Regional S.A.B (RA) Q2 2024 earnings summary

Executive summary

• Net income for 2Q24 reached MXN 1,608 million, up 24% year-over-year, with ROE/ROAE expanding to 21.4%–22.4% and year-to-date net income at MXN 3,223 million.

• Loan portfolio grew 12% year-over-year to MXN 164,366 million, outpacing sector growth, with core deposits up 10% to MXN 163,644 million.

• Financial margin expanded 20% year-over-year to MXN 3,524 million, with operating income up 27% and efficiency ratio improving to 39.0%.

• Continued optimization of the balance sheet, reduction in securities investment portfolio, and double-digit growth in non-financial revenues.

• Benefiting from Mexico's economic expansion, nearshoring, and robust labor market.

Financial highlights

• Interest income for 2Q24 was MXN 7,362 million, up 4% year-over-year; financial margin up 20% to MXN 3,524 million.

• Non-interest income rose 13% year-over-year, with FX fees up 35%, card services margin up 27%, insurance up 20%, and trade up 17%.

• Operating income for 2Q24 rose 27% year-over-year to MXN 2,191 million.

• Total expenses increased 14% year-over-year to MXN 1,733 million.

• Efficiency ratio improved to 39.0%–39.9%, contracting over 200 basis points year-over-year.

Outlook and guidance

• Growth outlook remains promising, with increased loan demand expected across agribusiness, manufacturing, logistics, and commerce.

• Earnings growth for the year expected to be between the mid and high range of guidance, with stronger performance anticipated in the fourth quarter.

• Net interest margin (NIM) expected to finish above guidance due to higher-than-expected rates; sensitivity is 12-16 basis points per 100 basis point rate change.

• Management highlights stable growth in deposits and loans, with a focus on maintaining strong capitalization and risk coverage.

• Forward-looking statements highlight expectations of continued growth but acknowledge risks and uncertainties in the economic environment.