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 results amid Mexico's volatile electoral period.

• Maintained disciplined asset quality, with NPL ratio at 1.0% and cost of risk at 1.8%.

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

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

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

Financial highlights

• Net income for Q2 declined 1% sequentially to Ps 14.02 billion, but rose 7% year-over-year; H1 net income up 8% year-over-year to Ps 28.2 billion.

• ROE for Q2 reached 23.3%, up 236bps year-over-year; bank ROE hit a record 31.5%.

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

• Fee revenue grew 3% in Q2 and 16% in H1, with non-interest income up 18% year-over-year and 75% sequentially.

• Efficiency ratio at 35.5%, reflecting robust income and expense management.

Outlook and guidance

• GDP growth forecast for 2024 revised down to 1.9% from 2.4% due to political and global uncertainties.

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

• Double-digit loan growth expected to continue, especially in corporate, commercial, and consumer segments.

• Guidance maintained for most metrics, with net income guidance slightly reduced due to buyback-related foregone interest.

• Focus on sustainable profitability, balance sheet optimization, and digital expansion.