ANNUAL REPORT 2014 NACIONAL FINANCIERA S.N.C. BOARD OF DIRECTORS AND COMMISSIONERS, AS OF DECEMBER 31, 2014

Board Members, Series “A”

Board Members Alternates

Luis Videgaray Caso Luis Madrazo Lajous Secretary of Finance and Public Credit and Head of Development Banking Unit Chairman of the Board Secretariat of Finance and Public Credit

Fernando Aportela Rodríguez Alejandro Díaz de León Carrillo Deputy Secretary of Finance Head of Public Credit Unit and Public Credit Secretariat of Finance and Public Credit

Ildefonso Guajardo Villarreal Enrique Edgardo Jacob Rocha Secretary of Economy President of Entrepreneur National Institute Secretary of Economy

Pedro Joaquín Coldwell Ma. de Lourdes Melgar Palacios Secretary of Energy Deputy Secretary of Electricity Secretary of Energy

Agustín Guillermo Carstens Carstens Jesús Alan Elizondo Flores Governor of Banco de México General Director of Financial System Analysis Banco de México

Board Members, Series “B”

Board members Alternates Gerardo Gutiérrez Candiani Luis Fernando Zárate Rocha President of Consejo Coordinador National President of Cámara Mexicana Empresarial (CCE) de la Industria de la Construcción (CMIC)

Francisco Javier Funtanet Mange Rodrigo Alpízar Vallejo President of Confederación de Cámaras President of Cámara Nacional de la Industria Industriales de los Estados Unidos de Transformación (CANACINTRA) Mexicanos (CONCAMIN) Jorge Enrique Dávila Flores Juan Pablo Castañón Castañón President of Confederación de Cámaras President of Confederación Patronal Nacionales de Comercio, Servicio y Turismo de la República Mexicana (COPARMEX) (CONCANACO-SERVYTUR)

5 Independent Board Members, Series “B”

(NO ALTERNATES IN THIS CATEGORY) Carlos José García Moreno Elizondo Financial Director of América Móvil, S.A.B. de C.V. Commissioners

Board Members Alternates

SERIE “A” Eduardo Gurza Curiel Arnulfo Ruiz Fonseca Public Comissionner Deputy Public Comissionner Secretariat of Public Service Secretariat of Public Service SERIE “B” Carlos Aguilar Villalobos Ignacio Núñez Anta General Director of Despacho Aguilar Auditor and Manager of Grupo Financiero Villalobos y Asociados, Consultoría Anáhuac y Auditoría, S.C.

Technical Secretariat for Board of Directors Lázaro Jiménez García Perla Liliana de la Peña Amante Secretary of the Board of Directors Deputy Secretary of the Board of Directors

6 OFFICERS ATTENDING SESSIONS OF THE BOARD OF DIRECTORS, AS OF DECEMBER 31, 2014

Jacques Rogozinski Schtulman Chief Executive Officer

Rebeca Esther Pizano Navarro Vice President of Development Financing

Raúl Solis Wolfowitz Vice President of Corporate Banking

Juan Pablo Newman Aguilar Vice President of Treasury and Markets

Pedro A. Argüelles Rodríguez Moncada Vice President of Credit

José Elías Sahab Jaik Vice President of Regional Promotion and Institutional Relations

Luis Dantón Martínez Corres Vice President of Legal and Fiduciary Operations

Federico Ballí González Vice President of Administration and Finance

Eleazar Pablo Moreno Moreno Director of Internal Control Entity

Adriana Covarrubias del Peral CEO’s Technical Coordinator

Lázaro Jiménez García Secretary of the Board of Directors

Perla Liliana de la Peña Amante Deputy Secretary of the Board of Directors

7 CONTENTS

MESSAGE FROM CHIEF EXECUTIVE OFFICER 11

ECONOMIC ENVIRONMENT 13

FINANCING 15 Financing Program 15 Credit and Guarantees to Private Sector Program 15 Productive Chains Program 15 Micro-Finance Program 17 Strengthening Distribution Channels 17 Sector-based Programs 18 Alternative Channels 23 Guarantees Program 24 Total Financing to Private Sector 25 Regional Promotion and Institutional Relations Network 25

CORPORATE BANKING 31 Guarantees on Securities Instruments 31 Structured Financing 31 Financial Advisory Services 32 Government Banking 32 Financing of Projects 32 Sustainable Projects 33 Investment Programs 35 Programa Mercado Institucional de Deuda Alternativa Societaria – Midas 39

INTERNATIONAL 41 Project Management 41 International Development Assistance 43 Financial Agent 45

9 TREASURY AND MARKETS 47 Treasury 47 Markets 48 Mutual Funds 49

LEGAL AND FIDUCIARY OPERATIONS 51 Fiduciary Operations 53

OPERATIONS SUPPORT 55 Quality Management and Organizational Culture 55 Human Capital Development 55 Corporate Governance 57 Internal Comptroller’s Office 57

FINANCIAL RESULTS 59

INTERNAL CONTROL ENTITY 63

ANNEX A 67 Nacional Financiera – Important Figures 67

ANNEX B 73 Report on Consolidated, Audited Financial Statements with Subsidiaries, as of December 31, 2014 73

ANNEX C 75 National Advisory Council Members 75

ANNEX D 77 Directory of Regional and Overseas Offices 77

10 MESSAGE FROM CHIEF EXECUTIVE OFFICER

The profound reforms promoted by the 2014 was a year of innovations, in terms of government of President Enrique Peña guarantees for inducing business financing, Nieto, and that were discussed, enriched and with new auction mechanisms that make approved by the National Congress, provided the allocation of resources more transparent us with an extraordinary platform for making and more efficient; sector-based and regional deep changes for the benefit of our country’s vocation programs in close coordination with development. state governments throughout the country; These reforms have not been an exercise emerging strategies for providing assistance in rhetoric, and even less so, idealization. in the case of natural disasters, and venture Rather, they are concrete proposals that have capital schemes. changed the rules of the game in vital issues, Other achievements were new funds for all aimed at increasing employment and energy reforms; diverse risk capital funds; elevating Mexicans’ standard and quality of the launching of a new auction system in life. the corporate and government capital debt In the case of financial reforms, there are market; syndicated auctions for securities tangible results in development banking, certificates; and aggressive initiatives for which now channels more financing at technical training and assistance, including lower costs. And furthermore, financing is mobile units covering the entire country, accompanied by other strategies for assisting corporate governance workshops and both businesses. in-person and online courses. As one of Mexico’s development banks, We will be continue working with the Nacional Financiera plays a prominent role, country’s economic actors—both public and because its goal of development financing private—to listen to their needs and to bring is focused on the business segment, which new ideas to the discussion table, to seek creates wealth and employment. alternative sources of productive financing, During 2014, Nafinsa fulfilled the goals it to address and respond to sector-based and established and registered an annual growth regional needs. of 17.1% in the total amount of credit and The best of Nacional Financiera’s history guarantees provided, without neglecting the is currently being written. With innovation bank’s financial sustainability. and creativity, we are confronting our new We thus increased our total amount of challenges as the primary entity promoting financing to 283,816 million pesos, assisting business development in Mexico. nearly 200,000 businesses with development Dr. Jacques Rogozinski S. financing and almost a million clients with Chief Executive Officer micro-financing.

11 12 ECONOMIC ENVIROMENT

Throughout the year, the international eco- world, with the resulting decline in the prices nomic context was characterized by a grow- of raw materials, domestic dynamism and ing differentiation in the rhythm of growth structural conditions in economies like those among advanced economies, and also be- in China and Brazil. tween advanced economies and emerg- It is worth highlighting what took place ing economies. This situation intensified in the oil market during the last quarter of toward the end of the year with a sudden the year. International prices for Brent and drop in international oil prices. Under these WTI crude oil had averaged at US $106.50 circumstances, divergence in the expected and US $99.80 per barrel during the first decisions and patterns in monetary poli- three quarters of the year, but during the cies expanded. The end of quantitative eas- last quarter the respective averages dropped ing (QE) measures in the United States and to US $76.20 and US $73.20, and further the decisions to continue to relax economic declined to US $55.80 and US $53.30 per controls and to even deepen this process in barrel by the year’s end. The increase in crude Japan and the Euro zone favored a strong ap- oil production in the United States from preciation of the dollar around the world. shale fields, combined with OPEC’s decision The United States began the year with a to not reduce its production or its export certain sluggishness, as a consequence of quotas, and also the diminished demand extreme climate events, but it demonstrated resulting from the global slowdown, led to a particularly notable improvement during an excess supply and modified medium-term the rest of 2014. Together with the United market expectations, given the uncertainty Kingdom, it was one of the G-7 countries regarding the time that would be required with the best economic performance in a to find new conditions for achieving a stable number of years. Near the year’s end, the balance. only G-7 economy that demonstrated a Lastly, due to the circumstances described, remarkable boost was the US economy, with world inflation was stable to declining during its labor market continuing to recuperate 2014. The risk of deflation in the Euro Zone more quickly than expected. established the intention to further relax The emerging economies, for their part, monetary conditions. In the United States experienced a diminishing of their growth an acceleration in inflation was indicated rhythm as a consequence of several factors, through the first half of the year, then including the slowdown in the developed diminishing throughout the second half.

13 Mexican Economy as expected, such as inflation. Also, increas- Mexico continued to promote an econom- es in the prices of agricultural products dis- ic approach based on three pillars: solid sipated in the year’s second quarter. During macroeconomic principles; strong external the second half of the year, an upward trend sector; and the design, passage and imple- was noted in inflation, as a result of increas- mentation of structural reforms in strategic es in gasoline and agricultural prices, such areas. as for tomatoes, during the final months of In this context, the GDP grew at an annual the year. At the year’s end, annual inflation growth rate of 1.7% in real terms during the was 4.08%, above the rate of 3.97% for the first half of the year, and during the second previous year. half, the variation would have been 2.4%, Highly-stable medium-term expectations, but despite an improvement, the growth together with the near certainty that the rate was not at the rhythm expected. Thus, Federal Reserve would not begin a cycle in 2014, the national economy would grow of increasing rates in 2014, the low transfer of by 2.1%, following a growth rate of 1.4% in exchange rate variations to final prices, and 2013. the economy’s affluence, were the conditions The external sector continued to serve as that led the Banco de México to reduce its the engine for the economy, due to the dy- reference rate by 50 pb at its June meeting namism of the US economy, with an average and maintain the rate at 3.0% until year’s end. growth rate of 6.2% for the first nine months Clearly, the drop in oil prices modified of the year. As a result of automotive manu- the economic situation for Mexico, and the facturing exports, this industrial sector pre- effect on the exchange rate was immedi- sented the best performance in 2014. ate. However, the most significant impact The domestic market remained limited due was on public finances. After the passage of to a lack of growth in real income, the reduc- the Law on Federal Income, the price for the tion in the rhythm of financing to the private Mexican mix as proposed by the Executive sector, uncertainty regarding, first, the pas- Branch and approved in the House of Repre- sage of reforms, and then, their implemen- sentatives was reduced. And the accelerated tation, as well as the perception of public decline during the following weeks revealed insecurity. that an average price of US $79 per barrel At the end of the third quarter of 2014, could not be maintained during 2015. The private consumption averaged a growth rate Secretariat of the Treasury and Public Credit of 1.7%; total investment rose to 1.1%; and (Secretaría de Hacienda y Crédito Público— government spending at all levels increased SHCP) once again applied the strategy of by 2.7%. Among the points worth empha- purchasing coverage to assure the price ap- sizing, it is important to mention the recu- proved in the Law, and thus nearly eliminat- peration of the construction sector, which ed the risk of having to confront a reduction showed an annual growth rate of 3.8% by in federal revenue. However, the prospects the month of October. for 2016 are uncertain, and this will be a The effect from new fiscal measures en- challenge for SHCP authorities and the Na- tering into effect in January was temporary, tional Congress. ¶

14 FINANCING

Financing Program correspond to resources granted to suppliers In 2014 Nacional Financiera channeled, of public offices and entities, through the through its various credit and guarantees Federal Government Purchases Program, programs, a total of 637,177 million pesos, created specifically to support small and of which 50.9% corresponded to Second-Ti- medium-sized establishments (SMEs). er loans, 46.5% to Guarantees and 2.6% to Within this program, Federal Govern- First-Tier and Public Sector Programs. (Figure 1). ment offices and entities registered ac- counts payable to December 2014, in the amount of 429,529 million pesos, of which Credit and Guarantees to Private Sector 23% was received in advance, thus assisting Program 7,163 suppliers that made use of advance With the variety of products offered by Na- receipt through financial factoring. finsa through its Productive Chains, Tradi- The Program’s main indicators, as of tional Programs, Micro-Business Financing December 2014, with respect to the same and Fixed Assets Financing programs, as period in 2013, are the following: well as its Guarantees Scheme and Guar- anteed Credit programs, the Institution was §§ There was an 8% increase (2,503 million able to channel a total of 632,667 million pe- pesos) in the balance. Due to promotion sos to the private sector, assisting a total of efforts in the Productive Chains program, 1,187,751 beneficiaries, including 197,330 it was possible to compensate, to a signif- businesses and 990,421 micro-loans. Of the icant extent, the departure of First-Order total beneficiaries, 99% were micro, small Companies, which contributed a large and medium-sized. volume of operations to the total in 2013.

§§ There was a 4% increase (27,184 million Productive Chains Program pesos) in publication in the Productive Second-tier financing included 228,094 Chains electronic platform. million pesos in loans through Productive Chains; 33,583 million pesos through Mi- Promotion activity continued, and as a re- cro-Business Financing and Fixed Assets Fi- sult, there were 54 chains in the process of nancing; and 62,421 million pesos through being implemented, and 143 in the promo- Traditional Discounts. tion phase, at the end of the second half of Of the 228,094 million pesos financed 2014. Operations have been diversified, with through Productive Chain Schemes, 100,518 a total of 53 new Chains registered at the million pesos represent 40% of the total and closing of the second half of 2014.

15 Figure 1 Total Financing (Millions of Pesos) 681,385 654,284 637,177 700,000 615,988 500 2,000 4,510 2,589 505,528 461,225 444 525,000 9,465 298,014

350,000 1,097 451,760 505,083 613,399 652,284 680,885 632,667

175,000 296,918

0 2008 2009 2010 2011 2012 2013 2014

Private Sector Public Sector

In 2014, Nafinsa channeled a total of 637, 177 million pesos through its various credit and guarantees programs.

16 Regarding the sectors addressed in this §§ Many different micro-finance institutions, Program, the main operation indicators are commercial banks, government entities the following, in comparison to the same and associations have promoted an inclu- period in the previous year: sive financing process and mechanisms for granting seed capital for initiating §§ The Industrial Sector registered an increase productive activities. This has significant- of 236 million pesos, equivalent to 1%. ly increased the percentage of the popu- lation that has access to formal financial §§ The Government Sector registered 7% services. growth, equivalent to 6,535 million pesos. §§ Micro-finance institutions provided ser- §§ The State Governments Sector registered vices to their clients through nearly 2,300 an increase of 0.3%, equivalent to 54 mil- branches, with 48% coverage in the coun- lion pesos. try’s central region, 29% in the southern region, and 23% in the northern region. Other important actions initiated during 2014 were: §§ In terms of types of loans, 18% corre- spond to individual loans, and 82% to a §§ Alliances were developed and discount group scheme or community bank, or in campaigns were conducted with large other words, through solidarity loans. First-Order Companies, with the aim of increasing their publication and balances. §§ It is estimated that in the market served by micro-finance institutions, women §§ Alliances were established with financial represent approximately 93% of the cli- intermediaries for the granting of new lines. ents receiving group loans, while this percentage is close to 64% in the case of §§ The Institution continued to offer First-Or- individual loans. der Companies the following products: Distributors and Selective Guarantee. From January to December 2014, a total of 24,355 million pesos was granted through §§ The Institution continued to offer Pro- the Micro-Finance Program, assisting 990,421 ductive Credit for Working Capital to sup- persons. The Micro-Finance balance thus in- pliers of First-Order Companies. creased to 11,130 million pesos.

Micro-Finance Program Strengthening Distribution Channels Information for 2014 presented in the mi- As of December 2014, the portfolio balance crofinance in Mexico benchmarking publi- for banking financial intermediaries increased cation prepared by ProDesarrollo (Financiera to 51,783 million pesos, equivalent to 136% Nacional de Desarrollo Agropecuario, Forest- of the goal for December 2013. al y Pesquero) highlights the following: There were ten financial intermediaries operating in Con_Prend@, with lines of 920 §§ The development of micro-finances in million pesos and a balance of 477 million Mexico is in a process of consolidation pesos; and there were 22 financial inter- and is considered a new, growing sector. mediaries operating in Líne@ Inmediata Nafinsa, with credit lines of 25,010 million pesos and a balance of 18,982 million pe-

17 million pesos channeled million pesos granted by through Program for Program for Financing 399 Financing Contracts 35 Suppliers of Empresas Eje

sos. Others were operating a different type Sector-based programs of scheme, with lines of 4,475 million pesos Nacional Financiera has implemented pro- and a balance of 4,428 million pesos. The grams to address the Micro, Small and Me- remaining financial intermediaries (eight) dium Establishments (MSMEs) in economic were operating in other schemes such as the sectors or activities that, due to their char- Línea Básica, Descuento Fácil and Descuento acteristics, have dealt with limited access to en Papel programs, with credit lines of 750 financing through traditional schemes. The million pesos and a balance of 681 million objective is to promote the growth and com- pesos. petitiveness of these establishments, as well At the end of December 2014, there as foster job creation and contribute to pro- were 34 intermediaries with a guarantees viding services to strategic and high-priority balance of 10,855 million pesos, derived sectors. from various processes for selecting SME With the aim of improved design and products: Education, Software, Automotive, promotion, a classification system was Freight and Passenger Transportation, and established for these programs, comprised Surety Companies. A total of 150 requests of six lines of action. The results from these have been received from recently-created sector-based programs operating during the financial intermediaries interested in period from January to December 2014 were becoming part of the Nafinsa network. A the following: pre-analysis process has been conducted for 70 of those financial intermediaries, and four Supplier Development of them were incorporated, at the amount of §§ Program for Financing Contracts for Fed- 690 million pesos. Also, dossiers were being eral Government Suppliers. Assistance prepared for five prospective candidates, to suppliers was granted through liquid- in preparation for their incorporation, at ity for carrying out their contracts, with approximately 250 million pesos. 399 million pesos channeled through 83 loans.

18 million pesos granted million pesos in credit to companies in the granted to Leather and 2,144 construction sector 281 Footwear Sector

§§ Program for Financing Suppliers of Em- Modernization and Fixed Assets presas Eje. Twelve loans were granted, for §§ The Program for Financing the Develop- a total of 35 million pesos, to small and ment and Modernization of Owner-Oper- medium-sized companies in the supplier ated Vehicles (Hombre-Camión) was im- chain of companies that have a supplier plemented, with the following objectives: development program. promote the replacement of federal trans- portation vehicles for freight, passengers §§ Implementation of the Program for Fi- and tourism; support national production nancing Pemex’s National Suppliers and through an increase in vehicle sales; and

Contractors continued, facilitating as- contribute to reducing CO2 emissions. In sistance to national companies that are 2014 the first loan was granted, in the Pemex suppliers for carrying out specific amount of 1.2 million pesos. projects. §§ With the objective of providing assistance §§ Through the Program for Financing the to public transportation for passengers in Construction Sector, 1,197 loans were Mexico City, the Program for Urban Trans- granted, for a total of 2,144 million pesos, portation Renewal continued to operate. to companies in this sector dedicated to A new corridor was incorporated, and re- developing commercial infrastructure. ceived a loan for 105 million pesos.

§§ The Assistance Program for the Leather §§ Through the Taxi Renewal Program, 142 and Footwear Sector and its Supplier Chain loans were granted, for a total of 16 million granted a total of 281 million pesos in cred- pesos, for acquiring new taxis and replacing it, through 238 loans, and received a new obsolete taxis in Mexico City. In addition, boost in the first half of the year, which will the same scheme was implemented in the increase its assistance even more. state of Aguascalientes, with 138 loans granted, for a total of 15 million pesos.

19 micro-loans granted new companies from to women owning incubators supported 130 72,872 micro-businesses

Inclusive Financing gram granted a total of 2,611 loans, at §§ Through the Program for University Fi- 295 million pesos, since it was initially nancing, 1,474 loans were granted, for a established, and the program ended in total of 232 million pesos, to support the September 2014. professional and graduate studies of stu- §§ A Program for Financing for Businesses dents in 32 universities around the country. Adhering or in the Process of Adhering to the Fiscal Incorporation System was ini- §§ The Program for Financing Entrepreneurs tiated, with the objective of motivating assisted 130 new companies in initiating micro-businesses to become part of the operations, with loans totaling 22 million formal sector, with the framework of pesos. These companies are from incuba- the “Crezcamos Juntos” strategy. The first tors in the Network accredited by the Na- nine loans were granted, for a total of 2.0 tional Entrepreneur Institute (Inadem). million pesos. Financing is complement- ed with information and training. §§ Through the Program for Supporting Women Owning Micro-Businesses, 72,872 §§ The Program for Financing Companies micro-loans were granted, for a total of Developing Information Software and 394 million pesos, to women owning mi- Technology granted 33 loans for a total of cro-businesses, with the aim of promoting 94 million pesos, providing assistance to their active role in the socioeconomic de- businesses of this type that lack access velopment of their communities. to credit under the methodologies from traditional analysis. §§ Through the Program for Financing Com- prehensive Modernization of Micro-Busi- §§ The Program for Third-Tier Operations is nesses, 114 loans were granted, in the aimed at assisting non-banking finan- amount of 14 million pesos. This pro- cial intermediaries in gaining access to financing from commercial banks, which

20 loans for the auto loans granted acquisition and/or with the support of 4,621 replacement of electric 15,392 Subasta Automotriz equipment scheme

will in turn allow them to expand and » In Yucatán 31 loans were granted for a enhance their financing to micro-busi- total of 82 million pesos. nesses, and small and medium-sized es- » In Zacatecas eight loans were granted tablishments in the country, particularly for a total of 21 million pesos. those in the segment of the market cur- » In Aguascalientes four loans were rently under-served. Eight lines of financ- granted for a total of 5 million pesos. ing were granted for this purpose, in the » Programs were implemented in Pueb- amount of 33 million pesos. la, Sinaloa and Tamaulipas during the year’s last quarter, and they will begin Sustainable Financing operations in 2015. The Eco-Business Credit for Energy Efficien- cy Program assisted micro and small compa- Economic Reactivation nies, through 4,621 loans for a total of 187 §§ The Assistance Program for Reactivating million pesos, for the acquisition and/or re- the Automotive Industry includes a financ- placement of efficient equipment, aimed at ing scheme for auto dealerships (Plan Piso) generating savings in electricity. and another that facilitates the granting of auto loans to persons purchasing new Regional Development cars (the latter operates under the modal- Programs for Advancing Strategic Sectors ity of auctioning lines of guarantees). and Promoting Employment is operating in coordination with participating state gov- §§ A total of 15 lines of credit were provided ernments, and is aimed at assisting their through Plan Piso, in the amount of 239 high-priority economic activities and con- million pesos, while the Subasta Auto- tributing to regional development and job motriz scheme facilitated the granting creation. of 15,392 auto loans, for a total of 2,523 » In Chiapas 197 loans were granted for million pesos. a total of 217 million pesos.

21 §§ In the framework of the Assistance Pro- » Emerging Program for Natural Disas- gram for Natural Disasters and Economic ters to Assist Businesses Affected by Reactivation, the following schemes were Tropical Storm Manuel and Hurricane placed into operation: Ingrid, through which 634 loans were » Por Michoacán Juntos lo Vamos a Lograr, granted, for a total amount of 673 mil- with 405 loans granted, at a total of 432 lion pesos. million pesos. » Crusade Against Hunger and Program » Emerging Program in the State of Baja Against Violence and Crime, an eco- California Sur for Businesses Affected by nomic reactivation scheme that facili- Hurricane Odile, with 166 loans grant- tated the granting of 603 loans, at a to- ed, for a total amount of 171 million tal of 555 million pesos. pesos. » Assistance to the Tourism, Agroindustry §§ In August the Program for Financial Assis- and Construction sectors in the state of tance to Border Zones was implemented Chiapas, in the amount of 278 million to facilitate financing in competitive - con pesos. ditions to businesses in the states located along the country’s northern and southern In addition, operations in the following borders: Baja California, Baja California Sur, schemes were concluded: Sonora, Chihuahua, Tamaulipas, Coahuila, Chiapas, Quintana Roo, Campeche and Ta- » Program for Economic Reactivation in basco. Results for 2014 indicate 265 loans, the State of Oaxaca, with 285 loans for a total of 291 million pesos. granted, for a total amount of 271 million pesos.

22 suppliers affiliated First-Order Companies with the Productive participating in the Pro- 11,737 Chains Program 600 ductive Chains Program

Alternative Channels the supply and demand of equipment Alternative Channels made it possible to ex- products to strengthen the electronic pand credit and grant financing to a larger domestic market, with the first opera- number of companies during 2014. These tion conducted on October 24, 2014. channels also contributed to reducing oper- ational costs within the Institution, by using Administration of Electronic Products centralized schemes to provide services to §§ Administering, coordinating and con- companies and making the Institution’s or- trolling the processes associated with ganizational structure more efficient. the operational implementation of the Productive Chains Program, Financing to Promotion of Factoring Distributors, Electronic Credit and other §§ Developing and implementing strate- special programs; supervising the func- gies for promotion and affiliation with tioning of the electronic products; estab- the Program for Factoring in Productive lishing mechanisms for providing train- Chains, using the national network of ing, specialized consulting, and technical internal and external promoters and assistance related to electronic products various means for providing assistance to financial intermediaries, First-Order (membership and affiliation campaigns, Companies and internal departments; through the Center for Services to Cli- assisting SMEs in accessing Nafinsa’s fi- ents—Call Center, and mass mailings nancing products, through the operation by email, major events for membership and administration of control systems and installation of modules in First-Order associated with post-sales; and also es- Companies, for example), with the fol- tablishing and defining mechanisms for lowing results obtained in 2014: reviewing and supervising documents for » Affiliation by suppliers with publica- the timely incorporation of businesses in tion in the system reached 93% of the line with current regulatory guidelines. target goal, guaranteeing that these suppliers can conduct their operations The results obtained were the following: in the Productive Chains Program. » Supervision, monitoring and registry » 11,737 suppliers affiliated with the of over 10,000 daily operations (Fixed Productive Chains Program. Rate, Variable, Emergenct and Mi- » A model for increasing indexes of cro-Finance Loans and Chains), with amounts financed and numbers of sup- amounts of over 800 million pesos a pliers with financing was maintained, day, through the Nafinet Platform. through promotion campaigns imple- » Service and support to over 600 mented through the Call Center. First-Order Companies participating » During the development and launching in the Productive Chains Program. of the Nafinsa’s Marketplace or Elec- » Services and support to over 50 finan- tronic Equipment Market, 73 stores cial intermediaries for credit oper- were created with their respective ations and consults (Banking Fi- salespersons incorporated, facilitating nancial Intermediaries, Non-Banking

23 phone calls from clients and users were 240,000 addressed through the Call Center

Financial Intermediaries, FISOS) re- » By the end of the first half of 2014, a garding the Nafinet System and oper- total of 69,015 users had received ser- ations conducted in this system. vices either in person or online. » Administration of approximately 155 » Using the ticket system through the internal users, over 3,500 users of fi- Call Center, suppliers are affiliated nancial intermediaries, and over 12,400 within an average of six days. users of First-Order Companies in the » Over 240,000 phone calls from clients Nafinet Platform. and users, regarding any of the In- » Dispersal of Funds to SMEs, with a stitution’s products, were addressed monthly average of 500 million pesos, through the Call Center. by First-Order Companies through the » Over 155,000 interactions have been Productive Chains. conducted using other channels of » Processing of over 1,500 cases per service through the Call Center, such month of companies requesting af- as SMS text messaging, message filiation to the Productive Chains campaigns by email, and personalized Program, and also new products and attention to email messages by a SME services such as Nafinsa’s Electronic executive. Equipment Market. » During the last two months of 2014, » Operational implementation of over the first virtual service center was in- 100 productive chains and 73 stores stalled in the Center for Assistance to in the Electronic Market. Entrepreneurs in Guadalajara, Jalisco, for responding to clients where Nafin- Services to Clients and Business Development sa staff is not physically present. Training §§ These services were offered through the Promotion of Businesses between Mexico designing of plans and processes orient- and Europe through Eurocentro Nafinsa ed toward providing services to users/ §§ Eurocentro Nafinsa México is a trust fund clients around the country, creating links created by Nacional Financiera to offer with internal departments, and negotiat- specialized services for providing consul- ing with multiple public and private enti- tation and promoting contact between ties, through the Business Development SMEs from Mexico and Europe. As part of Center, and including 25 business solu- the Eurocentro strategy, 13 events were tions and 10 online solutions, with the organized from January to October 2014, following results: through which a total of 582 businesses were assisted. » Services through Nafinsa’s mobile office were initiated, for providing Guarantees Program consultation services, business devel- During the period from January to Decem- opment, and assistance in financing ber 2014, a total of 296,002 million pesos programs throughout the country. was channeled (including guarantees fi- nancing and guaranteed credit).

24 million pesos, total of all financing to the private loan portfolio cor- sector was concentrated 283,816responding to the 80% on micro, small and medi- private sector um-sized establishment

Thus, the balance at the end of 2014, §§ Emphasize the promotion of products considering guaranteed credit, was 143,198 such as first-tier loans, selective guar- million pesos, or 10% above the balance antees, sector-based programs and the at the end of December 2013, with 39% Mercado Institucional de Deuda Alter- coverage by Garantía Nafinsa. nativa Societaria (Midas), on the basis of identified needs and support for public Total Financing to Private Sector and private sectors. The total loan portfolio corresponding to the §§ Coordinate with other development private sector, including guaranteed credit, banks in order to generate synergy in pro- at the end of December 2014, has increased moting and implementing projects with to a total of 283,816 million pesos. Of this high economic impact. amount, the Guarantees Program contrib- uted 50%, the Traditional Financing Pro- §§ Strengthen business relations and al- grams contributed 38%, and the Productive liances with the main local economic Chains Program, the remaining 12%. In ac- agents, making use of the State Advisory cordance with Nafinsa’s mission of assisting Councils for support. the country’s smallest businesses, 80% of all financing to the private sector was concen- Actions were carried out in 2014 to facili- trated on micro, small and medium-sized es- tate and grant more certainty in the tasks of tablishments (MSMEs). (Figure 2) promoting and referring projects to the Net- work of State Representatives. The applied Regional Promotion and Institutional measures allowed State Representatives to Relations Network focus on providing services to the corporate The Regional Promotion and Institutional segment of medium-sized businesses. Relations Network defined its primary ob- jective for 2014 as follows: “To transform §§ Corporate Banking: Corporate Financing, the operational and organizational model Mercado Interno de Deuda Alternativa So- of the Regional Promotion Network, with cietaria (Midas) and Sustainable Projects. the aim of contributing to a greater extent to generating economic impact.” §§ Development Financing: Selective Guar- antees, Incorporation of Financial Inter- To achieve this objective, the following strate- mediaries, Empresas Eje and Sector-based gies were defined: Programs with contributions from local governments to a counter-guarantee fund. §§ Develop regional experts (Network of State Representatives) with the capacity §§ Treasury and Markets: Investment Funds to identify market needs, generate proj- and Money Desk. ects with regional impact, and promote environmental sustainability. §§ Legal and Fiduciary: public and private trust funds.

25 Figure 2 Direct and Induced Loan Portfolio to Private Sector 2006 - 2014 (Millions of Pesos)

300,000 283,816 Average Annual Growth Rate 25% 4.6 times 242,415 106,475 Credit 225,000 212,931 191,723 80,374 173,658 63,279 57,557 Productive 114,664 34,143 Chains 150,000 48,543 31,609 38,557 38,695 104,600 44,351 49,837 72,431 29,397 42,988 143,198 Guarantees 75,000 52,520 21,301 26,624 130,432 17,722 20,329 63,119 75,278 89,815 110,957 17,974 48,582 30,801 16,824 0 2006 2007 2008 2009 2010 2011 2012 2013 2014

THE TOTAL LOAN PORTFOLIO CORRESPONDING TO THE PRIVATE SECTOR HAS INCREASED

26 cases were referred cases were referred for 37 to MIDAS Program 149 Selective Guarantees

Also, support was given to State Representa- Corporate Banking tives promoting and providing assistance to §§ Corporate Financing the operation of other products, including: Productive Chains, Entrepreneur Program, » For the First-Tier Program, at the end of Marketplace Electronic Equipment Program, December 2014, the Regional Promo- and packaged Emerging Programs and Sec- tion and Institutional Relations Net- tor-based Programs. work had promoted and referred 21 cases with project amounts of 75,214 Impact and Synergy of referred projects million pesos and amounts requested With the aim of focusing promotion work from Nafinsa of 41,398 million pesos. by the Network of State Representatives on » One of these projects, the “Consorcio projects with greater regional impact, the Minero Benito Juárez Peña Colorada” Impact on Development Matrix was adopt- project, is in the state of Colima and ed. Its purpose is to direct Nafinsa’s activities is designed to finance the expansion toward projects that are particularly identi- of the mining project in the amount of fied with fostering and financing economic 400 million dollars, of which 200 mil- development. lion dollars has been requested from Regarding synergy between the Network Nafinsa. of State Representatives and other Nafinsa departments as well as other development §§ Mercado Institucional de Deuda Societa- banks and state and municipal governments, ria (Midas) the objective of “Synergy in Promotion » Nafinsa assists medium-sized compa- Work: SME Segment” was established. It nies requiring corporate financing for facilitates receiving feedback and creating the acquisition of fixed assets, work- links between programs such as the Hunger ing capital and the consolidation of and Insecurity, Border Zones and Technical liabilities. Assistance programs and key economic actors.

27 projects were referenced financial intermediaries for the Entrepreneurs referred 23 11 Program

» The Network of State Representatives » The Network of State Representatives promoted and referred 37 cases in manages a Counter-Guarantee Fund 2014, signifying the request for 14,681 for Sector-Based Programs, since this million pesos in financing from Nafin- makes it possible to expand the scope sa. Of the 37 cases, implementation of these programs, designed to assist has begun in nine cases. strategic sectors for the benefit of local §§ Sustainable Projects economic development. » The Network of State Representa- » During 2014, the Network of State Rep- tives referred 21 projects with a total resentatives participated in the nego- of 30,888 million pesos in required fi- tiation and implementation of 40 Sec- nancing. tor-Based Programs, with a potential for operating 5,459 million pesos. Development Financing §§ Selective Guarantees §§ Empresas Eje » The Network of State Representatives » The Empresas Eje Program was de- has participated in the promotion and signed to be implemented jointly with identification of projects with the po- ProMéxico, with the aim of facilitating tential for being assisted with a Nafin- technical assistance to the suppliers of sa Selective Guarantee of up to 50% of large companies (Empresas Eje) in the the amount of financing granted by a various Mexican states. At the end of financial intermediary. 2014, there were 61 companies in this » 149 cases were referred for Selective program. The Network of State Rep- Guarantees during the year, repre- resentatives identified, promoted and senting a total of 15,138 million pe- certified 28 companies eligible for this sos. Of these cases, 18 began the im- program. plementation phase, at 1,492 million pesos, and 15 cases made it to a credit §§ Entrepreneurs Program institution, at 1,710 million pesos. » This program was designed by Naf- insa to promote the development of §§ Incorporation of Financial Intermediaries entrepreneurs and businesses that are » By the end of December 2014, the in their early stages and that require Network of State Representatives had financial and technical assistance to promoted and referred 23 financial in- become successfully consolidated. The termediaries as prospects for being Network of State Representatives ref- incorporated into the Nafinsa network, erenced a total of 11 projects for the and lines were authorized for a total of Entrepreneurs Program during 2014. 495 million pesos. §§ Productive Chains §§ Sector-based Programs with Contributions » At the end of December 2014, the Net- from State Governments for a Count- work of State Representatives, with er-Guarantee Fund operational support from Nafinsa’s

28 companies were productive chains were incorporated to Nafinsa promoted by State Marketplace Electronic 102 Representatives Network 116 Equipment Program

Financing Department, had promot- » The Sector-Based and Emerging pro- ed 102 productive chains, of which 32 grams channel federal resources for had initiated operations with lines of responding to needs for promoting 3,442 million pesos. productive sectors and to needs aris- ing from emerging situations. During §§ Nafinsa Marketplace Electronic Equip- 2014, State Representatives referred ment Program three sector-based programs. The “To- » For this program, the State Represen- dos por Michoacán” program initiat- tatives identified small and medi- ed operations and received resources um-sized companies oriented toward from the Secretariat of the Economy, the production of industrial equip- making it possible to structure a pro- ment, with the aim of these compa- gram with 500 million pesos for fi- nies promoting and finalizing sales on nancing MSMEs. the internet. In this process Nafinsa guaranteed 80% of the purchase val- §§ Events, Publications, Agreements and In- ue of the products, with the means terviews of payment or the liquidation of the » Through activities such as events, operation through a credit card issued publications, agreements and inter- by a commercial bank. The Network views, it is possible to: of State Representatives incorporated 1. Disseminate information regarding 116 companies into this program, and Nafinsa’s activities in the states. prepared 76 dossiers for initiating the 2. Promote the portfolio of products that formal process. To date 35 electronic Nafinsa has developed for specific stores have been implemented. business segments. 3. Establish local alliances for promoting §§ Emerging packaged and Sector-Based Nafinsa products designed to assist Programs SMEs.

29 prospective clients Advisory Council sessions were referred by Advisory 124 were conducted in 2014 129 Councils

4. Collaborate in generating new products. ters and local development. Experts from 5. Identify the needs of business groups Nafinsa departments as well as speakers and governments in the various states. from outside the Institution participated in these sessions. §§ The Network of State Representatives During 2014 the Advisory Councils re- carried out the following activities in ferred 129 prospective clients for the Insti- 2014: 370 promotion events, 82 articles tution’s various products and services, spe- published, 68 interviews in the media, cifically: new Productive Chains, 12; Treasury 28 training agreements, 23 collaboration Contracts, six; Entrepreneurs, two; Empresas agreements and three project agree- Eje, 17; Corporate Financing, four; Selective ments, for a total of 574. Guarantees, 26; financial intermediaries, 11; Marketplace Electronic Equipment Program, Advisory Councils 29; Midas Program, 13; and tailored Sec- The Advisory Councils continue to maintain tor-Based Programs, five. their contribution to improved institutional The Advisory Councils and businesses performance, by operating as promotional they had referred participated actively in the and advisory entities for Nafinsa programs. Corporate Governance workshops organized In 2014 they conducted 124 Council ses- in the states of Quintana Roo (Cancún, 25 sions, at which more than 85 presentations companies, in May); Guerrero (Acapulco, 11 were made regarding topics related to devel- companies, in September), and Jalisco (Puer- opment banking, financial-economic mat- to Vallarta, 24 companies, in October). ¶

30 CORPORATE BANKING

Guarantees on Securities Instruments sos) to 1,000 million pesos per operation, ex- Nafinsa’s Guarantees on Securities Pro- cept in the case of financial intermediaries. gram continues to encourage businesses to improve their credit rating by issuing Structured Financing debt securities and obtaining more depth Structured credit provides financing through in the market, enabling them to place larg- a vehicle with a specific purpose in which er amounts for longer terms by accessing a companies monetize their asset portfolios, larger segment of investors. The Guarantees making it possible to isolate operational risk on Securities Program is promoted with se- and obtain higher credit ratings, without curities intermediaries, the Mexican Associ- negative effects on balances. This program ation of Securities Intermediaries, Mexican is directed at medium and large companies Stock Exchange and others, with the aim that generate portfolios with receivables. of promoting the debt securities market in Mexico. Financing of Etileno XXI Petrochemical Plant During May Nafinsa honored one of the This project has had an enormous regional guarantees, paying the holders of securi- and national impact during its construction ties from an issuance of guaranteed se- phase, generating a large number of jobs curities certificates in the amount of 157 (approximately 8,000). It is estimated that it million pesos, thus fulfilling its contracted will begin its operations at the end of 2015, obligations in due time and form. During creating approximately 3,000 jobs, and sub- 2014 the guaranteed loans (guarantees on stituting imports in the amount of approx- securities) granted by Nafinsa were moni- imately 1,500 million dollars annually. At tored. These loans guarantee an average of the end of 2014 the total amount of Nafin- 50% of the issuances of guarantees on se- sa credit disbursed was 257 million dollars, curities instruments; the guaranteed bal- and the remaining amount will be disbursed ance as of December 2014 was 132 million during 2015. pesos and the induced balance was 270 million pesos. Support for Sugar Industry In addition, with the aim of more vig- With the aim of providing financing to main- orously promoting debt issuances on the tain approximately 85,000 direct and indi- market, Nafinsa modified its Guarantees on rect jobs, Nafinsa granted a structured loan Securities Program in August 2014, increas- through a trust fund for up to 1,800 million ing its risk exposure from 35% to 50% of the pesos. The balance of the credit for Decem- issuer’s total assets. It also increased the risk ber 2014 amounted 930 million pesos, to fi- limit from 40 million UDIs (211 million pe- nance the operational costs of the refineries

31 direct jobs will be gen- million dollars, erated by the supported Ramones I y II project 800 petrochemical company 1,200 total cost

Financing to Petrochemical Company Financing of Projects In October 2014, Nafinsa granted a simple corporate loan of up to 390 million dollars Government Trust Fund in the State to a company in the petrochemical industry, of Campeche for rehabilitating and initiating operations Pemex Exploración y Producción (PEP) is a of a fertilizer plant in Coatzacoalcos, Vera- decentralized entity included in Pemex’s four cruz. This high-priority project for Mexico subsidiary entities for carrying out its activ- will generate over 800 direct jobs and 1,500 ities. A considerable portion of the activities indirect jobs during its rehabilitation phase. carried out by PEP takes place in the mari- time region known as Sonda de Campeche Financial Advisory Services and also in the city of Carmen, Campeche. During 2014 Nafinsa responded to two re- In February a short-term (60 calendar quests for technical valuation reports, thus days beginning on the date of the first dis- assisting in the placement of Certificados de bursement) loan was granted to a trust Participación (CPOs) on the Stock Issuance fund created specifically for this purpose Market, to the benefit of companies in var- by the Campeche State Government, in the ious sectors. amount of 500 million pesos, under the tra- ditional First-Tier Loan Program. The aim is Government Banking to seek continuity in operations in the re- During 2014 Nafinsa continued to ad- gion and to avoid the interruption of strate- minister loans previously granted to two gic services that would endanger workers, semi-public entities, Pemex and CFE, and it the population, the environment and Pemex continues to actively participate in manag- Exploración y Producción (PEP) installations. ing the guarantee granted to creditor banks that financed the construction of Terminal 2 of the Mexico City International Airport.

32 National Journalism Company Sustainable Projects Nafinsa authorized the granting of two sim- Nafinsa promotes new financing schemes ple loans to a national journalism company and investments from different sources to for up to 340 million pesos. The resourc- projects that generate a positive environ- es will be used for acquiring software and mental balance. Nafinsa grants short, medi- equipment, and expanding its online plat- um and long-term financing to national and form, as well as for working capital, the ac- international companies and financial inter- quisition of a land plot in an industrial park, mediaries from both the private and pub- and laying the foundation for and construct- lic sectors that promote projects in Mexico ing an industrial plant measuring 12,000 oriented toward ecological, economic and square meters. social development, based on making better use of natural resources and creating added Combined-Cycle Thermoelectric Plant value. Nafinsa authorized a loan for up to 75 mil- Nafinsa is a leading bank in structuring lion dollars, as part of syndicated financing and coordinating financing for sustain- for up to 800 million dollars, for the con- able and energy projects. During 2014 Na- struction and operation of a combined-cy- finsa’s portfolio consisted of the following cle thermoelectric plant with a capacity for sustainable and energy projects: generating 850-900 megawatts, in the state of Nuevo Leon. This is a five-year loan, and Eurus Wind Park three disbursements have been made for a The Eurus wind park, with an installed ca- total of 26.6 million dollars. pacity of 250.5 MW and located in the state of Oaxaca, made payments on the principal Iron Mineral Plant in May and November, in line with the estab- Nafinsa authorized a loan for up to 200 mil- lished repayment schedule, in the amount lion dollars for renovating an iron mineral of 1 million dollars, leaving a balance as of plant in the state of Colima. The total invest- December 31, 2014 of 18.3 million dollars, ment for this project will be approximately thus demonstrating a favorable repayment 320 million dollars. At the end of 2014, the record. loan contract was formalized. DEMEX 1 Ramones I and II Gas pipelines The Piedra Larga wind park, Phase 1, with Nafinsa structured this project together an installed capacity of 90 MW and located with Banobras and commercial banks, with in the state of Oaxaca, made payments on a total cost of 1,200 million dollars. The the principal in June and December, in line pipeline will be 307 kilometers long, and will with the established repayment schedule, in extend from San Luis Potosí to Guanajuato. the amount of 15.9 million pesos, leaving a Nafinsa participated with an amount of up balance of 665.5 million pesos, thus demon- to 200 million dollars, in a 20-year loan, the strating a favorable repayment record. same as for the other banks in this syndicate. Nafinsa has also been invited to participate Bii Stinú in the second stretch of this pipeline, to The Bii Stinú wind park, with an installed ca- extend for approximately 440 kilometers pacity of 164 MW and located in the state (from Nuevo León to San Luis Potosí). of Oaxaca, made quarterly payments on the

33 million pesos, amount MW, Eurus Wind Park of credit disbursements 205.5 installed capacity 351.3 made by Santo Domingo wind park

principal, in line with the established repay- sa in the amount of 74.1 million dollars, with ment schedule, in the amount of 23.8 mil- respect to its participation in the syndicat- lion pesos, leaving a balance of 679.1 million ed financing granted for the operation of a pesos, thus demonstrating a favorable re- co-generation energy plant with an installed payment record. capacity of 300 MW in the state of Tabasco. Quarterly payments on the principal were Santo Domingo Wind Park received, beginning in June 2014, in line The Santo Domingo wind park, with an in- with the established repayment schedule, in stalled capacity of 160 MW and located the amount of 0.2 million dollars, leaving a in the state of Oaxaca, made disbursements in balance of 73.8 million dollars, demonstrat- the amount of 351.3 million pesos, with the ing a favorable repayment record. last disbursement of credit made in June, leaving a balance of 713.5 million pesos. The Ventika and Ventika II Wind Parks project began its operations in April 2014. In April 2014 two simple loan contracts were signed for participating in the financing of Piedra Larga Wind Park, Phase 2 the Ventika and Ventika II projects, in the The Piedra Larga wind park, Phase 2, with an amount of 70 million dollars (50% for each installed capacity of 137.5 MW and located in project). The projects consist of the con- the state of Oaxaca, made disbursements struction and operation of two wind parks in the amount of 434.1 million pesos, with with a joint installed capacity of 252 MW, in the last disbursement made in October, the state of Nuevo León. The disbursements leaving a balance of 893.1 million pesos. of the loans were made, in the amount of 22.1 million dollars. Co-generation Energy Plant In March a transfer contract was signed, Sierra Juárez Wind Energy Park through which Santander transfers and irre- In June the contract for a simple loan was vocably transmits the credit rights to Nafin- signed, for participating in the financing

34 million pesos, amount MW joint installed of credit disbursements capacity of Ventika I y II made by Energía Sierra 32.2 252 wind parks Juárez wind park

of the Sierra Juárez energy project, in the veloper contacted insurance agents, initi- amount of 39.2 million dollars. The project ating a claim process that continues. consists of the construction and operation of a wind park with an installed capacity of Hydroelectric Station 155.1 MW in the state of Baja California. For the financing of the first Hydroelectric Disbursements were made in the amount of Station financed by Nafinsa, with an in- 32.3 million dollars. stalled capacity of 28.8 MW and located in the state of Nayarit, disbursements were Aura Solar I Photovoltaic Station made in the amount of 170 million pesos, The Aura Solar I Photovoltaic Solar Park, with leaving a balance at the end of the year of an installed capacity of 38.6 MW and locat- 293 million pesos. ed in the state of Baja California Sur, was inaugurated on March 26, thus becoming Mexico’s largest photovoltaic station. Investment Programs

§§ In July the first payment on the principal Direct Investment was received, in line with the established During 2014 various actions were taken in repayment schedule, in the amount relation to the Institution’s direct invest- of 38.5 million pesos, leaving a balance of ment portfolio: 532.7 million pesos, demonstrating a fa- vorable repayment record. §§ Nafinsa attended the assemblies of the business group in the agricultural sec- §§ In September Hurricane Odile arrived at tor established in 2012, in which reports the shores of Baja California Sur, affecting from the Board of Administration on ac- infrastructure in the area, including the tivities carried out and financial state- Aura Solar photovoltaic station. The de- ments for 2012 and 2013 were presented.

35 MW, Nayarit’s Hydroelectric 28.8 Station installed capacity

§§ With regard to the Institution’s share- Indirect Investment holdings in the social capital of a com- The corporate structure of Corporación Mexi- pany dedicated to banking security and cana de Inversiones de Capital (CMIC or Fund protection, a report was presented to the of Funds) is divided into investment vehicles National Banking and Securities Com- such as CMIC subsidiaries, with the partic- mission (Comisión Nacional Bancaria y ipation of new investors (national, foreign de Valores—CNBV) regarding actions tak- and Afores), making it possible to develop en in relation to the company’s results at strategic alliances at the national and inter- the end of 2013. national levels with renowned participants in the risk capital industry, and in this way, §§ With regard to the Institution’s share- contribute to addressing and meeting the holdings in the social capital of anoth- requirements of this important industry in er company in the banking security and Mexico. protection sector, on October 2 the Insti- The vehicles administered by CMIC up to tution’s Board of Directors approved the the first half of 2014 are: Mexico I Fund of beginning of procedures for requesting Funds, Fund of Entrepreneur Capital Funds authorization from the Secretariat of Fi- (Mexico Ventures I), Mexico II Fund of Funds nance and Public Credit (Secretaría de (composed of two vehicles, “Limited Part- Hacienda y Crédito Público—SHCP) to nership” and “CKD Trust Fund”), and Mexico diminish its participation in the company Ventures I Fund of Funds Annex. in question. During the second half of 2014, the CMIC created the Mezzanine Debt Fund of Funds, §§ The quarterly packages of financial state- with the aim of development an ecosystem ments and bank statements of the Fide- of mezzanine funds focused on Mexican icomiso de Apoyo al Mercado Intermediario SMEs, in which the administrators of these Valores (FAMIV 9173), were sent by way of funds not only provide medium-term subor- SHCP’s information system platform. dinated financing, but also support the ad-

36 million dollars is Nafinsa direct jobs created authorized to contribute with Fund of Funds to the Energy Fund of Funds 35,049 Mexico 1 contribution 100 Mexico

ministration of the company in terms of its Mexico II Fund of Funds institutionalization. The process of obtaining capital for the In addition, with the enactment of the placement of the trust fund vehicle of a country’s Energy Reforms, and considering Capital Development Certificate (CKD) on the opportunities for investing in address- the Mexican Stock Exchange was concluded, ing the country’s growing energy needs, the estimating a crossover during the first quar- CMIC created the Mexico Energy Fund of ter of 2015. Funds, focused on specialized funds in the energy sector. Nafinsa acquired a commit- Annex Fund to Mexico Ventures I Fund ment of 100 million dollars in this vehicle. of Funds Supports the entrepreneur capital funds as Mexico I Fund of Funds they contribute to the growth of companies This fund maintains commitments in 22 promoted in their rounds of capitalization. funds for a total of 274.6 million dollars. Of To date two co-investments have been es- these funds, nine are in their investment tablished, with a commitment of 2 million phase, and 13 are in disinvestment. This in- dollars and 1 million dollars of capital con- vestment vehicle has contributed to creating tributed. over 35,049 direct jobs in 125 companies in Mexico. Mezzanine Debt Fund of Funds Established on November 12, 2014 with the Fund of Entrepreneur Capital Funds aim of assisting in financing Mexican SMEs This Fund is designed for companies in through an innovative scheme of debt and their initial stages and involved in sectors capital. Nafinsa is authorized to commit 30 such as innovation, information technolo- million dollars for this fund. The target size gy, biotechnology and health sectors. As of for the fund is 2,000 million pesos. December 2014, the portfolio of the Fund of Entrepreneur Capital Funds consisted of Mexico Energy Fund of Funds ten formally-established funds and six di- The objective of this Fund is to invest in com- rect co-investments in companies, with a panies and projects emerging in response to commitment of 65.7 million dollars. The the country’s Energy Reforms, as a Federal partners in this Fund of Funds are Nacion- Government strategy. Nafinsa is authorized al Financiera through CMIC (40 million dol- to contribute 100 million dollars to this vehi- lars), the Secretariat of Economy (30 million cle. At the end of 2014, there were 11 funds dollars), and a contribution from the Andean administered directly by CMIC, with a com- Development Corporation (Corporación An- mitment of 99.27 million dollars. dina de Fomento—CAF) in the amount of 10 million dollars.

37 Figure 3

1,989 MW 1,600

1,400

1,200

1,000

800 341 MW 600

400

200

0 2010 2011 2012 2013 2014

9 wind parks 2 photovoltaic parks 1 mini-hydroelectric 1 co-generation plant 1,605 MW 55.4 MW 28.8 MW 300 MW

38 Programa Mercado Institucional de Results Deuda Alternativa Societaria (Midas) Nacional Financiera, as a promoter of sus- During 2014, meetings continued with the tainable energy use, has achieved the fol- Mexican Stock Exchange, Secretariat of lowing: Economy, Mexican Association of Securities §§ Has promoted new segments of ser- Intermediaries, suppliers of specialized ser- vices, entering into the financing of new vices with experience in successfully assist- schemes for generating electricity, such ing businesses in reaching the objective of as co-generation. issuing debt—including the primary audit- ing firms—and medium and large compa- §§ Has a diversified portfolio of projects, and nies around the country, through Nafinsa’s is promoting the development of 11 proj- regional offices and State Representatives. ects for generating renewable energy and The purpose of the meetings is to promote one co-generation project, with a com- the Midas Program and disseminate infor- bined installed capacity of approximately mation regarding the Program’s operating 2 GW, through long-term financing. rules, while emphasizing that this program will assist medium and large Mexican busi- §§ Has developed new financial schemes nesses in the industrial, commercial and that incorporate various participants into services sectors that make a commitment their structures and permit the viability to issue debt within a time period no longer and financial profitability of sustainable and than three years, through a work program energy projects. developed specifically for this purpose. During the first half of 2014, 21 eligible §§ Has worked together with foreign finan- companies were identified. Of those com- cial institutions and multilateral financial panies, three have been rejected; nine are in entities to provide incentives for large- the process of preparing their files; and nine scale development of renewable energies. have completed their files, which are in a process of analysis and decision-making. Ini- §§ Has actively participated in internation- tial financing has been authorized for three al forums on sustainable development companies. aimed at promoting efficient energy use, During the second half of 2014, the first the use of cleaner fuels, and the develop- Midas loan was granted to a telecommuni- ment of alternative energy sources. cations company for up to 80 million dollars. These resources will be used for investing in Nafinsa has an important portfolio of fixed assets, construction and working cap- projects focused primarily on wind, hydraulic ital. By the year’s end, 70 million dollars had and solar energy and co-generation. It is an- been disbursed. ticipated that Nafinsa will soon expand its fo- cus to include geothermal, energy efficiency, recycling, and waste recovery and treatment projects. ¶

39

INTERNATIONAL

Project Management ment bank, for technical assistance with The disbursement of resources correspond- financing strategies for mitigation of cli- ing to loans from International Financial En- mate change. Among the actions carried tities (IFEs) in which Nafinsa is the borrower out through this Technical Cooperation, reached the amounts of 625 million dollars two consultants were hired to provide from CAF, 36.5 million dollars from IDB, and assistance to the Corporate Financing 8.4 million euros from KfW, as of Decem- Department for the Los Ramones project. ber 31, 2014. Among the programs assisted during the year, the following are particular- Study on Development of Alternative Cor- ly noteworthy: porate Debt Markets in Mexico, by the In- vestment Funds Monitoring Department, fi- Assistance Program for Feasibility Studies for nanced by IDB, with 76,355 Euros Sustainable Projects, financed by IDB, with 1 §§ The IDB signed Agreement IFD/CMF- million dollars 37655992-13 with Bolsas de Mercado Es- §§ Nafinsa maintains Agreement ATN/OC- paña (BME) Innova, a Spanish company, 11073-ME with the IDB. This Technical to conduct a study of the Development of Cooperation (TC) was used to hire experts Alternative Corporate Debt Markets (Mi- in environmental and social areas to con- das). On April 9, 2014, BME/IDB presented duct studies on using resources from Nafinsa with a report on the study that Loan 2631/TC-ME of the Program for Fi- considers a roadmap with the transpar- nancing Renewable Energies, and also ex- ency, corporate governance and econom- perts from specialized firms in evaluating ic-financial requirements that companies processes and structuring for funding. must meet throughout the life of the This TC was concluded on November 30, loan. This complements the program’s 2014, and the total amount disbursed operating rules and the eligibility criteria was 975,310 dollars, or approximate- for accessing Midas. ly 98% of the TC. The amount disbursed during 2014 alone was 373,569 dollars. Obtaining resources in foreign currencies with financial and international develop- Program of Technical Assistance to Develop- ment assistance institutions, for the benefit ment Bank with Financing Strategies for Mit- of Nafinsa programs igation of Climate Change, financed by IDB, §§ Credit line 2631/TC-ME with “Clean Tech- with 0.135 million dollars nology Fund” (CTF), financed by IDB, with §§ Nafinsa maintains Agreement ATN-MC- 70 million dollars for the Program for 13341-RG with the IDB, as a develop- Financing Renewable Energies. This line

41 considers resources from the CCLIP line through the same program from Section from the IDB of at least 70 million dollars, II of this credit line of 10.7 million euros. and at least 70 million dollars from Nafin- sa. On April 30, 2014 the total amount of §§ Line not specified, through CAF, for 300 the credit line, 70 million dollars, was dis- million dollars. As of December 31, 675 bursed as an advance payment, with the million dollars had been disbursed at 30, IDB’s approval of the “Projects Program” 60 and 90 days, and paid during 2014. prepared by the Sustainable Projects De- partment. Financing in the amount of 50 Negotiation of new operations from inter- million dollars has been verified for the national financial entities Aura Solar I, Bii Stinú, Ventika, Ventika II The Clean Technology Fund (CTF) was nego- and DEMEX II projects. Verification is still tiated with the IDB, and loans and techni- pending for 20 million dollars correspond- cal cooperations with the KfW, for a total of ing to the Sierra Juárez Energy project and 523.6 million dollars, and 50 million pound the Eoliatec del Pacífico project, and their sterlings from the Department of Energy environmental and social proceedings are and Climate Change of the United Kingdom being reviewed by the IDB to determine of Great Britain and Northern Ireland. The whether it has “no objection.” following points are especially worth high- lighting: §§ CCLIP III Line with the IDB, Loan 2843/ OC-ME, with 100 million dollars for the §§ IDB Loan for 350 million dollars to fi- Program for Financing Renewable Energy nance the Program for Financing the Pro- Projects. At the end of December 2014, motion of Co-generation in Mexico. This 36.1 million dollars had been disbursed, loan was negotiated on June 3, 2014. The of the total credit line of 100 million dol- Program will consist of a global credit lars, under the reimbursement modal- operation that will contribute to the im- ity and corresponding to the projects as plementation of Nafinsa’s strategy in indicated here: 7 million dollars to Aura structuring and financing sustainable Solar; 28 million dollars to Mini-hidro San projects, to take advantage of opportu- Rafael; 44.9 million dollars to Eoliatec; 2.5 nities involved in natural gas production million dollars to Ventika and Ventika II; and to improve the transportation, stor- and 17.6 million dollars to DEMEX II. age and distribution of gas.

§§ KfW line of 31.2 million euros for the §§ Loans and Technical Cooperations with Environmental Improvement Program the IDB and CTF for financing the Pro- for SMEs. As of December 31, 2014, 20.4 gram for Geothermal Financing and Risk million euros of Section I had been dis- Transfer. This operation was negotiated bursed, using all the funds in this line. with the IDB on May 6, 2014. The pur- Of this amount, 11.7 million euros corre- pose is to promote diversification in en- spond to the Small Transport (Owner-Op- ergy generation and reduce dependence erated) Company Program. The remain- on fossil fuels. ing 8.7 million euros correspond to the Environmental Improvement Program for §§ Contribution of Capital from the Govern- Small and Medium-Sized Establishments ment’s Department of Energy and Cli- in Mexico, granted through Fide, through mate Change (DECC) for up to 50 million the Eco-Business Credit Program. In ad- pound sterlings. In May 2014, negotiations dition, 5.4 million euros were disbursed of the Memorandum of Understanding

42 million dollars had been million euros had been disbursed for the Program disbursed for the 36.1 for Financing Renewable 20.4 Environmental Improvement Energy Projects Program for SMEs

(MOU) were reactivated, for receiving a gy and Financing of Impact. During the As- capital contribution from the Internation- sembly, bilateral meetings were organized al Climate Fund (ICF) of the Department with the Instituto de Crédito Oficial (ICO), of Energy and Climate Change of the Gov- Corporación Financiera Nacional de Ecuador ernment of the United Kingdom of Great (CFN) and representatives of the Inter-Amer- Britain and Northern Ireland, to finance ican Development Bank (IDB). In addition, a Program for Energy Efficiency in SMEs, in the framework of this Ordinary Meeting, with participation by Sener, Fide and IDB. it was agreed that Nafinsa and Bancomext The general objective of the program is to will host the 45th Ordinary Meeting of the finance and support Mexican SMEs in im- General Assembly and the 42nd Meeting of proving energy efficiency, providing them Alide Coordinators, to be held on May 20-22, with financing for investing in efficient 2015 in Cancun, Quintana Roo. technologies and providing consultation Also, on June 2-5, 2014, the Institution on ways to operate efficiently and reduce participated in ICO’s XII International Pro- carbon emissions. gram of Development Bank Directors, orga- nized in Madrid, Spain by the Instituto de International Development Assistance Crédito Oficial (ICO) of that country. The main Latin American Association of Financial Insti- objective was to learn about the scheme for tutions for Development (Asociación Latino- an annual seminar, to be replicated at Naf- americana de Instituciones Financieras para insa, and in this way, present the work being el Desarrollo—Alide) carried out in the various departments. In 2014 Nafinsa participated in the 44th Or- Nafinsa, in cooperation with Alide, pre- dinary Meeting of Alide’s General Assembly, sented a seminar on Corporate Risk Man- held on May 8-9 in the Colombian city of agement on September 10-12, 2014, with Cartagena, and organized by Financiera del 15 functionaries from Nicaragua, Paraguay, Desarrollo (Findeter). The central topic of the Peru, Costa Rica and El Salvador participat- event was Knowledge, Innovation, Technolo- ing. Information and experiences regarding

43 administration, evaluation, monitoring and and Guarantees. As a result of the work control of credit, operational and market meetings at the event, commitments were risks were exchanged at the seminar. established for organizing the Group’s An- nual Meeting in 2015. Nafinsa was able to Asia-Pacific Economic Cooperation (APEC) include Green Financing as one of the topics The 11th Annual Meeting and Conference to be discussed throughout the year. of Financial Institutions of Asia-Pacific Eco- Nafinsa also participated in the meeting nomic Cooperation (APEC) associated with of CEOs from the Montreal Group, held on SMEs was held in Taipei City on July 16-18, October 9, 2014, at the Canadian embassy in 2014. The theme for the event was to cele- the United States, located in Washington, D.C. brate a Commitment to Finance and Assist Innovation in SMEs. Also worth highlighting International Development Finance Club is the bilateral meeting held on July 15 with (IDFC) the event’s organizers, the Taiwan Coopera- Nafinsa participated in preparing the IDFC’s tive Bank and Taiwan Business Bank. first official publication entitled Best Practic- es in Development Finance, and the article Montreal Group “Green and Climate Finance Mapping,” pre- The Third Annual Meeting of the Montre- sented at the Climate Change Summit in al Group was held on April 7-9, 2014, with New York, in the United States, on Septem- participation by functionaries of the seven ber 23, 2014, and at the 20th Conference of development banks and various Nafinsa the Parties of the UN Framework Conven- departments. A highlight of the meeting tion for Climate Change in Lima, Peru on De- was the vote to include an eighth develop- cember 11, 2014. In addition to participating ment bank: Finnvera of Finland. Participants in preparing the contents of these publica- at the meeting exchanged experiences re- tions, Nafinsa participated in the IDFC’s garding such key topics as Key Performance third annual meeting held on October 12 at Indicators, Financing of Intangible Assets, the Metropolitan Club in Washington, D.C.

44 Inter-American Investment Corporation (IIC) da-Pró) of Bolivia, met with Nafinsa func- Nafinsa joined this entity in 2014, and will tionaries to learn more about the guar- host the Ninth International Conference of antees program, credit and the factoring Corporate Governance to be held in Mexico process. City on March 4-6, 2015. §§ On September 11-12 the seminar enti- Memorandum of Understanding tled Administration of Projects Financed In the framework of a visit by Japan’s prime by International Financial Entities was minister to our country, Nafinsa’s CEO and organized for five functionaries of Bande- the president of JBIC signed a Memorandum sal, El Salvador’s Development Bank, for of Understanding at the National Palace on the purpose of sharing Nafinsa’s experi- July 25, with Mexico’s President and the Jap- ence in obtaining and implementing IDB anese Prime Minister as witnesses. credit lines.

Seminars §§ On September 22-23, Cofide’s develop- §§ In February, functionaries of Corporación ment manager held meetings for learn- Financiera de Desarrollo (Cofide) of Peru ing more about Nafinsa’s experience in participated in a seminar at Nafinsa for entrepreneurship, investment vehicles the purpose of learning more about the for venture capital, Mexico Venture I Fund Institution’s structure and operations. In of Funds, capital for consolidated, grow- particular the seminar addressed the im- ing businesses, and strategies for assisting plementation of programs with financing entrepreneurs. from international financial entities, such as the Renewable Energy program and §§ On November 19, 2014 the Corporación the Energy Efficiency in SMEs projects. Financiera Nacional (CFN) of Ecuador sent a request in writing to Nafinsa for §§ On April 3, 2014 the Development Bank of a seminar to learn more about Nafinsa’s Jamaica Limited (DBJL) requested a semi- factoring product. A delegation of six nar from the DOFI for learning about the CFN functionaries visited Nafinsa’s facil- credit products operated by the Institu- ities on December 17-19. tion. On May 28 a delegation of four DBJL functionaries visited Nafinsa’s facilities. Financial Agent As of December 31, 2014, Nafinsa’s port- §§ On July 20-23 Nafinsa functionaries folio as a financial agent consisted of 22 held meetings with functionaries of loans: nine from the International Bank for Hong Kong Mortgage Corporation Limit- Reconstruction and Development (IBRD), 10 ed (HKMC) to present their experiences from the Inter-American Development Bank in the area of guarantees and risks. The (IDB), and three from the International Fund meetings took place at HKMC’s facilities for Agricultural Development (IFAD); plus in Hong Kong. 12 donations: 10 from IBRD and two from IFAD. The total amount of the portfolio was §§ On August 14 the Executive Director of 5,035.6 million dollars. the Fundación para la Producción (Fun-

45 In 2014 the following operations were concluded:

Loan No. Project Name Closing date Amount (millions of dollars)

7859-MX Compensatory Education Project June 30, 2014 100

7948-MX Quality Schools Program, Second Phase June 30, 2014 200

7652-MX Sustainable Rural Development Project June 15, 2014 50

7996-MX Program for Efficiency in Lighting and Electric Appliances Dec. 1, 2014 250.6

2993/OC-ME Program for Improving Productivity in Mexico Dec. 1, 2014 800

Project for Sustainable Development for Rural and 674-MX Sept. 30, 2014 25 Indigenous Communities in the Semi-arid Northwest

Total 1,425.6

During 2014 four loans and one donation cation (SEP) in charge, for 350 million dollars; were formalized. With regard to the loans, the Program for Compensatory Education, two were with the IDB to finance the Pro- with the National Council for Education De- gram for Competency-Based Training of Hu- velopment in charge, for 150 million dollars; man Resources, for 170 million dollars, with and the Project for the Development of Sus- the Secretariat of Public Education (SEP) in tainable Technology, with the Secretariat of charge; and the Program for Strengthening Energy in charge, for 18.4 million dollars. Public Finances, with the SHCP in charge, As a result of the above, 380 supervision for 800 million dollars. The other two loans missions by International Financial Entities were formalized with the IBRD to finance the (IFEs) were handled, and 152 were field visits. Third Phase of the Adjustment Program for Especially worth noting is the visit made by Educational Reform in Middle-Higher Educa- the president of the International Fund for tion, with the Secretariat of Public Education Agricultural Development (IFAD), to observe (SEP) in charge, for 300.7 million dollars; and the projects financed by this entity in the the Project for the Social Protection System state of Oaxaca, as well as the launching (Prospera), with the Secretariat of Social De- of the Fishery and Oceanography Research velopment in charge, and the Prospera Na- Ship in Mazatlán, Sinaloa, inaugurated by tional Coordination, for 350 million dollars. Mexico’s President. With regard to the donation formalized The main sectors financed by the finan- with the IBRD, it will be used to finance the cial entities were energy, agriculture, social, Reduction in Emissions from Deforestation education, environment, health and govern- and Forest Degradation (REDD+), with the ment sectors. Disbursements as of Decem- National Forestry Commission in charge, for ber 2014 amounted to 1,519 million dollars, an amount of 3.8 million dollars. while revenue from commissions charged as Two loans and one donation were negoti- financial agent amounted to 210.4 million ated with the IBRD to finance: the Program pesos. ¶ for Strengthening Autonomy in School Man- agement, with the Secretariat of Public Edu-

46 TREASURY AND MARKETS

Treasury At the end of 2014, a total of 22,000 mil- Funding lion pesos in Development Bank Securities In order to assure that the Institution con- Certificates were in circulation, and of that sistently has the necessary resources and amount, 7,000 million pesos were issued at is able to distribute them to its business a three-year term, with a revisable interest areas in the best cost and term conditions, rate, and 15,000 million pesos at a ten-year the Treasury uses a funding strategy based term, with a fixed interest rate. on diversifying funding sources and carrying With regard to funding in foreign curren- out hedging operations. cy, Nafinsa continued using its Program for In line with the strategy initiated during Certificates of Deposit through its London the last quarter of 2013, the Treasury con- branch as the primary vehicle for funding, tinued in 2014 to issue Development Bank with a maximum program amount of 2,000 Securities Certificates through syndicated million dollars, but significant amounts of auctions, which has made it possible to: funding were also provided through term deposits from clients in the Promotion Desk, §§ Improve liquidity conditions. and also disbursements in working capital lines in effect with foreign counterparts. §§ Develop a longer-term development banking debt curve, transmitting funding Balance Management benefits to the industry. Nafinsa maintained its strategy of mini- mizing the impact from changes in interest §§ Promote the comprehensive develop- rates, using the necessary hedging opera- ment of the securities market and the tions to protect the Bank’s revenue corre - national financial system. sponding to the financial margin, thus meet- ing the Treasury’s objectives of ensuring that §§ Foster the efficiency of local public debt balance risks remain within approved limits, markets, constantly seeking to bring effi- while strengthening the Bank’s capital. ciency to the process of discovering prices. Investments §§ Achieve greater participation by inves- In national currency there is a debt portfolio tors. structured primarily with Federal Govern- ment certificates, which contributes to gen- erating revenue; a liquidity portfolio com- §§ Enhance operations dynamics in the sec- posed primarily of government securities and ondary market for these instruments. which is used as a guarantee for Banxico’s

47 payment systems; and a portfolio of corpo- Markets rate certificates that contributes to the de- Promotion of Markets velopment of the private debt market. Work in this area was carried out in line with The generation of profit through the fi- the defined strategy and new goals for mea- nancial margin in dollars has come from suring revenue in support of the Money, For- the foreign currency debt and investment eign Exchange and Treasury Desks, consist- portfolios. These are strategic assets that ing of: have been maintained as one of the hedging instruments for the Institution’s balance, §§ Rate differential in repo operations in cor- through long-term funding lines. porate and banking (non-Nafinsa) securi- To take advantage of conditions in ties and direct government operations on international markets, the basic strategy the Money Desk. in terms of liquidity has been to optimize the profitability of surpluses in US dollars, §§ Rate differential in direct government by implementing synthetic investments in and corporate operations in the National pesos. Treasury.

London Branch §§ Rate differential in trading operations as Derived from the increase in the amount of Market Promotion. Nafinsa’s Certificates of Deposit (CDs) in For- eign Currency Program to 2,000 million dol- §§ Rate differential in funding in dollars for lars, the London Branch has maintained its the International Treasury. efforts in promoting and seeking new clients as well as in longer-term placement and is- §§ Price differential in the buying-selling of suance, to improve the Institution’s debt pro- foreign currency on the Foreign Exchange file, maintaining low funding costs in foreign Desk. currency for the Institution, a situation that has characterized the CD Program. An achievement of 159% marked the end of During 2014 the Program began with the 2014, obtained through ongoing promotion use of its additional capacity, reaching a bal- work with investment funds, Afores, insur- ance above 1,600 million dollars by mid-year. ance companies and the country’s primary The total volume operated during that peri- public and private treasuries, offering the od was over 16,000 million dollars. It is espe- Institution’s financial services and various cially worth noting that in November, for the banking, government and corporate instru- first time in the Program’s history, a five-year ments at short, medium and long terms, issuance in dollars was made, opening up while supporting the institutional needs for investment horizons for a range of investors funding at competitive market levels. with an appetite for risk in Mexico at terms This activity generated new business longer than one year. opportunities, which together with active The financing of CDs has contributed to a networking with our most representative significant amount of financing with foreign clients, contributed to the client portfolio currency, which has in turn helped to main- of 2,032 active contracts maintaining an tain a solid financial position and presence average total of 307,849 million pesos in international markets. at the end of 2014. In addition, funding through the issuance of Nafinsa treasury securities required by the client portfolio, was maintained at an average of 60% of the Institution’s total.

48 milllion pesos, total average balance through Market 307,849 Promotion

Mutual Funds and safe access to the distribution of Cetes- In compliance with the objective of promot- directo Government Securities. In addition, ing access by small and medium investors ongoing presence has been maintained to the securities market, the assets adminis- in social networks, the Interactive Muse- tered by Nafinsa’s Funds Operator amount- um of the Economy (Museo Interactivo de ed to 36,612 million pesos at the end of Economía—MIDE), KidZania educational 2014, in comparison to the total at the end and entertainment center, and various ex- of December 2013 of 28,395 million pesos. hibitions around the country, aimed at pro- The figure for 2014 is equivalent to a 28.94% moting the new Cetesdirectoniños product increase over the previous year, and surpass- focused on promoting a tradition of saving es the outstanding goal of 33,500 million pe- beginning in childhood. sos by 9.29%. This was achieved through the At the same time, and in adherence to the distribution of equities from the ten funds Institution’s tradition of Quality and Innova- administered and with 30 contracts signed tion, efforts have been made in a process of with 24 commercial brands in the securities ongoing technical and operational improve- market. ment of products, aimed at client satisfac- tion. The synergy of all these efforts has con- CETESDIRECTO tributed to the progressive consolidation of From January to December of 2014, efforts the presence of Cetesdirecto in the financial continued in positioning products through world. During 2014, the number of clients the generation of new functionalities, such registered increased by 17%, from 97,657 at as the programming of debt operations and the end of 2013, to 113,938 at the end of same-day availability of resources, email 2014. And, the total number of clients con- campaigns and contract schemes such as tracted in 2014 was 22,832, surpassing the the Debit Card that allows the public easy outstanding annual goal of 17,000 clients. ¶

49 50 LEGAL AND FIDUCIARY OPERATIONS

Corporate and Business Legal Operations development and signing of Securities Col- The objective of this area is to give certain- lateral and Deposit Contracts for formalizing ty to legal processes involved in granting the constitution of guarantees, when credit credit, financial and risk capital markets, and lines and discount lines are granted by Naf- international and advisory matters. Also, as- insa through the corresponding entities. sistance was given to various departments In addition Framework Contracts were of Nafinsa such as in preparing and review- formalized for Derived Financial Operations ing contracts for national and foreign oper- and ISDAS (International Swaps Dealers As- ations. sociation Master Agreement), signed with Nafinsa’s legal activities led to some im- various local and foreign financial institu- portant results, including the following: the tions, with special support to the process of implementation of Nafinsa’s syndicated auc- migrating the respective system. Legal ad- tions, with the placement of 22,000 million visory services were provided for the audits pesos; participation in the formalization of conducted by various authorities. Support issuances; implementation of updates to the was given to develop the terms of Nafinsa’s Program for Direct Sale of Certificates to operations instruments as a Federal Govern- the Public (SVD), including consultation and ment financial agent. review of legal instruments required by au- In addition, the first investment fund thorities, other entities in the financial sector, based on the new Law on Investment Funds clients and service providers; as well as the was constituted in August 2014, and was formulation of advices towards financial au- named Nafinsa’s Investment Fund in the En- thorities in compliance with applicable provi- ergy Sector, the Fondo de Inversión de Renta sions, updates and services corresponding to Variable (ENERFIN), specializing in Energy the Securities Debt Support Program. Sector products, in accordance with Energy Tasks also included the review, negotia- Reforms. tion, validation and updating of Framework Also, legal advisory services were provid- Contracts for Operations to Buy-Sell Stocks ed, together with support for implementing and Repos, and Contracts for Banking De- the Secondary Market Auctions Program posits of Titles in Commercial Commission (Subasec) to promote liquidity in corporate and Administration; legal services for busi- and government debt securities, including ness schemes and advisory services in the hiring activities with intermediaries partic- areas of corporate banking, financial agency ipants and brokerage firms that provide ne- operations and financing with international gotiation systems. elements, granted by the Institution or that Other tasks included coordinating, ad- the Institution anticipates receiving; and the vising and implementing activities for de-

51 signing and implementing an assistance Federal Law on Transparency and Access to scheme to motivate the list of corporations Public Government Information (LFTAIPG) promoting investment in the National Secu- The Liaison Unit carried out various actions rities Registry, in compliance with provisions from January to December 2014. For exam- in the Law on the Securities Market. ple it provided the coordination for updating As a result of the new businesses initiat- the information published on the website ed by Nafinsa, it has been necessary to create for Transparency Obligations. This work was legal instruments for developing corporate carried out in due time and form, in accor- business schemes, which have allowed Na- dance with that established in the LFTAIPG. finsa to participate in syndicated loans and The Institution received and responded to grant financing to projects for generating to a total of 221 requests for access to in- wind energy and other alternative energies. formation during 2014. The most frequent Nafinsa has also signed cooperative topic of these requests refers to the results agreements with various institutions such of Nafinsa’s primary activities, as well as as Canacintra, Pemex and Coparmex, and matters associated with statistics and ad- has granted loans to Pemex, Financiera Ru- ministration. ral and Infonacot, among other important During 2014 citizens submitted 21 re- operations. sources review applications to the Federal Institute of Access to Public Information and Governmental Normativity Data Protection (Instituto Federal de Acceso Regarding to Financial Reforms, the follow- a la Información y Protección de Datos— ing actions were carried out: IFAI), from these 18 were resolved during the same year. Subsequently, Nafinsa’s In- §§ An analysis of the impacts from Finan- formation Committee complied with eight cial Reforms in each of Nafinsa’s depart- resolutions (three revocations and five mod- ments. ifications) issued by IFAI. And the other ten applications corresponded to six confirma- §§ An analysis of the immediate actions in tions and four dismissed applications. Financial Reforms to the legal framework for development banking. Legal and Collecting Disputes and Credit De- partment §§ Two presentations to Nafinsa personnel Nafinsa ratified its commitment to promote regarding Financial Reforms. and direct legal actions that contribute to achieving the Institution’s objective as a de- §§ A proposal was developed for modifica- velopment bank, in line with the applicable tions to Nafinsa’s Organic Regulations, legal normative framework, by providing legal to be approved by the Board of Directors, services, recovery of the disputed portfolio, and then sent to the Secretariat of Fi- and the design of legal defense strategies for nance and Public Credit. preventing or minimizing economic impacts. It has thus been possible to diminish the §§ A book entitled La Reforma Financiera co- amount of the disputed portfolio and the mentada was written, with a prologue by contingencies derived from legal proceed- the Secretary of Finance and Public Cred- ings brought against the Institution, reduce it, and with the cooperation of Nafinsa accounting provisions and apply the liber- attorneys. The book was presented in De- ated resources to projects having economic cember 2014 by the Assistant Secretary and social impact. of Finance and Public Credit.

52 Also, an outstanding achievement during Desk and 7.6 billion pesos in Nafinsa’s 2014 was the successful implementation of Funds Operator, signifying a 13% increase the Nafinsa’s Marketplace Electronic Equip- in the liquid investment of the Institution’s ment Market platform, with an extraordi- fiduciary businesses, when compared to last nary contribution through legal consulta- year. Of the remaining resources, 81.9 billion tion and implementation provided to the pesos are deposited in the Treasury of the Institution’s areas involved. Federation and 50 billion pesos with other Continuity has been successfully provid- financial intermediaries. ed to the coordination of a single point of During 2014 a total of 27 trust funds entry to legal services in relation to banking were established, supporting the implemen- formalization, as the “front” for the Legal tation of important schemes for the current Disputes and Credit Department, Corporate administration in financial, energy and com- and Business Legal Department, and Fidu- munications areas, and in fact, assisting ciary Department, in relation to the Institu- various investment products and services in tion’s business areas. other areas in the Institution. Regarding the safekeeping and adminis- tration of securities and cash, new contracts Fiduciary Operations were formalized during the year with the At the end of 2014 the Fiduciary managed country’s Judicial Branch, signifying an in- 492 businesses, which total patrimony in crease in the assets in safekeeping of more trusts reached a historic figure of 1.08 billion than 12,000 million pesos. The total assets pesos, representing a 16% increase over the under safekeeping amounted to more than amount for the end of 2013. This means that 148 billion pesos at the end of 2014, repre- Nacional Financiera ranks second among the senting 20% more than the 123 billion pesos country’s fiduciary institutions in terms of at the end of 2013. participation in the fiduciary market, main- The revenue resulted from fiduciary activ- taining 18% of the country’s total patrimony ities in 2014 rose to 177.4 million pesos, or in trusts and 70% of the total patrimony in 2.6% above the amount obtained in 2013. Of trusts administered by development banks. the total for 2014, 169.4 million pesos cor- From the total patrimony managed, 238.3 responded to professional fees for fiduciary billion pesos (22%) correspond to liquid services, and 8 million pesos to commissions resources in trusts, of which 98.7 billion for safekeeping and administration of secu- pesos are invested in the Institution’s Money rities and cash. ¶

53

OPERATIONS SUPPORT

Quality Management and Organizatio- Human Capital Development nal Culture With the goal of maintaining the Institution’s Talent detection and gender equity dynamic of growth and qualitative changes, Nafinsa has a model for managing human Nafinsa maintains its strategy of ongoing capital that is based on the development of improvement in its Quality Management competencies and the ongoing evaluation System, in developing human capital, in of personnel’s potential. This made it possi- strengthening risk management, and in the ble to cover 38% of vacant positions during incorporation of an appropriate systems in 2014 with personnel already working in the its technological platform for efficient opera- Institution, thereby reducing recruitment tion of its programs. costs and optimizing investment in person- nel. Vacant positions were covered in accor- Quality Management System dance with public policies corresponding to With 14 years of operation, Nafinsa’s Quality government programs and designed to pro- Management System has been consolidated mote gender equity, gaining the promotion as an ongoing tool for analysis, evaluation 48.5% women. and improvement of processes. It has been Also, Nafinsa has a program to promote useful to develop and cover regulatory ele- the development of talented young people, ments and institutional observance, includ- through professional practical experience ing the internal control model, operational and social service. The Institution hired risk management, and compliance with the 23 young people for ongoing positions, various programs implemented by the Sec- representing 17.6% of those hired during retariat of Finance and Public Credit (SHCP) 2014. and the Secretariat of Public Service (SFP), in- cluding the Program for Accessible, Modern Government (PGCM). In late November 2014, an external quality audit was conducted, therefore the institution got an extension of its certificate of compliance with stipulations in Standard ISO9001:2008 for another three-year period.

55 Figure 4 Nacional Financiera’s governance structure

PERSONS RESPONSIBLE FOR AUTHORIZING GUIDELINES AND INDEPENDENT OVERSIGHT

BOARD OF DIRECTORS

SUPPORT ENTITIES

Internal Control Markets and Risk Administration Financing and Credit Auditing Committee Risk Management Human Resources and Institutional Executive Credit Committee Committee Development Committee of the Board of Directors

Persons responsible for detailed design and control

Chief Executive Officer

Internal Control Entity Risk Management

Internal Auditing

Internal Comptroller’s Office Regional Promotion and Institutional Relations Department Financial Department Financing Credit Department Department

Corporate Banking Department Administration Legal and Fiduciary and Finance Department Department

Figure 5 Nafinsa consolidates its internal control system by adopting best corporate practices

ADMINISTRATION AND PLANNING Board of Directors, Auditing Committee, Office Regulations established by authorities: of the Chief Executive Officer, Committees Evaluation SHCP/CNBV - Circular Única de Bancos for Internal Decision-Making and Maintenance SFP - Administrative Manual of General Application in Internal Control SUPERVISION AND ONGOING IMPROVEMENT MEASURES Internal and External AuditsINTERNAL COMPTROLLER’S Supervision OFFICE, INTERNAL AUDITING, OIC—SFP and Monitoring

INFORMATION AND COMMUNICATION MANAGEMENT Internal and external information system, Accounting Information System (SIF), Data Warehouse (DWH), Accountability and Communication

RISK MANAGEMENT Risk Management Committee Risk Management Risk Management Department

Administration Decision PET Technology Human and Strategic Corporate of Processes Making Control Environment ISO 9001 Material Resources Entities Planning Practices Model and Activities

56 Corporate Governance compliance with regulatory policies and pro- Nacional Financiera’s corporate governance visions. structure (Figure 4), which is the founda- At Nafinsa the Institutional Model of Inter- tion for its Internal Control System (SICOI), nal Control, based on best practices in Internal is composed of a Board of Directors as the Control, is schematically described in Figure 5. highest-level decision-making body, with its activities supported by a number of Com- mittees, in which external members par- Internal Comptroller’s Office ticipate with the aim of achieving greater Under this scheme, within the component objectivity and healthy equilibrium in deci- of supervision and ongoing improvement, sion-making, adhering to the best practices the Institution’s operations are character- in corporate governance. These committees ized by the incorporation of best corporate analyze topics associated with the Institu- practices, particularly the establishment, tion’s operations, and include: monitoring and verification of adequate internal control mechanisms, through the §§ Committees associated with business Standardized Method of Internal Control As- operations, focused on financing, credit sessment (MESE), developed by the Internal and venture capital. Comptroller’s Office. During 2014, the Institution, through the §§ Administrative, control and information Internal Comptroller’s Office, monitored the committees. Especially worth mention is performance of the Institution’s processes the Human Resources and Institutional through the MESE, confirming that in gener- Development Committee (CRHYDI). al terms, the processes have reasonable, ap- propriate control mechanisms, in line with §§ Committees associated with internal the application of Agendas of Control Rou- control and risk management. Especially tines (ARC), which constitute a self-manage- worth highlighting is the Risk Manage- ment tool for assuring the adequate imple- ment Committee (CAIR), whose funda- mentation of basic activities, in accordance mental objectives are to manage the with that established in the Operations risks to which the Institution is exposed, Manuals. and to assure that operations are in line The contents of the “Guidelines for the with the desired risk profile, the risk man- Institutional Model of Internal Control” ad- agement framework, and the limits to dress what is established in the Circular risk exposure previously approved by the Única de Bancos published by the National Board of Directors. Banking and Securities Commission (CNBV) and its modifications as of September 24, Internal Control System 2014, as well as that established by the Sec- At Nafinsa, the objective of the Internal Con- retariat of Public Service (SFP) through its Ad- trol System is to assure that the Institution ministrative Manual of General Application has, within its general operational strate- on Internal Control (MAAGCI), published in gies, mechanisms and standards for ongo- the Official Gazette of the Federation (DOF) ing evaluation of specific operations in each on July 12, 2010, with the most recent mod- process. It must verify that they are imple- ification made on May 2, 2014. mented with reasonable security in three This update contemplates substantial main categories: effectiveness and efficiency changes derived from Financial Reforms, in operations, reliability of information, and such as: the inclusion of the Institution’s In-

57 ternal Auditing Department, modifications ment during 2014, and through the Internal of the Internal Control Body’s functions, and Comptroller’s Office, coordinated the issues the obligation of functions of the Auditing of Focalized Transparency and Guidelines for Department and Committee, among others. Integrity and Ethics. Especially worth men- The Training Program on Prevention of Il- tioning is the process of updating the com- legal Operations was given to all personnel, position of the Ethics Committee and the ap- employees and functionaries, during August proval of the 2014 work program, as well as and September, and concluding during the the broadcasting of the Code of Conduct by first half of October, with highly satisfactory intranet and at nafinsa.com. In this regard, results in institutional participation, specifi- the Unit of Transparency and International cally reaching 99.9% participation. Cooperation Policies, which falls under the Finally, as part of the Federal Public Ad- SFP, granted the Institution a compliance ministration, the Institution addressed the score of 100. ¶ Program for Accessible, Modern Govern-

58 FINANCIAL RESULTS

Despite the uncertain context and diminish- At the end of December 2014, Nafinsa’s ing economic activity, Nafinsa surpassed its loan portfolio was at 140,618 million pesos, expectations for revenue in 2014, obtaining of which 1,892.3 million pesos corresponds a net profit of 1,648 million pesos (Figure 6), to the overdue loan portfolio, signifying an equivalent to a 7.3% nominal return on cap- Overdue Portfolio Index of 1.26%. ital. The Institution’s equity capital amount- The overdue loan portfolio at risk, at the ed to a total for the end of the year of 22,942 end of 2014, was at 1,892.3 million pesos, million pesos, representing 6.5% nominal concentrated primarily in the IF Mod. “B” growth against the total revenue of the pre- portfolios, with 1,705 million pesos (90.10%). vious year. Also, 82.8% of the overdue loan portfolio In addition the Institution’s financial (1,565.9 million pesos) is concentrated in situation demonstrates solid indicators, the Homex, Urbi and GEO “AAA” Trust Funds, including the following: with activity in housing development. This situation has caused the Institution to Indicators December register the highest overdue loan rates in the 2014 last ten years. (Figure 7).

Overdue loan portfolio / Risk portfolio 1.35% Comparison with other Banks 194% Reserves / Overdue loan portfolio The Overdue Portfolio Index of 1.26% in De- cember 2014 places Nafinsa just above the Growth in financing to private sector -7.1% (nominal) 1.23% average for other development banks, with the exception of the SHF, which has an Financing granted to MSMEs / Total fi- 80.3% nancing to private sector Overdue Portfolio Index of 6.73%. (Figure 8). Nafinsa compares favorably with the Financial penetration (Amount of pri- 1.65% 3.39% average for commercial banks, as vate sector portfolio / GDP) published by the National Banking and Se- Regulatory capital ratio 14.7% curities Commission (CNBV), as well as with Exchange Rate 14.74 the main commercial banks: Banamex, BBVA Bancomer, Banorte, Scotiabank Inver- lat, HSBC, Inbursa and Santander. The portfolios of Modality “A” non-bank- Overdue loan portfolio at risk ing financial intermediaries and banks, Nafinsa’s 2014 Institutional Program consid- Public Sector financial intermediaries ers, within its main indicators, maintaining and Decentralized Entities, which make low levels of overdue loan portfolio at risk. up 51.11% of the total portfolio at risk, is

59 Comparison of Units Sold by Year

DESCRIPTION 2008 2009 2010 2011 2012 2013 2014 Product 1 108 570 140 825 1,359 1,780 1,648

Figure 6 Net Profit (Millions of Pesos) Product 1 1,780 1,800 1,648

1,359 1,350

1,040

900 825

570

450

108

0 2008 2009 2010 2011 2012 2013 2014

Figure 7 Composition of Overdue Loan Portfolio (Millions of Pesos)

Former employees 0.02%

Programs 9.01% Emergencies 0.86%

Non-banking financial intermediaries 90.10%

60 Figure 8 Overdue Loan Portfolio in Banks in Mexico

8.00%

7.00% 6.73%

6.00% 5.71%

5.00%

4.00%

3.39% 3.32% 3.09% 3.00% 2.86% 2.87% 2.62%

2.00%

1.33% 1.26% 1.23% 0.99% 1.00% 0.64% 0.54%

0.00 SHF HSBC Nafin Inbursa Banorte Banobras Banamex Banjercito Santander Scotiabank Bancomext Banca Comer BBVA Bancomer Banca de Desarrollo

maintained without an overdue loan port- amount of 337,754 million pesos which, in folio. turn, consist of 176,758 million pesos from With the exception of the trust funds as- repo creditors, 133,000 million pesos corre- sisting housing development, the levels of sponding to internal debt, and 27,996 mil- the overdue loan portfolio have been con- lion pesos corresponding to external debt tained and reduced, basically as a result of and other liabilities. the continuity in planning strategies imple- In addition Nafinsa has a Financial Agent mented. balance of 202,512 million pesos, an amount Nafinsa has brought together a team representing a growth of 25,689 million pe- of executives specializing in payment col- sos during the year, equivalent to 15%. The lection, supervision of first and second-tier balance for stand-by guarantees reached loans and projects, as well as selective and a level of 46,282 million pesos, with a 17% securities guarantees, and this has enabled growth rate when compared to the previous the Institution to limit and reduce delin- year, due to the dynamism and acceptance quency rates, through both prevention and of Nafinsa’s guarantees program. correction. An analysis of Nacional Financiera’s fi- nancial statements for the 2014 period is Overall Situation provided in this report’s Annex B, “Report As of December 2014, the Institution’s as- on Consolidated, Audited Financial State- sets had reached a total of 359,289 mil- ments with Subsidiaries, as of December lion pesos, financed with liabilities in the 31, 2014.” ¶

61 62 INTERNAL CONTROL ENTITY

Nafinsa’s Internal Control Entity (OIC)fulfills Evaluations and Diagnostic Assessments: its functions in accordance with its sphere of Actions were focused on: responsibility and the guidelines established » Promoting policies and strategies for by the Secretariat of Public Service (SFP), improvement. and specified in its Internal Regulations. » Monitoring compliance with actions During 2014, the OIC carried out its activ- associated with strategies “4.1 Trans- ities in accordance with a Risk Management form processes of offices and enti- Model aligned with strategic planning by ties” and “4.5 Guaranteeing efficient Nacional Financiera and the Secretariat of government operation by simplify Public Service (SFP), covering the following: regulations in offices and entities in,” compliance with stipulations by regulatory established in the framework of the entities; identification of critical process- Program for Accessible, Modern Gov- es and relevant information; and requests ernment (PGCM). made by the Institution’s Board of Directors, » Promoting policies and strategies for Auditing Committee and Commissioners. improving government administra- The major lines of action were concentrat- tion in offices and entities of the Pub- ed on the following aspects: lic Federal Administration. Audits, Evaluations and Diagnostic As- » Disseminating the Government’s Cit- sessments izen-Focused Organizational Cultural Especially worth to mention that on 2014 Model. there were: 17 audits and nine diagnostic as- » Evaluating the process for develop- sessments focused on promoting improve- ing and maintaining the Institution’s ments in management. computer systems. » Corroborating compliance with the Audits. Emphasis was made on: General Provisions for Transparency » Internal control evaluation. and Federal Public Administration Ar- » Verification of mechanisms and activ- chives and the Administrative Manual ities that promote transparency and of General Application on Transparen- accountability in operations. cy and Archives. » Verification that transactions are con- » Verifying the lines of action in the Pro- ducted in accordance with stipula- gram for Accessible, Modern Govern- tions, policies and procedures estab- ment applicable to Nafinsa. lished. » Verifying implementation of the Ad- ministration of Information Security Process.

63 » Verifying that the Administrative As the Secretary of Nacional Financiera’s Manual of General Application on In- Auditing Committee, the OIC carefully at- formation and Communication Tech- tended to its responsibilities, in accordance nologies and Information Security is with the Committee’s Work Program. Espe- entirely operating. cially worth mentioning is that during 2014, in line with the Institution’s efforts to min- In support of the Institutional Quality Man- imize its use of paper, information for the agement System, collaboration was provid- OIC’s sessions was distributed and available ed in conducting an internal audit of quality through a website, facilitating the efforts of that included certified administrative pro- Committee members to consult and analyze cesses, with the aim of corroborating the de- information. gree of their development and contributing The OIC also fulfilled with its responsibili- to maintaining certification under interna- ties as a member of the Institution’s Informa- tional standard ISO 9001:2008. tion Committee, and with its designation as a public servant authorized by the Secretariat of Transparency and compliance with Public Service to receive and process requests regulations for access to information, in the terms spec- With the aim of promoting compliance ified in the Federal Law on Transparency and with both internal and external regulations, Access to Public Government Information, and transparency in decision-making, and suffi- to guarantee the spirit of this Law for the ben- cient accountability and ongoing improve- efit of the citizenry. ment, the Internal Control Entity (OIC) con- tinued to participate in an advisory capacity Auditing Committee in the Institution’s committees (Acquisitions In the framework of the Resolution that and Information, among others), which an- modifies the General Provisions Applicable alyze and evaluate the Institution’s opera- to Credit Institutions, published in the Of- tions aligned with achieving goals and ob- ficial Gazette of the Federation on May 12, jectives. Also worth mentioning is the OIC’s 2014, information was delivered formally on participation in Quality Operational Com- August 27 by the Auditing Committee to the mittees in the processes within its areas of Secretary of the Institution’s Board of Direc- responsibility. tors, appointed by the new president as Sec- retary of the Auditing Committee.

64 With its new composition, the Auditing opinion in November 2014, with its registry Committee began to hold sessions in before the Department of Organization and October, with the participation of the head Remunerations in the Federal Public Admin- of the Internal Control Entity, to attend as a istration of the Secretariat in December of guest at the three extraordinary sessions. the same year. Consequently, the Secretariat of Public Modification of the Internal Control Entity’s Service contributed to the modernization structure and consolidation of Nafinsa’s new Internal The Internal Control Entity started a pro- Auditing Department, and to the economic cess of modifying its structure, before the development that Mexico requires, through General Coordination of Entities for Super- the first Internal Control Entity in a devel- vision and Control and the Chief Clerkship opment bank that entirely fulfilled the pro- (Oficialía Mayor) of the Secretariat of Pub- posed objective, with adherence to regula- lic Service, for the purpose of contributing tions. ¶ part of a workforce. It received a favorable

65 ANNEX A

NACIONAL FINANCIERA IMPORTANT FIGURES

67 Table 1

NACIONAL FINANCIERA -­‐ IMPORTANT FIGURES AT YEAR'S END (MILLIONS OF PESOS)

Items 2012 2013 2014

Total Assets1/ 349,074 352,157 389,750

Financial Agent Portfolio 4,320 2,439 1,013 First-­‐Tier Loan Portfolio 18,968 24,107 32,926 Second-­‐Tier Loan Portfolio 92,057 94,062 116,360 Total Loan Portfolio 115,345 120,608 150,299

Equity Investment in Companies 3,910 4,576 5,740 Equity Investment in Real Estate 1,436 1,462 1,496 Equity Investment in Securities 132 98 23

Domestic Debt 119,860 132,936 156,019 Foreign Debt 22,803 24,577 31,327 Preventive Reserves for Credit Risk 2,314 3,255 3,665 Total Liabilities 335,290 337,754 376,342

Equity Capital 19,611 21,535 22,942

Assets in Trust or Under Mandate 976,008 1,138,900 1,325,455 Debtors by Guarantees or Other Contingent Obligations 43,122 49,114 56,359

Net Profit (loss) 1,358 1,780 1,648 Regulatory Capital Ratio (%) 16.4 15.3 14.6

1/ Consolidated with Subsidiaries

69 Table 2

Financing to Private SectorBy Second Tier, First Tier and Guarantees Classified by Region (Millions of Pesos- Number of Companies)

Credit and Guarantees Credit and Guarantees Difference in % Jan-Dec 2013 Jan-Dec 2014 2014/2013 Amount Companies Amount Companies Amount Companies

680,885 1,787,863 TOTAL 632,667 1,187,751 (7.1) (33.6)

40,267 190,747 NORTHWEST 31,976 134,652 (20.6) (29.4)

9,135 51,347 B. California Norte 8,457 33,602 (7.4) (34.6) 1,907 15,621 B. California Sur 1,757 9,124 (7.8) (41.6) 18,978 67,202 Sinaloa 12,573 46,952 (33.8) (30.1) 10,247 56,577 Sonora 9,189 44,974 (10.3) (20.5)

123,324 258,062 NORTHEAST 130,405 181,231 5.7 (29.8)

19,847 52,442 Coahuila 18,684 36,686 (5.9) (30.0) 12,728 40,861 Chihuahua 11,148 24,177 (12.4) (40.8) 5,793 25,645 Durango 4,413 26,435 (23.8) 3.1 70,782 66,770 Nuevo León 83,890 47,462 18.5 (28.9) 14,174 72,344 Tamaulipas 12,269 46,471 (13.4) (35.8)

124,228 389,031 CENTRAL WEST 104,368 243,446 (16.0) (37.4)

6,477 15,012 Aguascalientes 5,664 13,079 (12.5) (12.9) 2,985 16,928 Colima 2,935 8,436 (1.7) (50.2) 21,972 89,249 Guanajuato 19,057 53,436 (13.3) (40.1) 57,122 95,011 Jalisco 48,979 59,470 (14.3) (37.4) 17,150 67,657 Michoacán 13,456 42,554 (21.5) (37.1) 2,732 28,952 Nayarit 1,974 17,768 (27.7) (38.6) 10,108 54,588 San Luis Potosí 8,104 34,513 (19.8) (36.8) 5,682 21,634 Zacatecas 4,199 14,190 (26.1) (34.4)

330,720 503,069 CENTRAL 312,383 365,627 (5.5) (27.3)

201,892 75,691 D.F. 195,042 71,156 (3.4) (6.0) 5,509 49,536 Guerrero 3,804 34,157 (31.0) (31.0) 10,198 37,848 Hidalgo 8,427 24,472 (17.4) (35.3) 66,753 174,764 México 64,486 121,137 (3.4) (30.7) 6,567 37,650 Morelos 5,416 26,402 (17.5) (29.9) 16,242 25,181 Querétaro 14,753 16,080 (9.2) (36.1) 20,809 80,554 Puebla 18,304 59,676 (12.0) (25.9) 2,751 21,845 Tlaxcala 2,152 12,547 (21.8) (42.6)

62,346 446,954 SOUTH - SOUTHEAST 53,535 262,795 (14.1) (41.2)

5,487 23,993 Campeche 5,169 14,137 (5.8) (41.1) 8,817 71,689 Chiapas 7,445 45,372 (15.6) (36.7) 8,254 51,388 Oaxaca 5,852 26,398 (29.1) (48.6) 3,680 35,454 Quintana Roo 3,589 23,345 (2.5) (34.2) 8,908 55,741 Tabasco 7,444 26,151 (16.4) (53.1) 19,017 166,052 Veracruz 17,611 101,650 (7.4) (38.8) 8,181 42,637 Yucatán 6,425 25,742 (21.5) (39.6)

70 Table 3

DEPOSITS IN NATIONAL CURRENCY* (Millions of Pesos)

Instrument 2012 2013 2014

Short-­‐term Bas 80 0 0 Medium-­‐term Bas 31 0 0 Long-­‐term Bas 115 177 0 Banking Note Acceptances 226 177 0 Stock Certificates 10,966 11,462 28,425 Naftiie's 0 0 0 Nafin PGs 99,094 106,409 111,837 Zero Coupon Bonds 0 0 0 New Instruments 110,060 117,871 140,262 Diverse Deposits 393 212 521 Time Deposits 5,453 7,553 7,152 TOTAL 116,132 125,813 147,935

* Interest not included.

71 Table 4

TOTAL FOREIGN DEBT BALANCE AS OF DECEMBER 31 (Millions of US Dollars)

Item 2012 2013 2014

I. Direct Debt 1,755.3 1,876.2 2,125.1

A. A. Certificates of Deposit (London) 980 985 1259 Euronotes 0 0 0 Certificates of Deposit (London) 980 985 1259 Foreign Bonds 0 0 0

B. Multilateral Entities 330 185 69

C. Private Banks, Eximbanks and Suppliers 445.3 706.2 797

II. Total Guaranteed Debt 0 0 0

Total 1,755.3 1,876.2 2,125.1

72 ANNEX B

REPORT ON CONSOLIDATED, AUDITED FINANCIAL STATEMENTS WITH SUBSIDIARIES, AS OF DECEMBER 31, 2014

73

ANNEX C

NATIONAL ADVISORY COUNCIL MEMBERS

Northwest Region Western Region Baja California Aguascalientes President President Mario García Franco José Manuel Gómez Marmolejo

Baja California Sur Colima President President Armando Sánchez Porras José Manuel Costa Lavín

Sinaloa Guanajuato President President Rodolfo Gerardo Madero Rodríguez José Martínez González

Sonora Jalisco President President Roberto Gómez del Campo Laborín Ernesto Gómez Ibarra de la Mora

Northeast Region Michoacán Coahuila President President Germán Oteiza Figaredo Virgilio Verduzco Rosán Nayarit Chihuahua President President Manuel Menchaca Díaz del Guante Óscar Eugenio Baeza Fares San Luis Potosi Durango President President Alejandro Hernández de la Rosa José G. Gamboa Silva Zacatecas Nuevo León President President José de Jesús Aguirre Campos Francisco Garza Zambrano

Tamaulipas President César Treviño Sáenz 75 Central Region Southeast Region Mexico City Campeche President President Luis Alfonso Villaseñor Zepeda Víctor Manuel Abraham Elías

State of Mexico Chiapas President President Rubén Gonzalo Martínez Cárdenas Adrián Marenco Olavarrieta

Guerrero Oaxaca President President Roberto Sampedro Rosas Felipe Martínez Vasconcelos

Hidalgo Quintana Roo President President José David Maauad Abud Mario Rendón Monforte

Morelos Tabasco President President Guillermo León Flores Cristóbal Broca Hernández

Puebla Veracruz President President Ángel Fernández Carbajal Ramón Gómez Sañudo

Queretaro Yucatán President President Francisco Núñez Elías Carlos Gomory Rivas

Tlaxcala President Enrique Morodo Santisteban

76 ANNEX D

DIRECTORY OF REGIONAL AND OVERSEAS OFFICES

Northwest Regional Office Central Regional Office Said Saavedra Bracamonte (Director) David Garibay Mendoza (Director) Blvd. Eusebio Kino No. 309 Insurgentes Sur 1971, torre 4, piso 11, Torre Hermosillo 5° piso Plaza Inn Col. Country Club Col. Guadalupe. Inn, Delegación Álvaro Hermosillo, Son. Obregón C.P. 83010 México D. F. Tel: 01-662-289-2301 a la 2303 C.P. 01020 Email: [email protected] Tel: 01-55-5325-6132 Email: [email protected] Northeast Regional Office Alfonso Héctor Ramos Gámez (Director) Southern regional office Av. El Roble No. 300, Edificio Torre Alta, P.B. Antonio Morayta Llano (Director) Esq. Gómez Morín Calle 17 No. 135 Esq. Calle 28 Col. Valle del Campestre Col. México San Pedro Garza García, N.L. Mérida, Yuc. C.P. 66265 C.P. 97125 Tel: 01-81-8173-1201 y 1211 Tel: 01 999 948-4883 / 01 999 948-4884 Email: [email protected] Email: [email protected]

Western Regional Office London Branch Jorge Alberto Guerra Márquez Pedro Guerra Menéndez (Director) (Commissioned in substitution for the Rubén Darío No. 1109-5A, absence of the owner) Col. Providencia 28th, Floor, 30 St. Mary Axe Guadalajara, Jal. London EC3A 8BF C.P. 44620 Tel: 00 (44) 020-7469-4123 Tel: 01-33-3648-5501 y 5502 Fax: 00 (44) 020-7469-4122 Email: [email protected]

77 The information in this report was compiled by the Financial Planning and Programing Department.

Editing and printing was overseen by the Social Communication Office.

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