MEXICO - Finance
CEO, Crédito Real
Ángel Romanos Berrondo is the CEO of Crédito Real, having also served on the board for 20 years. Between 1987 and 1993, he was Treasurer of Mabe, S.A. de C.V. and Manager of International Business at CB Capitales, S.A. from 1994 until 1996. He has an MBA with a specialty in finance and statistics from the Wharton School of Business.
Crédito Real had a great quarter in 3Q2017; the year in general was easier than we believed. At the beginning of 2017, everything looked shaky because of Trump, the developments surrounding NAFTA, and the low peso. Interest rates went up 100% in 2016 and that had a large effect on financial companies, especially those like us that do not get their money from the public. Our entire funding is from banks or papers we put in the markets. The effect was significant for Crédito Real’s numbers, and although we have been able to transfer that to the end consumer, it takes time to show in our numbers because all our loans are on a fixed rate for a fixed period.
Costa Rica now represents 20% of our overall net income. This happened when an investment bank sought us out to acquire a personal loans company with 90% personal loans, plus a small portfolio in SMEs and cars. We did a deal whereby he retains 30% share in the company for seven years, and after that, we have an option to progressively buy him out at 10% per year. With our Costa Rican operation, we have 12 branches in Nicaragua, which is interesting business-wise. We are opening more branches in Nicaragua and also have two branches in Panama, with a plan to grow to 50 in the next three to four years. In Costa Rica, we have 56 branches.
The biggest difference between Crédito Real and banks is that we approach customers in person and create a link with them. We seek out customers and offer them a product; we do not have branches where they seek banking services. We create a personal bond that people do not have with a bank and this builds confidence. We go to their offices and homes, offering our products. We have close to 6,000 people on the streets through our distributors who knock on doors and visit businesses every day.
We do not want to become a bank at all. We invested heavily in evaluating this option and at the end of the day we found we would not gain anything by becoming a bank; it would only create problems. We are larger than most of the banks here, but we are more flexible than a bank. We make decisions quickly and do not have to seek permission because we are a regulated multi-purpose financial company (SOFOM) with different regulations. If we were a bank, it would have been complicated to receive the authorization for our acquisition in Costa Rica. Likewise, in the US we sell cars through our showrooms rather than just financing vehicles, and this would be complex if we were a bank. In Mexico, we only do the financing for cars, so we have different models and adapt to the different countries in which we operate.
Crédito Real expects to keep growing. We are in a great position to acquire new companies in the near future, and this will allow us to grow beyond what we planned. The companies we look to acquire and the products we will develop are all financial entities and non-banking financial products. Regardless of any new acquisitions, we should still grow the company organically by 10-15% in 2018 despite it being an election year. Our business is really counter-cyclical, and we are not affected by large crises. Our payroll loans business is stable and predictable. 2018 will offer great opportunities to grow our business.
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