Regional S.A.B (RA) Q3 2024 earnings summary

Executive summary

• Net income for 3Q24 was MXN 1,604 million, up 3% year-over-year, with ROE at 21.7% and financial margin up 12% to MXN 3,652 million; YTD net income reached MXN 4,827 million, up 19% year-over-year.

• Core deposits rose 11% year-over-year to MXN 168,555 million, with time deposits growing at a double-digit pace.

• Commercial loan portfolio with credit risk stage 1 reached MXN 139,394 million in 3Q24, with stage 2 at MXN 1,983 million; preferred banking portfolio grew 9% year-over-year to MXN 27,739 million.

• Banco Regional generated 86% of net income, Start Banregio 14%.

• Continued optimization of the balance sheet and focus on digital channels, with robust e-banking platform and new customer engagement initiatives.

Financial highlights

• Loan portfolio grew 13%-15% year-over-year, outperforming the sector's 12% growth as of August; commercial loans up 15% year-over-year.

• Net interest margin (NIM) reached 6.5% in 3Q24, up 32 bps year-over-year; Hey Banco's NIM at 7.2% over the last 12 months.

• Efficiency ratio improved to 39.5%, down 223 bps year-over-year.

• Non-financial income rose 40% year-over-year, with FX fees up 37%, card issuance fees up 15%, and insurance fees up 11%.

• Non-performing loan ratio at 1.3%, down 11 bps year-over-year; coverage ratio at 1.7x.

Outlook and guidance

• Maintains 2024 loan growth guidance of 12%-17%, core deposits 10%-15%, NIM 6%-6.4%, net profit 12%-16%, ROE 20%-22%, NPLs below 1.8%, cost of risk 0.7%-0.9%, efficiency ratio 40%-42%.

• For 2025, expects to provide detailed guidance next quarter; expense growth expected in the low teens as operational efficiencies are captured.

• Commercial loan portfolio remains the core business, with 15% growth in 3Q24; mortgage portfolio up 13% and consumer loans up 5% year-over-year.

• Time and core deposits expected to continue growing, supporting liquidity.

• Results are subject to risks including economic and political conditions, inflation, exchange rates, and regulatory changes.