MEXICO CITY, Oct. 31 - Grupo Financiero Banorte, which operates Mexico's fourth-largest bank, said Tuesday that its profits rose 15% year-on-year in the third quarter, driven by a growth in revenue from its loan portfolio.

The company's net income for the period stood at 13.268 billion pesos ($761.42 million), below LSEG's estimate of $13.440 billion.

Total revenues of Banorte, which manages the largest pension fund in the Latin American country, reached Ps. 33.802 billion in the period, 16% higher than the Ps. 29.205 billion reported between July and September 2022.

The entity's net loan portfolio increased by 15% year-on-year, one trillion pesos, in view of the strength of private consumption, while the delinquency rate stood at 1%.

"2024 will have a fairly positive dynamic on the credit side and on the deposit side, perhaps not as much as the dynamics of this one (2023)," said in a call with journalists its director of finance and operations, Rafael Arana.

The entity has postponed credit payments for its clients in the state of Guerrero for six months, following the damage caused by Hurricane Otis, added Arana, and this hiatus in payments will include credit cards, mortgage, car and payroll loans, among others.

Its net interest income (NII), the difference for banks between their earnings from loans and the distribution of deposits, increased 8% year-on-year thanks to the growth of the loan portfolio, the rise in interest rates and the normalization in the valuation of some accounts of the pension business, the entity pointed out.

In response to a question about the high probability that the Mexican central bank will start cutting interest rates next year, Banorte executives said the firm will seek to cushion its exposure to these declines by rebalancing its assets and liabilities.

"We view Banorte's results and trends as positive," Banco Santander analysts said in a note to clients, adding that they saw the current situation of its shares as "attractive."

The company's shares closed Tuesday at 146.32 pesos, down 2.68%, before the results were released.

With respect to its segments, the financial group noted in its report that "the insurance activity evolves in accordance with expectations".

Non-financial costs grew 11% year-on-year to 11.54 billion pesos, with labor costs up 15%, as the company increases its workforce to handle nearshoring-related operations.

(1 US dollar = 17.4279 Mexican pesos at the end of September).

(Reporting by Aida Pelaez-Fernandez and Kylie Madry. Edited by Sofía Díaz Pineda)