Government NPLs higher than expected in Banorte 3Q11 revision - Deutsche Bank

Wednesday, November 23, 2011

Mexican bank Banorte has revised financial results for 3Q11 with higher bad loans in its lending to state governments and lower personnel expenses, according to a Deutsche Bank (NYSE: DB) report.

Third quarter personnel expenses were revised down primarily due to a reduction in bonus provisions, reinforcing Deutsche Bank's view that Q3 earnings were not good, according to the report.

The report also said that non-performing loans (NPLs) in the government loan book were revised to 0.8% from 0%, taking total NPLs at the bank to 2.4% from 2.2%.

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Earlier this month Banorte reported that it was content with government loan exposure of 20% as no single state government represented more than 3% of total loans.

Deutsche Bank also said it continues to question if high loan exposure to states and municipalities should be a source of concern, but maintains a hold recommendation on the stock reflecting Banorte's recent increase in market-related gains.