January 24, 2020 / 7:13 PM / a month ago

After 'challenging' 2019, Mexico's Banorte bets on economic recovery

MEXICO CITY, Jan 24 (Reuters) - Grupo Financiero Banorte said on Friday it was expecting the Mexican economy to recover in 2020, which would help lift its banking unit after it suffered a drop in net profit during a difficult last quarter.

Banorte, which owns the largest Mexican bank, its most important asset, on Thursday reported a 12% drop in fourth-quarter net profit compared to the same quarter a year earlier. Net profit was 9.01 billion pesos ($477 million).

Recurring net income for the last quarter rose 6%.

“It was quite a challenging year,” Chief Executive Marcos Ramirez told investors during an earnings call. “We had to change course several times.” However, Ramirez said the group was expecting 0.8% economic growth for 2020 and 3.5% inflation.

Mexico entered a mild recession in the first half of last year and was flat in the third quarter, which Ramirez said made it difficult to grow Banorte’s banking business.

Ramirez said the Mexican economy should bounce back as both local and international businesses recover from a “transitional shock” after leftist President Andres Manuel Lopez Obrador came to power in December 2018 and uncertainty over a new trade deal.

Government plans to boost investment in infrastructure would also help the Mexican economy, he added, while national oil company Pemex was expected to increase crude oil production for the first time in at least a decade.

Ramirez said Banorte’s loan business was expected to grow between 6% and 8% in 2020.

$1 = 18.8860 pesos at end-December Reporting by Stefanie Eschenbacher, Abraham Gonzalez and Noe Torres; Editing by Cynthia Osterman

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