Mexico¹s banking sector is in good shape with the
country¹s largest lenders largely isolated from global
turmoil and well poised to capitalize on the economy¹s
expected growth. Output is likely to get a boost in the coming
years thanks to favorable global trends, with promised reforms
from a new government possibly adding a further fillip.
All of Mexico¹s big banks should benefit from the
While not the system¹s largest by assets, Banorte has
used its integration following the 2011 merger with Ixe
Financial Group to gain ground on foreign-owned players.
³OECD discussions are about deleveraging, while the
story in Mexico is about leveraging,² Banorte chief
executive Alejandro Valenzuela tells LatinFinance.
Mexico¹s strengthened fundamentals and economic growth
have successfully lifted the country¹s financial sector
after a prolonged phase of intermittent financial crises,
Valenzuela says. With stronger Mexican economic growth
forecasted, Banorte sees itself in a position to cater to the
growing business lending market.
The bank has been integrating operations that resulted from
its merger with Ixe in 2011 a deal that has made it the
third-largest financial institution in Mexico, surpassing
Santander. This has brought size as well as a stronger
investment banking operation. With no overhang from concerns of
a foreign parent, the bank is in a strong position to grow.
It has also been expanding non-bank assets. In January, the
bank merged its Afore Banorte pension operation with Afore XXI,
one of the country¹s other large operators, becoming a 50%
partner in Afore XXI Banorte with the Mexican Social Security
Institute. Banorte¹s pension assets under management
reached $225 billion pesos ($17.8 billion) at mid-year, up from
just $86 billion pesos in 2010.
Banorte¹s strategy for the next 12 months will focus on
continued integration, says Valenzuela. It will center on
increasing profitability by extracting synergies from mergers.
The bank also wants to take advantage of opportunities for
banking penetration that exist in Mexico, and by cross-selling
consumer products to its increasing client base.
Additional acquisitions could play a role here, particularly
those that would allow it to achieve greater scale in the
pension and retirement fund business. Valenzuela says Banorte
is analyzing opportunities to scoop up the BBVA pension assets
in Mexico, part of a package the Spanish bank is looking to
unload that also includes assets in Chile, Colombia and
³We want to look and see if those assets could generate
value and if we can afford them,² Valenzuela says, noting
that the bank is in the early stages of analysis. ³We will
have a clearer picture of where it stands within three to four
months.² Banorte¹s banking assets increased to $890
billion pesos as of June 2012, which represents 14% growth from
the first half of 2011. The real growth in its total assets
under management up to $1.4 trillion pesos at mid-year
from $1.3 trillion pesos the year before and from $712 billion
pesos two years before has come from the pension and
Banorte still sits third behind BBVA Bancomer and Banamex is
most credit categories, but has seen stronger growth in several
areas in the last 12 months, most notably credit cards and
government-related lending. It says it has the second largest
market presence in commercial and SME lending following the
integration of the Ixe operations. The bank has seen an overall
increase in market share over the past 12 months to 13% from
12% in deposits and to 14% from 13% in loans.
The bank has one of the lowest non-performing loan rates in
the Mexican financial system. NPLs also remain low in the
second half of 2012, at 1.8% of total loans versus the Mexico
average of 1.9% and smaller than the 2.4% reported during the
same period last year.
Banorte will continue to work in partnership with the IFC to
support small and medium-size enterprise financing with special
guarantees, as well as other priority sectors such as
agribusiness, low and middle income housing and infrastructure
financing. SME lending does not yet match the SME¹s
contribution to GDP.
Profitability has also been strong. The bank¹s 14% and
return on assets of 1.2% at mid-year were among the
system¹s highest. LF