Grupo Financiero Banorte SA (GFNORTEO), Mexico's largest publicly traded lender, expects its joint banking venture with retailer Comercial Mexicana SAB to post net income of about 1 billion pesos ($93 million) in its fifth year of operation.
Chief Executive Officer Luis Pena Kegel said the new bank will bring 5 million clients to Monterrey-based Banorte. Comercial Mexicana will have 51 percent of the new bank, which will have branches in its 180 stores across Mexico.
``The potential is enormous, and these are very conservative estimates,'' Pena Kegel said in an interview with Bloomberg television today in Mexico City.
The alliance mirrors Citigroup Inc. (C)'s response to Wal-Mart de Mexico SAB's in-store bank. Citigroup last year started a bank with Organizacion Soriana SAB that led to the opening of bank branches in 252 stores in less than five months. Wal-Mart, the world's largest retailer, plans to open 53 in-store bank branches this year, adding to the 16 units they started in 2007.
The return on equity of the joint operation is forecast to be more than 30 percent in the fifth year of operation, according to Banorte and Mexico City-based Comercial Mexicana. Comercial Mexicana has 180 stores in Mexico.
The joint venture will have capital of as much as 1.3 billion pesos and will start operating in July, Pena Kegel said today. Banorte and Comercial Mexicana bank will offer savings accounts, personal loans, credit cards and insurance.
Banorte, Comercial Mexicana, Wal-Mart and Citigroup are looking to serve lower-income consumers that need credit to buy home appliances and other expensive items. Pena Kegel said the 10,000 traditional bank branches that Mexico has today are too few to serve all 104 million Mexicans.
Banorte fell 0.1 percent today to 44.88 pesos, while Comercial Mexicana gained for a fifth day, adding 1.2 percent to 28.02 pesos.
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