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GFNORTE: 3Q07 Results

GFNORTE: 3Q07 Results. November, 2007. Contents. Results Overview. Asset Quality. Stock Metrics. Final Considerations. 1. Results Overview. 18%. 11%. 3%. 15%. Quarterly Highlights. CONSTANT MILLION PESOS. 3Q 06. 3Q 07. Net Income. 1,573. 1,712. 9%. ROE. 25.1 %. 22.3 %.

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GFNORTE: 3Q07 Results

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  1. GFNORTE: 3Q07 Results November, 2007

  2. Contents • Results Overview. • Asset Quality. • Stock Metrics. • Final Considerations.

  3. 1. Results Overview

  4. 18% 11% 3% 15% Quarterly Highlights CONSTANT MILLION PESOS 3Q06 3Q07 Net Income 1,573 1,712 9% ROE 25.1% 22.3% Efficiency Ratio 52.2% 55.4% Net Interest Margin 8.0% 7.7% Net Interest Income 3,793 4,363 Non Interest Income 1,856 1,907 Total Income 5,649 6,270 Non Interest Expense 3,009 3,549

  5. Quarterly Net Income CONSTANT MILLION PESOS 1,712 1,695 1,573 1,480 880 2Q07 3Q04 3Q05 3Q06 3Q07

  6. 11% 24% 23% Accumulated Highlights CONSTANT MILLION PESOS 9M06 9M07 4,548 5,044 Net Income 11% 25% 23% ROE Tax Rate 38% 34% Net Interest Margin 7.8% 7.4% Performing Loan Growth 29% 23% Past Due Loan Ratio 1.5% 1.6% Stock Price 42.92 34.66 Book Value 15.71 12.78 P/BV 2.71 2.73

  7. Income Statement CONSTANT MILLION PESOS 9M06 9M07 Change 10,951 12,301 12% Net Interest Income 5,961 5,887 (1%) Non Interest Income Service Fees 3,900 4,289 10% 751 408 (46%) Recovery 312 317 2% FX 998 873 (13%) Trading 16,912 18,188 8% Total Income Non Interest Expense (9,377) (10,422) 11% 7,535 7,766 3% Net Operating Income (1,226) (1,696) 38% Provisions 216 1,460 577% Non Operating Income (Expense) Net (2,457) (2,557) 4% Income Tax 481 71 (85%) Subsidiaries and Minority Interest Net Income 4,548 5,044 11%

  8. Recurring Net Income CONSTANT MILLION PESOS Non Recurring Recurring 5,044 4,838 4,548 4,748 4,122 1,871 CAGR 39% 9M07 9M06 9M04 9M05

  9. Non Interest Expense CONSTANT BILLION PESOS 9M06 9M07 9,377 10,422 Non Interest Expense 11% EFFICIENCY RATIO New Accounting Standards + Expansion Program 57% 57% 55% 4 pp 53% 9M07 9M05 9M06

  10. Net Interest Margin vs CETES PERCENTAGE Average CETE : 9M05: 9.39% 9M06: 7.25% 9M07: 7.13% CETES 9.5 8.6 87% 8.0 7.9 NIM 8.5 7.7 7.7 7.6 8.3 7.5 7.1 107% 7.5 7.1 7.2 7.1 7.0 7.0 7.0 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

  11. 18% 16% 28% 16% 17% 20% 10% 11% 7% Core Deposits CONSTANT BILLION PESOS YoY Change w/o INB 3Q05 3Q06 3Q07 Deposits Demand 70 82 95 42 48 61 Time Total 112 130 156 Mix 63% 63% 61% Demand Time 37% 37% 39% 100% 100% 100%

  12. 25% 23% Performing Loan Portfolio CONSTANT BILLION PESOS 173 165 134 3Q06 2Q07 3Q07 Change YoY w/o Extras 3Q06 2Q07 3Q07 QoQ YoY Consumer 50 55 58 6% 17% 48 63 67 5% 39% Commercial 23 30 30 (1%) 32% Corporate 13 17 18 4% 32% Government Total 134 165 173 5% 29%

  13. 23% 25% Performing Consumer Loan Portfolio CONSTANT BILLION PESOS 58 55 50 3Q06 2Q07 3Q07 YoY Change w/o Extras Change 3Q06 2Q07 3Q07 QoQ YoY 30 31 33 6% 10% Mortgage 6 7 7 1% 6% Car Loans 9 12 13 7% 45% Credit Card Payroll Loans 5 6 6 6% 24% 50 55 58 6% 17% Consumer

  14. Evolution of Loans & Deposits Performing Loan Portfolio (YoY) Core Deposits (YoY) 29% 23% 22% 20% 17% 12% 8% 3% 3Q04 3Q05 3Q06 3Q07 3Q04 3Q05 3Q06 3Q07

  15. Capitalization Ratio PERCENTAGE 3Q05 3Q06 3Q07 Tier 1 15.0% 12.6% 10.9% 3.2% 2.3% 3.9% Tier 2 TOTAL 18.3% 14.9% 14.8% Percentage Tier 1 82% 84% 74%

  16. Recovery Bank CONSTANT MILLION PESOS 9M05 9M06 9M07 728 545 496 Net Income ASSETS UNDER MANAGEMENT CONSTANT BILLION PESOS 79 71 68 63 62 Banorte 26 28 53 57 62 53 IPAB 40 18 1 5 3Q06 3Q05 3Q03 3Q04 3Q07

  17. Long Term Savings NET INCOME IN CONSTANT MILLION PESOS 9M05 9M06 9M07 Total 405 531 318 INSURANCE AFORE ROE: 16% ANNUITIES ROE: 34% ROE: 20% 331 142 210 134 65 119 139 60 50 9M05 9M06 9M07 9M05 9M06 9M07 9M05 9M06 9M07

  18. Siefore – Assets Under Management BILLION PESOS BANORTE INDUSTRY 792 755 664 56 53 44 Growth : 19% Growth: 27% 2005 2006 3Q07 2005 2006 3Q07

  19. Subsidiaries NET INCOME IN CONSTANT MILLION PESOS BROKERAGE HOUSE OTHER FINANCE COMPANIES ROE: 32% 194 200 192 111 148 61 9M05 9M06 9M07 9M05 9M06 9M07

  20. INB Results MILLION DOLLARS 9M07 9M06 Performing Loan Portfolio $737 $935 27% Net Interest Margin 4.7% 4.5% Net Income (Banorte’s 70%) $10.2 $12.4 22% Efficiency 42.9% 41.6% ROE 20.9% 22.8%

  21. Banorte USA Developments • Cross Border Mortgage Loan. • Origination US $40 million in 9M07. • US $80 million expected in ’07. • Infrastructure Expansion. • Opening of 2 new branches in 1Q08. • Brownsville. • Laredo.

  22. 2. Asset Quality

  23. Asset Quality CONSTANT BILLION PESOS 3Q06 2Q07 3Q07 Total Loan Portfolio 137 169 176 Past Due Loans 2.2 2.5 2.7 Loan Loss Reserves 3.7 3.6 3.6 PAST DUE LOAN RATIO RESERVE COVERAGE 1.6% 172% 1.5% 1.5% 141% 132% 3Q06 2Q07 3Q07 3Q06 2Q07 3Q07

  24. Credit Card Loans PDL RATIO VS. INDUSTRY Jul’06 Jul’07 6.2% 5.0% 4.4% 3.6% Banorte Other Major Banks Banorte Other Major Banks

  25. Mortgage Loans PDL RATIO VS. INDUSTRY Jul’06 Jul’07 3.5% 2.9% 2.7% 2.5% Banorte Other Major Banks Banorte Other Major Banks

  26. Mortgage Loans • Conservative origination policies. • Formal economy. • Low LTV of loan book 52%. • House value > 300 thousand pesos. • Adequate payment mechanisms. • Transparency in terms and conditions.

  27. 3. Stock Metrics

  28. 540 500 460 420 380 340 300 260 220 180 140 100 60 Dec-03 May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Stock Performance 2004 - 2007 Banorte: 517 Bolsa: 364 Inbursa: 241

  29. Market Capitalization MILLION DOLLARS 9,355 7,926 6,364 4,505 CAGR 51% 2,393 1,517 3Q03 3Q04 3Q05 3Q06 3Q07 Oct-07

  30. Daily Turnover MILLION DOLLARS 20.2 13.2 7.3 5.2 CAGR 74% 2.2 9M03 9M04 9M05 9M06 9M07

  31. 4. Final Considerations

  32. Slowdown in US economy. New competitors. Asset quality. Restricted liquidity. Volatility. Final Remarks RISKS OPPORTUNITIES • More resilient Mexican economy. • Low bancarization levels. • Low households debt level. • Demand for corporate loans. • Balance between risk & return.

  33. Challenges 2008 • Economic outlook: caution and moderation. • Balance between growth, asset quality and profitability. • Execution of infrastructure expansion program. • Greater focus on deposits and fee income.

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