Unifin Financiera SAB de CV

BMV:UNIFINA

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon, and welcome to UNIFIN's First Quarter 2021 Conference Call. [Operator Instructions] If you have not yet received a copy of the earnings release, you can find it on UNIFIN's website at www.unifin.com.mx. Please feel free to contact the Investor Relations team at [e-mail], and they will provide a copy immediately.

Forward-looking statements may be made during this conference call. These do not necessarily consider changing economic circumstances, industry conditions, the company's performance or financial results. These forward-looking statements are based on several assumptions and factors that could change, causing actual results to differ from current expectations materially. Therefore, UNIFIN asks that you refer to the disclaimer located in the earnings release before making any investment decision.

At this time, I would like to introduce Mr. Sergio Camacho, Chief Executive Officer. He will discuss the first quarter 2021 results. Mr. Camacho, you may begin.

[Sergio Camacho Carmona, executive]

Thank you. Good afternoon, and welcome to UNIFIN's First Quarter 2021 Conference Call. [Operator Instructions] Today with me are Sergio Cancino, our Chief Financial Officer; David Pernas, Head of Corporate Finance and Investor Relations; and Nayeli Robles. Head of Economic Analysis and Strategy. After our first quarter 2021 results discussion, we will open our usual Q&A session.

Last year was an unpredictable and challenging year that led us to be conservative and prudent in managing risk. While accelerating our digitalization process, we prepared for the rapidly emerging digital economy and managed to adapt our business to come out stronger and more efficient. This year, our focus will be on returning to pre-pandemic origination levels, which along with efficiencies we have made in acquisition costs will drive profitability up, while maintaining strict risk controls.

We have also focused on maintaining a high-quality portfolio by basing our origination strategy on key sectors and regions that were not severely impacted by COVID-19. 72% of our originations this quarter came from strategic sectors, such as agriculture, manufacturing, health care and commerce, which are performing well. Originations started at a slow pace at the beginning of the year, but were still better than anticipated forecast for the quarter.

We expect that as the economy begins to recover, originations will recover as well, and we can already see that [indiscernible] with month-over-month origination growth in the quarter. We expect this to continue, and we do believe that at this rate of economic recovery, we will reach pre-pandemic origination levels before the end of the year.

The total portfolio closed at MXN 65.4 billion, the highest level since the beginning of the pandemic. It is not only larger, but it is also higher quality with greater diversification. Despite having lower originations, we increased our client base by 500 clients in the first quarter of this year, reaching more than 8,500 active clients. The average ticket decreased from MXN 8 million to MXN 7.7 million, which is around USD 380,000. A downward trend market by the increasing Uniclick originations, which helped diversify the portfolio providing greater stability. Uniclick continues to deliver excellent results. The customer base has increased almost sixfold, and originations have increased by 74% versus the first quarter of last year.

We reduced acquisition costs by 43% as a result of efficiencies made out to our processes and that new clients were added to the portfolio during the quarter, an increase of 27.7% versus the previous year. The total portfolio increased to MXN 413 million, a 43.5% increase compared to the fourth quarter of last year. The profit conversion rate is high, and we expect to meet our guidance related to this. We are very optimistic about what the future holds for this business line.

As for the COVID-19 support program, the number of clients in the program has dropped by 45% in the start of the program from 1,205 clients in the second quarter of last year to 522 clients in the first quarter of this year. Deferred payments amounted to MXN 1.9 billion during the quarter. The fact that the placement was made in March means that this MXN 1.9 billion did not generate meaningful interest income in the first quarter of this year, while funding costs derived from bond placement rate interest costs. Once payments resume, profitability will start to rise. 92.8% of the clients included in the program are up-to-date with their payments.

Our NPL remained stable at 4.9% in the first quarter of this year compared to 4.8% of the fourth quarter of last year. Our coverage ratio increased from 51.9% in the first quarter to 86.1% in the first quarter of this year because of a significant increase in our provisions. Loan loss reserve provisions increased 74% in accordance with IFRS guidelines, defined by the expected loss analysis to adjust to current economic conditions.

Financial liabilities at the end of the quarter were MXN 69.4 billion, a 12% decrease compared to MXN 77.7 billion in the first quarter of last year. During the quarter, we issued a USD 400 million bond and the subsequent exchange offer of USD 127 million, targeting 2023 and 2025 notes. The company maintains a steady liability maturity profile with a weighted average term of 48 months versus 28 months for the total portfolio.

During the quarter, the weighted average funding cost, excluding the perpetual bond, stood at 10.6% as a result of quantitative easing policies and strategic financing activities. Interest income decreased by 3.6% year-over-year but grew 2.3% when compared to the fourth quarter of 2020. The portfolio yield stood at 17.6%. The yield is offset by various factors that will normalize with our regular basis operating cycle. Such factors are: The delay in interest income recognition as a consequence of originations placed at the end of the quarter, the nonaccrual of interest income related to the deferred payments from our COVID-19 support programs and lower origination volumes in recent quarters, which have impacted revenues as the first installments are mainly composed of interest income rather than capital amortizations.

As a result of a much improved commercial strategy, better economic performance and a change in the mix of originations as our working capital facilities become more relevant, we expect the yields of the portfolio to rally upwards by around 100 basis points towards the end of the year. The financial margin for the first quarter stood at MXN 881 million, a 21.7% decrease versus the first quarter of last year. This was mainly driven by an increase in interest cost as a result of the new debt issuance.

The NIM contracted by 40 basis points to 6% in the first quarter of this year versus the fourth quarter of last year. This was due to 3 factors. First, the impact on portfolio yields from the previously mentioned support program; second, the seasonality effect of our interest income due to the end of the quarter originations; and third, the negative carry from higher interest costs versus yields on cash position as the company proactively tapped the international markets at the start of the year.

Administrative expenses decreased by MXN 1.1 million compared to the first quarter of last year to MXN 369 million. OpEx, as a percentage of revenue, fell by 20 basis points compared to the fourth quarter of last year to 13.1% despite the decrease in interest income year-over-year, which reflects our ongoing cost control practices and the operating efficiency that the company continues to achieve. Net income decreased 25.6% due to negative carry from the increased interest costs and the creation of higher loan loss provisions. Compared to the fourth quarter of last year, net income increased 0.5%.

Moving on to the financial metrics. The return on assets stood at 1.5% at the end of the first quarter. The return on equity was 9.9%. But excluding the perpetual bond, the return on equity closed at 15.5%. Once again, the company decline in profitability can be explained by the effects mentioned before. However, management expects to see higher interest yields, a recovery in nominal originations to similar levels to pre-pandemic years and an improved dynamism in portfolio quality. We are targeting an improvement in return on assets for the year of between 40 to 60 basis points and expect to gradually return to levels reported in previous years.

As we have mentioned before, we continue to exercise financial discipline, improving our capitalization ratio from 19.8% at the end of the first quarter to 21.5% at the end of this quarter, reducing our financial leverage ratio from 5.5x at the end of the first quarter of last year to 4.9x at the end of the first quarter of this year. Excluding mark-to-market, it stood at 4.6% -- 4.6x at the end of the quarter. We maintained a healthy financial gap between assets and liability maturities, prudently managing the company liquidity as part of our risk management approach.

We have a clear road map to continue to improve our sustainability strategy. At the end of last year, we were working on our sustainability diagnosis, identifying trends and risks and opportunities amongst other items. This led us carry out an analysis of our stakeholders at the start of the year and [indiscernible] constraints. We have completed our materiality assessment and are ready to define our sustainability strategy going forward. Through this work, we are addressing 3 main themes: ESG priority issues, strategic guidelines and initiatives and our strategic plan, including objectives, targets and KPIs.

We plan to move into the implementation stage, having set up working groups and committees to implement and monitor our initiatives. Through these actions, we not only aim to improve our ESG commitment, but we also plan to release our first annual financial and nonfinancial report for 2021. We continue to focus on generating long-term value for our shareholders. We are confident that we can emerge from this challenging period as a more resilient and efficient company and remain committed to serving Mexican SMEs.

Thank you for listening. We will now like to begin our Q&A session.

[Operator]

[Operator Instructions] [Operator Instructions] Our first question is from [ Alexis Canton ] of Stifel. Hello, Alexis. Are you there?

[Unknown Analyst]

Yes, I'm here. Sorry. Could you now hear me?

[Operator]

We can hear you now.

[Unknown Analyst]

My first question is on derivatives. Obviously, in light of the recent news on AlphaCredit and I think a little bit increased focus. You had a big gain in your net derivative position approaching, I think, MXN 4 billion quarter-over-quarter.

We only had a sort of 2.5% devaluation of the peso. So obviously, that that's a very positive increase in assets and obviously supports the equity or capitalization of the company. So I'm curious if you could sort of explain exactly why you were able to report such a large gain?

And also, want to talk a little bit about the leap program. I think you state that outside of the 5% approximate NPL that you're reporting, you have another 5% or so of loans that are still under leap program. I mean we are now at the end of the first quarter, I believe the relief program started in the spring of last year. So we're approaching a year.

And certainly -- and one would assume some of these clients [indiscernible] such a long time. So I was wondering at what point do you contemplate charging this off? And obviously, just on the NPL, you're under provision. But if you include the extra 5% potentially from leap program, there's another MXN 4 billion or so gap. So I wondered if you could address a couple of those 2 questions.

[Sergio Manuel Rodriguez, executive]

Sure. Alexis, thank you for connecting to the call and your questions. So let me start first with addressing the variations on hedges. First and most importantly, I think we would like to highlight that all of our derivative positions are for hedging purposes, specifically. And that's basically the main explanation why the hedge accounting reflects and the professions reflect on OCI as well.

I do have to say that the differential between -- or the fluctuations in value from the mark-to-market 4Q vis-à-vis the first Q of this year are related to 3 specific or main considerations. The first being that over the course of the quarter, we had a fluctuation of approximately MXN 0.70 or more or less the 2.3% that you're mentioning in the valuation of the Mexican peso. So that effect aside, of course, with a very large delta in hedges, including principal and interest. We're speaking that the notion of that we are basically hedging is close to -- or a little over $2.5 billion presents a substantial movement in the valuation.

The one other thing -- the two other things are, one, during the quarter also, the company hired a new hedge related to the new bond issuance, the 2029 notes. And that, of course, we hired that derivative at a more efficiency FX level at the beginning of the quarter. And then, of course, had a fluctuation over the last period of it. So there was a mark-to-market gain also on those trades.

And finally, the other reason why there is a fluctuation in the hedges is not only related to FX. As you know, the embedded valuation of the mark to -- of the hedges or the derivatives from swapping to U.S. dollars to Mexican pesos, well, there's implicit valuations on rates too. And then because of that, the Mexican rate and the basis swap also had a substantial change. We're talking about 100 basis point differential over the quarter.

So all those 3 effects make the notion or the vast notion of that we are hedging today, again, upwards of $2.5 billion present these variations on a quarterly basis. I hope that information is sufficient. But if there's any other questions, we're happy to answer.

As to the NPL related to the COVID-19 support program, as you know, we granted -- the first stage of the program was launched at the beginning of the first quarter -- sorry, on second quarter of last year or at the end of the first quarter of last year. It consisted of approximately 1 point -- or top 100 clients, sorry, with an outstanding balance at that moment of approximately MXN 5.8 billion.

Over the course of time, there was a second relief program and then from that point onwards, we saw an improvement in the performance of the portfolio, less and less clients were requesting additional support. There was no additional support granted from the company to additional clients through the fourth quarter. And there hasn't been any additional support in the first quarter of this year either.

The current clients that are subject to the program are approximately 522 clients vis-à-vis the 1 -- the top 100 clients originally in the program. And the outstanding balance is beginning to reduce on a gradual basis as accruals and payments start to become due from this program. And that's why the outstanding balance has also decreased. The fourth quarter outstanding balance represented approximately MXN 3.8 billion, if we're not mistaken, or I'm not mistaken. And the current balance is approximately 3.2%.

So that's basically the explanation. And at the point -- and at this point, or at the end of the quarter, the clients that are scheduled to start paying and so on, out of the clients that are scheduled to start paying, basically, 93% of such are current on the payments as of the end of the first quarter. I'll leave it there, and let us know if you have any other questions.

[Unknown Analyst]

No, I appreciate that. But I think just the final part of that question, I think, was on sort of the difference between the, I guess, the maximum out potential, including NPLs and relief programs and the amount of provisions. Do you contemplate at any point having to take an additional significant amount of provisioning in, I guess, in the next few months?

I mean, you've sort of brought your NPLs about MXN 3.8 billion, if I recall. The relief program, at least at the end of the quarter, was about MXN 3.8 billion. And I believe you're only about 80% provisioned on the NPL. So there's a MXN 4 billion or so differential there. I was wondering how much of that MXN 4 billion you might think is -- will require additional provisions in the upcoming periods?

[Sergio Camacho Carmona, executive]

Alexis, no, we do not -- at this stage, we have a significant increase in our provisions. You need also to consider that as a difference from, let's say, a bank, the number that we are putting there does not include the asset related to that lease. So the risk that we have under those clients who are within the COVID program or so, it's less, less significant than what the number says.

[Sergio Manuel Rodriguez, executive]

And to expand a little on what Sergio was saying, I also think that it's important to consider, and that's the house view, say, that of course, as we start to see a better trend on asset quality going forward, the cost of risk embedded in both the current NPL portfolio and, of course, clients that are subject to the COVID-19 relief program should also adjust favorably to the company. And this will come from 2 specific reasons.

First, one of the main arguments or the main premises within the analysis of expected losses is, of course, the payment behavior of the clients. And considering that we expect payment behavior to improve, this would offset the cost of risk. And secondly, the other factors is basically -- the other factor would be basically related to that of the realization of the potential or estimated recovery value of the asset that Sergio was mentioning before. So all in all, we believe that there should be a normalization or normalization in the in the need for creating additional reserves in the coverage ratio trailing to similar levels on a gradual basis as there's improvement in the portfolio metrics. And then, of course, in the cost of risk of the company.

[Unknown Analyst]

I have one final question. Sorry to take too much time first. your cash went up by about less than MXN 50 million on the quarter despite the MXN 400 million of new bonds. I'm not including the exchange portion of the 2029 issue. You obviously announced that you've signed MXN 8 billion, so roughly MXN 400 million again of credit lines.

You have $900 million, I think, over the next 12 months of refinancing requirements. So of that, let's call it, $8.4 billion of credit lines. How much of that is available for refinancing, general corporate purposes as opposed to specifically earmarked towards lending, securitization, secured receivables, et cetera, et cetera.

[Sergio Manuel Rodriguez, executive]

Yes. So virtually, I would say 85% to 90% of the MXN 8 billion that was disclosed in the press release are basically available at this time. We haven't drawn upon anything. And there was, of course, some liability management carried out over the first quarter of this year because we decided to repay on an anticipated basis a couple of outstanding securitizations that were in the Mexican market, which we're happy, by the way, to announce right now that we have finally closed a new private securitization will be dispersed probably in the next couple of weeks.

But it's finalized -- the transaction is finalized already. So there will be a replacement in the pledge or in the discounting of those receivables. But try to go back to the original point. Most of the financing that was approved to the company within the quarter is now available in existing lines that are not drawn yet.

[Operator]

Our next question is from Nicolas Riva of Bank of America.

[Nicolas Riva, analyst]

Yes. I have 2 questions. The first one somehow related to what Alexis was asking. So the cash position -- your cash position in the quarter increased by MXN 1 billion, which is how much -- the collections on the loan book exceeded originations this quarter, but you also issued $400 million in new money from the '29s. You mentioned in the earnings report that you prepaid some securitizations. What were the other uses of cash in the quarter so that your cash position only increased by MXN 1 billion?

And then the second question, Alexis already asked about the jump in the derivative position. I wanted to ask, given what happened with AlphaCredit this week. And I know that you do not compete with AlphaCredit in the main business in payroll lending, but you are also a nonbank financial. And I wanted to ask you, where are the -- what's the regulation if there's any that you have from the CNBV or from any regulator in Mexico regarding, for example, your accounting for provisions for loan losses, your accounting for your derivatives position or other accounts receivable, if there is any regulation for you at all?

[Sergio Camacho Carmona, executive]

Basically, the whole regulation are IFRS. And submitting your financial statements under IFRS actually is more restrictive than what you see on the banking commission. One say that, we need to submit in terms of the derivatives an annex to the Mexican Stock Exchange every quarter, explaining and showing them what is the status of our derivative position. That will be the answer actually, no? We also, of course, will receive on a stand-alone basis or a regular basis some supervision by the CNBV, although because we have credit products such as factoring or auto loans. So under that, we are also, let's say, supervised, in some extent, by the banking commission.

[Nicolas Riva, analyst]

Sergio -- I'm sorry to interrupt, David. No. And because point is that AlphaCredit also used IFRS. And unfortunately, that didn't prevent them from having these misstatements, but I understand your point about submitting to stock exchange the derivatives position and stuff. And that was my question because they also used IFRS in the same way that I know that you have been using for a few years.

[Sergio Camacho Carmona, executive]

I think there's a couple of differences. And we're not here to discuss Alpha's position. I think that's their responsibility. In our context, I can tell you a couple of things, Nicolas. First and foremost, we decided to change into IFRS because we were basically looking to report on the international standards of accounting.

And the whole process of changing into IFRS and analyzing the changes in RS -- sorry, in IFRS, allowed us to really understand the full accounting and the full implications of IFRS 16, which is, for instance, the one related for leasing, IFRS 9, which is related to assets and financial liabilities among other things. And this is the one, for instance, that evaluates, of course, the reporting of derivatives. So that's one important thing.

Not only did we internally prepare for reporting under IFRS but when we decided to move into IFRS, we actually performed, what I would say, was a beauty contest in terms of proposals with different accounting firms to let them pitch us the implications about moving into IFRS. And this was basically the work of consensus information from a lot of different firms that provided the insights on how we have to book everything, very, very, very important.

Secondly, in case of Alpha, they report their financial statements as a whole on a quarterly basis because of their U.S.-denominated debt. But we are a public entity, and that's why the annex on the derivatives that we post to the Mexican stock and the banking commission to us, which is, again, evaluated on a quarterly basis, thus have to prove that the accounting is done appropriately. And I don't think -- and again, we don't want to compare or to mention what the other company is doing or saying or having to do. But I think this is something that doesn't apply to them.

On the other hand, we continuously evaluate not only with our own accounting firm, but with others whenever we hire a new hedge, the efficiencies, the financial effects and also the accounting effects of all of the derivatives that we hire. So this is very, very, very important to us. It's a priority. We have a significant derivative portfolio, and we all internally every single committee and risk committee of the company and, of course, to investors and so on, that this has to be recorded appropriately.

And then I mean just moving on into other specifics, the valuations that we carry out are done by us with several different valuation agents, such as Bloomberg, such as [ PIP ], such as Balmex here in Mexico, among others. We have a team specialized in the valuation and in the reporting of these derivatives. It's a special team within the company that evaluates the financial risk of the derivatives. And then, of course, additionally to this, evaluates the reporting of these derivatives.

And the valuation consists of being a consensus between the price providers, the banks that provide the monthly statements on mark-to-market with us and our own valuation. And we have to identify that there is no more than a 5% variation between the consensus of these positions. And we even take the lower within the 3 of those valuations, to be conservative. So this is very, very, very important in terms of controlling risk. I mean, I hope this is...

[David Sánchez, executive]

A lot of disclosure.

[Sergio Camacho Carmona, executive]

I can keep on going, by the way.

[Nicolas Riva, analyst]

No. Thanks very much, David and Sergio. And then on the usage of cash, besides the prepayment of securitizations on the origination this quarter?

[Sergio Camacho Carmona, executive]

So as you know, the raising of debt, the $400 million, and it was basically put in the OM as well, already consisted of -- or consider the repayment of a portion of short-term debt, and it was basically reported on the use of proceeds section of the document. Approximately, we were mentioning about $90 million in that use of proceeds, which were basically repaid immediately after the issuance of the transaction.

And then we decided to repay the 2 securitizations. And later, we decided to also do some small liability management the differential on other couple of facilities, which were expensive at the time. Additionally to that, basically, it's originations, operational expenses. And well, fees and other type of disbursements that we pay for external services provided to the company and so on. I would say, that's basically it.

[Operator]

Our next question is from Gilberto Garcia of Barclays.

[Gilberto Garcia, analyst]

A quick question for me. Can you provide some color on the drivers for the other income line in your income statement, please?

[Sergio Manuel Rodriguez, executive]

Sure, Gilberto. Thank you. Well, basically, the analysis here is if you see the cash position of last year of the company, it was approximately MXN 3 billion. And like we were saying before, we had an incremental MXN 1 billion in the cash position, which, of course, is invested.

Last year, we had a gain of MXN 80 million in this because of these investments in the first quarter of the year. And this year, that gain represented approximately 70 -- sorry, MXN 90 million, which is basically the differential between the MXN 73 million and the investment in -- and the cash investments that you see also in the operational gains, other operational gains.

[Gilberto Garcia, analyst]

Okay. So as your originations pick up, I guess it's fair to assume that this other income line will decline?

[Sergio Manuel Rodriguez, executive]

That is exactly correct. This is basically an effect of basically a cash -- a large cash position.

[Operator]

Our final question is from Mark Rieder of GIC.

[Mark Rieder, analyst]

I had a few questions. The first one is that you issued bonds recently on March 11, right? So just in light of the accounting issues fraud, restatements at Alpha, I'm just curious if you could just talk a little bit about what kind of due diligence, the banks Barclays, Citi, Goldman did as part of the underwriting that might give investors some additional comfort? That's the first question.

[Sergio Manuel Rodriguez, executive]

So I mean, we have a limited review and a comfort letter from our auditors. And of course, there's several procedures of diligence through every single stage of the transaction in terms of basically doing a questionnaire that is basically I -- sorry, [indiscernible] standard for every single transaction that we carried out. But it's been carried out through different stages of the process until disbursement. I would say that's part of the -- or sorry, the diligence that the banks do and on the other hand, of course, our auditors with a limited review.

Regardless of that or even considering that, there's plenty of continuous reviews and procedures done by other entities continuously to the company, either because of the securitizations or because we're doing additional onboardings with other counterparties for funding and other type of proceedings, even the joint ventures and other things that we celebrate with commercial entities. So that's pretty much the level of diligence or scrutiny that we're subject to, of course, Bolsa, CNBV, among others.

[Mark Rieder, analyst]

Okay. And so maybe ask it a different way, too, is how do you view yourself different from Alpha and why we might not see any accounting issues at UNIFIN? That's the first question.

And then finally, noise from a competitor can be impactful to space. We saw your bonds moved a little bit downward. So how does that impact your financing going forward? And can you talk a little bit about your upcoming maturities and how you plan to address them?

[Sergio Manuel Rodriguez, executive]

Yes. So I mean, UNIFIN is a company with an extensive and solid track record. We have been basically operational for the past 28 years with 0 implications in the company's reputation or any accounting and other type of potential effects or restatements, never had a restatement. The company has issued over time more than MXN 30 billion in Mexico and shy of MXN 3 billion in international markets from this type of issuances. In addition to going through very, very thorough diligence process from development banks, not only in Mexico but internationally speaking. And out of those, we also have -- out of the amount that we have raised, we have repaid every single thing that has been scheduled to be paid, over MXN 30 billion in total up to date.

We are publicly rated since 2002 by Standard & Poor's, Fitch and eventually we started also working with HR Ratings, local rating agency. We continuously are in discussions with the Mexican Stock Exchange, of course, and Comisión Nacional Bancaria de Valores. They review us on, say, a gradual basis when required. We work with different banks, like I said, with different firms internationally and locally. And I think this is a big factor on the track record of the company.

In addition to this, the company has no problem in opening disclosures as time goes by, and you can see this comparatively over time with our press releases, we always try to provide more and more and more disclosure. We are a completely open company, and I think that, that should account for credibility. Also, our accounting firm, we, of course, do the proper procedures of changing the auditor as expected every 5 years and so on. The auditing partner and so on. So I mean, I think that makes for a good argument of why we are the company that we say we are or claim we are.

[Mark Rieder, analyst]

Okay. And on the financings and how you plan to address that?

[Sergio Manuel Rodriguez, executive]

Sure. So it was, I think, very proactively done and opportunistic the way we approach the markets basically in January. And that allowed the company to basically raise shy of 50%, a little over 50% of the -- sorry, 45% of the total budget that we were looking to raise this year. Of course, that budget of $1 billion, which has been disclosed publicly to the market considers liability management.

So I mean, we're safe and sound at this point. We, like I said, also raised or just closed this week a private securitization to do the refinancing of those that we repaid on the public market. We are working with different counterparties to address several warehousing facilities for our different business lines.

And we have a couple of other financings on the pipeline on a senior unsecured basis with the private and syndicated parties to continue the financing and liability management that we have proposed for this year. So -- but being just a little over the first quarter of this year, we are basically at 50% of the year's budget, and we are just a few weeks over to basically advancing substantially in this budget.

[Sergio Camacho Carmona, executive]

In addition to that, over the last couple of months, we have expanded our portfolio on financial institutions to work with. We have been approach -- proactively approached by those financial institutions to start some talks related to specific kind of funding within our, for example, within our strategic planning for the year, we have agriculture as a business, an opportunity. As a sector, it's going to be growing faster than the rest of the country. And in that regard, for example, we have been approached or we have approached 2 financial institutions that they are basically funding this type of projects.

So on that regard, I think that we are open always to expand the possibilities for funding. And in that sense, we do believe that the results that we provide last year, considering the whole environment under the COVID situation being and showing our resilient model coupled that with the recent additions that we have early this year, somehow positioned the company under a very solid and strength position, financially speaking and markedly speaking, and that's basically the situation that we are seeing right now.

[Mark Rieder, analyst]

So I mean, of course, as a financial company, the most important thing is that you lower your cost of funding because that's how you make the most margin. So how do you see your cost of funding going over time?

[Sergio Manuel Rodriguez, executive]

The -- I'm going to shoot myself in the foot here. But basically, my KPI, the KPI is related specifically to my team. I count for the fact that we have to maintain and reduce the cost of funding. And in this context, well, we fortunately have been looking for other sources that become a cheaper cost, such as the development bank financing locally and internationally, too. So that -- in terms of averaging down the cost of funding will help us, of course, maintain this weighted average cost at the levels that we are hoping we can get.

Secondly, of course, reference rates have decreased for some time, even though we have an expectation that they will eventually pick up a little in pace. But in the meantime, we are working hard on being proactive in closing some of those debts. Additionally, the composition of debt vis-à-vis other years or the composition of, say, the types of debt vis-à-vis other years, I think, will likely change a little because we are targeting more securitizations, and that also would account for cheaper sources of funding. So the mix will probably help us in that context.

And like I said, we did the prefunding early this year. Of course, the yield was much better than the current levels of the market today. And I think that being considered, we are hopefully reaching our targets for cost of funding for the rest of the year.

[Operator]

Our next question is from Natalia Corfield of JPMorgan.

[Natalia De Melo Corfield, analyst]

Thank you very much for the explanations on the derivatives. I think there has been a lot of focus on that because of Alpha. Although I think there's a little bit of confusion in the market because the MXN 4.1 billion restatement of Alpha was not related to derivatives. It's related to other assets and other accounts receivables. But nonetheless, there was a restatement there on the relative as well that we still don't know the impact. And it's an important part of the balance sheet of the NBFIs. So in any case, an important topic to address. So thank you for that.

And -- but looking at UNIFIN results, its fiscal, and I have to say, I kind of like the evolution of asset quality and the maturity profile of your loans and your debt. So I don't have that many questions on that front. But my main question would be related to your origination. Because I'm seeing that has been -- leasing origination is still very weak, and we saw a big increase in structured finance and orders. So I just want to clarify with you that [indiscernible] and orders related to Uniclick? Or if there's anything else there? And what are you seeing in terms of origination of leasings going forward?

[Sergio Manuel Rodriguez, executive]

Thank you so much for your comments. Yes, I mean, let me give you some color on the originations. Out of the MXN 4 billion, well, basically, the part related to Uniclick is -- for the quarter was basically MXN 90 million. So it's still marginal when compared to the total amount of originations for the period but growing rapidly, and the pipeline continues to grow on a day-to-day basis. This is a very interesting business model, and we hope that this will continue expanding exponentially going forward.

The one important thing, and it's actually a very good question, is that structured finance actually aside from the MXN 90 million line also considers working capital facilities that are not necessarily directly related to Uniclick are more on the core business for cross-sell opportunities. But on the other hand, a big chunk of the structured finance numbers are related to bridge facilities that we extend to our clients and customers that will eventually be converted into leasing. They are not considered a lease as of today because in most cases, we cannot formalize a lease transaction when the asset is either nonexistent. And when it's nonexistent, what we mean is that it's in the process of being manufactured or imported into Mexico.

So imagine a product line -- a production line or imagine a very built-to-suit type of asset. In this context, we cannot formalize the operational lease contract. So we have to wait, but we do the disbursement to the supplier directly. There's no sale-and-leaseback on this type of bridge facilities. And we formalize the transactions. They get converted to leasing. So eventually, the composition or the mix of the portfolio should not necessarily differ much from what you have today in terms of the entire mix of assets. I don't know if that is helpful, sorry.

[Natalia De Melo Corfield, analyst]

Yes, yes. This is helpful. Thank you for that. And by the way, thank you for disclosing the collection numbers as well.

[Sergio Camacho Carmona, executive]

No, like...

[David Sánchez, executive]

More than welcome Natalia. And just a little bit comment on that. We are positive on the strategic sectors that we have mentioned in our press release and whenever we have the opportunity to speak with you. So on that regard, and as I said during the presentation, now 72% of our origination goes to those sectors, in which, as I said, we are positive because we see dynamism of some geographies and some industrial sectors are -- that are linked to the U.S. will outperform better than the whole country. So on that we are positive. We believe that we are starting to see a virtuous cycle within the company, and that will be expected to show and present better results.

[Operator]

Our next question comes from Adrian Garcia of Invesco.

[Adrian Garcia, analyst]

I'm sorry. Apologies for that. My question has to do with outsourcing. Right now, we're hearing a lot of talk about the government pushing for companies not to do any outsourcing and to bring everything in-house. I'm curious how would this push affect you guys? How much of your sales force or what other services are being outsourced? And would you have to make any significant changes that will affect your operations and if any, your operational costs?

[David Sánchez, executive]

We are currently running all the different analysis. It's something that is out there but has not been formalized to some extent. So we are working with different law firms, labor-related law firms to see what will be the implications. But certainly, that will not be significant because our current way of working, somehow it already incorporates these workers within our labor force.

[Adrian Garcia, analyst]

So by doing this analysis with legal firms, it means that there could be an impact? You're concerned that there should be something that may be affected.

[David Sánchez, executive]

Yes. And the initial analysis shows us that it will be not material.

[Operator]

We have reached the end of the question-and-answer session. I will now turn the call back to Sergio Camacho for closing remarks.

[Sergio Camacho Carmona, executive]

Well, thank you, all of you for being with us today. As we said, we are positive on the future outcome of the company. Uniclick is performing excellent, and that's part of our strategy on growing this digital platform and incorporate new products to that. So well, we appreciate your interest, and we will be here for any further questions you may ask. Have a nice weekend.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great rest of your day.