Good morning, and welcome to the second quarter 2026 Gentera 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 to everyone. Thank you all for joining us and for your continued interest in Gentera. I am Enrique Barrera, the company's Investor Relations Officer. I am 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 results for the second 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 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 México 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.
Good morning. Thank you, Enrique, and thank you all for joining us today in our second quarter 2026 Gentera report. As of the end of the second quarter of this year, we are pleased to once again report solid operating and financial results. These results reflect the successful execution of our business strategy, as well as the efficiencies that we have achieved over the past several years.
Gentera's loan portfolio reached MXN 94.6 billion, representing year-over-year growth of more than 13%. Our total customer base in México and Perú reached 6.7 million people served. Likewise, accumulated net income for the first half of the year reached MXN 4.8 billion, the highest first half results in our history, representing 12% in a year-over-year growth.
The modernization and efficiency initiatives we have implemented over the past years have enabled us to keep operating expenses growth below the increase of both loan portfolio and our revenues. Regarding asset quality, our Stage 3 non-performing loans ratio closed the quarter at 4.04%.
This level remains within the expected range of our current product mix and represents a slight improvement compared to the first quarter of the year, which was 4.13%. We will continue working diligently to keep delinquency levels under control in both México and Perú. Our subsidiaries continued to deliver strong growth. ConCrédito's loan portfolio increased by nearly 15% year over year.
Banco Compartamos Perú grew by more than 14% in local currency, while Banco Compartamos México also achieved growth of nearly 14%, despite our decision to slightly slow the pace of the growth in our Crédito Individual product, which, by the way, I will elaborate in greater detail in a moment. Looking ahead to the second half of 2026, our priorities remained very clear.
We will continue executing our business plan with discipline while staying close to our customers. We remain committed to delivering EPS growth between 13% and 16% in 2026. Regarding Gentera's consolidated loan portfolio growth, in this quarter, we will report and revise our full year growth guidance. These adjustments primarily reflects the slowdown in the consumer economy in México, which could affect our customers' payment capacity.
The adjustments of this guidance is also considering the stabilization of the quality of our i ndividual loan portfolio in México after a long period of sustained growth. Nevertheless, we remain fully committed to keep our leadership position in the market, while continue creating value for our customers and all our stakeholders. Now, while recognizing that the quality of our i ndividual loan portfolio in México has been an important topic of discussion over the past quarter, now we want to, in fact, address this matter during our first quarter earnings call.
We mentioned in the first quarter call that we have acknowledged early signs of portfolio deterioration and the need to implement corrective actions, which we began putting in place during February and March this year. With that in mind, let me provide additional context on this matter.
As you know, the growth of i ndividual loan business over the past several years has been extraordinary. Over the past four years, this portfolio has expanded more than 5x , and in 2025 alone, it grew more than 30%. This growth has generated significant benefit for both our customers and Banco Compartamos financial performance. However, as is typical in the lending business, periods of rapid growth are naturally followed by a stabilization phase before getting back to growth periods again.
As we have mentioned on several occasions, our lending portfolio follows a natural cycle. We first growth, then we follow a period of stabilization of the portfolio quality, and then we start growing again. Consistent with this approach, during the past quarter, we have taken the following actions.
First, we concluded a compelling assessment of the situation and we have a clear identification of both internal and external factors behind the portfolio deterioration. Based on that assessment, we developed a clear action plan and implementation of these actions began at the end of the first quarter of this year.
Today, we are already seeing early signs of stabilization in the quality of this portfolio, and we are very confident that the delinquency levels will return to normal by the end of this year. Addressing these challenges is strengthening both our lending methodology and our operating processes, allowing us to build a stronger product for future growth.
Now, at the consolidated level in Gentera, after incorporating the impact of these adjustments into our projections, we are revising Gentera's loan portfolio growth guidance, and now we expect to close the year with a portfolio growth in the range of 6%-9%. The good news is that we are maintaining our EPS growth guidance of 13%-16%. We expect to achieve this by maintaining our expected growth of our other products and subsidiaries, and together with the efficiencies that we have captured and the strong expense discipline that we have maintained over the past several years.
We both expect ConCrédito and Banco Compartamos Perú to continue delivering double-digit growth for this year. Overall, we remain cautiously optimistic, while recognizing that the current economic slowdown in México is likely to persist throughout the rest of this year.
Finally, our digital transformation process for the group lending business in México continues to make steady progress. Since group lending is the bank's largest business line, we are taking a disciplined and carefully phased approach to the implementation and scaling of this project. Therefore, over the coming quarters, we will continue refining both our processes and that technology through the controlled rollout of this platform in a couple of regions across the country.
We currently expect a full nationwide deployment during 2027. Well, thank you for your interest in Gentera and for joining us today. I will now turn the call over to Mario, who will provide additional details on the financial results. As always, afterwards, we will be able to take your questions.
Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique just mentioned, we are enthusiastic with the financial results that Gentera is presenting for the first semester of 2026. Following our strategy and the different initiatives that we have implemented in the last years and that we have explained in previous calls. In 2Q 2026, we reached a new record of 6.79 million people actively using our financial services, adding 657,000 people and growing 10.7% compared to 2Q 2025.
Our loan portfolio amounted to MXN 94.6 billion, representing a 13.1% growth compared to the same period of last year. Our three credit subsidiaries show double-digit growth compared to 2Q 2025, with Banco Compartamos growing 13.8%, Banco Compartamos Perú growing 14.5% in local currency, and ConCrédito growing 14.9%.
As Enrique mentioned above, we expect that for year-end, Banco Compartamos Perú and ConCrédito will continue growing double-digits, and Banco Compartamos México growing single digits for Gentera's portfolio to grow between 6%-9% on a year-end to year-end basis. Very important to note is that Gentera's average portfolio for the year will be around 10% higher than in 2025.
It is also worth to mention that our decision to slow down the growth of the portfolio in Banco Compartamos México in the second half result from the adjustments that our credit business requires after high levels of growth following natural cycles and dynamics, as explained by Enrique Barrera. Regarding the evolution of the different lines of our income statement, in 2Q 2026, Gentera's interest income grew 9.8% compared to 2Q 2025, amounting to MXN 12.96 billion, following the observed growth in portfolio and clients.
As I just mentioned, and given the fact that the average portfolio for the year will be above 10%, we expect that NII should also grow at the same rate. Also, in the same period, financing expenses increased 9.9%, mainly driven by the reduction in reference interest rates in México. Therefore, net interest income grew 13.9% to amount MXN 11.1 billion.
NIM amounted to 41.2% in 2Q 2026. For the first semester of the year, NIM stood at 40.6%. For year-end, we expect NIM to move around 41%. At the consolidated level, Gentera 2Q 2026 NPLs amounted to 4.04% compared to 4.13% in the previous quarter. Gentera's cost of risk for the first semester amounted to 13.7%.
It is important to say that we have seen stabilization trends in these metrics due to the implementation of the different actions to control asset quality that we have deployed, particularly in Banco Compartamos México, such as reinforcing origination, monitoring, and collection processes, adjusting the incentives program, strengthening our sales force, fine-tuning training and targeting strategies as described in our past conference call.
Banco Compartamos Perú and ConCrédito have shown stable and healthy risk levels. So for year-end, and based on the data that we have today, we expect that consolidated NPLs should be moving around 4% and consolidated cost of risk for the year around 13.5%. Gentera 2Q provision for loan losses amounted to MXN 3.43 billion, a 29.7% growth, which is in line with its growing asset quality and its loan portfolio mix and growth.
NIM after provisions for 2Q 2026 amounted to 28.5%, similar level presented in the previous quarter at 28.8% in 1Q 2026. We expect this ratio to be between 29%-30% by the end of the year. Net fees amounted to MXN 1.6 billion in 2Q, growing 14.2% compared to 2Q 2025, mostly driven by the growth of our insurance business. Operational expenses for 2Q 2026 amounted to MXN 6.19 billion, representing a 7.7% increase compared to 2Q 2025.
The modernization initiatives and investments in technology that we have described in past conference calls have benefited us to allow the adjustment of the operational expenses growth for the year to move around 10%. After all these effects, net income reached the second-best quarter ever, amounting to MXN 2.353 billion in 2Q 2026, growing 11.6% compared to the same period last year.
Gentera's controlling participation of net income in 2Q amounted to MXN 2.284 billion, growing 8.5%, implying an EPS of MXN 1.45 and around 8.5% above 2Q EPS of the previous year. The net income that Gentera generated in the first six months of 2026, one of the best result in any other first half of the year ever.
Gentera's controlling ROE for 2Q 2026 stood at 24.5%, in line with our original expectation for the year. For the full year of 2026, we should expect Gentera's controlling ROE to move between 24% and 25%. As always, these results have been achieved preserving solid and healthy liquidity, strong and diverse access to funding, and robust capitalization at Gentera and its subsidiaries. To conclude my remarks, as you can see, in the first half of the year, we're delivering results as promised.
While one of the objectives in the coming months will be to control the asset quality, we expect to comply with double-digit growth in Gentera's EPS within the range guided between 13%-16%. Finally, we at Gentera are very motivated by the fact that we're concluding the semester with solid operation and financial dynamics, servicing millions of clients in México and Perú, supporting them with their different financial needs so they can reach their dreams. At the same time, keep generating total value for all of our different stakeholders. Thank you. That is all for my remarks, and if you want, we can move 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 Yuri Fernandes of JP Morgan. Please go ahead.
Thank you. Hi, Enrique and Mario, Enrique Barrera, everybody. Good to see the stabilization of the new NPL formation. I would like to ask more about growth here, Mario, and less about 2026, and I know maybe a little bit too early, but for 2027.
I know for this year you have all the cost efficiency agenda that you have been delivering, so keeping the EPS, I think it is a good thing. But for 2027, how do you see the leverage for you to deliver EPS expansion? Do you believe you can have better margins because maybe individual lending will grow less and maybe your margins can expand more? Do you see another year for lower growth? You have higher taxes this year. Can taxes help?
Just help us to understand, given your end of period loan book should be smaller, how to continue to deliver those double-digits EPS for next year. That is the first question. Number two, just on dividend payout, I know you just approved the 40%, but any time we see a company growing a little bit less, that in your case is more like an asset quality control, we tend to debate payout, right? If this is maybe, this takes longer for you to recover the growth outlook, can we start to see debates around higher dividend payout for Gentera? Thank you.
Thank you very much, Yuri. Yeah, well, as we have always said, the market that we serve and the product that we have, we feel very confident that we can deliver a double-digit growth in our portfolio and in our net earnings in the medium term.
Having said that, obviously, we will be looking very closely to how we finish the year, and we will give you the specific 2027 guidance as soon as we have all of this evidence. But fixing that objective that we have to deliver double-digit growth in the portfolio and EPS, that is what we remain committed to do. Specifically in the EPS, the first driver will be the growth of the interest income that should come from the growth of the portfolio. Then we will be managing interest expenses to make sure that financial margins grow double-digit.
We will stabilize provisions in order to also keep at the NIM of the provisions a double-digit growth. Then, after all the efficiencies and discipline that we have had over several years, keeping positive jaws, we feel comfortable that we will also be able to deliver the EPS growth.
Having said that, please just wait until February, so we can give you the exact 2027 guidance. Based on your question about dividends, again, our medium-term objectives don't change. So, when we decided to increase the payout from 40 to 45, that was accounting for, if you want, a medium-term strategy. Even with that equation, we have always said that the first thing that we need to make sure is that we have sufficient capital for organic growth.
The second is that we will be looking how we can bring new products or new services to our clients through organic development or potentially inorganic. Then at the end, if we still have excess capital, the idea will be to distribute it to our shareholders. But at this point, the objective is that for next year, we will present to our assembly again, to our shareholders meeting, the proposal to increase to 45%, and that is where we stand at this point.
No, super clear, Mario. If I may just follow up on the growth. Last time we discussed this, I think the message was there were specific regions on asset quality, right? Like three, four regions, especially around México City. Maybe a little bit of training regarding the loan officers. It seems like now that the individual new NPL formation is kind of peaking, that maybe things are a little bit more under control.
The question is, what is the message for investors that this will not repeat? Because I remember in the past you saying, "Oh, we have a new underwriting model. We have better technology. The loan officers, they have less power to decide," right? Still, we face some problems. Whenever you start accelerating again for 2027, what gives you confidence that growth will not be followed by asset quality issues? Thank you.
Yeah. As Enrique said, we think that even though that the context is more complicated in general and that we need to be looking at the context in much detail, we believe that part of the things that happened were because of some changes that we did in our processes. As we said since the last conference call, we have been addressing, and I just mentioned some of the things that we have been doing. So we feel very comfortable that the things that are under control will allow us to come back to the levels where we feel comfortable.
Yeah, Yuri, and let me give you more detail on this because I am sure that this will be something that maybe is in the questions of many of you. So let me explain to you with a little bit more detail what happened and the current situation in our loan portfolio in general, but specifically also in Crédito Individual in México.
First of all, we have to say that the reason why we have higher NPLs in the individual lending portfolio in México are basically in two, let us say, perspective. The first one is internal perspective, and the second one is the external perspective. So let me start by the external perspective. This year, we know that we have had, and since last year, this acceleration of the economic activity in México. Last year was a very good year for us, and our customers did not feel that much this acceleration.
This year, they started to feel it a little bit more. We have observed that our customers are renewing their loans more cautiously and requesting smaller loan amounts, recognizing a more challenging economic environment. We see this as a positive sign since it demonstrated our customers are managing their indebtedness responsibly.
Likewise, we have always been committed to ensuring that our customers do not become over-leveraged. For this reason is that we have revised our loan portfolio in general, and we are guiding 6%-9%, not only because the individual loan portfolio, this acceleration, but also because we see this dynamic in the market. These are the external factors, let's say.
Now let me tell you about the internal factors that will explain why this is happening and why this should not be happening in the future, or how could the future look on this. For the individual loan portfolio in our individual products, throughout the history of the individual loan business, we have experienced several periods of rapid expansion of the portfolio.
Actually, I can remind that between 2011 and 2012, our portfolio in the Crédito Individual grew 3x in these two years. Between 2014 and 2016, it doubled its size also. In both cases, NPL levels increased to figures similar to those we are experiencing today. In the first case, it grew to 7.9%, and the second case was 5.8%.
In each instance, we deliberately slowed our portfolio growth in order to strengthen the portfolio quality before resuming expansion with this cycle that I explained, in which we grow and then we control. Today, after growing this portfolio approximately 5x since 2021, that's the rate of growth that we have had in individual lending now. Since 2021, the portfolio grew 5x .
Our ratio now stands at 6.5%. Consequently, we have decided to moderate the growth while implementing the corrective measures. We are already began to observe signs of stabilization and expect NPLs level to improve over the maybe two next quarters. In summary, after we have this rapid expansion, it is natural to have slowdown periods to stabilize the quality of the portfolio. Secondly, we have experienced four consecutive years of strong portfolio growth in Crédito Individual recently.
We have successfully managed similar portfolio quality levels in the past and consistently restored portfolio performance before resuming growth. The good news is that based on our experience, we are already seeing early signs of stabilization and expect clear evidence of recovery over the next two quarters. That's the general situation, and I hope this will give you a better color of what we are facing now, which is, I believe, or I will define it as a natural cycle of our business and the confidence that we will, when we are putting our actions in place, and we are looking signs of recovery.
Super clear. Thank you a lot, Enrique and Mario, for the answers. Thank you, guys.
Thank you, Yuri.
Our next question comes from Tito Labarta of Goldman Sachs. Please go ahead.
Hi. Good morning, Enrique, Mario and Enrique. Thanks for the call, and taking my question. I guess just following up a little bit on credit quality, but also, I guess, the provisioning from here, right? Because I think in the past you said cost of risk 13%, 13.5%, right? You provision a lot more given some of the issues that you're seeing.
Should we expect this to moderate already beginning next quarter? Or could it take some time, just as you sort of get through some of the problem loans, just to think about the cost of risk evolution and how it should go from here. Then just also following up on the loan growth side of things, right. I know you're feeling a little bit more confident here, but given the sort of short-term slowdown that you're doing, how quickly can you return?
Given that some of the issues were because you grew too fast the last several years, will you need to sort of slow down for an extended period of time before you are really able to accelerate growth maybe back to the double-digits? Or do you think it will be much faster than that in terms of your ability to recover growth? Thank you.
Thank you. Well, regarding the expectations, let me give you the expectations for year-end. We expect that NPLs should be around 4%, maybe a little higher, and cost of risk should start coming back to levels around 13.5% as I said. That is for this year.
Obviously, we will be giving updates every year. If in the future, given the new mix that we will be having where individual will be taking a higher share of the mix, we would expect that these levels would be growing in a very controlled way going forward. But for the end of the year, we should expect around 4% NPLs and around 13.5% cost of risk. Regarding loan growth, we think that we have the tools, as Enrique has mentioned, to speed up growth, with the new digitalization tools that we implemented last year, specifically in individual lending.
We are very, very efficient to be able to answer to the clients very fast, to be able to be more productive. I think that we have already the capabilities to accelerate. And it has been proven because we were able to grow a lot in the last years, as Enrique just explained. But we need to be also very, very prudent using also the control tools that we also have deployed. We are really not worried about accelerating growth. We want to accelerate growth with control. But I think we have the tools to do both.
Okay, great. That is helpful, Mario. And just to clarify, I get the 13.5% for the full year, but is it sort of like an immediate improvement? Or it was just you had to book additional provisions this quarter or is it more a moderation? Because you had a relatively low level, 12.8% in 1Q. So just to think on how that evolves, you sort of gradually get back to 13.5%, or is it you had just a bad quarter of provisions this quarter, and you could immediately adjust next quarter?
No, it obviously has a lag. Again, as mentioned before, we expect that in two quarters, we are going to be seeing these adjustments where things are normalized.
Got it. Okay, perfect. Thank you, Mario.
All right. Thank you, Tito.
Our next question comes from Eric Ito of Bradesco. Please go ahead.
Hi. Good morning, Enrique, Mario and Enrique Barrera. Thank you for the call. I have two questions as well. The first one is regarding OpEx and efficiency. When we look at your initial remarks, Enrique, you mentioned, I think you updated the guidance for 2026.
Maybe we have a slightly higher NIM for this year, running around 41%, and OpEx around 10%, which implies your efficiency ratio for this year is probably better than you had in the beginning of the year as you control operating expenses under this, let's say, more cautious scenario. I would just like to get your thoughts here for 2027, if we can maybe see a continuous improvement in efficiency ratio. I think in the previous call you mentioned and you announced some rebate programs for the good clients, maybe these are on hold.
I just want to get and pick your brains on your expectations for this program and efficiency for 2027. My second question is regarding Perú. I think Perú is developing very good performance for now. Just that we are starting to hear some concerns with El Niño potentially impacting Perú. I just want to get your thoughts here on how do you see provisionings for Perú, and if there could be any impact on your loan growth similar to what we have with México because of these concerns with El Niño. Thank you so much.
Okay. Regarding efficiency, well, again, I like to say that our objective in medium term is to keep improving the efficiency ratio. Our plans are to bring it below 60% in a couple of years, hopefully. We are absolutely committed to keeping that. Again, we have drivers on the top line that will allow us to grow as we just mentioned.
Also we have drivers in the cost side, through all of the improvements that we have been doing that should allow us to maintain efficiency. Again, we will maintain this also medium term, permanent rule, where our income needs to be growing faster than our expenses, meaning that we will maintain positive jaws, and that are the drivers that will allow us to get efficiency ratios lower.
Yeah, Eric, regarding Perú, I can happily say that our results and operations in Perú are running very well. In our individual loan portfolio, we continue to grow at a strong pace, and we are maintaining solid asset quality. Actually, year-to-year growth in the development lending in Perú has been 12% with a 3.2% NPLs. Also our group lending portfolio has experienced a growth of 7% with a 3.3% NPL.
We are doing good there. Yes, El Niño is something that we are very aware of. Actually, it has been in our conversation, not only in the management team, but also in our boards in México and in Perú, regarding El Niño in Perú. Yeah, we have provisions considered, and maybe Mario can tell you a little bit more about this, but this is in our forecast also.
Okay. Just to be clear here, on the provisions for El Niño, you are already considering that for the guidance of 13.5, but you haven't seen anything, let's say, in the first half yet?
No, we believe that the provisions that we have today, we are covered. We will be reviewing as things go through. We have voluntary provisions in Perú above IFRS provisions that we feel comfortable with. But it's something that we will continuously looking at. Important to say that all of the weather impacts, we need to see them community by community, because the impact that you have, it's not generalized. It's always in each community. So we need to be looking very closely, all of our offices, both in México and Perú. But we feel comfortable with the provisions that we have today.
And just to clarify, for loan growth, you still maintain your expectations, let's say, to keep this double-digit for this year. So for now
Yes
no concerns on slowing down?
Yeah. In Perú, yes, double-digits. yeah
Okay, perfect. 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, and thanks for the opportunity to ask questions. We were a little concerned with the monthly data from the regulator, especially with April, but you were able to meet expectations. In the first half, net income is expanding 12%, so the only Mexican financial with that growth and likely for the next year.
So congrats on your results. My first question will be a follow-up to Yuri's question on loan growth. As you mentioned, you now expect loan growth between 6%-9%, recognizing a tough year-over-year comp in the last quarter of the year, and that you are prioritizing asset quality over loan growth. Having said that, how should we think about loan growth next year? When are you expecting to re-accelerate, and that translating into NII and fee income growth?
And for my second question is, if you can provide more details on which geographies or micro sectors were the most affected in the asset quality of the individual sector. I believe you were nicely expanding this product with a digitalization process, so just wanted to see also if there were some adjustments in the digitalization process or how can we be more comfortable that you can return again to grow this portfolio. Thank you.
Okay. Yeah. Well, thank you first. Yes, you are right. We have been delivering a very strong quarter with double-digit growth in earnings. And again, our commitment, as we have said, is to reach the 13% - 16% guide in EPS, and we think that we feel comfortable doing that.
As I mentioned in my remarks, even though that we're saying that the loan growth will be 6% - 9%, it's important to know that it's a year-end-to-year-end number, or December to December. And remember that December of 2025 was a very high growth quarter. So in order to make the numbers right, it's important to look at the average portfolio for the year, and the average portfolio of the year will be, as I said, around 10% or double-digits.
Having said that, we expect that the interest income will follow more or less that route, and with improvement in the interest expenses, we should have a double-digit growth in the NIM, as we said. And even after the growth of provisions, we will be able to maintain double-digit growth in the NIM after provisions. And through the cost controls that we already set, because our objective is to reach the EPS guidance. Having said that, again, our medium-term objective is to maintain double-digit growth in the portfolio and the earnings.
We would like to restore that as soon as possible, but now most important is to do it with control. So we really need to see how the next two quarters develop in order to build the full 2027 year plan, and then give you very specific guidance on what we should expect specifically in 2027. But our objective is to restore double-digit both in portfolio and in earnings. That's our medium-term goal.
Ernesto, regarding the individual lending portfolio, let me speak a little bit more in detail about the main factors behind the deterioration, because it doesn't have to do that much with geographies. First of all, I think that we have this economic slowdown that is affecting the consumer activity in México, which is general.
That's one of the reasons I already explained. On the other hand, some of the things that we did and that we are now changing after a long period of growth. First of all, we have to take in account that we come from four or five years of very aggressive growth in which we hired more loan officers, we trained more loan officers, so that's a challenge itself.
Then we also made some product adjustments with the intention of simplifying the process for loan officers and the experience, making a better experience for our clients. Also we implement changes in the incentives models for the loan officers that were directly putting emphasis on the growth. All of these factors, some of them gave us very good results, and that's why we grew for so long, having a very good quality of the portfolio.
But in some other cases, we made some mistakes. That's the things that we are changing now. Having said that, I believe this will give you more color of what is causing this and why this is more like a matter of making adjustments to our processes, methodology, et cetera. While some of these changes proved beneficial, others didn't deliver the expected results.
We have learned from that experience, and we have implemented the necessary corrective actions. It is worth to emphasize that addressing these changes is also contributing to a stronger lending methodology and enabling us to build a more efficient operating process for the future growth.
Excellent. Super helpful. Thank you very much, Enrique and Mario.
Thank you.
Our next question comes from Ricardo Buchpiguel of BTG Pactual. Please go ahead.
Hi, everyone, and thanks for the opportunity of making questions. I have a question for growth, but now looking more in the long run. Gentera has been growing at double-digit pace since 2021, and it is way above the Mexican credit industry. There have been some volatile moments like we are seeing now where you are adjusting a little bit for all the cycle. In your view, how long can you keep sustaining this double-digit long growth and doing that without moving towards new markets?
Just to get a better sense on the size of the opportunity, if you could comment on what you view for the market share of Compartamos México in your specific segment, which is microfinance. For my second question, can you provide more colors on the drivers for the 41% NIM that you indicate in this call?
Now that the easing cycle is mostly behind us, not sure if you are embedding some improvement in terms of funding costs or higher spreads because you are being a little bit more restrictive on the second half. Any color on that will be helpful. Thank you.
Regarding long road, as we have said, the most important thing is the addressable market. As we have always said, we believe, in the segments, 100% of the population in México, there are around 90 million people, out of which around 60 million people are adults. Of the remaining 30, many are kids that will join the workforce in the next years. So we serve 6.7 million persons, in México, 5.7 million people. As you can see, the addressable market is very large.
With the products that we have in México, we think that those, the segment that they serve, still have chance to keep growing at 10%. Going forward in the long run, we have some strategic initiatives that we need to develop in order to be able to have more services to serve a larger share of this big addressable market. I think that we have a lot of work in the future. Double the growth, it's something that is achievable.
Ricardo, let me remind some of the specific data that we have given around market share and market potential, in México as well as in Perú. Here, as Mario was saying, we have a huge market potential. We still have a huge market potential in both countries.
In México, if we take the people, 18 years old and elder, from our segment, we are talking about around 50 million people, from which 36% have a formal credit, but the rest don't have a formal credit. We are talking around 30 million people that still we can serve. In Perú, that number is also big. We have 14 million people 18 years old and older in our segment, and half of that have a formal credit, but the other half doesn't.
That's why we believe, looking forward, we can still grow at double-digit for the following years. In terms of our market share, in México, yes, we are leaders there. We have 70% of market share in México in the group lending methodology, but we have 40% in the individual lending methodology, so we still can grow also there.
In Perú, those numbers are, we have, in the group lending methodology, we were the only players there. Now there are coming new players in the group lending methodology. Anyway, we have 70% of the market share. In the individual lending, we have a stronger microfinance industry in Perú, and we are competing there with several players, having 6% of the market share.
Ricardo, regarding the NIMs, given the fact that the ASR portfolio has been growing this year, double-digit, as Mario was describing in his remarks, the interest income that we have been generating is growing at double-digit. Also, the good reference interest rate environment that we have in both countries, México and Perú, has allowed us to have a more convenient interest expense line. That is the factor that the NIMs that we are expecting in Gentera, as Mario was describing, will be moving around 41%, before risk, and after risk, around 29%-30%.
That is super helpful. Thank you.
Thank you.
Our next question comes from Gustavo Araujo of UBS. Please go ahead.
Hi, everyone, Enrique, Mario. Enrique, congratulations on the results, and thanks for taking my question. Just to understand, on Banco Compartamos Perú , we have seen the operation delivering ROEs above 25% of the past few quarters. Do you believe this level is sustainable, and what could you consider level of profitability going forward? Second, also in Banco Compartamos Perú , in this quarter, we saw deterioration on the NPL ratio. Could you get a little bit more color on that? Do you see concerns for the second half of the year?
Yeah, sure. Gustavo, let me start with the context in Perú. Actually, as I said, we are performing very well in Perú. Let me divide this conversation in individual and group lending. As you know, it was strategic for us to buy the operation in Perú in 2011 because we wanted to, one, to learn from the individual lending methodology and bring it to México, which has been successful.
The second thing is to take the group lending methodology to Perú, and we have grown very, very fast. Not fast, maybe, but very solidly and in an important way in Perú in group lending. By now, I can tell you that in the group lending methodology, we remain as the leaders, and we are starting to see other players to come into the market, which is good because the industry is going to be more complete, let's say.
But we are very strong there, and the potential that we have on growing in Perú is still very high in the group lending methodology. In the individual lending methodology, we feel very strong, too. Actually, we are having very good numbers in the individual lending, despite that that's a very competitive environment and industry.
The reason why we feel strong and we are having good results is because we implemented, two years ago, the digital platform, Palpa, which allows our loan officers to manage their portfolios through digital technologies. So now we are competing very strongly with the usual suspects that we have there, and that's why we are having very good growth in individual lending with very good portfolio quality. Well, maybe I will leave Mario to speak a little bit more about the quality of the portfolio.
Yeah. Even though there has been a little pickup, it's performing better than expected. So maybe, just for the year-end, we should expect NPLs around 4%. Cost of risk around 8.8. I think that even though it has picked up a little bit, it is below our original expectation for the year.
Okay. Super clear. Thanks.
Thanks, Gustavo.
Our next question comes from Brian Flores of Citi. Please go ahead.
Hi, team. Good morning, and thank you for the opportunity to be here. I wanted to ask you a strategic question just to see if I understand correctly what is happening. I think you are undergoing a transformation.
If I understand correctly, we, as analysts, we should be comfortable with the trade-off between a structurally higher cost of risk that is being compensated by higher fees, perhaps a more efficient model in terms of OpEx, and that this naturally sustains both higher growth in the midterm and also above or similar levels to around 24%. I just wanted to check with you if this is making sense, or if there anything here that is different to think about.
You got it perfect.
Exactly.
We couldn't say it better.
You are absolutely right. We are evolving, and we have been evolving for a while. Just as you describe it, the idea is, with this new mix of products and with the growth of the different subsidiaries, with the contribution of the different products, because now it is not only the mix of the portfolio, it is the mix of earnings, the mix of the different sources of income.
We are following that route. We will have different metrics on risk, different metrics on efficiency, and different metrics of growth. The idea is that we maintain, as we have already said, a double in both in portfolio, double the growth in earnings, with ROEs above 23%, as we have said, 23%-24%, and still with very strong capitalization. As you describe it, is exactly what we are thinking.
Okay. Thank you very much.
Our next question comes from Pablo Ordóñez of GBM. Please go ahead.
Yes. Hi, Enrique, Mario, Enrique. Thank you for taking my question. I have a couple of questions on growth dynamics first, and then a second one in Perú. Enrique, you mentioned that in your remarks, the external and internal factors affecting your products in México. In the external, you mentioned economic weakness. I would also like to hear your update on the competitive environment from other banks and fintechs. Have your individual clients also been receiving products from other institutions?
We have heard some other banks, for instance, mentioning that they are observing weaker numbers in the credit bureau data. That is on individual. Then a second question, also in México, on group loans. We also observed a weak quarter with sequential contraction in the portfolio. 2025 was also a portfolio that had a single-digit growth. What is the potential for this group portfolio and methodology in México? I will stop here, and then I will ask my question on Perú.
Sure. Thank you, Pablo. Let me talk a little bit about competition. As we have mentioned in previous discussions, Gentera primarily serves customers seeking working capital and consumer financing, and we are talking about C and D segments. We have seen a lot of players coming in, most of them fintechs company that are not focused on this market and this segment.
I mean, not this segment, and maybe they are more focused on the consumer lending. Having said that, we are seeing a broader expansion of credit availability across the market, which is also reaching some of our customers. These examples include fintechs expanding into the C and D segment, like Nu or Mercado Pago or Plata.
We also have in the market government programs designed for small businesses, such as Tandas para el Bienestar, which is something that we have always had in México, and we believe that those programs actually help our customers to maintain their economy. We also have these traditional competitors that continue to maintain a strong market presence, including, and I am speaking about microfinance, but Provident or Caja Popular Mexicana, and even Banco Azteca and BanCoppel more in the consumer side. How are we responding to this?
We continue to grow responsibly while ensuring that our customers not become over-leveraged. That is our main concern on this side. As we see more competitors getting in, our main concern is how can we take care of our customers and be careful not to over-indebt them. Our strategy is to remain our customer's first payment priority.
For that, what we do is that we maintain very close to our customers, because on this environment in which we see more credit offering, being close to the customers and being the first payment priority is very, very important. That is what we also do. We accomplish this by maintaining close relationships through loan officers to this physical presence that for us is very, very important.
This is precisely why we have decided to moderate our portfolio growth during 2026. It is an important matter that you put in the table, and it is a complement on the explanation that we gave previously. Above all, we are maintaining those. We are maintaining ourselves close to our customers, having this long-term relationship that we have always sought.
Yeah. Regarding the second question, it is also our objective to maintain group lending growing double-digit growth. As of this year, or as of the first semester, it grew almost 17%, but we expect that for a full year, we will have these same effects that Enrique just explained for the whole portfolio of the bank in México, and then restoring double-digit growth in also group lending as soon as possible. Important to say that obviously, the growth of individual lending typically is and will be higher than the growth in the group lending portfolio. But we have the same objectives for both products.
Thank you, Enrique. Thank you, Mario. My question on Perú. You already explained the loan dynamics, but on profitability, two consecutive quarters with ROE around 26%. We have seen some improvements in the cost of risk. My question here is if we should continue to expect this 25% ROE for Perú for the second half.
In particular, we have observed also that in general in the Perúvian banking system, there has been some benefit in cost of risk from people taking money out from their pension accounts. Have you seen an extraordinary benefit from this impact in Perú, and if we should continue to expect this 25% ROE in the second half?
Well, I think that we should aim to have an ROE above 20%. That's where we are. 25% it was a great period, but I think it should be something between 20% and around 23%. Something around 23% should be sustainable. Based on your second question, we haven't seen anything particular regarding the pension payments.
Okay, perfect. Thank you very much for the call, Enrique and Mario.
Our next question comes from Carlos Gomez-Lopez of HSBC. Please go ahead.
Hello, and congratulations on the results. Two questions. First, I do not think we have talked about ConCrédito. That is a part of the business that probably is more linked to the Mexican economy. We see that although the loan portfolio is going up by 15%, you actually have fewer users. The loan per client is up 16%. Is that a segment where you think you could be reaching over-indebtedness? What do you expect for it for the rest of the year and into the coming years?
Is that a segment that has more or less potential than Banco Compartamos? Second, if you have this available, could you give us your insurance fees for the quarters? We find them on an annual basis, but I do not think you break them down for the company as a whole for this quarter. I believe it is the entirety of your fee income. Could you confirm that? Thank you.
Thank you, Carlos. Let me talk a little bit about ConCrédito. ConCrédito is really performing very well and as expected. This 15% that you mentioned, it is in line with the projections. Yeah, actually, we have seen maybe that the portfolio has been taken care of very carefully by our management team, because the strategy that we are following is that we want our empresarias, which you know, is our sales channel and distribution channel for the product.
We want our empresarias to become more mature. We have seen that as we have more mature empresarias, we have a more efficient business. Now we are looking that the loans, that are dispersing these empresarias, which get more mature, are better loans in terms of the quality of the portfolio, but also they are increasing the ticket.
That is the strategy that we are following, and that is why maybe you are looking some different dynamics than what you expected. I do not know. But yeah, the quality of the portfolio that we are having in ConCrédito is also very good. It is in the lower end of the ranges that we define as healthy.
Okay. It is in line with your expectations.
Yeah.
You are not too concerned about over-indebtedness. This is what you want, fewer-
Yeah, totally.
fewer entrepreneurs to have more loans. What about the final demand? Again, that is in connection with how México is doing. We know we had a slow beginning of the year. Has there been any change in the recent months that suggest higher demand, or the economy is still relatively low at the moment?
No. On one hand, the business is being affected by the slowdown of the economy in general, yes. On the other hand, as you know, ConCrédito's product, the Vale Dinero, is a-p urely consumer loan, and consumer loans for us have a very, very high potential. We are not seeing a restricted demand on that product. On the contrary, we believe we can grow at the pace we have forecast.
To add one example of that is also CrediTienda. The growth that we are experiencing in this product line is moving around 27% year-on-year. Some dynamics in Compartamos is, no. Regarding the insurance business, Carlos, more or less 90% of the fee incomes, fee income line that is reflected in P&L, it comes from the insurance business in the different subsidies.
That will be 90% of the fee income, which then gets netted out with fee expenses. Is that correct?
Well, there are different concepts. The fee income comes mostly from insurance, as Enrique said.
Yep.
Fee expenses come mostly from the use of third-party channels. The right way is to see them independently. But when you look at net fees, because they are growing because of the growth of the insurance business and staying stable and even diminishing because of our use of third-party channels.
Sorry. On page 12 of the press release, we published a graph where you can see how the insurance, how the fees, the fee income, is generated, and how the fee expenses are paid to these different channels.
That is right, but that is for Compartamos Banco.
That one-
That is the Mexican business, right. I was asking about.
Similar dynamics also in Perú.
Sorry.
Compartamos, the insurance business is not reflected in the fee income line. It is reflected in the other operating and income line.
Okay.
If you want, we can then go.
We can discuss in detail. All right. Thank you so much.
Thank you, Carlos.
You're welcome.
Our next question comes from Andres Soto of Santander. Please, go ahead.
Good morning, Enrique, Mario. Enrique, thank you for this presentation. My first question is regarding, I would like to hear your thoughts on the economics of individual lending versus group lending. In the past, I understood, when you compare both, they provided similar levels of ROE, considering that you will have higher cost of risk for individual lending, but that was partially offset by improved efficiency, as you perform less visits to the clients.
As you recalibrate the model, how do you see these economics evolving? Based on your assessment, will you require more visits for your customers in the individual lending model, therefore efficiency is going to be similar to the group lending, and then you will need to increase interest to compensate for that? Or how you think in terms of the relative value of each of these segments?
Andres, thank you. The P&L equation is basically the same. It does not change that much. As you said, number one, first we start with higher tickets. That is very important to take into consideration. So it is a higher loan in amount. Rates are typically lower than group lending. Risk is higher than group lending. But at the expense level, it can be, if you want, more efficiently managed.
Both products are very profitable, and independently of the product, we have different drivers and incentives in terms of the variable of the equation that we want to address in certain moments. For example, we have incentives to grow the portfolio size. We have also incentive when we want to increase the ticket or reduce it.
If we see that a risk is increasing, we can use incentives to make our sales force focus more on visiting, as you say. So we can use the different operational levers that we have to address the different P&Ls. But as you said, rates are typically lower, risk is typically higher, expenses are typically lower relative to the group lending methodology, but profitability, it is very good in both products.
Let me talk a little bit about the expectations that we have in the individual portfolio looking forward. I have very interesting numbers around here, so let me share with you some of them. I already said that we grew like 5x in the past four years, this portfolio. Four years ago, we were around MXN 3 billion in the portfolio. Today, we are around MXN 19 billion in the portfolio, and yet we have a market share with that MXN 19 billion of a little bit less than 40%. So it's a lot of potential there.
I think that we're becoming a very relevant player in that product, and we believe there's still a large market to address there. I'm talking about specifically working capital loans to small businesses. So that's our individual lending client. We are sure that after we g o through this control phase after the big growth, now controlling. When we start growing again, we're going to keep on growing on a similar pace. So we're enthusiastic about the product, and we believe it has a lot of potential yet.
Thank you, Enrique. My second question is regarding your new loan growth guidance for 2026. I would like to understand how much of that is going to be driven by slower origination and how much for additional write-offs. We saw significant write-offs for individual lending this quarter. Should we expect this level of write-offs to continue or even increase in the second half of the year?
It's mainly driven by the loan growth that we're expecting, and again, it suits the full dynamics of the portfolio that we were going to be following. Again, as we said, for year-end, we will have growth, and we will have an average portfolio that will be higher than last year. Again, as soon as we can, we will restore double-digit growth.
Specifically on write-offs, do you expect write-offs to increase in the second half of the year?
Write-offs have, obviously, the lack. We start with NPLs, then provisions, then we have to follow all the process. That is why write-offs will continue being higher, but we hope that is stable in the next quarters until we empty all of the write-offs that we have to empty because of increased risk that we observed in these quarters. Remember that individual lending takes a little longer than group lending.
Perfect. Thank you very much.
Okay.
I don't know if we don't have any other questions.
There are no further questions at this time. I would like to hand the floor back over to management for closing comments.
Well, thank you very much all for your attention and your presence here today. As you have heard, we had a good first semester. We presented very good and solid results. We are aware that we are facing challenges, and that we see them as part of our business as usual, most of them. On the other hand, we are aware that the local economy in México context is slowing down. We have to be very aware of that also and take it into consideration.
But taking all this into consideration, we are looking at, let's say, a kind of recovery phase for individual lending looking forward this year. We are looking as a prudent focus on the growth that we are going to still looking at the other subsidiaries and products, and we believe we're going to have a very good close of the results of this year. We are confident because we also know that we have a very clear diagnosis. We have a plan. We are executing. Thank you for your trust on this. Thank you for your questions, and see you next quarter.
With this, concludes the conference of today. You may now disconnect.