Crédito Real is a Mexican company with 25 years of experience in the financial services sector. The company, which has granted approximately five million loans, is one of the 500 largest in the country, and has recently expanded its operations to the USA and Central America.
In 2012, Crédito Real opted to become a publicly traded company and obtained a listing on the Mexican Stock Exchange (BMV). Following this, the company has achieved accelerated growth and assumed a leading market position. Crédito Real has received several prestigious awards from a range of industry voices, including “Socially Responsible Company”, “Inclusive Company” and “Great Place To Work”.
The flexibility and variety of Crédito Real’s products has enabled it to meet the credit needs of Mexico’s middle and lower income demographic, which are generally not serviced by traditional banking, reaching a portfolio of MXN31,355m ($1,716m) in Q1 2018.
A large part of Crédito Real’s success is primarily based on payroll loans: Crédito Real seized the opportunity to include solid assets in its portfolio which belong to institutions that guarantee the service and payment of originated loans with the contributions of federal funds. Another crucial element in this regard was the acquisition of Instacredit – a personal loans company based in Costa Rica – as well as achieving synergies with other business units. In 2017, the company achieved a better-than-expected performance, surpassing the objectives set out in its mandate.
At the beginning of 2018, following the first issuance for MXN800m under its credit loan portfolio securitisation programme and the placement of $230m subordinated perpetual notes (both executed at the end of the previous year), Crédito Real continued to strengthen its financial position by closing its offering of CHF $170m bonds in the Swiss market, enhancing the company’s liquidity and diversification of funding sources.
Crédito Real has an annual growth of 29.4% in its consolidated loan portfolio, and the non-performing loan ratio has maintained a downward trend, reaching 1.9% at the end of Q1 2018, below the level recorded by the SOFOMES (Multiple Purpose Financial Institutions) sector in Mexico.
Today, the size of this SOFOM makes it a major player in its sector, with a financial margin of over MXN5,920m pesos and net income of above MXN1,680m pesos recorded in the 12-month period ended 31 March 2018.
Currently, about 20% of the company’s credit portfolio comes from businesses outside Mexico, in particular, Costa Rica and the US. In 2016, Crédito Real acquired 70% of the capital stock of Instacredit, which has 72 branches in Costa Rica, Nicaragua and Panama. Instacredit is a well recognised brand in Central America, with a core business granting consumer loans to middle and low-income segments. Its products are personal loans; auto loans; SME loans; and mortgage loans.
Adding to the mix, the North American market has always been a source of huge potential to Crédito Real, especially the Hispanic segment without credit history, which is close to 50 million people. In 2015, Crédito Real began working with auto loan company Don Carro and, in addition, has acquired 99% of the capital stock of AFS Acceptance LLC, now Crédito Real USA Finance, a company comprising more than 580 distributors of used and pre-owned car loans, licensed to operate in 32 states across the US. The used cars loan portfolio in the US, composed of Crédito Real USA Finance and Don Carro, represents approximately 7% of the company’s total loan portfolio.
Since its beginnings as a debt issuer, and following its IPO in 2012, Crédito Real has focused on strengthening its internal controls to ensure efficient operations, as well as complying with best corporate governance practices to safeguard the interests of its shareholders and other stakeholders.
Crédito Real’s corporate governance is made up of a framework of values, rules and statutes that constantly regulate the operation of the bodies responsible for generating value to the company. Accounting for this is the Board of Directors, four supporting committees (Executive, Audit, Corporate Practices, and Communication and Control), and a strict code of ethics and business conduct principles.
Most of Crédito Real’s committees have independent directors with specialist experience in a specific area of global and national financial markets. The proportion of independent directors is 33%.
Testimony to the robust nature of the company structure is the reward received from the BMV in 2017 for the best rating amongst 80 issuers evaluated for corporate governance under the IPC sustainable methodology. In 2018, the Centro Mexicano para la Filantropía (Mexican Center for Philanthropy) presented Crédito Real with the “Corporate Social Responsibility Award 2018”.
The road ahead
Crédito Real’s strategy enables it to reach a potential consumer base of over 36 million people. Together with its broad geographic and diverse product range, as well as enhanced funding sources, this will allow it to fully capitalise on new growth opportunities.
Crédito Real has several strategic alliances, which, in addition to enhancing its commercial presence, will continue to generate synergies across a range of business lines and markets. The selective loan origination will allow it to continue maintaining a stable NPL ratio, which remains among the lowest in the sector.
Crédito Real is also incorporating new technologies to expand its financial services offering and is especially interested in dynamic fintech companies.
The company aims to consolidate a loan portfolio where 50% corresponds to the Mexican market and the remaining 50% to international markets; the company expects to achieve this in 2022.
Crédito Real will continue to be a strong performer because of its team and customer base, and it will continue to strive to provide a better place to work in a context of equality and respect. Crédito Real will continue to support its clients and enhance their quality of life through a thorough and ethical service, which delivers constant product innovation. Above all, Crédito Real wants to help its staff and customers exceed their potential.