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

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

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HSBC (HSBA LN): The Super-Tanker Is Turning

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

Banorte (GFNORTEO MF) To Boost Provisions; November Banks Data in Charts Reflects System’s Strength

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

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>
<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> management not only hiked credit charges in 4Q20 results, they also threw in personnel restructuring charges and advanced fee charges from 2021</li>
<li>In addition, loan margin pressure has been minimised due to the bank’s very low deposit costs and effective hedging</li>
<li>Banorte has a fortress balance sheet; compared to the big five Mexican banks it has the best core capital ratio, the lowest NPL ratio and amongst the highest NPL coverage ratios</li>
<li>As the problem loans from the relief programme roll into NPLs in 2021, we still expect the NPL ratio to remain below 2% and the NPL coverage to remain comfortably in excess of 100%</li>
<li>Operating expenses in 4Q20 were, at first sight, disappointing but these adjusting for the one-off restructuring charges, the opex to total assets are very comparable to previous quarters, and better than those of 4Q19</li>
<li>Management is optimistic about dividend resumption, with payout of 2019 and 2020 earnings expected to be c 50% which implies an accumulated potential dividend yield of in the range of 9-10% which we expect to be paid in 2021</li>
<li>Risks to our positive view on Banorte are greater than expected pressure on credit margins, worse than expected credit quality and a regulatory delay on dividend approval</li>
</ul>



Grupo Financiero Banorte-O (GFNORTEO MF) management not only hiked credit charges in 4Q20 results, they also threw in personnel restructuring charges and advanced fee charges from 2021
In addition, loan margin pressure has been minimised due to the bank’s very low deposit costs and effective hedging
Banorte has a fortress balance sheet; compared to the big five Mexican banks it has the best core capital ratio, the lowest NPL ratio and amongst the highest NPL coverage ratios
As the problem loans from the relief programme roll into NPLs in 2021, we still expect the NPL ratio to remain below 2% and the NPL coverage to remain comfortably in excess of 100%
Operating expenses in 4Q20 were, at first sight, disappointing but these adjusting for the one-off restructuring charges, the opex to total assets are very comparable to previous quarters, and better than those of 4Q19
Management is optimistic about dividend resumption, with payout of 2019 and 2020 earnings expected to be c 50% which implies an accumulated potential dividend yield of in the range of 9-10% which we expect to be paid in 2021
Risks to our positive view on Banorte are greater than expected pressure on credit margins, worse than expected credit quality and a regulatory delay on dividend approval


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