Grupo Supervielle SA (SUPV) 2016 Q4 法說會逐字稿

Good morning, and welcome to the Grupo Supervielle Fourth Quarter and Fiscal Year 2016 Earnings Call. A slide presentation will accompany today's webcast, which is available in the Investor section of Grupo Supervielle Investor Relations website at www.gruposupervielle.com. As a reminder, all participants will be in a listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. As a reminder, today's conference call is being recorded.

At this time, I would like to turn the call over to Ana Bartesaghi, Treasurer and IRO. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us today. Speaking during today's call will be Patricio Supervielle, our Chief Executive Officer and Chairman of the Board; and Jorge Ramirez, Vice Chairman of the Board. Also joining is Alejandra Naughton, Chief Financial Officer. All will be available for the Q&A session.

Before we proceed, I would like to make the following Safe Harbor statement. Today's call will contain forward-looking statements and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

I would now like to turn the call over to our CEO, Patricio Supervielle.

Thank you, Ana. Hello, everyone, and thank you for joining us today. It's a pleasure to welcome you to Supervielle's fourth quarter earnings conference call. If you're following the presentation, please turn to slide number 3. We're pleased to report fourth quarter and full year results, which demonstrate our ability to successfully execute on our profitable growth strategy, leveraging the capital raised in the IPO.

This resulted in above-industry loan expansion as we unlocked growth potential, while maintaining our focus on prudent risk management, which translated into improved NPLs and coverage ratios. Good results were further supported by a solid net interest margin, while operating efficiency reached 64.5% in fourth quarter 2016 from 73.8% in the first quarter of the year, before our IPO. This was achieved despite higher costs in the quarter, and we'll talk about this in a moment.

We are particularly pleased with the successful placement of our Argentine peso, inaugural 3.5 year global bond for a total of $300 million last month, starting a new funding source. Completing this transaction further diversified our funding base, complementing our strong retail deposit franchise to support growth with longer tenor in higher margin SMEs and individual loans supporting our commitment to maintain a relevant position in the Argentine financial markets.

Turning to the macro environment in slide 4, let me comment briefly, where we are now and the economic outlook for the year. As anticipated, 2016 was a transition year with several macroeconomic imbalances were addressed successfully. By year end, we saw some positive indicators showing an incipient economic recovery. Inflation continues to trend down reaching a low of 1.3% in January, below market expectations.

Lebac rates continued to decline, following the same trends. For 2017, inflation is anticipated to reach 20%, down from 41% in 2016. We believe wage negotiations in second quarter 2017 could be the decisive moment to determine the feasibility of this year's target. According to the most recent Market Expectations Survey, GDP is expected to grow at 3% this year, while the fiscal deficit is expected to fall gradually avoiding abrupt adjustments in a recession.

Moving on to the Argentine financial sector in slide 5, system loans with private sector expanded by 12% sequentially above inflation and doubling moderate growth in the previous quarter. Corporate loan growth accelerated to 11%, while retail loan growth increasing 12%. Year-on-year, systems loan were up 31%.

Industry deposits, in turn, increased 44% year-on-year and 21% sequentially, mainly reflecting the success of the initial phase of the government's Tax Amnesty Program. US dollar denominated system deposits rose 76% sequentially, while peso denominated deposits were up 11%, still below inflation. Note that the first tranche of the Tax Amnesty Program, which encouraged the declaration of cash holding in Argentina before October 31, 2016, added around [$8 billion] deposits to the industry. The BADLAR rate continued the downward trends that began in mid-2016, declining 230 basis points sequentially to 19.9% by the end of December, in line with the reduction in the Lebac rates.

Now, in terms of our performance, on slide 6, loans were up 58% year-on-year, almost doubling system growth and slightly above our guidance range of 47% to 57% for 2016. Note that our balance sheet loans rose 71% in the year as we further reduced securitized loans in line with our post-IPO strategy. On a sequential basis, loans were up 17% as we continued to execute on our growth strategy. Corporate loans continued to post a strong performance, increasing the share of our total portfolio to 48%, up from 41% in the second quarter of 2016. Higher margin SMEs and middle market loans represented about 59% of corporate loans. Consumer finance loans also did well, keeping their share of the total loans.

Looking at our loan book, in more detail, in slide 7, corporate loans were up 117% year-on-year and 30% sequentially, almost tripling market growth. Strong demand for trade finance and US dollar denominated loans remain the main driver behind corporate loans. Retail loans increased 20% year-on-year with growth continuing to pick-up, reaching 8% quarter-on-quarter following the improvements in early July.

Finally, consumer finance loans were up 67% year-on-year and 17% quarter-on-quarter. Most importantly, we continued to see an improvement in asset quality following the deterioration experienced in the second quarter of 2016, which resulted with a short-term contraction in consumer disposable income.

I will now hand off the call to Jorge Ramirez, who will review our funding, P&L and guidance. Please Jorge, go ahead.

Thank you, Patricio. Good day, everyone. Turning to funding on slide 8, we expanded our deposit base by 18% sequentially and 51% year-on-year. US dollar denominated deposits increased almost 21% of total deposits from 10% in the prior quarter, driven by the government's Tax Amnesty Program. Loans-to-deposits remain relatively stable at 100% quarter-on-quarter as we continued to primarily fund loan growth by reducing our holdings in Central Bank notes or Lebac's, given their declining interest rates, before starting to take higher gross wholesale deposits. We also stepped up issuances of medium term notes up 109% quarter-on-quarter, continuing to improve cost of funding and general mismatch.

As you can see on slide 9, our retail network and corporate franchise continue to support deposit diversification and drive growth in low cost demand deposits, posting sequential increases of 19% in savings accounts and 17% in checking accounts. Retail and Senior Citizen's deposits represented 60% of total deposits, underscoring our low cost deposit network franchise. Finally, other deposits, mainly US dollars were up 256% sequentially driven by the Tax Amnesty Program, while time deposits were down 7% as we funded loan growth through issuance of higher MTNs, as I just mentioned.

Moving on to slide 10, with a lower net interest margin for the year of 20.6%, slightly above our guidance range of between 17% to 20%, and 250 basis points above 2015 levels. NIM for the quarter was 20.9% despite the decline in interest rates, the higher share of low margin US dollar loans and deposits. The latter was partially offset by income from the termination of our real estate investment trust in the fourth quarter of 2016. Last November, we exercised our priority right to buy, at market prices, all of the strategic located branches included in this trust before these properties will be divested by the trustee, as established in the securitization terms and conditions.

Excluding the income from the termination of this trust, NIM would have been 19.5% in the fourth quarter of 2016 and 20.2% for the year. Gross financial margin for the quarter increased 25% sequentially. Average earning assets rose above average interest bearing liabilities, while interest rate of our liabilities declined 290 basis points above the 119 basis points decline in the rate of the loan portfolio. This is excluding trade finance and US dollar loans and deposits.

Moving on to slide 11, net service fee income was up 13% quarter-on-quarter. High volume in credit and debit cards as well as in checking and savings accounts, together with repricing following the elimination of regulatory restrictions on fees last September, remain the main drivers behind this performance. And net service fee income ratio declined to 30.3% in the quarter from 34.6% in the third quarter 2016, reflecting the higher growth in financial margin experienced in the period.

Income from insurance activities was down 33% quarter-on-quarter, reflecting the impact of regulatory changes in credit related products, which more than offset growth in non-credit related insurance products. Remember that beginning last September, Banco Supervielle and Cordial Compania Financiera started to self-insure against credit related risks and therefore no longer contract to life insurance coverage for the inflow of loans and credit cards.

Now, moving on to asset quality on slide 12, we posted an improvement in NPLs and coverage ratio, while [observing]asset quality in line with seasonality and business segment profile. The NPL ratio fell to 2.8%, down from 3.1% in Q2 of 2016 and 3% last quarter, posting sequential improvements across all segments. Actually, the total NPL ratio was better than our guidance range of 3% to 3.2% by year end. We increased the coverage ratio to 87.1% from 83.7% in the third quarter. Cost of risk was 3.9% this quarter, a slight increase from 3.7% in Q3, 2016, but significantly below the 5% reported in the Q2 of 2016. These increases are explained by regulatory provisions on new loans at inception, given the strong seasonal loan growth in December that distorts average volumes in which the ratio is calculated. Loan loss provisions increased 21% sequentially to ARS317 million, above the 17% loan growth in the quarter, as we increased the non-performing loan coverage ratio by 340 basis points quarter-on-quarter to 87.1%.

Moving on to expenses, on slide 12, the efficiency ratio improved to 64.5% in the quarter from pre-IPO levels of 73.8% in the first quarter of 2016, but an increase from the 62.5% reported in the previous quarter. For the year, the efficiency ratio was 67.5% in the low end of our 66% to 71% guidance range for 2016. Administrative expenses rose 21% quarter-on-quarter, mainly reflecting extraordinary payments to employees resulting from a collective agreement reached with the labor unions last December; a 1.4% increase in our headcount to support future growth. The full impact from the salary increase that we agreed to under the collective bargaining agreement with the merchant unions at our consumer finance segment effective since October [and] performance variances in connection with higher loan origination and year-end results. Higher marketing and publicity expenses and taxes among others also contributed to the overall increase in expenses.

Now, turning to profitability on slide 14, net income for the year almost doubled to ARS1.3 billion from ARS674 million in 2015 and was in the mid-point of our guidance range of ARS1.2 billion to ARS1.4 billion. In the quarter, net income was up 48% year-on-year and 52% sequentially as we continue to execute our strategy. As expected, return on average equity continued to normalize, reaching 31.3% this quarter after the dilution in the second quarter of 2016 from the capital raised in the IPO.

In terms of capitalization, as shown on slide 15, as anticipated, we repaid ARS137 million of high cost holding company debt in the quarter. Remaining funds at the holding company at year-end of around ARS130 million are invested in low risk short-term local mutual funds, which posted a 25% annualized return in the quarter, and taking advantage of tax losses carry forward in this Company. After paying down debt, we expect to maintain excess liquidity of ARS690 million to fund growth.

Following the significant loan growth in the quarter, the consolidated pro forma Tier 1 ratio adjusted to 12.3%, reaching the high end of our target guidance of 11.5% and 12.5%. Please bear in mind that this ratio only includes 50% of the Central Bank regulated subsidiaries fourth quarter profits, which will be 100% completed as Tier 1 capital, effective February 2017. This [affects us] 40 basis points of common equity Tier 1 ratio. As the loan portfolio continues to build up and seasons, we expect the current net income to increase our Tier 1 capital base to support future growth.

Please turn to slide 16, regarding on our performance in 2016, we're very pleased to have met or exceeded the guidance provided in the second quarter of 2016. Our results underpin the strength of our business model and value proposition as we continue to unlock value, deploying the funds from our IPO, grow the loans per branch, and taking advantage of the opportunities we see in our markets.

Now, let me turn the call back to Patricio, who will go over our guidance for 2017, and then, we will open the floor for questions.

Thank you, Jorge. Let me now share with you our guidance for 2017 and some of the underlying assumptions, which you can see in slide 17. As I mentioned earlier, the market expectation are, and ours, is for GDP to grow by 3% this year with add-on inflation down to 20%. We also estimate the average BADLAR rate to reach 19% in December. Based on these assumptions, as we continue to drive our growth strategy, we anticipate a pick-up in loan demand with growth in real terms exceeding 2016 levels. As a result, we expect total loan growth in 2017 to range between 38% to 45%.

Overall, asset quality is anticipated to trend down during the year supported by the expected improvement in macro conditions. As a result, we expect cost of risk to range between 3.2% to 3.6% in 2017, down from the 4% reported in 2016. With declining inflation, we also expect to see a compression in NIM in the industry this year, which leads us to anticipate NIM to range between 17% to 20% for the full year.

In terms of profitability, we expect net income in 2017 in the range of ARS2.1 billion to ARS2.3 billion, up from the ARS1.3 billion reported in 2016. Keep in mind that typically the Company net income in the second half of the year is higher than in the first half, mainly due to economic seasonality and the effect of the monthly cumulative increase in assets of the nominal terms and salary increases agreed upon between the Bank and the banking employee trade union during the first half are applied retroactively to the first quarter. We expect our Tier 1 ratio to range between 10.5% and 11.2% at year-end, as we continue to make progress on our capital deployment plan increasing our risk-weighted assets. Finally, as we continue to deploy capital to leverage our infrastructure, we expect to achieve additional improvements in the efficiency ratio, reaching levels of between 63% to 67% for the full year.

Moving on to slide 18, let me share with you some initiatives we are undertaking this year that will contribute to further drive operating leverage and leverage some areas of opportunities. We plan to allocate approximately ARS400 million to four key initiatives this year. First, to build out our core product leadership into integral relationship with customers developing cash management solutions. Second, 30% to increase our network footprint by opening five branches in strategic locations aligned with the Company's SME's business strategy.

Third, 20% to step up digital initiatives aimed at enhancing customer experience, increased cross sell and reduce service costs. And four, 30% to strengthen indirect commercial channels, particularly at our sales force and to upgrade our contact center and sales force. These initiatives, along with our strategy of leveraging our underutilized operational platform are expected to further drive profitable growth as the Company continue to execute on this strategy and deliver accelerated improvements in efficiency after 2017, reaching the [mid-50%] in 2019.

We are now ready to take questions, please. Operator, go ahead.

(Operator Instructions) Ernesto Gabilondo, Bank of America Merrill Lynch.

Hi. Good morning, Patricio, and all the management team, and congrats on your results. Just three questions from my side. My first question, if we analyze your fourth quarter net income, we arrived at a full-year net income of ARS2.1 billion, which is the low end of your guidance for 2017. As such, did you think your guidance is conservative or is there seasonality to results?

Secondly, can you quantify one-time items in fourth quarter results, such as the gains from the termination of Renta Inmobiliaria, and the one-time payment relative to the collective labor agreement? And finally, I would want to ask you about your net interest margin guidance. Clearly, you have guided stronger loan portfolio growth than the industry and your NIM seems to be more protective on a scenario of lower interest rates considering your retail exposure and your funding structure. Two of the three listed largest banks in Argentina have guided NIM pressure of 50 basis points for 2017, I believe your guidance contemplates a more ample range. So I just want to get your impressions on what are you expecting for NIM? Thank you.

Thank you, Ernesto, Alejandra speaking. So regarding your first question, seasonality is expected (inaudible) given our difficult seasonality. We calculate run rate based on the fourth quarter results, we believe that it's not the way to look at to predict our full year. Normally for us, profits of the first quarter of the year are lower than the previous one and they run that sequentially, let's say that we expect that approximately 60% of our profits will be made in the second half of the year.

Are you okay with this answer or (multiple speakers) I hope your question was regarding the payments of -- and again, you asked regarding the gain for Renta Inmobiliaria. We recorded gains approximately of ARS90 million connected with Renta Inmobiliaria Trust.

Michele, I'm sorry, there's one more question that he asked?

I'm sorry.

Ernesto, you also asked about the extraordinary payments to employees resulting from the agreement with the labor union, that's the same range of percentage, approximately [ARS35 million], but on the top of that, some other factors influence the increase of the personal expenses quarter-over-quarter. We think the most significant is the increase in the headcount to support our growth. Also, the full impact from the salary agreement agreed with merchant unions at our Consumer Finance segment that has got effective since October. And finally, and most importantly, the performance bonuses in connection with the higher loan origination and we emphasizing that we believe that this last factor is the most significant given the seasonality, again, of the (inaudible).

Okay. Regarding your question of the NIM, as you mentioned in your question, we have a larger composition of personal loans in our portfolio and that has s worked in our favor in terms of protecting us from NIM compression. However, going forward, and this is probably the reason why we're including this wider range as opposed to what the other large banks in Argentina have mentioned is that we continue increasing in our corporate portfolio and the mix might -- going forward might change a little. Irrespective of this, we expect our NIM to remain larger than the NIMs from our competitors and we'd still maintain a substantial gap, which will be above the ones from our competitors.

Frederic de Mariz, UBS.

Thank you very much. Good morning, everyone, and thank you for the conference call. Two questions on my side. The first one actually, you mentioned that the loan guidance of 38% to 45%, you also mentioned that you would grow faster in corporates. I'm curious to hear a little bit more color on where the growth could be coming from, in particular, what type of segments, what type of sectors in the industry for individuals. Where do you see the most opportunities or which segments, on the flip side, do you see the most hurdles? So that's the first question in terms of getting more color on the growth guidance.

The second question, we saw that there was a high level of write-offs in the quarter. You talked a bit about asset quality, I just wanted to understand if there is anything special in the fourth quarter of if it's just the business as usual in terms of high write-offs? Thank you.

Thank you, Frederic. Regarding your first question, we're seeing growth all across the Board. There is no specific sector that clearly stands out. Essentially, I mean, the most dynamic sectors last year have been agribusiness; construction, mostly infrastructure; energy generation as a result of the [reductions] that we -- essentially electricity generation as a result of the reductions that the government did in the last half of the year, and we're seeing also transportation and logistics to be very dynamic. But when we look at the specific portfolio within the bank, we're seeing stronger demand from all of our customer base. There's no particular industry that stands out, and we expect that going forward to remain all as a same.

As we always mentioned is, we have the customer base in place mostly from our corporate portfolio. We still need to keep growing our small and medium-sized companies and probably we expect some of the growth to come from there. And the other thing that it might pick-up, might come probably as a positive surprise for the year, if inflation keeps on coming down, as (inaudible) mentioned what we've been seeing is that the mortgage loan portfolio might start to pick-up earlier than what we have originally expected and we have positioned ourselves very well there in terms of big advantage of that trend, if it starts to ramp-up.

Regarding your question on asset quality, there are no extraordinary items in the fourth quarter of last year. The reason why we have the increase is, as we explained in the presentation is, the cost of risk ratio is calculated on the base of the average portfolio for the quarter and while the provisions are therefore the charges on our income statement are calculated on our year-end balance. The difference between the year-end balance and our average portfolio for the quarter is ARS5 billion. So the combination of that factor plus the [ARS5 billion], which increases our provisions on the performing loan portfolio, which are mandatory provisions that need to do, plus the increase in our coverage ratio are the explanation for our fourth quarter charges.

Got you. Thank you very much. That's very clear.

Fernando Suarez, AR partners.

Hi. Good morning, everyone. Thanks for taking the question and congratulation for the results. I would like to know about your outlook looking into the next quarter for you and looking for the year -- for the system, regarding the excess cash that major banks are generating, because of the Central Bank's recent announcement of not receiving any more cash? Thanks.

Thank you Fernando. Thank you for your compliment. It's a very good question indeed. We are a different type of bank compared to other big players in the market, because we have very large monthly payments given the composition of our customer base. So, we're more on the payer side than on the cash receiving side, okay. So, for us, it's an issue which is lower than or the impact is lower than what it is for the other banks in the industry. In any event, we are planning as the rest of the industry is planning to start charging for corporate cash deposits per individual start as of March 1. And this is an industry wide measure that they're using, given the change in the Central Bank [rules of game].

Gabriel Nobrega, UBS.

Hi, everyone. Thank you for taking my question. My question is more on the cost side, we've seen your efficiency levels improving, I just want to get more color for the rest of the year, what are you thinking about OpEx and how should we see salaries increases? Thank you.

Yes. We expect, in terms of administrative expenses to be growing during 2017 between 30% to 35%.

Carlos Gomez, HSBC.

Yes. Hi. Good morning. You just mentioned that you are well positioned, if there is an unexpected growth in mortgages and real estate. Can you perhaps elaborate more as to how you are positioned there and whether you are doing it in local currency or in the indexed account that Central Bank introduced? And how do you see mortgages in the long run in your portfolio as a percentage of your total loans? Thank you.

Thank you, Carlos. Well, we have reached an agreement with a real estate portal called ZonaProp (inaudible) has an exclusive agreement in which when people navigate through this portal and are looking for house, they have a mortgage calculator, which is tied to our Bank and we're using this as a lead, as a provider of leads for new loan originations.

We're one of the six or seven banks which are currently offering. We have a very competitive offer of our products with a very high loan-to-value ratio of up to 75%, and we are also offering financing for second houses, not just single homes and the kind of offering we're doing is essentially in the indexed currency, so it's adjusted by inflation.

Okay. If I can follow-up on that, so how did you plan to fund that, because my understanding is that it is the deposit side of the indexed currency that could be problematic in the future, what's your strategy there?

Well, I mean, remember that we have just placed $300 million special bond 3.5 year on a variable rate. So we expect, as interest rates come down, we're going to use that. In the future, I mean, this is a short-term answer for us, there is, in terms of the economics -- the economics are there, plus on top of that, the other thing you'll have to add to this product is that the profitability that you make out of a customer that has the mortgage with you is substantially higher than what you do with other type of customers.

So in every market, probably in Argentina also, traditionally, this has been an inexistent market. But going forward, when this market starts to really boom, what we expect is that, the part of this mortgages will have to be securitized, and as you know, we have a very highly developed ability to securitize our loan portfolio. So that's why in the mid-term, that the funding solution we're looking towards is disbursed.

(Operator Instructions) Elvin Chu, Trend Capital.

Hi. Congratulations for your good results. I just have one question on my list, obviously your loan growth continues to be driven largely or significantly by the consumer finance business. Now, going forward, I presume that that will continue to be the case -- I mean consumer finance will be an important driver of your loan growth. Now, in terms of your risk management, how do you guys ensure that with such a pace of loan growth in consumer finance business, how do you intend to control your non-performing loan from that segment? Thank you.

Morning, Elvin. I mean, you are right, however, let me just mention one thing, which is part of our -- the driver for our loan growth going forward was still expected to be corporate loans, okay, the [intension] in the market and SME companies. However, the consumer finance will be the second most important driver of growth for our loan portfolio. In terms of how we expect to control great quality -- I mean, this is a business, our bank has been doing for many, many years. We have already won -- we brought this consumer finance business back in 2011 from GE. So we have lots of experience in terms of underwriting standards and scoring and scoring mechanisms.

And going forward, with the controlling of inflation, with inflation coming down, which clearly will have an impact in terms of interest rates coming down, disposable income for this type of segments tend to become higher and that tends to help substantially in terms of the asset quality for the portfolio. So, clearly one of our -- I mean, the biggest problem we might face here is, if the country goes back to a recession, which is not the outlook we have for this year or the following years, but definitely not for this year. Actually, we expect this to be a recovery year, so we should see at least a stabilization in terms of asset quality level or even, some improvement.

Okay. Got it. Sorry, just one follow-up question on the NIM? I think one gentlemen was asking why your net interest margin will be more protected or higher than the peers for this year. I didn't quite catch the answer, what is the reasons or the various reasons behind it?

Because we have a mix -- we have a higher mix of personal loans, which are long-term and at fixed rate, compared to some of our peers. So that's why we have historically higher NIM than our peers. And despite the fact that corporate loans will keep growing, we still have such a large chunk of our portfolio that we derive the income from personal loans that protects the NIM.

Alejandra Aranda, Itau BBA.

Hi. Thank you. Congratulations on the results. And if I may, three questions. If you could give a little bit of guidance on what you're expecting for the insurance part of your business next year and going forward? A little bit more color on the fee evolution that you're expecting? And Jorge, if I may pick your brain of what you just said on securitizing mortgages; clearly, the Argentine market is quite small and there are no big players. Are you seeing ANSES stepping in as a buyer for those securitized products?

Okay. Hi, Alejandra, good morning. Let me take your last question first. In the long-run, possibly, it would be one among the logical buyer, but definitely, we're not expecting it to be at subsidized rates. I mean it will have to be at market rates and if ANSES -- I mean, if we go to much more normal environment, it makes all the sense in the world that it's the pension fund or the pension authority the one that is -- or any pension savings the one that provides the funding for mortgages.

I would add to that, that if inflation comes down, everything would tend to normalize. So you can also -- I mean insurance companies and mutual funds, which normally tend to buy only short-term/long-term papers will have to increase their -- will probably have to increase their average maturities for securities that they buy. And additionally on that, if interest rates are attractive, there is always a possibility that you'll see some carry trade coming from abroad.

So what we're expanding from such low levels in terms of mortgage credit in Argentina that, to answer you, we don't see these to be a huge problem for the industry, at least for the next couple of years, but definitely going forward, it is an issue that will have to be addressed. And as you pointed out, ANSES might sound like the logical buyer for these type of securities going forward.

Well, going back to your first question on insurance, I think what -- to me, a difference that the regulations of Central Bank had was that the credit related business for insurance companies is practically there, okay. So what you will see is a fade-off or -- of those properties in all of the insurance companies and this is what is affecting our fourth quarter figures in our insurance company, as we explained. What we expect going forward, is that the non-credit related part of the business will start to grow, I mean, we'll still have plenty of products which are voluntary insurance products that we could sell to over 2 million customer base or 2.2 million customer base in the group that we currently don't have available in insurance company and we are expecting to launch some of them during the year 2017.

And on top of that, the other plan going forward that we have is to start offering insurance for small and medium-sized companies, which is a line of business which is very attractive, very profitable and we currently aren't offering. So we expect the growth to come from there and probably between 2017 and 2019 -- 2017 we'll probably compensate the drop that we had in -- or the loss of the credit-related business will partially compensate for that. And from 2018 on, we expect this to keep on growing.

And I forgot your second question, I'm sorry, could you repeat it? Key evolution for 2017? Yeah. Well, it's 30 percentage points -- that's in the high 20s, yeah. So essentially this will come from -- part of it is repricing or keeping up with inflation and the rest will come from volume growth.

Thank you. There are no further questions at this time. I would like to turn the call back over to Ana Bartesaghi for closing remarks.

Thank you all for joining us today. We appreciate your interest in our Company. We look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, the team remains available to answer any questions that you may have. Thank you and enjoy the rest of your day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a nice day.