Grupo Financiero Interacciones reports net income up 22.74% YoY to Ps.842 million

• ROE of 21.24% in 3Q17, up 299 bps YoY and 78 bps QoQ.
• Loan portfolio up 19.35% YoY to Ps.105,962 million.
• NPL ratio of 0.05% in 3Q17, a 4 basis point YoY improvement.

MEXICO CITY, Oct. 25, 2017 /PRNewswire/ -- Grupo Financiero Interacciones, S.A.B. de C.V., (BMV: GFINTERO), ("Grupo Financiero Interacciones" or "GFI"), the largest specialized Mexican financial group with a business model focused on providing financing, risk management and financial advisory services mainly to the Mexican public sector, today announced results for the three and nine month periods ended September 30, 2017.

To obtain the full text of this earnings release, please visit
http://www.investorsinteracciones.com/images/media/quartelyResults/2017/3Q17/3Q17_Earnings_Release_Ingles_VF.pdf

Executive Summary: Simplified Financial Information ("SFI")

Disclaimer: As a result of the uniqueness of our business model, we simplified GFI´s financial information in an effort to make it more efficient to market participants to analyze our financial group. Simplified Financial Information ("SFI") is adjusted for valuations effects, non-recurring items and includes reclassifications of regulatory financial statements.

Fundamentals

As part of GFI's fundamentals during the quarter, states and municipalities presented an average liquidity surplus of 4.4% relative to their originally budgeted infrastructure agenda, as well as an annual nine month federal transfer growth of 14.1%. Both increases are a result of greater fiscal income stemming from the fiscal reform enacted during 2013. During most of the year, states and municipalities have presented a surplus in liquidity decreasing from 18.0% in January to 3.5% in September, in contrast to a 6.8% liquidity deficit in September 2016. We expect this surplus to be diluted and transformed into a deficit during the latter months of 2017, in line with states' and municipalities' annual spending seasonality, boosting GFI´s growth.

Simplified Financial Statements 

• The Bank´s financial margin for 3Q17 increased 15.45% YoY and 15.97% QoQ. The YoY change was driven by a 19.35% YoY loan growth that reflects GFI´s successful execution of opportunities stemming from the Financial Discipline Law. The QoQ change is mainly explained by a 2.04% expansion in the loan portfolio in addition to a 3.33% decrease in interest expense.
• During 3Q17, GFI released Ps.70 million in provisions, mainly as a result of the change in the credit profile of GFI´s clients during both time periods, as well as a change in the portfolio mix.
• Net Commissions increased 117.65% YoY and remained flat relative to 2Q17. The YoY change resulted from a strong growth stemming from advising on hedging solutions in the Government business line, as well as from an increase in commissions originated from market share gain in the traditional factoring market at the SME business line.

The sequential behavior reflects a decrease in commissions at the Infrastructure banking unit, explained by the packaging of projects, which will generate commissions until 4Q17, despite having been originated during 3Q17.

Please note that advisory commissions on hedging solutions for GFI´s clients are registered in the "Income from Brokerage Activities" line as per accounting guidelines on regulatory financial statements.

• Income from Brokerage Activities amounted to Ps.38 million in 3Q17, representing an increase of 123.53% YoY and an 84.23% decrease QoQ. The YoY change is explained by successful trading operations. The QoQ change is explained by a decrease in the securities portfolio´s balance deriving in lower revenue.
• Other Operating Income (Expenses) amounted to a Ps.14 million of income in 3Q17, compared to other operating income of Ps.53 million in 3Q16 and expenses of Ps.75 million in 2Q17. This line includes changes in Other Real Estate Owned ("OREO") and OREO discount adjustments, among others.
• Administrative and Promotional Expenses increased 23.29% YoY and 5.29% QoQ mainly driven by an expansion of GFI´s leasing corporate banking teams, as well as investment banking and legal counsel services.
• The Brokerage Unit reported income before taxes of Ps.59 million in 3Q17, increasing 37.21% YoY and decreasing 49.57% QoQ. The YoY change reflects an increase in revenue mainly stemming from successful trading operations, while the QoQ change is explained by a marginal decrease in revenue from commissions, in addition to lower trading income as a result of the successful execution of trading strategies implemented during 2Q17.
• Aseguradora Interacciones, the Insurance unit, reported income before taxes of Ps.3 million in 3Q17, compared to a Ps.12 million loss in 3Q16 and a Ps.20 million profit in 2Q17. The YoY change resulted from the implementation of its new strategy, aligning its costs to revenues and releasing technical reserves, while the QoQ change is explained by a 27.59% increase in operating expenses, in spite of a 175.00% increase in the issuance of new premiums targeting new clientele based on the subsidiary´s new strategy.
• Grupo Financiero Interacciones reported net income of Ps.842 million in 3Q17, representing an increase of 22.74% YoY and 3.57% QoQ. The YoY change is explained by an increase of 15.45% in the Bank´s financial margin, 117.65% higher net commissions, and 123.53% higher trading income, which more than offset the 23.29% increase in administrative and promotional expenses at the Bank, additionally, Ps.59 million in net income at the Brokerage unit also supported these results. The QoQ change is explained by a 15.97% increase in the Bank´s financial margin ("SFI"), in addition to a Ps.70 million provision release.

REGULATORY FINANCIAL STATEMENTS  - Regulatory Income Statement

FINANCIAL STATEMENTS  - Regulatory Balance Sheet

REGULATORY MAIN INDICATORS

RELEVANT EVENT

GRUPO FINANCIERO INTERACCIONES, S.A.B. DE C.V. ("GFINTER") hereby informs that on October 25, 2017, GRUPO FINANCIERO BANORTE, S.A.B. DE C.V. ("GFNORTE"), entered into a master merger agreement (the "Master Merger Agreement") pursuant to which GFINTER will merge into GFNORTE (the "Relevant Transaction").

The merger and the effects of the Merger Agreement are subject to approval by the shareholders of both issuers, who will gather at general extraordinary meetings, and by the financial and economic competition authorities.

Prior to the execution of the Master Merger Agreement, GFNORTE's and GFINTER's audit and corporate practices committees issued an opinion recommending the Relevant Transaction, which was submitted for discussion to the board of directors, who, in turn, agreed to submit the Transaction for discussion to the corresponding shareholders.

3Q17 EARNINGS CONFERENCE CALL

The conference call can be accessed by dialing +1-844-824-3835 (U.S. / Canada), 001-855-817-7630 (Mexico), or +1-412-317-5160 (Other International) and asking to be joined into the Grupo Financiero Interacciones call. The earnings release for the third quarter ending September 30, 2017 will be issued after the close of the U.S. market on Wednesday, October 25, 2017.

A simultaneous webcast of the conference call can be accessed by clicking the following link:
https://www.webcaster4.com/Webcast/Page/1449/22945

A telephonic replay of the conference call will be available after 12:00pm on October 27, 2017 on GFI's Investor Relations website at www.investorsinteracciones.com.

About Grupo Financiero Interacciones

Grupo Financiero Interacciones, S.A. de C.V. ("Grupo Financiero Interacciones" or "GFI"), is the largest specialized Mexican financial group with a business model focused on providing financing, risk management and financial advisory services mainly to the Mexican public sector, which includes federal, state and municipal governments, quasi-government entities and government suppliers. Grupo Financiero Interacciones conducts its business mainly through Banco Interacciones, its banking subsidiary, and through Interacciones Casa de Bolsa, its broker-dealer subsidiary, and Aseguradora Interacciones, its insurance company subsidiary. Grupo Financiero Interacciones is listed on the Bolsa Mexicana de Valores under the symbol "GFINTERO". For more information, please visit http://www.investorsinteracciones.com

This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties, and assumptions. By their very nature, forward-looking statements and such information involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved or will differ from actual results. A number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed or implied in such forward-looking statements. Should one or more of these factors or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. Grupo Interacciones assumes no obligation to update or correct the information contained in this press release.

Contact:
Adolfo Werner Fritz Rubio, Corporate Development Officer & Head of Investor Relations
Telephone: +52 55 53 26 86 00 Ext: 6825
E-mail: [email protected]

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SOURCE Grupo Financiero Interacciones, S.A. de C.V.

Related Links

http://www.grupofinancierointeracciones.mx/