Record loan portfolio and accelerating profits
Recovery surprised again, by reporting a net income of MXN 1.005 billion, above expectations, and with key indicators on a recovery trend. Loan Portfolio reached a record level
NIM increases to 31.8% and NPL fell to 2.6%, better than pre-pandemic levels. The environment continues being favorable for results and profits recovery. We reiterate our BUY recommendation
One of the best quarters in the last 5 years. Positive results confirm a more accelerated recovery inertia than expected, while we anticipate those trends to continue in a favorble dynamic enviroment for the company. Loan portfolio reached a record advance of 23.6% y/y to MXN 49.321 billion as result of: (1) 32.3% growth in Compartamos Banco portfolio due to solid dynamics in Mexico, and (2) the recovery of 15.7% y/y in Financiera Peru. Therefore, financial revenues increased 27.2% y/y recovering from deferral and discount programs that occurred last year due to the pandemic. On the other hand, interests expenses increased 18.0% y/y due to IFRS 9 implementation, which now includes costs related to credit origination and implicit interests related to leasing agreements -previously classified as operating expenses and consequently growing only 1.9% y/y. In this way, financial margin increased 28.3%. Meanwhile, provisions for loan losses increased 60.4% y/y due to solid origination process and loan portfolio growth, recalling that the company still has a low comparable base. As a result, the NIM recovered to 31.8% (vs 27.5% in 1Q21 and stable vs 4Q21). Non-Performing Loans continue to improve to 2.6% vs 2.8% in 4Q21, supported by Peru’s recovery and excellent dynamics in Mexico. The report should be well received by the market, meanwhile we reiterate our favorable opinion for the company. The dynamics reflected even better results for 2022 than what the company expected. Therefore, we’ll be reviewing our positive outlook estimates, while the valuation is still attractive with a decrease in the P/E multiple from 9.5x to 8.3x and P/BV of 1.1x.
