2023 in Figures

Highlights



Managed
portfolio		 Authorized
credit lines		 Shareholders
Equity
P$14,328 P$24,417* P$4,025
Interest
income		 ROE Financed
Vehicles
P$1,764 19.54% 2,014
Operating
Income		 ROA Clients
P$1,283 6.51% +1,790

Comparative Highlights

Financial
information		 2023 2022 Change in
pesos		 Change
in (%)
Managed
portfolio		 P$14,328 P$14,921 (P$593) (4%)
Operating
income		 P$1,764 P$1,506 P$258 17%
Interest
income		 P$1,283 P$1,125 P$158 14%
Authorized
credit lines		 P$24,417* P$16,701 P$7,716 46%
Shareholders
Equity*		 P$4,025 P$5,838 (P$1,813) (31%)
ROE 19.54% 16.12% 3.42 21%
ROA 6.51% 6.30% 0.21 (3%)

Income Statement
Summary

Interest income

In 2023, the company recorded interest income totaling P$1,764 million, an increase of 17% compared to the previous year. This rise is mainly attributable to a P$260 million increase in income generated by the loan and lease portfolio, as a result of a higher placement of these products. Despite facing a negative variation of (P$4.6) million, due to an exchange rate fluctuation at the end of 2023, net income amounted to P$7.7 million. Furthermore, there was an increase in income from securities repurchase agreements and investments, reaching P$20.1 million, which represents an increase of P$6.7 million compared to 2022. Additionally, a P$3.8 million reduction in the amortization of credit fees contributed to this result.

Interest income

Var. 17%





Revenues by product

At the end of FY 2023, revenues are composed as follows: P$ 1,764 million related to interest income, P$223 million in commissions and fees collected, P$15 million in brokerage income, P$363 million in net operating lease income, and P$216 million in total other operating income.



Revenues by product

Var. 12%

Var. 6%

Var. 40%

Var. 4%




Interest expenses

During 2023, there was a significant increase in interest expense, which grew 43% over the previous year, rising from P$633 million in 2022 to P$908 million. This increase was primarily due to higher costs associated with bank lending, which increased by P$153.5 million, and additional amortization expense.

In addition, exchange rate fluctuations had a negative impact, resulting in a loss of P$8.4 million and a net negative effect of P$12.1 million at the end of the year. There was also an increase of P$115.5 million in interest expense on debt certificates and the amortization of debt issuance costs.

However, some progress was made, such as a reduction in the amortization of origination costs of P$1.4 million and a decrease in interest on lease liabilities of P$0.6 million, thanks to payments made during the year.

Interest expenses

Var. 43%






Net interest income

The net interest income for 2023 amounted to P$856 million, remaining at comparable levels to the P$874 million recorded in FY2022.









Pretax income

2023 was a milestone year for Navistar Financial Mexico, recording a historic pretax profit, reflecting a continued positive trend and a fast recovery from the operational challenges encountered during the pandemic. In addition, improved management of non-performing accounts contributed to a decrease in the non-performing loan ratio, allowing us to reduce the necessary reserves. This effective management of resources led to double-digit growth in pretax income.

Net interest income

Var. (2%)




Pretax income

Var. 14%




Income taxes

In FY 2023, income taxes amounted to P$385 million, an increase of 63% compared to the previous year.

Income taxes

Var. 36%

Net income

Net income increased from P$889 million in 2022 to P$964 million in 2023, an increase of 8.4%. This increase is due to improvements in several aspects. First, there was a significant increase in the adjusted financial income, which rose to P$69.5 million, driven by an increase in interest income on loan and lease portfolios. In addition, improvements in credit quality and collection management efficiency were observed, resulting in a reduction in loan loss provisions.

Although there was an increase in commercial loan commissions and bank fees, a P$12.8 million gain in net interest income was achieved, thanks to effective strategies in interest rate and foreign exchange risk management. In addition, the P$78.8 million increase in operating lease income reflects improvements in client payment behavior.


Additionally, a benefit of P$53.7 million was recorded, due to the recognition of recoveries of impaired loans and other favorable adjustments. However, operating expenses experienced an increase of P$30.8 million, mainly due to higher labor costs. In addition, there was an increase in current taxes, which increased P$160.5 million due to higher income for the year, accompanied by a positive variation in deferred taxes of P$77.1 million.



Net income

Var. 8%




Balance Sheet
Summary

ASSETS

The composition of Navistar Financials’ assets is based primarily on the value of the portfolio, which is detailed below:

Managed portfolio

The portfolio consists of the company’s three offerings, Wholesale, Retail and Simple Leasing. During 2023, the portfolio under management experienced a 4% decrease, mainly driven by a 21% decrease in the wholesale portfolio.

Portfolio by risk level (IFRS 9)

During 2022, in order to adopt international best practices for the efficient management of the loan portfolio, new accounting criteria were implemented for the Mexican financial system, in accordance with the Financial Reporting Standards and the main indicators, aligned with IFRS9 regulations. These changes included the classification of the loan portfolio into risk stages 1, 2 and 3, as well as the adoption of a new expected loss model for each stage, in order to assess the impairment of financial instruments more accurately.

In 2023, the Stage 3 Portfolio was reduced from 4.4% in 2022 to 2.5%, representing a decrease of 43%. This significant reduction is primarily attributable to improvements in collection strategies, as well as an improvement in the payment behavior of some clients.


Assets

Var. (21%)

Var. 7%

Var. (11%)

Portfolio by risk level

Var. 1%

Var. 36%

Var. (43%)


Portfolio’s geographic distribution

At the end of 2023, our portfolio is spread across the 32 states of the Mexican Republic, with the states of Nuevo León representing 17.9%, Estado de México 13.3%, Coahuila 9.1%, Tamaulipas 6.7% and Jalisco 6.4%, being those with the highest concentration.

Baja California Baja California Sur Coahuila Chihuahua Durango Sinaloa Sonora Zacatecas Nuevo León San Luis Potosí Tamaulipas Aguascalientes Colima Jalisco Michoacán Nayarit Campeche Oaxaca Puebla Tabasco Tlaxcala Ciudad de México Guanajuato Guerrero Hidalgo Estado de México Morelos Querétaro Veracruz Chiapas Quintana Roo Yucatán







LIABILITIES


Funding sources

As with assets, the main component of the company’s liabilities is the debt used to finance the portfolio. The breakdown of debt is presented below:

Debt

Var. (0.4%)

Var. (4.6%)

Var. 19.7%

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Credit Ratings

Below are the credit ratings assigned to Navistar Financial Mexico, which allow it to access rates and lines of credit with highly competitive conditions.

S&P Global
Rating		 Flitch
Ratings		 HR
Ratings		 VERUM
Long-term mxAA+ mxAAA HR AAA AAA/M
Short-term mxA-1+ mxF1+ HR + 1 1+M

Shareholders’ Equity

Navistar Financials’ Shareholders’ Equity experienced a 32% reduction from P$5,838 in 2022 to P$3,961 in 2023, due to the dividend payment made during the year.

Shareholders’ Equity

Var. (31%)