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GRUPO FINANCIERO BANAMEX-ACCIVAL REPORTS FIRST QUARTER 1993 FINANCIAL RESULTS

    MEXICO CITY, April 15 /PRNewswire/ -- Grupo Financiero Banamex- Accival today issued the following:
    BANACCI
    First quarter 1993 results ("resultado patrimonial") for Grupo Financiero Banamex-Accival ("Banacci") reached New Pesos 858 million, 24 percent above the first quarter 1992 comparable results.(A)
    Results of Banacci are accounted as follows: New Pesos 618 million from Banco Nacional de Mexico's ("Banamex") results, of which New Pesos 48 million correspond to undistributed earnings of the bank's subsidiaries; New Pesos 41 million from Acciones y Valores de Mexico's ("Accival") results; New Pesos 16 million from Banacci's own investments; and New Pesos 183 million from the increase in revaluation surplus of assets of the group's subsidiaries at the end of the quarter as compared to year-end 1992.
                             BANACCI: RESULTS
                         (Millions of New Pesos)
     First quarter                     1992     1993
    Banamex total net income            502      618
    Accival net income                  122       41
    Banacci's own net income            (23)      16
    Revaluation surplus from
     subsidiaries assets                 93      183
    Banacci results                     693      858
    (A) -- All figures in this report are expressed in nominal New Pesos (equivalent to 1,000 "old" pesos), unadjusted for inflation.  The following reference exchange rates can be used to convert figures into dollars:
     First quarter                  1992      1993
    End of period                  3,084     3,098
    Average                        3,070     3,106
    At an extraordinary shareholders meeting also held in February 1993, several measures leading to a new corporate structure of the group were approved.  In essence, the main financial subsidiaries of Banamex and Accival operating in Mexico will become direct subsidiaries of Banacci. These changes are expected to be completed during the second quarter of the year.  The group does not expect any material effect on its financial results from the new corporate structure.
    A New Pesos 0.35 per share cash dividend on 1992 results was declared at the group's ordinary shareholders meeting held in February 1993 and paid in March on all Banacci shares.  This represented a 19 percent payout ratio on 1992 results of the group.
    BANAMEX
    Introduction
    To conform more closely with international standards for reporting, beginning with this quarterly report, a portion of the bank's income statement has been restated.  The most significant change is the reclassification of interest revenues and interest expenses associated with repurchase agreements with securities, which were previously recorded as non-interest income but should be considered as part of the net interest margin.  To facilitate comparisons, restated quarterly income statements since 1992 are provided at the end of this report.
    Financial Highlights
    Banamex's total net income amounted to New Pesos 618 million during the first quarter of 1993.  Of this amount, New Pesos 570 million corresponds to the bank's operations and New Pesos 48 million to undistributed earnings of its subsidiaries.
    Net interest income before provisions reached New Pesos 1,662 million during the first quarter of 1993.  Provisions during the quarter, net of recoveries and reversals, reached New Pesos 249 million, in full compliance with applicable regulations.  Non-interest income amounted to New Pesos 803 million, while total operating expenses were New Pesos 1,270 million.
                            BANAMEX: NET INCOME
                          (Millions of New Pesos)
      First quarter                              1992     1993
    Net interest income                         1,204    1,662
    Provisions for loan losses, net               336      249
    Net interest income, after provisions         868    1,413
    Non interest income                           956      803
    Total revenues, net of provisions           1,824    2,216
    Operating expenses                            953    1,270
    Pre-tax income                                871      946
    Taxes and employees' profit sharing           369      376
    Net income                                    502      570
    Undistributed earnings of subsidiaries        --        48
    Total net income                              502      618
    ROAA for the last 4 quarters reached 2.1 percent, and ROAE 30.7 percent.  Both figures are above their comparable values a year ago. The efficiency ratio continues to improve.
                        BANAMEX: FINANCIAL RATIOS
                               (In percent)
                           Last four quarters
     First quarter                      1992      1993
    Return on average assets(A)          1.8       2.1
    Return on average equity(A)         27.4      30.7
    Expenses/revenues                     62        55
    (A) -- Annualized figures using average of end of period monthly balances.
    Net Interest Income and Provisions for Loan Losses
    Net interest income before provisions reached New Pesos 1,662 million for the quarter, 38 percent higher than a year ago.  Net interest income after creating provisions for loan losses increased by 63 percent, to New Pesos 1,413 million.
                       BANAMEX: NET INTEREST INCOME
                         (Millions of New Pesos)
     First quarter                             1992     1993
    Interest income                           3,550    5,535
    Interest expense                          2,346    3,873
    Net interest income, before provisions    1,204    1,662
    Net provisions                              336      249
    Net interest income, after provisions       868    1,413
    During the first quarter of 1993, the reported provisions amounted to New Pesos 499 million.  However, there were New Pesos 250 million of recoveries of previous past due interest, which makes the net charge to the income statement New Pesos 249 million.  In addition, there were New Pesos 99 million of charge-offs to "E" loans during the quarter.
                         ALLOWANCE FOR LOAN LOSSES
                          (Million of New Pesos)
    Preventive reserves at Dec. 31, 1992            2,940
    Provisions taken during first quarter 1993        499
    Less: Recoveries and reversals                    250
    Net charges to income statement                   249
    Less: Charge-offs                                  99
    Preventive reserves at March 31, 1993           3,090
    Earning Assets and Yields
    Earnings assets, which include investments in government and other securities and repurchase agreements transactions on these securities, as well as performing, gross past due and rediscounted loans, averaged New Pesos 115,606 million during the quarter, 27 percent above the corresponding period a year ago.  The average yield on earning assets, using the narrow definition, was 5.75 percent, that compares favorably with the 5.30 percent of the first quarter of 1992.  The broad definition, which in addition to the net interest margin includes loan fees, reached 6.51 percent in the first quarter of 1993 vs. 6.02 percent in the same quarter of last year.
                     BANAMEX: EARNINGS ASSETS AND YIELDS
     First quarter                           1992        1993
    Yield-narrow definition (A)             5.3 pct.    5.8 pct.
    Yield-broad definition(A)               6.0 pct.    6.5 pct.
    Interest earning assets (in New Pesos)  90,869      115,606
    (A) -- Annualized figures using average of end of period monthly balances.
    Non-Interest Income
    Total non-interest income amounted to New Pesos 803 million during the quarter, 16 percent below the comparable figure a year ago.  The factors that explain this situation are i) reduced dividend income, which is offset by the separate reporting of undistributed profits of subsidiaries as part of the total net income of the bank; ii) lower foreign exchange revenues; and iii) trading income continued representing a smaller portion of the bank's revenues.
    It is worth mentioning that credit card merchant fees, which were previously presented as part of loan fees, are now presented separately as part of fees on services.  This line also includes fees on trusts, fund transfers and other services.
                      BANAMEX: NON-INTEREST INCOME
                        (Millions of New Pesos)
     First quarter                   1992      1993
    Loan fees                         164       219
    Fees on services                  284       285
    Foreign exchange                  124        93
    Dividends                          30         3
    Trading income                    128        77
    Other income                      226       126
    Total non-interest income         956       803
    Operating Expenses
    Total operating expenses during the first quarter of 1993 reached New Pesos 1,270 million, 33 percent above the same period of last year. Personnel expenses were the main component of such increase.  The personnel expense is not strictly comparable to the 1992 first quarter figure, since throughout 1992 the bank incorporated into its payroll employees of its service subsidiaries, and personnel that previously worked under temporary or fee arrangements.  In contrast, non-personnel expense grew less than the inflation rate for the period.
                       BANAMEX: OPERATING EXPENSES
                         (Millions in New Pesos)
     First quarter                              1992     1993
    Personnel                                    424      706
    Rents, depreciation and amortization         121      143
    Taxes, other than income tax                  30       37
    Contributions - Banking Protection Fund       43       56
    Other                                        335      327
    Total non-interest expense                   953    1,270
    Total w/o personnel                          529      564
    Loan Portfolio
    Banamex's strategic balanced approach to both retail and business banking is reflected in the composition of its loan portfolio.  Consumer loans, driven by the growth of residential first mortgages, increased by 59 percent from March 1992 to March 1993, and now represent 42 percent of total performing loans, including discounted loans.  In March 1992, consumer loans represented 34 percent of the total.
    Residential first mortgage loans represent one of the fastest growing, more profitable and sound business lines in Mexico.  A large housing deficit, plus the economic stability the country has attained, provide the bank with excellent opportunities in this market, where it has a leading position.
                                     Loan Portfolio        Composition
                                    Million new Pesos      In percent
                                         1Q                   1Q
                                   1992       1993     1992      1993
    Commercial                    38,037     42,983      65        57
    Consumer                      19,842     31,559      34        42
     Residential mortgage         12,569     20,398      21        27
     Credit card                   6,195      8,613      11        11
     Other consumer                1,078      2,548       2         3
    Other                            796        997       1         1
    Total performing(A)           58,675     75,539     100       100
    Net past due loans             1,575      2,464      --        --
    Total net loan portfolio      60,250     78,003      --        --
    (A) -- Includes discounted loans
    Credit Quality
    As a result of the general slowdown of the Mexican economy and the prevailing high real interest rates, past due loans in the financial system have increased.  This has been reflected in the bank's portfolio, as shown in the ratios presented below.
    Developments in the economy and the financial system confirm the high priority that asset quality deserves, validating the group's decision, immediately after its formation in mid-1991, to define asset quality as its main basic priority.
                     BANAMEX:  CREDIT QUALITY RATIOS
                                                          1Q
                                                       (percent)
                                                      1992   1993
    Net past due loans to total net loan portfolio     2.6    3.2
    Provisions to total gross loan portfolio           3.9    3.8
    Total reserves to gross past due loans            60.8   55.6
    The fundamental analysis of the loan portfolio, reflected in the loan classification, following the revised guidelines set forth by the National Banking Commission and effective as of December, 1992, results in an improvement of "D" and "E" loans (those with the highest risk classification) from December 1992 to March 1993.  The bank continued to be in full compliance with the resulting amount of required preventive reserves.  Furthermore, at the end of March 1993 the bank had created preventive reserves relating to interest that exceeded the required amount by new Ps.204 million.
                     BANAMEX: LOAN CLASSIFICATION
    Level of risk            4Q 1992               1Q 1993
    A                   56,245  83.7 pct.     64,024  83.5 pct.
    B                    6,086   9.7 pct.      6,502   8.5 pct.
    C                    2,015   3.0 pct.      3,314   4.3 pct.
    D                    1,221   1.8 pct.      1,352   1.8 pct.
    E                    1,629   2.4 pct.      1,446   1.9 pct.
    Total               67,196 100.0 pct.     76,638 100.0 pct.
    Loan classifications are conducted on a quarterly basis, based on the loan portfolio outstanding as at the end of the previous quarter.
    Capitalization
    At the end of February 1993, the bank's risk-adjusted net capital ratio stood at 9.6 percent, after having appropriated 16 percent of 1992 net income for cash dividends (amounting to new Ps.366 million) declared by the general shareholders meeting in February.  Starting in 1993, Mexican banking regulation requires a minimum ration of 8 percent.
                     BANAMEX:  CAPITALIZATION
                            4Q 1992         Feb. 1993
    Basic capital          6.24 pct.         5.91 pct.
    Supplementary capital  3.94 pct.         3.68 pct.
    Net capital           10.18 pct.         9.60 pct.
    Risk weighted assets
    (million of New Ps)   96,523              95,269
    Other developments
    During March 1993 the bank completed a sale for the equivalent of US $530 million of its Ajustabonos position having maturities of up to 15 months to a special purpose vehicle, which in turn issued senior and junior debt denominated in dollars in the international markets. The sale was completed at approximately the carrying cost of such instruments.  Banamex underwrote junior debt for US $93.5 million, and all senior debt was underwritten by third parties.  With this the bank limited its exposure for such portion of its adjustabonos position to the amount of the junior debt underwritten by the bank.  The bank believes that this transaction will improve its financial results.
    Note
    The following tables contain quarterly information for 1992 and 1Q 1993 in nominal New Pesos.  To facilitate its understanding, in some cases the information is presented in a format different to the published financial statements.  Multiplicative inflation factors and reference exchange rates are provided for convenience of the reader.
                   BANCO NACIONAL DE MEXICO, S.A.
                      Statement of Income
                  (Nominal New Pesos in million)
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Date:Apr 15, 1993
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