Grupo Financiero Santander Mexico Reports Second Quarter 2014 Loan Portfolio Up 20.6% YoY and Net Income of Ps.3,687 Million - Tucson News Now

Grupo Financiero Santander Mexico Reports Second Quarter 2014 Loan Portfolio Up 20.6% YoY and Net Income of Ps.3,687 Million

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SOURCE Grupo Financiero Santander Mexico, S.A.B. de C.V.

- Loan portfolio growth driven by YoY increases of 26.8% in SMEs, 8.3% in credit cards, 11.0% in consumer loans, 32.0% in mortgages and 22.6% in middle-market

- Continued prudent risk management reflected in a NPL ratio of 3.3% (1.9% excluding homebuilders and Santander Vivienda portfolio) and in a cost of risk of 3.4%

- Ongoing emphasis on operating efficiency resulted in an improved efficiency ratio of 42.9%, despite higher branch expansion expenses

MEXICO CITY, July 31, 2014 /PRNewswire/ -- Grupo Financiero Santander Mexico, S.A.B. de C.V., (NYSE: BSMX; BMV: SANMEX), ("Santander Mexico"), one of the leading financial groups in the Mexican financial system, today announced financial results for the three-month period ending June 30, 2014.

Reported net income for the quarter was Ps.3,687 million, representing a YoY decrease of 11.0% and a QoQ increase of 13.1%. Comparable 2Q13 results exclude the following items: i) the impact on 2Q13 results of a Ps.330 million provision in connection with Santander Mexico's exposure to homebuilders and; ii) a Ps.178 million after-tax price adjustment related to the sale of the insurance business to Zurich. Comparable net income in 2Q14 decreased 19.0% YoY.

Marcos Martinez, Executive President and CEO, commented, "We are encouraged by the strong loan growth achieved this quarter, up 21% YoY, more than doubling Mexican financial system growth during the period and demonstrating our leverage to the incipient economic recovery. Most importantly, our core products, mainly SMEs and mortgages, continued to report an outstanding performance growing well above market, while consumer loans, particularly credit cards, picked up slightly. We also saw a very good performance in middle market loans."

"SMEs loans reported one of the strongest growth rates among our core products, up 27% YoY above market growth as we continue to further strengthen our leadership position in this attractive market. This was further supported by a continued strong performance in middle market loans, up 23% reaching the Ps.100 billion loan milestone and now ranking #2 in this segment. Mortgages remain strong growing 32% YoY beating market growth and supporting our #2 position in this segment. Consumer loans rose 11% during the period, in line with market trends, despite the sale of a portion of a payroll loan portfolio last quarter. Credit card loans increased 8%, reflecting still lagging consumer demand, but outpaced market growth rates.  We grew our loan portfolio while maintaining prudent risk management, with total NPLs of 3.33% this quarter. Excluding the homebuilders and the ING acquisition, total NPLs stood at 1.92%, a 12 basis points sequential improvement."

"Furthermore, we reported a 140 basis points sequential improvement in efficiency, down to 42.9% this quarter although still temporarily affected by the 112 new branches that are not yet fully contributing to results. Net interest income showed a solid performance, up 3% sequentially, driven by strong growth in the loan portfolio. In summary, we continue to build on our focused business strategy delivering a 13% sequential increase in net income."

Mr. Martinez concluded, "Looking ahead, we see significant growth opportunities in our core markets, particularly given our expectation for accelerated GDP growth in the second half of the year, building on the incipient economic recovery observed this quarter."


Grupo Financiero Santander Mexico





Highlights






2Q14

1Q14

2Q13

% YoY

Income Statement Data





Net interest income

9,262

8,993

8,899

4.1

Fee and commission, net

3,291

3,423

3,052

7.8

Core revenues

12,553

12,416

11,951

5.0

Provisions for loan losses

3,672

3,469

3,348

9.7

Administrative and promotional expenses

5,921

5,902

5,314

11.4

Net income

3,687

3,259

4,143

(11.0)

Net income per share1

1.03

0.48

1.32

(22.0)

Balance Sheet Data





Total loans

440,675

409,349

365,360

20.6

Deposits

425,108

401,081

378,703

12.3

Shareholders´s equity

101,912

98,106

101,697

0.2






Key Ratios




bps

Net interest margin

4.96%

5.05%

5.05%

(9.6)

Net loans to deposits ratio

99.8%

98.1%

92.3%

755.0

ROAE2

14.1%

13.5%

17.8%

(363.1)

ROAA

1.6%

1.5%

2.2%

(64.5)

Efficiency ratio

42.9%

44.3%

39.2%

370.7

Capital ratio

16.1%

15.7%

15.3%

85.0

NPLs ratio

3.33%

3.40%

2.43%

89.8

Coverage ratio

111.8%

115.4%

180.0%

(6,819.8)

Operating Data




%

Branches3

1,293

1,279

1,215

6.4

ATMs

5,315

5,295

5,100

4.2

Customers

11,159,430

10,911,728

10,323,259

8.1

Employees

14,375

14,384

13,623

5.5






1) Treasury Shares and discontinued operations are not included

2) ROAE as reported

3) As of 2Q14 includes: 1,050 branches + 118 cash desks + 3 select offices + 50 select units + 48 select boxes + 24 brokerage house branches


To obtain the full text of this earnings report and the 2Q14 earnings presentation, please click on the following link: http://www.santander.com.mx/ir/english/financial/quarterly.html

2Q14 EARNINGS CALL DIAL-IN INFORMATION

Date:

Thursday, July 31, 2014

Time:

09:00 AM (MCT); 10:00 AM (US ET)

Dial-in Numbers:

1-888-778-9064 US & Canada; 1-913-312-1466 International & Mexico

Access Code:

9173916

Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1038576

Replay:

Starting on Thursday, July 31, 2014 at 1:00 pm US ET (12:00 pm MCT), and ending on Thursday, August 7, 2014 at 11:59 pm US ET (10:59 pm MCT)


Dial-in number: 1-877-870-5176 US & Canada; 1-858-384-5517 International & Mexico


Access Code: 9173916



ABOUT GRUPO FINANCIERO SANTANDER MEXICO, S.A.B. DE C.V. (NYSE: BSMX; BMV: SANMEX)
Grupo Financiero Santander Mexico, S.A.B. de C.V. (Santander Mexico), one of Mexico's leading financial services holding companies, provides a wide range of financial and related services, including retail and commercial banking, securities brokerage, financial advisory and other related investment activities. Santander Mexico offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of June 30, 2014, Santander Mexico had total assets of Ps.919.9 billion under Mexican Banking GAAP and more than 11 million customers. Headquartered in Mexico City, the Company operates 1,050 branches and 243 offices nationwide and has a total of 14,375 employees.

LEGAL DISCLAIMER
Grupo Financiero Santander Mexico cautions that this report may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements may be found in various places throughout this report 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 Mexico); 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 factors indicated in our  annual report 20F. 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 report 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 (Comision Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in nominal terms. Historical figures are not adjusted for inflation.

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