Moody's upgrades Banorte

Moody's Investors Service said it upgraded Banco Mercantil del Norte, SA's global foreign-currency senior debt rating to A2 from A3, foreign-currency subordinated debt rating to Baa2(hyb) from Baa3(hyb) and foreign-currency junior subordinated debt rating to Baa3(hyb) from Ba1(hyb). This concludes the review for upgrade that began Feb. 12, and the outlook is stable.

The agency said the upgrade takes into account the bank's stronger franchise value and increased earnings diversification derived from the significant expansion of the bank and its holding company, Grupo Financiero Banorte, in the last few years, as well as meaningful improvements in capitalization and corporate governance.

Nevertheless, Banorte's standalone intrinsic credit strength continues to be constrained by business integration challenges related to the bank's recent acquisitions, in Moody's view. The agency said these challenges are reflected in the bank's low operating efficiency, which continues to limit its profitability.

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