MEXICO TO GAIN $168B FROM COMPANIES MOVING CLOSER TO THE USA - BANORTE CHAIRMAN CARLOS HANK GONZALEZ

Mexico is poised to gain potentially $168 billion more in non-oil exports over the next five years, thanks to companies moving factories closer to the United States to strengthen supply chains, according to Grupo Financiero Banorte, the largest Mexican-owned bank.

"We want Banorte to be the bank of nearshoring," says its chairman, Carlos Hank González, referring to the business practice of suppliers, manufacturers and other entities moving to establish more nimble supply networks closer to consumption centers.

Banorte recently released a major research study that said Mexico's unique geographic location, demographic advantages, economies of scale and lower costs make it a natural hub for nearshoring. Banorte is betting the nearshoring boom will draw migration to the country's north from southern states and that likely will create more demand for mortgages and loans for small businesses.

"We have the capacity – because we're a local bank – to support these investments," Gonzalez says.

The predicted $168 billion in new exports from nearshoring over the next five years represents about 6.2% of non-oil exports in 2022.

He said the benefits can reach throughout Mexico, calling it "an exceptional opportunity, extending beyond the north or central regions and into the south, southeast and furthermost parts of the country."

Also, small and medium-sized companies must not be overlooked as they play a significant role in ensuring commercial success in nearshoring.

He says the bank plans to add 800 jobs in Mexico to take advantage of the nearshoring trend, with most of the hiring aimed at supporting those types of businesses.

Banorte announced that the industries most likely to register growth because of nearshoring include agricultural goods and livestock; chemicals and plastics; apparel and accessories; basic metals; machinery and equipment; and electric and electronics.

Carlos Hank González, Chairman of Grupo Financiero Banorte

Carlos Hank González is a veteran in the banking and business fields. He has held various senior leadership positions in the industry and sits on the boards of many influential companies. Since January 2015, he has been chairman of the Board of Directors of Grupo Financiero Banorte. He has been on the board since October 2014.

During his early career, Carlos Hank González was appointed in 1997 as general director of Interacciones Casa de Bolsa. In 1999, he become the CEO of Banco Interacciones and, in 2003, he became the CEO of Grupo Financiero Interacciones.

Carlos Hank González has guided what started as a regional bank into one of the largest and most respected Mexican financial groups. At Grupo Financiero Banorte, “we have to be the best allies to grow strongly with Mexico,” he said.

Amid this rapid growth, Banorte has stayed close to the needs of Mexicans and continually upgraded banking services that are supportive, inclusive and forward-looking.

Sustainability is not a fad at Banorte. “It is part of our DNA, essential in our strategy and operations to generate value to our stakeholders,” Carlos Hank González said.

He is chairman of the Banorte Board of Directors, and the bank’s achievements are well-documented. It was recognized as “The Best Bank in Mexico” in 2020 by The Banker, the international financial affairs publication owned by The Financial Times, and named the most valuable brand in the Mexican banking industry in 2020 in the “Banking 500” ranking by Brand Finance, the world’s leading brand valuation consultancy.

In fact, Grupo Financiero Banorte stands alone as the only Mexican bank to get an excellent credit rating from the influential Fitch Ratings Inc. Also, the group ALAS20, associated with an independent research group and an ESG (environmental, social and corporate governance) advisory firm, awarded Banorte its Institution Award in 2020, highlighting its “leadership, consistency and excellence.”

"We will continue being the bank that remains closest to Mexican families and businesses alike, and hand-in-hand with them, we will overcome all the challenges brought by this pandemic. We can state with all certainty that we are more than a bank. We are an ally for Mexico’s development."

Under the principle “we are more than a bank,” Carlos Hank González also has led a period of aggressive business diversification in the non-banking financial sector to broaden Banorte’s scope beyond into retail, wholesale, insurance, and pension fund management.

Carlos Hank González steered the bank onto stronger financial footing before the pandemic hit in the spring of 2020 with declining, past-due loans and increasing net income, equity and dividends while keeping staffing and branches steady.

Capital strength, together with sound liquidity management, were instrumental in weatherizing Grupo Financiero Banorte for the economic shocks of 2020, making Banorte one of the best capitalized banks in Mexico with a total Capital Adequacy Ratio of 21.7%. All of this contributed to mitigate losses in 2020, foreseeing strong growth coming out of the health care crisis.

Today, Banorte boasts a diversified business mix that provides strong fundamentals of increasing profitability, solid asset quality, high liquidity and strong capitalization ratios—all overseen by solid corporate governance.

Since the beginning of the COVID-19 crisis, Banorte was the first bank in Mexico to offer a support program for its customers. At the end of 4Q20, there were more than 630,000 loans enrolled into this program. It is another sign of the bank’s commitment to the well-being of Mexico.

“We will continue being the bank that remains closest to Mexican families and businesses alike, and hand-in-hand with them, we will overcome all the challenges brought by this pandemic,” Carlos Hank González said in 2020. “Our clients are our center of gravity, our reason for being.”

That approach, at the bank and his other businesses, is driven by innovative technology that “allows us to be there right at the time and in the channel we’re needed,” he said.

In March 2021, President Andrés Manuel López Obrador recognized uLink, the digital service of UniTeller, a subsidiary of Grupo Financiero Banorte, as the country’s best-evaluated remittance provider. It was the second consecutive year UniTeller gain top honors for providing customers a safe way to send money worldwide through its online platform and mobile app.

Besides banking, Carlos Hank González has led or been involved in more than 10 different companies, including being on the board of Grupo Televisa and Gruma.

He is the vice chair of the Board of Directors of Gruma, the global leader of tortilla production worldwide with 79 production plants and operations in 112 countries across America, Europe, Asia and Oceania.

He has been CEO of Grupo Hermes since 2008, which has more than 10,000 employees across 17 leading companies in construction of commercial buildings; power projects, including oil pipelines; tourism and infrastructure projects across Mexico.

He has served as CEO at Grupo Financiero Interacciones, CEO for Interacciones Casa de Bolsa and CEO for Banco Interacciones.

Carlos Hank González also leads the nonprofit Banorte Foundation, which supports communities in need and advances efforts in education, science, medicine, technology, economic and sustainable development.

He has a bachelor’s degree in business administration, specializing in finance, from Universidad Iberoamericana.

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REASONS TO INVEST IN MEXICO (Invest in Mexico Facilitation Board AC)

With a population of almost 130 million, a strategic location, and a vast cultural diversity and natural resources, Mexico is positioned among the world's 15 most important economies. It has an area of approximately 2 million square kilometers, ranking 14th in the world. Mexico is a federal republic divided into 32 states and 2,456 municipalities.

It has a privileged geographical location. Neighboring to the north with the United States -the world's largest market -, the border with this country is more than 3,100 kilometers long and has 56 border crossings. To the south, it borders with Guatemala and Belize, which represent the gateway to Central America, South America, and the Caribbean.

Its extensive coastline on the Atlantic and Pacific Oceans (11,122 kilometers) serves as a natural bridge connecting the Asia-Pacific region.

Mexico is open to trade and is one of the countries with the largest number of international trade agreements. Currently, it has 13 Free Trade Agreements (FTAs) with 50 countries, 32 Reciprocal Investment Promotion and Protection Agreements (RIPPAs) with 33 countries, and nine Partial Scope Agreements (PSAs) within the framework of the Latin American Integration Association (ALADI).

INFRASTRUCTURE - According to the Ministry of Communications and Transportation (Secretaría de Comunicaciones y Transporte), Mexico has a little more than 400,000 kilometers of highways, ranging from toll roads to breaches; 27,000 kilometers of railroads, 77 airports and 117 ports.

AEROSPACE - This industry generates more than 60,000 jobs and is present in 19 of Mexico's 32 states.

AGROALIMENTARY - Vegetables, beverages, and fruits are the main export groups, concentrating more than 60%.

AUTOMOTIVE & AUTOPARTS - The automotive industry contributes 20.8% to Mexico's manufacturing GDP and is the country's main net foreign exchange generator. Some of the country's leading automakers are Audi, BMW, Toyota, Ford, FCA, General Motors, KIA, Nissan, Honda, Mazda, and Volkswagen.

ELECTRONIC - Mexico is the fifth-largest exporter of computers globally and the second-largest exporter of electronics in Latin America.

CHEMICAL - The main subsectors are pharmaceutical, resins, synthetic rubber, and chemical fibers.

HUMAN TALENT - As of the first quarter of 2020, Mexico's total population registered 126,661,703 inhabitants, of which 51.7% are women, and 48.3% are men. The Mexican population is mostly young. The working-age population (15 years and older) amounts to 95,784,628 people. In the 2018-2019 period, the National Education System registered 36,635,816 students in the formal education modality, 2,100,277 teachers and 265,277 schools. The number of students in upper secondary education was 5,239,675 and in higher education 3,943,544. According to the OECD, higher education in Mexico is growing and, if current patterns continue, 26% of young people will obtain a higher education degree in their lifetime. Also, half a million graduates enter the labor market each year.

INNOVATION - The Global Innovation Index 2020, developed by Johnson-Cornet University, INSEAD and the World Intellectual Property Organization (WIPO), places Mexico in second place in Latin America and the Caribbean; and in position 55 out of 131 at the global level. According to WIPO, Mexico is the world's largest exporter of creative goods in Latin America. Additionally, Mexico is one of the three economies in the region with global R&D companies. Mexico advanced in the ranking due to an improvement in business sophistication and innovative products. The knowledge absorption sub-pillar increased the most, and it leads the creative goods exports indicator as well. Additionally, thanks to its leading brands, Mexico ranks 30th worldwide in the new global brand value indicator, with 81 among the top 5,000. It is also among the top 10 countries worldwide in indicators of production of high and medium-high technology manufacturing.

QUALITY OF LIFE - Availability and use of ICTs There are 80.6 million Internet users in Mexico, representing 70.1% of the population aged six and older. 51.6% are women, and 48.4% are men. The three primary means of connecting users to the Internet in 2019 were: smartphones with 95.3%, laptop with 33.2%, and desktop with 28.9%. It is estimated that the country has 86.5 million cell phone users, representing 75.1% of the population aged six and older. Electricity supply 99% of the country's inhabited houses have electricity; of them, 0.25% use solar energy as an alternative source, either exclusively or in a bidirectional or hybrid system (solar and public network). Access to drinking water service Potable water is a necessary service. It is an indicator of the quality of life of the population and the country's competitiveness in terms of the provision of services. Of the 32,925,270 households reported in the 2016 National Household Survey, 22,428,142 (68%) have a daily water supply. Financial Inclusion At the end of 2019, the number of branches -banks and popular savings and loan institutions- in the country was 16,883, with a demographic coverage of 92%. The number of branches per 10,000 adults was 1.8, and 125,997,761 deposit accounts were registered.

GLOBAL COMPETITIVENESS - In 2019, Mexico ranked 60th out of 190 countries that were evaluated -in the Doing Business 2020- to measure the ease of doing business. Mexico is the second best-evaluated country in Latin America, surpassing economies like India, Vietnam, South Africa, Luxembourg, and Greece. In addition, in the World Economic Forum's (WEF) Global Competitiveness Report 2019, Mexico remained in 48th place out of 141 economies that are evaluated and improved its performance by 0.3 points.

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