Market Overview

Grupo Financiero Interacciones reports operating income up 36.21% YoY and 10.70% QoQ, to Ps.993 million[1]

Share:

Grupo Financiero Interacciones reports operating income up 36.21% YoY and 10.70% QoQ, to Ps.993 million[1]

- ROE of 15.70% in 1Q18, up 26 bps YoY.

- Bank's Financial margin ("SFI") up 38.22% YoY.

- Bank's Business Commissions ("SFI") up 38.39% YoY.

- NPL ratio of 0.03% in 1Q18, a 3 basis point YoY improvement.

PR Newswire

MEXICO CITY, April 25, 2018 /PRNewswire/ -- Grupo Financiero Interacciones, S.A.B. de C.V., (BMV: GFINTERO), ("Grupo Financiero Interacciones" or "GFI"), the largest specialized Mexican financial group with a business model focused on providing financing, risk management and financial advisory services mainly to the Mexican public sector, today announced results for the three-month period ended March 31, 2018.

Grupo Financiero Interacciones Logo

To obtain the full text of this earnings release, please visit
http://www.investorsinteracciones.com/images/media/quartelyResults/2018/1Q18/1Q18_Earnings_Release_Ingles_VF.pdf

Executive Summary: Simplified Financial Information ("SFI")

Disclaimer: As a result of the uniqueness of our business model, we simplified GFI's financial information in an effort to make it more efficient for market participants to analyze our financial group. Simplified Financial Information ("SFI") is adjusted for valuation effects, non-recurring items and includes reclassifications of regulatory financial statements.

Fundamentals

  • As part of GFI's fundamentals during the quarter, states and municipalities presented a liquidity surplus of 14.5% relative to their originally budgeted infrastructure agenda, which is below last year's surplus of 16.5%, in addition to an annual three-month federal transfer growth of 5.6%.

Given this year's upcoming elections and its implications within the Financial Discipline Law's ("FDL") framework, states and municipalities covered their demand for short term needs through the use of factoring products, which have no debt ceiling within the FDL. State elections in particular not only made these debt acquisitions preferable to states and municipalities, but also accelerated them before the elections take place. GFI's expertise and deep understanding in the application of the FDL as well as its proactive approach in preparing its business model to leverage these opportunities, enabled it to offer and capture the most attractive opportunities available in the market.

It's important to note that GFI had to reconstitute its loan portfolio due to payments of Ps.109,479 million during the last twelve months.

Additionally, infrastructure spending in the country continues with a strong momentum of growth, reaching a 9 year high with Ps.14 billion invested in the month of January[2], which adds an additional driver of growth in conjunction with GFI's current pipeline of opportunities.

Simplified Financial Statements 

Grupo Financiero Interacciones






Simplified Financial Information ("SFI")

1Q18

4Q17

1Q17

Var.vs 

4Q17

1Q17

     Bank - Interest Income

3,242

3,027

2,679

7.10%

21.02%

     Bank - Interest Expense

-2,356

-2,159

-2,038

9.12%

15.60%

Bank's Financial Margin

886

868

641

2.07%

38.22%

     Provisions for Loan Losses

152

-269

39

-156.51%

289.74%

     Net Commissions

276

848

359

-67.45%

-23.12%

     Business Commissions

429

594

310

-27.78%

38.39%

     Temporary Commissions

-153

254

49

-160.24%

-412.24%

     Income from Brokerage Activities

142

22

100

545.45%

42.00%

     Other Operating Income (Expenses)

10

-22

40

-145.45%

-75.00%

     IPAB

-126

-123

-120

2.44%

5.00%

     Administrative and Promotional Expenses ("SG&A")

-488

-599

-433

-18.53%

12.70%

Subsidiary Result

-2

2

-

-200.00%

100.00%

Bank's Income before Income Taxes

850

727

626

16.92%

35.78%

Brokerage Unit's Income before Income Taxes

156

73

153

113.70%

1.96%

Insurance Unit's Income before Income Taxes

-4

111

-24

-103.60%

-83.33%

Extraordinary Items

-148

-136

-

8.82%

100.00%

Other Subsidiary Results

-11

-12

-26

-8.33%

-57.69%

     Taxes

-173

-96

-111

80.21%

55.86%

Net Income

670

667

618

0.45%

8.41%

* Millions of pesos






*Simplified Financial Information ("SFI") is adjusted for valuation effects, non-recurring items and includes reclassifications of regulatory financial statements


   

Main Indicators - Simplified Financial Information ("SFI")

4Q17

3Q17

4Q16

Var.vs 

3Q17

4Q16

Main Financial Ratios






Bank - Loan Portfolio Financial Margin 

3.08%

3.12%

2.31%

-4bp

76bp

ROE - Bank

15.76%

18.22%

15.20%

-246bp

56bp

ROE - GFI

15.70%

16.14%

15.44%

-44bp

26bp

Bank´s Efficiency Ratio

46.73%

42.07%

48.51%

466pb

-178bp

NPL Ratio

0.03%

0.02%

0.06%

1bp

-3bp

Coverage Ratio

39.05x

62.41x

23.34x

-23.4x

15.71x

*Millions of pesos






*Simplified Financial Information ("SFI") is adjusted for valuation effects, non-recurring items and includes reclassifications of regulatory financial statements


  • The Bank's financial margin for 1Q18 increased 38.22% YoY and 2.07% QoQ. The YoY change resulted from the positive contribution from GFI's loan book, in addition to a reduction in cost of funds from TIIE minus 5 basis points at 1Q17 to TIIE minus 73 basis points at 1Q18. Infrastructure Banking, not only represented the business unit with the strongest growth but also represented higher yields than other banking units. The QoQ change is mainly explained by the widening of credit spreads relative to the cost of liabilities, in spite of a seasonal sequential contraction in the loan portfolio.
       
  • During 1Q18, GFI released Ps.152 million in provisions, mainly as a result to the change in the credit profile of GFI's clients during both time periods, as well as a change in the portfolio mix. It is important to note that this release is also partially reflected in commissions paid during the corresponding periods, which generates a neutralizing effect in earnings.
        
  • Net Commissions decreased 23.12% YoY and 67.45% relative to 4Q17. The YoY change is mainly explained by a 38.39% increase in business commissions reflecting higher demand for Infrastructure products as well as for short term borrowing in the form of factoring structures in the Government business line, as mentioned above; this YoY increase in business commissions was outweighed by a 412.24% decrease in temporary commissions as a result of the 5.92% decrease in the Government loan portfolio and by the 41.88% YoY growth in the Infrastructure loan book, which does not generate temporary commissions.

The QoQ change reflects the same dynamics in temporary commissions mentioned above, in addition to a 27.78% decrease in business commissions in line with GFI's intrinsic business model seasonality.

  • Income from Brokerage Activities amounted to Ps.142 million in 1Q18, representing an increase of 42.00% YoY and 545.45% QoQ. These changes are explained by the widening of spreads, as well as from better profit-making opportunities during this time period in the fixed income market.
       
  • Other Operating Income (Expenses) amounted to Ps.10 million in 1Q18, compared to other operating income of Ps.40 million in 1Q17 and a Ps.22 million expense in 4Q17. This line includes changes in Other Real Estate Owned ("OREO") and OREO discount adjustments, among others.
       
  • Administrative and Promotional Expenses (SG&A) increased 12.70% YoY and decreased 18.53% QoQ. The YoY change is mainly driven by a greater origination of infrastructure banking projects, including projects that were deferred from 4Q17 to 1Q18, which require legal services related to their structuring. The QoQ decrease reflects GFI's business model seasonality.
        
  • The Brokerage Unit reported income before taxes of Ps.156 million in 1Q18, increasing 1.96% YoY and 113.70% QoQ. The YoY increase reflects a 69.05% increase in trading income, which offset the 16.03% decrease in commissions, while the QoQ increase is explained by an 80.51% higher trading income. Both increases in trading income resulted from higher margins in debt trading activities during this time period.
       
  • Aseguradora Interacciones, the Insurance unit, reported a loss before taxes of Ps.4 million in 1Q18, compared to a Ps.24 million loss in 1Q17 and a Ps.111 million profit in 4Q17. The YoY change resulted from the alignment of costs to revenues stemming from premiums with lower risk exposures as part of this business unit's strategy. This strategy implied the release of technical reserves as well as lower claims during 1Q18. The QoQ change is explained by a Ps.204 million catastrophic reserve release during 4Q17, in addition to a technical reserve release related with the non-renewal of Property & Casualty businesses with a much higher risk exposure, in line with this business unit's strategy.
       
  • Extraordinary Items regarding the recent transaction with Banorte announced on October 25th, 2017, amounted to Ps.148 million, these expenses reflect legal fees and integration costs.
        
  • Grupo Financiero Interacciones reported net income of Ps.670 million in 1Q18, representing an increase of 8.41% YoY and 0.45% QoQ. The YoY change is mainly explained by an increase of 38.22% in the Bank's financial margin, as well as a 38.39% increase in business commissions, in addition to a 42.00% increase in income from brokerage activities, which more than offset the 12.70% increase in SG&A, as well as the Ps.148 million in extraordinary items mentioned above. The QoQ change reflects an 18.53% decrease in SG&A, a 545.45% increase in income from brokerage activities, and a Ps.83 million increase in the Brokerage Unit's income before taxes, which offset the flat financial margin performance.

 

REGULATORY FINANCIAL STATEMENTS - Income Statement

Grupo Financiero Interacciones






Regulatory Income Statement

1Q18

4Q17

1Q17

Var.vs 

4Q17

1Q17

     Interest Income

5,000

4,491

4,256

11.33%

17.48%

     Premium Income (Net) 

12

52

10

-76.92%

20.00%

     Interest Expense

-4,198

-3,272

-4,134

28.30%

1.55%

     Net Increase in Technical Reserves

-

204

-3

-100.00%

100.00%

     Damages, Claims and Other Obligations (Net) 

-5

-4

-8

25.00%

-37.50%

Financial Margin

809

1471

121

-45.00%

568.60%

     Provisions for Loan Losses

152

-264

39

157.58%

289.74%

Financial Margin Adjusted for Credit Risk

961

1207

160

-20.38%

500.63%

          Commissions and Fees Charged

699

1,667

806

-58.07%

-13.28%

          Commissions and Fees Paid

-308

-433

-208

-28.87%

48.08%

     Commissions (Net)

391

1,234

598

-68.31%

-34.62%

     Income from Brokerage Actiities

437

-115

769

-480.00%

-43.17%

     Other Operating Income (Expenses)

-114

-493

-84

-76.88%

35.71%

     Administrative and Promotional Expenses

-830

-1,072

-714

-22.57%

16.25%

Operating Income

845

761

729

11.04%

15.91%

     Equity in Results of Non-Consolidated Subsidiaries and Associates

-2

2

-

-200.00%

-100.00%

Income before Income Taxes

843

763

729

10.48%

15.64%

     Income Taxes

-16

-270

-100

-94.07%

-84.00%

     Deferred Income Taxes

-157

174

-11

-190.23%

1327.27%

Income Before Discontinued Operations

670

667

618

0.45%

8.41%

     Discontinued Operations

-

-

-

0.00%

0.00%

Net Income

670

667

618

0.45%

8.41%

     Non-Controlling Interest

-

-

-

0.00%

0.00%

Total Net Income

670

667

618

0.45%

8.41%

* Millions of pesos












Main Indicators - Regulatory Income Statement

1Q18

4Q17

1Q17

Var.vs 

4Q17

1Q17

Main Financial Ratios






NIM

1.35%

2.65%

0.21%

-130pb

114pb

ROE - Bank

15.76%

18.22%

15.20%

-246pb

56pb

ROE -GFI

15.70%

16.14%

15.44%

-44pb

26pb

Bank´s Efficiency Ratio

52.93%

42.96%

48.60%

997pb

433pb

Efficiency Ratio - GFI

54.50%

51.12%

50.85%

338pb

365pb

NPL Ratio

0.03%

0.02%

0.06%

1pb

-3pb

Coverage Ratio

39.05x

62.41x

23.34x

-23.36x

15.71x

*Millions of pesos






 

REGULATORY FINANCIAL STATEMENTS - Balance Sheet

Grupo Financiero Interacciones






Regulatory Balance Sheet

1Q18

4Q17

1Q17

Var.vs 

4Q17

1Q17

Cash and Due from Banks

17,166

10,102

19,539

69.93%

-12.14%

Margin Accounts

-

-

-

0.00%

0.00%

Investment in Securities

107,750

114,048

96,390

-5.52%

11.79%

Debtors Under Sale and Repurchase Agreements

5

-

4

100.00%

25.00%

Derivatives

615

561

274

9.63%

124.45%

Total Loan Portoflio (Net)

111,908

115,122

105,173

-2.79%

6.40%

Loan Portfolio

113,431

116,807

106,597

-2.89%

6.41%

Performing Loan Portfolio

113,392

116,780

106,536

-2.90%

6.44%

Commercial Loans

113,253

116,383

106,368

-2.69%

6.47%

                         Commercial or Business Activity

33,034

28,458

24,540

16.08%

34.61%

                         Financial Entities

685

1,456

608

-52.95%

12.66%

                         Government Entities

79,534

86,469

81,220

-8.02%

-2.08%

Consumer Loans

19

270

20

-92.96%

-5.00%

Mortgages

120

127

148

-5.51%

-18.92%

Non-Performing Loan Portfolio

39

27

61

44.44%

-36.07%

Commercial Non-Performing Loans

35

22

50

59.09%

-30.00%

Commercial or Business Activity

22

22

50

0.00%

-56.00%

Government Entities

13

-

-

100.00%

100.00%

Non-Performing Mortgages

4

5

11

-20.00%

-63.64%

Allowances for Loan Losses 

-1,523

-1,685

-1,424

-9.61%

6.95%

Accounts Receivables Loan Derivatives, Discounts and Credits (Net)

3

3

3

0.00%

0.00%

Premium Debtors (Net)

19

60

59

-68.33%

-67.80%

Accounts Receivables from Reinsurers and Re-guarantee Companies (Net)

288

444

804

-35.14%

-64.18%

Accounts Receivables (Net)

4,661

4,122

6,572

13.08%

-29.08%

Foreclosed Assets (Net)

58

133

164

-56.39%

-64.63%

Real Estate, Furniture & Equipment (Net)

719

725

752

-0.83%

-4.39%

Investment in Subsidiaries

70

73

61

-4.11%

14.75%

Deferred Taxes (Net)

1,070

1,211

812

-11.64%

31.77%

Other Assets

714

626

1,829

14.06%

-60.96%

Total Assets

245,046

247,230

232,436

-0.88%

5.43%

Traditional Funding

109,249

104,203

112,410

4.84%

-2.81%

          Demand Deposits

68,771

58,975

55,101

16.61%

24.81%

          Term Deposits

25,736

26,630

36,731

-3.36%

-29.93%

          Credit Instruments Issued

14,742

18,598

20,578

-20.73%

-28.36%

Bank Loans

17,842

25,181

16,877

-29.14%

5.72%

          Instant Loans Flexibility

-

590

-

-100.00%

0.00%

          Short Term

10,119

10,008

6,271

1.11%

61.36%

          Long Term

7,723

14,583

10,606

-47.04%

-27.18%

Assigned Values For Liquidity

-

-

-

0.00%

0.00%

Technical Reserves

560

711

1,222

-21.24%

-54.17%

Creditors For Repurchase / Resale Agreements

91,867

91,783

76,508

0.09%

20.08%

Collateral Sold

-

-

457

0.00%

-100.00%

Derivatives

117

232

-

-49.57%

100.00%

Valuation Ajustment For Financial Coverage Of Liabilities

-

-

-

0.00%

0.00%

Accounts Payables To Reinsurers And Re-Guarantee Companies

8

65

79

-87.69%

-89.87%

Outstanding Debt In Securitization Transactions

-

-

-

0.00%

0.00%

Other Payables

4,778

5,004

4,503

-4.52%

6.11%

Outstanding Subordinated Debt

2,865

2,860

3,559

0.17%

-19.50%

Deferred Taxes And Employee Profits Sharing (Net)

11

13

15

-15.38%

-26.67%

Deferred Credits And Advanced Collections

397

390

454

1.79%

-12.56%

Total Liabilities

227,694

230,442

216,084

-1.19%

5.37%

Paid-In Capital

4,213

4,213

4,231

0.00%

-0.43%

               Capital Stock

2,345

2,345

2,345

0.00%

0.00%

               Share Subscription Premiums 

1,868

1,868

1,886

0.00%

-0.95%

Subscribed Capital

13,137

12,574

12,121

4.48%

8.38%

               Capital Reserves

801

801

671

0.00%

19.37%

               Retained Earnings

11,570

8,629

10,515

34.08%

10.03%

               Surplus (deficit) from Mark-to-Market of Securities Available for Sale 

116

224

315

-48.21%

-63.17%

               Foreign currency translation adjustment

4

5

5

-20.00%

-20.00%

               Results from Non-monetary Assets

-24

-25

-3

-4.00%

700.00%

               Net Income with Participation of Subsidiaries

670

2,940

618

-77.21%

8.41%

 Not Holding Interest

2

1

-

100.00%

100.00%

Shareholders' Equity

17,352

16,788

16,352

3.36%

6.12%

* Millions of pesos






RELEVANT EVENTS

  • Since the first quarter of 2018, the change in provisions for loan losses is presented as a net figure in the line "Provisions for Loan Losses" in the Income Statement. The comparative figures of 2017 have been updated to reflect this change.

This change is due to the implementation in advance of a new rule issued by the local regulator with respect to provisions for loan losses, which will be mandatory in 2019 and may be adopted by the Mexican banking system with prior notice to the relevant authority.

  • GRUPO FINANCIERO INTERACCIONES, S.A.B. DE C.V. ("GFINTER") hereby informs that on October 25, 2017, GRUPO FINANCIERO BANORTE, S.A.B. DE C.V. ("GFNORTE"), entered into a master merger agreement pursuant to which GFINTER will merge into GFNORTE. The merger and the effects of the Master Merger Agreement were approved by the shareholders of both issuers, gathered at general extraordinary meetings on December 5, 2017. Approval by the financial and economic competition authorities (anti-trust) is still pending.
        
  • During 1Q18 GFI incurred in extraordinary expenses regarding the recent transaction with Banorte that amounted to Ps.148 million. These expenses reflect legal fees and integration costs.

DISCLAIMER

The financial information referring to 1Q18 disclosed in this earnings report is unaudited and subject to adjustments and modifications in the future.

Adjustments and modifications identified when audit work is performed on the Company's year-end financial statements could result in differences from this unaudited financial information.

Simplified Financial Information ("SFI") is presented as supporting material to facilitate the analysis and understanding of the financial reporting of Grupo Financiero Interacciones and do not replace the regulatory financial statements. 

1Q18 EARNINGS CONFERENCE CALL

Date:

Thursday, April 26, 2018



Time:

9:00 am CT (Mexico), 10:00 am ET

The conference call can be accessed by dialing +1-844-824-3835 (U.S.A. / Canada), 001-855-817-7630 (Mexico), or +1-412-317-5160 (Other International) and asking to be joined into the Grupo Financiero Interacciones call. The earnings release for the first quarter ending March 31, 2018 will be issued after the close of the U.S. market on Wednesday, April 25, 2018.

A simultaneous webcast of the conference call can be accessed by clicking the following link:  https://www.webcaster4.com/Webcast/Page/1449/25320

A telephonic replay of the conference call will be available after 12:00pm on April 27, 2018 on GFI's Investor Relations website at www.investorsinteracciones.com.

About Grupo Financiero Interacciones

Grupo Financiero Interacciones, S.A. de C.V. ("Grupo Financiero Interacciones" or "GFI"), is the largest specialized Mexican financial group with a business model focused on providing financing, risk management and financial advisory services mainly to the Mexican public sector, which includes federal, state and municipal governments, quasi-government entities and government suppliers. Grupo Financiero Interacciones conducts its business mainly through Banco Interacciones, its banking subsidiary, and through Interacciones Casa de Bolsa, its broker-dealer subsidiary, and Aseguradora Interacciones, its insurance company subsidiary. Grupo Financiero Interacciones is listed on the Bolsa Mexicana de Valores under the symbol "GFINTERO". For more information, please visit http://www.investorsinteracciones.com

This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties, and assumptions. By their very nature, forward-looking statements and such information involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved or will differ from actual results. A number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements. Should one or more of these factors or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Grupo Interacciones assumes no obligation to update or correct the information contained in this press release.

Contact:
Adolfo Werner Fritz Rubio, Corporate Development Officer & Head of Investor Relations
Telephone: +52-55-53-26-86-00 Ext: 6825
E-mail: iro@interacciones.com

[1] Operating Income excluding Extraordinary Items ("SFI") amounting to Ps.148 million in 1Q18 and Ps.136 million in 4Q17

[2] Source: El Economista

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/grupo-financiero-interacciones-reports-operating-income-up-36-21-yoy-and-10-70-qoq-to-ps993-million1-300636788.html

SOURCE Grupo Financiero Interacciones, S.A. de C.V.

View Comments and Join the Discussion!