Good morning, and welcome to the third quarter 2022 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 Flores, 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 chief executive officer, and Mr. Mario Ignacio Langarica Ávila, Gentera's chief financial officer. Enrique Majós Ramírez and Mario Ignacio Langarica Ávila will present Gentera's results for the third quarter period and nine-month period of 2022, as per the report that was issued yesterday. Patricio Diez de Bonilla, along with Enrique and Mario, will actively participate in the Q&A session of this conference call. Please note that during this presentation, Gentera may make forward-looking statements. These do not account for future economic circumstances, industry conditions, and 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 would now like to turn the call over to Mr. Enrique Majós Ramírez for his presentation. Enrique, please go ahead.
Thank you and good day to everyone. Thanks for your interest in Gentera. As always, your presence and participation is very encouraging for us. We are proud to announce that this quarter Gentera results are again showing record numbers. In fact, we have been showing sustainable growth along all this year. These results are not only limited to our financial results, we are also improving the product offer and financial services that we provide to our customers. At the same time, our digital transformation journey continues rolling out through the strategic initiatives we have described in previous calls and conversations with you. Let me be more specific and update you in the three main economic engines of Gentera: Banco Compartamos Financiera, and ConCrédito.
Banco Compartamos in Mexico is clearly showing very solid growth in its loan portfolio with a healthy asset quality and with good profitability levels. Due to our solid position in the market, we are being able to attract more customers and at the same time increase the balance and share of wallets of our existing customers. Compartamos Financiera has had an outstanding recovery path even under the complicated economic and political conditions that Peru is living. Portfolio growth, asset quality, and profitability are already showing a strong recovery compared to the past couple of years. In Peru, we are having now similar dynamics to the ones we had in the pre-COVID years. ConCrédito is showing growth as expected. The synergies with Banco Compartamos has been very relevant for the portfolio growth of ConCrédito.
On the other hand, NPLs have had a slight increase in the last quarter, mainly as a consequence of the aggressive portfolio growth and geographic expansion. However, we see this increase as part of the cycle of growing and controlling, which is a very natural formula and dynamic in the micro-lending business. Having said that, Gentera's loan portfolio concluded the third quarter at MXN 51 billion, which means a 27% growth versus the same period 2021. The accumulated net income during this year has grown 126% versus the same third quarter of last year, reaching MXN 3.8 billion. Additionally, our overall portfolio quality is remarkable. Gentera continues presenting sound and stable levels of asset quality, showing now a consolidated NPL of 2.9%.
It is also important to mention that despite the context of economic slowdown, in the last nine months, Gentera has disbursed the largest amount of loans in our history, over MXN 120 billion. Our transformation strategy continues showing relevant progress, and we have been able to accelerate the benefits of some of these initiatives. A proof of this is the productivity of our loan officers in Mexico, which has increased over 30%. As a result of the use of data intelligence and algorithms, we have been able to increase the share of wallets of our own customers through an effective cross-selling strategy while maintaining a healthy portfolio. In summary, regarding our business results, let me point out the following. One, Banco Compartamos's loan portfolio has grown better than expected. Two, Peru performance has been recovering and improving better and sooner than expected.
Three, ConCrédito is growing as expected. Four, Gentera's overall asset quality has remained in the best levels ever. Five, expenses have been well-managed, and they will remain under control. Six, as a direct consequence of all of the above, we have a nine-month accumulated net income of MXN 3.8 billion this year. Finally, seven, our team has been fully committed to operate efficiently, being disciplined with our methodology, and providing our customers the service that they deserve. Around one year ago, we said that 2022 was going to be the year in which we would return to pre-COVID business results. As of the third quarter of the year, we can definitely say that we delivered. What can we expect for the end of this year?
With the outstanding dynamics reached so far, our expectation is that our EPS will close between MXN 2.82 and MXN 2.95. This is great news. This new increase of our guidance can be explained mainly by the combined effect of three elements, which in every case were above expectations. One, a better portfolio growth, two, a better asset quality, and three, lower expenses. Let me finally move to some good news that I want to share with you today. Yesterday, our board of directors decided to submit to our shareholders' meeting the following. First, for the shareholders' meeting taking place this November, the board will submit for approval an extraordinary dividend payment of MXN 469 million. This represents a 20% dividend in addition to the one that was distributed in the first half of the present year.
If this is approved, the dividend will be paid no later than November 23rd. Second, for our annual shareholders' meeting to be celebrated in April 2023, the board will also submit for approval the proposal of returning to a dividend payment up to 40% of the net income generated in 2022 results. As CEO, I am happy to announce these resolutions. For me, this is a recognition to your support as investors along the difficult times we have all faced in the last years. Just to make it more explicit, thank you for being in Gentera, for supporting the team, and thank you for supporting the clients that we serve. Well, this is all for my remarks.
Now let me turn the call to Mario, who will explain more details about the recent results and our expectations for the rest of the year. After this, Patricio, Mario, and myself will be happy to take your questions.
Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique signaled in his remarks, we are very enthusiastic with the results we're presenting and what we have achieved in the past couple of years. Now, as we have done in previous conference calls, we will focus our remarks on the following concepts. One, our strong and improving net income generation and profitability, with strong liquidity and capital positions. Second, our portfolio growth and the performance of our margin. Third, our asset quality, including cost of risk, allowances, NPLs, and coverage ratios. Four, our operational expenses, and five, our expectations for year-end. In these remarks, we will compare 3Q results and metrics to their 2021 comparables, but more important, we will continue comparing some of these results and metrics to 2019.
That was the full quote normal year before the pandemic started. Also, it will be very illustrative to see the progress seen in the nine-month periods of this year compared to 2021 and 2019. Now let me start. One, net income continued growing well above pre-pandemic levels. Gentera 3Q 2022 net income amounted to MXN 1.514 billion, and it is the highest quarter ever. Gentera controlling participation in 3Q 2022 amounted to MXN 1.501 billion, representing an EPS for the quarter of MXN 0.95.
On an accumulated nine-month basis, net income amounted to MXN 3.83 billion, showing a strong growth of 127% compared to 2021, and 52.8% compared to 2019. As of September, the accumulated EPS is at MXN 2.35, representing 58.8% growth compared to full year EPS in 2021. Important to note that we have a positive MXN 180 million non-recurring discontinued operations income in the quarter. Gentera's 3Q22 total and controlling ROE amounted to 33.7% and 26.1% respectively. For the nine-month periods, these ratios amounted to 20.2% and 22.2% respectively, compared to 17.6% in 2019.
Important to note that Banco Compartamos, our largest subsidiary, reached very strong levels of ROE at 32.9% and ROA at 10.4%. All of this maintaining very healthy liquidity positions in 3Q 2022 amounting to MXN 11.8 billion and strong capitalization levels. At 3Q 2022, Gentera's capital to assets ratio amounted to 34%. Banco Compartamos capital and equity ratio or ICAP amounted to 38.2%. In Compartamos Financiera, solvency level amounted to 19.1% and capital to assets ratio to 52.8%. As we have mentioned in different conference calls, we have strong access to different and incremental funding options for the holding company and our subsidiary. We have kept a healthy balance in the composition of our liabilities in short and long tenors and in fixed and floating rates.
Liquidity levels for Gentera and its subsidiaries are solid and sufficient to fund the growth and are and to face the opportunities that this year and the next will bring to the company. Second, our portfolio has kept growing to reach a new record and our margins have continued improving. As mentioned by Enrique, Gentera's 3Q 2022 loan portfolio reached a new historic level of MXN 51.4 billion, growing 37.2% compared to 3Q21 and 30.4% compared to 3Q 2019. This performance make us believe that we should finalize the year with a portfolio growth around 17% at the high end of the range guided for 2022, expecting to reach our highest ever historic portfolio. We have also observed continuous improvement in our margins.
Accumulated net interest income for the nine months of 2022 was 23% higher than the nine months of 2021, and 19.7% higher than the same period in 2019, representing a 4.2 NIM in the nine-month period of 2022. These results were mainly driven by a 26% growth of accumulated interest income compared to the nine months in 2021, coming from the portfolio growth of 33% in both Banco Compartamos and ConCrédito and 70% portfolio growth in Compartamos Financiera. It is important to remember that the interest expense line now reflect the expenses associated to the credit origination and leasing agreements, which were reclassified from 2022 onwards, according to financial reporting standards in Mexico and IFRS. Second, the financing expenses.
For your convenience, now we're presenting the effects of these lines in a separate line, so you can identify the movements more easily. In the nine-month period, financing expenses represented MXN 1.868 billion, a 25.5% growth compared to the first nine months of 2021. While expenses associated to credit origination represented MXN 459 million. Accumulated nine months 2022 provisions for loan losses amounted to MXN 3.67 billion, a higher level compared to MXN 2.8 billion registered in the first nine months of 2021. The higher level of provisions is explained by the strong growth of the portfolio in all our subsidiaries and the changes in the provision methodology and its new entrepreneurs profile.
Growth in provisions was compensated by NII growth, resulting in a nine months accumulated net interest income after provisions of MXN 14.56 billion. A 21% growth compared to MXN 12 billion in 2021, and MXN 12.1 billion above 2019, resulting in a nine months NIM after provisions of 32.1% compared to 28% in 2021. It's important to say that even considering reclassification impacts in the interest expense line described above, the NIM after provisions reach a 3Q 2022 32.3%, and it's slightly above the one reached in the 2Q. It's the best level since the pandemic started. For the year-end, we expect NIM to close around 38.5%, and NIM after provisions around 30.5%.
Regarding asset quality, cost of risk for the nine- months period show it stood at 9.9%, better than the 10.5% guided for the year. Allowances amounted to MXN 3.99 billion on a consolidated level. As of today, we still maintain around MXN 100 million in additional reserves in Peru. NPLs stood at 2.9, an improvement compared to 3.03 in 3Q, and similar to this, to the ratio seen during 2019. Worth highlighting is that Banco Compartamos and Peru continue showing very stable asset quality performance. Our coverage ratio in 3Q22 amounted to 268, which is basically the same level presented in 3Q 2021. Our operational expenses.
Our operational expenses for the quarter stood at MXN 3.7 billion, which is basically at the same level of last year. For the nine-month period, expenses stood at MXN 11.076 billion, representing a 3.7% annual growth compared to that same period in 2021, and 8.9% above 2019. Once again, it's important to note that expense linked to credit origination and leasing agreements are now reflected in the interest expense line above, as explained. Considering all of these changes, we expect to grow the operational expenses around 5.5% compared to 2021, which is lower than the 9% growth signaled in previous conference calls.
It's important to note that we're expecting to incur in some proportionally higher expense level in the next quarter compared to 3Q, mainly driven by the acceleration of expenses and investment in transformational initiatives that we have explained in the past and communicated in the past. Five, last but not least, as you can see, and based on what we have just described, we expect to finalize the year with a very strong result, the best net income ever, in which we will have sound operational dynamics and margins, with a cost of risk below the 10.5% that we guided for the year, and which will always be closely monitored, and control and forecasted operating expenses that are mostly driven by BAU and the acceleration of transformational initiatives that we still will continue investing in this year.
With these dynamics, we feel confident that we will reach a loan portfolio, as I mentioned before, around 17%, and we expect to finalize the close this year with the highest historical net income. As Enrique said, we'll be between MXN 4.65 billion and MXN 4.85 billion, representing a consolidated EPS between MXN 2.82 and MXN 2.95, keeping our pace to reach our medium-term ROE objective of 20%. As Enrique mentioned before, our board of directors will submit for approval to our shareholders' meeting an extraordinary dividend of MXN 469.4 million to be paid this November.
For next year numbers, to propose to the shareholders' meeting to return to our ceiling of a 40% payout ratio, obviously subject to 2022 full year net income performance. Thank you all for your attention. This is all from our presentation, and we can move forward to the Q&A session.
Ladies and gentlemen, to ask a question, please press star one on your telephone keypad at any time. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one on your telephone keypad to ask a question. Please hold while we poll for questions. Your first question for today is coming from Ernesto Gabilondo. Please announce your affiliation, then pose your question.
Thank you. Good morning. Ernesto Gabilondo from Bank of America. Hi, good morning, Enrique, Patricio, and Mario, and good morning, everybody. I just want to say congratulations on your strong third quarter results, on your new guidance, and that can take you back to the 20% ROE levels, and again, offering a 40% payout ratio. Congrats on that. I have a question, and it will be on asset quality. We have seen an important expansion of the loan book, but also it has been followed by some deterioration in your products. I just want to double-check if that is explained because of the expansion of the portfolio. Related to this, we continue to see ConCrédito with still high NPLs. I think the ROE is around 17% on that business.
We'd like to hear your last thoughts on ConCrédito and your strategy for the medium term? Thank you.
We guided. As we guided, the year we said we were going to be expecting a cost of risk around 10.5%. We expect to end the year below that number. For next year, as we have also mentioned in the past, we expect to normalize the cost of risk level to more historic type of numbers, and we expect to have a cost of risk for the next year around 11%. We will give obviously the right expectation and guidance in our next conference call. Obviously, it's a normalization. In general, it's a normalization of cost of risk.
Thank you, Ernesto. Nice to hear from you. Regarding ConCrédito and the asset quality, yes, as explained, I try explaining my remarks. We have a slight increase on the NPL from ConCrédito. This is something that for us is pretty normal in an operation like ConCrédito, in a micro-lending operation. It is more usual even when you are in a moment of aggressive growth, which is the case of ConCrédito. As we explained in the last call, ConCrédito's strategy for this year and next year at least is to have a very aggressive geographic expansion through digital platform and with this branch-less strategy. Also to grow through the synergies with Compartamos clients, which we call Referidas.
If you take that into account, then it is quite easy to understand that we are in this usual or normal cycle of growing and controlling. This is something that I remember many years ago, maybe five, six years ago, we were in Banco Compartamos going through these cycles, and we were explaining that this is like a, let's say, a quarter to quarter cycle in which you grow, you know that you will have some level of increase on your NPL, but at the same time, you are controlling that those NPLs stay at normal levels and then you start growing again. As I said, it's something that we have very well identified in ConCrédito.
The management team is doing what they have to do and what they know to, because of the experience they have managing this business. We feel comfortable that we are looking at a pretty normal kind of operation there.
Thank you very much, Enrique and Mario, and congrats again on your results
Thank you, Ernesto.
Your next question is coming from Juan Recalde at Scotiabank.
Hi. Good morning, Enrique, Patricio, Mario. Congratulations on the results, and thanks for taking my question. My question is related to the competitive environment. You have showed increasing number of clients. You also mentioned that you are gaining share of the wallet in those clients, and profitability has been better than expected. I was wondering how are you seeing the competitive environment in Mexico and Peru? How do you see the impact of higher rates in this competitive environment?
Hi. Thank you, Juan, and this is Patricio. In terms of the competitive market, after the pandemic, most of our competitors got impacted operationally. Some of them had higher than expected delinquency ratios, and as such, funding their businesses has been challenging. Therefore, the competitive landscape throughout Mexico, and I would say that also in Peru, it has weakened quite a bit. We've seen some competitors not only facing difficulties, but of actually closing their operations in Mexico. Again, something that of course harms competition, but at the end of the day, brings opportunity to the table to serve those customers that are left behind by our competitors.
Again, in terms of the market, as you know, in these conditions, the addressable market growth is still very large, not only in Mexico, but in Peru. The market is large and the competitive landscape is relatively weak. Therefore, we will continue to do things carefully to maintain the WGB growth, not only for the end of the year, but for the next year as well.
Thank you for the comments.
Your next question for today is coming from Luis Yance at Compass.
Hi, guys. Thanks for taking my questions. Enrique, Pato, and Mario. Again, congrats. Great results actually on the quarter. Couple questions. One is, I guess, a follow-up from, you know, what Ernesto was asking about, credit quality, et cetera. I know you mentioned that cost of risk going to 11% next year, and I think on your press release you mentioned three and a half percent of NPL seem normal. My first question is, you know, what sort of levels of both NPLs and cost of risk would kind of bring, you know, a yellow flag for you guys to perhaps start being a bit more cautious on origination?
Just to get a sense, you know, if cost of risk goes to, what, 13%-14% as the signal. Just to get a sense. That'd be my first question.
Good question. I think that something above 11.5% cost of risk should start making us more cautious, no? About the increases. Now, I've also mentioned in the past that we are standing in a very good position to take opportunities and to take more risk. That's a part of our business, no? To manage risk. So even 11.5% would be a number that we feel comfortable managing. But obviously we would be looking at each element, products and/or geographies, to make sure that we are under control. Probably, I don't know, Patricio, NPLs something above 4% could be something that we will start looking for.
Yes. Luis, thank you for your question. As Enrique said, the normalization of the business after fast growth periods requires a process of controlling NPLs. We've seen fast growth not only on the group lending methodologies, but also on the individual piece of our portfolio in Mexico. Same dynamics in Peru. You shouldn't be worried if next year we see after the normalization of processing, which NPLs start to pick up, because we will then focus on consolidating these fast growth periods that we had and set the foundations for future growth in the coming years. Again, as Mario said, we don't feel worried about the trends that we are seeing yet.
Again, the first semester of the next year, you should expect a little bit of an increase still. At the end of the 2023 is the second part of the year, it should get back to normal.
Great. Thanks, Pato and Mario. Another question on ROEs. I know you've been saying for quite some time that you were looking for ROEs of 20% or so, and you're there. Congrats on that. But when I look into the last two quarters, it's actually been a bit higher than that, you know, 23.7% and 20.4%. That still was ConCrédito and Peru still below 20%. Just wondering, number one, could those the idea of 20% plus also involves all three businesses being above 20%. If that is the case, once ConCrédito and Peru get there, I'm assuming Mexico stays where it is. That's another question, whether the 30% that we're seeing in Mexico is sustainable.
Just wondering if now we should start thinking more of a mid-twenties ROE as a potential target, even if it relates to just ambitions? If you can comment on that'd be great.
Yes, very good question. Well, specifically the last quarter had a more than positive effect because of this, discontinued operations, non-recurrent income that I mentioned. Yes, in an accumulated basis, we are already above 20%. We expect to keep at 20% and growing with time. Obviously we will provide you the plan and our expectations for next year, but we are happy that now we're reaching that level. Obviously for Peru specifically, we are. We all need to get their ROE back to the benchmark of 20%. Basically, I would tell you that for next year we should expect something between 20%, around 20% and maybe a little bit higher.
ConCrédito also goes above 20%, you think?
Yeah. The idea is to keep it above 20%. Historically it has been above 20%.
Okay, great. My last question, I know you'll give more detailed guidance next quarter, I guess, for 2023, but could you give some qualitative color in terms of some of the main variables? I know you mentioned, you know, cost of risk around 11%. Just wondering, you know, if loan growth should continue at double digits, meaning where they are, perhaps ROEs. Again, in general, I mean, you're gonna have an amazing year in terms of net income growth. Can we expect another year of double digit net income growth as well?
Yes, I will tell you that, again, this is a soft guidance. We expect to continue growing the portfolio at double digits, and obviously the net income at least at double digits. That would be our objective for the plan of 2023. You should project normalized NIMs and normalized cost of risk, as I have mentioned. For expenses, obviously next year we will have higher impact on expenses because of the inflation catch-up. At the end level, we expect to have a growing net income above 10% for next year.
What's normalized NIMs? Because you mentioned cost of risk a lot, but normalized NIMs, what would that be?
Well, as we mentioned, they should be around 30% and around 40%. 30% after provisions and 40% in NIM.
Great. Thanks a lot, Mario, for the answers, and congrats again, guys, for the quarter.
Thank you.
Your next question for today is coming from Thiago Batista with UBS.
Yes. Hi, guys. Congrats for the results. Very strong numbers again. I have a follow-up about the ROE of Banco Compartamos. The 30% that you guys are delivering year to date, do you believe that this is recurring or we can see a decline in this level of profitability? The second one, if you are looking for any type of M&A, any specific segment that would make sense for you guys to look?
Thank you, Thiago. This is Patricio. In terms of ROE, the bank is still running very profitable. The growing portfolio is sound, and we expect that to maintain for the coming year. As I said, or Mario answered previously, we expect the NIMs to remain healthy. All the initiatives that we've done to digitize our business model should allow us to maintain still a strong return on equity, despite the fact that we will maintain a strong capitalization for the bank. You should expect that, I mean, low 30s% should be a number that for the bank is still doable for coming year. We don't expect a further softening for 2023. Thank you, Thiago.
Regarding M&A, let me tell you that we all are aware that, despite the struggle that we all have when we are facing difficult times and crises, that also means that there can be opportunities in the market. We understand that the current context may bring those opportunities. We're open to evaluate opportunities. Bottom line, I can tell you that today, we need to be aligned and focused on our current strategy. No, we don't foresee in the short run any new acquisitions. We want to be very, very concentrated on the transformation that we are making, which is a big and very profound and relevant transformation, not only for the efficiency of the company, but also for the experience that we want the customer to have. We'll see.
The thing here is that despite of this concentration and focus that we want to maintain, we should be always open to see what is happening out there.
Very clear. Again, congratulations for the results. Very strong.
Thank you, Thiago. Thank you.
Your next question is coming from Alonso Garcia at Credit Suisse.
Hi. Good morning, everyone. Thank you for taking my question. My question is on your outlook for expense growth. I think last quarter, in the last conference call, you had guided for OpEx growth this year of 9%. Year to date, you are running considerably below that 9%. My question is how much of this expense that has not been executed as of September will be charged in the fourth quarter, and how much will be kicked to 2023? Considering that, what will be your new guidance for OpEx this year, and how should we look for 2023? Thank you.
Yes, thank you very much. Well, what we have been is that we have been having more rhythm in general than what we expected at the beginning of the year. Yes, we will end up the year with a new lower level of operating expenses than expected. Although in the last quarter, we will have some specific payments that you will see and that basically reflect on the net income guidance for the year-end that we have showed you. That will be between MXN 4.65 billion and MXN 4.85 billion.
We are again calendarizing those expenses of both the BAU, including the inflation that is catching up for next year, and also all those expenses in the transformation and initiatives that Enrique has described for next year. Probably we should expect for next year a growth in expenses a little higher than inflation. Obviously, we will give you that specific number as soon as we finalize the plan and in the next conference call.
Perfect. That's very clear. Thank you very much.
You're welcome, Alonso.
Your next question is coming from Carlos Gomez-Lopez at HSBC.
Hi, this is Carlos Gomez-Lopez. Thank you very much for taking the question. Congratulations. I want to ask you about Peru. You mentioned that it's recovering better than you expected. What type of growth do you expect for 2023 and 2024? Also, how much of the business is now group versus individual? Could you give us an approximation of the yields that you charge on the group lending and on individual lending? Thank you.
Thank you, Carlos. Peru's recovery took us longer than in Mexico due to the type of portfolio that they have and the restrictions that Peru had implemented to cope with the pandemic. As such, we took until 2022 to get back Peru to the pre-pandemic levels. Now, again, Peru is growing, not only on the individual piece of their portfolio, which represents close to 80% of what they do. 20% of the portfolio in Peru is group lending. The yields are fairly different. In Peru, as you know, in the individual lending fees, competition is fierce with larger players. The dynamics are different. There we are lending at around 29% or so.
In group lending, we have a cap in interest rates that allow us to lend not above 83.4%. Having said that, the opportunity that we see in Peru is of course in group lending, where we don't face as much competition as we do on the individual lending fees. Again, the reality is that we expect to continue to grow double digit in Peru, not only in 2023, but also in 2024. Again, as you can see, in group lending we are still doing very well, despite the fact that the regulation capped the portfolio. Again, we are optimistic of the performance of this subsidiary going forward.
To follow up on that, on the cap, I mean, from what I hear, the 83% constraints, the profitability would normally have. Would you be able to operate with a lower cap, let's say 70% or 60%?
Yes, of course. I mean, we cannot go above 83%, but as long as we are getting efficiency, of course, we can going below that. As you remember, we open aggressively branches to take the rural part of the portfolio and growing in customers last three years. Now we are more focused on group lending and getting the productivity that we have, for example, in Mexico, in order to be able to decrease further the rates. Again, as I said, the cap is close to 83%. In November, it will increase close to 88%. There's an ample room still to make profitable business in Peru.
We expect that this subsidiary continue with the strong momentum that they show in this 2022.
Okay. Last question on Peru. Do you have any Reactiva loans?
Yes, of course. Yes. I mean, yes. The reality is that we use it and as a very small piece of the portfolio.
Thank you so much.
Your next question is coming from Jose Cuenca at Citigroup.
Hi, everyone. Good morning. Thank you for taking my question, and congrats on the strong quarter. I have just two follow-ups in terms of growth and OpEx. Just did want to make sure I understand. In terms of growth, when we look at ConCrédito, I think you've been very clear in mentioning that ConCrédito is currently on a very aggressive path to expansion and growth. If I understand correctly, if we look at Perú and México, would it be safe to say that for 2023, would you be looking at double-digit growth in loan portfolio for Banco Compartamos and Compartamos Financiera? Just want to understand how do you see these other two subsidiaries. That would be my first question.
Well, yes. As you said, ConCrédito has been having faster growth than the other subsidiaries. For next year, what we are planning is to have double-digit growth for the three entities. Obviously ConCrédito is
We will expect to have the highest, but the three entities, we expect to cap those above double digits.
Okay, thank you. The question is a follow-up on expenses. I know you've already explained some of this, but just want to understand a little bit. So you mentioned on the past call that during the second half of this year, we would see an acceleration of expenses due to all the investments in digital initiatives and so on and so forth. I just would like to ask for a little bit more color. Why it seems these expenses, it seems as if they have been delayed or something like that. Just want to understand how this. Why the change, so to speak?
Why are we now expecting lower OpEx for the second half, which obviously positive, but just want to understand the rationale behind?
Yes. The implementation of the transformational initiatives have been a little slower than expected. Most of the investments that we have done so far have been reflected more at our CapEx level. The OpEx run rate, if you will, is a little behind. Even though, as I said before, in the last quarter, we expect a higher level. Obviously, as I mentioned before, with the calendarization of expenses during next year, we will provide you a guidance for next year. It has been more related to some adequacies and.
Ladies and gentlemen, please remain on the line while we connect the speaker's line.
Sorry again. I'm very sorry. As I mentioned, we will keep showing you what's the path of OpEx going forward. As I mentioned before, for next year, we should expect something a little bit about inflation, but we will give you the right numbers as we calendarize all the expenses in plan 2023.
Thank you.
You're welcome.
We have a question in our webcast tool from Consuelo Salazar. Hi, Patricio, Mario and Enrique. I would like to ask you, given the current market conditions with more Fintech going in the market, do you think that the group lending can be maintaining as original considered? Have you think about perhaps individual or long-term products to support your offer? Thank you.
Thank you. Yes, of course, the Fintech companies that are present not only in Mexico, but in, they will try to offer digital product that individualize the relationship with the customers. Of course, as you've seen, for example, in Mexico, we are now growing faster the individual lending piece of what we do. We know that through technology and better origination using data, we can assess individual products much stronger. Therefore, in the future, you should expect that digital products with origination using our business intelligence will be critical to reach more customers faster and cheaper. I hope I answered your question.
Once again, as a reminder, if there are any questions, please press star one on your phone at this time. As a final reminder, ladies and gentlemen, please press star one on your phone at this time for any questions. With no questions in queue, the question-
Okay.
Q&A session has concluded. I will now hand the call over to the management of the company for final remarks.
Thank you. Thank you again all to all of you for your support along these years. I'm talking about maybe since the pandemic and, of course, before that, but especially in the last two, three years. Your support, your trust in this management team has been fundamental for us. Thank you again for that. Our commitment to keep working for all of our stakeholders, of course, clients, shareholders, and the communities in which we operate.
We hope we can see each other the next conference call with some more good news and an update of what we are doing now, which really has us very happy, passionate, and encouraged towards the future that it is promising, not only for the following quarters, but of course and I think that more importantly for the following years. Thank you to all of you for that, and have a nice day.
Thank you all for participating in today's conference call. You may now disconnect.