Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Victor Galliano is an experienced equity banks analyst, having covered Latin America banks and non-bank financials for over 12 years, as well as more recently covering the Italian banks. He has worked in sell side equity research for 30 years in a career spanning Barclays, HSBC, BBVA LatInvest, Barings and NatWest.
Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.
The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Financials & FinTech research

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Banorte(GFNORTEO MM): Triple Hit in 4Q20 Lays the Foundation for Healthy Dividend Resumption in 2021

Mexican Banks YE 2020 Credit Quality Data Points; Banorte Screens Better than Peers

Mexican Banks Data for August Is Positive for Banorte (GFNORTEO MM)

Banorte (GFNORTEO MM): Constructive Citi and BBVA Read-Across for 3Q 2020

Mexican Banks: Confronting the Credit Quality Challenge

Gravity Works As WeWork Doesn't; Now Plan B

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Grupo Financiero Banorte SAB d / Equity Bottom-Up

Grupo Financiero Banorte SAB d (GFNORTEO MF)

<ul>
<li>3Q20 Results for <a href="https://www.smartkarma.com/entities/grupo-financiero-banorte-o" target="_blank" data-smartkarma-citation="entities:24780:1" rel="noopener">Grupo Financiero Banorte-O (GFNORTEO MF)</a>  saw a significant improvement in cost of risk, charge-offs, the NPL ratio and NPL coverage</li>
<li>In addition, core capital is strong with CET1 ratio at 13.7%</li>
<li>We believe that, despite the continuing challenges ahead, the credit quality and NPL coverage outlook is constructive, with 3Q20 being a short term reprieve to cost of risk</li>
<li>We estimate that Banorte’s charge-offs as a share of gross loans for full year 2020 should be comparable to those for 2009, at the peak of the GFC, with the bulk of these already taken; yet we expect NPL coverage to remain above 100% at YE 2020</li>
<li>Non-bank operations, which account for approximately one third of group earnings, should continue to support returns going forward</li>
<li>Valuations are attractive for Banorte, in our view, with our proprietary estimates close to consensus estimates for 2020 and 2021</li>
<li>Risks to our view include worse than expected delinquencies and charge offs going forward, as well as increased interest margin pressure and high opex</li>
</ul>


3Q20 Results for Grupo Financiero Banorte-O (GFNORTEO MF)  saw a significant improvement in cost of risk, charge-offs, the NPL ratio and NPL coverage
In addition, core capital is strong with CET1 ratio at 13.7%
We believe that, despite the continuing challenges ahead, the credit quality and NPL coverage outlook is constructive, with 3Q20 being a short term reprieve to cost of risk
We estimate that Banorte’s charge-offs as a share of gross loans for full year 2020 should be comparable to those for 2009, at the peak of the GFC, with the bulk of these already taken; yet we expect NPL coverage to remain above 100% at YE 2020
Non-bank operations, which account for approximately one third of group earnings, should continue to support returns going forward
Valuations are attractive for Banorte, in our view, with our proprietary estimates close to consensus estimates for 2020 and 2021
Risks to our view include worse than expected delinquencies and charge offs going forward, as well as increased interest margin pressure and high opex


Banorte (GFNORTEO MM): Prepared for the Next Wave…of NPLs