Transcript Diapositiva 1

Banorte Investor Day
Closing Remarks
November 16, 2007
1
Index
1. Treasury and Capital Markets.
2. Commitment to Shareholders.
3. Bancarization Opportunities.
4. Medium Term Strategies.
2
1. Treasury and Capital Markets
3
Hedging Strategy
4
Hedging
Strategy continues evolving.

Shield against Mexican elections is no longer needed.

Actual coverage is adequate for this complex environment.
Risk in fixed rate loan portfolio is contained.

A growing proportion of the loan portfolio has fixed rates.

Hedging necessary for long term maturities.

Credit cards and payroll loans are not hedged.

High returns on these loans.

Possibility of resetting interest rates.
5
Funding Strategy
6
Funding
Reduction in funding costs through growth in core deposits.

Banorte’s growth rates are higher than the industry.

Branch expansion supports future growth in core deposits.
New banks entering the market.

Possibility of an increase in funding costs.

Banorte is very competitive – funding cost at 43% of Cetes.

60% of core deposits are demand deposits.
7
Funding
Short term & long term market funding.

Access according to market conditions.
Mexican Inter-bank market.

Conditions are normal.

Recent increase in costs due to tightening by the Central Bank.
Dollar denominated funding.


INB’s funding comes mostly through clients.
Wholesale funding is accessible.
8
Capitalization Strategy
9
Capitalization
Capital strengthening.

Subordinated debt issuance in ’06.

Retained earnings.
Capital consumption.

Growth in risk assets.

Investment in INB.

Dividends.

Prepayments of expensive obligations.
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Capitalization Ratio
PERCENTAGE
3Q06
4Q06
1Q07
2Q07
3Q07
Tier 1
12.6%
12.2%
11.0%
10.9%
10.9%
Tier 2
2.3%
5.1%
4.9%
4.3%
3.9%
TOTAL
14.9%
17.4%
15.9%
15.2%
14.8%
% Tier 1
84%
70%
69%
72%
74%
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Non Convertible Subordinated Debt Outstanding
Type
Issue
Date
(Ps millions)
Tier 1 - 10 NC 5
Nov-02
Tier 2 - 10 NC 5
Balance
Rate
Maturity
1,208
8.0%
Nov-12
Feb-04
3,238
5.87%
Feb-14
Tier 1 - 15 NC 10
Oct-06
2,188
6.86%
Oct-21
Tier 2 - 10 NC 5
Oct-06
4,376
6.14%
Oct-16
12
2. Commitment to Shareholders
13
20 / 20 Vision
ROE
26%
25%
2005
2006
23%
9M07
14
Dividend Policy
Current dividend payment policy: 15% of recurring net income.
Dividend
% of
Year
per share
Income
Million Ps
2003
$0.18
18%
382
2004
$0.26
23%
528
2005
$0.32
24%
655
2006
$0.37
15%
757
2007
$0.45
15%
908
15
Credit Ratings
Investment grade from the 3 most important agencies.
The outlook is “positive”.
Perspective Scale over
IG
Agency
Rating
Standard & Poors
BBB-
Positive
=
Sep ‘07
Fitch
BBB
Positive
+1
Jul ‘07
Moody’s
Baa1
Stable
+2
May ‘07
BBB+
BBB+
Date
Baa1 Baa1
BBB
Banorte
BBB-
México
Investment
grade
Standard & Poors
Fitch
Moody’s
16
3. Bancarization Opportunities
17
Financial Penetration
Bank lending has become an engine of growth.
%
2005
2006
Sep-07
Mortgage
80%
46%
22%
Consumer
48%
36%
24%
Corporate
7%
21%
34%
Total
28%
28%
28%
18
Financial Penetration
Financial penetration is low compared to the mid 90’s.
Bank Loans and Deposits as a % of GDP
%
40
35
30
25
20
Deposits
15
Loans
10
5
0
1994
1996
1998
2000
2002
2004
2006
2007
19
Financial Penetration
The level of penetration is low compared to Latam peers.
Credit to Private Sector as a % of GDP
69%
32%
31%
29%
22%
Chile
Brazil
Average
Colombia
9%
Others
13%
Banks
Mexico
20%
12%
Peru
Argentina
20
Financial Penetration
Low levels of branch penetration and household leverage.
Branches per thousand habitants
Families with debt payments in the
formal economy
(Units)
(Millions)
25% of
families
0.62
6.0
0.53
5.1
0.46
0.34
3.2
2.4
0.10
UK
Canada
USA
Spain
Chile
0.08
Mexico
2000
2002
2004
2006
21
Financial Penetration
The outlook for mortgage lending is positive.
1,350
Thousands of new loans per year
1,200
1,050
900
850
790
708
Estimate
678
500
530
400
320
340
330
2000
2001
200
1998
1999
2002
2003
2004
2005
2006
2007 2008
2009 2010 2011
2012
22
4. Medium Term Strategies
23
Medium Term Strategies
Profitability
Validate 20/20 vision.
Organic growth
Improve efficiency.
Market share
Difficult competitive environment.
Asset quality
Portfolio maturing / New originations.
Growth drivers
Loans / Recent initiatives / markets
 Focus: Consumer / Commercial / Mortgage / Microlending /
USA / Investment projects.
Bancarization
Lower income segments.
24
Certain statements in this document are
“forward-looking statements”. These
statements are based on management’s
current expectations and are subject to
uncertainty and changes in
circumstances. Actual results may differ
materially from those included in these
statements due to a variety of factors.
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