Regional S.A.B (RA) Q2 2024 earnings summary

Executive summary

• Net income for 2Q24 reached MXN 1,608 million, up 24% year-over-year, with ROE/ROAE expanding to 21.4%-22.4%.

• Loan portfolio grew 12% year-over-year to MXN 164,366 million, outpacing sector growth, with commercial loans (stage 1) up 14% and preferred banking portfolio up 10%.

• Core deposits increased 10% year-over-year to MXN 163,644 million; time deposits grew 10-15%.

• Efficiency ratio improved to 39.0%-39.9%, contracting over 360 basis points year-over-year.

• Financial margin expanded 20% year-over-year to MXN 3,524 million.

Financial highlights

• Operating income for 2Q24 rose 24-27% year-over-year to MXN 2,191 million.

• Non-interest income reached MXN 954 million, with insurance placements up 29% and FX fees up 35%.

• Net commissions and fees totaled MXN 501 million, up 5% year-over-year.

• Total expenses increased 14% year-over-year to MXN 1,733 million.

• Net provisions for 2Q24 were MXN 410 million, up 21% year-over-year.

Outlook and guidance

• Growth outlook remains promising, with increased loan demand expected across agribusiness, manufacturing, logistics, and commerce.

• Earnings growth for the year expected to be between the mid and high range of guidance, with stronger performance anticipated in the fourth quarter.

• NIM expected to finish above guidance due to higher-than-expected rates; sensitivity is 12-16 basis points per 100 basis point rate change.

• Management highlights stable growth in deposits and loans, with a focus on maintaining strong capitalization and risk coverage.

• Forward-looking statements highlight expectations of continued growth but acknowledge risks and uncertainties in the economic environment.