Gentera, S.A.B. de C.V. (GENTERA) Earnings Call Transcript & Summary

Good morning, and welcome to the Second Quarter 2026 Gentera's Conference Call. Now I would like to turn the call to Mr. Enrique Barrera, Investor Relations Officer of the company. Sir, you may begin.

Good day to everyone. Thank you all for joining us and for your continued interest in Gentera. I'm Enrique Barrera, the company's Investor Relations Officer. I'm very pleased to introduce our management team. With us today are Mr. Enrique Majos, Gentera's Chief Executive Officer; Mr. Mario Langarica, Gentera's Chief Financial Officer. Enrique and Mario will present Gentera's results for the second quarter period as per the report that was issued yesterday, and we'll actively participate in the Q&A session of this conference call. [Operator Instructions] Now, please note that during this presentation, Gentera may make forward-looking statements. These do not account for future economic circumstances, industry conditions, company performance or financial results. Additional information on forward-looking statements can be found in the disclaimer located in our earnings release. If you did not receive a copy of the release or if you have any questions, please do not hesitate to contact our Investor Relations department in Mexico City. If you are a member of the media, we ask you to contact us directly. I would now like to turn the call over to Mr. Enrique Majos for his presentation. Enrique, please go ahead.

Good morning. Thank you, Enrique, and thank you all for joining us today in our second quarter 2026 Gentera's report. As of the end of the second quarter of this year, we are pleased to once again report solid operating and financial results. These results reflect the successful execution of our business strategy as well as the efficiencies that we have achieved over the past several years. Gentera's loan portfolio reached MXN 94.6 billion, representing year-over-year growth of more than 13%. Our total customer base in Mexico and Peru reached 6.7 million people served. Likewise, accumulated net income for the first half of the year reached MXN 4.8 billion, the highest first half results in our history, representing 12% in a year-over-year growth. The modernization and efficiency initiatives we have implemented over the past years have enabled us to keep operating expenses growth below the increase of both loan portfolio and our revenues. And regarding asset quality, our Stage 3 nonperforming loans ratio closed the quarter at 4.04%. This level remains within the expected range of our current product mix and represents a slight improvement compared to the first quarter of the year, which was 4.13%. We will continue working diligently to keep delinquency levels under control in both Mexico and Peru. And our subsidiaries continue to deliver strong growth. ConCrédito's loan portfolio increased by nearly 15% year-over-year. Banco Compartamos Peru grew by more than 14% in local currency, while Banco Compartamos Mexico also achieved growth of nearly 14% despite our decision to slightly slow the pace of the growth in our individual loan product, which, by the way, I will elaborate in greater detail in a moment. Looking ahead to the second half of 2026, our priorities remain very clear. We will continue executing our business plan with discipline while staying close to our customers. We remain committed to delivering EPS growth between 13% and 16% in 2026. And regarding Gentera's consolidated loan portfolio growth, in this quarter, we will report and revise our full year growth guidance. This adjustment primarily reflects the slowdown in the consumer economy in Mexico, which could affect our customers' payment capacity. The adjustments of this guidance is also considering the stabilization of the quality of our individual loan portfolio in Mexico after a long period of sustained growth. Nevertheless, we remain fully committed to keep our leadership position in the market while continue creating value for our customers and all our stakeholders. Now while recognizing that the quality of our individual loan portfolio in Mexico has been an important topic of discussion over the past quarter, now we want to, in fact, address this matter during our first quarter earnings call. We mentioned in the first quarter call that we have acknowledged early signs of portfolio deterioration and the need to implement corrective actions, which we began putting in place during February and March this year. With that in mind, let me provide additional context on this matter. As you know, the growth of individual loan business over the past several years has been extraordinary. Over the past 4 years, this portfolio has expanded more than 5x. And in 2025 alone, it grew more than 30%. This growth has generated significant benefit for both our customers and Banco Compartamo's financial performance. However, as is typical in the lending business, periods of rapid growth are naturally followed by a stabilization phase before getting back to growth periods again. As we have mentioned on several occasions, our lending portfolio follows a natural cycle. We first grow, then we follow a period of stabilization of the portfolio quality, and then we start growing again. Consistent with this approach, during the first -- the past quarter, we have taken the following actions. First, we concluded a compelling assessment of the situation, and we have a clear identification of both internal and external factors behind the portfolio deterioration. Based on that assessment, we developed a clear action plan and implementation of these actions began at the end of the first quarter of this year. Today, we are already seeing early signs of a stabilization in the quality of this portfolio, and we are very confident that the delinquency levels will return to normal by the end of this year. Addressing these challenges is strengthening both our lending methodology and our operating processes, allowing us to build a stronger product for future growth. Now, at the consolidated level in Gentera, after incorporating the impact of these adjustments into our projections, we are revising Gentera's loan portfolio growth guidance, and now we expect to close the year with a portfolio growth in the range of 6% to 9%. The good news is that we are maintaining our EPS growth guidance of 13% to 16%. We expect to achieve this by maintaining our expected growth of our other products and subsidiaries and together with the efficiencies that we have captured and the strong expense discipline that we have maintained over the past several years. And we both expect ConCrédito and the Banco Compartamos Peru to continue delivering double-digit growth for this year. Overall, we remain cautiously optimistic while recognizing that the current economic slowdown in Mexico is likely to persist throughout the rest of this year. Finally, our digital transformation process for the group lending business in Mexico continues to make steady progress. Since group lending is the bank's largest business line, we are taking a disciplined and carefully phased approach to the implementation and scaling of this project. Therefore, over the coming quarters, we will continue refining both our processes and the technology through the controlled rollout of this platform in a couple of regions across the country. We currently expect a full nationwide deployment during 2027. Well, thank you for your interest in Gentera and for joining us today. I will now turn the call over to Mario, who will provide additional details on the financial results. And, as always, afterwards, we will be able to take your questions.

Thank you, Enrique, and good day to everyone. As always, we appreciate your interest in Gentera. As Enrique just mentioned, we are enthusiastic with the financial results that Gentera is presenting for the first semester of 2026, following our strategy and the different initiatives that we have implemented in the last years and that we have explained in previous calls. In second Q '26, we reached a new record of 6.79 million people actively using our financial services, adding 657,000 people and growing 10.7% compared to second Q '25. Our loan portfolio amounted to MXN 94.6 billion, representing a 13.1% growth compared to the same period of last year. Our 3 credit subsidiaries showed double-digit growth compared to second Q '25 with Banco Compartamos growing 13.8%, Banco Compartamos Peru growing 14.5% in local currency and ConCrédito growing 14.9%. As Enrique mentioned above, we expect that for year-end, Banco Compartamos Peru and ConCrédito will continue growing double digits and Banco Compartamos Mexico growing single digits for Gentera's portfolio to grow between 6% to 9% on a year-end to year-end basis. Very important to note is that Gentera's average portfolio for the year will be around 10% higher than in 2025. It is also worth to mention that our decision to slow down the growth of the portfolio in Banco Compartamos Mexico in the second half results from the adjustments that our credit business requires after high levels of growth following natural cycles and dynamics as explained by Enrique. Regarding the evolution of the different lines of our income statement, one, in second Q '26, Gentera's interest income grew 9.8% compared to second Q '25, amounting to MXN 12.96 billion, following the observed growth in portfolio and clients. And as I just mentioned, and given the fact that the average portfolio for the year will be above 10%, we expect that NII should also grow at the same rate. Also in the same period, financing expenses decreased 9.9%, mainly driven by the reduction in reference interest rates in Mexico. Therefore, net interest income grew 13.9% to amount to MXN 11.1 billion. NIM amounted to 41.2% in second Q '26. For the first semester of the year, NIM stood at 40.6%. For year-end, we expect NIM to move around 41%. At the consolidated level, Gentera's second Q '26 NPLs amounted to 4.04% compared to 4.13% in the previous quarter. Gentera's cost of risk for the first semester amounted to 13.7%. It's important to say that we have seen stabilization trends in these metrics due to the implementation of the different actions to control asset quality that we have deployed, particularly in Banco Compartamos Mexico, such as reinforcing origination, monitoring and collection processes, adjusting the incentives program, strengthening our sales force, fine-tuning training and targeting strategies as described in our past conference call. Banco Compartamos Peru and ConCrédito have shown stable and healthy risk levels. So for year-end and based on the data that we have today, we expect that consolidated NPLs should be moving around 4% and consolidated cost of risk for the year around 13.5%. Gentera's second Q provisions for loan losses amounted to MXN 3.43 billion, a 29.7% growth, which is in line with its current asset quality and its loan portfolio mix and growth. NIM after provisions for second Q '26 amounted to 28.5%, similar level presented in the previous quarter at 28.8% in first Q '26. We expect this ratio to be between 29% and 30% by the end of the year. Net fees amounted to MXN 1.6 billion in second Q, growing 14.2% compared to second Q '25, mostly driven by the growth of our insurance business. Operational expenses for second Q '26 amounted to MXN 6.9 billion, representing a 7.7% increase compared to second Q '25. The modernization initiatives and investments in technology that we have described in past conference calls have benefited us to allow the adjustment of the operational expenses growth for the year to move around 10%. After all these effects, net income reached the second best quarter ever, amounting to MXN 2.353 billion in second Q '26, growing 11.6% compared to the same period last year. Gentera's controlling participation of net income in second Q amounted to MXN 2.284 billion growing 8.5%, implying an EPS of MXN 1.45 and around 8.5% above second Q EPS of the previous year. The net income that Gentera generated in the first 6 months of '26 was the best result in any other first half of the year ever. Gentera's controlling ROE for second Q '26 stood at 24.5%, in line with our original expectation for the year. And for the full year of '26, we should expect Gentera's controlling ROE to move between 24% and 25%. As always, these results have been achieved preserving solid and healthy liquidity, strong and diverse access to funding and robust capitalization at Gentera and its subsidiaries. Now to conclude my remarks. As you can see, in the first half of the year, we're delivering results as promised. While one of the objectives in the coming months will be to control the asset quality, we expect to comply with double-digit growth in Gentera's EPS within the range guided between 13% to 16%. Finally, we at Gentera are very motivated by the fact that we're concluding the semester with solid operational and financial dynamics, servicing millions of clients in Mexico and Peru, supporting them with their different financial needs so they can reach their dreams and at the same time, keep generating total value for all of our different stakeholders. Thank you. That is all for my remarks. And if you want, we can move to the Q&A session.

[Operator Instructions] Our first question comes from Yuri Fernandes of JPMorgan.

Good to see the stabilization of the new NPL formation. But I would like to ask more about growth here, Mario, and less about 2026, and I know maybe a little bit too early, but for 2027. I know for this year, you have all the cost efficiency agenda that you have been delivering. So keeping the EPS, I think it's a good thing. But for 2027, how do you see the leverage for you to deliver like EPS expansion? Like do you believe you can have better margins because maybe individual lending will grow less and maybe your margins can expand more? Do you see another year for lower growth? You have higher taxes this year, can taxes help? So just help us to understand, given your end of period loan book should be smaller, how to continue to deliver those double-digit EPS for next year? So that's the first question. And number two, just on dividend payout. I know you just approved the 40%. But any time we see a company growing a little bit less than in your case is more like an asset quality control, we tend to debate payout, right? So if this is -- maybe this takes longer for you to recover the growth outlook, can we start to see debates around higher dividend payout for Gentera?

Thank you very much, Yuri. Yes. Well, as we have always said, the market that we serve and the product that we have, we feel very confident that we can deliver a double-digit growth in our portfolio and in our earnings in the medium term. Having said that, obviously, we will be looking very closely to how we finish the year, and we will give you the specific 2027 guidance as soon as we have all of this evidence. But fixing that objective that we have to deliver double-digit growth in the portfolio and EPS, that is what we remain committed to do. Specifically in the EPS, the first driver will be the growth of the interest income that should come from the growth of the portfolio. Then we will be managing interest expenses to make sure that financial margins grow double digit. We will stabilize provisions in order to also keep at the NIM after provisions a double-digit growth. And then after all the efficiencies and discipline that we have had over several years, keeping positive jaws, we feel comfortable that we will also be able to deliver the EPS growth. Having said that, please just wait until February so we can give you the exact '27 guidance. Based on your question about dividends, again, our medium-term objectives don't change. So when we decided to increase the payout from 40% to 45%, that was accounting for, if you want, a medium-term strategy. And even with that equation, we have always said that the first thing that we need to make sure is that we have sufficient capital for organic growth. The second is that we will be looking how we can bring new products or new services to our clients through organic development or potentially inorganic. And then at the end, if we still have capital -- excess capital, the idea will be to distribute it to our shareholders. But at this point, the objective is that for next year, we will present to our assembly again to our shareholders' meeting, the proposal to increase to 45%, and that is where we stand at this point.

No, super clear, Mario. If I may, just a follow-up on the growth. Last time we discussed this, I think the message was there were specific regions on asset quality, right, like 3, 4 regions, especially around Mexico City, like maybe a little bit of training regarding the loan officers. And it seems like now that the individual new NPL formation is kind of peaking that maybe things are a little bit more under control. The question is, what is the message for investors that this will not repeat? Because I remember in the past, you're saying like, oh, we have a new underwriting model, we have better technology, the loan officers, they have less power to decide, right? And still, we face some problems. So whenever you start accelerating again for 2027, what gives you confidence that growth will not be followed by asset quality issues?

Yes. As Enrique said, we think that even though that the context is more complicated in general and that we need to be looking at the context in much detail, we believe that part of the things that happened were because of some changes that we did in our processes. And as we said since the last conference call, we have been addressing. And I just mentioned some of the things that we have been doing. So we feel very comfortable that the things that are under control will allow us to come back to the levels where we feel comfortable.

Yes, Yuri, and let me give you more detail on this because I'm sure that this will be something that maybe is in the questions of many of you. So let me explain you with a little bit more detail what happened and the current situation in our loan portfolio in general, but specifically also in Credito Individual in Mexico. First of all, we have to say that the reason why we have higher NPLs in the group -- individual lending portfolio in Mexico are basically in two, let's say, perspective. The first one is an internal perspective and the second one is the external perspective. So let me start by the external perspective. This year, we know that we have had and since last year, a deceleration of the economic activity in Mexico. Last year was a very good year for us, and our customers didn't feel that much that deceleration. But this year, they started to feel it a little bit more. We have observed that our customers are renewing their loans more cautiously and requesting smaller loan amounts, recognizing a more challenging economic environment. And we see this as a positive sign since it demonstrates that our customers are managing their indebtedness responsibly. And likewise, we have always been committed to ensuring that our customers do not become overleveraged. But for this reason is that we have revised our loan portfolio in general, and we are guiding 6% to 9%, not only because the individual loan portfolio deceleration, but also because we see this dynamic in the market. So these are the external factors, let's say. Now let me talk -- tell you about the internal factors that will explain why this is happening and why this should not be happening in the future or how could the future look on this. For the individual loan portfolio in our individual products, throughout the history of the individual loan business, we have experienced several periods of rapid expansion of the portfolio. Actually, I can remind that between 2011 and 2012, our portfolio in the credit individual grew like 3x in these 2 years. And between 2014 and 2016, it doubled its size also. And in both cases, NPL levels increased to figures similar to those we are experiencing today. In the first case, it grew to 7.9% and in the second case, it was 5.8%. And in each instance, we deliberately slowed our portfolio growth in order to strengthen the portfolio quality before resuming expansion with this cycle that I explained in which we grow and then we control. Today, after growing this portfolio approximately 5x since 2021, that's the rate of growth that we have had in individual lending now. Since 2021, the portfolio grew 5x. Our ratio now stands at 6.5%. Consequently, we have decided to moderate the growth while implementing the corrective measures. And we have already begun to observe signs of stabilization and expect NPLs levels to improve over the maybe two next quarters. So in summary, following periods of rapid expansion is natural to have -- after we have this rapid expansion, it is natural to have slowdown periods to stabilize the quality of the portfolio. Secondly, we have experienced 4 consecutive years of strong portfolio growth in Credito Individual recently. Then we have successfully managed similar portfolio quality levels in the past and consistently restored the portfolio performance before resuming growth. And the good news is that based on our experience, we are already seeing early signs of stabilization and expect clear evidence of recovery over the next 2 quarters. So that's the general situation, and I hope this will give you a better color of what we are facing now, which is, I believe, or I will define it as a natural cycle of our business and the confidence that we will -- and we are putting our actions in place, and we are looking signs of recovery.

Our next question comes from Tito Labarta of Goldman Sachs.

I guess just following up a little bit on credit quality, but also, I guess, the provisioning from here, right? Because I think in the past, you said cost of risk 13%, 13.5%, right? You provision a lot more given some of the issues that you're seeing. Should we expect this to moderate already beginning next quarter? Or could it take some time just as you sort of get through some of the problem loans? Just to think about the cost of risk evolution and how it should go from here? And then also following up on the loan growth side of things, right? I know you're feeling a little bit more confident here. But given the sort of short-term slowdown that you're doing, how quickly can you return? I mean, given that some of the issues were because you grew too fast the last several years, would you need to sort of slow down sort of for an extended period of time before you're really able to accelerate growth maybe back to the double digits? Or do you think it will be much faster than that in terms of your ability to recover growth?

Thank you. Well, regarding the expectations, let me give you the expectations for year-end. We expect that NPLs should be around 4%, maybe a little higher and cost of risk should start coming back to levels around 13.5%, as I said. So that is for this year. Obviously, and we will be giving updates every year in the future, given the new mix that we will be having and we will be taking a higher share of the mix, we would expect that these levels would be growing in a very controlled way going forward. But for the end of the year, we should expect around 4% NPLs and around 13.5% cost of risk. Now regarding loan growth, we think that we have the tools, as Enrique just mentioned, to speed up growth with the new digitalization tools that we implemented last year, specifically individual lending, we are very, very efficient to be able to answer to the clients very fast, to be able to be more productive. So I think that we have already the capabilities to accelerate. But we obviously -- and it has been proven because we were able to grow a lot in the last years, as Enrique just explained. But we need to be also very, very prudent using also the control tools that we also have deployed. So we're really not worried about accelerating growth. We want to accelerate growth with control. But I think we have the tools to do both.

Okay. Great. That's helpful, Mario. And just to clarify, right, and then I get the 13.5% for the full year. But is it sort of like an immediate improvement, right? It was just you had to book additional provisions this quarter? Or is it more a moderation, right? Because I mean, you had a relatively low level, right, 12.8% in 1Q. So just to think like on how that evolves, sort of you sort of gradually get back to 13.5%? Or is it sort of you had just a bad quarter of provisions this quarter and you can immediately adjust next quarter?

No. I mean it obviously has a lag. And again, as mentioned before, and we expect that in 2 quarters, we're going to be seeing these adjustments where things are normalized.

Our next question comes from Eric Ito of Bradesco.

I have 2 questions as well. The first one is regarding OpEx and efficiency. When we look at your initial remarks, Enrique, you mentioned, I think you updated the guidance for 2026. Maybe we have a slightly higher NIM for this year, running around 41% and then OpEx around 10%, which implies your efficiency ratio for this year is probably better than you had in the beginning of the year as you control operating expenses under this, let's say, more cautious scenario. But then I'd just like to get your thoughts here for 2027, if we can maybe see a continuous improvement in efficiency ratio. I think in the previous call, you mentioned and you announced some rebate programs for the good clients. Maybe these are on hold. So I just want to get and pick your brains on your expectations for this program and efficiency for 2027. And then I guess my second question is regarding Peru. I think Peru is developing a very good performance for now. Just that we are starting to hear some concerns with El Niño potentially impacting Peru. So just want to get your thoughts here on how do you see provisioning for Peru? And if there could be any impact on your loan growth similar to what we have with Mexico because of these concerns with El Niño?

Okay. Regarding efficiency, well, again, I'd like to say that our objective in medium term is to keep improving the efficiency ratio. And our plans are to bring it below 60% in a couple of years, hopefully. So we are absolutely committed to keep doing that. And again, we have drivers on the top line that will allow us to grow, as we just mentioned. And also, we have drivers in the cost side through all of the improvements that we have been doing that should allow us to maintain efficiency. And again, we will maintain this also medium-term permanent rule where our income needs to be growing faster than our expenses, meaning that we will maintain positive jaws. And that are the drivers that will allow us to get efficiency ratios lower.

Yes, Eric. And regarding Peru, I can happily say that our results and operations in Peru are running very, very well. In our individual loan portfolio, we continue to grow at a strong pace, and we are maintaining solid asset quality. Actually, a year-to-year growth in the individual lending in Peru has been 12% with a 3.2% NPLs. And also, our group lending portfolio has experienced a growth of 7% with a 3.3% NPL. So we are doing good there. And yes, El Niño is something that we are very aware of. Actually, it has been in our conversation, not only in the management team, but also in our Boards in Mexico and in Peru regarding El Niño in Peru. And yes, we have provisions considered and maybe Mario can tell you a little bit more about this, but this is in our forecast also.

Okay. So it's already -- so just to be clear here on the provisions for El Niño, you are still -- you're already considering that for the guidance of 13.5%, but we haven't seen anything, let's say, in the first half yet?

No, we believe that the provisions that we have today, we are covered. We will be reviewing as things go through. We have voluntary provisions in Peru above IFRS provisions that we feel comfortable with. But it's something that we will continuously looking at. Important to say that all of the weather impacts -- we need to see them community by community because the impact that you have, it's not generalized. It's always in each community. So we need to be looking very closely all of our offices, both in Mexico and Peru, but we feel comfortable with the provisions that we have today.

And just to clarify, for loan growth, you still maintain your expectations, let's say, to keep this double digit for this year. So for now, no concerns on slowing down?

Yes. In Peru, yes, double digit.

Our next question comes from Ernesto Gabilondo of Bank of America.

We were a little concerned with the monthly data from the regulator, especially in April, but you were able to meet expectations, in the first half, net income is expanding 12%. So the only Mexican financial with that growth and likely for the next year. So congrats on your results. My first question will be a follow-up to Yuri's question on loan growth. As you mentioned, you now expect loan growth between 6% to 9%, recognizing a tough year-over-year comp in the last quarter of the year and that you are prioritizing asset quality over loan growth. Having said that, how should we think about loan growth next year? When are you expecting to reaccelerate and that translating into NII and fee income growth? And for my second question is if you can provide more details on which geographies or micro sectors were the most affected in the asset quality of the individual sector? I believe you were nicely expanding this product with the digitalization process. So I just wanted to see also if there were some adjustments in the digitalization process or how can we be more comfortable that you can return again to grow this portfolio?

Okay. Yes. Well, thank you first. Yes, you're right. We have been delivering a very strong quarter with double-digit growth in earnings. And again, our commitment, as we have said, is to reach the 13% to 16% guide in EPS, and we think that we feel comfortable doing that. As I mentioned in my remarks, even though that we're saying that the loan growth will be 6% to 9%, it's important to note that it's a year-end to year-end number or December to December. And remember that December of '25 was a very high growth quarter. So in order to make the numbers right, it's important to look at the average portfolio for the year. And the average portfolio of the year will be, as I said, around 10% or double digit. Having said that, we expect that the interest income will follow more or less that route. And with improvement in the interest expenses, we should have a double-digit growth in the NIM, as we said. And even after the growth of provisions, we will be able to maintain double-digit growth in the NIM after provisions and through the cost controls that we already said because our objective is to reach the EPS guidance. Having said that, again, our medium-term objective is to maintain double-digit growth in the portfolio and the earnings. We would like to restore that as soon as possible. But now most important is to do with control. So we really need to see how the next 2 quarters develop in order to build the full 2027 year plan and then give you very specific guidance on what we should expect specifically in '27. But our objective is to restore double digit both in portfolio and in earnings. That's our medium-term goal.

Ernesto, regarding the individual lending portfolio, let me speak a little bit more in detail about the main factors behind the deterioration because it doesn't have to do that much with geographies. First of all, I think that we have this economic slowdown that is affecting the consumer activity in Mexico, which is general. So that's one of the reasons I already explained. On the other hand, some of the things that we did and that we are now changing after a long period of growth. So first of all, we have to take in account that we come from 4 or 5 years of very aggressive growth and we hired more loan officers, we trained more loan officers. So that's a challenge itself. And then we also made some product adjustments to -- with the intention of simplifying the process for loan officers and the experience, making a better experience for our clients. And also, we implement changes in the incentive models for the loan officers that were directly putting emphasis on the growth. So all of these factors, some of them gave us very good results, and that's why we grew for so long, having a very good quality of the portfolio. But in some other cases, we made some mistakes. So -- and that's the things that we are changing now. So having said that, and I believe this will give you more color of what is causing this and why this is more like a matter of making adjustments to our processes, methodology, et cetera. But some of these changes proven beneficial, others didn't deliver the expected results. We have learned from that experience, and we have implemented the necessary corrective actions. And it is worth to emphasize that addressing these changes is also contributing to a stronger lending methodology and enabling us to build a more efficient operating process for the future growth.

Our next question comes from Ricardo Buchpiguel of BTG Pactual.

I have a question for growth, but now looking more in the long run. Gentera has been growing at double-digit pace for -- since 2021, and it's way above the Mexican credit industry. And there has been some volatile moments like we are seeing now where you are adjusting a little bit through the cycle. But in your view, how long can you keep sustaining this double-digit loan growth and doing that without moving towards new markets? And just to get a better sense on the size of the opportunity, if you could comment on what is you view for the market share of Compartamos Mexico in your specific segment, which is microfinance? And for my second question, can you provide more color on the drivers for the 41% NIM that you indicated in this call? And now the easing cycle is mostly behind us, I'm not sure if you're embedding some improvement in terms of funding costs or higher spreads because you are being a little bit more restrictive on the second half. So any color on that would be helpful.

Regarding loan growth, as we have said, it's -- the most important thing is the addressable market. And as we have always said, we believe -- well, in the segments of the population in Mexico, there are around 90 million people, out of which around 60 million people are adults. And of the remaining 30 million, many are kids that will join the workforce in the next years. So we serve 6.7 million persons about, and in Mexico, 5.7 million people. So as you can see, the addressable market is very large. With the products that we have in Mexico, we think that those -- the segments that they serve still have chance to keep growing at 10%. But going forward in the long run, we have some strategic initiatives that we need to develop in order to be able to have more services to serve a larger share of this big addressable market. So I think that we have a lot of work in the future. And I think that this double-digit growth is something that is achievable.

And Ricardo, let me remind some of the specific data that we have given around market share and market potential in Mexico as well as in Peru. But here, as Mario was saying, we have a huge market potential. We still have a huge market potential in both countries. In Mexico, if we take the people, the 18 years old and elder from our segment, we are talking about around 50 million people from which 36% have a formal credit, but the rest don't have a formal credit. So we are talking around 30 million people that still we can serve. And in Peru, that number is also big. We have 14 million people, 18 years older in our segment. And we have -- half of that have a formal credit, but the other half doesn't. So that's why we believe looking forward, we can still grow at double digit for the following years. And in terms of our market share in Mexico, yes, we are a leader there. We have 70% of market share in Mexico in the group lending methodology. But we have 40% in the individual lending methodology, so we still can grow also there. And in Peru, those numbers are we have -- in the group lending methodology, we were the only players there. Now they're coming new players in the group lending methodology. But anyway, we have 70% of the market share. And in the individual lending, we have a stronger microfinance industry in Peru, and we are competing there with several players having 6% of the market share.

And regarding the NIMs, given the fact that the average portfolio has been growing this year double digit, as Mario was describing in his remarks, the interest income that we have been generating is growing at double digit. And also, the good reference interest rate environment that we have in both countries, Mexico and Peru has allowed us to have a more convenient interest expense line. And that is the factor that the NIMs that we are expecting in Gentera, as Mario was describing, is -- will be moving around 41% before risk and after risk around 29%, 30%.

Our next question comes from Gustavo Araujo of UBS.

Congratulations on the results. So just to understand on Compartamos Peru, we haven't seen the operation delivering ROE above 25% over the past few quarters. Do you believe this level is sustainable? And what could you consider a level of profitability going forward? And second, also in Compartamos Peru. in this quarter, we saw a deterioration on the NPL ratio. Could you give a little bit more color on that? And do you see concerns for the second half of the year?