Good morning, and welcome to the fourth 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, Mario Langarica, Gentera's Chief Financial Officer. Enrique and Mario will present Gentera results for the fourth quarter period and the full year 2025 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 this Q&A session, these will only be taken if you are connected via Zoom. 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. Hello, good morning to most of you, and good afternoon to some of you. Thank you for your interest in today's call. Today, we will share with you our fourth quarter 2025 results, as well as some notes on our full year results. As you have already seen in our press release, Gentera's financial results continue to be extraordinary. In 2025, we delivered record growth in clients, loan portfolio, and net income. Beyond economic value, we continue to generate social and human value for our clients, our employees, and our investors. Today, we will also be sharing with you our business guidance for 2026, which reflects both the strength of our operations and also the momentum of the market we serve.
To begin, I would like to take a moment to talk about our present and future vision and of course, our priorities for 2026. Our vision for the future must start with our purpose as an organization, and also based on the needs of our clients. Empowering the dreams of our clients and employees is what gives meaning to our work. To achieve that, we must clearly understand what our clients truly need. Our 35 years of history and experience, together with the constant feedback we receive from our clients, confirm that those needs are defined around five basic needs and services. Those five needs are first, working capital loans, second, credit for consumption needs, third, protections through different types of insurance products, fourth, payment method and digital transaction solutions, and fifth, savings products.
These needs are what guide our priorities and our strategy, and based on them, we have defined our five strategic pillars. These pillars determine where we invest our resources, define our initiatives, and give direction to our efforts. Let me briefly walk you through them. First, we will continue to grow our working capital credit products while maintaining our market leadership. Second, through ConCrédito and CrediTienda, we will continue increasing our participation in the consumer credit market. Third, we will keep expanding our insurance offering, further strengthening the relevance of these products within our financial solutions portfolio. Fourth, we will strengthen our savings products, making them more convenient and increasingly supported by digital platforms and tools. Fifth, we will continue strengthening our technological and digital capabilities, including the productive, responsible, and secure use of artificial intelligence. This is not optional.
It's essential for Gentera and for any company that aims to remain relevant over the long run. I would also like to update you on the impact of our transformation plan, which we launched several years ago and which is directly tied to these strategic initiatives. As you may remember, last year, I shared this chart showing how the transformation initiatives we launched in 2019 marked a clear inflection point in Gentera's growth. Between 2010 and 2019, our compounded annual growth in net income was 6.5%. After planning and executing our transformation initiatives, the growth doubled to 14.3% in the 2019 to 2024 period. Now, when we include 2025, our compounded annual growth in net income increases even further to 17.1%.
These results are not a coincidence. They are mainly the results of a set of fundamental strengths that define Gentera as an organization. Let me highlight a few of them. First, we have valuable and relevant products, and there is still strong unmet demand on our markets, both in Mexico and in Peru. Second, over the past years, we have evolved from a single product, fully manual process organization into a multi-company group with more productive and automated processes. This has allowed us to broaden our product offering, diversifying our revenues, and operate more efficiently. Third, our financial strength has been a key enabler, not only to capture growth opportunities, but also to navigate difficult periods and crises. Fourth, and most importantly, Gentera is built on extraordinary people, capable, committed, honest, and deeply focused on serving our clients.
From our loan officers to the senior management, this team is, without a doubt, our greatest strength. These elements don't just explain our past results. They are also the foundation of Gentera's future growth. Finally, I would like to highlight two core principles that guide everything we do at Gentera. The first one, our commitment to total value creation, meaning social value, economic value, and human value. Over the past few years, especially after the pandemic, we have demonstrated this commitment in every very tangible ways. Second, our conviction that this value must be shared among our clients, our employees, and our investors, as well as the community where we operate. In line with these principles, this year, we are launching three specific initiatives to share that value.
On one hand, this year, we will introduce new loyalty programs that will return economic value to our clients. These programs will not only benefit our clients directly, but also will improve our customer retention rate and strengthen our competitive position. On the other hand, our Board of Directors will propose to the shareholders meeting an increase in our dividend payout policy. From the current 40% profits distribution, we will be able to increase our dividends policy up to 45% starting this year. Finally, the Board of Directors will also propose to the shareholders meeting to increase Gentera economica's contribution to its foundation. Today, Fundación Compartamos receives 2% of the group's profits, and the proposal is to increase this to 3%. With these actions, we continue to honor our principles of value creation and share of value.
With that, I will now turn the call over to Mario Langarica, who will walk you through our fourth quarter 2025 results and our guidance for 2026. As always after that, we will be happy to take any questions you may have. 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're very enthusiastic with the progress of our strategy and the remarkable and solid results that Gentera is presenting for 2025. We are very excited with the positive dynamics and opportunities that we are seeing for 2026 and the following years. In 2025, we reached a new milestone of 6.5 million people using our financial services, adding 684,000 people in a year with an 11.8% growth compared to 2024. The strategic decisions we have taken in previous years have allowed Gentera to finalize the years with a historic loan portfolio of MXN 93.6 billion, g rowing 13.1% compared to 2024.
It is important to highlight that our credit subsidiaries, Banco Compartamos Mexico, Banco Compartamos Peru, and ConCrédito closed the year with double-digit growth in their specific loan portfolios in local currencies. Special notice to Compartamos Peru that presented a strong recovery compared to 2024. For 2026, we expect double-digit growth in the portfolios of our three credit subsidiaries aligned with Gentera's loan growth guidance. Now let me talk about the performance of the different lines of our income statement. Gentera's 2025 interest income grew 20.3% versus 2024, reaching MXN 48.4 billion, and net interest income grew 22.9% to amount MXN 40.5 billion, following the solid growth in clients and portfolio.
NIM amounted to 41% in 2025, in line with our expectations for the year and a slight improvement compared to 2024 of 39.8%. For 2026, we expect to have our NIM moving around 41%-42%. Cost of risk for 2025 amounted to 13%, mainly explained by the mix, the growth, and the asset quality of our portfolio. We feel comfortable with the observed level of cost of risk, and we expect to maintain it around 13% for year 2026. Gentera's 2025 provision for loan losses amounted to MXN 11.2 billion, a 21.7% growth, and we finished the year with a 222% coverage ratio compared to 209.5% in 2024.
NIM after provisions for year 2025 amounted to 29.7% compared to 28.7% last year in 2024. For year 2026, we expect to have a NIM after provisions around 30%. Net fees amounted to MXN 6.2 billion compared to MXN 4.65 billion in 2024, representing a 31.5% growth. These fees have been mostly driven by the strong results of our insurance business that represents around 90% of the collected commissions. It is also important to keep signaling the important contribution that Yastás, our Banco Compartamos branches, and our digital applications have in the business model that allows Gentera to depend less on third-party channels, therefore, reducing fee expenses in relative terms.
Operational expenses for 2025 amounted to MXN 23.6 billion, representing a 19.3% increase compared to 2024. Most of this growth follows the growth of our business, including a larger sales force and upgraded infrastructure, strategic initiatives and investments to make our operation more productive, and larger variable compensation explained by the extraordinary results achieved during the year. Worth highlighting in the OpEx line for 2025 is that Banco Compartamos changed its methodology for potential tax contingencies, aligning it with practices similar to those used by other banks and financial institutions in Mexico. This new methodology is based on expected value applied to different statistical analysis scenarios. The calculation obtained with this new methodology represented an effect or a reserve amounting to MXN 500 million, which was recorded in operating expenses line in 2025.
Operational expenses for 2026 should grow between 12% and 13%. In 2025, our net income amounted to MXN 8.5 billion, a historic record, growing 31.8% compared to 2024. Gentera's controlling participation of net income in 2025 amounted to MXN 8.2 billion, representing an EPS of MXN 5.20 per share for the year, above our original guidance, and 36.8% above 2024 EPS of MXN 3.80. Gentera's controlling ROE for 2025 stood at 24.8%, also above our original expectation for the year. The ROE reached this year is the best level achieved in the past 10 years. For 2026, we expect Gentera's controlling ROE to be between 24% and 25%.
All of this while maintaining solid and healthy liquidity levels, strong and diverse access to funding sources, and robust capitalization. Before finalizing my remarks, some additional comments about ConCrédito. We would like to inform you that, about a decision that was made during 2025. As you may remember, in year 2024, we communicated the corporate restructuring of ConCrédito. As a result of this, in 2025, and on a non-recurring basis, it was decided to generate a reserve related to the deferred tax assets due to the uncertainty of their future recovery. They later resulted in the cancellation of the deferred tax asset with an impact of MXN 328 million in 4Q 2025. Excluding this effect, ConCrédito would have concluded the year with a net income about MXN 1 billion and in line with our original business expectations.
Now, to conclude my remarks, after finalizing a remarkable year 2025, we expect that 2026 will represent another year of great achievements and a year in which we will keep consolidating our modernization initiatives. As a result of this, and as you probably read in our press release, our guidance for 2026 is the following: loan portfolio growth between 13% and 16%, net income growth between 13% and 16%, representing an EPS between MXN 5.88 and MXN 6.03. As you can see, this new guidance is in line with the double-digit growth that we have experienced in past years and the one that we keep expecting for the following years. As explained by Enrique, this guidance also includes three very important initiatives that will strengthen our commitment to keep generating total value.
First, we expect to launch improvements in the commercial proposal for our customers in the second half of 2026. Second, we will increase the contribution of our net income from 2%-3% to Fundación Compartamos to support more social programs. Third, we're proposing to our shareholders meeting to increase the maximum limit of our dividend payout from 40% to 45%. With these three initiatives, we will keep sharing value with our customers, with the society, and with our shareholders. Now, to conclude, I can tell you that we're strongly motivated by the results achieved in 2025, and we continue very excited about the transformation that is being implemented in the company and the strategic pillars, which will help us to keep improving our service and increasing our product offering.
We are fully committed to continue working hard in servicing millions of clients in Mexico and in Peru, aiming to support them in their different financial needs. That is all for my remarks. Thank you all for your attention. Now we can 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 Eric Ito of Bradesco. Please go ahead.
Hi, good morning, everyone, Enrique and Mario, and Enrique Barrera. First, congrats on your transformation plan since 2019. Pretty good outcome. I have two questions here on my side. First one, I'd like to ask on one of your initiatives that you mentioned during the presentation about the new loyalty program. If you could give us more sense on that, on what we can expect for this, more details. Don't know if you're gonna give back some money to the clients depending on the performance, and will that be recorded in new operating expenses? Is that 13% that you guided already includes the new loyalty program? My second question is on cost of risk.
You mentioned that the expectation for this year is of 13%, but when we look at the fourth quarter, you delivered 14.5%, a slight pressure on NPLs. Just want to get more color here on the expectation for cost of risk and what is implied for NPLs and performance of loans for this year. Thank you, guys.
Thank you, Eric. This is Enrique Majós. Yeah, about your first question about our new loyalty program. This program, we are very excited about it, first of all, and this program is in the process of being designed by our commercial team. We believe that this will be out there by the second half of this year. We don't have very precise numbers yet, but I can tell you that these numbers are already in a roadway , are already included in our guidance for this year.
Thank you, Eric. Regarding cost of risk, yeah, we saw a little tick-up in the last quarter, but again, we expect that we will be controlling and focusing a lot on making sure that asset quality keeps in line. We would expect to have NPLs around 4% for the year and cost of risk around 13%. We feel comfortable about that.
Okay. Thank you. Just to follow up on the first one on the operating expenses that you mentioned that already included in the guidance. Still on OpEx, can we expect efficiency gains this year with this growth that you guys are expecting, especially with the initiatives?
No, yeah. As Enrique said, under this specific guidance that we gave on the provision and expenses, we're considering that in the second half, we will have space for this commercial operations.
The OpEx should be stable compared to 2025.
Okay. Thank you. Thank you very much, guys. Very helpful.
Mm-hmm.
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 surpassing your 2020 guidance despite the couple of non-recurring impacts. My first question will be on your loan growth expectations. Just wondering if you can elaborate the loan growth per segment for group lending, individual, ConCrédito, Peru. My second question is on fees. We have seen fees surpassing our expectations in the last years. We have been forecasting to be growing roughly in line with loan growth. But just wondering if there's still room for positive surprises, especially as you are now on the way to digitalize the group lending methodology. You will be starting to use artificial intelligence.
Can you elaborate on how this artificial intelligence and the utilization of the group lending methodology could help the fees or other revenues? My last question is follow up on your guidance. As you mentioned last quarter, you have a couple of hits, one building this contingency tax and the other one the deferred taxes related to ConCrédito. For 2026, we should expect that MXN 500 million to show up in the OpEx for this year. Also on the other hand, we should expect effective tax rate to be at 34%. It should be probably returning to 30% this year. Just wanted to check that.
On this contingency tax, is this related to the litigation you have for a credit tax of MXN 1.2 billion? Or as you mentioned, it's just to be aligned with the other bank's practices and maybe aligning to the auditor's recommendations. Any color on this and the update on this litigation will be very helpful. Thank you.
Thank you, Ernesto. A lot of very relevant questions. Thank you so much. Let me start with the first one. In the long run, how do we see our portfolio mix? As you know, we have these two products, the group lending, the individual lending, and we have these two markets, Mexico and Peru. As we have seen in the recent years, the potential for the individual lending products in Mexico is very good, as well as the potential that group lending methodology has in Peru. On the other side, we have a more mature market for the individual lending in Peru and high potential growth in individual lending in Mexico, but a more mature market in the group lending in Mexico.
Taking that into account, what we have seen in the recent year, let's say the last year, is that in Mexico, the individual lending portfolio has grown in a very important way. Now, if I give you numbers of how we closed 2025, we have 42% of our portfolio in Mexico with individual group portfolio, and 58% of the portfolio is group lending. In Peru, it's not that much different, but it's different. In Peru, 53% of the portfolio is individual and 47% is group lending portfolio.
Anyway, looking forward and in the long run, what we see, we would like to see, in the following, let's say three to five years, a convergence of both markets, Mexico and Peru, and have maybe 2/3 of the portfolio in individual lending products and 1/3 of the portfolio with a group lending methodology.
Regarding fees, Ernesto, well, we expect a normalization this year. The last couple of years in insurance were very successful because basically we launched new products and we expanded the offering to family members of our clients. That's what mostly drove the impact, the higher growth compared to the client base. For this year, we expect to normalize it more close to the growth of clients.
Obviously we are, as Enrique mentioned in his remarks, we're going to be focusing on creating new products or new capacities that in the future should help us to increase this fee line. For this year, we expect it to be more normal and close to the growth of clients. In terms of tax, well, your questions about the two non-recurrent events. Number one, yes, the tax rate for next year should move around 30%. The effect of this last quarter and this year was totally related to the ConCrédito deferred tax consolidation that we did.
Regarding the new methodology for calculating reserves for potential fiscal contingencies, obviously the most relevant is the litigation that we are going through right now for 2016 fiscal year. Things are going very good. Unfortunately, we do not have yet a sentence. We expect it to have it, hopefully in the first half of the year. As soon as we have any new information, we will let you know. Obviously that reserve is calculated based on that and also a statistical probability of potential annual reviews. We don't expect it to grow unless there are new events or different changes in probability.
Already it could also reduce if we see a positive outcomes.
No, very helpful. Thank you very much, Enrique and Mario. Just a follow-up in the use of artificial intelligence. What should we expect on that? Is it on loan origination, collection, originating new revenues? Just a little bit color on what you're expecting with the use of artificial intelligence.
Sure, Ernesto. Yes, it's a very important question, too, because I think that artificial intelligence is actually changing the way we operate with the business, and mostly how we relate with our customers. I can tell you that we have been working since the second half of last year in a plan to really understand what Gentera wants to do with artificial intelligence. What do we want from the artificial intelligence to do for us and really create value? This is something that we have to evaluate very carefully in the first place, even before starting doing anything. We went through that process in the second half of, well, let's say the fourth quarter of last year. We are aware, and we are very conscious that we have to first understand how this value is going to be created.
How are we going to use artificial intelligence? We have to learn about those technologies. I think that we still don't know many things about this technology. We have to start small, we have to learn small, and we have to be very cautious to start upscaling this. At this point, I can tell you that we have a clear idea that we want to have, or we defined a small set of initiatives. Most of them have to do with the back office processes, and that's the way we are going to start. We are going to learn. After we do and we deploy this, let's say three to five back office initiatives, we can start thinking about deploying another initiatives that will enable us to give our customers a much better experience.
That's how we are looking at this. We believe we will capture a lot of value in the future. This is also a long run shot.
Perfect. No, thank you very much.
Our next question comes from Brian Flores of Citi. Please go ahead.
Hi, Enrique, Mario. Enrique, thank you for the opportunity. I have two questions. The first one is on your funding costs, right? Because we're perhaps entering the second year of what I would say, a very good conditions for your funding cost. Naturally, this would be the time where, it would be better and perhaps less costly to see what you could do on your funding costs, right, and your funding base. Because as you know, you always raise via, w ell, some deposits were via notes. Naturally, this leaves you exposed to some volatility on the funding cost, no? Just wanted to understand if there's any strategic initiative to change this to maybe lower the sensitivity now that we could have maybe a stable 2026, 2027, depending on who you read, right?
Just wanted to check if you're thinking about this, if M&A could be also a possibility to enhance your funding base. Then I can ask my second question. Thank you.
Thank you very much, Brian. Well, as we have discussed in the past, we have taken advantage of these last couple of years of reducing interest rates. Today, at the end of 2025, our cost of funds for Mexico is 7.9%, where the reference rate is 7%. In Peru, we have a cost of funds of 4.9%, where the reference rate is 4.25%. We have been relying on variable rate funding for the last year, and that is what has allowed us to take advantage of these reduction in rates. We think that now we're at probably the bottom or very close to the bottom of that rate reductions.
Now we are going to be changing a little bit more to have more fixed rate funding. We just did an issuance this year, which we came back to the long-term fixed rate bonds in Mexico for mostly the long-term investors at the forest. We will be managing our funding decisions following the idea that fixed rates will be more normal, no? Second, regarding M&A, we have always said with the capital that we accumulate, we have a very clear guide on how we use it. The number one is for organic growth. Second is to support new initiatives and new investments such as the one that Enrique has announced.
Third, we know very well what we need to build in the future. If we see an opportunity for M&A, we could do it. But there aren't many real options that are very clear and aligned to our strategy. So it's a possibility, but we don't see it in the proximity. The last is to share part of the value with our shareholders as just as we just did, proposing our shareholders meeting to increase the dividend payout to 45%.
No, super clear, Mario. Maybe just my second question on the asset side. I think Enrique mentioned a very interesting comment, right? In three to five years, we should see a higher contribution from individual lending. I think the fintech space is maybe full with offers to individuals. Just wanted to see on the strategic side how do you think you can compete and defend, and what is perhaps the strategic advantage that Gentera has now that is maybe I wouldn't say doubling down, but just moving to maybe a higher contribution from this segment?
Yeah, sure, Brian. Let me start by saying that we really believe in a hybrid model. Meaning, we will have the same closeness with our customers, this human touch that we have always had, but we have to take advantage of all the technology that is out there. When I talk about hybrid model, what I mean is we are going to be a kind of fintech that has this strong part on the human side and the human touch with customers. That's the way we are addressing the fintech initiative that we have in Gentera.
Yes, the main challenge, not only for the fintechs, but also for any traditional lender in this segment, and I could say in any segment, is not that much the origination part, but it is mainly on the collection part. We believe that as technology advances, the use of data advances, maybe we will find ways to have a better origination process. That's happening, we are looking at that since many years ago, but not that much in the collection part.
We believe that what we are going to keep on doing is using technology to enable and to improve and to enhance our processes, the customer experience, the efficiency of our internal ways of managing risk, and at the same time, having this human touch with more precise information. I believe this is something that has been out there for a while, this dynamic, I mean, and I think that we are all learning from each other, and we will keep on learning from each other. I don't know if that answers the question, but that's the way we see the future, more a hybrid model and taking advantage of any technology we can see out there. Obviously, artificial intelligence is going to also move a lot this landscape.
I would just add that, our individual product is mostly linked to micro entrepreneurs and linked, it's a working capital product. It's not like a personal loan. That's where we will grow more. As Enrique said, we will also expand to consumer loans, but this important growth will come mostly from working capital.
Yeah, totally. Yes.
No, super clear. Thank you, team, and congrats.
Thank you.
You're welcome.
Our next question comes from Lindsey Shema of Goldman Sachs. Please go ahead.
Hi, Enrique, Mario, and Enrique. Thank you so much for taking my question. Just wondering, first off, if you could provide some color on the drop of other operating income/expenses this quarter, and then maybe how we should see the line progressing in the future. My second question is kind of just bigger picture. Should we expect this kind of 24%-25% ROE as the sustainable level going forward? Kind of any excess returns after that going towards customers, increased dividends and, that increased contribution you did to your foundation and kind of just is 2026 the picture of what we should have as a run rate going forward? Thank you so much.
Thank you. Thank you. Well, other operating income is mostly driven by ConCrédito's participation of CrediTienda. It should also be a product that will be growing in the next years. It has been very successful, and we think that we can keep growing there. Regarding the ROE that we're giving, we feel comfortable that for 2026, we can deliver an ROE with 24%-26% as I mentioned before. Even after doing these three initiatives that we talked about, sharing value with our main constituencies, no?
I think that, for now, we think that 24%-25% ROE should be the amount we should be focusing for the next three years.
Okay, great. Very clear. Thank you so much.
Our next question comes from Maripaz Bodegas of GBM. Please go ahead.
Hi, good morning. Congratulations on your stunning results. I have a question regarding Peru. We saw a turnaround during the year, and congratulations on that. As I remember on previous call, you mentioned that you expected an ROE around 15% for this subsidiary. However, as the year progressed, the ROE exceeded 20%. Looking ahead, how do you see this metric evolving? Should we expect it to normalize closer to your original guidance or at the current levels that we have been seeing?
Yeah. Thank you, Maripaz. Yeah, well, as you have said it very clearly, Peru has surpassed our plan, our expectation. We had a great year. The behavior of asset quality was excellent since the beginning of the year. That was the main driver that brought the net income grow faster than expected. Remember that we have always said that we want all of our subsidiaries to have a stable ROE above 20%. We reached that level in Peru before that expected, which is great. For this year, we will keep the same objective to have our three subsidiaries, credit subsidiaries above those levels. That's why the ROE expected for the year is between 24% and 25%, as mentioned before.
Perfect. Thank you.
Our next question comes from Danele Miranda of Santander. Please go ahead.
Morning, Enrique. Mario and Enrique, thanks for taking my question. Just a very quick follow-up on cost of risk. I know that 13% is a stable level we should think about, but that stands with the current portfolio mix, right? I mean, we saw a much higher level in the fourth quarter. Given your expectation for individual to continue leading, how can you reach 13% in 2026? Can we have more color on the provisioning mix between individual and group lending? Thank you.
Yes. As Enrique said, we will be expecting to have more individual credit risk share. What is important and what we are still going to be seeing more in the next couple of years is the impact of the modernization of our servicing through what we call our digital [audio distortion] , our digital management of individual lending. That improves a lot the processes of our loan officer, giving him much more time to focus on new clients, but very important on helping clients that have problems with their credits to be treated on time. That's why we think that we can stabilize and maintain the levels of NPLs and cost of risk for both products.
A lot will come from the use of these new tools that we have.
Perfect, Mario.
Regarding the cost of risk in Grupal and individual. In Grupal, our normal level should be moving around 11%, I mean, 10%-11%. Individual should be moving around 15%-16% of the cost of the risk.
Perfect. Thank you.
Our next question comes from Yuri Fernandes of JP Morgan. Please go ahead.
Thank you, Enrique, Mario, everyone. I have a follow-up regarding your guidance for the year. The 13%-16% EPS growth. You're coming from a very high tax rate during the quarter and for the year, right? I think the effective for the year was 33%. Some one-time events and usually the tax rate should be below 30%. My question is regarding EBT, right? With this guidance, the implied EBT, assuming that the tax rate goes to 30%, normalizes back, is a 7%-10% EBT growth in 2026. Just checking if that's the real case, you know, what is driving this deceleration on earnings before taxes for Gentera? My second question is regarding OpEx, if you can provide a little bit more color.
I think this was part of the investments and there were already questions about technology. Just trying to understand how much should OpEx grow in 2026. Thank you.
Okay. Let me start with the second. As we said, the OpEx line should grow between 12% and 15%. Regarding the tax rate that we should assume for next year is 30%, as you said. Basically that is what gives us the 13%-16% growth in EPS.
Regarding OpEx, Yuri, the 12%-13% growth should take us the efficiency ratio to 11, around 65%, which is similar to the one that we had in 2025.
I get it. Again, the EBT, the earnings before taxes, the implied on these earnings, it's a material deceleration. I don't get why. Because OpEx 14%-15% is a deceleration, right? This year , I think, was 19%, the growth of OpEx. Loans are healthy, right? The guidance for loan growth. What is the miss here? Is fees, is the other operating income? Just trying to understand, because maybe your guidance is conservative and your EBT will grow more than 7%-10%, but the implied earnings before taxes with lower taxes, it is low down. I'm having a hard time reconciling this.
Well, the earnings before taxes that we're planning for the year will be around 13%. If you want, we can review those numbers with you in a second call. What we're seeing for the year is operating results growing around 13% with a tax rate of 30%.
No. Okay. We can discuss offline, because if your taxes improve, your tax rate improves, your EBT should grow less, right? On the implied EPS guidance, basically.
Yeah.
Okay, thank you.
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 Capital Group. Please go ahead.
Can you hear me?
Yeah.
Yes.
Both Enriques, Mario, thanks a lot for the time and congratulations again on the result. Very impressive track record the last five years. I just have a broader question. I mean, what are you guys seeing in the field regarding, you know, changing in client behavior, demands that your clients were not asking you, I don't know, three to four years ago, and now they are kind of asking you. Any sort of, you know, color on what your clients are doing differently will be very useful. I don't know. Are your clients accepting different payment methods beyond cash? Trying to understand the evolution of the, how you say, the financial sophistication of the client.
Sure. Yeah, very interesting question. If you remember in my opening remarks, I talked about the five basic needs of customers. I believe that the working capital loans, consumer loans, saving products, and even insurance are not changing that much. Maybe insurance, they are. I believe that one of the first changes that we have seen in the past is a broader offer of the insurance products. I think that the consciousness and the value that the client gives to this product is increasing. That's why we have been growing a lot on that line in the business. So insurance can be one. But the fifth need that I was talking about in the opening remarks is the payment services and the way they access to these products.
I think the most important change that we have seen and we will continue looking at is the way they access to their products, and the way they transact. We would like to see a more dramatic change from cash to digital money. To tell you the truth, this is very slow. Has been very slow. It has to do with a lot of things. It has to do with infrastructure, it has to do with maybe taxation. We are pushing our clients to go there. They are actually willing to go there and increase their payments. Now we have more than 1 million customers using our mobile banking. The other incentive they have is that they feel more safe using digital money than using cash for obvious reasons.
Having cash in the street is not safe. Those motivations are moving the needle to a more digital world. Not as fast as we would like to, but they are. In Peru, we have a lot of progress there. In Peru, I think the context is different. I think that the government has made a lot of things very well done to incentivize the use of digital money. Many of the transactions in the streets in Peru are already digital. We have our digital wallet, Bim, there that is directly connected with our credit and saving products and with our mobile banking platform. I think that in Mexico, we would like to see in a faster way, the dynamic that we have been seeing in Peru.
Are we still connected there? Do you hear us?
It appears that he disconnected.
Okay. Okay.
We continue with the next question. Our next question comes from Carlos Gomez-Lopez of HSBC. Please go ahead.
Hello, and like everybody else, congratulations on an excellent result. Three very brief questions. The first one, a follow-up on Maripaz on Peru.
Well, the profitability is certainly much, much higher than we expected. What about the size of the market? I mean, you're still growing only 10%. You are not dominant in Peru the way you are in Mexico. How much bigger can that business become for you relative to where it is today? The second is, how much more potential do you see in insurance? I mean, that has given you a lot of fee income that this company did not have 15 or 20 years ago. Can you go into new things? I'm thinking about, you know, funeral policies or healthcare. Do you see that as a big avenue of growth or you think that the product set that you have is what corresponds to your business? The third question is following up on Yuri.
Is your conservativeness in your guidance more a reflection of these initiatives in which you are sharing value to customers or to employees, and therefore that will perhaps cap the earnings growth that we might see in the coming years? Thank you so much.
Thank you, Carlos. Yeah, actually, I believe that both in Mexico and in Peru, we have a lot of market potential still. In Mexico, we know we have around 130 million people, and in the segment that we serve with the people with more than 18 years old, there are 50 million people population. From those 50 million, and I'm talking Mexico now I'm going to talk about Peru. But in Mexico, from those 50 million, 36% have a formal credit and the rest of them don't have a formal credit. That's why we believe there's a lot of opportunity to keep on serving. How many people from there are going to take credit? It depends on the activity, but the market potential is there.
Those numbers in Peru are, we have a total population of 34 million people. People in our segment and 18 years and older is 14 million people. From those 14 million people, 54% have a formal or an institutional credit, let's say, and the rest of them, close to half of them, don't have this formal credit offer. What we have to take into account there in Peru is that the rural areas are very big. We have a very, let's say, large number of people not living in these big cities. It's more challenging to get them, yes. But anyway, we believe that even if Peru is a more mature market in the individual lending, the group lending has a very, very large potential.
Both in individual and group lending in the rural areas, we have a large opportunity too.
Regarding insurance, we have talked a lot about this. If Mexico and Peru and the base of the pyramid in many countries is underbanked, underinsured is even worse. I think that we have been very successful bringing microinsurance to the communities that we serve, and we think that still there's a lot to do. As you remember, we started with one product some years ago, now we have four products, and now we're doing cross-selling. We plan to keep expanding in the next years, and insurance is still a product that has a lot of potential to grow in both countries.
Regarding the guidance and what we have talked, obviously this share of value is what somehow we want to do to share part of the profitability that we generate with the different constituencies. That is why we are showing this guidance of 13%-16%, because these initiatives are being considered in the plan.
Very clear. Thank you very much.
Our next question comes from Aldrin Castro of Ashmore Group. Please go ahead.
Hi, thank you very much for the opportunity. I have a couple of questions. First, regarding the sharing profitability mindset that you guys have, how did you came up with the increased contributions to the foundation from 2% to 3%? What was the framework that you used to come up with that result? Could we further expect this increasing from 3% to 4% going forward, or is it a one time that we should only expect? Secondly, if there is any update in terms of attracting competition in your different markets, do you start to see some competitors now emerging or getting ready for the following year?
Okay.
Thank you.
Yeah. First of all, we have to say that it is not that common that organizations, through their foundation, commit, and this is a commitment that we made from our board, to give this 2% that we have traditionally had of the profits to the foundation. As you know, our foundation has a lot of projects. Many of them we made them with our own staff. Many of them we make it through the organizations that we partnered with. At the end, I can tell you that in 2025 we benefit over, let's say, almost 400,000 people through all this project. Having this 2% is outstanding, and maybe it's an outlier in the industry.
Yes, what we have been talking with our board and internally with our management and the people of our foundation, is that we have the opportunity to increase the number of projects, to increase the impact, the social impact that we want to make through our foundation. That 2%-3% is based on those potential projects that we see. We have always been motivated to support projects that have to do with education and with health, basically. Financial education, many of them. We see opportunity to keep on supporting different projects all across the country here in Mexico and in Peru. That's the logic behind the 2%-3%.
What we also said is that we can give the foundation up to 3%, not necessarily the 3%, but we now could give 3% if we see that we find the specific projects to support. We don't see in the short term that this 3% could be increased to 4%. If in the future, this comes, I'm sure that it will be because we see the value that this could add to the project that we have, but not at this point. I can tell you that 3% will be more than enough for the following years.
Regarding competition, well, yeah, obviously we're seeing many participants that are trying to get into the segment, mostly through payments and collections and fintechs. Enrique has talked a lot about competition in the past. Yet, we have not seen a real new player in the credit side. Obviously, our performance and the size of the market and the need should bring more competition, and we welcome that, because it's very important for financial inclusion.
Thank you.
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. Well, just to comment, I believe that under the present context, not only in Mexico and Peru, but globally, maybe the name of the game is how to navigate uncertainty and how to navigate and avoid risk on this uncertain context. We believe that we have a strong and stable operation and results in Gentera and their subsidiaries. We also believe that we have a very strong team at every line and department of the company, including our board members and investors. We can expect that under this uncertain context, we will have strong footprint to continue advancing and growing and accomplishing our purpose, which is keep on being there for our customers and their dreams. Thank you for connecting with us today. Thank you for your time, and we hope we will see you soon in the next quarter.
Thank you.
With this, concludes the conference of today. You may now disconnect.