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GFNORTE:
1Q08 Results
June, 2008
1
Contents
1. Recent Performance.
2. Asset Quality & Capitalization.
3. Final Considerations.
2
Banorte at a Glance
Total
Market
Share
Branches
1,062
14%
ATM’s
3,812
14%
Loans (US bn)
$18.6
12%
Core Deposits (US bn)
$15.5
13%
Deposits
Loans
Money
Market
Consumer
16%
Time
32%
15%
52%
Demand
Mortgage
Corporate
19%
9%
19%
Government
38%
Commercial
3
Recent Results Recap
MILLION PESOS
1Q07
1Q08
Net Income
1,663
ROE
24.0%
23.2%
ROA
2.7%
2.6%
Net Interest Margin
7.1%
7.9%
Performing Loan Growth
24%
29%
Past Due Loan Ratio
1.4%
1.6%
Stock Price
52.30
12%
46.14
Book Value
14.03
20%
16.79
P/BV
3.73
11%
16%
1,928
2.75
4
Quarterly Net Income
MILLION PESOS
Non-recurring
Recurring
1,928
1,663
1,685
237
1,691
286
1,377
1Q07
4Q07
1Q08
5
Income Statement
MILLION PESOS
1Q07
1Q08
Change
YoY
Net Interest Income
3,821
5,179
36%
Non Interest Income
2,104
1,961
(7%)
Service Fees
1,418
1,573
11%
Recovery
116
190
64%
FX & Trading
569
198
(65%)
5,925
7,140
21%
Non Interest Expense
(3,469)
(3,799)
10%
Net Operating Income
2,456
3,341
36%
Provisions
(261)
(1,005)
284%
345
702
103%
(926)
(1,075)
16%
49
(34)
(170%)
1,663
1,928
16%
Total Income
Non Operating Income, Net
Income Tax
Subs & Minority Interest
Net Income
6
Non Interest Expense
BILLION PESOS
1Q07
Non Interest Expense
3.5
1Q08
10%
3.8
EFFICIENCY RATIO
60%
58%
53%
1Q06
1Q07
1Q08
7
Net Interest Margin vs CETES
PERCENTAGE
NIM
8.0
7.6
7.7
7.5
99%
CETES
8.2
7.9
7.9
7.7
107%
7.1
7.5
1Q06
7.1
7.0
2Q06
3Q06
7.0
7.0
4Q06
1Q07
7.1
7.2
7.4
2Q07
3Q07
4Q07
7.4
1Q08
8
Core Deposits
BILLION PESOS
1Q07
1Q08
Deposits
1Q06
Demand
81
18%
95
9%
103
Time
45
27%
57
11%
63
Total
126
21%
152
9%
166
Mix
Demand
64%
63%
62%
Time
36%
37%
38%
100%
100%
100%
9
Performing Loan Portfolio
BILLION PESOS
193
199
4Q07
1Q08
155
1Q07
Change
QoQ
YoY
1Q07
4Q07
1Q08
Consumer
52
63
67
5%
29%
Commercial
62
75
76
2%
23%
Corporate
26
37
39
5%
48%
Government
15
18
18
(2%)
15%
Total
155
193
199
3%
29%
10
Performing Consumer Loan Portfolio
BILLION PESOS
52
1Q07
63
67
4Q07
1Q08
Change
QoQ
YoY
1Q07
4Q07
1Q08
Mortgage
29
36
38
5%
32%
Car
7
7
7
3%
11%
Credit Card
11
14
15
8%
39%
Payroll
5
6
6
2%
20%
Consumer
52
63
67
5%
29%
11
Infrastructure
1Q07
1Q08
998
6%
1,062
ATM’s
3,245
18%
3,812
POS’s
22,592
31%
29,596
Employees
16,343
7%
17,428
Branches
12
New Loan Activity
13
Consumer Loans
NEW LOANS IN BILLION PESOS
CAR
1.60
PAYROLL &
PERSONAL
1Q06
1.36
1Q07
1Q08
2.90
2.46
2.40
1Q06
1Q07
1.61
1.59
1.27
MORTGAGE
1Q06
1.41
1Q07
1Q08
1Q08
14
Mortgage
ORIGINATION BY CHANNEL IN MILLION PESOS
Amount
1Q07
1Q08
Traditional
Change
%
% of
Total 1Q08
1,308
1,354
3%
47%
Equity
295
273
(8%)
9%
Apoyo Infonavit / Cofinavit
620
875
41%
30%
Pemex
179
400
124%
14%
2,402
2,902
21%
100%
Total
15
Credit Card
THOUSANDS OF NEW CARDS
185
147
77
1Q06
1Q07
1Q08
16
Subsidiaries
17
Recovery Bank
NET INCOME IN MILLION PESOS
1Q07
1Q08
131
167
Total
AUM IN BILLION PESOS
1Q07
1Q08
Acquired Loans
49
51
4%
Assets
7
8
14%
1.3
2.6
100%
Projects
%
18
Long Term Savings
NET INCOME IN MILLION PESOS
1Q07
1Q08
132
79
Total
AFORE
ANNUITIES
ROE:
27%
INSURANCE
ROE:
5%
59
ROE:
16%
46
26
39
33
8
1Q07
1Q08
1Q07
1Q08
1Q07
1Q08
19
Other Finance Companies
NET INCOME IN MILLION PESOS
Total
FACTORING &
LEASING
1Q07
1Q08
74
71
WAREHOUSING
ROE:
26%
60
1Q07
ROE:
18%
66
1Q08
4
5
1Q07
1Q08
20
Brokerage and Microlending
NET INCOME IN MILLION PESOS
BROKERAGE
MICROLENDING
ROE:
27%
71
63
1Q07
1Q07
1Q08
1Q08
(1)
(9)
21
Banorte USA
MILLION DOLLARS
1Q08
1Q07
INB
Performing Loans
891
Net Interest Margin
4.2%
Net Income (70%)
3.9
11%
15%
1,025
4.2%
11%
18%
4.6
ROE
22.9%
22.1%
Efficiency
42.8%
40.3%
22
2. Asset Quality & Capitalization
23
Asset Quality
PAST DUE LOAN
RATIO
1.4%
1Q07
1.5%
4Q07
1.6%
1Q08
RESERVE
COVERAGE
149%
131%
1Q07
4Q07
127%
1Q08
24
Asset Quality of Consumer Loans
PAST DUE LOAN RATIO
CREDIT CARDS
MORTGAGES
5.9%
5.6%
4.3%
1Q07
4Q07
1Q08
2.3%
2.3%
2.3%
1Q07
4Q07
1Q08
AUTO
1.9%
1Q07
2.0%
4Q07
PAYROLLS
1.9%
1Q08
2.0%
1.9%
4Q07
1Q08
1.6%
1Q07
25
Capitalization Ratio
PERCENTAGE
1Q06
1Q07
1Q08
Tier 1
13.0%
11.0%
10.3%
Tier 2
2.6%
4.9%
4.3%
TOTAL
15.6%
15.9%
14.6%
Percentage Tier 1
83%
69%
70%
26
Subordinated Debt Issuance
Rationale:
Strengthen Banorte’s growth capacity.
No dilution to existing shareholders.
Reduction in the bank’s cost of capital.
Tap the liquid peso market.
27
Local Subordinated Debt Issuance
MILLION PESOS
Placed with non-Afore institutional investors and retail clients.
Type
Amount
Term
Rate
Callable
Rating
Tier 1
$3,000
10 years
TIIE + 0.60 bp
Year 5+
Aaa.mx
Tier 2
$1,962
20 years
UDIS 4.95%
Year 15+
Aaa.mx
Total
$4,962
TIIE + 0.79 bp
28
Subordinated Debt Issuance
Improving Banorte’s cost of capital:
Amount (million pesos)
Average Term (years)
Cost
Spread over TIIE
February
2004
October
2006
March
2008
3,275
6,554
4,962
10
13
15
9.1%
9.3%
8.7%
326 bp
221 bp
79 bp
29
3. Final Considerations
30
The SME Opportunity
31
SME Focus
Sector with high economic impact.
 Generates 60% of GDP and 12 million jobs.
 Includes 98% of the country’s companies.
Low financial penetration.
 6 out of 10 do not use bank lending.
 Main concern is high interest rates.
 Financing is through suppliers.
Profitable product.
 High ROE’s.
 Low delinquencies.
 Guarantees: Assets + Government Programs (SE & Nafinsa).
32
SME Focus
Initiatives and product / service transformation.
New business model
Comprehensive product offering.
Favorable regulation
to amount of parametric loans
originated at the branch level.

Continuos innovation
900 thousand to 4 million UDIS.
Specialized sales force at branch level.
New product development:

SME package (Paquete PYMES).

New Asset Backed Loans (Crediactivo).
33
Banorte - Comerci Alliance Update
34
Banorte – Comerci Alliance
SOFOM: Authorization process.
Staffing and IT development.
Risk models.
Product development and testing.
Operations will begin in 2H08.
35
Challenges & Opportunities
36
Challenges
Adequate reading of uncertain environment:

Reduced liquidity in international markets.

Slower economic growth and rising inflation.
Asset quality & profitability.
Initiatives:

Continue domestic footprint expansion.

Alliance with Comercial Mexicana.
37
Opportunities
Continued expansion of margins and fees.
 Capitalize on vigorous loan growth.
 Improve productive asset mix.
 Focus on volumes to offset lower commissions.
Improve efficiency.
 Costs under control in spite of investment program.
 Accelerating revenue base.
Increase in core earnings as a % of total profits.
Continue delivering robust net income growth.
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