Grupo Financiero Banorte Sab De Cv Class O · BMV:GFNORTE/O
Grupo Financiero Banorte Sab De Cv Class O — Q3 2020 Earnings Presentation
25 slides from Grupo Financiero Banorte Sab De Cv Class O's earnings presentation, Oct 30, 2020
Slide 1: Conference Call: 3Q20 Results
Conference Call: 3Q20 Results October 30th, 2020
Slide 2: Disclaimer
Disclaimer ▪ This presentation contains certain general information as of the date hereof, information which have been prepared for information purposes only. Information is hereby presented in summary and does not pretend to be exhaustive and detailed. There is no statement or guarantee herein, exp
Slide 3: Remote Self-service/Digital Operations embedded in Quality
Remote Self-service/Digital Operations embedded in Quality Continuous migration towards remote and self- service channels Self-service Outstanding service levels as top priority, measured by Net Promoter Score (NPS) NPS quarterly improvement in Mobile and Web WEB and ATM services Mobile Served by st
Slide 4: Profitability Remains Resilient
Profitability Remains Resilient EPS +1% 3.44 3.42 y/y 3.07 3.12 3.16 3.09 Million pesos 3Q20 q/q y/y 9M20 y/y 3.03 Net Income 8,906 37% 1% 24,542 (11%) 3.03 Recurring* 27,890 6% 2.26 EPS 3.09 37% 1% 8.51 (11%) Recurring* 9.67 6% ROE 16.9% 394bp (266)bp 16.2% (431)bp Recurring* 18.3% 1Q 2Q 3Q 4Q 1Q 2
Slide 5: Net Interest and Non-Interest Income
Net Interest and Non-Interest Income NII +5% 22,000 Robust NII, +2% y/y growth in 3Q20 and +5% in 9M20 9M y/y Trading and other operating income back to normal 21,000 20,683 20,601 20,114 Total revenues in 9M20 up by +1% y/y and +3 y/y 20,000 considering recurring items 19,000 Million pesos 3Q20 q/q
Slide 6: Service Fees Affected But Recovering
Service Fees Affected But Recovering Fees Fees recovering due to better economic activity, 6.1 5.9 5.7 core banking fees +13% q/q in 3Q20 Billion Pesos 6.0 5.4 5.0 Electronic banking services +17% q/q 4.0 Remote digital transactions lead growth 3.0 2.0 2.7 2.7 2.6 2.3 1.0 - POS’s Transactions Mobile
Slide 7: Loan Growth with Quality
Loan Growth with Quality NPL Ratio 2.0% 1.9% Good quarter for mortgage and consumer loans +3% 1.7% Without 1.7% sequentially one-hit impact 1.5% Moderate increase in commercial loans Anticipated 1.2% and prepayments in corporate portfolio write-off 1.0% 0.8% Government growing back +3% y/y Asset qua
Slide 8: Government States & Municipalities Recovering
Government States & Municipalities Recovering GEM Banorte Government reactivation in 2020: 46% of bidding Bidding Results processes have been assigned to Banorte 1.39% Normalized spreads TIIE 0.84% Spread Leading segment among commercial banks 46% 41% Allocated 2019 9M20 Allocated 9M20 Market Share
Slide 9: Subsidiaries
Subsidiaries Business diversification providing resilient results for Net Income by Subsidiary the Group. Expansion y/y: Broker Dealer & Mutual 9M20 Funds 29%, Insurance 6%, Annuities 38%, Afore 12% Continuous growth on Insurance profitability and improved combined ratio On July 1st, 2020, Sólida (a
Slide 10: ESG Updates
ESG Updates Global: • We will adopt Sustainability Accounting Standards Board (SASB) methodology in our 2020 Annual Report • Participating in the next Task Force on Climate-Related Financial Disclosures (TCFD) Pilot TNFD • Members of the Informal Working Group (IWG) & Co-Chair of the Task Force on N
Slide 11: Financial Highlights
Financial Highlights Pace —_—_-~ .
Slide 12: Relief Program for Consumer and SMEs Loans
Relief Program for Consumer and SMEs Loans Over 630 thousand individuals and SMEs registered, amounting to 18% of the total portfolio Clients enrolled 630 to the program thousand Close and efficient communication: o With enrolled, extended and new eligible applicants o Based on archetypes & individu
Slide 13: Loan Portfolio Yield and NIM
Loan Portfolio Yield and NIM Total Portfolio 789 784 Average in bn pesos Average Portfolio grew $53 bn y/y 766 762 759 758 Total Portfolio Better performance vs. reference rate 750 748 +53 bn 736 Cost of funds is now below peers’ NIM from loan portfolio rose +12bps y/y in 9M20 Rate increase as % of
Slide 14: Resilient NIM
Resilient NIM NIM Bank’s NIM steady q/q 9.0% 8.6% 8.3% Resilient on good portfolio mix 8.5% Improved cost of funds 8.0% 7.5% 7.0% Steady NIM 6.5% 6.5% Reference Rate 6.0% 5.8% 5.8% (TIIE) NIM Bank´s NIM Average 5.5% 5.7% 5.1% 5.0% 5.3% 8.5% 5.0% (232bps) 4.5% 6.1% 5.8% 5.8% 5.6% 4.0% 5.4% 1Q 2Q 3Q 4
Slide 15: Margin Sensitivity Evolution
Margin Sensitivity Evolution Margin Sensitivity Fixed rate hedges elimination D 100 bps on NII Million pesos Dynamic risk management hedges 1,000 Variable rate funding Active ALCO ▪ A-L rates spread 600 504 428 4Q18 4Q19 2Q20 3Q20 15
Slide 16: Expenses Under Control
Expenses Under Control Managing the level of non-interest expenses Non-Interest Expenses Personnel expenses +1% y/y +4% 31,400 y/y We reinforce Guidance commitment for 2020: 30,106 4.0% - 4.8% Other 18,349 19,543 +7% Personnel 11,757 11,857 Expenses +1% 9M19 9M20 Efficiency Ratio 38.5% 39.8% 16
Slide 17: Bank Regulatory Capital Ratio
Bank Regulatory Capital Ratio Capital Adequacy Ratio (CAR) Strong CAR and CET1, far above mandatory Basel III requirement Dividends already Dividends not computing for CET1 21.1% in GFNorte’s 20.3% (actually sitting in GFNorte’s balance sheet, not in 19.7% balance sheet the Bank’s). Capital not supp
Slide 18: Liquidity
Liquidity Strong liquidity, supported by deposits growth Liquidity Coverage Ratio CCL (%) Liquidity coverage ratio well above minimum regulatory requirements 200% 194% Banxico USD bidding $420 million* impacts only 9% of the CCL 175% 463,388 437,080 150% 151% 410,573 141% 125% Minimum Regulatory 100
Slide 19: 2020 End Points
2020 End Points As we face an uncertain environment, the guidelines to be followed are: 2020 Expense control Loan Growth (ex-Gov) 6% – 8% Further development of digital transformation Expense Growth 4.0% – 4.8% Capital generation and preservation Tax Rate 25% – 26% Portfolio growth under a quality f
Slide 20: Selected Industry Exposures
Selected Industry Exposures Vs. Total Loans 3Q20 Oil Industry Pemex 3.6% Pemex Suppliers 1.6% Electricity Company CFE 2.1% CFE Suppliers 0.4% Construction & Real State Housing 1.0% SMEs • 77% Nafin / Bancomext guaranteed 4.7% Commercial 1.8% loans, 45% of SME book Others 1.9% Dollar denominated 10.5
Slide 21: ESG Appendix
ESG Appendix Pace lf
Slide 22: Sustainability Strategy
Sustainability Strategy —E__S ee GRUPO FINANCIERD @b BANORTE 2 SOCIAL « Ce ENVIRONMENTAL Ti Human Right: Climate Change Financial inclusion and Biodiversity Education Waste Management SUSTAINABLE Diversity and Inclusion Water Management nc f FINANCE Human Capital . . Community * Socio-environmental
Slide 23: Sustainable Finance
Sustainable Finance Sustainable finance loan book evaluation % of wholesale banking loan book iS ss, , ’ 9.7 : 9 Sorsess’ 0.8 10.0 “ — 75 0 oo ee 2Q19 3Q19 2Q20 3Q20 Other = Sustinable loan book = Climate-related loan book Loan book evaluation under Equator Principles Number of analyzed projects 6 5
Slide 24: What's Next on ESG?
What’s Next on ESG? Environment Social Governance • We set the goal to reduce emissions per • We are in the design phase of a financial • We are in the process of selecting and employee by 30% in 2020. education plan that includes all business evaluating our Board of Directors. areas. • Starting in
Slide 25: Conference Call: 3Q20 Results
Conference Call: 3Q20 Results October 30th, 2020
Grupo Financiero Banorte — Q3 2020 Earnings Presentation on 6ix