Regional B de C : Download the Press Release for the 3Q21

Regional, S.A.B. de C.V. presents, for informative purposes only, the internal financial statements for the period ended September 30, 2021. 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, which includes loans for small and medium businesses registered $93,179 million pesos during 3Q21.
• On the other hand, Preferred Banking portfolio, which includes mortgages, auto credits and consumer credits such as credit cards, lay up $17,360 million pesos, representing a 7% annualized gain.
• Core deposits, formed by demand deposits and savings accounts as time deposits, reached $106,461 million pesos during the Third Quarter of 2021, presenting a 9% increase compared to the previous quarter. Demand deposits had a 31% growth compared with 3Q20.
• Core deposits costs in national currency cost is 2.6% at the end of 3Q21.

Risks and Strengths

• Non-performingloans ratio was 1.7% at the end of 3Q21, 43 basis points higher than the same quarter last year.
• Regional has credit provisions that cover 1.4 times its non-performing loan portfolio.
• Banco Regional's capitalization ratio as of August 2021 is 15.5%.

Profitability

• The financial margin at the end of 3Q21 was $1,887 million pesos, increasing 4% versus 3Q20.
• Net Income was $868 at the close of 3Q21, 12% more than 3Q20.
• The Efficiency Index1 at the end of 3Q21 was 47.2%

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. October 25th, 2021. Regional, S.A.B. de C.V. (BMV: R.A) announced today its consolidated financial and operational results corresponding to 3Q21. 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 3Q21 a net income of $868 million pesos, achieving a 13.9% ROAE.

Financial Margin

At the end of 3Q21 the financial margin registered $1,887 million pesos, showing a 4% increase compared to the same quarter last year.

Non-Interest Income

Non-Interest Income at the end of the Third Quarter 2021 amounted $716 million pesos. The result of FX Fee, which generated $159 million pesos, stands out, with an increase of 30% over the same period of the previous year.

Operating Income

The operating income reached $1,153 million pesos, increasing 10% compared to the same period last year.

The net income at the end of 3Q21

Net Income	3Q20	2Q21	3Q21			3Q21 vs		9M20	9M21		9M21 vs
(Million pesos)		3Q20	2Q21			9M20
Financial Margin	1,818	1,841	1,887		4%	2%		5,637	5,546		(2%)
Total operating income	2,163	2,464	2,334		8%	(5%)		6,789	7,076		4%
Non interest expenses	(1,112)	(1,132)	(1,181)	6%	4%	(3,420)	(3,493)	2%
Operating Income	1,051	1,332	1,153		10%	(13%)		3,369	3,583		6%
Net income	775	959	868		12%	(10%)		2,439	2,631		8%

Loan Portfolio

The performing loan portfolio reached a balance of $113,352 million pesos at the end of 3Q21, increasing 3% compared to the same quarter last year. It stands out the growth in consumer loans increasing 20%.

The non-performing loan ratio was 1.7% at the end of 3Q21, 43 basis points higher than that of 3Q20, and Regional has a coverage ratio of provisions for credit loan losses of 1.4 times the non-performing loan portfolio.

Deposits

Core deposits reached $106,491 million pesos at the end of 3Q21 with an increase of 9% compared to the same quarter last year. Demand deposits stand out with a 31% increase compared to the Third Quarter in 2020.

Capitalization

The capitalization ratio to total risky assets of Banco Regional, S.A. stood at 15.5% by August 2021.

Net Income by Subsidiary

During the Third Quarter of 2021, Banco Regional, S.A. generated 75% of Regional's total Net Income, Start Banregio, S.A. de C.V. which is a subsidiary of Banco Regional, generated 23% and other subsidiaries contributed 2% of the Regional's net income.

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Financial Indicators

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

Financial ratios Last Twelve Months (LTM)	3Q20	4Q20	1Q21	2Q21	3Q21		3Q21 vs
		3Q20	2Q21
Net Interest Margin (NIM) (1)	5.8%	5.7%	5.5%	5.4%	5.3%		(51) b.p.	(7) b.p.
Total Loans NIM LTM (2)	6.1%	5.9%	5.8%	5.8%	5.8%		(29) b.p.	0 b.p.
Return on Equity (ROAE) (3)	16.5%	14.0%	13.2%	13.8%	13.9%		(262) b.p.	10 b.p.
Return on Assets (ROAA) (4)	2.3%	2.0%	1.9%	2.0%	2.0%		(30) b.p.	1 b.p.
Return on Assets (ROAA) of Total Loans (5)	2.4%	2.0%	2.0%	2.1%	2.1%		(26) b.p.	4 b.p.
Efficiency Ratio (6)	45.2%	47.8%	48.4%	47.2%	47.2%		196 b.p.	(1) b.p.
Loans to deposits (7)	113.9%	110.6%	110.8%	107.7%	108.2%		(563) b.p.	52 b.p.

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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