Regional S.A.B (RA) Q4 2024 earnings summary

Executive summary

• Net income for 4Q24 reached MXN 1,693 million, up 4% year-over-year, with ROAE at 21.3% and YTD net income at MXN 6,520 million, a 15% annual increase.

• Performing loans and leasing grew 14% year-over-year to MXN 175,080 million, with commercial loans up 15% and core deposits up 12% to MXN 168,029 million.

• Efficiency ratio improved to 39.7% for 4Q24, down 124 bps year-over-year, reflecting operational improvements.

• Strategic focus on nearshoring, regional expansion, digital upgrades, and disciplined cost and credit risk management drove results.

• Banco Regional contributed 83% of net income, Start Banregio 13%, Inmobiliaria Banregio 3%, and Hey Banco 1%.

Financial highlights

• Financial margin rose 12% year-over-year to MXN 3,769 million; interest income for 4Q24 was MXN 7,930 million, up 6%.

• Non-financial income up 20% year-over-year, with insurance fees +35%, FX fees +30%, and car merchant fees +28%.

• Operating income for 4Q24 was MXN 2,310 million, up 5% year-over-year.

• Loan portfolio with credit risk stage 1 grew 14% to MXN 171,668 million; time deposits increased 21% to MXN 91,369 million.

• Operating expenses rose 13% year-over-year, mainly due to expansion and digital investments.

Outlook and guidance

• 2025 guidance: loan and deposit growth of 10%-15%, NIM 6.2%-6.7%, efficiency ratio 40%-42%, net income growth 11%-16%, ROE 20%-22%, cost of risk 0.7%-0.9%, NPL below 1.8%.

• Dividend distribution of MXN 3,000 million in two installments, representing a 46% payout, subject to board and assembly approval.

• Capitalization ratio at 14.1% as of November 2024, expected to remain above 14% even after dividend payments.

• Effective tax rate expected between 25%-28% for 2025.

• OpEx expected to grow in the low teens in 2025, with continued focus on operating efficiencies.