Regional B de C : Press Release for the 3Q23

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Growth

• The commercial portfolio with credit risk stage 1, which includes loans for small and medium businesses, registered $121,610 million pesos during 3Q23. The commercial portfolio with credit risk stage 2, which includes loans for small and medium businesses registered $2,583 million pesos during 3Q23.
• On the other hand, Preferred Banking portfolio, which includes mortgages, auto credits and consumer credits such as credit cards, lay up $25,556 million pesos, representing a 25% annualized gain.
• Core deposits, formed by demand deposits and savings accounts as time deposits, reached $151,719 million pesos during the Third Quarter of 2023, presenting a 21% increase compared to the same quarter last year. Time deposits had a 51% growth compared to 3Q22.
• Cost of funding in domestic currency is 6.9% at the end of 3Q23.

Risks and Strengths

• The Loans portfolio with credit risk stage 3 ratio was 1.4% at the end of 3Q23, 5 basis points higher 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 August 2023 is 15.2%.

Profitability

• The financial margin at the end of 3Q23 was $3,258 million pesos, increasing 29% versus 3Q22.
• Net Income was $1,563 at the end of 3Q23, 20% more than 3Q22.
• The Efficiency Index1 at the end of 3Q23 was 41.7%.

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 has presence in 22 federal entities through a 161 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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EXECUTIVE SUMMARY

San Pedro Garza Garcia, N.L. October 23rd, 2023. Regional, S.A.B. de C.V. (BMV: R.A) announced today its consolidated financial and operational results corresponding to 3Q23. 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 3Q23 a net income of $1,563 million pesos, achieving a 20.9% ROAE.

Financial Margin

At the end of 3Q23 the financial margin registered $3,258 million pesos, showing a 29% increase compared to the same quarter last year.

Non-Interest Income

Non-Interest Income at the end of the Third Quarter 2023 amounted $852 million pesos. Income from Commissions, which generated $437 million pesos, stands out with an increase of 15% over the same period of the previous year.

Operating Income

The operating income reached $2,071 million pesos, increasing 22% compared to the same period last year.

The net income at the end of 3Q23:

Net Income	3Q22	2Q23	3Q23			3Q23 vs	9M22	9M23		9M23 vs
(Million pes os )		3Q22	2Q23		9M22
Financial Margin	2,522	2,930	3,258	29%	11%	6,868	9,009	31%
Total operating income	3,001	3,247	3,526	18%	9%	8,674	9,857	14%
Non interest expenses	(1,306)	(1,522)	(1,455)	11%	(4% )	(3,883)	(4,475)	15%
Operating Income	1,695	1,725	2,071	22%	20%	4,791	5,382	12%
Net income	1,303	1,300	1,563	20%	20%	3,608	4,051	12%

Loan Portfolio

The loan portfolio with credit risk stage 1 reached a balance of $146,308 million pesos at the end of 3Q23, increasing 19% compared to the same quarter last year. It stands out the growth in consumer loans increasing 40%.

The loan portfolio with credit risk stage 2 reached a balance of $3,441, million pesos at the end of 3Q23, with a growth of 82% compared to the same period last year.

The non-performing loan ratio was 1.4% at the end of 3Q23, 5 basis points higher than that of 3Q22, 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 $151,719 million pesos at the end of 3Q23 with an increase of 21% compared to the same quarter last year. Time deposits stand out with a 51% increase compared to the Third Quarter in 2022, reaching a balance of $81,019 million pesos.

Capitalization

The capitalization ratio to total risky assets of Banco Regional, S.A. stood at 15.2% by August 2023.

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EXECUTIVE SUMMARY

Net Income by Subsidiary

During the Third Quarter of 2023, Banco Regional, S.A. generated 84% of Regional's total Net Income, while Start Banregio, S.A. de C.V. which is a subsidiary of Banco Regional, generated 16% of Regional's net income.

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)
Net Interest Margin (NIM)	(1)
Total Loans NIM LTM	(2)
Return on Equity (ROAE)	(3)
Return on Assets (ROAA)	(4)
Return on Assets (ROAA) of Total Loans	(5)
Efficiency Ratio	(6)
Loans to deposits	(7)

					Variation
3Q22	4Q22	1Q23	2Q23	3Q23	3Q23 vs
3Q22	2Q23
5.6%	6.1%	6.2%	6.1%	6.2%	60 b.p.	1 b.p.
6.7%	7.5%	7.7%	7.9%	7.7%	107 b.p.	(16 b.p.)
19.5%	21.2%	21.0%	20.7%	20.9%	136 b.p.	16 b.p.
2.5%	2.6%	2.5%	2.4%	2.4%	(11 b.p.)	0 b.p.
2.6%	2.8%	2.7%	2.6%	2.6%	(3 b.p.)	(9 b.p.)
44.9%	43.4%	43.2%	42.6%	41.7%	(320 b.p.)	(91 b.p.)
100.4%	109.0%	104.7%	99.3%	100.1%	(39 b.p.)	77 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 adjusted by repos, cash equivalents, derivatives and margin calls) / (Average Total Loan with credit risk stage 1 + Total Loan with credit risk stage 2 of last 12 months).
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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Disclaimer

Press releases, as well as other printed materials from Regional; S.A.B de C.V. may contain certain predictions regarding expected future events and financial results. Such statements are subjected to risk and uncertainty. We hereby warn you that a number of important factors may cause results to differ materially from the plans, objectives, expectations and intentions expressed in such predictions. These factors include economic and political conditions, as well policies taken by the government of Mexico or those of other countries, such as inflation rates, exchange rates, regulatory changes, fluctuations in demand and competition.

Contact information

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