Grupo Financiero Banorte Sab De Cv Class O · BMV:GFNORTE/O
Grupo Financiero Banorte Sab De Cv Class O — Q1 2020 Earnings Presentation
49 slides from Grupo Financiero Banorte Sab De Cv Class O's earnings presentation, April 2020
Slide 1: GFNORTE 1Q20
XNOR GFNORTE GBOOY Best Bank 2019 México Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App 1 1Q20
Slide 2: Duration of the quarantine and GDP forecasts
Duration of the quarantine and GDP forecasts Impact of COVID-19 on GDP and the unemployment rate % y/y, % Final date of the Days under Current government support Base case Extraordinary support ‘pandemic’ quarantine GDP Unemployment GDP Unemployment GDP Unemployment Apr-30 38 -4.8 5.9 -3.5 5.2 May-3
Slide 3: We are experiencing the worst recession in the last 40 years
We are experiencing the worst recession in the last 40 years GDP in Mexico during GDP in 1983 GDP in 1995 economic contractions % y/y % y/y % y/y 1Q83 2Q83 3Q83 4Q83 1Q95 2Q95 3Q95 4Q95 0 0 -4.4 1983 -5 -1.8 -5 -1.5 -4.6 -5.7 -5.3 -10 -10 -7.5 -6.9 -3.7 1986 -9.1 -15 -15 -6.3 1995 -20 -20 GDP in 200
Slide 4: However, the great difference to those are inflation levels
However, the great difference to those are inflation levels Nominal governmental interest rate, inflation and annual exchange rate depreciation % 300 Interest rate Inflation Annual exchange rate depreciation 250 200 150 100 50 0 -50 Source: Banorte with data from INEGI and Banxico *Interest rate(198
Slide 5: Recovery plan to return back to normal from COVID-19
‘Recovery plan’ to return back to ‘normal’ from COVID-19 ▪ Four-month advance to the senior citizen pension Programs from Development Banks ▪ Support for: MX$ billion, US$ million, % of GDP ⎯ Fishermen Institution Measure MXN USD* % of GDP** ⎯ Children with disabilities Total 61.1 2,535 0.25 ⎯ Benit
Slide 6: Policy response from Banxico and financial authorities to provide liquidity
Policy response from Banxico and financial authorities to provide liquidity… Reference rate Measures announced by Measures from the Banking % Banxico and the MoF to Commission and Banxico for 9 improve liquidity financial institutions 8 ▪ Reduction of the Monetary Regulation ▪ Adjustments to the acc
Slide 7: …and strengthen credit channels
…and strengthen credit channels Additional measures announced by Banxico to promote liquidity and strengthen credit channels MX$ billion, US$billion, % of GDP # Measure MXN USD % of GDP Total 750 30.7 3.1 Increasing liquidity during trading hours to facilitate the optimal functioning of financial ma
Slide 8: USD/MXN, inflation, and reference rate forecasts
USD/MXN, inflation, and reference rate forecasts MXN forecasts Inflation forecasts Reference rate forecasts USD/MXN % yoy, bi-weekly frequency % 27.5 9 9 Headline 26.5 8 Core 8 7 2019: 25.5 25.01 Non-core 7.25 6 7 24.5 23.47 5 23.5 4 6 22.85 2018: 2020: 22.5 3 4.8 5 22.63 2019: 3.2 2 2020: 21.5 21.0
Slide 9: Preliminary Fiscal Policy Criteria: Macroeconomic and fiscal variables
Preliminary Fiscal Policy Criteria: Macroeconomic and fiscal variables in a very challenging backdrop Macroeconomic framework and fiscal variables1 Public debt** Selection % of GDP Public Primary 60 52.1 52.1 51.8 51.5 51.2 GDP USD/MXN: Crude oil Public Historical Histórico Actual 46.5 48.7 45.8 44.
Slide 10: 2020 – Strong decline, driven by the COVID-19 outbreak
2020 – Strong decline, driven by the COVID-19 outbreak 2020 GDP forecasts Impact to MSMEs: Percentage of vulnerable % yoy businesses under the marginal support scenario 1Q20 2Q20 3Q20 4Q20 2020 % 80 GDP (aggregate supply) -2.9 -16.2 -9.7 -2.6 -7.8 60 Primary sector -0.5 -2.5 -2.4 -0.6 -1.4 40 Second
Slide 11: About Banorte
About Banorte 11 Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App
Slide 12: GFNORTE – a Leading and Profitable Financial Franchise in Mexico
GFNORTE – a Leading and Profitable Financial Franchise in Mexico 1 2 3 Adequate business mix Sound Fundamentals Solid corporate governance Strong retail, wholesale and premium banking Independent Board Members represent platforms, as well as leading insurance and Increasing profitability, solid asse
Slide 13: From Regional Bank to National Financial Group
From Regional Bank to National Financial Group 20 | 20 Client Segmentation Business Diversification IT : central DB, multichannel Inorganic Growth Profitability Regional Bank 1899 … 1982-1992 1995 2000 2005 2010 2015 2020 Banorte INB IXE Nationalization Privatization Establishment Generali
Slide 14: Strategy | Perfect Vision
Strategy 20 | 20 Perfect Vision PRODUCTS & DISTRIBUTION SOLUTIONS CHANNELS Deposits & Loans Mobile Revenues Insurances Client Segmentation Internet Pension ▪ 12 million ex-Afore clients ATM 9 million Afore clients Digital Bank Annuities ▪ Structured Info & Learning Contact Center (Central DB & Watso
Slide 15: Diversified Business Mix
Diversified Business Mix Banco Operadora Banorte Arrendadora Casa de Bolsa Other Mercantil de Fondos Ahorro y y Factoraje Sólida Banorte Subsidiaries* del Norte Banorte Previsión Banorte 98.2619% 99.9999% 99.9999% 99.9999% 99.9999% 99.7167% 2.33% Banorte Financial (Fondos de Seguros Pensiones Servic
Slide 16: Business Mix - Diversified Net Income and Balance in Profitability
Business Mix - Diversified Net Income and Balance in Profitability Net Income Mix 1Q20 $35.3 b Net Income ROE Company 1Q20 1Q20 Bank 6,072 21.7% Broker Dealer 313 26.0% Long Term Savings 2,327 1) Retirement Savings (Afore) 325 10.9% Insurance 1,703 90.0% Annuities 284 22.7% Other Finance Companies L
Slide 17: Net Interest Margin Moving in the Right Direction
Net Interest Margin Moving in the Right Direction NIM 6.0% 5.9% 5.9% 5.6% 5.6% 5.7% 5.5% 5.5% 5.7% 5.6% 4.9% 5.0% 4.7% 4.4% 4.5% 4.5% 4.1% 4.1% 4.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 NIM NIM ex Insurance & Annuities NIM (Post-Provision) 5.0% 4.8% 4.5% 4.7% 4.6% 4.
Slide 18: Improving Efficiency
Improving Efficiency Cost to Income 56.0% 54.0% 55% 52.0% 48.5% 47.9% Reported Reported 50% 39.0% 39.1% 37.0% 44.9% 45% 42.8% 40.0% 39.7% 40.2% 40.6% 39.4% 38.5% 38.9% 40% *Recurring 35% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 1Q19* 2Q19 3Q19 4Q19 1Q20 +9%* +19%* +13% +10% +13% +5% +11% +8% +
Slide 19: Strong Net Income
Strong Net Income Net Income Million Pesos +17% CAGR +20% * Recurring YoY 2011-2019 Reported +14% YoY +4% 10,500 YoY* 37,500 36,528 35,000 35,345 31,958 Reported 32,500 10,000 30,000 30,311 9,932 27,500 9,500 1.2% 25,000 23,908 9,118 22,500 9,010 20,000 17,108 9,000 8,858 19,308 8,748 8,728 17,500 1
Slide 20: Constant Positive Growth in Profitability
Constant Positive Growth in Profitability ROA Reported: 2.47% 2.5% 2.30% 2.18% 2.0% 2.22% 2.18% 2.24% 2.28% 2.21% 2.20% 2.07% 1.86% 1.5% 1.10% 1.60% 1.40% 1.46% 1.47% 1.0% 1.30% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 1Q19* 2Q19 3Q19 4Q19 1Q20 * Recurring ROE 24% 22.4% Reported: 20.3% 20.1% 1
Slide 21: Digital Transformation
Digital Transformation 21 Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App
Slide 22: Digital Transformation Gaining Share
Digital Transformation Gaining Share Transactions (Tx) Customers Using Digital Transactions Growth (millions) +113% Branches 4.28 250 232.1 4.12 4.21 4% 3.90 WEB 200 POS 24% 3.50 19% 150 Call Center 2% Correspondents < 1% 100 50 80.5 22% 28% ATM 41.4 Mobile 0 1Q19 2Q19 3Q19 4Q19 1Q20 1Q 3Q 1Q 3Q 1Q
Slide 23: Mobile Product Segmentation
Mobile Product Segmentation • Security / transactional & sales functions (>70) • The born in social media, Banorte Go Individuals • CoDi payments • Cash Management • Payments SMEs • Services • Credit • Reporting • Security management Corporates • Reporting 23 Eco Hist DB NIM Rev C/I NI Div ROE TI LD
Slide 24: Adapting the Business & Infrastructure to the New Payments Market
Adapting the Business & Infrastructure to the New Payments Market Continuous growth on POS’s transactions The best DIGITAL PLATFORM with emphasis on e-commerce for aggregators Millions POS’s Transactions 150.0 +27% 100.0 50.0 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2017 2018 2019 2020 CoDi – Test Pilot and further dev
Slide 25: Loans & Deposits
Loans & Deposits 25 Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App
Slide 26: Healthy Funding & Loan Portfolio Structure
Healthy Funding & Loan Portfolio Structure 2018 1Q20 Funding $803 bn $818 bn US 34.8 bn Interbank Loans Interbank Loans Money Market Money Market Demand Demand Time Time Loan Portfolio $777 bn $780 bn US 33.2 bn Consumer Consumer Government Government Mortgage Mortgage Commercial Commercial Corporat
Slide 27: Loyal Deposits Base
Loyal Deposits Base Billion Pesos CAGR: Deposits +11% 667 688 YoY 700 637 Time Demand Core Deposits +11% 590 600 551 509 +12% 454 500 436 438 414 YoY 384 384 397 400 351 15% 336 306 300 +10% 300 255 YoY 223 229 234 211 194 +2% 190 158 168 200 129 136 116 124 100 2011 2012 2013 2014 2015 2016 2017 20
Slide 28: Continued Growth in Performing Loan Book, Special Focus on Consumer
Continued Growth in Performing Loan Book, Special Focus on Consumer US 33.2 bn US 12.4 bn Total Loan Portfolio Consumer Portfolio 780 288 291 777 300 269 800 763 241 700 250 203 567 616 200 176 600 518 158 472 140 500 CAGR: 150 118 CAGR: 401 425 99 +10% +14% 400 350 100 300 50 2011 2012 2013 2014 20
Slide 29: Sound Asset Quality
Sound Asset Quality Past Due Loan Ratio 3.1% 2.9% 3.0% 2.2% 1.9% 2.1% 2.0% 1.8% 1.7% 1.7% 2.0% 1.7% 1.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Credit Cards 6.1% 6.3% 6.0% 5.5% 5.9% 5.9% 6.0% 5.4% 5.8% Payroll 2.9% 3.3% 4.1% 3.7% 3.0% 3.8% 3.4%
Slide 30: Sound Asset Quality
Sound Asset Quality Coverage Ratio 150% 143% 139% 142% 140% 138% 138% 136% 138% 129% 128% 127% 130% 116% 105% 107% 110% 90% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 Cost of Risk 2.5% 2.5% 2.4% 2.5% 2.2% 2.1% 2.0% 2.3% 1.7% 2.2% 2.2% 2.2% 1.6% 2.0% 1.9% 1.9% 2.0% 1.5% Act
Slide 31: Strong Capital Position
Strong Capital Position Capital Adequacy Ratio Basel III 20.0% 20.3% 18.6% 19.0% 18.1% 17.2% 17.2% 1.1% Tier 2 15.1% 15.3% 15.3% 14.6% Total 5.7% Tier 1 17.9% 11.40% 9.70% 9.40% 7.70% 13.8% 13.1% 13.3% 7.90% 6.20% 12.7% 12.4% 12.1% 11.9% 12.7% 12.7% 12.2% CET1 11.5% Temporary waiver 2013 2014 2015 2
Slide 32: BAP: Long Term Savings Business
BAP: Long Term Savings Business Million Pesos 1Q20 YoY 1Q20 YoY Considering Banorte Futuro Insurance Net Income 1,696 6% 2,029 1% Equity 8,423 (7%) 24,746 (1%) Assets 43,752 (4%) 59,723 (2%) Premiums 10,364 (18%) 10,364 (18%) ROE 90.0% 12.7 pp 34.8% 0.8 pp AFORE Net Income 663 (20%) Equity 23,040 0%
Slide 33: GFNorte Guidance 2020
GFNorte Guidance 2020 Guidance 2020 Loan Growth 6% – 8% NIM Expansion 5 – 15bp Expense Growth 5% – 5.5% Efficiency 38.0 – 39.0% Cost of Risk 1.9% – 2.2% Tax Rate 26% – 27% Net Income 37.5 – 38.8 ROE 19.6% – 20.1% Macro Estimates 2020 GDP 0.8% Inflation 3.5% Reference Rate 6.50% 33 Eco Hist DB NIM Re
Slide 34: Deposit & Loan Market Share
Deposit & Loan Market Share Feb 2020 Deposits Loans 2° 3° Source: CNBV. 34 Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App
Slide 35: Market Share by Segment
Market Share by Segment Consumer C. Cards Mortgage Commercial Government Deposits Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Banorte 12.2% 12.1% 9.7% 9.9% 19.5% 19.2% 10.8% 10.3% 34.3% 29.9% 14.7% 13.6% BBVA 28.0% 29.4% 27.5% 27.4% 25.9% 26.0% 18.9% 19.6% 24.
Slide 36: Afore Market Share (Retirement Savings)
Afore Market Share (Retirement Savings) Assets Under Management Billion Pesos AUM Market Share Mar-19 Mar-20 Mar-19 Mar-20 XXI Banorte 796 866 22.5% 22.1% 1° CitiBanamex 641 684 18.1% 17.5% Profuturo GNP 522 597 14.7% 15.2% SURA 525 565 14.8% 14.4% PensionISSSTE 225 257 6.3% 6.6% Coppel 217 257 6.1%
Slide 37: Insurance Market Share
Insurance Market Share Million Pesos Premiums Market Share Net Income Market Share Dec-18 Dec-19 Dec-18 Dec-19 Dec-18 Dec-19 Dec-18 Dec-19 G.N.P. 60,221 67,995 12.2% 12.4% 3,234 4,435 8.1% 9.0% Metlife México 61,962 55,186 12.5% 10.0% 9,063 6,695 22.7% 13.6% BBVA Bancomer 40,520 47,363 8.2% 8.6% 4,8
Slide 38: Annuities Market Share
Annuities Market Share Million Pesos Resolutions * Market Share Mar-19 Mar-20 Mar-19 Mar-20 Banorte 1° 2,698 3,481 43.0% 47.6% Profuturo GNP 2,207 1,927 35.2% 26.4% Bancomer 1,355 1,901 21.6% 26.0% Total Industry 6,267 7,310 100.0% 100.0% Annuitants Market Share Mar-19 Mar-20 Mar-19 Mar-20 Banorte 1
Slide 39: GFNorte in the World
GFNorte in the World Market Capitalization Million pesos 1Q20 US 8.0 bn Total Shares Outstanding: 2,883.5 m Float: ~ 86% 400,000 (1) Total ADRs Outstanding: 4.79 m 350,000 302,763 Ticket Indexes 300,000 IPC (BMV) Sustainable IPC (BMV) GFNORTEO (BMV) MSCI Mexico 250,000 Oil and STOXX COVID-19 DJSI MI
Slide 40: Analyst Opinion & Investment Grade by All Major Rating Agencies
Analyst Opinion & Investment Grade by All Major Rating Agencies Analysts‘ Estimates Ratings Agencies (as of Apr 23, 2020) Agency Rating Outlook Date Net Income 2020 $36,440 Standard & Poor’s BBB Negative Mar-20 Target Price $112.8 Maximum $136.5 Number of Analysts 21 Fitch BBB- Negative Abr-20 # BUY
Slide 41: Appendix
Appendix 41 Eco Hist DB NIM Rev C/I NI Div ROE TI LD Dep Loan ICAP BAP Guid Mkt App
Slide 42: Quarterly Summary
Quarterly Summary Income Statement Highlights - GFNorte Change 1Q19 4Q19 1Q20 (Million Pesos) 4Q19 1Q19 Interest Income 38,075 37,667 37,008 (2%) (3%) Interest Expense 18,406 15,174 14,657 (3%) (20%) Technical Results (Insurance & Annuities) 1,116 (2,305) (383) 83% (134%) Net Interest Income 20,784
Slide 43: Quarterly Summary
Quarterly Summary Financial Ratios GFNorte 1Q19 4Q19 1Q20 NIM (1) 5.7% 5.7% 5.9% ROE (2) 22.4% 19.0% 18.8% ROA (3) 2.5% 2.28% 2.21% Efficiency Ratio (4) 37.0% 40.6% 38.9% Operating Efficiency Ratio (5) 2.5% 2.7% 2.5% CCL Banorte and SOFOM - Basel III (6) 116.6% 133.5% 120.1% Asset Quality: Past Due
Slide 44: Quarterly Summary
Quarterly Summary Change Share Data 1Q19 4Q19 1Q20 4Q19 1Q19 Earnings per share (Pesos) 3.444 3.125 3.162 1% (8%) Earnings per share Basic (Pesos) 3.469 3.138 3.180 1% (8%) Dividend per Share for the period (Pesos) 0.00 0.00 0.00 NA NA Payout for the period 0.0% 0.0% 0.0% NA NA Book Value per Share
Slide 45: Healthy Liquidity
Healthy Liquidity Loans / Deposits Liquidity Coverage Ratio (%) CCL (%) 110% 150% 108% 133% 140% 105% 106% 104% 130% 104% 117% 120% 102% 120% 110% 100% 101% 100% 98% 96% 90% 94% 80% 92% 70% 90% 60% 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 2015 2016 2017 2018 2019 2020 2015 2
Slide 46: Improving Corporate Governance
Improving Corporate Governance GFNorte Mexbol Index (Average)* Float 86% 45% Listed overseas Yes 46% of the companies Chairman of the Board-CEO separation Yes In 73% of the companies Share of independent board members, % 71.0 49.7 Share of total assets threshold to require shareholders Current Befor
Slide 47: Corporate Responsibility and Sustainability
Corporate Responsibility and Sustainability At GFNorte, sustainability means maximizing growth and profitability while seeking to achieve balance among the economic, social and environmental aspects of our business. This is achieved through a four-pillar framework: Sustainable Finance Transparency P
Slide 48: Corporate Responsibility and Sustainability
Corporate Responsibility and Sustainability Global Initiative Report (GRI Standards) UNEP Finance Initiative International standards on sustainability reporting and disclosure of economic, Initiative that aims to identify, promote and carry out the adoption of best environmental and socialtopics. en
Slide 49: 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 1Q20 report. During 2020 we have released: 1. Annual Report to the Banking and Sec
Grupo Financiero Banorte — Q1 2020 Earnings Presentation on 6ix