MSF Semi Annual Report 2015 - Mercantil Servicios Financieros

Transcription

2015 Semi Annual Report
2015 Semi Annual Report
Mercantil Servicios Financieros
Mercantil’s commitment to education
The primary focus of Mercantil Social
Commitment is strengthening and boosting education, to which we dedicate our best efforts
in order to strengthen various programs and initiatives throughout our 90 years of existence.
We permanently work together with, and promote, several educational institutions dedicated
to basic education, high school education and college-level education. Therefore, Mercantil
has always seen the promotion of education as a fundamental aspect of its corporate culture.
As a reference, several programs and projects can be highlighted, which supports schools
infrastructure, the formation of young people and unschooled adults, preparation for
entrepreneurship, scholarships and aid to college students, and the awareness of the
relevance of topics dealing with community development and environmental conservation.
This Semi-Annual Report presents a special overview of these experiences, most notably the
Give Your School a Helping Hand (Ponle Cariño a tu Escuela) program, a Mercantil initiative
with over 34 years of continued activities, which is an essential and permanent part of our
social investments. These initiatives are also an opportunity to work together with various
educational communities.
Mercantil considers Education as the doorway to facilitate individual and collective selfimprovement, and it also represents a real expectation of supporting a better standard of
living of those who receive this benefits. Our commitment is to share with and support
participants with initiatives centered on self-improvement and sustainable development of
communities.
Semi Annual Report 2015
CONTENTS
Introduction
5
Mercantil’s Stock Performance
6
Financial Highligths
7
Board of Directors and Administration
8
Notice of Ordinary General Shareholders’ Meeting
9
Board of Directors’ Report
11
Statutory Auditors’ Report
21
Financial Statements
23
Economic Climate
29
Management Discussion and Analisys
35
Performance of Subsidiariess
47
Subsidiaries and Corporate Contacts
53
Education:
An alliance for community growth
55
Servicios Financieros
3
Extending coverage of school education:
Nuestra Señora del Encuentro School
In the Technical School Didascalio “Nuestra
Señora del Encuentro” about1000 students,
from preschool to 6th year of high-school,
received catholic education, supported by
labor performed by the Asociación Benéfica
Cristiana Promotora de Desarrollo Integral
/ ABC-Prodein Centro Social.
The school, located in Mirador del Este,
Petare, Caracas, was founded 15 years ago
in order to serve residents of the area. The
class of this year was the Third Promotion
of Commerce and Administrative Services
Technicians, with mention in Computer
Science.
During their stay in the school, students
receive a complete education, which
includes simultaneous intellectual and
spiritual growth, under the premise of a
comprehensive education.
Four new classrooms, built with the support
of the Fundación Mercantil, will increase
the number of students served at “Nuestra
Señora del Encuentro”.
It is Venezuela’s foremost comprehensive financial services provider with an equity base of
Bs 37,831 million in equity. It operates in nine countries in the Americas and Europe. Its shares
are listed on the Caracas Stock Exchange (MVZ.A and MVZ.B) and it maintains a Level 1
American Depositary Receipt program (ADR) in the over-the-counter market (OTC) in the
United States of America (MSFZY and MSFJY).
The mission of Mercantil Servicios Financieros (Mercantil) is to "To fulfill the needs of our
customers by providing excellent financial products and services, attain the aspirations of
our employees, support the development of the communities where Mercantil has presence
and add value for our shareholders through a long term outlook."
Mercantil Banco Universal, founded in 1925, is Mercantil’s main subsidiary in Venezuela. At
June 30, 2015, it has a national network of 264 branches; one agency in Coral Gables, Florida,
U.S.; a branch in Curaçao and representative offices in Bogota, Lima, Mexico City, Sao Paulo
and New York; Mercantil Commercebank, N.A. in the U.S. which has 16 branches in Florida,
five in Houston and one in New York, Mercantil Bank (Schweiz) AG in Switzerland; Mercantil
Bank (Curaçao) N.V. in Curaçao, Mercantil Bank (Panamá) in Panama with four branches;
Mercantil Bank and Trust, Limited (Cayman) in the Cayman Islands; Mercantil Merinvest, C.A.
in Venezuela, Mercantil Capital Markets (Panamá) in Panama; Mercantil Seguros in Venezuela
with 34 branches, Mercantil Seguros Panamá in Panama and Mercantil Inversiones y Valores,
a holding for other minority investments.
Mercantil is actively involved in the development of different markets where it operates in
banking, insurance and wealth management.
Likewise, it permanently undertakes an important social work in different community sectors,
both in Venezuela through Fundación Mercantil, and in South Florida, U.S. through the
Mercantil Commercebank, N.A. subsidiary.
5
Mercantil’s
Stock Performance
"Caracas Stock Exchange: MVZ A & MVZ B
Level 1 ADR: MSFZY & MSFJY"
Semester ended
Earnings per share
June 30
December 31
June 30
December 31
June 30
2015
2014
2014
2013
2013
bolivars
bolivars
bolivars
bolivars
bolivars
70.18
59.32
40.08
38.11
35.01
4,760.00
4,800.00
1,400.00
1,400.00
650.00
650.00
929.99
910.00
360.00
360.00
67.8
68.4
23.6
23.6
16.2
16.2
24.4
23.9
10.3
10.3
370.11
318.49
262.22
241.23
192.53
12.9
13.0
4.4
4.4
2.5
2.5
3.9
3.8
1.9
1.9
59,401,343
42,813,618
59,401,343
42,813,618
59,401,343
42,813,618
59,401,343
42,813,618
59,401,343
42,813,618
1,651
4,889
44,723
28,005
18,767
1,348
1,947
1,152
2,403
4,088
14.50
1.50
9.50
1.00
5.50
0.3
0.3
0.1
0.1
1.5
1.5
0.1
0.1
1.4
1.4
(1)
Closing Price
Class A share
Class B share
Market price/ Earnings per share
(1)
Class A share
Class B share
Book value per share (2)
Market price / book value
(2)
Class A share
Class B share
Number of outstanding shares
Class A share
Class B share
Daily Average Traded Volume (Shares)
Class A share
Class B share
Paid Dividends
In cash (Bs per share)
Cash dividends for the period / Market price (%)
Class A share
Class B share
(1) Calculated based on weighted average shares issued minus repurchased shares adjusted by stock dividens.
(2) Calculated based on outstanding shares issued minus repurchased shares adjusted by stock dividens.
Market Quote for Mercantil Class A and B Shares
vs. Caracas Stock Exchange (CSE) Index
6,000
5,000
4,000
3,000
2,000
1,000
MVZ.A
Adjusted CSEI
MVZ.B
(3)
6
Annual Report
dec-14
jun-15
dec-13
jun-14
dec-12
jun-13
dec-11
jun-12
jun-11
dec-10
jun-10
dec-09
dec-08
jun-09
dec-07
jun-08
dec-06
jun-07
dec-05
jun-06
jun-05
dec-04
dec-03
jun-04
dec-02
jun-03
dec-01
jun-02
jun-01
dec-00
dec-99
jun-00
0
(3)
No stock exchange activities at this time.
Financial Highligths
Consolidated Earnings
(In thousands of Bs, except percentages and Other Indicators)
Semester ended
June 30
December 31
June 30
December 31
June 30
2015
2014
2014
2013
2013
bolivars
bolivars
bolivars
bolivars
bolivars
Balance Sheet (1)
Total Assets
Loan Portfolio (Net)
Deposits
Shareholders’ Equity
459,082,436
251,400,477
379,040,095
37,830,808
355,520,544 287,517,063
197,382,285 156,840,303
294,674,670 236,080,975
32,553,965 26,802,902
239,313,132 186,116,569
121,818,576 99,121,966
195,916,835 149,065,995
24,657,506 19,679,392
Income Statement (1)
Net Interest Income
Commissions and Other Income
Operating Expenses
Net Income
15,274,974
5,949,807
(13,529,785)
6,961,792
10,414,687
4,944,737
(10,977,682)
5,880,449
7,666,441
3,317,555
(7,762,908)
3,973,940
6,413,669
3,355,690
(6,699,246)
3,778,963
5,070,201
3,182,135
(5,032,913)
3,471,464
11.3 %
31.1 %
39.8 %
3.5 %
9.3 %
33.2 %
36.3 %
3.4 %
8.5 %
33.0 %
31.1 %
3.0 %
8.8 %
36.7 %
36.5 %
3.8 %
8.5 %
39.3 %
38.9 %
4.2 %
13.4 %
8.2 %
15.2 %
9.2 %
15.9 %
9.3 %
18.4 %
10.3 %
19.0 %
10.6 %
0.2 %
1,378.7 %
3.0 %
0.3 %
1,186.9 %
3.1 %
0.4 %
784.8 %
3.0 %
0.5 %
649.3 %
3.3 %
0.9 %
360.9 %
3.1 %
5.6 %
45,1 %
5.3 %
49.1 %
4.8 %
49.2 %
5.3 %
47.4 %
5.0 %
44.9 %
27.4 %
49.0 %
26.1 %
49.5 %
22.0 %
51.5 %
23.7 %
56.2 %
20.0 %
54.3 %
68.4 %
74.1 %
89.7 %
69.2 %
76.5 %
92.3 %
68.5 %
80.2 %
97.7 %
64.3 %
79.0 %
96.4 %
68.6 %
82.0 %
102.3 %
8,902
1,107
8,850
1,003
8,917
957
8,944
938
8,927
908
298
32
5
299
30
5
299
29
5
299
26
5
302
25
5
120
89
125
122
127
185
128
188
125
190
1,331
50,293
1,379
50,903
1,385
51,750
1,432
53,388
1,384
51,253
Profitability Indicators (%)
Net Interest Income / Average Financial Assets (NIM)
Commissions and Other Income / Total Income
Net Earnings for the Period / Average Equity (ROE)
Net Earnings for the Period / Average Assets (ROA)
Capital Adequacy Indicators (%)
Equity / Risk-Weighted Assets (regulatory minimum 8 %) (2)
Equity / Assets
Loan Portfolio Quality Indicators (%)
Past-Due and Non-Performing Loans / Gross Loan Portfolio
Allowances for Loan Losses / Past-Due + Non-Performing Loans
Allowances for Loan Losses / Gross Loan Portfolio
Efficiency Indicators (%)
Operating Expenses / Average Total Assets
Operating Expenses / Total Income
Liquidity Indicators (%)
Cash and Due from Banks / Deposits
Cash and Due from Banks and Investment Portfolio / Deposits
Other Indicators (%)
Gross Loans / Deposits
Financial Assets / Total Assets
Financial Assets / Deposits
Number of Employees
Employees in Venezuela
Employees Abroad
Banking Distribution Network
Branches in Venezuela (3)
Branches Abroad
Representative Offices
Mercantil Aliado Network
Correspondent Desk
Correspondent Trading Points
Automatic Teller Machines (ATM)
Point of Sale Terminals (POS) (4)
(1) In accordance with the standards of the National Securities Superintendency.
(2) Calculated on consolidated financial statements adjusted for inflation until 1999, according to the International Accounting Standard 29 (1AS-29) and following the rules of Basel Committe on Banking
Supervision of the Bank for International Settlements.
(3) Excludes internal branch for employees, at Edificio Mercantil (Caracas).
(4) Physical Points of Sale (POS).
7
Board of Directors
Principal Directors
Administración
Gustavo Vollmer A.
Chairman & CEO
3
Federico Vollmer A.
Gustavo A. Marturet M.2 †
Alfredo Travieso P.2
Luis A. Romero M.1
Víctor J. Sierra A.2
Gustavo Galdo C.3
Roberto Vainrub A.3
Miguel A. Capriles L.2
Nerio Rosales R.
Alternate Directors
Luis A. Sanabria U.2
Eduardo Mier y Terán1
Luis Esteban Palacios W.2
Luis A. Marturet M.2
Carlos Hellmund B.1
Francisco Monaldi M.3
Claudio Dolman C.2
Carlos Zuloaga T.3
Alejandro González Sosa2
Miguel A. Capriles C.1
Luis Pedro España N.1
Alberto Sosa S.3
Alexandra Mendoza Valdés1
David Brillembourg C.3
Rafael Sánchez B.3
Nelson Pinto A.
Gustavo Marturet M.1
René Brillembourg C.1
Millar Wilson
Fernando Eseverri I.1
Gustavo Vollmer A. *
Chairman & CEO
Nerio Rosales Rengifo *
Global Executive Director
Millar Wilson *
Executive Director of International Business
Luis Calvo Blesa *
Global Human Resources
and Corporate Communications Manager
Rosa M. de Costantino *
Global Private Banking
and Wealth Management Manager
Luis Alberto Fernandes *
Global Chief Legal Counsel
Alfonso Figueredo D. *
Global Chief Financial Officer
Fernando Figueredo M. *
Global Chief Risk Officer
Philip Henríquez S. *
Global Corporate and Invesment Banking Manager
Rodolfo Gasparri G. *
Global Operations and Technology Manager
Nelson Pinto A. *
Executive President Mercantil Banco Universal
María Silvia Rodríguez F. *
Executive President Mercantil Seguros
Secretary
Alternate
Secretary
Guillermo Ponce Trujillo
Carlos Tejada G. *
Global Commercial Banking Manager
Rafael Stern S.
Board of Directors Secretary
Statutory
Auditors
Francisco De León
Manuel Martínez Abreu
Alternate
Statutory Auditor
Legal
Counsel
Alternate
Legal Counsel
Note: The Audit, Compesation and Risk Committees were
created pursuant to provision in the By-laws and in accordance
with a resolution by the Board of directors. These commitees
are made up of independent Directors and are attended by the
Chairman and the CEO (ex-officio).
Humberto Chirico
Gladis Gudiño
Anahy Espiga
Corporate Strategic Planning Manager
Luis Alberto Fernandes
Luis M. Urosa Z.
Corporate Compliance
Paolo Rigio C.
Maigualida Pereira C.
Compliance Officer - Prevention of Money
Laundering and Terrorist Financing
1
2
3
8
Rafael Stern S.
Alternate Secretary
Member of the Audit Committe
Miembro of the Compensation Committe
Miembro of the Risk Committe
Annual Report
* Member of the Committe Executive
Notice of Ordinary
General Shareholder’s meeting
MERCANTIL SERVICIOS FINANCIEROS, C.A.
Authorized Capital Bs 1,328,794,493.00
Subscribed and Paid-In Capital Bs 664,397,246.50
Caracas - Venezuela
The Board of Directors hereby convenes an Ordinary General Shareholders’ Meeting to be held at the Auditorium’s Edificio Mercantil, located
at Avenida Andrés Bello N° 1, on September 18, 2015 at 10:00 in the morning, in order to:
1.
Consider the report presented by the Board of Directors and the Company’s Audited Financial Statements as of June 30, 2015, in light
of the Statutory Auditors’ Report.
2. Consider the “Proposal for the Thirty-Second Phase of the Company’s Stock Repurchase Program; that the Board of Directors of
Mercantil Servicios Financieros, C.A., submits for the consideration of the Ordinary General Shareholders’ Meeting to be held
September 18, 2015.”
3. Consider the “Proposal of Authorization for the Board of Directors for the Issuance and Placement of Bonds and/or Commercial
Papers that the Board of Directors submits for the consideration of the Ordinary General Shareholders’ Meeting to be held September
18, 2015.”
4. Consider the “Proposal of the subscribed and paid social capital enhance of the Company, that the Board of Directors submits for
the consideration of the Ordinary General Shareholders’ Meeting to be held September 18, 2015.”
N.B.
The Shareholders are hereby informed that 1) the Balance Sheet, Income Statement, Statement of Shareholders’ Equity and Statement
of Cash Flows for the period ended June 30, 2015, duly examined by the external auditors “Espiñeira, Pacheco y Asociados”; the
Statutory Auditors’ Report, the Board of Directors’ Report, 2) the “Proposal for the Thirty-Second Phase of the Company’s Stock
Repurchase Program; that the Board of Directors of Mercantil Servicios Financieros, C.A., submits for the consideration of the Ordinary
General Shareholders Meeting to be held September 18, 2015”, 3) the “Proposal of Authorization for the Board of Directors for the
Issuance and Placement of Bonds and/or Commercial Papers, that the Board of Directors submits for the consideration of the Ordinary
General Shareholders’ Meeting to be held September 18, 2015”, and 4) the “Proposal of the subscribed and paid social capital enhance
of the Company, that the Board of Directors submits for the consideration of the Ordinary General Shareholders’ Meeting to be held
September 18, 2015”, will be available to them 15 days prior to the Shareholders’ Meeting, in the Company’s Headquarters located at
Avenida Francisco de Miranda, entre Segunda y Tercera Transversal de la Urbanización Los Palos Grandes, Centro Comercial El Parque,
Segunda y Tercera Etapas, P03, Locales C-3-10, C-3-11, Municipio Chacao, Estado Miranda.
Caracas, August 20, 2015
On Behalf of Mercantil Servicios Financieros, C.A.
Corporate Secretary
9
Qualified entrepreneurs
and professionals training:
The Formula SAE UCV team
Fundación Mercantil supports the Formula
SAE UCV team, a non-profit organization
under the management of undergraduate
students at the Universidad Central de
Venezuela. The students design, build and
test a racing car by taking part in the
Formula SAE international competitions,
against 130 of the most prestigious
universities in the world.
The UCV SAE team earned the “Bosch
Three View Drawing Excellence Award” in
2014, for the design prototype drawings,
which were among the top 20 drawings in
the competition. Beyond completion, the
project supported by Fundación Mercantil
fulfills the mission to train qualified young
entrepreneurs and professionals.
Board of
Directors’ Report
Caracas, August 20, 2015
Dear Shareholders:
We are pleased to submit the consolidated results of Mercantil Servicios Financieros and main
activities for the first half of 2015.
The Financial Statements of Mercantil Servicios Financieros included in this report consolidate
the activities of its subsidiaries and were prepared in accordance with the standards of the
National Securities Superintendency. They are also presented in inflation-adjusted values as
supplemental information. They have been examined by the company’s external auditors
Espiñeira, Pacheco y Asociados, whose report is attached hereto.
Financial Results
Mercantil rreported semi-annual net income of Bs 6,962 million, which compared favorably with
Bs 5,880 million in the second half of 2014. The main contributions to this income were
Mercantil, C.A., Banco Universal with Bs 6,188 million; Mercantil Seguros, C.A. with Bs 530
million; Mercantil Commercebank Florida Bancorp with Bs 65 million and Mercantil Merinvest,
C.A. with Bs 32 million.
It should be noted that in accordance with various regulatory provisions both in Venezuela and
abroad, several Mercantil subsidiaries have made contributions to various government agencies,
totaling Bs 4,077 million and accounting for 25.6 % of Mercantil’s expenses. This combined with
Corporate Income Tax, amount to Bs 6,750 million and represents 42.4 % of its expenses. Bs 4,037
million of the Bs 4,077 million correspond to the amount paid in Venezuela and Bs 40 million
to the amount paid abroad.
Mercantil Servicios Financieros’ total Assets grew 29.1 % to Bs 459,082 million compared to
December 2014 and Shareholders’ Equity closed at Bs 37,831 million, 16.2 % more than in
December 2014.
The net loan portfolio grew Bs 27.4 % to Bs 251,400 million compared with Bs 197,382 million at
the close of 2014. Loan portfolio quality remained at acceptable levels. The ratio of past-due
and nonperforming loans to total loans was 0.2 %, considering the overall loan portfolio of
Mercantil Servicios Financieros, which consolidates the portfolios of Mercantil, C.A., Banco
Universal, Mercantil Commercebank Florida Bancorp, Mercantil Bank (Schweiz) AG, Mercantil
Bank (Curaçao) N.V. and Mercantil Bank (Panamá) S.A.
The ratio of allowances for loan losses over past-due and nonperforming loans was 1,378.7 %,
compared to 1,186.9 % at the close of 2014.
For this six-month period, the efficiency ratio measured by calculating operating expenses as a
percentage of average assets, was 5.6 %, compared to 5.3 % at the close of 2014; while the
efficiency ratio, measured by calculating operating expenses as a percentage of total net income
was 45.1 %, compared to 49.1 % in 2014.
11
The equity/risk-weighted assets ratio was 13.4 % (regulatory minimum is 8 %). This ratio was
15.2 % at the close of 2014 and is determined according to the guidelines of the National
Securities Superintendency (Superintendencia Nacional de Valores– SNV), which are based on
the standards of the Basel Committee on Banking Supervision of the Bank for International
Settlements.
The Ordinary General Shareholders' Meeting held on March 20, 2015, approved an ordinary
cash dividend to be paid out of the profits at December 31, 2014, for each outstanding common
Class A and B shares, payable in two portions (Bs 2.00 per share), the first on April 10, 2015 and
the second on October 10, 2015. It also announced an extraordinary cash dividend for each
outstanding common Class A and B shares paid at the rate of Bs 12.50 per common share payable
on May 11, 2015. These dividends represent a 50.0 % increase compared to the dividends in 2014.
The amount paid for the first portion of the ordinary cash dividend was Bs 204,429,922.00,
while the sum paid out in extraordinary dividends was Bs 1,277,687,012.50, making a total
of Bs 1,482,116,934.50.
At June 30, 2015, Mercantil had issued and placed the series 4 of issue 2010-I, series 1 of issue
2012-I, series 1 and 2 of issue 2013-I, series 1 and 2 of issue 2014-I, and series 1 and 2 of issue
2014-II of Unsecured Bonds amounting to Bs 30 million, Bs 20 million, Bs 60 million, Bs 40
million and Bs 100 million, respectively. In addition, series 3 to 8 of issue 2014-I of Commercial
Papers were placed, for Bs 220 million.
The Stock Repurchase Program initiated in May 2000 is currently in its Thirty-First Phase,
approved at the Shareholders' Meeting held on March 20, 2015. Given the stock market
situation, no new shares were repurchased between January 1 and June 30, 2015. At the close of
the first half of 2015 Mercantil did not hold any shares in Treasury.
Credit Ratings
Mercantil Servicios Financieros obtained “A1” and “A2” risk ratings for its commercial papers
and unsecured bonds, respectively issues from Fitch Ratings and Clave Sociedad Calificadora
de Riesgo. These were the highest possible ratings for a debt instrument in Venezuela. In its
evaluation issued in April 2015, Fitch Ratings also affirmed Mercantil Servicios Financieros'
long-term national rating of "A+(ven)” and its short-term national rating of “F1+(ven)”.
In January 2015, Fitch Ratings also affirmed Mercantil Banco's national risk ratings of “AA(ven)” long term, and “F1+(ven)” short term, the best national rating for a private financial
institution in Venezuela. It also ratified its international ratings of “CCC” long term, “C” short
term, and “ccc” for Viability, which are largely dependent on the country risk.
In September 2015, Fitch Ratings will review the international risk ratings of Mercantil
Commercebank Florida Bancorp and Mercantil Commercebank N.A. subsidiaries.
12
Annual Report
Acknowledgement
Dr. Gustavo A. Marturet Machado passed away on June 22, 2015. Through this date, Dr. Marturet
served as Principal Director of Mercantil Servicios Financieros, having started his career with
Mercantil in 1972, as a member of the Board of Sociedad Financiera Mercantil, and becoming
part of the Board of Mercantil Banco in 1974. Dr. Marturet acted as CEO of Mercantil Banco
and of Consorcio Inversionista Mercantil CIMA from 1982 to 1993, and from that date he was
also Chairman of their Boards, as well as of Mercantil Servicios Financieros, since its inception
in 1997 until March 2011, and of Mercantil Commercebank. He works with Mercantil for a total
of 43 years.
Dr. Marturet was a model of honesty, self-discipline, leadership, solidarity and institutional
awareness. His ample strategic vision turned him into a promoter of several initiatives that
placed Mercantil at the forefront of various activities, most significantly the international
expansion of the company. He established relationships with many different individuals and
institutions, which helped him to transmit, uphold and become a guarantor of the principles
and values of the “Mercantil Culture”, and role model to future generations.
With deepest regrets for the passing of Dr. Marturet, the Board wishes to stand out his
personal and professional qualities, as well as his valuable contribution to the healthy growth
and development of Mercantil.
Retirement and Appointment
Ms. Rosa de Costantino, Global Personal Banking and Wealth Management Manager and
member of the Executive Committee, will retire on September 30 after 36 years of continuous
service. She has distinguished herself for her competence and integrity in all the positions
and functions that Mercantil has entrusted to her, reflecting the high degree of commitment
to the Institution, and her significant contribution to the development of Personal Banking,
Private Banking and Wealth Management business.
The Board wishes to express their appreciation to Mrs. Costantino’s trajectory and solid
performance, with the hope of every success in her projects.
Mr. Jorge Pereira has been appointed as Global Personal Banking Manager. Mr. Pereira has
served for 30 years with Mercantil, being well known for his competence and commitment
to the values and principles of the “Mercantil Culture”.
90th Anniversary
Several internal celebratory events took place during the first half of the year, to
commemorate the 90th anniversary of Mercantil Banco.
The program of visits and meetings of the Chairman and Executive Committee with the
employees of all subsidiaries at the global level, in Venezuela, the United States, Panama and
Switzerland continued mainly focused on hearing their concerns and aspirations. Although
the program is included in regular annual activities, it has special significance on this
anniversary, as a welcome opportunity to promote and encourage the “Mercantil Culture”.
13
At the same time, the “Mercantil 90 Years Sporting Events” took place in Barquisimeto,
Maracaibo, Maracay, Puerto La Cruz, Puerto Ordaz, San Cristóbal, Valencia and Caracas.
An extraordinary benefit was given to the Mercantil people in Venezuela, as a special
recognition, in accordance with the years of service, consisting of the ownership transfer of
up to 90 shares of Mercantil Servicios Financieros, thereby strengthening even more the ties
with the company.
These and other initiatives, taking place during the second half of 2015, will acknowledge the
effort, professionalism and dedication of all employees contributing to the success of
Mercantil.
Products and Services
The Mercantil Banco subsidiary continued to offer products and services to suit the needs of
its more than 4,730,000 customers, around 91,000 of which were incorporated during the
six-month period.
Mercantil Banco ranks second in the financial system in terms of Credit Card product with a
share of 17.2 % of the market, and a portfolio of Bs 49,253 million (including parallel lines of
credit) thanks to continued promotional activities and adjustment on the credit limits to
increase customer loyalty and preference for credit cards. Throughout cross-selling initiatives,
first or second credit cards were granted to over 136,000 customers who fulfilled the
established evaluation and risk parameters, for a Bs 6,611 million exposure during the first
half of the year.
In addition, during the same period, 1,903 “New Professionals Credit Cards” were issued to
students in the Monteávila, Metropolitana and Católica Andrés Bello Universities, in support
of the Academic Communities strategy.
The consolidation process to include the unbanked sector of the population and support the
communities continued in the Majorities Banking segment, through the Mercantil Aliado
network, operating in low-income areas in 14 states throughout the country and the Capital
District, and through the offer of Microenterprise Credits and the Tarjeta Efectivo (Cash Card).
At the end of the year, Tarjeta Efectivo reflected a 26 % growth compared to the previous
six-month period, reaching a total of 220,000 Cards, while Microenterprise Credits reached
Bs 6,892 million with 17,389 active borrowers.
As a result of the strategy to use the Mercantil Vía Rápida fast-track self-service areas, at the
close of the semester, more than 5,250,000 transactions were processed using this service.
53.2 % of the total transactions managed through branch offices were processed through
Mercantil Vía Rápida.
Mercantil Online Banking continued to garner preference among clients, reaching at the end
of June 2015 more than 1,300,000 users of Mercantil Personal Online Banking, and more than
88,000 active users in Mercantil Business Online Banking. Together, Mercantil Online Banking
processed about 350 million transactions during the period, representing 56 % of the
transactions carried out through all channels.
14
Annual Report
During the first half of the year, new functionalities were incorporated on the Mercantil
Personal Online Banking, such as inquire and download of Tarjeta Efectivo digital balances,
and the requests of banking references for the Special Foreign Currency Account. Similarly,
Mercantil Móvil Online made available the consultation of balances and movements of the
Special Foreign Currency Account.
At the end of this half-year, @MercantilBanco, the official Mercantil Banco subsidiary Twitter
account, had more than 206,000 followers. This account is primarily intended to provide
information and advice on bank’s services, products and activities. With more than 28,000
approaches served through @MercantilBanco, this account is ranked as the third most
followed account in the banking system with reference to the “Klout” influence indicator, in
charge of measuring the account-followers interactions.
During the same period, the Mercantil Commercebank subsidiary added a new functionality
to the global mobile banking platform –Mercantil Mobile– allowing customers to -pay their
loans through the app, thereby providing a more efficient channel to carry out daily
transactions offering customers more comfort.
Likewise, the Mercantil Commercebank Online Banking was improved to allow customers to
update their personal profiles using the online web page. This new service lets customers to
visualize their contact information as it shows up in the Bank’s system, and will be able to
update their main address, mailing address, telephone numbers and e-mail addresses in a
secure and fast manner.
Personal Banking International continues to improve its customer services focused on three
segments: Mass Market, Premium and Premium Plus. Premium was recently added, and
represents an intermediate segment of about 7,000 customers with high complexity and
potential needs, served by a specialized group of professionals to introduce them to a wide
range of products and services, which would strengthen the relationship with Mercantil
Commercebank.
The Mercantil Seguros subsidiary continued to focus on high profitability products, with
special emphasis in the “Línea Vital” and “Industry and Commerce (SME)”.
Mercantil Seguros implemented the innovative Online Medical Consultations Service
(Mediconecta) for all customers with Policies with Medical Expenses Coverage, which allows
the customers to make video-medical consultations whenever they require it, receiving the
medical report by e-mail at home or at the office. In addition, customers may also use the
Mercantil Medical Attention Plan (Plan de Atención Médica Mercantil - PAMM) to request
medicines, medical appointments and lab test or studies requested by the Mediconecta
specialists, presenting the Medical Report of their medical video-consultation.
The New Model of Commercial Management began in January 2015, implementing the
Business School (Escuela de Negocios – ENA), aimed at the accreditation of Commercial Talent
in handling working skills associated to better commercial practices; allowing the
development of professional intelligence and strengthening the occupational profile through
learning centered in neurolinguistic activities. ENA combines the academic excellence of
formal education with business experience, in order to provide effective commercial
management tools, and finally, to close the gaps and strengthen the profile of the company’s
commercial resources. It is an educational model that includes various learning lectures, study
programs, evaluation and accreditation schemes, student files, operating procedures and
solutions for closing technical and attitudinal gaps.
15
In April 2015, a new branch office was opened in Cumaná, with a novel area for the attention
of customers, intermediaries and commercial allies for business management, insurance
policy handling and other related services, thereby consolidating Mercantil Seguros’
reputation as the best insurance provider in the country.
During the first half of 2015 the Personal Banking and Wealth Management businesses
focused in the improvement and development of products and services to serve of Personal
Banking segment and the Trust Fund, Mutual Fund and Securities Market businesses in
Venezuela, the United States, Switzerland and Panama.
The Securities Market Business, during the first half of 2015, provided a significant
contribution by developing the Mercantil Online functionality for the order registration of
foreign exchange in the Marginal Foreign Exchange System (Sistema Marginal de Divisas –
SIMADI). The “Cuenta de Valores Mercantil” increased the number of customers to 204,601
at the close of June 2015, allowing their participation in the primary and secondary securities
market, increasing securities custody management in 23 % and income in 4 %
In the United States, Mercantil Commercebank Investment Services, Inc. (MCIS) registered
a total of 3,308 customers at the close of first half of 2015, providing them brokerage and
advisory investment services. In the period, the volume of customer assets declined 1 %. In
2015, MCIS continues working to support growth and improve quality of services.
In Venezuela, investment and portfolio management services are conducted through
Mercantil Servicios de Inversión. In the first half of 2015, the Mercantil Fixed Income Portfolio,
Fondo Mutual de Inversión de Capital Abierto, C.A. maintained its position as industry leader,
reaching Bs 2,372 million in assets, for a total of 189,296 customers and reflecting at the first
half the year10 % growth in volume and 31 % increase in income. The Plan Crecer Mercantil
product continued its expansion, registering 60 % increase in assets.
Trust services are available to customers in Venezuela through Mercantil C.A., Banco
Universal, and in the United States through Mercantil Commercebank Trust Company, N.A.
Mercantil Banco, through its Trust Services Unit continued its focus on profitability and asset
growth, reinforcing its position as reference in the trust market business, with an increase of
13 % of customer assets.
Mercantil Commercebank Trust Company, N.A. registered 1 % growth of consolidated assets
under management.
Mercantil Bank (Schweiz) focused its wealth management products and services to Private
Banking, by increasing its assets in 6 %.
16
Annual Report
Prevention and Control of Money Laundering
and Terrorism Financing
Prevention and control of money laundering and terrorism financing is a priority for Mercantil
and an integral part of its organizational culture. The company has maintained internal control
and monitoring of its subsidiaries' activities to ensure early detection of suspicious
transactions, and has stepped up staff training in this area
To ensure compliance with anti-money laundering legislation, Mercantil has in place a wellstructured “Comprehensive Money Laundering and Terrorism Financing Prevention and
Control System” at its Venezuelan and overseas subsidiaries, in addition to Operational and
Follow-Up Plans, and Monitoring and Oversight programs. The company's “Know your
Customer” policy is the main guideline in this area.
Corporate Social Commitment
During the first half of 2015, Mercantil executed a social investment through its Mercantil
Banco Universal, Mercantil Seguros, Mercantil Merinvest and Mercantil Commercebank
subsidiaries, as well as Fundación Mercantil, for Bs 24 million, targeted through various
programs, projects and initiatives undertaken by renowned educational and social
development organizations in Venezuela and the United States.
Mercantil earmarked 51 % of the contributions to elementary and higher educational
institutions, particularly entrepreneurship and scholarships programs to encourage young
people to remain in secondary and higher education; and 49 % for social development
organizations that foster health prevention programs, social programs for children and young
people, and art and cultural programs in the communities.
The first half of 2015 highlights the development of the agreement between Fundación
Mercantil and Asociación Civil Fe y Alegría, with a new set of action lines to encourage both
the programs of refurbishing and maintaining schools facilities, and the attention of the
student population to promote entrepreneurship, inclusion and youth leadership. 12
educational centers nationwide were served during this period, with more than 6,000 students
being directly benefitted.
During the first half of 2015, the contributions and support provided to programs and initiatives
from many different educational, health and social development institutions should be
mentioned, such as: Universidad Católica Andrés Bello, Universidad del Zulia, Universidad
Simón Bolívar, Fundación Ideas, Alianza Social VenAmCham, Asociación Venezolana de Buena
Voluntad, Un Techo para mi país Venezuela AC, and the Museo de Arte Contemporáneo del
Zulia.
As part of the corporate social commitment in the United States was the support of a series
of programs in South Florida, Houston and New York promoted by several educational, social
and health institutions, such as the University of Houston, Florida International University
(FIU), SaludArte Foundation, Houston Museum of Fine Arts, Habitat for Humanity, League
Against Cancer, Juilliard School and Voices for Children Foundation.
17
corporation continued to develop the Online Donation Program in Venezuela “Un Aporte por
Venezuela”, as well as the culture support program through exhibitions in Espacio Mercantil,
a space for national art dissemination and promotion, and in Florida, United States, the
Zoolens Photography Project.
Special mention deserves Mercantil's Volunteers for their participation in various activities
and programs nationwide within the framework of the celebration of Fe y Alegría’s 60th
anniversary in Venezuela, and the projects carried out by March of Dimes, in South Florida,
United States.
One of Mercantil's corporate values is “to be an integral institution and an important factor
in the development of the communities and places in which it is involved.”
Awards and Acknowledgements
The Banker magazine once again included Mercantil Servicios Financieros among the world's
Top 500 Banking Brands. Mercantil ranks 334 in the ranking, the highest among Venezuelan
institutions included in the ranking.
This magazine also included Mercantil Servicios Financieros as the first Venezuelan institution
in its Top 1000 World's Financial Institutions, according to the analysis of the magazine.
Mercantil Servicios Financieros rose 50 places in comparison with the previous year, to rank
210th. It also ranks 6th (up 3 places from 2014) among the Top 25 Latin American financial
institutions.
Mercantil Servicios Financieros leads Venezuelan companies included among the world’s
biggest 2,000 public companies according to Forbes magazine. Compared to 2014, Mercantil
rose 85 positions from 773rd place to 648th place. It is the first of four Venezuelan companies
included in this year’s list. The Global 2,000 is a ranking based on total income, profit, assets
and market value.
The Global Finance magazine, in is edition of January 2015 has chosen the Mercantil Banco
Universal subsidiary as the "Venezuela's Best Trade Finance Provider in 2015” for the tenth
consecutive year. The magazine selection process took into consideration the transactions
volume, geographical coverage, customer services, price competitiveness, new business
development and technological innovations.
The prestigious finance publication Euromoney recognized Mercantil Banco as the “Best Bank
in Venezuela” in 2015. Mercantil Banco was granted with this distinction after an analysis of
its results, which showed a strong loan portfolio and high level of performance regarding
assets and equity, within an adequate risk management policy.
The Mercantil Commercebank subsidiary received the “Excellence in Banking and Finance
Award for the best Community Service Provider in 2014” granted by the South Florida
Business Journal. Since its foundation, Mercantil Commercebank has been acknowledged not
only for its corporate leadership in the finance services industry, but also for its continued
support of social programs centered on education, arts, culture, health, social services and
economic development.
18
Annual Report
For the third consecutive year, Mercantil Bank (Panamá) has been included among the Top
100 Banks in Central America, according to The Banker magazine. Mercantil Bank (Panamá)
ranks 75th and it also ranks 32st among banks in Panama. Last year, it ranked 74th among the
100 banks in Central America and 33rd among banks in Panama.
Development and Working Environment
There is a continuity in the application of compensation policies that benefits and support
workers preserving and improving their economic conditions. These policies, for which Mercantil
has a leading position in the financial sector, joined with the development of permanent
retention, education and training programs, allow to improve the staff professional training and
to maintain a continuous knowledge process. All of these are complemented with the
development of several activities that encourage areas of closeness and recreation with workers
and their families, nationwide.
The Mercantil Banco Universal, Mercantil Seguros and Mercantil Commercebank subsidiaries
were awarded, globally, in the group of best employers according to studies conducted by the
international consulting firm Aon Hewitt, taking into account rates of engagement, brand
strength, leadership and performance. This recognition is based on the results obtained in the
study of organizational climate and engagement survey for the year 2014 in which 8,266
employees of the organization participated.
Relations between bank officials and employees have continued to evolve within the traditional
spirit of harmony and cooperation, and the Board of Directors wishes to acknowledge them for
their efficiency and dedication to their work.
Pursuant to the National Superintendency Securities (formerly National Securities Commission)
resolution, please note that form CNV-FG-010 reflects Bs 8,850,534.68 in remunerations paid to
Company Directors and Executives in the second half of 2015.
During the first half of 2015, a number of Alternate Directors attended Board meetings, either
standing in as Principal Directors in their absence, or as invitees. On the occasion of the Chairman
of the Board's temporary absences, some of his CEO functions were delegated to members of
the Executive Committee.
Yours, sincerely
Gustavo Vollmer A.
Federico Vollmer A.
Alfredo Travieso P.
Luis A. Romero M.
Gustavo Galdo C.
Víctor J. Sierra A.
Roberto Vainrub A.
Miguel Ángel Capriles López
Nerio Rosales Rengifo
19
Inclusion and skills development:
Equal Opportunities Program (USB)
The Universidad Simón Bolívar Equal
Opportunities Program (PIO – Programa
Igualdad de Oportunidades) aims at
granting equal access opportunities to the
University to public sector senior
high-school students, particularly those
with vocational aspirations towards career
offered at the USB (Engineering,
Architecture, Science, Technology and
Administration).
Each year, the PIO receives support from
Fundación Mercantil, which allows it to
promote key experiences to participants,
students and lecturers, in areas such as
Mathematics, Physics, Chemistry and
Language, as well as to develop intellectual
and affective abilities to meet university
level academic requirements at the USB and
other higher educational institutions.
Statutory Auditors’ Report
21
Supporting knowledge, research and culture:
Padre Carlos Guillermo Plaza SJ
Cultural Center (UCAB)
The Padre Carlos Guillermo Plaza SJ
Cultural Center of the Universidad
Católica Andrés Bello (UCAB) supports
and promotes the spreading of
knowledge, research and culture, with
state-of-the-art technological tools.
This center receives 43 thousand
students per year, and is a
supplementary service to those offered
by the Central Library.
The relationship between the University,
with over 60 years’ experience, and
Fundación Mercantil have boosted the
Andrés Bello Foundation Scholarship
Program, aimed to offer economic aid to
students; the institutional program for the
support and promotion of students with
disabilities; the promotion of activities and
institutional programs of student
formation and the expansion of the UCAB
postgraduate studies offices.
Financial Statements
(Pursuant to the standards of the National Securities Superintendency)
Balance Sheet
Unconsolidated
June 30
December 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
531,142
39,163,600
181,101
39,875,843
44,750
34,778,210
(33,835)
34,789,125
48,220
28,119,205
(49,507)
28,117,918
Total Liabilities
470,000
1,575,035
2,045,035
750,000
1,485,160
2,235,160
180,000
1,135,016
1,315,016
37,830,808
32,553,965
26,802,902
Total Liabilities and Shareholder’s Equity
39,875,843
34,789,125
28,117,918
(in thousands of Bs)
Semester ended
Assets
Cash and Due from Banks
Investment Portfolio
Other Assets
Total Assets
Liabilities and Shareholders’ Equity
Unsecured Bonds and Commercial Paper
Other Liabilities
Income Statement
Unconsolidated
June 30
Diciembre 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
20,871
8,345
7,252
7,109,422
7,130,293
5,643,387
5,651,732
4,058,567
4,065,819
Total Expenses
(132,270)
(36,231)
0
(168,501)
(79,991)
(28,080)
336,788
228,717
(64,395)
(7,696)
(19,788)
(91,879)
Net Income
6,961,792
5,880,449
3,973,940
(in thousands of Bs)
Semester ended
Income
Financial Income
Equity Investments in subsidiaries
and affiliates and others
Total Income
Expenses
Operating
Financial
Deferred Corporate Income Tax
Alfonso Figueredo Davis
Isabel Pérez Sanchis
Gustavo Vollmer A.
Corporate Comptroller
President
23
Consolidated
Balance Sheet
(In thousands of Bs)
Semester ended
June 30
December 31
June 30
December 31
June 30
2015
2014
2014
2013
2013
bolivars
bolivars
bolivars
bolivars
bolivars
4,641,783
86,758,924
724,789
1,549,800
10,350,988
4,363,473
66,235,157
921,286
1,641,022
3,740,214
2,776,144
43,118,285
517,485
1,562,580
4,019,839
3,809,871
37,599,293
919,471
1,580,688
2,461,748
1,956,002
24,002,678
42,368
1,471,699
2,290,859
104,026,284
76,901,152
51,994,333
46,371,071
29,763,606
5,576
40,338,224
31,963,415
314,768
8,338,497
664,138
11,519
36,684,481
26,404,305
307,313
4,813,424
646,892
66,784
37,899,125
21,164,297
301,850
9,333,638
900,545
70,999
34,967,914
16,798,928
236,078
11,137,596
435,473
20,249
32,445,242
13,419,832
22,357
4,108,009
1,105,813
81,624,618
68,867,934
69,666,239
63,646,988
51,121,502
Current
Restructured
Past-Due
In Litigation
258,024,429
524,493
559,003
19
202,742,735
500,986
530,681
8,618
160,524,257
540,771
588,802
28,105
124,758,531
545,128
539,970
94,446
100,875,586
554,603
755,586
129,267
(Allowance for losses on Loan Portfolio)
259,107,944
(7,707,467)
251,400,477
203,783,020
(6,400,735)
197,382,285
161,681,935
(4,841,632)
156,840,303
125,938,075
(4,119,499)
121,818,576
102,315,042
(3,193,076)
99,121,966
2,980,586
235,831
40,054
4,311,714
14,462,872
2,481,114
338,801
28,116
2,044,681
7,476,461
2,078,490
168,807
42,503
1,291,680
5,434,708
1,681,142
242,007
78,098
1,116,611
4,358,639
1,235,125
145,330
129,868
1,093,848
3,505,324
459,082,436
355,520,544
287,517,063
239,313,132
186,116,569
Assets
Central Bank of Venezuela
Venezuelan Banks and other Financial Institutions
Foreing Banks and Other Financial Institutions
Pending Cash Items
Invesments Portfolio
Invesments in Trading Securities
Invesments in Securities Available-for-Sale
Invesments in Securities Held-to-Maturity
Share Trading Portfolio
Invesments in Time Deposits and Placements
Restricted Investments and Repos
Loan Portfolio
Interest and Commissions Receivable
Long-Term Investments
Assets Available for Sale
Property and Equipment
Other Assets
Total Assets
Gustavo Vollmer A.
Chairman and CEO
24
Annual Report
Consolidated
Balance Sheet
Semester ended
Liabilities and Shareholders’ Equity
June 30
December 31
June 30
December 31
June 30
2015
2014
2014
2013
2013
bolivars
bolivars
bolivars
bolivars
bolivars
127,259,236
134,338,576
107,662,570
9,779,713
94,244,958
101,175,773
91,069,337
8,184,602
73,747,401
84,327,523
70,921,341
7,084,710
58,309,779
68,533,113
62,315,596
6,758,347
43,574,957
48,135,146
47,849,693
9,506,199
379,040,095
294,674,670
236,080,975
387,995
619,507
166,240
198,080
118,037
387,995
619,507
166,240
198,080
118,037
2,000,004
3,801,941
1,805,136
439,894
14,946
300,127
2,620,511
1,805,136
439,894
127,739
695,127
2,859,311
1,522,347
628,420
112,837
430,127
974,051
1,528,632
628,420
19,927
322,164
2,230,891
1,302,400
974,051
14,381
8,061,921
5,293,407
5,818,042
3,581,157
4,843,887
126,424
32,920,611
696,414
93,504
21,573,322
696,338
63,632
17,877,043
696,058
54,236
14,198,060
696,144
41,612
11,657,054
701,177
421,233,460
322,950,748
260,701,990
18,168
15,831
12,171
11,114
9,415
664,397
191,709
0
166,715
2,998,777
32,366,773
(144,753)
(93,223)
1,680,413
664,397
191,709
0
166,715
2,982,241
27,054,686
(91,626)
(93,223)
1,679,066
664,397
191,709
0
166,715
3,005,619
21,145,563
(163,757)
(69,185)
1,761,841
153,322
191,709
203,546
166,715
3,005,730
18,505,241
(59,458)
0
2,490,701
153,418
191,709
203,546
166,715
2,992,875
14,725,519
(55,569)
0
1,301,179
37,830,808
32,553,965
26,802,902
24,657,506
19,679,392
459,082,436
355,520,544
287,517,063
239,313,132 186,116,569
Liabilities
Deposits
Non-Interest Bearing Checking Accounts
Interest Bearing Cheking Accounts
Saving Deposits
Time Deposits
195,916,835 149,065,995
Debt Authorized by the
National Securities Superintendency
Publicly Offered
Debt Securities
Financial Liabilities
Obligations with Banks and Savings and Loan Institutions
In Venezuela up to one year
Abroad up to one year
Abroad for more than one year
Liabilities Under Repurchase Agreements
Other Liabilities up to one year
Interest and Commissions Payable
Other Liabilities
Subordinated Debt
Total Liabilities
Minority Interest in Consolidated Subsidiaries
214,644,512 166,427,762
Capital
Maintenance of Paid-In Capital
Premium for Issuing Stock
Capital Reserves
Adjustment for Conversion of Net Assets by Subsidiaries Abroad
Retained Earnings
Shares Repurchased and Held by Subsidiaries
Pension plan remeasurement
Unrealized Gain from Adjustment at Market Value of Investments
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
Gustavo Vollmer A.
Chairman and CEO
25
Consolidated
Income Statement
June 30
December 31
June 30
December 31
June 30
2015
2014
2014
2013
2013
bolivars
bolivars
bolivars
bolivars
bolivars
115,943
2,473,136
20,890,929
189,598
2,163,700
15,375,964
26,066
2,513,251
9,871,519
15,918
2,248,182
8,212,612
8,606
1,538,052
6,430,182
23,480,008
17,729,262
12,410,836
10,476,712
7,976,840
(6,341,427)
(74,334)
(26,481)
(103,152)
(5,224,271)
(50,224)
(22,817)
(78,632)
(3,634,021)
(60,899)
(7,696)
(106,829)
(2,710,882)
(61,938)
(6,470)
(85,294)
(2,193,439)
(57,911)
(6,641)
(62,869)
(6,545,394)
(5,375,944)
(3,809,445)
(2,864,584)
(2,320,860)
Net Interest Income
16,934,614
12,353,318
8,601,391
7,612,128
5,655,980
Provision for Losses on Loan Portfolio and Commissions Receivable
(1,659,640)
(1,938,631)
(934,950)
(1,198,459)
(585,779)
Net Financial Margin
15,274,974
10,414,687
7,666,441
6,413,669
5,070,201
100,785
(2,540)
1,107,201
12,565
112,348
272,379
331,014
4,016,055
106,950
32,063
855,360
18,950
169,393
(32,250)
190,797
3,603,474
60,458
3,988
563,738
11,266
69,232
122,339
269,533
2,217,001
58,516
(8,996)
525,575
14,871
96,604
71,904
367,786
2,229,430
45,758
12,491
333,370
11,001
62,902
842,877
432,175
1,441,561
5,949,807
4,944,737
3,317,555
3,355,690
3,182,135
10,991,945
(9,315,390)
7,734,901
(6,500,123)
5,642,528
(4,716,228)
4,792,898
(4,002,379)
3,756,033
(3,222,884)
1,676,555
1,234,778
926,300
790,519
533,149
22,901,336
16,594,202
11,910,296
10,559,878
8,785,485
(4,501,073)
(3,492,659)
(2,781,564)
(2,323,119)
(1,991,268)
(1,433,701)
(2,457,415)
(5,137,596)
(1,029,856)
(1,885,215)
(4,569,952)
(683,612)
(1,448,810)
(2,848,922)
(603,509)
(986,740)
(2,785,878)
(412,471)
(792,349)
(1,836,825)
(13,529,785)
(10,977,682)
(7,762,908)
(6,699,246)
(5,032,913)
9,371,551
5,616,520
4,147,388
3,860,632
3,752,572
(2,672,860)
266,978
(66,366)
334,393
(151,335)
(20,244)
(20,829)
(58,791)
(195,152)
(83,777)
(2,405,882)
268,027
(171,579)
(79,620)
(278,929)
6,965,669
5,884,547
3,975,809
3,781,012
3,473,643
(3,877)
(4,098)
(1,869)
(2,049)
(2,179)
6,961,792
5,880,449
3,973,940
3,778,963
3,471,464
(In thousand of Bs)
Semester ended
Interest Income
Income from Cash and Due from Banks
Income from Investment Portfolio
Income from Loan Portfolio
Total Interest Income
Interest Expenses
Interest on Demand and Savings Deposits
Interest on Time Deposits
Interest on Securities issued by the institution
Interest on Financial Liabilities
Total Interest Expenses
Trust Fund Operations
Foreing Currency Transactions
Commissions on Customer account Transactions
Commissions on Letters of Credit and Guarantees Granted
Equity in Long-Term Investment
Exchange Gains
Income on Sale of Investments Securities
Other income
Total Commissions and Other Income
Insurance Premiums. Net of Claims
Premiums
Claims
Total Insurance Premiums. Net of Claims
Operating Income
Operating Expenses
Salaries and Employee Benefits
Depreciation, Property and Equipment Expenses,
Amortization of Intangibles and Other
Fees Paid to Regulatory Agencies
Other Operating Expenses
Total Operating Expenses
Net before Income taxes, Extraordinary items
and Minority Interest
Taxes
Current
Deferred
Total Taxes
Net Income before Minority Interest
Minority Interest
Net Income for the Period
Gustavo Vollmer A.
Chairman and CEO
26
Annual Report
Providing opportunities
for labor training:
Superatec
The aim of the well-known Superación
Personal a través de la Tecnología
Institution (Superatec), with the support
of Fundación Mercantil, is the
transformation of the lives of individuals
and communities through integral,
technological and labor training.
Young people and adults are served by the
organization, which aims at reducing the
technological gap and promoting
productive labor market inclusion, through
training in computer technology, digital
editing, personal finances and other skills
for the productive life of students.
Graduates from Superatec have the
opportunity to register in employment
offices, with the chance of obtaining
formal jobs in various areas of the country.
Mercantil and Fe y Alegría
Bringing Love and Care to Venezuelan Schools
The Fundación Mercantil “Give Your School a
Helping Hand” Program, together with
students, teachers, parents members of the
school community, and Mercantil Volunteer,
provides improvements, repairs and new
equipment to Fe y Alegría schools in the
country, as part of the agreement with this
international promoter of comprehensive
popular education.
Refurbished school areas in 19 schools in
Apure, Aragua, Bolívar, Carabobo, Lara,
Mérida, Vargas and Zulia had been completed
by June 30, 2015. The program also includes
other states and covers over 17 thousand
students per year.
The “Give Your School a Helping Hand”
program began over 30 year ago, with the aim
of contributing to improve the quality of the
elementary, medium and high school
education, through the refurbishing of
schools for the benefit of students and school
communities and the creation of awareness
of building maintenance and care.
Economic Climate
Global Environment
During the first half of 2015, the difference
between geographical areas continued to determine global economic growth. Therefore, global
economy suffered the effect of the dramatic drop in oil prices, the significant increase in the
value of the U.S. dollar, the deceleration of China’s economic growth, uncertainty in Europe
(particularly regarding financial stability, given the problems of the Greek economy), and the
expectation of changes in the U.S. monetary policy. In addition, there has also been great
divergence between the U.S. monetary policy and that of other economies, which has contributed
to the volatile exchange rate.
In China, the economic deceleration has increased during the last few months, in spite of a series
of government policies implemented to offset the slowdown, mainly through monetary stimuli.
Compared to the Eurozone two lines can be observed. On the one hand, consumer sentiment
indicators have improved during 2015, in line with a moderate acceleration of economic activity.
On the other hand, there are doubts regarding the integrity of the Eurozone itself, which have
resurfaced recently, as a result of the difficulties during the negotiation between Greece and the
Eurozone, which place at risk this phase of the economic recovery in the Zone.
Discrepancies still remain in various geographical areas regarding monetary policy. On the one
hand, the U.S. Federal Reserve is trying to increase interest rates (for the first time since 2004)
and to normalize monetary policy. On the other hand, the European Central Bank (ECB) and the
Bank of Japan are implementing even more flexible policies of monetary stimuli, in an attempt
to maintain long term interest rates at lower levels in order to stimulate economic growth.
United States
During the first half of the year, the U.S. economy showed two different trends. During the first
quarter of the year, there was a slight deceleration (0.2 % year-on-year decline of economic
activity), as a consequence of climate conditions, the strength of the U.S. dollar and the sectorial
effects of the drop of oil prices. In the second quarter of 2015, economic activity have expanded
moderately, driven by a strong labor market, which has improved household incomes and, as a
result, has stimulated private consumption. However, there is room still for additional
improvement of the labor market, given the fact that, although the market shows solid
improvement in job creation, the figures hide weak productivity, a high level of temporary jobs,
and a low salary growth.
29
Although the labor market showed improvements in the first half of 2015, signals seem to be
confusing. In June, the U.S. economy created 223,000 jobs. The unemployment rate declined to
5.3 % in June, the lowest since April 2007; however, this reduction can be explained by the decline
of the rate of activity to 62.6 %, the lowest level since October 1977. In addition, salary growth
continues to be low, with no month-on-month variation at the close of June.
The housing investment indicators provide signs that the U.S. economy had showed larger growth
during the second quarter of the year. The real estate market continues to be buoyed by an
increase in jobs, together with flexible loan conditions and an improvement in housing prices.
Latin America
During the first half of 2015, the region experienced a new decline of economic growth due to
factors related to foreign trade and to a weak internal demand. An expansion of 0.5 % is
expected for 2015 (1.1 % in 2014), which may increase the unemployment rate from 6 % to 6.5 %
in the year. The lower prices of basic products, particularly energy and food, and the weak
internal demand, forecast an inflation rate not far from the 9.5 % of 2014, although it has
started to accelerate during the first half of 2015 due to the pressure towards higher prices in
some South American economies. The reduced growth of commercial associates and the
decline of prices of raw materials have deteriorated the trade terms in the exporting economies
of primary goods in the region, by 1.8 % in 2014, with an additional contraction of 2.2 %
expected for 2015; this would cause an increase in the deficit of the current account of -3 GDP
points (-2.7 % in 2014) which, as in the last few years, will be compensated in part by direct
and portfolio investments, resulting in a weak negative variation of international reserves
(around US$ 857 billion). In this unfavorable external context, currencies in the region
experience weakenings between 15 % and 30 % in comparison with the US dollar in Brazil,
Colombia and Mexico, with limited appreciations (Costa Rica), which offset the loss of exports
competitiveness in the region.
During the first quarter of 2015, internal investments declined (-0.3 %) for the fourth
consecutive quarter, with household spending also decelerating, causing internal demand to
increase, in real terms, 1 %, less than half of the declining expansion showed in 2013.
Despite the economic deceleration, fiscal income (4.6 % in 1Q 2014 and 1Q 2015) and fiscal
spending (4.9 % vs. 5.2 %) maintained a relative stability in first quarter of 2015, with a slight
increase of the global negative balance of the government’s accounts. However, if this trend
continues, the fiscal deficit would continue for the eighth consecutive year (-2.8 % of GDP in
2014), although it is expected that the consolidated public debt will show no significant
changes in comparison with 2014, at levels slightly more than 30 points of the product.
30
Annual Report
Venezuela
During the first half of 2015 the Venezuelan economy suffered from an unfavorable external
context, the same as most of the exporting economies of basic products of the region; at the
domestic level, this translates into a continued restriction of access to foreign exchange,
domestic pressure on prices, and sluggishness in the economic activity. In spite of the lack of
official statistics at the closing date of this document on domestic production, aggregate
demand, balance of payments, prices and the labor market, among other macroeconomic
variables, some economic indicators point to the persistence of the slowness of real markets,
pressures on cost rising and on monetary liquidity, partly due to the injection of means of
payment of fiscal origin, and the secondary creation of money via banking loans.
The rising global oil imbalance, particularly noticeable from the second half of 2014, has
pushed the nominal value of the oil basket during the first half of 2015 at an average of US$/b 49.7,
49 % below to the US$/b 97 in the same period of 2014. If oil production and exports had
remained at similar levels than in the first half of 2014, the value of exports might have
declined by 60 %, around US$/b 16 billion. This decline in the main export item, and the service
(capital and interest) of the public debt are, in spite of the decline of imports spending, the
principal cause of the total international reserves drop, which passed from US$ 22,077 million
at the close of 2014 to US$ 16,180 million, the lowest level of external assets since May 2003.
Summary of Economic Performance
1st Half
2014
1st Half
2015
Variation of Gross
Domestic Product %
Total
Oil Sector
Non Oil Sector
-4.9
0,3
-4.5
nd
nd
nd
Exchange Rate Bs./US$
End of Period
Average
16.70
14.20
18.10
12.60
Exchange Rate Variation %
End of Period
Average
165.3 %
137.9 %
8,4 %
-11.3 %
Inflation (Caracas) %
Cumulative Variation
Annualized Variation
25,9
66,2
nd
nd
Interest Rate - End of Period
Average Leading Rates (6 main Banks)
90 day Time Deposits (6 main Banks)
16,6
14,5
19,7
14,5
Source: Central Bank of Venezuela and in-house calculations.
31
Public spending has been the most dynamic element of internal demand, within a context of
contraction of the private side of internal demand. The disbursements of the Central
Government, excluding the service of the debt, reached Bs 651.7 billion in June of this year
(Bs 385.9 billion in the first half of 2014), for a nominal expansion of 69 %. The evolution of
income from collected taxes under the administration of the National Integrated Tax
Administration Services (Servicio Nacional Integrado de Administración Tributaria - SENIAT)
has been very favorable, increasing from Bs 183,4 billion in the first half of 2014 to Bs 438,8
billion in the first half of 2015. Cash flow in local currency has been favorable, to the point of
requiring low issues of internal public debt.
Monetary liquidity, in this period, grew 30.9 % in nominal terms (18.3 % in the first half of last
year), due to, on the side of monetary supply, the speed of money circulation, the increase of
the monetary base (from 18 % in the first half of 2014 to 39 % in the same period of 2015),
and the expansion of secondary money from banking loans, which grew 41.3 % (27.4 % in the
same period of 2014),. On the other hand, the monetary policy implemented by the
Venezuelan Central Bank (Banco Central de Venezuela – BCV) had an expansive effect on
liquidity, in strong contrast with the contraction of the same period of last year. Open market
operations caused a net expansion of the means of payment in the hands of the public of Bs 1.1
billion, significantly different from the net astringency of Bs 6.6 billion in the first half of 2014.
Interest rates performance, within the legal margin of maximum and minimum levels, tended
to rise. Lending rates averaged 19.2 %, a 311 bps (basis points) increase from 16.1 % in the first
half of 2014. In the case of deposits rates measured by90-day fixed-terms deposits, increased
4 bps to average 14.6 %; whereas savings deposits declined 58 bps from 14.04 % to 13.45 % in
the same period.
32
Annual Report
Developing future leaders
The alliance between the Center for
Leadership at the Florida International
University and Mercantil Commercebank
has promoted the specialized Leadership
Lecture series for over three years. The
Center gathers experts and professors to
provide specialized knowledge to
participating students, professionals and
their organizations. Combining theory
and practical applications, the program
creates a learning environment where
students may improve their leadership
competence and identify opportunities to
apply their abilities as future leaders.
Promoting entrepreneurship
and good ideas
One of Mercantil’s motivations is to
contribute to the development of
entrepreneurial talent in Venezuela. For
this reason, it promotes the Ideas Contest,
an annual competition of business and
social entrepreneurship plans.
Mercantil is a founding member of this
initiative offering training to
entrepreneurs, and promoting and
supporting the generation of new
businesses and initiatives in the country.
For reference purposes only, the winners
of the 2014 Ideas Contest presented PleIQ,
the first educational augmented reality toy
made in Venezuela. This educational toy
stimulates multiple intelligences in
preschool children, and is the only
Venezuelan entrepreneurship initiative
chose to take part in Start-Up Chile,
together with other 70 projects among
over 1,800 companies world-wide.
Management
Discussion and Analysis
Balance Sheet
A summary balance sheet is shown below
Summary of Consolidated
Balance Sheet
Semester ended
(In thousands of Bs
except percentages)
and the variations found when comparing June 2015 with December 2014 are commented on:
Jun. 2015 Vs. Dec. 2014
Jun. 2015 Vs. Jun. 2014
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
287,517,063
103,561,892
29.
171,565,373
59.7
68,867,934
69,666,239
12,756,684
18.5
11,958,379
17.2
251,400,477
197,382,285
156,840,303
54,018,192
27.4
94,560,174
60.3
379,040,095
294,674,670
236,080,975
84,365,425
28.6
142,959,120
60.6
37,830,808
32,553,965
26,802,902
5,276,843
16.2
11,027,906
41.1
Trust Fund Assets
28,321,477
24,874,057
20,952,093
3,447,420
13.9
7,369,384
35.2
June 30
December 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
459,082,436
355,520,544
81,624,618
Loan Portfolio, Net
Deposits
Total Assets
The audited financial statements and their notes are attached to this report. The accounting
standards used are summarized at the end of this chapter.
Total Assets
Total assets are Bs 459,082 million, representing 29.1 % semi-annual growth, as a result of the
combined performance of cash and due from banks, and the investment and loan portfolios,
which grew 35.3 %, 18.5 % and 27.4 % respectively. The ratio of performing assets to total
assets is 75.1 %, up Bs 70,226 million (25.6 %) compared to the previous six months.
The most significant variations for this item during the period, taken individually by
subsidiary, are as follows:
Jun. 2015 Vs. Dec. 2014
(In thousands of Bs, except percentages)
Mercantil Banco Universal
Mercantil Seguros
Mercantil Commercebank
Bs
Bs
US$
June 30
December 31
2015
2014
Increase/
(Decrease)
394,598,671 292,085,486
22,039,756
14,972,929
8,169,718
7,878,288
102,513,185 35.1 %
7,066,827 47.2 %
291,430 3.7 %
35
At June 30, 2015, investments totaled Bs 81,625 million, Bs 12,757 million (18.5 %) up from
Bs 68,868 million in December 2014. This increase was seen mainly in the investments issued
by the Bolivarian Republic of Venezuela, state-owned companies and decentralized entities.
The most significant variations for this item during the period, taken individually by subsidiary,
are as follows:
Jun. 2015 Vs. Dec. 2014
Junio 30
Diciembre 31
2015
2014
Increase/
(Decrease)
65,949,729
12,343,475
2,218,159
48,782,994
8,765,710
2,230,747
17,166,735 35.2 %
3,577,765 40.8 %
(12,588) (0.6 %)
Mercantil Seguros
Bs
Bs
Us$
Government bonds issued by the Venezuelan State account for 0.70 times Mercantil's equity
and 5.7 % of its assets (0.64 times and 5.9 %, respectively in December 2014). At Mercantil Banco
Universal, these securities represent 0.47 times its equity and 4.7 % its assets (0.59 times and
5.8 %, respectively in December 2014).
At June 30, 2015, the Mercantil, C.A. Banco Universal subsidiary, in line with regulations issued
by the Executive Branch, purchased Bs 30,975 million in Mortgage Bonds, Participation
Certificates Agricultural Bonds and Stocks. These represent 57.4 % of the bank's investment
portfolio and 1.1 times its shareholders' equity (Bs 26,167 million representing 58.8 % of its
investment portfolio and 1.1 times its shareholders' equity at December 31, 2014).
Investments in Securities
by Issuer
Bs 81.625 million
June 2015
Jun-2015
Venezuelan Central Bank
Dec-2014
Jun-2014
4.8 %
1.7 %
10.6 %
Venezuelan State and Goverment Entities
70.2 %
70.0 %
64.7 %
Goverment and US Goverment-sponsored Bodies
12.3 %
15.9 %
16.0 %
Others
12.7 %
12.4 %
8.7 %
36
Annual Report
Investment by maturity and yield at June 30, 2015 are broken down as follows:
Investments by Maturity and Yield
(Stated in millions of Bs, except percentages)
Available
for Sale
Tradining
Years
Bs 1
Bs Less than 1
From 1 to 5
Over 5
US$ Less than 1
From 1 to 5
Over 5
4
2
6
Bs 1
%3
Held to
Maturity
Bs 2
Shares
Bs 1
%3
4,366
6,426
14,175
6.0
12.3
13.4
3,634
3,190
24,840
4.3
5.4
5.4
270
2,624
12,479
40,338
2.3
3.1
3.8
140
139
19
31,963
3.0
4.0
8.1
Time Deposits
and Placements
Bs 1
Trust Funds and
Restricted
Investments
Bs 1
%
%3
TOTAL
8,326 4
6.4
237
4
3.3
12.3
16,563
9,620
39,276
12
0.4
410
4.6
14
664
2.8
836
2,763
12,566
81,625
261
53
315
8,338
1
Market value.
Amortized cost.
Yield is based on the amortized cost at the end of the period. This is obtained by dividing income from securities (including amortization
of premiums or discounts) by the amortized cost or market value.
4
Bs 3,936 million correspond to deposits in the Venezuelan Central Bank with maturities less than 60 days.
2
3
Investments at the close of the first half of 2015, by company, issuer and currency, are made
up as follows:
Breakdown of Investments by Issuer and Currency at June 30, 2015
(In millions of Bolivars, except percentages)
Venezuelan
Central
U.S.
Bank
Government
Bolivars
Mercantil Seguros and Others
Total Bs
1
Int’l Venezuelan Venezuelan
Private Government Private
Total
Bs
49,573
7,188
56,761 1
54,005
11,455
65,459
Totals
US$
29
3,936
3,936
US$ Dollars
Florida BanCorp
Mercantil Seguros and Others
Total US$
Breakdown %
U.S.
Agencies
4.8 %
14
12
3
829
121
950
610
26
651
775
99
885
9
70
82
7.3 %
5.0 %
6.8 %
70.2 %
Bs 747 million include foreign exchange indexation clauses.
37
496
4,266
4,762
4
4
2,222
320
2,572
5.9 % 100.0 %
Net Loan Portfolio
AtJune 30, 2015, net loans totaled Bs 251,400 million, up Bs 54,018 (27.4 %) from Bs 197,382
million in December 2014.
Jun. 2015 Vs. Dec. 2014
June 30
December 31
2015
2014
Increase/
(Decrease)
214,849,226
162,619,332
52,229,893 32.1 %
5,525,072
5,250,102
Bs
US$
274,969
5.2 %
The ratio of past-due and nonperforming loans to gross loans is 0.2 % (0.3 % at December 31,
2014). The ratio by subsidiary is as follows:
• Mercantil Banco Universal 0.2 % compared with 0.4 % for the Venezuelan financial system.
• Mercantil Commercebank, N.A. 0.2 %, a ratio that improved compared to 0.3 % in
December 2014. Non-accrual loans amounted to 1.2 % of total loans (0.8 % at December
31, 2014).
At June 30, 2015, 99.6 % of Mercantil’s loan portfolio is outstanding. The allowance for losses
on loan portfolio covers 1,378.7 % of past-due and nonperforming loans (1,186.9 % at December
31, 2014); this indicator is 1,569.5 % at Mercantil Banco Universal (1,352.7 % at December 31,
2014) and 524.7 % at Mercantil Commercebank (444.1 % at December 31, 2014).
Net Loan Portfolio by
Business Segment
Bs 251,400 million
June 2015
Jun-2015
Dec-2014
Jun-2014
Large Corporations
19 %
21 %
25 %
Small and Medium Enterprise
46 %
45 %
44 %
Individuals
35 %
34 %
31 %
38
Annual Report
Compulsory Percentage of Mercantil Banco Universal Loan Portfolio by
economic sector and interest rates
June 2015
%
reached
%
required
27.7 1
23.0
Calculated on the gross loan portfolio at
12/31/2014, distributed as follows: 7.6 % for home
purchase, 0.4 % for self-construction, improvements and expansion, and 12 % for self-construction of main dwellings, from the latter 9.0 %
should be allocated for the purchase of bonds and
3.0 % for construction. Annual Compliance.
7.6
-
Microcredits 3 % calculated on the gross loan portfolio at
4.1
3.0
3.7 1
2.0
13.6
-
Sector
Agriculture
Mortgage
Percentages of Compliance
Calculated on the average gross loans at 12/31/2014
and 12/31/2013. Monthly compliance. Maximum per
customer 5 % of the current portfolio. It requires a
minimum number of new clients (10 %). Additionally,
the portfolio must be quarterly classified among
areas: strategic sectors (75 %), non-strategic sectors
(5 %), agribusiness investment (15 %) and trading (5
%), according to the Ministery of Agriculture and
Lands. 20 % of the portfolio must be allocated to
medium and long-term credits.
12/31/2014. Monthly Compliance.
Tourism
Calculated on the average gross loans at 12/31/2014
and 12/31/2013. The Tourism Ministry set in 4.25 %
the percentage that full-service banks have to earmark to the tourism sector in 2015. Compliance
must be achieved at 12/31/2015.
Calculated on the gross loan portfolio at 12/31/2014.
Manufacturing The percentage of compliance must be earmarked
to strategic development sectors in 60 % and to the
financing of SME, joint ventures, community and
state-owned companies in 40 %.
June 2015
Interest rates in force
Set weekly by the Venezuelan Central
Bank. At 06/30/2015 this is 13 %.
Set by the Housing and Habitat Ministry.
Set in accordance with family income of
debtors, ranging between 4.66 % and
10.66 %.
Within minimum and maximum rates
established by the Venezuelan Central
Bank. At 06/30/2015 the rate cannot be
higher than 24 %.
The Venezuelan Central Bank establishes
a preferential rate for the sector on a
monthly basis. As of 06/30/2015, the
maximum rate is 10.38 % and, in some
cases, could be decreased in 3bps
(minimum 7.38 %) in accordance with the
Law for Tourism Loans.
Set by the Venezuelan Central Bank at 18
%. For SME, state-owned industries,
community industries and joint ventures,
the applicable interest rate may not
exceed 90 % of the rate set by the
Venezuelan Central Bank. At 06/30/2015
this is equivalent to 16.2 %.
1
Includes Bs 1,357 million in Agricultural Bonds issued by the Venezuelan State and state-owned Entities valid for the compulsory agricultural
portfolio; and Bs 207 million in Class "B" shares of the company guaranteeing the loans of tourism SMEs "Sociedad de Garantías Recíprocas
para la Pequeña y Mediana Empresa," applicable for compliance with the tourism portfolio.
Loan Portfolio, gross
Classified by Status
June 30
2015
Semester Ended
(In thousands of Bs except percentages)
Current
Restructured
Past Due
In Litigation
December 31
%
2014
bolivars
bolivars
258,024,429
524,493
559,003
19
259,107,944
99.6 202,742,735
0.2
500,986
0.2
530,681
0.0
8,618
100.0 203,783,020
39
June 30
%
2014
%
bolivars
99.5
0.2
0.3
0.0
100.0
160,524,257
540,771
588,802
28,105
161,681,935
99.3
0.3
0.4
0.0
100.0
Deposits
At June 30, 2015 deposits reached Bs 379,040 million, which represents 28.6 % more than the
Bs 294,675 million registered in December 2014. Demand deposits were the main component
of total deposits and reached Bs 261,598 million, up 33.9 % compared to December 2014,
representing 69.0 % of total deposits. Savings deposits increased Bs 16,593 million (18.2 %)
and time deposits Bs 1,595 million (19.5 %) over the same period.
Jun. 2015 Vs. Dec. 2014
June 30
December 31
2015
2014
337,974,830
6,368,428
253,709,187
6,294,880
Bs
Us$
Increase/
(Decrease)
84,265,643
73,548
33.2 %
1.2 %
Deposits by
Business Segment
Bs 379.040 million
June 2015
Jun-2015
Dec-2014
Jun-2014
26 %
Large Corporations
25 %
26 %
Small and Medium Enterprise
28 %
26 %
26 %
Individuals
47 %
48 %
48 %
Shareholder’s Equity
At June 30, 2015, shareholders' equity was Bs 37,831 million, 16.2 % up from Bs 32,554 million
in December 2014. This increase mainly includes Bs 6,962 million in net income for the first
half of 2014, and Bs 1,650 million reduction corresponding to dividends.
Capital Ratios
Mercantil’s Equity/Assets ratio at June 30, 2015 is 8.2 % and its Equity/Risk-Weighted Assets
ratio is 13.4 %, based on the standards of the National Securities Superintendency
(Superintendencia Nacional de Valores - SNV), (9.2 % and 15.2 % at December 31, 2014).
• At June 30, 2015, Mercantil Banco Universal’s Equity/Assets ratio is 9.4 % and its
Equity/Risk-Weighted Assets ratio is 14.1 % (9.7 % and 16.5 % at December 31, 2014,
respectively), in accordance with the requirements of the Superintendency of Banking
Sector Institutions (Superintendencia de las Institutiones del Sector Bancario) in Venezuela.
• Mercantil Commercebank, N.A., based on the standards of the U.S. Office of the
Comptroller of the Currency (OCC), at June 30, 2015 the Equity/Assets ratio is 9.3 % and
the Equity/Risk-Weighted Assets ratio is 12.6 % (9.3 % and 13.3 % at December 31, 2014,
respectively).
The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums.
40
Annual Report
Income Statement
The main variations between the figures for June 30, 2015 and June 30, 2014 are summarized
below:
Financial Margin
Semester ended
(In thousands of Bs,
except percentages)
June 30
December 31
2015
2014
bolivars
bolivars
Jun. 2015 Vs. Dec. 2014
Jun . 2015 Vs. Jun. 2014
Increase/
2014
(Decrease)
bolivars bolivars
%
Increase/
(Decrease)
bolivars
%
June 30
Interest Income
23,480,008
17,729,262
12,410,836
5,750,746
32.4
11,069,172
89.2
Interest Expense
(6,545,394)
(5,375,944)
(3,809,445)
1,169,450
21.8
2,735,949
71.8
Net Interest Income
16,934,614
12,353,318
8,601,391
4,581,296
37.1
8,333,223
96.9
Allowance for losses on loan Portfolio and
provision for commissions receivable
(1,659,640)
(1,938,631)
(934,950)
(278,991)
(14.4)
724,690
77.5
15,274,974
10,414,687
7,666,441
4,860,287
46.7
7,608,533
99.2
Net Interest Income
Net Interest Income during the first half of 2015 was Bs 16,935 million, 96.9 % higher than the
Bs 8,601 million reached in the first half of 2014. This increase is mainly due to the growth of
financial assets and liabilities. Interest income was Bs 23,480 million, which reflects 89.2 %
increase compared to the first half of the previous year, resulting from 111.6 % growth in
income from the loan portfolio. Interest expenses reached Bs 6,545 million, 71.8 % more than
in the first half of 2014. The financial intermediation ratio (loans to deposits) was 68.4 % at
the close of June 2015 and 68.5 % at June 2014.
• Mercantil Banco Universal reached Bs 16,040 million, up 105.0 % compared to the first half of
the previous year, which amounted to Bs 7,823 million, mainly due to the increase in financial
assets and liabilities. The financial intermediation ratio was 64.7 % in June 2015 and 63.2 % in
June 2014.
• Mercantil Commercebank, N.A. achieved US$ 84 million, 17.4 % up from US$ 71 million
registered in the first half of the previous year. The Bank continues to hold a significant portion
of its assets, US$ 2,379 million (more than 29 %), in short-term investments and securities issued
by the U.S. government or U.S. government-sponsored agencies. This high level of liquidity has
continued to allow the Bank ample flexibility to increase its credit operations.
Mercantil’s net interest income/average financial assets ratio at June 30, 2015 was 11.3 %, in
comparison with the same period of 2014, when it was 8.5 %.
Evolution of Net Interest Income
11.3 %
20,000
11.5 %
(in millions of Bs)
18,000
10.5 %
16,000
9.3 %
14,000
12,000
9.5 %
8.8 %
8.5 %
8.5 %
8.5 %
10,000
8,000
7.5 %
6,000
4,000
2,000
6.5 %
5,656
7,612
1H 2013
2H 2013
8,601
12,353
16,935
2H 2014
1H 2015
-
Net Interest Income
Net Interest Income / Average Financial Assets
5.5 %
1H 2014
41
Loan Portfolio Provision
During the first half of 2015, loan loss provisions were Bs 1,660 million, up 77.5 % from Bs 935
million in the first half of 2014, bringing the accumulated provision to Bs 7,707 million at
the close of June 2015. This represents 3.0 % of Mercantil’s gross loans (3.1 % at December
31, 2014) and 1,378.7 % coverage of past-due and nonperforming loans (1,186.9 % at
December 31, 2014).
• Mercantil Banco Universal registered Bs 1,612 million in loan loss provisions in the first
half of 2015 (Bs 886 million in the first half of 2014) aimed mainly at provisions related to
the construction and service sectors, resulting from loan portfolio growth during the sixmonth period. At June 30, 2015, the accumulated loan portfolio provision was Bs 7,159
million, which represents 1,569.5 % coverage of past-due and nonperforming loans (931.3 %
at June 30, 2014). The ratio of Past-due and Nonperforming Loans to Gross Loans decreased
from 0.4 % in June 2014 to 0.2 % in June 2015.
• Mercantil Commercebank, N.A. registered US$ 6 million in loan loss provision during the
first half of 2015, . At June 30, 2015, the accumulated provision for the loan portfolio was
US$ 72 million and covers 524.7 % of past-due and nonperforming loans (369.4 % at the
close of June 2014).
(in millions of Bs)
Loan Portfolio Evolution
260,000
240,000
220,000
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
3.1 %
3.3 %
3.0 %
3.1 %
3.0 %
0.9 %
0.5 %
I Half
2013
II Half
2013
0.4 %
I Half
2014
0.3 %
II Half
2014
0.2 %
4.4 %
4.0 %
3.6 %
3.2 %
2.8 %
2.4 %
2.0 %
1.6 %
1.2 %
0.8 %
0.4 %
0.0 %
I Half
2015
Loan Portfolio
Past due and non-performing loans
Loan Portfolio Provision / Gross Loan Portfolio
Past due and non-performing loans / Gross Loan Portfolio
42
Annual Report
Commissions, Other Income and Insurance Premiums, Net of Claims
Commissions, Other Income and
Insurance Premiums
Jun. 2015 Vs. Jun. 2014
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
December 31
June30
2015
2014
2014
bolivars
bolivars
bolivars
15,274,974
10,414,687
7,666,441
4,860,287
46.7
7,608,533
5,949,807
4,944,737
3,317,555
1,005,070
20.3
2,632,252
79.3
1,676,555
1,234,778
926,300
441,777
35.8
750,255
81.0
22,901,336
16,594,202
11,910,296
6,307,134
38.0
10,991,040
92.3
Insurance Premiums, Net of Claims
Operating Income
Jun. 2015 Vs. Dic. 2014
June 30
Semester ended
except percentages)
99.2
Commissions and Other Income in the first half of the year totaled Bs 5,950 million, reflecting
Bs 2,632 million (79.3 %) year-on-year increase from Bs 3,318 million. This increase is mainly
due to:
• Bs 2,572 million (84.4 %) growth in earnings from activities such as commissions on the use
of debit and credit cards, income from financing insurance policies, as well as other
commissions on customer operations.
• Bs 61 million (22.6 %) increase in earnings from securities trading activities.
Insurance premiums, net of commissions, reinsurance and claims totaled Bs 1,677 million in
the first half of 2015, reflecting 81.0 % increase compared with Bs 926 million in the first half
of 2014. Net collected premiums in the first half of 2015 totaled Bs 14,254 million, which
represents a year-on-year increase of Bs 7,338 million or 107.5 %. This growth was mainly in
the health (80.9 %) and automobile (134.9 %) businesses. Mercantil Seguros is the country’s
second largest insurance company in terms of net collected premiums, with a market share
of 12.6 % at the close of June 30, 2015. Claims and administrative expenses totaled Bs 9,315
million, reflecting a year-on-year increase of Bs 4,599 million (97.5 %). The claims ratio was
66.1 % in the first half of 2015 (62.1 % at June 30, 2014).
43
Operating Expenses
Operating Expenses
Net Income
Semester ended
except percentages)
Jun. 2015 Vs. Dec. 2014
Jun. 2015 Vs. Jun. 2014
Increase/
(Decrease)
bolivars
%
Increase/
(Decrease)
bolivars
%
June30
December 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
Earnings from Financial Operation
22,901,336
16,594,202
11,910,296
6,307,134
38.0
10,991,040
Operating Expenses
(9,028,712)
(7,485,023)
(4,981,344)
1,543,689
20.6
4,047,368
81.3
Personal Expenses
(4,501,073)
(3,492,659)
(2,781,564)
1,008,414
28.9
1,719,509
61.8
Taxes (Current and Deferred)
(2,405,882)
268,027
(171,579)
2,673,909
(997.6)
(3,877)
(4,098)
(1,869)
(221)
(5.4)
2,008
107.4
6,961,792
5,880,449
3,973,940
1,081,343
18.4
2,987,852
75.2
Minority Interest
Net Income for the Period
92.3
2,234,303 1,302.2
During the first half of 2015, Operating and Personnel Expenses registered a year-on-year
increase of 74.3 % (Bs 5,767 million), due mainly to:
• Bs 1,720 increase in personnel expenses, reflecting a year-on-year rise of 61.8 %. This
increase in expenses is mainly due to the application of compensation policies and benefits
consistent with the market. Assets per employee at Mercantil Banco Universal rose from
Bs 30.9 million in 2014 to Bs 52.0 million in 2015. At Mercantil Seguros, net earned
premiums per employee rose from Bs 4.3 million in 2014 to Bs 9.6 million in 2015. In the
case of the overseas business, assets per employee amounted to US$ 8.5 million in 2015,
similar to the same last period.
• Bs 2,289 million (80.3 %) increase in expenses from commissions on the use of the pointof-sale and ATM network.
• Bs 1,009 million (69.6 %) increase in expenses for contributions to regulatory agencies.
• Bs 750 million (109.7 %) rise in depreciation, property and equipment expenses,
amortization of intangibles and others.
• Bs 2,234 million rise in income tax, mainly due to the exclusion of the financial and
insurance activities from the adjusted for inflation system as a result of changes in
Venezuelan fiscal regulations.
The efficiency ratio measured by calculating operating expenses as a percentage of average
assets was 5.6 % in June 2015, compared with 4.8 % in June 2014. The ratio of operating
expenses to total revenue was 45.1 % in June 2015 (49.2 % in June 2014). Personnel and
Operating expenses are affected by inflation in Venezuela, estimated at 105.4 % over the last
12 months at the close of June 30, 2015 (Source: Consensus Economics).
44
Annual Report
Taxes and Contributions
For the half-year period ended June 30, 2015, Mercantil and its subsidiaries reported
significant expenses for various kinds of taxes and contributions.
Operations in Venezuela generated the following expenses: Bs 2,361 million in estimated
corporate income tax payable, which includes Bs 266 million in deferred corporate income
tax; Bs 376 million in value added tax; Bs 729 million in municipal taxes; Bs 1,875 million in
contributions to the Deposit Guarantee Fund (Fondo de Protección Social de los Depósitos
Bancarios - FOGADE); Bs 205 million in contributions to the Superintendency of Banking
Sector Institutions (Superintencia de las Instituciones del Sector Bancario) Bs 357 million in
contributions to the Superintendency of Insurance Activity (Superintencia de la Actividad
Aseguradora); and Bs 296 million in contributions to the National Community Council Fund
(Servicio Autónomo Fondo Nacional de los Consejos Comunales - SAFONACC).
Operations overseas registered the following expenses: Bs 45 million in expenses for
corporate income tax payable which included Bs 1 million in tax on deferred income, Bs 7
million in municipal taxes and other contributions, and Bs 21 million for contributions to
regulatory agencies.
Mercantil Servicios Financieros and its subsidiaries also complied with other compulsory
contributions provided for under the applicable legislation.
Total contributions to the various official entities both in Venezuela and abroad account for
25.6 % of Mercantil's expenses which, combined with corporate income tax, make up 42.4 %
of those expenses (28.6 % and 30.5 % at June 30, 2014, respectively).
45
Summary of the Accounting Principles
used to prepare the Financial Statements
Financial statements are presented in accordance with the
accounting standards of the National Securities
Superintendency (SNV), in bolivars. A summary of some of
the main accounting principles applied is given below:
fixed and other assets are shown at their inflation-adjusted
value up to December 31, 1999. The market value determined
by independent assessments is higher than the inflation cost
adjusted for inflation indicated above. New additions are
being recorded at their acquisition value.
Securities Held for Trading - Unrealized gains or losses resulting
from differences in market value due to market fluctuations are
included in the results for the period. Available-for-Sale
Securities – Recorded at their market value. Unrealized gains or
losses resulting from differences in market value and exchange
rate fluctuations are included in shareholders’ equity. Held-toMaturity Securities – Recorded at their acquisition cost, adjusted
for amortization of premiums or discounts. For all portfolio
investments, permanent losses in market value are recorded as
a charge to income in the period in which they occur. Permanent
investments – are investments that represent 20 % to 50 % stock
ownership. Those greater than 50 % are recorded as an equity
interest and consolidated, except when control is likely to be
temporary.
Loan Portfolio
Assets and Liabilities in foreign currency
Mercantil applies the controlled official exchange rate of
Bs 6.2842 / US$ 1 for the translation of the foreign currency
balances of its subsidiaries in Venezuela and the financial
statements of its subsidiaries abroad. The effects of foreign
exchange rate fluctuations are recorded in the results, with the
exception of foreign exchange rate fluctuations of available-forsale debt investments and trading portfolio of shares included
in equity.
Differences between the accounting standards of the
National Security Superintendency and Superintendency of Banking Sector Institutions (SUDEBAN)
Las principales partidas de conciliación entre las normas SNV
anteriormente expuestas y las normas SUDEBAN para
Mercantil Servicios Financieros, son las siguientes:
Loans are classified as overdue 30 days after their maturity.
Allowances for loan portfolio losses are determined through a
collectability assessment that quantifies the amount that must
be set aside for each loan. These assessments take into account
such aspects as economic conditions, credit risk by customer,
credit history and the collateral received. When assessing loans
for small amounts of the same nature, these are grouped
together to determine the provisions required.
• Amortization of premiums or discounts of securities carried
out on a straight-line basis under SUDEBAN standards and
in accordance with the constant amortization rate under
SNV standards.
Recognition of income and expenditure
Differences between the accounting standards of the
National Security Superintendency and IFRS
Income, costs and expenses are recorded as they are earned or
incurred. Interest earned on past-due loan portfolios is
recorded as income when collected. Fluctuations in the market
value of derivatives are recognized as income in the period in
which they occur. Insurance premiums are recorded as income
when earned.
Consolidation
The cconsolidated financial statements include the accounts
of Mercantil and its more than 50 % -owned subsidiaries and
other institutions in which Mercantil has a controlling interest.
Inflation Adjustment
According to SNV standards, Mercantil’s financial
statements, as of December 31, 1999 must be presented in
historic figures. Since then Mercantil has ceased to adjust
for inflation in its primary financial statements. As a result,
46
Annual Report
• Foreign exchange rate fluctuations are recorded in the
results, with the exception of those that SUDEBAN indicates
to be included in equity and are subsequently recorded in
the results when SUDEBAN authorized.
The main accounting differences for Mercantil Servicios
Financieros between the SNV standards indicated above and
IFRS are:
• Deferred Income Tax: IFRS allows deferred tax to be
recognized for the total amount of loan portfolio loss
allowances, while SNV standards only allow recognition of
allowances for loans classified as high risk and unrecoverable.
• Provision for assets received in lieu of payment: SNV
standards stipulate a 100 % allowance for real property
received in lieu of payment after one year from the date of
incorporation; under IFRS no amortization deadlines are
established.
• Foreign Currency: The balances in foreign currency are
valued according to the best estimates of expected future
cash flow of bolivars using legally established procedures.
Performance of Subsidiaries
Mercantil’s global business includes the company’s operations in Venezuela and abroad. Its
results are explained in the Management Consolidated Financial Statement Review chapter.
A summary of Mercantil’s operations carried out through each subsidiary by June 30, 2015,
prepared in accordance with the accounting standards of the National Securities
Superintendency (Superintendencia Nacional de Valores - SNV) is presented below.
Mercantil Servicios Financieros (1)
(In thousands of Bs.)
as of June 30, 2015
Shareholders’ Equity Bs 37,830,808
Equity
Mercantil, C.A.
Banco Universal
Bs 39,989,955
Main Activity
Venezuelan
Universal
Bank
Main Subsidiaries
Mercantil
Commercebank
Florida BanCorp
Bs 4,123,710
Other
Banks Overseas
Bs 1,680,255
Mercantil
Seguros, C.A.
Bs 5,319,363
Mercantil
Merinvest, C.A.
Bs
321,270
Commercial Bank,
Brokerage and
Trust
Services
in the US
International
Bank
Insurance in
Venezuela
Investment
Banking, Mutual
Funds, Trading &
Brokegare
Mercantil
Commercebank
N.A.
Mercantil Bank
(Schweiz), AG.
Mercantil
Seguros
Panamá, S.A.
Mercantil Merinvest
Casa de Bolsa, C.A.
Mercantil
Commercebank
Investment
Services (MCIS)
Mercantil Bank
and Trust Limited
(Cayman)
Mercantil
Commercebank
Trust Company
(MCTC)
Mercantil Bank
(Curaçao) NV
Bs
Others
195,001
Other Non
Financial
Bussinesses
Mercantil
Servicios de
Inversión, C.A.
Mercantil
Sociedad
Administradora
de Entidades
de Inversión
Colectiva, C.A.
Mercantil Capital
Markets
(Panamá)
Mercantil Bank
(Panamá) S.A.
Total
(In thousand of Bs) 1
(1)
Total Assets
Investment
Loan Portfolio, Net
Deposits
Net Income
for the Semester
382,419,580
54,203,133
214,848,791
337,295,767
51,225,912
13,966,145
34,720,656
39,346,855
3,978,478
1,683,028
1,831,030
2,397,473
20,563,174
11,609,887
-
179,146
112,303
-
716,146
50,122
-
459,082,436
81,624,618
251,400,477
379,040,095
6,188,361
65,108
(58,310)
530,164
31,539
204,930
6,961,792
Number of Employees
7,355
962
123
1,492
47
30
10,009
In accordance with the standards of the National Securities Superintendency. Figures net of elimination resulting from the consolidation process.
47
Comments and a summary of the financial statements of Mercantil’s main subsidiaries are
presented below, based on the accounting standards applicable to each of them. This explains why
they differ from the consolidated information presented according to the accounting standards
of the National Securities Superintendency (Superintendencia Nacional de Valores). Mercantil C.A.,
Banco Universal is presented in accordance with the standards of the Superintendency of Banking
Sector Institutions (Superintencia de las Instituciones del Sector Bancario); Mercantil Commercebank
Florida Bancorp, according to US GAAP; Mercantil Seguros, C.A., in line with the standards of the
Superintendency of Insurance Activity (Superintencia de la Actividad Aseguradora).
During the first half of 2015, Mercantil Banco Universal's total assets grew Bs 94,886 million
(33.0 %), net loan portfolio increased Bs 52,229 million (32.1 %) and total deposits grew Bs 84,819
million (32.9 %). Loan portfolio quality remains favorable, with a ratio of past-due and
nonperforming loans to gross loans of 0.2 %, compared to 0.4 % for the Venezuelan financial
system as a whole. The loan portfolio provision covers 1,569.5 % of past-due and
nonperforming loans (1,352.1 at December 31, 2014).
At June 30, 2015, the Mercantil Banco Universal subsidiary ranks third in the Venezuelan
private financial system in terms of total assets with 11.4 % of the market. The leading
institution has a 20.0 % share, with Venezuela’s four main banks accounting for 58.2 % of
the total for the financial system. Mercantil Banco Universal is the leading bank in
Venezuela's private financial system in terms of savings deposits and loans to the tourism,
manufacturing and agricultural sectors with market shares of 21.3 %, 14.5 %, 14.9 % and 13.5 %,
respectively. The bank also ranks second in terms of gross loans, mortgage loans, as well as
in total deposits plus other demand liabilities with market shares of 13.3 %, 6.6 % and 11.4 %,
respectively.
At June 30, 2015 Investments in Securities totaled Bs 53,973 million, reflecting Bs 9,450
million (21.2 %) growth compared to December 2014. At June 30, 2015 investments in
securities are made up of 91.5 % in securities issued or guaranteed by the Venezuelan State
and Government Entities; 7.3 % in short-term certificates of deposit issued by the Venezuelan
Central Bank (Banco Central de Venezuela) with maturities under 60 days; 1.0 % in securities
issued by the Venezuelan and international private sectors, and 0.2 % in securities issued by
U.S. government-backed agencies and the government, and others.
Shareholders’ equity grew Bs 3,920 million (16.2 %) compared to December 2014 reaching
Bs 28,176 million at the close of June 2015. This increase mainly includes a net cumulative
result of Bs 5,982 million in the first half of 2015; a reduction of Bs 2,010 million
corresponding to cash dividends paid out and Bs 52 million decrease from recording
available-for-sale investments at their market value.
The equity/assets ratio as of June 30, 2015 is 9.4 %1 (minimum requirement 9 %) and the
equity/risk-weighted assets ratio is 14.1 % (minimum requirement 12 %), according to the
(1) Obtained by dividing equity by total assets minus investments in
securities issued or guaranted by the Venezuelan goverment or
public entities. As of March 2015, 50 % of the funds held by the
Central Bank of Venezuela (reserve requirements) are also deducted.
48
standards of the Superintendency of Banking Sector Institutions (Superintencia de las
Instituciones del Sector Bancario).
Annual Report
Net income in the first half of 2015 was Bs 5,982 million, reflecting Bs 2,477 million (70.7 %) yearon-year increase. This variation is due mainly to:
Bs 8,259 million (108.1 %) increase in net interest income, attributed
Evolution of Net Interest Income
mainly to a higher volume of financial assets and liabilities.
18,000
15.0 %
(in millions of Bs)
14,000
10.9 %
10.9 %
10.8 %
12.0 %
9.0 %
10,000
8,000
6.0 %
3.7 %
3.5 %
3.3 %
3.0 %
4,869
6,777
1H 2013
2H 2013
the same period of the previous year.
Bs 726 million (81.3 %) growth of expenses for nonperforming loans,
3.7 %
3.3 %
4,000
2,000
financial assets) at June 30, 2015 was 13.0 % compared to 9.8 % in
9.8 %
12,000
6,000
Mercantil's net interest margin (net interest income/average
13.0 %
16,000
7,637
11,497
15,896
1H 2014
2H 2014
1H 2015
a Bs 1,034 million (80.3 %) increase in earnings from commissions
on debit and credit cards, net of commissions for the use of the
0
0.0 %
point-of-sale and ATM network, generated by a higher annual
volume of transactions during the six-month period, Bs 47 million
Net Interest Margin
Operating Expenses / Average Total Assets
(14.4 %) increase in net earnings from the sale of investments in
Net Interest Income
securities as a result of trading Venezuelan government securities,
an activity that totaled Bs 376 million in net earnings in the first half
of 2015 and Bs 581 million (231.6 %) increase in expenses from available-for-sale assets, expenses
from provision for other assets and operating expenses, among other.
Operating expenses rose Bs 3,633 million (78.5 %) compared to the first half of 2014, mainly due
to Bs 1,310 million (69.1 %) increase in personnel expenses as a result of the application of
compensation and benefits policies according to the market; Bs 802 million (62.8 %) increase in
contributions to regulatory agencies; and Bs 1,521 million (104.6 %) increase in general and
administrative expenses. This increase is primarily due to Bs 498 million (92.8 %) in expenses to
outsource services such as securities transportation, surveillance, among others, Bs 734 million
(145.0 %) in expenses for depreciation of property and equipment, amortization of intangibles
and others, Bs 194 million (77.7 %) in taxes and contributions, and Bs 95 million (58.8 %) in other
general administrative expenses. An additional expense was Bs 1,977 million increase in income
tax, due mainly to the exclusion of financial activities from the adjusted for inflation system as a
result of changes in Venezuelan fiscal regulations. Mercantil Banco Universal has paid out taxes
and other fiscal contributions according to the legal regulations in force, for Bs 5,710 million,
representing 42.2 % of operating expenses.
Mercantil Banco Universal, Consolidated
June 30
December 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
382,778,560
287,892,974
224,959,269
53,972,774
44,523,248
46,794,136
214,848,791
162,619,332
123,279,963
Semester ended
Total Assets
Loan Portfolio, Net
Deposits
342,902,062
258,083,275
202,014,410
Equity
28,176,012
24,255,805
18,263,252
Net Earnings for the Period
5,982,226
5,925,763
3,504,897
Historic figures presented in accordance with the National Securities Superintendency.
49
Mercantil Commercebank Florida Bancorp
At June 30, 2014 Mercantil Commercebank Florida Bancorp registered US$ 8,202 million in
total assets, 3.7 % year-on-year increase. The investment
portfolio reached US$ 2,158 million, compared to US$ 2,229
Assets Quality Ratios
million at the close of December 2014. At June 30, 2015,
3%
12.2 %
9.3 %
2%
9.5 %
government or U.S. government-backed agencies,
securities issued by the private sector and securities
7.7 %
8%
1.4 %
1.4 %
1.2 %
1.1 %
0.7 %
1.0 %
0.8 %
0%
Dec-13
Jun-14
Dec-14
issued by the Venezuelan government, which account for
6%
1.2 %
1.2 %
Jun-13
the portfolio is made up of instruments issued by the U.S.
12 %
10 %
1.6 %
1%
14 %
12.1 %
4%
64.7 %, 34.9 % and 0.4 %, respectively. Net loans
2%
registered US$ 5,527 million, up 5.6 % at the close of 2014.
0%
Total deposits at June 30, 2015 were US$ 6,357 million,
Jun-15
representing 1.3 % growth compared to December 31,
Non Accrual / Gross Loans
Total Class Loans / Gross Loans
Total Class Loans + Oreo / Tier 1 + Allowance for loan losses
2014.
Shareholders' equity at the close of June 30, 2015 was
US$ 682 million, representing 0.7 % growth compared to
December 31, 2014 when it totaled US$ 677 million. This
Mercantil Commercebank Florida BanCorp, Inc
Consolidated
variation is mainly due to US$ 10 million in net income
June 30
December 31
June 30
2015
2014
2014
US$
US$
US$
Total Assets
8,202
7,912
7,476
Mercantil Commercebank Florida Bancorp registered
2,158
2,229
2,096
US$ 10 million in net income at June 30, 2015, similar to
the net income of the first half of 2014. The net earnings
Semester ended
Loan Portfolio, Net
5,527
5,233
5,007
Deposits
6,357
6,277
5,799
682
677
671
10
13
10
Equity
for the period and US$ 5 million decrease from adjusting
available-for-sale investments to their market value.
of its main subsidiary Mercantil Commercebank, N.A.,
was US$ 12 million in the first half of 2015 versus the US$ 13
million registered in the same period of 2014. This
Figures according to the accounting principles generally accepted
in the United States (USGAAP).
variation is mainly due to the increase in net income of
US$ 12 million, the US$ 3 million increase in the loan loss provisioning requirement, US$ 5
million increase in commissions and other income, and US$ 14 million increase in operating
and personnel expenses; these expenses are related to the regulations associated with the
Bank Secrecy Act (BSA) for banks operating in the United States.
The ratio of non-accrual loans to total loans was 1.2 % in June 2015, versus 1.0 % at the close
of June 2014.
Mercantil Commercebank N.A.’s main capital adequacy indicators are 9.3 % equity/assets,
and 12.6 % equity/risk-weighted assets, in accordance with the standards of the Office of
Comptroller of the Currency - OCC.
50
Annual Report
Mercantil Seguros
In the first half of 2015, the collected premiums registered 107.6 % year-on-year growth to
Bs 14,254 million, reflecting an outstanding effort of the company’s sales force. At June 30,
2015, Mercantil Seguros was the country’s second insurance company in terms of net
collected premiums, with 12.6 % of the insurance market.
Total assets at June 30, 2015 were Bs 21,465 million, 32.2 % more than at December 31, 2014.
Shareholders’ equity was Bs 5,497 million at June 30, 2015, 0.8 % up from the close of
December 2014, which means that the company has a margin of solvency that complies with
the regulations in force.
The figures presented include all the mandatory and voluntary reserves required to
guarantee the company’s operations, including outstanding claims reserves and end-ofperiod payments. Guarantees and reserves totaled Bs 13.341 million and reflect 52.6 % growth
compared to the close of December 2014.
At the close of June 30, 2015 the Company’s investment portfolio totals Bs 15,992
Net Collected Premiums
and Technical Result2
million, 19.7 % more than at the close of December 31, 2014. Total investments
representing technical reserves were Bs 12,882 million, 30.7 % up from
December 31, 2014, with sufficient liquidity levels being maintained to
diligently meet commitments with insured, insurance advisers and reinsurers.
100 %
98.2 %
97.6 %
98 %
94.2 %
95.9 %
Net collected premiums for the individual business lines grew from Bs 3,561
95.3 %
96 %
94 %
14,254
92 %
90 %
10,639
to 124.6 % growth of the health and automobile businesses.
88 %
86 %
84 %
5,905
million in the first half of 2014 to Bs 7,999 million at June 30, 2015, mainly due
6,866
Net collected premiums for the collective business lines grew from Bs 2,874
4,472
82 %
80 %
I Half
2013
II Half
2013
I Half
2014
Premiums Received Net
Combined Operating Ratio
II Half
2014
I Half
2015
million at June 30, 2014 to Bs 5,413 million at June 30, 2015, with 88.3 % growth.
This segment accounts for a significant proportion of the company's portfolio,
with a 38.0 % share.
The technical result1 at June 30, 2015 was Bs 201 million, with a combined
operating ratio2 of 98.2 %. Net income for the first half of 2015 registered Bs 978 million,
61.8 % up from the first half of 2014.
Mercantil Seguros, C.A.
Semester ended
June 30
December 31
June 30
2015
2014
2014
bolivars
bolivars
bolivars
Total Assets
21,464,971
16,233,747
12,152,427
15,991,966
13,364,999
10,047,866
5,496,522
5,451,630
3,914,573
977,875
1,009,500
604,193
14,253,705
10,638,700
6,865,700
Equity
Net Premiums
Historic figures presented in accordance with the standars of the Superintendency of Insurance Activity.
(1)
Technical result = Earned Premiums - Incurred claims - Commissions - Administrative expenses.
(2)
Combined Operating Ratio (COR) = Claims + Commissions + Administrative expenses + Contributions / Earned Premiums.
51
Other Subsidiaries of Mercantil Servicios Financieros
The subsidiaries of Mercantil Servicios Financieros include a brokerage company, a mutual funds
and investment portfolio management company which are consolidated with Mercantil
Merinvest, C.A., as well as other overseas banks, and other non-financial subsidiaries in
Venezuela, as listed below:
• Mercantil Merinvest, C.A., Bs 375 million in total consolidated assets at June 30, 2015,
reflecting 55.2 % growth compared to December 31, 2014. This variation is reflected in the
investments in securities, which grew 85.4 % compared to December 2014 to Bs 293million
at the close of the first half of 2015. Semi-annual net income was Bs 32 million, reflecting
69.5 % year-on-year growth from Bs 19 million. This variation was mainly due to the rise in
earnings from commissions on portfolio management, trading, among others.
• At June 30, 2015, the total assets of Mercantil Bank (Schweiz) AG, which includes its
Mercantil Bank and Trust Limited (Cayman) subsidiary, were US$ 261 million, reflecting 6.1 %
decrease compared to December 31, 2014. Net income for the six-month period reached a
US$ 0.5 million, similar to the net income registered at June 30, 2014.
• At June 30, 2015 Mercantil Bank (Panamá) S.A. reported US$ 249 million in total assets,
3.9 % down from the close of December 2014. Net loans totaled US$ 119 million, reflecting
US$ 8 million (7.6 %) increase compared to US$ 111 million for the previous six-month period.
Deposits totaled US$ 202 million, 4.5 % less than US$ 211 million registered at the close of
December 2014. Net income in the first half of the year totaled US$ 2.1 million loss, below
US$ 5.7 million compared to US$ 3.6 million registered during the same period the previous
year. The variation was mainly due to reduced earnings from trading securities in US$ 0.5
million during the first half of 2015 compared to US$ 7.4 million in the same period of 2014,
and lower loan portfolio provision requirements from US$ 4.7 million in the first half of 2014
to US$ 1.5 million in the first half of 2015.
• Mercantil Inversiones y Valores comprises Mercantil Servicios Financieros’ non-financial
companies, such as Servibien, Arrendadora Mercantil and others investing in securities. At
June 30, 2015, Mercantil Inversiones y Valores C.A. had Bs 84 million and Bs 82 million in
consolidated assets and equity, respectively.
52
Annual Report
Corporate Contacts
Mercantil Servicios Financieros
Av. Francisco de Miranda, entre Segunda y Tercera
Transversal, Urb. Los Palos Grandes, Centro Comercial
El Parque, Segunda y Tercera Etapa, P03, locales C-3-10
y C-3-11, Chacao, Caracas, Venezuela.
Phone: (58-212) 287.8200
www.msf.com
INVESTOR RELATIONS
Av. Andrés Bello, N° 1, Edificio Mercantil
25th floor, Caracas 1050, Venezuela
P.O. Box 789, Caracas 1010-A
Phone : (58-212) 503.1335
Fax: (58-212) 503.1075
investors@msf.com
CORPORATE COMMUNICATIONS
Av. Andrés Bello, N° 1, Edificio Mercantil
14th floor, Caracas 1050, Venezuela
P.O. Box 789, Caracas 1010-A
Phone: (58-212) 503.1670
mcomunicacionesc@bancomercantil.com
Subsidiaries
MERCANTIL, C.A. BANCO UNIVERSAL
Avenida Andrés Bello, N° 1 Edificio Mercantil
Caracas 1050, Venezuela
Phone: (58-212) 503.1111
Telex 27002/27003 BMERVC
P.O. Box 789, Caracas 1010-A. Venezuela.
mercan24@bancomercantil.com
www.mercantilbanco.com
@MercantilBanco
Call Center:
Phone: 0-500-600 2424/ 0-500-503 2424
(58-212) 600.2424 -(58-212) 503 2424
AGENCIA CORAL GABLES
220 Alhambra Circle, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.8500
Fax: (1-305) 460.8595
Telex: 681278 BMER UW
asala@mercantilcb.com
CURAÇAO BRANCH
Abraham Mendez Chumaceiro Boulevar 1
Willemstad, Curaçao. Netherlands Antilles
Phone: (5999) 461.5000
Fax: (5999) 461.1974
fgirigori@bancomercantilcu.com
www.mercantilbankcuracao.com
REPRESENTATIVE OFFICES
BOGOTÁ
Edificio Interbolsa. La Cabrera
Av. 82, Nº 12-18, Ofc. 805
Bogotá, Colombia
Phone: (57-1) 635.0035
Fax: (57-1) 623.7701
jrequena2@mercantilcb.com
MERCANTIL MERINVEST, C.A.
Avenida Andrés Bello, N° 1
Edificio Mercantil,
24th floor. Caracas 1050, Venezuela
Phone: (58-212) 503.2700
Fax: (58-212) 503.2757
www.mercantilmerinvest.com
@MMerinvest
LIMA
Edificio Banco de Comercio
Av. Canaval y Moreyra, Nº 452, 15th-17th floors
San Isidro, Lima 27, Perú
Phone: (511) 442.5100
Fax. (511) 442.5100 Ext. 237
rafael.alcazar@rebaza-alcazar.com
MÉXICO
Eugenio Sue N° 58, Colonia Polanco
Chapultepec, Delegación Miguel Hidalgo
C.P. 11560, México, D.F.
Phone: (52-55) 5282.2300
Fax: (52-55) 5280.9418
mercvenmex@prodigy.net.mx
MERCANTIL CAPITAL MARKETS (PANAMÁ), S.A.
Edificio Torre de Las Américas
Torre C, 25th floor, Punta Pacifica
Panama City, Panama
Phone: (507) 282 5800
contactenos@mercantilcmp.com
www.mercantilcapitalmaketspanama.com
SAO PAULO
Av. Paulista, N° 1842, 3° andar, CJ. 37
Edf. Cetenco Plaza,
Torre Norte-Cep 01310-200
Sao Paulo, SP, Brasil
Phone: (55-11) 3285.4647 - 3284.0206
Fax: (55-11) 3289-5854
mercansp@uol.com.br
MERCANTIL SEGUROS, C.A.
Av. Libertador con calle Isaías
“Látigo” Chávez,
Edificio Mercantil Seguros, Chacao. Caracas
1060, Venezuela
Phone: (58-212) 276.2000
Fax: (58-212) 276.2001
www.mercantilseguros.com
@MercantilSeg
NEW YORK
11 East 51st. Street, New York NY,
10022-5903, U.S.A.
Phone: (1-212) 891.7400
Fax: (1-212) 891.7419
ljordan@bancomercantilny.com
MERCANTIL SEGUROS PANAMÁ, S.A.
Calle Punta Darién, Edificio Torre de las Américas
Torre A, 14th floor, local 1403, Punta Pacífica
Panama City, Panama.
Phone: (507) 304 1150
www.mercantilseguros.com.pa
MERCANTIL COMMERCEBANK N.A.
220 Alhambra Circle, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.8701
Fax: (1-305) 460.4010
www.mercantilcb.com
@MercantilCB (english)
@MercantilCBesp (spanish)
MERCANTIL BANK (PANAMÁ), S.A.
Torres de las Américas, 14th floor,
Torre A, Locales 1401-1402. Punta Pacífica
P.O. Box 0819-05811.
Panama City, Panama.
Phone: (507) 282.5000
Fax: (507) 830.5963
contactenos_mbp@mercantilbankpanama.com
www.mercantilbankpanama.com
MERCANTIL COMMERCEBANK TRUST COMPANY, N.A.
220 Alhambra Circle, 11th floor,
Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 441.5555
Fax: (1-305) 441.5560
www.mercantilctc.com
MERCANTIL BANK & TRUST, LIMITED
Harbour Place, 4th floor
103 South Church Street
P.O. Box 1034 Grand Cayman,
KY1-1102 Cayman Islands
Phone: (1-345) 949-8455
Fax: (1-345)949-8499
MERCANTIL COMMERCEBANK
INVESTMENT SERVICES, Inc.
220 Alhambra Circle, Penthouse, Coral Gables,
Fl. 33134, U.S.A.
Phone: (1-305) 460.8599
Fax: (1-305) 460.8598
www. mercantilcis.com
MERCANTIL BANK (CURAÇAO) N.V.
Abraham Mendez Chumaceiro Boulevar 1
Willemstad, Curaçao.
Netherlands Antilles
Phone: (5999) 461.5000
Fax: (5999) 461.1974
fgirigori@bancomercantilcu.com
www.mercantilbankcuracao.com
MERCANTIL BANK (SCHWEIZ) AG
Kasernenstrasse 1
8004 Zurich,
Switzerland
Phone: (41) - 433 444 555 master
Telefax: (41) - 433 444 550
www.mercantilbanksuiza.com
53
Promoting ecological awarenes
and environmental advocacy
In the U.S., Mercantil Commercebank
created the Zoolens Photography
Project, with the aim of promoting
awareness of wildlife preservation
among students in Miami-Dade
County. The project which was
launched in 2010 in partnership with
Zoo Miami and the Zoological Society
of Florida gets students involved,
offering them a space for their
creativity and bringing the community
together through education and arts.
In 2012, Zoolens was opened to all high
school students in Miami-Dade. As part
of the project, the schools with
students earning prizes also receive
financial support from the bank for
their arts programs.
In Venezuela, Fundación Mercantil and
Mercantil Volunteers take part in
various activities to promote
environmental education. Together
with Universidad Simón Bolívar,
participate in the reforestation project
for the La Mariposa reservoir basin,
within the Caracas Metropolitan Area,
where there is a forest with over
9,000 cultivated trees by Mercantil
volunteers their families. Among
other activities promoting
environmental protection, Fundación
Mercantil also supports the Audubon
Conservation Society in creating the
“Birds of Venezuela” app to promote
the knowledge and protection of the
national avifauna
.
Education:
An alliance to growth with the community
“Give Your School a Helping Hand” and
the alliance with Fe y Alegría
“Give Your School a Helping Hand” a program for educational support created by Mercantil,
active for over 34 years, have developed in the last few years, a new impulse to consolidate
the alliance between Fundación Mercantil’s and Fe y Alegría, founded 60 years ago deeply
focused in the promotion of education, particularly in lower income areas, both rural and
urban. The agreement focuses on the renovation, construction and maintenance of the
infrastructure of educational centers.
This alliance allows to consider the specific needs of each school, both a school of basic
education and those that provide technical training with emphasis in agriculture, commerce
or industry.
“Give Your School a Helping Hand” has expanded through various areas in addition to the
rehabilitation and maintenance of school infrastructure, throughout projects aimed to
promote coexistence, youth leadership, healthy competition and entrepreneurship, applied
at different levels and modalities through Fe y Alegría educational model.
Other Institutions also receive support from Fundación Mercantil in order to develop school
infrastructure and equipment projects; among them: Asociación Venezolana de Servicios de
Salud de Orientación Cristiana (AVESOCC), Asociación Benéfica Cristiana Promotora de
Desarrollo Integral (Prodein) and the Fundación El Albor.
Support to students’ academic development programs
in Universities
Mercantil’s Social Commitment is extended to various national universities through different
projects, such as scholarships, laboratory equipment, libraries, science centers, training
programs, and rehabilitation of infrastructure projects.
To be noted is the support to scholarship programs at the Universidad Católica Andrés Bello,
Universidad Monteávila, Universidad Metropolitana, Universidad Central de Venezuela, and
the Programa de Igualdad de Oportunidades (PIO) of Universidad Simón Bolívar. All of them
are orientated to include students from low-income areas across de country into higher
education.
55
Job and entrepreneurship training
Entrepreneurship incentive is vital for social development, and Fundación Mercantil takes part
through initiatives beginning over a decade ago, such as Fundación Ideas and Alianza Social
VenAmCham with its RetoU program, which train entrepreneurs with appropriate tools and
techniques for their projects, in order to turn them into successful businesses.
In addition, Mercantil also promotes Social Entrepreneurship aimed to young people between
19 and 28 years old, fostering them devise and present projects orientated to solve problems
associated with the United Nations Millennium Development Goals, or contribute to improving
the living standards of populations or groups with special conditions.
In addition, educational initiatives are backed, such as the Instituto Técnico de Adiestramiento
para el Trabajo de la Fundación para el Desarrollo de la Educación (Fueduca), and the Unidad
Educativa Nuestra Señora del Encuentro of A.B.C. Prodein, which seek excellence and innovation
in the vocational training of young people from lower income areas, particularly at the technical
level in accounting and information technology.
Promotion of ecological awareness and
environmental protection
Training in environmental education is part of the set of projects that Mercantil promotes in the
societies where it is present, not only with permanent contributions, but also through the active
participation of its employees through Mercantil Volunteers. In Venezuela is driven by the
Universidad Simón Bolívar in Venezuela, which promotes the reforestation of the La Mariposa
water basin in the Caracas Metropolitan Area, where there is a cultivated forest by Mercantil
Volunteers. Mercantil also supports the Sociedad Conservacionista Audubon, with the creation
of the “Aves de Venezuelan” app to promote the knowledge of the avian variety of Venezuela.
The Mercantil Commercebank subsidiary in the United States promotes the Zoolens Project,
designed to encourage the awareness of wildlife through photography, for students in the MiamiDade County, providing an area for creativity, art and education, in cooperation with the Miami
Zoo and the Zoological Society of Florida.
Values and Leadership Promotion
Mercantil Commercebank supports the Leadership Lectures at the Florida International
University (FIU), in which professors and experts share their theoretical and practical knowledge,
allowing participants to acquire leadership skills and identify opportunities to make good use of
their own capabilities.
General Production: Corporate Communications Management
Artwork Photography: Walter Otto and Organización Mercantil.
Graphic Design: Arte Impreso H.M., C.A.
Caracas, Venezuela, September 2015.
Av. Francisco de Miranda, entre Segunda
y Tercera Transversal, Urb. Los Palos Grandes,
Centro Comercial El Parque, Segunda
y Tercera Etapa, P03, locales C-3-10 y C-3-11.
Chacao, Caracas, Venezuela
Phone: (58-212) 287.8200
www.msf.com

MSF Semi Annual Report 2015 - Mercantil Servicios Financieros

Transcription

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