Corporate Presentation nuevo formato 16:9/media/Files/B/Banorte-IR/presentatio… · (11) Provision...

1 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App

XNOR

2Q20

GFNORTE GBOOY

Best Bank 2019

México


-9.8

-5.3

-0.4

-6.3

-3.7

-4.4

-15 -10 -5 0

2020

2009

2001

1995

1986

1983

Source: INEGI, Banorte

We are experiencing the worst recession in the last 40 years

GDP in Mexico during

economic contractions% y/y

GDP in 1983% y/y

GDP in 2009% y/y

GDP in 1995% y/y

GDP in 2020f% y/y

-4.6 -5.7 -5.3-1.8

-30

-20

-10

0

1Q83 2Q83 3Q83 4Q83

-1.5

-9.1 -7.5 -6.9

-30

-20

-10

0

1Q95 2Q95 3Q95 4Q95

-5.6-8.9

-5.0-1.6

-30

-20

-10

0

1Q09 2Q09 3Q09 4Q09

-1.4

-19.4-14.6

-4.0

-30

-20

-10

0

1T20 2T20 3T20 4T201Q20 2Q20 3Q20 4Q20


Source: Banorte with data from INEGI and Banxico

*Interest rate(1980-Sep 1982: CPP; 1982-…: Cetes; Exchange rate: 1980-Nov 1991: ‘para solventar obligaciones en moneda extranjera’; Nov 1991-…: Fix)

However, the great difference to those are inflation levels

Nominal governmental interest rate, inflation and annual exchange rate depreciation%

-50

0

50

100

150

200

250

300

Jan-80 Sep-83 May-87 Jan-91 Sep-94 May-98 Jan-02 Sep-05 May-09 Jan-13 Sep-16 May-20

Interest rate Inflation Annual exchange rate depreciation


Source: Banorte and Presentation from Beatriz Leycegui (SAI, April 15, 2020)

USD/MXN: 24.10 **Nominal GDP in 2019

‘Recovery plan’ to return back to ‘normal’ from COVID-19

Programs from Development BanksMX$ billion, US$ million, % of GDP

▪ Four-month advance to the senior citizen pension▪ Support for:

⎯ Fishermen⎯ Children with disabilities⎯ Benito Juárez Universities⎯ Savings for people without access to financial services⎯ Agriculture⎯ Upkeep for schools

▪ Programs for:⎯ Apprenticeships⎯ Internet for everyone

▪ Guarantee prices▪ Toluca – Mexico City Train▪ Construction of branches of El Banco del Bienestar▪ Recruitment of 31 thousand new elements for the Army, Navy

and National Guard▪ Rural concrete roads▪ New credits and refinancing from INFONAVIT▪ ‘Sowing Life’ program will extend to 200 thousand farmers▪ Expedited returns of VAT to taxpayers▪ No increase to taxes or adoption of counter-cyclical measures or

corporate bailouts to businesses or banks▪ Elimination of 10 deputy ministries▪ Reduction of 25% in wages of high-ranking workers (Deputy

Director and upwards) and end-of-year bonus elimination▪ Savings of 75% in general spending and supplies categories

Institution Measure MXN USD* % of GDP**

Total 61.1 2,535 0.25

BANOBRASLiquidity support for companies in the infrastructure sector

6.0 249 0.02

NAFIN / BANCOMEXT

Liquidity support for "first-floor" financial institutions

10.0 415 0.04

NAFIN / BANCOMEXT

Liquidity support for "second-floor" financial institutions

20.0 830 0.08

NAFIN / BANCOMEXT

Guarantees program for companies and businesspeople

6.3 261 0.03

SHFStabilization of syndicated loans provided to construction companies

8.8 365 0.04

SHF Additional financing for "second-floor" bridge loans 6.0 249 0.02

SHF Small loans for housing improvements 2.0 83 0.01

FNDAttention scheme for the restructuring of debtors' loans

TBD

FND Measures to support the Rural Economy TBDBanco del Bienestar

Clients' Program 2.0 83 0.01

Banco del Bienestar

Outreach Program TBD

Banco del Bienestar

Reactivation of credit demand TBD

FOCIRExtension of the period to divest affected companies

TBD

FOCIRSuspension of commission payments for the management of FICAS

TBD

FOCIR Emerging Program "COVID 2020 - FOCIR-SE" TBD


Source: Banxico, MoF, CNBV

Reference rate%

Measures from the Banking Commission and

Banxico for financial institutions

▪ Adjustments to the accounting criteria to facilitate

the granting of support programs to clients

▪ Flexibility of the regulatory framework for capital

and liquidity requirements

▪ Advice to banks to refrain from paying dividends and

implementing share buyback programs

▪ Delay of the implementation of international

regulations

▪ Extension of deadlines for traded companies to

present information to the Commission

5.00

2

3

4

5

6

7

8

9

Dec-15 Jun-17 Dec-18 Jun-20

Policy response from Banxico and financial authorities to provide liquidity…


Note: 1. The total only adds up facilities for which we have information; 2. Using an exchange rate of USD/MXN 22.50

NA = Not available

Source: Banxico, Banorte

…and strengthen credit channels

Additional measures announced by Banxico to promote liquidity and strengthen credit channelsMX$ billion, US$billion, % of GDP

Measure MXN USD % of GDP

Total1 800.0 35.6 3.3

Provide liquidity and reestablish operational conditions in money markets

(1) Reduction of the Monetary Regulation Deposit 50.0 2.2 0.2

(2) Adjustments to the Ordinary Additional Liquidity Facility interest rate -- -- --

(3) Increasing liquidity during trading hours to facilitate the optimal functioning of financial markets and payment systems -- -- --

(4) Extending the securities eligible for the Ordinary Additional Liquidity Facility -- -- --

(5) Extending the counterparts eligible for the Ordinary Additional Liquidity Facility -- -- --

(6) Temporary securities swap window 100.0 4.4 0.4

Promote the orderly behavior in governmental and corporate bond markets

(7) Strengthening of the Government Debt Market Makers Program -- -- --

(8) Government securities term repurchase window 100.0 4.4 0.4

(9) Swap of government securities 100.0 4.4 0.4

(10) Securities Repurchase Facility 100.0 4.4 0.4

Strengthen credit channels

(11) Provision of resources to banking institutions to channel credit to MSMEs and individuals affected by the COVID-19 pandemic 250.0 11.1 1.0

(12) Collateralized financing facility for commercial banks with corporate loans, to finance MSMEs 100.0 4.4 0.4

Promote the orderly behavior of the foreign exchange market

(13) Non-deliverable FX forwards program expansion -- -- --

(14) USD credit auctions (financed with the swap line facility with the Federal Reserve) -- -- --

(15) Foreign exchange hedges settled by differences in USD -- -- --


Source. Banorte with data from the Presidency of the Republic, MoF, Banxico, CMN and BID Invest

^Aimed at channeling credit to MiPyMEs (liquidity provision to the financial system are excluded)

Summary – Measures announced to face the emergency of COVID-19

Summary of some of the announced measures

Entry: MXN Billion % of GDP

Total 1,010.6 4.5

Federal government 372.6 1.6

Announced in the morning conference

307.6 1.4

Others (Pre CGPE) 65.0 0.3

Banxico* 350.0 1.5

CMN / BID Invest 288.0 1.3


Source: INEGI, Bloomberg

2020 GDP forecasts% yoy

Unemployment rate%, sa

1Q20 2Q20 3Q20 4Q20 2020

GDP (aggregate supply) -1.4 -19.4 -14.6 -4.0 -9.8

Primary sector 1.4 -1.3 -2.1 0.3 -0.3

Secondary sector -2.9 -26.5 -15.6 -4.9 -12.5

Tertiary sector -0.7 -17.1 -14.9 -4.3 -9.2

GDP (aggregate demand)

-1.4 -19.4 -14.6 -4.0 -9.8

Private consumption -0.5 -17.0 -14.8 -3.7 -9.0

Investment -9.3 -40.1 -24.7 -8.6 -20.6

Government spending 3.4 1.2 -6.2 -8.4 -2.5

Exports 1.7 -36.7 -5.2 3.2 -9.6

Imports -3.4 -36.6 -9.7 -3.1 -13.2

2020 – Strong decline, driven by the COVID-19 outbreak

6.0

8.0

3

4

5

6

7

8

9

Dec-07 Mar-11 Jun-14 Sep-17 Dec-20


*Note: Seasonally adjusted by Banorte with the ARIMA X-12 method

Source: IMSS, STPS, INEGI and ANTAD

Initial impact of COVID-19 lockdowns in Mexico

Formal job creationThousands, seasonally adjusted*

Auto sales% y/y

ANTAD’s same-store sales% y/y in nominal terms

-64.5

-59.0

-41.1

-70

-60

-50

-40

-30

-20

-10

0

10

20

30

Mar-06 Dec-10 Sep-15 Jun-20

-22.9

-19.0

-17.9

-25

-20

-15

-10

-5

0

5

10

15

Mar-06 Dec-10 Sep-15 Jun-20

-526

-310

-50

-600

-500

-400

-300

-200

-100

0

100

200

Jun-94 Jun-07 Jun-20

Original figures:April: -555May: -345June: -83

Apr-

20

May-

20

Jun-

20

Supermarkets +8.7 +7.0 +2.4

Departmental -72.7 -49.6 -44.6

Specialized -17.5 -16.3 -14.5


Source: Bloomberg, INEGI, Banxico, Banorte

MXN forecastsUSD/MXN

Inflation forecasts% yoy, bi-weekly frequency

Reference rate forecasts%

USD/MXN, inflation, and reference rate forecasts

2019:7.25

2020:4.00

2

3

4

5

6

7

8

9

Dec-15 Aug-17 Apr-19 Dec-20

2018:4.8

2020:3.7

2019:2.8

-2

-1

0

1

2

3

4

5

6

7

8

9

Dec-18 Aug-19 Apr-20 Dec-20

Headline

Core

Non-core

22.65

22.00

23.50

22.85

20.00

21.00

18.50

19.50

20.50

21.50

22.50

23.50

24.50

25.50

Jan-19 Dec-19 Dec-20 Dec-21


Source: Banorte with data from the MoF

1. Preliminary Policy Criteria 2021, where the 2020 macroeconomic framework was updated; 2. Public sector borrowing requirements (PSBR); 3. Historical Balance of the Public Sector

Borrowing Requirements (HBPSBR); 4. Femsa $8,790 million; Wal-Mart $8,000 million; IBM ~$669 million)

The public deficit could increase around 60bps of GDP (~$150 billion), but non-recurring income and

spending cuts could partially offset it

Updated preliminary policy

criteria

Impact on public deficit2

%of GDP unless otherwise stated

Public sector debt 3

% of GDP

Possible fiscal strategy$ million

-4.4

-83bps-11bps-3bps

+33bps+7bps

-5.0

-5.6

-5.4

-5.2

-5.0

-4.8

-4.6

-4.4

-4.2

-4.0

Po

licy

Cri

teri

a

↑D

eclin

e in

GD

P

↓O

il o

utp

ut

↓Ex

chan

ge r

ate

↑O

il p

rice

↓In

tere

st r

ate

Up

dat

ed P

SBR

In the update for the 2020 macroeconomic framework within the

PPC the government assumes the use of almost 100% of the

different stabilization funds

48.7

45.8 44.9 44.9

51.851.2

40

45

50

55

2016 2017 2018 2019 2020

Policy criteriaActual PPC1

GDP(% y/y)

-9.8 -2.9

Oil output(kbpd, average)

1,710 1,850

Exchange rate(USD/MXN, average)

21.74 22.00

Oil price(US$/bbl, average)

30.6 24.0

Interest rate(%, average)

5.38 6.20Total 45,000

Non-recurring collection’(Femsa, Wal-Mart, IBM, etc)4

25,000

+Spending cuts 20,000


About Banorte


GFNORTE – a Leading and Profitable Financial Franchise in Mexico

One of the most public companies in Mexico

GFNorte is top 5 in trading at BMV, and has the highest Relative Weighting on S&P/BMV IPC Index,

rated OTCQX Best 50 Global.

float of almost 86%

and more than 4,000 investors, including large global institutional funds.

Investment grade ratings by S&P, Fitch, Moody's and HR Ratings.

1 2 3

Sound Fundamentals

Increasing profitability, solid asset quality, high

liquidity and strong capitalization ratios.

Adequate business mix

Strong retail, wholesale and premium banking

platforms, as well as leading insurance and

pension fund management units, serving more

than 21 million clients.

Solid corporate governance

Independent Board Members represent

71% of total board composition and best

practices in minority shareholder right

protection.


From Regional Bank to National Financial Group

20 | 20

Establishment

1899 1982-1992 1995 2000 2005 2010 2015

Privatization

INB IXE

Afin Afore Bancomer

Banorte Generali 50%

BancentroBanpaís

Bancrecer

Afore XXIIMSS 50%

Banorte-General i100%

…

Inorganic Growth

Regional Bank

Business Diversification

2020

Client

Segmentation

IT : central DB,

multichannel

Profitability

Nationalization

G.F. Interacciones


20/20

Strategy 20 | 20 Perfect Vision

PRODUCTS &

SOLUTIONS

Deposits & Loans

Insurances

Pension

Annuities

Wealth Mngt.

…

DISTRIBUTION

CHANNELS

Mobile

Internet

ATM

Contact Center

Branches

…

PROCESSES

Account opening - Credit Analisis

Next Best Offer – Next Best Action

Client Segmentation

▪ 12 million ex-Afore clients

9 million Afore clients

▪ Structured Info & Learning

(Central DB & Watson)

▪ Behavior understanding

Analitics Cost

Revenues

Digital

Bank


Diversified Business Mix

* Includes: Almacenadora Banorte; Ixe Servicios; Fundación Banorte A.B.P.

Casa de Bolsa

Banorte

Banco Mercantil del Norte

Pensiones Banorte

Seguros Banorte

Banorte Futuro

Afore XXI Banorte

Operadora de Fondos

Banorte

(Fondos de Inversión)

Other Subsidiaries*

Arrendadora y Factor Banorte

Banorte Ahorro y Previsión

98.2619% 99.9999% 99.9999% 99.9999% 99.9058%

50.0%

99.9999% 99.9999%

98.22%

Banorte Financial Services

(Uniteller)100.0%

100%


Business Mix - Diversified Net Income and Balance in Profitability

1) Without Goodwill: 1q20 = 52.3%

Net Income Mix

CompanyNet Income

1H20

ROE

1H20

Bank 9,678 16.9%

Broker Dealer 779 31.0%

Long Term Savings 4,304

Retirement Savings (Afore) 944 15.9%

Insurance 2,630 64.2%

Annuities 708 27.2%

Other Finance Companies

Leasing & Factoring 447 14.6%

Warehousing 19 14.6%

Sólida (156) (1.5%)

Total 15,636 15.8%

Recurring w/o advanced

provisions18,546

1)

1H20

$15.6 b


NIM

Net Interest Margin Moving in the Right Direction

NIM

(Post-Provision)

3.3% 3.4% 3.4% 3.5% 3.5%3.7%

4.3% 4.4%4.5%

4.4%

4.8%

3.1%

4.3%

2.9%2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20

4.1% 4.1%

4.4%

4.7%4.5%

4.9%

5.5% 5.6% 5.6%5.5%

5.9%

5.3%5.6%

5.3%

4.0%

4.5%

5.0%

5.5%

6.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20

NIM NIM ex Insurance & Annuities

4.9bn on

advanced

provisions


Fees on Services Affected But Recovering

Fees affected by lower economic activity.

Digital related concepts counteracting

lockdown

Electronic Banking services already recovered

in June, supported on POS fully digital

operations, even though travel, restaurants

and hotels are still 80% to 90% down.

6.0 6.1

5.4

2.42.7

2.3

-

1.0

2.0

3.0

4.0

5.0

6.0

1Q 2Q 3Q 4Q 1Q 2Q

2019 2020

Billio

n P

es

os

Fees Charged Fees Paid

Fees

POS & ATM/Web fees


Improving Efficiency

Cost to Income56.0% 54.0%

52.0%

48.5% 47.9%

44.9%42.8%

40.0% 39.7%38.5%

40.2% 40.6%38.9% 38.8%

35%

40%

45%

50%

55%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

+13% +5%+10%

+13%

+5% +4% +4% +7%+11%

+19%*

* Recurring

+8%

+9%*

Reported

39.0% 39.1%


8,728 8,858

9,010 9,118

6,518

9,427

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9,500

10,000

10,500

2Q19 3Q19 4Q19 1Q20 2Q20

Strong Net Income

Net Income

8,517

10,888

13,50815,228

17,108 19,308

23,908

30,311

35,34531,958

36,528

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

32,500

35,000

37,500

2011 2012 2013 2014 2015 2016 2017 2018* 2019*

Million Pesos

CAGR

2011-2019 +20%

+3%

+8%

YoY*

+17%

YoY* Recurring

Reported +14% YoY

* w/o advanced

provisions

Reported

-29%


1.10%

1.30%1.40% 1.46% 1.47%

1.60%

1.86%

2.07%2.22% 2.20% 2.24% 2.28% 2.21%

1.49%

2.18%2.30%

2.20%

1.0%

1.5%

2.0%

2.5%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

ROA

Constant Positive Growth in Profitability

ROE

14.1% 14.3% 14.2%13.2% 13.3%

14.1%

17.0% 19.3% 19.6%

19.5% 19.6%19.0% 18.8%

13.0%

20.3% 20.1% 19.5%

12%

15%

18%

21%

24%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

* Recurring

* Recurring

Reported:

Reported:

4.9bn on

advanced

provisions

4.9bn on

advanced

provisions


Digital Transformation

24 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App24

Fast Moving to Self-service/Digital Operations

Transaction Change

Jun vs Feb

Account statements 408%

Check deposit 100%

Payment of Services 91%

Transfers 31%

Payment to Credit Card 23%

Registration of Clarifications 140%

Lock and unlock of Credit Card 32%

Initial Activation of Credit Card 8%

Balance and Movements Consultation 20%

Mobile recharge 15%

1

2

3

4

5

6

7

8

9

10

Self-s

erv

ice

Se

rve

d b

y s

taff

Physical Remote

WEB and

Mobile

Contact

Center

Branch

ATM

NPS


3.50

3.904.12 4.21 4.28 4.30

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Digital Transformation Gaining Share

39.269.2

141.9

223.9

249.8

0

50

100

150

200

250

300

1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020

Transactions Growth

+76%

24%

32%

19%

2%

1%

19%

3%

Transactions (Tx) Customers Using Digital (millions)

WEB

MobileATM

Call Center

Correspondents

POS

Branches

*

Time Deposits

Mutual Funds

Credit Card

Insurance

Digital Deposit Account

Payroll loans

Mobile

as a

Point of Sale


Leaders in the Business & Infrastructure for the New Payments Market

Recovery on POS’s transactions pre

COVID-19 with emphasis on e-commerce

The best DIGITAL PLATFORM

for aggregators

CoDi – Test Pilot and further

development underway

54

42

56

0

10

20

30

40

50

60

ene-20 feb-20 mar-20 abr-20 may-20 jun-20

POS’s TransactionsMillions


Loans & Deposits


Healthy Funding & Loan Portfolio Structure

$822 bn

2Q20

$792 bn

Commercial

Consumer

Mortgage

Government

Corporate

US 35.6 bn

Demand

Money Market

Time

Senior Unsec. Debt

US 34.3 bn

2018

DemandTime

Money Market

Senior Unsec. Debt

Consumer

Commercial

Mortgage

Corporate

Government

Bank Deposits

Loan Portfolio

$759 bn

$777 bn


Demand68%

Time32%

116 124 129 136158 168

194223 229 227 224

190211

255

300

351384 397 414

438 454482

306336

384

436

509551

590637

667 681 706

100

200

300

400

500

600

700

2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20

Time Demand Core Deposits

2Q19 2Q20

Demand 396 482

Time 236 224

TOTAL 632 706

Loyal Deposits Base

Demand62%

Time38%

MIX

2013 1H20

Billion Pesos CAGR:

+10%

YoY

+12%

2%

(5%)

12%

Deposits

YoY

+22%

YoY

-5%

+11%

+9%


Continued Growth in Performing Loan Book, Special Focus on Consumer

US 34.3 bn

Billion Pesos 2Q19 1Q20 2Q20 QoQ YoY

Mortgage 163 173 177 2% 9%

Car Loans 25 27 27 (2%) 5%

Credit Cards 38 39 37 (3%) (1%)

Payroll 52 52 51 (0%) (2%)

Consumer 278 291 293 1% 5%

Commercial 171 182 186 2% 9%

Corporate 132 145 150 3% 14%

Government 187 162 163 1% (13%)

TOTAL 768 780 792 2% 3%

350 401

425 472

518 567

616

777 763

780 792

300

400

500

600

700

800

2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20

Total Loan Portfolio

99118

140158

176203

241269

288 291 293

50

100

150

200

250

300

2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20

CAGR:

+14%

US 12.7 bn

CAGR:

+10%

Consumer Portfolio


2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Credit Cards 6.3% 6.0% 5.5% 5.9% 5.9% 6.0% 5.4% 5.8% 5.5%

Payroll 3.3% 4.1% 3.7% 3.0% 3.8% 3.4% 3.3% 2.7% 3.3%

Car Loans 1.1% 1.1% 1.1% 0.9% 1.0% 1.0% 1.0% 0.9% 1.2%

Mortgage 0.9% 1.0% 0.9% 1.0% 1.0% 1.1% 1.1% 1.2% 1.3%

Commercial 2.5% 2.2% 1.9% 2.1% 2.4% 2.5% 2.4% 2.3% 1.1%

SME 5.5% 6.0% 5.5% 5.9% 6.4% 6.5% 6.6% 7.0% 3.7%

Commercial ex-SME 1.5% 1.2% 0.9% 1.1% 1.3% 1.6% 1.3% 1.2% 0.6%

Corporate 3.0% 2.9% 2.9% 2.9% 3.0% 2.8% 1.8% 1.8% 0.3%

Government 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%

Total GFNorte 2.0% 1.8% 1.7% 1.7% 1.9% 1.9% 1.7% 1.7% 1.2%

1.9%2.1%

3.1%2.9%

2.2%

1.8%2.0%

1.7% 1.7% 1.7%

1.2%

1.0%

2.0%

3.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20

Sound Asset Quality

Past Due Loan Ratio

1.9bn on

advanced

write-offs


2.2% 2.3%2.0% 1.9%

2.2%2.0%

2.2%

4.2%

1.7% 1.6%

2.2%2.5%

2.1%2.4% 2.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20

Actual

Prev. Criteria

143% 138%

105% 107%116%

139%129%

142% 138%128% 127%

138% 140%

201%

90%

110%

130%

150%

170%

190%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20

Sound Asset Quality

Coverage Ratio

Cost of Risk

* Cost of Risk: Provisions / Average Total loans (Performing + Past Due), On actual criteria all the recoveries are register on Provisions (net)

1.8%

Without 4.9 bn

one-hit impact


Strong Capital Position

7.90%

9.40%

11.40%

Capital Adequacy Ratio

11.5%12.7% 12.4% 12.1% 11.9% 12.7%

13.8% 13.1% 13.3% 12.7% 12.2%13.2%

5.2%

1.3%

15.1% 15.3%14.6%

15.3%

17.2% 17.2%18.1%

20.0% 20.3%

18.6% 19.0%19.7%

2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

*RWA= Risk Weighted Assets annual growth

RWA

Basel III

+17% +11% +8% +16% (2%) +19% +20% +19% +5% +7% +9% +15%

CET1

Minimum

Regulatory

Ratios

Total

Tier 1

18.4%

Tier 2

9.70%

7.70%

6.20%

Temporary

waiver


GFNorte Guidance 2020

Guidance

2020

Loan Growth 6% – 8%

NIM Expansion 5 – 15bp

Expense Growth 5% – 5.5% 4% 4.5%

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 -9.8%

Inflation 3.7%

Reference Rate 4.0%


Loans

May 2020

Deposits

2°

Deposit & Loan Market Share

Source: CNBV.

4°


Consumer C. Cards Mortgage Commercial Government Deposits

may-19 may-20 may-19 may-20 may-19 may-20 may-19 may-20 may-19 may-20 may-19 may-20

Banorte 12.1% 12.2% 9.7% 10.2% 19.4% 19.3% 10.2% 10.2% 34.6% 29.4% 13.9% 13.2%

BBVA 28.6% 29.4% 27.6% 28.1% 25.9% 26.1% 18.6% 19.5% 24.8% 28.1% 21.9% 23.2%

CitiBanamex 14.6% 12.6% 27.0% 26.0% 10.0% 9.0% 12.4% 12.8% 6.4% 7.5% 14.3% 14.6%

Santander 8.8% 8.9% 14.2% 14.3% 16.7% 16.5% 13.2% 13.1% 12.0% 13.9% 13.4% 13.4%

HSBC 6.3% 6.5% 5.6% 5.8% 6.4% 7.3% 8.9% 8.0% 5.2% 6.4% 8.4% 8.0%

ScotiaBank 5.2% 5.1% 2.7% 2.7% 14.8% 15.3% 7.2% 7.7% 1.8% 2.6% 6.5% 6.5%

Inbursa 4.7% 3.9% 4.1% 4.2% 0.6% 0.6% 0.0% 0.0% 3.2% 2.3% 3.1% 2.9%

Others 19.7% 21.3% 9.1% 8.7% 6.1% 6.0% 29.5% 28.7% 12.0% 9.9% 18.4% 18.2%

Market Position 3° 4° 2° 4° 1° 4°

Market Share by Segment

Source: CNBV.


Afore Market Share (Retirement Savings)

Source: CONSAR

AUM Market Share

Jun-19 Jun-20 Jun-19 Jun-20

XXI Banorte 829 946 22.4% 22.0%

CitiBanamex 670 763 18.1% 17.7%

Profuturo GNP 549 657 14.8% 15.3%

SURA 547 633 14.8% 14.7%

PensionISSSTE 233 275 6.3% 6.4%

Coppel 230 284 6.2% 6.6%

Principal 243 276 6.6% 6.4%

Invercap 179 202 4.8% 4.7%

Other 220 271 5.9% 6.3%

1°

Billion Pesos

Assets Under Management


Insurance Market Share

Million Pesos

Source: AMIS.

Mar-19 Mar-19

Premiums Market Share

Mar-20 Mar-20

6°

Mar-19 Mar-19

Net Income Market Share

Mar-20 Mar-20

3°

19,225 20,670 12.6% 12.5% 1,610 1,967 12.0% 12.3%

16,306 18,793 10.7% 11.3% 1,124 1,594 8.4% 10.0%

14,231 16,374 9.3% 9.9% 1,418 1,675 10.6% 10.5%

10,772 11,402 7.1% 6.9% 1,224 2,592 9.2% 16.2%

10,371 10,582 6.8% 6.4% 936 251 7.0% 1.6%

12,606 10,364 8.3% 6.3% 1,600 1,696 12.0% 10.6%

7,976 9,004 5.2% 5.4% 1,147 1,622 8.6% 10.1%

7,254 8,053 4.8% 4.9% 633 1,148 4.7% 7.2%

5,618 6,400 3.7% 3.9% 385 554 2.9% 3.5%

5,206 5,687 3.4% 3.4% -7 4 -0.1% 0.0%

43,054 48,468 28.2% 29.2% 3,297 2,883 24.7% 18.0%

152,619 165,797 100.0% 100.0% 13,367 15,986 100.0% 100.0%

Metlife México

G.N.P.

BBVA Bancomer

AXA Seguros

Banamex

Seguros Banorte

Qualitas

Monterrey New York Life

Chubb de México

Mapfre Crédito

Other

TOTAL


Annuities Market Share

Million Pesos

*\ Legal document for any pensioners entitled to receive a pension.

Source: AMIS to June 2020.

Jun-19 Jun-19

Resolutions * Market Share

Jun-20 Jun-20

Annuitants

Jun-19 Jun-19Jun-20 Jun-20

Market Share

Banorte

Profuturo GNP

Bancomer

Total Industry

5,446 5,910 42.3% 48.6%

4,288 2,655 33.3% 21.8%

3,135 3,593 24.3% 29.6%

12,878 12,159 100.0% 100.0%

Banorte

Profuturo GNP

Bancomer

Total Industry

5,058 4,903 38.8% 46.1%

4,050 1,925 31.1% 18.1%

3,910 3,813 30.0% 35.8%

13,032 10,641 100.0% 100.0%

1°

1°


GFNorte in the World

(1) Level 1

Ticket Indexes

GFNORTEO (BMV)

IPC (BMV)

Sustainable IPC (BMV)

MSCI Mexico

STOXX

GBOOY (OTCQX)

DJSI MILA

Climate Disclosure Leadership

OTCQX30

Euronext Vigeo EM70

XNOR (Latibex)FTSE Latibex All Shares

FTSE Latibex TOP

2Q20

Total Shares Outstanding: 2,883.5 m

Float: ~ 86%

Total ADRs(1) Outstanding: 6.25 m

321,102

187,425

229,869

150,000

200,000

250,000

300,000

350,000

400,000

4Q

13

4Q

14

4Q

15

1Q

16

2Q

16

3Q

16

4Q

16

1Q

17

2Q

17

3Q

17

4Q

17

1Q

18

2Q

18

3Q

18

4Q

18

1Q

19

2Q

19

3Q

19

4Q

19

1Q

20

2Q

20

Market CapitalizationMillion pesos

US 9.96 bn

Oil and

COVID-19

crisis


Analyst Opinion & Investment Grade by All Major Rating Agencies

Net Income 2020 $30,474

Target Price $118.4

Maximum $136.5

Number of Analysts 22

# BUY 18

# HOLD 2

# SELL 2

Analysts‘ Estimates

(as of July 22, 2020)

Ratings Agencies

RatingAgency Outlook Date

BBB-

BBB

Fitch

Standard & Poor’s Negative

Negative

Mar-20

Jul-20

Baa3Moody’s Negative Abr-20


Appendix


Quarterly Summary

Income Statement Highlights - GFNorte2Q19 1Q20 2Q20

Change1H19 1H20

Change

(Million Pesos) 1Q20 2Q19 1H19

Interest Income 37,612 37,008 32,684 (12%) (13%) 75,686 69,692 (8%)

Interest Expense 18,317 14,657 13,289 (9%) (27%) 36,723 27,947 (24%)

Technical Results (Insurance & Annuities) 197 (383) 1,288 N.A. 555% 1,313 905 (31%)

Net Interest Income 19,492 21,968 20,683 (6%) 6% 40,276 42,651 6%

Net Service Fees 3,630 3,455 3,069 (11%) (15%) 6,598 6,524 (1%)

Trading 963 1,166 1,703 46% 77% 2,114 2,869 36%

Other Operating Income (Expenses) 653 327 1,140 248% 75% 2,796 1,467 (48%)

Non Interest Income 5,246 4,949 5,911 19% 13% 11,508 10,860 (6%)

Total Income 24,738 26,916 26,595 (1%) 8% 51,784 53,511 3%

Non Interest Expense 9,525 10,466 10,307 (2%) 8% 19,528 20,774 6%

Provisions 3,728 4,344 8,456 95% 127% 7,464 12,800 71%

Operating Income 11,485 12,106 7,832 (35%) (32%) 24,792 19,938 (20%)

Taxes 3,100 3,228 1,886 (42%) (39%) 6,750 5,114 (24%)

Subsidiaries' Net Income 466 353 648 83% 39% 877 1,001 14%

Minority Interest (123) (113) (75) (33%) (39%) (258) (189) (27%)

Subsidiaries & Minority Interest 343 240 573 138% 67% 618 813 31%

Net Income 8,728 9,118 6,518 (29%) (25%) 18,660 15,636 (16%)

Recurring Net Income 8,728 9,118 6,518 (29%) (25%) 17,477 15,636 (11%)

N.I. w/o anicipated Provisions 2T20 8,728 9,118 9,867 8% 13% 17,477 18,985 9%


Quarterly Summary

Balance Sheet Highlights - GFNorte2Q19 1Q20 2Q20

Change

(Million Pesos) 1Q20 2Q19

Asset Under Management 2,763,574 2,708,692 2,878,778 6% 4%

Performing Loans (a) 768,183 779,818 791,637 2% 3%

Past Due Loans (b) 14,567 13,212 9,254 (30%) (36%)

Total Loans (a+b) 782,750 793,030 800,891 1% 2%

Total Loans Net (d) 764,158 774,525 782,337 1% 2%

Acquired Collection Rights ( e) 2,065 1,500 1,438 (4%) (30%)

Total Credit Portfolio (d+e) 766,222 776,025 783,774 1% 2%

Total Assets 1,589,998 1,729,280 1,783,581 3% 12%

Total Deposits 734,568 772,993 801,148 4% 9%

Total Liabilities 1,411,630 1,531,790 1,575,237 3% 12%

Equity 178,368 197,490 208,344 5% 17%

Total Loans ex-Government 580,729 618,269 628,920 2% 8%

Financial Ratios GFNorte 2Q19 1Q20 2Q20 1H19 1H20

NIM (1) 5.5% 5.9% 5.3% 5.6% 5.6%

ROE (2) 19.5% 18.8% 13.0% 21.1% 15.8%

ROA (3) 2.2% 2.21% 1.49% 2.3% 1.8%

Efficiency Ratio (4) 38.5% 38.9% 38.8% 37.7% 38.8%

Operating Efficiency Ratio (5) 2.4% 2.5% 2.3% 2.4% 2.4%

CCL Banorte and SOFOM - Basel III (6) 122.2% 120.1% 150.8% 122.2% 150.8%

Past Due Loan Ratio 1.9% 1.7% 1.2% 1.9% 1.2%

Coverage Ratio 127.6% 140.1% 200.5% 127.6% 200.5%

Cost of Risk (7) 1.91% 2.22% 4.24% 1.91% 3.24%

Market References

Banxico Reference Rate 8.25% 6.50% 5.00% 8.25% 5.00%

TIIE 28 days (Average) 8.50% 7.36% 6.07% 8.53% 6.72%

Exchange Rate Peso/Dolar 19.21 23.48 23.09 19.29 23.29

Tax Rate 25.9% 25.9% 22.2% 26.3% 24.4%


Quarterly Summary

Share Data 2Q19 1Q20 2Q20Change

1H19 1H20Change

1Q20 2Q19 1H19

Earnings per share (Pesos) 3.027 3.162 2.260 (29%) (25%) 6.471 5.423 (16%)

Earnings per share Basic (Pesos) 3.048 3.180 2.287 (28%) (25%) 6.518 5.470 (16%)

Dividend per Share for the period (Pesos) 5.54 0.00 0.00 NA NA 5.54 0.00 NA

Payout for the period 50.0% 0.0% 0.0% NA NA 50.0% 0.0% NA

Book Value per Share (Pesos) 61.08 67.70 71.41 5% 17% 61.08 71.41 17%

Issued Shares (Million) 2,883.5 2,883.5 2,883.5 0% 0% 2,883.5 2,883.5 0%

Stock Price (Pesos) 111.36 65.00 79.72 23% (28%) 111.36 79.72 (28%)

P/BV (Times) 1.82 0.96 1.12 16% (39%) 1.82 1.12 (39%)

Market Capitalization (Million Dollars) 16,716 7,981 9,956 25% (40%) 16,716 9,956 (40%)

Market Capitalization (Million Pesos) 321,102 187,425 229,869 23% (28%) 321,102 229,869 (28%)

Exchange Rate Peso/Dolar 19.20870 23.48470 23.08930 -2% 20% 19.29330 23.28700 21%

INFRASTRUCTURE 2Q19 1Q20 2Q20

Employees* 29,250 29,796 29,925

Branches 1,158 1,178 1,180

Correspondents 13,274 13,694 16,035

ATM’s 8,569 9,090 9,060

POS’s 162,115 166,225 162,127


Healthy Liquidity

Loans / Deposits

(%)

Liquidity Coverage Ratio

CCL (%)

104%

105%

101%

99%

90%

92%

94%

96%

98%

100%

102%

104%

106%

108%

110%

1Q2015

3Q 1Q2016

3Q 1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020

122%

120%

151%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

160%

1Q2015

3Q 1Q2016

3Q 1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020


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

approval in M&A operations, %Current Before Aug'16 19.7

Non-related 20 20 - -

Related 5 20 - -

Board members nominations committee

Existence Yes 13.5% of the companies

Final approval of nominated board members Shareholders Shareholders

Share of independent board members in this committee, %Current Before Aug'16

18.857.1 25

All members of the BOD are elected every year by the Shareholders’ Assembly.

Main Committees are chaired by independent members.

- Risk Policies

- Nominations

- Audit & Corporate Practices

Assembly quorum has always been higher than 60% and consensus has always been reached on proposals.


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:

Focus on Social and Environmental Risk Management, Environmental Efficiency, Human Rights and Gender Equity and Corporate Volunteering,

Responsible Investment, Financial Inclusion and Education

Sustainable Finance Transparency

People and Community Environmental Footprint

✓ PRI (Principles of Responsible Investment) – We seek to promote a sustainable risk management considering the risk of the environmental,

social and governance issues integrated in our investment portfolios, safeguarding the patrimony of our clients.

✓ Reporting – We incorporated in our Annual Integrated Report the framework of International Integrated Reporting Council (IIRC), Global

Reporting Initiative (GRI), Global Compact and we align our performance to the UN SDGoal's platform.

✓ Social & Environmental Risks Analysis – Under the Equator Principles’ framework, Banorte analyzes the environmental and social risks and

impacts of loan portfolios for Corporate and Business Banking, Government Banking and Structured Finance. Banorte goes beyond the Equator

Principles’ scope by including loans of lower amounts (loans greater than $ 1 million US dollars and analyzes their risks the Performance

Standards of the International Finance Corporation.

✓ Sustainability Management System – Its objective is to gather, validate, monitor and analyze data from the subsidiaries of the Group through

key environmental, social and economic indicators.


Corporate Responsibility and Sustainability

Global Initiative Report (GRI Standards)International standards on sustainability reporting and disclosure of economic, environmental and socialtopics.

UN Global CompactInternational initiative promoting 10 universally accepted Principles to promote Corporate Social Responsibility (CSR).

Carbon Disclosure Project (CDP)Organization that promotes awareness on climate change through a better quality and transparency of the information reported on the company's emissionsperformance.

IPC SustentableMexican index of 30 listed companies ,which are best positioned in relation to the pillars of Environment, Socialand Corporate Governance.

Empresa Socialmente Responsable (ESR) Recognition granted by the Mexican Center for Philanthropy (Cemefi) and AliaRSE, as a company committed with corporate social Responsibility.

Natural Capital DeclarationVoluntary financial sector initiative created at the Rio +20 Earth Summit, which recognizes the role of natural resources in the economy through its integration into financial products and services.

Equator PrinciplesStandard within the financial sector to determine, assessand manage the environmental and social risks of financed projects.

GEI2 Programme MexicoVoluntary reporting of greenhouse gas emissions

UNEP Finance InitiativeInitiative that aims to identify, promote and carry out the adoption of best environmental and sustainabilitypractices at all levels of operations of financialinstitutions.

Dow Jones Sustainability Index MILA In 2017 was included in the Dow Jones Sustainability Index MILA Pacific Alliance.

Asociación de Bancos de México (ABM) Participation in the Sustainability Committee and the Corporate Social Responsibility Committee, and signatories as the ABM Banking Sustainabilityprotocol.

STOXX ESG Leaders IndexIndex that represents the main global companies in terms ofenvironmental, social and governance criteria, based on ESG indicators provided by Sustainalytics.

Euronext Vigeo Emerging Markets 70 Recognizes the 70 companies from emerging countries with the most advanced practices in terms of sustainability.

FTSE4Good Emerging IndexIndex that evaluates actions in the themes of climate change, labor standards and risk management, among others.

Bloomberg Gender Equity IndexIndex that provides analysis of the commitment of 52 companies with the gender equity in the workplaceto investors and organizations.

Principles for Responsible Investment Initiative that promotes its signatories to integrate environmental, social and governmental (ESG)criteria into their investment and ownership decisions.


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: [email protected]

We recently published the 1Q20 report.

During 2020 we have released:

1. Annual Report to the Banking and Securities Commission (CNBV)

2. Annual Report to the Stock Exchange (Informe Anual Circular Única de Emisoras)

3. Audited Financial Statements for 2019

4. Annual Financial and CSR Report for 2019 under the GRI methodology (PDF & Interactive)

You can access our quarterly and annual reports (in Spanish and English) and other informative materials at :

investors.banorte.com

Disclaimer

Grupo Financiero Banorte does not warrant that the document is accurate, complete, reliable, fit for any particular purpose and does not accept liability for any act (or

decision not to act) resulting from the use of this document and related data. The information contained in this document is illustrative and informative so it should not

be considered as an advice and/or recommendation of any kind. Grupo Financiero Banorte is not part of any party or political trend.

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