Regional B de C : The Press Release for the 3Q22

EXECUTIVE SUMMARY

Regional, S.A.B. de C.V. presents, for informative purposes only, the internal financial statements for the period ended September 30, 2022. Also, and considering that the public company participated in a corporate restructuring through a merger in which it acted as a merging company with Banregio Grupo Financiero S.A.B. de C.V., who served as a merged and currently defunct company, discloses additional information regarding the financial statements of Banregio Grupo Financiero S.A.B. of CV, for the period ended March 31, 2018, in order to maintain continuity in the disclosure of financial information and for comparative and analytical purposes, as well as the pro forma financial statements in which the financial situation and the results of Regional, S.A.B. de C.V. are presented, as if the corporate restructuring referred to above had taken effect in the same quarter of the previous year.

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EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

Growth

• The commercial portfolio with credit risk stage 1, which includes loans for small and medium businesses, registered $100,664 million pesos during 3Q22. The commercial portfolio with credit risk stage 2, which includes loans for small and medium businesses registered $1,276 million pesos during 3Q22
• On the other hand, Preferred Banking portfolio, which includes mortgages, auto credits and consumer credits such as credit cards, lay up $20,392 million pesos, representing a 13% annualized gain.
• Core deposits, formed by demand deposits and savings accounts as time deposits, reached $125,516 million pesos during the Third Quarter of 2022, presenting an 18% increase compared to the same quarter last year. Demand deposits had an 18% growth compared to 3Q21.
• Core deposits costs in national currency cost is 4.7% at the end of 3Q22.

Risks and Strengths

• Loans portfolio with credit risk stage 3 ratio was 1.3% at the end of 3Q22, 35 basis points lower than the same quarter last year.
• Regional has credit provisions that cover 1.7 times its non-performing loan portfolio.
  Banco Regional's capitalization ratio as of August 2022 is 15.2%.

Profitability

• The financial margin at the end of 3Q22 was $2,522 million pesos, increasing 34% versus 3Q21.
• Net Income was $1,303 at the end of 3Q22, 50% more than 3Q21.
• The Efficiency Index1 at the end of 3Q22 was 44.9%.

Company Description

Regional, S.A.B de C.V. (Regional) is a Mexican public company, which principal subsidiaries, Banregio Grupo Financiero, S.A. de C.V. (BanregioGF), Banco Regional S.A. IBM (Banregio) and Start Banregio, SOFOM (Start), grant credits and leases to medium and small businesses as well to individuals as their main activity.

Banregio has presence in 22 federal entities through a 155 branches network, located in: Aguascalientes, Baja California, Baja California Sur, Chihuahua, Coahuila, Ciudad de México, Durango, Estado de México, Guanajuato, Jalisco, Michoacán, Nuevo León, Puebla, Querétaro, Quintana Roo, San Luis Potosí, Sinaloa, Sonora, Tamaulipas, Veracruz, Yucatán and Zacatecas.

Regional is a public traded company (R), its main subsidiary Banco Regional was founded in 1994.

1Last 12 months

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EXECUTIVE SUMMARY

San Pedro Garza Garcia, N.L. October 24th, 2022. Regional, S.A.B. de C.V. (BMV: R.A) announced today its consolidated financial and operational results corresponding to 3Q22. The figures are in current million pesos and the percentage variations are compared with the same period of the previous year, unless otherwise specified.

Results

Regional, S.A.B. de C.V. generated at the end of 3Q22 a net income of $1,303 million pesos, achieving a 19.5% ROAE.

Financial Margin

At the end of 3Q22 the financial margin registered $2,522 million pesos, showing a 34% increase compared to the same quarter last year.

Non-Interest Income

Non-Interest Income at the end of the Third Quarter 2022 amounted $902 million pesos. Income from Commissions, which generated $380 million pesos, stands out, with an increase of 42% over the same period of the previous year.

Operating Income

The operating income reached $1,695 million pesos, increasing 47% compared to the same period last year.

The net income at the end of 3Q22:

Net Income	3Q21	2Q22	3Q22		3Q22 vs	9M21	9M22	9M22 vs
(Million pesos)	3Q21	2Q22	9M21
Financial Margin	1,887	2,256	2,522	34%	12%	5,546	6,868	24%
Total operating income	2,334	2,854	3,001	29%	5%	7,076	8,674	23%
Non interest expenses	(1,181)	(1,316)	(1,306)	11%	(1%)	(3,493)	(3,883)	11%
Operating Income	1,153	1,538	1,695	47%	10%	3,583	4,791	34%
Net income	868	1,155	1,303	50%	13%	2,631	3,608	37%

Loan Portfolio

The loan portfolio with credit risk stage 1 reached a balance of increasing 8% compared to the same quarter last year. It stands 33%.

$122,539 million pesos at the end of 3Q22, out the growth in consumer loans increasing

The loan portfolio with credit risk stage 2 reached a balance of $1,886 million pesos at the end of 3Q22.

The non-performing loan ratio was 1.3% at the end of 3Q22, 35 basis points lower than that of 3Q21, and Regional has a coverage ratio of provisions for credit loan losses of 1.7 times the non-performing loan portfolio.

Deposits

Core deposits reached $125,516 million pesos at the end of 3Q22 with an increase of 18% compared to the same quarter last year. Demand deposits stand out with a 18% increase compared to the Third Quarter in 2021.

Capitalization

The capitalization ratio to total risky assets of Banco Regional, S.A. stood at 15.2% by August 2022.

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EXECUTIVE SUMMARY

Net Income by Subsidiary

During the Second Quarter of 2022, Banco Regional, S.A. generated 84% of Regional's total Net Income, Start Banregio, S.A. de C.V. which is a subsidiary of Banco Regional, generated 17% and other subsidiaries contributed (1%) of the Regional's net income.

Financial Indicators

The following chart shows information in a 12 month horizon in order to prevent distortions caused by seasonality.

Financial ratios Last Twelve Months (LTM)	3Q21	4Q21	1Q22	2Q22	3Q22	3Q22 vs
							3Q21	2Q22
Net Interest Margin (NIM)	(1)		5.3%	5.3%	5.3%	5.4%	5.6%	23 b.p.	17 b.p.
Total Loans NIM LTM	(2)				6.6%	6.5%	6.5%	6.5%	6.7%	9 b.p.	13 b.p.
Return on Equity (ROAE)	(3)		13.9%	15.3%	16.9%	17.9%	19.5%	565 b.p.	165 b.p.
Return on Assets	(ROAA)	(4)		2.0%	2.2%	2.4%	2.4%	2.5%	53 b.p.	14 b.p.
Return on Assets (ROAA) of Total Loans	(5)	2.1%	2.3%	2.5%	2.5%	2.6%	48 b.p.	11 b.p.
Efficiency Ratio	(6)						47.2%	46.4%	46.1%	46.4%	44.9%	(230 b.p.)	(145 b.p.)
Loans to deposits	(7)					108.2%	110.5%	105.1%	99.4%	100.4%	(779 b.p.)	101 b.p.

1. Net Interest Margin NIM: Financial Margin of last 4 quarters / Average productive assets of the last 12 months.
2. Total Loans NIM LTM: (Financial margin of last 4 quarters adjusted by repos, cash equivalents, derivatives and margin calls) / (Average productive assets of last 12 months).
3. Return on Average Equity (ROAE): Net income of last 4 quarters / Average stockholders' equity of last 4 quarters.
4. Return on Average Assets (ROAA): Net income of last 4 quarters / Average total assets of last 4 quarters.
5. Return on Average Assets (ROAA) of total Loans: (Net income of last 4 quarters / (Average total assets of last 4 quarters (-) average balance of repos or last 4 quarters)).
6. Efficiency Ratio: Administration and promotion expenses of last 4 quarters / (Financial Margin + Commissions + Trading + Other Income) of last 4 quarters.
7. Loans to deposits: Loan portfolio at the end of the quarter / Core deposits at the end of the quarter.

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