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GFNORTE

GFNORTE. August, 2008. Financial Performance. Asset Quality. Balance Sheet Management. Final Considerations. Banorte at a Glance. Market Share. Total. 1,073. 14%. Branches. 3,985. 14%. ATM’s. 20.4. 15%. Loans (US$bn). 21.5. 12%. Deposits (US$bn). Deposits. Loans. Corporate.

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GFNORTE

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  1. GFNORTE August, 2008.

  2. Financial Performance. • Asset Quality. • Balance Sheet Management. • Final Considerations.

  3. Banorte at a Glance Market Share Total 1,073 14% Branches 3,985 14% ATM’s 20.4 15% Loans (US$bn) 21.5 12% Deposits (US$bn) Deposits Loans Corporate Money Market Non interest bearing Commercial 20% 23% 36% 48% Government 11% 29% 14% Time 19% Consumer Mortgage

  4. Yearly Recap MILLION PESOS 2Q07 2Q08 Net Income 1,722 1,806 5% ROE 23.6% 20.5% ROA 2.7% 2.3% Efficiency Ratio 57.0% 54.1% Net Interest Margin 7.5% 7.5% Past Due Loan Ratio 1.5% 1.5% Reserve Coverage 141% 131% (2%) Stock Price 49.58 48.47 Book Value 14.92 18.12 25% P/BV 3.32 2.68 (22%)

  5. Income Statement MILLION PESOS 2Q07 1Q08 2Q08 QoQ YoY 4,247 5,179 5,232 1% 23% Net Interest Income 1,943 1,961 1,989 1% 2% Non Interest Income 1,424 1,573 1,712 9% 20% Service Fees 180 190 117 (38%) (35%) Recovery 339 198 160 (19%) (53%) FX & Trading 6,190 7,140 7,221 1% 17% Total Income Non Interest Expense (3,516) (3,799) (3,903) 3% 11% Net Operating Income 2,674 3,341 3,318 (1%) 24% Provisions (754) (1,005) (1,255) 25% 66% Non Operating Income, Net 612 702 551 (22%) (10%) Income Tax (867) (1,075) (751) (30%) (13%) Subs & Minority Interest 57 (34) (57) 68% (200%) Net Income 1,722 1,928 1,806 (6%) 5% Recurring Net Income 1,722 1,691 1,746 3% 1%

  6. Quarterly Net Income MILLION PESOS Non-recurring 1,928 Recurring 1,806 1,722 237 60 1,746 1,691 2Q07 1Q08 2Q08

  7. Core Earnings MILLION PESOS 2,137 1,904 1,578 2Q07 1Q08 2Q08

  8. Profitability ROE ROA 23.6% 23.2% 20.5% 2.7% 2.6% 2.3% 2Q07 1Q08 2Q08 2Q07 1Q08 2Q08

  9. Cost to Income Ratio BILLION PESOS 2Q07 1Q08 2Q08 QoQ YoY 3% 11% Non Interest Expense 3.5 3.8 3.9 EFFICIENCY RATIO 57% 57% 54% 2Q06 2Q07 2Q08

  10. Net Interest Margin vs CETES PERCENTAGE 8.2 8.0 7.9 7.9 NIM 7.7 7.7 7.6 7.5 7.5 7.1 100% 99% 7.5 7.5 7.4 7.4 7.2 7.1 7.0 7.1 7.0 7.0 Cetes 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

  11. Core Deposits BILLION PESOS Deposits 2Q07 1Q08 2Q08 QoQ YoY Demand 101 103 107 3% 6% Time 64 7% 60 63 2% Total 171 6% 161 166 3% Mix 63% 62% 62% Demand 37% 38% 38% Time 100% 100% 100%

  12. Performing Loan Portfolio BILLION PESOS 217 199 168 2Q07 1Q08 2Q08 Change 2Q07 1Q08 2Q08 QoQ YoY Consumer 56 67 71 6% 27% Commercial 64 76 79 4% 22% Corporate 31 39 43 10% 38% Government 17 18 24 39% 41% Total 168 199 217 9% 29%

  13. Consumer Loan Portfolio BILLION PESOS 71 67 56 2Q07 1Q08 2Q08 Change 2Q07 1Q08 2Q08 QoQ YoY Mortgage Loans 31 38 40 6% 29% Car Loans 7 7 8 2% 9% Credit Card Loans 12 15 16 8% 36% Payroll Loans 6 6 7 7% 16% Consumer 56 67 71 6% 27%

  14. Subsidiaries

  15. Recovery Bank NET INCOME IN MILLION PESOS QoQ YoY 2Q07 1Q08 2Q08 Total (10%) (21%) 191 167 151 AUM IN BILLION PESOS 2Q07 2Q08 % 85% Banorte’s Assets 10.4 19.2 (14%) Acquired Assets 44.9 38.7 100% Investment Projects 1.3 2.6 (13%) IPAB Portfolio 1.6 1.4 7% Total 58.2 62.0

  16. Long Term Savings NET INCOME IN MILLION PESOS 2Q07 1Q08 2Q08 QoQ YoY Total 125 79 63 (20%) (50%) AFORE ANNUITIES INSURANCE 88 58 39 33 30 8 7 6 0 2Q07 2Q08 1Q08 2Q07 2Q08 2Q07 2Q08 1Q08 1Q08

  17. Other Finance Companies NET INCOME IN MILLION PESOS 2Q07 1Q08 2Q08 QoQ YoY Total 76 71 85 19% 11% LEASING AND FACTORING WAREHOUSING 78 73 66 7 5 3 2Q07 2Q08 1Q08 2Q07 2Q08 1Q08

  18. Brokerage and Microlending NET INCOME IN MILLION PESOS BROKER DEALER MICROLENDING 143 71 63 2Q07 1Q08 2Q08 2Q07 2Q08 1Q08 (7) (8) (9)

  19. Banorte USA MILLION DOLLARS 1Q08 2Q08 2Q07 YoY QoQ INB 1,025 1,035 1% 11% 931 Performing Loans 4.2% 4.2% --- (0.3 pp) 4.5% Net Interest Margin 6.8 5.9 (13%) 6.6 (11%) Net Income (100%) 22.1% 20.3% 23.7% (1.8 pp) (3.4 pp) ROE 40.3% 41.3% 42.1% Efficiency 1.8 pp 0.8 pp

  20. 3. Asset Quality

  21. Asset Quality BILLION PESOS 2Q07 1Q08 2Q08 Total Loan Portfolio 173 203 220 Past Due Loans 2.6 3.2 3.2 Loan Loss Reserves 3.6 4.0 4.2 PAST DUE LOAN RATIO RESERVE COVERAGE 141% 131% 127% 1.6% 1.5% 1.5% 2Q07 1Q08 2Q08 2Q07 1Q08 2Q08

  22. Consumer Loans PDL RATIO MORTGAGE PAYROLL CREDIT CARD 6.7% 5.9% 3.6% 2.6% 2.3% 2.0% 1.8% 1.7% 1.5% 2Q07 1Q08 2Q08 2Q07 1Q08 2Q08 2Q07 1Q08 2Q08

  23. Industry Trends TOTAL LOANS Jun ‘07 Jun ‘08 3.0% 2.8% 1.5% 1.5% Banks Banorte Banorte Banks Source: Banxico

  24. Industry Trends CREDIT CARDS Jun ‘07 Jun ‘08 8.0% 6.7% 6.1% 3.6% Banks Banorte Banks Banorte MORTGAGES 2.8% 2.4% 2.6% 1.5% Banks Banorte Banorte Banks Source: Banxico

  25. 4. Balance Sheet Management

  26. Loans to Deposits 103% 100% 97% 98% 95% 90% 85% 2Q08 1Q08 4Q07 1Q07 2Q07 4Q06 3Q07

  27. Wholesale Funding Time Deposits Money Market Interbank Loans 13% 14% 13% 16% 14% 20% 23% 27% 25% 23% 24% 21% 38% 25% 63% 62% 61% 60% 59% 52% 48%

  28. Capitalization 4Q07 1Q08 2Q08 Tier 1 10.2% 10.3% 10.7% Tier 2 3.6% 4.3% 5.0% TOTAL 13.8% 14.6% 15.7% Percentage Tier 1 74% 70% 68%

  29. Subordinated Debt Issuance Reduction in Banorte’s cost of capital: March 2008 June 2008 February 2004 October 2006 Pesos (millons) 4,962 3,275 6,554 2,750 15 13 10 Average term (years) 10 9.1% Cost 8.7% 9.3% 9.0% 326 bp 79 bp 221 bp Spread over TIIE 77 bp

  30. 5. Final Considerations

  31. 55 50 500 45 40 450 35 400 30 25 350 20 15 300 10 5 250 0 98 99 00 01 02 03 04 05 06 07 08 010 98 99 00 01 02 03 04 05 06 07 08 010 GFNorte vs. US Financials S&P 500 Stock Financial Index GFNORTE

  32. Valuation vs. Peers July 2008 (times) P/BV 08e P/E 08e 1) Itaú 12.6 3.0 2) Santander Chile 12.8 2.9 3) Bradesco 2.8 12.7 4) 3) GFNorte 2.3 11.3 5) Bancolombia 2.3 10.2 6) Banco do Brasil 9.1 2.2 7) Unibanco 2.2 9.8 Average 2.5 11.2

  33. Uncertain scenario. US Financial Crisis. Restrictive monetary policy. Economic slowdown and inflationary pressures. Competitive pressures new market players. Regulatory changes Challenges provisions. regulatory deposits.

  34. Challenges • Proactive balance sheet management. • Funding costs. • Capitalization. • Focus on financial and fee income. • Higher emphasis on risk analysis. • Asset quality. • New origination models. • Increased risk-based pricing differentiation. • Early collection.

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