AT A GLANCE

GFNorte structure

102-1, 102-4, 102-5, 102-7, 102-45, 203-2, FS13, FS14

Throughout its history, Grupo Financiero Banorte has been characterized by growth through the acquisition of various businesses aligned with the strategy of growth, solidity and diversification. This is the reason for the solid position in holds in its various subsidiaries at present, which are shown below.

GFNorte’s equity in subsidiaries

Banco Mercantil del Norte, S.A.	98.26%
Arrendadora y Factor Banorte, S.A. de C.V., SOFOM	99.91%
Almacenadora Banorte, S.A. de C.V.	99.99%
Casa de Bolsa Banorte, S.A. de C.V.	99.99%
Operadora de Fondos Banorte, S.A. de C.V.	99.99%
Ixe Servicios, S.A. de C.V.	99.99%
Banorte Ahorro y Previsión, S.A. de C.V.	99.99%

*In July 2020 the merger of Sólida (the merging company, which continued to exist afterwards) and Arrendadora (the merged company, which ceased to exist) took effect. Additionally, Sólida changed its name to Arrendadora y Factor Banorte, S.A. de C.V., SOFOM, E.R.

GFNorte provides service to its clients through a network of channels that includes more than one thousand branches, more than 9,000 automatic teller machines, close to 17,000 correspondents and around 160,000 point-of-sale terminals. The evolution of these service channels over the past three years, as well as the transaction volume in each of them, is shown below.

*The data published last year is different from the current year due to an update.

Our geographic coverage through our branches and correspondents is as follows:

With the bank’s infrastructure, which covers the entire Mexican republic, we not only serve our clients but we can bring more financial instrument choices to more people. By supporting them with registration and payouts from Ministry of Wellness programs, 1.2 million people have benefited, 90% of them in the subprime segment (new clients).

Macroeconomic climate

Challenges and opportunities ahead in 2021

We continue to face daunting prospects for 2021, although there is more room for hope. Projections by multinational organizations like the International Monetary Fund and the World Bank look forward to a significant recovery of the world’s economy (+4.5% on average for 2021, vs. -4% in 2020), based on the efforts of central banks and governments to maintain expansive monetary policies, vaccination programs throughout the world and a gradual resumption of economic activity. The risks of these estimates lie in the possibility of new outbreaks or modified strains of the coronavirus that cannot be promptly countered by the application of vaccines, given the problems of mass production and distribution necessary to achieve herd immunity. There is the additional possibility of further financial fragility in some countries due to high debt levels, which have growth as an increasing amount of stimulus is necessary to deal with the crisis.

The outlook for Mexico is similar to the rest of the world. We expect the Mexican economy to grow by 4.1% this year, driven mainly by external demand. This assumes a likely boost from the implementation of USMCA, the new free trade agreement between Mexico, the United States and Canada, parallel to the new strategy of global regionalization to mitigate the risk of an overconcentration of sourcing from China. Additionally, the continuation of ambitious fiscal stimulus in the United States may mean significant opportunities for Mexican exporters. Expectations on domestic demand are more cautious, with substantial challenges remaining in the first half of the year, but a brighter outlook for the second half. The most significant of these challenges lie in investment, discretional consumption and non-essential services. The scope and degree of the vaccine’s efficiency will be a key catalyst for creating conditions more favorable for domestic demand.

Within this general outlook, we stand firmly by our commitment to being a strategic partner to Mexican families and businesses. Banco de México is likely to resume its policy cycle of easing monetary conditions, with a benchmark rate that could end the year at 3.50%. This in a context of economic growth that still lags behind what it had achieved before the pandemic, and inflation that may end the year at 3.7%, within the range of tolerance above and below Banxico’s 3% target. In terms of fiscal policy, 2021 may be similar to what we saw in 2020. Based on this macroeconomic framework, Mexico is expected to maintain its investment grade status with the world’s leading rating agencies.

This year, too, we must take into account some important geopolitical factors. The electoral agenda this year is intense around the world, and in Mexico mid-term elections are programmed for June 6th, with a little more than 21,000 elected offices at stake. Among them are 500 seats in the federal Chamber of Deputies, 15 governorships and 30 local congresses. This will be Mexico’s most important midterm election in history.

In addition to being a crucial year in terms of economic recovery, 2021 will be decisive in the transition toward a new post-pandemic reality. We can expect a sweeping restructuring on various fronts: operating, logistical, financial and more. This will almost certainly pose a new paradigm that we will all have to assimilate. But we at Banorte have an unwavering commitment to responding promptly and effectively to such challenges, supported largely by new digital and technological solutions and tools, and with the constant aim of providing the greatest benefit to our clients.