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Grupo Financiero Santander Mexico Reports Fourth Quarter 2013 Net Income of Ps.6,134 Million

- Loan portfolio up 12.6% YoY with increases of 26.2% in SMEs, 7.4% in credit cards, 10.1% in consumer loans and 28.0% in mortgages including the acquisition of ING's mortgage business (now Santander Vivienda)

MEXICO CITY, Jan. 30, 2014 /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 twelve-month periods ending December 31, 2013.

Comparable net income in 4Q13 decreased 27.0% YoY to Ps.3,114 million. Comparable 4Q13 results eliminate the following items: i) a Ps.1,927 million net gain after taxes resulting from the divestiture of the asset management business, ii) a Ps.1,074 million benefit from advanced tax credits, iii) an extraordinary net benefit of Ps.199 million before taxes related to the mandatory regulatory change in employee profit sharing (EPS) future payments occurred in 3Q13 and iv) branch expansion expenses before taxes of Ps.171 million.  Additionally, comparable 4Q12 results reflect Ps.1,368 million before taxes adjusted downward which include: an adjustment to be consistent with the accounting methodology adopted in 2013 to normalize expenses throughout the year, certain provisions, write-offs and administrative and promotional expenses. Reported net income for the quarter was Ps.6,134 million, representing YoY and QoQ increases of 85.3% and 4.3%, respectively.

Marcos Martinez, Executive President and CEO, commented, "We reported a strong performance in loan and deposit growth this quarter, ahead of industry growth rates. This good performance came about even as we continue to face an environment of lower growth."

"We expanded our total loan portfolio by 13% YoY this quarter, reflecting solid organic growth as well as the positive contribution from the November 2013 acquisition of ING's mortgage business, which solidifies our number two ranking in this attractive segment of the market. Among our core products, SME loans and mortgages grew YoY by 26% and 28%, respectively, well above the Mexican financial system growth rates during the period. Credit Cards and Consumer loans rose 7% and 10%, respectively, reflecting a conservative strategy to prioritize asset quality. Furthermore, we increased our deposit base by 12%, further supporting our liquidity profile."

"Net interest income for the quarter increased 6.5% YoY, with net interest margin of 5.25%, reflecting core business growth and lower cost of funding. At the same time, we remained on track with our branch expansion plan opening a total of 37 new branches during this quarter, for a total of 90 branches since the start of this process while maintaining tight cost controls across the organization. In summary, against a backdrop of a challenging economic environment, we closed 2013 in a very solid position as one of the most efficient and profitable franchises in the country."

"Also, several important events during the quarter improved our financial position. Among these, we divested our equity in the asset management business and entered into strategic agreements to continue to distribute these mutual funds to our clients. We also completed the optimization of our capital structure which has allowed us to reduce our cost of capital and increase return on equity, all while maintaining industry-leading capitalization levels, well above minimum regulatory capitalization requirements. As part of this strategy, we paid a Ps.16.9 billion, or U.S.$1.3 billion, cash dividend to our shareholders during the quarter. At the same time, in December 2013 we issued U.S.$1.3 billion in subordinated notes that comply with capital requirements under Basel III for Tier 2 capital, the first of their kind in Latin America."

Mr. Martinez concluded, "Looking ahead, macro and financial sector fundamentals in Mexico remain strong, despite the sharper than anticipated economic slowdown last year. We expect to see a recovery in public and private investment in 2014, driven by public spending as well as the infrastructure spending program. The recent approval of the energy, labour, financial and fiscal reforms should enhance economic growth in the following years, positively impacting Mexico's financial sector."

 

Grupo Financiero Santander Mexico







Highlights








4Q13  

3Q13   


4Q12  


   YoY 

Income Statement Data







Net interest income

9,384

9,111


8,812


6.5%

Fee and commission, net

3,310

3,301


3,227


2.6%

Core revenues

12,694

12,412


12,039


5.4%

Provisions for loan losses

3,598

3,102


2,948


22.0%

Administrative and promotional expenses

5,730

2,737


5,996


-4.4%

Net income

6,134

5,882


3,310


85.3%

Net income per share1

2.80

2.18


2.61


7.3%

Balance Sheet Data







Total loans

394,932

378,795


350,683


12.6%

Deposits

404,668

389,524


362,452


11.6%

Shareholders´s equity

94,701

100,494


97,827


-3.2%








Key Ratios






bps

Net interest margin

5.25%

5.18%


5.03%


22

Net loans to deposits ratio

93.6%

93.2%


93.6%


2.7

ROAE2

21.7%

19.8%


19.1%


255.4

ROAA

2.7%

2.5%


2.4%


26.3

Efficiency ratio

35.5%

33.0%


39.5%


(396.8)

Capital ratio

15.9%

15.7%


14.8%


113.0

NPLs ratio

3.56%

2.84%


1.74%


181.8

Coverage ratio

115.5%

146.6%


190.1%


(7,453.8)

Operating Data






%

Branches3

1,258

1,229


1,170


7.5%

ATMs

5,264

5,209


4,946


6.4%

Customers

10,512,051

10,586,497


9,965,356


5.5%

Employees

14,169

13,883


13,385


5.9%








1) Treasury Shares and discontinued operations are not included






2) ROAE as reported

3) As of 4Q13 includes: 1,018 branches + 121 cash desks + 3 select offices + 50 select units + 42 select boxes + 24 brokerage house branches

 

To obtain the full text of this earnings report and the 4Q13 earnings presentation, please click on the following link: http://www.santander.com.mx/ir/english/financial/quarterly.html

4Q13 EARNINGS CALL DIAL-IN INFORMATION

Date:  

Friday, January 31, 2014

Time:

10 AM (MCT); 11 AM (US ET)

Dial-in number:

1-877-870-5176; 1-913-312-1507 International & Mexico

Access Code:

3531096

Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1028405

Replay:

Starting Friday, January 31, 2014 at 2 PM US ET, and ending on Friday, February 7, 2014 at 11:59pm US ET


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


Access Code: 3531096

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 December 31, 2013, Santander Mexico had total assets of Ps.821.8 billion under Mexican GAAP and more than 10.5 million customers. Headquartered in Mexico City, the Company operates 1,018 branches and 240 offices nationwide and has a total of 14,169 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 may be found in various places throughout this report 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 our  annual report 20F. 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 for inflation.

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

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