Latin Finance - September/October 2009 - 45

Mexico banorte interview Time to Grow by Jonathan Roeder exico’s largest domestically owned retail bank saw second-quarter profits dip 27% from the same period in 2008, following a decline of 16% in the first quarter. On March 9, Banorte’s shares hit 13.37 pesos, lowest since October 2004, and in August, analysts were bearish on the stock. But the reality may not be so grim. Banorte stock traded in a 35-40 peso range in August, after performing vigorously since March and outperforming the IPC index since. Meanwhile, some believe the bank can gain market share even as it battles with rising credit defaults and deteriorating asset quality. According to the most recent data from Mexico’s National Banking and Asset Commission, Banorte inched past Santander in the first quarter of 2009 to control Taking advantage: Valenzuela the country’s third-largest credit portfolio, including consumer and corporate credit and home loans. The bank controls 11.94% of Mexican credit, with a market share worth 220 billion pesos. Banorte is the second largest mortgage lender in Mexico, ranking behind only BBVA Bancomer. In an August interview with LatinFinance, CEO Alejandro Valenzuela says Banorte’s domestic ownership makes it more nimble in seizing opportunities. “It gives us a capacity to know the market well, know our clients well and know where we’re standing,” says Valenzuela, who has headed the bank since April 2008. Banorte is the last major Mexican-owned player in the industry following the 1995 Tequila Crisis. In the years following, multinational giants scooped up the majority of Mexico’s banks and today BBVA, Citigroup and Santander lead, while HSBC and Scotiabank maintain a considerable presence. For years, foreign firms appeared to have the upper hand, with their economies of scale and diversified capital flows. But as the rest of the world lives its own crisis, being Mexican may give Banorte an edge. M Banorte profit has dropped amid rising loan provisions and lower interest rates, as Mexico struggles through its deepest downturn in decades. It hopes to outfox the foreign competition. Pablo Ruiz, equity analyst following Banorte at Vector Casa de Bolsa, notes that troubled firms such as Citi and Santander have tightened the purse strings for their Mexican units as they navigate the credit crunch. “[Banorte] has been very, very agile in taking market share that competitors have left behind,” Ruiz says. “I think that in the end, this is going to leave Banorte in a much more solid position.” Vector predicts Banorte shares will finish 2009 at levels similar to August while net profits will decline 9% this year from 7.1 billion pesos in 2008. Meanwhile, Goldman Sachs, Citi, BofA-Merrill Lynch, BBVA Bancomer and JPMorgan recommend selling Banorte shares. Deutsche Bank, Credit Suisse, HSBC, UBS and Santander have a neutral outlook, while Morgan Stanley and Monterrey-based brokerage GBM rate the stock a buy. “The bank can benefit from woes at international operations for top banks,” says Tomás Lajous, equity analyst at UBS. “At Banamex, BBVA Bancomer, and Santander, capital can be/is being pulled or held tight by their parents. This should mean slower loan growth rates or portfolio declines there, opening up room for Banorte to gain share. Most specifically, this applies to the corporate sector.” However, he says Banorte will remain “far from the top three,” and adds that the bank’s losses from Comerci’s disastrous 2008 currency bets continue to weigh. UBS predicts a year-end Banorte share price of 37.50 pesos and total net profits of 6.7 billion pesos for this year. LF Benefitting From Woe UPDATE For the complete interview, see www.latinfinance.com > September/October 2009 LatinFinance 45
http://www.latinfinance.com

Latin Finance - September/October 2009

Table of Contents for the Digital Edition of Latin Finance - September/October 2009

Latin Finance - September/October 2009
Contents
Investment Banking Survey
Who Said That?
OTPP Investment Strategy
Central Bank Scorecards
Brazil Liability Management
Real Estate Equity Resurrected
Structured Finance Forecasts
Grim Outlook. Reform Required
Banorte Seeks to Grow
Peru Spending Hits a Block
BCP Sees Better Days
Caribbean Investment Report
Sustainable Banking
Legal Services Survey
Parting Shot
Latin Finance - September/October 2009 - Latin Finance - September/October 2009
Latin Finance - September/October 2009 - Cover2
Latin Finance - September/October 2009 - Contents
Latin Finance - September/October 2009 - 2
Latin Finance - September/October 2009 - 3
Latin Finance - September/October 2009 - 4
Latin Finance - September/October 2009 - 5
Latin Finance - September/October 2009 - 6
Latin Finance - September/October 2009 - 7
Latin Finance - September/October 2009 - 8
Latin Finance - September/October 2009 - 9
Latin Finance - September/October 2009 - 10
Latin Finance - September/October 2009 - 11
Latin Finance - September/October 2009 - 12
Latin Finance - September/October 2009 - 13
Latin Finance - September/October 2009 - Investment Banking Survey
Latin Finance - September/October 2009 - Who Said That?
Latin Finance - September/October 2009 - 16
Latin Finance - September/October 2009 - 17
Latin Finance - September/October 2009 - 18
Latin Finance - September/October 2009 - 19
Latin Finance - September/October 2009 - 20
Latin Finance - September/October 2009 - 21
Latin Finance - September/October 2009 - 22
Latin Finance - September/October 2009 - OTPP Investment Strategy
Latin Finance - September/October 2009 - 24
Latin Finance - September/October 2009 - 25
Latin Finance - September/October 2009 - Central Bank Scorecards
Latin Finance - September/October 2009 - 27
Latin Finance - September/October 2009 - 28
Latin Finance - September/October 2009 - Brazil Liability Management
Latin Finance - September/October 2009 - Real Estate Equity Resurrected
Latin Finance - September/October 2009 - 31
Latin Finance - September/October 2009 - 32
Latin Finance - September/October 2009 - 33
Latin Finance - September/October 2009 - 34
Latin Finance - September/October 2009 - 35
Latin Finance - September/October 2009 - 36
Latin Finance - September/October 2009 - Structured Finance Forecasts
Latin Finance - September/October 2009 - 38
Latin Finance - September/October 2009 - Grim Outlook. Reform Required
Latin Finance - September/October 2009 - 40
Latin Finance - September/October 2009 - 41
Latin Finance - September/October 2009 - 42
Latin Finance - September/October 2009 - 43
Latin Finance - September/October 2009 - 44
Latin Finance - September/October 2009 - Banorte Seeks to Grow
Latin Finance - September/October 2009 - Peru Spending Hits a Block
Latin Finance - September/October 2009 - 47
Latin Finance - September/October 2009 - 48
Latin Finance - September/October 2009 - 49
Latin Finance - September/October 2009 - BCP Sees Better Days
Latin Finance - September/October 2009 - 51
Latin Finance - September/October 2009 - 52
Latin Finance - September/October 2009 - 53
Latin Finance - September/October 2009 - 54
Latin Finance - September/October 2009 - Caribbean Investment Report
Latin Finance - September/October 2009 - 56
Latin Finance - September/October 2009 - 57
Latin Finance - September/October 2009 - 58
Latin Finance - September/October 2009 - 59
Latin Finance - September/October 2009 - 60
Latin Finance - September/October 2009 - 61
Latin Finance - September/October 2009 - 62
Latin Finance - September/October 2009 - 63
Latin Finance - September/October 2009 - 64
Latin Finance - September/October 2009 - 65
Latin Finance - September/October 2009 - 66
Latin Finance - September/October 2009 - Sustainable Banking
Latin Finance - September/October 2009 - 68
Latin Finance - September/October 2009 - Legal Services Survey
Latin Finance - September/October 2009 - 70
Latin Finance - September/October 2009 - 71
Latin Finance - September/October 2009 - 72
Latin Finance - September/October 2009 - 73
Latin Finance - September/October 2009 - 74
Latin Finance - September/October 2009 - 75
Latin Finance - September/October 2009 - 76
Latin Finance - September/October 2009 - 77
Latin Finance - September/October 2009 - 78
Latin Finance - September/October 2009 - Parting Shot
Latin Finance - September/October 2009 - 80
Latin Finance - September/October 2009 - Cover3
Latin Finance - September/October 2009 - Cover4
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