Regional B de C : Download the Press Release for the 2Q22

Regional, S.A.B. de C.V. presents, for informative purposes only, the internal financial statements for the period ended June 30, 2022. Also, and considering that the public company participated in a corporate restructuring through a merger in which it acted as a merging company with Banregio Grupo Financiero S.A.B. de C.V., who served as a merged and currently defunct company, discloses additional information regarding the financial statements of Banregio Grupo Financiero S.A.B. of CV, for the period ended March 31, 2018, in order to maintain continuity in the disclosure of financial information and for comparative and analytical purposes, as well as the pro forma financial statements in which the financial situation and the results of Regional, S.A.B. de C.V. are presented, as if the corporate restructuring referred to above had taken effect in the same quarter of the previous year

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EXECUTIVE SUMMARY

Growth

• The commercial portfolio with credit risk stage 1, which includes loans for small and medium businesses registered $99,197 million pesos during 2Q22. The commercial portfolio with credit risk stage 2, which includes loans for small and medium businesses registered $1,422 million pesos during 2Q22
• On the other hand, Preferred Banking portfolio, which includes mortgages, auto credits and consumer credits such as credit cards, lay up $18,708 million pesos, representing a 10% annualized gain.
• Core deposits, formed by demand deposits and savings accounts as time deposits, reached $124,257 million pesos during the Second Quarter of 2022, presenting a 17% increase compared to the previous quarter. Demand deposits had a 29% growth compared to 2Q21.
• Core deposits costs in national currency cost is 4.0% at the end of 2Q22.

Risks and Strengths

• Loans portfolio with credit risk stage 3 ratio was 1.3% at the end of 2Q22, 27 basis points lower than the same quarter last year.
• Regional has credit provisions that cover 1.7 times its non-performing loan portfolio.
• Banco Regional's capitalization ratio as of May 2022 is 14.7%.

Profitability

• The financial margin at the end of 2Q22 was $2,256 million pesos, increasing 23% versus 2Q21.
• Net Income was $1,155 at the close of 2Q22, 20% more than 2Q21.
• The Efficiency Index1 at the end of 2Q22 was 46.4%.

Company Description

Regional, S.A.B de C.V. (Regional) is a Mexican public company, which principal subsidiaries, Banregio Grupo Financiero, S.A. de C.V. (BanregioGF), Banco Regional S.A. IBM (Banregio) and Start Banregio, SOFOM (Start), grant credits and leases to medium and small businesses as well to individuals as their main activity.

Banregio is present in 22 federal entities through a 156 branches network, located in: Aguascalientes, Baja California, Baja California Sur, Chihuahua, Coahuila, Ciudad de México, Durango, Estado de México, Guanajuato, Jalisco, Michoacán, Nuevo León, Puebla, Querétaro, Quintana Roo, San Luis Potosí, Sinaloa, Sonora, Tamaulipas, Veracruz, Yucatán and Zacatecas.

Regional is a public traded company (R), its main subsidiary Banco Regional was founded in 1994.

1Last 12 months

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San Pedro Garza Garcia, N.L. July 25th, 2022. Regional, S.A.B. de C.V. (BMV: R.A) announced today its consolidated financial and operational results corresponding to 2Q22. The figures are in current million pesos and the percentage variations are compared with the same period of the previous year, unless otherwise specified.

Results

Regional, S.A.B. de C.V. generated at the end of 2Q22 a net income of $1,155 million pesos, achieving a 17.9% ROAE.

Financial Margin

At the end of 2Q22 the financial margin registered $2,256 million pesos, showing an 23% increase compared to the same quarter last year.

Non-Interest Income

Non-Interest Income at the end of the Second Quarter 2022 amounted $906 million pesos. The result of Commissions, which generated $373 million pesos, stands out, with an increase of 41% over the same period of the previous year.

Operating Income

The operating income reached $1,538 million pesos, increasing 15% compared to the same period last year.

The net income at the end of 2Q22:

Net Income	2Q21	1Q22	2Q22			2Q22 vs		6M21	6M22		6M22 vs
(Million pesos)		2Q21	1Q22			6M21
Financial Margin	1,841	2,090	2,256		23%	8%		3,659	4,346		19%
Total operating income	2,464	2,819	2,854		16%	1%		4,742	5,673		20%
Non interest expenses	(1,132)	(1,261)	(1,316)	16%	4%	(2,312)	(2,577)	11%
Operating Income	1,332	1,558	1,538		15%	(1%)		2,430	3,096		27%
Net income	959	1,150	1,155		20%	0%		1,763	2,305		31%

Loan Portfolio

The loan portfolio with credit risk stage 1 reached a balance of $119,958 million pesos at the end of 2Q22, increasing 7% compared to the same quarter last year. It stands out the growth in consumer loans increasing 29%.

The loan portfolio with credit risk stage 2 reached a balance of $1,954 million pesos at the end of 2Q22.

The non-performing loan ratio was 1.3% at the end of 2Q22, 27 basis points lower than that of 2Q21, and Regional has a coverage ratio of provisions for credit loan losses of 1.7 times the non-performing loan portfolio.

Deposits

Core deposits reached $124,257 million pesos at the end of 2Q22 with an increase of 17% compared to the same quarter last year. Demand deposits stand out with a 29% increase compared to the Second Quarter in 2021.

Capitalization

The capitalization ratio to total risky assets of Banco Regional, S.A. stood at 14.7% by May 2022.

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Net Income by Subsidiary

During the Second Quarter of 2022, Banco Regional, S.A. generated 82% of Regional's total Net Income, Start Banregio, S.A. de C.V. which is a subsidiary of Banco Regional, generated 18% and other subsidiaries contributed (1%) of the Regional's net income.

Financial Indicators

The following chart shows information in a 12 month horizon in order to prevent distortions caused by seasonality.

1. Net Interest Margin NIM: Financial Margin of last 4 quarters / Average productive assets of the last 12 months.
2. Total Loans NIM LTM: (Financial margin of last 4 quarters (-) income by repos of last 4 quarters) / (Average productive assets of last 12 months (-) average balance of repos LTM).
3. Return on Average Equity (ROAE): Net income of last 4 quarters / Average stockholders' equity of last 4 quarters.
4. Return on Average Assets (ROAA): Net income of last 4 quarters / Average total assets of last 4 quarters.
5. Return on Average Assets (ROAA) of total Loans: (Net income of last 4 quarters / (Average total assets of last 4 quarters (-) average balance of repos or last 4 quarters)).
6. Efficiency Ratio: Administration and promotion expenses of last 4 quarters / (Financial Margin + Commissions + Trading + Other Income) of last 4 quarters.
7. Loans to deposits: Loan portfolio at the end of the quarter / Core deposits at the end of the quarter.

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