Credito Real said it was preparing to publish a special report after Barclays highlighted an accounting change in the company’s Q3 results. Barclays had highlighted that Credito Real adjusted the value of a loan portfolio it bought from retailer Famsa’s failed bank. If Credito Real did not adjust for it, it would have likely reported a net loss. Barclays analyst Gilberto Garcia wrote in a note, “Specific figures have yet to be provided, but we estimate some MXN 400mn (~$20m) in ‘unexplained’ sequential growth in interest income; of note, without this increase, the company would have likely reported a net loss”.
The non-bank lender’s net income stood at MXN 203.6mn ($10mn), up 2.4% YoY with an increase in net interest margins by 40bp to 12.2%. Credito Real said the impact of the accounting move was small, representing around MXN 85mn ($4.2mn) in Q3 and around MXN 360mn ($17.7mn) YTD. Credito Real said, “We are not including non-cash mark ups in our results…We record interests that are derived from received flows on a month-to-month basis. Given the lack of a defined interest rate for these credits, our records use the fair value methodology that reflects the implied rate of this portfolio. There is no mark-to-market concept when using this methodology”.
