Banco del Bajio SA Institucion de Banca Multiple

BMV:BBAJIOO

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, everyone, and welcome to Banco del Bajio's Fourth Quarter 2021 Results Conference Call. My name is Samina, and I will be your coordinator today. [Operator Instructions]

Before we begin the call today, I would like to remind you that forward-looking statements made during today's conference call do not account for future economic circumstances, industry conditions, company performance and/or financial results. These statements are subject to a number of risks and uncertainties.

Joining us today from BanBajio is Mr. Carlos De la Cerda, Executive Vice Chairman of the Board of Directors; Mr. Edgardo del Rincon, Chief Executive Officer; Mr. Joaquin Dominguez, Chief Financial Officer; and Mr. Luis Quiroz, Investor Relations Officer.

As a reminder, this video conference is being recorded. For opening remarks and introductions, I would now like to turn the call over to Mr. Luis Quiroz. Mr. Quiroz, you may begin.

[Luis Quiroz Hernandez, executive]

Good morning to everyone, and welcome to Banco del Bajio conference call for the fourth quarter of 2021. We hope that you and your families are doing well and in good health.

We are proud to announce the fourth quarter and full year results for 2021. As we have disclosed previously, 2021 was a year of transition, where we had more clarity about the asset quality after the first shock of the pandemic, which let us shift the focus back to the profitability and the transformation of the bank towards 2025. We are very pleased with the results that we are about to present as we continue to see encouraging trends for most of the main drivers. Without any further ado, let us start the presentation.

In Slide 3, we compare the 2021 results against the guidance, and we are glad to announce that we have met most of the goals we provided in the guidance earlier last year. In terms of revenues, we saw a stronger performance of the NII and noninterest income, both better than the top end of the guidance with a growth of minus 0.9% and 19.5%, respectively.

In the case of operating expenses, we stood within the guidance with a growth of 7.2%, in line with deflation, which help us maintain the efficiency ratio below 50%. We were able to return cost of risk to a more normalized level of 62 basis points after more than doubling it during the sanitary crisis. As a result, net income for 2021 was MXN 4.8 billion, surpassing the high end of the guidance and growing by almost 40% when compared to 2020.

Regarding the balance sheet, we did not meet our expectation for loan growth given the soft lending dynamics that affected the whole system and an abnormal level of prepayments from financial institutions and large corporates and for deposit growth as we gave priority to the funding mix. However, we managed to grow in our core lending segment and noninterest-bearing deposits, bringing improvements in the mix of assets and funding, which we are going to discuss later on this presentation. And lastly, we maintain our excellent asset quality as demonstrated by our NPL and coverage ratios.

On Slide 4, we would like to briefly comment on some key ratios recorded in the quarter compared to those of the system as of November, which is the most recent publicly available information. On the asset quality side, we posted an NPL ratio of 1.09%, below the 2.15% recorded for the system. Furthermore, our NPL adjusted ratio was 1.73%, also well below the 5.07% recorded for the system.

In terms of growth, we saw a deceleration on the year-over-year basis given the high comparison with the 4Q 2020. However, we continue to gain market share in our core segments, for example company loans, where we grew by 3.54%, while the system decreased. Our capitalization ratio on a preliminary basis as of December was 18.46%, which continues to increase steadily, and it is almost completely comprised of Tier 1 capital. Net income for the quarter stood at MXN 1.54 billion, representing a year-on-year increase of 109.7% as most of our key indicators have been stronger than originally projected, and inflation surprises help us maintain a below normal tax rate. The quarterly ROE stood at 16.6%.

In Slide 5, we would like to emphasize on some key indicators from our digital transformation strategy. This quarter, we increased the monthly active users of our digital platforms by 61.9% year-over-year with individuals growing by almost 124%.

In terms of transactions, our clients increased their money volume by 28.1% and the number of transactions by 32.4%. Being the mobile channel the most active, with individuals growing by more than 100%. As of now, 70% of the money volume and number of transactions at BanBajio are done through self-service channels.

We expect the investments in digital to continue yielding results, attracting new clients to the bank as we ended 2021 with a growth of 12% of new clients maintaining the CAGR of last year's at double digit, increasing the engagement with existing clients and, therefore, increasing revenues and providing the intelligence to accelerate the expansion of loans in individual and parametric SMEs.

As we mentioned in previous calls, we are finishing the migration of businesses to our new digital platform. We are very pleased to see the adoption of our clients with the digital solutions as demonstrated with the KPIs we mentioned before. Our mobile app is within the best 3 ranked banking apps in Mexico in most app stores. Also in 2022, we will expand the offerings of end-to-end digital services and products with an account opening platform that is omnichannel and adding more products along the year.

On Slide 6, our total loan portfolio reached MXN 200 billion, an increase of 0.3% compared to the fourth quarter of 2020. We continue to see soft credit demand in the system, although we saw some improvement in last quarter as we managed to grow 2% sequentially. We continue to see a better performance of our core segments, such as Agro business growing at 12.1% and SMEs growing at 10%. Also, we maintained a sound expansion of consumer loans growing by 15.9%. For this year, we maintain the expectation of continued growing in our core segments, which are lower ticket or higher yielding type of loans, giving priority to profitability and diversification with clients.

Total deposits reached MXN 184.8 billion, an increase of 2.7% compared to the fourth quarter of 2020. We would like to highlight the change in the mix and how we managed to decrease the cost of funding even though the average TIIE rate increased. We are going to provide more information on this topic on Slide 8 as it is one of the main drivers from the expansion in the net interest income for the year.

Moving on to Slide 7. We would like to highlight BanBajio's outstanding asset quality. As you can see on the upper chart, the NPL and the NPL adjusted stood at the end of December at 1.09% and 1.73%, which compared lower to those of the industry at 2.15% and 5.07%, respectively. The chart on the bottom left shows the good evolution of the asset quality as we have managed to return to sound levels of cost of risk of 62 basis points for the whole year while maintaining the elevated level of provisions at more than 2x.

For 2022, we could see some normalization of the coverage ratio using some of our additional reserves for the origination of new loans, and therefore, bringing down the cost of risk for the whole year. However, we will still maintain a strong coverage ratio above 1.5x given that some risks are still part of the outlook going forward.

In Slide 8, you will see the evolution of our funding. As we mentioned in previous calls, we have taken on a strategy to improve the cost of funding, which was fostered by the strong growth of zero-cost demand deposits alongside the ample liquidity profile of the bank. As such, we prepaid the bond issuance we had in the market, let go the most expensive deposits from clients and did not renew some maturing interbank loans.

The results so far are an increase in the share of zero-cost demand deposits from 17% to 21%, time deposits from 40% to 42%, reduced interest-bearing demand deposits from 19% to 17% and the share of interbank loans from 20% to 17%. Our zero-cost DDA account, Cuenta Conecta, has been an important driver of this improvement, which continues to show strong growth with 23.7% at the end of December.

All these changes have yielded a reduction of 15 basis points in the cost of funding, while the average TIIE rate increased by 68 basis points, which translate in the bank paying 61% of the TIIE rate for its resources. For 2022, we still can see some improvement as we are forecasting that deposits will outgrow loans for the whole year. Also, we continue to focus in growing deposits among a large number of clients, improving diversification and sustainability of our funding going forward.

On Slide 9, we can observe the evolution of our margins, which stood at the end of the fourth quarter at 4.68%, representing an increase of 64 basis points year-over-year. The expansion comes from improvement in the mix of assets and liabilities, which accounted for 47 basis points of the improvement as well as the repricing of recent rate hikes that happened during the second part of the quarter that accounted for 17 basis points of the improvement. The full reprice of the 75 basis point hikes of last quarter will be fully appreciated in the first quarter of 2022.

Going forward, we expect an additional 125 basis point increase in the BanBajio rate and in 2022 at 6.75%. Given the changes in the mix of the balance sheet, we estimate that the sensibility to rates now has increased to around 33 basis points of NIM per every 100 basis point change in the benchmark rate, which will represent an increasing inflow of around MXN 860 million of NII and around MXN 560 million of net income for a full year.

On Slide 10, you will see the performance of BanBajio's revenues, which grew 15.9% compared to the fourth quarter of last year. The net interest income expanded by 17.1% and mostly explained by the margin improvement, while noninterest income expanded by 11.4%, as trading income increased by 12.9% mainly from FX trading and net fees growing by 7.3% with strong performance from the acquiring business, transfer fees, trust and insurance. All of them growing by double digit on a year-over-year basis.

Also, we have included a comparison against the last quarter of 2019 before the COVID crisis. We can observe that BanBajio has now almost fully recovered its level of revenue generation. As we stand now, 0.9% below the 4Q '19. Even with average interest rates, there are 250 basis points below them as we have a higher base of noninterest income and better margins as a percentage of TIIE.

Going forward into 2022, we expect revenues to show a sizable expansion with NII growing at 20%, mainly boosted by the increase in the NIM and noninterest income continue growing at double digits based on higher transaction from our digital channels and increasing engagement with clients.

In Slide 11, we can see the performance of our efficiency ratio. It came in at 50.2% in the fourth quarter of 2021, which compares favorably against the system that posted an efficiency of 54.7% for the October-November period.

For 2021, we ended the year with expenses growing at 7.2%, within the guidance and a little below inflation. Since the COVID crisis, we have maintained muted growth in expenses with 2020 and 2021 not growing in real terms. In 2022, we expect some acceleration of the growth of expenses. However, we would like to shed more light on the components of this growth.

For recurring expenses, we expect them to grow around 7.1%, representing around 40% of the incremental OpEx. Expenses related to more revenues, such as variable compensation, credit card operation, cross-sell campaigns, in addition to the digital transformation and new infrastructure, are expected to increase 22.4%, representing 60% of the incremental OpEx.

Included as part of this new infrastructure, there is a plan to open 10 new branches that are necessary in geographies where we already have business yet not physical presence with the expectation of very short breakeven times for each branch. All in all, we expect to see an important improvement in the efficiency of the bank for next year of at least 300 basis points as we are expecting revenues to outgrow expenses by a large margin.

On Slide 12, we can observe the evolution of our net income. This fourth quarter, we managed to deliver a record high quarter in net income, which stands now above pre-COVID levels. As we mentioned in previous slides, we are now seeing similar level of revenues from pre-COVID levels. Yet with average interest rates, they are below those of 2019. This year, we expect to post level of net income above those precrisis aiming to return to record levels of net income for Banco del Bajio in 2022.

On Slide 13, we can see the preliminary capitalization ratio as of December of 2021 of 18.46%, of which almost all is Tier 1 capital. Our current capitalization remains very strong even after the dividend payment we made on May 10 for 25% of the net income of 2019 and 2020, which was the maximum payout allowed by the regulator.

Lastly, in Slide 14, we introduced the guidance for 2022. We are very proud of the track record of BanBajio since the IPO of delivering on most of the guidance it provides to the market, contributing to both the credibility and the transparency of the management team with its current and potential shareholders.

Bearing this in mind, we present the guidance and the assumptions used to compute it. The macroeconomic assumptions used are the following: Average TIIE rate of 6.55% consistent with BanBajio reference rate at the end of 2022 of 6.75%. GDP growth of 2.5% and inflation of 5%. We are forecasting loan growth to be from 6% to 8%, deposits growth from 8% to 10%, net interest margins of 5% with the NII expanding from 24% to 25% and noninterest income growing from 12% to 13%. Expenses growing from 12% to 13% and efficiency ratio below 47%.

Cost of risk from 50 to 70 basis points, while maintaining a coverage ratio above 1.5x and the NPLs below 1.50%. Net income from MXN 5.5 billion to MXN 6.3 billion, an increase of 23.8% to 31% against 2021. ROA from 2% to 2.2% and an ROE from 15% to 16.5%, which includes a dividend distribution that goes from 40% to 50% payoff from the net income of the past 3 years depending on the regulators' approval.

In summary, the fourth quarter and full year results restated the sound fundamentals for the bank and a solid balance sheet. We will continue the strategy of BanBajio towards 2025 with focus on creating value for all stakeholders. Also this year, we will release our sustainability strategy, outplaying targets and relevant KPIs regarding ESG. We are pleased to announce that we have met and even surpassed most of our targets for last year, and we maintained the compromise to deliver on the guidance that we provide for 2022.

With this, I conclude my presentation, and we can open the call to the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from Ernesto Gabilondo.

[Ernesto María Gabilondo Márquez, analyst]

Ernesto Gabilondo from Bank of America. Congratulations on your results. So far, the best net income growth in 2021 and the best guidance among Mexican banks for 2022. So congrats again.

So my first question is on expenses. We have seen that you're expecting OpEx growth of 12%, 13% for this year. So just wondering, what should be behind that growth? How much is related to inflation, digital investments and the ongoing business? And is this pace of growth the one we should expect in the next years? Or do you think it should be moderating? So that's my first question.

My second question is on the new IFRS 9. I just wanted to know if you have already analyzed what could be the potential impact and when do you expect to recognize it. And given there is a change in methodology, I don't know if it will go through equity.

And finally, my last question is on dividends. We saw you're expecting to pay dividends this year, but you are maintaining a common equity Tier 1 ratio above 16%, which I think seems kind of high, especially considering how the loan portfolio is growing. So do you think this will be a first payment and then maybe you can evaluate to do another payment in the second half? And under these assumptions, where do you see the sustainable ROE?

[Edgardo del Rincón Gutiérrez, executive]

Thank you, Ernesto. Many questions, Ernesto. Let me talk in the order that you are proposing.

Expenses. In expenses, the recurring expense in 2022 is growing 7.1%. That includes all the operation of the bank, the salaries, et cetera. So it's a growth that is in line with inflation last year and also the expected, let's say, increase in transactions in 2022.

The other component of the expense line is expenses that are related to incremental revenue into new projects. That piece of expenses is growing between 22% and 24% in the different scenarios we are proposing for the budget this year. From those, about 70% -- actually 71% is related to revenue increase, revenue growth. That means, for example, cross-sell campaigns, valuable compensation, EPA, for example, fees, et cetera.

So 71% is related to incremental revenue, and about 29% is related to the marginal increase in amortization of the infrastructure and technology investment we have been doing in the past few years. So that explains the incremental expense of 12% to 13%. Going forward, in the following years, what we expect is to keep expenses in single digit. So this is going to be, let's say, a special year because of the new amortizations we are having this year.

Also, it's important to say that we are also investing in infrastructure because transactions are growing. Actually, what we saw in 2021 is transactions growing 17%, 8% growth in branches and 32% growth in transactions in all digital channels as we are growing also 12% in customers. So I mean more transactions bring more expense, and that is the reason behind it. Related the...

[Joaquín Domínguez Cuenca, executive]

IFRS.

[Edgardo del Rincón Gutiérrez, executive]

Yes, go ahead.

[Joaquín Domínguez Cuenca, executive]

This is Joaquin Dominguez. In terms of IFRS, the main impact we are seeing is an increase of loan losses provisions, around MXN 270 million, and we will account in the capital of the past years.

[Edgardo del Rincón Gutiérrez, executive]

Let me go then to the -- how we see the return on equity, the sustainable ROE for the bank in the future. What we saw, Ernesto, is a sustainable ROE between 17% to 19%. The criteria for this is to continue growing in loans in these segments with larger margins like SMEs and consumer lending. Continue also with double-digit growth in the Agro business that performs very well in 2021, and we expect to continue with that very good performance.

Also, double-digit growing non-interest income, mainly coming from our cash management strategy that is bringing very good results already. And continue improving our cost of funds bringing more deposits from customers at low cost and keeping the outstanding asset quality. I mean that is a characteristic of BanBajio in the past years. Of course, it's going to be important, the level of capital that we can get. And for this, Carlos will complement this sense.

[Carlos De la Cerda Serrano, executive]

Ernesto, this is Carlos, Carlos De La Cerda. We have been discussing in the Board of Directors what should be the optimal level of capitalization of the bank. And we feel very comfortable in a long-term 14% level of capitalization rate, which is well below the 18% that we already have.

We have talked about paying out a strong dividend for this year if we are allowed by the regulator. But to continue paying out large amounts of dividends for the next 2 or 3 years because we feel that we cannot go down from 18% to 14% in a single shot. We have to do it gradually, and that will have to be through a strong dividend period payout for the next 2 or 3 years. But our long-term goal is to maintain a 14% capitalization rate that we feel is very strong, both in Mexico and internationally speaking.

[Ernesto María Gabilondo Márquez, analyst]

This is super helpful. So just a follow-up on the IFRS 9. So these MXN 760 million, will it be recognized through equity? Or should it go in the P&L?

[Joaquín Domínguez Cuenca, executive]

Excuse me, the amount is MXN 270 million, and we will recognize an equity.

[Ernesto María Gabilondo Márquez, analyst]

Excellent. And that should be first quarter of this year, right?

[Joaquín Domínguez Cuenca, executive]

Yes. Yes, that's right.

[Ernesto María Gabilondo Márquez, analyst]

Perfect. And then on the sustainable ROE, is considering in long-term capital ratio at the minimum level of 14%, a sustainable ROE should be around 17%, 18%?

[Edgardo del Rincón Gutiérrez, executive]

17% to 19%.

[Operator]

Our next question comes from Jorge Henderson.

[Jorge Henderson Cubillas, analyst]

This is Jorge Henderson from Santander. Congratulations for the results. I have a couple of questions. My first question is regarding cost of risk. Are you planning to release your remaining additional provisions this year? And if you do, can you provide us guidance of the timing of these releases? And well, also, I want to ask of the macro assumptions, but you're already shared them. So that will be my sole question.

[Edgardo del Rincón Gutiérrez, executive]

Thank you, Jorge. What we feel is the normalized level of cost of risk for the bank is between 60 to 80 basis points. As you know, our coverage ratio has been very, very strong in the past few quarters. So what we are planning to do is to gradually use those additional reserves depending on loan growth but also in future deterioration of few portfolios that we could see going forward. So just what we're going to see is a use -- a gradual use of those additional reserves that would impact positively the cost of risk this year. But the -- let's say the normalized level that we see for the bank based in the quality -- the asset quality we have is between 60 to 80 basis points.

[Jorge Henderson Cubillas, analyst]

So if you have a natural cost of risk between 60 and 80, you would not use your additional provisions?

[Edgardo del Rincón Gutiérrez, executive]

No. What I mean, I mean even that level of cost of risk is not a level in which we could use some additional reserves. And what we are planning to do is be more closer to the system in coverage ratio at the end of the year, a little bit higher but closer to the level of the system. That is today about 160%.

[Joaquín Domínguez Cuenca, executive]

In terms of macro assumptions, we are estimating GDP growth around 2.5%. And also, we consider an increase of 50 basis points in February in the interest rates and then other highs of 25 basis points in the rest of the year each quarter in the rest of -- in each quarter in the rest of the year.

[Operator]

Our next question comes from Thiago Batista.

[Thiago Bovolenta Batista, analyst]

It's Thiago Batista from UBS, Thanks for the results, very strong results, very good guidance. I have 2 questions. One of them in the guidance. I know that your guidance is really very complete. But can you indicate what is the normalized level of tax that you guys are expecting?

And also about the dividend payment, do you believe regulators will look case by case to allow the banks to play the dividends or no? They should make an announcement allowing all the banks to pay pretty much free how much they want. How do you believe that will be those payments in coming quarters, those dividend distributions in coming quarters?

[Edgardo del Rincón Gutiérrez, executive]

Thank you, Thiago. The level of tax rate that we're included in the budget is 23%. Yes, we have a normal, let's say, tax level in the fourth quarter, and that helps, of course, results together with the other companies that we already discussed during the presentation. But the level for 2022 is 23%.

Regarding dividend and how the regulator is going to react, what we expect is a new recommendation from the regulator. And we know that -- I mean the Bankers Association has been in conversations with the CNBV the last few months regarding this and also as we have been in several conversations with them, and what we are expecting is a new recommendation.

Actually, what should happen in the future is ending these recommendations and letting every bank to decide the level of capitalization raise. Is bank based in the minimum requirements that are already in the regulation? I -- we hope that, that will happen in the near future. But in the short term, talking in the next few weeks, what we expect is a new recommendation from the CNBV.

[Thiago Bovolenta Batista, analyst]

Okay. Very clear. And if you can do another one, I'm sorry for maybe 3 questions. About the loan growth, the current fixed rate, can you give you a little bit more of color on the segments that should be a stronger loan expansion? So if you can comment about the main segments when you look for loan growth for this year.

[Edgardo del Rincón Gutiérrez, executive]

Thank you, Thiago, of course. We saw some recovery in the fourth quarter. We grew 2% Q-over-Q in the fourth quarter. But still, the environment of soft demand for credit, mainly in large corporates, is still there. But with that, we were able to grow 10% in SMEs with good margins. The Agro business is part of this growth in which we grew 12% last year, and we are planning to continue with that growth.

Also, consumer lending is growing 16%. So what we feel is going to happen or our plans for 2022 is to continue growing in SMEs at least 10%, consumer lending in high teens. We don't have risk appetite for government at the margins that we are seeing in the marketplace today. We are planning to keep financial institutions and mortgages flat. And also the commercial portfolio, let's say medium and small companies, to grow between 6% to 7%. With that, we can be in line with the guidance we are providing, and we feel that we can continue improving the margins of all the different portfolios in the bank.

[Thiago Bovolenta Batista, analyst]

Very clear. And again, congratulations for the results.

[Operator]

Our next question comes from [ Luiz Suva. ]

[Unknown Analyst]

[ Luiz Suva ] from BTG Pactual. First of all, congratulations on the results in the quarter. My question is about the asset of Bancomext with [ CD ] living retail operations in Mexico. How do you see this move in terms of opportunities for BanBajio in terms of gaining market share in some segments?

[Edgardo del Rincón Gutiérrez, executive]

Yes, of course, Luiz. What we are seeing is a lot of concerns in -- both in customers but also in employees, and what we could expect is some level of distraction in the market in this player. So of course, we are -- I mean we will try to get that opportunity and bring customers that are today with Bancomext, of course.

But that is -- I mean the competitive environment is always there, and we are trying all ways to bring new customers to the bank from that player and from the market as a whole. So we will continue competing and trying to bring more customers. But yes, the -- what we are seeing is an important concern both in customers and employees, and that could bring an opportunity for us.

[Operator]

Our next question comes from [ Jose Luis Cuenca. ]

[Unknown Analyst]

Congratulations on the results. I just wanted to follow up on 3 items that have been discussed if I may. The first one is related to loan growth. You already mentioned a little bit of the context or the outlook you see for corporate demand being still relatively soft. I was just wondering if you could comment briefly what is your reading with regards to your clients and the market.

Do you see your clients with obviously uncertainty with regards to the environment? But do you see clients still with relatively -- being relatively comfortable with their liquidity, and so perhaps this is hampering loan demand? That would be the first question.

The second, with regard to funding cost and deposits, just wanted to understand where -- or how would you achieve this cost of funds improvement. Wondering if you would still be focusing specifically on the Conecta account, for example. Any comment with regards to that would be helpful.

And lastly, in terms of fees, same thing, if you could just comment a little bit. You mentioned before that you are planning to expand the offerings on the digital channel with new products and so forth. Just wondering if you could comment a little bit on that as well.

[Edgardo del Rincón Gutiérrez, executive]

Thank you, Luis. Regarding loan growth and the environment, when we talk about large corporations, yes, we're seeing soft demand, but our target really is the more the medium- and small-sized companies. So our footprint is mainly concentrated in the central part of Mexico and in the north.

So what we're seeing in the small- and medium-player companies is an increase in demand, mainly in those players that have the possibility to export outside Mexico. So we expect basing our footprint -- the average GDP growth of 2.5% that we are expecting is different state by state. So we feel that our footprint is more concentrated in those states with higher GDP growth.

So -- and also, we believe that based in the performance we saw in 2021, the level of prepayments that we saw are already there. Those happens mainly coming from financial institutions, from the state governments and some large corporations. But it was an important level of prepayments, so we don't expect that performance in this year. So basically that we feel that the loan growth we are forecasting is reasonable and we can do that.

[Carlos De la Cerda Serrano, executive]

I would also -- this is Carlos. I would also like to add that these regions of Mexico that Edgardo just mentioned, are also very rich in the modern agro business sector, which is one of our specialties, and we expect to grow double digit in that sector in the country. And as he said, this year, we had to overcome to compensate for prepayments of close to MXN 10,000 billion -- or MXN 10 billion that we don't expect at least not in that amount in this year, so we are confident that we will achieve the 8 to -- the 6% to 8% loan growth this year.

[Edgardo del Rincón Gutiérrez, executive]

Regarding to your second question, Jose Luis and regarding Cuenta Conecta, the improvement in the funding mix has been very important. In the past few quarters, a few times, I talked about the important engineering that we made in Cuenta Conecta at the beginning of 2020.

We improved the value proposition, the account opening process, reducing the time both for the customer but also for our banker in branches, et cetera. And that has been a huge success. The number of accounts that we opened in 2021 that were about 62,000 new accounts is 3x the number of accounts we opened in 2019. So -- and it's a customer with more quality and with more resources. So that has been growing very well. 24% in 2021.

But when we compare the level of deposits we have in Cuenta Conecta, let's say, with the end of '19, it's almost 80% more. So -- but also, we decided to let go a few customers that has an important cost, and we changed the -- our strategic pricing in general in deposits. And we decided not to grow a lot in deposits in 2021 because loans were not growing.

So our focus was more in profitability other than getting a good performance in the drivers. What we expect is to -- in 2022 is to continue with that mix improvement. So what you should expect in the coming years and not only this year, that the focus in the mix of funding and improvement cost of funds will be there and trying to bring more and more customers.

And going to your last question regarding fees. The digital transformation and the investment we are doing and the new platform in which all the individuals are there since the middle of 2021, and we already migrated to the new platform, 70% of the companies, we expect to finish during this first semester of 2022. What it is bringing is more engagement, more transactions. So for example, fees -- for transfer fees are growing almost 40%.

So we are seeing in several aspects very good performance. Bajio net effects in the digital platform, in the app, that is completely self-service end-to-end. That component represents today close to 50% of the FX fees we are getting without any person from the bank, I mean, being part of that transaction. It's completely done by the customer. So that's why the FX business in the bank is growing close to 40%.

So operations in cards, the dealings that we are seeing both in debit cards and in credit cards, the growth we're seeing is between 40% to 50%. And again, with very good quality in the case of credit cards having an NPL lower than the system.

So in general, with the recovery of grown loans and being a component of the all noninterest income, all those fees related to loans being so important and with the recovery where we expect in 2022, we feel that noninterest income in general, we will continue growing in the next few years, double digits.

[Operator]

Our next question comes from Carlos de Legarreta.

[Carlos de Legarreta Diaz, analyst]

My name is Carlos de Legarreta, I'm from GBM. And I have 2 actually. Just first on the dividend payment, I just want to understand exactly what you are saying with the [indiscernible] that you guided. I understand that you want to pay the remaining percentage of 2019 and 2020 profits, plus something between 40% to 50% of 2021 profits. Is that correct?

[Edgardo del Rincón Gutiérrez, executive]

Not exactly, Carlos, and thank you for your question. In the first scenario, what we are forecasting is, yes, 40%, let's say, the complement of 15% for 2019 and 2020 and an additional 40% for 2021, right? And the second scenario is to complement the 3 years to 50%, let's say, paying 25% for 2019 and 2020 and 50% for 2021. That is the range that is in the presentation within the guidance.

[Carlos de Legarreta Diaz, analyst]

Understood. And secondly, I mean, I know you just addressed this about Cuenta Conecta and everything, but I would like to ask it more on a larger picture. It seems clear that demand deposits, both for you and the system, are increasing. And that seems counterintuitive, at least if we think about the level or the trajectory of the interest rates.

Aside from obviously the improvements that you guys are doing, do you have any sense to what is happening, like what is explaining this growth in the noninterest-bearing demand deposit accounts?

[Edgardo del Rincón Gutiérrez, executive]

For me, Carlos, it is important. I mean, yes, we are seeing growth in demand deposits, but I feel that we should see the quality of that growth. In our case, what you are seeing is we are, let's say, reducing our appetite for interest-bearing demand deposits, and we are trying to focus having the right cost in those accounts that we pay for those deposits.

But also, we are very, very focused in bringing new customers and increasing the -- let's say, the engagement and the relationship with those customers based in the investments we have been doing in digital banking. So we want to be more relevant for our customers and bring in more new customers. So that's why our focus is growing in new customers, but also very focused in the cost of those source of funding.

So what I recommend is to see -- that's why we split in the presentation the demand deposits that we pay for those deposits and those deposits that have 0 costs. So we are very focused in the quality of those demand deposits and really improve our cost of funds.

[Operator]

Our next question comes from Brian Flores.

[Brian Flores, analyst]

This is Brian Flores from ASA Investments. I have 2 questions. One is a follow-up on the digital efforts that my colleague, Jose Luis, did. Do you have any KPIs that you can open regarding, for example, how many accounts or customers you're gaining per day? Or how is the cross-selling ratio doing or what is your goal? That would be the first question.

And then the second question is more of a follow-up on the comments made by Luis on the first part of the presentation regarding how inflation and taxes, the effective tax rates relate. So what is your scenario for inflation? And can you remind us about this dynamic? How does still work? It would be very helpful.

[Edgardo del Rincón Gutiérrez, executive]

Thank you for your question. About digital, what we have seen is an important growth. But let me tell you, this seems -- since the account opening process, we are very focused that 100% of the new accounts, let's say, more being digital. So the customer, when finished the process of the account opening, part of that process already is having all the digital, let's say, user name, password, et cetera. So he can log in and see the new account and the balance, et cetera, and the whole relationship with the bank and start using our digital platforms.

So that is helping, and what we are seeing is an important growth in digital customers. You saw in the presentation more than 60%. And actually individuals, that is the segment that we already migrated to the new platform, is growing more than 120% so that is bringing more and more transactions through digital channels. But what we are seeing is a very good performance, so the customer is using several channels, and that is -- for us means more engagement with the bank.

And regarding your -- part of your question about the cross-sell ratio, it's improving today, for example, in a small and medium company that have a loan with us, the cross-sell ratio is by different products and services, so that is bringing more and more engagement.

So part of the increase in deposits is mainly coming, of course, from those Cuenta Conecta that are new but also from that engagement from customers. The legacy, the existing customers, that is growing deposits importantly at low cost. So that is what we are doing. The second part, Joaquin?

[Joaquín Domínguez Cuenca, executive]

Regarding the taxes, income tax, we have a very deep related -- relation between inflation and effective tax rate. Inflation, we are assuming in 2020 is 5%. It's 200 basis lower than the real data we observed in 2021. So the relation comes because we have an important monetary net position that implies a fiscal cost in our statements. So applying the inflation to that monetary position reflects an impact in fiscal costs that also impacts the tax rate. So the inflation for the 2022 is 5% in our assumptions.

[Brian Flores, analyst]

That is very helpful, and congratulations on the results.

[Operator]

Our last question comes from Gilberto Garcia.

[Gilberto Garcia, analyst]

This is Gilberto Garcia from Barclays. Very thorough guidance. Could you please repeat the NIM sensitivity? I know you mentioned, but I missed it. And what your expectations are in terms of the average rate or the rate of increases for the year?

[Joaquín Domínguez Cuenca, executive]

Yes, of course. The NIM sensitivity is 33 basis points for each 100 basis points of change in TIIE. And for each 100 basis points of change of TIIE, the net income changed around MXN 543 million -- but it's MXN 543 million, MXN 1,712 million.

[Edgardo del Rincón Gutiérrez, executive]

Interest expectation?

[Joaquín Domínguez Cuenca, executive]

And for the expectation, as said before, is an increase of 50 basis points in February and then 50 basis points in each quarter.

[Edgardo del Rincón Gutiérrez, executive]

25, 25.

[Joaquín Domínguez Cuenca, executive]

25 Points in each quarter, and we are expected to end in 6.75 at the end of the year.

[Gilberto Garcia, analyst]

Thank you for repeating those numbers. And a follow-up on the Bancomext expected transaction. Would you have any objections from a competitive point of view, [indiscernible] and so on, if one of the larger G7 banks were to try to acquire these assets?

[Edgardo del Rincón Gutiérrez, executive]

Not really. What I feel is that it's not healthy for the environment and for the system to have more concentration, and that could impact the level of competition. So -- but we are observing that, the whole process I think, personally, that is going to be a long process.

So we are going to be observing and, as I said before, trying to take opportunity of that process because of the level of distraction that, that could bring and also the level of concern we are already seeing in the marketplace. So other than that, that is our reaction.

[Operator]

We have one last question from [ Jitendra Singh ]. Could you please repeat NIM sensitivity on NIM, NII and earnings, please?

[Luis Quiroz Hernandez, executive]

This is Luis. The sensibility from the interest rates is around 33 basis points in the NIM for every 100 basis point change in the interest rates. That translated to net income is around MXN 540 million for the whole year.

[Operator]

Perfect. Thank you. That concludes our question-and-answer session. I would now like to hand the call back over for some closing remarks.

[Luis Quiroz Hernandez, executive]

Thank you very much, everyone, for joining the conference call. We will see you next quarter.

[Operator]

That concludes today's call. You may now disconnect. Have a good day.