~Item 5.C~~~~Research and Development, patents and licenses, etc.~~
Item 5.C Research and Development, patents and licenses, etc.

Other than our technology program, we do not have any significant policies or projects relating to research and development, and we own no patents or licenses. See “Item 4.B Business Overview—Information Technology and Operations” in ~~our 2016 Form 20-F.~~this annual report.

~~Item 5.D~~~~Trend Information~~
Item 5.D Trend Information

We believe that the macroeconomic environment and the following trends in the Argentine financial system and in our business have affected and will, for the foreseeable future, continue to affect our results of operations and profitability. Our continued success and ability to increase our value to our shareholders will depend upon, among other factors, economic growth in Argentina and the corresponding growth of the market for long-term private sector lending and access to financial products and services by a larger segment of the population.

The analysis should be read in conjunction with the discussion in “Item 3.D Risk Factors” and taking into consideration that the Argentine economy has been historically volatile, which has negatively affected the volume and growth of several sectors, including the financial system.

Related to Argentina

In response to the COVID-19 pandemic, countries around the world, including Argentina, have adopted extraordinary measures to contain the spread of the virus. As a result of these measures imposed, the different countries have shown an immediate impact on their economies with a rapid drop of the production and activity indicators.
As a response, most governments implemented fiscal aid packages to sustain the income of part of the population and reduce the risks of breakdown in payment chains, avoiding financial and economic crises, as well as company bankruptcies. Argentina was no exception, with the Government acting as soon as the pandemic was declared.
In Argentina, the first case of COVID-19 was recorded on March 3, 2020. As a result, the Argentine government adopted multiple measures in response to the pandemic, including a nationwide mandatory lockdown that began on March 19, 2020 and was extended several times, until November 6, 2020 when the country shifted towards a “social distancing” phase, instead of a strict lockdown. After a sharp decline in economic activity in the second quarter of 2020, the progressive relaxation on mobility restrictions resulted in a rebound of the economic activity, showing eighth months of consecutive growth, recovering almost 90% of the COVID-19 drop.
239
Argentine GDP is expected to improve in 2021 due to a very favorable statistical base effect from 2020, and to benefit from favorable external conditions following the increase in commodities prices. Nevertheless, a second outbreak of the COVID-19 is taking place, and if the speed of vaccination does not progress at a good pace, further restrictions on mobility may be implemented in addition to the restrictions imposed on April 8, 2021. If this occurs, these limitations would cause a greater fiscal effort for the Government, and since Argentina does not have access to international financial markets, it could be financed with an increase of the monetary base as was the case in 2020, with the resulting impact on macroeconomic variables including inflation.
According to recent IMF estimates, the world economy is expected to grow by 5.5% in 2021 (reflecting an increase compared to prior forecasts). Said recovery would be due to a 4.3% growth of advanced economies and a 6.3% growth of the emerging economies. The IMF considers that said growth will vary from country to country depending on both access to vaccines and the vaccination rate in each country and the efficiency of policies adopted to mitigate the effect of the crisis. The IMF also indicates that if vaccines are not properly distributed worldwide, new mobility restrictions could be imposed that would hinder the economic recovery.
In Argentina, two positive international aspects could help improve the level of activity. First, a forecast 8.1% improvement of the world’s trade for 2021 after a sharp fall of approximately 9.6% in 2020. According to IMF estimates, prices of agricultural commodities will grow by 1.4% in 2021, while in the case of the two major trade partners of Argentina, Brazil and ~~financial environment going forward~~China, the Brazilian economy will show a 3.6% recovery and the Chinese GDP will grow by 8.1% which could boost Argentine exports. However, the above estimates are subject to the risks associated with a second or third COVID-19 wave that would impose further mobility restrictions and eventually the closing of borders which would affect global trade. Besides, there will be another two relevant events during 2021 in ~~Argentina~~Argentina: the mid-term elections in October and the negotiation of a new agreement with the IMF.
Argentine economic consulting firms that participate in the REM (Spanish acronym for Relevamiento de Expectativas de Mercado, or Market Expectations Report) published on April 6, 2021 by the Central Bank expect an economic growth rate of 6.7% in 2021. They estimate that the GDP would increase during the first and second quarters of 2021 by 1.9% and 0.2% (deseasonalized), respectively.
Likewise, the inflation rate is expected to rise from 36.1% (at the end of 2020) to 46.0% (year-on-year variation - December-December) in 2021. Analysts estimate a decrease in inflation rate for 2022, reaching a 39.3% rate at the end of the year. The nominal peso/dollar exchange rate is expected to be ~~significantly influenced by the presidential elections held on November 22, 2015,~~Ps.115.0/US.$ at year end, which ~~resulted in Mr. Mauricio Macri being elected President~~implies a year-on-year depreciation of ~~Argentina. The Macri administration is expected to adjust longstanding fiscal~~36.7% and monetary policies that have resulted in recurrent public sector deficits, inflation and pervasive foreign exchange controls and limited foreign investment. Sustainable economic growth and improved employmentwhich would imply an acceleration in the ~~short~~devaluation rate against 2020.
240
We cannot predict, particularly due to the uncertainties of the ongoing COVID-19 pandemic, including how long current conditions will persist, whether future global and ~~medium term~~Argentine economic performance will ~~depend upon~~differ materially from the ~~manner in which the above-mentioned issues are addressed~~IMF and ~~may develop adversely if the issues are not addressed adequately.~~REM forecasts.

A negative growth performance of the Brazilian economy (Brazil is Argentina’s main trade partner) may have a negative impact on Argentine exports and the overall level of economic and industrial activity (particularly with respect to the automotive industry). The international financial environment may also result in a devaluation of regional currencies and exchange rates, including the Peso, which would likely also cause volatility in Argentina.
Going forward, our ability to maintain positive nominal growth rates will remain a challenge for as long as the current level of foreign exchange controls and restrictions affecting capital flows remain in place.
Related to the Argentine Financial System

~~We expect that the~~Argentina has a small and under-penetrated financial system ~~will continue growing, strongly supported by an increase of savings into bank deposits~~when compared to ~~be used for loans~~other countries in Latin America, and we believe it has potential room to grow when the ~~private sector, with positive real interest rates intended to encourage savings over consumption. These greater savings will be used mainly for loans to finance production~~economic environment stabilizes, and ~~this will materially increase investment rates at country level which will allow a sustained long-term growth.~~inflation is normalized.

~~On December 17, 2015,~~As a result of the ongoing COVID-19 pandemic and the government measures taken to contain the virus, together with the consequent disruption in economic activity, despite the recovery in economic activity seen in the second falf of 2020 and early 2021, the credit dynamic recovery is not taking place. Instead, we may see a lower growth than expected in loans.
Moreover, certain of the government measures aimed at ameliorating economic conditions may further affect the revenues of the financial system. In 2020 a relevant portion of assets and liabilities of the banking industry became subject to increased regulation both in volumes and interest rates, thus impacting the financial margin of the banks. At the same time, regulation restricted the ability of banks to charge fees on certain services. We expect this trend to continue in 2021, and that the Central Bank ~~repealed regulations related to~~will continue promoting and ruling credit lines at subsidized interest ~~rate ceilings for personal loans, pledge loans~~rates, and ~~credit card loans and~~imposing minimum ~~interest~~ rates on time deposits.
Notwithstanding the challenging macroeconomic environment, the argentine financial system is solid, with high levels of liquidity and solvency.
Asset quality has been impacted by Central Bank’s regulations in 2020 including (i) the easing on debtor classifications (adding a 60 days grace period before the loan is classified as non-performing) which was introduced in March 2020 and was extended until March 31, 2021, and (ii) the relief programs ruled allowing debtors to defer their loan payments originally maturing between April 2020 and March 2021, together with the automatic rescheduling of unpaid credit card balances due April 2020 and September 2020. As a consequence, according to information from the Central Bank, delinquency ratios have declined during 2020, although the lifting of the ~~date~~above mentioned regulations since April 2021 is expected to derive in a deterioration in asset quality in the financial system. See “Item 3.D—Risk Factors—Risks related to the Argentine financial system—Our asset quality and that of ~~this annual report, interest rates for personal loans, pledge loans and credit card loans and time deposits may be freely agreed upon~~
~~among~~other financial institutions may deteriorate if the Argentine private sector does not fully recover” and ~~their customers. For more information, see “~~~~Item 4.B~~ “Item 4.B.—Business ~~overview—~~Overview—Argentine Banking ~~Regulation—Liquidity and Solvency Requirements—Interest rate and fee regulations~~.Regulations—Government Measures in Response to the Ongoing COVID-19 Pandemic.”

~~Financial institutions are expected to continue working to improve efficiency and keep administrative expenses under control.~~
Related to Us
~~We expect the level of activity of all of our subsidiaries to reflect any improvement in the economic context.~~

We intend to maintain prudent financial risk management policies and to continue improving our operating ~~efficiency.~~efficiency, in a year we believe will be marked by high levels of economic uncertainty and volatility. Loan growth will largely depend on the size and strength of the economic rebound, advance in the vaccination program, along with consumer and investor confidence.

~~We will pursue increased optimization and diversification~~Supervielle’s management continues to actively monitor the evolution of the ~~Bank’s deposit base,~~ongoing COVID-19 pandemic and the impact it may have on the business. Measures have been taken rapidly as the situation continued to evolve, focusing mainly on protecting the Company’s employees and customers and ensuring the continuity of business operations, but the pandemic appears to be far from being controlled.
The COVID-19 pandemic and measures established by the regulator and government to contain the spread of the virus have accelerated the adoption of digitalization in ~~particular by giving priority to new demand savings and deposit accounts. The Bank will also seek to increase loan volumes~~a traditionally cash-oriented culture. As a result, in the retail banking market by offering innovative products and services tailored to the needs of different socioeconomic and income segments, in particular high net worth and upper-middle-income individuals, senior citizens, entrepreneurs and small businesses. Our corporate banking will remain focusedcurrent low-touch economy we are rapidly executing on ~~SMEs and large-sized companies, prioritizing secured lending and maintaining a diversified corporate loan portfolio by continuing to limit exposure to each company.~~
~~Our consumer financing segment will seek to increase loans and credit cards volumes through its main channels, Walmart Argentina and Hipertehuelche. Supervielle Seguros will seek to continue growing~~our digital transformation strategy and introducing new ~~products. Espacio Cordial is expected~~functionalities across our business segments, while keeping high cybersecurity standards. In 2020 we saw strong growth in digital and automatic transactions across our company
and our different business segments. As an example, in 2020 91% of total monetary transactions at the bank

were conducted through our digital and automatic channels
compared to 79% in 2019. At the same time
InvertirOnline, our online broker, experienced a spike in usage with new accounts increasing over 128% year-on-year, and transactions increasing 128% in 2020 compared to 2019.
In a complex scenario, we will continue ~~offering its products~~to balance risk and ~~services~~profitability by managing the credit cycle, and excess liquidity through asset and liability management. We may continue to ~~more~~face further pressure from higher cost of funds resulting from the floor on interest rates on time deposits and subsidized rates on mandatory credit lines to SMEs, while regulation may continue to impact fees. In terms of expenses, we will continue to exercise strict control on recurring costs. While investments in accelerating our digital transformation strategy and in scaling up the service model pilots across the bank branches network will result in some temporary increases in costs, this will contribute to enhance efficiency in the longer term. Higher turnover tax rates along with the recent extension of the ~~Bank’s customers~~turnover tax to securities from the Central Bank in the Citi of Buenos Aires may also affect expenses.
In terms of asset quality, we could see a potential deterioration in non-performing loans during the second and ~~increasing~~third quarters of 2021 after the ~~number~~grace periods from the loan rescheduling programs implemented by the Central Bank, begin to expire in April. That moment will reflect more accurately the behavior of ~~products and services it offers. SAM will seek to continue growing~~our clients in terms of ~~assets under management and in terms of its funds family.~~their payment capacity.

~~We will also continue seeking opportunities~~In turn, we expect capital and liquidity to ~~further increase our business through acquisitions of banking and insurance assets.~~
~~Guidelines Towards Conversion to IFRS~~
On February 12, 2014, the Central Bank, through Communication “A” 5541, established the general guidelines towards conversion to IFRS as issued by the International Accounting Standards Board (IASB) for preparing financial statements of the entities under its supervision.
According to such convergence process, IFRS have been adopted for the fiscal year beginning on January 1, 2018. IFRS transition date pursuant to IFRS 1 “First-time Adoption of IFRS” was scheduled for January 1, 2017.remain at adequate levels underscoring long-term sustainability.

~~In accordance~~We will continue executing our transformation strategy with the goal of driving sustainable growth as demand resumes while enhancing our ~~consolidated~~current competitiveness, remaining flexible under this particularly volatile and challenging scenario. The ultimate impact of the pandemic on its business, results of operations and financial ~~statements as~~condition remains highly uncertain and will depend on future developments outside of ~~December 31, 2017,~~ the ~~estimated effect that~~Company control, including the ~~conversion to IFRS will have on our reported equity is a decrease~~intensity and duration of ~~approximately~~ ~~4.8%. See Note 33 to our consolidated financial statements.~~the pandemic, whether new variants of the COVID-19 arise, and the government measures in response of the COVID-19 pandemic, including the vaccination program.

~~The figures shown in that note may be subject to change and may only be considered definitive when audited financial statements for fiscal year 2018 are released.~~
~~Item 5.E~~~~Off-balance sheet arrangements~~
Item 5.E Off-balance sheet arrangements

Our off-balance sheet risk mainly arises from the Bank’s activities.
242
In the normal course of its business, the Bank is a party to financial instruments with off-balance sheet risk which are entered into in order to meet the financing needs of its customers. These instruments expose us to credit risk in addition to the amounts recognized on our consolidated balance sheets. These financial instruments include stand-by letters of credit and guarantees granted.
We also have off-balance sheet commercial commitments arising from our lease agreements for our administrative buildings and offices (including our headquarters), branches, senior citizens dedicated branches, sales and collection centers and storage properties. See “~~Stand-by Letters of Credit and Guarantees Granted~~~~” and~~ “Commitments under Lease Agreements sections” in Item ~~5.F.~~5.F to this annual report.

~~Item 5.F~~~~Contractual Obligations~~
Item 5.F Contractual Obligations

The table below identifies the principal amounts of our main ~~on-balance sheet~~ contractual obligations, their currency of denomination, remaining maturity and interest rate and the breakdown of payments due, as of December 31, ~~2017~~2020:

Amounts due by period(1)

Maturity

Annual
Interest Rate

Less than
1 year

1 - 3
years

3 - 5
years

After
5 years

Total at
December 31,
2017

(in thousands of Pesos)

Deposits

2018-2019

60,796,603

373

—

—

60,796,976

Central Bank

2018

6,514

—

—

—

6,514

International banks and institutions

2,803,801

5,409

—

—

2,809,210

Short Term Financial Loans (U.S.$)

2016

2,803,801

5,409

—

—

2,809,210

Medium Term Financial Loans (U.S.$)

2017

—

—

—

—

—

Financing received from Argentine financial institutions

353,416

350,049

207,718

—

911,183

Short Term Financial Loans (Pesos)

2018

27.0%

131,719

—

—

—

131,719

Long Term Financial Loans (Pesos)

2014-2022

19.0%-27.0%

221,697

350,049

207,718

—

779,464

Unsubordinated corporate bonds

3,010,018

9,913,653

621,265

—

13,544,936

Negotiable Obligation (Pesos) Class XIII

2019

BADLAR + 6,25%

—

26,214

—

—

26,214

Negotiable Obligation (Pesos) Class VI

2018

BADLAR + 3.5%

534,885

—

—

—

534,885

Negotiable Obligation (Pesos) Class A

2020

BADLAR + 4.50%

1,323,167

6,754,733

—

—

8,077,900

Negotiable Obligation (Pesos) Class B

2019

BADLAR + 3.25%

166,685

795,685

—

—

962,370

Negotiable Obligation (Pesos) Class C

2021

BADLAR + 4.25%

181,431

583,276

621,265

—

1,385,972

Negotiable Obligation (Pesos) Class XI

2018

BADLAR + 3.57%

226,747

—

—

—

226,747

Negotiable Obligation (Pesos) Class XIII

2018

BADLAR + 4.00%

172,005

—

—

—

172,005

Negotiable Obligation (Pesos) Class XIV

2019

BADLAR + 3.50%

149,265

632,019

—

—

781,284

Negotiable Obligation (Pesos) Class XV

2019

BADLAR + 3.75%

111,645

441,641

—

—

553,286

Negotiable Obligation (Pesos) Class XVI

2019

BADLAR + 4.25%

144,189

680,085

—

—

824,274

Subordinated loan

47,889

518,330

270,253

—

836,473

2017

Fixed 7%

47,889

518,330

270,253

—

836,473

Others

2,911,748

—

—

—

2,911,748

Total

69,929,990

10,787,814

1,099,236

—

81,817,040

~~(1)~~         ~~Reflects penalties payable to the Central Bank in connection with the Bank’s clients’ bounced checks.~~
Maturity Less than 1 year 1 - 3 years 3 - 5 years After 5 years Total at December 31, 2020

(in thousands of Pesos)
Deposits 179,907,568 530 — — 179,908,098
Liabilities at fair value through profit and loss 2020 2,005,724 — — — 2,005,724
International banks and institutions
Short-Term Financial Loans (U.S.$) — — — — —
Mid-Term Financial Loans (U.S.$) — — — — —
Financing received from Argentine financial institutions 5,639,231 507,681 25,191 — 6,172,103
Short-Term Financial Loans (Pesos) 5,639,231 5,639,231
Mid-Term Financial Loans (Pesos) — 507,681 — — 507,681
Long-Term Financial Loans (Pesos) — — 25,191 — 25,191
Unsubordinated corporate bonds 4,378,105 1,821,578 — — 6,199,683
Negotiable Obligation (Pesos) Class A 2020 693,837 — — — 693,837
Negotiable Obligation (Pesos) Class B 2021 1,134,745 1,821,578 2,956,323
Negotiable Obligation (Pesos) Class C 2023 2,549,523 — — — 2,549,523
Negotiable Obligation Class III 2020 — — — — —
Subordinated corporate bonds 1,211,262 — — — 1,211,262
Subordinated negotiable obligations – Class III and IV 2020-2021 1,211,262 — — — 1,211,262
Others 7,026,202 883,176 — — 7,909,378
Total 200,168,092 3,212,965 25,191 — 203,406,248

~~Stand-by Letters of Credit and Guarantees Granted~~
Stand-by letters of credit and guarantees granted are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Guarantees granted are surety guarantees in connection with transactions between two parties.
We use the same credit policies in issuing stand-by letters of credit and making guarantees as we do for granting loans. In the opinion of our management, our outstanding commitments do not represent unusual credit risk.
The contractual amount of these instruments represents the maximum possible credit risk should the counterparty draw down the commitment or we fulfill our obligation under the guarantee, and the counterparty subsequently fails to perform according to the terms of the contract. Most of these commitments and guarantees expire without the counterparty drawing on the credit line or a default occurring or without being drawn. As a result, the total contractual amount of these instruments does not represent our future credit exposure or funding requirements. Further, certain commitments, primarily related to consumer financing are cancelable, upon notice, at our option.
~~The following table sets forth the maximum potential amount of future payments under stand-by letters of credit and financial guarantees.~~

Amounts Due by Period

Less than
1 Year

1-3
Years

3-5
Years

After 5
Years

Total at
December 31,
2017

(in thousands of Pesos)

Guarantees

326,314

749,338

676

330,944

1,407,272

Stand-by letters of credit and acceptances

172,988

—

—

—

172,988

Total Off Balance Sheet

499,302

749,338

676

330,944

1,580,260

Commitments under Lease Agreements

Our commitments under our lease agreements are mainly rental payments. We can terminate lease agreements at any time at low or no cost at our option.

The following table sets forth the maximum potential amount of future payments under our lease agreements.

Amounts Due by Period

Amounts Due by Period

Less than 1 Year 1-3 Years 3-5 Years After 5 Years Total as of December 31, 2020

Less than
1 Year

1-3
Years

3-5
Years

After 5
Years

Total As
December 31,
2017

(in thousands of Pesos)

(in thousands of Pesos)
Lease commitments

225,024

354,493

98,370

45,620

723,507

723,905 492,684 166,599 184,012 1,567,200
Total commercial commitments

225,024

354,493

98,370

45,620

723,507

723,905 492,684 166,599 184,012 1,567,200

~~Item 5.G~~~~Safe Harbor~~
Item 5.G Safe Harbor

See the discussion at the beginning of this annual report under ~~the heading~~ “Forward-Looking Statements” for forward-looking statement safe harbor provisions.
243
Item 6. Directors, Senior Management and Employees

~~Item 6.~~~~Directors, Senior Management and Employees~~
Board of Directors

According to our bylaws, our Board of Directors may be composed of a minimum of three and a maximum of nine directors, and ~~the~~ shareholders may also appoint an equal or lesser number of alternate directors. As of the date of this annual report, our Board of Directors is composed of eight directors. There are no alternate directors. ~~All of our directors reside in Argentina.~~

Directors and their alternates, if any, are appointed for a term of two years by our shareholders during the annual ordinary shareholders’ meeting. Directors may be reelected. Alternate directors replace directors in the order in which they were elected. ~~Our Board of~~ Directors ~~is currently composed of eight members, half of whom~~ are elected annually in staggered elections. ~~Pursuant~~Despite their two-year appointment, pursuant to section 257 of the ~~Argentine Corporate Law, the~~AGCL, directors will maintain their positions until new directors are appointed at the following annual ordinary shareholders’ ~~meeting where directors are appointed. See “~~~~Description of Bylaws and Capital Stock—Election of Directors.~~”meeting.
The latest election relating to our Board of Directors took place at the ordinary and extraordinary shareholders’ meeting held on April ~~24, 2018,~~27, 2021, in accordance with Article ~~Nine~~9 of our ~~bylaws as amended at the extraordinary shareholders’ meeting held on October 7, 2015, and as described in “~~~~Description of Bylaws and Capital Stock—Election of Directors~~~~.” The amendment to Article Nine of our bylaws was approved by means of Resolution No.18,024 of the CNV, and registered with the IGJ on July 5, 2016.~~bylaws.

During the first meeting after directors have been appointed, they must appoint a chairman and vice-chairman of the board, or, if considered appropriate, a first vice-chairman and a second vice-chairman. The vice-chairman or, if applicable, the first vice-chairman, would automatically replace the chairman in the event that the chairman is absent, resigns, ~~deceases~~dies or faces any other impediment to serve as chairman, and the second vice-chairman, if applicable, would replace the first vice-chairman. In the absence of any of these directors or chairmen, the Board of Directors may appoint who will serve as chairman or chairmen. The chairman of the board may cast two votes in the case of a tie. ~~These provisions were incorporated by amendment to Article Nine of our bylaws and approved at our ordinary and extraordinary shareholders’ meeting held on April 19, 2016.~~

The Board of Directors functions and acts upon the majority vote of its members present at its meetings either physically or via any form of audio and visual simultaneous communication.

The following table sets forth the composition of our Board of Directors as of ~~the date of this annual report:~~April 27, 2021:

Name
Title
~~Title~~
Date of first
appointment to
the ~~Board(1)~~Board⁽¹⁾
Date of expiration of current term⁽²⁾
~~Date of~~
~~expiration of~~
~~current term(3)~~
~~Occupation~~
Date of Birth
Julio Patricio Supervielle
Chairman of the Board
June 9, ~~2008(2)~~
2008
December 31, ~~2018~~
2022
~~Business Management~~
December 13, 1956
Jorge Oscar Ramírez
First Vice-Chairman of the Board
April 15, 2011
December 31, ~~2018~~
2021
~~Certified Public Accountant~~
June 26, 1961
Emérico Alejandro Stengel
Second Vice-Chairman of the Board
Director
July 13, 2010
December 31, ~~2019~~
2021
~~Industrial Engineer~~
December 17, 1962
Atilio Dell’Oro Maini Director and Corporate Secretary September 28, 2011 December 31, 2022 February 13, 1956
Eduardo Pablo Braun Director April 26, 2019 December 31, 2022 June 25, 1963
José María Orlando Director August 12, 2020 December 31, 2021 September 25, 1964
244
Name Title
Date of first
appointment to
the Board⁽¹⁾
Date of expiration of current term⁽²⁾
Date of Birth
Laurence Nicole Mengin de Loyer
Director
~~March 23, 2010~~
April 28, 2020
December 31, ~~2019~~
2021
~~Business Management~~
May 5, 1968
~~Atilio Dell’Oro Maini~~
Hugo Enrique Santiago Basso
Director
~~September 28, 2011~~
April 26, 2019
December 31, ~~2018~~
2022
~~Lawyer~~
~~February 13, 1956~~
~~Richard Guy Gluzman~~
~~Director~~
~~April 15, 2011~~
December ~~31, 2018~~
~~Business Management~~
~~July 11, 1953~~
~~María Gabriela Macagni~~
~~Director~~
~~October 7, 2015~~
~~December 31, 2019~~
~~Chemical Engineer~~
~~January 13, 1964~~
~~Jorge Luis Mocetti~~
~~Director~~
~~April 27, 2017~~
~~December 31, 2019~~
~~Lawyer~~
~~September 28, 1960~~
3, 1979

(1) With the exception of Julio Patricio Supervielle and Laurence Nicole Mengin de Loyer, the respective date of appointment to the Board of each director is also the date on which each director first joined Grupo Supervielle. Julio Patricio Supervielle has held positions in the Board since March 21, 2000, however he has continuously served in our board since 2008. Laurence Nicole Mengin de Loyer first joined the Board on March 23, 2010, where she served as director until April 26, 2019.
~~(1)~~         ~~With the exception of Julio Patricio Supervielle, the respective date of appointment to the Board of each director is also the date on which each director first joined Grupo Supervielle.~~
~~(2)~~         ~~Julio Patricio Supervielle held positions within the Board since March 21, 2000, but as of 2008 has served on our board continuously.~~
~~(3)~~         Notwithstanding the expiration date stated above, pursuant to section 257 of the Argentine Corporate Law, the directors maintain their positions until the following annual ordinary shareholders’ meeting where directors are appointed.
(2) Notwithstanding the expiration date stated above, pursuant to section 257 of the AGCL, the directors maintain their positions until the following annual ordinary shareholders’ meeting where directors are appointed.

There are no family relationships between the abovementioned current members of our Board of ~~Directors.~~Directors, except for Julio Patricio Supervielle and Hugo Enrique Santiago Basso (uncle and nephew, respectively).

The following are academic and professional backgrounds of the members of the board. ~~The business address of each of the members~~
Julio Patricio Supervielle is Chairman of the Board ~~is Bartolomé Mitre 434, 5th floor,~~of Grupo Supervielle and CEO of Grupo Supervielle. He also serves as Chairman of Banco Supervielle, Cordial Compañía Financiera, Tarjeta Automática, Sofital, InvertirOnline, InvertirOnline.com Argentina, Espacio Cordial de Servicios, Bolsillo Digital and Futuros del Sur, subsidiaries of Grupo Supervielle. With over 35 years of financial industry experience, he joined the family business Exprinter-Banex in 1986 where he held various positions in Banco Banex S.A., including General Manager, Director and Chairman of the Board. He has been leading Grupo Supervielle since early 2000. During this time, Grupo Supervielle achieved significant growth in terms of net worth, assets and deposits, successfully completed some of its most significant acquisitions and launched its initial public offering (2016) on the New York Stock Exchange and the Buenos Aires ~~Argentina.~~
~~Julio Patricio~~Stock Exchange. Mr. Supervielle ~~received~~has a degree in Business Administration from Universidad Católica Argentina, ~~and~~ holds a master’s degree from The Wharton School of the University of ~~Pennsylvania. He~~Pennsylvania and attended the Global CEO Program organized by Wharton, IESE and CEIBS. ~~He joined~~As Chairman and CEO, Mr. Supervielle brings to the ~~family business~~Board his expertise and proven leadership in the ~~year 1986 where he held several positions at Banco Banex S.A., including: General Manager, Director,~~financial industry as well as valuable insight into our strategy formulation, culture crafting, risk management and ~~Chairman.~~compensation, providing an essential link between management and the Board. He ~~currently serves~~also provides the Board with important perspectives on innovation, management development and industry challenges and opportunities.
Jorge Oscar Ramírez is Grupo Supervielle’s First Vice Chairman and chairs the Global Risk Management Committee. He has served as ~~Chief Executive Officer~~CEO of Grupo ~~Supervielle;~~Supervielle from June 2018 to June 2020 and CEO of Banco Supervielle from February 2019 to June 2020. Up to June 2020 he was also Chairman of the ~~Boards~~Board of ~~Directors~~Supervielle Seguros, Vice Chairman of Cordial Compañía Financiera and member of the Board of several other subsidiaries of Grupo ~~Supervielle, Banco Supervielle, CCF~~Supervielle. He previously served as Regional President for Argentina, Uruguay and ~~Tarjeta.~~
the Andean region at BankBoston and served on the BoD of Alpargatas SAIC, Sigdopack Argentina and Alico. Jorge ~~Oscar Ramírez~~ is a ~~certified public accountant,~~Certified Public Accountant with a degree from ~~the~~ Universidad de Buenos ~~Aires. He also~~Aires and holds an Executive Management Program degree (PADE) from ~~ESE, the Business School~~ESE. With almost 40 years of ~~the Universidad de Los Andes,~~financial services experience both in ~~Santiago, Chile. From 1981 to 1985, he worked~~Argentina and in the ~~International~~Region and more than 16 years in C-level positions, Mr. Ramírez brings to the Board extensive industry knowledge, strategic perspective and executive experience in Public Companies. He has broad experience in a wide variety of fields such as Finance and Capital Markets, ~~division of Banco Nacional de Desarrollo~~Investor Relations, Risk Management, Executive Compensation, Government, Legal and Regulatory issues, Executive Compensation and International Business. Having served for more than ten years in Argentina (National Development Bank). He subsequently joined the First National Bank of Boston (later BankBoston) where he served as a lending officer and team leader in the Corporate Banking Division (1985 1989), then as an Investment Banking Officer, Senior Investment Banker and Managing Director of Boston Investment Group (BIGSA), the investment banking arm of First National Bank of Boston (1989 1995). From 1995 to 1997 he served as the Country Manager for First National Bank of Boston in Uruguay, and at the end of 1997, he served in the same capacity in Chile. In late 2000, he assumed regional responsibilities as Regional President for the Andean Region which included Chile, Peru, Colombia and Panama. In 2003, he returned to Argentina as CEO of BankBoston. In 2004, he assumed Regional responsibilities as Regional President for Argentina and Uruguay. Mr. Ramirez left BankBoston in December 2005 after the announcement of its sale to Standard Bank of South Africa. From May 2006 to January 2011, he was a partner of Prisma Investment S.A., a financial advisory firm in Argentina. He served on the Board of Directors of Alpargatas SAIC, the Argentine subsidiary of Alpargatas Brazil; of ALICO, the life insurance subsidiary in Argentina of AIG, later sold to Metlife, and of Sigdopack Argentina, a subsidiary of the Chilean Sigdo Koppers Group. He is also a founding partner of Fondos Online (fol.cl), an online brokerage house in Chile founded in 2009. He is currently First Vice-Chairman of theseveral Boards of ~~Directors~~publicly listed or subsidiaries of publicly listed companies, he also provides insights on Corporate Governance matters.
245
E. Alejandro Stengel is the CEO of Banco Supervielle, ~~and~~Second Vice-Chairman of Grupo Supervielle ~~Chairman~~and serves on the boards of Cordial Compañía Financiera, Supervielle Seguros, InvertirOnline, Futuros del Sur and Bolsillo Digital, subsidiaries of Grupo Supervielle. Prior to his current position Mr. Stengel was Banco Supervielle’s COO, with operational responsibilities for Personal & Business Banking, Corporate Banking, Operations, IT and Planning. He focused on streamlining the ~~Board~~organizational structure, launching the Bank’s Customer Centric strategy and implementing the Agile and Digital Transformation Program. As board member of ~~Directors~~Grupo Supervielle he had a central role in the formation and development of Supervielle Seguros ~~Vice-Chairman of the Board of Directors of~~(Insurance) and Espacio Cordial (Non-Financial Services). Before joining Grupo Supervielle, Mr. Stengel was the CEO of Los Grobo Agropecuaria, a leading Mercosur agribusiness company that won the National Quality Award under his tenure. As a Partner of Booz Allen Hamilton, a global management consulting firm, he worked with multinational and ~~a member of~~large corporations in Latin America, the ~~Board of Directors of CCF.~~
~~Emérico Alejandro~~United States and Europe on Strategy, Governance, Organization and Operations. He led strategic integration and operations enhancement projects in Financial Services. Mr. Stengel ~~obtained~~began his career in Corporate Banking at Citibank and Banco Santander. He earned an Industrial Engineering degree ~~in industrial engineering~~ from the Universidad de Buenos Aires and holds an MBA from The Wharton School of the University of Pennsylvania. ~~He served~~Mr. Stengel brings to the Board of Directors strong senior management experience and expertise in Strategy and Organizational Transformation, developed in regional and International business settings. His participation in Boards and successful Capital raising efforts (including an IPO) add Corporate Governance and Investor Relations to his contributions.
Atilio Dell´Oro Maini serves as ~~corporate banking officer at Citibank~~Director of Grupo Supervielle, First Vice Chairman of Banco Supervielle, Chairman of Micro Lending, First Vice Chairman of Cordial Compañía Financiera, Vice Chairman of Supervielle Seguros, Vice Chairman of Sofital, Vice Chairman of Espacio Cordial de Servicios, Vice Chairman of Tarjeta Automática, Vice Chairman of InvertirOnline, Vice Chairman of InvertirOnline.com Argentina, Vice Chairman of Bolsillo Digital and ~~Banco Santander. Subsequently,~~Vice Chairman of Futuros del Sur, subsidiaries of Grupo Supervielle. In 2003, he ~~became~~joined the law firm Cabanellas-Etchebarne-Kelly as a Senior Partner of ~~Booz Allen Hamilton,~~the Banking and Capital Markets divisions. In 1997, he worked at the London-based global law firm Linklaters & Paines. He worked in New York City as a ~~global management consultancy,~~Foreign Associate at the law firm White & Case in 1987 and Simpson Thatcher & Bartlett from 1988-1989. Previously, he joined the law firm Cárdenas, Cassagne & Asociados and was made Partner in 1990. He has extensive experience advising banks and other financial entities, corporations and governments with respect to all types of international and domestic banking and financial transactions. Atilio is a lawyer, with degrees in Political Science and Agricultural Production. He also completed the Program of Instruction for Lawyers at Harvard Law School. He is a Professor at the Master’s in Business Law program at Universidad de San Andrés, as well as a member of the Bar Association of the city of Buenos Aires. Mr. Dell’Oro Maini brings to the Board +30 years of experience in the legal and financial sectors with extensive expertise in mergers and acquisitions, international capital market transactions and strategic financial issues. Mr. Dell’Oro Maini offers the company valuable perspective and guidance in corporate governance, regulatory framework and Board effectiveness. He also has significant knowledge and direct involvement in issues related to CSR/ESG initiatives.
246
Eduardo Pablo Braun is an Industrial Engineer graduated from Universidad de Buenos Aires, where he ~~worked~~won the Bunge & Born scholarship for his academic excellence and holds an MBA with ~~multinacional~~an emphasis in Finance and ~~large corporations locally,~~Marketing from The Wharton School, University of Pennsylvania, 1990. He is an international lecturer in ~~Latin America,~~Leadership and Innovation, a business consultant and the author of ‘People First: Chief Emotions Officers’. He taught in programs at UC Berkeley, as a special guest at prestigious institutions such as IMD, Babson College, Yale School of Management and lectures in various academic and business forums in Singapore, Dubai, Germany, the United States and ~~Europe on strategy, corporate governance, organization~~other countries. He was a professor at Universidad Católica Argentina and ~~operations. He led several strategic integration and operations enhancement projects~~is an expert in ~~the financial services industry. Later~~leadership at Universidad de San Andrés. From January 2016 til December 2019 he was a director of Aeropuertos Argentina 2000 appointed ~~CEO~~by the Argentine Government. He was Director of the HSM Group between 1999 and 2011, in charge of the Global Relations Direction with the Speakers. He is a member of the Board of multinational compnay Cuvelier Los ~~Grobo Agropecuaria,~~Andes (French wines). In 2018 he was responsible for creating and conducting the Advisory Council for the Design of the Innovation Park of the City of Buenos Aires. Previously he was a ~~leading agribusiness company~~founding partner of MIG, a management consultancy firm specialized in strategies and business development. His experience as a management consultant began with Booz Allen & Hamilton at the Paris offices in 1990, where he worked on various projects for Europe, Brazil and Argentina, where he combined his experience as a consultant with that ~~won~~of executive positions. He participates or has participated in several NGOs such as the ~~National Quality Award under his office. In 2010~~Clinton Global Initiative, of which he ~~joined~~was a member for 5 years, EMA (Multiple Sclerosis Argentina), is a member of the Council of ICANA (Argentine Cultural Institute of North America) and President of the G25 Foundation. He currently serves as an Independent Director of Grupo Supervielle S.A. Mr. Braun provides to the Board of Directors his expertise in corporate governance, strategy and organizational culture. Including his international business experience of working experience based in Europe and as Director of an international company in the knowledge economy. As author and international speaker Mr. Braun has helped companies understand and tackle their cultural challenges. Mr. Braun also has experience serving as an outside Director of a subsidiary of a public company.
José María Orlando studied Business Administration at Universidad Católica Argentina. He worked as an officer of Bank Boston between 1986 and 1996, holding different positions in Buenos Aires, London and Boston in the areas of Finance, Treasury and Investment Banking. From 1996 to 1998, he served as CFO and Head of Global Markets for Deutsche Bank, DMG in Argentina. In 2000 he became CFO and CIO of Zurich Argentina. In 2005 he became Corporate Development Director and in 2007 he became CEO and Chairman of Zurich Argentina. In 2010, he was appointed as Latin America CEO of Zurich Global Life. During that term, he also served as Board Member of Zurich-Santander Insurance Americas in several countries. Since 2015, he has been a consultant at Deal Financial Services, rendering advisory services in brokerage, asset management, capital markets and mutual funds to individuals, corporations and institutional investors. He also serves as Vice Chairman of the Board of CIPPEC (Center for Research on Public Policies for Equity and Growth) and is a Director of Clodinet S.A. (Pilara). He is a member of the Board of Colegio Madre Teresa and is Co-Founder and First President of Voces y Ecos, an NGO focused on Media. In the past he was also a Member of the Administration Council and Treasurer of Universidad Católica Argentina; Director of Escuelas de Liderazgo Universitario; Member of the Executive Investment Committee of Máxima AFJP; Member of the Financial Matters Committee of the Argentine Banking Association; Member of the Board of Mercado Abierto Electrónico S.A. and Member of the Administration Council of Club Newman. He has participated as a speaker at numerous international conferences and seminars in the United States, Europe, Latin America and Asia. Since August 2020 he is an Independent Director of Grupo Supervielle S.A. Mr. Orlando brings extensive local and ~~currently serves~~international strategic and financial experience in commercial and investment banking, treasury, general and life insurance, asset management & brokerage through acting during more than 30 years in several international organizations as ~~Second Vice-Chairman of Grupo Supervielle~~CFO, CEO, Director and ~~the Bank; Chairman of Sofital S.A.F. e I.I.~~shareholder. He brings also background in organizational leadership and ~~Espacio Cordial, First Vice-Chairman of CCF and Vice-Chairman of Supervielle Seguros and Tarjeta.~~culture.
247
Laurence Nicole Mengin de Loyer graduated from McGill University in Canada with an undergraduate degree in Business Administration and a master’s degree in Business Administration. She started her career in New York City at the Mergers and ~~Aquisitions~~Acquisitions Division for Banque Nationale de Paris. Afterwards, in Paris, she joined the Apparel Division of Sara Lee Corporation, where she held a number of financial positions in different business units including Financial Analyst, Financial Controller, Chief Financial Officer and European Controller. When Sara Lee Corporation sold its European Apparel Division in 2006, she served as Group Controller of the newly created stand-alone business with responsibilities in the reorganization, financial control, definition and implementation of exit strategies for the private equity fund. In ~~2008,~~2009, as a result of her move to Argentina, ~~she volunteered as Vice-President and Treasurer of a not-for-profit organization dedicated to integrating newly-arrived foreigners to Argentina. In 2009,~~ she joined Banco Supervielle S.A. as Deputy Manager of the Administration Department until her nomination to the Board of Grupo Supervielle in March 2010. She ~~currently serves~~served as aindependent Director of Grupo ~~Supervielle.~~
~~Atilio Dell-Oro Maini~~ ~~is a lawyer, with degrees in Political Science~~Supervielle S.A. between 2016 and ~~Agricultural Production.~~2019. In ~~1984, he joined the law firm Cárdenas, Cassagne & Asociados and~~April 2020, she was made Partner in 1990. He worked in New York City as a Foreign Associate at the law firm White & Case in 1987 and Simpson, Thatcher & Bartlett from 1988-1989. In 1997, he worked at the London-based global law firm Linklaters & Paines. He also completed the Program of Instruction for Lawyers at Harvard Law School. In 2003, he joined the law firm Cabanellas • Etchebarne • Kelly as a Senior Partner of the Banking and Capital Markets divisions. He has extensive experience advising banks and other financial entities, corporations and governments with respect to all types of international and domestic banking and financial transactions. He is a Professor at the Master’s in Business Law program at Universidad de San Andrés, as well as a member of the Bar Association of the city of Buenos Aires. As of the date of this annual report, he serves as a member of the Boards of Directors of Banco Supervielle, Grupo Supervielle and Tarjeta, and Vice-Chairman of the Boards of Directors of Sofital, CCF and Espacio Cordial.
~~Richard Guy Gluzman~~ received a degree in Law from Nanterre University in Paris and a master’s degree in Business Administration from the ESSEC University in Paris. From 1978 to 1995, he worked in France holding various managerial positions in several technological companies (Burroughs S.A., Digital Equipment Corporation, Wang S.A. and JBA S.A.). His career in Argentina started in 1995, when he joined Coming S.A. (France Telecom & Perez Companc Group) as General Manager until 1997. From 1997 through 1999, he served as a member of Globalstar S.A.’s Board of Directors. From 1998 through 2000, he was at the helm of Diveo Broadband Networks S.A. as General Manager and then, from 2000 to 2006, he was a Director of Pegasus Capital, a private equity fund. As of the date of this annual report, he serves asappointed Independent Director of Grupo Supervielle. ~~In previous years he served~~To date, she serves as ~~First Vice-Chairman~~independent Director of ~~the boards of directors of the Bank, CCF~~Biosidus (a biotech company) and ~~as Vice-Chairman of~~Peugeot Citröen Insurance Company. Ms. Loyer brings to the Board of Directors extensive international business experience in a variety of ~~Tarjeta, Sofital~~industries. In addition, she brings expertise in financial control, market discipline and ~~Viñ~~audit, including experience gained as ~~del Monte.~~Chief Financial Officer in a public company. She also brings expertise in global corporate governance and strategy. Laurence also has experience serving as outside Director on other Boards.

~~María Gabriela Macagni~~Hugo Enrique Santiago Basso is an Industrial Engineer graduated ~~with a degree in chemical engineering~~ from Instituto Tecnológico de Buenos Aires (ITBA) and ~~received postgraduate specialization~~holds an MBA from The Wharton School of Business, University of Pennsylvania. He began his career at Banco Banex in ~~business management at Harvard Business School and Stanford Business School. She began her~~2004, where he successfully managed the merger project with Société Générale Argentina. In 2007 he led the startup of the ‘Cordial Negocios’ unit, with a focus on microfinancing. Then, he continued his career asin the consultancy area working for Mars & Co., with responsibilities in competitive strategy for CPG multinationals. For the last five years, he has been residing in California, United States of America, having developed a ~~consultant for Accenture. Subsequently, she joined Citibank Argentina where she worked as an Investment Banking officer and was responsible~~successful career in the financial area for the ~~structuring~~wine industry in high-end brands. After working for Treasury Wine Estates, he joined E&J Gallo, currently overseeing a portfolio of both local and international debt issue transactions. Beginning in 2002, she led the Corporate Bank Restructuring Unit. Afterwards, she joined the Board of Citibank Argentina, supervising Strategic Planning and Business Development areas. Since late 2011, she has served as a Director of Endeavor Argentina, an organization supporting high impact entrepreneurs in scaling their businesses, both in Argentina and globally. She is also a member of the Graduate Council at ITBA. In 2015, she was appointed Director of Grupo Supervielle.
~~Jorge Luis Mocetti~~ graduated as a lawyer from Universidad de Buenos Aires’ Law School. He also attended the Executive Human Recources Program organized by Stephen Ross School at Michigan University (Ann Arbor) and other Executive Programs at Duke University and Ashridge UK. He held Senior business and Human Rescources positions at The Nielsen Company, both in Latin America and Europe, as Country Manager, Senior Vice-President and Director. He also held director positions at Scotiabank and Telecom Argentina.ten luxury wineries. He is ~~a member of the Executive Committee of Axion Energy. He is a lecturer for postgraduate courses at Universidad de San Andrés. He currently serves as a~~ Director of Grupo Supervielle ~~S.A~~S.A., Banco Supervielle S.A., Espacio Cordial de Servicios S.A. and InvertirOnline.com Argentina S.A.U.

Duties and Liabilities of Directors

Directors have the obligation to perform their duties with the loyalty and the diligence of a prudent business person. Under Section 274 of the ~~Argentine Corporate Law,~~AGCL, directors are jointly and severally liable to the company, the shareholders and third parties for the improper performance of their duties, for breaching any law or the bylaws or regulations, if any, and for any damage to these parties caused by fraud, abuse of authority or gross negligence. The following are considered integral to a director’s duty of loyalty: (i) the prohibition on using corporate assets and confidential information for private purposes; (ii) the prohibition on taking advantage, or allowing another to take advantage, by action or omission, of the business opportunities of the company; (iii) the obligation to exercise board powers only for the purposes for which the law, the corporation’s bylaws or the shareholders’ or the Board of Directors’ resolutions were intended; and (iv) the obligation to take strict care so that acts of the board do not go, directly or indirectly, against the company’s interests. A director must inform the Board of Directors and the ~~supervisory committee~~Supervisory Committee of any conflicting interest he or she may have in a proposed transaction and must abstain from voting thereon.
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In general, a director will not be held liable for a decision of the Board of Directors, even if that director participated in the decision or had knowledge of the decision, if (i) there is written evidence of the director’s opposition to the decision and (ii) the director notifies the Supervisory Committee of that opposition. However, both conditions must be satisfied before the liability of the director is claimed before the Board of Directors, the ~~supervisory committee~~Supervisory Committee or the shareholders or relevant authority or the commercial courts.

Section 271 of the ~~Argentine Corporate Law~~AGCL allows directors to enter into agreements with the company that relate to such director’s activity and under arms’ length conditions. Agreements that do not satisfy any of the foregoing conditions must have prior approval of the Board of Directors (or the ~~supervisory committee~~Supervisory Committee in the absence of board quorum), and must be notified to the shareholders at a shareholders’ meeting. If the shareholders reject the agreement, the directors or the members of the ~~supervisory committee,~~Supervisory Committee, as the case may be, shall be jointly and severally liable for any damages to the company that may result from such agreement. Agreements that do not
satisfy the conditions described above and are rejected by the shareholders are null and void, without prejudice to the liability of the directors or members of the ~~supervisory committee~~Supervisory Committee for any damages to the company.

The acts or agreements that a company enters into with a related party involving a relevant amount shall fulfill the requirements set forth in Section 72 and 73 of ~~Law No. 26,831.~~the Argentine Capital Markets Law. Under Section 72, the directors and syndics (as well as their ascendants, descendants, spouses, brothers or sisters and the companies in which any of such persons may have a direct or indirect ownership interest) are deemed to be a related party. A relevant amount is considered to be an amount which exceeds 1% of the net worth of the company as per the latest balance sheet. The Board of Directors or any of its members shall require from the audit committee a report stating if the terms of the transaction may be reasonably considered adequate in relation to normal market conditions. The company may resolve regarding the compliance of above-mentioned requirements with ~~the~~prior report of two independent evaluating firms on that ~~shall have informed about the same matter and about the other terms of the transaction.~~matter. The Board of Directors shall make available to the shareholders the report of the audit committee or of the independent evaluating firms, as the case may be, at the main office on the business day after the board’s resolution was adopted and shall communicate such fact to the shareholders of the company in the respective market bulletin. The vote of each director shall be stated in the minutes of the Board of Directors approving the transaction. The transaction shall be submitted to the approval of the shareholders of the company when the audit committee or both evaluating firms have not considered the terms of the transaction to be reasonably adequate in relation to normal market conditions. In the case where a shareholder demands compensation for damages caused by a breach of Section 73, the burden of proof shall be placed on the defendant to prove that the act or agreement was in accordance to the market conditions or that the transaction did not cause any damage to the company. The transfer of the burden of proof shall not be applicable when the transaction has been approved by the Board of Directors with the favorable opinion of the audit committee or the two evaluating firms or if the transaction has been approved by the ordinary shareholders’ meeting without the decisive vote of the shareholder in respect of which the condition of a related party is met or has an interest in the act or contract at issue.
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Causes of action may be initiated against directors if so decided at a meeting of the shareholders. If a cause of action has not been initiated within three months of a shareholders’ resolution approving its initiation, any shareholder may start the action on behalf and on the company’s account. A cause of action against the directors may be also initiated by shareholders who object to the approval of the performance of such directors if such shareholders represent, individually or in the aggregate, at least 5% of the company’s capital stock.

Except in the event of a mandatory liquidation or bankruptcy, shareholder approval of a director’s performance, or express waiver or settlement approved by the shareholders’ meeting, terminates any liability of a director vis-à-vis the company, provided that shareholders representing at least 5% of the company’s capital stock do not object and provided further that such liability does not result from a breach of law or the company’s bylaws.

Under Argentine law, the Board of Directors is in charge of the company’s management and administration and, therefore, makes any and all decisions in connection therewith, as well as those decisions expressly provided for in the ~~Argentine Corporate Law,~~AGCL, the company’s bylaws and other applicable regulations. Furthermore, the board is generally responsible for the execution of the resolutions passed in shareholders’ meetings and for the performance of any particular task expressly delegated by the shareholders.

Meetings, Quorum, Majorities

Our Board of Directors must hold a minimum of one regularly scheduled meeting every three months. Meetings must also be convened when called by any member of the Board of Directors. The quorum for a Board of Directors’ meeting is the majority of its members. The Board of Directors will pass resolutions by the affirmative vote of the majority of members present. Pursuant to our bylaws our directors may participate in a meeting of the Board of Directors by means of a communication system that provides for a simultaneous transmission of sound, images and words. ~~If we make a public offer of our stock, directors~~Directors participating by such means count for quorum purposes for all meetings and all matters of agenda, therefore the board will pass resolutions by the affirmative vote of the majority of members present either physically or by means of such communication system.
Incentive-based Retirement Plan for Senior Management and Directors

In December 2016, Grupo Supervielle approved an incentive-based retirement plan, which replaced certain existing compensation mechanisms. Members of our senior management and Board of Directors ~~will be~~were entitled to receive cash payments over time under the plan if certain performance targets ~~are~~were met. 50% of the funds contributed by us to the plan ~~will be~~were released to individual plan accounts once the performance targets ~~have been~~were met, subject to compliance with waiting periods mandated by Argentine legislation. The remaining 50% ~~will vest~~was vested after an additional twelve-month waiting period. We ~~will~~initially agreed to monitor the eligibility and participation ~~of the members~~ as the ~~program develops~~plan would develop and ~~expect~~expected to contribute approximately U.S.$3.6 million per year to the program. The ~~program~~plan was approved for a one-year ~~period and can be cancelled or renewed every year.~~
~~The initial program covered up to 70 members of Supervielle’s senior management team and Board of Directors. In 2018, this program~~period. However, the plan was ~~renewed for another one-year period. The program currently covers up to 90 members of our senior management and Board of Directors.~~not used since 2018.
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Independence Criteria of Directors

In accordance with the provisions of Section 4, Chapter I, Title XII “Transparencia en el Ámbito de la Oferta Pública” and Section 11, Chapter III, Title II ““Órganos de Administración y Fiscalización, Auditoría Externa” of the CNV Rules, we are required to report to the shareholders’ meeting, prior to vote the appointment of any director, the status of such director as either “independent” or “non-independent.” ~~At present,~~
The members of the Board of Directors and the Supervisory Committee of companies admitted to the public offering regime in Argentina must inform the CNV within ten (10) business days from the date of their appointment whether such members of the Board of Directors or the Supervisory Committee are “independent” pursuant to CNV standards.
Pursuant to the CNV Rules, a director is not considered independent in certain situations, including where a director:
(1) is also a member of the board of the parent company or another company belonging to the same economic group of the issuer through a preexisting relationship at the time of his or her election, or if said relationship had ceased to exist during the previous three years;
(2) is or has been associated with the company or any of its shareholders having a direct or indirect “significant participation” on the same, or with corporations with which also the shareholders also have a direct or indirect “signification participation”; or if he or she was associated with them through an employment relationship during the last three years;
(3) has any professional relationship or is a member of a corporation that maintains frequent professional relationships of significant nature and volume, or receives remuneration or fees (other than the one received in consideration of his performance as a director) from the company or its shareholders having a direct or indirect “significant participation” on the same, or with corporations in which the shareholders also have a direct or indirect “significant participation.” This prohibition includes professional relationships and affiliations during the last three years prior to his or her appointment as director;
(4) directly or indirectly owns 5% or more of shares with voting rights and/or a capital stock of the company or any company with a “significant participation” in it;
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(5) directly or indirectly sells and/or provides goods and/or services (different from those accounted for in section c)) on a regular basis and of a significant nature and volume to the company or to its shareholders with direct or indirect “significant participation,” for higher amounts than his or her remuneration as a member of the board of directors. This prohibition includes business relationships that have been carried out during the last three years prior to his or her appointment as director;
(6) has been a director, manager, administrator or principal executive of not-for-profit organizations that have received funds, for amounts greater than those described in section I) of article 12 of Resolution No. 30/2011 of the UIF and its amendments, from the company, its parent company and other companies of the same group of which it is a part, as well as of the principal executives of any of them;
(7) receives any payment, including the participation in plans or stock option schemes, from the company or companies of the same economic group, other than the compensation paid to him or her as a director, except dividends paid as a shareholder of the company in the terms of section d) and the corresponding to the consideration set forth in section e);
(8) has served as director at the company, its parent company or another company belonging to the same economic group for more than ten years. If said relationship had ceased to exist during the previous three years, the independent condition will be recovered;
(9) is the spouse or legally recognized partner, relative up to the third level of consanguinity or up to the second level of affinity of persons who, if they were members of the board of directors, would not be independent, according to the above listed criteria.
Pursuant to the CNV Rules, a director who, after his or her appointment, falls into any of the circumstances indicted above, must immediately report to the issuer, which must inform the CNV and the authorized markets where it lists its negotiable securities immediately upon the occurrence of the event or upon the instance becoming known. In all cases, the references made to “significant participation” set forth in the aforementioned independence criteria will be considered as referring to those individuals who hold shares representing at least 5% of the capital stock and or the vote, or a smaller amount when they have the right to elect one or more directors by share class or have other shareholders agreements relating to the government and administration of the company or of its parent company; while those relating to the “economic group” correspond to the definition contained in section e) subsection 3, chapter V, Title II of the CNV Rules.
The Argentine independence standards under the CNV Rules differ in many ways from U.S. federal securities law and NYSE standards.
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Additionally, the Buenos Aires Professional Council of Economic Sciences (Consejo Profesional de Ciencias Económicas de la Ciudad de Buenos Aires or “CPCECABA”) also established certain requirements regarding the independence of public accountants which act as members of the Supervisory Committee. Pursuant to regulations issued by the CPCECABA and the CNV, syndics must be independent from the company they are auditing. A syndic will not be independent if he/she:
(i) is the owner, partner, director, administrator, manager or employee of the company or economically related entities;
(ii) is the spouse or relative (collateral until fourth grade), or relatives by affinity until second grade, of one of the owners, partners, directors, administrators or managers;
(iii) is a shareholder, debtor, creditor or guarantor of the company or economically related entities, representing a significant amount if compared with its own wealth or the company’s net equity;
(iv) possesses a significant amount of interest in the company or economically related entities (or if it has had such interest during the period to be audited);
(v) if the remuneration depends on or is contingent with the conclusions or results of its auditing work;
(vi) if the remuneration agreed depends on the result of the operations of the company.
Currently, Julio Patricio Supervielle, Jorge Oscar Ramirez, Atilio Dell’Oro Maini, ~~and~~ Emérico Alejandro Stengel, Hugo Enrique Santiago Basso and ~~are non-independent, whereas Richard Guy Gluzman,~~ Laurence Nicole Mengin de Loyer are non-independent, whereas Eduardo Pablo Braun and José María ~~Gabriela Macagni and Jorge Mocetti~~Orlando are independent members of our board according to the criteria established by the CNV. However, Laurence Nicole Mengin de Loyer is non-independent according to the U.S. federal securities law and the NYSE standards. See “Audit Committee” for further details about independence requirements of the members of our Audit Committee.

Corporate Governance

We have adopted a Corporate Governance Code to put into effect corporate governance best practices, which are based on strict standards regarding transparency, efficiency, ethics, investor protection and equal treatment of investors. The Corporate Governance Code follows the guidelines established by the CNV and the Central Bank. We have also adopted a Code of Ethics and an Internal Conduct Code, each designed to establish guidelines with respect to professional conduct, morals and employee performance.

Officers

Our management is comprised of our ~~CEO,~~Chief Executive Officer (“CEO”), Julio Patricio Supervielle, who reports to the Board of Directors, ~~our Chief Operating Officer (“COO”), José Luis Panero, who~~and is in charge of ensuring that the different companies in the ~~group~~Group function in a coordinated manner, with synergy and efficiency, applying the strategic guidelines defined for each business ~~unit,~~unit; the Bank’s CEO, Emérico Alejandro Stengel who is responsible for developing and executing the Bank’s business plans, enhancing key capabilities and increasing operational efficiency; our chief financial officer (“CFO”), ~~Alejandra Naughton,~~Mariano Biglia, who is in charge of the ~~financial~~accounting, tax and ~~accounting division. Both report to the CEO. Also~~planning divisions; our Chief of Legal Affairs and AML, Sergio ~~Gabai,~~Gabai; our Chief Credit Officer, Pablo Di Salvo, who is in charge of our global credit ~~division,~~division; our Chief of Human Resources, ~~Santiago Batlle, our Chief of IT and Operations, Marcelo Vivanco~~Martin Gallo, and our Chief ~~of Central Services & Supply Management, Claudia Andretto all of them reporting~~Technology Officer (“CTO”), Sergio Mazzitello. Our Treasurer and IRO, Ana Bartesaghi, also reports to the ~~COO,~~CEO.
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~~Also reporting~~
Our Chief Risk Officer (“CRO”), Javier Conigliaro, the Head of Internal Audit, Sergio Gustavo Vázquez, our Head of Anti Money Laundering, Juan Cuccia, and our Compliance Officer, Moira Almar, all report to the Board of ~~Directors are the CRO, Javier Conigliaro, and the Internal Audit Manager, Leandro Conti.~~Directors.
Chief Executive Officer

Name
Office
Profession
Date of Birth
Julio Patricio Supervielle
Chief Executive Officer
Business Administration
December 13, 1956
Senior Management that reports to the CEO
Name Office Profession Date of Birth
~~José Luis Panero~~
Emérico Alejandro Stengel
~~Chief Operating Officer~~
CEO of the Bank
~~Economics~~
Industrial Engineer
December ~~29, 1964~~
17, 1962
~~Alejandra Naughton~~
Mariano Biglia
Chief Financial Officer
~~Economics~~
Public Accountant
~~September 22, 1962~~
December 16, 1978
Sergio Gabai
Chief of Legal Affairs and
AML
Lawyer
April 26, 1967
~~Javier Conigliaro~~
~~Chief Risk Officer~~
~~Economist~~
~~November 16, 1964~~
Pablo Di Salvo
Chief Credit Officer
Business Administration
June 19, 1964
~~Santiago Batlle~~
Martin Gallo
Chief of Human Resources
Lawyer
~~April 16, 1973~~
October 18, 1978
~~Marcelo Vivanco~~
Sergio Mazzitello Chief Technology Officer Information Systems February 21, 1965
Senior Management that report to the Board of Directors

Name
~~Chief Officer~~
Office Profession Date of
~~Technology & Operations~~
~~Psychology and System~~
~~Analysis~~
~~January 9, 1962~~
Birth
~~Claudia Andretto~~
Javier Conigliaro
Chief Risk Officer
Economist November 16, 1964
Sergio Gustavo Vázquez Head of ~~Central Services~~
~~& Supply Management~~
Internal Audit
~~Economist~~
Business Administration and Public Accountant
May ~~8, 1960~~
1, 1974
Moira Almar Compliance Officer Lawyer December 6, 1968
Juan Cuccia Head of AML Public Accountant July 22, 1971

The CEO has five main responsibilities: (i) creating value for shareholders by monitoring the business units, (ii) bringing innovation to the provision of financial services, (iii) making sure that we deliver high quality and cost competitive services, (iv) leveraging key resources to provide support for the business units and (v) planning and executing acquisitions and alliances that fit into the corporate strategy.
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The ~~COO~~Bank’s CEO is responsible for developing and executing the Bank’s business plans and customer centric strategy, enhancing key capabilities and increasing operational efficiency. He leads the Bank’s digital transformation program, ensuring its adequate implementation organization-wide. He is also responsible for implementing the policies and the strategic goals defined by the Bank’s Board of ~~Grupo Supervielle reports to the CEO and Chairman of Grupo Supervielle. His main responsibility is to ensure sustainable results in each of the companies of Grupo Supervielle~~Directors, as well as ~~synergies~~for providing recommendations to the Board regarding future plans and ~~efficiencies inside~~ the company. He is responsible for encouraging and coaching the CEO’s of each of our companies in order to pursue each of the strategic and business plans. As part of his role, the COO is responsible for the coordination of the different group support functions in order to guarantee not only cost efficiency but also alignment to group strategy.annual budget.

The CFO directs and oversees the ~~finance,~~ controlling, accounting and ~~investor relations~~tax divisions. ~~The finance division is responsible for capital planning and funding strategies.~~ The controlling division is responsible for continuous evaluations of short-term and long-term strategic financial objectives, capital planning, preparing financial trends analyses and analyses of forecasts, budgets and costs. The accounting division monitors compliance with generally accepted accounting principles and applicable federal, state and local regulations and laws, and rules for financial ~~and tax~~ reporting. The ~~investor relations~~tax division is responsible for ~~preparing~~tax planning, compliance with federal and ~~providing financial information~~state tax regulations and acts as advisor to ~~and coordinating with, regulatory bodies and both domestic and international investors and analysts.~~business segments in the development of new products for tas matters.

The Chief of Legal Affairs and AML is in charge of ensuring that each of our businesses complies with internal policies and procedures within the legal framework established by regulatory authorities (including anti-money laundering laws and regulations) and with the applicable contractual requirements. In addition, the Chief of Legal Affairs and AML provides legal advice to Grupo Supervielle and each of its subsidiaries regarding business development, the prevention of legal risk and conflict resolution.
The CRO is responsible for developing and implementing an appropriate framework for the administration of overall risks that allows for the identification, evaluation, monitoring and mitigation of credit risk, financial risk (including market risk, interest rate risk and liquidity risk), as well as operational risks (including reputation risk) for each of our businesses.

The Chief Credit Officer is responsible for defining and putting into practice our global credit risk policies across all business units. The Chief Credit Officer utilizes common risk assessments and information collection platforms across all business units. He also maximizes the value we offer clients by facilitating the transit of clients across business units through credit policies designed specifically for upward sales and cross sales. In addition, the Chief Credit Officer maximizes penetration into different socio-economic segments through inclusive credit policies, while ensuring that pricing is consistent with risk levels. The Chief Credit Officer also manages and controls procedures related to credit risk and collection and recoveries for the purpose of safeguarding our assets, minimizing losses related to defaults and maximizing the protection of our businesses’ rights and interests.

The Chief of Human Resources is responsible for the design and implementation of human capital strategies. The human resource manager is in charge of global human resource policies across all business units. He functions as a strategic partner of top management to ensure that we attract and retain the talent necessary to achieve business growth. The Chief of Human ~~Resources’s~~Resources’ main strategies are: consolidating our talent pool, developing a sustainable organization focused on clients and with competitive remuneration packages, spreading the Supervielle culture, which breeds innovation, work ethic, empowerment and merit recognition and maintaining high morale among employees.
The Chief Technology Officer is responsible for leading the information technology administration, and in turn establish a solid relationship between IT and business areas to deliver added value to the organization and ensure compliance with digital transformation objectives, under a technological architecture framework. The CTO also leads the digital transformation of the core business with agile methodologies and organization by tribes to contribute with the vision of becoming a technological company.
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The Treasurer & IRO heads the Treasury and Investor Relations division. As Treasurer is responsible for the company liquidity position and funding strategies, and as IRO is responsible for preparing and providing financial information to, and coordinating with, regulatory bodies and both domestic and international investors and analysts.
The CRO is responsible for developing and implementing an appropriate framework for the administration of overall risks that allows for the identification, evaluation, monitoring and mitigation of credit risk, financial risk (including market risk, interest rate risk and liquidity risk), as well as operational risks (including reputation and cybersecurity risks) for each of our businesses.
The Head of Internal Audit is responsible, across all business units, for the audit process, evaluating and advising on internal control, corporate governance and risk management, in order to ensure compliance with laws, regulations and internal policies, contributing to the availability of reliable financial information, and the effectiveness and efficiency of operations, within the framework of the strategic objectives. His scope.
The Compliance Officer is responsible for developing, implementing and overseeing the Ethics and Compliance program. This program includes promoting an ethical corporate culture, monitoring the adherence to the Code of Ethics and verifying the effective enforcement of the anticorruption policy. The Compliance Officer conducts a regular risk analysis in order to adapt the Ethics and Compliance Program after monitoring and evaluating its effectiveness.
The following are academic and professional backgrounds of our management ~~members:~~members.

~~José Luis Panero~~ Mariano Biglia has been appointed Chief Operating Officer (COO) in June 2016. He previously was the Bank’s Chief Executive Officer since April 2009. He received a degree in Economics from Universidad Nacional de Córdoba and a Master’s degree in Finance awarded by CEMA. In 2009, he also completed the General Manager Program (GMP 7) at Harvard Business School. From 1988 through 2002 he held several positions at Banco Suquía, including Planning and Capital Markets Manager. From 2002 through 2007, he worked at Banco Banex as Financial Manager and since the merger with the Bank Mr. Panero served as Head of the Finance and Capital Markets department until April 2009 and Deputy CEO from 2006 to 2009. He is currently a member of the Boards of Directors of Banco Supervielle, CCF, Sofital and Supervielle Seguros.
~~Alejandra Naughton~~has been Chief Financial Officer of Grupo Supervielle since ~~September 2011. She~~June 2020. He joined Grupo Supervielle as head of financial reporting in 2010, and since 2016 has served as head of administration, tax and finance, leading the financial reporting team for Supervielle’s IPO and Follow On. Earlier, he held several positions within the Techint Group, where he worked on the IPO of Tenaris and Ternium and served as Controller of Ternium’s US subsidiary. He is a Certified Public Accountant with a degree from the University of Buenos Aires, holds an Advanced Management Program degree (AMP) from Kellogg School of Management at Northwestern University and is a CFA charterholder.
Sergio Mazzitello is Chief Technology Officer of Grupo Supervielle.  He joined Supervielle in December 2019. Previously he served since 2014 as Chief Information Officer in Naranja, from Grupo Galicia. He also held several executive level positions leading cross-functional international teams, in the areas of Business, Operations, and IT. He holds a degree in ~~Economics~~Information Systems from the ~~Universidad de~~University of Buenos Aires, a master’s in business administration from IDEA and more than 26 years’ experience in the payments industry and in financial services.
Pablo Di Salvo is the Chief Credit Officer of Grupo Supervielle since September 2017. He holds a Degree in Business Administration from the Argentine Catholic University of Buenos Aires and ~~a post graduate degree in Project Management from Universidad de Belgrano. She~~he attended the ~~CFO Executive~~Management Development Program at ~~the University of Chicago Booth School of Business. She has taken courses~~Universidad Austral – IAE Business School. Mr. Di Salvo previously held senior credit risk positions at ~~the Bank of England in London, where she was awarded the Expert in Finance~~Banco Itaú Argentina and ~~Management Accounting and Expert in Corporate Governance degrees;~~he also worked as Credit Risk Manager at the Federal Reserve Bank of New York where she was conferred the Expert in Management and Operations degree and at the International Monetary Fund where she was awarded the Expert in Safeguards Assessment degree. From 1994 to 2007 sheBanco Supervielle. He served ~~on the Central Bank’s staff~~ in several ~~senior~~ positions at BankBoston Argentina, both in Credit Risk and in commercial areas, including ~~that of Deputy General~~Latam Credit Risk Manager ~~(2003~~and Corporate Team Leader, and from 2003 to ~~2007) and Argentine Representative to the Governance Network at the Basle based Bank for International Settlements (Switzerland). During the years 2007 and~~ 2008 ~~she worked as a Consultant to the International Monetary Fund. As of the date of this annual report, she is also~~he was Chief ~~Finance~~Credit Risk Officer at ~~the Bank. She~~BankBoston Chile. He also ~~acts as alternate director~~held Credit Risk Manager positions at American Express Argentina. Mr. Di Salvo has almost 31 years of ~~ByMA.~~industry experience.
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Sergio Gabai has been Chief of Legal Affairs and AML of Grupo Supervielle since May 2012. He joined Banco Supervielle in 2016 as Head of the Legal Department. He also serves as Vice President of the Board of MILA, as Director of Sofital, Tarjeta Automática, Espacio Cordial de Servicios and IOL.Com, and as alternate syndic of Easy Cambio S.A. From 2000 through 2007 he was in charge of BBVA Banco Francés Legal Services for the Banking Business Department. Prior to this role, he was the Legal Affairs Assistant Manager at Bank Boston. A graduate of the Universidad de Buenos Aires as an Attorney-at-Law, he also holds a ~~Master’s~~master’s degree in Economics and Insurance Law from the Universidad Católica Argentina and a Ph.D. in Management from University of Navarra’s IESE Business School. He attended the Management Program for Lawyers at Yale ~~University and participated~~University. He has 25 years of the Effective Leadership Program at Universidad Austral — IAE. He also attended the Innovation Program at Universidad de San Andrés and the Finance and Operative Efficiency Program at Wharton School. From 1998 through 2000, he was the Legal Affairs Assistant Manager at Bank Boston. From 2000 through 2007 he was in charge of BBVA Banco Francés Legal Services for the Banking Business Department. He also serves as Director of SAM, and as Alternate Syndic for Sofital, Tarjeta and Supervielle Seguros.industry experience.

Juan Martín Gallo has been appointed Chief Human Resources Officer of Grupo Supervielle and Banco Supervielle as of January 2021. He previously served as Human Resources Manager of Grupo Supervielle´s Consumer Division, leading the company´s cultural transformation process. He joined Supervielle in August 2012 and held the position of Labor Relations Leader and later, Labor Advice Manager. Since his arrival at Supervielle, he has actively participated in the acquisitions carried out by the Company. Prior to joining Supervielle, he developed his professional career working at Law Offices, advising companies in various fields, including Banco Supervielle for 5 years since 2007. He is a Lawyer graduated from Universidad Católica Argentina, he is currently completing the master’s degree in business and administration at the IAE School Business of Universidad Austral. He participated in the Management for Lawyers Program at Yale University and the International Labor Standards Program at the International Labor Organization.
Javier Conigliaro has been Chief Risk Officer of Grupo Supervielle since July 2016. ~~Previously he~~He served as Chief Risk Officer of Banco Supervielle from 2012 through 2016. He held previous several positions at Banco Supervielle, Head of Corporate Risk in Société Générale Argentina, Credit Risk Senior analyst in SocGen New York and in Beal WestLB Argentina. With ~~over 29~~overall 32 years of experience in the risk industry within financial institutions, Mr. Conigliaro is an economist with graduate studies from the University of Buenos Aires, he attended the Executive Education Program in Risk Management at Kellogg School of Management & PRMIA and the Management Development Program at Universidad Austral —– IAE ~~School~~Business School. He reports to the Board of ~~Business. Previous~~Directors. 
Sergio Gustavo Vázquez has been Head of Internal Audit since March 2019.  Prior to his ~~experience~~appointment he was Audit Director at Banco Itaú and its subsidiaries in ~~Banco Supervielle, Mr. Conigliaro was~~Argentina, from June 2013 to March 2018, and he added responsibilities as Head of Audit Northern Hemisphere Subsidiaries since 2017. He also held several positions within the Audit area in Itaú from 1998 to 2013 where he served as Latam Audit System Supervisor in Itaú Latam Subsidiaries, among others. He developed an extensive career with a scope of Risk, Finance, Analytics and IT. He holds degrees in Business Administration and Public Accountant from the University of Buenos Aires and an MBA from the IAE. He also obtained international certifications as Internal Auditor “CIA” from the Institute of Internal Auditors in 2001 and as Information System Auditor “CISA” from ISACA in 2006. 
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Moira Almar has been Compliance Officer since October 2017. She previously served as the Head of ~~Corporate Risk~~Compliance at Banco Santander Rio from 2006 to 2017, having worked before in ~~Société Générale Argentina,~~various compliance and commercial positions also at Santander Rio. Moira holds a ~~credit risk senior analyst in SocGen New York and in Beal WestLB Argentina.~~
~~Pablo Di Salvo~~ ~~was appointed as Chief Credit Officer at Grupo Supervielle in September 2017. He received a degree in business administration~~Law Degree from the ~~Universidad Católica Argentina,~~National University of La Plata, Masters in Banking Disciplines at the University of Siena - Italy and ~~attended~~completed the Executive Management Development Program at Universidad Austral Business School. He held positions in credit risk at Banco Itaú Argentina and served as Credit Risk Manager at Banco Supervielle. He has worked in various positions with BankBoston Argentina, both in the credit risk and commercial teams, including Latam Credit Risk Manager and Corporate Team Leader. From 2003 to 2008, he was Head of ~~Credit Risk at BankBoston Chile. He also held positions as Credit Risk Manager at American Express Argentina. He has over 30 year of experience in the financial services industry.~~
~~Santiago Enrique Batlle~~ ~~graduated from Universidad Católica de La Plata as an Attorney at Law and received his Master’s degree in Business Administration Management from~~ the School of Business Management (EDDE / UADE). She has 24 years of industry experience and ~~Management~~16 in compliance. This area reports directly to the Ethic, Compliance & Corporate Governance Committee of the Board of Directors.
Ana Bartesaghi is Grupo Supervielle’s Treasurer and IRO since September 2011. She also serves as Director of Supervielle Seguros and Sofital. She was previously Head of Capital Markets at ~~IAE Universidad Austral.~~Banco Supervielle from 2004 to 2011 and she held prior positions at Citibank, Banco CMF, and Société Générale. She is a Certified Public Accountant from the University of Montevideo in Uruguay, and a post graduate degree in Economics from University of CEMA in Buenos Aires. She has 29 years of industry experience.
Juan Cuccia has been Head of AML of Grupo Supervielle since September 2006. He also ~~received~~serves as the Secretary of the AML Committee of Grupo Supervielle. He is a ~~postgraduate~~Certified Public Accountant with a degree ~~in Human Resources~~ from the Universidad Argentina de la Empresa. He participated in the Senior Management Program at IAE Universidad Austral and other programs at Stanford, London Business School and Michigan University. From July 2000 to 2004, he served as Labor Relations
Manager at Bank Boston NA, and from 2005 to March 2007 he served as their Human Resources Executive Director. From April 2007 to December 2010, he was Human Resources Executive Director at Standard Bank Argentina. He has served as Human Resources Head of Grupo Supervielle and Banco Supervielle since February 2011. He was appointed an alternate director of the Boards of Directors of Banco Supervielle and CCF. Such designations are pending of authorization by the Central Bank in agreement with Communication “A” 6304 of such regulator.
~~Marcelo Vivanco~~ has been the Chief of IT and Operations since February 2017 and prior to his appointment, he has been the Chief of IT since September 2016. He obtained an MBA from the Universidad del Salvador, a degree in System Analysis from Universidad CAECE and a degree in Psychology. He served as Director of Systems and Technology at Lojack Corporation and as Chief Technology Officer at Banco Comafi and La Ley Editorial (Thompson Group). At Banco Santander Río and Banco Galicia he served as Development Manager.
~~Claudia Andretto~~ ~~has been the Chief of Central Services and Supply Management since Februrary 2017. Previously she served as Head of Operations since 2008. She~~also holds a degree in ~~Economics~~Business Administration from the ~~Universidad de~~same university. Earlier he held several executive level positions related with Compliance, AML and Internal Audit within HSBC Group Argentina S.A. He has 24 years of industry experience. He has been a teacher of the Postgraduate Program in Prevention of Money Laundering and Terrorism Financing at the Buenos Aires and participated on the Advanced Regional Management and Leadership Program at IAE. From 1982 through 1994, she worked at Banco Roca where she led the Organization and Methods Department. From 1994 through 1998, she worked at Exprinter Banco S.A. From 1999 through 2001, she worked at Banco San Luis as Product Leader. In 2001, she took office as Banco Banex Organization Manager and remained in that position until 2007. After the merger with the Bank, she continued heading the same department at the Bank until 2008, when she was appointed Head of Operations.University (UBA) since 2012.

For the ~~biography~~biographies of Mr. Julio Patricio Supervielle and Mr. Emérico Alejandro Stengel, see “—Board of Directors.”

Supervisory Committee

We have a monitoring body called the supervisory committee (“Supervisory Committee”). Our Supervisory Committee consists of three syndics and three alternate syndics appointed by the shareholders at our annual ordinary shareholders’ meeting. The syndics and their alternates are elected for a period of one year, and any compensation paid to our syndics must have been previously approved at an ordinary shareholders’ meeting. The term of office of the members of the Supervisory Committee expires on the annual ordinary shareholders’ meeting to consider our financial statements as of December 31, ~~2018.~~2021.

Pursuant to the ~~Argentine Corporate Law,~~AGCL, only lawyers and accountants admitted to practice in Argentina and domiciled in Argentina or civil partnerships composed of such persons may serve as syndics in an Argentine sociedad anónima, or limited liability corporation.
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The primary responsibilities of the Supervisory Committee are to monitor ~~the~~ compliance with ~~Argentine Corporate Law,~~the AGCL, the bylaws, its regulations, if any, and the shareholders’ resolutions, to supervise the administration of the company and to perform other functions, including, but not limited to: (i) attending shareholders’ and Board of Directors’ meetings, (ii) calling extraordinary shareholders’ meetings when deemed necessary and ordinary and special shareholders’ meetings when not called by the Board of Directors, (iii) monitoring the company’s corporate records and other documents, and (iv) investigating written complaints of shareholders. In performing these functions, the Supervisory Committee does not control our operations or assess the merits of the decisions made by the Board of Directors.

The following chart shows the members of our Supervisory Committee appointed by the annual ordinary and extraordinary shareholders’ meeting held on April ~~24, 2018.~~27, 2021. According to Technical Resolution No. 15 of the Argentine Federation of Professional Counsel of Economic Sciences and Section III, Chapter III of Title II of the CNV Rules, all of our syndics and alternate syndics are independent.All of the members of our Supervisory Committee were appointed for the term of one year, until the annual shareholders’ meeting that considers the financial statements corresponding to the fiscal year ended December 31, 2021.

Name
Office
Beginning Date of
Office
~~Profession~~
Date of Birth
Enrique José Barreiro
Syndic
June 8, 2009
~~Public Accountant~~
December 5, 1945
Carlos ~~Alberto Asato~~
Alfredo Ojeda
Syndic
~~June 8, 2009~~
July 25, 2019
~~Public Accountant~~
January ~~15, 1948~~
17,1944
Valeria Del Bono Lonardi
Syndic
April 24, 2018
~~Lawyer~~
September 6, 1965
Name Office Beginning Date of Office Date of Birth
Carlos Enrique Lose
Alternate Syndic
June 8, 2009
~~Public Accountant~~
October 2,1943
Roberto Aníbal Boggiano
Alternate Syndic
June 8, 2009
~~Public Accountant~~
September 1,1955
~~Carlos Alfredo Ojeda~~
Jorge Antonio Bermúdez
Alternate Syndic
~~May 17, 2010~~
April 28, 2020
~~Public Accountant~~
~~January 15,1944~~
March 12, 1946

The following are academic and professional backgrounds of the Supervisory Committee members:

Enrique José Barreiro~~. He received~~ holds a degree in ~~Public Accounting~~Accountancy graduated from Universidad Nacional de Lomas de Zamora. From 1969 until May 2000, he worked at Banco Tornquist/Credit Lyonnais, where he held the position of Assistant ~~Accountant for five years.~~Accountant. From June 2000 ~~through~~until June 2007, he held the position of Assistant Accountant and General Accountant at Banco San Luis/Banco Banex S.A. He currently serves as a Syndic of Grupo Supervielle ~~the Bank, CCF,~~S.A., Banco Supervielle S.A., Tarjeta Automática S.A., Sofital S.A.F. e I.I., Cordial Compañía Financiera S.A., Espacio Cordial ~~Sofital S.A.F.e I.I. and~~de Servicios S.A., Supervielle Seguros S.A., Micro Lending S.A.U., InvertirOnline S.A.U., InvertirOnline.com Argentina S.A.U., Supervielle Productores Asesores de Seguros S.A., Bolsillo Digital S.A.U. and Futuros del Sur S.A.U.

Carlos ~~Alberto Asato~~Alfredo Ojeda~~. He~~ holds a degree in Accountancy graduated from Universidad de Buenos ~~Aires’s School~~Aires. He was an Internal Audit Manager of ~~Economic Sciences as~~the International Division of Gillette Company until 1977, and worked in Argentina, Brazil, Chile and Perú. He was a ~~Public Accountant. From October 1969 to March 1998, he held several positions~~partner of a major local audit firm until 1995. He is a consultant on audit and corporate issues and has an active participation in management and control aspects of corporations in various industries. He has lectured at ~~Banco Quilmes,~~Universidad de Buenos Aires, including ~~Department Head. Since 1983, he has been managing~~courses on Financial Planning and Budget Control and Audit and Management Control. He was also a speaker at various seminars and courses in his ~~own accounting~~areas of specialty. He is a co-author of Auditoría – Técnica y Práctica and ~~tax consultancy firm, Carlos Asato y Asociados. He also renders services as an external consultant in finance, tax and costs to Estudio Bruno Matarazzo y Asociados S.A.~~Normas para la Presentación de Estados Contables de Sociedades por Acciones. He is also a ~~lecturer for~~contributor to the ~~Public Accounting, Administration and Foreign Trade programs at Universidad del Museo Social Argentino.~~publication Doctrina Societaria y Concursal. He currently serves as Syndic of Grupo Supervielle ~~the Bank and Sofital S.A.F. e I.I.~~S.A.
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Valeria Del Bono Lonardi~~. She~~ is a ~~lawyer from~~Lawyer graduated from Universidad de Buenos ~~Aires’ Law School (1994),~~Aires and attended other professional specialization courses, including the International Criminal Update Program at Universidad Austral (2009). She joined Salvi Law Firm in 1995 and since then has been dedicated to the counseling and practice of criminal law. Her professional specialization is mainly based on the ~~dogmaticalness~~dogmatic of criminal offenses, with permanent assistance to insurance companies and independent professionals; the elaboration of strategies and proposals of technical defenses in the framework of oral and public trials and the advice on the prevention of corporate fraud, particularly to banking and financial entities. She is a member of the Bar Association of Buenos Aires and of the Bar Association of San Isidro. She currently serves as a Syndic of Grupo Supervielle S.A. and as an Alternate Syndic of Banco Supervielle S.A.

Carlos Enrique Lose. ~~He received~~holds a degree ~~of Public Accountant~~in Accountancy graduated from the Universidad de Buenos ~~Aires’ School of Economics.~~Aires. He worked for several years in the Audit Department of an important audit firm, and later dedicated to providing business advice. He was a lecturer at the Universidad de Buenos Aires’ School of Economics and has lectured courses at both public and private professional institutions. He is a founding partner of Bermúdez, Lose & Asociados. He has published different Works with specialized journals and is a co-author of the book Normas de Presentación de Estados Contables de Sociedades por ~~Acciones~~.Acciones. He currently serves as an Alternate Syndic of Grupo Supervielle ~~CCF and~~S.A, Cordial Compañía Financiera S.A., Espacio ~~Cordial.~~Cordial de Servicios S.A., Micro Lending S.A.U., InvertirOnline S.A.U., InvertirOnline.com Argentina S.A.U., Bolsillo Digital S.A.U. y Futuros del Sur S.A.U.

Roberto Aníbal Boggiano~~. He is~~ holds a ~~public accountant~~degree in Accountancy graduated from ~~the~~ Universidad de Buenos ~~Aires’ School of Economics.~~Aires. He attended ~~post-graduate~~post graduate seminars on planning and corporate taxation. ~~Mr. Boggiano~~He has worked at several companies, including Celulosa Jujuy S.A., where he was as an analyst accountant assistant, general accountant and chief of planning from 1978 to 1994; Sert S.A., where he served as the administrative manager from 1994 to 1995; and Estudio Carlos Asato y Asociados, where he was in charge of corporate taxation and advising from 1995 to 2011. He ~~was also an Alternate Syndic of Fiorito Factoring S.A. He~~ currently serves as an Alternate Syndic of Grupo Supervielle S.A. and ~~the Bank.~~as Syndic of Banco Supervielle S.A.

~~Carlos Alfredo Ojeda~~Jorge Antonio Bermúdez ~~. He is~~holds a ~~public accountant who graduated~~degree in Accountancy from ~~the~~ Universidad de Buenos ~~Aires’ School of Economics. He was an Internal~~Aires. After working in the Audit ~~Manager of the International Division of Gillette Company until 1977, and worked in Argentina, Brazil, Chile and Peru. He was a partner~~Department of a major ~~local audit~~ firm, ~~until 1995.~~he specialized in the Consulting and Finance fields, where he held senior management positions at important service companies. Later on he became a full time advisor in these fields. He iswas also a ~~consultant on audit and corporate issues and has an active participation in management and control aspects~~professor at the School of ~~corporations in various industries. He has lectured at~~Economics of Universidad de Buenos Aires ~~including courses on Financial Planning~~ and ~~Budget Control and Audit and Management Control. He was also a speaker at various seminars and~~
lectured courses in private entities in addition to those arranged by his ~~areas~~own firm. At present, he is an alternate syndic of ~~specialty.~~ ~~He is~~ Grupo Supervielle S.A., Banco Supervielle S.A., Cordial Compañía ~~co-author of~~ ~~Auditoría — Técnica~~Financiera S.A., Espacio Cordial de Servicios S.A., Micro Lending S.A.U., InvertirOnline S.A.U., InvertirOnline.com S.A.U., Bolsillo Digital S.A.U. y ~~Práctica~~ ~~and~~ ~~Normas para la Presentación de Estados Contables de Sociedades por Acciones~~~~. He is also a contributor to the publication~~ ~~Doctrina Societaria y Concursal~~~~. He currently serves as an Alternate Syndic for Grupo Supervielle.~~Futuros del Sur S.A.U.
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~~Pursuant to Article 13 ter of our bylaws, and according~~
According to the provisions of Section 79 of the Argentine Capital Markets Law, ~~No. 26,831,~~listed companies which have an audit committee are allowed not to have a Supervisory Committee. Such decision may only be adopted by an extraordinary ~~shareholders’~~shareholders meeting ~~may vote to eliminate our Supervisory Committee by meeting~~with a special quorum and supermajority of 75% of the ~~requirements of applicable laws, including Article 79 of Decree No. 1023/2013.~~voting stock.

Compensation of Directors, Management and Supervisory Committee

Our shareholders fix our directors’ compensation, including their salaries and any additional wages arising from the directors’ permanent performance of any administrative or technical activity. Compensation of our directors is regulated by the ~~Argentine Corporate Law~~AGCL and the CNV regulations. Any compensation paid to our directors must have been previously approved at an ordinary shareholders’ meeting. Section 261 of the ~~Argentine Corporate Law~~AGCL provides that the compensation paid to all directors ~~and syndics~~ in a year may not exceed 5.0% of net income for such year, if the company is not paying dividends in respect of such net income. The ~~Argentine Corporate Law~~AGCL increases the annual limitation on director compensation to up to 25.0% of net income based on the amount of dividends, if any, that are paid. In the case of directors that perform duties at special committees or perform administrative or technical tasks, the aforesaid limits may be exceeded if a shareholders’ meeting so approves, such issue is included in the agenda, and is in accordance with the regulations of the CNV. In any case, the compensation of all directors and members of the supervisory committee requires shareholders’ ratification at an ordinary shareholders’ meeting.

We have not entered into employment contracts with the members of our Board of ~~Directors.~~Directors, except for E. Alejandro Stengel as CEO of the Bank. We have assigned certain executive and technical-administrative functions to some of our directors. As of the date of this annual report, neither we, nor any of our affiliates, have entered into any agreement that provides for any benefit or compensation to any director after expiration of his or her term.

The aggregate compensation paid to our directors, (including compensation paid to members of our Audit Committee, Anti-Money Laundering and Anti-Terrorist Financing Committee, Risk Management Committee, Credit House Limit Committee, Ethics, Compliance and Corporate Governance Committee, Human Resources Committee and Disclosure Committee),senior management and members of our Supervisory Committee in ~~2017~~2020 was approximately ~~Ps.73.8~~Ps. 296.2 million, ~~Ps.90.9~~Ps. 332.6 million and ~~Ps.1.3~~Ps.0.6 million, respectively.

Audit Committee

Pursuant to the Argentine Capital Markets Law ~~No. 26,831~~ and its implementing regulations, we are required to have an audit committee consisting of at least three members of our Board of Directors with experience in business, finance, accounting, banking and audit matters. Under CNV regulations, at least a majority of the members of the audit committee must be independent directors.

~~Our~~As a foreign private issuer listed in the United States, our audit committee is composed of ~~no fewer than three~~ independent members designated by our Board of Directors, who are independent under Rule 10A-3 under the Exchange ~~Act (“Rule 10A-3”) and applicable NYSE standards.~~Act.

~~Our~~All three members of our audit committee ~~is composed of three members who~~ are financially literate and ~~one,~~ Laurence Nicole Mengin de Loyer is a financial expert.
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We will take the necessary measures to ensure that independent alternate members are available in order to fill possible vacancies. A quorum for a decision by the audit committee will require the presence of a majority of its members and matters will be decided by the vote of a majority of those present at the meeting. A chairman of the committee must be appointed during the first meeting after members of the committee have been appointed. The chairman of the committee may cast two votes in the case of a tie. Pursuant to our bylaws, audit committee members may participate in a meeting of the committee by means of a communication system that provides for a simultaneous transmission of sound, images and words, and members participating by such means count for quorum
purposes and the committee will pass resolutions by the affirmative vote of the majority of members present either physically or by means of such communication system. If the committee holds meetings by means of such communication system, it must comply with the same requirements applicable to Board of Directors’ meetings held in such way. Decisions of the audit committee will be recorded in a special corporate book and will be signed by all members of the committee who were present at the meeting. Pursuant to Section 17 Chapter III Title II of the CNV Rules, the audit committee must hold at least one regularly scheduled meeting every three months.

~~Pursuant to Law No. 26,831, the audit committee, among other things:~~
·                  ~~advises on~~The Audit Commitee has a written charter that establishes its duties and responsibilities. The current charter was approved by the Board of ~~Directors’ proposal for the designation of external independent accountants and ensure their independence;~~Directors in 2020.

·Our audit committee performs the following duties and responsibilities among others:
oversees the adequacy, appropriateness and effectiveness of our internal control ~~mechanisms~~systems to ensure the reasonableness, reliability, adequacy and ~~administrative~~transparency of our consolidated financial statements, financial and accounting ~~procedures~~information and ~~assesses~~our consolidated financial statements and information;
takes notice of complaints regarding accounting, internal controls over financial reporting and auditing matters, received through the ~~reliability of all financial and other relevant information filed with the CNV and other entities to which we report;~~
applicable procedures.

·                  ~~oversees our information policies concerning risk management;~~
·
provides the market with complete information on transactions in which there may be a conflict of interest with members of our various corporate bodies or controlling shareholders;

advises on the Board of Directors´ proposal for the designation of the external auditors, ensures their independence, analyzes the different services rendered by them, reviews their plans and evaluates their performance, giving an opinion on this matter when the Company issues its financial statements;
·
ensures that the Code of Ethics and Internal Conduct Code comply with current rules and regulations;
maintains an understanding of the internal auditing procedures to ensure that they are complete and up-to-date and approves such procedures to then submit them to the Board of Directors for their consideration and approval;
takes knowledge of Grupo Supervielle’s financial, reputational, legal and operative risks, and oversees compliance with policies designed to mitigate these such risks;
advises on the reasonableness of fees or stock option plans for our directors and managers proposed by the Board of Directors;

issues grounded opinions on related-party transactions under certain circumstances and file such opinions with regulatory agencies as required by the CNV;
·
verifies the fulfillment of any applicable rules of conduct;
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oversees the maintenance of adequate internal controls by each of Grupo Supervielle’s subsidiaries to minimize risk through the consolidation of best practices with respect to each of the businesses;
advises on our fulfillment of legal requirements and the reasonableness of the terms of the issuance of shares or other instruments that are convertible into shares in cases of capital increase in which pre-emptive rights are excluded or limited;

·                  ~~verifies the fulfillment~~
issues a report before any Board of ~~any applicable rules of conduct; and~~
Directors´ resolution to buyback our shares;

·                  ~~issues grounded opinions on related-party transactions under certain circumstances and file such opinions with regulatory agencies as required by the CNV in the case of possible conflicts of interest.~~
• at least once a year and upon the filing of the Company´s annual financial statements, issues a report to the Board and the shareholders addressing the work done to perform its duties, and the results of its work; and
• performs all duties stated in its chart, our bylaws and laws and regulations.

Additionally, the audit committee is required to prepare an annual working plan and present it to the Board of Directors and the Supervisory Committee. Members of the board, members of the Supervisory Committee and external independent accountants are required to attend the meetings of the audit committee if the audit committee so requests it, and are required to grant the audit committee full cooperation and information. The audit committee is entitled to hire experts and counsel to assist it in its tasks and has full access to all of our information and ~~documentation.~~documentation that it may deem necessary.

The following chart shows the current membership of our Audit ~~Committee according to the resolution passed at the Board of Directors’ meeting held on April 28, 2017.~~Committee:

Name
Position
Profession
~~Status(1)~~Status⁽¹⁾
Laurence Nicole Mengin de Loyer
⁽²⁾
Director, ~~Chairlady~~Chairperson of the Committee
Business ~~Management~~Administration (Financial Expert)
Independent
José María ~~Gabriela Macagni~~
Orlando
Director
~~Chemical Engineer~~
Business Administration
Independent
~~Richard Guy Gluzman~~
Eduardo Pablo Braun
Director
~~Lawyer~~
Industrial Engineer and Business Administration
Independent
~~Leandro Conti~~
~~Head of Internal Audit~~
~~Accountant~~
~~Permanent Invitee and Secretary of the Committee~~

(1) Pursuant to Rule 10A-3 of the Exchange Act.
~~(1) Pursuant to Rule 10A-3.~~
(2) As from the Shareholders’ Meeting held on April 27, 2021, Ms. Mengin de Loyer is a Non-Independent Director pursuant to the CNV Regulations whereas she is an Independent Director pursuant to Rule 10A-3 of the Exchange Act.
Sergio Vazquez, our Head of Internal Audit, is the Secretary of the audit committee.
Anti-Money Laundering and Anti-Terrorist Finance Committee

We have an anti-money laundering and anti-terrorist finance committee consisting of ~~two~~three members of our Board of Directors. Decisions of the ~~Anti-Money Laundering~~anti-money laundering and ~~Anti-Terrorist Finance Committee~~anti-terrorist finance committee are recorded in a special corporate book and signed by all members of the committee who were present at the meeting.

Among its duties, the anti-money laundering and anti-terrorist finance committee must:

·
oversee the adequacy, appropriateness and effectiveness of our internal control systems to ensure the reasonableness, reliability, adequacy and transparency of our consolidated financial statements, financial and accounting information and our consolidated financial statements and information;
·                  maintain an understanding of and ensure timely and appropriate responses regarding compliance with applicable rules and matters related to money laundering, conduct in the securities markets, data protection, reporting requirements and enforcement actions;
·                  ~~ensure that the Code of Ethics and Internal Conduct Code comply with current rules and regulations,~~
·                  ~~maintain an understanding of procedures to ensure that they are complete and up-to-date and approve such procedures to then bring them before the Board of Directors for its consideration and approval;~~
·                  ~~advise Grupo Supervielle on its financial, reputational, legal and operative risks, and oversee compliance with policies designed to mitigate these risks;~~
·                  ~~evaluate and improve the quality of Grupo Supervielle’s customer service, risk control and operations;~~
·                  ensure the proper intervention of the Board of Directors with respect to the approval of decisions adopted by the committees when required by corporate governance rules and to oversee compliance with these rules;
·                  oversee the maintenance of adequate internal controls by each of Grupo Supervielle’s subsidiaries to minimize risk through the consolidation of best practices with respect to each of the businesses; and
·                  ~~oversee the~~ compliance with current applicable anti-money laundering rules and ensure that Grupo Supervielle and its subsidiaries are in compliance with best practices related to anti-money laundering;
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take knowledge of the amendments to the applicable regulations and ~~ensure that~~provide for the timely revision of the internal policies and procedures manuals accordingly;
maintain an understanding of the best market anti-money laundering practices and ~~anti-terrorist finance committee has a rapporteur member~~oversee its implementation at the Group’s and its subsidiaries’ level;
oversee compliance with ~~knowledge relating to anti-money laundering and anti-terrorism finance who from time to time presents a report~~disclosure of information to the ~~anti-money laundering~~competent authorities; and ~~anti-terrorist finance committee regarding the state and relevant facts relating to each of Grupo Supervielle’s subsidiaries.~~

~~Additionally,~~
carry out all those functions established by the ~~anti-money laundering and anti-terrorist finance committee must prepare an annual working plan and present it to the Board of Directors and the Supervisory Committee. Members~~rules of the ~~board, members of~~Financial Intelligence Unit and other applicable provisions on the Supervisory Committee and external independent accountants must attend the meetings of the anti-money laundering and anti-terrorist finance committee if the committee so requests it, and must grant the anti-money laundering and anti-terrorist finance committee full cooperation and information. The anti-money laundering and anti-terrorist finance committee is entitled to hire experts and counsel to assist it in its tasks and has full access to all of our information and documentation.
matter.

The following table sets forth the members of the anti-money laundering and anti-terrorist finance committee.

Name
Position
~~Emérico Alejandro Stengel~~
Atilio Dell’Oro Maini
Director, Chairman of the Committee, Responsible Officer before ~~FIU(1)~~
UIF
~~Atilio Dell’Oro Maini~~
Emérico Alejandro Stengel
Director ~~Alternate Responsible Officer before FIU(1)~~
Hugo Santiago Enrique Basso
Director
Juan Cuccia
Head of AML, Rapporteur Member

~~(1) FIU: Financial Information Unit (Unidad de Información Financiera)~~
Risk Management Committee

The risk management committee is composed of at least two directors and of members of our ~~directors and members of the~~ management team, and of management of our main subsidiaries.

Our risk management committee performs the following functions:

·
develops strategies and policies for the management of credit risk, market risk, interest rate risk, liquidity risk, operational risk and other risks that could affect us, makes sure our strategies and policies are in line with regulations and best practices and oversees their correct implementation and enforcement and defines Grupo Supervielle’s risk appetite and tolerance and the global risk profile for the approval of the Board of Directors;

·
approves limits relating to the management of credit risk, market risk, interest rate risk and liquidity risk, and monitors the evolution of key indicators relating to operational risk, which includes a map of risks used by the trading desk for trading operations and the map of risks for investment operations at a consolidated level;

·
periodically monitors the risks that Grupo Supervielle faces and the application of strategies and policies designed to address such risks;

·
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defines the general criteria for pricing risk;

·
evaluates the adequacy of capital with respect to Grupo Supervielle’s risk profile;

·
defines policy and the methodological framework for performing stress tests with respect to risk management, approves scenarios for conducting individual stress tests for particular and general risks, evaluates and discusses the results of the stress tests that are presented and recommends contingency plans to address such risks, utilizes the results of the stress tests for the consideration of establishing or revising the limits and brings all of the results of the tests to the Board of Directors for approval;

·
designs effective information channels and systems for the Board of Directors related to risk management;

·
ensures that ~~ours~~our subsidiaries’ management compensation plans incentivize a prudent level of each risk;

·
approves risk management quantitative models and monitors the effectiveness of such models; and

·
remains aware of the memos and rules related to risk published by each regulatory agency that regulates any of our subsidiaries, as well as understands the repercussions that the application of such memos or rules could have on our operations.

The following table sets forth the members of the risk management committee.

Name
Position
Jorge Oscar Ramírez
Chairman of the Committee, Director
Julio Patricio Supervielle
Chairman of the Board ~~Chairman of the Committee~~
and CEO
~~Jorge Oscar Ramírez~~
~~Director~~
Emérico Alejandro Stengel
Director
~~José Luis Panero~~
Laurence Nicole Mengin de Loyer
~~Chief Operating Officer (COO)~~
Director
~~Alejandra Naughton~~
Mariano Biglia
Chief Financial Officer (CFO)
Javier Conigliaro
Chief Risk Officer (CRO)
~~Pablo Di Salvo~~
~~Chief Credit Risk Officer (CCRO)~~, ~~Permanent Invitee~~
~~Hernán Oliver~~
~~Head~~Secretary of ~~Global Markets of Banco Supervielle, Permanent Invitee~~
~~Sabrina Roiter~~
~~Credit Risk and Business Continuity Manager of Banco Supervielle, Permanent Invitee~~
~~Fernando Bodasiuk~~
~~Financial Risks Manager of Banco Supervielle, Permanent Invitee~~
the Committee

~~Credit House Limit Committee~~
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The Credit House Limit committee is composed of at least three members of our Board of Directors, one of whom is the Chairman of the Board. The CEO of the Bank, the CCRO and the Bank’s heads of Retail Banking ~~and/or Corporate Banking and/or Global Markets, are also members. The CCRO acts as chairman of the committee.~~
The Credit House Limit Committee is the highest authority in our and our subsidiaries’ credit risk decision-making structure with respect to assessing situations in which any credit approval limit is exceeded.
~~Our Credit House Limit committee performs the following functions:~~
·                  ~~Approves credit policies and each of our subsidiaries’ credit approval limits.~~
·                  ~~Reviews and establishes credit risk limits for our subsidiaries relating to facilities, duration, guarantees, special circumstances and environmental risks in connection with financing projects.~~
·                  ~~Confirms the credit policies approved by the Board of Directors of each of our subsidiaries.~~
·                  ~~Oversees the performance of each of our subsidiaries’ credit committees.~~
A quorum is established when more than half of the committee’s members are present and requires the presence of the chairman of the committee and at least two directors. A quorum of the majority of members present at the assembly is required to make any decision, and each of the directors may veto such decision. In the case of a tie, our CEO will have the deciding vote.
~~The following table sets forth the members of the Credit House Limit committee.~~
~~Name~~
~~Position~~
~~Julio Patricio Supervielle~~
~~Chairman of the Board~~
~~Jorge Oscar Ramírez~~
~~Director~~
~~Emérico Alejandro Stengel~~
~~Director~~
~~Nerio Peitiado~~
~~CEO of Banco Supervielle~~
~~Javier Martínez Huerga~~
~~Chairman of the Committee, CCRO of Banco Supervielle~~
~~Germán Magnoni~~
~~Head of Corporate Banking of Banco Supervielle~~
~~Hernán Oliver~~
~~Head of Global Markets of Banco Supervielle~~
~~Beatriz de la Torre~~
~~Head of Retail Banking of Banco Supervielle~~
~~When the agenda for the meeting relates to policy, the Chief Risk Officer and Head of Credit Risk of Institutional Relations must join the committee as voting members.~~
Ethics, Compliance and Corporate Governance Committee
~~The~~ ethics, compliance and corporate governance committee monitors the implementation and enforcement of the corporate governance code for Grupo Supervielle and its subsidiaries, and the execution of the Ethics and Compliance Program. The ethics, compliance and corporate governance committee makes sure that we and our subsidiaries comply with the guidelines established by the CNV Rules, the Capital Markets Law ~~(Ley de Mercado de Capitales)~~ ~~and the Communication “A” 5201 of the Central Bank. Among its duties, the ethics, compliance and~~
~~corporate governance~~ committee monitors the structure of our Board of Directors and committees and establishes the basic objectives that the Board of Directors and management must follow with respect to their activities and businesses.

The ethics, compliance and corporate governance committee ~~periodically evaluates the operations and compliance levels of~~is tasked with assisting the Board of Directors in adopting the best practices of good corporate governance aimed at maximizing the growth capacity of Grupo Supervielle and ~~each~~its related companies and prevent the destruction of ~~the existing committees, and may issue recommendations to improve efficiency.~~value. It also ~~organizes annual training sessions with assistance from~~assists the ~~Human Resources Manager. The~~Board of Directors in overseeing its Ethics and Compliance Program. Our ethics, compliance and corporate governance committee ~~defines~~performs the following functions:
prepares and submits to the Board of Directors for its approval the Code of Corporate Governance and the codes, policies and ~~governing proceedings as~~procedures with regards to ~~the~~ Ethics and Compliance, ~~Program~~aiming to a progressive convergence towards the international standards of ethics, compliance and ~~is also in charge~~corporate governance;
proposes to the Board of ~~engaging with local regulators (such as~~Directors the ~~CNV, Central Bank, ByMA, MAE~~agenda related to ethics and ~~IGJ), international regulators~~compliance;
defines policies and ~~enforcing agencies,~~procedures related to ethics and ~~ensuring~~compliance;
promotes, follows-up and oversees the compliance with ~~each recommendation or proposal issued by them. The corporate governance committee also~~ the Code of Corporate Governance, and with the codes, policies and procedures related to Ethics and Compliance and informs the Board of Directors of any deviations that may occur and makes recommendations accordingly;
takes knowledge of all applicable regulations and their impact within the Group’s practices;
makes recommendations to ~~our~~the Board of Directors ~~regarding how to comply with applicable guidelines established~~on the gradual and progressive adoption of the provisions set forth by the CNV and the Central Bank regarding corporate governance standards;
takes knowledge of the recommendations of the Basel ~~accords.~~Committee accords and makes recommendations to the Board of Directors for their gradual and progressive adoption;
submits to the Board of Directors an Annual Report of Compliance with the Code of Corporate Governance;
reviews the results of the inspections carried out by the Central Bank and any other regulatory bodies and addresses the observations of the external auditors as regards ethics, compliance and corporate governance issues;
reports to the Board of Directors on the general situation of the Code of Corporate Governance, ethics and compliance as well as on incidents and complaints;
proposes to the Board of Directors any changes to the terms of reference of the Board Committees in order to improve the execution of its objectives and functions;
proposes policies and procedures to the Board of Directors for the assessment and self-evaluation of the Board and its members and of the board committees;
defines policies and guidelines with regards to the Group’s related parties;
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revises from time to time the terms of the Code of Ethics and of the Code of Corporate Governance; and
carries out any other acts within its competence, as may be requested by the Board of Directors.

The following table sets forth the members of the ethics, compliance and corporate governance committee.

Name
Position
Atilio Dell’Oro Maini
Director, Chairman of the Committee
Laurence ~~Nicole~~ Mengin de Loyer
Director
~~María Gabriela Macagni~~
Moira Almar
~~Director~~
Compliance Officer, Secretary of the Committee
~~José Luis Panero~~
~~Chief Operating Officer (COO)~~
~~Moira Almar~~
~~Compliance Officer~~
Sergio Gabai
Chief of Legal Affairs and AML ~~Invitee Member~~
Javier Conigliaro
Chief Risk Officer (CRO)~~, Invitee Member~~
~~Leandro Conti~~
Sergio Vázquez
Head of Internal Audit
Leandro Carletti Head of ~~Banco Supervielle, Invitee Member~~
Corporate Affairs

~~Human Resources~~Nomination and Remuneration Committee

The ~~human resources committee approves~~Nomination and ~~monitors our compensation policies.~~Remuneration Committee is composed of at least three directors. The ~~committee helps create compensation policies and job performance evaluation systems.~~Chairman of the Committee must be an independent director under the Regulations terms of the CNV.

~~Our human resources committee~~The Nomination and Remuneration Committee performs the following functions:

assists the Board of Directors in the nomination of Directors process and in the definition of criteria for identification and selection of qualified individuals to be candidates for the Board of Directors;
·                  ~~brings~~
identifies and interviews candidates to be part of the Board of Directors and recommend candidates to the Board to be nominated at the Shareholders’ Meeting;
coordinates the induction process for new members of the Board of Directors and Senior Management;
dictates principles, parameters and guidelines of remuneration policies applicable to independent and non-independent members of the Board of Directors, Senior Management and staff in general, including (as the case may be) fee schemes, fixed and variable salaries and incentive plans, retirement plans and associated benefits, following current regulatory provisions;
carries out an annual evaluation of the financial incentives system for Senior Management, which may be carried out by an independent firm. Work together with the Risk Management Committee in evaluating incentives generated by the aforementioned economic incentive system for personnel;
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prepares (in conjunction with the Ethics, Compliance & Corporate Governance Committee) criteria and guidelines for the Board’s self-evaluation process and review it periodically;
coordinates implementation of the Board’s annual self-evaluation and prepare an annual report on the matter, in accordance with established evaluation guidelines and criteria. Also coordinate self-evaluation of the Board Committees performance;
raises proposals for strategic human resources plans to the Board, including but not limited to, human capital development plans, incentive plans and / or monetary and non-monetary benefits, communication plans, labor relations plans and training plans and carry out periodic monitoring of the implementation of said strategic plans;
dictates guidelines to conduct annual performance evaluations of personnel;
submits proposals to the Board of Directors ~~proposals~~ for ~~nominations~~appointments of senior managers of Grupo Supervielle companies (CEO, Deputy CEO and Senior Managers);
promotes achievement of high standards of integrity and honesty on the ~~directors~~part of ~~Group~~all employees of Grupo Supervielle and its ~~subsidiaries~~subsidiaries;
approves and ~~all other officials that~~inform the Board of Directors ~~appoints;~~
·                  ~~proposes~~of the contracting of insurance policies applicable to the Board of Directors ~~compensation policies for~~and members of Senior Management;
reviews the ~~directors;~~
organizational structure of Grupo Supervielle and its subsidiaries;

·                  ~~carries out an annual report regarding director compensation policies and submits its conclusions and~~
proposes recommendations to the Board of ~~Directors;~~Directors regarding its composition; and
exercises those other competencies assigned to this committee by the Board of Directors.

·                  ~~gathers information about the periodic evaluations of the staff of Group Supervielle and its subsidiaries;~~
·                  ~~determines the search method for directors, whether through a third party from an external consulting firm that specializes in human resources or directly; and~~
·                  ~~approves any external consulting firm that specializes in human resources.~~
The following table sets forth the members of the ~~human resources committee.~~Nominations and Remuneration Committee.

Name
Position
Eduardo Pablo Braun
Independent Director, Chairman of the Committee
Julio Patricio Supervielle
⁽¹⁾
Chairman of the Board ~~Chairman of the Committee~~
and CEO
~~Richard Guy Gluzman~~
Hugo Enrique Santiago Basso
Director
~~María Gabriela Macagni~~
Laurence Mengin de Loyer
Director
~~Jorge Luis Mocetti~~
~~Director~~
~~Santiago Batlle~~
~~Chief Human Resources Officer, Secretary of the Committee, Permanent Invitee~~
⁽¹⁾Julio Patricio Supervielle is an executive Director in his capacity as CEO of the company
268
Martin Gallo, our Chief Human Resources Officer, is the Secretary of the committee.
Disclosure Committee

The disclosure committee is responsible for the following tasks:

·
supervise our system of controls and disclosure procedures to ensure ~~(i)~~ that the information required to be made known to the public (directly or through regulatory bodies) is recorded, processed, summarized and reported accurately and in a timely ~~manner.~~
manner;

·
evaluate the effectiveness of disclosure controls and procedures to determine the need or desirability of making changes to those controls and procedures in relation to the preparation of the next periodic ~~reports.~~
reports;

·
review of any information related to a material fact that must be submitted to the Argentine Securities and Exchange Commission, Buenos Aires Stock Exchange, Mercado Abierto Electrónico S.A., Securities and Exchange Commission, New York Stock Exchange, the Argentine Central Bank, the Superintendency of Insurance, and any other regulatory body with which it interacts and which relates to (i) mandatory reports; (ii) press ~~release~~releases containing financial information, information on significant or material transactions; (iii) publication of relevant facts, (iv) oral communication and written correspondence for dissemination to shareholders and investors; and (v) any other relevant piece of information that should be ~~communicated.~~
communicated; and

·
propose to the Board the policy for the management of confidential information and control its compliance, particularly that related to legal persons.
The following table sets forth the members of the disclosure committee.
Name
Position
Julio Patricio Supervielle Chairman of the Board and CEO, Chairman of the Committee
Atilio Dell’Oro Maini Director
Laurence Nicole Mengin de Loyer Director
Mariano Biglia Chief Financial Officer (CFO)
Javier Conigliaro Chief Risk Officer (CRO)
Sergio Gabai Chief of Legal Affairs and AML
Ana Bartesaghi Treasurer and Investor Relations Officer (IRO), Secretary of the Committee
Matías González Carrara Head of Accountancy of Banco Supervielle
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Committee for the Analysis of Operations with Related Parties
The committee for the analysis of operations with related parties has advisory and supervision powers to evaluate the operations to be performed between by Grupo Supervielle’s related parties as established in the Policy of Approval of Operations with related parties, connected counterparties and related persons in order to ensure that such operations are granted under the conditions required by the applicable regulations and in a transparent manner.

The following table sets forth the members of the committee for the analysis of operations with related parties.~~disclosure committee.~~

Name
Position
~~Jorge Oscar Ramírez~~
Atilio Dell’Oro Maini
Director, Chairman of the Committee
Laurence Nicole Mengin de Loyer
Director
~~Atilio Dell’Oro Maini~~
Eduardo P. Braun
Director
~~José Luis Panero~~
Julio Patricio Supervielle
~~Chief Operating Officer (COO)~~
Chairman of the Board and CEO
~~Alejandra Naughton~~
Pablo Di Salvo
Chief ~~Financial~~Credit Officer ~~(CFO)~~
(CCO)
Javier Conigliaro
Chief Risk Officer (CRO)
Sergio Gabai
Chief of Legal Affairs and AML
~~Ana Bartesaghi~~
Moira Almar
~~Treasurer and Investor Relations~~Compliance Officer ~~(IRO), Secretary of the Committee~~
~~Leandro Conti~~
Hernán Oliver
Head of ~~Internal Audit of~~Treasury and Global Markets at Banco Supervielle
~~Mariano Biglia~~
Other upon invitation
~~Head~~CEO of ~~Accountancy of Banco Supervielle~~
any subsidiary which operation is under committee’s analysis

Cyersecurity Committee
The main objectives of the Cybersecurity Committee are to evaluate and implement the policies that are proposed with regards to cybersecurity within the field of the Information Security, including the definitions of risk appetite and the risk map of information security. In addition, it must ensure compliance with these policies, including the contingency plans for cybersecurity events.
The following table sets forth the members of the cybersecurity committee.
Name
Position
Julio Patricio Supervielle Chairman of the Board and CEO, Chairman of the Committee
Atilio Dell’Oro Maini Director
E. Alejandro Stengel Director, CEO of Banco Supervielle
Sergio Mazzitello Chief Technology Officer
Javier Conigliaro Chief Risk Officer (CRO)
Others from management team CIOs of Grupo Supervielle’s subsidiaries
CISOs of Grupo Supervielle’s subsidiaries
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Fintech Committee
The main objectives of the Fintech Committee are to analyze and approve the Company’s interest in fintech ventures, products and related projects; to propose and approve budgets and investments for each undertaking, and to monitor the evolution of undertakings and projects.
The following table sets forth the members of the fintech committee.
Name
Position
E. Alejandro Stengel Director
Other members of management as related to the nature of the proposed investment, upon invitation
Banco Supervielle S.A.’s Board of Directors

Our main subsidiary, the Bank, is managed by its Board of Directors, which is currently comprised of ~~seven~~five members. As of the date of this annual report, the shareholders present at any annual ordinary meeting may determine the size of the Board of Directors, provided that there shall be no less than three and no more than nine directors, and appoint an equal or lesser number of alternate directors. Any director so appointed will serve for two years. The elections of the Bank’s Board of Directors are staggered. As of the date of this annual report, one half of the members of the Bank’s Board of Directors are elected each year. While directors generally serve two-year terms, in the event of an increase or decrease in the number of directors serving on the Bank’s board, the shareholders’ are authorized to appoint directors for a period of less than two years. Directors may be reelected and will remain on their duties until their replacements take their positions.

~~On July 19, 2010, the Board of Directors approved a revised version of the~~The Bank’s corporate governance model ~~which~~ contains most of the recommendations made by the Central Bank and CNV regarding corporate governance.
Such model provides guidelines regarding decision-making by our Board of Directors, as well as certain guidelines for the committees reporting to the Board of Directors. This corporate governance model may change in the future in consideration of the recommended guidelines in Communication “A” 5201, approved by the Central Bank on May 9, 2011. Among other things, the ~~model incorporates~~guidelines incorporate provisions to the Board of Directors’ regulations, such as:

·
The Board of Directors shall meet on a monthly basis in order to discuss policies, strategic issues and business, and other customary issues such as provisions, budgetary divergences, portfolios, etc.

·
The Board of Directors shall meet on a quarterly basis in order to analyze: (i) operational risks and regulatory compliance, (ii) prevention of money laundering and financing of terrorism, (iii) auditing, (iv) information technology, (v) human resources, (vi) credit risks, and (vii) implementation of the Bank’s strategic plan.

271
The following table sets forth information about the members of the Bank’s Board of Directors, which is currently comprised of ~~seven members:~~five authorized regular members ⁽¹⁾:

Name
Title
~~Title~~Year of
Election
to the
Board
~~Year of Election to~~
~~the Board~~
Date of Expiration
of Term (until the
~~Term~~
~~(until the~~ shareholders’
meeting that will
consider the
financial
statements as of)
Date of Birth
Julio Patricio Supervielle
Chairman of the Board
2005
~~2005~~
December 31, ~~2019~~
2021
December 13, 1956
~~Jorge Oscar Ramírez~~
Atilio Dell’Oro Maini
First Vice-Chairman of the Board
2011
~~2016~~
December 31, ~~2019~~
2021
~~June 26, 1961~~
February 13, 1956
~~Emérico Alejandro Stengel~~
Alejandra Naughton
Second Vice-Chairman of the Board
2020
~~2010~~
December 31, ~~2018~~
2021
~~December 17,~~September 22, 1962
~~Atilio Dell’Oro Maini~~
Richard Guy Gluzman
Director
~~Director~~
2019
~~2011~~
December 31, ~~2019~~
2022
~~February 13, 1956~~
July 11, 1953
~~José Luis Panero~~
Hugo Enrique Santiago Basso
Director
~~Director~~
2019
~~2017~~
December 31, ~~2018~~
2022
December ~~29, 1964~~
~~Santiago Batlle~~
~~Alternate Director~~
~~2017~~
~~December 31, 2018~~
~~April 16, 1973~~
3, 1979

~~Richard Guy Gluzman~~⁽¹⁾On January 6, 2021, Santiago Batlle resigned ~~from the position of Director and First Vice-Chairman of the Board on April 27, 2017.~~as Alternate Director.

All ~~of the~~ appointed directors were approved to be members of the Board of Directors as required by Central Bank ~~regulations, with the exception of Santiago Batlle, whose designation as alternate director is pending authorization, in agreement with Communication “A” 6304 of the Central Bank.~~regulations.

In accordance with Section 11, Chapter III, Title II of the CNV Rules, all directors have the status of non-independent ~~directors, with the exception of Carlos Martín Noel, who holds~~directors.
Mr. Richard Guy Gluzman has the status of independent ~~director.~~director pursuant to the Central Bank rules.

Set forth below ~~is a brief~~are the biographical ~~description~~descriptions of ~~Carlos Martín Noel~~Alejandra Naughton and ~~Santiago Batlle.~~Richard Guy Gluzman. For ~~biographical description of José Luis Panero, see “—~~~~Offices~~~~” and for~~ biographical descriptions of the rest of the Bank’s directors, see “—Board of Directors.”

~~Santiago Enrique Batlle~~Alejandra Naughton was appointed director of Banco Supervielle on July 13, 2020. Before being appointed director, she was Chief ~~Human Resources~~Financial Officer of Grupo Supervielle as from September 2011. She was also Chief Financial Officer of Banco Supervielle as from 2012. She holds a degree in ~~2011. Previously,~~Economics from the Universidad de Buenos Aires and a post graduate degree in Project Management from Universidad de Belgrano. She attended the CFO Executive Program at the University of Chicago Booth School of Business. She has taken courses at the Bank of England in London, where she was awarded the Expert in Finance and Management Accounting and Expert in Corporate Governance degrees; at the Federal Reserve Bank of New York where she was conferred the Expert in Management and Operations degree and at the IMF where she was awarded the Expert in Safeguards Assessment degree. From 1994 to 2007 she served on the Central Bank’s staff in several senior positions, including that of Deputy General Manager (2003 to ~~2010~~2007) and Argentine Representative to the Governance Network at the Basle based Bank for International Settlements (Switzerland). During the years 2007 and 2008 she worked as a Consultant to the IMF. Ms. Naughton brings to the Board valuable expertise on banking regulations and monetary matters given her deep knowledge of the banking sector based on her extensive experience at the Central Bank. Her involvement acting as CFO since Grupo Supervielle’s IPO allows her to take on a stewardship role as the Company pursues its reporting responsibilities with the market and financial authorities. Leveraging her experience, she provides permanent support to our IR Program.
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Richard Guy Gluzman has a Law degree from Nanterre University in Paris and a master’s degree in Business Administration from the ESSEC University in Paris. From 1978 to 1995, he worked in France holding various managerial positions in several technological companies (Burroughs S.A., Digital Equipment Corporation, Wang S.A. and JBA S.A.). His career in Argentina started in 1995, when he joined Coming S.A. (France Telecom & Perez Companc Group) as General Manager until 1997. From 1997 through 1999, he served as ~~Chief Human Resources Officer~~a member of Globalstar S.A.’s Board of Directors. From 1998 through 2000, he was at ~~Standard Bank. From 1997 through 2007, his career at Bank Boston climbed up~~the helm of Diveo Broadband Networks S.A. as General Manager and then, from 2000 to ~~Chief Human Resources Officer. He has~~2006, he was a degree as an Attorney at Law from the Universidad Católica de La Plata, an MBA from IAE Business School and an Executive Degree in Strategy for Results from London Business School. He attended the HR Executive Program from Ross SchoolDirector of ~~Business and obtained~~Pegasus Capital, a Human Resources Post Degree from the Universidad Argentina de la Empresa. He was appointed an alternate director of the Boards of Directors of Banco Supervielle and CCF. Such designations are pending of authorization by the Central Bank in agreement with Communication “A” 6304 of such regulator.
~~Carlos Martín Noel~~ ~~resigned to his position~~private equity fund. In recent years he served as Director of the boards of directors of Grupo Supervielle S.A., Banco Supervielle S.A., Cordial Compañía Financiera S.A., Tarjeta Automática S.A. and Sofital S.A.F. e I.I. Mr. Gluzman brings to the Board ~~on April 19, 2018.~~17 years of international experience in Europe in Hi-Tech industries (computing, software and services), and strong experience in Latam Private Equity Fund. In addition, he brings extensive management and operational experience. Mr. Gluzman is also serving as non-executive Director in two other Boards in autoparts and massive consumption packaging industry in Argentina.
Banco Supervielle S.A.’s Senior Management

The Bank’s senior management is in charge of the implementation and execution of its overall ~~short term and~~ strategic objectives and reports to the CEO. The following ~~table sets~~tables set forth certain relevant information on the Bank’s current executive officers and its senior management.
Senior management asthat reports to the Board of ~~the date of this annual report:~~Directors:

Name
Position
~~Position~~
Date of Birth
Year of
Appointment
Emérico Alejandro Stengel CEO December 13, 1956 2020
Mariano Biglia CFO December 16, 1978 2020
Javier Conigliaro Chief Risk Officer November 16, 1964 2012
Sergio Gustavo Vázquez Head of Internal Audit May 1, 1974 2019
Moira Almar Regulatory Compliance Officer December 6, 1968 2017
Juan Cuccia Head of AML July 22, 1971 2006
Senior management that reports to the CEO:
~~Nerio Peitiado~~Name
Position
~~Chief Executive Officer~~Date of Birth
~~January 12, 1965~~
~~2016~~Year of
Appointment
Silvio Margaria COO and Deputy CEO November 12, 1971 2020
Sergio Mazzitello Chief Technology Officer February 21, 1965 2019
Pablo Di Salvo Chief Credit Officer June 19, 1964 2017
273
~~Germán Magnoni~~Name
Position
~~Head~~Date of ~~Corporate Banking~~Birth
~~September 24, 1969~~
~~2012~~Year of
Appointment
~~Beatriz Edith de la Torre~~
Hernán Oliver
Head of ~~Retail Banking~~
~~July 1, 1961~~
~~2016~~
~~Pablo Di Salvo~~
~~Chief Credit Officer~~
~~June 19, 1964~~
~~2017~~
~~Hernán Oliver~~
~~Head of~~Treasury and Global Markets
June 2, 1973
2009
~~Alejandra Naughton~~
Roberto García Guevara
Head of Capital Markets and Structuring
~~Chief Finance Officer~~
August 21, 1964
~~September 22, 1962~~
~~2012~~
2018
Romina Jacqueline Rubarth
Head of Business Intelligence February 10, 1979 2019
Esteban Nicolás D´Agostino Head of Operations and Central Services July 8, 1972 2020
Sergio Gabai
Chief of Legal Affairs ~~and AML~~
April 26, 1967
2012
~~Javier Conigliaro~~
Martin Gallo
~~Chief Risk Officer~~
~~November 16, 1964~~
~~2016~~
~~Marcelo Vivanco~~
~~Chief Technology Officer & Operations~~
~~January 9, 1962~~
~~2016~~
~~Claudia Andretto~~
~~Chief of Central Services & Supply Management~~
~~May 8, 1960~~
~~2008~~
~~Leandro Conti~~
~~Head of Internal Audit~~
~~February 16, 1972~~
~~2007~~
~~Santiago Batlle~~
Chief Human Resources Officer
October 18, 1978
~~April 16, 1973~~
~~2011~~
2021

Set forth below are brief biographical descriptions of the members of the Bank’s senior management.

~~Nerio Peitiado~~Silvio Margaria was appointed Deputy CEO and COO of Banco Supervielle in ~~2016.~~June 2020. He ~~received a degree~~joined Banco Supervielle in ~~Business~~2016, and Administration from the Universidad de Buenos Aires and a Master’s degree in Business and Administration from the University of Texas. From 1994 through 1999 he was an associate at McKinsey & Co. From 1999 through 2004 he held the position of General Manager at Formatos Eficientes (EKI). From 2004 through 2005 he was General Manager at Valle de las Leñas. From 2005 to August 2009 he was General Director at Entertainment Depot. From 2009 to 2016,since April 2019 he was Head of ~~Retail Banking~~Personal and Business Banking. He has more than 25 years of experience in the financial industry. Before joining Supervielle, he was responsible for banking companies at Banco Macro S.A. from 2011 to 2016. Previously, he held several managerial positions overseeing nationwide retail banking networks, as well as corporate banking at international banks such as BankBoston, N.A. (from 1994 to 2007) and Standard Bank S.A. (from 2007 to 2011). He holds a Law degree from Universidad Católica Argentina and attended the Executive Development Program of the ~~Bank. As of the date of this annual report, he serves as Vice-Chairman of SAM and as an Alternate Director of Supervielle Seguros.~~Universidad Austral Business School.

~~Germá~~Hernán ~~Magnoni~~Oliver has been the Bank’s Head of Corporate Banking since 2012. He graduated as a Public Accountant at the Universidad de Morón. He holds a Master’s degree in Business Administration from CEMA. He took part of the Banking Management Program at UTDTTreasury and the Advanced Management Program at IAE. He was in charge of the Leasing Department at Banco Supervielle until 2012. At Societé Générale Argentina he led the office of Large Corporations and Fiduciary Business. Before that, he worked for seven years in Corporate Sales at Banco Río (Santander).
~~Beatriz de la Torre~~ has been Head of Retail Banking since November 2016. She has over 30 years of industry experience. Prior to her appointment, she served as Senior Advisor for Banco de la Nación Argentina. Previously, she was Head of Retail Banking at Itaú Argentina from 2009 to 2015. She was also Retail Banking Manager at Standard Bank Argentina, formerly Bank Boston, from 2005 to 2009 and held several Retail Banking and Technology Managerial positions at BankBoston and Deutsche Bank. She holds a degree in systems from Universidad Tecnológica Nacional and attended the Executive Development Program at Universidad Austral Business School. She has over 30 years of experience in the financial services industry.
~~Hernán Oliver~~ ~~has been the Bank’s Head of~~ Global Markets since May 2009. He holds a degree in Economics from the Universidad Católica Argentina as well as a ~~Master’s~~master’s degree in Finance from CEMA. ~~Over the~~In 1996 -and 1997, ~~period,~~ he worked at Bank of America. From 1997 to 2002, he served as Finance Department Senior Trader at Banco General de Negocios. He then worked at Banco Finansur Finance Department until 2004, when he was hired as the Head of the Trading Desk at Banco Banex (at present Banco Supervielle). He has also been appointed as Alternate Director of Mercado Abierto Electrónico, the most important electronic securities and foreign currency trading market in Argentina
Roberto García Guevara joined Banco Supervielle in April 2018 as Head of Capital Markets. He is a public accountant graduated from Universidad de Buenos Aires. From 1992 to 1995 he worked at Baring Securities Argentina as a sales trader. From July 1995 to June 1998 he served as Head of Argentine Research at Caspian Securities Sociedad de Bolsa. Between July 1998 and November 2002, he worked at Merril Lynch S.A. Sociedad de Bolsa serving as Senior Country Analyst - First Vice President, covering Argentina and Chile, and he also served as Vice President of the Board. From 2003 to August 2007 Roberto was Head of Research of Raymond James Argentina. From September 2007 until 2009 he worked at UBS Pactual as Head of Southern Cone and Andean Equity Strategy & Research. Roberto returned to Raymond James Argentina in 2010, where he was Head of Research until 2012. During his career in Research, he was ranked 10 times by the annual survey of “Institutional Investor” as a top three analyst for Argentine Equity Research (he was ranked number one five times). In 2012 he moved to the Corporate Finance effort within Raymond James Argentina (then AR Partners) and was Head of Corporate Finance between 2015 and March 2018.
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Jacqueline Rubarth has led the Customer Experience and Business Intelligence team since April 2019, and she has also led the Agile Transformation Office since January 2020. She joined the Bank in January 2013 as Commercial Leader in the Medium and Large Business team and in February 2016 she was appointed Business Intelligence and Business Banking Planning Manager. She has more than 23 years of experience in the financial industry with a trajectory mostly carried out in the commercial line, always with focus in customer service. Before joining Supervielle, she spent 2 years as Corporate Commercial Executive at Banco Galicia and previously 14 years at BBVA, developing in the Corporate Banking and Investment Banking areas. She has a degree in Capital Markets from the Universidad del Salvador and attended the Management Development Program at Austral Business School.
~~Leandro Conti~~Esteban Nicolás D´Agostino has been ~~the Bank’s Head~~Chief of ~~Internal Audit~~Operations and Central Services of Banco Supervielle since ~~September 2007.~~April 2020. He ~~graduated from the Universidad Nacional de La Plata as~~is a Public Accountant from University of Buenos Aires and attended the ~~Advanced Management~~Executive Development Program at ~~the IAE~~Universidad Austral Business ~~School and~~School. Prior to this appointment, he also holds the CIA (Certified Internal Auditor) certification conferred by the Institute of Internal Auditors. In the period 1997 through 2006, his career progressed at Price Waterhouse and Co. S.R.L up to the Audit Manager position. From 2006 to 2007, he held the position of Auditserved as General Manager at ~~Banco Santa Cruz S.A.~~RECSA, a company dedicated to collection management. He has more than 25 years of experience in the banking industry, having worked at Citibank. His experience covers credit, collections, branches, operations and technology areas. Additionally, at Citibank he led the customer service models strategy with a focus on processes and operations for three years.
For the biography of Mr. Emérico Alejandro Stengel, see “—Board of Directors.”

For the biographies of Mr. ~~Pablo Di Salvo, Ms. Alejandra Naughton,~~Mariano Biglia, Sergio Mazzitello, Mr. Sergio Gabai, Mr. ~~Santiago Enrique Batlle~~Pablo Di Salvo, Mr. Martin Gallo, Mr. Javier Conigliaro, Mr. Sergio Gustavo Vázquez, Ms. Moira Almar and Mr. ~~Marcelo Vivanco and Ms. Claudia Andretto. See~~Juan Cuccia, see “—Officers.”

Committees Reporting to Banco Supervielle S.A.’s Board of Directors

In accordance with Central Bank regulations, the Bank has several ~~committees under the supervision of our~~ Board ~~of Directors:~~committees: the Audit Committee (Communication “A” 2525), the Information Technology Committee (Communication “A” 4609) and the Committee on Control and Prevention of Money Laundering and Financing of Terrorism (Communications “A” 4363 and “A” 4459). In addition, the Bank also has a Risk Management Committee. Each of the Bank’s Board committees has its own ~~code of regulation.~~internal charter. Each committee must report to the Board on a periodical basis and submit an annual report.

Banco Supervielle S.A.’s Audit Committee

The audit committee is formed by at least two members of the Bank’s Board of Directors and its internal audit manager. The Board of Directors appoints the members of the audit committee for a term of two or three years. The CEO is invited to attend the meetings.

The audit committee is responsible for assisting the Board of Directors in the supervision of the consolidated financial statements, controlling compliance with policies, processes, procedures and rules set forth for each of the Bank’s business areas and for evaluating and approving the corrective measures proposed by the internal audit area.
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The following table sets forth the members of the audit committee:

Name
Position
~~Jorge Ramirez~~
~~Chairman~~
~~Emérico Alejandro Stengel~~
~~Director~~
~~Leandro Conti~~
~~Member - Secretary~~
Richard Guy Gluzman
~~Permanent Guest~~
Director, Chairman of the Committee
~~Maria Gabriela Macagni~~
Alejandra Naughton
~~Permanent Guest~~
Director
~~Laurence Nicole Mengin de Loyer~~
Sergio Vazquez
~~Permanent Guest~~
Head of Internal Audit, Secretary of the Committee
Banco Supervielle S.A.’s Information Technology Committee

The ~~Information Technology Committee~~information technology committee is formed by ~~nine members,~~at least one Director appointed by the Board of ~~Directors. This committee must have among its members at least one director~~Directors, the Chief Technology Officer, the CEO, the COO, the CRO, the Head of Technology Infrastructure, the Head of Innovation and Channel Development, the Head of Central Systems, the Head of Information Security and the Head of ~~Information Technology and Operations. The following table sets forth the members of the Information Technology Committee.~~IT Governance.

The information technology committee is responsible, among other things, for the following activities: (i) controlling the adequate operation of the information technology ~~environment~~environment; (ii) contributing to the effectiveness of the information technology environment; (iii) considering the information technology and ~~its efficiency; (ii)~~information security plans and submitting them for the approval of the Board of Directors; (iv) taking notice of the information technology and systems ~~plan~~plans and reviewing ~~it; (iii)~~them; (v) periodically evaluating such plan and the level of compliance with it; ~~(iv)~~(vi) reviewing audit reports related to information ~~technology;~~technology and ~~(v)~~the relevant action plans to overcome any issues or weaknesses arisen from them; (vii) maintaining an adequate dialogue with the external auditing division of the ~~Superintendency:~~Superintendency; (viii) taking knowledge and comply with of all applicable regulation of the Central Bank and other regulatory bodies; (ix) taking knowledge and approving the resources for the management of the systems contingency plan; (x) taking knowledge of the new projects within the committee’s competence and managing the priorities of each of them; (xi) taking knowledge of deviations in relation to the projects assigned to the Information Technology and Information Security teams; (xii) overseeing the financial budget of Information Technology; and (xiii) approving policies, standards, and any procedure related to Information Technology.
The following table sets forth the members of the Information Technology Committee.

Name
Position
~~Julio Patricio Supervielle~~
~~Chairman~~
~~Nerio Peitiado~~
~~Member~~
~~Leandro Conti~~
~~Member~~
~~Marcelo Vivanco~~
~~Member~~
~~Fabián Romero~~
~~Member~~
~~Marcelo Talamona~~
~~Member~~
~~Federico Casuscelli~~
~~Member~~
~~Gabriel Grande~~
~~Member~~
~~Esteban Lus Bietti~~
~~Member~~
Richard Guy Gluzman
~~Permanent Guest~~
Director, Chairman of the Committee
~~Julieta Montes~~
Sergio Mazzitello
Chief Technology Officer, member and Secretary of the Committee
Alejandro Stengel
~~Guest~~
CEO
Silvio Margaria Deputy CEO and COO
Javier Conigliaro CRO
Other members of management team: Head of Technology Infrastructure
Head of IT Operations
Head of Systems Development
Head of IT Strategy and Solutions Engineering
Responsible Officer of IT Governance

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Banco Supervielle S.A.’s Committee on the Control and Prevention of Money Laundering and Financing of Terrorism

The committee on the control and prevention of money laundering and financing of terrorism is formed by ~~six members,~~at least two directors (one of ~~which are permanent guests.~~whom will chair the committee and will act as Corporate Compliance Officer with the Financial Intelligence Unit and another that will act as Alternate Compliance Officer with the Financial Intelligence Unit) and the Head of AML, who will act as Secretary. The Board of Directors appoints the members of the control and prevention of money laundering and financing of terrorism committee for a minimum term of ~~2 or 3~~two years and a maximum of three years.

The committee on the control and prevention of money laundering and financing of terrorism ~~analyzes~~has to: (i) consider the Bank’s general strategies and policies in the area of money laundering prevention designed by the Senior Management and submit them for Board of Directors’ approval; (ii) approve the internal procedures necessary to ensure effectiveness and compliance with the regulations and policies in force, promote their implementation and control their performance; (iii) take knowledge of the amendment to applicable regulations and ensure that the updates of internal policies and ~~strategies with respect~~procedures manuals are timely carried out; (iv) ensure the adoption of a formal and permanent and up-to-date training program for the personnel; (v) have an understanding in the consideration and survey of the best market practices related to ~~control and~~the prevention of money laundering and financing of terrorism ~~developed~~and promote their application in the Bank; (vi) analyze the reports of unusual operations raised by the ~~senior management~~AML Department or any other Bank officer and, ~~submits such policies~~subject to legal advise, arrange for their report with the relevant authorities; (vii) take knowledge of and ~~strategies, together~~promote compliance with ~~its recommendations,~~the corrective measures that have arisen as a result of the external and internal audit reports related to the prevention of money laundering and terrorism financing; (viii) appoint the Head of Prevention of Money Laundering and Terrorism Financing with the concurrence of the Board of ~~Directors in order to get its approval. In addition, this committee is responsible~~Directors; (ix) inform the control authorities about the removal or resignation of the Corporate Compliance Officer before the FIU within 15 business days of the occurrence, stating the relevant causes of such removal or resignation; (x) coordinate with Internal Audit for the ~~application~~periodic implementation of external audits carried out by recognized firms specialized in the ~~general policies and strategies approved by the Board of Directors, approving the internal procedures necessary to assure~~field; (xi) ensure due compliance with the ~~legal framework~~reporting duties to the competent authorities; and ~~policies effective over such areas, promoting~~(xii) carry out all those functions as may be established by the ~~implementation of such policies~~Central Bank and ~~controlling compliance.~~the FIU from time to time..

The following table sets forth ~~certain relevant information on~~ the members of the committee on control and prevention of money laundering and financing of terrorism:

Name
Position
~~Emérico Alejandro Stengel~~
~~Director~~
Atilio Dell’Oro Maini
Director,
Chairman of the Committee and Corporate Compliance Officer with the FIU
~~Nerio Peitiado~~
Alejandra Naughton
~~Member~~
Director and Alternate Compliance Officer with the FIU
~~Sergio Gabai~~
~~Member~~
Juan Cuccia
Member —– Head of AML – Secretary
~~Pablo Schweitzer~~
~~Assistant Secretary~~

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Banco Supervielle S.A.’s Risk Management Committee

The Risk Management Committee sets forth policies and limits to financial risks (including market risk, credit risk, liquidity risk, interest rate risk, exchange risk and other risks) and submits to the Board of Directors the appropriate proposals. Furthermore, this committee supervises the degree of correlation between the risks assumed and the risk profile set forth by the Board of Directors, and analyzes and approves investment and funding policies.

The following table sets forth the members of the Risk Management Committee:

Name
Position
Julio Patricio Supervielle
Chairman
of the Board, Chairman of the Committee
~~Jorge Ramírez~~
Richard Guy Gluzman
~~Member~~
Director
Emérico Alejandro Stengel
~~Member~~
CEO
~~Nerio Peitiado~~
Silvio Margaria
~~Member~~
Deputy CEO and COO
Pablo Di Salvo
Chief Credit Officer, Member
~~Alejandra Naughton~~
Mariano Biglia
CFO, Member
Hernán Oliver
Head of Treasury and Global Markets, Member
Javier Conigliaro
CRO, Member —– Secretary
Sabrina Roiter
Head of Credit Risk, Member
Fernando Bodasiuk
Head of Financial Risks, Member
~~Laurence Loyer~~
~~Permanent Guest~~
~~Juan Lombardini~~
~~Permanent Guest~~
~~Ana Bartesaghi~~
~~Permanent Guest~~
~~Leandro Conti~~
~~Permanent Guest~~

Banco Supervielle S.A.’s Credit Committee

The Bank’s credit committee is formed by ~~two directors and~~ the ~~Bank’s~~Chairman of the Board, the CEO, the Chief Credit Officer, the Deputy CEO and COO, the Chief Risk Officer, the Head of Treasury and Global Markets, the Head of Corporate Banking, ~~and certain~~the Credit Officer for Corporate Banking ~~Officers. The Chairman~~and Financial Institutions, the Credit Officer for SMEs and the Commercial Manager of ~~the Risk Committee of Grupo Supervielle is a permanent invitee to their meetings.~~Personal and Businesses Banking.

Banco Supervielle S.A.’s other management committees

The Bank has other management committees, such as the ~~Executive Committee, formed by the CEO and the Senior managers, the~~ Assets and Liabilities ~~Committee, the Retail Banking Credit~~ Committee and the Operational and Reputational Risk Committee.

Management of Our Other Subsidiaries

The senior management of our other subsidiaries is in charge of the implementation and execution of those subsidiaries’ overall short-term and strategic objectives and reports to the respective ~~CEOs~~Boards of Directors of those ~~companies.~~ companies, and functionally to Grupo Supervielle’s CEO.
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The CEO of CCF, Tarjeta, Espacio Cordial and ~~Tarjeta~~Mila is ~~Carlos Depalo,~~Juan Martin Monteverdi, the CEO of SAM is Guillermo Guichandut, the CEO of Supervielle Seguros is Diego Squartini, and the CEO of ~~Espacio Cordial~~InvertirOnline is ~~Juan Martin Monteverdi.~~Christel Sasse.

Set forth below are brief biographical descriptions of the CEOs of our other subsidiaries.

~~Carlos Depalo~~ Juan Martin Monteverdi has been responsible of the consumer finance units of Grupo Supervielle since August 2018. He also serves as Director of Bolsillo Digital S.A.U. He has been Chief Executive Officer Cordial Servicios since April 2014 and Chief Executive Officer of ~~CCF~~Cordial Compañía Financiera, Tarjeta Automática and Mila since ~~2011.~~September 2018. He ~~graduated from~~studied Business Management at the Universidad Nacional de ~~Buenos Aires as a Public Accountant~~Quilmes and ~~attended the Advanced~~took courses in Management, ~~Program~~Leadership and Sales at ~~The~~ IAE Business ~~School. Between 2004~~School and Universidad Austral. From June 2011 to April 2014 he ~~worked at GE Money (General Electric) serving as Sales & Marketing Director. During 2004 he held~~was the ~~position of Alternative Channels~~Branch Network Manager at Banco ~~Comafi.~~Supervielle. From ~~2001~~July 2009 to ~~2003,~~July 2011 he ~~served as Business Planning~~was Territorial Manager ~~at Orígenes AFJP. From 1996 to 2001~~for Retail Banking and since 2006 he held ~~Business Management~~several managerial positions also at Banco ~~Río (Santander).~~Supervielle.

Guillermo Guichandut has served as CEO of SAM since 2005. He also serves as Chairman of the Board of Directors of SAM. He received a degree in public accounting from Universidad Nacional de la Plata, and has completed a masters in Banking Management at the Universidad del CEMA. He is currently an Adjunct Professor of financial mathematics in the Economics department of the Universidad Nacional de la Plata. He is a member of the Executive Committee of the Argentine Chamber of Mutual Funds and President of its Communication Commission. Mr. Guichandut has vast experience in the financial sector, having worked at Bank of Boston and Banco Société Générale Argentina until his appointment as General Manager at SAM in 2005.

Diego Squartini has been Chief Executive Officer of Supervielle Seguros since 2013. He obtained a degree in Economics and a Master’s degree in Business Management from Universidad Nacional de Cuyo. He also attended the Leadership Program at Universidad Austral. From 2010 to 2013, he served as Regional Manager at Banco Supervielle. From 2004 to 2010 he was the Financial Manager at Banco Regional de Cuyo. From 2000 to 2004, he worked as Corporate Business Manager and from 1995 to 2000 as Branch Manager, also at Banco Regional de Cuyo.

~~Juan Martin Monteverdi~~ Christel Sasse has been appointed Chief Executive Officer of ~~Cordial Servicios since April 2014. He studied Business Management~~InvertirOnline in March, 2021. She joined InvertirOnline as Chief Product Officer in June 2020 bringing 17 years’ experience in product management, marketing, e-commerce and digital marketing. Earlier, she held several positions at Eventbrite, Thomson Reuters, Mercado Libre, and Procter&Gamble. She holds an Industrial Engineer degree from the Universidad Tecnológica Nacional ~~de Quilmes~~Buenos Aires, a Postgraduate Degree in Capital Markets from Universidad del Salvador and ~~took courses~~a Master in ~~Management, Leadership~~Internationalization of Local Development, Economic Science and ~~Sales at IAE Business School and Universidad Austral. From June 2011 to April 2014 he was~~Social Science from the Branch Network Manager at Banco Supervielle. From July 2009 to July 2011 he was the Territorial Manager for Retail Banking and since 2006 he held several managerial positions also at Banco Supervielle.
~~Employees~~University of Bologna.

~~We had~~ Employees~~5,320 employees at December 31, 2017, 4,982 employees at December 31, 2016 and 4,843 employees at December 31, 2016.~~

We had 5,021 employees (Includes permanent and temporary employees) as of December 31, 2020, 5,084 employees as of December 31, 2019 and 5,253 employees as of December 31, 2018.
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At the holding company we had 107 employees atas of December 31, ~~2017 and 6~~2020, 9 employees atas of December 31, ~~2016~~2019 and 612 employees atas of December 31, ~~2015. At~~2018.
Banking Business employees:
As of December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 the Bank had ~~3,835, 3,522~~3,706, 3,837 and ~~3,398~~3,936 employees, respectively. AtAs of December 31, ~~2017, 65.8%~~2020, 70.3% of the Bank’s employees were members of a national union in which membership is optional. The Bank has not experienced any significant conflicts with this union.
All management positions in the Bank are held by non-union employees. AtAs of December 31, ~~2017,~~2020, the Bank’s employees were under collective bargaining agreement No. 18/75, which regulates labor contracts of financial entities, while the Bank’s managers were covered by general contractual labor laws. However, senior management, as is the case for all other banks in Argentina, is not under a union’s supervision with respect to remuneration and other labor conditions and follows the applicable regulation in this respect.

The Bank currently does not maintain any pension or retirement program for its employees. In order to incentivize the performance of its employees, the Bank implemented several incentive payment plans for its employees linked to performance and results.

~~At December 31,~~ ~~2017, 2016 and 2015, CCF~~Consumer Finance Segment had ~~501, 703 and 701~~1,011 employees ~~respectively. At December 31, 2017, 42.3% of CCF’s employees were under the collective bargaining agreement~~ ~~Convenio Colectivo de Empleados de Comercio No.130/75~~ (~~Convenio de Comercio~~), which regulates labor contracts of non-banking, financial institutions. The remaining 57.7% of employees, all managers and some senior analysts, were covered only by general contractual labor laws. In addition, at December 31, 2017, 0.6%:
• As of December 31, 2020, 2019 and 2018, CCF had 477, 452 and 346 employees, respectively. At December 31, 2020, 38.7% of CCF’s employees were under the collective bargaining agreement Convenio Colectivo de Empleados de Comercio No.130/75 (Convenio de Comercio), which regulates labor contracts of non-banking, financial institutions. The remaining 61.3% of employees, all managers and some senior analysts, were covered only by general contractual labor laws. In addition, as of December 31, 2020, 1.5% of CCF’s employees were members of the Commerce Employees Union (Sindicato de Empleados de Comercio).

• At As of December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, Tarjeta had ~~739, 487~~386, 422 and ~~479~~538 employees, respectively. AtAs of December 31, ~~2017, 92.3%~~2020, 93.7% of Tarjeta’s employees were under the collective bargaining agreement Convenio Colectivo de Empleados de Comercio No.130/75 (Convenio de Comercio). The remaining ~~7.7%~~6.3% of employees, all managers and some senior analysts, were covered by general contractual labor laws.
At December 31, 2017, and 2016 SAM had 12 employees and 11 in December 31, 2015. Employees of SAM are not unionized and are covered only by general contractual labor laws. SAM currently does not maintain any pension or retirement program for its employees. SAM incentivizes employee performance through several incentive payment plans linked to performance and results.
At ~~December 31, 2017, 2016 and 2015, Espacio Cordial had 132, 120 and 113 employees, respectively. At December 31, 2017, 100%~~
As of December 31, 2020, 2019 and 2018, Espacio Cordial had 119, 119 and 125 employees, respectively. As of December 31, 2020, 99.1% of Espacio Cordial’s employees were under the collective bargaining agreement No. 18/75, which regulates labor contracts of financial entities, including the Bank’s. In addition, as of December 31, 2020, 77.8% of Espacio Cordial’s employees were union members.
280
• As of December 31, 2020, and 2019, MILA had 29 employees and 32 employees. As of December 31, 2020, 62.1% of MILA’s employees were under the collective bargaining agreement ~~No. 18/~~Convenio Colectivo de Empleados de Comercio No.130/75 ~~which regulates~~(Convenio de Comercio). The remaining 37.9% of employees were covered by general contractual labor ~~contracts~~laws.
Insurance Segment had 151 employees
• As of ~~financial entities, including the Bank’s. In addition, at~~ December 31, ~~2017, 68.9% of Espacio Cordial’s employees were union members.~~
At ~~December 31, 2017,~~2020, 2019, and 2018, Supervielle Seguros had ~~91 employees. At~~129, 122 and 106 employees respectively. As of December 31, ~~2017, 12 out of 91~~2020, 10.9% of its employees were union members from the Sindicato del Seguro de la República Argentina. At December 31, ~~2017, 89 out~~2020, 93.8% of 91its employees were under the collective bargaining agreement No. 264/95 Convenio Colectivo de Empleados de Seguros y Reaseguros.
As of December 31, 2020, Supervielle Productores Asesores de Seguros had 22 employees. None of its employees were under the collective bargaining agreement.
InvertirOnline S.A.U. and Invertironline.com Argentina S.A.U. had 135 employees:

~~Grupo Supervielle has grown significantly since 2001.~~
• As of December 31, ~~2017, Grupo Supervielle~~2020, InvertirOnline S.A.U. and Invertironline.com Argentina S.A.U. had ~~5,320~~124 and 11 employees, ~~as compared to~~respectively. As of December 31, ~~2001, when the Bank (operating~~2020, 25.7% of InvertirOnline S.A.U. employees were under ~~the name Banco San Luis S.A., Banco Comecial Minorista) had 515 employees.~~
~~Compensation~~
Labor relations in Argentina are governed by specific legislation, such as labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be conducted. Every industrial or commercial activity is regulated by a specific collective bargaining agreement that groups together companies according to industry sectors and by trade unions. While the process of negotiation is standardized, each chamber of industrial or commercial activity negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity. In the banking sector, salaries are established on an annual basis through negotiations between the chambers that represent the banks and the banking employees’ trade union. The National Labor Ministry mediates between the parties and ultimately approves the annual salary increase to be applied in the banking activity. Parties are bound by the final decision once it is approved by the labor authority and must observe the established salary increases for all employees that are represented by the banking union and to whom the collective bargaining agreement ~~applies.~~Convenio Colectivo de Empleados de Comercio No.130/75 (Convenio de Comercio). Employees of InvertirOnline S.A.U. and Invertironline.com are not unionized and are covered only by general contractual labor laws.
Supervielle Asset Management employees:

As of December 31, 2020, 2019 and 2018, SAM had 11, 12 and 12 employees respectively. Employees of SAM are not unionized and are covered only by general contractual labor laws. SAM currently does not maintain any pension or retirement program for its employees. SAM incentivizes employee performance through several incentive payment plans linked to performance and results.
Compensation
Labor relations in Argentina are governed by specific legislation, such as labor Law No. 20,744 and Collective Bargaining Law No. 14,250, which, among other things, dictate how salary and other labor negotiations are to be conducted. Every industrial or commercial activity is regulated by a specific collective bargaining agreement that groups together companies according to industry sectors and by trade unions. While the process of negotiation is standardized, each chamber of industrial or commercial activity negotiates the increases of salaries and labor benefits with the relevant trade union of such commercial or industrial activity. In the banking sector, salaries are established on an annual basis through negotiations between the chambers that represent the banks and the banking employees’ trade union. The National Labor Ministry mediates between the parties and ultimately approves the annual salary increase to be applied in the banking activity. Parties are bound by the final decision once it is approved by the labor authority and must observe the established salary increases for all employees that are represented by the banking union and to whom the collective bargaining agreement applies.
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For the past ten years, negotiations have taken place during the first half of the year.

In addition, each company is entitled, regardless of union-negotiated mandatory salary increases, to give its employees additional merit increases or variable compensation schemes.

Item 7. Shareholders and Related Party Transactions

Item ~~7.A.~~7.A Major Shareholders
~~As of April 24, 2018,~~
As of April 29, 2021, we had 456,722,322 outstanding shares of common stock, consisting of 61,738,188 Class A shares and 394,984,134 Class B shares, all with a par value of Ps.1.00 per share. Each share of our common stock represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share. As of March 31, 2021, we had approximately 12,500 holders of record of our shares.
The table below sets forth information concerning the ownership of our Class A and Class B shares as of April 29, 2021. We are not aware of any other shareholder or holder of ADSs that beneficially owns 5.0% or more of any voting class of our securities.
Shareholder Name Class A Shares 5
votes Class B Shares 1
Vote Total Shares Percentage
of Capital
Stock Total Votes Percentage
of Votes
Julio Patricio Supervielle 61,738,188 98,684,713 (*) 160,422,901 35.124822 % 407,375,653 57.89258 %
Other — 296,299,421 296,299,421 64.875178 % 296,299,421 42.10742 %
Total: 61,738,188 394,984,134 456,722,322 100.00 % 703,675,074 100.000 %
(*) Includes: (i) 12,784,713 Class B shares of common stock ~~consisting~~ of ~~126,738,188 Class A shares and 329,984,134~~the Company, par value Pesos 1.00 per share, (ii) 85,900,000 Class B shares all with a par value of Ps.1.00 per share. Each share of our common stock represents the same economic interests, except that holders of our Class A shares are entitled to five votes per share and holders of our Class B shares are entitled to one vote per share. As of March 28, 2018, we had approximately 5,560 holders of record of our shares.
The table below sets forth information concerning the ownership of our Class A and Class B shares as of April 26, 2018. We are not aware of any other shareholder or holder of ADSs that beneficially owns 5.0% or more of any voting class of our securities.
Shareholder
Name

Class A
Shares 5
votes

Class B Shares 1
Vote

Total Shares

Percentage
of Capital
Stock

Total Votes

Percentage
of Votes

Julio Patricio Supervielle

126,738,188

37,030,422

163,768,610

35.85737
%
670,721,362

69.60036
%
Capital World Investors(1)

—

26,397,070

26,397,070

5.77968
%
26,397,070

2.73921
%
Other

—

266,556,642

266,556,642

58.36295
%
266,556,642

27.66043
%
Total:

126,738,188

329,984,134

456,722,322

100.00
%
963,675,074

100.000
%
~~(1) Based on a Schedule 13G filed~~represented by ~~Capital World Investors on February 8, 2018. Held in the form of~~17,180,000 ADSs.
As of April 19, 2021, we have identified 16 record holders of our ADSs (each representing the right to receive five Class B shares) in the United States, and 6 record holders of our Class B shares in the United States. The record holders of our ADSs located in the United States, in the aggregate, held, as of April 19, 2021 approximately 1.4 million of our ADSs, representing approximately 2.3% of our ADSs and 1.8% of our Class B shares.
Share Ownership of Banco Supervielle S.A.
As of April 29, 2021, the Bank had 829,563,871 outstanding shares of common stock, consisting of 930,371 Class A shares and 828,633,500 Class B shares, all with a par value of Ps.1.00 per share. Each share of the Bank’s common stock represents the same economic interests, except that holders of its Class A shares are entitled to five votes per share and holders of Class B shares are entitled to one vote per share.
282
The following table sets forth information regarding the ownership of the Bank’s Class A and Class B shares as of April 29, 2021:
Shareholder Name Class A
Shares 5 votes Class B
Shares 1 Vote Total Shares Percentage of
Capital Stock Total Votes Percentage of
Votes
Grupo Supervielle S.A. 830,698 804,702,309 805,533,007 97.103 % 808,855,799 97,068 %
Sofital S.A.F.e.I.I.⁽¹⁾ 49,667 23,131,588 23,181,255 2.7944 % 23,379,923 2.806 %
Other Shareholders 50,006 799,603 849,609 0.1024 % 1,049,633 0.126 %
Total: 930,371 828,633,500 829,563,871 100 % 833,285,355 100 %
An in-kind capital contribution by Mr. Julio Patricio Supervielle of 7,672,412 non-endorsable ordinary registered shares of Sofital S.A.F. e I.I. to Grupo Supervielle was approved at a shareholders’ meeting of Grupo Supervielle dated April 27, 2017. The capitalization of such capital contribution was approved by the CNV and registered by the IGJ on February 28, 2018.
As of April 20, 2018, we have identified 43 record holders of our ADSs (each representing the right to receive five Class B shares) in the United States, and no record holders of our Class B shares in the United States. The record holders of our ADSs located in the United States, in the aggregate, held, as of April 20, 2018 approximately 53.2 million of our ADSs, representing approximately 94.5% of our ADSs and 80.6% of our Class B shares.
~~Share Ownership of Banco Supervielle S.A.~~
As of April 24 2018, the Bank had 744,386,351 outstanding shares of common stock, consisting of 930,371 Class A shares and 743,455,980 Class B shares, all with a par value of Ps.1.00 per share. Each share of the Bank’s common stock represents the same economic interests, except that holders of its Class A shares are entitled to five votes per share and holders of Class B shares are entitled to one vote per share.
~~The following table sets forth information regarding the ownership of the Bank’s Class A and Class B shares as of April 24, 2018:~~
Shareholder Name

Class A
Shares
5 votes

Class B
Shares
1 Vote

Total Shares

Percentage
of Capital
Stock(1)

Total Votes

Percentage
of Votes

Grupo Supervielle S.A.(2)

830,698

719,516,097

720,346,795

96.77
%
723,669,587

96.73
%
Sofital S.A.F.e.I.I.(3)

49.667

23,131,588

23,181,255

3.11
%
23,379,923

3.13
%
Other Shareholders

50,006

808,295

858,301

0.12
%
1,058,325

0.14
%
Total:

930,371

743,455,980

744,386,351

100
%
748,107,835

100
%
(1)                                 ~~Percentages in the chart have been adjusted by rounding. It is possible that such percentages do not represent arithmetic aggregations of the figures used for its calculation.~~
~~(2)~~                                 Grupo Supervielle is a financial services holding company organized under the laws of Argentina of which Julio Patricio Supervielle owns 35.86% of the capital stock, with a 69.60% of total voting rights.
~~(3)~~
Sofital is a corporation organized under the laws of Argentina of which Grupo Supervielle owns 96.8% and Espacio Cordial owns 3.2%.
~~Item 7.B~~~~Related Party Transactions~~
Other than as set forth below, we are not a party to any material transactions with, and have not made any loans to any (i) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by us; (ii) associates (~~i.e.~~, an unconsolidated enterprise in which we have a significant influence or which has significant influence over us); (iii) individuals owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, as applicable, and close members of any such individual’s family (~~i.e.~~~~, those family members that may be expected to influence, or be influenced by, that person in their dealings with us, as applicable); (iv) key management personnel (~~~~i.e.~~, persons that have authority and responsibility for planning, directing and controlling our activities, including directors and senior management of companies and close members of such individual’s family); or (v) enterprises in which a substantial interest is owned, directly or indirectly, by any person described in (iii) or (iv) over which such a person is able to exercise significant influence nor are there any proposed transactions with such persons. For purposes of this paragraph, this includes enterprises owned by our directors or major shareholders that have a member of key management in common with us, as applicable. In addition, “significant influence” means the power to participate in the financial and operating policy decisions of the enterprise, but means less than control. Shareholders beneficially owning a 10% interest in our voting power are presumed to have a significant influence on us.
~~Management Services~~
To the extent that there are no conflicts of interest, we lend management services to our subsidiaries, the Bank, Tarjeta, SAM, Sofital, CCF and Espacio Cordial. Our services include: financial and commercial advisory services, fiscal planning and optimization, defining auditing policies, developing and evaluating upper management, elaborating annual budgets, planning and developing complementary activities and defining the mission of related companies and policies related to social responsibility. These services are provided pursuant to agreements that provide that our subsidiaries will indemnify us for any claim, damage, liability, tax, cost and expense incurred or suffered by us in connection with financial transactions in which such subsidiaries were engaged. The management’s fees are equal to the ordinary and extraordinary costs incurred plus a mark-up of 20% plus 21% VAT. If the services to be provided are of an extraordinary nature, we have the right to additional compensation, the amount of which shall be determined in each case.
~~The following table sets forth information regarding fees received from our subsidiaries and related parties for our management services for the year ended December 31, 2017.~~
~~Year ended December 31, 2017~~
~~(in thousands of Pesos, plus VAT)~~
~~Bank~~
~~Ps.~~
~~48,180~~
~~Tarjeta~~
~~156~~
~~Cordial Microfinanzas~~
42
~~SAM~~
~~473~~
~~Sofital~~
~~103~~
~~Viñas del Monte~~
5
~~CCF~~
~~4,764~~
~~Espacio Cordial~~
~~264~~
~~Total.~~
~~53,987~~

~~Operator Services Agreement with the Bank~~Item 7.B Related Party Transactions
Other than as set forth below, we are not a party to any material transactions with, and have not made any loans to any (i) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by us; (ii) associates (i.e., an unconsolidated enterprise in which we have a significant influence or which has significant influence over us); (iii) individuals owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, as applicable, and close members of any such individual’s family (i.e., those family members that may be expected to influence, or be influenced by, that person in their dealings with us, as applicable); (iv) key management personnel (i.e., persons that have authority and responsibility for planning, directing and controlling our activities, including directors and senior management of companies and close members of such individual’s family); or (v) enterprises in which a substantial interest is owned, directly or indirectly, by any person described in (iii) or (iv) over which such a person is able to exercise significant influence nor are there any proposed transactions with such persons. For purposes of this paragraph, this includes enterprises owned by our directors or major shareholders that have a member of key management in common with us, as applicable. In addition, “significant influence” means the power to participate in the financial and operating policy decisions of the enterprise, but means less than control. Shareholders beneficially owning a 10% interest in our voting power are presumed to have a significant influence on us.
Management Services
To the extent that there are no conflicts of interest, we lend management services to our subsidiaries, the Bank, Tarjeta, SAM, Sofital, CCF and Espacio Cordial. Our services include: financial and commercial advisory services, fiscal planning and optimization, defining auditing policies, developing and evaluating upper management, elaborating annual budgets, planning and developing complementary activities and defining the mission of related companies and policies related to social responsibility. These services are provided pursuant to agreements that provide that our subsidiaries will indemnify us for any claim, damage, liability, tax, cost and expense incurred or suffered by us in connection with financial transactions in which such subsidiaries were engaged. The management’s fees are equal to the ordinary and extraordinary costs incurred plus a mark-up of 20% plus 21% VAT. If the services to be provided are of an extraordinary nature, we have the right to additional compensation, the amount of which shall be determined in each case.
283
The following table sets forth information regarding fees received from our subsidiaries and related parties for our management services for the years ended December 31, 2020 and 2019.
Grupo Supervielle S.A.
Year ended December 31,
2020 2019

(in thousands of Pesos, plus VAT)
Bank 178,269 127,586
Tarjeta 423 404
SAM 1,439 1,372
Sofital 148 142
CCF 13,182 12,575
Espacio Cordial 741 705
Total 194,202 142,784
Operator Services Agreement with the Bank
In March 2016, we entered into an agreement with the Bank pursuant to which the Bank will provide accounting, administrative, legal and treasury services to us. The Bank’s services include, among others: accounting records of transactions and preparation of financial statements, management of institutional relations, structuring and management of funding instruments, liquidity investment operations management, maintenance of our corporate records, management of compliance with disclosure requirements, registration of corporate acts and compliance with information requirements. Pursuant to this agreement, we paid to the Bank in 2020 a total amount of Ps.851,500. The term of the agreement is one year and may be renewed automatically at maturity for equal and successive periods. This agreement is renewed automatically and it is in force as of the date of this annual report.
Trademark Licenses
In 2013, we signed agreements with Espacio Cordial and CCF granting them licenses to use certain of our trademarks (including our trademarks for “Cordial,” “Carta App” and “Tienda Supervielle.” We granted these trademark licenses to these subsidiaries to enhance the marketing of certain their products and services related to insurance, health, tourism, credit cards and loans, among others. Pursuant to these agreements, we received fees from these companies in 2020 in a total amount of Ps.1,254,100.
Financial Loans
Some of our directors and the directors of the Bank have been involved in certain credit transactions with the Bank as permitted by Argentine law. The AGCL and the Central Bank’s regulations allow directors of a limited liability company to enter into a transaction with such company if such transaction follows prevailing market conditions. Additionally, a bank’s total financial exposure to related individuals or legal entities is subject to the regulations of the Central Bank. Such regulations set limits on the amount of financial exposure that can be extended by a bank to affiliates based on, among other things, a percentage of a bank’s RPC.
The Bank is required by the Central Bank to present to its Board of Directors, on a monthly basis, the outstanding amounts of financial assistance granted to directors, controlling shareholders, officers and other related entities, which are transcribed in the minute books of the Board of Directors. The Central Bank establishes that the financial assistance to directors, controlling shareholders, officers and other related entities must be granted on an equal basis with respect to rates, tenor and guarantees as loans granted to the general public.
284
The financial assistance granted to our directors, officers and related parties by the Bank was granted in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other non-related parties, and did not involve more than the normal risk of collectability or present other unfavorable features.
The following table presents the aggregate amounts of total consolidated financial exposure of the Bank to related parties, the number of recipients, the average amounts and the single largest exposures as of the end of the periods indicated.
As of December 31,
2020 2019

(in thousands of Pesos, except number of recipients)
Aggregate total financial exposure 242,271 1,311,056
Number of recipient related parties 80 70
(a) individuals 71 63
(b) companies 9 7
Average total financial exposure 3,028 23,595
Single largest exposure during the period 933,426 1,120,671
Item 7.C Interests of Experts and Counsel
Not applicable.

In March 2016, we entered into an agreement with the Bank pursuant to which the Bank will provide accounting, administrative, legal and treasury services to us. We will pay the Bank Ps.32.000 (plus 21% VAT) per month for such services. In addition, we will pay the Bank Ps.8.000 (plus 21% VAT) per month for institutional services. The Bank’s services include, among others: accounting records of daily transactions and closing entries, preparation of financial statements, management of accounting records, management of institutional relations, structuring and management of funding instruments, liquidity investment operations management, maintenance of our corporate records, management of compliance with disclosure requirements, registration of corporate acts and compliance with information requirements. The term of the agreement is one year and may be renewed automatically at maturity for equal and successive periods. This agreement was renewed automatically and it is in force as of the date of this annual report.
Item 8. Financial Information

Item 8.A ~~Trademark Licenses~~
In 2013, we signed agreements with Espacio Cordial, CCF and Cordial Microfinanzas granting them licenses to use certain of our trademarks (including our trademarks for “Cordial,” “Cordial Servicios,” “Cordial.com,” “Cordial Servicios Pensados para vos,” “Cordial mucho más que efectivo,” “Cordial Negocios,” “Cordial Negocios un impulso para tus proyectos”). We granted these trademark licenses to these subsidiaries to enhance the marketing of certain their products and services related to insurance, health, tourism, credit cards and loans, among others. Pursuant to these agreements, we received fees from these companies in 2017 in a total amount of Ps.4.5 million.
~~Financial Loans~~
Some of our directors and the directors of the Bank have been involved in certain credit transactions with the Bank as permitted by Argentine law. The Argentine Corporate Law and the Central Bank’s regulations allow directors of a limited liability company to enter into a transaction with such company if such transaction follows prevailing market conditions. Additionally, a bank’s total financial exposure to related individuals or legal entities is subject to the regulations of the Central Bank. Such regulations set limits on the amount of financial exposure that can be extended by a bank to affiliates based on, among other things, a percentage of a bank’s RPC.
The Bank is required by the Central Bank to present to its Board of Directors, on a monthly basis, the outstanding amounts of financial assistance granted to directors, controlling shareholders, officers and other related entities, which are transcribed in the minute books of the Board of Directors. The Central Bank establishes that the financial assistance to directors, controlling shareholders, officers and other related entities must be granted on an equal basis with respect to rates, tenor and guarantees as loans granted to the general public.
The financial assistance granted to our directors, officers and related parties by the Bank was granted in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other non-related parties, and did not involve more than the normal risk of collectability or present other unfavorable features.
The following table presents the aggregate amounts of total consolidated financial exposure of the Bank to related parties, the number of recipients, the average amounts and the single largest exposures as of the end of the periods indicated.

As of December 31,

2017

2016

2015

(in thousands of Pesos)

Aggregate total financial exposure

428,758

281,620

207,787

Number of recipient related parties

76

78

79

(a) individuals

68

69

70

(b) companies

8

9

9

Average total financial exposure

5,642

3,611

2,630

Single largest exposure

336,110

79,709

73,499

~~Irrevocable Capital Contributions and Share Transfers~~
Following the approval at the Shareholders’ Meeting of April 27, 2017, Julio Patricio Supervielle made a capital contribution to Grupo Supervielle in the form of 7,672,412 of newly-issued Sofital shares. As a result of the capital increase, a total of 7,494,710 new Class B shares were subscribed as follows: on July 18, 2017, 4,321,208 were issued to Mr. Julio Patricio Supervielle in return for the in-kind contribution, representing 57.66% of the total capital increase, and 3,173,502 Class B shares were issued to existing shareholders of Grupo Supervielle who exercised their preemptive and accretion rights with respect to the capital increase, representing 42.34% of the total capital increase.
On February 17, 2017, we and the Bank made capital contributions to CCF for Ps.100.0 million. On March 22, 2017, CCF held an Extraordinary Shareholders’ meeting by which it resolved to accept such contributions for increase the capital stock in the amount of Ps.19.3 million increasing it from Ps.104.4 million to Ps.123,7 million, and issue 19,348,722 ordinary, non-endorsable nominative shares with a nominal value of Ps. 1 each and entitled to one vote per share.
~~On March 27, 2017, we made capital contributions to the Bank for Ps.95.0 million.~~
~~On July 24, 2017, we and the Bank made an irrevocable capital contribution in advance of future capital increases to CCF for an amount of Ps.2.5 million and Ps.47.5 million, respectively.~~
On September 20, 2017, we, the Bank and CCF made an irrevocable capital contribution in advance of future capital increases to Tarjeta for an amount of Ps.131.3 million, Ps.15.0 million and Ps.3.8 million, respectively.
On November 24, 2017, we made a capital contribution to the Bank for an amount of Ps.2.6 billion. On same date, the Bank. held an ordinary shareholders’ meeting by which it resolved to accept such contributions and increase the capital stock in the amount of Ps.105.5 million with a paid in capital from Ps.2.5 billion.
~~On December 13, 2017, we and the Bank made an irrevocable capital contribution in advance of future capital increases to CCF for an amount of Ps.30 million and Ps.570 million, respectively.~~
~~On January 16, 2018, we and the Bank made~~ a capital contribution in advance of future capital increases to CCF for an amount of Ps.19.0 million and Ps.361.0 million respectively. On January 24, 2018, CCF held an ordinary shareholders’ meeting by which it resolved to accept the contributions received on July 24, 2017, December 12, 2017 and January 16, 2018, and increase the capital stock in the amount of Ps.56.751 million with a paid in capital from Ps.973.243.
~~On March, 19, 2018, we, the Bank and CCF made a capital contribution to Tarjeta for an amount of Ps.262.5 million, Ps.30.0 million and Ps.7.5 million, respectively.~~
On ~~April, 19, 2018, the shareholders’ meeting of the Bank approved the capitalization of the capital contriubtion commited by us for an amount of Ps.861 million.~~
~~Item 7.C~~~~Interests of experts and counsel~~
~~Not applicable.~~
~~Item 8.~~~~Financial Information~~
~~Item 8.A.~~Consolidated Statements and Other Financial Information.
~~See Item 18 and our audited consolidated financial statements as of and for the three years ended December 31, 2017~~
See Item 18 and our audited consolidated financial statements as of and for the years ended December 31, 2020 and 2019 included in this annual report.

Legal Proceedings

As of the date of this annual report, we are not a party to any legal or administrative proceedings for which the outcome is likely to have a material adverse effect on our results of operations.
The Bank and CCF are party to proceedings relating to collection efforts and other legal or administrative actions initiated in the normal course of business, including certain class actions initiated against a number of banks and financial companies, including ours, by public and private organizations in connection with alleged overcharging on products and interest rates, among others.
The class action lawsuits involving the Bank and CCF are related to alleged overcharging on life insurance, interest rates and administrative charges, fees on the sale price of foreign currency, administrative charges on savings accounts, consumer loans and credit cards, and interest rates in factoring operations, as well as the inadequacy of the contingency risk charge on checking accounts. These types of class actions were brought against every financial entity in Argentina. Some of these lawsuits have been settled by the parties out of court. These settlements have typically involved an undertaking by the financial institution to adjust the fees and charges.
285
In the course of 2020 a new class action has been brought against the Bank in relation to debits of fees or charges from savings accounts and/or credit cards of customers or former customers.
Our subsidiaries are not parties to any legal proceedings, the outcome of which is likely to have a material adverse effect on their respective results of operations.
Dividends
In accordance with the AGCL, our bylaws and CNV regulations, we may make one or more declarations of dividends with respect to any year, including anticipated dividends, out of our distributable net income (ganancias líquidas y realizadas) as reflected in our consolidated balance sheet, or consolidated special interim balance sheet in case of anticipated dividends.
Declaration and payment of dividends to all holders of each class of our shares (Class A, Class B shares and preferred shares (to the extent any such shares are outstanding)), to the extent funds are legally available, is determined by all of our shareholders with voting rights (i.e., our Class A and Class B shareholders) at the annual ordinary shareholders’ meeting. At such annual ordinary shareholders’ meeting, our Class A shares will be entitled to five votes each and our Class B shares will be entitled to one vote each. It is the responsibility of our Board of Directors to make a recommendation to our shareholders with respect to the amount of dividends to be distributed. The Board of Directors’ recommendation will depend on a number of factors, including but not limited to, our operating results, cash flow, financial condition, capital position, legal requirements, contractual and regulatory requirements, and investment and acquisition opportunities. As a general rule, the Board of Directors will favor efficient use of capital in its recommendation-making process. Thus, the Board will recommend reinvesting earnings when there are investment opportunities, or it will recommend distributing dividends when there is excess capital.
However, shareholders are ultimately entitled to overrule the recommendation of the Board of Directors through the affirmative vote of the absolute majority of the present votes at an ordinary shareholders’ meeting.
The Board of Directors may also decide and pay anticipated dividends. In such instance, each individual director and member of the Supervisory Committee will be jointly and severally liable for the payment of such dividends if our retained earnings for the year for which such dividends were paid is insufficient to cover the payment of such dividends.
Dividends are distributed on a pro rata basis according to the number of ordinary shares held by the shareholder. All shares of our capital stock rank pari passu with respect to the payment of dividends, regardless of class. Under CNV regulations, cash dividends must be paid to the shareholders within 30 days of their approval. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of authorization by the CNV for the public offering of such shares. The right of shareholders to demand payment of dividends shall toll three years after the date on which we first make them available to shareholders. Any dividends that are not claimed during this period are deemed extraordinary gains by us.
286
In accordance with Argentine law, our bylaws and CNV regulations, we are required to allocate to our legal reserve 5% of our yearly income, plus or minus the results of prior years, until our legal reserve equals 20% of our adjusted capital stock. Under the AGCL and our bylaws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order: (i) to comply with the legal reserve requirement; (ii) to pay the accrued fees of the members of the Board of Directors and Supervisory Committee; (iii) to pay dividends on preferred stock, which shall be applied first to pending and unpaid accumulated dividends; and (iv) the remainder of the net income for the year may be distributed as additional dividends on preferred stock, if any, or as dividends on common stock, or may be used for voluntary or contingent reserves, or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.
Holders of ADSs will be entitled to receive any dividends payable in respect of our underlying Class B shares. Exchange controls currently in place impair the conversion of dividends, distributions, or the proceeds from any sale of Class B shares, as the case may be, from Pesos into U.S. dollars and the remittance of the U.S. dollars abroad, therefore restricting the ability of foreign shareholders holders of ADSs to receive dividends in U.S. dollars abroad. In particular, with respect to the proceeds of any sale of Class B shares underlying the ADSs, as of the date of this annual report, the conversion from Pesos into U.S. dollars and the remittance of such U.S. dollars abroad is subject to prior Central Bank approval (as described below), although access to the MLC to pay dividends to non-resident shareholders may be granted, subject to certain conditions. See “Item 4.B Business overview—Argentine Banking Regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution.” The ADS deposit agreement provides that the Depositary will convert cash dividends received by the ADS depositary in Pesos to U.S. dollars: if so permitted by, and subject to the limits set forth in, applicable foreign exchange regulations in place at such time and, after deduction or upon payment of fees and expenses of the ADS depositary and deduction of other amounts permitted to be deducted from such cash payments in accordance with the ADS deposit agreement (such as for unpaid taxes by the ADS holders in connection with personal asset taxes or otherwise), will make payment to holders of the ADSs in U.S. dollars. If dividend payments cannot be made in U.S. dollars outside of Argentina, the transfer outside of Argentina of any funds collected by foreign shareholders in Pesos in Argentina may be subject to certain restrictions. See “Item 10.D Exchange Controls” and “Item 3.D Risk Factors.”
In accordance with the provisions of Title IV, Chapter III, Section 3, Subsection b) of the Regulations of the Argentine Securities Commission (Restated Text 2013), we have made use of the option to absorb the accumulated negative results that were generated as a consequence of the inflation adjustment by application of the IAS 29, subject to the ratification of the general shareholders’ meeting.
The general shareholders’ meeting held on April 27, 2021 determined the creation of voluntary reserves under the terms of Section 70 of the AGCL in the amount of Ps.385.2 million for the future distribution of dividends. Our Board of Directors has the discretion to determine the timing, amount, and other terms and conditions of the payment of dividends according to the scope of the delegation made by the general shareholders’ meeting. For more information on current exchange controls applicable to the payment of dividends, see “Item 3.D. —Risk Factors— Risks Relating to Our Class B Shares and the ADSs—Restrictions on transfers of foreign exchange and the repatriation of capital from Argentina may impair your ability to receive dividends and distributions on, and the proceeds of any sale of, the Class B shares underlying the ADSs.”
287
We are a holding company, and in addition to certain management fees we collect from some of our subsidiaries, our main source of cash to pay dividends are the dividends we receive from our subsidiaries. We therefore depend on the results of operations, cash flow and distributable income of our operating subsidiaries, principally the Bank.
We and our subsidiaries are subject to contractual, legal and regulatory requirements affecting our ability to pay dividends.
On January 31, 2020, the Central Bank issued Communication “A” 6886, pursuant to which financial entities must obtain prior approval of the Central Bank in order to distribute dividends. See “Item 4.B Business overview—Argentine Banking Regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution.”
Although distribution of dividends by the Bank has been authorized by the Central Bank at times, no assurance can be given that in the future the Central Bank will not limit the Bank’s ability to distribute dividends approved by its shareholders at the annual ordinary shareholders’ meeting or that such authorization will be for the full amount of dividends that the Bank may distribute pursuant to applicable regulation.
We are required to pay personal assets tax corresponding to Argentine and foreign individuals and foreign entities for the holding of our shares at December 31 of each year. We pay this tax on behalf of our shareholders, whenever applicable, and are entitled, pursuant to the Personal Assets Tax Law, to seek reimbursement of such paid tax from the applicable shareholders in various ways, including by withholding dividends. See “Item 10.E Taxation—Material Argentine Tax Considerations—Personal assets tax.”
In 2020 and 2019, we received the following dividend payments in cash from our subsidiaries: (i) Ps.183.2 million in 2020 and Ps.300.6 million in 2019 from SAM, (ii) Ps.627.3 million in 2020 and Ps.633.8 million in 2019 from Supervielle Seguros, (iii) Ps.36.4 million in 2020 and Ps.45.6 million in 2019 from Sofital, and (iv) Ps.16.1 million in 2020 and Ps. 88.9 million in 2019 from InvertirOnline. We did not receive dividend payments from the Bank or our other subsidiaries during 2020 and 2019.
As described in Note 25 to our audited consolidated financial statements we may pay dividends to the extent that we have distributable retained earnings and distributable reserves calculated in accordance with the rules of the Argentine Central Bank. Therefore, retained earnings included in our audited consolidated financial statements may not be wholly distributable.
Grupo Supervielle paid dividends to its shareholders for 2020 and 2019, totaling approximately Ps.519.6 million and Ps.532.5 million, respectively.
288
Following the Ps385.2 million dividend reserve approved by our general shareholders’ meeting held on April 27, 2021, and the reserve release decided by our board of directors on April 29, 2021, our shareholders’ equity under the rules of the Argentine Central Bank comprise the following captions:
As of December 31, 2020
(In millions of Pesos)
Capital Stock 456.7
Capital Adjustment 2,968.6
Paid in Capital 28,858.2
Legal Reserve 352.3
Other Reserves 2,718.8
Other Comprehensive Income 642.9
Total shareholders’ equity attributable to the owners of the parent under the rules of the Argentine Central Bank 365,997.5
Note: In accordance with the provisions of General Resolution No. 777/18 of the Argentine Securities Commission, the distribution of profits must be treated in the currency of the date of ~~this annual report, we are not a party to any legal or administrative proceedings for which~~ the ~~outcome is likely to have a material adverse effect on our results of operations.~~
~~The Bank and CCF are party to proceedings relating to collection efforts and other legal or administrative actions initiated in~~shareholders’ meeting by using the normal course of business, including certain class actions initiated against a number of banks and financial companies, including ours, by public and private organizations in connection with alleged overcharging on products and interest rates, among others.
Although the provisions regarding class actions held in the Argentine National Constitution and the Consumer Protection Law are currently considered to be insufficient and in need of completion, the Argentine Supreme Court has, nonetheless, admitted class actions, as is the case with lawsuits against financial entities related to “collective interests,” as long as certain procedural requirements are met.
~~The class action lawsuits involving the Bank and CCF are related to alleged overcharging on life insurance, interest rates and administrative charges,~~ ~~fees on the sale~~ price of foreign currency, administrative charges on savings accounts, consumer loans and credit cards, and interest rates in factoring operations, as well as the inadequacy of the contingency risk charge on checking accounts. These types of class actions were brought against every financial entity in Argentina. Some of these lawsuits have been settled by the parties out of court. These settlements have typically involved an undertaking by the financial institution to adjust the fees and charges.
~~Our subsidiaries are not parties to any legal proceedings, the outcome of which is likely to have a material adverse effect on their respective results of operations.~~
~~Dividends~~
In accordance with Argentine Corporate Law, our bylaws and CNV regulations, we may make one or more declarations of dividends with respect to any year, including anticipated dividends, out of our distributable net income ~~(ganancias líquidas y realizadas)~~ ~~as reflected in our consolidated balance sheet, or consolidated special interim balance sheet in case of anticipated dividends.~~
~~Declaration and payment of dividends to all holders of each class of our shares (Class A, Class B shares and preferred shares (to the extent any such shares are outstanding)),~~index corresponding to the ~~extent funds are legally available, is determined by all of our shareholders with voting rights (~~~~i.e.~~~~, our Class A and Class B shareholders) at~~month prior to the ~~annual ordinary shareholders’~~ meeting. ~~At such annual ordinary~~Therefore, the shareholders’ meeting ~~our Class A shares will be entitled to five votes each and our Class B shares will be entitled to one vote each. It is the responsibility of our Board of Directors to make~~approved a recommendation to our shareholders with respect to the amount of dividends to be distributed. The Board of Directors’ recommendation will depend on a number of factors, including but not limited to, our operating results, cash flow, financial condition, capital position, legal requirements, contractual and regulatory requirements, and investment and acquisition opportunities. As a general rule, the Board of Directors will favor efficient use of capital in its recommendation-making process. Thus, the Board will recommend reinvesting earnings when there are investment opportunities or it will recommend distributing dividends when there is excess capital.
However, shareholders are ultimately entitled to overrule the recommendation of the Board of Directors through the affirmative vote of the absolute majority of the present votes at an ordinary shareholders’ meeting.
The Board of Directors may also decide and pay anticipated dividends. In such instance, each individual director and member of the Supervisory Committee will be jointly and severally liable for the payment of such dividends if our retained earnings for the year for which such dividends were paid is insufficient to cover the payment of such dividends.
~~Dividends are distributed on a pro rata basis according to the number of common shares held by the shareholder. All shares of our capital stock rank~~ ~~pari passu~~ with respect to the payment of dividends, regardless of class. Under CNV regulations, cash dividends must be paid to the shareholders within 30 days of their approval. In the case of stock dividends, shares are required to be delivered within three months of our receipt of notice of authorization by the CNV for the public offering of such shares. The right of shareholders to demand payment of dividends shall toll three years after the date on which we first make them available to shareholders. Any dividends that are not claimed during this period are deemed extraordinary gains by us.
~~In accordance with Argentine law, our bylaws and CNV regulations, we are required to allocate to our legal~~dividend reserve 5% of our yearly income, plus or minus the results of prior years, until our legal reserve equals 20% of our adjusted capital stock. Under Argentine Corporate Law and our bylaws, our yearly net income (as adjusted to reflect changes in prior results) is allocated in the following order: (i) to comply with the legal reserve requirement; (ii) to pay the accrued fees of the members of the Board of Directors and Supervisory Committee; (iii) to pay dividends on preferred stock, which shall be applied first to pending and unpaid accumulated dividends; and (iv) the remainder of the net income for the year may be distributed as additional dividends on preferred stock, if any, or as dividends on common stock, or may be used for voluntary or contingent reserves, or as otherwise decided by our shareholders at the annual ordinary shareholders’ meeting.
Holders of ADSs will be entitled to receive any dividends payable in respect of our underlying Class B shares. We will pay cash dividends to the ADS depositary in U.S. dollars abroad, although we reserve the right to pay cash dividends in Pesos in Argentina if so required by applicable foreign exchange regulations in place at the time of payment. The ADS deposit agreement provides that the depositary will convert cash dividends received by the ADS depositary in Pesos to U.S. dollars: if so permitted by, and subject to the limits set forth in, applicable foreign exchange regulations in place at such time and, after deduction or upon payment of fees and expenses of the ADS depositary and deduction of other amounts permitted to be deducted from such cash payments in accordance with the ADS deposit agreement (such as for unpaid taxes by the ADS holders in connection with personal asset taxes or otherwise), will make payment to holders of the ADSs in U.S. dollars. If dividend payments cannot be made in U.S. dollars outside of Argentina, the transfer outside of Argentina of any funds collected by foreign shareholders in Pesos in Argentina may be subject to certain restrictions. Although the transfer of funds abroad by local companies to pay annual dividends only to foreign shareholders based on approved and fully audited consolidated financial statements does not require formal approval by the Central Bank, however, the decrease in availability of U.S. dollars in Argentina in the past years led the Argentine government to impose informal restrictions that consisted of de facto measures restricting local residents and companies from purchasing foreign currency through the MLC to make payments abroad, such as dividends, among others. The Macri administration has since eliminated most of the foreign exchange restrictions in place, but, in the future, the Argentine government or the Central Bank could reintroduce exchange controls and impose restrictions on capital transfers abroad by our shareholders. See “~~Item 10.D Exchange Controls~~~~” and “~~~~Item 3.D Risk Factors~~.”
We are a holding company, and in addition to certain management fees we collect from some of our subsidiaries, our main source of cash to pay dividends are the dividends we receive from our subsidiaries. We therefore depend on the results of operations, cash flow and distributable income of our operating subsidiaries, principally the Bank.
~~We and our subsidiaries are subject to contractual, legal and regulatory requirements affecting our ability to pay dividends.~~
~~In particular, pursuant to Central Bank Communication “A”~~ ~~6464, as amended and supplemented, dividend distributions shall be admitted as long as none of the following circumstances apply:~~
~~(i)~~           ~~the financial institution is not subject to a liquidation procedure or the mandatory transfer of assets by the Central Bank in accordance with sections 34 or 35~~ ~~bis~~ ~~of the FIL;~~
~~(ii)~~        ~~the financial institution is not receiving financial assistance from the Central Bank;~~
~~(iii)~~     ~~the financial institution is in compliance with its reporting obligations to the Central Bank;~~
~~(iv)~~    ~~if the average minimum cash reserve is lower than the amount of cash required by the latest reported position or the pro forma position after making the dividend payment; and/or~~
~~(v)~~       ~~if the financial institution did not comply with the applicable Additional Capital Margins (as defined below).~~
Financial institutions that comply with all of the above mentioned conditions may distribute dividends up to an amount equal to: (i) the positive balance of the account “unappropriated earnings” (resultados no asignados) at the end of the fiscal year, plus (ii) voluntary reserves for future payments of dividends, minus (iii) voluntary reserves and mandatory statutory reserves registered as of that date and other items, such as (a) 100% of the debit balance of each of the items recorded under “Other accumulated comprehensive income”, (b) the result from the revaluation of property, plant, equipment and intangible assets and investment properties, (c) the net positive balance of the book-value and the market-value of certain public debt securities and Central Bank notes that the financial institution owns that are not marked to market, (d) unrecorded adjustments of asset value informed by the Superintendency or mentioned by external auditors on their report, and (e) individual exemptions for asset valuation granted by the Superintendency. In addition, pursuant to Central Bank Communication “A” 5827, as of January 1, 2016, financial entities are required to establish a capital margin in addition to their minimum capital requirements, for the purpose of accumulating their own resources, which they will be able to use if they incur losses. The higher the use of such marginal amounts, the higher the percentage of profits that financial entities will be required to withhold in order to restore that margin. See “~~Item 4.~~B ~~Business overview—~~~~Argentine Banking Regulation—Liquidity and Solvency Requirements—Requirements Applicable to Dividend Distribution~~.”
~~Although distribution of dividends by the Bank has been authorized by the Central Bank at times, no assurance can be given that~~ in the future the Central Bank will not limit the Bank’s ability to distribute dividends approved by its shareholders at the annual ordinary shareholders’ meeting or that such authorization will be for the full amount of dividends that the Bank may distribute pursuant to applicable regulation.
We are required to pay personal assets tax corresponding to Argentine and foreign individuals and foreign entities for the holding of our shares at December 31 of each year. We pay this tax on behalf of our shareholders, whenever applicable, and are entitled, pursuant to the Personal Assets Tax Law, to seek reimbursement of such paid tax from the applicable shareholders in various ways, including by withholding dividends. See “~~Item 10.E Taxation—Material Argentine Tax Considerations—Personal assets tax~~.”
Over the past five years, we received dividend payments in cash from SAM for 2016, 2015, 2014, 2013 and 2012 of Ps.73.0, Ps.77.5; Ps.17.1 million, Ps.16.1 million and Ps.9.0 million, respectively, Ps.7.0 million from Tarjeta Automatica in 2015, Ps. 23.1 million and Ps.42.3 million from Espacio Cordial in 2016 and 2015 respectively and Ps.6.5 million from Sofital in 2015. We received dividend payments in cash from Supervielle Seguros for the period ended on June 30, 2017, June 30, 2016 and June 30, 2015 of Ps. 150.0 million, Ps.76.8 million and Ps.4.8 million, respectively. We did not receive dividend payments from the Bank and our other subsidiaries. However, we received a distribution of dividends in the form of Bank shares for 2012 for an amount ~~equal~~of Ps.385.2 million corresponding to ~~Ps.97.4 million.~~
~~Grupo Supervielle paid dividends to its shareholders for 2016, 2015, 2014, 2013, 2012 and 2011 totaling approximately Ps.65.5, Ps.25.2~~the Ps.341 million ~~Ps.7.4 million, Ps.8.3 million, Ps.8.7 million and Ps.24.4 million, respectively.~~
On February 19, 2018, our Board of Directors proposed a distribution of dividends in cash for the 2017 fiscal year of Ps.243.7 million. On April 24, 2018, our ordinary shareholders’ meeting approved the dividend payment for the 2017 fiscal yearincluded in the ~~amounts~~board of ~~Ps.243.7~~ ~~million~~.
directors proposal.

Item 8.B Significant Changes

~~Not applicable.~~
In addition to the information set forth in this section, additional information on significant changes can be found in “Item 3. Key Information— D. Risk Factors.” and in “Item 5.—A. Operating Results.”
The Ongoing COVID-19 Pandemic
The ongoing COVID-19 pandemic and government measures taken to contain the spread of the virus are disrupting economic activity. The ongoing COVID-19 pandemic has significantly increased economic uncertainty.
For more information, see “Item 3. Key Information—D. Risk Factors.—Risk Factors—Risks Relating to Argentina—The ongoing COVID-19 pandemic and government measures to contain the virus are adversely affecting our business and results of operations, and, as conditions are evolving rapidly, we cannot accurately predict the ultimate impact on the Group” and “Item 5. A. —Operating Results—The Ongoing COVID-19 Pandemic.”
Argentina’s Sovereign Debt Restructuring
As of the date of this annual report, there is uncertainty as to whether the Argentine government will be able to successfully negotiate a new program with the IMF. For more information, see “Item 3. Key Information— D. Risk Factors— Risk Factors–Risks Relating to Argentina–The Argentine government’s ability to obtain financing from the international loan and capital markets may be limited or costly, which may impair its ability to implement reforms and foster economic growth.” and “Item 5.A.—Operating Results—The Argentine Economy and Financial System—Argentina’s Sovereign Debt Restructuring.”
289
Item 9. The Offer and Listing
Item 9.A Offer and Listing Details
The information set forth in Exhibit 2(d), “Description of Securities Registered under Section 12(b) of the Exchange Act” is incorporated herein by reference.

~~The following table sets forth, for the periods indicated, the annual high and low market prices for the Class B Shares on the ByMA and the ADSs on the NYSE.~~
Item 9.B Plan of Distribution
Not applicable.

ByMA

NYSE

Ps. per Class B Share

U.S.$ per ADS

Year

High

Low

High

Low

2016(1)

47.50

31.85

15.40

11.20

2017

112.90

40.59

30.08

13.36

~~The following table sets forth, for the periods indicated, the annual high and low market prices for the Class B Shares on the ByMA and the ADSs on the NYSE.~~

ByMA

NYSE

Ps. per Class B Share

U.S.$ per ADS

Period

High

Low

High

Low

2016

Second Quarter(1)

37.90

31.85

12.88

12.10

Third Quarter

46.00

37.45

15.40

12.55

Fourth Quarter

47.50

39.00

15.26

11.20

ByMA

NYSE

Ps. per Class B Share

U.S.$ per ADS

Period

High

Low

High

Low

2017

First Quarter

53.10

40.90

17.00

13.40

Second Quarter

59.71

49.87

18.26

16.32

Third Quarter

86.00

58.07

24.69

16.94

Fourth Quarter

112.90

82.20

30.08

23.41

ByMA

NYSE

Ps. per Class B Share

U.S.$ per ADS

Period

High

Low

High

Low

2018

First Quarter

134.90

112.00

33.01

28.26

~~The following table sets forth, for the periods indicated, the annual high and low market prices for the Class B Shares on the ByMA and the ADSs on the NYSE.~~

ByMA

NYSE

Ps. per Class B Share

U.S.$ per ADS

Period

High

Low

High

Low

2017

October

94.00

83.65

27.01

23.89

November

97.75

82.20

27.67

23.41

December

112.90

90.60

30.08

26.38

2018

January

128.70

112.00

33.01

29.40

February

134.90

112.00

32.59

28.26

March

125.70

116.50

30.84

28.40

April(2)

126.50

109.00

31.21

26.55

Item 9.C ~~(1)~~         ~~Values available for our Class B Shares and ADS from May 19, 2016, the first trading day on the ByMA and NYSE, respectively.~~
~~(2)~~         ~~From April 1 through April 26, 2018.~~
C. Markets.
On May 18, 2016, we completed our IPO. Since May 19, 2016, our ADSs representing Class B shares have been trading on the NYSE under the symbol ‘SUPV.’ Our Class B shares are currently traded on the ByMA (MERVAL since May 2016, ByMA since April 2017) and MAE (since May 2016) under the symbol ‘SUPV.’
On December 29, 2016, the CNV approved the constitution of ByMA as a new stock market, formed by a spin-off of certain assets of the MERVAL relating to its stock market operations and capital contributions of the Buenos Aires Stock Exchange. Following such authorization, and effective April 17, 2017, the listing of all securities listed on MERVAL have been automatically transferred to ByMA, as successor of MERVAL’s activities. Additionally, the delegation of powers granted by MERVAL to the Buenos Aires Stock Exchange will apply to ByMA and, thus, the Buenos Aires Stock Exchange will continue to carry out the activities referred to in paragraphs b), f) and g) of Article 32 of the Law No. 26,831 on account
On May 18, 2016, we completed our IPO. Since May 19, 2016, our ADSs representing Class B shares have been trading on the NYSE under the symbol ‘SUPV.’ Our Class B shares are currently traded on the ByMA (formerly MERVAL and, ByMA since April 2017) and MAE (since May 2016) under the symbol ‘SUPV.’
On December 29, 2016, the CNV approved the constitution of ByMA as a new stock market, as a spin-off of certain assets of the MERVAL relating to its stock market operations and capital contributions by the Buenos Aires Stock Exchange. Following such authorization, and effective April 17, 2017, all securities listed on MERVAL have been automatically transferred to ByMA, as successor of MERVAL’s activities. Additionally, the delegation of powers granted by MERVAL to the Buenos Aires Stock Exchange will apply to ByMA, thus, the Buenos Aires Stock Exchange will continue to carry out the activities referred to in paragraphs b), f) and g) of Article 32 of the Argentine Capital Markets Law on behalf of ByMA, including the authorization, suspension and cancelling of the listing or trading of securities and acting as arbitration court of such market for all matters concerning listed companies’ relationship with shareholders and investors.

Item 9.D D. Selling Shareholders

Not applicable.

Item 9.E E. Dilution

Not applicable.

F. Item 9.F Expenses of the ~~issue~~
Issue

Not applicable.

Item 10. Additional Information
Item 10.A Share Capital
Not applicable.
290
Item 10.B Memorandum and Articles of Association
The information set forth in Exhibit 2(d), “Description of Securities Registered under Section 12(b) of the Exchange Act” is incorporated herein by reference.

~~Item 10.A.~~~~Share capital~~
~~Not applicable.~~
~~Item 10.B.~~~~Memorandum and articles of association~~
~~Corporate Purpose~~
Our bylaws set forth in Article 4 that our corporate purpose is to carry out financial activities, within or outside of Argentina, either on our own account, or on account of a third party or associated with a third-party, by providing capital, in cash or otherwise, to other existing or newly created companies, assuming their control or not (with the limitations set forth in Section 30 and related sections of the Argentine Corporate Law), or to individuals, as well as stock trading, shares, debentures and all types of securities, the issuance of guarantees, constitution or transfer of secured loans, whether real or not, excluding transactions provided under the Financial Institutions Law and any other law that requires public bidding. We may exercise mandates, representations, agencies and commissions for all transactions related to financial activity and manage assets and businesses of corporations, persons or entities located in Argentina or abroad. To that extent, and according to our bylaws, we have full legal capacity to acquire rights, incur obligations and exercise any kind of acts not prohibited by law or by our bylaws.
~~Rights, Preferences and Restrictions of Each Class of Common Shares~~
Our Class A shares are entitled to five votes each and our Class B shares are entitled to one vote each during shareholders’ meetings, as established in subsection (a) of Article Six of our bylaws.
However, Class A shares are entitled to only one vote with regard to certain issues detailed in the last paragraph of Article 244 of the Argentine Corporate Law, such as: (i) change of our corporate structure; (ii) our early dissolution; (iii) our relocation abroad; (iv) a fundamental change in our corporate purpose; or (v) total or partial recapitalization of our statutory capital after a loss. The provisions set forth in Article 244 of the Argentine Corporate Law will not apply to the surviving entity in a merger or a split-up. Also, under Article 284 of the Argentine Corporate Law, Class A shares are entitled to only one vote in the election of syndics.
Upon request from a shareholder of Class A shares, our Board of Directors must convert all or part of such shareholder’s Class A shares into Class B shares at an exchange rate of one Class B share per one Class A share. Before making the exchange, the Board will verify that there are no restrictions that prohibit or limit the exchange (subsection b) of Article Six of the bylaws.
A two thirds vote by our Class A shares is required, regardless of the percentage of capital they represent, in order for us to duly resolve a merger with another company, our voluntary dissolution, our relocation abroad, and the fundamental change in our corporate purpose (subsection d) of Article Six of the bylaws.
Any person who directly or indirectly acquires through any means or title Class B shares, or any of our stock convertible into Class B shares, in an amount which gives that person control over more than 3% of all Class B shares, must inform us of this within five days (5) of completing the acquisition which causes them to exceed this 3% threshold (subsection e) of Article Six of our bylaws.
The provisions of subsection (f) of Article Six of our bylaws authorize the total or partial redemption of fully paid-in shares, which must be made on the terms provided in Article 223 of the Argentine Corporate Law (including the condition that the shareholders’ meeting set a fair price with respect to the shares to be redeemed) and such other terms as may be determined by our Board of Directors. This partial or total redemption must be approved by the affirmative vote of the absolute majority of the present votes at an extraordinary shareholders’ meeting.
~~Preferred Shares~~
~~Preferred shares may only be issued with the prior approval by a shareholders’ general meeting.~~
The Argentine Corporate Law and our bylaws permit our shareholders to authorize the issuance of preferred shares and determine their rights during a general shareholders’ meeting. These preferred shares may be entitled to accumulated and non-accumulated fixed dividends, with or without additional participation.
Holders of preferred shares may also have other privileges, such as in the event of liquidation. Holders of preferred shares may also have a right to vote. Additionally, if holders of preferred shares are not paid dividends they shall be entitled to vote. Regardless of dividend payments, preferred shares shall also have a right to vote with respect to special issues, such as a change in our corporate structure, a merger into another company (where we are not the surviving company and the surviving company does not trade on an exchange), early liquidation, our relocation abroad, total or partial recapitalization of our statutory capital after a loss and a fundamental change in our corporate purpose as it is described in our bylaws.
~~Shareholders’ Liability~~
Shareholders’ liability for the losses of a company is limited to the value of the shareholder’s shareholdings in the company. According to the Argentine Corporate Law, however, shareholders who have a conflict of interest with the company with respect to certain matters and who do not abstain from voting on such matters may be held liable for damages to the company, provided that their votes were necessary for the adoption of the relevant decision. In addition, shareholders who voted in favor of a resolution that is subsequently declared void by a court as contrary to Argentine laws or a company’s bylaws (or regulations, if any) may be held jointly and severally liable for damages to such company, other shareholders or third parties resulting from such resolution. See also “~~Item 3.D Risk Factors —Risks Relating to Our Class B Shares and the ADSs—Our shareholders may be subject to liability for certain votes of their securities~~.”
~~Preemptive Rights and Accretion Rights~~
According to the Argentine Corporate Law and Article Six, (subsection c) of our bylaws, in the event of a capital increase, holders of common shares of any class have a preferential right, in proportion to the number of shares they hold, to subscribe to additional shares of the same class as those they own. Holders of preferred shares have a preemptive right to subscribe only with respect to the issuance of preferred shares. Preemptive rights will also be given to holders of common shares in the event of an issuance of preferred shares or convertible securities, but will not apply in the event of a conversion of such preferred shares or convertible securities.
~~According to Article 15 of our bylaws and Section 216 of the Argentine Corporate Law, no shares issued after our IPO may be entitled to multiple votes, except as permitted by applicable law.~~
According to Article 194 of the Argentine Corporate Law, shareholders who would have exercised their right to a preemptive subscription and who have indicated their intention to exercise their right to accrue will have the right to assume the preemptive subscription rights of shareholders who do not exercise their right, in proportion to the number of shares bought by said shareholders upon exercising their right to preemptive subscription. The right to a preemptive subscription must be exercised within 30 days of the announcement to shareholders that they can exercise their right. Such announcement must be published for a period of three days in the Official Gazette and in an Argentine newspaper of wide circulation. According to the Argentine Corporate Law, companies that are authorized by the CNV to make public offers of their securities may, upon authorization of an extraordinary shareholders’ meeting held in the same place and manner as other shareholders’ meetings, reduce this period to 10 days. Any shares which are not subscribed by shareholders pursuant to their preemptive subscription right or right to accrue may be offered to third parties.
~~Appraisal Rights~~
~~Whenever our shareholders approve:~~
·                  ~~a merger or spin-off in which we are not the surviving corporation, unless the acquirer’s shares are authorized for public offering or listed on any stock exchange;~~
·                  ~~a transformation of our corporate legal status;~~
·                  ~~a fundamental change in our corporate purpose;~~
·                  ~~a change in our domicile outside Argentina;~~
·                  ~~a voluntary termination of the public offering or listing authorization;~~
·                  ~~a decision in favor of our continuation upon delisting or cancellation of our public offering authorization; or~~
·                  ~~a total or partial recapitalization following a mandatory reduction of our capital or liquidation,~~
any shareholder that voted against such action or did not attend the relevant meeting may exercise appraisal rights, that is, the rights to withdraw and have its shares cancelled in exchange for the book value of its shares, determined on the basis of our latest balance sheet prepared, or that should have been prepared, in accordance with Argentine laws and regulations, provided that such shareholder exercises its appraisal rights within the time frame set forth below.
Appraisal rights must be exercised within five (5) days following the meeting at which the resolution was adopted in the event of a dissenting shareholder that voted against such resolution, or within 15 days following such meeting in the case of a dissenting shareholder that did not attend the meeting and who can prove that it was a shareholder at the date of the meeting. In the case of mergers or spinoffs involving an entity authorized to make public offering of its shares, appraisal rights may not be exercised if the shares to be received as a result of the transaction are listed in
any stock exchange. Appraisal rights are terminated if the resolution giving rise to such rights is overturned at another shareholders’ meeting held within 60 days from the last day for our attending shareholders to exercise their appraisal rights.
Payment of appraisal rights must be made within one year of the date of the shareholders’ meeting at which the resolution was adopted, except where the resolution that gave rise to such rights was to delist the capital stock of the company or to reject a public offering or listing proposal, in which case the payment period is reduced to 60 days from the meeting at which the resolution was adopted or from the publication of the notice informing the delisting or rejection of the public offering or listing of the capital stock.
Because of the absence of legal precedent directly on point, there is doubt as to whether holders of ADSs will be able to exercise appraisal rights either directly or through the depositary with respect to Class B shares in the form of ADSs.
~~Registration Requirements of Foreign Companies that Hold Class B Shares Directly~~
Under the Argentine Corporate Law, foreign companies that hold shares directly (and not as ADSs) in an Argentine company must register with the IGJ in order to exercise certain shareholder rights, including voting rights. The registration requires the filing of corporate and accounting documents in order to demonstrate that the foreign shareholder’s principal activity is performed outside Argentina. Therefore, it will have to prove that it is entitled to conduct business in its place of incorporation and meets certain foreign assets requirements.
~~Liquidation Rights~~
In the case of our liquidation or dissolution, our assets will be applied to satisfy our outstanding liabilities and proportionally distributed first among our holders of preferred stock, if any, as per the terms of the preferred stock, if any. If any surplus remains, it will be proportionally distributed among holders of our common stock. Our liquidation will be carried out by the Board of Directors or by the liquidator or liquidators appointed by a shareholders’ meeting, under the surveillance of the Supervisory Committee.
~~Meetings of Shareholders and Voting Rights~~
~~Notice of Meetings~~
Notices of shareholders’ meetings are governed by the provisions of our bylaws, the Argentine Corporate Law and Law No. 26,831. Notice of shareholders’ meetings must be published for five days in the Official Gazette, in an Argentine newspaper of wide circulation and in the publications of Argentine authorized markets in which the shares are listed and traded, at least 20 days but not more than 45 days prior to the date on which the meeting is to be held and must include information regarding the type of meeting to be held, the date, time and place of such meeting and the agenda. If a quorum is not available for such meeting, a notice for a second meeting, which must be held within 30 days from the date on which the first meeting was called, must be published for three days, at least eight days before the date of the second meeting. The above-described notices of shareholders’ meetings may be effected simultaneously, in the case of ordinary meetings, in order for the second meeting to be held on the same day as the first meeting, one hour after, except in certain circumstances. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote of such shares.
The quorum for an ordinary shareholders’ meeting is the majority of the share capital entitled to vote. The quorum for an extraordinary meeting is at least 60% of the share capital entitled to vote. Shareholders may attend in person or by proxy. Directors, syndics, members of the Supervisory Committee, managers and our employees may not hold proxies in representation of shareholders. If the quorum is not achieved, meetings may be reconvened with lower quorum requirements. According to our bylaws, the quorum for the second meeting of an extraordinary meeting will be satisfied with any presence of shareholders. Decisions at an ordinary or extraordinary shareholders’ meeting require the affirmative vote of the absolute majority of the present votes. In addition, ~~pursuant to the provisions of Article Sixteen of our bylaws, as amended at our ordinary and extraordinary shareholders’ meeting held on May 25,~~
~~2016, any amendment to subsection (g) of Article Six of our bylaws require~~ the affirmative vote of the absolute majority of the present votes of Class B shareholders. Class B shares are entitled to one vote per share. Class A shares are entitled to five votes per share, except in those cases described below. The ordinary and extraordinary shareholders’ meeting held on April 24, 2018 approved further amendments to subsection (g) of Article Six of our bylaws. However, as of the date of this annual report, these amendments have not been approved by the CNV and are pending registration before the IGJ, therefore, are not yet effective. Please see “~~Item 10.B. Memorandum and articles of association—Corporate Governance~~~~” for a description of these amendments.~~
The Argentine Corporate Law requires that certain resolutions, such as early dissolution, major changes in corporate purpose or the transfer of a company’s legal domicile abroad, be decided by the majority of all outstanding shares and without allowing multiple votes per share, except in the case of the surviving entity in a merger or a split-up. Under Article 284 of the Argentine Corporate Law, Class A shares are entitled to one vote only in the election of syndics. Our bylaws require a two thirds vote by Class A shares, regardless of the percentage of capital they represent, in order for us to duly resolve a merger with another company, our voluntary dissolution, our relocation abroad, and the fundamental change in our corporate purpose (subsection d) of Article six of the bylaws).
~~Election of Directors~~
The board is made up of the number of members determined at the ordinary shareholders’ meeting, between a minimum of three and a maximum of nine directors. The shareholders may appoint as many alternate directors as there are effective directors, and for the same term in order to cover any vacancy and in the order in which they were elected.
~~Board members are appointed at the annual ordinary shareholders’ meeting.~~
~~Directors will be elected for a term of two years when the Board is composed of three to eight members, and for a term of three years when the Board is composed of nine members.~~
According to our bylaws, if our Board of Directors is composed of six or more members, their election will be staggered. If the ordinary shareholders’ meeting appoints six, seven or eight directors, half of our board will be elected annually if there is an even number of members, and the whole number of directors calculated by dividing the total number of members of our board by half and rounding either up or down based, as appropriate in each alternating year, will be elected if there is an odd number of members. In such circumstances, the shareholders will decide which one of the new directors is appointed for a term of one or two years for the purposes of electing half of our Board. If nine directors are appointed, a third of our board will be elected annually. In such circumstances, the shareholders will decide which one of the new directors is appointed for a term of one, two or three years, for the purposes of electing a third of our Board. In each case at least three directors shall be elected at each ordinary shareholders’ meeting.
~~Pursuant to section 257 of the Argentine Corporate Law, the directors maintain their positions until the following annual ordinary shareholders’ meeting where directors are appointed.~~
Argentine Corporate Law reserves the right to cumulative voting in order to elect up to one third of the directors to fill vacancies of the Board of Directors, sharing such part with candidates voted for by means of the plural system. Cumulative voting is a system designed to protect non-controlling interests results, as it gives rise to the possibility, but does not ensure, that non-controlling interests results will be able to elect some of their candidates to the Board of Directors. Such system works by multiplying the number of votes corresponding to the members that are taking part in the proceeding by the number of contemplated vacancies, which cannot exceed one third of the vacancies. The larger the number of vacancies, the greater the possibility that minority groups or shareholders will win positions in the Board of Directors.
~~Mandatory Tender Offer Regime~~
We are subject to the mandatory tender offer rules set forth in Law No. 26,831. These rules provide that in certain circumstances an OPA with respect to some or all of our outstanding shares must be launched. The circumstances include situations in which anyone intends to purchase, either directly or indirectly, for cash, either individually or collectively, either in one act or in a series of successive acts during a period of 90 consecutive days, a number of voting shares, subscription rights or stock options, convertible negotiable securities or similar securities which together with that person’s existing holdings could, directly or indirectly, entitle such person to subscribe, purchase
~~or convert voting shares, shares entitled to or that once exercised grant the right to a “significant share” in the voting capital stock of a publicly traded company.~~
~~In such circumstances, the OPA must be launched by the prospective purchaser within 10 days of having made the decision to participate in such purchase.~~
Such obligation is not applicable in cases where the acquisition would not trigger a change of control of the company. It also does not apply in cases where there is a change of control as a consequence of a corporate reorganization or as a consequence of mere redistributions of shares among companies of the same group.
~~Concept of a “Significant Share”~~
The regulations establish a duty to effect an offer with respect to part or all of the outstanding shares of the company depending on the percentage of the voting capital stock to be acquired. The regulations provide for the following duties relating to the OPA:
·                  Whenever the goal is to acquire a holding equal to or greater than 15% of the voting capital stock or of the company votes, the offer must be made for a number of securities that would enable the purchaser to acquire at least 50% of the voting capital stock of the affected company.
·                  Whenever an entity already has a holding equal to or greater than 15% of the voting capital stock or the votes of the company, but less than 51% of such rights, and the intention is to increase such shareholding in the affected company’s capital stock at least 6% during a twelve-month period, the offer shall be made on the number of securities representing at least 10% of the voting capital stock of the affected company.
·                  Whenever a holding equal to or greater than 51% of the voting capital stock or the votes of the company is sought, the offer shall be made for the number of securities that would enable the purchaser to obtain 100% of the voting capital stock of the affected company. The application of this stipulation shall have priority over the stipulations discussed in the preceding paragraphs.
~~Determination of the OPA Price in the Case of a Change in Control~~
~~The price shall be determined by the offeror with the following exceptions:~~
·                  If the purchaser has purchased other securities related to the offering within the 90 days prior to the announcement of the offer, the price cannot be lower than the highest price the purchaser paid in such transactions.
·                  If the purchaser has obtained firm sale commitments from the controlling shareholder or other shareholders entitled to take part in the public offering, the price cannot be lower than the price provided for in such commitments.
In order to determine the price, the purchaser shall also consider the following criteria, according to the CNV Rules: (i) book value of the shares; (ii) valuation of the target company according to discounted cash flows (DCF) or other applicable valuation criteria applicable to comparable business; and (iii) average price of the shares for the last six months before the “offer.” Based on certain interpretations of Law No. 26,831 and the CNV Rules, there is no certainty as to whether the average price of the shares for the last six months before the “offer” should be considered as a minimum price. The price may be challenged by both the CNV and any offeree shareholder.
Subsection (g) of Article Six of our bylaws, as amended at the ordinary and extraordinary shareholders’ meeting held on May 25, 2016, provides that if an OPA on our shares takes place, there may be no difference in the price to be offered for common shares, regardless of the class of shares. In addition, if there is an OPA triggered by a change of control, the price to be offered cannot be lower than the highest price that the offeror, acting individually or with its affiliates and/or other persons, paid or agreed to pay for our common shares regardless of the class of shares,
during the 180 days prior to the date of the offer (inclusive of such date). The ordinary and extraordinary shareholders’ meeting held on April 24, 2018 approved further amendments to subsection (g) of Article Six of our bylaws. However, as of the date of this annual report, these amendments have not been approved by the CNV and are pending registration before the IGJ, therefore, are not yet effective. Please see “~~Item 10.B. Memorandum and articles of association—Corporate Governance~~~~” for a description of these amendments.~~
~~Penalties for Breach~~
Without prejudice to the penalties established by the CNV, Law No. 26,831 provides that purchases in violation of such regime will be declared irregular and ineffective for administrative purposes by the CNV and cause the auction of the shares acquired in violation of the applicable regulation, without prejudice to the penalties that may correspond.
~~Tender Offer Regime in the Case of a Voluntary Withdrawal from the Public Offering and Listing System in Argentina~~
Law No. 26,831 and CNV regulations also established that when a company whose shares are publicly offered and listed in Argentina agrees to withdraw voluntarily from the public offering and listing system in Argentina, it must follow the procedures provided for in the CNV’s regulations and it must likewise launch an OPA for its aggregate shares or subscription rights or securities convertible into shares or stock options under the terms provided for in such regulation. It is not necessary to extend the public offering to those shareholders that voted for the withdrawal at the shareholders’ meeting.
The acquisition of one’s own shares must be made with liquid and realized profits or with free reserves, whenever paid up in full, and for the amortization or disposition thereof, within the term set forth in Section 221 of the Argentine Corporate Law and the company must present the CNV with evidence that it has the necessary solvency to effect such purchase and that the payment for the shares will not affect its solvency.
According to Section 98 of Law No. 26,831 the price offered in the case of a voluntary withdrawal from the public offering and listing system in Argentina should be equitable and take into account the following relevant criteria:
·                  ~~The equity value of the shares, taking into account a special financial statement for the withdrawal from the public offering system or listing;~~
·                  ~~The value of the company, in accordance with discounted cash flow criteria and ratios applicable to comparable businesses or companies;~~
·                  ~~The company’s liquidation value;~~
·                  Average quotation prices on the stock exchange where the shares are listed during the six month period immediately preceding the withdrawal application, regardless of the number of sessions necessary for such negotiation; and
·                  The consideration offered before, or the placement of the new shares, in the event that a public offering has been made with regard to the same shares or if new shares have been issued, if applicable, during the last year, to be counted as of the date of the agreement for the withdrawal application.
~~Under no circumstances can the price offered be lower than the price indicated in the fourth bullet above.~~
~~Mandatory or Voluntary Tender Offer in the Case of Near-total Control~~
If a shareholder or group of shareholders holds, directly or indirectly, 95% or more of the outstanding capital stock of a publicly traded Argentine company, any minority shareholder may request that the controlling shareholder launch an OPA for all outstanding shares of such company. In addition, a person that holds, directly or indirectly, 95% or more of the outstanding capital stock of a publicly traded Argentine company may issue a unilateral declaration of its intention to purchase all outstanding shares of such company within six months following the date of acquisition of near-total control and withdraw the company from public offering and its shares from listing and
trading. The price offered should be an equitable price, following the criteria set forth in Law No. 26,831, but in no case may it be lower than the average trading price of such shares during the six-month period preceding the OPA application.
~~Shareholder Claims~~
Pursuant to article 46 of Law No. 26.831, companies whose shares are listed on any authorized market (including the ByMA), such as we intend our shares to be, are subject to the jurisdiction of the arbitration court of such authorized market for all matters concerning such companies’ relationship with shareholders and investors, without prejudice to the right of shareholders and investors to submit their claims to the courts of the City of Buenos Aires.
~~Corporate Governance~~
~~We comply with the Argentine Corporate Law, the Law No. 26,831 and CNV rules and corporate governance regulations.~~
Our bylaws were amended at the extraordinary shareholders’ meeting held on October 7, 2015. Such amendment was approved by means of Resolution No.18,024 of the CNV dated April 19, 2016 and was registered before the IGJ. In addition, the extraordinary shareholders’ meetings held on April 19, 2016 and May 5, 2016 approved several amendments to our bylaws and an amended and restated text of our bylaws (~~texto ordenado~~~~), which were approved by the CNV and registered before the IGJ.~~
~~The ordinary and extraordinary shareholders’ meetings held on April 27, 2017 and April 24, 2018 approved further amendments to our bylaws and an amended and restated text of our bylaws~~ ~~(texto ordenado)~~~~, which are currently subject to approval by the CNV and pending registration before the IGJ and, therefore, are not yet effective.~~
The shareholders’ meeting held on April April 27, 2017, amended Article Five, subsection (g) of Article Six and Article Sixteen of our bylaws. The latter two provisions were further amended by the shareholders’ meeting held on April 24, 2018.
Article Five of our bylaws, as amended on April 27, 2017, provides that the capital stock of the Company may be increased through an ordinary shareholders’ meeting decision up to five-fold of the amount at that time pursuant to article 188 of Argentine Law No. 19,550, being liable to register any capital increase resolution in public deed. As long as the Company is authorized to place a public offering of its shares, the capital stock: (a) will result from each subscription of the last approved capital stock increase and the capital evolution will be included in the Company’s financial statements; (b) pursuant to article 188 of of Argentine Law No. 19,550, may be increased through ordinary shareholders’ meeting without any limitation whatsoever and without being compelled to amend by-laws. Upon each increase, features of those shares to be issued will be defined in virtue of such increase, and the Board of Directors may be assigned the power to issue such shares, at different times, as deemed convenient within the two-year period from such shareholders’ meeting date, as well as the definition of payment terms and conditions of such shares. As long as the Company is authorized to place a public offering of its shares, the shareholders’ meeting may pass the issuance of options to be issued or securities convertible in shares and assign the Board of Directors the definition of such issuance terms and conditions, rights to be granted, price fixing of options and shares resulting from such options, as well as any other issue susceptible to be assigned pursuant to all regulations in force.
Subsection (g) of Article Six of our bylaws, as amended on April 24, 2018, provides that upon a tender offer of any shares of the Company, the price to be tendered per common share shall be the same for all classes of shares. In addition, upon a tender offer in case of a change of control, the fair price to be tendered shall not be lower than the highest price paid or agreed to be paid by the offeror, whether acting individually or jointly with any affiliates and or otherwise, per common share of any class of the Company during the 180 calendar days prior to, and including, the date of the offer. The procedure to carry out the tender offer must be done in accordance with the Capital Markets Law and with the CNV Rules.
Article Sixteen of our bylaws, as amended on April 24, 2018, provides that quorum and majority requirements for shareholders’ meetings shall be governed by Sections 243 and 244 of Argentine Law No. 19,550, according to the class of shareholders’ meeting, whether it is a first- or second-call meeting and the matters to be transacted thereat, except for the quorum at second-call extraordinary shareholders’ meetings, which shall be deemed validly constituted whichever the number of voting shares present. Further, any amendment to subsection (g) of Article Six described above shall be valid if also approved by the absolute majority of votes of Class B shareholders present at the meeting.
Item 10.C Material ~~contracts~~
Contracts

No material contracts outside the ordinary course of business have been entered into during the last 2 years.

Item 10.D Exchange Controls
On September 1, 2019, after the market disruptions caused by the results of the PASO elections, with the purpose of strengthening the normal functioning of the economy, fostering a prudent administration of the exchange market, reducing the volatility of financial variables and containing the impact of the variations of financial flows on the real economy, the Argentine government issued Decree No. 609/2019 whereby foreign exchange controls were temporarily reinstated. The decree: (i) reinstated, originally until December 31, 2019, the exporters’ obligation to repatriate the proceeds from exports of goods and services in the terms and conditions set forth by the Central Bank’s implementing regulations and settle for Pesos through the MLC; and (ii) authorized the Central Bank to (a) regulate access to the MLC for the purchase of foreign currency and outward remittances; and (b) set forth regulations to avoid practices and transactions aimed to circumvent, through the use of securities and other instruments, the measures adopted through the decree. On the same date, the Central Bank issued Communication “A” 6770, which was subsequently amended and supplemented by further Central Bank communications.
At present, foreign exchange regulations have been consolidated in a single regulation, Communication “A” 6844, as subsequently amended and supplemented from time to time by Central Bank’s communications (the “FX Regulations”). Below is a description of the main exchange control measures implemented by the FX Regulations:
Specific provisions for inward remittances
Repatriation and settlement of the proceeds of exports of goods.
In accordance with section 7.1 of the FX Regulations, exporters must repatriate, and settle in Pesos through the MLC, the proceeds of their exports of goods cleared through customs as from September 2, 2019.
Although the FX Regulations maintain the obligation to repatriate export proceeds to Argentina through the MLC, in accordance with Section 2.6, exporters are authorized to avoid the settlement in Pesos to the extent that: (a) the funds are credited in foreign-denominated accounts in the name of the exporter, opened at local banks; (b) the funds are brought to Argentina within the applicable terms; (c) the funds are simultaneously applied to the making of payments for which the regulations grant access to the MLC, subject to any applicable caps; (d) if the funds correspond to the proceeds of new external financial indebtedness and are applied to the prepayment of foreign currency-denominated loans with local banks, the new indebtedness must have a longer average life than the local indebtedness, and (e) the mechanism is tax-neutral.
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Amounts collected in foreign currency for insurance claims related to the exported goods must also be repatriated and settled in Pesos in the MLC, up to the amount of the insured exported goods.
Moreover, through section 8 of the FX Regulations, the Central Bank reinstated the export proceeds monitoring system, setting forth rules governing such monitoring process and exceptions thereof. Exporters will need to appoint a financial entity in charge of monitoring compliance with the aforementioned obligations.
Decree No. 661/2019 clarified that the collection of the export benefits set forth under the Argentine Customs Code shall be subject to the exporter complying with the repatriation and peso settlement obligations imposed by the new FX Regulations.
Finally, the FX Regulations authorize the application of export proceeds to the repayment of: (i) pre-export financings and export financings granted or guaranteed by local financial entities; (ii) foreign pre-export financings and export advances settled in the MLC, provided that the relevant transactions were entered into through public deeds or public registries; (v) financings granted by local financial entities to foreign importers; and (vi) financial indebtedness under contracts executed prior to August 31, 2019 providing for cancellation thereof through the application abroad of export proceeds. The application of export proceeds to the repayment of other indebtedness shall be subject to Central Bank approval.
Obligation to repatriate and settle in Pesos the proceeds from exports of services
Section 2.2 of the FX Regulations imposes to exporters the obligation to repatriate, and settle in the MLC, the proceeds from exports of services within 5 business days following payment thereof.
Sale of non-financial non-produced assets
Pursuant to Section 2.3 of the FX Regulations, the proceeds in foreign currency of the sale of non-financial non-produced assets must be repatriated and settled in Pesos in the MLC within 5 business days following either the perception of funds in the country or abroad, or their accreditation in foreign accounts.
External financial indebtedness
Section 2.4 of the FX Regulations have reinstated the requirement to repatriate, and settle in Pesos through the MLC, the proceeds of new financial indebtedness disbursed from and after September 1, 2019 as a condition for accessing the MLC to make debt service payments thereunder. Although the regulations do not establish a specific term for repatriation, this requirement shall be met any time prior to accessing the MLC. The reporting of the debt under the reporting regime established by Communication “A” 6401 (as amended and restated from time to time, the “External Assets and Liabilities Reporting Regime”) is also a condition to access the MLC to repay debt service.
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Subject to compliance with the aforementioned obligations, access to the MLC is granted for the repayment of debt services at maturity or up to 3 business days in advance. In addition, as set forth by Section 3.5 of the FX Regulations, access to the MLC for prepayments will be granted, provided all of the following conditions are met: (i) the prepayment is simultaneous with the conversion of the new indebtedness to Pesos; (ii) the new indebtedness has a higher average life than the outstanding of the current debt being prepaid; and (iii) the first principal payment under the new indebtedness is (a) at a later date and (b) for an amount not greater than, the scheduled principal payment under the existing debt being prepaid.
Moreover, Section 3.11 of the FX Regulations authorizes (1) local borrowers under (A) foreign financial indebtedness with non-related creditors and (B) foreign indebtedness to finance the import of goods granted by foreign financial entities or official credit agencies, and (2) Argentine security trusts created to guarantee indebtedness detailed in (1)(A) and (1)(B) above, to access the MLC to purchase foreign currency to constitute the guarantees for the amounts required under the relevant loan agreements, subject to compliance with the following conditions: (a) the relevant indebtedness grants the relevant borrower access to the MLC for repayment and the agreements provide for debt service guarantee accounts; (b) the funds are transferred to accounts opened in local financial entities; credit into offshore accounts shall only be admitted if that is the only alternative set forth under the financing documents provided that such financing documents were entered into before August 31, 2019; (c) the amount accumulated in guarantee accounts does not exceed the amount of the next debt service payment; (d) the daily purchases do not exceed 20% of the maximum amount mentioned in (c); and (e) the bank must review the financing documents and confirm that the aforementioned conditions are met. Any funds not applied to cancel debt services must be settled through in Pesos in the MLC within 5 business days from the corresponding debt service payment date.
Additionally, Section 3.3 of the FX Regulations states that the Central Bank’s prior approval will be required to access the MLC for the repayment of debts for imports of goods and services.
Duly registered securities that are denominated and payable in foreign currency in Argentina
In accordance with Section 2.5 of the FX Regulations issued by the Central Bank, resident debt issuers are granted access to the MLC for the payment at maturity of principal and interest under new duly registered issuances of debt securities that are denominated and payable in foreign currency in Argentina, to the extent they (i) are fully subscribed in foreign currency, and (ii) the proceeds from the issuance are settled through the MLC. However, the settlement of the proceeds from the issuance shall not be required for the future access to the MLC for repayment of domestic issuances as provided in (ii) above, provided that certain conditions are met (i.e., the proceeds are deposited in a local foreign currency-denominated bank accounts and are simultaneously applied to transactions having access to the MLC, and the mechanism is tax neutral, among others).
Payments of local debt securities denominated in foreign currency among residents
In accordance with Section 3.6 of the FX Regulations, access to the MLC for the payment of foreign currency denominated obligations between Argentine residents executed from September 1, 2019 is subject to prior approval from the Central Bank. With regard to existing transactions as of such date, access is authorized; provided that the relevant transactions were entered into through public deeds or public registries. These prohibitions do not apply to loans in foreign currency granted by local financial entities, including payments of credit cards.
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Access to the MLC by security trusts for principal and interest payments.
Pursuant to Section 3.7 of the FX Regulations, Argentine security trusts created to guarantee principal and interest payments by resident debtors may access the MLC in order to make such payments at their scheduled maturity, to the extent that, pursuant to the current applicable regulations, the debtor would have had access to the MLC to make such payments directly. Also, subject to certain conditions, a trustee may access the MLC to guarantee certain capital payments and interest on financial debt abroad and anticipate access to it.
Specific Provisions Regarding Access to the Exchange Market
Residents are authorized to access the MLC for the payment of import of goods in accordance with Section 10.1 of the FX Regulations. This regulation sets forth different requirements depending on whether it relates to the payment of imports of goods with customs clearance or the payments of import of goods pending customs clearance. Also, the imports and import payments monitoring system (SEPAIMPO) has been reinstated, setting forth rules governing such monitoring process and exceptions thereof.
Pursuant to the FX Regulations, the local importer must appoint a local financial entity to act as a monitoring bank, which will be responsible for verifying compliance with the applicable regulations, including, among others, the liquidation of import financing and the entry of imported goods.
Payment of services provided by non-residents
Pursuant to Section 3.2 of the FX Regulations, residents may access the MLC for payment of services provided by non-residents (except affiliates), as long as it is verified that the operation has been declared, if applicable, in the last presentation of the External Assets and Liabilities Reporting Regime.
Access to the MLC for the prepayment of debts for services requires prior authorization by the Central Bank. Such approval will be also required to pay services rendered by foreign affiliates, provided, however, that the following transactions will be exempted:

~~In January 2002,~~
(i) in the case of credit card issuers, remittances related to tourism and travel activities will be exempted, to the extent that they do not relate to transactions requiring the Central Bank’s prior approval as set forth in the FX Regulations;
(ii) collections of funds relating to services rendered by non-residents to residents, made by local agents in Argentina;
(iii) expenses paid by local institutions to offshore institutions in their ordinary course of business;
(iv) payments of reinsurance premiums abroad, provided that the transfer abroad is made in the name of a foreign beneficiary qualified by the Argentine Superintendence of Insurance;
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(v) transfers made by travel assistance companies in connection with health-coverage related losses arising from services rendered abroad by third parties to their resident customers; and
(vi) payments under operating leases of vessels authorized by the ~~approval~~Argentine Ministry of Transport and solely intended to provide services to another non-affiliated resident, provided that the amount payable abroad does not exceed the amount paid by the latter, net of commissions, reimbursement of expenses or other items that should be withheld by the resident who makes the payment abroad.
Repayment of principal and interest of imports of goods and services
Access to the MLC for the repayment of principal and interest of imports of goods and services is granted provided that the operation has been declared, if applicable, in the last overdue presentation of the External Assets and Liabilities Reporting Regime.
Access to the MLC for the prepayment of debts for imports of goods and services shall require prior authorization by the Central Bank.
Payments of principal and interest of foreign financial indebtedness
Section 7 of Communication “A” 7106 of the Central Bank establishes that debtors with scheduled principal payments maturing between October 15, 2020 and March 31, 2021 relating to (i) foreign financial indebtedness of the non-financial private sector with a creditor who is not a counterparty related to the debtor; (ii) foreign financial indebtedness on account of transactions of the debtor and/or (iii) issuances of debt securities publicly registered in Argentina, denominated in foreign currency, of private sector customers or of the financial entities themselves, had to submit a refinancing plan to the Central Bank in line with the following criteria (the “Refinancing Plan”):
(a) debtors were given access to the MLC on the original maturity dates to make payments of net principal amounts not exceeding forty percent (40%) of the ~~Public Emergency Law, Argentina declared a public emergency situation in its social, economic, administrative, financial~~principal amounts due; and ~~foreign exchange matters and authorized~~
(b) the ~~Argentine Executive Branch to establish a system to determine~~balance of the ~~foreign exchange rate between the Peso and foreign currencies and to issue foreign exchange-related rules and regulations. The Public Emergency Law ceased~~principal amount shall have to be ~~in effect on December 31, 2017. Within this context, on February 8, 2002, through Decree No. 260/2002, the Argentine Executive Branch~~refinanced, at least, by means of a new foreign indebtedness with an average life of two (2) years.
Further, section 7 of Communication “A” 7106 of the Central Bank provides that, in addition to the refinancing granted by the original creditor, proceeds from new foreign financial indebtedness with other creditors shall also be computed, provided that the proceeds obtained therefrom be transferred and settled through the MLC. In the case of issuances of debt securities publicly registered in Argentina and denominated in foreign currency, new issuances shall also be computed provided that certain conditions are met. In addition, Communication “A” 7106 established that the Refinancing Plan was to be submitted to the Central Bank before September 30, 2020 in respect of repayments maturing on or before December 31, 2020. In turn, for repayments maturing between January 1, 2021 and March 31, 2021, the Refinancing Plans had to be submitted no later than thirty (30) calendar days in advance of the due date for repayment of the principal to be refinanced. The abovementioned provisions shall not apply to: (i) indebtedness with international organizations or associated agencies thereof or secured by them; (ii) indebtedness granted to the debtor by official credit agencies or secured by them; and (iii) when the amount for which access to the MLC is requested for repayment of principal under such indebtedness does not exceed the equivalent of US$ 1,000,000 (one million U.S. dollars) per calendar month.
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Through Communication “A” 7133 (as amended by Communication “A” 7196), the Central Bank provided that:
(a) access to the MLC ~~through which all~~up to 45 calendar days prior to the maturity date for the payment of principal of and interest on foreign ~~exchange transactions~~financial debts or debt securities publicly registered in Argentina and denominated in foreign currency ~~must~~will be ~~conducted,~~allowed if the prepayment is made by virtue of a debt refinancing process that complies with the provisions set forth in Communication “A” 7106 mentioned above and, ~~(ii)~~additionally, when all of the following conditions are met: (a) the amount of interest paid does not exceed the amount of interest accrued on the refinanced indebtedness up to the date the refinancing was settled, and (b) the accumulated amount of the principal maturities of the new debt does not exceed the amount that the principal maturities of the refinanced debt would have accumulated;
(b) access to the MLC prior to the maturity date for payment of interest on foreign ~~exchange transactions~~financial debts or debt securities publicly registered in Argentina and denominated in foreign currency ~~must~~will be ~~conducted~~allowed if the prepayment is consummated as part of a process for the exchange of debt securities issued by the customer and all of the following conditions are met: (a) the amount paid before maturity corresponds to interest accrued as at the closing date of the exchange; (b) the average life of the new debt securities is longer than the remaining average life of the exchanged security; and (c) the accumulated amount of the principal maturities of the new securities does not exceed at any time the amount that the principal maturities of the exchanged securities would have accumulated; and
(c) pursuant to the provisions of section 7 of Communication “A” 7106 concerning scheduled principal repayments maturing between October 15, 2020 and March 31, 2021: (a) the Central Bank will consider the Refinancing Plan established therein completed when the debtor accesses the MLC to pay off capital in an amount exceeding 40% of the principal amount that was then due, to the extent that the debtor settles currency on the MLC as from October 9, 2020, in an amount equal to or greater than the excess over such 40%, on account of (i) foreign financial indebtedness, (ii) issuance of debt securities publicly registered abroad, (iii) issuance of debt securities publicly registered in Argentina and denominated in foreign currency that meet the conditions set forth in section 3.6.4 of Communication “A” 6844 of the Central Bank, and (b) in the case of debt securities publicly registered in Argentina or abroad, issued on or after October 9, 2020, with an average life of not less than two years, and the delivery of which to the creditors has allowed to reach the parameters provided in the proposed Refinancing Plan, the foreign currency settlement requirement was considered fulfilled for the purposes of being allowed access to the MLC for the service of principal and interest thereon.
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In line with the Central Bank, the CNV issued General Resolution No. 861 to facilitate the refinancing of debt through the capital markets. In this regard, the CNV provided that whenever the issuer intends to refinance debt through an exchange offer or new issues of debt securities, in both cases in exchange for or to be paid with debt securities previously issued by the company and placed privately and/or with preexisting credits against such company, the requirement of placement through public offering will be regarded as met if the new issue is underwritten in this way by the creditors of the company whose debt securities without public offering and/or preexisting credits represent a percentage that does not exceed thirty percent (30%) of the aggregate amount actually placed, and the remaining percentage is underwritten and paid in cash or in kind by tendering debt securities originally placed through public offering, or other debt securities publicly offered and listed and/or traded on markets authorized by the CNV, issued by the same company, by persons who are domiciled in Argentina or in countries that are not included in the list of non-cooperative jurisdictions for tax purposes, listed in section 24 of the Annex to Decree No. 862/2019 or anyone that may replace it in the future. Additionally, General Resolution No. 861 provided for mandatory compliance with certain conditions to consider that the public offering requirement has been met.
Payment of principal and interest on registered debt securities with foreign clearing
On February 4, 2021, the Central Bank issued Communication “A” 7218, which provides access to the MLC to Argentine residents for the payment of principal and interest on notes registered with foreign clearing and central securities depository agencies issued as from February 5, 2021, which have been partially settled with foreign currency in Argentina, to the extent that all of the following conditions are met, (i) the borrower provides evidence of exports made prior to the issuance of the notes, or that the proceeds of the issuance of such notes were used for making payments abroad; provided that one of the two (2) conditions is met, access to the MLC shall not require the prior approval of the Central Bank; (ii) the average life of the notes shall not be less than five (5) years; (iii) the first payment of principal under the notes shall not occur before three (3) years as from the issue date; (iv) the notes subscribed locally in Argentina and settled locally with foreign currency shall not exceed 25% of the aggregate amount of notes subscribed; and (v) all of the funds of the offering shall be settled through the MLC prior to the borrower accessing the MLC for the first time for paying interest and/or principal under the notes.
Prepayment of financing denominated in foreign currency granted by local financial institutions
The Central Bank’s prior approval shall be required to access the MLC to prepay foreign currency financing granted by local financial institutions, unless they relate to payments of credit card purchases made in foreign currency.
Payment of dividends and corporate profits
In accordance with Section 3.4 of the FX Regulations, access is granted to the MLC to pay dividends to non-resident shareholders, subject to the following conditions:
Maximum amounts: The total amount of transfers made through the MLC for payment of dividends to non-resident shareholders may not exceed the 30% of the total value of the capital contributions made in the relevant local company that entered and settled through the MLC as of January 17, 2020. The total amount paid to non-resident shareholders shall not exceed the corresponding amount denominated in Pesos determined by the shareholders’ meeting to be distributed as dividends.
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Minimum Period: Access to the MLC will only be granted after a period of not less than thirty (30) calendar days has elapsed as from the date of the settlement of the last capital contribution that is taken into account for determining the aforementioned 30% cap.
Documentation requirements: Dividends must be the result of closed and audited balance sheets. When requesting access to the MLC for this purpose, evidence of the definitive capitalization of capital contributions must be provided or, if not available, evidence of filing of the process of registration of the capital contribution before the Public Registry shall be provided. In this case, evidence of the definitive capitalization shall be provided within 365 calendar days from the date of the initial filing with the Public Registry. If applicable, the External Assets and Liabilities Reporting Regime shall have been complied with.
Access to the MLC by other residents -excluding entities- for the formation of external assets and for derivatives transactions
Section 3.10 of the FX Regulations sets forth that access to the MLC for the build-up of foreign assets and for derivatives transactions by local governments, mutual funds, other universalities established in Argentina, requires prior authorization by the Central Bank.
Derivatives transactions
Section 4.4 of the FX Regulations requires that derivatives transactions, including payment of premiums, constitution of collateral and settlement of futures, forwards, options and other derivatives, shall, as of September 11, 2019, be made in local currency (i.e., Pesos).
Likewise, access to the MLC is granted for the payment of premiums and settlements, margins and other collateral in connection with interest rate hedge agreements for foreign debt declared and validated, if applicable, in the External Assets and Liabilities Reporting Regime, as long as such agreements do not cover higher risks than external liabilities of the recorded debtor’s interest rate risk being covered.
An entity authorized to operate in the MLC must be designated by the debtor to track the operation and an affidavit must be provided in which the debtor undertakes to repatriate and settle the funds that are in favor of the local client as a result of such operation, or as a result of the release of the funds of the constituted as collateral, in Pesos within the following five (5) business days.
Additional Requirements Regarding Access to the Exchange Market
On May 28, 2020, the Central Bank issued Communication “A” 7030 , as amended by Communications “A” 7042, 7052, 7068, 7079, 7094, 7151 and 7193 (“Communication 7030”), which established additional requirements on outflows made through the MLC. Below is a brief description of such measures:
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Additional requirements on outflows through the MLC
In the case of certain outflows made through the MLC (i.e., payments of imports and other purchases of goods abroad; payment of services rendered by non-residents; remittances of profits and dividends; payment of principal of and interest on external indebtedness; payments of interest on debts for the import of goods and services; payments of indebtedness in foreign currency owed by residents made through trusts organized in Argentina to secure the provision of services; payments under foreign currency-denominated debt securities publicly registered in Argentina and liabilities in foreign currency owed by residents; purchases of foreign currency by resident individuals for the purpose of forming external assets, providing family assistance and entering into derivative transactions (other than those made by individuals on account of the formation of external assets), purchase of foreign currency by individuals to be simultaneously used to purchase real estate in Argentina with a mortgage loan; purchase of foreign currency by other residents (excluding financial institutions) to form external assets and in connection with derivative transactions; other purchases of foreign currency by residents for specific uses and under interest rate hedge agreements in connection with liabilities incurred by residents that have been reported and validated under the External Assets and Liabilities Reporting Regime), the financial institution shall obtain the Central Bank’s prior approval before processing the transaction, unless it has obtained an affidavit executed by the legal entity or individual stating that, at the moment of accessing the local exchange market:
(a) Holding foreign currency in Argentina and non-holding of available external liquid assets. The customer shall certify that all foreign currency in Argentina is available in accounts with financial institutions and that the customer had no external liquid assets available at the beginning of the day when access to the market was requested in an amount higher than the equivalent to US$ 100,000.
Communication 7030 provides a merely illustrative list of liquid external assets including, among others, holdings of foreign currency bills and coins, holdings of coined gold or gold bars for good delivery, demand deposits with financial institutions abroad and other investments that allow for immediate availability of foreign currency including, for example, investments in external government securities, funds held in investment accounts with investment managers abroad, crypto-currency, funds in payment service providers’ accounts, etc.
Available liquid external assets are not understood to include those funds deposited abroad that may not be used by the legal entity or individual as they are reserve or security funds set up in compliance with the requirements under borrowing agreements abroad or funds set up as collateral under derivative transactions consummated abroad.
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If the legal entity or individual had liquid external assets available in an amount higher than the sum specified in the first paragraph, the financial institution may also accept an affidavit provided it is satisfied that such amount shall not be exceeded on the grounds that, either partially or totally, such assets:
i. were used during such day to make payments that would have required access to the local exchange ~~rate~~market;
ii. were transferred to the legal entity or individual to a correspondent account of a local institution licensed to deal in foreign exchange;
iii. are funds deposited in bank accounts abroad from collections of exports of goods and/or services or advances, pre- or post-export financing of goods by non-residents, or from the disposal of non-financial non-produced assets in respect of which the term of 5 business days after collection has not yet expired; or
iv. are funds deposited in bank accounts abroad from financial indebtedness abroad and the amount thereof does not exceed the equivalent amount payable as principal and interest within the next 120 calendar days.
The affidavit filed by legal entities or individuals shall expressly indicate the value of their liquid external assets available as of the beginning of the day as well as the amounts allocated to each of the situations described in paragraphs i) through iv), as applicable.
(b) New inflows and settlement of foreign currency from collections of loans granted to third parties and time deposits or sales of any asset, provided same were purchased and granted after May 28, 2020. Customers’ affidavits shall include a commitment to settle in the MLC, within a term of five business days upon being made available, those funds received from abroad from the collection of loans granted to third parties, the collection of a time deposit or the sale of any asset, provided the asset had been purchased, the time deposit had been made or the loan had been granted after May 28, 2020.
The filing of affidavits shall not be required for outflows through the MLC in the following cases: (1) the exchange institution’s own transactions, acting as customer; (2) payment of financing in foreign currency granted by local financial institutions in connection with purchases in foreign currency using credit or shopping cards; and (3) payments abroad by credit card companies that are not financial institution in connection with the use of credit, shopping, debit or pre-paid cards issued in Argentina.
Additionally, Communication “B” 12082 of the Central Bank established that, prior to allowing any outflow of funds abroad, financial institutions are required to check the online system implemented by the Central Bank to verify if the customer that intends to access the MLC is included in the list of CUITs (Tax Identification Numbers) showing inconsistent foreign exchange transactions.
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Payment of imports of goods by accessing the MLC until March 31, 2021.
In addition to complying with the filing requirement as set forth in paragraph (i) above, item 2 of Communication 7030 sets forth that, for the purposes of accessing the MLC to pay imports of goods or the principal amount of debts arising from the import of goods, legal entities and individuals shall obtain the Central Bank’s prior approval, unless any of the following situations occurs:
(a) The entity has received an affidavit from the client stating that the total amount of payments associated with its imports of goods processed through the exchange market during 2020, including the payment whose course is being requested, does not exceed in more than U.S.$1,000,000, the amount by which the importer would have access to the exchange market when computing the imports of goods that appear in his name in the system for tracking payments of imports of goods (SEPAIMPO) and that were made between January 1, 2020 and the day prior to accessing the MLC, plus the amount of payments made under other exceptions, subtracting the amount pending to be ~~freely agreed upon among contracting parties,~~entered into Argentina, related to payments of imports with pending customs registration made between September 1, 2019 and December 31, 2019.
(b) In the case of a deferred payment or at sight payment of imports corresponding to operations that have been shipped as of July 1, 2020 or that, having been shipped previously, did not have arrived in the country before that date.
(c) It is a payment associated with an operation not included in section b) above, to the extent that it is destined to the cancellation of a commercial debt for imports of goods with an export credit agency or a foreign financial entity or that was guaranteed by either of such entities.
(d) It is a payment made by: i) the public sector, ii) entities in which the Argentine State has a majority participation in the capital stock or in the making of major corporate decisions or iii) trusts constituted with contributions made by the national public sector.
(e) It is an imports payment with pending customs entry registration, to be made by an entity in charge of the provision of critical drugs to be entered by private request by the beneficiary.
(f) It is an imports payment with pending customs entry registration made for the purchase of COVID-19 detection kits or other products with tariff positions that are included in the list included in Decree No. 333/2020 as amended.
(g) The financial entity has received an affidavit from the client stating that, including the advanced import payment which is being requested, plus the amounts included in (a), do not exceed U.S.$3,000,000 and that these payments are related to imports of products related to the provision of medication or other goods related to medical assistance and/or health care directed to the population or supplies that are necessary for their local preparation.
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Prior to authorizing payments for imports of goods, the intervening financial entity must, in addition to requesting the client’s affidavit, verify that such statement is compatible with the existing data in the Central Bank from the online system implemented for this purpose.
The amount by which importers can access the MLC under the conditions established within the framework of section 2 of Communication “A” 7030 will be increased by the equivalent of 50% of the amounts that, the importer settles through the MLC as export advances or pre-financing of exports from abroad with a minimum term of 180 days, as of October 2, 2020.
In the case of operations settled as of April 1, 2021, access to the MLC will also be admitted for the remaining 50% to the extent that the additional part corresponds to advanced payments of capital goods, and that the financial entity has the documents justify the products paid correspond to tariff positions classified as BK (Capital Goods).
Access to the MLC for payment of imports of goods while submission of import clearance is pending.
Pursuant to Communication “A” 7138, to access the MLC for the payment of imports of goods pending customs clearance, importers are required (in addition to the other requirements in force under the FX Regulations) to file a declaration through the Integral Import Monitoring System (Sistema Integral de Monitoreo de Importaciones or SIMI) showing the “SALIDA” status in connection with the imported goods to the extent that such declaration is required for the registration of the application for import of goods for consumption.
Access to the MLC for prepayment of imports
Communication “A” 7138 clarified that, effective as of November 2, 2020, payments for imports of goods pending customs clearance made between September 2, 2019 and October 31, 2019 will be considered in default if they (A) relate to (i) payments on demand upon presentation of shipping documents; (ii) payments of commercial debts abroad; and (iii) payment of commercial guarantees for imports of goods granted by local institutions, and (B) are not regularized, that is, the customer failed to furnish evidence to the institution in charge of monitoring such payment (up to the amount paid) of the existence of (i) import clearance in its name or in the name of a third party; (ii) the settlement on the MLC of currency associated with the return of the payment made; (iii) other forms of regularization permitted under the FX Regulations; and/or (iv) the Central Bank’s acceptance of the total or partial regularization of the transaction.
Importers will not be allowed access to the MLC to make new prepayments of imported goods until such defaulted transactions are not regularized.
Payments of principal under debts with related counterparties until March 31, 2021
The Central Bank’s prior approval is required to access the MLC to make payments abroad of principal of financial debts when the creditor is a counterparty related to the debtor. This requirement is applicable until March 31, 2021, pursuant to Communication “A” 7193. Such requirement shall not apply to the local financial institutions’ own transactions.
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Item 4 of Communication “A” 7123 of the Central Bank establishes that, for as long as the requirement to obtain prior approval to access the MLC to pay, at maturity, principal of foreign financial indebtedness of the non-financial private sector when the creditor is a counterparty related to the debtor continues to be in place, such requirement will not be applicable if the funds have been entered and settle through the MLC as of October 2, 2020 and the average life of the indebtedness is not less than 2 (two) years.
Extension of the term for outflows through the MLC in connection with the sale of securities to be settled in foreign currency or transfers to foreign depositaries.
In the case of outflows through the MLC, including by means of swap or arbitrage transactions, in addition to the requirements that apply to each particular case, financial institutions shall request the filing of an affidavit certifying that:
(a) on the day when access to the market is requested and within the prior 90 calendar days no sales of securities have been made via settlement of foreign currency or transfers thereof to foreign depositaries; and
(b) the customer filing the affidavit undertakes to refrain from selling securities to be settled in foreign currency or transferring same to foreign depositaries since the day access is requested and during a term of 90 calendar days.
The filing of the affidavit shall not be required in case of outflows through the MLC in the following circumstances: 1) the financial institution’s own transactions, acting as customer; 2) payment of financing in foreign currency granted by local financial institutions, including payments for purchases made in foreign currency using credit or shopping cards; and 3) remittances abroad in the name of individuals who are the recipients of retirement and/or pension benefits paid by ANSES.
Communication “A” 7193
Through Communication “A” 7193, the Central Bank modified Section 2 of Communication “A” 7030 as amended, that regulated the requirements to access the MLC for the payment of imports, in accordance with what is already reflected in “—Payment of imports with access to the exchange market until March 31, 2021.”
Likewise, Communication “A” 7193 established that financial entities will be required to obtain the prior consent of the Central Bank to provide their clients with access to the MLC for payments, with regards to payment operations included in Sections 3.1. to 3.11. and 4.4.2. of FX Regulations (including those that are specified through exchanges or arbitrations), to individuals or entities included by the AFIP in the database of “false” invoices or equivalent documents established by such Agency. This requirement will not be applicable to access the MLC for the payment of financing in foreign currency granted by local financial entities, including payments in foreign currency made through credit or purchase cards.
Other Specific Provisions
Access to the MLC for savings or investments purposes of individuals
Pursuant to Section 3.8 of the FX Regulations, Argentine residents may access the MLC for the purposes of external assets’ formation, family assistance or derivative operations (with some exceptions expressly set forth) for up to U.S.$200 (through debits to local bank accounts) or U.S.$100 (in cash) per person per month through all authorized exchange entities. If the access entails a transfer of the funds abroad, the destination account must be an account owned by the same person.
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Effective as of September 16, 2020, the Central Bank ordered under Communication “A” 7106 that purchases in pesos made abroad with a debit card and amounts in foreign currency acquired by individuals in the MLC as of September 1, 2020, for the payment of obligations between residents under section 3.6 of the FX Regulations, including payments for credit card purchases in foreign currency, will be deducted, as from the subsequent calendar month, from the US$ 200 monthly quota. If the amount of such purchases exceeds the quota available for the following month or such quota has been already absorbed by other purchases made since September 1, 2020, such deduction will be made from the quotas of the following months until completing the amount of those purchases.
In addition, pursuant to Communication “A” 7106 and effective as of September 16, 2020, in order to allow access to the MLC for the formation of external assets, the relevant institution must be provided with a customer’s affidavit whereby the customer undertakes not to enter into securities transactions in Argentina to be settled in foreign currency as from the time the customer requests access to the MLC and for 90 calendar days thereafter.
The relevant institution shall check the online system implemented by the Central Bank to verify whether the person has not reached the limits set for the applicable calendar month or has not exceeded them in the previous calendar month and is thus entitled to enter into the foreign exchange transaction, and shall request the customer to provide an affidavit stating that such person is not a beneficiary of any “Zero Interest-Rate Loans” contemplated in section 9 of Decree No. 332/2020, as amended, “Subsidized Loans for Companies” and/or “Zero Interest-Rate Loans for Independent Workers Engaged in Cultural Activities.”
In addition, for the purpose of entering into derivative transactions relating to the payment of premiums, creation of guarantees and payments of futures, forwards, options and other derivatives, to the extent they imply a payment in foreign currency, individuals shall be required to obtain the Central Bank’s prior approval.
Access to the local exchange market is also allowed for the payment of premiums, creation of guarantees and payment of interest rate hedge agreements under obligations by residents vis-à-vis foreign creditors that are reported and validated, as applicable, under the External Assets and Liabilities Reporting Regime, provided that it does not cover risks higher than the external liabilities actually incurred by the debtor at the interest rate of the risk being hedged through such transaction. The customer who accesses the local market using this mechanism shall designate an institution authorized to deal in the MLC which shall follow up the transaction and shall sign an affidavit committing to enter and settle the funds payable to the local customer as a result of such transaction or as a result of the release of the collateral money, within 5 business days following the date such payment or release.
Moreover, any persons who received loans denominated in pesos directed to SMEs listed in items 2 and 3 of Communication “A” 7006 of the Central Bank shall request the Central Bank’s previous authorization to access the MLC to enter into transactions for the purpose of forming external assets, providing family assistance and entering into derivative transactions or selling securities to be settled in foreign currency or transferring such securities to other depositaries. The applicable institution shall request customers willing to access the MLC to provide evidence of the referred authorization from the Central Bank or an affidavit to the effect that they are not beneficiaries of any financing listed in items 2 or 3 of Communication “A” 7006 of the Central Bank.
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The Central Bank has also established that individuals benefitting from the provisions of item 4 of Communication “A” 6949, as supplemented, and section 2 of Decree No. 319/20 may not, until repaying in full the financed amount or while the benefit regarding the adjustment of the value of the installment continues, as applicable, (i) access the MLC for the purpose of forming external assets, providing family assistance and entering into derivative transactions; and (ii) arrange for the sale in Argentina of securities with settlement in foreign currency or transfer them to foreign depositaries.
Sale of foreign currency to non-residents
In accordance with Section 3.12 the FX Regulations, prior approval by the Central Bank will be required for access to the MLC by non-residents for the purchase of foreign currency, except for the following operations: (a) international organizations and institutions that perform functions of official export credit agencies, (b) diplomatic representations and consular and diplomatic personnel accredited in the country for transfers made in the exercise of their functions, (c) representatives of courts, authorities or offices, special missions, commissions or bilateral bodies established by Treaties or International Agreements, in which the Argentine Republic is part, to the extent that transfers are made in the exercise of their functions, (d) foreign transfers in the name of individuals who are beneficiaries of retirement and/or pensions paid by the ANSES, for up to the amount paid by said agency in the calendar month and to the extent that the transfer is made to a bank account owned by the beneficiary in its registered country of residence, (e) purchase of foreign currency (in cash) by non-resident individuals for tourism and travel expenses, up to a maximum amount of U.S.$100 dollars, to the extent the financial entity can verify that the client has settled an amount equal or higher than the sum to be purchased within 90 days prior to the operation, and (f) transfers to offshore bank accounts by individuals that are beneficiaries of pensions granted by the Argentine government pursuant to Laws Nos. 24,043, 24,411 and 25,914, as supplemented.
Swap, arbitrage and securities transactions
Financial institutions may carry out currency swap and arbitrage transactions with their customers in the following cases:
(i) inflows of foreign currency from abroad, to the extent that they do not relate to transactions subject to the ~~requirements and regulations imposed~~obligation to settle them in the MLC. Financial institutions shall allow inflows of foreign currency from abroad to be credited into the accounts opened by the ~~Central Bank.~~customer in foreign currency in connection with these transactions;
~~On June 9, 2005, through Decree No. 616/2005,~~
(ii) transfer of foreign currency abroad by individuals from their local accounts denominated in foreign currency to bank accounts held by such individuals abroad. Financial institutions shall require an affidavit from the ~~Argentine Executive Branch mandated~~customer stating that ~~(i) all inflows of funds into~~the customer has not sold any securities to be settled in foreign currency in the local market within the past 5 business days;
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(iii) transfer of foreign ~~exchange market arising~~currency abroad by local common depositaries of securities in connection with proceeds received in foreign currency on account of services of principal and interest on Argentine Treasury bonds, when such transaction forms part of the payment procedure at the request of the foreign common depositaries;
(iv) arbitrage transactions not originated in transfers from abroad may be made without any restrictions, to the extent that the funds are debited from an account in foreign ~~debts incurred~~currency held by ~~residents, both~~the customer with a local financial institution. To the extent that the funds are not debited from an account denominated in foreign currency held by the customer, these transactions may be made by individuals, ~~or legal entities~~without the Central Bank’s prior approval, up to the amount allowed for the use of cash under items 3.8. and 3.12 of the FX Regulations;
(v) transfers of foreign currency abroad made by individuals from their local accounts denominated in foreign currency to offshore collection accounts up to an amount equivalent to US$ 500 in any calendar month, provided that the individual provides an affidavit stating that the transfer is made to assist in the maintenance of Argentine ~~private sector, except for those concerning~~residents who were forced to remain abroad in compliance with the measures adopted in response to the COVID-19 pandemic; and
(vi) all other swap and arbitrage transactions may be made by customers without the Central Bank’s prior approval to the extent that they would be allowed without need of such approval in accordance with other exchange regulations. This also applies to local common depositaries of securities with respect to the proceeds received in foreign ~~trade financing~~currency as payments of principal of and ~~primary~~interest on foreign currency securities paid in Argentina.
If the transfer is made in the same currency as that in which the account is denominated, the financial institution shall credit or debit the same amount as that received from or sent abroad. When the financial institution charges a commission or fee for these transactions, it shall be instrumented under a specifically designated item.
In addition, any person who has outstanding facilities in pesos under the scope of Communications “A” 6937, “A” 6993, “A” 7006, “A” 7082 of the Central Bank, as supplemented (i.e., credit facilities at subsidized interest rates) will be prevented from selling securities to be settled in foreign currency or transferring such securities to foreign depositaries, until such facilities have been fully repaid.
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Use of export proceeds for the payment of new issuances of debt securities
Pursuant to Communication “A” 7196, as of January 7, 2021, proceeds in foreign currency from exports of goods and services may be used for the payment of principal and interest under new duly registered issuances of debt securities, to the extent that:
such issuance corresponds to (i) an exchange of debt securities, or (ii) the refinancing of foreign financial indebtedness, concerning scheduled principal repayments maturing between March 31, 2021, and December 31, 2022; and
considering the transaction as a whole, the average life of new indebtedness is at least 18 months longer than the principal and interest payments being refinanced which should occur before December 31, 2022.
Use of export proceeds for the payment of debts denominated in foreign currency
Communication “A” 7138 provides for cases in which proceeds in foreign currency from exports of goods and services may be used for the payment of certain debts denominated in foreign currency, indicating that, if the conditions set forth in item 1 of Communication “A” 7123 (relating to use of proceeds, the timing of entry and settlement of funds on the MLC and the monitoring of the transaction by a local financial institution) are met, proceeds in foreign currency from exports of goods and services may be used for:
(a) payments of principal and interest of financial debts abroad with an average life (considering services of both principal and interest) of not less than one year.
(b) the repatriation of non-residents’ direct investments in companies that do not control local financial institutions, provided that such repatriation occurs after the date of completion and implementation of the investment project and at least one year after the inflow of the capital contribution through the MLC.
In addition, Communication “A” 7138 provided for new transactions that may be paid out of foreign currency export proceeds:
(a) new issuances of debt securities ~~admitted to public offering~~publicly registered in Argentina as of November 11, 2019 and ~~listed~~denominated in ~~authorized markets;~~foreign currency for which principal and ~~(ii) all inflows of funds by non-residents channeled~~interest are payable in Argentina in foreign currency (to the extent the proceeds have been obtained through the ~~MLC~~MLC), with an average life of not less than one year considering maturities of both principal and ~~aimed at being held in local currency, acquiring all types~~interest;
(b) new indebtedness or direct investment capital contributions, the proceeds of ~~financial assets or liabilities~~which have entered and settled, and have allowed to reach the parameters provided in the ~~financial or non-financial private sector (except for foreign direct investments~~Refinancing Plan under item 7 of Communication “A” 7106; and ~~primary~~
(c) new issuances of debt securities ~~and shares admitted~~publicly registered in Argentina or abroad issued after October 9, 2020, with an average life of not less than two years, the delivery of which allowed the issuer to ~~public offering and listed~~reach the parameters provided in ~~authorized markets), and investments~~its Refinancing Plan.
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Export proceeds to guarantee new indebtedness
Communication “A” 7196 allows for proceeds from exports of goods and services held in local or foreign financial institutions to guarantee payment of new indebtedness entered into pursuant to Communication “A” 7123 and has complied with the mandatory repatriation and settlement obligation, as from January 7, 2021. Funds in these accounts shall not exceed at any time 125% of the principal and interest to be paid in the current month and the following six calendar months, in accordance with the scheduled of payments as agreed upon with the creditors. Funds exceeding such amount must be repatriated and settled through the MLC subject to the applicable foreign exchange rules.
In the event the financial agreement entered into requires the funds to be deposited for a period exceeding that which has been established for its mandatory settlement, the exporter may request this latter period be extended up until five business day after the former.
Access to the MLC for the constitution of guarantees
Residents may access the MLC for the constitution of guarantees in connection to new indebtedness entered into as of January 7, 2021, pursuant to the Communication “A” 7123 refinancing scheme, or in connection to local trusts created to guarantee principal and interest payments of such new indebtedness. Such guarantees are to be held in local financial institutions or, in the event of foreign indebtedness, in foreign financial institutions, in an amount equal to that established in the agreement, pursuant to the following conditions:
concurrently to such access, foreign currency-denominated funds are being repatriated and settled through the MLC and/or funds credited to the correspondent account of a local financial institutions, and
the guarantees shall not exceed at any time 125% of the principal and interest to be paid in the current month and the following six calendar months, in accordance with the scheduled of payments as agreed upon with the creditors.
Funds which are not applied to the payment of principal and interest or the conservation guarantee detailed herein must be settled through the MLC within five business days from its maturity date.
Access to the MLC for the payment of new issuances of debt securities
New duly registered issuances of foreign-denominated debt securities, issued as of January 7, 2021, intended to refinance pre-existing debt, when seeking access to the MLC for the payment of principal and interest under such new indebtedness, shall be considered to have complied with the obligation to mandatory settle through foreign currency for an amount equivalent to the refinanced principal, the interest accrued up to the date the refinancing was settled and, to the extent that the new debt securities do not schedule principal maturities before 2023, the interest that would accrue until December 31, 2022 by the indebtedness which is refinanced in advance and/or by the deferment of the refinanced principal and/or by the interest which would accrue on the amounts so refinanced.
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Special regime for financings under Plan Gas IV
On November 19, 2020, the Central Bank issued Communication “A” 7168 which provided for specific regulations applicable to transactions entered and settled through the MLC as of November 16, 2020 intended for the financing of projects falling within the scope of the Plan Gas IV. In particular, Communication “A” 7168 provides that:
(a) Institutions may grant access to the MLC to remit funds abroad in the nature of dividends and profits to non-resident shareholders without the prior consent of the Central Bank provided the following conditions are met:
(i) the dividends and profits arise from audited and closed financial statements;
(ii) the total amount to be paid as dividends and profits to non-resident shareholders, including the payment then requested to be processed, does not exceed the amount in local currency payable to them as per the distribution approved by the ~~public sector~~shareholders’ meeting;
(iii) access occurs not earlier than two calendar years from the date of the settlement in the MLC of the transaction that qualifies for inclusion in this point; and ~~acquired~~
(iv) the transaction is disclosed, if applicable, in ~~secondary markets, should meet~~the last filing due under the External Assets and Liabilities Reporting Regime.
(b) Institutions may grant access to the MLC, without the prior consent of the Central Bank, for the payment at maturity of principal and interest services on foreign indebtedness provided that such indebtedness has an average life of not less than two years and the remaining requirements for principal and interest payments on foreign financial indebtedness under the FX Regulations are met.
(c) Entities may grant access to the MLC, without the prior consent of the Central Bank, for the repatriation of direct investments made by non-residents up to the amount of direct investment contributions settled on the MLC market as of November 16, 2020 as long as all of the following ~~requirements:~~ conditions are met:
(i) ~~such inflows~~ the institution has documentation that proves the effective inflow of ~~funds could only be transferred outside~~the direct investment in the resident company;
(ii) access occurs not earlier than two years from the date of settlement on the MLC of the transaction that qualifies for inclusion in this point;
(iii) in case of a capital reduction and/or return of irrevocable contributions made by the local ~~foreign exchange market at~~company, the ~~expiration of a term of 365 calendar days~~institution has documentation that proves that the relevant legal mechanisms have been complied with and has verified that the external liability in pesos generated as from the date of the non-acceptance of the irrevocable contribution or the capital reduction, as applicable, has been disclosed in the last filing due under the External Assets and Liabilities Reporting Regime.
In all cases, the institution shall have documentation that allows it to verify the genuineness of the transaction to be processed, that the funds were used to finance projects falling under the scope of such plan and the fulfilment of the other requirements set forth in the FX Regulations.
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Local collections for exports of on-board supplies to foreign flagged means of transport (regimen de ranchos)
On February 5, 2020, the Central Bank issued Communication “A” 7217, establishing that, regarding local collections for exports of on-board (regimen de ranchos) supplies to foreign flagged means of transport, it shall be considered that the follow-up of the shipment permit is totally or partially complied with, for an amount equivalent to the amount paid locally in Pesos and/or in foreign currency to the exporter by a local agent that owns the foreign flagged means of transport, as long as the following conditions are met:
(a) The documentation allows to verify that the delivery of the exported merchandise has taken place in the country, that the local agent of the company that owns the foreign flagged means of transport made the payment to the exporter locally and in which currency the payment was made.
(b) An entity shall issue a certification stating that the company that owns the foreign flagged means of transport would have had access to the MLC pursuant to Section 3.2.2. of the FX Regulations for the equivalent amount in foreign currency which is intended to be computed to the shipment permit.
The entity which states the precedent shall previously verify compliance with all the other requirements stablished in Section 3.2.2. of the FX Regulations except for provisions of Section 3.13. and the local agent of the company that owns the foreign flagged means of transport shall have filed an affidavit stating that it has not transferred or will transfer funds abroad for the proportional amount of the operations included in the certification.
(c) In the event that the funds have been received in the country in foreign currency, a certification that the settlement of ~~such~~the funds into Pesos; (ii) the proceeds of such inflows of funds should be credited to an account in the local banking system; (iii) a non-transferable and non-interest-bearing deposit for 30% of the amount of the transaction should be kept in Argentina for a period of 365 calendar days, in accordance with the terms and conditions set forth in the applicable regulations (the “Deposit”); and (iv) the Deposit was to be denominated in U.S. dollars and held in Argentine financial institutions and it could not be used to guarantee or as collateral of any type of credit transactions. The requirements of Decree 616/2005 were subsequently eased, as detailed below.
~~On December 18, 2015, through Resolution No. 3/2015, the former Ministry of Treasury and Public Finance amended Executive Decree No. 616/2005,~~ ~~reducing (i) the Deposit percentage to 0% and (ii) the required period that the proceeds of any new financial indebtedness incurred by residents, held by foreign creditors and transferred~~ through the MLC ~~had~~has been made is needed.
The local agent of the company that owns the foreign flagged means of transport shall not have used this mechanism for an amount greater than U.S.$250,000 in the calendar month.
Central Bank’s Reporting Systems
Advance information on foreign exchange transactions
The institutions authorized to deal in foreign exchange shall provide the Central Bank, at the end of each business day and two business days in advance, with information on transactions relative to outflows through the MLC in daily amounts equal to or higher than the equivalent of US$ 50,000 (fifty thousand U.S. Dollars).
Customers of licensed institutions shall provide such institutions with information sufficiently in advance so that they may comply with the requirements under this reporting regime and, accordingly, to the extent any further requirements set forth in the exchange regulations are simultaneously satisfied, they may process the exchange transactions.
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Other foreign exchange regulations
Pursuant to General Resolution No. 836/20, the CNV provided that mutual investment funds in pesos shall invest at least 75% of their assets in financial instruments and marketable securities issued in Argentina exclusively in local currency. General Resolution No. 838/20 clarified that such requirement is not applicable to investments in assets issued or denominated in foreign currency that are made and paid in pesos and the interest and principal amounts whereof are exclusively paid in pesos.
Under Interpretation Criterion No. 17 (referring to General Resolution No. 836/2020), the CNV established that new investments in assets issued in foreign currency may be made only if the aggregate of the assets listed in section 78, Article XV, Chapter III, Title XVIII of the CNV Rules plus the rest of the assets issued in a currency other than pesos does not exceed 25% of the assets of the relevant mutual investment fund.
Pursuant to General Resolution No. 871/2020, sales transactions of securities to be settled in foreign currency and in a foreign jurisdiction will be carried out provided that a minimum holding period of three business days is observed to be counted as from the date such securities are credited with the relevant depositary. As regards to sales of securities to be settled in foreign currency and in a local jurisdiction, the minimum holding period will be two business days to be counted as from the date such securities are credited with the relevant depositary. These minimum holding periods shall not be applicable in the case of purchases of securities to be settled in foreign currency.
In addition, transfers of securities acquired from foreign depositaries to be settled in pesos will be processed subject to a minimum holding period of three business days counted as from the crediting thereof with the depositary, unless such crediting results from a primary placement of securities issued by the National Treasury or refers to shares and/or CEDEARs (Certificado de Depósito Argentinos) traded on markets regulated by the CNV. Settlement and clearing agents and trading agents must verify compliance with the aforementioned minimum holding period of the securities.
As regards incoming transfers, General Resolution No. 871/2020 provided that securities transferred by foreign depositaries and credited with a central depositary may not be allocated to the settlement of transactions in foreign currency and in a foreign jurisdiction until three business days after such crediting into sub-account/s in the local custodian. If such securities are allocated to the settlement of transactions in foreign currency and in local jurisdiction, the minimum holding period will be two business days after such crediting into sub-account/s in the local custodian.
In addition, in the price-time priority order matching segment, transactions for the purchase and sale of fixed-income securities denominated and payable in US dollars issued by Argentina under local laws by sub-accounts subject to section 6 of the FX Regulations and that are also regarded as qualified investors, the following requirements must be observed:
(a) for the aggregate of such securities, the nominal amount of securities purchased and to be ~~kept~~settled in ~~Argentina from 365 calendar days~~pesos may not exceed the nominal amount of securities sold and to ~~120 calendar days from~~be settled in pesos, on the ~~date~~same trading day and for each customer sub-account;
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(b) for the aggregate of such securities, the ~~transfer~~nominal amount of securities sold and to be settled in foreign currency and in local jurisdiction may not exceed the ~~relevant amount. On January 5, 2017, pursuant~~nominal amount of securities bought and to ~~Resolution No. 1—E/2017 of~~be settled in such currency and jurisdiction, on the ~~Ministry of Treasury, the mandatory stay period of 120 days was further reduced to 0 days.~~
On May 19, 2017, the Central Bank issued Communication “A” 6244 effective as of July 1, 2017 (amended by Communication “A” 6312 dated August 30, 2017), which structurally modified the exchange regulations in force, establishing a new foreign exchange regimen that significantly eased the access to the MLC~~. Communication “A” 6244 (as amended by Communication “A” 6312) has replaced all previous rules governing exchange transactions, the general exchange position~~same trading day and ~~the provisions of Decree No. 616/05, while rules governing information~~for each customer sub-account; and ~~filing requirements were not replaced.~~
~~In addition, Communication “A” 6244 (as amended by Communication “A” 6312 and Communication “A”~~ ~~6363) set forth:~~
1.
~~The principle of freedom of exchange: Argentine and non-Argentine residents may freely access the MLC.~~
2.
~~The obligation of carrying out any exchange transaction through an entity authorized by the Central Bank has been maintained.~~
3.
~~Time restrictions to trade in the MLC for carrying out foreign exchange transactions have been eliminated.~~
4.
~~The mandatory inflow and settlement of export proceeds through the MLC within the applicable term.~~
5.
The obligation of Argentine residents to comply with the reporting regime, even though there has not been an income of funds to the MLC nor any future access through the transactions to be declared, is maintained.

~~Likewise,~~
(c) for the aggregate of such securities, the nominal amount of securities sold and to be settled in foreign currency and in a foreign jurisdiction may not exceed the nominal amount of securities bought and to be settled in such currency and jurisdiction, on ~~November 10, 2017,~~ the ~~Central Bank repealed the requirement that proceeds from operations of exports of goods, services~~same trading day and ~~raw materials, be repatriated and settled through the MLC.~~for each sub-account.
Foreign Exchange Criminal Regime
Any operation that does not comply with the provisions of the FX Regulations is subject to Law No. 19,359 of Foreign Exchange Criminal Regime.
Notwithstanding the above mentioned measures adopted by the current administration, the Central Bank and the Federal Government in the future may impose additional exchange controls that may further impact our ability to transfer funds abroad and may prevent or delay payments that our Argentine subsidiaries are required to make outside Argentina.

Item 10.E Pursuant to Communication “A” 6401, dated December 26, 2017, a new reporting regime was created by means of which the “Review of Debt Securities and External Liabilities Issued by the Financial Sector and the Non-Financial Private Sector” established by Communication “A” 3602, and the “Survey on direct investments,” established by Communication “A” 4237, were replaced by a unified report on direct investments and debt. Only Argentine residents (both legal entities or natural persons) whose flow of balance of foreign assets or debt during the previous calendar year reaches or exceeds the equivalent of U.S.$1 million in Pesos are required to report foreign holdings of (i) shares and other capital participations; (ii) debt; (iii) financial derivatives; and (iv) real estate, on an annual basis. Argentine residents whose flow or balance of foreign assets or debt reaches or exceeds the equivalent of U.S.$50 million in Pesos, shall comply with the report on a quarterly basis.Taxation On January 11, 2018, with the aim of providing more flexibility to the foreign exchange system and promoting competition, allowing the entrance of new players to the system, a free floating foreign exchange market was created by means of Decree No. 27/2018 replacing the MLC.
The following discussion contains a description of the principal Argentine and United States federal income tax consequences of the acquisition, ownership and disposition of our Class B shares or ADSs. It does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase our Class B shares or ADSs, it is not applicable to all categories of investors, some of which may be subject to special rules, and it does not specifically address all of the Argentine and Unites States federal income tax considerations applicable to any particular holder. This discussion is based upon the tax laws of Argentina and the regulations thereunder and the tax laws of United States and the regulations thereunder as in effect on the date of this annual report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Each prospective purchaser is urged to consult its own tax advisor about the particular Argentine and United States federal income tax consequences to it of an investment in our Class B shares or ADSs. This discussion is also based upon the representations of the Depositary and on the assumption that each obligation set forth in the deposit agreement among us, the Depositary and the registered holders and beneficial owners of the ADSs, and any related documents, will be performed in accordance with its terms.
Material Argentine Tax Considerations
The following discussion is a summary of the material Argentine tax considerations relating to the purchase, ownership and disposition of our Class B shares or ADSs. The following summary is based upon tax laws of Argentina as in effect on the date of this document and is subject to any change in Argentine law that may come into effect after such date, and any change could apply retroactively and could affect the continued validity of this summary. On December 29, 2017, Law No.27,430 was published in the Official Gazette introducing a material tax reform (the “Tax Reform Law”), which introduces several modifications to the former tax regime. The Tax Reform Law has been regulated by the General Resolution (AFIP) No.4227/2018 (published in the Official Gazette on April 12, 2018), regulating, among others, the income tax applicable to income derived from financial transactions, obtained by Foreign Beneficiaries (as defined below). Decree No.1170/2018 (published in the Official Gazette on December 27, 2018) has regulated certain amendments introduced by the Tax Reform Law. Also, on December 6, 2019, Decree No.824/2019 was published in the Official Gazette, which approves a new ordered text of the Income Tax Law. On December 9, 2019, Decree No.862/2019 was published in the Official Gazette, which approves a new ordered text of the regulatory decree of the Income Tax Law, with certain modifications. It is important to point out that on December 23, 2019, Law No. 27,541 was published in the Official Gazette, which also introduces several modifications to the Argentine tax regime, such as the income tax applicable to income obtained by Argentine resident individuals and undivided estates located in Argentina derived from financial operations, among other aspects.
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Law No. 27,541 has been regulated by the Decree No.99/2019 (published in the Official Gazette on December 28, 2019), General Resolution (AFIP) No.4659/2020 (published in the Official Gazette on January 7, 2020), General Resolution (AFIP) No.4664/2020 (published in the Official Gazette on January 15, 2020), Decree No. 116/2020 (published in the Official Gazette on January 30, 2020), General Resolution (AFIP) No. 4667/2020 (published in the Official Gazette on January 31, 2020), General Resolution (AFIP) No. 4673/2020 (published in the Official Gazette on February 7, 2020), General Resolution (AFIP) No. 4690/2020 (published in the Official Gazette on April 1, 2020), Decree No. 330/2020 (published in the Official Gazette on April 1, 2020), General Resolution (AFIP) No. 4691/2020 (published in the Official Gazette on April 2, 2020), General Resolution (AFIP) No. 4815/2020 (published in the Official Gazette on September 16, 2020), General Resolution (AFIP) No. 4816/2020 (published in the Official Gazette on September 16, 2020), General Resolution (AFIP) No. 4850/2020 (published in the Official Gazette on November 6, 2020), General Resolution (AFIP) No. 4855/2020 (published in the Official Gazette on November 10, 2020), General Resolution (AFIP) No. 4873/2020 (published in the Official Gazette on December 4, 2020), among others. Additionally, on August 26, 2020, on October 31, 2020 and on December 1, 2020, Law No. 27,562 and Decrees No. 833/2020 and 966/2020, were published in the Official Gazette, respectively, which extended the scope and validity of the moratorium established in Law No. 27,541.
This summary includes the modifications under the mentioned regulations, nevertheless, please note it does not include all of the tax considerations that may be relevant to you or your situation, particularly if you are subject to special tax rules.
This summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of our Class B shares or ADSs. No assurance can be given that the courts or tax authorities responsible for the administration of the laws and regulations described in this report will agree with this interpretation. In this regard, it is important to highlight that, notwithstanding the issuance of the above mentioned regulations it is expected that more regulations and explanations would be issued shortly, since to date it is not possible to determine how the recent modifications incorporated to the Argentine tax regime will be applied and/or construed by the tax authorities of Argentina. Holders are encouraged to consult their tax advisors regarding the tax treatment of our Class B shares or ADSs as it relates to their particular situation.
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Income Tax
Taxation on Dividends
According to the amendments introduced to the Income Tax Law by virtue of the Tax Reform Law, and Law No. 27,541, the taxation applicable on the distribution of dividends from Argentine companies would be as follows:

~~Within the new foreign exchange market, exchange operations will be carried out by financial entities and any other person authorized to by the Central Bank to engage~~
(i) Dividends originated in ~~permanent or customary trade in the purchase and sale of foreign coins and banknotes, gold coins or bars and traveler’s checks, money orders, transfers or similar operations in foreign currency.~~
By virtue of Communication “A” 6443 of the Central Bank, which entered into force on March 1, 2018, companies from any sector that operate in the foreign exchange market may operate as an exchange agency solely by registering via an electronic form entitled the “Registry of Exchange Operators” (~~Registro de Operadores de Cambio~~).
As of the date of this annual report, in accordance with current regulations, all individuals and legal persons, assets and other universities may operate freely in the MLC and foreign exchange transactions shall be carried out at the exchange rate freely agreed between the parties. All exchange and/or arbitrage operations must be carried out through financial or exchange entities authorized by the Central Bank, and must comply in all cases with the provisions applicable to each transaction. Transactions that do not fall within the scope of the foreign exchange regulations will be subject to the Foreign Exchange Regime Law.
~~Item 10.E~~~~Taxation~~
The following discussion contains a description of the principal Argentine and United States federal income tax consequences of the acquisition, ownership and disposition of our Class B shares or ADSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase our Class B shares or ADSs and is not applicable to all categories of investors, some of which may be subject to special rules, and does not specifically address all of the Argentine and Unites States federal income tax considerations applicable to any particular holder. This summary is based upon the tax laws of Argentina and the regulations thereunder and the tax laws of United States and the regulations thereunder as in effect on the date of this annual report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Each prospective purchaser is urged to consult its own tax advisor about the particular Argentine and United States federal income tax consequences to it of an investment in our Class B shares or ADSs. This discussion is also based upon the representations of the depositary and on the assumption that each obligation in the deposit agreement among us, ~~The Bank of New York Mellon, as depositary and the registered holders and beneficial owners of the ADSs, and any related documents, will be performed in accordance with its terms.~~
~~Material Argentine Tax Considerations~~
The following opinion of material Argentine tax matters is based upon the tax laws of Argentina and regulations thereunder as of the date of this annual report, and is subject to any subsequent change in Argentine laws and regulations which may come into effect after such date. This section is the opinion of the law firm of Errecondo, González & Funes insofar as it relates to matters of Argentine tax law. This opinion does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of such securities. No assurance can be given that the courts or tax authorities responsible for the administration of the laws and regulations described in this annual report will agree with this interpretation. Holders should carefully read “~~Item 3.D Risk Factors~~—~~Risks Relating to Our Class B Shares and the ADSs~~—~~Changes in the Argentine tax laws may adversely affect the results of our operations and the tax treatment of our Class B shares and/or the ADSs~~~~.” Holders are encouraged to consult their tax advisors regarding the tax treatment of our Class B shares and ADSs as it relates to their particular situation.~~
~~Taxation on dividends~~
~~Pursuant to Law No. 26,893, dividends and other~~ profits paid in cash or in kind —except for stock dividends—by companies and other entities incorporated in Argentina referred to in the Income Tax Law, Sections 69 (a)(1), (2), (3), (6) and (7), and Section 69(b), were subject to income tax at a 10% rate except for those beneficiaries that were domestic corporate taxpayers. Law No. 27,260 repealed this withholding tax as of July 23, 2016. Consequently, no withholding tax is to levied on dividends distributed to either Argentine or non-Argentine resident shareholders since then. This treatment applies only to dividends to be distributed at any time out of retained earnings accumulated until the end of the last fiscal year starting before January 1, 2018.
Likewise, the portion of those dividends exceeding the company’s accumulated net taxable income (as determined by application of the Argentine Income Tax Law), if any, is subject to a 35% withholding tax on such excess (the “Equalization Tax”). For purpose of the Equalization Tax, the amount of accumulated net taxable income to be considered shall be determined by (1) deducting the income tax paid by the company, and (2) adding the dividends
and profits not subject to tax received as distributions from other corporations. If the distribution is in-kind, then the corporation must pay the tax to the Argentine tax authorities and will be entitled to seek reimbursement from the shareholders.
~~Dividends to be distributed out of earnings accrued in~~obtained during fiscal years ~~starting~~initiated on or after January 1, 2018 ~~are~~and up to December 31, 2020: dividends on Argentine shares paid to Argentine resident individuals and/or non-Argentine residents would be subject to a 7% income tax ~~treatment different from the one previously described, based~~withholding on the ~~recent enactment~~amount of ~~a comprehensive tax reform -Law No. 27,430-, published in the Official Gazette on December 29, 2017, and generally effective since January 1, 2018.~~
~~Pursuant~~such dividends (“Dividend Tax”). Note that according to Section 48 of Law No. ~~27,430, dividends and other~~27,541, the application of the corporate 25% rate was suspended for one tax period; thus the 7% rate would also apply for dividend distributions involving profits paid in cash or in kind —except for stock dividends—by companies and other entities incorporated in Argentina referred to in the Argentine Income Tax Law (the “Income Tax Law”), Sections 69 (a)(1), (2), (3), (6), (7) and (8), and Section 69(b) out of retained earnings accumulated inobtained during fiscal years ~~starting~~initiated on or after January 1, 2018 ~~will be subject to withholding tax at a 7% rate (on profits accrued during fiscal years starting January 1, 2018~~and up to December 31, 2019), and at a 13% rate (on profits accrued in fiscal years starting January 1, 2020 and onwards), provided that they are distributed to Argentine resident individuals and foreign shareholders. No dividend withholding tax applies2020. However, if dividends are distributed to ~~the aforementioned~~ Argentine corporate entities required to assess the dividend withholding tax. In addition, the Equalization Tax is repealed. Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from any profit distributions we may make not only on our Class B shares but also on the ADSs.
~~Capital gains~~
The results derived from the transfer of shares and other equity interests, bonds and other securities of Argentine companies are subject to Argentine capital gains tax, regardless of the type of beneficiary who realizes the gains.
~~Capital gains obtained by Argentine corporate taxpayers~~Entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine ~~entities) derived from~~entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina), no Dividend Tax should apply. Equalization Tax (as defined below) is not applicable. It is worth noting that the ~~sale, exchange or other disposition of shares are subject to income tax at the corporate rate on net income. Recently,~~unclear statutory language under Law No. ~~27,430 decreased~~27,541 with respect to the suspension provision led to different opinions in the market stating whether the 25% corporate income tax rate ~~from 35%~~was suspended for one period (until January 1, 2021) or for two tax periods (until January 1, 2022). The Argentine tax authorities have unofficially stated (through the minutes of a meeting held on January 8, 2020 with professional associations) that the suspension period was limited to ~~30%~~just one period (until January 1, 2021). However, by the time of drafting this document, no formal clarification nor specific rule was formally issued to clarify said understanding. Additionally, as recently transpired, there is a bill subject to discussion by the National Congress to extend the provisions of Section 48 of Law No. 27,541 for fiscal years beginning on or after January 1, ~~2018 to~~2021 and until December 31, ~~2019,~~2021, inclusive; thus resulting in the application of the 30% corporate rate and the 7% rate for dividend distributions for an additional period.
Argentine individuals and undivided estates located in Argentina are not allowed to offset income arising from the distribution of dividends on Argentine shares with other losses arisen in other type of operations.
(ii) Dividends originated in profits obtained during fiscal years initiated on or after January 1, 2021 onward: dividends on Argentine shares paid to Argentine resident individuals and/or non-Argentine residents would be subject to a 13% income tax withholding on the amount of such dividends. Note that according to Section 48 of Law No. 27,541, the application of the corporate 25% rate was suspended for one tax period; thus the 13% rate would apply for dividend distributions involving profits obtained during fiscal years initiated on or after January 1, 2021. In the case of non-Argentine residents, said 13% rate could be reduced pursuant to applicable treaties to avoid double taxation if certain conditions are met, as the case may be. However, if dividends are distributed to Argentine Entities, no Dividend Tax should apply. Equalization Tax (as defined below) is not applicable. As stated above, the unclear statutory language under Law No. 27,541 with respect to the suspension provision led to different opinions in the market stating whether the 25% corporate income tax rate was suspended for one period (until January 1, 2021) or for two tax periods (until January 1, 2022). The Argentine tax authorities have unofficially stated (through the minutes of a meeting held on January 8, 2020 with professional associations) that the suspension period was limited to just one period (until January 1, 2021). However, by the time of drafting this document, no formal clarification nor specific rule was formally issued to clarify said understanding. As stated above, as recently transpired, there is a bill subject to discussion by the National Congress to extend the provisions of Section 48 of Law No. 27,541 for fiscal years beginning on or after January 1, ~~2020~~2021 and ~~onwards.~~
~~Individual resident’s capital gains tax~~
Law No 27,430 established that as from January 1, 2018, gains realized by Argentine resident individuals from the sale, transfer or disposition of shares, securities representing shares and certificates of deposit of shares are exempt from capital gains tax in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares are traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV. For periods prior to 2018, it is currently under discussion the extent of the exemption (established by Law No. 26,893 and its implementing decree 2334/2013) applicable to the sale of shares and other securities through a stock exchange market, so as to determine whether it applies only sales of securities made in stock exchanges duly authorized by the CNV or in any stock exchanges.
~~Nonresident’s capital gains tax~~
Pursuant to Law No. 26,893, capital gains obtained by non-Argentine residents from the sale, exchange or other disposition of shares and other equity interests, bonds and other securities of Argentine companies were subject to capital gains tax until December ~~30, 2017, even if those transactions were entered into between nonresidents.~~
~~Law No~~. 27,430 provides that the capital gains tax applicable to nonresidents for transactions entered into between September 23, 2013 and December 30, 2017, is still due. However, no taxes will be claimed to nonresidents with respect to past sales of Argentine shares or other securities traded31, 2021, inclusive; thus resulting in CNV’s authorized markets (such as ADSs) as long as the cause of the non-payment was the absence of regulations stating the mechanism of tax collection at the time the transaction was closed. General Resolution (AFIP) 4.227, which will come into effect on April 26, 2018,
stipulates that the income tax should be paid to the AFIP under the following procedures: (i) in case the securities were sold through an Argentine stock exchange market, and the withholding has been made, then the withholder must pay the tax, (ii) in case the securities were sold but not through an Argentine stock exchange market and there is an Argentine buyer involved, then the Argentine buyer should pay the income tax; and (iii) when both the seller and the buyer were foreign beneficiaries and the sale was not performed through an Argentine stock exchange market, the person liable for the tax is the buyer and the payment shall be made through an international bank via wire transfer to the AFIP. The payment of capital gains tax applicable for transactions entered into before December 30, 2017 is due on June 11, 2018.
In turn, Law 27,430 and Decree 279/2018, maintain the 15% capital gains tax (calculated on the actual net gain or a presumed net gain equal to 90% of the sale price) on the disposal of shares or securities by nonresidents. However, nonresidents are exempt from the capital gains tax on gains realized from the sale of (a) Argentine shares in the following cases: (i) when the shares are placed through a public offering authorized by the CNV, (ii) when the shares were traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers, or (iii) when the sale, exchange or other disposition of shares is made through an initial public offering and/or exchange of shares authorized by the CNV; and (b) depositary shares or depositary receipts issued abroad, when the underlying securities are shares (i) issued by Argentine companies, and (ii) with authorization of public offering. The exemptions will only apply to the extent the foreign beneficiaries reside in, or the funds used for the investment proceed from, jurisdictions considered as cooperating for purposes of the exchange of tax information.
~~In addition, it is clarified that, from 2018 onward, gains from the sale of ADSs will be treated from Argentine sources.~~
In case the exemption is not applicable and, to the extent foreign beneficiaries do not reside in, or the funds do not arise from, jurisdictions not considered as cooperative for purposes of fiscal transparency, the gain realized from the disposition of shares would be subject to Argentine income tax at a 15% rate on the net capital gain or at a 13.5% effective rate on the gross price. In case such foreign beneficiaries reside in, or the funds arise from, jurisdictions not considerd as cooperative for purposes of fiscal transparency, a 35% tax rate on the the net capital cagin or at a 31.5% effective rate on the gross price should apply.
In such scenarios, according to General Resolution (AFIP) 4227, the income tax should be withheld and paid to the AFIP under the following procedures: (i) in case the securities were sold by a foreign beneficiary, through an Argentine stock exchange market, the custodian entity should withhold and pay the tax if it is involved in the payment process; if it is not involved in the payment process but there is an Argentine buyer involved, the Argentine buyer should withhold the income tax (ii) in case the securities were sold by a foreign beneficiary, but not through an Argentine stock exchange market and there is an Argentine buyer involved, the Argentine buyer should withhold the income tax; and (iii) when both the seller and the buyer are foreign beneficiaries and the sale is not performed through an Argentine stock exchange market, the person liable for the tax shall be the legal representative of the seller of the shares or securities being transferred or directly by the seller, in the event that there was no local legal representative. In this case, the payment shall be made through an international bank via wire transfer to the AFIP.
~~Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from the holding and disposing of ADSs or Class B Shares.~~
~~Personal assets tax~~
Argentine companies, such as us, have to assess and pay the personal assets tax corresponding to their shareholders that are Argentine individuals and non-Argentine resident persons. As of December 31, 2016, Law No. 27,260 lowered the rate to 0.25%, which is to be assessed on the proportional net worth value (valor patrimonial proporcional), of the shares as per the Argentine entity’s last financial statements prepared under Argentine GAAP. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to ~~seek reimbursement of such paid tax from the applicable Argentine domiciled individuals and/or foreign domiciled shareholders.~~
Pursuant to Law No. 27,260, Argentine companies that have properly fulfilled their tax obligations during the two fiscal year periods prior to the 2016 fiscal year and comply with certain other requirements may qualify for an
~~exemption on personal asset tax for the 2016, 2017 and 2018 fiscal years. The request for this tax exemption had to be filed before March 31, 2017~~. The Company has already filed this request and has been granted the exemption for the referred fiscal years. Notwithstanding, in the future, the Company may not be exempt from the payment of the personal assets tax.
~~Value added tax~~
~~The sale, exchange or other disposition of our Class B shares and ADSs, and the distribution of dividends in connection therewith, are exempted from the value added tax.~~
~~Tax on debits and credits on Argentine bank accounts~~
Credits to and debits from bank accounts held at Argentine financial institutions, as well as certain cash payments, are subject to this tax, which is assessed at a general rate of 0.6%. There are also increased rates of 1.2% and reduced rates of 0.075% that may apply in certain cases. Owners of bank accounts subject to the general 0.6% rate may consider 34% of the tax paid upon credits to such bank accounts and taxpayers subject to the 1.2% rate may consider 17% of all tax paid upon credits to such bank accounts as a credit against income tax or tax on presumed minimum income. When financial institutions governed by Law No. 21,526 make payments acting in their own name and on their own behalf, the application of this tax is restricted only to certain specific transactions. Such specific transactions include, among others, dividends or profits distributions.
~~Tax on minimum presumed income~~
Entities domiciled in Argentina are subject to this tax at the rate of 1% applicable over the total value of their taxable assets, to the extent it exceeds in the aggregate an amount of Ps.$200,000. Specifically, the law establishes that banks, other financial institutions and insurance companies will consider a taxable base equal to 20% of the value of taxable assets. This tax shall be payable only to the extent the income tax determined for any fiscal year does not equal or exceed the amount owed under the tax on minimum presumed income. In such case, only the difference between the tax on minimum presumed income determined for such fiscal year and the income tax determined for that fiscal year shall be paid. Any tax on minimum presumed income paid will be applied as a credit toward income tax owed in the immediately-following 10 fiscal years. Please note that shares and other equity participations in entities subject to tax on minimum presumed income are exempt from this tax. ~~Pursuant to the Tax Amnesty Law, tax on minimum presumed income was repealed effective effective as of the fiscal year beginning on January 1, 2019.~~
~~Turnover tax~~
In addition, gross turnover tax could be applicable to Argentine residents on the transfer of shares and on the payment of dividends to the extent such activity is conducted on a regular basis within an Argentine province or within the City of Buenos Aires. However, under the Tax Code of the City of Buenos Aires, any transactions with shares, as well as the payment of dividends are exempt from gross turnover tax.
~~Holders of our Class B shares or ADSs are encouraged to consult a tax advisor as to the~~ ~~particular Argentine gross turnover tax consequences derived from holding and disposing of our Class B shares or ADS.~~
~~Stamp taxes~~
~~Stamp tax is a local tax that is levied based on the formal execution of public or private instruments.~~
~~Documents subject to stamp tax include, among others, all types of contracts, notarial deeds and promissory notes. Each province and the City of Buenos Aires have its own stamp tax legislation.~~
Stamp tax rates vary according to the jurisdiction and type of agreement involved. In certain jurisdictions, acts or instruments related to the negotiation of shares and other securities duly authorized for its public offering by the CNV are exempt from stamp tax. ~~This does not apply to ADSs.~~
~~On January 2, 2018, Law~~ No. 27,429 enforced a “Fiscal Consensus” signed between the National Executive Power and representatives of the Provinces and the City of Buenos Aires. Among other issues, the provinces assumed the commitment to apply tax rates not higher than those for each activity and period In the stamp tax, for certain acts and contracts, not higher than 0.75% as of January 1, 2019 with a gradual reduction until its complete elimination as of January 1, 2022.
~~Other taxes~~
There are no Argentine federal inheritance or succession taxes applicable to the ownership, transfer or disposition of our shares. The provinces of Buenos Aires and Entre Ríos establish a tax on free transmission of assets, including inheritance, legacies, donations, etc. Free transmission of our shares could be subject to this tax. In the case of litigation regarding the shares before a court of the City of Buenos Aires, a 3% court fee would be charged, calculated on the basis of the claim.
~~Tax treaties~~
Argentina has signed tax treaties for the avoidance of double taxation with several countries, although there is currently no tax treaty or convention in effect between Argentina and the United States.
~~THE ABOVE~~ ~~OPINION~~ ~~IS NOT INTENDED TO BE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP OR DISPOSITION OF CLASS B SHARES OR ADSs. HOLDERS ARE~~ ~~ENCOURAGED~~ ~~TO CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING IN EACH PARTICULAR CASE.~~
~~United States Federal Income Tax Considerations~~
~~This summary describes certain U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning and disposing of the Class B shares and ADSs~~ (and to the extent provided under “Information Reporting and Backup Withholding” and “FATCA” below, investors other than U.S. holders). The discussion does not apply to certain classes of holders, such as persons that own or are deemed to own 10% or more of our voting stock or 10% or more of the total value of all classes of our stock, dealers in securities or currencies, traders that elect mark-to-market accounting for securities holdings, banks, financial institutions, insurance companies, tax-exempt organizations, entities treated as partnerships for U.S. federal income tax purposes (or a partner therein), persons who are liable for the alternative minimum tax, persons who acquired ADSs or Class B Shares underlying ADSs pursuant to the exercise of an employee stock option or otherwise as compensation, persons holding ADSs or Class B Shares underlying ADSs in connection with a trade or business conducted outside of the United States , persons holding the Class B shares or ADSs as a position in a “straddle” or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction, or persons that have a functional currency other than the U.S. dollar, all of which may be subject to rules that differ significantly from those described below. This discussion assumes that the Class B shares and ADSs are held as “capital assets” for U.S. federal income tax purposes.
This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury regulations, administrative rulings and judicial authority, all as in effect as of this date. All of these laws and authorities are subject to change, possibly on a retroactive basis. You should consult your own tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of purchasing, owning and disposing of the Class B shares and ADSs in light of your particular circumstances.
For purposes of this summary, you are a U.S. holder if you are a beneficial owner of Class B shares or ADSs and you are, for U.S. federal income tax purposes, a citizen or resident of the United States, a U.S. domestic corporation, or otherwise subject to U.S. federal income tax on a net income basis with respect to income from the Class B shares and ADSs.
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the Class B shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the Class B shares represented by that ADS.
~~The following discussion generally assumes that we are not, and will not become, a passive foreign investment company (“PFIC”). See “~~~~Dividends~~~~” below for further discussion.~~
~~Dividends~~
~~Subject to the discussion below concerning passive foreign investment company status, t~~he gross amount of distributions paid with respect to the Class B shares or ADSs (including the amount of any Argentine taxes withheld) will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to you as dividends. The dividends will be treated as foreign-source income and will not be eligible for the dividends-received deduction generally available to U.S. corporations. Dividends paid in Pesos will be included in a U.S. holder’s income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of a U.S. holder’s receipt, or in the case of ADSs, the depositary’s receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. If such a dividend is not converted into U.S. dollars on the date of receipt, a U.S. holder generally will have a basis in the non-U.S. currency equal to its U.S. dollar value on that date. A U.S. holder generally will be required to recognize foreign currency gain or loss realized on a subsequent conversion or other disposition of such currency, which will be treated as U.S.-source ordinary income or loss.
Dividends received by certain non-corporate U.S. holders will generally be subject to taxation at reduced rates if the dividends are “qualified dividends.” Subject to applicable limitations, dividends paid on the ADSs will be treated as qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) the issuer was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a PFIC. The ADSs are listed on the NYSE and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on our audited consolidated financial statements and current expectations regarding our income, assets, activities and relevant market data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2017 taxable year and we do not anticipate becoming a PFIC for our 2018 taxable year or the foreseeable future. However, because the rules for determining whether a company is a PFIC are not entirely clear when applied to foreign banks and because the composition of our income and assets will vary over time, there can be no assurance that we will not be a PFIC for any taxable year. If we were a PFIC for any taxable year, your tax consequences in owning, receiving distributions in respect of, and disposing of the Class B shares or ADSs could be materially and adversely affected. You should consult your tax advisors concerning the potential application of the PFIC rules, including any filing requirements if we were treated as a PFIC.
~~Because the~~ Class B shares are not themselves listed on a U.S. exchange, dividends received with respect to the Class B shares or ADSs may not be treated as qualified dividends. U.S. holders of Class B shares or ADSs should consult their own tax advisors regarding the availability of the reduced dividend tax rate in the light of their own particular circumstances.
~~Dividends received by U.S. holders will generally constitute~~ foreign source and “passive category” income for U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign taxes, any Argentine taxes withheld from cash dividends on the Class B shares or ADSs will be treated as a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability if the tax is treated for U.S. federal income tax purposes as imposed on the U.S. holder (or at a U.S. holder’s election, may be deducted in computing taxable income if the U.S. holder has elected to deduct all foreign income taxes for the taxable year). However, amounts withheld on account of the Argentine personal assets tax (as defined in ~~“—Material Argentine Tax Considerations~~~~”) will not be a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability. The rules with respect to foreign tax credits are complex and U.S. holders are~~
~~urged to consult their independent tax advisors regarding the availability of the foreign tax credit under their particular circumstances.~~
~~Sale or Other Disposition~~
Upon a sale or other disposition of the Class B shares or ADSs, U.S. holders will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized on the disposition and the U.S. holder’s tax basis, determined in U.S. dollars, in the Class B shares or ADSs. Generally, such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the Class B shares or ADSs were held for more than one year. A U.S. holder’s ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder may be taxable at a preferential rate. If an Argentine tax is withheld on the sale or other disposition of the Class B shares or ADSs, a U.S. holder’s amount realized will include the gross amount of the proceeds of the sale or other disposition before deduction of the Argentine tax. See “~~—Material Argentine Tax Considerations~~~~—Capital gains~~” for a description of when a disposition may be subject to taxation by Argentina. This gain or loss will generally be U.S.—source gain or loss for foreign tax credit purposes. U.S. holders should consult their tax advisors as to whether the Argentine tax on gains may be creditable against the U.S. holder’s U.S. federal income tax on foreign-source income from other sources.
~~Foreign Financial Asset Reporting~~
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the Class B shares and ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders that fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the Class B shares and ADSs, including the application of the ~~rules to their~~30% corporate rate and the 7% rate for dividend distributions for an additional period.
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(iii) Dividends originated in profits obtained during tax periods before those contemplated above: no Argentine income tax withholding would apply on dividend distributions except for the application of the Equalization Tax (as defined below).
The equalization tax (the “Equalization Tax”) is applicable when the dividends distributed are higher than the “net accumulated taxable income” of the immediate previous fiscal period from when the distribution is made. In order to assess the “net accumulated taxable income” from the income calculated by the Income Tax Law, the income tax paid in the same fiscal period should be subtracted and the local dividends received in the previous fiscal period should be added to such income. The Equalization Tax would be imposed as a 35% withholding tax on the shareholder receiving the dividend. Dividend distributions made in property (other than cash) would be subject to the same tax rules as cash dividends. Stock dividends on fully paid shares (“acciones liberadas”) are not subject to Equalization Tax.
For Argentine individuals and undivided estates not registered before the Argentine tax authorities as taxpayers for income tax purposes as well as for non-Argentine residents, the Dividend Tax withholding will be considered a final payment. Argentine individuals and undivided estates are not allowed to offset income arising from the distribution of dividends on Argentine shares with losses from other types of operations.
The Income Tax Law provides a first in-first out rule pursuant to which distributed dividends correspond to the former accumulated profits of the distributing company.
Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from profit distributions made on Class B shares and ADSs.
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Capital gains tax
According to Income Tax Law regulations, the results derived from the transfer of shares, quotas and other equity interests, titles, bonds and other securities, are subject to Argentine income tax (unless an exemption applies), regardless of the type of beneficiary who realizes the gain.
Capital gains obtained by Argentine corporate entities (in general, entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non-Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina, among others) derived from the sale, exchange or other disposition of shares in Argentine entities are subject to income tax on the net income at the rate of 30% for fiscal years initiated after January 1, 2018 and up to December 31, 2020 and at the rate of 25% for tax periods initiated after January 1, 2021 and onwards (note that, according to Section 48 of Law No. 27,541, the reduction of the corporate rate provided for in the Tax Reform Law was suspended until tax periods commencing after January 1, 2021, inclusive). As stated above, the unclear statutory language under Law No. 27,541 with respect to the suspension provision led to different opinions in the market stating whether the 25% corporate income tax rate was suspended for one period (until January 1, 2021) or for two tax periods (until January 1, 2022). The Argentine tax authorities have unofficially stated (through the minutes of a meeting held on January 8, 2020 with professional associations) that the suspension period was limited to just one period (until January 1, 2021). However, by the time of drafting this document, no formal clarification nor specific rule was formally issued to clarify said understanding. In addition, as stated above, as recently transpired, there is a bill subject to discussion by the National Congress to extend the provisions of Section 48 of Law No. 27,541 for fiscal years beginning on or after January 1, 2021 and until December 31, 2021, inclusive; thus resulting in the application of the 30% corporate rate for an additional period. Losses arising from the sale of shares can only be offset against income derived from the same type of operations, for a five-year carryover period.
Starting in 2018, income obtained by Argentine resident individuals and undivided estates located in Argentina from the sale of shares and other securities are exempt from capital gains tax in the following cases: (i) when the shares are placed through a public offering authorized by the CNV and/or (ii) when the shares are traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers; and/or (iii) when the sale, exchange or other disposition of shares is made through a tender offer regime and/or exchange of shares authorized by the CNV. In addition, Section 34 of Law No. 27,541, provides that as since tax period 2020, in the case of securities under the provisions of Section 98 of the Income Tax Law, not included in the first paragraph of Section 26 subsection u) of the Income Tax Law, Argentine resident individuals and undivided estates located in Argentina are exempt from capital gains tax derived from their sale, exchange, or disposal to the extent said securities are listed on stock exchanges or securities markets authorized by the CNV, without being applicable the provisions of Section 109 of the Income Tax Law. In this sense, Section 109 of the Income Tax Law provides that the total or partial exemptions established or that will be established in the future by special laws regarding securities, issued by the national, provincial, or municipal states or the City of Buenos Aires, will not have effects on income tax for Argentine resident individuals and undivided estates located in Argentina. ADSs would not qualify for the exemption applicable to Argentine resident individuals since the referred conditions would not apply. If the exemption does not apply, the income derived by Argentine resident individuals and undivided estates located in Argentina from the sale, exchange or other disposition of ADSs (and shares, if applicable) is subject to income capital gains tax at a 15% rate on net income (calculated in Argentine currency). The acquisition cost may be updated pursuant to the IPC inflationary index rate to the extent the equity participation was acquired after January 1, 2018. Losses arising from the sale of non-exempt Argentine shares can only be offset by Argentine individuals and undivided estates located in Argentina against income derived from operations of the same source and type (understanding by “type” the different concepts of income included under each article of Chapter II, Title IV of the Income Tax Law), for a five-year carryover period.
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If Argentine resident individuals and undivided estates located in Argentina perform a conversion procedure of securities representing shares, that do not meet the exemption requirements stated in the conditions mentioned in points (i), (ii) and (iii) of the paragraph above, to hold instead the underlying shares that do comply with said requirements, such conversion would be considered a taxable transfer of the securities representing shares for which the fair market value by the time the conversion takes place should be considered. The same tax treatment will apply if the conversion process involves shares that do not meet the exemption requirements stated above that are converted into securities representing shares to which the exemption is applicable. Once the underlying shares or securities representing shares are converted, the results obtained from the sale, exchange, swap or any other disposition thereof would be exempt from income tax provided that the conditions mentioned in points (i), (ii) and (iii) of the paragraph above are met. Pursuant to amendments introduced by Law No. 27,541, it could also be construed that a capital gains exemption could also apply for Argentine resident individuals and undivided estates located in Argentina if the securities involved are listed on stock exchanges or securities markets authorized by the CNV (although the matter is not free from doubt and further clarifications should be issued). Due to the amendments introduced to the Income Tax Law, as from 2018, non-Argentine resident individuals or legal entities (“Foreign Beneficiaries”) are also exempt from income tax derived from the sale of Argentine shares in the following cases: (i) when the shares are placed through a public offering authorized by the CNV; and/or (ii) when the shares are traded in stock markets authorized by the CNV, under segments that ensure priority of price-time and interference of offers; and/or (iii) when the sale, exchange or other disposition of shares is made through a tender offer regime and/or exchange of shares authorized by the CNV. The exemption applies to the extent the Foreign Beneficiaries reside in a “cooperative jurisdiction” and, in accordance with Section 90 of the regulatory decree of the Income Tax Law, if their funds come from “cooperative jurisdictions” (as defined below).
In addition, the Tax Reform Law stated that income derived from the sale of ADSs gives rise to Argentine source income. However, capital gains obtained from the sale, exchange or other disposition of ADSs by Foreign Beneficiaries that reside in a cooperative jurisdiction and, in accordance with Section 90 of the regulatory decree of the Income Tax Law, their funds come from cooperative jurisdictions, are exempt from income tax on capital gains derived from the sale of ADSs to the extent the underlying shares are authorized for public offering by the CNV.
In case Foreign Beneficiaries conduct a conversion process of shares that do not meet the exemption requirements, into securities representing shares that are exempt from income tax pursuant to the conditions stated above, such conversion would be considered a taxable transfer for which the fair market value by the time the conversion takes place should be considered.
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In case the exemption is not applicable and the Foreign Beneficiaries are resident in a cooperative jurisdiction and their funds were channeled through cooperative jurisdictions, the gain derived from the disposition of ADSs would be subject to Argentine income tax at a 15% rate on the net capital gain or at a 13.5% effective rate on the gross price.
For Foreign Beneficiaries resident in or whose funds come from jurisdictions considered as non-cooperative for purposes of fiscal transparency, the tax rate applicable to the sales of shares and/or ADSs is assessed at 35%. Pursuant to General Resolution AFIP No. 4227/2018, the presumed net basis on which the 35% rate should apply in the case of sale or disposition of securities is assessed at 90%. General Resolution (AFIP) N° 4227/2018 provides different payment mechanisms depending on the specific circumstances of the sale transaction. Pursuant to Section 252 of the regulatory decree of the Income Tax Law, in the cases included in the last paragraph of Section 98 of the Income Tax Law (i.e., when the acquirer and the seller of the security involved are non-Argentine residents), the tax shall be paid by the foreign seller directly through the mechanism established for such purpose by the tax authorities, or (i) through an Argentine individual resident with sufficient mandate or (ii) by the foreign seller’s legal representative domiciled in Argentina.
As a result of the enactment of Law No. 27,541, certain clarifications and definitions are still pending and expected to be issued shortly.
Holders are encouraged to consult a tax advisor as to the particular Argentine income tax consequences derived from holding and disposing of Class B shares and ADSs and whether any different treatment under a treaty to avoid double taxation could apply.
Tax treaties
Argentina has signed tax treaties for the avoidance of double taxation with Australia, Belgium, Bolivia, Brazil, Canada, Chile, Denmark, Finland, France, Germany, Italy, Mexico, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland, the UK and the United Arab Emirates. The agreement signed with Qatar was approved by the National Congress on December 29, 2020 through Law No. 27,608 (published in the Official Gazette on January 15, 2021). The treaties signed with China, Luxembourg, Turkey, Austria and Japan are still undergoing the respective ratification procedures. There is currently no tax treaty for the avoidance of double taxation in effect between Argentina and the United States. Holders are encouraged to consult a tax advisor as to the potential application of the provisions of a treaty in their specific circumstances.
Personal assets tax
For tax period 2019, onwards, Argentine entities, like us, have to pay the personal assets tax corresponding to Argentine and foreign resident individuals and foreign resident entities for the holding of company shares by December 31 of each year. Law No. 27,541 (published in the Official Gazette on December 23, 2019) changed the “domicile” criterion for the “residence” criterion as stipulated under income tax rules. Also, according to Section 13 of the Decree No. 99/2019 any reference to “domicile” criterion in relation to the personal assets tax should be understood as referring to “residence.” For tax period 2019, inclusive, and onwards the applicable tax rate is 0.50% and is levied on the proportional net worth value (“valor patrimonial proporcional”) by December 31st of each year, of the shares arising from the last balance sheet. Pursuant to the Personal Assets Tax Law, the Argentine company is entitled to seek reimbursement of such paid tax from the applicable Argentine resident individuals and/or foreign resident shareholders. The Argentine company may seek this reimbursement of Personal Assets Tax by setting off the applicable tax against any amount due to its shareholders or in any other way or, under certain circumstances, waive its right under Argentine law to seek reimbursement from the shareholders.
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Holders are encouraged to consult a tax advisor as to the particular Argentine personal assets tax consequences derived from the holding of Class B shares and ADSs.
Value added tax
The sale, exchange or other disposition of our Class B shares or ADSs and the distribution of dividends are exempted from the value added tax.
Tax on debits and credits on Argentine bank accounts
All credits and debits originated in bank accounts held at Argentine financial institutions, as well as certain cash payments, are subject to this tax, which is assessed at a general rate of 0.6%. There are also increased rates of 1.2% and reduced rates of 0.075%. According to Section 45 of Law No. 27,541, the applicable rate of tax on debits and credits on Argentine bank accounts (the “TDC”) is doubled for certain cash withdrawals made by certain Argentine legal entities. Owners of bank accounts subject to the general 0.6% rate may consider 33% of the tax paid as a tax credit against specific taxes. The taxpayers that are subject to the 1.2% rate may consider 33% of all tax paid as a credit against specific taxes. Such amounts can be utilized as a credit for taxes or for the special contributions on cooperatives capital. The remaining amount is deductible for income tax purposes. If lower rates were applied, the available credit would be reduced to 20%.
TDC has certain exemptions. Debits and credits in special checking accounts (created under Communication “A” 3250 of the Argentine Central Bank) are exempted from this tax if the accounts are held by foreign legal entities and if they are exclusively used for financial investments in Argentina. For certain exemptions and/or tax rate reductions to apply, bank accounts must be registered with the Tax Authority (AFIP-DGI) in accordance with AFIP’s General Resolution No.3900/2016.
Pursuant to Law No. 27,432 (published in the Official Gazette on December 29, 2017), the TDC shall apply until December 31, 2022, inclusive. Whenever financial institutions governed by Law No. 21,526 make payments acting in their own name and behalf, the application of this tax is restricted to certain specific transactions. Such specific transactions include, among others, dividends or profits distributions.
Tax on minimum presumed income
Pursuant to Law No. 27,260, passed by the Argentine Congress on June 29, 2016, the tax on minimum presumed income was eliminated for tax periods beginning as of January 1, 2019.
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PAIS Tax (“Impuesto para una Argentina inclusiva y solidaria”)
Law No. 27,541 establishes, on an emergency basis and for the term of five fiscal periods from the entry into force of said law (i.e. December 23, 2019), a federal tax applicable to certain transactions for the purchase of foreign currency for saving purposes or without a specific destination and other operations of currency exchange and acquisition of services performed by Argentine tax residents (individuals, undivided estates, legal entities, among others). The applicable rate is, in general, 30%.
Investors should consider the provisions that apply to them according to their specific case.
In addition, General Resolution (AFIP) N° 4815/2020 established on the operations subject to PAIS Tax and for the taxpayers defined in Article 36 of Law No. 27,541 that qualify as Argentine residents, in the terms of Article 116 and subsequent of the Income Tax Law, the application of a thirty-five percent (35%) collection on the amounts in Ps. that, for each case, are detailed in Article 39 of the Law No. 27,541.
Said collection will have the character of payment on account and will be computable in the annual income tax return or, where appropriate, the annual personal assets tax return, corresponding to the fiscal period in which they were incurred.
Additionally, this general resolution establishes a refund regime for those subjects to whom the established collection has been applied and who are not taxpayers of income tax or, where appropriate, personal assets tax.
Solidary and Extraordinary contribution to help moderate the effects caused by the Pandemic
On an emergency basis and for only one time, it was created an extraordinary, obligatory contribution which applies on the assets of certain individuals and undivided estates in existence at the date of entry into force of Law No. 27,605 (i.e. December 18, 2020) (the “Extraordinary Contribution”).
The taxpayers are: (i) Argentine resident individuals and undivided estates, for their assets located in the country and abroad. Also included are those individuals of Argentine nationality whose domicile or residence is in “non-cooperative jurisdictions” or “null or low tax jurisdictions” according to the terms of the Income Tax Law, and (ii) Individuals and undivided estates residing abroad (except those mentioned in the previous point) for their assets located in the country.
The individual’s residence by December 31, 2019 according to Income Tax Law provisions shall be applicable for the purposes of this Extraordinary Contribution.
In both cases, these individuals will be exempted from this Extraordinary Contribution when the total value of their assets, included and valued according to the personal assets tax law terms, regardless of the treatment they have against such tax and without any non-taxable minimum threshold deduction, does not exceed Ps. 200,000,000, inclusive.
For those mentioned in point (i), the taxable base of this Extraordinary Contribution will be determined considering the total value of their assets in the country and abroad, including contributions to trusts or foundations of private interest and other similar structures, participations in companies or other entities of any type without fiscal personality and direct or indirect participations in companies or other entities of any type, existing at the date of entry into force of this law.
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The Extraordinary Contribution to be paid will be determined on the basis of a scale and rates varying from 2% to 5.25%, depending on (i) the total value of the assets and (ii) their location. The differential rate between assets located abroad and those located in the country shall be eliminated if part of these assets are repatriated within a certain period of time and to the extent those funds remain until December 31st, 2021 deposited in a bank account under the name of the holder or are affected, once this deposit is made, to one of the destinations established by General Resolution AFIP 4930.
The application, collection and inspection of this Extraordinary Contribution will be in charge of the AFIP. The provisions of the Argentine Fiscal Procedures Law (Law 11,683, text ordered in 1998 and its amendments) and the Criminal Tax Regime of Title IX of Law No. 27,430 and its amendments are supplementary applicable to the Extraordinary Contribution. Filing of the tax return and payment thereof shall be made until March 30, 2021, inclusive. General Resolution AFIP 4930 also established a reporting regime that shall be complied with from March 22 until April 30, 2021 under which certain individuals are required to inform their existing assets by March 20, 2020 and, in certain cases, also their existing assets by December 18, 2020.
Law No. 27,605 was regulated by the Decree N° 42/2021 (published in the Official Gazette on January 29, 2021) and by General Resolution AFIP 4930.
Note that although the Extraordinary Contribution was conceived as a one-time tax on assets existing as of December 18, 2020, it is important to mention that in Argentina there are several taxes that have been created on an exceptional basis and for a limited time, and were later extended for additional periods (e.g., Tax on Credits and Debits on Bank Accounts).
Gross turnover tax
This tax is a provincial tax, which is also levied in the City of Buenos Aires, applicable to gross revenues resulting from the regular and onerous exercise of commerce, industry, profession, business, services or any other onerous activity conducted on a regular basis within the respective Argentine jurisdiction. Each of the provinces and the City of Buenos Aires apply different tax rates depending on the type of activity.
In addition, gross turnover tax could be applicable on the transfer of Class B shares or ADSs and on the perception of dividends to the extent such activity is conducted on a regular basis within an Argentine province or within the City of Buenos Aires. However, under the Tax Code of the City of Buenos Aires, any transaction with shares as well as the perception of dividends are exempt from gross turnover tax.
In accordance with the stipulations of the Fiscal Consensus entered into by and amongst the Argentine Executive Branch, the representatives of the Provinces and the City of Buenos Aires on November 16, 2017 and approved by the Argentine Congress on December 21, 2017 (the so-called “Fiscal Consensus” and/or the “Consensus”), local jurisdictions took on certain commitments in connection with certain taxes that are within their powers. The Consensus shall be effective only in connection with the jurisdictions that have their legislative branches approve the Consensus and such effectiveness shall not commence if such approval has not been granted. When it comes to the impact of the Consensus on gross turnover tax, the Argentine provinces and the City of Buenos Aires agreed to grant exemptions and impose maximum tax rates on certain businesses and for certain periods.
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However, it is important to point out that later, the Argentine Executive Branch, the representatives of the Provinces and the City of Buenos Aires signed three agreements to suspend the Fiscal Consensus (“Fiscal Consensus 2018, 2019 and 2020”). These agreements shall be effective only in connection with the jurisdictions that have their legislative branches approve them and such effectiveness shall not commence if such approval has not been granted.
Holders of Class B shares and ADSs are encouraged to consult a tax advisor as to the particular gross turnover tax consequences of holding and disposing of Class B shares and ADSs in the involved jurisdictions.
Regimes for the Collection of Provincial Tax Revenues on the Amounts Credited to Bank Accounts
Different tax authorities (i.e., City of Buenos Aires, Corrientes, Córdoba, Tucumán, Province of Buenos Aires and Salta, among others) have established collection regimes for gross turnover tax purposes applicable to those credits verified in accounts opened at financial entities, of any type and/or nature and including all branch offices, irrespective of territorial location. These regimes apply to those taxpayers included in the lists provided monthly by the tax authorities of each jurisdiction. The applicable rates may vary depending on the jurisdiction involved. Collections made under these regimes shall be considered as a payment on account of the gross turnover tax. Note that certain jurisdictions have excluded the application of these regimes on certain financial transactions. Holders of Class B shares and ADSs shall corroborate the existence of any exclusions to these regimes in accordance with the jurisdiction involved.
Stamp tax
Stamp tax is a provincial tax, which is also levied in the City of Buenos Aires, applicable to the execution of onerous transactions within an Argentine provincial jurisdiction or the City of Buenos Aires or outside an Argentine provincial jurisdiction or the City of Buenos Aires but with effects in such jurisdiction.
In the City of Buenos Aires, acts or instruments related to the negotiation of shares and other securities duly authorized for its public offering by the CNV are exempt from stamp tax.
Regarding the Fiscal Consensus, almost all the provinces in Argentina and the City of Buenos Aires have committed to establish for the stamp tax a maximum tax rate of 0.75% as from January 1, 2019, 0.5% as from January 1, 2020, 0.25% as from January 1, 2021 and abrogate the stamp tax starting from January 1, 2022. However, such commitment was delayed by one calendar year pursuant to Law No. 27,469 “Fiscal Consensus 2018” (published in the Official Gazette on December 4, 2018). Fiscal Consensus 2018 shall be effective only in connection with the jurisdictions that have their legislative branches approve it and such effectiveness shall not commence if such approval has not been granted. However, later the Argentine Executive Branch, the representatives of the Provinces and the City of Buenos Aires signed Fiscal Consensus 2019 and 2020 to suspend the Fiscal Consensus and the Fiscal Consensus 2018. These agreements shall be effective only in connection with the jurisdictions that have their legislative branches approve them and such effectiveness shall not commence if such approval has not been granted.
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Holders of Class B shares and ADSs are encouraged to consult a tax advisor as to the particular stamp tax consequences arising in the involved jurisdictions.
Prospective investors should consider the tax consequences in force in the above mentioned jurisdictions at the time the concerned document is executed and/or becomes effective.
Other taxes
There are no federal inheritance or succession taxes applicable to the ownership, transfer or disposition of our Class B shares or ADSs. At the provincial level, the province of Buenos Aires imposes a tax on free transmission of assets, including inheritance, legacies, donations, etc. For tax period 2021, any gratuitous transfer of property lower than or equal to Ps.322,800 is exempt. This amount is increased to Ps.1,344,000 in the case of transfers among parents, sons, daughters and spouses. The amount to be taxed, which includes a fixed component and a variable component that is based on differential rates (which range from 1.6026% to 8.7840%), varies according to the property value to be transferred and the degree of kinship of the parties involved. Free transmission of Class B shares or ADSs could be subject to this tax. Holders of Class B shares and ADSs are encouraged to consult a tax advisor as to the particular tax consequences arising in the involved jurisdictions.
Court tax
In the event that it becomes necessary to institute enforcement proceedings in relation to our Class B shares and ADSs in the federal courts of Argentina or the courts sitting in the City of Buenos Aires, a court tax (currently at a rate of 3.0%) will be imposed on the amount of any claim brought before such courts. Certain court and other taxes could be imposed on the amount of any claim brought before the Province courts.
Incoming Funds Arising from Non-Cooperative or Low or Nil Tax Jurisdictions
According to Section 82 of the Tax Reform Law, for fiscal purposes, any reference to “low tax or no tax countries” or “non-cooperative countries” should be understood to be “non-cooperative jurisdictions or low or nil tax jurisdictions,” as defined in Section 19 and Section 20 of the Income Tax Law.
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As defined under Section 19 of the Income Tax Law, non-cooperative jurisdictions are those countries or jurisdictions that do not have an agreement in force with the Argentine government for the exchange of information on tax matters or a treaty to avoid international double taxation with a broad clause for the exchange of information. Likewise, those countries that, having an agreement of this type in force, do not effectively comply with the exchange of information will also be considered as non-cooperative. The aforementioned treaties and agreements must comply with international standards of transparency and exchange of information on fiscal matters to which the Argentine Republic has committed. The Executive Branch published a list of the non-cooperative jurisdictions based on the criteria above. In this sense, according to Section 24 of the regulatory decree of the Income Tax Law, the following jurisdictions should be considered as “non-cooperative” under the disposition of Section 19 of the aforementioned law:
Bosnia and Herzegovina; Brecqhou; Burkina Faso; State of Eritrea; State of the Vatican City; State of Libya; Independent State of Papua New Guinea; Plurinational State of Bolivia; Ascension Island; Sark Island; Santa Elena Island; Solomon Islands; The Federated States of Micronesia; Mongolia; Montenegro; Kingdom of Bhutan; Kingdom of Cambodia; Kingdom of Lesotho; Kingdom of Swaziland; Kingdom of Thailand; Kingdom of Tonga; Hashemite Kingdom of Jordan; Kyrgyz Republic; Arab Republic of Egypt; Syrian Arab Republic; Algerian Democratic and Popular Republic; Central African Republic; Cooperative Republic of Guyana; Republic of Angola; Republic of Belarus; Republic of Botswana; Republic of Burundi; Republic of Cape Verde; Republic of Ivory Coast; Republic of Cuba; Republic of the Philippines; Republic of Fiji; Republic of the Gambia; Republic of Guinea; Republic of Equatorial Guinea; Republic of Guinea- Bissau; Republic of Haiti; Republic of Honduras; Republic of Iraq; Republic of Kenya; Republic of Kiribati; Republic of the Union of Myanmar; Republic of Liberia; Republic of Madagascar; Republic of Malawi; Republic of Maldives; Republic of Mali; Republic of Mozambique; Republic of Namibia; Republic of Nicaragua; Republic of Palau; Republic of Rwanda; Republic of Sierra Leone; Republic of South Sudan; Republic of Suriname; Republic of Tajikistan; Republic of Trinidad and Tobago; Republic of Uzbekistan; Republic of Yemen; Republic of Djibouti; Republic of Zambia; Republic of Zimbabwe; Republic of Chad; Republic of the Niger; Republic of Paraguay; Republic of the Sudan; Democratic Republic of Sao Tome and Principe; Democratic Republic of East Timor; Republic of the Congo; Democratic Republic of the Congo; Federal Democratic Republic of Ethiopia; Lao People’s Democratic Republic; Socialist Democratic Republic of Sri Lanka; Federal Republic of Somalia; Federal Democratic Republic of Nepal ; Gabonese Republic; Islamic Republic of Afghanistan; Islamic Republic of Iran; Islamic Republic of Mauritania; People’s Republic of Bangladesh; People’s Republic of Benin; Democratic People’s Republic of Korea; Socialist Republic of Vietnam ; Togolese Republic; United Republic of Tanzania; Sultanate of Oman; British Overseas Territory Pitcairn, Henderson, Ducie and Oeno Islands; Tristan da Cunha; Tuvalu; and Union of the Comoros.

In turn, low or nil tax jurisdictions are defined as those countries, domains, jurisdictions, territories, associated states or special tax regimes in which the maximum corporate income tax rate is lower than 60% of the corporate income tax rate established in Section 73(a) of the Income Tax Law.
Pursuant to Section 25 of the regulatory decree of the Income Tax Law, for purposes of determining the taxation level referred to in Article 20 of the Income Tax Law, the aggregate corporate tax rate in each jurisdiction, regardless of the governmental level in which the taxes were levied must be considered. In turn, “special tax regime” is understood as any regulation or specific scheme that departs from the general corporate tax regime applicable in said country and results in an effective rate below that stated under the general regime. According to the legal presumption under Section 18.2 of Law No. 11,683, as amended, incoming funds from non-cooperative or low or nil jurisdictions could be deemed unjustified net worth increases for the Argentine party, no matter the nature of the operation involved. Unjustified net worth increases are subject to the following taxes:
income tax would be assessed at 110% of the amount of funds transferred.
VAT would be assessed at 110% of the amount of funds transferred.
Although the concept of “incoming funds” is not clear, it should be construed as any transfer of funds:

~~Information Reporting and Backup Withholding~~
~~Dividends paid on and proceeds~~
(i) from the sale or other disposition of the Class B shares or ADSs that are made within the United States or through certain U.S.-related financial intermediaries generally will be subject to information reporting unless ~~a U.S. holder is treated as~~ an exempt recipient and may also be subject to backup withholding unless a U.S. holder (i) provides a correct taxpayer identification number and certifies that it is not subject to backup withholding or (ii) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be allowed as a refund or credit against the holder’s U.S. federal income tax liability, provided the holder timely furnishes the required information to the Internal Revenue Service (“IRS”).
A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.
~~FATCA~~
~~We have entered into an agreement with the~~ IRS effective April 24, 2014, pursuant to which we have agreed to comply with certain due diligence, information reporting and withholding obligations pursuant to sections 1471 through 1474 of the Code, and the regulations promulgated thereunder (often referred to as the “Foreign Account Tax Compliance Act” or “FATCA”). Therefore, an investor considered to have a financial account that is a “U.S. account” maintained by us may be required to provide certain information regarding such investor (or relevant beneficial owner of the Class B shares or ADSs), including information and tax documentation regarding the identity of such investor as well as that of its direct and indirect owners, and we may be required to report this
~~information to the IRS.~~ However, our equity is not a U.S. account. Stock or other equity or debt instruments issued by a financial institution is not treated as a U.S. account if such stock or other instrument is regularly traded on an established securities market. We expect that the Class B shares and ADSs will be so treated. Further, a U.S. account generally does not include an equity instrument in a ~~financial institution, such as us, that is not~~non-cooperative/low or nil tax jurisdiction or from a bank account opened outside of a non-cooperative or low or nil tax jurisdiction but owned by an ~~investment entity.~~
In addition, it is possible that under future guidance, payments on the Class B shares and ADSs may be subject to a withholding tax of up to 30% under rules applicable to foreign “passthru payments.” Regulations implementing this rule have not yet been adopted or proposed and the IRS has indicated that any such regulations would not be effective prior to January 1, 2019 (or, if later, the date on which final regulations on this issue are published).FATCA is particularly complex and its application to Argentine financial institutions is uncertain at this time. Although we have registered with the IRS and believe that we are compliant with obligations imposed on us under FATCA, it is unclear to what extent we may be able to comply with FATCA in the future. Each holder of Class B shares or ADSs should consult its own tax advis~~or to obtain a more detailed explanation of FATCA and to learn how FATCA might affect each holder in its particular circumstances.~~
~~Item 10.F~~~~Dividends and paying agents~~
~~Not applicable.~~
~~Item 10.G~~~~Statement by experts~~
~~Not applicable.~~
~~Item 10.H~~~~Documents on display~~
We file reports, including annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at its public reference rooms in Washington, D.C., at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Foreign private issuers, like us, have been required to make filings with the SEC by electronic means since November 4, 2002. Any filings we make electronically are available to the public over the Internet at the SEC’s web site at http://www.sec.gov/
~~Item 10.I.~~~~Subsidiary Information~~
~~Not applicable.~~
~~Item 11.~~~~Quantitative and Qualitative Disclosures about Market Risk~~
~~Market Risk~~
Market risk is the risk of loss arising from fluctuations in financial markets variables, such as interest rates, foreign exchange rates and other rates or prices. This risk is a consequence of lending, trading and investments businesses and mainly consists of interest rate risk and foreign exchange risk.
~~Our market risk arises mainly from our capacity as a financial intermediary.~~
~~The Risk Management Committee is responsible for approving and amending our market risk policies.~~
The Risk Management Committee uses a risk map to explain, in detail, the trades that the trading desk is authorized to close and identifies the officers authorized to close those transactions. The risk map also describes the maximum terms for transactions, maximum amounts for the position in each product, the maximum amount of losses accepted (“stop loss”), the maximum expected loss (given a confidence interval) over a specific time period if the portfolio were held unchanged over that period (VaR limit) and the credit risk limits with all financial counterparties, and it is structuredentity located in a manner that establishes different investment amounts tied to our organizational chart, where the Treasury Manager has the highest authorized amount. Our Financial Risk Department conducts a daily control over compliance with the limits established in the risk map. In the event that an exception is needed, the trading desk
must apply for authorization from the CEO while maintaining the Asset & Liabilility Committee and the Risk Management Committee informed of all developments. In addition, the Risk Management Committee authorizes risk levels in terms of interest rate, foreign exchange rate, inflation and term imbalance risks. The Assets and Liabilities Committee is responsible for monitoring compliance with our market risk policies every two weeks.
In the course of its monthly meetings, our Board of Directors is advised of the full range of resolutions adopted by the Assets and Liabilities Committee, including: liquidity risk, market risk, foreign currency risk and interest rate risk management.
~~We evaluate, upgrade and improve market risk measurements and controls on a daily basis. In order to measure significant market risks (whether they arise in trading~~non-cooperative or ~~non-trading portfolios), we use the value at risk methodology,~~low or “VaR.” This methodology is based on statistical methods that take into account many variables that may cause a change in the value of its portfolios, including interest rates, foreign exchange rates, securities prices, volatility and any correlation among them. VaR is an estimation of potential losses that could arise from reasonably likely adverse changes in market conditions. It expresses the maximum amount of loss expected (given a confidence interval) over a specified time period, or “time horizon,” if that portfolio were held unchanged over that time period.
All VaR models, while forward looking, are based on past events and are dependent upon the quality of available market data. The quality of our VaR models is therefore continuously monitored. As calculated, VaR is an estimate of the expected maximum loss in the market value of a given portfolio over a ten day time horizon at a one tailed 99% confidence interval. We assume a ten day holding period and adverse market movements of 2.32 standard deviations as the standard for risk measurement and comparison. Additional information on our Risk Management is set forth in Note 23 to our audited consolidated financial statements.
~~The following table shows the five-day 99% confidence VaR for our combined trading portfolios in 2017, 2016 and 2015 (in thousands of Pesos):~~

2017

2016

2015

Minimum

33,561

36,590

30,741

Maximum

128,835

111,622

59,350

Average

72,739

72,961

46,028

As of December 31,

81,986

45,385

30,741

~~The following chart shows the three-month 99% confidence interest rate risk VaR for our combined trading portfolios for 2017 (in thousands of Pesos)~~
~~Minimum~~
~~403,872~~
~~Maximum~~
~~591,639~~
~~Average~~
~~495,991~~
~~As of December 31, 2017~~
~~591,639~~
nil tax jurisdiction;

~~In order~~
(ii) to ~~take advantage of good trading opportunities, the Bank has sometimes increased risk; however, during periods of uncertainty, the Bank has also reduced it.~~
~~Interest Rate Risk~~
Central Bank Communication “A” 5580 did not impact our minimum capital requirements for interest rate risk and other related measures, not being part of the Pillar I capital requirements. Notwithstanding this fact, the Superintendency of Financial Institutions continuesa bank account located in Argentina or to ~~review such risks and determines if there is~~ a ~~need for additional regulatory capital in case a predetermined threshold is surpassed or it finds clear evidence of an inappropriate management of this type of risk. See “~~~~Item 4.B Business overview—Argentine Banking Regulation—Liquidity and Solvency Requirements—Limitations~~.”
We define Interest Rate Risk as the risk relating to changes in the entity’s financial income and economic value as a result of fluctuations in the market’s interest rates. The following are known factors that contribute to this risk:
·                  ~~Differences in maturity and adjustment dates of assets, liabilities and off-balance sheet holdings;~~
·                  ~~Foreseeability, evolution and volatility with respect to local interest rates, foreign interest rates and CET;~~
·                  ~~The base risk arising out of an imperfect correlation when adjusting asset and liability rates for instruments with similar revaluation characteristics; and~~
·                  ~~Implicit options for particular assets, liabilities and off-balance sheet commitments held by the entity.~~
The Bank and CCF employ a prudent interest rate risk strategy allowing them to uphold their commitments and maintain desired levels of revenue and capital, both in normal and adverse market conditions.
As of July 1, 2018, the Central Bank Communication “A” 6397 will be in force for the whole local banking system, in compliance with Basel’s new document related to Interest Rate Risk in the Banking Book (IRRBB) (https://www.bis.org/bcbs/publ/d368.htm). The Bank and CCF will adapt their internal models to the requirements listed in that regulation.
~~Interest Rate Risk Management Model~~
The Bank and CCF include interest rate gaps in their interest rate risk management model. This approach analyzes mismatches between asset and liability interest rates between reevaluation periods with respect to balance sheet and off-balance sheet line-items. The result is a basic representation of the balance sheet structure that allows for the detection of interest rate risk concentrations within the different periods. This is also used to estimate the potential impact of interest rates fallingbank account opened outside of ~~the financial margin (NIM-EaR method) and the entity’s economic value (MVE-VaR method).~~
~~Every balance sheet and off-balance sheet line-item is classified according to its maturity. For asset/liability management accounts without maturity,~~Argentina but owned by an ~~internal method of analysis is used to determine possible maturity and sensitivity.~~
The Asset and Liability Management Committee monitors interest rate risk management and each financial management team is in charge of executing it. The Risk Management team and Financial Planning team are in charge of monitoring compliance, enforcing risk management strategies and issuing periodic reports.
~~Interest Rate Risk Capital Requirement~~
The Bank and CCF evaluate their minimum capital requirements relating to interest rate risk through the MVE-EaR model, using a holding period of three months and a 99% confidence interval. This quantitative model factors in the economic capital required for our securitization risk. The following chart shows the three-month 99% confidence interest rate risk VaR for our combined trading portfolios for 2017, 2016 and 2015 (in thousands of Pesos):

2017

2016

2015

Minimum

403,872

223,082

160,590

Maximum

591,639

461,509

221,237

Average

495,991

348,404

196,582

As of December 31,

591,639

373,404

184,564

~~The Bank and CCF’s consolidated gap position refers to the mismatch of interest-earning assets and interest-bearing liabilities.~~
~~The following tables show the Bank and CCF’s consolidated exposure to a positive interest rate gap, excluding CER adjusted securities:~~

Remaining Maturity at December 31, 2017

0-1 Year

1-5 Years

5-10 Years

Over 10 Years

Total

(in thousands of Pesos, except percentages)

Interest-earning assets

Investment Portfolio(1)

6,096,738

686,209

41,631

85

6,824,663

Loans to the non-financial public sector (2)

4,892

26,631

—

—

31,523

Loans to the private and financial sector (2)

38,455,834

15,547,415

1,707,001

—

55,710,250

Other assets

105,715

—

—

—

105,715

Receivables from financial leases

892,352

1,609,311

5,986

—

2,507,649

Total interest-earning assets

45,555,531

17,869,566

1,754,618

85

65,179,800

Interest-bearing liabilities

Savings

27,929,157

—

—

—

27,929,157

Time deposits

17,891,418

300

—

—

17,891,718

Investment accounts

900,150

—

—

—

900,150

Subordinated notes

772,776

8,184,445

—

—

8,957,221

Liabilities with Argentine financial institutions

216,154

387,944

—

—

604,098

Liabilities with international banks and institutions

2,778,116

5,154

—

—

2,783,270

Total interest-bearing liabilities

50,487,771

8,577,843

—

—

59,065,614

Asset/liability gap

(4,932,240
)
9,291,723

1,754,618

85

6,114,186

Cumulative asset/liability gap

(4,932,240
)
4,359,483

6,114,101

6,114,186

Cumulative sensitivity gap as a percentage of total interest-earning assets

4.3
%
19.3
%
20.8
%
20.8
%

Argentine party.
The Argentine party may rebut such legal presumption by duly evidencing before the Argentine tax authority that the funds arise from activities effectively performed by the Argentine party or by a third party in such jurisdiction, or that such funds have been previously declared.
THE ABOVE SUMMARY IS NOT INTENDED TO BE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP OR DISPOSITION OF CLASS B SHARES OR ADSs. HOLDERS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES ARISING IN EACH PARTICULAR CASE.
United States Federal Income Tax Considerations
This discussion describes certain U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning and disposing of the Class B shares and ADSs (and to the extent provided under “Information Reporting and Backup Withholding” and “FATCA” below, investors other than U.S. holders). This discussion does not contain a detailed description of all potential U.S. federal income tax consequences and does not address the Medicare tax on net investment income, U.S. federal estate and gift taxes or the effects of any state, local or non-U.S. tax laws. In addition, this discussion does not apply to certain classes of holders, such as persons that own or are deemed to own 10% or more of the voting power or 10% or more of the total value of all classes of our stock, dealers in securities or currencies, regulated investment companies, real estate investment trusts, traders that elect mark-to-market accounting for securities holdings, banks or other financial institutions, insurance companies, tax-exempt organizations, entities treated as partnerships for U.S. federal income tax purposes (or a partner therein), persons who are liable for the alternative minimum tax, persons who acquired Class B shares or ADSs pursuant to the exercise of an employee stock option or otherwise as compensation, persons holding Class B shares or ADSs in connection with a trade or business conducted outside of the United States, persons holding the Class B shares or ADSs as a position in a “straddle” or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction, persons required to accelerate the recognition of any item of gross income with respect to our Class B shares or ADSs as a result of such income being recognized on an applicable financial statement, or persons that have a functional currency other than the U.S. dollar, all of which may be subject to rules that differ significantly from those described below. This discussion assumes that the Class B shares and ADSs are held as “capital assets” for U.S. federal income tax purposes.
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This discussion is based on the provisions of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury regulations, administrative rulings and judicial authority, all as in effect as of this date. All of these laws and authorities are subject to change, possibly on a retroactive basis. You should consult your own tax advisors concerning the U.S. federal, state, local and non-U.S. tax consequences of purchasing, owning and disposing of the Class B shares and ADSs in light of your particular circumstances.
For purposes of this summary, you are a U.S. holder if you are a beneficial owner of Class B shares or ADSs and you are, for U.S. federal income tax purposes, an individual citizen or resident of the United States, a U.S. domestic corporation, or otherwise subject to U.S. federal income tax on a net income basis with respect to income from the Class B shares and ADSs.
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the Class B shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the Class B shares represented by that ADS.
Dividends
Subject to the discussion under “—Passive Foreign Investment Company” below, the gross amount of distributions paid with respect to the Class B shares or ADSs (including the amount of any Argentine taxes withheld) will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations of earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to you as dividends. Any dividends you receive (including any withheld taxes) will be treated as foreign-source income and will not be eligible for the dividends-received deduction generally available to U.S. corporations. Dividends paid in Pesos will be included in a U.S. holder’s income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of a U.S. holder’s receipt, or in the case of ADSs, the depositary’s receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. If such a dividend is not converted into U.S. dollars on the date of receipt, a U.S. holder generally will have a basis in the non-U.S. currency equal to its U.S. dollar value on that date. A U.S. holder generally will be required to recognize foreign currency gain or loss realized on a subsequent conversion or other disposition of such currency, which will be treated as U.S.-source ordinary income or loss.
226
Dividends received by certain non-corporate U.S. holders will generally be subject to taxation at reduced rates if the dividends are “qualified dividends.” Subject to applicable limitations (including a minimum holding period requirement), dividends paid on the ADSs will be treated as qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) the issuer was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company (a “PFIC”) (see the discussion under “—Passive Foreign Investment Company” below).
Because the Class B shares are not themselves listed on a U.S. exchange, dividends received with respect to the Class B shares that are not represented by ADSs generally will not be treated as qualified dividends. U.S. holders of Class B shares or ADSs should consult their own tax advisors regarding the availability of the reduced dividend tax rate in the light of their own particular circumstances.
Dividends received by U.S. holders will generally constitute foreign source income and “passive category” income for U.S. foreign tax credit purposes. Subject to limitations under U.S. federal income tax law concerning credits or deductions for foreign taxes, any Argentine taxes withheld from cash dividends on the Class B shares or ADSs will be treated as a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability if the tax is treated for U.S. federal income tax purposes as imposed on the U.S. holder (or at a U.S. holder’s election, may be deducted in computing taxable income if the U.S. holder has elected to deduct all foreign income taxes for the taxable year). However, amounts withheld on account of the Argentine personal assets tax (as discussed in “—Material Argentine Tax Considerations”) will not be a foreign income tax eligible for credit against a U.S. holder’s U.S. federal income tax liability. The rules with respect to foreign tax credits are complex and U.S. holders are urged to consult their independent tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Passive Foreign Investment Company
Based on the past and projected composition of our income and assets, and the valuation of our assets, we do not believe we were a PFIC for our most recent taxable year, and we may do not expect to become a PFIC in the current taxable year or in the foreseeable future, although there can be no assurance in this regard.
227
In general, we will be a PFIC for any taxable year in which:
at least 75% of our gross income is passive income, or
at least 50% of the value (determined based on a quarterly average) of our assets is attributable to assets that produce or at held for the production of passive income.
For this purpose, passive income generally includes dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person). If we own at least 25% (by value) of the stock of another corporation, for purposes of determining whether we are a PFIC, we will be treated as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the other corporation’s income.
Our determination with respect to our PFIC status is based in part upon certain proposed U.S. Treasury regulations that are not yet in effect and which are subject to change in the future. Those regulations and other administrative pronouncements from the Internal Revenue Service (the “IRS”) provide special rules for determining the character of income derived in the active conduct of a banking business for purposes of the PFIC rules. Although we believe we have adopted a reasonable interpretation of the regulations and administrative pronouncements, there can be no assurance that the IRS will follow the same interpretation.
The determination of whether we are a PFIC is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. In addition, because the value of our assets may be based, in part, on the market value of our Class B shares and ADSs, a decrease in the price of our Class B shares and ADSs may also result in us becoming a PFIC. If we are a PFIC for any taxable year during which you hold our Class B shares or ADSs, you will be subject to special tax rules discussed below.
If we are a PFIC for any taxable year during which you hold our Class B shares or ADSs and you do not make a timely mark-to-market election, as described below, you will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of such Class B shares or ADSs. Distributions received in a taxable year will be treated as excess distributions to the extent that they are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the Class B shares or ADSs. Under these special tax rules:
the excess distribution will be allocated ratably over your holding period for the Class B shares or ADSs,
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and
the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
228
Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year in which you hold our Class B shares or ADSs, you will generally be subject to the special tax rules described above for that year and for each subsequent year in which you hold Class B shares or ADSs (even if we do not qualify as a PFIC in such subsequent years). However, if you own Class B shares or ADSs and we cease to be a PFIC, you may be able to avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if your Class B shares or ADSs had been sold on the last day of the last taxable year during which we were a PFIC. You are urged to consult your own tax advisor about this election.
In lieu of being subject to the special tax rules discussed above, you may make a mark-to-market election with respect to your Class B shares or ADSs provided such Class B shares or ADSs are treated as “marketable stock.” Class B shares or ADSs generally will be treated as marketable stock if the Class B shares or ADSs shares are regularly traded on a “qualified exchange or other market” (within the meaning of the applicable Treasury regulations). Under current law, the mark-to-market election may be available to holders of ADSs for as long as the ADSs are traded on the NYSE, which constitutes a qualified exchange, although there can be no assurance that the ADSs will be “regularly traded” for purposes of the mark-to-market election. The Class B shares are traded on the ByMA, which must meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange for these purposes, and no assurance can be given that the Class B shares will be “regularly traded” for purposes of the mark-to-market election.
If you make an effective mark-to-market election, for each taxable year that we are a PFIC you will include as ordinary income the excess of the fair market value of your Class B shares or ADSs at the end of the year over your adjusted tax basis in the Class B shares or ADSs. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the Class B shares or ADSs over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted tax basis in the Class B shares or ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. In addition, upon the sale or other disposition of your Class B shares or ADSs in a year that we are a PFIC, any gain will be treated as ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income as a result of the mark-to-market election.
If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the Class B shares or ADSs are no longer regularly traded on a qualified exchange or other market, or the IRS consents to the revocation of the election. You are urged to consult your tax advisor about the availability of the mark-to-market election, and whether making the election would be advisable in your particular circumstances.
Alternatively, holders of shares in a PFIC can sometimes avoid the special tax rules described above by electing to treat the PFIC as a “qualified electing fund” under Section 1295 of the Code. However, this option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election.
229
If we are a PFIC for any taxable year during which you hold our Class B shares or ADSs and any of our non-U.S. subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of the PFIC rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.
You will generally be required to file IRS Form 8621 if you hold our Class B shares or ADSs in any year in which we are classified as a PFIC. You are urged to consult your tax advisors concerning the U.S. federal income tax consequences of holding our Class B shares or ADSs if we are considered a PFIC in any taxable year.
Sale or Other Disposition
Upon a sale or other disposition of the Class B shares or ADSs, U.S. holders will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the U.S. dollar value of the amount realized on the disposition and the U.S. holder’s tax basis, determined in U.S. dollars, in the Class B shares or ADSs. Subject to the discussion under “—Passive Foreign Investment Company” above, such gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if the Class B shares or ADSs were held for more than one year. A U.S. holder’s ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder may be taxable at a preferential rate. If an Argentine tax is withheld on the sale or other disposition of the Class B shares or ADSs, a U.S. holder’s amount realized will include the gross amount of the proceeds of the sale or other disposition before deduction of the Argentine tax. See “—Material Argentine Tax Considerations—Income Tax—Capital gains tax” for a description of when a disposition may be subject to taxation by Argentina. Any gain or loss will generally be U.S.–source gain or loss for foreign tax credit purposes. U.S. holders should consult their tax advisors as to whether the Argentine tax on gains may be creditable against the U.S. holder’s U.S. federal income tax on foreign-source income from other sources.
Foreign Financial Asset Reporting
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the Class B shares and ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders that fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the Class B shares and ADSs, including the application of the rules to their particular circumstances.
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Information Reporting and Backup Withholding
Dividends paid on and proceeds from the sale or other disposition of the Class B shares or ADSs that are made within the United States or through certain U.S.-related financial intermediaries generally will be subject to information reporting unless a U.S. holder is treated as an exempt recipient and may also be subject to backup withholding unless a U.S. holder (i) provides a correct taxpayer identification number and certifies that it is not subject to backup withholding or (ii) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be allowed as a refund or credit against the holder’s U.S. federal income tax liability, provided the holder timely furnishes the required information to the IRS.
A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.
FATCA
We have entered into an agreement with the IRS effective April 24, 2014, pursuant to which we have agreed to comply with certain due diligence, information reporting and withholding obligations pursuant to sections 1471 through 1474 of the Code, and the regulations promulgated thereunder (often referred to as the “Foreign Account Tax Compliance Act” or “FATCA”). Therefore, an investor considered to have a financial account that is a “U.S. account” maintained by us may be required to provide certain information regarding such investor (or relevant beneficial owner of the Class B shares or ADSs), including information and tax documentation regarding the identity of such investor as well as that of its direct and indirect owners, and we may be required to report this information to the IRS. However, stock or other equity or debt instruments issued by a financial institution is not treated as a U.S. account if such stock or other instrument is regularly traded on an established securities market. We expect that the Class B shares and ADSs will be so treated. Further, a U.S. account generally does not include an equity instrument in a financial institution, such as us, that is not an investment entity.
In addition, it is possible that under future guidance, payments on the Class B shares and ADSs may be subject to a withholding tax of up to 30% under rules applicable to foreign “passthru payments.” Regulations implementing this rule have not yet been adopted or proposed and the IRS has indicated that any such regulations would not be effective prior to the date that is two years after the date on which final regulations on this issue are published. FATCA is particularly complex and its application to Argentine financial institutions is uncertain at this time. Although we have registered with the IRS and believe that we are compliant with obligations imposed on us under FATCA, it is unclear to what extent we may be able to comply with FATCA in the future. Each holder of Class B shares or ADSs should consult its own tax advisor to obtain a more detailed explanation of FATCA and to learn how FATCA might affect each holder in its particular circumstances.
Item 10.F    Dividends and Paying Agents
Not applicable.
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Item 10.G   Statement by Experts
Not applicable.
Item 10.H   Documents on Display
We file reports, including annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. Foreign private issuers, like us, are required to make filings with the SEC by electronic means. Any filings we make electronically are available to the public over the Internet at the SEC’s web site at http://www.sec.gov/.
Item 10.I     Subsidiary Information
Not applicable.
Item 11.      Quantitative and Qualitative Disclosures about Market Risk
Market Risk
Market risk is the risk of loss arising from fluctuations in financial markets variables, such as interest rates, foreign exchange rates and other rates or prices. This risk is a consequence of lending, trading and investments businesses and mainly consists of interest rate risk and foreign exchange risk.
Our market risk arises mainly from our capacity as a financial intermediary.
The Risk Management Committee is responsible for approving and amending our market risk policies.
The Risk Management Committee uses a risk map to explain, in detail, the trades that the trading desk is authorized to close. The risk map also describes the maximum amounts for the position in certain products, the maximum amount of losses accepted (“stop loss”) and the maximum expected loss (given a confidence interval) over a specific time period if the portfolio were held unchanged over that period (VaR limit). It is structured in a manner that establishes different investment amounts tied to our organizational chart, where the Treasury Manager has the highest authorized amount. Complementarily, the Credit Committee establishes the credit risk limits with all financial counterparties. Our Financial Risk Department conducts a daily control over compliance with the limits established in the risk map. In the event that an exception is needed, the trading desk must apply for authorization from the CEO while maintaining the Asset and Liability Committee and the Risk Management Committee informed of all developments. In addition, the Risk Management Committee authorizes risk levels in terms of interest rate, foreign exchange rate, inflation and term imbalance risks. The Assets and Liabilities Committee is responsible for monitoring compliance with our market risk policies every two weeks.
In the course of its monthly meetings, our Board of Directors is advised of the full range of resolutions adopted by the Assets and Liabilities Committee, including: liquidity risk, market risk, foreign currency risk and interest rate risk management.
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We evaluate, upgrade and improve market risk measurements and controls on a daily basis. In order to measure significant market risks on the trading portfolio, we use the value at risk methodology, or “VaR,” in our internal models. This methodology is based on statistical methods that take into account many variables that may cause a change in the value of its portfolios, including interest rates, foreign exchange rates, securities prices, volatility and any correlation among them. VaR is an estimation of potential losses that could arise from reasonably likely adverse changes in market conditions. It expresses the maximum amount of loss expected (given a confidence interval) over a specified time period, or “time horizon,” if that portfolio were held unchanged over that time period.
All VaR models, while forward looking, are based on past events and are dependent upon the quality of available market data. The quality of our VaR models is therefore continuously monitored. As calculated, for the trading book VaR is an estimate of the expected maximum loss in the market value of a given portfolio over a ten-day time horizon at a one tailed 99% confidence interval. We assume a ten-day holding period and adverse market movements of 2.32 standard deviations as the standard for risk measurement and comparison. Additional information on our risk management is set forth in Note 27 to our audited consolidated financial statements.
The following table shows the Basel Standardized Approach for market risk capital requirement for our combined trading portfolios in 2020, 2019 and 2018 (in thousands of Pesos):

2020

2019

2018

Minimum 176,332 278,454 281,541
Maximum 577,100 773,178 680,659
Average 360,473 534,489 441,025
As of December 31, 551,765 342,719 410,769
In order to take advantage of good trading opportunities, we have sometimes increased risk; however, during periods of uncertainty, we have also reduced it.
Interest Rate Risk
Central Bank Communication “A” 6397 amended the way in which the Central Bank evaluates capital needs related to interest rate risk exposure, by the way adapting its methodology to international best practices. Even though Interest Rate Risk is not part of Tier I capital requirements in a direct way, this could be the case whenever the bank reaches the status of “outlier bank.” The “outlier bank” test compares the bank’s ρEVE with 15% of its Tier 1 capital, under a set of prescribed interest rate shock scenarios. Tier I capital requirements will increase by the excess of the bank’s ρEVE over 15% of its Tier 1 capital. Therefore, the Superintendency of Financial Institutions continues to review such risk and determines if there is a need for additional regulatory capital in case a predetermined threshold is surpassed or it finds clear evidence of an inappropriate management of this type of risk. Additionally, the Central Bank establishes the need to measure interest rate risk considering two dimensions: a) the impact of interest rate fluctuations over the underlying value of a bank’s assets, liabilities and off-balance sheet items and hence its economic value and b) the impact over the net interest income. In order to tackle the first dimension, the Central Bank established a Standardized Framework considering the impact of six different shock scenarios over the bank’s ρEVE. To assess the impact over the net interest income, the bank has to make use of its internal measurement systems (SIM). See “Item 4.B Business overview—Argentine Banking Regulation—Liquidity and Solvency Requirements—Limitations.”
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We define interest rate risk as the risk relating to changes in the entity’s financial income and economic value as a result of fluctuations in the market’s interest rates. The following are known factors that contribute to this risk:
differences in maturity and adjustment dates of assets, liabilities and off-balance sheet holdings;
foreseeability, evolution and volatility with respect to local interest rates, foreign interest rates and CET;
the base risk arising out of an imperfect correlation when adjusting asset and liability rates for instruments with similar revaluation characteristics; and
implicit options for particular assets, liabilities and off-balance sheet commitments held by the entity.
The Bank and CCF employ a prudent interest rate risk strategy allowing them to uphold their commitments and maintain desired levels of revenue and capital, both in normal and adverse market conditions.
Interest Rate Risk Management Model – Standardized Framework
The Bank and CCF include interest rate gaps in their interest rate risk management model. This approach analyzes mismatches between asset and liability interest rates between reevaluation periods with respect to the financial statements and off-financial statements line-items. The result is a basic representation of the financial statements structure that allows for the detection of interest rate risk concentrations within the different periods. This is also used to estimate the potential impact of interest rates falling outside of the financial margin (NIM-EaR method) and the entity’s economic value (MVE-VaR method).
Every financial statements and off-financial statements line-item is classified according to its maturity. For asset/liability management accounts without maturity, an internal method of analysis is used to determine possible maturity and sensitivity.
The Asset and Liability Management Committee monitors interest rate risk management and each financial management team is in charge of executing it. The Risk Management team and Financial Planning team are in charge of monitoring compliance, enforcing risk management strategies and issuing periodic reports.
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Interest Rate Risk Capital Requirement
The Bank evaluates its minimum capital requirements relating to interest rate risk through the use of a MVE-VaR internal model, using a holding period of three months and a 99% confidence interval. This quantitative model factors in the economic capital required for our securitization risk. The results are then compared with those obtained from the application of the Standardized Framework, being the resulting capital need the higher of those figures. In the case of CCF, capital needs are calculated directly through the application of the Standardized Framework, adopting local regulations applicable to entities of the size of CCF (Group “C” banks). The following chart shows the Bank’s interest rate risk figures under the Standardized Framework described above for 2020, 2019 and 2018 (in thousands of Pesos):

2020

2019

2018

Minimum 183,329 381,847 879,416
Maximum 948,699 878,805 1,141,684
Average 499,205 601,951 1,010,551
As of December 31, 948,699 555,428 879,416
The Bank and CCF’s consolidated gap position refers to the mismatch of interest-earning assets and interest-bearing liabilities. The following tables show the Bank and CCF’s consolidated exposure to a positive interest rate gap, in Pesos:

Remaining Maturity at December 31, 2020

0-1 Year

1-5 Years

Over 5 Years

Total

(in thousands of Pesos, except percentages)
Interest-earning assets
Investment Portfolio⁽¹⁾ 36,403 6,837 - 43,240
Loans to the non-financial public sector⁽²⁾ 21 - - 21
Loans to the private and financial sector⁽²⁾ 68,036 15,708 3,006 86,751
Receivables from financial leases 476 661 42 1,178
Other assets - - 62,868 62,868
Total interest-earning assets 104,937 23,206 65,916 194,058
Interest-bearing liabilities
Savings 50,044 0 55,877 105,921
Time deposits 46,423 3 - 46,425
Non subordinated notes 2,166 - - 2,166
Liabilities with financial institutions 1,944 146 - 2,090
Other liabilities 0 0 14,391 14,391
Total interest-bearing liabilities 100,576 149 70,268 170,993
Asset/liability gap 4,361 23,057 -4,352 23,066
Cumulative asset/liability gap 4,361 27,418 23,066 46,131
Cumulative sensitivity gap as a percentage of total interest-earning assets 4 % 99 % -7 % 12 %
(1) Includes government securities and instruments issued by the Central ~~Bank and participation in our securitization trusts.~~Bank.
(2) Loan amounts are stated before deducting allowances for loan losses. ~~Non-accrual loans are included with loans as interest-earning assets.~~
The following two tables detail the Bank’s consolidated exposure to an interest rate gap, including CER adjusted securities, which may differ from ordinary interest rate securities behavior. Although the Bank maintains a positive gap in CER adjusted securities with maturities over one year, it is not significant.
~~The table below shows the Bank’s consolidated exposure to an interest rate gap, in Pesos:~~

Remaining Maturity at December 31, 2017

0-1 Year

1-5 Years

5-10 Years

Over 10 Years

Total

(in thousands of Pesos, except percentages)

Interest-earning assets in national currency

Investment Portfolio(1)

4,693,581

550,499

—

—

5,244,080

Loans to the non-financial public sector (2)

4,892

26,631

—

—

31,523

Loans to the private and financial sector (2)

30,981,968

10,869,346

1,648,415

—

43,499,729

Other assets

55,492

—

—

—

55,492

Receivables from financial leases

813,674

1,375,108

3,390

—

2,192,172

Total interest-earning assets

36,549,607

12,821,584

1,651,805

—

51,022,996

Interest-bearing liabilities in national currency

Savings

21,889,153

—

—

—

21,889,153

Time deposits

15,999,857

300

—

—

16,000,157

Investment accounts

900,150

—

—

—

900,150

Subordinated notes

772,776

7,511,557

—

—

8,284,333

Liabilities with Argentine financial institutions

216,154

387,944

—

—

604,098

Liabilities with international banks and institutions

—

—

—

—

—

Total interest-bearing liabilities

39,778,090

7,899,801

—

—

47,677,891

Asset/liability gap

(3,228,483
)
4,921,783

1,651,805

—

3,345,105

Cumulative asset/liability gap

(3,228,483
)
1,693,300

3,345,105

3,345,105

Cumulative sensitivity gap as a percentage of total interest-earning assets

6.3
%
18.7
%
20.3
%
20.3
%

The table below shows the Bank’s consolidated exposure to an interest rate gap in foreign currency:

Remaining Maturity at December 31, 2020

0-1 Year

1-5 Years

Over 5 Years

Total

(in thousands of Pesos, except percentages)
Interest-earning assets in foreign currency
Investment Portfolio⁽¹⁾ 1,745 10 241 1,996
Loans to the non-financial public sector⁽²⁾ - - - -
Loans to the private and financial sector⁽²⁾ 5,947 4,337 -20 10,263
Receivables from financial leases - - - -
Other assets - - 23,385 23,385
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Remaining Maturity at December 31, 2020

0-1 Year

1-5 Years

Over 5 Years

Total

(in thousands of Pesos, except percentages)
Total interest-earning assets 7,692 4,347 23,606 35,645
Interest-bearing liabilities in foreign currency
Savings 17,457 0 3,241 20,698
Time deposits 4,499 - - 4,499
Subordinated notes 1,131 - - 1,131
Liabilities with financial institutions 9,115 - - 9,115
Other Liabilities 0 0 3,614 3,614
Total interest-bearing liabilities 32,203 0 6,855 39,058
Asset/liability gap -24,511 4,347 16,751 -3,413
Cumulative asset/liability gap -24,511 -20,164 -3,413 -6,826
Cumulative sensitivity gap as a percentage of total interest-earning assets -319 % 100 % 71 % -10 %
(1) Includes government securities and instruments issued by the Central ~~Bank and participation in our securitization trusts.~~Bank.
(2) Loan amounts are stated before deducting allowances for loan losses. ~~Non-accrual loans are included with loans as interest-earning assets.~~
Foreign Currency Risk
The Risk Management Committee is responsible for deciding the net position in foreign currency to be maintained at all times according to market conditions and monitoring it regularly.
Policies regarding foreign currency risk are applied at the level of our subsidiaries. Our foreign currency risk arises mainly from our operations in our capacity as a financial intermediary.
Since May 2003, the fluctuation of the U.S. dollar has been included as a risk factor for the calculation of the market risk requirement, considering all assets and liabilities in U.S. dollars. As of December 31, 2020, the Bank’s consolidated total net asset foreign currency position subject to foreign currency risk was Ps.1,543,375,000, and this position generated a market risk capital requirement of Ps.135,256,000 as of such date.
Liquidity Risk
Policies regarding liquidity risk are applied at the level of our subsidiaries. Our liquidity risk arises mainly from the operations of the Bank and CCF. Our other subsidiaries are also subject to liquidity risk, which is not significant.
The Bank and CCF define liquidity risk as the risk of having to pay additional financial costs due to an unexpected need for liquidity. This risk arises out of the differences in amounts and maturity of the assets and liabilities held by the Bank. There are two types of Liquidity Risk:
Funding Liquidity Risk, which results from the inability to obtain funds at market price that are needed to ensure liquidity, mainly due to the market’s perception of the Bank and CCF.
Market Liquidity Risk, which occurs when the Bank or CCF cannot trade its position in one or several assets at market price, which is caused by two factors:

~~The table below shows the Bank’s consolidated exposure to an interest rate gap in foreign currency:~~

Remaining Maturity at December 31, 2017

0-1 Year

1-5 Years

5-10 Years

Over 10 Years

Total

(in thousands of Pesos, except percentages)

Interest-earning assets in foreign currency

Investment Portfolio(1)

1,403,157

135,710

41,631

85

1,580,583

Loans to the private and financial sector(2)

7,473,866

4,678,069

58,586

—

12,210,521

Other assets

50,223

—

—

—

50,223

Receivables from financial leases

78,678

234,203

2,596

—

315,477

Total interest-earning assets

9,005,924

5,047,982

102,813

85

14,156,804

Interest-bearing liabilities in foreign currency

Savings

6,040,004

—

—

—

6,040,004

Time deposits

1,891,561

—

—

—

1,891,561

Subordinated notes

—

672,888

—

—

672,888

Liabilities with Argentine financial institutions

—

—

—

—

—

Liabilities with international banks and institutions

2,778,116

5,154

—

—

2,783,270

Total interest-bearing liabilities

10,709,681

678,042

—

—

11,387,723

Asset/liability gap

(1,703,757
)
4,369,940

102,813

85

2,769,081

Cumulative asset/liability gap

(1,703,757
)
2,666,183

2,768,996

2,769,081

Cumulative sensitivity gap as a percentage of total interest-earning assets

-4.1
%
22.1
%
23.1
%
23.1
%

~~(1)~~         ~~Includes government securities, instruments issued by the Central Bank and participation in our securitization trusts.~~
~~(2)~~         ~~Loan amounts are stated before deducting allowances for loan losses. Non-accrual loans are included with loans as interest-earning assets.~~
~~Foreign Currency Risk~~
~~The Risk Management Committee is responsible for deciding the net position in foreign currency to be maintained at all times according to market conditions and monitoring it regularly.~~
~~Policies regarding foreign currency risk are applied at the level of our subsidiaries. Our foreign currency risk arises mainly from our operations in our capacity as a financial intermediary.~~
Since May 2003, the fluctuation of the U.S. dollar has been included as a risk factor for the calculation of the market risk requirement, considering all assets and liabilities in U.S. dollars. As of December 31, 2017, the Bank’s consolidated total net asset foreign currency position subject to foreign currency risk was Ps.471.6 million, and this position generated a value at risk of Ps.38.6 million as of such date.
~~Liquidity Risk~~
Policies regarding liquidity risk are applied at the level of our subsidiaries. Our liquidity risk arises mainly from the operations of the Bank and CCF. Our other subsidiaries are also subject to liquidity risk, which is not significant.
The Bank and CCF define liquidity risk as the risk of having to pay additional financial costs due to an unexpected need for liquidity. This risk arises out of the differences in amounts and maturity of the assets and liabilities held by the Bank. There are two types of Liquidity Risk:
·                  ~~Funding Liquidity Risk, which results from the inability to obtain funds at market price that are needed to ensure liquidity, mainly due to the market’s perception of the Bank and CCF.~~
·                  ~~Market Liquidity Risk, which occurs when the Bank or CCF cannot trade its position in one or several assets at market price, which is caused by two factors:~~
·
○ the assets are not sufficiently liquid and cannot be traded in the secondary market; and

·
○ changes in the market where the assets are traded.
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To manage liquidity risk, the Bank and CCF focus on their sources of liquidity. The Bank relies on certain financial products that can provide a quick source of liquidity in extreme situations of illiquidity. To this effect, the Bank relies on the control of two core metrics, the liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR). The first one, with a shorter-term perspective, is aimed at assessing the availability of enough liquid assets to meet the withdrawal of deposits and other liabilities in a 30-day stress scenario. Meanwhile, the NSFR aims to promote resilience over a longer time horizon by creating incentives for banks to fund their activities with more stable sources of funding on an ongoing basis.
The Bank and CCF rely on a set of indicators that allows them to detect and take steps to prevent potential liquidity risks. The Bank’s and CCF’s set of indicators and risk limits are established by the Risk Management team and approved by the Board of Directors. These indicators are constantly monitored by the Risk Management Committee.
The Risk Management Committee coordinates and supervises the identification, measuring and monitoring of liquidity risk. The Assets and Liabilities Committee develops the strategies that allow for adequate liquidity risk management. The Assets and Liabilities Committee relies on several different departments within the Bank to develop and enforce these strategies, from issuing reports and risk management proposals to monitoring compliance with the established limits.
Operational Risk
We define operational risk as the risk of loss resulting from inadequate or failed internal processes due to personnel, systems or external events. The definition includes legal risk but excludes strategic and reputational risk. Legal risk can result from internal or external events and includes exposure to sanctions, penalties or other economic consequences that arise out of non-compliance with contractual or regulatory obligations.
We believe that we are pioneers in the design of operational risk management frameworks in Argentina, placing emphasis on risk identification, risk management policies and our organizational model. We have tailored our framework to the requirements established by the Central Bank, the Basel accords and international best practices. The Bank’s operational risk management processes are overseen by a correspondent, who is assisted by a network of risk, and every branch and service center has a delegate in charge of monitoring risk. The correspondents and delegates report to the Operational Risk Department, ensuring that the Bank’s entire network is working together to monitor operational risk.
Operational Risk Measuring Models
The risk management process is based on complying with several stages designed to evaluate the Bank’s vulnerability to operational risk events, minimizing operational risk. This method allows the Bank to achieve a better understanding of its operational risk profile and adopt the necessary measures to address any vulnerability. The stages are divided into:
Identification of operational risk by implementing a Risk Control Self-Assessment model, which applies to each one of the Bank’s processes and IT assets.
237
Measurement and evaluation of operational risk by establishing risk levels, evaluating the effectiveness of control mechanisms and determining residual risk for each of the Bank’s processes and IT assets.
Mitigation, resulting from the application of plans of action and strategies designed to maintain risks within the levels established by the Board of Directors.
Monitoring to quickly detect and address deficiencies in the policies, processes and procedures for managing operational risk, and to ensure constant improvement.
Documenting the incidents and losses related to operational risk by establishing a database that allows for a comparison of the frequency and impact of operational risk events with the risk control self-assessment model.
The Bank and other subsidiaries of the Group, mainly CCF, have Operational Risk Committees that are in charge of the enforcement of the operational risk policies and monitors the operational risks and operational risk events affecting the different companies. In addition, the Operational Risk Committee issues reports to the high management, Risk Management Committee and Board of Directors.
The Bank and CCF evaluate internally their minimum capital requirements regarding operational risk through two different models:
Banco Supervielle: has adopted a model that calculates (i) expected and unexpected losses, (ii) VaR (at a 99.9% confidence interval) and (iii) the minimum capital required to cover expected and unexpected losses. The holding period used is one year.
CCF: capital needs are calculated directly through the application of the Standardized Framework, adopting local regulations applicable to entities of the size of CCF.
Item 12.      Description of Securities Other Than Equity Securities
Item 12.A   Debt Securities
Not applicable.
Item 12.B   Warrants and Rights
Not applicable.
Item 12.C   Other Securities
Not applicable.
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Item 12.D   American Depositary Shares
Fees and Expenses
Holders of our ADRs are generally expected to pay fees to the Depositary according to the schedule below:

~~To manage liquidity risk, the Bank and CCF focus on their sources~~Persons depositing or withdrawing shares or
ADS holders must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of ~~liquidity. The Bank relies on certain financial products that can provide a quick source~~100 ADSs) Issuance of liquidity in extreme situations of illiquidity. To this effect, the Bank considers factoring positions with a maturity of less than 90 days among its principal liquidity indicators and continuously monitors its factoring positions. The Bank also uses these indicators to determine its liquidity risk policy.
Following the same prudent risk strategy, the Bank and CCF prioritize the securitization of assets with a maturity of over 180 days, which reflects the Bank’s and CCF’s policy to minimize maturity mismatches.
In addition, the Bank and CCF rely on a system of indicators that allows them to detect and take steps to prevent potential liquidity risks. The Bank’s and CCF’s system of indicators and risk limits are established by the Risk Management team and approved by the Board of Directors. These indicators are constantly monitored by the Risk Management Committee.
The Risk Management Committee coordinates and supervises the identification, measuring and monitoring of liquidity risk. The Assets and Liabilities Committee develops the strategies that allow for adequate liquidity risk management. The Assets and Liabilities Committee relies on several different departments within the Bank to develop and enforce these strategies, from issuing reports and risk management proposals to monitoring compliance with the established limits.
In addition, the Bank must comply with the liquidity coverage ratio, a 30-day horizon stress scenario, established by the Central Bank and the net stable funding ratio which will be implemented as of January 1, 2018.
~~Operational Risk~~
~~We define operational risk as the risk of loss~~ADSs, including issuances resulting from ~~inadequate~~a distribution of shares or failed internal processes due to personnel, systems or external events. The definition includes legal risk but excludes strategic and reputational risk. Legal risk can result from internal or external events and includes exposure to sanctions, penaltiesrights or other ~~economic consequences that arise out of non-compliance with contractual or regulatory obligations.~~
We believe that we are pioneers in the design of operational risk management frameworks in Argentina, placing emphasis on risk identification, risk management policies and our organizational model. We have tailored our framework to the requirements established by the Central Bank, the Basel accords and international best practices. The Bank’s operational risk management processes are overseen by a process owner, who is assisted by a network of correspondents, and every branch and service center has a delegate in charge of monitoring risk. The correspondents and delegates report to the Operational Risk Department, ensuring that the Bank’s entire network is working together to monitor operational risk.
~~Operational Risk Measuring Models~~
The risk management process is based on complying with several stages designed to evaluate the Bank’s vulnerability to operational risk events, minimizing operational risk. This method allows the Bank to achieve a better understanding of its operational risk profile and adopt the necessary measures to address any vulnerability. The stages are divided into:
·                  ~~Identification of operational risk by implementing a Risk Control Self-Assessment model, which applies to each one of the Bank’s processes and IT assets.~~
·                  Measurement and evaluation of operational risk by establishing risk levels, evaluating the effectiveness of control mechanisms and determining residual risk for each of the Bank’s processes and IT assets.
·                  ~~Mitigation, resulting from the application of plans of action and strategies designed to maintain risks within the levels established by the Board of Directors.~~
·                  ~~Monitoring to quickly detect and address deficiencies in the policies, processes and procedures for managing operational risk, and to ensure constant improvement.~~
·                  Documenting the incidents and losses related to operational risk by establishing a database that allows for a comparison of the frequency and impact of operational risk events with the risk control self-assessment model.
The Bank and CCF have an Operational Risk Committee that is in charge of the enforcement of the operational risk policies and monitors the operational risks and operational risk events affecting the Bank and CCF. In addition, the Operational Risk Committee issues reports to the Bank’s and CCF’s high management, Risk Management Committee and Board of Directors.
~~The Bank and CCF internally evaluate their minimum capital requirements regarding operational risk through two different models:~~
·                  Banco Supervielle: has adopted a model that calculates (i) expected and unexpected losses, (ii) VaR (at a 99.9% confidence interval) and (iii) the minimum capital required to cover expected and unexpected losses. The holding period used is one year.
·                  CCF: has adopted a model that calculates (i) expected losses, (ii) VaR (at a 99.0% confidence interval) and (iii) the minimum capital required to cover unexpected losses. The holding period used is one year.
~~Item 12.  Description of Securities Other Than Equity Securities~~
~~Item 12.A~~~~Debt Securities~~
~~Not applicable.~~
~~Item 12.B~~~~Warrants and Rights~~
~~Not applicable.~~
~~Item 12.C~~~~Other Securities~~
~~Not applicable.~~
~~Item 12.D~~~~American Depositary Shares~~
~~Fees and Expenses~~
~~Holders of our ADRs are generally expected to pay fees to the depositary according to the schedule below:~~
~~Persons depositing or withdrawing shares or ADS holders must pay:~~
~~For:~~
~~$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)~~
~~Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property~~
property Cancellation of ~~ADSs for the purpose of withdrawal, including if the deposit agreement terminates~~
~~$0.05 (or less) per ADS~~
~~Any cash distribution to ADS holders~~
~~Persons depositing or withdrawing shares or ADS holders must pay:~~
~~For:~~
~~A fee equivalent to the fee that would be payable if securities distributed to you had been Class B shares and the Class B shares had been deposited for issuance of ADSs~~
~~Distribution of securities distributed to holders of deposited securities (including rights) which are distributed by the depositary to ADS holders~~
~~$0.05 (or less) per ADS per calendar year~~
~~Depositary services~~
~~Registration or transfer fees~~
~~Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares~~
~~Expenses of the depositary~~
~~Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) converting foreign currency to U.S. dollars~~
~~Taxes and other governmental charges the depositary or the custodian have to pay on any ADSs or shares underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes~~
~~As necessary~~
~~Any charges incurred by the depositary or its agents for servicing the deposited securities~~
~~As necessary~~
~~The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering~~ ADSs for the purpose of withdrawal, ~~or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from~~including if the ~~amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from~~deposit agreement terminates
$0.05 (or less) per ADS Any cash ~~distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash~~ distribution ~~payable (or by selling a portion of securities or other property distributable)~~ to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to you had been Class B shares and the Class B shares had been deposited for issuance of ADSs Distribution of securities distributed to holders of deposited securities (including rights) which are ~~obligated~~distributed by the Depositary to ADS holders
$0.05 (or less) per ADS per calendar year Depositary services
Registration or transfer fees Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when you deposit or withdraw shares
Expenses of the Depositary Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) converting foreign currency to U.S. dollars
Taxes and other governmental charges that the Depositary or the custodian have to pay ~~those fees. The depositary may generally refuse to provide fee-attracting services until its fees~~on any ADSs or shares underlying an ADS, for ~~those services are paid.~~
From time to time, the depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to usexample, stock transfer taxes, stamp duty or withholding taxes
As necessary
Any charges incurred by the depositary or share revenue from the fees collected from ADS holders. The depositary for our ADRs is The Bank of New York Mellon. In 2017, we received a dividend revenue share from the depositary for a total amount of Ps.128,684.90. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.
The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositaryDepositary or its ~~affiliate receives when buying or selling foreign currency~~agents for ~~its own account. The depositary makes no representation that~~servicing the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.
~~PART II~~
~~Item 13.~~~~Defaults, Dividend Arrearages and Delinquencies~~
~~None.~~
~~Item 14.~~~~Material Modifications to the Rights of Security Holders and Use of Proceeds~~
~~None.~~
~~Item 15.~~~~Controls and Procedures~~
~~(a)~~ ~~Disclosure Controls and Procedures~~.
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as amended. We performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with or submit to the SEC under the Exchange Act, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and is communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding the required disclosure. Our CEO and CFO concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were effective to provide reasonable assurance of their reliability. Notwithstanding the effectiveness of our disclosure controls and procedures, these disclosure controls and procedures cannot provide absolute assurance of achieving their objectives because of their inherent limitations. Disclosure controls and procedures are processes that involve human diligence and compliance and are subject to error in judgment. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by our disclosure controls and procedures.
~~(b) Management’s Annual Report on Internal Control over Financial Reporting.~~
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The company’s internal control over financial reporting was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles. The company’s internal control over financial reporting includes those policies and procedures that:
~~(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;~~
~~(ii) provide reasonable assurance that transactions are recorded as~~deposited securities
As necessary to permit preparation of financial statements in accordance with applicable generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including the Board of Directors, Chief Executive Officer, Chief Financial Officer and other personnel, we conducted an assessment of the effectiveness of the company’s internal control over financial reporting as of December 31, 2017. In making this assessment, we and our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our and our management’s assessment and those criteria, management believes that the company maintained effective internal control over financial reporting as of December 31, 2017.
The effectiveness of the company’s internal control over financial reporting as of December 31, 2017 has been audited by Price Waterhouse & Co. S.R.L., an independent registered public accounting firm, as stated in their report, which appears herein.
~~(c) Attestation Report of the Registered Public Accounting Firm. Please see “Item 18. Financial Statements.~~
The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
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From time to time, the Depositary may make payments to us to reimburse us for costs and expenses generally arising out of establishment and maintenance of the ADS program, waive fees and expenses for services provided to us by the Depositary or share revenue from the fees collected from ADS holders. The depositary for our ADRs is The Bank of New York Mellon (the “Depositary”). In 2020, the Depositary reimbursed expenses for an amount of U.S.$17,835.67. In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.
The Depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the Depositary or its affiliates receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the Depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request.
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PART II
Item 13.      Defaults, Dividend Arrearages and Delinquencies
None.
Item 14.      Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15.      Controls and Procedures
(a) Disclosure Controls and Procedures.
We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, as amended. We performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with or submit to the SEC under the Exchange Act, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and is communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding the required disclosure. Our CEO and CFO concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were effective to provide reasonable assurance of their reliability. Notwithstanding the effectiveness of our disclosure controls and procedures, these disclosure controls and procedures cannot provide absolute assurance of achieving their objectives because of their inherent limitations. Disclosure controls and procedures are processes that involve human diligence and compliance and are subject to error in judgment. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by our disclosure controls and procedures.
(b) Management’s Annual Report on Internal Control over Financial Reporting.
1)          Our management is responsible for establishing and maintaining adequate internal control over financial reporting for us and our consolidated subsidiaries. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officers, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with applicable generally accepted accounting principles. Internal controls and procedures are processes that involve human diligence and compliance and are subject to error in judgment. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
2)          Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control–Integrated Framework 2013.
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3)          Based on our assessment, we and our management have concluded that our internal control over financial reporting was effective as of December 31, 2020.
(c) Attestation Report of the Registered Public Accounting Firm.
Price Waterhouse & Co. S.R.L., an independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2020, as stated in their report to our consolidated financial statements.
Please see “Item 18. Financial Statements-Report of the Independent Registered Public Accounting Firm”
~~Please see “Item 18. Financial Statements-Report of the Independent Registered Public Accounting Firm”~~ for our registered public accounting firm’s attestation report on the effectiveness of our internal control over financial reporting.
(d) Changes in Internal Control over Financial Reporting During the Year Ended December 31, 2020.
During the period covered by this annual report, there have not been any changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16. [Reserved]
Item 16.A   Audit committee financial expert
Our Board of Directors has determined that Mrs. Laurence Nicole Mengin de Loyer is the audit committee’s financial expert. Mrs. Loyer is an independent director under Rule 10A-3 of the Exchange Act.
Item 16.B   Code of Ethics
We have adopted a code of ethics that is applicable to all our employees, which is posted on our website at: https://s21.q4cdn.com/714080446/files/doc_downloads/2020/C%C3%B3digo-de-%C3%89tica-(EN).pdf. We have updated our code of ethics during the year ended December 31, 2019, effective as of January 1, 2020. The update of our code of ethics introduced, among others, guidelines for the use of social media and the responsibility and obligation of employees to report corrupt practices. In this update the Compliance Department was appointed as responsible for the operational management and dissemination of the code (instead of the Human Resources Department). In addition, we did not grant any waivers to our code of ethics during the year ended December 31, 2020.
We have also adopted the following policies: (i) investor communication, confidentiality and insider trading information, (ii) conflict of interest, (iii) related party transactions, (iv) travel and gift policies and (v) integrity program for the prevention of corruption. These policies are posted on our website at www.gruposupervielle.com/English/Corporate-Governance/Corporate-Governance-policies/default.aspx.
Information contained or accessible through our website is not incorporated by reference in and should not be considered part of this annual report.
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Item 16.C   Principal Accountant Fees and Services
The following table sets forth the total amount billed to us and our subsidiaries by our independent registered public accounting firm, Price Waterhouse & Co. S.R.L., during the fiscal years ended December 31, 2020 and 2019.

2020

2019

(in thousands of Pesos)
Audit Fees 104,230 104,777
Audit Related Fees 2,162 4,540
Tax Fees - 4,230
All Other Fees 4,773 2,763
Total 111,165 116,312
Audit fees are fees for professional services performed by Price Waterhouse & Co. S.R.L for the audit and limited review of Grupo Supervielle’s consolidated annual and quarterly financial statements under IFRS requirements and services that are normally provided in connection with statutory and regulatory filings.
Audit-related fees consist of fees for professional services performed by Price Waterhouse & Co S.R.L. related to attestation, review and verification services with respect to our financial information and the provision of services in connection with special reports.
Tax fees are fees billed with respect to tax compliance and advisory services related to tax liabilities.
All other fees include fees paid for professional services other than the services reported above under “audit fees,” “audit related fees” and “tax fees” in each of the fiscal years above.
Audit Committee Pre-approval Policy and Procedures
Following SEC requirements regarding auditor independence, the Audit Committee pre-approves auditor services before the commencement of the service. The Audit Committee evaluates the nature and scope of the work to be performed and the fees for such work prior to the engagement.
The Audit Committee has delegated to its Chairperson the authority to grant pre-approvals to auditor services. The decision of the Chairperson to pre-approve a service is presented to the full Audit Committee at the following scheduled meeting.
The General Annual Shareholders´ Meeting designates the external auditor.
Item 16.D   Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16.E    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 16.F    Change in Registrant’s Certifying Accountant
None.
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Item 16.G Corporate Governance
NYSE Corporate Governance Rules
Under NYSE rules, foreign private issuers are subject to more limited corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with four principal NYSE corporate governance rules: (1) we must have an audit committee meeting the independence requirements of Rule 10A-3, subject to specified exceptions; (2) our CEO must promptly notify the NYSE in writing after any executive officer becomes aware of any non-compliance with the applicable NYSE corporate governance rules; (3) we must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules; and (4) we must provide a brief description of any significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards. The table below briefly describes the significant differences between our corporate governance practice and the NYSE corporate governance rules, applicable to U.S. domestic companies.
Section
NYSE corporate governance rule for U.S. domestic issuers
Our approach
303A.01 A listed company must have a majority of independent directors. “Controlled companies” are not required to comply with this requirement. Neither Argentine law nor our bylaws require us to have a majority of independent directors. However, pursuant to Section 109 of the Argentine Capital Markets Law, our Audit Committee must be composed of at least three members of the Board of Directors, with the majority of independent directors; thus, we are required to have at least two independent directors. Our Audit Committee is composed of three independent directors in accordance with the Exchange Act.
303A.02 This section establishes general standards to determine directors’ independence. No director qualifies as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with the listed company (whether directly or as a partner, shareholder, or officer of an organization that has a relationship with the company), and emphasizes that the concern is independence from management. The board is also required, on a case by case basis, to express an opinion with regard to the independence or lack of independence, of each individual director.
(ii) In addition, in affirmatively determining the independence of any director who will serve on the compensation committee of the listed company’s board of directors, the board of directors must consider all factors specifically relevant to determining whether a director has a relationship to the listed company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (A) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the listed company to such director; and (B) whether such director is affiliated with the listed company, a subsidiary of the listed company or an affiliate of a subsidiary of the listed company. (b) In addition, a director is not independent if: Pursuant to CNV Rules, a director is not considered independent in certain situations, including where a director: (a) is also a member of the board of directors of the parent company or another company belonging to the same economic group of the issuer through a pre-existing relationship at the time of his or her election, or if said relationship had ceased to exist during immediately the previous three years; (b) is or has been associated with the company or any of its shareholders having a direct or indirect “significant participation” on the same, or with corporations with which also the shareholders also have a direct or indirect “signification participation”; or if he or she was associated with them through an employment relationship during the last three years; (c) has any professional relationship or is a member of a corporation that maintains frequent professional relationships of significant nature and volume, or receives remuneration or fees (other than the one received in consideration of his performance as a director) from the issuer or its shareholders having a direct or indirect “significant participation” on the same, or with corporations in which the shareholders also have a direct or indirect “significant participation.” This prohibition includes professional relationships and affiliations during the last three years prior to his or her appointment as director; (d) directly or indirectly owns 5% or more of shares with voting rights and/or a capital stock of the issuer or any company with a “significant participation” in it; (e) directly or indirectly sells and/or provides goods and/or services (different from those accounted for in section c)) on a regular basis and of a significant nature and volume to the company or to its shareholders with direct or indirect “significant participation”, for higher amounts than his or her remuneration as a member of the board of directors. This prohibition includes business relationships that have been carried out during the last three years prior to his or her appointment as director;
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Section
NYSE corporate governance rule for U.S. domestic issuers
Our approach
A. the director is or has been within the last three years, an employee, or an immediate family member is, or has been within the last three years, an executive officer, of the listed company, its parent or a consolidated subsidiary. Employment as interim chairman or CEO or other executive officer shall not disqualify a director from being considered independent; (f) has been a director, manager, administrator or principal executive of not-for-profit organizations that have received funds, for amounts greater than those described in section I) of article 12 of Resolution No. 30/2011 of the UIF and its amendments, from the issuer, its parent company and other companies of the same group of which it is a part, as well as of the principal executives of any of them;
B. the director has received, or has an immediate family member who has received, during any twelve-month period within the last three years, more than U.S.$120,000 in direct compensation from the listed company, its parent or a consolidated subsidiary, other than director and committee fees and pension or other forms of deferred compensation for prior services (provided such compensation is not contingent in any way on continued service); C. (i) the director is a current partner or employee of a firm that is the listed company’s internal or external auditor; (ii) the director has an immediate family member who is a current partner of such firm; (iii) the director has an immediate family member who is a current employee of such firm and personally works on the company’s audit; or (iv) the director or an immediate family member was within the last three years a partner or employee of such firm and personally worked on the company’s audit within that time; D. the director, or an immediate family member is, or has been with the last three years, employed as an executive officer of another company where any of the listed company’s present executive officers at the same time serves or served on that company’s compensation committee; E. the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from the listed company its parent or a consolidated subsidiary for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of U.S.$1 million, or 2% of such other company’s consolidated gross revenues. (g) receives any payment, including the participation in plans or stock option schemes, from the company or companies of the same economic group, other than the compensation paid to him or her as a director, except dividends paid as a shareholder of the company in the terms of section d) and the corresponding to the consideration set forth in section e); (h) has served as member of the board of director of the issuer, its parent company or another company belonging to the same economic group for more than ten years. If said relationship had ceased to exist during the previous three years, the independent condition will be recovered; (i) is the spouse or legally recognized partner, relative up to the third level of consanguinity or up to the second level of affinity of persons who, if they were members of the board of directors, would not be independent, according to the above listed criteria; Pursuant to the CNV Rules, a director who, after his or her appointment, falls into any of the circumstances indicated above, must immediately report to the issuer, which must inform the CNV and the authorized markets where it lists its negotiable securities immediately upon the occurrence of the event or upon the instance becoming known. In all cases, the references made to “significant participation” set forth in the aforementioned independence criteria will be considered as referring to those individuals who hold shares representing at least 5% of the capital stock and or the vote, or a smaller amount when they have the right to elect one or more directors by share class or have other shareholders agreements relating to the government and administration of the company or of its parent company. Pursuant to the CNV Rules we are required to report to the shareholders’ meeting, prior to voting for the appointment of any director, the status of such director as either “independent” or “non-independent.”
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Section
NYSE corporate governance rule for U.S. domestic issuers
Our approach
303A.03 The non-management directors of a listed company must meet at regularly scheduled executive sessions without management. Neither Argentine law nor our bylaws require the holding of such meetings and we do not hold non-management directors meetings. The AGCL provides, however, that the board shall meet at least once every three months, and according to our bylaws, whenever the chairman considers necessary to convene for a meeting.
303A.04 A listed company must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. “Controlled companies” are not required to comply with this requirement. Pursuant to applicable local rules, we have an Ethics, Compliance and Corporate Governance committee. We also have a Nomination and Remuneration Committee which, among other duties, advises the Board of Directors on the nomination of directors.
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Section
NYSE corporate governance rule for U.S. domestic issuers
Our approach
303A.05 A listed company must have a compensation committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. “Controlled companies” are not required to comply with this requirement. Neither Argentine law nor our bylaws require the establishment of a compensation committee. However, we have a Nomination and Remuneration Committee which advises the Board of Directors on: (a) the nomination of directors and senior officers and their succession plans, (b) the remuneration polices for the Board of Directors, senior officers and the personnel, and (c) Human Resources policies, training and evaluation of the staff performance.
303A.06 303A.07 A listed company must have an audit committee with a minimum of three independent directors who satisfy the independence requirements of Rule 10A-3, subject to certain specified exceptions, with a written charter that covers certain minimum specified duties. (a) The audit committee must have a minimum of three members. All of its members shall be financially literate or must acquire such financial knowledge within a reasonable period of time after the appointment and at least one of its members shall have experience in accounting or financial management. In addition to meeting any requirement of Rule 10A-3 (b) (1), all audit committee members must satisfy the independence requirements set out in Section 303A.02. (b) The audit committee must have a written charter that establishes the duties and responsibilities of its members, including, at a minimum, some of the duties and responsibilities required by Rule 10A-3 of the Exchange Act and the following responsibilities set forth in NYSE Sections 303A.07(b)(iii)(A)-H) of the NYSE Manual.
The responsibilities of an audit committee, as provided in the Argentine Capital Markets Law and the CNV Rules are essentially the same as those provided for under Rule 10A-3, which we are required to satisfy. Argentine law requires the audit committee be composed of three or more members from the Board of Directors (with a majority of independent directors), all of whom must be well-versed in business, financial or accounting matters. Our Audit Committee is composed of three independent directors according to Rule 10A-3 and one of the members is well-versed in business, financial and accounting matters, in accordance with the requirements of the Exchange Act. See “Directors, Senior Management and Employees – Audit Committee” section for further details about the Audit Committee Composition. Our audit committee performs the following duties and responsibilities among others:
a)      oversees the adequacy, appropriateness and effectiveness of our internal control ~~over~~systems to ensure the reasonableness, reliability, adequacy and transparency of our consolidated financial ~~reporting.~~statements, financial and accounting information and our consolidated financial statements and information;
~~(d)~~ ~~Changes in Internal Control over Financial Reporting During the Year Ended December 31, 2017~~.
~~During the period covered by this annual report, there have not been any changes in our~~b)      takes notice of complaints regarding accounting, internal ~~control~~controls over financial reporting and auditing matters, received through the applicable procedures
A. at least annually, obtain and review a report by the independent auditor describing: the firm’s internal quality-control procedures; any material issues raised in the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the auditor’s independence) all relationships between the independent auditor and the listed company; B. meet with management and the independent auditor to review and discuss the listed company’s annual audited financial statements and quarterly financial statements, including a review of the company’s specific disclosures under Operating and Financial Review and Prospects”; C. discuss the listed company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; D. discuss risk assessment and risk management policies; E. hold separate regular meetings with management, the internal auditors (or other personnel responsible for the internal audit function) and the independent auditors; F. review any issue or difficulty arising from the audit or management’s response with the independent auditor; G. set clear policies for the recruitment of employees or former employees of the independent auditors; and H. report regularly to the board of directors. (c) Rule 303A.07(c) establishes that each listed company must have ~~materially affected or are reasonably likely~~an internal audit function to ~~materially affect, our~~provide management and the audit committee with ongoing advice on the company’s risk management processes and internal control ~~over~~systems.
c)      provides the market with complete information on transactions in which there may be a conflict of interest with members of our various corporate bodies or controlling shareholders;
d)      advises on the Board of Directors´ proposal for the designation of the external auditors, ensures their independence, analyzes the different services rendered by them, reviews their plans and evaluates their performance, giving an opinion on this matter when the Company issues its financial ~~reporting.~~statements;
e)      ensures that the Code of Ethics and Internal Conduct Code comply with current rules and regulations;
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Section
NYSE corporate governance rule for U.S. domestic issuers
Our approach
f)      maintains an understanding of the internal auditing procedures to ensure that they are complete and up-to-date and approves such procedures to then submit them to the Board of Directors for their consideration and approval;
~~Item 16.A~~g)      takes knowledge of Grupo Supervielle’s financial, reputational, legal and operative risks, and oversees compliance with policies designed to mitigate these such risks;
h)      advises on the reasonableness of fees or stock option plans for our directors and managers proposed by the Board of Directors;
i)      issues grounded opinions on related-party transactions under certain circumstances and file such opinions with regulatory agencies as required by the CNV;
j)      verifies the fulfillment of any applicable rules of conduct;
k)      oversees the maintenance of adequate internal controls by each of Grupo Supervielle’s subsidiaries to minimize risk through the consolidation of best practices with respect to each of the businesses;
l)      advises on our fulfillment of legal requirements and the reasonableness of the terms of the issuance of shares or other instruments that are convertible into shares in cases of capital increase in which pre-emptive rights are excluded or limited. Our Audit ~~committee~~Committee is ruled by its internal charter.
m)      issues a report before any Board of Directors´ resolution to buyback our shares;
n)      at least once a year and upon the filing of the Company´s annual financial ~~expert~~statements, issues a report to the Board and the shareholders addressing the work done to perform its duties, and the results of its work, and
~~Laurence Nicole Mengin de Loyer is~~o)      performs all duties stated in its chart, our ~~audit committee’s financial expert. She is an independent~~bylaws and laws and regulations.
If a member of the audit committee ~~under Rule 10A-3~~is simultaneously a member of the audit committee of more than three public companies the board of directors shall determine whether such simultaneous service would prevent such members from effectively serving on the listed company’s audit committee, and ~~applicable~~disclose such determination in the order of business of the annual shareholders’ meeting of the listed company or in the company’s annual report on Form 10-K filed with the SEC.
303A.08 Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE ~~standards.~~rules. We do not currently offer equity-based compensation to our directors, executive officers or employees, and have no policy on this matter.
248
Section
NYSE corporate governance rule for U.S. domestic issuers
~~Item 16.B~~Our approach
303A.09 A listed company must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects, including director’s standards and responsibilities The CNV Rules contain recommended Corporate Governance guidelines for listed companies and the Board of Directors must include on its annual report, the level of compliance of such guidelines. Since 2011, we have in place a Code of ~~Ethics~~
Corporate Governance which contains corporate governance guidelines. Our Code of Corporate Governance is subject to periodic revision in order to comply with the latest applicable regulations and standards and to include up-to-date best market practices. The latest revision of our Code of Corporate Governance was approved in October 2019.
303A.10 A listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. Each listed company may determine its own policies, which should address conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of listed company assets, compliance with laws, rules and regulations, and encouraging the reporting of any illegal or unethical behavior. Neither Argentine law nor our bylaws require the adoption or disclosure of a code of business conduct. We, however, have adopted a code of business conduct and ethics that ~~is applicable~~applies to ~~among others,~~all of our employees.
303A.12 a) Each listed company CEO CFO and principal accounting officer and persons performing similar functions, which is posted on our website at: https://www.gruposupervielle.com/English/Corporate-Governance/Corporate-Governance-policies/default.aspx. We did not modify our code of ethics duringmust certify to the NYSE each year ~~ended December 31, 2017. In addition, we did not grant any waivers to our code of ethics during the year ended December 31, 2017.~~
We have also adopted the following policies: (i) investor communication, confidentiality and insider trading information, (ii) conflict of interest, (iii) related parties transactions and (iv) travel and gift policies. These policies are posted on our website at www.gruposupervielle.com/English/Corporate-Governance/Corporate-Governance-policies/default.aspx.
~~Information contained~~that he or ~~accessible through our website~~she is not ~~incorporated by reference in and should not be considered part~~aware of ~~this annual report.~~
~~Item 16.C~~~~Principal Accountant Fees and Services~~
The following table sets forth the total amount billed to us and our subsidiaries by our independent registered public accounting firm, Price Waterhouse & Co. S.R.L., during the fiscal years ended December 31, 2017 and 2016.

2017

2016

(in thousands of Pesos)

Audit Fees

26,812

16,809

Audit Related Fees

16,200

11,309

Tax Fees

1,510

1,490

All Other Fees

969

1,492

Total

45,491

31,100

~~Audit fees~~ are fees for professional services performed by Price Waterhouse & Co. S.R.L for the audit and limited review of Grupo Supervielle’s consolidated annual and quarterly financial statements under local and U.S. GAAP requirements and services that are normally provided in connection with statutory and regulatory filings.
~~Audit-related fees~~ consist of fees for professional services performed by Price Waterhouse & Co S.R.L. related to attestation, review and verification services with respect to our financial information and the provision of services in connection with special reports.
~~Tax fees~~ ~~are fees billed with respect to tax compliance and advisory services related to tax liabilities.~~
~~All other fees~~ ~~include fees paid for professional services other than the services reported above under “audit fees”, “audit related fees” and “tax fees” in each of the fiscal periods above.~~
~~Audit Committee Pre-approval~~
Our audit committee is required to pre-approve all audit and non-audit services to be provided by our independent registered public accounting firm. Our Audit Committee has reviewed and approved audit and non-audit services fees proposed by our independent auditors.
~~Item 16.D~~~~Exemptions from the Listing Standards for Audit Committees~~
~~Not applicable.~~
~~Item 16.E.~~~~Purchases of Equity Securities~~any violation by the ~~Issuer and Affiliated Purchasers~~
~~None.~~
~~Item 16.F~~~~Change in Registrant’s Certifying Accountant~~
~~None.~~
~~Item 16.G~~~~Corporate Governance~~
~~NYSE Corporate Governance Rules~~
~~Under NYSE rules, foreign private issuers are subject to more limited corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with four principal~~company of NYSE corporate governance ~~rules: (1) we must satisfy the requirements of Rule 10A-3 relating to audit committees; (2) our~~listing standards. b) Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A. c) Each listed company must submit an executed Written Affirmation annually to the ~~applicable NYSE corporate governance rules; (3) we~~NYSE. In addition, each listed company must ~~provide~~submit an interim Written Affirmation as and when required by the ~~NYSE with annual~~interim Written Affirmation form specified by the NYSE.
Comparable provisions do not exist under Argentine law and interim written affirmations as required under the NYSE corporate governance rules; and (4) we must provide a brief description of any significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards. The table below briefly describes the significant differences between our domestic practice and the NYSE corporate governance rules.
CNV Rules.

~~Section~~
Item 16.H
~~NYSE corporate governance rule for~~
~~U.S. domestic issuers~~
~~Our approach~~
~~303A.01~~
~~A listed company must have a majority of independent directors. “Controlled companies” are not required to comply with this requirement.~~
Neither Argentine law nor our bylaws require us to have a majority of independent directors. However, pursuant to Section 109 of the Capital Markets Law, our Audit Committee must be composed of at least three members of the Board of Directors, the majority of which must be independent; thus, we are required to have at least two independent directors.
~~303A.02~~
No director qualifies as “independent” unless the Board of Directors affirmatively determines that the director has no material relationship with the listed company (whether directly or as a partner, shareholder, or officer of an organization that has a relationship with the company), and emphasizes that the concern is independence from management. The board is also required, on a case by case basis, to express an opinion with regard to the independence or lack of independence, of each individual director.
~~Pursuant to current CNV Rules, a director is not independent if such director is:~~
a)             a member of management or an employee of shareholders who hold material holding in the listed company or of other entities in which these shareholders have material holdings or over which these shareholders exercise a material influence;
b)             ~~is currently an employee or has, in the last three years, been an employee of the listed company;~~
c)              a person who has a professional relationship or is part of a company or professional association that maintains professional relations with, or that receives remunerations or fees (other than directors’ fees) from, the listed company or from shareholders that have material holdings in the listed company, or with a company in which such shareholders have material holdings or exercise a material influence;
~~Section~~
~~NYSE corporate governance rule for~~
~~U.S. domestic issuers~~
~~Our approach~~
d)             ~~a person who has material holdings in the listed company or in an entity that has material holdings in, or exercises a material influence over, the listed company;~~
e)              a person who directly or indirectly provides goods or services to the listed company or to shareholders that have material holdings in or exercise a material influence over the listed company and receives compensation for such services that is substantially higher than that received as director of the listed company;
~~This prohibition includes professional relations during the last three years prior to the designation; or~~
f)               ~~the member is married or is a family member to an individual who would not qualify as independent.~~
“Material holdings” are shareholdings, either directly or indirectly, that represent at least 15% of the capital stock of the relevant entity, or a smaller percentage when the person has the right to elect one or more directors per class of shares or by having entered into agreements with other shareholders relating to the governance and the management of the relevant entity or of its controlling shareholders.
Notwithstanding the foregoing, Resolution 730 of the CNV approved on April 12, 2018, redefined certain criteria to define the independence of directors, which standards will be in force as from the first annual ordinary meeting to be held after December 31, 2018. Among other assumptions , a director will not be independent if such director: (i) Has served as director at the issuer, its parent company or another company belonging to the same economic group for more than 10 years. The condition of independent director will be recovered after having passed at least 3 years since the cessation of his position as director; (ii) Is also a member of the board of the parent company or another company belonging to the same economic group of the issuer by a relationship existing at the time of its election or that had ceased during the 3 years immediately preceding; (iii) Directly or indirectly, is the owner of 5% or more of shares with the right to vote and / or share capital in the issuer or in a company that has a ‘significant participation’ in it.
~~303A.03~~
~~The non-management directors of a listed company must meet at regularly scheduled executive sessions without management.~~
~~Neither Argentine law nor our bylaws require the holding of such meetings and we do not hold non-management directors meetings.~~
The Argentine Corporate Law provides, however, that the board shall meet at least once every three months, and according to our bylaws, whenever the chairman considers necessary to convene for a meeting.
~~303A.04~~
A listed company must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. “Controlled companies” are not required to comply with this requirement.
Pursuant to applicable local rules, we have an Etchis, Compliance and Corporate Governance committee. Neither Argentine law nor our bylaws require the establishment of a nominating committee, as directors are nominated and appointed by the shareholders.
~~303A.05~~
~~A listed company must have a compensation committee composed entirely of independent directors, with a written~~
~~Neither Argentine law nor our bylaws require the establishment of a compensation committee. We do not have a compensation~~
~~Section~~
~~NYSE corporate governance rule for~~
~~U.S. domestic issuers~~
~~Our approach~~
~~charter that covers certain minimum specified duties. “Controlled companies” are not required to comply with this requirement.~~
~~committee. However, we have a Human Resources committee which advises the Board of Directors on Senior Officers compensation schemes.~~
~~303A.06~~
~~303A.07~~
A listed company must have an audit committee with a minimum of three independent directors who satisfy the independence requirements of Rule 10A-3, with a written charter that covers certain minimum specified duties.
~~The responsibilities of an audit committee, as provided in Law No. 26,831 and the CNV standards are essentially the same as those provided for under Rule 10A-3, which we are required to satisfy.~~
Argentine law requires the audit committee be composed of three or more members from the Board of Directors (with a majority of independent directors), all of whom must be well-versed in business, financial or accounting matters.
~~The responsibilities of an audit committee include but are not limited to, the following:~~
a)             ~~advise on the Board of Directors’ proposal for the designation of external independent accountants and to ensure their independence;~~
b)             oversee our internal control mechanisms and administrative and accounting procedures and assess the reliability of all financial and other relevant information filed with the CNV and other entities to which we report;
c)              ~~oversee our information policies concerning risk management;~~
d)             ~~provide the market with complete information on transactions in which there may be a conflict of interest with members of our various corporate bodies or controlling shareholders;~~
e)              ~~advise on the reasonableness of fees or stock option plans for our directors and managers proposed by the Board of Directors;~~
f)               advise on our fulfillment of legal requirements and the reasonableness of the terms of the issuance of shares or other instruments that are convertible into shares in cases of capital increase in which pre-emptive rights are excluded or limited;
g)              ~~verify the fulfillment of any applicable rules of conduct; and~~
~~(h)~~         ~~issue grounded opinions on related-party transactions under certain circumstances and file such opinions with regulatory agencies as required by the CNV in the case of possible conflicts of interest~~
~~303A.08~~
~~Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules.~~
~~We do not currently offer equity-based compensation to our directors, executive officers or employees, and have no policy on this matter.~~
~~303A.09~~
~~A listed company must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects.~~
Neither Argentine law nor our bylaws require the adoption or disclosure of corporate governance guidelines. The CNV Rules contain a recommended Code of Corporate Governance for listed companies and the Board of Directors must include on its annual report, the degree of compliance of such code. We have adopted, as of May 26, 2011, a corporate governance manual.
~~Section~~
~~NYSE corporate governance rule for~~
~~U.S. domestic issuers~~
~~Our approach~~
~~303A.10~~
~~A listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.~~
Neither Argentine law nor our bylaws require the adoption or disclosure of a code of business conduct. We, however, have adopted a code of business conduct and ethics that applies to all of our employees.
~~303A.12~~
~~a) Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards.~~
b) Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A.
c) Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation as and when required by the interim Written Affirmation form specified by the NYSE.
~~Comparable provisions do not exist under Argentine law and CNV standards.~~
~~Item 16.H.~~Mine Safety Disclosure

Not applicable.

Item 17. Financial Statements

Not applicable.

Item 18. Financial Statements
249
Our audited consolidated financial statements are included in this annual report beginning at Page F-1.
Item 19. Exhibit Index
Exhibit
Number
Description
1.1 Bylaws of Grupo Supervielle (English translation), as amended (incorporated by reference to Exhibit 1.1 to our Annual Report on Form 20-F (File No. 001-37777) filed on May 1, 2017).
2.1 Deposit Agreement among Grupo Supervielle, The Bank of New York Mellon, as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts, dated May 18, 2016 (incorporated by reference to Exhibit 2.1 to our Annual Report on Form 20-F (File No. 001-37777) filed on May 1, 2017).
8.1 List of subsidiaries of Grupo Supervielle as of the date of this annual report ~~beginning at Page F-1.~~
(filed herein).
12.1
~~Item 19.~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herein).~~Exhibits~~
12.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herein).
13.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herein).
101. INS XBRL Instance Document.
101. SCH XBRL Taxonomy Extension Schema Document.
101. CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101. LAB XBRL Taxonomy Extension Label Linkbase Document.
101. PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101. DEF XBRL Taxonomy Extension Definition Document.
250
The amount of long-term debt securities of Grupo Supervielle authorized under any given instrument does not exceed 10% of its total assets on a consolidated basis. Grupo Supervielle hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
251
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

~~EXHIBIT INDEX~~
~~Exhibit~~
~~Number~~
~~Description~~
~~1.1~~
~~Bylaws of Grupo Supervielle (English translation), as amended (incorporated by reference to Exhibit 1.1 to our Annual Report on Form 20-F (File No. 001-37777) filed on May 1, 2017).~~
~~2.1~~
Deposit Agreement among Grupo Supervielle, The Bank of New York Mellon, as depositary, and the holders from time to time of American depositary shares issued thereunder, including the form of American depositary receipts, dated May 18, 2016 (incorporated by reference to Exhibit 2.1 to our Annual Report on Form 20-F (File No. 001-37777) filed on May 1, 2017).
~~2.2~~
Indenture dated as of February 9, 2017 among Banco Supervielle S.A. as issuer, The Bank of New York Mellon as trustee, paying agent, calculation agent, registrar and transfer agent and Banco Santander Rio S.A. as Argentine registrar and transfer agent, Argentine paying agent and representative of the trustee in Argentina.
~~2.3~~
First supplemental indenture dated as of February 9, 2017 to the indenture dated as of February 9, 2017 among Banco Supervielle S.A. as issuer. The Bank of New York Mellon as trustee, registrar, calculation agent, paying agent and transfer agent and Banco Santander Rio S.A. as Argentine registrar, Argentine paying agent, Argentine transfer agent. and representative of the trustee in Argentina.
~~2.4~~
Second supplemental indenture dated as of February 9, 2017 to the indenture dated as of February 9, 2017 among Banco Supervielle S.A., as issuer, The Bank of New York Mellon as trustee, registrar, calculation agent, paying agent and transfer agent and Banco Santander Rio S.A. as Argentine registrar, Argentine paying agent, Argentine transfer agent and representative of the trustee in Argentina.
~~8.1~~
~~List of subsidiaries of Grupo Supervielle as of the date of this annual report.~~
~~12.1~~
~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~12.2~~
~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
~~13.1~~
~~Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
The amount of long-term debt securities of Grupo Supervielle authorized under any given instrument does not exceed 10% of its total assets on a consolidated basis. Grupo Supervielle hereby agrees to furnish to the SEC, upon its request, a copy of any instrument defining the rights of holders of its long-term debt or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
~~SIGNATURES~~
~~The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.~~
~~GRUPO SUPERVIELLE S.A.~~
~~By:~~
/~~s/ Alejandra Naughton~~
~~Name: Alejandra Naughton~~
~~Title: Chief Financial Officer~~
~~Date: April 27, 2018.~~
GRUPO SUPERVIELLE S.A. ~~AND SUBSIDIARIES~~
~~INDEX TO CONSOLIDATED FINANCIAL STATEMENTS~~
By: /s/ Julio Patricio Supervielle
Name: Julio Patricio Supervielle
Title: Chief Executive Officer
By: /s/ Mariano Biglia
Name: Mariano Biglia
Title: Chief Financial Officer
Date: April 30, 2021

Consolidated Financial Statements
As of December 31, 2020, 2019 and
for the years ended December 31, 2020, 2019 and 2018

Contents
~~Page~~
Report of the ~~Independent Registered Public Accounting Firm~~
~~F- 1~~
~~Consolidated Balance Sheet as of December 31, 2017 and 2016~~
~~F- 2~~
~~Consolidated Statement of Income for the years ended December 31, 2017, 2016 and 2015~~
~~F- 5~~
~~Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015~~
~~F- 7~~
~~Consolidated Statement of Cash Flows for the years ended December 31, 2017, 2016 and 2015~~
~~F- 8~~
~~Notes to the Consolidated Financial Statements~~
~~F- 10~~
~~[PwC Office Letterhead]~~
~~Report of~~ Independent Registered Public Accounting ~~Firm~~firm
F-2
~~To the Board~~
Consolidated Statements of ~~Directors and Shareholders of Grupo Supervielle S.A.~~
~~Opinions on the~~ Financial ~~Statements and Internal Control over Financial Reporting~~
~~We have audited the accompanying consolidated balance sheets of Grupo Supervielle S.A. and its subsidiaries~~Position as of December 31, ~~2017~~2020 and ~~2016, and~~2019
F-5
Consolidated Income Statement for the ~~related consolidated statements of income, of changes in shareholders’ equity and of cash flows for each of the three~~ years ~~in the period~~ ended December 31, ~~2017, including~~2020, 2019 and 2018 F-7
Consolidated Statement of Comprehensive Income for the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in ~~Internal Control - Integrated Framework~~ ~~(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).~~
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years ~~in the period~~ ended December 31, ~~2017~~2020, 2019 and 2018
F-9
Consolidated Statement of Changes in ~~conformity with accounting rules prescribed by~~Shareholders’ Equity for the ~~Banco Central de la República Argentina (the “BCRA”). Also in our opinion, the Company maintained in all material respects, effective internal control over financial reporting as of~~years ended December 31, ~~2017, based on criteria established in~~ ~~Internal Control - Integrated Framework~~ ~~(2013) issued by~~2020, 2019 and 2018 F-10
Consolidated Statement of Cash Flow for the ~~COSO.~~years ended December 31, 2020, 2019 and 2018 F-11
Notes to the Consolidated Financial Statements F-13

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Grupo Supervielle S.A.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated statements of financial position of Grupo Supervielle and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
F-2

~~Basis for Opinions~~
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing on Item 15. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
~~Emphasis of Matter~~
Accounting rules prescribed by the BCRA vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 35 to the consolidated financial statements.
Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~/s/ PRICE WATERHOUSE & Co. S.R.L.~~
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Fair value of financial instruments that do not have an active market
As described in Notes 2 .a and 6 to the consolidated financial statements, the fair value of financial instruments that do not have an active market is determined based on valuation techniques. The balance of this type of instruments as of December 31, 2020 is Ps. 52,762,335 thousands. Included in this balance are Ps.28,449,953 thousands of financial assets which are classified as Level 2. These financial instruments are priced using internal methods and assumptions that management believes a hypothetical market participant would use to determine a current transaction price. The significant assumptions used by management to value the financial instruments included implicit rates in the last available tender for similar securities and spot rate curves . These valuation techniques require management to make estimates and judgments for complex instruments involving pricing models.
The principal considerations for our determination that performing procedures relating to fair value of financial instruments that do not have an active market is a critical audit matter are the significant judgment by management to determine the fair value of these financial instruments due to the use of an internally-developed model, which included significant assumptions related to the implicit rates in the last available tender for similar securities and spot rate curves ; this in turn led to a high degree of auditor subjectivity and judgment to evaluate the audit evidence obtained related to the valuation, and the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the fair value of financial instruments that do not have an active market. These procedures also included, among others, testing management process for (i) evaluating the reasonableness of implicit rates in the last available tender for similar securities and spot rate curves and the appropriateness of the valuation models used; (ii) testing the mathematical accuracy of the valuation techniques; and (iii) testing the completeness and accuracy of data provided by management. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of valuation method and the evaluation of implicit rates in the last available tender for similar securities and spot rate curves.
F-3
Estimation of the allowance for loan losses of assets measured at amortised cost and fair value through OCI
As described in Notes 2.b , 1.11.2, 26 and 27 to the consolidated financial statements, the Company’s allowance for loan losses was Ps.8,424,714 thousands as of December 31, 2020. The Company assesses impairment under the expected credit losses method described in IFRS 9. Management’s models used to determine the expected credit loss include the use of significant judgement, considering factors such as the definition of what is considered to be a significant increase in credit risk and the development of assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions.The impact of the forecasts of economic conditions are determined based on the weighted average of three internally developed macroeconomic scenarios that take into consideration the Group´s economic outlook as derived through forecast macroeconomic variables, which include inflation rate, monthly economic activity estimator and private sector wage.
The principal considerations for our determination that performing procedures relating to the estimation of the allowance for loan losses of financial assets measured at amortised cost and fair value through OCI is a critical audit matter are: (i) that is an area highly subjective that involves a significant amount of judgment and effort in developing the valuation models for determining the allowance for loan losses, (ii) the significant judgments and estimations made by management in both the forecast of macroeconomic variables, which include inflation rate, monthly economic activity estimator and private sector wage and in the definition of what is considered to be a significant increase in credit risk, both of which significantly affect its estimate of expected credit losses at the balance sheet date, (iii) the audit of these figures involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s allowance for loan losses estimation process, which included controls over the data, models and assumptions used in the estimation process. These procedures also included, among others, (i) evaluating models used by management, the reasonableness of assumptions of forecasts of macroeconomic variables, which include inflation rate, monthly economic activity estimator and private sector wage, the methodology used for the generation of the macroeconomic scenarios (ii) evaluating the definition of what is considered to be a significant increase in credit risk (iii) testing the mathematical accuracy of the impairment calculation for the credit balances (iv) testing the completeness and accuracy of data provided by management. Professionals with specialized skill and knowledge were used to assist in evaluating and testing the appropriateness of the models used by management and the reasonableness of the definition of what is considered to be a significant increase in credit risk, the assumptions and estimates made by Management to incorporate relevant information about past events, current conditions and forecasts of economic conditions.

/s/ PRICE WATERHOUSE & Co. S.R.L.
/s/ SANTIAGO JOSÉ MIGNONE (Partner)
Santiago José Mignone
Buenos Aires, Argentina
April 30, 2021.
We have served as the Company’s auditor since 2008.
F-4
GRUPO SUPERVIELLE S.A.
Consolidated Statements of Financial Position
As of December 31, 2020 and 2019
(Expressed in thousands of pesos)
12/31/2020 12/31/2019
ASSETS
Cash and due from banks (Note 1.7) 36,674,869 35,945,335
Cash 12,792,522 11,913,814
Financial institutions and correspondents
Argentine Central Bank 19,623,684 21,683,569
Other local financial institutions 4,106,336 2,307,232
Others 152,327 40,720
Debt Securities at fair value through profit or loss (Note 1.7, 5, 6 and 16.1) 9,871,903 773,961
Derivatives (Note 6 and 10) 143,944 350,680
Reverse Repo transactions (Note 9) 22,354,735 -
Other financial assets (Note 5, 6 and 16.2) 4,285,221 2,854,686
Loans and other financing (Note 6 and 26) 105,395,186 119,817,347
To the non-financial public sector 23,530 39,307
To the financial sector 12,062 87,841
To the Non-Financial Private Sector and Foreign residents 105,359,594 119,690,199
Other debt securities (Note 1.7, 6 and 16.3) 40,859,975 14,238,340
Financial assets pledged as collateral (Note 6 and 16.4) 4,904,935 7,261,336
Current income tax assets (Note 4) - 139,487
Inventories (Note 16.5) 70,964 �� 60,521
Investments in equity instruments (Note 6 and 15) 116,328 19,848
Property, plant and equipment (Note 13) 7,103,638 5,448,454
Investment Property (Note 14) 5,997,945 5,520,143
Intangible assets (Note 15) 6,782,538 5,919,425
Deferred income tax assets (Note 4) 3,315,885 2,275,175
Other non-financial assets (Nota 16.6) 1,352,880 1,795,477
TOTAL ASSETS 249,230,946 202,420,215
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-5
GRUPO SUPERVIELLE S.A.
Consolidated Statements of Financial Position
As of December 31, 2020 and 2019
(Expressed in thousands of pesos)
12/31/2020 12/31/2019
LIABILITIES
Deposits (Note 16.7) 178,641,594 121,176,255
Non-financial public sector 7,911,255 7,447,131
Financial sector 57,416 38,253
Non-financial private sector and foreign residents 170,672,923 113,690,871
Liabilities at fair value through profit or loss (Note 5 and 16.8) 2,002,005 258,060
Derivatives (Note 5 and 10) 1,995 -
Repo transactions (Note 5 and 9) - 435,401
Other financial liabilities (Note 5 and 16.9) 7,528,889 12,409,984
Financing received from the Argentine Central Bank and other financial institutions (Note 5 and 16.10) 5,852,292 12,276,610
Unsubordinated debt securities (Note 5 and 23) 4,226,748 8,286,163
Current income tax liability 1,288,267 -
Subordinated debt securities (Note 5 and 23) 1,140,469 2,886,028
Provisions (Note 17 and 16.11) 681,092 921,696
Deferred income tax liabilities (Note 4) 42,005 689,268
Other non-financial liabilities (Note 16.12) 12,146,102 11,175,664
TOTAL LIABILITIES 213,551,458 170,515,129

SHAREHOLDERS’ EQUITY
Shareholders’ Equity attributable to owners of the parent company 35,651,135 31,878,404
Shareholders’ Equity attributable to non-controlling interests 28,353 26,682
TOTAL SHAREHOLDERS’ EQUITY 35,679,488 31,905,086
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-6
GRUPO SUPERVIELLE S.A.
Consolidated Income Statement
For the financial years ended December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)
12/31/2020 12/31/2019 12/31/2018
Interest income (Note 16.13) 64,699,880 60,983,625 63,700,230
Interest expenses (Note 16.14) (28,578,388 ) (47,531,377 ) (36,468,510 )
Net interest income 36,121,492 13,452,248 27,231,720
Net income from financial instruments (NIFFI) at fair value through profit or loss (Note 16.15) 3,315,582 28,536,382 13,215,705
Result from derecognition of assets measured at amortized cost 657,019 - -
Exchange rate differences on gold and foreign currency 1,064,545 (441,191 ) 2,359,639
Net Income From Financial instruments And Exchange Rate Differences 5,037,146 28,095,191 15,575,344
Net Financial Income 41,158,638 41,547,439 42,807,064
Services Fee Income (Note 16.16) 11,493,824 11,707,556 12,414,260
Services Fee Expense (Note 16.17) (3,548,269 ) (3,054,954 ) (2,970,070 )
Income from insurance activities (Note 16.18) 1,671,455 1,896,923 1,777,345
Net Service Fee Income 9,617,010 10,549,525 11,221,535
Subtotal 50,775,648 52,096,964 54,028,599
Results from exposure to changes in the purchasing power of money (4,290,328 ) (7,296,543 ) (12,597,117 )
Other operating income (Note 16.19) 3,779,451 3,751,037 5,180,332
Loan loss provisions (8,615,060 ) (10,533,018 ) (10,846,363 )
Net operating income 41,649,711 38,018,440 35,765,451
Personnel expenses (Note 16.20) 18,176,866 19,283,346 18,384,833
Administration expenses (Note 16.21) 10,318,557 10,310,666 11,729,051
Depreciation and impairment of non-financial assets (Note 16.22) 2,407,028 2,470,504 905,545
Other operating expenses (Note 16.23) 6,574,779 8,656,215 9,030,424
Income/ (Loss) before taxes 4,172,481 (2,702,291 ) (4,284,402 )
Income tax (Note 4) (671,707 ) (229,663 ) (2,117,088 )
Net income / (loss) for the year 3,500,774 (2,931,954 ) (6,401,490 )
Net income / (loss) for the year attributable to owners of the parent company 3,499,882 (2,929,201 ) (6,341,497 )
Net income / (loss) for the year attributable to non-controlling interests 892 (2,753 ) (59,993 )
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-7
GRUPO SUPERVIELLE S.A.
Consolidated Income Statement
For the financial years ended December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)
12/31/2020 12/31/2019 12/31/2018
NUMERATOR
Net income / (loss) for the year attributable to owners of the parent company 3,499,882 (2,929,201 ) (6,341,497 )
PLUS: Diluting events inherent to potential ordinary shares - - -
Net income attributable to owners of the parent company adjusted by dilution 3,499,882 (2,929,201 ) (6,341,497 )

DENOMINATOR
Weighted average of ordinary shares 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

Basic Income per share 7.66 (6.41 ) (13.88 )
Diluted Income per share 7.66 (6.41 ) (13.88 )
The accompanying notes and schedules are an integral part of the Consolidated Financial Statements
F-8
GRUPO SUPERVIELLE S.A.
Consolidated Statement of Comprehensive Income
For the years ended December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)
12/31/2020 12/31/2019 12/31/2018
Net income / (loss) for the year 3,500,774 (2,931,954 ) (6,401,490 )

Components of Other Comprehensive Income not to be reclassified to profit or loss
Revaluation surplus of property, plant and equipment 818,447 (84,516 ) 646,265
Income tax (Note 4) (238,992 ) 13,170 (159,864 )
Net revaluation surplus of property, plant and equipment 579,455 (71,346 ) 486,401
(Loss) / income from equity instruments at fair value through other comprehensive income - (6,475 ) 2,182
Income tax (Note 4) - 1,944 (655 )
Net (loss) / income from equity instruments at fair value through other comprehensive income - (4,531 ) 1,527
Total Other Comprehensive Income not to be reclassified to profit or loss 579,455 (75,877 ) 487,928
Components of Other Comprehensive Income to be reclassified to profit or loss
Income from financial instruments at fair value through other comprehensive income 326,200 15,364 24,985
Income tax (Note 4) (101,962 ) (4,610 ) (6,991 )
Net income from financial instruments at fair value through other comprehensive income 224,238 10,754 17,994
Other Comprehensive Income to be reclassified to profit or loss 224,238 10,754 17,994
Other Comprehensive (loss) / income 803,693 (65,123 ) 505,922
Other comprehensive (loss) / income attributable to parent company 802,914 (64,940 ) 505,396
Other comprehensive (loss) / income attributable to non-controlling interest 779 (183 ) 526
Comprehensive loss 4,304,467 (2,997,077 ) (5,895,568 )
Comprehensive loss for the year attributable to owners of the parent company 4,302,796 (2,994,141 ) (5,836,101 )
Comprehensive loss for the year attributable to non-controlling interest 1,671 (2,936 ) (59,467 )
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-9
GRUPO SUPERVIELLE S.A.
Consolidated Statement of Changes in Shareholders’ Equity
For the financial years ended on December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)
Items Capital stock Capital Adjustment Paid in capital Legal reserve Other reserves Retained earnings Other comprehensive income
Total
Shareholders´ equity attributable to parent company

Total
Shareholders´ equity attributable to non-controlling interest
Total shareholders´ equity
Balance at December 31, 2017 456,722 3,079,801 33,164,697 152,370 6,662,091 (1,582,686 ) 98,157 42,031,152 465,561 42,496,713
Distribution of retained earnings by the shareholders’ meeting on April 24, 2018:
- Other reserves - - - 38,931 4,554,572 (4,593,503 ) - - - -
- Dividend distribution - - - - - (687,687 ) - (687,687 ) - (687,687 )
Purchase of subsidiaries ‘shares - - (914 ) - - - - (914 ) (338 ) (1,252 )
Other movements - - - - - - - - (376,254 ) (376,254 )
Net loss for the year - - - - - (6,341,497 ) - (6,341,497 ) (59,993 ) (6,401,490 )
Other comprehensive income for the year - - - - - - 505,396 505,396 526 505,922
Balance at December 31, 2018 456,722 3,079,801 33,163,783 191,301 11,216,663 (13,205,373 ) 603,553 35,506,450 29,502 35,535,952
Distribution of retained earnings by the shareholders’ meeting on April 26, 2019:
- Other reserves - - - - 2,833,486 (2,833,486 ) - - - -
- Dividend distribution - - - - - (634,568 ) - (634,568 ) - (634,568 )
Purchase of subsidiaries ‘shares - - 663 - - - - 663 116 779
Net loss for the year - - - - - (2,929,201 ) - (2,929,201 ) (2,753 ) (2,931,954 )
Other comprehensive (loss) for the year - - - - - - (64,940 ) (64,940 ) (183 ) (65,123 )
Balance at December 31, 2019 456,722 3,079,801 33,164,446 191,301 14,050,149 (19,602,628 ) 538,613 31,878,404 26,682 31,905,086
Absorption of negative retained earnings (*) - - (4,417,494 ) (191,301 ) (19,316,859 ) 23,925,654 - - - -
Distribution of retained earnings by the shareholders’ meeting on April 28, 2020:
- Other reserves - - - - 5,796,775 (5,796,775 ) - - - -
- Dividend distribution - - - - (530,065 ) - - (530,065 ) - (530,065 )
Net income for the year - - - - - 3,499,882 - 3,499,882 892 3,500,774
Other comprehensive  income for the year - - - - - - 802,914 802,914 779 803,693
Balance at December 31, 2020 456,722 3,079,801 28,746,952 - - 2,026,133 1,341,527 35,651,135 28,353 35,679,488
(*) See Note 25.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-10
GRUPO SUPERVIELLE S.A.
Consolidated Statement of Cash Flow
For the years ended December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)
12/31/2020 12/31/2019 12/31/2018
Cash flow from operating activities

Net income / (loss) for the year 3,500,774 (2,931,954 ) (6,401,490 )

Adjustments to obtain flows from operating activities:
Income tax 671,707 229,663 2,117,088
Depreciation and Impairment of Property, plant and   equipment 2,407,028 2,470,504 905,545
Loan loss provisions 8,615,060 10,533,018 10,846,363
Other adjustments:
Exchange rate difference on gold and foreign currency (1,064,545 ) 441,191 (2,359,639 )
Interest from loans and other financings (64,699,880 ) (60,983,625 ) (63,700,230 )
Interest from deposits and financing received 28,578,388 47,531,377 36,468,510
Net income from financial instruments at fair value through profit or loss (3,315,582 ) (28,536,382 ) (13,215,705 )
Fair value measurement of investment properties 92,457 173,076 (301,426 )
Results from exposure to changes in the purchasing power of money 4,290,328 7,296,543 12,597,117
Interest on liabilities for financial leases 207,035 289,288 -
Allowances reversed (572,480 ) (678,796 ) (665,561 )
Result from derecognition of financial assets measured at amortized cost (657,019 ) - -

(Increases) / decreases from operating assets:
Debt securities at fair value through profit or loss (3,704,499 ) 33,730,615 13,361,338
Derivatives 206,736 (317,331 ) 49,878
Reverse Repo transactions (22,354,735 ) - 10,358,040
Loans and other financing
    To the non-financial public sector 15,777 29,390 32,129
    To the other financial entities 75,779 746,839 393,321
    To the non-financial sector and foreign residents 69,862,241 87,397,438 73,827,816
Other debt securities (26,621,635 ) (5,209,685 ) (7,918,913 )
Financial assets in guarantee 2,356,401 (3,057,655 ) (180,104 )
Investments in equity instruments (48,916 ) 1,941 122,467
Other assets (578,668 ) 3,051,066 (9,736,045 )

Increases / (decreases) from operating liabilities:
Deposits
Non-financial public sector 464,124 (15,810,885 ) 4,174,518
Financial sector 19,163 (14,598 ) 4,299
Private non-financial sector and foreign residents 28,504,851 (113,144,888 ) (16,309,593 )
Derivatives 1,995 (197,328 ) 197,328
Repo transactions (435,401 ) 435,401 -
Liabilities at fair value through profit or loss 1,743,945 (303,388 ) 561,448
Other liabilities (3,796,035 ) 713,438 995,641
Income Tax paid (1,272,880 ) (1,102,703 ) (2,932,952 )

Net cash provided by / (used in) operating activities (A) 22,491,514 (37,218,430 ) 43,291,188

Cash flows from investing activities

Payments related to:
Purchase of PPE, intangible assets and other assets (4,724,074 ) (1,516,436 ) (5,978,681 )
Purchase of liabilities and equity instruments issued by other entities (47,564 ) - (376,258 )
Acquisition of subsidiaries, net of cash adquired (7,292 ) (269,496 ) (3,849,461 )

Collections:
Disposals related to PPE, intangible assets and other assets 425,906 10,920 908,416

Net cash used in investing activities (B) (4,353,024 ) (1,775,012 ) (9,295,984 )
The accompanying Notes are an integral part of these Consolidated Financial Statements.
F-11
GRUPO SUPERVIELLE S.A.
Consolidated Statement of Cash Flow
For the years ended December 31, 2020, 2019 and 2018
(Expressed in thousands of pesos)

12/31/2020 12/31/2019 12/31/2018
Cash flows from financing activities

Payments:
Repurchase of non-controlling interest in subsidiaries - 772 (1,252 )
Lease liabilities (1,366,164 ) (1,703,937 ) -
Financing received from Argentine Financial Institutions (6,785,701 ) (155,072,118 ) (143,192,966 )
Unsubordinated debt securities (21,297,718 ) (23,641,629 ) (15,818,913 )
Subordinated debt securities (1,774,264 ) (1,147,619 ) (27,195 )
Dividends (530,065 ) (634,568 ) (687,687 )

Collections:
Unsubordinated negotiable obligations 2,653,805 11,452,532 8,752,664
Financing received from Argentine Financial Institutions 14,873,400 150,529,472 149,113,655

Net cash used in financing activities (C) (14,226,707 ) (20,217,095 ) (1,861,694 )

Effects of exchange rate changes and exposure to changes in the purchasing power of money on cash and cash equivalents (D) 10,375,405 32,802,331 32,132,480

Net increase / (decrease) in cash and cash equivalents (A+B+C+D) 14,287,188 (26,408,206 ) 64,265,990
Result from exposure to changes in the purchasing power of the currency of Cash and equivalents (12,853,555 ) (33,941,124 ) (32,132,480 )
Cash and cash equivalents at the beginning of the year 38,032,893 98,382,223 66,248,712
Cash and cash equivalents at the end of the year 39,466,526 38,032,893 98,382,223
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-12
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)

1. ACCOUNTING STANDARDS AND BASIS OF PREPARATION
Grupo Supervielle S.A. (individually referred to as “Grupo Supervielle” or “the Company” and jointly with its subsidiaries as the “Group”), is a financial services holding company organized under the laws of Argentina that conducts its business through its subsidiaries, providing banking services, proprietary brand credit card services, personal loans, insurance and other services.
Grupo Supervielle´s Consolidated Financial Statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 include the assets, liabilities and results of the controlled companies detailed in Note 1.2.

1.1.1 Basis of preparation
These Consolidated Financial Statements have been prepared in accordance with IFRS as adopted by the IASB.
The preparation of Financial Statements at a certain date requires Management to make estimations and evaluations affecting the amount of assets and liabilities recorded and contingent assets and liabilities disclosed at such date, as well as income and expenses recorded during the year. Actual results might differ from the estimates and evaluations made at the date of preparation of these Consolidated Financial Statements. The most significant judgments made by Management in applying the Group’s accounting policies and the major estimations and significant judgments are described in Note 2.
These consolidated financial statements as of December 31, 2020, were approved by resolution of the Board of Directors’ meeting held on April 30, 2021.

1.1.2 Going concern
By
The consolidated financial statements as of December 31, 2020, 2019 and 2018 have been prepared on a going concern basis as there is a reasonable expectation that the Group will continue its operational activities in the foreseeable future (and in any event with a time horizon of more than twelve months from the end of the reporting period).
~~/s/ DIEGO LUIS SISTO (Partner)~~

1.1.3 Measuring Unit – IAS 29 (Financial reporting in hyperinflationary economies)
The Consolidated Financial Statements of the Entity are expressed in Argentine pesos which is the functional currency.
IAS 29 establishes the conditions under which an entity shall restate its financial statements if it is located in an economic environment considered hyperinflationary. This Standard requires that the financial statements of an entity that reports in the currency of a highly inflationary economy shall be stated in terms of the measuring unit current at the closing date of the latest reporting period, regardless of whether they are based on a historical cost approach or a current cost approach. To this end, in general terms, the inflation rate must be computed in the non-monetary items as from the acquisition date or the revaluation date, as applicable. These requirements also comprise the comparative information of the financial statements.
To determine the existence of a highly inflationary economy under the terms of IAS 29, the standard details a series of factors to consider, including a cumulative inflation rate over three years that is close to or exceeds 100%.
It is important to highlight that the three-year accumulated inflation rate as of December 31, 2020 reached 209.2%. On the other hand, the macroeconomic events that have taken place in the country during the year show that the country is complying with the qualitative factors provided for in IAS 29 to consider Argentina as a highly inflationary economy for accounting purposes. All this, consequently, originates the need to apply the restatement for inflation of the financial statements in the terms of IAS 29 for the year ended December 31, 2020.
The Group determined to use the Internal Wholesale Price Index (IWPI) to restate balances and transactions until the year 2016, for the months of November and December 2015 the average variation of the Consumer Price Index (CPI) of the City of Buenos Aires was used, due to the fact that during those two months there were no IWPI measurements at national level. Then, from January 2017 omwards, the Group used the National Consumer Price Index (National CPI).
F-13
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The tables below show the evolution of these indexes in the last three years and as of December 31, 2020 according to official statistics (INDEC):
As of December 31,
2018 2019 2020
Variation in Prices
Annual 47.6 % 53.8 % 36.1 %
Accumulated 3 years 148.0 % 183.4 % 209.2 %
As a consequence of the aforementioned, these Consolidated Financial Statements as of December 31, 2020 were restated in accordance with the provisions of IAS 29.
Restatement of the Financial Position
The Group restated all the non-monetary items in order to reflect the impact of inflation in terms of the measuring unit current as of December 31, 2020. Consequently, the main items restated were Property, Plant and Equipment, Intangible assets, Goodwill, Inventories and Equity. Each item must be restated since the date of the initial recognition in the Group’s accounts or since the date of the last revaluation. Monetary items have not been restated because they are stated in terms of the measuring unit current as of December 31, 2020.
Comparative figures must also be presented in the measuring unit current as of December 31, 2020. Therefore, comparative figures for the previous reporting periods have been restated by applying a general price index, so that the resulting comparative financial statements are presented in terms of the current unit of measurement as of the closing date of the reporting period.
Restatement of the Income Statement and the Statement of Cash Flows
In the Income Statement, items shall be restated from the dates when the items of income and expense were originally recorded. To this end, the Group applied the variations in a general price index.
The effect of inflation on the monetary position is included in the Income Statement under Results from exposure to changes in the purchasing power of money.
The items of the Statement of Cash Flows must also be restated in terms of the measuring unit current at the closing date of the Statement of Financial Position. IAS 29 para 33 states that all items in the statement of cash flows are expressed in terms of the measuring unit current at the end of the reporting period. The loss arising from the restatement has an impact on the Income Statement and must be eliminated from the Statement of Cash Flows because it is not considered cash or cash equivalent.
Restatement of the Statement of Changes in Shareholder’s Equity
All components of the Statement of Changes in Shareholder’s Equity, except reserves and retained earnings, must be restated from the dates on which the items were contributed or otherwise arose.

~~Diego Luis Sisto~~
1.1.4 New Standards and Interpretations issued by the IASB adopted by the Group

~~Buenos Aires, Argentina~~
~~April 27,~~
(a) 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:

~~We have served as~~
(i) Clarifies that, the ~~Company’s auditor since 2008.~~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;
F-14
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)

F-1

~~Table~~
(ii) Removes the evaluation of ~~Contents~~whether market players can replace the lack of processes or goods and continue with the production of products;
(iii) Add explanatory guidelines and examples to help entities evaluate whether a substantial process has been acquired;
(iv) Restrict definitions of a business or product by focusing on goods and services granted to clients and remove the reference to the capacity of reducing costs, and
(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 amendment did not have any impact in the Group´s consolidated financial statements.

(b) Definition of significant or relatively significant - Changes to IAS 1 and IAS 8
On 31 October 2018, the IASB issued amendments to the definition of material in IAS 1 and IAS 8.
The amendments to IAS 1, ‘Presentation of financial statements’, and IAS 8, ‘Accounting policies, changes in accounting estimates and errors’, and consequential amendments to other IFRSs: i) use a consistent definition of materiality throughout IFRSs and the Conceptual Framework for Financial Reporting; ii) clarify the explanation of the definition of material; and iii) incorporate some of the guidance in IAS 1 about immaterial information.
The amended definition is: “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.”
The amendment clarifies that the reference to obscuring information addresses situations in which the effect is similar to omitting or misstating that information. It also states that an entity assesses materiality in the context of the financial statements as a whole.
The amendment also clarifies the meaning of ‘primary users of general purpose financial statements’ to whom those financial statements are directed, by defining them as ‘existing and potential investors, lenders and other creditors’ that must rely on general purpose financial statements for much of the financial information they need.
Entities need to apply these changes for annual periods beginning on or after 1 January 2020.
The amendment did not have a significant effect in the Group´s consolidated financial statements.
(c) Amendment to the Conceptual Framework
The IASB has revised its Conceptual Framework. This will not result in any immediate change to IFRS, but the Board and Interpretations Committee will use the revised Framework in setting future standards. Preparers might also use the Framework to assist them in developing accounting policies where an issue is not addressed by an IFRS
The amendment is effective for annual periods beginning on or after 1 January 2020 for preparers that develop an accounting policy based on the Framework.
The Group considers that such changes have no significant effect in its consolidated financial statements.
1.1.5 New Standards and Interpretations issued by the IASB not in force
(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).
F-15
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
When non-monetary assets account for a business, the investor will recognize earnings or losses of the sale or contribution of assets. If assets do not account for a business, earnings or losses are recognized by the investor only up to the amount recognized by the investor in the associate or joint venture. These changes are applied with retroactive effect.
IASB has decided to delay the application date for this modification until the research project over the interest method is concluded.
The Group is evaluating the impact of the application of this new standard.
(b) IFRS 17 “Insurance contracts”
In May 18, 2017, the IASB issued IFRS 17 “Insurance contracts” as replacement for IFRS 4. It requires a current measurement model where estimates are re-measured each reporting period. Contracts are measured using the building blocks of discounted probability-weighted cash flows, an explicit risk adjustment, and a contractual service margin representing the unearned profit of the contract which is recognized as revenue over the coverage period. This standard is effective for fiscal years beginning on or after January 1, 2023. The Group is evaluating the impact of the adoption of this new standard.
(c) Changes in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Reference interest rate reform (IBOR)
The IASB has issued amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 that address issues that arise during the reform of an interest rate benchmark, including the replacement of one benchmark with an alternative one. The most important changes are related to the accounting of financial instruments at amortized cost. For instruments to which the amortised cost measurement applies, the amendments require entities, as a practical expedient, to account for a change in the basis for determining the contractual cash flows as a result of IBOR reform by updating the effective interest rate using the guidance in paragraph B5.4.5 of IFRS 9. As a result, no immediate gain or loss is recognised. This practical expedient applies only to such a change and only to the extent it is necessary as a direct consequence of IBOR reform, and the new basis is economically equivalent to the previous basis. IFRS 16 was also amended to require lessees to use a similar practical expedient when accounting for lease modifications that change the basis for determining future lease payments as a result of IBOR reform (for example, where lease payments are indexed to an IBOR rate).Such changes will become effective as from January 1, 2021.
The Group is assessing the impact of the amendments.
(d) Amendment to IFRS 16 ‘Leases’- Covid 19 - Related rent concessions
Rent concessions have been, or are expected to be, provided to lessees as a result of the COVID-19 pandemic. Such concessions might take a variety of forms, including payment holidays and deferral of lease payments for a period of time, sometimes followed by increased rent payments in future periods. IFRS 16 contains requirements that apply to such rent concessions. The IASB has noted, however, that applying those requirements to a potentially large volume of rent concessions related to COVID-19 could be complex – particularly in the light of the many other challenges that stakeholders face during the pandemic.
As a result, the IASB has provided lessees (but not lessors) with relief in the form of an optional exemption from assessing whether a rent concession related to COVID-19 is a lease modification. Lessees can elect to account for rent concessions in the same way as they would if they were not lease modifications. In many cases, this will result in accounting for the concession as a variable lease payment.The practical expedient only applies to rent concessions occurring as a direct consequence of the COVID-19 pandemic. Lessees that apply the exemption will need to disclose that fact, as well as the amount recognised in profit or loss arising from COVID-19-related rent concessions. If a lessee chooses to apply the practical expedient to a lease, it would apply the practical expedient consistently to all lease contracts with similar characteristics and in similar circumstances. The amendment is to be applied retrospectively in accordance with IAS 8, but lessees are not required to restate prior period figures or to provide the disclosure under paragraph 28(f) of IAS 8.
F-16
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The amendments are mandatory for annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted. The Group is assessing the impact of the amendments.
(e) Annual Improvements 2018-2020
Fees included in the 10% test for derecognition of financial liabilities
The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Under the amendment, costs or fees paid to third parties will not be included in the 10% test.
Illustrative examples accompanying IFRS 16, ‘Leases’
The Board has amended Illustrative Example 13 that accompanies IFRS 16 to remove the illustration of payments from the lessor relating to leasehold improvements. The reason for the amendment is to remove any potential confusion about the treatment of lease incentives.
Subsidiary as a first-time adopter
IFRS 1 allows an exemption if a subsidiary adopts IFRS at a later date than its parent. The subsidiary can measure its assets and liabilities at the carrying amounts that would be included in its parent’s consolidated financial statements, based on the parent’s date of transition to IFRS, if no adjustments were made for consolidation procedures and for the effects of the business combination in which the parent acquired the subsidiary.
The Board has amended IFRS 1 to allow entities that have taken this IFRS 1 exemption to also measure cumulative translation differences using the amounts reported by the parent, based on the parent’s date of transition to IFRS. The amendment to IFRS 1 extends the above exemption to cumulative translation differences, in order to reduce costs for first-time adopters. This amendment will also apply to associates and joint ventures that have taken the same IFRS 1 exemption.
Taxation in fair value measurements
The Board has removed the requirement for entities to exclude cash flows for taxation when measuring fair value under IAS 41, ‘Agriculture’. This amendment is intended to align with the requirement in the standard to discount cash flows on a post-tax basis.
Effective date
All of the amendments are effective 1 January 2022. Earlier application is permitted
The Group is assessing the impact of the amedments.
(f) Amendments to IAS 1, ‘Presentation of financial statements’, IFRS Practice statement 2 and IAS 8,’ Accounting policies, changes in accounting estimates and errors’
The IASB amended IAS 1, ‘Presentation of Financial Statements’, to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment also clarifies that accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. their significant accounting policies. To support this amendment, the Board also amended IFRS Practice Statement 2, ‘Making Materiality Judgements’, to provide guidance on how to apply the concept of materiality to accounting policy disclosures.
The amendment to IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, clarifies how companies should distinguish changes in accounting policies from changes in accounting estimates. The distinction is important, because changes in accounting estimates are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events as well as the current period.
F-17
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
These amendments should be applied for annual periods beginning on or after 1 January 2023. Earlier application is permitted. The amendments should be applied prospectively.
The Group is assessing the impact of the amendments.
1.2. Consolidation
A subsidiary is an entity, including structured entities, over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
The subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The following chart details the subsidiaries included in the consolidation process:
Percentage of direct or indirect investment in capital stock
Company Main Activity 12/31/2020 12/31/2019 12/31/2018
Banco Supervielle S.A. Commercial Bank 99.90 % (1) 99.90 % (1) 99.89 % (1)
Cordial Compañía Financiera S.A. Financial Company 99.90 % 99.90 % 99.90 %
Tarjeta Automática  S.A. Credit Card 99.99 % 99.99 % 99.99 %
Supervielle Asset  Management S.A. Asset Management and Other Services 100.00 % 100.00 % 100.00 %
Sofital S.A.F. e I.I. Real State 100.00 % 100.00 % 100.00 %
Espacio Cordial de Servicios S.A. Retail Services 100.00 % 100.00 % 100.00 %
Supervielle Seguros S.A. Insurance 100.00 % 100.00 % 100.00 %
Micro Lending S.A.U. Financial Company 100.00 % 100.00 % 100.00 %
InvertirOnline S.A.U. Financial Broker 100.00 % 100.00 % 100.00 %
InvertirOnline.Com Argentina S.A.U. Representations 100.00 % 100.00 % 100.00 %
Supervielle Productores Asesores de Seguros S.A. Insurance Broker 100.00 % 100.00 % -
Bolsillo Digital S.A.U. Fintech 100.00 % 100.00 % -
Futuros del Sur S.A. Financial Broker 100.00 % 100.00 % -
Easy Cambio S.A. Financial Company 100.00 % - -
(1) Grupo Supervielle S.A.’s direct and ~~Subsidiaries~~indirect interest in Banco Supervielle S.A votes amounts to 99,87%,as of 12/31/2020, 12/31/2019 and 12/31/2018 respectively.
Financial Statements of controlled companies are for the same period of the Group´s Financial Statements.
Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of income, statement of comprehensive income, statement of changes in shareholder’s equity and statement of financial position, respectively.
Easy Cambio S.A. was consolidated from the acquisition date (See Note 29).
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred to the former owners of the acquired business, the equity interests issued by the Group, the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.
The Group recognizes any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net assets.
Acquisition-related costs are expensed as incurred.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquired entity and the acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in the Consolidated Income Statement as a “bargain purchase”.

1.3. Consolidated ~~Balance Sheet~~Structured Entities
~~As of December 31, 2017 and 2016~~
The Group have securitized certain financial instruments, mainly consumer loans, through financial trusts that issue debt securities and participation certificates.
The structured entity in which the Group was the trustor as of December 31, 2020 are set out below:
Issued Securities
Issuers Financial Trust Set-up on Due of principal obligation Securitized Amount Type Amount Type Amount
Micro Lending S.A.U. III 06/08/2011 10/12/2016 $ 39,779 VDF TV A
VDF B VN$ 31,823 CP VN$ 1,592
Micro Lending S.A.U. IV 09/01/2011 06/29/2017 $ 40,652 VDF TV A
VDF B VN$ 32,522 CP VN$ 1,626
The structured entity in which the Group was the trustor as of December 31, 2019 are set out below:
Issued Securities
Issuers Financial Trust Set-up on Due of principal obligation Securitized Amount Type Cantidad Tipo Cantidad
Banco Supervielle S.A. Serie 97 27/03/2018 20/03/2020 $ 750,000 VDF TV A VN$ 712,500 CP VN$ 37,500
Cordial Compañía Financiera S.A. 20 08/04/2019 15/01/2022 $ 600,000 VDF VN$ 480,000 CP VN$ 120,000
Cordial Compañía Financiera S.A. 21 24/06/2019 15/06/2022 $ 1,000,000 VDF VN$ 780,000 CP VN$ 220,000
Cordial Compañía Financiera S.A. 22 13/11/2019 15/01/2021 $ 571,560 VDF VN$ 469,260 CP VN$ 102,300
Micro Lending S.A.U. III 08/06/2011 12/10/2016 $ 39,779 VDF TV
A VDF B VN$ 31,823 CP VN$ 1,592
Micro Lending S.A.U. IV 01/09/2011 29/06/2017 $ 40,652 VDF TV
A VDF B VN$ 32,522 CP VN$ 1,626
Micro Lending S.A.U. XVIII 01/12/2017 15/10/2022 $ 119,335 VDF TV
A VDF
TV B VN $ 89,501 CP VN$ 22,543
F-19
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of ~~Argentine~~ pesos)
The Group controls a structured entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Structured entities are consolidated from the date on which the control is transferred to the Group. They are deconsolidated from the date that control ceases.
As for financial trusts, the Group has evaluated the following:
• The purpose and design of the trust
• Identification of relevant activities of the trust
• Decision-making process on these activities
• If the Group has the power to direct the relevant activities of the trust
• If the Group is exposed to, or has rights to, variable returns from its involvement with the trust
• If the Group has ability to affect those returns through its power over the trust
In accordance with the aforementioned, the Group controls such financial trusts and, therefore, such structured entities have been consolidated.
The following chart details the assets and liabilities of Structured Entities that have been consolidated by the Group as of December 31, 2020 and 2019:

December 31,

2017

2016

ASSETS

Cash and due from banks

Cash

Ps.
3,039,001

Ps.
1,879,885

Financial institutions and correspondents

Argentine Central Bank (Note 17)

7,083,631

5,736,955

Other local financial institutions (Note 17)

32,582

151,252

Foreign (Note 17)

924,137

378,633

Other

50,124

19,407

Ps.
11,129,475

Ps.
8,166,132

Government and corporate securities (Note 5)

Holdings of trading securities

1,187,196

125,243

Unlisted Government securities

508,589

818,853

Investments in listed corporate securities

38,624

1,895

Securities issued by the Argentine Central Bank

13,611,627

1,414,053

Ps.
15,346,036

Ps.
2,360,044

Loans (Note 6)

To the non-financial public sector

32,607

4,306

To the financial sector

Interbank loans (Call money loans granted)

30,000

25,000

Other loans to domestic financial institutions (Note 17)

379,466

419,456

Accrued interest, adjustments and exchange rate differences receivable

9,900

28,958

To the non-financial private sector and foreign residents

Overdrafts

3,616,843

3,110,097

Promissory notes

15,494,647

9,426,568

Mortgage loans

1,549,765

78,057

Automobile and other secured loans

313,724

65,076

Personal loans

14,818,163

9,916,776

Credit card loans

7,966,037

6,678,578

Foreign trade loans

11,215,752

5,311,475

Other loans

492,496

283,881

Accrued interest, adjustments and exchange rate differences receivable

1,397,740

773,961

Documented interest

(829,086
)
(324,795
)
Other

(83
)
(1,738
)
Less: Allowances (Note 7)

(1,533,598
)
(899,147
)

Ps.
54,954,373

Ps.
34,896,509

Other receivables from financial transactions (Note 8)

Argentine Central Bank

855,261

535,351

Amounts receivable for spot and forward sales pending settlement (Note 8)

3,374,940

4,745

Securities receivable under spot and forward purchases pending settlement (Note 8)

56,781

594,730

Unlisted corporate bonds

66,619

29,166

Balances from forward transactions without delivery of underlying asset pending settlement

26,916

28,304

Other (Note 8)

2,191,205

2,586,247

Less: Allowances (Note 7)

(10,326
)
(5,807
)

Ps.
6,561,396

Ps.
3,772,736

12/31/2020(i) 12/31/2019
Assets
Loans - 2,170,985
Financial assets - 148,174
Other assets - 397,110
Total Assets - 2,716,269
Liabilities
Financial liabilities - 1,939,295
Other liabilities - 56,675
Total Liabilities - 1,995,970

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-2

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Balance Sheet — Continued~~
~~As of December 31, 2017 and 2016~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

ASSETS (Continued)

Receivables from financial leases

Receivables from financial leases

Ps.
2,507,649

Ps.
1,516,227

Accrued interest and adjustments pending collection

36,908

26,882

Less: Allowances (Note 7)

(25,356
)
(15,254
)

2,519,201

Ps.
1,527,855

Unlisted equity investments (Note 9)

Other

1,003

3,732

Less: Allowances (Note 13)

(269
)
(231
)

Ps.
734

Ps.
3,501

Miscellaneous receivables

Minimum presumed income tax — Tax credit (Note 20)

26,183

8,408

Other (Note 8)

1,801,253

1,139,203

Less: Allowances (Note 13)

(50,492
)
(37,295
)

Ps.
1,776,944

Ps.
1,110,316

Premises and equipment, net (Note 10)

Ps.
694,431

Ps.
621,575

Miscellaneous assets, net (Note 11)

Ps.
612,264

Ps.
425,501

Intangible assets

Goodwill (Note 12.1)

22,043

31,475

Other intangibles (Note 12.2)

302,458

253,987

Ps.
324,501

Ps.
285,462

Unallocated items

51,923

36,411

Total Assets

Ps.
93,971,278

Ps.
53,206,042

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-3

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Balance Sheet — Continued~~
~~As of December 31, 2017 and 2016~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

LIABILITIES

Deposits

Non-financial public sector

Ps.
6,171,661

Ps.
2,587,253

Financial sector

15,702

9,326

Non-financial private sector and foreign residents

Current accounts

5,679,805

4,361,405

Savings accounts

29,578,994

13,205,937

Time deposits

13,014,886

11,677,322

Investment accounts

255,000

375,000

Other

1,328,837

3,510,701

Accrued interest and exchange rate differences payable

442,142

170,920

Ps.
56,487,027

Ps.
35,897,864

Other liabilities from financial transactions

Argentine Central Bank — Other

6,514

4,966

Banks and international institutions (Note 14)

2,783,270

703,010

Unsubordinated negotiable obligations (Note 15.1)

8,307,202

1,966,936

Amounts payable for spot and forward purchases pending settlement (Note 8)

25,275

592,386

Securities to be delivered under spot and forward sales pending settlement (Note 8)

3,788,545

29,979

Loans from domestic financial institutions (Note 14)

620,800

983,823

Other (Note 8)

2,602,566

2,132,925

Accrued interest and exchange rate differences payable

309,182

100,809

Ps.
18,443,354

Ps.
6,514,834

Miscellaneous liabilities

Directors’ and Statutory Auditors’ fees

1,743

1,534

Other (Note 8)

3,056,310

2,180,694

Ps.
3,058,053

Ps.
2,182,228

Provisions (Note 13)

80,163

63,252

Subordinated negotiable obligations (Note 15.2)

685,873

1,378,758

Unallocated items

60,513

134,158

Non-controlling interests (Note 28)

11,497

103,397

Total Liabilities

Ps.
78,826,480

Ps.
46,274,491

SHAREHOLDERS’ EQUITY

15,144,798

6,931,551

Total Liabilities and Shareholders’ Equity

Ps.
93,971,278

Ps.
53,206,042

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-4

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Statement of Income~~
~~As of December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

2015

Financial income

Interest on cash and due from banks

191

—

—

Interest on loans granted to the financial sector

90,151

73,754

9,173

Interest on overdrafts

1,162,923

996,571

594,315

Interest on promissory notes

2,479,741

1,906,421

1,400,099

Interest on mortgage loans

24,184

7,275

10,014

Interest on automobile and other secured loans

30,916

17,271

32,678

Interest on credit card loans

1,802,522

1,733,606

1,289,386

Interest on financial leases

413,029

329,550

178,219

Interest on other loans

6,281,543

3,715,110

2,186,064

Income from government and corporate securities

2,373,060

1,241,554

689,472

Interest on other receivables from financial transactions

192

217,662

38,066

Income from options

—

—

483

Consumer price index adjustment (“CER”)

85,617

1,724

374

Exchange rate differences on gold and foreign currency

250,758

367,436

44,735

Other (Note 19)

499,844

186,645

268,666

Ps.
15,494,671

Ps.
10,794,579

Ps.
6,741,744

Financial expenses

Interest on current account deposits

637,696

—

—

Interest on savings account deposits

3,702

4,639

4,830

Interest on time deposits

1,982,098

2,803,306

2,168,344

Interest on interbank loans (call money loans)

28,720

31,173

18,933

Interest on other loans from the financial sector

180,160

309,462

137,982

Interest on other liabilities from financial transactions

128,237

128,027

266,760

Interest on subordinated obligations

325,961

267,542

81,282

Other interest

1,651,228

401,079

56,404

Consumer price index adjustment (CER)

11,001

920

276

Contributions made to Deposit Insurance Fund

82,721

87,619

180,704

Other (Note 19)

1,162,764

832,758

470,535

Ps.
6,194,288

Ps.
4,866,525

Ps.
3,386,050

Gross financial margin - gain

9,300,383

5,928,054

3,355,694

Loan loss provisions (Note 7)

1,820,169

1,057,637

543,844

Services fee income

In relation to lending transactions

765,006

515,353

384,047

In relation to deposits transactions

1,429,671

922,403

678,531

Other commissions

198,136

136,362

77,071

Other (Note 19)

2,580,459

1,953,398

1,696,059

Ps.
4,973,272

Ps.
3,527,516

Ps.
2,835,708

Services fee expense

Commissions

787,425

544,044

365,847

Other (Note 19)

708,423

536,616

412,645

Ps.
1,495,848

Ps.
1,080,660

Ps.
778,492

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-5

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Statement of Income - Continued~~
~~For the years ended December 31, 2016, 2015 and 2014~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

2015

Administrative expenses

Personnel expenses

Ps.
5,475,680

Ps.
3,859,525

Ps.
2,767,111

Directors’ and statutory auditors’ fees

80,862

73,894

59,475

Other professional fees

426,204

286,507

186,586

Advertising and publicity

272,769

226,350

165,413

Taxes

615,896

452,081

268,520

Depreciation of premises and equipment (Note 10)

118,594

81,558

56,637

Amortization of other intangibles (Note 12.2)

128,875

111,284

92,431

Other operating expenses

1,034,532

847,218

584,341

Other

237,210

121,864

80,889

Ps.
8,390,622

Ps.
6,060,281

Ps.
4,261,403

Subtotal - Income from financial transactions

Ps.
2,567,016

Ps.
1,256,992

Ps.
607,664

Income from insurance activities

479,061

606,143

175,947

Miscellaneous income

Results from equity investments

26,099

—

3

Default interests

92,739

82,142

51,907

Loans recovered and allowances reversed

167,844

130,987

60,199

Other (Note 19)

257,611

216,755

255,056

Result from discontinued operations

1,549

—

—

Ps.
545,842

Ps.
429,884

Ps.
367,165

Miscellaneous losses

Results from equity investments

—

4,996

—

Default interests and charges paid to the Argentine Central Bank

4,164

1,598

176

Loan loss provisions for miscellaneous receivables and other provisions

44,796

76,627

23,863

Depreciation and losses from miscellaneous assets (Note 11)

11,184

7,740

7,311

Amortization of goodwill (Note 12.2)

9,222

9,295

9,302

Other (Note 19)

307,114

358,690

172,775

Ps.
376,480

Ps.
458,946

Ps.
213,427

Non-controlling interests result

Ps.
(5,897
)
Ps.
(22,166
)
Ps.
(16,080
)

Income before tax

3,209,542

1,811,907

921,270

Income tax (Note 20)

Ps.
(772,483
)
Ps.
(500,603
)
Ps.
(247,161
)

Net Income for the fiscal year

Ps.
2,437,059

Ps.
1,311,304

Ps.
674,109

Basic earnings per share

6.20

4.10

4.42

Diluted earnings per share

6.20

4.10

4.42

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-6

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Statement of Changes in Shareholders’ Equity~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos)~~

Contribution from shareholders

Reserves

Total
Shareholders’

Capital Stock

Paid-in Capital

Legal

Other

Retained earnings

Equity

Balance at December 31, 2014

Ps.
124,485

Ps.
91,543

Ps.
24,897

Ps.
1,103,141

Ps.
362,920

Ps.
1,706,986

Distribution of retained earnings by the shareholders’ meeting on April 30,2015

Other Reserves

—

—

—

355,535

(355,535
)
—

Dividend distribution

—

—

—

—

(7,385
)
(7,385
)
Capitalization of retained earnings

124,485

—

—

(124,485
)
—

—

Net Income for the year

—

—

—

—

674,109

674,109

Balance at December 31, 2015

Ps.
248,970

Ps.
91,543

Ps.
24,897

Ps.
1,334,191

Ps.
674,109

Ps.
2,373,710

Distribution of retained earnings by the shareholders’ meeting on April 19, 2016

Legal Reserves

—

—

24,897

—

(24,897
)
—

Other Reserve

—

—

—

624,050

(624,050
)
—

Dividend distribution

—

—

—

—

(25,162
)
(25,162
)
Contribution from shareholders

114,807

3,156,892

—

—

—

3,271,699

Net Income for the year

—

—

—

—

1,311,304

1,311,304

Balance at December 31, 2016

Ps.
363,777

3,248,435

49,794

1,958,241

1,311,304

6,931,551

Distribution of retained earnings by the shareholders’ meeting on April 27, 2017

Legal Reserves

—

—

22,961

—

(22,961
)
—

Other Reserve

—

—

—

1,222,843

(1,222,843
)
—

Dividend distribution

—

—

—

—

(65,500
)
(65,500
)
Contribution from shareholders

92,945

5,748,743

—

—

—

5,841,688

Net Income for the year

—

—

—

—

2,437,059

2,437,059

Balance at December 31, 2017

Ps.
456,722

8,997,178

72,755

3,181,084

2,437,059

15,144,798

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-7

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Statement of Cash Flows~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

2015

Changes in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Ps.
9,688,554

Ps.
7,616,502

Ps.
4,046,180

Cash and cash equivalents at the end of the year

25,421,865

9,688,554

7,616,502

Net increase in cash and cash equivalents

Ps.
15,733,311

Ps.
2,072,052

Ps.
3,570,322

Causes of changes in cash and cash equivalents

Cash Flow from operating activities

Net (payments)/collections related to:

Government and corporate securities

Ps.
2,140,023

Ps.
(947,998
)
Ps.
744,287

Loans

To the financial sector

144,199

(217,926
)
(169,047
)
To the non-financial public sector

(25,002
)
5,951

5,747

To the non-financial private sector and foreign residents

(9,702,001
)
(4,863,859
)
(184,866
)
Other receivables from financial transactions

(1,880,356
)
(67,871
)
76,259

Receivables from financial leases

(551,434
)
(60,992
)
(219,970
)
Deposits

To the financial sector

6,376

(241,655
)
100,164

To the non-financial public sector

3,244,458

1,352,419

(314,813
)
To the non-financial private sector and foreign residents

14,371,284

7,994,649

4,827,512

Other liabilities from financial transactions

Interbank loans (call money loans received)

(178,925
)
119,032

(139,115
)
Other (except for liabilities included in Financing Activities)

727,743

(589,851
)
(417,149
)
Collections related to income from services

5,789,970

4,436,397

3,040,982

Payments related to expenses for services

(1,775,300
)
(1,279,764
)
(902,340
)
Administrative expenses paid

(7,537,254
)
(5,340,482
)
(3,608,264
)
Payment of organization and development expenses

(156,309
)
(97,184
)
(100,886
)
Net collections of penalty interest

92,739

82,142

51,907

Differences deriving from court resolutions paid

(4,918
)
(1,480
)
—

Other (payments) / collections related to miscellaneous income and losses

(10,269
)
(100,958
)
23,913

Net payments related to other operating activities

(1,088,322
)
(163,934
)
(73,512
)
Income tax/Minimum Presumed Income Tax paid

(461,678
)
(310,983
)
(290,971
)
Net cash provided by / (used in) operating activities

Ps.
3,145,024

Ps.
(294,347
)
Ps.
2,449,838

Cash Flow from investing activities

Net (payments) / collections related to bank premises and equipment

(175,841
)
(494,253
)
35,742

Net (payments) / collections related to miscellaneous assets

(145,140
)
35,520

(220,287
)
Payments for sales of equity investments

33,112

(21
)
—

Other collections / (payments) for investing activities

5,053

(18,510
)
(4,289
)
Net cash used in investing activities

Ps.
(282,816
)
Ps.
(477,264
)
Ps.
(188,834
)
F-8

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Consolidated Statement of Cash Flows~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos)~~

December 31,

2017

2016

2015

Cash Flow from financing activities

Net collections / (payments) related to:

Unsubordinated negotiable obligations

Ps.
5,288,294

Ps.
371,069

Ps.
638,722

Argentine Central Bank

1,548

1,843

2,092

International banks and institutions

2,098,285

568,385

74,445

Subordinated negotiable obligations

(1,058,813
)
(123,811
)
(74,684
)
Financing received from Argentine financial institutions

(228,665
)
(1,686,277
)
254,113

Contributions from shareholders

5,841,688

3,301,137

—

Payment of dividends

(65,500
)
(25,503
)
(7,385
)
Other payments from Financing Activities

(7,256
)
(19,757
)
(16,616
)
Net cash provided by financing activities

Ps.
11,869,581

Ps.
2,387,086

Ps.
870,687

Financial income on cash and cash equivalents (including interest and monetary results)

1,001,522

456,577

438,631

Net increase in cash and cash equivalents

Ps.
15,733,311

Ps.
2,072,052

Ps.
3,570,322

~~The accompanying notes are an integral part of these consolidated financial statements~~
F-9

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
1.~~Business of the Company~~
Grupo Supervielle S.A. (“Grupo Supervielle”, the “Company” or the “Group”) is a financial services holding company organized under the laws of Argentina that conducts its business through its subsidiaries, providing banking services, proprietary brand credit card services, personal loans, insurance and other services. The detail subsidiaries of the Company and respective ownership is included in Note 2.
2.~~Basis of Consolidation~~
~~Grupo Supervielle’s consolidated financial statements~~
(i) Structured entities outstanding as of December 31, ~~2017~~2020 are in the process of being liquidated so they were not consolidated.
1.4. Transactions with non-controlling interest
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognized in a separate reserve within equity attributable to owners of the Group.
1.5. Segment Reporting
An operating segment is defined as a component of an entity or a Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), and whose financial information is evaluated on a regular basis by the chief operating decision maker.
Operating segments are reported in a manner consistent with the internal reporting provided to:
(i)             Key personnel of the senior management who account for the main authority in operating decision-making processes and is responsible for allocating resources and assessing the performance of operating segments; and
(ii)            The Board, who is in charge of making strategic decisions of the Group.
F-20
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.6. Foreign currency translation
(a) Functional and ~~2016~~presentation currency
Figures included in the Consolidated Financial Statements of each of the Group’s entities are measured using the functional currency, that is, the currency of the primary economic environment in which the entity operates. Consolidated Financial Statements are presented in Argentine pesos, which is the functional and presentation currency of the Group.
(b) Transactions and balances
Transactions in foreign currency are translated into the functional currency using the exchange rates published by the Argentine Central Bank at the dates of the transactions. Gains and losses in foreign currency resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currency at year end exchange rates, are recognized in the income statement, under “Exchange rate differences on gold and foreign currency”, except when such items are deferred in the shareholders’ equity for transactions classified as cash flow hedges, when applicable.
As of December 31, 2020 and 2019, the balances in US dollars were converted at the reference exchange rate determined by the Argentine Central Bank. In the case of foreign currencies other than US dollars, they have been converted to this currency using the rexchange rates derived from repo transactions reported by the Argentine Central Bank.
1.7. Cash and due from banks
Cash and due from Banks includes available cash and unrestricted deposits held in Banks, which are short-term liquid instruments and have original maturities of less than three months.
Assets disclosed under cash and due from Banks are measured at amortized cost which is close to its fair value.
Cash and Cash equivalents include cash and highly liquid short-term securities with an original maturity of less than three-months according to the following detail:
Item 12/31/2020 12/31/2019 12/31/2018
Cash and due from banks 36,674,869 35,945,335 70,551,283
Debt securities at fair value through profit or loss 1,868,604 773,961 26,458,009
Money Market Funds(*) 923,053 1,313,597 1,372,931
Cash and cash equivalents 39,466,526 38,032,893 98,382,223
(*) Included within the “other financial assets” line in the statement of financial position
The Group invests in money market funds (MMF) whose investments qualify individually as cash and cash equivalents. An MMF is an open-ended mutual fund that invests in short-term debt instruments (typically one day to one year) such as treasury bills, certificates of deposit, bonds, government gilts and commercial papers.
These MMF have to comply with strict fund policies such as:
- Controls ensuring constant net asset value or linear performance to limit volatility supported by actual performance;
- Returns benchmarked to short-term money market interest rates;
- Investment in high-quality instruments with high liquidity and a maximum weighted average maturity of a few weeks; and
- Highly diversified portfolio.
Reconciliation between balances as appearing on the Statement of Financial Position and the items in the Statement of Cash Flow:
Items 12/31/2020 12/31/2019 12/31/2018
Cash and due from Banks
As per Statement of Financial Position 36,674,869 35,945,335 70,551,283
F-21
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Items 12/31/2020 12/31/2019 12/31/2018
As per the Statement of Cash Flows 36,674,869 35,945,335 70,551,283
Debt securities at fair value through profit or loss
As per Statement of Financial Position 9,871,903 773,961 31,649,050
Securities not considered as cash equivalents (8,003,299 ) - (5,191,041 )
As per the Statement of Cash Flows 1,868,604 773,961 26,458,009
Money Market Funds
As per Statement of Financial Position – Other financial assets 4,285,221 2,854,686 3,556,206
Other financial assets not considered as cash equivalents (3,362,168 ) (1,541,089 ) (2,183,275 )
As per the Statement of Cash Flow 923,053 1,313,597 1,372,931
Reconciliation of liabilities from financing activities at December 31, 2020, 2019 and 2018 is as follows:
Cash Flows
Items 12/31/2019 Inflows Outflows Other non-cash movements 12/31/2020
Unsubordinated debt securities
8,286,163 2,653,805 (6,785,701 ) 72,481 4,226,748
Subordinated debt securities
2,886,028 - (1,774,264 ) 28,705 1,140,469
Financing received from the Argentine Central Bank and other financial institutions 12,276,610 14,873,400 (21,297,718 ) - 5,852,292
Lease Liabilities 1,288,420 - (1,366,164 ) 1,259,442 1,181,698
Total 24,737,221 17,527,205 (31,223,847 ) 1,360,628 12,401,207
Cash Flows
Items 12/31/2018 Inflows Outflows Other non-cash movements 12/31/2019
Unsubordinated debt securities
19,491,854 11,452,532 (23,641,629 ) 983,406 8,286,163
Subordinated debt securities
2,898,105 - (1,147,619 ) 1,135,542 2,886,028
Financing received from the Argentine Central Bank and other financial institutions 16,823,037 150,529,472 (155,072,118 ) (3,781 ) 12,276,610
Lease Liabilities - - (1,703,937 ) 2,992,357 1,288,420
Total 39,212,996 161,982,004 (181,565,303 ) 5,107,524 24,737,221
Cash Flows
Items 12/31/2017 Inflows Outflows Other non-cash movements 12/31/2018
Unsubordinated debt securities
26,558,104 6,429,136 (11,619,542 ) (1,875,844 ) 19,491,854
Subordinated debt securities 2,120,799 - (19,976 ) 797,282 2,898,105
Financing received from the Argentine Central Bank and other financial institutions 10,902,349 109,529,169 (105,180,217 ) 1,571,736 16,823,037
Total 39,581,252 115,958,305 (116,819,735 ) 493,174 39,212,996
1.8. Financial Instruments
Initial Recognition and measurement
Financial assets and financial liabilities are recognized when the entity becomes a party to the contractual provisions of the instrument. Purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset.
At initial recognition, the Group measures a financial asset or liability at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees and commissions. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in profit or loss. Immediately after initial recognition, an expected credit loss allowance (ECL) is recognized for financial assets measured at amortized cost and investments in debt instruments measured at fair value through other comprehensive income, as described in note 1.12, which results in an impariment loss being recognized in profit or loss when an asset is newly originated.
F-22
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the Group recognizes the difference as follows:
- When the fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation technique that only uses data from observable markets, the difference is recognized as a gain or loss.
- In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is determined individually. It is either amortized over the life of the instrument until its fair value can be determined using market observable inputs, or realized through settlement.
Financial Assets
a – Debt Instruments
Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as loans, government and corporate bonds and, accounts receivables purchased from clients in non-recourse factoring transactions.
Classification
Pursuant to IFRS 9, the Entity classifies financial assets depending on whether these are subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss, on the basis of:
a) the Group’s business model for managing financial assets, and;
b) the cash-flows characteristics of the financial asset
Business Model
The business model reflects how the Group manages a group of financial assets in order to generate cash flows. That is, whether the Group’s objective is solely to collect the contractual cash flows from the assets (measured at amortized cost) or is to collect both the contractual cash flows and cash flows arising from the sale of assets (measured at fair value through other comprehensive income). If neither of these is applicable, then the financial assets are classified as part of other business model and measured at fair value through profit or loss.
The business model of the Group does not depend on the management’s intentions for an individual instrument. Consequently, such business model is not assessed instrument by instrument, but at a higher aggregated level.
The Group reclassifies an instrument when and only when its business model for managing those assets has changed.
Therefore, this business model is not evaluated instrument by instrument, but at a higher level of aggregated portfolios and is based on observable factors such as:
- How the business model’s return is evaluated and how financial assets held in that business model are evaluated and reported to the Group’s key personnel.
- The risks affecting the business model’s return (and financial assets held in that business model) and, particularly, the way these risks are managed.
- How the Group’s key personnel is compensated (for instance, if salaries are based on the fair value of the assets managed or on contractual cash flows collected)
- The expected frequency, the value, moment and reasons of sales are also important aspects.
The evaluation of the business model is based on reasonably expected scenarios, irrespective of worst-case or stress case scenarios. If after the initial recognition cash flows are realized in a different manner from the original expectations, the Group will not change the classification of the remaining financial assets held in that business model, but it will consider such information for evaluating recent purchases or originations. An instrument’s reclassification is only made when, and only when, an entity changes its business model for managing financial assets
F-23
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Contractual Cash Flow Characteristics
Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell, the Group assesses whether the financial instruments’ cash flows represent solely payments of principal and interest. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset shall be classified and measured at fair value through profit or loss.
Based on the aforementioned, there are three different categories of Financial Assets:
i) Financial assets at amortized cost.
Financial assets shall be measured at amortized cost if both of the following conditions are met:
(a) the financial asset is held for collection of contractual cash flows, and
(b) the assets’s cash flows represent solely payments of principal and interest.
The amortized cost is the amount at which it is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.
ii) Financial assets at fair value through other comprehensive income:
Financial assets shall be measured at fair value through other comprehensive income when:
(a) the financial asset is held for collection of contractual cash flows and for selling financial assets and
(b) the ~~years ended~~ asset’s cash flows represent solely payments of principal and interest.
These instruments shall be initially recognized at fair value plus or minus transaction costs that are incremental and directly attributable to the acquisition or issue of the instrument, and subsequently measured at fair value through other comprehensive income. Gains and losses arising out of changes in fair value shall be included in other comprehensive income within a separate component of equity. Impairment gains or losses or reversal, interest revenue and foreign exchange gains and losses on the instrument’s amortized cost are recognized in profit or loss. At the time of sale or disposal, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to the income statement. Interest income from these financial assets is determined using the effective interest rate method.
iii) Financial assets at fair value through profit or loss:
Financial assets at fair value through profit or loss comprise:
- Instruments held for trading
- Instruments specifically designated at fair value through profit or loss
- Instruments with contractual cash-flows that do not represent solely payments of principal and interest
These financial instruments are initially recognized at fair value and any change in fair value measurement is charged to the income statement.
The Group classifies a financial instrument as held for trading if such instrument is acquired or incurred for the main purpose of selling or repurchasing it in the short term, or it is part of a portfolio of financial instruments which are managed together and for which there is evidence of short-term profits or if it is a derivative financial instrument not designated as a hedging instrument. Derivatives and trading securities are classified as held for trading and are measured at fair value.
F-24
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
b – Equity Instruments
Equity instruments are instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets.

Such instruments are measured at fair value through profit and loss, except where the Group’s management has elected, at initial recognition, to irrevocably designate an equity investment at fair value through other comprehensive income. This option is available when instruments are not held for trading. The gains or losses of these instruments are recognized in other comprehensive income and are not subsequently reclassified to profit or loss, including on disposal. Dividends that result from such instrument will be charged to income when the Group’s right to receive payments is established.
Derecognition of Financial Assets
The Group derecognizes financial assets only when any of the following conditions are met:
1. The rights on the financial asset cash flows have expired; or
2. The financial asset is transferred pursuant to the requirements in 3.2.4 of IFRS 9.
The Group derecognizes financial assets that have been transferred only when the following characteristics are met:
1. The contractual rights to receive the cashflows from the assets have expired or when they have been transferred and the Group transfers substantially all the risks and rewards of ownership.
2. The Entity retains the contractual rights to receive cash flows from assets but assumes a contractual obligation to pay those cash flows to oher entities and transfers subtantially all of the risks and rewards. These transactions result in derecognition if the Group:
a. Has no obligation to make payments unless it collects amounts from the assets;
b. Is prohibited from selling or pledging the financial assets;
c. Has an obligation to remit any cash it collects from the assets without material delay.
Write Off of Financial Assets
The Group reduces the gross carrying amount of a financial asset when it has no reasonable expectations of recovering a financial asset in its entirety of a portion thereof. A write-off constitues a derecognition event.
Financial Liabilities
Classification
The Group classifies its financial liabilities as subsequently measured at amortized cost using the effective rate method, except for:
- Financial liabilities at fair value through profit or loss.
- Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition.
- Financial guarantee contracts and loan commitments.
Financial Liabilities valued at fair value through profit or loss: At initial recognition, the Group can designate a liability at fair value through profit or loss if it reflects more appropriately the financial information because:
- The Group eliminates or substantially reduces an accounting mismatch in measurement or recognition inconsistency; or
- if financial assets and financial liabilities are managed and their performances assessed on a fair value basis according to an investment strategy or a documented risk management; or

GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
- if a host contract contains one or more embedded derivatives and the Group has opted for designating the entire contract at fair value through profit or loss.
Financial guarantee contract: A guarantee contract is a contract which requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument.
Financial guarantee contracts and loan commitments are initially measured at fair value and subsequently measured at the higher of the amount of the loss allowance and the unaccrued premium at year end.
Derecognition of financial liabilities
The Entity derecognizes financial liabilities when they are extinguished; this is, when the obligation specified in the contract is discharged, cancelled or expires.
When an existing financial liability is exchanged by another of the same borrower under significantly different conditions, or the conditions are significantly modified, such exchange or modification is treated as a derecognition of the original liability and a new liability is recognized, the difference between the value in books of the initial financial liability and the consideration paid is recognized in the Consolidated Income Statement. When the renegotiation conditions are not significantly different, or the conditions are not significantly modified, the flows of the modified financial liabilities are discounted at the rate of the original contract.
1.9. Derivatives
Derivatives are initially recognized at their fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value.
All derivative instruments are recognised as assets when their fair value is positive, and as liabilities when their fair value is negative. Any change in the fair value of derivative instruments is included in the income statement.
The Group has not applied hedge accounting in these consolidated financial statements.
1.10. Repo Transactions
Reverse Repo Transactions
According to the derecognition principles set out in IFRS 9, these transactions are treated as secured loans since the risk has not been transferred to the counterparty. Loans granted in the form of reverse repo agreements are accounted for under “Repo Transactions”, classified by counterparty and also by the type of assets received as collateral. At the end of each month, accrued interest income is charged under “Repo Transactions” with its corresponding offsetting entry in “Interest Income.” The assets received and sold by the Group are derecognized at the end of the repo transaction, and an in-kind liability is recorded to reflect the obligation to deliver the security disposed of.
Repo Transactions
Loans granted in the form of repo transactions are accounted for under “Repo Transactions”, classified by counterparty and also by the type of asset pledged as collateral. In these transactions, when the recipient of the underlying asset becomes entitled to sell it or pledge it as collateral, it is reclassified to “Financial assets pledged as collateral”. At the end of each month, these assets are measured according to the category they had before they were subject to the repo transaction, and results are charged against the applicable accounts, depending on the type of asset. At the end of each month, accrued interest expense is charged under “Repo Transactions” with its corresponding offsetting entry in “Interest-Expenses”.
F-26
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.11. Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses (“ECL”) associated to its financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, loan commitments and financial guarantee contracts that are not measured at fair value.
The impairment for expected credit losses is recorded with a charge to the consolidated income statement for the period in which the impairment arises. In the event of occurrence, the recoveries of previously recognized impairment losses are recorded in the consolidated income statement for the period in which the impairment no longer exists or is reduced.
In the case of assets measured at fair value through other comprehensive income, the changes in the fair value due to expected credit losses are charged in the consolidated income statement of the year where the change happened, other movements in the fair value of the instrument are reflected in other comprehensive income.
As a rule, the expected credit loss is estimated as the difference between the contractual cash flows to be recovered and the expected cash flows discounted using the original effective interest rate. In the case of purchased or originated credit-impaired assets, this difference is discounted using the effective interest rate adjusted by credit rating.
Depending on the classification of financial instruments, which is mentioned in the following sections, the expected credit losses may be over 12 months or during the life of the financial instrument:
- 12-month expected credit losses: arising from the potential default events, as defined in the following sections that are estimated to be likely to occur within the 12 months following the reporting date. These losses will be associated with financial assets classified in Stage 1.
- Lifetime Expected credit losses are those arising from the potential default events that are likely to occur throughout the life of the financial instruments. These losses are associated with financial assets classified in Stage 2 or Stage 3.
With the purpose of estimating the expected life of the financial instrument all the contractual terms are taken into account (e.g. duration, purchase options, etc.), for most financial instruments the contractual period (including extension options) is the maximum period considered to measure expected credit losses. In the case of revolving credit facilities (e.g.: credit cards), the expected life is estimated through quantitative analyses to determine the period during which the entity is exposed to credit risk, taking into account the effectiveness of management procedures that mitigate such exposure (e.g. the ability to unilaterally cancel such financial instruments, etc.).
1.11.1 Financial instruments presentation
For the purposes of estimating ECL, and in accordance with its internal policies, the Group classifies its financial instruments (financial assets, loan commitments and guarantees) measured at amortized cost or fair value through other comprehensive income in one of the following categories:
- Normal Risk ("Stage 1"): includes all instruments that have not experienced a significant increase in credit risk since initial recognition and is not purchased or originated credit impaired.
- Normal risk under watchlist ("Stage 2"): includes all instruments that, have experienced significant increases in credit risk since initial recognition but are not yet deemed credit-impaired.
- Doubtful Risk (“Stage 3"): includes financial instruments, overdue or not, which are considered to be credit impaired. Likewise, loan commitmennts or financial guarantees whose payment is probable and their recovery doubtful are considered to be in Stage 3.
F-27
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The following chart summarizes the impairment requirements pursuant to IFRS 9 (for financial assets that are not purchased or originated credit-impaired):
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)
12 months ECL Lifetime ECL
The following describes the Group´s judgements and assumptions for ECL measurement:
1.11.2 Significant increase in credit risk
The Group considers a financial instrument to have experienced a significant increase in credit risk when any of the following conditions exist:
Personal and Business Banking
Portfolios between 31 and 90 days past due
The credit origination score has deteriorated by more than 30% with respect to the current performance score
Score of behavior less than cut off (1)
Loans and credit cards refinanced under Decree No. 260/2020 Coronavirus (COVID-19) (see Note 34) that were impaired at the time of refinancing. Or, loans that were not impaired at the time of refinancing, but deferred more than 5 installments.
Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).
(1) Renta Higher income : Segment plan sueldo (payrroll customers) >=400, Segment Open Market >=700 y Segment Senior Citizens >=610
Rest: Segment plan sueldo (payrroll customers) >=500, Segment Open Market >=700 y Segmento Senior Citizens >=610
Corporate Banking
Portfolios between 31 and 90 days past due
Maximum Argentine Central Bank a situation equal to 2
Credit Ratings C (Probability of default higher than 30%)
Its rating deteriorated by more than two notes from its credit approval rating.
Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).
Consumer Finance:
Portfolios between 31 and 90 days past due.
Entrepreneurs portfolio affected by the Sectorial Analysis (explained below).
Sectoral Analysis – Covid-19 Risk
In virtue of the fact that internal impairment models do not reflect properly Covid-19 impact on the local and global industries 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.
Finally, the different industries are classified into four types of risk. They are:
Low risk
Medium risk
High risk
Very high risk
F-28
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
This additional definition of a significant increase in credit risk has been applied for the SME and E&P segments, for the very high and high risk activities (only for the Single Firm portfolio):
Very high risk High risk
Construction Machinery & equipment
Tourism & Gastronomy Iron and steel industry
Real estate Home appliances
Entertainmet Sports
Passenger transport Textile
Professional services
The Group has considered that non collaterallized facilities of clients within the high risk activities are considered to have experienced a significant increase in credit risk, whereas all facilities of clients within the very high risk activities are considered to have experienced a significant increase of credit risk.
The impairment model in IFRS 9 applies to financial assets measured at amortized cost, debt instruments at fair value through other comprehensive income, lease receivables and loan commitments and financial guarantees that are not measured at fair value.
1.11.3 Individual and collective evaluation basis
Expected losses are estimated both in a collective and individual basis.
The Group´s individual estimation is aimed at calculating expected losses for significantly impaired loans. 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 carrying value of the instrument.
For expected credit loss provisions modelled on a collective basis, the Group has developed internal models. The grouping of exposures is performed on the basis of shared characteristics, such that risk exposures within group are homogeneous. In performing the grouping there must be sufficient information for the group to be statistically reliable .
The Group has identified three groupings: Personal and Business Banking, Corporate Banking and Consumer Finance, amongst these three segments the Group estimates parameters in a more granular way based on the shared risk characteristics
Credit risk features may consider the following factors, among others:
Group Parameter Grouping
Personal and Business Banking
Probability of Default
(PD)
Personal loans (1)
Credit card loans (1)
Mortgage loans
Refinancing
Other financings
Loss Given Default
(LGD)
Personal loans
Credit card loans
Overdrafts
Mortgage loans
Refinancing
Other financings
Corporate Banking
Probability of Default
(PD) (2)
Small companies
Medium companies
Big companies
Financial Area
Secured loans
F-29
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Group Parameter Grouping
Unsecured loans
Consumer Finance Probability of Default Credit cards loans
Refinancing
Cash loans
Cash consumptions and directed loans
CCF Automobile Loans
Tarjeta Automatica Personal loans
Loss Given Default Credit cards
Personal loans
Refinancing
CCF Automobile Loans
⁽¹⁾ For credit cards and personal loans, the Group includes an additional layer of analysis: senior citizens, high income, open market, high income payroll, non- high income open market, non-high income payroll, Personal and Business Banking, former senior cityzens and former payroll
⁽²⁾ Probability of default within Corporate Banking is calculated by grouping clients based on the client size for Stage 1 facilities. For Stage 2 and Stage 3, Probability of default is calculated including all segments of Corporate Banking due to the lack of materiality to form a larger group.
The credit risk characteristics used to group the instruments are, among others: type of instrument, debtor’s sector of activity, geographical area of activity, type of guarantee, aging of past due balances and any other factor relevant to estimating the future cash flows.
Grouping of financial instruments is monitored and reviewed on a regular basis by the Credit Risk and Stress Test Area.
1.11.4 Definition of default and impaired credit
The Group considers that a financial instrument is in default when such instrument entails one or more of the following criteria:
Personal and Business Banking
Financial instruments delinquent more than 90 days past due.
Corporate Banking
Financial instruments delinquent more than 90 days in past due.
Financial instruments with B.C.R.A. situation greater than or equal to 3.
Rating C or D.
Consumer Finance
Financial instruments more than 90 days past due.
These criteria are applied in a consistent manner to all financial instruments and are aligned with the internal definition of defaultused for the administration of credit risk. Likewise, such definition is consistently applied to define PD (“Probability of Default”), Exposure at Default (“EAD”) and Loss Given Default (“LGD”).
1.11.5 Measurement of Expected Credit Loss – Explanation of inputs, assumptions and calculation techniques
ECL is measured on a 12-month or lifetime basis, depending on whether a significant increase in credit risk has been recorded since initial recognition or whether an asset is considered to be credit-impaired. ECL are the discounted product of the Probability of Default (“PD”), Exposure at default (“EAD”) and Loss Given Default (“LGD”), defined as follows::
The PD represents the likelihood of a borrower defaulting on its financial obligation (pursuant to the “Definition of default and credit impaired” set forth in Note 1.11.4), either over the next 12 months or over the remaining lifetime (lifetime PD) of the obligation.
F-30
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
EAD is based on the amounts the Group expects to be owed at the time of default, over the next 12 months (12 months EAD) or the remaining lifetime (lifetime EAD). For example, for a revolving commitment, the Group includes the current drawn balance plus any further amount that is expected to be drawn up to the current contractual limit by the time of default, should it occur.
LGD represents the Group´s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty, seniority of claim, availability of collateral or other type of credit support. LGD is expressed as a percentage per unit of exposure at the time of default LGD is calculated on a 12-month or lifetime basis, where 12 month LGD is the percentage of loss expected to be made if the default occurs in the next 12 months and lifetime LGD is the percentage of loss expected to be made if the default occurs over the remaining expected lifetime of the loan.
ECL is determined by projecting PD, LGD and EAD for each future month and each individual exposure or collective segment. These three components are multiplied and adjusted for the likelihood of survival (that is, the exposure has not been prepaid or defaulted in an earlier month). This effectively calculates an ECL for each future month, which is then discounted back to the reporting date and summed. The discount rate used inthe ECL calculation is the original effective interest rate or an approximation thereof.
The Entity based its calculation of the ECL parameters on internal modelsthat were adapted in order to be compliant with IFRS 9.
The Group includes forward-looking information in its definition of PD, EAD and LGD. See Note 1.11.6 for the explanation of forward-looking information and its consideration in the calculation of ECL.
1.11.6 Forward-looking information considered in expected credit loss models
The evaluation of significant increase in credit risk and the calculation of ECL includes forward-looking information. The Group has performed historical analysis and identified key economic variables that impact credit risk and expected credit losses for each portfolio.
Forecasts of these economic variables (“base economic scenario”) are provided on a six-month basis by the Research team of the Group and provide the best estimate view of the economy over the the next 12 months. The impact of these economic variables on PD and LGD has been determined by performing statistical regression analysis to understand the impact changes in these variables have 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 weightings. The number of other scenarios is set based on the analysis of each major product type to ensure non linearities are captured.. The number of scenarios and their attributes are reassessed on a six-month basis, unless a change in the macroeconomic scenes requires a sooner reassessment.
As of January 1, 2020 and as of December 31, 2020, as for its portfolios, the Group concluded that three scenarios have properly captured non-linearities. Scenario weightings are determined by a combination of statistical analysis andexpert judgement analysis, taking into account a range of possible outcomes each chosen scenario is representative of. The assessment of significant increases in credit risk is performed using lifetime PD under each of the base and the other scenarios, multiplied by the associated scenario weighting, along with qualitative and backstop indicators (See Note 1.11.2). This determines if the financial instrument is in Stage 1, Stage 2 or Stage 3 and, hence, whether 12-month or Lifetime ECL should be recorded. As with any economic forecast, projections and probabilities of occurrence are subject to a high degree of uncertainty, and therefore actual results may be significantly different to those projected. The Group considers these forecasts to represent its best estimate of the possible outcomes and has analyzed the non-linearities and asymmetries within the different portfolios of the Group to establish that the chosen scenarios are appropriately representative of the range of possible scenarios.
F-31
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The most significant assumptions used to calculate ECL as of December 31, 2020 are as follows:
Parameter Industry / Segment Macroeconomic Indicator Scenario 1 Scenario 2 Scenario 3
Probability of Default Personal and Business Banking Open Market Inflation Rate 46,8% 41,3% 52,4%
Private Sector Wage 50,7% 55,7% 45,6%
Income Payroll Quantity of Private Sector Employment 5924 5928 5921
Private Sector Real Wage 2,7% 10,2% (4,5)%
Senior Citizens Inflation Rate 46,8% 41,3% 52,4%
Monthly Economic Activity Estimator 138 140 136
Corporate Banking All Interest Rate (4,6)% (3,8)% (5,5)%
Monthly Economic Activity Estimator 138 140 136
Consumer Finance CCF Private Sector Wage 50,7% 55,7% 45,6%
Monthly Economic Activity Estimator 138 140 136
CCF Automobile secured Private Sector Wage 50,7% 55,7% 45,6%
Inflation Rate 46,8% 41,3% 52,4%
Loss Given Default Supervielle Bank All Private Sector Wage 50,7% 55,7% 45,6%
Consumer Finance CCF Private Sector Wage 50,7% 55,7% 45,6%
CCF Automobile secured Private Sector Loans 64,1% 70,5% 57,7%
Private Sector Wage 50,7% 55,7% 45,6%
The following are weightings assigned to each scenario as of December 31, 2020:
Scenario 1 80 %
Scenario 2 10 %
Scenario 3 10 %
Sensitivity analysis
The chart below includes changes in ECL as of December 31, 2020 that would result from reasonably potential changes in the following parameters:
December 31, ~~2017, 2016~~2020
Reported ECL Allowance 8,424,714
Gross carrying amount 113,819,900
Reported Loss rate 7.40 %
ECL amount by scenarios
Favorable scenario 6,927,295
Unfavorable scenario 8,142,498
Loss Rate by scenarios
Favorable scenario 6.09 %
Unfavorable scenario 7.15 %
F-32
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.12. Leases
The group as lessor:
Operating leases
Leases where the lessor retains a substantial portion of the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of lease incentives) are recognized in profit or loss on a straight-line basis over the term of the lease. In addition, the Group recognizes the associated costs such as amortization and expenses.
The historical cost includes expenditures that are directly attributable to the acquisition of these items and those expenses are charged to profit or loss during the lease term.
The depreciation applied to the leased underlying assets is consistent with the one applied to similar assets’ group. In addition, the Group utilizes the criteria described in Note 1.18 to determine whether there is objective evidence that an impairment loss has occurred.
Finance leases
Finance leases are measured at the present value of the future lease payments using a discount rate determined at inception.
The difference between the gross receivable and the present value represents unearned financial income and is recognized during the lease term using the net investment method, which reflects a constant periodic rate of return.
Incremental costs directly attributable to negotiating and arranging the lease are included in the initial measurement of the lease and reduce the amount of income recognized during the lease term.
The Group utilizes the criteria described in Note 1.11 to determine whether there is objective evidence that an impairment loss has occurred, as for loans carried at amortized cost.
The group as lessee:
Accounting policy for leases in which the Group acts as a lessee is disclosed in Note 7.
1.13. Property, plant and ~~2015~~equipment
Property, plant and equipment is measured at historical cost less depreciation, except for land and buildings, where the Group adopted the revaluation model. The historical cost includes expenditure that is directly attributable to the acquisition or building of these items.
The subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost of the item can be measured reliably. The carrying amount of an asset is derecognized when replaced.
Repairs and maintenance expenses are charged to profit or loss when they are incurred.
Depreciation is calculated using the straight-line method, applying annual rates sufficient to extinguish the values of assets at the end of their estimated useful lives. In those cases in which an asset includes significant components with different useful lives, such components are recognized and depreciated as separate items.
The following chart presents the useful life for each item included in property, plant and equipment:
Property, plant and equipment Estimated useful
life
Buildings 50 Years
Furniture 10 Years
Machines and equipment 5 Years
Vehicles 5 Years
Others 5 Years
F-33
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The asset’s residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Increases in the carrying amounts arising on revaluation of land and buildings are recognized in other comprehensive income. Decreases that reverse previous increases of the same asset are first recognized in other comprehensive income to the extent of the remaining surplus attributable to the asset. All other decreases are charged to profit or loss.
Gains and losses on disposals are determined by comparing proceeds with carrying amount.
1.14. Investment properties
Investment properties are composed of buildings held for obtaining a rent or for capital appreciation or both, but is never occupied by the Group.
Investment properties are measured at its fair value, and any gain or loss arising from a change in the fair value is recognized in profit or loss. Investment properties are never depreciated. The fair value is determined using sales comparison approach prepared by the Group’s management considering a report of an independent valuation expert.
Investment properties under the cost approach reflect the amount that would be required to replace the service capacity of the asset. They were valued at acquisition or construction cost, net of accumulated depreciation and / or accumulated depreciation losses. The cost includes expenses that are directly attributable to the acquisition or construction of these items.
Movements in investment properties for the year ended December 31, 2020 and 2019 were as follows:
12/31/2020 13/31/2019
Income derived from rents (rents charged) 9,719 14,998
Direct operating expenses of properties that generated income derived from rents (6,637 ) (13,168 )
Fair value remeasurement (92,457 ) (173,076 )
The net result generated by the investment property as of December 31, 2020 and 2019 amounts to a loss of 89,375 and an income of 171,246 respectively, and is recognized under "Other operating income", "Administrative expenses" and "Other operating expenses". in the consolidated comprehensive income statement.
Gain and losses on disposals are determined by comparing proceeds with the carrying amount.
1.15. Inventories
Inventories are valued at the lower of cost and net realizable value. Cost includes the acquisition costs (net of discounts, rebates and similar), as well as other costs that have been incurred to bring the inventories to their current location and conditions to be commercialized. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of sale.
The inventories’ net realizable values are reviewed and adjusted if carrying amount is greater than its net realizable value at the end of each reporting period.
The Group establishes an allowance for obsolete inventory and low turnover rate products at the end of each year.
F-34
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.16. Intangible Assets
(a) Goodwill
Goodwill resulting from the acquisition of subsidiaries, associates or joint ventures account for the excess of the:
i) consideration transferred, valued at fair value as of acquisition date
ii) amount of any non-controlling interest in the acquired entity; and
iii) acquisition-date fair value of any previous equity interest in the acquired entity
iv) over the fair value of the net identifiable assets acquired.
Goodwill is included in the intangible assets item in the consolidated financial statement.
Goodwill is not subject to amortization, but it is annually tested for impairment. Impairment losses are not reverted once recorded. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Goodwill impairment is recognized when the carrying amount exceeds its recoverable amount which derives from the fair value of the cash-generating unit.
The fair value of the reporting unit is estimated using discounted cash flows techniques.
(b) Trademarks and licenses
Trademarks and licenses acquired separately are initially valued at historical cost, while those acquired through a business combination are recognized at their estimated fair value at the acquisition date..
Intangible assets with a finite useful life are subsequently carried at cost less accumulated depreciation and / impairment losses, if any. These assets are tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.
Trademarks acquired by the Group have been classified as intangible assets with an indefinite useful life. The main factors considered for this classification include the years in which they have been in service and their recognition among industry customers.
Intangible assets with an indefinite useful life are those that arise from contracts or other legal rights that can be renewed without a significant cost and for which, based on an analysis of all the relevant factors, there is no foreseeable limit of the period over which the asset is expected to generate net cash flows for the Group. These intangible assets are not amortized, but are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired, either individually or at the level of the cash generating unit. The categorization of the indefinite useful life is reviewed annually to confirm if it is still applicable.
(c) Software
Costs related to software maintenance are recognized as an expense as incurred. Development, acquisition or implementation costs which are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:.
it is technically feasible to complete the software so that it will be available for use
management intends to complete the software and use or sell it
there is an ability to use or sell the software
it can be demonstrated how the software will generate probable future economic benefits
adequate technical, financial and other resources to complete the development and to use or sell the software are available, and
the expenditure attributable to the software during its development can be reliably measured.
These intangible assets are amortized on a straight-line basis during their estimated useful life, over a term not exceeding five years.
F-35
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.17. Assets held for sale
The assets, or groups of assets, with some directly associated liabilities, classified as held for sale in accordance with the provisions of IFRS 5 "Non-current assets held for sale and discontinued operations" will be disclosed separately from the rest of assets and liabilities.
An asset may be classified as held for sale if its carrying amount will be recovered primarily through a sale transaction, rather than through its continued use, and a sale is considered highly probable.
To apply the above classification, an asset must meet the following conditions:
- It must be available for immediate sale in its current conditions;
- Management must be committed to a plan to sell the asset and have started an active program to locate a buyer and complete the plan; the asset must be actively marketed for sale at a reasonable price, in relation to its current fair value;
- the sale must be expected to be completed within 12 months from the reclassification date;
- it is unlikely that the plan will be significantly changed or withdrawn.
The assets, or groups of assets, possibly with some directly associated liabilities, classified as held for sale in accordance with the provisions of IFRS 5 "Non-current assets held for sale and discontinued operations", are measured at the lower of their carrying amount and fair value less costs to sell.
The Group will not depreciate the asset while classified as held for sale.
The balances of financial instruments, deferred taxes and investment properties classified as held for sale are not subject to the valuation methods detailed above.
1.18. Impairment of non-financial assets
Assets with an indefinite useful life are not subject to amortization but are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or, at least, on an annual basis.
Impairment losses are recognized when the carrying amount exceeds its recoverable amount. The recoverable amount of an asset is the higher of an asset’s fair value less costs of disposal and value in use. For purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
1.19. Trust Assets
Assets held by the Group in its Trustee role, are not included in the Consolidated Financial Statements. Commissions and fees earned from trust activities are included in Service fee income.
1.20. Offsetting
Financial assets and liabilities are offset and the net amount reported in the consolidated financial statement where the Group has a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the assets and settle the liability simultaneously.
1.21. Financing received from the Argentine Central Bank and other Financial Institutions
The amounts owed to other financial institutions are recorded at the time the bank disburses the proceeds to the Group. Non-derivative financial liabilities are measured at amortized cost.
F-36
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.22. Provisions / Contingencies
A provision will be recognized when:
- an entity has a present obligation (legal or implicit) as a result of past event;
- it is probable that an outflow of resources embodying future economic benefits will be required to settle the obligation; and
- the amount can be reliably estimated.
An Entity will be deemed to have an implicit obligation where (a) the Group has assumed certain responsibilities as a consequence of past practices or public policies and (b) as a result, the Group has created an expectation that it will discharge those responsibilities
The Group recognizes the following provisions:
For labor, civil and commercial lawsuits: provisions are calculated based on lawyers’ reports about the status of the proceedings and the estimate about the potential losses to be afforded by the Group, as well as on the basis of past experience in this type of claims.
For miscellaneous risks: These provisions are set up to address contingencies that may trigger obligations for the Group. In estimating the provision amounts, the Group evaluates the likelihood of occurrence taking into consideration the opinion of its legal and professional advisors.
Other contingent liabilities are: i) possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group; or ii) present obligations that arise from past events but it is not probable that an outflow of resources will be required to its settlement; or whose amount cannot be measured with sufficient reliability.

Other contingent liabilities are not recognized. Contingent liabilities, whose possibility of any outflow in settlement is remote, are not disclosed unless they involve guarantees, in which case the nature of the guarantee is disclosed.
The Group does not account for positive contingencies, other than those arising from deferred taxes and those contingencies whose occurrence is virtually certain.
As of the date of these consolidated financial statements, the Group’s management believes there are no elements leading to determine the existence of contingencies that might be materialized and have a negative impact on these consolidated financial statements other than those disclosed in Note 17.
1.23. Other non-financial liabilities
Non-financial accounts payable are accrued when the counterparty has fulfilled its contractual obligations and are measured at amortized cost.
1.24. Employee benefits
The Group’s short-term obligations includes liabilities for wages and salaries, including annual leave, that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as Other Non-Financial Liabilities in the Consolidated Financial Position.
During 2018, the Group had in place a retirement plan based on incentives for members of senior management and the Board of Directors, who will be entitled to receive cash payments over time if certain performance objectives are met. This retirement plan was ceased in 2019.
F-37
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
In addition, provisions related to pre-retirement plans and seniority awards benefits are recognized. Liabilities related to this plan are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. These obligations are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period, using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
These provisions are measured at the present value of the disbursements that are expected to be required to settle the obligation using a pre-tax interest rate that reflects prevailing market conditions the time value of money and the specific risks for that obligation.
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value
1.25. Debt Securities
Subordinated and unsubordinated Debt Securitiesissued by the Group are measured at amortized cost. Where the group buys back its own negotiable obligations, such obligations will be derecognized from the Consolidated Financial Statements and the difference between the residual value of the financial liability and the amount paid will be recognized as financial income or expenses.
1.26. Assets and liabilities derived from insurance contracts
The Group applies IFRS 4 “Insurance Contracts” in order to recognize and measure the assets and liabilities derived from insurance contracts.
Assets derived from insurance contracts
An insurance contract is a contract under which the Group (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.
Once a contract has been classified as an insurance contract, it remains an insurance contract for the rest of its term, even if the insurance risk is significantly reduced during this period, unless all rights and obligations are extinguished or expired.
The insurance contracts offered by the Group include property insurance that covers combined family insurance, theft and similar risks, property damage, personal accidents, among other risks. They also include temporary life insurance contracts.
Total premiums are recognized on the date of issuance of the policy as an account receivable. At the same time, a reserve for unearned premiums representing premiums for risks that have not yet expired is recorded as a liability. Unearned premiums are recognized as income during the contract period, which is also the coverage and risk period. The book value of insurance accounts receivable is reviewed for impairment whenever events or circumstances indicate that the book value may not be recoverable. The impairment loss is recorded in the income statement.
F-38
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Liabilities derived from insurance contracts
Debt with insured
The insurance claims reserves represent debts with insured people for claims reported to the company and an estimate of the claims that have already been incurred but that have not yet been reported to the company (IBNR). The reported claims are adjusted on the basis of technical reports received from independent appraisers.
Debts with reinsurers and co-insurers
The Group mitigates the risk for some of its insurance businesses through co-insurance or reinsurance contracts in other companies. In the case of co-insurance, the Group associates with another company to cover a risk assuming only a percentage of it and also the premium. In reinsurance, the risk is transferred to another insurance company both proportionally (as a percentage of the risk) and not proportionally (excess loss is covered above a certain limit). The reinsurance agreements assigned do not exempt the Group from its obligations to the insured.
Coinsurance and reinsurance liabilities represent balances owed under the same conditions and the amounts payable are estimated in a manner consistent with the contract that gave rise to them.
Debts with producers
They represent liabilities with insurance agents originated in the commissions for the insurance operations that they originate for the Group companies. The balances of the current accounts with these entities are also included.
Technical commitments
The current risk reserve regularizes the premiums to be collected based on the incurred but not reported risks.
1.27. Capital Stock and Capital Adjustments
Accounts included in this item are expressed in terms of the measuring unit current as of December 31, 2020 as described in Note 1.1.2, except from the item “Capital Stock”, which has been held at nominal value.
Common shares are recognized in shareholders´ equity and carried at nominal value. When any subsidiary of the Group buys shares of the Group (treasury stock), the effective payment, including any cost directly attributable to the transaction (net of taxes), is deducted from shareholders´ equity until the shares are either canceled or disposed.
1.28. Reserves and Dividend distribution
Pursuant to provisions set by the Argentine Corporations law, the Group and its subsidiaries, other than Banco Supervielle and Cordial Compañía Financiera, are required to appropriate 5% of the net income for the fiscal year to the legal reserve until such reserve is equal to 20% of Capital stock, plus the balance of the Capital Adjustment account.
As concerns Banco Supervielle and Cordial Compañía Financiera, according to the regulations set forth by the Argentine Central Bank, 20% of net income for the fiscal year, net of previous years’ adjustments, if any, is required to be appropriated to the legal reserve. Notwithstanding the aforementioned, in appropriating amounts to other reserves, Financial Institutions are required to comply with the provisions laid down by the Argentine Central Bank in the revised text on distribution of dividends described in Note 25.
The distribution of dividends to the Group’s shareholders is recognized as a liability in the consolidated financial statements for the fiscal year in which dividends are approved by the Group’s Shareholders.
F-39
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
1.29. Revenue Recognition
Financial income and expense is recognized in respect of all debt instruments in accordance with the effective interest rate method, pursuant to which all gains and losses which are an integral part of the transaction effective interest rate are deferred.
Gains or losses included in the effective interest rate embrace disbursements or receipts relating to the creation or acquisition of a financial asset or liability, such as preparation and processing of the documents required to consummate the transactions, and payments received for the extension of credit arrangements.
Fees and commissions earned by the Group on the origination of syndicated loans are not part of the product effective interest rate, and are recognized in the income statement at the time the service is delivered. Commissions and fees earned by the Group on negotiations in third parties’ transactions are not part of the effective interest rate either, and are recognized at the time the transactions are executed.
The Group’s income from services is recognized in the income statement as performance obligations are fulfilled, part of the consideration received is allocated to the customer loyalty programs described below. Consideration is allocated based on the relative standalone selling prices for services rendered and points granted.
Below is a summary of the main commissions earned by the Bank:
Commission Frecuency of revenue recognition
Account maintenance Monthly
Safe deposit boxes Semi-annual
Issuing Bank Event driven
Credit Card renewal Annual
Check management Event driven
Customer loyalty programs
The Group offers reward programs that allow its cardholders to earn points that can be redeemed for a broad range of rewards, including goods and travels among others. This constitutes a performance obligation. The Group establishes a liability based on the fair value of the points issued that are expected to be exchanged by customers. Points to be redeemed are estimated based on the historical redemption behavior of each program. The liability is reduced and the revenue is recognized as performance obligations relating to the points are satisfied, which normally is when the points are exchanged by customers or at their due dates.
1.30. Income tax
Income Tax
Income tax expense for the year includes current and deferred tax. Income tax is recognized in the consolidated statements of income, except for items required to be recognized directly in other comprehensive income. In this case, the income tax liability related to such items is also recognized in such statement.
Current income tax expense is calculated on the basis of the tax laws enacted or substantially enacted as of the date of the Statement of Financial Position in the countries where the Company and its subsidiaries operate and generate taxable income. The Group periodically assesses the position assumed in tax returns in connection with circumstances in which the tax regulation is subject to interpretation. The Group sets up provisions in respect of the amounts expected to be required to pay to the tax authorities.
Deferred income tax is recognized, using the deferred tax liability method, on temporary differences arising from the carrying amount of assets and liabilities and their tax base. However, the deferred tax arising from the initial recognition of an asset or liability in a transaction other than a business combination which, at the time of the transaction does not affect income or loss for accounting or tax purposes, is not recorded. Deferred income tax is determined using tax rates (and laws) enacted as of the date of the Financial Statements and that are expected to be applicable when the deferred tax assets are realized or the deferred tax liabilities are settled.
F-40
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Deferred income tax assets are recognized only to the extent future tax benefits are likely to arise against which the temporary differences can be offset.
The Group recognizes a deferred tax liability for taxable temporary differences related to investments in subsidiaries and affiliates, except that the following two conditions are met:
the Group controls the timing on which temporary differences will be reversed; and
such temporary differences are not likely to be reversed in the foreseeable future.
Deferred income tax assets and liabilities are offset when a legal right exists to offset current tax assets against current tax liabilities and to the extent such balances are related to the same tax authority of the Group or its subsidiaries, where tax balances are intended to be, and may be, settled on a net basis..
1.31. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to the Group’s shareholders by the weighted average number of common shares outstanding during the year.
Diluted earnings per share are calculated by dividing the net income for the year by the weighted average number of common shares issued and dilutive potential common shares at year end. Since the Company has no dilutive potential common shares outstanding, there are no dilutive earnings per share amounts.
2. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of these Consolidated Financial Statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires Senior Management to make judgements in applying the accounting standards to define the Group’s accounting policies.
The Group has identified the following areas which involve a higher degree of judgement or complexity, or areas where assumptions and estimates are material for these Consolidated Financial Statements which are essential to understand the underlying accounting/financial reporting risks:
a- Fair value of derivatives and other instruments
The fair value of financial instruments not listed in active markets is determined using valuation techniques. Such techniques are validated and reviewed periodically by qualified personnel independent from the area which developed them. All models are assessed and adjusted before being put into use in order to ensure that results reflect current information and comparable market prices. As long as possible, models rely on observable inputs only; however, certain factors such as as implicit rates in the last available tender for similar securities and spot rate curves, require the use of estimates. Changes in the assumptions of these factors may affect the reported fair value of financial instruments.
b- Allowances for loan losses
The Group recognizes the allowance for loan losses under the expected credit losses method included in IFRS 9. The most significant judgements of the model relate to defining what is considered to be a significant increase in credit risk, determining the life of revolving facilities, and in making assumptions and estimates to incorporate relevant information about past events, current conditions and forecasts of economic conditions. The impact of the forecasts of economic conditions are determined based on the weighted average of three internally developed macroeconomic scenarios that take into consideration the Group´s economic outlook as derived through forecast macroeconomic variables, which include inflation rate, monthly economic activity estimator and private sector wage.A high degree of uncertainty is involved in making estimations using assumptions that are highly subjective and very sensitive to the risk factors
Note 1.11 provides more detail of how the expected credit loss allowance is measured.
F-41
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
c- Impairment of Non-Financial Assets
Intangible assets with definite useful life and property, plant and equipment are amortized or depreciated on a straight-line basis during their estimated useful life. The Group monitors the conditions associated with these assets to determine whether the events and circumstances require a review of the remaining amortization or depreciation term and whether there are factors or circumstances indicating impairment in the value of the assets which might not be recoverable.
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
d- Structured Entities
Assessing whether the Group controls a structured entity requires Management to make, judgments.
Management assesses its exposure to risks and rewards, as well as its ability to make decisions and direct the relevant activities of such structured entity. Structured entities controlled by the Group are subject to consolidation. The following elements were used to determine if the Group controls a structured entity:
• The purpose and design of the trust
• Identification of relevant activities of the trust
• Decision-making process on these activities
• If the Group has the power to direct the relevant activities of the trust
• If the Group is exposed to, or has rights to, variable returns from its involvement with the trust
• If the Group has the ability to affect those returns through its power over the trust
e- Income tax and deferred tax
A significant level of judgment is required to determine current and deferred tax assets and liabilities. Current income tax is measured at the amount expected to be paid while deferred income tax is measured based on the temporary differences between the carrying amount of assets and liabilities and their tax base, at the rates expected to be in force at the time of reversal of such differences.
A deferred tax asset is recognized when future taxable income is expected to exist to offset such temporary differences, based on Management’s assumptions about the amounts and timing of such future taxable income. Then, management needs to determine whether deferred tax assets are likely to be used and offset against future taxable income. Actual results may differ from these estimates, for instance, changes in the applicable tax laws or the outcome of the final review of the tax returns by the tax authorities and tax courts.
Future taxable income and the number of tax benefits likely to be available in the future are based on a medium term business plan prepared by management on the basis of reasonable expectations.
F-42
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
3. SEGMENT REPORTING
The Group determines operating segments based on performance reports which are reviewed by the Board and key personnel of 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 Personal and Business Banking.
In this sense, Small and Medium Size Companies clients and the loan portfolio have been transferred from the Corporate Division to the Personal and Business Banking area. Such change became effective on January 1, 2020. The comparative information as of December 31, 2019 and 2018 was modified with the purpose of showing the new organization and making it comparable to information as of December 31, 2020.
As from January 1, 2020, the Bank´s clients receive the following services:
Personal and Business Banking Segment:
- Small companies, individuals and companies that record annual sales of up to 100,000
- “Small and Medium Size Companies”, companies that record annual sales of over 100,000 up to 700,000
Corporate Baking Segment:
- Megras that record annual sales over 700,000 up to 2,500,000
- Big Companies. Grandes companies that record annual sales of over 2,500,000
The Group considers the business for the type of products and services offered, identifying the following operating segments:
a- Personal and Business Banking– Includes a wide range of financial products and services targeted to small comoanies, included in Entrepreneours & SMSs, and high income people identified with so-called Identité proposal. Likewise, the Bank offers services and products targeted to retirees and pensioneers.
b- Corporate Banking – Includes advisory services at a corporate and financial level, as well as the administration of assets and loans targeted to corporate clients.
c- Bank Treasury – This segment is in charge of the assignment of liquidity of the Entity in accordance with the different commercial areas´ needs and its own needs, Treasury implements financial risk administration policies of the Bank, administers trading desk operations, distributes financial products, such as negotianle securities and develops business with the financial sector clients and whole sale non-financial sector clients.Consumer – Includes loans and other credit products targeted to middle and lower-middle income sectors and non-financial products and services.
d- Consumer Finance– Includes loans and other credit products targeted to middle and lowed-middle income sectors and non-financial products and services.
e- Insurance: Includes insurance products, with a focus on life insurance, to targeted customers segments
f- Asset Management and Other Services– Includes MFs administered by the Group. Includes also assets, liabilities and results of ~~the controlled companies detailed below. The percentages directly or indirectly held by Grupo Supervielle in each of those companies’ capital stock are as follows:~~Micro Lending S.A.U., Invertir Online.Com Argentina S.A.U. and InvertirOnline S.A.U, Easy Cambio S.A., Bolsillo Digital S.A.U and Futuros del Sur S.A.
Operating results of the different operating segments of the Group are reviewed individually with the purpose of taking decisions over the allocation of resources and the performance analysis of each segment. The performance of such segments will be evaluated based on operating income and is measured consistently with operating income/(expenses) of the consolidated income statement.
Transaction between segments are carried out at arm´s length. Income, expenses and results from transfers between operating segments are eliminated in consolidation.
The Group does not present information by geographical segments because there are no operating segments in economic environments with risks and rewards that are significantly different.
F-43
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The following chart includes information by segment measured in accordance with IAS 29, as of December 31, 2020, 2019 and 2018:
Asset by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments Total as of 12.31.2020
Cash and due from banks 12,345,695 533,466 23,288,859 238,350 2,176 399,895 (133,572 ) 36,674,869
Debt securities at fair value through profit or loss - - 8,827,214 1,034,836 - 9,853 - 9,871,903
Loans and other financing 52,474,545 42,240,034 5,823,189 6,808,494 592,067 49,403 (2,592,546 ) 105,395,186
Other Assets 8,569,274 8,324,469 58,840,094 3,063,890 1,254,830 1,080,197 16,156,234 97,288,988
Total Assets 73,389,514 51,097,969 96,779,356 11,145,570 1,849,073 1,539,348 13,430,116 249,230,946
Liabilities by segments
Personal and Business
Banking
Corporate Banking Bank
Treasury
Consumer
Finance
Insurance Asset Management and Other Services Adjustments Total as of 12.31.2020
Deposits 93,834,062 16,184,803 65,197,484 3,561,745 - - (136,500 ) 178,641,594
Financing received from the Argentine Central Bank and others 15,011 - 5,794,778 2,529,652 - 48,169 (2,535,318 ) 5,852,292
Debt Securities 23,896 12,588 4,190,264 - - - - 4,226,748
Other liabilities 7,481,326 2,073,534 5,859,467 2,016,065 857,130 579,256 5,964,046 24,830,824
Total Liabilities 101,354,295 18,270,925 81,041,993 8,107,462 857,130 627,425 3,292,228 213,551,458
Result by segments
Personal and Business
Banking
Corporate Banking Bank
Treasury
Consumer
Finance
Insurance Asset Management and Other Services Adjustments For the year ended 12.31.2020
Interests income 22,032,597 12,981,215 25,591,006 4,433,064 - 42,406 (380,408 ) 64,699,880
Interest Expense (8,181,916 ) (1,073,707 ) (18,395,101 ) (1,367,357 ) - (26,587 ) 466,280 (28,578,388 )
Distribution of results by the Treasury 3,409,620 (6,389,960 ) 2,980,340 - - - - -
Net interest income 17,260,301 5,517,548 10,176,245 3,065,707 - 15,819 85,872 36,121,492
Net income from financial instruments at fair value through profit or loss - - 2,315,048 143,465 353,513 162,716 340,840 3,315,582
Result from derecognition of assets measured at amortized cost - - 688,793 - - - (31,774 ) 657,019
Exchange rate differences on gold and foreign currency 379,276 52,605 423,261 37,771 (98 ) 73,159 98,571 1,064,545
NIFFI And Exchange Rate Differences 379,276 52,605 3,427,102 181,236 353,415 235,875 407,637 5,037,146
Net Financial Income 17,639,577 5,570,153 13,603,347 3,246,943 353,415 251,694 493,509 41,158,638
Services Fee Income 7,464,407 672,282 59,634 2,133,202 - 1,584,304 (420,005 ) 11,493,824
Services Fee Expenses (2,453,402 ) (192,364 ) (59,759 ) (762,313 ) - (50,754 ) (29,677 ) (3,548,269 )
Income from insurance activities - - - - 1,454,204 - 217,251 1,671,455
Net Service Fee Income 5,011,005 479,918 (125 ) 1,370,889 1,454,204 1,533,550 (232,431 ) 9,617,010
Subtotal 22,650,582 6,050,071 13,603,222 4,617,832 1,807,619 1,785,244 261,078 50,775,648
Result from exposure to changes in the purchasing power of money (1,078,519 ) (1,274,193 ) (269,124 ) (887,134 ) (381,065 ) (253,338 ) (146,955 ) (4,290,328 )
Other operating income 1,531,510 1,518,644 253,278 364,527 10,498 233,704 (132,710 ) 3,779,451
Loan loss provisions (4,365,418 ) (3,370,120 ) (4,097 ) (886,996 ) - 11,571 - (8,615,060 )
Net operating income 18,738,155 2,924,402 13,583,279 3,208,229 1,437,052 1,777,181 (18,587 ) 41,649,711
Personnel expenses (13,284,682 ) (1,271,081 ) (930,606 ) (1,713,808 ) (317,809 ) (540,802 ) (118,078 ) (18,176,866 )
Administrative expenses (7,431,135 ) (508,923 ) (462,356 ) (1,463,065 ) (264,086 ) (458,159 ) 269,167 (10,318,557 )
Depreciations and impairment of non-financial assets (1,924,361 ) (144,156 ) (108,498 ) (135,823 ) (20,761 ) (10,497 ) (62,932 ) (2,407,028 )
Other operating expenses (3,834,606 ) (1,255,478 ) (736,566 ) (602,415 ) (1,826 ) (103,867 ) (40,021 ) (6,574,779 )
Operating income (7,736,629 ) (255,236 ) 11,345,253 (706,882 ) 832,570 663,856 29,549 4,172,481
Income from associates and joint ventures - - - 6,456 - - (6,456 ) -
Result before taxes (7,736,629 ) (255,236 ) 11,345,253 (700,426 ) 832,570 663,856 23,093 4,172,481
Income tax 1,380,576 75,324 (2,219,977 ) 122,886 (294,523 ) (262,820 ) 526,827 (671,707 )
Net income (6,356,053 ) (179,912 ) 9,125,276 (577,540 ) 538,047 401,036 549,920 3,500,774
Net  income for  the  year attributable to owners of the parent company (6,356,053 ) (179,912 ) 9,125,276 (577,540 ) 538,047 401,036 549,028 3,499,882
Net loss for the year attributable to non-controlling interest - - - - - - 892 892
F-44
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Result by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments For the year ended 12.31.2020
Other comprehensive income 220,150 115,969 479,208 - - - (11,634 ) 803,693
Other comprehensive income attributable to owners of the parent company 220,150 115,969 479,208 - - - (12,413 ) 802,914
Other comprehensive loss attributable to non-controlling interest - - - - - - 779 779
Comprehensive income for the year (6,135,903 ) (63,943 ) 9,604,484 (577,540 ) 538,047 401,036 538,286 4,304,467
Comprehensive income attributable to owners of the parent company (6,135,903 ) (63,943 ) 9,604,484 (577,540 ) 538,047 401,036 536,615 4,302,796
Comprehensive loss attributable to non-controlling interest - - - - - - 1,671 1,671
Asset by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments Total as of 12.31.2019
Cash and due from banks 10,471,392 1,392,602 22,967,633 437,209 4,608 3,295,926 (2,624,035 ) 35,945,335
Debt securities at fair value through profit or loss - - 425,175 126,287 - 222,499 - 773,961
Loans and other financing 56,863,126 52,299,847 5,064,985 6,857,365 618,048 41,858 (1,927,882 ) 119,817,347
Other Assets 3,216,481 1,600,424 24,308,991 4,050,457 1,485,761 733,256 10,488,202 45,883,572
Total Assets 70,550,999 55,292,873 52,766,784 11,471,318 2,108,417 4,293,539 5,936,285 202,420,215
Liabilities by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments Total as of 12.31.2019
Deposits 86,332,384 14,481,577 21,342,195 2,224,661 - - (3,204,562 ) 121,176,255
Financing received from the Argentine Central Bank and others 17,161 - 12,250,927 1,293,014 - 62,652 (1,347,144 ) 12,276,610
Debt Securities 147,721 104,240 8,013,021 - - 21,181 - 8,286,163
Other liabilities 6,347,903 1,876,158 5,926,868 4,348,891 1,031,927 3,517,477 5,726,877 28,776,101
Total Liabilities 92,845,169 16,461,975 47,533,011 7,866,566 1,031,927 3,601,310 1,175,171 170,515,129
Result by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments For the year ended 12.31.2019
Interests income 30,299,712 19,478,944 6,132,453 6,834,394 - 303,685 (2,065,563 ) 60,983,625
Interest Expense (11,995,094 ) (4,676,394 ) (28,791,267 ) (4,274,907 ) - (182,092 ) 2,388,377 (47,531,377 )
Distribution of results by Treasury 6,447,537 (9,131,377 ) 2,683,840 - - - - -
Net interest income 24,752,155 5,671,173 (19,974,974 ) 2,559,487 - 121,593 322,814 13,452,248
Net income from financial instruments at fair value through profit or loss 13,964 - 27,334,575 331,348 526,305 132,899 197,291 28,536,382
Exchange rate differences on gold and foreign currency 2,601,295 281,750 (3,381,111 ) 11,166 1,679 29,577 14,453 (441,191 )
NIFFI And Exchange Rate Differences 2,615,259 281,750 23,953,464 342,514 527,984 162,476 211,744 28,095,191
Net Financial Income 27,367,414 5,952,923 3,978,490 2,902,001 527,984 284,069 534,558 41,547,439
Services Fee Income 7,153,209 1,532,939 50,267 2,433,057 - 868,490 (330,406 ) 11,707,556
Services Fee Expenses (1,979,198 ) (166,561 ) (66,517 ) (889,658 ) - (41,409 ) 88,389 (3,054,954 )
Income from insurance activities - - - - 1,627,670 - 269,253 1,896,923
Net Service Fee Income 5,174,011 1,366,378 (16,250 ) 1,543,399 1,627,670 827,081 27,236 10,549,525
Subtotal 32,541,425 7,319,301 3,962,240 4,445,400 2,155,654 1,111,150 561,794 52,096,964
Result from exposure to changes in the purchasing power of money (2,439,672 ) (2,243,877 ) (535,746 ) (1,141,796 ) (1,204,601 ) (475,643 ) 744,792 (7,296,543 )
Other operating income 1,665,517 860,383 467,542 568,593 10,190 212,318 (33,506 ) 3,751,037
Loan loss provisions (4,555,505 ) (4,302,282 ) 33,553 (1,760,136 ) - 51,352 - (10,533,018 )
Net operating income 27,211,765 1,633,525 3,927,589 2,112,061 961,243 899,177 1,273,080 38,018,440
Personnel expenses (14,363,518 ) (1,412,159 ) (886,187 ) (1,740,329 ) (255,296 ) (414,832 ) (211,025 ) (19,283,346 )
Administrative expenses (7,109,852 ) (464,220 ) (421,634 ) (1,592,780 ) (359,381 ) (360,971 ) (1,828 ) (10,310,666 )
Depreciations and impairment of non-financial assets (1,891,160 ) (247,501 ) (97,492 ) (136,548 ) (12,751 ) (9,014 ) (76,038 ) (2,470,504 )
Other operating expenses (4,635,433 ) (2,306,728 ) (693,363 ) (865,702 ) (1,673 ) (135,505 ) (17,811 ) (8,656,215 )
F-45
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Result by segments
Personal and Business
Banking
Corporate Banking
Bank
Treasury

Consumer
Finance
Insurance Asset Management and Other Services Adjustments For the year ended 12.31.2019
Operating income (788,198 ) (2,797,083 ) 1,828,913 (2,223,298 ) 332,142 (21,145 ) 966,378 (2,702,291 )
Income from associates and joint ventures - - - 4,570 - - (4,570 ) -
Result before taxes (788,198 ) (2,797,083 ) 1,828,913 (2,218,728 ) 332,142 (21,145 ) 961,808 (2,702,291 )
Income tax 7,210 8,894 24,010 736,962 (301,677 ) (117,294 ) (587,768 ) (229,663 )
Net  income (780,988 ) (2,788,189 ) 1,852,923 (1,481,766 ) 30,465 (138,439 ) 374,040 (2,931,954 )
Net income for  the  year attributable to owners of the parent company (780,988 ) (2,788,189 ) 1,852,923 (1,481,766 ) 30,465 (138,439 ) 376,793 (2,929,201 )
Net loss for the year attributable to non-controlling interest - - - - - - (2,753 ) (2,753 )
Other comprehensive  income (50,447 ) (35,598 ) (89,847 ) - 110,770 - (1 ) (65,123 )
Other comprehensive income attributable to owners of the parent company (50,447 ) (35,598 ) (89,847 ) - 110,770 - 182 (64,940 )
Other comprehensive income attributable to non-controlling interest - - - - - - (183 ) (183 )
Comprehensive income for the year (831,435 ) (2,823,787 ) 1,763,076 (1,481,766 ) 141,235 (138,439 ) 374,039 (2,997,077 )
Comprehensive  income attributable to owners of the parent company (831,435 ) (2,823,787 ) 1,763,076 (1,481,766 ) 141,235 (138,439 ) 376,975 (2,994,141 )
Comprehensive loss attributable to non-controlling interest - - - - - - (2,936 ) (2,936 )
4. INCOME TAX
On December 21, 2019, the National Executive enacted Income Tax Law 27,541. This law has introduced several changes to the previous income tax treatment. Some of the key changes involved in the reform include:
Article 27 of the Law stipulates that the inflation adjustment, positive or negative, corresponding to the first and second fiscal year beginning on January 1, 2019, should allocate a sixth (1/6) in that fiscal period and the remaining five sixth (5/6), in equal parts, in the next five (5) immediate fiscal periods.
In turn, it is clarified that said provision does not preclude the allocation of the remaining thirds corresponding to previous periods, calculated in accordance with the previous version of article 194 of the Income Tax Law.
Article 48 of the Law 27,541 establishes that until the fiscal years beginning as of January 1, 2021 inclusive, the tax rate will be thirty percent (30%) -Dividends or distributed profits will be 7%.
The following table reconciles the statutory income tax rate in Argentina to the Group´s effective tax rate as of December 31, 2020, 2019 and 2018:
12/31/2020 12/31/2019 12/31/2018
Current income tax (2,700,633 ) (562,210 ) (1,009,829 )
Income tax – deferred method 2,028,926 332,547 (1,107,259 )
Income tax allotted in the Income Statement (671,707 ) (229,663 ) (2,117,088 )
Income tax allotted in Other comprehensive income (340,954 ) 10,504 (167,510 )
Total Income Tax Charge (1,012,661 ) (219,159 ) (2,284,598 )
The following is a reconciliation between the income tax charged to income as of December 31, 2020, 2019 and 2018, and that which would result from applying the current tax rate on the accounting profit
12/31/2020 12/31/2019 12/31/2018
Income before taxes 4,172,481 (2,702,291 ) (4,284,402 )
Tax rate 30 % 30 % 30 %
Income for the year at tax rate (1,251,744 ) 810,687 1,285,321
Permanent differences at tax rate:
Tax inflation adjustment 14,441 228,247 (3,836,719 )
Deductible investments 5,305 77,894 440,450
Others 560,291 (1,346,491 ) (6,140 )
Income tax (671,707 ) (229,663 ) (2,117,088 )
F-46
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)

December 31,

December 31,

December 31,

Issuing Company

2017

2016

2015

Grupo Supervielle S.A.

Banco Supervielle S.A. (“Banco”)

99.88
%
98.23
%
97.39
%
Cordial Compañía Financiera S.A. (“CCF”)

99.89
%
98.32
%
97.52
%
Cordial Microfinanzas S.A. (“Cordial”)

—

99.77
%
99.67
%
Sofital S.A.F. e II (“Sofital”)

100.00
%
100.00
%
95.03
%
Tarjeta Automática S.A. (“Tarjeta”)

99.99
%
99.78
%
99.68
%
Supervielle Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión (“SAM”)

100.00
%
100.00
%
99.75
%
Espacio Cordial de Servicios S.A. (“ECS”)

100.00
%
100.00
%
99.75
%
Supervielle Seguros S.A. (“SS”)

100.00
%
100.00
%
99.75
%
4.1 Deferred tax
The net position of the deferred tax is as follows:
12/31/2020 12/31/2019
Deferred tax assets 3,315,885 2,275,175
Deferred tax liability (42,005 ) (689,268 )
Net assets by deferred tax 3,273,880 1,585,907

Deferred taxes to be recovered in more than 12 months 1,687,447 2,063,254
Deferred taxes to be recovered in 12 months 1,628,438 211,921
Subtotal – Deferred tax assets 3,315,885 2,275,175
Deferred taxes to be paid in more than 12 months (65,140 ) -
Deferred taxes to be paid in 12 months 23,135 (689,268 )
Subtotal – Deferred tax liabilities (42,005 ) (689,268 )
Total Net Assets by deferred Tax 3,273,880 1,585,907
Deferred tax assets / (liabilities) are summarized as follows:
Balance at 12/31/2019 (Charge)/Credit to Income /OCI (*) Balance at 12/31/2020
Intangible assets (955,680 ) (20,331 ) (976,011 )
Retirement plans 114,991 849 115,840
Loan Loss Reserves 1,253,696 924,017 2,177,713
Property, plant and equipment (1,235,317 ) 57,792 (1,177,525 )
Foreign Currency (83,709 ) 40,831 (42,878 )
Tax Loss Carry Forward 224,665 - 224,665
Inflation adjustment credit 2,032,364 490,706 2,523,070
Provisions 266,923 (125,743 ) 141,180
Others (32,026 ) 319,852 287,826
Total 1,585,907 1,687,973 3,273,880

~~Intercompany balances and transactions have been eliminated~~
(*) include ($340,954) that was recorded in ~~consolidation.~~
3.~~Significant Accounting Policies~~
The consolidated financial statements have been prepared in accordance with the rules of the Argentine Central Bank (“BCRA”) which prescribes the generally accepted accounting principles for all banks in Argentina (“Argentine Banking GAAP”), which differs in certain significant respects from generally accepted accounting principles in Argentina applicable to enterprises in general (“Argentine GAAP”).
For purpose of these consolidated financial statements, certain disclosures related to formal legal requirements for reporting in Argentina have been omitted since they are not required for Securities and Exchange Commission (“SEC”) reporting purposes.
~~The following is a summary of significant policies followed by the Group in the preparation of the consolidated financial statements.~~
~~3.1 Presentation of Financial Statements in Constant Argentine Pesos~~
The consolidated financial statements have been prepared in constant monetary units, reflecting the overall effects of inflation through August 31, 1995. As from that date, in accordance with Argentine Banking GAAP and the requirements of the control authorities, restatement of the financial statements was discontinued until December 31, 2001. As from January 1, 2002, in accordance with Argentine Banking GAAP recognition of the effects of inflation has been resumed. In accordance with BCRA Communication “A” 3,921, inflation accounting was discontinued as from March 1, 2003.
F-10

~~Table of Contents~~OCI.
Balance at 12/31/2018 (Charge)/Credit to Income Balance at 12/31/2019
Intangible assets (523,741 ) (431,939 ) (955,680 )
Retirement plans 120,441 (5,450 ) 114,991
Loan Loss Reserves 2,191,203 (937,507 ) 1,253,696
Property, plant and equipment (704,615 ) (530,702 ) (1,235,317 )
Foreign Currency (171,598 ) 87,889 (83,709 )
Tax Loss Carry Forward 336,380 (111,715 ) 224,665
Inflation adjustment credit - 2,032,364 2,032,364
Provisions - 266,923 266,923
Others 5,289 (37,315 ) (32,026 )
Total 1,253,359 332,548 1,585,907
F-47
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
5. FINANCIAL INSTRUMENTS
Financial instruments held by the Group as of December 31, 2020 and 2019:
Financial Instruments as of 12/31/2020 Fair value
through
profit or loss Amortized Cost Fair value
through
OCI Total
Assets
- Cash and due from banks - 36,674,869 - 36,674,869
- Debt securities at fair value through profit or loss 9,871,903 - - 9,871,903
- Derivatives 143,944 - - 143,944
- Reverse Repo transactions - 22,354,735 - 22,354,735
- Other financial assets 3,407,891 877,330 - 4,285,221
- Loans and other financing - 105,395,186 - 105,395,186
- Other debt securities - 6,325,194 34,534,781 40,859,975
- Financial assets pledged as collateral 4,687,488 217,447 - 4,904,935
- Investments in Equity Instruments 87,131 - 29,197 116,328
Total Assets 18,198,357 171,844,761 34,563,978 224,607,096
Liabilities
- Deposits - 178,641,594 - 178,641,594
- Liabilities at fair value through profit or loss 2,002,005 - - 2,002,005
- Derivates 1,995 - - 1,995
- Other financial liabilities 7,326,629 202,260 - 7,528,889
- Financing received from the Argentine Central Bank and other financial institutions - 5,852,292 - 5,852,292
- Unsubordinated debt securities - 4,226,748 - 4,226,748
-Subordinated debt securities - 1,140,469 - 1,140,469
Total Liabilities 9,330,629 190,063,363 - 199,393,992
Financial Instruments as of 12/31/2019
Fair value
through
profit or loss Amortized Cost Fair value
through
OCI Total
Assets
- Cash and due from banks - 35,945,335 - 35,945,335
- Debt securities at fair value through profit or loss 773,961 - - 773,961
- Derivatives 350,680 - - 350,680
- Other financial assets 1,499,631 1,355,055 - 2,854,686
- Loans and other financing - 119,817,347 - 119,817,347
- Other debt securities - 4,475,465 9,762,875 14,238,340
- Financial assets pledged as collateral 6,704,298 557,038 - 7,261,336
- Investments in Equity Instruments 7,891 - 11,957 19,848
Total Assets 9,336,461 162,150,240 9,774,832 181,261,533
Liabilities
- Deposits - 121,176,255 - 121,176,255
- Liabilities at fair value through profit or loss 258,060 - - 258,060
- Repo transactions - 435,401 - 435,401
- Other financial liabilities 8,163,994 4,245,990 - 12,409,984
- Financing received from the Argentine Central Bank and other financial institutions - 12,276,610 - 12,276,610
- Unsubordinated debt securities - 8,286,163 - 8,286,163
-Subordinated debt securities - 2,886,028 - 2,886,028
Total Liabilities 8,422,054 149,306,447 - 157,728,501
F-48
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
6. FAIR VALUES

~~Grupo Supervielle S.A. and Subsidiaries~~6.1 Fair Value of Financial Instruments
The Group classifies fair values of financial instruments in a three level hierarchy according to the reliability of the inputs used to determine them.
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 quoted price is available and there is an active market for the instrument, it will be included in Level 1. Otherwise, it will be included in Level 2.
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 determine fair value a financial instrument are observable, such instrument is included in level 2. If the inputs used to determine the price are not observable, the instrument will be included in Level 3.
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 Group’s financial instruments measured at fair value as of December 31, 2020 and 2019 are detailed below:
Financial Instruments as of 12/31/2020 FV level 1 FV level 2 FV level 3 Total
Assets
- Cash and due from banks - - - -
- Debt securities at fair value through profit or loss 9,632,732 239,171 - 9,871,903
- Derivatives 143,944 - - 143,944
- Other financial assets 3,407,891 - - 3,407,891
- Other debt securities 6,353,196 28,181,585 - 34,534,781
- Financial assets pledged as collateral 4,687,488 - - 4,687,488
- Investments in Equity Instruments 87,131 29,197 - 116,328
Total Assets 24,312,382 28,449,953 - 52,762,335
Liabilities
- Liabilities at fair value through profit or loss 2,002,005 - - 2,002,005
- Derivatives 1,995 - - 1,995
- Other financial liabilities 7,326,629 - - 7,326,629
Total Liabilities 9,330,629 - - 9,330,629
Financial Instruments as of 12/31/2019 FV level 1 FV level 2 FV level 3 Total
Assets
- Cash and due from banks - - - -
- Debt securities at fair value through profit or loss 768,963 - 4,998 773,961
- Derivatives 350,680 - - 350,680
- Other financial assets 1,499,631 - - 1,499,631
- Other debt securities 9,762,875 - - 9,762,875
- Financial assets pledged as collateral 6,704,298 - - 6,704,298
- Investments in Equity Instruments 7,891 11,957 - 19,848
Total Assets 19,094,338 11,957 4,998 19,111,293
Liabilities
- Liabilities at fair value through profit or loss 258,060 - - 258,060
- Other financial liabilities 8,163,994 - - 8,163,994
Total Liabilities 8,422,054 - - 8,422,054
F-49
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Below is shown the reconcilation of the financial instruments classiffied as Fair Value Level 3:
FV level 3 12/31/2019 Transfers Additions Disposals P/L 12/31/2020
Assets
- Debt securities at fair value through profit or loss 4,998 - - 4,998 - -
The Group’s policy is to recognize transfers between fair value levels only at end of period. The transfers were produced by the classification as Level 3 of the financial instruments with lack of observable prices.
Valuation Techniques
Valuation techniques to determine fair values Level 2 and Level 3 include the following:
- Market or quoted prices for similar instruments.
- The estimated present value of instruments.
The valuation technique to determine fair value Level 2 is based on inputs other than the quoted price included in Level 1 that are readily observable for the asset or liability (i.e., prices).
For Level 3, the Group uses valuation techniques through spot rate curves which calculate the yield upon market prices.
These valuation techniques are detailed below:
-       Interpolation model: It consists of the determination of the value of financial instruments that do not have a market price at the closing date, based on quoted prices for similar assets (both in terms of issue, currency, and duration) in the active markets ( MAE, Bolsar or secondary) through the linear interpolation of them. This technique has been used by the Entity to determine the fair value of the instruments issued by the BCRA and Treasury Bills without quotation at the end of this period.
-       Performance Curve Model under Nelson Siegel: This model proposes a continuous function to model the trajectory of the instant forward interest rate considering as a domain the term comprised until the next interest and / or capital payment. It consists in the determination of the instrument’s price estimating volatility through market curves. The Entity has used this model to estimate prices in debt securities or financial instruments with variable interest rate.
The principal inputs considered by the Group for its determination of fair values under the linear interpolation model are:
-       Instrument prices that were quoted between the date the curve is estimated and the settlement date of the latest payment available.
-       Implicit rates in the last available tender.
-       Only instruments that have been traded with a 24-hour settlement are considered.
-       If the same instrument has been listed on MAE (“Mercado Abierto Electrónico”) and Bolsar, only the market price that has been traded in the market with higher volume is considered
-       The yield curve is standardized based on a set of nodes, each of which has an associated expiration date.
-       Instruments denominated in US dollars are converted at the exchange rate on the date the instrument is negotiated.
F-50
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Likewise, for the determination of fair values under the Nelson Siegel model, the main data and aspects considered by the Entity were:
-      The Spot rate curves in pesos + BADLAR and the Spot rate curve in US dollars are established based on bonds predefined by Financial Risk Management.
-       The main source of prices for Bonds is MAE, without considering those corresponding to operations for own portfolio.
-       The portfolio of bonds used as input is changed with every issuance.
The Group periodically evaluates the performance of the models based on indicators which have defined tolerance thresholds.
Under IFRS, the estimated residual value of an instrument at inception is generally the transaction price.
In the event that the transaction price differs from the determined fair value, the difference will be recognized in the income statement proportionally for the duration of the instrument.

~~Notes to the Consolidated~~6.2 Fair Value of other Financial ~~Statements~~Instruments
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
The following describes the methodologies and assumptions used to determine the fair values of financial instruments not recorded at their value in these financial statements:
-       Assets whose fair value is similar to book value: For financial assets and liabilities that are liquid or have short-term maturities (less than three months), the book value is considered to be similar to fair value.
-       Fixed rate financial instruments: The fair value of financial assets was determined by discounting future cash flows at the current market rates offered, for each year, for financial instruments with similar characteristics. The estimated fair value of deposits with a fixed interest rate was determined by discounting future cash flows through the use of market interest rates for deposits with maturities similar to those of the Group’s portfolio.
-       For listed assets and the quoted debt, fair value was determined based on market prices.
Below is the difference between the carrying amount and the fair value of the main assets and liabilities recorded at amortized cost as of December 31, 2020 and 2019, respectively:
Other Financial Instruments as of 12/31/2020 Book value Fair value FV Level 1 FV Level 2 FV Level 3
Financial Assets
- Cash and due from Banks 36,674,869 36,674,869 36,674,869 - -
- Other financial assets 877,330 877,330 877,330 - -
- Loans and other financing 105,395,186 112,402,330 - - 112,402,330
- Reverse Repo transactions 22,354,735 22,354,735 22,354,735 - -
- Other Debt Securities 6,325,194 6,325,194 6,325,194 - -
- Financial assets in guarantee 217,447 217,447 217,447 - -
171,844,761 178,851,905 66,449,575 - 112,402,330
Financial Liabilities
- Deposits 178,641,594 179,320,910 - - 179,320,910
- Other financial liabilities 202,260 202,260 202,260 - -
- Financing received from the BCRA and other financial institutions 5,852,292 5,607,896 - - 5,607,896
- Unsubordinated Negotiable obligations 4,226,748 4,226,748 4,226,748 - -
- Subordinated Negotiable Obligations 1,140,469 1,192,293 1,192,293 - -
190,063,363 190,550,107 5,621,301 - 184,928,806
Other Financial Instruments as of 12/31/2019 Book value Fair value FV Level 1 FV Level 2 FV Level 3
Financial Assets
- Cash and due from Banks 35,945,335 35,904,615 35,904,615 - -
- Other financial assets 1,355,055 1,355,055 1,355,055 - -
- Loans and other financing 119,817,347 124,755,831 - - 124,755,831
- Other Debt Securities 4,475,465 4,588,171 4,588,171 - -
- Financial assets in guarantee 557,038 557,038 557,038 - -
162,150,240 167,160,710 42,404,879 - 124,755,831
Financial Liabilities
- Deposits 121,176,255 121,178,488 - - 121,178,488
- Repo transactions 435,401 435,401 435,401 - -
- Other financial liabilities 4,245,990 4,321,690 4,321,690 - -
- Financing received from the BCRA and other financial institutions 12,276,610 11,950,528 - - 11,950,528
- Unsubordinated Negotiable obligations 8,286,163 8,286,163 8,286,163 - -
- Subordinated Negotiable Obligations 2,886,028 3,223,964 3,223,964 - -
149,306,447 149,396,234 16,267,218 - 133,129,016
F-51
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)

~~Argentine GAAP requires financial statements shall be prepared in constant monetary units. The application~~
6.3 Fair Value of inflation adjustments shall become effective within an inflation context, which is featured, among other things, by the existence of an accrued inflation rate over a three-year period or exceeding the 100%. Once such rate is reached, all relevant financial statements shall be re-expressed as from the moment in which such adjustment was interrupted.Equity instruments
The following are the equity instruments measured at Fair Value throug profit or loss as of December 31, 2020 and 2019:
12/31/2020 12/31/2019
Grupo Financiero Galicia S.A. 74,881 7,891
Pampa Holding S.A 8,286 -
Loma Negra S.A. 3,179 -
Others 785 -
Total 87,131 7,891
The following are the equity instruments measured at Fair Value throug Other Comprehensive Income as of December 31, 2020 and 2019:
Detail
FV at 12/31/2019 Loss through OCI Additions FV at 12/31/2020
MAE 6,276 (1,666 ) - 4,610
SEDESA 2,197 (583 ) - 1,614
COELSA 1,251 (332 ) - 919
PROVINCANJE 371 (100 ) - 271
CUYO AVAL SGR 1,428 8 1,436
ARGENCONTROL 170 (45 ) - 125
LOS GROBO SGR 95 (22 ) - 73
IEBA SA 83 (22 ) - 61
MODO - (25,089 ) 45,043 19,954
Others 86 48 - 134
Total 11,957 (27,803 ) 45,043 29,197
Detail
FV at 12/31/2018 Income through OCI FV at 12/31/2019
MAE 9,655 (3,379 ) 6,276
SEDESA 3,380 (1,183 ) 2,197
COELSA 1,925 (674 ) 1,251
PROVINCANJE 568 (197 ) 371
CUYO AVAL SGR 1,883 (455 ) 1,428
ARGENCONTROL 263 (93 ) 170
LOS GROBO SGR 437 (342 ) 95
IEBA SA 127 (44 ) 83
Others 194 (108 ) 86
Total 18,432 (6,475 ) 11,957
F-52
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
7. FINANCE LEASES

As of balance sheet date, management evaluated that within this environment, the inflation threshold set by Argentine professional accounting standards, had not been reached, and in consequence, no inflation adjustment has been applied to Financial Statements.
The lack of objective data throughout the historical series, during 2015 and the first four months of 2016, regarding the Consumer Price Index (“CPI”) and the Wholesale Price Index (“WPI”), the existence of other qualitative and quantitative indicators, such as the program established by the BCRA to foster monetary stability that aims to induce a systematic and sustainable low inflation rate, and, the fact that in 2017, the market has evidenced a strong downward trend of inflation rate. All in all, this data allow the Group to estimate that the preparation of the consolidated financial statements in accordance with the applicable criteria under a hyperinflationary economy is not required.
7.1 The Group considers that this conclusion is consistent whit that of most companies with operations in Argentina reporting under Argentine GAAP. The Group reassesses inflation data periodically to determine whether this conclusion continues to be reasonable.
as lessee

~~However, in~~
(i) The following table shows the recent past years, certain macroeconomic indicators have suffered significant fluctuations, a fact that must be considered when assessing and interpreting the financial condition and performance as shown in these Financial Statements.
~~3.2 Foreign Currency~~
Assets and liabilities denominated in foreign currencies are converted into pesos using the year-end exchange rates. Transactions denominated in foreign currencies are translated into local currency at the prevailing exchange on the date of transaction settlement. Foreign exchange differences were recordedcarrying amount in the statement of ~~income for each year~~financial position:
12/31/2020 12/31/2019
Right-of-use asset
Land and buildings 2,146,928 2,047,260
Lease liability
Current 660,694 637,106
Non-current 521,004 651,313
Total 1,181,698 1,288,419
(ii) The following table shows the amounts charged in the ~~caption “Exchange rate differences~~income statement:
Items 12/31/2020
Right-of-use assets – Depreciation 780,397
Interest expenses on ~~gold and foreign currency”~~lease liabilities (Other operating expenses) 207,035
(iii) Lease activities:
The Group leases several branches. Rental agreements are generally made for fixed periods of 1 to 3 years, but may have extension options as described in (iv) below.
Contracts may contain lease components or not. The Group assigns consideration in the contract to the lease and non-lease components based on their independent relative prices. However, for the leases of real estate for which the Group is a lessee, it has chosen not to separate the lease components and those that are not, and instead counts them as a single lease component.
Lease terms are negotiated individually and contain a wide range of different terms and conditions. Lease agreements do not impose other obligations to do or not do, other than the leased assets owned by the lessor. Leased assets cannot be used as collateral for obtaining loans.
Until 2018, Property, Plant and Equipment leases were classified as operating leases. As of January 1, 2019, leases are recognized as a right-of-use asset by registering a liability as a counterparty on the date on which the leased asset is available for use by the Entity.
Assets and liabilities arising from leases are initially measured based on the present value. Lease liabilities include the net present value of the following lease payments:
fixed payments (including fixed payments in substance), less any incentives receivable;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
F-53
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be easily determined, which is generally the case with leases in the Group, the lessee’s incremental borrowing rate is used, which is the rate that the individual lessee would have to pay to borrow the necessary funds to obtain an asset of similar value to the asset by right of use in a similar economic environment with similar terms, security and conditions.
To determine the incremental interest rate, the Group:
whenever possible, uses the external financing recently received as a starting point, adjusted to reflect changes in financing conditions since the external financing was received.
uses a rate determination approach that begins with a risk-free interest rate adjusted for credit risk for leases that the Entity already has for those cases in which it does not have recent third-party financing, and
makes specific adjustments for the lease, for example, term, currency and guarantee.
The Group is exposed to possible future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they become effective. When adjustments to lease payments based on an index or rate become effective, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between capital and financial cost. The financial cost is charged to income during the lease period to produce a constant periodic interest rate on the remaining balance of the liability for each period.
The right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of the lease liability;
any lease payment made at or before the commencement date, less any lease incentives received;
any initial direct costs, and
an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
The right-of-use assets are generally depreciated during the shortest useful life of the asset and the lease term in a linear fashion.
Payments associated with short-term leases of equipment and all leases of low-value assets are recognized linearly as an expense in income. Short-term leases are leases with a lease term of 12 months or less and that does not contains a purchase option. Low-value assets include computer equipment and small items of office furniture.
(iv) Extension and termination options
Extension and termination options are included in several property leases. These are used to maximize operational flexibility in terms of managing the assets used in operations. Most of the extension and termination options maintained are exercisable only by the Group and not by the respective lessor.

~~3.3 Gold~~7.2
~~Gold has been valued at its market price at the year-end and converted into pesos using the year-end exchange rates.~~
~~3.4 Government and Corporate Securities~~
Government securities mainly represent obligations of the Argentine government. Corporate securities included in this caption consist of listed corporate equity securities and listed debt securities. Corporate equity and debt securities are considered to be held for trading purposesThe Group as ~~defined under Argentine Banking GAAP.~~
~~Realized gains and losses on sales and interest income on government and corporate securities are included as “Income from government and corporate securities” in the accompanying statement~~lessor
The following is a breakdown of the maturities of the Group’s financial and operating leases receivables and of the current values as of December 31, 2020 and 2019:
Financial Lease Receivables 12/31/2020 12/31/2019
Up to 1 year 1,982,763 2,427,531
More than a year up to two years 1,099,924 1,589,098
From two to three years 634,899 906,156
From three to five years 355,885 574,490
More than five years 14,429 27,744
Total 4,087,900 5,525,019
Unearned financial income (1,196,789 ) (1,186,642 )
Net investment in the lease 2,891,111 4,338,377

F-54
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
The balance of allowance for loan losses related to finance leases amounts to 252,961 and 111,708 as of December 31, 2020 and 2019.
Operating Lease Receivables 12/31/2019 12/31/2018
Up to 1 year 16,067 22,744
More than a year up to two years 13,766 21,418
From two to three years 9,202 18,438
From three to five years - 12,528
Total 39,035 75,128
8. TRANSFER OF FINANCIAL ASSETS
When the Group transfers financial assets under an agreement that meets all requirements to derecognize such assets, the difference between the carrying amount of those assets and the amount received as consideration is charged to income.

~~Government Securities~~
Argentine Banking GAAP establishes two categories in which banks should classify Argentine government securities, according to the purpose of the relevant assets. The Group recognizes the securities as follows:
a)~~Securities measured at fair value: These securities, that have an active market in accordance with Central Bank rules, have been valued at their market price at year-end and converted into pesos~~
F-11

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
following the procedure described in Note 3.2. Realized and unrealized exchange gains and losses are recorded in financial income for each year. Changes in fair value of these securities are recorded as financial income.
b)~~Securities measured at cost plus accrued interest: These securities,~~
(a) Transfers that do not have an active market in accordance with Central Bank rules, are valued at acquisition cost plus financial results accrued, exponentially applying the internal rate of return as per their issuance terms and conditions. The accruals of the internal rate of return mentioned above were recorded in the related consolidated statements of income. This category includes securities recorded under the caption “Unlisted Government securities”.qualify for derecognition
The following is a detail of the financial assets transferred by the Group that continue to be recognized in its consolidated financial statements as of December 31, 2020 and 2019:

~~Investments in listed corporate securities~~
~~These securities have been valued at their market price at each year-end. Changes in valuation~~
12/31/2020 12/31/2019
Securitized Personal Loans
Asset - 2,197,444
Liabilities - 1,156,889
Transfers of ~~these~~ ~~securities are recorded as financial income for each year.~~
~~3.5 Interest Income (Expense)~~
Interest income and expense has been accrued according to a compound interest formula in the period in which it was generated, except those whose maturity does not exceed 92 days, on which interest has been accrued according to a simple interest formula.
The Bank suspends the accrual of interest when the related loan is 90 days past due and the collection of interest and principal is in doubt. The suspension of interest corresponds to the loans classified as “with problems” and “medium risk” or below, under Argentine Central Bank´s classification rules. Accrued interest remains on the Bank´s books and is considered to be part of the loan balance when determining the allowance for loan losses. Regarding impaired loans, interest is recognized on a cash basis after reducing the balance of accrued interest, if applicable.
~~3.6 Loans~~
~~Loans are valued at amortized cost, plus interest accrued at each balance sheet date, net of allowances for loan losses, as described in note 3.7.~~
~~3.7 Allowances for Loan Losses~~
Allowances for loan losses are recognized considering the evaluation of the debt repayment capacity, the degree of debtors’ compliance and the guarantees securing the respective transactions, following the regulations on Debtor Classification and Minimum Loan Loss ~~Risk Allowances issued by the BCRA.~~
~~3.8 Other~~ receivables ~~and liabilities from financial transactions~~
·~~Amounts receivable for spot and forward sales pending settlement:~~ These receivables have been valued at their agreed settlement value. The difference between the market value of the securities and/or the foreign currency exchanged at the time of execution of the sale contracts and the agreed forward exchange value (premium) was accreted into income during the period held. The securities and/or foreign currency to be delivered were valued as stated on note 3.4, and recorded as Securities to be delivered under spot and forward sales pending settlement within “Other liabilities from financial transactions”.
·~~Securities receivable and to be delivered for spot and forward sales pending settlement:~~ ~~Securities and/or foreign currency to be received for purchases and to be delivered for sales are valued following the procedure described in Note 3.2.~~
F-12

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
·~~Unlisted corporate bonds: Have been valued at acquisition cost plus accrued interest at year-end.~~
·~~Other receivables not included in the Debtor Classification Regulations~~: This caption includes participation certificates issued by trusts and investments in mutual funds Participation certificates issued by trusts have been accounted for under the equity method, and debt securities issued by trusts in pesos and in foreign currency been accounted for at cost plus accrued interest. Investments in mutual funds have been accounted for at fair value, using net asset values at each balance sheet date. Changes in valuation are recognized in the statement of income.
·~~Banks and international institutions and subordinated negotiable obligations: Valued on the basis of the cash received, net of transaction costs, plus the financial results accrued on the basis of the internal rate of return estimated upon initial recognition.~~
~~3.9 Receivables from financial leases~~
The receivable from financial leases were valued at the discounted value of the sum of minimum installments pending collection (excluding any contingent installments), the residual value and the purchase options. Interests earned on these receivables are recognized as financial income.
~~3.10 Provisions for Contingencies~~
~~The Group has certain contingent liabilities~~ with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. The Group accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated.
~~3.11~~~~Unlisted equity investments~~
Under Argentine Banking GAAP, the equity method is used to account for investments where a significant influence in the corporate decision making process exists. Investments in which the Group does not exercise significant influence are accounted for at cost, adjusted for inflation where applicable, as indicated in Note 3.1, with the limit of their respective equity value calculated based on the latest financial statements of the issuers available at the year-end.
~~3.12 Premises and Equipment, net~~
~~Have been valued at cost and adjusted for inflation, where applicable, as indicated in Note 3.1., less the corresponding accumulated depreciation.~~
~~Depreciation is calculated following the straight-line method over the following estimated useful lives:~~
~~Buildings~~
~~50 years~~
~~Furniture and facilities~~
~~10 years~~
~~Machinery and equipment~~
~~5 years~~
~~Vehicles~~
~~5 years~~
~~Other~~
~~5 years~~
recourse
Asset - 41,116
Liabilities - -

~~The cost~~
(b) Transfers of ~~maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements are added to the carrying amount of the respective assets. When~~financial assets ~~are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income.~~
~~The recorded value of these assets does not exceed their estimated recoverable value.~~
F-13

~~Table of Contents~~that qualify for derecognition
The Group makes, in certain opportunities, non-recourse portfolio sales. In these cases, the Group has not retained any substantial risk or reward regarding the transferred portfolio, and therefore, such portfolio meets derecognition requirements.
9. REPO AND REVERSE REPO TRANSACTIONS
The Group carries out repo transactions in which it performs the spot sale of a security with the related forward purchase thereof, thus substantially retaining all the risks and rewards associated with the instruments and recognizing them in "Repo Transactions" at year-end, as the provisions set out in point 3.4.2 (Derecognition of Assets) of IFRS 9 "Financial Instruments") are not met.
The residual values of assets transferred under repo and reverse repo transactions as of December 31, 2020 and 2019 are detailed below:
Repo Transactions:
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended~~
Book Value
December 31, ~~2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~3.13 Miscellaneous Assets~~
Have been valued at cost and adjusted for inflation, where applicable, as indicated in Note 3.1, less accumulated depreciation, where applicable, calculated following the straight-line method over the estimated useful lives of the assets. The recorded value of these assets does not exceed their estimated recoverable value. Depreciable assets are those recorded under the captions “Assets taken as guarantee for loans” and “Other miscellaneous assets” (See note 11).
~~3.14 Intangible Assets~~
~~Other intangibles~~
~~Other intangibles consist of computer software costs and leasehold improvements and have been valued at cost, less accumulated amortization.~~
Amortization of leasehold improvements is calculated following the straight-line method over the shorter of the life of the improvement or the remaining lease term. Amortization of computer software cost is calculated following the straight-line method over a 5 years period.
~~Goodwill~~
Represents the excess of the acquisition cost over the value assigned to businesses acquired. Goodwill is amortized following the straight-line method over estimated useful lives, not exceeding 10 years.
~~3.15 Severance and vacation~~
~~Severance costs are expensed in the year in which the termination terms are agreed with the employees.~~
~~Vacations are expensed as paid.~~
~~3.16 Deposits~~
~~Deposits are valued at amortized cost. For deposits denominated in foreign currency, the procedure described in Note 3.2 is applied.~~
~~3.17 Subordinated Negotiable Obligations~~
~~Subordinated Negotiable Obligations are valued at amortized cost plus accrued interest using the internal rate of return.~~
~~3.18 Shareholders’ Equity~~
Shareholders’ Equity accounts have been adjusted for inflation following the procedure described in Note 3.1, except for the “Capital Stock” account, which has been stated at their original values. The adjustment stemming from the restatement of these accounts has been capitalized.
~~3.19 Minimum Presumed Income Tax and Income Tax~~
Income tax is calculated at the rate of 35% on the tax result for all the years presented. Argentine Banking GAAP does not require the recognition of the effects of temporary differences between the carrying amounts of existing assets and liabilities and their respective tax basis and, therefore, income taxes for Banco Supervielle and Cordial Compañía Financiera are recognized on the basis of amounts due in accordance with Argentine tax regulations.
F-14

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended~~ 2020
-
December 31, ~~2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Minimum presumed income tax, established by Law No. 25,063, complements income tax since while the latter is assessable on the taxable profit for the fiscal year, minimum presumed income tax is a minimum tax levied on potential income provided by certain productive assets at the rate of 1%; the Entity’s tax obligation for each fiscal year being the higher of the two taxes. However, if in any fiscal year minimum presumed income tax exceeds income tax, that amount in excess will be computable as payment on account of income tax in excess of minimum presumed income tax arising in any of the following ten fiscal years.
The abovementioned law establishes that, the entities regulated by the Financial Institutions Law must consider 20% of their taxable assets as the taxable basis for calculation of the minimum presumed income tax, after deducting those defined as non-computable assets.
On December 27, 2017, the Argentine Congress approved a comprehensive income tax reform that will become effective as 2018. This tax reform, among other things, reduces the 35% income tax rate to 30% for 2018 and 2019 ~~and to 25% from 2020 onwards, and imposes a withholding income tax on dividends paid by an Argentine entity of 7% for 2018 and 2019 increasing this percentage to 13% from 2020 onwards.~~
~~3.20~~~~Cash and Cash Equivalents~~
~~Cash and cash equivalents include cash and due from banks and highly liquid investments with an original maturity of less than three months according to the following detail:~~

December 31,

2017

2016

2015

Cash and due from banks

Ps.
11,129,475

Ps.
8,166,132

Ps.
6,808,591

Securities issued by the BCRA — listed

13,611,524

336,785

645,218

Investments in money market funds

680,866

1,185,637

162,693

Cash and cash equivalents

Ps.
25,421,865

Ps
9,688,554

Ps
7,616,502

~~Reconciliation between balances as appearing on the Balance sheet and the items considered as Cash and cash equivalents:~~

December 31,

2017

2016

2015

Cash and due from banks

As per the Balance sheet

Ps.
11,129,475

Ps.
8,166,132

Ps.
6,808,591

As per the Statement of cash flows

Ps.
11,129,475

Ps.
8,166,132

Ps.
6,808,591

Government and corporate securities

Securities issued by the BCRA

As per the Balance sheet

Ps.
13,611,627

Ps.
1,414,053

Ps.
691,246

BCRA bills and notes — unlisted

Ps.
(103
)
(1,077,268
)
(46,028
)
As per the Statement of cash flows

Ps.
13,611,524

Ps.
336,785

Ps.
645,218

Other receivables from financial transactions

Other receivables not included in the debtor classification regulations

Financial trust Participation Certificates, Financial trust debt securities and other (Note 8)

Ps.
1,251,073

Ps.
1,928,212

Ps .
1,543,389

Other assets

Ps.
(570,207
)
(742,575
)
(1,380,696
)
As per the Statement of cash flows

Ps.
680,866

Ps.
1,185,637

Ps.
162,693

F-15

~~Table of Contents~~
435,401
Reverse Repo Transactions:
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended~~
Book Value
December 31, ~~2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~3.21~~~~Use of Estimates~~
The preparation of financial statements in conformity with Argentine Banking GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years. Significant estimates include those required for the accounting of the allowance for loan losses, the recoverable value of assets and the provisions for contingencies, among others. Actual results could differ from those estimates.
~~3.22~~~~Impairment of long-lived assets~~
The Group periodically evaluates the carrying value of its long-lived assets and certain intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying value of a long-lived asset is considered impaired by the Group when the expected cash flows, discounted and without interest cost, from such an asset, is less than its carrying value. In that event, a loss would be recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Previously recognized impairment loss is only reversed when there is a subsequent change in estimates used to compute the fair value of the asset. In that event, the new carrying amount of the asset should be the lower of its fair value or the net carrying amount the asset would have had if no impairment had been recognized.
4.~~Restricted Assets~~
At 2020
22,354,735
December 31, ~~2017 and 2016, the following Group’s assets are restricted:~~

December 31,

Item

2017

2016

Loans

In guarantee of secured borrowings

Ps.
28,075

Ps.
178,862

Ps.
28,075

Ps.
178,862

Other receivables from financial transactions

Special guarantee accounts in BCRA (a)

Ps.
855,261

Ps.
535,351

Others

—

620

Ps.
855,261

Ps.
535,971

Miscellaneous receivables

Trust guarantee deposits

Ps.
15,057

Ps.
7,893

Guarantee deposits for forward transactions

245,550

114,820

Guarantee deposits for repurchase agreements

—

59,014

Guarantee deposits for credit cards

161,079

135,297

Other guarantee deposits

26,295

21,316

Total

Ps.
447,781

Ps.
338,340

~~(a)~~2019
-
F-55
GRUPO SUPERVIELLE S.A.         ~~Includes the special accounts balances as security for activities related to automated clearing house~~
F-16

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
5.~~Government and Corporate Securities~~
~~Government and corporate securities consist of the following:~~

December 31,

2017

2016

Holding of Government Securities

Measured at fair value

Ps.
1,187,196

Ps.
125,243

Measured at amortized cost

508,589

818,853

Total

Ps.
1,695,785

Ps.
944,096

Securities issued by the BCRA

Measured at fair value

13,611,524

336,785

Measured at amortized cost

103

1,077,268

Total

Ps.
13,611,627

Ps.
1,414,053

Investment in listed corporate securities

Argentine shares

38,624

1,895

Total

Ps.
38,624

Ps.
1,895

Total government and corporate securities

Ps.
15,346,036

Ps.
2,360,044

~~The maturities as of December 31, 2017, of government and corporate securities were as follows:~~

Maturing within

Carrying value

1 year

1 to 5 years

5 to 10 years

After
10 years

Listed Government Securities

Ps.
1,187,196

1,051,558

81,940

53,571

127

Unlisted Government Securities

508,589

508,589

—

—

—

Securities issued by the BCRA

13,611,627

13,611,627

—

—

—

Investment in listed corporate securities

38,624

38,624

—

—

—

Ps.
15,346,036

15,210,398

81,940

53,571

127

6.~~Loans~~
~~The Group’s lending activities consist of the following:~~
· ~~Loans to the non-financial public sector: loans to the federal and provincial governments of Argentina.~~
· ~~Loans to the financial sector: loans to local banks and financial entities.~~
· ~~Loans to the non-financial private sector and foreign residents:~~
~~Overdrafts~~ ~~— short-term obligations drawn on by customers through overdrafts of current accounts.~~
~~Promissory Notes~~ ~~— endorsed promissory notes, discounted and purchased bills and factored loans.~~
~~Mortgage loans~~ ~~— loans to purchase or improve real estate and collateralized by such real estate or commercial loans secured by real estate.~~
F-17

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Automobile and other secured loans~~ ~~— loans where collateral is pledged as an integral part of the loan document.~~
~~Personal loans~~ ~~— loans to individuals.~~
~~Credit card loans~~ ~~— loans to credit card holders.~~
~~Foreign Trade loans~~ ~~— loans to exporters / importers.~~
~~Government securities loans~~ ~~— loans where government securities are exchanged.~~
~~Other~~ ~~— includes mainly short-term loans for export prefinancing and financing.~~
~~As of December 31, 2017 and 2016, the classification of the Group’s loan portfolio pursuant to BCRA regulations was as follows:~~

December 31,

2017

2016

Non-financial public sector

Ps.
32,607

Ps.
4,306

Financial sector (Argentine)

419,366

473,414

Non-financial private sector and foreign residents

56,035,998

35,317,936

Commercial

- With self-liquidating preferred guarantees

821,715

538,046

- With other preferred guarantees

4,205,026

1,891,658

- Without preferred guarantees

21,544,937

14,312,177

Consumer

- With self-liquidating preferred guarantees

132,542

90,109

- With other preferred guarantees

1,636,559

108,021

- Without preferred guarantees

27,695,219

18,377,925

Subtotal

56,487,971

35,795,656

Less: Allowance (Note 7)

(1,533,598
)
(899,147
)
Total

Ps.
54,954,373

Ps.
34,896,509

Loans with “Self-liquidating preferred guarantees” consist mainly of loans secured by cash collateral, gold collateral, warrants over primary products and other forms of collateral of self-liquidation.
~~Loans with “Other preferred guarantees” consist, in general, of loans secured by mortgages and other forms of collateral pledged to secure the loan amount.~~
~~Loans “Without preferred guarantees” consist, in general, of unsecured loans.~~
~~The following industry segments comprised the most significant loan concentrations as of December 31, 2017 and 2016:~~

December 31,

2017

2016

Financial Sector

3.2
%
3.4
%
Services

5.3
%
3.6
%
Primary Products

10.5
%
8.1
%
Consumer

56.2
%
58.2
%
Retail Trade

2.7
%
3.7
%
Construction

8.0
%
8.8
%
Manufacturing

7.2
%
4.4
%
Other

6.9
%
9.8
%
F-18

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Substantially all of Group´s operations, property and customers are located in Argentina. Therefore, the performance of loan portfolio, financial condition and the results of its operations depend primarily on the macroeconomic and political conditions prevailing in Argentina.
7.~~Allowance for Loan Losses~~
The activity in the allowance for loan losses (which includes the allowances for loans, for other receivables from financial transactions and for receivables from financial leases) for the years ended December 31, 2017, 2016 and 2015, was as follows:

December 31,

2017

2016

2015

Balance at beginning of year

Ps.
(920,208
)
Ps.
(638,648
)
Ps.
(429,358
)
Provision charged to income

(1,820,169
)
(1,057,637
)
(543,844
)
Write-offs and reversals

1,171,097

776,077

334,554

Balance at end of year

Ps.
(1,569,280
)
Ps.
(920,208
)
Ps.
(638,648
)
The Group has entered into certain renegotiations with customers. The Group has eliminated any differences between the principal and accrued interest due under the original loan and the new loan amount through a charge against the allowance for loan losses.
8.~~Other Receivables and Liabilities from Financial Transactions, Miscellaneous Receivables and Miscellaneous Liabilities~~
~~The composition of other receivables from financial transactions, by type of guarantee, as of December 31, 2017 and 2016 was as follows:~~

December 31,

2017

2016

Preferred guarantees, including deposits with BCRA

Ps.
855,261

Ps.
535,351

Unsecured

5,716,461

3,243,192

Allowance (Note 7)

(10,326
)
(5,807
)

Ps.
6,561,396

Ps.
3,772,736

~~The breakdown of the caption “other” included in “Other receivables from financial transactions” in the balance sheet was as follows:~~

December 31,

2017

2016

Other receivables not included in the debtor classification regulations

Financial Trust Participation Certificates

Ps.
470,238

Ps.
530,607

Financial Trust Debt Securities

99,969

100,644

Money Market Funds

680,866

1,185,637

Other Mutual Funds

—

110,951

Other

—

373

Other payments by third parties

15,966

11,979

Other financing

681,476

376,601

Accrued commissions receivable

77,497

113,371

Other

165,193

156,084

Ps.
2,191,205

Ps.
2,586,247

F-19

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~The breakdown of the caption “other” included in “Other liabilities from financial transactions” in the balance sheet was as follows:~~

December 31,

2017

2016

Collections and other operations on behalf of third parties

Ps.
1,465,674

Ps.
953,743

Sundry (payment orders abroad)

342,877

464,070

Other withholdings and collection

452,209

455,663

Social security payment orders pending settlement

123,538

82,761

Liabilities for financing of purchases

19,799

29,845

Other

198,469

146,843

Ps.
2,602,566

Ps.
2,132,925

~~The breakdown of the caption “other” included in “Miscellaneous receivables” in the balance sheet was as follows:~~

December 31,

2017

2016

Guarantee deposits

Ps.
448,979

Ps.
339,340

Sundry debtors

821,205

397,399

Payments in advance

134,962

109,568

Tax advances

136,959

95,116

Loans to employees

179,300

190,925

Receivables from sale of assets

65,650

998

Other

14,198

5,857

Ps.
1,801,253

Ps.
1,139,203

~~The breakdown of the caption “other” included in “Miscellaneous liabilities” in the balance sheet was as follows:~~

December 31,

2017

2016

Tax payable

Ps.
944,982

Ps.
727,218

Payroll and social security

788,046

583,317

Sundry creditors

1,152,847

678,246

Collections in advance

166,772

156,382

Other

3,663

35,531

Ps.
3,056,310

Ps.
2,180,694

F-20

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
The Group enters into forward transactions related to government securities and foreign currencies. The Group recognizes cash, security or currency amount to be exchanged in the future as a receivable and payable at the original transaction date. The assets and liabilities related to such transactions are as follows:

December 31,

2017

2016

Amounts receivable from spot and forward sales pending settlement

3,374,940

4,745

Receivables from repo transactions of government securities

3,352,271

—

Receivable from spot sales of government and private securities pending settlement

17,151

3,501

Receivables from spot sales of foreign currency pending settlement

1,967

1,091

Receivables from other spot sales pending settlement

3,551

153

Securities and foreign currency receivable from spot and forward purchases pending settlement

56,781

594,730

Spot purchases of government and private securities pending settlement

22,411

980

Spot purchases of foreign currency pending settlement

31,411

3,322

Forward purchases of securities under repo transactions

—

590,266

Other spot purchases pending settlement

2,959

162

Amounts payable for spot and forward purchases pending settlement

25,275

592,386

Payables for spot purchases of government securities pending Settlement

22,352

970

Payables for spot purchases of foreign currency pending settlement

5

—

Payables for forward purchases of securities under repo transactions

—

591,264

Other payables for spot purchase pending settlement

2,918

152

Securities and foreign currency to be delivered under spot and forward sales pending settlement

3,788,545

29,979

Forward sales of government securities under repo transactions

3,758,266

3,500

Spot sales of foreign currency pending settlement

26,696

26,317

Other forward sales pending settlement

3,583

162

~~These instruments consist of foreign currency and securities contracts (spot and forward purchases and sales), whose valuation method is disclosed in Note 3.8).~~
~~Premiums on these instruments have been included in the “Financial income” and “Financial expense” captions of the consolidated statements of income of each year.~~
9.~~Unlisted equity Investments~~
~~Equity investments in other companies consisted of the following as of December 31, 2017~~ ~~and 2016:~~

December 31,

2017

2016

In Complementary and authorized activities

Mercado Abierto Electrónico S.A.

Ps.
61

Ps.
61

SEDESA S.A.

37

39

Argencontrol S.A.

25

25

Compensadora Electrónica S.A.

56

54

Provincanje S.A.

684

684

Total equity investments in Complementary and authorized activities

Ps.
863

Ps.
863

F-21

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31,

2017

2016

In Non-financial Institutions

Viñas del Monte S.A.

Ps.
—

Ps.
2,730

San Luis Trading S.A.

51

51

SWIFT S.A.

1

1

Other

88

87

Total equity investments in non-financial institutions

Ps.
140

Ps.
2,869

Less: Allowances (Note 13)

Ps.
(269
)
Ps.
(231
)
Total Equity investments

Ps.
734

Ps.
3,501

~~The interests in mutual guarantee companies are not above detailed, as their aggregated amount is lower than Ps. 1.~~
~~10.~~~~Premises and Equipment, net~~
~~The major categories of premises and equipment as December 31, 2017 and 2016 were as follows:~~

December 31,

2017

2016

Land and buildings

Ps.
351,587

Ps.
368,400

Furniture and fittings

64,386

61,009

Machinery and equipment

251,365

169,028

Vehicles

27,093

23,138

Ps.
694,431

Ps.
621,575

Accumulated depreciation included in the above categories was Ps. 474,654 and Ps. 356,060 as of December 31, 2017 and 2016, respectively. Depreciation expense was Ps. 118,594, Ps. 81,558 and Ps. 56,637 as of December 31, 2017, 2016 and 2015, respectively.
~~11.~~~~Miscellaneous Assets~~
~~Miscellaneous assets consisted of the following as of December 31, 2017~~ ~~and 2016:~~

December 31,

2017

2016

Construction in progress

Ps.
279,659

Ps.
22,267

Advances for purchase of assets

832

249

Stationery and office supplies

35,364

20,449

Works of art

3,739

3,455

Assets taken as guarantee for loans

325

331

Others miscellaneous assets

292,345

378,750

Ps.
612,264

Ps.
425,501

~~Depreciation expense was Ps. 11,184, Ps. 7,740 and Ps 7,311 as of December 31, 2017, 2016 and 2015, respectively.~~
~~12.~~~~Intangible Assets~~
~~12.1 Goodwill~~
~~As of December 31, 2017 and 2016 goodwill breakdown is as follows:~~
F-22

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31,

Estimated Useful
life (years)

2017

2016

Goodwill for the purchase of Banco Regional de Cuyo S.A., net of accumulated amortization

10

Ps.
2,556

Ps.
6,391

Goodwill for the purchase of Cordial Compañía Financiera, net of accumulated amortization

10

18,526

23,697

Goodwill for the purchase of Supervielle Seguros S.A., net of accumulated amortization

10

954

1,130

Others

7

257

Total

Ps.
22,043

Ps.
31,475

~~12.2 Other Intangible Assets~~
~~As of December 31, 2017 and 2016, the organization and development costs breakdown is as follows:~~

December 31,

Estimated useful
life (years)

2017

2016

Cost from information technology projects (a)

5

208,752

Ps.
142,946

Other capitalized cost (b)

5

93,706

111,041

Total

302,458

Ps.
253,987

~~(a) Under Central Bank rules, the Bank capitalizes software cost relating to preliminary application development and post implementation stages of software development.~~
~~(b) Under Central Bank rules, the Bank records cost inherent to the improvements in leased building.~~
~~Amortization expense of goodwill and other intangible assets was Ps. 138,097, Ps. 120,579 and Ps. 101,733 as~~ ~~of December 31, 2017, 2016 and 2015, respectively, which was recorded in Administrative expenses and Miscellaneous Losses.~~
~~13.~~~~Allowances and Provisions~~
~~Allowances on other assets and provisions as of December 31, 2017 and 2016 were as follows:~~

December 31,

2017

2016

Allowances against asset accounts:

Unlisted equity investments (a)

Ps.
269

Ps.
231

Miscellaneous receivables, for collection risk (b)

50,492

37,295

Ps.
50,761

Ps.
37,526

Provisions:

For contingent commitments

3,985

2,347

Other contingencies (c)

76,178

60,905

Total Provisions

Ps.
80,163

Ps.
63,252

~~(a) Includes the estimated losses due to the excess of the cost over the equity method in equity investments.~~
~~(b) Based upon an assessment of debtors’ performance, the economic and financial situation and the collateral securing their respective obligations.~~
~~(c) Includes the estimated amounts payable under lawsuits against the Group and other contingences.~~
F-23

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~14.~~~~Other Liabilities from Financial Transactions - Banks and International Institutions, and Loans from Domestic Financial Institutions~~
~~The Group borrows funds under different credit arrangements from local and foreign banks and international lending agencies as follows:~~

December 31,

Description

2017

2016

Banks and International Institutions

Contractual long-term liabilities

Ps.
5,168

Ps.
31,342

Contractual short-term liabilities

Ps.
2,778,102

Ps.
671,668

Total Banks and International Institutions

Ps.
2,783,270

Ps.
703,010

Loans from Domestic Financial Institutions

Contractual long-term liabilities

Ps.
387,944

Ps.
43,564

Contractual short-term liabilities

Ps.
232,856

Ps.
940,259

Total Loans from Domestic Financial Institutions

Ps.
620,800

Ps.
983,823

Total

Ps.
3,404,070

Ps.
1,686,833

~~As of December 31, 2017 maturities of the above long-term loans for each of the fiscal years 2019 through 2021 and thereafter were as follows:~~
Contractual long-term Liabilities

2020

Ps.
116,323

2021

104,207

Thereafter

172,582

Ps.
393,112

~~15.~~~~Other Liabilities from Financial Transactions - Unsubordinated and Subordinated Negotiable Obligations~~
~~15.1 Unsubordinated Negotiable Obligations~~
~~The amounts outstanding and the terms corresponding to outstanding unsubordinated negotiable obligations were as follows:~~

Annual

December 31,

Issue date

Maturity date

interest rate

2017

2016

Short-Term

Grupo Supervielle Class XX

07/28/2015

01/28/2017

Mixed

Ps.
—

129,389

Cordial Compañía Financiera Class IX

10/06/2015

10/06/2017

Badlar + Spread 5.95%

Ps.
—

83,750

Cordial Compañía Financiera Class X

05/19/2016

11/19/2017

Badlar + Spread 5.50%

Ps.
—

197,000

Cordial Compañía Financiera Class XII

12/23/2016

12/23/2017

24.90%

Ps.
—

154,214

Cordial Compañía Financiera Class XIII

12/16/2016

06/23/2018

Badlar + Spread 4,00%

Ps.
151,429

—

Cordial Compañía Financiera Class XI

10/25/2016

04/24/2018

Badlar + Spread 3.57%

Ps.
200,000

—

Banco Supervielle Class V

11/19/2015

05/20/2017

Badlar + Spread 4.50%

Ps.
—

339,715

Banco Supervielle Class VI

10/12/2016

10/12/2018

Badlar + Spread 3,50%

Ps.
421,347

—

F-24

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

Annual

December 31,

Issue date

Maturity date

interest rate

2017

2016

Banco Supervielle Class VII

11/15/2016

11/17/2017

Badlar + Spread 3.50%

Ps.
—

268,273

Total short-term liabilities

Ps.
772,776

1,172,341

Long-Term

Grupo Supervielle Class XIII

01/31/2014

01/31/2019

Badlar +Spread 6.25%

Ps.
22,870

22,659

Banco Supervielle Class VI

10/07/2016

10/12/2018

Badlar + Spread 3.50%

Ps.
—

420,507

Cordial Compañía Financiera Class XI

10/25/2016

04/24/2018

Badlar + Spread 3.57%

Ps.
—

200,000

Cordial Compañía Financiera Class XIII

12/23/2016

06/23/2018

Badlar + Spread 4.00%

Ps.
—

151,429

Cordial Compañía Financiera Class XIV

05/11/2017

05/11/2019

Badlar + Spread 3,50%

Ps.
555,396

—

Cordial Compañía Financiera Class XV

08/24/2017

02/23/2019

Badlar + Spread 3,75%

Ps.
411,410

—

Cordial Compañía Financiera Class XVI

11/22/2017

11/21/2019

Spread 4,25% + TM20

Ps.
532,308

—

Banco Supervielle Class A

02/09/2017

08/09/2020

Badlar + Spread 4,50%

Ps.
4,731,379

—

Banco Supervielle Class B

12/22/2017

12/22/2019

TM20 + Spread 3,25%

Ps.
625,271

—

Banco Supervielle Class C

12/22/2017

12/22/2021

Badlar + Spread 4,25%

Ps.
655,792

—

Total long-term liabilities

Ps.
7,534,426

794,595

Ps.
8,307,202

1,966,936

~~As of December 31, 2017 and 2016, interest and principal on all of the above debt securities were payable in Pesos.~~
Accrued interest on the above liabilities for Ps. 282,183 and Ps. 74,749 as of December 31, 2017 and 2016 is included under the caption “Other Liabilities from Financial Transactions” in the accompanying balance sheet.
~~15.2 Subordinated Negotiable Obligations~~
~~The amounts outstanding and the terms corresponding to outstanding subordinated negotiable obligations at the dates indicated were as follows:~~

December 31,

Issue date

Maturity date

Annual
interest rate

2017

2016

Subordinated Negotiable obligations

Banco Supervielle Class I

11/08/10

11/11/17

11.375
%
—

800,674

Banco Supervielle Class III

8/15/13

8/20/20

7.00
%
431,701

363,623

Banco Supervielle Clas IV

11/14/14

11/18/21

7.00
%
254,172

214,461

Total long-term liabilities

Ps.
685,873

Ps.
1,378,758

~~As of December 31, 2017, interest and principal on all of the above subordinated negotiable obligations were payable in US Dollars.~~
~~Each line of the “Subordinated Negotiable Obligations” includes accrued interest for a total amount of Ps. 12,985 and Ps. 23,485 as of December 31, 2017 and 2016.~~
F-25

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Subordinated long-term negotiable obligations as of December 31, 2017 mature as follows:~~
2018

Ps.
12,985

2019

—

2020

420,845

2021

252,043

Total

Ps.
685,873

~~16.~~~~Balances in Foreign Currency~~
~~The balances of assets and liabilities denominated in foreign currencies (principally in U.S. dollars) were as follows:~~

December 31,

2017

2016

Assets:

Cash and due from banks

Ps.
6,090,701

Ps.
3,736,333

Government and corporate securities

1,685,490

886,997

Loans

12,307,602

5,539,631

Other receivables from financial transactions

101,856

158,894

Receivables from financial leases

317,401

50,023

Equity investments in other companies

1

1

Miscellaneous receivables

724,457

125,785

Unallocated items

4,605

3,597

Total

Ps.
21,232,113

Ps.
10,501,261

Liabilities:

Deposits

Ps.
14,085,744

Ps.
7,402,682

Other liabilities from financial transactions

3,255,107

1,180,392

Miscellaneous liabilities

89,396

35,313

Subordinated Negotiable Obligations

685,873

1,378,757

Unallocated items

7,378

12,134

Total

Ps.
18,123,498

Ps.
10,009,278

~~17.~~~~Deposits and Interest-bearing Deposits with Other Banks~~
~~Interest-bearing Deposits with Other Banks:~~
a)             Included in “Cash and Due from Banks” there are: (1) interest-bearing deposits with the BCRA totaling 7,083,631 and 5,736,955 as of December 31, 2017 and 2016, respectively; and (2) interest-bearing deposits in local and foreign banks totaling 956,719 and 529,885 as of December 31, 2017 and 2016, respectively.
b)             ~~Included in “Loans” there are: overnight bank interest-bearing deposits totaling 379,466 and 419,456 as of December 31, 2017 and 2016, respectively.~~
~~Deposits~~
~~The following table sets forth information regarding the maturity of deposits exceeding Ps.100,000 at December 31, 2017:~~
F-26

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

~~December 31, 2017~~
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
10. DERIVATIVE FINANCIAL INSTRUMENTS
~~Time Deposits~~
~~Within 3 months~~
~~Ps.~~
~~13,936,903~~
~~After 3 months but within 6 months~~
~~4,715,336~~
~~After 6 months but within 12 months~~
~~71,206~~
~~Over 12 months~~
~~190~~
~~Total Time Deposits(1)~~
~~Ps.~~
~~18,723,635~~
~~(1)~~ ~~Only principal.~~
~~18.~~~~Transactions with Related Parties~~
The Group has granted loans to certain related parties including officers, equity-method investees and consolidated companies. Total loans outstanding as of December 31, 2017 and 2016, amounted to Ps. 351,217 and Ps. 133,600, respectively.
Such loans were made in the ordinary course of business at normal credit terms, including interest rates and collateral requirements, and, in management’s opinion, such loans represent normal credit risk.
~~19.~~~~Breakdown of Captions Included in the Income Statement~~

December 31,

2017

2016

2015

Financial Income

Other

Interest on foreign trade loans

Ps.
228,131

Ps.
84,597

Ps.
33,558

Premium on repo transactions

180,153

13,556

5,283

Forward transactions

—

—

228,152

Income from sales of equity investments

—

—

1,089

Mutual guarantee companies income

63,131

51,463

—

Other

28,429

37,029

584

Ps.
499,844

Ps.
186,645

Ps.
268,666

December 31,

2017

2016

2015

Financial Expenses

Other

Turnover Tax

Ps.
980,563

Ps.
698,526

Ps.
431,929

Premium on repo transactions

108,712

94,143

38,085

Forward transactions

71,830

39,016

—

Other

1,659

1,073

521

Ps.
1,162,764

Ps.
832,758

Ps.
470,535

December 31,

2017

2016

2015

Services fee income

Other

Commissions

Ps.
2,187,068

Ps.
1.684.792

Ps.
1,527,169

Income from Mutual Funds administration services

204,818

140,118

80,234

Rentals from safety boxes

128,431

90,938

74,684

Other

60,142

37,550

13,972

Ps.
2,580,459

Ps.
1,953,398

Ps.
1,696,059

F-27

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Service fee expense

Other

Expenses and promotions related to credit cards

Ps.
256,119

Ps.
205,265

Ps.
158,474

Turnover tax

375,447

263,615

208,140

Other

76,857

67,736

46,031

Ps.
708,423

Ps.
536,616

Ps.
412,645

December 31,

2017

2016

2015

Miscellaneous income

Other

Sales of products

Ps.
568

Ps.
92,755

Ps.
73,919

Other adjustments and interest of miscellaneous credits

117,686

42,327

14,055

Rentals

26,709

42,256

24,900

Gains on premises and equipment and miscellaneous assets disposals

3,147

5,568

101,079

Charge of couriers

7,939

5,274

4,174

Recoveries from National Social Security Administration (ANSES)

36,926

—

—

Other

64,636

28,575

36,929

Ps.
257,611

Ps.
216,755

Ps.
255,056

December 31,

2017

2016

2015

Miscellaneous losses

Other

Charges paid to National Social Security Administration (ANSES)

Ps.
113,341

Ps.
229,669

Ps.
12,309

Unrecoverable VAT and other tax credits

13,092

19,296

9,429

Grants paid

22,439

15,115

6,540

Turnover tax

23,585

13,819

10,964

Losses on quota refund

61,836

12,744

12,762

Losses related to fiduciary services

3,801

2,244

—

Court resolutions paid

4,918

1,480

1,322

Other adjustments and interest of miscellaneous liabilities

6,622

1,432

—

Other

57,480

62,891

119,449

Ps.
307,114

Ps.
358,690

Ps.
172,775

~~20.~~~~Income Taxes~~
~~Income tax charge for the fiscal years ended December 31, 2017, 2016 and 2015 amounted to Ps. 772,483, Ps. 500,603 and Ps. 247,161 respectively.~~
As of December 31, 2017 and 2016, the consolidated Group’s Minimum Presumed Income Tax (MPIT) available to credit against future income tax amounts to Ps. 26,183 and Ps 8,408, respectively. Such MPIT expire over the following ten years.
~~21.~~~~Restrictions Imposed on the Distribution of Dividends~~
The distribution of retained earnings in the form of dividends is governed by the Argentine Corporations Law. These rules require Grupo Supervielle to transfer 5% of its net income to a legal reserve until the reserve equals to 20% of the company’s outstanding capital stock.
F-28

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~In addition, with regard to Banco Supervielle and Cordial Compañía Financiera the regulations in force at December 31, 2017 provide as follows:~~
a)                 20% of the profits shown by the income statement for the fiscal year, plus - minus the adjustments to prior year results, minus the accumulated loss, if any, at the end of the preceding year, must be transferred to the Bank´s legal reserve.
b)                 ~~No profits may be distributed or remitted prior to the approval of the results for the year and of the publication of the Bank´s annual financial statements.~~
c)                  All profit distributions must have the prior authorization of the Superintendency of Financial and Exchange Institutions of the BCRA, the intervention of which will be aimed at verifying the correct application of the procedures described in the regulations in force on this matter, issued by the BCRA.
d)                 The amount to be distributed, shall not compromise the Company’s liquidity and solvency, which can be verified by not recording insufficiencies in the capital adequacy requirements at the end of the fiscal year from which dividends are to be paid out. In regards to minimum liquidity requirements, the average balance of liquid assets (in pesos, foreign currency or government securities) must exceed the liquidity requirement of the last closed period, or the projected period considering the dividend payment.
~~22.~~~~Capital Stock~~
As of December 31, 2017 the Group has outstanding 126,738,188 Ordinary Class “A”, nominated, non-endorsable shares, which are entitled to five votes per share and 329,984,134 Ordinary Class “B”, nominated and non-endorsable shares, which are entitled to one vote per share.
On October 7, 2015, the Company’s shareholders approved the capitalization of retained earnings for an amount of 124,485, by issuing 63,369,094 Class A ordinary shares, 59,516,170 Class B ordinary shares and 1,600,000 preferred shares. At the same time, shareholders approved an amendment to preferred shares terms, giving their holders the right to convert the preferred into an equal number of Class B ordinary shares. Such option was exercised by the preferred shares holders on January 5, 2016 and in consequence the 3,200,000 outstanding preferred shares were cancelled and an equal number of new Class B ordinary shares were issued.
On April 14, 2016, the National Securities Commission authorized the public offering by the Resolution No. 18,023 and amended by Resolution No. 18,033 dated April 21, 2016. The public bid of ordinary shares ended on May 18, 2016. 127,500,077 ordinary shares were assigned, and delivered by issuing 95,682,077 new class B shares and by 31,818,000 shares sold by existing shareholders of the Company, all shares with a nominal value of Ps. 1.00 and one vote per share. The price was set at USD 2.20 per share, or USD 11.00 per American Depositary Share (ADS), whith each ADS representing 5 shares. Moreover, as of May 26, 2016, the international underwriters excersiced the overallotment option for 19,125,010 class B ordinary shares of nominal value Ps. 1.00 each and one vote per share, which were issued on May 27, 2016.
~~The issuance of new class B ordinary shares for 95,682,077 and 19,125,010 makes a total capital increase of 114,807,087.~~
As of March 28, 2017, the shareholder Julio Patricio Supervielle promised to make a contribution in kind of 7,672,412 shares of Sofital S.A.F. e I.I. On April 27, 2017, the General Shareholders’ Meeting resolved to capitalize the said contribution, increasing the capital stock by up to 8,032, through the issuance of 8,032,032 Class B common shares entitled to one vote per share. On July 12, 2017, the Subscription Period ended in relation to the issuance of up to 8,032,032 new ordinary class B shares. As a result, Grupo Supervielle S.A. increased its share capital by 7,494,710 new shares.
F-29

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
As of July 7, 2017, the Ordinary and Extraordinary General Shareholders’ Meeting approved an increase in the share capital of Grupo Supervielle S.A. for the sum of up to Ps.145,000,000 (Pesos one hundred and forty-five million pesos), to be offered by public subscription in the country or abroad.
The public bid of ordinary shares ended on September 12, 2017. 103,000,000 ordinary shares were assigned, and delivered by issuing 70,000,000 new class B shares and by 33,000,000 shares sold by existing shareholders of the Company, all shares with a nominal value of Ps. 1.00 and one vote per share. The price was set at USD 4.00 per share, or USD 20.00 per American Depositary Share (ADS), whith each ADS representing 5 shares. Moreover, as of September 15, 2017, the international underwriters excersiced the overallotment option for 15,449,997 class B ordinary shares of nominal value Ps. 1.00 each and one vote per share, which were issued on September 19, 2017.
~~The issuance of new class B ordinary shares for 70,000,000 and 15,449,997 makes a total capital increase of 85,449,997.~~
~~The Company is not subject to the minimum capital requirements established by the BCRA.~~
Pursuant to BCRA regulations, Banco Supervielle and Cordial Compañía Financiera must maintain a minimum capital, which is calculated by weighting the risks related to assets, bank premises and equipment, miscellaneous and intangible assets.
~~Under BCRA regulations, as of December 31, 2017 and 2016, the minimum capital requirements as applied to the Bank were as follows:~~

Minimum Capital

Computable Capital

Computable Capital as a %
of Minimum Capital

December 31, 2017

Ps.
6,170,705

Ps.
10,430,163

169,0

December 31, 2016

Ps.
4,187,509

Ps.
6,146,853

146,8

~~As of December 31, 2017 and 2016, the Bank and CCF, met all capital adequacy requirements to which are subject.~~
~~23.~~~~Earnings per Share~~
Basic and diluted earnings per share are based upon the weighted average of common shares outstanding of Grupo Supervielle. Average shares outstanding were 392,831,769, 319,827,519 and 151,839,052, for the years ended December 31, 2017, 2016 and 2015, respectively.
~~24.~~~~Contribution to the Deposit Insurance System~~
Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.
The National Executive Branch through Decree No. 1127/98 dated September 24, 1998, extended this insurance system to demand deposits and time deposits of up to Ps. 30 denominated either in pesos and/or in foreign currency. In May 2016, the amount was updated to Ps. 450, through Communication “A” 5943.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to Banco Supervielle, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up after July 1, 1995, at an interest rate exceeding the one established regularly by the BCRA based on a daily survey conducted by it. Those deposits whose ownership has been acquired through endorsement and
F-30

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
those deposits made as a result of incentives other than the interest rate are also excluded. This system has been implemented through the creation of the Deposit Insurance Fund (“FGD”), which is managed by a company called Seguros de Depósitos S.A. (“SEDESA”). The shareholders of SEDESA are the BCRA and the financial institutions, in the proportion determined by the BCRA based on the contributions made to the fund.
~~25.~~~~Financial Instruments with Off-Balance Sheet Risk~~
~~25.~~~~a. Credit-related financial instruments~~
The Group enters into various transactions involving off-balance sheet financial instruments. The instruments could be used in the normal course of its business in order to meet the financing needs of its customers. These instruments expose the Group to credit risk above and beyond the amounts recorded in the consolidated balance sheets. These financial instruments include commitments to extend credit, standby letters of credit, guarantees granted and acceptances.
~~The Group uses the same credit policies in making commitments, conditional obligations and guarantees as it does for granting loans.~~
The Group’s exposure to credit loss in the event of non-performance by the counterparty to the financial instrument for standby letters of credit, guarantees granted and acceptances is represented by the contractual notional amount of those investments.
~~A summary of the credit exposure related to these items is shown below:~~

December 31,

2017

2016

Standby letters of credit

Ps.
100,039

Ps.
19,458

Guarantees granted

Ps.
724,953

Ps.
488,792

Acceptances

Ps.
48,554

Ps.
41,961

~~Standby letters of credit and guarantees granted are conditional commitments issued by the Group to guarantee the performance of a customer to a third party.~~
~~Acceptances are conditional commitments for foreign trade transactions.~~
The credit risk involved in issuing letters of credit and granting guarantees is essentially the same as that involved in extending loan facilities to customers. In order to grant guarantees to its customers, the Group may require counter-guarantees. These counter-guarantees are classified by type, as follows:

December 31,

2017

2016

Preferred counter-guarantees

Ps.
12,590,730

Ps.
5,844,275

Other counter-guarantees

Ps.
23,199,398

Ps.
10,341,973

The Group accounts for checks drawn on other banks, as well as other items in process of collection, such as notes, bills and miscellaneous items, in memorandum accounts until such time as the related item clears or is accepted. In management’s opinion, the risk of loss on these clearing transactions is not significant. The amounts of clearing items in process were as follows:

December 31,

2017

2016

Checks drawn on other banks

Ps.
1,045,459

Ps.
1,985,525

Bills and other items for collection

Ps.
1,942,623

Ps.
3,445,586

F-31

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~25.~~~~b. Trust activities~~
~~See note 26~~
~~25.~~~~c. Derivative Financial Instruments~~

In the normal course of business, the Group enters into a variety of transactions principally in the foreign exchange stock markets. Most counterparties in the derivative transactions are banks and other financial institutions.

These instruments include:
·
- Forwards and ~~Futures:~~futures: they are agreements to deliver or take delivery at a specified rate, price or index applied against the underlying asset or financial instrument, at a specific date. Futures are exchange traded at standardized amounts of the underlying asset or financial instrument.
Forwards contracts are OTC agreements and are principally dealt in by the Group in foreign exchange as forward agreements.
·
- Swaps: they are agreements between two parties with the intention to exchange cash flows and risks at a specific date and for a period in the future.
·
- Options: they confer the right to the buyer, but no obligation, to receive or pay a specific quantity of an asset or financial instrument for a specified price at or before a specified date.

Pursuant to BCRA´s rules, forward transactions with delivery of underlying assets, must be recorded under “Other receivables from financial intermediation” and “Other liabilities from financial transactions” in the accompanying consolidated balance sheet and they are valued as mentioned in Note 3.8.
As of December 31, 2020 and 2019, the following amounts were recorded for operations related to derivatives:
12/31/2020 12/31/2019
Amounts receivable for spot and forward transactions pending settlement 143,944 350,680
Amounts payable for spot and forward transactions pending settlement - -
143,944 350,680

The following table shows, the notional value of options and outstanding forward and futures contracts as of December 31, 2020 and 2019:
12/31/2020 12/31/2019
Forward sales of foreign exchange without delivery of underlying assets 3,189,269 446,195
Forward purchases of foreign exchange without delivery of underlying assets 1,647,980 579,188
The incomes/(expenses) generated by derivative financial instruments during the years ended December 31, 2020 and 2019 amounted to 180,102 and 971,521 respectively.
11. EARNINGS PER SHARE
Earnings per share are calculated by dividing income attributable to the Group´s shareholders by the weighted average number of outstanding common shares during the period. As the Group does not have preferred shares or debt convertible into shares, basic earnings are equal to diluted earnings per share.
12/31/2020 12/31/2019 12/31/2018
Income attributable to shareholders of the group 3,499,882 (2,929,201 ) (6,341,497 )
Weighted average of ordinary shares (thousands) 456,722 456,722 456,722
Income per share 7.66 (6.41 ) (13.88 )
F-56
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
12. SPECIAL TERMINATION ARRANGEMENTS
Special termination arrangements are principally termination benefits payable to employees who accepted a pre-retirement offer. These benefits are payable during the period between their effective termination date and their retirement age, when they voluntarily accept an irrevocable termination arrangement.
As of December 31, 2020 and 2019, special termination arrangements amounted to Ps. 1,146,516 and Ps. 1,289,981, respectively. The amounts charged to profit or loss regarding these benefits as of December 31, 2020 and 2019 were Ps. (140,695) and Ps. 718,688, respectively including in Other non-financial liabilities.
The evolution during each period is detailed below:
12/31/2020 12/31/2019
Balances at the beginning 1,289,981 829,507
Charged to profit or loss 140,695 718,688
Benefits paid to participants (284,160 ) (258,214 )
Balances at closing 1,146,516 1,289,981
F-57
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
13. PROPERTY, PLANT AND EQUIPMENT
Changes in property, plant and equipment for financial years ended on December 31, 2020 and 2019 are as follows:
Gross carrying amount Depreciation
Item At the beginning of the year Useful Life Revaluation Additions Additions by business combinations Disposals At the end of the year At the beginning of the year Disposals Additions by business combinations Of the Year Other Movements At the end of the year
Net carrying amount
12/31/2020

Cost model
Furniture and facilities 1,373,239 10 - 77,415 - (30,084 ) 1,420,570 (949,089 ) (85,526 ) - (100,150 ) - (1,134,765 ) 285,805
Machinery and equipment 4,296,555 5 - 1,326,532 - (436,367 ) 5,186,720 (3,822,034 ) (238,037 ) - (308,075 ) - (4,368,146 ) 818,574
Vehicles 235,652 5 - 72,255 - (47,045 ) 260,862 (101,041 ) 25,273 - (44,344 ) - (120,112 ) 140,750
Right of use assets 2,047,260 - - 803,901 - (704,233 ) 2,146,928 (771,302 ) 604,923 - (780,397 ) - (946,776 ) 1,200,152
Construction in progress 653,718 - - 152,146 - (167,470 ) 638,394 - - - - - - 638,394
Revaluation model -
Land and Buildings 2,600,111 50 818,447 786,020 - (1,846 ) 4,202,732 (114,615 ) 2,489 - (70,643 ) - (182,769 ) 4,019,963
Total 11,206,535 818,447 3,218,269 - (1,387,045 ) 13,856,206 (5,758,081 ) 309,122 - (1,303,609 ) - (6,752,568 ) 7,103,638
Gross carrying amount Depreciation
Item At the beginning of the year Useful Life Revaluation Additions Additions by business combinations Disposals At the end of the year At the beginning of the year Disposals Additions by business combinations Of the Year Other Movements At the end of the year
Net carrying amount
12/31/2019

Cost model
Furniture and facilities 1,373,239 10 - - - - 1,373,239 (944,414 ) - - (4,675 ) - (949,089 ) 424,150
Machinery and equipment 4,226,071 5 - 261,872 - (191,388 ) 4,296,555 (3,398,030 ) 425,780 - (849,784 ) - (3,822,034 ) 474,521
Vehicles 236,589 5 - 47,385 - (48,322 ) 235,652 (80,055 ) 21,317 - (42,303 ) - (101,041 ) 134,611
Right of use assets - 6 - 2,047,260 - - 2,047,260 - 877 - (772,179 ) - (771,302 ) 1,275,958
Construction in progress 746,082 - - 154,345 - (246,709 ) 653,718 - - - - - - 653,718
Revaluation model
Land and Buildings 2,537,146 50 (84,516 ) 147,606 - (125 ) 2,600,111 (123,271 ) 40,558 - (31,902 ) - (114,615 ) 2,485,496
Total 9,119,127 (84,516 ) 2,658,468 - (486,544 ) 11,206,535 (4,545,770 ) 488,532 - (1,700,843 ) - (5,758,081 ) 5,448,454
F-58
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
13.1 Revaluation of Property, Plant and Equipment
The Group´s properties, plant and equipment measured at revaluation model were valued at each reporting date by an independent expert. The frequency of revaluations ensures fair value of the revalued asset does not differ materially from its carrying amount.
The last revaluation was made on December 31, 2020.
The following are the book values that would have been recognized if the assets had been accounted under the cost model:
Class Revaluation
date Revalued
amount Residual Value
according to the
cost model Difference
Land and buildings 12/31/2020 4,019,963 3,201,516 818,447
Land and buildings 12/31/2019 2,485,496 2,570,012 (84,516 )
For all Land and Buildings with a total valuation of 4,020 million as of December 31, 2020, the valuation was determined using sales Comparison Approach prepared by the Group’s management considering a report of an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the price per meter (Level 3). The Group estimated that, other factors being constant, a 5% reduction on the Sales price per meter for the period ended December 31, 2020 would have reduced the value of the Land and Buildings on 150.7 million, which would impact, net of its tax effect on the "Net Revaluation surplus of property, plant and equipment" item in the statement of comprehensive income.
14. INVESTMENT PROPERTIES
The movements in investment properties for the years ended December 31, 2020 and 2019 were as follows:
Item At the Beginning of the year Total useful
life P/L for changes in the FV Additions Disposals As of 12/31/2020

Measurement at fair value
Rented properties 5,520,143 50 (92,457 ) 1,447,123 (876,864 ) 5,997,945
TOTAL INVESTMENT PROPERTIES 5,520,143 (92,457 ) 1,447,123 (876,864 ) 5,997,945
Item At the Beginning of the year Total useful
life P/L for changes in the FV Additions Disposals As of 12/31/2019
Measurement at fair value
Rented properties 865,687 50 (173,076 ) 4,834,792 (7,260 ) 5,520,143
TOTAL INVESTMENT PROPERTIES 865,687 (173,076 ) 4,834,792 (7,260 ) 5,520,143
Investment properties are measured at fair value which is determined by professionally qualified valuers.
For all Investment Properties with a total valuation of 5.998 million as of December 31, 2020, the valuation was determined using sales Comparison Approach prepared by the Group’s management considering a report of an independent expert. Sale prices of comparable properties are adjusted considering the specific aspects of each property, the most relevant premise being the price per meter (Level 3). The Group estimated that, other factors being constant, a 5% reduction on the Sales price per meter for the period ended December 31, 2020 would have reduced the value of the Investment Properties by 224.9 million, which would impact, net of its tax effect on the "Other Operating Income" item in the Income statement.
F-59
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
15. INTANGIBLE ASSETS
Intangible assets of the Group for fiscal years ended on December 31, 2020 and 2019 are as follows:
Gross carrying amount Depreciation
Item At the beginning of the year Additions Additions by business combinations Disposals At the End of the year At the beginning of the year Disposals By business combinations Of the year At the End of the year
Net carrying amount at
12/31/2020

Measurement at cost
Goodwill 3,632,645 7,292 - - 3,639,937 - - - - - 3,639,937
Brands 199,999 - - - 199,999 - - - - - 199,999
Other intangible assets (*) 3,913,880 1,739,447 - (14,279 ) 5,639,048 (1,827,099 ) (71 ) - (869,276 ) (2,696,446 ) 2,942,602
TOTAL 7,746,524 1,746,739 - (14,279 ) 9,478,984 (1,827,099 ) (71 ) - (869,276 ) (2,696,446 ) 6,782,538
Gross carrying amount Depreciation
Item At the beginning of the year Additions Additions by business combinations Disposals At the End of the year At the beginning of the year Disposals By business combinations Of the year At the End of the year
Net carrying amount at
12/31/2019

Measurement at cost
Goodwill 3,613,818 18,827 - - 3,632,645 - - - - - 3,632,645
Brands 199,999 - - - 199,999 - - - - - 199,999
Other intangible assets (*) 3,033,287 886,405 - (5,812 ) 3,913,880 (1,203,185 ) 164 - (624,078 ) (1,827,099 ) 2,086,781
TOTAL 6,847,104 905,232 - (5,812 ) 7,746,524 (1,203,185 ) 164 - (624,078 ) (1,827,099 ) 5,919,425
(*)mainly include systems and programs.
F-60
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020, presented in comparative format
(Expressed in thousands of pesos)
15.1 Goodwill impairment
Goodwill is assigned to the Group’s cash generating units on the basis of the operating segments.
12/31/2020 12/31/2019
Supervielle Seguros S.A. 9,686 9,686
Cordial Compañía Financiera S.A. 243,971 243,971
Banco Regional de Cuyo S.A. 50,784 50,784
InvertirOnline S.A.U. / InvertirOnline.Com Argentina S.A.U. 1,846,042 1,846,042
Micro Lending S.A.U. 1,453,519 1,453,519
Others 35,935 28,643
TOTAL 3,639,937 3,632,645
The recoverable amount of a cash generating unit is determined on the basis of its value in use. These method uses cash flow projections based on approved financial budgets covering a period of five years.
The key assumptions are related to marginal contribution margins. These were determined on the basis of historic performances, other external sources of information and the expectations of market development.
The discount rates used are the respective average cost of capital ("WACC"), which is considered a good indicator of the cost of capital. For each cash generating unit, where the assets are assigned, a specific WACC was determined considering the industry, the country and the size of the business.
The main macroeconomic premises used are detailed below:
Real Forecast Forecast Forecast Forecast Forecast
2020 2021 2022 2023 2024 2025
Inflation (end of period) 35,6 % 46,8 % 29,2 % 19,6 % 18,0 % 18,0 %
Inflation (average) 44,6 % 41,1 % 37,7 % 24,3 % 18,7 % 18,0 %
Cost of funding (average) 31,3 % 40,0 % 26,8 % 21,5 % 18,8 % 18,8 %
Loan’s interest rate (average) 59,4 % 40,0 % 18,4 % 18,2 % 17,5 % 17,1 %
Goodwill has been tested annually for impairment. No impairment adjustments have been determined over these assets as a result of the tests performed.
The sensitivity analysis for the cash-generating unit to which the Goodwill was allocated was based on a 1% increase in the weighted average cost of capital. The Group concluded that no impairment loss would need to be recognized on the Goodwill in the segment under these conditions.
F-61
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
16. COMPOSITION OF THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND CONSOLIDATED INCOME STATEMENT
16.1 Debt securities at fair value through profit or loss
12/31/2020 12/31/2019
Government securities 8,864,640 768,967
Corporate securities 401,671 4,994
Securities issued by the BCRA 605,592 -
9,871,903 773,961
16.2 Other financial assets
12/31/2020 12/31/2019
Participation Certificates in Financial Trusts 40,855 41,648
Investments in Asset Management and Other Services 1,528,987 1,178,803
Other investments 535,684 81,151
Receivable from spot sales pending settlement 1,077,649 188,679
Several debtors 833,604 848,251
Miscellaneous debtors for credit card operations 203,811 516,154
Miscellaneous debtors for collections 64,631 -
4,285,221 2,854,686
16.3 Other debt securities
12/31/2020 12/31/2019
Government securities 12,674,746 14,226,009
Securities issued by the BCRA 28,181,585 -
Others 3,644 12,331
40,859,975 14,238,340
16.4 Financial assets pledged as collateral
12/31/2020 12/31/2019
Special guarantees accounts in the Argentine Central Bank 3,710,757 2,887,177
Deposits in guarantee 1,194,178 4,374,159
4,904,935 7,261,336
16.5 Inventories
12/31/2020 12/31/2019
Electronics 56,282 29,614
Home and Health care 16,110 10,529
Tools and Workshop Equipment 259 22,121
Obsolescence Reserve (1,687 ) (1,743 )
70,964 60,521
F-62
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
16.6 Other non-financial assets
12/31/2020 12/31/2019
Other Miscellaneous assets 603,701 1,164,863
Loans to employees 235,259 359,305
Payments in advance 321,958 18,474
Other non-financial assets 16,367 -
Retirement Plan 143,252 205,805
Works of art and collector’s pieces 32,343 47,030
1,352,880 1,795,477
16.7 Deposits
12/31/2020 12/31/2019
Non-financial sector 7,911,255 7,447,131
Financial sector 57,416 38,253
Current accounts 16,891,003 14,819,309
Savings accounts 102,845,465 54,445,823
Time deposits and investments accounts 46,113,056 40,457,410
Others 4,823,399 3,968,329
178,641,594 121,176,255
16.8 Liabilities at fair value through profit or loss
12/31/2020 12/31/2019
Liabilities for transactions in local currency 2,002,005 258,060
2,002,005 258,060
16.9 Other financial liabilities
12/31/2020 12/31/2019
Amounts payable for spot transactions pending settlement 1,362,541 2,986,677
Collections and other operations on behalf of third parties 4,951,341 7,112,817
Fees accrued to pay 5,423 366
Financial guarantee contracts 19,832 20,786
Liabilities associated with the transfer of financial assets not derecognized - 970,923
Lease liability 1,181,698 1,288,419
Others 8,054 29,996
7,528,889 12,409,984
16.10 Financing received from the Argentine Central Bank and other financial institutions
12/31/2020 12/31/2019
Financing received from local financial institutions 645,206 1,278,545
Financing received from international institutions 5,207,086 10,998,065
5,852,292 12,276,610
F-63
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
16.11 Provisions
12/31/2020 12/31/2019
Legal issues 32,557 44,993
Labor lawsuits 29,552 38,151
Tax 113,303 106,029
Eventual commitments 8,634 499
Judicial Deposits 22,303 21,465
Restructuring Provision - 680,703
Unused Balances Credit Cards 206,812 -
Charges to be paid to National Social Security Administration 225,387 -
Others 42,544 29,856
681,092 921,696
16.12 Other non-financial liabilities
12/31/2019 12/31/2018
Payroll and social securities 5,500,933 5,401,884
Sundry creditors 3,660,784 3,209,713
Revenue from contracts with customers (1) 188,665 262,069
Tax payable 1,802,458 1,900,826
Social security payment orders pending settlement 894,809 297,448
Other 98,453 103,724
12,146,102 11,175,664
(1) Deferred income resulting from contracts with customers includes the liability for the customers’ loyalty program. The Group estimates the value of ~~options and outstanding forward and futures contracts as of December 31, 2017 and 2016:~~

December 31,

2017

2016

Forward sales of foreign exchange without delivery of underlying assets

Ps
3,092,744

Ps
342,160

Forward purchases of foreign exchange without delivery of underlying assets

568,290

448,223

Repurchase agreements

—

590,266

~~The following table shows,~~ the ~~income / (expenses) generated by derivatives financial instruments during~~points assigned to customers through the ~~years ended December 31, 2017~~ ~~, 2016 and 2015:~~

As of December 31,

2017

2016

2015

Forward transactions results

Ps.
(71,830
)
Ps.
(39,016
)
Ps.
228,050

Call options written on stock

—

—

483

Reverse repurchase agreements

180,153

13,556

5,391

Repurchase agreements

(108,712
)
(94,143
)
(38,084
)
~~26.~~~~Financial Trusts and Mutual Funds~~
a) ~~Financial Trusts~~
~~The Group acts as trustee or settler in financial trusts.~~
F-32

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
I) ~~As Trustee~~
~~The following are the financial trusts where the Group acts as trustee at year-end:~~
~~Financial trust Banex Créditos IV~~
~~Trustee: Banco Supervielle~~
· ~~Banex Asset-Backed Securities Program~~
~~Financial Trust~~
~~Trustee~~
~~Set up on~~
~~Assets~~
~~assigned in~~
~~trust~~
~~Value initially~~
~~assigned in~~
~~trust~~
~~Securities issued and last~~
~~maturity (1)~~
~~Observation~~
~~Holdings —~~
~~book value~~
~~as of~~
~~December~~
~~31, 2017~~
~~(Ps.)~~
~~Fideicomiso Financiero Banex Créditos IV~~
~~Banco~~
~~Supervielle~~
~~S.A.~~
~~03/19/2004~~
~~Personal loans~~
~~Ps.~~
~~30,012~~
~~VDFA~~
~~NV$~~
~~21,000~~
~~Due: 01/20/05~~
~~VDFB~~
~~NV$~~
~~6,000~~
~~Due: 04/20/05~~
CP
~~NV$~~
~~3,000~~
~~Due: 04/20/07~~
~~In liquidation~~
—
~~(1)VDFA means Senior Debt Securities, VDFB means Subordinated Debt Securities and CP means Certificates of Participation~~
~~Guarantee management trusts~~
~~Trustee: Banco Supervielle~~
~~Trust~~
~~Indenture executed~~
on
~~The principal~~
~~obligation expires~~
on
~~Original~~
~~Principal~~
~~amount~~
~~Ps.~~
~~Principal~~
~~balance~~
~~Ps.~~
~~Beneficiaries~~
~~Settlers~~
~~Credimas~~
~~01/11/2013~~
~~01/22/2018~~
~~04/30/2018~~
~~12/26/2018~~
~~16,000~~
~~4,000~~
~~16,000~~
~~1,533~~
~~1,469~~
~~16,000~~
~~Banco~~
~~Supervielle~~
~~S.A.~~
~~Credimas S.A.~~
~~The Group acts also as trustee in the following trusts:~~
·              Mendoza Trust, in liquidation phase, since it has fulfilled the contract period, but is pending the completion of several acts that derive from the trustee. The liabilities recorded, mainly originating from the exclusion of assets, as of December 31, 2017 increased in the amounts of Ps. 17,343 and have been backed by assets in trust (loans, other miscellaneous receivables and other financial assets) in the amount of Ps. 576. This trust will be liquidated following the procedures established by Law 24,441.
·              ~~Lujan Trust: the term of the contract has expired and all documentation relating to the liquidation has been delivered. To date, only the final deregistration in tax matters is still pending.~~
~~II)~~ ~~As Settler~~
The Group transfers portions of their loan portfolio to special purpose trusts that fund the purchase by issuing securities that are sold to third parties, thereby creating an additional source of funding for operations.
In the case of the securitization transactions arranged by the Group, the trustee typically issues senior bonds, subordinated bond and participation certificates, and places the senior bonds and a portion of the subordinated bonds and participation certificates in the Argentine capital markets.
~~The following are the financial trusts where the Group acts as settler at year-end:~~
F-33

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Publicly offered and listed financial trusts~~
~~Supervielle Créditos Financial Trust~~
~~Assets assigned in trust: Personal loans~~
~~Trustee: TMF Trust Company (Argentina) S.A.~~
Financial trust

Set up on

Value initially
assigned in trust
(Ps.)

Securities issued and last maturity (5)

Holdings — book value as
of December 31, 2017 (Ps.)

Serie 88 (1),(3)

07/23/2015

$
220,004

VDF TV A
VN$213,400
Maturity: 11/20/17

VDF TV B
VN$6,600
Maturity: 01/22/18

In liquidation

Serie 91 (1),(3)

11/19/2015

$
300,003

VDF TV A
VN$288,000
Maturity:: 11/20/17

CP
VN$12,000
Maturity: 05/21/18

In liquidation

Serie 93 (2),(3)

03/28/2016

$
300,009

VDF TV A
VN$267,000
Maturity: 04/20/18

CP
VN$33,000
Maturity: 04/22/19

In liquidation

Serie 93 (2),(3)

09/19/2017

$
236,867

VDF TV A
VN$220,285
Vto: 06/20/2019

CP
VN$16,581
Maturity: 04/20/22

VDF TV 302

~~(1) Securities issued under the Supervielle Confiance 3 program~~
~~(2) Securities issued under the Supervielle Confiance 4 program~~
~~(3) Personal loans originated, or subsequently acquired, by Banco Supervielle and granted to ANSES retirees and pensions.~~
~~Cordial Compañía Financiera Crédito Financial Trust~~
~~Assets assigned in trust: Personal Loans~~
~~Trustee: TMF Trust Company (Argentina) S.A.~~
Financial trust

Set up on

Value initially
assigned in trust
(Ps.)

Value of Participation
Certificates issued
as of December 31,
2017 (Ps.)

Value of Debt
securities issued
as of December 31,
2017 (Ps.)

Serie XIV

10/04/2016

266,322

45,201

—

Serie XV

03/07/2016

400,000

99,702

—

Serie XVI

04/07/2017

398,000

96,254

—

Serie XVII

05/17/2017

499,100

115,016

27,498

Serie XVIII

06/13/2017

500,000

110,470

13,372

Total

466,643

40,870

~~b) Mutual Funds~~
~~At December 31, 2017 and 2016, Banco Supervielle is the depository of the following Mutual Funds managed by Supervielle Asset Management.~~

Portfolio

Net worth

Number of units

Mutual Fund

12/31/2017
Ps.

12/31/2016
Ps.

12/31/2017
Ps.

12/31/2016
Ps.

12/31/2017
Ps.

12/31/2016
Ps.

Premier Renta C.P. Pesos

1,908,881

1,419,212

1,906,561

1,417,419

310,154,313

274,406,695

Premier Renta Plus en Pesos

2,376,919

1,952,173

2,364,513

1,940,593

388,251,454

396,802,512

Premier Renta Fija Ahorro

5,570,513

3,887,918

5,466,840

3,875,616

304,239,464

269,631,898

Premier Renta Fija Crecimiento

225,412

527,991

222,822

526,249

23,616,268

69,664,347

F-34

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

Portfolio

Net worth

Number of units

Mutual Fund

12/31/2017
Ps.

12/31/2016
Ps.

12/31/2017
Ps.

12/31/2016
Ps.

12/31/2017
Ps.

12/31/2016
Ps.

Premier Renta Variable

144,493

113,525

141,002

102,116

8,180,869

10,145,371

Premier FCI Abierto Pymes

367,845

503,721

367,121

479,023

114,190,777

182,714,748

Premier Commodities Agrarios

6,891

6,126

6,734

5,740

2,217,205

2,249,465

Premier Capital

310,768

98,748

308,039

98,216

129,624,410

46,218,442

Premier Inversión

603,393

997,897

602,213

996,654

3,590,757,014

7,564,905,911

Premier Balanceado

319,771

167,233

318,628

166,996

238,318,110

163,256,582

Premier Renta Mixta en USD

2,379,900

263,014

2,297,195

229,522

110,928,209

14,172,066

~~27.~~~~Loans and issuance of negotiable obligations~~
~~a. International financing programs~~
~~Global Financial Exchange Program~~
~~In April 2007, the Bank entered into an agreement under the IFC-World Bank Group global financial exchange program whereby the latter entity may issue a guarantee in favor~~application of a ~~correspondent bank, thus hedging~~mathematical model that considers assumptions about redemption rates, the ~~Bank’s payment obligations generated by import or export operations with its customers. This program amounts to USD 30,000,000 (USD thirty million).~~
fair value of points redeemed based on the combination of available products, and customer preferences, as well as the expiration of not redeemed points. As of December 31, ~~2017, in-force operations with coverage~~2020 and 2019, the amounts of 188,665 and 262,069, respectively, have been recorded for the points not redeemed or expired.
The following table shows the estimated use of the liability recorded as of December 31, 2020:
Maturity
Item Up to 12 months Up to 24 months More than 24 months Total
Revenue from contracts with customers 88,352 46,692 53,621 188,665
16.13 Interest Income
12/31/2020 12/31/2019 12/31/2018
Interest on overdrafts 2,678,469 6,217,172 6,807,778
Interest on promissory notes 6,226,382 8,002,944 8,539,122
Interest on personal loans 14,173,544 17,584,460 22,887,135
Interest on corporate unsecured loans 5,981,812 8,360,682 6,322,241
Interest on credit card loans 3,818,628 6,555,201 7,147,137
Interest on mortgage loans 3,994,607 5,148,348 4,123,314
Interest on automobile and other secured loan 738,403 943,454 1,030,844
Interest on foreign trade loans 1,453,129 2,356,094 2,448,435
Interest on financial leases 704,408 1,537,851 1,929,148
Interest on public and private securities measured at amortized cost 20,524,157 - -
Others 4,406,341 4,277,419 2,465,076
Total 64,699,880 60,983,625 63,700,230
F-64
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
16.14 Interest Expenses
12/31/2020 12/31/2019 12/31/2018
Interest on current accounts deposits 6,325,123 8,182,612 10,742,108
Interest on time deposits 19,574,998 27,030,921 13,602,675
Interest on other financial liabilities 2,285,959 10,472,760 9,933,537
Interest from financing from financial sector 100,834 373,163 1,548,673
Others 291,474 1,471,921 641,517
Total 28,578,388 47,531,377 36,468,510
16.15 Net income from financial instruments at fair value through profit or loss
12/31/2020 12/31/2019 12/31/2018
Income from corporate and government securities 2,999,989 2,086,183 3,828,698
Income from securities issued by the Argentine Central Bank 135,491 25,478,678 12,934,407
Derivatives 180,102 971,521 -3,547,400
Total 3,315,582 28,536,382 13,215,705
16.16 Service fee income
12/31/2020 12/31/2019 12/31/2018
Commissions from deposits accounts 4,627,421 4,777,932 4,626,945
Commissions from credit and debit cards 3,413,407 3,944,787 4,576,075
Commissions from loans operations 164,852 401,370 819,244
Others Commissions 3,131,296 - -
Others 156,848 2,583,467 2,391,996
Total 11,493,824 11,707,556 12,414,260
16.17 Service fee expenses
12/31/2020 12/31/2019 12/31/2018
Commissions paid 3,469,846 2,955,840 2,858,035
Export and foreign currency operations 78,423 99,114 112,035
Total 3,548,269 3,054,954 2,970,070
16.18 Income from insurance activities
12/31/2019 12/31/2019 12/31/2018
Accrued premiums 2,300,856 2,978,764 3,081,828
Accrued losses (308,798 ) (471,071 ) (695,386 )
Production expenses (320,603 ) (610,770 ) (609,097 )
Total 1,671,455 1,896,923 1,777,345
16.19 Other operating income
12/31/2020 12/31/2019 12/31/2018
Loans recovered and allowances reversed 572,480 678,796 665,561
Insurance commissions 51,525 92,966 831,740
Rental from safety boxes 340,303 390,561 501,124
Commissions from trust services 9,638 35,778 15,958
Returns of risk funds 1,215,745 235,093 587,419
Commissions from financial guarantees - 854,752 985,595
Default interests 212,927 573,061 505,679
Sale of fixed assets 133,983 - -
Others 1,242,850 890,030 1,087,256
Total 3,779,451 3,751,037 5,180,332
F-65
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
16.20 Personnel expenses
12/31/2020 12/31/2019 12/31/2018
Payroll and social securities 16,682,917 16,902,763 13,627,260
Others expenses 1,493,949 2,380,583 4,757,573
Total 18,176,866 19,283,346 18,384,833
16.21 Administrative expenses
12/31/2020 12/31/2019 12/31/2018
Directors´ and statutory auditors’fees 341,532 382,328 342,430
Professional fees 3,043,958 1,385,391 3,459,708
Advertising and publicity 688,705 737,956 862,200
Taxes 1,857,970 2,000,527 2,244,207
Maintenance, security and services 2,823,341 2,351,755 1,152,917
Rent 72,050 70,446 973,551
Others 1,491,001 3,382,263 2,694,038
Total 10,318,557 10,310,666 11,729,051
16.22 Depreciation and impairment of non-financial assets
12/31/2020 12/31/2019 12/31/2018
Depreciation of property, plant and equipment 523,212 928,664 439,094
Depreciation of other non-financial assets 234,143 145,583 154,856
Depreciation of intangible assets 869,276 624,078 311,013
Depreciation of right-of-use assets 780,397 772,179 -
Impairment of other-non financial assets - - 582
Total 2,407,028 2,470,504 905,545
16.23 Other operating expenses
12/31/2020 12/31/2019 12/31/2018
Promotions related with credit cards 525,355 695,109 886,298
Turnover tax 3,950,539 5,104,595 5,869,614
Fair value on initial recognition of loans 195,459 273,505 809,049
Contributions made to deposit insurance system 289,814 332,127 323,838
Others 1,613,612 2,250,879 1,141,625
Total 6,574,779 8,656,215 9,030,424
17. COMMITMENTS AND CONTINGENCIES
International Financial Reporting Standards result in a contingent liability consisting of (i) a possible obligation, arising from past events, the existence of which must be confirmed by the occurrence of one or more future events of an uncertain nature, which are not have under the control of the Group or (ii) a present obligation that has not been probable or whose amount cannot be measured or estimated with sufficient reliability.
F-66
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
The provisions recorded are detailed below:
12/31/2020 12/31/2019 12/31/2018
Legal issues 32,557 44,993 64,226
Labor lawsuits 29,552 38,151 35,929
Tax 113,303 106,029 27,759
Unused Balances Credit Cards 206,812 - -
Deceased ANSES 225,387 - -
Judicial Deposits 22,303 21,465 20,553
Eventual commitments 8,634 499 2,505
Restructuring Provision - 680,703 -
Others 42,544 29,856 31,052
Total 681,092 921,696 182,024
18. RELATED PARTY TRANSACTIONS
Related parties are those entities that directly, or indirectly through other entities, have control over another, are under the same controlling party or may have significant influence on another entity’s financial or operating decisions.
The Group controls another entity when it has power over other entities’ financial and operating decisions and also receives benefits from such entity. The subsidiaries that the Group has control are detailed in Note 1.2.On the other hand, the Group considers that it has joint control when there is an agreement between the parties on the control of an economic activity in common.
Finally, those cases in which the Group has significant influence is due to the power to influence the financial and operating decisions of another entity but not being able to exercise control over them. To determine these situations, not only the legal aspects are observed, but also the nature and substantiation of the relationship.
Furthermore, the key personnel of the Group’s Management (Board of Directors members and Managers of the Group and its subsidiaries) are considered as related parties.
Controlling Interest
Mr. Julio Patricio Supervielle is the main shareholder of the Group. Julio Patricio Supervielle´s interest in the capital and votes of the Group as of December 31, 2020 and December 31, 2019 is 35.12% and 57.89%; respectively.
Remuneration of key personnel
The remuneration received by the key personnel of the Group as of December 31, 2020 and 2019 amounts to 628.7 million and 480.8 million respectively.
Transactions with related parties
The financings, including those that were restructured, were granted in the normal course of business and on substantially the same terms, including interest rates and guarantees, as those in force at the time to grant credit to non-related parties. Likewise, they did not imply a risk of bad debts greater than normal nor did they present any other type of unfavorable conditions.
The following table presents the aggregate amounts of total consolidated financial exposure of the Bank to related parties, the number of recipients, the average amounts and the single largest exposures as of December 31, 2020 and 2019:
As of December 31, 2020 As of December 31, 2019
Aggregate total financial exposure 242,271 1,311,056
Number of recipient related parties 80 95
(a)     Individuals 71 86
(b)     Companies 9 10
Average total financial exposure 3,028 18,729
Single largest exposure 933,426 1,120,671

GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
19. INSURANCE
a. Assets and liabilities related to insurances activities
12/31/2020 12/31/2019
Assets related to insurance contracts (Loans and other financing)
Receivables premius 590,044 618,048
Commissions receivables 2,023 -
Total 592,067 618,048

Liabilities related to insurance contracts (Other non-financial liabilities)
Debt with insured 136,124 185,380
Debt with reinsurers 11,731 55,239
Debt with co-insurers - 2,317
Debt with producers 183,809 204,734
Technical commitments 221,719 236,877
Outstanding claims paid by re-insurance companies (regularizer) (9,059 ) (655 )
Total 544,324 683,892

Debt with insured
Property insurance
Direct administrative insurance 18,158 15,305
Direct insurance in mediation 25 1,089
Claims settled to pay 293 1,199
Claims occurred and not reported - IBNR 9,794 20,093
Life insurance
Direct administrative insurance 64,506 56,181
Direct insurance in judgments 1,418 1,688
Direct insurance in mediation 886 2,501
Claims settled to pay 19,164 27,525
Claims occurred and not reported - IBNR 21,880 59,799
Total 136,124 185,380

Debt with producers
Producers currenct account 39,274 38,456
Commisions for premiums receivable 144,535 166,278
Total 183,809 204,734

Technical commitments
Course and similar risk
Premiums and surcharges 221,714 236,825
Premium insufficiency 5 52
Total 221,719 236,877
b. Income from insurances activities
The composition of the item “Result for insurance activities” as of December 31, 2020 and 2019 is disclosed in Note 16.18.
F-68
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
20. ASSET MANAGEMENT AND OTHER SERVICES
As of December 31, 2020 and 2019, Banco Supervielle S.A. is the depository of the Asset managed by Supervielle Asset Management S.A.
Portfolio Net Worth Number of Units
Asset Management and Other
Services 12/31/2020 12/31/2019 12/31/2020 12/31/2019 12/31/2020 12/31/2019
Premier Renta C.P. Pesos 36,297,562 19,103,061 36,260,237 19,073,822 12,597,963,038 3,958,398,573
Premier Renta Plus en Pesos 168,089 148,593 162,743 145,943 11,899,481 10,250,999
Premier Renta Fija Ahorro 1,721,266 633,635 1,709,665 625,558 59,317,777 12,851,475
Premier Renta Fija Crecimiento 73,983 63,880 73,386 63,519 3,983,791 3,688,485
Premier Renta Variable 188,342 226,526 185,576 223,268 6,689,975 6,982,580
Premier FCI Abierto Pymes 941,245 762,877 917,368 761,161 119,588,138 91,559,624
Premier Commodities 259,125 28,643 255,128 18,506 25,702,973 2,596,034
Premier Capital 192,336 175,700 191,253 175,237 36,842,932 36,057,519
Premier Inversión 736,703 184,280 713,499 184,186 1,576,391,366 442,160,447
Premier Balanceado 1,196,216 849,329 1,195,336 848,555 253,733,905 249,317,925
Premier Renta Mixta 3,559,642 181,414 3,151,517 181,267 1,072,064,209 76,562,093
Premier Renta Mixta en USD 112,768 177,271 112,768 176,619 2,083,508 2,815,589
Premier Performance en USD 526,115 617,920 521,839 616,534 7,724,190 9,312,208
Premier Global USD 490,472 951,507 489,973 948,572 5,444,411 11,338,023
21.CONTRIBUTION TO THE DEPOSIT INSURANCE SYSTEM
Law No. 24485 and Decree No. 540/95 established the creation of the Deposit Insurance System to cover the risk attached to bank deposits, in addition to the system of privileges and safeguards envisaged in the Financial Institutions Law.
The National Executive Branch through Decree No. 1127/98 dated September 24, 1998, established the maximum amount for this insurance system to demand deposits and time deposits denominated either in Pesos and/or in foreign currency. Such limit was set at $1,000 as from March 1, 2019 and increased to 1,500 as of May 1, 2020.
This system does not cover deposits made by other financial institutions (including time deposit certificates acquired through a secondary transaction), deposits made by parties related to Banco Supervielle, either directly or indirectly, deposits of securities, acceptances or guarantees and those deposits set up at an interest rate exceeding the one established regularly by the Argentine Central Bank. Those deposits acquired through endorsement and those deposits made as a result of incentives other than interest rate are also excluded. This system has been implemented through the creation of the Deposit Insurance Fund (“FGD”), which is managed by a company called Seguros de Depósitos S.A. (“SEDESA”). The shareholders of SEDESA are the Argentine Central Bank and the financial institutions, in the proportion determined for each one by the Argentine Central Bank based on the contributions made to the fund.
22.RESTRICTED ASSETS
As of December 31, 2020 and 2019, the following Grupo Supervielle’s assets are restricted:
Item 12/31/2020 12/31/2019
Financial assets in guarantee
Special guarantee accounts in the Argentine Central Bank 3,710,757 2,887,162
Trust guarantee deposits - 5,173
Guarantee deposits for currency forward transactions 601,248 2,865,356
Guarantee deposits for credit cards transactions 421,942 432,118
Other guarantee deposits 160,820 215,866
Guarantee deposits for repo transactions - 32,510
4,894,767 6,438,185
F-69
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
23. FINANCIAL TRUSTS
The detail of the financial trusts in which the Group acts as Trustee or as Trustee is summarized below:
As Trustee:
Banco Supervielle S.A.
Below is a detail of financial trusts:
Below is a detail of the Guarantee Management trust where the Bank acts as a trustee as of December 31, 2020:
Financial trust Indenture executed on Due of principal obligation Original principal amount Principal balance Beneficiaries Settlers
Fideicomiso de Administración Interconexión 500 KV ET Nueva San Juan - ET Rodeo Iglesia 09/12/2018 The Term of this Trust Fund Contract will be in force over 24 months as from 09/12/2018, or until the expiration of liabilities through Disbursements (Termination Date”). 30 days (thirty days) after the maturity of this Trust Agreement without the parties’ having agreed upon an Extension Commission, the Trustor of the ~~aforementioned agency~~trust account shall receive USD 6,000 (six thousand US Dollars) at the exchange rate in force in Banco Supervielle as a fine. - - Those initially mentioned in Exhibit V (DISERVEL S.R.L., INGENIAS S.R.L, GEOTECNIA (INV. CALVENTE), NEWEN INGENIERIA S.A., INGICIAP S.A., MERCADOS ENERGETICOS, DISERVEL S.R.L.) and providers of works, goods and services included in the Project to be assigned by the Trustee with prior consent of the Trustor Interconexion Electrica Rodeo S.A.
As of 09/30/2020, Banco Supervielle S.A. as Trustee, is undergoing a negotiation process for the Contract “Extension Commission”. On 10/07/2020, the Trustor accepted the extension commission and the Bank accepted the request for the extension of the Trust contract sent by IERSA on 09/16/2020.
Micro Lending Financial Trust
The following are financial trusts where Micro Lending S.A.U acts as settler:
Financial Securitized Issued Securities
Trust Set-up on Amount Type Amount Amount Type Amount
III 06/08/2011 $ 39,779 VDF TV A
Vto: 03/12/13 VN$ 31,823 VDF B
Vto: 11/12/13 VN $ 6,364 CP
Vto: 10/12/16 VN $ 1,592
IV 09/01/2011 $ 40,652 VDF TV A
Vto: 06/20/13 VN$ 32,522 VDF B
Vto: 10/20/13 VN $ 6,504 CP
Vto: 06/29/17 VN $ 1,626
24. ISSUANCE OF DEBT SECURITIES
Banco Supervielle S.A.
Unsubordinated Debt Securities
Global Program for the Issuance of Medium-Term Securities for up to N/V USD 2,300,000 of Banco Supervielle S.A.
On September 22, 2016, the Shareholders’ meeting No. 117, resolved to approve the creation of a Global Program for the Issuance of debt securities for up to a maximum outstanding amount of USD 800,000. The Program was authorized by the National Securities Commission through Resolution No. 18,376 dated November 24, 2016. On March 6, 2018, the Shareholders’ meeting, resolved to approve the extension of the Program for up to a maximum outstanding amount of USD 2,300,000. The Program was authorized by the National Securities Commission through Resolution No. 19,470 dated April 16, 2018.
F-70
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Frequent issuer regime registration CNV
On August 6, 2018, the Board of Directors resolved to request the National Securities Commission (the “CNV”) to register the Bank as a frequent issuer of negotiable obligations. Said request was authorized by the CNV through Resolution No. 19,958 dated December 27, 2018. The Bank is registered with the CNV as a frequent issuer of debt securities under No. 03. At the board meeting of the company on March 7, 2019, it was resolved to approve the Bank’s ratification in the Frequent Issuer Regime and at the Board meeting on December 2, 2019 it was resolved to allocate the maximum amount of USD 300,000 corresponding to the Global Issuance Program of Negotiable Obligations for up to USD 2,300,000, with the bank in the process of reducing the maximum amount of said Program. The CNV approved said ratification through Resolution DI-2020-11-APN-GE #CNV dated February 11, 2020.
On June 12, 2020, the Board of Directors of Banco Supervielle SA, approved the issuance of a Class G Non-Subordinated Negotiable Obligation for an amount that will not exceed in its N/V USD 30,000,000 set within the Global Program of Debt Securities. It was also approved to modify the terms of said issuance, so that the Issue Amount is up to USD 50,000,000 and without prejudice to the fact that the Negotiable Obligations are denominated in USD dollars, they may be integrated and payments under them can be made in pesos. The bidding period ended on June 25, 2020.
As of December 31, 2020 and 2019, the amounts outstanding and the terms corresponding to outstanding unsubordinated negotiable obligations were as follows:
Class Issue Date Maturity Date Annual Interest Rate 12/31/2020 12/31/2019
Banco Supervielle Class A 02/09/2017 08/09/2020 Badlar + Spread 4.5% - 5,179,248
Banco Supervielle Class C 12/22/2017 12/22/2021 Badlar + Spread 4.25% 444,327 908,288
Banco Supervielle Class E 02/14/2018 02/14/2023 Badlar + Spread 4.05% 1,579,563 2,177,446
Banco Supervielle Class G 06/30/2020 06/30/2021 2% Annual Nominal 2,202,858 -
Micro Lending Class III 10/04/2017 10/05/2020 Badlar + Spread 7% - 21,181
Total 4,226,748 8,286,163
The outstanding amount of the Class A Negotiable Obligations was reduced on October 17, 2018 by a nominal value in pesos of $ 618,030 and on January 23, 2019 by a nominal value in pesos of $ 254,925. Thus resulting in the total amount of circulation in pesos of $ 3,895,215.
Subordinated debt securities
Program for the issuance of Negotiable Obligations for up to N/V $ 750,000 (increased to N/V $ 2,000,000) of Banco Supervielle S.A.
As of March 25, 2013, the Bank’s Extraordinary General shareholders’ meeting, approved the creation of a Global Program for the issuance of debt securities for up to a maximum outstanding amount of $750,000. On April 15, 2016, the Ordinary and Extraordinary Shareholders’ meeting approved the increase the maximum outstanding amount of the Program to $2,000,000 or its equivalent in foreign currency, passed by Resolution N° 18,224 from the National Securities Commission on September 22, 2016.
The following chart provides the main terms and conditions of issuances underway as of December 31, 2020 and 2019:
Issuance Maturity Book Value
date Currency Class Amount Amortization Term date Rate 12/31/2020 12/31/2019
08/20/2013 U$S III 22,500 100% at mat, 84 Months 08/20/20 7 % - 1,780,980
11/18/2014 U$S IV 13,441 100% at mat, 84 Months 11/18/21 7 % 1,140,469 1,105,048
Total 1,140,469 2,886,028
F-71
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
25. RESTRICTIONS IMPOSED ON THE DISTRIBUTION OF DIVIDENDS
Pursuant to regulations set by the Argentine Central Bank, 20% of the profits for the year, net of possible prior year adjustments, where applicable, are to be allocated to the Legal Reserve.
Pursuant to the amended text on distributions of dividends, financial entities shall comply with a series of requirements, as follows: i) They shall not be subject to the provisions of Sections 34 and 35 bis of the Financial Institutions Law; ii) No liquidity assistance loans shall have been granted to them; iii) they shall be in compliance with information regimes; iv) they shall not record shortfalls in the compiled minimum capital (without computing for such purposes the effects of the individual exemptions granted by the Superintendence of Financial and Foreign Exchange Institutions) or minimum cash, v) they shall have complied with additional capital margin when applicable.
The entities not facing any of these situations may distribute dividends in accordance with provisions set forth in said amended text, provided the entity´s liquidity or solvency is not jeopardized.
It is worth to be mentioned that pursuant to Communication “A” 6464 issued by the Argentine Central Bank, until March 31, 2020, financial entities, which, for the purpose of determining the distributable result, have not applied the additional on capital margins shall rely on previous authorization issued by the SEFyC.
On August 30, 2019 and with the purpose of stabilizing the exchange market, the Argentine Central Bank issued Communication “A” 6768, pursuant which financial entities shall rely on the previous authorization of Exchange and Financial Entities Superintendence before distributing its income. Over the course of such authorization process, the Central Bank will assess, among other items, potential effects of the application of international accounting standards pursuant to Communication “A” 6430 (Paragraph 5.5 of IFRS 9 – Detriment of financial assets value) as well as the effects of the re-expression of financial statements pursuant to Communication “A” 6651.
On March 19, 2020 the Argentine Central Bank issued Communication “A” 6939 by means of which the suspension of income distribution of financial entities was made effective until June 30, 2020.
Later, on June 4, 2020, through Communication “A” 7035, the Argentine Central Bank extended such suspension until December 31, 2020.
On March 19, 2020, in the midst of the coronavirus’ outbreak crisis, the Central Bank issued Communication “A” 6939, as amended from time to time, by virtue of which the distribution of dividends by financial entities was temporarily suspended until June 30, 2021.
Our shareholders’ equity under the rules of the Argentine Central Bank comprise the following captions:
12/31/2020
Capital Stock 456,722
Capital Adjustment 2,968,586
Paid in Capital 28,858,170
Legal Reserve -
Other Reserves -
Retained earnings 3,412,111
Other Comprehensive Income 642,945
Total shareholders’ equity attributable to the ~~agreement specified in~~owners of the previous paragraph amounted to USD 19,287,000 (nineteen million two hundred eighty seven thousand). On December 31, 2016, this operations amounted to USD 12,956,956 (USD twelve million nine hundred fifty six thousand and nine hundred fifty six).parent under the rules of the Argentine Central Bank 36,338,534
Absorption of Negative Non-Allocated Income
In accordance with the provisions of Title IV, Chapter III, Section 3, Subsection b) of the Regulations of the Argentine Securities Commission (Restated Text 2013), the Company has made use of the option to absorb the accumulated negative results that were generated as a consequence of the inflation adjustment by application of the IAS 29, subject to the ratification of the AGM.
F-72
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Based on the foregoing, and in accordance with the order of absorption of accumulated losses as established in such regulations, Grupo Supervielle’s Net Worth as of January 1, 2020 (transition date) is composed as follows:

~~The agreement signed with the IFC is subject to compliance with certain covenants, the regular remittance~~
January 1, 2020
Thousands of ~~information and certain financial ratios regarding creditworthiness, credit risk, immobilization of assets, exposure~~AR$
Capital stock 456,722
Capital Adjustment 2,968,586
Issue Premium 28,858,170
Other comprehensive income 117,647
Total shareholders´ equity 32,401,125
26. LOANS AND OTHER FINANCING
As of December 31, 2020 and 2019 the composition of the loan portfolio is as follows:
Assets Before Allowances Total as of
December 31,
Stage 1 Stage 2 Stage 3 2020
Promissory notes 18,228,303 610,850 146,257 18,985,410
Unsecured corporate loans 12,407,922 793,555 2,359,458 15,560,935
Overdrafts 2,034,612 159,552 302,868 2,497,032
Mortgage loans 7,894,984 2,118,357 1,044,497 11,057,838
Automobile and other secured loans 1,227,511 312,404 352,278 1,892,193
Personal loans 19,046,521 1,452,586 624,011 21,123,118
Credit card loans 17,420,096 1,839,516 389,148 19,648,760
Foreign Trade Loans 9,558,036 1,585,023 1,901,861 13,044,920
Other financings 3,293,864 725,488 163,301 4,182,653
Other receivables from financial transactions 2,546,026 33,788 59,701 2,639,515
Receivables from financial leases 2,817,385 217,321 152,820 3,187,526
Subtotal 96,475,260 9,848,440 7,496,200 113,819,900
Allowances for loan losses (1,856,309 ) (1,988,731 ) (4,579,674 ) (8,424,714 )
Total 94,618,951 7,859,709 2,916,526 105,395,186
Assets Before Allowances Total as of
December 31,
Stage 1 Stage 2 Stage 3 2019
Promissory notes 10,904,372 300,364 387,249 11,591,985
Unsecured corporate loans 13,579,312 494,932 1,045,787 15,120,031
Overdrafts 5,908,410 119,964 1,593,199 7,621,573
Mortgage loans 8,209,763 1,550,950 1,017,564 10,778,277
Automobile and other secured loans 1,088,637 354,852 217,339 1,660,828
Personal loans 19,124,764 1,518,200 1,541,472 22,184,436
Credit card loans 16,133,436 762,996 738,378 17,634,810
Foreign Trade Loans 22,053,128 837,964 1,819,440 24,710,532
Other financings 10,541,125 127,893 103,346 10,772,364
Other receivables from financial transactions 2,511,245 22,471 62,543 2,596,259
Receivables from financial leases 3,836,879 250,933 250,569 4,338,381
Subtotal 113,891,071 6,341,519 8,776,886 129,009,476
Allowances for loan losses (2,185,274 ) (1,141,825 ) (5,865,030 ) (9,192,129 )
Total 111,705,797 5,199,694 2,911,856 119,817,347

GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Expected Credit Loss Allowances
Expected credit loss allowance recognised in the period is affected by a range of factors as follows:
• Transfers between Stage 1 and Stage 2 or 3 due to financial instruments experiencing significant increases (or decreases) of credit risk or becoming credit-impaired in the period, and the consequent “step up” (or “step down”) between 12 months and Lifetime;
• Additional allowances for new financial instruments recognized during the period, as well as releases for financial instruments de-recognized during the period, ;
• Impact on the measurement of ECL of changes in PDs, EADs and LGDs in 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;
• Discount unwind within ECL due to passage of time, as ECL is measured on a present value basis;
• Foreign exchange retranslations for assets denominated in foreign currencies and other movements; and
• Financial assets derecognised during the period and write-offs of allowances related to assets that were written off 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:
An analysis of changes in the gross carrying amount and the corresponding ECL allowance is, as follows:
Assets Before Allowances ECL Allowance
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Balance at the beginning of the year 113,892,858 6,341,521 8,776,882 129,011,261 2,185,274 1,141,825 5,865,030 9,192,129
Transfers
1 to 2 (3,214,532 ) 3,214,532 - - (116,717 ) 1,082,821 - 966,104
1 to 3 (1,543,847 ) - 1,543,847 - (36,310 ) - 2,481,033 2,444,723
2 to 3 - (846,342 ) 846,342 - - (222,310 ) 742,127 519,817
2 to 1 817,989 (817,989 ) - - 33,836 (124,642 ) - (90,806 )
3 to 2 - 36,687 (36,687 ) - - 10,485 (39,274 ) (28,789 )
3 to 1 46,735 - (46,735 ) - 1,413 - (45,148 ) (43,735 )
Net changes of financial assets (15,379,218 ) 2,736,983 (53,260 ) (12,695,495 ) 832,860 1,226,241 (457,000 ) 1,602,101
Write-Offs (1,123,756 ) (1,151,327 ) (4,102,760 ) (6,377,843 ) (1,123,756 ) (1,151,327 ) (4,102,760 ) (6,377,843 )
Exchange Differences and Others 2,979,031 334,375 568,571 3,881,977 79,709 25,638 135,666 241,013
Gross carrying amount at December 31, 2020 96,475,260 9,848,440 7,496,200 113,819,900 1,856,309 1,988,731 4,579,674 8,424,714

GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Assets Before Allowances ECL Allowance
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Balance at the beginning of the year 148,088,044 15,181,940 8,764,377 172,034,361 3,011,796 2,400,090 4,926,073 10,337,959
Transfers
1 to 2 (1,328,535 ) 1,328,535 - - (83,582 ) 423,682 - 340,100
1 to 3 (6,848,389 ) - 6,848,389 - (126,062 ) - 4,692,322 4,566,260
2 to 3 - (1,760,766 ) 1,760,766 - - (296,040 ) 1,018,262 722,222
2 to 1 5,995,283 (5,995,283 ) - - 74,463 (458,568 ) - (384,105 )
3 to 2 - 62,781 (62,781 ) - - 13,217 (43,191 ) (29,974 )
3 to 1 218,823 - (218,823 ) - 21,122 - (153,805 ) (132,683 )
Net changes of financial assets (45,996,053 ) (2,869,752 ) (2,841,336 ) (51,707,141 ) (799,829 ) (974,665 ) 2,101,388 326,894
Write-Offs - - (6,846,644 ) (6,846,644 ) - - (6,846,644 ) (6,846,644 )
Exchange Differences and Others 13,761,898 394,064 1,372,938 15,528,900 87,366 34,109 170,625 292,100
Gross carrying amount at December 31, 2018 113,891,071 6,341,519 8,776,886 129,009,476 2,185,274 1,141,825 5,865,030 9,192,129
Collateral and other credit enhancements
Collateral is an instrument pledged as security for repayment of a loan, to be forfeited in the event of default. The Entity accepts collateral as security before a potential breach on behalf of a debtor occurs.
The Argentine Central Bank classifies these guarantees in three types: Preferred “A” (considered self-settleable), Preferred “B” (made up by mortgage or pledge loans) and remaining guarantees (mainly bank guarantees and fines).
In virtue of the administration of collateral, the Group relies on a specific area devoted to the review of the legal compliance and suitable instrumentation of received collateral. In accordance with the type of collateral, the guarantors may be people or companies (in the case of mortgages, pledges, fines, guarantees and liquid funds) and international top level Financial Entities (for credit letters stand by).
The Group monitors collateral held for financial assets considered to be credit-impaired as it becomes more likely that the Group will take possession of collateral to mitigate potential credit losses.
Credit Impaired loans Gross exposure Allowances for loans losses Book value Fair value of collateral
Overdrafts 302,868 152,172 150,696 81,482
Financial Lease 152,820 98,234 54,586 102,255
Documents 146,257 138,617 7,640 631
Mortgage loans 1,044,497 249,563 794,934 480,309
Personal loans 624,011 582,724 41,287 -
Pledge loans 352,278 235,434 116,843 107,785
Credit cards 389,148 373,666 15,483 1,319
Other 4,484,321 2,749,264 1,735,057 1,450,733
Total 7,496,200 4,579,674 2,916,526 2,224,514
Write-off policy
The Group writes off, in whole or in part, when it has exhausted all practical recovery efforts and has concluded there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include: (i) ceasing enforcement activity and (ii) where the Group´s recovery method is foreclosing on collateral and the value of the collateral is such that there is no reasonable expectation of recovering in full.
F-75
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
The Group may write-off financial assets that are still subject to enforcement activity, The outstanding contractual amounts of such assets written off during the year ended 31 December, 2020 was 7,198,080. The Group still seeks to recover amounts it is legally owed in full, but which have been partially written off due to no reasonable expectation of recovery.
12.31.2020 12.31.2019
Balance at the beginning of the year 5,240,360 3,614,921
Additions 5,788,119 6,113,008
Disposals (1,229,014 ) (1,666,458 )
Cash colletion (550,119 ) (631,103 )
Portfolio sales (77,117 ) (61,979 )
Condonation (601,778 ) (973,376 )
Exchange differences and other movements (2,601,385 ) (2,821,111 )
Gross carrying amount 7,198,080 5,240,360
27. RISK MANAGEMENT POLICIES
Comprehensive Risk Management is a key discipline for financial institutions. The Group intends to create, through its subsidiaries, a solid and efficient organization in risk management, the framework for an optimal use of its capital and to identify business opportunities in the markets and geographic regions in which it operates, seeking the best risk-reward balance for its shareholders. The risk management framework is communicated to the entire organization and strives to strike a balance between a strong risk culture and being an innovative company, focused on its customers and recognized for its agile, easy and friendly operating style.
The Company’s Board of Directors considers that its criteria and guidelines regarding risk management are a key part of its Corporate Governance. The risks to which the Group is exposed are inherent to the financial industry, such as credit, the market, interest rate, liquidity, operational risk, reputation and strategic risk. In addition, the Group is exposed to the risk of securitization, given its leadership role on this issue.
Financial risk factors
Credit risk
The Integral Risk Committee approves credit risk strategies and policies submitted in accordance with recommendations provided by the Integral Risk Corporate Department, the Credit Corporate Department and commercial sectors and in compliance with regulations set by the Argentine Central Bank. The credit strategy and policy is aimed at the development of commercial opportunities within the framework and conditions of the Group´s business plan, while keeping suitable caution levels in face of the risk.
Policies and procedures enable the definition of accurate aspects aimed at the deployment of the Group´s Strategy related to the administration of credit risk; among them, the Group´s criteria to grant loans, credit benefits and powers, types of products and the way in which the structure is organized, among other aspects. Likewise, the Group relies on an integral risk policy where aspects related to general key risk governance as well as specific manuals and procedures that include, among others, all relevant regulations issued by the Argentine Central Bank.
The Group´s credit risk management policies are applied to corporate and individuals. To such ends, a customer segmentation has been defined for Corporate Banking and Personal and Business Banking.
The Group focuses on supporting companies belonging to sectors with potential, and successful in their activity. Within the range of credit products offered for the business segment, the Group aims to develop and lead the factoring and leasing market, as well as to be a benchmark in foreign trade.
Within Corporate Banking, we seek a solid proposal for medium and large companies’ market, seeking to maintain proximity with clients through service centers, agreements with clients throughout their value chain, and providing agile responses through existing credit processes.
F-76
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Regarding Personal and Business Banking, in addition to payroll and senior citizens segments, special focus is placed on Entrepreneurs and SMEs, SMEs as well as the Banks´s Identité segment.
In the case of CCF, the focus is consumer finance, fundamentally in granting personal loans, credit cards and car loans.
The area of Capital Markets and Structuring targets the trust business segment; placement of assets in the capital market through financial trusts and debt securities, own and of third parties; and for its part, the area of Treasury and Finance has the Trading Desk within its scope. Among traded products are: interbank call, REPO transactions, corporate call, securities from public sector and monetary policy instruments of the Central Bank, acquisition of consumer portfolios, third-party financial trusts, negotiation of financial derivatives (futures, rate swaps, etc.), among others.
The Group is willing to carry out a strategy that enable it to address its contractual commitments, both under normal market conditions and adverse situations. Therefore, the Group relies on scoring and rating models to estimate probability of default (PD) for the different client portfolios. As for risk appetite framework, the Group relies on cut-offs for each risk-based segment that express the maximum risk to be assumed in terms of probability of default.
In addition to PD parameters, the Group relies on estimates of exposure at default (EAD) and loss given default (LGD) parameters with the purpose of estimating Group’s allowance for loan losses and the necessary economic capital to face unexpected losses that may arise due to credit risk.
The Group is aimed at keeping a diversified and atomized portfolio, in order to minimize risk concentration. To such ends, loan originationand client portfolio profiles are adjusted to each different circumstance. To this end, the entity has an indicators dashboard linked to the appetite for credit and concentration risk. The evolution of the NPL, Coverage and Cost of Risk indicators is monitored in relation to target limits established according to risk appetite and the strategy determined in the entity’s business plan. Likewise, there is a portfolio limits scheme that measures balance concentration by debtor or economic group, the concentration of the main debtors, concentration by value chain, economic activities, portfolio by risk level based on the facility risk rating. and the exposure in foreign currency both at a total level and by product type.
Credit Risk Measurement Models
The Entity relies on models aimed at estimating the distribution of potential credit losses in its credit portfolio, which depend on defaults by the counterparties (PD – Probability of Default), as well as the assumed exposure to such defaults (EAD –Exposure At Default) and the recoveries of each defaulted loan (LGD – Loss Given Default).
Based on the aforementioned, the Group has developed a Risk-Adjusted Return on Capital (RAROC) model.
Regarding CCF, it also has estimates of the aforementioned parameters related to credit risk and a monitoring model of the RAROC Measurement metric.
The Group has deepened its work on the expected loss methodologies under IFRS 9, focusing on methodological improvements in the estimation of parameters (PD, EAD and LGD), aligning the definition of the parameters to the credit process. The forward looking model has been redesigned including more variables and openings. Likewise, effects resulting from the pandemic have been evaluated and incorporated into the expected loss calculation.
Allowances for loan losses calculation
Based on the results of the PD (probability of default), EAD (exposure at the time of default) and LGD (loss in the event of default) estimates, the associated statistical forecast is calculated.
Allowances for loan losses calculation is based on models that analyzes the Group’s own portfolio information to estimate, in global terms, the average value of the loss distribution function over an annual term (expected credit loss). The expected credit loss is determined based on PD, EAD, and LGD loss factors.
F-77
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Economic Capital Calculation
The economic capital for credit risk is the difference between the portfolio’s value at risk (according to the confidence level for individuals of 99.9% and for companies of 99%) and the expected credit losses.
The Group relies on economic capital models for credit risk (one for individuals and another for companies). Such quantitative models include the exacerbation of capital by concentration risk and Securitization Risk. In the economic capital calculation models a one year holding period is used, except from factoring exposures where a six month holding period is used.
Counterparty Risk Management
The Group relies on a Counterparty’s Risk Map approved by the Credit Committee where the following limits are defined for each counterparty according to the Group’s risk appetite: credit exposure and settlement limits, foreign exchange settlement risk, securities settlement risk and Repo transactions settlement risk, among other.
Regarding the economic capital for the counterparty’s risk, it is included in the Economic Capital Quantitative Model for Credit Risk.
Impairment of Financial Instruments
The Group tests for impairment the financial assets measured at amortized cost, debt instruments measured at fair value through other comprehensive income, finance lease and financial guarantee contracts and loan commitments granted that are not measured at fair value.
As a rule, the expected credit loss is estimated as the difference between the contractual cash flows to be recovered and the expected cash flows discounted using the original effective interest rate. In the case of purchased or originated credit-impaired assets, this difference is discounted using the effective interest rate adjusted by credit rating.
The movements in the allowance for loan losses as of December 31, 2020 are detailed in note 26.
Write-Off
The Group reduce the gross carrying amount of a financial asset when it has no reasonable expectations of recovering a financial asset in its entirety of a portion thereof. A write-off constitues a derecognition event.
Maximum Credit Risk Exposure
Financial Instruments to which the impairment requirements in IFRS 9 are applied:
December 31, 2020
ECL Staging
Loan Type Stage 1
12-month ECL Stage 2
Lifetime ECL Stage 3
Lifetime ECL Total
Overdrafts 18,228,303 610,850 146,257 18,985,410
Promissory Notes 12,407,922 793,555 2,359,458 15,560,935
Unsecured Corporate Loans 12,516,187 285,078 302,868 13,104,133
Mortgage Loans 7,894,984 2,118,357 1,044,497 11,057,838
Automobile and other secured loans 1,227,511 312,404 352,278 1,892,193
Personal Loans 19,046,521 1,452,586 624,011 21,123,118
Retail 15,535,247 1,425,146 510,209 17,470,602
Consumer Finance 3,511,274 27,440 113,802 3,652,516
Credit Card Loans 43,673,047 3,118,508 389,148 47,180,703
Retail 38,301,754 2,633,285 243,466 41,178,505
Consumer Finance 5,371,293 485,223 145,682 6,002,198
Receivables from Financial Leases 2,817,385 217,321 152,820 3,187,526
Foreign Trade Loans 9,558,036 1,585,023 1,901,861 13,044,920
Other Financings 3,759,131 746,038 163,301 4,668,470
Other Receivables from Financial Transactions 2,546,404 34,037 59,701 2,640,142
Total 133,675,431 11,273,757 7,496,200 152,445,388
F-78
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
December 31, 2019
ECL Staging
Loan Type Stage 1
12-month ECL Stage 2
Lifetime ECL Stage 3
Lifetime ECL Total
Overdrafts 37,008,385 601,442 1,590,928 39,200,755
Promissory Notes 10,904,371 300,364 387,249 11,591,984
Unsecured Corporate Loans 13,579,312 494,932 1,045,787 15,120,031
Mortgage Loans 8,209,762 1,550,950 1,017,564 10,778,276
Automobile and other secured loans 1,088,637 354,852 217,339 1,660,828
Personal Loans 44,364,398 6,715,548 1,571,483 52,651,429
Personal and Business Banking 17,793,608 1,099,343 592,285 19,485,236
Consumer Finance 26,570,790 5,616,205 979,198 33,166,193
Credit Card Loans 42,284,160 1,241,422 742,864 44,268,446
Personal and Business Banking 36,630,601 1,051,965 370,432 38,052,998
Consumer Finance 5,653,559 189,457 372,432 6,215,448
Foreign Trade Loans 22,053,128 837,964 1,819,440 24,710,532
Other Financings 10,714,901 158,201 103,923 10,977,025
Other Receivables from Financial Transactions 2,511,243 22,471 62,543 2,596,257
Receivables from Financial Leases 3,836,879 250,933 250,565 4,338,377
Total 196,555,176 12,529,079 8,809,685 217,893,940
Financial Instruments to which the impairment requirements in IFRS 9 are not applied
Financial assets measeured at fair value through profit or loss are not subject to impairment The maximum exposure to credit risk is the corresponding fair value.
Market risk
Group defines Market Risk as the risk resulting from deviations in the trading portfolio value as a result of market fluctuations during the period required for the settlement of portfolio positions.
The Risk Department’s measurement, control and follow-up perimeter covers those operations where certain loss risk in the Group ´s shareholders equity value is assumed, as a result of changes in market factors. Such risk results from the variation in risk factors under evaluation (interest rate, exchange rate, market price of equity instruments and options), as well as liquidity risk in the different products and markets where the Group operates.
According to its business strategy, Banco Supervielle is the component of the Group with the greatest exposure to this risk. On the other hand, Cordial Compañía Financiera has a minimum exposure to market risk and associated with liquidity management purposes. That is why market risk controls present a greater level of detail and emphasis on Banco Supervielle’s trading portfolio.
With the purpose of measuring the risk of positions homogeneously and therefore, setting a limit and threshold structure to support management and control schemes, Banco Supervielle uses the VaR model (Value at Risk), which defines the maximum expected loss to be recorded in a financial asset portfolio in normal market conditions, within a certain period of time and at a pre-established confidence level. Indicators obtained from this enable the Group to identify a potential market risk and take preventive measures.
F-79
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Market risk management is focused on the trading portfolio managed by the Trading desk, although there is also a broader control including managed positions with liquidity management objectives. For this reason, in terms of the broader trading portfolio, the controls are limited to the exposure to the assumed risk, measured using the VaR methodology, in relation to the regulatory capital (RC). In addition, a control is carried out on the VaR by group of assets, thus limiting the risk that the Entity can assume in each group of assets considered in isolation. The objective is to incorporate an element of alert to credit events or break in the correlations between groups of assets, events that may escape the consideration of a diversified VaR.
The controls over the Trading desk are more exhaustive. Approved strategies and policies are reflected in what is known internally as a unified Risk Map document, where detailed operations enabled by the Trading desk can be explained in detail. In the same document the entire framework of controls that translate the risk appetite with which the Entity is willing to operate is exposed. In this way, limitations are established on the open position in certain financial instruments, VaR limit on the diversified portfolio, maximum allowable loss amount before executing the stop loss policy and conditions that could lead to the execution of a stop strategy gain. The entire control scheme is complemented by action plans that must be implemented once a violation occurs within the limits established therein.
The exposure to the Group’s exchange rate risk at the end of the year by currency type is detailed below:
Balances as of 12/31/2020 Balances as of 12/31/2019
Currency Monetary Financial Assets Monetary Financial Liabilities

Derivatives
Net
Position
Monetary Financial Assets

Monetary Financial Liabilities

Derivatives
Net
Position
US Dollar 42,899,393 35,709,785 529 7,190,137 56,061,739 50,902,660 - 5,159,079
Euro 974,565 785,018 - 189,547 807,436 783,009 - 24,427
Others 293,182 6,208 - 286,974 199,362 - - 199,362
Total 44,167,140 36,501,011 529 7,666,658 57,068,537 51,685,669 - 5,382,868
Financial assets and liabilities are presented net of derivatives, which are disclosed separately. Derivative balances are shown at their Fair Value at the closing price of the respective currency.
The table above includes only Monetary Assets and Liabilities, since investments in equity instruments and non-monetary instruments does not generate foreign exchange risk exposure.
A sensitivity analysis was performed considering reasonably possible changes in foreign exchange rates in relation to the Group’s functional currency. The percentage of variation used in this analysis is the same the Group used in its Business Plan and Projections.
12/31/2020 12/31/2019
Currency Variation P/L Equity Variation P/L Equity
US Dollar 40.20 % 2,687,853 2,687,853 31.9 % 270,549 270,549
(40.20 )% (2,687,853 ) (2,687,853 ) (31.9 )% (270,549 ) (270,549 )
Euro 40.20 % 75,960 75,960 31.9 % 7,793 7,793
(40.20 )% (75,960 ) (75,960 ) (31.9 )% (7,793 ) (7,793 )
Other 40.20 % 115,338 115,338 31.9 % 61,993 61,993
(40.20 )% (115,338 ) (115,338 ) (31.9 )% (61,993 ) (61,993 )
Total 40.20 % 2,879,151 2,879,151 31.9 % 340,335 340,335
(40.20 )% (2,879,151 ) (2,879,151 ) (31.9 )% (340,335 ) (340,335 )
Sensitivity Analysis
It is important to note that within the daily report provided to the trading desk for the monitoring of the exposure to assumed risk, the Financial Risk Management makes a comparison between the profitability obtained and the implicit risk for each asset. When using a diversified VaR methodology, it is important to provide information related to the contribution that each asset in the portfolio makes to the aggregate VaR measurement, and fundamentally if this asset generates risk diversification or not. That is why, within the variables included in the daily report, the VaR component of each asset is included, thus allowing a sensitivity analysis on the impact of each asset on the total risk.
F-80
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
With the aim of improving the assumed risk analysis through the use of alternative measurement metrics, the Group recognizes the change in market conditions on exposure to risk through an adjustment to the volatilities used in the VaR calculation. According to the methodology used, the returns of assets registered in more recent dates have a greater incidence in the calculation of volatilities. In parallel, the Entity performs a measurement and monitoring of the assumed risk through the application of an expected shortfall methodology, analyzing the universe of unexpected losses located in the distribution queue beyond the critical point indicated by VaR.
Economic capital calculation
Banco Supervielle adopts the diversified Parametric VaR methodology for the calculation of market risk economic capital, both at a consolidated and individual level. It should be noted that in the case of Cordial Compañía Financiera, according to the provisions established by the Argentine Central Bank, its Board of Directors has chosen to quantify its needs for economic capital by applying a simplified methodology. According to this methodology, the aggregate economic capital arises from the following expression:
EC = (1,05 x MC) + max [0; ΔEVE – 15 % x bS)]
Where, EC: economic capital according to profile’s risk (ICAAP).
MC: Minimum capital requirement in accordance with Argentine Central Bank regulations.
ΔEVE (Economic Value): measure of interest rate risk calculated according to the Standardized Framework bS (Basic Shareholders’ equity) : Tier 1 capital.
Interest Rate Risk
Interest Rate Risk is the risk derived from the likelihood that changes in the Group’s financial condition occur as a result of market interest rate fluctuations, having effect on its financial income and economic value. The following are such risk factors:
✓ Different terms maturity and interest rate ~~risk.~~re-adjustment dates for assets, liabilities and off balance sheet items.
✓ Forecast, evolution and volatility of local interest rates and foreign interest rates.
✓ The basis risk that results from the unsuitable correlation in the adjustment of assets and liabilities interest rates for instruments that contain similar revaluation features;
The Group’s interest rate risk management model, includes the analysis of interest rates gaps. Such analysis enables the basic explanation of the financial statement structure as well as the detection of interest rate risk concentration along the different terms. Special attention focuses on the accumulated gap during the first ninety days, as it is the holding period used when evaluating exposure to interest rate risk in each of the entities and due to its relevance when evaluating actions that may modify the structural balance positioning.
The interest rate risk management is aimed at keeping the Group’s exposure within those levels of risk appetite profile validated by the Board upon changes in the market interest rates.
To such ends, the interest rate risk management relies on the monitoring of two metrics:

~~As of December 31, 2017~~
✓ MVE – VaR Approach: measures the difference between the economic values estimated given the interest rate market curve and ~~2016,~~said value estimated given the ~~Bank is in compliance with the aforementioned commitments, requirements and obligations.~~
~~Foreign Trade Credit Facility Program~~
In May 2009, Banco Supervielle S.A. entered into agreement within the framework of IDB’s Trade Finance Facilitation Program. Banco Supervielle S.A. the line of credit granted to Banco Supervielle S.A. for USD 15,000,000 (United States dollars fifteen million) under this program shall be used to cover risks inherent in the confirmation of letters of credit, promissory notes, bid guarantees, and other similar instruments used in international business operations.
As of December 31, 2017, there were no current operations with coverage of said entity under the agreement mentioned in the previous paragraphs. As of December 31, 2016, coverage operations under the agreement referred to in the previous paragraph amounted to USD 13,500,000 (U$S thirteen million five hundred thousand).
The agreement entered into with the IDB is subject to compliance with certain financial covenants, certain positive and restrictive covenants, certain do and not do obligations and reporting requirements.
~~As of December 31, 2017 and 2016, the Bank is in compliance with the aforementioned commitments, requirements and obligations.~~
F-35

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~b. Program for the issuance of Negotiable Obligations denominated in USD~~
On April 30, 2007, the Ordinary and Extraordinary Shareholders’ Meeting No. 95 of Banco Supervielle resolved to approve the application for admission to the public offering regime through the creation of a Global Program for the issuance of Corporate Bonds for up to a maximum amount of US$ 200,000,000. The Program was authorized by the Argentine Securities Commission (Comisión Nacional de Valores) on August 10, 2007.
~~b.1. Issuance of Subordinated Corporate Bonds Class I~~
~~On October 13, 2010, the Board of Directors of Banco Supervielle approved the issuance of Class 1 Corporate Bonds. The subscription period ended on November 8, 2010.~~
~~The following are the main terms and conditions of the issuance:~~
~~Amount: US$ 50,000,000.~~
~~Rank: Class 1 Corporate Bonds are Banco Supervielle’s subordinated payment obligations in the terms of the BCRA regulations concerning Regulatory Capital [RPC] and Supplementary Shareholders’ Equity.~~
~~Maturity date: November 11, 2017~~
~~Interest~~interest rate~~: 11.375%~~
~~Interest Payment Date: The interest accrued by the Class 1 Corporate Bonds will be paid on a half-yearly basis on May 11 and on November 11 each year.~~
~~Amortization:~~ ~~Principal shall be repaid on the Maturity Date.~~
~~Applicable law and jurisdiction: The corporate bonds shall be governed by, and must be interpreted according to, the laws of the State of New York~~
~~As of November 12, 2017, Banco Supervielle S.A. made the last interest payment and capital payment of the Class I Negotiable Obligations, being fully amortized.~~
~~As of December 31, 2016, said obligation is registered in item Subordinated loans and Negotiable Obligations for 800,674.~~
On March 25, 2013, the Ordinary and Extraordinary Shareholders’ Meeting of Banco Supervielle resolved to approve the application for admission to the public offering regime through the creation of a Global Program for the issuance of Corporate Bonds for up to a maximum amount of $ 750,000,000. Additionally, on April 15, 2016 the Ordinary and Extraordinary Shareholder’s Meeting of Banco Supervielle resolved to increase the Global Program for up to a maximum amount of $ 2,000,000,000.
~~The Program was authorized by the Argentine Securities Commission (Comisión Nacional de Valores) on September 22, 2016.~~
~~b.2. Issuance of Subordinated Corporate Bonds Class III~~
~~On May 16, 2013 the Board of Directors of Banco Supervielle approved the issuance of Class 3 Corporate Bonds. The subscription period ended on August 15, 2013.~~
~~The following are the main terms and conditions of the issuance:~~
~~Amount: US$ 22,500,000.~~
~~Rank: Class 3 Corporate Bonds are Banco Supervielle’s subordinated payment obligations in the terms of the BCRA regulations concerning Regulatory Capital [RPC] and Supplementary Shareholders’ Equity.~~
~~Maturity date: August 20, 2020~~
~~Interest rate: 7.00%~~
F-36

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Interest Payment Date: The interest accrued by the Class 3 Corporate Bonds will be paid on a half-yearly basis on February 20 and on August 20 each year.~~
~~Amortization:~~ ~~Principal shall be repaid on the Maturity Date.~~
~~Applicable law and jurisdiction: The corporate bonds shall be governed by, and must be interpreted according to, the laws of Argentina.~~
~~As of August 21, 2017, Banco Supervielle S.A. made the eighth interest payment of the Class III Negotiable Obligations.~~
~~As of December 31, 2017 and 2016, said obligation is recorded in Subordinate Negotiable Obligations item for 431,701 and 363,623, respectively.~~
~~b.3. Issuance of Subordinated Corporate Bonds Class IV~~
On October 14, 2014 the Board of Directors of Banco Supervielle approved an increase of the total amount of the Program for up to Ps. 750,000 and the issuance of Class 4 Corporate Bonds for up to USD 30,000,000 within such Program. The subscription period ended on November 14, 2014.
~~The following are the main terms and conditions of the issuance:~~
~~Amount: US$ 13,441,000.~~
~~Rank: Class 4 Corporate Bonds are Banco Supervielle’s subordinated payment obligations in the terms of the BCRA regulations concerning Regulatory Capital [RPC] and Supplementary Shareholders’ Equity.~~
~~Maturity date: November 18, 2021~~
~~Interest rate: 7.00%~~
~~Interest Payment Date: The interest accrued by the Class 4 Corporate Bonds will be paid on a half-yearly basis on May 18 and on November 18 each year.~~
~~Amortization:~~ ~~Principal shall be repaid on the Maturity Date.~~
~~Applicable law and jurisdiction: The corporate bonds shall be governed by, and must be interpreted according to, the laws of Argentina.~~
~~As of November 20, 2017, Banco Supervielle S.A. made the sixth interest payment of the Class IV Negotiable Obligations.~~
~~As of December 31, 2017 and 2016, said obligation is recorded in Subordinated loans and Negotiable Obligations item for 254,172 and 214,461, respectively.~~
~~b.4. Issuance of Unsubordinated Corporate Bonds Class A~~
As of September 22, 2016, the Bank’s Extraordinary General shareholders’ meeting, passed the creation of a Global Program for the issuance of Negotiable Obligations for up to a maximum outstanding amount of US$ 800,000,000 (eight hundred million pesos).
As of November 23, 2016 the Board passed the issuance of Class A Negotiable Obligations for a maximum amount of V/N USD 300,000,000 (United State dollars three hundred millon). The bidding period closed on February 02, 2017.
~~The following describes the main terms and conditions of the aforementioned issuance of Class A:~~
~~Amount:~~ ~~Ps. 4,768,170~~
~~Rank:~~ ~~Class A Corporate Bonds are Banco Supervielle’s unsubordinated payment obligations~~
~~Maturity date:~~ ~~August 9, 2020~~
~~Interest Rate:~~ ~~Floating Badlar of Private Banks + 4.5%~~
F-37

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Interest Payment Date:~~ ~~The interest accrued by the Class A Corporate Bonds will be paid on a quarterly basis~~
~~Amortization:~~ ~~Capital to be paid in two quotas, first 50% on February 9, 2020 and rest 50% on August 9, 2020.~~
~~Applicable Law and Jurisdiction:~~ ~~Negotiable Obligations shall be governed by and be interpreted pursuant to New York Laws from United States of America.~~
~~As of November 9, 2017, Banco Supervielle S.A. made the third interest payment of the Class A Negotiable Obligations.~~
~~As of December 31, 2017, said obligation is recorded in other liabilities for financial transactions - Unsubordinated Negotiable Obligations item for 4,731,379.~~
~~c. Program for the issuance of Negotiable Obligations denominated in Pesos~~
On March 25, 2013, the Extraordinary Meeting of Shareholders of Banco Supervielle approved the creation of a global program of Corporate Bonds denominated in Pesos for up to a maximum amount of Ps. 750,000.
~~c.1. Issuance of Unsubordinated Corporate Bonds Class V~~
On September 24, 2015 the Board of Directors of Banco Supervielle approved the issuance of Class V Corporate Bonds for up to Ps. 350,000 within of the Program. The subscription period ended on November 18, 2015.
~~The following are the main terms and conditions of the issuance:~~
~~Amount:~~ ~~Ps. 340,100.~~
~~Rank:~~ ~~Class 5 Corporate Bonds are Banco Supervielle’s unsubordinated payment obligations~~
~~Maturity date: May 20, 2017~~
~~Interest rate:~~ ~~Flotante Badlar of Private Banks + 4.50%~~
~~Interest Payment Date:~~ ~~The interest accrued by the Class 5 Corporate Bonds will be paid on a quarterly basis~~
~~Amortization:~~ ~~Principal shall be repaid on the Maturity Date.~~
~~Applicable law and jurisdiction: The corporate bonds shall be governed by, and must be interpreted according to, the laws of Argentina.~~
~~As of May 22, 2017, Banco Supervielle S.A. made the sixth and last interest and capital payment of the Class V Negotiable Obligations, being totally amortized.~~
~~As of December 31, 2016, said obligation is recorded in other liabilities for financial transactions - Unsubordinated Negotiable Obligations item for 339,715~~ .
~~c.2. Issuance of Unsubordinated Corporate Bonds Class VI~~
On July 13, 2016, the Board approved the issuance of Class VI Unsubordinated Negotiable Obligations for a maximum amount of V/N AR$ 600,000,000 (Argentine Pesos sixty million) within the Global Program of Negotiable Obligations. The bidding period closed on October 7, 2016, with a total amount of AR$ 422,000,000 (Argentine Pesos four hundred and twenty two millon) and maturity date October 12, 2018. The agreed rate is Badlar + 3.50%.
~~The following describes the main terms and conditions of the aforementioned issuance of Class VI:~~
~~Amount:~~ ~~Ps. 422,000~~
F-38

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Rank:~~ ~~Class 6 Corporate Bonds are Banco Supervielle’s unsubordinated payment obligations~~
~~Maturity date:~~ ~~October 12, 2018~~
~~Interest Rate:~~ ~~Floating Badlar of Private Banks + 3.5%~~
~~Interest Payment Date:~~ ~~The interest accrued by the Class 6 Corporate Bonds will be paid on a quarterly basis~~
~~Amortization:~~ ~~Principal shall be paid on Maturity Date.~~
~~Applicable Law and Jurisdiction:~~ ~~The corporate bonds shall be governed by, and must be interpreted according to, the laws of Argentina.~~
~~As of October 12, 2017, Banco Supervielle S.A. made the fourth interest payment of the Class VI Negotiable Obligations.~~
~~As of December 31, 2017 and 2016, said obligation is recorded in other liabilities for financial transactions - Unsubordinated Negotiable Obligations item for 421,347 and 420,507, respectively.~~
~~c.3. Issuance of Unsubordinated Corporate Bonds Class B and C~~
As of November 29, 2017 the Board passed the issuance of Unsubordinated Class B and C Negotiable Obligations for a maximum amount of nominal value AR$ 3,500,000,000 (Pesos three thousand five hundred million). The bidding period closed on December 20, 2017.
~~The following describes the main terms and conditions of the aforementioned issuance of Class B:~~
~~Amount: $629,000,000 (Pesos six hundred twenty nine millon)~~
~~Type: Negotiable Obligations will be unsubordinated liabilities of the Bank~~
~~Maturity date: December 22, 2019~~
~~Interest Rate: Floating TM20 + 3.25%~~
~~Interest Payment Date: Interests accrued by Negotiable Obligations will be paid on a three-month basis making the first payment on March 22, 2018~~
~~Minimum interest rate:~~ ~~29.25% applicable in first interest payment.~~
~~Amortization: Capital to be paid at maturity date.~~
~~Applicable Law and Jurisdiction: Negotiable Obligations shall be governed by and be interpreted pursuant to Argentina Laws.~~
~~As of December 31, 2017, said obligation is recorded in other liabilities for financial transactions - Unsubordinated Negotiable Obligations item for 625,271.~~
~~The following describes the main terms and conditions of the aforementioned issuance of Class C:~~
~~Amount: $659,750,000 (Pesos six hundred fifty-nine million seven hundred fifty thousand)~~
~~Type: Negotiable Obligations will be unsubordinated liabilities of the Bank~~
~~Maturity date: December 22, 2021~~
~~Interest Rate: Floating Badlar of Private Banks + 4.25%~~
~~Interest Payment Date: Interests accrued by Negotiable Obligations will be paid on a three-month basis making the first payment on March 22, 2018~~
~~Minimum interest rate:~~ ~~29.25% applicable in first and second interest payment.~~
~~Amortization: Capital to be paid in three equal quotas, first 33.33% quota on December 22, 2020, second 33.33% quota on June 22, 2021 and rest 33.34% at Maturity Date.~~
~~Applicable Law and Jurisdiction: Negotiable Obligations shall be governed by and be interpreted pursuant to Argentina Laws.~~
~~As of December 31, 2017, said obligation is recorded in other liabilities for financial transactions - Unsubordinated Negotiable Obligations item for 655,792.~~
F-39

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~c.4. Issuance of Unsubordinated Corporate Bonds Class D and E~~
As of January 16, 2018 the Board passed the issuance of Unsubordinated Class D and E Negotiable Obligations for a maximum amount of nominal value $ 2,500,000,000 (Pesos two thousand five hundred million). The bidding period closed on February 7, 2018.
~~The~~ ~~following describes the main terms and conditions of the aforementioned issuance of Class D:~~
~~Amount: $748,888,888 (Pesos seven hundred forty eight million eight hundred eighty eight thousand eight hundred and eighty eight).~~
~~Type: Negotiable Obligations will be unsubordinated liabilities of the Bank~~
~~Maturity date: August 14, 2019~~
~~Interest Rate: Floating Badlar + 3.5%~~
~~Interest Payment Date: Interests accrued by Negotiable Obligations will be paid on a three-month basis making the first payment on May 14, 2018.~~
~~Minimum interest rate:~~ ~~26.75% applicable at first interest payment.~~
~~Amortization: Capital to be paid at Maturity Date.~~
~~Applicable Law and Jurisdiction: Negotiable Obligations shall be governed by and be interpreted pursuant to Argentina Laws.~~
~~The~~ ~~following describes the main terms and conditions of the aforementioned issuance of Class E:~~
~~Amount: $1,607,666,666 (Pesos one thousand six hundred seven million six hundred sixty six thousand six hundred sixty six)~~
~~Type: Negotiable Obligations will be unsubordinated liabilities of the Bank~~
~~Maturity date: February 14, 2023~~
~~Interest Rate: Floating Badlar + 4.05%~~
~~Interest Payment Date: Interests accrued by Negotiable Obligations will be paid on a three-month basis making the first payment on May 14, 2018.~~
~~Minimum interest rate:~~ ~~26.25% applicable in three initial interest payment.~~
~~Amortization: Capital to be paid in three equal quotas, first quota on February 14, 2021.~~
~~Applicable Law and Jurisdiction: Negotiable Obligations shall be governed by and be interpreted pursuant to Argentina Laws.~~
~~d. Negotiable Obligations and Short-term securities of Cordial Compañía Financiera~~
~~The following are the series of short-term securities and corporate bonds issued by Cordial Compañía Financiera, outstanding as of December 31, 2017 and 2016:~~

Date of
issuance

Due date

Nominal value
(Ps.)

Applicable Rate

December
31, 2017

December
31, 2016

Class IX

10/06/2015

04/06/2017

88,750

Floating rate 5.95% + BADLAR

—

88,750

Class X

05/19/2016

11/19/2017

199,000

Variable TNA 5.50% + BADLAR

—

199,000

Class XI

10/25/2016

04/24/2018

200,000

Variable TNA 3.57% + BADLAR

200,000

200,000

Class XII

12/23/2016

12/23/2017

154,214

Fixed 24.90%

—

154,214

Class XIII

12/23/2016

06/23/2018

151,429

Variable TNA 4.00% + BADLAR

151,429

151,429

Class XIV

05/11/2017

05/11/2019

558,000

Variable TNA 3.50% + BADLAR

555,396

—

Class XV

08/24/2017

02/23/2019

413,500

Variable TNA 3.75% + BADLAR

411,410

—

Class XVI

11/22/2017

11/21/2019

535,500

Variable TNA 4.25% + TM20

532,308

—

Total

1,850,543

793,393

F-40

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
As of December 31, 2017 and 2016, Cordial Compañía Financiera’s Short Term Securities and Negotiable Obligations are recorded under Unsubordinated Negotiable Obligations for an amount of 1,850,543 and 793,393, respectively.
~~e. Global Program for the Issuance of Corporate Bonds~~
On September 22, 2010, Grupo Supervielle’s Shareholders’ General Meeting passed the adhesion to the public offering regime pursuant Law 17,811 and the creation of a Simple Negotiable Obligations Issuance Global Program, non-convertible into shares, which was passed by the National Securities Commission on November 11, 2010. Said negotiable obligations may be short, medium and/or long term, subordinated or not, with or without guarantee, in pesos, in US dollars or any other currency, for a maximum current amount that shall not exceed, at any time, 1,000,000 (one billion pesos) or its equivalent in any other currency, pursuant to the last amendment of the Program on May, 7, 2015.
Likewise, negotiable obligations may be issued in several classes and/or series over the course of the program enforcement, relying on the possibility of re-issuing successive classes and/or series to be amortized.
As of April 19, 2016, since the aforementioned Program was no longer in effect, the Group’s Ordinary and Extraordinary shareholders’ meeting, passed the creation of a new Negotiable Obligations Issuance Global Program, for the issuance of simple, short and/or medium term, subordinated or not, with or without guarantees, securities for up to a maximum outstanding amount of 1,000,000 (one billion pesos), under which different classes and/or series of Negotiable Obligations denominated in pesos, dollar or other foreign currencies can be issued.
~~At December 31, 2017 and 2016 the following series of corporate bonds of Grupo Supervielle issued under the above mentioned program were outstanding:~~
Class

Issuance
date

Currency

Amount (in
thousands)

Rate

Maturity
Date

12/31/2017

12/31/2016

Class XIII

01/31/2014

AR$

23,100

BADLAR + 6.25%

01/31/2019

22,870

22,659

Class XX

07/28/2015

AR$

129,500

Mixed: Fixed 27.5% until 6th month and BADLAR + 4.5% upon maturity.

01/28/2017

—

129,389

Total

22,870

152,048

~~As of December 31, 2017 Class XX was fully amortized.~~
~~Funds~~ curve resulting from the ~~allocation~~simulation of ~~said negotiable obligations classes, net of issuance expenses, were assigned in full, pursuant~~different stress scenarios. The Group uses this approach to ~~Article 36 of Negotiable Obligations Law 23,576, to~~calculate the ~~settlement of the Group’s financial liabilities.~~
~~28.~~~~Non-controlling interest~~
~~The breakdown of~~economic capital for this ~~caption is as follows:~~

December31,

Company

2017

2016

Banco Supervielle

11,497

103,397

Total

Ps.
11,497

Ps.
103,397

F-risk.41

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~29.~~~~Group’s Risk Management Policies~~
~~Comprehensive risk management constitutes a key discipline for financial institutions. Grupo Supervielle~~ aims to create through its subsidiaries, a solid and efficient organization in risk management, the framework for an optimal use of its capital and for identifying business opportunities in the markets and geographical regions in which it operates, seeking the best risk-reward balance for its shareholders. The risk management framework is communicated to all the organization and strives for a balance between a solid culture in risk matters and being an innovative Company, focused on its customers, and recognized for its agile, straightforward and gentle operating style.
The Company’s Board of Directors considers that its criteria and guidelines regarding risk management are a key part of its Corporate Governance. The risks to which the Company is exposed, are inherent to the financial industry, such as credit, market, interest rate, liquidity, operational, reputational and strategic risk. In addition, the Company is exposed to securitization risk, given the leadership role it has on this subject.
~~Within this framework, Banco Supervielle and Cordial Compañía Financiera follow the guidelines set forth by the BCRA for comprehensive risk management and corporate governance~~
~~30.~~~~Parent only Financial Statements~~
~~The following are the parent company only financial statements of Grupo Supervielle as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015.~~
~~Balance sheet (Parent Company only)~~

��
December 31,

2017

2016

Assets

Current assets

Cash and due from banks

Ps.
17,171

Ps.
4,050

Short - term investments

4,321,803

830,955

Tax credits

10

—

Other receivables

80,885

13,147

Total current assets

Ps.
4,419,869

Ps.
848,152

Non - current assets

Long - term investments

Ps.
10,792,345

Ps.
6,234,535

Premises and equipment

397

—

Tax credits

8,205

11,133

Other receivables

1,682

4,630

Total non-current assets

Ps.
10,802,629

Ps.
6,250,298

Total assets

Ps.
15,222,498

Ps.
7,098,450

Liabilities

Current Liabilities

Trade accounts payable

Ps.
2,275

Ps.
671

Financial indebtedness

2,728

137,833

Taxes payable

1,197

2,802

Other accounts payable

25,675

2,723

Total current liabilities

Ps.
31,875

Ps.
144,029

Non - current liabilities

Financial indebtedness

Ps.
22,870

Ps.
22,870

Other accounts payable

22,955

—

Total non-current liabilities

Ps.
45,825

Ps.
22,870

Total liabilities

Ps.
77,700

Ps.
166,899

Shareholder’s equity

Ps.
15,144,798

Ps.
6,931,551

Total liabilities and shareholders’ equity

Ps.
15,222,498

Ps.
7,098,450

F-42

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Statement of Income (Parent Company only)~~

December 31,

2017

2016

2015

Equity in earnings of controlled companies

Ps.
1,891,777

Ps.
1,285,428

Ps.
788,490

Administrative expenses

(144,721
)
(69,914
)
(26,253
)
Other income, net

56,457

31,086

18,405

Financial results, net

Generated by assets

Ps.
643,273

Ps.
188,345

Ps.
49,176

Generated by liabilities

(9,727
)
(129,641
)
(155,709
)
Income before income tax

Ps.
2,437,059

Ps.
1,311,304

Ps.
674,109

Income tax

—

—

—

Net income for the year

Ps.
2,437,059

Ps.
1,311,304

Ps.
674,109

~~Statement of Cash Flows (Parent Company only)~~

December 31,

2017

2016

2015

Changes in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Ps.
835,005

Ps.
22,042

Ps.
1,657

Net (decrease) / increase in cash and cash equivalents

(678,877
)
812,963

20,385

Cash and cash equivalents at the end of year

Ps.
156,128

Ps.
835,005

Ps.
22,042

Cash flow from operating activities

Operating expenses paid

Ps.
(101,031
)
Ps.
(65,569
)
Ps.
(28,717
)
Dividends received

235,071

187,359

33,600

Other operating income received / (expenses paid)

6,838

71,046

(21,343
)
Net cash provided by / (used in) operating activities

Ps.
140,878

Ps.
192,836

Ps.
(16,460
)

Cash flow from investing activities

Other investments

Ps.
(3,816,695
)
Ps.
—

Ps.
—

Proceeds from sales of subsidiaries

51,685

1,203

Ps.
—

Purchase from premises and equipment

(418
)
—

190

Increase in long-term investments

(2,960,821
)
(2,248,250
)
(25,504
)
Net cash used in investing activities

Ps.
(6,726,249
)
Ps.
(2,247,047
)
Ps.
(25,314
)

Cash flow from financing activities

Contributions received

5,841,688

3,301,137

—

Dividends paid

(65,500
)
(25,162
)
(7,385
)
Financing (paid) / received

(144,832
)
(594,048
)
54,256

Net cash provided by financing activities

Ps.
5,631,356

Ps.
2,681,927

Ps.
46,871

Net financial income from holdings of cash and cash equivalents

275,138

185,247

15,288

Net (decrease) / increase in cash and cash equivalents

Ps.
(678,877
)
Ps.
812,963

Ps.
20,385

F-43

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Cash and cash equivalents include cash and due from banks and highly liquid investments with an original maturity of less than three months according to the following detail:~~

December 31,

2017

2016

2015

Cash and due from banks

Ps.
17,171

Ps.
4,050

Ps.
3,485

Time deposits

138,957

830,955

18,557

Cash and cash equivalents

Ps.
156,128

Ps.
835,005

Ps.
22,042

~~Reconciliation between balances as appearing on the Balance sheet and the items considered as Cash and cash equivalents:~~

December 31,

2017

2016

2015

Cash and due from banks

As per the Balance sheet

Ps.
17,171

Ps.
4,050

Ps.
3,485

As per the Statement of cash flows

Ps.
17,171

Ps.
4,050

Ps.
3,485

Short term investments

As per the Balance sheet

Ps.
4,321,803

Ps.
830,955

Ps
43,720

Items that are not cash equivalents

(4,182,846
)
—

(25,163
)
As per the Statement of cash flows

Ps.
138,957

Ps.
830,955

Ps
18,557

~~31.~~~~Credit Line for Productive Investment~~
Pursuant to Communications “A” 5319 of the BCRA, financial institutions are required to offer a credit line directed to finance investment projects to purchase capital goods and/or to finance the construction of facilities to produce goods and/or services and to market goods (excluding inventories). These credit lines were required to reach in aggregate an amount equal to 5% of average deposits received from the non-financial private sector, at or before June 30, 2013. Communications “A” 5380, 5449, 5516 and 5600 further extended these requirements to new credit lines, with the last one being due on December 31, 2018.
~~32.~~~~Protection to users of financial services~~
On July 19, 2013, the BCRA issued Communication “A” 5460, granting a broad protection to consumers of financial services, including, among other aspects, the regulation of fees and commissions charged by financial institutions for services provided. Therefore, fees and charges must represent a real, direct and demonstrable cost and should have a technical and economic justification.
On June 10, 2014, the BCRA issued Communications “A” 5590, 5591 and 5592, through which it adopted a set of rules regarding the reference interest rate for personal loans and car loans granted to retail customers, that are not considered as micro, small and medium size companies. In addition, it established new rules regarding fees and charges for basic financial products and services, as defined by the BCRA. Beginning on the effective date of the rule, financial institutions must have prior authorization from the BCRA to implement increases to the cost of those services.
On December 17, 2015 the BCRA issued Communication “A” 5853 through which it established that interest rates shall be agreed freely between financial institutions and its customers, thus removing the reference interest rate for personal loans and car loans.
F-44

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~33.~~~~Adoption of the International Financial Reporting Standards~~
The National Securities Commission (“CNV”) has established the application of Technical Pronouncement No. 26 of the Argentine Federation of Professional Councils in Economic Sciences, which adopts the International Financial Reporting Standards (“IFRS”) issued by the IASB (International Accounting Standards Board) for certain entities included within the public offering system, whether because of their capital or their negotiable obligations, or because they have requested to be included in such system, for financial statements corresponding to fiscal years started as from January 1, 2012. The adoption of such standards is not applicable to the Company since the CNV exempts banks, insurance companies and companies that invest in banks and insurance companies. Therefore, due to the fact that Banco Supervielle is the Company’s main equity investment, a financial institution subject to the BCRA regulations, the Company continued following the valuation and disclosure criteria applied by Banco Supervielle for the presentation of the consolidated financial statements.
On February 12, 2014, the BCRA approved a convergence roadmap to IFRS for financial statements of institutions under its supervision, with an effective date for fiscal years commenced on January 1, 2018.
In March 2015, Banco Supervielle and Cordial Compañía Financiera’s Board of Directors approved an implementation plan, following the guidelines set up by the BCRA, which shall have a six-month period review and update.
~~At the date of these financial statements, the Group had taken the necessary measures to fulfill the implementation plan.~~
In accordance with the requirements of the Technical Pronouncement No. 26 and 29 of the Argentine Federation of Professional Councils in Economic Sciences, the following are the reconciliations of the shareholders´ equity in accordance with Argentine GAAP and IFRS at December 31, 2017 and January 1, 2017, and the reconciliations of net income and comprehensive income for the fiscal year ended as December 31, 2017. The Company has considered, in the preparation of the reconciliations, those IFRS that it considers will be applicable for the preparation of its financial statements as of December 31, 2018 as it were adopted by the BCRA. The items and figures contained in this note are subject to change and only may be considered final when the annual financial statements for the year in which IFRS are applied for the first time.
~~The items and amounts included in the reconciliation could be modified to the extent that, when preparing the financial statements as of December 31, 2018, the standards used are different.~~
~~Reconciliation of Shareholders’ equity~~

12/31/2017

01/01/2017

Shareholders’ equity as stated

15,144,798

6,931,551

Loan origination fees and costs
(a)
(223,248
)
(68,123
)
Intangible assets
(b)
(69,142
)
(46,268
)
Goodwill
(c)
8,464

—

Transfers of financial assets
(d)
(105,939
)
(26,218
)
Government securities and other investments
(e)
(15,368
)
(9,485
)
Investments in other companies
(f)
7,216

—

Vacation Provision
(g)
(265,497
)
(215,361
)
Property, Plant and Equipment
(h)
283,470

273,022

Deferred Income tax
(i)
477,426

313,919

Special Termination Arrangements
(j)
(598,281
)
(290,025
)
Customer loyality programs
(k)
(51,193
)
(44,091
)
Accounting for Guarantees
(l)
(12,608
)
(9,111
)
Initial Recognition at Fair Value
(m)
(182,161
)
(88,463
)
Non-controlling interest
(n)
11,497

103,397

Equity under IFRS

14,409,434

6,824,744

Non-controlling interest

(10,583
)
(100,046
)
The Group Shareholder’s equity under IFRS

14,398,851

6,724,698

F-45

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Reconciliation of Net Income~~
~~12/31/2017~~
~~Net income under Argentine Banking GAAP~~
~~2,437,059~~
~~Loan origination fees and costs~~
~~(a)~~
~~(155,125~~
)
~~Intangible assets~~
~~(b)~~
~~(22,874~~
)
~~Goodwill~~
~~(c)~~
~~8,464~~
~~Transfers of financial assets~~
~~(d)~~
~~(79,721~~
)
~~Government securities and other investments~~
~~(e)~~
~~(12,857~~
)
~~Vacation Provision~~
~~(g)~~
~~(50,136~~
)
~~Property, Plant and Equipment~~
~~(h)~~
~~(109,171~~
)
~~Deferred Income tax~~
~~(i)~~
~~163,507~~
~~Special Termination Arrangements~~
~~(j)~~
~~(308,256~~
)
~~Customer loyality programs~~
~~(k)~~
~~(7,102~~
)
~~Accounting for Guarantees~~
~~(l)~~
~~(3,497~~
)
~~Initial Recognition at Fair Value~~
~~(m)~~
~~(93,698~~
)
~~Non-controlling interest~~
~~(o)~~
~~5,897~~
~~Net income under IFRS~~
~~1,772,490~~
~~Non-controlling interest~~
~~(7,984~~
)
~~Net income attributable to the Group in accordance with IFRS~~
~~1,764,506~~

✓ ~~Reconciliation~~NIM – EaR Approach: measures changes in expected accruals over a certain period of ~~Comprehensive Income~~time (12 months) upon an interest rate curve shift resulting from a different stress situation simulation practices.
F-81
GRUPO SUPERVIELLE S.A.

Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
During 2018, with the publication of Communication “A” 6397, the Argentine Central Bank presented the applicable guidelines for the treatment of interest rate risk in the investment portfolio. The regulation makes a distinction between the impact of fluctuations in interest rate levels on the underlying value of the entity’s assets, liabilities and off-balance sheet items (economic value or MVE), and the alterations that such movements in the interest rate may have on sensitive income and expenses, affecting net interest income (NII). This same criterion had already been adopted by Banco Supervielle, so that the new regulations implied a readaptation of the management model to the suggested measurement methodology, maintaining some criteria and incorporating others.
As established by the regulator, both Banco Supervielle and Cordial Compañia Financiera must use the Standardized Framework described in point 5.4. of the Communication "A" 6397 for the measurement of the impact on the economic value of the entities (ΔEVE) of six proposed disturbance scenarios. These scenarios include parallel movements in the curves of market interest rates upwards or downwards, flattening or steepening of the slope of these curves, as well as an increase or decrease in short-term interest rates. A base curve of market interest rates is considered for each of the significant currencies in the financial statement of each entity. According to the applicable regulation, Banco Supervielle has to use an internal measurement system (SIM) for measurement based on results (ΔNIM). This requirement is not applicable to Cordial Compañía Financiera. It is important to highlight that Banco Supervielle, which has not been qualified by the Argentine Central Bank as having a local systemic importance (D-SIB), is not legally bound to have its own internal measurement system (SIM) for the measurement based on economic value (ΔEVE).
Beyond the regulatory provisions, it is important to note that both Banco Supervielle and Cordial Comapñia Financiera have been working with internal measurement systems (SIM) to measure the impact of rate fluctuations, both on economic value (ΔEVE) and on results (ΔNIM). The development of these systems included the definition of assumptions for the determination of the maturity flow of different lines of assets and liabilities without defined maturity or with implicit or explicit options of behavior.
During 2020 an important methodological change was implemented, since the Entity decided to align itself with the provisions of the Standardized Framework in relation to assets and liabilities with Units of Purchasing Power (UVA) adjustment and stopped considering them as susceptible to interest rate risk in the risk calculation with its internal measurement systems (SIM).
Improvements were made to the dynamic rate GAP measurement tool, allowing various sensitivity exercises to be carried out in a year characterized by a changing context and numerous regulations that altered financial margins.
Economic Capital Calculation
As a first step to calculate economic capital, Banco Supervielle calculates its exposure to interest rate risk from the MVE-EaR (economic value) approach of its internal measurement system (SIM), using a holding period of three months (90 days) and a confidence level of 99%. This quantitative model includes the exacerbation of capital by securitization risk. The result obtained is compared with the worst result of the alterations proposed in the six scenarios proposed by the Standardized Framework, with the resulting economic capital being the worst of both measurements (SIM and Standardized Framework).
In the case of Cordial Compañía Financiera, as mentioned above, the Entity’s Board of Directors has chosen to quantify its needs for economic capital by applying a simplified methodology. With regard to interest rate risk, the Group measures the impact of fluctuations in market interest rates on the economic value based on the application of the Standardized Framework. In the event that the worst ☐ EVE of the six scenarios proposed by the regulation exceeds 15% of the basic net worth (capital level one) of the Entity, the sum of the economic capital calculated according to the simplified methodology would be increased by said excess.
The exposure to interest rate risk is detailed in the table below. It presents the residual values and average rate of the assets and liabilities, categorized by date of renegotiation of interest or expiration date, the lowest.
F-82
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
Term in days
Assets and Liabilities Up to 30 From 30 to 90 from 90 to 180 from 180 to 365 More than 365 Total

To 12/31/2020
Total Financial Assets 94,212,108 23,283,810 21,884,220 13,991,605 76,333,380 229,705,123
Total Financial Liabilities (110,298,588 ) (23,704,722 ) (5,066,130 ) (1,500,505 ) (69,482,671 ) (210,052,616 )
Net Amount (16,086,480 ) (420,912 ) 16,818,090 12,491,100 6,850,709 19,652,507
Average rate Assets 33.76 % 37.13 % 37.10 % 44.08 % 22.70 % 31.37 %
Average rate Liabilities 31.29 % 16.88 % 15.85 % 42.82 % 13.45 % 23.60 %
Term in days
Assets and Liabilities Up to 30 From 30 to 90 from 90 to 180 from 180 to 365 More than 365 Total

To 12/31/2019
Total Financial Assets 57,417,639 20,427,549 15,594,538 16,684,376 69,002,031 179,126,133
Total Financial Liabilities (68,842,995 ) (18,271,575 ) (6,965,625 ) (9,086,825 ) (60,866,894 ) (164,033,914 )
Net Amount (11,425,356 ) 2,155,974 8,628,913 7,597,551 8,135,137 15,092,219
Average rate Assets 50.15 % 62.53 % 62.88 % 61.73 % 31.39 % 46.52 %
Average rate Liabilities 40.67 % 36.72 % 28.94 % 34.96 % 25.25 % 33.70 %
The table below shows the sensitivity to a reasonably possible additional variation in interest rates for the next year, taking into account the composition as of December 31, 2020. Variations in rates were determined considering the scenarios set by Communication "A" 6397 for the calculation of the Interest Rate Risk in the Investment Portfolio.
12/31/2020 12/31/2019
Concepto Additional variation in the interest rate Increase / (decrease) in the income statement Additional variation in the interest rate Increase / (decrease) in the income statement
Decrease in the interest rate 4% ARS; 2% USD (433,698 ) 4% ARS; 2% USD (486,558 )
Increase in the interest rate 4% ARS; 2% USD 430,992 4% ARS; 2% USD 354,392
If the market interest rates for instruments denominated in pesos decreased by 4 percentage points and f 2 percentage points for those denominated in US dollars, net income for the year would decrease by 433,698 and 486,558 as of the end of December 31, 2020 and 2019 respectively. On the contrary, if the interest rates increased in equal measure, net income for the year would increase by 430,992 and 354,392 respectively.
Liquidity Risk
The Group defines Liquidity Risk as the risk of assuming additional financing expenses upon unexpected liquidity needs. Such risk results from the difference of sizes and maturities between the Group’s assets and liabilities. Such risks involve the following:
~~12/31/2017~~
~~Other comprehensive income under Argentine Banking GAAP~~

✓ Funding Liquidity Risk means the risk to obtain funds at normal market cost when needed, based on the market’s perception of the Group.
✓ Market Liquidity Risk means the risk resulting from the Group’s incapacity to offset an asset position at market price, as a consequence of the following two key factors:
Assets are not liquid enough,
Changes in the markets where those assets are traded.
Liquidity and concentration indicators of funding sources are used to determine the tolerance to this risk, starting from the most restrictive definitions to the most comprehensive ones.
F-83
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
The following are the main core metrics used for liquidity risk management:
✓ LCR (Liquidity Coverage Ratio): measures the relation between high quality liquid assets and total net cash outflows over a 30-day period. The Group estimates this indicator on a daily basis, having met during the year the minimum value established by law, as well as that established internally based on their risk appetite.
✓ Net Stable Funding Ratio (NSFR): measures the ability of the Group to fund its activities with sufficiently stable sources to mitigate the risk of future stress situations arising from its funding. The Group calculates this indicator on a daily basis, having complied with the minimum value required by the regulator and that that established internally based on its risk appetite.
✓ Coverage of Remunerated Accounts and Pre-Payable Term Deposits this indicator is aimed to reduce funding dependence of unstable sources in non-liquid scenarios.
In addition, the Assets and Liabilities Committee performs a daily monitoring of some follow-up metrics . Such indicators are used to analyze the main components of LCR while assessing the Group’s liquidity condition and warning upon trend changes that may affect the guidelines set by the risk appetite policy. Additionally, within these monitoring indicators, Committee assess for the availability of liquid assets to respond to an eventual withdrawal of more volatile deposits, such us remunerated sight accounts and deposits of the public sector in foreign currency.
During 2020 the local financial market operated with high levels of liquidity due to the impact of restrictions on mobility, the consequent drop in the level of economic activity and the strong monetary issue faced by the Central Bank of Argentina to cover the needs of assistance to the sectors affected by the COVID-19 pandemic. This strong initial growth of the monetary base had its correlation in the use of LELIQ and Pasive Repo by the monetary authority as an absorption mechanism. In line with the aforementioned, Banco Supervielle experienced strong growth in demand balances, both for retail and institutional clients. The latter, with their correlate in loans to the Central Bank of Argentina via LELIQ and / or Repo, counteracted the positive effect of growth in retail balances and put pressure on the LCR, which was effectively managed throughout the year, staying within comfort values established by the Board of Directors.
Liquidity in dollars strengthened throughout the year. On the one hand, the strong drop in deposits that began in August 2019 gradually diminished until reaching a reversal and slightly positive monthly variations towards the end of 2020. This was combined with an active management of loan collections in dollars, which is reflected in a significant fall in balances on this line of the balance sheet.
Economic capital calculation
The Group relies on the following elements that ensure the suitable management of this type of risk:

—
~~Ajustments on Comprehensive Income for application of IFRS 1~~
~~(6,527~~
)
~~Government securities and other investments~~
~~(e)~~
~~6,974~~
~~Property, Plant and Equipment~~
~~(h)~~
~~239,305~~
~~Investments in other companies~~
~~(f)~~
~~7,216~~
~~Deferred Income tax~~
~~(i)~~
~~(86,439~~
)
~~Non-controlling interest about ajustments~~
~~(o)~~
~~(243~~
)
~~Other comprehensive income under IFRS~~
~~160,286~~
~~Non-controlling interest~~
~~(351~~
)
~~Other comprehensive income attributable to the Group under IFRS~~
~~159,935~~
✓ Broad liquidity indicators dashboard, to monitor liquidity levels. Each indicator relies on its relevant threshold and limit, which are monitored on a daily basis by the Risk Area (sending due warnings upon violation cases), on a byweekly basis by the Assets and Liabilities Committee (ALCO) and on a monthly basis by the Integral Risk Committee. Likewise, a weekly report is drawn up and sent to members of the Integral Risk Committee, ALCO and the Board.

a)             ~~Loan origination fees~~
✓ Indicators that measure the concentration of funding sources, establishing the Group’s risk appetite.
✓ Development and ~~costs~~
~~Under Argentine GAAP, the Company does not defer loan origination fees~~monitoring of new liquidity coverage and costs. In accordance with IFRS 9 “Financial Instruments”, loan origination fees net of certain direct loan origination costs should be recognized over the life of the related loan as an adjustments of to yield using the interest method.
The effects of the adjustments required to state such amounts in accordance with IFRS, decrease assets by 68,123 and 223,248 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017 the adjustment for 155,125 was recognized in the statement of income.
b)        ~~Intangible assets~~
According to IFRS, an intangible asset is an identifiable non-monetary asset that does not possess physical substance. In order to be recognized, the Company must have control over it and the asset must generate future economic benefits.
Under Argentine Banking GAAP, the Company capitalizes costs relating to intangible assets that do not meet IFRS requirements for recognition. The adjustment corresponds to the derecognition of these assets and the reversal of accumulated amortization and amortization of the fiscal year.
The effects of the adjustments required to state such amounts in accordance with IFRS, decrease assets by 46,268 and 69,142 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017,
F-46

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017, a result of (22,874) was recognized in the income statement.~~
c)         ~~Goodwill~~
The Company has applied the exemption from IFRS 1 for business combinations. As a result, business combinations and acquisitions of non-controlling interests that ocurred prior to January 1, 2017, were not restated and the book value of the goodwill under IFRS at December 31, 2016, is equal to the book value under Argentine GAAP at that date, and amounts to 31,475. Intangible assets under Argentine GAAP that do not qualify for separate recognition under IFRS have not been recognized.
Under Argentine GAAP, the recognized goodwill is amortized over a maximum period of 120 months. In accordance with IFRS, the goodwill is not amortized, but is tested for impairment annually. The goodwill has been tested at the date of transition and no impairment has been recognized. The amortization charge of 8,464 has been adjusted in the income statement.
d) ~~Transfers of financial assets~~
~~According to the Argentine Banking GAAP, for transfers of receivables with recourse, the Group recorded a gain in the income statement and accounted for the transaction as a sale of loans.~~
In accordance with IFRS 9 “Financial Instruments”, it must be analyzed whether it has substantially transferred all the risks and rewards inherent in the ownership of the transferred asset. If the aforementioned is not complied with, the entity will continue to recognize the transferred asset in its entirety, and will recognize a financial liability for the consideration received. In subsequent periods, the entity will recognize any income from the transferred financial asset and any expense incurred on the financial liability.
The Company recognized an asset for the transferred portfolios of 144,198 and 570,803, a liability for the consideration received of 170,416 and 676,742, and an adjustment to unallocated results of 26,218 and 26,218 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017 the adjustment of (79,721) was recognized in the income statement.
e) ~~Government securities and other investments~~
~~Under Argentine Banking GAAP the Group has recorded “Holding of trading securities”, “Unlisted Government Securities”, “Investments in listed corporate securities”, “Securities issued~~leverage indicators set by the Argentine Central Bank ~~listed”~~in compliance with Basle III route map.
✓ Different liquidity risk follow-up tools have been added, including a disaggregate assessment of contractual term mismatches and ~~“Securities receivable under spot~~funding concentration reports, by counterparty, product and ~~forward purchases pending settlement” at fair value, meanwhile~~significant currency. The accuracy of the ~~“Securities issued~~information required for such reports contributed to the improvement of our Risk Management Information System (MIS).
✓ The liquidity coverage ratio is used to assess the Group’s capacity to meet liquidity needs over a 30-day period within a stress scenario described by the Argentine Central ~~Bank unlisted”~~Bank. The follow-up of this indicator is carried out on a daily basis, keeping the Group’s liquidity director and ~~“Unlisted corporate bonds” has been value at cost increased by their internal rate~~officials updated on its evolution.
✓ Permanent monitoring of ~~return. Changes~~limit and threshold compliance in ~~valuation~~virtue of ~~these securities are included in earnings.~~the stable funding ratio (NSFR).
F-84
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)

~~IFRS 9 “Financial Instruments” establishes~~
✓ Individual stress tests, carried out on a daily basis upon an ~~entity should classify~~eventual critical scenario of a sudden withdrawal of deposits and its ~~financial assets~~impact on the minimum cash position and LCR.
✓ Intraday liquidity monitoring tools as indicated above.
✓ Regarding contingency plans, the Group follows a policy that ensures the application of its guidelines in stress tests, according to the ~~business model that it uses to manage them~~decision taken by ALCO Committee and ~~the characteristics~~Integral Risk Committee.
The Risk management framework described herein enables a suitable liquidity condition; therefore, the Group considers the economic capital estimation unnecessary to cover such risk, as long as the Group’s solvency should not be affected once the stress tests contingency plan have been implemented.
Below is an analysis of the assets and liabilities maturities, determined based on the remaining period as of December 31, 2020 and 2019 until the contractual maturity date, based on undiscounted cash flows:
As of 12/31/2020 Less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years Total
Cash and due from banks 36,717,126 - - - - 36,717,126
Cash 12,868,539 - - - - 12,868,539
Financial institutions and correspondents - - - - - -
Argentine Central Bank 19,836,222 - - - - 19,836,222
Other local financial institutions 3,848,820 - - - - 3,848,820
Others 163,545 - - - - 163,545
Debt Securities at fair value through profit or loss 2,995,709 3,863,084 654,825 4,023,869 - 11,537,487
Derivatives 143,944 - - - - 143,944
Reverse Repo transactions 22,452,025 - - - - 22,452,025
Other financial assets - - - - 1,995,834 1,995,834
Loans and other financing 16,751,292 45,402,101 16,099,375 31,723,942 3,578,926 113,555,636
To the non-financial public sector 23,289 - - - - 23,289
To the financial sector 4,206 6,702 2,544 - - 13,452
To the Non-Financial Private Sector and Foreign residents 16,723,797 45,395,399 16,096,831 31,723,942 3,578,926 113,518,895
Other debt securities 28,385,679 639,210 7,089,420 5,966,933 100,395 42,181,637
Financial assets pledged as collateral 1,686,400 3,680,854 717,294 1,907,549 311,972 8,304,069
TOTAL ASSETS 109,132,175 53,585,249 24,560,914 43,622,293 5,987,127 236,887,758
As of 12/31/2020 Less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years Total
Deposits 132,523,336 26,459,417 5,289,801 10,644,216 4,566,477 179,483,247
Non-financial public sector 6,331,241 1,493,437 55,608 112,268 57,938 8,050,492
Financial sector 89,090 - - - - 89,090
Non-financial private sector and foreign residents 126,103,005 24,965,980 5,234,193 10,531,948 4,508,539 171,343,665
Liabilities at fair value through profit or loss - 2,547,937 - - - 2,547,937
Repo transactions - - - - - -
Other financial liabilities 7,732,441 - - - - 7,732,441
Financing received from the Argentine Central Bank and other financial institutions 68,390 1,989,029 1,855,366 1,917,967 - 5,830,752
Unsubordinated debt securities - 3,586,903 455,669 1,295,122 - 5,337,694
Subordinated debt securities - 39,259 1,170,903 - - 1,210,162
TOTAL LIABILITIES 140,324,167 34,622,545 8,771,739 13,857,305 4,566,477 202,142,233
F-85
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
As of 12/31/2019 Less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years Total
Cash and due from banks 26,670,491 - - - - 26,670,491
Cash 8,822,591 - - - - 8,822,591
Financial institutions and correspondents - - - - - -
Argentine Central Bank 16,381,107 - - - - 16,381,107
Other local financial institutions 1,435,202 - - - - 1,435,202
Others 31,591 - - - - 31,591
Debt Securities at fair value through profit or loss 430,513 - - - - 430,513
Derivatives 257,587 - - - - 257,587
Reverse Repo transactions - - - - - -
Other financial assets - - - - 939,852 939,852
Loans and other financing 21,306,539 32,856,149 14,084,678 22,046,665 1,106,681 91,400,712
To the non-financial public sector 28,872 - - - - 28,872
To the financial sector 5,355 17,375 9,763 10,492 - 42,985
To the Non-Financial Private Sector and Foreign residents 21,272,312 32,838,774 14,074,915 22,036,173 1,106,681 91,328,855
Other debt securities 7,171,139 401,722 3,090,168 - - 10,663,029
Financial assets pledged as collateral 765,391 2,880,890 733,929 2,055,037 1,982,106 8,417,353
TOTAL ASSETS 56,601,660 36,138,761 17,908,775 24,101,702 4,028,639 138,779,537
As of 12/31/2019 Less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years Total
Deposits 61,988,823 6,814,743 23,328,510 17,172 - 92,149,248
Non-financial public sector 4,984,287 96,282 389,608 - - 5,470,177
Financial sector 37,358 - - - - 37,358
Non-financial private sector and foreign residents 56,967,178 6,718,461 22,938,902 17,172 - 86,641,713
Liabilities at fair value through profit or loss 189,554 - - - - 189,554
Repo transactions 225,144 - - - - 225,144
Other financial liabilities 7,894,660 - - - - 7,894,660
Financing received from the Argentine Central Bank and other financial institutions 96,682 3,197,676 279,037 5,453,649 - 9,027,044
Unsubordinated debt securities - 3,376,997 3,095,134 3,144,238 - 9,616,369
Subordinated debt securities - 75,654 1,423,084 861,402 - 2,360,140
TOTAL LIABILITIES 70,394,863 13,465,070 28,125,765 9,476,461 - 121,462,159
28. INTERNATIONAL FINANCING PROGRAMS
In December 2017, Banco Interamericano de Desarrollo (BID) granted Banco Supervielle S,A, a loan (tranche A) for USD 40,000,000, USD 35,000,000 of which are settled over a three-year term and the remaining USD 5,000,000 over a five-year term, In June 2018, the Bank was granted a loan (tranche B) for USD 93,500,000, USD 40,000,000 are settled over a year term and the remaining USD 53,500,000 are settled over ywo years and a half,
In turn, in September 2019, the Entity was granted a senior non-guaranteed syndicated loan for USD 80,000,000 (eighty million US Dollars) at a three-year term and a Libor interest rate +3,40% by the FMO, the Dutch development bank, as organizer, and Proparco, a subsidiary of the French Development Agency, Such funds were immediately allocated among Small and Medium Size Companies Clients of our portfolio who run their businesses in regional exporting economies in different sectors,
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GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
It is worth to be mentioned that such agreement is subject to the compliance of certain financial covenants, certain “do and do not do” conditions as well as certain reporting requirements,
As of December 31, 2019, the Entity did not meet the non-performing loan ration nor the coverage, Therefore, on January 29, 2020, the Entity started the process to receive a waiver with BID, which was made effective on February 18, 2020, As a result of such waiver, BID waives its right to accelerate such debt resulting from the breach in non-performing loan ratios and coverage ratios over a period that started on October 1, 2019 and finished in December 31, 2019, Likewise, on April 16, 2020 new exemptions were requested thus extending the agreed terms until April 30, 2020,
On August 11, 2020, a new amendment was agreed that extends the agreed deadlines from May 1, 2020 to December 31, 2020,
As of December 31 and as of the date of issuance of these financial statements, the Bank was in compliance with the financial covenants of both loans.
29. BUSINESS COMBINATIONS
- EASY CAMBIO S,A,
On October 16, 2020, the Group acquired 100% of the capital stock of Easy Cambio S,A, for a total price of $13,7 millons, a company authorized by the Central Bank of the Argentine Republic as Exchange Agent, in order to expand the offer of financial services provided to individual clients throughout the country,
The amounts recognized as of the date of acquisition for each main class of assets acquired and liabilities assumed are:
Fair Value
Cash and Due from Banks 6,474
Other Assets 1,240
Miscellaneous obligations (28 )
Net identifiable assets acquired 7,686
Consideration of the ~~contractual~~acquisition:
- Amount paid net of expenses 14,978
Net cash ~~flows. Based on the aforementioned, the Group has classified its~~flow used - investment portfolio into those held for trading, which were valued at fair value through profit and loss and those held for investment, which were valued at fair value with changes in other comprehensive income.activities 14,978
Goodwill 7,292
The goodwill determined is attributable to the synergies that exist between the Easy Cambio S,A, business, and that of the Group, If the acquisition had occurred on January 1, 2020, Grupo Supervielle’s net result would have been 3,411,124,
30. ASSETS AND LIABILITIES IN FOREIGN CURRENCY
At At 12/31/2020  (per currency) At
Items 12/31/2020 Dollar Euro Real Others 12/31/2019
ASSETS
Cash and Due from Banks 20,398,250 19,133,411 972,675 15,461 276,703 18,919,331
Government and corporate securities at fair value with changes in results 1,846,252 1,846,252 - - - 959,676
Derivatives 529 529 - - - -
Other financial assets 1,133,994 1,133,884 110 - - 1,567,666
Loans and other financing 15,222,168 15,219,370 1,780 - 1,018 29,246,976
Other Debt Securities 4,800,665 4,800,665 - - - 88
Financial assets in guarantee 524,543 524,543 - - - 6,130,740
Other non-financial assets 240,739 240,739 - - - 244,060
TOTAL ASSETS 44,167,140 42,899,393 974,565 15,461 277,721 57,068,537
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GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
At At 12/31/2020  (per currency) At
Items 12/31/2020 Dollar Euro Real Others 12/31/2019
LIABILITIES
Deposits 25,199,406 24,737,162 462,244 - - 31,770,757
Non-financial public sector 903,482 903,332 150 - - 2,956,100
Financial sector 2,057 2,057 - - - 12,337
Non-financial private sector and foreign residents 24,293,867 23,831,773 462,094 - - 28,802,321
Liabilities at fair value with changes in results 0 - - - - 0
Other financial liabilities 2,378,133 2,049,159 322,767 13 6,194 5,570,567
Financing received from the Argentine Central Bank and other financial entities 5,200,132 5,200,132 - - - 10,993,994
2,202,858 2,202,858 - - -
Subordinated negotiable obligations 1,140,468 1,140,468 - - - 2,886,028
Other non-financial liabilities 380,014 380,006 7 - 1 464,323
TOTAL LIABILITIES 36,501,011 35,709,785 785,018 13 6,195 51,685,670

NET POSITION 7,666,129 7,189,608 189,547 15,448 271,526 5,382,867
31. CURRENT/NON-CURRENT DISTINCTION
The group has adopted the presentation of all assets and liabilities in order of liquidity due to this presentation provides information that is reliable and more relevant,
As of December 31, 2020 and 2019, the amount expected to be recovered or settled after more than twelve months for each asset and liability line item is as follows:
12/31/2020 12/31/2019
ASSETS No more than 12 months after the reporting period More than 12 months after the reporting period Total No more than 12 months after the reporting period More than 12 months after the reporting period Total
Cash and due from banks 36,674,869 - 36,674,869 35,945,335 - 35,945,335
Cash 12,792,522 - 12,792,522 11,913,814 - 11,913,814
Argentine Central Bank 19,623,684 - 19,623,684 21,683,569 - 21,683,569
Other local financial institutions 4,106,336 - 4,106,336 2,307,232 - 2,307,232
Others 152,327 - 152,327 40,720 - 40,720
Debt Securities at fair value through profit or loss 9,871,903 - 9,871,903 773,961 - 773,961
Derivatives 143,944 - 143,944 350,680 - 350,680
Reverse Repo transactions 22,354,735 - 22,354,735 - - -
Other financial assets 4,285,221 - 4,285,221 2,854,686 - 2,854,686
Loans and other financing 75,152,213 30,242,973 105,395,186 84,171,764 35,645,583 119,817,347
To the non-financial public sector 12,632 10,898 23,530 9,557 29,750 39,307
To the financial sector 12,062 0 12,062 44,746 43,095 87,841
To the Non-Financial Private Sector and Foreign residents 75,127,519 30,232,075 105,359,594 84,117,461 35,572,738 119,690,199
Other debt securities 28,836,567 12,023,408 40,859,975 13,759,182 479,158 14,238,340
Financial assets in guarantee 4,904,935 - 4,904,935 7,261,336 - 7,261,336
Current income tax assets - - - 139,487 - 139,487
Inventories 70,964 - 70,964 60,521 - 60,521
Investments in equity instruments 19,954 96,374 116,328 - 19,848 19,848
Property, plant and equipment - 7,103,638 7,103,638 - 5,448,454 5,448,454
Investment Property - 5,997,945 5,997,945 - 5,520,143 5,520,143
Intangible assets - 6,782,538 6,782,538 - 5,919,425 5,919,425
Deferred income tax assets 451,540 2,864,345 3,315,885 211,921 2,063,254 2,275,175
Other non-financial assets 717,343 635,537 1,352,880 1,027,614 767,863 1,795,477
TOTAL ASSETS 183,484,188 65,746,758 249,230,946 146,556,487 55,863,728 202,420,215
F-88
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
12/31/2020 12/31/2019
LIABILITIES No more than 12 months after the reporting period More than 12 months after the reporting period Total No more than 12 months after the reporting period More than 12 months after the reporting period Total
Deposits 178,641,218 376 178,641,594 121,174,622 1,633 121,176,255
Non-financial public sector 7,911,255 - 7,911,255 7,447,131 - 7,447,131
Financial sector 57,416 - 57,416 38,253 - 38,253
Non-financial private sector and foreign residents 170,672,547 376 170,672,923 113,689,238 1,633 113,690,871
Liabilities at fair value through profit or loss 2,002,005 - 2,002,005 258,060 - 258,060
Derivatives 1,995 - 1,995 0 - -
Repo Transactions - - - 435,401 - 435,401
Other financial liabilities 6,814,747 714,142 7,528,889 11,646,963 763,021 12,409,984
Financing received from the Argentine Central Bank and other financial institutions 5,522,424 329,868 5,852,292 11,827,975 448,635 12,276,610
Unsubordinated negotiable Obligations 3,155,866 1,070,882 4,226,748 5,830,502 2,455,661 8,286,163
Current income tax liability 1,288,267 - 1,288,267 - - -
Subordinated negotiable obligations 1,140,469 - 1,140,469 1,790,228 1,095,800 2,886,028
Provisions 42,181 638,911 681,092 29,570 892,126 921,696
Deferred income tax liability 42,005 - 42,005 689,268 - 689,268
Other non-financial liabilities 10,325,372 1,820,730 12,146,102 8,886,616 2,289,048 11,175,664
TOTAL LIABILITIES 208,976,549 4,574,909 213,551,458 162,569,205 7,945,924 170,515,129
32. OFFSETTING OF FINANCIAL ASSET AND LIABILITIES
A financial asset and a financial liability shall be offset and the net amount presented in the statement of financial position when, and only when, the Group fulfill with paragraph 42 of IAS 32, and currently has a legally enforceable right to set off the recognized amounts; and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously,
In addition, the Group has master netting arrangement that not satisfies the offsetting criteria but creates a right of set-off that becomes enforceable and affects the realization or settlement of individual financial assets and financial liabilities only following a specified event of default or in other circumstances not expected to arise in the normal course of business,
As of December 31, 2020 and 2019, the amount of assets and liabilities subject to a master netting arrangement not offset is as follows:
Net in
Financial Amounts subject to a master
netting arrangement not offset
12/31/2020 Gross
amount (a) Amount
offset (b) Statements
(c) = (a) – (b) Financial asset /
(Financial liability) Collateral Net amount
Credit cards transactions - - - (3,143,567 ) 487,207 (2,656,360 )
Derivatives instruments 103,093 40,851 143,944 - - -
Total 103,093 40,851 143,944 (3,143,567 ) 487,207 (2,656,360 )
Net in
Financial Amounts subject to a master
netting arrangement not offset
12/31/2019 Gross
amount (a) Amount
offset (b) Statements
(c) = (a) – (b) Financial asset /
(Financial liability) Collateral Net amount
Credit cards transactions - - - (3,115,913 ) 827,175 (2,288,738 )
Derivatives instruments 423,353 (72,673 ) 350,680 - - -
Total 423,353 (72,673 ) 350,680 (3,115,913 ) 827,175 (2,288,738 )
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GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
33. MINIMUM CAPITAL REQUIREMENTS
The Central Bank requires financial institutions to maintain minimum capital amounts measured as of each month’s closing, The minimum capital is defined as the greater of (i) the basic minimum capital requirement, which is explained below, or (ii) the sum of the credit risk, operational risk and market risk, Financial institutions (including their domestic Argentine and international branches) must comply with the minimum capital requirements both on an individual and a consolidated basis,
The following table sets forth information regarding excess capital and selected capital and liquidity ratios of the Bank, consolidated with CCF:
As stated above under “Presentation of Financial and Other Information”, we have prepared our audited consolidated financial statements for 2019, 2018 and 2017 under IFRS, Minimum capital requirement has been prepared in accordance with the rules of the Argentine Central Bank, which is not comparable to data prepared under IFRS.
Year ended December 31,(2)
2020 2019 2018

(in thousands of Pesos except percentages and ratios)
Calculation of excess capital:
Allocated to assets at risk 9,047,140 7,164,842 6,090,341
Allocated to Bank premises and equipment, intangible assets and equity investment assets 1,350,035 826,133 370,233
Market risk 551,765 251,739 301,724
Interest rate risk - - -
Public sector and securities in investment account, 27,651 11,472 96,882
Operational risk 3,233,793 2,349,952 1,486,516
Required minimum capital under Central Bank rules 14,210,384 10,604,138 8,345,696
Basic net worth 30,242,263 16,991,091 11,847,865
Complementary net worth 1,090,865 1,033,734 1,163,939
Deductions (7,028,227 ) (2,999,716 ) (867,798 )
Total capital under Central Bank rules 24,304,901 15,025,109 12,144,006
Excess capital 10,094,517 4,420,971 3,798,310
Selected capital and liquidity ratios:
Regulatory capital/risk weighted assets⁽¹⁾ 19,29 % 11,60 % 11,90 %
Average shareholders’ equity as a percentage of average total assets 11,16 % 10,40 % 9,90 %
Total liabilities as a multiple of total shareholders’ equity 7,5 x 7,1 x 9,4 x
Cash as a percentage of total deposits 20,31 % 28,20 % 35,10 %
Tier 1 Capital / Risk weighted assets 13,35 % 10,80 % 10,80 %
⁽¹⁾   Risk Weighted Assets includes operational risk weighted assets, market risk weighted assets, and credit risk weighted assets, Operational risk weighted assets and market risk weighted assets are calculated by multiplying their respective required minimum capital under Central Bank rules by 12,5, Credit Risk Weighted Assets is calculated by applying the respective credit risk weights to our assets, following Central Bank rules,
⁽²⁾   Nominal values without inflation adjustment,
34. IMPACT OF COVID-19 ON GROUP`S OPERATIONS
The Group operates in a complex economic context which main variables have been featured by strong volatility at a national and international level,
The pandemic outbreak in March 2020 produced by Covid-19 has had significant consequences globally, most countries implemented a series of unprecedented restrictions, The different sanitary restricting measures produced, to a greater or lesser extent, an almost immediate impact on economies which witnessed the quick fall of production and activity indicators, Accordingly, most governments implemented fiscal aid packages to sustain part of the population’s income and reduce the risk of breaches in payment chains; thus, avoiding a financial and economic crisis as well as companies´ bankruptcies, Argentina was not the exception and the Government took action in the wake of the pandemic,
F-90
GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
The Argentine economy was in a recessive process and the pandemic outbreak in March 2020 turned the scenario even more complex, The country is expected to close 2020 with activity fall,
The following are the main local indicators:
GDP estimated fall (EMAE) as of December 2020 amounted to a 10,0%,
Accrued inflation between January 1, 2020 and December 30, 2020 amounted to a 36,1% (Consumer Price Index - CPI),
Between January 1, 2020 and December 30, 2020, the peso recorded a 40% depreciation against the USD, according to the Exchange rate released by Banco de la Nación Argentina,
The monetary authority implemented additional Exchange restrictions which, in turn, affected the foreign currency value in existing alternative markets for certain Exchange operations restricted in the official market,
These measures, aimed at restricting the access to the exchange market with the purpose of containing the demand of dollars, entail the Argentine Central Bank´s prior authorization request for certain operations; thus, the following operations impact for the society:

~~The Company adjusted~~
− Payment of dividends and earnings to non-residents
− Payment of financial loans granted to non-residents: those companies that register scheduled capital maturities between 10/15/2020 and 03/31/2021 shall submit a capital refinancing program of at least the ~~value~~60%, with new external indebtedness and an average life of ~~its investment portfolio at fair value (9,485)~~two years and ~~(15,368) at January 1, 2017 and December 31, 2017, respectively. At January 1, 2017,~~shall be allowed to acquire only the adjustment was recognized by (2,958) against unallocated results and (6,527) against comprehensive income, while, for the fiscal year ended December 31, 2017, the adjustment was recognized in the statement of income. Results by (12,857) and in other comprehensive income by 6,974.
F-47

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
f) ~~Investments in other companies~~
Under IFRS, investments in which the Company has no control or significant influence should be measured at fair value. Under Argentine GAAP those investments are measured at cost value with the limit of the value through the equity metod.
~~The Company recognized an increase of assets for 7,216 as of December 31, 2017, which, by application of the exception of IFRS 1, was recognized in the other comprehensive income.~~
g) ~~Vacation Provision~~
~~Under IFRS, short-term employee benefits such as vacation, salary and social security contributions are recognized as a liability~~ equivalent to the ~~undiscounted amount that the Company expects to pay for that benefit.~~40% of agreed-upon capital commitments
− Payment of debt securities issuance with public registration
− Payment of indebtedness among residents in foreign currency
Additionally, the exchange regime mandated the registration and settlement of funds resulting from the following operations and concepts in local currency:

~~Following Argentine Banking GAAP, the cost~~
− Exports of ~~vacations earned by employees is recorded by the Group when paid.~~goods and services
− Collection of prefinancings, advances and post-financing of exports of goods
− Exports of services
− Disposal of non-produced non-financial assets
− Disposal of external assets
Such exchange restrictions, or those to be issued, might affect the Group’s capacity to access the Mercado Único y Libre de Cambios (MULC) for the acquisition of necessary foreign currency to address financial obligations, Assets and liabilities in foreign currency as of December 30, 2020 have been estimated in accordance with MULC´s quotations in place,
Likewise, in October 2020, the Government launched a set of measures aimed at contributing with the development of exportable goods and promoting the local market and construction industry,
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GRUPO SUPERVIELLE S.A.
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)
With the purpose of mitigating the economic crisis, the Argentine Central Bank issued the following set of pre-emptive measures:
•           Communication “A” 6937 reduced the restriction over the maximum position in liquidity bills of the Argentine Central Bank (LELIQ) with the purpose of making liquidity available and encouraging credit line provisions for Small and Medium Size Companies at a preferential rate (Not exceeding 24% annually), Communication “A” 7054 modified the standards on Minimum Cash” due to the authorization of financing lines at a 24% subsidized rate, which includes a special tranche for investments in national capital goods and another tranche with minimum requirements for companies that have not had access to banking loans. As from July 1, 2020, “Medium and Small Size Clients” are included in the item of “Decrease of minimum cash demand in average in pesos” provided such funds are allocated in the acquisition of machinery and equipment produced for national Small and Medium Size companies, among other modifications, As of the date of these financial statements issuance, loans of 24% rates and 0% rates have been granted for 10,7 billion and 819 million respectively, As from October 16, 2020, through Communication “A” 7140, regulations on “Financing line for productive investments of Small and Medium Size companies were enforced,
•           Communications “A” 6942 and “A” 6949, determined the postponement of the maturity of loans granted by local financial institutions that would become effective on March 20 and April 12, and cancelled any punitive interest over unpaid balances in loans granted by financial entities, Communication “A” 7044 and “7107” extended maturities for loans granted by local financial entities until December 31, 2020 and unpaid installments are deferred until such loan’s life termination, Through Communication “A” 7181 it was extended until March 31, 2021,
•           Communication “A” 6939 suspended, until June 30, 2020, the distribution of dividends for financial entities, Such measure was extended through Communication “A” 7035 until December 31, 2020, Through Communication “A” 7181 it was extended until March 31, 2021,
•           Communication “A” 6945 established that, until June 30, 2020, any operation carried out through ATMs shall not be subject to any charge or commission, Communication “A” 7107 extended such term until December 31, 2020, Through Communication “A” 7181 it was extended until March 31, 2021,
•           Communications “A” 6964 and 7095 automatically refinanced unpaid balances of credit card financing to be registered between April 1, 2020 and April 30, 2020 and between September 1, 2020 and September 30, 2020 respectively, Such balances have been refinanced over a year term with three-month grace period in 9 monthly equal and consecutive installments, Likewise, pursuant to Communication “A” 6993, the Argentine Central Bank established a zero-interest-rate financing policy, applicable only to eligible clients to be defined by the Federal Administration of Public Revenues (AFIP) in the future, Additionally, through Communication “A” 7082 opened the possibility of granting “Zero Culture Rate Loans” at 24 months under a 12-month grace period, Communication “A” 7111 extended delinquency days for 1, 2, and 3 categories over a 60-day term, Such measure is applicable until December 31, 2020, Through Communication “A” 7181 it was extended until March 31, 2021,
•           Decree 312/2020, issued by the Argentine Central Bank, suspended the closing of bank accounts, Decree 544/2020, issued on June 19, 2020, extends until December 31, 2020 the suspension of the obligation of closing bank accounts and the application of disqualification pursuant to Article 1° of Law N° 25,730, as well as the application of fines .
•           Communication “A” 6980 established that non-adjustable term deposits under ARS 1 million made up by individuals as from April 20, 2020, will entail a minimum rate of 70% of the LELIQ average auction, Communication “A” 7018 extended the scope of such measures over all term deposits regardless of their minimum amount, Later, Communication “A”7027 increased the minimum rate equivalent to 79% LELIQ average auction, And, as from August 1, 2020, an additional increase from such 79% to an 87% was set for term deposits of individuals exceeding the ARS 1 million,
The volatile and uncertain context remains as of the issuance of these financial statements,
The Group’s Board of Directors monitors the evolution of variables that may affect its business; thus, defining the course of action and identifying any potential impact on its equity and financial situation, The Group’s financial statements must be read in virtue of said circumstances,
35. SUBSEQUENT EVENTS
On April 27, 2021, the Ordinary General Shareholders’ Meeting approved the following distribution of the results of the 2020 fiscal year, which had shown a profit of $ 3,412,111.:

~~As a result, the Company recognized a liability~~
* Legal Reserve: 352,343
* Reserve for the outstanding vacation balances of 215,361 and 265,497 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated results, while, for the fiscal year ended December 31, 2017, the adjustment was recognized in the income statement by (50,136).
h) ~~Property, Plant and Equipment~~
~~Through the application of IAS 16 and IAS 40, the Company adopted the revaluation model for its properties and the fair value model for its investment properties.~~
~~Under Argentine Banking GAAP, these assets were recorded at historical value less accumulated amortization.~~
As a result, the Company recognized an increase of assets due to the revaluation of its properties of 293,478 and 283,470 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized in other comprehensive income, while for the fiscal year ended December 31, 2017, an adjustment was recognized for (109,171) in the income statement and 119,619 in the other comprehensive income.
i) ~~Deferred Income tax~~
Under IFRS, the tax charge for the fiscal year includes current and deferred taxes. Current income tax is calculated based on laws approved or substantially approved at the balance sheet date. Deferred tax is recognized under the liability method, due to temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recorded if they arise from the initial recognition of Goodwill; or the initial recognition of an asset or liability in a transaction, other than a business combination, which at the time of the transaction, affects neither the accounting result nor the taxable profit or loss. Deferred tax is determined using tax rates (and laws) approved or about to be approved at the balance sheet date and expected to apply when the corresponding deferred tax asset is realized or the deferred tax liability is settled.
~~Under Argentine Banking GAAP, Banco Supervielle and Cordial Compañía Financiera (subsidiaries of the Group) recognize the current tax for the year.~~
~~The Group recognized a deferred tax net asset of 313,919 and 477,426 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated~~
F-48

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~results, while for the fiscal year ended December 31, 2017 the adjustment was recognized in the statement of income by 163,507 and (86,439) in the other comprehensive income.~~
j) ~~Special Termination Arrangements~~
Special termination arrangements are principally postemployment benefits that a group of eligible employees receive during the period between their effective termination date and their retirement age, whe they voluntary accepts an irrevocable termination arrangement.
~~Under Argentine Banking GAAP, the cost of the special termination arrangement are recorded when paid.~~
~~Under IFRS, long-term benefits should be recorded as an expense recognized in the period the employees irrevocably accept the offer and the amount of the termination liability is reasonable estimable.~~
As a result, the Company recognized a liability corresponding to these arrangements of 290,025 and 598,281 as of January 1, 2017 and December 31, 2017, respectively. As of January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017, the adjustment was recognized in the statement of income by (308,256).
k) ~~Customer loyalty programs~~
~~The Group offers reward programs that allow its cardholders to earn points that can be redeemed for a broad range of rewards, including goods and travels among others.~~
~~Under Argentine Banking GAAP, the Group recorded a liability based on the redemptions paid during the last 12 months.~~
In accordance with IFRS 15, the Company establishes a liability based on the fair value of the points issued that are expected to be exchanged by customers. Points to be redeemed are estimated based on the historical redemption behavior of each program. The liability is reduced as the points are exchanged by customers or their due.
As a result, the Company recognized a liability of 44,091 and 51,193 as of January 1, 2017 and December 31, 2017, respectively. As of January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017, the adjustment was recognized in the income statement by (7,102).
l) ~~Accounting for Guarantees~~
Under IFRS, the financial guarantees granted must initially be recognized at their fair value, which is equivalent to the commission charged in most cases. This amount is subsequently amortized in a straight line over the life of the contract. At each closing, the financial guarantees are measured by the greater of: (i) the value of the outstanding commission at the end of the fiscal year and (ii) the best estimate of the amount to be paid to settle the contract discounted to its present value at fiscal year closing.
~~Under Argentine GAAP the fees charged in the financial guarantee agreements are charged to income at the time they are collected.~~
The Company recognized a liability corresponding to the reversal of the non-accrued charge of 9,111 and 12,608 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017, the adjustment was recognized in the statement of income by 3,497.
F-49

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
m)    ~~Initial Recognition at Fair Value~~
Under IFRS, the Company must recognize the financial instruments in their initial measurement at their fair value. In the event that the Company originates loans that accumulate an interest rate that is unfavorable, the entity will recognize the loan at its fair value and the difference between that value and the transaction price as a loss in the income statement.
The Company originates some financing that meets the conditions established by the IFRS, as a result the Company recognized a decrease of assets corresponding to the non-accrued negative interest of 88,463 and 182,161 as of January 1, 2017 and December 31, 2017, respectively. At January 1, 2017, the adjustment was recognized against unallocated results, while for the fiscal year ended December 31, 2017, the adjustment was recognized in the statement of income by (93,698).
n) ~~Non-controlling interest about adjustments~~
~~Differences in non-controlling interest include the effect of recording, if applicable, the respective effects of other differences between current accounting standards and IFRS.~~
~~34.~~~~Subsequent events~~
On April 6, 2018 the Company has agreed to acquire 100% (or 4,000,000 ordinary shares) of the share ownership of Micro Lending S.A. (“MILA”) for a cash price of US$20 million, subject to final adjustments. Specialized in car financing, particularly for used cars, MILA is estimated to rank 4th in the Argentine new and used car loan market, holding a total market share of approximately 6%, or 10% when considering the used car market on a stand-alone basis.
~~35. Summary of Significant Differences between Argentine Banking GAAP and US GAAP~~
The accompanying consolidated financial statements have been prepared in accordance with Argentine Banking GAAP, which differs in certain significant respects from US GAAP. Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the SEC.
~~I. Differences in measurement methods~~
As indicated in Note 3.1, as from March 1, 2003, inflation accounting was discontinued. The following reconciliation does not include the reversal of the adjustments to the consolidated financial statements for the effects of inflation, because, as permitted by the Securities and Exchange Commission (“SEC”), it represents a comprehensive measure of the effects of price-level changes in the Argentine economy, and as such, is considered a more meaningful presentation than historical cost-based financial reporting for both Argentine Banking GAAP and US GAAP.
The main differences, other than inflation accounting, between Argentine Banking GAAP and US GAAP as they relate to the Group are described below, together with an explanation, where appropriate, of the method used in the determination of the necessary adjustments. References below to “ASC” are to Accounting Standard Codification issued by the Financial Accounting Standards Board in the United States of America.
~~The following tables summarize the main reconciling items between Argentine Banking GAAP and US GAAP:~~
F-50

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Reconciliation of net income:~~

December 31,

2017

2016

2015

Net income under Argentine Banking GAAP

Ps.
2,437,059

Ps.
1,311,304

Ps.
674,109

US GAAP adjustments

Loan origination fees and costs

Note 35.a

(155,125
)
(14,057
)
(4,254
)
Intangible assets

Differences in basis relating to purchase accounting

Note 35.b

7,300

6,840

4,435

Other intangible assets

Note 35.b

(22,874
)
(3,439
)
(17,970
)
Loan loss reserves

Note 35.c

(268,255
)
(133,988
)
49,049

Transfers of financial assets

Note 35.d

(67,300
)
(245,952
)
(27,948
)
Government securities and other investments

Note 35.e

5,513

(3,252
)
162

Vacation Provision

Note 35.f

(84,682
)
(35,587
)
(12,825
)
Special Termination Arrangements

Note 35.h

(308,256
)
(151,100
)
(69,271
)
Customer Loyalty Programs

Note 35.i

(7,102
)
(15,995
)
21,094

Credit Card Loans —Imputed Interest

Note 35.j

(93,698
)
21,666

(75,775
)
Deferred Income tax

Note 35.k

216,403

257,428

84,987

Accounting for Guarantees

Note 35.l

2,495

526

(10,997
)
Non-controlling Interest

Note 35.m

5,897

22,166

16,080

Net Income under US GAAP

Ps.
1,667,375

Ps.
1,016,560

Ps.
630,876

Non-controlling Interest

Note 35.m

(22,783
)
(18,876
)
(12,522
)
Net Income attributable to the Group in accordance with US GAAP

Ps.
1,644,592

Ps.
997,684

Ps.
618,354

Basic earnings per share attributable to the Group

Note 35.II.i

4.1865

3.1194

4.0416

Diluted earnings per share attributable to the Group

Note 35.II.i

4.1865

3.1194

4.0416

~~Net income includes the consolidating financial trusts in which the Group does not have participation but conserve the risks and rewards of them (see Note 35.I.d.).~~

December 31,

2017

2016

2015

Net Income under US GAAP before consolidation of financial trusts without holding in “certificates of participation”

Ps.
1,667,375

Ps.
1,016,560

Ps.
630,876

Net income corresponding to consolidated financial trusts, without holding in “certificates of participation”

30,106

9,308

45,200

Net Income under US GAAP

Ps.
1,697,481

Ps.
1,025,868

Ps.
676,076

Non-controlling interest corresponding to consolidated financial trusts, without holding in “certificates of participation”

Ps.
(30,106
)
Ps.
(9,308
)
Ps.
(45,200
)
Non-controlling Interest

(22,783
)
(18,876
)
(12,522
)
Net Income attributable to the Group in accordance with US GAAP

Ps.
1,644,592

Ps.
997,684

Ps.
618,354

~~Reconciliation of Shareholders’ Equity:~~

December 31,

December 31,

2017

2016

Shareholders’ Equity as stated

Ps.

15,144,798

Ps.

6,931,551

US GAAP adjustments:

Loan origination fees and costs

Note 35.a

(223,248
)

(68,123
)
Intangible assets

Differences in basis relating to purchase accounting

Note 35.b

52,897

45,597

Other intangible assets.

Note 35.b

(69,142
)

(46,268
)
Loan loss reserves

Note 35.c

(386,580
)

(118,325
)
Transfers of financial assets

Note 35.d

(418,083
)

(350,783
)
Government securities and other investments.

Note 35.e

3,302

(9,485
)
Vacation Provision

Note 35.f

(300,043
)

(215,361
)
Special Termination Arrangements

Note 35.h

(598,281
)

(290,025
)
Customer Loyalty Programs

Note 35.i

(51,193
)

(44,091
)
Credit Card Loans—Imputed Interest

Note 35.j

(182,161
)

(88,463
)
Deferred Income tax

Note 35.k

787,954

571,551

Accounting for Guarantees

Note 35.l

(6,616
)

(9,111
)
Non-controlling Interest

Note 35.m

11,497

103,397

Equity under US GAAP

Ps.

13,765,101

Ps.

6,412,061

Non-controlling Interest

Note 35.m

(9,895
)

(84,662
)
The Group Shareholder’s Equity under US GAAP

Ps.

13,755,206

Ps.

6,327,399

F-51

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Equity and Shareholders Equity include the consolidating financial trusts in which the Group does not have participation but conserve the risks and rewards of them (see Note 35.I.d.).~~

December 31,

2017

2016

Equity under US GAAP before consolidation of financial trusts without holding in “certificates of participation”

Ps.
13,765,101

Ps.
6,412,061

Net assets corresponding to consolidated financial trusts without holding in “certificates of participation”

139,997

86,615

Equity under US GAAP

Ps.
13,905,098

Ps.
6,498,676

Non-controlling interest corresponding to consolidated financial trusts without holding in “certificates of participation”

(139,997
)
(86,615
)
Non-controlling Interest

(9,895
)
(84,662
)

The Group Shareholder´s Equity under US GAAP

Ps.
13,755,206

Ps.
6,327,399

~~Description of changes in Shareholder’s Equity:~~

December 31,

2017

2016

2015

Equity under US GAAP at the beginning of the year attributable to Parent Company

Ps.
6,327,399

Ps.
2,090,136

Ps.
1,461,497

Distribution of dividends

(65,500
)
(25,162
)
(7,385
)
Contributions from shareholders

5,841,688

3,271,699

—

Other comprehensive income (see Note 35.II.a.)

7,027

(6,958
)
17,670

Net Income under US GAAP

1,644,592

997,684

618,354

Equity under US GAAP at the end of the year attributable to Parent Company

Ps.
13,755,206

Ps.
6,327,399

Ps.
2,090,136

~~a. Loan origination fees and costs~~
Under Argentine Banking GAAP, the Group does not defer loan origination fees and costs. In accordance with US GAAP under ASC 310, loan origination fees net of certain direct loan origination costs should be recognized over the life of the related loan as an adjustment of to yield using the interest method.
The effects of the adjustments required to state such amounts in accordance with US GAAP, would decrease assets by Ps. 223,248 as of December 31, 2017 and Ps. 68,123 as of December 31, 2016. Income would decrease by Ps. (155,125), Ps. (14,057) and Ps. (4,254) for the years ended December 31, 2017, 2016 and 2015, respectively.
F-52

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~b. Intangible assets:~~
i)            ~~Differences in basis relating to purchase accounting~~
Under Argentine Banking GAAP, net assets acquired are recorded at the book value of the acquired company at the acquisition date and goodwill is recognized based on the difference of the book value of the net assets acquired and the acquisition cost. Such goodwill is being amortized under the straight line method.
~~Under US GAAP, the Group applies the purchase method of accounting to its business combinations. The additional interest acquired was accounted for as a step acquisition applying the purchase method.~~
~~Accordingly, the excess of the purchase price over the fair value of assets acquired and liabilities assumed, if any, is considered as goodwill.~~
For acquisitions prior to December 15, 2008, in the event the fair value of the net assets acquired exceeds the consideration paid, the excess is allocated as a pro rata reduction of the amounts that otherwise would have been assigned to the acquired assets. For acquisitions after that date, if the net assets acquired exceed the consideration paid, the excess is recorded as gain in statement of income.
~~Under Argentine Banking GAAP, goodwill recognized is amortized on straight-line basis over its useful life.~~
Under US GAAP goodwill is not subject to amortization, but is subject to at least an annual assessment for impairment. The Group analyzes qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.
Goodwill impairment exists when the fair value of the reporting unit to which the goodwill is allocated is not enough to cover the book value of its assets and liabilities and the goodwill. The fair value of the reporting unit is estimated using discounted cash flow techniques. The sustained value of the majority of the goodwill is supported ultimately by revenue from credit-card business, included in “Consumer Finance” reporting unit.
The evaluation methodology for potential impairment is inherently complex and involves significant management judgment in the use of estimates and assumptions. These estimates involve many assumptions, including the expected results of the reporting unit, an assumed discount rate and an assumed growth rate for the reporting unit.
~~The Group has reviewed Goodwill for impairment as of December 31, 2017 and 2016 and no impairment was recorded.~~
~~The following table summarizes the acquisitions made by the Company and the calculation of goodwill under US GAAP.~~

Supervielle
Seguros

Cordial
Compañia
Financiera

Banco Regional
de Cuyo

Tarjeta
Automática

Banco
Societé
Generalé

June 6, 2013

August 1, 2011

September 19,
2008

December 15,
2007

March 3, 2005

Acquisition Date

Fair value of net tangible assets acquired

2,409

126,386

48,350

6,371

39,054

Intangible assets identified, net of related deferred income tax (a)

—

9,466

23,244

6,780

25,175

Net assets

Ps.
2,409

135,852

71,594

13,151

64,229

% acquired

100.00
%
100.00
%
99,94
%
51,00
%
91,54
%
Net assets acquired

Ps.
2,409

135,852

71,549

6,707

58,795

Consideration paid

Ps.
4,543

168,047

97,542

15,835

37,209

Goodwill

Ps.
2,134

32,195

25,993

9,128

(21,586
)
F-53

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~(a)~~         Intangible assets identified consist of brand, core deposits, customer relationship and commercial relationship agreement. Brand is not amortized under US GAAP. The remaining intangibles identified are amortized over 10 years
In relation with Tarjeta Automática, on March 5, 2009 the Group acquired an additional 24% interest of this entity for a total consideration of Ps. 13,992. Under US GAAP this acquisition was accounted as an equity transaction when the control was previously obtained, following ASC 805 guidance.
~~The following table summarizes the shareholder´s equity adjustment computed to conform the accounting of these acquisitions to US GAAP as of December 31, 2017 and 2016~~

December 31,

December 31,

2017

2016

Elimination of Goodwill recognized under Argentine Banking GAAP

Ps.
(22,043
)
Ps.
(31,475
)
Recognition of Goodwill under US GAAP

69,450

69,450

Recognition of Intangible Assets under US GAAP

81,745

81,745

Amortization of Intangible Assets under US GAAP

(61,897
)

(59,081
)
Allocation of negative Goodwill to fixed assets

(23,247
)

(23,247
)
Reversal of depreciation of fixed assets recognized under Argentine Banking GAAP due to differences in purchase accounting of Societé Generalé acquisition

8,889

8,205

Total

Ps.
52,897

Ps.
45,597

~~Net income impact related to the shareholder´s equity adjustment for the years ended December 31, 2017, 2016 and 2015 amounted to Ps. 7,300, Ps. 6,840 and Ps. 4,435, respectively.~~
~~The activity of the goodwill and intangible assets under US GAAP during the years ended December 31, 2017 and 2016 is as follows:~~

December 31,

2017

2016

Goodwill at the beginning of the year

Ps.
69,450

Ps.
69,450

Goodwill at the end of the year.

Ps.
69,450

Ps.
69,450

Intangible assets identified in the Business Combination at the beginning of the year, net of the corresponding amortization

22,664

25,793

Amortization under US GAAP.

(2,816
)
(3,129
)
Intangible assets identified in the Business Combination at the end of the year, net of the corresponding amortization

Ps.
19,848

Ps.
22,664

~~The following table shows the intangible assets gross carrying amount, detailed with their respective useful lives:~~

December 31, 2017

Gross carrying amount

Accumulated
amortization

Remaining
useful life
(months)

Core Deposits

Ps.
21,052

Ps.
21,052

—

Overdraft

8,603

8,603

—

Customer Relationship

17,679

17,679

—

Brand Name

19,848

—

—

Commercial Agreement

14,563

14,563

—

Total

Ps.
81,745

Ps.
61,897

—

~~The aggregate amortization expense for intangible assets identified for the years ended December 31, 2017, 2016 and 2015 was Ps. 2,816, Ps. 3,129 and Ps. 5,250, respectively.~~
F-54

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~ii)~~ future dividends: 341,000
* Other ~~intangible assets~~reserve: 2,718,768
F-92
GRUPO SUPERVIELLE S.A.
ASC 350-40 defines three stages for the costs of computer software developed or obtained for internal use: the preliminary project stage, the application development stage and the post-implementation operation stage. Only the second stage costs are to be capitalized.
~~Under Argentine Banking GAAP, the Group capitalizes costs relating to all three of the stages of software development.~~
Shareholders’ equity adjustment between Argentine GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (69,142) and Ps. (46,268), respectively. Net income adjustment for the years ended December 31, 2017, 2016 and 2015 amounted to Ps. (22,874), Ps. (3,439) and Ps. (17,970), respectively.
~~c. Loan loss reserves~~
Under Argentine Banking GAAP (see note 3.7), the allowance for loan losses is calculated following BCRA regulations. These criteria are different for commercial and consumer loans. For commercial such criteria are principally based on the debtors’ payment capacity and cash-flows analysis. Loan loss reserves for consumer loans and commercial loans are based on delinquency and BCRA established loss factors.
Increases in the reserve are based on the deterioration of the quality of existing loans, while decreases in the reserve are based on regulations requiring the charge off of non-performing loans classified as “non-recoverable”. The Group charges-off non-performing loans on the month following the date on which such loans are classified as “irrecoverable without preferred guarantees” and fully provisioned.
In the case of the consumer portfolio, the charge-off takes place when the loan is approximately 360 days past due. For the commercial portfolio, the situation depends on the individual evaluation of the credit risk. All charged-off loans are registered in off balance accounts while the Group continues its collection efforts.
In addition, under BCRA rules, the Group records recoveries on previously charged-off loans directly to income and records the amount of charged-off loans in excess of amounts specifically allocated as a direct charge to the consolidated statement of income.
~~The Group’s consumer portfolio consists principally of personal loans and credit card loans.~~
The Group’s commercial portfolio is currently diversified among clients of different size (small, medium-sized businesses and corporations) and who are active in different economic sectors (mainly the agricultural, construction, sugar, manufactured, foodstuff, automotive vehicles, among others). The risks associated with this portfolio are principally related to the specific economic performance of each individual client and to economic factors, such as the price and demand of products and services and competitiveness, among others.
Under BCRA rules, a minimum loan loss reserve is calculated primarily based upon the classification of commercial loan borrowers and upon delinquency aging (or the number of days the loan is past due) for consumer loan borrowers. Although the Group is required to follow the methodology and guidelines for determining the minimum loan loss reserve, as set forth by the BCRA, the Group is allowed to establish additional loan loss reserve.
~~For commercial loans, the Group is required to classify all commercial loan borrowers. In order to classify them, the Group must consider different parameters related to each of those customers.~~
~~Pursuant to BCRA regulations, commercial loans are classified as follows:~~
F-55

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

~~Classification~~
~~Criteria~~
~~In normal situation~~
~~Borrowers for whom there is no doubt as to their ability to comply with their payment obligations.~~
~~Subject to special monitoring/Under observation~~
Borrowers that, among other criteria, are up to 90 days past due and, although considered to be able to meet all their financial obligations, are sensitive to changes that could compromise their ability to honor debts absent timely corrective measures.
~~Subject to special monitoring / Under negotiation or refinancing agreement~~
Borrowers who are unable to comply with their obligations as agreed with the Group and, therefore, formally state, within 60 calendar days after the maturity date, their intention to refinance such debts. The borrower must enter into a refinancing agreement with the Group within 90 calendar days (if up to two lenders are involved) or 180 calendar days (if more than two lenders are involved) after the payment default date. If no agreement has been reached within the established deadline, the borrower must be reclassified to the next category according to the indicators established for each level.
~~Troubled~~
~~Borrowers with difficulties honoring their financial obligations under the loan on a regular basis, which, if uncorrected, may result in losses to the Group.~~
~~With high risk of insolvency~~
~~Borrowers who are highly unlikely to honor their financial obligations under the loan.~~
~~Irrecoverable~~
Loans classified as irrecoverable at the time they are reviewed (although the possibility might exist that such loans might be collected in the future). The borrower will not meet its financial obligations with the Group.
~~Irrecoverable according to Central Bank Rules~~
(a) Borrower has defaulted on its payment obligations under a loan for more than 180 calendar days according to the corresponding report provided by the BCRA, which report includes (1) financial institutions liquidated by the BCRA, (2) residual entities created as a result of the privatization of public financial institutions, or in the privatization or dissolution process, (3) financial institutions whose licenses have been revoked by the BCRA and find themselves subject to judicial liquidation or bankruptcy proceedings and (4) trusts in which Seguro de Depósitos S.A. (SEDESA) is a beneficiary, and/or (b) certain kinds of foreign borrowers (including banks or other financial institutions that are not subject to the supervision of the BCRA or similar authority of the country in which they are incorporated) that are not classified as “investment grade” by any of the rating agencies approved by the BCRA.
For consumer loan portfolio, the Group classifies loans based upon delinquency aging, consistent with the requirements of the Central Bank. Minimum loss percentages required by the BCRA are also applied to the totals in each loan classification.
~~Under the BCRA regulations, consumer borrowers are classified as follows:~~
F-56

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Notes to Consolidated Financial Statements
As of December 31, 2020 presented in comparative format
(Expressed in thousands of pesos)

~~Classification~~
~~Criteria~~
~~Performing~~
In accordance with the provisions of General Resolution No. 777/18 of the Argentine Securities Commission, the distribution of profits must be treated in the currency of the date of the shareholders’ meeting by using the price index corresponding to the month prior to the meeting. Therefore, the shareholders’ meeting approved a dividend reserve for an amount of Ps.385.2 million corresponding to the Ps.341 million included in the board of directors proposal.
F-93

~~If all payments on loans are current or less than 31 calendar days overdue and, in the case of checking account overdrafts, less than 61 calendar days overdue.~~
~~Low Risk~~
~~Loans upon which payment obligations are overdue for a period of more than 31 and up to 90 calendar days.~~
~~Medium Risk~~
~~Loans upon which payment obligations are overdue for a period of more than 90 and up to 180 calendar days.~~
~~High Risk~~
~~Loans in respect of which a legal action seeking collection has been filed or loans having payment obligations overdue for more than 180 calendar days, but less than 365 calendar days.~~
~~Irrecoverable~~
~~Loans in which payment obligations are more than one year overdue or the debtor is insolvent or in bankruptcy or liquidation.~~
~~Irrecoverable according to Central Bank Rules~~
~~Same criteria as for commercial loans in the Irrecoverable according to BCRA Rules.~~
~~The tables above contain the loan portfolio classification by credit quality indicator set forth by the BCRA.~~
~~The following tables show the loan balances categorized by credit quality indicators for the years ended December 31, 2017 and 2016:~~

As of December 31, 2017

“1”
Normal
Situation

“2”
With special
follow-up or
Low Risk

“3”
With problems
or Medium
Risk

“4”
High risk of
insolvency or
High risk

“5”
Uncollectible

Total

Consumer Loans

28,539,809

1,185,729

865,815

955,536

46,901

31,593,790

Commercial Loans

29,890,894

48,672

6,028

49,195

1,540

29,996,329

Total Financing Receivables

58,430,703

1,234,401

871,843

1,004,731

48,441

61,590,119

As of December 31, 2016

“1”
Normal
Situation

“2”
With special
follow-up or
Low Risk

“3”
With problems
or Medium
Risk

“4”
High risk of
insolvency or
High risk

“5”
Uncollectible

Total

Consumer Loans

18,655,404

816,389

548,921

529,150

39,022

20,588,886

Commercial Loans

18,876,383

9,877

7,859

33,388

358

18,927,865

Total Financing Receivables

37,531,787

826,266

556,780

562,538

39,380

39,516,751

~~Under US GAAP, the loan losses reserve should be in amounts adequate to cover inherent losses in the loan portfolio at the respective balance sheet dates. Specifically:~~
a) Loans considered impaired in accordance with ASC 310-10 are valued at the present value of the expected future cash flows discounted at the loan’s effective contractual interest rate, except that as a practical expedient a creditor may measure impairment based on a loans observable market price or at the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. Under ASC 310-10, a loan is considered impaired when, based on current information, it is probable that the borrower will be unable to pay contractual interest or principal payments as scheduled in the loan agreement. ASC 310-10 applies to all loans (including those restructured in a troubled debt
F-57

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
restructuring involving amendment of terms), except large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment , loans carried at the lower of cost or fair value, debt securities, and leases.
The Group applies ASC 310-10 to all commercial loans classified as “With special follow-up or Low Risk”, “With problems”, “Insolvency Risks” and “Uncollectible”. The Group specifically calculates the present value of estimated cash flows for commercial loans. For commercial and other loans in legal proceedings are specifically reviewed either on a cash-flow or collateral-value basis, both considering the estimated time to settle the proceedings. The Group has also analyzed all the loans included into the scope of ASC 340-10 “Trouble Debt Restructuring” and calculates the present values of estimated cash flows of each of the loans being a trouble debt restructuring.
b) In addition, following ASC 450-20, the amount of losses incurred in the homogeneous loan pools is estimated based on the number of loans that will default and the loss in the event of default. Using modeling methodologies, the Group estimates the number of homogeneous loans that will default based on the individual loans’ attributes aggregated into pools of homogeneous loans with similar attributes. This estimate is based on the Group’s historical experience with the loan portfolio. The estimate is adjusted to reflect an assessment of environmental factors not yet reflected in the historical data underlying the loss estimates, such as changes in real estate values, local and national economies, underwriting standards and the regulatory environment. The probability of default on a loan is based on an analysis of the movement of loans with the measured attributes from either current or any of the delinquency categories to default over a 12-month period.
As a result of analysis performed, the shareholders’ equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (386,580) and Ps. (118,325), respectively, as follows:

December 31, 2017

December 31, 2016

Allowances
under US
GAAP

Adjustment to
Shareholders’
Equity

Allowances
under US
GAAP

Adjustment to
Shareholders’
Equity

Modeling methodologies

Ps.
2,041,510

Ps.
(368,711
)
Ps.
1,105,125

Ps.
(121,715
)
Impaired loans individually evaluated for impairment

28,978

(17,869
)
1,201

3,390

Total

Ps.
2,070,488

Ps.
(386,580
)
Ps.
1,106,326

Ps.
(118,325
)
~~Net income adjustment between Argentine Banking GAAP and US GAAP for the years ended December 31, 2017, 2016 and 2015 amounted to Ps. (268,255), Ps. (133,988), and Ps. 49,049, respectively.~~
~~Recoveries and charge-offs~~
Under Argentine Banking rules, recoveries are recorded in a separate income line item under Other Income. Under US GAAP, recoveries and charge-offs would be recorded in the allowance for loan losses in the balance sheet; however there would be no net impact on net income or shareholder´s equity. ~~The definition of charge-off under US GAAP described above does not differ from Argentine Banking rules.~~
F-58

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Disclosure requirements~~
i)~~Allowance for Credit Losses and Recorded Investments in Financial Receivables~~
~~The following table presents the allowance for loan losses and the related carrying amount of Financial Receivables for the years ended December 31, 2017 and 2016 respectively:~~

As of December 31, 2017

Consumer
Loan Portfolio

Commercial
Loan Portfolio

Total

Allowances for loan losses:

Ps.

Ps.

Ps.

Beginning balance

1,073,385

32,941

1,106,326

Charge-offs

(1,343,070
)
(61,294
)
(1,404,364
)
Recoveries

125,883

41,961

167,844

Provision

2,106,212

94,470

2,200,682

Ending balance

1,962,410

108,078

2,070,488

Ending balance- individually evaluated for impairment

—

28,978

28,978

Ending balance- collectively evaluated for impairment

1,962,410

79,100

2,041,510

Financing receivables:

Ending balance

Ending balance: individually evaluated for impairment

—

63,095

63,095

Ending balance: collectively evaluated for impairment

31,593,790

29,933,234

61,527,024

As of December 31, 2016

Consumer
Loan Portfolio

Commercial
Loan Portfolio

Total

Allowances for loan losses:

Ps.

Ps.

Ps.

Beginning balance

622,083

57,219

679,302

Charge-offs

(659,091
)
(144,101
)
(803,192
)
Recoveries

98,240

32,747

130,987

Provision

1,012,153

87,076

1,099,229

Ending balance

1,073,385

32,941

1,106,326

Ending balance- individually evaluated for impairment

—

1,201

1,201

Ending balance- collectively evaluated for impairment

1,073,385

31,740

1,105,125

Financing receivables:

Ending balance

Ending balance: individually evaluated for impairment

—

21,089

21,089

Ending balance: collectively evaluated for impairment

20,588,886

18,906,776

39,495,662

~~ii) Impaired Loans~~
ASC 310, requires a creditor to measure impairment of a loan based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.
~~This Statement is applicable to all loans (including those restructured in a troubled debt restructuring involving amendment of terms), except large groups of smaller-balance homogenous loans that are~~
F-59

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~collectively evaluated for impairment. Loans are considered impaired when, based on Management’s evaluation, a borrower will not be able to fulfill its obligation under the original loan terms.~~
~~The following table discloses the amounts of loans considered impaired in accordance with ASC 310, as of December 31, 2017 and 2016:~~

As of December 31, 2017

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

With no related allowance recorded:

Ps.

Ps.

Ps.

Commercial

Impaired Loans

—

—

—

With an allowance recorded:

Commercial

Impaired Loans

63,095

60,913

28,978

Total

63,095

60,913

28,978

As of December 31, 2016

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

With no related allowance recorded:

Ps.

Ps.

Ps.

Commercial

Impaired Loans

13,429

12,247

—

With an allowance recorded:

Commercial

Impaired Loans

6,049

5,881

1,201

Total

19,478

18,128

1,201

~~The average recorded investments for impaired loans were Ps. 69,874 and Ps. 45,958 as of December 31, 2017 and 2016, respectively.~~
~~The interest income recognized on impaired loans amounted to Ps. 17,860, Ps. 8,695, and Ps. 8.807 for years ended December 31, 2017, 2016 and 2015, respectively.~~
~~iii) Non-accrual Loans~~
~~The method applied to recognize income on loans is described in Note 3.5.~~
~~Additionally, the Group has made use of the option granted by the BCRA authorizing financial entities to interrupt the accrual of interest for clients in the following categories:~~
·                  ~~“With problems”; “With high risk of insolvency” and “Irrecoverable” in the commercial portfolio.~~
·                  ~~“Medium risk”; “High risk” and “Irrecoverable” in the consumer portfolio.~~
According to the above, the threshold for suspending the accrual of interest is as from 91 days of arrears. Resumption of interest accrual takes place when the client improves its situation passing to situation:
·                  ~~“Normal” or “With special tracking — Under observation” in the commercial portfolio.~~
·                  ~~“Normal” or “Low risk” in the consumer portfolio.~~
The Group recognizes interest income on a cash basis for non-accrual loans. Under U.S. GAAP, recognition of interest on loans is generally discontinued when, in the opinion of management, there is an assessment that the borrower will likely be unable to meet all contractual payments as they become due.
F-60

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
As a general practice, this occurs when loans are 90 days or more overdue. Any accrued but uncollected interest is reversed against interest income at that time. Management believes that the difference in interest recognition does not have a material impact to the Group’s Consolidated Statements.
As consequence, non-accrual loans are defined as those loans in the categories of: (a) Consumer portfolio: “Medium Risk”, “High Risk” and “Uncollectible” and (b) Commercial portfolio: “With problems”, “High Risk of Insolvency” and “Uncollectible”.
~~The following table represents the amounts of non-accruals, segregated by class of loans, as of December 31, 2017 and 2016, respectively:~~

As of December 31,

2017

2016

Ps.

Ps.

Consumer

1,868,252

1,117,094

Commercial

56,763

41,606

Total Non-accrual loans

1,925,015

1,158,700

~~An aging analysis of past due loans, segregated by class of loans, as of December 31, 2017 and 2016 were as follows:~~

As of December 31, 2017

30-90 Days
Past Due

91-180
Days Past
Due

181-360
Days Past
Due

Greater
than 360

Total Past
Due

Current

Total
Financing

Consumer

Personal Loans

518,459

295,369

381,601

2,303

1,197,732

14,644,230

15,841,962

Credit Card Loans

379,700

393,260

370,445

2,578

1,145,983

7,756,926

8,902,909

Other Loans

89,762

35,532

36,132

10,524

171,950

6,676,969

6,848,919

Total Consumer Loans

987,921

724,161

788,178

15,405

2,515,665

29,078,125

31,593,790

Commercial:

Performing Loans

—

—

—

—

—

28,954,226

28,954,226

Impaired loans

928,446

45,099

52,730

15,828

1,042,103

—

1,042,103

Total Commercial Loans

928,446

45,099

52,730

15,828

1,042,103

28,954,226

29,996,329

Total

1,916,367

769,260

840,908

31,233

3,557,768

58,032,351

61,590,119

As of December 31, 2016

30-90
Days Past
Due

91-180
Days Past
Due

181-360
Days Past
Due

Greater
than 360

Total Past
Due

Current

Total
Financing

Consumer

Personal Loans

488,235

316,478

282,866

23,620

1,111,199

10,593,959

11,705,158

Credit Card Loans

143,132

104,059

95,990

1,022

344,203

6,218,394

6,562,597

Other Loans

59,974

26,548

23,649

4,797

114,968

2,206,163

2,321,131

Total Consumer Loans

691,341

447,085

402,505

29,439

1,570,370

19,018,516

20,588,886

Commercial:

Performing Loans

—

—

—

—

—

18,359,178

18,359,178

Impaired loans

442,775

59,232

25,380

41,300

568,687

—

568,687

Total Commercial Loans

442,775

59,232

25,380

41,300

568,687

18,359,178

18,927,865

Total

1,134,116

506,317

427,885

70,739

2,139,057

37,377,694

39,516,751

F-61

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~iv) Troubled debt restructuring (TDR)~~
A restructured loan is considered a TDR if the debtor is experiencing financial difficulties and the Group grants a concession to the debtor that would not otherwise be considered. Concessions granted could include but it not necessary limited to: reduction in interest rate to rates that are considered below market, extension of repayment schedules and maturity dates beyond original contractual terms.
~~The table below presents the December 31, 2017 and 2016 carrying value of loans that were modified in a TDR within the previous 12 months:~~

Segment

Number of
contracts

Pre-modification
outstanding
recorded investment

Post-modification
outstanding
recorded investment

December 31, 2017

Consumer

54,939

2,177,304

1,804,596

Commercial

7

8,138

5,391

December 31, 2016

Consumer

29,062

827,720

775,685

Commercial

—

—

—

The Group considers a TDR that have subsequently defaulted if the borrower has failed to make payments of either principal, interest or both for a period of 90 days or more from contractual due date. Loans considered TDR that have defaulted during the ~~years ended December 31, 2017 and 2016, respectively were as follows:~~

December 31, 2017

Troubled debt restructuring that subsequently defaulted

Number of
contracts

Recorded
investment

Consumer

5,783

212,179

December 31, 2016

Troubled debt restructuring that subsequently
defaulted

Number of
contracts

Recorded
investment

Consumer

3,481

88,575

~~d. Transfers of financial assets~~
The Group has securitized certain of their personal, pledge and credit card loans originated by the Bank and CCF on their behalf through the transfers of such loans to special purpose trusts which issues multiple classes of bonds and certificates of participation.
In addition, on November 7, 2007 the Group securitized certain properties through the transfer of such properties to a special purpose trust “Renta Inmobiliaria I” which issues multiple classes of bonds and
F-62

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~certificates of participation. As of December 2016, the Group had liquidated the mentioned trust and acquired the properties that were originally transferred.~~
Under Argentine Banking GAAP, securitizations were accounted for as sales. Debt securities issued by the trusts and retained by the Group are accounted for at cost plus accrued interest and participation certificates issued by the trusts and retained by the Group are accounted for under the equity method except the participation certificates of Real Estate trust that was accounted for at cost with the limit of the equity method and the participation certificates of CCF 3, 4 and 5 were accounted for at the recoverable value determined by the present value of net cash flows generated by the trusts with the limit of the equity method.
~~Under US GAAP, FASB ASC 810 “Consolidation” addresses consolidation of variable interest entities, as defined in the rules, which have certain characteristics.~~
~~The methodology for evaluating trust and transactions under the VIE requirements includes the following two steps:~~
~~1) Determine whether the entity meets the criteria to qualify as a VIE and;~~
~~2) Determine whether the Group is the primary beneficiary of a VIE.~~
~~In performing the first step the significant factors and judgments that were considered in making the determination as to whether an entity is a VIE includes:~~
· The design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;
· ~~The nature of the involvement with the entity;~~
· ~~Whether control of the entity may be achieved through arrangements that do not involve voting equity;~~
· ~~Whether there is sufficient equity investment at risk to finance the activities of the entity and;~~
· ~~Whether parties other than the equity holders have the obligation to absorb expected losses or the right to received residual returns.~~
~~For each VIE identified, the Group performs the second step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and criteria:~~
· ~~Whether the Group has the power to direct the activities that most significantly impact the VIE’s economic performance and;~~
· ~~Whether the Group absorb the majority of the VIE’s expected losses or the Group receive a majority of the VIE’s expected residual returns.~~
As of December 31, 2017 and 2016, under FASB ASC 810, financial trusts mentioned in Note 26 were considered variable interest entities. In accordance with FASB ASC 810, the Group was deemed to be the primary beneficiary of these trusts and, therefore, the Group included them in its consolidated financial statements. The impact in the US GAAP shareholders’ equity or net income reconciliation is disclosed below.
As of December 31, 2017 and 2016, the table below presents the carrying amount and classification of the VIE’s assets and liabilities which have been consolidated for US GAAP purposes. As mentioned in Note 26. under BCRA rules, those amounts were recorded under “Other receivables from financial intermediation — Other receivables not covered by debtors classification regulations.
F-63

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31,

December 31,

2017

2016

Assets

Cash and due from banks

Ps.
6,276

Ps.
16,244

Trading securities assets

75,843

—

Other receivable from financial transactions

50,866

151,979

Loans

1,459,617

1,515,729

Allowances related to Loans

(114,095
)
(67,905
)
Other assets

28,680

38,996

Ps.
1,507,187

Ps.
1,655,043

Liabilities

Other liabilities from financial transactions:

Debt Securities

Ps.
811,018

Ps.
953,678

Certificates of Participation

606,643

614,020

Other liabilities

89,526

87,345

Ps.
1,507,187

Ps.
1,655,043

~~As a result of consolidating these trusts, total consolidated assets would increase by Ps. 978,852 and Ps. 982,651 as of December 31, 2017 and December 31, 2016, respectively.~~
~~Therefore, the Group recognized the loans and other assets under the financial trust included below and re-established its loan loss reserves under ASC 310. See Note 35.I.c. allowance for loan losses.~~
In addition, the Group had recognized a gain for the sale of the assets included in the trusts “Renta Inmobiliaria I” and “CCF Créditos Serie 5”. As a consequence that the Group had a controlling financial interest in trusts, the reconsolidation of the assets and liabilities was made and the gains recognized by the Group at the inception were reversed for US GAAP purposes. In addition, a reconciling adjustment was recognized in order to consolidate each trust assets and liabilities under US GAAP principles.
- ~~Renta Inmobiliaria I~~
Renta Inmobiliaria I was liquidated on the second semester of 2016 and the Group reacquired the properties of this trust. Under Argentine Banking GAAP the Group recognized this assets for its market value at the moment of the readquisition and as consequence that the Group was consolidating the assets and liabilities of this trust, under US-GAAP this properties should be accounted for its historical cost minus amortization.
~~Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (312,144) and Ps. (324,565).~~ ~~Net income adjustment as of December 31, 2017, 2016 and 2015 amounted to Ps. 12,421, Ps. (218,687), and Ps. (33,971), respectively.~~
- ~~CCF Créditos Serie 5~~
~~Net Income adjustment as of December 31, 2015 amounted to Ps. 4,976.~~
~~Transfers of receivables with recourse~~
~~Under Argentine Banking GAAP, for transfers of receivables with recourse, the Group recorded a gain in the income statement and accounted for the transaction as a sale of loans.~~
F-64

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Under US GAAP, ASC 860 “Transfers and servicing” establishes accounting and reporting standards for transfers and servicing of financial assets.~~
Transfers of financial receivables with recourse do not comply with the conditions prescribed in ASC 860-10-40 to be accounted for as a sale, as consequence, the transaction is considered a secured borrowing and, as a result of it, the Group should continue reporting the transferred financial receivables in its statement of financial position with no change in their measurement.
Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (105,939) and Ps. (26,218) (corresponding to assets for an amount of Ps. 570,803 and Ps. 144,198 and liabilities for an amount of Ps. 676,742 and Ps. 170,416, respectively). Net income as of December 31, 2017, 2016 and 2015, amounted to Ps. (79,721), Ps. (27,265) and Ps. 1,047, respectively.
~~e. Government securities and other investments~~
~~Investments securities classified as trading and available for sale~~
Under Argentine Banking GAAP the Group has recorded “Holding of trading securities”, “Unlisted Government securities”, “Investments in listed corporate securities”, “Securities issued by the Argentine Central Bank listed” and “Securities receivable under spot and forward purchases pending settlement” at fair value, meanwhile the “Securities issued by the Argentine Central Bank unlisted” and “Unlisted corporate bonds” has been value at cost increased by their internal rate of return. Changes in valuation of these securities are included in earnings.
Under US GAAP “Holding of trading securities”, “Investments in listed corporate securities” and certain “Securities issued by the Argentine Central Bank” were considered “trading securities” and, as such, valued at fair value with changes in fair value recognized in the consolidated statement of income.
~~The table below shows the investments classified as trading securities:~~

December 31,

December 31,

2017

2016

Shareholders’s

Carrying

Fair

Equity

Carrying

Fair

Amount

Value

Adjustment

Amount

Value

Trading securities

Holdings of trading securities

Ps.
139,385

Ps.
139,385

Ps.
—

Ps.
158,341

Ps.
158,386

Unlisted Government securities

437

437

—

—

—

Investments in listed corporate securities

38,624

38,624

—

1,895

1,895

Securities issued by Argentine Central Bank

9,330,248

9,330,248

—

907,461

907,098

Total trading securities

Ps.
9,508,694

Ps.
9,508,694

Ps.
—

Ps.
1,067,697

Ps.
1,067,379

Other “Securities issued by Argentine Central Bank”, “Unlisted corporate bonds”, “Unlisted government securities” and “Securities receivable under spot and forward purchases pending settlement” were considered as “available for sale securities” for US GAAP purposes and, as such, were recorded at fair value with the unrealized gain and losses reported as net of income tax included in other comprehensive income in the Shareholders´ equity, in accordance with ASC 320 “Investment — Debt and Equity Securities”.
F-65

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~The table below shows the investments classified as available for sale securities:~~

December 31, 2017

Accumulated

Shareholders’

Amortized

Book

Fair

Unrealized

equity

Cost

Value

Value

(Loss)/Gain

Adjustment

Securities issued by Argentine Central Bank

Ps.
2,341,832

2,343,618

2,343,618

1,786

—

Unlisted Government Securities and holdings of trading securities

1,803,747

1,799,367

1,802,131

(1,616
)
2,764

Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement (*)

91,950

91,989

92,527

577

538

Total

Ps.
4,237,529

4,234,974

4,238,276

747

3,302

(*)This line does not include forward transactions pending settlement for an amount of Ps. 20,610. These operations have not been included for US GAAP purposes. The Group records securities purchases and sales as of the trade date under US GAAP.

December 31, 2016

Amortized

Book

Fair

Accumulated
Unrealized

Shareholders’
equity

Cost

Value

Value

(Loss)/Gain

Adjustment

Securities issued by Argentine Central Bank

1,486,805

1,485,743

1,484,288

(2,517
)
(1,455
)
Unlisted Government Securities

818,853

818,853

811,195

(7,658
)
(7,658
)
Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement (*)

616,872

620,574

620,520

3,648

(54
)
Total

2,922,530

2,925,170

2,916,003

(6,527
)
(9,167
)
(*)This line does not include forward transactions pending settlement for an amount of Ps. 8,250. These operations have not been included for US GAAP purposes. The Group records securities purchases and sales as of the trade date under US GAAP
~~The amount of the unrealized gain or loss on available for sale securities, before tax, that have been included in accumulated other comprehensive income is as follows:~~
Securities

December
31, 2016

Increase

Decrease

December 31,
2017

Securities issued by Argentine Central Bank

Ps.
(2,517
)
Ps.
11,338

Ps.
(7,035
)
Ps.
1,786

Unlisted Government Securities

(7,658
)
7,284

(1,242
)
(1,616
)
Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement

3,648

871

(3,942
)
577

Total

Ps.
(6,527
)
Ps.
19,493

Ps.
(12,219
)
Ps.
747

F-66

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Securities

December
31, 2015

Increase

Decrease

December 31,
2016

Securities issued by Argentine Central Bank

Ps.
10

Ps.
618

Ps.
(3,145
)
Ps.
(2,517
)
Unlisted Government Securities

—

—

(7,658
)
(7,658
)
Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement

705

3,661

(718
)
3,648

Total

Ps.
715

Ps.
4,279

Ps.
(11,521
)
Ps.
(6,527
)
~~The maturities of available for sale securities as of December 31, 2017 are as follows:~~

December 31, 2017

After 5

After 1 year

year but

Within 1

but within 5

within 10

Securities

year

years

years

Total

Securities issued by Argentine Central Bank

Ps.
2,341,832

—

—

2,341,832

Unlisted government bonds

1,803,747

—

—

1,803,747

Unlisted corporate bonds

1,010

65,569

—

66,579

Securities receivable under spot and forward purchases pending settlement

25,371

—

—

25,371

Total

Ps.
4,171,960

65,569

—

4,237,529

~~In addition, the Group has evaluated whether there was a decline in the value of the security that is other-than temporary as defined by ASC 310-10.~~
The table below presents the fair value and the associated gross unrealized losses on AFS debt securities and whether these securities have had gross unrealized losses for less than 12 months or for 12 months or longer as of December 31, 2017 and 2016:

Less than 12 months

Total

Gross Unrealized
losses

Fair Value

Gross Unrealized
losses

Fair Value

December 31, 2017

Securities issued by Argentine Central Bank

Ps.
(7,035
)
1,484,288

Ps.
(7,035
)
1,484,288

Unlisted government bonds

(1,242
)
811,195

(1,242
)
811,195

Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement

(3,942
)
620,520

(3,942
)
620,520

Total

Ps.
(12,219
)
2,916,003

Ps.
(12,219
)
2,916,003

Less than 12 months

Total

Gross Unrealized
losses

Fair Value

Gross Unrealized
losses

Fair Value

December 31, 2016

Securities issued by Argentine Central Bank

Ps.
(3,145
)
903,654

Ps.
(3,145
)
903,654

Unlisted government bonds

(7,658
)
811,195

(7,658
)
811,195

Unlisted corporate bonds and Securities receivable under spot and forward purchases pending settlement

(718
)
11,040

(718
)
11,040

Total

Ps.
(11,521
)
1,725,889

Ps.
(11,521
)
1,725,889

F-67

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~For purposes of determining whether the decline in fair value for these categories of securities qualifies as “other than temporary impairment,” the Group has considered the following factors:~~
·                  The decline in fair value is not attributable to credit quality. It solely derives from adverse interest rate fluctuations of observable inputs of similar instruments according to their fair value hierarchy.
·                  ~~Future principal payments will be sufficient to recover the current amortized cost of these investments.~~
·                  ~~The Group has the intention to hold these securities at least until their fair value recover to a level that exceeds their amortized cost.~~
·                  ~~The extent to which the fair value has been less than the amortized cost is not relevant for these categories of securities.~~
As of December 31, 2017 and 2016 the Group has evaluated if an “other than temporary impairment” exists. As a result of its analysis, has determined that the decrease was temporary in nature and no impairment has to be recorded under US GAAP.
~~Net income adjustment between Argentine Banking GAAP and US GAAP for the year ended December 31, 2017, 2016 and 2015 amounted to Ps. 5,513, Ps. (3,252) and Ps. 162, respectively.~~
~~f. Vacation Provision~~
~~Following Argentine Banking GAAP, the cost of vacations earned by employees is recorded by the Group when paid.~~
~~US GAAP requires that this expense be recorded on an accrual basis as the vacations are earned.~~
Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (300,043) and Ps. (215,361), respectively. Net income adjustment as of December 31, 2017, 2016 and 2015 amounted to Ps. (84,682), Ps. (35,587) and Ps. (12,825), respectively.
~~g. Derivative Instruments~~
~~The Group enters into derivative transactions, mainly, futures, forward, options and interest rate swaps.~~
Under Argentine Banking GAAP futures, forward and options are accounted at fair value and interest rate swap at its notional value. Over this value, the Group agrees to pay a fix interest rate and to receive a floating interest rate. The differences arising between fixed and floating rates of interest rate swaps are settled monthly and are recorded at their net position. This net position is calculated instrument by instrument. Differences arising between the spot price and the future price in futures and forwards transactions are settled daily through ROFEX.
Under US GAAP, ASC 815 “Derivatives and Hedging” establishes accounting and reporting standards for derivative instruments, including certain ones embedded in other contracts (collectively referred to as derivatives) and for hedging activities.
F-68

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
The standard requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The Group had no embedded derivatives and does not apply hedge accounting in accordance with FASB ASC 815.
~~There are no shareholders´ equity and net income adjustments between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016.~~
~~Under US GAAP, FASB ASC 815 also requires additional disclosures, as follows:~~

December 31,

December 31,

2017

2016

Derivatives not designated as
hedging instruments under FASB
ASC 815

Balance sheet
classification (1)

Fair
value

Balance sheet
classification (1)

Fair value

Assets derivatives

Foreign exchange contracts

Other receivables from financial intermediation

—

Other receivables from financial intermediation

28,304

Total assets derivatives

—

28,304

Liability derivatives

Foreign exchange contracts

Other liabilities from financial intermediation

—

Other liabilities from financial intermediation

—

Options

Other liabilities from financial intermediation

—

Other liabilities from financial intermediation

—

Total liability derivatives

—

—

~~(1) According to Central Bank rules~~.
~~See amounts of gain or (loss) recognized in income on derivatives in Note 25.c.~~
~~h. Special Termination Arrangements~~
Special termination arrangements are principally termination benefits that a group of eligible employees receive during the period between their effective termination date and their retirement age, when they voluntary accepts an irrevocable termination arrangement.
~~Under Argentine Banking GAAP, the costs of the special termination arrangement are recorded when paid.~~
Under ASC 712 “Special termination benefits” a liability should be recorded and an expense recognized in the period the employees irrevocably accept the offer and the amount of the termination liability is reasonably estimable.
Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (598,281) and Ps. (290,025), respectively. Net income adjustment as of December 31, 2017 and 2016 and 2015 amounted to Ps. (308,256), Ps. (151,100) and Ps. (69,271), respectively.
~~i. Customer Loyalty Programs~~
~~The Group offers reward programs that allow its cardholders to earn points that can be redeemed for a broad range of rewards, including goods and travels among others.~~
~~Under Argentine Banking GAAP, the Group recorded a liability based on the redemptions paid during the last 12 months.~~
Under US GAAP the Group establishes a reward liability based upon the points earned that are expected to be redeemed and the average cost per point redeemed. The points to be redeemed are estimated based
F-69

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~on past redemption behavior, card product type, and other historical card performance. The liability is reduced as the points are redeemed.~~
Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (51,193) and Ps. (44,091), respectively. Net income adjustment as of December 31, 2017, 2016 and 2015 amounted to Ps. (7,102), Ps. (15,995) and Ps. 21,094, respectively.
~~j. Credit Card Loans— Imputed Interest~~
As of December 31, 2017 and 2016, the Group has granted credit card loans with zero interest rates or preferential interest rates. Under Argentine Banking GAAP, the Group has recorded the investment at the amount granted without consideration of the market interest rate involved in the transaction.
Under US GAAP, ASC 835-30 establishes a method to determine the interest rate corresponding to these types of transactions. This Standard provides guidance for the appropriate accounting when the face amount of an account receivable does not reasonably represent the present value of the consideration given or received in the exchange.
The objective is to approximate the interest rate for an account receivable that would have resulted if an independent borrower and an independent lender had negotiated a similar transaction under comparable terms and conditions with the option to pay the cash price upon purchase for the amount of the purchase that bears the prevailing rate of interest to maturity.
~~Shareholders´ Equity adjustment between Argentine Banking GAAP and US GAAP as of December 31, 2017 and 2016 amounted to Ps. (182,161) and Ps. (88,463), respectively. Net income adjustment~~ ~~for the years ended December 31, 2017, 2016 and 2015 amounted to Ps. (93,698), Ps. 21,666 and Ps. (75,775), respectively.~~
~~k. Deferred Income Tax~~
Argentine Central Bank regulations do not require the recognition of deferred tax assets and liabilities and, therefore, income taxes for Banco Supervielle and Cordial Compañía Financiera S.A. are recognized on the basis of amounts due in accordance with Argentine tax regulations. However, Grupo Supervielle and Grupo Supervielle’s non-bank subsidiaries apply the deferred income tax method. As a result, Grupo Supervielle and its non-banking subsidiaries have recognized a deferred tax asset as of December 31, 2017 and 2016. As indicated in note 3.19, on the December 27, 2017 the Argentine Congress approved a comprehensive income tax reform that will become effective as of 2018.
In addition, the Group records as an asset the credit related with Minimum Presumed Income Tax amounting to Ps. 26,183 and Ps. 8,408 as of December 31, 2017 and 2016, respectively. The MPIT credit will be computable as a down payment of any income tax excess over minimum notional income tax through the next ten years.
For purposes of US GAAP reporting, the Bank and Cordial Compañía Financiera S.A. apply FASB ASC 740 “Income Taxes”. Under this method, income taxes recognized using the asset and liability method whereby deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and their respective tax basis. Deferred tax assets are also recognized if it is more likely than not those assets will be realized.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recorded or settled. The effect of a change in tax rates is recognized in income statement in the period when enacted. A valuation allowance is recognized for that component of net deferred tax assets which is “more likely than not” that
F-70

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
it will not be realized. Under this pronouncement, an enterprise must use judgment in considering the relative impact of negative and positive evidence to determine if a valuation allowance is needed or not.
As of December 31, 2017 and 2016, and based on the analysis performed on the realizability of the deferred tax assets, the Group believes that is more likely than not that it will recover all the temporary differences and no portion of the net operating tax loss carryforward with future taxable income and, therefore, a valuation allowance was provided against the net operating tax loss carryforward based on the taxable income projections.
Legal entities in Argentina file their individual tax returns with the tax authority and consolidation of tax returns are not permitted. Consequently, deferred tax assets, deferred tax liabilities, and valuation allowances are determined based on the individual positions of each legal entity.
~~As such, the US GAAP adjustment included: a) Deferred Income Taxes for banking companies not recorded for local purposes and; b) tax effects on the US GAAP adjustments including in the reconciliation.~~
~~Deferred tax assets / (liabilities) are summarized as follows:~~

December 31, 2017

ASC 740-10 applied to
Argentine Banking
GAAP balances

ASC 740-10 applied
to US GAAP
adjustments

ASC 740-10
Total

Deferred tax assets

Loan loss reserves

Ps.
200,588

Ps.
115,974

Ps.
316,562

Loans origination fees and cost

—

66,974

66,974

Provisions

23,163

284,855

308,018

Transfer of Financial Assets

—

125,425

125,425

Credit Card Loans — Imputed Interest

—

54,648

54,648

Financial Guarantees

—

1,985

1,985

Loss carry forward

50,647

—

50,647

Ps.
274,398

Ps.
649,861

Ps.
924,259

Deferred tax liabilities

Fixed Assets

Ps.
48,997

Ps.
(6,559
)
Ps.
42,438

Intangible assets

17,630

(14,795
)
2,835

Exchange rate differences

39,394

—

39,394

Government Securities and other investments

—

991

991

Ps.
106,021

Ps.
(20,363
)
Ps.
85,658

Net deferred income tax asset before valuation allowance

Ps.
168,377

Ps.
670,224

Ps.
838,601

Valuation allowance

(50,647
)
—

(50,647
)
Net deferred income tax assets

Ps.
117,730

Ps.
670,224

Ps.
787,954

F-71

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31, 2016

ASC 740-10 applied to
Argentine Banking
GAAP balances

ASC 740-10 applied
to US GAAP
adjustments

ASC 740-10
Total

Deferred tax assets

Loan loss reserves

Ps.
169,225

Ps.
41,414

Ps.
210,639

Loans origination fees and cost

—

23,843

23,843

Provisions

22,662

192,317

214,979

Transfer of Financial Assets

—

122,774

122,774

Credit Card Loans — Imputed Interest

—

30,962

30,962

Government securities and other investments

—

3,320

3,320

Financial Guarantees

—

3,189

3,189

Loss carry forward

137,067

—

137,067

Ps.
328,954

Ps.
417,819

Ps.
746,773

Deferred tax liabilities

Fixed Assets

Ps.
29,983

Ps.
(6,837
)
Ps.
23,146

Intangible assets

24,269

(9,260
)
15,009

Ps.
54,252

Ps.
(16,097
)
Ps.
38,155

Net deferred income tax asset before valuation allowance

Ps.
274,702

Ps.
433,916

Ps.
708,618

Valuation allowance

(137,067
)
—

(137,067
)
Net deferred income tax assets

Ps.
137,635

Ps.
433,916

Ps.
571,551

~~The following table reconciles the statutory income tax rate in Argentina to the Group´s effective tax rate calculated on the basis of US GAAP for the years ended December 31, 2017, 2016 and 2015:~~

December 31,

2017

2016

2015

Pre-tax income in accordance with US GAAP (a)

Ps.
2,352,923

Ps.
1,345,089

Ps.
931,395

Statutory income tax rate

35
%
35
%
35
%
Tax on net income at statutory rate

Ps.
823,523

Ps.
470,781

Ps.
325,988

Permanent tax differences

(81,661
)
(188,124
)
(78,743
)
Changes in valuation allowance

(86,420
)
36,563

8,074

Income tax in accordance with US GAAP

Ps.
655,442

Ps.
319,221

Ps.
255,319

~~(a) Includes pre-tax income of trusts that are consolidated under US GAAP, as described in Note 35.I.d.~~
ASC 740-10 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition for uncertain tax positions taken or expected to be taken in a tax return. As of December 31, 2017 and 2016, there were no uncertain tax positions.
~~The following table shows the tax years open for examination as of December 31, 2017, in which the Group’s operate:~~
~~Jurisdiction~~
~~Tax year~~
~~Argentina~~
~~2013 — 2017~~
~~l. Accounting for guarantees~~
~~The Bank issues financial guarantees, which are obligations to pay to a third party when a customer fails to repay its obligation.~~
~~Under Central Bank rules, guarantees issued are recognized as liabilities when it is probable that the obligation undertaken by the guarantor will be performed.~~
F-72

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Under US GAAP, FASB ASC 460 “Guarantees” requires that at inception of a guarantee, a guarantor recognize a liability for the fair value of the obligation undertaken in issuing the guarantee. Such liability at inception is deemed to be the fee received by the Group with an offsetting entry equal to the consideration received. Subsequent reduction of liability is based on an amortization method as the Group is decreasing its risk. As of December 31, 2017 and 2016, the fair value of the guarantees less the estimated proceeds from collateral amounted to Ps. (6,616) and Ps. (9,111), respectively. Net income adjustment as of December 31, 2017, 2016 and 2015 amounted to Ps. 2,495, Ps. 526 and Ps. (10,997), respectively.
~~m. Non-controlling Interest~~
Argentine Banking GAAP requires to record non-controlling interests as a component of the liabilities. Under US GAAP, FASB ASC 810 requires to record such interests as shareholders’ equity. As consequence, consolidated net income and comprehensive income are reported with separate disclosure of the amounts attributable to the parent company and to the non-controlling interest. The non-controlling interest in accordance with Argentine Banking GAAP has been eliminated for US GAAP reconciliation purposes. Also, non-controlling interest under US GAAP reflects the effect in non-controlling interest of all the other US GAAP adjustments discussed.
Had US GAAP been applied, the Group’s shareholder’s equity would increase by Ps. 1,602 and Ps. 18,735 at December 31, 2017 and 2016, respectively. In addition, income for the fiscal years ended at December 31, 2017, 2016 and 2015 would have (decreased) / increased by Ps. (16,886), Ps. 3,290 and Ps. 3,558, respectively.
~~II. Additional disclosure requirements:~~
a)~~Comprehensive income~~
“Reporting Comprehensive Income” ASC 220 establishes standards for reporting and the display of comprehensive income and its components (revenues, expenses, gains and losses) in the financial statements. Comprehensive income is the total of net income and all transactions, and other events and circumstances from non-owner sources.
~~The following disclosure presents the Comprehensive Income according to ASC 220, for the years ended December 31, 2017, 2016 and 2015:~~

December 31,

2017

2016

2015

Income Statement

Financial income

Ps.
15,991,409

Ps.
10,981,488

Ps.
7,496,156

Financial expenses

(6,448,536
)
(5,191,330
)
(3,809,350
)
Gross financial margin — gain

9,542,873

5,790,158

3,686,806

Loan Loss provisions net of recoveries

(2,200,682
)
(1,099,229
)
(532,191
)
Services fee income

4,746,614

3,459,641

2,662,219

Services fee expense

(1,504,268
)
(1,097,632
)
(759,367
)
Administrative expenses

(8,886,710
)
(6,159,154
)
(4,454,857
)
Subtotal- Income from financial transactions

1,697,827

893,784

602,610

Income from insurance activities

479,061

606,143

175,947

Miscellaneous income

545,898

298,897

367,165

Miscellaneous losses

(369,863
)
(453,735
)
(214,327
)
Income before tax

2,352,923

1,345,089

931,395

Income Tax

(655,442
)
(319,221
)
(255,319
)
Net income under US GAAP

Ps.
1,697,481

Ps.
1,025,868

Ps.
676,076

Less: Net Income attributable to the Non-controlling Interest.

(52,889
)
(28,184
)
(57,722
)
Net Income attributable to the Group

Ps.
1,644,592

Ps.
997,684

Ps.
618,354

~~(a)~~         ~~includes net income from participation in Financial Trust consolidated under US GAAP~~
F-73

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Comprehensive income~~

December 31,

2017

2016

2015

Net income for the year

Ps.
1,697,481

Ps.
1,025,868

Ps.
676,076

Other comprehensive income:

Gross unrealized (loss) / gain, net

7,274

(7,242
)
18,653

Estimated tax benefit / (loss) on unrealized (loss) / gain on available for sale securities

(2,546
)
2,535

(6,529
)
Unrealized (loss) / gain, net of tax

4,728

(4,707
)
12,124

Comprehensive income

1,702,209

1,021,161

688,200

Less: Other comprehensive income attributable to non-controlling interest

(247
)
284

(983
)
Less: Comprehensive income attributable to non-controlling interest

(52,889
)
(28,183
)
(57,722
)
Comprehensive income attributable to the Group

Ps.
1,649,073

Ps.
993,262

Ps.
629,495

December 31,

2017

2016

2015

Unrealized net (loss) / gains - Available for sale securities

Ps.
747

Ps.
(6,527
)
Ps.
715

Estimated tax benefits / (loss) on unrealized net gains on available for sale securities

(262
)
2,284

(250
)
Accumulated other comprehensive income, net

Ps.
485

Ps.
(4,243
)
Ps.
465

~~b) Statements of Income and Balance Sheets~~
The presentation of financial statements according to the Argentine Banking GAAP differs significantly from the format required by the SEC under Rules 210.9 to 210.9-07 of Regulation S-X (Article 9). The income statements presented below disclose the categories required by Article 9 using Argentine Banking GAAP:

December 31,

2017

2016

2015

Interest income

Interest and fees on loans

Ps.
12,652,880

Ps.
8,887,937

Ps.
5,733,880

Interest and dividends on investment securities taxable

2,373,059

1,241,555

689,472

Interest on other receivables from financial transactions

364,836

412,467

273,657

Ps.
15,390,775

Ps.
10,541,959

Ps.
6,697,009

Interest expense

Interest on deposits

2,960,459

3,076,406

2,173,450

Interest on securities sold under agreements to repurchase

108,712

94,143

38,085

Interest on short-term liabilities from financial intermediation

1,933,596

792,419

480,079

Interest on long-term liabilities from financial intermediation

128,237

128,027

81,282

Ps.
5,131,004

Ps.
4,090,995

Ps,
2,772,896

Net interest income

Ps.
10,259,771

Ps.
6,450,964

Ps.
3,924,113

Provision for loan losses, Net of reversals

1,652,325

926,650

483,645

Net interest income after provision for loan losses

Ps.
8,607,446

Ps.
5,524,314

Ps.
3,440,468

Non-interest income

Service charges on deposit accounts

Ps.
1,435,289

Ps.
925,096

Ps.
678,531

Credit-card service charges and fees

937,690

802,059

769,446

Other commissions

868,288

594,910

881,083

Insurance commissions, fees and premiums

1,162,677

1,120,921

Loans related commissions

1,084,217

730,099

506,648

Income from equity in other companies

27,648

—

3

Foreign exchange, net

250,758

367,436

44,735

Other

571,302

353,119

482,910

Total non-interest income

Ps.
6,337,869

Ps.
4,893,640

Ps.
3,363,356

Non-interest expense

Commissions

Ps.
800,636

Ps.
559,391

Ps.
365,847

Personnel expenses

5,475,674

3,860,094

2,767,111

Fees and external administrative services

507,065

360,519

246,061

Depreciation of premises and equipment

118,594

81,558

56,637

Renting

249,934

225,363

148,381

Electricity and communications

193,227

149,888

101,009

Advertising and publicity

549,408

443,526

314,295

Taxes

2,035,846

1,438,996

1,101,813

Amortization of other intangibles

128,875

111,284

92,431

Loss from equity in others companies

—

4,997

—

Repair maintenance and conservation

356,500

308,276

147,845

Insurance

35,498

26,476

14,204

Security Services

191,282

132,122

95,751

Other Provisions and reserves

44,797

76,627

23,863

Other

998,655

766,003

362,173

Stationary and supplies

43,885

38,762

29,055

Total non-interest expense

Ps.
11,729,876

Ps.
8,583,880

Ps.
5,866,476

Income before tax expense

3,215,439

1,834,074

937,350

Income tax expense

772,483

500,603

247,161

Net Income attributable to Parent Company

Ps.
2,442,956

Ps.
1,333,471

Ps.
690,189

Net Income attributable to non-controlling interest

Ps.
5,897

22,166

16,080

Net Income

Ps.
2,437,059

Ps.
1,311,304

Ps.
674,109

F-74

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
Argentine Banking GAAP also requires certain classifications of assets and liabilities, which are different from those required by Article 9. The following balance sheet presents Grupo Supervielle’s balance sheet as of December 31, 2017 and 2016, as if they had followed Article 9 balance sheet disclosure requirements using Argentine Banking GAAP.

December 31,

2017

2016

Assets

Cash and due from banks

Ps.
3,105,770

Ps.
2,048,348

Interest bearing deposits in other Banks

8,023,716

6,115,561

Trading account assets

1.734.409

945,991

Other short-term investments

680,866

1,185,637

Available for sale securities (*)

13,612,362

1,414,053

Loans

58,613,161

36,664,087

Allowances for loan losses (Note 7)

(1,536,728
)
(888,677
)
Loans, net

57,076,433

35,775,410

Other receivables from financial transactions

5,880,530

2,585,807

Miscellaneous receivables

1,776,209

1,106,292

Premises and equipment

694,430

620,003

Intangible Assets — Goodwill

22,042

31,263

Intangible Assets — Other

302,459

252,334

Assets held for sale (**)

—

207,656

Other assets

1,062,052

917,687

Total assets

Ps.
93,971,278

Ps.
53,206,042

December 31,

2017

2016

Liabilities and Shareholders’ Equity:

Noninterest bearing Deposits

Ps.
22,984,798

Ps.
12,265,395

Interest bearing Deposits

33,502,231

23,632,468

Short-term borrowing

3,796,719

3,344,884

Other liabilities

60,512

134,158

Amounts payable for spot and forward purchases pending settlement

3,764,064

592,386

Other liabilities from financial transactions

2,685,835

2,193,928

Long-term debt

8,882,608

1,697,360

Other Liabilities (***)

3,058,053

2,173,223

Liabilities held for sale (**)

—

74,687

Contingent liabilities

80,163

62,596

Total Liabilities

Ps.
78,814,983

Ps.
46,171,094

Total Parent Company shareholders´ equity

15,144,798

6.931.551

Non-controlling Interest

11,497

103.397

Total liabilities and shareholders’ equity

Ps.
93,971,278

Ps.
53.206.042

F-75

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
(*) The carrying value and market value of securities classified into “available-for-sale securities” have been mentioned in note 35.1.e. This line includes Ps. 735 corresponding to restricted investments.
(**) These lines includes the assets and liabilities of Cordial Microfinanzas that have been classified as held for sale as it met the criteria stablished by the ASC 360-45-9 and have been measured at its carrying value.
~~(***) These line include taxes payables, sundry accounts and social debts.~~
~~In the following table is a description of total loans by categories:~~

December 31,

December 31,

2017

2016

Financial Sector

3,236,350

6
%
823,772

2
%
Services

3,578,836

6
%
1,656,902

5
%
Primary Products

6,275,915

11
%
3,069,654

8
%
Consumer

30,420,943

51
%
20,343,028

55
%
Retail Trade

1,540,861

3
%
1,324,768

3
%
Construction

5,200,237

9
%
3,482,245

10
%
Manufacturing

4,318,475

7
%
1,736,015

5
%
Other

4,041,544

7
%
4,227,703

12
%
Total

58,613,161

100
%
36,664,087

100
%
~~Transactions with related parties are described in note 18.~~
~~c) Fair Value Measurements Disclosures~~
ASC 820 -10 defines fair value, establishes a consistent framework for measuring fair value and expands disclosure requirements about fair-value measurements. ASC 820 -10, among other things, requires the Group to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
In addition, ASC 825 -10 provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments and written loan commitments not previously recorded at fair value. Under ASC 825 -10, fair value is used for both the initial and subsequent measurement of the designated assets, liabilities and commitments, with the changes in fair value recognized in net income. As a result of ASC 825 -10 analyses, the Group has not elected to apply fair value accounting for any of its financial instruments not previously carried at fair value.
~~Fair Value Hierarchy~~
~~ASC 820 -10, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.~~
ASC 820 -10 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
·                  ~~Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.~~
F-76

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
·
Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
~~Level 2 — inputs include the following:~~
~~a) Quoted prices for similar assets or liabilities in active markets;~~
~~b) Quoted prices for identical or similar assets or liabilities in non-active markets;~~
~~c) Pricing models whose inputs are observable for substantially the full term of the asset~~ ~~or liability; and~~
~~d) Pricing models whose inputs are derived principally from or corroborated by~~ ~~observable market data through correlation or other means~~
·
~~Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.~~
~~A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.~~
~~Determination of Fair Value~~
~~The Group identified and categorized different assets and liabilities measured at fair value in accordance with the requirements of FASB ASC 820.~~
Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models that use primarily market-based or independently-sourced market parameters, including interest rate yield curves, option volatilities and currency rates. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, the Group’s creditworthiness, liquidity and unobservable parameters that are applied consistently over time.
The Group believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.
The following section describes the valuation methodologies used by the Group to measure various financial instruments at fair value, including an indication of the level in the fair-value hierarchy in which each instrument is generally classified. Where appropriate, the description includes details of the valuation models, the key inputs to those models as well as any significant assumptions.
~~Description of the measurement processes~~
The Group uses fair value to measure certain assets and liabilities on a recurring basis when fair value is the primary measure for accounting. This is done primarily for government and private securities (debt instruments issued by National Government and Central Bank and other) classified as available for sale or trading account, forward transactions pending settlement and derivatives (forward transactions without delivery of underlying assets and interest rate swaps).
F-77

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~Assets~~
~~Government and corporate securities~~
Investment securities: as quoted market prices are available in an active market, securities are classified within level 1 of the valuation hierarchy. Level 1 securities include national and government bonds, instruments issued by BCRA and corporate securities.
~~Derivatives Financial Instruments~~
~~Forward transactions traded in Self-Regulated markets are made through recognized exchange markets, such as MAE and ROFEX. Therefore, they are classified in Level 1 of the fair-value hierarchy.~~
~~Items measured at fair value on a recurring basis~~
~~The following table presents the financial instruments carried at fair value as of December 31, 2017 and 2016, under US GAAP:~~
Balances as of December 31, 2017

Total fair value

Quoted market
prices in active
markets - Level
1

Internal models
with significant
observable
market
parameters -
Level 2

Internal models
with significant
unobservable
markets
parameters -
Level 3

Assets

Government and corporate securities

Holdings of trading securities

Ps.
139,385

Ps.
139,385

Ps.
—

Ps.
—

Unlisted government securities

1,802,568

1,802,568

—

—

Investments in listed corporate securities

38,624

38,624

—

—

Securities issued by the Argentine Central Bank (*)

11,673,866

11,673,866

—

—

Other receivables from financial transaction

Securities receivable under spot and forward purchases pending settlement

25,371

25,371

—

—

Unlisted corporate bonds

67.156

67,156

—

—

Ps.
13,773,886

Ps.
13,773,886

Ps.
—

Ps.
—

Liabilities

Securities to be delivered under spot and forward sales pending settlement

Ps.
3,788,545

Ps.
3,788,545

Ps.
—

Ps.
—

Ps.
3,788,545

Ps.
3,788,545

Ps.
—

Ps.
—

~~(*) “Securities issued by the Argentine Central Bank” includes a reverse repo transaction operation for an amount of Ps. 3,738,790 that it is adjusted in Note 35.II.f. “Repurchase agreements”.~~
Balances as of December 31, 2016

Total fair value

Quoted market
prices in active
markets - Level
1

Internal models
with significant
observable
market
parameters -
Level 2

Internal models
with significant
unobservable
markets
parameters -
Level 3

Assets

Government and corporate securities

Holdings of trading securities

Ps.
158,386

Ps.
158,386

Ps.
—

Ps.
—

Investments in listed corporate securities

1,895

1,895

—

—

Unlisted government securities

811,195

811,195

—

—

Securities issued by the Argentine Central Bank (*)

2,391,386

2,391,386

—

—

Other receivables from financial transaction

Derivative instruments

28,304

28,304

—

—

Securities receivable under spot and forward purchases pending settlement

591,408

591,408

—

—

Unlisted corporate bonds

29,112

29,112

—

—

Ps.
3,853,300

Ps.
3,853,300

Ps.
—

Ps.
—

Liabilities

Securities to be delivered under spot and forward sales pending settlement

Ps.
29,979

Ps.
29,979

Ps.
—

Ps.
—

Ps.
29,979

Ps.
29,979

Ps.
—

Ps.
—

F-78

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~(*) “Securities issued by the Argentine Central Bank” includes a reverse repo transaction operation for an amount of Ps. 37,840 that it is adjusted in Note 35.II.f. “Repurchase agreements”.~~
~~As of December 31, 2017 and 2016 there are not assets and liabilities recorded at fair value on a non-recurring basis.~~
~~As of December 31, 2017 and 2016, the Group has not made transfers in or out of Level 1, Level 2, and Level 3.~~
~~d) Disclosure about Fair Value of Financial Instruments.~~
ASC 825, “Disclosures about Fair Value of Financial Instruments” requires disclosures of estimates of fair value of financial instruments. These estimates were made as of December 31, 2017 and 2016. Because many of the Group’s financial instruments do not have a ready trading market from which to determine fair value, the disclosures are based upon estimates regarding economic and current market conditions and risk characteristics. Such estimates are subjective and involve matters of judgment and, therefore, are not precise and may not be reasonably comparable to estimates of fair value for similar instruments made by other financial institutions.
~~The estimated fair values do not include the value of assets and liabilities not considered financial instruments.~~

December 31,

2017

Book Value

Fair Value

Level 1

Level 2

Level 3

Non derivative activities

Assets

Cash and due from banks (1)

Ps.
11,129,475

Ps,
11,129,475

11,129,475

—

—

Government and Corporate securities(*) (2)

11,607,246

11,609,195

11,609,195

—

—

Loans and leases (3)

57,473,574

62,873,349

—

—

62,873,349

Others (**) (4)

6,609,656

6,610,194

6,610,194

—

—

Liabilities

Deposits (5)

Ps.
56,487,027

Ps,
56,357,281

—

—

56,357,281

Other liabilities from financial transactions (6)

10,136,152

10,136,152

3,820,334

—

6,315,818

Negotiable obligations (7)

8,993,075

8,982,279

—

—

8,982,279

Others (8)

3,058,053

3,058,053

—

—

3,058,053

~~(*)~~“Government and Corporate securities” includes an adjustment related a reverse repo transaction operation for an amount of for an amount of Ps. 3,738,790 that have been adjusted for US GAAP purposes.
~~(**)“Assets - Others” includes an adjustment related forward transactions pending settlement for an amount of Ps. 20,610 that have been adjusted for US GAAP purposes.~~
F-79

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31,

2016

Book Value

Fair Value

Level 1

Level 2

Level 3

Non derivative activities

Assets

Cash and due from banks (1)

Ps.
8,166,132

Ps.
8,166,132

8,166,132

—

—

Government and Corporate securities (2) (*)

2,360,044

2,351,580

2,351,580

—

—

Loans and leases (3)

36,424,364

39,141,141

—

—

39,141,141

Others (**) (4)

3,772,576

3,788,752

3,769,791

—

18,961

Liabilities

Deposits (5)

Ps.
35,897,864

Ps.
35,846,634

—

—

35,846,634

Other liabilities from financial transactions (6)

4,547,898

4,547,898

627,331

—

3,920,567

Negotiable obligations (7)

3,345,694

3,378,350

—

—

3,378,350

Others (8)

2,182,228

2,182,228

—

—

2,182,228

~~(*)“Government and Corporate securities” includes an adjustment related to forward transactions pending settlement for an amount of Ps. 48,322 that have been adjusted for US GAAP purposes.~~
~~(**)“Assets - Others” include forward transactions pending settlement for an amount of Ps. 8,250 that have been adjusted for US GAAP purposes.~~
~~The following is a description of the estimating techniques applied:~~
~~(1) Cash and due from banks:~~ ~~By definition, cash and due from banks are short-term and do not possess credit risk. The carrying values as of December 31, 2017 and 2016 are a reasonable estimate of fair value.~~
~~(2) Government and Corporate securities:~~ When available, the Group uses quoted market prices to determine the fair value. If market prices are not available, quoted prices for similar assets in active markets have been used to calculate the fair value.
~~(3) Loans:~~ The fair values of loans are estimated for groups with similar characteristics, including type of loan, credit quality incorporating the credit risk factor. For floating- or adjustable-rate loans, which mature or are repriced within a short period of time, the carrying values are considered to be a reasonable estimate of fair values. For fixed-rate loans, market prices are not generally available and the fair values are estimated discounting the estimated future cash flows based on the contracted maturity of the loans. The discount rates are based on the current market rates corresponding to the applicable maturity. For non-performing loans, the fair values are generally determined on an individual basis by discounting the estimated future cash flows and may be based on the appraisal value of underlying collateral as appropriate. The fair value of “loans” is classified as Level 3 of the valuation hierarchy where significant unobservable inputs were used to calculate the fair value. The valuation technique used to obtain the fair value was an income approach using discounted cash flows. No changes in the valuation technique took place during the year.
~~(4) Others:~~ Includes other receivables from financial transactions and equity investments in other companies. This caption also includes financial trusts certificates of participation the fair value of which is estimated using valuation techniques to convert the future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The estimate of the cash flows is based on the future cash flows from the securitized assets, considering prepayments, historical loan performance, etc. Equity investments in companies where significant influence is exercised are not within the scope of ASC 825, Financial Instruments. Equity investments in other companies are carried at market value less costs to sell.
~~(5) Deposits:~~ The fair value of deposit liabilities on demand and savings account deposits is similar to its book value. The fair value of time deposits was calculated by discounting contractual cash flows using current market rates for instruments with similar maturities.
~~(6) Other liabilities from financial transactions:~~ ~~Includes credit lines borrowed under different credit arrangements. As of December 31, 2017 and 2016, when no quoted market prices were available, the~~
F-80

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~estimated fair value has been calculated by discounting the contractual cash flows of these liabilities at estimated market rates.~~
~~(7) Negotiable obligations:~~ As of December 31, 2017 and 2016, the fair value of the negotiable obligations was determined based on quoted market prices and when no quoted market prices were available, the estimated fair value has been calculated by discounting the contractual cash flows of these liabilities at estimated market rates.
~~(8) Others:~~ ~~Includes other liabilities from financial transactions. Their fair value was estimated at the expected future cash flows discounted at the estimated market rates at year-end.~~
~~e) Segment Reporting~~
The Group has disclosed its segment information in accordance with the “Disclosures about Segments of an Enterprise and Related Information” ASC 280-10. Operating segments are defined as components of an enterprise about which separate financial information is available and which is regularly reviewed by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. Reportable segments consist of one or more operating segments with similar economic characteristics, distribution systems and regulatory environments. The information provided for Segment Reporting is based on internal reports used by management.
The Group measures the performance of each of its business segments primarily in terms of net income (i.e., net revenues—or financial income and service fee income, net of financial expenses and service fee expenses—after deducting loan loss provisions and administrative costs directly attributable to the segment). Net income excludes the financial expenses incurred by Grupo Supervielle at the holding level in connection with its funding arrangements (although substantially all the proceeds of such arrangements have been contributed as capital to the subsidiaries through which the segments are operated), as well as transactions between segments, which are reflected under “Adjustments.”
~~Income from financial transactions and other segment information are based on Argentine Banking GAAP and are consistent with the presentation of the Group’s consolidated financial statements.~~
~~The Group operates its business along the following segments:~~
·~~Retail Banking~~: Through the Bank, we offer our retail customers a full range of financial products and services, including personal loans, deposit accounts, purchase and sale of foreign exchange and precious metals and credit cards, among others.
·~~Corporate Banking~~: Through the Bank, we offer large corporations, medium-sized companies and small businesses a full range of products, services and financial assessment including factoring, leasing, foreign trade finance and cash management.
·~~Treasury~~: The Treasury segment is primarily responsible for the allocation of the Bank’s liquidity according to the needs and opportunities of the Retail Banking segment, the Corporate Banking segment and its own needs and opportunities. The Treasury segment implements the Bank’s financial risk management policies, manages the Bank’s trading desks, distributes treasury products such as debt securities, and develops businesses with wholesale financial and non-financial clients.
·~~Consumer Finance~~: Through CCF and Tarjeta, we offer credit card services and loans to the middle and lower-middle-income sectors. We also offer consumer loans, credit cards and insurance products through an exclusive agreement with Walmart Argentina.
F-81

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
·~~Insuranc~~~~e: Through Supervielle Seguros, we offer insurance products, with a focus on life insurance, to targeted customer segments.~~
·~~Asset Management & Other Services~~: We also offer a variety of other services to our customers, including asset management, microcredit financing (through Cordial Microfinanzas), mutual fund products (through SAM) and non-financial products and services (through Espacio Cordial).
~~Below is a table with the information for each segment identified by the Group as of and for the years ended December 31, 2017, 2016 and 2015.~~

As of December 31, 2017

(in thousands of pesos)

Retail
Banking

Corporate
Banking

Treasury

Consumer
Finance

Insurance

Asset
Mgmt &
Other
Services

Adjustments

Consolidated
Total

Assets

Cash and due from banks

2,799,066

260,107

8,000,292

74,143

3,012

340

(7,485
)
11,129,475

Government and corporate securities

—

—

15,255,201

—

87,832

3,003

—

15,346,036

Loans

20,868,845

27,605,696

2,302,233

6,093,736

—

—

(1,916,137
)
54,954,373

Other receivables from financial transactions

(4,251
)
506,331

4,570,399

794,727

330,864

315,115

48,211

6,561,396

Receivables from financial leasing

439,189

2,080,012

—

—

—

—

—

2,519,201

Other assets

379,155

10,893

244,148

522,328

111,323

285,235

1,907,715

3,460,797

Total Assets

24,482,004

30,463,039

30,372,273

7,484,934

533,031

603,693

32,304

93,971,278

As of December 31, 2017

(in thousands of Pesos)

Retail
Banking

Corporate
Banking

Treasury

Consumer
Finance

Insurance

Asset Mgmt &
Other
Services

Adjustments

Consolidated
Total

Financial income

6,186,492

3,719,565

2,261,049

3,032,272

96,017

49,354

149,922

15,494,671

Financial expenses

(1,816,992
)
(449,607
)
(3,017,638
)
(1,370,932
)
(1,789
)
(1,071
)
463,741

(6,194,288
)
Distribution of Income (Expenses) for Treasury Funds(1)

1,172,277

(2,313,053
)
1,140,776

—

—

—

—

—

Gross financial margin

5,541,777

956,905

384,187

1,661,340

94,228

48,283

613,663

9,300,383

Services Fee Income

2,835,892

806,289

64,768

1,284,466

—

561,712

(579,855
)
4,973,272

Services Fee Expenses

(1,177,104
)
(102,617
)
(22,818
)
(625,461
)
—

(8,411
)
440,563

(1,495,848
)
Net Service Fee Income

1,658,788

703,672

41,950

659,005

—

553,301

(139,292
)
3,477,424

Income from Insurance Activities

—

—

—

—

375,443

—

103,618

479,061

Net Revenue

7,200,565

1,660,577

426,137

2,320,345

469,671

601,584

577,989

13,256,868

Loan Loss Provisions

(737,284
)
(153,312
)
(3,642
)
(924,499
)
—

—

(1,432
)
(1,820,169
)
Direct costs

(3,934,851
)
(359,172
)
(116,792
)
(1,149,235
)
(154,366
)
(264,494
)
(28,260
)
(6,007,170
)
Indirect costs

(1,599,491
)
(546,087
)
(237,874
)
—

—

—

—

(2,383,452
)
Income from financial transactions

928,939

602,006

67,829

246,611

315,305

337,090

548,297

3,046,077

Miscellaneous Income / (Expenses)

98,907

28,591

1,451

16,939

1,184

3,220

19,070

169,362

Non-controlling interests result

—

—

—

—

—

—

(5,897
)
(5,897
)
Income Before Income Tax

1,027,846

630,597

69,280

263,550

316,489

340,310

561,470

3,209,542

Income tax

(346,827
)
(92,381
)
(21,534
)
(84,110
)
(110,875
)
(116,756
)
—

(772,483
)
Net income

681,019

538,216

47,746

179,440

205,614

223,554

561,470

2,437,059

F-82

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

As of December 31, 2016

(in thousands of pesos)

Retail
Banking

Corporate
Banking

Treasury

Consumer
Finance

Insurance

Asset
Mgmt &
Other
Services

Adjustments

Consolidated
Total

Assets

Cash and due from banks

1,718,821

161,375

6,208,483

78,394

3,807

6,800

(11,548
)
8,166,132

Government and corporate securities

—

—

2,247,370

8,594

104,080

—

—

2,360,044

Loans

13,869,169

16,958,277

1,352,717

4,403,552

—

193,915

(1,521,121
)
34,896,509

Other receivables from financial transactions

174,633

317,461

1,639,240

439,471

284,796

179,115

738,020

3,772,736

Receivables from financial leasing

266,305

1,261,942

7

—

—

—

(399
)
1,527,855

Other assets

252,895

50,482

169,732

564,484

68,992

121,706

1,254,475

2,482,766

Total Assets

16,281,823

18,749,537

11,617,549

5,134,495

461,675

501,536

459,427

53,206,042

As of December 31, 2016

(in thousands of pesos)

Retail
Banking

Corporate
Banking

Treasury

Consumer
Finance

Insurance

Asset
Mgmt &
Other
Services

Adjustments

Consolidated
Total

Financial income

4.482.498

2.920.526

1.589.736

1.769.292

52.916

119.960

(140.349
)
10.794.579

Financial expenses

(1.916.534
)
(374.446
)
(1.703.934
)
(1.028.048
)
(1.066
)
(50.284
)
207.787

(4.866.525
)
Distribution of Income (Expenses) for Treasury Funds

1.307.621

(1.918.789
)
611.169

—

—

—

—

—

Gross intermediation margin

3.873.585

627.291

496.971

741.244

51.850

69.676

67.438

5.928.054

Provision for loan losses

(550.715
)
(153.078
)
(9.265
)
(338.869
)
—

(5.709
)
—

(1.057.637
)
Services Fee Income

2.306.782

559.866

46.545

931.082

—

261.703

-578.462

3.527.516

Services Fee Expenses

(996.626
)
(63.472
)
(9.113
)
(433.721
)
—

(1.150
)
423.422

(1.080.660
)
Net Service Fee Income

1.310.156

496.394

37.432

497.361

—

260.553

-155.040

2.446.856

Income from Insurance Activities

—

—

—

—

476.349

—

129.794

606.143

Direct costs

(2.790.068
)
(213.622
)
(94.259
)
(839.258
)
(139.227
)
(228.613
)
8.840

(4.296.207
)
Indirect costs

(1.188.127
)
(399.202
)
(176.745
)
—

—

—

—

(1.764.074
)
Income from financial transactions

654.831

357.783

254.134

60.478

388.972

95.907

51.032

1.863.135

Miscellaneous Income / (Expenses)

(130.372
)
24.500

(2.973
)
8.177

—

93.990

(22.384
)
(29.062
)
Non-controlling interests result

—

—

—

—

—

—

(22.166
)
(22.166
)
Income Before Income Tax

524.459

382.283

251.161

68.655

388.972

189.897

6.482

1.811.907

Income tax

-161.897

-45.109

-88.258

-973

-136.570

-65.123

-2.673

-500.603

Net income

362.562

337.174

162.903

67.682

252.402

124.774

3.809

1.311.304

F-83

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

As of December 31, 2015

(in thousands of pesos)

Retail
Banking

Corporate
Banking

Treasury

Consumer
Finance

Insurance

Asset
Mgmt &
Other
Services

Adjustments

Consolidated
Total

Financial income

2,917,135

1,906,335

693,726

1,050,944

22,840

71,084

79,680

6,741,744

Financial expenses

(1,514,611
)
(350,635
)
(921,029
)
(529,309
)
(320
)
(30,609
)
(39,537
)
(3,386,050
)
Distribution of Income (Expenses) for Treasury Funds

664,487

(1,119,721
)
455,234

—

—

—

—

—

Gross intermediation margin

2,067,011

435,979

227,931

521,635

22,520

40,475

40,143

3,355,694

Provision for loan losses

(299,135
)
(72,108
)
—

(166,326
)
—

(6,275
)
—

(543,844
)
Services Fee Income

1,953,001

391,853

23,891

573,838

—

126,596

(233,471
)
2,835,708

Services Fee Expenses

(581,199
)
(41,309
)
(6,126
)
(272,132
)
—

(1,047
)
123,321

(778,492
)
Net Service Fee Income

1,371,802

350,544

17,765

301,706

—

125,549

(110,150
)
2,057,216

Income from Insurance Activities

—

—

—

—

130,607

—

45,340

175,947

Direct costs

(2,076,291
)
(158,438
)
(57,676
)
(638,493
)
(68,183
)
(141,958
)
84,853

(3,056,186
)
Indirect costs

(812,083
)
(272,994
)
(120,139
)
—

—

—

—

(1,205,216
)
Income from financial transactions

251,304

282,983

67,881

18,522

84,944

17,791

60,186

783,611

Miscellaneous Income / (Expenses)

12,610

73,601

5,117

47,893

91

75,023

(60,597
)
153,738

Non-controlling interests result

—

—

—

—

—

—

(16,079
)
(16,079
)
Income Before Income Tax

263,914

356,584

72,998

66,415

85,035

92,814

(16,490
)
921,270

Income tax

(42,137
)
(68,139
)
(21,711
)
(6,734
)
(30,953
)
(33,285
)
(44,202
)
(247,161
)
Net income

221,777

288,445

51,287

59,681

54,082

59,529

(60,692
)
674,109

~~f) Repurchase agreements~~
~~The Group entered into Repo and Reverse Repo agreements of financial instruments as disclose in Note 8.~~
In accordance with BCRA Rules, the Group derecognizes the securities transferred under the repurchase agreement and records an asset related to the future repurchase of these securities. Contemporaneously, the Group records a liability related to the cash received in the transaction. As mentioned in Note 3.8, the asset related to securities to be repurchased is measured as the same criteria as the transferred securities.
~~Similar treatment applies to reverse repo agreements.~~
~~Under US GAAP, ASC 860 “Transfers and Servicing”, these transactions have not qualified as sales and therefore these transactions are recorded as secured financings.~~
~~Had US GAAP been applied, the Group’s assets and liabilities would have decreased by approximately Ps. 3,352,217 and 594,764 as of December 31, 2017 and December 31, 2016, respectively.~~
~~In addition, the measurement adjustments of those securities are included in Note 35.I.e.~~
~~g) Acceptances~~
Under Argentine Banking GAAP, acceptances are accounted for in memorandum accounts, Under US GAAP, third party liability for acceptances should be included in “Other Receivables Resulting from Financial Transactions” representing Group customers’ liabilities on outstanding drafts or bills of exchange that have been accepted by the Group. Acceptances should be included in “Other Liabilities from Financial Transactions” representing the Group’s liability to remit payment upon the presentation of the accepted drafts or bills of exchange.
~~The Group’s assets and liabilities would be increased by approximately Ps. 48,554 and Ps. 55,711 had US GAAP been applied as of December 31, 2017 and 2016, respectively.~~
F-84

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2017, 2016 and 2015~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~h) Items in process of collection~~
The Group does not give accounting recognition to checks drawn on the Group or other banks, or other items to be collected until such time as the related item clears or is accepted. Such items are recorded by the Group in memorandum accounts, US GAAP, however, account for such items through balance sheet clearing accounts at the time the items are presented to the Group.
~~Grupo Supervielle’s assets and liabilities would be increased by approximately Ps. 1,045,459 and Ps. 1,985,525 applying US GAAP at December 31, 2017 and 2016, respectively.~~
~~i) Earnings per share~~
~~Argentine Banking GAAP rules do not require the disclosure of earnings per share or dividends per share.~~
Under US GAAP, ASC 260 “Earning Per Share”, it is required to present basic per-share amounts (basic EPS) which is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period.
Diluted earnings per share (diluted EPS) measure the performance if the potential common shares that were dilutive had been issued. Potential common shares are securities that do not have a current right to participate fully in earnings but could do so in the future. No potential common shares exist, and therefore basic and diluted EPS are the same.
~~The following table sets forth the computation of basic EPS:~~

December 31,

2017

2016

2015

Earnings per share under US GAAP

Numerator

Net income for the year attributable to the Group net of preferred dividends

Ps.
1,644,591,926

Ps.
997,683,608

Ps.
613,669,000

Denominator

Average number of shares outstanding

392,831,769

319,827,519

151,839,052

Net income per common share

Basic and diluted

Ps.
4.1865

Ps.
3.1194

Ps.
4.0416

F-85

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
j)~~Cash Flow~~
The statement of cash flows under Argentine Banking GAAP differs from the statement of cash flows under US GAAP. According to ASC 230, the statement of cash flows for a period shall report net cash provided or used by operating, investing and financing activities.
~~The statement of cash flows under US GAAP is shown below:~~

December 31,

2017

2016

2015

Cash and cash equivalents at the beginning of the year

Ps.
9,688,595

Ps.
7,873,684

Ps.
4,236,987

Cash and cash equivalents at the end of the period

21,758,918

9,688,595

7,873,684

Net increase in cash and cash equivalents

Ps.
12,070,323

Ps.
1,814,911

Ps.
3,636,697

Causes of changes in cash and cash equivalents

Cash Flow from operating activities

Net (payments)/collections related to:

Interest received on loans, leases and government securities

12,103,112

10,529,487

6,904,085

Interest paid

(6,201,233
)
(5,932,146
)
(3,025,342
)
Purchases of Trading Securities

(110,449,801
)
(9,766,328
)
(3,852,865
)
Proceeds from sales of Trading Securities

111,249,348

8,965,170

3,844,751

Decrease in Other receivables from financial transactions

(1,125,516
)
72,868

(3,090
)
Fees and commissions received

5,789,970

4,436,397

3,040,982

Fees and commissions paid

(9,409,023
)
(6,691,853
)
(4,700,400
)
Payments of income tax / minimun presumed income tax

(474,899
)
(345,561
)
(389,564
)
Net collections / (payments) related to other operating activities

(1,151,138
)
(365,876
)
(133,641
)
Net cash provided by operating activities

Ps.
330,820

902,158

1,684,916

Cash Flow from investing activities

(Payments)/collections related to:

Payments to acquire bank premises and equipment

(196,408
)
(507,251
)
(105,043
)
Receipts from sales of bank premises and equipment

20,567

12,998

140,785

Increase in intangible assets

(156,309
)
(97,184
)
(100,886
)
Increase in loans and leases, net

(20,940,436
)
(13,768,330
)
(6,610,515
)
Purchases of available for sale securities

(48,298,116
)
(77,576,169
)
(4,651,357
)
Proceeds from sales of available for sale securities

47,866,004

76,563,334

5,478,396

Payments to acquire miscellaneous assets

(684,145
)
(489,105
)
(399,493
)
Receipts from sales of miscellaneous assets

542,153

530,193

179,206

Increase in deposits at the Argentine Central Bank

(319,910
)
(140,739
)
(190,070
)
Receipts / (Payments) for sale of equity securities

33,112

(21
)
—

Net cash used in investing activities

Ps.
(22,133,488
)
(15,472,273
)
(6,258,977
)

Cash Flow from financing activities

(Payments)/collections related to:

Proceeds from issuance of unsubordinated negotiable obligations

7,570,920

1,493,743

2,038,879

Repayment of unsubordinated negotiable obligations

(1,180,664
)
(769,060
)
(884,824
)
Increase in deposits, net

16,154,504

12,493,587

6,764,640

(Decrease) / Increase in other short term liabilities, net

4,630,403

1,735,578

(431,672
)
Repayment of subordinated negotiable obligations

(876,835
)
—

—

Financing received from Argentine financial institutions

(228,665
)
(1,686,277
)
—

Proceeds from issuance of stocks

5,841,688

3,301,137

—

Payment of dividends

(65,500
)
(25,503
)
(7,385
)
Payments for debt issue cost

—

—

(4,391
)
F-86

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~

December 31,

2017

2016

2015

Proceeds from debt securities related with consolidated financial trust

2,513,424

1,307,005

2,090,646

Repayment of debt securities related with consolidated financial trust

(1,663,099
)
(1,992,606
)
(1,836,124
)

Net cash provided by financing activities

Ps.
32,696,176

15,857,604

7,729,769

Financial income on cash and cash equivalents (including interest and monetary results)

1,176,815

527,422

480,989

Net increase / (decrease) in cash and cash equivalents

Ps.
12,070,323

Ps.
1,814,911

Ps.
3,636,697

~~Cash and cash equivalents reconciliation:~~

December 31,

2017

2016

2015

Cash and cash equivalents under Argentine Banking GAAP

Ps.
25,421,865

Ps
9,688,554

Ps
7,616,502

Securities under repurchase agreements

(3,738,790
)
—

—

Cash and cash equivalent from consolidated financial trusts

75,843

41

257,182

Cash and cash equivalents under US-GAAP

21,758,918

9,688,595

7,873,684

~~Set forth below is the reconciliation of net income to net cash flows from operating activities, as required by FASB ASC 230:~~

December 31,

2017

2016

2015

Net income for the fiscal year

Ps.
1,697,481

Ps.
1,025,868

Ps.
676,076

Adjustments to reconcile net income to net cash from operating activities:

US GAAP Reconciliation Adjustments

792,467

313,620

55,755

Income Tax for the fiscal year

871,845

576,649

340,306

Amortizations and depreciations

267,875

210,521

166,384

Results from equity investments

—

4,996

(3
)
Provision for loan losses, net of reversals

1,809,323

1,042,814

545,101

Non-controlling interests

(52,889
)
(28,184
)
(57,722
)
Gain for sale of premises and equipment

(3,147
)
(5,568
)
(93,830
)
Increase in interest payable from negotiable obligations and debt securities of financial trust

204,621

50,187

42,936

(Decrease) / Increase in government and private securities

(2,673,232
)
(695,590
)
22,392

Increase in interest receivable from Loans

(623,897
)
(358,836
)
(149,055
)
(Increase) / Decrease in other receivable from financial intermediation

(414,466
)
(543,391
)
123,649

Increase from miscellaneous assets

(665,083
)
(506,650
)
(222,802
)
Increase in balances from forward transactions without delivery of underlying asset

1,388

5,929

12,662

Decrease / (Increase) in interest payable from Deposits

271,222

(49,643
)
78,013

Increase of miscellaneous liabilities

635,659

414,907

483,692

Decrease in Taxes Payables

(671,220
)
(234,554
)
(289,587
)
Financial income on cash and cash equivalents

(1,117,127
)
(238,124
)
(49,051
)
Net cash provided by operating activities

Ps:
330,820

Ps.
902,158

Ps.
1,684,916

F-87

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~k) New authoritative pronouncements~~
~~The last Accounting Standards Updates issued by the FASB applicable for the Group are mentioned below:~~
~~ASU No. 2014-09~~
In May 2014, the FASB issued the Accounting Standard Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)”. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts).
The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
ASU No. 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.
All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019.
~~The impact of this Update will not have any significant effect in the US GAAP disclosures and financial information.~~
~~ASU No. 2016-01~~
On January 2015, the FASB issued the Accounting Standard Update No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities (Financial Instruments—Overall Subtopic 825-10)”.
~~The amendments in this Update make targeted improvements to generally accepted accounting principles (GAAP) as follows:~~
1. Require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
2. Simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value.
~~3. Eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities.~~
4. Eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet.
~~5. Require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.~~
F-88

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
6. Require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
7. Require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements.
8. Clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets.
~~For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.~~
~~The impact of this Update did not have any significant effect in the present US GAAP financial statements.~~
~~ASU 2016-02~~
On February 2016, the FASB issued the Accounting Standard Update No. 2016-02 “Leases”. The amendments affects any entity that enters into a leas, with some specified scope exemptions. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.
A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. Reasonably certain is a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous leases guidance. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments.
~~The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.~~
~~The Company is still evaluating the impact of this Update in the US GAAP financial statements.~~
~~ASU 2016-13~~
On June 2016, the FASB issued the Accounting Standard Update No. 2016-13 “Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments”. The amendments affect entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this Update affect an entity to varying degrees depending on the credit quality of the assets held by the entity, their duration, and how the entity applies current GAAP. There is diversity in practice in applying the incurred loss methodology, which means that before transition some entities may be more aligned, under current GAAP, than others to the new measure of expected credit losses.
The amendments in this Update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a
F-89

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period.
The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (PCD assets) that are measured at amortized cost basis is determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets. Interest income for PCD assets should be recognized based on the effective interest rate, excluding the discount embedded in the purchase price that is attributable to the acquirer’s assessment of credit losses at acquisition
The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
~~The Company is still evaluating the impact of this Update in the US GAAP financial statements.~~
~~ASU 2016-15~~
On August 2016, the FASB issued the Accounting Standard Update No. 2016-15 “Statement of Cash Flow — Classification of Certain Cash Receipt and Cash Prepayment”. The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments in this Update provide guidance on the following eight specific cash flow issues: i) Debt prepayment or debt extinguishment co sts, ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, iii) Contingent Consideration Payments Made after a Business Combination, iv) Proceeds from the Settlement of Insurance Claims, v) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies, vi) Distributions Received from Equity Method Investees, vii) Beneficial Interests in Securitization Transactions and viii) Separately Identifiable Cash Flows and Application of the Predominance Principle .
~~The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.~~
~~The Company is still evaluating the impact of this Update in the US GAAP financial statements.~~
~~ASU 2016-18~~
On Novemeber 2016, the FASB issued the Accounting Standard Update No. 2016-18 “Statement of Cash Flow — Restricted Cash”. The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update do not provide a definition of restricted cash or restricted cash equivalents.
~~The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.~~
F-90

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~The Company is still evaluating the impact of this Update in the US GAAP financial statements.~~
~~ASU 2017-01~~
On January 2017, the FASB issued the Accounting Standard Update No. 2017-01 “Business Combinations — Clarifying the definition of a Business”. The amendments in this Update affect all reporting entities that must determine whether they have acquired or sold a business. The amendments in this Update provide a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for a set to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs.
~~The amendments in this Update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017.~~
~~The impact of this Update will not have any significant effect in the present US GAAP financial statements.~~
~~ASU 2017-04~~
In January 2017, the FASB issued the Accounting Standards Update No. 2017-04 “Simplifying the Test for Goodwill Impairment”. The amendments in this Update simplify how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill.
An entity should apply the amendments in this Update on a prospective basis. A public business entity that is an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
~~The Company considers this ASU will not have any significant effect in the US GAAP disclosures and financial information.~~
~~ASU 2017-05~~
In February 2017, the FASB issued the Accounting Standards Update No. 2017-05 “Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”. The amendments in this Update clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset and add guidance for partial sales of nonfinancial assets. An entity may elect to apply the amendments in this Update either: a) retrospectively to each period presented in the financial statements in accordance with the guidance on accounting changes in paragraphs 250-10-45-5 through 45-
F-91

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~10 (retrospective approach); or b) retrospectively with a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption (modified retrospective approach).~~
The amendments in this Update are effective at the same time as the amendments in Update 2014-09. Therefore, for public entities, the amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period.
~~The Company considers this ASU will not have any significant effect in the US GAAP disclosures and financial information.~~
~~ASU 2017-11~~
On July 2017, the FASB issued the Accounting Standard Update No. 2017-11 “Earnings per share, Distinguishing liabilities from equity, derivatives and hedging”. The amendments in this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260).
The amendments in this Update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.
~~The Company is still evaluating the impact of this Update in the US GAAP financial statements.~~
~~ASU 2017-12~~
In August 2017, the FASB issued an ASU that will improve and simplify accounting rules around hedge accounting. The new standard refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. More hedging strategies will be eligible for hedge accounting. These include hedges of the benchmark rate component of the contractual coupon cash flows of fixed-rate assets or liabilities, hedges of the portion of a closed portfolio of prepayable assets not expected to prepay, and partial-term hedges of fixed-rate assets or liabilities (e.g., the first and second years of a five-year bond).
Public business entities, public not-for-profit entities, and financial institutions will have until the end of the first quarter in which a hedge is designated to perform an initial assessment of a hedge’s effectiveness. All other companies will have until their financial statements are available to be issued. After initial qualification, the new guidance permits a qualitative effectiveness assessment for certain hedges instead of a quantitative test, such as a regression analysis, if the company can reasonably support an expectation of high effectiveness throughout the term of the hedge. An initial quantitative test to establish that the hedge relationship is highly effective is still required. For cash flow hedges, if the hedge is highly effective, all changes in the fair value of the derivative hedging instrument will be recorded in other comprehensive income. They will be reclassified to earnings when the hedged item impacts earnings. On the other hand, for fair value hedges, because the change in fair value of the hedged item and the derivative hedging instrument will still be recorded in current earnings, if the hedge is not perfectly effective, there will be an Income Statement impact.
F-92

~~Table of Contents~~
~~Grupo Supervielle S.A. and Subsidiaries~~
~~Notes to the Consolidated Financial Statements~~
~~For the years ended December 31, 2015, 2014 and 2013~~
~~(Expressed in thousands of Argentine pesos — unless otherwise stated)~~
~~The ASU is effective for public companies in 2019 and private companies in 2020. Early adoption is permitted.~~
~~The Company considers this ASU will not have any significant effect in the US GAAP disclosures and financial information.~~
F-93

Title of each ~~Class~~class	Trading Symbol(s)	Name of each ~~Exchange~~ exchange on which ~~Registered~~registered
American Depositary Shares, each representing 5 Class B shares of Grupo Supervielle S.A.	SUPV	New York Stock Exchange
Class B shares of Grupo Supervielle S.A.	SUPV	New York Stock Exchange*

Title of class		Number of shares outstanding
Class B ordinary shares, nominal value Ps.1.00 per share		~~329,984,134~~ 394,984,134
Class A ordinary shares, nominal value Ps.1.00 per share		~~126,738,188~~ 61,738,188

Large accelerated Filerx	☐		Accelerated Filero	☒
Non-accelerated Filer	~~Non-Accelerated Filer~~ o ☐		Emerging Growth Companyo	☐

Item 10.	Additional Information	~~247~~ 286

Item ~~10.A.~~10.A Share Capital	~~Share capital~~286	~~247~~
Item 10.B Memorandum and Articles of Association		286
~~Item 10.B.~~	~~Memorandum and articles of association~~	~~247~~

Item 10.C Material Contracts	~~Material contracts~~286	~~254~~

Item 10.D	Exchange Controls	~~254~~ 286

Item 10.E	Taxation	~~256~~ 308

Item 10.F	Dividends and ~~paying agents~~Paying Agents	~~263~~ 327

Item 10.G	Statement by ~~experts~~Experts	~~263~~ 327

Item 10.H	Documents on ~~display~~Display	~~263~~ 327

Item ~~10.I.~~	10.I Subsidiary Information	~~263~~ 327

Item 11.	Quantitative and Qualitative Disclosures about Market Risk	~~263~~ 327

Certain Defined Terms and Conventions	iii

Presentation of Financial and Other Information	iv

Forward-Looking Statements	viii

PART I	1

Item 1.	Identity of Directors, Senior Management and Advisors	1

Item 2.	Offer Statistics and Expected Timetable	1

Item 3.	Key Information	1

Item ~~3.A.~~	3.A Selected Financial Data	1

Item 3.B	Capitalization and indebtedness	6 4

Item 3.C	Reasons for the offer and use of proceeds	6 4

Item 3.D	Risk Factors	6 4

Item 4.	Information of the Company	32

Item 4.A	History and development of the Company	37 32

Item 4.B Business Overview	~~Business overview~~38	41

~~Item 4.C~~	~~Organizational structure~~	~~136~~

~~Item 4.D~~	~~Property, plants and equipment~~	~~137~~

Item 5.	Operating and Financial Review and Prospects	~~158~~ 179

Item 5.A	Operating Results	~~158~~ 179

Item 5.B	Liquidity and Capital Resources	~~205~~ 228

Item 5.C	Research and Development, patents and licenses, etc.	~~213~~ 235

Item 5.D	Trend Information	~~213~~ 235

Item 5.E	Off-balance sheet arrangements	~~214~~ 238

Item 5.F	Contractual Obligations	~~215~~ 239

Item 5.G	Safe Harbor	~~216~~ 239

Item 6.	Directors, Senior Management and Employees	~~216~~ 240

Item 7.	Shareholders and Related Party Transactions	~~239~~ 277

Item ~~7.A.~~	7.A Major Shareholders	~~239~~ 277

Item 7.B	Related Party Transactions	~~240~~ 278

Item 7.C	Interests of ~~experts~~Experts and ~~counsel~~Counsel	~~242~~ 281

Item 8.	Financial Information	~~243~~ 281

Item ~~8.A.~~	8.A Consolidated Statements and Other Financial ~~Information~~Information.	~~243~~ 281

Item 8.B	Significant Changes	~~245~~ 285

Item 9.	The Offer and Listing	~~246~~ 285

Item 9.A Offer and Listing Details	285
Item 9.B Plan of Distribution	285
Item 9.C Markets	285
Item 9.D Selling Shareholders	286
Item 9.E Dilution	286
Item 9.F Expenses of the Issue	286

	Grupo Supervielle S.A.
	Year ended December 31,
	2017			2017			2016			2015			2014			2013
	(in thousands of Pesos or U.S. dollars, as indicated)
Consolidated Income Statement Data
Argentine Banking GAAP:
Financial income(1)	U.S.$	825,317		Ps.	15,494,671		Ps.	10,794,579		Ps.	6,741,744		Ps.	4,751,352		Ps.	3,045,380
Financial expenses(2)	(329,936		)	(6,194,288		)	(4,866,525		)	(3,386,050		)	(2,464,526		)	(1,303,916		)
Gross financial margin	495,381			9,300,383			5,928,054			3,355,694			2,286,826			1,741,464
Loan loss provisions	(96,951		)	(1,820,169		)	(1,057,637		)	(543,844		)	(356,509		)	(350,535		)
Services fee income	264,899			4,973,272			3,527,516			2,835,708			2,162,820			1,765,659
Services fee expenses	(79,676		)	(1,495,848		)	(1,080,660		)	(778,492		)	(610,341		)	(421,587		)
Income from insurance activities	25,517			479,061			606,143			175,947			8,513			—
Administrative expenses	(446,923		)	(8,390,622		)	(6,060,281		)	(4,261,402		)	(3,013,842		)	(2,287,201		)
Income from financial transactions	162,248			3,046,077			1,863,135			783,611			477,467			447,800
Miscellaneous income	29,074			545,842			429,884			367,165			190,005			129,245
Miscellaneous losses	(20,053		)	(376,480		)	(458,946		)	(213,427		)	(91,761		)	(95,734		)
Non-controlling interests result	(314		)	(5,897		)	(22,166		)	(16,079		)	(13,707		)	(10,556		)
Income before income tax	170,955			3,209,542			1,811,907			921,270			562,004			470,755
Income tax	(41,146		)	(772,483		)	(500,603		)	(247,161		)	(199,084		)	(97,765		)
Net income for the fiscal period	129,809			2,437,059			1,311,304			674,109			362,920			372,990
U.S. GAAP:
Net income	88,812			1,697,481			1,025,868			676,076			301,514			398,815

	Grupo Supervielle S.A.
	As of December 31,
	2017			2017			2016			2015			2014			2013
	(in thousands of Pesos or U.S. dollars, as indicated)
Consolidated Balance Sheet Data
Argentine Banking GAAP:
Assets
Cash and due from banks	U.S.$	592,807		Ps.	11,129,475		Ps.	8,166,132		Ps.	6,808,591		Ps.	3,649,084		Ps.	2,662,592
Government and corporate securities	817,400			15,346,036			2,360,044			931,881			1,008,080			483,990
Loans:	2,927,122			54,954,373			34,896,509			20,148,261			14,596,580			11,292,289
to the non-financial public sector	1,737			32,607			4,306			8,778			12,666			15,699
to the financial sector	22,337			419,366			473,414			181,734			3,514			36,029
To the non-financial private sector and foreign residents:
Overdrafts	192,650			3,616,843			3,110,097			1,634,870			993,284			679,085
Promissory Notes(3)	825,316			15,494,647			9,426,568			5,984,777			5,583,705			4,472,631
Mortgage loans	82,548			1,549,765			78,057			50,032			69,554			83,660
Automobile and other secured loans	16,710			313,724			65,076			104,469			168,603			225,901
Personal loans	789,283			14,818,163			9,916,776			6,018,601			3,631,840			2,970,622
Credit card loans	424,308			7,966,037			6,678,578			5,677,922			3,688,328			2,410,111
Other	623,635			11,708,248			5,595,356			953,574			793,192			684,219
Accrued Interest, adjustments and exchange rate differences receivable	74,450			1,397,740			773,961			428,600			357,844			257,689
Documented interest	(44,161		)	(829,086		)	(324,795		)	(277,488		)	(287,605		)	(200,345		)
Other unapplied charges	(4		)	(83		)	(1,738		)	(295		)	(1,322		)	(1,012		)
Allowances	(81,686		)	(1,533,598		)	(899,147		)	(617,313		)	(417,023		)	(342,000		)
Other receivables from financial transactions	349,490			6,561,396			3,772,736			2,461,813			2,263,612			1,742,721

	Exchange Rates
	High(1)	Low(1)	Average(1)(2)	Period-end(1)(3)
2013	6.5180	4.9228	5.4789	6.5180
2014	8.5555	6.5430	8.1188	8.5520
2015	13.7633	8.5537	9.2689	13.0050
2016	16.0392	13.0692	14.7794	15.8502
2017	18.8300	15.1742	16.5665	18.7742
October 2017	17.6775	17.3217	17.4528	17.6713
November 2017	17.6700	17.3307	17.4925	17.3845
December 2017	18.8300	17.2600	17.7001	18.7742
2018
January 2018	19.6500	18.4100	19.0200	19.6500
February 2018	20.1600	19.4700	19.8409	20.1150
March 2018	20.3875	20.1433	20.2378	20.1433
April 2018 (through April 25, 2018)	20.2595	20.1450	20.1955	20.2595

	As of December 31,		As of September 30,		As of June 30,		As of March 31,		As of December 31,		Year on Year
	2017								2016		Variation(1)
	(in thousands of Pesos, except percentages)
Total Loans	54,954,373		47,835,751		39,371,973		37,093,363		34,896,509		57.5	%
Receivables from financial leases	2,519,201		2,219,887		1,877,238		1,693,673		1,527,855		64.9	%
Total Loans & Receivables from financial leases(2)	57,473,574		50,055,638		41,249,211		38,787,036		36,424,364		57.8	%
Securitized loan portfolio	1,295,322		1,841,286		2,143,002		1,288,220		1,413,427		(8.4	)%
Total	58,768,896		51,896,924		43,392,213		40,075,256		37,837,791		55.3	%
NPL	2.8	%	2.8	%	2.9	%	2.9	%	2.8	%
Coverage ratio	91.8	%	88.9	%	88.0	%	87.0	%	87.1	%

~~Subsidiary~~		~~Country of~~ ~~Incorporation/ Residence~~
~~Banco Supervielle S.A.~~		~~Argentina~~
~~Cordial Compañía Financiera S.A.~~		~~Argentina~~
~~Supervielle Seguros S.A.~~		~~Argentina~~
~~Supervielle Asset Management S.A.~~		~~Argentina~~
~~Tarjeta Automática S.A.~~		~~Argentina~~
~~Sofital S.A.F.e I.I~~		~~Argentina~~
~~Espacio Cordial de Servicios S.A.~~		~~Argentina~~

Subsidiary	Jurisdiction of incorporation	Name under which the subsidiary does business
Banco Supervielle S.A.	Argentina	Supervielle
Cordial Compañía Financiera S.A. (in the process of being renamed as IUDÚ Compañia Financiera S.A.)	Argentina	Walmart Servicios Financieros IUDÚ Pesos Ya
Tarjeta Automática S.A.	Argentina	Carta Automática Pesos Ya
Supervielle Seguros S.A.	Argentina	Supervielle Seguros
Supervielle Asset Management S.A. Sociedad Gerente de Fondos Comunes de Inversión S.A.	Argentina	Supervielle Asset Management
Espacio Cordial de Servicios S.A.	Argentina	Cordial
Micro Lending S.A.U.	Argentina	MILA
InvertirOnline S.A.U.	Argentina	invertirOnline
InvertirOnline.com Argentina S.A.U.	Argentina	invertirOnline.com
Supervielle Productores Asesores de Seguros S.A.	Argentina	Supervielle Broker de Seguros
Futuros del Sur S.A. (in the process of being renamed Supervielle Agente de Negociación S.A.U.)	Argentina	N/A
Bolsillo Digital S.A.U.	Argentina	IUDÚ PAGO
Easy Cambio S.A.	Argentina	N/A
Sofital S.A.F. e I.I.	Argentina	N/A

	For the year ended December 31, 2017						As of December 31, 2020
Segment	Net Revenue	Percentage		Net Income	Percentage		Net Revenue		Percentage			Net (Loss) / Income
	(in thousands of Pesos)
Retail Banking	7,200,565	56.8	%	681,019	36.3	%
							(in thousands of Pesos)
Personal & Business Banking								20,347,486		42.5	%		(6,356,053	)
Corporate Banking	1,660,577	13.1	%	538,216	28.7	%		6,313,237		13.2	%		(179,912	)
Treasury	426,137	3.4	%	47,746	2.5	%
Consumer Financing	2,320,345	18.3	%	179,440	9.6	%
Bank Treasury								13,119,934		27.4	%		9,125,276
Consumer Finance								4,379,944		9.1	%		(577,540	)
Insurance	469,671	3.7	%	205,614	11.0	%		1,816,291		3.8	%		538,047
Asset Management & Other Services	601,584	4.7	%	223,554	11.9	%
Asset Management and Other Services								1,915,081		4.0	%		401,036
Total Allocated to Segments	12,678,879	100.0	%	1,875,590	100.0	%		47,891,973		100.0	%		2,950,854
Adjustments(1)	577,989			561,470
Adjustments⁽¹⁾								88,347					549,028
Total Consolidated	13,256,868			2,437,059				47,980,320		100.0	%		3,499,882

											As of December 31, 2020
	As of December 31, 2017										Personal and Business Banking		Corporate Banking		Bank Treasury		Consumer Finance		Insurance		Asset Management and Other Services		Adjustments⁽¹⁾			Consolidated Total
	Retail Banking		Corporate Banking	Bank Treasury	Consumer Finance	Insurance	Asset Mgmt & Other Services	Adjustments(1)		Consolidated Total
	(in thousands of Pesos)										(in thousands of Pesos)
Assets
Cash and due from banks	2,799,066		260,107	8,000,292	74,143	3,012	340	(7,485	)	11,129,475		12,345,695		533,466		23,288,859		238,350		2,176		399,895		(133,572	)		36,674,869
Government and corporate securities	—		—	15,255,201	—	87,832	3,003	—		15,346,036
Loans	20,868,845		27,605,696	2,302,233	6,093,736	—	—	(1,916,137	)	54,954,373
Other receivables from financial transactions	(4,251	)	506,331	4,570,399	794,727	330,864	315,115	48,211		6,561,396
Receivables from financial leasing	439,189		2,080,012	—	—	—	—	—		2,519,201
Debt Securities at fair value through profit or loss												-		-		8,827,214		1,034,836		-		9,853		-			9,871,903
Loans and other financings												52,474,545		42,240,034		5,823,189		6,808,494		592,067		49,403		(2,592,547	)		105,395,185
Other assets	379,155		10,893	244,148	522,328	111,323	285,235	1,907,715		3,460,797		8,569,274		8,324,469		58,840,094		3,063,890		1,254,830		1,080,197		16,156,233			97,288,987
Total Assets	24,482,004		30,463,039	30,372,273	7,484,934	533,031	603,693	32,304		93,971,278		73,389,514		51,097,969		96,779,356		11,145,570		1,849,073		1,539,348		13,430,114			249,230,944

	As of December 31, 2017		As of September 30, 2017		As of June 30, 2017		As of March 31, 2017		As of December 31, 2016		Active Customers As of December 31,
	Total Customers	Active Customers	Total Customers	Active Customers	Total Customers	Active Customers	Total Customers	Active Customers	Total Customers	Active Customers	2020		2019
Retail Banking	1,930,750	1,433,187	1,876,093	1,386,025	1,850,582	1,375,338	1,833,793	1,385,745	1,810,281	1,391,199
Personal & Business Banking												1,393,971		1,402,562
Individuals												1,371,106		1,380,550
Entrepreneurs												20,854		22,012
SMEs												2,011		N/A
Corporate Banking	4,873	4,873	4,662	4,662	4,569	4,569	4,647	4,647	4,587	4,587		2,304		4,981
Consumer Finance	463,416	463,416	460,231	460,231	450,157	450,157	441,789	441,789	434,495	434,495
Consumer Finance (IUDÚ+ MILA)												410,580		372,168
InvertirOnline												80,024		51,829
Total	2,399,039	1,901,476	2,340,986	1,850,918	2,305,308	1,830,064	2,280,229	1,832,181	2,249,363	1,830,281		1,886,879		1,831,540

~~Loans~~				As of December 31, 2020
(in thousands of Pesos, except for ratios and operating data)
Loans
Banco Supervielle Total Loan Portfolio	~~58,839.5~~	98,251
Payroll loan to the Province of San Luis employees	~~685~~	1,822
Payroll loans to the Province of San Luis employees / Banco Supervielle Total Loan Portfolio	1	1.9	%
Loans to the provincial government	—	-
Deposits
Consolidated Total Deposits	~~60,757.8~~	175,216
Deposits made by the Province of San Luis	~~4,821~~	703
Deposits made by the Province of San Luis / Consolidated Total Deposits	8	0.4	%
Net Revenue
Related Net Revenue / Banco Supervielle’s Consolidated Net Revenue	3	1.4	%
Operating Data
Employees	~~332~~	238
Branches	22	20
Senior Citizen Service Center	3	3
ATM’s & Self Service Terminals	~~130~~	148

						% Change
	4th quarter 2017	3rd quarter 2017	2nd quarter 2017	1st quarter 2016	4th quarter 2016	4th quarter 2017 vs. 3rd quarter 2017		4th quarter 2017 vs. 4th quarter 2016		4th quarter 2020		3rd quarter 2020		2nd quarter 2020		1st quarter 2020		4th quarter 2019
Life insurance and total permanent disability insurance for debit balances	35.7	48.9	64.3	82.4	103.4	(27.0	)%	(65.5	)%		0.2		0.3		0.6		1.2		1,3
Mortgage Insurance											35.0		37.2		38.2		37.9		38,8
Personal Accident Insurance	17.6	17.1	16.0	13.8	13.2	3.2	%	32.9	%		27.5		27.4		27.0		31.1		36,5
Protected Bag Insurance	36.3	35.3	33.7	27.9	28.0	2.7	%	29.9	%		67.4		72.8		81.3		79.1		77,9
Broken Bones	6.7	6.2	6.5	0.1	—	8.9	%	—			17.2		16.4		18.6		21.1		21,5
Others	7.0	0.5	0.4	—	—	1,346.3	%	—			11.1		10.2		9.0		12.2		12,1
Home Insurance	28.0	3.1	—	—	—	809.1	%	—			77.4		71.4		72.4		89.1		79,5
Technology Insurance	10.8	1.6	—	—	—	564.2	%	—			28.5		24.6		21.4		33.1		28,6
ATM Insurance	5.9	1.5	—	—	—	290.7	%	—			20.9		24.5		23.8		25.2		34,1
Mortgage Insurance	2.8	0.2	0.3	—	—	1,300.0	%	—
Life Insurance	81.3	72.4	67.7	57.8	54.4	12.3	%	49.5	%		287.7		247.6		278.0		266.5		290,7
Total	232.1	186.7	188.8	182.0	199.0	24.3	%	16.6	%		573.0		532.4		570.2		596.6		620,9

	Distribution Network
	As of December 31, 2020
Banco Supervielle S.A. Branches		185
Banco Supervielle S.A. Sales and Collection Centers		13
Tarjeta Automática S.A. Branches		20
CCF Sales Points		79
Micro Lending S.A.U.		5
ATMs		457
Self-service Terminals		221
Supervielle own-experience ATMs with biometric identification		256

	As of December 31, 2017	As of the date of this annual report
Banco Supervielle S.A. Branches(1)	179	180
Banco Supervielle S.A. Sales and Collection Centers	19	19
Tarjeta Automática S.A. Branches	20	20
Tarjeta Automática S.A. Sales and Collection Centers	41	41
Cordial Compañía Financiera Sales Points	67	80
ATMs	518	521
Self-service Terminals	186	193

	Year ended December 31, 2017
Liabilities	Banco Supervielle		Private Banks
	(in millions of Pesos)	%	(in millions of Pesos)	%
Deposits	60,758	73.7	1,374,702	75.6
Other Liabilities	21,646	26.3	442,967	24.4
Total	82,404	100	1,817,669	100

	Year ended December 31, 2017
Deposits Breakdown	Banco Supervielle		Private Banks
	(in millions of Pesos)	%	(in millions of Pesos)	%
Checking accounts	5,700	9.4	238,408	17.3
Saving Accounts	29,579	48.7	595,372	43.3
Time deposits	17,259	28.4	413,838	30.1
Other deposits	8,220	13.5	127,084	9.2
Total	60,758	100	1,374,702	100

	Year ended December 31, 2020
Liabilities and Shareholders equity	Banco Supervielle					Private Banks
	(in millions of Pesos)		%			(in millions of Pesos)		%
Deposits		178,641.6		71.7	%		4,744,543.4		70.8	%
Other Liabilities		70,589.3		28.3	%		1,958,721.0		29.2	%
Total		249,230.9					6,703,264.4

	Year ended December 31, 2020
Deposits Breakdown	Banco Supervielle					Private Banks
	(in millions of Pesos)		%			(in millions of Pesos)		%
Checking accounts		16,891.0		9,5	%		1,009,139.8		21,3	%
Saving Accounts⁽¹⁾		102,845.5		57,6	%		1,805,636.3		38,1	%
Time deposits		46,113.1		25,8	%		1,349,726.1		28,4	%
Other deposits		12,792.0		7,2	%		580,041.2		12,2	%
Total		178,641.6					4,744,543.4

Very high risk		High risk
Construction		Machinery & equipment
Tourism & Gastronomy		Iron and steel industry
Real estate		Home appliances
Entertainment		Sports
Passenger transport		Textile
Professional services

Parameter	Segment	Macroeconomic Indicators
Probability of Default	Personal and Business Banking	Inflation Wage increase Private employment Monthly Economic Activiy Estimator
	Corporate Banking	Real Badlar Rate Monthly Economic Activiy Estimator
	Consumer Finance	Wage increase Inflation Monthly Economic Activiy Estimator
Loss Given Default	All	Wage increase

Loan portfolio atomization	4Q20		3Q20		2Q20		1Q20		4Q19
%Top10	17	%	18	%	18	%	16	%	16	%
%Top50	30	%	33	%	35	%	33	%	32	%
%Top100	36	%	38	%	42	%	39	%	40	%

Ps. Change QoQ	Business Sector	4Q20 Share		3Q20 Share
(In millions)
6,927	Families and individuals	47.2	%	44.0	%
1,781	Agribusiness	14.3	%	13.6	%
750	Food & Beverages	9.2	%	9.2	%
(1,285)	Construction & Public works	4.1	%	5.6	%
343	Retailer	1.9	%	1.7	%
(301)	Wine	2.7	%	3.2	%
1,146	Utilities	3.8	%	3.0	%
(172)	Financial	2.6	%	2.9	%
(2.130)	Oil, Gas & Mining	0.3	%	2.4	%
(55)	Transport	1.2	%	1.4	%
(269)	Chemicals & plastics	1.2	%	1.6	%
(361)	Automobile	1.0	%	1.4	%
70	Machinery & Equipment	1.0	%	1.0	%
1,006	Others	9.5	%	9.3	%

Loan portfolio collaterall	Entrepreneurs & Small Businesse		SMEs & Middel Market		Large		Total
Collateralized Portfolio	50	%	45	%	42	%	43	%
Unsecured Portfolio	50	%	55	%	58	%	57	%

		Credit Approval Limit (in millions of Pesos)
		Unsecured	Secured
House Limit (Senior Committee + Board of Director’s Chairman)		Total Maximum Approval Limit
Credit Approval Committee Corporate Banking	Senior Committee (Credit Manager + Commercial Coordinator Manager + CEO + Credit Coordinators + One Member of the Board of Directors)	300	300
	Coordinating Officers Committee (Credit + Corporate Banking)	80	140
	Regional Committee (Credit Manager or Credit Officers + Commercial Manager)	40	70
Retail Financing	Small Businesses (Retail Credit Manager + Commercial Manager)	25	35
	Small Businesses (Retail Credit Manager or Credit Supervisors)	25	35
	Retail Automatic credit analysis process	1.5	—
	Retail Manual credit analysis process	—	10

		Credit Approval Limit (in millions of Pesos)
		Unsecured	Secured

		Total Maximum Approval Limit
Senior Committee	Chief Credit Officer (as Chairman of the Committee); Chairman; CEO (as Vice chairman of the Committee); COO; Chief Risk Officer; Credit Executive Manager middle-market & corporates; Credit Executive Manager SMEs; Head of Corporate Banking; Manager of SMEs business Head of Treasury and Global Markets;	Limitless	Limitless
Junior Committee
	Chief Credit Officer (as Chairman of the Committee); COO; Head of Corporate Banking; Head of Treasury and Global Markets; Manager of SMEs business; Credit Executive Manager middle-market & corporates; Credit Executive Manager SMEs; Executive Manager Corporate Banking Bs Aires and Interior;	600	600
Manager		300	300

	As of September 30, 2020
	Total Assets

	*(in millions* *of Pesos)*		*Share of* *Total (%)*
Banco Santander Río S.A.		899,223,2		14.7	%
Banco de Galicia y Buenos Aires S.A.		862,438,9		14.1	%
Banco Macro S.A.		716,293,1		11.7	%

	As of December 31, 2017
	Total Loans
	(in millions of Pesos)	Share of Total (%)
Banco Santander Río S.A.	166,220.7	15.5	%
Banco de Galicia y Buenos Aires S.A.	158,817.4	14.8	%
Banco Macro S.A.(1)	132,952.4	12.4	%
BBVA Banco Francés S.A.	123,705.6	11.5	%
HSBC Bank Argentina S.A.	65,921.2	6.2	%
ICBC S.A.	60,661.0	5.7	%
Banco Patagonia S.A.	56,337.7	5.3	%
Banco Supervielle SA	50,776.8	4.7	%
Credicoop Cooperativo Limitado	46,379.3	4.3	%
Banco Hipotecario S.A.	31,909.0	3.0	%
Nuevo Santa Fe	27,526.8	2.6	%
Citibank N.A.	26,457.1	2.5	%
Itau Argentina	22,895.6	2.1	%
Banco Comafi S.A.	16,486.1	1.5	%
Nuevo Banco de entre Rios S.A.	11,853.4	1.1	%
Otros	72,909.7	6.8	%
Total Private Banks	1,071,809.8

	As of December 31, 2017
	Total Deposits
	(in millions of Pesos)	Share of total (%)
Banco Santander Río S.A.	234,037.3	17.0	%
Banco de Galicia y Buenos Aires S.A.	200,884.4	14.6	%
BBVA Banco Francés S.A.	153,962.7	11.2	%
Banco Macro S.A.(1)	143,636.5	10.4	%
Credicoop Cooperativo Limitado	89,049.7	6.5	%
HSBC Bank Argentina S.A.	85,860.2	6.2	%
Banco Patagonia S.A.	68,685.4	5.0	%
ICBC S.A.	64,952.7	4.7	%
Banco Supervielle SA	60,057.4	4.4	%
Nuevo Santa Fe	36,163.5	2.6	%
Citibank N.A.	33,928.6	2.5	%
Itau Argentina	29,903.1	2.2	%
Banco Hipotecario S.A.	21,006.3	1.5	%
Banco de Santiago del Estero S.A.	20,891.1	1.5	%
Nuevo Banco de entre Rios S.A.	20,889.5	1.5	%
Otros	110,976.4	8.1	%
Total Private Banks	1,374,884.8

	As of September 30, 2020
	Total Deposits

	*(in millions* *of Pesos)*		*Share of* *total (%)*
Banco Santander Río S.A.		684,273.6		15.8	%
Banco de Galicia y Buenos Aires S.A.		616,450.8		14.2	%
Banco Macro S.A.		480,826.8		11.1	%
BBVA Banco Francés S.A.		398,187.4		9.2	%
Credicoop Cooperativo Limitado		290,609.4		6.7	%
HSBC Bank Argentina S.A.		267,515.2		6.2	%
Citibank N.A.		240,585.7		5.5	%
ICBC S.A.		205,974.1		4.7	%
Banco Patagonia S.A.		193,308.1		4.5	%
Banco Supervielle S.A.		166,278.9		3.8	%
Nuevo Santa Fe		129,728.9		3.0	%
Itau Argentina		105,453.5		2.4	%
Banco Hipotecario S.A.		79,575.4		1.8	%
Others		478,171.30		11.0	%
Total Private Banks		4,336,939.10		100.0	%

	As of December 31, 2017			As of September 30, 2020
	Personal Loans			Personal Loans
	(in millions of Pesos)	Share of total (%)
Banco Macro S.A.(1)	47,376.7	22.4	%
				*(in millions* *of Pesos)*		*Share of* *total (%)*
Banco Macro S.A					60,609.8		24.4	%
Banco de Galicia y Buenos Aires S.A.U.					31,583.2		12.7	%
BBVA Banco Francés S.A.					21,992.1		8.9	%
Banco Santander Río S.A.	29,382.2	13.9	%		21,076.1		8.5	%
Banco de Galicia y Buenos Aires S.A.(2)	22,288.7	10.5	%
BBVA Banco Francés S.A.	16,318.5	7.7	%
Banco Supervielle SA(3)4)	14,579.4	6.9	%
Banco Supervielle S.A.⁽¹⁾					18,365.5		7.4	%
Nuevo Banco de Santa Fe	9,686.9	4.6	%		13,188.5		5.3	%
Banco Patagonia S.A.	8,731.1	4.1	%		7,289.0		2.9	%
Nuevo Banco de Entre Rios					7,257.5		2.9	%
ICBC S.A.					5,320.0		2.1	%
HSBC Bank Argentina S.A.	7,087.3	3.4	%		4,703.8		1.9	%
Banco Hipotecario S.A.	6,262.2	3.0	%		4,475.5		1.8	%
ICBC S.A.	5,907.1	2.8	%
Nuevo Banco de Entre Rios	5,493.2	2.6	%
Others	38,316.8	18.1	%		52,106.5		21.0	%
Financial Private System	211,430.2				247,967.5		100.0	%