Financiera Independencia Sab De Cv · BMV:FINDEP
Financiera Independencia Sab De Cv — BCP Securities Mexico City Conference, November 2022
23 slides from Financiera Independencia Sab De Cv's conference presentation, November 2022
Slide 1: Company Presentation
Company Presentation November 2022 1
Slide 2: Disclaimer
Disclaimer The material that follows contains certain information about Financiera Independencia, S.A.B. de C.V, SOFOM, E.N.R. (the “Company” or “FISA”) and its subsidiaries (collectively, “Financiera Independencia” or “Findep”), including Apoyo Económico Familiar, S.A. de C.V., SOFOM, E.N.R. (“AEF”
Slide 3: Current Situation: Strengthened Balance Sheet
Current Situation Strengthened Balance Sheet 2021 vs. 3Q22 vs. Million Pesos 2016 2021 3Q22 2016 2016 Total Assets 12,155 10,599 -13% 11,815 -3% Tangible Assets* 10,568 9,545 -10% 10,806 2% Total Portfolio 7,448 7,709 4% 8,641 16% Total Portfolio (FISA+AEF+AFI) 5,476 7,709 41% 8,641 58% Net Debt** 6
Slide 4: Current Situation: Benefiting from operating efficiencies
Current Situation Benefiting from operating efficiencies Principal lines of Income Statement 2016 9M22 annualized % of average portfolio % of average portfolio *LLR methodology is not comparable as we implemented the CNBV methodology in 1Q22. As a proxy, TTM write-offs to average portfolio decreased f
Slide 5: Consistent gains in net income
Current Situation Our strategy and execution have yielded consistent gains in net income Net Income excluding one-off, non-cash effects on results (Million Pesos) 2.6x * Excluding write-off of Finsol Mexico’s goodwill effect for MXN 448 m in 2020, and MXN 311 m in excess discretionary reserves, whic
Slide 6: Main points during our roadshow in July 2017…
Main points during our roadshow in July 2017… 1 Unique ● Stable and profitable throughout economic cycles Business ● Knowledge of the segment and the business built through Model experience with millions of loans originated 2 ● Continued investment in analytics Balance risk ● Focus on businesses wher
Slide 7: Unique Business Model: consistent profitability
1 Unique Business Model Consistent profitability and low volatility through crises. 2017 Roadshow… Consistent Profitability and Improving Asset Quality ● We talked about the consistent profitability and low volatility of risk of our portfolio even through crises. …outcome ● Our portfolio has yielded co
Slide 8: Lowest volatility and fastest recovery in the market
1 Unique Business Model FISA & AEF showed the lowest volatility and fastest recovery in the market. Maximum increase in NPLs from 1Q20 to peak and time to regain pre-pandemic levels. Maximum Increase in NPLs 29% 52% 277% 242% 124% 73% 68% Months from 1Q20 to Peak 6 7 8 12 10 11 9 Months from Peak to
Slide 9: Balance risk and growth: Lower NPLs
2 Balance risk and growth Lower NPLs despite growing remaining businesses 2017 Roadshow… NPL Ratio - Legacy Methodology (current operations) ● Prudent Growth ● Continued investment in analytics and technology ● Transformation of the risk function …outcome ● We have been able to grow our remaining bu
Slide 10: Continued Investment in Analytics
2 Balance risk and growth Continued Investment in Analytics 2017 2022 ● In process of building the risk function ● In excess of 90 collaborators dedicated to analytics, 1 in 4 of non branch staff ● Roughly 1 in 12 non branch staff dedicated to analytics ● In excess of 180 business users of data, rou
Slide 11: Focus on individual unsecured loans
2 Balance risk and growth Focus on individual unsecured loans to simplify the corporate structure ● Individual unsecured loans can achieve efficiencies through digital transformation. ● Aligned with our expertise. Strong skills in Data Analytics, Risk Management, and Systematic Operation are key to s
Slide 12: Actions taken to support stakeholder confidence
2 Balance risk and growth Actions taken to support stakeholder confidence ● Clear message of long term commitment to debt investors on Strengthened Balance Sheet behalf of equity holders. (No dividends since 2016) ● Better position to navigate challenging market. ● Listened to stakeholders and switch
Slide 13: AFI has grown 3.3x since 2016
3 Growth in the US AFI has grown 3.3x since 2016 2017 Roadshow… AFI (US) Portfolio, USDm ● Large unserved Hispanic market (62m) 188m in the US, with 3.3x California being the largest market. ● Proven business model poised for growth. ● Opportunities in efficiency based on scale. …outcome 57m ● Our US
Slide 14: AFI then and now
3 Growth in the US AFI then and now 2016 2022 ● Branch centric business model, with ● Hybrid business model supported by most activities performed face to face. digital channels and operations in Mexico. ● Limited micro-market around the ● Larger market enabled by digital branch, given the need for
Slide 15: Increase in operating leverage has yielded efficiency
3 Growth in the US An increase in operating leverage has yielded significant efficiency AFI Non-Interest Expenses / Average Loan Portfolio 15
Slide 16: Majority of assets expected in the US
3 Growth in the US We expect a majority of our assets to be located in the US in the short term % of Findep total portfolio 16
Slide 17: Technology has allowed us to do more with less
4 Efficiency through technology Technology has allowed us to do more with less Loan Portfolio per Employee (Thousands MXN) 2017 Roadshow… ● Migrating IT platform 2.5x to the cloud. ● Developing mobile tools to enable efficiency of Customer Service staff. ● Self service tools for our customers. …outcom
Slide 18: Technology has allowed us to do more with less
4 Efficiency through technology Technology has allowed us to do more with less Monthly average origination per employee (Includes all FINDEP employees). Thousands MXN +69% 18
Slide 19: Architecture and software development processes
4 Efficiency through technology Architecture and software development processes 2016 2022 ● Monolithic architecture with most ● Microservices based applications with more computing occurring on premise. than 900 micro services developed, all Cloud native. ● Very large cycles required to get patches ●
Slide 20: Digital transformation of the origination process
4 Efficiency through technology Digital transformation of the origination process 2016 2022 ● New clients attracted through canvassing, ● Most clients attracted through digital with full applications documented before channels and go through a staged analysis submitting the file for analysis. process,
Slide 21: Digital transformation of the collections process
4 Efficiency through technology Digital transformation of the collections process 2016 2022 ● Accounts assigned in batch to collectors ● Accounts are assigned daily to collectors every month with feedback every week. while defining daily smart routes. ● 360 customer information and collection ● Outdat
Slide 22: Cash generation
Cash generation A unique characteristic of our business model ● Quarterly collection (principal, interest and accessories) is around 25% of loan portfolio ● We can decide to deleverage by reducing origination and contracting the portfolio, as exemplified between March and September 2020 (1,275) (958)
Slide 23: Final Remarks
Final Remarks We have plenty of time and options to refinance our 2024 bond… Current Situation 2024 Refinancing Options Although recent concerns regarding the financial ● Issue new Bond. stability of other Mexican non-bank lenders are weighing on our bond… ● Private securitization of USD or MXN Portfol
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