2014 Performance

During the year, our more than 13 million customers nationwide were segmented in terms of banking and retail banking sub-segments were created according to income and specific characteristics defined for each group.

This base was our starting point, allowing us to design and offer financial solutions tailored to each segment through appropriate channels, thus improving our relationship with customers and profitability.

With the use of cutting-edge analytical tools, we now have the ability to better understand the behavior, characteristics and needs of our clients in order to provide them with customized solutions.

These tools are being extended to branch executives, facilitating their work and boosting productivity. Knowing a customer’s profile results in more personalized service and better experiences for our clients.

Outlook for Retail Banking in 2015

We will continue promoting the development of our customers with packaged financial solutions, which offer the combinations best suited to their profile and improve our relationship with them, creating value for each customer segment and sub segment.

In this way, our campaigns will not be directed to only a single product, but to generate value through individualized proposals for each of our clients, as well as promote solution packages to generate greater cross-selling, customer satisfaction and improve profitability.

We will also strongly promote the development and use of our alternative channels, such as the Internet, ATMs and mobile phones, which provide greater productivity and convenience for our customers.

Products

Total Deposits
Ps 158.139 billion in Performing Loans Portfolios

Deposits recorded a good level of growth at 12%, with good penetration among our clients and a more efficient deposit mix.

Demand deposits registered an increase of 18%; retail time deposits 5% and Money market 4%.

Consumer Loans
Ps 158.139 billion in Performing Loans Portfolios

Banorte offers various loan products directed at different levels of consumption. Our interest as a Mexican bank is to provide support to Mexican families by offering them products to strengthen their economy and allow them to enjoy a better quality of life.

Our Consumer loan portfolio grew by 13%, totaling Ps 158.139 billion.

Credit Cards

Ps 23.209 billion in Performing Loans Portfolio 14% increase over last year

Even when the economic slowdown impacted our expectations, we registered a 14% growth and gained more customers by providing improved benefits. These encouraging results demonstrate that we still have great potential for further growth, so we will continue to implement strategies to strengthen performance.

Undoubtedly the various campaigns carried out during the year were important in obtaining these results. Among them, several campaigns stood out such as “1, 2, 3 for me”, designed to motivate customers with an offer of three products - a savings account, a credit card and recurrent internet use – with the benefit of not having to pay an annual fee; Ixe’s “From me for me”, already very well positioned, offering its cardholders an ample catalogue with a wide range of products to choose from, depending on the amount signed for in December and January; and our newest campaign, Banorte’s “2% cashback”, something completely new to the market, which has had great success and consists in refunding cardholders, who register on the website to participate in the program, 2% of the amount signed for during the Christmas holiday season.

Another strategy to promote credit card use was to strengthen the relationship between customers and businesses, by allowing our customers interest-free monthly installments for purchases made at different establishments and retail chains.

Car loans

Ps 11.074 billion in Performing Loans Portfolio 3% decrease from last year

In a weakened market, the strong competition from car manufacturers with their own financing agencies significantly affected all banks. And even though we lost one point of the market share, we continue to be strong players in this segment, ranking 4^th in the market.

Mortgages

Ps 89.758 billion in Performing Loans Portfolios 10% increase over last year

We offer a catalogue of products for different segments with improved proposals. An example of this is our offer of the lowest rate in the market - 7.99% - for one of our customer segments. We also increased program penetration with public entities to promote housing in Mexico.

Payroll loansa

Ps 34.098 billion in portfolios
30% increase over last year

We continue focusing on this important customer base which grew significantly this year, among other factors, by the purchase of the largest payroll portfolio in the market and that increasingly more companies and Government entities choose us as their bank to distribute payrolls to workers.

Also, due to high rates of performance in this large customer segment, we increased our product offer, which resulted in good penetration and expanded our market share in all loan products.

Prospects for Products in 2015

Our products recorded higher participation and growth than others in the market, we know that we still have an enormous potential. One area of opportunity is to continue to promote electronic banking and alternate channels with strategies that seek alternatives to using the telephone or a branch. For example, redeeming points can only be done over the internet or refunds from cashback programs are only realized via SMS messages on mobile phones.

We will also focus on improving portfolio quality and the cost of deposits, favoring profitability over growth, and the use of efficient and massive methods of payment such as the POS terminal.

Channels

We seek to draw closer to customers by offering options for their transactions: from a branch visit to channels that optimize their time by allowing them to make transactions 24 hours a day, 365 days a year from anywhere. The Sumando program represents a technological platform that permits communication between all channels and promotes the use of these more efficient and cost-effective alternate channels through which Ps 1.8 billion transactions were made.

Traditional Channel

Branches

1,110 Banorte + 159 Ixe = 1,269

We have a strong presence in the country with a network of 1,269 branches, which realize around 214 million transactions a year. Beginning in 2014, we implemented a new business management model that would convert each branch manager into a strategist for a customer’s business, thanks to the financial intelligence platform that allows executives to exchange information, learn more about customers and offer them personalized proposals. Today, we are the third largest bank in terms of number of branches, although in some regions as Northern, Central and West we have a greater presence that makes us the indisputable leaders.

Alternate Channels

ATMs

During the year, 587 million transactions were carried out using our 7,297 ATMs, a 12% growth with respect to 2013. We have begun to dabble in the transaction automation with multifunctional ATMs that download part of cash deposit transactions normally carried out at the teller window. With 200 ATMs already operating with this function, we will continue installing state-of-the-art ATMs that shorten transaction times, as well as working on improving our time per operation.

Internet Banking

At the end of 2014, more than 1.85 million customers rely on Banorte for Internet or Ixe Net, a growth of 18% compared to the 1.57 billion in 2013. Through this channel nearly 827 million total transactions were realized, representing a growth of 17%. Moreover, electronic banking serviced 422,568 accounts, of which 190,825 chose to receive statements via email and 153,154 have enabled the option of no home deliveries, preferring in both cases the Paperless option. This represents an increase of 12% and 7%, respectively, compared to 2013.

Telephone Banking

53 million calls answered

Through the “Don Roberto González Barrera” Contact Center customers can get information and advice about products and services, activate their cards, make transactions and contract insurance.

During the year 53 million calls were answered, 8% more than in 2013 and 16.2 million outgoing calls, 6% less than in 2013. In order to maintain the levels of efficiency and quality service, we continue to take surveys to monitor pulse of the “customer’s voice” to improve their experience.

Mobile Banking

Through a mobile financial services platform we provide an efficient, safe and sustainable global solution for all our customers; compatible with all major mobile platforms for smartphones and low-end phones, in addition, it is not dependent on mobile telephone service providers.

Pagomóvil Banorte is a service offered through Banorte Móvil, where purchases with a debit or credit card can be made at any e-commerce in Mexico. The service generates a virtual card on the mobile phone that allows you to make Internet purchases in a totally secure manner without providing the actual data of the card. This service is unique in Mexico and prevents frauds, cloning, duplications and unrecognized charges.

In 2014, over 247,000 clients used Banorte’s mobile service, which represents a growth of 29% compared to the 192,000 customers in 2013. More than 43 million total transactions were carried out, a 97% increase over last year.

As from 2014 this service can be acquired through our ATM network. Two new features were also incorporated into this channel: i) payment for telephone service (Telmex) and electricity (CFE) by scanning the billing’s bar code, thus avoiding manual deposits, optimizing times and mitigating errors and ii) the free “Notifications” service, that operates through Push messages, and has increased the rate of contact in communications with customers, positioning Banorte as one of the most innovative on the market.

At the close of 2014 there were 208,306 mobile phone tokens in use, a 95% increase over the same period last year.

Point of Sale Terminals

The total number of POS terminals amounted to more than 162,000, of which over 28,000 pertain to the Ixe network, representing an annual increase of 15%.

At the end of December 2014, we ranked second in the market with a 22% share, according to the CNBV.

In 2014, the number of POS transactions totaled Ps 224 million, representing an annual increase of 38%. Billings totaled Ps 167.300 billion, an annual increase of 4.5%, 5 basis points higher than the market according to PROSA (electronics transactions provider using ATMs, POS terminals and credit cards). This growth positioned our unit of acquired business in 3^rd place nationally in billings with a 14% market share for this concept.

Third-party correspondents

Through our third-party correspondents we support banking and provide a service that contributes to the well being of thousands of Mexicans who do not have access to financial services.

Banorte has made strategic alliances with various counterparts that have allowed us to increase our market share, permitting our services to be available to customers at more locations and with more convenient hours.

Banorte has positioned itself as a major player in this market. At the end of 2014, it had 5,400 points of contact through 7-Eleven stores (1,867), Telecomm-Telegrafos (1,676), Extra stores (1,112), Soriana (634), Control Group with the Del Sol and Woolworth brands (77) and NetPay (34) representing an increase of 30% over the 4,147 points of contact in 2013.

There was a 44% annual increase in total transactions in the correspondent bank network, from 5.9 million in 2013 to 8.5 million transactions in 2014.

Prospects for Channels in 2015

We will concentrate efforts and strategies to strengthen the use of channels now available to customers, thanks to new technological tools. And once we conclude the implementation of the three channels most frequently used by customers — e-banking, mobile banking and ATMs— we are sure that the number of transactions carried out by these means will register a significant increase. One way to achieve this will be to install multifunction ATMs in 50% of our branches by next year.