Banorte to buy remittances company UniTeller for US$20mn

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Friday, April 28, 2006

Mexican banking group Grupo Financiero Banorte has agreed to buy US remittances company UniTeller Holdings for some US$20mn, GF Banorte said in a press release.

The transaction is expected to close in the fourth quarter once regulatory approvals given.

The acquisition of UniTeller is part of Banorte's strategy to improve its services for Spanish-speaking clients in the US. In January this year the group announced the acquisition of 70% of Texas-based Inter National Bank for US$259mn.

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In 2004, Banorte launched its Tarjeta Enlace Express debit card and savings account aimed at banking remittance recipients, who usually collect remittances in cash.

Last year Mexicans living abroad sent home US$20bn in remittances, a 21% increase over the previous year.

Mexico is one of the six Latin America countries considered a large receptor of remittances according to the classification used by the UN Economic Commission for Latin America and the Caribbean (Eclac).

A large receptor of remittances receives US$2.5bn a year. The other countries in this category are Brazil, Colombia, El Salvador, Guatemala and the Dominican Republic.

UniTeller was created in 1994 and operates in the US with offices worldwide. In 2005, UniTeller processed more than 1.1 million remittances for about US$370mn, about half of which went to Mexico.

Grupo Financiero Banorte is one of Mexican largest financial groups. Banco Mercantil del Norte (Banorte) is group's flagship company and ranked fifth on the banking system ranking with market share of 9.4% in terms of loans at end-2005.

FIRST QUARTER RESULTS

GF Banorte also came out with its first quarter results which showed profits up 21% compared to 1Q05.

Earnings came in at 1.37bn pesos (US$123.46mn) compared with 1.13bn pesos for the same period a year ago.

Net interest income for the quarter rose 11% to 3.293bn pesos as the group's net interest margin widened to 7.5% compared to 7.3% a year ago. Net non-interest income grew 38% to 2.072bn pesos.

"The earnings quality was weak because the earnings growth was driven by lines that are very hard to forecast or unpredictable like trading incomes and acquired loan portfolios. These were the lines that really drove the earnings results and were unusually high this quarter," Deutsche Bank analyst Mario Pierry told BNamericas.

Performing loans increased 23% to 116bn pesos at the end of the quarter. Consumer loans grew 33% to 41bn pesos, while corporate loans increased to 35% to 21bn pesos. The past-due loan ratio fell to 1.6% from 1.9%.

Banorte's capitalization ratio stood at 15.6% at end-March compared to 16.2% a the same time a year ago.

"For the second quarter, bank's net interest margin should stay stable because we believe the interest rates have bottomed out in Mexico. I expect costs to continue to rise as the bank is implementing an expansion plan by increasing its distribution network", Pierry said.