Credito Real's net income for 1Q16 increased 24.4%

MEXICO CITY, April 27, 2016

1Q16 Highlights

• Net income for 1Q16 increased 24.4% over 1Q15, reaching Ps. 406.2 million, compared to Ps. 326.7 million during 1Q15. ROE reached 22.8% in the quarter.
• Financial margin increased 41.5% to Ps. 1,016.5 million in 1Q16, compared to Ps. 718.4 million recorded during 1Q15.
• 1Q16 average cost of funds has been reduced to 6.6%, meaning an improvement of 10 bps when compared to 6.7% in 1Q15.
• Loan portfolio increased by 45.2% to reach Ps. 20,735.4 million at the end of 1Q16, compared to Ps. 14,280.3 million recorded at the end of 1Q15. Excluding the acquisition of Instacredit the loan portfolio increased 25.8%, driven by payroll and used car loans.
• Allowances for loan losses represented 145.2% of non-performing loan portfolio, compared to 143.7% in 1Q15; and the non-performing loan ratio increased from 2.2% to 2.7% at the end of 1Q16 when compared to 1Q15.
• The efficiency ratio increased to 51.0% from 34.1% reported in 1Q15; showing the effect of consolidating acquired new businesses such as Instacredit, Resuelve and AFS.
• As of February 22^nd Crédito Real acquired 70% of Instacredit; adding growth and regional diversification to Crédito Real's portfolio.

Message from the CEO

"We are starting 2016 off on the right foot. If I may summarize this quarter's result in three single figures, those would be the loan portfolio expansion of 45%, our earnings increasing 24% and ROE reaching 23%. The three figures are above our 2016 guidance.

Our loan portfolio growth was spurred by organic and inorganic activity. We estimate our organic growth was 18% approximately, and inorganic growth was approximately 27%. These estimates take into account the effects of Instacredit and AFS in our portfolio. All our lines of business showed a healthy growth, especially payroll, used-car and group loans operated by Contigo.

Step by step we have built a strong credit platform that today serves over 760,000 customers, 51% more than a year ago. We are able to serve customers overlooked by big financial institutions in Mexico, the USA, and Central America, with a multiple-product proposal, and with a robust customer-service process. Our overall growth perspective is based on building relations with partners who are specialists in the distribution and commercial side of the business; while we focus on the asset quality and adequate funding.

Payroll has decreased its participation in our portfolio as expected, from 78% to 64% year over year; however, it reported a strong 20% growth aided by the pensioners' market penetration. Meanwhile the used car loan business has increased its contribution from 3% to over 9% in the portfolio, helped by our increased business in the USA.