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GFNorte: 4Q05 Results

GFNorte: 4Q05 Results. February-2006. Contents. 2005 Results Snapshot of New Products Development of GFNorte’s share Final Remarks. 1. 2005 Results. GFNorte Highlights. MILLION PESOS. 2004. 2005. 2,697. 5 , 719. Net Income. 112%. 2 , 907. 4 , 907. Net Income w/o one offs. 69%.

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GFNorte: 4Q05 Results

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  1. GFNorte: 4Q05 Results February-2006

  2. Contents • 2005 Results • Snapshot of New Products • Development of GFNorte’s share • Final Remarks

  3. 1. 2005 Results

  4. GFNorte Highlights MILLION PESOS 2004 2005 2,697 5,719 Net Income 112% 2,907 4,907 Net Income w/o one offs 69% ROE 17.5% 30.8% ROE w/o one offs 18.9% 26.4% 17.54 22.28 27% Stock Price Net Interest Margin 5.0% 8.1% EPS 1.34 2.83 112% 2.22 2.20 P/BV 0.9% Performing loans growth 33% 24% 2.0% 1.6% Past due loan ratio Reserve Coverage 153% 166%

  5. GFNorte´s Income Statement Million pesos Variations 4Q04 4Q05 2004 2005 YoY QoQ Net Interest Income after Repomo 2,861 3,524 23% 10,144 13,248 31% 1,469 1,291 (12%) Non Interest Income 6,021 6,169 2% Services 1,132 1,129 (0%) 4,532 4,503 (1%) Recovery 117 61 (48%) 574 629 9% Forex & Trading 221 102 (54%) 914 1,037 13% Total Income 4,330 4,815 11% 16,165 19,417 20% Non Interest Expense 2,622 2,791 6% 11,509 11,116 (3%) Net Operating Income 1,708 2,024 19% 4,656 8,301 73% (382) (332) (13%) (1,227) (1,446) 18% Loan loss and loss sharing provis. (59) (3) (94%) (36) 1,041 2,968% Non Operating Income (Expense)Net (319) (554) 74% (735) (2,264) 208% Income tax and profit sharing Subsidiaries and minority interest (7) 32 1,986% 40 87 172% Net Income 942 1,168 24% 2,697 5,719 112%

  6. GFNorte’s Balance Sheet 29% Million pesos 4Q04 4Q05 Cash and due from banks 60 63 Investments in subsidiaries: 15,799 20,386 • Bank 14,117 18,204 • Long Term Savings 510 764 • AuxiliaryOrganizations 633 814 • Brokerage 538 549 • Pronegocio 0 54 Others 86 47 Total Assets 15,946 20,496 Income Tax & Profit Sharing 0 0 Total Liabilities 0 0 Stockholder’s Equity 15,946 20,496 Liabilities + Equity 15,946 20,496

  7. Net Income by Business Units Million Pesos Change 2004 2005 4Q04 4Q05 YoY QoQ Banking 2,264 5,090 125% 862 1,097 27% 243 390 60% Long Term Savings 11 12 6% 79 74 (6%) Brokerage 25 19 (23%) 117 182 56% Factoring and Leasing 35 43 22% - (18) N.C. Pronegocio - (8) N.C. (6) - N.C. Holding 8 5 N.C. 2,697 5,719 112% GFNORTE 942 1,168 24%

  8. ROE and ROA ROE ROA 3.1% 30.8% 17.5% Recurrent Profits Recurrent Profits 2.7% 26.4% 1.2% 2004 2005 2004 2005

  9. NIM vs. CETES Percentages 9.7 9.5 9.0 8.6 99% 8.1 8.5 8.5 8.3 7.1 7.3 6.3 5.6 5.4 6.2 CETES 80% 5.1 NIM 4.4 4.3 4.2 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05

  10. Non Interest Expense 2004 2005 Total Expense 12 11 (3%) Billion Pesos Efficiency Ratio 70.6% 56.8% 2004 2005

  11. Deposits & Loans

  12. Core Deposits Billion Pesos Deposits 4Q04 3Q05 4Q05 Demand 67 66 76 Time 37 39 40 Total 104 105 115 Mix Demand 65% 63% 65% Time 35% 37% 35% 100% 100% 100%

  13. Performing Loan Portfolio Billion Pesos 113 103 91 4Q04 3Q05 4Q05 Change 4Q04 3Q05 4Q05 QoQ YoY Consumer 29 35 38 8% 30% Commercial 34 37 39 7% 15% Corporate 14 18 20 16% 49% 14 13 15 13% 12% Government Total 91 103 113 10% 24%

  14. Performing Consumer Loan Portfolio Billion Pesos 38 35 29 4Q04 3Q05 4Q05 Change 4Q04 3Q05 4Q05 QoQ YoY Mortgage 17 21 22 9% 28% Car Loans 6 6 6 0% 1% Credit Cards 4 6 6 10% 61% Payroll Loans 2 3 3 16% 68% Consumer 29 35 38 8% 30%

  15. Asset Quality Billion Pesos 4Q04 3Q05 4Q05 Total Loan Portfolio 94 106 116 Past Due Loans 1.9 1.9 1.9 Loan Loss Reserves 2.8 3.1 3.1 Past Due Loan Ratio Reserve Coverage 166% 2.0% 165% 1.8% 153% 1.6% 4Q04 3Q05 4Q05 4Q04 3Q05 4Q05

  16. Banorte´s Loan Portfolio Billion pesos 172 163 161 114 59% 51% 113 103 66% 12% 71% 100% 88% 47 IPAB / FOBAPROA 49% 21% 41% 34% 29% 79% Loan Portfolio 1996 1997 2001 2002 2003 2004 2005

  17. Banking Sector´s Capitalization Ratio 4Q03 4Q04 4Q05 10.5% 12.2% 13.3% Tier 1 2.2% 4.0% 2.8% Tier 2 12.7% 16.2% 16.1% TOTAL 83% 75% 83% Percentage Tier 1

  18. Recovery Bank

  19. Recovery Bank Million Pesos 2003 2004 2005 Net Income 761 627 848 Portfolio 2003 2005 Managed 27% Proprietary 36% Proprietary 73% Managed 64%

  20. Recovery Bank ASSETS UNDER MANAGEMENT Billion Pesos 68 66 64 64 Banorte 19 23 33 47 IPAB 49 41 33 17 2005 2002 2003 2004

  21. Long Term Savings

  22. Long Term Savings Net Income Million Pesos Total 243 60% 2004 2005 Afore Insurance Annuities 207 46 137 119 110 15 217% 15% 89% 2004 2005 2004 2005 2004 2005

  23. Relevant Indicators

  24. Clients Millions 11 9 3 2.4 2 83% 6 3 3 1 Insurance 2 Afore 5 4 4 3 Bank 2001 2003 2005

  25. Assets under Management Billion Pesos 401 13% Of the Country’s financial intermediation 39 284 119 22 Long Term Savings 45% 114 Brokerage 243 Bank 148 2005 2001

  26. Transactions with Clients Millions of transactions per month 34 30 25 36% 74% 71% Electronic Banking 67% 33% 26% 29% Branches 2001 2003 2005

  27. Monthly placements per Branch MORTGAGE LIFE INSURANCE 1.4 15 13 1.0 0.8 9 4Q03 4Q04 4Q05 4Q03 4Q04 4Q05

  28. 2. Snapshot of New Products

  29. Snapshot of New Products Results up to December 31 • Clients: 16,300. • Portfolio: $325 million. • Average loan per client: $23,000 pesos. • Clients: 43,000. • Portfolio: $1,200 million. • Average balance per client: $28,830 pesos.

  30. Snapshot of New Products Results up to December 31 • Opened accounts: 400,440. • Balance: $1,200 million pesos. • Average accounts opened daily: 1,585. • Average balance per account: $ 2,330. • Estimated new accounts in one year: 100,000.

  31. Snapshot of New Products Results up to December 31 • Opened accounts: 65,000. • Deposits: $1.5 billion pesos: • Checking: $900 millions. • Investment: $600 millions.

  32. 3. Performance of GFNorte’s Share

  33. Recent Share Evolution 2005-2006 IPC 140 GFNorte 135 130 125 120 115 110 105 100 95 90 Jul-05 Oct-05 Jun-05 Dec-04 Dec-05 Nov-05 Feb-05 Mar-05 Apr-05 Sep-05 May-05 Jan-05 Jan-06 Aug-05

  34. Performance of IPC vs. GFNorte 2004 2005 83% 50% 38% 27% IPC Banorte IPC Banorte Annual Change 2004-2005 128% 102% IPC Banorte

  35. GFNorte’s Performance $100 pesos invested on Dec’92, today would be in real terms... 306 GFNorte 228 IPC 119 Dollar

  36. Market Capitalization Million Dollars 4,229 3,174 1,751 CAGR 55% 2003 2004 2005

  37. Vs Latin America MARKET CAP IN BILLION DOLLARS P/E Santander Chile 7.9 Banco de Chile 4.6 Unibanco 9.9 Itaú Bradesco 30.4 32.3 Banorte 4.2 P/BV

  38. Daily Turnover Million Dollars 10.3 4.9 2.3 4Q03 4Q04 4Q05

  39. 4. Final Remarks

  40. Consumer Strategies for 2006 Products Customers Consolidation of new initiatives Development and Innovation Mutual Funds Cross Selling Loyalty programs Service Hispanic Market in USA Channels • Branches program: 3 years • 211 openings, replacements and remodelings • 106 new branches (68% in Mexico City) • Investment: $1,100 million pesos • Alternate channels: • Growth to 4,000 ATM for 2008 • Telecomm: 1,554 branches

  41. Challenges 2006 Recomposition of competitive map. Political environment: correct reading. Increase market share in deposits. Consolidation of new initiatives. Discipline in operating expenses. Strengthen position in mutual funds. Achievement of the USA project.

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