Good morning, welcome to the second quarter 2021 Gentera's conference call. I would like to turn the call over to Mr. Enrique Barrera, Investor Relations Officer for 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 Ramírez, Gentera's Chief Executive Officer. Mr. Patricio Diez de Bonilla, Banco Compartamos's Chief Executive Officer. Mario Langarica, Gentera's Chief Financial Officer. They will review the results 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 if 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 will now like to turn the call over to Mr. Enrique Majós Ramírez for his presentation. Enrique, please go ahead.
Thank you. Good morning or good afternoon to everyone. Thank you for being with us in this second quarter 2021 Gentera's report. Welcome, and it's always a pleasure to be here with you. In our last call, we shared with you the first signs of positive results after a year of dealing with one of the most important global crisis ever. As we said last quarter, the first half of the year was going to be about controlling and consolidating our operations. Today, we are proud to say that we are delivering. Net income for the second quarter 2021 was MXN 663 million. This means a net improvement of MXN 1,383 million from the second quarter 2020, and a 72% growth compared with last quarter. Our ROE is back to double digits in 11.4%.
Because our good results at this point of the year, we have good news for you. We will increase our guidance for the year in this call. In summary, Mexico is showing outstanding results. At the same time, we are also aware of the uncertain social, political, and health environment that we are living, especially in Peru, and we will talk about this. However, we are confident that we are doing what we need to do to control and manage the challenges. We know that the context will continue to be complicated for everyone. However, last year we had a much more uncertain context, and we made it through successfully. We have the team, and we have the strategy to keep on growing and improving our value proposition in the current environment.
If I had to deliver just a single message today, I will say that we have control of the difficult context we are facing, and at the same time, we are putting our eyes on a promising future with very good perspectives. In this call, I will briefly talk about three things. The first one, our performance during the first half of the year. The second one, our expectations for the second half of the year. Third, we will talk about an update on our digital transformation strategy initiatives. Let me start by talking about the status of the business as of the end of the first half of the year. Results for Gentera are beyond expectations. In Mexico, we have good results and good perspective for the rest of the year.
NPLs is in 1.5% as of the second quarter 2021, which is an outstanding NPL level. Customer base has grown close to 4% in the last quarter, which also shows an increase in market share from 40% we had last year to 42% that we have now. Patricio will provide more detailed information about this, so let me now go to Peru. In Peru, we know the situation is complicated. We are proactively controlling and managing the business with good results, however. We reinforced our commitment in Peru with a capitalization of MXN 500 million. That will help us face any stress scenario. We believe we have a clear strategy to face the challenges of the current Peruvian context. Speaking about Guatemala.
As we communicated recently, we are selling our Guatemala's operations to Fundación Génesis Empresarial, an important NGO with long experience in our business. We have been working to transfer our Guatemala operations to a third-party institution. We wanted to focus our efforts on the main business that we have in Mexico and Peru. It is important to mention that Guatemala represented a very small, 1.5%, of Gentera's portfolio. In this move, the main challenge was to preserve the value that Gentera has created in Guatemala for the last 10 years. I'm talking not only about value in terms of number of clients, but also in terms of job creation. We now are proud to tell you that with this transaction, in the way that we have it executed, we accomplished this challenge.
From now on, we are going to be able to increase our focus in our strategy in Mexico and Peru, without losing the value that we created for the people in Guatemala along the past 10 years. What can we expect for the second half of the year? In summary, our strategy for the second half of the year can be explained in four points. First, we will keep focused on growth and portfolio quality in Mexico. Second, we will focus on the quality of the portfolio in Peru to successfully address the challenges that we are facing there. Third, we will accelerate our digital transformation process to gradually capture value, starting on the fourth quarter of this year. Fourth, we will keep our expenses under control.
Talking about the expected results for the year, even when we are reducing our expectations on Peru's results for this year, our outstanding results in Mexico will more than compensate our overall Gentera's results. Based on the first and second quarter results, we are changing our 2021 guidance. We are increasing our guidance. Earnings per share, plus MXN 0.85 to MXN 0.95. Our new EPS will be from MXN 1 to MXN 1.10. Portfolio growth will be at 13%-15%, so it remains as it was before. As you can see, EPS improvement comes mainly from better expectations on the quality of our portfolio, better margins, and a close control of expenses. Looking forward and talking about the digital transformation process.
As I mentioned in our last conference call, Gentera has to continue evolving to a more convenient and more efficient business model based on the tools that digital technology provide us. We have been in the digital transformation journey for a while now. More specifically, we created Fiinlab in 2016. Every company at any industry talks about digital transformation. However, the relevance of digital transformation is to use technology to really improve results for the customer and for the company. I feel very close to capture the value that this work will create for our customers, at the same time that Gentera achieves much better financial results. Let me provide some specific updates on the progress of our main digital transformation initiatives.
Our digital credit management platform, which, as you know, will allow us in Mexico, Compartamos Banco, to better control our processes, have a better segmentation of our customer base, and at the end, improve the productivity of our loan officers, will roll out in the first quarter of 2022. We estimate that with this platform, the following 24 months will be gradually improving our loan officers' productivity by at least 25%. Regarding Yastás, we continue improving our digital capabilities. We are migrating our core transactional platform from a traditional POS terminal to a mobile application. We expect to implement our new core by the first quarter 2022. By the second half of the year, our Yastás representatives will increase their productivity by two times, and functionality for our agents will improve in terms of their user experience.
Talking about ConCrédito, we are also having great progress on the transformation of its operations into a more digital business. As of this quarter, ConCrédito has successfully implemented a 100% branchless model, operating in more than 143 cities and 23 states in Mexico. This really is a great achievement. To the growth of CrediTienda, which as you know, is ConCrédito's marketplace platform. It will allow us to increase our efficiency by 25% in terms of our customer growth in 2022. To guarantee the success of our digital transformation plan, I am proud to say that we have partnered with McKinsey to help us implementing our transformation business strategy. We have been working with McKinsey together for the last three months now, and we expect to work together through this year and the next one. We are looking very good results from this partnership.
Working together with the support of McKinsey's methodology, planning and execution internal processes have clearly improved in only a few weeks. I feel very confident that their support will give us great effectiveness on the implementation and results of Gentera's strategy. Just to finish, let me share with you my overall thoughts about the times we are living in Gentera. We can face any crisis on a survivor mode, which means being defensive, or we can face it as an opportunity to grow and be proactive. In Gentera, we choose to be proactive. We proactively manage the business and control it by challenging the situations and facing them with courage. However, we are putting our eyes not only on the challenges of the present, but on a promising future. We really believe we have great growth opportunities ahead. As I always said, we have the best team ever.
People is the most valuable asset for any company, and our people is the most reliable guarantee to assure that we will successfully achieve our plans. Thank you for staying with us and supporting us with your trust. I will now pass the call to Patricio Diez de Bonilla, and then we will be happy to take your questions. Thank you so much.
Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. It's now over a year since the pandemic was declared, and since that moment, we have been very active implementing different plans to support our clients in these challenging times and giving them alternatives to reactivate their business. After 15 months of operating in different manner and adapting our processes to face the reality of the sanitary contingency, I can tell you that after the consolidation process that we started at the end of last year, the business dynamics have improved significantly. As you could see in our second quarter 2021 results, Gentera's financial subsidiaries showed very solid numbers and metrics. In the case of our largest subsidiary, Banco Compartamos, some of the financial and operational metrics reached in this quarter were even better of pre-pandemic levels.
To highlight some of the achievements in this subsidiary are, first, we have delivered 6 months of continued customer growth, attracting over 160,000 clients in this 1st semester, which took us to conclude the quarter serving 2.3 million customers. With the most recent figures published by ProDesarrollo, Arroyo Microfinance Network, Banco Compartamos holds 42% of market share in number of customers and 40% in terms of portfolio. An improvement from a year ago, where we had 40% and 38%, respectively. Second, we cleaned up the portfolio, which at the end of second quarter 2021 stood at MXN 21.5 billion in microloans. We delivered NPLs at 1.57%, which is the best level in the past 13 years. Customers value their good access to credit in Banco Compartamos.
A clear proof of better dynamics in the portfolio is the cost of risk, which for the first semester ended at 4.5% in Banco Compartamos. Third, now the portfolio is stable, and with strong asset quality, we're ready to grow. In this month of July, the loan origination is 20% higher than July 2019. We believe that this month alone will represent the most important in terms of loan origination in our 30 years of history. The previous record was reached in March 2021, when we disbursed MXN 10.3 billion in one month alone. This reflects the strong demand for credit in the market.
Fourth, because of better mixed performance between performing loans and non-performing loans, it has contributed to generate a larger interest income and lower levels of provisions compared to what we originally anticipated, and thus improving margins. These dynamics, along with other improvements in net commissions and cost control initiatives that Mario Langarica will address in his remarks, have supported to deliver a very strong second quarter, reaching a net income of MXN 895 million in Banco Compartamos, representing 191% recovery compared to the second quarter.
Our best result for any given quarter over four years. Another important metric to highlight is the excellent figure reached in the turnover rate in our employees, which stood at a record low of 14.5% for the last 12 months. This is very relevant for us. This is proof of the good and safe work environment that Gentera and Compartamos promote and generate for their employees.
It more also is very important for us because as we retain employees, we have a more experienced loan officers that will serve in a better way to current and future clients. As you can see, Banco Compartamos is experiencing very solid performance, and our expectation is to keep this good momentum in the following months and with no doubt in the coming years. Let me briefly jump to the Peru and Guatemala financial subsidiary. The case of Peru, Compartamos Financiera, it feels facing challenges related to the impact of the economic activity generated by COVID-19. Of this, we have taken different actions to support this operation. Our biggest concern locally has been the quality of the portfolio. To deal with this risk, we have taken different actions. First, we restructure loans to those customers in need. We have now 88% of the portfolio in on time.
Second, to those customers delinquent, we also offer discounts to keep them motivated to pay on time. Third, we reinforce these actions with a strong incentive program for our loan officers. Despite these actions, the default for the quarter stood at 4.6%. The remaining 7.7% still has between 1 and 90 days behind the schedule and is our focus for collection. Now that we have this clear visibility at the end of the quarter, Gentera capitalized MXN 500 million in Compartamos Financiera, generate additional reserves to absorb potential losses while maintaining a strong capitalization locally. Other risk that we dealt recently was the interest rate cap that was imposed at 83.4% on July 1st, 2021. Such regulation affect exclusively the group lending portfolio, which represents 21.4% of the loan book in Peru. To mitigate the impact, we have taken different actions.
First, we have increased the minimum ticket by 30%. This will allow us to generate larger interest income despite the smaller rate. Second, the length of the loan was increased by one month or 25%. This measure allow us to reduce the cost of the renewal process. Third, we have reduced our staff by 14% in this portfolio and closed four branches that were not productive and the potential market was not large enough to maintain them. Fourth, we started a fee-related income for the product to generate other income with the same customers. All these actions will allow us to have an impact of MXN 60 million in this portfolio this year, and we expect to go back to profitability in 2022. After the actions taken this semester in Peru, we believe that the worst operation we think for this subsidiary is behind us.
We need to maintain our effort in understanding the customer needs, developing alternative to meet and maintain a strong team in the country to manage the volatile environment that we are facing. We are confident and committed to our Peruvian customers and team because Compartamos will make a difference locally. Regarding our Guatemalan operation, on July 5th, we formalized the transfer of our loan portfolio business and operations to Fundación Génesis Empresarial in that country. This decision was aligned with the strategy and priority that we have outlined for the following years, where we will focus our efforts and resources to better serve our clients in Mexico and Peru. Gentera found in Fundación Génesis Empresarial a great ally to give continuity to the service expectations of the clients served through Compartamos.
As a result of this decision, this was the last quarter in which Compartamos Guatemala will be consolidated to Gentera's financials. I want to take this opportunity to recognize and thank all the contribution commitment that the Compartamos Guatemala teams had in our 10 years of history in the country. Helping us adapt the group lending model in Guatemala and bring credit access to the underserved population in this country. To finalize my remarks, it is important to highlight that even with the current challenges, the implementation and execution of the plan followed in the past months is paying off, and we continue with a very strong financial position and a strong operational performance. All of this has been supported by our team, who is fully committed to serve more clients in this year and in a more efficient and digital manner in the future.
The size of the financially underserved market in Peru and Mexico is still very large, and we are certain that we will capture the opportunities that arise in this and following years, and in this way, being the best financial provider in our segment. Once again, many thanks for your continued support to Gentera and for your interest in following our transformation process to become the best and most convenient financial option for the low-income segment of the population. For now, we will keep working hard on supporting our clients in their path of economic recovery and fulfillment of their dreams. I will now hand the conference to Mario Langarica, who will review Gentera's second quarter financials. Thank you all. Mario, please go ahead.
Thank you, Enrique and Patricio, good day to everyone. I hope that you and your families remain safe and healthy. I would like to focus my 2 Q 2021 presentation in the following remarks. One, the improvement of our margins. Two, the adequate level of allowances and healthy NPLs cost of risk and coverage ratios. Three, the continued growth of our net income. Four, the strength of our liquidity funding and capitalization positions. Five, a quick note on two corporate events recently announced. One, our margins have kept improving. As mentioned before, Gentera's total loan portfolio amounted to MXN 39.1 billion in 2 Q 2021, a 1.9% contraction compared to the figure reported in first quarter 2021, and 3.9% smaller compared to 2 Q 2020. It is important to note that the contraction of this quarter was mainly driven by the FX consolidation effects of Compartamos Financiera Peru.
Since at local currency, we observed that all performing loan portfolios grew quarter- to- quarter. Interest income grew 8.7% compared to the previous quarter, mainly driven by better-performing quality at Banco Compartamos portfolio. We have also been able to reduce 7% interest expenses through active liability management. These result in net interest income growth of 10.5% quarter- on- quarter and NIM improving to 35.2% in 2 Q 2021 compared to 32.1% in first quarter 2021 and 29% in fourth quarter 2020, showing a consistent recovery trend. Provision for loan losses at Gentera amounted to MXN 1.16 billion, representing a MXN 440 million increase compared to first quarter 2021 after a provision of MXN 304 million in Compartamos Peru to cover for potential losses in its loan portfolio through September.
Even after this additional provisions in Peru, and supported by the outstanding risk dynamics in the loan portfolio of Banco Compartamos, net interest income after provisions amounted to MXN 3.948 billion, resulting in a NIM after provisions of 27.2%, slightly above to the one reached in 2Q 2021, but more than double to the one presented in 2Q 2020 of 13.5%. It is important to highlight that we expect to see NIM before and after provisions moving closer to 40% and 30%, respectively, by the end of the year. We should expect further improvement in these ratios. Cost of risk stood at 11.7% in 2Q 2021 and 9.4% for the first half of the year, thus moving below the low end of the range guided for the year at 10.5%. Net commissions also showed an improvement, mainly driven by our insurance business and other fee collections.
Operational expenses had a 6.7% contraction compared to first quarter 2021. Considering the first semester of this year, expenses amounted to MXN 6.9 billion, representing a 5.9% growth compared to the same period of 2020. We are maintaining our 10% guidance growth area of expenses for the year, mainly driven by planned increases in expenses, some inflationary adjustments, and effects of the consolidation of ConCrédito , as mentioned in the past. Second, we have sufficient allowances based on the observed trends, sound asset quality, and improving NPLs. Allowances amounted to MXN 3.2 billion on a consolidated level with a coverage ratio of 280.5%, above 228% presented last quarter. NPLs amounted to 2.96%, improving compared to the 3.74% and 3.79% of first quarter 2021 and 2Q 2020. As we have mentioned before, most of the original pandemic impact has already been reflected and absorbed in our income statement and capital base.
Three, net income has kept growing, maintaining a positive trend. Gentera second quarter 2021 net income amounted to MXN 653 million, 72.8% above first quarter 2021, with Banco Compartamos showing an impressive growth compared to the previous quarter of 186%. The controlling company's participation in net income amounted to MXN 595 million, resulting in the equivalent of MXN 0.37 EPS. Four, we maintain strong liquidity, funding, and capital positions. Gentera concluded 2Q 2021 with a very robust liquidity position amounting to MXN 20 million. Liquidity levels at each subsidiary are solid and sufficient to fund our expected loan for the rest of the year, and are strong to face additional challenges and/or opportunities in each local market. Access to funding continued strong, and we keep working hard on maintaining excellent communication with all our relationships to maintain this.
Gentera's strong capital-to-asset ratio amounted to 33% in 2Q 2021, and Banco Compartamos concluded the quarter with a 36.9% CAPA. Compartamos Financiera with a solvency level of 17.7%, and ConCrédito with a capital-to-asset ratio of 69%. Finally, I would like to inform you about two important events that happened at the end of the second quarter and at the beginning of July that have already been presented above. First, on June 25, Gentera made a MXN 500 million, PEN 99 million transfer to Compartamos Financiera in Peru to increase its capital reserves and to strengthen its capital position. This to support the additional provisions of MXN 304 million mentioned before. Second, on July 5th, Gentera announced the transfer of Compartamos S.A., Guatemala's loan portfolio business and operations to Fundación Génesis Empresarial. This transition process will be concluded during the third quarter of this year.
It's important to note that the potential expenses of this transfer have already been reflected in Gentera's 2Q 2021 income statement, amounting to MXN 207 million. The Compartamos Guatemala loan portfolio and other lines related to the balance sheet will be out of the consolidated balance sheet in the next quarter. Finally, and recognizing that we still are facing a challenging environment, we're very proud and enthusiastic about the results delivered so far. Particularly, Banco Compartamos and ConCrédito have already delivered ROEs above 20% for the first semester of 2021. We are very motivated with the plan for the second half of the year. We have clear objectives that should drive revenues, that, along with a normalized and monitored cost of risk and adequate expense control, would allow us for additional improvement in margin and profitability levels. Thank you all for your attention.
This is all for my presentation, and we can now move forward to the 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. One moment as we poll for questions. Thank you. Our first question comes from Ernesto Gabilondo with Bank of America. Please proceed with your question.
Hi, good morning, both Enrique, Patricio, Mario, and good morning, everyone. Congratulations on your Mexico operation. My first question is on your sensitivity to interest rates. Can you remind us what is the potential impact of an increase in the interest rates of 100 basis points in 12 months? My second question is on competition. We have seen a lot of competitors looking to attend the low-income segment, such as new digital banks like Banorte, Nubank, Klarna, Coppel, and other fintechs. I believe the expansion of the Mexican digital banks will be rational. Nubank and other fintechs tend to take market share and then worry about profitability in the long term. Considering your experience with Azteca in 2010, they entered aggressively in the market, and forced you to grow for a couple of years, how are you preparing against competition and for a potential indebtedness in the sector?
Finally, my last question is related to cap rates in Peru and in Mexico. In the case of Peru, Castillo will appoint the new head of the central bank, plus three new members out of seven. The current bill, and it's already implemented by Julio Velarde, will pose to the rate rate and establish it at the table with the industry. We will have more news on this this next September. How are you positioning from an eventual tougher cap rate in Peru? Then for Mexico, specifically about a potential usury rate in Mexico, do you think this could be a problem for one of your products? I think for the traditional business of Gentera, I see no concern.
For example, when looking to ConCrédito, we're seeing that the final client is having an interest rate of 120%, while in the online market there's an average interest rate of 100%. We still have many requirements from ConCrédito. How are you seeing the potential risk of this usury rate in Mexico? Now that you have been talking a lot of digitalization, are you expecting to lower rates in order to align ConCrédito's interest rates with the traditional Gentera's products? Thank you.
Thank you very much, Ernesto Gabilondo. I'll answer the first one, and then Enrique will continue. As you know, we have been, during the years, having a very active liability management strategy. Regarding a potential increase in interest rates in Mexico particularly, we already have part of that potential increase in our projections. Also, as you know, we have flexibility in moving between fixed rate and variable rate, and we have already started positioning for that potential scenario. Also remembering that we still have a large funding position with the liquidity in our balance sheet, that we think that we can also manage in order to maintain our expenses level in an adequate level.
Ernesto, this is Enrique. Let me talk a little bit about competition, FinTech, and the concerns that you put it in the table. I will start by saying that, yeah, I believe that these FinTech players will definitely become more and more relevant. I think that in any case, and this is our experience since we started our innovation lab and Fiinlab, the more critical challenge that we are all facing with all the players that we are trying to do something in the digital world, is a risk assessment model. I think that technology gave us a lot of benefits in terms of customer experience and even cross-selling and segmentation, et cetera. The really, really big challenge that we have there is in risk assessment models.
As you are saying, the major risk for upgrading or upscaling any of these models is to be very careful with the delinquency. That's the reason we believe that our strategy is the right strategy to go through. And I mean, as you can see in my explanation, what we are doing is we are combining the digital touch with customers with a human touch. We are combining what the technology provide us to do a better risk assessment model through algorithms and artificial intelligence. We are also doing it on top of our traditional operations. That's the case of our digital platform to assess the credit that I talked about.
We have to be very careful with delinquency, but I believe we have the winner formula here because we are going to be very close, not only to provide the customers more convenience in the way we deliver the product, but also in the way we assess the risk with these new technologies, which as I said, I think is the main challenge that we are all facing. When I say we, I refer to all the new FinTech players. Yeah, I think there's a great opportunity there, and we have to go with a very clear strategy to capture that opportunity. Let me put together my answer with your questions around ConCrédito. Yes, I think that what ConCrédito is very powerful, and the reason we believe it's a very strategic business for Gentera, is because it offer us mainly two strategic advantages.
The first one is that we are providing new products, new consumer products, and that's increasing our product offer. On the other hand, it gives us a new strategic distribution channel with more than 50,000 empresarios. I know we all understand this, and the concern comes more in terms of the interest rates. As I said, we are making a lot of progress and putting in digital technology the operations. We are capable now to operate branchless. That will bring us efficiencies. Eventually, we think that we can capture those efficiencies and bring down, as far as we can, the interest rates to customers. Just to complement on this thing, it is also worth to remember that in Mexico, we don't have interest cap initiative.
We have an initiative that Monreal put it, and it's related with the same mandate that Banco de México had before in terms of regulating rates and commissions. We don't see, in the short run, a threat in terms of interest rate cap in Mexico. Well, I believe that can answer your question, and I think Patricio has the answer for the third one.
Thank you, Ernesto. As you know, the interest rate cap risk has always been there, and we actually manage the risk. In Peru, as you know, the 83.4% is now in play. As I mentioned during my remarks, we've taken actions to increase the ticket size to reduce the operational cost. We will continue to work to find ways for profitability to make this product work despite the fact of this outbreak. Again, as you mentioned, this might be revised over time. Again, the message here is that for financial inclusion, having such gaps are not necessarily good, and there's data to prove this information. We, as any other administration, need to go and talk with the new government in Peru, see and talk, as we've done in the past, about why the cost is where it is.
This is a process that we normally do, not only in Peru. We also manage the risk in Mexico. Again, what we can do today is talking with regulators. In Mexico also, we will have a new Congress by September. Again, we need to go through the process and talk with these legislators in case the bill is again proposed. What we could do in the meantime is what Enrique mentioned of our digital transformation and try to have a lean process, efficient model, digitized processes to be able to reduce the cost and be able to also reduce the rates as we gain economies of scale. Again, this is, as I said, a risk that has always been there. We manage it, and we don't think that it's a higher risk today in Mexico than it has been in the past.
In Peru, again, with the actions we've been taking, the impact is today small, and we expect that with the actions that we take, the profitability of the product will return in 2022. Hope to answer your question.
Yes. Thank you very much, Enrique, Patricio, and Mario Langarica.
Thank you, Ernesto.
Thank you. Our next question comes from Juan Recalde with Scotiabank. Please proceed with your question.
Hi. Good morning. Thank you for taking my question. My question would be related to ConCrédito. We saw the client rising around, I think, 17% quarter-on-quarter. The portfolio was 13% quarter-on-quarter, and the ROE was close to 19%. Things are looking quite good there. I was wondering how big can this business become, and what portion of your earnings could be generated from ConCrédito in the mid to long term?
Juan, thank you for your question. Yes, ConCrédito is looking very good, and we are very excited with the results and the perspective this has in the future. As you said, the growth is being quite good. We expect that with all the transformation that we're making on the operation with this digital platform that I talked about, we are going to continue on this path. Now we are looking at a growth of around 13%-15%, and we believe that for the next month, maybe the next 12 months, we could see the growth around 20% or even a little bit above 20%. That looks good. Yeah, the other thing that is worth to explain is that as you can see, the net income for ConCrédito this quarter was less than the previous one. It was because we made some.
Related to the change in our insurance company. We just made those reserves, and if we discount that effect, we would have had an additional MXN 37 million net income. It is looking good. It is looking good, and we are very excited about what we are doing with ConCrédito.
Thank you, Enrique.
Thank you. Our next question comes from Ricardo Buchpiguel with BTG Pactual. Please proceed with your question.
Good morning, everyone, and congrats on the very strong results. I first just want to confirm your 2021 guidance of MXN 1-MXN 1.1. Just to understand, if you analyze the EPS for the Q2 quarter, we'll be talking about around 1.5 EPS. Probably, this guidance is saying that we should see some acceleration on earnings for the second half of the year compared only to the 2 Q of 2021. Mainly, I want to understand, if this is the case, is it mainly related to top line dynamics or perhaps some effect on the Peruvian subsidiary? For my second question, I wanted to understand a little bit more, what is the rationale for the operation expenses that you book in terms of the exit to Compartamos Guatemala, right?
Just you have a bit more light on what premises were used to reach these around MXN 270 million for the quarter. Thank you.
Thank you very much. As you mentioned, we guided 1 to 1.10 EPS for the rest of the year. We still think that we have some wins on the environment. We need to be very careful about the next quarter. We have the next semester. We're very confident on the growth, that's why we clearly believe that our results are going to be very positive. We still need to see how the rest of the year develops, mainly in Peru. Also, as I mentioned in my remarks, there are some operational expenses that are expected to happen in the second semester related to increases in some expenses, mostly driven by inflation. That's why we are putting our guidance in those levels. Regarding the MXN 270 million of expenses booked at the Guatemala subsidiary, that is the net effect of the transaction.
Considering all of the effect that will result in the transfer of the portfolio and some of our colleagues moving to Fundación Génesis Empresarial, the net effect of the transaction represents those MXN 277 million, and that's the rationale behind it.
Very clear. Just one quick follow-up. You mentioned that higher operation expenses will impact earnings for the second half, like. There's still uncertainty on Peru. This will also reflect a bit in the NII and fee income estimates, right? We should expect maybe a lower NII or a lower fee income when compared to the 2Q 2021, which was very strong, right?
Oh, NII, as I mentioned before, the margins will improve. It's more related to the provision. Well, part of the provision, but we expect both the NIM before provisions and after provisions to reach the levels that I mentioned, around 40% and 30%, and the operating expenses will come at the lower line.
I see. Thank you.
Thank you. Our next question comes from Yuri Fernandes with JP Morgan. Please proceed with your question.
Hi, everybody. Hi, Patricio, Mario, Enrique. Good morning, everyone. Again, congratulations on the results. I have a 1st question regarding the consolidated earnings, the MXN 650 million. When you look to the subsidiaries, right, when you try to add Mexico, Peru, Guatemala, ConCrédito, and even the data that you report for the 1st half, I guess you just had the 1st half for Aterna and the other non-bank businesses you have. There is still a portion of the earnings that I cannot know where it's coming from. I thought it was related to the non-bank business, but I feel I can't guess. I guess my point is, for the MXN 250, where is this other earnings coming from? Historically, when we look, the main subsidiaries, they were about 90% of the earnings, right? This quarter, they were about 80% of the earnings.
I don't know if you're holding helping. I thought they were holding the cost center, not providing earnings. I don't know. The first question is more to understand where the portion of the earnings are coming from to help them with MXN 660. My second question is regarding the asset quality for Mexico. It has been great, and I guess you did a very good work charging off bad clients, originating just for the sectors that you think are better during COVID. Still the cost of risk, they are below 4%. Historically in Mexico, the cost of risk were 8%, 10%. My point is, do you think because of this better origination, you can keep the cost of risk low for this year and maybe just 2022, we start to see cost of risk in Mexico perhaps moving back to the normal levels?
We should start to see cost of risk in Mexico start to increase, because again, 4% seems to be a very good number. Again, my point is, how sustainable the cost of risk in Mexico is, and how long should we continue to see this level of provisions in Mexico? Thank you very much.
Hello, how are you? Thank you very much for your question. Yes, most of the earnings have come from Mexico, as we have already explained. Compartamos is a very important driver. ConCrédito is a very important driver. Also, Yastás and Aterna have kept contributing to better performance. All the four subsidiaries in Mexico are performing well and contributing to the earnings.
You report the earnings of Aterna, Yestas, directly reporting the earnings for the first half of the year, not the second Q. Even adding this, there are still like MXN 100 million that I don't know where they come from.
Yeah. We don't. Also, Compartamos Servicios, they have given you the disclosure. If you want, we can have a conference call to go through the details of each one.
Okay, that would be great.
In terms of asset quality, Yuri, yes, it's a number that is even better than the one we were expecting, and this is for many reasons. Of course, origination has been key. The monitoring process that we follow with the customers throughout the length of the credit is also helping. As I said during my remarks, even the fact that the competition is getting weaker, as Compartamos has become one of the most reliable sources of funding, customers are trying to keep a good credit history with us. They are paying us back on time. Again, now this is the best NPL that we've had for the last 13 years. Today, we have not been growing much the portfolio. The portfolio has been stable for this semester. This second part of the year, it will be more of growth.
We aim to grow double digits for the year, and we are flat as of June. As you know, as we accelerate, we increase new customers who tend to be riskier at the beginning. Once we season the customers throughout the cycle, they become much better customers and more stable asset quality. To resume, yes, today it's a very low point with some deterioration as we grow, but this will be seen on the first half of next year. Our aim is to keep the cost of credit as low as possible. Again, thinking about the sustainable one, 8% is the one we had in the chat. We aim to have something around there for 2022, it's not something that you will see in this year.
Super clear, guys. Thank you very much, and again, congrats on the solid results in Mexico.
Thank you, Yuri.
Thank you. Our next question comes from Jorge Henderson with Santander. Please proceed with your question.
Hello, thank you very much for the presentation, and also congratulations for the results. Just one question. This is regarding asset quality in Peru. Where do you see the NPL ratio looking on the Peruvian subsidiary? At what levels do you see NPL ratio looking? That would be my only question. Thank you.
Thank you. As we live in Mexico, you remember that back in September, we provisioned the potential losses that we were expecting in Mexico, generating losses during the third quarter of last year. Once we took the hit, even though the asset quality deteriorated in October, November, the reality is that expense for provisioning didn't move a lot. You shouldn't be worried as NPL increases in Peru. Because we have now provisioned most of the excess losses that we have for these subsidiaries. As you know, our write-off policy in the group is to write off loans of 180 days of arrears. We provision today what we expect to lose for the coming quarter. You might see a spike in NPL, but not necessarily a higher provision cost for these subsidiaries.
If it moves to 7%, 8%, and then we'll be writing off those loans, that's the normal process that we did in Mexico, and we expect to happen in Peru. The good news is that we already generated the provisioning. We have the strong capitalization, and this is not now a concern as it was a couple of months ago. Now we have a clear visibility on what you should expect for the coming quarters.
Thank you very much, Roger.
Thank you. Our next question comes from Carlos Legarreta with GBM. Please proceed with your question.
Hi. Thank you. Good morning, and thank you for taking the question. Just regarding the credit portfolio growth of 13%, that is for the entire year, for the entire company, right? Does this include the movements of, say, the consolidating Guatemala versus consolidating only ConCrédito for half of last year? I think that puts a little noise into it. Perhaps you could comment on Mexico, particularly Compartamos, what are the expectations in terms of portfolio growth? Thank you.
Yes. The growth is we're maintaining the guidance that we gave at the beginning of the year. Most of the growth will come from Mexico. We also expect to see some additional growth from Peru. The main driver will be Mexico. As we have already mentioned before, Guatemala will be out of the consolidated numbers in the next quarter.
Okay, thank you. I apologize for this because I did miss the sensitivity to interest rates that you provided, I think earlier in the other questions. Could you repeat that for us, please?
Yeah, sure. What I said is that we, as most of the market, expect some growth in the reference rate of Banxico. We have part of that considered in our projections. As I mentioned before, we have liability management tools in order to mitigate the potential effect on the interest expenses. We have part of the portfolio in fixed rate. We have the ability to move from variable to fixed, and our variable levels are very cheap at this point, and it makes sense to stay with variable rate at some point. The last point that I mentioned before was that we have this excess funding that we can also reuse it in order to mitigate the potential growth in expenses.
Okay. That makes a lot of sense. I appreciate it.
Just to add, Carlos, to your question about the portfolio in Mexico, just remember that in Mexico we will have now, and it's becoming more relevant, the combination not only of the portfolio in Banco Compartamos, but also the portfolio of ConCrédito. The result in the growth of portfolio in Mexico will be the combination of those two businesses.
Absolutely. Thank you.
Thank you. Our next question comes from Ricardo Benavides with HSBC. Please proceed with your question.
Okay, my question has been answered.
Our next question comes from Gilberto Garcia with Barclays. Please proceed with your question.
Hi, good morning. Thank you for the call. Given the fairly consistent improvement in positive trends, would you be able to provide sort of a rough guidance of what your expectations are for 2022? Following the departure from Central America, I know that Peru is significantly larger for your overall portfolio, but would you consider divesting Peru and to just focus on Mexico? Thank you.
Regarding 2022, obviously we will provide the guidance by year-end, but what we mentioned in the past is that we expect that in 2022 we will be able to reach a ROE above 2019. That's what we have said in the past. The specific guidance will obviously, we will give it at year end or year start.
Gilberto, regarding your second question, the divesting in Guatemala, as I explained, is for a very clear and strategic reason.
Mexico and Peru because we see great growth opportunities, and because we see that if we transform into a more efficient company through technology, we have a lot to take out of, talking about value in Mexico and Peru. In the shorter run, we will concentrate in Mexico and Peru. Maybe in the future, we will be talking about any other expansion, but not at this point, not for the following, at least two years.
Understood. Thank you very much.
Thank you. There are no further questions. I would now like to hand the call back over to management for any final comments.
Well, thank you all for staying with us in this call. It was a pleasure again. Just to point out maybe two or three takeaways. The first one is, I believe it is clear that we are proactively managing and controlling the challenges and the difficult situations that we are living all over the region. Well, we feel comfortable about the way we are controlling the situation. The second thing is that, as you can see, we expect very good results for the second half of the year. I think we have the elements, we have the strategy, and mostly we have the team to execute a very good second semester. Third, that we are very excited about the value that we will capture through our digital transformation initiatives.
We are preparing ourselves to have a very good 2022 year in terms of capturing value through new technologies, through improvements in the way we serve our clients, and through the efficiencies that we will capture through technology. Thank you so much for staying with us. Thank you for your interest, for the follow-up, and for the support that we always receive from you, and have a nice day.
Thank you for your participation in today's conference call. You may now disconnect. Have a wonderful weekend.