1 3Q02 RESULTS. 2 Highlights 9M02 9M01 3Q02 GFNORTE RESULTS 1,299.4 19.4% 2.61 18.76 1,116.5 15.4%...

1

3Q02 RESULTS3Q02 RESULTS

2

HighlightsHighlights9M029M01

3Q02 GFNORTE RESULTS3Q02 GFNORTE RESULTS

1,299.4

19.4%

2.61

18.76

1,116.5

15.4%

(4.3%)

15.5%

5.6%

100.0%

1,562.8

1,174.8

20.4%

15.4%

3.13

21.06

1,342.5

954.5

12.8%

59.7%

58.0%

3.3%

118.6%

GFNORTE

GFNorte’s Net Income (PS million)

GFNorte’s Net Income (PS million) (Excluding Generali)

ROE

ROE (Excluding Generali)

EPS (Ps/per share)

Book Value

BANKING SECTOR

Banking Sector’s Net Income (PS million)

Banking Sector’s Net Income (PS million) (Excluding Generali)

Capitalization Ratio

Loan Portfolio annual growth (Exc.FOBA/IPAB)

Total Deposits annual growth

Past due loan ratio

Reserve Coverage

3

GFNorte generated profits for PS 1,563 million in the GFNorte generated profits for PS 1,563 million in the first nine months of the yearfirst nine months of the year

ACCUMULATED NET INCOME SEPTEMBER 2002ACCUMULATED NET INCOME SEPTEMBER 2002MILLIONS OF PESOSMILLIONS OF PESOS

BANKING PS 1,343 86%

($10)HOLDING 0%

$60BROKERAGE 4%

$117LONG TERM SAVINGS 7%

$53AUXILIARY ORGANIZATIONS 3%

PS 1,563GFNORTE 100%

4DATA AS OF SEPTEMBER ‘02.

3Q01 3Q02 % GROWTHQTR YR

LOAN PORTFOLIO(Millions of Pesos)

Traditional loan portfolio showed an important Traditional loan portfolio showed an important growth specially in Mortgage and Consumer loansgrowth specially in Mortgage and Consumer loans

2Q02

11,223Commercial

Mortgage and Consumer

Mortgage

3,945

2,206

Credit Card 591

Auto 943

14,279

9,742

1,518

2,567

261.9%

341.5%

156.8%

172.2%

Other 205

Corporate 7,203

Recovery Banking 6,581

453

11,370

5,580

120.8%

57.9%

(15.2)%

14,398

13,186

9,323

1,219

2,268

376

9,787

5,758

13.3%

8.3%

4.5%

24.5%

13.2%

20.5%

16.2%

(3.1)%

16,319 45.4%

5

Bancrecer’s IntegrationBancrecer’s Integration

A year after winning the bid for

Bancrecer, it’s interesting to see:

The progress we’ve made.

The challenges we still face.

The adjustments made along the

way to reduce client perception

risk and include additional

operating improvements that will

enhance efficiency in the mid term.

6


LEGAL &

FINANCIAL

Implement a strict and ambitious cost reduction program.

Merge legal and accountancy.

Reach a profitable settlement with Generali.

COMMERCIAL ORGANIZATIONALTECHNOLOGICAL

& OPERATIONALACHIEVEMENTSCOMMITMENT

Reductions of Ps 406 million this year, and Ps 807 in 2003.

Ps 594 million from 2,055-employee downsize.

Ps 111 million from consolidating the cash concentration and distribution centers.

Ps 72 million in rents.

Ps 37 million by consolidating credit and debit card, ATM and sales point terminal operations.

Ps 30 million from the telecommunication network integration, with unified computer centers and equipment and equalizing contracts with technology and maintenance service suppliers.

Ps 23 million in office supplies, photocopies, internal communication and correspondence.

Add up to a total annual saving of Ps 867 million.

7


LEGAL &

FINANCIAL





& OPERATIONAL

ACHIEVEMENTSCOMMITMENTS

Reach the goal by March 31.

Accomplished as planned.

Report conslidated figure since the first quarter 2002.

Take advantage of Bancrecer’s fiscal loss of approximately Ps 4,600 million in a shorter term.

8

LEGAL &

FINANCIAL





& OPERATIONAL

ACHIEVEMENTS

USD 45 million cash premium in the second quarter of the year.


9


LEGAL &

FINANCIAL





& OPERATIONAL

Reorganize the branch network.

Enhance the sales volume of the acquired network.

Integrate both banks commercially.

Exterior rebranding.


Close branches: 96 Bancrecer 9 Banorte.

So far, 109 Bancreser and 10 Banorte branches have been closed down.

10


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding

ACHIEVEMENTS

Introducing Imanorte attracted an inflow of Ps 1,651 million.

2,160 car “Autoestrene” loans for Ps 209 million; 192 mortgage loans for Ps 96 million; and 8,043 “Credinóminas” [payroll loans] for Ps 101 million.

Around 14,000 car insurance policies [“Fórmula Auto”] have been placed, whereas 337 policies of our recently incorporated life insurance [“Fórmula Vida”] were sold in the first two weeks of October alone.

11


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding ACHIEVEMENTSCOMMITMENTS

Show Banorte to the client as an integrated bank by the second quarter of 2002.

At present, we offer the same products and services throughout the entire integrated network.

12


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding


Scheduled to begin in the second quarter of the year.

We started in September in the northwest and southeast regions where Banorte’s presence is less significant. The rest of the country will be covered as of November and should be finished before the year is out.

13


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding

Standardize a single structure.

Maintain an intensive personnel training and continual information program.


To integrate the organizational structures of both banks in the shortest possible time.

A single organizational structure for both banks was formed during the first quarter of the year.

The Bancrecer Labor Union was dissolved, and those employees were transferred to Banorte’s payroll and fringe benefit system.

A new salary tabulator was developed, with salaries 10% lower than those Banorte used to have.

A new organizational diagram was created for the branches of both networks.

14


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding



ACHIEVEMENTS

The personnel have participated in training programs covering Banorte’s

sales philosophy, and product features and how to operate them.

15


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding



Provide technological support for Commercial Integration.

Use a single operating platform for both banks.


A year ago, we promised to finish by the second quarter of 2002.

It will be fully completed at the end of this year.

16

Provide technological support for Commercial Integration.

Use a single operating platform for both banks.


LEGAL &

FINANCIAL





& OPERATIONAL




Exterior rebranding




We set a 12 month deadline as of April this year.

We have decided to include additional elements in this project.

April 2003, start trial tests to standardize operations in all the service channels and prepare to transfer all the Banorte clients to the Altamira Platform.

Around June, start setting up this new operating platform throughout the entire network.

By September 2003, over 80% of the deposit, loan and service volume should be handled in this new mode.

The remaining 20% should be incorporated by October-November.

The project will stay within the initial budget.

17


TOTAL COST OF THE INTEGRATION

Overall Budget of Integration Costs: Ps 1,076 million.

Expenditure to date: 44%, equivalent to Ps 473 million.

Severance and CompensationsPs 284

Technological Integration87

Medical Service Fund for Retirees51

Operative Integration, Rebranding & Others51

Ps 473

18


The terms initially estimated were too ambitious for a project this size.

By the year’s end, we will have completed the most import part of the process :

A single image (brand name) with the same supply of products and services.

Legally, we are a single institution.

Organizationally, we have a single structure and labor platform.

In addition to our own integration efforts, we have been exposed to extraordinary events:

The new mode for paying taxes on-line was implemented and added to the traditional means still in use.

Adjustments to the information processes due to the change in the IT Law, compelled us to simultaneously information to both our clients and the SAT [Tax Administration].

19


Challenges we have yet to face:

Finish consolidating the technological platform, and

Implement the new operative model in all the branches.

20

Eventhough assets under management of the Eventhough assets under management of the Recovery Banking represent an important figure, the Recovery Banking represent an important figure, the

risk involved is lowrisk involved is low

MILLIONS OF PESOS OF SEPTEMBER 2002

REPOSESSED ASSETS 12,879

TOTAL ASSETS $61,916

100%

Bancen

Banpaís

2,392

15,986

Serfín 13,466

10,722

Loans purchasedor managed-IPAB 24,189

49,037

5,440

0

10,722

1,254

$17,416

28%

16,162

10,722

1,031

10,510

0

3,044

$14,585

24%

11,541

10,510

48%28% 24%

0

2,392

15,986

2,956

0

8,581

$29,915

21,334

2,956

48%

SHAREDW/IPAB

IPABBANORTE

Banorte

TOTAL

6,538

New Portfolios

TOTAL LOAN PORTFOLIOS

27%27%

932.2932.2

2,3952,395

21

The Non Interest Expense control has been The Non Interest Expense control has been fundamental ...fundamental ...

NON INTEREST EXPENSE

1999 2000

MILLIONS OF PESOS OF SEPTEMBER 2002

... resulting in a 14% expense decrease from 1999 to 3Q02.

2001

7,556

6,401 6,454

3Q01 3Q02

10.36.1

NON INTEREST EXPENSEPER BRANCH

3Q02

6,538

14%

22

ASSETSASSETS

26.1%

10.6%

BANACCI GFNORTE

7.9%

GFBITALGFSANTANDER

SOURCE: CNBV AT 2Q02.

GFBVA-BANCOMER

15.6%

2°

21.2%

4° 4.5%

SCOTIABANK

COMPARATIVES TO THE INDUSTRYCOMPARATIVES TO THE INDUSTRY

23

DEPOSITSDEPOSITS

27.3%

11.8%

BANACCI GFNORTE

8.7%

GFBITALGFSANTANDER


GFBVA-BANCOMER

15.9%

2°

20.4%

4° 4.8%

SCOTIABANK


24

LOAN PORTFOLIOLOAN PORTFOLIO(Including Fobaproa/IPAB)(Including Fobaproa/IPAB)

26.2%

14.6%

BANACCI GFNORTE

6.9%

GFBITALGFSANTANDER


GFBVA-BANCOMER

13.1%2°

20.2%

3°5.4%

SCOTIABANK


25

NUMBER OF BRANCHESNUMBER OF BRANCHES23.9%

15.4%

BANACCI GFNORTE

19.5%

GFBITAL GFSANTANDER


GFBVA-BANCOMER

13.1%2°

20.3%

4°5.2%

SCOTIABANK


26

ROE ROE SEPTEMBER 2002SEPTEMBER 2002

COMPARATIVES TO THE INDUSTRYCOMPARATIVES TO THE INDUSTRYGFNorte´s ROE ranks among the highest in MexicoGFNorte´s ROE ranks among the highest in Mexico

35.0%

GFNORTE

4.2%

BITALGFSANT-SF

SOURCE: PRESS RELEASE EACH BANK AT 3Q02.

BANACCI

6.1%

20.0%

20.4%

2°

SCOTIABANKINVERLAT

BBVA-BMR

14.4%

27

The capitalization ratio increased to 12.8% with rules The capitalization ratio increased to 12.8% with rules of 2003of 2003

12.6%9.9%

15.4%

BANAMEX BBVA -BANCOMER BITAL

BANORTESANTANDER

SERFÍN

20012003 200320032001RULES OF:

18.5%

CAPITALIZATION RATIOCAPITALIZATION RATIO

12.8%

3°

SOURCE: PRESS RELEASE EACH BANK AT 3Q02.

28

RECENT EVENTSRECENT EVENTS

Payment from Generali

•Assicurazioni Generali made a USD 45 million payment to Banorte in June’02 for

the expansion of it’s branch network after Bancrecer acquisition, and for the

technological infrastructure developments for the Afore, Bankassurance and

Annuities businesses. This payment was accounted as an Extraordinary Income

in the 2Q02.

Dividend Payment

• Thanks to its good results, and solid financial position, last October 14, GFNorte

paid Ps 500 million in dividends, declared in the General Ordinary Shareholders’

Meeting held on September 30, 2002. The payment was equivalent to

distributing $1 Mexican peso per outstanding share. This dividend is a sample of

GFNorte’s current strength.

29

Risk FactorsRisk Factors

Operating Risks Bancomer BanorteFierce competition of international institutions Consolidation in the sector Same

Subsidiaries´ co-obligations Minimum capital requirements SameInsolvency Same

Non income generating activities of the Holding Co. All income comes from subsidiaries SameGovernment regulations could be adverse Loan loss provisions Same

Capital requirements SameDebtors support programs Same

Inadequate loan loss provisions estimate Tighter requirements Same

Fobapora-IPAB exposure USD 7.7 Billion (32%)USD 8.9

Billion (63%)

Short term funding Short term deposits Same

Foreign exchange asset-liability mismatch Some mismatch No mismatch

Dollar exchange rate and interest rate volatility Risks associated

Lower USDexposure

Majority shareholder official investigation BBVA and some Board members No investigations

Integration of another bank in process BBV-Probursa and Promex Bancrecer

30

Risk FactorsRisk Factors

Country Risks

A recesion and/or inflation and interest rates increase Example: 1994 economic crisis Same

Peso-dolar exchange rate depreciation or devaluation

Impact on financials Same

International adverse events Close tights with the USA Same

Terrorist attacks to the U.S. New attacks against USA Same

Bancomer Banorte

1 3Q02 RESULTS. 2 Highlights 9M02 9M01 3Q02 GFNORTE RESULTS 1,299.4 19.4% 2.61 18.76 1,116.5 15.4%...

Documents

Transcript of 1 3Q02 RESULTS. 2 Highlights 9M02 9M01 3Q02 GFNORTE RESULTS 1,299.4 19.4% 2.61 18.76 1,116.5 15.4%...