Regional S.A.B (RA) Q3 2024 earnings summary

Executive summary

• Net income for 3Q24 was MXN 1,604 million, up 3% year-on-year, with ROE rising 83 bps to 21.7% and YTD net income reaching MXN 4,827 million, up 19% year-on-year.

• Financial margin increased 12% year-on-year to MXN 3,652 million, with total income up 12% and operating income up 7% compared to 3Q23.

• Loan portfolio grew 30% year-on-year, with performing loans and leasing up 13% to MXN 169,334 million and commercial loans up 15%.

• Core deposits rose 11% year-on-year to MXN 168,555 million, with time deposits up double digits.

• Continued branch expansion, with 22 new locations in the last 12 months and plans for 20 more in 2025.

Financial highlights

• Net interest margin reached 6.5%, up 32 bps year-on-year; efficiency ratio improved to 39.5%, down 223 bps year-on-year.

• ROE at 21.7% for the quarter; ROAA at 2.8%, up 34 bps year-on-year.

• Non-performing loan ratio at 1.3%, down 11 bps year-on-year; coverage ratio at 167.7%.

• Non-financial income rose 40% year-on-year, driven by FX, card, and insurance fees; non-interest income totaled MXN 974 million.

• Capitalization ratio at 15.0% as of August 2024.

Outlook and guidance

• Maintains 2024 loan growth guidance of 12%-17%, with double-digit growth expected in 2025.

• Net profit guidance for 2024 is 12%-16%, with expectations to reach the mid-to-high end.

• Cost of risk expected to return to 0.7%-0.9% in 2025 after a temporary increase to 1%.

• Efficiency ratio guidance at 40%-42%, with OpEx growth in the low teens for 2025.

• Results are subject to risks including economic and political conditions, inflation, exchange rates, and regulatory changes.