MEXICO Santander Serfin Business Evolution and Financial Results

MEXICO Santander Serfin Business Evolution and Financial Results

MEXICO
Santander Serfin
Business Evolution and
Financial Results 2003
1
Santander Central Hispano cautions that this presentation contains forward looking
statements. These forward looking statements are found in various places throughout
this presentation and include, without limitation, statements concerning our future
business development and economic performance. While these forward looking
statements represent our judgment and future expectations concerning the
development of our business, a number of risks, uncertainties and other important
factors could cause actual developments and results to differ materially from our
expectations. These factors include, but are not limited to, (1) general market,
macroeconomic, governmental and regulatory trends, (2) movements in local and
international securities markets, currency exchange rates, and interest rates,
(3)competitive pressures, (4) technological developments, (5) changes in the
financial position or credit worthiness of our customers, obligors and counterparties.
The risk factors and other key factors that we have indicated could adversely affect
our business and financial performance contained in our past and future filings and
reports, including those with the Securities and Exchange Commission of the United
States of America.
The following financial information in derived from
unaudited financial statements prepared in accordance
with Mexican Regulatory Accounting Principles and
practices established by the CNBV. All figures are
presented in real terms at purchasing prices of
December 31, 2003, unless otherwise explicitly indicated
3
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
4
Economic Activity
Manufacturing Exports (YoY%)
25%
GDP could grow by 3.2% driven by US 4.1%
recovery
•
•
20%
15%
Exports and industrial activity starting
to recover their growth
10%
5%
0%
Services could pent-up due to labor
market improvement
-5%
-10%
98 J 99 J 00 J 01 J 02 J 03 J
GDP Forecast Evolution
Industrial Production
150
145
140
135
130
1700
1650
1600
1550
1500
1450
I III I III I III I III I III I III
99
00
01
02
03
04
'00A J O'01A J O'02A J O'03A J
Prod Ind US
1750
10
8
6
4
2
0
-2
-4
142
140
138
136
134
132
130
128
Manufacturing output MX
YoY Growth
5
Adjusted Trend
Inflation
Good news regarding inflation as of yearend 2003:
„
•
Official target was achieved (3.98% annual rate)
•
Tight monetary policy should continue
We forecast a 3.9% inflation rate for 2004
„
•
Core inflation will continue at 3.5% level
Inflation should continue under control
Core Inflation at same levels
3.3
3.1
2.9
2.7
2.5
2.3
2.1
1.9
1.7
1.5
9
8
7
6
5
4
3
2
'01 M S '02 M S '03 M S '04 M S
Core
INPC
7.5
7
6.5
6
5.5
5
4.5
4
'02 M
M
J
S
Merchandises
Central Bank Goal
6
N '03 M
M
J
S
N
Services
Public Revenues and Balance of Payments
Fiscal discipline will continue in 2004, fiscal reforms resolutions are urgent:
• Fiscal Deficit will reduce from 0.6% in 2003 to 0.3% in 2004
• Oil prices should support public revenues
External accounts under control
• Public Sector external debt market maturities are already largely refinanced
• Small deficits in trade finance and current account
• Many sources for external financing
7
Financial Markets. Low Volatility
Exchange Rate, BoP flows should support a stable currency in the MXN$11.0/USD
neighborhood. Gradual adjustments towards MXN$11.3/US at yearend:
•
International reserves at historical maximums
•
Lower influence from political environment
•
Manufacturing sector should enhance competitiveness
Interest Rates, Could start a slight upward trend due to global conditions
•
Short end of the yield curve sensitive to foreign exchange rate movements
•
Private pension funds are likely to continue providing liquidity to the market
(US$4.2 bn annually)
•
Long term rates could react to the trend of the 10Y US bond
Low probability of moving forward in the structural reform agenda
8
Macroeconomic Variables
2003
2004
GDP
1.20%
3.20%
Inflation
3.98%
3.40%
Cetes 28 d
6.23%
6.00%
TIIE 28 d
6.83%
6.25%
Libor USD
1.21%
1.50%
FX End of Period P$/USD
11.23
11.25
FX Average P$/USD
10.80
11.00
9
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
10
Santander Serfin in Mexico
Consolidated Financial System with 6 top players
Market Share
Deposits + Funds
Current Loans
Scotia
Inverlat
BBVA
Bancomer
6,4% Bital-HSBC
11,1%
BBVA
Bancomer
Scotia
Inverlat
8.8%
Bital-HSBC
8.4%
26.4%
29,3%
PDL’s
BBVA
Bancomer
Scotia
Inverlat
9.2%
20.8%
Bital-HSBC
Banorte
7,5%
Citi
Banamex
13,6%
Santander
Serfin
20.9%
Banorte
21.4%
Citi
Banamex
20.0%
14.9%
Santander
Serfin
23,4%
Citi
Banamex
32.8%
Banorte
11.5%
4.7%
Sample
1,379,912
Pesos in Millions
648,691
December 2003
11
35,105
Santander
Serfin
Santander Serfin in Mexico
With a sound capital base and ready to grow...
Capital Ratio (Sep’03)
15.8%
15.3%
14.7%
13.8%
13.8%
12.4%
Santander Serfin
Dec’03: 11.6%
Bancomer
Banamex
Bital
Santander
Banorte
Santander Serfin has actively paid dividends:
•
676 MM USD in 2 years
12
Inverlat
Santander Serfin in Mexico
With the best asset quality in the system
13.3
December 03
14.0
334
Santander Serfin
PDL / Total
Loans: 1.5%
12.0
10.0
Allowances /
PDL: 285%
7.3
8.0
154
147
128
127
6.0
124
120
5.2
4.8
5.6
4.0
2.4
2.0
1.3
0.0
Santander Serfin
Banamex
Banorte
Bital
PDL / Total Loans
SBInverlat
BBV-Bancomer
Allowances / PDL
September 2003 figures
13
Sistema
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
14
Commercial Activity – Deposits
Supercuenta Millonaria
106% increase in volume and 55% increase in monthly account openings
Volume
New Accounts
26,049
8,062
20,313
20,250
20,923
6,330
3,904
4Q02
4,752
1Q03
5,670
2Q03
13,529
3Q03
4Q03
4Q02
(Pesos in Millions)
15
1Q03
2Q03
3Q03
4Q03
Commercial Activity – Credit Cards
Strong growth in number of credit cards, volumes and fees
Credit Cards
1,709,624
+30%
1,313,361
571,422
582,390
580,901
579,584
654,772
208,914
289,198
450,083
352,696
114,363
620,377
647,033
684,144
688,119
Mar-03
Jun-03
Sep-03
'Dec 03
544,226
'Dec02
Light
Unik
Other
credit card billings up 35%..., loan portfolio market share + 1.1%
16
Commercial Activity – Mortgage Loans
Mortgage Loans are starting to pick up as approvals increase 24%, and new
mortgage loan portfolio increases 73%
Approvals
New Mortgage Loan Portfolio
(Pesos in Millions )
1,191
960
1,558
899
2002
2003
2002
17
2003
Commercial Activity – Small and Medium Size Companies
New approvals increase 86% during the second half of 2003...
Loan Portfolio (average)
# Approvals
(Pesos in Millions)
1,115
1,403
1,455
802
907
881
605
631
1Q03
2Q03
3Q03
1Q03
4Q03
18
2Q03
3Q03
4Q03
Commercial Activity – Current Loan Portfolio without IPAB Notes
Santander Serfin achieved the highest growth and a 1.6% market share
increase
Banks
December 02
Volume
Quota %
December 03
Volume
Quota %
Change 03/02
%
P.P.
BBVA Bancomer
157,574
25.1
171,157
26.4
8.6
1.3
Banorte
142,365
22.7
138,991
21.4
(2.4)
(1.3)
Banamex
142,744
22.7
129,934
20.0
(9.0)
(2.7)
Santander Serfin
83,933
13.4
96,970
14.9
15.5
1.6
SBInverlat
50,927
8.1
57,073
8.8
12.1
0.7
Bital
49,904
8.0
54,566
8.4
9.3
0.5
System
627,447
648,691
Pesos in Millions and Percentages. Banking Businesses Figures
19
3.4
Commercial Activity – Credit Card Loan Portfolio
. . . credit card portfolio also continued increasing its market share
Banks
December 02
Volume
Quota %
December 03
Volume
Quota %
Change 03/02
%
P.P.
Banamex
17,782
41.2
23,006
41.7
29.4
0.5
BBVA Bancomer
15,012
34.8
17,706
32.1
17.9
(2.7)
Santander Serfin
5,699
13.2
7,905
14.3
38.7
1.1
Bital
2,130
4.9
2,739
5.0
28.6
0.0
Banorte
1,574
3.7
2,610
4.7
65.8
1.1
914
2.1
1,161
2.1
27.0
(0.0)
SBInverlat
System
43,112
55,127
Pesos in Millions and Percentages. Banking Businesses Figures
20
27.9
Commercial Activity – Deposits
...Santander Serfin grew in line with the system..
Banks
December 02
Volume
Quota %
December 03
Volume
Quota %
Change 03/02
%
P.P.
BBVA Bancomer
287,635
31.9
335,357
32.9
16.6
Banamex
247,991
27.5
247,641
24.3
(0.1)
(3.2)
Santander Serfin
124,272
13.8
140,403
13.8
13.0
(0.0)
Bital
113,377
12.6
138,814
13.6
22.4
1.0
Banorte
75,027
8.3
88,513
8.7
18.0
0.4
SBInverlat
54,432
6.0
69,931
6.9
28.5
0.8
System
902,735
1,020,659
Pesos in Millions and Percentages. Banking Businesses Figures
21
13.1
1.0
Commercial Activity – Mutual Funds
… and achieved a 10% increase in mutual funds, enhancing floating rate
products
Banks
December 02
Volume
Quota %
December 03
Volume
Quota %
Change 03/02
%
P.P.
Banamex
70,531
22.0
75,612
21.0
7.2
(1.0)
BBVA Bancomer
65,702
20.5
68,735
19.1
4.6
(1.4)
Santander Serfin
43,186
13.5
47,656
13.3
10.3
(0.2)
SBInverlat
16,281
5.1
17,975
5.0
10.4
(0.1)
Banorte
12,524
3.9
15,135
4.2
20.9
0.3
Bital
11,834
3.7
13,944
3.9
17.8
0.2
System
320,270
359,252
Pesos in Millions and Percentages.
22
12.2
Commercial Activity – Deposits + Mutual Funds
… ending 2003 with a 12.3% increase, keeping its market share
Banks
December 02
Volume
Quota %
December 03
Volume
Quota %
Change 03/02
%
P.P.
BBVA Bancomer
353,336
28.9
404,092
29.3
14.4
Banamex
318,522
26.0
323,253
23.4
1.5
(2.6)
Santander Serfin
167,459
13.7
188,059
13.6
12.3
(0.1)
Bital
125,211
10.2
152,758
11.1
22.0
0.8
Banorte
87,551
7.2
103,648
7.5
18.4
0.4
SBInverlat
70,713
5.8
87,907
6.4
24.3
0.6
1,223,005
91.8
1,379,912
System
Pesos in Millions and Percentages.
23
12.8
0.4
Commercial Activity
Loan portfolio grew as follows:
2002
2003
88,585
98,717
11.4%
29,971
31,555
5.3%
Consumer Portfolio
6,567
9,163
39.5%
Institutional Portfolio
42,043
48,645
15.7%
909
1,567
72.4%
9,094
7,787
-14.4%
IPAB NOTE
49,456
23,053
-53.4%
Total Loans
138,041
121,770
-11.8%
Total Loans without Ipab Note
Commercial Portfolio
New Mortgage Loans
Old Mortgage Loans
Constant pesos in millions as of December, 2003. Financial Group figures
24
Change
Commercial Activity – Loan Portfolio by Type of Loan
Loan portfolio mix improving, with focus on commercial and consumer
loans
Total Loan Portfolio by Type of Loan
December 2002
December 2003
Total: 138,041
Total: 121,770
Commercial
22%
Consumer
5%
Commercial
26%
Mortgage
7%
Ipab
19%
Ipab
36%
Consumer
8%
Mortgage
8%
Insitutional
30%
Insitutional
39%
Constant pesos in millions as of December, 2003. Financial Group figures
25
Santander Serfin is growing its consumer, commercial and institutional
portfolio, improving profitability
Loan Portfolio by Type of Loan
Total Loan Portfolio w/o Ipab Note
+11.4%
93,886
89,975
88,585
48,645
97,397
98,717
31,555
4Q02
1Q03
2Q03
3Q03
4Q03
Commercial
12
YoY Growth by Type of Loan
10
39,5
9,354
9,163
Mortgage
Consumer
Institutional
Spread on Loans
9.7
9.2
8.7
7.4
8
7.8
Loan Rate
7.5
6
6.7
4.2
15,7
3.4
2
2.4
-6,5
Comercial
Hipotecario
Consumo
Institucional
3.2
3.1
2.2
0
4Q02
Constant pesos in millions as of December, 2003. Financial Group figures
26
Reference Rate
5.3
4
5,3
4.7
1Q03
2Q03
3Q03
4Q03
Spread
In regards of funding, interest rate downward trend was counteract and
growth is starting to recover
Funding Breakdown
Deposits + Funds
+8.1%
75,986
177,703
181,857
181,129
44,876
41,683
48,921
48,300
129,135
136,020
132,935
132,830
174,011
64,418
188,059
47,656
47,656
140,403
Cuentas a Vista +Ahorro
4Q02
1Q03
2Q03
3Q03
Depósitos
8.2
9.0
8.0
7.0
7.0
6.0
6.0
4.9
8.1
5.0
0.3
3.2
3.0
-1.3
-3.7
2.0
2.9
5.19
4.6
4.1
4.0
0.1
Fondos
Spread on Deposits
4Q03
Fondos
YoY growth
Depositos a Plazo
2.6
Reference Rate*
2.99
Cost of Funds
3.4
2.8
2.0
1.0
2.2
0.0
4Q02
1Q03
2Q03
3Q03
4Q03
4Q02
1Q03
2Q03
3Q03
4Q03
Constant pesos in millions as of December, 2003. Reference Rate is a weighted average on Peso, Dollar and Udi Funding
27
Spread
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
28
Santander Serfin 2003 Financial Results
Constant Pesos in Millions as of December 2003
Net Operating Income increases 13.9% supported by fees and cost control
improvements
2002
2003
9,582
9,222
-3.8%
(57)
(129)
127.2%
Adjusted Net Interest Income
9,526
9,093
-4.5%
Commissions and Fees
4,488
5,233
16.6%
Trading Income
1,316
899
-31.7%
15,331
15,225
-0.7%
(10,147)
(9,322)
-8.1%
5,184
5,903
13.9%
993
993
-0.1%
(154)
(663)
331.0%
Subsidiaries Results
(59)
34
-157.6%
Extraordinary Items
129
(115)
-189.8%
6,093
6,151
1.0%
Net Interest Income
Provisions for Loan Losses
Operating Income
Non Interest Expense
Net Operating Income
Other Income (Expense)
Income Tax
Net Income
29
Var %
Net Interest Income (includes repo operations, f/x and monetary result )
Net Interest Income quarterly decrease is due to repo operations (higher
interest rates) and monetary results (inflation seasonality) during 4T03
245
-558
2,433
-186
1,934
3Q03
Financial Income
Repo & F/X
Pesos in Millions
30
Monetary Result
4Q03
Net Interest Income (not including repo operations, f/x and monetary result )
Without repo and f/x operations, Net interest income figures are practically
the same as 1Q03, despite interest rates downward trend
2,379
2,328
2,266
2,309
9.7
8.4
2,064
6.8
5.8
5.1
4Q02
1Q03
2Q03
NII
3Q03
TIIE
Pesos in Millions and Percentages
31
4Q03
Net Interest Income (includes repo operations, f/x and monetary result )
Net Interest Margin from clients improves 8.0% QoQ
2, 433
1,934
996
564
Other
1,602
1,484
Clients
3Q03
4Q03
Pesos in Millions
32
Commissions and Fees 2002 - 2003
Growth in Fees speed up throughout the year
16.6%
13.2%
11.2%
6M
9M
33
12M
Commissions and Fees
With positive quarterly comparisons
Fees Breakdown
Commissions and Fees
+26.9%
1,413
2003
1,400
Credit Cards
1,268
1,103
4Q02
1,088
1Q03
2Q03
3Q03
4Q03
1,975
23.6%
Loan Fees
253
29.1%
Handling Fees
974
-5.3%
Funds
699
-3.9%
Afore
1,332
3.6%
Other
1,576
26.4%
(1,577)
-1.1%
5,233
16.6%
Fees Paid
TOTAL
Pesos in Millions
34
%vs2002
Non Interest Expenses 2002 - 2003
Expense levels improve qoq in both personnel and operating expenses,
achieving 825 million savings
Non Interest Expenses
2002
2003
Var %
10,147
9,322
2002
Personnel
4,174
3769.5
-9.7%
Operating
4,475
4101.5
-8.3%
Dep & Amortiz.
711
758
6.6%
IPAB fees
787
693
-11.9%
10,147
9,322
-8.1%
2003
2,405
2,350
2,313
2,254
1Q03
2Q03
3Q03
Pesos in Millions
35
4Q03
Net Operating Income
Positive performance in fees and expenses more than offset net interest
income and trading results
+13.9%
5,903
5,184
825
-360
-72
-417
744
- 849
2002
NII
Provisions
+1,568
Trading
Pesos in Millions
36
Fees
Expenses
2003
Santander Serfin keeps its high asset quality levels and strong PDL’s
coverage
Allowances / PDL %
PDL / Total Loans %
618.9
1.2
1.0
1.1
1.2
358.8
309.9
333.8
285.4
0.7
4Q02
1Q03
2Q03
3Q03
4Q03
4Q02
37
1Q03
2Q03
3Q03
4Q03
Improving efficiency and fees to expense ratios with a comfortable capital base
Efficiency Ratio %
Fees / Expenses %
57.1
51.0
51.3
48.5
48.4
73.1
74.2
3Q03
4Q03
63.1
55.5
45.7
4Q02
1Q03
2Q03
3Q03
4Q03
4Q02
ROE %
1Q03
2Q03
Total Capital Ratio %
41.7
16.8
15.1
14.1
13.8
30.9
4Q02
1Q03
25.2
25.1
26.0
2Q03
3Q03
4Q03
11.6
4Q02
38
1Q03
2Q03
3Q03
4Q03
Bottom line affected by tax rate and extraordinary items
Net Income: 6,151 mm, +1.0%
„
ROE: 29.9%
ROA: 2.7%
„
Efficiency ratio: 49.8%.
6,093
„
Commissions and Fees, net: +16.6%
„
Expenses: -8.1%
„
Fees / Expense ratio: 66.5%, + 14.6pts
„
Total Loans: +11.4%
„
PDL / Total Loans: 1.2%
„
Allowance / PDL: 285.4%
„
Capital Ratio: 11.6%
2002
Pesos in Millions
39
6,151
2003
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
40
Conclusions
• Better expectations/improved macroeconomic outlook.
• Focused in commercial activity
•
Based on Client Banking and client link improvement
•
Supported by innovative products and specific segment needs
Santander Serfin will continue increasing its business
relationship and market share with an active position
41
Agenda
I.
Macroeconomic Outlook
II.
Santander Serfin in Mexico
III.
Business Evolution
•
Commercial Activity
•
2003 Results
IV.
Conclusions
V.
Financial Statements
42
Appendix
Grupo Financiero Santander Serfin Financial Statements
Constant Pesos in Millions as of December de 2003. CNBV Data
43
Grupo Financiero Santander Serfin – Consolidated Balance Sheet
Constant Pesos in Millions as of December de 2003
Change
03/02
53.8
17.6
10.9
60.0
(53.4)
(26.2)
(11.2)
(5.9)
Funds available
Financial instruments
Current loan portfolio
Past due loan portfolio
IPAB note
Allowance for loan losses
Loan portfolio, net
Other assets
Dec. 02
32,262
50,424
87,679
906
49,456
(5,609)
132,433
20,381
Mar. 03
33,930
43,665
88,691
1,284
45,079
(4,608)
130,446
24,523
Jun. 03
41,666
45,019
92,480
1,406
28,062
(4,358)
117,590
20,905
Sep. 03
46,187
52,562
96,099
1,298
25,599
(4,331)
118,664
21,276
Dec. 03
49,624
59,311
97,267
1,450
23,053
(4,138)
117,632
19,170
Total Assets
235,500
232,565
225,180
238,689
245,736
4.3
Funding
Saving deposits
Money Market
Bank and other loans
Other liabilities
Total stockholders' equity
154,716
129,135
25,581
35,120
23,059
22,605
162,581
136,020
26,561
20,983
24,652
24,348
157,647
132,935
24,712
18,078
23,335
26,120
155,474
132,830
22,645
37,307
18,112
27,796
171,124
140,403
30,720
22,524
25,332
26,756
10.6
8.7
20.1
(35.9)
9.9
18.4
Liabilities & stockholders' equity
235,500
232,565
225,180
238,689
245,736
4.3
44,876
29,570
41,683
30,880
48,921
32,913
48,300
34,228
47,656
34,416
6.2
16.4
Mutual funds
Pension funds
(1) CNBV Data
44
Grupo Financiero Santander Serfin – Consolidated Income Statement
Constant Pesos in Millions as of December de 2003
1Q02
2Q02
3Q02
4Q02
YTDDec
2,433
2,200
2,618
2,331
9,582
2,099
2,756
2,433
1,934
9,222
(26)
7
(20)
(18)
(57)
(44)
(38)
(48)
2
(129)
Adjusted Net Interest Income
2,407
2,207
2,598
2,314
9,526
2,055
2,718
2,385
1,936
9,093
Commissions and Fees, net
1,300
853
1,232
1,103
4,488
1,290
1,106
1,437
1,400
5,233
608
50
102
557
1,316
506
(43)
125
312
899
4,316
3,110
3,931
3,973
15,331
3,850
3,781
3,947
3,647
15,225
(2,350) (2,313) (2,254)
(9,322)
Net Interest Income
Provisions for loan losses
Trading income
Operating Income
Non Interest Expense
Net Operating Income
Other income and (expenses),net
Income Tax
Susbidiaries Results
Extraordinary items
Net income
(2,576) (2,306)
(2,467) (2,798)
1Q03
2Q03
3Q03
4Q03
YTDDec
(10,147) (2,405)
1,740
804
1,464
1,176
5,184
1,445
1,431
1,634
1,393
5,903
272
754
231
(263)
993
726
91
(14)
176
978
(253)
(86)
(185)
370
(154)
(155)
(146)
(233)
(128)
(663)
(24)
(8)
(48)
20
(59)
(2)
38
17
(19)
34
0
(2)
123
7
129
0
0
0
(101)
(101)
1,735
1,462
1,586
1,310
6,093
2,014
1,413
1,403
1,320
6,151
45