Slim's Son Sees Latin American Growth in Small Loans, Big Construction

Marco Antonio Slim, son of billionaire Carlos Slim and chief executive officer of Grupo Financiero Inbursa SAB, said financial stability in Latin America and Mexico makes the region the most attractive investment opportunity as the European crisis roils markets.

“I see much more opportunity in Mexico,” Slim, 42, said yesterday in a telephone interview from Mexico City. “In contrast to the rest of the world, we have conditions that allow us to be optimists.”

Slim’s family, led by the 70-year-old whom Forbes magazine calls the world’s richest person, is investing in infrastructure projects and expanding its banking business to position itself for growth. Inbursa, Mexico’s fifth-largest bank, is tapping into the market for small-business loans by allowing clients to make payments through their phone bills.

Inbursa’s net income more than doubled last year to 8.07 billion pesos ($620 million) as its average loan portfolio shot up 31 percent to 149 billion pesos. The company doubled its branches last year to 198 and is planning to increase that number to 280 this year to reach more customers.

Inbursa gained 3.10 pesos, or 7.5 percent, to 44.69 pesos at 4 p.m. New York time in Mexico City trading, the biggest increase in 10 months. The shares have risen 17 percent this year, compared with a 2.5 percent decline in Mexico’s IPC index.

Slim, whom friends call “Tony,” is the second of six children by Carlos Slim and his wife, Soumaya Domit, who died in 1999. His elder brother, Carlos, is chairman of holding company Grupo Carso SAB and of Telefonos de Mexico SAB, the nation’s largest phone company. Younger brother Patrick is chairman of America Movil SAB, Latin America’s largest wireless carrier.

No Baseball

The entire clan, including spouses and children, attempts to gather once a week to spend time together, Marco Antonio Slim said. He said he doesn’t share his father’s passion for baseball and, when asked what he does for fun, replied, “Inbursa.”

Mexico’s economy isn’t immune to the global market selloff triggered by investors’ concerns that the European debt crisis will spread, Slim said. The MSCI World Index has fallen 16 percent since its April 15 peak after Greece, Spain and Portugal had their credit ratings cut. Mexico’s IPC index has dropped 8.2 percent in the same period.

“Certainly we’re going to have very moderate global growth” in the next few years, Slim said.

What makes Mexico different is its financial stability and need for investment in infrastructure and development, he said. Mexico’s banking system has “very strong solvency, with large levels of capitalization and liquidity,” Slim said.

Infrastructure Projects

The Slim family controls Impulsora del Desarrollo y el Empleo en America Latina SAB, a construction financing firm, and Carso Infraestructura y Construccion SAB, a builder of roads, housing and oil-drilling projects. Latin America has lagged in spending on its own infrastructure, Slim said.

“Now, like never before, we have a very large amount of available resources, long loan terms and low rates, that make much of the required investments viable,” he said.

Mexico’s escalating levels of drug-related violence have been exaggerated and shouldn’t be a damper on investment, Slim said. Mexico’s growth each year would be as much as 1.5 percentage points higher and the country would attract more foreign direct investment if there were less drug-related violence, said Gabriel Casillas, chief economist at JPMorgan Chase & Co., last week in an interview.

More than 20,000 people have been killed in fighting among gangs, the police and the army since President Felipe Calderon took office in 2006. The Slim family hasn’t made any changes to its security precautions since the disappearance this month of former senator and presidential candidate Diego Fernandez de Cevallos, Slim said.

International Growth

While Inbursa still plans to expand outside of Mexico, as it announced it would do in 2008 when it sold a 20 percent stake to Spain’s Criteria CaixaCorp, the company is focusing on growth in Mexico now, he said. He said he could offer no timetable for when international expansion would occur.

Inbursa is trying new tactics to expand its loan portfolio to small businesses in Mexico. The challenge is to extend banking services to cash-based and unregistered businesses, which represented 28 percent of the economy in 2003, according to a 2008 International Monetary Fund study.

To reach that market, Inbursa has begun extending loans for the past year to clients who have regularly paid their bills to Telmex, the phone company under the Slim family’s control. In the program, which offers an average loan of 80,000 pesos, the businesses can make payments through their Telmex bills.

The company is signing up customers for the program at a rate of as many as 1,000 a month, Slim said.

“We can offer loans in a very agile way,” he said.

Slim said Inbursa also plans to start offering a banking service through mobile phones this year after the government established technical rules last month for receiving and making payments on wireless devices. The rules were designed to help more people access banking services, according to the National Banking and Securities Commission.

Inbursa will work on the project with America Movil or any other wireless company it can, Slim said.

To contact the reporters on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

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