Grupo Financiero Banorte (GFNORTEO) Q2 2024 earnings summary

Executive summary

• Net income reached Ps 14.02 billion in Q2 2024, up 7% year-over-year, with ROE at 23.3% and resilient domestic demand supporting robust loan growth across all segments.

• Maintained disciplined asset quality, with NPL ratio at 1.0% and cost of risk at 1.8%, while reducing balance sheet sensitivity to interest rate cycles.

• Continued digital transformation and sustainability initiatives, including the launch of Bineo digital bank, Green Mortgage, Mujer PyME loan, and publication of responsible investment reports.

• Subsidiaries contributed positively: bank net income +7%, insurance +30%, annuities +22%, Afore +3% in 1H24.

• Core deposits surpassed Ps 1 trillion, up 14% year-over-year, with a stable funding mix.

Financial highlights

• Net income for Q2 declined 1% sequentially to Ps 14.02 billion, but H1 net income rose 8% year-over-year to Ps 28.2 billion.

• Net interest income grew 12% year-over-year but fell 8% sequentially; non-interest income rose 18% year-over-year and 75% sequentially, driven by insurance/annuities and higher net fees.

• Net interest margin at group level was 5.7%, and at bank level 6.4%, up 10bps sequentially.

• Cost-to-income (efficiency) ratio at 35.5%, below guidance, with non-interest expenses up 13% year-over-year.

• EPS for the quarter was Ps 4.911, up 8% year-over-year.

Outlook and guidance

• GDP growth forecast for 2024 revised to 1.9% from 2.4% due to political transition and U.S. election uncertainty.

• Inflation expected at 4.4% year-end; reference rate to end 2024 at 10.5%.

• Loan growth guidance maintained at double digits, with strong demand across corporate, commercial, and consumer segments.

• Net income guidance slightly reduced due to foregone interest from buyback program, but EPS guidance maintained.

• Management remains focused on sustainable profitability, balance sheet optimization, and digital transformation.