Grupo Financiero Interacciones is the largest specialized financial group in Mexico focused on providing government and infrastructure lending, risk management and financial advisory services to the domestic public sector.
We rank second in government lending in Mexico and serve a customer base that includes the Federal Government, States, Municipalities, as well as government suppliers.
Interacciones Casa de Bolsa, and the insurance unit, Aseguradora Interacciones. We employ more than 1,000 individuals and are present in 35 major cities and more than 20 of 32 states, throughout Mexico.
GFI’s successful execution and focused low-risk business model, where approximately 94% of the Company’s loan portfolio is secured by Federal Government contributions or guarantees, has delivered superior loan growth and profitability, reporting more than ten years of consecutive quarterly profits.
* Figures in billions of pesos
Message from the Chairman of the BoardDear Shareholders and employees,
2016 has been, in particular, a year of great uncertainty in the market, caused by a changing environment, both nationally and internationally. However, at GFI we have reached historic milestones, having had the largest credit origination in the Group's history, and this way achieving an increase in the portfolio of 18.24%, which translated into a ROE of 17.52% with an IMOR of o.o5%. This performance responds to a unique and robust business model, which has once again demonstrated the solidity of its foundations, as well as its adaptability and responsiveness to changes within its environment.
In a market that is undoubtedly evolving towards a more specialized one, niche banks will have the advantage of deep knowledge of the terrain where we operate and of our clientsÂ´ needs, in order to be able to adapt one to the other through product innovation. In this context, today in Grupo Financiero Interacciones we celebrate another year of being the largest specialized financial group in the country.
Throughout a corporate strategy of innovation and leveraging our experience in the subnational sector, we are currently in a privileged position to face the challenges that the context proposes and, as always, to help our states and municipalities develop their economies through infrastructure. That is how we reached 55 quarters delivering growing profits, and 2017 stands as a year of challenges that we will be able to transform into opportunities, as we have been doing historically.
Ing. Carlos Hank Rhon
Chairman of the Board
Grupo Financiero Interacciones
Message from the Chief Executive OfficerWe are proud to share with you another year of outstanding results at Grupo Financiero Interacciones. Undoubtedly, 2016 has been marked by the uncertainties and surprises that have arisen in the global and national context. This year has witnessed the advance of protectionist tendencies, manifested by the departure of the United Kingdom from the European Union (Brexit) and the victory of the candidate Donald Trump for the presidency of the United States. These changes have been reflected in the rise in rates and the rise in the exchange rate, and in generalized international volatility.
Likewise, we have faced challenges directly related to our business. There were electoral processes in 12 states. The Financial Discipline Law was approved, which, beyond establishing limits to indebtedness in states and municipalities, it caused a high degree of uncertainty regarding its application. We saw 5 increases in the benchmark rate of our country accumulating 250 basis points, reaching its highest level since 2009 when it was at 6.00%. And above all this, Interacciones strengthened and consolidated in the financial sector, along with our commitment to boost Mexico's development.
During 2016, more than in any other year in our history as a public company, our ability to adapt to the conditions of the market was emphasized, availing our niche approach and specialization in such a way that, in spite of all the changes that were manifested in our environment, we are very satisfied with our results. We achieved a cumulative ROE of 17.52%, 11 basis points higher than last year's result, and accumulated profits of 2,596 million pesos, 13.96% above the result of 2015, marking another record year in profits for GFI.
Banco Interacciones, our main subsidiary, closed the year with profits 10.16% higher than the previous year, an efficiency index of 34.29%, and with a fund raising that is at its highest level historically, while the cost of funding reached its historical minimum level of TIIE + 9 basis points.
In our Government Banking we had a double beneficial effect for our model, as the conjunctural effects of the Financial Discipline Law were combined with our usual seasonality during the last quarter of the year. The aforementioned law generated a temporary delay in the financing requirements in states and municipalities given their implications with respect to the state elections. These delays led to a greater demand for loans during the last quarter, which were accentuated when combined with the typical stationary acceleration of the model.
We continue with the strategy of expanding the exhibition of infrastructure projects, driven by the structures of public-private partnerships (PPPs), this being our main focus for future growth since our "Re IPO" in October 2013. During the year, we achieved 40.07% growth in the credit portfolio in this bank, reflecting our greater focus on the sector.
In the SME Banking, despite distancing from the exposure with PEMEX at the beginning of the year and a temporary deceleration in the public bidding market, our proactivity to increase commercial relations with other customers allowed us to close the year with a portfolio of 6,510 Million pesos, which we expect to increase as the segment reactivates and exposure in Pemex increases as its financial situation improves.
This year we have bet on a new subsidiary, the Leasing Banking, which only during its first year has excelled with a portfolio growth of 59.01%. In this way, we establish ourselves in the public sector as the pioneers in offering leasing products under the traditional structures of our bank.
Casa de Bolsa Interacciones today is positioned as one of the preferred stock exchange institutions of our country, offering personalized service and attention that have allowed us to gain the trust of our clients. This subsidiary generated profits of 176 million pesos, giving ROE of 12.62%, in an environment in which the investment portfolios were impacted in a general way. We see great opportunities in the future for our brokerage house, which we have gradually transformed by having a more efficient operation and maximizing its profitability.
For Aseguradora Interacciones, our insurance unit, 2016 has been a year of great challenges and transformations, during which we continue with the re-direction of the strategy, making a stop in the way to focus on a specialized sector, in which we reduce the risks and optimize the use of capital to offer greater value to our shareholders and better services to our customers. In this subsidiary we achieved a net income of 34 million pesos, an increase of 66 million pesos with respect to the previous year, achieving a ROE of 7.33%. We are carrying out a revolution in our insurance business model, in which we must plant today to reap great results in the future.
This year three general shareholders' meetings were held (2 ordinary and 1 extraordinary), in which a dividend of 780 million pesos was approved, paying 2.89 pesos per share.
On the other hand, as part of our commitment to subnational infrastructure and relying on the great opportunities we see in Mexico, we held in October the second Forum âImpulsando a MÃ©xico: Crecer en Tiempos de DesafÃoâ ("Promoting Mexico: Growing in Challenging Times". Business leaders from the public sector, civil society and the academia have attended, including the President of Mexico, Enrique PeÃ±a Nieto, the General Director of PEMEX, JosÃ© Antonio GonzÃ¡lez Anaya, Governors of the states of Colima, Oaxaca and Tamaulipas, the Secretary of Treasury and Public Credit, JosÃ© Antonio Meade, among others. The level of convening this event had is a direct result of the performance we have had in recent years.
With the results obtained and with the visibility of commercial activity that we had in early 2016, we achieved once again a record year, having overcome obstacles in our path and preparing ourselves to continue generating results for our shareholders in the future.
Lic. Carlos Rojo Macedo
Chief Executive Officer
Grupo Financiero Interacciones
Seguros La Reforma merges with Seguros Hispano Mexicana, S.A.
Corporate name changes to Seguros la República, S.A.
Foundation of Corporación Mexicana de Valores, S.A. de C.V.
Corporación Mexicana de Valores, S.A. de C.V. is aquired by whom we now form Grupo Financiero Interacciones and changes corporate name to Interval Casa de Bolsa, S.A de C.V.
Corporate name changes to Interacciones Casa de Bolsa, S.A. de C.V.
Constitution of Grupo Financiero Interacciones, S.A. de C.V., integrated by: Interacciones Casa de Cambio, S.A. de C.V., Factoraje Interacciones, S.A. de C.V., Arrendadora Interacciones, S.A. de C.V., these being subsidiaries of Interacciones Casa de Bolsa, S.A. de C.V.
Constitution of Banco Interacciones, S.A., Institución de Banca Múltiple. Seguros la República, S.A. chages Company name to Aseguradora Interacciones, S.A. Both are incorporated to Grupo Financiero Interacciones, S.A. de C.V.
Banco Interacciones, S.A., Institución de Banca Múltiple merges the leasing and factoring businesses.
Carlos Hank González assumes the general direction of GFI. There is a change in strategy and the current approach is adopted.
Constitution of Interacciones Sociedad Operadora de Sociedades de Inversión, S.A. de C.V. as subsidiary of Banco Interacciones, S.A.
Exceeds $100 thousand millions in assets
- OPA for $3,880 thousand millions at a Price of $61.00 per share, going from 10% to 30% on floating shares.
- A dividend is $1.18 per share is decreed.
- Participation in the National Finance Prize.
- Credit Suisse begins as Market Maker
- Carlos Rojo Macedo assumes the general direction of Grupo Financiero Interacciones, supported by the same team that initiated the current strategy in the year 2000
- Adolfo Herrera Pinto assumes the general direction of Interacciones Casa de Bolsa
- HR Ratings increases HR A+ long-term Interactions rating with positive outlook to HR AA - with stable outlook. It also raises the HR2 short-term deposit rating with a positive outlook to HR1 with a stable outlook
- In September GFINTER O reaches $113.80 per share, giving a 90% return on the IPO price in 2013
- We visited 200 investors in 16 cities around the world
- UBS begins as Market Maker
- A dividend of $1.45 per share is decreed
- ROE (17% - 18%)
- NPL (< 1%)
- LOAN PORTFOLIO (17% - 21%)
- EARNINGS (17% - 20%)
- EFFICIENCY (< 45%)
- Mr Sr. Luis Manuel Enrique Téllez Kuenzler is appointed as a member of the Board of Directors and as part of the Audit and Corporate Practices Committee
- Fitch Ratings upgrades Banco Interacciones and Interacciones Casa de Bolsa's long-term national scale rating to A+(mex) with stable outlook since A(mex). Likewise, it increases to A+(mex) the national scale rating of Aseguradora Interacciones with stable outlook
- A Split 2:1 was approved to help increase the liquidity of shares in the market
- Bank of America Merrill Lynch begins coverage of GFINTER O, to become the 7th analyst along with Actinver, Banorte, Barclays, BBVA Bancomer, Credit Suisse and Grupo Bursátil Mexicano
- We visited 213 investors in 18 cities around the world
- We organized the first forum "Promoting Mexico: The Future After the Reforms" in coordination with El Financiero - Bloomberg. The event was attended by 22 panelists and more than 400 guests of the highest level of the public and private sector, including Agustín Carstens and José ángel Gurría
- We began to form part of the Sectorial Index of Financial Services, adding to the IPC Comp MX, IPC Small Cap, MSCI LatAm (small cap) and IMC30
- A dividend of $1.71 per share is decreed
- UBS remains as Market Maker
- Moody's upgrades its long-term foreign currency and local currency deposits and long-term global senior unsecured debt to Ba1 (BB+) from Ba2 (BB). Also, it increases the Base Credit Risk Assessment (BCA and the "Adjusted BCA" rating to Ba2 (BB) from Ba3 (BB-) along with an improvement in the long term counterparty risk, going to Baa3 (BBB-) from Ba1 (BB+) and short term to "Prime-3" (from Ba1-Baa3) from "Not Prime" Ba1-C
- We have given investors a return of 78.48% with dividends from our IPO in 2013
- We accumulated more than 51 quarters reporting utilities
- We fulfilled the "guidance" of growth in revenues granted to the market, having grown 17.67%.
- We held the first "Interacciones Day" for investors from all over Mexico, attended by 80 investors
- A dividend of $2.89 per share is decreed
- We accumulated more than 55 quarters reporting consecutive upward earnings
- We reached a historical record in credit origination, reaching an annual growth of 18.24% in the loan portfolio
- We achieved a net income of 2,596 million during the year, an increase of 13.96% year over year.
- We held the second edition of the forum "Boosting Mexico: Growing in times of challenges" in coordination with El Financiero - Bloomberg. The event was attended by 8 panelists, including the President of the Nation, Enrique Peña Nieto, and more than 500 guests of the highest level of the public and private sector.
Its main activity is to provide financing, financial advisory and risk management services to the public sector mainly, including the Federal Government, states, municipalities, parastatal entities and Federal Government providers.
2. Banco Interacciones is the second largest bank in granting loans to the government in Mexico
It is also one of the best capitalized banks in the Mexican financial system and occupies an important place in the development of subnational infrastructure in the country.
Our business approach, operating structure and branchless operation allows us to achieve the best operational efficiency in its class and an outstanding efficiency.
Our non-performing loan ratio is 0.27%, the lowest in the Mexican financial system. This is because we have become experts in transferring the risk from the final customer to the Federal Government through the structuring of credits, using resources from the Federal Government as a primary or secondary source of payment.
We have historically demonstrated that we have the capacity to maintain an ROE above 20%, since 2001 and through different scenarios of economic environment.
We have a high degree of specialization in the financing of basic need projects, which range from 100 to 1,500 million pesos. These projects have a high need for advice and also, by their nature, are not affected by cuts to the federal budget; On the contrary, the cuts encourage the financing of projects with Public Private Partnership (PPP) structures, which are one of our specialties and due to their higher requirements generate more commissions.
7. One of the most profitable groups in Mexico with an average return on capital of over 20% in recent years. In addition, GFI has consistently recorded quarterly earnings for more than ten years.
8. In recent years we have achieved compound annual growth rates in our credit portfolio (TACC) of around 21%.
9. We plan to enhance our future growth increasing our presence beyond the 21 states we currently serve and diversifying our products according to the needs of our customers, as we have been doing so.
GFI offers investors a unique vehicle to participate in the transformation and growth of the subnational infrastructure in our country, focusing on projects of fundamental infrastructure for the socioeconomic development of states and municipalities, financing projects in different sectors such as prisons, water treatment plants, roads, hospitals, museums, schools, etc.