Grupo Financiero Banorte (GFNORTEO) Q3 2024 earnings summary

Executive summary

• Net income for 3Q24 reached Ps 14.24 billion, up 7% year-over-year, with strong profitability, resilient margins, and stable asset quality despite political and macroeconomic volatility in Mexico.

• ROE improved to 22.9% in 3Q24, up 140bps year-over-year; bank ROE reached 31.1%, up 228bps YoY.

• Loan portfolio expanded 11% year-over-year, led by consumer (+11%), corporate (+24%), and commercial (+10%) loans.

• Maintained solid asset quality with NPLs stable at 1% and cost of risk at 1.6%-1.8%, supported by robust risk management.

• Continued focus on digital transformation, customer-centricity, and ESG initiatives, including financial education, sustainable finance, and new digital products.

Financial highlights

• Net interest income rose 13% sequentially and 8% YoY in 3Q24; NIM at 6.5% for the group and 6.7% for the bank, both at record highs.

• Non-interest income for 9M24 increased 20% year-over-year, driven by fees and premium income.

• Cost to income ratio at 35.5%, reflecting efficient expense control and operational discipline.

• Non-interest-bearing deposits grew 8% year-over-year; time deposits up nearly 20%.

• EPS for 3Q24 was Ps 5.061, up 10% YoY; book value per share reached Ps 90.23.

Outlook and guidance

• Management expects continued healthy loan origination, stable asset quality, and robust capital and liquidity levels.

• GDP growth forecast for 2024 revised to 1.3%, and 1% for 2025, with inflation expected at 4.7% in 2024 and 4.4% in 2025.

• Expecting two more rate cuts in 2024 (ending at 10%) and 200 bps cuts in 2025 (ending at 8%).

• ROE expected to remain strong, targeting around 28% at the bank level.

• Expense growth targeted to be in single digits for 2025, with ongoing efficiency improvements.