The financial report for the fourth quarter of last year from Grupo Financiero Regional (Banregio) was in line with market analysts' expectations, showing a 14 percent increase in its credit portfolio compared to the same period in 2023, according to Eduardo López, an analyst at Intercam Banco.
In the guidance for the entire previous year, Banregio anticipated growth in the credit portfolio of between 12 to 17 percent and an increase in net income in a range of between 12 and 16 percent. For the full year, net income grew by 14.9 percent. López commented: "The report was in line with expectations, falling within the growth ranges established in the bank's annual guidance, so the implication of the report is neutral".
He positively highlighted that Banregio maintained growth in its portfolio above the market, without sacrificing profitability, as ROE remained stable at around 21 percent. Regarding commercial credit, which is the bank's main product, portfolio growth was 15.3 percent, surpassing the system's growth, indicating that Banregio continues to gain market share in this segment.
The growth in financial margin was 11.6 percent annually and is attributed to a 6 percent increase in interest income contrasted with a mere 1.4 percent rise in interest expenses. Provisions increased by 45.6 percent year-on-year, resulting in an 8.2 percent rise in the adjusted financial margin compared to the fourth quarter of 2023.
After a significant drop in Regional's shares in 2024, at the beginning of 2025, bank stocks have experienced a rebound, with an increase of 21 percent. This is believed to be due to the market recognizing that banks are trading at an attractive discount relative to their valuation and maintaining solid fundamentals.
Looking ahead to 2025, Banregio is expected to record high single-digit growth in its portfolio, with an ROE close to 20 percent. Regarding the income for 2024 and a dividend payout of 50 percent of the income, the dividend yield at the last price would be 7.1 percent. Despite uncertainty in the local market that could generate volatility in banking sector stocks, the buy recommendation and target price remain at 172 pesos per share.
