Good morning, and welcome to the Third Quarter 2021 Gentera's conference call. Now, I would like to turn the call over to Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, you may begin.
Thank you. Good morning. Thank you all for joining us and for your continued interest in Gentera. I'm Enrique Barrera, the company's Investor Relations Officer. I'm very pleased to introduce our management team. With us today are Mr. Enrique Majós, Gentera's Chief Executive Officer. Patricio Diez de Bonilla, Banco Compartamos Chief Executive Officer, and Mario Langarica, Gentera Chief Financial Officer. They will reveal the results for Gentera third quarter period as per the report that was issued yesterday. Please note that during this presentation, Gentera may make forward-looking statements. These do not account for future economic circumstances, industry conditions, company performance, or financial results. Additional information on forward-looking statements can be found in the disclaimer located in our earnings release. If you did not receive a copy of the release, or you have any questions, please do not hesitate to contact our Investor Relations department in Mexico City.
If you are a member of the media, we ask you to contact us directly. I would now like to turn the call over to Mr. Enrique Majós for his presentation. Enrique, please go ahead.
Thank you, and good morning to everyone. As always, your presence and interest in our call is encouraging for us. Let me start by saying that for four quarters in a row, Gentera has been showing remarkable resilience, and we have achieved very good results demonstrating a solid recovery path after more than one year of complicated contexts. Talking about our business results during the third quarter, Gentera's overall net margin looks really good. We will definitely deliver the results we promised starting this year. As you can see in yesterday's press release, due to the positive performance of our business, we are increasing our guidance for the second time this year.
From the original 0.85-0.95 EPS, now we believe we will end the year in the range of 1.15-1.25 EPS, which means 35% above our original estimation. Financial results are a consequence of customer satisfaction and a strong business operation. That's why we feel proud to say that our performance during this year has been very good. Clients and portfolio look stable compared with the third quarter, 2020. However, it is important to consider that these results were impacted by three main factors. First, the loss of clients and portfolio as a consequence of selling our Guatemala's operation, which as you know, was a strategic business decision explained in our last conference call. Second, a 19% devaluation of the Peruvian currency. Third, the pandemic brought us extraordinary write-offs in Mexico and in Peru.
Even after these negative effects, Gentera's portfolio remains stable on a yearly basis, increasing 3.3% during the last quarter. By the way, Peru has shown good growth portfolio trends. Especially during August and September, the loan disbursement amount has been historically high and portfolio quality is looking better. At Gentera's level, cost of risk is improving, and we are now close to 9% and consistently decreasing. I want to point out that Banco Compartamos has the best NPL numbers in the last 13 years. We haven't seen these numbers since 2008, which is an incredible milestone for us, especially under the present conditions. In Peru, we're looking at good NPL trends while we continue stabilizing the payment condition for our customer base.
Patricio will give you more color of our operations in Peru, but I can tell you that we are turning around the complicated situation we have had in Compartamos Financiera along the year. Finally, accumulated expenses for the year are under control and in line with our budget. We expect to end the year around 9% of expenses growth, and future quarters look equally positive. With such good results in our business operations, our digital transformation process is also having very good progress. Our management team, all across the company, is giving strong attention to our transformation initiatives. Let me point out some of them. This quarter, we started testing our end-to-end digital credit process, and we plan to roll it out by the end of the first quarter 2022. We are strictly focusing on improving customer experience and loan officers' productivity.
We will gradually start to capture efficiencies during the four quarters of the 2022 year. Our digital payment platform is also being transformed. Yastás is developing its new core system. This technological platform will include more digital features and mobile capability for better experience for agents and end users. ConCrédito is also showing very good results. Financially speaking, portfolio increased more than 10% compared to last quarter, and 20% on a yearly basis. Net margin increased 28% compared with last quarter. By the end of this year, ConCrédito will represent more than 25% of Gentera's net margin. Maybe the most relevant update in ConCrédito is the fact that its operation has evolved from a branch-based operation to a fully digital operation without physical branches. Today, ConCrédito's empresarias can solve their transactions and support without having to go to a branch.
This has allowed ConCrédito to increase its presence by 40% nationwide. ConCrédito has presence in 139 cities, and 40 of them are branchless. Finally, I want to recognize the support and trust from all of you, our shareholders and investors. As you know, this year our board decided not to pay dividends until it was clear that we had succeeded on overcoming the impact of the pandemic, and I want to thank you for being truly patient for the last few years on this. As management, we operate under some basic principles. First, our obligation is to keep Gentera's financial strength in order to guarantee the services we provide to our customers. Second, we have always had a long-term strategy.
I am showing we have Enrique's line still connected.
Do you hear me? It's Mario.
Yes, Mario, I can hear you.
I think we lost Enrique. Patricio, you want to continue with the speech of Enrique?
Yes. Perfect. Yep. He was talking about the long-term strategy that we have, and we believe that investing in the future will be always strategic. Third, as management, we're focused on customer satisfaction and business profitability. We always be on top of our priorities. Having these principles in mind and being grateful for your continuous and long-term support, I want to announce that yesterday we proposed to our board the payout of a 10% dividend once we deliver this year expected results. The board agreed-
I'm back.
will propose the dividend to the annual shareholders meeting next April. Our equity and cash flow requirements for 2022 is still a restriction for us to get back to the traditional dividend levels. However, we feel comfortable that by 2023, we will be back to our regular payout dividend. Let me finish by saying that we are aware that we still have challenges to face. We will always have. As well, we will always have opportunities to capture. Transformation is a never-ending journey. Bottom line, I will feel very proud about the way we have faced the huge challenges from the pandemic. In Gentera, I see a great team that will take the company and our customers' experience to the next level.
Let me follow up on my remarks and talk a little bit about what happened in the third quarter of 2020. We decided to recognize the impact of the pandemic in our financials in Mexico. As such, we reported our first loss in 30 years of history in the third quarter of 2020. Such decision was indeed relevant but necessary to set the foundations for a steady recovery of the business. 12 months after, we have consolidated the business and presenting strong operational figures which allow us to think that the future is promising. As you could see in our third quarter's 2021 results, Banco Compartamos operational metrics are even better than pre-pandemic levels. To highlight some of the achievements in this subsidiary, let me share the following.
First, we've grown the customer base every month in 2021, attracting over 250,000 clients since January. This represents 11.6% growth year to date. We serve more than 2.4 million customers in Mexico. It's important to mention that the fifth largest NSI that reports to ProDesarrollo in Mexico serves less than 250,000 clients. Banco Compartamos keeps gaining share in number of customers served and holds 43% of the market in number of customers versus 40% last year. The microcredit loan portfolio at the end of third quarter stood at MXN 22.7 billion, a 9.4% growth versus third quarter of 2021, and we presented NPLs at 1.6%. As Enrique said, this continues to be one of the best levels in the past 13 years of history.
Third, credit demand remains strong. July represented the most important month in terms of loan origination in our 31 years of history, disbursing more than MXN 11 billion this month alone. Our expectation is to conclude the year with loan growth in Mexico around 15%. Fourth, the churn of our employees remains under control. We expect to finalize the year in 16%. This allow us to have experienced personnel in front of the customers, which translates in better service. As consequence, the Net Promoter Score for the bank is 92%. As a reference, the Net Promoter Score for the banking industry is around 65%. Profitability has been reestablished due to a better mix between performing and non-performing loans. Margins have been improving steadily and have contributed to generate larger margin after provisions.
These strong dynamics have supported to turn around the business, and we have generated profits for the last 12 months. As such, in this quarter alone, we reach a net income of MXN 396 million in Banco Compartamos, representing a net improvement of more than MXN 2.1 billion in our net income this quarter alone. As you can see, Banco Compartamos is experiencing very solid performance, and our expectation is to keep this good momentum for year-end, and with no doubt for the future years. Let me jump to our Peruvian operation. In the case of Peru, we follow the same strategy that we implemented in Mexico.
We provisioned the expected credit losses for the pandemic last quarter, and we are pleased to announce that Compartamos Financiera started to show much better dynamics in this third quarter, as you can see in our results. The actions taken in the past months to mitigate the challenges related to the impacts in the economic activity generated by COVID-19 and impacts related to the interest rate regulation are starting to pay off. Our third priority in Peru was to control asset quality of the portfolio. To deal with this, we restructured loans, we offered discounts as an incentive for the customers to pay on time, and we implemented an incentive program for loan officers to reach their goals.
Regarding interest rates gap that was imposed at 83%, which affect exclusively to the group lending portfolio, as you may recall, we took actions to diminish the impact coming from this regulation. Among these actions are, first, we have increased the minimum ticket in the renewal process. This allow us to generate larger interest income despite the smaller rate. Second, we are gradually increasing the length of new loans to five or six months from the previous four months. This measure will allow us to reduce the cost of renewal process. Third, we are moving some credit payments from a biweekly standard to monthly payments, reducing transactional costs. Additionally, we reduced some operational costs associated to this methodology, such as closing branches that were not productive. All these measures allowed us to maintain profitability in the product despite the rate gap.
Let me highlight some of the achievements in Compartamos Financiera this quarter compared with the second quarter of 2021. Number of customers served started to grow again, now serving 617,000. In this third quarter, we reach an inflection point, and we are growing again. Second, portfolio growth. The portfolio grew 2.2% in local currency. The progress in the portfolio is even better, growing 5.8% quarter-on-quarter. NPL stood at 4.3%, representing an improvement compared with the 4.6%. Our expectation is to improve or maintain NPL reach this quarter for the following months. Finally, after five quarters of operational losses, we are now generating net income in this third quarter of 2021.
Net income of MXN 84 million, representing 232 million in net improvement compared to the losses in the third quarter of 2020. With these results and all the measures and current dynamics that we are witnessing in the Peruvian market, we believe that the worst for this, the subsidiary is behind us. We will keep working hard in understanding the customer needs, developing alternatives to meet their needs, and maintain a strong team in the country to manage the company. We're confident and committed to our Peruvian customers as well as our local team. I also want to take this opportunity to thank all the passion and dedication of our teams in Mexico and Peru, who are fully committed to serve more clients during this year and in more efficient and digital manner in the future.
As we have stated in the past, the size of the financially underserved market in Peru and Mexico is very large, and we are certain that we will capture all the opportunities that arise in this and following years. I will now hand the conference to Mario Langarica, who will review Gentera's third quarter financials. Thank you all. Mario, please go ahead.
Thank you, Enrique, Patricio, and good day to everyone. I hope that you and your families remain safe and healthy. I would like to focus my 3Q 2021 presentation in the following remarks. One, the improvement of our margins. Second, the adequate and healthy level of allowances, NPLs, cost of risk, and coverage ratios. Third, the continued growth of our net income. Fourth, the strength of our liquidity, funding, and capitalization positions. Number one, our margins have kept improving. As mentioned before, Gentera's total loan portfolio amounted to MXN 40.4 billion in 3Q 2021, a 3.3% increase compared to the figure reported in 2Q 2021, and a 1% contraction compared to 3Q 2020.
It is very important to note again that this contraction was mainly driven by a MXN 3.5 billion FX depreciation effect on the consolidation of Compartamos Financiera in Peru. In local currency, our loan portfolios have grown 9.4% in Banco Compartamos, 8.1% in Peru, and 20.9% in ConCrédito versus 3Q 2020. It is also important to note that the consolidation of 87,000 clients and MXN 530 million of Compartamos Guatemala into Gentera's financials since July 2021. We have observed positive performance on the three lines of margin, even after the FX impact in Peru and the consolidation of Guatemala.
During the first nine months of 2021, interest income grew 12.9% compared to the same period in 2020, mainly driven by Banco Compartamos and a better mix of its performing loans in the portfolio. For the same period, we have also been able to reduce by 13.3% interest expenses through active liability management, including a reduction of our extra liquidity positions. These effects result in a growth in net interest income of 16.5% as of September 2021. The performance of 3Q 2021 compared to 2Q 2021 was very similar for these items, resulting in NIM for the first nine months of the year of 34.5% and 35.7% for 3Q 2021, continuing the recovery trend.
For this quarter, provision for loan losses amounted to MXN 909 million, represented a one hundred and seventy million decrease compared to 2Q 2021. Net interest income after provisions amounted to MXN 4.19 billion in 3Q 2021, resulting in a NIM after provisions of 29.4%, above 27.2% last quarter. For the nine months of the year, NIM after provisions amount to 28%, almost doubling the level reached in the same period of 2020. It is important to highlight that we expect to see NIM before and after provisions moving above 40% and 30% soon. Cost of risk stood at 9.1% in 3Q 2021 and 9.3% for the first nine months of the year, thus moving below the 10.5% minimum level guided for the year.
Operational expenses had an 11.2% growth compared to 2Q 2021, and for the nine months of the year, a 9% growth, compared to the 2020 period. It's important to note that this quarter growth was mainly driven by an increase in incentives and loyalty rewards related to the excellent risk performance of the portfolio in Banco Compartamos. Second, some inflation-related adjustment in wages. Third, some expenses related to the implementation of the new outsourcing law in Mexico. We expect to close 2021 under the 10% growth guidance that we gave and around 9%. Two, we have sufficient allowances, historical low NPLs, and healthy coverage ratios. Allowances amounted to MXN 3.29 billion on a consolidated level in 3Q 2021.
As of today, we still maintain MXN 190 million in additional reserves compared to the 330 that we kept in the second quarter of 2021. Our coverage ratio amounted to 269%, superior to 241% in 3Q 2020. NPLs amounted to 3.03% compared to 2.96% in 2Q 2021, and a large improvement compared to the 6.94% in 3Q 2020. As mentioned by Patricio, NPLs at Banco Compartamos are at 1.61%, which are among the lowest in our history. We want to reinforce the message that most of the pandemic impact has already been reflected in our financial statements and absorbed by our strong capital base. Three, net income has kept growing, maintaining a positive recovery trend.
Gentera's 3Q 2021 net income amounted to MXN 657 million, a very strong recovery compared to the losses of MXN 1.983 billion presented in 3Q 2020. The cumulative net income in the nine-month period of the year was MXN 168.88 million, representing a MXN 3.6 billion recovery compared to the MXN 1.926 billion loss in the same period of 2020. As of September 2021, Gentera's controlling participation amounted to MXN 1.504 billion, representing an accumulated EPS of MXN 0.95. As mentioned above, we are increasing our EPS guidance for 2021 to a range between MXN 1.15-MXN 1.25.
Also, a very relevant point to highlight is the fact that Compartamos Financiera in Peru is already back in quarter of positive net income, which make us feel very enthusiastic about this year and the prospects for next year. Four, we maintain strong liquidity funding and capital positions. Gentera concluded 3Q 2021 with a very healthy liquidity position amounting to MXN 17 billion. Liquidity levels at each subsidiary are very solid and sufficient to fund our expected growth and are strong to face opportunities in each local market. It's important to note that due to the open and solid access to different funding sources, Banco Compartamos has already decreased over MXN 5 billion in extra liquidity since 3Q 2020. In the following months, we will keep optimizing the level of liquidity, always considering the market conditions.
We have recently announced a MXN 2 billion-MXN 2.5 billion three- to five-year peso bond that we expect to place in the market in November. It will be the first bond to officially have a formal social denomination level, which has always been very consistent with our historical social objectives. Gentera's strong capital-to-assets ratio amounted to 35% in 3Q 2021. Banco Compartamos concluded the quarter with 34.1 [CAR], or Capital Adequacy ratio. Compartamos Financiera with a solvency level of 18.1, and ConCrédito with a capital-to-assets ratio of 66%. Important to say that even considering this strong capital position, Banco Compartamos and ConCrédito were able to reach strong levels of ROE in the nine months period of the year.
Banco Compartamos reached a cumulative ROE of 19.5%, and ConCrédito of 21.7% in the same period. Recognizing that we and our clients have adapted to the new environment and dynamics of the markets, we are very pleased about the results we're presenting and excited about future opportunities. The size of the addressable market is large in Peru and Mexico, and certainly we will be there to offer financial product services that our clients need to achieve their objectives. We're strongly motivated with the current dynamics, with the new EPS guidance provided for 2021, and with the objective to initiate our dividend distribution after approval of our shareholders meeting. This is a proof of the sound performance of the group in this year and our expectations that the best is just yet to come.
Thank you very much for your attention, and now we can open and move forward to Q&A session.
Ladies and gentlemen, to ask a question, please press star one on your telephone keypad at this time. If you are using a speakerphone, please make sure that your mute function is turned off to allow the signal to reach our equipment. Your first question for today is coming from Ernesto Gabilondo. Please announce your affiliations, and pose your question.
Ernesto Gabilondo from Bank of America. Hi, good morning, Enrique, Patricio, and Mario. Congratulations on your results and your improved guidance. My first question is on your ConCrédito's contribution to other income. We noticed that during the quarter, that line generated almost MXN 400 million. Just wondering, what should we expect for that line in the next quarters? My second question is on asset quality. I believe you were guiding a cost of risk between 10.5% and 11.5%. After the nine months, it seems that it could be below your guidance. How are you seeing the cost of risk evolving? Once you start growing again the loan portfolio, what should be the normalized cost of risk?
For my last question is related to the competitive landscape and the digital transformation. I would like to hear from you who you see as the most aggressive fintechs or potential digital banks going into your segment. We have seen, for example, Nubank that has been growing rapidly, so I don't know if that is one of them. On the other hand, can you share with us some of your digital initiatives to track potential new competition? Thank you.
Excellent, Ernesto. Thank you very much. Well, regarding your first question on other key income related to the CrediTienda income that we book at other income, the amount is MXN 96 million for 3Q 2021. The rest of the amount that you mentioned relates to the accounting movements that we did in order to finally register the impact of the Guatemala's consolidation, which now you can look at it at the discontinued operations line that amounts to MXN 153 million. The contribution of ConCrédito in the quarter was MXN 96 million of CrediTienda.
Okay. In terms of cost of risk, Ernesto, I mean, as you know, we're always focused on loan origination and the quality of such process. As you've seen, the asset quality for Mexico this year has been coming down. Also, the cost of risk for this year was not necessarily something to compare with because we provisioned a lot in 2020, which reduced the amount of money that we needed to provision in this 2020. Therefore, we will maintain good asset quality, and you should expect to see the cost of risk moving around 8%-9% for next year, on a consolidated basis once it's normalized the origination and the provisioning level for the full year.
Your next question.
Enrique. Sorry, I think we're missing one part of the strategic question of the competition landscape. I don't know if Majós is on the line.
I think he disconnected. For the FinTech landscape, Ernesto, of course, there are many new entrants, many players, not only financial institution, also retailers and so forth coming in. Of course, there's a lot of money flowing into this segment, and we are looking at every newcomer to see what's the value proposition for this segment. Again, as Enrique mentioned before, the reality is we are very focused on our digital transformation. We think that we have a strong capabilities there to not only originate, but understand better the customers using data. With such data, start to deploying new products that could be easier, faster, and cheaper for the segment.
Again, no, of course, there's a lot that is going on right now, but I wouldn't mention one simple player. The dynamic is very intense as you've seen in the latest news.
Thank you, Patricio. Do you hear me there? This is Enrique.
Yes. Perfect. Thank you.
Hello?
Yeah. I'm sorry, I'm having problems with my connection. Sorry about that. Just to continue with Patricio's explanation, Ernesto, and your question about fintechs. What we see is that we are all, fintechs and the traditional financial institution, looking for digital tools basically on three things. The first one is, how can you make better customer acquisition more efficiently, digitally, at a low cost? The second one is, how can you assess the risk better with algorithms and digital intelligence? Third, how can you make your back-office processes more efficient? I think that we are all working on that. Actually, the initiatives that we have in the transformation process are focused mostly on those three things.
At the end, I think that, fintechs and ourselves are working on that. I think that we are also looking that we are not strictly competing. We are in some point, but we are also collaborating on developing these tools, and we are working with some fintechs to help us to bring those capabilities to Gentera. Yeah, it's a very interesting moment in not only the financial world, but all over the world with all the digital initiatives and innovations. We believe we are doing good progress collaborating with other fintechs, and we are very excited about the progress we are making on basically those three things that I mentioned.
Thank you very much, Enrique. Just to follow up on this, I think that with the Yastás, you already have like a very good presence in the low-income segment related to payments. I don't know if you're like trying to replicate some of what we have seen in Brazil, like trying to bring software to small merchants in order to build the relationship with Gentera. I don't know if something related to that are you exploring.
Yeah, sure. What I mentioned in my last intervention was that we are developing a new core system for Yastás. This is a specific digital payment platform core system. That system is aimed basically to bring better mobile capabilities. We are putting in the hands of our agents and our end users platforms, apps that will allow them to make better and more convenient transactions from their mobile phone. Yes, we are working specifically on what you're mentioning now.
Perfect. Thank you very much.
Your next question is coming from José [Sentura]. Enrique, what factors contributed to a lower effective tax rate during the 3Q 2021?
Okay. It's just a seasonal effect. In reality, the corporate rate is 30%. All of our subsidiaries pay their taxes every month applying taxable income minus deductions times 30%. For the full year, it's expected to be around 30%. In this quarter, we have some effects of the deconsolidation of Guatemala that showed this percentage. We should always expect it to be around between 27% and 30% since the corporate rate is 30%.
Your next question is coming from Jason Mollin. Please announce your affiliation, then pose your question.
This is Jason Mollin from Scotiabank. My question is related to the Peruvian operations. If you can talk to or about the operating environment in Peru for Compartamos Financiera, the subsidiary there. It was indeed encouraging to see the number of clients tick up quarter-over-quarter a little bit. It would be valuable to hear how Gentera is managing the operating environment there, given the interest rate cap and how that's impacting the business and how you see that if it is impacting the business going forward or will impact the business. Thanks.
Thank you, Jason. This is Patricio. In Peru, as you know, we have two different portfolios. The largest piece of business is the individual lending portfolio. Individual lending portfolio represents 80% of what we do there. This is not impacted by the regulation, and the focus on this portfolio was on asset quality. As you know, the lockdowns in Peru were present even in this 2021, January, February, still very strict in terms of mobility. Things are getting back to normal as vaccination plans are being rolled out. The reality is that the economic environment is still a little bit sluggish. Even though the GDP for Peru will grow, the reality is that some of our competitors are facing strong operational challenges. That represents an opportunity for Compartamos Financiera.
We think that after we recognize the expected losses for credit losses last quarter, the progress of the newer originations have been adequate. We are confident that this piece of the portfolio will regain momentum. The micro entrepreneurs in Peru require financing. Also, July for the Peruvian operation was one of the most important months in their history in terms of loan origination. We are confident that what we implemented there to tackle credit quality for that piece of the portfolio is paying off now and will continue to regain growth in customers and portfolio for the coming quarter and years. There's a market for this product in Peru, no questions asked.
In terms of the group lending methodology, as I said, this is indeed impacted by the regulation. We are now, since July 1st, operating at 83%, which is the maximum rate. As I said, we did some adjustments to the product offering to increase the volumes and to reduce some operational costs associated to the methodology. Having implemented such actions allowed us to still have profits in this portfolio. We are confident that for the coming quarter and months, the reality is that these actions will keep the group lending methodology alive in Peru. This is a product that we face very low competition. As we with the infrastructure that we have already gained productivity, profitability will be regained in the coming quarter and year.
Having said that, we are confident that, as I said in my remarks, the worst for the Peruvian operation, the impact of this economic slowdown as well as the pandemic is behind us, and we see good opportunities for this subsidiary in the coming years.
Thank you very much, Patricio . Sorry.
Your next question is coming from Ricardo Buchpiguel. Please announce your affiliation, then pose your question.
Hi, this is Ricardo Buchpiguel from BTG Pactual. Good morning, everyone, and congrats on the solid results. I have two questions. First, considering the long-tail market that has likely expanded due to the pandemic, your competitors probably have struggled in the period, and Gentera has a very sound capital and liquidity position. Should we expect Gentera maybe buying some competitors and increasing consolidation in this market? And can you clarify a little bit what kind of opportunities you could see with this scenario? And also, could you please comment on the main trends you expect for next year in each of Gentera's brand subsidiaries? Thank you.
I couldn't hear your second question. Could you repeat it back, please?
Sure, yes. I just want to have a sense on what are the main trends you expect for 2022 in each of Gentera's subsidiaries.
Of course. Thank you. In terms of competition, yes, even though we have a very strong position, no, financially speaking, the reality is that next year we will increase our share in ConCrédito. As you know, ConCrédito it's now 51% owned by Gentera. Next year, we plan to move to 75%, and that will require capital from the group allocated to this subsidiary. We believe that the acquisition of ConCrédito will allow us to strengthen the footprint of Gentera in the Mexican market because we serve different needs of this segment with both subsidiaries. We don't see or plan for next year other acquisition. Of course, we are open to the dynamic, but you should not expect further capital allocation for M&A activities next year.
Then your second question was in terms of trends. Of course, the dynamics, Mexico it's doing well. I'm talking about Banco Compartamos. We really think that we will deliver 2021 results as we mentioned in our remarks. We think that that will set strong foundations to keep this growth momentum for the coming year. A double-digit growth for the Mexican subsidiary can be expected. However, we won't provide guidance until February. For ConCrédito, it's still in a fast growth phase. As you know, ConCrédito, it's more on the northeast, northwest of the country. There's a possibility of taking the model to other states where ConCrédito is not present.
The growth for this subsidiary should be faster than what you see for Banco Compartamos. Peru, again, will regain momentum and growth is expected. Altogether, we see a very positive outlook for 2022 as we move the growth of the business as well as we capture efficiencies from all the digital initiatives that we are implementing next year.
Thank you.
Your next question is coming from Thiago Batista. Please announce your affiliation, then pose your question.
Hi, guys. It's Thiago Batista from UBS. I have a follow-up about Compartamos Peru and a follow-up on Jason's questions. With all the change that we saw in Peru, the cap, the political changes, the change that Compartamos Peru did, what is the level of profitability that is feasible for this operation in long term? This quarter, the bank achieved a very close to 10% of ROE. But if we went back, let's say a couple of years, this used to be close to 20%. What is the level of ROE that the Peruvian operation can deliver in the medium term?
Thank you. Thank you very much, Thiago. The objective, as we have said in the past, is to get back to ROEs above 20%. As you remember, in the last quarters of 2019, we were there, and we believe that we have a lot of opportunity to bring back Peru to those levels. We are, as Patricio and Enrique have explained in detail, in the process of rebuilding the financials in Peru, but we have been observing very positive trends in that direction.
No, thank you.
Your next question is coming from Jorge Henderson. Please announce your affiliation, then pose your question.
Yes. Yeah, thank you for the opportunity. Jorge Henderson from Santander. I have two questions, and my first question is on Banco Compartamos. You still 9% below the number of clients you had in Mexico in 2019. But you have grown your number of clients 4% year-to-date. My question is on the detail of this recovery. Are these customers new ones, new customers, or are these previous customers that are coming back to Banco Compartamos? Also, my second question is on ConCrédito. Could you provide us more detail on what was behind this quarter's 11% increase on ConCrédito loan book? Also, can you remind us of the duration of the loans of this segment and the number of emprendedoras in this [line]? Thank you and congratulations for the results.
Jorge, yes, this is Patricio. Indeed, the growth in customers has been very good this year in Mexico, 250,000 new customers for Banco Compartamos, 11% growth in nine months. This is a reflection of the demand that exists for credit in the Mexican market. The new customers that we attracted are half of them existing customers that we basically left or they went away, paid out their credit last year and waited for new credit until the pandemic went away and they're coming back to us. The other piece is it's new customers to Banco Compartamos. It's a combination of both, and we expect to maintain this growth momentum for the year end.
Jorge, thank you for your questions. For the second question, can you repeat it? Because we didn't hear it clearly. I know it's about ConCrédito and the customer base growth, but I didn't get the
Yes.
The entire question, please.
I mean, actually, there are two questions. The first one is if you could provide more detail on what was behind this quarter's increase on ConCrédito's loan book, which I think that's very good. And also if you could share with us the duration of these loans and the number of emprendedoras that you have in segment.
Yeah, sure. We have in ConCrédito around 60,000 emprendedoras, and we are growing that number. As Patricio explained before, maybe the most important part of the growth in ConCrédito will come from geographical expansion that we are having, which, by the way, is a branchless expansion, which is more efficient, and we are having very good results on serving our customers in a digital way. We are also, since we are expanding geographically, going into places in which we don't have necessarily that much experience in the empresarias on providing credit.
That's also a challenge for us, but it's an opportunity because we are opening the number of empresarias that we can get to expand our network. That's why Patricio was explaining that, looking forward, we see that ConCrédito has enormous potential and, because you combine geographical expansion with digital capabilities.
Okay, thank you. Also one follow-up question. Again, give a percentage of ownership of ConCrédito you plan to get next year. Could you repeat that the share, please?
Yeah. As you know, we have now the 51% of the company, and we have the right to increase that participation. We are in the process of going there. We are talking with our partners, so as soon as we have more specific details on this, we will communicate them.
Okay. Thank you very much.
Your next question is coming from Alonso Garcia. Please announce your affiliation, then pose your question.
Hi. Good morning, everyone. This is Alonso Garcia from Credit Suisse. Thank you for taking my question. My first question is actually a follow-up on ConCrédito, and in part it was answered with the previous question. I was wondering about the deterioration in asset quality in the subsidiary. Based on your previous answer, I guess this is due to the geographic expansion and the, let's say, lack of experience of your new emprendedoras. But if that's the case, I just wanted to ask, I mean, what are the levels of NPL ratio and total cost of risk that you feel comfortable with for the subsidiary? And my second question would be on your outlook for OpEx growth for next year.
I think you are guiding for 9% OpEx growth this year, but I was wondering what are you expecting for next year, and what should be the main drivers? Thank you.
Thank you, Alonso. Yes, as you said, for your first question, you're right. Basically the reasons why we are looking at NPLs that are slightly going up is because those two factors, the geographic expansion and the expansion of the profile of the empresarias to increase our network. Although we know that this is, we have been observing these trends very carefully for the last months, even a whole year, and we feel that we have this under control, so we don't expect NPLs to go further. We think that we are getting into the maximum NPL that we will get, and now we are going to start looking this going down.
Alonso, for your question regarding OpEx, as you said, again, we expect to be below 10%, around 9% this year. For next year, we're not providing guidance yet, but as Enrique has explained, we are also in the process of reviewing the investment that we need to make for this strategic initiative that we have already described. We will provide details on our OpEx guidance in the next quarter as soon as we have the full 2022 plan.
Thank you very much to both of you.
Your next question is coming from Carlos Gómez. Please announce your affiliation, then pose your question.
Hello. Carlos Gómez from HSBC. I want to know how you are looking at your capital position. You mentioned earlier that you have to disburse for the acquisition of the extra 25% or 24% of ConCrédito. What capital ratios are you focusing on and should we be looking at, and what levels do you want to maintain? Thank you.
I'm sorry. Sorry, I thought I was on mute. Okay. As we have always mentioned, our key capital ratios that we are always taking care of are one, the bank. As we have communicated, we have a 25% minimum [CAR] at the bank. So any use of capital should take into consideration that we need to be above that. And that's permanent. Regarding Peru, it needs to be the solvency level above 17%.
Having said this, the plans that we have for next year, including ConCrédito and including what we just said about the dividend of at least 10% when the shareholders meeting approve it, consider that we need to be above these capital internal limits. We will be above our limits during the year.
Okay. For Gentera, the holding, do you have any particular ratio or you are focusing on the subsidiaries?
We focus on the subsidiaries, so that's where we keep the controls at the capital and equity levels.
Thank you so much.
Your next question is coming from Gilberto García. Please announce your affiliation, then pose your question.
Hi, good morning. This is Gil García from Barclays. I had a follow-up on the operating expenses, just to understand, because you mentioned in the press release that the increase in the quarter has was partly to do with the like extraordinary bonuses to loan officers above the budget and so on. But if you will be at around 9% for the full year, that implies that the fourth quarter number will also be significantly up compared to the first half of the year. I just want to understand if there were continued extraordinary items or if they include any sort of special projects that you discuss a little bit for next year. Thank you.
Yes, thank you. Every year, we budget a specific amount of incentives to be paid. Obviously, if the performance is superior, we need to honor that incentive to our loan officers force. That's basically what has happened this year, and that's a very good message because that expense, it comes with a multiplier at the income level. Well, yes, it has increased the expenses over the budgeted number. Again, as we have mentioned for Gentera, for the full year, it will be below our guidance. Next year, we will adjust the hurdles of the incentives, and we will reach the bar for our loan officers in order to meet a more productive and higher levels.
This should be communicated the amount of expenses, as I mentioned in the previous question, about what we expect for OpEx next year.
Okay. Understood. Thank you very much.
Your next question is coming from Yuri Fernandes. Please announce your affiliation, then pose your question.
Hello, everyone. It's Yuri Fernandes from JP Morgan. And first of all, congrats on the turnaround of the business. 2020 was a challenging year, so happy you are being able to provide better figures. I have just a follow-on on ConCrédito. You already touched this two times, but can you explore from the business which one is driving those higher NPLs? Because when we look to the new NPL formations, look to your charge-offs and, like, all the moving pieces, this is the third quarter that we are seeing higher new NPLs in ConCrédito. So my question is, are you seeing like, you talk a little bit about the experience of the sales force.
Do you think this is more like, you know, like the traditional ConCrédito, or this can be related to CrediTienda? If you can explore a little bit the CrediTienda model, like how asset quality is tracking for that product. I understand that you buy the product from the distributor and receive, like, those installments. My question is, like, how is the asset quality? Is something that you are seeing a deterioration? Regarding my second question on expenses, you mention a lot about digital transformation. When we look to your number of investments, the strategic investments, right? And there you have other expenses like ConCrédito. There are a lot of things there. How much are you really investing in digital transformation? Here I'm talking more about Compartamos in Mexico.
Like, how big is your budget, and do you think this is enough? Do you plan to increase the digital transformation budget for 2022? Any color would be interesting. Thank you, guys.
Okay. Thank you, Yuri. I will answer your first and your last question. Yes, you're reading well, the reason why we are experiencing this NPLs growth in ConCrédito. Let me get a little bit more specific on this. Yeah, we have these two factors, the geographic expansion and the expansion on the profile of the empresarias to extend the network. The bigger impact comes from the change or the expansion of the profile. Traditionally, ConCrédito has enrolled empresarias from markets, specifically more in the northwest of the country, where they have a lot of experience providing this kind of what we call ValeDinero, which is loans through this mechanism.
They had experience with other businesses, which, for instance, selling shoes, traditionally in that region of the country has been through this kind of mechanism. They had a lot of experience there. That doesn't mean that new people cannot get this experience. They will get it, and we know how to train them to get that experience. Getting new people with no previous experience on this brings us into a longer learning curve, and that's why we're looking at this NPLs going up. As I told you, we have this under control. We have a very good digital online information about how these clients are behaving. That's something very good from ConCrédito's model because they have a lot of digital information in real time.
We feel very comfortable that we are looking closely to this behavior, and we have it under control. For your last question in terms of investment, what we are looking to the future. Well, we have been investing a lot on technology and innovation since a few years ago, not only through the Fiinlab innovation lab, but even before when we started with Yastás, which is also a very important part of the digital transaction platforms and payment platforms. Our investment in ConCrédito is also classified as an innovation digital investment.
For the future, we think that we are going to invest around MXN 1,500 million in the following 1-2 years on innovation, online with the transformation initiatives that we have already in place and that we will develop through the next 12-18 months. That's what I can tell you about these two questions you had. I will let, I think, Mario to answer the second one.
No. You have already answered. We will provide a detail on the expenses and the investments in the next quarter. You have a better number and a precise number of what we expect to do. We're finishing, as we mentioned before, the plan. There are these strategic initiatives that Enrique has just described, and we will provide numbers in the next quarter.
Guys, just a follow-up regarding the first question. Maybe a positive way to think about this challenge in asset quality in ConCrédito, like the challenge you are seeing today, maybe that's a sign that it's not that easy to originate and collect money digitally, right? So that could be, you know, like an issue for disruptors and other guys going to your market, right? Do you think it's fair to think about this?
Yeah, I don't know if I get your question clearly. What I can tell you is that we have the advantage of combine the experience of ConCrédito with experience of Banco Compartamos and the group lending clients. What we are doing is that we are creating synergy to have those two credit assessment and collection processes, creating synergies to have a stronger model than the ones some other fintechs can have without these group lending methodology and clients that we do.
Okay, thank you.
As a final reminder, ladies and gentlemen, press star one at this time if you have any questions. There are no questions in queue. I will now like to hand the call over to the management team for closing remarks.
Thank you so much. First of all, I want to apologize for my connection problems. I have already solved them, so sorry about that. I would like to make emphasis in a couple of things now that I have a good connection. First of all, thank you for all your questions. I believe that they are because you're very interested on what we are doing, and you're looking that we are having good progress. Thank you. That, as I said in the beginning, encourages us. Second, I want to really be grateful with you for your continuous and long-term support. I hope that the dividend that we are planning to do next year and the plans that we have for the next ones will make up to you.
The other thing is that we are aware that we still have challenges to face, and we know that's how it will be in the future, and that's how it will always be. That's why we do what we do, because we want to solve and give and provide our customers better conditions, and we have to solve all the challenges that we face in that journey. We feel comfortable, and I feel very comfortable with the team that we have, and we will continue facing and solving those challenges. As well, we will always have opportunities in the future, and I believe that we have a lot of opportunities looking mostly on our transformation initiatives, which is, by the way, a never-ending journey.
I believe that learning how to work and to get progress on this new innovation digital environment will give us a lot of opportunities, and we will capture them. Bottom line, I feel very proud about the way we are facing the huge challenges and the way we face the huge challenge that we had specifically last year with the pandemic. I believe that in Gentera, we have a great team that will take the company and our customers' experience to the next level. Thank you so much to you for your interest and attention. Thank you to all the management team and the team that is working very hard for our customers. Thank you to our board members. Thank you all for your attention today. I hope we'll see you in the next conference call.
Looking forward.
Thank you all for participating in today's conference call. You may now disconnect and have a nice day.