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August- 2001

Encuentro Bursátil Grupos Financieros AMIB. August- 2001. Contents. I. GFNorte Results GFNorte Banking Division Other Divisions II. COMPARATIVES TO THE INDUSTRY III. OPERATIVE INFORMATION IV. MANAGEMENT’S VISION & STRATEGIES. I. GFNORTE RESULTS. Highlights.

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August- 2001

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  1. Encuentro Bursátil Grupos Financieros AMIB August- 2001

  2. Contents • I. GFNorte Results • GFNorte • Banking Division • Other Divisions • II. COMPARATIVES TO THE INDUSTRY • III. OPERATIVE INFORMATION • IV. MANAGEMENT’S VISION & STRATEGIES

  3. I. GFNORTE RESULTS

  4. Highlights • GFNorte generated a profit of Ps 876.9 millions, 29.5% greater than that of 1H00. • GFNorte reached an annual ROE of 21.3% • Banorte increased it’s Capitalization Ratio to 15.6% • Commercial loans, excluding corporate loans, and automobile loans grew by 23.9%. • Issuance of Non-Convertible Subordinate Bonds for 436 million UDIS. (Ps 1,301 million) • Banorte announces a reduction of interest rated in Mortgage and Car loans to a fixed rate of 17.90% • Banorte begins the process for the possible purchase of Bancrecer.

  5. GFNorte

  6. GFNorte Accumulated Net Income JUNE 2001 (Millions of Pesos) GFNorte Net Income $876.9 749.0 $40.3 $13.1 $57.7 $16.8 Banking Sector Auxiliary Organizations Brokerage House Long Term Savings Holding DIVISION 2Q‘00 2Q ‘01 % 627.0 Banking 749.0 19.5 Auxiliary Organizations 32.3 40.3 24.8 Brokerage House 8.0 13.1 63.8 Long Term Savings 1.6 57.7 >100.0 Holding 8.2 16.8 >100.0 $677.1 $876.9 TOTAL 29.5%

  7. GFNorte has maintained a constant earnings growth ACCUMULATED NET INCOME (Millions of Pesos) 1,722.9 1,594.1 1,558.2 1,162.5 1,267.5 848.5 721.9 701.9 876.9 2Q’00 677.1 '95 '96 '97 '98 '99 ‘00 2Q’01 Book Value 10.3 9.0 12.5 14.6 16.1 15.3 17.2 Per Share (*) Extraordinary Income: 1997: Ps709.6 y 1998: Ps431.5. Extraordinary Income (*) Based on 503.7 millions of shares. Millions as of June 2001.

  8. A major contribution to earnings was that of the Banking Sector with 80% of total Group´s earnings GFNORTE EARNINGS %

  9. GFNorte has increased it’s ROE beyond 20% ROE 21.3% 20.7% 15.1% 1999 2000 1H01

  10. GFNorte increased its net income per share by 36% and during 2000, and 30% from 1H00 to 1H01. NET INCOME PER SHARE 3.42 1.74 2.52 1.34 36% 30% 1999 2000 1H’00 1H’01 Pesos as of june 2001.

  11. The good results and perspectives of GFNorte have been reflected on the share price. 18.01

  12. Banking Division

  13. The net income from the Banking Division increased by 19.5% vs. 1H00. (Millions of Pesos) 1H’00 627

  14. The Net Interest Margin has moved in paralell to interest rates levels. 5.5%(*) (*) Without Extraordinary Income from money market transactions in 2Q01.

  15. Fees on services and trading have increased their contribution to the Non Interest Income. SERVICES 37% TRADING 54% FIDUCIARY 63% 46% FOBAPROA Data as of June ‘01.

  16. The actions taken to lower expenses have improved the Efficiency Ratio • Non Interest Expense / (Total Operating Income – Repomo-Margin - Provisions - Trading Income)

  17. The drop in Loan Portfolio was mainly due to the Fobaproa Notes and in 2001 to the impact of the deceleration in the economic activity in the United States. (Millions of Pesos) 89,758 88,080 86,733 82,433 81,023 77,650 Data as of June ‘01. Government includes Goverment Entities and Fobaproa-IPAB Notes.

  18. The commercial loans from the Banking Division showed an increase of 24% from 4Q99 to 2Q01, meanwhile Corporate loans decreased by 20% Commercial & Automobile Mortgage Corporate Credit Card Data as of June ‘01.

  19. Past due loans have been decreasing and are totally provisioned. (Millions of Pesos) Data as of June ‘01.

  20. Total Deposits have maintained in a contracted market (Millions of Pesos) Data as of June ‘01.

  21. The Capitalization ratio was strengthened with the issuance of the Non Convertible Subordinate-Bonds Rules 2003 2.5% NCSB *: Since 3Q00 we use 2003 rules.

  22. Other Divisions

  23. Other divisions are profitable and have gained market share 1H00 1H01 Net Income Market Share Net Income Market Share Long Term Savings: Afore 9.0% 36.9 8.9% 36.5 Bancassurance 1.4% 1) (18.0) 1.3% 7.9 Annuities 9.1% (17.3) 9.6% 13.3 Brokerage: Brokerage House 9.7% 8.0 5.5% 13.1 Auxiliary Organizations: Factoring 32.4% 9.2 28.7% 13.0 Leasing 5.0% 1) 18.5 4.6% 19.7 Warehousing 2.2% 2) 2.1% 1.3 4.3 Bonding N.A. 2.2% 2) 3.4 3.3 Millions as of June 2001. Wholesale Participation1) Mar ‘01. 2) Dec ‘00. Market Share: Afore & Annuities: Number of Affiliated; Bancassurance:Premiums; Brokerage House: Variable Equity; Factoring & Leasing: Total Loans, Bonding: Sureties sold.

  24. II . COMPARATIVES TO THE INDUSTRY

  25. GFNorte has increased it´s national market share (MARKET SHARE) DEPOSITS LOANS Source A B.M. Mkt. % for deposits excludes Financial Intermediaries and refers to Banking Sector exclusively. Loans includes Fobaproa Source CNBV

  26. We have also increased our market share in the 3 largest cities of the country. MEXICO MONTERREY 6° 1° 7° 3° GUADALAJARA 5° 4° DEPOSITS LOANS Source: A B.M. Mkt. % for deposits excludes Financial Intermediaries and Mkt. % for Loans excludes Fobaproa.

  27. 21.3% 30.6% 17.2% 16.9% 7.1% GFBVA- BANCOMER BANACCI GFNORTE GFSANTAND GFBITAL GFNorte´s ROE ranks among the highest in Mexico ROE Source: Press Release each bank. June 2001.

  28. Banorte has maintained a low level of past due loans PAST DUE LOAN RATIO 6.9% 5.6% 5.4% 3° 3.3% 0.9% SANTANDER- SERFIN BANAMEX BANORTE BITAL BBVA - BANCOMER Data as of June ‘01.

  29. The capitalization ratio stood at 15.6% with rules of 2003 CAPITALIZATION RATIO 2003 2001 2001 2003 2003 RULES OF: 15.6% 15.6% 13.0% 12.4% 8.4% SANTANDER - SERFÍN BBVA - BANCOMER BANORTE BITAL BANAMEX W/O MARKET RISK 18.3% 24.0% 14.7% 15.4% 18.0% (*) Data as of June ‘01. (*) Rules 2001.

  30. III . OPERATIVE INFORMATION

  31. Our client base has increased steadily as Banorte has reinforced its presence in traditional entities and moved further into new territories NUMBER OF CLIENTS (Thousands) 2,818 2,596 2,324 1,900 889 627 301 142 2001* 1994 ‘95 ‘96 ‘97 ‘98 ‘99 2000 Products % Accounts Checking Account 54.3% Investment 31.8% Credit Card 7.3% Credits 2.4% Money Market 2.0% Mortgage 2.0% Brokerage 0.3% Total Accounts 100.0% Includes the Banking and Brokerage Sectors. * June 2001.

  32. Supported on Banorte´s technological platform, the electronic banking has grown aggressively POS PC Banking ATM’s 1994 1995 1996 1997 1998 1999 2000 2Q01 Data as of June ‘01.

  33. More than 50% of all transactions are channeled through electronic banking TRANSACTIONS BY DISTRIBUTION CHANNEL 2Q01 45.9% 34.0% 6.2% 6.0% 4.0% 3.9% TELEPHONE BANKING PC BANKING ATM BRANCH POS INTERNET Data as of June ‘01.

  34. The volume of e-business transactions increased considerably. % Var. January’01 June’01 Pc Banking: Transactions 176% 182,837 503,944 Companies 211% 2,148 6,688 Home Banking: Transactions 48% 120,837 178,590 Clients 507% 16,836 102,115

  35. IV. MANAGEMENT’S VISION & STRATEGIES

  36. The deceleration of the economic activity in the United States has affected the expected GDP growth in México 2002 2000 2001 GDP 4.40% 6.90% 2.00% INFLATION 4.30% 8.96% 5.21% CETES 28 DAYS End of the year 9.50%% 17.59% 9.80% Average 9.85% 15.24% 12.27% EXCHANGE RATE 9.65 9.57 9.2 Estimados revisados el 25-Julio-2001

  37. A new competitive environment is arising • Fewer and bigger financial institutions • More sophisticated participants • Lower net interest margins • New non interest income products • Internet Banking

  38. GFNorte strategies and plans are aiming to be a successful contender in this new environment • Enhancing its position through acquisitions. (interested in aquiring Bancrecer) • Strategic alliances in new businesses. • New sources of non-interest income through the acquisition of IPAB loan portfolios. • Re-engineering back-office processes in order to improve operative efficiency. • Cross-selling of GFNorte products.

  39. PROFITABILITY GFNorte has followed a clear and sucessful strategy for increasing it’s profitability External Factors Strategy Deposit Volume and Mix New Loans Interest Rate Non Interest Income Non Interest Expense Recovery

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