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: Stay the Course with Our Two Key Positive Picks, Cautious on SanMex

Mexican Banks Continue to Address NPL Issues in May

Mexican Banks ROE Recovery Continues into June

Citigroup 1Q21 Results – Mexican Consumer Banking’s Charge-Offs Are Not an Early Warning for Banorte

Thoughts on Mexican Bank Trends to March 2021

Banorte (GFNORTEO MX): Don’t Fight the Positive Consensus Call

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>BBVA Bancomer delivered the best returns of the biggest five Mexican banks, on a trailing twelve months basis to April; <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>  was second with mid-teens ROE</li>
<li>The rising bad loan charge offs show that Mexican banks continue to be proactive in addressing credit quality risks</li>
<li>To April 2021, bank system returns continued to recover from historically low levels; in large part, future returns depends upon the direction of cost of risk and efficiency ratio</li>
<li>Returns have been supported by limited erosion of credit spreads; spreads ticked up in April due to lower funding costs</li>
<li>Banorte and <a href="https://www.smartkarma.com/entities/banco-del-bajio-sa" target="_blank" data-smartkarma-citation="entities:28382:1" rel="noopener">Banco del Bajio SA (BBAJIOO MM)</a>  screen well on credit quality metrics, particularly on NPL coverage and ratio; they both also have higher than average core capital ratios</li>
<li>Risks to our positive view on Banorte and BanBajio include higher than expected opex, greater than expected spread pressure and a further worsening of credit quality resulting in higher credit charges</li>
</ul>


BBVA Bancomer delivered the best returns of the biggest five Mexican banks, on a trailing twelve months basis to April; Grupo Financiero Banorte-O (GFNORTEO MF)  was second with mid-teens ROE
The rising bad loan charge offs show that Mexican banks continue to be proactive in addressing credit quality risks
To April 2021, bank system returns continued to recover from historically low levels; in large part, future returns depends upon the direction of cost of risk and efficiency ratio
Returns have been supported by limited erosion of credit spreads; spreads ticked up in April due to lower funding costs
Banorte and Banco del Bajio SA (BBAJIOO MM)  screen well on credit quality metrics, particularly on NPL coverage and ratio; they both also have higher than average core capital ratios
Risks to our positive view on Banorte and BanBajio include higher than expected opex, greater than expected spread pressure and a further worsening of credit quality resulting in higher credit charges


Grupo Financiero Banorte SAB d

Mexican Bank Trends to April 2021