Mexico Banorte warns FX, the potential dividend could weigh on the results of the full year

By Natalia Siniawski

Mexico City (Reuters) – The executives of the Mexican lender Banorte warned Wednesday that the volatility of foreign exchanges and a potential dividends payment could weigh on the performance of the company for the rest of the year.

Warning prospects occurred one day after the bank declared a 4% increase in net profit in the second quarter, reinforced by two -digit growth in its loan portfolio. Banorts actions increased by 3.5% when the analyst’s call.

On the call, the leaders said that a strengthening of the PESO could work the results by reducing the value of the revenues generated in US dollars, although they have maintained directives in full year.

They noted that a peso level of 17 or 18 for the dollar would add pressure, while a move above 20 would be beneficial. Bank forecasts are that the Peso is relaxing around 19 by green background by the end of the year.

This perspective is based on expectations that the central bank of Mexico will reduce interest rates of 100 basic points this year, exceeding an expected reduction of 50 points in the United States, which would reduce the rate differential and weigh on the Peso.

The leaders added that they analyzed a dividends payment which could be announced in the third quarter to reward the shareholders, although this would mean less money to the cashier to increase the loan book.

Despite the opposite winds, which also include uncertainty concerning examinations of the American-mexico-Canada commercial pact, the Garza’s financial director Rafael Arana said that the bank was well placed to manage stress.

(Report by Natalia Siniawski; additional report by Noe Torres; edition by Chizu Nomiyama and Kylie Madry)