We offer financial liquidity and investment solutions for social infrastructure development.

Infrastructure and Development Banking

Grupo Financiero Banorte and Grupo Financiero Interacciones merged in July 2018 to strengthen the area of public sector financing. Today, we offer financial liquidity and investment solutions for social infrastructure development at all three levels of government— with direct financing to states and municipalities— as well as to contractors and suppliers.

We specialize in lending in which the repayment source will be public funds. Our products provide financial viability to infrastructure projects and government procurement, providing precise monitoring, and guaranteeing they are carried to completion.

We also lend certainty to government initiatives, creating synergies with the private sector.

As part of our high degree of specialization, we have a Market Intelligence Unit that conducts technical, economic, financial and political analysis of the sectors in which we participate in order to assertively promote our products and services and anticipate important business opportunities. This unit also supports the institutional relationship effort with current or potential customers.

GFNorte and GFInteracciones merge to support public sector financing

We provide the following specialized products and services:

1. Direct financing (DIFI)
Financial solutions tailored to the needs of state and local governments that generate long term productive public investment to enable them manage temporary liquidity shortfalls —periods of under a year:

• Direct credit to states and municipalities
• Interest rate hedges

DIFI makes it possible for state and municipal governments to develop their communities through social impact projects; it also helps governments resolve seasonal fluctuations in revenue and expenditure. We provide legal and regulatory consulting based on our thorough knowledge of public finance market related legal and regulatory issues.

We have earned our customers’ trust thanks to our prompt attention, high degree of technical specialization, and thorough knowledge of Mexico’s Law on Financial Discipline to ensure healthy public finances.

In addition, we offer support and consulting services for reordering and strengthening finance at all three levels of government, at the same time as we support the development of basic and productive social infrastructure.

With our interest rate hedging products, we help shield state and municipal public finance from market volatility.

2. Contractor Financing (FICON)
We finance contractors engaged in public federal, state and municipal infrastructure projects in the form of:

• Public-private partnerships
• Financed public works
• Traditional public works
• Concessions

The FICON model guarantees the correct execution and completion of public works on time and in due form. We design unique structures for each project in order to mitigate a variety of risks in the construction and execution process, in providing services, and in operations and maintenance.

We have a highly specialized technical area (UASPI) for assuring control and oversight of project management from start to finish. When necessary we issue preventative risk alerts for risk mitigation purposes.

3. Supplier financing (FIPRO)
We offer timely liquidity to suppliers to all three levels of government so that they can continue to attend to public sector needs:

• Financing to suppliers of goods and services to all three levels of government.

FIPRO offers benefits to governments and suppliers alike. It entails no liabilities or costs for governments and their agencies. It makes possible payment planning in keeping with budgetary availability by incorporating a timeline for contractual payments. For their part, suppliers access the resources necessary to meet their contractual commitments.

Social impact

The projects we finance have high social impact with significant benefits both for the public and private sectors. They address fundamental needs of communities by developing basic infrastructure.

Although Mexico’s political and economic environment can undergo sudden changes, we have the capacity to remain public administration’s natural ally for financial solutions, making us the main driver of their priority projects.

Portfolio and beneficiaries

Types of projects:

	Mobility: roads, paving, bridges, tunnels, international bridges and public transport.
	Water: treatment plants, collectors, potable water distribution and sanitation infrastructure.
	Urban complexes: administrative cities, integral public service centers and parking facilities.
	Education: museums, sports complexes and school infrastructure.
	Energy: electric power transmission and distribution lines, pipelines, luminaires, and infrastructure for petroleum extraction and clean electric power generation.
	Health: hospitals (general and specialty).
	Security: penitentiaries and barracks for those changed with maintaining public order.

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Correspondents

Ever closer to our customers

We bring banking closer to our customers in towns with limited access to banks. Through our network of correspondents —retail chains separate from Banorte, with their own staff and equipment— we provide our customers a range of services such as payments, deposits, withdrawals or checking your account balances in real time just as if they had conducted such business directly in one of our branches.

We promote financial inclusion in Mexico through Banorte correspondents for two reasons:

1. Many of our banking agents are present in areas where we have no branch offices, allowing us to bring our products and services to people far from our branches, without the need to invest in major infrastructure.
2. Correspondents bring our services closer to customers with no previous banking experience.

Correspondents are great drivers of financial inclusion for Mexican development.

Number of municipalities in Mexico: 2,459. Source: www.inegi.gob.mx
Poverty index data taken from: www.coneval.gob.mx
Learn more about growth in bank agent infrastructure in the Our Coverage section.

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In support of Mexico’s development, we incentivize relations with domestic suppliers through our value chain.

This year, 96% of our suppliers (1,681) were domestic, and 95% provided some type of service to the institution.

To ensure that integrity and sustainability permeate our entire operation, we disseminate healthy business practices through our value chain.

Since 2012, we have asked all our suppliers to sign contracts affirming that they are aware of and apply the 10 UN Global Compact Principles. We apply a questionnaire to new suppliers in keeping with the criteria laid out in the Global Compact’s Supply Chain Sustainability – A Practical Guide for Continuous Improvement (2nd edition), which allows us to detect risks associated with failing to comply with applicable laws, as well as learning of their corporate sustainability and social responsibility initiatives.

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Fundación Banorte

Fundación Banorte embodies our sense of shared responsibility for this country and for its people. We want to play a part in Mexico’s progress and ensure that the social investment of this Financial Group obtains the greatest possible return.

Accordingly, we have joined efforts with various allies, and allocated a substantial amount of funding to transform education for the 21st century through the “Banorte Educational Leaders” program, because we are convinced that this is the best tool for social mobility.

We have two other programs: 1,000 Dreams to Fulfill, through which we support the dreams of many young people; and Disaster Support, through which we help rebuild communities affected by natural disasters.

Social investment by Fundación Banorte in 2018 totaled Ps. 88 million, directly benefiting 359,417 Mexicans throughout the country. These results were made possible by the strategic alliances we have formed with non-profit organizations, academic and public institutions and authorities at all three levels of government.

Banorte Educational Leaders

We transform preschool education in the 21st century through network of learning, continuing education, multiplication of good practices and mentoring of preschool educational leaders. With this, we strengthen their role as agents of change and support girls’ and boys’ right to learn.

1. We train public preschool directors in leadership and management to strengthen their role as agents of change in their school community; and support the formation of socio-emotional skills.
2. We created one of the largest learning communities in the country for preschool directors, to offer continuing education.
3. We launched the “Transform your School with Fundación Banoarte” Prize to recognize best leadership practices in schools.
4. We developed the first Preschool Leadership and Innovation Forum in Mexico for more than a thousand administrators from across the country.
5. We are continually evaluating the program with a specialized external consultant.
6. The Ministry of Public Education of Campeche state is handling replication of the program for other educational levels. Every two years, we expand the program to other states of Mexico.
7. We document the program and collect information to support our quality education recommendations to the authorities.

This program is currently active in Aguascalientes, Campeche, Hidalgo, Puebla, Sonora, Mexico City and Mexico State, and is held biyearly, in each semester of the school year. Out top achievements of 2018 were:

• We completed training for 1,171 public preschool directors and supervisors through the International Specialization Course for Transformative Educational Leaders.
• We held five graduation ceremonies in which 648 school directors and supervisors received their certifications.
• We obtained international certification from the University of Cambridge for 521 Banorte Educational Leaders.
• We developed the Virtual Learning Community (VLC), a resource center that offers continuing education for our graduates and a peer-to-peer learning network currently used by 1,583 educational leaders.
• We created content specializing in the development of socio-emotional skills, to support implementation of the Preschool Educational Model. We also created a series of 14 chapters on childhood development between 0 and 6 years, which will be disseminated through our VLC and educational television, benefiting 2,941 primary caretakers of children.
• We supported the formation of socio-emotional skills for 886 educational leaders through the “Educating in Balance” online course. We provided an introduction to the topic for 782 preschool directors through live workshops in six states of Mexico.
• We incorporated directors and community educators from Childhood Development Centers (CDCs) who provide preschool education services in disadvantaged communities of Mexico City and the metropolitan area, with which:
  • We strengthened leadership and management skills of 60 educational leaders belonging to 30 CDCs.
  • We helped 30 community educators obtain Standard EC0435 certification from the Ministry of Public Education’s National Council for Job Skill Standardization and Certification (CONOCER), which covers the provision of services for attending to, caring for and supporting comprehensive development of children in CDCs.
  • We promoted the academic advancement of 60 educational leaders from CDCs and provided training to 10 of them to help them pass their licensing exam with the National Higher Education Evaluation Center (CENEVAL) toward obtaining their undergraduate degree in Preschool Education.
• We organized the first Preschool Leadership and Innovation Forum, a space for inspiration and specialized learning at this educational level, which was attended by 1,232 professionals —directors, supervisors and educators— from 23 states of Mexico, who for two days had an opportunity to hone their skills, reflect, discuss with their peers and share national and international experiences.
• We created the Transform your School with Fundación Banorte prize, which is intended to recognize and strengthen school communities that develop effective leadership practices and innovation to improve the learning experience for students and strengthen ties with the community. The call for entries was sent to public preschools and CDCs, with a total of 119 entries received.
• We carried out an acceleration process for the 25 finalist educational leaders, in order to identify areas of opportunity and strengthen their practices, which will help empower and multiply them.
• We awarded outstanding practice awards to three public preschools and three CDCs; and provided assistance and counseling to the professionals responsible so that they could improve these practices and spread the word about them, to benefit their educational community.

1,000 Dreams to Fulfill

We support Mexican youth who show academic, artistic, and sports talent, as well as those receiving special education, helping them fulfill their dreams. We provided each student with a stipend for a three-year period and encouraged them to continue their studies and maintain a level of excellence in their activities. In 2018:

• We provided 1,575 scholarships to children of GFNorte employees.
• We selected 571 new scholarship recipients to receive support starting in January 2019. With this, we have helped make dreams come true for 2,146 young people.
• We reached out to secondary and undergraduate students from 31 states of Mexico and brought 964 young people into the B21 platform, an online resource center to complement their extracurricular education and strengthen the skills needed for the 21^st century. These young people participated in 1,199 free courses.

Disaster Aid

We coordinated an action plan to help rebuild homes and restore means of support in nine communities of seven states of Mexico that had been affected by the September 2017 earthquakes. This action plan is part of the comprehensive “Banorte Adopts a Community” program which will support these communities for three years. In 2018:

• We completed reconstruction of a crafts market and 370 homes in adopted communities, and continued work on rebuilding and repairing another 245 homes.
• Together with the United Nations Development Programme, we held four practical workshops on home reinforcement in earthquake-prone areas, which resulted in the creation of a Manual on Structural Reinforcement of Housing, with publication funded by Banorte.
• We strengthened do-it-yourself construction skills for beneficiaries and provided training in community organization, resilience, mutual assistance and learning a trade, to strengthen the social fabric of the community.
• We conducted 15 on-site visits to selected communities to oversee project progress, interview beneficiaries and identify opportunities for development of interventions in the second and third years.
• We participated in the comprehensive actions of the “Banorte Adopts a Community” program in seven communities visited during the year, which received particularly valuable support from the GFNorte corporate volunteer corps.

Other Philanthropic Support

We donate to philanthropic actions and counterpart funds to resolve issues affecting communities where we have a commercial or service presence, to those whose programs relate to Fundación Banorte’s strategies, or to the concerns of Group employees and senior management, as well as to union causes.

In 2018 we provided opportunities for educational access to poor and unprivileged youth and the homeless; we gave young people with intellectual disabilities opportunities for independent living; we supported access to educational and cultural institutions for more than 300,000 people and fostered dialogue with political candidates on the issues of infant and early childhood development and preschool education.

Special Projects

As we do every year, we provided advice and helped design and operate social assistance initiatives within GFNorte, raising awareness on matters of philanthropy and social commitment and encouraging participation by members of our own community.

AyuDamos (We Give Help)

• We helped design a call for entries and nomination form for social causes aimed at Group employees.
• We reviewed nominations and identified the most viable projects.
• We helped monitor and follow up on the selected projects.

Tarjeta 40 (credit card with support for social causes)

• We followed up on the application and verified the use of the donations made in 2017.
• We helped identify organizations participating in the Social Cause program to ensure that the nominated programs were viable and had a high community impact.

With all the actions taken over the course of the year, we were able:

• To maintain Fundación Banorte’s leadership in developing 21^st century education in Mexico, strengthening the role of educational leaders and empowering the work of teachers.
• To escalate the Banorte Educational Leaders program, replicate our good practices and work to position preschool education and one of the most important academic levels in a person’s life.

In 2019, we intend to continue generating social value for Grupo Financiero Banorte through systematic, high-impact social investment in the communities where we operate and with which we coexist. In our philanthropic work, GFNorte will continue to act as a key investor in quality preschool education for the 21st century, promoting the talent of the Mexicans of today and the future. We will also redouble our efforts in solidarity with communities as they recover from natural disasters or emergencies, and we will fortify our social practices so we can continue meet the expectations of our customers and our investors.

AyuDamos (We Give Help) is Banorte’s philanthropic trust, funded through voluntary donations by our employees, and to which Banorte Foundation makes a matching contribution for each peso donated.

It funds projects chosen by a selection committee comprised of volunteer employees that visit and review each and every one of the institutions. In this way we strengthen a culture of donation and social work among our employees.

In 2018, we decided to direct the trust’s first invitation to institutions with which we have established an alliance for the Banorte Adopts a Community program with the aim of strengthen actions in communities affected by the earthquakes of September 2017.

In the second invitation, the trust appropriated Ps. 3,315,456.00 to 16 institutions that submitted projects. The funds were distributed as follows:

In line with our sustainability model and the “Our People” pillar, this program is one part of the Bank’s community intervention effort, promoting activities that contribute to teir development through actions with an enduring effect.

The volunteer work model is built on three axes:

• Community. Concentrate all intervention initiatives in communities where we operate through activities that contribute to community development. These initiatives are “Playing, Playing;” “Working for my community;” volunteer activities with natural disaster relief campaigns, Financial Education workshops provided in communities, as well as the visits our territorial ambassadors pay to Social Society Organizations that request donations from the AyuDamos trust.
• Environment. We conduct activities directed at lowering our environmental impact.
• Experiencia Banorte. Our volunteers are experts in various subjects and share their knowledge through workshops, conferences, classes or mentoring to diverse sectors of the public.

Community

Playing, Playing. This is our annual toy drive. Gifts are donated by Banorte employees from throughout the country, and costumed volunteers deliver them to community centers, civil society organizations and communities that are part of Banorte Adopts a Community program.

In 2018, we collected 30,825 presents consisting of school kits that contain professional notebooks, pencils, pens, and pencil cases as well as backpacks and toys.

This year we sent 501 school kits to communities affected by the 2017 earthquakes that also form part of the Banorte Adopts a Community program.

Working for my community. An initiative that promotes social organization by communities and employees in order to build community alliances, foster solidarity and encourage the active involvement of volunteers in community development and in actions with a lasting impact.

In 2018, we entered into an alliance with Fundación Hogares, I.A.P. to promote four days of volunteer work:

1. Hidalgo, Santa María Tecajete. We helped rebuild the local market: We dignified the area by installing a fixed structure and counters from which local commerce can be conducted.
2. Morelos, La Nopalera. When a meeting of this community affected by the 2017 earthquake prioritized recovering public spaces, we installed a pocket park and painted the surrounding housing.
3. Mexico City, Tlalpan. For the second year, we went to this neighborhood to rehabilitate a walkway, on which we painted a street mural. We also helped clean surrounding streets.
4. Mexico State, San Diego Linares. We installed a lecture hall that can be used for informative gatherings, for conducting workshops or projecting movies. We also planted trees and did maintenance work on a neighboring park.

In each of these activities, our volunteers created bonds with the community and with Fundación Hogares personnel, and in that way helped raise awareness of social problems and community organization.

Volunteers from the Torre Sur corporate headquarters in Monterrey organized a drive to collect plastic bottle caps for the Alianza Anticáncer Infantil, A.B.P. center. They offered the children a workshop on cooking and movies, and delivered the bottle caps with which to purchase wheelchairs.

Natural disasters. The Banorte Adopts a Community program arose out of the 2017 earthquakes, and through it we have adopted nine communities in the states where homes needed to be rebuilt. The bank volunteers located near those communities undertook a series of activities that were to become part of the reconstruction program:

• San Francisco del Mar, Oaxaca: making ecoblocks and cleaning up three damaged homes.
• Tonalá, Chiapas: painting and applying final protective coats to two homes.
• Santa Cruz Cuautomatitla, Puebla: painting the walls of 10 rebuilt homes.
• Tlayacapan, Morelos: grounds work and cleaning of homes that were being prepared for their owners.
• Jojutla, Morelos: painting a mural inside the Juan Antonio Market, Tlaxcoapan; Civil Protection signage and fire extinguishers were installed.
• Ocuilan, State of Mexico: painting exterior walls of homes and landscaping.