DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

7 March 2017Americas/MexicoEquity Research

Regional Banks

Mexican Banks MONTHLYResearch Analysts

Marcelo Telles, CFA212 325 5133

marcelo.telles@credit-suisse.com

Alonso Garcia, CFA52 55 5283 8917

alonso.garcia@credit-suisse.com

Lucas Lopes55 11 3701 6052

lucas.lopes@credit-suisse.com

January CNBV data – Annual growth in core earnings well above volume expansionCS view: Positive for the sector. Results reinforce our positive view for the Mexican banks (which show a large decoupling of earnings growth from expansion in volumes), leading us to reiterate our Outperform ratings on GFNorte, Sanmex, GFInbur and Gentera. Moreover, we are now placing Inbursa as our top pick in the sector (followed by Banorte), noting the very large discrepancy of our earnings forecasts vis-a-vis consensus estimates for the year (16% below CSe).

On Tuesday (Mar. 7), CNBV published financial data for multiple banks as of January 2017. In line with credit data reported by Banxico last week, a deceleration in annual total loan growth was observed (from 12.9% in December) while maintaining a healthy pace of 11.6%; slowdown was explained mainly by the corporate segment (from 16.6% to a still solid 13.2%), while the consumer and mortgage portfolios proved more resilient, growing 12.0% and 10.0%, respectively, similar to a month ago. In sequential terms, loan growth decelerated from 1.4% to a flat performance in January, purely explained by commercial (from +2.3% to -0.1%, mainly on government loans). As to asset quality, the NPL formation rate declined by 22bps y/y, driven by the commercial and mortgage portfolios (also noting a 156bps improvement in credit cards); sequentially, NPL formation rate increased by 102bps m/m, reverting most of the sequential improvement in December, but noting the consumer and mortgage segments remain below November's figures.

Figure 1: Summary table

y/y growth Banking sector Banorte Santander Inbursa Compartamos InteraccionesNet Income 80.0% 31.1% 38.7% -686.3% 1.7% -9.6%Core earnings 38.3% 32.2% 20.5% 54.9% -1.4% -43.7%ROE 824bps 516bps 525bps 3958bps -583bps -355bpsTotal loans 11.6% 11.7% 5.7% 14.1% 8.7% 16.1%

Commercial 11.9% 8.8% 4.9% 12.7% n.m. 16.3%Consumer 12.0% 18.0% 8.3% 16.5% 8.7% n.m.Mortgage 10.0% 16.7% 6.2% 57.2% n.m. n.m.

Cost of risk -64bps -18bps -38bps 33bps 132bps n.m.

SUMMARY TABLE

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 2

■ Banorte posted a 32% growth in core earnings y/y, driven mainly by strong NII growth (+20%), controlled provisions (+3%) and operating leverage. Sequentially, there was a drop in net income of 20%, explained by higher provisions and opex, as well as lower fees, despite sustaining a strong NII and posting healthier trading gains. Worth highlighting, annual loan growth sustained a similar pace vis-à-vis December of 12%; sequentially, total loan growth decelerated to +0.3% (coming from a strong 3.3% in December), largely driven by commercial (from 4.5% to -0.1%), while consumer loans actually accelerated to 1.3% (from 0.3%). On a y/y basis, the NPL formation rate is up by 64bps, explained by the consumer portfolio (+591bps); similar to the system, the NPL formation rate deteriorated sequentially by 111bps (following a 114bps improvement in December), also noting prints in consumer and mortgage remain below November.

■ In annual terms, Sanmex reported an increase in core earnings of 20.5%, driven 15% NII growth, lower provisions as well as operating leverage. Sequentially, the bank posted a 3.6% m/m increase in net income (core pretax +5.3%), as higher provisions, opex and taxes were more than offset by an increase in NI, a lower loss at the other income line and even nicer trading gains. Annual loan growth decelerated from 8% to 6%, mainly explained by the corporate book; sequentially, while better relative to December, volumes contracted (across the board) and underperformed the system again this month. In regards to asset quality, the NPL formation rate improved by 116bps y/y explained by the consumer segment; sequentially, the total NPL formation rate increased by 108bps (following a 12bps increase in December), explained by commercial and mortgage loans, with consumer improving by 19bps sequentially (following a 41bps improvement last month).

■ Inbursa shows very strong operating trends on a y/y basis, with a 55% growth in core pretax earnings, driven by a 33% increase in risk-adjusted NII and operating leverage. Sequentially, the company had a strong start of the year (+89% m/m earnings growth) on the back of solid sequential NII expansion (+8%), lower provisions, high trading gains (noting the strong performance of YPF) and an increase in other operating income. On a y/y basis, loan growth decelerated (from 19%) but maintained a healthy pace of 14%, mainly explained by a slowdown in corporates (to 8.6%), with consumer maintaining a very solid clip (16.5%); sequentially Inbursa posted a 0.3% volume growth in January after a 3.9% sequential decline in December (which was explained by commercial loans). In annual terms, total NPL formation rate increased by 62bps (explained by commercial and consumer) to a healthy 1.0%; sequentially, the NPL formation rate increased by 95bps m/m, only offsetting partially the 193bps sequential improvement in December, with the three segments remaining well below November.

■ Year-on-year, core earnings at Gentera's Compartamos were 1% down mainly as a 4% growth in NII is offset by a 22% increase in provisions. However, it is worth noting that the company posted a much better month vis-à-vis December, with earnings increasing by 88% m/m, explained by sequential declines in provisions and opex of 15% and 29% m/m, respectively, more than offsetting the lower NII. Annual loan growth declined from 9.7% to 8.7%, with the company posting a 4% m/m decline in volumes (following a 1.3% drop the previous month). It is important to note the 90bp sequential improvement in the NPL formation rate, after a 234bps increase in December, indicating company's efforts to revert asset quality deterioration are bearing fruit; versus a year ago, the NPL formation rate is up by 503bps (a milder increase compared to the 541bps as of December).

■ Interacciones' net income is down by 10% y/y, mainly driven by higher opex and also a lower net of provisions, fees and other income. Sequentially, the bank reported a 71% decline in net income (after a very strong month of December on seasonality), explained by a much lower net of provisions, fees and other operating income, as well as a slight trading loss (vis-à-vis a gain in December), more than offsetting the higher NII and lower opex. In annual terms, loan growth decelerated to 16% from 18% the previous month; sequentially, and following a very strong month of December (+27% m/m), total loans declined by 4% in January.

7 March 2017

Mexican Banks 3

Figure 2: Banking sector – Key highlightsP$ in millions, unless otherwise stated

Banking sectorDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 62,203 61,069 59,259 -1.8% -3.0% 34.0% 20.8%

on performing loans 41,271 43,103 44,125 4.4% 2.4% 20.1% 24.4%on non-performing loans 254 332 239 30.9% -28.3% -6.0% -31.7%other 20,678 17,634 14,895 -14.7% -15.5% 88.9% 12.5%

Interest expense -25,587 -22,606 -21,530 -11.6% -4.8% 97.1% 32.4%NII 36,616 38,463 37,729 5.0% -1.9% 12.8% 15.0%Provisions -11,374 -9,527 -10,163 -16.2% 6.7% 6.2% -8.7%NII after provisions 25,243 28,936 27,566 14.6% -4.7% 15.1% 27.1%Fee income 9,205 11,188 8,222 21.5% -26.5% 23.4% 9.8%Market-related income 832 1,984 6,793 138.5% 242.4% -574.8% 248.0%Other operating income -22 1,052 1,733 -4916.9% 64.7% -162.5% -35.7%Total operating revenues 35,258 43,160 44,314 22.4% 2.7% 34.4% 31.0%Opex -25,652 -30,589 -25,591 19.2% -16.3% 31.6% 9.7%Operating profit 9,606 12,571 18,723 30.9% 48.9% 42.0% 78.5%Equity income 321 407 304 26.8% -25.3% -21.6% -1.5%Pretax profit 9,927 12,978 19,027 30.7% 46.6% 38.5% 76.2%Tax expense -2,557 -3,648 -4,540 42.7% 24.5% 230.6% 65.0%Net Income before disc. 7,370 9,330 14,487 26.6% 55.3% 12.8% 80.0%Discontinued operations 0 111 3 n.m. n.m. n.m. n.m.Net Income 7,370 9,441 14,490 28.1% 53.5% 14.2% 80.0%Effective tax rate 25.8% 28.1% 23.9%ROE 10.2% 13.1% 20.1% 294bps 697bps 89bps 824bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 4,278,817 4,339,096 4,340,610 1.4% 0.0% 12.9% 11.6%Performing portfolio 4,181,565 4,245,946 4,246,081 1.5% 0.0% 13.4% 12.1%Commercial 2,654,779 2,719,418 2,714,914 2.4% -0.2% 14.4% 12.5%

Corporate 1,936,295 1,945,520 1,939,214 0.5% -0.3% 17.6% 14.1%Government 540,537 585,430 583,287 8.3% -0.4% 6.4% 6.1%Other 177,947 188,468 192,413 5.9% 2.1% 8.7% 17.1%

Consumer 864,909 858,117 857,025 -0.8% -0.1% 12.4% 11.9%Credit card 345,571 338,795 336,185 -2.0% -0.8% 9.1% 8.7%Personal 175,848 175,038 174,749 -0.5% -0.2% 14.5% 13.7%Payroll 213,471 211,270 211,798 -1.0% 0.2% 13.8% 12.6%Other 130,019 133,014 134,293 2.3% 1.0% 16.3% 16.7%

Mortgage 661,877 668,411 674,142 1.0% 0.9% 11.0% 10.7%Non-Performing portfolio 97,252 93,150 94,529 -4.2% 1.5% -6.9% -6.6%Commercial 37,835 36,148 37,214 -4.5% 2.9% -19.7% -20.1%

Corporate 36,942 35,309 36,376 -4.4% 3.0% -20.3% -20.6%Government 58 1 3 -97.9% 114.4% -98.5% -97.0%Other 835 838 836 0.4% -0.3% 28.0% 25.9%

Consumer 39,256 37,813 38,116 -3.7% 0.8% 10.9% 14.2%Credit card 18,736 17,553 17,448 -6.3% -0.6% 6.5% 8.1%Personal 9,878 9,655 10,050 -2.3% 4.1% 7.9% 15.7%Payroll 7,599 7,441 7,331 -2.1% -1.5% 33.2% 29.5%Other 3,043 3,164 3,287 3.9% 3.9% 2.4% 13.8%

Mortgage 20,161 19,189 19,198 -4.8% 0.0% -8.4% -9.4%Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.3 2.1 2.2 -13bps 3bps -46bps -42bpsCommercial 1.4 1.3 1.4 -9bps 4bps -55bps -54bps

Corporate 1.9 1.8 1.8 -9bps 6bps -83bps -79bpsGovernment 0.0 0.0 0.0 -1bps 0bps -1bps -1bps

Consumer 4.3 4.2 4.3 -12bps 4bps -6bps 8bpsCredit card 5.1 4.9 4.9 -22bps 1bps -12bps -3bpsPersonal 5.3 5.2 5.4 -9bps 21bps -30bps 9bpsPayroll 3.4 3.4 3.3 -4bps -6bps 48bps 42bpsAuto 1.5 1.5 1.5 -6bps 1bps -9bps 1bps

Mortgage 3.0 2.8 2.8 -17bps -2bps -57bps -60bpsDec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.8% 1.8% 2.8% -108bps 102bps 21bps -22bpsCommercial 0.5% 0.3% 0.9% -22bps 64bps 52bps -29bpsConsumer 11.1% 7.6% 9.9% -350bps 230bps -26bps 37bps

Credit card 13.2% 7.4% 11.1% -580bps 367bps -25bps -156bpsPayroll 11.8% 10.5% 11.1% -129bps 56bps 54bps 164bpsOther non-revolving 8.3% 5.8% 7.8% -248bps 199bps -83bps 183bps

Mortgage 1.3% 0.0% 1.1% -126bps 110bps -21bps -60bpsCoverage of new NPLs 114.9% 151.4% 100.9% 3646bps -5043bps -3420bps -1478bpsCost of risk 3.2% 2.7% 2.8% -58bps 16bps -19bps -64bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 4

Figure 3: Banorte – Key highlightsP$ in millions, unless otherwise stated

BanorteDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 6,354 6,877 7,054 8.2% 3% 29% 33%

on performing loans 4,561 4,823 5,028 5.8% 4.2% 27% 31%on non-performing loans 37 48 32 27.3% -31.9% -18% 5%other 1,756 2,006 1,993 14.2% -0.6% 37% 39%

Interest expense -2,268 -2,518 -2,698 11.0% 7.1% 48% 60%NII 4,086 4,359 4,356 6.7% -0.1% 20% 20%Provisions -1,235 -985 -1,009 -20.2% 2.4% 139% 3%NII after provisions 2,851 3,374 3,347 18.3% -0.8% 5% 27%Fee income 1,057 1,115 897 5.4% -19.6% 20% 8%Market-related income -125 194 234 -255.3% 20.5% 41% -5%Other operating income 276 160 186 -41.8% 16.3% -342% 156%Total operating revenues 4,059 4,843 4,664 19.3% -3.7% 15% 23%Opex -2,494 -2,543 -2,821 1.9% 10.9% 25% 17%Operating profit 1,565 2,300 1,843 47.0% -19.9% 6% 34%Equity income 37 40 44 8.9% 11.0% -53% -62%Pretax profit 1,601 2,340 1,887 46.1% -19.4% 3% 26%Tax expense -431 -710 -580 64.7% -18.3% -7% 16%Net Income before disc. 1,171 1,630 1,307 39.3% -19.8% 9% 31%Discontinued operations 0 0 0 n.m. n.m. n.m. n.m.Net Income 1,171 1,630 1,307 39.3% -19.8% 9% 31%Effective tax rate 26.9% 30.3% 30.7%ROE 14.3% 20.4% 16.8% 612bps -365bps 284bps 516bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 548,870 567,083 568,919 3.3% 0.3% 12% 12%Performing portfolio 538,254 557,022 558,750 3.5% 0.3% 13% 12%Commercial 339,843 355,584 355,118 4.6% -0.1% 11% 10%

Corporate 194,861 201,804 202,934 3.6% 0.6% 15% 14%Government 126,163 133,540 132,521 5.8% -0.8% 4% 3%Other 18,819 20,240 19,663 7.5% -2.8% 17% 9%

Consumer 86,147 86,632 87,879 0.6% 1.4% 17% 18%Credit card 28,853 28,445 29,125 -1.4% 2.4% 10% 13%Personal 1,985 2,020 1,976 1.8% -2.1% 277% 279%Payroll 40,731 41,125 41,446 1.0% 0.8% 16% 17%Other 14,578 15,043 15,331 3.2% 1.9% 21% 22%

Mortgage 112,264 114,807 115,753 2.3% 0.8% 17% 17%Non-Performing portfolio 10,615 10,060 10,169 -5.2% 1.1% -13% -13%Commercial 6,053 5,811 5,972 -4.0% 2.8% -25% -24%

Corporate 5,709 5,467 5,628 -4.2% 2.9% -29% -29%Government - - - n.a. n.a. n.a. n.a.Other 344 344 344 0.0% n.a. n.a. n.a.

Consumer 3,407 3,200 3,154 -6.1% -1.4% 13% 14%Credit card 1,722 1,623 1,539 -5.7% -5.2% 7% 3%Personal 76 80 92 4.8% 16.1% 55% 78%Payroll 1,413 1,315 1,344 -7.0% 2.2% 22% 28%Other 195 182 179 -6.7% -1.8% -8% -1%

Mortgage 1,156 1,049 1,043 -9.2% -0.6% 1% -3%Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 1.9 1.8 1.8 -16bps 1bps -52bps -52bpsCommercial 1.7 1.6 1.7 -14bps 5bps -74bps -72bps

Corporate 2.8 2.6 2.7 -21bps 6bps -159bps -155bpsGovernment 0.0 0.0 0.0 0bps 0bps 0bps 0bps

Consumer 3.8 3.6 3.5 -24bps -10bps -13bps -13bpsCredit card 5.6 5.4 5.0 -23bps -38bps -13bps -45bpsPersonal 3.7 3.8 4.5 11bps 68bps -497bps -457bpsPayroll 3.4 3.1 3.1 -26bps 4bps 13bps 27bpsAuto 1.3 1.2 1.1 -13bps -4bps -36bps -26bps

Mortgage 1.0 0.9 0.9 -11bps -1bps -14bps -18bpsDec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.2% 1.1% 2.2% -114bps 111bps 387bps 64bpsCommercial 0.1% -0.4% 0.8% -56bps 121bps 618bps -30bpsConsumer 11.7% 7.6% 9.6% -410bps 206bps -113bps 591bps

Credit card 17.3% 9.8% 10.0% -749bps 15bps -8bps 1020bpsPayroll 10.7% 7.8% 11.5% -286bps 365bps -168bps 422bpsOther non-revolving 4.1% 2.8% 4.5% -130bps 167bps -102bps 239bps

Mortgage 1.1% 0.5% 0.8% -59bps 27bps 10bps -60bpsCoverage of new NPLs 124.4% 200.1% 97.6% 7564bps -10244bps 23607bps -5267bpsCost of risk 2.7% 2.1% 2.1% -61bps 1bps 113bps -18bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 5

Figure 4: Santander Mexico – Key highlightsP$ in millions, unless otherwise stated

SantanderDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 7,025 7,364 7,566 4.8% 2.7% 25.5% 29.2%

on performing loans 5,217 5,458 5,502 4.6% 0.8% 26.0% 25.4%on non-performing loans 18 26 27 45.3% 1.0% -2.1% 7.8%other 1,790 1,880 2,037 5.0% 8.4% 24.6% 41.0%

Interest expense -2,772 -2,958 -3,082 6.7% 4.2% 54.2% 56.4%NII 4,253 4,406 4,484 3.6% 1.8% 11.5% 15.4%Provisions -1,619 -1,505 -1,575 -7.1% 4.7% 9.8% -4.5%NII after provisions 2,634 2,902 2,908 10.2% 0.2% 12.4% 30.0%Fee income 1,328 1,184 1,179 -10.9% -0.5% -16.2% 2.5%Market-related income 404 371 402 -8.2% 8.3% 352.4% 162.5%Other operating income 28 -234 -115 -920% -51% -215% -196%Total operating revenues 4,395 4,224 4,374 -3.9% 3.6% -1.3% 19.5%Opex -2,400 -2,379 -2,449 -0.9% 2.9% 20.5% 10.2%Operating profit 1,995 1,844 1,925 -7.6% 4.4% -20.0% 33.9%Equity income 39 24 53 -38.9% 122.1% -14.8% 126.4%Pretax profit 2,034 1,868 1,979 -8.2% 5.9% -20.0% 35.4%Tax expense -512 -379 -436 -25.9% 15.0% -23.8% 24.7%Net Income before disc. 1,523 1,489 1,543 -2.2% 3.6% -18.9% 38.7%Discontinued operations 0 0 0 n.m. n.m. n.m. n.m.Net Income 1,523 1,489 1,543 -2.2% 3.6% -18.9% 38.7%Effective tax rate 25.1% 20.3% 22.0%ROE 15.3% 15.8% 17.1% 48bps 137bps -416bps 525bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 600,165 591,428 588,750 -1.5% -0.5% 8.0% 5.7%Performing portfolio 585,275 576,745 573,933 -1.5% -0.5% 8.9% 6.5%Commercial 365,437 357,229 355,223 -2.2% -0.6% 9.3% 5.9%

Corporate 295,966 287,420 280,758 -2.9% -2.3% 11.7% 7.6%Government 55,378 56,988 61,923 2.9% 8.7% -4.8% -3.2%Other 14,093 12,821 12,542 -9.0% -2.2% 30.3% 21.2%

Consumer 97,295 96,082 95,503 -1.2% -0.6% 9.1% 8.1%Credit card 50,513 49,364 48,963 -2.3% -0.8% 8.0% 7.3%Personal 21,185 21,129 21,183 -0.3% 0.3% 2.7% 3.8%Payroll 25,534 25,513 25,275 -0.1% -0.9% 17.5% 13.4%Other 62 75 83 21.2% 10.4% 39.1% 55.5%

Mortgage 122,544 123,434 123,207 0.7% -0.2% 7.8% 6.9%Non-Performing portfolio 14,890 14,683 14,817 -1.4% 0.9% -19.5% -17.8%Commercial 5,449 5,298 5,442 -2.8% 2.7% -38.4% -36.9%

Corporate 5,449 5,298 5,442 -2.8% 2.7% -38.3% -36.9%Government - - - n.a. n.a. n.a. n.a.Other - - - n.a. n.a. n.a. n.a.

Consumer 3,916 3,983 3,939 1.7% -1.1% 8.7% 12.8%Credit card 2,163 2,173 2,129 0.5% -2.0% 4.2% 14.4%Personal 931 976 975 4.9% -0.1% 1.8% -0.7%Payroll 822 834 834 1.5% 0.0% 34.6% 28.8%Other 0 0 0 -59.2% -94.2% -89.6% -99.6%

Mortgage 5,524 5,402 5,436 -2.2% 0.6% -9.8% -7.9%Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.5 2.5 2.5 0bps 3bps -85bps -72bpsCommercial 1.5 1.5 1.5 -1bps 5bps -110bps -100bps

Corporate 1.8 1.8 1.9 0bps 9bps -142bps -130bpsGovernment 0.0 0.0 0.0 0bps 0bps -1bps -1bps

Consumer 3.9 4.0 4.0 11bps -2bps -2bps 16bpsCredit card 4.1 4.2 4.2 11bps -5bps -15bps 25bpsPersonal 4.2 4.4 4.4 21bps -1bps -4bps -19bpsPayroll 3.1 3.2 3.2 5bps 3bps 39bps 37bpsAuto 0.2 0.1 0.0 -16bps -8bps -102bps -163bps

Mortgage 4.3 4.2 4.2 -12bps 3bps -78bps -64bpsDec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.4% 2.5% 3.6% 12bps 108bps -29bps -116bpsCommercial -0.1% 0.7% 2.2% 76bps 146bps -63bps 81bpsConsumer 12.7% 12.3% 12.1% -41bps -19bps 68bps -1037bps

Credit card 14.4% 12.6% 13.3% -178bps 72bps 72bps -1460bpsPayroll 10.4% 10.5% 10.1% 6bps -33bps 132bps 63bpsOther non-revolving 11.4% 13.6% 11.4% 218bps -214bps 20bps -1223bps

Mortgage 1.6% 0.2% 1.2% -145bps 99bps 9bps 26bpsCoverage of new NPLs 134.8% 118.6% 88.3% -1622bps -3034bps 865bps 1272bpsCost of risk 3.2% 3.0% 3.2% -22bps 17bps -2bps -38bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 6

Figure 5: Inbursa – Key highlightsP$ in millions, unless otherwise stated

InbursaDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 2,761 2,710 3,061 -1.9% 13.0% 38.9% 58.9%

on performing loans 2,168 2,013 2,247 -7.1% 11.6% 21.6% 42.3%on non-performing loans 40 67 43 68.4% -36.3% 33.6% -61.3%other 553 629 771 13.8% 22.6% 157.6% 225.3%

Interest expense -1,149 -1,173 -1,401 2.1% 19.4% 53.7% 105.6%NII 1,612 1,536 1,659 -4.7% 8.0% 29.4% 33.3%Provisions -680 -642 -603 -5.7% -6.0% 2.2% 33.7%NII after provisions 932 895 1,056 -4.0% 18.1% 59.8% 33.1%Fee income 346 352 206 1.6% -41.4% 22.3% 10.5%Market-related income 328 209 1,992 -36.3% 853.2% -128.4% -249.9%Other operating income 19 -15 107 -181.1% -809.0% -87.7% 29.9%Total operating revenues 1,625 1,440 3,362 -11.4% 133.4% -12009.1% -1364.1%Opex -573 -552 -577 -3.6% 4.4% 48.7% 11.4%Operating profit 1,052 888 2,785 -15.6% 213.5% -331.6% -455.3%Equity income 61 211 67 245.9% -68.4% 12.2% 187.4%Pretax profit 1,113 1,099 2,851 -1.2% 159.5% -660.9% -474.9%Tax expense -246 227 -342 -192.3% -250.4% -52.8% -202.8%Net Income before disc. 866 1,326 2,510 53.1% 89.2% 364.6% -686.3%Discontinued operations 0 0 0 n.m. n.m. n.m. n.m.Net Income 866 1,326 2,510 53.1% 89.2% 364.6% -686.3%Effective tax rate 22.1% -20.7% 12.0%ROE 12.0% 18.0% 33.2% 599bps 1521bps 1379bps 3958bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 295,209 283,662 284,451 -3.9% 0.3% 19.2% 14.1%Performing portfolio 287,462 275,962 276,562 -4.0% 0.2% 19.5% 14.2%Commercial 236,324 224,593 225,018 -5.0% 0.2% 19.6% 13.5%

Corporate 196,681 188,980 188,774 -3.9% -0.1% 15.3% 9.5%Government 28,491 23,680 24,088 -16.9% 1.7% 65.1% 67.7%Other 11,152 11,933 12,155 7.0% 1.9% 25.4% 6.8%

Consumer 44,747 44,829 45,003 0.2% 0.4% 14.6% 13.0%Credit card 13,500 13,591 13,845 0.7% 1.9% 45.6% 46.5%Personal 13,764 13,347 12,642 -3.0% -5.3% -8.1% -13.1%Payroll 1,826 1,623 1,656 -11.2% 2.0% 0.8% -2.1%Other 15,656 16,269 16,861 3.9% 3.6% 19.2% 19.3%

Mortgage 6,392 6,540 6,540 2.3% 0.0% 63.2% 56.4%Non-Performing portfolio 7,747 7,700 7,889 -0.6% 2.5% 7.7% 12.0%Commercial 3,808 3,824 3,879 0.4% 1.5% -22.9% -21.0%

Corporate 3,808 3,823 3,879 0.4% 1.4% -22.9% -21.0%Government - - - n.a. n.a. n.a. n.a.Other 0 0 1 0.0% 80.2% n.a. n.a.

Consumer 3,585 3,517 3,642 -1.9% 3.6% 76.6% 89.3%Credit card 1,274 1,230 1,272 -3.5% 3.5% 158.2% 149.4%Personal 1,792 1,776 1,839 -0.9% 3.5% 72.2% 91.1%Payroll 294 293 306 -0.2% 4.6% 0.2% 9.7%Other 225 218 225 -2.9% 3.1% 14.3% 30.5%

Mortgage 354 359 368 1.5% 2.4% 78.7% 73.4%Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.6 2.7 2.8 9bps 6bps -29bps -5bpsCommercial 1.6 1.7 1.7 9bps 2bps -90bps -72bps

Corporate 1.9 2.0 2.0 8bps 3bps -95bps -75bpsGovernment 0.0 0.0 0.0 0bps 0bps 0bps 0bps

Consumer 7.4 7.3 7.5 -14bps 21bps 243bps 288bpsCredit card 8.6 8.3 8.4 -33bps 12bps 344bps 329bpsPersonal 11.5 11.7 12.7 22bps 95bps 511bps 649bpsPayroll 13.8 15.3 15.6 145bps 32bps -7bps 144bpsAuto 1.3 1.2 1.2 -9bps 1bps -19bps -1bps

Mortgage 5.2 5.2 5.3 -4bps 12bps 43bps 50bpsDec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 2.0% 0.0% 1.0% -193bps 95bps -17bps 62bpsCommercial 0.8% 0.2% 0.4% -69bps 24bps 68bps 61bpsConsumer 7.0% -0.7% 3.7% -773bps 440bps -443bps 87bps

Credit card 11.3% -3.6% 0.0% -1495bps 361bps -636bps 0bpsPayroll -0.2% 5.6% 11.3% 582bps 567bps 654bps 1506bpsOther non-revolving 5.6% 0.2% 3.3% -546bps 311bps -415bps 54bps

Mortgage 3.4% 1.0% 1.5% -246bps 55bps 164bps -165bpsCoverage of new NPLs 151.6% 8685.9% 260.5% 853430bps -842540bps 709854bps -36360bpsCost of risk 2.9% 2.7% 2.5% -20bps -11bps -52bps 33bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 7

Figure 6: Compartamos – Key highlightsP$ in millions, unless otherwise stated

CompartamosDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 1,511 1,559 1,491 3.2% -4.4% -20.3% 6.9%

on performing loans 1,466 1,541 1,467 5.1% -4.8% -21.1% 5.7%on non-performing loans 1 2 1 268.6% -69.9% 28.1% 54.9%other 44 16 23 -63.2% 44.6% 473.1% 238.7%

Interest expense -82 -91 -101 11.0% 10.0% 67.7% 69.5%NII 1,428 1,468 1,390 2.7% -5.3% -22.9% 4.1%Provisions -315 -297 -251 -5.9% -15.3% 41.5% 22.3%NII after provisions 1,113 1,171 1,139 5.2% -2.7% -30.8% 0.8%Fee income 35 28 28 -20.0% -0.5% -36.0% -0.7%Market-related income 3 3 5 -18.4% 100.7% -48.5% 25.1%Other operating income -22 13 -14 -159.5% -205.2% -173.0% 46.1%Total operating revenues 1,130 1,215 1,159 7.5% -4.6% -29.5% 0.4%Opex -816 -963 -679 18.0% -29.5% -31.7% 1.6%Operating profit 314 252 480 -19.7% 90.3% -19.7% -1.2%Equity income 0 0 0 n.a. n.a. n.a. n.a.Pretax profit 314 252 480 -19.7% 90.3% -19.7% -1.2%Tax expense -71 -66 -130 -6.9% 96.2% 24.0% -8.2%Net Income before disc. 243 186 350 -23.5% 88.2% -28.7% 1.7%Discontinued operations 0 0 0 n.m. n.m. n.m. n.m.Net Income 243 186 350 -23.5% 88.2% -28.7% 1.7%Effective tax rate 22.7% 26.3% 27.1%ROE 27.1% 20.4% 37.6% -678bps 1725bps -1362bps -583bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 25,403 25,063 24,021 -1.3% -4.2% 9.7% 8.7%Performing portfolio 24,434 23,937 22,780 -2.0% -4.8% 7.8% 6.5%Commercial - - - n.a. n.a. n.a. n.a.

Corporate - - - n.a. n.a. n.a. n.a.Government - - - n.a. n.a. n.a. n.a.Other - - - n.a. n.a. n.a. n.a.

Consumer 24,434 23,937 22,780 -2.0% -4.8% 7.8% 6.5%Credit card - - - n.a. n.a. n.a. n.a.Personal 6,195 6,187 5,943 -0.1% -3.9% 8.4% 5.7%Payroll - - - n.a. n.a. n.a. n.a.Other 18,239 17,750 16,837 -2.7% -5.1% 7.7% 6.8%

Mortgage - - - n.a. n.a. n.a. n.a.Non-Performing portfolio 969 1,126 1,241 16.2% 10.2% 72.3% 73.1%Commercial - - - n.a. n.a. n.a. n.a.

Corporate - - - n.a. n.a. n.a. n.a.Government - - - n.a. n.a. n.a. n.a.Other - - - n.a. n.a. n.a. n.a.

Consumer 969 1,126 1,241 16.2% 10.2% 72.3% 73.1%Credit card - - - n.a. n.a. n.a. n.a.Personal 325 364 392 12.1% 7.6% 40.0% 39.6%Payroll - - - n.a. n.a. n.a. n.a.Other 644 762 849 18.2% 11.4% 93.7% 94.8%

Mortgage - - - n.a. n.a. n.a. n.a.Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 3.8 4.5 5.2 68bps 67bps 163bps 192bpsCommercial n. a. n. a. n. a. n.a. n.a. n.a. n.a.

Corporate n. a. n. a. n. a. n.a. n.a. n.a. n.a.Government n. a. n. a. n. a. n.a. n.a. n.a. n.a.

Consumer 3.8 4.5 5.2 68bps 67bps 163bps 192bpsCredit card n. a. n. a. n. a. n.a. n.a. n.a. n.a.Personal 5.0 5.6 6.2 58bps 63bps 120bps 143bpsPayroll n. a. n. a. n. a. n.a. n.a. n.a. n.a.Auto n. a. n. a. n. a. n.a. n.a. n.a. n.a.

Mortgage n. a. n. a. n. a. n.a. n.a. n.a. n.a.Dec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 14.7% 17.0% 16.1% 234bps -90bps 541bps 503bpsCommercial n.a. n.a. n.a. n.a. n.a. n.a. n.a.Consumer 14.7% 17.0% 16.1% 234bps -90bps 541bps 503bps

Credit card 0.0% 0.0% 0.0% 0bps 0bps 0bps 0bpsPayroll 0.0% 0.0% 0.0% 0bps 0bps 0bps 0bpsOther non-revolving 14.7% 17.0% 16.1% 234bps -90bps 541bps 503bps

Mortgage 0.0% 0.0% 0.0% 0bps 0bps 0bps 0bpsCoverage of new NPLs 103.4% 82.2% 74.5% -2114bps -773bps -1516bps -2251bpsCost of risk 15.0% 14.1% 12.3% -93bps -183bps 294bps 132bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 8

Figure 7: Interacciones – Key highlightsP$ in millions, unless otherwise stated

InteraccionesDec-16 Jan-17 Dec-16 Jan-17

INCOME STATEMENT Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Interest income 1,358 1,135 1,295 -16.5% 14.2% 29.8% 39.8%

on performing loans 568 703 796 23.7% 13.2% 44.2% 57.6%on non-performing loans 0 0 0 n.m. 439.8% -97.5% 227.4%other 790 431 499 -45.4% 15.7% 11.7% 18.5%

Interest expense -734 -902 -1,020 22.9% 13.1% 60.8% 71.7%NII 624 232 275 -62.8% 18.3% -25.7% -17.3%Provisions -31 -407 0 1196.7% -100.0% -261.9% -100.0%NII after provisions 592 -174 275 -129.4% -257.8% -130.9% 258.9%Fee income 92 777 26 742.9% -96.7% 258.5% -88.6%Market-related income -372 132 -6 -135.6% -104.6% -246.4% -94.1%Other operating income 52 34 66 -34.6% 95.2% -125.2% -47.4%Total operating revenues 365 769 361 110.9% -53.0% 38.5% 10.4%Opex -176 -216 -198 23.0% -8.3% 5.3% 47.6%Operating profit 189 553 163 192.6% -70.5% 58.0% -15.4%Equity income -4 -15 -2 234.2% -87.2% 112.1% -255.3%Pretax profit 185 538 161 191.6% -70.0% 56.9% -16.9%Tax expense -35 -78 -28 124.4% -64.4% -33.0% -40.2%Net Income before disc. 150 460 133 207.2% -71.0% 103.4% -9.6%Discontinued operations 0 0 0 n.m. n.m. n.m. n.m.Net Income 150 460 133 207.2% -71.0% 103.4% -9.6%Effective tax rate 18.9% 14.6% 17.3%ROE 13.4% 40.7% 11.6% 2727bps -2904bps 1701bps -355bps

Dec-16 Jan-17 Dec-16 Jan-17LOAN PORTFOLIO Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total loan portfolio 90,450 115,034 110,310 27.2% -4.1% 18.2% 16.1%Performing portfolio 90,387 114,977 110,255 27.2% -4.1% 18.3% 16.2%Commercial 90,145 114,799 110,082 27.3% -4.1% 18.5% 16.4%

Corporate 23,178 24,793 24,275 7.0% -2.1% 4.2% 23.4%Government 66,587 89,518 85,228 34.4% -4.8% 25.7% 16.2%Other 380 487 578 28.3% 18.7% -74.6% -63.3%

Consumer 21 21 20 -1.5% -3.4% -47.3% -32.2%Credit card - - - n.a. n.a. n.a. n.a.Personal 16 16 16 0.6% -1.1% -50.6% -30.3%Payroll - - - n.a. n.a. n.a. n.a.Other 5 5 4 -8.0% -11.4% -31.4% -38.8%

Mortgage 221 157 154 -28.9% -2.2% n.a. n.a.Non-Performing portfolio 62 57 55 -8.4% -4.0% -49.7% -51.6%Commercial 55 50 50 -9.4% 0.0% -52.3% -52.3%

Corporate 50 50 50 -0.1% 0.0% -52.3% -52.3%Government 5 - - n.a. n.a. n.a. n.a.Other - - - n.a. n.a. n.a. n.a.

Consumer 0 0 0 0.0% 0.0% 0.0% 0.0%Credit card - - - n.a. n.a. n.a. n.a.Personal - - - n.a. n.a. n.a. n.a.Payroll - - - n.a. n.a. n.a. n.a.Other 0 0 0 0.0% 0.0% 0.0% 0.0%

Mortgage 7 7 5 -0.7% -32.8% -19.2% -44.0%Dec-16 Jan-17 Dec-16 Jan-17

NPL RATIOS Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 0.1 0.0 0.0 -2bps 0bps -7bps -7bpsCommercial 0.1 0.0 0.0 -2bps 0bps -6bps -7bps

Corporate 0.2 0.2 0.2 -1bps 0bps -24bps -33bpsGovernment 0.0 0.0 0.0 -1bps 0bps 0bps 0bps

Consumer 0.3 0.3 0.3 0bps 1bps 15bps 11bpsCredit card n. a. n. a. n. a. n.a. n.a. n.a. n.a.Personal 0.0 0.0 0.0 0bps 0bps 0bps 0bpsPayroll n. a. n. a. n. a. n.a. n.a. n.a. n.a.Auto 1.3 1.4 1.6 11bps 17bps 43bps 60bps

Mortgage 3.1 4.2 2.9 117bps -128bps 77bps -44bpsDec-16 Jan-17 Dec-16 Jan-17

ANNUALIZED NPL FORMATION RATE Nov-16 Dec-16 Jan-17 Nov-16 Dec-16 Dec-15 Jan-16Total 0.0% -0.1% 0.0% -4bps 5bps -6bps -2bpsCommercial 0.0% -0.1% 0.0% -4bps 7bps n.a. n.a.Consumer 0.0% 0.0% 0.0% 0bps 0bps 0bps 0bps

Credit card n.a. n.a. n.a. n.a. n.a. n.a. n.a.Payroll n.a. n.a. n.a. n.a. n.a. n.a. n.a.Other non-revolving 0.0% 0.0% 0.0% 0bps 0bps 0bps 0bps

Mortgage -0.2% -0.2% -16.6% 0bps -1638bps 101bps -1534bpsCoverage of new NPLs n.a. n.a. n.a. n.a. n.a. n.a. n.a.Cost of risk 0.4% 4.7% 0.0% 433bps -475bps 801bps -319bps

Source: CNBV, Credit Suisse

7 March 2017

Mexican Banks 9

Companies Mentioned (Price as of 07-Mar-2017)G.F. Inbursa (GFINBURO.MX, MXN29.38, OUTPERFORM, TP MXN36.0)Gentera (GENTERA.MX, MXN27.92, OUTPERFORM, TP MXN37.0)Grupo Financiero Banorte (GFNORTEO.MX, MXN100.61, OUTPERFORM, TP MXN124.0)Grupo Financiero Interacciones (GFINTERO.MX, MXN88.25, NEUTRAL, TP MXN89.0)Santander Mexico (SANMEXB.MX, MXN30.36, OUTPERFORM, TP MXN38.0)YPF Sociedad Anonima (YPF.N, $21.63)

Disclosure AppendixAnalyst Certification Marcelo Telles, CFA, Alonso Garcia, CFA and Lucas Lopes each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for G.F. Inbursa (GFINBURO.MX)

GFINBURO.MX Closing Price Target Price Date (MXN) (MXN) Rating 29-Apr-14 34.40 36.00 N 18-Jul-14 38.31 42.00 20-Jan-15 37.77 47.00 O 22-Jan-17 29.52 36.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price GFINBURO.MX

01- Jan- 2015 01- Jan- 2016 01- Jan- 201725

30

35

40

45

50

N EU T RA LO U T PERFO RM

3-Year Price and Rating History for Gentera (GENTERA.MX)

GENTERA.MX Closing Price Target Price Date (MXN) (MXN) Rating 18-Jul-14 27.49 31.00 O 21-Jan-15 28.26 33.00 24-Feb-16 34.89 38.00 N 27-Jul-16 34.84 39.00 O 22-Jan-17 30.16 37.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price GENTERA.MX

01- Jan- 2015 01- Jan- 2016 01- Jan- 201725

30

35

40

O U T PERFO RMN EU T RA L

3-Year Price and Rating History for Grupo Financiero Banorte (GFNORTEO.MX)

GFNORTEO.MX Closing Price Target Price Date (MXN) (MXN) Rating 10-Mar-14 81.22 84.00 U 18-Jul-14 92.46 96.00 20-Jan-15 78.28 89.00 N 07-Apr-15 92.05 107.00 O 12-Oct-15 83.91 110.00 20-Jul-16 103.67 119.00 22-Jan-17 98.41 124.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price GFNORTEO.MX

01- Jan- 2015 01- Jan- 2016 01- Jan- 201770

90

110

130

U N D ERPERFO RMN EU T RA L

O U T PERFO RM

7 March 2017

Mexican Banks 10

3-Year Price and Rating History for Grupo Financiero Interacciones (GFINTERO.MX)

GFINTERO.MX Closing Price Target Price Date (MXN) (MXN) Rating 30-Apr-14 78.99 68.00 N 18-Jul-14 91.59 96.00 21-Jan-15 99.72 106.00 22-Jan-17 76.04 89.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price GFINTERO.MX

01- Jan- 2015 01- Jan- 2016 01- Jan- 201760

80

100

120

N EU T RA L

3-Year Price and Rating History for Santander Mexico (SANMEXB.MX)

SANMEXB.MX Closing Price Target Price Date (MXN) (MXN) Rating 07-Mar-14 29.96 33.00 U 18-Jul-14 33.96 36.00 20-Jan-15 28.71 32.00 N 07-Apr-15 33.85 37.00 12-Oct-15 26.67 33.00 O 24-Jul-16 34.69 40.00 22-Jan-17 29.83 38.00 * Asterisk signifies initiation or assumption of coverage.

Target Price Closing Price SANMEXB.MX

01- Jan- 2015 01- Jan- 2016 01- Jan- 201720

25

30

35

40

U N D ERPERFO RMN EU T RA L

O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activitiesAs of December 10, 2012 Analysts’ stock rating are defined as follows:Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months.Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011.Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time.Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

7 March 2017

Mexican Banks 11

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings DistributionRating Versus universe (%) Of which banking clients (%)Outperform/Buy* 45% (64% banking clients)Neutral/Hold* 39% (60% banking clients)Underperform/Sell* 14% (52% banking clients)Restricted 2%*For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Important Global Disclosures Credit Suisse’s research reports are made available to clients through our proprietary research portal on CS PLUS. Credit Suisse research products may also be made available through third-party vendors or alternate electronic means as a convenience. Certain research products are only made available through CS PLUS. The services provided by Credit Suisse’s analysts to clients may depend on a specific client’s preferences regarding the frequency and manner of receiving communications, the client’s risk profile and investment, the size and scope of the overall client relationship with the Firm, as well as legal and regulatory constraints. To access all of Credit Suisse’s research that you are entitled to receive in the most timely manner, please contact your sales representative or go to https://plus.credit-suisse.com . Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: https://www.credit-suisse.com/sites/disclaimers-ib/en/managing-conflicts.html . Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

Target Price and RatingValuation Methodology and Risks: (12 months) for G.F. Inbursa (GFINBURO.MX)

Method: Our economic profit model analysis, based on an estimated 12.6% cost of capital and a 7.1% terminal growth rate, supports our P$36 target price and Outperform rating for Grupo Financiero Inbursa.

Risk: The following risks could compromise our Outperform rating and impede the achievement of our P$36 target price for Grupo Financiero Inbursa: (1) increased delinquency; (2) above-normal claim ratios in the insurance division; (3) higher protectionism by the US, affecting the domestic economy; and (4) execution risk of successfully implementing strategy with Walmart.

Target Price and RatingValuation Methodology and Risks: (12 months) for Gentera (GENTERA.MX)

Method: Our residual income analysis, based on an estimated 13.5% cost of equity and a 7.1% terminal growth rate, supports our P$37 target price and Outperform recommendation for Gentera. We have implied in our valuation a recurring ROE (Return on Equity) of 23.4%.

Risk: The following are risks to our P$37 target price and Outperform recommendation for Gentera: (1) higher than anticipated delinquencies and cost of risk ; and (2) lower than anticipated NIMs owed to higher funding costs.

Target Price and RatingValuation Methodology and Risks: (12 months) for Grupo Financiero Banorte (GFNORTEO.MX)

Method: Our DDM analysis, based on an estimated 13% cost of capital and a 7.1% terminal growth rate, supports our P$124 target price and Outperform rating for Banorte.

Risk: The following are risks to our P$124 target price and Outperform rating for G F Banorte: (1) increased delinquency; (2) above-normal claim ratios in the insurance division; (3) higher protectionism by the US, affecting the domestic economy; and (4) execution risk to deliver on the revenue synergies.

Target Price and RatingValuation Methodology and Risks: (12 months) for Grupo Financiero Interacciones (GFINTERO.MX)

Method: Our economic profit model analysis, based on an estimated 14.1% cost of equity and a 7.1% terminal growth rate, supports our P$89 twelve-month target price and Neutral rating for Interacciones.

Risk: The following risks could compromise our Neutral rating and impede the achievement of our P$89 target price for Interacciones: (1) higher than expected funding costs; (2) difficulty to securitize infrastructure loans; (3) higher than expected competition in the government lending business; (4) a worsening of subnational public finances; and (5) higher than expected pressure on prices.

Target Price and RatingValuation Methodology and Risks: (12 months) for Santander Mexico (SANMEXB.MX)

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Method: Our economic profit analysis, based on an estimated 13% cost of capital and a 7.1% terminal growth rate, supports our P$38 target price and Outperform rating for Santander Mexico.

Risk: The following are risks to our P$38 target price and Outperform rating for Santander Mexico: (1) increased delinquency; (2) higher protectionism by the US, affecting the domestic economy, and; (3) the under-execution of the investment banking division's pipeline of projects resulting in lower than anticipated fees.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections. See the Companies Mentioned section for full company names The subject company (GENTERA.MX, GFINBURO.MX, GFINTERO.MX, GFNORTEO.MX, SANMEXB.MX, YPF.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (GFNORTEO.MX, SANMEXB.MX, YPF.N) within the past 12 months.Credit Suisse has managed or co-managed a public offering of securities for the subject company (GFNORTEO.MX, SANMEXB.MX, YPF.N) within the past 12 months.Credit Suisse has received investment banking related compensation from the subject company (GFNORTEO.MX, SANMEXB.MX, YPF.N) within the past 12 monthsCredit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (GENTERA.MX, GFINBURO.MX, GFINTERO.MX, GFNORTEO.MX, SANMEXB.MX, YPF.N) within the next 3 months.For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683. For date and time of production, dissemination and history of recommendation for the subject company(ies) featured in this report, disseminated within the past 12 months, please refer to the link: https://rave.credit-suisse.com/disclosures/view/report?i=288669&v=6hbupomoghoiancpqv9fwb908 . Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (GFINBURO.MX, GFNORTEO.MX, SANMEXB.MX, YPF.N) within the past 3 years.Principal is not guaranteed in the case of equities because equity prices are variable.Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.This research report is authored by:Credit Suisse Securities (USA) LLC..........................................................................................................................................Marcelo Telles, CFACasa de Bolsa Credit Suisse (Mexico), S.A ..............................................................................................................................Alonso Garcia, CFABanco de Investments Credit Suisse (Brasil) SA or its affiliates. ......................................................................................................Lucas LopesTo the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the FINRA 2241 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.Casa de Bolsa Credit Suisse (Mexico), S.A ..............................................................................................................................Alonso Garcia, CFABanco de Investments Credit Suisse (Brasil) SA or its affiliates. ......................................................................................................Lucas LopesFor Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

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