1 us mkt ti nim rev c / i ni roe l/d dep loan icap app 2q20/media/files/b/ba...2 us mkt ti nim rev c...

1 NIM Rev C / I NI ROETI L/D Dep Loan ICAPMkt AppUs 2Q20

2 NIM Rev C / I NI ROETI L/D Dep Loan ICAPMkt AppUs

History and Business Highlights 3

Market Presence 7

Digital Bank 9

Results 13

NIM 14

Cost to Income 15

Net Income 16

ROE / ROA 17

Deposit & Loans 18

Loans / Deposits 19

Deposits growth 20

Loan growth 21

Asset Quality - NPL 23

CAR 27

Appendix 29


A Leading Bank in Mexico Globally Recognized

Balanced business mixStrong retail, wholesale

and premium banking platforms.

Sound FundamentalsSolid asset quality,

increasing profitability, high liquidity

and strong capitalization ratios.

Investment grade ratingsS&P, Fitch,

Moody's and HR Ratings.

https://www.latinfinance.com/awards/banks-of-the-year-awards/2019


Nation Wide Operation

1,180Branches

9,060ATM´s

162,127 POS´s

16,035 Correspondents


From Regional to Leading and Innovative Bank

20 | 20

Establishment

1899 1982-2092 1995 2000 2010 2018

Privatization

IXEAfin BancentroBanpaísBancrecer

…

Inorganic Growth

Regional Bank

Business Diversification

& Consolidation

Client

Segmentation

IT : central DB,

multichannel

Profitability

Nationalization

G.F. Interacciones


20/20

Transformation to Digital Bank Centered on the Client

PRODUCTS &

SOLUTIONS

Deposits & Loans

Insurances

Pension

Annuities

Wealth Mngt.

…

DISTRIBUTION

CHANNELS

Mobile

Internet

ATM

Contact Center

Branches

…

PROCESSES

Account opening - Credit Analisis

Next Best Offer – Next Best Action

Client Segmentation

▪ 12 million clients

▪ Structured Info & Learning

(Central DB & Watson)

▪ Behavior understanding

Analitics

Cost

Revenues

Digital Bank

20

15


BBVA23%

Banorte14%

Santander13%

CitiBanamex13%

ScotiaBank8%

HSBC7%

Inbursa4%

Others18%

BBVA23%

CitiBanamex15%

Santander13%

Banorte13%

HSBC8%

ScotiaBank7%

Inbursa3%

Others18%

Loans

May 2020

Deposits

2°

Deposit & Loan Market Share

Source: CNBV.

4°


Consumer C. Cards Mortgage Commercial Government Deposits

May-19 May-20 May-19 May-20 May-19 May-20 May-19 May-20 May-19 May-20 May-19 May-20

Banorte 12.1% 12.2% 9.7% 10.2% 19.4% 19.3% 10.2% 10.2% 34.6% 29.4% 13.9% 13.2%

BBVA 28.6% 29.4% 27.6% 28.1% 25.9% 26.1% 18.6% 19.5% 24.8% 28.1% 21.9% 23.2%

CitiBanamex 14.6% 12.6% 27.0% 26.0% 10.0% 9.0% 12.4% 12.8% 6.4% 7.5% 14.3% 14.6%

Santander 8.8% 8.9% 14.2% 14.3% 16.7% 16.5% 13.2% 13.1% 12.0% 13.9% 13.4% 13.4%

HSBC 6.3% 6.5% 5.6% 5.8% 6.4% 7.3% 8.9% 8.0% 5.2% 6.4% 8.4% 8.0%

ScotiaBank 5.2% 5.1% 2.7% 2.7% 14.8% 15.3% 7.2% 7.7% 1.8% 2.6% 6.5% 6.5%

Inbursa 4.7% 3.9% 4.1% 4.2% 0.6% 0.6% 0.0% 0.0% 3.2% 2.3% 3.1% 2.9%

Others 19.7% 21.3% 9.1% 8.7% 6.1% 6.0% 29.5% 28.7% 12.0% 9.9% 18.4% 18.2%

Market Position 3° 4° 2° 4° 1° 4°

Loan Portfolios Market Share

Source: CNBV.

9 NIM Rev C / I NI ROETI L/D Dep Loan ICAPMkt AppUs9

Fast Moving to Self-service/Digital Operations

Transaction Change

Jun vs Feb

Account statements 408%

Check deposit 100%

Payment of Services 91%

Transfers 31%

Payment to Credit Card 23%

Registration of Clarifications 140%

Lock and unlock of Credit Card 32%

Initial Activation of Credit Card 8%

Balance and Movements Consultation 20%

Mobile recharge 15%

1

2

3

4

5

6

7

8

9

10

Self-s

erv

ice

Se

rve

d b

y s

taff

Physical Remote

WEB and

Mobile

Contact

Center

Branch

ATM

NPS


39.269.2

141.9

223.9

249.8

0

50

100

150

200

250

300

1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020

Digital Transformation Gaining Share

Transactions GrowthTransactions (Tx) Customers Using Digital (millions) +76%

24%

32%

19%

2%

1%

19%

3%WEB

MobileATM

Call Center

Correspondents <

POS

Branches

3.50

3.904.12 4.21 4.28 4.30

1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

*

Time Deposits

Mutual Funds

Credit Card

Insurance

Digital Deposit Account

Payroll loans

Mobile

as a

Point of Sale


Mobile Product Segmentation

Individuals

SMEs

Corporates

• Security / transactional & sales functions (>70)

• The born in social media, Banorte Go

• CoDi payments

• Cash Management

• Payments

• Services

• Credit

• Reporting

• Security management

• Reporting


Adapting the Business & Infrastructure to the New Payments Market

The best DIGITAL PLATFORM

for aggregators

CoDi – Test Pilot and further

development underway

Recovery on POS’s transactions pre

COVID-19 with emphasis on e-commerce

54

42

56

0

10

20

30

40

50

60

ene-20 feb-20 mar-20 abr-20 may-20 jun-20

POS’s Transactions


Results


3.2%

3.6% 3.6%3.5% 3.5%

3.7%

4.5%

4.8%5.0% 4.9% 5.0%

5.2%

4.7%

3.0%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20

NIM

Bank Net Interest Margin

NIM

(Post-Provision)

4.1%

4.5%4.8% 4.9%

4.7%

5.2%

5.8%

6.3% 6.4% 6.3%6.5%

6.6%

6.3%

5.8%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20


Improving Efficiency

Cost to Income56.0% 54.0% 53.7%

50.5% 50.9%

47.5%

45.0%

41.4%43.0%

41.6%43.1% 43.8% 43.7%

42.2%

35%

40%

45%

50%

55%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

* Recurring

Reported

41.4% 42.3%


6,553 6,730 6,848

6,180

3,669

7,077

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2Q19 3Q19 4Q19 1Q20 2Q20

Strong Net Income

Net Income

8,517

10,88812,122 11,936

13,518 15,044

18,339

23,158

26,289 24,834

27,493

7,500

10,000

12,500

15,000

17,500

20,000

22,500

25,000

27,500

30,000

2011 2012 2013 2014 2015 2016 2017 2018* 2019*

Million Pesos

CAGR

2011-2019 +17%

(44.0%)

YoY*

+14%

YoY* Recurring

* w/o advanced

provisions


1.1%

1.30%

1.60%1.40% 1.47%

1.56%

1.79%

2.11%2.26% 2.25% 2.32% 2.37%

2.02%

1.11%

2.27% 2.36%2.14%

1.0%

1.5%

2.0%

2.5%

3.0%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

ROA

Constant Positive growth in Profitability

ROE

14.1% 14.3%16.4%

13.7% 13.7%14.8%

20.3%

24.1% 23.4%

22.8%23.6% 23.9%

21.7%

12.4%

25.7% 24.2%23.9%

10%

15%

20%

25%

30%

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20

* Recurring

Reported:

Reported:* w/o advanced

provisions

* w/o advanced

provisions


Loans

Deposits


Healthy Funding & Loan Portfolio Structure

2019 2Q20

$757 bn

DemandTime

Money

Market

Interbank

Loans

$744 bn

2Q20

Consumer

Commercial

Mortgage

Corporate

Government

Commercial

Consumer

Mortgage

Government

Corporate

US 37.4 bn

Demand

Money

Market

Time

Interbank

Loans

US 33.7 bn

Billion Pesos

Funding

Loan Portfolio

$864 bn

$779 bn2019

55%31%

9%5%

21%

22%

19%

23%

15%


Demand68%

Time32%

129 136158 168

194223 229 236 236 229 227 224

255300

351384 397 414

394 396 401438 454

482

384436

509551

590637 623 632 637

667 681 706

100

200

300

400

500

600

700

2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Time Demand Core Deposits

2Q19 2Q20

Demand 396 482

Time 236 224

TOTAL 632 706

Loyal Deposits Base

Demand62%

Time38%

MIX

2013 2Q20

Billion Pesos

22%

(5%)

12%

Deposits

YoY

+22%

YoY

(5%)

2013-2019 CAGR:

+10%

YoY

+12%


Continued Growth in Performing Loan Book, Special Focus on Consumer

US 33.7 bn

Billion Pesos 2Q19 1Q20 2Q20 QoQ YoY

Mortgage 163 173 177 2% 9%

Car Loans 25 27 27 (2%) 5%

Credit Cards 38 39 37 (3%) (1%)

Payroll 51 50 51 2% 2%

Consumer 276 289 293 1% 6%

Commercial 156 166 171 3% 10%

Corporate 133 146 153 5% 15%

Government 185 161 161 0% (13%)

TOTAL 750 763 779 2% 4%

335 389

420 464

510 557 604

756 746

750716

744 763 779

300

400

500

600

700

800

2011 2012 2013 2014 2015 2016 2017 2018 1Q192Q193Q194Q191Q202Q20

Total Loan Portfolio

98118

140155

174201

237

267 271 276 282 286 289 293

50

100

150

200

250

300

2011 2012 2013 2014 2015 2016 2017 2018 1Q192Q193Q194Q191Q202Q20

CAGR:

+14%

US 12.7 bn

CAGR:

+10%

Consumer Portfolio


Loan Book View

89%

0%11% 17%

28%

12%

43%

Currency Term

22%

10%

18%10%

10%

9%

21%

Sector

1 year

5 years

10 years

> 10 yearsPesos

Dollars

UDIs

Subnational

Government

Federal

Government

Services

Commerce

Manufacturing

Transportation

Other


1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Credit Cards 6.1% 6.3% 6.0% 5.5% 5.9% 5.9% 6.0% 5.4% 5.8% 5.5%

Payroll 2.9% 3.3% 4.1% 3.7% 3.0% 3.8% 3.4% 3.3% 2.7% 3.3%

Car Loans 0.9% 1.1% 1.1% 1.1% 0.9% 1.0% 1.0% 1.0% 0.9% 1.2%

Mortgage 0.9% 0.9% 1.0% 0.9% 1.0% 1.0% 1.1% 1.1% 1.2% 1.3%

Commercial 2.6% 2.6% 2.3% 1.9% 2.2% 2.5% 2.7% 2.5% 2.4% 1.1%

Corporate 3.0% 2.9% 2.8% 2.8% 2.7% 2.8% 2.7% 1.7% 1.7% 0.2%

Government 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%

Total Banorte 1.9% 2.0% 1.8% 1.7% 1.7% 1.9% 1.9% 1.6% 1.7% 1.1%

2.9%

2.2%

1.8%2.0%

1.7% 1.6% 1.7%1.9% 1.9%

1.6% 1.7%

1.1%

1.0%

2.0%

3.0%

2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Sound Asset Quality

Past Due Loan Ratio

1.9bn on

advanced

write-offs


2.2% 2.3%2.0% 1.9% 1.9%

2.2% 2.0%2.2%

4.4%

2.1%2.5%

2.1%2.4%

2.2%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Actual

Prev. Criteria

103% 106%115%

139%128%

142% 138% 136%128% 127%

138% 140%

203%

90%

110%

130%

150%

170%

190%

2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

Sound Asset Quality

Coverage Ratio

Cost of Risk

* Cost of Risk: Provisions / Average Total loans (Performing + Past Due), On actual criteria all the recoveries are register on Provisions (net)

1.9%

Without 4.9 bn

one-hit impact


Healthy Liquidity

Loans / Deposits

(%)

Liquidity Coverage Ratio

CCL (%)

104%

98%

96%

90%

95%

100%

105%

1Q2015

3Q 1Q2016

3Q 1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020

122%120%

151%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

1Q2015

3Q 1Q2016

3Q 1Q2017

3Q 1Q2018

3Q 1Q2019

3Q 1Q2020


Healthy Leverage Ratio

7.5% 7.8%8.4% 8.4%

10.8% 10.8% 10.9% 11.0%

5.0%

7.5%

10.0%

12.5%

2015 2016 2017 2018 2019 4Q19 1Q20 2Q20

20.2% 20.5%21.4%

20.5%

23.7% 23.7% 24.1%25.2%

15.0%

17.5%

20.0%

22.5%

25.0%

27.5%

2015 2016 2017 2018 2019 4Q19 1Q20 2Q20

Net Capital / Credit Risk Assets

Leverage RatioBasic Capital / Adjusted Assets


Strong Capital Position

7.90%

9.40%

11.40%

Capital Adequacy Ratio

12.7% 12.4% 12.1% 11.9% 12.7%13.8% 13.1% 13.3% 13.3% 12.2%

13.2%

5.2%

1.3%

15.3%14.6%

15.3%

17.2% 17.2%18.1%

20.0% 20.3%

18.6% 19.0%19.7%

2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

*RWA= Risk Weighted Assets annual growth

RWA

Basel III

+11% +8% +16% (2%) +19% +20% +19% +5% +7% +9% +15%

CET1

Minimum

Regulatory

Ratios

Total

Tier 1

18.4%

Tier 2


Investment Grade by All Major Rating Agencies

RatingAgency Outlook Date

BBB-

BBB

Fitch

Standard & Poor’s Negative

Negative

Mar-20

Jul-20

baa3Moody’s Negative Aprl-20


Appendix


Quarterly Summary

Income Statement and Balance Sheet

Highlights - Bank 2Q19 1Q20 2Q20Change

(Million Pesos) 1Q20 2Q19

Net Interest Income 16,853 17,517 17,421 (1%) 3%

Non-Interest Income 4,631 4,726 5,268 11% 14%

Total Income 21,483 22,243 22,690 2% 6%

Non-Interest Expense 8,931 9,718 9,579 (1%) 7%

Provisions * 3,657 4,262 8,527 100% 133%

Operating Income 8,895 8,263 4,584 (45%) (48%)

Taxes 2,382 2,112 934 (56%) (61%)

Subsidiaries & Minority Interest 39 29 19 (33%) N.A.

Net Income 6,553 6,180 3,669 (41%) (44%)

Balance Sheet

Performing Loans (a) 750,052 763,091 778,548 2% 4%

Past Due Loans (b) 14,170 12,827 8,885 (31%) (37%)

Total Loans (a+b) 764,222 775,918 787,433 1% 3%

Total Loans Net (d) 746,152 757,986 769,358 2% 3%

Acquired Collection Rights ( e) 1,720 1,261 1,438 14% (16%)

Total Loans (d+e) 747,872 759,247 770,796 2% 3%

Total Assets 1,160,329 1,293,647 1,348,628 4% 16%

Total Deposits 738,028 791,870 821,721 4% 11%

Demand Deposits 394,308 451,842 479,142 6% 22%

Time Deposits 343,720 340,028 342,579 1% (0%)

Total Liabilities 1,046,845 1,179,984 1,226,044 4% 17%

Equity 113,484 113,663 122,583 8% 8%


Quarterly Summary

Infrastructure 2Q19 1Q29 2Q20

Employees 29,250 29,796 24,337

Branches 1,158 1,178 1,180

ATM’s 8,569 9,090 9,060

POS’s 162,115 166,225 162,127

Financial Ratios - Bank 2Q19 1Q20 2Q20

Profitability:

NIM (1) 6.3% 6.3% 5.8%

NIM after Provisions (2) 4.9% 4.7% 3.0%

ROE (3) 22.8% 21.7% 12.4%

ROA (4) 2.2% 2.0% 1.1%

Operation:

Efficiency Ratio (5) 41.6% 43.7% 42.2%

Operating Efficiency Ratio (6) 3.1% 3.2% 2.9%

Average Liquidity Coverage Ratio for Banorte

and SOFOM - Basel III (7)122.2% 120.1% 0.0%

Asset Quality:

Past Due Loan Ratio 1.9% 1.7% 1.1%

Coverage Ratio 127.5% 139.8% 203.4%

Capitalization:

Net Capital/ Credit Risk Assets 24.8% 24.1% 25.2%

Total Capitalization Ratio 19.9% 19.0% 19.7%

Leverage

Basic Capital/ Adjusted Assets 11.0% 10.9% 11.0%


Corporate Responsibility and Sustainability

Global Initiative Report (GRI Standards)International standards on sustainability reporting and disclosure of economic, environmental and socialtopics.

UN Global CompactInternational initiative promoting 10 universally accepted Principles to promote Corporate Social Responsibility (CSR).

Carbon Disclosure Project (CDP)Organization that promotes awareness on climate change through a better quality and transparency of the information reported on the company's emissionsperformance.

IPC SustentableMexican index of 30 listed companies ,which are best positioned in relation to the pillars of Environment, Socialand Corporate Governance.

Empresa Socialmente Responsable (ESR) Recognition granted by the Mexican Center for Philanthropy (Cemefi) and AliaRSE, as a company committed with corporate social Responsibility.

Natural Capital DeclarationVoluntary financial sector initiative created at the Rio +20 Earth Summit, which recognizes the role of natural resources in the economy through its integration into financial products and services.

Equator PrinciplesStandard within the financial sector to determine, assessand manage the environmental and social risks of financed projects.

GEI2 Programme MexicoVoluntary reporting of greenhouse gas emissions

UNEP Finance InitiativeInitiative that aims to identify, promote and carry out the adoption of best environmental and sustainabilitypractices at all levels of operations of financialinstitutions.

Dow Jones Sustainability Index MILA In 2017 was included in the Dow Jones Sustainability Index MILA Pacific Alliance.

Asociación de Bancos de México (ABM) Participation in the Sustainability Committee and the Corporate Social Responsibility Committee, and signatories as the ABM Banking Sustainabilityprotocol.

STOXX ESG Leaders IndexIndex that represents the main global companies in terms ofenvironmental, social and governance criteria, based on ESG indicators provided by Sustainalytics.

Euronext Vigeo Emerging Markets 70 Recognizes the 70 companies from emerging countries with the most advanced practices in terms of sustainability.

FTSE4Good Emerging IndexIndex that evaluates actions in the themes of climate change, labor standards and risk management, among others.

Bloomberg Gender Equity IndexIndex that provides analysis of the commitment of 52 companies with the gender equity in the workplaceto investors and organizations.

Principles for Responsible Investment Initiative that promotes its signatories to integrate environmental, social and governmental (ESG)criteria into their investment and ownership decisions.

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