Bank of the Year México: Banorte
October 31, 2019
Following a high-profile merger, the new banking powerhouse reported profit increases
In June 2018, Mexican regulators approved Grupo Financiero Banorte’s bid to acquire Grupo Financiero Interacciones in a deal that created Mexico’s second largest bank by assets, loans and deposits.
The $1.4 billion cash-and-stock transaction, first announced in October 2017, marked the largest deal in Mexico’s banking sector in 17 years. Before the merger, Banorte was Mexico’s third-largest bank by loans and assets and fourth by deposits.
The merger allowed Banorte to add Interacciones’ expertise in infrastructure financing and government loans to its consumer banking business, helping to create economies of scale, improve margins and diversify sources of revenue.
The deal has started to pay off. In July, Grupo Financiero Banorte reported a 21% increase in second-quarter net profit versus the same period a year earlier. Growth during the quarter was powered by the banking business, with government lending rising 44% after the acquisition of Interacciones.
Banorte also made inroads on its digital transformation strategies. Last year, the bank teamed with Amazon and MasterCard to launch Amazon’s first-ever debit card in Mexico, a product intended to help shoppers who do not possess bank accounts to buy online. The card, known as Amazon Rechargeable, can be loaded with cash at convenience stores across the country.
Analysts say the card may serve as a bridge to help bring some of Mexico’s unbanked population into the formal economy.