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GFNorte 1Q05 Results

GFNorte 1Q05 Results. May-2005. Contents. 1Q05 Results • Banking Sector • Recovery Bank • Long Term Savings Sector Relevant Events Economic Environment Final Remarks. 1. 1Q05 Results. GFNorte Highlights. 66%. 88%. 43%. MILLION PESOS. 1Q 04. 1Q05. Net Income. 582.

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GFNorte 1Q05 Results

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  1. GFNorte 1Q05 Results May-2005

  2. Contents • 1Q05 Results • • Banking Sector • • Recovery Bank • • Long Term Savings Sector • Relevant Events • Economic Environment • Final Remarks

  3. 1. 1Q05 Results

  4. GFNorte Highlights 66% 88% 43% MILLION PESOS 1Q 04 1Q05 Net Income 582 1,090 87% ROE 16.2% 26.9% Stock Price 43.93 72.75 4.1% 7.2% Net Interest Margin 1.15 2.16 EPS 1.53 2.19 P/BV Performing loans growth 20% 21% Past due loan ratio 4.8% 1.9% Reserve Coverage 127% 154%

  5. GFNorte´s Net Income MILLION PESOS 1,090 921 582 1Q04 4Q04 1Q05

  6. GFNorte´s Net Income MILLION PESOS 1Q04 1Q05 Var% Banking 453 900 99% 86 127 48% Long Term Savings 31 25 (19%) Brokerage 18 43 139% Auxiliary Organizations 0 (4) - Pronegocio (6) (2) (63%) Holding 582 1,090 87% GFNORTE

  7. Banking Sector

  8. Banking Sector´s Income Statement MILLION PESOS Var% 1Q04 1Q05 Net Interest Income after Repomo 2,101 2,749 31% 1,260 1,047 (17%) Non Interest Income Services 704 726 3% Recovery 129 166 29% Forex 130 59 (54%) Trading 297 95 (68%) 3,361 3,796 13% Total Income (2,557) (2,338) (9%) Non Interest Expense Net Operating Income 804 1,458 81% Loan loss and loss sharing provisions (122) (243) 100% Non Operating Income (net) (149) 37 N.A. Income tax and profit sharing (98) (351) 258% Subsidiaries and minority interest 72 83 15% Net Income 507 984 94%

  9. Net Interest Margin vs. CETES PERCENTAGES 9.0 8.8 8.1 CETES 80% 7.1 7.2 6.3 6.3 56% 6.2 5.6 5.4 4.6 4.9 NIM 5.0 4.3 4.3 4.2 4.1 3.9 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

  10. Non Interest Income MILLION PESOS 1Q04 1Q05 Trading & Fx 34% Trading & Fx 15% Recovery 16% Services 56% Services 69% Recovery 10%

  11. Non Interest Expense 1Q04 1Q05 Total Expense 2.6 2.3 9% 76% 61% 1Q04 1Q05 BILLION PESOS EFFICIENCY RATIO

  12. Core Deposits BILLION PESOS Deposits 1Q03 1Q04 1Q05 Demand 53 60 64 Time 34 35 36 Total 87 95 100 Mix Demand 61% 64% 64% Time 39% 36% 36% 100% 100% 100%

  13. Cost of Deposits % of CETES 37% 30% 27% 1Q03 1Q04 1Q05

  14. Performing Loan Portfolio BILLION PESOS 87 85 72 1Q04 4Q04 1Q05 Variation 1Q04 4Q04 1Q05 QoQ YoY Consumer 24 29 30 4% 22% Commercial 25 29 29 (1%) 17% Corporate 13 14 16 16% 22% Government 10 13 13 (4%) 27% Total 72 85 87 3% 21%

  15. Performing Consumer Loan Portfolio BILLION PESOS 30 29 24 1Q04 4Q04 1Q05 Variation 1Q04 4Q04 1Q05 QoQ YoY Mortgage 14 17 18 4% 23% Car loans 6 6 6 1% 5% Credit Card 3 4 4 7% 36% Payroll loans 1 2 2 8% 48% Consumer 24 29 30 4% 22%

  16. Loan Portfolio Transformation 1Q03 1Q05 Government 8% Government 14% Commercial 36% Commercial 33% Consumer 29% Consumer 34% Corporate 27% Corporate 19% $60.3 billion pesos $87.4 billion pesos 45 %

  17. Asset Quality BILLION PESOS 1Q03 1Q04 1Q05 Total Loan Portfolio 67 78 91 Past Due Loans 3.7 3.8 1.7 Loan Loss Reserves 4.7 4.8 2.7 Past due loan ratio Reserve Coverage 154.2% 5.6% 127.2% 127.2% 4.8% 1.9% 1Q03 1Q04 1Q05 1Q03 1Q04 1Q05

  18. Capitalization Ratio 1Q03 1Q04 1Q05 Tier 1 10.9% 10.5% 12.5% Tier 2 2.4% 5.0% 3.6% TOTAL 13.4% 15.4% 16.2% Percentage of Tier 1 81% 68% 77%

  19. Recovery Bank

  20. Recovery Bank MILLION PESOS 1Q03 1Q04 1Q05 Net Income 121 151 206 1Q03 1Q05 Proprietary 51% Proprietary 29% Managed 49% Managed 71%

  21. Recovery Bank ASSETS UNDER MANAGEMENT BILLION PESOS 62 58 58 Banorte risk (owned + auctions) 17 21 32 Serfin Portfolio 16 14 11 IPAB Porfolio (servicing) 25 23 19 1Q03 1Q04 1Q05

  22. Long Term Savings Sector

  23. Afore ASSETS UNDER MANAGEMENT BILLION PESOS 33 28 22 1Q03 1Q04 1Q05 CUSTOMERS MILLIONS 2.4 2.3 2.1 1Q03 1Q04 1Q05

  24. Insurance PREMIUMS SOLD BILLION PESOS 1.3 1.1 0.6 1Q03 1Q04 1Q05 CUSTOMERS MILLIONS 2.8 1.7 0.7 1Q03 1Q04 1Q05

  25. GFNortes´s ROE and ROA 26.9% 2.5% 16.2% 1.0% 1Q04 1Q05 1Q04 1Q05 ROA ROE

  26. 2. Relevant Events

  27. Start up of Pronegocio Jan ‘05 Authorization from Hacienda. Mar ‘03 24 branches operating and 16 to be open during 2005. Results: • 1,536 customers. • $43 million pesos in loans. • $2 million pesos of past due loans. Loans characteristics: • Amount $10 to $50 thousand pesos. • Interest rate 3.5% - 4% monthly. • Loan fee 3%. • Term Up to 24 months. • Collateral NAFIN at 80%.

  28. Credit Card Campaign “Ya bájale” March 3 Launching of the program to transfer other banks credit card balances. Characterístics: • Fixed interest rate 25%. • Term: 6 to 36 months. • 4 months at 0% interest rate. • No annual fee. • 5 thousand Banorte points. Result as of May 2nd: • 250 million pesos in loans. • 18,544 pesos average balance per customer.

  29. 3. Economic Environment

  30. Economic Outlook Macroeconomic variables 2005-2006 Variables 2005 2006 GDP 3.70% 3.20% Inflation 3.80% 3.64% Fiscal deficit (% GDP) (0.15%) (0.15%) 28 days Cetes (Average) 9.49% 9.01% 28 days Cetes (End od period) 9.30% 8.75% Dollar exchange rate (End of period) 11.70 11.95 Trade balance (11,500) (12,000) Direct Foreign Invesment 14,500 13,500 Oil price 27 24 GDP USA 3.70% 3.50%

  31. Political Environment • Mexican macroeconomic fundamentals are strong, sustained by a prudent fiscal, and monetary policies. • However, political noise could generate market volatility in 2H05 and beyond. At present, the market is focusing in the selection of presidential candidates. • Mexico city´s major Andrés López Obrador, who is today the leading man on the 2006 presidential polls , won a political battle concerning his impeachment case and thus has the possibility to run. • On the positive side both Institutional build up, as well as strong economic fundamentals, provide for a shield against populism and/or bad economic management. • It is still too early to have a clear view of whom are going to be the candidates and what will be their respective platforms. By this fall this should be clearer.

  32. 4. Final Remarks

  33. Long Term Goals • Vision 20/20. • ROE of 20% sustainable. • Net Income growth of 20% per year: double every 4 years. • Improve efficiency ratio. • Innovation and bancarization. • Aquisition and retention of high worth customers. • Goal achievement: net income.

  34. Market Cap CAGR=68% MILLION DOLLARS 3,284 1,990 1,160 1Q03 1Q04 1Q05

  35. Daily Volume MILLION DOLLARS 8.7 6.7 1.8 1Q03 1Q04 1Q05

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