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

Santander Mexico (BSMXB MM) – Opportunistic Cash Offer for Minorities

Mexican Banks February 2021 Data Chart Book: Potential Signs that the Worst Is Past

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

Mexican Banks: Confronting the Credit Quality Challenge

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

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

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

<ul>
<li>The Mexican banks’ outlook is more constructive; there is GDP growth recovery potential, even if the credit quality drag is likely to worsen in the near term</li>
<li>An early look at 1Q 2021 via the January data shows that loan growth trends are recovering from their lows</li>
<li>The NPL ratio continues to deteriorate, especially in the consumer category post expiry of relief programmes, and cost of risk remains high into January and could potentially go higher in the near term</li>
<li>Despite these challenges, we see that Mexican banks are well provisioned against higher NPLs and also well capitalised</li>
<li>Our core picks in Mexican banks are <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>, and in the mid-caps <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>; they stand out for their attractive value and better-than-peers credit quality metrics as well as solid capital adequacy ratios</li>
<li>Risks to our view include softer than expected loan growth recovery and worse than expected NPLs, combined with credit spread erosion</li>
</ul>


The Mexican banks’ outlook is more constructive; there is GDP growth recovery potential, even if the credit quality drag is likely to worsen in the near term
An early look at 1Q 2021 via the January data shows that loan growth trends are recovering from their lows
The NPL ratio continues to deteriorate, especially in the consumer category post expiry of relief programmes, and cost of risk remains high into January and could potentially go higher in the near term
Despite these challenges, we see that Mexican banks are well provisioned against higher NPLs and also well capitalised
Our core picks in Mexican banks are Grupo Financiero Banorte-O (GFNORTEO MF), and in the mid-caps Banco del Bajio SA (BBAJIOO MM); they stand out for their attractive value and better-than-peers credit quality metrics as well as solid capital adequacy ratios
Risks to our view include softer than expected loan growth recovery and worse than expected NPLs, combined with credit spread erosion


Grupo Financiero Banorte SAB d (GFNORTEO MF)

Mexican Banks; an Early Look at 2021 Data