UPDATE: 4 Mexico’s Banorte receives a profit boost for 2023 due to strong Q4

(Adds Comment from Analyst)

MEXICO CITY (Reuters), January 19th, 2019 – Grupo Financiero banorte in Mexico said Thursday that it expects to increase its profitability in 2023 after reporting a 28% increase in fourth quarter net income.

According to the bank’s presentation, it expects a net income of between 50.5 and 52.5 billion pesos this year, an increase from last year’s 45.4 billion.

It stated that the total return on equity (ROE), in 2023, will be between 19.5% and 21.0%. This is up from the 20-22 figure of 19.2%. Meanwhile, total expenses are expected increase by 11% to 13% including Bineo, a digital bank.

Forecasts for loan growth range between 6% to 8%

Marcos Ramirez, chief executive of the financial company, said that they expect to launch their new digital bank within the second or third quarter in 2023.

Banorte received permission from regulators last year to launch the digital banking platform, Bineo.

Ramirez said that the firm will spend 10 million pesos this year on technology for the group.

After reporting that its fourth-quarter net profits jumped 28% to 11 billion pesos ($595m) over the year-earlier period due to strong revenue growth, the bank issued the guidance.

The revenue for the group, which includes one of the largest banks in the country and pension funds, was 31.9 billion pesos ($1.64billion), up 26% compared to the previous year.

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.

The quarter’s non-interest expenses were 11% more than the previous year.

Banorte’s earnings per share were 4.02 pesos in December and January, slightly below the Refinitiv estimate 4.04 pesos.

According to the company’s report, Banorte reported that it showed clear growth trends over 2022 in all of its business lines despite operating in a challenging macroeconomic climate.

Citi analysts believe that investors will be pleased with the bank’s performance, providing a positive outlook for this year.

Citi reported that Guidance is closer to consensus at upper range. Citi also stated that the update on Bineo’s status and the increase in the share buyback program will help “investor sentiment” toward the stock.

($1 = 19.5089 pesos by end-December) (Reporting and Editing by Carolina Pulice and Valentine Hilaire; Editing and Reporting by Isabel Woodford and Bradley Perrett