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GFNORTE: 1Q07 Results

GFNORTE: 1Q07 Results. May 2007. Contents. 1Q07 Overview. Stock Metrics. 1. 1Q07 Overview. New accounting standards. Change. Impact. 89% in fees. 20 bp NIM. 123 bp in efficiency ratio. Deferral of fees charged on new loans. Non financial companies consolidated.

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GFNORTE: 1Q07 Results

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  1. GFNORTE: 1Q07 Results May 2007

  2. Contents • 1Q07 Overview. • Stock Metrics.

  3. 1. 1Q07 Overview

  4. New accounting standards Change Impact 89% in fees. 20 bp NIM. 123 bp in efficiency ratio. Deferral of fees charged on new loans. Non financial companies consolidated. 25 bp in efficiency ratio. Financial derivatives marked to market. 54 bp in efficiency ratio. Income of Portfolios Acquired: from Non Interest Income to Non Operating Income. 140 bp in efficiency ratio. 4Q06 excess loan loss reserves credited vs. income statement in 1Q07. 23 pp in reserve coverage.

  5. 14% 102% 70% Highlights Constant Million Pesos 1Q06 1Q07 1Q06 1Q07 Net Income 1,423 1,623 14% 24.0% ROE 25.4% Stock Price 25.89 52.30 Net Interest Margin 7.5% 7.1% 0.80 EPS 0.70 P/BV 2.25 3.83 Tax Rate 37% 35% 23% 24% Growth in Performing Loans 1.6% 1.4% Past Due Loan Ratio Reserve Coverage 171% 149%

  6. GFNORTE’s Income Statement 5,580 5,781 4% (3,123) (3,387) 8% 2,457 2,394 (3%) (255) (34%) (386) 5 339 6,605% (734) (903) 23% 81 50 (38%) 1,423 1,623 14% Constant Million Pesos 1Q06 1Q07 Change Net Interest Income 3,430 3,729 9% (5%) 2,150 2,052 Non Interest Income Services 10% 1,254 1,383 Recovery (71%) 388 113 FX & Trading 9% 508 556 Total Income Non Interest Expense Net Operating Income Loan loss and loss sharing provisions Non Operating Income (Expense) Net Taxes Subsidiaries and minority interest Net Income

  7. Net Income 1,623 1,521 1,423 1,177 CAGR 17% 1Q07 1Q05 1Q06 4Q06 Constant Million Pesos

  8. ROE and ROA Annualized ROE ROA 27% 26% 24% 2.8% 2.7% 2.5% 1Q05 1Q06 1Q07 1Q07 1Q05 1Q06

  9. 1Q06 1Q07 Non Interest Expense 3.1 3.4 8% 61% 58% 55% 55% 1Q07 1Q05 1Q06 Non Interest Expense Constant Billion Pesos EFFICIENCY RATIO Increase due to New Accounting Standards 340 bp

  10. 9.7 9.5 9.0 8.6 8.1 8.0 7.9 7.7 7.6 8.5 8.5 7.1 8.3 77% 101% 7.5 7.3 7.1 7.0 7.0 7.0 6.2 Percentage Net Interest Margin vs CETES CETES NIM 1Q07 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06

  11. YoY Change w/o INB Deposits 1Q05 1Q06 1Q07 Demand 68 79 93 Time 39 44 56 Total 107 123 148 27% 18% 15% 21% 16% 13% 10% 9% 8% Mix Demand 63% 64% 63% Time 37% 36% 37% 100% 100% 100% Core Deposits Constant Billion Pesos

  12. 151 142 121 1Q06 4Q06 1Q07 Variation 1Q06 4Q06 1Q07 QoQ YoY Consumer 42 48 50 5% 18% 42 59 60 1% 45% Commercial 22 24 26 4% 16% Corporate 15 11 15 36% (1%) Government Total 121 142 151 6% 24% Loan Portfolio Performance Constant Billion Pesos

  13. 50 48 42 1Q06 4Q06 1Q07 YoY Change w/o Extras Variation 1Q06 4Q06 1Q07 QoQ YoY 25 27 28 5% 12% Mortgage 28% 28% 6 6 7 2% 5% Car loans 7 10 11 10% 50% Credit Card 4 5 5 2% 27% Payroll loans 42 48 50 5% 18% Consumer Consumer Loan Portfolio Performance Constant Billion pesos

  14. Lending and Deposits’ Dynamics Loan Portfolio YoY Core Deposits YoY 24% 23% 21% 20% 14% 5% 1Q07 1Q05 1Q06 1Q07 1Q05 1Q06 Balance Constant Billion pesos 151 148 123 121 107 98 1Q05 1Q07 1Q06

  15. 147 77 21 1Q07 1Q05 1Q06 Thousands of New Credit Cards

  16. 125 146 155 2.0 2.1 2.2 3.4 3.6 3.3 1.6% 1.6% 1.4% Constant Billion pesos Asset Quality 1Q06 4Q06 1Q07 Total Loan Portfolio Past Due Loans Loan Loss Reserves RESERVE COVERAGE PAST DUE LOAN RATIO 172% 166% 149% 1Q06 4Q06 1Q07 1Q06 4Q06 1Q07

  17. Evolution of Loan Loss Reserves Constant Million Pesos 3,576 3,321 708 210 Performing Loans 498 PDL´s Reserve Reversal Charge Offs Balance 1Q07 Balance 4Q06 New Reserves (464) (499)

  18. 12.5% 13.0% 11.0% 3.6% 2.6% 4.9% 16.2% 15.6% 15.9% 77% 83% 69% Banking Sector Capitalization Ratio PERCENTAGE 1Q05 1Q06 1Q07 Tier 1 Tier 2 TOTAL Percentage Tier 1

  19. 64 61 60 56 Banorte 22 33 53 54 IPAB 38 31 8 2 1Q07 1Q06 1Q04 1Q05 Recovery Bank Assets under Management Constant Billion pesos Asset Breakdown 1Q07 Constant Billion Pesos Investment Projects 1 Assets 7 33 54 Portfolio 48 Total: 56

  20. 70 61 60 58 45 45 43 25 12 1Q05 1Q06 1Q07 1Q05 1Q06 1Q07 1Q05 1Q06 1Q07 Long Term Savings Net Income Constant Million Pesos TOTAL 150 142 128 1Q05 1Q06 1Q07 ROE: 20% ROE: 22% ROE: 45% AFORE ANNUITIES INSURANCE

  21. 2.82% 2.31% 18% Dec-05 Dec-06 Evolution of AFORE EQUIVALENT FEE Charged to a yearly balance BANORTE GENERALI INDUSTRY 3.30% 2.36% 28% Dec-05 Dec-06 ASSETS UNDER MANAGEMENT Constant Billion Pesos BANORTE GENERALI INDUSTRY 750 52 619 41 27% 21% Dec-05 Dec-06 Dec-05 Dec-06

  22. Recent Events

  23. Sale of Bonding Company • Date: March 30. • Amount: Ps $168 million (1.3x BV). • Profit: Ps $31 million. • Rationale: • Attractive sale opportunity. • High exposure to contingent risks. • Will not consolidate with the Group as of 2Q07.

  24. Banorte USA

  25. Banorte USA • Bancarization in US. • Bi-national US–México: • Foreign Trade • Remittances. • Mortgages. • Bi-national México – USA: • Foreign Trade • Manufacturing and SME’s. • High Net Worth Clients.

  26. Results YoY 1Q06 – 1Q07 Deposits 44% Loans 32% Net Income 17% ROE 23% Efficiency 43% Bank Transactions: - Volume 12% - Dollars 19% Revenues 16% Number of Cards 48% Remittances

  27. Preliminary Results / Plans for 2007 • Referencing: • Banorte branches: US $32 million in 3 months. • Binational Mortgages: US $60 million in 2007 estimated. • Growth Drivers: • Organic: Branches in 2007. 3) San Antonio 2) Brownsville 1) Laredo

  28. 2. Stock Metrics

  29. Stock Index vs. GFNorte 2005 - 2006 1Q07 141% 105% 24% 9% IPC Banorte IPC Banorte

  30. One of the best performing stocks among the BMV’s most active. Stock Performance Ahead of the IPC in 1Q07 Behind the IPC in 1Q07 LEADERS WORSENING 110% GFNORTE 90% Ahead of the IPC 1Q07 GMEXICO WAL-MART 70% GEO TELEVISA Annual Return TELMEX IPC 50% INBURSA AMERICA MOVIL FEMSA 30% ICA Behind the IPC 1Q07 10% CEMEX LAGGERS IMPROVING -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% Quarterly Return

  31. 19.7 15.3 8.7 CAGR 43% 6.7 1Q04 1Q05 1Q06 1Q07 Stock’s Daily Turnover Million Dollars

  32. Market Capitalization Billion Dollars 9.5 4.8 3.3 CAGR 69% 1.9 1Q07 1Q04 1Q05 1Q06

  33. Banorte vs. LatAm Banks Accumulated Return in USD 2006 - 2007 126% 45% 39% 38% 23% 17% 12% Bancolombia Santander Chile Unibanco Banco Chile Itau Inbursa Bradesco Banorte (4%)

  34. Comparison vs. Latin America Market Value in Billion Dollars 1Q07 P/E ‘06 Itaú 41.7 Bradesco Unibanco 40.5 Banorte 12.2 9.5 Santander Chile Banco de Chile 9.0 5.6 P/BV ‘06

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