Grupo Financiero Banorte (GBOOY) is the only Mexican bank with an ADR, although it trades in the OTC market. In the last three years, it has outperformed the S&P 500 and the Mexican stock market by 44.28% and 21.22%, respectively. Banorte ranks in the top 4 of the Mexican banking industry market share, dominated by foreign banks like BBVA, Santander, and Banamex (Citi).
Banorte is a diversified Mexican financial institution offering banking, brokerage, asset management, insurance, annuities, and pension funds. The largest revenue source is banking (72%), followed by insurance (16%). In Q1 2024, their loan portfolio included loans for commercial, corporate, government, and consumer loans, with mortgages accounting for 59% of consumer loans. Their Q1 Stages 1 & 2 Loans totaled $1,047,067 million pesos.
Banorte has been digitalizing successfully, with a high Net Promoter Score across all channels. Financially, Banorte has shown robust growth in NII and fees from services. The company maintains an appealing efficiency ratio of 34% and well-capitalized balance sheet.
Banorte’s growth in NIM, book value, and ROE has been impressive over the last three years. The company has joint ventures with RappiPay and recently launched a digital bank named Bineo. The Mexican economy is experiencing positive tailwinds, attracting foreign investments and infrastructure projects.
In terms of valuation, Banorte’s stock price correction has brought it back to fair-value territory based on its book value per share. With strong financials, valuation, and macro-outlook, a buy rating is recommended. The risk of political uncertainty in upcoming elections seems minimal.