COMPARTAMOS, S.A.B. de C.V REPORTS 1Q11 RESULTS

Transcription

1 COMPARTAMOS, S.A.B. de C.V REPORTS 1Q11 RESULTS Mexico City, Mexico April 25, 2011 Compartamos, S.A.B. de C.V. ( the Holding or the Company ) (BMV: COMPARC) announced its non-audited consolidated financial results for the first quarter ended March 31, All figures were prepared in accordance with the requirements of the Comisión Nacional Bancaria y de Valores (CNBV) and are expressed in nominal Mexican Pesos (Ps.). 1Q11 Highlights: On March 28, the Holding announced its intention to acquire a 82.7% stake in the shares of Financiera Créditos Arequipa, S.A. On March 31, the Holding held its ordinary and extraordinary shareholders meetings, in which they approved, among others, the following: o The public offer for the acquisition of shares representing the capital stock of Banco Compartamos, S.A. Institución de Banca Múltiple in exchange for the reciprocal subscription of shares of the Company. o The establishment of a stock plan. o o The cancellation of treasury shares on the Holding The recognition of capital contributed to the Company s shareholders equity, the capitalization of said recognition and the consequent amount of capital stock. Comments from the Executive President Carlos Labarthe, Compartamos Executive President commented on the results: We are very proud of the Holding s first quarter results. Per our efforts of expanding operations in Latin America, we are waiting for the authorizations to acquire 82.7% of Financiera Crear in order to serve a larger number of clients. The first quarter 2011 results of our only subsidiary, Banco Compartamos, are in line with expectations, serving over 2 million customers and reaching a portfolio of Ps. 10,658. In this effort to generate social value, Financiera Crear in Peru will contribute more than 87,000 active clients and a portfolio of over Ps. 1,561. In Banco Compartamos, we have more than 10,000 employees, and with Financiera Crear we will add over 900 employees in Peru, which clearly strengthens the generation of social, economic and human value. Carlos Labarthe concluded, In Financiera Crear as well as in Banco Compartamos, we will maintain our growth efforts within the markets that each of them serves, always seeking to offer better products and financial services to our clients. For additional information visit: or contact: Patricio Diez de Bonilla, CFO Carolina Velazco Bernal, Investor Relations Compartamos, S.A., Institución de Banca Múltiple. Insurgentes Sur 553, Ciudad de México, México T: +52 (55) / 7388 / 7254 / 7696 investor-relations@compartamos.com

2 Results of Operations As per the Official Gazette of the Federation (DOF), published on March 16, 2011, a resolution modifying the general regulations applicable to stock issuing companies and other stock market participants was published. In 4Q10, the Holding reported its financial results per the Financial Information Norms (NIFs Normas de Información Financiera). Following the modification, financial information for 1Q11 should be reported according to the general regulations applicable to credit institutions. The results discussed in this report reflect those generated by Banco Compartamos, the Holding s only subsidiary, during 1Q11. Net Operating Income/Expense At the closing of 1Q11, the Holding reported a net operating income of Ps. 8 million. General expenses reached Ps. 8 million; this line item includes expenses related to the costs for advisory and services which Banco Compartamos, S.A., Institución de Banca Múltiple to the Holding. Net income from the consolidated and associated subsidiaries was Ps. 446 million, which represented 97.16% of Banco Compartamos net income. Net income before taxes was Ps. 437 millions in 1Q11. General expenses reached Ps. 8.4 million. These were mainly attributable to advisory services lent by Banco Compartamos to the Holding. Income taxes were Ps. 2 million. Net Income As a result, for 1Q11, net income reached Ps. 435 million. Compartamos Holding 1Q11 2

3 The consolidated financial statements of the Holding reflects the performance of its only subsidiary, Banco Compartamos. Its results are as follows: Results of Operations Banco Compartamos Financial Results for 1Q11: Net Interest Income after provisions (NII after provisions) Interest income reached Ps. 1,722 million, 26.2% higher when compared with 1Q10, which is consistent with the 26.1% growth in the total loan portfolio, due to a 30.5% larger client base. Interest expense, grew 12.9%, or Ps. 9 million, from Ps. 70 million in 1Q10 to Ps. 79 million in 1Q11, in line with the 21.0% increase in interest bearing liabilities. As a consequence, the Bank reported net interest income of Ps. 1,643 million, 27.0% higher than in 1Q10. Due to the stable performance of nonperforming loans, provisions for loan losses reached Ps. 90 million, or Ps. 14 million more than the Ps. 76 million reported in 1Q10. As a consequence, NII after provisions rose to Ps. 1,553 million, a 27.5% increase compared to Ps. 1,218 million reported in 1Q10. Due to the aforementioned, NIM (Net Interest Margin) after provisions (NII after provisions for losses /average yielding assets) for 1Q11 was 55.9%, compared to 54.1% in 1Q10. Net Operating Income In the Official Gazette of the Federation (DOF), published on January 27, 2011, a resolution modifying the general regulations applicable to credit institutions, in which they substitute the Accounting criteria for credit institutions, which among other things changes the manner in which the Income Statement is presented. Due to these changes, there are two changes to the Income Statement. The first one, the Other products and Other expenses line items are now considered within Other operating income (expenses). The second change is the elimination of the line item entitled Net operating revenue. The following line items: Commissions and fee income, Commissions and fee expenses, Trading gains (losses), Other operating income (expenses) and Operating expenses will now be considered within Net operating income. As a result, for comparison effects, 2010 figures were reclassified, under this new criteria. Net operating income for 1Q11 was Ps. 702 million, 19.2% higher than the Ps. 589 million reported in 1Q10. This was the result of Ps. 45 million in fee income, which was 21.6% higher than 1Q10. Fee income was generated from the voluntary life insurance product as well as delinquency fees charged to clients. This revenue was offset by a Ps. 75 million fee expense, 11.9% higher than the figure reported in 1Q10. Due to internal cost-control policies and procedures established by the Bank, total operating expenses grew 37.9% to Ps. 823 million, supporting the increase in interest income, total loan portfolio and number of clients, reflecting efficiency improvements. Compartamos Holding 1Q11 3

4 During 1Q11, Compartamos service office network reached 369 service offices, 17 more than in 4Q10. However, the total number of employees grew to 10,878 employees, 38.3% higher than the 7,864 employees reported in 1Q10. Operating expenses were mainly allocated towards employee-related expenses, such as salaries, productivity bonuses and training, which represented 57.2% of this line item, or Ps. 471 million. Net Income Compartamos reported net income of Ps. 459 million in 1Q11, an increase compared to 1Q10. Excluding shares repurchased, earnings per share (EPS) increased 14.8%, to Ps. 1.10, during the first quarter as compared to 1Q10. Balance Sheet Liquidity Cash and other investments increased 32.8%, from Ps. 827 million in 1Q10 to Ps. 1,098 million in 1Q11. During 1Q10, cash and other liquidity represented 8.8% of total assets, while in 1Q11, cash and liquidity represented 9.1% of total assets. As mentioned in the 1Q10 report, as credit markets improved, Compartamos implemented a new cash policy, which requires that at the end of each month, the Bank obtains the required amount to: (i) fund portfolio growth, (ii) cover operating expenses and (iii) amortize the maturity of the Bank s debt obligations for the following month. Cash and other investments are invested in short-term instruments where the counterparty risk is approved by the Board s Risk Committee. Total Loan Portfolio Total loan portfolio reached Ps. 10,658 million in 1Q11, 26.1% higher than the Ps. 8,454 million reported in 1Q10. This growth was due to a 30.5% increase in the number of clients during the last twelve months, reaching 2,018,056 active clients as of March 31, The average outstanding balance per client in 1Q11 was Ps. 5,281, a slight decrease of 3.4% compared to Ps. 5,468 in 1Q10. Credit Quality Compartamos is committed to maintaining asset quality. During the first quarter, NPL s slightly increased to 2.01% in 1Q11 from 1.98% in 4Q10. The Bank experienced an improvement in the NPL s mainly in the individual loan product (Crédito Crece Tu Negocio), which improved from 5.58% in 4Q10 to 4.93% in 1Q11, and the home renovation loan (Crédito Mejora tu Casa), which improved slightly to 6.81% in 1Q11 from 7.00% in 4Q10. The Group Loan product (Crédito Mujer) experienced Compartamos Holding 1Q11 4

5 a slight increase in NPL s in 1Q11 to 0.95% compared to 0.81% in 4Q10. Crédito Adicional increased from 1.13% in 4Q10 to 1.72% in 1Q11. The urban group lending product s (Crédito Comerciante) NPL s also increased from 3.18% in 4Q10 to 3.71% in 1Q11. Compartamos core product, the Group Loans (Crédito Mujer), which represented 76.5% of the portfolio in 1Q11, reached a standalone NPL ratio of 0.95%, an improvement when compared to the 1.03% reported in 1Q10. Compartamos internal policy is to write off all NPL s exceeding 270 days past due. As a result, 1Q11 write-offs reached Ps. 63 million the same amount reported in 1Q10. Compartamos goal is to maintain excellent asset quality. By March 31, 2011, the allowance for loan losses, was calculated per the modifications of the general regulations applicable to the credit institutions, published by the DOF on October 25, The Bank recognized Ps million in Shareholders Equity, reported on the balance sheet as per March 31, 2011, within the result for previous periods as the initial financial accrued effect derived from the application of the classification methodologies for non-revolving consumer loan portfolios as well as solidarity group loans. At the end of 1Q11, the coverage ratio (allowance for loan losses/ non-performing loans) was 161.2% compared to 136.9% in 1Q10. The allowance for loan losses was calculated on the methodology established by the CNBV, which requires a different reserve coverage for each originated loan, depending on the number of defaulted payments. The allowance for loan losses is obtained as follows: As shown in the table above, the allowance for loan losses is derived from a methodology that considers the number of late payments differently from non-performing loans that are calculated after the number of days that a loan is in arrears. Therefore, the coverage ratio (allowance for loan losses/nonperforming loans) may move independently from NPL trends. Compartamos Holding 1Q11 5

6 Other Accounts Receivable and Other Assets The other accounts receivable line increased 95.9% to Ps. 145 million in 1Q11, versus Ps. 74 million in 1Q10. Of this amount, Ps. 91 million was represented by accounts receivables from retailers, such as supermarkets and convenience stores, which collected client payments at their locations. In 1Q10, however, receivables from retailers totaled Ps. 59 million; reflecting clients preference for using these alternative channels to make their payments. Finally, in the other assets line item, of the total of Ps. 168 million, Ps. 110 million was mainly related to deferred taxes. Total Liabilities As previously mentioned, Compartamos modified its liquidity strategy. As such, at the end of each month, the Bank will only obtain the amount required to: (i) fund portfolio growth, (ii) cover operating expenses and (iii) amortize the maturity of its debt obligations for the following month. During 1Q11, the required level of liabilities increased and total liabilities reached Ps. 6,005 million, 21.8% above the Ps. 4,929 million reported in 1Q10. Compartamos finds itself in a sound funding position to sustain the accelerated growth. Compartamos has diversified its funding mix; we currently have a stronger funding structure, which includes various sources. To date, Compartamos finances its assets with the following alternatives: (i) Strong capital base: 50.0% of total assets were funded with equity, which grew significantly from quarter-to-quarter as a result of the Bank s strong profitability (e.g. 31.8% ROAE for 1Q11). (ii) Short-term banking obligations: One of the benefits of having a banking license is to be able to issue these types of notes in the local debt markets eventhough as of March 31, 2011, Compartamos did not report any outstanding short-term obligations. (iii) Long-term debt issuances: Compartamos has been active in debt capital markets and, as of March 31, had Ps. 2,501 million outstanding Certificados Bursátiles Bancarios. The established program allows for an additional Ps. 3,500 million over the next 3 years. (iv) Credit lines with commercial, development banks and other institutions: The Bank has several credit lines with various local commercial and development banks, as well as with international financial institutions. As of March 31, 2011, Compartamos has sufficient access to various alternatives to finance future growth. Compartamos liabilities are wholly peso-denominated. Therefore, there is no FX exposure. Total Stockholders Equity Total stockholders equity increased Ps. 1,540 million, or 34.6%, reaching Ps. 5,997 million in 1Q11, compared to Ps. 4,457 million in 1Q10. This growth was represented by retained earnings. Compartamos Holding 1Q11 6

7 The equity to assets ratio increased to 50.0%, while the capitalization ratio stood at 44.8%. Compartamos reported Ps. 5,996 million in Tier I capital, Ps. 20 million in Tier 2 capital, and risk weighted assets of Ps. 12,189 million. Performance Ratios and Metrics ROAE/ROAA Return on average equity (ROAE) for 1Q11 was 31.8% compared to 37.6% in 1Q10. Return on average assets (ROAA) for 1Q11 was 15.8% compared to 17.2% in 1Q10. Efficiency Efficiency ratio for 1Q11 was 54.0%, compared to 50.3% in 1Q10. This result was in line with expectations as well as strict cost controls. *** Company Description Compartamos is a holding company who is in charged to promote, organize and manage, all types of companies, national and internationally subject to its investment policies. As of now, Compartamos onlysubsidiaryis Banco Compartamos, S.A., Institución de Banca Múltiple. Compartamos was established in 2010 and headquartered in Mexico City. Compartamos shares began trading on the Mexican Stock Exchange on December 24, 2010 under the ticker symbol COMPARC. Note on Forward-Looking Statements This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management s current view and estimates of future economic circumstances, industry conditions, Bank performance and financial results. The words anticipates, believes, estimates, expects, plans and similar expressions, as they relate to the Bank, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. Compartamos Holding 1Q11 7

8 Consolidated Income Statement for the Period ended March 31, 2011 (in millions of Pesos) Compartamos Holding 1Q11 8

9 Consolidated Balance Sheet for the Period ended March 31, 2011 (in millions of Pesos) Compartamos Holding 1Q11 9

10 Banco Compartamos, S.A., Institución de Banca Múltiple Income Statement for the Period ended March 31, 2011 (in millions of Pesos) Compartamos Holding 1Q11 10

11 Banco Compartamos, S.A., Institución de Banca Múltiple Balance Sheet for the Period ended March 31, 2011 (in millions of Pesos) Compartamos Holding 1Q11 11