1 Strategy and Perspectives for 2008 Banorte Investor Day November 15, 2007

1

Strategy and Perspectives for 2008

Banorte Investor Day

November 15, 2007

2

1. Results Overview for 2007

2. Asset Quality

3. Industry Trends

4. Outlook for 2008

5. Final Remarks

Contents

3

1. Results Overview for 2007

4

YTD Financial RecapCONSTANT MILLION PESOS

Performing Loan Growth

Past Due Loan Ratio

Net Income

ROE

Stock Price

Book Value

P/BV

Net Interest Margin

Tax Rate

9M079M06

23% 29%

4,548 11%

34.66

2.71

7.8%

24%

2.73

7.4%

5,044

42.92

38% 34%

25% 23%

12.78 15.71

1.6% 1.5%

23%

11%

5

Comparable Results

Net Interest Income 10,547

9M07

12,30117%

Non Interest Income 5,198 5,88713%

Total Income 15,745 18,18816%

Non Operating Expense 9,521 10,4229%

9M062007 accounting standards

CONSTANT MILLION PESOS

6

Efficiency Ratio

59%

2004

55%

20062003

76%

57%

2005 Sep‘07

57%

53%

Accounting+

Investments

Efficiency is moving towards our medium term target of low 50’s.

7

Net IncomeCONSTANT MILLION PESOS

Recurring

Non Recurring

9M04

4,122

9M05

4,548

9M06

1,871

5,044

9M07

CAGR 39%

4,838

4,748

Recurrent profits continue to improve on a yearly basis.

8

Net Interest Margin vs CETESPERCENTAGE

Average CETE:

9M05: 9.39%

9M06: 7.25%

9M07: 7.13%

CETES

NIM

9.5

8.6

7.6

7.17.0 7.0

8.38.5

7.5

7.78.0

7.9

7.0 7.1 7.2

7.17.5

7.7

3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07

87%

107%

Average NIM for 2007 and 2008 should be close to 7.5%.

9

Evolution of Loans & Deposits

Performing Loan Portfolio(YoY)

23%

3Q06

22%

3Q05

Core Deposits(YoY)

17%

3Q06

3%

3Q05

29%

3Q07

20%

3Q07

12%

3Q04

8%

3Q04

The current Loans to Total Deposits ratio is less than 85%.

10

Core DepositsCONSTANT BILLION PESOS

Mix

Demand

Time

Demand

Time

Total

Deposits 3Q05 3Q073Q06

95

61

156

61%

39%

100%

82

48

130

63%

37%

100%

70

42

112

63%

37%

100%

20%17%

16%

28%

18%

16%

YoY Changew/o INB

11%

7%

10%

11

CONSTANT BILLION PESOS

Performing Loan Portfolio

3Q06 2Q07 3Q07 QoQChange

YoY

Commercial

Corporate

Government

Total

Consumer

YoYw/o Extras

3Q06 2Q07 3Q07

134165 173

39%5%

32%(1%)

32%4%

29%5%

17%6%

67

30

18

173

58

63

30

17

165

55

48

23

13

134

50 25%

23%

12

Performing Consumer Loan PortfolioCONSTANT BILLION PESOS

QoQChange

YoYYoY Changew/o Extras

Consumer

Car Loans

Credit Card

Payroll Loans

Mortgage

3Q06 2Q07 3Q07

3Q06 2Q07 3Q07

50 55 58

6%1%

45%7%

24%6%

17%6%

10%6%

7

13

6

58

33

7

12

6

55

31

6

9

5

50

30

25%

23%

13

Transformation of the Loan Book

2001 2007

Commercial & Corporate

23%

Government & Fobaproa

69%

Commercial &Corporate

56%

Mortgage19%

Government10%

Mortgage6%

Consumer2% Consumer

15%

14

Evolution of Savings in Mexico

20072001

Deposits

54%

Brokerage

20%

AFORE + Insurance

21%

Mutual Funds

8%

Deposits

42%

Brokerage

21%

AFORE + Insurance

28%

Mutual Funds

12%

Source: Banco de México, CNBV and SHCP

15

Evolution of Credit in Mexico

20072001

Corporate

67%

Mortgage

12%

Consumer

12% Government

9%

Corporate

39%

Mortgage

14%

Consumer

29%

Government

18%

Source: Banco de México, CNBV and SHCP

16

Key Metrics

17

Infrastructure

Distribution network 9M07

Branches

ATM’s

POS’s

1,023

3,513

26,627

Employees 17,218

978

3,033

19,050

15,410

9M06

5%

16%

40%

12%

18

Footprint Expansion (Branches)

960

2004

459

2001

1,023

Sep‘07

456

1998

19

Assets under Management

Bank

Brokerage

Long Term Savings

326

171

2006

55053

263

130

2004

430

37

343

183

Sep‘07

58155


20

Customers

4.4 4

3.2

2.7

2.4

Bank

Afore

Insurance

10.3

5.1

3.4

3.7

12.2

4

2.4

5.6

3.2

3.4

12.2

20062004 Sep‘07

MILLIONS

21

2. Asset Quality

22

Asset Quality

Past Due Loans

Loan Loss Reserves

RESERVECOVERAGE

PAST DUE LOANRATIO

Total Loan Portfolio


3Q06 2Q07 3Q07

2.2

3.7

137

2.5

3.6

169

2.7

3.6

176

132%

172%141%

3Q06 2Q07 3Q07

1.5%1.6% 1.5%

3Q06 2Q07 3Q07

23

Past Due Loan Ratio

2.0%

2004

5.4%

2001

1.5%

2007

5.8%

1998

24

Sep’06

3.7%

Banorte Other Major Banks

4.6%

Sep’07

5.1%


6.3%

Credit Cards

PDL Ratio vs. Industry

Source: Asociación de Bancos de México (ABM)

25

Mortgage Loans

2.5% 2.9%2.4%

3.3%



Sep’06 Sep’07

PDL Ratio vs. Industry


26

Conservative origination policies

Formal economy

Low LTV of loan book 52%

House value > 300,000 pesos

Adequate payment mechanisms

Transparency in terms and conditions

Mortgage Loans

27

3. Industry Trends

28

977914

425

1,801

1,5411,359

1,022960

504

1,730

1,4511,347

Bancomer Banamex HSBC Banorte Santander Scotiabank

Branch Network

Banorte 2007e = 1,046.

+4%

+1%

+5%

+5%

+18%

Industry growth: +7%

+6%

Sep’06 Sep’07


29

5,1615,947

5,618

3,8373,513

1,257

4,7315,542

5,353

3,3213,036

1,122

ATM Network

+7%+9%

+5%

+16%

+16%

+12%

Sep’06 Sep’07

Bancomer Banamex HSBC Santander Banorte Scotiabank

Industry growth: +11%

Banorte 2007e = 3,669.


30

2003 2004 2005 2006 2007

Cost-Weighted Core Deposits

BBVA

Banamex

HSBC

Santander Banorte

Scotiabank

32%

24%

6%10%

16%

12%

29%

25%

17%

12%

12%

5%

Market share

Source: Internal calculations with data from Asociación de Bancos de México (ABM)

31

Growth Sep‘06 – Sep‘07

Cost-Weighted Core Deposits

Banorte

16%

Market

6%

Source: Internal calculations with data from Asociación de Bancos de México (ABM)

32

2003 2004 2005 2006 2007

Performing Loans

BBVA

Banamex

HSBC

Santander

Banorte

Scotiabank

31%

23%

14%

9%

13%10%

34%

20%

15%

7%

12%13%

Market share


33

Performing Loans

29%28%

BanorteMarket



34

2003 2004 2005 2006 2007

Mortgages

34%

25%

8%

9%

14%

10%

BBVA

Banamex

HSBC

Santander

Banorte

Scotiabank

45%

14%12%

11%

9%

8%

Market share


35

2003 2004 2005 2006 2007

Consumer Loans

31%

26%

8%

9%

15%

BBVA

Banamex

HSBC

Santander

Banorte

Scotiabank

11%

34%

25%

17%

13%

7%5%

Market share


36

Credit Card Outstandings

Banorte

46%

Market

31%



37

2003 2004 2005 2006 2007

Government + Corporate Loans

BBVA

Banamex

HSBC

Santander

Banorte

Scotiabank

31%

21%

7%

13%

17%

10%

30%

21%

17%15%12%

5%

Market share


38

Government Loans

Banorte

40%

Market

(3%)



39

Past Due Loan Ratio

Sep‘06 Sep‘07

Industry Average: 2.4%

2.6%

2.2%2.5%

2.1%

1.6%

0.9%

3.4%

2.8%2.6% 2.5%

1.5% 1.5%

HSBC Scotiabank Banamex Bancomer Banorte Santander


40

Reserve Coverage Ratio

-24

204 199

181172

153 148153163

184

132 145

124

Bancomer Santander Banamex Banorte HSBC Scotiabank

Sep‘06 Sep‘07


41

4. Outlook for 2008

42

Progress of 2007 Initiatives

Expansion of Distribution

Network

Integration of Banorte USA

Ramp-up of Credit Card Platform

Re-focus Long Term Savings

business

Bancarization of lower income

segments

Plan: 29 new and 41 renovations

Actual: 52 new and 18 renovations

Offshore deposits

Cross-border mortgages

From 172,000 to 1.5 million cards in the last 3 years

Annual growth of 50% in outstandings

New fees in AFORE: Growth

Change in management

Entry level deposit products

Remittances

43

Low correlation between banking sector and economic growth

Balance between growth, asset quality and profitability

Execution of infrastructure expansion program

Greater focus on deposits and fee income

Explore alternate channels

Challenges 2008

44

2008 Initiatives

Distribution Network

Banorte USA

Micro-lending business

Deepen Bancarization

50 new branches + 50 renovations

600 ATM’s

Investment: US $45 million

New markets / products

Organic growth

Emphasis on asset quality

Overhaul of business model

Alternate channels

Broaden customer base

Emphasis on SME’s

Heavily under-banked

Next secular growth story

45

Loan growth: +22% - 24%

Average NIM: 7.5%

Efficiency ratio: below 55%

Net income: Ps $8.0 billion

EPS growth: +18% - 19%

ROE: +/- 22%

Outlook for 2008

46

5. Final Remarks

47

Medium Term Strategies

Take the fullest advantage of growth opportunities in the

Mexican Financial Sector:

Innovating

Developing competitive products

Penetrating new markets

Investing intelligentlyIn talent

In infrastructure

48


Alert to a more dynamic & competitive environment:

Old and new forces

Client loyalty and retention

New income segments

Alternate distribution channels

49


Maintain 20/20 vision:

Focus on core earnings

Efficiency

Emphasis on asset quality

Balanced funding

Robust capitalization

Positive operating leverage

Cost containment

50

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.

51

Documents

1 Strategy and Perspectives for 2008 Banorte Investor Day November 15, 2007