1Q20 1 A Leading Bank in Mexico Globally Recognized Balanced - - PowerPoint PPT Presentation

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Sep 14, 2023 358 likes •661 views

Us Mkt TI NIM Rev C / I NI ROE L/D Dep Loan ICAP App 1Q20 1 A Leading Bank in Mexico Globally Recognized Balanced business mix Strong retail, wholesale and premium banking platforms. Sound Fundamentals Solid asset quality,

SLIDE 1 1 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

1Q20

SLIDE 2 2 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

A Leading Bank in Mexico Globally Recognized

Balanced business mix

Strong retail, wholesale and premium banking platforms.

Sound Fundamentals

Solid asset quality, increasing profitability, high liquidity and strong capitalization ratios.

Investment grade ratings

S&P, Fitch, Moody's and HR Ratings.

SLIDE 3 3 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Nation Wide Operation 1,178

Branches

9,090

ATM´s

166,225

POS´s

13,694

Correspondents

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From Regional to Leading and Innovative Bank

20 | 20

Establishment 1899 1982-2092 1995 2000 2010 2018 Privatization  IXE Afin  Bancentro Banpaís Bancrecer … Inorganic Growth Regional Bank Business Diversification & Consolidation Client Segmentation IT: central DB, multichannel Profitability Nationalization  G.F. Interacciones

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Loans

Feb 2020

Deposits

2°

Deposit & Loan Market Share

Source: CNBV. 3°

SLIDE 6 6 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us Consumer

C. Cards

Mortgage Commercial Government Deposits Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Feb-19 Feb-20 Banorte 12.2% 12.1% 9.7% 9.9% 19.5% 19.2% 10.8% 10.3% 34.3% 29.9% 14.7% 13.6% BBVA 28.0% 29.4% 27.5% 27.4% 25.9% 26.0% 18.9% 19.6% 24.1% 26.6% 21.6% 22.1% CitiBanamex 15.2% 13.1% 27.2% 26.7% 10.1% 9.4% 12.6% 12.1% 5.9% 5.8% 14.7% 14.5% Santander 8.7% 8.8% 14.1% 14.2% 16.9% 16.5% 13.3% 13.2% 12.0% 12.7% 13.6% 13.0% HSBC 6.3% 6.6% 5.6% 5.7% 6.1% 7.2% 8.7% 7.9% 6.3% 5.9% 8.1% 8.2% ScotiaBank 5.2% 5.2% 2.7% 2.8% 15.0% 15.2% 7.1% 7.5% 1.7% 2.4% 6.3% 6.5% Inbursa 4.8% 4.1% 4.1% 4.1% 0.7% 0.6% 0.0% 0.0% 4.1% 5.8% 3.2% 3.1% Others 19.6% 20.6% 9.0% 9.2% 5.9% 6.0% 28.7% 29.3% 11.6% 11.0% 17.8% 19.0% Market Position 3° 4° 2° 4° 1° 3°

Loan Portfolios Market Share

Source: CNBV.

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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

2015

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Digital Transformation Gaining Share

Transactions Growth Transactions (Tx) Customers Using Digital (millions) 41.4 80.5 232.1 50 100 150 200 250 1Q 2017 3Q 1Q 2018 3Q 1Q 2019 3Q 1Q 2020

+113%

24% 28% 22% 2% 1% 19% 4% WEB Mobile ATM Call Center Correspondents < POS Branches 3.50 3.90 4.12 4.21 4.28 1Q19 2Q19 3Q19 4Q19 1Q20 *

Time Deposits Mutual Funds Credit Card Insurance Digital Deposit Account Payroll loans

Mobile as a Point of Sale

SLIDE 9 9 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

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

SLIDE 10 10 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Adapting the Business & Infrastructure to the New Payments Market

Continuous growth on POS’s transactions with emphasis on e-commerce The best DIGITAL PLATFORM for aggregators CoDi – Test Pilot and further development underway

50.0 100.0 150.0 1Q 2017 3Q 1Q 2018 3Q 1Q 2019 3Q 1Q 2020

POS’s Transactions

Millions

+27%

SLIDE 11 11 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Results

SLIDE 12 12 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us 3.2% 3.6% 3.6% 3.5% 3.5% 3.7% 4.5% 4.8% 5.0% 4.8% 5.2% 4.7% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 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% 6.2% 6.6% 6.3% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20

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Improving Efficiency

Cost to Income 56.0% 54.0% 53.7% 50.5% 50.9% 47.5% 45.0% 41.4% 43.0% 43.7% 41.6% 43.1% 43.8% 43.7% 35% 40% 45% 50% 55% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 1Q19* 2Q19 3Q19 4Q19 1Q20 Reported 40.5% * Recurring *Recurring Reported 41.4% 42.3%

SLIDE 14 14 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us 6,157 6,553 6,730 6,848 6,180 7,362 5,000 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 10,500 1Q19* 2Q19 3Q19 4Q19 1Q20

Strong Net Income

Net Income 8,517 10,888 12,122 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% 0.4% YoY* +14% YoY * Recurring * Recurring Reported

SLIDE 15 15 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us 1.1% 1.30% 1.60% 1.40% 1.47% 1.56% 1.79% 2.11% 2.26% 2.10% 2.25% 2.32% 2.37% 2.02% 2.27% 2.36% 2.50% 1.0% 1.5% 2.0% 2.5% 3.0% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 1Q19* 2Q19 3Q19 4Q19 1Q20 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% 22.2% 22.8% 23.6% 23.9% 21.7% 25.7% 24.2% 26.2% 10% 15% 20% 25% 30% 2011 2012 2013 2014 2015 2016 2017 2018* 2019* 1Q19* 2Q19 3Q19 4Q19 1Q20 * Recurring * Recurring Reported: Reported:

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Loans Deposits

SLIDE 17 17 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Healthy Funding & Loan Portfolio Structure

2019 1Q20 $757 bn Demand Time Money Market Interbank Loans $744 bn 1Q20 Consumer Commercial Mortgage Corporate Government Commercial Consumer Mortgage Government Corporate US 34.4 bn Demand Money Market Time Interbank Loans US 32.5 bn Billion Pesos

Funding Loan Portfolio

$807 bn $763 bn 2019 56% 34% 8% 2% 21% 22% 19% 23% 15%

SLIDE 18 18 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us Demand 67% Time 33% 129 136 158 168 194 223 229 236 236 229 227 255 300 351 384 397 414 394 396 401 438 454 384 436 509 551 590 637 623 632 637 667 681 100 200 300 400 500 600 700 2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 Time Demand Core Deposits 1Q19 1Q20 Demand 394 454 Time 229 227 TOTAL 623 681

Loyal Deposits Base

Demand 62% Time 38% MIX 2013 1Q20 Billion Pesos 15% (1%) 9% Deposits YoY +15% YoY (1%) CAGR: +10% YoY +9%

SLIDE 19 19 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Continued Growth in Performing Loan Book, Special Focus on Consumer

US 32.5 bn Billion Pesos 1Q19 4Q19 1Q20 QoQ YoY Mortgage 159 170 173 2% 9% Car Loans 25 27 27 2% 10% Credit Cards 37 40 39 (3%) 6% Payroll 51 50 50 1% (1%) Consumer 271 286 289 1% 7% Commercial 158 157 166 6% 5% Corporate 137 130 146 12% 6% Government 179 170 161 (5%) (10%) TOTAL 746 744 763 3% 2% 335 389 420 464 510 557 604 756 746 750 716 744 763 300 400 500 600 700 800 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 Total Loan Portfolio 98 118 140 155 174 201 237 267 271 276 282 286 289 50 100 150 200 250 300 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 CAGR: +14% US 12.3 bn CAGR: +10% Consumer Portfolio

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Loan Book View

89% 0% 11% 16% 26% 14% 44% Currency Term 24% 10% 18% 9% 9% 8% 22% Sector 1 year 5 years 10 years > 10 years Pesos Dollars UDIs Subnational Government Federal Government Services Commerce Manufacturing Transportation Other

SLIDE 21 21 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Credit Cards 6.1% 6.3% 6.0% 5.5% 5.9% 5.9% 6.0% 5.4% 5.8% Payroll 2.9% 3.3% 4.1% 3.7% 3.0% 3.8% 3.4% 3.3% 2.7% Car Loans 0.9% 1.1% 1.1% 1.1% 0.9% 1.0% 1.0% 1.0% 0.9% Mortgage 0.9% 0.9% 1.0% 0.9% 1.0% 1.0% 1.1% 1.1% 1.2% Commercial 2.6% 2.6% 2.3% 1.9% 2.2% 2.5% 2.7% 2.5% 2.4% Corporate 3.0% 2.9% 2.8% 2.8% 2.7% 2.8% 2.7% 1.7% 1.7% Government 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Banorte 1.9% 2.0% 1.8% 1.7% 1.7% 1.9% 1.9% 1.6% 1.7% 2.9% 2.2% 1.8% 2.0% 1.7% 1.6% 1.7% 1.9% 1.9% 1.6% 1.7% 1.0% 2.0% 3.0% 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20

Sound Asset Quality

Past Due Loan Ratio

SLIDE 22 22 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us 2.2% 2.3% 2.0% 1.9% 1.9% 2.2% 2.0% 2.2% 2.1% 2.5% 2.1% 2.4% 2.2% 1.0% 1.5% 2.0% 2.5% 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20 Actual

Prev. Criteria

103% 106% 115% 139% 128% 142% 138% 136% 128% 127% 138% 140% 90% 110% 130% 150% 2013 2014 2015 2016 2017 2018 2019 1Q19 2Q19 3Q19 4Q19 1Q20

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)

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Healthy Liquidity

Loans / Deposits (%) Liquidity Coverage Ratio CCL (%) 103% 102% 98% 90% 95% 100% 105% 1Q 2015 3Q 1Q 2016 3Q 1Q 2017 3Q 1Q 2018 3Q 1Q 2019 3Q 1Q 2020 117% 133% 120% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% 1Q 2015 3Q 1Q 2016 3Q 1Q 2017 3Q 1Q 2018 3Q 1Q 2019 3Q 1Q 2020

SLIDE 24 24 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

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% 5.7% 1.1% 15.3% 14.6% 15.3% 17.2% 17.2% 18.1% 20.0% 20.3% 18.6% 19.0% 2014 2015 2016 2017 2018 1Q19 2Q19 3Q19 4Q19 1Q20 *RWA= Risk Weighted Assets annual growth RWA Basel III +11% +8% +16% (2%) +19% +20% +19% +5% +7% +9% CET1 Minimum Regulatory Ratios Total Tier 1 17.9% Tier 2

SLIDE 25 25 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Investment Grade by All Major Rating Agencies

Rating Agency Outlook Date BBB- BBB Fitch Standard & Poor’s Negative Negative Mar-20 Aprl-20 baa3 Moody’s Negative Aprl-20

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Appendix

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Quarterly Summary

Income Statement and Balance Sheet Highlights - Bank 1Q19 4Q19 1Q20 Change (Million Pesos) 4Q19 1Q19 Net Interest Income 16,931 17,654 17,517 (1%) 3% Non-Interest Income 6,105 4,906 4,726 (4%) (23%) Total Income 23,036 22,559 22,243 (1%) (3%) Non-Interest Expense 9,341 9,875 9,718 (2%) 4% Provisions * 3,700 3,713 4,262 15% 15% Operating Income 9,996 8,971 8,263 (8%) (17%) Taxes 2,647 2,167 2,112 (3%) (20%) Discontinued Operations

Subsidiaries & Minority Interest

14 44 29 (34%) N.A. Net Income 7,362 6,848 6,180 (10%) (16%) Balance Sheet Performing Loans (a) 745,735 743,507 763,091 3% 2% Past Due Loans (b) 13,095 12,392 12,827 4% (2%) Total Loans (a+b) 758,830 755,899 775,918 3% 2% Total Loans Net (d) 741,008 738,816 757,986 3% 2% Acquired Collection Rights ( e) 1,864 1,359 1,261 (7%) (32%) Total Loans (d+e) 742,872 740,175 759,247 3% 2% Total Assets 1,172,383 1,149,536 1,293,647 13% 10% Total Deposits 737,227 744,271 791,870 6% 7% Demand Deposits 391,855 435,453 451,842 4% 15% Time Deposits 345,372 308,819 340,028 10% (2%) Total Liabilities 1,056,082 1,035,276 1,179,984 14% 12% Equity 116,301 114,261 113,663 (1%) (2%)

SLIDE 28 28 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Quarterly Summary

Infrastructure 1Q19 4Q19 1Q20 Employees 22,782 24,123 24,098 Branches 1,149 1,182 1,178 ATM’s 8,453 8,919 9,090 POS’s 158,533 166,505 166,225 Financial Ratios - Bank 1Q19 4Q19 1Q20 Profitability: NIM (1) 6.2% 6.6% 6.3% NIM after Provisions (2) 4.8% 5.2% 4.7% ROE (3) 26.2% 23.9% 21.7% ROA (4) 2.5% 2.4% 2.0% Operation: Efficiency Ratio (5) 40.5% 43.8% 43.7% Operating Efficiency Ratio (6) 3.2% 3.4% 3.2% Average Liquidity Coverage Ratio for Banorte and SOFOM - Basel III (7) 116.6% 133.5% 120.1% Asset Quality: Past Due Loan Ratio 1.7% 1.6% 1.7% Coverage Ratio 136.1% 137.9% 139.8% Capitalization: Net Capital/ Credit Risk Assets 22.0% 23.7% 24.1% Total Capitalization Ratio 18.1% 18.5% 19.0% Leverage Basic Capital/ Adjusted Assets 9.3% 10.8% 10.9%

SLIDE 29 29 NIM Rev C / I NI ROE TI L/D Dep Loan ICAP Mkt App Us

Corporate Responsibility and Sustainability

Global Initiative Report (GRI Standards) International standards on sustainability reporting and disclosure of economic, environmental and socialtopics. UN Global Compact International 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 Sustentable Mexican index of 30 listed companies ,which are best positioned in relation to the pillars of Environment, Socialand CorporateGovernance. 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 Declaration Voluntary 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 Principles Standard within the financial sector to determine, assessand manage the environmental and social risks of financed projects. GEI2 ProgrammeMexico Voluntary reporting of greenhouse gas emissions UNEP Finance Initiative Initiative 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 Index Index that represents the main global companies in terms of environmental, 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 Index Index that evaluates actions in the themes of climate change, labor standards and risk management, among others. Bloomberg Gender Equity Index Index 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 ownershipdecisions.