Grupo Financiero Santander México, S.A.B. de C.V.€¦ · Santander México Continues to Report...
Transcript of Grupo Financiero Santander México, S.A.B. de C.V.€¦ · Santander México Continues to Report...
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First Quarter 2015
Grupo Financiero Santander
México, S.A.B. de C.V.
Investor Presentation
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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.
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GDP (% Growth)
Interest Rate (CETEs) Inflation (% Annual)
Source: GDP – INEGI
CETE, Inflation, Exchange Rate – BANXICO
Estimates – SANTANDER
3.83.43.33.22.92.6
2.21.6
2.01.4
4.0
2012 2016E 2Q14 1Q14 2013 4Q15E 3Q15E 2Q15E 1Q15E 4Q14 3Q14
4.5
3.53.0
3.94.54.5
2014 2013 2012 2011 2015E 2016E
3.53.2
4.14.03.6
3.8
2015E 2012 2011 2013 2014 2016E
Consistent Signs of Economic Recovery Supported by Solid Macro
Fundamentals
2.1 3.2
3
…Driven by Both Internal and External Factors in the Near and Long Term
Labour - Increase flexibility and formalization
Increase of public and private investment Infrastructure
Plan
US
Economy
Structural
Reforms
Drive stronger industrial growth
Fiscal – Increase tax revenues
Energy - Reduce industrial operating costs, strengthen public
finance, encourage private investment
Financial – Enhance transparency and foster competition
Support economic recovery Public
Expenditure
Near
Term
M
id-L
on
g T
erm
Telecom – Increase competition
4
24%
29%
35% 38%
32%
26%
21% 21% 18%
16% 14% 14% 13% 12% 12% 13% 15% 15% 16% 16% 17% 17%
18% 19%
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Low Banking Penetration1
An Expanding Middle-Class
Solid Macro Fundamentals are Complemented by an Under Banked
System with Favorable Demographics…
Source: CNBV, INEGI and IMF and HBS ”Mexico’s financial crisis of 1994-1995” from May 2012
Avg. pre-tequila crisis levels2: 31.5%
Notes: 1) Considers loans within the banking sector (CNBV)
2) Pre-tequila average takes into account 1991-1994 period
Loan-to-GDP Ratio
Source: CONAPO 2010
5
A Large, Young…
…and Join the Formal Sector …and Active Population, Expected to Expand…
…that Support Increasing Demand for Financial Products
Source: US Census Bureau
Population <60 years old
Source: CONAPO
Active Population per Sector
687376778190
UK US Germany Canada Japan Mexico
%
Ag
es
2010 2020 (E)
% % % %
25-60
43%
25-60
46%
Source: INEGI As of January 2015
73%
Formal
36.3 mm
27%
Informal
13.5 mm
+9.1mm
113.5mm 126.4mm
Total
Population
120.5mm
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Santander México: One of the Most Important Retail Banking Franchises in
Mexico, Consistently Generating Profits and Strong Loan Growth
Source: Company filings and CNBV (Mexican banking GAAP) figures for Groups as 4T14
Notes: 1 Comprised by: 1,081 branches + 18 SME offices + 6 SME branches + 119 cash desks + 3 select offices + 44 select units + 51 select boxes + 24 brokerage house branches
2 Net income in 2011, 2012 and 2013 include the following non-recurring gains: 2011 = 4,348 Insurance business sale to Zurich
2012 = 1,731 Sale and leaseback of branches and 2013 = 4,929 Asset managemnet divestiture and change in EPS methodology
CAGR takes into account recurring gains
Santander México Ranking
MX$930.4 billion in assets
MX$441.5 billion in loans
MX$511.5 billion in deposits
MX$105.1 billion in equity
1,346 branches1
11.7 million customers
#4
#4
#3
#4
#4
Retail
Banking
Corporate
Activities
Wholesale
Banking
Retail Banking Franchise
Distribution by profit before taxes
Net Income2
14,01413,85111,827
2013
20,876
2012
17,822
2011
18,683
2010 2009 2014
394,932350,683
313,672227,556207,737
465,541
2013 2012 2011 2010 2009 2014
Total Loans
77%
14%
9%
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Our Successful Track Record is Driven by a Focused Strategy that
Targets the Growing Middle Class and Profitable Affluent Segments…
Number of customers
Classic
7.0 million
Private Banking
14,290
Premier
333,623
Select
242,760
Preferred
4.1 million
Hig
h-I
nco
me
Mid
-In
co
me
12% 11%
36%
29%
49%
16%
13%
15%
34%
36%
21%
17%
4%
5%
GOI* Deposits Loans
2% A
B
C
D
E
Individuals Segmentation Contribution
Source: Company data
As of March, 2015
Notes: *Gross Operating Income
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…with a Comprehensive and Innovative Product Offering …
A full range of product
offerings through a
strategic alliance with
Zurich
Auto insurance
platform offering 12 top
auto insurance
companies services
Top 3 player in Credit
Cards
Products that meet clients’
needs and provide access
to promotions
Introducing innovative
products
Fast assessment processes
New products to increasingly
penetrate the open market
2nd largest market player
Focus on mid and high
income residential market
Source: Company data
As of March, 2015
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CRM
Customer
Management Tool
Contact
Centers
ATMs Branches
Brokers
1.6 million customers with
pre-authorized credit offers
41% mortgages
41% consumer loans
42% credit cards
28% insurance policies
Main sales and service channel
44% consumer loans
58% credit cards
59% mortgages
52% insurance policies
15% consumer loans
20% insurance policies
Source: Company data
As of 1Q15
… and a Superior Multi-Channel Distribution Platform Supported by a
Unique CRM System
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High Potential, Profitable SMEs and Middle-Market Customers are
Targeted and Serviced…
Number of customers
Source: Company data
As of March, 2015
Notes: *Gross Operating Income
Commercial Segmentation Contribution
Number of customers
SMEs
318,829
D
Middle-market
34,560
Corporates
Institutions
20,141
23%
13%
39%
44%
35%
7%
32%
10%
26%20%
14%
37%
GOI1 Deposits Loans
A
B
C
D
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…through a Specialized Network Supported by Our CRM System
Providing a Wide Range of Products
Specialized
Network 24 Offices
Nationwide
Dedicated
Executives
Wide variety of lending
Highly active participation in
NAFIN programs
Driven by pre-authorized
models
Comprehensive
investment products
Cash management oriented
Payroll services
CRM
Source: Company data
As of March, 2015
Launched comprehensive
program for SMEs
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Our Retail Business is Complemented by Well-Regarded, Client-Oriented
and Profitable Wholesale Banking Operation
“Best Trade Bank in Mexico” – Trade
Finance Magazine in 2013
“Best Trade Bank in Mexico” – Trade
Finance Magazine in 2014
"Best Infrastucture Bank in Mexico
2014" by Latin Finance
“Best Trade Finance Bank Award” –
Global Finance Magazine in 2014
“Best Trade Finance Provider in
Mexico” – Global Finance Magazine in
2015
…Highly Regarded and Award-Winning Revenue Mainly Driven by Recurring
Business…
Total: MX$14,018 mm
Market-Driven
Business
Net Interest
Margin
Fee-Driven
Business
Source: Company data
As of 1T15
71%
23%
6%
13
Our Proven Strategy is Reflected in Strong Market Shares across Core
Products…
#3
Individual Loans
Commercial Loans
Leader in SMEs financing by Ministry of
Finance
Leadership position in the high potential SME
market
Offer differentiated products to increase
transactionality
#2
28.4
19.1 15.8 13.9
12.0
4.6 0.4
Banorte BBVA
Bancomer Scotiabank Banamex Inbursa HSBC
Mo
rtg
ag
es
Co
ns
um
er1
Co
mm
erc
ial2
3.65.05.4
9.610.8
24.128.3
Azteca HSBC
Banorte Banamex BBVA
Bancomer
4.17.9
10.611.411.915.5
21.0
Banamex BBVA
Bancomer HSBC Scotiabank Inbursa Banorte
Source: CNBV data as of March 2015
Notes: 1) Includes credit cards, payroll and other personal loans
2) Includes middle-market, smes and corporates
#2
Scotiabank
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Source: Company filings CNBV GAAP
Notes: 1) Includes credit cards, payroll, personal and auto loans
2) Annualized opex (1Q15x4) divided by Annualized income before opex and allowances (1Q15x4)
3) Annualized net income (1Q15x4) divided by average equity (4Q14;1Q15)
Focus on efficiency and profitability
Expenses annual growth +8.3%
Efficiency ratio3 44.8%
ROAE4 12.0%
Total loans up 16%, above market levels Mortgages +15%
SMEs +24%
Middle-market +15%
Consumer1 +11%
Ongoing prudent risk management
NPL ratio 3.68%
Cost of risk 3.13%
Closed agreement to acquire a Ps.3,179 million consumer loan
portfolio from Scotiabank México; effective as of April 2015
Deposit growth of 14% Individual demand deposits +23%
Santander México Continues to Report Strong Loan Growth Above Market
Rates
Opened 194 branches since 4Q12, expansion plan expected to
finalize on 2Q15.
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Source: Company filings CNBV GAAP
Total Loans
+16%
+16%
474,738 +2%
+16%
1Q15 4Q14
465,541
3Q14
441,475
2Q14
440,675
1Q14
409,349 Retail
Corporates
3Q12 1Q15
Santander México Total Loans up 16% YoY With Solid Growth Across All
Segments
Middle-Market 23%
Corporates 14%
Gov&FinEnt 12%
SMEs 12%
Mortgages 23%
Credit Cards 9%
Consumer 7%
Middle-Market
23%
Corporates 20%
Gov&FinEnt 10%
SMEs 9%
Mortgages 20%
Credit Cards 10%
Consumer 8%
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Source: Company filings CNBV GAAP
Notes: 1) Includes personal, payroll and auto loans
… and Continued Growth in Commercial Loans,
Driven by a Strong Performance in Middle-Market
and SMEs
+15%
1Q15
110,149
1Q14
95,865
+4%
1Q15
42,038
1Q14
40,506
+20%
1Q15
35,475
1Q14
29,458
Personal
Payroll
Individual Loans
Commercial Loans
Mo
rtg
ag
es
Cre
dit
Ca
rds
Co
ns
um
er1
Mid
dle
-ma
rket
Co
rpo
rate
s
SM
Es
Go
v &
Fin
En
t
187,662 165,829 1Q14 1Q15 +13%
287,076 243,520 1Q14 1Q15 +18%
Individual Loans Up 13% YoY, Reflecting Growth in Consumer Loans and
Mortagages and Commercial Loans Achieving Growth Across All Segments
+24%
1Q15
56,400
1Q14
45,322
+15%
1Q15
109,502
1Q14
95,576
+16%
1Q15
65,134
1Q14
56,006
+20%
1Q15
56,040
1Q14
46,616
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Total Deposits
Source: Company filings CNBV GAAP
Notes: 1) Loans net of allowance divided by total deposits (Demand + Term)
3Q14
438,143
65%
35%
2Q14
425,108
61%
39%
1Q14
401,081
64%
36%
0% 459,130
+14%
Demand
Term
1Q15
64%
36%
4Q14
459,624
64%
36%
Individuals, SMEs and mid-market remain the main contributors to demand deposit growth – up
23%, 21% and 23%, respectively.
Optimizing cost of funding
Continue to drive growth of Select client base
New branches contribute to deposit growth
Deposit Base up 14% YoY; Healthy Mix Contributes to Funding Costs
1Q15
99.6%
4Q14
97.6%
3Q14
97.0%
2Q14
99.8%
1Q14
98.1%
Net Loans to Deposits1
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Net Interest Income Up for the Fourth Consecutive Quarter: +1.3% QoQ and
+10.4% YoY
Gross Operating Income2
Net Commissions and Fees Net Interest Income and NIM1
Source: Company filings CNBV GAAP
Notes: 1) Annualized financial margin (1Q15x4) divided by daily average interest earnings assets (1Q15)
2) Gross Operating Income does not include Other Income
71%
23%
6% Net Interest Income
Net Commissions andFees
Trading Gains
9,9259,7999,524
9,2628,993
5.05 4.87
1.3%
1Q15 4Q14
10.4%
3Q14 1Q14 2Q14
3,2983,3643,3393,2913,423
1Q14 3Q14 4Q14 2Q14 1Q15
-2.0%
-3.7%
14,01813,55813,51413,91112,969
1Q15 3Q14 4Q14
3.4%
8.1%
2Q14 1Q14
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Cost of Risk1 Loan Loss Reserves (LLR)
Source: Company filings CNBV GAAP
Notes: 1) Annualized loan loss reserves (1Q15x4) divided by average loans (4Q14,1Q15)
* Commercial loans include: mid-market, smes, corporates, financial institutios and government
* Commercial NPLs reflect the exposure to homebuilders
NPLs 1Q14 4Q14 1Q15 Var YoY (bps) Var QoQ (bps)
Consumer 4.14% 4.19% 3.61% -53 -57
Credit Card 3.20% 4.12% 3.79% 59 -33
Mortgages 4.30% 5.07% 5.00% 69 -7
Commercial* 2.84% 3.14% 3.19% 35 5
SMEs 2.50% 2.99% 2.75% 25 -24
Total Loans 3.40% 3.75% 3.68% 27 -7
Cost of Risk Down 19 bps QoQ with Improving NPLs and Coverage Ratios
3,6833,334
3,8143,6723,469
1Q15 4Q14 3Q14 2Q14
10.5%
6.2%
1Q14
-19bps
-32bps
1Q15
3.13%
4Q14
3.32%
3Q14
3.49%
2Q14
3.42%
1Q14
3.45%
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Source: Company filings CNBV GAAP
Notes: 1) Annualized opex (1Q15x4) divided by annualized income before opex (net of allowances) (1Q15x4)
Expenses Breakdown Administrative & Promotional Expenses
6,3896,0595,9385,9215,902
8.3%
5.4%
1Q15 4Q14 3Q14 2Q14 1Q14
Efficiency1
+0.5pp
1Q15
44.8%
4Q14
43.0%
3Q14
43.0%
2Q14
42.9%
1Q14
44.3%
Effective Expense Management Offset by Impact from Deposit Insurance
Fee and Branch Expansion Plan
46%
38%
8%
8%
Personnel
Admin expenses
IPAB
Dep and amort.
Var YoY
1Q14 4Q14 1Q15 Var $$ Var %
Personnel 2,587 2,886 2,916 329 12.7%
Admin expenses 2,454 2,256 2,439 -15 -0.6%
IPAB 436 508 535 99 22.7%
Dep and amort. 425 409 499 74 17.4%
Admin & prom expenses 5,902 6,059 6,389 487 8.3%
Admin & prom expenses (ex IPAB) 5,466 5,551 5,854 388 7.1%
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Source: Company filings CNBV GAAP
Notes: 1) Annualized net income (1Q15x4) divided by average equity (4Q14,1Q15)
ROAE1
Higher Effective Tax Rate Offsets Strong Loan Volume Growth and Impacts
Net Income
12.0% -2.0 pp
-1.5 pp
1Q15 4Q14
14.0%
3Q14
13.6%
2Q14
14.1%
1Q14
13.5%
Effective Tax Rate
Net Income
3,215
3,824
3,2443,687
3,259
-1.4%
-15.9%
1Q15 4Q14 3Q14 2Q14 1Q14
23.5%
+4.5pp
+5.5pp
1Q15 4Q14
19.0%
3Q14
19.4%
2Q14
20.4%
1Q14
18.0%
Profit before Taxes
4,2044,719
4,0264,636
3,975
+5.8%
-10.9%
1Q15 4Q14 3Q14 2Q14 1Q14
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Metrics
Total Loans
• Consumer
• Mortgages
• SMEs
Total Deposits
2015
Target
Δ 13%-15%
Δ 12%-15%
Δ 10%-12%
Δ 22%-25%
Δ 10%-12%
Based on Our Performance To-Date and Expectations of Continued
Economic Recovery We Maintain Guidance for 2015
Pre-tax Earnings Growth
Cost of Risk
Expenses
Tax Rate
Δ 15%-20%
3.4%-3.6%
Δ 6%-8%*
23%-25%
* Does not include the deposit insurance fee (or IPAB) and the reversal from the employee profit sharing (EPS) future payments
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Questions and Answers