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GFNORTE

GFNORTE. 2Q04 Results. Contents. GFNorte in the Industry GFNorte’s Results Banking Sector’s Results Long Term Savings Sector’s Results Economic Outlook. 1. GFNorte in the Industry. Banorte vs . Industry. ASSETS. 30%. 28%. 28%. 26%. 14%. 16%. 12% . 12% . 4°. 10%. 11%. 5%. 5%.

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GFNORTE

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  1. GFNORTE 2Q04 Results

  2. Contents • GFNorte in the Industry • GFNorte’s Results • Banking Sector’s Results • Long Term Savings Sector’s Results • Economic Outlook

  3. 1. GFNorte in the Industry

  4. Banorte vs. Industry ASSETS 30% 28% 28% 26% 14% 16% 12% 12% 4° 10% 11% 5% 5% BBVA- Bancomer Banamex Santander Banorte HSBC Scotiabank BRANCHES 25% 24% 21% 20% 20% 19% 16% 15% 14% 13% 4° 6% 5% 1Q03 BBVA- Bancomer Banamex Banorte Scotiabank HSBC Santander 1Q04

  5. Banorte vs. Industry CAPITALIZATION 18% 16% 16% 15% 15% 14% 14% 13% 13% 12% 12% 11% 3° BBVA - Bancomer HSBC Banorte Scotiabank Banamex Santander 1Q03 1Q04

  6. Deposits Market Share CORE DEPOSITS 29% 29% 27% 24% 16% 15% 15% 13% 10% 6% 6% 5° 5% BBVA Banamex Santander HSBC Banorte Scotiabank Bancomer Serfin TOTAL DEPOSITS 28% 28% 22% 22% 16% 16% 16% 15% 13% 6% 5° 5% 5% 4Q01 1Q04 BBVA Banamex HSBC Santander Banorte Scotiabank Bancomer Serfin

  7. Loans Market Share PERFORMING LOANS 29% 29% 25% 22% 12% 10% 9% 9% 9% 9% 8% 3° 6% BBVA Banamex Banorte Santander HSBC Scotiabank Bancomer Serfin COMMERCIAL LOANS 26% 24% 23% 15% 11% 11% 9% 8% 9% 4° 7% 5% 6% 4Q01 1Q04 BBVA Banamex Santander Banorte HSBC Scotiabank Bancomer Serfin

  8. 2. GFNorte’s Results

  9. Highlights 4% 38% MILLIONS OF PESOS 1H03 1H04 1,087 17.6% 29.50 2.16 1.14 13.6% 41% 6.0% 116% 1,127 15.8% 40.83 2.23 1.42 14.5% 17% 3.6% 131% Net Income Annualized ROE Stock Price EPS P/BV Capitalization Ratio Loan growth w/o IPAB Past due loan ratio w/o IPAB Reserve Coverage

  10. GFNorte’s Income 2% 4% MILLIONS OF PESOS 2Q03 2Q04 1H03 1H04 Banking 436 519 850 958 Long – Term Savings 69 20 149 99 Brokerage House 26 9 33 39 Auxiliary Organizations 24 23 44 40 Holding 3 (4) 11 (9) GFNORTE 558 568 1,087 1,127

  11. 3. Banking Sector’s Results

  12. Income Statement MILLIONS OF PESOS 2Q03 2Q04 Var % 1H03 1H04 Var % 2,070 2,092 1% 4,412 4,108 (7%) Net Interest Income after REPOMO (365) (149) (59%) (642) (267) (58%) Loan Loss and Loss Sharing Provisions 1,001 912 (9%) 1,799 2,124 18% Non Interest Income Services 513 724 41% 1,000 1,399 40% Recovery 85 126 48% 188 251 34% Foreign Exchange 124 150 21% 211 275 31% Trading (Securities- Realized and unrealized gains ) 280 (87) (131%) 400 198 (50%) 2,706 2,855 6% 5,570 5,965 7% Total Income (2,311) (2,358) 2% (4,612) (4,811) 4% Non Interest Expense 395 497 26% 958 1,154 20% Net Operating Income 82 114 39% (51) (30) (41%) Non Operating Income (Expense) Net Income Tax,profit sharing, Undistrib. Earnings of Subsidiaries (*) (15) (62) 327% 20 (84) (520%) 463 549 19% 927 1,039 12% Total Net Income (*) Includes extraordinary items and minority interest.

  13. NIM vs. CETES 8.8 6.3 6.3 CETES 5.6 5.4 4.9 4.6 NIM 4.3 4.2 4.1 4.3 3.9 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04

  14. Non Interest Income … AS % OF TOTAL INCOME 34% 31% 26% 25% 2001 2002 2003 1H04 … AS % OF EXPENSES 44% 41% 33% 32% 2001 2002 2003 1H04

  15. Expenses BILLIONS OF PESOS 2001 2002 2003 1H04 Personnel 5.1 4.4 4.3 2.2 2.8 2.4 2.4 1.2 O & A 1.6 1.3 1.4 0.7 VAT & IPAB Rent, depreciation & amortization 1.3 1.2 1.4 0.7 10.8 9.4 9.5 4.8 EFFICIENCY RATIO 87% 81% 78% 77% 2001 2002 2003 1H04

  16. Total Customers MILLIONS 9.3 8.2 2.2 6.9 1.5 6.0 0.9 0.6 Insurance 2.9 2.8 2.6 2.4 Afore 4.2 3.9 3.4 3.0 Bank 2001 2002 2003 2Q04

  17. Total Resources from Customers BILLIONS OF PESOS 418 407 386 36 32 27 265 154 150 133 Assets Under Management 21 Brokerage House 107 227 225 228 Bank 137 2001 2002 2003 1H04

  18. Core Deposits (Billions of Pesos) 1Q04 Deposits 2Q03 3Q03 4Q03 2Q04 62 Demand Deposits 58 59 67 64 33 Time Deposits 33 33 33 34 95 Total 90 92 100 98 Deposits Mix 65% Demand Deposits 64% 64% 67% 65% Time Deposits 35% 36% 36% 33% 35% 100% 100% 100% 100% 100%

  19. Core Deposits ANNUAL GROWTH (2Q04 VS. 2Q03) 11% 8% 5% Demand Deposits Time Deposits Total

  20. Loan Portfolio (Billions of Pesos) 75 71 64 2Q03 1Q04 2Q04 VARIATION 2Q03 1Q04 2Q04 Q on Q Y on Y Consumer 19 24 26 7% 34% Commercial 19 24 25 5% 31% Corporate 18 13 14 6% (19%) Government 8 10 10 1% 23% TOTAL 64 71 75 5% 17%

  21. Consumer and Mortgage Loan Portfolio (Billions of Pesos) 26 24 19 2Q03 1Q04 2Q04 VARIATION 2Q03 1Q04 2Q04 Q on Q Y on Y Mortgage 12 14 15 7% 27% Car loans 4 6 6 4% 36% Credit Cards 2 3 3 10% 47% Payroll loans 1 1 2 12% 93% Consumer 19 24 26 7% 34%

  22. Number of New Loans 41% 24% CREDIT CARDS CAR LOANS 53,887 19,751 19,823 43,620 = 1H03 1H04 1H03 1H04 MORTGAGE 4,598 3,264 1H03 1H04

  23. Loan Portfolio 2002 1H04 Government 9% Government 13% Commercial 27% Commercial 33% Consumer 25% Consumer 35% Corporate 38% Corporate 19% Ps 66,000 Millions Ps 75,000 Millions 14%

  24. Loan Portfolio BILLIONS OF DE PESOS 153 152 150 147 48% 51% 59% 105 66% 71% 43 52% IPAB / FOBAPROA 49% 21% 41% 34% 29% 79% LOAN PORTFOLIO 2Q04 1996 1997 2001 2002 2003

  25. Fobaproa – IPAB Notes BILLIONS OF DE PESOS 1S´04 YIELD MATURITY BANCEN - BANPAIS 19 TIIE + 85 pb 2010 BANCRECER 46 TIIE + 40 pb 2009 BANORTE (FOBAPROA) 7 CETES – 135 pb 2005/2006 72 TOTAL

  26. Asset Quality 131% 130% 127% 128% 122% 116% 1Q03 2Q03 3Q03 4Q03 2Q04 1Q04 BILLIONS OF DE PESOS 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 Loan Portfolio 64 68 71 75 75 78 Past Due Loans 3.6 4.0 3.5 3.6 3.6 2.8 Loan Loss Reserves 4.5 4.7 4.5 4.4 4.6 3.7 Past Due Loan Ratio (exc. IPAB) RESERVE COVERAGE 6.0% 5.6% 5.0% 4.8% 4.8% 3.6% 1Q03 2Q03 3Q03 4Q03 2Q04 1Q04

  27. Recovery Bank MILLIONS OF PESOS 2001 2002 2003 1H04 Net Income 484 561 714 263 CONTRIBUTION TO GFNORTE’S NET INCOME 33% 32% 29% 23% 2001 2002 2003 1H04

  28. Recovery Banking Assets Under Management (Billions of Pesos at Face Value) 65 59 60 59 Banorte risk (owned + auctions) 18 17 21 23 20 Serfin Portfolio 17 14 13 IPAB Portfolio (servicing) 27 26 24 23 2001 2002 2003 2Q04

  29. Capitalization Ratio 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 Tier 1 10.9% 11.2% 11.4% 10.5% 10.5% 10.7% Tier 2 2.4% 2.4% 2.4% 2.2% 5.0% 3.8% TOTAL 13.4% 13.6% 13.8% 12.7% 15.4% 14.5%

  30. 4. Long Term Savings Sector’s Results

  31. Afore BILLIONS OF PESOS 28 25 20 16 10 7 4 5 1998 1999 2000 2001 2002 2003 1H04 CUSTOMERS MILLIONS 2.9 2.8 2.6 2.4 1.6 1.4 1.2 1998 1999 2000 2001 2002 2003 1H04

  32. Insurance GROSS WRITTEN PREMIUMS BILLIONS OF PESOS 1.8 1.7 1.4 1.0 0.9 0.8 0.4 1998 1999 2000 2001 2002 2003 1H04 CUSTOMERS MILLIONS 2.2 1.5 0.9 0.6 0.5 0.4 0.2 1998 1999 2000 2001 2002 2003 1H04

  33. Contribution to GFNorte’s Net Income … LONG TERM SAVINGS SECTOR 10% 9% 8% 6% 2001 2002 2003 1H04 2001 2002 2003 1H04 Afore 5.9% 6.2% 5.0% 4.4% Insurance 0.5% 2.0% 3.6% 3.0% Annuities (0.4%) 0.0% 1.3% 1.5%

  34. 5. Economic Outlook

  35. Economic Environment • Mexico´s economy experienced higher growth during 1H04. • Aggregate demand is showing its best performance since 2000. • Exports growth has detonated the industrial sector recovery. • - Job creation continues to lag, but there are signs of improvement in the labor market. • Macroeconomic fundamentals remain solid. • - Public finances registered a surplus during 1H04, helped by the oil windfall. • - Proactive debt management provides a shield as interest rates rise. • - International reserves are at an all time high. • - The current account deficit will represent 1.5% of GDP and it is being financed by long • term flows of capital. • Inflation expectations are deteriorating. • - Monetary policy is expected to remain restrictive throughout 2004. Banxico has already • increased the “corto” five times during the year. • Political conditions remain complex. • - Mexico´s City Mayor López Obrador, will face a probable impeachment process. Expect • noise from this affair. • - 9 remaining state elections of which 5 are for Governor. • - Do not expect major reforms to be passed.

  36. Macroeconomic Environment 2005 2003 2004 GDP 1.3% 3.8% 3.9% Inflation 3.98% 4.35% 3.84% 28 days Cete rate (End of the year) 6.06% 7.55% 8.13% 28 days Cete rate (Average) 6.22% 6.65% 7.87% Peso exchange rate (End of the year) 11.24 11.59 12.03 SOURCE: BANORTE’S BROKERAGE HOUSE AS OF AUGUST 2004

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