1 gfnorte 4q03 results. 2 banorte continues gaining market share now as a national coverage bank dec...

1

GFNORTE4Q03 Results4Q03 Results

2

Banorte continues gaining market share now as a national coverage bank

Dec ‘96Dec ‘01

Total Deposit

Traditional Loans

156

2.3

7

14°

Dec ‘96

455

32

6.4

Dec ‘01

BRANCHES AND EMPLOYEES

States

Branches

MS%

DEPOSITS: EXCLUDES FINANCIAL INTERMEDIARIES AND INCLUDES MUTUAL FUNDS AND SOURCE: ABMLOANS: INCLUDES FOBAPROA, IPAB CREDIT AND SOURCE: DEC ‘96 CNBV; DEC ‘01 AND SEP ‘03 A.B.M.

BTE + BCRBTE

1,182

32

16.6

6° 4°

BTE + BCRBanorte

BANORTE

BANCENTRO

BANPAÍS

BANCRECER

Bank Emp 4,840

1,024

15.1

32

Dec ‘03

13,336

4°

Dec ‘03

8,516 15,099

3.0

3.3

14°

10°

7.8

7.0

5°

6°

11.7

8.6

4°

4°

11.8

12.2

5°

4°

Total Loans 3.3 10° 9.4 3° 15.6 3° 16.6 3°

Non Interest Deposits 6.8 5° 11.4 5° 15.4 5° 16.5 4°

3

The client base and the distribution channels have experienced an important growth

DISTRIBUTION CHANNELS

CLIENTS : INCLUDES THE BANKING SECTOR AND THE BROKERAGE HOUSE. * INTERNET. **MILLIONS OF PHONE CALLS FOR THE PERIOD.

CLIENTS (Thousands)

627 889

1,9002,324

‘96 ‘97 ‘98 ‘99

2,818

‘00 ‘01

4,678 4,634

02

3,865

Dec’03

Call Center**

20.6

POS 10,400

PC Banking 22,709

ATM2,524

Branches 1,0292,458

990212157

8.3

‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 Dec’03

TRANSACTIONS PERDISTRIBUTION CHANNEL

ATM

BRANCHES

POS

TELEPHONEBANKING

3%

23%

6%

PC BANKING & INTERNET

14%

54%

54%

20032002

28%

9%

6%

3%

4

2,219

1,6851,6511,688

1,4221,304

952787

'96 '97 '98 '99 '00 '01 '02 2003

EXTRAORDINARY INCOME NOT INCLUDED IN GRAPH: 1997: PS 796, 1998 : PS 484, 2000: PS 245 AND 2002: PS 410. MILLIONS AS OF DECEMBER 2003.

GFNorte’s Recurrent Income

1996 1997 1998 1999 2000 2001 2002 2003ROE 21.0% 29.1% 21.5% 15.1% 20.7% 17.2% 15.6% 17.5%CETE 31.4% 19.9% 24.4% 21.6% 15.3% 11.4% 7.1% 6.3%DIFERENCE 5.4 5.8 8.7 11.2

5

GFNorte’s Objectives & Strategy

Objectives

•Provide excellence in financial services

•Maximize shareholder value

Strategy

•We have succeeded in building a national franchise through selective acquisitions. We will now focus on exploiting our leading market position by:

Improving our funding mix

Increasing Non Interest Income

Reducing Non Interest Expense, improving our efficiency ratio

Aggressively growing our credit portfolio, with strict credit risk policies

Further developing our asset recovery business

Multi-channel approach with a cross-sell focus

6

HIGHLIGHTS

GFNORTE1,685*

15.6%

25.5

3.4 *

1.1

14.8%

76.0%

3.1%

118.0%

2,219

17.5%

39.0

4.4

1.5

12.7%

20.4%

2.4%

121.7%

NET INCOME IN MILLION PESOS AS OF 4Q03.EPS & BOOK VALUE ARE PESOS PER SHARE. BOOK VALUE EXCLUDES MINORITY HOLDINGS.•EXCLUDES GENERALI EXTRAORDINARY INCOME OF Ps 410 millions.(1)EXCLUDES THE SHORT-TERM LOAN FOR Ps 6,761 MILLION GRANTED TO A FINANCIAL ENTITY OF THE FEDERAL GOVERNMENT IN DECEMBER 2002.

20032002

BANKING SEGMENT

Net Income

Annualized ROE

Stock Price

EPS

P/BV

Capitalization Ratio

Traditional loan growth (1)

Past due loan ratio

Reserve Coverage

31%

53%

7

Profit composition

NET INCOME

BANKING Ps 1,798 81%

8HOLDING 0%

102BROKERAGE 5%

217LONG TERM SAVINGS 10%

93AUXILIARY ORGANIZATIONS 4%

Ps 2,219GFNORTE 100%

2002 20032001

84%

0%

4%

8%

4%

100%

85%

3%

2%

6%

4%

100%

MILLION PESOS

8

Net Interest Margin

CeteTIIE

4.7% 4.9%

4.3%3.9%

4.2%

4Q02 1Q03 2Q03 3Q03 4Q03

TYPE OF ASSET 3Q03 4Q03

Fobaproa / Ipab Notes 85,537 2.2% 79,901 2.5%Loan Portfolio 64,501 8.0% 68,072 8.4%

VOL NIM VOL NIM

Other (1) 42,647 1.1% 46,882 0.9%Total 192,684 3.9% 194,856 4.2%

(1): 4Q03 Includes: Deposits in Central Bank Ps 17,128 millions, Fixed Income Securities Ps 16,764 millions and in other banks Ps 12,990 millions.

5.1%4.6%

8.4%

7.4%

9.6%

8.8%

6.8%

6.3%

1.0

0.50.4

5.4%

5.8%

9

2,228

2,991

3,798

2001 2002 2003

Non Interest Income

Recovery 875

Service 2,086

Trading 837

TOTAL 3,798

739

1,965

288

2,991

MILLION PESOS AS OF 4Q03

39% 27%

1,020

865

342

2,228

467 478504 522

585

4Q02 1Q03 2Q03 3Q03 4Q03

Service Fees

10

Service Fees

The Service Fee Income accumulated through the year rose by 6% vs. 2002 as a result of the new clients that were attracted and which show the following rise in fee collecting: Credit Cards, 11%; Account Management fees, 7%; and Electronic Banking Services, 2%.

Account Management Fees

Fund Transfers

2003 vs 2002

Fiduciary

NET FEES - SERVICES

Credit Card

Other Fees Net

Electronic Banking

2002 2003

194 178 (8%)

666 710 7%

183 178 (3%)

591 655 11%

254 260 2%

76 106 39%

1,965 2,086 6%

MILLION PESOS

11

The accumulated Non Interest Income from Recovery Banking increase an 18% due to the higher Serfin portfolio income and that of the Fobaproa portfolio.

Recovery Fees

II.- FOBAPROA FEES

NET FEES – RECOVERY

a. Serfin Loans (1)

b. Other Portfolios

Income

- Expense

640 543

397 180

243 363

411 165

296 130

115 35

381 477

739 875 18%

Income

- Expense

(1) COLLECTION RIGHTS.MILLION PESOS

I.- LOAN PORTFOLIOS ACQUIRED 358 398

2003 vs 20022002 2003

12

Recovery Bank

AUM Composition

AUM = ASSETS UNDER MANAGEMENT(*): FIGURES IN BILLION PESOS.

2001 2002 2003

6560 59Proprietary

Loans Acquired

SERFIN

IPAB

11%11% 7%

17%17% 29%

30%29% 24%

42% 43% 40%

13

Non Interest Expense

MILLION PESOS. (*) FOURTH QUARTER 2001 INCLUDES PROFORMA FOR BANCRECERVAT = VALUE ADDED TAX. AT 2002 VAT=PS 621 MILLIONS AND IPAB=PS 678 MILLIONS. AT 2003 VAT=PS 645 MILLIONS AND IPAB=PS 732 MILLIONS O&AE = OPERATION AND ADMINISTRATIVE EXPENSES INCLUDING IT.RENT, DEP. & AMORT. = RENT, DEPRECIATION & AMORTIZATION.

2,902

2,437

4Q01 * 4Q03

16%

1,222 1,391

1,299 1,377

2,342 2,379

4,332 4,216

2002 2003

9,195 9,362

PERSONNEL

O&AE

VAT & IPAB

RENT,DEP &AMORT.

=

14

EFFICIENCY RATIO INCLUDES TRADING.* AVERAGE FOR THE PERIOD.

Efficiency ratio has suffered after each acquisition, being Banorte able to return to

adecuate efficiency levels in the following years.

After the acquisition of Bancrecer the efficiency ratio went up to 87%, coming down to an

average for the year of 78% by 2003.

Efficiency Ratio

1992

EfficiencyRatio

1996 1997 2001 Dec 2002

55% 66% 93% 78% 105% 78%87%

2003*

78%

15

Traditional Loan Portfolio

TRADITIONAL LOAN PORTFOLIO 4Q02 3Q03 4Q03QUARTER

Commercial 17,743 20,112 23,036 14.5% 29.8%

Corporate 14,573 12,671 11,859 (6.4)% (18.6)%

Mortgage 10,838 12,681 13,551 6.9% 25.0%

Automobile 3,089 4,651 5,022 8.0% 62.6%

Credit Card 1,729 2,541 2,829 11.3% 63.6%

Electronic Payroll Loans 583 1,018 1,214 19.3% 108.2%

Government Entities 6,054 8,955 9,147 2.1% 51.1%

Financial Entities 3,545(*) 3,706 3,350 (9.6)% (5.5)%

TOTAL 58,155(*) 66,338 70,007 5.5% 20.4%FIGURES = MILLION PESOS. TRADITIONAL LOAN PORTFOLIO DOES NOT INCLUDE NEITHER FOBAPROA / IPAB NOTES NOR RECOVERY BANK BUSINESSGOVERNMENT ENTITIES INCLUDES FEDERAL, STATE & MUNICIPALITIESFINANCIAL ENTITIES = INCLUDES GOVERNMENT AND PRIVATE FINANCIAL ENTITIES LIKE LEASING,FACTORING COMAPNIES AND OTHERS.(*) IT EXCLUDES THE SHORT-TERM LOAN FOR Ps 6,761 MILLION GRANTED TO A FINANCIAL ENTITY F THE FEDERAL GOVERNMENT IN DECEMBER 2002.

VARIATION

ANNUAL

58,155

66,33870,007

4Q02 3Q03 4Q03

16

4,922

3,5173,472

4Q02 3Q03 4Q03

Past Due Loans

MORTGAGE

CORPORATE

COMMERCIAL

AUTOMOBILE

CREDIT CARD

ELECTRONIC PAYROLL

4Q03

1,183

663

419

192

169

87

TOTAL 3,517

RECOVERY LOANS 804

TYPE OF LOAN PDLRatio

0.8%

0.4%

0.3%

0.1%

0.1%

0.1%

2.4%

0.5%

MILLION PESOS

3Q03

1,179

663

405

161

134

89

3,472

841

PDLRatio

0.8%

0.4%

0.3%

0.1%

0.1%

0.1%

2.3%

0.5%

17

Loans & Insurance allocation by quarter

BANCRECERBANORTENUMBER OF LOANS AND INSURANCE POLICIES.

AUTOMOBILE ELECTRONIC PAYROLL LOANS MORTGAGE

LIFE INSURANCE CAR INSURANCE

4Q02 1Q03 2Q03 3Q03 4Q03

32%38%

68%

62%

8,287

9,929

43%

57%

9,894

41%

59%

10,729

42%

58%

10,486

4Q02 1Q03 2Q03 3Q03 4Q03 4Q02 1Q03 2Q03 3Q03 4Q03

19% 21%

81% 79%

1,737

1,397

35%

65%

1,867

28% 33%

72% 67%

22,751 22,793

36%

64%

32,978

35%

65%

34,988

39%

61%

2,085

38%

62%

37,813

38%

62%

2,454

4Q02 1Q03 2Q03 3Q03 4Q03 4Q02 1Q03 2Q03 3Q03 4Q03

37%42%

63%

58%17,158

29,872

44%

56%

34,930

75%

63%

15,977

20,753

25%37%

60%

19,446

40%45%

55%

36,470

61%

19,317

39%43%

57%

27,732

60%

21,812

40%

18

Fobaproa - IPAB

After Banorte’s expansion strategy, the proportion of Fobaproa / IPAB notes has been reducing since Traditional Loan portfolio started to rise

Traditional Loans

BILLION PESOS AS OF DECEMBER 2003. NET OF FOBAPROA CHECKING ACCOUNT AND LOSS SHARING PROVISIONS.(1) SHORT TERM LOANS TO SOCIEDAD HIPOTECARIA FEDERAL.(2) SALE OF LOANS TO SOLIDA ADMINISTRADORA DE PORTAFOLIOS.

Fobaproa / IPAB Notes Ps 6.7 (1)Ps 1.9 (2)

1996 1997

42

103

2001

149

2002

159

2003

149

21%

71%

66% 59%51%

19

Industry Growth

Twelve month Traditional Loan Portfolio growth (*)

(Excludes Fobaproa / IPAB)

BA

NO

RT

E

BIT

AL

SA

NT

AN

DE

R

SE

RF

IN

BA

NC

OM

ER

SC

OT

IAIN

VE

RL

AT

BA

NA

ME

X

17%

- 2%

-10%

1%16%

20% (1)

(*) FROM 4Q’02 TO 4Q’03.SOURCE: 4Q’03 QUARTERLY REPORTS, EXCEPT BANAMEX.(1) Excludes loans managed by the Recovery Banking unit and excludes the short-term loan for Ps 6,761 million granted to a financial entity of the Federal Government in December 2002.

20

Banorte’s Loan mix is shifting away from the Monterrey region

Dec01 Dec03Loans 27% 31%Branches 22% 23%





MONTERREY

NORTHEAST

SOUTHEAST

NORTHWEST


WEST

MEXICO CITY

Dec01 Dec03

100% 100%NATIONAL

SOURCE: ABM. 2001 DOES NOT INCLUDES BANCRECERLOANS EXCLUDES IPAB AND FOBAPROA AND CENTRALIZED OPERATIONS.

……and concentrating more in Mexico City

21

Comparatives to the Industry 4Q’03

SOURCE OF ASSETS AND NUMBER OF BRANCHES: ABMSOURCE OF ROE AND CAPITALIZATION RATIO: PRESS RELEASE OF EACH BANK. INCLUDES MARKET AND CREDIT RISKS. RULES 2003.(1) CALCULATED FOR BANKING SECTOR (*) INFORMATION AS OF 3Q03.

25.1%

12.8%

Banamex Banorte

10.2%

Bital*Santander

15.1%

4°5.5%

Scotiabank* Banamex BanorteBital SantanderBBVA-Bancomer

Scotiabank

24.4%

15.1%

19.5%

13.6%

20.7%

5.6%

BBVA-Bancomer

30.3%

4°

15.7%(1)17.5%

29.9%

Santander Banamex GFNorte

15.5%(1)

Bital*

24.4%

Scotiabank*

3°

ROEGroup

CAPITALIZATION RATIO16.4%

BBVA -Bancomer

12.4%

Banamex

12.4%

Scotiabank*BBVA-Bancomer

13.3%

Banorte

12.7%

3°

14.7%

Bital* Santander

11.6%

ASSETS NUMBER OF BRANCHES

22

Tot. M.S.Branches 136 24.1 Total Deposits $28,710 27.9Total Loans $7,884 29.0

Market Share by Region

TOTAL M.S.Branches 1,024 15.1% Total Deposits $211,486 11.8%Total Loans $148,627 16.6%

Tot. M.S.Branches 160 17.7 Total Deposits $19,385 14.2Total Loans $7,081 13.9

Tot. M.S. Branches 170 24.2 Total Deposits $55,819 39.0Total Loans $20,340 21.8


MONTERREY

NORTHEAST

SOUTHEAST

NORTHWEST


WEST

MILLION PESOS. SOURCE: ABM M.S. MARKET SHARE. BRANCHES: INCLUDES BANKING MODULES AND EXCLUDES REMOTE COUNTERS; TOTAL DEPOSITS: INCLUDES CENTRALIZED OPERATIONS. TOTAL LOANS: INCLUDES IPAB AND FOBAPROA NOTES.

Tot. M.S.Branches 237 14.0Total Deposits $59,680 7.0Total Loans $21,620 6.9

MEXICO CITY

4° 4° 3°

4° 3°3°

1° 1° 2°

1° 1° 1°

5° 6° 6°

5° 5°4°

4°

5°

3°

DECEMBER 2003

23

TENDENCY OF IPC, GFNORTE, GFB (Monthly)

JAN ’02 – FEBRUARY 13th’04

IPC

GFB

44%

20%

GFNORTE

104%

11.89.8

41.8

20.5

Jan'02

Feb'02

Mar

'02

Apr'02

May

'02

Jun'02

Jul'0

2

Aug'02

Sep

'02

Oct'02

Nov'02

Dec

'02

Jan'03

Feb'03

Mar

'03

Apr'03

May

'03

Jun'03

Jul'0

3

Aug'03

Sep

'03

Oct'03

Nov

7/03

Nov

14/03

Nov

21/03

Nov

28/03

Dec

5/03

Dec

11/03

Dec

19/03

Dec

26/03

Jan

2/04

Jan

9/04

Jan

16/04

Jan

23/04

Jan

30/04

Feb 6

/04

Feb 1

3/04

9,982.8

6,928.0

24

Stock Performance

2001 2002 2003Feb 13th

2004

STOCK PRICE 19.1

GROWTH VS 2001

PS -

USD -

P / BV

GFNORTE

BBVA BANCOMER

GFBanorte's P/BV Discount to GFBB's

DAILY VOLUME (USD Million)

0.99

1.91

1.6

25.5

33.5%

17.5%

1.14

1.40

2.1

39.0

104.2%

66.4%

1.46

1.50

2.2

(3)%

41.8

118.8%

83.2%

1.57

1.78

7.7

(12)%(48)% (19)%

25

Dividends

$353

$500

3Q02 3Q03

Payout ratio (1) 33%

(1) Ps 500 millions / Net Income as of 2001 Ps 1,587.9 millions; Ps 353 millions / Net Income as of 2002 Ps 2,016.0 millions(2) $ 1 / Share Price as of Sep’ 2002 $ 22.99; $ 0.70 / Share Price as of Sep’ 2003 $ 33.16

Dividend / Share Ps 1.0

18%

Ps 0.7

Yield (2) 4.4% 2.1%

26

Outlook

Traditional Loan Portfolio growth:

Low Cost Deposit growth:

Asset Quality:

NIM:

Non Interest Income:- Service fees:- Recovery fees:

Capital Management:

improving steadily

improving slowly

stable

improving slowly

improving slowly stable

cash dividend

27

GFNORTE4Q03 Results4Q03 Results

1 gfnorte 4q03 results. 2 banorte continues gaining market share now as a national coverage bank dec...

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