Good morning everyone, welcome to the Grupo Supervielle Q4 2021 earnings call. This is Ana Bartesaghi, Treasurer and IRO. A slide presentation will accompany today's webinar, which is available in the investor section of Grupo Supervielle's investor relations website. Today's conference call is being recorded. As a reminder, all participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. If you want to ask a question, you will need to be connected to a Zoom platform from any device. We will not be able to take your questions if you are connected from a phone line. Also, please make sure your name and last name appear in the Zoom platform you are using.
To ask a question by voice, please press the Raise Your Hand button located in the Zoom platform and press Raise Your Hand again to withdraw your question. You can also enable in the Zoom platform anytime during the call. We will ask you to limit yourself to one question and a follow-up, and then you can raise your hand again in another round. Speaking during today's call will be Patricio Supervielle, our Chairman and CEO, and Mariano Biglia, our Chief Financial Officer. Also joining us are Alejandro Stengel, Second Vice Chairman of the board and Bank CEO, and Jorge Ramírez, First Vice Chairman of the board. Alejandra Naughton, board member of several Grupo Supervielle subsidiaries, will also be joining us for today's call. All will be available for the Q&A session.
As a reminder, today's call will contain forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties, including as a result of the COVID-19 pandemic, and I refer you to the forward-looking statement section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Mariano Biglia, our CFO, will start the call discussing our performance for the quarter and our near-term outlook. Patricio Supervielle, our Chairman and CEO, will follow with an update on our midterm strategic initiatives.
Thank you, Ana. Good morning, everyone. Thank you for joining us today. Please turn to slide four of our earnings presentation. While economic activity continued to grow above pre-pandemic levels, market conditions faced significant macro and regulatory changes, including high inflation, negative real interest rates, weakening currency, and industry loans at historical lows. Profitability in the quarter was negatively impacted by one-time personnel expenses related to headcount efficiencies, together with losses due to inflation and higher loan loss provisions. Central bank regulations and higher taxes also impacted performance. This resulted in an attributable net loss of nearly ARS 617 million, where we posted break-even profitability when excluding non-recurring personnel charges. The acceleration of our strategy to capture operating efficiencies has allowed us to reduce personnel expenses.
Excluding non-recurring early retirement charges, our efficiency ratio improved 170 basis points sequentially, although it remains highly impacted by a lower revenue base. We also retained strong liquidity and an adequate capital base, closing the year with a Tier 1 ratio of 12.7% that support our strategic transformation initiatives and long-term sustainability. Capital remains hedged against inflation through real estate investments, mortgages, and sovereign bonds. On the ESG front, in line with our goal to more broadly integrate ESG criteria in our strategic planning, we will begin reporting under the SASB framework in our 2021 sustainability report, expanding on our current GRI reporting. Maintaining our commitment to long-term value creation, Patricio will discuss shortly how we are advancing on our value creation strategy to drive ROE improvement and related goals for 2022. Now please turn to slide five.
In terms of lending, we recovered market share year-on-year, even when our loan book posted a low single-digit contraction remaining at historical lows. Average peso loans were up just over 2% year-on-year, compensating the decline in US dollar-denominated loans. Now moving on to funding on slide six. Liquidity levels remain strong, both in pesos and dollars, with the loan-to-deposit ratio at nearly 56%. Corporate deposits increased 5% sequentially as we continue to expand our share in sight deposits from both retail and corporate customers. Total deposits, however, were down 5% as we exercise liquidity management at lower institutional funding. Turning to slide seven. Total peso Net Interest Margin expanded 140 basis points sequentially to just over 18%.
This was driven mainly by a 100 basis points reduction in cost of funds, resulting from a better funding mix. During the quarter, we continued to attract low and no interest-bearing peso deposits while reducing institutional funding. Higher inflation also drove higher peso needs. In turn, peso loan portfolio Net Interest Margin declined 30 basis points. The decrease in cost of funds could not offset the 120 basis points sequential decline in the average yield on peso loans, as lower interest earned on mandatory credit lines granted to SMEs at preferential rates and higher credit card volumes drove lower yields. Moving on to asset quality on slide eight. Our total NPL ratio improved 100 basis points sequentially to 4.3%, declining across business segments. At the bank, the NPL ratio dropped to 2.6%, reaching pre-pandemic and pre-recession levels.
In turn, IUDÚ posted a 100 basis point sequential drop in the NPL ratio, mainly as we started to write off delinquent loans of customers who did not resume payments after the expiration of the 12-month grace periods approved by the Central Bank. Note that during the quarter, we reassessed our exposure to the public works construction sector as details on the IMF agreement became public, including the extent of the expected fiscal tightening and the ability of public spending. Based on this context, we decided to write off a portion of the portfolio, reducing our exposure to this sector, impacting cost of risk and coverage. The total coverage ratio at year-end stood at 110%. Turning to capitalization on slide nine.
We closed the year with a Tier 1 capital ratio of 12.7%, contracting 140 basis points sequentially, mainly explained by the following factors. First, our bottom line was impacted by accelerating headcount efficiencies, which increased severance costs. Second, in Q4 2021, we also increased investments in digital transformation initiatives, which are deducted from Tier 1 capital. These investments were in line with our investment plan of approximately ARS 3 billion for the full year, disclosed in previous quarters. Third, certain write-offs in the quarter, mainly related to the public construction sector, reduced the expected loss regulatory easing, negatively impacting capital. Part of this effect, approximately 40 basis points, will be recovered during 2022. Finally, the increase in risk-weighted assets was more than offset by inflation adjustment of capital.
We expect at year-end 2022 an adequate Tier 1 capital in the range of 12%-13%. Slide 10. While guidance remains suspended due to continued limited visibility ahead, on Slide 10, we share our views on the main drivers of our business for this year. Peso-denominated consumer and commercial loans are expected to grow slightly above inflation as we continue to pursue our goal of regaining market share lost in 2020 when we took a more conservative approach in the midst of the pandemic. Growth in real terms will be lower, however, if annual inflation were to accelerate above 55%. At the same time, while deposit growth remains fostered by foreign exchange restrictions and interest rate floors on time deposits, we expect deposits to grow slightly above inflation.
In terms of asset quality, as anticipated, NPLs ratios declined in the fourth quarter and are expected to remain stable or decline slightly in the year. We also anticipate provisions to grow above 2021 levels in line with loan growth, while cost of risk is expected to remain at similar levels of last year. With respect to margins, we expect Net Interest Margins to increase slightly in 2021, above 2021 levels. This is mainly driven by sustained improvements in our funding mix, a key pillar of our strategic plan, together with anticipated growth in higher margin personal loans. Margin is also expected to benefit from the impact of higher inflation on inflation-adjusted assets, including government bonds and mortgages, along with a net positive effect from the central bank regulations enacted last January. More detail on these regulations can be found in our earnings report.
At the same time, we expect fee income from individuals to increase in line with inflation, while insurance income is likely to grow in real terms as premiums recover from the lower levels observed in the last two years. In turn, personal and administrative expenses are anticipated to increase slightly above inflation, driven by additional costs related to the execution of our transformation strategy. Our plan also calls for continued implementation of headcount efficiencies as we move ahead with our branch and channel resizing. In connection with our network and digital transformation initiatives, we plan to invest approximately ARS 5.1 billion and ARS 1.2 billion, respectively, during 2022. Lastly, capital and liquidity are expected to remain at adequate levels, with the Tier 1 ratio anticipated to range between 12%-13% as I noted earlier.
Also recall that 100% of our capital remains hedged against inflation. Now let me turn the call to Patricio Supervielle, who will provide an update on our strategic initiatives. Patricio, please go ahead.
Thank you. Thank you, Mariano, and good day, everyone. While work is being done to stabilize the economy, the financial sector in Argentina will continue to face macroeconomic and regulatory challenges that we expect will go beyond this year. Concurrently, the pandemic has changed personal and business lives through accelerated digital adoption and remote working. Along with these changes, we too have accelerated our initiatives to anticipate our clients' new needs and the changing environment in which we operate. In this context, we reaffirm our focus in long-term value creation and are advancing on our six strategic pillars to improve return on equity, enhance retail client acquisition, expand digital adoption, continue to capture operating efficiencies, lower cost of funding, and maintain healthy asset quality. We are executing our strategy on three key fronts.
First, accelerating the digital and operational transformation of Banco Supervielle, scaling customer acquisition, and executing on our omni-channel and branch transformation strategy. Second, at IUDÚ, we are transforming model from a consumer finance business into a full digital banking platform to drive profitability. Third, at InvertirOnline, we aim to diversify revenue generation beyond Argentina. On the next slide, I will discuss how leading indicators of our transformation confirm we are on the right track of these initiatives and elaborate on our key goals for this year. Now please turn to slide 12. Starting with Banco Supervielle retail customer base, we added 53,000 new retail customers in 2021, of which over 80% are digital. Digitized clients in turn increased over 30% year-on-year.
We also expanded the share of digital and automatic personal loan consumers over retail customers by five percentage points to 40% at year-end. Asset Management retail customers were up 80% year-on-year, with assets under management more than doubling as we increased share of wallet. Our goals this year on these fronts include further accelerating digital customer acquisition, continue cross-selling digital products, including launching and expanding personal finance management products as part of our initiatives to increase share of wallet. We will also continue to leverage our core, our car loan alliances, including our recent alliance with KAVAK, to expand our share as a leader in the pre-owned car loans market. Moving on to slide 12. Let me share some examples of the successes we are having in boosting share of wallet at the bank and driving higher transactions among SMEs and corporate customers.
We reached the top five ranking in brand awareness among private banking customers, increasing our customer base and share of wallet. As we show on the left chart, during the year we expanded SME & Middle Market customers by nearly 4%. Moreover, 20% of our sales to SME customers were digital following the launch of digital onboarding early last year. We also increased our share of total system customers by over 40 basis points in the year to 5%, regaining our leading market position in leasing and posted share increases across payroll services, sight deposits and assets, among others. Looking ahead, we expect to continue accelerating digital customer acquisition while also launching new features and services, including digital lending to further drive share of wallet. Please turn to page 14 to see the traction we are making on enhancing the customer experience.
The share of total digitized retail customers increased consistently during the year, up nearly seven percentage points. We also saw significant advances in corporate clients as we more than doubled the number of monthly collections and payments introductions. In turn, the share of online and automatic monetary transactions continued to increase to nearly 90% of total transactions by year end, while we saw sustained growth in ECHEQs, volumes and customers ranking number six in this segment above our natural market share. We expect to continue advancing on driving digital adoption at the bank while scaling digital onboarding and sales throughout the year. Please turn to slide 15. As we show during 2021, we also advanced on improving funding quality, another key pillar of our strategic plan.
The share of corporate customer side deposits increased 80 basis points year-on-year. At the same time, the share of retail customer side deposit was up five basis points against year-end 2020, and recovered sequentially by 30 basis points, contributing to improve our funding mix. During the year, we aim to continue expanding corporate side deposits, keeping our focus on driving growth in transactional products, managing relationships with corporate customers, and increasing share of wallet to become the primary bank for more of our customers. Please turn to slide 16 for an update on our initiative to scale our branch transformation and innovation. Starting with our hybrid model last year, we began to scale our virtual hubs, expanding our footprint and enabling banking anywhere and anytime. The omni-channel model combines efficiencies of our virtual hub with the strength of face-to-face interaction and a correspondent strategy.
To date, we have implemented three virtual hubs offering a superior customer experience with our internal customer satisfaction score at 4.5 over 5, and we are working towards scaling this model to other regions and segments. We also made significant progress on our branch transformation front, implementing a new service model and modernizing our network. By year-end, we modernized and expanded services to SMEs and multi-segment businesses in 16 branches that until then, were exclusively dedicated to senior citizens. In addition, we increased our 24-hour lobby service to 40% of the total branch area, enabling extended banking hours and higher efficiencies. This year, we will continue working to expand towards expanding our digital footprint while boosting customer acquisition on the back of virtual hubs to perform purchases. As we show on slide 17, we are advancing on rightsizing our branch network and accelerating efficiencies.
We are enhancing customer service and productivity, introducing best-in-class technologies which allow us to extend service hours and facilitate self-service banking in some branches. We are also converting some branches to a full self-service format. We closed 1 branch last year and plan to close another 16 this year, subject to central bank authorization. This includes the branch effectively closed last year, but are still subject to central bank approval. These initiatives have allowed us to reduce headcount by nearly 6% year-on-year, and 11% during December, since December 2018. During this year, we expect to obtain additional headcount efficiencies and remain vigilant to opportunities to extract further value generation. Please turn to slide 18 to review our strategic pillar related to maintaining healthy asset quality at the bank.
As Mariano stated earlier, NPLs declined to the low 2.6% levels observed in first Q 2019, while net cost of risk contracted significantly to low single digits as we implemented portfolio limits, further optimized economic sector, as well as our exposure to our top 10 customers. Looking ahead, we expect to maintain low levels of NPLs. Finally, our strategy to transform our consumer finance business to a neobank via our fully digital bank, IUDÚ, is picking up speed. We are well-positioned to continue to attract new customers with a wide range of offerings, including savings accounts, personal loans, credit cards, insurance, wellness offerings, and many others that will be launched in the current year to increase customer engagement with the aim of making IUDÚ its clients' primary bank.
As I noted in our last call, we launched the retail digital savings account in the fourth quarter with the aim of attracting lower cost funding from for this business. Between December and February, we opened nearly 70,000 new deposits accounts, and while we had almost 300,000 downloads of the app in 2021, during January and February alone of this year, we saw over 100,000 additional downloads. At the year-end, we registered 20,000 digital customers, and that number tripled in the first two months of 2022, closing February with nearly 100,000 digital customers. Our strategy to convert this business online includes reducing IUDÚ physical presence.
In 2021, we were able to reduce headcount by 7% and expect an additional 25% reduction by the end of the first quarter 2022, along with branch closures in the coming months. In summary, while the financial services industry face significant macro and regulatory challenges ahead that go beyond this year, we remain focused on executing on our six strategic pillars to improve return on equity. Leading indicators demonstrate we are on track to further accelerate digital customer acquisition and capture additional operating efficiencies when long-term demand resumes, all while lowering cost of funding and maintaining healthy asset quality. Now we're ready to open the floor to questions. Ana, please go ahead.
Thank you, Patricio. At this time, we will be conducting the question and answer session. As a reminder, to ask a question you need to be connected to the Zoom platform. We will not be able to take your questions if you are connected from a phone line. To ask a question by voice, please press the Raise Your Hand button and press it again to withdraw your question. You can also send your questions in written form via the Q&A box. We would ask you to limit yourself to one question and a follow-up, and then you can raise your hand again in another round. One moment while we call for questions. The first question comes from Ernesto Gabilondo with Bank of America. Please go ahead, Ernesto.
Thank you, Ana. Hi, good morning, Patricio and Mariano and all your team. Thanks for your presentation and for the opportunity. I have three questions, but I will make one question, and then I will raise my hand again. My question is on IUDÚ. We continue to see high level of NPLs and customer risk of around 19% and 16% respectively. And also when looking to the reserve coverage ratio of IUDÚ, it seems to be low at 60%, for this type of segment. It will be interesting to know what would be IUDÚ's targets for asset quality, and when do you expect to start, like, showing some key performance indicators for IUDÚ, and when do you expect IUDÚ to become profitable?
Also related to the same question, it will be interesting to understand the IUDÚ's strategy in the short term. Would it be more focused on client growth over profitability, or do you expect both to be aligned in the short term? Thank you.
Hey, Mariano, would you like to answer the question on asset quality?
Sure, Patricio.
Yes.
Hi, Ernesto. Thank you for your question. Regarding NPLs at IUDÚ, we are seeing the NPL ratio between 19% and 30%. We are still seeing the effects of the automatic deferrals set during the pandemic, which ended at the end of March regarding personal loans at the end of March 2021. We still have the NPLs from that loan portfolio, which was much more punitive for this business segment as compared with the bank, for example. We are still working in the recovery of this portfolio. Finally, these NPLs will be eventually not recovered, will be written off, the last part in April 2022.
In the next two quarters, we still might see some write downs which will lower cost of risk, will lower the NPL ratio, without the distortion that this portfolio made. Then during 2022, we'll start to see what we expect to become more similar to the internal trend, which we expect to start 5 percentage points lower after rate loss, and then keep lowering until the end of the year. Remember this business segment has a new customer profile. It's not only the old customer profile from the Walmart stores. Now with ChangoMás, it's becoming a digital bank.
We expect to see a different profile of customers with better credit behavior. We still, as it is a new development, there's still more uncertainty than what we can expect at the bank level. We expect the NPL to be decreasing, first because of the first effect that I explained, and second, because of the new portfolio.
Thank you, Mariano. Let me take the part of the strategy. First, a straight answer when you ask whether the strategy is focused more on client growth or the profitability or if both are aligned. The answer is yes, they are aligned. Absolutely aligned, profitability and client growth. Let me take a brief description of what the context we see in Argentina for neobanks. If you look at the performance of neobanks in Argentina, they are not profitable. None of them are.
By the same token, another aspect which is a critical aspect, I believe, which is the funding on the funding side, although let's say some of the let's say the best neobanks in Argentina in terms of UX and number of customers, they've achieved certain level of funding. It's frankly very low, and it's almost irrelevant. I would like to show as a comparison with funds that are being managed by the biggest company in Argentina with a fantastic UX, Mercado Pago, Mercado Libre. They have maybe 2.5 million customers, but the funds they manage, it's the volume is around 1% of the fund industry.
It's frankly irrelevant. Even though it's a fantastic company with a UX which is absolutely fantastic, they have not been able to attract funding. I believe that the neobanks, to be successful, they need to attract customers that become that they transform or they choose IUDÚ as their principal bank. This is the key factor. In order to do this, you need to be able to offer certain types of services that we believe that we are doing and we are providing, which are the services let's say a traditional bank does, which are loans, credit cards and insurances.
If you look at the savings or in Argentina, they are all mainly in the banks or in the fund industry, but not in neobanks, as I said, or in big techs. They are in the traditional banks. Our target for us at IUDÚ is with a disruptive move to attract customers from traditional banks and get their principal with our company. This is the way we want to go further, and this we have in our product suites that we have, we believe will enable us to acquire this principal with clients.
By the same token, as I said, for us, the strategy will be not only client growth but also efficiency and profitability. For us, this year will be a transformational year in terms of the operating business model, and you will see a drastic reduction in cost all along year 2022. I think then we expect that our company, IUDÚ, will become profitable as of 2023.
Now, this is very, very helpful. Thank you very much.
Thank you, Ernesto. Our next question, I think you said you will be raising your hand again later on. Our next question comes from Rodrigo Nistor with Itaú BBA.
Yes.
Hello, Rodrigo Nistor.
Hi, good morning. Hi, good morning. Thank you for the opportunity. This is Pedro Leduc filling in for Rodrigo Nistor. Once again, congratulations on the clarity of the disclosures. They are really helpful. Well, in your presentation, you talk about the transformation of the bank, the bank is embarking. The banks can't control many things like the macro or central bank regulations. Could you comment briefly on what you're doing to address your current weak spots and minimize the negative impacts of the operating environment?
Alejandro, would you like to follow on that question?
Yes. Thank you for your question, Rodrigo. Sorry, Pedro. Your comment is actually right on, and we are focusing on the things that, regardless of context, we can control. One of them is very tight expense controls. This includes every efficiency that we can make, and it extends to right-sizing our network. We believe that the transformation we embarked on for some time now is allowing us to be able to capture many efficiencies, while at the same time enhancing customer experience and extending our reach through our digital network. The other thing we're focusing on is enhancing our cost of funding. This is very important in the context that we face, and we are, as we presented, showing some progress in that regard.
Finally, to continue the digital transformation will allow us to increase our acquisition of digital clients to, adopt or get a higher proportion of our customer base to continue to adopt, digital and automatic channels, and also to leverage cross-sell opportunities in our portfolio.
These are the key things that we're focusing on in what you well described is a challenging environment.
Thank you very much.
Thank you, Pedro. Our next question comes from Juan Recalde with Scotiabank. Hi, Juan, you can go-
Okay. Hi, thank you for taking my question. Can you hear me well?
Yes, very clear. Juan .
Okay, perfect. I have two questions. One is related to IUDÚ and how and the relationship with what used to be Walmart. How are you leveraging that partnership, the partnership with now, it's called ChangoMás. How are you leveraging that partnership to benefit IUDÚ? Can you leverage, for example, the credit, the co-branded credit cards to bring more customers to IUDÚ, for example? That would be the first question. The second one would be related to the dividends. We know that there is this new regulation from the central bank that limits the percentage of profits that can be distributed as dividends. What should we expect in terms of dividend payments for 2022?
Regarding the question of, let's say, the arrangements and transfer and Grupo de Narváez, basically, we signed a new contract. This contract gives us a complete control of our customers. Before what in the period or the era of Walmart, you would go to the branches and you would see a Walmart financial services and below in little letters the name of our brand. Now this is gone. I mean, all customers that we have, let's say, we have originated in this franchise, they belong to IUDÚ, and they know that. So there's no confusion on that. And we're able for us, and we don't have any more the concern what's happened every time we renegotiate with the supermarket. These clients are in our franchise, and what we've been doing is transforming them to full digital clients working with the IUDÚ app.
Looking forward, the opportunities with the ChangoMás franchise, we believe they are important in the sense that, of course, there is, when you have traffic in a supermarket, there's opportunities to get new customers. And the people from ChangoMás, they have plans probably in 2023 not this year, but next year, to put in place a loyalty program, which they know is extremely effective to, with data analytics to basically to do data mining and get new customers. And we know that for that, it's going to be for us, it's a powerful tool also for attracting customers for, let's say, into IUDÚ.
But that's, I would say, in a nutshell, we have a very good relation. We talk with them all the time how to basically perform better in stores and so on. But they know that we, the operational model will be fully digital. Particularly, for instance, when in the post sales of customers, they have to work through the app, no longer with people in the stores. Having said that, the main, let's say, origination we believe in the next few years will come from, let's say, Internet from basically from -- all the plan we have on digital marketing, trying to attract customers from traditional banks and come to IUDÚ. That's basically my answer.
Yes, let me add the answer in terms of dividends. Central Bank regulations needs on dividend apply for the bank and IUDÚ, which are the financial companies, which are subject to Central Bank regulations. But the holding company, Grupo Supervielle is only affected indirectly, because it only needs the dividends that the holding company can receive from the bank and IUDÚ. But in past years, where we approve dividends of approximately 10% of our net profit, we funded all 100% of the dividend at the holding company, was funded by dividends, received from other subsidiaries, not subject to Central Bank regulation as Supervielle Seguros and Supervielle Asset Management mainly.
We don't expect to approve dividends from the bank or IUDÚ, as we haven't done that in the last years. The dividend for this year that we recommended to the shareholders to approve is only to offset the personal asset tax. That can be funded with dividends from, again, Supervielle Seguros and Supervielle Asset Management, and will not be limited by these regulations. Just let me know if you...
Okay.
Thanks.
That's helpful. Thank you very much.
Okay.
Thank you, Juan. Our next question comes from Marlon Medina Robles with JP Morgan. Hi, Marlon. You can proceed, and you can prompt your question now.
Hello, Ana. Hi, Patricio. Actually, it's Yuri Fernandes here.
Hi.
Sorry to see. No worries. I was using Marlon's link. I have a first one on margins. You mentioned you were expecting a better funding. We saw a decrease in deposits, but with still good loans deposit ratio, good liquidity ratios. My question is, what should we see for margins 2022? Because we saw some expansion this quarter, but I don't know how sustainable it is, given I guess we have a new deposit regulation taking place in January, right? Maybe the first Q of 2022 may be more challenging given now we should pay minimum remuneration for a larger chunk of your deposit base.
The first question is margins, what you see, what you expect for 2022. I have a second one, regarding capital. We saw some decrease. You explained very well, in the release. My question is regarding the RWAs. We saw RWAs growing faster than loans. If you can provide more color. Also, your general view for capital during the year, like, how do you expect to review this capital, during the year? What do you see as the outlook for capital? Thank you very much.
Yeah, Mariano. Thank you, Yuri, for your question. Mariano, you're next to answer the question on margins.
Yes. Hello, Yuri. Thanks for your questions. First, regarding margins. I think you mentioned Central Bank recent regulations from January and February. Although it did raise the interest rates on time deposits, and it also raised the limit from ARS 1 million to ARS 10 million of deposits that are set at the highest interest rate, now at 39%. These regulations also increased the rates and the repo rates that we received from instruments from the Central Bank, and also increased the cap on certain interest rates with credit cards going from 34% to 39%, and also increasing the interest rates on subsidized loans.
All in all, the increase in interest rates, although it impacts both assets and liabilities, we think the net effect will be positive for 2022. I think, more important, we expect during 2022 to decrease also our cost of funds. We've seen that during the fourth quarter of 2021. In cost of funds also will be very important, the role of IUDÚ starting to add customers that are also saving accounts customers and not only lending customers as IUDÚ had in the past. Inflation, as we are long on inflation because we have hedged our net equity 100% against inflation, mainly through inflation-adjusted instruments as mortgages and sovereign bonds.
Also high inflations will increase margins. Those will be the main factors playing in the financial margin for 2022. Regarding capital and risk-weighted assets. Risk-weighted assets have three components. The first and more important is the risk-weighted assets of credits, and that is very linked to the loan growth. Of course, it's not a one-to-one relationship because there are certain particularities of the regulations, but it tends to go one-on-one with loan growth. We have market risk-weighted assets and operational risk. Those other two components, although less material, can also have an impact. For instance, for market risk, sometimes on the hedge we have against, for instance, against dollars can increase market capital requirements.
Operational is related mainly to operational requirement of capital is mainly linked to revenues. In the long term, the increase in risk-weighted assets will be linked to increasing loans. But in the shorter term, there can be some mismatches. Lastly, for capital in 2022 we expect to remain at adequate level in the range of 12%-13%. Now we are at 12.7%, having decreased in the last quarter from 14.1%. But the write-offs in the quarter made an extraordinary degree, where due to the technicalities of the regulations that allow us to recover a part of the expected loss provisions and add the bank capital. We expect to recover 0.4% of Tier 1 ratio to our capital.
Adjusting for that, we would be in 13.1%. Increasing risk-weighted assets would lead to a small decrease in the Tier 1 capital ratio, but always, we see it above 12%.
No, that's very clear, Mariano. Thank you very much.
Thank you, Yuri. Our next question comes from Alejandra Aranda with Itaú BBA. Please, Alejandra, go ahead.
Hi, good morning. Thank you for the opportunity. Most of my questions have been answered, but regarding the right sizing, I mean, how long should we expect this to continue? What should we expect in terms of additional costs coming from this and the additional investments for this year?
Well, as I said, in consumer finance, the right sizing will be particularly, let's say large. This year it will be very large, and this is already. We can see this in the first quarter already. We think in the first quarter of consumer finance, as we said, we are reducing 25% of the workforce by first quarter of 2022 through the change of operation model. You might expect to continue to see this another year. Regarding the bank, the capture of efficiencies will continue because the transformation is ongoing and it has a lot to do with the new digital processes, automation, digital adoption of clients, brand transformation.
I don't know if you want to add something, Alejandro, on that, on the capture of efficiencies.
Yes. As Patricio was saying, we will continue to capture these efficiencies, which, as you know, have been driven by a combination of digital adoption that was accelerated during the pandemic, and also our investments of increasing automated channels and their availability to the public. In effect, what has happened is that our clients are going to the bank at different hours, extended hours, and even during weekends, deciding when and how to serve or self-serve from our services. This is creating huge opportunities to rethink and optimize our branch network, and also to extend our reach as our investments in digital transformation allow for retention of digital native clients.
In terms of investments, I recall Mariano mentioned earlier on that the investments planned for 2022, in terms of our network, are at approximately ARS 5.1 billion, just to give you an idea of the second question. Digital transformation initiatives are at around ARS 1.2 billion .
Let me comment on investment. What we mentioned during the presentation is ARS 5.1 billion, as Alejandro said, for IT and digital transformation related investments, ARS 1.2 billion for the transformation of the network. Regarding severance, I don't know if you were asking also on the investment on severance. During 2022, we got ARS 2.6 billion of severance at the bank level. On top of that, ARS 500 million at IUDÚ, where we started the cap reductions already in the fourth quarter. For 2022, we'll see cap efficiencies at the bank and increasing at IUDÚ level.
On a consolidated basis, the ARS 3.1 billion of costs in severance, that is Banco Supervielle plus IUDÚ, will be a bit lower in 2022, maybe in real terms 10% lower. It's still at high levels due to these efficiencies at both companies.
Okay. Thank you very much.
Thank you, Alejandra. Now we can go back to Ernesto Gabilondo with Bank of America. Ernesto, please go ahead.
Uh-
Further questions.
Thank you, Ana. My last question is on your ROE expectations. I think the ROE of last year was - 2%. Considering now your 2022 perspectives, where do you see the ROE?
Yes, please. Mariano.
Let me comment on, although we are not giving the ROE for net income guidance, let me explain on the main factors that we see improving in 2022 or affecting 2022 results. Although there are still many moving parts to see the exact level, the precise level of net profits or ROE we see for the full year. As we saw during the presentation, 2021 net profit or net loss was negatively impacted by regulations or taxes that although I explained some improvements, but most of them will be still in place during 2022. We will also keep a high level of additional costs due to efficiencies, although a bit lower than 2021.
On the other hand, we'll start to reduce the net loss from the IUDÚ business segment, which is very significant in 2021, reaching or expecting to reach a break even by the end of the year or beginning of 2023, as Patricio said earlier. Reducing loss from IUDÚ, mainly from new customers with deposits, which is very important in a high inflation environment that affects this company in more than other businesses, will be very important in 2022 also. We are keeping additional costs from efficiencies. We are starting to see lowering costs from the reductions we made in 2020, and particularly during 2021.
With the 6% less headcount at the bank level, that will allow us to have less personnel costs. Also in 2021, we reduced the space that we lease for the corporate building. According to IFRS 16, the savings of that agreement will be seen in 2022 and 2023, not just in 2021. That's because of the accounting rule. But in the net in the life of the contract, that would be a significant saving. What I explained before that we would expect to allow us to have a higher Net Interest Margin and reducing costs and trying to maintain cost of risk will be the main factors that will play in 2022 ROE.
Thank you, Mariano. Can you just remind us your macro expectations regarding inflation, interest rates, and FX? Also, you were mentioning high inflation will help Net Interest Margins on higher inflation in government bonds. How do you see this could be impacting the net monetary position?
Well, higher inflation, as we are hedged against inflation for real estate assets and inflation adjustment bonds and mortgages, is positive for margin, but at the end of the day, it's neutral for the P&L, because we have a higher margin, but a higher loss from the monetary position. Our monetary position is now, and we expect in this environment to keep the same during the year, covering inflation to cover 100% of net equity. On top of that, we might have also a long position in US dollars that is mainly tactical if we expect to see a higher devaluation or not. That will be the effect on inflation.
Higher inflation impacts mainly the IUDÚ business segment, but we are covered on a consolidated basis. Also for loans and deposits, if inflation we started to work on the 2022 forecast with 50% inflation, then started to work with 55% inflation projected. If inflation goes beyond that or much higher, let's say beyond 60%, the growth on loans in real terms will be lower because that will at some point affect credit demand. Deposits may still be growing at or slightly above inflation because the central bank, at the end of the day, together with the foreign exchange restriction, fosters the deposits growth. I hope I answered your question.
Yes. Thank you very much, Mariano.
No problem.
Yes. I think we have some question in the panel. It says, could you please provide an update on InvertirOnline, its growth and growth prospects?
Okay. Thank you for an opportunity to talk about InvertirOnline. Last year, 2021, we were able to increase our number of clients around 25% in terms of active users. We are over 110,000 active users. This is one of the metrics defining active users. Users that have been using, operating, transacting with InvertirOnline over the last 60 days. InvertirOnline, we believe that it's important for us to gain traction in terms of growth in Argentina. For this, we are launching in this quarter the new mobile app, which we believe will help us to gain traction.
As well as we are in the process of connecting to a digital wallet to provide customers who and to refer, let's say, our customers to a digital wallet that eventually they if they want to transact with cryptocurrencies. We are doing this in absolute accordance with the standards of Argentine regulation. At the same time, a substantial number of the people at InvertirOnline, engineers and software developers, they are working on the international platform. We are working in the implementation of a plan in order to launch services in the region. This is in process. That's basically my answer.
Okay. Ladies and gentlemen, we have reached the end of today's Q&A session. Thank you 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, we remain available to answer any questions that you may have. Thank you, and stay safe and healthy.