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, stable asset quality, and resilient margins despite political volatility in Mexico.

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

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

• Asset quality remained solid with NPLs stable at 1% and cost of risk at 1.6%.

• Continued investment in digital transformation, ESG initiatives, and financial education.

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-income ratio at 35.5%; efficiency ratio at 35.0% for 9M24.

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

• 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%, with 2025 at 1%.

• Inflation expected to end 2024 at 4.7% and 2025 at 4.4%.

• Two additional rate cuts expected in 2024, with policy rate at 10% by year-end and 8% by end-2025.

• Loan growth guidance (ex-government) close to 13%; cost of risk guidance improved due to better-than-expected performance.