Análisis Actinver
BANKING CREDIT APRIL 2015
Martin Lara & Juan Ponce
June 9, 2015 Index
Figures as of April 2015 3
Outlook 5
Recommendations 6
Price Performance 7
Total Banking Credit 8
Breakdown of the Banking Credit by Segment 10
Credit Growth by Segment 11
Loan Portfolio and Market Share Breakdown 12
Asset Quality 13
Growth Projections (2015E-2016E) 14
2 Figures as of April 2015
Total loan portfolio accelerates in April. The industry’s total loan portfolio grew at a very healthy 13% annual rate, which was slightly above the 12% rate of the previous month. Enterprise and government, the main drivers. This performance was mainly driven by a 14% increase in enterprise loans which represent 44% of the industry’s total loan portfolio. In this case, there was a slight acceleration in the growth rate compared to the previous month’s 13%; in addition, government loans (15% of total) advanced 27%, slightly above the previous month’s 25% annual expansion, which confirms our positive view on this segment. This was fueled by an 8% increase in states and municipalities (vs. 7% in March) and a 73% growth in other government entities (vs. +65% in March). Consumer loans stagnate. Consumer loans (21% contribution to total loans) were up 6% YoY, which was in line with the rate of the previous five months. This included a 1% rise in credit cards, 20% in payrolls and 1% in personal loans. Mortgages register a solid growth. Mortgages (17% of total) advanced 9% YoY, also in line with the previous month’s annual growth rate. Most of the banks that we cover continued to gain market share. Banregio’s loan portfolio grew 31%, Sanmex’s 18% and Interacciones’s 27%. Banorte was the only one that lost some market share as its loan book rose only 11%. Stable asset quality. The industry’s NPL ratio was 3.05% in April, which was basically in line with March’s 3.04%. However, it was below last year’s 3.38% level.
3 Figures as of April 2015
Banregio presents a slightly higher NPL ratio. Sanmex’s, Banorte’s and Banco Interacciones’s NPL ratio’s remained basically unchanged vs. March this year at 3.70%, 2.76% and 0.15%, respectively. However, Banregio’s NPL ratio experienced a marginal increase to 1.45%. The industry’s ROE improves. The industry’s ROE improved marginally to 13.15% in April, compared to 12.98% in March. By bank, there was a slight rebound at Banco Interacciones (17.52%) and a marginal reduction at Sanmex (13.32%), Banorte (13.27%) and Banregio (17.72%), in all cases compared to March this year. Recommendations. This information confirms our positive point of view on GFInter and Sanmex and our neutral views on GFNorte and GFRegio.
4 Outlook
We continue to like the Mexican banking sector because of the following reasons: High growth potential. After this report, we revised upwards the growth of the banking credit that we expect to 14% in 2015 and 15% in 2016. The main drivers are a stronger macroeconomic performance and a low financial penetration. Solid asset quality. We also expect the industry’s NPL ratio to reach 2.8% and 2.7%, respectively. Higher margins. We believe that bank margins could expand gradually if Banco de Mexico increases its interest rates, which will probably take place in the second half of 2015. Higher capitalization. We expect the capitalization index of Mexican banks to remain above 15% in the future, which will allow them to grow significantly without any additional capital. Our recommendations are: BUY on Sanmex and GFInter, HOLD on GFRegio and GFNorte. The main risk in our projections would be a lower-than-expected macroeconomic growth.
5 Recommendations
Price Target Div. Potential P/E Net Profit Growth Company Recom. 09-Jun-15 Price Yield Return P/BV 2015E 2016E ROE 2015E 2016E GFNorte O HOLD MP 86.63 MP 92.00 0.3% 6% 2.3x 14.5x 12.5x 12.5% 9% 16% Sanmex B BUY MP 28.10 MP 32.50 0.0% 16% 1.7x 12.9x 10.9x 12.0% 5% 19% GFRegio O HOLD MP 85.86 MP 95.00 0.0% 11% 2.8x 14.9x 12.8x 17.5% 15% 17% GFInter O BUY MP 96.38 MP 113.00 0.0% 17% 2.1x 11.4x 9.8x 13.2% 17% 16% Source: Actinver
6 Price Performance
Source: Bloomberg
185
165
145
125
105
85
65
MEXBOL Index GFREGIO MM Equity GFNORTEO MM Equity SANMEXB MM Equity GFINTERO MM EQUITY FINDEP* MM EQUITY
7 Total Banking Credit (April 2015)
10% CAGR 2012-2014 Figures in million pesos $4,000,000 14%
$3,500,000 12%
$3,000,000 10% $2,500,000 8% $2,000,000 6% $1,500,000 4% $1,000,000
$500,000 2%
$0 0%
Total Credit Chg. (YoY)
8 Asset Quality (April 2015)
4.0% 150%
3.5% 145% 3.0% 140% 2.5%
2.0% 135%
1.5% 130% 1.0% 125% 0.5%
0.0% 120%
Industry NPL % Industry Coverage %
9 Breakdown of the Banking Credit by Segment (April 2015)
Other 3%
Gov. Entities 15%
Enterprises 44%
Total Credit: MP3.450 Trillion Mortgages 17%
Consumer 21%
10 Credit Growth by Segment (April 2015)
30%
25% 27%
20%
15%
14%
10% 13%
9%
5% 6%
0% Total Credit Enterprises Consumer Mortgages Gov. Entities
11 Loan Portfolio & Market Share Breakdown (April 2015)
Change in the Total Loan Portfolio Market Share
35% 30%
30% 25%
31%
25%
20%
27%
24.1%
20% 23.6%
23%
15%
20%
15%
18%
10% 15.3%
15%
14.4%
14.2%
13.9% 13.6%
10% 13.6%
13%
11%
5% 5%
2.3%
2.0%
7%
1.6%
1.4%
6.4%
6.0%
0.5% 0.6% 0% 0%
April 2014 April 2015
12 Asset Quality (April 2015)
NPL Ratio Coverage Ratio 5% 400%
4% 350%
4% 300%
358%
3.9%
3.7%
3%
250%
3.4%
3.4%
3% 3.1%
3.1%
3.1% 3.0%
200%
256%
2.8%
2.8%
2.8% 2.7%
2% 2.7%
227%
150% 209%
2%
1.9%
174%
169%
167%
100%
156%
1%
146%
1.5%
132%
121% 118%
50% 116% 107%
1% 105%
100%
1.0%
0.2% 0.1% 0% 0%
April 2014 April 2015 April 2014 April 2015
13 ROE & Capitalization Index (April 2015)
ROE Capitalization Index 40% 40%
35% 35%
30% 37.0% 30%
35.0% 34.6%
25% 25%
20% 26.6% 20%
24.8%
22.6%
15% 15%
19.3%
18.9%
18.4%
18.1%
17.9%
17.7%
17.6%
17.5% 16.6%
10% 10%
15.9%
15.6%
15.3%
15.2%
14.6%
14.0%
13.4%
13.3%
13.3%
13.2%
5% 5% 12.5%
10.6%
9.5%
7.4% 6.9% 0% 0%
April 2014 April 2015
14 Projections (2015E-2016E)
2015E 2016E 35% 30%
30%
25%
30%
25% 25% 20% 20%
15%
15%
15% 15%
10% 15%
15%
14% 12%
10% 14%
8% 9%
5% 5% 6% 0% 0%
15 Equity, Economic, Quantitative and Fixed Income Research Departments
Equity Research
Head of EquityResearch
Senior Analysts Martín Lara Telecommunications, Media and Financials (52) 55 1103-6600 x1840 [email protected]
Carlos Hermosillo Bernal Consumption (52) 55 1103-6600 x4134 [email protected] Pablo Duarte de León FIBRAs (REITs) (52) 55 1103-6600 x4334 [email protected]
Pablo Abraham Peregrina Mining, Metals, Paper & Conglomerates (52) 55 1103-6600 x4334 [email protected]
Ramón Ortiz Reyes Cement, Construction and Concessions (52) 55 1103-6600 x1835 [email protected]
Federico Robinson Bours Carrillo Energy, Conglomerates, Industrial and Mining (52) 55 1103-6600 x4127 [email protected]
Junior Analysts
Juan Enrique Ponce Luiña Telecommunications, Media and Financials (52) 55 1103-6600 x1693 jponce@actinver,com.mx
Enrique Octavio Camargo Delgado Energy, Conglomerates, Industrial and Mining (52) 55 1103-6600 x1836 [email protected]
José Antonio Cebeira González Consumption (52) 55 1103-6600 x1394 [email protected]
Mauricio Arellano Sampson Mining, Metal, Paper, Conglomerates, Cement, Construction & Concessions (52) 55 1103-6600 x1835 [email protected]
Laura Elena Bosch Ramírez FIBRAs (REITs) (52) 55 1103-6600 x4136 [email protected] Economic and Quantitative Research Ismael Capistrán Bolio Head of Economic and Quantitative Research (52) 55 1103-6600 x1487 [email protected]
Jaime Ascencio Aguirre Economy and Markets (52) 55 1103-6600 x1100 [email protected]
Santiago Hernández Morales Quantitative Research (52) 55 1103-6600 x4133 [email protected]
Roberto Galván González Technical Research (52) 55 1103-6600 x1837 [email protected] Fixed Income Research
Araceli Espinosa Elguea Head of Fixed Income Research (52) 55 1103 -6600 x6641 [email protected]
Roberto Ramírez Ramírez Fixed Income Research (52) 55 1103-6600 x1672 [email protected]
Jesús Viveros Hernández Fixed Income Research (52) 55 1103-6600 x6649 [email protected]
Raúl Márquez Pardinas Fixed Income Research (52) 55 1103-6600 x1110 [email protected]
16 Disclaimer
Important Statements. Of the Analysts: “The analysts in charge of producing the Analysis Reports: Jaime Ascencio Aguirre; Mauricio Arellano Sampson; Laura Elena Bosch Ramírez; Enrique Octavio Camargo Delgado; Ismael Capistrán Bolio; José Antonio Cebeira González; Pablo Enrique Duarte de León; Araceli Espinosa Elguea; Roberto Galván González; Carlos Hermosillo Bernal; Santiago Hernández Morales; Martín Roberto Lara Poo; Raúl Márquez Pardinas; Ramón Ortiz Reyes; Pablo Abraham Peregrina; Juan Enrique Ponce Luiña; Federico Robinson Bours Carrillo; Jesús Viveros Hernández, declare”:
"All points of view about the issuers under coverage correspond exclusively to the responsible analyst and authentically reflect his vision. All recommendations made by analysts are prepared independently of any institution, including the institution where the services are provided or companies belonging to the same financial or business group. The compensation scheme is not based or related, directly or indirectly, with any specific recommendation and the remuneration is only received from the entity which the analysts provide their services. "None of the analysts with coverage of the issuers mentioned in this report holds any office, position or commission at issuers underhis coverage, or any of the people who are part of the Business Group or consortium to which they belong. They have neither held any position during the twelve months prior to the preparation of this report. " "Recommendations on issuers, made by the analyst who covers them, are based on public information and there is no guarantee of their assertiveness regarding the performance that is actually observed in the values object of the recommendation" "Analysts maintain investments subject to their analysis reports on the following issuers: AC, ACTINVR, ALFA, ALPEK, ALSEA, AMX, AZTECA, CEMEX, CHDRAUI, FEMSA, FIBRAMQ, FINDEP, FUNO, GENTERA, GFREGIO, GRUMA, ICA, IENOVA, KOF, LAB, LIVEPOL, MEXCHEM, OHLMEX, PEÑOLES, POCHTEC, TLEVISA, SORIANA, SPORTS, VESTA and WALMEX.
On Actinver Casa de Bolsa, S.A. de C.V. Grupo Financiero Actinver Actinver Casa de Bolsa, S.A. de C.V. Grupo Financiero Actinver, under any circumstance shall ensure the sense of the recommendations contained in the reports of analysis to ensure future business relationship. All Actinver Casa de Bolsa, SA de C.V. Grupo Financiero Actinver business units can explore and do business with any company mentioned in documents of analysis. All compensation for services given in the past or in the future, received by Actinver Casa de Bolsa, SA de C.V. Grupo Financiero Actinver by any company mentioned in this report has not had and will not have any effect on the compensation paid to the analysts. However, just like any other employee of Actinver Group and its subsidiaries, the compensation being enjoyed by our analysts will be affected by the profitability gained by Actinver Group and its subsidiaries. At the end of each of the previous three months, Actinver Casa de Bolsa, SA de C.V. Actinver Financial Group, has not held any investments directly or indirectly in securities or financial derivatives, whose underlying are Securities subject of the analysis reports, representing one percent or more of its portfolio of securities, investment portfolio, outstanding of the Securities or the underlying value of the question, except for the following: * AEROMEX, AXML, BOLSA A, FINN 13, FSHOP 13, SMARTRC14. Certain directors and officers of Actinver Casa de Bolsa, SA de C.V. Grupo Financiero Actinver occupy a similar position at the following issuers: AEROMEX, MASECA, AZTECA, ALSEA, FINN, MAXCOM, SPORTS, FSHOP and FUNO. This report will be distributed to all persons who meet the profile to acquire the type of values that is recommended in its content.
17 Disclaimer
Guide for recommendations on investment in the companies under coverage included or not, in the Mexican Stock Exchange main Price Index (IPC) Buy. The stock’s total return is expected to exceed the total return of the IPC index in the current year. Neutral. The stock’s total return is expected to be in line with the total return of the IPC index in the current year. Sell. The stock’s total return is expected to be below the total return of the IPC index in the current year.
To see our analysts change of recommendations click here.
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