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1
Banorte Investor Day
Banorte USA
November 16, 2007
2
Index
1. Introduction
2. US Denominated Deposits
3. Inter National Bank
4. International Business
5. Banorte Securities
6. Remmittances
3
To be a cross-border financial group offering integrated
financial products and services to a diverse group of
customer segments.
To be a dual-currency financial group which offers a wide
range of products and services in U.S. Dollars and
Mexican Pesos.
Grupo Financiero Banorte’s Vision
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Mexican banking system USD denominated deposits: US$14 billion.
Mexican Nationals deposits in abroad: US$35 billion.
Banorte’s strategy:
Follow our Mexican customer and support their investments and
business operations in the U.S.
Dual-Currency Opportunity
5
Private Banking / Wealth Management / Brokerage Services
Provide USD denominated financial investment products.
Banorte Securities International.
Commercial / Retail Banking
Provide financial products and services.
Facilitate cross-border transactions for businesses and individuals.
Remittances
Provide remittance services to the non/under-banked immigrant population living in the U.S.
Banorte’s Expansion Strategy in USA
Three-pronged strategy for US Expansion :
6
Structure
Banorte USA
RemittancesU.S. Bank Brokerage/Investments
International Business
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2. Dollar Denominated Deposits
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Dollar Denominated Deposits
Banorte Dollar Deposits
Demand
Time Deposits
Total Mexico
INB
Total USA
Total
USD MILLIONS
YoYSep ‘06 Sep ‘07
BSI – Onshore
BSI - Mexico Accounts
Dec ‘06
Enlace Express
736 745 721 (2%)
18 19 25 38%
767 716 822 7%
1,521 1,480 1,568 3%
1,060 1,025 1,036 (2%)
2,582 2,505 2,603 1%
1,034 1,363 1,269 23%
18 42 75 324%
1,052 1,405 1,344 28%
3,634 3,911 3,947 9%
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3. Inter National Bank
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Benefits of INB Acquisition
INB is a well-managed institution.
Serving the high-growth border region of Texas with Mexico.
Growth drivers in the region:
• Construction and real-estate.
• Bilateral trade.
• Other commercial activities.
Serving a market with a large middle to high income Hispanic population.
INB management has been retained.
Continue to operate the bank for the coming years.
Previous Board and shareholders are still involved in the operations.
Revenue synergies with Banorte and customer referrals for INB.
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Free fund transfers between savings and checking accounts.
Free ATM withdrawals and account balance inquiries at both banks’
ATMs.
Referrals by Banorte to INB = 3,200+ new accounts with US$45
million in balances
Acceptance of checks for deposit with next day availability in both
currencies at both institutions.
Banorte Securities (BSI) offices have been opened at INB banking
centers in McAllen & El Paso.
Benefits to Customers
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New Products & Services
Mortgages to Americans purchasing Mexican Resort Properties
US$40 million funded to date with US$38 million at closing.
Potential: 2008-US$150, 2009 US$250, 2010 US$350 million
Loans secured by investment portfolios held by customers at BSI in dollars
or at Banorte in pesos
US$5 million funded to date with US$20 million at closing.
Potential: 2008 US$60, 2009 US$100, 2010 US$150 million.
Banorte Securities offices have been introduced in INB offices
$75 million funded to date in new investment accounts.
Potential: 2008 US$125, 2009 US$185, 2010 US$250 million
Competitive Foreign Exchange Platform
2007 Revenues = 3x 2006 Revenues.
13
New Products & ServicesIn Development:
INB issued credit card program to be launched in 1Q, 2008.
2008E US$15 million.
2009E US$25 million.
2010E US$50 million.
Trade financing loans programs to be offered in late 2007.
2008E US$50million.
2009E US$125 million.
2010E US$200 million.
Enhanced treasury management services
Lockbox, remote deposit capture and ACH services.
Potential: Increase in non-interest income.
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Potential New Markets
New branches to be opened in 1Q08:
Laredo
Brownsville
Potential New Markets
Texas: San Antonio / Houston / Dallas.
San Diego, California.
Details of model branch:
Approximately 4,100 sqf facility.
3 drive-thru lanes & drive-up ATM.
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INB Growth
1,085
1,205
1,473
935
1,075
1,267
678
761
945
1/26/06 11/16/06 9/30/07
Total Assets Deposits Loans
MergerAnnouncement
Date of Merger
36%
36%
40%
11%
15%
12%
Current
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9M07 Financial Highlights
9M07
Loans
Efficiency Ratio
ROE
Net Earnings (70%) 22%
Deposits
$935
4.5%
$12.4
41.6%
22.8%
$737
$10.2
20.9%
42.9%
4.7%
MILLION DOLLARS
9M06 YoY
Net Interest Margin
$1,034 $1,267
27%
23%
ROA 1.76%1.79%
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Profitability
ROA
1.83%
2005
1.81%
2004
ROE
21.6%
2006
22.2%
2004
1.65%
2006
19.4%
2007
1.73%
Sep ‘07
22.7%
Sep ‘07
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4. International Business
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International Business
Net Interest Margin
Non Interest Income
Total income
Direct Expenses
Earnings from Operations
Corporate expenses
Net Earnings (Pre tax)
Mexico
MILLION DOLLARS
YoYSep ‘06 Sep ‘07Dec ‘06
36 49 39 9%
17 23 19 7%
53 72 57 8%
4 5 4 11%
50 67 54 8%
4 5 4 (1%)
46 62 50 9%
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5. Banorte Securities International, Ltd.
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Private Banking/ Wealth Management
Growth Strategy:
Organically.
Focused on Hispanic Population:
Mexican nationals.
Mexican-Americans residing in the US.
BSI markets its services to:
High net worth individuals in Mexico.
Hispanics/US citizens and residents.
Currently, BSI has approximately US$1.1 billion in AUM.
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Synergies
INB and Banorte Securities clients will benefit from expanded
services from both Institutions:
Banorte Securities will refer clients to INB, seeking bank accounts
not available at BSI.
INB will refer clients to Banorte Securities that seek brokerage
accounts not available at Inter National Bank.
INB can provide loans to BSI customers wishing to use their
brokerage accounts as collateral.
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MILLION DOLLARS
Revenues
Expenses
Earnings from Operations
Investment Earnings
Taxes
Net Earnings
Banorte Securities Results
Sep ‘06 Dec ‘06 YoYSep ‘07
5.7 7.5 7.9 40%
4.3 5.7 5.1 19%
1.4 1.8 2.9 102%
0.3 0.4 0.2 (21%)
(0.5)
(0.8) (1.0) 95%
1.2
1.4 2.1 78%
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Highlights
Sep ‘07
Earnings from Operations 78%
ROE
AUM 3%
Efficiency Ratio
$1,078
$1.2
$1,111
$2.1
11.3% 19.1%
76.4% 66.5%
MILLIONS DOLLARS
Sep ‘06 YoY
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6. Remittances:
Banorte’s Distribution System
& UniTeller
26
(1.7%)
Banks
(2.8%)
5 %
Sep-06 vs. Sep-07
6.7%
NonBanks
Banksw/o
Banorte
1.4%
MarketGrowth
Banorte
Growth in Family Remittances
Banorte continues to grow well above the market and
other Mexican banks.
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Remittances Market
Banorte: strong payer of remittances to customers in Mexico
Payment agreements:
30+ U.S. licensed remittance companies
3 major U.S. banks (BofA, Chase, and Wells Fargo).
4 million remittances paid in 2006 = US$1.6 Billion (7% Mkt Share).
2007E transactions = 4.3 million.
Banking the beneficiaries of remittances.
Over 69,000 Enlace Express Accounts (without fees).
UniTeller will benefit from:
Additional financial resources
Correspondent banking relationships in U.S. and other parts of the world.
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Integrating the Unbanked
5,600
33,130
2004 2005
52,200
2006
Number of Customers
Sep-2007
69,600
Enlace Express:
Quasi-equivalent to free checking in the U.S.
Debit card-based.
No minimum balances or monthly fees.
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Acquisition of 100% of UniTeller: January 18th, 2007.
Background:
Based in New Jersey.
US$1.1 billion in 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.
Presence in Mexico’s rural areas - complement to Banorte’s network.
Attractive technological infrastructure:
Enough capacity to support immediate growth.
Acquisition
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Opportunities & Strategy
STRATEGY: Vertical Integration
Acquisition of UniTeller will streamline Banorte’s remittance
services.
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 efforts.
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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.
New Products & Services
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Certain statements in this document are
“forward-looking statements”. These
statements are based on management’s
current expectations and are subject to
uncertainty and changes in
circumstances. Actual results may differ
materially from those included in these
statements due to a variety of factors.
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