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GFNORTE: 4Q07 Results

GFNORTE: 4Q07 Results. February, 2008. Contents. 4Q07 Overview. Asset Quality. Stock Metrics. Final Considerations. 22%. 10%. 7%. Yearly Recap. CONSTANT MILLION PESOS. 2006. 2007. Net Income. 6,185. 6,810. 11%. ROE. 24.9 %. 22.6 %. ROA. 2.8 %. 2.6 %. Net Interest Margin.

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GFNORTE: 4Q07 Results

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  1. GFNORTE: 4Q07 Results February, 2008

  2. Contents • 4Q07 Overview. • Asset Quality. • Stock Metrics. • Final Considerations.

  3. 22% 10% 7% Yearly Recap CONSTANT MILLION PESOS 2006 2007 Net Income 6,185 6,810 11% ROE 24.9% 22.6% ROA 2.8% 2.6% Net Interest Margin 7.7% 7.6% Performing Loan Growth 19% 32% Past Due Loan Ratio 1.4% 1.5% Stock Price 42.25 45.08 Book Value 13.42 16.42 P/BV 3.15 2.75

  4. Quarterly Net Income CONSTANT MILLION PESOS 1,685 1,560 1,263 1,018 4Q04 4Q05 4Q06 4Q07

  5. Income Statement CONSTANT MILLION PESOS Change 4Q06 4Q07 2006 2007 QoQ YoY 3,931 4,881 15,069 17,384 24% 15% Net Interest Income 2,010 1,914 8,072 7,899 (5%) (2%) Non Interest Income Service Fees 1,424 1,666 5,391 6,028 17% 12% Recovery 136 164 900 580 21% (36%) FX and Trading 450 83 1,782 1,292 (82%) (28%) 5,941 6,795 23,141 25,283 14% 9% Total Income 3,395 3,841 12,931 14,432 13% 12% Non Interest Expense 2,546 2,954 10,210 10,851 16% 6% Net Operating Income (341) (921) (1,588) (2,645) 170% 67% Provisions (12) 382 208 1,867 3,283% 798% Non Operating Income, Net (756) (3,255) (694) (3,293) (8%) 1% Income Tax 122 (36) 610 31 (130%) (95%) Subs & Minority Interest 1,560 1,685 6,185 6,810 8% 10% Net Income

  6. Comparable Results MILLION PESOS 2006 Accounting Standards ‘07 2007 Net Interest Income 14,515 17,384 20% Non Interest Income 7,185 7,899 10% Total Income 21,700 25,283 17% Non Interest Expense 13,157 14,432 10% Operating Profit 8,534 10,851 27%

  7. Non Interest Expense CONSTANT BILLION PESOS 2006 2007 12.9 14.4 Non Interest Expense 12% EFFICIENCY RATIO 56.8% 56.3% 55.0% Accounting Changes 3.4 pp 52.9% 2005 2006 2007

  8. Net Interest Margin vs CETES PERCENTAGE CETES 8.6 8.2 8.0 99% 7.9 7.7 7.7 7.6 7.5 8.5 NIM 111% 7.1 7.4 7.5 7.2 7.1 7.1 7.0 7.0 7.0 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

  9. 21% 13% 14% 30% 23% 13% Core Deposits CONSTANT BILLION PESOS Deposits 4Q05 4Q06 4Q07 82 99 111 Demand 43 56 64 Time 125 154 175 Total Mix 66% 64% 63% Demand 34% 36% 37% Time 100% 100% 100%

  10. Performing Loan Portfolio CONSTANT BILLION PESOS 193 175 146 4Q06 3Q07 4Q07 Change 4Q06 3Q07 4Q07 QoQ YoY Consumer 49 59 63 7% 29% 61 68 75 10% 23% Commercial 25 31 37 19% 47% Corporate 11 18 18 0% 60% Government Total 146 175 193 10% 32%

  11. Performing Consumer Loan Portfolio CONSTANT BILLION PESOS 63 59 49 4Q05 3Q07 4Q07 Change 4Q06 3Q07 4Q07 QoQ YoY 28 33 36 9% 31% Mortgage Loans 7 7 7 3% 10% Car Loans 10 13 14 9% 41% Credit Card Loans 5 6 6 1% 20% Payroll Loans Consumer 49 59 63 7% 29%

  12. Consumer Loans ORIGINATION IN CONSTANT BILLION PESOS PAYROLL & PERSONAL MORTGAGE AUTO 12.0 11.0 7.4 6.7 6.3 5.6 5.3 4.7 4.3 2005 2006 2007 2005 2006 2007 2005 2006 2007

  13. Credit Cards THOUSANDS OF NEW CARDS 709 518 263 190 2004 2005 2006 2007

  14. Credit Card: 2007 Achievements • Increase in risk adjusted profitability. • New products: • Mujer Banorte / Inmediata / Platinum / Empuje Negocios. • Ya Bájale: record level of balances transferred. • Ps $3.0 billion pesos (+47% YoY). • Diversification of distribution channels. • Development of existing portfolio. • Campaigns to promote usage and commercial alliances.

  15. Capitalization Ratio PERCENTAGE 2005 2006 2007 13.3% 12.2% 10.2% Tier 1 2.8% 5.1% 3.6% Tier 2 16.1% 17.4% 13.8% TOTAL 83% 70% 74% Percentage Tier 1

  16. Credit Ratings Notches Over Investment Grade International Rating Agency Outlook Date Standard & Poor’s BBB- Positive = Sep-07 Fitch BBB Positive +1 Sep -07 Moody’s Baa1 Stable +2 Dec-07

  17. Subsidiaries

  18. Recovery Banking NET INCOME IN MILLION PESOS 2005 2006 2007 Total 917 715 766 AUM IN BILLION PESOS % 2006 2007 (5%) Loan Book 54.4 51.8 29% Assets 5.2 6.7 85% Projects 1.3 2.4

  19. Long Term Savings NET INCOME IN MILLION PESOS 2005 2006 2007 Total 422 545 388 AFORE ANNUITIES INSURANCE ROE: 16% ROE: 24% ROE: 20% 323 224 170 168 148 136 82 53 50 2005 2006 2007 2005 2006 2007 2005 2006 2007

  20. Other Finance Companies NET INCOME IN MILLION PESOS 2005 2006 2007 Total 197 256 271 FACTORING LEASING WHAREHOUSING ROE: 23% ROE: 30% ROE: 13% 140 122 107 92 86 73 15 11 15 2005 2006 2007 2005 2006 2007 2005 2006 2007

  21. Other Subsidiaries NET INCOME IN MILLION PESOS ROE: 33% BROKERAGE MICROLENDING 288 191 80 23 2007 2005 2006 2005 2006 2007 (20) (30)

  22. 11% 11% 26% 25% Banorte USA MILLION DOLLARS 2007 2006 INB Performing Loans 779 974 Net Interest Margin 4.6% 4.4% Net Income (70%) 12.5 15.8 Efficiency 46.4% 41.6% ROE 19.4% 21.5%

  23. Business Indicators • Customers • AUM • Infrastructure

  24. Customers MILLIONS 12.7 2.4 3.2 9.2 2.4 Insurance 3.3 2.9 Afore 6.2 4 Bank 3.9 2004 2007

  25. Assets Under Management BILLION PESOS 596 58 181 395 34 Long Term Savings 119 Brokerage House 357 242 Bank 2004 2007

  26. Infrastructure 2006 2007 Distribution Channel Branches 994 1,051 6% ATM´s 3,140 3,674 17% 30% POS 21,453 27,857 Employees 15,929 9% 17,348

  27. 2. Asset Quality

  28. Asset Quality CONSTANT BILLION PESOS 4Q06 3Q07 4Q07 Total Loan Portfolio 150 179 197 Past Due Loans 2.1 2.7 2.9 3.7 Loan Loss Reserves 3.6 3.8 PAST DUE LOAN RATIO RESERVE COVERAGE 172% 1.5% 1.5% 1.4% 132% 131% 4Q06 3Q07 4Q07 4Q06 3Q07 4Q07

  29. Reserve Creation from Loan Book CONSTANT MILLION PESOS % of Total 2007 Credit Card 1,229 44 69% of total Other Consumer 696 25 Mortgage 539 19 Corporate / Commercial 279 10 Government 76 2 Total 2,818 100

  30. Loan Book Performance 2007 Loan Growth Net Credit Losses ROE Credit Card 41% 31% 6.5% Other Consumer 14% 38% 3.6% Mortgage 31% 16% 0.8% Corporate / Commercial 30% 21% (0.2%) Government 60% 19% 0% Total 32% 23% 0.9%

  31. 3. Stock Metrics

  32. Stock Performance 2004-2007 Banorte: 483 IPC: 341 Inbursa: 244

  33. Stock Turnover: Daily Volume MILLION DOLLARS 20.3 13.9 10.3 CAGR = 72% 4.9 2.3 2003 2004 2005 2006 2007

  34. Market Capitalization MILLION DOLLARS 8,341 7,858 4,229 3,174 CAGR = 48% 1,751 2007 2006 2003 2004 2005

  35. LatAm Bank’s Performance 2007 RETURNS IN DOLLARS 55% 46% 44% 34% 11% 7% Banco Macro Banco de Chile Banorte Bancolombia Inbursa Itaú Unibanco Bradesco (4%) (23%)

  36. LatAm Valuations 13.0 Itaú 12.5 Bradesco 55.1 54.6 12.0 GFNorte Santander - Chile 7.9 11.5 8.7 Banco do P/E Brasil 11.0 41.7 Unibanco 10.5 18.3 10.0 Bancolombia 6.2 9.5 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3.0 P/BV BILLION DOLLARS

  37. 4. Final Considerations

  38. 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Financial Penetration BANK CREDIT TO PRIVATE SECTOR AS % OF GDP 38% +23 pp 26% 15% 14% 12% 10% 10% 8% 8% 7% 7% 7% 6% 6%

  39. LatAm Comparison CREDIT TO PRIVATE SECTOR AS % OF GDP 72% 34% 33% 33% 24% 22% 9% Other 13% Bank 15% Chile Colombia Average Brazil Mexico Peru Argentina

  40. Challenges 2008 • Improve origination & follow up process. • Efforts to reduce reserve requirements. Asset Quality • 80 new branches + 20 refurbishments. • 600 new ATM’s + 330 substitutions. • 12,000 POS’s. Infrastructure • Low bancarization levels. • New secular growth story. • Specialized products & sales force. SME’s

  41. Challenges 2008 • Increased loan demand. • Emphasis on payrolls. Government banking • Seek new alliances. • Middle & lower income segments. Alternate channels • Calibration of business model. • Emphasis on profitability & asset quality. Microlending • Greater revenue synergies. • New products. Banorte USA

  42. Medium Term Challenges • Adequate reading of uncertain environment. • Asset quality & profitability. • Investment: • Competitive infrastructure. • Cost containment. • Alternate distribution channels. • Funding costs and capitalization.

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