January, 2005

INFONAVIT: The leading mortgage institution in

Mexico

www.infonavit.org.mx

DisclaimerDisclaimer

This presentation may contain forward-looking statements. These

statements may include the plans and objectives of management for

future operations and financial goals, loan portfolio growth, and

availability of funds. These forward-looking statements are subject to

the inherent uncertainties in predicting future results and conditions.

Certain factors that could cause actual results to differ materially

include the uncertainties of economic conditions, and future strategic

decisions, all of which are difficult or impossible to predict accurately,

and may of which are beyond the control INFONAVIT. Although

INFONAVIT believes that the assumptions underlying the forward-

looking statements included herein are reasonable, any of the

assumptions could be inaccurate and therefore there can be no

assurance that the forward-looking statements included herein will

prove to be accurate. Therefore, the inclusion of such information

should not be regarded as a representation by INFONAVIT or any

other person that the objectives and plans of INFONAVIT will be

achieved.

ContentsContents

• Introduction to INFONAVIT

• INFONAVIT’s strategy

• Results 2000 – 2004

• Credit program for 2005

• Outlook 2005 - 2009

Mortgage Bank

Mortgage loan originator with a social purpose

Created in 1972; up-to date has originated more than 33

million mortgages

Tripartite governance system with equal representation of

labor sector, employers’ sector and the Federal Government

Pension Fund Manager

Since the 1992 reform, it is part of the Pension Fund System

Workers´ funds are held in separate individual accounts

with minimum guaranteed returns

Added to pension fund savings at retirement

Introduction to INFONAVITIntroduction to INFONAVIT

INFONAVIT’s dual natureINFONAVIT’s dual nature

“Collect funds for the National Housing Fund”

“Fulfill the mandate of originating loans”

“Collect invested funds”GoalGoal::

FISCAL COLLECTIONSFISCAL COLLECTIONS ORIGINATIONORIGINATION SERVICINGSERVICINGCoreCore

Processes:Processes:

• Fund Management• Service to workers and

employers• Fiscal Collections

• Processing • Underwriting• Closing• Loan marketing and

promotion• Product Design

• Loan Administration• Collections • Special collections (Work Out)• File custody

Functions:Functions:

Introduction to INFONAVITIntroduction to INFONAVIT

BusinessBusiness modelmodel

Institutional relationshipsInstitutional relationships

As of December 2004As of December 2004

INFONAVIINFONAVITT

11,914,401 11,914,401 active workers in

the National Housing Fund

820,897820,897employers paying

contributions

2,284,1492,284,149outstanding mortgages

Introduction to INFONAVITIntroduction to INFONAVIT

Introduction to INFONAVITIntroduction to INFONAVIT

INFONAVIT as Pension Fund Manager: Assets under INFONAVIT as Pension Fund Manager: Assets under managementmanagement

November 2004November 2004

Source: Comisión Nacional del Sistema de Ahorro para el Retiro (CONSAR)

Mil

lio

n P

eso

s

0

100000

200000

300000

400000

500000

2000 2001 2002 2003 2004 e

Loan

s

INFONAVIT Others

IntroductionIntroduction to INFONAVIT to INFONAVIT

INFONAVIT as a mortgage institution: Origination 2000-2004INFONAVIT as a mortgage institution: Origination 2000-2004

Source: Conmisión Nacional de Fomento a la Vivienda (CONAFOVI)

73%62%

68% 58% 57%

27%38%

32%

42%43%

336,271 326,300

394,763

500,003 535,000

INFONAVIT as mortgage institution: 2003 OriginationINFONAVIT as mortgage institution: 2003 Origination

Introduction to INFONAVITIntroduction to INFONAVIT

Source:Inside Mortgage Finance Top 15 Retail Producers in 2003. Estimation assuming US$ 140,000 average loan

Lo

ans

INFONAVIT as a mortgage institution: Mortgage loan portfolioINFONAVIT as a mortgage institution: Mortgage loan portfolio

September 2004September 2004

Source: Comisión Nacional Bancaria y de Valores (CNBV)

Introduction to INFONAVITIntroduction to INFONAVITM

illi

on

Pe

sos

INFONAVIT as mortgage institution: 2003 ServicingINFONAVIT as mortgage institution: 2003 Servicing

Source:Inside Mortgage Finance Top 30 Mortgage Servicers in 2003. Estimation assuming US$ 140,000 average loan balance

Introduction to INFONAVITIntroduction to INFONAVIT

5,187

4,743 4,606

3,357

2,0461,760

-

1,000

2,000

3,000

4,000

5,000

6,000

WASHINGTONMUTUAL

WELLS FARGOHOME MORTGAGE

COUNTRYWIDEHOME LOANS

CHASE HOME INFONAVIT BANK OFAMERICA NA

Th

ou

san

d l

oan

s

INFONAVIT’s StrategyINFONAVIT’s Strategy

• Economic Housing• Origination Rules • Reserve Policies• Accounting and

supervision• Risk management

• Technology• Remote

channels • De-regulation• ISO 9000

Innovation, Quality and

Efficiency

Renewed social focus, sound

financial practices

VisionMissionGoals

Strategic Plans

• Cultural change: Intranet Workers Union Intensive computer use Board administration

APPRAISALS

COLLECTION AGENCIES INFONAVITBUILDERS

NOTARIES

BUILDER INSPECTOR

BANKS

OUTSOURCINGBased on: Capabilities Regulatory

framework

60.9% 57.1% 52.9% 49.6% 44.6%

34.2%40.4%

45.3%48%

49.9%

4.9%

2.5%1.9%

2.4%

5.4%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2000 2001 2002 2003 2004

Mill

ion

Pes

os

Employers contributions Loan Payments Others

38,237

45,54252,266

59,822

69,498CAGR = 16.1%

Total cash inflowsTotal cash inflows

Results 2000 - 2004Results 2000 - 2004

CAGR = Compounded Annual Growth Rate

205,346245,742 242,283

205,536

27,926 55,45390,327

1,3322,264 10,112

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2001 2002 2003 2004

Lo

ans

Traditional Economic Apoyo INFONAVIT

CAGR = 14.1%

Results 2000 - 2004Results 2000 - 2004

Loan originationLoan origination

205,346

275,000300,000 305,975

CAGR = Compounded Annual Growth Rate

Past-due loans and coveragePast-due loans and coverage

Results 2000 - 2004Results 2000 - 2004

21.7%15.2% 12.5%

9.5%8.6%

78.8%

102.5%113.4%

146.9%

170.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2000 2001 2002 2003 2004 e

Pas

t-d

ue

loan

s

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

Co

vera

ge

Past-due loans Coverage

1,2681,655

3,148

4,290

5,025

0

1,000

2,000

3,000

4,000

5,000

2000 2001 2002 2003 2004

Mil

lon

Pes

os

Cash inflows from fiscal collectionsCash inflows from fiscal collections

396.3%

Results 2000 - 2004Results 2000 - 2004

Results 2000 - 2004Results 2000 - 2004

Real return to National Housing FundReal return to National Housing Fund

Standard & Poor’s rating: stable outlookStandard & Poor’s rating: stable outlook

Results 2000 - 2004Results 2000 - 2004

• Key role to attend Mexico’s large housing deficit

• Expected future cash flows will remain in excess of

mandatory payments

• Profitability levels and internal capital generation will

strengthen as a result of improvement in collections and

asset quality

• Expected to maintain its robust base of reserves

• Sound risk management procedures will enable Infonavit to

manage credit and operational risks to protect generation

of adequate returns

Long Term mxAAA A- BBB-

Short Term mxA-1+ A-2 A-3

Domestic Scale

Global Scale

Local Currency

Local Currency

Foreign Currency

2004 Securitization Program2004 Securitization Program

• First transaction issued in March 2004 (CEDEVIS 04) 750.5 million pesos Denominated in nominal pesos Fixed Nominal rate. Benchmark M7. Spread 0.88% Rated mxAAA by Standard and Poor’s, AAA(mex) by

Fitch and AAAmx by Moody’s

• Second transaction issued in November 2004 (CEDEVIS 04U)

1,208.8 million pesos Denominated in UDIs Fixed Real rate. Benchmark UDI Bono 10. Spread

0.78% Rated mxAAA by Standard & Poor’s, AAA(mex) by

Fitch

Results 2000 - 2004Results 2000 - 2004

Public offers in Mexico, targeting Mexican institutional investors

Credit program for 2005Credit program for 2005

Definition of mortgage productsDefinition of mortgage products

Program Infonavit Funding Property value Key features

Economic 100% Up to USD 15,000

Traditional, Low Income 100%Between USD 15,000

and USD 38,000Worker's salary up to 3.9x minimum wage

Traditional 100%Between USD 15,000

and USD 38,000

Co-funding PartialBetween USD 15,000

and USD 38,000Mixed funding with commercial / mortgage bank

Apoyo Infonavit Guarantee Up to 80,000100% funding provided by commercial / mortgage bank

9.8 million beneficiaries WITHOUT credit to October 2004

Credit program for 2005Credit program for 2005

Market strategyMarket strategy

0 -3.9 SM

4 - 6.9 SM

7 - 10.9 SM

78%

12%

More than 11 SM

Traditional ProgramLow Income

Economic Program

Traditional Program

Co-funding

“Apoyo INFONAVIT”

5%

5%

20,000

55,000

90,000

90,000

Goal 2005

120,000

375,000

5.3%

14.7%

24.0%

24.0%

32.0%

100%

Comparison between 2005 vs 2004 credit goals, by property Comparison between 2005 vs 2004 credit goals, by property type type

Credit program for 2005Credit program for 2005

80,31690,725

104,570

116,912

129,542

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2005 2006 2007 2008 2009

Mill

ion

Pes

os

Expected cash inflowsExpected cash inflows

Outlook 2005 - 2009Outlook 2005 - 2009

CAGR = 12.69%

CAGR = Compounded Annual Growth Rate

Outlook 2005 - 2009Outlook 2005 - 2009

Projected credit program 2005-2009Projected credit program 2005-2009

CAGR = 10.3%

CAGR = Compounded Annual Growth Rate

Percentage of beneficiaries with incomes up to 3.9 vsm

56%

58.6%59.8%

60% 60.4%

120,000 130,000 145,000 165,000 175,000

235,000 280,000 310,000 325,000 340,000

25,000 30,000 35,000 40,00020,000

0%

20%

40%

60%

80%

100%

2005 2006 2007 2008 2009

Economic Traditional Medium / Residential

375,000 435,000 485,000 525,000 555,000

Outlook 2005 - 2009Outlook 2005 - 2009

Projected credit program 2005-2009Projected credit program 2005-2009

32%

62.7%

5.3%

31.5%

61.3%

7.2%

Outlook 2005 - 2009Outlook 2005 - 2009

7.0%

5.0% 5.0% 5.0%5.0%

92.2%

110.5%

110.5% 110.5% 110.5%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2005 2006 2007 2008 2009

80.0%

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

115.0%

Past-due loan ratio and coveragePast-due loan ratio and coverage

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2000 2001 2002 2003 Projected2004

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

Past-due loans Coverage

Outlook 2005 - 2009Outlook 2005 - 2009

CapitalizationCapitalization

Outlook 2005 - 2009Outlook 2005 - 2009

Projected real return to National Housing FundProjected real return to National Housing Fund

4.00%4.00%4.00%4.00%

3.50%3.50%

3.75%

4.00%

2005 2006 2007 2008 2009

January 2005

INFONAVIT: The leading mortgage institution in

Mexico

www.infonavit.org.mx