Banorte: profit up 20.4%, but net interest income jumped 48.2% – and that changes the math

On 30 October Grupo Financiero Banorte reported results for the third quarter of 2026. Net interest income came in at MXN 53,699.5 mn (+48.2% year on year), net profit at MXN 15,658.3 mn (+20.4%), capital expenditures at MXN 1,198.7 mn. Profit grew at less than half the pace of net interest income: net profit equals 29.2% of net interest income versus 35.9% a year earlier. With a P/E LTM of 9.9 and ROE of 24.7%, the portal model puts the share's upside to fair value at +11%. Our conclusion: rather attractive – on the portal model's +11% upside to fair value. Our view: the share is rather attractive at the current price; upside on the portal model +11%.

Our view: is there upside

Our view in numbers

Key takeaways

— Net interest income rose 48.2% while profit rose only 20.4%: the interest-income surge did not reach the bottom line

— Profit equalled 29.2% of net interest income versus 35.9% a year earlier – a gap of 6.7 percentage points

— ROE of 24.7% against a P/E LTM of 9.9 – the market pays less than ten times earnings for that return

— Dividend yield of 8.3% over the last 12 months – higher than most Mexican paper offers

— Capex of MXN 1,198.7 mn – under 8% of quarterly profit, the bank barely spends on infrastructure

— The portal model gives +11% to fair value – there is room, but not much

Key figures, MXN bn

Net interest income rose 48.2% while profit rose only 20.4%: the interest-income surge did not reach the bottom line

Net interest income for the third quarter of 2026 came to MXN 53,699.5 mn, 48.2% above the same quarter a year earlier. That is the strongest net interest income growth among the quarters with comparable data. Profit, meanwhile, grew only 20.4%, to MXN 15,658.3 mn.

The gap between the two lines means non-interest costs ate part of the gain. The bank earned considerably more on its interest margin, but only half of the increase reached net profit. The report does not disclose the cause – all that is visible is that the net interest income surge did not translate into profit one for one.

For a holder this is a warning sign: if net interest income grows 48% while profit grows 20%, either loan-loss provisions rose or operating costs accelerated. Without the bank's detail the exact cause cannot be named, but the divergence itself matters.

Profit equalled 29.2% of net interest income versus 35.9% a year earlier – a gap of 6.7 percentage points

The ratio of net profit to net interest income in the third quarter of 2026 was 29.2% versus 35.9% in the same quarter a year earlier. This is not a margin and not a profitability measure, simply the share of profit in net interest income – and it fell by 6.7 percentage points.

A lower share means each peso of net interest income brings less profit than a year ago. With net interest income up 48.2%, such a drop in the share is significant: had the ratio held at 35.9%, profit would have been noticeably higher.

The report does not disclose the cause of the compression. It could be higher provisions, operating costs or one-off charges – but without the bank's data nothing specific can be asserted. What matters is that the direction of change is negative and persistent.

ROE of 24.7% against a P/E LTM of 9.9 – the market pays less than ten times earnings for that return

Grupo Financiero Banorte's return on equity is 24.7% and its P/E LTM is 9.9. The combination of high return on capital and a low multiple is uncommon: the market pays less than ten times annual earnings for a bank earning almost a quarter of its capital a year.

Profit over the last twelve months was MXN 58,788.0 mn, market capitalisation MXN 582,554.1 mn. That gives a P/E LTM of 9.9, which for a bank with such a return looks modest. However, the facts do not allow a comparison with the multiple's own three-year history – no such data is given.

The portal model, which sets return on equity against price to book, gives +11% upside to fair value. This is our own estimate, not a market consensus. It points to a moderate cushion, not to undervaluation.

Dividend yield of 8.3% over the last 12 months – higher than most Mexican paper offers

The dividend yield over the last 12 months is 8.3%. That is a high yield for the Mexican equity market and well above deposit rates. The payout is covered by profit: with a P/E LTM of 9.9 the inverse is about 10.1%, so the dividend takes most of the profit.

Our estimate of the current-year dividend starts from trailing twelve-month profit of MXN 58,788.0 mn and the current 8.3% yield. If the bank keeps the payout at the level that produces this yield, the payment stays high. But it depends on the profit base and on the bank's policy, as well as on one-off items that could reduce it.

The risk to the dividend is the compression of profit as a share of net interest income. If profit grows more slowly than net interest income, as in the third quarter, the dividend could be cut. The 8.3% yield is attractive, but it is not guaranteed going forward.

Capex of MXN 1,198.7 mn – under 8% of quarterly profit, the bank barely spends on infrastructure

Capital expenditures in the third quarter of 2026 were MXN 1,198.7 mn. That is under 8% of quarterly profit of MXN 15,658.3 mn. For a bank such spending is small: most costs are operating, not investment.

Low capex means the bank is not building new infrastructure on a large scale and is not investing heavily in fixed assets. That leaves more free funds for dividends and capital build-up. But it also means growth comes from the existing base, not from new capacity.

For a holder this is mostly a plus: less investment means more money for payouts. But the sustainability of that approach depends on whether the current infrastructure is enough for growth. The report does not say.

The portal model gives +11% to fair value – there is room, but not much

The portal model, which sets return on equity against price to book, puts the share's upside to fair value at +11%. This is our own estimate, not a market consensus and not a target price. It points to a moderate cushion, not to deep undervaluation.

With a P/E LTM of 9.9 and ROE of 24.7% the share looks inexpensive. However, the facts do not allow a comparison of the current multiple with its own three-year history – no such data is given. So the portal model's +11% is what we have to rely on.

An 11% cushion is not the level that justifies calling the share significantly undervalued. It rather confirms that the share is priced close to fair value, with a slight tilt towards upside. A stronger conclusion would need data on the multiple's path over several years.

Valuation on the latest reported figures

Bottom line

The strong side of the report is net interest income growth of 48.2% and ROE of 24.7%. The weak side is that profit grew only 20.4% and its share of net interest income fell from 35.9% to 29.2%. The 8.3% dividend yield is attractive, but its sustainability depends on profit. The portal model gives +11% upside to fair value – there is room, but not much. Our conclusion: rather attractive – on the portal model's +11% upside to fair value. Our view: the share is rather attractive at the current price; upside on the portal model +11%.