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GFNORTE

GFNORTE. 1Q03 Results. Banorte went from a regional to a national bank improving its market share. BRANCHES AND EMPLOYEES. Dec ‘01. Dec ‘96. Mar ‘03. Banorte. BTE + BCR. 14°. 6°. 4°. 4°. 1,0 70. 156. 455. 1,182. Branches MS%. 15. 7. 2.3. 6.4. 16.6. 32. 7. 32. 32. States.

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GFNORTE

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  1. GFNORTE 1Q03 Results

  2. Banorte went from a regional to a national bank improving its market share BRANCHES AND EMPLOYEES Dec ‘01 Dec ‘96 Mar ‘03 Banorte BTE + BCR 14° 6° 4° 4° 1,070 156 455 1,182 Branches MS% 15.7 2.3 6.4 16.6 32 7 32 32 States 12,861 4,840 8,516 15,099 Bank Emp BANORTE BANCENTRO BANPAÍS BANCRECER Dec ‘01 MARKET SHARE (%) Dec ‘96 Mar ‘03 BTE BTE + BCR 5° 5° 5° 4° 6.8 11.4 15.4 15.6 Non Interest Deposits 14° 5° 4° 4° 3.0 7.8 11.7 12.8 Total Deposit 10° 6° 4° 4° 3.3 7.0 8.6 10.3 Traditional Loans 10° 3° 3° 3° 3.3 9.4 15.6 15.8 Total Loans DEPOSITS: EXCLUDES FINANCIAL INTERMEDIARIES AND INCLUDES MUTUAL FUNDS AND SOURCE: ABM LOANS: INCLUDES FOBAPROA, IPAB CREDIT AND SOURCE: DEC ‘96 CNBV; DEC ‘01 AND FEB ‘03 A.B.M.

  3. The client base and the distribution channels have experienced an important growth CLIENTS (Thousands) 4,678 4,646 4,634 TRANSACTIONS PER DISTRIBUTION CHANNEL March 2003 2,818 2,324 1,900 889 627 ATM 54% ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 02 Mar’03 BRANCHES 26% DISTRIBUTION CHANNELS PC Banking* 22,606 PC BANKING & INTERNET 10% POS 10,250 Call Center** 5.3 TELEPHONE BANKING 6% ATM 2,513 POS 4% Branches 1,075 8.3 2,458 990 212 157 ‘96 ‘97 ‘98 ‘99 ‘00 ‘02 Mar’03 ‘01 CLIENTS : INCLUDES THE BANKING SECTOR AND THE BROKERAGE HOUSE. * TRADITIONAL AND INTERNET. **MILLIONS OF PHONE CALLS FOR THE PERIOD.

  4. GFNorte has achieved both profit growth and excellent perfomance through time 24.99 SHARE PRICE NET INCOME 10.50 31.4 21.0 17.5 ROE % 8.8 28 DAYS CETE RATE % 1,623 1,269 927 Extraordinary Income EXTRAORDINARY INCOME: 1997: PS 775, 1998: PS 477 AND 2002: PS 416.MILLIONS AS OF MARCH 2003. DURING 2000 WE HAD A EXTRAORDINARY INCOME OF PS 238 MILLION FROM THE RECOVERY BANKING UNIT

  5. GFNorte’s Objectives & Strategy • Objectives • Provide excellence in financial services • Maximize shareholder value • Strategy • We have succeeded in building a national franchise through selective acquisitions. We will now focus on exploiting our leading market position by: • Providing an integrated multi-channel approach with a cross-sell focus. • Continuing to aggressively grow our credit portfolio, following strict credit risk policies. • Improving our efficiency levels by continuing to realize cost synergies from Bancrecer and shifting our transaction mix towards lower cost channels. • Maintaining our leadership in the asset recovery sector, a business that should continue to be very profitable for the foreseeable future. Meanwhile developing our traditional banking business.

  6. GFNORTE Net Income Annualized ROE EPS Book Value BANKING SECTOR Net Income w/o Afore Recovery Banking Business Contribution Capitalization Ratio Traditional loan portfolio annual growth (12 M) Past due loan ratio Past due loan ratio (excluding loans sold to Sólida) Reserve Coverage 392 15.7% 0.78 20.28 275 33% 12.9% 33.1% 3.4% - 116.1% 507 17.5% 1.01 23.58 399 25% 13.4% 27.3% 2.3% 3.5% 127.2% GFNorte Results HIGHLIGHTS (MILLIONS OF PESOS) 1Q’03 1Q’02 EPS & BOOK VALUE ARE PESOS PER SHARE . BOOK VALUE EXCLUDES MINORITY HOLDINGS.

  7. GFNorte’s Net Income breakdown NET INCOME 2001 2002 1Q’03 BANKING 85% 84% Ps 399 79% LONG TERM SAVINGS 6% 8% 75 15% AUXILIARY ORGANIZATIONS 4% 4% 20 4% BROKERAGE 2% 4% 7 1% HOLDING 3% 0% 7 1% GFNORTE Ps 507 100% 100% 100% MILLION PESOS

  8. Net Interest Margin 8.8% 7.4% 7.4% 4.7% 4.4% 4.2% 1Q’02 4Q’02 1Q’03 Net Interest Margin Average 28 days Cete Rate • NIM increased due to: • Commercial and Consumer loan growth of 38% in one year, improving the traditional loan portfolio mix. • Loan fees related to new loans granted. • Interest rates increase in 1Q’03. • Exchange rate moved from $10.44 to $10.79 pesos per dollar during 1Q03.

  9. Cete vs. NIM 9.3% 9.1% 9.0% 8.6% 8.1% 7.9% 7.5% 7.5% 7.3% 6.8% 7.0% 6.9% 6.8% 6.8% 6.7% 6.7% 5.82% 5.3% 5.2% 4.9% 4.7% 4.7% 4.4% 4.2% 27-dec 31-jan 28-feb 27-mar 25-apr 30-may 27-jun 25-jul 29-aug 26-sep 31-oct 28-nov 26-dec 30-jan 24-feb 25-mar 28-apr 06-may 2001 2002 2003 Net Interest Margin (NIM) 28 days Cetes Rate SOURCE: BANCO DE MÉXICO. CETE= 28 DAYS CETE RATES

  10. Non Interest Income 1,061 768 590 1Q’02 4Q’02 1Q’03 1Q’03 vs 4Q’02 Service 3% 485 455 470 335% Recovery 265 23 100 78% Trading 311 111 198 30% TOTAL 1,061 590 768 MILLION PESOS

  11. Service Fees 1Q’03 vs 4Q’02 1Q’02 4Q’02 1Q’03 Fund Transfers 43 46 43 (7%) 161 149 147 (1%) Account Management Fees Fiduciary 53 44 45 2% Credit Card 127 146 147 1% Electronic Banking 90 61 64 5% Other Fees Net 11 9 24 167% NET FEES - SERVICES 485 455 470 3% • Service charges’ increase in 1Q’02 has affected customer habits being now more selective in the use of financial services. • Banorte has adjusted down service charges to special clients to remain competitive. MILLION PESOS

  12. Recovery Fees 1Q’03 vs 4Q’02 1Q’02 4Q’02 1Q’03 I.- LOAN PORTFOLIOS ACQUIRED 126 (94) 53 80 (24) 44 a. Serfin Loans (1) Income 140 132 113 - Expense 60 56 70 - 100 - - Extraordinary amortization 46 (70) 9 b. Other Portfolios (2) Income 111 56 50 - Expense 65 26 41 + Extraordinary Transfer to Sólida - (100) - II.- FOBAPROA FEES 139 117 47 265 23 100 335% NET FEES – RECOVERY MILLION PESOS (1) COLLECTION RIGHTS (2) 8 PACKAGES.

  13. Recovery Banking Business 1Q’02 4Q’02 1Q’03 MANAGED ASSETS * 1. Proprietary loans 6,085 5,598 3,252 (1) 1,285 1,387 1,333 2. Repossesed assets 47,532 43,371 41,196 3. Fobaproa - IPAB 4. Acquired loan portfolios 11,932 10,390 12,548 Banorte Risk 12% 66,834 60,745 58,330 NET INCOME 1Q’02 1Q’03 Traditional Bank 288 336 Recovery Bank 144 111 BANKING SECTOR 432 447 Recovery Bank Contribution 25% 33% MILLION PESOS * ASSETS MANAGED BY SOLIDA ADMINISTRADORA DE PORTAFOLIOS (1) INCLUDES LOANS SOLD TO SOLIDA FOR PS 1.9 BILLION.

  14. Non Interest Expense - 18% 2,676 Other 12% 2,271 2,243 2,205 17% VAT & IPAB 13% 16% 14% 26% 26% 23% 27 % O&AE 13% 12 % 14% Personnel 44% 48% 46% 49% 4Q'01 1Q'02 4Q'02 1Q'03 • 18% drop in total expenses since Bancrecer’s acquisition. 11% drop in Operation & Administrative Expenses during 1Q’03 and 58% vs 4Q01. • Personnel expenses increase of 7% in 1Q’03 due to provisions created for severance expenses, medical care and personnel incentives. MILLION PESOS. FOURTH QUARTER 2001 PROFORMA FOR BANCRECER VAT = VALUE ADDED TAX O&AE = OPERATION AND ADMINISTRATIVE EXPENSES INCLUDING IT.

  15. Efficiency Ratio 1992 1996 1997 2001 Dec 2002 1Q‘03 Efficiency Ratio 55% 66% 93% 78% 105% 87% 78% 74% • Efficiency ratio has suffered after each acquisition, being able Banorte to return to adecuate efficiency levels in the following years. • After the acquisition of Bancrecer the efficiency ratio went up to 87%, returning it down to an average of 74% by 1Q’03. • Expected average efficiency ratio for 4Q’03 is 69% being highly dependent on income trend, although cost reduction efforts will continue during the year. EFFICIENCY RATIO INCLUDES TRADING

  16. Expense and Income 2001 2002 Acum Feb '03 BBVA- Bancomer Average G6 BBVA- Bancomer Average G6 BBVA- Bancomer Average G6 Banorte Banorte Banorte Expense 10,438 18,545 67,109 9,197 16,931 71,068 1,442 2,740 11,254 Income 12,005 28,558 103,789 11,401 28,229 106,514 2 4,674 17,448 # of Branches 1,182 1,752 7,074 1,063 1,663 6,768 1,065 1,659 6,763 Expense per Branch 8.8 10.6 9.5 8.7 10.2 10.5 1.4 1.7 1.7 Income per Branch 10.2 16.3 14.7 10.7 17.0 15.7 1.7 2.8 2.6 2002 Acum Mar. '03 2003 Annualized BTE BCR BTE BCR BTE BCR Direct Expense x Branch 5.0 2.0 1.3 0.4 5.2 1.5 Total Income x Branch 12.0 4.1 3.7 1.3 14.6 5.2 Direct Contribution 7.0 2.1 2.4 0.9 9.4 3.8 Annual Growth 34% 83% MILLION PESOS. BANORTE INCLUDES SÓLIDA AND IS BANKING SECTOR.

  17. Traditional Loan Portfolio 63,194 57,314 Ps 6.5 Finan. Entity Ps 1.9 Sale to Sólida 41,677 54,794 1Q’02 4Q’02 1Q’03 ANNUAL GROWTH BASE 100 1Q02 4Q02 1Q03 TRADITIONAL LOAN PORTFOLIO Commercial 14,418 17,296 17,104 30% 19% Corporate 9,102 14,186 13,090 23% 44% Mortgage 9,084 10,550 10,949 19% 21% Automobile 1,939 3,007 3,509 6% 81% Credit Card 1,098 1,684 1,831 3% 67% Electronic Payroll Loans 327 568 639 1% 95% Government Entities 5,056 5,894 6,636 12% 31% Financial Entities 636 10,009 3,556 6% 459% TOTAL 41,659 63,194 57,314 100% 38% FIGURES = MILLION PESOS. PS = THOUSAND MILLION PESOS TRADITIONAL LOAN PORTFOLIO DOES NOT INCLUDE NEITHER FOBAPROA / IPAB NOTES NOR RECOVERY BANK BUSINESS GOVERNMENT ENTITIES INCLUDE FEDERAL, STATE & MUNICIPALITIES

  18. Quarterly Loan & Insurance placement AUTOMOBILE MORTGAGE LOANS ELECTRONIC PAYROLL LOANS 9,930 22,751 1,737 22,792 1,677 20,403 1,489 7,809 8,287 1,404 7,423 17,792 6,946 62% 1,004 79% 67% 68% 10,443 81% 72% 79% 90% 80% 89% 96% 92% 82% 100% 76% 38% 33% 28% 32% 20% 19% 21% 21% 18% 10% 24% 11% 8% 4% 1Q02 2Q02 3Q02 4Q02 1Q02 2Q02 3Q02 4Q02 1Q03 1Q03 1Q02 2Q02 3Q02 4Q02 1Q03 CAR INSURANCE POLICIES LIFE INSURANCE POLICIES 29,872 20,753 17,565 17,127 16,678 15,977 63% 18,518 58% 17,158 16,530 13,626 77% 75% 74% 75% 63% 100% 100% 100% 42% 37% 37% 25% 26% 23% 25% 1Q02 2Q02 3Q02 4Q02 1Q02 2Q02 3Q02 4Q02 1Q03 1Q03 BANORTE BANCRECER NUMBER OF LOANS & POLICIES ARE ACCUMULATED DURING THE QUARTER

  19. Fobaproa - IPAB After Banorte’s expansion strategy, the proportion of Fobaproa / IPAB notes has been reducing since Traditional Loan portfolio started to rise Traditional Loans 155 Fobaproa / IPAB Notes 147 Ps 6.5 145 Ps 1.9 100 41 66% 59% 58% 71% 21% 1996 1997 2001 2002 1Q ’03 BILLION PESOS AS OF DECEMBER 2002. NET OF FOBAPROA CHECKING ACCOUNT AND LOSS SHARING PROVISIONS.

  20. Industry Growth Twelve months’ Traditional Loan Portfolio growth (*) (Excludes Fobaproa / IPAB) 38%(1) 17% 7% 1% - 3% SERFIN SCOTIA INVERLAT BANORTE BANAMEX BANCOMER SANTANDER - 41% BITAL (*) FROM 1Q’02 TO 1Q’03. SOURCE: 1Q’03 QUARTERLY REPORTS, EXCEPT BANAMEX. (1) Excludes loans managed by the Recovery Banking unit.

  21. Traditional PDL ratio breakdown PDL ratio of loans granted Interest Rate TOTAL 1Q’03 Before 31/Dec/01 After 1/Jan/02 TIIE + 4.8 COMMERCIAL 6.0% 1.1% 2.1% CONSUMER 6.3% 2.5% 4.6% 17.9% Fix - Mortgage 5.7% 1.7% 4.4% 16.9% Fix - Automobile 11.4% 2.4% 3.7% 25.0% Fix - Credit Card 6.3% 7.4% 6.6% TIIE + 23 - Electronic Payroll 65.2% 4.1% 7.7% TIIE +1.4 CORPORATE 22.0% 0.2% 7.1% TIIE +1.4 GOVERNMENT 0.0% 0.0% 0.0% TIIE +0.7 SUBSIDIARIES 0.0% 0.0% 0.0% TRADITIONAL LOANS 8.6% 1.0% 3.7% TOTAL LOANS PDL 2.8% 1.0% 2.3% TOTAL LOANS PDL INCLUDES FOBAPROA / IPAB AND RECOVERY BANK BUSINESS

  22. Loan Loss Provisions 127% 118% 116% 5,652 5,617 4,338 1Q’02 4Q’02 1Q’03 • Loans transferred to Sólida Administradora de Portafolios for Ps 1.9 billion carried a loan loss provision of Ps 1.6 billion. • Excluding the sale to Sólida, Reserve Coverage would have been 112% and Past Due Loan Ratio would have moved from 3.1% to 3.5% vs 4Q02. MILLION PESOS

  23. Banorte’s Loan mix is shifting away from the Monterrey region ……and concentrating more in Mexico City Dec01 Feb03 Loans 39% 33% Branches 16% 16% MONTERREY Dec01 Feb03 Loans 13% 11% Branches 14% 13% NORTHEAST Dec01 Feb03 Loans 6% 9% Branches 16% 16% NORTHWEST Dec01 Feb03 Loans 27% 29% Branches 22% 23% MEXICO CITY Dec01 Feb03 Loans 11% 10% Branches 15% 16% WEST Dec01 Feb03 Loans 4% 8% Branches 16% 16% SOUTHEAST Dec01 Feb03 100% 100% NATIONAL SOURCE: ABM. 2001 DOES NOT INCLUDES BANCRECER LOANS EXCLUDES IPAB AND FOBAPROA AND CENTRALIZED OPERATIONS.

  24. Comparatives to the Industry 1Q’03 ASSETS NUMBER OF BRANCHES 29.9% 28.0% 24.5% 20.9% 19.7% 14.0% 15.8% 12.5% 13.6% 4° 4° 2° 10.2% 5.5% 5.3% BBVA- Bancomer Banamex Santander Banorte Bital Scotiabank BBVA- Bancomer Banamex Bital Banorte Santander Scotiabank ROE Group CAPITALIZATION RATIO 41.7% 14.1% 14.1% 25.0% 13.4% 17.5% 17.4%(1) 13.2% 16.5%(1) 3° 3° 12.2% 13.0% 12.0% Santander Scotiabank GFNorte Banamex Bital BBVA- Bancomer Santander BBVA - Bancomer Banorte Scotiabank Banamex Bital SOURCE OF ASSETS AND NUMBER OF BRANCHES: ABM SOURCE OF ROE AND CAPITALIZATION RATIO: PRESS RELEASE OF EACH BANK. INCLUDES MARKET AND CREDIT RISKS. RULES 2003. (1) CALCULATED FOR BANKING SECTOR

  25. GF BBVA Bancomer's P/BV premium over

  26. Dividend Policy • In the Stockholders Ordinary General Assembly held on April 29th, 2003 it was approved a dividend policy of a minimum of 15% payout ratio on the recurrent net income of GFNorte, as long as there is no legal hinder and market conditions and the Group financial situation allow it.

  27. Macroeconomic Environment Budget 2003 Revised 2003 2001 2002 GDP (0.3%) 0.9% 3.0% 2.5% Inflation 4.4% 5.7% 4.3% 3.9% 28 days Cetes rate (end of the year) 6.8% 6.9% 7.8% 7.4% 28 days Cetes rate (average) 11.3% 7.1% 8.0% 7.9% Peso exchange rate (end of the year) 9.14 10.31 10.60 10.50 SOURCE: BANORTE’S BROKERAGE HOUSE BUDGET GOALS FOR 2003 • 3 - 5 year Planning Process by 2H’03 • ROE = 18% • Loan growth between 15% and 18% • Deposit growth of 6% • Net income per share = 4.20 - 4.40 pesos/share • Estimated Dividend Payment by October 2003

  28. GFNORTE 1Q03 Results

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