Earnings Report /
Mexico

Gentera: GENTERA, Quarterly Report 1Q21: Recovery trend continues

  • Results came in line with estimates. Net income reached MXN 378 million, while main indicators showed q/q improvements

  • NIM recovered to 27.5% and NPLs declined to 3.7%, while ICAP at 32.3% and liquidity remained very solid

  • The company's financial strength, strategy and positioning should help to consolidate recovery trend in quarters ahead

Marissa Garza Ostos
Marissa Garza Ostos

Head of Equity Research

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Banorte
4 May 2021
Published byBanorte
  • Gentera's results came in line with our estimates. Net income reached MXN 378 million, while the main indicators showed sequential improvements

  • NIM recovered to 27.5% and NPLs declined to 3.7%, while ICAP at 32.3% and liquidity remained very solid. The quarter points to a sustained recovery and growth outlook for 2H21

Indicators reflect consistent sequential improvements. Although the environment remains challenging, Gentera's results confirm a recovery trend that should help the company resume growth in the second half of the year. The loan portfolio showed a 10.4% y/y decline to MXN 39.9 billion, affected by operating dynamics and the COVID-19 impact, although on a sequential basis it declined just 2.0% y/y due to the business seasonality. Compartamos Banco's loan portfolio remained nearly stable, dropping 0.9% y/y. This, coupled with the strategy focused on providing benefits to clients, affected financial income, which fell 13.7% y/y, although on a quarterly basis it increased 5.1% due to origination acceleration in Banco Compartamos and Concrédito, as well as lower impacts from deferral programs. Interest expense rose 10.5% y/y, despite lower funding costs, as the company drew on various lines of credit to maintain high levels of liquidity. As a result, Financial Margin fell 15.8% y/y, slightly better than our estimate. Meanwhile, provisions contracted 42.4% y/y due to a better performance in Compartamos Banco's portfolio and the reversal of provisions following the prudential measure in 3Q20. As a result, NIM recovered to 27.5% (vs. 27.0% in 4Q20). Non-performing loans improved to 3.7% vs. 5.4% previously. We remain optimistic that the company's financial strength, strategy and positioning should help to consolidate the recovery trend in the quarters ahead.