Banorte Focused on Consumer Credit and Gaining Share, Ortiz Says

Grupo Financiero Banorte SAB (GFNORTEO), Mexico’s third-largest bank by outstanding loans, is focusing on expanding consumer credit, Chairman Guillermo Ortiz said.

“Where the bank needs to boost its share is in the consumer market,” he said yesterday in an interview in Puerto Vallarta, Mexico. “In credit cards, we have a 6 percent market share, more or less, while the bank has a 13 or 14 percent share of the total credit market.”

Banorte’s credit portfolio totaled 340 billion pesos ($25.7 billion) at the end of February and rose 19 percent from the same month a year earlier, according to data on the website of the National Securities and Banking Commission, or CNBV. The Monterrey, Mexico-based bank trails local units of Banco Bilbao Vizcaya Argentaria SA and Citigroup Inc. in outstanding loans.

Banorte, Mexico’s largest locally owned bank, is increasing market share, Ortiz said after participating in the World Economic Forum on Latin America in this resort city. The nation’s banks are lending “carefully,” he said. Ortiz was finance minister from 1994 to 1998, during the administration of President Ernesto Zedillo, and governor of Mexico’s central bank from 1998 until December 2009.

Credit Suisse Group AG analysts led by Marcelo Telles raised Banorte to the equivalent of buy on April 13 and forecast the shares will rise 38 percent this year to 84 pesos on the potential for earnings growth.

Credit ’Boom’

“We believe no other stocks offer as much upside risk to earnings as Banorte does in the medium to long-term if rates begin to rise,” the analysts wrote in a research note. Mexican banking is “on the verge of a boom” and sector profits “are set to expand massively,” they wrote.

Ortiz said Mexico’s bank lending is not growing too quickly and cited a low rate of delinquent loans.

“I don’t like to talk about credit booms and bubbles,” he said. “Banks are extending credit carefully.”

The nation’s delinquent credit rate was less than 2.5 percent at the end of February, according to the CNBV.

Banorte has increased 44 percent this year, the biggest gain on Mexico’s benchmark IPC stock index. The company fell 4 percent yesterday after JPMorgan Chase & Co. cut its recommendation to the equivalent of hold from buy, citing the stock’s valuation.

“We no longer find the valuation sufficiently compelling to recommend the shares,” JPMorgan analysts led by Saul Martinez wrote in the report. “We continue to believe Banorte is well positioned to generate healthy bottom-line growth and profitability” in the coming years, Martinez said.

’No Pressure Points’

Mexico’s public finances are healthy and have “no pressure points,” Ortiz said.

“Mexico’s doing well even as the U.S. economy is growing at lower rates than it was before the crisis,” he said.

Latin America’s second-biggest economy, which sends 80 percent of its exports to the U.S., may grow 3.6 percent this year and 3.7 percent in 2012, the International Monetary Fund said yesterday in its World Economic Outlook report. The expected expansion will represent “a slight slowdown but still above potential,” the multilateral lender said.

Mexico’s inflation may end 2012 at 3.9 percent from 3.4 percent last year, while unemployment may decline to 4.8 percent this year from 5.2 percent in 2011, the IMF report shows.

To contact the reporters on this story: Brendan Case in Dallas at bcase4@bloomberg.net; Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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