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GFNORTE 4Q02 Results

GFNORTE 4Q02 Results. January, 2003. GFNorte Results. HIGHLIGHTS. GFNORTE GFNorte’s Net Income (PS million) GFNorte’s Net Income (PS million) (Excluding Generali) ROE ROE (Excluding Generali) EPS (Ps/per share) Book Value BANKING SECTOR

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GFNORTE 4Q02 Results

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  1. GFNORTE4Q02 Results January, 2003

  2. GFNorte Results HIGHLIGHTS GFNORTE GFNorte’s Net Income (PS million) GFNorte’s Net Income (PS million) (Excluding Generali) ROE ROE (Excluding Generali) EPS (Ps/per share) Book Value BANKING SECTOR Banking Sector’s Net Income (PS million) Banking Sector’s Net Income (PS million) (Excluding Generali) Capitalization Ratio Loan Portfolio annual growth (Exc.FOBA/IPAB) Total Deposits annual growth Past due loan ratio Reserve Coverage 2002 2001 1,587.9 17.2% 3.18 19.14 1,342.8 11.5% 33.5% 12.4% 5.5% 100.0% 2,015.9 1,621.0 19.2% 15.6% 4.03 22.35 1,700.3 1,346.9 14.8% 77.3% 65.9% 3.1% 118.0%

  3. GFNorte generated profits for PS 2,016 million in the year ACCUMULATED NET INCOME DECEMBER 2002 MILLIONS OF PESOS BANKING PS 1,700 84% LONG TERM SAVINGS $165 8% AUXILIARY ORGANIZATIONS $82 4% BROKERAGE $80 4% HOLDING ($12) 0% GFNORTE PS 2,016 100%

  4. Traditional loan portfolio showed an important growth specially in Mortgage and Consumer loans 3Q02 4Q02 % GROWTH QTR YR 4Q01 LOAN PORTFOLIO (Millions of Pesos) Commercial 19,136 46.4% 16,623 13,072 15.1% Mortgage and Consumer 15,629 203.6% 14,545 5,148 7.5% Mortgage 10,430 286.1% 9,924 2,701 5.1% Credit Card 1,664 91.6% 1,546 869 7.7% Auto 2,973 118.0% 2,614 1,364 13.7% Other 561 161.1% 461 215 21.7% Corporate 14,025 53.2% 11,583 9,152 21.1% Recovery Banking 5,308 (16.9)% 5,684 6, 386 (6.6)% DATA AS OF DECEMBER ‘02.

  5. Bancrecer Integration COMMITMENTS LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Legal and accounting merger. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding. • Standardize a single structure. • Maintain an intensive personnel training and continuous information program. • Provide technological support for Commercial Integration. • Use a single operating platform for both banks.

  6. Bancrecer Integration LEGAL AND FINANCIAL • IMPLEMENT A STRICT AND AMBITIOUS COST REDUCTION PROGRAM COMMITMENT ACHIEVEMENTS Reductions of Ps 406 million this year, and Ps 807 in 2003. 594 2,055-employee downsize 111 Consolidation of cash concentration and distribution centers 72 Rents 37 Consolidation of credit and debit card, ATM and sales point terminal operations 30 Telecommunication network integration, with unified computer centers and equipment and homologous contracts with technology and maintenance service suppliers 23 Office supplies, photocopy, internal communication and correspondence Ps 867 million total annual savings • LEGAL AND ACCOUNTING MERGER Reach the goal by March 31, 2002. • Accomplished as planned • Report conslidated figures since the first quarter 2002. • Take advantage of Bancrecer’s fiscal loss of approximately Ps 4,600 million in a shorter term. • REACH A PROFITABLE SETTLEMENT WITH GENERALI • USD 45 million cash premium in the second quarter of the year.

  7. Bancrecer Integration COMMERCIAL • REORGANIZE THE BRANCH NETWORK COMMITMENT ACHIEVEMENTS Close branches: 96 Bancrecer, 9 Banorte. • So far, 110 Bancrecer and 11 Banorte branches have been closed down due to market considerations. • ENHANCE THE SALES VOLUME OF THE ACQUIRED NETWORK • Introducing Imanorte attracted an inflow of Ps 2,149 million. • 5,580 car “Autoestrene” loans for Ps 556 million; 569 mortgage loans for Ps 272 million; and 16,187 “CrediNómina” [payroll loans] for Ps 206 million. • 17,753 car insurance policies [“Fórmula Auto”] have been placed since January 21, 6,358 policies of our recently incorporated life insurance [“Fórmula Vida”] were sold since October. • INTEGRATE BOTH BANKS COMMERCIALLY Show Banorte to the client as an integrated bank by the second quarter of 2002. • At present, we offer the same products and services throughout the entire integrated network. • EXTERIOR REBRANDING Scheduled to begin in the 2Q02. • All former Bancrecer branches throughout the country now display Banorte’s brand.

  8. Bancrecer Integration ORGANIZATIONAL • STANDARDIZE A SINGLE STRUCTURE COMMITMENT ACHIEVEMENTS To integrate the organizational structures of both banks in the shortest time possible. • A single organizational structure for both banks was formed during the first quarter of the year. • The Bancrecer Labor Union was dissolved, and those employees were transferred to Banorte’s payroll and fringe benefit system. • A new salary tabulator was developed, with salaries 10% lower than those Banorte used to have. • A new organizational diagram was created for the branches of both networks. • MAINTAIN AN INTENSIVE PERSONNEL TRAINING AND CONTINUAL INFORMATION PROGRAM • Personnel have intensively participated in training programs covering Banorte’s sales philosophy, product features and operating procedures.

  9. Bancrecer Integration TECHNOLOGICAL AND OPERATIONAL • PROVIDE TECHNOLOGICAL SUPPORT FOR COMMERCIAL INTEGRATION COMMITMENT ACHIEVEMENTS A year ago, we promised to finish by 2Q02. • Commercial integration was accomplished by November 30. Currently, all branches have the same product supply. • USE A SINGLE OPERATING PLATFORM FOR BOTH BANKS We set a 12 month deadline as of April this year. • We decided to include additional elements in this project. • April 2003, start trial tests to standardize operations in all the delivery channels and prepare to transfer all Banorte clients to the Altamira Platform. • Around June, start setting up this new operating platform throughout the entire network. • By September 2003, over 80% of the deposit, loan and service volume should be handled in this new mode. • The remaining 20% should be incorporated by October-November. • The project will stay within the initial budget.

  10. Ps 342 Severance and Compensations 179 110 Technological Integration Image Change 51 Medical Service Fund for Retirees 45 Operative Integration and Branches Closes Ps 727 Bancrecer Integration TOTAL COST OF THE INTEGRATION • Overall Budget for Integration Costs: Ps 1,076 million. • Expenditure to date: 68%, equivalent to Ps 727 million. DECEMBER 2002.

  11. Challenges that we will have to face for 2003: Bancrecer Integration • Finish successfully the Technological and Operative Transformation stage. • Substantially increase the volume of operations in the Bancrecer’s network.

  12. 1996 1997 DEC’ 02 1992 Efficiency Ratio * 78% 105% 87% Banking Sector Efficiency Ratio ... ... Grupo Financiero Banorte has supported its growth through the acquisition of other financial institutions, and has improved their performance to reach Banorte’s standards and has made them profitable. 2001 55% 66% 93% 78% (*) With Trading

  13. Comparatives to the Industry ASSETS 25.3% 19.9% 15.0% 10.8% 2° 4° 9.6% 4.6% BVA- BANCOMER BANORTE BANACCI SANTANDER BITAL SCOTIABANK SOURCE: CNBV AT 3Q02.

  14. Comparatives to the Industry DEPOSITS 26.6% 19.3% 15.1% 2° 12.1% 4° 10.8% 5.0% BVA- BANCOMER BANORTE BANACCI SANTANDER BITAL SCOTIABANK SOURCE: CNBV AT 3Q02.

  15. Comparatives to the Industry LOAN PORTFOLIO (Including FOBAPROA/IPAB) 25.5% 19.2% 14.9% 2° 14.6% 3° 7.0% 5.3% BVA- BANCOMER BANORTE BANACCI SANTANDER BITAL SCOTIABANK SOURCE: CNBV AT 3Q02.

  16. Comparatives to the Industry NUMBER OF BRANCHES 23.8% 20.3% 19.6% 15.2% 2° 13.1% 4° 5.3% BVA- BANCOMER BANORTE BANACCI BITAL SANTANDER SCOTIABANK SOURCE: CNBV AT 3Q02.

  17. Comparatives to the Industry GFNorte´s ROE ranks among the highest in Mexico ROE DECEMBER 2002 34.6% 20.0% * 19.2% 14.8% 6.1% * 3° 4.2% * BITAL GFNORTE BANACCI SANTANDER - SERFIN SCOTIABANK INVERLAT* BBVA-BMR SOURCE: PRESS RELEASE EACH BANK AT 4Q02. * FIGURES AS OF 3Q02

  18. The capitalization ratio increased to 14.8% with rules of 2003 CAPITALIZATION RATIO 2001 2003 2003 2003 2001 2003 RULES OF: 20.5% 14.8% 2° 13.1% 13.0% * 12.6% * 9.9% * BBVA - BANCOMER SCOTIABANK INVERLAT SANTANDER SERFÍN BANAMEX* BITAL BANORTE SOURCE: PRESS RELEASE EACH BANK AT 3Q02. * FIGURES AS OF 3Q02

  19. Recent Events • GFNorte and Banco Popular Español • GFNorte and Banco Popular Español signed an agreement on November 27, 2002, to the effect that Banorte could serve the Spanish Bank’s clients in Mexico and they, in turn, would do the same for Banorte’s clients in Spain, as well as in France and Portugal were they also have branches. • Banorte placed Non-Convertible Subordinate Notes • On November 28, 2002, Banorte placed Non-Convertible Subordinate Notes, at a 10-year term for an amount equal to Ps 1,136 million. The funds from this placement serve for funding long-term operations and also helped improving Banorte’s capitalization ratio.

  20. GFNORTE4Q02 Results January, 2003

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