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Interest, fee income drives Banorte's Q2 profit 26.6% higher


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According to Market Intelligence, April 2023

Interest, fee income drives Banorte's Q2 profit 26.6% higher

Grupo Financiero Banorte SAB de CV on July 26 posted a 26.6% rise in its second-quarter profit as the financial group booked stronger net interest and fee income.

The company, which recently became Mexico's second-largest bank following its acquisition of Grupo Financiero Interacciones SAB de CV, said that its quarterly profit reached 7.19 billion pesos, or 2.59 pesos per share, up from 5.68 billion pesos, or 2.05 pesos per share, earned in the year-ago period.

The result came as net interest income hit 17.86 billion pesos, up 17% year over year, while fee and service income grew 11% to 3.26 billion pesos. Results also included some 1.22 billion pesos in trading income, up 27% from the prior-year period, and 401 million pesos in other operating income, more than triple the amount booked a year ago.

The company's net interest margin came to 5.7% for the second quarter, which compares to 5.9% in the prior quarter and 5.4% a year ago.

Provisions for the period came to 3.84 billion pesos, down 10% from the linked quarter but up 9% year over year. Banorte's past-due loans totaled 12.89 billion pesos on June 30, up 6% for the quarter and up 19% over the year. The increase brought the company's nonperforming loan ratio to 1.97% from 1.92% three months earlier and 1.8% a year ago.

On a divisional basis, Banorte's primary banking subsidiary, Banco Mercantil del Norte SA Institución de Banca Múltiple, saw a 29% annual improvement in net profit, hitting 5.30 billion pesos, while earnings from its insurance operations grew 11% to 751 million pesos.

Banorte's Tier 1 capital ratio at quarter-end stood at 15.77%, up from 15.55% three months earlier and 13.07% a year earlier.

As of July 25, US$1 was equivalent to 18.81 Mexican pesos.