Grupo Financiero Banamex SA, Citigroup Inc.'s Mexican unit, is targeting the millions of Mexican households without bank services as it seeks to expand in an underserved market with a young population.
"Banamex is a story of organic growth," said Manuel Medina Mora, Citigroup's chairman and chief executive for Latin America and Mexico.
At a meeting with analysts and investors Thursday, Mr. Medina Mora said there are at least 8 million households in Mexico that have no access to financial services but have strong ties to Mexican workers living in the United States. Those households could be a significant source of expansion in consumer and retail banking, he said.
Banamex, which Citigroup bought for $12.5 billion in 2001, has 8.5 million clients, twice as many as it had seven years ago. Its pension fund manager, Afore Banamex, has another 4.5 million, about 80% of whom use no other Banamex banking service.
For the first quarter Banamex reported $338 million of profits, a 28% increase from the same period last year. It generated 7% of Citi's net income; three years earlier Banamex's profits represented just 4% of Citi's total.
The consumer lending market, which expanded by 42% in Mexico last year, has been one of the pillars of Banamex's profit growth. First-quarter net income from its consumer banking operations jumped 61%, to $190 million. Banamex also has the largest share of Mexico's thriving credit card market (40%).
"We have exceeded all financial expectations and projections from the acquisition," Mr. Medina Mora said. Most of the profits, however, came from operating efficiencies linked to the integration into Citi's global business model.
Contrary to what most foreign banking companies did in Mexico, Citigroup preserved the Banamex brand name, and Banamex took over 220 money-losing branches operated by Citibank Mexico.
The brand is Banamex's "major asset," Mr. Medina Mora said.
Banamex is Citi's largest foreign operation, with 1,400 branches in Mexico and $38.6 billion of assets.
In Mexico, it ranks second in deposit and loan market share, after Grupo Financiero BBVA-Bancomer, a unit of the Spanish giant Banco Bilbao Vizcaya Argentaria SA. However, Banamex generated more profits than its top two rivals combined.
Mexico's third-largest financial group is Santander Serfin, which is owned by Spain's Santander Central Hispano SA and Bank of America Corp.
