Presentation on theme: "September 2007 BANORTE USA. 2 To be a bi-national financial group offering integrated financial products and services to a diverse group of customer segments."— Presentation transcript:
2 To be a bi-national financial group offering integrated financial products and services to a diverse group of customer segments. To be a bi-currency financial group which offers a wide range of products and services in U.S. Dollars and Mexican Pesos. Grupo Financiero Banortes Vision
3 The Mexican banking system has approximately $14 billion in U.S. dollar deposits within the country. It is estimated that Mexican Nationals have approximately $35 billion dollars in deposits in bank accounts and investments abroad. Banorte wants to have a bigger share of its customers wallets on both sides of the border. Bi-currency: Statistics
4 Banortes U.S. Expansion Strategy Banorte has a Three-Pronged Strategy for U.S. Expansion: Private Banking / Wealth Management (Brokerage Services) Provide Mexican Nationals and U.S. Citizens dollar-denominated financial investment products (Banorte Securities International, Ltd.). Commercial/Retail Banking Provide financial products and services to facilitate cross-border transactions for businesses and individuals. Remittance Market Provide an integrated approach to remittances to the non/under-banked immigrant population living in the U.S.
5 Banorte USA Remittances U.S. Bank U.S. Bank Brokerage/ Investments Brokerage/ Investments International Business International Business
6 WA OR CA MT WY CO NM ID NV UT AZ OK TX IA MO IL NC VA KY PA WV CT MD NJ 6.1% 5.7% 31.4% 2.2% 7.1% 13.8% 40.5% 7.4% 13.9% 6.2% 20.9% 3.6% 28.2% 1.8% 1.6% 2.7% 2.5% 10.2% 3.8% 0.8% 2.7% 0.6% 8.5% 4.0% Strategic Reasons for Entering the U.S. Market Cross Border Business Binational products for individuals -Credit Cards -Mortgages -US based deposit accounts Private Banking in US -High net worth US Residents -Mexicans Nationals Family Remittances US Banking Market Attractive local banking market High growth rates Cross border business Foreign trade products and services Bi-national products to individuals Family remittances Improve our position in the industry Private banking market (México-US) Synergies Across all market segments (Banorte México, Banorte US Bank, Banorte Securities, and Remittance Money Transmitter) Geographical diversification of income for Grupo Financiero Banorte
7 Banorte and INB clients are already benefiting from expanded services from both banks : Free fund transfers between Banorte and INB savings and checking accounts Free withdrawal and account balance inquiries in ATMs of both Banks Acceptance of each others checks for deposit with next day availability in both currencies. Banorte Securities Intl, Ltd. (BSI) offices in McAllen & El Paso Account opening process of accounts referred by Banorte to INB has resulted in the opening of over 3,000 accounts with $45 million in balances. Synergies
8 New Products and Services New Products Introduced Since Merger: Mortgages to Americans purchasing Mexican Resort Properties: $38 million funded to date with $24 million at closing. Potential: 2008-$150 million, 2009-$250 million, 2010-$350 million Loans secured by investment portfolios held by customers at BSI in dollars or at Banorte in pesos: $5 million funded to date with $20 million at closing. Potential: 2008-$60 million, 2009-$100 million, 2010-$150 million. Banorte Securities offices have been introduced in INB offices: $72 million funded to date in new investment accounts. Potential: 2008-$125 million, 2009-$185million, 2010-$250 million Competitive Foreign Exchange Platform
9 New Products and Services New Products Currently in Development: New INB issued credit card program to be launched in 1Q, 2008. Potential: 2008-$15 million, 2009-$25 million, 2010-$50 million. New trade financing loans programs to be offered in late 2007. Potential: 2008-$50million, 2009-$125 million, 2010-$200 million. Enhanced treasury management services including lockbox, remote deposit capture and ACH services which should increase our non-interest income. New Markets: Laredo and Brownsville, Texas to open 1Q, 2008.
10 New Markets: Proposed New Branches LAREDO, TEXAS BROWNSVILLE, TEXAS Potential New Markets: SAN ANTONIO, TEXAS HOUSTON, TEXAS DALLAS, TEXAS SAN DIEGO, CALIFORNIA Approximately 4,100 sf facility Approximately 4,100 sf facility 3 drive-thru lanes & drive-up ATM 3 drive-thru lanes & drive-up ATM Completion is estimated for 1 st Qtr 2008 Completion is estimated for 1 st Qtr 2008 Details:
11 Private Banking/Wealth Management Private Banking/Wealth Management Banorte Securities International, Ltd (BSI) markets its services to: High net worth individuals in Mexico Hispanics/US citizens and residents Growth Strategy: Grow organically by creating a dedicated sales force which focuses on the Hispanic population, including high net-worth Mexican nationals and Mexican- Americans residing in the U.S. Currently has approximately $1.2 Billion in assets.
12 INB and Banorte Securities clients will benefit from expanded services from both Institutions: Banorte Securities will refer clients to Inter National Bank, seeking bank accounts not available at BSI. Inter National Bank will refer clients to Banorte Securities that seek brokerage accounts not available at Inter National Bank. Inter National Bank can provide loans to BSI customers wishing to use their brokerage accounts as collateral. Synergies
13 Remittances Market Banorte has been a strong payer of remittances to customers in Mexico Payment agreements with more than 30 U.S. licensed remittance companies (including UniTeller) and 3 major U.S. banks (BoA, Chase, and Wells Fargo) Over to 4 million remittances paid in 2006 totaling $1.6 Billion (7% Mkt Share) Banorte has been promoting banking the beneficiaries of remittances Over 62,000 Enlace Express Accounts (without fees) Strategy: Vertical Integration Acquisition of UniTeller will streamline GFNortes remittance service Access to a large number of under-banked clients on both sides of the border – additional business opportunities Promote remittances to Banorte, and banking of beneficiaries complements Banortes bancarization effort UniTeller will benefit from additional financial resources, and correspondent banking relationships in the US as well as in other parts of the world
14 Banortes Agreements w/ Major Corporations & Financial Institutions
15 Acquisition of 100% of UniTeller Transaction Closed on Jan. 18, 2007 High Growth Industry: Estimated $50 billion in remittances from the U.S. to Latin America in 2006 billion (close to $25 billion to Mexico alone) Background: Based in New Jersey $1.12 Million transfers per year Agent Network in the US: 1,000 collection agents in 41 States Strong payment network: Over 4,000 payment points in 19 countries including top remittance destination countries Strong payment network in Mexicos rural areas, complementing Banortes banking network Guatemala, Philippines, El Salvador Strong compliance culture Attractive technological infrastructure with enough capacity to support immediate growth UniTeller
16 Projects in Progress Account Link (deposits to an account) Product Improvements Discounts on remittances from U.S. from Uniteller and Banorte Payment options to Banorte accountholders Marketing campaigns in conjunction with other U.S. transmitters to promote remittances UniTeller (contd)
17 5,600 33,130 20042005 52,200 2006 Opportunity to integrate the non-banked: Enlace Express is Banortes equivalent to free checking in the U.S.: debit-card based no minimum balances or monthly fees Since its inception, the Enlace Express product has achieved significant progress. # of Customers (In Thousands) Jun-2007 62,467
18 BANORTE USA Results from Operations September 2007
19 Dollar Denominated Assets Dollar Denominated Assets Banorte Dollar Deposits Demand Time Deposits Total Mexico INB Total USA Total GFB IN MILLONS OF DOLLARS YTDY on YJUNE 2006Variance (%)2007 BSI –INB Accts BSI Mexico Accts 699 745 748 0% 7% 676 716 793 11% 17% 1,375 1,461 1,541 5% 12% 958 1,025 1,033 0% 8% 2,333 2,486 2,574 3.5% 10% 9771,3631,280(6%)31% 2 42 72 71%3,316% 979 1,405 1,352 (4%)38% 3,311 3,891 3,926 2%18% DEC
20 Earnings - Banorte USA IN MILLIONS OF DOLLARS Y on YJUNE DEC 2006Variance (%)2007 International business- (México) Pre-Tax INB Financial Corp. Banorte Securities, Ltd. Uniteller Holdings, Inc. Total Earnings 21.558.2 25.016% 9.417.9 11.927% 0.8 1.4 1.370% (0.1) (0.4) (353%) 31.677.337.920%
21 INB June 30, 2007 Highlights Net Interest Margin4.7% 1S07 4.5% IN MILLIONS OF DOLLARS Loans 721922 28% Deposits9771,277 31% Efficiency Ratio 43.5%41.3% 1S06 ROE 20.8%23.7% ROA 1.8% Net Earnings10.012.5 24%
22 Inter National Bank: Earning Assets vs. Cost of Funds
24 IN MILLONS OF DOLLARS Revenues Expenses Earnings from Operations Investment Earnings Taxes Net Earnings 2006Variance (%)2007 Banorte Securities International, Ltd. Note: Banorte Securities consolidates into Casa de Bolsa and not Banorte USA. 3.8 7.5 5.0 32% (2.9) (5.7) (3.3) 12% 0.9 1.8 1.7 102% 0.2 0.4 0.2 (4%) (0.2) (0.8) (0.6) 132% 0.8 1.4 1.3 70% JUNEDECY on YJUNE
25 Family Remittance Indicators - Mexico Family Remittance Indicators - Mexico YTD Y on Y JUNE DEC IN MILLONS OF DOLLARS Transactions (000S) Revenues No.of Accounts-EE Avg. Deposit Balances 2006Variance (%)2007 Paid into Accounts Paid in Cash Total Paid Direct Deposit % 1,9313,9692,0644% 7% $744$1467$755 $50$119$77 6%8%9% $794$1586$8325% $4.2$9$4.45%4% 43,90752,20762,46739% 42% $17$20$2220% 30% - - - - - - - -
26 (3%) Banks (4%) 9 % Market Growth (1H06 vs. 1H07) 7% Non Banks w/o Banorte 0.6% Market Growth Banorte Family Remittances Paid in Mexico Family Remittances Paid in Mexico While the growth in the remittance market has slowed, Banorte continues to grow well above the rate of growth of other Mexican banks.
27 BANORTE USA Supplemental Information September 2007
28 Inter National Bank: Loan Growth In Thousands % Growth 40% 34% 15% 36% Ann