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Edited Transcript of GENTERA*.MX earnings conference call or presentation 25-Oct-19 2:00pm GMT

Q3 2019 Gentera SAB de CV Earnings Call

Nov 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Gentera SAB de CV earnings conference call or presentation Friday, October 25, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Enrique Barrera Flores

Gentera, S.A.B. de C.V. - IR Officer

* Enrique Majós Ramírez

Gentera, S.A.B. de C.V. - CEO

* Mario Ignacio Langarica Ávila

Gentera, S.A.B. de C.V. - CFO

* Patricio Diez De Bonilla Garcia Vallejo

Banco Compartamos, SA, Institución de Banca Múltiple - CEO

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Conference Call Participants

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* Carlos Gomez-Lopez

HSBC, Research Division - Senior Analyst, Latin America Financials

* Juan C. Dominguez

Onyx Equity Management Gestora de Investimentos Limitada - Equity Analyst

* Juan Ignacio Recalde

Scotiabank Global Banking and Markets, Research Division - Associate

* Ricardo Alonso Garcia

Crédit Suisse AG, Research Division - Research Analyst

* Yuri R. Fernandes

JP Morgan Chase & Co, Research Division - Analyst

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Presentation

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Operator [1]

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Good morning, and welcome to the Third Quarter 2019 GENTERA Conference Call.

Now I would like to turn the call over to Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, please go ahead.

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Enrique Barrera Flores, Gentera, S.A.B. de C.V. - IR Officer [2]

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Thank you. Good morning, and thank you all for joining us and for your continued interest in GENTERA. I'm Enrique Barrera, the company's Investor Relations Officer. I'm very pleased to introduce our management team. With us today are Mr. Enrique Majós, GENTERA's Chief Executive Officer; Mr. Patricio Diez De Bonilla, Banco Compartamos Chief Executive Officer; and Mr. Mario Langarica, GENTERA's Chief Financial Officer. They will review the results of GENTERA for the third quarter period as per the report that was issued yesterday.

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 Mexico City. If you are a member of the media, we ask you to contact us directly.

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.

I would now like to turn the call over to Mr. Enrique Majós for his presentation. Enrique, please go ahead.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [3]

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Thank you, Enrique, and thank you all for joining us in our GENTERA third quarter 2019 conference call. We are very happy to report that our quarterly results are as expected, in line with the guidance that we provided at the beginning of the present year.

Our key performance indicators show a solid and healthy growth as we get closer to the end of the year. And at this point, we have showed consecutive solid results in each of the 3 quarters of the year.

As every quarter, I will start by providing some overall GENTERA results, followed by some comments regarding on our present and future strategy. Then Patricio, who since last quarter is responsible for the business in the 3 countries in which we operate, will provide specific information about each Compartamos business unit. Afterwards, Mario, our CFO, will provide specific information about our financial results and expectations. Finally, we will have our traditional Q&A session.

So let me start with our performance as of September 2019. Our total loan portfolio grew 18.6% on a year-to-year basis. And our number of clients reached 3.7 million, which represents a 12.8% increase compared with the same quarter 2018. This number is the largest number of customers served in our 29 years of history.

Our efforts to incorporate high-quality assets were also reflected in the sequential improvement of the nonperforming portfolio ratio, which stood at 2.9% at the end of September.

Net income for the 9-month period ended in September was MXN 2.5 billion, which represented a 19% growth compared to the recurring net income for the same period of last year. And for this third quarter, reported yesterday, net income was MXN 948 million, which represented a 29% growth compared with the same quarter of the previous year.

We have been working hard on our efficiency. And by the end of the quarter, efficiency ratio improved to 72.1% compared to the 76.8% reported in the third quarter 2018.

Worth highlighting is that this quarter represented the fourth consecutive quarter in which net interest income after provision is growing faster than our operating expenses, which was possible thanks to the results of both a new efficiency culture and the implementation of some transformation processes. This has been key -- a key priority for me, and I'm very happy with my team and its capacity to deliver also in this matter.

Moving to some performance indicators. I'm very proud to communicate that all GENTERA subsidiaries continue showing very positive results. Let me give you some relevant figures to compare our September's results with the third quarter of last year.

To begin with, Mexico's total loan portfolio grew 13%. Peru grew 30% and Guatemala grew 15%. Also as I already mentioned, we reached the historic maximum of 3.7 million customers.

ATERNA ended the quarter with more than 8.1 million insurance policies, which means an outstanding 60% growth in the last 12 months.

INTERMEX remittances payments grew more than 22%. And Yastás grew 18% in the number of transactions and reached more than 4,000 affiliates, which, by the way, represents 32% annual growth.

Finally, during this quarter, through alliance with other institutions, Fundación GENTERA reached 8,000 people with educational opportunities and social responsibility actions.

On the other hand, 44% of GENTERA's employees participated in at least 1 volunteer activity during the quarter, reaching more than 20,000 people. Later on, Patricio will explain the specifics of our performance across our operations in Mexico, Peru and Guatemala.

Now moving to our strategic plan. I am sure you remember from our previous calls that our actions are based on 2 tracks. The first one, maintain a solid performance on our current operation. And the second one, transform into a more digital and efficient business. On both tracks, our main goal is to improve our customers' overall experience.

New business models are also needed in order to incorporate to our offer a better and more customized set of product, such as digital personal loans and digital transaction service, being payments one of the most relevant. New digital business models are evolving really fast and the journey is, at the same time, exciting and complex. New players are jumping in every given day, and technology is definitely changing the way financial providers are getting engaged with customers.

In GENTERA, we are aware of the urgency of moving towards innovation and at the same time, we know that these strategic advantages and strengths we have are really relevant. For example, our 3.7 million customers stay for our brand, also our deep understanding of the market and the close relationship we have built with our clients and our unique capacity of providing credit to the underserved segments. Our foundational, call them, pillars of the future of financial services. Therefore, we are working on developing new risk assessment techniques that will allow us to reach more people in a more efficient way and with a high-quality portfolio.

Also, we continue working on developing and deploying transactional channels that will allow us to provide product that are gradually migrating from the use of cash to the use of digital money.

In the digital transformation arena, there are several projects in which we have been working. In previous calls, we have given you visibility of that, so let me mention again some of them.

In the first place, we have our mobile banking application, which has already been in operation for more than 3 years, with excellent user experience and with more than 100,000 active users. Also, we have to mention our strategic correspondent network, Yastás, which enables our cash-in and cash-out transactions and has proven to be really appealing for many players in the financial service arena.

In Peru, BIM, or Billetera Móvil, which means e-wallet, with more than 150,000 users, allows over 30% of Crédito Súper Mujer clients to use digital means to execute their payments. CoDi, Banco de México QR code payment platform, was also implemented successfully and on time last month. By the way, we can say that we are pioneers on the implementation of CoDi. And as of today, it is up and running 100% in our mobile banking platform.

We also have our 1.5 million debit cards, which are key to enable digital transactions. Also, our credit origination process is being optimized through digitalization. And in addition, we are working in 3 high-potential initiatives that are being tested in Fiinlab, our financial inclusion innovation lab and that are close to -- related to the credit offer that we have.

These are some of the digital transformation projects that we are running and working on. And to set a transparent expectation about our digital plans and our future results, it is important to mention that some of these projects are already running live, but some others are in the design or in the development process. Integrating all these tools, applications and solutions will be key for building our new digital products and services. And 2020 will be a year in which some marginal impacts might be seen. However, most of the impact will come within the next 24 months.

Since I left operations of the bank in 2015 to start Fiinlab and of course, since I was given the opportunity to lead GENTERA 2 years ago, I have been working towards the digital transformation of GENTERA. After working on this for the past 4 years, I can tell you, I'm really excited about the things that are about to come.

Finally, I will mention some other important highlights of the quarter. As we mentioned in the previous conference calls, the agreement between Yastás and Banorte to serve their clients through our widely extended correspondent network, is having very good results with over 50,000 transactions during the last quarter.

In August, GENTERA was recognized by the Institute of Internal Auditors for implementing at -- and taking part in activities to highlight the importance of the internal audit role. So I want to explicitly recognize our audit team and the entire organization for this recognition.

GENTERA was also recognized for our corporate governance practices by the Institutional Investor Perception Study for Latin America. We appreciate this recognition, which encourages us to maintain our high governance standards.

Finally, I want to point out that last September 25, ConCrédito, together with GENTERA's finance team, issued MXN 800 million in the Mexican local market. This issuance was oversubscribed with a demand of MXN 1,000 million. This was ConCrédito's largest issuance in its history, and I want to congratulate both teams involved in this effort.

With these results on hand, we are confident that we are on the right track for the present year and the ones to come. During the following quarters, we will keep working hard to develop new and better financial solutions to expand with more and better products to help our customers to meet their goals and dreams.

Let me now turn the call to Patricio, who will give you deeper information on Compartamos strategy and results. Go ahead, Patricio.

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [4]

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Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in GENTERA. I will review the business results of GENTERA's financial subsidiaries in Mexico, Peru and Guatemala.

At the end of the third quarter, we served over 3.7 million customers, a 10.7% growth versus last year and the highest number in our entire history. This reflects the strong demand that exists for productive loans in the region and attractiveness of the different financial services and products offered in these 3 countries.

Customer growth leads to a solid performance of GENTERA total loan portfolio at the end of the quarter, which ended the period within the range guided for the year of 17% to 19%, and leave us in a very good position to finalize the year in line with our portfolio growth expectation.

It's important to highlight that in this third quarter, the loan portfolio for GENTERA is also the largest in 29 years of operations.

With regards to asset quality, consolidated NPL improved to 2.9% compared to the 3% in the previous quarter and is relatively stable, expecting to finalize the year and moving around 3%. This solid asset quality continues to be the result of strong origination processes, improvement in customer service and adequate monitoring of customer performance that help us to react rapidly if we detect any deterioration. Good quality has been the focus of our operation and will continue to be so going forward.

Let me go into more details in the performance of the Mexican, Peruvian and Guatemalan financial subsidiaries. Let me start talking about Banco Compartamos in Mexico. The results that we published yesterday were achieved thanks to the strategy that we followed during 2018 and also due to the marketing initiatives and new benefits implemented in April of this year. As a consequence, we're witnesses -- witnessing better dynamics in most operational and financial metrics. These results are encouraging and continue proving a better performance in the bank. In this 3 -- third quarter, we grew again in the number of customers served, finalizing the quarter with over 2.6 million that represents 8% growth when compared with last year.

Considering the past 12 months, we have attracted close to 200,000 customers. This figure is the strongest growth in number of customers since 2016 and is a reflection of the customer sentiment about the changes that we have made in the product offering and service. Customer retention rate continues in very solid levels, and now it's at 85%.

In this third quarter, the loan portfolio experienced a 7.4% sequential growth compared with the previous quarter. The result obtained in this quarter continue reflecting an improved operation and better value proposition for our customers.

Crédito Mujer presented a robust growth of 16.1% in this portfolio on a year-on-year comparison, thanks to the focus -- to our focus on providing better service and more convenience to our customers. And asset quality stood at 2%, which is at a very healthy level.

For this third quarter, we saw an acceleration in the ticket demanded by our clients, and now it grew 4.7% on a year-on-year basis compared with the 2.2% annual growth percentage in the second quarter 2019. We're really motivated with the fact that the level of customer retention rate is very healthy, and the traction of new customers is gaining momentum. If we continue these dynamics, we could be offering them a higher credit size according to their needs and their credit history that could propel growth in the portfolio.

NPLs in Banco Compartamos stood at 2.9%, which is the same level presented in the previous quarter. The level reached in this third quarter is very much in line with our expectations for this period. However, by the end of the year, as we anticipated in our previous conference call, it will probably present a slight deterioration because of a larger portfolio and larger base of new customers.

Employee turnover also continued showing positive trends, maintaining, again, historic levels at 24%. In this year, we have made the most solid ratio ever seen in 29 years of history of the company. This reflects a positive work environment for our more than 15,000 employees in Mexico.

Now let me talk briefly about our Peruvian and Guatemalan subsidiaries, Compartamos Financiera and Compartamos S.A. Compartamos Financiera in Peru represented 34.4% in GENTERA loan portfolio and 19.6% of its net income at the end of the quarter. Its loan portfolio grew over 30% in the last 12 months and 6.3% sequential growth compared with the previous quarter, finalizing the quarter with over 690,000 active customers. At the end of this quarter, 72% of the customers we served in Peru came from the group lending methodology. And this methodology represented only 20% of the portfolio. In addition, the quality of our portfolio in Peru is very good and stable. NPLs improved to 2.7% at the end of the quarter versus 2.8% 1 year ago and 3% in the previous quarter.

Another very important point to highlight in Compartamos Financiera is in its efforts to have a more efficient and digital operation. It's the solid progress that we are having in the acceptance of the use of the electronic wallet called BIM in the country. At the end of the quarter, more than 159,000 clients in the Crédito Mujer methodology used this electronic wallet as a more convenient alternative to execute these -- their payments, making the operation of this methodology more efficient compared to the traditional service.

We're very excited with the progress seen so far in this subsidiary and with the potential market that Peru represents for the group lending methodology, which gives us the opportunity to achieve greater financial inclusion in this geography. We've been growing in very solid mode since we entered the Peruvian market in 2011, with a compounded annual growth rate of 24% per year until now, which as we remarked in previous conference, has led us to be among the 3 largest microfinance institutions in the market as per number of customers.

Now let me jump to our operation in Guatemala, which concluded the quarter with over 100,000 active customers and portfolio of MXN 654 million, which grew 15% in pesos compared with the 9.8% compared of the previous quarter.

In this quarter, Compartamos Guatemala represented an income of MXN 10 million for 9-month period finalized in September. Accumulated net income stood at MXN 43.8 million compared with MXN 25.1 million in the same period of last year, representing 75% growth.

With regards to asset quality, NPL stood at 4.4% in the third quarter of 2019. Even though it's a larger ratio compared to the 3.5% level presented in the third quarter of 2018, it's a better level compared with the 5.5% presented in the previous quarter. We are working hard with the expectation to have better NPL levels in the coming future.

We are very enthusiastic with the progress achieved this year, and now we have a much more optimistic and motivated team in the 3 countries where we operate, working hard every day in improving the service and product offerings provided to our customers with a clear purpose in helping them to achieve their dreams.

Thank you for your attention. That is all for my remarks. I will now turn the call over to Mario Langarica to review GENTERA's financials for the quarter. Thank you.

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Mario Ignacio Langarica Ávila, Gentera, S.A.B. de C.V. - CFO [5]

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Thank you, Enrique and Patricio, and good day to everyone. As in previous conference calls, I will start talking about the interest income generated in 3Q '19, which stood at MXN 5.76 billion, representing a 9.1% increase compared to 3Q '18. This is the fourth consecutive quarter with positive growth. This result was mainly driven by an 18.6% larger loan portfolio and a larger contribution of Compartamos Financiera in GENTERA's consolidated interest income.

Interest expenses grew 12.9% compared to 3Q '18. This increase is mainly explained by: one, the 10.9% increase in Banco Compartamos total loan portfolio; two, the extra liquidity holds in Banco Compartamos, which in this period started in MXN 1,450 million and ended the quarter in MXN 870 million; and third, the 31% increase in Compartamos Financiera portfolio.

Net interest income showed an 8.8% increase compared to 3Q '18, whereas net interest margin stood at 45.9%, representing a contraction compared to the 49.3% achieved in 3Q '18. This contraction comes from: one, Banco Compartamos extra liquidity; and two, smaller contribution of the Mexican subsidiary in GENTERA's consolidated credit portfolio, which represented 63.9% versus 67.1% in 3Q '18.

If GENTERA having had the additional liquidity described before, NIM before provision for 3Q should have stood around 47%, 1.2 percentage points above the level reported.

As Patricio already mentioned, asset quality has been stable. However, as the loan portfolio has been growing faster in these past months, it has required an increasing level of provisioning, which for this quarter, increased 28% compared to 3Q '18 million.

Net interest margin after provisions stood at 38.6%, which is below 42.7% ratio obtained in 3Q '18. As explained before, if this ratio hadn't been affected by the extra liquidity we have had since November 2018, then NIM after provisions ratio should have stood around 39.7%, around 1 percentage point above the level reported.

The cost of risk for the quarter stood at 8.69%, which is slightly above the 8.5% guided, but it's completely in line with our expectations. And considering for the 9-month period of the year, it stood at 8.1%.

Fee income during the quarter increased 2.3% to MXN 352 million compared to 3Q '18. This increase is mainly driven by the fees generated at Compartamos Financiera Peru, which grew 38.5% in the quarter. And in the bank, we saw a 10.4% contraction, which is explained by better performance in credit payments and therefore, a smaller amount in late payment fees.

Fee expenses increased 16.7% mainly due to the flexibility that we have been giving our clients back in Banco Compartamos to use third-party channels to execute their disbursements and payments at their convenience and also due to the growth in the number of clients and those transactions in Peru.

Operating expenses showed an improvement as we achieved a 1.3% contraction in expenses compared to 3Q '18, which is well below our year-end objective of being below 8%. For the 9-month period, expenses stood at MXN 10,173 million, which represents a 1.8% increase compared to the same period of the previous year. This improvement in operating expenses was achieved thanks to a more disciplined cost control in different subsidiaries and mainly Banco Compartamos, where operating expenses contracted 7.2% in its annual comparison.

We're doing a large effort to become more efficient. For the 9-month period ended in September, operating expenses stood at MXN 10,170 million (sic) [MXN 10,173 million] as explained before, representing a 1.8% increase, which leave us in a very good position to finalize this year well below the 8% growth originally guided, which represents a historic improvement in managing operating expenses in GENTERA.

The efficiency ratio for the quarter stood at 72.1%, an improvement compared to the 76.8% in 3Q. For the 9-month period, it stood at 74.4%.

GENTERA closed this third quarter of the year with a consolidated net income of MXN 948 million, representing a 29% growth compared to the net income reached in 3Q. And for the 9-month period ended in September, cumulative net income stood at MXN 2,506 million, which represented 19.6% growth compared to the cumulative recurring net income of last year.

Just to remember, in 2018, there were 2 nonrecurring benefits that in aggregate represented an amount of MXN 186 million.

In 3Q '19, ROE stood at 19.4% and ROA at 7%, which represented an improvement compared to 17% and 6.2%, respectively, reached in 3Q '18. For the 9-month period, ROE stood at 17.6% and ROA at 6.3%, which are above our expectation for the year.

Finally, to conclude my remarks, given the dynamics experienced in the past months, we are deciding to move upwards our EPS guideline to be above MXN 2 over the originally guided range to the market, which was between MXN 1.85 and MXN 1.95, the higher level, mainly driven by solid asset quality performance and strong discipline in cost control.

Thank you, all. That is all for our presentation. Operator, we can now move forward to the Q&A session.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Alonso Garcia with Crédit Suisse.

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Ricardo Alonso Garcia, Crédit Suisse AG, Research Division - Research Analyst [2]

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My first question is on Peru. I mean I would like to touch base here with you on the strategy that is currently -- that you are currently taking out there. I mean is it you are gaining new customers based on lower yields? Is it because of improvements in the product offering and in the quality of the service? I mean what is the strategy here? I would also like to touch base here in Peru in terms of competition. And also, if you could comment about retention rate in Peru, that will be great. And for how long we can continue to see this sort of growth rates? And lastly, my second question is on OpEx. I mean what has been the -- what have been the main drivers behind the very nice cost control, especially in the Mexico subsidiary? And how much room is there for efficiency to improve in the coming years? And what would be the drivers going forward for that?

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [3]

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Thank you, Alonso. This is Patricio. In terms of Peru, as we discussed, since we acquired the company locally, the strategy was to export Crédito Mujer into the Peruvian market. As you know, the Peruvian market is highly competed, highly -- with very professional players in the local market, but they are more focused on the individual lending side of the business, right? So we saw an opportunity to export Crédito Mujer to take the operation to all the states in Peru, and that has proven to be an adequate strategy. We've entered with Crédito Mujer and we've grown from 0 customers to -- I mean as I mentioned during my remarks, 70% of our customers in Peru are Crédito Mujer related. So the fastest growth that we've seen in Peru has to do with the entrance of this product and the acceptance of this product in the local market. The competition in this group lending methodology, it's just starting. Even though they've -- we've had some players here and there, but more -- mostly NGOs. Now professional players are entering into the rural piece of the business, but we think that we have still some sort of advantage because we've been doing this -- I mean this product for the last 4 years and growing rapidly in this segment.

Again, what we see is that there is still an opportunity to continue with double-digit growth in Peru for the -- for next year, mostly driven for Crédito Mujer. And as you know, Crédito Mujer has a different cost structure than the individual lending. Individual lending in Peru, the active rate for that product is around 29%. The yield of the group lending methodology is higher with lower NPL. So we are actually entering in a higher-yield business. In the short term, of course, as you expand geographically, you need to do some sort of investment. We need to open branches. We need to hire people, and that growth comes with certain lack of productivity. In the coming years, where -- when the growth, let's say, moderates, if you will, what we could do is growing with the productivity of our loan officers and making this piece of business as profitable as it is in Mexico.

So the strategy is to continue doing so. For the coming years, we will have a more balanced portfolio. Today, as I've said, 80% of our portfolio is in the individual lending side, and only 20% of our customers are there. Going forward, a more balanced portfolio. Crédito Mujer will gain share in this balance sheet, and this is why we are so enthusiastic of the dynamics of the Peruvian market.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [4]

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Alonso, regarding your question on operational expenses, we have been doing a deep review of our expense base for the last months. And this year, the things that we have focused on have been: one, to make sure that all of our projects and expenses related to the projects are aligned to the new strategy. We have also reviewed the structures, both at the corporate level and at the field. We have obtained some productivity in the middle and back office in the operations in serving the field. And also, we made some reviews on our incentive schemes. All of those are the ones that have helped us reduce the expenses so far.

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Operator [5]

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And our next question comes from Yuri Fernandes with JPMorgan.

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Yuri R. Fernandes, JP Morgan Chase & Co, Research Division - Analyst [6]

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I have a follow-up on your expenses view, particularly for the 4Q. My point is if expenses should not accelerate a lot, first, for seasonality and second, because your market campaigns, they have been running super low, so if that's the case, if we should see any spike on the 4Q? And for the coming years, if your strategy should pressure expenses? So my point is should we see expenses growing below, at or above inflation for the next year? That's the first one. My second question is regarding your margins. They were up slightly this quarter after several quarters of trending down. And my point now is if we reach a new inflection point for margins, you are a liability-sensitive bank, so lower margins should benefit you. But my point is regarding your discount and pricing policies. So should we see further discounts on lending rates for the next year? What should we expect for margins going on?

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [7]

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Okay. Perfect. Well, relating to the expenses for the rest of the year, we are planning -- there may be a little pickup in the last quarter, mostly a seasonal pickup, but we expect that we are going to be around 2% overall for the year. For the following years, we will provide guidance in our next call. But all of the effort that we have done so far have basically reduced the base -- the expense base. But we are also going to be continuing investing in all of these new ideas and on our strategic projects that Enrique described before. So we will give you a little bit more guidance on what we expect to spend next year. But we will be focusing very, very intensively to keep positive jaws. So any expense growth that we show for next year, it has to be compensated with increase in margins.

Now regarding margins, as you know, we have this combination of a reduction in prices and a reduction in expenses. Again, both have to show positive jaws. In terms of what we expect for pricing policies next year, again, we are still finalizing our planning, and we will provide more detail in the next call.

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Operator [8]

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And our next question comes from Carlos Gomez with HSBC.

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Carlos Gomez-Lopez, HSBC, Research Division - Senior Analyst, Latin America Financials [9]

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Two brief questions. Can you give us an update on ConCrédito? And can you update us on your expectation for dividends for this year and next year?

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [10]

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The second one was...

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Carlos Gomez-Lopez, HSBC, Research Division - Senior Analyst, Latin America Financials [11]

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Dividends.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [12]

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Dividends, okay. Sure, Carlos. On ConCrédito, as you know, we have now an investment that gives us a participation of 36% of the company. So we are not a major partner there yet, but we have the plans. And in June 2020, we will obtain the major participation with the debt conversion and the additional investment. We are working very closely with them. I think that we are finding relevant synergies for the future. And many of them are being worked since now. We are very focused also on doing all the regulatory and legal paperwork and tasks that have to be done to get to this target that we have in June 2020. And at the end, I can tell you that we feel very happy and excited about the partnership that we have with ConCrédito. We have the seat in the Board, so we are very close to their planning and decisions. And they are very open also to have us there. So it's a promising investment for sure.

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [13]

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Regarding the dividend, as you know, today, our payout ratio is at 20%. At this point, there is no change to that. And obviously, that will be discussed in our Board in April -- first with the Board and then with the assembly in April.

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Operator [14]

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And our next question comes from Adriana De Lozada with Scotiabank.

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Juan Ignacio Recalde, Scotiabank Global Banking and Markets, Research Division - Associate [15]

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This is Juan Recalde from Scotiabank. The question would be related to the digital initiatives. So I would like to know if you can provide us some metrics that we -- related to BIM and to get a sense of the adoption in Peru, Mexico and Guatemala. And also I would like to know how does the adoption and usage of the digital wallet benefits GENTERA.

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [16]

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Okay. And thank you for the question. Talking about Peru, as you know, BIM has been an effort that everyone embraced in the Peruvian market. It's -- I mean it's a way to transfer money using your cell phone. And for our customers in Peru, it has been very important. Again, using cash for the group meetings have certain inconvenience because, I mean the group meetings take longer, you might get robbed. You transfer the money, it's more complex. And the customers with this technology are very happy because now the group meetings are much faster. They transfer all the money to the treasurer of the group and then the treasurer, once they have the entire payment for Compartamos, transfer the money to Compartamos, and that's a very seamless, easy way of using this kind of technology. Again, it has reduced the group meeting time. Therefore, the productivity of our loan officers is where it is improving. And this is something that, again, we've been working for, for the last 2 or 3 -- no, 2 years, actually, and it's ramping up. And it's something similar of what we expect, for example, with the CoDi platform in Mexico. At the end of the day, it's something that allows the customers to reduce the use of cash and using electronic money to do their transactions. And again, the efforts -- our efforts to do all the education about the benefits, showing the convenience about the platform, it's what we've been working on. But again, at the end of this quarter, over 150,000 customers in Peru use this technology with very good results. So we are very enthusiastic about the acceptance of new technologies into the group lending methodologies.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [17]

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And Juan, if you allow me, I will also would like to give you a little bit more color about our overall digital strategy, even if I already made it in our remarks. But we recognized that competitors in the fintech arena are becoming more and more relevant. And in general, we believe that the space for banks and fintech is going to be a space that has to define itself as a collaboration space. I think that fintech have very relevant strengths and capacities. And so do banks. On the side of the banks, we have cost of funding, we have robust core banking systems, regulatory compliance and more on. And obviously, fintech players are more agile. And they are very, very willing to understand, in a different way, the way we connect with customers. But specifically talking about GENTERA, we realize and we recognize that our mission and also our competitive advantage is to provide loans to the underserved market and population. And this requires special efforts because it is not the same as providing loans to a more banked and more digitalized group of people. In our case, we are talking about unbanked people, a cash economy, but we believe we are in the best strategic position to succeed on offering the clients these services, providing and developing personalized digital loans and also building transactional platforms to manage the cash into digital money and make their transactions easier and improve the way they also do business in their micro business. So that's, in general, what we are doing and what I described in my remarks previously.

And I think that when you look at examples at BIM and what Patricio just told you, I think that we'll start to see a compelling story and strategy to really make more solid moves into the digital transformation and the digital world, talking about financial services.

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Operator [18]

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(Operator Instructions) And our next question comes from Juan Dominguez with Onyx.

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Juan C. Dominguez, Onyx Equity Management Gestora de Investimentos Limitada - Equity Analyst [19]

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First of all, congratulations on the [revenue] during the quarter. I have 2 questions on my end. First, I wonder if you can provide us an update on how has the access to funding of your competitors evolved during the past months. We know that the entire microfinance space lost a major source of funding during this year, so I wonder how that has evolved. And also on ConCrédito, I wonder if you can share us some hard data given that you've recently did the [virtual] for the issuance of the bonds. What's the loan growth that you're seeing there? What's the ROE that you're getting at ConCrédito? And also, how is this activity and the product going?

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Patricio Diez De Bonilla Garcia Vallejo, Banco Compartamos, SA, Institución de Banca Múltiple - CEO [20]

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Okay. Related to access to funding, I would -- I can talk about what we have faced in the last year. And we have been very successful, both in Mexico, Peru, and also with recent ConCrédito. So we think that government -- the development banks are very open to support the microfinance sector. And we have been successful accessing the market. We understand that there -- some of our peers have been able to access the funding, but probably we could expect some credit appetite reduction from probably banks. But so far, the development banks have been stating that they want to support the system.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [21]

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Yes. And speaking about [CrediTienda] and just in the first place to say that until we don't have a majority participation of ConCrédito, we cannot give that much information about this specific project. But I can tell you that, obviously, it's one of the synergies that we are looking at. And I think it's going to be a powerful platform for the future.

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Operator [22]

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(Operator Instructions) And with no questions in the queue, the question-and-answer session is concluded. I will now hand the call over to Enrique Majós. Please go ahead, sir.

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Enrique Majós Ramírez, Gentera, S.A.B. de C.V. - CEO [23]

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Thank you, and thank you all for your interesting questions and comments and for your continued interest in our quarterly results. Our commitment with our clients and obviously, with all our other stakeholders encourage us to work with passion every day. We feel really excited about the challenges and the opportunities we see in the near future. So we are working and we are looking forward to talk with you in our next conference call and obviously, other investor meetings that we might have in the following months with you. So thank you, again, and have a nice day.

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Operator [24]

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Thank you all for participating in today's conference call. You may now disconnect.