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1 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
XNOR
2Q20
GFNORTE GBOOY
Best Bank 2019
México
2 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
-9.8
-5.3
-0.4
-6.3
-3.7
-4.4
-15 -10 -5 0
2020
2009
2001
1995
1986
1983
Source: INEGI, Banorte
We are experiencing the worst recession in the last 40 years
GDP in Mexico during
economic contractions% y/y
GDP in 1983% y/y
GDP in 2009% y/y
GDP in 1995% y/y
GDP in 2020f% y/y
-4.6 -5.7 -5.3-1.8
-30
-20
-10
0
1Q83 2Q83 3Q83 4Q83
-1.5
-9.1 -7.5 -6.9
-30
-20
-10
0
1Q95 2Q95 3Q95 4Q95
-5.6-8.9
-5.0-1.6
-30
-20
-10
0
1Q09 2Q09 3Q09 4Q09
-1.4
-19.4-14.6
-4.0
-30
-20
-10
0
1T20 2T20 3T20 4T201Q20 2Q20 3Q20 4Q20
3 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: Banorte with data from INEGI and Banxico
*Interest rate(1980-Sep 1982: CPP; 1982-…: Cetes; Exchange rate: 1980-Nov 1991: ‘para solventar obligaciones en moneda extranjera’; Nov 1991-…: Fix)
However, the great difference to those are inflation levels
Nominal governmental interest rate, inflation and annual exchange rate depreciation%
-50
0
50
100
150
200
250
300
Jan-80 Sep-83 May-87 Jan-91 Sep-94 May-98 Jan-02 Sep-05 May-09 Jan-13 Sep-16 May-20
Interest rate Inflation Annual exchange rate depreciation
4 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: Banorte and Presentation from Beatriz Leycegui (SAI, April 15, 2020)
USD/MXN: 24.10 **Nominal GDP in 2019
‘Recovery plan’ to return back to ‘normal’ from COVID-19
Programs from Development BanksMX$ billion, US$ million, % of GDP
▪ Four-month advance to the senior citizen pension▪ Support for:
⎯ Fishermen⎯ Children with disabilities⎯ Benito Juárez Universities⎯ Savings for people without access to financial services⎯ Agriculture⎯ Upkeep for schools
▪ Programs for:⎯ Apprenticeships⎯ Internet for everyone
▪ Guarantee prices▪ Toluca – Mexico City Train▪ Construction of branches of El Banco del Bienestar▪ Recruitment of 31 thousand new elements for the Army, Navy
and National Guard▪ Rural concrete roads▪ New credits and refinancing from INFONAVIT▪ ‘Sowing Life’ program will extend to 200 thousand farmers▪ Expedited returns of VAT to taxpayers▪ No increase to taxes or adoption of counter-cyclical measures or
corporate bailouts to businesses or banks▪ Elimination of 10 deputy ministries▪ Reduction of 25% in wages of high-ranking workers (Deputy
Director and upwards) and end-of-year bonus elimination▪ Savings of 75% in general spending and supplies categories
Institution Measure MXN USD* % of GDP**
Total 61.1 2,535 0.25
BANOBRASLiquidity support for companies in the infrastructure sector
6.0 249 0.02
NAFIN / BANCOMEXT
Liquidity support for "first-floor" financial institutions
10.0 415 0.04
NAFIN / BANCOMEXT
Liquidity support for "second-floor" financial institutions
20.0 830 0.08
NAFIN / BANCOMEXT
Guarantees program for companies and businesspeople
6.3 261 0.03
SHFStabilization of syndicated loans provided to construction companies
8.8 365 0.04
SHF Additional financing for "second-floor" bridge loans 6.0 249 0.02
SHF Small loans for housing improvements 2.0 83 0.01
FNDAttention scheme for the restructuring of debtors' loans
TBD
FND Measures to support the Rural Economy TBDBanco del Bienestar
Clients' Program 2.0 83 0.01
Banco del Bienestar
Outreach Program TBD
Banco del Bienestar
Reactivation of credit demand TBD
FOCIRExtension of the period to divest affected companies
TBD
FOCIRSuspension of commission payments for the management of FICAS
TBD
FOCIR Emerging Program "COVID 2020 - FOCIR-SE" TBD
5 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: Banxico, MoF, CNBV
Reference rate%
Measures from the Banking Commission and
Banxico for financial institutions
▪ Adjustments to the accounting criteria to facilitate
the granting of support programs to clients
▪ Flexibility of the regulatory framework for capital
and liquidity requirements
▪ Advice to banks to refrain from paying dividends and
implementing share buyback programs
▪ Delay of the implementation of international
regulations
▪ Extension of deadlines for traded companies to
present information to the Commission
5.00
2
3
4
5
6
7
8
9
Dec-15 Jun-17 Dec-18 Jun-20
Policy response from Banxico and financial authorities to provide liquidity…
6 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Note: 1. The total only adds up facilities for which we have information; 2. Using an exchange rate of USD/MXN 22.50
NA = Not available
Source: Banxico, Banorte
…and strengthen credit channels
Additional measures announced by Banxico to promote liquidity and strengthen credit channelsMX$ billion, US$billion, % of GDP
Measure MXN USD % of GDP
Total1 800.0 35.6 3.3
Provide liquidity and reestablish operational conditions in money markets
(1) Reduction of the Monetary Regulation Deposit 50.0 2.2 0.2
(2) Adjustments to the Ordinary Additional Liquidity Facility interest rate -- -- --
(3) Increasing liquidity during trading hours to facilitate the optimal functioning of financial markets and payment systems -- -- --
(4) Extending the securities eligible for the Ordinary Additional Liquidity Facility -- -- --
(5) Extending the counterparts eligible for the Ordinary Additional Liquidity Facility -- -- --
(6) Temporary securities swap window 100.0 4.4 0.4
Promote the orderly behavior in governmental and corporate bond markets
(7) Strengthening of the Government Debt Market Makers Program -- -- --
(8) Government securities term repurchase window 100.0 4.4 0.4
(9) Swap of government securities 100.0 4.4 0.4
(10) Securities Repurchase Facility 100.0 4.4 0.4
Strengthen credit channels
(11) Provision of resources to banking institutions to channel credit to MSMEs and individuals affected by the COVID-19 pandemic 250.0 11.1 1.0
(12) Collateralized financing facility for commercial banks with corporate loans, to finance MSMEs 100.0 4.4 0.4
Promote the orderly behavior of the foreign exchange market
(13) Non-deliverable FX forwards program expansion -- -- --
(14) USD credit auctions (financed with the swap line facility with the Federal Reserve) -- -- --
(15) Foreign exchange hedges settled by differences in USD -- -- --
7 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source. Banorte with data from the Presidency of the Republic, MoF, Banxico, CMN and BID Invest
^Aimed at channeling credit to MiPyMEs (liquidity provision to the financial system are excluded)
Summary – Measures announced to face the emergency of COVID-19
Summary of some of the announced measures
Entry: MXN Billion % of GDP
Total 1,010.6 4.5
Federal government 372.6 1.6
Announced in the morning conference
307.6 1.4
Others (Pre CGPE) 65.0 0.3
Banxico* 350.0 1.5
CMN / BID Invest 288.0 1.3
8 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: INEGI, Bloomberg
2020 GDP forecasts% yoy
Unemployment rate%, sa
1Q20 2Q20 3Q20 4Q20 2020
GDP (aggregate supply) -1.4 -19.4 -14.6 -4.0 -9.8
Primary sector 1.4 -1.3 -2.1 0.3 -0.3
Secondary sector -2.9 -26.5 -15.6 -4.9 -12.5
Tertiary sector -0.7 -17.1 -14.9 -4.3 -9.2
GDP (aggregate demand)
-1.4 -19.4 -14.6 -4.0 -9.8
Private consumption -0.5 -17.0 -14.8 -3.7 -9.0
Investment -9.3 -40.1 -24.7 -8.6 -20.6
Government spending 3.4 1.2 -6.2 -8.4 -2.5
Exports 1.7 -36.7 -5.2 3.2 -9.6
Imports -3.4 -36.6 -9.7 -3.1 -13.2
2020 – Strong decline, driven by the COVID-19 outbreak
6.0
8.0
3
4
5
6
7
8
9
Dec-07 Mar-11 Jun-14 Sep-17 Dec-20
9 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
*Note: Seasonally adjusted by Banorte with the ARIMA X-12 method
Source: IMSS, STPS, INEGI and ANTAD
Initial impact of COVID-19 lockdowns in Mexico
Formal job creationThousands, seasonally adjusted*
Auto sales% y/y
ANTAD’s same-store sales% y/y in nominal terms
-64.5
-59.0
-41.1
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
Mar-06 Dec-10 Sep-15 Jun-20
-22.9
-19.0
-17.9
-25
-20
-15
-10
-5
0
5
10
15
Mar-06 Dec-10 Sep-15 Jun-20
-526
-310
-50
-600
-500
-400
-300
-200
-100
0
100
200
Jun-94 Jun-07 Jun-20
Original figures:April: -555May: -345June: -83
Apr-
20
May-
20
Jun-
20
Supermarkets +8.7 +7.0 +2.4
Departmental -72.7 -49.6 -44.6
Specialized -17.5 -16.3 -14.5
10 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: Bloomberg, INEGI, Banxico, Banorte
MXN forecastsUSD/MXN
Inflation forecasts% yoy, bi-weekly frequency
Reference rate forecasts%
USD/MXN, inflation, and reference rate forecasts
2019:7.25
2020:4.00
2
3
4
5
6
7
8
9
Dec-15 Aug-17 Apr-19 Dec-20
2018:4.8
2020:3.7
2019:2.8
-2
-1
0
1
2
3
4
5
6
7
8
9
Dec-18 Aug-19 Apr-20 Dec-20
Headline
Core
Non-core
22.65
22.00
23.50
22.85
20.00
21.00
18.50
19.50
20.50
21.50
22.50
23.50
24.50
25.50
Jan-19 Dec-19 Dec-20 Dec-21
11 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Source: Banorte with data from the MoF
1. Preliminary Policy Criteria 2021, where the 2020 macroeconomic framework was updated; 2. Public sector borrowing requirements (PSBR); 3. Historical Balance of the Public Sector
Borrowing Requirements (HBPSBR); 4. Femsa $8,790 million; Wal-Mart $8,000 million; IBM ~$669 million)
The public deficit could increase around 60bps of GDP (~$150 billion), but non-recurring income and
spending cuts could partially offset it
Updated preliminary policy
criteria
Impact on public deficit2
%of GDP unless otherwise stated
Public sector debt 3
% of GDP
Possible fiscal strategy$ million
-4.4
-83bps-11bps-3bps
+33bps+7bps
-5.0
-5.6
-5.4
-5.2
-5.0
-4.8
-4.6
-4.4
-4.2
-4.0
Po
licy
Cri
teri
a
↑D
eclin
e in
GD
P
↓O
il o
utp
ut
↓Ex
chan
ge r
ate
↑O
il p
rice
↓In
tere
st r
ate
Up
dat
ed P
SBR
In the update for the 2020 macroeconomic framework within the
PPC the government assumes the use of almost 100% of the
different stabilization funds
48.7
45.8 44.9 44.9
51.851.2
40
45
50
55
2016 2017 2018 2019 2020
Policy criteriaActual PPC1
GDP(% y/y)
-9.8 -2.9
Oil output(kbpd, average)
1,710 1,850
Exchange rate(USD/MXN, average)
21.74 22.00
Oil price(US$/bbl, average)
30.6 24.0
Interest rate(%, average)
5.38 6.20Total 45,000
Non-recurring collection’(Femsa, Wal-Mart, IBM, etc)4
25,000
+Spending cuts 20,000
12 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
About Banorte
13 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
GFNORTE – a Leading and Profitable Financial Franchise in Mexico
One of the most public companies in Mexico
GFNorte is top 5 in trading at BMV, and has the highest Relative Weighting on S&P/BMV IPC Index,
rated OTCQX Best 50 Global.
float of almost 86%
and more than 4,000 investors, including large global institutional funds.
Investment grade ratings by S&P, Fitch, Moody's and HR Ratings.
1 2 3
Sound Fundamentals
Increasing profitability, solid asset quality, high
liquidity and strong capitalization ratios.
Adequate business mix
Strong retail, wholesale and premium banking
platforms, as well as leading insurance and
pension fund management units, serving more
than 21 million clients.
Solid corporate governance
Independent Board Members represent
71% of total board composition and best
practices in minority shareholder right
protection.
14 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
From Regional Bank to National Financial Group
20 | 20
Establishment
1899 1982-1992 1995 2000 2005 2010 2015
Privatization
INB IXE
Afin Afore Bancomer
Banorte Generali 50%
BancentroBanpaís
Bancrecer
Afore XXIIMSS 50%
Banorte-General i100%
…
Inorganic Growth
Regional Bank
Business Diversification
2020
Client
Segmentation
IT : central DB,
multichannel
Profitability
Nationalization
G.F. Interacciones
15 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
20/20
Strategy 20 | 20 Perfect Vision
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 ex-Afore clients
9 million Afore clients
▪ Structured Info & Learning
(Central DB & Watson)
▪ Behavior understanding
Analitics Cost
Revenues
Digital
Bank
16 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Diversified Business Mix
* Includes: Almacenadora Banorte; Ixe Servicios; Fundación Banorte A.B.P.
Casa de Bolsa
Banorte
Banco Mercantil del Norte
Pensiones Banorte
Seguros Banorte
Banorte Futuro
Afore XXI Banorte
Operadora de Fondos
Banorte
(Fondos de Inversión)
Other Subsidiaries*
Arrendadora y Factor Banorte
Banorte Ahorro y Previsión
98.2619% 99.9999% 99.9999% 99.9999% 99.9058%
50.0%
99.9999% 99.9999%
98.22%
Banorte Financial Services
(Uniteller)100.0%
100%
17 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Business Mix - Diversified Net Income and Balance in Profitability
1) Without Goodwill: 1q20 = 52.3%
Net Income Mix
CompanyNet Income
1H20
ROE
1H20
Bank 9,678 16.9%
Broker Dealer 779 31.0%
Long Term Savings 4,304
Retirement Savings (Afore) 944 15.9%
Insurance 2,630 64.2%
Annuities 708 27.2%
Other Finance Companies
Leasing & Factoring 447 14.6%
Warehousing 19 14.6%
Sólida (156) (1.5%)
Total 15,636 15.8%
Recurring w/o advanced
provisions18,546
1)
1H20
$15.6 b
18 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
NIM
Net Interest Margin Moving in the Right Direction
NIM
(Post-Provision)
3.3% 3.4% 3.4% 3.5% 3.5%3.7%
4.3% 4.4%4.5%
4.4%
4.8%
3.1%
4.3%
2.9%2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20
4.1% 4.1%
4.4%
4.7%4.5%
4.9%
5.5% 5.6% 5.6%5.5%
5.9%
5.3%5.6%
5.3%
4.0%
4.5%
5.0%
5.5%
6.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20
NIM NIM ex Insurance & Annuities
4.9bn on
advanced
provisions
19 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Fees on Services Affected But Recovering
Fees affected by lower economic activity.
Digital related concepts counteracting
lockdown
Electronic Banking services already recovered
in June, supported on POS fully digital
operations, even though travel, restaurants
and hotels are still 80% to 90% down.
6.0 6.1
5.4
2.42.7
2.3
-
1.0
2.0
3.0
4.0
5.0
6.0
1Q 2Q 3Q 4Q 1Q 2Q
2019 2020
Billio
n P
es
os
Fees Charged Fees Paid
Fees
POS & ATM/Web fees
20 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Improving Efficiency
Cost to Income56.0% 54.0%
52.0%
48.5% 47.9%
44.9%42.8%
40.0% 39.7%38.5%
40.2% 40.6%38.9% 38.8%
35%
40%
45%
50%
55%
2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20
+13% +5%+10%
+13%
+5% +4% +4% +7%+11%
+19%*
* Recurring
+8%
+9%*
Reported
39.0% 39.1%
21 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
8,728 8,858
9,010 9,118
6,518
9,427
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
2Q19 3Q19 4Q19 1Q20 2Q20
Strong Net Income
Net Income
8,517
10,888
13,50815,228
17,108 19,308
23,908
30,311
35,34531,958
36,528
7,500
10,000
12,500
15,000
17,500
20,000
22,500
25,000
27,500
30,000
32,500
35,000
37,500
2011 2012 2013 2014 2015 2016 2017 2018* 2019*
Million Pesos
CAGR
2011-2019 +20%
+3%
+8%
YoY*
+17%
YoY* Recurring
Reported +14% YoY
* w/o advanced
provisions
Reported
-29%
22 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
1.10%
1.30%1.40% 1.46% 1.47%
1.60%
1.86%
2.07%2.22% 2.20% 2.24% 2.28% 2.21%
1.49%
2.18%2.30%
2.20%
1.0%
1.5%
2.0%
2.5%
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% 14.2%13.2% 13.3%
14.1%
17.0% 19.3% 19.6%
19.5% 19.6%19.0% 18.8%
13.0%
20.3% 20.1% 19.5%
12%
15%
18%
21%
24%
2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2Q19 3Q19 4Q19 1Q20 2Q20
* Recurring
* Recurring
Reported:
Reported:
4.9bn on
advanced
provisions
4.9bn on
advanced
provisions
23 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Digital Transformation
24 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App24
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
25 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
3.50
3.904.12 4.21 4.28 4.30
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Digital Transformation Gaining Share
39.269.2
141.9
223.9
249.8
0
50
100
150
200
250
300
1Q2017
3Q 1Q2018
3Q 1Q2019
3Q 1Q2020
Transactions Growth
+76%
24%
32%
19%
2%
1%
19%
3%
Transactions (Tx) Customers Using Digital (millions)
WEB
MobileATM
Call Center
Correspondents
POS
Branches
*
Time Deposits
Mutual Funds
Credit Card
Insurance
Digital Deposit Account
Payroll loans
Mobile
as a
Point of Sale
26 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Leaders in the Business & Infrastructure for the New Payments Market
Recovery on POS’s transactions pre
COVID-19 with emphasis on e-commerce
The best DIGITAL PLATFORM
for aggregators
CoDi – Test Pilot and further
development underway
54
42
56
0
10
20
30
40
50
60
ene-20 feb-20 mar-20 abr-20 may-20 jun-20
POS’s TransactionsMillions
27 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Loans & Deposits
28 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Healthy Funding & Loan Portfolio Structure
$822 bn
2Q20
$792 bn
Commercial
Consumer
Mortgage
Government
Corporate
US 35.6 bn
Demand
Money Market
Time
Senior Unsec. Debt
US 34.3 bn
2018
DemandTime
Money Market
Senior Unsec. Debt
Consumer
Commercial
Mortgage
Corporate
Government
Bank Deposits
Loan Portfolio
$759 bn
$777 bn
29 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Demand68%
Time32%
116 124 129 136158 168
194223 229 227 224
190211
255
300
351384 397 414
438 454482
306336
384
436
509551
590637
667 681 706
100
200
300
400
500
600
700
2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20
Time Demand Core Deposits
2Q19 2Q20
Demand 396 482
Time 236 224
TOTAL 632 706
Loyal Deposits Base
Demand62%
Time38%
MIX
2013 1H20
Billion Pesos CAGR:
+10%
YoY
+12%
2%
(5%)
12%
Deposits
YoY
+22%
YoY
-5%
+11%
+9%
30 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Continued Growth in Performing Loan Book, Special Focus on Consumer
US 34.3 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 52 52 51 (0%) (2%)
Consumer 278 291 293 1% 5%
Commercial 171 182 186 2% 9%
Corporate 132 145 150 3% 14%
Government 187 162 163 1% (13%)
TOTAL 768 780 792 2% 3%
350 401
425 472
518 567
616
777 763
780 792
300
400
500
600
700
800
2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20
Total Loan Portfolio
99118
140158
176203
241269
288 291 293
50
100
150
200
250
300
2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20
CAGR:
+14%
US 12.7 bn
CAGR:
+10%
Consumer Portfolio
31 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
Credit Cards 6.3% 6.0% 5.5% 5.9% 5.9% 6.0% 5.4% 5.8% 5.5%
Payroll 3.3% 4.1% 3.7% 3.0% 3.8% 3.4% 3.3% 2.7% 3.3%
Car Loans 1.1% 1.1% 1.1% 0.9% 1.0% 1.0% 1.0% 0.9% 1.2%
Mortgage 0.9% 1.0% 0.9% 1.0% 1.0% 1.1% 1.1% 1.2% 1.3%
Commercial 2.5% 2.2% 1.9% 2.1% 2.4% 2.5% 2.4% 2.3% 1.1%
SME 5.5% 6.0% 5.5% 5.9% 6.4% 6.5% 6.6% 7.0% 3.7%
Commercial ex-SME 1.5% 1.2% 0.9% 1.1% 1.3% 1.6% 1.3% 1.2% 0.6%
Corporate 3.0% 2.9% 2.9% 2.9% 3.0% 2.8% 1.8% 1.8% 0.3%
Government 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%
Total GFNorte 2.0% 1.8% 1.7% 1.7% 1.9% 1.9% 1.7% 1.7% 1.2%
1.9%2.1%
3.1%2.9%
2.2%
1.8%2.0%
1.7% 1.7% 1.7%
1.2%
1.0%
2.0%
3.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20
Sound Asset Quality
Past Due Loan Ratio
1.9bn on
advanced
write-offs
32 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
2.2% 2.3%2.0% 1.9%
2.2%2.0%
2.2%
4.2%
1.7% 1.6%
2.2%2.5%
2.1%2.4% 2.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2Q19 3Q19 4Q19 1Q20 2Q20
Actual
Prev. Criteria
143% 138%
105% 107%116%
139%129%
142% 138%128% 127%
138% 140%
201%
90%
110%
130%
150%
170%
190%
2011 2012 2013 2014 2015 2016 2017 2018 2019 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)
1.8%
Without 4.9 bn
one-hit impact
33 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Strong Capital Position
7.90%
9.40%
11.40%
Capital Adequacy Ratio
11.5%12.7% 12.4% 12.1% 11.9% 12.7%
13.8% 13.1% 13.3% 12.7% 12.2%13.2%
5.2%
1.3%
15.1% 15.3%14.6%
15.3%
17.2% 17.2%18.1%
20.0% 20.3%
18.6% 19.0%19.7%
2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20
*RWA= Risk Weighted Assets annual growth
RWA
Basel III
+17% +11% +8% +16% (2%) +19% +20% +19% +5% +7% +9% +15%
CET1
Minimum
Regulatory
Ratios
Total
Tier 1
18.4%
Tier 2
9.70%
7.70%
6.20%
Temporary
waiver
34 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
GFNorte Guidance 2020
Guidance
2020
Loan Growth 6% – 8%
NIM Expansion 5 – 15bp
Expense Growth 5% – 5.5% 4% 4.5%
Efficiency 38.0 – 39.0%
Cost of Risk 1.9% – 2.2%
Tax Rate 26% – 27%
Net Income 37.5 – 38.8
ROE 19.6% – 20.1%
Macro Estimates 2020
GDP -9.8%
Inflation 3.7%
Reference Rate 4.0%
35 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Loans
May 2020
Deposits
2°
Deposit & Loan Market Share
Source: CNBV.
4°
36 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
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°
Market Share by Segment
Source: CNBV.
37 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Afore Market Share (Retirement Savings)
Source: CONSAR
AUM Market Share
Jun-19 Jun-20 Jun-19 Jun-20
XXI Banorte 829 946 22.4% 22.0%
CitiBanamex 670 763 18.1% 17.7%
Profuturo GNP 549 657 14.8% 15.3%
SURA 547 633 14.8% 14.7%
PensionISSSTE 233 275 6.3% 6.4%
Coppel 230 284 6.2% 6.6%
Principal 243 276 6.6% 6.4%
Invercap 179 202 4.8% 4.7%
Other 220 271 5.9% 6.3%
1°
Billion Pesos
Assets Under Management
38 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Insurance Market Share
Million Pesos
Source: AMIS.
Mar-19 Mar-19
Premiums Market Share
Mar-20 Mar-20
6°
Mar-19 Mar-19
Net Income Market Share
Mar-20 Mar-20
3°
19,225 20,670 12.6% 12.5% 1,610 1,967 12.0% 12.3%
16,306 18,793 10.7% 11.3% 1,124 1,594 8.4% 10.0%
14,231 16,374 9.3% 9.9% 1,418 1,675 10.6% 10.5%
10,772 11,402 7.1% 6.9% 1,224 2,592 9.2% 16.2%
10,371 10,582 6.8% 6.4% 936 251 7.0% 1.6%
12,606 10,364 8.3% 6.3% 1,600 1,696 12.0% 10.6%
7,976 9,004 5.2% 5.4% 1,147 1,622 8.6% 10.1%
7,254 8,053 4.8% 4.9% 633 1,148 4.7% 7.2%
5,618 6,400 3.7% 3.9% 385 554 2.9% 3.5%
5,206 5,687 3.4% 3.4% -7 4 -0.1% 0.0%
43,054 48,468 28.2% 29.2% 3,297 2,883 24.7% 18.0%
152,619 165,797 100.0% 100.0% 13,367 15,986 100.0% 100.0%
Metlife México
G.N.P.
BBVA Bancomer
AXA Seguros
Banamex
Seguros Banorte
Qualitas
Monterrey New York Life
Chubb de México
Mapfre Crédito
Other
TOTAL
39 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Annuities Market Share
Million Pesos
*\ Legal document for any pensioners entitled to receive a pension.
Source: AMIS to June 2020.
Jun-19 Jun-19
Resolutions * Market Share
Jun-20 Jun-20
Annuitants
Jun-19 Jun-19Jun-20 Jun-20
Market Share
Banorte
Profuturo GNP
Bancomer
Total Industry
5,446 5,910 42.3% 48.6%
4,288 2,655 33.3% 21.8%
3,135 3,593 24.3% 29.6%
12,878 12,159 100.0% 100.0%
Banorte
Profuturo GNP
Bancomer
Total Industry
5,058 4,903 38.8% 46.1%
4,050 1,925 31.1% 18.1%
3,910 3,813 30.0% 35.8%
13,032 10,641 100.0% 100.0%
1°
1°
40 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
GFNorte in the World
(1) Level 1
Ticket Indexes
GFNORTEO (BMV)
IPC (BMV)
Sustainable IPC (BMV)
MSCI Mexico
STOXX
GBOOY (OTCQX)
DJSI MILA
Climate Disclosure Leadership
OTCQX30
Euronext Vigeo EM70
XNOR (Latibex)FTSE Latibex All Shares
FTSE Latibex TOP
2Q20
Total Shares Outstanding: 2,883.5 m
Float: ~ 86%
Total ADRs(1) Outstanding: 6.25 m
321,102
187,425
229,869
150,000
200,000
250,000
300,000
350,000
400,000
4Q
13
4Q
14
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
4Q
18
1Q
19
2Q
19
3Q
19
4Q
19
1Q
20
2Q
20
Market CapitalizationMillion pesos
US 9.96 bn
Oil and
COVID-19
crisis
41 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Analyst Opinion & Investment Grade by All Major Rating Agencies
Net Income 2020 $30,474
Target Price $118.4
Maximum $136.5
Number of Analysts 22
# BUY 18
# HOLD 2
# SELL 2
Analysts‘ Estimates
(as of July 22, 2020)
Ratings Agencies
RatingAgency Outlook Date
BBB-
BBB
Fitch
Standard & Poor’s Negative
Negative
Mar-20
Jul-20
Baa3Moody’s Negative Abr-20
42 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Appendix
43 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Quarterly Summary
Income Statement Highlights - GFNorte2Q19 1Q20 2Q20
Change1H19 1H20
Change
(Million Pesos) 1Q20 2Q19 1H19
Interest Income 37,612 37,008 32,684 (12%) (13%) 75,686 69,692 (8%)
Interest Expense 18,317 14,657 13,289 (9%) (27%) 36,723 27,947 (24%)
Technical Results (Insurance & Annuities) 197 (383) 1,288 N.A. 555% 1,313 905 (31%)
Net Interest Income 19,492 21,968 20,683 (6%) 6% 40,276 42,651 6%
Net Service Fees 3,630 3,455 3,069 (11%) (15%) 6,598 6,524 (1%)
Trading 963 1,166 1,703 46% 77% 2,114 2,869 36%
Other Operating Income (Expenses) 653 327 1,140 248% 75% 2,796 1,467 (48%)
Non Interest Income 5,246 4,949 5,911 19% 13% 11,508 10,860 (6%)
Total Income 24,738 26,916 26,595 (1%) 8% 51,784 53,511 3%
Non Interest Expense 9,525 10,466 10,307 (2%) 8% 19,528 20,774 6%
Provisions 3,728 4,344 8,456 95% 127% 7,464 12,800 71%
Operating Income 11,485 12,106 7,832 (35%) (32%) 24,792 19,938 (20%)
Taxes 3,100 3,228 1,886 (42%) (39%) 6,750 5,114 (24%)
Subsidiaries' Net Income 466 353 648 83% 39% 877 1,001 14%
Minority Interest (123) (113) (75) (33%) (39%) (258) (189) (27%)
Subsidiaries & Minority Interest 343 240 573 138% 67% 618 813 31%
Net Income 8,728 9,118 6,518 (29%) (25%) 18,660 15,636 (16%)
Recurring Net Income 8,728 9,118 6,518 (29%) (25%) 17,477 15,636 (11%)
N.I. w/o anicipated Provisions 2T20 8,728 9,118 9,867 8% 13% 17,477 18,985 9%
44 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Quarterly Summary
Balance Sheet Highlights - GFNorte2Q19 1Q20 2Q20
Change
(Million Pesos) 1Q20 2Q19
Asset Under Management 2,763,574 2,708,692 2,878,778 6% 4%
Performing Loans (a) 768,183 779,818 791,637 2% 3%
Past Due Loans (b) 14,567 13,212 9,254 (30%) (36%)
Total Loans (a+b) 782,750 793,030 800,891 1% 2%
Total Loans Net (d) 764,158 774,525 782,337 1% 2%
Acquired Collection Rights ( e) 2,065 1,500 1,438 (4%) (30%)
Total Credit Portfolio (d+e) 766,222 776,025 783,774 1% 2%
Total Assets 1,589,998 1,729,280 1,783,581 3% 12%
Total Deposits 734,568 772,993 801,148 4% 9%
Total Liabilities 1,411,630 1,531,790 1,575,237 3% 12%
Equity 178,368 197,490 208,344 5% 17%
Total Loans ex-Government 580,729 618,269 628,920 2% 8%
Financial Ratios GFNorte 2Q19 1Q20 2Q20 1H19 1H20
NIM (1) 5.5% 5.9% 5.3% 5.6% 5.6%
ROE (2) 19.5% 18.8% 13.0% 21.1% 15.8%
ROA (3) 2.2% 2.21% 1.49% 2.3% 1.8%
Efficiency Ratio (4) 38.5% 38.9% 38.8% 37.7% 38.8%
Operating Efficiency Ratio (5) 2.4% 2.5% 2.3% 2.4% 2.4%
CCL Banorte and SOFOM - Basel III (6) 122.2% 120.1% 150.8% 122.2% 150.8%
Past Due Loan Ratio 1.9% 1.7% 1.2% 1.9% 1.2%
Coverage Ratio 127.6% 140.1% 200.5% 127.6% 200.5%
Cost of Risk (7) 1.91% 2.22% 4.24% 1.91% 3.24%
Market References
Banxico Reference Rate 8.25% 6.50% 5.00% 8.25% 5.00%
TIIE 28 days (Average) 8.50% 7.36% 6.07% 8.53% 6.72%
Exchange Rate Peso/Dolar 19.21 23.48 23.09 19.29 23.29
Tax Rate 25.9% 25.9% 22.2% 26.3% 24.4%
45 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Quarterly Summary
Share Data 2Q19 1Q20 2Q20Change
1H19 1H20Change
1Q20 2Q19 1H19
Earnings per share (Pesos) 3.027 3.162 2.260 (29%) (25%) 6.471 5.423 (16%)
Earnings per share Basic (Pesos) 3.048 3.180 2.287 (28%) (25%) 6.518 5.470 (16%)
Dividend per Share for the period (Pesos) 5.54 0.00 0.00 NA NA 5.54 0.00 NA
Payout for the period 50.0% 0.0% 0.0% NA NA 50.0% 0.0% NA
Book Value per Share (Pesos) 61.08 67.70 71.41 5% 17% 61.08 71.41 17%
Issued Shares (Million) 2,883.5 2,883.5 2,883.5 0% 0% 2,883.5 2,883.5 0%
Stock Price (Pesos) 111.36 65.00 79.72 23% (28%) 111.36 79.72 (28%)
P/BV (Times) 1.82 0.96 1.12 16% (39%) 1.82 1.12 (39%)
Market Capitalization (Million Dollars) 16,716 7,981 9,956 25% (40%) 16,716 9,956 (40%)
Market Capitalization (Million Pesos) 321,102 187,425 229,869 23% (28%) 321,102 229,869 (28%)
Exchange Rate Peso/Dolar 19.20870 23.48470 23.08930 -2% 20% 19.29330 23.28700 21%
INFRASTRUCTURE 2Q19 1Q20 2Q20
Employees* 29,250 29,796 29,925
Branches 1,158 1,178 1,180
Correspondents 13,274 13,694 16,035
ATM’s 8,569 9,090 9,060
POS’s 162,115 166,225 162,127
46 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Healthy Liquidity
Loans / Deposits
(%)
Liquidity Coverage Ratio
CCL (%)
104%
105%
101%
99%
90%
92%
94%
96%
98%
100%
102%
104%
106%
108%
110%
1Q2015
3Q 1Q2016
3Q 1Q2017
3Q 1Q2018
3Q 1Q2019
3Q 1Q2020
122%
120%
151%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
1Q2015
3Q 1Q2016
3Q 1Q2017
3Q 1Q2018
3Q 1Q2019
3Q 1Q2020
47 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Improving Corporate Governance
GFNorte Mexbol Index (Average)*
Float 86% 45%
Listed overseas Yes 46% of the companies
Chairman of the Board-CEO separation Yes In 73% of the companies
Share of independent board members, % 71.0 49.7
Share of total assets threshold to require shareholders
approval in M&A operations, %Current Before Aug'16 19.7
Non-related 20 20 - -
Related 5 20 - -
Board members nominations committee
Existence Yes 13.5% of the companies
Final approval of nominated board members Shareholders Shareholders
Share of independent board members in this committee, %Current Before Aug'16
18.857.1 25
All members of the BOD are elected every year by the Shareholders’ Assembly.
Main Committees are chaired by independent members.
- Risk Policies
- Nominations
- Audit & Corporate Practices
Assembly quorum has always been higher than 60% and consensus has always been reached on proposals.
48 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Corporate Responsibility and Sustainability
At GFNorte, sustainability means maximizing growth and profitability while seeking to achieve balance among the economic, social and
environmental aspects of our business. This is achieved through a four-pillar framework:
Focus on Social and Environmental Risk Management, Environmental Efficiency, Human Rights and Gender Equity and Corporate Volunteering,
Responsible Investment, Financial Inclusion and Education
Sustainable Finance Transparency
People and Community Environmental Footprint
✓ PRI (Principles of Responsible Investment) – We seek to promote a sustainable risk management considering the risk of the environmental,
social and governance issues integrated in our investment portfolios, safeguarding the patrimony of our clients.
✓ Reporting – We incorporated in our Annual Integrated Report the framework of International Integrated Reporting Council (IIRC), Global
Reporting Initiative (GRI), Global Compact and we align our performance to the UN SDGoal's platform.
✓ Social & Environmental Risks Analysis – Under the Equator Principles’ framework, Banorte analyzes the environmental and social risks and
impacts of loan portfolios for Corporate and Business Banking, Government Banking and Structured Finance. Banorte goes beyond the Equator
Principles’ scope by including loans of lower amounts (loans greater than $ 1 million US dollars and analyzes their risks the Performance
Standards of the International Finance Corporation.
✓ Sustainability Management System – Its objective is to gather, validate, monitor and analyze data from the subsidiaries of the Group through
key environmental, social and economic indicators.
49 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
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.
50 DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid MktEco Hist App
Contact Information and Reports
If you have any information request or comments, please contact Banorte's Investor Relations Department at:
Tel: (52) 55 1670 2276
E-mail: [email protected]
We recently published the 1Q20 report.
During 2020 we have released:
1. Annual Report to the Banking and Securities Commission (CNBV)
2. Annual Report to the Stock Exchange (Informe Anual Circular Única de Emisoras)
3. Audited Financial Statements for 2019
4. Annual Financial and CSR Report for 2019 under the GRI methodology (PDF & Interactive)
You can access our quarterly and annual reports (in Spanish and English) and other informative materials at :
investors.banorte.com
Disclaimer
Grupo Financiero Banorte does not warrant that the document is accurate, complete, reliable, fit for any particular purpose and does not accept liability for any act (or
decision not to act) resulting from the use of this document and related data. The information contained in this document is illustrative and informative so it should not
be considered as an advice and/or recommendation of any kind. Grupo Financiero Banorte is not part of any party or political trend.