Regional S.A.B (RA) Q4 2024 earnings summary

Executive summary

• Net income for 4Q24 reached MXN 1,693 million, up 4% year-over-year, with YTD net income at MXN 6,520 million, a 15% annual increase; strong profitability and loan portfolio growth outperformed peers.

• Performing loans and leasing grew 14% year-over-year to MXN 175,080 million; core deposits increased 12% to MXN 168,029 million.

• Efficiency ratio improved to 39.7% for 4Q24, down 124 bps year-over-year, reflecting operational improvements.

• Strategic focus on nearshoring, regional expansion, digital upgrades, and disciplined cost and credit risk management drove results.

• Maintained robust asset quality and diversified income streams, with significant growth in non-financial and insurance revenues.

Financial highlights

• Return on average equity (ROAE) rose 20 bps year-over-year to 21.3%; return on assets (ROAA) at 2.8%.

• Loan portfolio grew 14% year-over-year, outpacing sector growth; commercial loans up 15%.

• Core deposits increased 12% year-over-year; time deposits up 21%; financial margin up 12% year-over-year.

• Non-financial income up 20% year-over-year, with insurance fees +35%, FX fees +30%, and car merchant fees +28%.

• Operating income reached MXN 2,310 million, up 5% from 4Q23; efficiency ratio at 39.7%.

Outlook and guidance

• 2025 guidance: loan and deposit growth of 10%-15%, NIM 6.2%-6.7%, efficiency ratio 40%-42%, net income growth 11%-16%, ROE 20%-22%, cost of risk 0.7%-0.9%, NPL below 1.8%.

• Dividend distribution of MXN 3,000 million in two installments, representing a 46% payout, subject to board and assembly approval.

• OpEx expected to grow in the low teens in 2025, with continued focus on operating efficiencies.

• Net interest margin (NIM) LTM improved to 6.6%, up 68 bps year-over-year; NIM of total loans at 7.5%.

• Management notes results are subject to risks including economic and political conditions, inflation, exchange rates, regulatory changes, and competition.