Fideicomiso Irrevocable F/2061 FHipo (FHIPO14) Earnings Call Transcript & Summary

Good morning. My name is Daniella, and I will be your conference operator. [Operator Instructions] This is FHipo Second Quarter 2026 Conference Call. FHipo released its earnings report on Thursday, July 30, after market close. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail it to you. Please note that this call is for investors and analysts only. Questions from the meeting will not be taken nor should the call be reported on. Any forward-looking statements made during this call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to turn the call over to Daniel Braatz. Daniel, please go ahead.

Good morning, everyone, and thank you for joining us today. I will talk to you about our second quarter results and key highlights for the quarter. FHipo's cumulative distribution since inception have reached approximately MXN 7.6 billion, reflecting our ongoing commitment to deliver profitability to our investors. Throughout the quarter, our focus remains on keeping the balance sheet strong and proactively managing risk, while working to further strengthen the quality and resilience of our portfolio. Our capitalization ratio as of the second Q of 2026 stood at 62.5%, equivalent to 0.6x debt-to-equity ratio on an on-balance basis. Our financial margin stood at 57.1% of interest income during the quarter, primarily due to a decrease in interest expenses. We also continue actively managing our interest rate exposure. As of the end of the second Q, we maintained a stable risk profile with a floating rate exposure on a consolidated basis, debt at 29.6% Finally, on July 30, FHipo released its first sustainability report covering fiscal year 2025, in line with the IFRS S1 and IFRS S2 sustainability disclosure standards. Moving on into Slide 5. We highlight our steady track record of delivering value to investors through consistent distributions. This quarter, we reported an estimated distribution of MXN 0.356 per CBFI in line with our current distribution policy, resulting in an annualized yield per CBFI of 10.7%. This demonstrates our ability to generate sustainable results and generate attractive returns to our investors. Moving on into Slide 6 on our balance. Debt-to-equity ratio stood at 0.6x for the quarter. And on a consolidated basis, resulted in 1.2x. Our capital structure provides flexibility and resilience to pursue attractive investment opportunities as they arise. Moving on into Slide 7. We want to highlight our continued focus on higher-yielding assets. Our portfolio has an average loan-to-value of 77% at origination, while the loan-to-value considering the outstanding principal balance is estimated at 56%. And our estimated current market loan-to-value at 27%, supporting the overall strength and resilience of our portfolio. On Slide 8, as of the second quarter, our nonperforming loan ratio measured against the accumulative balances of the total portfolio origination stood at 2.73% demonstrating the portfolio's historical performance against original loan balances. On Slide 9, we highlight our environmental practices. Approximately 58% of Infonavit borrowers have benefited from the green mortgage program, supporting with in province through eco-technologies that provide efficient water, electricity and gas systems in their homes. We also participate in Fovissste sustainable housing program, which similarly promotes the construction and acquisition of homes equipped with these Eco-technologies. Additionally, FHipo's corporate offices are located in a building with LEED Gold Certification, reflecting our commitment to energy efficiency, water management and responsible waste practices in our day-to-day operations. On Slide 10, I'd like to highlight that women borrowers account for approximately 31% of our consolidated portfolio and 37% of our digital mortgage platform portfolio. Within our own team, 46% of the workforce is female, demonstrating our continued commitment to inclusion and gender equality. Finally, on Slide 11, from a governance standpoint, our nomination, audit and practices committees are fully independent. And more than half of our technical committee members holding dependent status, reinforcing strong oversight and transparency. All together, these efforts reflect FHipo's ongoing commitment to creating value in a responsible and sustainable manner. I will now pass the call to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy.

Thank you, Daniel, and good morning, everyone. I will start on Slide 13. As Daniel mentioned, FHipo has strengthened its balance sheet by successfully executing a disciplined deleveraging strategy in the recent past. As of the second quarter of 2026, our on-balance leverage ratio stood at 0.6x and our total consolidated debt-to-equity ratio, including both on and off-balance financing, stood at 1.2x, down from 2.0x back in 2021. Hence, a cumulative reduction of 0.8x over the last 5 years. This financial discipline has improved our flexibility and strengthen our ability to navigate challenging market environments. Our diversified funding structures allows us to preserve flexibility to allocate capital efficiently and focus on long-term value creation. Moving to Slide 14. As you can see, our sources remain with a competitive rate and well diversified across securitizations bank facilities and capital market instruments. More than 90% of our outstanding financings carry legal maturities exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Considering our capital structure, FHipo maintains additional leverage capacity of approximately MXN 17 billion with respect to our internal regulatory limits. With this, now I will turn the call over to Jesus Gomez, our COO, who will walk you through the portfolio breakdown before we discuss the financial results for the quarter. .

Thanks, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move to Slide 16 to take a closer look at the portfolio breakdown as of the end of the second quarter of 2026. As of June 30, 2026 , FHipo's consolidated portfolio comprised 41,593 loans with an outstanding balance of MXN 15.5 billion. The average loan-to-value at origination stood at 77% with an average payment-to-income ratio of 24.5%. At the end of the quarter, 92.1% of the portfolio is performing. The portfolio is well diversified across several origination programs, including for Infonavit Mas Credito, for Infonavit Total, Fovissste and the digital mortgage platforms portfolio. This mix is aligned with our strategy of prioritizing assets with attractive risk-adjusted returns on supporting overall long-term profitability. On Slide 17, FHipo's portfolio continues to geographically diversified across all 32 Mexican states. [indiscernible] remained the largest contributors, together accounting for approximately 29% of the total portfolio balance. In terms of our origination programs, here's the breakdown by portfolio. For Infonavit Mas Credito accounts for 52% of the total portfolio, equivalent to MXN 8 billion. The digital mortgage platforms portfolio accounted for 18%, equaling to MXN 2.8 billion. The Infonavit Total Pesos program represented 14% of the total portfolio equivalent to MXN 2.2 billion. Fovissste portfolio accounted for 13% of the total portfolio, equivalent to MXN 2 billion. And finally, the Infonavit Total VSM portfolio represented 2.5% of the total portfolio equivalent to MXN 368 million. This distribution is explained by our strategy of maintaining a diversified portfolio that is aligned with market demand. I will now hand the call back to Ignacio to disclose FHipo's financial results for the second quarter. .

Thank you, Jesus. Continuing on Slide 19. Our nonperforming loan ratio stood at 7.9% at the end of the quarter. We maintain a solid allowance for loan losses with an expected loss coverage of 1.35x and an NPL coverage ratio of 0.55x. If we move to Slide 21, where we will go through the income statement for the quarter. The total interest income for the second quarter of 2026 resulted in MXN 291.3 million, down 10% compared to the second quarter of 2025 mainly due to the natural amortization of the portfolio. Interest expense totaled MXN 125 million for the quarter, a 14.2% decrease from the MXN 145.7 million reported in the second quarter of 2025 primarily as a result of declining interest rates over the past 12 months. Our financial margin came in at MXN 166.3 million, equivalent to 57% of total interest income for the quarter. The allowance for losses recorded in the second quarter of 2026 totaled MXN 28.5 million. The valuation of receivable benefits from securitization transactions reflected a fair value profit of MXN 22.5 million during the quarter, which is primarily explained by the performance of the underlying mortgages portfolios backing such trust certificates. The total expense incurred during the second quarter of 2026, which include portfolio servicing and administrative services as well as all other expenses directly related to the company's ordinary business amounted to MXN 127.7 million. As a result, net profit for the quarter amounted to MXN 36.1 million. And with this, the estimated distribution for the second quarter of 2026 under the current distribution policy is of MXN 0.356 per CBFI which considering the closing price per CBFI as of the second quarter of 2026 and the days lapsed in the second quarter results in an annualized yield of 10.7%. With this, I will now hand the call back to our CEO Daniel Braatz for some closing remarks. .

Thank you, Ignacio. FHipo's business model continues to demonstrate resilience and adaptability. The actions we have implemented to date have strengthened our position, allowing us to operate effectively across different markets conditions. Our goal remains unchanged to deliver sustainable returns to our holders supported by the same disciplined strategy that has characterized FHipo since inception. We remain focused on profitability, risk management and maintaining a strong capital structure. Looking ahead, we will assess opportunities that align with our strategic priorities. Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon.

That concludes today's call. You may now disconnect.