Grupo Financiero Santander Mexico Reports Second Quarter 2013 Net Income of Ps.4,143 Million - Strong loan growth with YoY increases of 42.6% in SMEs, 15.9% in credit cards, 8.0% in consumer loans, and 13.3% in mortgages

- Continued prudent risk management demonstrated by an NPL ratio of 2.4% and cost of risk of 3.4%

- Ongoing emphasis on operational efficiency reflected in a 39.2% ratio

MEXICO CITY, July 30, 2013 /PRNewswire/ -- Grupo Financiero Santander Mexico, S.A.B. de C.V., (NYSE: BSMX; BMV: SANMEX), ("Santander Mexico"), one of the leading financial groups in the Mexican financial system, today announced financial results for the three- and six-month periods ending June 30, 2013.

Comparable net income in 2Q13 increased 19.5% YoY to Ps.4,651 million. Comparable results eliminate the extraordinary impact on 2Q13 results of a Ps.330 million provision in connection with Santander Mexico's exposure to homebuilders, a Ps.178 million price adjustment related to the sale of the insurance business to Zurich, and Ps.142 million of expenses related to the branch expansion plan. Additionally, comparable 2Q12 results exclude a non-recurring gain of Ps.1,731 million on the sale and leaseback of 220 branches and reflect expenses that were adjusted upward by Ps.260 million to be consistent with the accounting methodology adopted in 2013 to normalize expenses throughout the year.  Reported net income for the quarter was Ps.4,143 million, representing a YoY decrease of 21.6% and a sequential decline of 12.2%.

Marcos Martinez, Executive Chairman and CEO, commented, "This quarter we reported a solid operating performance in an environment of decelerating GDP growth and financial market uncertainty. Although we grew at a slower rate, in line with the broader trend in the Mexican financial system, we continued to expand our loan portfolio while prioritizing asset quality and our efficiency-oriented culture, helping to make Santander Mexico one of the most profitable franchises in the country. In the second quarter, our gross operating income grew by 18% year over year, leveraged by an efficiency level of 39.2%.

Keeping to our strategy of focusing on our key segments, this quarter we achieved YoY growth of 42.6% in SMEs, where we continue to lead the market. Furthermore, our credit card and mortgage segments registered above-industry growth of 15.9% and 13.3%, respectively. At the same time, the 8% increase in consumer loans growth, reflects our decision to take a more prudent approach to risk management given the current market environment.

Our agreement in June 2013 to acquire ING Hipotecaria demonstrates our commitment to further strengthen our core businesses and will strengthen our position as the second largest player in the Mexican mortgage market, while favorably contributing to results."

Mr. Martinez concluded: "Looking ahead, we expect an economic recovery beginning in the second half of the year in tandem with a pick-up in public and private investment. In addition, we anticipate the infrastructure program to further drive economic growth, particularly starting 2014, while the possibility of achieving the energy and fiscal reforms will also contribute positively in the medium and long term."

 


Grupo Financiero Santander Mexico






Highlights









2Q13

1Q13


2Q12


YoY (%)


Income Statement Data








Net interest income

8,899

8,636


8,394


6.0%


Fee and commission, net

3,052

3,218


2,761


10.5%


Core revenues

11,951

11,854


11,155


7.1%


Provisions for loan losses

3,348

2,804


1,994


67.9%


Administrative and promotional expenses

5,314

5,288


4,535


17.2%


Net income

4,143

4,717


5,285


-21.6%


Net income per share *

0.6

0.7


0.8


-21.6%


Balance Sheet Data








Total loans

365,360

352,267


338,905


7.8%


Deposits

378,690

374,920


330,875


14.5%


Shareholders´s equity

101,697

102,519


95,545


6.4%








pb


Key Ratios






pbs


Net interest margin

5.1%

5.2%


4.9%


18.0


Net loans to deposits ratio

92.3%

90.8%


99.1%


(681.4)


ROAE***

18.5%

19.4%


22.4%


(390.0)


ROAA

2.2%

2.3%


2.6%


(40.0)


Efficiency ratio

39.2%

39.8%


34.9%


429.7


Capital ratio

15.2%

15.6%


14.6%


60.0


NPLs ratio

2.43%

1.83%


1.46%


97.0


Coverage ratio

180.0%

185.6%


224.1%


(4,417.2)


Operating Data






%


Branches**

1,215 *

1,193


1,125


6.0%


ATMs

5,100

5,020


4,779


6.7%


Customers

10,325,561

10,050,864


9,583,468


7.7%


Employees

13,623

13,498


12,461


9.3%










* Treasury Shares and discontinued operations are not included




**As of 2Q13 includes: 980 branches + 121 cash desks + 3 select offices + 48 select units + 35 select boxes + 28 brokerage house branches



***ROAE excluding declared dividends from equity




To obtain the full text of this earnings report and the 2Q13 earnings presentation, please click on the following link: http://www.santander.com.mx/ir/english/financial/quarterly.html

2Q13 EARNINGS CALL DIAL-IN INFORMATION

Date:                    

Wednesday, July 31, 2013



Time:                   

9:00 AM (MCT); 10:00 AM (US ET)



Dial-in Numbers:    

1-888-208-1427 US & Canada; 1-913-312-0665 International & Mexico



Access Code:       

5382576



Webcast:              

https://viavid.webcasts.com/starthere.jsp?ei=1019473



Replay:                

Starting Wednesday, July 31, 2013 at 01:00 PM US ET, and ending on    


Wednesday, August 7, 2013 at 11:59PM US ET




Dial-in number: 1-877-870-5176 US & Canada; 1-858-384-5517 International & Mexico




Access Code: 5382576

ABOUT GRUPO FINANCIERO SANTANDER MEXICO, S.A.B. DE C.V. (NYSE: BSMX; BMV: SANMEX)

Grupo Financiero Santander Mexico, S.A.B. de C.V. (Santander Mexico), one of Mexico's leading financial services holding companies, provides a wide range of financial and related services, including retail and commercial banking, securities brokerage, financial advisory and other related investment activities. Santander Mexico offers a multichannel financial services platform focused on mid- to high-income individuals and small- to medium-sized enterprises, while also providing integrated financial services to larger multinational companies in Mexico. As of June 30, 2013, Santander Mexico had total assets of Ps.831.7 billion under Mexican GAAP and more than 10.1 million customers. Headquartered in Mexico City, the Company operates 980 branches and 235 offices nationwide and has a total of 13,623 employees.

LEGAL DISCLAIMER

Grupo Financiero Santander Mexico cautions that this report may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements could be found in various places throughout this reports and include, without limitation, statements regarding our intent, belief, targets or current expectations in connection with: asset growth and sources of funding; growth of our fee-based business; expansion of our distribution network; our focus on strategic businesses; our compound annual growth rate; our risk, efficiency and profitability targets; financing plans; competition; impact of regulation; exposure to market risks including interest rate risk, foreign exchange risk and equity price risk; exposure to credit risks including credit default risk and settlement risk; projected capital expenditures; capitalization requirements and level of reserves; liquidity; trends affecting the economy generally; and trends affecting our financial condition and our results of operations. 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: changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies; changes in economic conditions, in Mexico in particular, in the United States or globally; the monetary, foreign exchange and interest rate policies of the Mexican Central Bank (Banco de Mexico); inflation; deflation; unemployment; unanticipated turbulence in interest rates; movements in foreign exchange rates; movements in equity prices or other rates or prices; changes in Mexican and foreign policies, legislation and regulations; changes in requirements to make contributions to, for the receipt of support from programs organized by or requiring deposits to be made or assessments observed or imposed by, the Mexican government; changes in taxes; competition, changes in competition and pricing environments; our inability to hedge certain risks economically; economic conditions that affect consumer spending and the ability of customers to comply with obligations; the adequacy of allowances for loans and other losses; increased default by borrowers; technological changes; changes in consumer spending and saving habits; increased costs; unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; changes in, or failure to comply with, banking regulations; and certain other factors indicated in the "Risk Factors" section of our Registration Statement on Form F-1 (File No. 333-183409). The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the U.S. Securities and Exchange Commission, could adversely affect our business and financial performance.

Note: The information contained in this report is not audited. Nevertheless, the consolidated accounts are prepared on the basis of the accounting principles and regulations prescribed by the Mexican National Banking and Securities Commission (Comision Nacional Bancaria y de Valores) for credit institutions, as amended (Mexican Banking GAAP). All figures presented are in nominal terms. Historical figures are not adjusted by inflation.

 

SOURCE Grupo Financiero Santander Mexico, S.A.B. de C.V.



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