2nd Quarter 2016Fixed Income
Presentation
Investor Relations
Jonathan Rangel • IRO • [email protected]
+52 (55) 5228 9753
Israel Becerril • IR • [email protected]
+52 (55) 5340 5200
IR Agency
Alejandro Ramírez • [email protected]
www.creal.mx • [email protected]
Unique attributes
HIGH YIELD
PRODUCTS
Mid to low income
segments not
attended by banks
CENTRALIZED
CREDIT ANALYSIS
AND FUNDING
PAYROLL
SMALL BUSINESS
USED CARS
DURABLE GOODS
GROUP LOANS
PARTNERING &
DECENTRALIZED
DISTRIBUTION
On site presence to
approach customers
Sales forces: 10,000 reps.
Shared income & risk
We develop a credit
analysis customized
to our clients
That generate
higher margins
TARGET
UNSERVED
CUSTOMER2
Crédito Real is a financial company operating where traditional banks are not effective
Customers walking
into branches
Customer approach on site
Train & develop sales forces
Compete with existing
players with a loan portfolio
and a fully integrated
presence
Ally with strategic partnersExclusivity agreements
Standard credit analysis
focused on mid and high
income segments
Credit analysis standards
according to customers profile,
attending mid and low income
segments
Source: (1) Crédito Real, CNBV, Companies filings. Size of the circle reflects size of consumer loan portfolio.
Reaching underserved customers enhances growth and profitability
Credito RealTraditional banks
Bank Branches
Crédito Real Customers
65% of Crédito
Real Customers
0 to 300,000 adults More than 300,000
54.3% of population 45.7%
63% of Bank
Branches
RURAL TRANSITION SEMI-URBAN URBAN MID-CITIES BIG CITIES
Rural & semi-urban focus
3
High quality loan portfolio growth (1)
Creal
Gentera
Banorte Santander
Interacciones
Banregio
Inbursa
Unifin
Banco Azteca
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
0% 10% 20% 30% 40% 50%
Ave
rage
NP
L R
atio
20
11
-20
15
% Consumer Portfolio CAGR 2011–2015
ROE (%)
23%
26%
5%
14% 14%
19%
18%
10%
22%
9%
Findep
Partners strategy
Funding
Credit analysis
platform
Corporate &
servicing processes
Provides:
Market Know-how
Customer base
Sales forces
ESTABLISHED
PARTNERS
4
CREDITO REALInterest alignment:
Set objectives and KPI’s
Risk and income sharing
Generate Efficiencies
Allow us to reach:
Faster scale
Lower risk
Faster return on
investment
Diminish learning
curve
22 Years of track record1993
Starts operations with durable good loans
2007
Partnership with Nexxus Capital Private Equity, Introduction of Group Loans
2010
Issuance of its US$210mm, 10.25%
Sr. Notes due 2015
2012
IPO in the BMV, Introduction of SME and
Used car loans
2011
Acquires 49% of payroll distributors
2004
Introduction of Payroll loans
1995
First public debt issuance
2014
Part of MSCI México Small-Cap Index, FTSE Small-Cap and IMC30 , Acquires remaining 51% of distributor Kondinero, Issuance of its US$425mm, 7.5% Sr. Notes due 2019
Experienced management team
2015
Partnership with car loan distributors in the USA, and
with a credit repair company
ANGEL ROMANOS / CEO
Founder, MBA from Wharton
CARLOS OCHOA / CFO
COO for 12 years, Master In Economics from Bristol University
PATRICIA FERRO / NEW BUSINESSES OFFICER
Extensive banking system background
LUIS RAMÓN RODRÍGUEZ / COO
Comprehensive experience analysis and collection in HSBC
LatAm
LUIS MAGALLANES/ CMO
Former Marketing VP at Coca Cola for Mexico, Brazil and LatAm
LUIS CARLOS AGUILAR / PAYROLL COMMERCIAL OFFICER
CFO for 13 years, MBA from IPADE
IKER OTEGUI / USED CARS OFFICER (USA)
Solid financial career in MABE and used cars Mexico
LUIS BERRONDO / HEAD OF M&A AND NEW PRODUCT
DEVELOPMENT
Previously served as the High-End Business General Manager at
Mabe
JONATHAN RANGEL / IRO
Former COMERCI´s IRO, MBA from IPADE
5
2016
Acquires 70% of Instacredit
Issuance of its US$625mm, 7.25% Sr Notes due 2023
• Long-term commitment of main shareholders
• Financial & entrepreneurial legacy of main shareholders (BITAL, MABE)
Corporate structure
100%
49%
49%
38%
23%
51%
64%
65%
55%
24%
70%
99%
Corporate structure
• More than 80 strategic partners
• Partners network with + 10,000 sales reps.
• Centralized credit analysis & collection
• Management with over 15 years of experience.
• Committees: Audit, Corporate practices, Executive & Treasury
• 4 of 12 board members are independent
Service Companies
Main shareholders 40 %
Subsidiaries & Associates
PAYROLL GROUP LOANS USED CARS OTHERS
6
Free float 60%
Percentage of ownership
74% 50% - 55%
6%
5% - 10%
8%
15% - 20%
2%
4%- 8%
10%
10% - 15%
2015 2019Used car loans
Group loans
Small business loans
Durable goods loans
Payroll loans
Diversified & Growing Loan portfolio
CAGR 10’-15´ 36%
ROE 2015 22%
NPL 2015 2.4%
CAGR 15’-19’ 15% - 20%
ROE 20% - 25%
NPL 2% - 3%
19%
7%
7%
5%
Organic Loan Portfolio Growth
50% - 80%
30% - 50%
25% - 35%
10% - 20%
5% - 10%
17
.6 b
illion
Expected CAGR
7
30
.8 -
36
.5 b
illion
Inorganic Growth
• Find established partners who are already profitable• Partners who keep running the business and remain as shareholders
PAYROLL• Enter new markets (e.g. pensioners)
• Further consolidation
SMALL BUSINESS• Increase sales reps
• Increase origination through brokers
USED CARS
• Drive & Cash expansion
• Enlarge dealers network in Mexico and USA
• Focus on USA-Latino market with Don Carro and AFS
GROUP LOANS• Partner with other micro-lending companies
• Generate efficiencies & increase profitability
DURABLE GOODS • In house credit card, telemarketing and e-commerce
OTHERS• Inorganic growth: Instacredit, Resuelve & Credilikeme
Growth strategy
8
2Q´16 Payroll Portfolio per Region
Payroll unique attributes
CREAL CONSUBANCO CREDIAMIGO
MARKET SHARE 35% 20% 10%
PRODUCT
DESCRIPTION
Personal loan linked
to payroll (low risk)Yes Yes
DISTRIBUTION
Network in rural areas +
4,000
sales reps + 250 branches
Integrated
operations
Integrated
operations
CAGR 53% 20% 18%
AVERAGE DURATION 40 months Yes Yes
ONSITE PRESENCE Yes Yes Yes
DIFFERENTIATORSExclusivity with 3 main
Distributors / 12 alliancesX X
• No exclusivity agreements with government entities
• Government entities carefully selected
• Non direct relation with government entities or unions
• Disclosed fees for every contract
14%Served market
Competitive landscape
86%Unserved market
• On site distribution in rural and semi-urban communities
• Manage of sales forces
• Over 250 customized agreements with government entities
• Equity stake and exclusivity with 3 main distributors
• Funding constraints for small players
Business practices
Entry barriers
2Q´16 Payroll Portfolio per Sector
Market of approximately 7 million employees
9
41.5%
20.3%
12.0%
8.2%
5.9%
5.8%
2.8%1.0% 2.4%
Federal Education
IMSS
Government
Health
State Education
Education Ministry
12.8%
9.1%
8.0%
6.6%
6.3%
6.1%
2.4%2.2%
2.0%1.8%
1.8%1.5%
1.4%1.3%
1.1%
35.6%
OAXACA
MEXICO CITY
ESTADO DE MEXICO
VERACRUZ
GUERRERO
CHIAPAS
GUANAJUATO
TABASCO
SAN LUIS POTOSI
JALISCO
MICHOACAN
HIDALGO
CAMPECHE
SINALOA
TAMAULIPAS
OTHERS
3,350
3,400
3,450
3,500
3,550
3,600
3,650
Micro Little Medium Big
Credito Real Traditional banks
Average loan amount
Average loan term
Interest rate
Use of proceeds
~3 million
4-6 months
18%
Working capital
7.7 million
14-41 months
8-14% + commissions
Capex & working capital
Origination & Service
• Key account executives strengthen the Customer relation
model
• Application process takes up to 72 hours
• Site-visits at least once a year
• Risk assessment based in quantitative and qualitative
information
• Distribution through on-site presence
• Massive attention model based on branches
• Application process takes several weeks
• Limited customer site-visits
• Risk assessment based only in qualitative information
• Distribution through branches
SME differentiators
NPL
Source(1) INEGI (2009) and CNBV 2012
SMEs represents 52% of Mexican GDP and 80% of labor force(1)
# of Businesses in thousands
Rate of Businesses with loans
6.5%
29.2%
39.6%
52.6%
Creal Target Market
Diversified sector base Market share(1)Portfolio expansion & NPL
10
-15%
-6%
3%
12%
1.0x
1.5x
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
2Q
16
Loan
Gro
wth
Credito RealSectorNPL Crédito RealNPL Sector
34%
29%
14%
10%
10%
2%
Commerce Services
Textile Others
Construction Agriculture
Strategy before Today´s strategy
Interest Income 100%
Net Income & ROA 1%
Interest Income 13%
Net Income & ROA 6%
Integrated operationsOrigination through partnerships and
distributors
In-house brandNetwork of regional operators to reach a
national presence
High distribution costs Efficiencies on Distribution Costs
160 clients per sales rep Target 220 clients per sales rep
267 promoters 1,061 promoters
74 branches 143 branches
$120 million loan portfolio $558.3 million loan portfolio*
Smaller scale – Small market shareLarger scale – Larger market share
New product introduction
New group loan strategy enhances growth and ROA
Note: *The loan portfolio belongs to group loans distributors to 2014
Leaders of the market in terms of Loan portfolio(1)
Only consider group loans
Group Lending Presence (1)
Market share
NO. COMPANYLOAN
PORTFOLIO
1 BANCO COMPARTAMOS 14.9
2 CAME 1.7
3 FINANCIERA INDEPENDENCIA 0.7
4 FINCA MÉXICO 0.6
5 CRÉDITO REAL (CONTIGO) 0.6
6 TE CREEMOS 0.4
7 SIEMPRE CRECIENDO 0.3
8 BANCO FORJADORES 0.3
9 IMPULSARTE 0.3
10 FINANCIERA FELICIDAD 0.2
11
38%
6%
10%
13%
4%
5%
Yield FundingCost
ExpectedLosses
SG&A Taxes &Others
ROA
Used car loan expansion in the USA
AUTO FINANCE
COMPANY
• License to operate in 40 states
• +300 used-car dealers network
• Credit analysis and servicing
know-how
CAR DEALER
• 5 branches
• Ensure asset quality by
origination since inception
• Focused on customers with
not credit history
Increase loan portfolio
Merge commercial an
financial margin
Attend Hispanic market in
other states
Assets and liabilities in USD,
improving funding costs
23% Financial
Margin & Fees
15% Commercial
Margin
Actual footprint
12
Expected Profitability analysis
Loan diversification by region Loan diversification by product
- Instacredit CEO continues operating the business
- Efficiencies through the knowhow merge of both companies
FY 2016e (MM USD) Instacredit
Loan portfolio 165.4
Interest income 103.7
Interes expense 15.0
Financial margin 88.7
Provisions for losses24.9
SG&A 51.7
Other income 13.5
Operatin Result 25.6
Income taxes 7.7
Net income 17.9
NPL 3%
NIM 54%
Yield 63%
ROA (loan portfolio) 11%
Efficiency ratio 58%
Expanding to Central America
13
Acquisition benefits
- Attend other LatAm markets
- Larger customer base
- Access markets with high growth potential
Is a financial institution focusing on the low and middle segments of
the population that have historically been underserved by other
financial institutions in Latam.
Costa Rica, 85%
Nicaragua, 13%
Panama, 3%
Personal loans, 46%
Car loans, 36%
SME's, 17%
Home equity loans 1%
Outstanding asset quality
Stable levels of NPLs with sufficient reserves (1)
Product Credito Real** Banking Sector*
Payroll 2.3% 2.9%
Durable goods 2.7% 4.4%
SME 2.5% 2.8%
Group loans 0.9% 3.6%
Used Cars 1.9% 1.6%
Total 2.3% 3.1%
Instacredit 3.4%(2) 1.2%(3)
• Selective with distributors and government entities
• Specialized collection management
• Income and risk shared with distributors
• Loan structure to reduce default risk
• Regional footprint
*Average LTM ended on May 2016, except group loans for banking sector that is until December 2014. Source CNBV
** Average LTM ended on June 2016. For Group loans NPL belongs to distributors
(1) Reserves calculated as end of period allowance for loan losses divided by total loan portfolio
(2) Instacredit NPL Average of last six months
(3) Metric: Banking sector Total loan portfolio. Average LTM ended on June, 2016. Source BCCR
Average NPLs comparison*
14
1.8% 1.6% 1.7% 1.5% 1.5% 1.5%1.9% 1.9% 2.2% 2.1% 2.0% 2.4% 2.7% 2.3%
1.9% 1.9% 1.9% 1.9% 2.0%
3.2% 3.1% 3.0% 3.2%
2.6% 2.8% 2.8%
3.9% 3.7%
1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16
NPL Reserves / Total Loan Portfolio
Yield and return drivers
Yield
2015
Yield
2019Drivers
PAYROLL 29% 35% • Effect of acquiring 51% of Credifiel and Credito Maestro
DURABLE GOODS 17% 21% • Development of new products
SMALL BUSINESS 14% 18%• Diversification of Fondo H portfolio focused on business with higher
rates
GROUP LOANS 13% 12%• Change of business strategy through consolidation of regional players
• ROA enhanced by earnings participation
USED CARS 42% 30% • Increased competition in Mexico & USA
AVERAGE YIELD
ROA
27%
6%
28%
7%
• Expected ROA 5% - 7%
• Expected ROE 20% - 25%
*Reported as of December 2015 YTD 15
1,004
1,225
1,371
333 375
2013 2014 2015 2Q 15 2Q 16
2,724
3,327
4,264
976
1,655
2013 2014 2015 2Q 15 2Q 16
10,423
13,805
17,610
14,790
22,193
2013 2014 2015 2Q 15 2Q 16
Key financial indicators
CAGR ’13–’15: 30.0% YoY Growth : 50.0% CAGR ’13–’15: 25.1% YoY Growth: 69.5%
NIM % (1) Net income
CAGR ‘13–'15 : 16.9% YoY Growth : 12.6%
Loan portfolio Interest incomeMX$mm MX$mm
MX$mm
16
22.8%
19.3%21.0%
20.3%
23.0%
2013 2014 2015 2Q 15 2Q 16
7.7%
6.9%
6.0%6.3%
4.7%
2013 2014 2015 2Q 15 2Q 16
41.8%38.8% 38.1%
40.5%
36.9%
2013 2014 2015 2Q 15 2Q 16
25.1% 26.8%
35.9%32.3%
59.1%
2013 2014 2015 2Q 15 2Q 16
24.5% 24.7%
22.2% 22.9%
19.1%
2013 2014 2015 2Q 15 2Q 16
Performance metrics
ROAE Efficiency ratio (1)
Capitalization ROAA
Notes:
(1) Efficiency index consists of administrative and promotion expenses for the period divided by the sum of (a) financial margin and (b) the difference
between (i) commissions and fees collected and (ii) commissions and fees paid for the period 17
2,628
300
2,000
3,450
3,736
1,728
903
6,361
2016 2017 2018 2019 - older
Local Market Credit Lines Senior Notes
4.1%
3.3%
3.3%
3.5%
4.3%
3.5%
3.7%
3.0%
4.0%
4.4%
2Q 16
2Q 15
2015
2014
2013
Average TIIE Spread
Diversified funding sources
Improving funding costDebt profile
Debt maturity schedule as of 2Q16 (1)
Notes:
(1) Debt does not include FX effect and accrued interests
(2) As a percentage of 2016e Net Income
Market risks
Interest Rate Risk Around 50% of Crédito Real ‘s debt is fixed
Interest rate increase 50 bp 100 bp 150 bp
Impact in Net Income(2) (1.0%) (2.0%) (3.0%)
FX Risk 18 18.5 19
Impact in Net Income (2) (2.3%) (3.4%) (4.5%)
27%
18%16%
39%
Asset & Liabilities duration Assets Liabilities
1.7 years 1.9 years
18
8.7%
7.5%
6.3%
7.0%
7.6%
Assets in USD: +100 million
47%30%
32%
47%
20% 23%
2Q 15 2Q 16
Ps. 14,221.0
Senior Notes Credit Lines Local Notes
Ps. 22,788.3
9,817 4,928 6,361
21,105 1,123
2,572
3,695
Credit Lines Local Market Senior Notes Total
Drawn Undrawn
Diversified funding sources
Notes: Information as of June 30, 2016
(1) 6.75% of the loan portfolio or MX $ 1,442.57 mm is pledged to guarantee credit facilities.(2) Short term refers to amortization under 1 year. Medium term ranges from 1 to 5 years.(3) Does not includes de Fx effect and accrued interests
• Authorized credit line capacity of MX$10,939 mm
(MX$1,123 mm of available credit lines)
• Cash and equivalents of MX$458.7 mm as of June
30, 2016
• Funding program in the Mexican Market of
MX$7,500mm (MX$2,572 mm still available)
• US$425 mm 7.5% 144/Reg S Senior Unsecured
Notes due 2019
• Total Shareholders Equity amounts to MX$8,184.3
Total Debt(3)Drawn vs. Undrawn
Term (2)
Other Considerations
Secured vs. Unsecured (1)
19
10,940
7,500 6,361
24,800
90%
10%
Credit Lines100% = MX$10,9039 mm
Drawn
Undrawn66%
34%
Local Market100% = MX$7,500 mm
Drawn
Undrawn
50%50%
Credit Lines100% = MX$9,817 mm
Unsecured
Secured
58%
42%
Credit Lines100% = MX$9,817 mm
Short Term
Long Term
100%
Local Market100% = MX$4,928mm
Unsecured
Secured
47%
53%
Local Market100% = MX$4,928mm
Short Term
Long Term
883
1,745
300
1,000 1,000
928
2,522
1,076
1,159
1,052
448
1,134
236
201
157 903
6,361
sep-16 dic-16 mar-17 jun-17 sep-17 dic-17 mar-18 jun-18 sep-18 dic-18 2019 +
Local Market Credit Lines Senior Notes
Debt Maturity Profile
Notes: Information as of June 30, 2016Does not includes de FX effect and accrued interests
MX$mm
20
1,811
4,267
1,076
1,459
1,052
448
2,134
236
1,201
157
7,264
Adequate Asset and Liability Management
Notes: Scheduled collections include only current outstanding portfolio collections, and does not include new origination projections and considers 2% of NPL.Debt service refers to principal outstanding plus interest
Cumulative Liquidity Profile (June 30, 2016)
21
MX$mm
-
5,000
10,000
15,000
20,000
25,000
30,000
sep-16 dic-16 mar-17 jun-17 sep-17 dic-17 mar-18 jun-18 sep-18 dic-18 mar-19 jun-19 2019+
Scheduled Collections
Debt Service
2,999
310 316
141
2,231
520
2,678
73
Collections Interest Expenses Rebate &Distributors
AdministrativeCosts
Operating CashFlow
Funding Origination Change in Cash
3,126
422 423
193
2,088
342 4,032
(1,603)
Collections InterestExpenses
Rebate &Distributors
AdministrativeCosts
Operating CashFlow
Funding Origination Change in Cash
Cash Flow Generation
22Notes
MX$mm
2Q 2016 Operating & Investment Cash Flow Composition MX$mm
Investment Flow
Excludes data from strategic distributors and joint ventures
2Q 2015 Operating & Investment Cash Flow Composition
Operations Flow
Investment Flow
Operations Flow
Solid Cash Flow Generation
Overview of business lines
DistributionNetwork of
15 distributors
Exclusivity
agreement with
Fondo H
Distributors Mexico
Drive & Cash
Don Carro & AFS in
USA
Network of
4 retailers
Equity participation
in Contigo and
Somos Uno
Presence in Costa
Rica, Nicaragua and
Panama
Loan Amount ($) 40,391 3,857,532 162,836 15,663 3,334 20,822
Average Term40
months
3-36
months
12-36
months
12
months
3.8
months
33 – 55
months
% NPL 2.3% 1.9% 2.4% 3.0% 1.0% 2.7%
% Mix Portfolio 63.8% 6.5% 10.7% 3.8% 2.7% 14.1%
Customers 350,380 376 14,519 54,138 182,076 150,071
* Distributors’ loan portfolio information.
*PAYROLL SMALL
BUSINESS
USED CARS DURABLE
GOODS
GROUP LOANS
23
INSTACREDIT
Payroll & Durable goods
Payroll loan description
50% interest income
50% risk sharing
Public Sector Employees
+ 300 agreements
+ 4,000 sales
representatives
Distributors
Government AgencyCollection Trust
Credit Analysis & Funding
Loan disbursement
Durable goods loan description
Retailers
4 retailers
115 stores
Over 50,000
customers
Collection
Customer servicing
Loan disbursement
5% to 7% of interest income
ProductDescription
Personal loans for unionized government employees
repaid through direct payroll
TargetMarkets
• Unionized public employees C+, C and D+• Average annual income USD from $6,000 to $10,000
ProductStatistics
• Avg. loan amount – MX$40,391• Avg. term – 40 months• Avg. annual interest rate – 40% - 55% 50% shared
with payroll distributors• Payment frequency – Bi-weekly• Customers – 350,380 (46.6 % of total Credito Real
customers)
Distribution
NetworkNetwork in rural & semiurban areas
ProductDescription
Loans to finance purchases of durable goods from
selected retailers
TargetMarkets
B, C+, C and D
ProductStatistics
• Avg. loan amount – MX$15,663• Avg. term – 12 months• Avg. annual interest rate – 40% - 50%• Payment frequency – Monthly• Customers – 54,138
(7.2 % of total Credito Real customers)
Distribution
Network
Well known retailers that uses own sales forces to
promote our credit products
Origination and collection process Origination and collection process
Credit Analysis & Funding
24
Group loans & Small business
Group loans description
Origination and collection process
Funding
Loan disbursement
Collection
Promoters
Groups of 12-25 borrowers,
all members warranty the
loans, disbursement of 10%
Customers
Distributor
Small business loan description
Origination and collection process
Funding
30% sharing of operating income
SMEsFondo H
distributor
Loan disbursement
Collection
ProductDescription
Loans to finance micro-business working capital
requirements
TargetMarkets
Women in suburban areas C-, D and E
ProductStatistics
• Avg. loan amount – MX$3,334• Avg. term – 3.8 months / 14.1 weeks• Avg. annual interest rate – 90% - 110%• Payment frequency – Weekly• Customers – 182,076 (24.2 % of total customers)
Distribution
NetworkStrategic alliances with distributors
ProductDescription
Loans for working capital to small businesses
TargetMarkets
Medium and little size business
ProductStatistics
• Avg. loan amount –MX $3,857,532• Term 3 - 36 months• Avg. annual interest rate – 18% • Payment frequency – Monthly• Customers – 376
Distribution
NetworkStrategic alliance: 30% sharing of operating income
Credit Analysis & FundingCredit Analysis & Funding
25
Origination and collection process
Used Cars
Loan description
Credit
Analysis
Car Dealer
Approved
× Not Approved
Customer
Funding, income
& risk sharing
Drive & Cash Used cars Used cars USA
Buys Cars from
customer
(50% of Market Value)
Customer lease car
Acquire car through auction
Upgrade Car
Sale & financing of used car
(direct & indirect lending)
CollectionC
olle
ctio
n
Funding
Product Description Sale & leaseback Loans for used cars Loans for used cars
Target MarketsB, C+ and C. Independent professionals with working capitals needs
C+, C and C-C+, C and C- (Hispanic market with no credit history)
Product Features
• Loan amount ~ 100,000 • Term - 1-12 months• Avg. annual interest rate - 35% to 60%• Payment frequency - monthly • Insurance fee• GPS systems to secure cars• Car invoice as loan guarantee
• Loan amount – MX $50,000 -$200,000
• Term 1 - 48 months• Avg. annual interest rate 25% - 35%• Payment frequency – Monthly• Income from insurance• GPS systems to secure cars
• Loan amount – 18,900 usd• Term – 48 months• Avg. annual interest rate – 20% - 25%
+ commecrial margin (30% - 35%)• Payment frequency – Biweekly • Income from insurance
Distribution Network 45 branches in 20 states of Mexico
Strategic alliances with car dealers that
use own sales forces to promote our
credit products
• 5 dealerships in Dallas-FortWorth, Texas
• License to operate in 40 states• Agreements with 466 car dealers
DRIVE & CASH USED CARS USED CARS USA
Credit
Analysis
Approved
× Not Approved
26
Decreases the pressure by creditors
Legal and financial advice
Negotiation as a Block of different accounts, that allow better
agreements between creditors and debtors
Reinstatement to credit system
New added businesseslooks to capitalized the debtor to negotiate and settle
their credit card debts.
By the end of the program the client can be subject
for a loan.
Fee business for the company
New SME´s customer base
Lead management generation for new customer base
24 Resuelve Branches
(13 states, 2 countries)
7 Branches Tijuana Mexico City
Renace Deuda Fin. Cura Deuda
Added value of Resuelve
Competitive footprint
Grant personal loans through social network data
VS
Needs $ Requirements
Good
payment
record Interest rate
Term and
amountPositive
credit
score
$12,000
$10,000
$8,000
$5,000
$2,000Bad
payment
record
Negative
social
pressure
Negative
credit
score
27
Synergy of Resuelve and Credito Real
Distribution model
DISTRIBUTION INTEREST ALIGNMENT ALLOW US TO REACH
PAYROLL
• 15 distributors, owning 100% of
Kondinero and 49% of the other two
largest.
• More than 4,000 sales representative
• More than 100 telephone operators
Sharing 50% of interest income and
sharing 50% of risk. Equity participation.
• 350,380 customers
• More than 300 agreements
• 30 states
• 80 cities
• About 40% of historical renewal rate
SMALL BUSINESS• Fondo H, presence in Mexico City and
metropolitan area
• 8 sales reps & brokers
• Operating Margin sharing 30%
(interest income – interest expense –
provisions)
• Exclusivity & Non-compete.
• Financing more than 250 business
including: manufacturing, distribution
and services sector
• 2 states
• High customer retention
USED CARS
• 18 distributors
• One Partnership with 45 branches in
20 states of Mexico
• 2 Partnerships in the USA
• More than 400 locations in the USA
• 51% equity share in Drive & Cash
• 65% equity share in AFS Acceptance
• 64% equity share in Don Carro
• 50% interest income & risk sharing
• 14,519 clients
• 20 states in Mexico
• USA States with Hispanics
concentration
GROUP LOANS• 2 Partnerships & 1 Alliance
• 161 branches
• More than 1,251 promoters
• 38% & 23% equity share respectively
in each Partnership
• 182,076 customers
• 67 cities
• 20 states
• Groups of 12 to 25 borrowers
• About 60% of renewal rate
DURABLE GOODS
• 4 different retailers
• 115 stores
• Continuous sales force trainee
• More than 800 sales reps.
•Rebate from 5% to 7% of future
interest
•Paid up front with no credit risk
• 54,138 customers
• Approval rate around 30%
INSTACREDIT
• Personal, Cars, SME’s and
Mortgages loans
• 67 branches
• More than 440 promoters
• 70% equity share
• 150,071 customers
• Presence in Costa Rica, Nicaragua
and Panama
OTHERS
Resuelve
• 24 Branches
Credilikeme
• Finthech
Resuelve
• 56% equity share
Credilikeme
• 24% equity share
Resuelve:
• 13 states
• 2 countries
• 20,876 customers
Credilikeme
• ~6,000 customers
• National presence
28
197.1%
124.9%
79.6%67.1%
52.7%
31.0%21.4%
35.9%
5.9% 7.4%
27.2%
5.8%
USA Canada Germany Brazil Colombia Mexico
Market opportunity
Source: World Bank and Euromonitor. Data of Consumer Loan Penetration to 2014, except
Mexico that is for 2014. Data of Credit Penetration to Private Sector to 2012, except Canada
that is to 2008
Note 1: Population utilizing banking services.
Income level by bracket (approximate annual amount in USD):
“A/B” +108,400; “C+” 76,500; “Cm/C” 29,700; “D” 8,900; “E” 3,400.
Source: CNBV 2012, Agustin Carstens (Central Bank Minister)
Low penetration of credit Limited access to banking services
Strong Government Support
Consumer Loan Penetration as % GDP
Credit Penetration to Private Sector as %
GDP8.0
16.6
39.9
52.5
21%
79%
96%
83%
57%
25%
Target Market
2013
Population Segment Population (mm) Bancarization (1)
Financial reform should
double the current credit
penetration as % of GDP
within the next 5 years• SME credit guarantee
program allows to limit loss
severities to 50% of the
principal amount.
• Crédito Real is in process to
guarantee part of its SME
loan portfolio
28%
56%
Actual 2019
Evolution of Population
81%79%
2000 2013
Cm to C, D & E A, B & C+
19%
21%
Population (mm) Population (mm)
18
79
25
92
Target Market
Source: AMAI
A&B
C+
Cm to C
D&E
29
Crédito Real Mexico (1) Brazil (5) Colombia (6) USA (2) Canada(3) Germany (4)
Benchmark 4.25% 14.25% 5.75% 0.50% - 0.50% 0.05%
Credit Card 21.5% - 65.0% 76% - 323% 20.2% - 31.9% 10.3% - 28.0% 14.6%
Mortgage 10.9% - 17.3% 11.90% 7% - 13% 3.50% 1.6% - 3.5%
Payroll 40% - 55% 24.4% - 123.4% 20.0% 30.0% 9.0% (c) 9.0% (c)
Durable Goods 40% - 50% 69.3% 38.6% 10.5% 3.3% 3.0%
SME's 18% - 35% 14.5% (a) 11.7% 8.2% 7.5% 2.9%
Microcredit 90% - 110% 90% - 205.5% 22.0% 30.9% 11% - 17% 8.5%
Used Car Loans 25% - 35% 10.4% - 16.4% (a) (b) 22.8% (b) 20.0% (b) 4% - 7.5% (b) 5.5% - 7.2% (b)
1 Source: Banxico, Condusef, Profeco, IMCO, CAME (2) Source: FED, Credit Cards Survey, CBS, Bank rate (3) Source: BOC, Car Loans Canada.
4 Source: European Central Bank, European commission (5) Source: BACEN, Bloomberg, Economic Commission for LATAM and the Caribbean.
6 Source: BANREP, Superintendencia.
Notes: (a) Commissions not included (b) Interest rates for new car loans (c) Interest rate for personal loans
Interest rate comparison
30
Financial information / Profit & loss statement
31
Profit & Loss
Ps. Millions 2Q'16 2Q'15 Var % Var YTD’16 YTD’15 Var %Var 2015 2014
Interest Income 1,654.7
976.2 678.5 69.5% 2,994.0
1,919.2
1,074.8 56.0% 4,264.2 3,327.1
Interest Expense (422.9) (240.3) 182.6 76.0% (745.7) (464.9)
280.8 60.4% (952.3) (882.3)
Financial Margin 1,231.8
735.9
496.0 67.4% 2,248.3
1,454.3
794.0 54.6% 3,311.9 2,444.8
Provision for Loan Losses (208.0) (58.8) 149.3 254.0% (255.4) (136.3)
119.0 87.3% (345.6) (264.5) Financial Margin adjusted for Credit Risks 1,023.8
677.1
346.7 51.2% 1,993.0
1,318.0
675.0 51.2% 2,966.3 2,180.3
Commissions and fees charged 106.8
-
106.8 - 254.7
- 254.7 - - -
Commissions and fees paid (76.0) (50.6) 25.4 50.3% (134.5) (73.6) 61.0 82.9% (142.2) (99.0)
Other income from operations 229.6
3.5
226.1 6,440.3% 290.8
15.9 274.9 1,723.7% 36.2 23.7
Administrative and promotion expenses (746.6) (221.6) 525.0 236.8% (1,310.4) (458.8) 851.6 185.6% (1,138.1) (629.6)
Operating result 537.6
408.4
129.2 31.6% 1,093.6
801.5 292.1 36.4% 1,722.3 1,475.4
Income taxes (148.9) (91.9) 57.0 62.0% (281.6) (176.8) 104.8 59.3% (421.6) (334.8)
Income before participation in the results of subsidiaries 388.7
316.5 72.2 22.8% 812.1
624.8 187.3 30.0% 1,300.7 1,140.7
Participation in the results of subsidiaries and associates and non-controlling participation (13.8) 16.6 (30.4) (183.1%) (30.9) 35.0 (65.9) (188.3%) 70.6 84.1
Net Income 374.9 333.1 41.8 12.6% 781.1 659.8 121.4 18.4% 1,371.4 1,224.8
Financial information / Balance sheet
32
Balance Sheet
Ps. Millions 2Q'16 2Q'15 Var % Var 2015 2014 Var % Var
Cash and cash equivalents 172.3 23.1 149.2 647.1% 120.8 53.8 67.1 124.7%
Investments in securities 286.4 791.0 (504.6) (63.8%) 543.3 1,251.2 (707.9) (56.6%) Securities and derivatives transactions 2,725.1 1,488.7 1,236.4 83.1% 2,112.8 950.3 1,162.6 122.3%
Performing loan portfolio
Commercial loans 21,676.5 14,482.6 7,193.9 49.7% 17,193.6 13,544.3 3,649.3 26.9%
Total performing loan portfolio 21,676.5 14,482.6 7,193.9 49.7% 17,193.6 13,544.3 3,649.3 26.9%
Non-performing loan portfolio
Commercial loans 516.2 307.7 208.5 67.8% 416.1 260.6 155.5 59.6% Total non-performing loan portfolio 516.2 307.7 208.5 67.8% 416.1 260.6 155.5 59.6%
Loan portfolio 22,192.7 14,790.3 7,402.4 50.0% 17,609.6 13,804.9 3,804.7 27.6%
Less: Allowance for loan losses 825.6 391.7 433.9 110.8% 485.5 420.1 65.4 15.6%
Loan portfolio (net) 21,367.1 14,398.6 6,968.5 48.4% 17,124.1 13,384.8 3,739.4 27.9%
Other accounts receivable (net) 3,368.5 1,946.0 1,422.4 73.1% 2,258.9 1,156.2 1,102.7 95.4% Property, furniture and fixtures (net) 251.0 119.0 132.0 111.0% 149.1 85.5 63.6 74.4% Long-term investments in shares 891.2 792.6 98.6 12.4% 835.6 859.0 (23.4) (2.7%)
Other assets Debt insurance costs, intangibles and others 4,019.3 2,120.3 1,899.0 89.6% 2,850.8 2,174.8 676.0 31.1%
Total assets 33,080.8 21,679.3 11,401.5 52.6% 25,995.5 19,915.5 6,080.0 30.5% Notes payable (certificados bursatiles) 4,935.0 2,911.9 2,023.1 69.5% 3,610.4 2,571.9 1,038.5 40.4%
Senior notes payable 7,913.4 6,738.2 1,175.2 17.4% 7,334.6 6,561.0 773.6 11.8% Bank loans and borrowings from other entities
Short-term 4,897.6 813.5 4,084.1 502.0% 3,490.5 1,120.3 2,370.2 211.6%
Long-term 5,042.3 3,757.5 1,284.8 34.2% 3,008.4 3,140.8 (132.3) (4.2%)
9,939.8 4,571.0 5,368.8 117.5% 6,498.9 4,261.0 2,237.9 52.5%
Total Debt 22,788.3 14,221.0 8,567.2 60.2% 17,443.9 13,393.9 4,049.9 30.2%
Income taxes payable 80.8 28.9 51.9 179.3% 88.3 51.9 36.4 70.0%
Other accounts payable 2,027.4 1,443.0 584.4 40.5% 1,750.8 1,112.4 638.4 57.4%
Total liabilities 24,896.5 15,693.0 9,203.5 58.6% 19,283.0 14,558.3 4,724.7 32.5%
Stockholders' equity
Capital stock 2,114.5 2,110.4 4.0 0.2% 2,108.1 2,135.0 (26.8) (1.3%)
Earned capital: Accumulated results from prior years 4,435.7 3,203.8 1,231.8 38.4% 3,035.2 1,977.4 1,057.8 53.5% Result from valuation of cash flow hedges, net 208.1 4.3 203.8 4,729.5% 89.3 5.6 83.7 1,495.2% Cumulative translation adjustment 50.7 - 50.7 - 2.8 - 2.8 - Controlling position in subsidiaries 594.3 9.9 584.5 5,925.2% 105.8 14.5 91.4 630.9%
Net income 781.1 657.8 123.3 18.7% 1,371.4 1,224.8 146.6 12.0%
Total stockholders' equity 8,184.3 5,986.3 2,198.0 36.7% 6,712.5 5,357.2 1,355.3 25.3% Total Liabilities and Stockholders' equity 33,080.8 21,679.3 11,401.5 52.6% 25,995.5 19,915.5 6,080.0 30.5%
Financial information / Ratios
33
Financial Ratios
Ps. Millions 2Q'16 2Q'15 % Var YTD’16 YTD’15 %Var 2015 2014
Yield 30.8% 26.9% 4.0% 29.7% 26.9% 2.8% 27.1% 26.2% Net Interest Margin 23.0% 20.3% 2.7% 22.3% 20.4% 1.9% 21.0% 19.3% Return on Average Loan Portfolio 7.0% 9.2% (2.2%) 7.7% 9.2% (1.5%) 8.7% 9.7% ROAA: Return on average assets 4.7% 6.3% (1.6%) 5.2% 6.4% (1.2%) 6.0% 6.9% ROAE: Return on average stockholders’ equity 19.1% 22.9% (3.8%) 20.9% 23.3% (2.4%) 22.2% 24.7% Debt to Equity Ratio 2.8 2.4 0.4 2.8 2.4 0.4 2.6 2.5 Average cost of funds 7.6% 7.0% 0.7% 7.2% 6.8% 0.4% 6.3% 7.5% Efficiency ratio 59.1% 32.3% 26.8% 55.3% 33.2% 22.1% 35.9% 26.8% Capitalization Ratio 36.9% 40.5% (3.6%) 36.9% 40.5% (3.6%) 38.1% 38.8% Provisions for loan losses as a percentage of total loan portfolio 3.7% 1.6% 2.2% 2.3% 1.8% 0.5% 2.0% 1.9% Allowance for loan losses as a percentage of total past-due loan portfolio 159.9% 127.3% 32.6% 159.9% 127.3% 32.6% 116.7% 161.2% Total past-due loan portfolio as a percentage of total loan portfolio 2.3% 2.1% 0.2% 2.3% 2.1% 0.2% 2.4% 1.9%
Disclaimer
This presentation does not constitute or form part of any offer or invitation for sale or subscription of or
solicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the
basis of or be relied on in connection with any contract or commitment whatsoever.
This presentation contains statements that constitute forward-looking statements which involve risks and
uncertainties. These statements include descriptions regarding the intent, belief or current expectations of the
Company or its officers with respect to the consolidated results of operations and financial condition, and future
events and plans of the Company. These statements can be recognized by the use of words such as “expects,”
“plans,” “will,” “estimates,” “projects,” or words of similar meaning. Such forward-looking statements are not
guarantees of future performance and actual results may differ from those in the forward-looking statements as a
result of various factors and assumptions. You are cautioned not to place undue reliance on these forward
looking statements, which are based on the current view of the management of the Company on future events.
The Company does not undertake to revise forward-looking statements to reflect future events or circumstances.
34