Mercantil Servicios Financieros, C.A. Financial Report Fourth Quarter 2016

Transcription

1 Mercantil Servicios Financieros, C.A. Financial Report Fourth Quarter Mercantil Servicios Financieros (Mercantil). Financial Report Fourth Quarter Caracas Stock Exchange (MVZ.A & MVZ.B); Level 1 ADR: MSFZY & MSFJY Caracas, January 30, Mercantil reports its earnings for the quarter ended 31,. Summary Net Income: Mercantil posted Bs. 8,462 million in net income in 4Q, 100.8% more than Bs. 4,214 million registered in 4Q In annual terms, net income in reached Bs. 18,035 million, reflecting 28.0% year-on-year growth from Bs million. Net earnings per share in 4Q were Bs (Bs in 4Q 2015). Net earnings per share in were Bs (Bs in 2015). ROE and ROA in 4Q reached 54.7% and 3.7% respectively, (44.4% and 3.6% in 4Q 2015). At year-end, these indicators were 29.2% and 2.0%, respectively (37.1% and 3.0% at 31, 2015). Class A and B share prices closed at Bs. 12,600 each, compared to Bs. 5,200 and Bs. 5,150 per A and B shares, respectively, at September 30,, and Bs. 5,000 each at 31, The main variations in net quarterly income are: Net Interest Income reached Bs. 31,024 million, Bs. 17,367 million (127.2%) more than the Bs. 13,657 million in 4Q 2015, mainly due to the increase in financial assets and liabilities. The financial intermediation ratio (loans-to-deposits) was 52.7% at the close of 4Q (66.3% at 31, 2015). Commissions and other income totaled Bs. 14,651 million, reflecting a Bs. 9,127 million (165.2%) year-on-year increase from Bs. 5,524 million in 4Q 2015, mainly due to Bs. 8,604 million increase in income from commissions for the use of credit and debit cards, as well as other commissions from insurance policy financing. Personnel and Operating Expenses totaled Bs. 32,875 million, Bs. 20,534 million (166.4%) up from Bs. 12,341 million in 4Q 2015, due to increases of Bs. 4,732 million (180.8%) in personnel expenses, Bs. 1,546 million (87.4%) in expenses for contributions to regulatory entities, and Bs. 14,256 million (176.2%) in operating expenses. Personnel and Operating Expenses have been affected by the inflationary environment of the Venezuelan economy. Current Income Tax Expense reached Bs. 3,994 million, Bs. 1,280 million (47.2%) up from Bs. 2,714 million in 4Q 2015, mainly due to the increase of the rate from 34% to 40% for the banking, financial and insurance sectors and from the exclusion, beginning in, of special contributors from the Venezuelan system of adjustments for inflation. Summary of the Financial Statements and Ratios (In millions of Bolivars, except percentages) September 2015 Dec. 16 vs. Sep. 16 Dec. 16 vs. Dec. 15 QUARTERLY RESULTS % % Net Interest Income 31,024 24,385 13, Allowance for losses on loan portfolio 516 4,349 1, Commissions and other income 14,651 8,348 5, Insurance premiums, net of claims 4,175 3,885 1, Salaries and Operating Expenses 32,875 26,238 12, Net Income Quarter 8,462 2,811 4, Net Income 12 Months 18,035 14, KEY FINANCIAL INDICATORS Income per share Quarter Bs / share Income per share 12 Months Bs / share Market price A share 12,600 5,200 5, Market price B share 12,600 5,150 5, Book value per share Net Income (quarter) / Average Assets (ROA) 3.7% 1.4% 3.6% Net Income (quarter) / Average Equity (ROE) 54.7% 19.1% 44.4%

2 Assets: In 4Q, total assets registered Bs million (48.0%) quarter-over-quarter growth to Bs. 1,484,732 million, Bs. 850,407 million (134.1%) year-on-year growth. The main variations for this item, taken individually by subsidiary, are as follows: Mercantil Banco Universal registered Bs. 489,043 million (55.8%) quarter-over quarter growth and Bs. 802,808 million (142.6%) year-on-year growth. Mercantil Bank, N.A. (formerly Mercantil Commercebank, see page 20) registered US$ 39 million (0.5%) quarter-over-quarter decline and US$ 268 million (3.3%) year-on-year increase. Mercantil Seguros registered Bs. 11,229 million (23.1%) quarter-over-quarter growth and Bs. 28,073 million (88.2%) year-on-year growth. Net Loan Portfolio: In 4Q, the net loan portfolio registered a quarter-over-quarter increase of Bs. 94,144 million (16.8%) to Bs. 655,363 million, Bs. 311,223 million (90.4%) year-on-year growth. The main variations of this item, taken individually by subsidiary, are as follows: Mercantil Banco Universal registered Bs. 94,095 million (18.8%) quarter-over-quarter growth and Bs. 287,906 million (93.7%) year-on-year growth. Mercantil Bank N.A. registered US$ 13 million (0.2%) quarter-over-quarter growth and US$ 120 million (2.2%) year-on-year growth. Deposits: In 4Q, deposits registered Bs. 437,672 million (51.9%) quarter-over-quarter growth to Bs. 1,281,647 million, and Bs. 746,744 million (139.6%) year-on-year growth. The main variations for this item, taken individually by subsidiary, are as follows: Mercantil Banco Universal registered Bs. 437,515 million (56.4%) quarter-over-quarter growth and Bs. 721,095 million (146.3%) year-onyear growth. Mercantil Bank, N.A. registered US$ 25 million (0.4%) quarter-over-quarter growth and US$ 55 million (0.8%) year-on-year growth. Shareholders Equity totaled Bs. 75,405 million, representing Bs. 7,112 million (10.4%) increase from Bs. 68,292 million in the previous quarter, and Bs. 30,871 million (69.3%) year-on-year growth. This quarterly variation is primarily attributable to Bs. 8,462 million in net income, among others. Capital Ratios: Mercantil s equity to risk-weighted assets ratio at 31, is 10.1%, based on the standards of the National Securities Superintendence (SNV Superintendencia Nacional de Valores) versus 11.4%, at 31, Mercantil Banco Universal, in accordance with the requirements of the Superintendence of Banking Sector Institutions (SUDEBAN Superintendencia de las Institutiones del Sector Bancario) has an equity-to-assets ratio of 11.2% and an equity to risk-weighted assets ratio of 13.1% at 31, (10.0% and 12.7% at 31, 2015). Mercantil Bank, N.A., based on the standards of the U.S. Office of the Comptroller of the Currency (OCC), at 31,, has an equity-to-assets ratio of 9.2% and an equity to risk-weighted-assets ratio of 12.4%, (9.4% and 12.3% at 31, 2015). The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums. Summary of Financial Statements (In millions of Bolivars, except percentages) September 2015 Dec. 16 Vs Sep. 16 Dec. 16 Vs Dec. 15 % % Cash and due from banks 575, , , Investment Portfolio 180, ,127 96, Loan Portfolio, Net 655, , , Other assets 73,769 64,631 38, TOTAL ASSETS 1,484,732 1,003, , Deposits 1,281, , , Financial Liabilities 14,239 13,616 8, Other Liabilities 113,440 77,437 46, Shareholders Equity 75,405 68,292 44, TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 1,484,732 1,003, , ASSETS UNDER MANAGEMENT 226, , ,

3 Table of contents Page Contribution of subsidiaries 4 Market share 5 Credit Ratings 5 Analysis of Consolidated Financial Statements 6 Operating Income Net Interest Income 6 Loan Portfolio Provision 7 Total Commissions and Other Income 8 Total Operating Expenses 9 Efficiency Ratios 10 Balance Sheet Liquidity 10 Investment Portfolio 11 Financial Intermediation Activity Loan Portfolio 12 Deposits 13 Total Assets 14 Financial Obligations 15 Shareholders Equity 15 Capital Ratios 15 Wealth Management 16 Performance of Subsidiaries in accordance to its Local Accounting Standards 17 Corporate Events 20 New Measures announced for the Venezuelan Financial Environment 20 Awards and Acknowledgements 21 Appendix I: Summary of the accounting principles used to prepare the financial statements 22 Appendix II: Financial statements of Mercantil Servicios Financieros 23 Appendix III: Consolidated Loan Portfolio by Classification 28 Appendix IV: Statutory percentage of loan portfolio in Venezuela 29 Appendix V: Stock Performance Summary and Financial Indicators of Mercantil Servicios Financieros 30 Appendix VI: Financial statements of Mercantil Banco Universal 32 Appendix VII: Financial statements of Mercantil Commercebank Holding Corporation 34 Appendix VIII: Financial statements of Mercantil Seguros 36 3

4 Contribution of Subsidiaries 31, MERCANTIL SERVICIOS FINANCIEROS (1) (In millions of Bolivars, except percentages) Shareholders Equity: Bs. 75,405 million Shareholders Equity (2) (2) (2) Mercantil Banco Universal Bs Mercantil Bank Bs Other Banks Overseas Bs Mercantil Seguros Bs Mercantil Merinvest Bs. 582 Otras Bs. 761 Main Activity Main Subsidiaries Venezuelan Universal Bank U.S. Domestic Bank & Brokerage Mercantil Bank, N.A. Mercantil Investment Investment Services (MIS) * Mercantil Trust Company (MTC) ** International Banking Mercantil Bank (Schweiz) AG. Mercantil Bank (Panamá) S.A. Mercantil Bank and Trust Limited (Islas Caiman) Mercantil Bank (Curacao) NV Insurance in Venezuela and Abroad Mercantil Seguros Panamá S.A Investment banking, mutual funds, trading & brokerage Mercantil Merinvest, Casa de Bolsa, C.A. Mercantil Capital Markets (Panamá) Other Minor Investment Mercantil Servicios de Inversión, C.A. Mercantil Sociedad Administradora de Entidades de Inversión Colectiva, C.A.. In millions of Bs (1) Total Total Assets 1,334,458 83,711 8,111 56, ,013 1,484,732 % Assets % 0.1% 100.0% Investments 131,854 23,490 3,169 21, ,211 Loans (Net) 595,301 56,647 3, ,362 Deposits 1,211,637 64,716 5, ,281,647 Contribution Income net: Quarter 7, , Months 18, (542) 1, (2,184) 18,035 Assets under Management 66,459 18,524 5, , ,508 Number of Employees 6, , ,370 1 Financial data presented in accordance with SNV standards (see Appendix I). Includes the effect of inter-company transactions eliminations typical of the consolidation process. Foreign currency transactions and balances are translated at the purchase official exchange rate, see Appendix V. 2 See Summary of Subsidiaries performance according to their Regulatory Accounting Standards (page 17). * Formerly Mercantil Commercebank Investment Services, Inc (see page 20) ** Formerly Mercantil Commercebank Trust Company (see page 20) 4

5 Market Share Venezuela Mercantil Banco (1) Mercantil Seguros (2) USA Mercantil Bank, N.A. (3) Positioning Market Share Commercial and Universal Bank's Private Total Private Tourism Loans % 16.7% Manufacturing Loans % 16.3% Agricultural Loans % 24.2% Morgtgage Loans under the mortgage Debtor Law (Ley Especial del Deudor Hipotecario) % 14.0% Microcredits Loans % 9.2% Gross Loans % 14.7% Savings Deposits % 25.1% Total Deposits % 15.4% Total Deposits + Other Demand Liabilities % 15.3% Total Assets % 15.1% Trust % 19.0% Insurance Market Net Premiums % U.S. (3) Florida (4) Total Deposits (1) Source: Summary of Unconsolidated Financial Statements Published in National newspapers at 12/31/. (2) Source: Venezuelan Superintendency of Insurance at 10/31/ (3) Source: American Bankers based on 200 Bank Holdings, Commercial Banks and Saving Institutions with more Deposits in U.S. at 06/30/16. (4) Source: Federal Deposit Insurance Corporation (FDIC), to the Florida Stated U.S. at 06/30/, Total number of institutions in Florida: 241 in Florida. Credit Ratings Fitch Ratings Clave (*) Mercantil Servicios Financieros National Ratings Long-term Short-term Rating for Unsecured Bonds ( Long-term in local currency) Rating for Commercial Paper (Short-term in local currency) Mercantil Banco Universal National Ratings Long-term Short-term International Ratings Long-term (Foreign and local currency) Short-term (Foreign and local currency) Viability Mercantil Commercebank Florida Bancorp y Mercantil Bank, N.A. Long-term Deposit (Mercantil Bank, N.A. only) Long-term Short-term Viability A+(Ven) F1+(Ven) A2 A1 A+(Ven) F1(Ven) CCC C ccc BB+ BB B bb A2 A1 (*) A credit rating agency in Venezuela 5

6 (In millions of Bs) Analysis of Consolidated Financial Statements Operating Income (In millions of Bolivars, except percentages) Quarter 12 months Ended on Ended on Dec. Dec. Dec. Dec Bolivars % 2015 Bolivars % Net Interest Income 31,024 13,657 17, ,356 41,658 47, Allowance for Losses on Loan Portfolio 4,516 1,735 2, ,665 4,924 7, Net Financial Margin 26,508 11,922 14, ,691 36,734 39, Commissions and Other Income 14,651 5,524 9, ,885 15,424 22, Insurance Premiums, Net of Claims 4,175 1,825 2, ,028 4,488 7, Operating Income 45,334 19,272 26, ,607 56,645 69, Net Interest Income In 4Q, net interest income was Bs. 31,024 million, 127.2% higher than the Bs. 13,657 million of 4Q 2015, mainly due to an increase in the volume of financial assets and liabilities. Interest income was Bs. 39,255 million, which reflects a 99.4% year-on-year increase; this increase is reflected in the behavior of income from the loan portfolio, which grew 98.8%. Interest expenses totaled Bs. 8,231 million, 36.5% compared to 4Q The financial intermediation ratio (loans-to-deposits) was 52.7% at the close of 4Q (66.3% at the close of 2015). Mercantil Banco Universal, reached Bs. 29,535 million, up 124.8% from Bs. 13,139 million in 4Q 2015, mainly due to the higher volume of financial assets and liabilities. The financial intermediation ratio was 50.1% in and 63.8% in Mercantil Bank, N.A., totaled US$ 49 million, 8.5% up from US$ 45 million in 4Q The Bank continues to hold a significant portion of its assets, US$ 2,290 million, more than 27%, in short-term investments and securities issued by the U.S. government or U.S. governmentbacked agencies. In, net interest income was Bs 89,356 million, 114.5% up from Bs. 41,658 million in Mercantil s net interest margin (net interest income-to-average financial assets) was 14.5% at 31,, compared to 12.0% the previous year. Evolution of Net Interest Income 100,000 90, % 15.5% 80,000 70, % 13.5% 60, % 50,000 40,000 30, % 8.6% 9.3% 9.5% 20, % 10,000-8,402 13,267 20,955 41,658 89, % Net Interest Income Net Interest Income / Average Financial Assets 6

7 Loan Portfolio Provision In 4Q, expenses totaled Bs. 4,516 million, Bs. 2,781 million (160.3%) up from Bs. 1,735 million in 4Q Mercantil Banco Universal registered Bs. 4,484 million in loan portfolio provisions in 4Q (Bs. 1,676 million in 4Q 2015), aimed mainly at provisions related to the industrial and services sectors, as a result of loan portfolio growth during the quarter. Mercantil Bank, N.A. registered US$ 4 million in loan portfolio provisions in 4Q (US$ 3 million in 4Q 2015), mainly as loans for the commercial sector. In, provision expenses totaled Bs. 12,665 million, Bs. 7,741 million (157.2%) up from Bs. 4,924 million in The accumulated allowance amounts to Bs. 20,523 million at 31,, representing 3.0% of gross loans, the same as at the close of September 30,. This provision covers 764.4% of past-due and nonperforming loans (842.1% at September 30, ). (Million of Bs) Evolution of Loan Portfolio 700, , , , , , , , , , , , ,000 50, % 3.3% 3.1% 3.0% 3.0% 0.9% 0.5% 0.3% 0.2% 0.4% % 4.0% 3.6% 3.2% 2.8% 2.4% 2.0% 1.6% 1.2% 0.8% 0.4% 0.0% Gross Loans Past Due and Non-Performing Loans Past Due and Non-Performing Loans / Gross Loans Allowance for Losses on Loan Portfolio / Gross Loans 7

8 Total Commissions and Other Income In 4Q, commissions and other income totaled Bs. 14,651 million, Bs. 9,127 million (165.2%) up from Bs. 5,524 million in 4Q 2015, primarily due to: Bs. 9,971 million (199.1%) increase in earnings from commissions on the use of credit and debit cards, insurance policy financing, and other commissions on client transactions, among other, mainly due to the larger volume of transactions. 68% Composition of Total Income Bs 61,570 million Year % Bs 139,272 million Year Bs. 278 million (80.3%) decline in earnings from securities trading activities. In, Commissions and Other Income totaled Bs. 37,886 million, Bs. 22,462 million (145.6%) up from 2015, mainly due to a Bs. 22,620 million (162.7%) increase in commissions from the use of credit and debit cards, insurance policy financing, other commissions on clients transactions, and a decline of Bs. 253 million (27.6%) in earnings from securities trading. 25% 29% Insurance Premiums, net of Claims In 4Q, insurance premiums, net of commissions, reinsurance and claims totaled Bs. 4,175 million, reflecting 128.8% year-on-year growth from Bs. 1,825 million. This improvement is attributed to insurance activity in the Automobile business. 6% 1% 6% 1% Year 2015 Year Net Interest Income Commissions on Transactions, Insurance Premiums net and Other Collected premiums in 4Q amounted to Bs. 28,863 million, reflecting Bs. 13,896 million, 92.9% year-on-year growth. The Individuals business was the main contributor to this growth. At October 31,, Mercantil Seguros ranked second in the country s insurance companies in terms of collected premiums, with a 10.0% of the market. Claims and administration expenses during 4Q totaled Bs. 17,032 million, up Bs. 10,065 million (144.5%) compared to Bs. 6,967 million in 4Q This growth is mainly attributable to the Individuals and Automobile businesses. The claims ratio was 60.3% in 4Q (62.0% in 4Q 2015). The technical result was Bs. 725 million, up Bs. 236 million (47.8%) from Bs. 490 million in 4Q The variation is mainly due to the increase in claims incurred, premiums received and taxes and contributions. In, Insurance Premiums, net of Claims, Commissions, Reinsurance and Claims reached Bs. 12,028 million, up 168.0% from 2015, collected premiums reflect a 117.2% year-on-year rise from Bs. 39,017 million in 2015 to Bs. 84,759 million in. Claims and administration expenses totaled Bs. 51,316 million, up Bs. 27,948 million (119.6%) from During, Mercantil Seguros Panamá subsidiary, contributed in Venezuela with US$ 16,308 thousands in collected premiums. Other Income Income on Sales Investment Securities 8

9 Total Operating Expenses (In millions of Bolivars, except percentages) Quarter 9 months Ended on Ended on 2015 Bolivars % 2015 Bolivars % Operating Income 45,334 19,272 26, ,606 56,645 69, Personal and Employee Benefits 7,349 2,617 4, ,691 10,053 14, Other Operating expenses 25,526 9,723 15, ,099 25,498 46, Taxes Current and Deferred 3,994 2,714 1, ,770 6,996 4,774 (68.2) Minority Interests (4) (2) (2) (100.0) (11) (7) (3) (37.5) Net Income 8,462 4,214 4, ,035 14,092 3, In 4Q, personnel and operating expenses totaled Bs. 32,875 million, reflecting a 166.4% year-on-year increase from Bs. 12,341 million in 4Q This increase is mainly due to: Bs. 4,732 million in personnel expenses, reflecting a year-on-year increase of 180.8%. This increase in expenses was due to the application of compensation and benefit policies according to market value. Assets per employee in Mercantil Banco Universal rose from Bs million in 2015 to Bs million in. In Mercantil Seguros, net collected premiums per employee rose from Bs million in 2015 to Bs million in. In the case of overseas business, the assets per employee indicator was US$ 8.0 million in 2015 compared to US$ 8.9 million in. Bs. 1,546 million (87.4%) increase in expenses for contributions to regulatory agencies. Bs. 1,658 million (268.0%) growth of taxes and contributions. Bs. 14,257 million (179.2%) rise in operating expenses. The Bs. 1,280 million (47.2%) increase in income tax expenses is mainly due to the exclusion of financial and insurance activities from the system of adjustment for inflation, as a result of changes in fiscal regulations in Venezuela. In addition to the increase of the applicable rate for such activities from 34% to 40%. In, personnel and operating expenses totaled Bs. 96,790 million, 172.3% up from Bs. 35,550 million in 2015, mainly due to a Bs. 14,638 million increase in personnel expenses and Bs. 46,601 million increase in other operating expenses, which showed a larger degree of depreciation, fixed assets expenses, amortization of intangibles and other expenses for Bs. 9,180 million; increase of expenses for contributions to regulatory agencies for Bs. 5,575 million; increase of Bs. 5,001 million for taxes and contributions, and increase of Bs. 26,845 million in other operating expenses, which have been affected by the inflationary environment of the Venezuelan economy. Income tax expenses grew by Bs. 4,774 million compared to Total Personal and Operating Expenses Years (In millions of Bolivars) Δ % Composition of Net Income by Business Line 1.2% 0.6% 24, % 88.4% 9.6% 89.8% 46,786 10,053 18,741 6,274 14,940 Δ +172,3% 11,418 7,419 3,334 5,843 4,715 13,895 1,713 Dec Dec Dec. Year 2015 Year Banking Insurance Wealth Management Salaries and employee benefits Other operating expenses Fees paid to regulatory agencies Depreciation, Property and equipment, Amortization of intangibles and others expenses 9

10 Efficiency Ratios The efficiency ratio measured by calculating operating expenses to average assets was 9.4% in, vs. 6.4% in The ratio of operating expenses to total income was 61.2% in (48.3% in 2015). Personnel and Operating Expenses have been affected by the inflationary environment of the Venezuelan economy. The company has made significant efforts to adapt its organizational and operative structure to the current environment in the countries where it operates. In the case of Venezuela, these efforts have notably reduced the significant effects of inflation % 180.0% 160.0% 140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 180.9% 9.4% 68.5% 6.4% 47.7% 56.1% 49.1% 5.4% 47.4% 48.3% 61.3% 20.1% 5.3% 5.3% % 9.5% 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% Inflation in Venezuela annual Operating Expenses / Total Income Operating Expenses / Average Assets Balance Sheet The principal Balance Sheet variations during 4Q are reviewed below and commented on with respect to the previous quarter. The main yearon-year variations are also included for comparison purposes. Summary of Balance Sheet and Assets under Management (In millions of Bolivars, except percentages) September Dec. 16 vs. Sep. 16 Dec. 16 vs. Dec Bolivars % Bolivars % Cash and due from banks 575, , , , , Investment Portfolio 180, ,127 96,020 42, , Loan Portfolio, Net 655, , ,141 94, , Total Assets 1,484,732 1,003, , , , Deposits 1,281, , , , , Shareholders Equity 75,405 68,292 44,534 7, , Assets under Management 226, , ,063 88, , Liquidity At the close of 4Q, cash and due from Banks (cash and legal reserve requirements, in Venezuela) plus investments in time deposits and placements, included in the investment portfolio, increased 129.9%, to Bs. 602,139 million, up Bs. 340,179 million from Bs. 261,959 million in September 20,. This growth is observed mainly in the accounts held at the BCV. Demand deposits are related to the recent high liquidity levels of the financial system in Venezuela and to the internal risk limits, and do not accrue interest. Compared to 31, 2015, cash and due from Banks plus investments in time deposits and placements rose Bs. 439,082 million (269.3%), from Bs. 163,058 million to Bs. 602,139 million. The liquidity ratio calculated as total cash and due from Banks divided by deposits was 44.9%, and the ratio from dividing total cash and investments by deposits was 59,0%, compared with 28.4% and 44.7%, respectively, in September and 29.1% and 47.1% respectively at the close of 4Q Liquidity (In millions of Bolivars) 163,057 42, ,169 Δ % 261,956 62, ,343 Δ +18.7% 336, ,771 7,397 22,616 26,749 Dec Sep. Dec. Cash and Due from Banks - Legal Reserves Legal Reserves Investments in Time Deposits and Placements 602,139 10

11 Investment Portfolio At the close of 4Q, the investment portfolio totaled Bs. 180,211 million, reflecting Bs. 42,084 million (30.5%) quarter-over-quarter growth from Bs. 138,127 million. Compared to 31, 2015, the investment portfolio grew Bs. 84,190 million (87.7%) from Bs. 96,020 million to Bs. 180,211 million. The variations for this item, taken individually by subsidiary, are as follows: Investments Portfolio (In millions of Bolivars) Δ +87.7% 138, ,211 96,020 Δ+30.5% Dec.2015 Sep. Dec. (In millions, except percentages) September Abs. % Mercantil Banco Universal Bs 163, ,328 58, Mercantil Seguros Bs 23,100 20,555 2, Mercantil Bank, N.A. US$ 2,331 2,393 (62) (2.6) Investments by maturity and yield at the close of 4Q are broken down as follows: Trading Available for Sale Investments by Maturity and Yield (In millions of Bolivars, except percentages) Held to Maturity Shares Time Deposits and Placements Trust Fund and Restricted Investments Years Bs. 1 Bs. 1 % 3 Bs. 2 % 3 Bs. 1 Bs. 1 % Bs. 1 % 3 TOTAL Less Than , , , , ,079 From 1 to , , ,759 Over , , , , ,665 72,044 1,013 26,749 3, ,211 Government bonds issued by the Venezuelan State account for 0.44 times Mercantil s equity, and 2.2% of its assets (0.53 times and 3.6% in September, respectively). At Mercantil Banco Universal, these securities represent 0.24 times its equity and 1.7% of its assets (0.38 times and 2.9% in September, respectively). By 31,, the Mercantil, C.A. Banco Universal subsidiary, in line with regulations issued by the Executive Branch, had purchased Bs. 90,570 million, in Mortgage Bonds, CDs, Agriculture bonds and Stocks. This represents 70.3% of the Bank s investment portfolio, and 1.5 times its shareholders equity (Bs. 52,335 million representing 57.3% of its investment portfolio and 1.0 times its shareholders equity at September 30, ). 1 Registered at Market Value 2 Amortized cost 3 The yield of securities is based on amortized cost at the end of the period. Yield is calculated by dividing income investments (including premium amortization or discounts) by the amortized cost or market value. Breakdown of Investments by Issuer 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Venezuelan Central Bank US Government & US Gov. Guaranteed Agencies Private 2015 September Venezuelan Government and Public Entities 11

12 Financial Intermediation Activity Loan Portfolio At the close of 4Q, the net loan portfolio totaled Bs. 655,363 million, reflecting a 16.8% quarter-over-quarter from Bs. 561,220 million. Loan Portfolio (In millions of Bolivars) Δ % 655,363 Compared to 31, 2015, the loan portfolio increased Bs. 311,223 million (90.4%), from Bs. 344,141 million to Bs million. 561,220 The variations for this item, taken individually by subsidiary, are as follows: 344,141 Δ+16.8% Dec Sep. Dec. (In millions, except percentages) September Abs. % Mercantil Banco Universal Bs 595, ,226 94, Mercantil Bank, N.A. US$ 5,679 5, The ratio of Past-due and Nonperforming loans to gross loans was 0.4%, the same as at the close of September. The ratio by subsidiary is as follows: Mercantil Banco Universal 0.3%, the same as the ratio for the Venezuelan financial system. Mercantil Bank, N.A. 0.8% (0.3% at the close of the previous quarter). Non-accrual loans reached 1.2% of the total loan portfolio (1.3% at the close of the previous quarter). At 31,, 99.4% of Mercantil s loan portfolio is outstanding. The allowance for losses on the loan portfolio covers 764.4% of pastdue and nonperforming loans (842.1% at September 30, ), this indicator standing at 959.4% for Mercantil Banco Universal (957.9% at September 30, ) and at 170.2% for Mercantil Bank, N.A. (454.4% at September 30, ). The market positioning of Mercantil s main subsidiaries are shown on pages 5 and 17. Appendix III shows the distribution of the loan portfolio, broken down by economic activity, maturity, country and type of risk. Distribution of Loan Portfolio by Client Segment (In millions of bolivars) Individuals Large Corporation SME's 700, , , , , , , % 15% 37% 34% 16% 45% 33% 30% 21% 27% 24% 45% 43% 47% 43% Dec Dec Dec Dec Dec

13 Deposits At the close of 4Q, deposits were Bs. 1,281,647 million, representing a quarter-over-quarter increase of Bs. 437,672 million (51.9%) from Bs. 843,975 million. Compared to 31, 2015, deposits grew Bs. 746,744 million (139.6%) from Bs. 534,903 million to Bs. 1,281,647 million. Demand deposits were the main component of total deposits, reaching Bs. 956,332 million, up 51.1% from the previous quarter, and representing 74.6% of total deposits. Savings and time deposits increased by Bs. 113,696 million (59.9%) and Bs. 544 million (2.6%), respectively, in the same period. Deposits (In millions of Bolivars) 534,903 Δ % 843,972 Δ +51.9% 1,281,647 The variations of this item, taken individually by subsidiary, are as follows: Dec Sep. Dec. (In millions, except percentages) September Abs. % Mercantil Banco Universal Bs. 1,213, , , Mercantil Bank, N.A. US$ 6,563 6, The analysis of Mercantil s main subsidiaries and their positioning in the market can be found on pages 5 and 17. Distribution of Deposits by Client Segment (In millions of bolivars) Individuals Large Corporation SME's 1,300,000 1,200,000 1,100,000 1,000, , , , , , , , , , % 21% 49% 48% 22% 31% 56% 56% 26% 20% 24% 29% 24% 26% 26% Dec Dec Dec Dec Dec

14 Total Assets At the close of 4Q total assets registered 48.0% growth to Bs. 1,484,732 million, up Bs. 481,412 million from Bs. 1,003,320 million the previous quarter. This is the result of the combined behavior of total cash and due from banks, investments and the loan portfolio, which grew Bs. 336,045 million, Bs. 42,084 million and Bs. 94,144 million, respectively. The ratio of performing assets over total assets was 58.4%, up Bs. 141,124 million (19.4%) from the previous quarter. Consolidated Total Assets (In millions of Bolivars) Δ % 1,484,732 Compared to 31, 2015, assets grew Bs. 850,408 million (134.1%), from Bs. 634,324 million to Bs. 1,484,732 million. The variations of this item, taken individually by subsidiary, are as follows: 634,324 1,003,320 Δ+48.0% Dec Sep. Dec. (In millions, except percentages) September Abs. % Mercantil Banco Universal Bs 1,365, , , Mercantil Seguros Bs 59,911 48,682 11, Mercantil Bank, N.A. US$ 8,398 8,436 (39) (0.5) The analysis of Mercantil s main subsidiaries and their positioning in the market is shown on pages 5 and 17. The loan portfolio remained the main component (44.1%) of total assets, cash and due from Banks accounting for 38.8%, while the investment portfolio accounted for 12.1% at the end of the quarter. Assets Distribution Total Bs 1,484,732 million Cash and Due from Banks 38.8% Loan Portfolio, Net 44.1% Venezuelan Central Bank 1.1% Venezuelan Govermment 8.5% US Govermment. 0.6% Private Sector 1.3% US Govermment Guaranteed Agencies 0.7% Other Assets 4.9% 14

15 Financial Obligations At the close of 4Q, financial obligations reached Bs. 16,067 million, up 5.2% compared to Bs. 15,276 million in the previous quarter; compared to 31, 2015, obligations rose 61.1%. September 2015 (In millions of Bolivars) Bs. Bs. Bs. Publicly Traded Debt Securities Issued by Mercantil Subordinated debt 1,127 1, ,828 1,660 1,594 Other Financial Liabilities 14,239 13,616 8,378 16,067 15,276 9,972 Shareholders Equity At the close of 4Q, shareholders equity reached Bs. 75,405 million, a Bs. 7,112 million (10.4%) increase from Bs. 68,292 million in the previous quarter. Compared to the 4Q 2015, shareholders equity rose 69.3% from Bs. 44,533 million. The variation in 4Q is mainly due to Bs. 8,462 million in net income for the period and to sections on actuarial studies. Evolution of Shareholders Equity (In millions of Bolivars) 44,533 Δ +69.3% 68,292 75,405 Δ+10.4% Dec Sep. Dec. Capital Ratios Mercantil s equity-to-assets ratio at 31, is 5.1%, and its equity to risk-weighted assets ratio is 10.1%, based on the standards of the SNV (7.0% and 11.4% at 31, 2015). Capital Structure Mercantil Banco Universal, in accordance with the requirements of SUDEBAN, has an equity-to-assets ratio of 11.2% at 31,, and an equity to risk-weighted assets ratio of 13.1% (10.0% and 12.7%, respectively, at 31, 2015). Mercantil Bank, N.A., based on the standards of the OCC, has an equity-to-assets ratio of 9.2% and an equity to risk-weighted assets of 12.4% at 31,, (9.4% and 12.3% respectively at 31, 2015). The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums. Capital stock 1% Capital reserve 1% Share premium 19% Traslation adjustments of net assets of subsidiaries abroad 8% Retained earnings 70% Unrealized gain fron adjustments of investments to market value 1% Remedición por plan de pensiones -2% 15

16 Wealth Management The Wealth Management business comprises trust services, securities brokerage, mutual funds and portfolio management services. Net assets under management recorded off the balance sheet at 31, reached Bs. 226,508 million, representing a 63.6% quarter-over-quarter and 111.6% year-on-year growth. They are broken down as follows: TOTAL ASSETS UNDER MANAGEMENT (In millions of Bolivars, except percentages) September 2015 Dec. 16 vs Sep.16 % Dec. 16 vs Dec. 15 % Trust Funds 52,831 48,808 32, Mutual Fund 3,701 3,286 2, Brokerage 144,403 66,027 52, Financial Advisory 5,218 5,466 3,688 (4.5) 41.5 Custody of Securities Trading 20,354 18,889 16, Total Assets under Management Bs 226, , , At the close of 4Q, the Trust Fund managed Bs. 52,831 million, which reflects increases of 17.9% and 64.8% compared to the close of the previous quarter and the previous year, respectively. At 31,, Mercantil s trust fund ranked second in the private banking sector and fourth in the fiduciary market in Venezuela. At the close of, Mercantil maintains its leading position in Venezuela s mutual fund industry. Mutual Fund assets under management grew 12.6% and 37.9% compared to September and 2015, respectively, reaching Bs. 3,701 million. Mercantil offers its clients products and services (as broker-dealers and investment advisers) in global financial markets. At the close of, total client assets reached Bs. 149,621 million, up 109.3% compared to the previous quarter, and 166.1% up from the close of 2015). 16

17 Mercantil Banco Universal Performance of Subsidiaries according to Local Accounting Standards Mercantil Banco Universal total assets grew Bs. 470,107 million (54.4%) compared to September. During 4Q, net loan portfolio grew Bs. 94,082 million (18.8%) and total deposits grew by Bs. 444,547 million (56.9%), to reach Bs. 595,302 million and Bs. 1,226,267 million, respectively. Loan portfolio quality remains very favorable, with 0.3% ratio of past-due and nonperforming loans to gross loans, the same as the Venezuelan financial system as a whole. Loan portfolio provision covers 959.4% of past-due and nonperforming loans (957.9% at September 30, ). At 31,, the Mercantil Banco Universal subsidiary ranks fourth in the Venezuelan financial system in terms of total assets, with 10.2% of the market. The leading institution has 19.7%, and the first four banks of the country account for 58.7% of the total financial system. It is also the third bank in the Venezuelan private banking system in terms of loans for tourism, manufacturing, mortgages, and microcredits with market shares of 8.5%, 7.7%, 6.2%, and 7.1%, Mercantil C.A., Banco Universal Consolidated (In millions of Bolivars) respectively. Mercantil is the leading bank in terms of agriculture loans with 14.4% of the market, and in terms of savings deposits with 20.2% of the market. Shareholders equity grew Bs. 7,056 million (13.0%) quarter-over-quarter to Bs. 61,349 million. This increase includes, mainly, Bs. 7,043 million in net quarterly income, among others. The equity-to-assets ratio was 11.2% (minimum requirement 9%) at 31,, and the equity to risk-weighted assets was 13.1% (minimum requirement 12%), based on SUDEBAN s standards for Venezuela. In 4Q, net earnings of Bs. 7,043 million reflected Bs. 3,474 million (97.4%) year-on-year growth, mainly due to the Bs. 16,481 million increase in net interest income as a result of an increase in financial assets and liabilities; Bs. 8,891 million in net income from commissions on the use of credit and debit cards as well as from other client transactions; Bs. 2,825 million increase in loan portfolio provision; and rises of Bs. 16,963 million in personnel and operating expenses and of Bs. 1,194 million in contributions to regulatory agencies. In annual terms, net earnings were Bs. 18,602 million, representing a year-on-year increase of Bs. 6,441 million (53.0%). This growth is mainly due to Bs. 45,666 million increase in net interest income, Bs. 21,420 million increase in net income from commissions for the use of credit and debit cards, Bs. 7,747 million increase in loan portfolio provisions, Bs. 45,584 million increase in personnel and operating expenses, and Bs. 4,369 million increase in contributions to regulatory agencies. Income tax expenses rose Bs. 2,944 million mainly due to the increase of the rate from 34% to 40%. Mercantil has made significant efforts to adapt its organizational and operative structure to the current environment, in order to reduce the significant effects of inflation. Dec. Sep. Dec Total Assets 1,334, , ,055 Investments Portfolio 131,796 91,394 69,387 Loan Portfolio 595, , ,412 Deposits 1,226, , ,093 Shareholders Equity 61,349 54,293 37,339 Net Income Quarter 7,043 3,463 3,568 Net Income 12 Months 18,602 12,162 Historic figures in accordance with the standards of SUDEBAN. Evolution of Net Interest Income 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, % 11.1% 10.8% 10.9% 12.0% 6.5% 4.1% 4.4% 3.5% 3.3% 7,352 11,646 19,134 39,528 85, Operating Expenses / Average Total Assets Net Interest Income Net Interest Margin 18.0% 15.0% 12.0% 9.0% 6.0% 3.0% 0.0% 17

18 Mercantil Bank, N.A. Total assets of Mercantil N.A. as of 31, registered a quarter-over-quarter decline to US$ 8,424 million, (0.4%) and US$ 271 million (3.3%) year-on-year increase. The net loan portfolio was US$ 5,683 million, up US$ 18 million from the previous quarter and 2.3% more than in 4Q As of 31,, the Bank holds US$ 2,290 million (27.2% of total assets), mainly, in short-term placements and bonds issued or guaranteed by the U.S. government or U.S. government-baked agencies. The Bank s Deposits totaled US$ 6,619 million at the close of, up US$ 31 million from the previous quarter and up 0.9% from 4Q Non-performing assets (non-accrual loans and assets received in lieu of payment) remained at US$ 71 million, similar to The ratio of non-performing assets over total assets is 0.8%, similar to The ratio of non-performing loans to total loans reached 1.3% at the close of, which compares to 1.2% in 4Q Mercantil Commercebank, N.A. Consolidated (In millions of US$) Dec. Sep. Dec Total Assets 8,424 8,457 8,153 Investments Portfolio 2,290 2,347 2,206 Loan Portfolio 5,683 5,665 5,556 Deposits 6,619 6,588 6,563 Shareholders Equity Net Income Quarter Net Income 12 Months Figures presented according to accounting principles generally accepted in the United States (USGAAP) Assets Quality Ratios 8.0% 18.7% 6.0% 14.9% 13.5% 4.0% 9.3% 7.7% 2.9% 2.2% 2.0% 1.7% 1.9% 1.2% 1.1% 1.2% 1.2% 0.8% 0.0% 0.7% Non-Accrual Loans / Gross Loans Total Class Loans / Gross Loans Total Class Loans + OREO / Tier 1+ Allowance for Loan Losses 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% The Bank s equity at 31, had grown to US$ 772 million, down US$ 13 million compared to the previous quarter, which includes the quarterly result of US$ 8 million, US$ 21 million reduction from adjusting available-for-sale securities to their market value, and US$ 1.5 million in paid dividends. At 31,, the equity-toassets ratio and the equity to risk-weighted assets, based on the standards of the OCC, are 9.2% and 12.4%, respectively (9.4% and 12.3%, respectively at 31, 2015). In 4Q, the US$ 8 million registered in net income was US$ 4 million (108.8%) more than in 4Q 2015, attributable to US$ 3 million increase in net interest income, US$ 3 million increase in commissions and other income, US$ 2 million decline in personnel and operating expenses, and US$ 2 million increase in tax expenses. In annual terms, the US$ 31 million in net income registered reflects US$ 11 million (52.5%) increase compared to 2015, mainly due to US$ 20 million increase in net interest income, US$ 9 million increase in loan portfolio provisions, US$ 71 million increase in commissions and other income and US$ 7 million increase in personnel and operating expenses. Tax expenses increased US$ 1 million compared to

19 Mercantil Seguros Net collected premiums in 4Q grew 92.9% year-on-year to Bs. 28,863 million from Bs. 14,966 million. At the close of October 31,, Mercantil ranked second in the Venezuelan insurance companies in terms of collected premiums, with a market share of 10.0%. Total assets stood at Bs. 104,825 million at year end, reflecting 37.8% quarter-over-quarter growth. The Company registered Bs. 51,770 million in shareholders equity, which complies with the statutory solvency requirements. The figures presented include all the mandatory and voluntary reserves required to guarantee the company s operations, including outstanding claims reserves, and end-of-period payments. At the close of 31,, the company s investment portfolio was Bs. 89,876 million, up 48.4% from the previous quarter. Total investments representing technical reserves reached Bs. 64,576 million (54.9% up from 3Q and 125.9% up from the close of 4Q 2015), with liquidity levels amply meeting all statutory requirements on commitments towards policyholders, insurance brokers and reinsurers. Mercantil Seguros, C.A. Consolidated (In millions of Bolivars) Dec. Sep. Dec Total Assets 104,825 76,065 45,708 Investments suitable for representing 64,576 41,693 28,586 Investments not-suitable for representing Technical Reserves 25,300 18,884 6,795 Shareholders Equity 51,770 32,786 23,232 Net Income Quarter 1, Net Income 12 Months 5,495 2,200 Premiums Received Quarter 28,863 20,872 14,966 Premiums Received 12 months 84,759 39,017 Historic figures in accordance with the standards of the Venezuelan Superintendency of Insurance Activity (Sudeseg) In 4Q, the technical result closed at Bs. 725 million, with a combined operating ratio 1 of 96.5%. Net income for 4Q totaled Bs. 1,299 million (54.1% up from 4Q 2015). The claims ratio was 60.3% (57.0% in 2015). In annual terms, the technical result closed at Bs. 1,593 million, with a combined operating ratio of 97.5%. Net earnings for totaled Bs. 5,495 million (149.8%) up from the figure in The claims ratio was 62.0% for (64.0% at 31, 2015). Evolution of Collected Premiums and Combined Ratio 1 100% 95% 95.7% 95.6% 97.4% 97.5% 90% 89.8% 85% 80% 7,166 10,379 17,504 39,017 84, Premiums Received Combined Ratio 1 Combined ratio = (incurred claims + commissions + operating expenses)/ earned premiums 19

20 Corporate Events Unification of the Mercantil Brand Continuing with the strategy of unifying under the Mercantil brand all subsidiaries, which started 10 years ago, Mercantil initiated a name adjustment project for the companies, particularly abroad, in order to guarantee a global image and a differentiated brand platform that allows companies and businesses a better communications and presence. To date, changes have taken place in the United States companies, and therefore, Mercantil Commercebank, N.A. is now Mercantil Bank, N.A., and its subsidiaries Mercantil Commercebank Investment Services, Inc. and Mercantil Commercebank Trust Company are now Mercantil Investment Services, Inc., and Mercantil Trust Company, N.A. These new adjustments aim exclusively to strengthening the Mercantil brand, with no effect on management structures, usual business and administrative procedures, client service styles and shareholder structure. All companies maintain the same current graphic identity of the Impulso Mercantil (Mercantil Drive),. The project will proceed in stages, depending on the permissions granted by the regulatory authorities in the countries where Mercantil operates, and the corresponding registrations fulfilled of the companies to modify their names. New Measures Announced in the Venezuelan Finance Sector The Venezuelan Central Bank issues Regulation to calculate legal reserves The BCV issued a Resolution establishing that, after the Bank has determined the legal reserves of financial institutions, it will deduct from its national agriculture loan portfolio an amount equivalent to that cancelled by each institution when purchasing, in the primary market and up to the last business day before their maturity, 2017 Agriculture BANDES Certificates of Participation, issued by the Venezuelan Economic and Social Development Bank (BANDES Banco de Desarrollo Económico y Social de Venezuela) in. Universal and Microfinance Banks exempted by the BCV from transferring all foreign currency deposits from Exchange Agreements Num. 20 and 31 to BCV accounts The BCV informed that all foreign currency funds must be deposited in demand deposit accounts in their correspondent banks, and always maintain their balances equal or superior than the total deposits received under Exchange Agreement Nº 20. This extraordinary measure will be in force from October 14, through June 30, 2017; which highlights: i) Banks must not carry out treasury operations, investments, loans or any other financial intermediation operations using funds from foreign currency deposits; ii) the net foreign currency position includes assets and liabilities under Exchange Agreement Nº 20. Also, operations under the cited Agreement are excluded from the calculation of regulatory legal reserves. The Ministries of Industry and Commerce, and of Banking and Finance established the minimum percentage of the manufacturing loan portfolio 10% is the minimum loan portfolio percentage that Banks must earmarked to the manufacturing sector in the fiscal year, based on the gross loan portfolio at the end of 31, Guidelines for the financing parameters for this sector were also established as follows: 60% minimum for the strategic development sectors of the manufacturing sector and large industries, and the remaining 40% for the Small and Medium Enterprises, joint venture and state-owned companies. The BCV establishes the maximum limits of commissions, fees and/or surcharges to be applied by Banks for their operations and activities The BCV set the maximum limits that Banks may charge as Commissions, Fees and/or Surcharges for their operations and activities, increasing those relating to deposit accounts, debit and credit cards, automatic teller machines, transfers, clearing house operations, and operations carried out in offices, walk-up teller's windows, mobile banking and non-banking correspondent services. The BCV notified the expansion of the monetary cone Six new bills (banknotes) and three new coins will be in circulation from 15,, to complement and coexist with the current monetary cone. The BCV also indicated that the new bills and new coins would be gradually distributed by the Bank at its Caracas and Maracaibo offices, and through the national banking system. The Office of the Presidency issued a Decree by which it establishes the withdrawal from circulation of the 100 bolivars bills (banknotes) The Office of the Presidency issued a Decree establishing the withdrawal from circulation of the 100 bolivars bills within 72 hours continuous from the publication of the Decree in the Official Gazette of 11,. It also indicated that the exchange of the cited bills by legal tender bills should be made in public and private banks. Subsequently, the Office of the Presidency has extended on three occasions, by Decree, the circulation period and validity of the 100 bolivars bills issued by the BCV, and therefore, they will be legal tender through February 20, The Office of the Presidency decrees a 2% reduction of VAT The Office of the Presidency issued a Decree establishing that a 10% VAT (before 12%) will be charged on sales of products and services to final consumers up to Bs. 200,000, when those sales or services are paid using electronic means. The cited Decree was published on 14,, and will be in force for 90 days. 20

21 Awards and Acknowledgments Mercantil Servicios Financieros and Mercantil Seguros included in the Top 100 Companies ranking of VenAmCham The Venezuelan American Chamber of Industry and Commerce (VenAmCham) presented the Top 100 Companies ranking, with Mercantil Servicios Financieros and Mercantil Seguros ranked six and nine, respectively. The list includes the most successful companies in the country, with national or foreign capital, ranked by their total income at the close of Mercantil Banco was recognized as the Best Bank in Venezuela in by LatinFinance LatinFinance, a magazine specialized in Latin American and Caribbean finance topics, acknowledged Mercantil Banco as the Best Bank in Venezuela in. The magazine chose Mercantil Banco for three reasons: long-term strategy, development of digital technologies and efficient cost management in a changing environment. Mercantil Banco received the first edition of the International Rotary Award to Socially Responsible Enterprises Mercantil Banco received the first edition of the Award for Socially Responsible Enterprises. The award acknowledged the university program Promoting Socially Responsible Leaders, also known as El Reto U (The U Challenge), which has been promoted for the last 12 years by the Social Alliance of the Venezuelan American Chamber of Commerce and Industry (VenAmCham) and Districts 4370 and 4380 of Rotary International. The award was presented at the United Nations Headquarters during the celebration of the Rotary International Day. The Mercantil Collection receives the 2015 AICA Award for the Venezuelan Ceramics exhibition The Venezuelan Ceramics exhibition of the Mercantil Collection received the 2015 AICA Award of the International Association of Art Critics, Venezuelan Chapter, as Best Collective Exhibition. The decision was taken because the exhibition strengthens the artistic scope developed by modern and contemporary Venezuelan ceramics, with specific examples in research and experimentation with techniques. 21