Grupo Financiero Banorte B de C : GFNorte Annual Report 2021

Page

1. GENERAL INFORMATION

5

a) Glossary of Terms and Definitions

5

b) Executive Summary

9

c) Risk Factors

13

d) Other Securities

43

e) Significant Changes to Registered Securities' Rights

47

f) Destination of Funds

49

g) Public Documents

49

2. THE COMPANY

50

a) Development and History of the Company

50

b) Business Description

61

i.

Main Activities

61

ii.

Distribution Channels

64

iii. Patents, Licences, Brands and other Contracts

67

iv.

Main Clients

69

v. Applicable Legislation and Tax Situation

70

vi.

Human Resources

122

vii. Environmental Performance

122

viii. Market Information

122

ix.

Corporate Structure

138

x. Description of Main Assets

139

xi. Administrative, Arbitration and Judicial Processes

140

xii. Representative Shares of Company's Equity

140

xiii. Dividends

141

3. SELECTED FINANCIAL INFORMATION

142

a) Selected Financial Information

142

b) Financial Information per Business Line, Geographical Region and Export Sales

144

c) Report of Relevant Loans

146

d) Management Analysis and Comments on Operating Results and the Company's Financial

149

Situation

i.

Operating Results

149

ii. Financial Situation, Liquidity and Captial Resources

168

iii. Internal Control

175

e) Critical Accounting Estimates, Provisions or Reserves

176

4. ADMINISTRATION

288

a) External Auditors

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b) Operations with Related Parties and Conflicts of Interest

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c) Managers and Shareholders

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d) Corporate By-Laws and other Agreements

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5. STOCK MARKET

289

a) Share Structure

289

b) Performance of Shares in the Stock Market

289

c) Market Maker

292

6. UNDERLYING ASSETS

293

7. RESPONSIBLE OFFICERS

294

8. ANNEXES

295

a) Audit and Corporate Practices Committee Report (2021, 2020and 2019)

295

b) Audited Financial Statements (2021, 2020and 2019)

301

TERM

DEFINITION

ADR's:

American Depositary Receipts

Afores:

Retirement Saving Funds Managers.

Afore Bancomer:

Administradora de Fondos para el Retiro Bancomer, S.A. de C.V.

Afore Banorte:

Banorte Generali, S. A. de C. V., AFORE (prior its merger with Afore XXI).

Afore XXI Banorte:

Afore XXI Banorte, S.A. de C.V. (corporate identity after the Afore Banorte and Afore

XXI merger).

Almacenadora Banorte

Almacenadora Banorte, Organizacion Auxiliar del Credito, Grupo Financiero Banorte

Arrendadora y Factor Banorte:

Arrendadora y Factor Banorte, S.A. de C.V., Sociedad Financiera de Objeto Multiple,

Entidad Regulada, Grupo Financiero Banorte.

ATM's:

Automated Teller Machine.

Bancen:

Banco del Centro, S. A.

Bancrecer:

Bancrecer, S. A.

Banking Subsidiaries:

Banorte and subsidiaries

Banorte:

Banco Mercantil del Norte, S. A., Institucion de Banca Multiple, Grupo Financiero

Banorte.

Banorte Ahorro y Previsión

Banorte Ahorro y Previsión, S.A. de C.V.

Banorte Futuro

Banorte Futuro, S.A. de C.V.,

Banorte-Ixe Tarjetas:

Banorte-Ixe Tarjetas, S.A. de C.V., Sociedad Financiera de Objeto Multiple, Entidad

Regulada (Formerly Ixe Tarjetas). Subsidiary of Banorte.

Banorte USA:

Banorte USA Corp., subsidiary of Banco Mercantil del Norte, S. A.

Banxico:

Bank of Mexico (Mexican Central Bank).

BIVA

Bolsa Institucional de Valores (Mexican Stock Exchange)

BMV:

Bolsa Mexicana de Valores, S.A.B. de C.V. (Mexican Stock Exchange).

bp

Basis points

Capitalization requirements:

Capital requirements for credit institutions established in the LIC and Circular Unica de

Bancos

Casa de Bolsa Banorte:

Casa de Bolsa Banorte, S.A. de C.V., Grupo Financiero Banorte (merged entity with

Ixe Casa de Bolsa).

Casa de Bolsa Banorte Ixe:

Casa de Bolsa Banorte Ixe, S.A. de C.V., Grupo Financiero Banorte.

CAPS:

Comité de Auditoria y Prácticas Societarias (Audit & Corporate Practices Committe).

CC:

Credit letters.

CDP:

Not-for-profit organization which provides the major environmental divulgation system

in the world.

CEBUR:

Certificado Bursátil (Stock Certificate).

CEDES:

Certificados de Depósito a Plazo Fijo (Fixed term Certificate of Deposit).

CETES:

Certificados de la Tesorería de la Federación (Mexican Federal Treasury Certificates).

Circular Unica de Bancos

General provisions applicable to credit institutions, published in the Official Gazette on

(CUB):

December 2nd, 2005, as they have been modified.

TERM

DEFINITION

Circular Única de Emisoras

General provisions applicable to issuers and other market participants, published in the

(CUE):

Official Gazette on March 19, 2003, as they have been modified.

CMPC

Código de Mejores Prácticas Corporativas (Best Corporate Practices Code).

CNBV:

Comisión Nacional Bancaria y de Valores (National Banking and Securities

Commission).

CNSF:

Comisión Nacional de Seguros y Fianzas (National Insurance and Bonding

Commission).

COFECO/ COFECE:

Comisión Federal de Competencia Económica (Federal Commission of Economic

Competion).

CONDUSEF:

Comisión Nacional para la Protección y Defensa de los Usuarios de Servicios

Financieros (National Comission for the Protection and Defense of Financial Services

users).

CONSAR:

Comisión Nacional del Sistema de Ahorro para el Retiro (National Comission of the

Retirement Saving Funds System).

CPO's:

Certificados de Participación Ordinarios (Ordinary Participation Certificates).

CPR

Comité de Politicas de Riesgo (Risk Policies Committee).

CR:

Capitalization ratio.

Creditos Pronegocio:

Créditos Pronegocio, S.A. de C.V., Sociedad Financiera de Objeto Limitado, Grupo

Financiero Banorte

CUSF:

General provisions applicable to Insurance and Bonding Insitutions.

D:

Director.

DMD:

Deputy Managing Director.

DOF:

Diario Oficial de la Federacion (Official Gazette).

ED

Executive Director

EMISNET:

Electronic Communications System with Securities Issuers.

EPS:

Employee Profit Sharing Agreement.

FCICK 16-1

Conversion Trust FCICK 16-1

Fincasa Hipotecaria:

Fincasa Hipotecaria, S.A. de C.V. Sociedad Financiera de Objeto Múltiple, Entidad

Regulada, Grupo Financiero Banorte (merged in Banco Mercantil del Norte).

Fintech

Financial Technology Entities

Forward:

Non-standardized private contract to buy or sell a specific asset at a certain price level

whose liquidation will be carried out at a future date.

Generali:

Assicurazioni Generali, S.P.A. Italian company and strategic partner of GFNorte until

2013.

GFInter

Grupo Financiero Interacciones, S.A.B. de C.V

GFNorte, the Company, the

Grupo Financiero Banorte, S. A. B. de C. V.

Issuer:

GEO:

Corporación GEO, S.A.B. de C.V.

Holding:

Holding company.

Homex:

Desarrolladora Homex, S.A.B. de C.V.

IFC:

International Finance Corporation.

IMSS:

Instituto Mexicano del Seguro Social. (Mexican Social Security Institute)

INB:

Inter National Bank.

Indeval:

S. D. Indeval, Institucion para el Depósito de Valores, S. A. de C. V. (Institute for

Deposit of Securities).

IPAB:

Instituto para la Protección al Ahorro Bancario (Institute for the Protection of Bank

Savings).

ISR:

Income Tax.