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7th Latin American Banking 7th Latin American Banking ConferenceConference

Salomon Smith BarneySalomon Smith BarneyNew YorkNew York

March 08, 2001March 08, 2001

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I. 2000 RESULTSI. 2000 RESULTS

• Relevant InformationRelevant Information

• ProfitabilityProfitability

• Asset QualityAsset Quality

• CapitalizationCapitalization

• Other SectorsOther Sectors

• InternetInternet

• Efficiency Projects & AlliancesEfficiency Projects & Alliances

II. MANAGEMENT’S VISION & II. MANAGEMENT’S VISION &

STRATEGIESSTRATEGIES

ContentsContents

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I . RESULTS 2000I . RESULTS 2000

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Relevant InformationRelevant Information

Banorte created provisions in 3Q00 against stockholder’s equity for 1,737.7 million pesos to cover all contingencies with Fobaproa and to comply with YR2003 capital rules.

GFNorte 2000 accumulated profit of Ps 1,677.3 million, a 36% increase over that of 1999, obtaining a ROE of 21%. The Banking Sector obtained profits of Ps 1,463.9 million, showing a 48%growth in the same period, excluding Pension Funds.

During 2000, GFNorte’s Non Interest Expense decreased by 13.0% compared to 1999. The Banking Sector decreased 15% in this line for the same period.

The Banking Sector performing commercial, mortgage and consumer loans increased by 23% in the year, meanwhile total past dues decreased by 17%.

The Banking Sector past due loan ratio decreased from 5.8% to 5.1% and the Reserve coverage stood at 101.1%.

The Banking Sector capitalization ratio was 12.0% with, Tier 1 of 11.1% and Tier 2 of 1.0%, using 2003 rules.

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Banorte strengthened its capital base to fully create provisions for Fobaproa and YR2003 and to take advantage of the tax loss carry-forward in Bancentro, which amounts Ps 1,735 million* by the end of 2000.

Relevant InformationRelevant Information

BanorteBanorteBancentroBancentro

Equity$ 1,217

Traditional Banking Business

Money market from Brokerage House

Bancentro’s Fobaproa assets

Serfín loans management

Afore from Banorte

Brokerage House Mutual Funds administration

BrokerageHouse

BrokerageHouse

Equity$290 Capital market business

Investment banking

* Representing 35% of total cummulative losses for Bancentro (Ps $4,957 million)

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GFNORTEGFNORTE

AuxiliaryOrganizations

5.3%

Long TermSaving

8.3%

Group’s IntegrationGroup’s Integration

% Group´s Investment in Subsidiaries.

December 2000.

BancentroBancentro

Banorte(Banpais)

Banorte(Banpais)

Banking

84.4% 2.0%

Brokerage

AnnuitiesAnnuities

Pension Funds

Pension Funds

InsuranceInsurance

FactoringFactoring

WarehousingWarehousing

LeasingLeasing

BondingBonding

Brokerage

House

Brokerage

House

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Banorte became a national bank improving its Banorte became a national bank improving its market positionmarket position

Dec96

%

Branches 156 2.3

States 7

Dec00

452

32

5.9

%

3.6 7.8

9.23.3

Dec ‘96%

Branches

10° 5°

10° 4°

6.8 11.85° 5°

MARKET COVERAGEMARKET COVERAGE

Rank

Dec ‘00% Rank

Market

14° 6°

BANORTE

BANCENTRO

BANPAIS

Total Deposits

Loans

Non InterestDeposits

Source: A B.M. Mkt. % for deposits excludes Financial Intermediaries and refers to Banking Sector exclusively. Loans include Fobaproa and source CNBV (September 2000).

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GFNorte’s organization is structured for servicing clientsGFNorte’s organization is structured for servicing clients

BANORTE’S GENERAL DIRECTION

Government Banking

Government Banking

Investor Relations

Investor Relations

NON TRADITIONAL

BANKING BUSINESS

Specialized areas

• Commercial, Corporate, Middle Sector and Private Banking

Territorials

• Monterrey, West, México City, Northeast, Northwest and Southeast

• Marketing

• Legal

• Treasury

• e- Business

• Long Term Savings

Sector

• Recovery Bank

CorporateDevelopmentCorporate

Development

Public RelationsPublic

Relations

DON ROBERTO GONZALEZ BARRERAPresident

DON ROBERTO GONZALEZ BARRERAPresident

Corporate Examiner

Corporate Examiner

SUPPORT & CONTROL

• Risk Management

• Technology and

Operations

• Human Resources

• Planning and Control

OTHÓN RUIZ MONTEMAYORVice-President & GFNorte’s General

Director

OTHÓN RUIZ MONTEMAYORVice-President & GFNorte’s General

Director

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A stock option for senior management was implementedA stock option for senior management was implemented

The stock option plan started on October, 2000.

24 key top executives are benefited in the first stage.

The objectives of this plan are:

- Retain key people

- Move top management to maximize share value

- Attract new top executives

4.8 million shares were acquired for this program. (1% of total shares outstanding as of Dec/00)

An equivalent to one year of monthly salary is the amount assigned to each executive in the 3 year stock option program.

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Banorte has a national presenceBanorte has a national presence

M.S. Market Share Millions Ps. * Includes Modules ** Excludes centralized Operations.

TOTAL M.S.Branches* 452 5.9% Deposits** $98,207 7.8%

TOTAL M.S.Branches* 452 5.9% Deposits** $98,207 7.8%

December 2000

Tot. M.S. Branches 68 13.4 Total deposits $14,266 23.3

Tot. M.S. Branches 100 5.4Total Deposits $22,032 3.8 Tot. M.S.

Branches 32 3.9 Total Deposits $4,192 4.6

Tot. M.S. Branches 118 15.0 Total Deposits $36,020 29.2

Tot. M.S. Branches 104 8.8 Total Deposits $17,900 11.1

Tot. M.S. Branches 30 3.8 Total Deposits $3,797 3.5

MONTERREY

NORTHEAST

MEXICO

SOUTHEAST

WEST

NORTHWEST

11Includes the Banking and Brokerage Sectors.

142 301627 889

1,9002,324

1994 ‘95 ‘96 ‘97 ‘98 ‘99

2,818

2000

Checking Account 50.3%Investment 38.7%Credit Card 5.6% Credits 1.9% Money Market 1.7%Mortgage 1.5%Brokerage 0.3%Total Accounts 100.0%

Products % Accounts

Our Client base has increased through time as Our Client base has increased through time as Banorte has reinforced its presence in traditional Banorte has reinforced its presence in traditional

entities and moved further into new territoriesentities and moved further into new territories

NUMBER OF CLIENTSNUMBER OF CLIENTS(Thousands)(Thousands)

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Supported on Banorte´s technological platform, Supported on Banorte´s technological platform, electronic and phone banking have grown aggressivelyelectronic and phone banking have grown aggressively

December 2000; * Tradicional & Internet; Call Center = Number of calls

Transactions 2000

(millions)

130 212 408

986 1,341 1,434218

990

1,988

3,318

4,548 6,286

1,538

2,458

3,750

6,398

9,5129,037

1994 1995 1996 1997 1998 1999 2000

POS

PC Banking

ATM’s

7.4

17.5*

100.7

Call Center 10.1

Units

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TRANSACTIONS BY DISTRIBUTION CHANNEL2000

5.6%

BRANCH ATM PCBANKING

TELEPHONEBANKING

POS INTERNET

More than 50% of all transactions are channelled through More than 50% of all transactions are channelled through electronic bankingelectronic banking

3.6%

1.6%

37.3%44.7%

7.2%

Dec, 2000.

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ProfitabilityProfitability

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ACCUMULATED NET INCOMEACCUMULATED NET INCOME

Book Value 10.3 8.9 13.7 15.7 16.0 15.2Per Share (*)

1,521.9

1,234.0

1,557.0

685.6705.1

'95 '96 '97 '98 '99

1,677.3

‘00

828.8

1,135.5

GFNorte has maintained constant GFNorte has maintained constant earnings growthearnings growth

ExtraordinaryIncomeMillions as of December 2000. (*) Based on 493.2 millions of shares.

Extraordinary Income: 1997: $693.1 & 1998: $421.5

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NET INCOME PER SHARENET INCOME PER SHARE

GFNorte has increased its net income per GFNorte has increased its net income per share by 36%share by 36%

3.40

2.50

1999 2000

Pesos as of December 2000.

36 %

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ROE ROE

Source: Press Release each bank.

15%

GFNorte increased it’s ROE maintaining a market GFNorte increased it’s ROE maintaining a market leadershipleadership

21%

6%

21%

BA

NA

CC

I

GF

BV

A-

BA

NC

OM

ER

GF

NO

RT

E

5%

GF

BIT

AL

21%

20001999

GFNorte GFNorte

15%

GF

SA

NT

AN

D

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2000 GFNORTE EARNINGS2000 GFNORTE EARNINGS

5%4%

2%3%

87%

BANKING

BROKERAGE

LONG TERM SAVINGS

HOLDING

AUXILIARY ORGANIZATIONS

A major contribution to earnings was that of A major contribution to earnings was that of the Banking Sector with 87% of total Group´s the Banking Sector with 87% of total Group´s

earningsearnings

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The negative impact of interest rates and lower income from The negative impact of interest rates and lower income from IPAB was more than offset by higher volumes of operations, IPAB was more than offset by higher volumes of operations,

non interest income and efficiency improvementnon interest income and efficiency improvement

Million of Ps. Data as of December 2000Market interest rates dropped 6.3 percentual points in one year period.Important interest rate drop on IPAB notes.

NON INTEREST EXPENSENON INTEREST EXPENSE

6,9425,881

1999 2000

15%

TOTAL NET INCOMETOTAL NET INCOME

1,052

1,563

1999 2000

48%

TOTAL GROSS INCOMETOTAL GROSS INCOME

8,789 7,942

1999 2000

57%1,928

2,005

822

1,336Non Interest

Income

IPABMargin

50%

5,524 5,115Margin

Operation 7%

10%

20

57,317

41,473

1999 2000*

38 %

$ 5,561 millions pesos

ASSETS UNDERASSETS UNDERMANAGEMENTMANAGEMENT

2000 RECOVERY2000 RECOVERY

The Recovery Bank, that was created in 1997, had The Recovery Bank, that was created in 1997, had excellent results. At present time it has 761 excellent results. At present time it has 761 employees distributed in 33 regional officesemployees distributed in 33 regional offices

Cash 85%

Others15%

Serfín $17,300Loans

Current Ps.* Includes $8,547 millions of own risk loans. Others includes repossesed assets, excluding restructurings.

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Asset QualityAsset Quality

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The Banking Sector performing commercial, mortgage The Banking Sector performing commercial, mortgage and consumer loans showed a 23% increased in the and consumer loans showed a 23% increased in the

year and past due loans decreased by 17%year and past due loans decreased by 17%

23,912

19,483

1999 2000

23 %

Millions as December 2000Performing loans not includes IPAB, governmental and financial entities.

4,120

4,935

1999 2000

17 %

PERFORMING LOANSPERFORMING LOANS PAST DUE LOANSPAST DUE LOANS

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PAST DUE LOAN RATIOPAST DUE LOAN RATIO

Data as of Dec ‘00.

Banorte has maintained a low level of past due loansBanorte has maintained a low level of past due loans

BANAMEX BITAL BBVA -BANCOMER

BANORTESANTANDER-SERFIN

0.9%

3.7%

5.1%

7.1%7.8%

3°

2000

5.1%

1999

5.8%

Banorte Banorte Banking SectorBanking Sector

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RESERVE COVERAGERESERVE COVERAGE

BANORTEBBV -

BANCOMERBANAMEX BITAL SANTANDER-

SERFIN

443.7%

102.5% 101.1%111.8%

106.4%

Banorte maintained a reserve coverageBanorte maintained a reserve coverageof 101.1%of 101.1%

Data as of Dec ‘00.

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CapitalizationCapitalization

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CAPITALIZATION RATIOCAPITALIZATION RATIO

Capitalization ratio stood at 12.0% with rules of 2003Capitalization ratio stood at 12.0% with rules of 2003

12.3% 12.0%11.2%

BANAMEX BBVA -BANCOMER

BITAL BANORTESANTANDER - SERFÍN

16.0%

15.4% 13.8%14.3% 13.3%20.7%W/O MARKETRISK

Data as of December 2000.

2003 2000 200120032000RULES OF:

12.3%

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This strategy has shown good results that have been This strategy has shown good results that have been recognized by international rating agenciesrecognized by international rating agencies

In January 9, 2001, Fitch:

Granted a C/D rate for indivudual strength to Banorte, the

highest for a mexican bank.

Granted the BBB- rate for local currency and BB+ rate for

foreign currency, been the latter limited only by the contry

risk.

A positive perspective that confirms the financial strength of

Banorte.

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Others SectorsOthers Sectors

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Millions as of December 2000. Wholesale Participation. 1) Sep ‘00. 2)Nov ‘00, 3)Jun ‘00. Market Share: Afore & Annuities: Number of Affiliated; Bancassurance: Premiums; Brokerage House: Assets under management; Factoring & Leasing: Total Loans.

Other sectors are profitable and have gained market Other sectors are profitable and have gained market shareshare

Net Income

Market Share

Net Income

Market Share

1999 2000

161.2 5.1% 27.1 5.6% 1)

29.1 17.5% 42.4 19.9% 1)

11.3 4.9% 23.1 4.8% 2)

2.5 13.7

6.3 6.2

59.5 8.7% 68.3 8.9%

(6.4) 0.9% 4.6 1.0% 1)

(23.8) 6.7% (32.8) 9.8%

Brokerage House

Leasing

Factoring

Warehousing

Bonding

Afore

Bancassurance

Annuities

Long Term Savings:

Brokerage Sector:

Auxiliary Organizations:

1.0%

N.A. N.A.

2.1% 3)

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Our Pension Funds Management company has shown Our Pension Funds Management company has shown an outstanding performancean outstanding performance

AFORE INDICATORSAFORE INDICATORS

BANORTE INDUSTRY

Ps 261 Ps 558

24.7% 17.7%

55.9% 27.7%

Total Expenses per contributor 1)

Contributing Affiliates growth *

Commissions growth *

1) Source: Salomon Smith Barney, Private Pension Funds in Latin America. Published December 2000. Total expenses as of September 2000.* Source: ING Barings; Sep/2000 vs Sep/1999 in real terms.

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www.banorte.comwww.banorte.com

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Since 1995 Banorte has had presence in Internet Since 1995 Banorte has had presence in Internet through www.banorte.com and through www.banorte.com and

has increased its acceptance in the markethas increased its acceptance in the market

Home Banking.- with more than 150,000 transactions per month

and 30,000 clients.

Business PC Banking.- with more than 75,000 transactions per

month and 3,400 business.

Our new services include:

Credit Card payments for e-commerce businesses and Internet

virtual credit card.

Acquisition and payments of Banorte-Generali insurance policies by

Internet.

Stock and mutual funds trading.

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Next steps in InternetNext steps in Internet

Increasing the functionality of service platforms besides

making strategic alliances as a way of growth.

Increasing the volume of operations improving customer

service quality and trust.

Developing new businesses.

Using Intranet to:

Support the commercial process

Transform the internal process

Motivating the development of a new technological

architecture.

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Efficiency Projects Efficiency Projects

& Alliances& Alliances

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EVOLUCIONAimed to improve the efficiency of the Group’s operations, to

control operative risk , to reduce the organizational structure cost

and to improve internal control.

TRANSFORMACION

Implement a more efficient credit process that allows to optimize

the risk and profitability levels.

PROFITABILITY

Automated profitability measurement of each business area by territory, branch, product and client. This tool is fundamental for decision making.

In order to improve it’s operating efficiency, GFNorte In order to improve it’s operating efficiency, GFNorte has three main projects in processhas three main projects in process

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GFNorte has made several alliances aimed to improve GFNorte has made several alliances aimed to improve its valueits value

Banorte’s clients will have access to this spanish bank and viceversa.

Third most important business in money transfers from US to Mexico.

Tourism spots development.

Additionally, other specific associations:

...........................................................Caja de Ahorros de Valencia, Castellón y Alicante

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II. MANAGEMENT’S VISION II. MANAGEMENT’S VISION

& STRATEGIES& STRATEGIES

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GFNorte has followed a clear and sucessful strategy GFNorte has followed a clear and sucessful strategy for increasing it’s profitabilityfor increasing it’s profitability

New Loans New Loans

Non Interest Non Interest IncomeIncome

Deposit Volume Deposit Volume and Mixand Mix

Non InterestNon InterestExpenseExpense

RecoveryRecovery

PROFITABILITY

IPABIPAB

IncomeIncome

InterestInterest

RateRate

Risk ControlRisk Control

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