Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>We close out our long position on BanBajio as the share price has rallied since July-end and in particular the PE multiple gap has narrowed versus its peers</li>
<li>In terms of PBV ratio, BanBajio’s discount to Banorte has also narrowed and it is now very close to the average discount over the last eighteen months</li>
<li>We expect other fundamental factors to act as a drag on BanBajio’s share price performance versus its peers; its rising cost of risk trends and its eroding net interest margin</li>
</ul>


We close out our long position on BanBajio as the share price has rallied since July-end and in particular the PE multiple gap has narrowed versus its peers
In terms of PBV ratio, BanBajio’s discount to Banorte has also narrowed and it is now very close to the average discount over the last eighteen months
We expect other fundamental factors to act as a drag on BanBajio’s share price performance versus its peers; its rising cost of risk trends and its eroding net interest margin


BanBajio (BBAJIO:MM), Time to Close Out the Long Position

<ul>
<li>Aside from Trump’s tariff policies, Mexican banks are under pressure from government to deliver on more competitive lending rates, with fintech challengers Nubank and MercadoLibre’s MercadoPago gaining traction in Mexico</li>
<li>Despite these challenges, 1Q25 results were sound and the bank sector participated in Mexican bolsa rally in April; yet we believe there is selective attractive value there</li>
<li>We apply our scorecard – which assesses balance sheet strength, returns, credit quality and valuations – that is weighted to arrive at our investment picks; BanBajio and BanRegio stand out</li>
</ul>


Aside from Trump’s tariff policies, Mexican banks are under pressure from government to deliver on more competitive lending rates, with fintech challengers Nubank and MercadoLibre’s MercadoPago gaining traction in Mexico
Despite these challenges, 1Q25 results were sound and the bank sector participated in Mexican bolsa rally in April; yet we believe there is selective attractive value there
We apply our scorecard – which assesses balance sheet strength, returns, credit quality and valuations – that is weighted to arrive at our investment picks; BanBajio and BanRegio stand out


Mexican Banks – Looking Beyond Trump Policies, We See Value in Smaller Caps

<ul>
<li>We stick with our buy on BanBajio but we close out the short on Banorte; the PBV differential between the two narrowed largely due to Banorte’s share price action</li>
<li>BanBajio’s shares reflect that the market was underwhelmed by BanBajio 2Q 2025 results, especially in terms of credit quality, but we believe that this is now largely discounted</li>
<li>BanBajio continues to screen very well against Banorte and the rest of the Mexican bank peer group; in addition, BanBajio ranks top of our scorecard, with Gentera in bottom position</li>
</ul>


We stick with our buy on BanBajio but we close out the short on Banorte; the PBV differential between the two narrowed largely due to Banorte’s share price action
BanBajio’s shares reflect that the market was underwhelmed by BanBajio 2Q 2025 results, especially in terms of credit quality, but we believe that this is now largely discounted
BanBajio continues to screen very well against Banorte and the rest of the Mexican bank peer group; in addition, BanBajio ranks top of our scorecard, with Gentera in bottom position


Mexican Banks – Stick with Buy on BanBajio (BBAJIO:MM), Closing Out the Short on Banorte

<ul>
<li>We stick with our pairs trade long on BanBajio and short on Banorte; we remove BanRegio from buy, as we do not see it to be so compelling on valuations</li>
<li>BanBajio stands out versus both Banorte and Gentera in terms of its PBV ratio discount; in both cases, BanBajio’s PBV discount is c 40%</li>
<li>Based on our updated propietary scorecard, BanBajio remains top with Inbursa bottom of the ranking</li>
</ul>


We stick with our pairs trade long on BanBajio and short on Banorte; we remove BanRegio from buy, as we do not see it to be so compelling on valuations
BanBajio stands out versus both Banorte and Gentera in terms of its PBV ratio discount; in both cases, BanBajio’s PBV discount is c 40%
Based on our updated propietary scorecard, BanBajio remains top with Inbursa bottom of the ranking


Mexican Banks – BanBajio (BBAJIO:MM) Remains the Value Play

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Sinopec Engineering Group H / Index Rebalance

<ul>
<li>The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.</li>
<li>The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.</li>
<li>There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.</li>
</ul>


The WisdomTree Emerging Markets SmallCap Dividend Index is a fundamentally weighted index that measures the performance of small cap stocks within Emerging Markets.
The changes at the October rebalance were announced after market close on 4 October with implementation scheduled at the close on 16 October.
There are 8 trading days to implementation and there are a bunch of stocks with over 2x ADV to trade.


WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade

Mexico

Banco del Bajio S.A. provides a full range of commercial banking services. The Bank offers mortgages loans, saving, investment option, pension advice, and electronic billing services. Banco del Bajio operates in Mexico.

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Banco del Bajio SA (BBAJIOO MM)

BanBajio (BBAJIO:MM), Time to Close Out the Long Position

Closing long position on BanBajio due to share price rally, narrowing PE multiple and PBV ratio gap with peers. Share price outlook impacted by...

Victor Galliano

Mexican Banks – Looking Beyond Trump Policies, We See Value in Smaller Caps

Mexican banks face pressure from government and fintech challengers, but show strong results and selective value; based on our proprietary...

Victor Galliano

Mexican Banks – Stick with Buy on BanBajio (BBAJIO:MM), Closing Out the Short on Banorte

We maintain buy on BanBajio, close short on Banorte with the PBV discount narrowing due to Banorte price action. BanBajio's underwhelming 2Q...

Victor Galliano

Mexican Banks – BanBajio (BBAJIO:MM) Remains the Value Play

We keep our pairs trade long on scorecard top-rated BanBajio and short on Banorte, removing BanRegio from the buy list. BanBajio's PBV ratio...

Victor Galliano

WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade

There are 370 adds/257 deletes for the WisdomTree Emerging Markets SmallCap Dividend Index. Round-trip trade is around US$1bn. There is big impact...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

BanBajio (BBAJIO:MM), Time to Close Out the Long Position

​Closing long position on BanBajio due to share price rally, narrowing PE multiple and PBV ratio gap with peers. Share price outlook impacted by...

Victor Galliano

Mexican Banks – Looking Beyond Trump Policies, We See Value in Smaller Caps

​Mexican banks face pressure from government and fintech challengers, but show strong results and selective value; based on our proprietary...

Victor Galliano

Mexican Banks – Stick with Buy on BanBajio (BBAJIO:MM), Closing Out the Short on Banorte

​We maintain buy on BanBajio, close short on Banorte with the PBV discount narrowing due to Banorte price action. BanBajio's underwhelming 2Q...

Victor Galliano

Mexican Banks – BanBajio (BBAJIO:MM) Remains the Value Play

​We keep our pairs trade long on scorecard top-rated BanBajio and short on Banorte, removing BanRegio from the buy list. BanBajio's PBV ratio...

Victor Galliano

WisdomTree Emerging Markets SmallCap Dividend Index Rebalance: US$1bn to Trade

There are 370 adds/257 deletes for the WisdomTree Emerging Markets SmallCap Dividend Index. Round-trip trade is around US$1bn. There is big impact...

Brian Freitas

Closing long position on BanBajio due to share price rally, narrowing PE multiple and PBV ratio gap with peers. Share price outlook impacted by...

Mexican banks face pressure from government and fintech challengers, but show strong results and selective value; based on our proprietary...

We maintain buy on BanBajio, close short on Banorte with the PBV discount narrowing due to Banorte price action. BanBajio's underwhelming 2Q...

We keep our pairs trade long on scorecard top-rated BanBajio and short on Banorte, removing BanRegio from the buy list. BanBajio's PBV ratio...