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

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

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

Smartkarma Webinar | Latin America Financials: Focusing on Value Opportunities

Mexican Banks; an Early Look at 2021 Data

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

Grupo Financiero Banorte SAB d / Equity Bottom-Up

Grupo Financiero Banorte SAB d (GFNORTEO MF)

<ul>
<li>Mexican loan appetite was soft to February, as seen in the yoy decline in system loan balances</li>
<li>There was a further erosion of system credit spreads in February, which we see as the lagged impact of past benchmark rate cuts and a changing loan mix</li>
<li>Despite these headwinds, there are some encouraging signs, as seen in the improving trend in opex to assets ratio, and the slightly lower system cost of risk</li>
<li>In terms of balance sheets, NPL coverage ratios remain healthy, even with loan charge-offs increasing, and core capital ratios are reassuring</li>
<li>Based on our spider charts, <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> leads among the big five banks in terms of trailing twelve month returns and most other metrics; 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> looks solid in terms of credit quality, coverage and capital</li>
<li>Risks to our positive view on Banorte and BanBajio include a slower than expected recovery which hurts credit quality and therefore cost of risk as well as intense competition driving credit spreads lower</li>
</ul>


Mexican loan appetite was soft to February, as seen in the yoy decline in system loan balances
There was a further erosion of system credit spreads in February, which we see as the lagged impact of past benchmark rate cuts and a changing loan mix
Despite these headwinds, there are some encouraging signs, as seen in the improving trend in opex to assets ratio, and the slightly lower system cost of risk
In terms of balance sheets, NPL coverage ratios remain healthy, even with loan charge-offs increasing, and core capital ratios are reassuring
Based on our spider charts, Grupo Financiero Banorte-O (GFNORTEO MF) leads among the big five banks in terms of trailing twelve month returns and most other metrics; in the mid-caps, Banco del Bajio SA (BBAJIOO MM) looks solid in terms of credit quality, coverage and capital
Risks to our positive view on Banorte and BanBajio include a slower than expected recovery which hurts credit quality and therefore cost of risk as well as intense competition driving credit spreads lower


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