1q.14 i earnings presentation - santander méxico · pdf file 1q.14 i earnings...

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  • 0 Mexico

    Mexico City, April 30th, 2014

    1Q.14 I Earnings Presentation

    Grupo Financiero Santander

    México, S.A.B. de C.V.

  • 1

    Safe Harbor Statement

    Grupo Financiero Santander México cautions that this presentation may contain forward-looking statements within the

    meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in

    various places throughout this presentation and include, without limitation, statements regarding our intent, belief, targets or

    current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion

    of our distribution network; our focus on strategic businesses; our compound annual growth rate; our risk, efficiency and

    profitability targets; financing plans; competition; impact of regulation; exposure to market risks including interest rate risk,

    foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk;

    projected capital expenditures; capitalization requirements and level of reserves; liquidity; trends affecting the economy

    generally; and trends affecting our financial condition and our results of operations. While these forward-looking statements

    represent our judgment and future expectations concerning the development of our business, a number of risks,

    uncertainties and other important factors could cause actual developments and results to differ materially from our

    expectations. These factors include, but are not limited to: changes in capital markets in general that may affect policies or

    attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the

    United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de

    México); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange

    rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and

    regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or

    requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes;

    competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic

    conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of

    allowances for loans and other losses; increased default by borrowers; technological changes; changes in consumer

    spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain

    additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations; and certain

    other risk factors included in our annual report on Form 20-F. The risk factors and other key factors that we have indicated

    in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could

    adversely affect our business and financial performance. Note: The information contained in this presentation is not audited. Nevertheless, the consolidated accounts are prepared on the basis

    of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comisión

    Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in millions

    of nominal Mexican pesos, unless otherwise indicated. Historical figures are not adjusted by inflation.

  • 2

    Focus on operating efficiency and profitability

     Efficiency ratio2 44.3%

     ROAE3 13.5%

    Total loan growth up 16.2%, well above market levels  Consumer1 9%

     SMEs 29%

     Mortgages 32% (12% excluding ING portfolio)

    Source: Company filings CNBV GAAP

    Notes: 1) Includes credit cards, payroll and personal loans

    2) Annualized opex (1Q14x4) divided by Annualized income before opex and allowances (1Q14x4)

    3) Annualized net income (1Q14x4) divided by average equity (4Q13;1Q14)

    Prudent risk management

     NPL ratio 3.4% (2.0% excluding homebuilders and ING)

     Cost of risk 3.5%

    Strong Above-Market Loan Growth Despite Economic Weakness that

    Extended into 1Q14…

    Branch expansion on track: 103 opened to-date

    Deposits growth of 10.2%, in line with the sector  Demand deposits +18.2%

  • 3

    GDP (% Annual Growth) Interest Rate (CETEs)

    Inflation (% Annual) Exchange Rate (Avg MXN/USD)

    Source: GDP – INEGI

    CETE, Inflation, Exchange Rate – BANXICO

    Estimates - SANTANDER

    4.1

    3.0

    1.1

    3.93.9

    2013 2012 2014E 2015E 2011

    3.8 3.5

    3.9 4.54.5

    2011 2012 2015E 2014E 2013

    3.6 3.94.0

    3.6 3.8

    2014E 2013 2012 2011 2015E

    12.713.012.813.212.4

    2013 2012 2014E 2015E 2011

    …while Solid Macro Fundamentals Support an Expected Pick-Up in 2H14,

    to Be Driven by Anticipated Public and Private Investments

  • 4

    Source: CNBV Banks as of February 2014 – Billions of Pesos.

    Notes: 1) Includes government and financial entities

    2) Includes credit cards, payroll and personal loans

    3,0253,0302,8432,8552,777

    2Q13 1Q13

    11.3% 10.5%

    7.4%

    3Q13

    +9%

    Feb’14

    9.5%

    4Q13

    10.2%

    Total Loans

    Mexico’s Financial System Loan Growth Tempered by the Economic

    Deceleration

     Over all loan growth deceleration over last twelve

    months reflecting economic slowdown

     Market recovery expected in 2014 , approximate

    15% YoY system loan growth

    2,8672,9632,7552,7792,687

    Feb’14

    +7%

    4Q13

    7.6% 6.2%

    3Q13

    4.9%

    2Q13

    4.8%

    1Q13

    4.5%

    Total Deposits

    YoY Growth

  • 5

    Source: Company filings CNBV GAAP

    Notes: * Includes middle-market, government and financial institutions

    Total Loans

    +22%

    (11)%

    394,932

    3Q13

    378,795

    2Q13

    365,360

    +16%

    1Q14 1Q13

    352,267

    409,349

    4Q13

    Retail

    Corporates

    1Q13 1Q14

    Santander Mexico’s Total Loan Growth Up 16%, Well Above-Market Levels

    and with Strong Performance Across all Core Products…

    Middle-Market 22%

    Corporates 18%

    Gov&FinEnt 11%

    SMEs 10%

    Mortgages 21%

    Credit Cards 10%

    Consumer 8% Middle-

    Market 23%

    Corporates 14%

    Gov&FinEnt 11%

    SMEs 11%

    Mortgages 24%

    Credit Cards 10%

    Consumer 7%

  • 6

    165,829 136,973

    Source: Company filings CNBV GAAP

    Notes: 1) Includes personal, payroll and auto loans

    Consumer1 Credit Cards Mortgages

    Individual Loans

    40,50640,07939,34738,25337,117

    2Q13 1Q13

    +1%

    +9%

    1Q14 4Q13 3Q13

    95,865 90,711

    76,78275,16772,806

    +6%

    +32%

    1Q14 4Q13 3Q13 2Q13 1Q13

    1Q13 1Q14 +21%

    29,226

    3Q13

    28,721

    2Q13

    27,817

    1Q13

    27,050

    4Q13

    +9%

    29,458 +1%

    1Q14

    Payroll

    Personal

     Change in trend in credit cards

     2nd largest market player

     Focus on mid and high income

    residential market

     Organic growth above market

    rates, further supported with

    inorganic expansion

    …Mainly Driven by the 21% YoY Increase in Individual Loans, Principally

    Reflecting Strong Growth in Mortgages…

     Excluding the sale of the payroll

    loan portfolio, consumer loans

    expanded by 15%

  • 7

    …while Continued Strong Growth in SMEs is further Supported by Solid

    Performance in Middle-Market Loans

    Source: Company filings CNBV GAAP

    SMEs Middle-Market

    Corporates

    95,576 91,415

    87,21484,221 79,019

    +5%

    +21%

    1Q14 4Q13 3Q13 2Q13 1Q13

    45,322 41,35539,62937,76635,120

    +29%

    1Q14 4Q13 3Q13 2Q13 1Q13

    +10%

    56,006 62,413

    75,19670,392 63,055

    -10%

    -11%

    1Q14 4Q13 3Q13 2Q13 1Q13

    Commercial Loans

    243,520 215,294 1Q13 1Q14 +13%

    Government & Fin Entities

    46,616 39,733

    31,90631,744 38,100 +17%

    +22%

    1Q14 4Q13 3Q13 2Q13 1Q13

  • 8

    Total Deposits

    Source: Company filings CNBV GAAP

    Notes: * Includes money market

    1) 1Q13 demand deposits were adjusted Ps.10,800 downward in order to deduct the effect from a

    reclassification that is not reflected in CNBV reported figures

    +18%

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