2014

Financiera Independencia Reports 4Q12 Results

MEXICO CITY, Feb. 25, 2013 /PRNewswire/ --

  • Significant portfolio clean-up at core business to accurately reflect Financiera Independencia's new operating standards. Clean-up consisted of:
    • Ps.175 million increase in provision for loan losses, and
    • Ps.300 million accelerated write-off from past due loans affecting loan loss reserves
  • Total loan portfolio of Ps.6,722.8 million, an 8.5% year-over-year decrease, mainly due to the extraordinary write-off at the core business to adjust to new operating standards, and a contraction of Finsol Brazil's loan portfolio
  • Non-performing loan ratio of 5.5% in 4Q12 compared to 9.4% in 3Q12 and 4Q11, principally driven by the aforementioned extraordinary write-off
  • Total loan origination of Ps.2,801.4 million, down 11.6% year-on-year and 7.1% sequentially reflecting more stringent approval standards at Independencia's individual loan business
  • NIM after provisions including fees decreased to 37.4% in 4Q12, from 44.9% in 4Q11 given the additional provisions from the clean-up strategy
  • Provisions for loan losses increased to 53.7% of financial margin in 4Q12, from 41.1% in 3Q12 and 42.3% in 4Q11
  • Funding cost decreased to 10.90% in 4Q12, from 10.98% in 4Q11 but increased from 10.88% in 3Q12
  • Net loss of Ps.120.4 million in 4Q12 compared with net income of Ps.20.2 million in 4Q11 and Ps.8.0 million in 3Q12
  • Equity to total assets of 28.4% compared with 27.7% in 4Q11, and 28.1% in 3Q12
  • ROE in 4Q12 was negative 16.6%, compared with 2.6% in 4Q11.

Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R. (BMV: FINDEP; OTC: FNCRY), ("Findep" or the "Company") a leading Mexican microfinance lender of personal loans to lower income segment individuals and working capital loans through group lending microfinance, announced today results for the three- and twelve-month periods ended December 31, 2012. During 4Q12 the Company recorded a Net Loss of Ps.120.4 million compared with Net Income of Ps.20.2 million in 4Q11.


Financial & Operational Highlights



4Q12

4Q11

%


12M12

12M11

%



Income Statement Data










Net Interest Income after Provisions*

505.3

582.9

-13.3%


2315.8

2,275.2

1.8%



Net Operating Income (Loss)*

(174.5)

43.4

NM


(164.8)

304.9

NM



Net Income (Loss)*

(120.4)

20.2

NM


(116.5)

185.8

NM



Total Shares Outstanding (million)

715.9

715.9

0.0%


715.9

715.9

0.0%



Earnings (Loss) Per Share

(0.1682)

0.0281

NM


(0.1627)

0.2596

NM



Profitability & Efficiency










NIM before Provisions Excl. Fees

58.7%

52.5%

6.2 pp


56.6%

49.8%

6.7 pp



NIM after Provisions Excl. Fees

27.2%

30.3%

-3.1 pp


30.7%

31.1%

-0.4 pp



NIM after Provisions Incl. Fees

37.4%

44.9%

-7.5 pp


43.1%

44.2%

-1.1 pp



ROA

(4.7%)

0.7%

NM


(1.1%)

1.9%

NM



ROE

(16.6%)

2.6%

NM


(3.9%)

6.2%

NM



Efficiency Ratio Incl. Provisions

125.1%

95.0%

30.1 pp


105.1%

90.6%

14.5 pp



Efficiency Ratio Excl. Provisions

67.9%

63.5%

4.4 pp


65.7%

63.6%

2.1 pp



Operating Efficiency

33.8%

30.6%

3.2 pp


32.5%

29.7%

2.8 pp



Fee Income

21.4%

23.8%

-2.4 pp


22.7%

23.6%

-0.9 pp



Capitalization










Equity to Total Assets

28.4%

27.7%

0.7 pp


28.4%

27.7%

0.7 pp



Credit Quality Ratios










NPL Ratio

5.5%

9.4%

-3.9 pp


5.5%

9.4%

-3.9 pp



Coverage Ratio

117.5%

76.4%

41.1 pp


117.5%

76.4%

41.1 pp



Operational Data










Number of Clients

1,355,400

1,617,170

-16.2%


1,355,400

1,617,170

-16.2%



Number of Offices

538

509

5.7%


538

509

5.7%



Total Loan Portfolio* 

6,722.8

7,347.7

-8.5%


6,722.8

7,347.7

-8.5%



Average Balance (Ps.)

4,960.0

4,543.5

9.2%


4,960.0

4,543.5

9.2%



* Figures in millions of Mexican Pesos.











Commenting on the results, Noel Gonzalez, Executive Vice President and Group CEO, said, "While 4Q12 and full year results are below expectations and guidance, there is good reason for that, as we decided to implement a one-time increase of Ps.175 million in loan loss reserves –which I will elaborate on later.

"From an operational standpoint we are pleased with Financiera Independencia's 4Q12 performance, particularly at our core business where our transformation strategy came into full effect last September.  Since then, our post-September –or new-standard-originated portfolio– has shown significant improvements in early delinquency indicators.

"To give you a very specific idea of the impact this strategy is having, tracking our delinquency roll rates on a daily basis, we have seen our 30, 60, and 90 days past due loans drop from 8.6%, 4.8% and 3.7% to 6.0%, 3.4% and 2.4% respectively at the end of the month from October to January, a more than 30% improvement on each segment.

"Based on these fundamental improvements and our confidence in our new operating and origination standards, in 4Q12 we accelerated most foreseeable core business 2013 pre-September, or pre-new-standard-originated loan write-offs into 2012 and thus, cleaned-up our 2013 starting portfolio to allow this year's results to predominantly reflect the performance of our new-standard-originated portfolio.

"The portfolio clean-up was achieved through the aforementioned increase to our core business' Loan Loss Reserves by Ps.175 million and then accelerating Ps.300 million worth of foreseeable 2013 Loan Loss Write Offs.

"While our portfolio clean-up strategy negatively impacted our 2012 reported figures and took us to below expectations and guidance, it sets the stage for improved results in 2013 as future performance will be driven predominantly by our new-standards-originated portfolio.  Furthermore, our new-standards-originated portfolio is expected to significantly enhance the accuracy with which our 2013 financial results reflect Financiera Independencia's underlying performance. We expect this will provide our investor base and the overall market with a solid ground to assess the Company's results and anticipate future performance. I am confident that the benefits of this strategy and our new operating standards will become evident as we begin reporting 2013 results," noted Mr. Gonzalez.

4Q12 Earnings Conference Call



Day:         

Tuesday February 26, 2013



Time:        

11:30 AM US EST; 10:30 AM Mexico City time



Dial-in number: 

866-393-9621 (US & Canada)


706-758-4196 (International & Mexico)



Access Code:    

96957820



Web cast:          

A live web cast of the conference call and replay will be available at www.findep.mx



Replay:               

Starting at 2:30 pm EST on February 26 and ending at 11:59 pm EST on March 5, 2013. The replay is accessible by dialing (855) 859-2056 (U.S./Canada) or 404-537-3406 (international) and entering pass code 96957820.

To obtain the full text of this earnings release, please visit our Investor Relations website at www.findep.mx under the Financial Information / Quarterly Reports section.

All financial figures discussed in this announcement are audited and are prepared in accordance with Mexican Banking Accounting Principles unless stated otherwise. Figures for 2011 and 2012 are expressed in nominal pesos. Tables state figures in millions of pesos, unless otherwise noted. Independencia: refers to operations excluding the acquisitions of Finsol, AEF and AFI. NM: Not Meaningful

About Financiera Independencia:
Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R. (Independencia), is a Mexican microfinance lender of personal loans to individuals and working capital loans through group lending microfinance. Independencia provides microcredit loans on an unsecured basis to individuals in the low-income segments in Mexico in urban and rural areas of both the formal and informal economy. As of December 31, 2012, Independencia had a total outstanding loan balance of Ps.6,722.8 million, operated 538 offices in Mexico, Brazil, and the US and had a total labor force of 12,843 people. The Company listed on the Mexican Stock Exchange on November 1, 2007, where it trades under the symbol "FINDEP". On November 30, 2009 Independencia launched a sponsored Level I American Depositary Receipt (ADR) program in the United States. Each ADR represents 15 shares of Independencia common stock and trades over-the-counter (OTC). More information can be found at www.findep.mx

Some of the statements contained in this press release discuss future expectations or state other forward-looking information. Those statements are subject to risks identified in this press release and in Financiera Independencia's filings with the Mexican Stock Exchange. Actual developments could differ significantly from those contemplated in these forward-looking statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Our forward-looking statements speak only as of the date they are made and, except as may be required by applicable law, we do not have an obligation to update or revise them, whether as a result of new information, future or otherwise.

SOURCE Financiera Independencia, S.A.B. de C.V., SOFOM, E.N.R.



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