Grupo Financiero Banorte Sab De Cv Class O · BMV:GFNORTE/O
Grupo Financiero Banorte Sab De Cv Class O — 3Q24 Earnings Presentation
114 slides from Grupo Financiero Banorte Sab De Cv Class O's earnings presentation, October 2024
Slide 1: Corporate Presentation 3Q24
th anniversary Corporate Presentation 3Q24
Slide 2: Table of Content
Table of Content Markets Awards About Banorte 3 Results NIM 9 GFNORTEO Fees 11 Cost to Income 12 Net Income 13 ROE / ROA 14 Digital Bank 17 GBOOY Deposits & Loans 22 Loans / Deposits 23 Deposits growth 24 Loan growth 25 Asset Quality - NPL 28 XNOR CAR 30 BAP (Insurance, Pension & Afore) Insurance
Slide 3: About Banorte
About Banorte Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 3 Mkt C/I C/I Hist Hist App App
Slide 4: GFNORTE – A Leading and Profitable Financial Franchise in Mexico
GFNORTE – A Leading and Profitable Financial Franchise in Mexico Adequate Business Mix - Strong retail, wholesale, premium traditional and digital banking platforms, as well as 1 leading insurance and pension fund management units, serving more than 20 million clients. 2 Sound Fundamentals - Solid
Slide 5: From Regional Bank to Second Largest National Financial Group
From Regional Bank to Second Largest National Financial Group 15.1%* 4,5,6 Plan 1,2,3 Plan 20|20 Plan • Best • Banorte’s experience Client Digital Business Diversification Segmentation Transformation • Best * Loan book IT : central DB, personalized Market Share • JV Rappi offer Inorganic Growth mu
Slide 6: Strategy – Client centric & Digital Evolution
Strategy – Client centric & Digital Evolution PRODUCTS & DISTRIBUTION SOLUTIONS CHANNELS 1M New customer Rappi clients behavior Deposits & Loans Mobile Client Segmentation Insurances ▪ 13.9 million ex-Afore clients 7.7 million Afore clients Web Rappi JV Consumer focus Digital Bank Pensions ATM ▪ S
Slide 7: Diversified Business Mix
Diversified Business Mix Banking Wealth Insurance & Other Financials Digital - Traditional Management Pension Funds Banco Casa de Operadora Banorte Arrendadora bineo* Mercantil Bolsa de Fondos Ahorro y y Factor Almacenadora del Norte Banorte Banorte Previsión Banorte Banorte 99.9999% 98.2618% 99.9
Slide 8: Business Mix - Diversified Net Income and Balance
Business Mix - Diversified Net Income and Balance • Sound business diversification: Net Income by Subsidiary – Banorte Bank +7% y/y; 9M24 +7%, ROE +29.5% 9M24 – Broker dealer & mutual funds 9M24 +29% – Insurance 9M24 +28% y/y Afore Holding – Annuities 9M24 +17 y/y 2.6% 2.3% – Afore 9M24 +25% y/y A
Slide 9: Net Interest Margin Moving in the Right Direction
Net Interest Margin Moving in the Right Direction NIM 7.0% 6.5% 6.3% 6.2% 6.3% 6.5% 6.0% 5.6% 5.6% 5.7% 5.5% 5.4% 5.5% 5.3% 4.9% 4.8% 5.0% 4.7% 4.4% 4.5% 4.5% 4.1% 4.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 Previous criteria IFRS NIM (Post-Provision)
Slide 10: Net Interest Income sensitivity evolution
Net Interest Income sensitivity evolution ◼ Dynamic risk management hedging Bank's NII Sensitivity per 100bps change in rate - Local Currency Balance Sheet ◼ Focus on stable low-cost liabilities Million pesos 1400 ◼ Active ALCO 1200 1,127 1,205 1,222 1,064 11.1% 13% 979 ◼ Organic growth of fixed r
Slide 11: Core Banking Fees keep growing
Core Banking Fees keep growing Net Fees 29% ● Net fees +7% q/q, +29% y/y; 9M24 +20% y/y, doble-digit Million 5,500 y/y 5,302 growth across all lines of business: banking, brokerage pesos 4,937 5,000 house, mutual funds. 4,500 ● Core banking fees +4% q/q, +19% y/y; 9M24 +15% y/y 4,000 4,094 ● POS t
Slide 12: Efficiency already recovered from the pandemic
Efficiency already recovered from the pandemic Cost to Income 57.0% 54.0% 52.0% 52.0% 48.5% 47.9% 44.9% Recurring 45.4% 47.0% 42.8% 40.0% 39.7% 41.4% 42.0% 39.0% 39.1% 42.7% 37.4% 36.2% 35.5% 35.5% 37.0% 34.1% 32.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q
Slide 13: Net Income growing
Net Income growing Net Income Million Pesos CAGR 2012-2023 15% 15% YoY 52,418 14,238 50,000 14,018 45,408 14,000 45,000 13,268 2% 40,000 36,528 q/q 13,000 35,000 31,958 35,583 35,345 35,048 30,000 30,508 7% 23,908 30,311 12,000 25,000 *Recurring y/y 19,308 20,000 17,108 15,228 13,508 11,000 15,000
Slide 14: Positive Growth in Profitability
Positive Growth in Profitability ROA 3.00% 2.50% 2.30% 2.36% 2.33% 2.31% 2.35% 2.18% 2.05% 1.86% 1.94% 2.26% 2.00% 2.22% 1.60% 2.07% 1.40% 1.46% 1.47% 1.85% 1.50% 1.30% 1.76% 1.00% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 Previous criteria IFRS Recurring
Slide 15: Positive Growth in Profitability
Positive Growth in Profitability ROE 25.0% 23.3% 22.9% 21.3% 21.5% 20.3% 20.1% 19.2% 20.0% 17.0% 17.1% 19.3% 19.6% 15.3% 14.3% 14.2% 14.1% 15.0% 13.2% 13.3% 14.8% 10.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 ROE of the Bank 35.0% 31.5% 31.1% 28.8% 30.0
Slide 16: Positive Growth in Profitability
Positive Growth in Profitability ROTE of the Group 30.0% 29.2% 28.6% 27.5% 26.9% 27.1% 25.9% 26.9% 25.1% 25.0% 24.7% *Recurring 20.9% 20.0% 19.1% 18.7% 19.2% 17.3% 18.8% 16.2% 16.4% 15.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 Note: A new methodology w
Slide 17: Transformation
Transformation Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 17 Mkt C/I C/I Hist Hist App App
Slide 18: Digital Transformation Gaining Share
Digital Transformation Gaining Share Transactions (Tx) Transactions 3Q24 Branches 1.6% 1,191 WEB 1,200 (millions) 10% 1,000 POS 22% 800 Correspondents 0.2% Call Center 0.4% 600 9% ATM 400 44% y/y 57% Mobile 200 - 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 3Q Checks from other banks cashing Customers Using D
Slide 19: 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: 3Q24 o processes / services / systems Banorte Móvil WEB o products App o branch-administration, contingency, others +0.4 pts YOUR 85.5 +2.3 pts 85.0 y/y V
Slide 20: 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 28% y/y Digital 400 Physical The best DIGITAL PLATFORM for aggregators 208 350 192 300 173 250 190 200 150 255 268 100 168 199 50 0 CoDi 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23
Slide 21: Ongoing RappiCard evolution
Ongoing RappiCard evolution Rappi Cards Average Billing Thousand 2,750 Rappi Cards 1,118 Million 2,512 Millares 1,200 1,063 2,500 2,396 ▄ Stressed to the market, now operating with risk metrics 1,000 960 2,250 2,034 in desired direction 800 2,000 1,750 ▄ Presenting positive unit economics 600 1,50
Slide 22: Loans & Deposits
Loans & Deposits Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 22 Mkt C/I C/I Hist Hist App App
Slide 23: Healthy Funding & Loan Portfolio Structure
Healthy Funding & Loan Portfolio Structure Bank Deposits 2018 $759 bn 3Q24 1,138bn US58.0bn Senior Unsec. Debt Senior Unsec. Debt 5% Money Market Money Market 5% Demand Time Time 28% Demand 62% Loan Portfolio $777 bn 1,125bn US57.3bn Consumer Consumer Government 17% 16% Government Mortgage Mortgag
Slide 24: Loyal Deposits' Base
Loyal Deposits’ Base Deposits CAGR 2013-2023 YoY Billion Pesos +10% 1,100 996 1,018 1,029 962 947 962 1,000 Time Demand Core Deposits 9% 900 840 751 750 750 800 689 685 689 705 713 715 637 667 700 590 623 551 4% 600 509 533 538 538 500 436 414 438 384 384 397 336 351 400 300 291 305 314 273 262 27
Slide 25: Continued Growth in Performing Loan Book, Special Focus on Consumer
Continued Growth in Performing Loan Book, Special Focus on Consumer Loan Portfolio YoY 1,200 Billion 1,094 1,125 Pesos 1,032 1,032 1,047 1,010 11% 1,000 920 802 821 821 777 763 800 616 CAGR: 567 +9% 600 518 472 401 425 400 200 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 2022 2023 3Q23 4
Slide 26: Cost of Funds vs Loan Growth y/y
Cost of Funds vs Loan Growth y/y 20% 55% 15% 49.3% 50% 11.4% 10% 45% 5% 40% 0% 35% j f mam j j a s o n d j f mam j j a s o n d j f mam j j a s o n d j f mam j j a s o n d j f mam j j a s 2020 2021 2022 2023 2024 Loan Growth y/y Cost of Funds vs CETES Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Lo
Slide 27: Rate comparison
Rate comparison Reference Rate vs Loan Portfolio’s Yield Reference Rate vs Consumer Yield 14% 29% 28.5% 28.3% 13.2% 12% 24% 11.6% 10.7% 10% 10.5% 19% 8% 14% 13.8% 10.5% 6% 9% 9.2% 4% 4% O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O
Slide 28: Sound Asset Quality
Sound Asset Quality NPL Ratio 3.5% 3.1% 2.9% 3.0% 2.5% 2.2% 2.1% 2.0% 1.8% 1.7% 1.7% 2.0% 1.5% 1.0% 1.1% 1.0% 1.01% 1.01% 1.00% 1.0% 1.1% 0.9% 0.5% 0.0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 Previous criteria IFRS Previous Criteria IFRS | 2018 2019 20
Slide 29: Sound Asset Quality
Sound Asset Quality Coverage Ratio 250% 224% 207% 200% 179% 182% 188% 181% 178% 138% 139% 142% 138% 191% 150% 129% 107% 116% 105% 100% 50% Previous criteria IFRS 0% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q23 4Q23 1Q24 2Q24 3Q24 Cost of Risk 3.0% 2.8% 2.5% 2.4% 2.5% 2.3% 3 mon
Slide 30: Strong Capital Position
Strong Capital Position Capital Adequacy Ratio Basel III 24.7% 22.8% 22.2% Buffer 20.2% 20.7% 20.7% 21.3% 20.2% 4.5pp TLAC 19.2% to 2025 18.5% 17.90% 17.3% 17.2% 0.2% Tier 2 15.3% 15.3% 5.1% 14.6% Total 14.65% Tier 1 +3.250% 19.0% TLAC 4Q23 11.40% 9.40% 15.3% 15.1% 14.7% 15.7% 14.7% 15.5% CET1 7.9
Slide 31: Annuities NII vs. Technical Results
Annuities NII vs. Technical Results When valorization on UDIS securities go up or down, the same effect occurs in Technical Reserves with null effect in Net Income Annuities 8,000 6,774 6,565 6,054 6,000 4,000 2,000 3,054 2,153 0 (1,357) (2,103) -2,000 -4,000 (4,894) (5,471) -6,000 (5,662) -8,000
Slide 32: Annuities Margin – inflation effect
Annuities Margin – inflation effect 2Q24 3Q24 Monthly Inflation 1.2% 0 0.9% 0.6% 0.3% 0.0% o tns’ n est stso ns’ s ts ents’ Inflation rgi n Margin n stest s ents’ Inflation rg i n Margin res res s re re interests e einterests sindexed nte interests nte interests in t t s i s i ets indexed in e n en
Slide 33: Technical Reserves – inflation effect
Technical Reserves – inflation effect 2Q24 3Q24 Monthly Inflation 1.2% 0 00 1 0 1 0.9% 0.6% 0.3% 0.0% Issuance Technical Technical Others Net Increase Technical Technical Net Increase Interest in Technical Issuance Interest Others in Technical Interest - Interest - Inflation (mortality) Reserves Inf
Slide 34: BAP: Long Term Savings Business
BAP: Long Term Savings Business Million Pesos 3Q24 9M24 YoY 3Q24 9M24 YoY Insurance Considering Banorte Futuro Net Income 1,000 4,325 29% 1,405 5,400 28% Equity 9,353 9,353 20% 25,148 25,148 8% Assets 79,036 79,036 31% 94,526 94,526 25% Premiums 7,903 35,713 24% 7,903 35,713 24% ROE 44.3% 58.2% 11
Slide 35: Insurance business steadily improving
Insurance business steadily improving Retained Insurance Technical Reserves Premiums 8,000 Change Change Million 16,000 3Q24 9M24 Pesos 6,000 2,652 (Million Pesos) q/q y/y y/y 1,655 4,000 Net Interest Income (NII) 906 (3%) 3% 2,772 13% 14,000 813 (833) 2,000 Premium Income 7,307 (14%) 20% 30,872 2
Slide 36: 2024 Guidance
2024 Guidance 2024 Guidance Loan Growth 10% – 12% ✓ NIM 6.1% – 6.4% ✓ NIM of Bank 6.3% – 6.5% ✓ Recurring Expense Growth 6.0% - 7.0% Total Expense Growth* 13.0% – 14.0%* ✓ Efficiency 36.0% – 37.0% ✓ Cost of Risk 1.7% – 1.9% ✓ Tax Rate 25% – 27% Net Income 56.0– 56.8 bn** ROE 2024 21.5% – 22.5% ✓ ROE
Slide 37: Market Presence
Market Presence Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 37 Mkt C/I C/I Hist Hist App App
Slide 38: Deposit & Loan Market Share
Deposit & Loan Market Share Deposits Loans Others BBVA Others 22% 19% BBVA 22% 25% Inbursa Inbursa 6% 5% 2nd 2nd HSBC Banorte 7% Scotiabank Banorte 14% 6% 15% Scotiabank HSBC 7% 7% Citibanamex Citibanamex Santander Santander 12% 9% 12% 12% Source: CNBV Aug 2024 Div TI NIM Dep BAP Guid ESG Eco Rev
Slide 39: Market Share by Segment
Market Share by Segment Auto Payroll C. Card Mortgage Commercial Government Deposits Aug-23 Aug-24 Aug-23 Aug-24 Aug-23 Aug-24 Aug-23 Aug-24 Aug-23 Aug-24 Aug-23 Aug-24 Aug-23 Aug-24 Banorte 22.2% 18.1% 20.9% 19.8% 9.9% 10.9% 19.6% 19.5% 12.3% 12.7% 26.0% 26.4% 14.1% 13.8% BBVA 27.1% 22.9% 37.2% 3
Slide 40: Market Share by Segment
Market Share by Segment Total Loan Book Commercial & Corporate Mortgage 15.1% 15.1% 15.0% 19.5% 19.6% 19.5% 12.1% 19.4% 11.8% 11.9% 11.1% 18.8% 14.7% 10.8% 14.5% +17bps +41bps +11bps Aug-20 Aug-21 Aug-22 Aug-23 Aug-24 Aug-20 Aug-21 Aug-22 Aug-23 Aug-24 Aug-20 Aug-21 Aug-22 Aug-23 Aug-24 Credit Car
Slide 41: Afore Market Share (Retirement Savings)
Afore Market Share (Retirement Savings) Assets Under Management AUM Market Share Sep-23 Sep-24 Sep-23 Sep-24 XXI Banorte 1,086 1,300 19.9% 19.2% 1° Profuturo GNP 957 1,260 17.5% 18.6% SURA 846 1,076 15.5% 15.8% CitiBanamex 852 1,060 15.6% 15.6% Coppel 406 502 7.4% 7.4% PensionISSSTE 365 454 6.7% 6
Slide 42: Insurance Market Share
Insurance Market Share Million Pesos Premiums Market Share Net Income Market Share Sep-23 Sep-24 Sep-23 Sep-24 Sep-23 Sep-24 Sep-23 Sep-24 G.N.P. 49,146 56,310 12.7% 12.5% 1,547 2,249 6.2% 6.6% Metlife México 41,739 43,371 10.8% 9.6% 3,313 4,320 13.2% 12.6% BBVA 35,010 42,777 9.1% 9.5% 4,388 5,494
Slide 43: Annuities Market Share
Annuities Market Share Million Pesos Resolutions * Market Share Sep-23 Sep-24 Sep-23 Sep-24 Banorte 12,428 12,752 43.7% 45.3% 1° Bancomer 9,717 6,615 34.2% 23.5% Profuturo GNP 6,262 8,785 22.0% 31.2% Total Industry 28,406 28,153 100.0% 100.0% Annuitants Market Share Sep-23 Sep-24 Sep-23 Sep-24 Ban
Slide 44: GFNorte in the World
GFNorte in the World Market Capitalization US 20.0bn Billion 550 3Q24 Pesos 492.4 Total Shares Outstanding: 2,813.2 m 500 Float: ~ 86% Total ADRs(1) Outstanding: 10.11 m 450 406.9 400 392.4 Ticket Indexes 350 IPC (BMV) Sustainable IPC (BMV) GFNORTE O (BMV) 300 MSCI Mexico STOXX DJSI MILA 250 Oil a
Slide 45: Analysts' Opinion & Investment Grade by All Major Rating Agencies
Analysts’ Opinion & Investment Grade by All Major Rating Agencies Analysts’ Estimates Ratings Agencies (as of Oct 23, 2024) Agency Rating Outlook Date Net Income 2024 $56,715 Target Price $182.7 Standard & Poor’s BBB Stable Aug-24 Maximum $230.0 Number of Analysts 21 Fitch BBB- Stable Nov-23 # BUY
Slide 46: ESG
ESG Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 46 Mkt C/I C/I Hist Hist App App
Slide 47: Sustainability Strategy
Sustainability Strategy MSCI ESG Latest Ratings Action: Three AA consecutive years Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 47 Mkt C/I C/I Hist Hist App
Slide 48: Appendix
Appendix Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 48 Mkt C/I C/I Hist Hist App App
Slide 49: Quarterly Summary
Quarterly Summary GFNorte-Consolidated Statement of Change Change Comprehensive Income Highlights 3Q23 2Q24 3Q24 9M23 9M24 (Million Pesos) 2Q24 3Q23 9M23 Interest Income (1) 99,573 95,152 103,922 9% 4% 278,241 294,445 6% Interest Expense 66,384 63,214 67,913 7% 2% 184,798 191,722 4% Net Interest I
Slide 50: Quarterly Summary
Quarterly Summary Financial Ratios GFNorte 3Q23 2Q24 3Q24 9M23 9M24 12M* NIM (1) 6.3% 5.7% 6 .5 % 6.2% 6 .2 % 6 .2 % NIM adjusted w/o Insurance & A nnuities 5.9% 5.8% 6 .0 % 5.9% 5 .8 % ROE (2) 21.5% 23.3% 2 2 .9 % 21.2% 2 2 .7 % 2 2 .4 % ROA (3) 2.3% 2.3% 2 .4 % 2.4% 2 .3 % 2 .3 % Efficiency Rati
Slide 51: Quarterly Summary
Quarterly Summary GFNorte-Consolidated Statement of Financial Change Position Highlights 3Q23 2Q24 3Q24 (Million Pesos) 2Q24 3Q23 Asset Under Management 3,855,570 4,291,332 4,437,289 3% 15% Stage 1 Loans 999,902 1,086,206 1,115,560 3% 12% Stage 2 Loans 10,121 8,171 9,777 20% (3%) Stage 1 & 2 Loans
Slide 52: Quarterly Summary
Quarterly Summary Change Change Share Data 3Q23 2Q24 3Q24 9M23 9M24 2Q24 3Q23 9M23 Earnings per share (Pesos) 4.602 4.911 5.061 3% 10% 13.655 15.095 11% Earnings per share Basic (Pesos) 4.637 4.898 5.023 3% 8% 13.761 14.867 8% Dividend per Share for the period (Pesos) 0.00 9.09 0.00 (100%) N.A. 7.
Slide 53: Healthy Liquidity
Healthy Liquidity Loans to Deposits 110% 105% 100% 99% 100% 97% 95% 90% 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 2016 2017 2018 2019 2020 2021 2022 2023 2024 Liquidity Coverage Ratio - LCR 230% 210% 190% 175% 166% 170% 156% 150% 130% 110% 90% 70% 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
Slide 54: Insurance and Annuities P&L
Insurance and Annuities P&L Insurance P&L + Annuities P&L = Insurance & Annuities P&L Premium Revenue Premium Premium Revenue Revenue Claims ∆ ∆ = Technical Non-Interest = ∆ Technical Non-Interest Non-Interest Result Income Income = Technical Result Result Claims Income Claims Acquisition Technica
Slide 55: Financial Targets GFNorte
Financial Targets GFNorte 5 years Net Income Double digit growth ROE 19.5% - 21.5% ROA 2.2% - 2.6% NIM 6.0% - 6.3% Cost-to-Income ratio 34% - 36% CET1 12.0% - 13.0% Cross-sell ratio 2.3 - 2.6 2.8* Note: Forecasts were generated under the new accounting rules, approaching convergence to IFRS internat
Slide 56: 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 57: 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 3Q24 report. During 2024 we have released: 1. Annual Report 2023 to the Banking
Slide 58: Economic and Financial Perspectives
Main macro view Economic activity will continue to grow in Mexico in 2024 and 2025 Risks abound amid increased global Economic and uncertainty Financial Nearshoring and long-term opportunities and challenges Perspectives A solid banking sector Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP
Slide 59: 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 2023 2024F 2025F GDP -8.4 6.0 3.7 3.2 1.3 1.0 (% y/y) Inflation 3.2 7.4 7.8 4.7 4.7 4.4 (% y/y) Exchange rate 19.91 20.53 19.50 16.97 19.90 20.90 USD/MX
Slide 60: Economic activity has underperformed expectations so far this year
Economic activity has underperformed expectations so far this year, negatively impacting the outlook GDP Index 100 = 4Q18 110 2024: 2023: 2025: 103.6 104.7 106.0 105 100 2022: 100.4 95 2019: 99.6 2021: 96.8 90 2020: 91.1 2024: 2025: 85 Primary activities 1.3% 1.0% Industrial production 80 Services
Slide 61: Performance across sectors is heterogeneous…
Performance across sectors is heterogeneous… GDP: Supply GDP: Aggregate Demand % y/y nsa, % q/q sa % y/y nsa 1Q24 2Q24 3Q24 4Q24 2024 2025 1Q24 2Q24 3Q24 4Q24 2024 2025 GDP (% y/y) 1.5 2.1 0.9 0.7 1.3 1.0 GDP (% y/y) 1.5 2.1 0.9 0.7 1.3 1.0 Consumption 3.5 3.5 2.4 1.4 2.7 0.8 Agricultural -2.3 -2.
Slide 62: …however, domestic demand remains resilient
…however, domestic demand remains resilient Employment: INEGI (general) and Investment Consumption IMSS (formal sector) Index 100 = July 2018 Index 100 = Feb 2020 Million 65 23 120 115 22 110 110 60 +32.9% +10.5% 105 21 +15.9% 100 100 55 20 90 95 19 80 90 50 18 85 70 INEGI (left axis) 17 45 80 IMS
Slide 63: Mexico will continue growing at various speeds across states
Mexico will continue growing at various speeds, with differentiated drivers across states Economic growth by state States with greatest relevance for % y/y, 20-year average manufacturing 1.- Nuevo Leon 2.- State of Mexico 3.- Jalisco 4.- Guanajuato 5.- Baja California States with greatest relevanc
Slide 64: Nowcasting Economic Activity – IGAE (GDP proxy)
Nowcasting Economic Activity – IGAE (GDP proxy) Nowcasting of Monthly Economic Activity - IGAE % y/y; nsa IGAE Nowcast IGAE Nowcast 30 5.4 5.3 20 4.5 3.8 3.8 10 3.4 2.4 0 0.7 2.0 1.9 1.6 1.0 0.9 0.8 0.7 -10 0.1 -20 -0.6 -1.0 -1.3 -30 Sep-19 Mar-22 Sep-24 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 J
Slide 65: Performance of households' expenditures
A Performance of households’ expenditures Households’ Expenditures – Resilient Sectors Households’ Expenditures – Vulnerable Sectors Debit & Credit Purchases in real terms; January 1st, 2020 = 100 Debit & Credit Purchases in real terms; January 1st, 2020 = 100 Supermarkets Accommodation and Food Se
Slide 66: Performance of businesses' revenues
Performance of businesses’ revenues SMEs’ Revenues – Resilient Sectors SMEs’ Revenues – Vulnerable Sectors POS Billing in real terms; % y/y POS Billing in real terms; % y/y Accommodation and Food 9.0 24.5 Retail Sales Services 6.0 26.5 -2.1 Professional Services -3.0 21.2 Healthcare 19.2 Recreatio
Slide 67: Core inflation has moderated, allowing for additional cuts from Banxico
Core inflation has moderated, allowing for additional cuts from Banxico Inflation forecast Reference rate forecast % y/y fortnightly frequency % 12 12 Headline Core 2024 11 10 Non-core 10.00 2022: 7.8 10 8 9 2023: 2025 6 4.7 8 8.00 4 7 2024: 6 2 4.7 2025: 4.4 5 0 4 -2 3 Dec-22 Dec-23 Dec-24 Dec-25
Slide 68: Divergence across Board members, with the dovish wing dictating the narrative
Divergence across Board members, with the dovish wing dictating the narrative Bias Member Relevant comments Hawkish "...initiating a cycle of monetary easing prematurely could send a signal of complacency and that we are content with the high levels of headline inflation…" Jonathan "...it is neces
Slide 69: Banxico's hawk-o-meter
Banxico’s hawk-o-meter Tone of Banxico’s Board comments Index*; 2024 Avg Jan-Aug 24' Sep 24' . 0.68 0.70 0.64 0.49 0.46 0.33 0.25 0.22 -0.08 -0.08 Jonathan Heath Irene Espinosa Galia Borja Victoria Rodríguez Omar Mejía Note: * From -1 to 0 implies a dovish tone; from 0 to 1 implies a hawkish tone
Slide 70: The MXN will remain supported by a solid macro stance
The MXN will remain supported by a solid macro stance, healthy inflows and a high carry, although performance will still be influenced by external and idiosyncratic factors USD/MXN forecast Performance of main currencies in the last 12 months Pesos per dollar % 24.5 MYR 10.1 23.5 PLN 8.7 2025: ZAR
Slide 71: USD/MXN retains premiums amid greater volatility in the second half
USD/MXN retains premiums amid greater volatility in the second half of the year Performance of the Mexican peso USD/MXN* USD/MXN, +/- σ ro the 0-day moving average Relative to the 90-day moving average, daily data 20.50 USD/MXN ±2σ 6 2004 2008 2012 2016 2020 2024 20.00 5 19.50 4 Election day in th
Slide 72: Public finances: reasonable revenues, albeit with an increase in spending in 2024
Public finances: reasonable revenues, albeit with an increase in spending in 2024 Revenues vs GEPC estimated figures Federal government spending $ billon % of total spending 8,000 2024 2023 2022 2021 Estimated Observed 6,000 Spending ($ billion) 9,022.0 8,257.6 7,048.2 6,257.1 Social programs 8.2
Slide 73: Public finances ahead of 2025, with consolidation expected
Public finances ahead of 2025, with consolidation expected in said year Primary Balance PEMEX maturities* % of GDP US$ billion Observed GEPC (Sep'23) Pre-GEPC (Apr'24) 25 40.7 (52.0%) 23.0 2 1.4 1.1 0.9 20 1 0.6 13.5 0.1 15 7.1 7.2 0 10 4.6 3.6 4.6 6.2 5 0.3 2.3 2.0 3.3 0.5 -0.1 -0.3 -0.4 -0.1 -1
Slide 74: Claudia Sheinbaum's inauguration and short-term goals
Claudia Sheinbaum’s inauguration and short-term goals Inauguration speeches What to expect on the first 100 days ▪ From her speech at the Lower She outlined 100 commitments throughout her ▪ National Energy Plan House, we highlight administration, from which we highlight: ▪ National Security Strate
Slide 75: Claudia Sheinbaum's cabinet and composition of the legislative branch
Claudia Sheinbaum’s cabinet and composition of the legislative branch Key actors within the Sheinbaum’s cabinet Lower House composition Interior: Finance: Infrastructure: Simple Two thirds Rosa Icela Rogelio Ramírez de Jesús Antonio majority: 251 majority: Rodríguez la O Esteva 334 (fmr. Minister
Slide 76: Constitutional reforms presented by AMLO in early 2024 along with changes from Sheinbaum
Constitutional reforms presented by AMLO in early 2024 along with changes from Sheinbaum Reforms approved and to be approved Social ISSSTE’s Eliminate Animal Housing programs Pensions autonomous welfare bodies Austerity of Extortion and Wages Vapes and Electoral tax crimes as (minimum & government
Slide 77: Impact of the tensions between the United States and China
Impact of the tensions between the United States and China Foreign trade Armed conflicts Global economy Effects on other elections in 2024 Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI
Slide 78: Economic activity remains tied to performance in the US
Economic activity remains tied to performance in the US GDP growth in US and Mexico Mexico GDP growth estimates* % y/y, 1990 to 2023 % y/y 8 2024 2025 y = 1.262x - 0.6836 1996 1997 2023 1994 6 R² = 0.4425 1990 2000 Banorte 1.3 1.0 2010 1991 2022 2012 2006 2011 1998 Consensus 1.5 1.2 4 2015 2004 20
Slide 79: US economic influence by sectors
US economic influence by sectors 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 Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev R
Slide 80: US economic influence by states
US economic influence by 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. Jalisco 4. Michoacan
Slide 81: Mexico's geographical location, demographics and natural resources remain 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 Profit reinvestment and accounts between companie
Slide 82: Nearshoring impact in Mexico
Nearshoring impact in Mexico US$466.6bn US$18bn US$9.2bn US$8.8bn US$4.5bn (83%) (3%) (2%) (2%) (1%) Total impact from Autos Computers Auto parts Heavy Wires & nearshoring in the next (9%) (8%) (7%) vehicles cables 5 years: US$168bn (6%) (3%) Agro Auto Warehousing Appliances industry industry and
Slide 83: Positive evidence of nearshoring in Mexico
Positive evidence of nearshoring in Mexico Investment announcements in 2023 by country of origin Investment announcements in 2024 by country of origin US$ million US$ million (up to September 30th) Ranking Country of origin Amount % total Ranking Country of origin Amount % total Total 110,744 -- T
Slide 84: The United States remains at the forefront of investment in Mexico
The United States remains at the forefront of investment in Mexico amidst tensions with China Foreign Direct Investment FDI in 2023 by country of origin** US$ billion % of total USA 37.8 60 FCH: EPN AMLO* Spain 10.5 Average: Average: Average: Canada 9.6 Japan 8.1 US$25.7 billion US$35.7 billion US
Slide 85: Nearshoring evidence across GFI figures
Nearshoring evidence across GFI figures, mainly non-residental construction and imported machinery and equipment Non-residential construction Imported machinery and equipment and capital goods Index 100 = March 2014 imports Index 100 = March 2014 120 170 Machinery and equipment imported 110 150 Ca
Slide 86: FIBRAs and demand for industrial spaces
FIBRAs and demand for industrial spaces Major industrial real estate markets in Mexico as of 1Q24 Demand for industrial spaces Demand for Investment Cumulative demand industrial spaces growth 2026-2027 6.1 2024 million m2 6 million m2 2.8% due to nearshoring +14% Most dynamic sectors according to
Slide 87: However, some bottlenecks persist
However, some bottlenecks persist Electricity demand in Mexico Maximum water level of Mexico’s dams Billion cubic meters ● According to the IEA the current electricity 130 consumption in Mexico is around 300 TWh ● For the next five years it could need between 380 - 120 400 TWh 110 ● Mexico will ne
Slide 88: Mexico has benefited previously from similar investments
Mexico has benefited previously from similar investments, driving structural changes across several industries Mexico: Non-oil exports to the US: Top five goods imported from US: Vehicle imports by country world* Mexico % of total vehicle imports (yearly figures) US$ billion constant prices (month
Slide 89: Mexico is consolidating its position as main commercial partner with US
Mexico is consolidating its position as main commercial partner with US US: Main commercial partners, ranking by imports % of total imports (cumulated Jan-Aug for each year) 23 Canada China Mexico 21 19 17 15.7 15 13.1 13 12.9 11 9 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Source
Slide 90: 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, 2023 Imports 69.1 61.5 142.7 Con tecno og e Bing GeoN es icroso t To To *The three states represent close to 58% of the share of total imports Source: US Census Div TI NIM Dep
Slide 91: 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, 2023 55.7 gdp 69.1 55.8 29.1 81.7 29.0 Con tecno og e Bing icroso t To To Source: Ministry of Economy Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Re
Slide 92: Geolocalization of industrial zones and parks and Banorte's branches
Geolocalization of industrial zones and parks and Banorte’s branches Manufacturing industry and Banorte’s branches US$ millions Source: Banorte with figures from S&P and AMIA Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI
Slide 93: Good's journey – Autos and other vehicles
Good’s journey – Autos and other vehicles The road to U.S. – January 2021 to April 2023 US$ millions Source: Banorte with figures from S&P Global-Panjiva and AMIA Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NI
Slide 94: Good's journey – Autos and other vehicles
Good’s journey – Autos and other vehicles Key border crossings Shipping method % of total export value: January 2021 to April 2023 % of total export value: January 2021 to April 2023 Laredo (TAMPS) 40.1 Port of Veracruz (VER) 18.2 Port of Altamira (TAMPS) 9.1 Nogales (SON) 9.0 Juarez (CHIH) 8.8 P.
Slide 95: Nearshoring score – Top 10 states
Nearshoring score – Top 10 states Nearshoring score – Top 10 states with the largest potential Score: Maximum value = 10 Nuevo León 9.3 Chihuahua 9.1 Baja California 8.9 Tamaulipas 8.5 Coahuila 8.2 Sonora 8.1 Querétaro 7.8 Jalisco 7.7 San Luis Potosí 7.6 Guanajuato 7.6 Source: Banorte Div TI NIM D
Slide 96: Banking credit forecast using lagged GDP
Banking credit forecast using lagged GDP Banking credit Backtest and forecast* $ billons % y/y in real terms 5,200 Forecast Year Observed Model 4,700 Fitted 2021 -9.0 -7.8 Observed 4,200 2022 2.2 1.5 3,700 2023 5.6 5.4 2024 6.3 (until August) 5.8 3,200 2025* 4.1 2,700 Banking Credit Forecast Model
Slide 97: Capitalization ratios
Capitalization ratios Capitalization ratio % of net capital / credit risk assets Tier 1 Common Capital Additional Tier 1 Additional Capital Regulatory Minimum 26 25.7 24.4 24 22.8 22.3 22 21.5 20.8 20 19.6 19.5 19.4 19.3 19.5 18 17.2 16.6 17.1 16.8 16.5 16.4 16.3 16 15.9 15.9 15.8 15.6 15.5 15.3 1
Slide 98: Credit has grown significantly, while NPLs remain quite low
Credit has grown significantly, while NPLs remain quite low Banking credit Non-performing loans ratio % y/y, in real terms % of total loan portfolio 10 Total Consumer 18 Total Consumer Mortgage Firms Mortgage Firms 9 14 10 8 6 7 2 6 -2 5 -6 4 -10 3 -14 2 -18 1 -22 0 2019 2020 2021 2022 2023 2024 2
Slide 99: Credit has grown significantly, while NPLs remain quite low
Credit has grown significantly, while NPLs remain quite low Banking credit Non-performing loans ratio % y/y, in real terms % of total loan portfolio 20 Total 6 Total Consumer Consumer 15 Mortgages Corporates 5 10 5 4 0 -5 3 -10 -15 2 -20 -25 1 Aug-18 Aug-19 Aug-20 Aug-21 Aug-22 Aug-23 Aug-24 Aug-1
Slide 100: Financial access in Mexico
Financial access in Mexico Key FAS Indicators Outstanding deposits with commercial banks % GDP 30 2016 2017 2018 2019 2020 2021 2022 27 24 Number of ATMs per 100,000 adults 54.59 55.62 59.56 62.38 63.16 63.56 66.32 21 18 Number of commercial bank branches 15 14.02 14.03 14.03 13.92 13.00 12.23 12.
Slide 101: Financial access in Mexico
Financial access in Mexico Accounts Made or received a digital payment* % of population aged 15+, in a financial institution or mobile money % of population aged 15+ account 50 50 49.0 43.9 39.1 36.9 45 40 27.4 30 40 20 34.5 35 31.7 10 0 30 2011 2014 2017 2022 2014 2017 2022 Owns a credit or debit
Slide 102: Formal and informal savings
Formal and informal savings Current savings instrument Reasons for not having a savings account* % of population between 18 and 70 years old % of population that does not have an account 100 33.2 32.2 Without savings 80 39.8 Doesn't have enough money 31.9 60 13.6 15.4 Both 5.4 4.6 15.3 She/he does
Slide 103: Formal and informal credit
Formal and informal credit Current loan instruments Reasons for not having a loan* % of population between 18 and 70 years old % of population that does not have a loan 100 80 42.9 Without a loan Doesn't like to borrow 34.4 45.6 47.9 60 12.6 12.7 11.0 Both Doesn't fullfil the requirements 25.9 40
Slide 104: Access to financial instruments and digitalization in urban and rural populations
Access to financial instruments and digitalization in urban and rural populations Financial instrument access by type of area Channels used to do transactions or check account’s % of population between 18 and 70 years old balance 80 % of population between 18 and 70 years old 74.2 Urban Rural 70 7
Slide 105: Financial conditions of Mexicans
Financial conditions of Mexicans Savings Savings relative to current income % of population aged 18-years-old or more % of population aged 18-years-old or more with savings Avg. 52.0 70 57.3 18 - 29 59.6 60 Women Men 30 - 49 54.0 50 - 64 46.9 50 ≥6 41.3 40 Debt 63.3 % of population aged 18-years-o
Slide 106: Financial strategies and behavioral of Mexicans
Financial strategies and behavioral of Mexicans Not enough money to cover his/her expenses Options to cover his/her expenses % of population aged 18-years-old or more % of population aged 18-years-old or more Reduce expenses 68.3 Total 30.5 Women 32.5 Borrow from family or friends 41.6 Men 28.0 Us
Slide 107: Financial strategies and behavioral of Mexicans
Financial strategies and behavioral of Mexicans Means to cover an economic emergency (equivalent to How often do you have money left at the end of the month? one-month income % of population aged 18-years-old or more % of population aged 18-years-old or more 50 45.9 40 34.7 30 64.3 Loans from fami
Slide 108: MSMEs represent a key part of Mexico's productive chain
MSMEs represent a key part of Mexico’s productive chain Key facts on MSMEs Number of MSMEs, employees and added value % of the total ▪ According to INEGI, there are around 4.8 million MSMEs in Mexico 100 94.9 ▪ INEGI estimates that these companies are responsible of 90 Micro Small Medium Large 72%
Slide 109: Key figures on AFOREs and the pension system
Key figures on AFOREs and the pension system AUMs by Siefore Employer contributions to retirement % of GDP % of the base wage 20 15.0 16 11.5 12.5 13.5 15 12 8.5 9.5 10.5 10 6.5 7.5 8 5 4 0 0 1998 2003 2008 2013 2018 2023 2022 2023 2024 2025 2026 2027 2028 2029 2030 Investment regime by Siefore Ne
Slide 110: Job informality
Job informality People working in informality Informality rate Population aged 15+, million % of population aged 15+ 58 62 56 60 55.5 54 58 52 56 50 54 54.3 48 52 46 50 44 42 48 40 46 Feb-06 Apr-12 Jun-18 Aug-24 Feb-06 Apr-12 Jun-18 Aug-24 Source: INEGI Div TI NIM Dep BAP Guid ESG Eco Rev Div Div
Slide 111: State economic activity and Banorte's regional reach
State economic activity and Banorte’s regional reach Heat Map: Contribution to Economic Growth Branch Network % GDP, contribution points # of branches Average Net Income by branch Thousand MXN Source: Banorte Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco
Slide 112: Analyst Certification
Analyst Certification. We, Alejandro Padilla Santana, Juan Carlos Alderete Macal, Alejandro Cervantes Llamas, Marissa Garza Ostos, Katia Celina Goya Ostos, Francisco José Flores Serrano, José Luis García Casales, Santiago Leal Singer, Víctor Hugo Cortes Castro, Leslie Thalía Orozco Vélez, Hugo Arman
Slide 113: Visit our website
Visit our website Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep Loan ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE @alexpadillasan LD Mkt NIM NIM Hist C/I NI NI ROE Loan ROE Mkt App 113 Mkt C/I C/I Hist Hist App 113 App de BANORTE
Slide 114: Our Annual Report & Corporate Presentation
Our Annual Report & Corporate Presentation Div TI NIM Dep BAP Guid ESG Eco Rev Div Div NI Loan ICAP BAP BAP Dep Eco L D Dep ESG Eco Rev Rev LD ICAP Guid ICAP Guid TI TI ROE LD NIM Mkt NIM Hist C/I NI NI Loan Loan ROE ROE Mkt App 114 Mkt C/I C/I Hist Hist App App
Grupo Financiero Banorte — 3Q24 Earnings Presentation on 6ix