Grupo Financiero Banorte-o Aktie

Good morning, everyone. This is Tomas Lozano. Welcome to Grupo Financiero Banorte Second Quarter Earnings Call. Our CEO, Marcos Ramirez, will begin today's call by presenting the main results of the quarter and the first half of the year, highlighting the positive trends observed across our portfolio and profitability indicators and the evolution of the main macro indicators.

Then Rafael Arana, our COO, will go over the financial highlights of the group, providing details on the margin evolution and the impact of inflation in the units, which was offset by more technical reserves, resulting neutral for net income. Rafa will also comment on the evolution of cost of funds, provisions and capital ratios, including the recent issuance of our AT1 and dividend payment. Please note that today's presentation may include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially. On Page 2 of our conference call deck, you will find our full disclaimer regarding forward-looking statements. Thank you.

Marcos, please go ahead.

Thank you, Tomas. Good morning, everyone. Thank you for joining us today. The second quarter delivered strong results, reflecting the structural strength of our core business and the resilience of domestic demand. Performance was broadly positive across our businesses, supported by solid margins, continued loan growth and disciplined expense management.

Before moving on, let me briefly explain a seasonal dynamic within the annuities business. As you know, June recorded very low inflation with things to reduce the contribution for inflation-linked securities to margin performance. Importantly, this effect was neutral to net income as it was offset by lower technical reserves associated with these instruments.

Overall, the quarter reflects the quality of our execution and the adaptability of our business model. Accordingly, we are determining our full year guidance and remain confident in a more dynamic second half. That said, global conditions remain volatile. Although tensions in the Middle East have eased in recent weeks, some concerns for inflationary effects of the conflict. In Mexico, 2026 began on a softer log, but more recent high-frequency data owing to a gravel recovery.

As I mentioned earlier, domestic demand remains supportive and we begin to see a pickup in activity, particularly as we move into the summer months with the World Cup providing a short-term boost to consumption and tourism. In addition, exports remain resilient and we anticipate a modest recovery in investment and a greater implementation of infrastructure programs. This should be supported by the increasing execution of [ Lam ] Mexico, particularly across sectors such as energy, transportation, weather and telecommunications as well as by measures designated to facilitate project development and encourage public product investment.

With this in mind, we maintained our GDP growth expectation for 2026 at around 1.4%. On the trade front, discussions around the USMCA review officially began on July 1. Our base case continues to assume a constructive dialogue between all parties that the annual review process will serve as a framework to further deepen economic integration across the region. This view is supported by the structural advantages that Mexico offers, including its manufacturing scale, competitive labor force and strategic position with North America supply chain.

Regarding monetary policy, as we highlighted in previous calls, we believe Mexico has reached the end of the easing cycle, with a reference rate at 6.5%. [indiscernible] we expect to hold to 2027. Inflation has evolved in a favorable direction, and while it may close the year slightly above target recent indicators suggest that price dynamics remain broadly under control. Finally, on the exchange rate, we've maintained our forecast of around MXN 18.10 per dollar by year-end.

Shifting gears to the results on Slide #3. Our second quarter results reflect positive underlying business momentum. Net interest income for both the group and the bank expanded year-over-year. driven mainly by lower funding costs and healthy growth in lending volumes. As I mentioned earlier, group NII was impacted by a seasonal dynamic within the Annuities business during the quarter. Excluding seasonal dynamic margin remain positive and continue to reflect the strength of our operating fundamentals. On asset quality, cost of risk declined 29 basis points sequentially and it's on track with our guidance for the year.

On capital, we successfully complemented our AT1 issuance for USD 1.35 billion during the quarter. The transaction attracted significant investor interest, reflecting confidence in our business model and financial profile. The issuance provides additional flexibility in managing our capital structure and aligns with our objective of maintaining AT1 instruments within the 30 to 40 range of regulatory capital. Rafael will provide additional color later in the presentation.

Moving to Slide #4. Net income for the quarter reached MXN 15.6 billion, up 1% sequentially. The Results were supported by healthy business trends across our main segments, continued funding optimization, lower provisions and favorable market-related income. These results were achieved despite the benefit from a business sale recorded during last quarter. For the first half of 2026, net income reached MXN 31 billion, 4% higher than the same period last year. already incorporating the nondeductibility of the past. Nevertheless, consistent execution of our strategy and the sound evolution of the business supported positive results. Profitability metrics remained solid, with ROE for the quarter reaching 25.7%, up 209 basis points year-over-year. supported by continued earnings generation and the effect of the dividend payment in May.

ROA stood at 2.3%, broadly stable compared of last year. Analyzing results by subsidiary on the Slide #5, the bank delivered another strong quarter, reported net income of MXN 12.4 billion, up 6% sequentially. Results displayed strong core banking operations, boosted by a decline in cost of funds, a more dynamic lending activity, larger net fees and a stronger market-related revenue. despite the higher base given the additional income recorded in the first quarter for the aforementioned business sale. For the first half of the year, the bank generated MXN 24 billion in net income the first half of 2025.

Altogether, the results deeded an ROE of 32.4%, [ 223 ] points higher than the previous quarter, with accumulated figures ROA stood at 31.3%. The insurance company net income declined 43% in the quarter and 4% compared to second quarter. The sequential value operation mainly reflects the normalization of premium origination following the seasonal peak of the first quarter. For the first half of the year, results reflect the regulatory changes associated with the nondebt of VAT. Even so, commercial dynamics remain favorable, with premium volumes continuing to grow across the business.

The annuities business grew 13% on a cumulated basis and was supported by higher business volumes and lower claims across the portfolio. Pension funds reported a strong quarter with net income rising 65% sequentially and 23% on an accumulated basis. Results were boosted by a larger base of assets under management, driving higher fee income alongside higher valuation. Lastly, the brokerage sector accumulated decline mainly reflected lower market valuation in the securities portfolio.

Turning to Slide #6. Loan portfolio expanded 8% year-over-year. Growth was supported by a dynamic activity across the portfolio, particularly in consumer lending, while commercial and corporate loans contributed 8% and 2%, respectively. Corporate balances continued to be affected by prepayments and exchange rate movements and our dollar-denominated book which accounts already for 13% of the total portfolio. Excluding these FX effects, total loan growth reached close to 9% year-over-year, despite uncertainty around annual revision of the USMCA, we anticipate a strong pipeline of corporate and commercial loans related to real estate, financial services and tourism sectors.

Government lending increased 7% compared to last year. Although quarterly performance continued to reflect the impact of short-term maturities and repayments mainly from states and municipalities. Our view on this segment remains unchanged, and we continue to see opportunities linked to Plant Mexico as we bring visibility throughout the year. Turning to Slide #7. Consumer lending remains the main driver of portfolio expansion, increasing 10% year-over-year. This reflects sustained customer demand or streamlined operating model and the continued rollout of our hyper personalization strategy, supported by expanding digital capabilities.

Auto loans once again posted outstanding annual growth of 26%, benefiting from stronger commercial partnerships that are [indiscernible] to broaden distribution channels across the country. The credit card portfolio was up 12% year-on-year, supported by effective commercial campaigns greater customer engagement during seasonal spending periods and a broader value propositions across the product offering, resulting in a solid pace of origination Payroll loans grew 4% year-over-year, reflecting the effectiveness of our commercial strategy and digital offerings as well as the consistent execution of our sales force, analogs increased 5% year-over-year.

During the quarter, we remain focused on refining our origination processes and strengthening the customer journey and we remain constructive for this portfolio as the year goes by. Moving to Slide #8. Asset quality remains within expected levels when the NPL ratio standing at 1.5% for the quarter. As we have discussed before, this figure continues to reflect the isolated commercial portfolio as well as the impact of changes to our mortgage write-off policy, even with the continued expansion of the consumer lending asset quality asset quality trends remains with our respective ranges and cost of risk continues to move in line with our guidance for the year.

It is worth noting that the recent regulatory adjustment affecting certain government to guaranteed loans provided a modest benefit to provisioning during the quarter. However, the impact in our results was not material. Net fees on Slide #9, expanded 17% year-over-year and 16% during the first half of 2026. This performance was mainly driven by higher transaction volumes, mainly in consumer products. [indiscernible] loans structural fees and mutual on operations as well as our focus on profitability and in affiliated digital businesses.

On the ESG front, on Slide #10, I would like to highlight that throughout the year, we continue working on multiple fronts to improve our disclosures regarding risk, insurance activities and sustainable products. Next to this, FTSI improved its ESG rating for Banorte and ratify our performance in its [ Goodship ] for Good Index Series. Moreover, Banorte was among the world's most sustainable companies in 2026 by Time and by [indiscernible]. These events are like of evidence of our constant commitment towards strengthening our progress in sustainability.

Now, before passing the word to Rafa, I would like to touch on 3 topics that many investors have asked about in recent weeks as well as two recognitions granted to Banorte's customer-centric operating volumes and legal capabilities. First, I will briefly address our pouch to AML sanctions and the compliance policies that support our institutions. Even before the FTO resignations announced last year, Banorte maintained a robust framework supported by a strong governance or oversight and controls aligned with international standards.

We continue to build on that foundation by further improving our monitoring and compliance capabilities and investing more in technology, data in analytics, analytics and based tools to support these efforts with important investments deployed over the last 3 years. I want to stress that we maintain an ongoing dialogue with both Mexican and U.S. authorities.

Insurance, we are aligned with evolving regulatory expectations. As in [indiscernible], we have taken a similar approach to constantly improve our capabilities and address the changing dynamics of the money services industry. We take this responsibility very seriously and remain confident in the strength of our controls, governance and compliance programs, supported by leading U.S. Mexican external advisers.

Turning to our digital proposition for [indiscernible] continues to gain traction gradually and in line with our expectations. Our approach is centered on financial inclusion, responsible lending and financial education, while some competitors have pursued faster portfolio growth, we remain focused on helping customers build healthy credit habits and strengthen their financial profiles and achieve sustainable financial progress over time rather than prioritizing rapid origination that could eventually lead to signs of deterioration.

Our strategy is built for long run, growing hand in hand with our customers supporting the increasing financial sophistication and creating sustainable value of enduring relationships. Staying on the topic of technology, I would like to follow up on AI progress. we discussed during the first quarter call. As I mentioned before, our objective is to build an AI agnostic platform that allows us to scale these tools across the origination. We continue to advance our hyper personalization strategy, which now gains a new dimension to the implementation of artificial intelligence, enabling a more granular understanding of our clients and creating new opportunities to enhance loan origination and customer satisfaction.

This approach is already reflected in our customer lifetime value and credit risk assessment models, enabling us to deliver more personalized pricing, strengthen our commercial efforts and further advance our vision of one agent per decline. By year end, we expect around 10,000 employees across the bank to incorporate AI into their daily workloads, supporting greater productivity, faster execution and improved service levels. Early applications are already simplifying internal processes and reducing their petite tasks, allowing our teams to dedicate more time to customers and business development.

Looking ahead, we expect AI to play an increasingly important role in software development, application design and analytical work across business and risk functions. We are pleased with the progress achieved so far, and we will continue to update the market as these efforts span throughout their organization. Last, but not least, I would like to highlight some of the most relevant recognitions we have received during the year.

Banorte has named best corporate governance and best consumer bank in Mexico by more finance and a best bank by Global Finance. These awards reinforce what we see across the business every day. a strong institution, a customer-focused strategy and differentiated capabilities that continue to position us well for the future.

With this, I conclude my remarks. Rafa, please go ahead.

Thank you, Marcos. Good morning to all. If I move basically to the highlights of the financial numbers that we -- that Marcos has already explained, but pointing to more detail. I think relevant numbers come from the NII, especially on the loans to deposit track that is growing around 13%, basically run by the funding cost that is trending lower at a faster pace.

Margins are -- the spread on the margin side continue to evolve. So NII to loans to deposits continue to be a very positive story for Banorte. We'll continue to do so in the coming months. There's some issues as always on the second quarter and sometimes it flows to the third quarter, especially on the annuity side. But as you know, inflation-related instruments have been affected by the lower inflation part, that is basically fully compensated on an income basis by the clinical reserves, but it affects the overall numbers on the NII. So that's what I'm highlighting the NII, there is more barren any external issues, the loans to the proceed studies, as I mentioned before, growing at a 13% base.

Overall, when you look at the total revenue, it's growing 10% when you add everything that is related to the group, not just for the bank. In the following slide, we will go deep into the bank performance to try to explain the highlights of that evolution for the year. If I move to the next one, please. When we go deep into the bank, what you could see is the NII of the bank is growing at 15% year-on-year, as I mentioned, basically for what we has been doing on the funding side and also on the evolution of the consumer book that continues to grow at a very reasonable pace.

The net interest margin for the bank is reaching 6.9% above what we gave as a guidance for the year. The high end of the guidance was around 6.85%. So now we are sitting at 6.9%. Fees continues to be a very good story. The bank net fees are growing growth, notwithstanding the fact that, as you know, since the high growth that we have on the -- especially on the car loans and some parts on the mortgage side, that you have to pay in advance some of the fees related to the selling process. So taking even including that, you continue to see a very positive growth on the net fees.

This is basically related to the activity that we have having in every single of the channels of the bank, that is giving us a very reasonable growth on the fees going from the mutual funds go also on the corporate investment banking that continues to basically provide companies to issuance pacing to the market because they are not really appealing for the more for the loan growth. So they are basically going to the market for the issuance of bonds, we are very present in that part. So overall, very good growth in the bank net fees.

In the next one, this is what really is giving us that stability on the net interest margin that is basically related to the to the manage of the balance sheet on the sensitivity side, but you see we are much more liability sensitive now. The full the full sensitivity of the overall balance sheet dollar and peso book is 9,281 [indiscernible] book on that part, and that will continue to really -- to go steady into the low end.

So sensitivity continues to be where we will want it to be -- you know that the fixed rate part of the book continues to strengthen because of the growth that we have on the car loans and also on the mortgage group. So that is basically sustaining this part along with a very good evolution on the funding side.

On an NII basis is basically nothing with 0.2% on the [indiscernible] sensitivity on the NII. So I think we are very, very reshow the all is being positioned, but notwithstanding the fact that we are always begin about an issue that we could see on the evolution of the interest rates. If I move to the next one, if I go now to the profitability metrics for the bank, the return on equity of the bank is growing at 221 basis points year-on-year, reaching 32.4% in the second quarter.

It is basically 200 basis points on a year-to-year basis on this part. The net income has grown at 5% and the ROA of the bank is growing at 263 basis points on a year-to-year basis. So all the profitability metrics and if you go down to the return on tangible, tangible is reaching 36.2%, on a tangible basis, when you basically strip down the effect of the pension company on that part. If we move to the next one, please. This is what really shows how being managing the evolution of the funding cost the reference against the active rate and the funding rate and also how the balance sheet positioning has allowed us to keep a very sustainable net interest margin for the loan portfolio.

As you can see, it keeps on growing to airport now. So that is giving us additional spread on the loan book. So even though the rates continue to go down, we continue to be very beneficial because of the funding cost and the and the combination that we have on the fixed and variable rates on the book. And also, I would like to stress the fact that we continue to not because we are pricing our loans in the market at a higher price on a contrary based upon a risk philosophy that will go for the clients that we like the risk Sometimes, we are very comfortable offering the best price in the market for the clients that we like the risk. So that is allowing us to have the clients that we like, the client that we want and also being able to grow the gross relationship that we have with them in a very important way. On the next one, please.

Here is the funding cost. The funding cost will continue to go down in this part. We have the cost of funds reduction on a year-to-year basis has been more than 300 basis points. And it's not just having in Mexico, but also a very efficient managing of the relationship with the clients, offering the right offers to them in a very, I would say, appealing way for the clients based upon the asset mix and the funding mix. So when we do the hyper personalization offer, we take into account the asset side and the funding side in order to give the best price to the client. Sometimes it goes to the funding size, sometimes go to the asset side on this part.

Another good story is the Noninterest Bearing, it continues to grow at 11% for year-on-year, above the loan growth time deposits continue to be also a very good story around 9%. So when you see the time deposits and noninterest-bearing deposits are continues to give us a very sustainable flow of funds to keep on pricing our offering to the market at the best conditions for the clients. But we have been reducing is the high interest rates that we have in some positions that we have on the funding side, and we have been able to get rid of those in the past year. So that trend will continue to be a pretty good story. And if you compare this trend to public information, Banorte is the one that has been able to reduce in comparison with the other players in the market, the most in the funding cost.

That doesn't mean that we have the lowest funding costs but that we -- the trend is the highest trend on the lower part of the forecast. If we go to the next one, please. quality on the portfolio, there has been some -- some questions about the evolution of the cost of risk and on the NPLs and the write-off rate. And I think that this really shows the story. The cost of risk is down 29 basis points on a quarter-to-quarter basis. No matter that we still have that -- the specific loan that went sour on the third quarter of last year that continues to be very on the cost of risk, but notwithstanding that, we are already trending to a much better goal that is basically what we gave the guidance at the beginning of the year.

We continue to work on that loan, and we hope to have better news in the coming months. But it's important to say that since most of the provisions are already in place, we will continue to be on the protective way to build up a very small amount of provisions in the, I think, in the month of September because we basically based upon the valuation of the asset, we take a very precautionary way and adjust the value of the asset since it has been not working that asset, that reduces the value that we have in the market. I immediately adjust that in the provision [indiscernible]. So -- but we are on guidance, and we think we will continue to be on guidance for the year. Credit provisions went down for the for the quarter on this part, write-off rates continues to be steady as we have always been. But I would say that if you strip that specific loan, the NPLs that -- and the cost of risk will go exactly as we expected at the beginning of the year.

So the 1.9, we will be down to the 1.8 and the NPLs will also be very close to the 1.1 that we -- when we got at the beginning of the year. So that is playing heavy on this number, but it's just one isolated was on that part. If we move into the next one, the expense growth is still -- and here, you have to do an adjustment taking into consideration because of revenue and TDF that happened at the end of the year that basically move away from the income statement and then went back again into that -- into the numbers of the bank at the beginning of the year.

If you strip that the expense growth instead of being the 10% year-on-year will be 8.6% year-on-year, excluding Vine and TDF that we hope to finalize that process in the remaining of the year. Cost-to-income ratio is at 36.2%. We know we need to trend back again to the numbers that we like. That is from 34% to 35%. And I think we will be trending to that number by the end of the year. So the -- I would say the cost income is not where we wanted to be, but it's right on track where we want to put the position of the bank at the end of the year and fully into the next year.

The next one, please. Capital, and this is related to what Marcos mentioned about the issuance that we did on the AT1. As Marcos already said, there was a very reasonable position into the market. The appetite was there, close to 5x the book. And basically, what we have achieved on this part is what we wanted always to be around 30 to 40 in the overall capital numbers to have the AT1. This is important to really bring into table them. Why do we issuance the AT1s? And what's the focus of those? And I'm going to stay only on the business side. Banorte was not present at all on the dollar book. Now we are 15.1 percentage points of market share on that. So we are the second in the market. and we achieved that only in 5 years in that part.

So it's very beneficial for us, allow us to keep on position ourselves with clients that we didn't have in the past that we were needed on the dollar book. So that has been a very good story on that, that will continue to do so. So basically, total cap is around 21.5%, core Tier 1 12.5%. As you know, we always commit from 12.5% to 13.5%. Above that, we basically move into an extraordinary dividend on that part. And that number of 12.5% will continue to grow through the year you will see in like a release on capital that we advised at the beginning of the year where we modified the models in the credit card on the other part. And we will release that from the mortgage book, around 65 basis points that will come into the core tier 1 and in addition to the evolution of the net income that is providing the strength on the capital numbers.

So no issues on the capital numbers. well above all the requirements that we have on this part, okay? So if I go to the next one, please. We continue to stay with the guidance. When you go to the loan growth, and right now, we are barely reaching the 8% overall for the long roll. But if you adjust that by the FX side, the loan growth is really 8.8% for the year on this part. Net interest margin is above guidance is reaching 6.9 for the bank. So 1 basically moving, and I think that the number will be hovering around 6.8 to 6.9.

Expenses, we still want to end the year at a single digit, not double digit, but single digit by the end of the year. Cost of risk will be in the range that we guide the market. The return on equity for the bank, as you know, is already above that, but we would like to stay maybe for the high end of the guidance, around '29 to '30 and the return of this probe will be basically from the '23 to 2024.

ROA is on line more on the 2.4 than in the 2.2. Basically, I would say, in a very challenging environment, Banorte continues to deliver based upon the relationship that we have with our clients, the evolution and the technology that we have that we could provide the solutions to the client on a one-to-one basis. And also looking forward to the -- to what we are already seeing the potential evolution of the artificial intelligence day-to-day in the life of our employees that could really bring up another step on the efficiency side. On the analytical side, we are already testing many, many initiatives concerning basically hyper personalization.

As Marcos mentioned, financial inclusion, financial, what would like to really allow the clients to be fully in control of the finance numbers that they have on a very terminal by reaching that we could deploy an agent per client by the end of the year. We would like to be testing that part on a specific part of the customer base to see how the customers relates to that and how the customers really what they like, why they all like on that part. So basically, with this, I conclude my remarks. Thank you very much.

Thank you. We will now move to our Q&A session. As always, we kindly ask you to present only your most relevant question. We will be happy to take any other questions any time after the call. [Operator Instructions]. Dan and myself will be calling the name of the person that is next in the line. If there are any technical difficulties, please let us know by using the chat. Thank you. We're now ready to start.

We'll take our first question from Brian Flores from TD. Brian, please go ahead.

Thomas, congratulations and also a lot of success in the new journey. I wanted to ask you on asset quality, particularly on credit cards, right? Because we saw that on the monthly deltas in terms of H3, the segment was the largest contributor. So I just wanted to understand if you're seeing a deterioration in this segment, how is your appetite changing as you see this, obviously, underlying trends in asset quality. And if this in any sense changes what you're expecting in terms of cost of risk?

Thank you, Brian. Carlos?

Thank you, Marcos. This is Carlos Salazar, Chief Risk and Credit Officer. Most of the increase in the credit card delinquency rate is attributable to the rapid portfolio growth in recent years. new accounts, which naturally have higher delinquency rates now represent a larger share of the portfolio than they did in previous years. As a result, while the individual meters remain stable, the portfolios past-due loan ratio is higher because of the change in portfolio mix, and that's it.

But I can give you the safeguards that we have put in place at the credit card business, protecting asset quality while continue to grow the portfolio remains one of our highest priorities. We are now relying on several safeguards. I will mention just 2 or 3 of them. We have more than 10 safeguards regarding the managing of risk at the card portfolio. One of that is disciplined underwriting. The other one is portfolio segmentation. Another one is analytics and artificial intelligence and also early warning systems.

Obviously, collections optimization are paramount as well as froth prevention. While we are not relaxing underwriting standards to support growth, the current normalization remains within our pricing, provisioning and risk appetite assumptions, we continue to recalibrate our models as new portfolio performance data become available. In short, what we have set in place a guards within our strategy are 5 fronts. The: First one is selective origination, the second one, data-driven portfolio management; third one, proactive risk monitoring; the fourth one, effective collections and the fifth one is strong governance. That is rigorous portfolio oversight, stress testing and adherence to our risk appetite.

So we believe the recent increase in delinquencies reflects portfolio normalization, not deterioration following strong growth rather than structural deterioration in grade quality. Our underwriting standards remain unchanged, and our risk management framework is proactive, and we are confident that portfolio performance will continue to evolve within the assumptions embedded in our guidance.

If I just add one thing on this part. I think you will continue to see these numbers on the credit card for the third quarter, and that will evolve in a positive way for the fourth quarter. As Carlos mentioned, I think you have also to take into consideration that the inclusion of the portfolio of TDS also increased on a minimal basis the NPL base, not that the portfolio is it back, but a big part of the risk of the portfolio.

And remember that in the first quarter, Gerardo also advised that we adjust the models for the credit card to adjust to the new information that we will get into the market. We are confident about the policy, the payment flows and also the number of people that place in full but we are taking into consideration also a very specific seasonal effect that comes from the World Cup that people use the line a little bit more than usual. Okay.

We will now continue with Renato Meloni. Renato, please go ahead.

Congrats, Tomas, on your new role. I have a question on the NIM trajectory for the rest of the year. I'm wondering if you still expect to see your cost of funds coming down? And if you could add to that, if you see loan growth picking up, do you think you can maintain your same level of funding costs or that might increase a little bit if your asset growth is outpacing your capacity to grow deposits?

No, I think on the NIM, think you will continue to see a drop in the funding cost. I think the dynamics that we have in the noninterest range at 11%. Remember that basically, the first part of the year to July is the low the low season for the carrier of phones, and we're already getting the 11% and going down on the funding cost. Another very relevant part is that part of the funding base that we had we have been getting rid of the high cost of the -- some of the funding side related to a specific companies or institutions that we don't need that funding anymore because of the pace of growth of the noninterest-bearing side.

So I think you will continue to see a very positive expansion on the net interest margin and also on the spread on the loan book based upon the funding cost and the already very good activity that we have gathering the noninterest bearing and the low funding cost that we currently. So I think that will continue to be -- and even if the loan book picks up, as you can see on the LDR basis, we are basically for now to the 100%, and we have a continuous flow of funds that will come into the second part of the year.

That will allow to balance any extraordinary growth that I hope it happens because we could fund that at a very good cost. But I think we don't have any pressure now to raise more funding based upon trends that we currently have in the what we call the demand deposit base.

Now we'll go with Marcelo Mizrahi from Bradesco. Please, Marcelo.

Congratulations, Tomas. And so my question is regarding the growth, the perspective of growth of the portfolio, especially the corporate portfolio, so the commercial portfolio, not just in terms a possibility to have a better second half, but also comparing to the competition. So we saw in the last numbers that the system seems to growing more than Banc.

So my question is regarding how is the competition right now? And if the competition is affecting the possibility to grow for trust the growth on the corporate side, how do you guys are seeing that? And why you are still very comfortable regarding the guidance of growth of the portfolio?

Marcelo, yes, we are comfortable with the guidance that we are not increasing the guidance. Yes, some competitors there, I don't know, when they try to go faster. I don't know how to say it [indiscernible]. But, please Gerardo, go ahead.

Yes. But I will say, Marcelo, is that the confidence that we have in achieving our loan growth guidance has to do with what we are already seeing in the business. Commercial lending has clearly reaccelerated. Consumer demand remains healthy across payroll, credit cards, auto and marches and funding costs continue to improve, and our commercial pipeline remains very robust, which is very important. So corporate customers as well as those companies that are above SMEs or between corporate and SMEs have a very robust pipeline.

I want to tell you that there is also a seasonality effect. If you add into consideration, the last 6 months of 2025. There was not even 1 month from July to December, in which you could see a decrease in average loan balances. Our loan book kept on growing. So importantly, this growth is not being achieved by relaxing underwriting standards. It reflects stronger customer and corporate demand improved with client analytics and continued market share gains, which I should emphasize. There are several loan segments in which we have achieved a bigger market share. And based on the momentum we have today, we remain comfortable with our analog growth guidance in that regard.

And yes, you are right, some competitive to a pursue faster portfolio growth. But we really remain focused on helping customers belated and to achieve sustainable room with them. So our strategy is to build for the long run, and we will keep there. And we are very happy with the things that we are doing, and let's see what happened in the future.

And Marcelo also in the public numbers, there are some peers that report some number -- some loans as commercial, some of the government. So we are happy to connect after the call with you and show you the details.

Yes, the numbers are done really to focus on what is the box of every number.

Great. So you -- so no pressures on spreads as well looking forward?

No, no. no.

Now we'll continue with Gabilondo from Bank of America.

Thank you. Hi, good morning, Marcos, Rafa and Tomas, and good morning to all your team. Thank you for the opportunity to ask questions. And Tomas, congrats on your new position, well deserved, and I wish you a successful role.

My question will be a follow-up on loan growth. So given the softer macroeconomic backdrop and the annual revisions to the USMCA agreement, how do you see the sentiment again towards corporate loans? You already anticipated ever pipeline. But what will be other initiatives to accelerate loan growth? You mentioned you have been taking market share, accelerating SME.

So any more color on that will be very helpful. And also related, any concerns with competition, such as dynamic or fintechs to be more specific. And I don't know if you can provide like your expectations by segment. Also related to this, how do you see the development of the Mexico plant and the potential activation of public-private associations, is there room for total loans, including governments to reach double-digit growth in the second half?

Thank you, Ernesto. Let me start at the competitors, yes, they are there and welcome. Maybe the we have the alteration of their strategy. I don't know. Our strategy is long term, we will grow, and we will be there, and let's see what happens. But having said that, we are growing the car loans, 15% to 20%, the credit cards 14%, so consumer is going to be 10% to 14% houses 6% to 7%. And that's why we are confident in commercial 8% to 11%, corporate to and maybe the government that we still don't know, but from around 5%. That's the idea of growing. So the is going to grow from 8% to 11%. We will keep on that number is our guide, and we will keep it -- we are confident that we will achieve it. And regarding the other Atlanta, Alejandro Padilla is going to help us.

Thank you, Marcos. Thank you, Ernesto. This is Alejandro Padilla, Chief Economist. Well, I'm going to address 3 parts of your us. First one related to GDP, our 1.4% of GDP growth for this year. And I think that it's important to walk you through some details about the Mexican economy. Obviously, following a weak first quarter of 2026, during which the economy contracted 0.6% quarter-over-quarter. High-frequency indicators suggest that for the second quarter, we should see an encouraging recovery.

For example, April IgA, which is the Mexico's monthly proxy of GDP increased 1.2%, and that was a very positive number. Tomorrow, we have the data for May. I think it's going to be slightly negative. Maybe month-on-month, it's going to be 0.4% negative. That will imply a positive annual rate of 0.6%. But then June, I think, is going to be positive again with a plus 0.5% on a monthly basis. So if you put that number -- those numbers together, I think that the second quarter will depict a very strong 1.3% quarter-by-quarter. That's basically 2% on an annual basis. Then when we look at what's happening by breakdown of the aggregate demand, consumption has been relatively well.

We might see some positive effects coming from what happened with the World Cup. Exports are performing really, really well. I mean just to put an example, the data between January to May of Mexican exports depict growth of almost 23%. So I think that despite we are in this review process with the U.S. and Canada, and we are facing some tariffs. Mexican exports having really strong, very resilient, gaining a lot of momentum, especially in industries related with AI.

And then I think the third one is that despite that when we sit down with the U.S. and Canada on July 1 and the U.S. decided not to extend for 16 more years, the agreement we still have the U.S. MCA for the next 10 years. So I think that these annual revisions will take place in the next couple of years. but this will be a transition process until reaching an agreement to extend this USMCA. Why we are thinking that at one moment, the U.S. will decide to be in them with Canada and Mexico to extend the USMCA for 16 more years. because it makes a lot of sense for them. I think regional integration will be highly important for the U.S. to be more competitive vis-a-vis China that's why we think that good things can go in the right way, especially in the exporting sector.

And regarding plant Mexico, what you asked, well, I think that it's important to take into account that I mean overall, I think that the Mexican government has been more open about how to execute this program. We have been observing some positive news regarding energy. For example, there were projects approved by the Federal Electricity Commission, CFE. And out of those 37 projects, 31 were involved in private developers. So maybe it has been slow, but we are observing a shift in that regard. And I think in the second quarter, we might see some momentum in terms of investment in Mexico, especially in infrastructure, as you can recall from what I mentioned in previous calls, and Mexico and the infrastructure plan is focusing mainly on energy. 50% of the plants are focusing on energy.

The rest is telecommunications is anything that has to do with roads, trains, and when you see the 2026 budget of the government, MXN 722 billion are going to be deployed into this type of investments. So I'm positive that throughout the second half of the year, we might see some momentum regarding investments. So that's basically comments from those questions.

Thank you, Ernesto. Now we'll go with Tito Labarta from Goldman Sachs.

Also congratulations, Tomas, on the new role. My question on capital. You mentioned you should have about a 65 bps benefit in July. You're already at 12.5%, better to about 13% and then you should continue to be generating capital given the profitability and expected loan growth. So just thinking about potential additional dividends later in the year, further buybacks, how are you thinking about capital evolution and ability to continue to return capital above the 50% payout that you did?

Thank you, Tito. [indiscernible] will answer that, Tomas.

Thank you, Marcos. As always, as you mentioned, capital generation continues to be very strong and above the 1% to 1.5%, depending also on the loan growth and the use of capital, we would consider either buybacks or extraordinary dividends. So I think the answer is yes, with the capital projection that we have and the guidance, there should be space for an extraordinary dividend or a buyback. The size of that will depend on the loan growth and the capital generation, as I mentioned before.

Okay. Great. And maybe if I can, just one quick follow-up. I know there's been a couple of questions on competition. particularly on the funding side, you've been able to reduce your funding costs despite more pressure from tax, even though they've been reducing some of the remuneration recently, but also thinking about incumbent banks that have been sort of underinvested in over the years, maybe becoming more aggressive. How you're seeing just the competitive dynamics from both incumbents and fintechs and your position relative to them?

Rafa, please go ahead.

The numbers speak by themselves. I think when you grow 11% to 12%, the noninterest-bearing and our continuous flow, every time from a higher base that gives you the message that the market is receiving that you are not going for the high funding benefit that some of these companies offer for the full relationship, I think when you have a full value proposition in place and the way we manage now the pricing for the client, sometimes you play hard on the funding side. And sometimes you play on the on the asset side, depending on the risk of the client and the lifetime value of the client.

So that gives you a very flexible way that the clients are always surprised in a very positive way of how they relate to the bank. So when you look at the numbers of these incumbents and you see the size of the funding side, that is basically sometimes in some cases, 4x the asset side that can give you an idea of how imbalance and the cost of liquidities for these companies.

And another important thing is that -- and that is related to what Marcos mentioned about the evolution of our new offer for the young clients. But we are looking at the market is that many of these clients, still clients Unfortunately, they end up having 4 or 5 credit cards that are really creating a huge burden on their finance on the personal finance because if you also look at the rates that those clients are being charged for using those cards, it's basically impossible for that to pay for that. So our view on the market is that Clients are moving to a much more permanent relationship to someone that can give you a full value proposition on a payroll on a credit card, sometimes on a guaranteed credit card that allows you to reduce substantially the rate that you pay for the other incumbents.

So I think we have many tools that allow us to link not just the funding side but also the asset side can allow the clients to grow in a good way, not in an accelerated way that they end up in the credit bureau, unfortunately, and that's not what we are looking for financial inclusion. So I think that's something that is important. And also, there has been like a big advertising that basically, these incumbents are coming with huge analytics and huge -- believe me, I would say, speaking for Banorte, and also, I know all our main competitors believe me. We have -- I will not say the same, but maybe a much better technology to offer to the clients based upon what we have evolved and where we tested with in and what we I think we are in a very good position to know exactly how to guide the clients into this new venture when they become financial included into the financial system. So I think we have the tools and we are very, very comfortable fighting this for the clients in a way that we could really evolve them into a multiple site to keep growing into the financial inclusion journey.

We now will go to Ricardo Buchpiguel from BTG. Please, Ricardo.

Hi, everyone, and thank you for the opportunity of making questions. Can you provide more color on the outlook for the insurance and annuities business for the second half of the year and 2027. We have been seeing more increased competition in the out insurance segment. So I was Wondering if you are seeing a similar trend across the insurance industry as a whole. And given the -- some impact that you mentioned, for the year in the insurance segment. I wanted to see your view on a recovery?

Yes. The [indiscernible] business, I think, is in a very good position. As you know, the return on equity for the company is above 50%. But the most important thing is that not because this is tight sales because it's not for sales in any way, but the pace that we are growing on credit cards, the base we are growing in car loans, the pace that we're going on the mortgage side, on the SME side and also on the commercial and the corporate side, continues to give us a very solid platform to keep increasing the sales on the insurance company.

But we have been a little slow in developing is in the new product development that are more really targeted to the young people that will come into the third -- on the end of the third quarter that will also give us an additional push into the insurance business. If you look at the premium growth in the insurance business, you really see that the evolution of the business is pretty solid on this part. But you are also taking into consideration is that in order to have a very specific arms-length negotiations with the insurance company, the fees that are coming into the bank are reaching now 32% on that part. That's -- That's what the market is doing, and we didn't have we have any beneficial either to the bank or to the insurance company.

So I would say that you have to look at the dynamics of the insurance company and basically, the evolution on the premiums continues to be very, very positive on this part. So we don't see any -- we have a lot of appetite for the insurance business. I think we have been a little slow in developing and deploying the new products into the market, but they will come in, as I mentioned into the third quarter. But I don't see any -- honestly, any weaknesses on that based upon the full service that we provide to clients and the pace of growth that we have and the product that could be offered and insurance related to the sales.

So no, I honestly don't see any weakness at all. Our technical reserves and everything is online. So we don't see any specific thing that we don't like about the insurance company.

Thank you. Now continue with Carlos Gomez-Lopez from HSBC. Carlos, please go ahead.

Hello, I would like to also join in congratulating Tomas. Good luck in your new role to be reporting to Rafael, which we see is not demanding but at all. So it will be a busy job. Question for you, on the fees, we have seen an increase in the fees, but it's mostly because the interchange fees have been declining. Can you clarify the process by which this has happened and what we should expect for fees overall going forward. And I know it's only one question, but if you can explain a little bit more the 65 basis points in capital savings that you're going to get from mortgage models and when that would apply?

Thank you, Carlos. Rafa?

Yes. I would say that when you look at what happened, especially for the gas stations and things on the inlet side and on the acquiring side, I think we have a larger client side at an issuing side. So that explains part of the benefit on that part in the rest is basically the activity that we have on the bank. I think the credit card fees, the mutual phone fees the fees that are coming on the Forward banking, the cash management piece.

So I think the activity of the bank keeps growing at a pace of 28% to 32% per year. So that every single transaction comes potentially with a fee where we could charge the fee on that part. But I would say that electronic banking, everything is moving in the right direction on that part that allow us to have a 22% growth on the net fees for the bank.

So I would like to I would love to give you a specific part, but I think it's the overall pace of growth of the bank and the activity that the bank is having on every single office channels, ATM mobile cash management, mutual on every single part is growing at a very good pace, opening of new accounts relation with driven fees. So that's -- I want to point any specific issue that is really that's because we are growing 22%. Is the overall pace of growth of the bank.

I think you also had a question of the mortgage recalibration. That is related to basal if Gerardo wants to give something, but it's basically the recognition of the benefit of the internal model that gets phased out in different years, No?

That's correct. As Tomas is telling you, there is Carlos 62 basis points net of the impact on capital. So that's a onetime effect because of internal modeling. And that's a propriety for [indiscernible].

The 82 -- close to 82 basis points that will took last quarter that we took last quarter on credit cards and the commercial side.

So I think it's very dynamic all the time. Just remember, we have more than 120 internal models trying to originate and also to optimize provisions and capital use. They move the needle. They move a bit sometimes in favor of us and sometimes against us, all of them.

Yes. Okay. Now sort of the 65 basis points or 62 to mortgages, that would come to your numbers this year or next year. I wanted to have an idea of the timing?

This year in July.

This year in July. So it will be in the...

62 basis points.

62 basis points, as of today, you should have 13.2% CET1.

Exactly right. Yes. [indiscernible] the generation of income that we have for this month.

All right. And sorry. For the piece. I was, in particular, referring to the fees paid and you can see a reduction in the fees paid for interchange. And I wonder if there was one general agreement or something one particular reason for that to go down. That's not one that accepts that fee and expense that declines.

Yes. The fact is that we were having a relationship with a very large, I would say, [indiscernible] clients, but we were not making any money with them. So we part ways with them. on that part. So that's why you see that there's been a reduction on that. So now we are much more in control of how the flows are being priced in not having a difficult way to negotiate the price with companies that have a huge size on the transaction side. But basically, you just see the transaction flow, you don't get any benefit on that.

Okay. So this is the elimination of a correspondent partner and to whom you don't pay fees any?

Right, specific two partners.

We'll continue Pablo Ordonez from GBM. Pablo, please go ahead.

Congratulations on your results and your appointment, Tomas. I have a more structural question on how are you reading the fundamentals of your consumer client base. How is the balance sheet and the leverage of your consumer clients after all these years of loan growth. Have you seen any signs of household balance sheet deterioration from the structural supply of credit card from [indiscernible] and in terms of formal jobs, it seems to be gradually improving, but they are mostly concentrated in the central part of Mexico. Overall, I would love to hear your readings on your -- on the fundamentals of your consumer segment.

Thank you, Pablo. I think Carlos Salazar can give us some color on that.

Yes. Yes. I will start from the above. If I give you a view of what we see in the consumer loan book, just trying to first play with 3 variables. We measure asset quality with 3 indicators. And these 3 indicators are NPLs cost of risk and coverage ratios. They all work together, and I will tell you that we remain very confident that there is no systemic impact on the behavior of our consumers because the labor market keeps going on strong, also consumer sales are stable, and all the economic indicators that tried to explain the fundamentals are working very well together. If I give you a systemic view, I will tell you that NPLs are backward looking.

I will just remind you of that coverage is current. That answers another question, how prepared are we today? And cost of risk is forward-looking, what losses that we expect. And if I these 3 ingredients together, I could summarize the following. We think our consumer credit quality can be viewed by these complementary lenses. The first one, the NPL ratio is a backward-looking indicator that reflects loans that have already become nonperforming Second, cost of risk is forward-looking as it reflects the expected losses recognized during the period based on IFRS 9 models, portfolio composition and also macroeconomic assumptions.

The third lens that we try to use looking at our consumer loan portfolio is the coverage ratio, which measures the relationship between reserves and existing. So it naturally depends on movements in both reserves and the stock of nonperforming loans. For that reason, this metric should always be interpreted together rather than individually. And this quarter, the modest increase in NPLs reflects expected normalization, and I underline that normally in certain consumer portfolios following strong growth, while cost of risk remained within our guidance.

That indicates that expected losses continue to evolve broadly in line with our assumptions. So rather than discussing cost of risk, NPL and coverage separately, you can just come to a conclusion, a very brief conclusion, in which review these metrics as complementary grade independent and NPLs yo[indiscernible] has been, cost of risk reflects the losses we expect going forward and the coverage ratio measures the reserves we hold against existing problem loans. That's why we don't necessarily move in the same direction and why we always have led them to be. So we keep a very positive outlook on consumer loans, and they have been evolving in line with our risk appetite with very handsome percentages of.

Now we'll go with [indiscernible] from White Oak. Please go ahead.

I wanted to ask the slide where you show the NIM of loan portfolio has been stable even as rates have been going down, does this include or exclude the impact of any hedges you might be doing?

Could you repeat the last part? Because there was some noise on the line, please.

Okay. Sorry. Yes. So when you show that your NIM of the loan portfolio has remained stable even as rates have been going down, does that include or exclude the impact of hedges, derivative hedges that you might be doing.

[indiscernible] this one, you take the deals that you charge on the asset side, then the one that you pay on the passive, and you include just the natural hedges that is the mortgages and so on. That is the market -- let's say, market related hedges is in the other margin that we report.

Everything is on the [indiscernible] is all this goes to the plant, and that's the result of all the inputs that we received there. So that's why we manage everything and we see the whole picture, and we can move from there. But yes, the hedges are in.

Yes. I will remind you, [indiscernible] we perform active balance sheet management as every bank. But what we consider our structural pillars are for in order to protect NIM. The first one is dynamic interest rate risk hedging all the time, that [indiscernible] mentioned. But also, if you -- I gave you a complementary view of that, I will add a second front, which is focused on stable low-cost liabilities, which are very evident.

The third front is active outcome management. And the fourth 1 is organic growth of fixed rate loans. Those 4 pillars have been just maintaining NIM. But as Rafael was telling you at the beginning of this call has increased the NIM, although the reference rates in the market has, as you know, going down.

Yes, I would say that which is pure and pure management of the balance sheet and the natural hedges on the we use for that. But I would say that is a very clean evolution of the margin, honestly, on this part is low funding cost, fixed rate, as Gerardo mentioned, good trend on the consumer book on the fixed -- on the fixed part. And the most important thing, a continuous trending down on the funding cost by increasing the size of the noninterest-bearing deposits and demand deposits. I would say is, I would say, feel banking on stream.

Perfect. That's very helpful. On the part that has helped you expand the NIM basis reference rate spread, would you say it's 50-50 funding cost, lower funding cost and better trends on the natural hedges on balance sheet, like our mortgages and the fixed-rate loans? Or would you say funding cost has a bigger role to play?

I think I would say that it's not exactly 50-50, but I would say that at this point in time, funding cost is playing most important role. On another part of the evolution of the margin, the fixed rate part was playing a very good part of that part. So it moves -- if the funding cost continues to go down as we expect that to go down, you will continue to see a pretty good evolution of the margin, even though maybe the mix on the fixed rate part of the book, and the variable rate part of the book stays basically the same that is basically reaching the 64.

Great. My final question on this topic is while we are maintaining this NIM, is it coming at a constant risk profile of our loan book? Or is the risk profile of loan book increasing marginally to deliver the high end is

Why are we making? I would say that this has been in the making for the last 5 years to building up the fixed rate part of the book, that was clear also to getting rid of high funding costs that was present when the loan growth was growing at a very fast pace. I would say that the third part of that and the most important one is a continuous strength on the funding cost. If I can give you a number that I already said, we have lowered the funding cost for Banorte 111 basis points for the year. I think we are top compared to the market on that part.

And that's not because not paying the client what he deserves. I think what we are giving is an overall value proposition that sometimes I referred to that before. You are beneficial on the funding and some tile beneficial on the asset. That's based upon the profile of the client. So there are many variables on this. but this has been on the making for the last 5 years. It's not a result that just happened last year. A lot of natural hedges, a lot of very good growth on the part of the book that we wanted.

And let me just give you something. When we were building this, there was a part on this building that cost us MXN 2 billion to position the fixed rate part of the portfolio at a point in time. That was recovering test that 6, 7 months when we start moving into that direction. But instead of paying very high cost hedges we were for the natural hedges and for the relationship for the client that allow us to be seen in the market as the best offer on the mortgage side specifically, if we like the risk.

Thank you. Now we'll continue with Andres Soto from Santander.

My question is regarding -- I'm back. Sorry about that. My question is regarding provisioning. On the isolated commercial exposure you mentioned, could you please clarify, is this the PEMEX supplier that you have referred in the past? And I would like to understand if those September provision should be seen as a final adjustment to this exposure, and if this will, in the end, bring the cost of risk at the top end of your guidance for the full year, even as you may expect some improvement in the fourth quarter.

[indiscernible] you know, because of the confidentiality we can give you this is not the PEMEX supplier. [indiscernible].

No. I think Andres, what you've seen is that we already mostly fully provide for this and the son operation that you see coming on this part. And also in September, as I mentioned before, is the adjustment of the value of the asset on that part. That will continue to build up some provisions, very small compared to the whole size of the provision cycle -- if you ask me, if we get rid of this that we book that we can get greed and normalize this, into the usual numbers that Banorte runs the cost of risk that is from 1.8% to 1% to 2%.

Right now, we are at around 2.1. But basically, if you see the trend from the first quarter to the second quarter, there was already a reduction in the cost of risk. And that will continue to do so based upon what Gerardo was mentioned a very good origination processes are very good collection process on this part and the adjust of the models on the most risk part of the portfolio, what's happened in January is already delivering good results. So I would say that, that's a specific asset, and we will continue to adjust the value of the asset as we see fit in order to not have any surprises as we thinking in the worst case possible.

Thank you, Rafa. So you mentioned year-to-date cost of risk at 2.1% for the second quarter specifically, it was 2%. We can assume that this 2% is what is sort of your normal cost of risk, but up in the third quarter and coming down in the 41. So most likely, it will be in between 2.1% for the full year. Is that the right approach to look at this.

1.8% to 2%.

Even 2%, not even the 2.1%. Perfect. So congratulations to Tomas on his appointment.

Now we'll go with Jorge Perez from Itau.

First, congratulations, Tomas, for the new position. My question is mainly about the loan growth in the corporate portfolio, specifically in the business portfolio. We saw some acceleration in the second quarter, but it's also seen that the bank is -- has been losing market share -- and if we zoom in by the segment, there appears to be significantly weakness in the e-commerce specifically.

So I think which is an important segment for the bank. So I want to understand what is driving that. Are you seeing more competition in the segment, pricing risk appetite or you're looking for growth in other segments of the economy? That's all

Thank you, we have an explanation for Tomas.

[indiscernible] and when you look at the CNBV numbers, normally, we look at the consolidated. But when you look at segments, as you mentioned, commerce specifically, you don't look at the consolidated. So you have there the impact that we have the loan to [ Tarjeta Futuro ] that was -- the JV with rapid was around 10 billion. So from December to January, when we integrated the company, you reduced that. So I think that's the main effect that you consider. I don't know this is clear or you want me to give you more details?

No, no, that's very clear. So the debt that [indiscernible]...

[indiscernible] the convertible and additional line for the funding of the company the two were registered in that bill that you are seeing, that is the nonconsolidated view. You used to have that in the commerce book specifically. When we integrated the company, that line basically disappear. And that's why you see the reduction. You don't see these numbers on the consolidated. That is the normal view that you have, but I think you did a very good job looking at the details and the specifics of the segment. And there, you don't see the numbers with the same of consolidation.

We'll continue with Edson Murguia from Summacap, please go ahead.

Congrats on the new role. My question is a quick one regarding on AI investment. You mentioned in the remarks, Marcos and Rafa about 10,000 people by the end of 2026 using different type of AI tools in the bank. So how much of investment is Banorte doing it to achieve that?

So I cannot -- sorry, but I cannot give you a specific number because that will put me in budget with my provider. So sorry. What I can give you is that when we talk about the 10,000 people, basically, it's related to the day-to-day job that they do about the same time we are doing on the coating side, on the aging side and all that.

But I think the numbers that you see on the expense line on the IT side are already embedded in this part Obviously, that has to be compensated by productivity and also -- but also, especially on the coating side, we see a huge opportunity on the total side. So I would say that, that will be a bad thing. Remember that AI is expensive tools because you have to build up infrastructure on the cooling side, on the energy side and also it's not cheap the tokens and everything is not cheap on that part.

So -- but I think we are doing it in the right way. And I think we can provide that by the first quarter of next year, in comparison to the first quarter or when you see the full deployment of the budget, we will be specifically on the AI investment.

Now we'll take our last question with Anand Vaswani from Wide Oak.

My question is on cost of funds. In the presentation on Slide 17, we show it's 45% of the reference rate. Given the competition from digital banks, fintechs, where do you think this will settle over the next couple of years?

I think what you will see is that banks like BBVA sales and we continue to lower the funding cost because of all the different venues that we have to gather funding, cash management, mutual funds and thanks on that part that are related to flow. Also, the acquiring business provides a huge inflow of funds on the chip side. So I think you will continue to see that from the large parts, the funding cost trending down on that part.

I think the fintech needs to evolve to a much more sustainable business on the funding side, not just by offering high yields on pure funding, but they need to go and move into related business like SMEs and things like that. But that will also create another additional cost that needs to recover and then they have to balance the profitability of the relationship. I would say that we will continue to play their funding game on the low end, on the low cost end. And I think we have all the tools to do so by the huge offering that we have on the market.

SMEs, for instance, is a huge source of of cheap funding for us because of the relationship that we have, payrolls, new accounts in that way. So acquiring business, merchant business. So I think we don't see really any weaknesses that we cannot cover by the offer that we have. Obviously, we have rolled that offer in a continuous way. And we adjust and we have bought and we transform on that part, we are never sitting idle loans, looking at how the market. That's why we tested the market with Vineland TDF for almost 3 years to understand exactly the alignment of that market. And I think we understand that pretty well. That doesn't mean that we doesn't need to evolve. We continue to evolve in that process. I think they moved to a much more digital offering, especially on the SME is going to be mandatory.

Thank you, Anand. With this, we conclude our call. Thank you, everyone, for joining.

Good morning, everyone. This is Tomas Lozano, Head of Investor Relations, Corporate Development, Financial Planning and ESG. Welcome to Grupo Financiero Banorte First Quarter Earnings Call for 2026.

I would like to start off by thanking our investors for your valuable feedback on how to improve our disclosures, including our sustainability performance. At the end of February, we launched our 2025 integrated annual report together with our first report on nature and biodiversity risks and opportunities following the TNFD guidance. Both reports are already available on our web page.

We'll begin today's call with remarks from our CEO, Marco Ramirez, who will present the main results of the quarter, highlighting the strength of our core business metrics despite a volatile macro environment. Then Rafael Arana, our COO, will go over financial highlights for the group, providing details on the margin evolution and cost of funds, who'll address a schedule of debt in our provisions as well as remarks on cost control.

Please note that today's presentation may include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially. On Page 2 of our conference call deck, you will find our full disclaimer regarding forward-looking statements. Thank you. Marcos, please go ahead.

Thank you, Tomas. Good morning, everyone. Thank you for joining us today. We begin the year with an overall strong first quarter and solid performance across our business units, despite higher market volatility and increased geopolitical risks, particularly the conflict in the Middle East. Despite this complex operating environment, we are reaffirming our outlook and guidance, supported by a strength in our core business. At the same time, we remain prepared to adjust our strategies as needed to navigate through any ongoing volatility.

In this context, 2026 is key for the trade relationships between Mexico and the U.S. as the USMCA formal revision begins in July. Discussions are already underway and our base case is still supportive of a constructive agreement between both countries. Regarding macroeconomic performance, Mexico is positioned for a stronger and more balanced growth in 2026. After a modest 0.6% expansion in 2025, GDP growth is expected to reach around 1.8% this year, driven by improving domestic demand, a temporary boost from the spillover effects of in consumption and tourism from the FIFA World Cup in the summer alongside a stronger export and investment during the second half of the year assuming a positive resolution of the USMCA.

Furthermore, we believe the execution of the Mexico and other infrastructure initiatives from the federal government will support a stronger growth over time. On monetary policy, Banxico delivered a 25 basis point cut during the quarter, bringing the rate down to 6.75%. Given recent inflation dynamics, we expect limited room for further reductions this year with utmost one additional cut to end the year at 6.5%, effectively marking the end of the easing cycle.

Finally, we expect the exchange rate to remain broadly stable in 2026, despite recent U.S. dollar volatility linked to the geopolitical developments with a year-end level of MXN 18.1 per dollar.

Now starting off with the financial results on Slide #3, we highlight the group's strong core business performance. Net interest income for the group and the bank expanded year-over-year driven by a continued optimization of funding costs and an expanding portfolio of consumer lending, which helped offset a lower interest rate environment. It is worth noting that provisions for the quarter were mainly impacted by a periodic recalibration of some of our internal models. This adjustment was already embedded in the guidance. So it does not represent an additional impact in our cost of risk estimate for the year.

Moreover, our capital adequacy ratio reached 19.7%, reinforcing our financial flexibility and enabling further optimization of the capital base. I will expand on this later in the presentation.

Shifting to business performance on Slide #4. Net income for the quarter reached MXN 15.5 billion, up 1% year-over-year. This performance mainly reflected a defensive margin and disciplined expense management, partly offset by a one-off provision increase already mentioned, negative mark-to-market adjustments across insurance, foreign and brokerage portfolios and a normalization of our trading income.

Profitability metrics remained resilient with ROE standing at 23.9% in the first quarter and ROA at 2.4%. Analyzing results by subsidiary on Slide #5, the bank reported net income of MXN 11.7 billion in the quarter, 6% higher year-over-year, displaying some business trends across our core segments. Sequentially, net income declined 6%, mainly explained by seasonally lower transaction volumes and higher one-off provisions.

Overall, these results yielded a 30% ROE for the quarter, up 213 basis points versus the first quarter of last year. The insurance company net income declined 20% year-over-year, despite solid commercial performance driven by strong auto credit activity. Results were mainly affected by a base effect from base policy renewals to be fully reflected in this quarter, negative mark-to-market adjustments and higher bancassurance fees. The annuities business grew 7% year-over-year. supported by larger business volume and a positive valuation of inflation-linked assets.

The pension for annual contraction was mainly driven by negative mark-to-market effects despite higher fee income for larger assets under management. Similarly, the brokerage sector annual decline reflected lower market valuations in securities.

On Slide #6, lending activity, remains resilient, growing 6% year-over-year, and 8% excluding government. Overall growth was mainly led by strong consumer activity, with solid contributions for the commercial and corporate portfolios, which grew 6% and 2%, respectively, despite some repayments and exchange rate movements in the dollar book.

While our current guidance does not reflect any benefit to potential renegotiation of the USMCA, we are well positioned to capture opportunities as the investment decisions move forward.

Government lending declined 5% year-over-year, mainly due to prepayments and scheduled loan maturities during the quarter. It is worth noting that our appetite for this portfolio remains unchanged and we are constructive on the offset potential to support public infrastructure projects released related to the Plan Mexico.

Turning to Slide #7. As I mentioned earlier, consumer lending continues to be the main driver of growth, increasing 11% year-over-year. Performance was supported by healthy consumer demand, efficient execution and process optimization and a commercial approach that prioritizes deeper client engagement. Although loans stand out with a strong 30% year-over-year driven by a solid activity across the sector and recent commercial partnerships.

Credit card business balances grew 14% year-over-year, driven by sound consumption trends and targeted commercial initiatives. Along the same lines, payroll lending increased 12% year-over-year supported by a broader product offering and greater availability to digital channels, building deeper customer relationships.

Finally, mortgages, they grew 6% year-over-year, driven by improved execution in origination, personalized offerings and a disciplined risk approach.

Turning to risk indicators on the Slide #8. Asset quality is well contained, performing in line with the loan mix, stable at 1.4%. This still reflects the nonsystemic phasing in our commercial portfolio, the impact of recent changes in our mortgage write-off policy and a stronger growth in consumer lending. I would like to highlight that this indicator is the result of a disciplined risk exposure prioritizes, lower leverage profiles across the different loan portfolios.

Moreover, as I mentioned earlier, the quarterly cost of risk hike is not related to asset quality and responds mainly to the scheduled recalibration of our internal risk models, Rafa will provide further details later in the call.

On Slide #9, fees grew 15% year-over-year, driven by strong volumes across consumer and wholesale banking products, with the retail segment achieving record net new account openings. Moreover, mutual funds and the positive impact of prioritizing efficiency and profitability in our digitally affiliated business supports this growth. Sequentially, net fees declined after a high seasonal base in the fourth quarter.

On the ESG front on Slide #10, the first quarter of the year marked several key sustainability milestones, including the publication of our annual 2025 report, which integrates our financial performance with relevant progress across our sustainability strategy. We also released our inaugural report on nature and biodiversity related impacts and dependencies in our loan portfolio aligned with the TNFD titles, becoming the first bank in Mexico to disclose under this framework.

Before concluding my remarks, I would like to emphasize that despite the one-offs already discussed, our operating performance continues to reflect the underlying strength in our core business, supporting a positive outlook and our ability to deliver the guidance for this year. As we continue executing our strategy, we are transforming our operating processes by deeply integrating artificial intelligence into daily work streams across the organization. We were among the first institutions to adopt AI at scale and our intention is to have 10,000 people across operations and back office areas, integrating daily activities with artificial intelligence levels 1 and 2.

This effort is guided by a formal AI governance structure already in place. That is, advancing multiple use cases across the bank, such as a client personalization, rating 1 agent per client and shaping our business and risk areas by simplifying workflows, enhancing decision predictability through advanced data usage and supporting exponential growth opportunities.

Finally, as you know, we will hold our Annual Shareholders Meeting tomorrow where we will propose the distribution of a cash dividend equivalent to 50% of our 2025 net income or MXN 10.45 per share. This proposal is fully aligned with our continued focus on maximizing value and total returns for our shareholders.

With this, I conclude my remarks, and now, Rafa, for the main financial results of the group. Thank you, and Rafa, please go ahead.

Thank you, Marcos. We move to the specific financial highlights. But I would like to stress what Markus mentioned because there was some concerns about a pickup on the provisional side, but we will discuss that specific in a minute here too. But I can assure you that basically, are not related to the performance of the portfolio. We will go in detail on that part. It has been related to some regulatory issues on calibration of models that we have been doing on that part and a specific case on the commercial side that is coming back from last year. As you know, we are fully working on the recovery of that part. So we will strip down the net effect of the provisioning, taking away all the extraordinary effects and what is the current level of provision that the bank is really performing at.

So the first thing that we would like to see is that the NII in loans and deposits continue to be double digit, 10% growth year-over-year. And the NII for the quarter was 1% and 10% for year-on-year. So NII continues to perform exactly as planned. Basically, it has to do with a lower churn in the funding plan, a much strong performance as we have on the portfolio basically on the fixed rate part of the portfolio that we have built over time and is delivering a pretty good results of the margin piece.

So another thing that is causing some attention about this is related to the insurance business. The insurance business, the premium is going as planned but we have to adjust the fact of the first quarter against the second quarter because in the second quarter, basically, you will have a policy that usually runs in the first quarter that has been moved to the second quarter. That's what is causing that decrease in the performance on the insurance company, but the insurance company continues to deliver exactly as planned on a quarterly basis, if you strip that extraordinary process of the big premium that is going to be moved into the second quarter.

So NII continues to go strong. Loans and deposits NII continues to do well. So I think the core, as Marcos mentioned, continues to be right on track to deliver the guidance that we promised the market.

If we move to another very basic issue concerning the structure of the bank and how the activity of the bank is really moving forward, when you look at the core banking revenues and NIM, you see the net interest margin for the bank which is sitting at 6.6%, 2 basis points ahead of what we have the lower end of the guidance for the market. So you will continue to see and we will see a graph in a minute that we strengthens the quality of the balance sheet that is delivering these margin numbers.

When you go to the NII, we see that it is growing 9% on a year-to-year basis, based upon what we mentioned about the loan deposit ratio that we have. Bank net fees also showing the increased activity of the bank in every single of the channels. We are basically reaching record levels of new opening of accounts at the bank and new open accounts also on the digital space with very strong balances, especially at the branch level.

The sensitivity we also from the market in the calls that we have, we are back around the 48%. There was some concerns for some analysts because we pick up at the end of the year, we explained that because of the growth in the government book and also the big inflow that we have on the deposit side. But now we are back again to the 48%. So basically, we are bit sensitive so neutral on that part. On an NII basis is basically noting 0.1%. So we continue to be very disciplined to managing the balance sheet in a way that can really allow us to take the full benefit of the fixed rate part of the group.

The profitability of the bank, the return on equity of the bank is reaching 30.1%. This is also, as we mentioned during the -- when we have been talking to some of the analysts. When you see the 30.1%, it is also including that extraordinary effect of the sale of the credit bureau that is basically MXN 500 million that is included in that part, okay? If you strip that down, you reach the 29.7% that we have before.

The net income of the bank is growing at 6% on a year-to-year basis and the ROA is 2.4%, going down from the -- for the fourth quarter. As you know, in the fourth quarter, you basically get a full inflow of very cheap deposit funds that allow us to benefit the margin on the asset classes that we have in.

This is the most important graph that shows why we are so confident about delivering the margin numbers and how the balance sheet is also working for us in sustaining the margin. The graph on the top, the blue line shows exactly that -- what the active rate of the portfolio is, 12.0. The next one is the clear blueline shows where is the reference rate in the market, the 7.3%. And in the low end, we see basically what is the funding cost that is having for the market.

But what is critical for us is the red dotted line, the black line with red dots that shows exactly how resilient the net interest margin for the loan portfolio has been through time, notwithstanding the ups and downs on the active rate and the passive rate. So that shows exactly how we are managing the balance sheet and how we are delivering the margin based upon the strategy that we follow on the asset classes.

Funding cost continues to be a good story. We had a very good quarter on the funding cost. Usually, we have more withdrawals in the first quarter. This year has been much more steady. The support for the inflow that we have at the end of the year so that continues to show a very good trend on the cost of funds. We continue to see that number to be able based upon what we saw on the potential reduction of rates coming down and also on the management that we have been doing on the retail phase to reach those numbers very close to the 42 at the end of the year.

What is also quite important is that there were some concerns about the impact that some of the other players in the market, especially the newcomers into the market, how they're going to affect our non interest bearing demand deposits. As you can see, on a year-to-year basis, noninterest rate deposits is growing 15%. So that really shows the strength of the retail franchise that we have and how we are integrating the relationship driven model for the clients that allow us to really give a much better deal in the overall relationship that we have with the bank and not in just a specific problem. So that is key for us.

Another very important thing is that the mix continues to be very healthy 70-30, 70 demand deposits and 30 time deposits. So time deposits continues to grow also pretty -- in a strong way, 11% for the year, but with very good costs, and we continue to be the leaders in the market.

What is also -- and this is going to -- we're going to take some time on this graph, and then we will move into more detail about that to explain the cost of risk. As you see, is moving to 2.2%, 2.06% without the recalibration of the models. Gerardo will explain that in a minute. But what is clear about this is that the cost of risk is in range of what we expect for the end of the -- for the guidance that we delivered to the market. We really don't see any specific issues concerning any trends or basically a deterioration in any of the portfolios.

Basically, as you know, in the third quarter, we had an extraordinary case, that is also affected in the first quarter a much smaller part, but still was there. And we are really hoping for the recovery of that loan in the third quarter. Another specific part, and Gerardo also will talk about this is the write-off rate as you see is very steady. So the pickup in provision is perfectly explained by the situation that we said. The models, specific things that we have in that part and also at the pace of growth of the consumer book.

Remember that the consumer book is the one who requires more provisioning since we are growing at a very fast pace on the consumer book that is also showing not because of deterioration of the book, but because of the regulatory issues that we need to put in there in the provisions in day one.

Another important thing concerning the consumer is that basically, we are reaching now the third place in the credit card market, as Marcos mentioned. That is a milestone because, as you know, our credit card business is the one who is underrated related to the 20% of the base EBITDA in all the consumer or other consumer business that we have. So now we are continuing to grow in a very solid pace. As you saw in the NPLs, credit cards going down on the NPLs. The same that the payroll loans is going down on the NPLs. So that really shows that we are growing nicely and with a very good trend on the NPLs.

So I would like to ask Gerardo to go and explain the issue about the provisioning part.

Yes. Thank you, Rafa. This is Gerardo Salazar, Chief of Risk and Credit Officer at Grupo Financiero Banorte. Let me bring to your attention the performance of the quarter-over-quarter cost of risk. As you can see, it increased from 1.36% to 2.18%, highly influenced by 4 factors. Factor number one, a base effect of the Tarjetas del Futuro, the consolidation of the fourth quarter of '25. The factor -- the second factor is internal models recalibration as Rafa was explaining, and this is expected within the guidance. The factor number 3 is growth on retail portfolios and the fourth factor is additional provisions for a specific wholesale paper according to regulation.

But if we exclude TDF's, Tarjetas del Futuro's effect, before quarter '25 and the internal models effects on the first quarter of '26, cost of risk will have changed from 2.32% to 2.06% that reflects an improvement. But also, let me guide you through a different timeframe. If we talk about cost of risk in the 12 months' timeframe, you will see that it increased from 1.77% to 1.89%. But if you exclude Tarjetas del Futuro accounting impacts for the fourth quarter of '25 and internal models effects in the first quarter of '26, cost of risk in a 12-month timeframe will have changed from 2.02% to 1.86% and that also reflects an improvement in a 12-month timeframe.

Well, in this graph, you're currently seeing, there is a very important relationship between cost of risk and provisions and also between provisions and write-offs. Let me talk and guide you through bringing your attention to these 3 variables. The component number one, we have a very stable contained write-off rate approximately 0.43%. And that indicates realized losses are under control, and there is no systemic deterioration in asset quality.

Component #2 or variable #2 is at elevated cost of risk partly due to recalibration and not purely deterioration because of model updates and prudence are driving provisions in this case. The third variable, which is provisions. But as a matter of fact, as you can very clearly see are increasing and this is driven by model recalibration and Stage 3 isolation of the already mentioned case.

This suggests that we are front loading risk recognition. And let me just explain why I'm telling you that we are provisioning ahead of losses. Cost of risk is elevated by prudence and model recalibration, not by a spike in a realized default rate, and this is evidenced by a stable write-off rate. As a result, reserves are strengthening, and this is positioning Banorte in a very conservative mode for future credit cycles.

So in the short term, there is pressure on earnings because of a high cost of risk. But in the medium term, we have -- we will have earnings tailwind that is lower future cost of risk as provision normalize. In essence, and to conclude, I will tell you that cost of risk is elevated, but mainly due to prudence and model recalibration, not a deterioration in credit and write-offs remain stable at 0.43%, confirming losses are contained. The result is higher provisions today, strengthening reserves and positioning Banorte conservatively for the future.

Thank you, Gerardo. Thank you. So basically, we continue to see the guidance that we promised the market that we are right on target to deliver the guidance that we promised in the market for the whole year.

The other thing that has also now that we have been managing the Bineo and TDF in our -- basically, streamlining the expense lines, you see that finally, we are reaching our first target that is close to the 34%. That will denote the number for the end of the year, but it will be around 35% for the end of the year, but we are clearly in trend to reach our 34% that we are aiming to have fully in '26. So good expense control, and that's notwithstanding that we continue to invest in every single part of the technology case and also including in some branches and ATMs that we needed to put in place, basically for the payors.

There also has been some concerns because basically, we usually run our core Tier 1 from 12.5% to 13.5%. So there were some questions about the 12.7%. So what happened to the 12.7% because it seems that 90 basis points of the capital moves from one place to the other. Those 90 basis points of capital that you see that is not showing on the core Tier 1 are basically related basically to regulatory issue 40 basis points that we will see that returning for us around 80 basis points in July and another 50 basis points that are related to the risk-weighted assets that happened in the first quarter.

So that will be normalized in the second quarter, in the third quarter. And you will see the usual numbers hovering around the 13.5% core Tier 1. And remember that at the group level, we are still holding 90 basis points of capital also. So that 12.7%, we have to add 90 basis points that is being held at the group level.

So we continue to see the guidance to be delivered as we promised by end of the year. And I would like to also talk about the important that we see on the consumer book that we continue to really outpace the market in most of the different products that we have, and that has to do with the fact that we are moving more and more to the hyper personalization issue that allows us to do the cross-sell in a much efficient way.

The only one that is below our expectations is the mortgage book, but you will see that the mortgage book will be recovering in the second quarter, in the third quarter to reach a loan growth around 8% to 9% by the end of the year. Everything else is online on the consumer. We continue to gain market share. If you see the evolution of the market share of Banorte compared to the market, you will continue to see a very good evolution in most of the products.

So with that, I conclude that the guidance is going to be delivered as we promised the market. And what happened in the first quarter, there was a lot of moving parts like you many times said, but those moving parts are easily explained by the manner how do we manage the book and how do we manage in a conservative way, the provision inside of the book. Everything else is on track. Good funding costs, good margin, good growth in the consumer and ready for any potential growth that comes into the market for the corporate and the commercial once the market start to develop in a much more active way, we are fully prepared to capture that opportunity.

Thank you, Marcos and Rafael. We will now move to our Q&A session.

[Operator Instructions] We're now ready to start. We will take the first question from Ernesto Gabilondo from Bank of America.

My first question relates to loan growth. We have observed that Banorte's loan growth and overall industry growth are tracking below expectations for the year. So against this backdrop, what do you see as a key potential drivers that could help accelerate growth in the corporate and government loan portfolios, which are the ones that are lagging, any color of what you're seeing will be helpful.

And my second question concerns asset quality and other income. We understand these lines were affected by certain one-off items on provisions, as you mentioned. The increase was mainly related to the recalibration of your models. However, this is not expected to repeat, should we expect cost of risk to behave more in the low end of your guidance range of 1.8% to 2.1%? And in terms of other income that came meaningfully higher than expected, could you provide some detail on the drivers behind this performance specifically? I don't know if there were asset sales or recoveries. And also, how should we assume these levels in the next future quarters?

A long question. Talking about the loan growth, it's not below the expectations. It's not flat in the year. It's going to be -- as we said since the beginning, it's going to be, I don't know, in the second quarter and third quarter, is going to be increasing, and I will ask Alex to walk ahead on that, please.

Yes, Marcos. Thank you. Thank you, Ernesto. This is Alejandro Padilla, Chief Economist. Well, as you know, the Mexican economy started the year with a slowdown in the first quarter, following a strong close to last year. This performance can be explained by seasonal factors that typically affect the beginning of the year as was reflected in the monthly GDP proxy of January as well as some headwinds stemming from the global geopolitical environment, as Marcos mentioned earlier in the call.

In this regard, I expect the first quarter to show no growth in terms -- in a quarterly basis and later to accelerate 1.1% in the second quarter. Even so, we believe the economy will gradually regain momentum, in particular, during the second quarter, we could see some positive effects associated with the 13 World Cup matches that Mexico will host. In this regard, a few weeks ago, we published a research note on the potential impact of the World Cup on the Mexican economy. The key finding of our study points to a potential impact of something around 42 to 62 basis points on GDP already incorporated in our forecast driven by investment in the 3 host cities, particularly in connectivity, also driven by consumption and by tourism.

And looking ahead in the second half of the year, some of the factors we expect to support the growth includes the launch of infrastructure projects under the government's announced investment programs, especially following the recent approval of the infrastructure investment law as well as the progress in the discussions related to the USMCA review process. In this context, we continue to see a constructive tone in the bilateral talks between the U.S. and Mexico, which has allowed the export sector to maintain a very favorable performance. And as a result, we believe our guidance range of 1.4% to 1.8% is achievable with a bias towards the upper end of the range.

As I said, the government lending and the corporate lending, our appetite for this portfolio remains unchanged. We are very constructive on the upside potential to support the public infrastructure projects related to the Plan Mexico. And you will see that in the second semester, I think so. And now Gerardo can elaborate.

Before touching on asset quality, we remain very optimistic about the 2 drivers of loan growth. The first one is the USMCA treaty, which sooner or later will recognize Mexico as -- with a more favorable treatment than the rest of the world. That's very important for us. The second is the new Strategic Infrastructure Investment Act, which are making projects more bankable. So we are very well aware that some private investment is at times just waiting to see what the rules are going to be and to source and make some CapEx regarding loan growth.

So in the commercial side of the business, we have those expectations, our central scenario and that's a very important growth driver. And being more specific, this is Strategic Infrastructure Business Act provides bankable potential for so many projects at the moment.

Regarding asset quality, as Marcos was mentioning, we -- you mentioned Ernesto, that we expect beyond more effects, adverse effects more than these one-off items that we just mentioned. Let me touch on credit risk modeling recalibration. As this core credit risk modeling recalibration is about realigning the model outputs like probability of default, loss given default, exposure at default with observed reality without rebuilding the model. And what happened -- what just happened is in the commercial side of the book.

Once we take this into consideration, we are obligated to make recalibrations that equals, correcting the level of risk estimates to current reality while preserving the model's ranking power using updated data, disciplined methodology and strong governance. If you look at other parts of the loan portfolio, there are very favorable data on that regard. If you look at mortgages, for example, you would look at very favorable data.

We will continue to make model recalibration, but let me make, with the permission of Marcos and Rafa, a forward-looking statement regarding, for example, the internal model of mortgages. We are expecting a very important push on capital for the second or third quarter of this year, which will be around 60 to 90 basis points on capital. That gives an example that sometimes internal model recalibration will hit on earnings and some of the times, they will build a possibility of provisioning less in the income statement or having a stronger capital in the balance sheet.

So if -- let me be very explicit about this. We do not expect an out of control credit risk metrics regarding cost of risk or NPLs going forward.

Thank you. Another thing, talking about other income, the sale of credit bureau, as Rafa mentioned, plus other recoveries it was around MXN 500 million of net income. A normal level should be close to previous years talking about in other income.

Perfect Marcos, Gerardo, Alejandro. Just a last question on the digital competitive landscape against other fintechs. I remember in the last conference call, you mentioned to be exploring new products, ideas to compete against the new entrants and to serve the unbanked younger population. Also in your remarks, you commented about the adoption of artificial intelligence. So just wondering if there's any update on potential new products for these younger or unbanked clients? And what would be Banorte's key differentiators?

Thank you, Ernesto. As you know, we know how to manage the public about 40 years and above, and maybe we may do something with the younger people that clients are with us. That's why we will launch a new product, a lot of things. Yes, it's going to be at the end of this one that you will see, and it's going to be called Banca Joven and you will hear about us in the future about that.

The next question is from Tito Labarta from Goldman Sachs.

One quick follow-up on the provisions for that one specific corporate that you had a provision a bit more, could you quantify how much that was? And is that now fully provisioned? Or could there still be more provisions related to that? And then my second question. Just thinking also a little bit about the loan growth in USMCA, right. I guess, particularly like on the corporate and government book, if USMCA given everything going on geopolitically in the world, if that gets delayed, and doesn't -- you don't get a resolution this year, how could that potentially sort of continue to impact not only the commercial growth, but then could there be some indirect effects on the consumer, which is, as you said, has been very resilient?

But if there's continued ongoing uncertainty, could there be some ramifications down the road also for the consumer, also, again, if there's any delays on USMCA or if that doesn't get resolved sooner or gets resolved rather later?

The first one goes to Rafa, please.

That specific loan that is related to the third quarter provisioning is MXN 276 million and there's no more comment to that issue.

We expected the other way around, we expect to start to recover something that hit us in the past and the second one the loan growth...

Regarding the USMCA. Thank you, Marcos. Thank you, Tito, Alejandro Padilla again. Well, regarding the USMCA review, bilateral discussions between the U.S. and Mexico continue to be highly constructive. The recent visit this week by the USTR Katherine Tai reflects a strong spirit of cooperation with both sites, aiming to deepen regional integration in order to enhance North American competitiveness and national security. And as you mentioned, Tito, a lot of things have happened in the geopolitical spectrum.

And I think that the recent conversations between Ministry of Economy and the USTR are focused on advancing the USMCA review with particular emphasis on strengthening rules of origin especially in the auto sector and steel, cooperation on critical minerals, the reduction of nontariff buyers and sectoral tariffs as well as reinforcing supply chains. The improving investment clarity, uncertainty and enhancing regional competitiveness vis-a-vis Asia is crucial for both countries in preparation for the technical discussions that we will have by the end of May and the official start of the review process on July 1.

So all in all, I think that this will be something that we will continue to analyze and discuss in coming months. We have to remind also that we have U.S. midterm elections in November. So let's see how this situation can also change the way the discussions take place. However, we are constructive that maybe somewhere around end of 2026 or beginning 2027, we will have clarity about the extension of the agreement.

But I think it's important to stress out, and I will be very emphatic on this that, for example, FDI in Mexico has been resilient despite of the situation. Why? Because Mexico has important competitive advantages and comparative advantages with the rest of the world. Last year, FDI reached figures around $41 billion, which was almost 11% above the previous year. While new investments, we're talking about greenfields were depicted and even larger increase.

So all in all, I know that there are some uncertainty surrounding what's going to happen with the USMCA. But the exporting sector continues to perform very well. Indeed, the data that we have until February suggests that exports are growing in a cumulative basis around 7% with advanced manufacturing and key industries, especially the industries of the future growing at a 2-digit pace. So that's the way we are analyzing USMCA and the performance of investment and the exporting sector.

Just one thing about the -- what you mentioned about the consumer potential too. I think the discipline that we have in the risk side you usually see a push coming from the commercial people, from the retail people, telling open more the risk metrics, open more allow us to get more. We will not do that. We will continue to be as disciplined as we are. We are gaining market share in a very important way. And we will not stress the risk models that we have. We are very happy with the models, the way they are performing, and there's no need for us to go and get market share based upon aggressiveness that we will not do that at all.

No, that's helpful. And so just -- and again, we don't know what's going to happen to USMCA, hopefully, it does get resolved. But how much is that impacting certainly, I guess, the commercial loan book? Just the concern is like if it doesn't get resolved, like that slow growth there, that then can have other ramifications for the rest of the economy could get a little worse. But how much -- can you quantify how much uncertainty is causing that commercial loan book to not grow for now?

Currently, for the total loan book, all loan origination on the book that are related to U.S. exposures is around 2.6% or 2.7% of the total loan book. That's our exposure. But what we are trying to say is that when the international trade framework like USMCA tilt in favor of Mexico, which is the less credible scenario, but suppose you think in a very adverse way, it's going to continue to be tilting in favor of Mexico.

But if that happens, we could count on an immediate boost on trade and working capital financing, if that happens and also a second run effect regarding CapEx which will finally accelerate for the loan book in the wholesale sector. And also the reshoring will be amplifying the cycle. And finally, getting to your question, Tito, there will be a spillover to consumption. And that what we're trying to project is a scenario in which job creation in export sectors are going to materialize, incomes will grow and retail credit expansion will take place.

So in that scenario, I think that we are trying to see not being optimistic, but rather pessimistic in the international trade, the economy will be tilting still in favor of Mexico relative to some other countries. We're not saying there is not going to be tariffs in the near future, but the treatment that USMCA will give to Mexico will be favorable to say the least.

We will continue with Yuri Fernandes from JPMorgan.

I'll limit myself to just one question here. Regarding capital, guys, I guess Rafa already mentioned that capital is expected to improve in June. So if you can explain the 40 bps regulatory headwind this quarter, what was this? And why should it improve in June? And also the marked RWA, I think like the marked RWA is part of the reason why core capital didn't improve so maybe some color on that.

And finally, just an understanding that I got from Gerardo and Rafa's previous answers about capital and provisions. So basically, the internal models require more provisions because the capital was a little bit less good than you expected. So once capital improved, maybe could have lower provisions. So just making sure this understanding is also right.

Thank you, Yuri, for your question about the capital. Rafa, please.

Yes, you're right about what you mentioned. The fact is we have 30 basis points of capital that were basically affected by the risk-weighted assets that we have because they require more capital based upon the regulatory issue and also concerning the deposit mix that we have, we have a layer that we go to the regulator, that layer was moved. So that penalized us by 50 basis points. That as Gerardo said, we will recover those 80 -- those 90 basis points that were against us. In July, we will recover 80 basis points on that part.

So even though there was -- even though this has happened unusually, we will also like to talk more about -- with the regulator about some issues that I think we will also allow us to move that 40 basis points into the capital again. But consider that we don't achieve that, you will see a replenish of capital of 80 basis points in July, in addition to the generation of capital that the bank has in a permanent way that we will see by July as we usually see the numbers very, very close to the 13.5% that we basically like to run the bank around that number.

So those things happen on that part is not that we were careless or anything like that about the capital or the weighted assets or anything like that, basically one is the regulatory issue that we are talking to the regulators about that issue. And the other thing is that the density of the portfolio really increased on that part. So there was nothing really that was out of the hands. One is a regulatory issue and the other one was part of the evolution of the book.

And regarding the regulatory side of your question, Yuri, what we could say is that due to composition of the total loss absorption capacity, TLAC, formula, a low risk-weighted asset density translate into a higher TLAC requirement. But not the risk on capital management discipline becomes a handicap in terms of a TLAC requirement. But the CNBV will adjust the TLAC formula established under current Mexican regulations. The new methodology reduces TLAC volatility by adopting 3.5% of the corresponding risk-weighted assets from the numerator, and that instantly will give us some comfort that is not needed, but it is very welcome.

So you will continue to see a very good evolution on the capital numbers. So it was -- honestly, the 50 basis points were unexpected, but I think that we will recover 80 basis points by July.

Super clear. So it's not the second quarter, it is July. So this improvement is for the third quarter. I'm just making sure this is the...

For the second quarter, you will see the evolution of the natural generation of capital of the bank, that we will be very close to the 13.4%, 13.5% at the end of the second quarter.

No, no. Super clear. And again, you have a solid capital position and organic generation. It's more like it was a little bit surprising, the evolution we would expect a little bit more. But very clear the explanations, Rafa and Gerardo.

The next question is from Ricardo Buchpiguel from BTG.

I have just a quick one here. The other operating income and expense line has been a bit more volatile and even positive in the last couple of quarters. I understand that Q4 was related to a reclassification in the insurance provisions, but I wanted to understand better what drove the positive print in Q1 and what we should expect in terms of a normalized level?

Yes. The other operating income, as we mentioned, has to do with the sale of the credit bureau that MXN 526 million went into that net number. So you will see that normalizing in the second quarter. If you talk about the insurance, if you look at the claims and things, they were -- they performed pretty well. And what we mentioned about the reduction on the insurance company has to do with a specific big client that will be moved from the first quarter to the second quarter.

You will see a normalizing the results of the insurance company in the second quarter. But the insurance company is doing very, very well, very solid numbers also coming. Return on equity is above 50%. So it was just a matter of timing where this big policy instead of going into the first quarter is moving to the second quarter. So that's the only thing. Claims and everything, were under control. So nothing related to that. And the combined ratio also is very well under control so no, we don't see any specific issue there.

Very clear. Just one quick question. If I take your account the MXN 126 million out of the equation, then the level from Q1 could be seen as a little bit more normalized or is there any other adjustment I should do just to have a sense on the number moving forward?

I think -- if you just talk about the level of normalized on the Q1, you also have to talk about the extraordinary issues that are related to what Gerardo talked about the calibration of models and things like that. If you add all those things more than net, the benefit of the credit bureau income that we have because you have just for the calibration of the models, close to calibration of the models plus, in addition, the last part of that credit that went sour in the third quarter, you get around MXN 600 million, and you get a net income of MXN 520 million by the credit bureau sale. So it makes one to the other. So I would say that if you strip those 2 out, I would say that you will get very, very similar numbers that you get on the key metrics of profitability of the bank.

Now we'll continue with Pablo Ordóñez from GBM.

Congratulations on the results. My question is more structurally strategic on artificial intelligence. We know you have been mentioning about the personalization for a while. But now, Marcos, you mentioned that you have one agent per client. Is that correct? Is this already implemented? And my question is more broad -- sorry? And how should we think of the AI strategy for Banorte in terms of products and financials? Is there any further upside in the medium term on the expense line? And also, can you remind us where are you in terms of your cross-selling index? And what other KPIs are you following?

Thank you. It's a good question. Yes, it should translate to less expense of our business. That's the final objective, and we are doing this because we are aiming to go there and also the numbers of the cross-selling, they range to 2.6% on the retail and up to 4.8% on the wealth management piece. So it has been increasing from the 1.4% that we have 4 years ago to the 2.4% that we currently have.

Yes. Remember -- we were at 1.6%, 1.7%. So it was less than half.

I think AI is -- I think it's critical for you to understand this. We are moving, as Marcos mentioned, to basically normalize off the back end of operations, the back office operations by the end of the year. Everybody should be managing their job based upon artificial intelligence that will be achieved by the end of the year. That's what we call level 1 and there will be some level 2 that we will be using some agents in some more complex tasks.

On the personalization piece that have been ongoing for the last 3 years, there's a lot of artificial intelligence embedded on that. Basically, what we are looking and Marcos touched on that is to have an agent per client that allows -- and that agent per client will manage other -- many other agents that allow us to really serve the client based upon a specific mix that the client has. But the core of that, and that will not be any useful, even if you have agents. If you don't have all the data that you have to build in place and get all the models, the models that you have to have in order to measure the most critical piece that we measure is the lifetime value.

So everything that we do now that we go by plan is based upon the lifetime value. So the key metric that obviously cross sell is a key metric that we use, but the most important thing is what's the value of that cross sell that is really reflected on the lifetime value. So artificial intelligence, just remember that Banorte was the first along with 8 other banks that were the first to touch on artificial intelligence with -- 8 years ago. So we have a long run on that part. Obviously, artificial intelligence has accelerated a lot in a very important way. But just remember one thing, if you don't have the data online, real time, artificial intelligence is just a joke.

Perfect. And on the expense -- on the efficiency, Rafa and Marcos, do you think that this AI could take Banorte to be a bank in the low 30s of efficiency in the next couple of years?

Two years, I don't know, but we should aim to that in, let's say, 3, 4 years, yes.

The next question is from Brian Flores from Citi.

I have also just one question. It is on your risk-adjusted NIM, as you mentioned, and you explained, you are advancing on the consumer book. Yet, as we saw the NIM is decreasing. So I just wanted to check with you if the new originations are coming at maybe lower spreads. And on the risk side, I just wanted to check if -- this higher mix or -- sorry, higher proportion of consumer on the mix should also bring a slightly higher cost of risk.

I think if you look at the risk-adjusted NIM and you look at the public information, Banorte has a huge edge on the risk-adjusted margin on the consumer. We have 90 basis points in advantage compared to the next competitor that we have in our risk-adjusted margin. That allows us to really play in the market when we like the risk to be quite aggressive for the clients that we like to have because the risk-adjusted margin allow us to do that.

And that's basically related to the risk discipline that risk that we have. If you see a reduction on the -- slight reduction on the NIM, I think you should be looking at the guidance that we gave, that is 6.4% to 6.8%. We are now staying at 6.6% because usually, the first quarter is the low end quarter because a lot of the cheap funding basically starts to move away from the bank. This year, we have retained a lot more than usual, but usually, you get some outflows on that part.

So the margin, as you saw on the graph that we project about the NIM of the portfolio, it's continue to be steady and growing. The more the rates go down, the better for us, as you saw on the sensitivity on the book. So you should expect an improving the margin and this is key in how Banorte competes. When we like the risk based upon the risk-adjusted margin that we have and based upon the lifetime value of the client that we have to develop, we could really, really bring that client into the bank.

And regarding cost of risk, there is no trade-off. We are not trying to aggressively pursue as Rafa and Marcos just told us. More loan volume sacrificing a series of risks that we have shown internally and externally that we are controlling the consumer loan book in a very good way because we have not just a low number regarding cost of risk and NPLs but also an alignment between leading indicators and outcomes. And that is we have seen stability with low volatility, not just low levels and cost of risk. And also there is alignment between provisions and write-offs, like we said before.

And the vintage performance is very consistent in every type of consumer lending product. So what I tell you that there is no trade-off, and we have demonstrated that we are controlling the consumer loan book as we should.

Thank you, Super clear. Just clarifying here. I think my point was on your Slide #18, I think we see when maybe the consumer appetite was less, the cost of risk closer to 1.5%, right? Now we're closer to, let's say, 1.82%, which is in the guidance, as you mentioned, but part of the trade-off. So just compared to previous years, that's what I was trying to convey here, slightly higher cost of risk now that you have this shift in the mix.

Yes, but as you mentioned, you know that if we grow the consumer book, by nature and by regulation, you have to build more provisions on day one. So that -- you're right on that. But that's in alignment of the pace of growth. If you look at the pace of growth of the consumer that we have, we are outpacing the market in many of the products. And that obviously is giving us more provision on day 0, but not because deterioration, it's because of regulations, the composition.

Now we'll continue with Renato Meloni from Autonomous.

So first, I would like to -- just focusing here on Slide 16. So you can see that your active rate is declining less than set this year. And that's because of the mix shift, as you mentioned -- just mentioned, now you were able to retain a lot of the value here in this first Q. So I'm wondering, as the consumer portfolio outpaces the growth of the rest of the portfolio, do you see some expansion here if rates continue at this level?

And can we maybe expect your NIM to end the year at the higher end of the guidance? And then just a follow-up here, still thinking about this mix shift. You mentioned before that you're building up provisions ahead of the -- or of any credit cycles, but your coverage ratio remains at historically low levels. So considering that you're stronger in consumer lending now do you think you would have to operate at a higher level?

The margin, I think that if you continue to see the downward trend on the rates, we could see an expansion in the margin, yes. I think we could see by the end of the year, you will see an expansion of the margin coming for 2 things: a lower funding costs that we have and a very large inflow of funds that were going into the fourth quarter. So that will be a case.

And concerning the other thing related to the provisions, we have -- well, it comes with a growth. I mean not because it's bad growth, it is because the growth requires more provisions. So yes, we will be building more, and more provisions, but in alignment with not because of risk deterioration, but because of this is needed by regulation that we set up those provisions on day one. So it's just the size of the portfolio. I mean we are growing nicely. If I give you some very big numbers. Car loans, NPLs, 0.55. Mortgages, 1.2. Credit cards going down to 3. Payables also going down on the NPLs. That are the ones that consume more of the provisions.

So no, I think we are never, I would say, comfortable with the provisioning because we always take care of those things. But I think the discipline that we have on the risk side, and we will continue to have that discipline. This is allowing us to compete very -- because remember working with Banorte and Banorte has a higher funding cost at this point in time that BBVA and [indiscernible]. So the way that we compete against them is based upon the risk-adjusted margin that we delivered and we compensate by the lack of the funding cost, we compensate on the risk adjusted side.

So you're comfortable with the current coverage ratio level?

Yes. That's right, we are.

The next question is from Andres Soto from Santander.

Just a couple of follow-ups on my side. In the release, you mentioned that the USMCA uncertainty is impacting corporate demand. And your -- in the call, you have expressed confidence on a positive resolution, given that this -- the positive resolution is rather a consensus view. What do you believe your clients are still waiting before they resume investment and credit demand?

Waiting for the rules and be published. It's the last mile, I would call it, the regulation and the signing of the agreement.

And your expectation is that for that agreement to be signed by the end of 2026?

Sorry, again.

If the expectation is for the agreement to be signed in 2026 still?

No, our expectation today is that -- it could be by the end of 2026, but most likely in 2027. And this is because you have in the middle, the midterm elections in the U.S. in November. So I think it's going to be very difficult for the U.S. to really want to sign an agreement before the elections. So I think it's more a matter of 2027. But I think the important thing is that while we see more visibility, uncertainty about the talks and the specific topics that they are discussing that could put the confidence of investors in the second half of 2026.

Got it. And in terms of loan growth, can you remind us how to break down the guidance of 8% to 11% between consumer and corporate?

Yes. Mortgages from 8 to 10, lending rates on 10 to 12, auto from 15 to 20, credit card from 14 to 18 so consumer is between 10 and 14. Commercial from 8 to 10. Corporate from 8 to 10 and government from 0 to 4.

So this 8 to 10 in the commercial side is contingent on people getting confidence on the agreement is close to be signed, right?

Yes. That's right. That's why we split the consumer and the corporate and the commercial and the government. I think the consumer will be above double digit growth. And the commercial and the corporate is depending on how clear the ruling of how the investment should...

Perfect. That's very clear. And my second follow-up is on the cost of risk. I see additional provisions related to the case that happened in the third quarter. What has specifically changed this quarter to make you make additional provisions? And how confident are you that this is going to be released in the third quarter?

Salazar.

What I will tell you, Andres, is that in the last 2 months, we changed or reached an inflection point in which we are more optimistic. As we said in the last call, there is economic intrinsic value of a positive nature on this because the recovery rate is very high, but we are bargaining to make a very important restructuring process in which all the parts involved in this loan finally have reached an agreement. We have not finalized that. It is not perfected from the legal or contractual point of view but we remain confident that we touch the bottom on this case. And from now on, there is recovery to be made.

What percentage of the loan is already provisioned?

Full. 100%, full.

Understood. And that implies, if I did the numbers correctly, that has added up 20 basis points to your cost of risk over the past 12 months, correct?

Yes, that's right.

It's correct.

Perfect. So -- and that was already reflecting your guidance for cost of risk of 1.8% to 2.1% this year. Meaning -- I mean, the release of those provisions, meaning that structurally, given the change in the loan book, you are probably running at a cost of risk structural that is 2% or slightly higher because of this growth in consumer lending. That is correct?

Correct.

That's correct.

Congratulations on the results.

And we will continue with Marcelo Mizrahi from Bradesco.

So my question is regarding the level of NIM. So in this quarter, do you Banorte delivers the NIMs very close to the top of the range of the NIM -- of the guidance of the NIM and looking forward, I understand that, okay, there's a lot of -- of course, you guys already mentioned that it has -- we will have some impact on the interest rate reduction on the second quarter on the NIMs. So my question is how -- what's the level of the NIMs are looking to the guidance that we have to work looking forward?

As in the guidance, the NIM is from 6.2% to 6.5% of that. And the NIM of the bank is from 6.4% to 6.8%. That's the guidance, and we will depend on that.

Well, now you are in the middle, 6.6% and basically looking forward to a 6.7%, 6.8%.

The next question is from Carlos Gomez Lopez from HSBC.

First, on the capital maybe the only one that doesn't quite understand it, and maybe we will take it off-line. But just to clarify that when you have this reduction, this 80 or 90 basis points that disappeared, that will be in the fourth quarter of last year. That's the timing of it?

The impact was during the first quarter, and you will see the positive compensation that Rafa and Marcos mentioned during the third quarter.

The impact was this quarter, sorry -- the fourth quarter of last year would be normal. It is this quarter, which would be below normal. And actually, what I thought was more interesting is Rafael, you emphasizing so much that you would like to run the company with a 13%, 13.5%. That is what you think is the normal level of capital for the bank, right?

Yes, it is. That's why we -- as I mentioned, we are warehousing at the group 90 basis points, but those 90 basis points to the number that we have on the core Tier 1, we are already in the number that we like.

Okay. That's very clear. And second on loan growth, and I'm sorry to come back to this, but we are already at the end of April, we are running at 6%. And when I look at the trends for the system and for you, they're pointing down, not up. Do you see any evidence whatsoever that we are starting to see an inflection and we are -- at least we are seeing a continuation of loan growth as opposed to a reduction of loan growth every single month or that's something that we cannot really hope for until after the summer?

That's a way that we consider the pipeline and the pipeline is full. So our expectation is that in the next months, you will see some growth there. We don't have the magic ball, but at least we see the pipeline that is full. And we are optimistic that something is happening.

Next, we'll go with Edson Murguia from Sumacap.

I have just one regarding on the loan book growth, specifically Auto loan. How sustainable is having 30% growth on an yearly basis? Because you mentioned in the prior remarks that Banorte will not change models, will not change the risk appetite that the banks have. So trying to understand how can we see for the following quarters.

Well, it's not sustainable 30%. As I said before, the expectation is from 15% to 20%, and we are optimist about the 15% to 20%, but obviously, it will go down a little bit, and that's why we keep the guide for the year for -- between these 2 levels.

Because you are building from a very large base every year, 35% last year. Right now, we are growing at 25%. But as Marcos mentioned, we are very comfortable with 15%-16% loan growth because we like the brands that we are managing, and we like the risk that those brands that accompany it.

Congrats on the results.

We'll take our last question from Natalia Corfield from JPMorgan. Natalia, we can contact you after the call is over.

Can you hear me?

Yes. Perfectly.

All right. Sorry, I was on mute. So my question is on capital gain. You added around [Technical Difficulty] quarter. And I'm wondering what the right level [indiscernible]. What is the level that you would control [Technical Difficulty]

We didn't hear very well, but Rafa knows what you are talking about so...

Yes, the level that we'd like to have on the core Tier 1 ranges from 12.5% to 13.5% depending on when we pay the dividends or not. And that's the level that we have been basically maintaining on that part. As you know, we have been on a dividend basis, basically 83%, 85% when you add the extraordinary dividend, but we continue to be very disciplined about the 12.5% to 13.5% on the core Tier 1.

You want to talk about the TLAC now?

Yes, correct.

150 to 200 basis points of above TLAC.

150 to 200?

Let's say, between 100 and 200, aiming to 150.

And what Gerardo mentioned, that there is a recalibration of the TLAC that will be beneficial for us that will give us another positive.

All right. Because it used to be higher -- you ended the quarter at 162. So 162 would be comfortable for you based on what you just said.

Yes. And yes, we will at a certain point of core Tier 1, 14.8%, but that was too much on that. That's why we start to pay an extra dividend based upon...

Thank you, everyone. With this, we conclude our call. Thank you very much for the interest in Banorte. Thank you.

Good morning, everyone. This is Tomas Lozano, Head of Investor Relations, Corporate Development Financial Planning and ESG. Welcome to Grupo Financiero Banorte's First Quarter Earnings Call for 2026. Our CEO, Marcos Ramirez, will begin today's call by presenting the main results of the quarter and the year, highlighting the positive trends observed across our portfolio and profitability indicators and the main macro expectations that will drive our operations throughout this new year.

Then Rafael Arana, our COO, will go over the financial highlights of the group, providing details on the margin evolution and cost of funds provisions. I will mention some reporting highlights related to the accounting of Tarjetas del Futuro and Banorte. He will conclude presenting our 2026 guidance. Please note that today's presentation may include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially.

On Page 2 of our conference call deck, you will find our full disclaimer regarding forward-looking statements. Thank you, Marcos. Please go ahead.

Thank you, Tomas. Good morning, everyone. I hope this new year brings you all the best, and thank you for joining us today. As I always say, I consider myself an evidence-based optimist. Despite a challenging operating environment, marked by a sluggish economic growth and a trade and regulatory uncertainties, we closed the year delivering on the commitments we set to the market showing solid and resilient performance across our key structural metrics.

After the strong fourth quarter results and overall throughout 2025, I have a constructive view of these New Year's operating momentum and our ability to keep capturing market shares. On the macro front, we expect GDP to end 2025 in line with our initial expectation of 0.5%. Looking ahead, we anticipate a recovery in Mexico economic activity in 2026, reaching 1.8% GDP growth, supported by stronger private consumption.

We expect incremental tourism stemming from the FIFA World Cup to up 40 to 50 basis points in GDP growth, together with a rebound in construction and investment. Exports should remain a key driver of growth, particularly due to the fundamental USMCA trade negotiations taking place with the U.S. We expect dialogue to remain constructive, and we believe current global conditions point toward greater integration of value chains between both countries enable the opportunity to strengthen the development hubs under plant Mexico, boost investment and reinforce Mexico role as a strategic North American partner. On monetary policy after the Mexican Central Bank cut of its reference rate by cumulative 300 basis points in 2025, closing the year at 7%, we believe it is now nearing the end of its easing cycle.

For 2026, we anticipate inflationary pressures to reach 4.4%. Therefore, we forecast 2 additional 25 basis points cuts in the first half of the year, bringing the policy rate to 6.5%, which we expect to be the eternal rate for the current cycle. On the fiscal side, the government is expected to maintain its consolidation efforts in 2026, in line with the budget approved by the Congress. Finally, we expect the exchange rate to remain stable in 2026, supported by a weaker U.S. dollar, lower risk premiums under global liquidity and favorable macro commissions for the Mexican peso thus expecting a year-end level of MXN 18.1 per dollar.

Now starting off with the group's overall financial performance on Slide #3. We closed the year with a fairly strong quarter reported by a solid operating trends with lending and fee activity expanding, driven by healthy private consumption, declining cost of funds and higher seasonal transaction volumes. Margin performance was supported by our continued efforts to minimize our balance sheet sensitivity, the strong risk metrics and optimize funding costs, which fully offset the impact of declining rates of the loan portfolio.

Capital generation remains strong and continues to support high-value returns for our shareholders. We closed the year with a 20.1% capital adequacy ratio. Widely surpassing the TLAC requirements of 18.34%, which is now fully implemented after a 4-year ramp-up period and the CET1 of 12.6% aligned with our management target after the distribution of the extraordinary dividend at the end of the last year after delivering an 88% payout ratio in 2025, we still hold close to MXN 11 billion at the holding company available for organic growth alternatives.

Before moving into profitability, as you know, from our material event at the end of the year, we finalized the acquisition of Tarjetas del Futuro. Therefore, we have deconsolidated the legal entity from the group's and the bank's financial statements and integrated its operations into Banorte.

With this, Tarjetas del Futuro was recognized as a discontinued operation and the reclassification was met retroactively up to 2024 as per the accounting norms. This step enhances our value propositions by building on the scale and operational capabilities that we already have, allowing us to evolve from a single-product business into a multiproduct platform, boosting profitability and creating larger opportunities for growth.

Now continuing with profitability on Slide #4. Reported net income for the quarter reached MXN 15.9 billion, up 22% sequentially. This marks a strong recovery of the quarter impacted by isolated Stage 3 loan phase, as you know, showing solid performance across our core businesses, a well-protected balance sheet, healthy risk metrics and the offset of the [indiscernible] expense seasonality. With accumulated figures, net income reached MXN 58.8 billion, fully in line with our guidance and 5% higher than in 2024, driven by the diversification of our revenue streams and disciplined expense management.

ROE for the quarter stood at 24.2%, 411 basis points higher compared to the previous quarter. For the full year, ROE stood at 22.8%, up 36 basis points in the year and very close to the upper end of our guidance. Analyzing results by subsidiary in slide 5 the banks reported net income of MXN 12.5 billion in the quarter and MXN 46.5 billion in 2025, with sound core banking operations driven by healthy lending growth especially in the fixed rate portfolio, neutralization of balance sheet sensitivity, optimized cost of funds and a strong fee revenue.

Altogether, these results driven a 29% ROE for the bank in 2025, 5 basis points above 2024. Notably, December ROE reached a very strong 36.8% confirming the positive trend where we ended the year and enter 2026. Rafa will provide more details later in the presentation. The insurance business grew 23% compared to 2024, driven by higher premium issuance, mainly in the Life segment and additional business generation related to the bank lending.

These factors helped offset higher fees from the bancassurance operation. The annuities business is slightly contracted by 1% versus 2024 and 7% quarter-on-quarter, laterally explained by a base effect from the last period release of technical reserves despite higher business volumes. As for the pension fund businesses, cumulative positive results were driven by higher yields on financial products and increasing fees on larger base assets under management despite growing expenses from commercial efforts aimed at attracting customers from different demographics. Finally, the brokerage sector reported double-digit growth, boosted by larger transaction fees.

On Slide #6, loan portfolio growth was in line with guidance, expanding 8% with the year and 9% excluding the government portfolio. Commercial and corporate portfolios grew 5% and 8%, respectively still driven by short-term working capital requirements.

As I mentioned before, due to the uncertainty surrounding the USMCA renegotiation, both segments decelerated during the year. However, we remain confident that a positive outcome will lead to a rebound in the second half of 2026. Moreover, these portfolios were also impacted by exchange rate fluctuations in the dollar book which currently represents 14.5% of the total portfolio.

On the other hand, our government book rose 1% in the year and 19% quarter-on-quarter. This year acceleration was mainly related to resuming activity with the states and municipalities despite large prerepayments for [indiscernible] during the quarter. We reiterate our appetite for government lending, and we are constructive in the collaboration we can have with the government to develop the country with infrastructure with projects as planned Mexico evolves.

Turning to Slide #7. Overall consumer lending remains the main growth driver of the loan expansion, increasing 12% in the year, supported by resilient consumption trends and employment levels and effective cross-sell strategy tailored to each client's needs and the continued scaling of our hyper personalization model. The mortgage book rose 7%. Thanks to an improved origination process, strategic alliances and a disciplined risk approach. We anticipate a reactivation of the sector's demand as the reduction in the reference rate is transferred to customers' pricing.

Auto loans posted a strong 32% increase for the year, supported by our commercial alliances for lending car dealerships and higher overall activity in the sector. We continue to grow a robust network that ensures our availability and the competitiveness of our offering with the [indiscernible] brands. Looking ahead, we expect low to moderate into the high teens in 2026 following higher base.

Regarding credit cards, this business rose 14% year-over-year, driven mainly by a good promotions, enhanced rewards and loyalty programs for existing clients along with tailored marketing campaigns, allowing us to fully capture the seasonal increase in transactions. Finally, payroll loans also displayed solid growth, up 11% versus 2024. This reflects our fresh product offering designed to meet short-term liquidity needs, combined with process improvements and greater availability to digital channels while also driving additional demand deposits that help optimize funding costs.

On Slide #8, we maintained top level asset quality with an NPL ratio of 1.4% at year-end. Despite the nonsystemic case in our commercial portfolio discussed last quarter and continued growth across all portfolios. Cost of risk stood at 1.8%, fully in line with our guidance for the year. It is also worth noting that so far, we see no signs of sectorial or geographical deterioration in our books, and we expect this indicator to continue normalizing throughout 2026 as consumer lending continues to expand.

On Slide #9, this grew 20% sequentially and 5% for the full year. The sequential increase reflects higher transaction activity driven by seasonal factors. For the year, stronger volumes in consumer products and mutual funds together with the effect of prioritizing efficiency and profitability to digital and related businesses drove these positive results. However, this was slightly offset by a larger fees pay on credit origination to an external sales force. These results reflect the strength of our operating model supported by the continued evolution of our digital capabilities, disciplined risk approach, process improvement efficiencies and our ability to deliver hyperfunctional offerings tailored to our customers' needs. This combination has strengthened operational efficiency, enhance service quality and customer experience and reinforce our execution consistency. Importantly, these capabilities enable us not only to mitigate the impact of limited economic growth in the country, but also to strengthen customer preference for loyalty. Making Banorte standout and capture opportunities as the competitive landscape evolves.

On the ESG front, on Slide #10, I would like to highlight the environmental pillar where we made relevant progress in lowering our energy and weather construction from our operations during the year. In our branch network, we obtained the EDGE sustainable certification for the first 48 branches and we will go for more in 2026.

We completed the installation of electric vehicle chargers in all our corporate buildings, supporting sustainable mobility for our employees. And now, more than 30% of the energy that we use consoles. Furthermore, as I mentioned earlier, auto loans had a relevant growth during the year and more than 23% of them were hybrid and electric vehicles. Regarding our commitment to plant 1 million trees by 2030, we not only met but exceeded our 2025 target, planting more than 240,000 trees across Mexico.

On this social front, as every year, we participated in Mexico financial innovation with, providing workshops and comprehends to more than 6,000 somen and young professionals as part of our responsibility to help our clients make the best use of the products and services that we provide.

Finally, before I pass it over to Rafa, I would like to address some concerns about our competitive landscape. We know we operate in an environment with intense competition for clients, for talent and investor capital. This drives us to constantly review our processes, our technology and value proposition so that will remain the top choice for our customers, the best developer of talent for our people and the most attractive investment for our shareholders.

As I mentioned before, looking ahead to 2026, we will keep expanding our digital capabilities and delivering hyper-personalized solutions while maintaining solid fundamentals, disciplined risk management and strong profitability and growth metrics. With these priorities, we are confident but Banorte is well prepared to capture opportunities and navigate challenges in an evolving market competing effectively with both incumbents and digital players aligned.

Now I pass the word to Rafa to cover the main financial results as well to discuss our guidance for the year. Rafa, please go ahead.

Thank you, Marco. Thank you all for attending the conference. The first part that we would like to look at is how the NII really move into the year. But you can see on the table, basically, if we look -- we saw a very strong growth in NII basically on the loan and deposits. We will explain why the funding cost is trending down on a strong growth in the consumer side that allow us to get a better yield on the portfolio. There was also something that needs to be relevant for the comparison about the possibilities and the potential of the bank. When you look at the FX, the FX affected us by MXN 2.1 billion that is really something to consider because we never put that on the budget, and these are really a deduction of the -- it affects several lines that we will see on the next pages.

But I think it was a really an unexpected hit MXN 2.1 billion, and we end up delivering the results. On the annuities, you see a very slight FX by the [indiscernible] nothing really relevant. The NII for the total NII for the quarter was 8%, and for the year was 6%, but it's relevant to notice what I mentioned before, how the loans and deposits are really moving forward at a 14% year-on-year basis.

The net interest income for the quarter was on the low side, but for the year was 85% year-on-year. Premium income grew 24%, and there was -- I will discuss in a bit the effect that we have on what happened on the claims and the insurance company. Claims went up 8% on a year-to-year basis. But the insurance company, we will see in a moment had a very, very, very strong year.

Moving then to the net interest margin. We continue to deliver a very resilient NIM for the bank. It moved to 6.8% for the year. And basically, you see a 13 basis points growth on the year-to-year basis. So net fees also was a very good story. Net fees grew 22% year-on-year. And basically, we continue to see a very, very strong activity on every single one of the channels that we serve the clients. If we move then to the sensitivity, you will see a slight pickup on the sensitivity to MXN 418 million that if you look at the local sensitivity on the NII, it's really less than 0.2%, 0.3% on the dollar and the peso book and the effect that happened in December was that the government book finally pick up in December.

As you know, you have a very rapid growth on the lending side but at the same time, the funding side really grew and a very, very fast paid also. So even if you see a movement on sensitivity, you would also see a pickup on the margin because that assets were funded with a very low funding cost, okay?

So the balance sheet on the foreign currency, basically, we try to be stable on that. As you know, on the foreign currency, we don't have fixed rate assets that we have on the peso book and we continue to build up the peso group, obviously, to continue our strategy and adaptive to the trending number on the rates. If we go to the profitability of the bank we basically see that net income, but a very good growth in net income for the bank, 16% we have a very strong or very strong fourth quarter because the momentum and the dynamics of the lending funding as fees continue to be very, very aggressive, much better than previous years.

The bank return on equity ended up around 31.8%. And I will show you in a minute what was the effect on December and the ROA continues to be a solid 2.7% on the hour. If we move, I would like to move into a graph that shows exactly how we are managing the asset side of the book and the liability side of the book.

The graph that you see on the top side, which shows exactly what is the rate that we are charging on the asset side. That's the overall rate for the asset side. Then the next graph is which is like a blue collar line that really shows how it has been a decrease in the official rate for the asset side.

And then you see at the bottom of the page, a red line that really shows the funding cost. And you see a very continuous decrease on the pace of growth on the funding cost ended up at 3.8% and the most important graph is the one that is there is the darker one that really shows that we have been continuing to be able to manage the return on the book at 8.3%. So what you -- that means that the spread of the book continue to holds pretty steady even though the decrease in the rates. That is what is really sustaining the margin in a very, very steady pace.

On the next slide, you see our continuous effort to continue to go to the levels that we would like to have the funding cost -- the funding cost ended up at 44.1% at the end of the year, basically because as you saw, the noninterest bearing deposits grew 12%. So we continue to grow our noninterest-bearing deposits. The mix has evolved to 70% to 30%. So we continue to be quite attractive to be a bank that basically supports most of the operations in the retail, in the SME and the transaction of banking fees and on the government side. So that allow us to have along with the payables, a continued source of cheap funding that we continue to grow.

Basically, if we move next to the cost of risk, you will see that the cost of risk is trending now to a much more normal levels that we used to have based upon the effect that we have on the third quarter. You continue to see also on the graph the write-off that continue to be very disciplined and very, very steady. Credit provisions now are down again to the level that we like to have and that we expect it to have on the budget. And I would like to really guide you to something that is going to confuse you guys booking a bit based upon the integration of Tarjetas del Futuro.

And also, as you know, that Tarjetas del Futuro was not part of the overall processes and procedures that we have at the bank even we try to advance the most that we can, but there was obviously not the same [indiscernible] and processes on that. And a very good example of that was exactly how the provision side on the TDF was being built. So when we integrate TDF, obviously, we put all the processes and procedures that we have at the bank. There was a release of provisions on TDF that now seems when you integrate all the numbers at the bank, that was a huge drop in the cost of risk.

I would like to ask also Gerardo on that. But to be very clear, the cost of risk that after you do all the numbers and things. It's really much more close to 1.92%. That I think is the number that we feel comfortable after all the integration procedures, [indiscernible] and that. And I would like Gerardo to please continue to explain on this.

I'm Gerardo Salazar, Chief Risk and Credit Officer of Banorte. Regarding this issue, I will tell you that although Tarjetas del Futuro adopted a regulatory style of framework as a conservative market benchmark given Tarjetas del Futuro monoline business model, limited customer interaction beyond credit and elevated observed annualized net credit losses were approximately 28%. Tarjetas del Futuro management apply a significant management overlay, resulting in an allowance of roughly 30% of the outstanding portfolio to ensure adequate short-term loss absorption.

Following the integration of the loan portfolio of Banorte's Group, the portfolio was recognized and subsequently managed under the bank's IFRS9-compliant expected credit losses framework consistent with the methodology applied across the bank retail credit portfolios. This resulted in a removal of TDF's conservative overlays and the recalibration of loss default assumptions based on Banorte's historical performance, recovery experiences and servicing capabilities.

And to be more specific, when you take into consideration Banorte managing this portfolio, Banorte has better collections, infrastructure, more effective early warning systems stronger legal recovery processes and broader restructuring tools. That is the probability of default of this portfolio remains the same. That has not changed but loss given the false declines, and that justifies a lower provisioning for in this case.

Thank you, Gerardo. Now we move to another line that was affected because of the integration, that is the expense growth. As you remember, we committed at the beginning of the year to have a single-digit growth on the expense line. And we achieved that, but it needs some explanation because of also the integration of [ tariff ], TDF and Bineo.

Basically what you see on the graph is that let's concentrate on the overall numbers, that is the non-interest expenses, that is MXN 52.2 billion in 2024 that moves to MXN 57.7 million in 2025. That's an 11% growth. And the result for that 11% growth is that based upon the accounting rules, you have to [indiscernible] from the base, the Bineo and the TDF expense line. So it seems that expenses grow in a more important way than in reality, when you put those expenses back again on the base, really, the expense growth was only 9% that is in line but we but we're committed to the market. So that 9% is the one that we -- that is the real number once you put again on the base, the numbers that are basically the same ones that were in 2024. So also, we achieve on that. And you saw that in a much more explanation on the graph.

But when you go to the graph that is basically the efficiency ratio that shows what we call the jaws of it continues to expand at a very good pace. Revenue continues to grow nicely. Expenses are much more under control and that will continue to be the case for Bineo and for TDF. Let me be very clear on one thing. On the Bineo side, we currently have an expectation of the around MXN 1 billion of expenses for the year in the case that the sale doesn't get completed in the full year. If the sale gets completed before the full year, then you have reduction of that MXN 1 billion that we see on expense line on that part.

And on TDF also, you will see that also our expectation is to reduce the expenses around MXN 500 million, close to MXN 800 million, MXN 900 million that were in the past. So additional efficiencies will come in from those 2, but we have to go from the timing of the activities on the Bineo side and taking very good care of TDF, Tarjetas Del Futuro to be able to really keep the clients that we have been built in the company that are close to 600,000 clients, 60% of those lines profitable brands that have the capability to be cross-sell once we integrate everything in Banorte and if that was going to be the case. So TDF, we will continue to be a very important provider of clients of a segment that was not in the past an objective of Banorte. So once we clear the expense line, I would like to go now to capital and liquidity. There was also some comments about what is the liquidity ratio, the liquidity ratio continues to be hold and efficient.

We were at a point in time when the things were not very clear. We have an additional surplus on liquidity. We feel very comfortable with 162 liquidity ratio. And when you go to the capital ratio, it is the first time that you see the -- 12.6% on the core Tier 1. But if you look at the holding company, the holding company still basically is managing MXN 10 billion more that is part of this capital that has not been assigned to the bank.

So you will continue to see that based upon the momentum of the bank and the subsidiaries are very, very good growth on the capital base to be again at the 13% in the first quarter. The TLAC that have now been fully adjusted is 18.34%. We are 20.1% so we feel very comfortable with that. With this based upon the momentum of generating capital that we have at the institution. And another thing to be relevant about this is also that our AT1s have been obviously been affected by the FX that we have.

Now let's see what was the effect of the commitment for 2025. The loan growth ended 8% inside the guide, ex government 9%. Net interest margin for the group 6.3%. Net interest margin for the bank, 6.6%. Expense growth, as I mentioned to you before is a 9.4% taking into account and putting again the basis to be comparable about the effort that we have on the expense line. The efficiency, 35.8%. Efficiency is a number that we need and we would like to continue to lower down. There will be years that we need to invest more in order to keep the trade with our competitors on this. And this year, it seems to be the case, but we will do a lot of efforts to really grow the revenue base in order to reduce the efficiency ratio.

Cost of risk in line, as I mentioned to you, we -- Gerardo explained it, we are not fooling around that about the deconsolidation and consolidation and the effect that we have on the extraordinary situation that we have through TDF. The real cost of risk that we do is around 1.8% and it ranges from 1.8% to 1.84%, that's case. Remember that Tarjetas Del Futuro really became, again, installed at the bank in December '26. And before that was eliminated line by line on the group. When you go into the page of the financial results on page 6, you will see that our discontinued operations have the full effect of that, that is around MXN 2.1 billion. So there's no effect of all these numbers in the net income. I would like to make that very, very clear. All these movements start up because of accounting rules, but no effect on the net income of the bank. You will see that on the consolidation of operations in the financial [indiscernible] that we have on Page 6, okay?

The net income, the tax rate, it was at 27%. Net income was in line 58.8%. And I would like to because I don't want to be, let's say, jumping around about this number, but 50.8% is including the effect of Bineo, the effect of TDF, the effect of FX and all that at the same time. So really, the performance of the bank was on the group was really, really very, very strong. Return on equity for the group 22.8%.

So that's the number that we would like to have around the 23% on a recurring basis. Return on equity of the bank is at 29.1%. And just an effect that have -- and we don't like to play this game, but based upon the payment of dividends that we have in December and a very strong month that we have in December, the return on equity for the bank at the month of December was 37% return on equity, okay? So return on assets is 2.3% right in the middle of the guidance.

Now I would like to move if Marcos and move to the...

Yes. Just the guidance.

The guidance for 2026, as you can see on the loan growth, 8% to 11%, and without the government book 10% to 12%. Net interest margin for the group, 6.2% to 6.5%. Net interest margin of the bank, 6.4% to 6.8%. Let me explain why there's this range on the bank. If we grow the government book, I expect that is expected because it seems that there's now a lot of movement concerning infrastructure and things like that. If that happens, you will see a very accelerated pace of growth on the loan book.

But since those loans are very thin on the margin, you will see maybe or to trend more to the mid of the NIM of the bank, that is around 6.5%. If that is not the case, the number will be very close to the 6%. Expenses, and I would like to be clear here on the expense line. And the first time, we are also trying to put a number in pesos in order to try to avoid all the deconsolidation and consolidation for you to be able to really follow the expense growth.

The expense growth, as you see on the recurring from 5 to 6 and in addition, organic growth and investment because obviously, we are investing a lot in -- we have been investing for many years in artificial intelligence, but now that part has accelerated a lot, and we have to reinforce the teams on that part. We don't need to buy more technology, but we have to use more of the technology that we have and that's required to really as we create more people on the application...

On the non income tax rate, 27% to 29%. Net income is MXN 62 million to 64 million and taking into consideration other things that is included here. As you know, there's a lack of utility impact of the loan book that is affected around MXN 1.2 billion for the year. So that is already included on that part. So the return on equity for the group 22% to 24%.

Our return on equity for the bank 28% to 30% return on assets 2.2% to 2.4%. And as you can see, there's a slight pickup on the cost of risk to 1.8% to 2.1% not because the wrong reason because of the right reasons because of the rapid pace of growth on the consumer group that really requires much more provision than at the beginning of the cycle.

So we are based upon our economists -- our chief economist, GDP of 1.4% to 1.8%. Inflation rate 4.2% to 4.6% and Mexico reference rate, 6.5 percentage for the year. I will also add that we expect the FX to move much more close to the MXN 18 per dollar at the end of the year, but we think that there will be more strengthening of the peso in the coming months. So that will also not have the full effect that we have last year to MXN 2.1 billion, but still will be something that we have to manage.

And let me also tell you about the effect that we have on the FX that was not mentioned before. If you take because of the 14.5% that we wrote on the dollar book, the dollar book was affected by the FX when you convert to pesos. If that was not the case, the commercial and the corporate group was really growing around MXN 20 billion more. That was the effect of the FX.

So with that, I end my comments and I pass to...

Now we will go to our Q&A session. [Operator Instructions] We'll start with Jorge Kuri from Morgan Stanley.

Everyone. Congrats on the numbers, and thanks for the conference call. A quick question on the guidance. Would you mind double-clicking on the credit growth assumptions. What are the different expectations for the compositions of loans, consumers, mortgages, government and commercial, et cetera, and how do you think that sensitivity of your guidance is relative to economic growth of USMCA is negotiated favorably early on in the year, and we get an economy that is closer to 2%. How do you see that translating into your loan growth expectations.

Thank you, Jorge. In commercial, we are -- the guidance is between 8% and 10%. The corporate is also between 8% and 10%. Government is from 0% to 4%. Consumer is from 10% to 14%. Mortgage is from 8% to 10%. Credit card is from 14% to 18%. Auto loans, 15% to 20% and payroll 10% to 12%. That's if you breakdown the numbers. And now I will pass to Alex, the economy.

Thank you, Marcos. Thank you, Jorge. Alejandro Padilla, Chief Economist. Let me just walk you through our 1.8% GDP or this range between 1.4% to 1.8% of GDP for 2026. What we think is that this year, all the engines of the economy will try to level -- last year, we observed that consumption grew less than 1%. For this year, we are expecting 2% of growth -- this is supported by the World Cup, as Marcos was mentioning. We think that given tourism and also private consumption in Mexico, we can have additional 30 to 50 basis points there.

Also, I think it's important to take into account that last year, investment declined around 7%. We are expecting a mild recovery, only 0.7% in our models. This is supported by additional spending, especially in infrastructure. When you see the budget for 2026, the government will deploy 1.2 percentage points of GDP in key infrastructure projects. And in addition to that, nearly 25% of the budget is going to states and municipalities, so we think that, that should push a little bit this investment figure.

And the other one is exports. Exports last year grew around 7%. It was a very positive year. Why? Because when you see the average tariff rate that Mexico is paying is around 4.5%. The world is paying 16.8%. So there is in relative terms, a competitive advantage that Mexico will likely hold throughout 2026. As you were mentioning, Jorge, this is an important year, given the review process of the USMCA.

So far, regardless of how this process will take place. We think that Mexico will continue to be a key ally for the U.S. in terms of trade. We are surveyed in 2025, and we think that it will continue in 2026. So that's the way we are analyzing GDP. That's a range between 1.4% to 1.8% and just let me close with one thing. The fourth quarter of 2025 closed with a better momentum than in the third quarter, that will help inertial GDP for Mexico in 2026, where calculating that this inertial GDP will at least give you 60 basis points. That 60 basis points is more than what the entire economy grew in 2025.

So that's why we are more constructive in terms of GDP dynamics. And the other one is that we expect that the U.S. will grow more this year than the previous year. We have 2.4% of growth supported by consumption in the U.S., but also by investment and I think this is key, taking into account that in our studies, 56% of the Mexican economy is highly dependent on the U.S. economy. So that's the way we are calculating this range between 1.4% to 1.8%. That's Rafael mentioned before.

Next question is from Renato Melone from Autonomous.

Congrats on the result. So just wanted to pick up here on your earlier comment, credit card growth and payroll growth. We saw some NPL increases this quarter. I wonder if you can comment a little bit of the dynamics here and if you expect asset quality to stabilize and enable this growth. And then also related to this, your coverage ratio has been declining and it's at the lowest level now since 2019 at 134%. So I'm curious to know what level you feel comfortable in operating.

Renato, I will pass to...

Thank you, Marcos. I will tell you, Renato that in payroll lending, the deterioration is attributable to the loss of payroll dispersion from our large clients, resulting in a very temporary statistical effect. Notwithstanding this impact underlying asset quality trends remained solid as the remainder of the portfolio continues to exhibit improved performance and declining risk metrics.

In red cards, the increase is partially explained by the consolidation of a higher risk portfolio Tarjetas Del Futuro. And additionally, in December, delinquency ratios was distorted by a denominator effect as the strong origination growth reported in November to retail -- was offset by a significant but expected repayment in December.

We see this seasonality effect every year. Within Banorte credit card portfolios, are behaving very well and also the payroll loans have very good risk metrics. Regarding the coverage ratio, I will say that asset quality is generally improving, early-stage delinquencies are also declining and vintage curves show better performance from recent originations.

I will tell you that we have to take into consideration that although this reserve coverage ratio is declining. We have a very high degree of capital strength. We have a high CET1 total capital ratios and strong pre-provision operating profit in that regard. Even if reserves are lower, loss absorption capacity remains very robust.

When -- I will tell you as Renato that you should worry when the reserve coverage ratio declines due to several factors that are not present in Banorte. Among them is NPLs rising, but reserves are flat or falling. It's not the case. I have to remark this. Also, you should be worried if early delinquencies are accelerating. That's not the case in Banorte. And you should be very worried if growth is driven by looser underwriting, we're not doing that. We are -- we remain very strong with the underwriting standards up to this point.

And if I just may add, Renato, on the credit part, don't be surprised it on the first quarter, you continue to see a slight pickup on credit card, very, very slight and then churning down in a very, very positive way in the second quarter.

Because as Alejandro explained, we have a very strong prepayment part. You have a pretty. You continue to grow the book in a very fast pace. We placed close to 890,000 cards last year. Maybe this year, we can reach the 1 million cards but we have very, very strong placement. No first payment defaults are not present on the group. All the facilities are being served and follow in a very close way. So as Gerardo mentioned, I don't think this is a matter of concern. It's a matter of seasonality that will flow into the first quarter but spending in a very important way into the second quarter.

Thank you. Now we'll continue with Brian Flores from Citi. Brian, please go ahead.

Rafa, Marcos, Tomas and team I wanted to see how sustainable is the savings on the funding side. Rafael, we know Nubank and also I think now other fintechs like Revolut are joining the system. So we're very curious as to work -- or how low can this funding costs go. We have been very impressed positively on the results from Banorte. I think your cost, as you were mentioning in the presentation is now at 44.1%.

How sustainable is this with obviously these pressures that could come from newcomers and if I may, just a very quick follow-up, a quick question to Alejandro on [indiscernible] because I was checking Banxico survey. I think at the medium point, is expecting 1.2 in terms of GDP growth. So just checking if maybe he thinks there is some enthusiasm from the World Cup that is missing on consensus numbers.

For the second one...

Yes, for sure. Thank you, Brian. I think that we might start observing some adjustments in the market consensus regarding GDP especially given the figure that will be released this Friday that is the 2025 preliminary GDP because then I think that the market can recalibrate inertial GDP.

But yes, I think that consensus, it's not taking into account some of the figures that could be important in terms of the World Cup. Just to put some examples, there are some expectations from FIFA about how many tourists can come to Mexico and how much money can they spend. And when you see the figures of tourism in Mexico, I think that even those assumptions are very conservative.

I think that we can have a positive effect in terms of tourism. But it is not only tourism, let's take into account that private consumption, especially consumption from Mexico during World Cup is steered by purchases of screens, obviously, services, restaurants, bars, and all of the things that usually when there is a World Cup increases. So that's how we think that GDP can be benefited by this 30 to 50 basis points.

I think your question is a key one about how the dynamics in the market are moving. I think if you look at the numbers that are present on public numbers from most of the fintechs, what you see is a huge capability of gathering funding at a very high cost and then a limited part of deploying those funds into the asset side that create a very deep imbalance on the process. And I would like to say when you say how you have been able to really lower the funding costs and grow noninterest-bearing deposits above 12%. I think the fact is that Banorte really competes on the value proposition per client, we don't compete like product. I think that if there's 2 ways to compete in the market. One is playing the liability side, bringing up a lot of liabilities into the bank, and then you have through cost, the liquidity cost and the cost that you have to really finance that overpayment that we have.

If you don't have the assets to deploy that. And when you look at the asset side, we can play the game to have a very high cost on the asset side for the clients. And then you have another imbalance because you are basically a factory of generating nonperforming loans and sending people to credit bureau.

I think that the way that Banorte competes in the market and you see that in the activity at the branches and on the digital space is that we have a very strong digital foundation a very, very, very strong digital analytic foundation and the hyper personalization that we have at the bank takes into account the value per client, the present value of the client, the potential value for clients and also what is the business that this client has with other banks.

And then we offer them, I will really a very comprehensive offer that take into account all those things. So when you monetize all the offer that Banorte has, is a much more powerful offer to the client. So the value added that we put in the hands of the client is not just a very high liability price for a very good full relationship that allows them to have a very balanced asset cost side and a very reasonable funding price on the funding side.

And also you will see on the coming months more and more Banorte moving into a much more hyper personalization processes and being able also to attract young players into the market in a very reasonable way, not to try to overshoot the funding side and have a very reasonable and practical approach to really develop the clients that we have.

That has been the approach that we have on the noninterest-bearing deposits is playing right the service that the branches provide the capabilities that we have on the digital and the surprises that where the client receives when they see the hyper personalization, that they receive is really what is allowing us to have a very good relationship with the client. When they monetize their relationship with Banorte is a much more profitable relations that they can have with the fintechs. That's the reason.

Now the next question is from Pablo Ordonez from GBM.

Marcos and Rafa, congratulations on strong results. My question is on the fee side and on the regulatory outlook. More than looking beyond the interchange fees, what should we expect in terms of digitalization and any boost to [indiscernible], should we expect any radical changes here? Any color that you can give us from the meeting yesterday with the government. And with this, how should we -- what should we expect in terms of the fee performance after a very strong year in 2025?

I will start with the meeting yesterday with President. We participated in the meeting, as you know, with President on the Mexican banking sector, the discussion was conservative and reported [indiscernible] openness to engage with the private sector.

We welcome the government's collaborative approach to fostering conditions for stronger growth and sustainable investment as well as its forward-looking agenda to enhance Mexico competitiveness [indiscernible] Banorte, we value these dialogues,and it's important to step towards aligning efforts in support and Mexico long-term development. That's what happened yesterday. It was a good reunion. And now, Rafa, the...

I would say that the fee side has always been a very attractive point for the regulators to see. But if you look at the evolution of Mexico and you compare the interchange fees on the debit side and on the credit side, Mexico is quite competitive on that. So we don't have a -- I think the Mexican Banking Association have a constant dialogue with the authorities in order to put all the numbers in clear in order to because if this is going to sound a little strange, but this kind of price controls, obviously, they benefit the larger banks and they really uptake on the smaller banks.

So that's something that I don't think is right for the market. I think the market has been behaving pretty, pretty good. And on the digital evolution on everything, I think the banks are fully prepared to really deploy the digital capabilities that the bank has even using CoDi or Movil and all the infrastructure that the bank has. I think what Marcos mentioned about also with the meeting yesterday is that it seems that now the digital approach to the Mexican economy is a real one.

And I think the banks will be key players on deploying that part. So I'm not worried about the fees evolution, I think there would be a reasonable part trying to protect basically the mid and the small banks, not the large ones.

And a quick follow-up on this. What growth rates in terms of the guidance, should we expect in a few months...

We can't hear.

What growth rates should we expect for the fee income in...

20% for the last year was really a very strong one. I think this will be above the loan growth. I think 4, 5 percentage points above loan growth. That's what we expect to see because we continue to see a lot of transactionality flowing into the bank, the transactional banking on the corporate commercial and the government and in the retail side, continue to be quite active.

Just to give you a number that shows you that I think the new opening -- let me just go into the difficult part, the branches. We are now opening 5 to 6, 7 new accounts per branch per day when we used to have around 3. So that momentum continues to be and the number in digital you can multiply that number by 5 or by 6, but still the balances that come through the branches are much, much higher than the ones that come from digital.

Now we'll continue with Carlos Gomez-Lopez from HSBC. Carlos, please go ahead.

Congratulations on the results. I want to ask about the fintech strategy. Now you are integrating at Tarjetas Del Futuro and Bineo. So what are going to be the -- how are you going to compete with the new fintechs? Are you going to have any new initiatives are you going to launch something which is different, which is a different brand?

Or do you think that Banorte.com is where you want to be. Also accounting-wise, you had a charge in the quarter, I think, MXN 6.3 billion directly to equity from the integration of Tarjetas Del Futuro. Is it done? Is there anything else that we need to expect from Bineo and from the Tarjetas Del Futuro. And did you complete the sale of the license to [indiscernible]?

Carlos, for the last one, that's all. There's nothing more common. But what you have to see and you can look at that number in the discontinued operations there will be a flow in the reduction of the expenses and basically on the timing of the selling of the Bineo brand, but no additional costs will come to that.

On digital, I would like to be very, very, very careful with this because Banorte never stays put. And as you say, Tarjetas Del Futuro will be a key element to continue to provide a flow of clients into Banorte, but now we can cross-sell them. So that will be a plus for the clients and for Banorte that they were a mono product in the past, and it was difficult really to make profit -- a reasonable profit from those relationships.

I think we can offer a very good set of products, those clients that could bring additional benefit for them and a reasonable profit for us. So that will be the movement of Tarjetas Del Futuro. It's going to be fully integrated into Banorte. So all the scale of Banorte will be playing into Tarjetas Del Futuro but they will still have the individual attractiveness for that part of the market that will continue to be a permanent flow to bring into Banorte new clients.

And also more and more, our clients seems to demand based upon the experience of Tarjetas Del Futuro that we have a much more, let's say, amicable approach to digital with the joint generation and from universities and that. And I think what we learned about Tarjetas Del Futuro there will be a very good evolution of Banorte into that part of the business.

And you will see that in a very -- in the very short term. So we feel very confident in digital. I think Banorte is prime in digital. And you will see that expanded approach to try to integrate more and more clients into a digital offerings into the market.

Would that strategy include any high-yielding account? We see that Revolut is offering 15%. Are you planning to compete with those offers? Or that's not part of your strategy?

We will manage a new way and create one, not in that way.

I think, Carlos, if I go with you and I say, okay, I'm going to give you 15% here. By the way, what are you going to charge me on the credit card, then you do the math, and maybe that's not a very good offer. And I respect a lot. And I think it creates a lot of good dynamics into the market, at least as companies come into the market and bring more clients into the banking system, my main way is to really take care of those clients and not over lend to those lines and really evolve with them all the financial, I would say, we needed for those guys to be sufficient in the way they manage their finance. I think Banorte will surprise the market pretty soon in a very reasonable offer to compete not in a way about price. I don't think that has been very -- always a very reasonable one, but sometimes you have to attract the attention of the market because of the price and things because you don't have anything else. You just have an idea. But Banorte, I think have a very, very, very present and reasonable offering to the markets that will evolve in a very intelligent way to really compete with this -- with the fintechs in the very short future.

We'll take the next question from Yuri Fernandes from JPMorgan.

Marcos, Gerardo, Tomas, everyone connected. I have a question regarding the majority equity evolution of Banorte. When we go to the majority equity this year, it was mostly flat year-over-year, around MXN 249 billion, despite the net income -- I get you have some dividends, the AT1s. But what caught my attention here was a MXN 6 billion hit this quarter from Tarjetas Del Futuro, like the acquisitions you had. So my question is, what explains this hit on Tarjetas Del Futuro if you can provide a little bit of more color on this? The explanations on P&L and provisions from Gerardo they were very good, but this on the equity side was not clear for me.

Rafa, please go ahead.

Yes, Yuri, thank you for your question. And it seems -- remember that when we started with Tarjetas Del Futuro, we put down $50 million that was basically for the price of our total price of $250 million. When we try to really put the capital down that was around $200 million, there was a restriction on the authorities. So we needed to build up what is called a convertible loan that eventually will be converted into shares.

At that point in time, if you're going to the premium on the equity side, we see that we have been building that part on the premium side. So there was a convertible loan here, but there was a premium on the equity side. So when you see the reduction on the equity side was basically when we do convert and we bought the company and we convert the convertible loan into really permanent investment into shares that was basically when we pulled out of that part of the capital based on the premiun and then we build capital into the company.

On the other hand, the company has a loan that was basically guaranteed by a trust that owns the book of the company, okay? So the movements that happened in Tarjetas Del Futuro was basically the conversion of the convertible loan into shares to put capital because the company didn't have any capital at all, a commitment that we did when we bought the company that we were unable to do because of the regulations and then a guaranteed loan that was on a trust that was basically owning the loans of the company.

So when you -- when we do all the integration of Banorte, we convert the loan into shares -- so now that the company does that capital that was always belonging to that company. So now it's on the capital part. And also, now you will see on the coming months started October 1, that all the loans now will be passed as Gerardo mention of the portfolio of the credit cards of panel and the additional cross-sell that we can give to them.

So basically, what you see, Yuri, and thank you for bringing that out is that, that convertible loan was basically converted into shares using the brand that we will be saving at the equity side.

Got it. So basically, [indiscernible] capitalized Tarjetas Del Futuro a few years ago, you convert the bond now. And this is just a onetime right half, we should not see this hit again.

We will not be touching the capital base because of Tarjetas Del Futuro. It will have a running rate like any product that we have, the provisions and everything, but basically on the running rate of the business, no additional capital noticed on anything. I think last year, believe me, was a lot of moving parts on this part.

Finally, we are out of that. The only pending part is when Bineo is going to be sold. If we never sold in the -- as soon as that is being sold, the less we need to continue to spend on the expense side, but no more on the equity side, anything on the equity side.

No, super clear, Rafa. And it was a mess here for us also to read it. If I may, just an easy one and a quick one here, just on margins. I think the guidance implies in a flattish margins for you, like 6.3%, 6.35%. But guidance for loan growth is for consumers to grow faster. So just trying to understand if there is any chance that maybe margins can go higher, like maybe to the high end of the guidance, given your top mix and the good funding cost.

No, I agree with you. We are really penalizing the margin, taking into account what Marcos mentioned that if we see an important acceleration on the government book, because infrastructure and things, those loans basically are not very rich in margins, but are very rich in fees and other things. So we are trying to cover the low end. But if you ask me, I think we will be more in the mid to the high end of the -- on the margin side because we continue to have very good funding cost, very reasonable fixed rate loans that really sustained the margin on a continuous basis.

Super clear. .

I will continue with Ernesto Gabilondo from Bank of America.

Marcos, Rafa, Thomas, Gerardo, Alejandro, all have connected. Congrats on your results. I have a follow-up on your guidance. So should we expect seasonality in the guidance? Should we expect growth to accelerate in the second half? Or should we expect consistent growth throughout the year and also on your ROE guidance, how much dividend payout ratio are you assuming for this year? And also, considering your new guidance, should we expect this guidance to reflect Banorte's sustainable ROE for the group in the long term?

And then I just have a very quick question also related to the fintech competition. We have asked several young people in Mexico if they are served by a financial institution. And we were surprised that most of them have a new bank account, but they don't have a BBVA or a Banorte account. We were surprised about this because the next generation using financial services without going to branches so just wanted to hear your thoughts on how is Banorte positioning to be on the mind of the next generations. And also how do you expect to monetize those younger generations, which tend to be [indiscernible]

Okay. The first one, yes, in the guidance, it's not a line that will always open up. It will accelerate at the end of the year. Everything is -- as you know, we are talking about the agreement with the U.S. and everything will accelerate as soon as we sign that agreement. So that's -- we think that that's going to happen at the end of the year. The second -- the ROE, the dividend that we are giving as always, 50% dividend and then we'll see if there is some extraordinary but these numbers, we are guiding to a 50% dividend.

The guidance to reflect [indiscernible] sustainable ROE for the group in the long term should be, as we say always, [indiscernible], and the idea is to continue with the [indiscernible] that where everybody is talking around and use, but it's a good number. And the last one, we are working very hard. You are right. We need to do something with these young clients. And we are working and I don't know if the next quarter or maybe the other one, but we will issue something like we will see with you. And I don't know if you -- to say something about it, Rafa. But you will be, I hope, surprised that the word that we can use that. Internally, we will do something talking about exactly what you say, now the young people that they don't use branches, Banorte should be in the line of this young generation. So let's keep in touch.

And just remember, Banorte is very, very, very clear. And we expect very much -- the thing is that we have in Mexico, like Nubank, like Clara, like Stori, like Uala because they have really brought in to the table something that we were kind of in a comfortable way because we were growing nicely the digital evolution and basically attracting clients that were profitable for us, profitable for them on that but I think when you look at the offer of Nubank, I'm not talking about the products but I'm talking about the experience.

I think we can really do a lot more about the experience to attract the plans that we have. And what we are really working as Marcos says, is the capabilities of Banorte in analytics and artificial intelligence to really flow the needs of the client and the emotions of the clients, not just the needs but the emotions of the clients are going to be very soon present into the market. You will see that. But thank you for the refelection about this because we have been working in a very, very important way. And we are really, really I would say, happy about what we can really deliver into the market.

The next question is from Tito Labarta from Goldman Sachs.

Congrats on the strong results. I guess another follow-up just on the competitive environment. Particularly on payroll, right, because I think one of the things all these fintechs are getting banking licenses for is to try to compete on payroll and get some principality. I mean and you mentioned there were some losses there on some payrolls.

So just how do you think about potential competition for that? Can the fintechs really compete for payroll once they get the banking license and is that a risk at all to sort of keep in mind? And also along those lines, another sort of incumbent with Banamex getting spun off of city potentially becoming more competitive? Just any risk that you see from there as well.

As I stated I don't know the environment is very competitive. So we are expecting that, and that's why we need to move faster than the others. But you are right. They are here and we are 52 banks now and competing and we need to do something spectacular. That's what we are working on.

And I would say just to add what Marcos mentioned is that the competitiveness on the payroll, I mean, the payroll that we lost was not for young people, it was really for civil servants. So -- but what you and I challenge you all to see the value proposition that Banorte has on the table.

I think we have the strongest value proposition in payroll. It provides credit cards, it provides credit cards with a very, very reasonable rate -- it provides insurance, it provides savings, it provides everything that you need to link to your payroll with a lot of benefits linked because of the relationship that we build on the payroll.

So I really do challenge to see the offer that we have on the payroll side that I think is the most comprehensive offer into the market and the most attractive on price-wise and functionality for the clients. So payroll is going to be a battlefield. It's already a battlefield. But now the battlefield is going to move into the new entrants into the banking system and that's where we think we can play a very, very key role.

Yes. If I might add, Rafa, I will say that up to now, with a tremendous respect with these players fintechs are winning transactions. And banks like Banorte are winning because we're building ecosystems for the employer and for the employees. And that's a very different competition, just try to keep that in mind.

Now we'll continue with Marcelo Mizrahi from Bradesco. Marcelo, please go ahead.

So my question is regarding the efficiency ratio going forward. So we are seeing this integration of Tarjetas Del Futuro. So it's -- we want to understand the mindset of you guys looking not just this year but -- in a long-term view. So what's the efficiency ratio that Banorte will target in the next few years.

We were discussing 34% or 35%. It's going to be 34%.

Our goal is to reach again the 34% -- not for the next year. We will try to be there. But I think we feel comfortable from 34% below and below. And I think with all that we are doing in digital and things, and the implementation of artificial intelligence bank-wide that will help us to deliver that.

These levels that we will see in this year, that's an impact of the integration process.?

Exactly right, Marcelo.

Okay. So after that, so we will -- so it's possible to see already in this year, the ratio started to come down.

Exactly right. I think '25, '26 will be and in between years, but a lot of the base to continue to drop to 34% will be set up in '26 because it will be the deploy of our bank-wide artificial intelligence push and also the integration of Bineo, the selling of Bineo, the integration of TDF. All that is potential benefits, but it will take time to realize through the year -- maybe at the end of the year, we will be very close to the number that we were trying to reach.

I have another question. Can I do another question? So we -- you guys were talking about a better performance on corporate credit on the fourth quarter. So my question is regarding why do you -- so if you guys -- so you have an explanation. So we saw a better environment and growth to corporate side -- on the corporate side already on the fourth quarter. So we were expecting that just in the second half of this year, but it's already started to be better.

I will ask Rene Pimentel to answer that question. Are you there, Rene?

Yes. Thank you. Well, basically, during the fourth quarter, we closed a lot of the transactions that had been in the pipeline throughout the year. I think that this year, of course, we will continue to focus on our core sectors in which we have been focusing, which are growing faster than the economy.

But also, we will start looking at new segments in which Banorte has not been clear before and that we believe that we have the product and services to offer a good offering to our clients. So we believe that this growth will continue throughout the year. And we have a good pipeline for the second half of the year.

So we'll continue to see growth in the range that was already mentioned by Marcus, the 8% to 10%.

The next question is from Daniele Miranda from Santander.

Marcos, Rafa and everyone connected from the team. Just a very quick one from my side. You mentioned consumer lending will continue to be the main growth engine. Has this been driven or will it be driven by new customer acquisition or by deeper penetration and higher loan balances among already existing claims. Just trying to assess here how much more risk you are taking while expanding consumer exposure and how difference during this segment?

Thank you, Daniel. It's going to be both. We still want to grow operational way. And also, as we were talking about the hyper personalization, we still supplies that they need more products from now. So you will see that we will go in both lines and growing eco.

Now we'll take our last question from Federico Galassi.

Two or 3 questions, if I may. The first one is, Rafa, you mentioned that you are thinking in 18 for the Mexican peso at the end of the year -- do you have any sensitivity? Is the currency continue to appreciate and finish, I don't know, 17, something like that.

Rafa, please go ahead.

I would say the really hard effect was last year because of the drop on the peso rate. I think -- we have some sensitivity on that part, but I don't think we are not going to play that game because it's a short-term basically strengthened of the peso.

I think we are convinced and Alejandro is also convinced of that by the end of the year, the peso will be in a much more reasonable price around the MXN 18 per dollar. So no, we are currently doing this because it's a very -- it will be like follow the [indiscernible] will be up and down, so we will better fix on the end term of where the -- to be that is around MXN 18.

Okay. Perfect. Fair enough. The other question is related with the insurance business, in particular in auto cars with the change in the regulation with the VAT. Do you -- what we are thinking to -- do you thinking to increase premiums? How do you think toward this year to keep up to at least maintain the rise of the last year.

Okay. We were discussing this in the morning and yesterday, and we will absorb part of this increase. And also a little bit will pass to the client. The competition is huge. It's not only banks, the insurance companies, but we think that it's going to be [indiscernible] going to come from for the banks and other for the clients. We will see the result in the next months.

And Frederico remember that Banorte has evolved not for a single price for the clients. We do price the insurance based upon the, I would say, the quality of the risk of the client. So that will allow us to have, as Marcos mentioned, a much more flexibility instead of just have a fixed price. So if you are really a low-risk line maybe we will absorb everything on that part. And if you are not a low-risk line, maybe you will get the full heat of the [indiscernible].

Perfect. And the last one, I don't know if you mentioned before, but do you have any news or something to mention about the pickup of fees -- on fees that was mentioned last year.

No, we don't have anything new there.

Thank you very much for your interest in Banorte. With this, we conclude our call. Thank you very much.

Good morning, everyone. This is Tomas Lozano, Head of Investor Relations, Corporate Development, Financial Planning and ESG. Welcome to Grupo Financiero Banorte Third Quarter Earnings Call for 2025. Our CEO, Marcos Ramirez, will begin today's call by presenting the main results of the quarter and the first 9 months of the year and will comment on the strong results of our core business as well as extraordinary that impacted this quarter's results.

Then Rafael Arana, our COO, will go over the financial highlights of the group, providing details on the margin evolution and sensitivity, asset quality and expenses and will cover the adjustments in the guidance to reflect Bineo's impairment and the group's operational strength.

Please note that today's presentation may include forward-looking statements that are subject to risks and uncertainties, which may cause actual results to differ materially. On Page 2 of our conference call deck, you will find our full disclaimer regarding forward-looking statements.

Thank you, Marcos, please, go ahead.

Thank you, Tomas. Good morning, everyone. Thank you for joining us today. Before starting our call, I'm proud to share with you that yesterday, we concluded our 125th anniversary celebrations, with a special Board meeting in Monterrey.

We thank you for your patience as we had to move our official reporting dates to make this celebration special. We achieved 125 years of sharing with you, our shareholders, a transformational journey that has a lot to become one of the leading financial groups in the country. Your trust and support has been key as you have helped us to execute and embrace digital transformation, expand our business participation and reimagine the way we operate by placing our customers at the center.

Moving on with our results, let me begin by highlighting that this was an overall strong quarter. Our core business continues to demonstrate the structural strength, supported by the solid performance across our business units, expanding margins and disciplined expense management. However, it was overshadowed by 2 extraordinary items that impacted our results.

The first item has to do with the NIM. As you well know, we announced itself in September. Although this transaction is still awaiting regulatory authorizations, accounting standards require its classification as a discontinued operation with an initial valuation impairment of MXN 1.3 billion. Second, we recognized a new nonperforming case for the commercial portfolio with its corresponding impact on higher provisions and cost of risk for the quarter. It is important to highlight that, that is an isolated case and we do not expect any particular industry to be at risk.

These extraordinary events do not reflect a weakening of the structural strength in our core business or operating trends. Additionally, our cost of risk outlook for the full year is not modified since the possibility of occurrence of such case was previously anticipated. We expect the positive trend in our quarterly results to continue during the fourth quarter, together with the usual seasonal dynamics that characterized the end of the year.

Regarding the Mexican economy, our economic analysis team maintains its GDP growth forecast at 0.5% for 2025, driven mainly by Brazil [indiscernible] and signs of recovery in domestic consumption. Looking ahead to 2026, we anticipate a rebound in GDP growth to 1.8%, supported by a combination of factors expected to stimulate private construction and tourism, such as Mexico participation in the FIFA World Cup and the renewing momentum in key sectors such as investment in construction.

On the fiscal front, the Mexican government expects to uphold fiscal consolidation efforts to 2025 to 2026, in line with the budget proposal recently submitted to Congress. Additionally, we foresee a continued constructive and collective dialogue between Mexico and the U.S. in the coming months, which could support the process of the USMCA scheduled for next year.

Regarding monetary policy, we forecast 2 additional 25 basis cuts in the reference rate, bringing it to 7% at year-end. For next year, we expect 2 further reductions, with the rate reaching 6.5% in the first quarter and remaining stable throughout 2026. Finally, we expect a steady Mexican peso for the remainder of 2025 as the broad weakening of the U.S. dollar and the increased appetite for risk assets have favored the currency. As a result, our economic analysis team forecast MXN 18.80 per dollar by year-end.

Now starting off with the financial results on Slide #3, we highlight the group's sound structural performance. Margin for both the group and the bank expanded in the quarter, supported by the neutralization of our balance sheet sensitivity. Cost of fund optimization has absorbed the impact of decline in rates in the loan portfolio, which also reflects the natural hedge of larger fixed rate loan balances. The overall expansion and composition of our credit portfolio continues to support revenue generation, driven by a resilient internal demand and the implementation of the hyper personalization strategy.

Our capital generation remains strong, driving the capital adequacy ratio to 22.3% and creating opportunities for capital optimization. We will provide greater detail later in the presentation. As for the extraordinary items that I mentioned before, we see Bineo's impact. And regarding the risk metrics and increase in the NPL ratio to 1.4% and cost of risk reached 2.7%, reflecting the isolated case during the quarter.

On Slide #4, net income for the third quarter decreased 11% sequentially and rose 1% with accumulated figures, mainly affected by both extraordinary items already discussed. Nevertheless, results still reflect a strong structural performance in our core businesses. ROE for the first 9 months reached 22.3%, in line with the full year guidance.

Results by subsidiary on Slide 5, despite a minus 4% sequential decline in the bank's net income to MXN 11.3 billion, mainly affected by higher provisions that offset the dynamic consumer activities in core banking products and structural efficiency in margins. Consequently, ROE for the bank stood at 27% for the quarter.

With accumulated figures, net income from the bank grew 2%, reaching MXN 34 billion. Despite higher provisions, the bank is playing a sound [indiscernible] and higher market-related income from heavier trading activity. The business was positively impacted by the neutralization of our balance sheet sensitivity to rates, supported by larger lending volumes along with the consistent optimization of our funding costs.

Our banking operations still showing resilience on consumer dynamics and the positive impact of higher fees from the insurance company. Altogether, these results yielded an accumulated ROE of 28.4%, in line with the guidance.

Our insurance business grew 20% during the first 9 months of the year, driven by higher billing issuance, mainly in the life sector. The overall positive evolution of the business is also capturing higher lending activity of auto loans and mortgages at the bank, which offset greater fees paid for the bancassurance operation.

Annuities expanded 28% quarterly due to the higher business volume despite a greater competitive market. With accumulated figures, it grew 3% driven by a positive technical result on lower inflation adjusted reserves. In the brokerage sector, the quarterly decline was driven by lower evaluation in securities. However, the first 9-month expansion derived from increased fees due to higher trading operation and market-related gains. Lastly, results in the pension funds business were driven by higher yields on financial products in both comparison periods.

On Slide #6, the loan portfolio, excluding the government book, grew 10% year-over-year, driven mainly by consumer lending. In the year, the commercial and corporate book grew 9% and 7%, respectively, still supported by short-term working capital financing, primarily in the tourism, real estate and industrial sectors.

Deceleration in both portfolios is in line with our expectations for the year since customers in both segments continue to wait for trade clarity before committing to long-term investments. Moreover, these portfolios were further impacted by FX variations in the dollar book, which currently represents 40% of the total loan portfolio.

On the other hand, our government portfolio declined 12% in the year, largely related to lower activity in the federal government and prepayments from states and municipalities. Nevertheless, we reiterate our appetite for the segment, and we anticipate a seasonally active fourth quarter.

Turning to Slide #7. Consumer lending continues to drive overall loan growth. The 12% year-over-year expansion was supported by our ability to capture the disposable market with digital capabilities, process efficiencies and hyper personalized business model. In this sense, auto loans sustained stronger-than-expected annual growth, increasing 31%. This expansion was driven by our ongoing efforts with existing strategic alliances to improve our availability and the competitiveness of our offering within the partnership, and our capacity to gain market share by capturing business from competitors.

The credit card portfolio rose 16% year-over-year, mainly supported by our resilience on private consumption, improved promotional efforts that derive in larger building balances, targeted marketing campaigns and the continued success of our rewards and loyalty programs with our existing customer base. Payroll loans grew 10% in the year, driven by an observed greater demand, process optimization and increased availability to digital channels. Moreover, we continue to enhance our value proposition with differentiated high liquid products designed to align with evolving customer needs. Finally, mortgages rose 8% in the year, supported by improved origination processes, strategic alliances and our hyper personalization strategy.

On Slide #8, the structural asset quality continued to demonstrate solid performance across most of the products. However, as noted at the beginning of the call, our risk indicators reflect an isolated nonsystemic case with the commercial portfolio. I would like to insist that it does not indicate broader sectorial or geographical concerns nor a deterioration in our quality forecast. While the recovery outlook remains strong, such case resulted in elevated provision. In this sense, both NPL ratio and cost of risk rose in the quarter. However, we are still holding our cost of risk guidance range for the year between 1.8% and 2%.

On Slide 9, net fees grew 1% quarter-over-quarter and remained relatively stable with accumulated figures. Sequential slowdown reflects lower transaction activity compared to a seasonally high second quarter. With accumulated figures, higher transaction volumes in consumer products and investment funds were offset by regular fees paid on credit origination to the external sales force.

Moving on, on sustainability in the Slide #10. I would like to highlight that in line with the high growth rates of auto loans, a growing proportion of this portfolio is related to hybrid and electric vehicles. This supports growth in sustainable products such as Autoestrene Verde [indiscernible] auto loan product.

Similarly, on the social front, our book in payroll clients demand stronger support from them through financial education workshops, which help our clients make better informed decisions when hiring the different financial products available to them.

Lastly, the environmental front, we are very close for reaching our 2025 target of 226,000 planted trees across Mexico, in line with our commitment to One Trillion Trees organization.

So as you can see, our core business and structural expense continue to have a sound evolution. In this sense, apart from Bineo consolidation impact of net income, we are maintaining or improving all of the other operational ratios in the guidance for 2025, being confident we will comply with our commitment to the market.

Now before asking Rafa to cover the main financial results of the group and the updated guidance for the year, I would like to address our capital allocation plans. The bank's organic capital generation enabled us the possibility of an extraordinary dividend during the fourth quarter. Accordingly, we are having a shareholders' meeting in the upcoming days to seek approval and proceed with the distribution of around 35% of the net income of 2024, amounting MXN 6.99 per share by year-end. With this, our total payable ratio will reach 85%.

With this, I conclude my remarks. And please Rafa, please go ahead.

Thank you. Thank you, Marcos. Now we move to the financial highlights. And I would like to address and thank you for all the feedback that you give us yesterday concerning the results and some of the questions that allows to really go directly into what's really of concern of what you saw in the numbers.

Firstly, let's remember that when we set up the guidance for the loan growth, we were expecting a country that was supposed to grow at 0 GDP. And we set up a loan growth with the exception of the government book, very close to 10% or double-digit growth. I will go in a minute to show that, that's still very feasible for us, and we're still going to keep that on the guidance.

But if we see a very strong consumer that continues to grow in a very good way for us, it's not the same on the corporate and the commercial. That is much more a wait-and-see mode for the country, even though we continue to provide working capital and some CapEx for the commercial and the corporate. But that -- I would say that's where you see less activity in the group.

The government book is starting to move forward in the way that we always expected that by the end of the year, the government book was going to continue to be trending up based upon many initiatives that were on the making for the -- I would say, for 6, 7 months on the book. So even though there was some concern about that the commercial and corporate was not growing in the bank and that we are only becoming more a consumer bank, that's not exactly the case, and it's most related to what I mentioned about the economic activity that is very related to what's going to happen with the USMCA in the corporate and the commercial.

If you look on the positive side, concerning the growth in the lending side, we basically captured market in car loans, payables, credit cards, mortgage books, a piece on the commercial and corporate, but we capture market on that part. Governments start to move. This is positive information. So you we'll see that. We have really started to move from 26.4% to 27.4%, and you will reflect that on the on the fourth quarter.

So all on all what we see is that we continue to see very strong demand on the consumer side and very healthy demand on the consumer side and we will see the numbers in a minute. And what Marcos mentioned about this isolated case that was very not expected for us, we're working with that case for many months, but it was really not in our hands to sort it out. And Gerardo will explain that in a moment.

So if we now move because what I don't want for the investors to see is that Banorte is starting to really slow down on that part. I think the third quarter is always the most difficult one, but you will see a very good pickup on the fourth quarter on the loan growth to achieve, but we guide the market to [indiscernible].

If you go to the slide that we're showing on NII, I think the key part is looking at the NII, especially on the -- what is loans and deposits. NII concerning loans and deposits is growing at a very healthy 15% on that part. So when you see another part on the NII, when you see the MXN 1.5 million that was really not expected to happen because it's related to the strength of the peso, that is causing us to lose on the net income, on the NII, MXN 1.5 billion that was not expected in any way when we set up the guidance. If the peso starts to go more in a trend to the 18, 19 something, you will see a recovery on that part. But NII, especially on the loans and deposits continue to be very healthy and growing in a nice way. So that's what I would like to result on that part. That expansion on the NII will continue also into the fourth quarter.

Based upon all the cost of funds that we have, we will see in a minute how the spread of the book continues to expand based upon all the strategies that we set up on the on the balance sheet. So very reasonable NII in the loans and deposit, 15% year-on-year on that part, and a negative impact in the valorization from FX of MXN 1.5 billion that was really not expected where we set up at the beginning of the year.

So if I move now to the next one, the bank NIM continues to expand in an important way. Now it's reaching 6.9% based upon all the strategy that we set up on the balance sheet. And that also has allowed us to compete in the market because by having the lowest cost of risk and NPLs, we can provide the market with very attractive prices if we like the risk. So we are very, very diligent on the risk. But based upon the spreads that we're getting on the group, we can really go for the clients and we like to have that at the bank.

So I already discussed the NII. Bank net fees, some people are concerned about the bank net fees. Remember that out of this -- the third quarter is really a kind of a slow month on that. You will see a lot of activity in the fees in the coming next 3 months because of all the promotions and things that accompany the end of the year. We have a very -- I would say, we are very confident that fees will continue to expand.

And remember that when you have to look at fees, since we are selling really cars and mortgages in a very important way, I mean we -- in parallel, we are basically the leader in the market and in the mortgage which we are seconding market but very close to the first one, is that you have to pay the dealers on the commission basis what you have with the dealer to the sellers with the sales force that we have and the same happens on the mortgage front. Then you absorb that through the life of the loans. So this is related to the very fast pace that we are growing the group in the mortgage book and in the car loans.

And another important thing to mention is that we have 2 very large issuers that was a very important part of the fees that were running to us because of the very large number of transactions. But we decided based upon a very I would say, a profitability metric analysis that we did on those 2 clients, but it was not on the best for the bank to keep on sharing those because there was basically no money to be made on that. You will see that balancing out in the next quarter.

So when I go to the next page and the sensitivity continues in the same way that we have been planned in the group. So the sensitivity on an NII basis is nothing and basically, and on the balance sheet on the peso route, this continues to be very, very, very low. On the dollar book, you see that's much more active balance sheet management, not in the same that was in the peso that you have a long way to really position the balance sheet. And the reason for that is that we don't have fixed rate loans on the dollar group. We have a lot of fixed rate books on the peso book that allow us to hedge the balance sheet in a natural way.

In the next -- what you see, the bank's net income was basically affected by the -- what Marcos was already mentioned, but that's an extraordinary base that we had on the commercial side. The ROA of the bank continues to stay at 2.5%, and the ROE of the bank, including the loan that was mentioned before, stay at 27%. But in accumulative basis by the end of the year will be very, very in line with what we guide the market today.

I will jump to the next one, and it's basically the graph about the managerial NIM, but you see the effect of the annuities and insurance on that part. You see now basically those 2 trending. So there's no -- the only thing that happened on the pension book was a slight effect on the URBI because of inflation that happened in the quarter.

The most important part also in the next slide to see why we are confident that NIM will continue to expand and continue to deliver pretty good numbers on the margin side. You see that when you look at the graph, you see the active -- the rate that we are really having on balancing the active rate that is present in the market how we are dealing with the reduction of the fees.

But you see, and also a very important part is the reduction that we are having on the funding side that you can see that on the red dotted line on the low part of the graph. And then you move into the next one that is -- no, no, no -- into the next one, that is really the spread. And the spread is 8.9%. And you see that, that spread continues to extend even though the rates continue to drop. And that spread will continue to move up through the remaining of the year and into the next year.

So basically, what you saw -- you see in those graphs is that you see the portfolio continues to post pretty good numbers around 12.9%. You see a deep reduction on the active rate that is basically the lowering of the rates that the Central Bank is doing. But you see that the spread goes in the other way, and that's exactly what we plan the balance sheet to do so we started to position our balance sheet. So that will continue in the coming months.

The next graph really shows the trend that we have on the funding cost and that graph will continue to grow in the coming months. As you know, basically, October, November and December are pretty rich months concerning the noninterest-bearing deposits, and we will continue to see that drop in the funding cost has stayed there for the remainder of the year and into the next year.

There was a concern about -- on the funding side that it was like a drop on the interest-bearing deposits. That was a deliberate move because there was expensive funding that we were holding on the balance sheet and we don't need that anymore. So we got rid of those expensive funds, okay?

And in the next graph, it is really what is creating Banorte being such steady on the NPS and cost of risk, it was kind of a surprise for the market and also for us, the big pickup that we have on the cost of risk is -- I think is mentioning that it's tough to keep the risk numbers the way we have been keeping for many, many months and years. And this is really an extraordinary pace. Gerardo will go in a minute to explain exactly what this case is posing.

But what I would like to address is that we still hope that Marcos mentioned that we will, on our guidance, on the cost of risk from 1.8% to 2% on that part. And the write-off rate that you see continues to be quite steady on that. So this was the big pickup that we have in the third quarter. And another thing that you will see is that an addition MXN 400 million provisions were put also on the third quarter that those provisions will be reversed in the coming quarter because it was basically because of a calibration of the models from the credit cards that we are coming into -- before integrating the Tarjetas del Futuro, the Rappi integration with us.

I will pass and then I will continue, but please Gerardo, you would like to address the case?

Yes. Sure. Thank you. Good morning, everyone. I will say that the higher provisions recorded during the period is primarily attributable to a single isolated exposure within the commercial loan portfolio. The specific case required an additional reserve following a detailed credit review that considered updated financial information and collateral valuations.

Importantly, this adjustment is not indicative of a broader portfolio trend. Comprehensive statistical and credit analytics confirm that the event is idiosyncratic and nonreplicable. The exposure in question has characteristics that differ materially from the rest of the portfolio. That is including sector, geography, obligor structure and collateral profile. And those does not share risk drivers or behavioral patterns with other loans.

Portfolio level analysis support this conclusion. Let me explain 3 factors. The first factor is correlation test between the affected exposure and the rest of the commercial loan book show provisions statistically indistinguishable from 0, confirming the absence of common risk factors. Second, migration and delinquency rates across all other commercial cohorts remain stable and within historical norms. And third, vintage performance and profitability of default distributions exhibit no significant drift compared to prior quarters. Consequently, the increase in provision should be interpreted as a one-off technical adjustment, reflecting the institution's conservative provisioning framework rather than a signal of credit deterioration or a change in portfolio quality.

This proactive approach strengthens coverage ratios and demonstrates the bank's commitment to prudent forward-looking risk management practices, ensuring portfolio resilience under diverse economic scenarios.

Thank you, Gerardo. If you've got more questions, we will address that during that. The other thing that we would like to touch, the next slide please, is -- when we commit to the market at the beginning of the year about the guidance, we said that we were going to push hard to go into single-digit numbers, the expansion on the ratio.

As you can see on that part, we are very, very close to achieve that to reach lower cost expansion for the year and started to go back again to single digits. And from then, a continuous evolution into what we like our 34% cost-income ratio. This was a big step, and you will see that big drop also on the fourth quarter on the expense line. But we are right on target what we promised the market that we will be below 2-digit numbers into single-digit numbers. That's -- I think that's another part that we will discuss when I touch about the guidance.

The next one goes with the capital. Marcos already announced and the distribution of the extraordinary dividend. And the reason for that, you can see easily on the quality of the capital and the size of the capital base, 14.8% is what we have and own on the core Tier 1. That number when we pay the dividend, will go for the first quarter close to the 12.5% and evolve here very close to the number that we would like to have, that is the 13% for Teir 1 ratio, fully compliant with TLAC. No issue with TLAC in any way. So capital continues to be a very strong generation of dividends for our investors, and we continue to hold a very prudent management on the capital base.

Now I will move into the guidance to see what are the adjustments that we will have in [indiscernible]. The first one was loan growth. The new guidance that we are putting in the loan growth, the range is open because there's pipeline, but we have to go to make that pipeline a realistic one. But we think that without the government group, we're going to be very close to the double-digit number, if not above the 10% in double-digit numbers, but we have to see how the pipeline evolves on the remainder of the months.

The pipeline looks strong, and I think we could achieve what we promised the market on that. Net interest margin for the group will be a bit -- a little bit above what we guide the market on the range. The NIM of the bank, for sure, will be very close to the 6.7%, 6.8%. The recurring expense growth that we were putting double-digit numbers is going to range from 9.4% to 9.7%. That put us on an efficiency ratio from 35.5% to 36.9%, trending to the number that we would like to have that is the 34%.

Cost of risk will continue to hold the 1.9% to 2%. We feel confident about that. Tax rate, the same. The net income basically has been affected by Bineo. If you strip the Bineo number, the bank is exactly on guidance. And you have to consider that we were not taking into account MXN 1.5 billion of FX that happened to the bank that really affect the net income in the MXN 1.5 billion basis. So on the net income basis, basically, what you see is the effect of Bineo.

And let me tell you this. There's a lot of initiatives trying to minimize this effect. But in order to try to be as close as we can be for the guidance by the end of the year and not promising that we will be on the guidance, but efforts are being made to be very close. We continue to see very good consumer, government is coming alive and also a pipeline on the dollar book is becoming quite effective. At the same time, we don't see any hiccups on the quality of the group on the consumer and no more in extraordinary cases under the commercial and corporate.

Return on equity for the group will continue to go from 22% to 23%, up from 21.5% and the return on equity of the bank will be from 28% to 29%. The ROA will stay at 2.2% to 2.4%. So with this, this is the guidance that we have at this moment. But I would like to address the fact that important efforts are being made basis of the dynamic of the bank that we could really achieve a better number on the -- of the net income guidance by the end of the year that will be close to what we promised the market on that.

With this, I conclude my remarks. Happy to jump on Q&A.

Thank you. We will now move to our Q&A session. As always, we kindly ask you to present only your most relevant question, and we will be happy to take any other questions any time after the call. [Operator Instructions] We are now ready to start our Q&A session. We'll start with Brian Flores from Citi.

[Foreign Language] I wanted to ask you on the proposed interchange rate caps for credit and debit cards. If you have any color on your conversations from the regulator, any, I don't know, initial gauging of impact that you could have I think it's probably going to become a very relevant discussion. So any color you can have on that would be really appreciated.

Thank you. Yes, we are aware of that. It's still moving, nothing is said about that. So we should wait. We have a meeting with the Ministry of Finance and [ one of the ] bank of Mexico, and we are waiting to start working and to move on, and we have some days ahead to maneuver and to see what's going on. So far, we don't have anything. And as soon as we know, we will let you know. But so far, we are -- it's a work in progress. And they open the doors, that's very important to negotiate and to hear from the [indiscernible] Mexico, what's going on. So we will see in, let's say, 1 month around that the conversations. I cannot tell the word because I don't know anymore.

Now we'll continue with Jorge Kuri from Morgan Stanley.

Congrats on the great results. I wanted to ask you about your market-related income. Just trying to figure out what -- what's the number going forward because it's evidently been a really big contributor to the profits this year. You're on track to basically double the amount of market-related income this year versus 2024. And if I just try to benchmark it in any way, the number really looks above trend. If you look at it as a percentage of revenues, it'll probably be around 6% this year versus a very consistent 3% over the last 3, 4 years. If I look at it as a yield on your marketable securities, that's around 1%, which is also exactly double of a very consistent 0.5% that it's been over the last 3 years. So can you walk us through what's behind this really big increase? And I guess most importantly, how sustainable that is as we look into 2026 and '27?

It's not sustainable, it was what it was because they saw an opportunity. The rates were going down, the effect was somehow it was clear to see what was going in the market. So we'll take the advantage. But I think, for the future, we are not depending on the trading for the bank. So if we see an opportunity, we will take it. But again, you will see for the next year, the budget is going to be a -- Boeing one, I don't how to say it, but it's going to be the same, but this month. And we do not expect to move the needle there too much. Rafa, do you want to say something?

Thank you, Jorge, for the question. And sorry that we cannot project this graph, but you will see that even though you see a big number on the trading book, if you compare that number to the expansion on the -- basically on the NII and compared to the expansion that we have on the technical results of insurance and annuities and also the impact of the net fees, the trading when you look on a percentage basis, continues to be basically the same trend.

As Marcos mentioned, it was a very easy gain based upon the way we position the balance sheet and the acquisitions. But it's not that we are chasing or changing in any way the strategy on the trading book. But we are very, very -- I would say, very carefully looking at this is that the NII continues to expand much faster than this. The net interest -- NII also for the annuities and insurance continue to expand faster than that and also the fact of the net fees. If we see that this takes another trend compared to this today to what I mentioned about the NII and the fee, then that will make us to put into another strategy on the trading group that we are not really moving anything on the strategy.

We will send this graph, I'm happy to put that on the web page for everybody to see that we take a very delicate balance about trading, NII of the insurance and the fee base. And yes, this was a very good part of the year, but also because the other also were not in an important one.

Can I just ask a clarification. Rafa, I think you mentioned there's going to be a reversal of loan loss provisions of MXN 400 million during the fourth quarter? Did I understand that correctly?

Correctly that.

Now we'll continue with Yuri Fernandes from JPMorgan.

I would like to explore a little bit the insurance results here. And I know this is volatile and it's hard to predict the dynamic. But this quarter, we saw the premium decreasing a little bit, like 3% quarter-over-quarter. But technical reserves, they were down 17%. So basically, the insurance reserves, they didn't follow as much premiums. And this helped right in the end, like this help insurance results. So if you can provide a little bit of more color why this happened like any clarification? How do you see the insurance results?

And a second one, and this is very quick, Rafa and Marcos, just on the guidance. So just make it clear. The guidance excludes -- includes Bineo. So basically, we are doing all the calculations with your accounting earnings, meaning that the 4Q could be stronger, right? Like basically, you are using the MXN 13 billion as net income for this quarter to get to our guidance?

I start with the second one. Thank you. Yes, the guidance that we are providing to you, if you see there is a better guidance in some items, and this is the guidance included in the Benio. That's the one that everything is in there. And the first one, taking the insurance, Rafa, please go ahead.

Yes, I think the first thing to notice is that the insurance business is having an extraordinary good year. We expect net income to grow very close to 20% or above that. You know that the return on equity of the company is 68%. What happens is basically that one wealth management product that we are actively selling on our wealth clients had a small reduction on the year. And that really explains the reduction in the technical reserves because that product basically, you need to reserve 100% when you put on the book.

But there was not a lack of growth on the company basically on the property and casualty. And also, we are becoming quite important on the wealth management fees for this product. So nothing really to worry about that something is going on, not in the right trend on the insurance.

On the other hand, I think, the insurance business providing the 20% and the 68% of return on equity, and the activity that the company is having is becoming really a very important part of the net income of the whole group, the insurance company. So no, it's basically -- and that is explained very well on the group that we provide to you how the technical reserves went down because of the -- we have a reduction on the placement of this product for this quarter that will start again on the fourth quarter. So that's basically this.

And I also want to add another thing on there because somebody would like to ask this, what's going to happen with the insurance provisions in going around the market that some companies didn't provide. Banorte just fully, you can -- fully provide for the issues about the taxes on the insurance part. So there will be no effect for us on the insurance side. So that's for the market to know in that part because that was also another concern for some investors that what's going to happen once the settlement of the insurance business at what's going to happen with Banorte. Banorte is as always fully provided that.

Now we'll take our next question from Ricardo Buchpiguel from BTG.

As you mentioned in the presentation, we have been seeing that the bank has been growing quite a bit in consumer loans. So could you walk us through what is driving that trading demand that you talked in the presentation, especially given the slowing down macro environment? And are you expanding to new customer profiles or regions here? Or is it mostly growth within the Banorte traditional portfolio base?

I think that what's very important, Banorte has been really revamping all the processes that we have for the consumer and not for the companies. But on the consumer, especially on the mortgage process and on the card process and on the credit card process, you really see most of them of the -- most efficient process in the market that allow us to serve that and go back to the client in a very short period of time. So what you see on the numbers of Banorte, and you can compare that to the other bank that is very active on that bank, on this part is that Banorte really is penetrating the market on a month-by-month basis. And the most important thing, if you look at the NPS of the car loans that stayed really lower 0.6% and also NPLs on the mortgage group that is still very low, just fairly above 1% on NPL is basically all the processes, and we are serving our clients, but also we are attracting a lot of new clients by the products that we sell on the mortgage part and on the car loans and also on the credit cards.

If you see the expansion that we have in credit cards and charge, you continue to see that card loans are growing 31%. So many of those clients are clients of Banorte, but a lot also are coming from the market. Credit card was growing 16%. So we are also outpacing the market in that. And the most -- and in the mortgage group that is around 8% to 9%.

The most important thing is that we are really attracting the clients that we like and it's basically -- based upon the pricing policy that we follow based upon the risk of the client and the value of the client, we think that we are offering the best deal in the market for the mortgage part. So it's coming from the already existing client base, but also a new -- a lot of new clients are coming to the bank based upon the offers that we've had on the car loans and on the mortgage and on the credit.

We'll continue with Ernesto Gabilondo. Ernesto is having some comments, so he sent me his questions to read them. We believe there are 5 negative headlines for next year. One, a potential deceleration on the auto portfolio because of higher tariffs to autos and auto parts from Chinese cars? Two, lower U.S. rates in the loan portfolio that you have in dollars. Third, lower tax banking deductions. Other banks have anticipated the basis points impact of the effective tax rate.

Fourth, the value-added tax impact on the insurance sector. Other banks are disclosing the impact for next year. Five, the proposal in the interchange fees, I think Ernesto, that has been already covered. And finally, can you please elaborate on your initial thoughts on these impacts and the potential tailwinds, especially if Mexico reaches the USMCA renegotiation?

Yes, that's the bad things. There is also good things. The GDP is going to be [ corporate ]. We still don't know, as we said, the proposal in the interchange fees, so that's out. And regarding the orders, we can work one by one. And yes -- but the insurance sector, we have covered regarding that is not a fit for us. So I see more plus than minus for the next year. Maybe Alex can walk us how we see things for the next year [indiscernible]. Rafa, please go ahead.

Let me -- Ernesto, let me guide you on the impact of the VAT for the insurance. Remember that Banorte prices the insurance based upon the risk of the client. So we don't have just a single price for that. So I think we could accommodate that impact that the VAT will have based upon this volution that we have.

And just before Alex comes and say, look, this year was supposed to be 0 GDP, and we continue to grow on that part. Next year is expected to be somewhat a better year on that part. So there will be headwinds that you mentioned that potentially coming for everywhere. But I would say that if the USMCA goes forward, the tailwind was -- is going to be quite strong.

And yes, this is Alejandro Padilla, Economist. Well, from the macro side and answering some of your questions, first, in terms of GDP, as Marcos was mentioning before, we are holding our 0.5% GDP for this year. We observed a contraction in the third quarter. However, I think that in the fourth quarter, we should see a recovery, why because of what we mentioned before, there are some seasonal factors that tend to be very positive in terms of consumption by the end of the year.

Moving forward to 2026, our forecast is 1.8%, and this is supported by several factors. The first one is that we're going to have an inertial growth component of slightly above 40 basis points. Then we expect a recovery in private consumption combined with a rebounding tourism during the summer, this is associated, as Marcos mentioned before, with the FIFA World Cup. This could add between 40 to 50 basis points to growth. Then we have a positive effect on primary activities due to better weather conditions in 2025 that will benefit crops in 2026.

The fourth one is that we expect a solid external sector performance as Rafael was mentioning before. Considering that Mexico has an effective tariff rate that is lower than the rest of the world, and this has been supportive of the Mexican exports that have been growing at a 2-digit pace throughout 2025. And I think that although not at the similar pace, but they will continue growing throughout 2026. And the big one is that public construction and also infrastructure projects that the government plans to reactivate as part of its priority programs will be equivalent to almost 1.4 percentage points of GDP, and this could be also beneficial for GDP in 2026.

And then if we move into tariffs, well, although Mexico is facing 2 types of tariffs, the specific country tariffs that the U.S. has imposed to Mexico and Canada and the tariffs that are associated with sectoral goods to the rest of the world, the effective tariff in Mexico is less than 7% in the world, is 17.4%. So we have relative position that is stronger vis-a-vis the China and other competitors. So I think that will support exports for the remaining of 2025, but especially in 2026.

And then regarding the USMCA, we have a very constructive view in that regard. We believe that Mexico will continue playing a key role within the highly integrated value chains with the U.S. And we think that the review process in 2026 will go in a very positive way taking into account that there is a lot of cooperation and coordination between Mexico and the U.S. and that this will result in a USMCA 2.0 that will allow Mexico to increase its participation in the U.S. market.

Now we will continue with Tito Labarta from Goldman.

A couple of questions. first, just on the Bineo. So there should be no more impairment charges from here, I assume. Is that correct? And would there be any potential tax benefits that you can get from this? And then -- but maybe more importantly, I mean, you sold it to another fintech, I guess, mostly just to get rid of the license and get maybe something in return.

But maybe talk a little bit about your own digital operations, how that's evolving, why you feel comfortable selling Bineo and how the whole digitizing the bank is going, particularly as fintechs maybe get a little bit more relevant over time? And then I have a follow-up on provisions after.

Thank you, Tito, for the question. First, there is no more impairment charges. That's it. We don't see more -- everything. We don't see any tax benefits on the other hand. So that's it. We won't talk about Bineo anymore. And we learned a lot. There is a lot of experience that we learn. Remember that 4 years ago, we took all the roles, possible roles and we learn from them. So it's obvious that we -- now we are prepared, and we are stronger, and we did take our digital banking inside and whatever. So I don't know if Rafa want to say something else, but yes, there is a lot of learning, obviously.

Yes. What Marcos mentioned, Tito, is that we learned a lot on that, but what we also discovered that, that it was not just the issuance of having a digital bank from scratch that was supposed to provide that learning process. And I think it did. But the most important thing is that Banorte has a very clear path on how to address the digital evolution that we see on the young people and the newcomers into the banking system with a very good proposition that you will see in the market pretty soon that basically addresses the issues of the newcomers that they really need a lot of financial education and a lot of practical ways to manage the interaction with the client, with the app on that part.

And based upon all, of course, that we have learned and all the learning process that we have also in the artificial intelligence part, we will deploy that in a very short period of time to address the capabilities of Banorte to really reach that part of the population that was not really an important, I would say, goal of Banorte for a time because we basically were very happy delivering a very good mobile application for the mid- to the high end of part of the payer mix.

But we were losing a little bit on the part that we learned from Bineo and from Rappi, the newcomers into the banking process. But I think we have a very good response to that, and you will see that in a very short period.

Great. And then my follow-up on the provisions, right? You mentioned the cost of risk excluding isolated case was 1.87%. So it implies the additional provision was about MXN 2.5 billion, if I'm correct when -- is that the right number? And given there could be some guarantees here, do you expect to be able to recover this over time? How quickly? And does the guidance factor in any recovery there? And also, I guess, is this now fully provisioned?

Yes. Up to now, Tito, it is 45% provisioned. But let me tell you about -- despite this higher provisioning, the intrinsic economic value of the underlying assets and collateral structure supports a favorable recovery outlook. The exposure retains substantial realizable value given the quality, liquidity and marketability of the pledge collateral as well as the borrowers receivable repayment capacity.

From a valuation standpoint, internal stress testing and discounted cash flow analysis indicate a higher expected recovery rate, well above typical levels for comparable distress exposures, the assets net present value under conservative recovery assumptions remain significant, limited ultimate loss severity. Accordingly, while the provision reflects a prudent accounting treatment aligned with expected credit loss models, the economic loss expectation is materially lower. This positions the bank to achieve a reasonable recovery ratio as resolution progresses mitigating the impact on capital and profitability metrics.

Okay. And is that the MXN 2.5 billion the right amount? I had a different number initially, but just want to confirm how much that was the provision for the isolated case?

Yes. The provision is around 2.2%.

Now we'll take our next question with Marcelo Mizrahi with Banco.

So my question is regarding the cost of earnings. So what we see -- we saw very good results coming from that part. And we -- it's important to hear you about the competition, how you guys are thinking about the competition and the cost of funding, why the cost of funding of Banorte is going lower, and it is already impacting the NIM and probably could be some good upside to the next year. So the question is regarding how is the competition? And how do you believe guys that the cost of funding will be in the next couple of quarters?

Thank you, Marcelo. I guess the competition -- you're talking about the newcomers, I mean, also, no? Rafa, please go ahead.

Yes, we continue to see -- as you can see on the funding cost that is going down, not just because of the rates because we are getting rid of expensive funding that we needed when the rate of growth of the asset side really happened to Banorte. Now we are a note we are balanced that with our own funding part. I can give you some numbers on this. So the overall growth of the non-interest bearing demand deposits is around 6%, and it will end the year well above that because of the seasonality of the year. Time deposits also is a pretty good story around 10% with a very reasonable. I would say, price to offer to the client based upon the quality and profitability of the client. So we don't see really the big effect that happened when the new entrance were offering 15%. And that is also going down, and it's becoming a lot more rational on that part.

So we continue to see pretty good activity on the funding side, lowering the cost on a permanent basis. And I think. As Alejandro mentioned, next year will be a good activity on the funding side with a very, very balanced cost on the different types of offers that we do for the non-interest bearing and interest bearing deposit. And the mix continues to be quite nice, 31% is in time deposits and 69% in demand deposits.

So I think we have a well-positioned bank that provides a lot of services and opportunities for the people. But we see is that we are opening now more new accounts at the branches and on the digital side than any year before. So we continue to see that the clients based upon our model that you can open everything in minutes on digital or in physical, is attracting a lot of good clients, and that is giving us a noninterest-bearing part growth and also the time deposits growth on a very balanced cost.

Looking forward, it's possible to maintain you guys believe that if we will see a better environment to growth it's possible to maintain this cost of funding, this percentage compared to the interest rates or not?

Well, I think so. I think we will continue to keep the funding cost trending down. There's a lot of initiatives all over the place: transactional banking, cash management, SMEs, individuals, all over the place we are looking for funds.

Let me drop. I would like to make a position regarding the last question of Tito Labarta. Tito, if you are still there -- let me be very precise with the provisioning for the quarter, it's 1.7.

Yes. Product specification.

We'll continue with Renato Meloni from Autonomous.

So first I wanted to focus a bit on this decline on the interest-bearing deposits -- was this -- you mentioned that it was some expensive funding that you've eliminated? Was this concentrated or among separate clients? And then your loan-to-deposit rate went to 105%. So I'm wondering if you can still increase leverage here or keep growing with that level.

And then just a second follow-up. During the presentation, Rafa was mentioning that the provisions for the credit card business. As far as I understand, would be reversed in the upcoming quarters. So just wanted to make sure that this reversal is happening and why are you provisioning now and then reversing it later?

Yes. I will tell you, Renato, that from the overall point of view, we see the increase in provisions for credit card loans during the third quarter primarily reflecting the extraordinary expansion of the portfolio. As you remember, Marcos was mentioning a 16.1% growth year-over-year. That's very important to keep into context. And this effect is mechanical and volume-driven as provisioning is applied to a larger base of forming assets, particularly those in early stages of seasoning that naturally carry higher model probabilities of default.

Importantly, delinquency rates and risk metrics remain stable across cohorts or clusters and that confirms that the high provisions stem from the portfolio growth and composition effect. Another factor that we must take into consideration for this third quarter should be the extraordinary provisioning with Tarjetas del Futuro credit card portfolio. And this effect is expected to be reversed in the short term due to model calibration. And that's the quantitative effect that Rafa was mentioning is MXN 400 million. So we expect a reversion, but this is not just mean reversion, but reversion in absolute value of around MXN 400 million in provisions.

Yes. You mentioned about the interest-bearing deposits, remember that Banorte had a very strong years, 2 years ago on the loan growth that really, really overshoot concerning our capacity to fund the book. So that created a need to go into the market and go for market funding.

Now that we have been growing the funding side in a very important way, and we are now very balanced assets against liabilities, we have the capacity to get rid of funding that is not necessary anymore. And it was much more expensive against the funding that we can really go into the market today or keeping the growth on the natural funding side on the interest-bearing deposits, retail deposits, commercial and SME deposits.

So that's the reason that you will continue to see an expanding size on the -- or the size of the deposit or the deposit growth, but also with a much better price in the coming months based upon the trend that we see in the noninterest-bearing and the trend that we continue to see on the time deposits with a very reasonable rate that really reflects the value and the different values that we provide to our clients.

So I think we are getting again into a very balanced position. And you can see that easily on the LDR. You will see that, by the end of the year, the LDR will also drop again around 98%, 97% with a very good funding costs for the year.

We'll continue with Daniel Vaz from Safra.

Congrats on the strong NIM performance, I was looking at the sensitivity right now is practically 0. So you have been able to expand margins in this easing rate environment. It's quite impressive. And to face, well, I think, Ernesto mentioned, the negative headwinds. You see the funding benefits that you mentioned, you see better GDP? And I want to focus on the favorable loan mix as your consumer lending has been outpacing the portfolio, right?

So on retail, looking ahead to 2026, you're growing now 12% year-over-year, right? So on the consumer portfolio, and well above this in car loans and credit cards. I saw -- I noted some acceleration in payroll and mortgage. I think it's normally much more important and tend to perform better on lower interest rate scenario.

So my question is, do you see room for this portfolio -- this consumer portfolio to expand above this current base of 12% for the next year? And maybe if that -- it's a follow-up question, would it be enough to guide the market to NIMs even better than your guidance in 2025?

Thank you, Daniel. You're pushing the bar too high, but it seems that, yes, there is room for improvement. Yes. We think that next year, we will grow double-digit growth in our portfolio. And we will release that in January, I guess, next year. But yes, we're -- let's call it that way. We are optimistic and documented optimistic. So we expect a good year next year, and we are working on that and that we need to handle a lot of things internally. But it seems that it's going to be a good year, and we are expecting -- and yes, we can grow more than in the consumer portfolio next year, the answer is yes.

And the better NIMs, we're happy with the NIM that we have right now, but maybe you can improve them a little bit. That's right. I don't know, Rafael, you want to say something?

The only thing that I would add is that we see a big opportunity on the payable portfolio. We are launching a lot of improvements on the value proposition on the payable portfolio, and it linked with the commercial and the corporate and the government and the retail part. So the payroll will be a good story. Credit cards continue to be, I would say, the most efficient product to be -- to be acquired in the market and also on the benefits. If you walk into one of our offices and you decide to go into the offices and in 5 minutes, you will get your credit card, the credit card that you like and based upon your profile on that.

But if you want to go into the mobile, it would be exactly the same. You will get your digital credit card in less than minutes, in 5 minutes. And then if you want to get your card in physical, that we'll send it to you in a very short period of time. So a lot of improvement on the process side allow us to compete in a better way. And being the first in the market by the response to the client, that gives us an edge that we have been using in this.

And also, we are adding more and more value into the propositions for the client to become really a very related client to the bank in cross sell. We expect cross-sell to keep increasing an important way. The hyperpersonalization process that we are using by providing each of the clients base of the risk of the client and the value of the client of what they are outside with us, that is allowing to bring a lot of good clients into the bank.

So the processes are in place and improving. I think the analytics are in place and it's very, very relevant the way we do this. And the pricing also, we price every single client differently based upon the risk and potential value for the bank. So that is what really is driving the growth on the consumer. It's not just pure demand, it's that really the value proposition that we are offering on a client-by-client and basis is being the difference in the market.

Now we'll go with Andres Soto from Santander.

My question is regarding some comments that you guys have already made in terms of GDP growth and loan growth for next year. I understand you are expecting rebound to 1.8%, and you expect loan growth to remain at double digit in 2026. I would like -- given that 1 important consideration there is the USMCA renegotiation, I would like to understand what is your expectation in terms of timing for this? Do you expect next year to be and even year in terms of growth? Or do you expect most of the growth to be delivered in the second half of the year given this expectation?

And also tied with that, how these shape of recovery will translate into your cost of risk performance over the next few quarters?

Thank you, Marcos. Thanks, Andres. Well, we think that's going to be pretty balanced, the growth dynamics for 2026. Regarding your question about the USMCA review, well, according to the agreement, it will officially start on July 2026. However, some issues have already been addressed by Mexico and by the U.S. as well, like, for example, making the consultations with industry leaders and designing the whole negotiating process.

So I think that although it's going to be difficult to have the complete agreement by 2026, we can have a very good idea of what's happening on a sectorial basis. I think it will depend also on midterm elections in the U.S. and how President Trump sees the result for the Republican party because on that, it will depend if he goes and tries to reach a faster agreement or not.

Regardless of that, I think that by the third or fourth quarter of 2026, we will have a very clear idea of what's going to happen with the USMCA 2.0. And I think this is going to be positive in terms of investment, for example, that has been one of the main sectors in Mexico that have been lagging behind, obviously, for the uncertainty coming from tariffs, but I think that the 2026 can be a good turning point in the price relationship between the Mexico and the U.S. And that's why we are optimistic and our GDP number of 1.8% contemplates that idea.

I don't know, Rafael, you want to go through the loan question.

On the baseline of a scenario of a 1.8% GDP growth, the cost of risk is expected to remain contained around the same interval between 1.8% and 2%. This is going to be supported by several structural and cyclical factors that are favorable to the bank.

On the structural side, the institution benefits from a very well-diversified loan portfolio. We have to remember that. And also a conservative underwriting framework and enhanced early warning and collection models that include to improve -- that continue to improve risk discrimination and recovery rates.

Cyclically, stable employment conditions, moderate inflation and gradual easing of interest rate should sustain borrower affordability and credit performance, and particularly on -- in the payroll and mortgage segments. Furthermore, the ongoing optimization of provisioning models after calibration adjustments in 2025 will likely normalize credit cost levels, and that's our expectation.

Let me tell you that, Andres, overall, these dynamics suggest that despite modest economic expansion, the bank's cost of risk should remain within historic range, reflecting both prudent risk management and resilient asset quality fundamentals.

If I may, a follow-up question to Alex. In this 1.8% GDP growth expectation, what are you considering in terms of private investment? And I imagine this is mostly dependent on the USMCA renegotiation? Or is there any other factors that make you optimistic about private investment recovery in 2026?

Well, that's a very good question, Andres, and I can tell you that our forecast in terms of private investment will be highly correlated with the investment that the government will deploy throughout 2026.

As I was mentioning before, in the budget of 2026, the government is planning to spend close to MXN 500 billion, 1.3 percentage points of GDP on infrastructure and -- well, I think that's plan Mexico and other type of mix programs between the private and public sector will be deployed in 2026 as well. So I think that's positive.

And the second 1 is that, yes, I think that we might see some firms that will start doing some CapEx taking into account more certain scenario in terms of trade between the U.S. and Mexico. So all of these are contemplated into our 1.8% GDP forecast for 2026.

Now we'll take Edson Murguia with from Summacap.

Okay. I'm not sure if I'm listening. But I have 2 questions. One is specifically for Dr. Salazar. Could you give us a little bit more color about this calibration model, specifically in the consumer loan book? Because you mentioned Dr. Salazar, this was related to calibration, but could you elaborate a little bit more?

And my second question is regarding on the brokerage business. Could you give us a little bit more color about why total assets has a reduction this quarter, but the AUM increase stop trying to figure out the rationale between the business, per se.

Let's go with the first one.

Yes. The bank is continuing to refine it's retail credit risk models. And that is to enhance the accuracy or expected loss estimation across consumer and payroll portfolios. The ongoing calibration process incorporates updated behavioral data, revised macroeconomic assumptions and recent portfolio performance trends that assures that the probity of default and loss given default parameters reflect current risk conditions more precisely.

And that always gets proven by statistics like called Kolmogorov-Smirnov, the KS, receiver operating characteristics, ROCs, also the area under the curve and R-squared. So if data is telling us that we have permission to calibrate our models, we will go ahead and do it because this is always data and model based. Remember, we use in the retail side of our loan portfolio around 120 internal credit risk models. And they go all the way from different segments, different products around also different clusters of the markets that we are attending.

And the second part, Edson, remember that we do see the position between bank and brokerage and we have movements every day or every quarter. So I think it's really not material to see a movement in any of the isolated books.

Okay. And last, just a clarification. Marcos, you mentioned that the dividend that is going to propose to the extraordinary shareholder meeting is going to be MXN 60.99, or it's going to be MXN 0.90?

No, MXN 0.99, sorry about that.

You can find the full information if you want in the assembly.

Now we'll continue with Carlos Gomez from HSBC.

First of all, congratulations on your first 125 years of existence many more to come, I hope. Second, in particular, you mentioned the interchange fee, and that is still to be negotiated. However, what is not negotiated, we understand is the nondeductibility of the IPAP contribution. Could you comment on that and would you expect that partially or totally to be passed on to deposit costs?

And if Tomas doesn't kill me, just follow-up on the growth question. We understand that you expect better 2026. But when we look at the numbers right now, we seem to be slowing down, at least that is our perception. Is that what you see? Do you see the economy, which is still getting slower, and you expect it to recover during 2026, or you have already started to see a recovery?

Let's start for the -- as you can see it's not only Mexico, a lot of countries, they have these regulations, so, we need to live with that. And maybe part of this is going to be passed on and maybe we will, I don't know how to say the word, swallow it. But it is what it is. And for the next year, you will see it on the guide and it's going to be included there. But we don't see that affect us too much. That's the correct answer. We don't like specific taxes, but -- but this is -- if you see in other contracts they have it, so we will manage it.

And the second one. First, Rafael...

Carlos, we -- if you look at the consumer book from the October numbers are pretty, pretty strong, even stronger than the September numbers. So we haven't seen any slowdown in the consumer at all. On the contrary, we continue to see very strong numbers coming from the consumer. And at the same time, very active now is the government book and also dollar book starts to come alive again. So no, we haven't seen as much...

Alex?

Yes. And well, regarding the GDP question, yes, Carlos, as you notice, the third quarter GDP came in with a mild contraction. However, with some high-frequency indicators. This suggests that we might see a rebound in the fourth quarter. Indeed, we are expecting an increase of 0.3% on a quarterly basis. And this is mainly by some more positive drivers coming from consumption, which has been lagging throughout 2025, but we are starting to see some recovery. So I think that this trend can extend into 2026, this recovery that we might observe throughout the fourth quarter of this year.

We have a follow-up question from Bradesco. Marcelo, please go ahead.

So regarding the efficiency, so the efficiency ratio are thinking about expense into the next year. I believe that the sale of Bineo could bring some upside to the efficiency ratio in the next year or even in the next few years. Could you guys give us some color about that target or something about that?

Yes. The fact is that by canceling the operation of Bineo, you will see that basically, what we put on the group today on the -- what was the impact of the Bineo operation, we think that just to give you an idea that based upon the cost savings, we will recover that in 7 months. So that gives you an idea of how the evolution of the efficiency ratio comes. Also, once we get the go from the regulators, the Rappi operation will be included into the scale of Banorte. So that will be also a reduction in cost.

And the most important part is that when you will look at the recurring days of cost of Banorte and what was Bineo and Rappi adding was close to 5 percentage points. So we started to go down to 3 percentage points less in the coming year. Just based upon on these 2 operations, plus efficiencies that we can we can achieve. So you will start to see -- now it's in 1 single digit, but it's in uppers 1 single digit. You will see those numbers trend from the 7% to the 8% from the next year and then drop again to very close to inflation plus 150 basis points by the third year. That's the evolution that is on the efficiency ratio.

Thank you very much. Thank you for your interest in Banorte. With this, we will conclude our presentation. Thanks.