MEXICO - Finance
CEO, Crédito Real
Ángel Romanos Berrondo is the CEO of Crédito Real, having also served on the board for 17 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.
We have always had competitors, but our direct competitors are not commercial banks, but traditional entities. Our key difference is that we’ve been able to fund ourselves, both in the national and international markets. With this funding we have been able to outgrow the competition, and are able to offer a bigger and better range of products to our customers at their best convenience.
It was a major accomplishment after 20 years in the market to be able to take the company public, as there are few such companies in Mexico. The sector in which we have long worked is just starting to develop. Our company is really not known by end consumers, even though it is a large company when you see the numbers.
We started our business with durable goods loans, leveraging our synergy with MABE. From there we moved into the payroll loans business in 2004. Then, in 2007, we started providing group loans. Since then, our portfolio has been evolving more toward payroll loans because of their maturity. Group loans have a very short maturity of about three months. In contrast, the maturity of durable goods loans is about a year and of payroll loans over three years. Around 57% of our loans are payroll loans and 43% are from the other business lines. Today, we are the leaders in the public sector payroll loans business. We want to remain at that level, and I forecast growth of between 15% and 20% per annum. Two years ago, we undertook an analysis of used car financing. We focus on the base of the pyramid and look at products that traditional banks have, but that are not doing hugely well at the base. At Crédito Real, we have built expertise in analyzing people and making fast credit decisions at the very low end of the pyramid where people don’t have a credit history. We look at traditional products, such as auto financing, but we look at how we can do it differently to access low-income people. We discovered that the competition was not coming from traditional banks, but entities similar to ourselves. The largest contributor to growth over the coming years will definitely come from used car sales and SME loans. These are virgin markets with huge growth potential, and also because of the significant government support programs that will be made available.
Two years ago, we also started financing SMEs, especially the smaller ones. They are established businesses that lack traditional finance. They exist between the informal and formal economies, and as such offer real opportunities. A year ago, when President Peña Nieto took office, he announced many programs to support companies willing to lend money to this sector of the economy. That’s when we really concentrated on it. We already work with Nafinsa, and have enjoyed a relationship for around 15 years. Today, it is seeking to lend more to SMEs in the same way as Bancomext. Everybody targeting the SME sector is looking for intermediaries that know how to lend to this sector, such as ourselves. There are many players already in the market. Banks have had SME-oriented products for many years, and yet there are many niches within the SME segment that need to be addressed. We are focusing on the smaller of those that generate revenue of between Ps5 million and Ps50 million a year. You cannot really base a credit assessment on their own financials, which is why we focus on analyzing the owner of the company. If, for example, we are to lend money to a beauty salon, much of its income is in cash, so the only way to know its true financial capacity is to familiarize yourself with the business. We send people to observe the business, whereupon we can better assess what kind of loan we can provide. This is something the banks do not do today. We never wait for people to come to us; we approach customers on the street and directly at their businesses.
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