Hello, and welcome to Virtual Investor Conferences. On behalf of OTC Markets, we are very pleased you have joined us for our Financial Services Conference. Our next presentation is from Grupo Financiero Banorte. Please note you may submit questions for the presenter in the box to the left of the slides. You can also view a company's availability for a one-on-one meeting by clicking "Book a Meeting" in the top toolbar. At this point, I'm very pleased to welcome Corina Beltrán, Investor Relations Vice President, and Tania Martínez, Director of Investor Relations of Grupo Financiero Banorte, which trades on the OTCQX Best Market under the symbol GBOOY and on the Bolsa Mexicana under the symbol GFNORTEO. Welcome back, Tania and Corina.
Thank you, Greg, and thank you, everyone, for your interest in Banorte. I would like to start with a quick overview of our macroeconomic indicators. We continue to see a resilient Mexican economy supported by internal demand. At the beginning of the year, the market was expecting 0% GDP growth for Mexico, and this estimate has been revised upwards given the sound fundamentals of private consumption, mostly driven by a solid labor market, as you can see in the top right side of this slide, improving working conditions as well, and the deployment of social programs in the country. Nevertheless, we do see that investment is still waiting for more clarity around trade negotiations in the North American region. So, all in, we spiked 0.5% GDP growth for this year and 1.8% for 2026. Inflation continues to trend down.
We're forecasting 4% by year-end, which leads us to expect further easing from the central bank, with the reference rate ending at 7% by the end of this year and 6.5% for 2026. In the next slide, please. When discussing economic growth, it is important to acknowledge that there are different growth dynamics depending on the region. We have the north and the center, which are manufacturing or industrial hubs that usually evolve above the mean. And we have also, this also applies for the touristic poles. And we have some other states that are focused on primary activities with different growth dynamics. So, as you can see on the right side of this slide, Banorte holds its largest operations in the states and regions with higher economic growth, which are mostly centered in the north and in the center of the country. In the next slide, please.
Now, going on into the bank, Banorte has local operations, but it holds a globally diversified investor base. We have presence in the Mexican market as well as in the U.S. through the OTC and in Spain, and we are constituents of large global indexes. We are currently one of the three most liquid companies in the Mexican market. We hold a float of around 87% and the market cap of close to $26 billion. So, as I was mentioning before, we have a very large and diversified investor base. We have over 6,000 investors, and we hold investment grade by the three largest global rating agencies. In the next slide, please. Here is the evolution of Banorte. We just recently turned 125 years operating in the market.
We started as a very small regional bank, and the story of our evolution has been mostly driven by inorganic growth to gain scale and business diversification as well. So, this process of inorganic expansion led us to perform a very profound transformation in terms of technology. We ended up with over 200 systems that were not really connected to each other. So, we embarked into this IT transformation, building a multi-channel layer that could provide a comprehensive view of the customer. And with this, we developed the analytics team, the customer experience team, and we have a transformation in the culture of the bank. So, we really went through a product-driven bank into a customer-driven bank.
At the very end of this timeline, you can see our 4-5-6 Plan, which is consolidating all the strengths of our previously embarked processes of digital alternatives and to fully benefit from the scale of the bank to provide to the market the best experience, the best personalized offerings, and the best business operation in the market. Can we go to the next slide, please? Thank you. In this slide, we can really see where has been our focus of investments in the past year. From 2016 to 2025, investments in IT have grown close to four times, whereas net income grew 3.1 times. All of the efficiencies and the optimizations coming from these investments in technology are reflected in mostly stable administrative and operating expenses. In the next slide, please, we have the real outcome of these investments.
We now can claim that Banorte is a digital bank with branches, so we have fully digital cycles for most transacting products, and it's seamless whether the person wants to bank digitally or in the human-digital space. We have above-average NPS, which is the green number that you see here and measures the satisfaction of the customer with the interaction, and given the evolution of the processes and the flexibility of the architecture of our technology, we have also below-average time to market to better serve our customers, so Corina, can you please guide us through the fundamentals of the bank, please?
Thank you, Tania. Shifting gears to the fundamentals of the group and focusing on the profitability of the group's net income, we can see that compared to the second half of 2024, we have been increasing our net income year- over- year, as well as compared to the first half of 2024. And this is mainly because of our diversified business model. In the last past quarters, the subsidiaries have been performing well with good profitability levels, and this optimization has allowed us to achieve an ROE of around 23%. Regarding revenue composition, most of our income generation comes from the banking business, which is a core business of the group. And this income generation is aided by the way that we have shielded the balance sheet to the interest rate cycle.
For instance, we anticipated that the interest rate was going to go down, and so we started to increase our fixed-rate loans, also our non-interest-bearing deposits, and this allowed us to generate a greater margin and therefore generate higher profitability. And last but not least, it's also worth mentioning that we're the second-largest franchise in Mexico. We currently hold a 50% market share. We are currently very proud of this, considering that most of our competitors are located outside of Mexico, so they're foreign companies. So, we plan to keep this position going forward. If we move on to the next slide, we can see our deposit structure and our loan portfolio structure. In these last couple of years, we have increased our demand deposits, allowing us to optimize our funding costs.
On the side of the loan portfolio, we have also changed the loan portfolio mix, where we have decreased the participation of government loans within our portfolio, and we have increased our consumer, mortgage, corporate, and commercial portfolios. This change in the mix has allowed us to become more profitable because, as I just mentioned, fixed-rate loans allowed us to shield the balance sheet and create a greater margin. A lot of our fixed-rate loans are in the consumer portfolio. For instance, that has allowed us to be more strategic and create more profitability within the group. If we move on to the next slide, we can see the performance of our loan portfolio.
The main driver of the loan portfolio increase has been consumer, and this is due to our hyper-personalization efforts, where we have been acquiring business by our own client base and acquiring the relationship that they have with other banks, so migrating them towards our ecosystem. This has been done thanks to our digital capabilities, our investment in technology. And so, we expect for the performance of consumer loans to be the driver. In addition, regarding the commercial and corporate loans, we have also seen a very good performance of double-digit growth year over year. Right now, we have been seeing that there's been more demand in terms of working capital rather than CapEx since they're still waiting for the USMCA to be renegotiated. In addition, regarding government loans, there was also a contraction quarter over quarter and year over year due to prepayments.
However, as you can see, the total loan growth, excluding government, has been 13%, which is considered to be a very healthy loan expansion. If we go on to the next slide, we can see our asset quality metrics. The NPL ratio is currently stable, and this is because we have been investing in our loan origination models and risk models, allowing us to become or to have an NPL ratio highly recognized in the Mexican banking system. We actually have the lowest right now, so that's something that we're really proud of. And something that's worth mentioning is that in this last quarter, we saw a slight increase in the NPL ratio, and this is because of isolated cases. And something that we also would like to add is that we would see the NPL ratio start normalizing or to normalize as the consumer loan portfolio increases.
Regarding the cost of risk, we can also see that the levels have remained stable. This is thanks to our reserve models, which currently connect with the risk level of our clients, and as I mentioned with the NPL ratio, we could see this cost of risk normalizing as we increase the consumer loan portfolio. If we move on to the next slide, we can see how the net income and the ROE have been growing in tandem in these last couple of years. The ROE is currently at almost 24%, and as I said before, this is because of our diversified business model, and this has allowed us to remain competitive, especially by the way in which we generate income. If we go on to the next slide, we can see that we currently hold a strong capital position.
The capital and leverage ratio currently stands at 21.7%, which is above the minimum regulatory of 16.275%. It is also above TLAC's minimum regulatory of 17.90%, which is a TLAC to 2025, and something that we would like to add is that we usually aim for that CET1 ratio to stand between 12% and 13%. However, given the macroeconomic environment that we have seen and the uncertainty, we have decided to stand at a higher percentage, so right now, we're standing at 14%. However, despite having this strong capital position, if we move on to the next slide, we can see that, well, one of our biggest priorities is to give back to our shareholders, and so currently, our dividend policy is to distribute between 16% and 50% of our net income. We have already paid 2024's net income in this year.
So we have already distributed the dividend for this year, which is 50% of 2024's net income. It was paid in May. And we are still evaluating the possibility to distribute an extraordinary dividend by the end of the year, obviously depending and under the approval of the board of directors. Something that was also approved this year in April was the operation of the buyback program. This year, we haven't operated. We decided to operate it last year because we saw that there was a disconnection between the fundamentals of the group and the stock price. However, we haven't been seeing that disconnection as strong this year, so we haven't used it. However, it's still there in case we decide to use it. If we go on to the next slide, this is the end of our presentation.
In case you have any questions, you can email us at investor@banorte.com. We can now receive or we can now move on to the Q&A session. The first question is, what is the disconnection between GDP deceleration and loan growth? Something that we have been seeing, and as I mentioned in the presentation, is that we have been able to acquire a greater business within our same client base or customer base just by taking the relationship that they have with other banks. So that is how we have been able to grow despite seeing a deceleration in GDP. The second question is, what are the loan growth drivers within your portfolio? We still see the consumer portfolio to be the main loan growth driver.
This is primarily, as we mentioned before, because of our hyper-personalization efforts and because of all the digital strategy and the investment of technology that we have been doing in these last couple of years. Thank you.