Mercantil Servicios Financieros, C. A. Financial Report First Quarter

Transcription

Mercantil Servicios Financieros, C. A.
Financial Report First Quarter 2013
Mercantil Servicios Financieros (Mercantil). First Quarter 2013
Caracas Stock Exchange (MVZ.A & MVZ.B); Level 1 ADR: MSFZY & MSFJY
Caracas, April 30, 2013. Mercantil Servicios Financieros (Mercantil) reports its earnings for the quarter ended March 31, 2013.
Summary
Net Income: Mercantil posted Bs 2,039 million (US$ 363 million)1 in net income in 1Q 2013, 156.3% up on the Bs 796 million (US$ 185 million) 1
registered in 1Q 2012.
 Net earnings per share in 1Q 2013 were Bs 20.57, US$ 3.661 (Bs 8.02, US$ 1.871 in the first quarter of 2012).
 ROE and ROA in 1Q 2013 reached 47.9% and 5.2%, respectively (27.7% and 3.0% in 1Q 2012).
 The price of Mercantil’s Class “A” and “B” common shares closed at Bs 210 and Bs 202, respectively, compared to Bs 140 and Bs 135 at
the end of December 2012 and Bs 71 and Bs 75 at the end of March 2012.
The main variations in net quarterly income are:
 Net Interest Income reached Bs 2,591 million (US$ 461 million)1, Bs 870 million (50.6%) more than the Bs 1,721 million (US$ 401 million)1
reached in 1Q 2012, mainly due to growth of financial assets and liabilities. The financial intermediation ratio (loans-to-deposits) was 68.6% at
the close of 1Q 2013 (75.7% at the close of the first quarter of 2012).
 Loan Portfolio Provision registered Bs 143 million (US$ 25 million)1 in expenditure, which reflects a Bs 39 million (21.4%) year-on-year decline
from Bs 182 million (US$ 42 million)1. The provision represents 3.1% of the gross loan portfolio (3.4% at March 31, 2012) and covers 306.4% of
past-due and nonperforming loans (235.9% at March 31, 2012).
 Commission and income reached Bs 1,924 million (US$ 342 million)1, up Bs 1,077 million (127.1%) from Bs 847 million (US$ 197 million) 1
registered in 1Q 2012, which stemmed from Bs 717 million income growth resulting from exchange differences due to the change from Bs
4.2893/US$1 to Bs 6.2842/US$1 in the exchange rate set by the Venezuelan Central Bank for the valuation of assets and liabilities in foreign
currency; Bs 99 million earnings growth from securities trading; and Bs 261 increase in income from commissions on customer transactions;
among other factors.
 Insurance premiums, net of claims reached Bs 235 million (US$ 42 million)1, up Bs 60 million (34.3%) year-on-year from Bs 175 million (US$
41 million)1. Net earned premiums during the quarter reached Bs 2,099 million and reflected Bs 464 million (28.4%) year-on-year growth.
 Personnel and Operating Expenses reached Bs 2,359 million (US$ 420 million)1,, Bs 674 million (40.0%) more than the Bs 1,684 million (US$
393 million)1 registered in 1Q 2012, due to increases of Bs 246 million (35.6%) in personnel expenses, Bs 144 million (56.9%) in expenses for
contributions to regulatory entities and Bs 284 million in expenses for commissions for using the point-of-sale network, ATMs and other banking
facilities.
Personnel and Operating Expenses are affected by inflation in Venezuela which averaged 25.1% over the last 12 months, as well as by the
effect of devaluation on expenses in Venezuela, and the conversion of the expenses of the overseas subsidiaries. The efficiency ratio measured
by calculating operating expenses as a percentage of average assets, was 5.0% in March 2013 versus 5.4% in March 2012.
Summary of the Financial Statements and Ratios 2
(In millions of Bolivars, except percentages)
March
December
2013
2012
QUARTERLY RESULTS
Net Interest Income
Allowance for losses on loan portfolio
Commissions and other income
Insurance premiums, net of claims
Salaries and Operating Expenses
Net Income – Quarter
KEY FINANCIAL INDICATORS
Income per share – Quarter Bs / share
Market price A share
Market price B share
Book value per share
Net Income (quarter) / Average Assets (ROA)
Net Income (quarter) / Average Equity (ROE)
1
2
March
2012
∆ Mar 13
vs. Dec 12
∆ Mar 13
vs. Mar 12
2,591
143
1,924
235
2,359
2,039
2,502
280
1,378
400
2,129
1,508
1,721
182
847
175
1,684
796
%
3.6
(48.9)
39.7
(41.3)
10.8
35.4
%
50.6
(21.4)
127.1
34.3
40.0
156.3
20.57
210.00
202.00
174.74
5.2%
47.9%
15.20
140.00
135.00
147.49
5.0%
47.6%
8.02
71.00
75.00
114.04
3.0%
27.7%
35.3
50.0
49.6
18.5
4.0
0.6
156.5
195.8
169.3
53.2
73.3
72.8
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the
period. See exchange rates in Appendix VI. Exchange control in place in Venezuela since February 2003.
See Appendix III Summary of the Financial Statements and Ratios (in Dollars).
Contact: Investor Relations. Phone: 58-212-503.1335. e-mail: [email protected]. website: www.bancomercantil.com.
1
Assets: In 1Q 2013 total assets registered Bs 26,197 million (18.4%) quarter-over-quarter growth to Bs 168,839 million (US$ 26,869 million)1, and
Bs 59,425 million, (54.3%) year-on-year growth.
The variations for this item, taken individually by subsidiary, are as follows:
 Mercantil Banco Universal registered Bs 11,672 million (11.1%) growth in 1Q 2013 and Bs 43,222 million (58.8%) year-on-year growth.
 Mercantil Commercebank registered a US$ 94 million (1.4%) decline in 1Q 2013 and US$ 88 million (1.3%) decline compared to March
2012.
 Mercantil Seguros registered Bs 1,219 million (17.8%) growth in 1Q 2013 and Bs 2,481 million (44.3%) growth compared to March 2012.
Loan Portfolio In 1Q 2013, total loans registered Bs 12,145 million (15.6%) quarter-over-quarter growth to Bs 90,031 million (US$ 14,327 million)1,
and Bs 27,227 million (43.4%) year-on-year growth.
 Mercantil Banco Universal registered Bs 2,971 million (5.1%) growth in 1Q 2013 and Bs 16,423 million (37.1%) growth compared to March
2012.
 Mercantil Commercebank registered a US$27 million (0.6%) decline in 1Q 2013 and US$ 234 million (5.7%) growth compared to March
2012.
Deposits: In 1Q 2013 deposits registered Bs 20,792 million (18.1%) quarter-over-quarter growth to Bs 135,397 million (US$ 21,545 million)1, and
Bs 49,531 million (57.7%) year-on-year growth.
 Mercantil Banco Universal registered Bs 9,923 million (10.9%) growth in 1Q 2013 and Bs 37,975 million (60.4%) growth compared to March
2012.
 Mercantil Commercebank, N.A. registered US$ 50 million (0.9%) growth in 1Q 2013 and US$ 31 million (0.6%) growth compared to March
2012.
Shareholders’ Equity: Totaled Bs 17,861 million (US$ 2,842 million)1, up Bs 2,785 million (18.5%) quarter over quarter from Bs 15,076 million
(US$ 3,515 million)1 and Bs 6,204 million (53.2%) year-on-year growth. The quarterly variation can be primarily attributed to Bs 2,039 million in net
income for the period; Bs 1,441 million growth due to the effect of converting the net assets of overseas subsidiaries, and reductions of Bs 664
million for provisions for dividends declared by the General Meeting of Shareholders (see page 22) and Bs 31 million from adjusting available-forsale investments to their market value.
Capital Ratios: Mercantil’s equity/assets ratio at March 31, 2013 is 10.6% and its equity/risk-weighted assets ratio is 19.5%, based on the
standards of the National Securities Superintendency-SNV, for its abbreviation in Spanish (10.7% and 18.5% at March 31, 2012).
 Mercantil Banco Universal, in accordance with the requirements of the Superintendency of Banking Sector Institutions (SUDEBAN, for its
abbreviation in Spanish), has an equity/assets ratio of 10.2% and an equity/risk-weighted assets ratio of 19.6% at March 31, 2013 (10.1% and
16.3% at March 31, 2012).
 Mercantil Commercebank, N.A., based on the standards of the U.S. Office of the Comptroller of the Currency (OCC), at March 31, 2013 the
equity/assets ratio is 10.1% and the equity/risk-based assets ratio 17.3%, (9.2% and 17.1% at March 31, 2012).
The equity ratios of Mercantil and its subsidiaries exceed the regulatory minimums.
Summary of the Financial Statements
March
December
2013
2012
Cash and due from banks
Investment Portfolio
Loan Portfolio, Net
Other assets
TOTAL ASSETS
ASSETS UNDER MANAGEMENT
Deposits
Financial Liabilities
Other Liabilities
Shareholders’ Equity
TOTAL LIABILITIES AND SHAREHOLDERS´
EQUITY
1
30,444
42,624
90,031
5,740
168,839
27,557
32,621
77,885
4,579
142,642
16,468
26,305
62,804
3,837
109,414
∆ Mar 13
vs. Dec 12
%
10.5
30.7
15.6
25.4
18.4
28,673
22,566
18,823
27.1
52.3
135,397
3,523
12,058
17,861
168,839
114,605
2,683
10,278
15,076
142,642
85,866
2,894
8,997
11,657
109,414
18.1
31.3
17.3
18.5
18.4
57.7
21.7
34.0
53.2
54.3
March
2012
∆ Mar 13
vs. Mar 12
%
84.9
62.0
43.4
49.6
54.3
2
Table of contents
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Contribution of subsidiaries
Market share
Credit Ratings
Management discussion and analysis
Operating Income
 Net Interest Income
 Loan Portfolio Provision
 Total Commissions and Other Income
 Insurance Premiums, Net of Claims
 Total Operating Expenses
Balance Sheet
 Liquidity
 Investment Portfolio
 Financial Intermediation Activity
 Loan Portfolio
 Deposits
 Total Assets
 Financial Obligations
 Shareholders’ Equity
 Capital Ratios
Assets and Liabilities in Foreign Currency
Summary of Subsidiaries’ performance according to their Regulatory Accounting Standards
Private Banking and Wealth Management
Corporate Events
New Measures announced for the Venezuelan Economy
Awards and Acknowledgements
Global Economic Climate
U.S. Economic Climate
Venezuelan Economic Climate
Appendix I: Summary of the accounting principles used to prepare the financial statements
Appendix II: Financial statements Mercantil Servicios Financieros, C.A.
Appendix III: Summary of the Financial Statements and Ratios (in Dollars)
Appendix IV: Consolidated Loan Portfolio by Classification
Appendix V: Statutory percentage of Mercantil Banco Universal loans by economic sector and interest rates
Appendix VI: Summary of Financial Indicators – Mercantil Servicios Financieros
Appendix VII: Financial statements Mercantil Banco Universal
Appendix VIII: Financial statements Mercantil Commercebank Holding Corporation
Appendix IX: Financial statements Mercantil Seguros
Appendix X: Key Macroeconomic Indicators
Page
4
5
5
6
6
7
8
8
9
10
11
13
14
15
16
16
16
17
18
21
22
22
23
23
23
24
26
27
32
33
34
35
37
39
41
43
3
Contribution of the Subsidiaries
March 31, 2013
MERCANTIL SERVICIOS FINANCIEROS
(1)
(In millions of Bolivars and Dollars (2), except percentages)
Patrimonio: Bs. 17.861 (US$ 2.842)
Shareholders’
Equity
(3)
 Venezuelan
Main
Activity
(3)
Mercantil
Banco Universal
Bs. 8.368
US$ 1.949
Universal
Bank
Main
Subsidiaries
Mercantil
Commercebank
Bs. 2.631
US$ 613

U.S.A Domestic
Bank & Brokerage

Mercantil
Commercebank N.A.
Mercantil
Commercebank
Investment Services
(MCIS)
Mercantil
Commercebank Trust
Company (MCTC)


(3)
(3)
Bank
Overseas
Mercantil
Merinvest
Bs. 89
US$ 21
Mercantil
Seguros
Bs. 1.794
US$ 418
Bs. 764
US$ 178
 International
Banking
Others
Bs. 155
US$ 36
 Investment
 Insurance
In
Venezuelan
 Mercantil Bank
 Other
banking, mutual
funds, trading
& brokerage in
Venezuelan
Minor
Investments
 Mercantil Merinvest,
(Schweiz) AG.
(Suiza)
 Mercantil Bank and
Trust Limited
(Islas Caiman)
 Mercantil Bank
Curacao, NV
 Mercantil Bank
Panamá, S.A.
Casa de Bolsa, C.A.
 Mercantil Servicios
de Inversión, C.A.
 Mercantil Sociedad
Administradora de
Entidades de
Inversión Colectiva,
C.A.
In millions of Bs.(1)
Total Assets
% Assets
Investments
Loans (Net)
Deposits
Contribution
Income net:
Quarter
Assets Management
In millions of US$(2)
Total Assets
Investments
Loans (Net)
Deposits
Contribution
Income net:
Quarter
115,265
68.3%
23,613
60,727
99,680
41,973
24.9%
12,539
27,308
32,804
3,678
2.2%
1,183
1,996
2,913
7,478
4.4%
5,197
-
73
0.0%
29
-
373
0.2%
63
-
Total
168,839
100.0%
42,624
90,031
135,397
1,761
63
(1)
195
15
6
2,039
11,780
10,967
2,688
40
3,198
-
28,673
18,344
3,758
9,663
15,861
6,679
1,995
4,345
5,220
585
188
318
463
1,190
827
-
12
5
-
59
10
-
26,869
6,784
14,327
21,545
313
11
-
35
3
1
363
1,875
1,745
428
6
509
-
4,563
7,228
780
91
1,592
37
22
9,750
Assets Management
Number of Employees
1
Financial data presented in accordance with SNV standards (see Appendix I). Figures net of elimination of inter-company transactions.
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the period. See
exchange rates in Appendix VI. Exchange control has been in place in Venezuela since February 2003.
3
See Summary of Subsidiaries’ performance according to their Regulatory Accounting Standards (page 18).
2
4
Market Share
Positioning
Commercial
and Universal
Private
Bank's
Market Share
Venezuela
Mercantil Banco (1)
Tuorism Loans
Industrial Loans
Agricultural Loans
Morgtgage Loans under the mortgage Debtor Law (Ley Especial del
Deudor Hipotecario)
Microcredits Loans
Gross Loans
Savings Deposits
Total Deposits
Total Deposits + Other Demand Liabilities
Total Assets
Trust
Mercantil Seguros
3
2
3
2
1
2
12.9%
14.2%
14.2%
3
1
9.3%
4
3
1
3
3
4
4
2
2
1
2
2
3
2
8.3%
14.5%
20.7%
13.7%
12.0%
11.6%
8.1%
3
11.7%
15
1.2%
(2)
Net Premiums
U.S.A.
Mercantil Commercebank (3)
Total Deposits
(1) Source: Summary of Unconsolidated Financial Statements Published in National newspapers.
(2) Source: Venezuelan Superintendency of Insurance at February 28, 2013.
(3) Source: Federal Deposit Insurance Corporation (FDIC), to the Florida Stated USA, at June 30, 2012, total number of institutions: 292 in Florida
Credit Ratings
Mercantil Servicios Financieros
National Ratings
Long-term
Short-term
Rating for Unsecured Bonds ( Long-term in local currency)
Rating for Commercial Paper (Short-term in local currency)
Mercantil Banco Universal
National Ratings
Long-term
Short-term
International Ratings
Long-term (Foreign and local currency)
Short-term (Foreign and local currency)
Viability
Mecantil Commercebank Florida Bancorp y
Mercantil Commercebank N.A.
Long-term Deposit (Mercantil Commercebank ,N.A. only)
Long-term
Short-term
Viability
Fitch Ratings
Clave (*)
AA(Ven)
F1+(Ven)
A2
A1
A2
A1
AA+(Ven)
F1+(Ven)
B+
B
b+
BB+
BB
B
bb
(*) A credit rating agency in Venezuela
5
Management Discussion and Analysis
Operating Income
Quarter
Ended on
∆
US$ 1
Mar.2013
(In millions of Bolivars and millions of US$, except percentages)
Net Interest Income
Allowance for Losses on Loan Portfolio
Net Financial Margin
Commissions and Other Income
Insurance Premiums, Net of Claims
Operating Income
461
25
436
342
42
820
March
2013
March
2012
2,591
143
2,447
1,924
235
4,606
Bolivars
1,721
182
1,539
847
175
2,561
870
(39)
908
1,077
60
2,045
%
50.6
(21.4)
59.0
127.1
34.3
79.9
Net Interest Income
In 1Q 2013, net interest income was Bs 2,591 million (US$ 461 million)1, 50.6% higher than the Bs 1,721 million (US$ 401 million)1 registered in 1Q
2012, due to an increase in the volume of financial assets and liabilities. Interest income was Bs 3,698 million, a 50.7% year-on-year increase, both
in growth of loan portfolio income by 50.0% and investment portfolio income by 54.1%. Financial expenses totaled Bs 1,107 million, up 51.1%
compared to 1Q 2012.
The financial intermediation ratio (loan-to-deposits) was 68.6% at the close of 1Q 2013, 75.7% at the close of March 2012.

Mercantil Banco Universal, reached Bs 2,227 million, 54.3% up on the Bs 1,444 million in interest income registered in 1Q 2012, mainly due
to a higher volume of financial assets and liabilities. The financial intermediation ratio was 62.6% in March 2013 and 73.5% in March 2012.

Mercantil Commercebank, N.A., totaled US$ 36 million, similar to the US$ 37 million registered in 1Q 2012. The Bank continues to hold a
significant portion of its assets, US$ 2,170 million (more than 32%), in short-term investments and securities issued by the US government or
US government-sponsored bodies. This high level of liquidity has continued to give the Bank ample flexibility to increase its credit operations.
Mercantil's net interest margin (income/average financial assets) at March 31, 2013 was 8.4% compared to 7.9% the previous year.
Evolution of Net Interest Income
(Million of Bs)
3,000
8.6%
2,500
8.5%
9.0%
8.4%
8.1%
7.9%
8.0%
2,000
7.5%
1,500
7.0%
1,000
6.5%
500
-
6.0%
1,721
1,948
2,230
2,502
2,591
IQ2012
IIQ2012
IIIQ2012
IVQ2012
IQ2013
Net Interest Income
1
8.5%
5.5%
Net Interest Income / Average Financial Assets
period. See exchange rates in Appendix VI. Exchange control has been in place in Venezuela since February 2003.
6
Loan Portfolio Provision
In 1Q 2013, expenses totaled Bs 143 million (US$ 25 million)1, Bs 39 million (21.4%) down from Bs 182 million (US$ 42 million)1 in 1Q 2012.

Mercantil Banco Universal registered Bs 138 million in loan portfolio provisions in 1Q 2013 (Bs 144 million in 1Q 2012), aimed mainly at
provisions related to the commercial, construction and services sector and the result of loan portfolio growth during the quarter.

Mercantil Commercebank, N.A. registered US$ 0.1 million in loan portfolio provisions, US$ 8 million (99.2%) less compared to 1Q 2012,
mainly for credits related to the commercial and construction sectors.
This brings the accumulated allowance to Bs 2,893 million (US$ 460 million) 1 at March 31, 2013 and represents 3.1% of gross loans (3.4% at
March 31, 2012). This provision covers 306.4% of the past-due and nonperforming loan portfolio (235.9% at March 31, 2012).
Evolution of Loan Portfolio and Asset Quality Ratios
(Millions of Bs)
100,000
90,000
3.4%
3.3%
80,000
3.3%
3.3%
70,000
3.1%
60,000
50,000
40,000
30,000
1.3%
1.4%
20,000
1.1%
10,000
0.9%
1.0%
0
2008
2008
Gross Loans
2009
2009
2010
2010
2011
4.2%
4.0%
3.9%
3.6%
3.6%
3.2%
3.3%
3.0%
2.8%
2.7%
2.4%
2.4%
2.1%
2.0%
1.8%
1.6%
1.5%
1.2%
0.9%
0.8%
0.6%
0.4%
0.3%
0.0%
2012
Past Due and Non-Performing Loans
Past Due and Non-Performing Loans / Gross Loans
Allowance for Losses on Loan Portfolio / Gross Loans
1
7
Total Commissions and Other Income
Composition of Total Income
In 1Q 2013, commissions and other income totaled Bs 1,924 million (US$
342 million)1, Bs 1,077 million (127.1%) up from Bs 847 million (US$ 197
million)1registered in 1Q 2012, primarily due to:
Bs. 2,743 million
1
US$ 640 million
March 2012
 Bs 717 million (11,950.0%) increase in earnings from exchange difference
due to the new exchange rate set by the Venezuelan Central Bank for the
valuation of assets and liabilities in foreign currency (adjusted from Bs
4.2893/US$1 to Bs 6.2842/US$1).
Bs. 4,750 million
1
US$ 845 million
March 2013
63%
 Bs 261 million (43.0%) growth of earnings from commissions on debit and
credit cards, insurance policy financing, other commissions on customer
operations, and other income.
55%
 Bs 99 million (42.3%) growth of earnings from securities trading activities.
Insurance Premiums, net of Claims
21%
19%
En 1Q 2013, insurance premiums, net of commissions, reinsurance and
claims, totaled Bs 235 (US$ 42 million)1, reflecting 34.3% year-on-year
growth from Bs 175 million (US$ 41 million)1. This improvement is attributed
to the Property & Casualty business.
17%
9%
9%
7%
IQ 2012
IQ 2013
Net Interest Income
Commissions on Transactions, Insurance Premiums net and Other
Exchange Gains and Losses and Other Income
Income on Sales Investment Securities
Net earned premiums for 1Q 2013 amounted to Bs 2,099 million (US$ 374
million)1, reflecting Bs 464 million (28.4%) year-on-year growth. The main
contributors to this variation were the Health (30%) and Automobile (25%)
businesses. At February 28, 2013, Mercantil Seguros was the country’s
third largest insurance company in terms of net earned premiums, with
11.7% of the insurance market.
Claims during 1Q 2013 totaled Bs 1,439 million (US$ 256 million)1, up Bs
319 million (28.4%) compared to Bs 1,121 million (US$ 261 million) in 1Q
2012. The claims ratio was 65.8% in 2013 (63.8% in 2012). The technical
result was Bs 43 million (US$ 8 million)1, similar to Bs 44 million (US$ 10
million)1registered in the first quarter 2012.
Composition of Total Income by
Business Segments
1.1%
1.4%
Net Earned Premiums
88.2%
86.0%
(12 months change)
10.7%
12.6%
60%
50%
IQ 2012
40%
Banking
IQ 2013
Insurance
Asset Management
30%
20%
10%
0%
IQ 2012
IIQ 2012
IIIQ 2012
Insurance Market
IVQ 2012
feb 2013
Mercantil
1
Dollar figures are given for reference purposes only. Balance Sheet
figures are translated at the closing exchange rate and income statement
figures at the average exchange rate for the period. See exchange rates in
Appendix VI. Exchange control has been in place in Venezuela since
February 2003.
8
Total Operating Expenses
Quarter
∆
Ended on
US$ 1
(In millions of Bolivars and US$, except percentages)
Mar. 2013
Operating Income
Operating Expenses
Salaries and Employee Benefits
Other Operating expenses
Taxes Current and Deferred
Net Income
Operating Income
March
2013
March
2012
Bolivars
%
820
4,606
2,561
2,045
79.9
167
253
37
0
363
937
1,422
207
(1)
2,039
691
993
80
(1)
796
246
429
127
0
1,243
35.6
43.2
158.8
0.0
156.3
In 1Q 2013, operating expenses totaled Bs 2,359 million (US$ 420 million)1, a 40.0% year-on-year increase from Bs 1,684 million (US$ 393
million)1. This increase is mainly due to:

Bs 246 million in personnel expenses, a year-on-year rise of 35.6%. The application of wage increase policies in Venezuela contributed
to higher expenses as well as the effects of the new Labor Law in effect since May 2012 At Mercantil Banco Universal, assets per
employee rose from Bs 10.5 million in 2012 to Bs 16.0 million in 2013. At Mercantil Seguros, net earned premiums per employee rose
from Bs 1.1 million in 2012 to Bs 1.3 million in 2013. In the case of the overseas business, the assets per employee indicator remained at
US$ 8.7 million in 2013.

Bs 144 million (56.9%) rise in expenses for contributions to regulatory agencies.

Bs 57 million (81.5%) increase in expenses for taxes and contributions.

Bs 227 million (33.9%) increase in expenses for commissions for using the point-of-sale and ATM network and other facilities.
The efficiency ratio measured by calculating operating expenses as a percentage of average assets, was 5.0% in March 2013, versus 5.4% in
March 2012. The ratio of operating expenses to total income was 41.3% in March 2013 (52.3% in March 2012). Personnel and operating expenses
are affected by inflation in Venezuela which averaged 25.1% over the last 12 months, as well as by the effect of devaluation on expenses in
Venezuela, and the conversion of the expenses of the overseas subsidiaries.
Total Operating Expenses
Efficiency Ratios and Inflation in
Venezuela
Quarters
(In millions of Bolivars)
Δ +40.0%
57.7%
2,359
937
708
5.4%
603
5.7%
5.5%
5.4%
5.3%
31.0%
5.0%
24.3%
Δ +26.4%
25.1%
24.6%
305
138
191
185
IQ 2012
IVQ 2012
IQ 2013
Salaries and employee benefits
Other operating expenses
Fees paid to regulatory agencies
Depreciation, Property and equipment, Amortization of intangibles and others expenses
1
41.3%
5.5%
841
396
252
5.9%
47.7%
5.3%
Δ +10.8%
925
49.8%
44.3%
37.7%
691
6.1%
50.4%
51.0%
2,129
1,684
52.3%
17.7%
21.3%
18.0%
5.1%
4.9%
4.7%
20.1%
11.0%
4.5%
IQ 2012
IIQ 2012
IIIQ 2012
Inflation in Venezuela
IVQ 2012
IQ 2013
Operating Expenses / Total Income
Operating Expenses / Average Assets
9
Balance Sheet
The principal balance sheet variations during 1Q 2013 are reviewed below and commented on with respect to the prior quarter. The main year-onyear variations are also indicated for comparison purposes.
Summary of Balance Sheet and Assets in Trust
(In millions of Bolivars and Dollars, except percentages)
∆
US$ 1
Mar.2013
March
2013
30,444
December
2012
March
2012
∆
Mar 13 vs. Dec 12
Bolivars
%
Mar 13 vs. Mar 12
Bolivars
%
Loan Portfolio, Net
Total Assets
4,844
6,784
14,327
26,869
42,624
90,031
168,839
27,557
32,621
77,885
142,642
16,468
26,305
62,804
109,414
2,887
10,003
12,145
26,197
10.5
30.7
15.6
18.4
13,976
16,319
27,227
59,425
84.9
62.0
43.4
54.3
Deposits
Shareholders´ Equity
21,545
2,842
135,397
17,861
114,605
15,076
85,866
11,657
20,792
2,785
18.1
18.5
49,531
6,204
57.7
53.2
4,563
28,673
22,566
18,823
6,107
27.1
9,850
52.3
Asset Management
Liquidity
At the close of 1Q 2013, total cash and due from banks (cash and the
reserve ratio in Venezuela) plus investments in time deposits and
placements, which are included in the investment portfolio, increased
11.1% to Bs 34,872 million (US$ 5,549 million)1, exceeding the Bs
31,394 million (US$ 7,319 million) recorded in the previous quarter by
Bs 3,478 million This growth is attributed mainly to accounts held at the
Central Bank of Venezuela.
Compared to March 31, 2012, cash and due from banks plus
investments in time deposits and placements grew Bs 16,229 million
(87.1%), from Bs. 18,643 million to Bs 34,872 million.
Liquidity
Δ +87.1%
34,872
31,394
17,403
16,065
18,642
7,886
Δ +11.1%
Δ +68.4%
11,492
13,041
8,581
2,175
3,837
4,428
IQ 2012
IVQ 2012
IQ 2013
Cash and Due from Banks - Legal Reserves
Legal Reserves
Investments in Time Deposits and Placements
The liquidity ratio calculated by dividing total cash and due from banks by deposits was 22.5%; and the ratio calculated by dividing total cash and
investments by deposits was 54.0%, compared with 24.0% and 52.5%, respectively in December 2012 and 19.2% and 49.8%, respectively at the
close of 1Q 2012.
1
10
At the close of 1Q 2013, the investment portfolio totaled Bs 42,624 million
(US$ 6,784 million)1, reflecting a quarter-over-quarter increase of Bs
10,003 million (30.7%) from Bs 32,621 million (US$ 7,606 million)1. This
growth is observed mainly in investments issued by the Venezuelan state,
state-owned companies and decentralized entities to fund social housing
construction projects.
Investments Portfolio
(In million of Bolivars)
Δ +62.0%
42,624
32,621
Compared to March 31, 2012, the investment portfolio grew Bs 16,319
million (62.0%) from Bs 26,305 million to Bs 42,624 million.
26,305
Δ + 30.7%
The variations for this item, seen individually by subsidiary, are as follows:
Mar. 2012
(In millions,
except percentages)
Mercantil Seguros
Mercantil Commercebank, N.A.
Bs.
Bs.
Us$
March
December
2013
2012
24,302
5,473
1,995
Dec. 2012
Mar. 2013
∆
Abs.
18,413
4,681
2,122
%
5,889
792
(127)
32.0
16.9
(6.0)
Investments by maturity and yield at the close of 1Q 2013 are broken down as follows:
Investments by Maturity and Yield
Available
for Sale
Trading
Years
Bs. 2
Bs. Less Than 1
Bs. 2
Held to
Maturity
%4
Bs. 3
%4
1,624
10.2
From 1 to 5
4,308
12.2
3,824
5.3
Over 5
8,233
14.8
4,666
4.2
8
513
13.2
98
4.7
From 1 to 5
51
1,386
5.5
324
3.1
Over 5
49
12,276
4.9
66
2.0
107
28,339
US$ Less Than 1
Time Deposits
and Placements
Shares
Bs. 2
Bs. 2
4,384
8,978
5
Restricted
Investments
%
Bs. 2
%4
5.6
6
6.1
6,400
2
11.1
8,134
392
21
TOTAL
12,920
38
3
6
24
4,428
0.1
0.6
314
3.7
972
17
2.8
1,778
23
3.6
12,421
748
42,624
1
Registered at Market Value
3
Amortized cost
4
The yield of securities is based on amortized cost at the end of the period. Yield is calculated by dividing income from (including Premium amortization or discounts) by amorti zed cost or market
value.
5
Bs. 3,690 million are Central Bank placements with maturity under 30 days.
6
Consists of Repos with the Central Bank of Venezuela with maturity under 30 days
2
11
Investments at the close of 1Q 2013, by company, issuer and currency, are broken down as follows:
Breakdown of Investments by Issuer and Currency at March 31, 2012
Venezuelan
US Gov.
Government
Venezuelan
US
Guaranteed
and Public
Central Bank Government
Agencies
Int’I Private
Entities
Bolivars
Mercantil Seguros & Others
Total Bs.
4,076
4,076
-
-
-
Venezuelan
Private
19,079
3,552
33
715
23,187
4,267
22,6312
748
27,454
Total US$1
US Dollars
Mercantil Commercebank
Florida Bancorp
Mercantil Seguros & Others
12
22
13
20
68
1,050
60
795
29
114
106
36
156
1,995
351
Total US$
1,123
846
233
212
-
2,414
16.6%
12.5%
3.4%
56.2%
1.7%
100.0%
Breakdown %
1
2
Total Bs
9.6%
Dollar figures given for reference purposes only and are translated al the closing exchange rate. See Exchange rates in Appendix VI. Exchange control has been in place in Venezuela since
February 2003.
Bs. 1.385 million include US$ indexation clause
Government bonds issued by the Venezuelan State account for 0.9 times Mercantil's equity and 9.2% of its assets (0.6 and 6.8%, respectively in
December 2012). At Mercantil Banco Universal, these securities represent 1.0 times the equity and 9.1% of the assets (0.6% and 5.6%,
respectively in December 2012). Mercantil holds 2.2% of the public debt securities in national and foreign currency issued by the Venezuelan nation
according to official figures obtained from the Ministry of Planning and Finance at December 31, 2012.
At March 31, 2013, the Mercantil, C.A. Banco Universal subsidiary, in line with a regulation issued by the executive, purchased Bs 8,639 million in
Agricultural Bonds, Mortgage Bonds and Participation Certificates, accounting for 36.7% of the bank's investment portfolio and 0.8 times its
shareholders' equity (Bs 7,517 million representing 42.1% of its investment portfolio and 0.8 times its shareholders' equity at December 31, 2012).
Breakdown of Investments by Issuer
March 2012
December 2012
March 2013
60%
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Venezuelan Central
Bank
US Government
Private
Venezuelan
Government and
Public Entities
US Gov. Guaranteed
Agencies
12
Financial Intermediation Activity
Loan Portfolio
Loan Portfolio
At the close of 1Q 2013, net loans were Bs 90,031 million (US$ 14.327
million)1, reflecting 15.6% growth over 4Q 2012 when they totaled Bs
77,885 million (US$ 18,158 million)1.
Δ + 43.4%
90,031
77,885
Compared to March 31, 2012, the loan portfolio grew Bs 27,227 million
(43.4%) from Bs 62,804 million to Bs 90,031 million.
62,804
Δ + 15.6%
At March 31, 2013, consumer and commercial loans account for 58.6%
of the loan portfolio which totaled Bs 54,497 million, reflecting 17.9%
quarter-over-quarter growth and 54.1% year-on-year growth.
The variations for this item, taken individually by subsidiary, are as
follows:
Mar. 2012
(In millions,
except percentages
Mercantil Commercebank, N A
Bs.
Us$
March
December
2013
2012
60,727
4,345
Dec. 2012
Mar. 2013
∆
Abs.
57,756
4,372
%
2,971
(27)
5.1
(0.6)
The ratio of past-due and nonperforming loans to gross loans was 1.0% (0.9% at December 2012). The ratio by subsidiary is as follows:

Mercantil Banco Universal 0.8% compared with 1.0% for the Venezuelan financial system.

Mercantil Commercebank, N.A. 1.5%, similar to the 1.6% registered at the close of December 2012 (1.8% non-accrual loans, 1.9% at
December 31, 2012).
At March 31, 2013, 98.4% of Mercantil’s loan portfolio is outstanding. The allowance for losses on loan portfolio covers 306.4% of past-due and
nonperforming loans 372.6% at December 31, 2012); this indicator is 496.1% at Mercantil Banco Universal (611.1% at December 31, 2012) and
105.2% at Mercantil Commercebank (92.2% at December 31, 2012).
The analysis of Mercantil's main subsidiaries and their positioning in the market are shown on Pages 5 and 18.
Annex IV shows the distribution of the loan portfolio, broken down by economic activity, maturity, country and type of risk.
The statutory percentage of Mercantil Banco Universal loans by economic sector and interest rates is shown in Annex V.
Loan Portfolio
by Business Segment
(In millions of bolivars)
SME's
Large Corporation
Individuals
100,000
90,000
80,000
31%
70,000
29%
31%
33%
24%
24%
24%
47%
47%
45%
43%
43%
Mar. 2012
Jun. 2012
Sep. 2012
Dec. 2012
Mar. 2013
60,000
50,000
40,000
28%
25%
26%
30,000
20,000
10,000
0
1
Dollar figures given for reference purposes only and are translated al the closing exchange rate. See Exchange rates in Appendix VI. Exchange control has been in place in Venezuela since
February 2003.
13
Deposits
Deposits
At the close of 1Q 2013, deposits were Bs 135,397 million (US$ 21,545
million)1, representing a quarter-over quarter increase of Bs 20,792 million
(18.1%) compared to Bs 114,605 million (US$ 26,720 million)1.
Δ + 57.7%
135,397
Compared to March 31, 2012, deposits grew Bs 49,531 million (57.7%)
from Bs 85,866 million to Bs 135,397 million.
114,605
85,866
Δ +18.1%
Checking accounts were the main component of deposits which totaled
Bs 81,419 million, up 17.0% from the previous quarter, and represented
60.1% of total deposits. Savings deposits increased Bs 6,404 million
(16.4%) and time deposits Bs 2,586 million (43.3%) compared to the
previous quarter.
The variations for this item, taken individually by subsidiary, are as
follows:
(In millions,
except percentages)
Bs.
Us$
March
December
2013
2012
100,863
5,380
Mar. 12
Mar. 13
∆
Abs.
90,940
5,330
Dec. 2012
%
9,923
50
10.9
0.9
The financial intermediation (loan-to-deposit) ratio is 68.6%, compared to 70.3% in December 2012.
An analysis of Mercantil's main subsidiaries and their positioning in the market can be seen on Pages 5 and 18.
Breakdown Deposits
by Business Segment
(In millions of bolivars)
Individuals
Large Corporation
SME's
140,000
130,000
120,000
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1
55%
55%
52%
52%
56%
21%
23%
24%
20%
19%
26%
25%
24%
24%
24%
Mar. 2012
Jun. 2012
Sep. 2012
Dec. 2012
Mar. 2013
Dollar figures given for reference purposes only and are translated at the closing exchange rate. See Exchange rates in Appendix VI. Exchange control has been in place in Venezuela since
February 2003.
14
Total Assets
At the close of 1Q 2013, total assets registered 18.4% growth to Bs 168,839
million (US$ 26,869 million)1, up Bs 26,197 million compared to Bs 142,642
million (US$ 33,258 million)1 in the previous quarter. This is the result of the
combined behavior of the investment portfolio and the loan portfolio, which
grew Bs 10,003 million and Bs 12,145 million, respectively. The ratio of
performing assets to total assets was 79.7%, up Bs 22,153 million (19.7%)
on the previous quarter.
Total Assets Consolidated
168,839
142,642
109,414
Compared to March 31, 2012, assets grew Bs 59,425 million (54.3%) from
Bs 109,414 million to Bs 168,839 million.
Mar. 2012
(In millions,
except percentages)
Mercantil Seguros
Bs.
Bs.
Us$
March
December
2013
2012
116,668
8,083
6,693
104,996
6,864
6,787
Dec. 2012
Mar. 2013
∆
Abs.
%
11,672 11.1%
1,219 17.8%
(94)
(1.4)
The analysis of Mercantil's main subsidiaries and their positioning in the market are shown on Pages 5 and 18.
The loan portfolio remained the principal component (53.3%) of total assets, and the investment portfolio increased its share to 25.2%, while total
cash and due from banks at the end of the quarter accounted for 18.0%.
Assets Distribution
Total Bs. 168,839 million
1
(US$ 26,869 million)
March 2013
Composition of Assets
Breakdown of Assets by Sudsidiaries
Investment Portfolio 25%
Cash and Due from Banks 18%
Loan Portfolio, Net 53%
Venezuelan Central Bank 3%
Mercantil Banco Universal 68.3%
Mercantil Commercebank 24.9%
Venezuelan Govermment 14%
Mercantil Seguros 4.4%
US Govermment. 4%
Others Countries 2.2%
Private Sector 1%
Other Subsidiaries (Venezuela) 0.2%
US Govermment Guaranteed Agencies 3%
Other Assets 4%
1
15
Financial Obligations
At the close of 1Q 2013, total financial obligations were 4,320 million (US$ 788 million)1, 29.4% up compared to Bs 3,338 million (US$ 779
million)1 in the previous quarter, while compared to March 31, 2012, obligations rose 28.1%.
(In million of bolivars and dollars)
Publicly Traded Debt Securities Issued by Mercantil
Subordinated debt
Other Financial Liabilities *
*
1
US$
15
112
227
561
788
March
2013
December
2012
March
2012
Bs.
Bs.
Bs.
96
701
797
3,523
4,320
176
479
655
2,683
3,338
479
479
2,894
3,373
Includes liabilities under repurchase agreements with BCV, funds received for special financing programs, liabilities with credit cards, letters of credit and securities loan agreements.
At the close of 1Q 2013, shareholder's equity reached Bs 17,861 million
(US$ 2,842 million)1, 18.5% up from Bs 15,076 million (US$ 3,515 million)1in
the previous quarter and 53.2% up from Bs 11,657 million (US$ 2,719
million)1in 1Q 2012.
The variation in the first quarter is primarily due to Bs 2,039 million in net
income for the period, a Bs 1,441 increase from conversion adjustments of
net assets of subsidiaries abroad, and a reduction of Bs 664 million in
provisions for dividends declared by the Shareholders' Meeting (see Page
22) and Bs 31 million from adjusting available-for-sale investments to their
market value.
Evolution of Shareholders´
Equity (In million of Bolivars)
17,861
15,076
11,657
Mar. 2012
Dec. 2012
Mar. 2013
Capital Ratios
Mercantil’s equity/assets ratio at March 31, 2013 is 10.6% and its equity/riskweighted assets ratio is 19.5%%, based on the standards of the National
Securities Superintendency-SNV (10.7% and 18.5% at March 31, 2012).

Mercantil Banco Universal, in accordance with the requirements of the
Superintendency of Banking Sector Institutions (SUDEBAN), the
equity/assets ratio at March 31, 2013 is 10.2% and its equity/riskweighted assets ratio 19.6% (10.1% and 16.3% at March 31, 2012).

Mercantil Commercebank, N.A., based on the standards of the U.S.
Office of the Comptroller of the Currency (OCC), at March 31, 2013, the
equity/assets ratio is 10.1% and the equity/risk-based assets ratio
17.3%, (9.2% and 17.1% at March 31, 2012).
Capital Structure
March 2013
Capital Stock 2%
The equity ratios of Mercantil and its subsidiaries exceed the regulatory
minimums.
Capital Reserve 1%
Share Premium 1%
Traslation Adjustments of net Assets of Subsidiaries Abroad 17%
Retained Earnings 74%
Unrealized Gain fron Adjustments of Investments to Market Value 5%
1
16
Assets and Liabilities in Foreign Currency
Mercantil has US$ 8,024 million and US$ 6,578 million in assets
and liabilities in foreign currency, respectively at March 31, 2013.
The estimated effect of each Bs 0.10/US$1 increase in the
exchange rate of 6.2842/US$1 at March 31, 2013, would be a rise
of Bs 802 million in assets, and Bs 145 million in liabilities, of which
Bs 32 million would be recorded as income for the period.
Assets by Currency
Bs. 109,414 million
(US$ 25,509 million1)
March 2012
Bs. 168,839 million
1
(US$ 26,869 million )
March 2013
70.5%
69.1%
30.9%
29.5%
Bolivars
US$
At March 31, 2013, Mercantil’s shareholders’ equity was Bs 17,861 million, equivalent to US$ 2,842 million1, which is partially covered in US dollars
by the following net assets:
Allocation
by Company:
Assets
US$ 1.455
100%
80%
Mercantil Commercebank
Florida Bancorp and
Subsidiaries (43%)
60%
Other Foreing Subsidiaries
(9%)
Assets by subsidiaries
in Venezuela (40%)
Cash and Due
from Banks
(Foreing Banks),
28.7%
40%
US Treasuries,
3.1%
US$ denominated
bonds issued by
the Venezuelan
government (*),
28.1%
Subsidiaries in Venezuelan
(40%)
20%
Loan Portfolio &
Other Assets,
2.3%
Overseas Branch and
Agencies (8%)
0%
1
Dollar figures are given for reference purposes only. Balance Sheet
figures are translated at the closing exchange rate and income statement
figures at the average exchange rate for the period. See exchange rates
in Appendix VI. Exchange control has been in place in Venezuela since
February 2003.
Principal and
Interest Covered
Bonds (Ticc),
37.8%
* Issued in US$ or under indexation clause
(see Investment Portfolio, page 11)
17
Summary of Subsidiaries’ performance according to their Regulatory Accounting Standards
Mercantil Banco Universal’s total assets grew Bs 11,470 million
(11.0%) compared with December 2012. During 1Q 2013 net loans
grew Bs 2,971 million (5.1%) and total deposits rose Bs 10,320 million
(11.2%) quarter over quarter to Bs 60,727 million and Bs 102,820
million, respectively. Loan portfolio quality remains very favorable, with
a 0.8% ratio of past-due and nonperforming loans to gross loans
compared to 1.0% for the Venezuelan financial system as a whole. The
loan portfolio provision covers 496.1% of ´past-due and nonperforming
loans (372.6% at December 31, 2012).
Mercantil C.A., Banco Universal
Consolidated
(In millions of Bs and US$)
US$
Mar.
2013
18,455
3,775
9,663
16,362
1,636
196
Total Assets
Loan Portfolio
Deposits
Mar.
2013
Dec.
2012
Mar.
2012
115,984
23,724
60,727
102,820
10,279
1,100
104,514
18,038
57,756
92,500
9,233
1,224
73,175
12,492
44,303
64,721
6,608
666
At March 31, 2013, the Mercantil Banco Universal subsidiary ranks
fourth in the Venezuelan financial system in terms of total assets with
11.6% of the market. The leading institution has a 15.3% share and
figures in accordance with the standards of the Venezuelan Superintendency of Banking
Venezuela’s four main banks account for 51.9% of the country’s Historic
Sector Institutions (SUDEBAN).
financial system. It is also the leading bank in the private financial
system in terms of mortgage and manufacturing loans, with market
shares of 9.3% and 14.2%, respectively. The bank also ranks second in terms of gross loans and microcredits, tourism and agricultural loans with
14.5%, 8.3%,12.9% and 14.2% of the market, respectively. Mercantil is Venezuela's leading bank in terms of savings deposits with 20.7% of the
market.
Shareholders’ Equity registered Bs 1,045 million (11.3%) quarter-over-quarter growth to Bs 10,279 million. This increase mainly includes Bs 1,100
million in net quarterly income, Bs 927 million increase registered in exchange differences using the new exchange rate set by the Venezuelan
Central Bank for the valuation of assets and liabilities in foreign currency, which went from Bs 4.2893/USS$1 to Bs 6.2842/US$1, reduction of Bs
479 million from adjusting investments available for sale to their market value, and Bs 469 million in dividends paid in cash. The equity/assets ratio
as of March 31, 2012 is 10.2% (minimum requirement 8%) and the equity/risk-weighted assets ratio, according to the standards of the
Superintendency of Banking Sector Institutions in Venezuela, is 19.6% (minimum requirement 12%).
In the first quarter of 2013, the Bs 1,100 million in net earnings reflected Bs 433 million (65.1%) year-on-year growth, mainly due to a Bs 651
million rise in net interest income as a result of higher financial assets and liabilities; Bs 373 million in net income from commissions on credit and
debit cards and other income; Bs 18 million decrease in loan portfolio provisions; rises of Bs 407 million in personnel and operating expenses; Bs
134 million in contributions to regulatory agencies; and Bs 67 million in corporate income tax, among others.
Evolution of Gross Loans Portfolio
Venezuela
Evolution of Net Interest Income
2,500
13.0%
10.9%
10.6%
11.0%
11.1%
10.2%
2,000
20.0%
17.0%
16.0%
15.7%
15.4%
11.0%
16.0%
15.7%
16.7%
16.0%
14.5%
9.0%
1,500
14.0%
12.0%
12.3%
7.0%
1,000
4.3%
4.5%
4.4%
4.2%
3.8%
5.0%
8.0%
11.9%
13.0%
9.1%
8.5%
12.0%
6.8%
500
1,531
1,694
1,890
2,236
4.0%
1.0%
0.0%
5.7%
5.4%
4.2%
4.9%
IQ 2013
11.0%
10.0%
2,182
0
IQ 2012
IIQ 2012
IIIQ 2012
IVQ 2012
Net Interest Income
Net Interest Margin
Operating Expenses / Average Total Assets
3.0%
15.0%
9.0%
IQ 2012
IIQ 2012
IIIQ 2012
Venezuelan Financial System
IVQ 2012
Mercantil
IQ 2013
Market Share
18
At March 31, 2013, total assets reached US$ 6,724 million, similar to the
US$ 6,820 million registered in the previous quarter. Total loans reached
US$ 4.342 million, similar to the previous quarter and 5.7% more than in
1Q 2012. Commercial and industrial loans registered 22.4% year-onyear growth. At March 31, 2013, the bank holds US$ 2,170 million
(32.3% of total assets) mainly in short-term investments and bonds
issued or guaranteed by the US government. Deposits and investments
sold under repurchase agreement totaled US$ 5,431 million at the close
of March 2013, which reflects quarter-over-quarter growth of 0.9% and
year-on-year growth 0.7 %.
Assets Quality Ratios
8%
Total Assets
Loan Portfolio
Deposits
Investments Sold under
Repurchase Agreements
Income net Quarter
Dec.
2012
Mar.
2012
6,724
2,170
4,342
5,407
6,820
2,253
4,371
5,366
6,816
2,474
4,107
5,138
24
727
10
15
719
10
255
690
6
40%
32%
5.80%
23.41%
24%
4.88%
4%
Mar.
2013
Figures presented according to accounting principles generally accepted in the United States
(USGAAP )
39.56%
31.30%
6%
Consolidated
(In millions of US$)
18.71%
4.62%
3.84%
3.77%
2.82%
2%
14.47%
16%
2.85%
2.33%
1.94%
1.77%
0%
8%
0%
IQ 2012
IIQ 2012
IIIQ 2012
NA(w/o Commitments) /Total Lns.
Total Class Lns /Total Lns.
Total Class+OREO /Tier 1+ALLL
IVQ 2012
IQ 2013
Nonperforming assets (non-interest earning loans and assets received in
lieu of payment) fell US$ 10 million during the quarter and US$ 135
million compared to March 2012. Nonperforming assets accounted for
1.3% of total assets, 0.1% down on the previous quarter. The ratio of
nonperforming loans to total loans declined from 1.9% in 4Q 2012 to
1.8% in 1Q 2013, and the bank registered US$ 0.1 million in loan
provisioning, 99.2% lower than in 4Q 2012.
The bank's equity at March 31, 2013 was US$ 727 million, US$ 8 million
(1.1%) up on the prior quarter, mainly attributable to the quarterly result
of US$ 10 million. At March 31, 2013, the equity/assets ratio is 10.1%
and the equity/risk-based assets ratio 17.3% (9.2% and 17.1% at March
31, 2012), based on the standards of the Office of the Comptroller of the
Currency (OCC).
In 1Q 2013, net earnings totaled US$ 10 million, US$ 4 million (63.8%) up on 1Q 2012, mainly attributable to US$ 8 million (99.2%) reduction in
loan portfolio provisioning and US$ 2 million (10.1%) year-on-year decline in commissions and other income. Additionally, corporate income tax
expenditure registered a US$ 2 million (63.8%) year-on-year rise to US$ 6 million in 1Q 2013.
19
Mercantil Seguros
In 1Q 2013, premium income registered 28.4% growth to Bs 2,099
million from Bs 1,635 million at the close of 1Q 2012. At the close of
February 2013, Mercantil Seguros was the country’s third insurance
company in terms of net collected premiums, with 11.7% of the
insurance market.
Total Assets stood at Bs 7,475 million at March 31, 2013 reflecting
12.1% quarter-over-quarter growth. The company registered Bs 2,163
million in equity, thus complying with statutory solvency requirements.
The figures presented include all the mandatory and voluntary reserves
required to guarantee the company’s operations, including outstanding
claims reserves and end-of-period payments.
Evolution of Net Collected Premiums and
Technical Result
2,099
1,635
1,470
1,563
33.0%
30.6%
33.1%
21.2%
17.2%
44
IQ 2012
82
54
IIQ 2012
135
IIIQ 2012
Premiums Received Net
IVQ 2012
US$
Mar.
2013
Total Assets
Investments suitable for
representing
Technical Reserves
Investments not-suitable for
representing
Technical Reserves
Income net Quarter
Quarter
Mar.
2013
Dec.
2012
Mar.
2012
1,189
7,475
6,671
5,181
722
4,534
4,724
3,641
302
344
34
1,898
2,163
193
1,000
2,236
319
853
1,428
109
374
2,099
2,498
1,635
Historic figures in accordance with the standards of the Venezuelan Superintendency of
Insurance Activity (Sudeseg)
2,498
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Mercantil Seguros C.A.
Consolidated
(In million of Bs. and US$)
43
IQ 2013
At March 31, 2013, the company’s investment portfolio was Bs 6,432
million (12.4% up on the previous quarter). Total investments
representing technical reserves reached Bs 4,534 million (4.0% below
the figure for the previous quarter and 24.5% less than at the close of
March 2012), while liquidity levels meet all the statutory requirements on
commitments towards policyholders, insurance brokers and reinsurers.
In the first quarter of 2013, the technical result closed at Bs 43 million,
with a combined operating ratio of 97.6%. Net income for 1Q 2013
registered 76.3% year-onyear growth to Bs 193 million. The claims ratio
was 65.8% (63.8% in 2012).
Technical Result
Technical Result / Total Income
Mercantil Merinvest
At March 31, 2013, Mercantil Merinvest reached Bs 144 million in total
consolidated assets, representing 16.1% quarter-over-quarter growth
and a 26.3% year-on-year increase.
In 1Q 2013, net earnings reached Bs 15 million, reflecting 47.6% growth
from Bs 10 million in 1Q 2012.
Mercantil Merinvest C.A.
Consolidated
(In millions of Bs and US$)
US$
Mar.
2013
Total Assets
Income net Quarter
23
14
20
3
Mar.
2013
144
87
128
15
Dec.
2012
124
56
98
7
Mar.
2012
114
55
102
10
Figures presented according to the standards of the Venezuelan Securities and Exchange
Commission (SNV)
20
Private Banking and Wealth Management
The Private Banking and Wealth Management business is comprised of: trust services, securities brokerage, mutual funds and portfolio
management services. Net assets under management recorded off-balance sheet at March 31, 2013 stood at Bs 28,673 million (US$ 4,563
million)1, representing a 27.1% quarter-over-quarter increase and 52.3% year-on-year growth. They are broken down as follows:
TOTAL ASSETS UNDER MANAGEMENT
March
2013
March
2012
∆ Mar 13
vs. Dec 12
∆ Mar 13
vs. Mar 12
15,104
1,302
13,026
1,217
11,093
914
%
16.0
7.0
%
36.2
42.5
Brokerage
9,592
6,696
5,432
43.2
76.6
Financial Advisory
2,675
1,627
1,384
64.4
93.3
Total Private Banking and
Wealth Management Bs.
28,673
22,566
18,823
27.1
52.3
Total Private Banking and
Wealth Management US$
4,5631
5,2611
4,3881
(13.3)
4.0
Trust Funds
Mutual Fund
1
December
2012
During the first quarter of 2013, the Trust Fund managed Bs 15,104 million in assets, which reflects quarter-over-quarter growth of 16.0% and yearon-year growth of 36.2%. At March 31, 2012, Mercantil's trust fund ranked second in the private banking sector and fourth in the fiduciary market in
Venezuela.
At the close of March 2013, Mercantil maintained its position as Venezuela's mutual fund industry leader. Mutual Fund assets under management
grew 7.0% and 42.5% compared to December and March 2012, respectively, reaching Bs 1,302 million.
Mercantil offers its clients investment products and services (as broker-dealers and investment advisers) in global financial markets. At the close of
March 2013, the total value of client assets was Bs 12,267 million, 47.4% up on the close of December 2012 (up 80.0% year-on-year).
21
Corporate Events
Shareholders’ Meetings
The Shareholders’ Meetings of Mercantil Servicios Financieros and its subsidiaries in Venezuela and abroad were held during the first quarter of
2013. They approved the reports presented by the Board of Directors for consideration by the shareholders, the audited financial statements and
Statutory Auditors Report as of December 31, 2012, the proposal made in accordance with the bylaws to appoint the members of the Board of
Directors, the Statutory Auditors and set their remunerations. On behalf of Mercantil's Board of Directors and shareholders, the president of
Mercantil, Gustavo J. Vollmer A. thanked Alejandro González Sosa for his brilliant overall performance during over 32 years and his valuable
contribution as Executive President of the Corporation, adding that he will remain on the Board of Directors.
Share Repurchase Program
The Shareholders’ Meeting authorized the Twenty-seventh Phase of Mercantil Servicios Financieros’ Stock Repurchase Program, which started
from April 11, 2013, giving continuity to the program initiated in May 2000 to add value to the company.
Dividends
The Shareholders’s Meeting of Mercantil Servicios Financieros held in March 2013 approved a cash dividend of Bs 6.50 per common share,
payable as follows: two ordinary cash dividends for each Class A and B outstanding share at the rate of Bs 1.00 per common share, payable on
April 10 and October 10, 2013, respectively, and an extraordinary cash dividend at the rate of Bs 4.50 per common share, payable on May 10,
2013.
Changes in the organizational structure of Mercantil Servicios Financieros and its subsidiaries
In February 2013, the Board of Directors approved Mercantil's new organizational structure whose purpose is to adapt to the evolution of the
corporation's activities in Venezuela and the countries where it has a presence. Under the new structure, Gustavo Vollmer A. holds the positions of
President and Executive President of Mercantil Servicios Financieros, in accordance with the bylaws of the company. Furthermore, two Executive
Management Director positions were created, reporting directly to the President and Executive President of Mercantil.
Nerio Rosales Rengifo was appointed Global Executive Director of Mercantil Servicios Financieros and National Business, and Millar Wilson as
Executive Director of International Business. In addition, Millar Wilson, who had served as President & Chief Executive Officer (CEO) of
Commercebank since 2009, has been appointed Vice Chairman & Chief Executive Officer (CEO) of the company. Gustavo A. Vollmer continues to
be Chairman of Commercebank N.A.
In March 2013, the Board of Directors of Mercantil Banco Universal appointed Nelson Pinto Alves as Executive President of the company. He has
been with Mercantil Banco Universal for more than thirty years, and held the position of Manager of Personal and Commercial Banking. Gustavo
Vollmer A. thanked Nerio Rosales Rengifo, who is undertaking new responsibilities, for his dedication as Executive President during the past five
years. The Board of Directors of Mercantil Seguros appointed María Silvia Rodríguez Feo as Executive President of the company. She held the
position of General Manager and has been with Mercantil for twenty-five years. Alberto Benshimol continues to be President of Mercantil Seguros.
In addition, the Board of Directors of Commercebank appointed Alberto (Al) Peraza as President and Chief Operating Officer (COO), who has been
with Mercantil for over 20 years and served as Chief Financial Officer (CFO) of the Bank. Peraza joins the Mercantil Commercebank, N.A. Board of
Directors.
New Measures announced for the Venezuelan Economy
The Ministry of Planning and Finance established a new exchange rate
In February 2013, the Executive branch and the Central Bank of Venezuela amended Exchange Agreement N° 14, establishing the fixed bid
exchange rate at Bs 6.2842/US$1 and the fixed ask exchange rate at Bs 6.30/US$1, effective from that date.
In February 2013, the BCV suspended the purchase and sale of securities through SITME, the Foreign Currency Transactions System.
The Executive Office of the President created the Superior Body for the Optimization of the Exchange System
The Executive Office of the President of the Republic created the Superior Office for the Optimization of the Exchange System under the Ministry of
Planning and Finance, the Central Bank and the Ministry of Petroleum and Mining. The purpose of this body will be to design, plan and execute the
state's exchange strategies by setting priorities for the allocation of foreign currency, the equilibrium of total currency flows, and the coordination of
foreign currency inflows from hydrocarbons and other sources, among others.
The Ministry of Planning and Finance issued an Exchange Agreement on special currency auctions
The Ministry of Planning and Finance issued an Exchange Agreement authorizing the Superior Body for the Optimization of the Exchange System
to regulate the terms and conditions governing the special currency auctions of oil revenue in foreign currency that will be earmarked for imports for
the real sector of the national economy, through the Complementary Exchange Administration System (SICAD). This system is managed by the
Central Bank of Venezuela and in accordance with auction notices sent out for that purpose.
22
The Ministry of Planning and Finance and the Ministry of Agriculture and Land established the minimum monthly percentages and the
conditions applicable to compulsory agricultural loans during financial year 2013
The Ministry of Planning and Finance and the Ministry of Agriculture and Land established the minimum loan portfolio percentages that all banks
must earmark each month for the agricultural sector during financial year 2013 at between 21% and 25%. Additionally, the percentage
corresponding to June, September, October, November and December 2013 was reduced and the percentage corresponding to February was
increased. The different percentages for the financing of strategic items will continue to be established, setting maximum or minimum limits
depending on the particular case; and the number of new borrowers (individuals) under the agricultural portfolio must be increased by at least 30%
compared with the total number of borrowers at the close of the immediately preceding year.
The Ministry of Housing and Habitat established the minimum percentage for the mortgage portfolio
The Ministry of Housing and Habitat established the minimum percentage of the annual gross loan portfolios that banking sector institutions must
earmark out of their own funds for residential real estate loans for the construction, purchase, refurbishment, expansion or self-construction of main
dwellings at 20% and modified the distribution of the percentages to be earmarked for long-term loans for home purchase; or short term loans for
home construction, refurbishment, expansion and self-construction.
Awards and Acknowledgements
Mercantil Servicios Financieros among Forbes’ Global 2000 ranking
In April 2013, Mercantil Servicios Financieros is among the world's biggest 2000 public companies, according to Forbes magazine's ranking based
on sales, profits, assets and market capitalization. Mercantil Servicios Financieros was number 1,148 on the list and is the only Venezuelan
company in the ranking, having risen 245 positions compared with the previous year.
Global Economic Climate
The threats and challenges looming over global economic growth and stability during much of 2012 have not disappeared. The global economy is
still dependent on the growth demonstrated by the emerging countries, given that numerous mature economies in Europe and especially Japan are
showing difficulties to achieve economic growth. The performance of big emerging countries like China, India and Brazil continues to be key in this
regard. The major players in the global economy are beginning to show some improvement, starting with stable economic growth in the USA and
the economic expansion of China, which slightly exceeded general expectations.
China's first-quarter GDP appears to have been in the region of 7.7%. In March the Management Purchases Index exceeded 50 points for the fifth
consecutive month, reaffirming the view of more significant growth in recent months. Inflation, one of the greatest threats, remained low in January
and an average year-on-year variation of 2.4% is expected. Asian economic growth was solid in South Korea and slightly less so in Japan. Less
dynamism was observed however in other countries, India for example.
The Brazilian economy grew 2.7% in 2012, at a slower pace than in 2011 (7.5%), the relatively weak tone being attributable to the loss in the
significance of net exports (due to exchange appreciation) and lower stocks. Inflation has picked up again, spurred on by rising food prices.
January's figure stood at 6.2%, almost two percentage points above the central target of the Monetary Policy Committee (4.5%). Renewed
inflationary tensions have once again pushed the monetary authority against the ropes and complicate the use of further reductions in the reference
interest rate of the Special Settlement and Custody System (Selic) in order to boost the country’s depressed activity.
It has been confirmed that in the eurozone GDP shrank by 0.5% in the fourth quarter, a greater decline than expected. The symptoms of weak
economic activity were widespread, even though there was ample evidence of financial tensions abating somewhat in the European periphery
countries. However, the financial crisis that reared its head in Cyprus in mid-March has rather changed the financial outlook for Europe. Although
the eurozone countries have agreed to a 10 billion euro bailout for Cyprus to avoid default (largely triggered by the crisis in Greece), some to-ing
and fro-ing regarding the scope of the measures agreed caused panic in European financial markets, affecting the stability of the euro. In March,
the banks in Cyprus reopened their offices after remaining closed for thirteen days (to avoid a massive run on deposits) and received 5 billion euros
in financial aid from the European Central Bank.
U.S. Economic Climate
During the first quarter the US economy continued to grow, thereby avoiding another sharp economic turndown. The best news this quarter was in
relation to private consumer spending, retail sales in particular which registered 4.6% year-on-year growth at the end of February. The International
Council of Shopping Centers and Goldman Sachs reported that chain store sales in March were up 2.6% from their February level. Consumer
spending in the first part of the year is confirmed by the Consumer Confidence Index reported by the University of Michigan which reached 78.6
points in March (vs. 76.2 averaged over 2012). Increased consumer confidence was also reflected by the strength of the consumer credit index
which rose 5.8% to US$ 16.1 billion since January 2012.
23
The expansion of economic activity in the first quarter was reflected by substantial improvements in the job market. Unemployment closed at 7.6%
in March, against the 2012 average of 8.1%. Even though, January and February were good months in terms of job creation with average increases
of more than 200,000 jobs per month, in March they slowed down with a net creation of just 88,000 jobs. Job creation in the public sector is
continuing to fall, although this factor is more than offset in the private sector. Amid a scenario of recovering employment, there is some uncertainty
as to how the fiscal adjustment program under way might affect the course of the economy in the short term. A conservative tone of the fiscal policy
and the need to maintain some incentives for growth, partially explain the Federal Reserve's monetary policy to continue to anchor the short-term
interest rate (at 0.13%). The stance of the monetary authorities can also partly be explained by the still low minimum inflationary pressures shown
by the US economy. In the first quarter, annualized inflation may close around 2.1%, relatively in line with its behavior in 2012.
In the real estate market there are still clear signs of a recovery. In February, 7.9% more homes were built and sales of new homes picked up in the
first two months of the year to more than 400,000 homes per annum (against an average of 366,000 in 2012) and sales of used homes reached
4,980,000 in February, equivalent to 10.5% growth in one year. All of this has contributed to a continuous improvement in house prices. In January,
the Case-Shiller home price index showed that prices in 20 cities had risen 8.1% year-on-year.
Treasury Rate 10 Years
Source: Bloomberg
4.6%
4.3%
4.0%
3.7%
3.4%
3.1%
2.8%
2.5%
2.2%
1.9%
1.6%
1.3%
IQ13
IVQ12
IIQ12
IIIQ12
IQ12
IIIQ11
IVQ11
IIQ11
IQ11
IVQ10
IIQ10
IIIQ10
IQ10
IIIQ09
IVQ09
IQ09
IIQ09
IVQ08
IIQ08
IIIQ08
IQ08
1.0%
Venezuelan Economic Climate
Economic activity
During the first quarter of 2013, despite the fact that the global economy was slightly more robust this year, above all due to China's slower
economic growth and the improvements foreseen in the US job market, persistent doubts over Europe's economic performance may and in fact
have counteracted upward pressure on the principal prices of crude oil in the first months of the year compared to the close of the first quarter of
2012. Despite high oil prices, less currency being available from the Foreign Currency Administration System (CADIVI) and the fact that no
resources have been transferred from the Central Bank of Venezuela (BCV) to the National Development Fund ((FONDEN), the Central Bank's
level of international reserves declined in the first three months of the year. On the fiscal front, central government’s performance during the first
quarter was marked by an increase in the income it received, due fundamentally to the higher bolivar value of the oil industry’s contribution to the
national treasury in reaction to the new rate of exchange, as well as more net income from domestic borrowing, in the context of an electoral
scenario. On the monetary front, a slight increase in money supply was reported, explained mainly by higher public spending as a result of the
availability of less currency through Cadivi, the increase in the secondary creation of money through loans, despite the net restrictive effect of Open
Market Operations on payment systems. All these steps caused a slowdown in the growth of domestic prices.
24
Oil Sector, Reserves
The price of the Venezuelan oil basket averaged US$103.8/bbl in the first quarter, 5.6% more than in the previous quarter. However this was 7.4%
down on the first quarter of 2012. Venezuelan oil production averaged 2,858 mbd in the first quarter, down 2 mbd compared to the previous quarter.
However, compared to the first quarter of 2012 it was up 23.2%. Notwithstanding, international reserves fell an accumulated US$ 2,852 million,
closing at US$ 27,035 million in March, their lowest level since December 2012. The executive branch represented by the Ministry of Planning and
Finance and the Central Bank of Venezuela, announced an amendment to Exchange Agreement N° 14 through Decree N° 9,381 of February 8,
2013 which adjusted the official exchange rate from Bs 4.30/US$1 to Bs 6.30/US$1 and created a new superior body in charge of the exchange
system and policies. The Superior Body for the Optimization of the Exchange System (OSOSC - for its abbreviation in Spanish) will come under the
Ministry of Planning and Finance and the Central Bank of Venezuela and the office of Petroleum and Mining, but its decisions will be reached by
consensus between the Ministry and the Central Bank. Their attributions include setting priorities for the allocation of foreign currency and guidance
on applications for non-production and insufficient production certificates.
Monetary Policy
In the fiscal area, primary spending by the National Treasury stood at Bs 108.2 billion, representing a 27% year-on-year increase. Stripping out the
high level of inflation for the period, this makes an increase of 3.7%, which contrasts clearly with the real decline of 26.3% in the first quarter of
2012. In the area of the national debt, assignments of Government Bonds and Treasury Bills amounted to Bs 45.2 billion which, together with
shorter maturities, resulted in Bs 14.7 billion in net positive domestic indebtedness, reflecting a 72.5% year-on-year increase in positive domestic
indebtedness.
In the money market, money in the hands of the public (M2) increased 6% in the first quarter, 30 basis points above the 5.7% increase reported in
1Q 2012. With respect to the handling of the monetary policy, in the first quarter, the Venezuelan Central Bank was more actively involved in open
market operations than in the same period of last year which restricted the net effect of open market operations on payment systems by Bs 5.2
billion, 1.1 times above the Bs 2.6 billion contraction in the first quarter of 2012.
Inflation
Accumulated domestic inflation was 5% in the first two months of the year1 which is almost double the figure for the first two months of 2012 (2.6%).
Broken down by group, the highest above-average price increases were in: Restaurants and Hotels (8,3%), Food and Non-alcoholic Beverages
(5.7%), Health, Entertainment and Culture (5.6%). According to the eleven geographical locations comprising the National Consumer Price Index,
the cities that underwent higher-than-the-national-average price adjustments (5%) were: Maracay, Ciudad Guayana (6.2%), Mérida (6.1%), San
Cristóbal (5.8%), Maturín (5.4%), Puerto La Cruz-Barcelona and Valencia (5.1%).
Monetary Liquidity (M2) and Monetary Base (BM) (Annual Var.)
Source: Central Bank of Venezuela and Own Calculation
BM
M2
120%
60.0%
Monetary Liquidity
110%
Monetary Base
100%
50.0%
90%
80%
40.0%
70%
60%
30.0%
50%
40%
20.0%
30%
20%
10.0%
10%
1
IQ13
IIIQ12
IVQ012
IIQ12
IQ12
IVQ11
IIIQ11
IQ11
IIQ11
IIIQ10
IVQ10
IIQ10
IQ10
IVQ09
IIQ09
IIIQ09
IQ09
IIIQ08
IVQ08
IIQ08
0.0%
IQ08
0%
Latest information available by BCV
25
APPENDIX I
Summary of the Accounting Principles used to prepare the Financial Statements
Financial statements are presented in accordance with the accounting standards of the National Securities Superintendency (SNV), in bolivars. A
summary of some of the main accounting principles applied is given below:
Securities Held for Trading - Unrealized gains or losses resulting from differences in market value due to market fluctuations are included in the
results for the period. Available-for-Sale Securities – Recorded at their market value. Unrealized gains or losses resulting from differences in market
value and exchange rate fluctuations are included in shareholders’ equity. Held-to-Maturity Securities – Recorded at their acquisition cost, adjusted
for amortization of premiums or discounts. For all portfolio investments, permanent losses in market value are recorded as a charge to income in
the period in which they occur. Permanent investments are investments that represent 20% to 50% stock ownership. Those greater than 50% are
recorded as an equity interest and consolidated, except when control is likely to be temporary.
Loan Portfolio
Loans are classified as overdue 30 days after their maturity. Allowances for losses on loan portfolio are determined through a collectibility
assessment that quantifies the amount to be set aside for each loan. These assessments take into account such aspects as economic conditions,
credit risk by customer, credit history and the collateral received. When evaluating loans for small amounts of the same nature, these are grouped
together to determine provisions.
Recognition of income and expenditure
Income, costs and expenses are recorded as they are earned or incurred. Interest earned on loan portfolios is recorded as income when collected.
Fluctuations in the market value of derivatives are recognized in income in the period in which they occur. Insurance premiums are recorded as
income when earned.
Consolidation
The consolidated financial statements include the accounts of Mercantil and its more than 50%-owned subsidiaries and other institutions in which
Mercantil has a controlling interest. See the main subsidiaries on Page 5 and the reconciliation of their accounting standards with SNV standards
on Pages 37, 39, 41.
Inflation Adjustment
According to SNV standards, Mercantil’s financial statements, as of December 31, 1999 must be presented in historic figures. Since then Mercantil
has ceased to adjust for inflation in its primary financial statements. As a result, fixed and other assets are shown at their inflation-adjusted value up
to December 31, 1999. The market value determined by independent assessments is higher than adjusted cost for inflation indicated above. New
additions are being recorded at their acquisition value.
Differences between the accounting standards of the Superintendency of Banking Sector Institutions in Venezuela (SUDEBAN) and US
GAAP
The main accounting differences for the reconciliation of items under SNV and SUDEBAN for Mercantil Servicios Financieros are:
 Amortization of premiums or discounts of securities carried out on a straight-line basis under SUDEBAN standards and in accordance with the
constant amortization rate under SNV standards.
 Under SNV standards, the effects of exchange fluctuations are included in the results for the period, with the exception of exchange
fluctuations from available-for-sale investments and the stock trading portfolio which are included in shareholders' equity. Under SUDEBAN
standards, all fluctuations are recorded in the results, with the exception of exchange fluctuations from the stock trading portfolio and the
fluctuations which, as provided by the SUDEBAN exception, must subsequently be included in income when authorized by SUDEBAN.
The main accounting differences for Mercantil Servicios Financieros between the above mentioned SNV standards and SUDEBAN standards are:
 Deferred Income Tax: US GAAP allows deferred tax to be recognized for the total amount of loan portfolio loss allowances, while SNV
standards only allow recognition of allowances for loans classified as high risk and unrecoverable.
 Provision for assets received in lieu of payment: SNV standards stipulate a 100% allowance for real property received in lieu of payment after
one year from the date of incorporation; under US GAAP no amortization deadlines are established. (See SNV - USGAAP earnings
reconciliation, Page 39).
26
APPENDIX II
MERCANTIL SERVICIOS FINANCIEROS, C.A.
CONSOLIDATED BALANCE SHEET
UNAUDITED FIGURES
∆
US$
1
Mar. 2013
CASH AND DUE FROM BANKS
Cash
Banco Central de Venezuela
Venezuelan Banks and Other Financial Institutions
Foreign and Correspondent Banks
Allowance for Cash and Due from Banks
March
December
March
2013
2012
2012
∆
Mar 13 vs. Dec 12
Bolivars
%
Mar 13 vs. Mar 12
Bolivars
%
330
3,997
46
253
218
2,076
25,121
287
1,588
1,372
2,457
22,414
76
888
1,722
1,303
11,902
84
1,853
1,326
(381)
2,707
211
700
(350)
(15.5)
12.1
277.6
78.8
(20.3)
773
13,219
203
(265)
46,0
59.3
111.1
241.7
(14.3)
3.5
4,844
30,444
27,557
16,468
2,887
10.5
13,976
84.9
17
4,510
1,429
4
705
119
107
28,339
8,978
24
4,428
748
88
20,192
7,364
20
3,837
1,120
437
19,430
2,880
14
2,175
1,369
19
8,147
1,614
4
591
(372)
21.6
40.3
21.9
20.0
15.4
(33.2)
(330)
8,909
6,098
10
2,253
(621)
(75.5)
45.9
211.7
71.4
103.6
(45.4)
6,784
42,624
32,621
26,305
10,003
30.7
16,319
62.0
LOAN PORTFOLIO
Current
Rescheduled
Past Due
Litigation
14,550
87
113
37
91,432
548
711
233
79,337
492
552
161
63,747
322
581
349
12,095
56
159
71
15.2
11.4
28.8
43.8
27,685
226
130
(116)
43.4
70.2
22.4
(33.2)
14,787
(460)
92,924
(2,893)
80,543
(2,657)
64,999
(2,195)
12,381
(236)
15.4
8.9
27,925
(698)
43.0
31.8
14,327
90,031
77,885
62,804
12,145
15.6
27,227
43.4
182
33
10
152
537
1,141
210
60
956
3,373
895
185
49
832
2,616
670
216
141
696
2,114
246
25
11
124
757
27.5
13.5
22.4
14.9
28.9
471
(6)
(81)
260
1,259
70.3
(2.8)
(57.4)
37.4
59.6
26,869
168,839
142,642
109,414
26,197
18.4
59,425
54.3
INVESTMENT PORTFOLIO
Investments in Trading Securities
Investments in Securities Available for Sale
Investments in Securities Held to Maturity
Share Trading Portfolio
Investments in Time Deposits and Placements
Restricted Investments
INTEREST AND COMMISSIONS RECEIVABLE
LONG-TERM INVESTMENTS
ASSETS AVAILABLE FOR SALE
PROPERTY AND EQUIPMENT
OTHER ASSETS
TOTAL ASSETS
1
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at th e average exchange rate for the
27
APPENDIX II
CONSOLIDATED BALANCE SHEET
UNAUDITED FIGURES
∆
US$
1
Mar. 2013
DEPOSITS
Non-interest Bearing
Interest-Bearing
Savings Deposits
Time Deposits
March
December
March
2013
2012
2012
∆
Mar 13 vs. Dec 12
Bolivars
%
Mar 13 vs. Mar 12
Bolivars
%
6,223
6,733
7,227
1,362
39,108
42,311
45,418
8,560
35,309
34,308
39,014
5,974
24,563
26,485
27,963
6,855
3,799
8,003
6,404
2,586
10.8
23.3
16.4
43.3
14,545
15,826
17,455
1,705
59.2
59.8
62.4
24.9
21,545
135,397
114,605
85,866
20,792
18.1
49,531
57.7
15
96
176
0
(80)
(45.5)
96
100.0
561
5
1,788
112
24,026
3,523
34
11,219
701
150,970
2,683
23
9,593
479
127,559
2,894
27
8,487
479
97,753
840
11
1,626
222
23,411
31.3
47.8
16.9
46.3
18.4
629
7
2,732
222
53,217
21.7
25.9
32.2
46.3
54.4
1
8
7
5
1
14.3
3
60.0
24
31
32
27
153
192
204
167
153
192
204
167
153
192
204
167
0
0
0
0
0.0
0.0
0.0
0.0
0
0
0
0
0.0
0.0
0.0
0.0
476
2,113
(1)
2,992
13,277
(7)
1,550
11,902
(7)
1,551
8,524
(4)
1,442
1,375
0
93.0
11.6
0.0
1,441
4,753
(3)
92.9
55.8
75.0
(8)
(49)
(49)
(48)
0
0.0
(1)
2.1
148
932
963
918
(31)
(3.2)
14
1.5
2,842
17,861
15,076
11,657
2,785
18.5
6,204
53.2
26,869
168,839
142,642
109,414
26,197
18.4
59,425
54.3
DEPOSITS AUTHORIZED BY THE
VENEZUELAN SECURITIES AND EXCHANGE
COMMISSION
Publicly Traded Debt Securities Issued
FINANCIAL LIABILITIES
INTEREST AND COMMISSION PAYABLE
OTHER LIABILITIES
SUBORDINATED DEBT
TOTAL LIABILITIES
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES
SHAREHOLDERS’ EQUITY
Paid in Capital
Capital Inflation Adjustment
Share Premium
Capital Reserves
Translation Adjustments of net Assets of
Subsidiaries Abroad
Retained Earnings
Shares repurchased and held by Subsidiaries
Repurchased Shares Restricted for Employee
Stock Option Plan
Unrealized Gain (Loss) from Adjustment on
Investments Available For Sale to Market Value
TOTAL SHAREHOLDERS´ EQUITY
EQUITY
1
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and i ncome statement figures at the average exchange rate for the
28
APPENDIX II
CONSOLIDATED INCOME STATEMENT
UNAUDITED FIGURES
Quarter
Ended on
1
US$
Mar. 2013
Income from Cash and Due from Banks
March
2013
∆
March
2012
Bolivars
%
1
4
3
1
33.3
Income from Investment Securities
117
655
425
230
54.1
Income from Loan Portfolio
541
3,039
2,026
1,013
50.0
658
3,698
2,454
1,244
50.7
186
1,047
672
375
55.7
Interest for Time Deposits
5
27
28
(1)
(3.6)
Interest for Securities Issued by the Bank
1
4
0
4
1.0
Interest on Financial Liabilities
5
29
32
(3)
(9.4)
197
1,107
732
375
51.1
461
2,591
1,721
870
50.6
25
143
182
(39)
(21.4)
436
2,447
1,539
908
59.0
NET FINANCIAL MARGIN
4
21
16
5
31.3
Trust Fund Operations
2
10
(4)
14
(350.0)
Foreign Currency Transactions
27
154
106
48
(45.7)
Commissions on Transactions
1
4
6
(2)
(26.7)
Commissions on Letters of Credit and Guarantees Granted
4
24
20
4
20.0
129
723
6
717
11.950.0
42.3
INTEREST INCOME
Interest for Demand and Savings Deposits
INTEREST EXPENSE
NET INTEREST INCOME
Provision for losses on loan portfolio
Expenses from write-down of available for sale investments
Equity in Long-Term Investments
Exchange Gains and Losses
59
333
234
99
Income (Loss) on Sale of Investment Securities
116
654
463
191
41.3
Other Income
342
1,924
847
1,077
127.1
TOTAL COMMISSIONS AND OTHER INCOME
42
235
175
60
34.3
Total insures premiums, net of claims
820
4,606
2,561
2,045
79.9
OPERATING INCOME
167
937
691
246
35.6
33
185
138
47
34.1
Salaries and employee benefits
Depreciation, Property and Equipment Expenses, Amortization of Intangibles
and Others
70
396
252
144
56.9
Fees paid to regulatory agencies
150
841
603
238
39.5
Other operating expenses
420
2,359
1,684
674
40.0
TOTAL OPERATING EXPENSES
INCOME BEFORE TAXES
AND MINORITY INTEREST
400
2,247
877
1,370
156.3
37
207
80
127
158.8
0
(1)
(1)
0
0.0
363
2,039
796
1,243
156.3
363
185
177
95.6
Total Taxes
Minority Interests
NET INCOME
1
29
APPENDIX II
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED FIGURES
Quarter ended on
March
March
2013
2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided
Operating activities Allowance for losses on the loan portfolio
Depreciation and amortization
Provision for interest receivable and other assets
Gain on equity in long-term investment
Minority interest expense
Deferred Income Tax
Provision for available for sale assets
Accrual for employee termination benefits
Payment of employee termination benefits
Net change in operating assets and liabilities Interest and commissions receivables
Interest and commissions payables
Available for sale and other assets
Other liabilities
Net cash provided by operating activities
2,039
796
144
61
2
(24)
1
50
0
175
(129)
182
43
19
(20)
1
2
10
81
(69)
(246)
11
(841)
917
2,160
(37)
2
(214)
1,680
2,475
(8,004)
(31,099)
18,810
(165)
(20,458)
(1,201)
(14,881)
12,265
(27)
(3,844)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in
Deposits
Short-term financial liabilities
Debt securities by Mercantil
Subordinated debt
Long-term financial liabilities received
Long-term financial liabilities paid
Cash dividends
Net cash flows from financing activities
20,791
184
(80)
223
650
6
(0)
21,773
4,032
(225)
0
0
386
(258)
(1)
3,934
CASH AND CASH EQUIVALENTS 1
Net increase for the period
At the beginning of the period
At the end of the period
3,475
31,390
34,866
2,565
16,005
18,570
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in investments securities
Loans granted
Loans collected
Additions to fixed assets, net of depreciation and write-offs
Net cash flows from investing activities
1
Includes: Cash and Cash Equivalents, Cash and Due from banks, Investments in time deposits and placements within 90 days maturity
30
APPENDIX II
Statement of Shareholders’ Equity
UNAUDITED FIGURES
Capital
stock
Balance as of March 31, 2012
Net income
Cash paid dividend to subsidiaries
Unrealized income on Investments available
for sale
Translation effect of net assets in subsidiaries
abroad
Balance as of June 30, 2012
Net income
Share repurchased 1
for sale
abroad
Balance as of September 30, 2012
Net income
for sale
abroad
Balance as of December 31, 2012
Net income
Cash dividends
for sale
abroad
Balance as of March 31, 2013
153
153
Capital
inflation
adjustment
192
192
Paid-in
Surplus
204
204
Capital
Reserve
s
Translation
adjustment
of the
assets In
subsidiaries
Abroad
167
1,551
167
(7)
1,544
Retained
earnings
8,524
873
10
9,407
986
Shares
repurchased
held by
subsidiaries
(4)
(4)
Repurchased
shares
restricted for
employee
stock option
plan
(48)
(49)
Unrealized
Gain
(loss) from
adjustments
on
investments
Available for
sale to
market
value
918
11,657
873
10
(262)
(262)
656
(3)
153
153
153
192
192
192
204
204
204
167
1
1,545
167
5
1,550
167
1,441
2,992
10,394
1,508
11,902
2,039
(664)
13,277
(6)
(7)
(7)
(49)
(49)
(49)
Total
Shareholders'
Equity
(7)
12,271
986
(3)
77
77
733
1
13,333
1,508
230
230
963
5
15,076
2,039
(664)
(31)
(31)
932
1,441
17,861
31
APPENDIX III
Summary of the Financial Statements and Ratios
(In millions Dollars 1, except percentages and figures per share)
March
2013
December
2012
March
2012
∆ Mar 13
vs. Dec 12
∆ Mar 13
Vs. Mar 12
Loan Portfolio Net
Other assets
TOTAL ASSETS
4,844
6,784
14,327
914
26,869
6,425
7,606
18,158
1,066
33,255
3,840
6,133
14,642
894
25,509
%
(24.6)
(10.8)
(21.1)
(14.3)
(19.2)
ASSET MANAGEMENT
4,563
5,261
4,388
(13.3)
4.0
21,545
561
1,921
2,842
26,869
26,720
626
2,394
3,515
33,255
20,019
675
2,096
2,719
25,509
(19.4)
(10.4)
(19.7)
(19.1)
(19.2)
7.6
(16.9)
(8.4)
4.5
5.3
461
25
342
42
420
363
583
65
321
93
496
352
401
42
197
41
393
185
(20.9)
(61.5)
6.5
(54.8)
(15.3)
3.1
15.0
(40.5)
73.6
2.4
6.9
96.2
3.66
33.42
32.14
27.81
5.2%
47.9%
3.54
32.64
31.47
34.39
5.0%
47.6%
1.87
16.55
17.49
26.59
3.0%
27.7%
3.4
2.4
2.1
(19.1)
4.0
0.6
95.7
101.9
83.8
4.6
73.3
72.8
Deposits
Other Liabilities
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY
%
26.1
10.6
(2.2)
2.2
5.3
INCOME – QUARTER
Financial Margin
Allowance for losses on loan portfolio
Commissions and other income
Insurance premiums, net of claims
Salaries and Operating Expenses
Net Income - Quarter
KEY FINANCIAL INDICATORS
Income per share – Quarter Bs/ share
Market price A share
Market price B share
Book value per share
Net Income (quarter) / Average Assets (ROA)
Net Income (quarter) / Average Equity (ROE)
1
32
APPENDIX IV
Consolidated Loan Portfolio by Classification
By Economic Activity
Commercial
Consumer
Agricultural
Services
Foreign trade
Industrial
Residential mortgage
Construction
Car loans
Other
March
2013
39,577
12,694
9,432
6,079
5,828
5,692
4,513
2,451
2,226
4,433
92,924
By Maturity
Up to six months
Six months to one year
One to two years
Two to three years
Three to four years
Four to five years
Over five years
March
2013
33,462
12,429
15,484
9,981
5,629
5,702
10,239
92,924
By Geographical Location of the Debtor
Venezuela
United States of America
Mexico
Colombia
Brazil
Switzerland
Peru
Other countries
March
2013
63,831
18,189
733
393
1,379
861
2,145
5,393
92,924
By Type of Risk
Normal
Potential
Real
High
Unrecoverable
March
2013
89,536
903
1,551
812
122
92,924
42.6
13.7
10.1
6.5
6.3
6.1
4.9
2.6
2.4
4.8
100.0
December
2012
32,194
11,727
9,049
5,337
4,316
5,618
4,169
2,344
2,276
3,511
80,543
36.0
13.4
16.7
10.7
6.1
6.1
11.0
100.0
December
2012
29,019
12,444
13,191
8,130
4,674
4,396
8,689
80,543
68.7
19.6
0.8
0.4
1.5
0.9
2.3
5.8
100,0
December
2012
60,562
11,993
623
371
1,077
648
1,396
3,872
80,543
96.4
1.0
1.7
0.9
0.1
100.0
December
2012
77,332
887
1,509
695
120
80,543
%
%
%
%
40.0
14.6
11.2
6.6
5.4
7.0
5.2
2.9
2.8
4.4
100.0
March
2012
26,653
7,257
7,423
4,879
3,304
4,570
3,625
2,548
1,875
2,864
64,999
36.0
15.5
16.4
10.1
5.8
5.5
10.8
100.0
March
2012
21,585
9,637
12,715
6,470
3,500
3,884
7,206
64,999
75.2
14.9
0.8
0.5
1.3
0.8
1.7
4.8
100.0
March
2012
46,764
10,790
670
470
1,424
432
1,033
3,414
64,999
96.0
1.1
1.9
0.9
0.1
100.0
March
2012
61,737
965
1,977
248
73
64,999
%
%
%
%
%
41.0
11.2
11.4
7.5
5.1
7.0
5.6
3.9
2.9
4.4
100.0
%
33.2
14.8
19.6
10.0
5.4
6.0
11.1
100.0
%
71.9
16.6
1.0
0.7
2.2
0.7
1.6
5.3
100.0
%
91.8
2.5
4.9
0.7
0.1
100.0
33
APPENDIX V
Statutory percentage of Mercantil Banco Universal loans by economic sector and interest rates
March
2013
1
March
2013
% of
Compliance
Reached
% of
Compliance
required
Sector
Percentages of compliance
Agriculture
Calculated on the average gross loans at
12/31/2012
and
12/31/2011,
monthly
compliance. Maximum per customer 5% of the
current portfolio. It requires a minimum
number of new clients. Additionally the
portfolio must be quarterly classified between
strategic a non-strategic sectors. The
concentration in the strategic segment of the
loan portfolio must not be less than 70% and
medium and long-term credits less than 10%
of the total agricultural loan portfolio.
Interest Rates
21.6%1
21.0%
Set weekly by the Central Bank (BCV). At
03/31/2012 this is 13%
Mortgage
Calculated on the gross loan portfolio at
12/31/2012, distributed as follows: 6.0% in
long term loans and 13.0% in short-term
loans. Annual Compliance.
8.0%1
-
Set semi-annually by the Housing and
Habitat Ministry. Set in accordance with
family income of debtors, ranging between
1.40% and 11.42%
Microcredits
3% Calculated on the gross loan portfolio at
12/31/2012. Monthly Compliance.
3.2%
3.0%
Within minimum and maximum rates
established by the Central Bank. At
03/31/2013 the rate cannot be higher than
24%
Tourism
It’s calculated based on the average of the
Loan Portfolio figures at year-end 2012 and
2011. Compliance must be reached by
December 31, 2013 (1.5% semiannually).
2.1%
-
The Central bank establishes a preferential
rate for the sector on a monthly basis. As of
March 31, 2012, the rate is 10.64% and can
be as low as 7.64% in some cases in
accordance with the Law for Tourism Loans.
Industrial
Calculated on the gross loan portfolio at
12/31/2012. Monthly Compliance.
9.5%
10.0%
Set by the Central Bank at 19%.
Includes Bs 1.757 million in Agricultural Bonds issued by the Venezuelan State in accordance with the agricultural portfolio, and Bs. 1.283 million in special mortgage securities issued by
mortgage issued by Fondo Simón Bolivar para la Reconstrucción, S.A. attributable to mortgage portfolio growth
34
APPENDIX VI
Summary of Financial Indicators
“Caracas Stock Exchange: MVZ A & MVZ B
ADR Level 1: MSFZY y MSFJY”
Quarter
Ended on
US$
Mar 13
Net income in billions of Bolivars (millions of US$)
Mar 13
363
Mar 12
2,039
796
59,401,343
59,401,343
210.00
71.00
1,559
1.2
1,848
0.6
Mercantil’s stock indicators
Class A share:
Number of outstanding shares3 (Issued shares minus repurchased shares)
Market Price
33.42
Average daily volume (# of shares)
Market Price / Book value per share
Market Price / Period Net Earnings per share
Dividends received in Cash / Market price A
Class B share:
Number of outstanding shares3 (Issued shares minus repurchased shares)
Market Price
Average daily volume (# of shares)
42,813,618
202.00
2,173
75.00
1,705
1.2
9.8
0.7
9.4
32.14
Dividends received in Cash / Market price B
Book value per share in Bs (Equity / # of outstanding shares) 2
Total weighted outstanding shares
Earnings per share (Net Result/ weighted outstanding shares)
Market Quote Mercantil Class A and Class B Shares
vs. Caracas Stock Exchange (CSE) Index
Adjusted CSE
8.9
0.0
42,813,618
Market Price / Book value per share
Market Price / Period Net Earnings per share
Price MVZ/A
6
10.2
0.0
0.0
0.0
27.81
9
174.74
114.04
99,162,172
99,198,316
3.66
20.57
8.02
Composition of Net Income by
Business Segments
Price MVZ/B
225
1.6%
3.2%
210
195
82.3%
180
88.8%
9.6%
14.5%
165
150
135
IQ 2012
120
Banking
IQ 2013
Insurance
Asset Management
105
90
75
60
45
30
15
0
Mar-12
1
2
3
Jun-12
Sep-12
Dec-12
Mar-13
Figures in US$ given for reference purposes only; Balance Sheet figures translated at the closing exchange rate and income at the average exchange rate for the period. See exchange rates
in Appendix VI. Exchange control has been in place in Venezuela since February 2003.
Issued shares minus repurchased shares.
Stock dividends paid are considered as issued shares for comparison purposes.
35
APPENDIX VI
Summary of Financial Indicators
Quarter
Ended on
Mar 13
Mar 12
Balance Structure indicators
Gross Loans/Deposits
68.6%
75.7%
Gross financial margin / Average interest earning assets
Commissions and other income as a percentage of Total income
8.4%
45.5%
7.9%
37.3%
Return on average assets (ROA)
Return on average equity (ROE)
5.2%
47.9%
3.0%
27.7%
5.0%
41.3%
5.4%
52.3%
22.5%
54.0%
19.2%
49.8%
Profitability Ratios (%):
Efficiency Ratios (%):
Operating expenses / Average total assets
Operating expenses / Total income
Liquidity Ratios (%):
Cash and due from banks / Deposits
Cash and due from banks and Investments Portfolio / Deposits
Asset Quality Ratios (%):
Non-performing loans/ Gross loans
1.0%
1.4%
306.4%
235.9%
3.1%
3.4%
Equity / Assets
10.6%
10.7%
Equity / Risk – Weighted Assets (regulatory minimum 8%)
19.5%
18.5%
8,869
8,530
881
849
Branches in Venezuela
302
302
Bank branches
Insurance branches
268
34
269
33
Branches Abroad
Representative Offices
24
5
23
5
Allowance for loan losses / Non performing loans
Allowance for loan losses / Gross loans
Capital Adequacy Ratios (%):
Number of employees
Employees in Venezuela
Employees Abroad
Distribution network
Number of ATMs
1,398
1,307
Number of points of sale (POS)
Mercantil Aliado Network:
49,415
43,785
Correspondent Desk
Correspondent Trading Points
119
192
69
164
Exchange rate Bs/US$1 (Controlled since February 2003)
Average Exchange Rate for the quarter (Bs/US$1)
6.2842
5.6192
4.2893
4.2893
Inflation for the last 12 months
25.1%
24.6%
Exchange and inflation rates
36
APPENDIX VII
MERCANTIL C.A. BANCO UNIVERSAL
According to rules issued by SNV 1
UNAUDITED CONSOLIDATED FIGURES
US$
1
Mar.2013
SUMMARY OF BALANCE SHEET
ASSETS
Cash and Cash Equivalents
Loan Portfolio
Properties and Equipment and Other Assets
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Bolivars
Bolivars
%
%
4,650
3,867
9,663
384
29,224
24,302
60,727
2,415
26,894
18,414
57,756
1,932
15,124
12,664
44,303
1,354
2,330
5,888
2,971
483
8.7
32.0
5.1
25
14,100
11,638
16,423
1,061
93.2
91.9
37.1
78.3
TOTAL ASSETS
18,565
116,668
104,996
73,446
11,672
11.1
43,222
58.8
LIABILITIES AND SHAREHOLDERS'EQUITY
Deposits 3
Financial Liabilities and Other Liabilities
16,050
757
100,863
4,759
90,940
4,263
62,888
3,602
9,923
497
10.9
11.7
37,975
1,157
60.4
32.1
TOTAL LIABILITIES
16,807
105,622
95,202
66,490
10,420
10.9
39,132
58.9
1,758
11,046
9,793
6,956
1,252
12.8
4,090
58.8
18,565
116,668
104,996
73,446
11,672
11.1
43,222
58.8
SHAREHOLDERS´ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
Quarter
∆
Ended on
US$
2
Mar.2013
SUMMARY OF STATEMENT OF INCOME
Interest Income
Interest Expense
Gross Financial Margin
Provision for Losses on Loan Portfolio
Operating Income
Operating Expenses
Income before taxes
Taxes
NET INCOME
NET INCOME IN US$ 2
March
2013
March
2012
Bolivars
%
585
188
397
25
372
279
651
316
335
22
3,285
1,058
2,227
138
2,090
1,569
3,658
1,773
1,885
125
2,127
684
1,444
144
1,299
638
1,937
1,271
666
58
1,158
374
784
(7)
791
931
1,721
502
1,219
67
54.4
54.7
54.3
(4.7)
60.9
145.9
88.9
39.5
182.9
115.4
313
1,761
313
608
142
1,152
171
189.3
120.9
Conciliation of Net Income SNV and SUDEBAN
(In millions of Bs.)
Quarter
Ended on
March
2013
Net income 3
Deferred Income Tax
Long term interest bearing loans, investments in securities adjusted for amortization, and other consolidation effects
Net income SNV
Inter-company eliminations
Contribution to Mercantil's Results
1,100
0
661
1,761
0
1,761
March
2012
666
0
(58)
608
0
608
1
These financial statements are presented in accordance with SNV standards and adjusted for inflation up to December 31. 1999 (See accounting principles used). They reflect Mercantil
Banco Universal’s contribution to Mercantil´s results. These Standards of the SNV are described in Appendix I.
3
Historic figures in accordance with the standards of the Superintendency of Banking Sector Institutions in Venezuela.
2
37
APPENDIX VII
MERCANTIL C.A. BANCO UNIVERSAL
1
According to rules issued by SUDEBAN
US$
1
Mar.2013
ASSETS
Loan Portfolio
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Bolivars
Bolivars
%
%
4,650
3,764
9,663
378
29,224
23,656
60,727
2,377
26,894
17,970
57,756
1,895
15,124
12,436
44,303
1,312
2,330
5,686
2,971
482
8.7
31.6
5.1
25.5
14,100
11,220
16,423
1,066
93.2
90.2
37.1
81.2
TOTAL ASSETS
18,455
115,984
104,514
73,175
11,470
11.0
42,809
58.5
LIABILITIES AND SHAREHOLDERS'EQUITY
Deposits
Financial Liabilities and Other Liabilities
16,362
457
102,820
2,885
92,500
2,780
64,721
1,846
10,320
105
11.2
3.8
38,099
1,039
58.9
56.3
TOTAL LIABILITIES
16,819
105,705
95,281
66,567
10,424
10.9
39,138
58.8
1,636
10,279
9,233
6,608
1,045
11.3
3,671
55.6
18,455
115,984
104,514
73,175
11,470
Quarter
11.0
42,809
58.5
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
∆
Ended on
US$
3
Mar.2013
Interest Income
Interest Expense
Operating Income
Operating Expenses
Income before taxes
Taxes
NET INCOME
NET INCOME IN US$ 3
March
2013
March
2012
Bolivars
%
584
195
389
25
364
191
555
336
219
22
3,279
1,097
2,182
138
2,044
1,072
3,116
1,890
1,225
125
2,296
765
1,531
157
1,375
699
2,074
1,350
724
58
983
332
651
(18)
669
373
1,042
541
501
67
42.8
43.4
42.5
(11.6)
48.7
53.3
50.3
40.1
69.1
115.6
196
1,100
196
666
155
433
40
65.1
26.1
Indicators1 from Consolidated Financial Statements
Gross financial margin / Average assets
Return on average assets (ROA) 2
Return on average equity (ROE) 2
Non-performing loans / Gross loans
Allowance for loan losses / Non performing loans
Operating expenses / average total assets
Equity / Assets
Equity / Assets minus Venezuelan Government Investments
Equity / Risk-weighted Assets
1
2
3
System
average2
7.9%
3.8%
42.7%
1.0%
329.1%
3.2%
4.6%
8.5
N.D.
N.D.
March
2013
March
2012
8.0%
3.9%
43.6%
0.8%
496.1%
3.9%
5.0%
7.9%
10.2%
19.6%
8.3%
3.8%
42.1%
0.7%
605.7%
4.2%
5.8%
8.1%
10.1%
16.3%
Consolidated.
Based on annualized figures.
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and i ncome statement figures at the average exchange rate for the
N.A.: Not available
38
APPENDIX VIII
MERCANTIL COMMERCEBANK FLORIDA BANCORP
(In millions of Dollars, except percentages)
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Dollars
%
Dollars
%
ASSETS
Investments Securities
Loan Portfolio
TOTAL ASSETS
186
1,995
4,345
167
6,693
145
2,122
4,372
148
6,787
376
2,107
4,111
187
6,781
41
(127)
(27)
19
(94)
28.2
(6.0)
(0.6)
12.8
(1.4)
(190)
(112)
234
(20)
(88)
(50.5)
(5.3)
5.7
(10.9)
(1.3)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Financial Liabilities, Other Liabilities and Subordinated Debt
TOTAL LIABILITIES
5,380
691
6,072
5,330
845
6,175
5,349
862
6,211
50
(153)
(103)
0.9
(18,1)
(1.7)
31
(170)
(139)
0.6
(19,8)
(2.2)
622
613
570
9
1.5
52
9.1
6,693
6,787
6,781
(94)
(1.4)
(88)
(1.3)
EQUITY
Quarter
Ended on
March
2013
∆
March
2012
US$
%
Interest Income
Interest Expense
43
7
46
9
(3)
(2)
36
37
(0)
(1.2)
0
8
(8)
(99.2)
36
28
8
28.1
15
16
(2)
(9.5)
Operating Income
Operating Expenses
51
36
45
36
6
(0)
14.4
(0.7)
Income before taxes
15
8
7
81.0
4
1
2
146.9
11
7
5
66.6
Taxes
NET INCOME US$
(5.7)
(23.9)
Conciliation of Net Income SNV and USGAAP
(In millions of dollars )
Ended on
Mercantil Commercebank N.A. Consolidated - Net Income
Results for the Holding and other Affiliates
Mercantil Commercebank Florida Bancorp - Net Income
Deferred Income Tax
Provision for available for sale assets
Others
Contribution to Mercantil's Results1
1
Quarter
March
2012
10
6
(1)
(1)
9
5
2
1
1
0
(0)
1
11
7
March
2013
These financial statements are presented in accordance with rules of the SNV (see accounting principles used) to reflect the contribution of Mercantil Commercebank Florida Bancorp to the
results of Mercantile. These Standards of the SNV are described in Appendix I.
39
APPENDIX VIII
MERCANTIL COMMERCEBANK, N.A.
According to USGAAP
(In millions of Dollars, except percentages)
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Dollars
%
Dollars
%
ASSETS
Investments Securities
Loan Portfolio
TOTAL ASSETS
11
2,170
4,342
202
6,724
13
2,253
4,371
182
6,820
8
2,474
4,107
227
6,816
(2)
(84)
(29)
20
(95)
(14.1)
(3.7)
(0.7)
10.8
(1.4)
3
(304)
235
(25)
(91)
40.7
(12.3)
5.7
(11.1)
(1.3)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Financial Liabilities, Other Liabilities and Subordinated Debt
TOTAL LIABILITIES
5,407
591
5,998
5,366
735
6,101
5,138
988
6,126
41
(144)
(103)
0.8
(19,6)
(1.7)
269
(397)
(128)
5.2
(40,2)
(2.1)
727
719
690
8
1.1
37
5.4
6,724
6,820
6,816
(95)
(1.4)
(91)
(1.3)
EQUITY
Quarter
Ended on
March
2013
∆
March
2012
US$
%
Interest Income
Interest Expense
Operating Income
Operating Expenses
Income before taxes
Taxes
NET INCOME US$ 2
43
5
38
0
38
13
51
35
16
6
10
46
7
38
8
30
15
45
35
10
4
6
(3)
(2)
(0)
(8)
8
(2)
6
0
6
2
4
(5.6)
(28.8)
(1.2)
(99.2)
26.6
(10.1)
14.4
0.6
63.8
63.8
63.8
Indicators
Similar
Group1
Gross financial margin / Average assets
Return on average assets (ROA) 2
Return on average equity (ROE) 2
Non Accrual / Gross loans
Operating expenses / average total assets
Equity / Assets
Equity / Risk-weighted Assets
1
2
March
2013
3.6%
1.0%
9.1%
1.6%
1.7%
2.8%
N.D.
N.D.
March
2012
2.3%
0.6%
5.6%
1.8%
1.6%
2.1%
10.1%
17.3%
2.4%
0.4%
3.6%
4.6%
1.5%
2.1%
9.2%
17.1%
Based on September, 2012.
Annualized
N.A.: Not available
40
APPENDIX IX
MERCANTIL SEGUROS
Unaudited Consolidated Figures
US$
1
Mar.2013
ASSETS
Premiums receivable
Property and equipment
Other assets
TOTAL ASSETS
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Bolivars
Bolivars
%
%
89
871
164
33
129
1,286
557
5,473
1,032
205
815
8,083
357
4,681
955
212
659
6,864
392
3,686
761
147
617
5,603
200
792
77
(7)
156
1,219
56.1
16.9
8.1
(3.3)
23.7
17.8
166
1,788
271
58
198
2,481
42.3
48.5
35.7
39.2
32.1
44.3
Uncollected Premium
Reserves
Accounts Payable Reinsures
Other provisions and other liabilities
TOTAL LIABILITIES
405
235
21
54
128
843
2,547
1,476
130
341
807
5,301
2,317
1,179
0
287
743
4,527
1,978
997
185
241
637
4,038
230
297
130
54
64
775
9.9
25.2
100.0
18.9
8.7
17.1
569
479
(55)
100
170
1,264
28.8
48.1
(29.7)
41.4
26.7
31.3
SHAREHOLDERS’ ÉQUITY
443
2,782
2,338
1,565
444
19.0
1,217
77.8
1,286
8,083
6,864
5,603
1,219
17.8
2,481
44.3
LIABILITIES AND SHAREHOLDERS’ ÉQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’
ÉQUITY
Quarter
2
US$
Mar.2013
∆
Ended on
March
March
2013
2012
Bolivars
%
Earned Premiums Received
Claims Incurred
Commissions and Acquisition Expenses
Management Expenses
Taxes and Contributions
Technical Result
Income from Investments
Foreign exchange gains
Taxes
Contracts of excess of lost
NET INCOME
NET INCOME US$ 2
Conciliation of Net Income SNV and SUDESEG
(In million of Bs.)
312
(205)
(50)
(32)
(17)
8
32
5
(1)
(9)
35
1,755
(1,154)
(280)
(179)
(96)
45
180
27
(8)
(49)
195
35
1,309
(832)
(229)
(128)
(69)
50
100
0
(4)
(31)
115
27
446
(322)
(51)
(51)
(27)
(5)
80
27
(5)
(18)
80
8
Quarter
Ended on
March
2013
Mercantil Seguros (Consolidated) - Net Income
Valuation of Investments
Earned premiums
Exchange Gains and Losses
Other
Contribution to Mercantil's Results
1
2
34.1
38.7
22.3
39.9
38.7
-9.3
80.3
26,500
137.1
57.3
69.1
29.1
193
0
1
0
1
195
March
2012
109
(0)
4
0
2
115
These financial statements are presented in accordance with SNV standards and adjusted for inflation up to December 31, 1999 (See accounting principles used, Appendix I). They reflect
Mercantil Seguros contribution to Mercantil’s results. These Standards of the SNV are described in Appendix I.
41
APPENDIX IX
MERCANTIL SEGUROS
According to rules issued by SUDESEG
Unaudited Consolidated Figures
US$
1
Mar.2013
ASSETS
Premiums receivable
Property and equipment
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ ÉQUITY
Uncollected Premium
Reserves
Accounts Payable Reinsures
Other provisions and other liabilities
March
December
March
2013
2012
2012
∆
∆
Mar 13 vs. Dec 12
Mar 13 vs. Mar 12
Bolivars
Bolivars
%
%
722
302
165
1,189
4,534
1,898
1,043
7,475
4,724
1,000
947
6,671
3,641
853
687
5,181
(190)
898
96
804
(4.0)
89.8
10.1
12.1
894
1,045
356
2,294
24.5
122.5
51.8
44.3
640
205
845
4,023
1,288
5,311
3,498
936
4,434
2,996
757
3,753
525
352
877
15.0
37.6
19.8
1,027
532
1,559
34.3
70.2
41.5
344
2,163
2,236
1,428
(73)
(3.2)
735
51.5
1,189
7,475
6,671
5,181
805
12.1
2,294
44.3
Quarter
∆
Ended on
US$ 1
Mar.2013
Earned Premiums Received
Claims Incurred
Commissions and Acquisition Expenses
Management Expenses
Taxes and Contributions
Technical Result
Income from Investments
Foreign exchange gains
Taxes
Contracts of excess of lost
NET INCOME
NET INCOME US$2
March
March
2013
2012
312
(205)
(50)
(32)
(17)
1,754
(1,154)
(282)
(179)
(96)
1,304
(832)
(231)
(128)
(69)
8
32
5
(1)
(9)
34
43
180
27
(8)
(49)
193
34
44
100
0
(4)
(31)
109
25
Bolivars
450
(322)
(51)
(51)
(27)
%
34.5
38.7
21.9
39.9
38.7
(1)
(2.0)
80
80.3
27 26,500.0
(5)
137.1
(18)
57.3
83
76.3
9
34.6
KEY FINANCIAL AND OPERATING INDICATORS
Mercantil Seguros
Market Share
Equity / Total Assets
Incurred Claims / Earned Premiums (%)
Commissions and Acq. Expenses / Earned Premiums (%)
Administrative Expenses / Earned Premiums (%)
Combined Ratio (%)3
Insured Persons
4
Quarter
Ended on
March
March
2013
2012
2,099
1,635
11.7%2
29.0%
65.8%
16.0%
10.2%
13.7%2
27.6%
63.8%
17.7%
9.8%
97.6%
96.7%
1,503,645
1,422,790
1
Dollar figures are given for reference purposes only. Balance Sheet figures are translated at the closing exchange rate and income statement figures at the average exchange rate for the period.
See exchange rates in Appendix VI. Exchange control in place in Venezuela since February 2003.
Market Share at 2012/11/30
3
Combined ratio = (incurred claims + commissions + operating expenses)/ earned premiums
4
In numbers.
2
42
APPENDIX X
Key Macroeconomic Indicators
12 Months
2011
Gross Domestic Product. Var.%
I 12
II 12
III 12
IV 12
I 13
1
Consolidated
Oil activities
Non-Oil activities
Other Net Taxes on Products
Consumer Price Index (% Change)
Unemployment Rate (% Change)
Wage Income Index (% Var )
Quarter
2012
2
3
4.2
0.6
4.5
5.9
5.6
1.4
5.8
9.1
5.9
2.2
6.1
8.7
5.6
1.1
6
8.2
5.5
1.1
5.6
9.5
5.5
1.1
5.4
9.8
ND
ND
ND
ND
29
7.8
19.5
7.4
14.9
9.3
17.2
8.3
16.6
7.8
30.1
6.5
ND
ND
38.3
23.6
39.5
29.4
22.7
23.6
ND
50.6
60.1
53.9
53.1
57.4
60.1
60.5
15.6
12.5
14.5
15.6
12.5
14.6
15.4
12.5
14.5
16.3
12.5
14.5
16.8
12.5
14.5
15.6
12.5
14.6
15.3
12.5
14.5
4,289.3 4,289.3
4,289.3 4,289.3
0.0
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
6,284.2
6,284.2
0.0
4,289.3 4,289.3
4,289.3 4,289.3
0.0
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
4,289.3
4,289.3
0.0
6,284.2
6,284.2
0.0
45,998
88,132
4,679
46,813
38,001
93,569
3,771
59,339
12,020
24,677
1,059
13,716
10,580
22,647
1,021
13,088
8,616
22,464
,846
14,694
6,785
23,781
845
17,841
ND
ND
ND
ND
29,889
3
29,887
3
27,587
3
28,424
3
25,887
3
29,887
3
27,035
3
101.1
2,263
103.4
2,545
112.0
2,313,3
103.5
2,345
100.0
2,663,3
98.3
2,860
103.8
2,858
147,443 192,340
324,726 414,000
42,843.9
85,274.0
1
Monetary Liquidity (% Change)
Interest Rates (Period end) (%)
1
4
Six Main Commercial and Universal Banks
Period-end Loan Rate
Period-end Saving Deposit Rate
Period-end Time Deposit Rate
Exchange Rate (Preferential)
Period end (Bs/US$) (Bid rate)
7
Annual average exchange rate (Bs/US$)
Depreciation (%)
7
2
Exchange Rate (Oil)
Period end (Bs/US$) (Bid rate)
7
Annual average exchange rate (Bs/US$)
Depreciation (%)
7
2
External Sector (millions of US$)
Trade Balance
5
Oil Exports
Non-Oil Exports
Imports
Central Bank of Venezuela Intl. Res.
FEM
Oil Export Average Price (US$/b)
Average Oil Production (Thousands bpd)
Central Government (millions of Bs)
Non-Oil Income
Realized Expenses by the National Treasury
6
45,386.3 48,181.9 55,927.3
ND
86,920.1 105,093.3 136,712.9 108,204.5
1
Year-on-year variation.
Annual Dec-Dec figures. Annualized quarterly figures.
Annual figures for the second semester.
4
Annual figures correspond to weighted averages.
5
Balance of payments figures.
6
Does not include public debt amortization.
7
Exchange Rate US$/1 for comparison purposes. At January 1, 2008, begins the Monetary Conversion Law.
ND: Not Available
FEM: Macroeconomic Stabilization Fund
Source: Central Bank of Venezuela (BCV). Ministry of Finance (MF). National Statistics Institute (INE)
Ministry of Energy and Production (MEP). Bloomberg and own calculation
2
3
43

Mercantil Servicios Financieros, C. A. Financial Report First Quarter

Transcription

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