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Banorte Investor Day

Banorte Investor Day. Banorte USA. November 16, 2007. Index. Introduction US Denominated Deposits Inter National Bank International Business Banorte Securities Remmittances. Grupo Financiero Banorte’s Vision.

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Banorte Investor Day

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  1. Banorte Investor Day Banorte USA November 16, 2007

  2. Index • Introduction • US Denominated Deposits • Inter National Bank • International Business • Banorte Securities • Remmittances

  3. Grupo Financiero Banorte’s Vision • To be a cross-borderfinancial group offering integrated financial products and services to a diverse group of customer segments. • To be a dual-currencyfinancial group which offers a wide range of products and services in U.S. Dollars and Mexican Pesos.

  4. Dual-Currency Opportunity • Mexican banking system USD denominated deposits: US$14 billion. • Mexican Nationals deposits in abroad: US$35 billion. • Banorte’s strategy: • Follow our Mexican customer and support their investments and business operations in the U.S.

  5. Banorte’s Expansion Strategy in USA Private Banking / Wealth Management / Brokerage Services Provide USD denominated financial investment products. Banorte Securities International. Commercial / Retail Banking Provide financial products and services. Facilitate cross-border transactions for businesses and individuals. Remittances Provide remittance services to the non/under-banked immigrant population living in the U.S. Three-pronged strategy for US Expansion :

  6. Structure Banorte USA U.S. Bank International Business Brokerage/Investments Remittances

  7. 2. Dollar Denominated Deposits

  8. Dollar Denominated Deposits USD MILLIONS Sep ‘06 Dec ‘06 Sep ‘07 YoY 736 745 721 (2%) Demand Enlace Express 18 19 25 38% Time Deposits 767 716 822 7% Banorte Dollar Deposits 1,521 1,480 1,568 3% BSI - Mexico Accounts 1,060 1,025 1,036 (2%) Total Mexico 2,582 2,505 2,603 1% INB 1,034 1,363 1,269 23% BSI – Onshore 18 42 75 324% Total USA 1,052 1,405 1,344 28% Total 3,634 3,911 3,947 9%

  9. 3. Inter National Bank

  10. Benefits of INB Acquisition INB is a well-managed institution. Serving the high-growth border region of Texas with Mexico. Growth drivers in the region: Construction and real-estate. Bilateral trade. Other commercial activities. Serving a market with a large middle to high income Hispanic population. INB management has been retained. Continue to operate the bank for the coming years. Previous Board and shareholders are still involved in the operations. Revenue synergies with Banorte and customer referrals for INB.

  11. Benefits to Customers Free fund transfers between savings and checking accounts. Free ATM withdrawals and account balance inquiries at both banks’ ATMs. Referrals by Banorte to INB = 3,200+ new accounts with US$45 million in balances Acceptance of checks for deposit with next day availability in both currencies at both institutions. Banorte Securities (BSI) offices have been opened at INB banking centers in McAllen & El Paso.

  12. New Products & Services Mortgages to Americans purchasing Mexican Resort Properties US$40 million funded to date with US$38 million at closing. Potential: 2008-US$150, 2009 US$250, 2010 US$350 million Loans secured by investment portfolios held by customers at BSI in dollars or at Banorte in pesos US$5 million funded to date with US$20 million at closing. Potential: 2008 US$60, 2009 US$100, 2010 US$150 million. Banorte Securities offices have been introduced in INB offices $75 million funded to date in new investment accounts. Potential: 2008 US$125, 2009 US$185, 2010 US$250 million Competitive Foreign Exchange Platform 2007 Revenues = 3x 2006 Revenues.

  13. New Products & Services In Development: INB issued credit card program to be launched in 1Q, 2008. 2008E US$15 million. 2009E US$25 million. 2010E US$50 million. Trade financing loans programs to be offered in late 2007. 2008E US$50million. 2009E US$125 million. 2010E US$200 million. Enhanced treasury management services Lockbox, remote deposit capture and ACH services. Potential: Increase in non-interest income.

  14. Potential New Markets • New branches to be opened in 1Q08: • Laredo • Brownsville • Potential New Markets • Texas: San Antonio / Houston / Dallas. • San Diego, California. • Details of model branch: • Approximately 4,100 sqf facility. • 3 drive-thru lanes & drive-up ATM.

  15. INB Growth Deposits Loans Total Assets 36% 36% 11% 15% 40% 12% Merger Announcement Current Date of Merger

  16. 9M07 Financial Highlights MILLION DOLLARS 9M06 YoY 9M07 Loans $737 27% $935 Deposits $1,034 23% $1,267 Net Interest Margin 4.7% 4.5% Net Earnings (70%) $12.4 $10.2 22% Efficiency Ratio 42.9% 41.6% ROE 20.9% 22.8% ROA 1.79% 1.76%

  17. Profitability ROA ROE 22.2% 21.6% 1.83% 1.81% 22.7% 19.4% 1.73% 1.65% 2004 2005 2006 Sep ‘07 2004 2006 2007 Sep ‘07

  18. 4. International Business

  19. International Business Mexico MILLION DOLLARS YoY Sep ‘06 Dec ‘06 Sep ‘07 Net Interest Margin 36 49 39 9% 17 23 19 7% Non Interest Income Total income 53 72 57 8% 11% Direct Expenses 4 5 4 Earnings from Operations 50 67 54 8% (1%) 4 5 4 Corporate expenses 46 62 50 9% Net Earnings (Pre tax)

  20. 5. Banorte Securities International, Ltd.

  21. Private Banking/ Wealth Management Growth Strategy: Organically. Focused on Hispanic Population: Mexican nationals. Mexican-Americans residing in the US. BSI markets its services to: High net worth individuals in Mexico. Hispanics/US citizens and residents. Currently, BSI has approximately US$1.1 billion in AUM.

  22. Synergies INB and Banorte Securities clients will benefit from expanded services from both Institutions: Banorte Securities will refer clients to INB, seeking bank accounts not available at BSI. INB will refer clients to Banorte Securities that seek brokerage accounts not available at Inter National Bank. INB can provide loans to BSI customers wishing to use their brokerage accounts as collateral.

  23. Banorte Securities Results MILLION DOLLARS Sep ‘06 Dec ‘06 Sep ‘07 YoY Revenues 5.7 7.5 7.9 40% 4.3 5.7 5.1 19% Expenses Earnings from Operations 1.4 1.8 2.9 102% Investment Earnings 0.3 0.4 0.2 (21%) Taxes (0.5) (0.8) (1.0) 95% Net Earnings 1.2 1.4 2.1 78%

  24. Highlights MILLIONS DOLLARS Sep ‘06 YoY Sep ‘07 3% $1,078 $1,111 AUM Earnings from Operations $1.2 78% $2.1 Efficiency Ratio 76.4% 66.5% 11.3% 19.1% ROE

  25. 6. Remittances: Banorte’s Distribution System & UniTeller

  26. Growth in Family Remittances Banorte continues to grow well above the market and other Mexican banks. Sep-06 vs. Sep-07 6.7% 5 % 1.4% (2.8%) (1.7%) Market Growth Non Banks Banorte Banks Banks w/o Banorte

  27. Remittances Market Banorte: strong payer of remittances to customers in Mexico Payment agreements: 30+ U.S. licensed remittance companies 3 major U.S. banks (BofA, Chase, and Wells Fargo). 4 million remittances paid in 2006 = US$1.6 Billion (7% Mkt Share). 2007E transactions = 4.3 million. Banking the beneficiaries of remittances. Over 69,000 Enlace Express Accounts (without fees). UniTeller will benefit from: Additional financial resources Correspondent banking relationships in U.S. and other parts of the world.

  28. Integrating the Unbanked • Enlace Express: • Quasi-equivalent to free checking in the U.S. • Debit card-based. • No minimum balances or monthly fees. Number of Customers 69,600 52,200 33,130 5,600 2004 2005 2006 Sep-2007

  29. Acquisition • Acquisition of 100% of UniTeller: January 18th, 2007. • Background: • Based in New Jersey. • US$1.1 billion in transfers per year. • Agent Network in the US: 1,000 collection agents in 41 States. • Strong payment network: • Over 4,000 payment points in 19 countries. • Presence in Mexico’s rural areas - complement to Banorte’s network. • Attractive technological infrastructure: • Enough capacity to support immediate growth.

  30. Opportunities & Strategy STRATEGY: Vertical Integration Acquisition of UniTeller will streamline Banorte’s remittance services. Access to a large number of under-banked clients on both sides of the border – additional business opportunities. Promote remittances to Banorte, and banking of beneficiaries. Complements Banorte’s bancarization efforts.

  31. New Products & Services • Account Link - deposits to an account. • Product Improvements: • Discounts on remittances from U.S. from Uniteller and Banorte. • Payment options to Banorte accountholders. • Marketing campaigns in conjunction with other U.S. transmitters to promote remittances.

  32. Certain statements in this document are “forward-looking statements”. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors.

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