Mexico’s Banorte sees profitability boost for 2023, following strong Q4 By Reuters

© Reuters. FILE PHOTO: The logo of Grupo Financiero Banorte is pictured at its headquarters in Mexico City, Mexico, August 10, 2017. REUTERS/Ginnette Riquelme

MEXICO CITY (Reuters) -Mexico’s Grupo Financiero Banorte expects to grow its profitability in 2023, it said on Thursday, after reporting a 28% year-on-year increase in fourth-quarter net income.

The bank forecasts a net income this year of between 50.5 billion pesos and 52.5 billion pesos, it said in a presentation, up from the 45.4 billion pesos it posted last year.

It added it expects a total return on equity (ROE) in 2023 of between 19.5% and 21.0%, up from the 19.2% seen in 2022, while total expenses are expected to grow by between 11% and 13%, including those of digital bank Bineo.

Loan growth is forecast at between 6% and 8%.

The financial group expects to launch its new digital bank in the second or third quarter of 2023, Chief Executive Marcos Ramirez said in a conference call.

Banorte got permission last year from regulators to launch the digital bank, which will be named Bineo.

The firm will spend 10 billion pesos on technology for the group this year, Ramirez added during the call.

The guidance comes after the bank reported that its fourth-quarter net profit surged 28% to 11.6 billion pesos ($595 million) from the year-earlier period, boosted by strong revenue growth.

Revenue for the group, which owns one of the country’s largest banks and pension funds, totaled 31.9 billion pesos ($1.64 billion) in the fourth quarter, up 26% from a year earlier.

The bank’s performing loan book grew 5% quarter-over-quarter, while its consumer loans rose 4%, driven by increases across credit cards, mortgages and payroll.

Non-interest expenses in the quarter were 11% higher than a year earlier.

Banorte posted earnings per share of 4.02 pesos in the three months to December, slightly missing the Refinitiv estimate of 4.04 pesos.

“During 2022, Banorte showed clear growth trends in most of its business lines, despite operating in an increasingly challenging macroeconomic environment,” the company said in its report.

The bank’s results are likely to be well received by investors, Citi analysts said, giving a favorable perspective for the current year.

“Guidance is more aligned to consensus at the upper range,” Citi said in a report, adding that the updates on Bineo’s future and the increase to the share buyback program will support “investor sentiment toward the stock.”

($1 = 19.5089 pesos at end-December)