BANKING ON SUCCESS

Mexico 2019 | FINANCE | INTERVIEW

By implementing a system to improve its technology platforms via web and mobile applications, BanBajío seeks to target a wider network of individuals.

Joaquín Domínguez Cuenca
BIOGRAPHY
Joaquín Domínguez Cuenca started his banking career at Banca Cremi. He joined BanBajío in 1994 and held several positions starting as subdirector of finance and treasury. In 1999, he assumed the position of CFO and since 2000 has served as Executive Director of Finance and Treasury. He graduated from the ITAM and holds a master’s in finance from ITESM.

As BanBajío starts its 25th year of operations, what milestones have marked this period for the bank?

The bank was founded in 1994 with a capital of MXN120 million (USD6.29 million) in the context of the tequila crisis. The vision then was to create a regional bank focused on the export sector. In 1998, we put in place a strategy to become the financial partner of choice for medium enterprises. At the time, we signed a partnership with Spain's Banco Sabadell that allowed us to grow in international business and offer import-export-related financial services. The main focus of the bank has been to have excellent relation with clients. Traditionally, banks in Mexico have committees to approve credit, but we instead replicated the system that Banco Sabadell had thereby resulting in an agile credit process. This allowed us to penetrate some industries. For example, we have been the leader in the agribusiness sector for 13 years in a row. To date, 10% of our commercial portfolio is in agriculture. Before, it was nearly 20% of all of our loans and represented 30% of our revenues. So we had decided to diversify in other areas. For instance, we have tremendously grown in services for SMEs. We enjoy serving these companies that have steadily gotten into the 'formal' sector through our services.

What has been the performance of the bank after its IPO in 2017?

The IPO was an excellent decision. Interest rates have been low in Mexico, at 3.3% even, so that was a challenging environment for the sector. In a short time period, we experienced high profitability levels of up to 16% annually, so the goal was to tell a story to make investors understand that this was a sustainable company. We put in place a plan to make investors aware of our strengths as a financial institution. The performance of the bank, compared to others, has been excellent. Now, we are the 26th firm with a higher trading level, and that is only after a couple of years of being publicly traded.

Which segments drive the profitability of the bank at the moment?

Approximately 80% of the bank's business comprise corporates and SMEs, which together, represent what we call company loans. Our policy has always been to compete in service, so we are in a segment of companies that do not move much from bank to bank. Moving forward, we have to develop digital and consumer banking. Many years ago, going to a financial institution was an important event for a businessman. Since 2018, we have been implementing a system to improve our technology platforms. These platforms allow us to reach an enormous market of individuals. Today, we have systems that work well in the business area, and we can expand our business through online platforms and mobile applications. While we will focus as usual on our traditional business segments, moving forward we see great potential to use our existing capacity to penetrate more in retail banking. This will allow us to sustain our growth rate in the coming years.

As a local bank, which opportunities do you see in the insurance sector that could complement existing services?

We are complementary to the insurance sector; therefore, we have several partnerships to underwrite automotive, life or house policies. We are working with eight insurance companies through this partnership, and what we have learned is that it does not matter the company we partner with, but we are the representative for the client. This means that if the client has any trouble, they might come to us. We are well positioned to offer our services, and, on top of that, guide our clients on what insurance solutions best fit their requirements. Additionally, as an insider, we are knowledgeable about the insurance business and are able to represent our clients in the event of a claim.