Earnings Call: Q3 2025

Oct 21, 2025

Good morning, and welcome to the third quarter 2025 Gentera's conference call. Now I would like to turn the call to Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, you may begin. Good day. 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, Mr. Mario Langarica, Gentera's Chief Financial Officer. Enrique and Mario will present Gentera's results for the third quarter period as per the report that was issued yesterday, and will actively participate in the Q&A session of this conference call. As a reminder, now that we are holding our conference call via Zoom, it is important to highlight that if you want to ask questions during the Q&A session, these will only be taken if you are connected via this platform. Now, 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 would now like to turn the call over to Mr. Enrique Majós for his presentation. Enrique, please go ahead. Thank you, and good morning or good afternoon to everyone. It is a pleasure to be here with you today. Before we move into the results, I would like to start by celebrating something very, very special, Gentera's 35th anniversary. As you may know, our story began back in 1990 with a deeply social purpose, to empower people and their communities through financial inclusion. From the beginning, our mission has been clear, to create social value, economic value, and also human value, and support our people, clients, and employees to foster their dreams. Over these 35 years, that purpose has only grown stronger. Today, we proudly serve more than 6 million clients, and over our history, we have reached more than 17 million people. That is a legacy built on trust, inclusion, and sustainable growth. Now, let's talk about our performance this quarter. Despite a complex global and regional environment, both in Mexico and Peru, Gentera continues to deliver strong, high-quality growth. By the end of the third quarter, our results are fully aligned with our guidance, which by the way, you remember last quarter was updated and increased after a strong first half of the year. Let me share a few key highlights. Gentera's loan portfolio grew 16% year-over-year, and our client base, including end users, increased 11%. Portfolio quality remains solid, with NPLs at 3.4%, showing the strength of our business model and our discipline in the execution. In Mexico, Compartamos Banco continues to perform exceptionally well. Portfolio grew 19% compared with last year, and NPL stands at 3.5%, which is in line with our portfolio quality standards. In Peru, after a challenging 2024, Compartamos Financiera has recovered faster than expected, achieving a 9% portfolio growth in local currency with a strong quality. This performance has been translated into a net profit of PEN 45 million in the first nine months, a truly remarkable comeback. ConCrédito also continues to grow consistently, and at the same time, Yastás and Aterna continue supporting our credit and saving customers to provide them a wider and more convenient product offer. Aterna, by the way, is already serving 16 million active insurance clients and continues to strengthen our value proposition in both Mexico and Peru. Another highlight this quarter is the diversification of our revenue base. We have evolved from being a primary group lending product organization to a multi-product company, offering a broader portfolio of financial solutions. Today, in addition to the revenue generated by our group lending products, individual loan is growing in the mix as well as ConCrédito. As we have pointed out, insurance products have grown to 11% of the total Gentera's income. With this strong performance, we expect to close 2025 on a very positive note. Fully aligned with our latest guidance, and that positions Gentera for an excellent start to 2026. Now, let me talk about 2026 and our expectations. Looking ahead, we see that next year is going to be a very strong year in terms of the opportunity, and we will continue our momentum both in Mexico and Peru. We will share more detailed guidance for you in the beginning of the year in February as we always do. Based on our current trends and the solid progress of our transformation plan, we are confident that Gentera will continue to grow at double-digit rates. There are three key drivers behind our strong performance. First, a market of clients who continue to find real value in our products that help them grow their businesses. Second, Gentera's strong leadership and trusted position in the market we serve. Third, our transformation strategy, which is expanding our range of products and services while improving convenience, productivity, and efficiency. As we have shared before with this chart, we are currently executing more than 300 strategic initiatives across our business units, each one focused on adding value to our customers. One of the most significant initiative is the rollout of our digital platform for credit process management in Mexico and in Peru. This initiative has already delivered 20% improvement in productivity within our individual credit operations over the past two years. For the group lending in Mexico, deployment is still underway, and we expect to see the full impact over the next 24 months as the platform reaches full scale and maturity. As you can see, we are closing 2025 with excellent results, and we will enter 2026 with a strong momentum and great optimism. Gentera today is more diversified, more efficient, and better positioned than ever to keep delivering sustainable growth and long-term value to our clients and each of our stakeholders. With that, I will conclude my remarks and hand it over to Mario Langarica, our CFO, who will share more details on our financial performance. Thank you very much. Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique mentioned in his remarks, we are very excited about the continuous and consistent results that we have achieved during the year. We're enthusiastic and motivated with these positive dynamics, and we expect to grow strong year with positive trends going forward. As of September, we have reached a historic record of 6.35 million, 6,350,000 people using our financial services, representing an increase of around 650,000 people and 11.4% growth compared to Q3 2024. As we have explained in past conference calls, the modernization initiatives that we have started in past years are bringing better than expected results that have allowed Gentera to reach a new record loan portfolio of MXN 87.8 billion pesos, representing a 16.4% annual growth compared to Q3 2024. In Mexico, both Banco Compartamos and ConCrédito have reported annual growth around 20% in their respective loan books. In Compartamos Financiera, we have reinitiated growth while improving our operation, our asset quality, and our profitability levels. As we have signaled before, we expect to grow the consolidated loan portfolio for Gentera within the range guided more around 15% for 2025 trends. Now, regarding each specific line of our income statement, Gentera's accumulated interest income amounted to MXN 35 billion in the nine-month period, with a solid 21.1% growth compared to the same period in 2024. For the same period, financing expenses only increased 1%, mainly driven by the reduction of reference interest rates, and even after considering the growth in the funding of our loan portfolio. Net interest income grew 24.3%, and NIM amounted to 40.8% above our expectation for the year. Asset quality has been stable during the year and better than originally expected, both in Mexico and in Peru. Gentera's consolidated NPLs amounted to 3.43%, and cost of risk to 13.3% in Q3 2025. For the nine-month period of the year, cost of risk amounted to 12.5%, compared to 12.7% in 2024. We expect to end the year with a cost of risk around 12.5%, better than the level of 13% originally guided. It is important to consider that we expect to reach this annual level, even considering the heavy rains in Mexico recently. As we have done in previous catastrophic and natural disaster events in the past, together with Fundación Compartamos, we have activated our emergency and contingency plans to help and support our customers and employees in the areas that have been impacted. Gentera's Q3 2025 provision for loan losses amounted to MXN 2.85 billion, a 14.6% growth, which is an adequate increase considering a larger loan portfolio and its mix. NIM, after provision for Q3 2025, amounted to 30.6%, compared to 28.6% in Q3 2024, which is also better than our original expectations for 2025. For the nine-month period, NIM after provisions stood at 29.9%, which is in line with the new expectations of the year. Net fees amounted to MXN 1.5 billion in Q3 2025, compared with MXN 1.17 billion in Q3 2024, representing a 29.5% annual growth. These fees, as explained before, have been mostly driven by better-than-expected results of our insurance business that represent around 90% of the commissions collected. Now, considering net fees for the nine-month period, they stood at MXN 4.3 billion, representing a 39.4% growth. Operational expenses for Q3 2025 amounted to MXN 6.08 billion, representing a 25.2% growth compared to Q3 2024. This growth, again, is mainly explained by a larger number of employees, the variable compensation associated with our solid growth, strategic initiatives, and investments that are making Gentera more productive, efficient, and profitable. We expect expenses to grow around 20% for the full year. As we have signaled in our previous conference calls, most of these incremental expenses are productive expenses. In this quarter, you will notice higher-than-average effective tax rate that is mainly related to ConCrédito subsidiaries corporate restructure that we announced last year. Specifically, it refers to one of deferred tax events that if we take off, would have resulted in a very similar net income figure for ConCrédito compared to second Q 2025, around MXN 300 million. ConCrédito is performing strongly and in line with our expectations. In 3Q 2025, net income amounted to MXN 2.156 billion, growing 23% compared to 3Q 2024. Gentera's controlling participation of net income in 3Q 2025 amounted to MXN 2.099 billion, representing an EPS of MXN 1.33, 27.5% above 3Q 2024 EPS. As of September 25, accumulated net income amounted to MXN 6.485 billion, the highest nine-month figure in our history, and already higher than the net income generated in 2024. After this strong result, we expect to finalize the year at the high end of our EPS guidance, which is MXN 5.15, around 36% higher than our 2024 EPS of MXN 3.8. Gentera's controlling ROE for 3Q 2025 amounted to 25.5%, which remains above our original expectation for the year. For the nine-month period, it stood at 25.9%. Very important to highlight that our three credit subsidiaries are showing ROE ratios for the nine-month period of 2025 above 20%. These strong results have been achieved maintaining solid and healthy liquidity levels, strong and diverse access to funding sources, and a robust capitalization in Gentera and each of its subsidiaries. To conclude my remarks, as you have seen from our 3Q results, we continue delivering as promised, and we expect to keep obtaining double-digit growth in Gentera loan portfolio in the coming quarters, while generating solid growth in total revenues with an adequate cost of risk and operational expenses growing below total income generated to keep positive yields that too allow us to keep continue generating strong levels of profitability. That is all for my remarks. Thank you for your attention. We can now move forward to the Q&A session. Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please use the raise your hand button of your Zoom tool. Our first question comes from Brian Flores of Citi. Please go ahead. Hi, team. Good morning. Thank you for the opportunity. Mario and team, I have 2 questions. The first one is a bit obvious. You're presenting here the guidance. You also mentioned in 2026 you'll be growing at double-digit rates. Just wanted to confirm, is this the loan book? Is this the earnings? Is it both? You seem to be going well above the guidance. Just a question on what is holding you back in terms of revisions, why not update according to our numbers? The net income on the fourth quarter would need to decrease by double-digit to reach the top of the guidance. Just if you could expand a bit on your cautious stance. A second question on margins. I think you mentioned, Mario, an expansion on margins that are going very well. It seems like you have higher yields on assets, you have a lower cost of funding. Just how do you envision this going into 2026? How should we picture this? I know you've been making a lot of efforts with new, different sources of funding, so if you could expand a bit on this trend going forward, it would be really helpful. Thank you. Thank you very much, Brian. Of course. Yeah, the guidance, the double-digit growth refers to both the book, the loan book, and the EPS. We will provide, obviously, the guidance in February. But the idea is that we will have double-digit growth in our plan for next year in both items. Regarding the guidance for year-end, in the last quarter, we're expecting higher expenses, and we are analyzing some strategic initiatives. That's why we're keeping the guidance at the high end of what we have already published. Regarding margins going forward, that will also be provided with more detail in February. As you know, we have this changing mix in the portfolio that will be the driver for the projections of margins next year. as we have seen at this point, we expect for this year a NIM around 40%, and after provisions, around 30%, and more detailed information will be provided in February for next year. No, thank you. Super helpful. Regarding access to funding, yes, Brian, as you say now, we have very good access to funding in the different local debt capital markets, both in Mexico and in Peru, with development banks, with commercial banks, and multilaterals. In Mexico, we recently issue a new long-term bond, and it was very successful. Pension funds, different investors participated, but yes, very good access in general. Thank you. Thank you. Our next question comes from Erick Ito of Bradesco. Please go ahead. Hi, Enrique, Mario, and Enrique Barrera. Thank you for the opportunity to ask question, and congrats on the results. I have two here from my side as well. The first one, more on the macro side. There was the economic package announced last month, which included changes to the IPAB and some changes to write-off. I just wonder if you could share some initial thoughts on what could be the impact for you guys from these changes. That's the first one. The second one, just going back to ConCrédito, right? You mentioned there was some impact from deferred tax events, which I believe the tax rate should not be this high going forward. I just want to confirm that. But also, if I look specifically for the operating expenses for ConCrédito, there was a relevant increase in this quarter. Just want to understand if this is also related to the corporate structure and if you could see it maybe normalizing going forward, because I think that that was one of the main drivers that impacted the net income contraction for ConCrédito. Thank you. Yeah. Thank you very much. Yeah, well, yes, regarding the tax reform, the IPAB effect is going to be marginal for us. It's small, given the fact that we have a smaller percentage of deposits on our balance sheet, and that probably would be around between MXN 40 million and MXN 50 million. On the write-offs, there are still specific rules to be published by the Secretaría de Hacienda, but if we took it as the general rule, there will not necessarily be an impact on neither accounting nor financial terms. It would be more a matter of deferring the deduction of the write-offs. We're still waiting for the specific rules for banks, and when we have that information, we could provide more detail. It would not be that deductions are eliminated. It would just be a matter of when you can apply the deduction. Okay, thank you. For ConCrédito? Oh, sorry. Yeah, for ConCrédito, yes, the increase in expenses, it's completely related to the deferred taxes that I just described before. Thank you. We should expect going forward that the effective tax rate for ConCrédito should be moving around 30%. Okay. Yeah. Just one here on the OpEx still. If I look at your hirings, total hirings, they have decelerated compared to the previous years, right? But still, if you look year to date, you're still with 1,000 new hirings. Just want to understand if, for 2026, we could still see more hirings going forward or if you're maybe getting close to your optimized level of workforce. Just to understand how much we can capture any efficiency gains. Obviously, we are in a growth mode in ConCrédito and also in the bank, as you have seen. As you know, our model is hybrid. We will be hiring people as it makes sense, given our objectives to grow the portfolio. Remember always that these hirings always have a multiplying effect on revenues. If we hire more people, we expect that sales force to have a multiplying effect on revenues. What we will obviously announce to you in February, the specific objectives for next year. Okay, perfect. Thank you. Thank you so much. Our next question comes from Ernesto Gabilondo of Bank of America. Please go ahead. Thank you. Hi, good morning, Enrique, Mario and Enrique. Thanks for the opportunity to ask questions, and congrats on your strong third quarter results. My first question will be on the recent floods. I'm just wondering if you have evaluated the potential impact on loan book, asset quality, temporary closed branches. As you mentioned, if we include this impact, the cost of risk for the year should be around 12.5%, but if you can give further details, it will be highly appreciated. My second question is a follow-up on OpEx growth. You were mentioning that you were evaluating expenses related to the digital transformation in last quarter. Just wondering how should we think about the OpEx growth for this year? For my last question is related to your long-term ROE. If making the numbers, your ROE is already at 24%-25% this year. Just thinking how should we think about the profitability levels? You were saying before that at some point you will start to reward clients with rebates in order to keep clients' loyalty, maintain strong asset quality, and remain as the most competitive offering in the low-income segment. At the same time, you also have been evaluating the possibility to increase dividend payments. I will appreciate your initial thoughts on how you're thinking about the profitability. Thank you. Thank you very much, Ernesto. Yeah. Well, unfortunately, as you know, the geography of both Mexico and Peru brings us every year some heavy impacts, mostly with rain and winds and hurricanes. Obviously, as I said, we have contingency and emergency plans to support our clients and our employees in these areas. All of that, obviously, it's always included in our expectations and our provision for the year. This specific event is now hitting hard around 1% of our clients and 1% of the portfolio. That doesn't mean that the 1% will be a write-off. Usually, it's a fraction of that, and we're still evaluating. Again, we don't expect any impact on what we have already guided for cost of risk for the year. It's very important for you to take into account that we are very well prepared to assist our clients when these events happen. Regarding OpEx growth, we have said it's 20%, what we expect. Just if you make the math, you will have what it is for the last quarter. Yes, it's not only the strategic initiatives related to the digital transformation. There are several initiatives that we're evaluating, and that's why we're keeping the OpEx growth at that level as mentioned. Regarding long-term ROE, well, we have accomplished this quarter important benchmarks that we set in the past, which one was to be with an ROE above 22%, and the other was bringing back our subsidiaries to ROEs above 20%. That is very important. Having said this allows us to think strategically of what we want to do going forward in different items, as we have said. The first one is to make sure that we have sufficient capital to support our growth, and that could also include some improvement in pricing, as you mentioned, going forward. The second, obviously, is this capital should help us to analyze potential inorganic initiatives that could help us to accelerate our long-term strategic objectives. The next one is to keep and maintain a stable dividend payout policy. All of these we're analyzing in detail because we have achieved these results, and we will provide you a more clear picture of what we're going to do going forward in February. Perfect. Thank you very much, Mario, and congrats again. Thank you. Our next question comes from Tito Labarta of Goldman Sachs. Please, go ahead. Hi. Excuse me. Hi. Good morning. Thanks for the call and taking my question. A couple questions also. I guess first on fee income remains very strong, particularly the insurance fees. Just how you think about the sustainability of the growth. Should that begin to moderate? Or how much more room you think you have to penetrate on the insurance and support fee income growth? Just following up on the provisioning levels, Mario, I think you said 12.5% this year, but just thinking maybe longer term, do you expect to remain around this 12.5%? In the past, it's been closer to 13%. Just maybe thinking longer-term cost of risk, should it be around that 12.5%-13% level or any changes from there? Thank you. Hi, Tito, this is Enrique. In terms of the fees, the net growth in net fees should be moving around 20% for this year, and going forward, should be moving more in line with the growth of the portfolio. If next year is in mid-teens, it should be moving in that range. Pretty much in line with that. Regarding cost of risk, yeah. Well, as you remember, for this year, we originally guided 13% based on the expectations for the mix of the portfolio, basically. We have achieved excellent results, particularly in both products, both in Mexico and Peru. This also has to do with all the investment that we have done in the past to improve our data analysis and our risk scorings, et cetera, using the modernization tools that we have implemented. Having said this, probably for next year, something similar to the 13% would be something that we would probably be thinking about. We're just building our 2026 plan, and we are adjusting the model, and we will provide you a specific cost of risk guidance for next year. Having said that, at this point, we think it should move around 13%. Okay, very clear. Thanks, Mario. Thanks, Enrique. Our next question comes from Carlos Gomez-Lopez of HSBC. Please, go ahead. Hello, and good morning, and congratulations on the results. I wanted to follow up on what possible strategic initiatives you might have, and you have mentioned inorganic growth, and I have to say that that kind of concerns me, because I thought you had kind of forsworn that for a while. What are you looking at that you might be missing in your group as it is today? The second- Sorry. The second, a more technical question. You are paying the second dividend of the year, the MXN 1.2 billion in November, if I recall correctly. Is this already out of your equity count or it will come out in the fourth quarter? I know it's a bit technical. Thank you. Okay. Sorry. No, yeah, maybe I misexplained. What I said is that the capital accumulation that we are seeing and we expect going forward should allow us to maintain our organic growth. We will be reviewing in the future, going forward, if there could be some inorganic acquisitions that could make sense for the strategy, but not at this point. I was talking more in general, following the question of Ernesto, of how we see this capital accumulation in the future. If you like, it's that. I'm sorry about the confusion. Yes. Maybe Carlos, this is Enrique. This is a very strategic and important point, so let me just build on what already Mario said. We realize that our level of capitalization is growing strong. Actually, we have reached these levels before than expected, and this is a very good news. This will allow us to have flexibility on defining different strategies in the use of this capital. We could improve the pricing of our customers, or we can make any other use of it. We want to analyze this very carefully, very strategically with our team, and make the best decision. In any case, when it comes the time, we will let you know. All right. Thank you. That's the long term. In the short term, sorry, you have, again, possible higher expenses. You have explained about technology. What else do you have that you might be spending money on the fourth quarter? Because again, your first, second quarter have been so stable that it's kind of puzzling that you are guiding us to a low of Q4. Yeah. Mostly it would be the incentives that we're going to pay for year-end that are giving the very strong performance that we have had in all the sub-tier. Let me understand, that is incentives for employees rather than borrowers, right? Yeah. Okay, very clear. Thank you. Carlos, regarding the dividend that you were signaling, the $2.4 billion dividends, and that is going to pay in two installments, were authorized in April, in the shareholders meeting. It was reflected in that month, in April, when the shareholders authorized this dividend. Okay, the dividend is already recorded in equity, but not distributed. Exactly. At Gentera business. Correct. Very clear. Thank you so much. Thank you, Carlos. Once again, if you'd like to ask a question, please use the raise your hand button of your Zoom tool. Our next question comes from Juan Dominguez of Onyx Equity Management. Please go ahead. Hi, guys. Can you hear me? Yes. Yes. Thank you so much for the opportunity, and very impressive how the business has evolved over the past years, despite all the challenges that you have gone through. Again, congratulations on the very strong delivery that you once again showed. Just a couple of questions on my side. First, on OpEx, you are guiding for 2025, the growth of 20% year-over-year. You already mentioned that a lot of it is due to the variable compensation that you're paying to the loan officers. Of course, results are very strong, better than what you initially were expecting at the beginning of the year. I'm wondering, how are you thinking about the incentive packages for the next year? Are you going to make life a bit tougher for your loan officers going forward, just to make them earn bonuses perhaps next year? Second, I know you have been piloting acquiring services, especially for your individual client base. You are starting to offer POS devices for them. Do you have any early results to share with us on that specific strategy? Okay. First, regarding the OpEx and the incentives, we have a very well-defined formula for paying incentives that has worked well. Obviously, every year, we put high objectives for our sales force, and they reach it. The formula is very well adapted, and it touches the different, if you want, P&L lines of their specific objective, which is bringing new clients, bringing a higher portfolio, and obviously maintaining asset quality and cost of risk at very good levels. We will put higher objectives, but if they reach it, we will pay accordingly. That's our promise. Then, regarding the POS question. Can you elaborate a little bit more, Juan, about the second question? Because I don't get which pilot you are referring to. Yeah, I guess this is coming from a previous conversation with you guys. You mentioned that you are starting for your individual clients, you're starting to offer these small payment devices, right? POS devices, just to see how it goes. I know it's very small, but I'm just wondering how you see the early results of that. Yeah. Well, probably there's a little confusion there, Juan. What we have said is that we have POSs on our Yastás points, where we have the strategy of allowing our Yastás partners to disburse and collect and make the payments of different financial services. That's where we have the POS devices that complement our Yastás strategy. Some of those clients, some of those Yastás points, can be individual lending clients. Probably at some point in some of our conversation, we probably explained something that's a little bit. Okay, it's more like an overlapping of the client base rather than a new thing that you are trying to do. Exactly. It's related to the Yastás network. Okay. Understood. Thank you, guys. Again, congratulations on the results. Thank you, Juan. Thank you. There are no further questions at this time. I would like to hand the floor back over to management for closing comments. Thank you. Before we end the call, Enrique Barrera made me realize that in my opening remarks, I miscommunicated Peru's results when I was referring to the accumulated net income in the last nine months of this year. What I wanted to say, and this is a disclaimer, is that net income grew from PEN 45 million in 2024, I'm talking about the first nine months of 2024, to PEN 189 million in the same time or the same period, nine months of 2025. I just wanted to clarify this. I know you have the numbers in our press release, but sorry about that, and thank you for your interest. Thank you for your time in this call. I will just end by emphasizing or talking again about our 35th anniversary. We are very happy that this September we made 35 years working and doing everything we can every day for our customers since 1990. You have been a very, very important part of this effort and this goal and this mission that we have. Thank you for your support. Thank you for being with us, and let's celebrate together. Thank you so much. With this, concludes the conference of today. You may now disconnect.