Grupo Financiero Banorte Sab De Cv Class O · BMV:GFNORTE/O
Grupo Financiero Banorte Sab De Cv Class O — Q1 2023 Earnings Presentation
105 slides from Grupo Financiero Banorte Sab De Cv Class O's earnings presentation, May 2023
Slide 1: Corporate Presentation 1Q23
Corporate Presentation 1Q23 DB Div BAP Eco 1 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 2: Table of Content
Table of Content About Banorte 3 Markets Awards Results NIM 9 Revenue composition 12 Fees 14 GFNORTEO Cost to Income 15 Net Income 17 EPS 18 Dividend 19 ROE / ROA 20 GBOOY Digital Bank 22 Deposit & Loans 27 Loans / Deposits 28 Deposits growth 29 Loan growth 30 XNOR Government Loan Book 32 Asset Qu
Slide 3: About Banorte
About Banorte DB Div BAP Eco 3 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 4: GFNORTE – A Leading and Profitable Financial Franchise in Mexico
GFNORTE – A Leading and Profitable Financial Franchise in Mexico 2 1 Sound Fundamentals 4 Adequate business mix Solid asset quality, high 3 Strong retail, wholesale and liquidity, and strong Solid corporate governance premium banking platforms, capitalization ratios. Independent Board Members Digi
Slide 5: From Regional Bank to Second Largest National Financial Group
From Regional Bank to Second Largest National Financial Group 15%* 1,2,3 Plan 20|20 Plan Client • Banorte’s Segmentation Digital Business Diversification Transformation * Loan book IT : central DB, Market Share Inorganic Growth multichannel • JV Rappi 2.3% Profitability • bineo – Regional Bank Dig
Slide 6: Strategy – Client centric & Digital Evolution
Strategy – Client centric & Digital Evolution PRODUCTS & DISTRIBUTION SOLUTIONS CHANNELS > 10M New customer Rappi clients behavior Deposits & Loans Mobile Client Segmentation Insurances ▪ 11.5 million ex-Afore clients Web Rappi JV Digital 8.6 million Afore clients Pensions ATM Consumer focus Bank
Slide 7: Diversified Business Mix
Diversified Business Mix In progress… bineo Banco Casa de Operadora Banorte Arrendadora JV with Other Digital Mercantil Bolsa de Fondos Ahorro y y Factor RAPPI Subsidiaries* Bank del Norte Banorte Banorte Previsión Banorte** 50% 100% 98.2618% 99.9999% 99.9987% 99.9999% 99.9009% Looking for fully l
Slide 8: Business Mix - Diversified Net Income and Balance
Business Mix - Diversified Net Income and Balance Net Income Mix Net Income by Subsidiary 1Q23 $13.0 bn Other Finance Companies Afore 1% 2% Holding Million pesos 1Q23 q/q y/y ROE 1Q23 3% Annuities Bank 10,130 19% 35% 5% 27.5% Bank Broker Dealer & Mutual F. 89 (48%) (90%) Insurance 78% 6.1% 11% Ins
Slide 9: Net Interest Margin Moving in the Right Direction
Net Interest Margin Moving in the Right Direction NIM 7.0% 6.6% 6.6% 6.3% 6.5% 6.0% 6.0% 5.6% 5.5% 5.6% 5.4% 5.5% 5.3% 4.9% 5.0% 4.7% 4.4% 4.5% 4.5% 4.1% 4.8% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 Previous criteria IFRS NIM (Post-Provision) 6.5% 5.9%
Slide 10: Bank Net Interest Margin
Bank Net Interest Margin NIM of Bank 6.7% 6.5% 6.3% 6.4% 6.5% 5.8% 5.9% 5.9% 5.9% 6.0% 5.5% 5.2% 5.2% 4.8% 4.9% 4.8% 5.0% 4.7% 4.5% 4.5% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 Previous Criteria IFRS NIM of Bank (Post-Provision) 6.0% 5.7% 5.5% 5.3% 5.5%
Slide 11: Margin Sensitivity Evolution
Margin Sensitivity Evolution ● Dynamic risk management hedges. Focus on stable low-cost liabilities. Active ALCO. Organic growth of floating rate portfolio. NII Sensitivity per 100 bps in rate change Foreign Currency Balance Sheet Local Currency Balance Sheet Million pesos Million pesos 1,205 1,22
Slide 12: Revenue Composition
Revenue Composition Million Pesos 25,033 24,813 100,000 25,000 90,000 90,107 20,751 80,000 20,000 70,000 60,000 15,000 50,000 40,000 10,000 30,000 20,000 4,223 17,043 5,000 3,687 4,208 10,000 11,413 3,794 3,055 2,816 3,660 0 1,373 412 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 3Q22 1
Slide 13: Consistent Growth in Core Fees with clear shift into Electronic Banking
Consistent Growth in Core Fees with clear shift into Electronic Banking CAGR 2014 - LTM 12% 11% 16% 4% 8% 1Q23 vs. 1Q22 14% 25% 12% 0% 16% 1Q23 vs. 4Q22 (5%) 10% (9%) (4%) 5% Million Pesos DB Div BAP Eco 13 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 14: Core Banking Fees keep growing
Core Banking Fees keep growing +14% ▄ Net Fees flat q/q, +10% y/y, driven by: Net Fees y/y ▄ Core banking fees seasonal contraction (8%) q/q, and Million 5,000 Previous criteria IFRS +10% y/y; with electronic banking services +12% y/y. pesos 4,223 4,208 4,000 3,687 ▄ Digital transactions leading a
Slide 15: Efficiency already recovered from the pandemic
Efficiency already recovered from the pandemic Cost to Income 57.0% 54.0% Previous Criteria IFRS 52.0% 52.0% 48.5% 47.9% Recurring 44.9% 40.0% 39.7% 45.4% 47.0% 42.8% 41.4% 40.8% 42.0% 39.0% 39.1% 42.7% 36.2% 37.0% 34.5% 37.4% 32.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22
Slide 16: Tax Rate
Tax Rate 35% 30% 28.5% 28.3% 28.8% 27.4% 27.5% 27.3% 26.4% 26.6% 26.2% 26.1% 25.8% 24.8% 24.1% 25% 21.3% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 DB Div BAP Eco 16 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 17: Net Income growing
Net Income growing Net Income Million Pesos CAGR +30% +15% YoY 2012-2022 45,408 +21% 47,000 YoY 42,000 14,000 13,018 36,528 13,000 37,000 31,958 35,583 12,000 11,524 11,544 11,592 +12% 35,345 35,048 QoQ 32,000 10,748 11,000 30,311 30,508 27,000 10,000 23,908 Recurring 22,000 9,000 19,308 17,108 8,
Slide 18: Earnings per Share record high
Earnings per Share record high EPS Pesos * Recurring 4.75 4.51 4.50 4.25 4.02 4.00 3.73 3.75 3.42 3.50 3.25 3.16 3.03 2.96 2.96 3.00 2.67 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q* 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 DB Div
Slide 19: Continuous Growth in Dividends
Continuous Growth in Dividends Evolution of GFNorte’s Dividends Million pesos Dividend Policy 34,283 35,000 100% Payout 90% 30,000 Dividend To distribute from 80% 16% up to 50% With Extraordinary Div. of Net Income 25,000 70% 60% 20,000 +3,500 15,979 16,759 50% Extraordinary Dividend 15,000 40% 11
Slide 20: Pre-pandemic - Constant Positive Growth in Profitability
Pre-pandemic - Constant Positive Growth in Profitability ROA 2.48% 2.5% 2.30% 2.26% 2.26% 2.18% 2.22% 2.05% 1.94% 2.0% 1.86% 2.07% 2.18% 1.60% 1.46% 1.47% 1.76% 1.85% 1.5% 1.40% 1.30% Previous Criteria Recurring IFRS 1.0% 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021 2022 1Q22 2Q22 3Q22 4Q2
Slide 21: Pre-pandemic - Constant Positive Growth in Profitability (Bank)
➢Pre-pandemic - Constant Positive Growth in Profitability ROA of the Bank 3.0% 2.5% 2.27% 2.36% 2.12% 1.79% 2.62% 2.0% 1.60% 2.40% 2.35% 1.56% 2.02% 2.24% 2.25% 1.40% 1.40% 1.47% 1.5% 1.96% 1.1% 1.61% 1.74% 1.0% Previous Criteria Recurring IFRS 0.5% 0.0% 2011 2012 2013 2014 2015 2016 2017 2018* 2019
Slide 22: Transformation
Transformation 1. Digital Transformation at Core Bank 2. Rappi JV 3. bineo Digital Bank DB Div BAP Eco 22 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 23: Digital Transformation Gaining Share
Digital Transformation Gaining Share Transactions (Tx) Transactions 1Q23 (millions) Branches 800.0 2.2% WEB 700.0 12% 600.0 POS 24% 500.0 400.0 +48% Correspondents 0% 300.0 1Q y/y Call Center 1% 11% 200.0 50% Mobile ATM 100.0 0.0 Digital Deposit Account Customers Using Digital (million) Mobile Cre
Slide 24: Customer’s Voice, Key in Banorte’s Evolution
Customer’s Voice, Key in Banorte’s Evolution ● On the right track to reach a 90-point NPS score, based on improvements from internal customers: Banorte Móvil WEB App o processes / services / systems o products o branch-administration, contingency, others +1.7 pts 79.8 +0.7 pts 84.1 vs 1Q22 vs 1Q22
Slide 25: Leaders in the Business & Infrastructure for the Payments Market
Leaders in the Business & Infrastructure for the Payments Market Rappi JV – Credit Cards and Credits to affiliates POS Transactions +13% Millions 1Q y/y The best DIGITAL PLATFORM for aggregators 400 350 Digital Physical 300 187 176 250 178 200 150 100 177 174 132 CoDi 50 0 1Q21 2Q21 3Q21 4Q21 1Q22
Slide 26: Ongoing RappiCard evolution
Ongoing RappiCard evolution RappiCard: keeps growing in cards and billing 867k 826k 59% Issued Cards with at Of cardholders cards least one with a credit line purchase above Ps 5,000 1,965M1 71% 77% Average Monthly active Of users under monthly billing users 36 years old Source: JV Banorte Rappi,
Slide 27: Loans & Deposits
Loans & Deposits DB Div BAP Eco 27 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 28: Healthy Funding & Loan Portfolio Structure
Healthy Funding & Loan Portfolio Structure Bank Deposits 2018 $759 bn 1Q23 $939 bn US 50.0 bn Senior Unsec. Debt Senior Unsec. Debt Money Market Money Market Demand Time Time Demand Loan Portfolio $777 bn $950 bn US 50.6 bn Consumer Consumer Government Government Mortgage Mortgage Commercial Comme
Slide 29: Loyal Deposits’ Base
Loyal Deposits’ Base Deposits CAGR 2011-2022: Billion Pesos +10% YoY 900 840 834 818 840 833 +5% 796 Time Demand Core Deposits 751 750 800 667 700 637 623 616 623 590 600 614 YoY 551 +11% 584 600 509 533 538 +5% 500 436 438 384 397 414 384 400 336 351 306 300 255 YoY 300 211 223 229 217 211 217 21
Slide 30: Continued Growth in Performing Loan Book, Special Focus on Consumer
Continued Growth in Performing Loan Book, Special Focus on Consumer Loan Portfolio Billion Pesos YoY 920 920 950 1,000 +14% 861 876 900 821 835 777 802 763 800 700 616 567 CAGR: 600 518 +9% 472 500 401 425 400 300 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 1Q22
Slide 31: SME’s Loan Book
SME’s Loan Book SME's Loans Change 1Q22 4Q22 1Q23 (Million Pesos) 4Q22 1Q22 Stage 1 and 2 loans 37,505 40,416 42,690 6% 14% % of Commercial Portfolio, stage 1 and 2 loans 18.5% 17.6% 18.2% 59 bp (31 bp) % of Total Portfolio, stage 1 and 2 loans 4.5% 4.4% 4.5% 10 bp (0 bp) NPL Ratio 1.65% 1.09% 1.0
Slide 32: Government Book Breakdown
Government Book Breakdown Billion Pesos Federal Government Subnational 197.4 174.0 180.4 166.5 171.7 161.6 160.2 163.8 154.5 134.9 139.6 112.3 117.8 107.1 105.5 111.5 114.5 112.4 109.0 94.4 57.8 56.2 59.4 58.3 60.2 68.1 40.5 47.1 42.1 51.2 2017 2018 2019 2020 2021 1Q22 2Q22 3Q22 4Q22 1Q23 70% 71%
Slide 33: Rate comparison
Rate comparison Reference Rate vs Loan Portfolio’s Yield Reference Rate vs Consumer Yield 29.6% 14.0% 13.2% 30.0% 20.0% 26.3% 12.0% 25.0% 28.4% 10.3% 25.0% 26.8% 15.0% 9.2% 11.25% 10.0% 24.6% 11.25% 8.0% 20.0% 9.1% 9.1% 8.9% 10.0% 6.50% 6.0% 6.50% 15.0% 4.00% 5.0% 4.0% 4.25% 13.7% 12.7% 13.2% 2.0%
Slide 34: Sound Asset Quality
Sound Asset Quality NPL Ratio 3.1% 2.9% 3.0% Previous Criteria IFRS 2.5% 2.2% 2.1% 2.0% 2.0% 1.8% 1.7% 1.7% 1.5% 1.1% 1.0% 1.0% 0.9% 1.1% 1.0% 1.0% 1.0% 1.1% 1.0% 0.5% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 Previous Criteria IFRS | 2018 2019 2020 2021 3Q21
Slide 35: Sound Asset Quality
Sound Asset Quality Write-off Rate 1.00% 0.80% 0.60% 0.53% 0.50% 0.40% 0.38% 0.38% 0.38% 0.39% 0.20% 0.00% 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 DB Div BAP Eco 35 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 36: Sound Asset Quality
Sound Asset Quality Coverage Ratio 250% 224% 207% 202% 193% 179% 188% 179% 182% 200% 138% 191% 150% 139% 129% 142% 138% 105% 107% 116% 100% 50% Previous Criteria IFRS 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 Cost of Risk 3.0% 2.8% 2.5% 2.5% 2.0% 2.0% 2.3%
Slide 37: Strong Capital Position
Strong Capital Position Capital Adequacy Ratio Basel III 25.8% 24.7% 22.9% 23.0% 22.8% 22.1% 0.4% 20.2% 0.3% Tier 2 TLAC 18.6% to 2025 17.2% 17.2% 6.3% 17.90% 15.3% 15.3% Total 14.6% Tier 1 21.7% 13.025% +1.625% TLAC 4Q22 11.40% 9.40% 15.3% 16.3% 15.4% 14.7% 15.1% CET1 7.90% 13.9% 13.7% 12.7% 12.4
Slide 38: BAP: Long Term Savings Business
BAP: Long Term Savings Business BAP Net Income Million Pesos 4,500 4,000 3,890 3,899 1,500 3,500 1,366 3,000 2,733 2,500 1,000 2,000 1,604 586 1,500 596 500 1,000 500 0 0 1Q19 1Q20 1Q21 1Q22 1Q23 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Insurance Annuit
Slide 39: Insurance & Annuities Technical Results
➢Insurance & Annuities Technical Results Technical Results from Ins. & Ann. NII + Technical Results from Ins. & Ann. 0 4,000 3,794 -500 3,750 -1,000 3,500 -1,500 3,250 -2,000 3,055 -2,500 3,000 2,816 -3,206 -3,123 -3,000 -3,376 2,750 -3,500 2,500 -4,000 2,250 -4,500 -5,000 2,000 1Q22 2Q22 3Q22 4Q22
Slide 40: BAP: Long Term Savings Business
BAP: Long Term Savings Business Million Pesos 1Q22 1Q23 YoY 1Q22 1Q23 YoY Insurance Considering Banorte Futuro Net Income 1,222 1,366 12% 1,387 1,682 21% Equity 7,051 9,183 29% 23,825 24,950 5% Assets 55,045 56,265 3% 71,447 72,343 1% Premiums 13,532 11,640 (14%) 13,532 11,640 (14%) ROE 75.7% 64.8
Slide 41: Insurance Business Steadily Improving
Insurance ➢Insurance business Business steadily Steadily improving Improving ▄ Operating Income from insurance increased +38% Retained Insurance Technical Reserves sequentially on seasonality and interest income. Premiums 4,522 6,000 Million pesos 12,000 ▄ 3,324 Premiums reducing (10%) y/y but on
Slide 42: Seguros Banorte (Insurance)
Seguros Banorte (Insurance) DB Div BAP Eco 42 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 43: Profitable Mix Portfolio on Insurance
Profitable Mix Portfolio on Insurance Insurance Premiums CAGR Million Pesos 2014 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 1Q23 YoY 14-22 Auto 4,105 4,480 4,991 5,023 5,641 5,601 4,993 4,703 5,100 3% 1,315 1,682 28% Life 4,506 5,357 6,184 9,070 11,565 13,737 14,551 15,171 15,636 17% 9,065 6,687
Slide 44: 2023 Guidance
➢2023 Guidance 2023 Guidance Loan Growth 6% – 8% NIM 6.5% – 6.8% NIM of Bank 6.7% – 7.0% Recurring Expense Growth 7.0% - 8.0% * Includes bineo 2% Total Expense Growth* 11.0% – 13.0% Efficiency 36.0% – 38.0% Cost of Risk 1.6% – 1.8% Tax Rate 24% – 26% Net Income 50.5 – 52.5 bn ROE 2023 19.5% – 21.0%
Slide 45: Market Presence
Market Presence DB Div BAP Eco 45 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 46: Deposit & Loan Market Share
Deposit & Loan Market Share Deposits Loans 2nd 3rd Source: CNBV February 2023 DB Div BAP Eco 46 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 47: Market Share by Segment
Market Share by Segment Auto Payroll C. Card Mortgage Comm + Corp Government Deposits Feb-22 Feb-23 Feb-22 Feb-23 Feb-22 Feb-23 Feb-22 Feb-23 Feb-22 Feb-23 Feb-22 Feb-23 Feb-22 Feb-23 Banorte 19.5% 21.0% 20.1% 20.8% 10.5% 10.0% 18.8% 19.3% 12.1% 11.6% 24.8% 27.6% 12.8% 12.9% BBVA 31.1% 28.8% 37.9%
Slide 48: Market Share by Segment
Market Share by Segment Total Loan Book Commercial & Corporate Mortgage 15.1% 14.9% 14.9% 19.6% 19.5% 14.7% 19.2% 19.3% 12.1% 11.8% 18.8% 11.6% 10.8% +3bp 10.3% (51bp) 14.0% +49bp Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Feb-19 Feb-20 Feb-21 Feb-22 Feb-23 Credit Card A
Slide 49: Afore Market Share (Retirement Savings)
Afore Market Share (Retirement Savings) Assets Under Management AUM Market Share Billion Pesos Mar-22 Mar-23 Mar-22 Mar-23 1° XXI Banorte 1,061 1,107 20.5% 20.3% Profuturo GNP 860 935 16.6% 17.1% CitiBanamex 814 855 15.7% 15.7% SURA 791 846 15.3% 15.5% Coppel 380 405 7.3% 7.4% PensionISSSTE 352 36
Slide 50: Insurance Market Share
Insurance Market Share Premiums Market Share Net Income Market Share Million Pesos Dec-21 Dec-22 Dec-21 Dec-22 Dec-21 Dec-22 Dec-21 Dec-22 G.N.P. 78,894 88,896 13.5% 14.2% 1,618 2,633 5.7% 5.4% Metlife México 62,472 69,710 10.7% 11.1% 2,750 9,840 9.7% 20.2% BBVA 47,875 55,547 8.2% 8.9% 4,141 6,213
Slide 51: Annuities Market Share
Annuities Market Share Resolutions * Market Share Million Pesos Mar-22 Mar-23 Mar-22 Mar-23 Banorte 5,013 4,294 44.6% 43.6% 1° Bancomer 3,936 2,791 35.0% 28.3% Profuturo GNP 2,285 2,775 20.3% 28.1% Total Industry 11,234 9,860 100.0% 100.0% Annuitants Market Share Mar-22 Mar-23 Mar-22 Mar-23 Banort
Slide 52: GFNorte in the World
GFNorte in the World Market Capitalization Million Pesos US 23.3 bn 500,000 4Q22 Total Shares Outstanding: 2,883.5 m 437,997 450,000 431,221 Float: ~ 86% 403,424 (1) Total ADRs Outstanding: 7.63 m 400,000 350,000 Ticket Indexes 300,000 IPC (BMV) Sustainable IPC (BMV) GFNORTE O (BMV) Oil and MSCI M
Slide 53: Analysts’ Opinion & Investment Grade by All Major Rating Agencies
Analysts’ Opinion & Investment Grade by All Major Rating Agencies Analysts’ Estimates Ratings Agencies (as of April 20, 2023) Agency Rating Outlook Date Net Income 2023 $52,053 Target Price $173.3 Standard & Poor’s BBB Stable Jul-22 Maximum $198.0 Number of Analysts 22 Fitch BBB- Stable Dec-22 # B
Slide 54: ESG
ESG DB Div BAP Eco 54 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 55: Sustainability Strategy
Sustainability Strategy MSCI ESG Latest Ratings Action: Three AA consecutive years DB Div BAP Eco 55 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 56: Continuous evolution in ESG on the back of constant feedback from investors
Continuous evolution in ESG on the back of constant feedback from investors ENVIRONMENTAL SOCIAL GOVERNANCE SUSTAINABLE FINANCE SECOND TCFD (Task Force on CEMEFI recognition for 12th For the SECOND consecutive Release of PRB (Principles for Climate-related Financial consecutive year for Banorte ye
Slide 57: Sustainable Finance
Sustainable Finance Loan book evaluation Responsible Investments – Mutual Funds % of wholesale banking loan book % share of total analyzed AUM by instrument Asset Class 15.0 Fund´s Portfolio 12.5 11.896 Equity 69 0… 10.0 Fixed Income 98 7.685 18 7.5 7.0 Money Market 94 0.650 5.… 0.25 5.0 0.001 0.1
Slide 58: Integrated Annual Report 2022
Integrated Annual Report 2022 • Main financial & ESG highlights and addresses valuable feedback from our investors including best practices established by GRI, SASB and CDP questionnaire on climate change aspects. • Environmental: CO2 emissions quantification & decarbonization targets for the most
Slide 59: Appendix
Appendix DB Div BAP Eco 59 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 60: Business Mix - Assets Under Management
➢Business Mix - Assets Under Management Billion Pesos US 179 bn 3,356 3,145 3,209 3,128 3,161 3,214 2,976 2,772 Afore XXI Banorte 2,607 1,107 2,423 1,061 1,017 995 1,056 1,094 1,016 2,185 882 2,039 2,106 747 1,829 733 315 Insurance & Annuities 287 295 300 304 645 232 271 606 626 175 190 227 232 237
Slide 61: Quarterly Summary
Quarterly Summary GFNorte-Consolidated Statement of Change Comprehensive Income Highlights 1Q22 4Q22 1Q23 (Million Pesos) 4Q22 1Q22 Interest Income (1) 55,322 80,773 87,223 8% 58% Interest Expense 28,310 49,548 55,493 12% 96% Net Interest Income 27,012 31,225 31,730 2% 17% Net Service Fees (3) 3,6
Slide 62: Quarterly Summary
Quarterly Summary Financial Ratios GFNorte 1Q22 4Q22 1Q23 NIM (1) 6.0% 6.6% 6.6% ROE (2) 18.1% 19.4% 21.5% ROA (3) 2.2% 2.3% 2.5% Efficiency Ratio (4) 36.2% 40.8% 34.5% Operating Efficiency Ratio (5) 2.0% 2.5% 2.1% CCL Banorte and SOFOM - Basel III (6) 221.9% 154.6% 154.8 Past Due Loan Ratio 1.0%
Slide 63: Quarterly Summary
Quarterly Summary Change Share Data 1Q22 4Q22 1Q23 4Q22 1Q22 Earnings per share (Pesos) 3.728 4.020 4.515 12% 21% Earnings per share Basic (Pesos) 3.756 4.062 4.551 12% 21% Dividend per Share for the period (Pesos) 0.00 5.81 0.00 (100%) N.A. Payout for the period 0.0% 47.8% 0.0% (100%) N.A. Book V
Slide 64: Evolution of Cross-Sell
Evolution of Cross-Sell Cross-Sell Index 2.31 2.25 2.20 2.14 2.09 2.11 2.04 2.04 2.06 2.02 2.01 1.98 1.89 1.83 1.79 2015 2016 2017 2018 2019 2020 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 DB Div BAP Eco 64 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 65: NIM expansion and Portfolio Mix
➢NIM expansión and Portfolio Mix 2016 NIM of the Bank 1T23 11.0% Core Deposits Core Deposits 10.0% 9.0% 8.0% 7.0% Loan Portfolio Loan Portfolio 6.0% Consumer Consumer 5.0% Government Government 4.0% Mortgage Mortgage Commercial 3.0% Commercial 1Q 4Q 3Q 2Q 1Q 2Q 3Q 4Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q
Slide 66: Funding Cost trending in the right direction
Funding Cost trending in the right direction • Cost of funds to 40.4% of CETES. Cost of Funds vs CETES Reference Rate • Demand deposits represent 74% of total core 80% 75% deposits. 75% 70% 65% 60% 58% 54% 55% 56% Banks 4-6 55% 50% 47% 45% 40%38% 40.4% Banorte 35% 37% 34% 32% Bank 2 30% 27% Bank 1
Slide 67: Asset Quality
Asset Quality Credit Losses 3.5% Net Credit Losses Expected Losses 3.0% 2.5% 2.1% 2.1% 2.5% 2.0% 2.0% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 2.0% 1.8% 2.2% 2.2% 1.8% 1.7% 1.8% 2.1% 2.1% 1.9% 1.4% 1.8% 1.8% 1.5% 1.7% 1.5% 1.4% 1.3% 1.3% 1.3% 1.0% 1.2% 1.2% 0.5% 0.5% 0.0% 2012 2013 2014 2015 2016 2017 2018 2
Slide 68: Healthy Liquidity
Healthy Liquidity Loans to Deposits Liquidity Coverage Ratio (%) CCL (%) 110% 230% 222% 108% 208% 210% 106% 104% 190% 104% 103% 170% 102% 155% 100% 100% 150% 98% 130% 96% 110% 94% 90% 92% 90% 70% 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2016 2
Slide 69: Selected industry exposures
Selected industry exposures Vs. Total Loans 1Q23 Oil Industry* 4.4% Electricity Companies* 4.2% Construction & Real Estate Housing 1.3% Commercial 1.4% SMEs Others 1.3% • 70% Nafin / Bancomext guaranteed 4.5% Malls 1.8% loans, 46% of SME book Tourism 4.5% Dollar denominated 12.3% Restaurants 0.2% Ai
Slide 70: Insurance and Annuities P&L 2022
Insurance and Annuities P&L 2022 Insurance P&L + Annuities P&L = Insurance & Annuities P&L Premium Technical Premium Revenue Reserves Revenue ∆ ∆ = Technical Non-Interest = Technical Non-Interest Result Income ∆ Result Income Premium = Technical Result Non-Interest Claims Revenue Technical Income
Slide 71: Healthy Leverage Ratio
Healthy Leverage Ratio GFNorte Billion Pesos Banorte Leverage Ratio Basic Capital / Adjusted Assets 13.4% 13.2% 12.7% 12.7% 12.7% 13.0% 12.1% 11.7% 12.1% 10.8% 11.0% 8.4% 8.4% 9.0% 7.5% 7.8% 7.0% 5.0% 2015 2016 2017 2018 2019 2020 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 DB Div BAP Eco 71 NIM Rev NI ROE
Slide 72: Debt Profile
Debt Profile March 31, 2023 Current Amount Amount RC Effect Issuance Tenor Maturity / Call Coupon (date) Maturity Outstanding Outstanding bps (years) (Million Pesos) (Million Dollars) Basel II and TIER 2 Tier 2 UDIS 2008 20NC15 15-ago-23 0.4 4.95% 2,153 116 - Tier 2 Note USD 2016 NC10 15NC10 04-oc
Slide 73: Afore 2022 reforms
➢Afore 2022 reforms • Increase contributions AUM Estimates 2500 • from 6.5% in 2022 • to gradually reach 15% in 2030. +29.2% 2000 • Due to this effect, AUM would increase approximately 29% above normal growth. • This increase in value more than compensates, by 1500 far, for the fee's reduction, • fr
Slide 74: Corporate Responsibility and Sustainability
Corporate Responsibility and Sustainability Global Initiative Report (GRI Standards) UNEP Finance Initiative International standards on sustainability reporting and disclosure of Initiative that aims to identify, promote and carry out the adoption of best economic, environmental and socialtopics.
Slide 75: Contact Information and Reports
Contact Information and Reports If you have any information request or comments, please contact Banorte's Investor Relations Department at: Tel: (52) 55 1670 2276 E-mail: investor@banorte.com We recently published the 1Q23 report. During 2023 we have released: 1. Annual Report 2022 to the Banking
Slide 76: Economic and Financial Perspectives
Main macro view Resilience in Mexican economic activity in 2023… Economic and …but with lingering risks amid increased global uncertainty Financial Perspectives Nearshoring and long-term opportunities and challenges A solid banking sector DB Div BAP Eco 76 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mk
Slide 77: Forecasts of main economic and financial variables
Forecasts of main economic and financial variables Forecasts of main macroeconomic and financial variables in Mexico End of period 2020 2021 2022 2023F 2024F GDP (% y/y) -8.1 4.8 3.1 2.0 2.3 Inflation (% y/y) 3.2 7.4 7.8 4.8 3.7 Exchange rate USD/MXN 19.91 20.53 19.50 18.70 19.40 Banxico’s referen
Slide 78: We revised our 2023 GDP higher, boosted by several positive domestic factors
We revised our 2023 GDP higher, boosted by several positive domestic factors 2023 GDP: Supply 2023 GDP: Demand % y/y nsa; % q/q sa % y/y nsa; % q/q sa % y/y 1Q23 2Q23 3Q23 4Q23 2023 % y/y 1Q23 2Q23 3Q23 4Q23 2023 GDP 3.9 2.9 1.8 -0.2 2.0 GDP 3.9 2.9 1.8 -0.2 2.0 Private 4.2 3.1 2.5 0.8 2.6 consump
Slide 79: The recovery has been heterogeneous, with room still to be made up
The recovery has been heterogeneous, with room still to be made up in certain states and sectors Economic activity level in 4Q22 vs. the most recent peak State activity level in 3Q22 vs. the most recent peak (1Q19) (1Q19) %, using seasonally adjusted figures %, seasonally adjusted figures Corporat
Slide 80: However, Mexico will continue growing at different speeds
However, Mexico will continue growing at different speeds Economic growth by state % y/y, 2015-2019 average 2015-2019 Average GDP 1.5+ 0 to 1.5 <0| Source: INEGI DB Div BAP Eco 80 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 81: Nowcasting Economic Activity – IGAE (GDP proxy)
Nowcasting Economic Activity – IGAE (GDP proxy) Nowcasting of Monthly Economic Activity - IGAE % y/y; nsa 30 IGAE Nowcast IGAE Nowcast 4.7 4.5 4.4 20 3.9 3.8 10 3.4 3.2 2.8 2.8 2.6 2.8 0 -10 -20 -30 Mar-18 Jan-19 Nov-19 Sep-20 Jul-21 May-22 Mar-23 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Source:
Slide 82: Performance of households’ expenditures
Performance of households’ expenditures Households’ Expenditures – Resilient Sectors Households’ Expenditures – Vulnerable Sectors Debit & Credit Purchases; January 1st, 2020 = 100 Debit & Credit Purchases; January 1st, 2020 = 100 Supermarkets Accommodation and Food Services 250 200 Healthcare Tra
Slide 83: Performance of businesses revenues
Performance of businesses revenues SMEs’ Revenues – Resilient Sectors SMEs’ Revenues – Vulnerable Sectors POS Billing; January 1st, 2020 = 100 Debit & Credit Purchases; January 1st, 2020 = 100 300 Retail Sales 450 Professional Services Healthcare 400 227.4% 250 Manufacturing Recreation, Sports and
Slide 84: Inflation will come down slowly, but not enough for Banxico to start an easing cycle
Inflation will come down slowly, but not enough for Banxico to start an easing cycle late in the year Inflation forecast Reference rate’s trajectory % y/y fortnightly frequency % 14 12 13 11 2022: 2023: 12 10.50 11.25 11 10 2022: 10 7.8% 9 9 8.25 8 8 7 7 6 2023: 6 5 4.8% 5 4 3 Headline 4 2 Core 4.
Slide 85: Market volatility, inflation concerns, and central bank actions have impacted currencies
Market volatility, inflation concerns, and actions from central banks have impacted currencies, albeit with idiosyncratic factors still at play 2023 performance vs. USD USD/MXN forecast %, YTD Pesos per dollar HUF 8.1 MXN 8.1 23.85 Forecast COP 7.3 22.60 CLP 7.2 IDR 4.9 21.35 BRL 4.0 PLN 3.8 20.10
Slide 86: Public finances – Rosy estimates for 2023
Public finances – Rosy estimates for 2023 MoF: Macroeconomic assumptions and fiscal variables* Historical Balance of Public Sector Borrowing Requirements (HBPSBR) 2023 2024 % of GDP 55 Actual GEPC (Sep'22) Pre-GEPC (Apr'23) GDP (% y/y) 3.0 (3.0) 3.0 (2.4) 51.6 50.8 49.5 49.9 49.9 49.9 49.9 49.9 49
Slide 87: Political highlights in 2023
Political highlights in 2023 2023’s relevant dates in the political agenda Composition of the Lower House and Senate Lower House, Seats Absolute Governorship elections in majority: 251 Qualified Coahuila and the State of Deadline for the PVEM majority: 334 Mexico submission of the 2024 PT MC Moren
Slide 88: Trends in 2023
10 global factors to consider in 2023 1 Ukraine war and other geopolitical factors 2 Possible global recession 3 Inflation and monetary policy 4 Supply chain normalization Nearshoring and 5 Pandemic aftermath 6 Commodities performance 7 new trends in international trade 8 Energy transition 9 Digit
Slide 89: Economic activity could be affected by a recession in US
Economic activity could be affected by a recession in US GDP growth in US and Mexico Mexico GDP growth estimates* % y/y, 1990 to 2021 % y/y 8 2023 2024 y = 1.2349x - 0.5801 1996 1997 6 R² = 0.4664 Banorte 2.0 2.3 1990 2010 1994 2021 2006 2000 1998 Consensus 1.6 1.8 4 1991 2011 2012 2015 2004 2022
Slide 90: US Economic Influence – Sectors of Mexico
US Economic Influence – Sectors of Mexico US Economic Influence in the Mexican Economy % of GDP 56% Real estate services 56% of Mexico’s GDP depends on the US economy. US Dependent Non-US Dependent Source: Banorte DB Div BAP Eco 90 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 91: US Economic Influence – GDP by Mexican States
US Economic Influence – GDP by Mexican States US Economic Influence Top 7 States with High US Economic Dependency 1.- Veracruz 2.- Zacatecas 3.- Guerrero 4.- Nuevo Leon 5.- Yucatan 6.- Sonora 7.- Estado de Mexico Top 7 States with None US Economic Dependency 1.- Baja California Sur 2.- Chihuahua 3
Slide 92: Mexico's geographical location, benign demographics and natural resources key drivers
Mexico's geographical location, benign demographics and natural resources (among other factors) remain as key drivers for the economy Real GDP growth FDI Population pyramid in 2020 % y/y US$ billion in nominal terms Million people by age bracket 10 6.8 Utility reinvestment and accounts between 85+
Slide 93: Nearshoring impact in Mexico
Nearshoring impact in Mexico Total impact from nearshoring in the next 5 years: US$168bn • *Using 2022’s total of US$539 billion as a baseline, • Source: Banorte with data from INEGI, Banxico and BEA; Images: freepik.es DB Div BAP Eco 93 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I Ap
Slide 94: Top investments in the auto sector in 2022 and so far in 2023
Top 5 investments in the auto sector in 2022 and so far in 2023 Note: Tesla’s investment is based on different media reports, including Reuters Source: Press releases DB Div BAP Eco 94 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 95: Mexico has benefited previously from similar investments
Mexico has benefited previously from similar investments, driving structural changes across several industries Mexico: Non-oil exports to the world* US: Top five goods imported from US: Vehicle imports by country US$ billion, 2015 constant prices (monthly figures, sa) Mexico % of total vehicle imp
Slide 96: The main destination of Mexican exports is Texas, followed by Michigan and California
The main destination of Mexican exports is Texas, followed by Michigan and California US: Imports from Mexico US$ billion, 2022 99.2 Source: Ministry of Economy DB Div BAP Eco 96 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 97: Export centers are concentrated in the north and center of Mexico
Export centers are concentrated in the north and center of Mexico Mexico: Exports to US US$ billion, 2021 Source: Ministry of Economy DB Div BAP Eco 97 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Slide 98: Banking credit forecast using lagged GDP
Banking credit forecast using lagged GDP Banking credit Backtest and forecast* $ billons % y/y in real terms 4,700 Adjusted model Year Observed Original model (dummy 2020) Forecast 4,200 Fitted 2019 4.6 5.5 Observed 2020 1.1 1.7 3,700 2021 -8.6 -8.8 -8.6 3,200 2022* 2.1 1.4 1.2 2,700 2023* 4.6 4.6
Slide 99: Banking sector KPI’s
Banking sector KPI’s • Capitalization ratio • Non-performing loans ratio • % of net capital / credit risk assets • % of total loan portfolio 40 10 Capitalization ratio 35 Banking sector's average 9 30 Total Consumer 25 8 22.02 Mortgage Firms 20 7 15 19.27 6 10 5 5 0 4 Autofin Credit Suisse Banregi
Slide 100: Financial access in Mexico
Financial access in Mexico Key FAS Indicators • Outstanding deposits with commercial banks • % GDP 30 28.85 2016 2017 2018 2019 2020 Number of ATMs per 100,000 adults 54.59 55.62 58.82 61.54 62.13 25 Number of commercial bank branches per 14.02 14.03 13.86 13.73 12.79 20 100,000 adults 2012 2013 2
Slide 101: State economic activity and Banorte’s regional reach
State economic activity and Banorte’s regional reach • Heat Map: Contribution to Economic Growth • Branch Network per Federal Entity • % GDP, contribution points • # of branches Average Net Income per Federal Entity • Source: Análisis Económico Banorte DB Div BAP Eco 101 NIM Rev NI ROE TI L D Dep
Slide 102: FDI will be key to drive growth, expecting ‘new investments’ to gather pace
FDI will be key to drive growth, expecting ‘new investments’ to gather pace Mexico: Foreign direct investment US$ billion 60 New investments Profit reinvestment Accounts between firms 50 48.4 40 35.9 34.0 34.1 34.6 35.3 30.4 31.2 31.5 6% 30 28.2 21.8 45% 20 31% 10 49% 48% 20% 0 2012 2013 2014 2015
Slide 103: @alexpadillasan
DB Rev Div Dep ESG NIM TI LD Loan BAP Guid Eco 103 Hist C/I NI ROE @alexpadillasan ICAP Mkt App 103 de BANORTE
Slide 104: ROTE of the Group
ROTE of the Group 30% 27.5% 27.4% 27% 25.9% 25.1% 25.6% 26.9% 24% 24.7% 23.4% 20.9% 21% 19.1% 19.3% 17.3% 17.6% 17.3% 18% 16.6% 16.2% *Recurring 18.8% 15% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020* 2021 2022 1Q22 2Q22 3Q22 4Q22 1Q23 DB Div BAP Eco 104 NIM Rev NI ROE TI L D Dep Loan ICAP Gu
Slide 105: Our Annual Report
➢Our Annual Report DB Div BAP Eco 105 NIM Rev NI ROE TI L D Dep Loan ICAP Guid Mkt ESG Hist C/I App
Grupo Financiero Banorte — Q1 2023 Earnings Presentation on 6ix