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

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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.