By Kylie Madry
MEXICO CITY () - Executives of Mexican lender Banorte said on Tuesday it would either sell or fuse year-old fintech Bineo, part of a larger overhaul of the bank's digital strategy to cut costs and simplify operations.
CEO Marcos Ramirez informed reporters that Bineo, which incurred a loss of 289 million pesos ($14.12 million) during the first quarter, might either come under the Banorte group or get sold off. He mentioned that a choice regarding this matter would likely be finalized within this year.
If Bineo were merged with Banorte, it would bring along its customers and technological resources, according to Ramirez, who also suggested that this might result in a name change. He admitted that this approach would be the most beneficial for the company.
Additionally, Ramirez mentioned that Banorte might choose to sell Bineo's banking license for approximately the same amount that they have invested in the fintech—around $100 million.
"He mentioned that they have received inquiries from numerous individuals who reached out to them directly," although he didn't identify any possible purchasers.
Acquiring a license has turned into a typical method for aspiring banks in Mexico to bypass years of bureaucratic hurdles. In 2022, Citi purchased Deutsche Bank’s license to maintain operations of its corporate and investment banking divisions within the nation as part of separating from its domestic retail branch Banamex.
Analysts at J.P. Morgan said the market could take the Bineo divestment favorably, given it "has been a headwind to earnings per share."
Moving ahead, the consolidation will result in Banorte’s digital efforts, such as its partnership for the Rappi credit card and the Banorte Movil application, functioning “as one unified route rather than three distinct paths,” according to Ramirez.
A week ago, Banorte acquired the leftover shares in RappiCard’s parent company for $50 million. This agreement grants Banorte exclusive privileges to provide Rappi cards for the next fifteen years.
FURTHER GROWTH AHEAD
Ramirez stated that Banorte remains committed to achieving an anticipated increase of approximately 10% in its loan portfolio for the year, regardless of concerns about a potential recession hitting Mexico. Despite these worries, Banorte continues to anticipate modest economic expansion in Latin America’s second-largest economy.
He stated, 'Banorte has consistently placed its bets on Mexico.' He added that during periods of crisis, Banorte invariably experiences growth.
Ramirez also mentioned that Banorte fully supported President Claudia Sheinbaum’s request for banks to reduce interest rates, stating that the company would synchronize its rate adjustments with those decided by the central bank’s monetary policies.
In March, Mexico's central bank lowered its key interest rate to its lowest point since September 2022, reducing it by 50 basis points.
The outlook from Ramirez comes after Banorte reported first-quarter profits up 8% as internal demand boosted its loan book growth.
The group’s net profit rose to 15.29 billion pesos ($747.3 million), marginally exceeding the LSEG-predicted figure of 15.04 billion pesos. This growth was driven by a revenue increase of 10%, reaching 40.58 billion pesos, which also surpassed the LSEG forecast.
($1 was equivalent to 20.4604 pesos at the end of March)
(Reported by Kylie Madry; Edited by Sarah Morland and Saad Sayeed)