--Banorte aims to sustain loan growth of 15%-20% a year
--$2.5 billion share sale to fund recent acquisitions,
strengthen capital
--No acquisitions on the radar, but possibility not ruled
out
By Anthony Harrup
MEXICO CITY--The chief executive of Mexican banking concern
Grupo Financiero Banorte SAB (GFNORTE.MX, GBOOY) says this week's
capital increase lends support to the bank's plans to expand
lending as it shores up its capital to continue on a solid growth
path.
Banorte, Mexico's third-largest bank by loans and the country's
only major commercial bank still controlled by Mexican investors,
raised $2.5 billion in a share sale to pay for recent acquisitions
and improve its capital ratios.
In an interview, Chief Executive Alejandro Valenzuela said
Banorte aims to sustain annual loan growth between 15% and 20%. He
said 20% would be the "speed limit" for increasing loans without
overdoing risk, although faster economic growth would support more
lending as demand for credit increases.
Banorte expanded its loan portfolio by about 16% last year to
around $32 billion. By comparison, Spain's Banco Bilbao Vizcaya
Argentaria's (BBVA, BBVA.MC) BBVA Bancomer unit saw loans contract
6%, and Citigroup Inc. (C) unit Banamex increased loans by 13%.
Overall bank-loan growth has slowed this year along with the
Mexican economy, and economists polled last month by the central
bank expect economic growth of less than 3% compared with 3.9% the
previous two years.
Banorte will use $800 million of the new money to finance its
half of the purchase of BBVA's Mexican pension business, and $857.5
million to take full control of its Mexican pension and insurance
joint-ventures with Italian partner Assicurazioni Generali SpA
(G.MI), as well as around $300 million to buy out International
Finance Corp.'s small stake in Banorte's bank unit.
Remaining money will serve to raise Banorte's core capital
ratio, the strictest measure of a bank's financial strength, to
between 13% and 13.5% from the current 11.5%.
The additional capital also raises the possibility that the
company could continue with its expansion via acquisitions, and
while there are no immediate plans for that, management isn't
ruling out the possibility.
"There's nothing on the radar, but our job is to look for
opportunities, if they are sensible," Mr. Valenzuela said. He
stressed the significance of shareholder approval for any buying
proposals given Banorte's "atomized" ownership. Banorte is among
the most liquid stocks on the Mexican exchange, with a share float
of close to 90%.
Banorte shares were up 0.3% at MXN79.97 ($6.39) Thursday
afternoon, following a 10% jump the previous session in the wake of
the capital increase.
Mr. Valenzuela described the jump as a bounceback after the
shares fell from around MXN90 in the previous two months on a
combination of the selloff in emerging markets, a slowdown in
Mexico's economy, concerns about Banorte's exposure to Mexico's
struggling housing construction companies and dilution from the
share offering.
Banorte was very clear on its intended uses of the money, and
investors saw it as a clear point to get into the stock, he said.
Demand for the shares was above $8.5 billion.
Banco Santander said in a report it expects Banorte's shares to
recover most of the lost ground as worries about capital ratios and
exposure to the homebuilders will soon be in the past. Mexican
banks which lent money to the country's largest homebuilders have
to make provisions against loan losses after several of the top
builders failed to make payments and are seeking to restructure
their debts.
Write to Anthony Harrup at anthony.harrup@dowjones.com
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