UNIFIN · features, which help Unifin to significantly outgrow the Mexican economy 27+ +16% Market...

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UNIFIN 2Q20 Results 1

Transcript of UNIFIN · features, which help Unifin to significantly outgrow the Mexican economy 27+ +16% Market...

Page 1: UNIFIN · features, which help Unifin to significantly outgrow the Mexican economy 27+ +16% Market Share(1) 4 Pillars That Underpin Our Successful Story Years Unifin’s Total Portfolio

UNIFIN 2Q20 Results

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Agenda

1 Business Update and Current Initiatives

3 Financial Highlights

2 COVID-19 Update

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Business Update and

Current Initiatives

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$1,154 $1,669 $1,935 $2,664 $3,903 $6,155 $9,297 $11,488

$18,855

$30,142

$41,672 $45,149

$58,611 $63,826

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20

2.3% 1.1%

(5.3%)

5.1% 3.7%

3.6%

1.4% 2.9%

3.3%

2.6% 2.1% 2.2%

(0.3%)(1.4%)

Unifin: a Leading NBFI

Almost three decades of a unique

business model which was built based

on client-centricity and financial

education

Self-reinforcing ecosystem

complemented by a superior product

platform covering huge market needs

Thorough understanding of the under-

penetrated Mexican financial system

with an enormous growth opportunity

Adaptability and resiliency as core DNA

features, which help Unifin to

significantly outgrow the Mexican

economy

27+

+16% Market

Share(1)

4 Pillars That Underpin Our Successful Story

Years

Unifin’s Total Portfolio vs. Mexico’s GDP Growth Evolution

Total Portfolio (MXN$ mm) – CAGR 2017-1H20: 33.2%

Mexico GDP Growth (%) – CAGR 2017-1H20: 1.7%

Unifin’s CAGR above Mexico GDP by ~31.5%

Sound Measures Taking Unifin in the Right Direction

Despite current COVID-19

complications, Unifin’s credit ratings

have been ratified

Unifin has successfully renewed

MXN$12 bn of outstanding debt to

cover its working capital requirements

Sources: Bloomberg. Note: (1) SME loan portfolio market share as of May 2020.

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www.unifin.com.mx | 5 Sources: Base Point of Interest, Pitney Bowes 2019

SME Addressable Market by Company Size

UNIFIN’s target market: 239,000 SMEs

Revenues of MXN$10 to $1,000 million, 10 – 500 employees, solid credit history

SMEs account for 9/10 businesses, 50% of Mexico’s GDP and 2/3 of the job market

Our Distribution Channels

Unifin’s Target Market

74%

86%

26%

14%

Latam

Average

Mexico

Demand not served Current Credit Offer

Highly Underserved SME Financing Market

(MXN$ mm; % of total SME addressable market) (%)

92%

4% 3% 1%

< $100

$100 - $200

$201 - $500

> $500

B2B Prospecting

Model

Strong Sales Force

of ~150 Agents Digital Platform

Structured into Relationship Managers and Specialized

Product Executives

SME database segmented by industry, geography, headcount, turnover

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Total Addressable Market by Industry Distribution

(% of addressable SME market)

Commerce

29%

Services

22% Construction

11%

Manufacturing

8%

Transportation

4%

Other

26%

Healthcare Products

Retail

Agriculture Media

Retail and Wholesale

E-commerce Financial and Insurance Services

Well-identified Opportunities in Key Sectors

Significant Presence in States with Solid Growth Potential

(2020E State GDP Growth vs. Mexico 2020E GDP Growth)

Unifin’s Target Market (Cont’d)

Significantly Above

Above

Below

Significantly Below

There are significant

imminent opportunities

in diverse industries

across Mexico’s

economy

19 states are expected

to recover at a faster

rate than the country

average. Unifin holds

presence in 10/19 of

these markets

Significantly Above

Above

Below

Significantly Below

Unifin Presence

~25% of Unifin’s total

loans portfolio are

exposed to the

USMCA’s supply chain,

expected to recover

faster than the national

average

Sources: Base Point of Interest, Pitney Bowes 2019

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Accelerating Finance for SMEs

The expanded product portfolio strives to serve our clients’ specific needs while generating steady returns with diversified risk

Under a single product sale, there is a 5% - 20% probability of finalizing a sale to a new customer

A diverse product portfolio has a higher potential of cross- / up-selling, with the probability increasing to 60% - 70% for existing customers

o Our extended lineup and complementary services, including Uniclick, seek to take advantage of these cross- / up-sale opportunities

Unifin benefits from a decreasing customer acquisition cost and an increasing addressable target market due to the inclusion of

its expanded lineup of complementary services

Our Client-Centric Mission

Estimated

Market

Size

(MXN$ bn)

Market

share

(%)

Portfolio

yield

(%)

Product Lineup and Complementary Services Portfolio Expansion

Leasing Factoring Auto Loans

SOS Short-Term Loans

Unsecured Loans Fleet Services

~$390 ~$220 ~$12 ~$78 ~$8 ~$70

~27% ~9% ~17% < 1% < 1% ~1%

~19% ~17% > 70% ~29% ~25%

Ins. Brokerage

~$700

< 1%(1)

~65 –

70%(2) ~17%

Medium-Term Secured Loans

~$474

~1%

~20%

Today Future

Notes: (1) Based on GWP sold. Unifin does not hold the underwriting risk of the insurance premiums sold via its brokerage business. (2) EBITDA margin.

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Uniclick’s Key Takeaways

Smooth / efficient online

credit authorization process

(< 5 minutes)

Proprietary big data and

artificial intelligence

capabilities

Backed by UNIFIN’s

27 years of experience

Specialized debt collection

team

Unique powerful technological platform

built to adapt, strengthening relationships

with clients

Nationwide digital presence

with physical branches in

18 different states

Improve Unifin’s

coverage providing

financial solutions for

the vast majority of

unserved SMEs in

Mexico

Reduce client

acquisition cost and

enable upselling

opportunities

Contribute to UNIFIN’s

one-stop shop strategy

with complementary

products

A new way to reach our

clients more efficiently,

leveraging our

technology

Uniclick’s client acquisition cost is 8.3x lower than Unifin's overall acquisition cost

Rewriting the Rules and Creating Powerful New Ways to Engage with the Customer at a Lower Cost

Snapshot

Market underserved by

banks but well-known by

Unifin, which we

leverage for cross-

selling opportunities

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Premier Alliances Reinforce Our Mission-Critical Focus

Symbiotic

Ecosystem of

Partnerships and

Alliances

Strategic

Partnership

Digital Accelerator:

Unifin’s unique digital accelerator in Mexico includes tools for SMEs to improve profitability

Propel Current

Capabilities

Increase Data

Flow

Acquire New

Clients

Differentiated Partnership with Google

Become the leading platform that offers innovative

digital financial solutions and business services to

the ever-dynamic SME segment

Propel Uniclick’s digital platform growth and enable

a provision of pinpointed financial solutions for the

lower SME mass market

Contribute in the development of digital marketing

and artificial intelligence capabilities in order to

reach new clients at a reduced acquisition cost and

to build stronger relationships (cross-selling and

upselling)

Delivery of educational programs to UNIFIN’s client

base, accelerating their digital transformation and

enabling digital presence within their markets

Provide Uniclick’s clients with real-time feedback of

their online business, based on geographic

location, target market and product specifications

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COVID-19 Update

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COVID-19: Our Priorities

Keeping our People

Safe

Same Mission

Stronger than Ever:

Support our

Customers and the

Mexican Economy

Commitment with our

Shareholders:

Financial Discipline

COVID-19 insurance coverage for all employees and family members

Symptom monitoring, online medical consultations and continuous

testing

Psychological assistance to ensure well being

Guarantee proper home office

Offices conditioned for social distancing practices

Strong balance sheet: increase loan loss reserve, no FX risk

Cash flow preservation: expense reduction

Underwriting criteria for new origination

Client Support Plan: granting 3 – 4 months portfolio extensions to our

vulnerable clients (12.7% of our total portfolio)

Strategic alliances: provide our clients with the necessary digital tools

to bridge towards recovery

Daily Management Committees: maintain responsiveness and agility

during uncertain times

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COVID-19: Impact on Unifin

Client Support Plan Breakdown

Product

Clients

Included

(#)

% of Total

Clients

(%)

Outstanding

Balance

(MXN$ mm)

% of Total

Portfolio

(%)

Differed

Payments

(MXN$ mm)

Leasing 784 10.2% $7,124 11.2% $995

Auto Loans 314 4.0% $503 0.8% $12

Factoring 26 0.3% $353 0.6% $120

Uniclick 81 1.1% $82 0.1% $78

Total 1,206 15.5% $8,089 12.7% $1,205

59% 29%

3% 10%

87%

8% 4% 1%

Leasing Auto Loans Factoring Uniclick

Breakdown by Product (% of Clients Included)

Breakdown by Product (% of Outstanding Balance)

Breakdown by Client Industry (% of Clients Included)

Unifin Clients’ Breakdown by State (% of Clients Included)

Mexico City 19.4%

State of Mexico 13.1%

Querétaro 8.1%

Guanajuato 6.9%

Nuevo León 6.1%

Top States by % of Total

We maintain our entrepreneurial and long-term vision in this challenging environment, with the ambition to serve our clients and

create value for our shareholders

53.6%

0.6%

3.7%

8.5%

16.6%

18.6%

21.5%

30.2%

Financial Services

Agriculture

Construction

Commerce

Services

Manufacturing

Transport

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Financial Highlights

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98.8%

0.3% 0.2% 0.7%

Portfolio and NPLs

Leasing, 74.7%

Factoring, 3.6%

Auto loans, 4.6%

Structured leasing &

others, 17.1%

Total Portfolio Composition

(%)

$45,149

$58,611 $50,386

$63,826

3.1%

4.1% 3.8%

5.7%

2018 2019 2Q19 2Q20

Total Portfolio NPL Ratio

NPL as % of Total Portfolio

(MXN$ mm; %)

NPL and NPL Coverage Ratio

Leasing Factoring Total NPL: 10.9% Total NPL: 6.8%

79.8%

5.9% 7.5% 6.8%

Leasing

89.1%

0.6% 1.9% 8.4%

0-30 31-60 61-90 > 90

43.5%

Loan Loss Reserves

100.0%

0-30 31-60 61-90 > 90 Loan Loss Reserves

Auto & Other Loans

Total NPL: 1.2%

100.0%

0-30 31-60 61-90 > 90 Loan Loss Reserves

(%)

1Q20 NPL

at 4.3%

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Reserves, Capitalization and Leverage

3.8

5.5

3.5

4.9 4.5

2Q19 2Q20

Financial Financial (ex. MTM) Financial Pro Forma

Capitalization Leverage

(x) (%)

Reserves Breakdown (MXN$ mm)

% Recovery Est. Recovery value NPL +90 Gain (loss) Potential charge-off

100.0% $2,918 $3,243 $(324) $1,088

90.0% $2,627 $3,243 $(616) $796

80.0% $2,335 $3,243 $(908) $504

75.0% $2,189 $3,243 $(1,054) $358

62.7% $1,831 $3,243 $(1,412) $0

Reserve $(1,412)

19.7

18.0

21.4

20.4

21.4

2Q19 2Q20

Accounting Adjusted (ex. MTM) Pro Forma

*

*Pro forma considering MXN 2.5 bn of capital increase related to the rights offering.

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Balance Sheet Overview

70.5% 79.9%

7.6% 1.6%

21.9% 18.5%

2Q19 2Q20

Fixed Cap @ 7.5 Variable

25.2%

74.8%

Secured Unsecured

70.8%

29.2%

USD$ MXN$

Rates MXN$ vs. USD Secured vs. Unsecured

(%)

(%) (%)

26.4%

12.3% 10.1%

13.9%

37.3%

Financial Debt

46.2%

26.5%

16.5%

7.6% 3.2%

0-12 months 13-24 months 25-36 months 37-48 months 49-80 months

Total Portfolio

Maturity Profile

57.1% 46.4% 61.2% 182.9% 1,165.6% Debt / Portfolio

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Balance Sheet Overview (Cont’d)

9.23% 8.92%

10.72% 9.93% 9.97%

Securitization BankingLines

InternationalBonds

Total Total(inc. Perpetual Bond)*

Weighted Average Cost of Funding

(%)

(MXN$ mm) 6M20 % of Total 6M19 % of Total Var.% Average maturity

(Months)

International Notes $41,119 55.3% $21,411 39.7% 92.0% 60

Revolving lines $8,115 10.9% 7,951 14.7% 2.1% 7

Term loans $12,587 16.9% $7,804 14.5% 61.3% 18

Securitizations $12,573 16.9% $16,782 31.1% (25.1%) 36

Total Financial Liabilities $74,394 100.0% $53,949 100.0% 37.9% 43

Financial Liabilities

Perpetual Notes have an interest rate of 10.64%

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$3,215

$3,817

$915 $1,068 7.8% 7.4%

7.9% 7.1%

2018 2019 2Q19 2Q20

NIM

Var. 16.6% Var. 18.7%

(MXN$ mm; %)

$1,092 $1,377

$352 $372 12.5% 12.8%

13.5% 13.3%

2018 2019 2Q19 2Q20

Admin. Expenses Opex

Administrative Expenses and OpEx as % of Revenue

(MXN$ mm; %)

Var. 5.5% Var. 26.1%

22.2

17.1

$9,739

$11,161

2Q19 2Q20

ROAE Total Equity

42.5

29.0 $5,208

$6,630

2Q19 2Q20

ROAE

(MXN$ mm; %)

Ex. Perpetual

3.4

2.2

$66,659

$89,017

2Q19 2Q20

ROAA Total Assets

ROAA

(MXN$ mm; %)

NIM, Expenses and Profitability

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UNIFIN 2Q20 Results

19

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Appendix

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` ` ` ` `

Uniclick’s Product Portfolio

Product Lineup and Complementary Services Portfolio Expansion Today Future

PM PFAE

Product

Description

Short-term

loans to

companies

$200k to

$2.5 mm

Facility

Size (MXN$)

Interest

Rate

Tenor

Starting

at 30%

24

months

Short-term

loans to sole

proprietorship

$200k to

$500k

Starting

at 30%

24

months

Short-term

loans

$200k to

$10.0 mm

Starting

at 23%

24 to 48

months

Mortgage

credits

Corporate

credit

cards

Revolving

consumer

financing

Digital

factoring

platform

Business

mgmt.

software

-- -- -- -- --

-- -- -- -- --

-- -- -- -- --

New products under development

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Our Leadership: Key Management

Sergio

Camacho CEO

• Mr. Camacho is in charge of Unifin’s top management

• Sergio is responsible for managing the key decisions to take Unifin towards its

mission and vision

24 4

• Mr. Cancino has a long track record in financial planning, accounting and taxation

• Sergio has been instrumental in building the strength of the finance and

accounting division

37 5

Jose Ramon

Diaz Chief Leasing Officer

• Mr. Diaz has led and implemented innovative changes in the leasing business for

the last 5 years

• Jose Ramón supervises that all leasing transactions follow high-quality execution

processes for our clients

17 2

Juan Jose del

Cueto Chief Operating

Officer

• Mr. Cueto is in charge of implementing, developing and directing new

businesses

• Juan José is also leads internal and administrative control processes

39 13

Guillermo

Garcia Legal Counsel

• Mr. Garcia is in charge of overseeing all legal matters within Unifin

• Guillermo has helped to supervise and coordinate financial transactions

such as senior notes and securitizations

21 3

Federico

Castillo Chief Credit Officer

• Mr. Castillo is in charge of credit risk control of the Company

• Federico has 45 years of experience in the financial markets. He has been

key in the improvement of control and analysis of all of our market operations 45 1

Emilio Lang Chief Customer Service Officer

• Mr. Lang is in charge of our innovative Customer Service Team

• Emilio leads the development of strategies to continuously improve customer

experience

26 1

Sergio

Cancino Chief Financial Officer

Total Experience At Unifin

Claudia Ortega Chief Business

Innovation

• Mrs. Ortega is responsible for the business innovation team

• Claudia oversees business optimization through innovative strategies and

data driven analysis

32 2

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Environmental, Social & Governance

ESG Highlights

MXN$20 mm

In charitable giving

programs per year

+180,000

Impacted kids in diverse

situations, such as

childhood cancer, education

and orphans

150

Volunteers

Involved in ESG projects in

the last year

+190,000

Families helped through

community engagement

programs in the last year

ESG Model

Responsible

Financial Solutions to

SMEs

Trusted and

Sustainable Partner

Provide Added Value

Services to Society

Highly-transparent

Reporting

Focused on Business

Ethics Practice

Implement Solutions

Through Employee

Engagement

Influence Community

Positively for Unifin’s

Stakeholders

Diversity and Quality

of Life for Employees

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Income Statement and Balance Sheet

Financial Metrics 2Q20 2Q19 Var.% 6M20 6M19 Var.%

Interest income 2,804 2,611 7.4% 5,730 5,011 14.4%

Interest cost 1,736 1,696 2.4% 3,538 3,225 9.7%

Financial margin 1,068 915 16.6% 2,192 1,786 22.8%

Financial margin (as % of income) 38.1% 35.0% 38.3% 35.6%

Loan loss reserves 628 30 1993.2% 755 89 747.3%

Adjusted financial margin 440 885 (50.3%) 1,438 1,697 (15.3%)

Admin. expenses 372 352 5.5% 744 677 10.0%

Operating income 8 490 (98.3%) 579 930 (37.8%)

Operating income margin 0.3% 18.8% 10.1% 18.6%

Comprehensive financing result 307 47 547.0% 252 185 35.6%

Net income before tax 323 547 (40.8%) 844 1,135 (25.6%)

Net income 261 453 (42.3%) 674 926 (27.3%)

Net income margin 9.3% 17.3% 11.8% 18.5%

Operating Metrics

Total portfolio 63,826 50,386 26.7%

Leasing 47,717 38,557 23.8%

Factoring 2,282 2,863 (20.3%)

Auto loans 2,927 2,851 2.6%

Structured leasing & other loans 10,900 6,115 78.3%

NPL ratio 5.7% 3.8%

Key Financial Indicators

Net Interest Margin (NIM) 7.1% 7.9%

Efficiency ratio 40.4% 42.4%

ROAA 2.2% 3.4%

ROAE 17.1% 22.2%

ROAE (excl. Perpetual Bond) 29.0% 42.5%

Capitalization (equity / net loan portfolio) 18.0% 19.7%

Capitalization (excl. MTM) 20.4% 21.4%

Equity / total assets 12.5% 14.6%

Financial leverage (excl. ABS) 5.5x 3.8x

Financial leverage (excl. ABS and MTM) 4.9x 3.5x

Total leverage (excl. ABS) 5.8x 4.1x

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Contact:

T: +52 55 4162 8270

[email protected]

About Unifin UNIFIN is a non-regulated Mexican leasing company, operating as a non-banking financial services company, specializing in three main business lines: operating leasing, factoring and auto and other lending. Through UNIFIN’s leasing business line, its core business line, the Company offers operating leases for all types of equipment and machinery, various types of transportation vehicles (including cars, trucks, helicopters, airplanes and other vessels) and other assets in a variety of industries. Through its factoring business line, UNIFIN provides liquidity and financing solutions to its customers by purchasing or discounting accounts receivables and by providing vendor financing. UNIFIN’s auto loans and other lending business line is focused on financing the acquisition of new and used vehicles, while the other lending portion of this business line includes financing working capital needs and the acquisition of other capital assets.

Disclaimer This document may contain certain forward-looking statements. These statements are non-historical facts, and they are based on the current vision of the Management of Unifin Financiera, S.A.B. de C.V., for future economic circumstances, the conditions of the industry, the performance of the Company and its financial results. The terms "anticipated", "believe", "estimate", "expect", "plan" and other similar terms related to the Company, are solely intended to identify estimates or predictions. The statements relating to the declaration or the payment of dividends, the implementation of the main operational and financial strategies and plans of investment of equity, the direction of future operations and the factors or trends that affect the financial condition, the liquidity or the operating results of the Company are examples of such statements. Such statements reflect the current expectations of the management and are subject to various risks and uncertainties. There is no guarantee that the expected events, trends or results will occur. The statements are based on several suppositions and factors, including economic general conditions and market conditions, industry conditions and various factors of operation. Any change in such suppositions or factors may cause the actual results to differ from expectations.