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3Q02 RESULTS

3Q02 RESULTS. 3Q02 GFNORTE RESULTS. Highlights. 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)

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3Q02 RESULTS

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  1. 3Q02 RESULTS

  2. 3Q02 GFNORTE RESULTS Highlights 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 9M02 9M01 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%

  3. GFNorte generated profits for PS 1,563 million in the first nine months of the year ACCUMULATED NET INCOME SEPTEMBER 2002 MILLIONS OF PESOS BANKING PS 1,343 86% LONG TERM SAVINGS $117 7% AUXILIARY ORGANIZATIONS $53 3% BROKERAGE $60 4% HOLDING ($10) 0% GFNORTE PS 1,563 100%

  4. Traditional loan portfolio showed an important growth specially in Mortgage and Consumer loans 2Q02 3Q02 % GROWTH QTR YR 3Q01 LOAN PORTFOLIO (Millions of Pesos) 16,319 45.4% 14,398 Commercial 11,223 13.3% 14,279 261.9% 13,186 Mortgage and Consumer 3,945 8.3% 9,742 341.5% 9,323 Mortgage 2,206 4.5% 1,518 156.8% 1,219 Credit Card 591 24.5% 2,567 172.2% 2,268 Auto 943 13.2% 453 120.8% 376 Other 205 20.5% Corporate 11,370 57.9% 9,787 7,203 16.2% Recovery Banking 5,580 (15.2)% 5,758 6,581 (3.1)% DATA AS OF SEPTEMBER ‘02.

  5. Bancrecer’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. Bancrecer’s Integration COMMITMENT ACHIEVEMENTS • Reductions of Ps 406 million this year, and Ps 807 in 2003. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • 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. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • Reach the goal by March 31. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • 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. Bancrecer’s Integration ACHIEVEMENTS • USD 45 million cash premium in the second quarter of the year. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali.

  9. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • Close branches: 96 Bancrecer 9 Banorte. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding. • So far, 109 Bancreser and 10 Banorte branches have been closed down.

  10. Bancrecer’s Integration ACHIEVEMENTS LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • 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. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • Show Banorte to the client as an integrated bank by the second quarter of 2002. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • At present, we offer the same products and services throughout the entire integrated network.

  12. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • Scheduled to begin in the second quarter of the year. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • 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. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • To integrate the organizational structures of both banks in the shortest possible time. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • Standardize a single structure. • Maintain an intensive personnel training and continual information program. • 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. Bancrecer’s Integration ACHIEVEMENTS • The personnel have participated in training programs covering Banorte’s sales philosophy, and product features and how to operate them. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • Standardize a single structure. • Maintain an intensive personnel training and continual information program.

  15. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • A year ago, we promised to finish by the second quarter of 2002. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • Standardize a single structure. • Maintain an intensive personnel training and continual information program. • Provide technological support for Commercial Integration. • Use a single operating platform for both banks. • It will be fully completed at the end of this year.

  16. Bancrecer’s Integration COMMITMENTS ACHIEVEMENTS • We set a 12 month deadline as of April this year. LEGAL & FINANCIAL COMMERCIAL ORGANIZATIONAL TECHNOLOGICAL & OPERATIONAL • Implement a strict and ambitious cost reduction program. • Merge legal and accountancy. • Reach a profitable settlement with Generali. • Reorganize the branch network. • Enhance the sales volume of the acquired network. • Integrate both banks commercially. • Exterior rebranding • Standardize a single structure. • Maintain an intensive personnel training and continual information program. • Provide technological support for Commercial Integration. • Use a single operating platform for both banks. • 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. Bancrecer’s Integration • Overall Budget of Integration Costs: Ps 1,076 million. • Expenditure to date: 44%, equivalent to Ps 473 million. Ps 284 Severance and Compensations 87 Technological Integration 51 Medical Service Fund for Retirees 51 Operative Integration, Rebranding & Others Ps 473 TOTAL COST OF THE INTEGRATION

  18. Bancrecer’s Integration • 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. Bancrecer’s Integration • Challenges we have yet to face: • Finish consolidating the technological platform, and • Implement the new operative model in all the branches.

  20. TOTAL Banorte 6,538 Bancen 2,392 Banpaís 15,986 REPOSESSED ASSETS 12,879 TOTAL ASSETS $61,916 100% Eventhough assets under management of the Recovery Banking represent an important figure, the risk involved is low SHARED W/IPAB BANORTE IPAB 27% 5,440 1,031 0 2,392 15,986 Loans purchased or managed-IPAB 24,189 10,722 10,510 2,956 932.2 Serfín 13,466 0 10,510 2,956 New Portfolios 2,395 10,722 0 10,722 0 TOTAL LOAN PORTFOLIOS 49,037 16,162 11,541 21,334 1,254 3,044 8,581 $17,416 $14,585 $29,915 48% 28% 28% 24% 48% 24% MILLIONS OF PESOS OF SEPTEMBER 2002

  21. The Non Interest Expense control has been fundamental ... ... resulting in a 14% expense decrease from 1999 to 3Q02. NON INTEREST EXPENSE PER BRANCH NON INTEREST EXPENSE 10.3 6.1 7,556 6,538 6,454 6,401 3Q01 3Q02 14% 3Q02 1999 2000 2001 MILLIONS OF PESOS OF SEPTEMBER 2002

  22. COMPARATIVES TO THE INDUSTRY ASSETS 26.1% 21.2% 15.6% 10.6% 2° 7.9% 4° 4.5% GFBVA- BANCOMER BANACCI GFNORTE SCOTIABANK GF SANTANDER GFBITAL SOURCE: CNBV AT 2Q02.

  23. COMPARATIVES TO THE INDUSTRY DEPOSITS 27.3% 20.4% 15.9% 11.8% 2° 8.7% 4° 4.8% GFBVA- BANCOMER BANACCI GFNORTE SCOTIABANK GF SANTANDER GFBITAL SOURCE: CNBV AT 2Q02.

  24. COMPARATIVES TO THE INDUSTRY LOAN PORTFOLIO (Including Fobaproa/IPAB) 26.2% 20.2% 14.6% 2° 13.1% 5.4% 6.9% 3° GFBVA- BANCOMER BANACCI SCOTIABANK GFBITAL GF SANTANDER GFNORTE SOURCE: CNBV AT 2Q02.

  25. COMPARATIVES TO THE INDUSTRY NUMBER OF BRANCHES 23.9% 20.3% 19.5% 15.4% 2° 13.1% 5.2% 4° GFBVA- BANCOMER GFBITAL BANACCI GF SANTANDER GFNORTE SCOTIABANK SOURCE: CNBV AT 2Q02.

  26. COMPARATIVES TO THE INDUSTRY GFNorte´s ROE ranks among the highest in Mexico ROE SEPTEMBER 2002 35.0% 20.4% 20.0% 2° 14.4% 6.1% 4.2% GFNORTE GFSANT-SF BBVA-BMR BANACCI BITAL SCOTIABANK INVERLAT SOURCE: PRESS RELEASE EACH BANK AT 3Q02.

  27. The capitalization ratio increased to 12.8% with rules of 2003 CAPITALIZATION RATIO 2001 2003 2003 2003 2001 RULES OF: 18.5% 15.4% 12.8% 12.6% 3° 9.9% BBVA - BANCOMER SANTANDER SERFÍN BANAMEX BITAL BANORTE SOURCE: PRESS RELEASE EACH BANK AT 3Q02.

  28. RECENT 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 Factors Operating Risks Bancomer Banorte Fierce competition of international institutions Consolidation in the sector Same Subsidiaries´ co-obligations Minimum capital requirements Same Insolvency Same Non income generating activities of the Holding Co. All income comes from subsidiaries Same Government regulations could be adverse Loan loss provisions Same Capital requirements Same Debtors support programs Same Inadequate loan loss provisions estimate Tighter requirements Same USD 8.9 Billion (63%) Fobapora-IPAB exposure USD 7.7 Billion (32%) Short term deposits Same Short term funding Foreign exchange asset-liability mismatch Some mismatch No mismatch Lower USD exposure Dollar exchange rate and interest rate volatility Risks associated Majority shareholder official investigation BBVA and some Board members No investigations Integration of another bank in process BBV-Probursa and Promex Bancrecer

  30. Risk Factors Country Risks Bancomer Banorte 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

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