Specialising in market niches such as government banking, infrastructure projects, factoring to suppliers of government-owned firms, agribusiness, and fiduciary services, Banco Interacciones continues to strengthen its structure through good results and a 100 percent plough back net income policy. In 2009 the net income was 39 percent higher than the previous year, exceeding shareholders expectations. The institution has been named the Best Investment Bank in Mexico for 2010 by World Finance.
Growth in a downturn
The Institution managed not to be a part of crisis, acting proactively to take preventive measures anticipating the effects that the subprime crisis could cause, and identifying the business opportunities within the market segments it regularly attends, in order to continue with the sustained growth.
Banco Interacciones has been disciplined in following a clearly defined strategy entering market segments which demand a high degree of specialisation in designing flexible financing mechanisms.
Its target market is the public sector in its three levels: federal, state, and municipal governments; as well as state-owned firms and other government owned companies. These types of markets have payment sources with the lowest credit risk which allows the bank to maintain a healthy balance and certain source of payment for its loan portfolio.
Interacciones is not a branch network institution; instead it is a well recognised and respected bank with a high degree of market penetration in the niches where it participates. The low operative cost that this implies is a value proposition for the depositors that allows them to receive a personalised service and high yield for the money invested.
The prices of its services reflect a balance between risk, return, and the opportunity cost of its capital.
Interacciones aggressively pursues strict risk management and capital allocation policies to support its business.
In these past years, the bank has accomplished important results, as measured by profitability, capitalisation, loan portfolio size, minimum rates of default, and other indicators, and it is among the market leaders in each of these categories ranging on average from third to first place.
Its productive assets are healthy and have low exposure to credit and market risk. And the bank has supported its niche markets:
– Its loan portfolio accounts for 71 percent of its total assets.
– It has no exposure to credit risk regarding consumer credit (credit cards, automotive credits or individual mortgages).
– Its past due loan rate is very low, which avoids the creation of additional reserves for loan losses.
– 96 percent of its loan portfolio has (directly or indirectly) a government related source of payment.
– The bank has a flexible strategy where it can adapt to the specific needs of every client.
– Banco Interacciones has a short time to market in assisting with financial solutions for its clients needs.
– The bank grows its loan portfolio with loans backed by government guarantees which make them very safe.
– Increases liquidity by offering a high interest rate. The savings created by the avoidance of high operating costs related to a big branch network are transferred directly to the depositor in the form of a handsome yield premium.
Banco Interacciones will continue to follow its current strategy, supporting governments and related companies, and will participate in eligible infrastructure projects. The bank will support those projects which can help it grow, be it organically or inorganically, all inside the guidelines set by its strategy.
The bank works to solve customers’ needs by listening carefully to their aims, in order to develop a high quality tailor made solution.
In 2009 the Mexican stock market (IPC Index) showed a surprising recovery, offering an accumulated yield of 43 percent. The share of Financial Group Interacciones (GFINTER O) showed an accumulated yield of 26 percent.
Once again Banco Interacciones has shown consistent and very low volatility results given the adverse financial and economic scenario companies and mainly financial intermediaries are facing. The outlook for the bank is very promising given the fact that the institution fully adheres to the business model mentioned above which is also responsible for its excellent financial performance in the past seven years.
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