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Banking 13 Sep 2019

Leadership and transformation, hallmarks of BBVA in Mexico

Last week, Eduardo Osuna Vice President and General Manager of BBVA in Mexico, conducted a “teach-in” for analysts who follow both the bank and the Spanish banking sector in general. He used the meeting organized by BBVA to talk about the Group’s Mexican affiliate and stress the bank’s positive performance at every level.

Eduardo Osuna started off his presentation by reviewing the current local macroeconomic climate. He explained that this year’s less-than-expected growth occurred in a context of less public spending and uncertainties around the signing of the new trade agreement with the U.S., most especially at the beginning of the year. Nonetheless, he expressed confidence that growth would rebound in 2020 and emphasized the opportunities the Mexican market represents for the financial sector, due to both low penetration of banking and the country’s young population.

Limited penetration of banking in Mexico, coupled with the size and characteristics of its population — with an average age of only 27 — means this market represents an enormous opportunity for the financial sector. The Mexican Government is aware of this and is taking steps to further formalize its economy, promote financial inclusion, and encourage less use of cash. One such measure is ‘Cobro Digital’ (digital payment) (CoDi), a platform, developed by Banco de México, which makes the payment of goods and services possible, efficiently, safely, and in a matter of seconds.

Referring to BBVA specifically, Eduardo Osuna reminded the group that the bank leads the industry in all respects. Its leadership is all encompassing: BBVA has the largest commercial network in the country and by far the largest loan portfolio of the Mexican system, with a 22 percent market share, which translates into a 30 percent share of earnings, in terms of net profit. All this with the highest level of customer satisfaction in the country (the bank boasted a net promoter score – NPS – of 60 points in June 2019), and a 14 percent share of offices.

Eduardo Osuna also briefly analyzed the affiliate’s financial performance during the first six months of 2019. The bank continues to be a leader in terms of profitability, with a 25 percent ROE, thanks to a mix of credit that is more cost effective than its peers and a near 5 percent growth of its loan portfolio compared to June 2018, with a bias toward retail segments  (+8.0 percent during the same period). Despite the high risk profile, Eduardo Osuna reminded the audience that BBVA’s cost of risk in Mexico is at historic lows and stands at levels on par with its competitors, who in theory have more conservative portfolios. This provides proof positive of the bank’s successful approach to risk management. Finally, Eduardo Osuna also mentioned that BBVA continues to be ‘best in class’ in terms of efficiency, with a ratio of 36 percent when factoring local criteria (33 percent according to consolidated data).

BBVA has been experiencing an ongoing process of transformation in Mexico since 2010. During this time, for example, the bank has completely renovated its commercial network and established new customer service processes in its offices. In addition, Eduardo Osuna stressed the bank’s prioritizing of investments with the most direct impact on the business and efforts to make operations more efficient, with the ultimate goal of delivering a better customer experience. He noted that between 2010 and 2018, the bank’s monthly customer transaction average almost tripled, thanks especially to functionality provided through the banking app (the number of transactions through this channel shot up by more than 700 percent during this timeframe). In fact, by the end of June 2019, BBVA already had 7.8 million mobile customers in Mexico, and 55 percent of sales were made via digital channels.

BBVA remains fully committed to Mexico and its society, with initiatives, for example, in the field of education, such as its nationwide school scholarship program from which 6,000 students benefit each year, or its contribution to the reconstruction of 25 schools after the earthquake of 2017. BBVA was the first private bank in Mexico to issue a green bond, in September 2018.

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