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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.
• 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 Banorte’s 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: StatisticsBi-currency: Statistics
4
Banorte’s U.S. Expansion StrategyBanorte’s 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 BankingProvide financial products and services to facilitate cross-border
transactions for businesses and individuals.
Remittance MarketProvide an integrated approach to remittances to the non/under-banked
immigrant population living in the U.S.
5
Banorte USABanorte USA
RemittancesRemittances U.S. Bank U.S. Bank Brokerage/Brokerage/InvestmentsInvestments
International International BusinessBusiness
6
WA
OR
CA
MT
WY
CO
NM
ID
NVUT
AZ OK
TX
IA
MO
IL
NC
VA
KY
PA
WV
CT
MDNJ
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%
0.6%
8.5%
4.0%
Strategic Reasons for Entering the U.S. MarketStrategic Reasons for Entering the U.S. Market
Cross Border Cross Border BusinessBusiness
Binational products for individualsBinational products for individuals
-Credit Cards-Credit Cards
-Mortgages-Mortgages
-US based deposit accounts-US based deposit accounts
Private Banking in USPrivate Banking in US
-High net worth US Residents-High net worth US Residents
-Mexicans Nationals-Mexicans Nationals
Family RemittancesFamily Remittances US Banking US Banking MarketMarket
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 ATM’s of both Banks
Acceptance of each others checks for deposit with next day availability in
both currencies.
Banorte Securities Int’l, 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.
SynergiesSynergies
8
New Products and ServicesNew 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 ServicesNew 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 facilityApproximately 4,100 sf facility3 drive-thru lanes & drive-up ATM3 drive-thru lanes & drive-up ATMCompletion is estimated for 1Completion is estimated for 1stst Qtr 2008 Qtr 2008
Details:
11
Private Banking/Wealth ManagementPrivate 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.
SynergiesSynergies
13
Remittances MarketRemittances 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 GFNorte’s 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 Banorte’s 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
Banorte’s Agreements w/ Major Corporations & Financial Institutions
15
Acquisition of 100% of UniTellerTransaction Closed on Jan. 18, 2007High 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 Mexico’s rural areas, complementing
Banorte’s banking network Guatemala, Philippines, El Salvador
Strong compliance culture Attractive technological infrastructure with enough capacity to support
immediate growth
UniTeller 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
UniTellerUniTeller (cont’d)(cont’d)
17
5,600
33,130
2004 2005
52,200
2006
Opportunity to integrate the non-banked:Opportunity to integrate the non-banked:
Enlace Express is Banorte’s 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 AssetsDollar Denominated Assets
Banorte Dollar Deposits
Demand
Time Deposits
Total Mexico
INB
Total USA
Total GFB
IN MILLONS OF DOLLARS
YTD Y on YJUNE JUNE
2006
Variance (%)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%
977 1,363 1,280 (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 JUNEDEC
2006 Variance (%)2007
International business-(México) Pre-Tax
INB Financial Corp.
Banorte Securities, Ltd.
Uniteller Holdings, Inc.
Total Earnings
21.5 58.2 25.0 16%
9.4 17.9 11.9 27%
0.8 1.4 1.3 70%
(0.1) (0.1) (0.4) (353%)
31.6 77.3 37.9 20%
21
INB June 30, 2007 HighlightsINB June 30, 2007 Highlights
Net Interest Margin 4.7%
1S07
4.5%
IN MILLIONS OF DOLLARS
Loans 721 92228%
Deposits 977 1,27731%
Efficiency Ratio 43.5% 41.3%
1S06
ROE 20.8% 23.7%
ROA 1.8% 1.8%
Net Earnings 10.0 12.524%
22
Inter National Bank: Earning Assets vs. Cost of Funds
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Yield on Earning Assets 6.36 6.43 7.04 8.15 8.39
Cost of Funds 2.29 2.05 3.03 4.28 4.73
Spread 4.07 4.38 4.01 3.87 3.66
2003 2004 2005 2006 Jun-2007
23
Inter National Bank: Net Interest Margin
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Net Interest Margin 4.32 4.67 4.47 4.58 4.49
2003 2004 2005 2006 Jun-2007
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IN MILLONS OF DOLLARS
Revenues
Expenses
Earnings from Operations
Investment Earnings
Taxes
Net Earnings
2006 Variance (%)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%
JUNE DEC Y on YJUNE
25
Family Remittance Indicators - MexicoFamily Remittance Indicators - Mexico
YTD Y on YJUNE JUNEDEC
IN MILLONS OF DOLLARS
Transactions (000’S)
Revenues
No.of Accounts-EE
Avg. Deposit Balances
2006 Variance (%)2007
Paid into Accounts
Paid in Cash
Total Paid
Direct Deposit %
1,931 3,969 2,064 4% 7%
$744 $1467 $755
$50 $119 $77
6% 8% 9%
$794 $1586 $832 5% 5%
$4.2 $9 $4.4 5% 4%
43,907 52,207 62,467 39% 42%
$17 $20 $22 20% 30%
-
-
-
- - -
- -
26
(3%)
Banks
(4%)
9 %
Market Growth(1H06 vs. 1H07)
7%
NonBanks
Banksw/o
Banorte
0.6%
MarketGrowth
Banorte
Family Remittances Paid in MexicoFamily 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
$366,005
$514,161
$687,505
$787,588
$930,822
$200,000
$500,000
$800,000
$1,100,000
2003 2004 2005 2006 Jun-2007
In ThousandsIn Thousands
% Growth 40% 34% 15% 36% Ann
29
Inter National Bank: Net Loan Losses
$297,951
$241,878
$184,713 $194,714
$274,384
$100,000
$200,000
$300,000
$400,000
2003 2004 2005 2006 Jun-2007
30
Inter National Bank: Deposit Growth
In ThousandsIn Thousands
$618,346
$796,897
$938,699
1,363,135
976,569
1,277,247
$400,000
$800,000
$1,200,000
$1,600,000
2003 2004 2005 2006 Jun-2006 Jun-2007
% Growth 18 % 29% 18% 45% YoY 31 %
31
Inter National Bank: Account Growth
17,94719,182
25,825
29,481
33,310
0
10,000
20,000
30,000
40,000
2003 2004 2005 2006 Jun-2007
% Growth 10% 7% 35% 14% 26% Ann
32
Inter National Bank: Net Earnings
$12,405
$15,203
$20,018$19,177
12,486
$26,400
$0
$4,000
$8,000
$12,000
$16,000
$20,000
$24,000
$28,000
2003 2004 2005 2006 2007-YTD 2007-Proj38%
33
Inter National Bank: Return on Average Assets
1.75% 1.81% 1.83%1.65%
1.80%
0.00%
0.50%
1.00%
1.50%
2.00%
2003 2004 2005 2006 Jun-2007
34
Inter National Bank: Return on Equity
25.29%
22.25% 21.63%19.42%
23.74%
0.00%
3.00%
6.00%
9.00%
12.00%
15.00%
18.00%
21.00%
24.00%
27.00%
30.00%
2003 2004 2005 2006 Jun-2007