ANNUAL REPORT 2005

ANNUAL REPORT ‘05 Mission

A Financial Group committed to Mexico, comprising the best human capital and created to efficiently care for and increase the patrimony of our clients and partners

Vision

To be leaders in mexico’s financial sector with regard to profitable growth, in the benefit of our clients, collaborators and partners

Values

• Commitment to Mexico • Long-Term Vision • Integral Personnel Development • Integrity • Reliability • Austerity

Key Capacities

• Operating Efficiency • Slender Structure with Good Communication and Clear Leadership • Transparency and Little Bureaucracy • Result-Driven • Clear Business Approach • Pertinent Risk Selection Index Relevant Figures 02 Corporate Structure 04 Report to Shareholders 05 Audit Committee Report 07 Board of Directors 09 General Directors 09 Directors’ Curricula 10 Results of Grupo Financiero Inbursa 11 Subsidiaries of Grupo Financiero Inbursa 12 Banco Inbursa 12 Seguros Inbursa y Patrimonial Inbursa 16 Pensiones Inbursa 18 Operadora Inbursa de Sociedades de Inversión 20 Inversora Bursátil 22 Fianzas Guardiana Inbursa 22

Pieta (Pietá) 1498 – 1500, Bronze with brown patina Michelangelo Buonarroti Annual Report Grupo Financiero Inbursa RELEVANT FIGURES 02

Relevant Figures

Stockholder’s Equity1 Stockholder’s Equity2 (National Banking and Securities (US GAAP B USD) Commission GAAP B Ps)

50.000 50.000 3,600 3,600 8000 8000 800 800 40,892.8 40.000 40.000 40,892.8 3,400 3,400 6000 6000 600 600 637.3 637.3 3,495.0 3,495.0 8,790.0 8,790.0 39,142.1 5,549.6 39,142.1 30.000 30.000 3,200 3,200 4000 4000 5,549.6 400 400 414.9 414.9 3,236.0 32,102.8 3,236.0 32,102.8

20.000 20.000 3,000 3,000 2000 2000 200 200 2,913.4 2,913.4

2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

In May 2005, dividends in the amount of 900 B Ps were paid. In June 2005 the IDEAL spin-off was performed for 8,790 B PS. • Capital GFI • IDEAL spin-off capital

Net income1 Net income2 (National Banking and Securities (National Banking and Securities Commission GAAP B Ps) Commission GAAP B Ps) 3,495.0 3,495.0 38.000 38.000 3400 3400 8000 8000 800 800 39,142.1 39,142.1

50.000 50.000 3,600 3,600 8000 8000 800 800 36.000 36.000 3300 3300 6000 6000 600 600 637.3 637.3 40,892.8 40.000 40.000 40,892.8 3,400 3,400 6000 6000 600 600 5,549.6 34.000 3200 4000 5,549.6 400 637.3 34.000 3200 637.3 4000 400 3,495.0 3,495.0 3,236.0 3,236.0 8,790.0 8,790.0 414.9 414.9 39,142.1 39,142.1 5,549.6 30.000 30.000 3,200 3,200 4000 4000 5,549.6 400 400 32.000 32.000 3100 3100 2000 2000 200 200 414.9 414.9 2,913.4 2,913.4 3,236.0 3,236.0 32,102.8 32,102.8 32,102.8

20.000 20.000 3,000 3,000 2000 2000 32,102.8 200 200 2,913.4 2,913.4

2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

1Does not include minority interest 2All amounts presented as figures and under US GAAP refer to non-audited numbers.

Infrastructure 2004 2005 Customers 5.8 MM 6.0 MM 1.6 % 1.6 % 3,495.0 3,495.0 38.000 38.000 3400 3400 8000 8000ATM’s 800 611 800 50 582 50 15.0 % 15.0 % 39,142.1 39,142.1 13.7% 13.7% Employees 4,133 4,610 1.2 % 1.2 % 13.2% 13.2% 36.000 36.000 3300 3300 6000 6000 600 600 12.0% 12.0% Sales Points 189 205 10.0 % 10.0 % 637.3 30 637.3 30 27.5 27.50.8 % Sales Force 0.88,805 % 0.8 % 10,022 0.8 % 5,549.6 5,549.6 34.000 34.000 3200 3200 4000 4000 400 0.6 %400 0.6 % 3,236.0 3,236.0 Call Centers (Positions) 482 826 414.9 18.8 18.8 414.9 5.0 % 5.0 % 0.4 % 0.4 % 17.1 17.1 32.000 32.000 3100 3100 2000 2000 200 0.4 % 200 0.4 % 10 10 2,913.4 2,913.4 32,102.8 32,102.8

2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 20042005 20042005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005

PRLV 65%PRLV 65% PRLV 44%PRLV 44% Immediately Immediately demandable demandable deposits 30 deposits% 30 % 1.6 % 1.6 % 50 50 15.0 % 15.0 % 13.7% 13.7% 1.2 % 1.2 % 13.2% 13.2% Immediately Immediately 12.0% 12.0% demandable demandable 10.0 % 10.0 % deposits 51%deposits 51% 30 30 27.5 27.5 Bank Loans 5% 0.8 % 0.8 % 0.8 % 0.8 % Bank Loans 5% 0.6 % 0.6 % 18.8 18.8 5.0 % 5.0 % 0.4 % 0.4 % 17.1 17.1 0.4 % 0.4 % 10 10

Bank Loans 5%Bank Loans 5%

2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005

3800 3800 3,800 3,800 100.0 100.0 100.0 100.0 80,000 80,000 80,000 80,000 5.40 5.40 5.40 5.40 5.39 5.39 PRLV 65%PRLV 65% 3400 3400 3,400 3,400 5.39 5.39 98.0 98.0 98.0 98.0 PRLV 44%PRLV 44% Immediately Immediately 60,000 60,000 60,000 60,000 5.30 5.30 5.30 5.30 demandable demandable deposits 30 deposits% 30 % 3000 3000 3,000 3,000 96.0 96.0 96.0 96.0 3,252,331 3,252,331 62,008.70 3,252,331 3,252,331 62,008.70 62,008.70 40,000 40,000 62,008.70 40,000 40,000 5.20 5.20 5.20 5.20 94.0 94.0 94.0 94.0 2600 2600 2,600 2,600 Immediately Immediately 93.0 93.0 40,148.40 40,148.40 demandable demandable 20,000 20,000 40,148.40 20,000 20,000 40,148.40 5.10 5.10 5.10 5.10 92.2 92.2 30,600.76 30,600.76 30,600.76 30,600.76 92.0 92.0 92.0 92.0

deposits 51%deposits 51% 5.11 5.11 5.11 5.11 2200 2200 2,200 2,200 92.0 92.0 2,510,861 2,510,861 Bank Loans 5%Bank Loans 5% 2,510,861 2,510,861 2,120,961 2,120,961 2,120,961 2,120,961 5.04 5.04 5.04 5.04

2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 Bank Loans 5%Bank Loans 5%

Transportation 83%Transportation 83%

3800 3800 3,800 3,800 100.0 100.0 100.0 100.0 80,000 80,000 80,000 80,000 5.40 5.40 5.40 5.40 5.39 5.39 3400 3400 3,400 3,400 5.39 5.39 98.0 98.0 Entertainment98.0 2%Entertainment98.0 2% 60,000 60,000 60,000 60,000 5.30 5.30 5.30 5.30

3000 3000 3,000 3,000 96.0 96.0 96.0 96.0 3,252,331 3,252,331 62,008.70 3,252,331 3,252,331 62,008.70 62,008.70 62,008.70 Communications 40,000 40,000 40,000 40,000 5.20 5.20 5.20 5.20 Communications Media 13%Media 13% 94.0 94.0 94.0 94.0 2600 2600 2,600 2,600 93.0 93.0 40,148.40 40,148.40 20,000 20,000 40,148.40 20,000 20,000 40,148.40 5.10 5.10 5.10 5.10 92.2 92.2 30,600.76 30,600.76 30,600.76 30,600.76 92.0 92.0 92.0 92.0 5.11 5.11 5.11 5.11 2200 2200 2,200 2,200 92.0 92.0 2,510,861 2,510,861 2,510,861 2,510,861 Others 2%Others 2% 2,120,961 2,120,961 2,120,961 2,120,961 5.04 5.04 5.04 5.04

2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005

Accident Accident and Health 14 and% Health 14 %

Life 35 Life% 35 % Transportation 83%Transportation 83%

Entertainment 2%Entertainment 2%

Automobiles 23%Automobiles 23%

Communications Communications Media 13%Media 13% Property Property and Casualty 28%and Casualty 28%

Others 2%Others 2%

9800 9800

9600 9600

Accident Accident 9400 9400 and Health 14 and% Health 14 % 9200 9200 9,279.2 9000 9000 9,279.2

Life 35 Life% 35 % 8800 8800

8600 8600

8400 8400 8,478.1 8200 8200 8,478.1

Automobiles 23%Automobiles 23%

2004 2004 Property Property 2005 2005 and Casualty 28%and Casualty 28%

Government Entities Government Entities Government Entities Government Entities Bond T. Real 31%Bond T. Real 31% Shares 65%Shares 65% CD’s 74%CD’s 74% Bond T. Nominal 63%Bond T. Nominal 63%

9800 9800

9600 9600 Government Government Entities Bond 26%Entities Bond 26% 9400 9400

9200 9200 Government Entities Government Entities Government Entities Government Entities Bond T. Nominal 39%Bond T. Nominal 39% Bonds 35%Bonds 35% CD’s 29%CD’s 29% 9,279.2 9000 9000 9,279.2

8800 8800

8600 8600

8400 8400 8,478.1 8200 8,478.1 8200 Government Entities Government Entities CD’s 30%CD’s 30% Bond T. Real 8%Bond T. Real 8%

2004 2004 2005 2005

25 % 25 %

Government Entities Government Entities Government Entities Government Entities 20 % 20 % Bond T. Real 31%Bond T. Real 31% Shares 65%Shares 65% CD’s 74%CD’s 74% Bond T. Nominal 63%Bond T. Nominal 63% 21.9 % 21.9 %

15 % 15 % Government Government Entities Bond 26%Entities Bond 26% 14.8 % 14.8 % 10 % 10 % 10.1 % Government Entities Government Entities Government Entities Government Entities 10.1 % 8.5 % Bond T. Nominal 39%Bond T. Nominal 39% Bonds 35%Bonds 35% 5 % CD’s 5 % 29%CD’s 8.5 % 29% 2.8 % 2.8 2.8 % 2.8 Fondo Inbursa Fondo Inbursa IP and C IP and C Dow Jones Dow Jones Cetes Cetes Inflation GovernmentInflation Entities Government Entities CD’s 30%CD’s 30% Bond T. Real 8%Bond T. Real 8%

25 % 25 %

20 % 20 % 21.9 % 21.9 %

15 % 15 % 14.8 % 14.8 % 10 % 10 % 10.1 % 10.1 % 8.5 % 5 % 5 % 8.5 % 2.8 % 2.8 2.8 % 2.8 Fondo Inbursa Fondo Inbursa IP and C IP and C Dow Jones Dow Jones Cetes Cetes Inflation Inflation 03

Under CNBV Rules Under US GAAP_ Rules

2003 2004 2005 % var 2003 2004 2005 % var Assets B Ps B Ps B Ps (´04 vs´05) B Ps B Ps B Ps (´04 vs´05) Group 77,993 105,496 86,005 -18.5% 9,675 12,117 10,970 -9.5% Banco Inbursa 65,891 90,093 77,440 -14.0% 6,100 7,771 7,145 -8.1% Pensiones Inbursa 20,137 23,149 16,165 -30.2% 1,958 2,588 1,731 -33.1% Seguros y Patrimonial Inbursa 17,025 18,825 21,099 12.1% 1,468 1,692 2,024 19.6% Operadora Inbursa 445 548 581 6.0% 41 48 55 14.7% Inversora Bursátil 1,123 1,329 1,700 28.0% 95 115 160 38.4% Fianzas Guardiana 973 1,193 1,146 -3.9% 77 97 102 5.1%

2003 2004 2005 % var 2003 2004 2005 % var Stockholders’ Equity B Ps B Ps B Ps (´04 vs´05) B Ps B Ps B Ps (´04 vs´05) Group 34,481 39,142 32,103 -18.0% 2,857 3,495 3,236 -7.4% Banco Inbursa 22,629 23,974 23,885 -0.4% 1,596 1,827 2,063 12.9% Pensiones Inbursa 6,964 9,748 2,500 -74.4% 668 954 348 -63.5% Seguros y Patrimonial Inbursa 2,134 2,832 3,147 11.1% 370 487 582 19.5% Operadora Inbursa 426 502 500 -0.3% 35 44 47 8.0% Inversora Bursátil 917 1,145 1,444 26.1% 75 99 135 36.8% Fianzas Guardiana 593 849 787 -7.2% 58 78 78 0.4%

2003 2004 2005 % var 2003 2004 2005 % var Net Income1 B Ps B Ps B Ps (´04 vs´05) B Ps B Ps B Ps (´04 vs´05) Group 2,504 5,556 2,914 -47.6% 319 672 419 -37.7% Banco Inbursa 2,365* 1,357 1,034 -23.8% 115 204 192 -5.9% Pensiones Inbursa 988 2,729 587 -78.5% 75 276 65 -76.4% Seguros y Patrimonial Inbursa 176 687 781 13.7% 89 85 105 23.5% Operadora Inbursa 161 174 219 25.5% 11 17 21 27.9% Inversora Bursátil 177 359 314 -12.7% 17 36 32 -12.5% Fianzas Guardiana 163 240 192 -20.2% 10 18 21 16.9%

1 Figures corresponding to Grupo Financiero and INBURSA Market Average Banco do not include minority interest. 2 Non-audited figures presented under United Tier Capital Ratio (Bank) 23.3% 14.3% States of America Generally Accepted Accoun- NPL / Total Loan Portfolio (Bank) 0.8% 1.8% ting Principles (US GAAP) Reserves / NPL (Bank) 17.1 2.4 * Efficiency is calculated as follows: Combined Ratio (Insurance and Patrimonial) 93.7% 99.3% Operative expenses / (Financial Margin + Other Income) Reserves / Premiums (Insurance and Pensions) 3.16 2.17 ** Efficiency is calculated as follows: Efficiency * (Bank) 50.4% 69.8% Operating expenses / Retained Premiums Efficiency** (Insurance) 9.6% 9.9%

Millions of Pesos constant 2004 2005 % var Managed Assets 595,094.5 984,702.7 65% Assets under management 717,463.0 964,790.0 34% Annual Report Grupo Financiero Inbursa CORPORATE STRUCTURE 04

Corporate Structure

C.C 32,142.1*

Operadora Banco Fianzas Inversora Seguros Arren- Pensiones Inbursa Inbursa Guardiana Bursátil Inbursa dadora Inbursa Inbursa Inbursa 100% 100% C.C 100% 100% 100% C.C 500.1* C.C 1,443.5* C.C 2,499.9* 23,924.3* 100% C.C 2,757.5* 100% C.C 787.1* C.C 73.3*

Afore Inmobiliaria Sinca Patrimonial Salud Promotora Inbursa Inbursa Inbursa Inbursa Inbursa Inbursa

94% 100% 84% 100% 100% 84% C.C 687.3* C.C 872.5* C.C 2,725 * C.C 390.6* C.C 119* C.C 886.5*

* Amounts stated in B Ps 05

Report to Shareholders

ECONOMIC ENVIRONMENT

In 2005, the GDP (Gross Domestic Product) of the Mexican economy grew by 3% in real terms compared with GDP growth of 4.4% the previous year. GDP growth in 2005 occurred in an environment of very favorable external and stable macroeconomic conditions. Falling interest rates contributed to a growth in consumption and investment, particularly in the housing sector. On the other hand, the external sector, driven by the dynamism of the U.S. economy and improved oil prices, contributed to record petroleum exports for the year, reaching 213 billion dollars. For its part, the trade balance observed a deficit of $7.558 billion dollars. Likewise, remittances grew by 20% compared to the previous year, reaching 20 billion dollars.

The implementation of a conservative monetary policy by the central bank together with a revaluation of the exchange rate contributed to the lowest level of inflation in 38 years—3.3%—as measured by the change in the national index of consumer prices published by INEGI.

Financial stability in international markets sustained by global growth, including the favorable performance of the U.S. economy during the year; high worldwide liquidity; foreign portfolio investment; and the growth of domestic savings were reflected in the trend towards lower interest rates maintained nationally. In this context, the country risk, known as the difference of rates between American treasury and Mexican government bonds, was at 113 base points in November 2005—the lowest level in history. The return rate on Treasury Certificates (CETES) fell 89 base points to 8.02% at the close of the year compared with the year before. This decrease in interest rates contributed to a continuing growth in credit to higher levels, and the approval of the commercial bank credit to the private sector showed a 22.4% increase in real terms.

The growth in national domestic savings together with the high liquidity observed in the international markets during the year, as well as the increased participation of the bank in distinct economic sectors, propelled a growth in human and fiscal capital, improving the expectations for growth in 2006. Annual Report Grupo Financiero Inbursa GRUPO FINANCIERO INBURSA 06

GRUPO FINANCIERO INBURSA

Grupo Financiero Inbursa recorded a net income of 2.913 billion pesos a balance of more than 18 billion pesos with two-digit growth rates during the year in comparison with 5.549 billion pesos the previous annually since its launch. year. This decrease is mainly explained by the losses recorded by the long-term position at a fixed rate through swaps, in spite of the It should be emphasized that the growth of Afore Inbursa’s assets operating growth recorded in the group’s different subsidiaries. In management business occurred both in the number of clients and addition, it is worth mentioning that during 2004, extraordinary the accumulated balance, 29.5% and 54.4% respectively. The workers income was recorded, mainly from the capital restructuring of funds administered by Afore Inbursa accumulated a balance of 62.009 Grupo Televicentro. billion pesos at the close of the year, representing 10.6% of the total market, 2.5 percentage points greater than the market share of 2004. In July 2005, the spin-off of 8.790 billion pesos from the financial group took place with the formation of a new economic group named In the insurance business, 2005 was characterized by strong Impulsora del Desarrollo y del Empleo en América Latina (IDEAL) competition mainly in the automobile business. Nevertheless, the and oriented to the development of physical and human capital in wide range of products at competitive prices and an appropriate Mexico and Latin America. As a result of this and the creation of selection of risks helped Seguros Inbursa reach a record figure in this reserves and the payment of 900 million pesos in dividends in May niche market, with more than 403,000 clients by the end of year. 2005, the Stockholders’ equity of Grupo Financiero Inbursa was reduced by 18% to 32.103 billion pesos. Forty years since its founding as a Mexican group, Grupo Financiero Inbursa is one of the most solid financial groups in the country. The From its implementation, the strategy of cross selling our products capacity to face new challenges, an appropriate selection of risks, has been reflected in significant advances during the year. The sales operating efficiency and client service have been primary factors in force was increased to 10,022 financial advisers from the 5,285 that the Group’s consolidation, which has allowed it to contribute to the initiated the program at the end of 2001. It’s worth emphasizing growth of the country, creating more and better job opportunities. that 30% of these advisers have clients with more than two products This has been possible thanks to the talent and performance of all contracted with the group. For its part, the client portfolio was at those that, in these 40 years, have collaborated with this institution as more than 6 million at the end of 2005. well as the preferences of our clients and confidence of our partners.

The credit portfolio was at 55.582 billion pesos. The change in the Finally, we confirm that the financial information to December composition of the portfolio denominated in national currency from 31, 2005 submitted for your approval has been prepared according 60% in 2004 to 72% should be emphasized. The financial margin to the accounting policies and criteria established by current legal showed an increase of more than two times to 3.524 billion pesos provisions and in conformity with the accounting criteria for compared with the results of the previous year. For their part, non- controlling entities of financial groups established by the Mexican performing loans represented 0.8% of the total portfolio with a National Banking and Securities Commission, and reasonably reflects balance in preventive reserves of 7.450 billion pesos equivalent to the financial situation of Grupo Financiero Inbursa S.A. de C.V., at 17.1 times the past due portfolio. December 31, 2005.

The capture of retail sales reached 24 billion pesos, 39.8% greater than the registered balance of the previous year. It’s worth mentioning that the Inbursa CT account, four years after its launch, has consolidated Marco Antonio Slim Domit Chairman of the Board of Directors itself as one of the most successful products on the market reaching Mexico City, Jan. 23, 2006

To the Board of Directors Grupo Financiero Inbursa, S.A. de C.V.

To comply with the responsibility assigned to the Audit Committee based upon Securities Market Laws in general and in due compliance with the recommendations contained in the best Corporate Practice Code incorporated in the Provisions Generally Applied to Issuers of Securities and Other Securities Market Participants (the “Provisions”) issued by the Ministry of Finance and Public Credit, we inform this body of the activities we performed as the Audit Committee of Grupo Financiero Inbursa, S.A. de C.V. (the “Company”) during the fiscal year that ended on Dec. 31, 2005.

In connection with the company’s Audit Committee duties, during the fiscal year, the following activities were performed:

a) An analysis was undertaken of possible auditors external to the company, including diverse options. Candidates for external auditor were recommended to the Board of Directors, including the terms of their mandate and the conditions for their hiring with the purpose of carrying out an accounting audit of the company. b) Auditors external to the company were interviewed with the finality of verifying that they met the requirements of independence and staff turnover. c) The audit analysis and commentary, including the extent of and the procedures used were reviewed jointly with the external auditors, assuring the most objective manner possible in order for the information disclosed to be useful, prompt and reliable. d) The committee collaborated with the supervision of the completion of the audit contract terms including the evaluation of the results. e) Bases for elaborating and disseminating the company’s financial information were recommended to the Board of Directors, including general guidelines for internal controls. f) The company’s financial statement as of Dec. 31, 2005, the report of the auditors, as well as the accounting practices used to determine the financial statement were reviewed. After having listened to the external auditors’ commentaries whose responsibility it is to express their opinion regarding the reasonableness of the financial statement and their conformity with generally accepted accounting principles in Mexico, it’s approval was recommended to the Board of Directors and that it be presented at the Annual Ordinary General Shareholders’ Meeting. g) Diverse transactions and their related parts were reviewed and analyzed.

According to the legal provisions in force, the Company’s Management has the basic responsibility to issue the financial statements based upon accounting criteria and practices established by the Comisión Nacional Bancaria y de Valores (CNBV), prepare in due time and form the financial information and any other information to be disclosed to the securities market and implement internal control systems. In the exercise of its functions, the management may be supported by designated intermediary committees, and in the exercise of said functions, the Audit Committee has reviewed in the name of the board of Directors the audited and consolidated financial statements of the Company and its subsidiaries as of Dec. 31, 2005. Such review included an analysis and approval of accounting policies procedures and practices of the company.

Finally, we declare that we have reviewed the financial statements of the company as of Dec. 31, 2005, taking into consideration that they were elaborated in conformity with accounting policies, procedures and practices applied to the company according to current legal provisions and in conformity with accounting criteria established by CNBV and we are in agreement that their content since it reasonably reflects the financial situation of the Company as of Dec. 31, 2005.

Sincerely,

Lic. José Kuri Harfush President, Audit Committee Grupo Financiero Inbursa, S.A. de C.V. 09

Board of Directors

NOT INDEPENDENT DIRECTORS

Standing Directors Carlos Slim Helú (Honorary Life Chairman) Héctor Slim Seade Marco Antonio Slim Domit (Chairman) Arturo Elías Ayub Eduardo Valdés Acra (Vice-Chairman) Javier Foncerrada Izquierdo

INDEPENDENT DIRECTORS

Standing Directors Agustín Franco Macías Antonio Cosio Pando Claudio X. González Laporte Ángeles Espinosa Yglesias Juan Antonio Pérez Simón Guillermo Gutiérrez Saldívar David Ibarra Muñoz Fernando G. Chico Pardo José Kuri Harfush Laura Diez Barroso Azcárraga

Statutory Auditors Standing Alternate Víctor Alberto Tiburcio Celorio Esteban Ailloud Peón del Valle

Secretary Assistant Secretary Raúl H. Zepeda Ruiz José Pablo Antón Sáenz Padilla

General Directors

Grupo Financiero Inbursa Marco Antonio Slim Domit Joined GFI:1992 Afore Inbursa Sandra Sosa Nasta Joined GFI:1996 Banco Inbursa Javier Foncerrada Izquierdo Joined GFI:1992 Fianzas Guardiana Inbursa Alfredo Ortega Arellano Joined GFI:1991 Inversora Bursátil Eduardo Valdés Acra Joined GFI:1986 Operadora Inbursa Guillermo Robles Gil Orvañanos Joined GFI:1992 Pensiones Inbursa Heriberto Lechuga Anaya Joined GFI:1975 Seguros Inbursa José A. Morales Morales Joined GFI:1992 09

Directors’ Curricula

CARLOS SLIM HELÚ MARCO ANTONIO SLIM DOMIT Grupo Financiero Inbursa S.A. de C.V. • Honorary Life Chairman Grupo Financiero Inbursa S.A. de C.V. • Chairman of the Board of Directors and CEO EDUARDO VALDÉS ACRA Vice-Chairman of the Financial Group Board of Directors Inbursa and ANTONIO COSÍO PANDO CEO of Inversora Bursátil, S.A de C.V. Compañía Industrial de Tepeji del Río, S.A de C.V. • CEO

ÁNGELES ESPINOSA YGLESIAS FERNANDO G. CHICO PARDO Museo Amparo • Director Promecap, S.C. • Chairman

JAVIER FONCERRADA IZQUIERDO AGUSTÍN FRANCO MACÍAS Banco Inbursa, S.A • CEO Grupo Infra, S.A. de C.V. • Chairman of the Board

DAVID IBARRA MUÑOZ CLAUDIO X. GONZÁLEZ LAPORTE Independent Advisor Kimberly Clark de México, S.A. de C.V. • CEO

JUAN ANTONIO PÉREZ SIMÓN GUILLERMO GUTIÉRREZ SALDIVAR Teléfonos de México, S.A de C.V • Vice-Chairman of the Board Equipos Mecánicos, S.A. de C.V. • CEO

ARTURO ELÍAS AYUB JOSÉ KURI HARFUSH Teléfonos de México, S.A de C.V. • Strategic Alliances Director Janel, S.A. de C.V. • CEO

HÉCTOR SLIM SEADE LAURA DIEZ BARROSO AZCÁRRAGA Teléfonos de México, S.A de C.V. • Operation Support Director Mexico City Historical District • Consultant 11

Results of Grupo Financiero Inbursa

Grupo Financiero Inbursa recorded profits in the amount of 414.9 million dollars under United States of America Generally Accepted Accounting Principles (US GAAP) and 2 billion 913.4 million pesos under the CNBV rules, during 2005, representing a decrease of 35% and 47% respectively regarding the same period of the prior year. The decrease is principally explained by losses registered due to the long-term position at a fixed rate from swaps that negatively impacted the year’s results, in spite of the operating growth recorded in different subsidiaries of the group.

Additionally, it’s important to mention that in the third quarter of 2004, extraordinary income of 2 billion 24.9 million pesos was recorded from the assessment of Televisa opportunity costs after the corporate restructuring of Grupo Televicentro. At the close of 2005, shareholders’ equity in Grupo Financiero Inbursa was at 32 billion 102.3 million pesos, a decrease of 18% compared to the previous year. This decrease was due to two principal factors: 1) The spin-off of 8.790 billion pesos in July for the purpose of creating a new economic group named Impulsora del Desarrollo y el Empleo en América Latina (IDEAL) dedicated to investing in infrastructure materials in Mexico and Latin America and 2) The payment of a dividend equaling 900 billion pesos in May.

It is worth mentioning that the Remuneration and Assessment, Audit, Finance and Planning Committees, ratified by the Shareholders’ Meeting, have met quarterly, and they have performed the review and supervision duties entrusted thereto and have annually submitted to the Shareholders’ Meeting their management report. Such Committees have complied with the duties for which they were created, at the satisfaction of this body, in accordance to the recommendations contained in the Corporate Code of Best Practices incorporated to the Provisions Generally Applied to Securities Issuer Companies and other Securities Market Participants.

1 Non-audited figures presented under United States of America Generally Accepted Accounting Principles (US GAAP) Grupo Financiero Inbursa Subsidiaries BANCO INBURSA 12

Banco Inbursa

US GAAP 1

Net Income Jan-Dec ´05 Jan-Dec ´04

B USD B USD Net Income CNBV PCGA 95.3 115.6 Adjustment for monetary position 57.2 90.9 Adjustment for deferred liabilities 39.5 (5.2) Others 0.3 2.9 Net Increase 97.1 88.7 Net Income US GAAP 192.4 204.3

Banco Inbursa registered an income of 1 billion 34.4 million pesos in comparison with 1 billion 357.2 million pesos registered the year before. This result is explained mainly due to the negative impact of the position of a long-term fixed rate compensated for by a significant increase in the financial margin during the period. The net income under US GAAP was 1.924 B USD compared with the 2.043 B USD the previous year. The difference between the result under CNBV rules and US GAAP is explained mainly by the adjustments in deferred liabilities and the monetary position.

As of December 2005, the financial margin was 3.5242 billion pesos showing an increase of 112% from the previous year. It is worth mentioning that this result was reached even with a 2.4% decrease in the credit portfolio and is explained by the change in the composition of the portfolio denominated in national currency which, at the closing of 2005, represented 72% of the total portfolio compared to 60% registered in 2004.

Stockholder’s Equity Jan-Dec 05 Jan-Dec 04

B USD B USD Stockholder’s Equity CNBV PCGA 2,246.0 2,080.8 Intermediation Adjustment 0.0 0.0 Deferred Taxes (169.6) (200.3) Derivatives 4.9 0.0 Others (22.0) (53.5) Stockholder’s Equity US GAAP 2,059.3 1,827.0

At the closing of 2005, Stockholders’ equity was 2 billion 059.3 million dollars under U.S. GAAP, whereas, under the rules of the CNBV it totaled 2.246 billion dollars. The difference is explained mainly by the deduction of deferred taxes of 169.6 million dollars.

The Banco Inbursa credit portfolio showed a decrease of 2.4% to 55 billion 582.6 million pesos at the closing of December 2005. This result is explained by a fall of 4.7% in the commercial credit portfolio, partially compensated by a significant increase in the consumer and mortgage credit portfolio of 18% and 52% respectively.

1 Non-audited figures presented under United States of America Generally Accepted Accounting Principles (US GAAP) 50.000 3,600 8000 800 50.000 3,600 8000 800

40.000 40,892.8 3,400 6000 600 40.000 40,892.8 3,400 6000 600 637.3 3,495.0 637.3 8,790.0 3,495.0 8,790.0 39,142.1 30.000 3,200 4000 5,549.6 400 39,142.1 30.000 3,200 4000 5,549.6 400 414.9 3,236.0 32,102.8 414.9 3,236.0 32,102.8 20.000 3,000 2000 200

20.000 3,000 2000 2,913.4 200 2,913.4

2004 2004 2004 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2005 2005 2005 3,495.0

38.000 3400 3,495.0 8000 800

38.000 39,142.1 3400 8000 800 39,142.1

36.000 3300 6000 600 36.000 3300 6000 600 637.3 637.3

34.000 3200 4000 5,549.6 400 34.000 3200 4000 5,549.6 400 3,236.0 414.9 3,236.0 414.9 32.000 3100 2000 200

32.000 3100 2000 2,913.4 200 2,913.4 32,102.8 32,102.8

2004 2004 2004 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2005 2005 2005

1.6 % 1.6 % 50 15.0 % 50 15.0 % 13.7% 13.7% 1.2 % 13.2% 1.2 % 13.2% 12.0% 10.0 % 12.0% 30 10.0 % 27.5 0.8 % 0.8 % 27.5 30 0.8 % 0.8 % 0.6 % 0.6 % 18.8 5.0 % 0.4 % 18.8 17.1 5.0 % 0.40.4 % % 17.110 0.4 % 10

2003 2003 2004 2003 2004 2003 2005 2004 2005 2004 13 2005 2005

Revenue Sources

PRLV 65% PRLV 65% PRLV 44% Immediately PRLV 44% demandableImmediately depositsdemandable 30 % deposits 30 %

Immediately demandableImmediately depositsdemandable 51% deposits 51% Bank Loans 5% Bank Loans 5%

Bank Loans 5% Bank Loans 5%

2004 2005

Late Payments Coverage Index 3800 3,800 The non-performing loans at the close of the year were 3800 3,800 100.0 100.0 80,000 80,000 5.40 5.40 100.0 100.0 at 4.358 B Ps which80,000 represented a non-performing loan80,00018.0 18.0 5.40 5.40 20,000.0 20,000.0

3400 3,400 5.39 5.39 16.0 16.0 4.0% 4.0% 98.0 4,000.0 4,000.0 98.0 5.39 5.39 17.1

3400 3,400 17.1 20,093.0 index of 0.8%, the lowest in the market. Please note 20,093.0 60,000 60,000 5.30 5.30 98.0 98.0 60,000 60,00014.0 14.0 5.30 5.30 18,000.0 18,000.0 3000 3,000 that regarding commercial credits, the total balance of 96.0 96.0 12.0 12.0 3.0% 3.0% 3,000.0 3,000.0 3,524.2 3,524.2 3000 3,000 111.9% 96.0 111.9% 96.0 3,252,331 3,252,331 62,008.70 40,000 62,008.70 40,000 5.20 5.20 3,252,331 3,252,331 credit is considered as non-performing from the first 62,008.70 62,008.70 10.0 10.0 16,000.0 16,000.0 40,000 40,000 5.20 5.20 94.0 94.0 2600 2,600 day of default. 94.0 94.0 2600 2,600 8.0 8.0 2.0% 2.0% 2,000.0 2,000.0 93.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 93.0 92.2 40,148.40 40,148.40 30,600.76 6.0 30,600.76 6.0 92.0 92.0 14,000.0 14,000.0 1.8% 1.8% 20,000 20,000 5.10 5.11 5.10 5.11 92.2

30,600.76 30,600.76 92.0 92.0 92.0

2200 2,200 5.11 5.11 2,510,861 2,510,861

4.0 1.0% 1,000.0 1,662.9 2200 2,200 During 2005, preventive reserves of 8.810 B Ps were4.0 1.0% 1,000.0 1,662.9 92.0 2,510,861 2,510,861 2,120,961 2,120,961 5.04 5.04 13,927.0 13,927.0

2,120,961 2,120,961 2.0 12,000.0

2.0 5.04 5.04 12,000.0 0.8% 0.8% 2.4

created, which allowed the accumulation of 7.450 B 2.4 2003 2003 Ps, 13.4% more2003 than the previous year. This figure2003 2003 2003 2003 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 2005 2004 2005 2004 is equivalent 2005 to 2004 coverage of 17.1 times the non-2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2005 2005 Inbursa2005 Inbursa 2005 Inbursa Inbursa2005 20052004 2004 2005 2004 2004 performing loans. Regarding the revenue sources,Market Average Market Average Market Average Market Average 2005 2005 2005 2005 the immediately demandable deposits registered a significant growth equal to 40% during the year, thus Financial Margin Retail Revenues representing near 51% of the total revenue sources. (B Ps) Inbursa CT (B Ps) This result is explained mainly by an increase in the 18.0 18.0 Inbursa CT accounts for individuals which represented 20,000.0 20,000.0 Transportation 83% 16.0 16.0 4.0% 4.0% 4,000.0 4,000.0 17.1

17.1 Transportation 83% 20,093.0 83% of total deposits. 20,093.0 14.0 14.0 18,000.0 18,000.0

12.0 12.0 3.0% 3.0% 3,000.0 3,000.0 3,524.2 3,524.2 111.9% Banco Inbursa is one of the best capitalized banks in 111.9% 10.0 10.0 Entertainment 2% 16,000.0 16,000.0 Entertainment 2% 8.0 8.0 2.0%Mexico, with 2.0% a 23.3% Tier Capital Ratio, which2 ,000 is .0 2,000.0

6.0 6.0 favorably compared with that obtained by the market 14,000.0 14,000.0 1.8% 1.8% Communications

4.0 1.0% Media Communications1,000.0 13% 1,662.9 4.0 average, which1.0% was 14.3%. 1,000.0 1,662.9 Media 13% 13,927.0 2.0 2.0 12,000.0 12,000.0 13,927.0 0.8% 0.8% 2.4 2.4 This parameter shows, in addition to soundness, Banco

Others 2% Inbursa’s capacity to participate in the growth ofOthers the 2% Inbursa Inbursa Inbursa Inbursa 2004 2004 2004 2004 Market Average Market Average Market AverageMexicanMarket credit Average market. 2005 2005 2005 2005

Accident and HealthAccident 14 % and Health 14 %

10000 10000 100.0% 100.0% Life 35 % Life 35 % 99.3% 99.3% 9000 9000 95.0% 95.0% 9,380.9 9,380.9 9,156.4 9,156.4 93.7% 93.7% 8000 8000 90.0% 90.0%

Automobiles 23% Automobiles 23% 7000 7000 85.0% 85.0%

Property and CasualtyProperty 28% and Casualty 28%

2004 2004 Inbursa Inbursa 2005 2005 Market Average Market Average

9800 9800 9600 10000 10000 9600 100.0% 100.0% 9400 9400 99.3% 9200 99.3% 9000 9000 9200 95.0% 95.0%

9000 9,279.2 9,380.9 9,380.9

9000 9,279.2 9,156.4 8800 9,156.4 93.7% 93.7% 8000 8000 8800 90.0% 90.0% 8600 8600 8400 7000 7000 8400 85.0% 85.0% 8200 8,478.1

8200 8,478.1

2004 2004 2004 2005 2004 Inbursa Inbursa 2005 2005 2005 Market Average Market Average

Government Entities Government Entities Bond T.Government Real 31%Entities Shares 65% CD’s 74% Shares 74% Shares Bond T.Government Nominal 74% 63%Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Nominal 63%

Government Government Government EntitiesGovernment Bond 26% Entities Bond 26% Entities Bond 26% Entities Bond 26%

Government Entities Government Entities Bond T.Government Nominal 39%Entities Bonds Government 35%Entities CD’s 29% Bond T. Nominal 39% Bonds 35% CD’s 29%

Government Entities CD’s 30% Bond T.Government Real Entities 8% CD’s 30% Bond T. Real 8%

Shares 74% Shares 74%

25 % 25 % Government Government Entities Bond 26% Entities Bond 26% 20 %

20 %21.9 % 21.9 % 15 % 15 % 14.8 % 10 % 14.8 % 10 % 10.1 % 8.5 %

5 % 10.1 % 5 % 8.5 % 2.8 % 2.8

Fondo Inbursa % 2.8 IPFondo and CInbursa Dow JonesIP and C CetesDow Jones Inflation Cetes Inflation 50.000 50.000 50.000 3,600 50.000 3,600 3,600 8000 3,600 8000 8000 800 8000 800 800 800 40,892.8 40,892.8 40,892.8 40.000 40.000 40.000 3,400 40.000 3,400 40,892.8 3,400 6000 3,400 6000 6000 600 6000 600 600 600 637.3 637.3 637.3 637.3 3,495.0 3,495.0 3,495.0 3,495.0 8,790.0 8,790.0 8,790.0 8,790.0 39,142.1 39,142.1 39,142.1 39,142.1 5,549.6 5,549.6 5,549.6 30.000 30.000 30.000 3,200 30.000 3,200 3,200 4000 3,200 4000 4000 400 4000 400 5,549.6 400 400 414.9 414.9 414.9 414.9 3,236.0 3,236.0 3,236.0 3,236.0 32,102.8 32,102.8 32,102.8 32,102.8

20.000 20.000 20.000 3,000 20.000 3,000 3,000 2000 3,000 2000 2000 200 2000 200 200 200 2,913.4 2,913.4 2,913.4 2,913.4

2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 3,495.0 3,495.0 3,495.0 3,495.0 38.000 38.000 38.000 3400 38.000 3400 3400 8000 3400 8000 8000 800 8000 800 800 800 39,142.1 39,142.1 39,142.1 39,142.1

36.000 36.000 36.000 3300 36.000 3300 3300 6000 3300 6000 6000 600 6000 600 600 600 637.3 637.3 637.3 637.3 5,549.6 5,549.6 5,549.6 34.000 34.000 34.000 3200 34.000 3200 3200 4000 3200 4000 4000 400 4000 400 5,549.6 400 400 3,236.0 3,236.0 3,236.0 3,236.0 414.9 414.9 414.9 414.9

32.000 32.000 32.000 3100 32.000 3100 3100 2000 3100 2000 2000 200 2000 200 200 200 2,913.4 2,913.4 2,913.4 2,913.4 32,102.8 32,102.8 32,102.8 32,102.8

2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005

1.6 % 1.6 % 1.6 % 1.6 % 50 50 15.0 % 50 15.0 % 50 Grupo15.0 Financiero % Inbursa Subsidiaries15.0 % 13.7% 13.7% AFORE INBURSA13.7% • SINCA INBURSA 1413.7% 1.2 % 1.2 % 1.2 % 13.2% 1.2 % 13.2% 13.2% 13.2% 12.0% 12.0% 12.0% 12.0% 10.0 % 10.0 % 10.0 % 10.0 % 27.5 30 27.5 30 27.5 30 27.5 30 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.8 % 0.6 % 0.6 % 0.6 % 0.6 % 18.8 18.8 5.0 % 18.8 5.0 % 18.8 5.0 % 5.0 % 0.4 % 17.1 0.4 % 17.1 0.4 % 17.1 0.4 % 17.1 0.4 % 10 0.4 % Afore10 0.4 Inbursa% 10 0.4 % 10

2003 2003 At the end of 2003 2004,2003 with the intention of diminishing2003 2003 the cost of commissions 2003 of the 2003 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 beneficiary base2005 in2005 the sector, the authority 2005 made2005 a change in the regulation related2005 to 2005 affiliation which basically consists of the ability of any affiliated member to change retirement funds as long as this new retirement fund has a lower commission than the current one the person is enrolled in. This regulatory change along with the increase of the Financial Advisers sales force in December 2004 from 8,513 to 10,022 at the closing of 2005, allowed the most significant growth in the number of members affiliated with Afore

PRLV 65% InbursaPRLV in its history,65% reaching an affiliatedPRLV member65% base of 3,252,331,PRLV 29.5% greater65% than PRLV 44% PRLV 44% PRLV 44% PRLV 44% Immediately Immediately Immediately Immediately demandable the demandableprevious year. This increase consequentlydemandable was reflected in the demandableassets managed which deposits 30 % reacheddeposits a level 30 of % 62billion 8.7 milliondeposits pesos, 30an % increase of 54.5%deposits during the 30 year% and growth in market share from 8.1% to 10.6%. Immediately Immediately Immediately Immediately demandable demandable demandable demandable deposits 51% deposits 51% deposits 51% deposits 51% Income from commissions showed an increase of 33.5% to 640.9 million pesos. Nevertheless, Commission Equivalents Bank Loans 5% Bank Loans 5% Bank Loans 5% Bank Loans 5% the net income of the retirement fund (afore) was negatively impacted by higher acquisition AFORE % costs related to the commercial growth strategy. Thus, Afore Inbursa reached a net income of 4.4 million pesos compared with 111 million in 2004. Inbursa 1.53% Bank Loans 5% Bank Loans 5% MarketBank LoansAverage 5% 2.82%Bank Loans 5%

Source: Consar

Affiliated Assets Minimum Salaries per Balance Indicators Members Administered Affiliated Member Accumulated

3800 38003,800 38003,800 38003,800 3,800 100.0 100.0100.0 100.0100.0 100.0100.0 100.0 80,000 80,00080,000 80,00080,0005.40 80,00080,0005.405.40 80,0005.405.40 5.405.40 5.40 5.39 5.39 5.39 5.39 5.39 5.39 3400 34003,400 34003,400 34003,400 3,400 5.39 5.39 98.0 98.098.0 98.098.0 98.098.0 98.0 60,000 60,00060,000 60,00060,0005.30 60,00060,0005.305.30 60,0005.305.30 5.305.30 5.30

3000 30003,000 30003,000 30003,000 3,000 96.0 96.096.0 96.096.0 96.096.0 96.0 3,252,331 3,252,331 3,252,331 3,252,331 3,252,331 3,252,331 62,008.70 62,008.70 62,008.70 3,252,331 3,252,331 62,008.70 62,008.70 62,008.70 62,008.70 40,000 40,00040,000 40,00040,0005.20 40,00040,0005.205.20 62,008.70 40,0005.205.20 5.205.20 5.20 94.0 94.094.0 94.094.0 94.094.0 94.0 2600 26002,600 26002,600 26002,600 2,600 93.0 93.0 93.0 93.0 40,148.40 40,148.40 40,148.40 40,148.40 40,148.40 40,148.40 20,000 20,00020,000 20,00020,0005.10 20,00020,0005.105.10 40,148.40 20,0005.105.10 40,148.40 5.105.10 92.2 5.10 92.2 92.2 92.2 30,600.76 30,600.76 30,600.76 30,600.76 30,600.76 30,600.76 30,600.76 92.0 30,600.76 92.092.0 92.092.0 92.092.0 92.0 5.11 5.11 5.11 5.11 5.11 5.11 5.11 5.11 2200 22002,200 22002,200 22002,200 2,200 92.0 92.0 92.0 92.0 2,510,861 2,510,861 2,510,861 2,510,861 2,510,861 2,510,861 2,510,861 2,510,861 2,120,961 2,120,961 2,120,961 2,120,961 2,120,961 2,120,961 2,120,961 2,120,961 5.04 5.04 5.04 5.04 5.04 5.04 5.04 5.04

2003 20032003 200320032003 2003200320032003 2003200320032003 2003200320032003 2003200320032003 2003200320032003 200320032003 20032003 2003 2004 20042004 200420042004 2004200420042004 2004200420042004 2004200420042004 2004200420042004 2004200420042004 200420042004 20042004 2004 2005 20052005 200520052005 2005200520052005 2005200520052005 2005200520052005 2005200520052005 2005200520052005 200520052005 20052005 2005

Millions of Pesos Constant • Market Average to December 2005 • Inbursa

The Accumulated Balance index issued by CONSAR in September 2001 shows the percentage of assets that an affiliated member ceases to earn when not participating in the retirement fund with the best accumulated balance per affiliated member. Afore Inbursa has registered Transportation 83% Transportation 83% Transportation 83% Transportation 83% the best accumulated balance per affiliated member since the indicator first appeared.

Entertainment 2% Entertainment 2% Entertainment 2% Entertainment 2%

Communications Communications Communications Communications Media 13% Media 13% Media 13% Media 13%

Others 2% Others 2% Others 2% Others 2%

Accident Accident Accident Accident and Health 14 % and Health 14 % and Health 14 % and Health 14 %

Life 35 % Life 35 % Life 35 % Life 35 %

Automobiles 23% Automobiles 23% Automobiles 23% Automobiles 23%

Property Property Property Property and Casualty 28% and Casualty 28% and Casualty 28% and Casualty 28%

9800 9800 9800 9800

9600 9600 9600 9600

9400 9400 9400 9400

9200 9200 9200 9200 9,279.2 9,279.2 9,279.2 9000 9000 9000 9000 9,279.2

8800 8800 8800 8800

8600 8600 8600 8600

8400 8400 8400 8400 8,478.1 8,478.1 8,478.1 8200 8200 8200 8200 8,478.1

2004 2004 2004 2004 2005 2005 2005 2005

Government Entities Government Entities Government Entities Government Entities Government Entities Government Entities Government Entities Government Entities Bond T. Real 31% Bond T. Real 31% SharesBond T. Real 65% 31% SharesBond T. Real 65% 31% CD’sShares 74% 65% CD’sShares 74% 65% BondCD’s T. Nominal 63%74% BondCD’s T. Nominal 63%74% Bond T. Nominal 63% Bond T. Nominal 63%

Government Government Government Government Entities Bond 26% Entities Bond 26% Entities Bond 26% Entities Bond 26%

Government Entities Government Entities GovernmentGovernment Entities Entities GovernmentGovernment Entities Entities Government Entities Government Entities Bond T. Nominal 39% Bond T. Nominal 39% BondsBond T. Nominal 35% 39% BondsBond T. Nominal 35% 39% Bonds 35% Bonds 35% CD’s 29% CD’s 29% CD’s 29% CD’s 29%

Government Entities Government Entities Government Entities Government Entities CD’s 30% CD’s 30% CD’s 30% CD’s 30% Bond T. Real 8% Bond T. Real 8% Bond T. Real 8% Bond T. Real 8%

25 % 25 % 25 % 25 %

20 % 20 % 20 % 20 % 21.9 % 21.9 % 21.9 % 21.9 %

15 % 15 % 15 % 15 % 14.8 % 14.8 % 14.8 % 14.8 % 10 % 10 % 10 % 10 % 10.1 % 10.1 % 10.1 % 10.1 % 8.5 % 8.5 % 8.5 % 5 % 5 % 5 % 5 % 8.5 % 2.8 % 2.8 % 2.8 % 2.8 2.8 % 2.8 Fondo Inbursa Fondo Inbursa Fondo Inbursa Fondo Inbursa IP and C IP and C IP and C IP and C Dow Jones Dow Jones Dow Jones Dow Jones Cetes Cetes Cetes Cetes Inflation Inflation Inflation Inflation 50.000 3,600 8000 800

40.000 40,892.8 3,400 6000 600 637.3 3,495.0 8,790.0 39,142.1 30.000 3,200 4000 5,549.6 400 414.9 3,236.0 32,102.8

20.000 3,000 2000 200 2,913.4

2004 2004 2004 2004 2005 2005 2005 2005 3,495.0 38.000 3400 8000 800 39,142.1

36.000 3300 6000 600 637.3

34.000 3200 4000 5,549.6 400 3,236.0 414.9

32.000 3100 2000 200 2,913.4 32,102.8

2004 2004 2004 2004 2005 2005 2005 2005

1.6 % 50 15.0 % 13.7% 1.2 % 13.2% 12.0% 10.0 % 27.5 30 0.8 % 0.8 % 0.6 % 18.8 5.0 % 0.4 % 17.1 0.4 % 10

2003 2003 2004 2004 2005 2005 15

PRLV 65% Sinca Inbursa PRLV 44% Immediately demandable deposits 30 %

A recomposition of the Sinca Inbursa investment portfolio was undertaken in 2005.

Immediately demandable In September, the sale of Sinca equity interest in CIE Las Américas was announced. The transaction deposits 51% Bank Loans 5% was valued at 990 million pesos. On the other hand, in November the sale of equity interest in Ferrosur to Infraestructura y Transportes Ferroviarios S.A. de C.V., a subsidiary of ITM (Infraestructura y Transportes México S.A. de C.V.), which is also subsidiary of Grupo México, equivalent to 33% of the total shares, was announced. The transaction totaled 1.086 billion pesos. Bank Loans 5% Later, Sinca Inbursa acquired 8.3% of ITM and authorization by COFECO is pending.

Finally, in October 2005 equity interest equivalent to 25% of the capital in Concesionaria Vuela Compañía de Aviación S.A. de C.V. was announced. Concesionaria Vuela Compañía de Aviación S.A. de C.V is the holder of the airline that will start operations at the beginning of March 2006 under the brand name of Volaris. Sinca Inbursa is participating in this investment along with 3800 3,800 Grupo Televisa, Grupo TACA and the investment fund Discovery Américas. 100.0 100.0 80,000 80,000 5.40 5.40

3400 3,400 5.39 5.39 The total investment portfolio of Sinca Inbursa at the closing of 2005 was 1.626 billion pesos, 98.0 98.0 60,000 60,000 5.30 5.30 maintaining its leadership in the market and its commitment to the talent of Mexican businessmen 3000 3,000 96.0 96.0 3,252,331 3,252,331 62,008.70 in a continuous40,000 search for opportunities62,008.70 40,000that allow the participation in the country’s5.20 growth and 5.20 94.0 94.0 2600 2,600 development, supporting high-yield projects. 93.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 92.2

30,600.76 30,600.76 92.0 92.0 5.11 5.11 2200 2,200 92.0

2,510,861 2,510,861 Investments made by Sinca Inbursa are recorded according to acquisition value and their 2,120,961 2,120,961 contribution to overall results is figured by the participation method, considering amortization,5.04 5.04

2003 2003 if applicable.2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

Investment by Sector

Transportation 83%

Entertainment 2%

Communications Media 13%

Others 2%

Accident and Health 14 %

Life 35 %

Automobiles 23%

Property and Casualty 28%

9800

9600

9400

9200

9000 9,279.2

8800

8600

8400

8200 8,478.1

2004 2005

Government Entities Government Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Nominal 63%

Government Entities Bond 26%

Government Entities Government Entities Bond T. Nominal 39% Bonds 35% CD’s 29%

Government Entities CD’s 30% Bond T. Real 8%

25 %

20 % 21.9 %

15 % 14.8 % 10 % 10.1 %

5 % 8.5 % 2.8 % 2.8 Fondo Inbursa IP and C Dow Jones Cetes Inflation Grupo Financiero Inbursa Subsidiaries SEGUROS INBURSA Y PATRIMONIAL INBURSA 16

Seguros Inbursa and Patrimonial Inbursa

US GAAP 1

Net Income Jan-Dec ´05 Jan-Dec ´04 Variation %

B USD B USD

Net Income CNSF GAAP 73.4 59.6 23.1% Reserve adjustments 4.6 6.7 -30.7% Investments adjustments (48.5) 25.5 -290.5% Deferred taxes (5.1) (6.0) -15.0% Deferred cost of acquisition (17.1) (3.4) 401.1% Monetary position adjustments (36.0) (45.9) -21.4% Others 133.8 48.6 175.2% Net increase 31.7 25.5 24.4% Net Income US GAAP 105.1 85.1 23.5%

The combined total premiums of Seguros Inbursa and Patrimonial Inbursa were 9.156 billion pesos, and represents a decrease of 2.4% in 2005 if compared with the previous year. This decrease is explained mainly by the strong competition in the automobile market observed during the year, that also produced a decrease in premiums in this market niche of 7.2%. Nevertheless, the offer of products at competitive prices contributed to Seguros Inbursa achieving an increase in its client base of 5.6% to 403,000 automobiles at the closing of the year.

Against this background, the business lines that registered important increases in premiums were Property and Casualty, Accident and Health with rates of 18.1% and 14.6% respectively.

As a result, Seguros Inbursa and Patrimonial Inbursa reported a combined income of 781.0 million pesos by the end of 2005, 13.7% more than reported in 2004. Under US GAAP, the net income of Seguros Inbursa and Patrimonial Inbursa together was 105.1 million dollars, 31.7 million dollars more than that obtained under the accounting rules of the Comisión Nacional de Seguros y Fianzas (CNSF). The difference between the results in US GAAP and the CNSF rules in 2005 is explained fundamentally by the reversion of 138.4 million dollars from asset reserves and other adjustments, as well as by total deductions of 106.7 million dollars as a result of investments, deferred taxes, costs of acquisitions and adjustments in monetary positions.

1 Non-audited figures presented under United States of America Generally Accepted Accounting Principles (US GAAP) 50.000 3,600 8000 800

40.000 40,892.8 3,400 6000 600 637.3 3,495.0 8,790.0 39,142.1 30.000 3,200 4000 5,549.6 400 414.9 3,236.0 32,102.8

20.000 3,000 2000 200 2,913.4

2004 2004 2004 2004 2005 2005 2005 2005 3,495.0 38.000 3400 8000 800 39,142.1

36.000 3300 6000 600 637.3

34.000 3200 4000 5,549.6 400 3,236.0 414.9

32.000 3100 2000 200 2,913.4 32,102.8

2004 2004 2004 2004 2005 2005 2005 2005

1.6 % 50 15.0 % 13.7% 1.2 % 13.2% 12.0% 10.0 % 27.5 30 0.8 % 0.8 % 0.6 % 18.8 5.0 % 0.4 % 17.1 0.4 % 10

2003 2003 2004 2004 2005 2005

PRLV 65% PRLV 44% Immediately demandable deposits 30 %

Immediately demandable deposits 51%

Bank Loans 5%

Bank Loans 5%

3800 3,800 100.0 100.0 80,000 80,000 5.40 5.40

3400 3,400 5.39 5.39 98.0 98.0 60,000 60,000 5.30 5.30

3000 3,000 96.0 96.0 3,252,331 3,252,331 62,008.70 40,000 62,008.70 40,000 5.20 5.20 94.0 94.0 2600 2,600 93.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 92.2

30,600.76 30,600.76 92.0 92.0 5.11 5.11 2200 2,200 92.0 2,510,861 2,510,861 2,120,961 2,120,961 5.04 5.04

2003 2003 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

18.0 20,000.0

16.0 4.0% 4,000.0 17.1 20,093.0 14.0 18,000.0

12.0 3.0% 3,000.0 3,524.2 111.9% 10.0 Transportation 83% 16,000.0

8.0 2.0% 2,000.0

6.0 14,000.0 1.8%

4.0 1.0% 1,000.0 1,662.9 Entertainment 2% 2.0 12,000.0 13,927.0 0.8% 2.4

17 Communications Media 13%

Inbursa Inbursa 2004 2004 Market Average Market Average 2005 2005

Others 2%

18.0 20,000.0

16.0 4.0% 4,000.0 17.1 20,093.0 14.0 Total Premium Detail per 18,000.0 12.0 3.0% 3,000.0 Business Line (2005) 3,524.2 111.9% 10.0 16,000.0 Accident 8.0 2.0% 2,000.0 and Health 14 %

6.0 14,000.0 1.8%

4.0 1.0% 1,000.0 1,662.9 Life 35 % 2.0 12,000.0 13,927.0 0.8% 2.4

Jan-Dec 05 Jan-Dec 04

Inbursa Stockholders’ equity Inbursa B USD B USD 2004 2004 Market Average Market Average 2005 2005 Stockholders’ equity CNSF GAAP 295.9 245.8 Automobiles 23% Adjustment on assets 50.5 57.9 Property Deferred Cost of Acquisitions 68.3 60.8 and Casualty 28% Fixed Assets (41.1) (35.8) Others 23.3 32.9

Adjustment on reserves 444.3 383.7 Total Premiums1 Deferred taxes (236.8) (247.4) Others 27.6 46.5 10000 100.0% Net Increase 285.6 240.7

Stockholders’ Equity US GAAP 581.5 486.5 9800 99.3% 9000 95.0%

9600 9,380.9 9,156.4

9400 93.7% 8000 90.0% 9200 The Seguros Inbursa and Patrimonial Inbursa combined Stockholders’ equity, under US GAAP

9000 9,279.2 was 581.5 million dollars compared with 295.9 million dollars obtained under the CNSF 7000 85.0% 8800

rules. This difference is explained mainly by positive effects of a total of 522.4 million dollars 8600

in key adjustments to assets, reserves and others, compensated for by a deduction of 236.8 8400

million dollars from adjustments to deferred taxes. 8200 8,478.1 2004 Inbursa 2005 Market Average

2004 Combined Selected Indicators INDICATORS Market Average 2005 Index1 Jan-Dec 05 Jan-Dec 04 Dec 05 Investments / Assets 84.2% 90.3% 74.5%

Investments / Reserves 10000 1.08 1.41 0.98 100.0%

Reserves / Premiums 3.16 2.72 2.17 99.3% 9000 95.0% Combined Index 93.7% 91.7% 99.3% 9,380.9 9,156.4

Includes Patrimonial Inbursa 93.7% 8000 Government Entities 90.0% Government Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Nominal 63%

7000 85.0% Government The combined index of both insurance businesses, that is to say, the operation, acquisition Entities Bond 26% and casualty rate cost in connection with withheld premiums was 93.7%, compared with Government Entities Government Entities 91.7% registered in the previous year. Bond T. Nominal 39% Bonds 35% CD’s 29% 2004 Inbursa 2005 Market Average

1. Includes Seguros and Patrimonial

Government Entities CD’s 30% Bond T. Real 8%

Shares 74%

Government Entities Bond 26%

25 %

20 % 21.9 %

15 % 14.8 % 10 % 10.1 %

5 % 8.5 % 2.8 % 2.8 Fondo Inbursa IP and C Dow Jones Cetes Inflation

Shares 74%

Government Entities Bond 26% Grupo Financiero Inbursa Subsidiaries PENSIONES INBURSA 18

Pensiones Inbursa

US GAAP 1

Jan-Dec 05 Jan-Dec 04

B USD B USD

Net Income CNSF GAAP 55.2 236.4 Adjustment on reserves 6.2 3.0 Adjustment on investments 9.6 (205.3) Deferred taxes (18.2) 97.3 Deferred cost of acquisitions 0.1 (12.2) Adjustment on monetary position 45.3 62.8 Others 32.8 94.1 Net Increase 10.1 39.8 Net Income US GAAP 65.3 276.2

At the closing of 2005, Inbursa Pensions reported earnings of 586.7 million pesos, compared with 2 billion 723.1 million pesos registered the previous year. The decrease is principally explained by a smaller contribution from subsidiaries derived from the spin-off of IDEAL in June of 2005. As a result of the spin-off, the stockholders’ equity in Inbursa Pensions diminished from 9 billion 748.3 million pesos to 2 billion 499.9 million pesos.

Jan-Dec 05 Jan-Dec 04

Stockholders’ Equity B USD B USD

Stockholders’ Equity CNSF GAAP 235.1 846.1 Adjustment on Investments 132.8 (376.1) Adjustment on Reserves 175.4 157.9 Deferred Taxes (94.2) (194.6)

Others (101.1) (231.4) Net Income 112.9 108.0 Stockholders’ Equity US GAAP 348.0 954.1 19

For its part, the Pensiones Inbursa Stockholders’ equity was 348 million dollars under U.S. GAAP compared with 235.1 million dollars obtained under the CNSF rules. The difference is explained due to positive effects in the adjustments to investments and reserves by an amount of 308.2 million dollars compensated by deductions equivalent to 195.3 million dollars originating from adjustments in deferred taxes and other B Ps 12M04 12M05 adjustments. Total Premiums 577.2 563.6 Others 230.4 251.5 Also, it is worth indicating that in July 2004, an Cost of Acquisitions 49.5 (19.2) extraordinary income of 2.025 billion dollars Net Income 460.2 455.9 was obtained from the restructuring of Grupo Investments Results 1,020.2 985.3 Televicentro. Monetary Position Results (482.1) (723.7) Subsidiaries Share* 294.3 2,364.9 The Pensiones Inbursa Stockholders’ equity Net Income 586.7 2,723.1 climbed to 2 billion 499.9 million pesos, 7 billion 248.4 million pesos less with respect to the level Assets 16,164.5 23,148.8 registered in 2004. Nevertheless, this decrease is Investments 16,043.8 22,874.0 derived from the split-off of IDEAL made in the Reserves 13,500.4 13,258.8 third quarter of 2005. Stockholders’ Equity 2,499.9 9,748.3 * Promotora Inbursa 50.000 3,600 8000 50.000 800 3,600 8000 800

40.000 40,892.8 3,400 6000 40.000 40,892.8 600 3,400 6000 600 637.3 637.3 3,495.0 3,495.0 8,790.0 8,790.0 39,142.1 39,142.1 30.000 3,200 4000 5,549.6 30.000 400 3,200 4000 5,549.6 400 414.9 414.9 3,236.0 3,236.0 32,102.8 32,102.8

20.000 3,000 2000 20.000 50.000 200 3,000 3,600 2000 8000 200 800 2,913.4 2,913.4

40.000 40,892.8 3,400 6000 600 637.3 3,495.0 8,790.0 39,142.1 30.000 3,200 4000 5,549.6 400 2004 2004 2004 2004 2004 2004 2004 2004 414.9 3,236.0

2005 2005 2005 2005 200532,102.8 2005 2005 2005

20.000 3,000 2000 200 2,913.4

2004 2004 2004 2004 2005 2005 2005 2005 3,495.0 3,495.0 38.000 3400 8000 38.000 800 3400 8000 800 39,142.1 39,142.1

36.000 3300 6000 36.000 600 3300 6000 600 637.3 637.3

34.000 3200 4000 5,549.6 34.000 400 3200 4000 5,549.6 400 3,236.0 3,236.0 414.9 414.9 3,495.0 32.000 3100 2000 32.000 38.000 200 3100 3400 2000 8000 200 800 39,142.1 2,913.4 2,913.4

32,102.8 36.000 32,102.8 3300 6000 600 637.3

34.000 3200 4000 5,549.6 400 2004 2004 2004 2004 2004 2004 2004 2004 3,236.0 2005 2005 2005 2005 2005 2005 2005 2005 414.9

32.000 3100 2000 200 2,913.4 32,102.8

2004 2004 2004 2004 2005 2005 2005 2005

1.6 % 1.6 % 50 15.0 % 50 15.0 % 13.7% 13.7% 1.2 % 13.2% 1.2 % 13.2% 12.0% 12.0% 10.0 % 10.0 % 27.5 30 27.5 30 0.8 % 0.8 % 0.8 % 0.8 % 0.6 % 0.6 % 18.8 5.0 % 18.8 5.0 % 0.4 % 17.1 0.4 % 1.6 % 17.1 0.4 % 10 0.4 % 10 50 15.0 % 13.7% 1.2 % 13.2% 12.0% 10.0 % 27.5 30 2003 2003 2003 0.8 % 0.8 % 2003 2004 2004 2004 2004 0.6 % 2005 2005 2005 2005 18.8 5.0 % 0.4 % 17.1 0.4 % 10

2003 2003 2004 2004 2005 2005

PRLV 65% PRLV 65% PRLV 44% PRLV 44% Immediately Immediately demandable demandable deposits 30 % deposits 30 %

Immediately Immediately demandable demandable deposits 51% deposits 51% PRLV 65% Bank Loans 5% Bank Loans 5% PRLV 44% Immediately demandable deposits 30 %

Bank Loans 5% Bank Loans 5%Immediately demandable deposits 51%

Bank Loans 5%

Bank Loans 5%

3800 3,800 3800 3,800 100.0 100.0 100.0 100.0 80,000 80,000 5.40 5.40 80,000 80,000 5.40 5.40

3400 3,400 5.39 3400 5.39 3,400 5.39 5.39 98.0 98.0 98.0 98.0 60,000 60,000 5.30 5.30 60,000 60,000 5.30 5.30

3000 3,000 3000 96.03,000 96.0 96.0 96.0 3,252,331 3,252,331 3,252,331 3,252,331 62,008.70 62,008.70 40,000 62,008.70 40,000 5.20 5.20 40,000 62,008.70 40,000 5.20 5.20 94.0 94.0 94.0 94.0 2600 2,600 2600 3800 2,600 3,800 93.0 100.0 93.0 100.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 20,000 80,00092.240,148.40 20,000 80,00040,148.40 5.10 5.40 5.10 5.40 92.2

30,600.76 30,600.76 92.0 92.0 30,600.76 30,600.76 92.0 92.0 5.11 5.11 5.11 5.11

3400 3,400 92.0 5.39 5.39 92.0 2200 2,200 2200 2,200 98.0 98.0 2,510,861 2,510,861 2,510,861 2,510,861

2,120,961 2,120,961 2,120,961 2,120,961 60,000 60,000 5.30 5.30 5.04 5.04 5.04 5.04

3000 3,000 96.0 96.0 3,252,331 3,252,331 62,008.70 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 40,000 62,008.70 2003 40,000 2003 5.20 2003 5.20 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 94.0 94.0 2005 2005 2005 2005 2005 2005 2005 2600 2005 2005 2,600 2005 2005 2005 2005 2005 2005 2005 93.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 92.2

30,600.76 30,600.76 92.0 92.0 5.11 5.11 2200 2,200 92.0 2,510,861 2,510,861 2,120,961 2,120,961 5.04 5.04

2003 2003 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

Transportation 83% Transportation 83%

Entertainment 2% Entertainment 2%

Communications Communications Transportation 83% Media 13% Media 13%

Entertainment 2% Others 2% Others 2%

Communications Media 13%

Others 2%

Accident Accident and Health 14 % and Health 14 %

Life 35 % Life 35 %

Accident and Health 14 %

Automobiles 23% Automobiles 23%

Life 35 %

Property Property and Casualty 28% and Casualty 28%

Automobiles 23%

Property and Casualty 28%

9800 Grupo Financiero9800 Inbursa Subsidiaries OPERADORA INBURSA 9600 9600 20

9400 9400

9200 9200

9000 9,279.2 9000 9,279.2

8800 8800

8600 8600 9800

8400 8400 9600

8200 8,478.1 Operadora Inbursa 8200 9400 8,478.1 9200

9000 9,279.2

8800 2004 2004 2005 Funds managed by Operadora Inbursa reached 30.186 billion 2005 8600 pesos at the closing of 2005, an increase of 21% with respect 8400 to 2004. 8200 8,478.1

Debt instruments (Fixed Income) 2004 2005

Government Entities Government EntitiesGovernment Entities Government Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Real Bond 31% T. Nominal 63% Shares 65% CD’s 74% Bond T. Nominal 63%

Government Government Entities Bond 26% Entities Bond 26%

Government Entities Government Entities Government Entities Government Entities Bond T. Nominal 39% Bonds 35% Bond T. NominalCD’s 39% 29% Bonds 35% CD’s 29% Government Entities Government Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Nominal 63%

Government Entities Bond 26%

Government Entities Government Entities CD’s 30% CD’s Bond30% T. Real 8% Bond T. Real 8% Government Entities Government Entities Bond T. Nominal 39% Bonds 35% CD’s 29% Inburex 8.7 bn Ps Fonibur 8.8 bn Ps

Government Entities The investment fund in debt instrumentsCD’s (INBUREX),30% which Bond T. Real 8% climbed to 8.735 billion pesos, presented annual yields of 9.01%, 216 basis points greater than the market average. 25 % 25 %

20 % 20 %

21.9 % 21.9 % Annual average On the other hand, the variable income of Operadora Inbursa 15 % 15 % yield in dollars (FONIBUR), with a portfolio equivalent to 8.844 billion pesos, 14.8 % 14.8 % 10 % presented annual yields of 24.7%, representing a difference of 10 % 25 % 10.1 % 10.1 %

8.5 % 419 basis points against the registered by the market average. 8.5 % 5 % 5 % 20 % 21.9 % 2.8 % 2.8 % 2.8 Fondo Inbursa Fondo Inbursa IP and C IP and C 15 % Dow Jones Dow Jones

Cetes Cetes 14.8 % 10 % Inflation Annual yield from January to December 2005 Inflation 10.1 %

FUND Annual Yield 8.5 % 5 % Inbursa Average Market 2.8 % 2.8 DINBUR 8.56% 5.62% Fondo Inbursa IP and C INBUREX 9.01% 6.85% Dow Jones Cetes INBURSA 20.41% 20.51% Inflation FONIBUR 24.70% 20.51% From March 31, 1981 to December 2005 IGLOBAL 32.26% 20.51% 50.000 3,600 8000 50.000 800 3,600 8000 800

40.000 40,892.8 3,400 6000 40.000 40,892.8 600 3,400 6000 600 637.3 637.3 3,495.0 3,495.0 8,790.0 8,790.0 39,142.1 39,142.1 30.000 3,200 4000 5,549.6 30.000 400 3,200 4000 5,549.6 400 414.9 414.9 3,236.0 3,236.0 32,102.8 32,102.8

20.000 3,000 2000 20.000 200 3,000 2000 200 2,913.4 2,913.4

2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 3,495.0 3,495.0 38.000 3400 8000 38.000 800 3400 8000 800 39,142.1 39,142.1

36.000 3300 6000 36.000 600 3300 6000 600 637.3 637.3

34.000 3200 4000 5,549.6 34.000 400 3200 4000 5,549.6 400 3,236.0 3,236.0 414.9 414.9

32.000 3100 2000 32.000 200 3100 2000 200 2,913.4 2,913.4 32,102.8 32,102.8

2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005

1.6 % 1.6 % 50 15.0 % 50 15.0 % 13.7% 13.7% 1.2 % 13.2% 1.2 % 13.2% 12.0% 12.0% 10.0 % 10.0 % 27.5 30 27.5 30 0.8 % 0.8 % 0.8 % 0.8 % 0.6 % 0.6 % 18.8 5.0 % 18.8 5.0 % 0.4 % 17.1 0.4 % 17.1 0.4 % 10 0.4 % 10

2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005

PRLV 65% PRLV 65% PRLV 44% PRLV 44% Immediately Immediately demandable demandable deposits 30 % deposits 30 %

Immediately Immediately demandable demandable deposits 51% deposits 51%

Bank Loans 5% Bank Loans 5%

Bank Loans 5% Bank Loans 5%

3800 3,800 3800 3,800 100.0 100.0 100.0 100.0 80,000 80,000 5.40 5.40 80,000 80,000 5.40 5.40 18.0 20,000.0

3400 3,400 5.39 3400 5.39 3,400 5.39 5.39 16.0 98.0 4.0% 98.0 4,000.0 98.0 98.0 17.1 60,000 60,000 5.30 5.30 60,000 60,000 5.30 20,093.0 5.30 14.0 18,000.0 3000 3,000 3000 3,000 12.0 96.0 3.0% 96.0 3,000.0 96.0 96.0 3,524.2 111.9% 3,252,331 3,252,331 3,252,331 3,252,331 62,008.70 62,008.70 40,000 62,008.70 40,000 5.20 5.20 40,000 62,008.70 40,000 5.20 5.20 10.0 16,000.0 94.0 94.0 94.0 94.0 2600 2,600 2600 2,600 8.0 2.0% 93.0 2,000.0 93.0 20,000 40,148.40 20,000 40,148.40 5.10 5.10 20,000 92.240,148.40 20,000 40,148.40 5.10 5.10 92.2

30,600.76 30,600.76 6.0 92.0 92.0 30,600.76 30,600.76 14,000.0 92.0 92.0 1.8% 5.11 5.11 5.11 5.11 2200 2,200 2200 2,200 92.0 92.0 1,662.9 2,510,861 2,510,861 4.0 2,510,861 1.0% 2,510,861 1,000.0 2,120,961 2,120,961 2,120,961 2,120,961 5.04 5.04 5.04 5.04 2.0 12,000.0 13,927.0 0.8% 2.4

2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 Inbursa Inbursa 2004 2004 Market Average Market Average 2005 2005

Transportation 83% Transportation 83%

Entertainment 2% Entertainment 2%

Communications Communications Media 13% Media 13%

Others 2% Others 2%

Accident Accident and Health 14 % and Health 14 %

10000 100.0% Life 35 % Life 35 % 99.3% 9000 95.0% 9,380.9 9,156.4 93.7% 8000 90.0%

Automobiles 23% Automobiles 23% 7000 85.0%

Property Property and Casualty 28% and Casualty 28%

2004 Inbursa 2005 Market Average

9800 9800

9600 21 9600

9400 9400

9200 9200

9000 9,279.2 9000 9,279.2

8800 8800

8600 8600

8400 8400

8200 8,478.1 8200 8,478.1

2004 2004 2005 2005

Government Entities Government EntitiesGovernment Entities Government Entities Bond T. Real 31% Shares 65% CD’s 74% Bond T. Real Bond 31% T. Nominal 63% Shares Shares 74% 65% CD’s 74% Bond T. Nominal 63%

Government Government Government Entities Bond 26% Entities Bond 26% Entities Bond 26%

Government Entities Government Entities Government Entities Government Entities Bond T. Nominal 39% Bonds 35% Bond T. NominalCD’s 39% 29% Bonds 35% CD’s 29%

Government Entities Government Entities CD’s 30% CD’s Bond30% T. Real 8% Bond T. Real 8%

Fondo Inbursa 9.2 bn Ps Dinbur 3.4 bn Ps IGLOBAL 4.3 bn Ps

25 % 25 %

20 % 20 % 21.9 % 21.9 %

15 % 15 % 14.8 % 14.8 % 10 % 10 % 10.1 % 10.1 %

5 % 8.5 % 5 % 8.5 % 2.8 % 2.8 % 2.8 Fondo Inbursa Fondo Inbursa IP and C IP and C Dow Jones Dow Jones Cetes Cetes Inflation Inflation Grupo Financiero Inbursa Subsidiaries OPERADORA INBURSA 22

Inversora Bursátil

Inversora Bursátil registered earnings of 313 million pesos during 2005, compared with 359.3 the previous year. Nevertheless, in 2004 it participated in two of the most important corporate restructurings carried out in the country in recent years (ICA and Desc).

In 2005, Inversora Bursátil placed a total of 91.790 billion pesos in short-term Stock Market Certificates, 3.609 billion pesos in long-term Stock Market Certificates and 47.771 billion in commercial paper.

The assets in custody registered an increase of 34.7% to 964.8 billion pesos.

Inversora Bursátil’s stockholders’ equity increased by 27% this year, despite the payment of of 10 million pesos in dividends. Stockholders’ equity surpassed the 1 billion 144.9 million pesos of 2004 reaching 1 billion 443.5 million in 2005.

Fianzas Guardiana Inbursa

During 2005, Fianzas Guardiana Inbursa reported premiums of 446.2 million pesos at the end of 2005, 60.2 million more than the 386 million pesos registered in 2004.

Fianzas Guardiana Inbursa reported 2005 earnings of 191.6 million pesos compared to 240.2 million pesos obtained in the same period of the previous year.

Grupo Financiero Inbursa 25 FINANCIAL STATEMENTS

At December 31, 2005 and 2004

Contents

Report of independent auditor’s 26 Statutory auditors report 27 Financial statements audited 28 Consolidated balance sheets Consolidated statements of income Consolidated statement of change stockholder’s equity Consolidated statement of change financial position 26

REPORT OF INDEPENDENT AUDITORS

To the Stockholders of Grupo Financiero Inbursa, S.A. de C.V. and subsidiaries

We have audited the accompanying consolidated balance sheets of Grupo Financiero Inbursa, S.A. de C.V. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in stockholders’ equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in Mexico. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and are prepared in conformity with the accounting criteria established by the Mexican National Banking and Securities Commission for controlling entities of financial groups. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting criteria used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As mentioned in Note 2, Grupo Financiero Inbursa, S.A. de C.V. is required to prepare and present its financial statements on the basis of the accounting criteria established by the Mexican National Banking and Securities Commission. In the instances mentioned in the aforesaid note, such criteria are at variance with generally accepted accounting principles in Mexico issued by the Mexican Institute of Public Accountants.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Grupo Financiero Inbursa, S.A. de C.V. and subsidiaries at December 31, 2005 and 2004, and the consolidated results of their operations, changes in their stockholders’ equity and changes in their financial position for the years then ended, in conformity with the accounting criteria for controlling entities of financial groups established by the Mexican National Banking and Securities Commission.

Mancera, S.C. José Luis García

Mexico City February 28, 2006

Grupo Financiero Inbursa 27 FINANCIAL STATEMENTS 28

GRUPO FINANCIERO INBURSA, S.A. DE C.V. AND SUBSIDIARIES

Consolidated Balance Sheets (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

December 31 2005 2004

Assets Cash and cash equivalents (Note 6) Ps. 12,848 Ps. 10,218 Investment in securities (Note 7) Instruments for trading 5,271 18,249 Available for sale - 2 Held to maturity 3,236 3,277 8,507 21,528

Securities and derivatives Debit balances under repurchase agreements (Note 8) 151 21 Derivatives (Note 9) 3,864 1,465 4,015 1,486

Performing loan portfolio (Note 10) Commercial loans 49,504 51,947 Loans to financial entities 1,085 833 Consumer loans 3,429 2,962 Home mortgage loans 858 588 Loans to government entities Total performing loan portfolio 54,876 56,330

Past-due loan portfolio (Note 10) Commercial loans 295 331 Loans to financial entities - - Consumer loans 88 7 Home mortgage loans 53 10 Total past-due loan portfolio 436 348 Total loan portfolio 55,312 56,678 Preventive provision for credit risks (Note 11) (7,450) (6,542) Loan portfolio (Net) 47,862 50,136

Other accounts receivable (Net) (Note 12) 1,718 3,270 Foreclosed and repossessed property 26 20

Buildings, furniture and equipment (Net) (Note 13) 852 667 Long-term equity investments (Notes 3 and 14) 9,578 17,135 Other assets, deferred charges and intangibles (Net) (Note 15) 599 604

Total assets Ps. 86,005 Ps. 105,064 Grupo Financiero Inbursa 29 FINANCIAL STATEMENTS

December 31 2005 2004

Liabilities Traditional deposits (Note 16) Demand deposits $ 24,125 $ 17,176 Time deposits 22,116 37,820 46,241 54,996

Interbank and other borrowings (Note 17) Demand deposits Short-term 1,197 1,365 Long-term 947 1,531 2,144 2,896

Securities and derivatives Credit balances under repurchase agreements (Note 8) 151 21 Derivatives (Note 9) 1,230 734 1,381 755

Other accounts payable Income tax and employee profit sharing payable (Note 18) 336 95 Sundry creditors and other accounts payable (Note 19) 2,779 6,392 3,115 6,487 Deferred taxes (Net) (Note 20) 981 898 Deferred credits 1 1 Total liabilities 53,863 66,033

Stockholders’ equity (Note 21) Contributed capital Capital stock 12,987 13,403 Stock premium 595 915 13,582 14,318

Earned capital Capital reserves 2,763 3,349 Retained earnings 23,944 32,191 Excess or deficit from restatement of stockholders’ equity (10,035) (15,423) Result from holding non-monetary assets derived from valuation of long-term equity investments (1,064) (980) Net income 2,913 5,527 18,521 24,664 Minority interest 39 49 Total stockholders’ equity 32,142 39,031 Total liabilities and stockholders’ equity $ 86,005 $ 105,064 30

Memoranda Accounts (Note 26) December 31 2005 2004

Transactions on behalf of others Customers’ current accounts Customers’ banks Ps. 1 Ps. 2 Settlement of customers’ transactions (124) (122) (123) (120)

Customers’ securities Customers’ securities received for safekeeping 964,790 713,464 Securities and notes received in guarantee 956 1,055 965,746 714,519

Transactions on behalf of customers Customers’ repurchase agreements 57,530 47,469

Total transactions on behalf of others Ps. 1,023,153 Ps. 761,868

Proprietary transactions Proprietary memoranda accounts Irrevocable lines of credit Ps. 2,804 Ps. 3,303 Property held in trust or under mandate 197,390 181,649 Property held for safekeeping or under management 787,312 592,653 Other contingent liabilities 388 7,146 Securities delivered for safekeeping 1,418 1,145 989,312 785,896

Repurchase transactions Securities to be received under repurchase agreements 108,373 82,099 Creditors under repurchase agreements (108,391) (82,092) (18) 7 Debtors under repurchase agreements 108,391 44,779 Securities to be delivered under repurchase agreements (108,373) (44,785) 18 (6) Total proprietary transactions Ps. 989,312 Ps. 785,897

Note: The historical capital stock is Ps. 2,594 and Ps. 3,000 at December 31, 2005 and 2004, respectively. See accompanying notes.

These balance sheets --consolidated with those of the financial entities and other companies that make up part of the financial group and are susceptible to being con- solidated-- were prepared in accordance with the accounting rules for Financial Group Holding Companies as issued by the National Banking and Securities Commission based on the provisions in Article 30 of the Law to Regulate Financial Groups, of universal and mandatory compliance, applied in a consistent fashion, and all incomes and expenses derived from the transactions performed by the Holding Company and the financial entities are reflected therein abiding by sound practices and the applicable legal and administrative provisions.

These consolidated balance sheets were approved by the Board of Directors under the responsibility of the undersigning officers. Lic. Marco Antonio Slim Domit C.P. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director Grupo Financiero Inbursa 31 FINANCIAL STATEMENTS

GRUPO FINANCIERO INBURSA, S.A. DE C.V. AND SUBSIDIARIES

Consolidated Statements of Income January 1 through December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

2005 2004

Interest income Ps. 16,985 Ps. 11,097 Interest expense 13,157 8,365 Monetary position result, net (financial margin) (640) (1,032) Financial margin (Note 24) 3,188 1,700

Preventive provision for credit risks (Note 11) 1,289 1,314 Financial margin adjusted for credit risks 1,899 386

Commissions and fees collected 1,776 1,763 Commissions and fees paid (126) (84) Intermediation (loss) income (Note 25) (170) 1,978 1,480 3,657 Total operating revenues 3,379 4,043

Administrative and promotional expenses 2,126 1,779 Operating income 1,253 2,264

Other income 508 249 Other expenses 323 198 185 51 Income before income tax and employee profit sharing 1,438 2,315 Current year income tax and employee profit sharing (Note 18) (491) (266) Deferred income tax and deferred employee profit sharing (Note 20) (133) (615) (624) (881) Income before equity interest in net income of subsidiaries and associates 814 1,434 Equity interest in net income of subsidiaries and associates (Note 14) 2,071 4,021 Income from continuing operations 2,885 5,455

Discontinued operations, extraordinary items and changes in accounting policies (Note 20) 28 78 Consolidated net income 2,913 5,533 Minority interest - 6 Net income Ps. 2,913 Ps. 5,527

These financial statements --consolidated with those of the financial entities and other companies that make up part of the financial group and are susceptible to being consolidated-- were prepared in accordance with the accounting rules for Financial Group Holding Companies as issued by the National Banking and Securities Commission based on the provisions in Article 30 of the Law to Regulate Financial Groups, of universal and mandatory compliance, applied in a consistent fashion, and all incomes and expenses derived from the transactions performed by the Holding Company and the financial entities are reflected therein abiding by sound practices and the applicable legal and administrative provisions. These consolidated balance sheets were approved by the Board of Directors under the responsibility of the undersigning officers. Lic. Marco Antonio Slim Domit Lic. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director 32

Consolidated Statements of Changes in Stockholders’ Equity January 1 through December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2, 21 and 22) Contributed capital Earned capital

Excess or deficit Result from Total Capital Stock Capital Retained from restatement of holding non Net Minority stockholders’ stock premium reserves earnings stockholders’ equity monetary assets income interest equity

Balance at December 31, 2003 $ 13,403 $ 915 $ 3,264 $ 30,741 $ (15,423) $ (1,054) $ 2,494 $ 43 $ 34,383 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2003 to retained earnings and increase in reserve for the repurchase of Company’s shares 85 2,409 (2,494) Dividends declared as per board of directors’ meeting held on April 14, 2004 (959) (959) Recognition of comprehensive income (Note 22) Comprehensive income Adjustment to net income of subsidiaries of year ended December 31, 2003 - - - Net income 5,527 5,527 Result from holding non-monetary assets derived from valuation of long-term equity investments 74 74 Minority interest 6 6 Balance at December 31, 2004 13,403 915 3,349 32,191 (15,423) (980) 5,527 49 39,031 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2004 to retained earnings 5,527 (5,527) Dividends declared as per board of directors’ meeting held on April 13, 2005 (918) (918) Effect of spin-off as per resolution adopted at extraordinary stockholders’ meeting held on September 25, 2005 (Note 14) (416) (320) (586) (12,856) 5,388 (130) (8,920) Recognition of comprehensive income (Note 22) Comprehensive income Net income 2,913 2,913 Result from holding non-monetary assets derived from valuation of long-term equity investments 46 46 Minority interest (10) (10) Balance at December 31, 2005 $ 12,987 $ 595 $ 2,763 $ 23,944 $ (10,035) $ (1,064) $ 2,913 $ 39 $ 32,142

These statements of stockholder’s equity --consolidated with those of the financial entities and other companies that make up part of the financial group and are susceptible to being consolidated-- were prepared in accordance with the accounting rules for Financial Group Holding Companies as issued by the National Banking and Securities Commission based on the provisions in Article 30 of the Law to Regulate Financial Groups, of universal and mandatory compliance, applied in a consistent fashion, and all incomes and expenses derived from the transactions performed by the Holding Company and the financial entities are reflected therein abiding by sound practices and the applicable legal and administrative provisions. Grupo Financiero Inbursa 33 FINANCIAL STATEMENTS

Consolidated Statements of Changes in Stockholders’ Equity January 1 through December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2, 21 and 22) Contributed capital Earned capital

Excess or deficit Result from Total Capital Stock Capital Retained from restatement of holding non Net Minority stockholders’ stock premium reserves earnings stockholders’ equity monetary assets income interest equity

Balance at December 31, 2003 $ 13,403 $ 915 $ 3,264 $ 30,741 $ (15,423) $ (1,054) $ 2,494 $ 43 $ 34,383 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2003 to retained earnings and increase in reserve for the repurchase of Company’s shares 85 2,409 (2,494) Dividends declared as per board of directors’ meeting held on April 14, 2004 (959) (959) Recognition of comprehensive income (Note 22) Comprehensive income Adjustment to net income of subsidiaries of year ended December 31, 2003 - - - Net income 5,527 5,527 Result from holding non-monetary assets derived from valuation of long-term equity investments 74 74 Minority interest 6 6 Balance at December 31, 2004 13,403 915 3,349 32,191 (15,423) (980) 5,527 49 39,031 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2004 to retained earnings 5,527 (5,527) Dividends declared as per board of directors’ meeting held on April 13, 2005 (918) (918) Effect of spin-off as per resolution adopted at extraordinary stockholders’ meeting held on September 25, 2005 (Note 14) (416) (320) (586) (12,856) 5,388 (130) (8,920) Recognition of comprehensive income (Note 22) Comprehensive income Net income 2,913 2,913 Result from holding non-monetary assets derived from valuation of long-term equity investments 46 46 Minority interest (10) (10) Balance at December 31, 2005 $ 12,987 $ 595 $ 2,763 $ 23,944 $ (10,035) $ (1,064) $ 2,913 $ 39 $ 32,142

These consolidated statements of stockholder’s equity were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Marco Antonio Slim Domit C.P. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director 34

Consolidated Statements of Changes in Financial Position January 1 through December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

2005 2004 Operating activities Net income Ps. 2,913 Ps. 5,527 Items not (providing) requiring the use of Company’s resources: Depreciation and amortization 205 166 Goodwill amortization - 44 Deferred taxes 133 615 Preventive provision for credit risks 1,289 1,314 Mark-to-market unrealized gains (548) (657) Equity interest in net income of subsidiaries (2,071) (4,021) Discontinued operations, extraordinary items and changes in accounting policies (28) (78) 1,893 2,910 Increase or decrease in items pertaining to operating activities Loan portfolio 985 (10,046) Treasury transactions 13,412 (9,302)

Derivatives for trading (1,903) - Traditional deposits (8,755) 20,537 Bank loans (752) (2,242) Other accounts receivable; foreclosed and repossessed property; other assets, deferred charges; other accounts payable and deferred credits (1,653) 2,119 Deferred taxes (78) (30) Resources provided by operating activities 3,149 3,946

Financing activities Effect of spin-off (8,920) Dividends paid (918) (959) Resources used in financing activities (9,838) (959)

Investing activities

Fixed assets and long-term equity investments 9,319 48 Resources provided by investing activities 9,319 48 Net increase in cash and cash equivalents 2,630 3,035 Cash and cash equivalents at beginning of year 10,218 7,183 Cash and cash equivalents at end of year Ps. 12,848 Ps. 10,218

These profit and loss statements --consolidated with those of the financial entities and other companies that make up part of the financial group and are susceptible to being consolidated-- were prepared in accordance with the accounting rules for Financial Group Holding Companies as issued by the National Banking and Securities Commission based on the provisions in Article 30 of the Law to Regulate Financial Groups, of universal and mandatory compliance, applied in a consistent fashion, and all incomes and expenses derived from the transactions performed by the Holding Company and the financial entities are reflected therein abiding by sound practices and the applicable legal and administrative provisions.

These consolidated profit and loss statements were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Marco Antonio Slim Domit Lic. Francisco Díaz Bocanegra C.P. Federico Loaiza Montaño C.P. Raúl Reynal Peña Chairman Chief Administrative Officer Chief Finance Officer Audit Director Grupo Financiero Inbursa 35 FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005)

1. Description of the Business and Relevant Events III. Other companies a) Description of the business • Out Sourcing Inburnet, S.A. de C.V.

Grupo Financiero Inbursa, S.A. de C.V. (the Group) conducts its transac- is engaged in providing professional, administrative, accounting, infor- tions in conformity with the regulations established in the Law Regulating mation technology and management services exclusively to its affiliated Financial Groups and the General Rules for the Incorporation and Functio- companies. ning of Financial Groups, as well as the requirements of the Mexican Natio- nal Banking and Securities Commission (the CNBV or the Commission). The • Asesoría Especializada Inburnet, S.A. de C.V. Group is engaged primarily in acquiring and managing the voting shares issued by Group companies. Such shares must represent at least 51% of the provides promotional services for the sale of financial products offered ex- paid-in capital of each company. clusively by companies in the Group.

In conformity with the Law Regulating Financial Groups, the Group is liable b) Relevant events alternatively and unconditionally for the liabilities and losses of its subsi- diaries (Note 28). During 2005 and 2004, the Group’s operations were affected by the follo- wing relevant events: In conformity with the requirements of the CNBV applicable to Controlling Companies of Financial Groups, the accompanying financial statements For 2005: include the consolidated financial information. i) Spin-off The Group has no personnel of its own; management and control of ope- rations is effected by means of service agreements entered into with its In August 2005, the Group concluded a corporate restructuring pro- affiliated companies. cess, whereby it spun off its equity investment in certain subsidiaries and created a new economic group engaged in making infrastructure A description of the activities performed by the companies in which the investments in Mexico and Latin America. As part of the restructuring, Group is the majority shareholder is as follows: the Group transferred its equity interest in the following companies: Pensiones Inbursa, Banco Inbursa, Seguros Inbursa and Fianzas Inbur- I. Companies regulated by the CNBV sa, to Impulsora del Desarrollo Económico de América Latina, S.A. de C.V. (the newly created company). The spin-off of shares that gave rise • Arrendadora Financiera Inbursa, S.A. de C.V. to a decrease in stockholders’ equity of Ps. 8,920 had no effect in the Group’s results of operations. is an auxiliary credit organization that conducts its transactions in conformity with the regulations established in the Auxiliary Credit ii) New accounting pronouncements Organizations and Activities Act and the general regulations imposed by the Commission. The Company is engaged primarily in leasing all ty- - Circular Única applicable to banks pes of personal and real property under financial and operating leases, in terms of the Auxiliary Credit Organizations and Activities Act and On December 2, 2005, provisions of general application for credit institu- regulations. tions (Circular Única or “Sole Circular”) were issued in the Official Gazette with the aim of updating and compiling into one circular the provisions • Banco Inbursa, S.A. contained in the circulars formerly issued by the Commission applicable to credit institutions. The provisions include new rules that address principally is a multiple-type banking institution engaged in providing banking the following areas: and credit services and acting as a trust company, in terms of the Mexican Credit Institutions Act. • The strengthening of internal control system, with related corporate governing bodies responsible for the review of any new internal control • Inversora Bursátil, S.A. de C.V. procedures.

acts primarily as an intermediary in the trading of securities and cu- • The updating of rules related to risk management and capitalization re- rrencies in terms of the Securities Trading Act quirements.

• Operadora Inbursa de Sociedades de Inversión, S.A. de C.V. • The updating of minimum guidelines to be observed in carrying out its credit transactions. conducts its transactions in conformity with the Mexican Investment Funds Act, the Mexican Corporations Act and the general regulations im- • Additional requirements for the diffusion of the financial information, as posed by the Commission. The Company is engaged primarily in providing well as additional liability requirements for officers in charge of preparing administrative and stock distribution and repurchasing services, as well as and subscribing the financial information. administering the portfolios of the investment funds it manages. Some of the new provisions established in the Circular Única with res- pect to the adoption of minimum guidelines to be observed in carrying II. Companies regulated by the Mexican National Insurance and Bonding out credit transactions, and the preparation, start-up and completion of the plan to apply internal control provisions must be fully implemented Commission (CNSF) by 2006.

• Seguros Inbursa, S.A. At the time the Circular Única went into force, all general rules and provi- sions, circulars and circulars/official communications, as well as any other is engaged in selling fire, automobile, maritime transportation, civil secondary administrative standards formerly issued by the Commission or and professional liability, crop, sundry, individual, group and collective life, past commissions, with the exception of those circulars related to bank accident and health insurance. The Company is also authorized to engage debtors’ assistance programs, were revoked. in reinsurance and rebonding business. - Trust operations • Fianzas Guardiana Inbursa, S.A. On July 11, 2005, Banxico Circular 1/2005 was issued that establishes the is duly authorized by the Mexican government to guarantee, for a fee, the rules for banks and other financial institutions to follow in trust operations. fulfillment of contracted financial obligations of individuals or corporate Such rules include amendments to the related financial laws published in entities to other individuals or corporate entities, public or private. The June 13, 2003. Company is also liable for the payment of claims arising under bonds ex- tended. - Requirements related to recommendations for transactions with securi- ties and derivative financial instruments • Pensiones Inbursa, S.A. On December 15, 2005, provisions of general application were published in is engaged in life insurance activities that involve exclusively the handling the Official Gazette that address financial uses and practices as they relate of pension insurance derived from social security legislation. The Company to security and derivative recommendations made by financial institutions. is also authorized to engage in reinsurance, co-insurance and counter-in- The aim of these new provisions is to establish minimum internal control re- surance business. quirements to be observed by credit and other financial institutions related to these types of recommendations so as to prevent conflicts of interest. 36

These new provisions will take effect on June 15, 2006. vi) Dynamic solvency testing (minimum guarantee capital) iii) New accounting pronouncements In conformity with the rules issued by the CNSF, insurance companies are required to assess their capital adequacy in relation to their minimum gua- Effective January 1, 2005, the Group adopted the provisions of Mexican rantee capital requirement to identify possible risks that might affect their accounting Bulletin B-7, Business Acquisitions. Bulletin B-7 addresses the financial position under several operating scenarios. The dynamic solvency financial accounting and reporting for business and entity acquisitions and testing should be performed by an actuary, whose report must be presented requires that all business combinations be accounted for using the purchase to the Commission prior to July 31, 2005. method. Bulletin B-7 also eliminates the option of amortizing goodwill, re- quiring instead the evaluation of goodwill for impairment at the end of each vii) Provisions that include new rules to be observed by the external au- year, and provides specific rules related to the accounting treatment of the ditors of non-bank banks, auxiliary credit organizations and money ex- transfer or sale of net assets between entities under common control. change houses

The adoption of this accounting pronouncement is not expected to have a On June 28, 2004, new requirements related to reports and communica- material effect on the Group’s financial position or on its results of opera- tions were issued in the Official Gazette for the purpose of establishing the tions at December 31, 2005. following: homologation of reports and opinions issued by external audi- tors on consolidated financial statements issued by multiple-type banking In 2005, the Group had no business acquisitions. institutions, specifying the contents and scope of the information contained in audit reports and ensuring the independence of external auditors during For 2004: the course of their work. i) New requirements related to money laundering 2. Accounting Policies and Practices

In 2004, changes were made to regulations related to money laundering The financial statements of the Group are prepared on the basis of the that specifically address the issue on preventing the financing of terrorism accounting criteria established by the CNBV, which include specific rules and that broaden the powers of the Ministry of Finance and Public Credit with respect to the recording, valuation, presentation and disclosure of (SHCP) to establish provisions of general application for financial interme- the Group’s financial information. Also, as required by the CNBV, in diaries to prevent such illicit activities. Highlights of the new provisions are certain instances, the financial statements were prepared considering as follows: i) requires financial institutions to identify and report unusual the guidelines of generally accepted accounting principles in Mexico or alarming transactions; ii) broadens the guidelines for identifying cus- (Mexican GAAP). tomers; iii) requires customers to be classified by risk grade; iv) requires financial institutions to establish a communications and control committee When reviewing the financial statements, the CNBV has, within its ins- and a compliance officer position. pection and supervisory powers, the right to demand those modifications and corrections that it considers necessary prior to the publication of such ii) Collateralized repurchase agreements statements.

As of October 2004, financial institutions began to carry out collaterali- In certain instances, the accounting criteria used in the preparation of fi- zed repurchase agreements whereby the seller is obligated to provide a nancial statements are at variance with Mexican GAAP as applicable to guarantee on fluctuations in the value of repurchased securities for those unregulated entities. The main differences are as follows: agreements with terms of more than three business days. i) Under the CNBV accounting criteria, the unrealized gain or loss on the iii) Rules for the grading of loan portfolios of multiple-type banking ins- equity investment in companies in which the Group does not have a con- titutions trolling interest or over which it does not exercise significant influence is recognized using the equity method, whereas Mexican GAAP requires the As of December 1, 2004, new rules went into force related to the methodo- use of the restated-cost method. logy for the grading of the loan portfolio that broaden the risk ranges into which the different types of loans the Bank extends are classified. ii) For Mexican GAAP purposes, foreclosed and repossessed property is treated as a non-monetary item, whereas the CNBV rules requires that fo- iv) Accounting pronouncements reclosed and repossessed property be treated as a monetary item.

New accounting pronouncements issued by the Mexican Institute of Public iii) Premiums receivable and payable on repurchase agreements are recor- Accountants (MIPA) went into effect as of January 1, 2004. Such pronoun- ded at their present value, not based on the accrual method. cements, as they apply to stockbrokerage firms, are as follows: iv) Under both Mexican GAAP and the Commission’s criteria, the assets and - Mexican accounting Bulletin C-12, Accounting for Certain Financial Instru- liabilities of those companies over which the Group exercises significant ments with Characteristics of Both Liabilities and Equity, defines the basic influence must be consolidated. However, Commission accounting criteria differences between liabilities and equity. Bulletin C-12 also establishes the establish an exception to this rule, as it does not require consolidation of rules for classifying and valuing the initial recognition of the components of investment funds, companies regulated by the CNSF and non-financial liabilities and equity of combined financial instruments. The recognition and companies, even though the Group exercises significant influence over its subsequent valuation of the components of liabilities and equity of financial subsidiaries. instruments is subject to the requirements of previously issued bulletins. v) Mexican GAAP requires the identification of embedded derivatives, whi- - Mexican accounting Bulletin C-15, Accounting for the Impairment or le Commission accounting criteria does not address this issue. With respect Disposal of Long-Lived Assets, defines the rules for the computation and to the valuation of the hedging effectiveness of those derivatives acting recognition of losses derived from the impairment and the reversal of such as hedges, Commission accounting criteria differ from Mexican GAAP in assets, of long-lived assets and certain identifiable tangibles and intangi- certain valuation procedures. bles, which includes goodwill. vi) Commission accounting criteria establish that the balance of margins - In May 2004, the MIPA issued Mexican accounting Bulletin B-7, Business related to futures for trading is included as part of the caption Cash and Acquisitions. The observance of Bulletin B-7 is compulsory for fiscal years cash equivalents, whereas Mexican GAAP requires that such margins be beginning on or after January 1, 2005, although earlier observance is re- included in Derivatives. commended. Bulletin B-7 addresses the financial accounting and reporting for business and entity acquisitions and requires that all business combina- vii) Companies are not required to eliminate intercompany transactions tions be accounted for using the purchase method. Bulletin B-7 also elimi- when using the equity method recognized by the holding company. nates the option of amortizing goodwill and provides specific rules related to the acquisition of minority interest and these types of transactions bet- viii) Under Commission accounting criteria, the effect of the change in tax ween entities under common control. rates used to compute deferred taxes is presented in the statement of inco- me as an extraordinary item and not as part of the caption Deferred taxes, The Group’s management has concluded that the adoption of these new as required by Mexican GAAP. accounting bulletins will not have a material effect on the Group’s financial position or on its results of operations. a) Consolidation of the financial statements v) Provisions of general application for broker dealers The Group is required to consolidate the financial information of those entities of which it holds more than 50% of the voting shares (Note 3), On September 6, 2004, the Commission issued provisions of general appli- with the exception of its investments in companies regulated by the CNSF, cation for broker dealers (Circular Única) with the aim of updating and com- which, in conformity with CNBV regulations, are recognized using the equi- piling into one circular the provisions contained in its Series 10 circulars, ty method. with the exception of those circulars that were issued in conjunction with Banco de Mexico (BANXICO). The new provision related to internal control The financial statements are prepared based on the grouping of accounts and risk management, among others, will take effect gradually and must be required by the CNBV for financial groups. fully implemented by 2007. Grupo Financiero Inbursa 37 FINANCIAL STATEMENTS

Important intercompany balances and transactions have been eliminated 2005 in the consolidation, except for those carried out between companies in Effect Effect the insurance and bonding sector, as well as those related to investment Average financial on other funds (SINCA Inbursa, S.A. de C.V.). As specified by the CNBV, transactions amount on margin expenses conducted between the CNSF-regulated subsidiaries and other companies Liabilities in the Group, have not been eliminated (Note 4). Deposits 48,341 48,289 52 Interbank and other Commission regulations require that amounts shown in the financial sta- borrowings 3,173 3,173 - tements of credit institutions be expressed in millions of Mexican pesos Securities and derivatives 211,171 211,152 19 with purchasing power at the latest balance sheet date reported on. Since Other accounts payable 13,120 - 13,120 certain captions of the accompanying consolidated financial statements 275,805 262,614 13,191 show balances less than one million Mexican pesos, certain historical or Net long position $ 22,524 $ 20,380 $ 2,144 nominal amounts are the same as the amounts restated or, otherwise, are Net monetary result $ 655 $ 593 $ 62 not included in the captions. Net monetary position in other subsidiaries $ 50 $ 47 $ 3 b) Use of estimates Total monetary position result $ 705 $ 640 $ 65 The preparation of financial statements requires management to make cer- tain estimates to determine the value of certain assets and liabilities. Actual amounts could vary from these estimates. Excess or deficit from restatement of stockholders’ equity. This represents the accumulated monetary position gain or loss determined at the time the c) Recognition of the effects of inflation on financial information effects of inflation were first recognized.

The amounts shown in the accompanying financial statements and in these Accumulated result from holding non-monetary assets. The result from hol- notes are expressed in millions of Mexican pesos with purchasing power at ding non-monetary assets represents the increase in the specific value of December 31, 2005, using factors derived from the value of the Investment non-monetary assets over or under the increase in the value of such assets Units (UDIs). The restatement factor applied to the financial statements at as measured solely by inflation. December 31, 2004 was 1.029087, which is similar to the factor calculated using information derived from the Mexican National Consumer Price Index d) Recording of transactions from January 1 to December 31, 2005. The main inflation accounting con- cepts and procedures are as follows: Transactions related to investments in securities, repurchase agreements and security loans, among others (both proprietary and customer’s posi- Capital stock, retained earnings and capital reserves. Capital stock, retai- tions), are recorded at the time agreements are entered into, irrespective ned earnings and capital reserves have been restated from the time capital of the settlement date. contributions were made or earnings were obtained, through the latest balance sheet date. e) Cash and cash equivalents

The captions Excess or deficit from restatement of stockholders’ equity and Cash and cash equivalents consist basically of bank deposits and highly Result from holding non-monetary assets derived from valuation of long- liquid investments with maturities of less than 90 days. Such investments term equity investments are restated as additional items in stockholders’ are stated at acquisition cost plus accrued interest at the balance sheet equity. date, similar to market value.

Non-monetary items. Non-monetary items different from stockholders’ f) Foreign currency transactions equity (buildings, furniture and equipment, deferred charges) are shown restated based on the value of the UDI, from the date of purchase to the - Buying and selling of foreign currency latest balance sheet date. Transactions involving the buying and selling of foreign currency are recor- Equity investments in subsidiaries. Equity investments in subsidiaries ded at the contracted price. In the case of the buying or selling of foreign are valued based on the equity method. The difference between their currency, where it is agreed that settlement shall be a maximum of two restated values based on the value of the UDI is recognized in the cap- bank-working days after trade date, such currency is recorded as a restric- tion Result from holding non-monetary assets in stockholders’ equity. ted liquid asset and a liquid asset disbursement, respectively. This caption also includes increases or decreases determined in other stockholders’ equity accounts of subsidiaries different from the current - Foreign currency denominated assets and liabilities year gain or loss. Foreign currency denominated assets and liabilities are recorded at the pre- Statement of income. The amounts shown in the statement of income are vailing exchange rate on the day of the related transaction and are trans- expressed in millions of constant Mexican pesos, based on the factor obtai- lated using the exchange rate of the date of the financial statements, as ned by dividing the value of the UDI at the end of the year by the value of published by BANXICO on the immediately following bank-working day. the UDI in each of the months the transactions occurred. Exchange differences are charged or credited to results of operations under the caption Intermediation (loss) income. Monetary position result. Monetary assets and liabilities give rise to gains and losses due to the diminished purchasing power of the Mexican peso. g) Investments in securities The effect of inflation on the average monetary position of the Group and its subsidiaries is included each month in the statement of income. An Investments in securities include debt instruments and shares. They are analysis of the principal average annual amounts of monetary assets and classified based on management’s intentions with regard to each invest- liabilities considered in determining the monetary position result for the ment at the time of purchase. Each classification includes specific rules with year ended December 31, 2005 is as follows: respect to the way the investment is recorded, valued and presented in the financial statements, as shown below:

Securities for trading 2005 Effect Effect These instruments are acquired for the purpose of obtaining gains on retur- Average financial on other ns and/or their changes in market value. These investments are initially re- amount on margin expenses corded at cost, plus returns, which in the case of debt instruments, interest Assets is determined using the real interest or straight-line method, and is credited Cash and cash equivalents $ 7,090 $ 1,280 $ 5,810 to income as part of the caption Interest income. Securities for trading are Investments in securities and derivatives 163,939 162,029 1,910 valued using the restated prices provided by a price supplier and the related Loan portfolio 55,042 54,079 963 gain or loss is credited or charged to operations under the caption Interme- Other assets 72,258 65,606 6,652 diation (loss) income. 298,329 282,994 15,335 The transfer of this type of instruments to Available for sale or Held to ma- turity requires express authorization from the CNBV.

Securities available for sale

They refer to cash surplus investments, which are not intended for trading or to be held to maturity. These investments are initially recorded at cost, plus returns, which in the case of debt instruments, interest is determined using the real interest or straight-line method, and is credited to income as part of the caption Interest income. 38

Such securities are valued at fair value using the restated prices provided on the related price quotations in the markets where futures are traded: the by a price supplier authorized by the Commission and the related gain or Chicago Mercantile Exchange (CME) and the Mexican Derivatives Market loss is credited or charged to stockholders’ equity. At the maturity date or (MexDer). at the time the instruments are sold, the difference between the selling price and their carrying value is recognized in the results of the year. The • Forwards and futures for hedging mark-to-market adjustment of instruments available for sale reflected in stockholders’ equity is reversed against results of operations as a realized In the case of forwards and futures for hedging, the asset or liability gain or loss. position (buying or selling) is recorded at the initial spot price multi- plied by the number of units of the underlying asset, which is valued Securities held to maturity at its fair value, using the same valuation methods or techniques as those used for the primary hedged position, recognizing this effect Investments in debt instruments with determined payments due in results of operations in the caption Intermediation (loss) income. over a period of more than 90 days are acquired by the Group or its The counter or offsetting asset or liability account is valued at the subsidiaries with the intention of holding them to maturity. These contracted price. investments are recorded at cost, plus returns determined using the straight-line method, and are credited to income as part of the caption In addition, the difference between the initial spot price and the counter- Interest income. account is recognized as a deferred charge or credit, using the straight- line method during the effective term of the agreement. Transfer of instruments between categories For presentation purposes, the Group offsets the asset and liability posi- The transfer of instruments to Held to maturity or Available for sale requi- tions, presenting the net result together with the principal position. res the express authorization of the CNBV. In October 2005, the Group stopped using hedging forwards. Dividends • Swaps Stock dividends received are recorded recognizing the increase or decrea- se in the number of shares held and, at the same time, the average unit Swaps for trading and for hedging are recorded at the initially contracted purchase cost of the shares. This is the same as assigning a zero value to price. the stock dividend received. Swaps for trading are valued at their fair value, which represents the Cash dividends received are recorded by decreasing the value of the re- present value of anticipated future cash flows to be received and to be lated equity investment. delivered, which are projected based on the applicable implicit future rates, discounted by the prevailing market interest rates at the date of h) Repurchase agreements valuation. The determined result of this valuation is recognized in results of operations as an unrealized gain or loss. In security repurchase agreements, a portion is recorded as an asset and the other portion as a liability, in both memoranda and balance sheet In the case of swaps used as hedges, both the portion recognized as an accounts. asset (flows to be received) and the portion recorded as a liability (flows to be delivered) are valued using the same method as the one used to At the end of each month securities to be received and to be delivered value the assets and liabilities that are being hedged. The effect of the under repurchase agreements are valued at their fair value based on valuation is recognized in the statement of income in the caption Inter- prices provided by a price supplier. Accounts receivable and paya- mediation (loss) income. ble under security repurchase agreements are valued at the present value of the price at maturity (the contracted price plus the related i) Clearing accounts premium), based on the rate of return on similar securities, whose ma- turity is equal to the remaining period of the repurchase agreement. Clearing account balances refer to the buying and selling of securities The related gain or loss on valuation is included as part of the caption pending settlement. Intermediation (loss) income. With respect to transactions involving the buying and selling of foreign In conformity with Commission requirements, the net debit and credit currency that are not paid for immediately in cash or where settlement balances shown in the balance sheets correspond to individual offsetting is not on a same-day basis, the related amount receivable or payable is of the asset and liability positions for each transaction. recorded in Mexican pesos in a clearing account, until the respective pa- yment is made. The net amount of debit and credit balances in clearing Repurchase transactions with collateral must have maturities of more accounts is included as part of the caption Other accounts receivable and than three business days or when the risk limits established with other Sundry creditors, respectively, in the balance sheet. intermediaries have been exceeded. Guarantees received in repurchase transactions in which the Group acts as buyer are recorded in memoranda k) Loan portfolio and interest earned accounts. For transactions in which the Group acts as seller, delivered securities are reclassified to the caption Proprietary securities delivered Loans granted are recorded as an asset as of the date on which resources in guarantee under security repurchase agreements. are used by the borrower. When payments of principal or accrued interest are not made at the time they are due, the aggregate amount of principal At December 31, 2004, for transactions in which the consolidated compa- and interest is transferred to the past-due portfolio: nies act as buyers, it is not required to provide guarantees, since the risk limits established with other intermediaries have not been exceeded. • When the Group learns that borrower has declared bankruptcy in terms of the Mexican Bankruptcy Act or i) Derivatives • When the borrower fails to make payments within the originally stipu- lated terms, as follows: Derivatives are recorded at the contracted price and are valued using the applicable accounting criteria based on their classification as either for · If the loan is repayable in one single payment of principal and interest trading or hedging. Highlights of the accounting treatment used for each and is 30 days or more overdue; agreement are as follows: · If the loan is of principal repayable in one single payment and interest payable in installments and is 90 days or more overdue in the interest • Forwards for trading payments or 30 days or more overdue in payment of principal; · If the loan has principal and interest due and payable in installments The position in forwards for trading is recognized as an asset and a lia- and is 90 days or more overdue. bility at the initially contracted price multiplied by the notional amount. · If the loan consists of revolving loans and two monthly billing periods The net balance (position) is presented in the balance sheet as part of the or, if applicable, is 60 days or more overdue. caption Securities and derivatives · If the loan consists of mortgage loans and is 90 days or more over- due. The valuation effect resulting from the difference between the con- tracted price and the fair value is recognized in the statements of in- Overdue loans are transferred back to the performing loan portfolio when come as Intermediation (loss) income. The fair value of forwards is there is evidence of sustained payment on part of the borrower of both provided by a price supplier. principal and interest of at least three consecutive installments, or in the case of installments that cover periods in excess of 60 days, when the • Futures for trading borrower has made at least one payment.

The position in futures for trading is recognized as an asset and a liability Interest on performing loans is credited to income as it accrues, irres- at the initially contracted price multiplied by the notional amount. The net pective of the settlement date. The recognition of interest is suspended balance (position) is presented in the balance sheet as part of the caption at the time the loan is transferred to the past-due portfolio. Ordinary cash and cash equivalents, together with the guarantees provided (margin). uncollected interest included in the past-due portfolio is not considered in grading the credit risk since such interest is reserved in full. Fluctuations in futures transactions are recognized in results of operations in the caption Intermediation (loss) income. The fair value is obtained based Grupo Financiero Inbursa 39 FINANCIAL STATEMENTS

l) Preventive provision for credit risks financial statements of the investees. When these companies pay cash dividends, the amount received is deducted from the carrying The Ministry of Finance and Public Credit (SHCP) establishes the rules value of the investments (Note 14). for credit portfolio grading applicable to credit institutions. The Bank sets up quarterly the preventive provision for credit risks based on the In those cases where the Group has no significant equity interest, shares qualitative and quantitative factors for each borrower and by type of are valued at cost and restated based on the value of the UDI. If there credit. A summary of the grading process is shown in Note 11. is evidence that the realizable value is less than cost, the value of the original investment is written off. As a result of the grading process, any increase or decrease in the pre- ventive provision for credit risks is credited or charged to results of ope- Cash dividends paid by companies are recorded net of the value of the rations, adjusting the financial margin, accordingly. related equity investment.

Loans are written off when collection is deemed to be practically im- q) Deferred charges possible. The collection of loans that have previously been written off is recognized through a credit to the preventive provision for credit risks. Deferred charges are recorded at acquisition cost and are restated ba- sed on the value of the UDI and amortized at the annual rate of 5% In the case of corporate credits, the Group performs a detailed analysis (Note 15). of the financial position and qualitative aspects of the applicant, and reviews the borrowers’ credit history based on reports obtained from r) Impairment in the value of long-lived assets credit bureaus. The Group performs annual analyses to determine whether there are in- In the case of consumer, home mortgage and other loans granted to dications of impairment in the value of its long-lived assets, tangible or small and medium-sized companies, the Group performs parametric intangible, including goodwill. At December 31, 2005 and 2004, there analyses and verifies the borrowers’ credit history based on reports ob- are no indications of impairment in the Group’s long-lived assets. tained from credit bureaus. s) Deposits and borrowings The Group has also created specific policies to grant loans based on the product or type of credit requested. Liabilities in the form of deposits and borrowings (demand and time deposits and interbank and other borrowings) are accounted for at the The control of credits starts from the time information is received to the underlying amount of the liability. Accrued interest is charged to income time the credit is repaid in full, passing through a number of filters in the using the accrual method at the agreed rate. different areas of the Group. Securities included in traditional deposits (demand and time deposits) The Group monthly evaluates and follows up on credits by means of and that are part of the direct bank deposits are classified and recorded regulatory reports issued to meet the requirements of the related re- as follows: gulatory authorities and internal reports with their respective monthly updating. • Securities placed at nominal value are accounted for at the underlying amount of the liability. Accrued interest is charged to income; The Group has established different procedures for the recovery of credits, including loan restructuring negotiations and court-action for • Securities placed at a price other than nominal value (with a premium collection. or at a discount) are accounted for at the underlying amount of the liabi- lity, while the difference between the nominal value of the security and m) Capital and operating leases the amount of cash received is recognized as a deferred charge or credit and is amortized using the straight-line method against income during • Capital lease the term of the security.

Financial leases are accounted for in the portfolio at their underlying Fixed-term deposits made through certificates of deposit (CD’s) and no- amounts. Unaccrued financial income is recorded as a deferred credit. tes with interest payable at maturity (PRLV’s) at December 31, 2005 and 2004, were recorded at their nominal value (Note 16). Guaranty deposits made by customers under capital leases are recor- ded in Other accounts payable, against which last rental payments Interbank call money transactions, whose repayment period may not are applied. Guaranty deposits are only recognized as revenue for exceed three days, are included as part of the caption Demand deposits. the Group once the leases have expired and when the purchase op- Accrued interest is charged to income using the accrual method. At De- tion has been exercised. cember 31, 2005 and 2005, the Group has not recorded any balance for this type of transactions. • Operating lease t) Labor obligations All transactions not classified as capital leases are controlled in memo- randa accounts. All rental income under such leases is recognized in the The revised Mexican accounting Bulletin D-3, Labor Obligations, portfolio and is recorded under the caption Accounts receivable using establishes the overall rules for the valuation, presentation and dis- the accrual method. All assets subject to operating leases are recorded closure of so-called “other post-retirement benefits” as well as the as fixed assets. rules applicable to employee termination pay for those workers who have not reached the age of retirement due to causes other than n) Foreclosed and repossessed property or property received as pay- restructuring. ment in kind • Termination payments Foreclosed and repossessed property is recorded at the lower of either the court-awarded value established in the foreclosure or re- Under Mexican Labor Law, the Group is liable for termination benefits possession proceedings or the net realizable value of the property. accruing to employees who are dismissed in certain circumstances. It is Property received as payment in kind is recorded at the lower of the the practice to charge termination payments to costs and expenses of appraised value of the property or the agreed amount. In conformi- the year in which the decision to dismiss an employee is made. ty with CNBV requirements, foreclosed and repossessed property is classified as monetary items and, accordingly, has not been restated • Retirement pension fund and seniority premiums as the rest of the long-lived assets. Under Mexican labor law, in the case of Group companies which have o) Buildings, furniture and equipment employees of their own, employees who resign after fifteen or more years of service, as well as those who are dismissed in certain circums- Buildings, furniture and equipment are recorded initially at cost and tances or the heirs of those who die before such time, are entitled to a presented in Mexican pesos with purchasing power at the balance seniority premium. sheet date, net of the related accumulated depreciation, which is computed on restated values using the straight-line method, at the To meet this obligation, at December 31, 2005 and 2004, the Group has related tax rates. set up a reserve based on actuarial computations, following require- ments of the Mexican accounting Bulletin D-3, Labor Obligations, issued Maintenance and repairs are recognized in the statement of income at by the Mexican Institute of Public Accountants. the time they are incurred. u) Deferred taxes p) Long-term equity investments Deferred taxes are determined on all temporary differences in ba- Equity investments in subsidiaries and other long-term equity in- lance sheet accounts for financial and tax reporting purposes, using vestments are recorded initially at acquisition cost and then valued the enacted income tax rate at the time the related asset or liabili- at their net carrying value using the equity method, which consists ty is expected to be realized. Deferred taxes are computed on tax of recognizing the Group’s equity, after purchase, in current year losses to be carried forward. The current year effect is recognized results of operations and other stockholders’ equity accounts in the in the statement of income and the cumulative effect is presented, 40

depending on its nature, as an asset or liability. The Group evaluates tem resources are computed by applying a 0.5% cash flow commission periodically the possibility of recovering deferred tax assets and, if and a 0.5% annual commission on the daily balance of each affiliate’s necessary, creates a valuation allowance for those assets that are accumulated contributions. Balance commissions are provided for on unlikely to be recovered (Note 20). a daily basis and the accumulated balance is obtained at the end of each month. Cash flow commissions are recognized at the time worker The effects derived from the change in tax rates must be presented in contributions are received. the statement of income as an extraordinary item. aa) Intermediation (loss) income v) Contingent liabilities and commitments Intermediation (loss) income is mainly derived from mark-to-market va- Liability provisions are recognized whenever (i) the Group has current luations of securities, instruments to be received or to be delivered un- obligations (legal or assumed) derived from past events, (ii) the liability der repurchase agreements, derivatives and foreign currency, as well as will most likely give rise to a future cash disbursement for their settle- the purchase-sale of securities and derivatives for trading, and foreign ment and (iii) the liability can be reasonably estimated. currency. This caption also includes the effect of translation of foreign currency positions and UDIs. Contingent liabilities are recognized only when they will most likely give rise to a future cash disbursement for their settlement. Also, commit- ab) Goodwill ments are only recognized when they will generate a loss. Goodwill represents the excess purchase price of shares of subsidiaries w) Assets and liabilities in investment units (“UDIS”) over the book value of the shares acquired and is restated based on the value of the UDI. UDI denominated assets and liabilities are presented in the balance sheet at their Mexican peso value at the balance sheet date. The value Through December 31, 2004, goodwill was being amortized using the of the UDI at December 31, 2005 and 2004 was Ps. 3.637532 and Ps. straight-line method over a period of twenty years. 3.534716, respectively. Effective January 1, 2005, the Group adopted the requirements of Mexi- x) Memoranda accounts can accounting Bulletin B-7, Business Acquisitions, issued by the Mexi- can Institute of Public Accountants. As a result, the Group no longer The Group records and controls in Memoranda accounts all supple- amortizes its goodwill. The adoption of this accounting pronouncement mentary financial and non-financial information to that included in the gave rise to an increase in the Group’s net income for 2005 of Ps. 158 balance sheet, mainly with respect to contingent liabilities for the ope- derived from the proscription of amortization of goodwill. Goodwill is ning of lines of risk exposure due to participation in Banxico’s so-called recorded initially at acquisition cost and then restated based on the va- SPEUA interbank payment system (through 2004), the opening of lines lue of the UDI. of credit agreed with borrowers, securities held for safekeeping or under management valued at fair value and property held under trust agree- ac) Equity interest in net income of subsidiaries ments (when the Group acts as trustee), as well as asset and liability positions derived from security repurchase agreements. This caption represents the equity method applied to long-term invest- ments in shares of companies not subject to consolidation. y) Recognition of interest ad) Comprehensive income Interest on performing loans is recognized and credited to income using the accrual method. Late interest on past-due loans is credited to in- Comprehensive income consists of the net income or loss for the year, come at the time the interest is actually collected. Interest on financial plus the result from holding non-monetary assets and the effect of defe- instruments is credited to income using the accrual method. rred taxes applied directly to stockholders’ equity, as well as the effect of minority interest. Interest on liabilities is charged to income using the accrual method, irrespective of the date on which it is due and payable. 3. Consolidation of Subsidiaries z) Commission income and expense The Group is required to consolidate the financial information of all its subsidiaries in the financial sector, as well as the subsidiaries that pro- Commissions collected and paid are credited and charged, respectively, vide supplementary or ancillary services. CNBV requirements establish to income of the year in which the commissions are determined. Com- that long-term equity investments in insurance and bonding companies missions are independent of the interest rate charged or paid. are to be valued using the equity method and, accordingly, they are not subject to consolidation. The Group is a major stockholder in the Commissions derived from the management of retirement savings sys- following companies:

Equity % 2005 2004 Arrendadora Financiera Inbursa, S.A. de C.V. 99.9999 99.9999 Asesoría Especializada Inburnet, S.A. de C.V. 99.9993 99.9993 Banco Inbursa, S.A. 99.9996 99.9996 Fianzas Guardiana Inbursa, S.A. 99.9999 99.9999 Inversora Bursátil, S.A. de C.V., Casa de Bolsa 99.9956 99.9956 Pensiones Inbursa, S.A. 99.9999 99.9999 Operadora Inbursa de Sociedades de Inversión, S.A. de C.V. 99.9985 99.9985 Out Sourcing Inburnet, S.A. de C.V. 99.9980 99.9980 Seguros Inbursa, S.A. 99.9999 99.9999

Highlights of the financial information of consolidated subsidiaries, including intercompany transactions, at December 31, 2005 and 2004 are as follows:

2005 Total Total Stockholders’ Net assets liabilities equity income Arrendadora Financiera Inbursa $ 374 $ 301 $ 73 $ 15 Asesoría Especializada Inburnet 9 4 5 3 Banco Inbursa 77,439 53,515 23,924 1,034 Inversora Bursátil 1,700 257 1,443 313 Operadora Inbursa 581 81 500 219 Out Sourcing Inburnet 28 9 19 2 $ 80,131 $ 54,167 $ 25,964 $ 1,586

2004 Total Total Stockholders’ Net assets liabilities equity income Arrendadora Financiera Inbursa $ 132 $ 74 $ 58 $ 10 Asesoría Especializada Inburnet 3 1 2 1 Banco Inbursa 89,723 65,799 23,924 1,352 Inversora Bursátil 1,323 183 1,140 358 Operadora Inbursa 546 46 500 174 Out Sourcing Inburnet 23 6 17 3 $ 91,751 $ 66,109 $ 25,641 $ 1,898 Grupo Financiero Inbursa 41 FINANCIAL STATEMENTS

Highlights of the unconsolidated financial information of CNSF-regulated subsidiaries, including intercompany transactio- ns, at December 31, 2005 and 2004 are as follows:

2005 Seguros Fianzas Pensiones Inbursa Guardiana Inbursa Total Investments in securities Ps. 13,463 Ps. 960 Ps. 16,044 Ps. 30,467 Debtors 2,474 97 5 2,576 Reinsurers and rebonders 1,692 17 0 1,709 Other assets 2,988 72 115 3,175 Total assets Ps. 20,617 Ps. 1,146 Ps. 16,164 Ps. 37,927

Technical reserves Ps. 15,077 210 12,829 28,116 Reinsurers and rebonders 610 7 - 617 Other liabilities 2,173 142 835 3,150 Total liabilities Ps. 17,860 Ps. 359 Ps. 13,664 Ps. 31,883

Contributed capital Ps. 988 Ps. 147 Ps. 1,027 Ps. 2,162 Accumulated earned capital 1,219 448 886 2,553 Net income 550 192 587 1,329 Total stockholders’ equity 2,757 787 2,500 6,044 Total liabilities and stockholders’ equity Ps. 20,617 Ps. 1,146 Ps. 16,164 Ps. 37,927

2004 Seguros Fianzas Pensiones Inbursa Guardiana Inbursa Total Investments in securities Ps. 15,600 Ps. 1,043 Ps. 22,780 Ps. 39,423 Debtors 2,245 68 8 2,321 Reinsurers and rebonders 638 14 - 652 Other assets 264 63 266 593 Total assets Ps. 18,747 Ps. 1,188 Ps. 23,054 Ps. 42,989

Technical reserves Ps. 13,478 Ps. 211 Ps. 13,204 Ps. 26,893 Reinsurers and rebonders 391 11 - 402 Other liabilities 2,058 121 142 2,321 Total liabilities Ps. 15,927 Ps. 343 Ps. 13,346 Ps. 29,616

Contributed capital Ps. 984 Ps. 146 Ps. 5,268 Ps. 6,398 Accumulated earned capital 1,152 460 1,728 3,340 Net income 684 239 2,712 3,635 Total stockholders’ equity 2,820 845 9,708 13,373 Total liabilities and stockholders’ equity Ps. 18,747 Ps. 1,188 Ps. 23,054 Ps. 42,989

In the unconsolidated financial statements, the equity investment in these companies has been valued using the equity method, which consists of recognizing the Group’s proportional share in the stockholders’ equity and in the net income or loss of the investees. The equity investment in subsidiaries is reflected in the balance sheet in the caption Long-term equity investments (Note 14). 4. Related Parties

At December 31, 2005 and 2004, the balance of loans made to related parties represents a percentage within the limits established under the Credit Institutions Act. An analysis is as follows: a) Balances and transactions with companies regulated by the CNBV and companies that provide su- pplementary services to the Group

The following balances represent related party transactions, which are included in the Group’s assets, liabilities and results of operations. Such balances have not been eliminated in the consolidated financial statements, since the CNBV accounting criteria prohibits the Group from consolidating the financial statements of the subsidiaries with which the Group conducts these transactions (Note 2 iii).

Balances 2005 2004 Commissions receivable on investment funds (Note 12) $ - $ 18 Commissions receivable from Inbursa Siefore (Note 12) 27 18 27 $ 36 Deposits $ 70 $ 303

Transactions Administrative expenses and rentals paid $ 392 $ 374 b) Transactions with CNSF-regulated companies

The Group’s subsidiaries in the insurance and bonding sector carried out several intercompany transactions in 2005 and 2004, on which they obtained income or incurred expenses. As specified by the CNBV, the financial information of subsidiaries in the insurance and bonding sector is not subject to consolidation. Also, CNBV requirements establish that intercompany transactions must not be eliminated when using the equity method and, consequently, the related balances and transactions have been included in the Group’s consolidated financial information. The equity investment in subsidia- ries in the insurance and bonding sector has been valued using the equity method and are included in the statement of income under the caption Equity interest in net income of subsidiaries and associates.

Balances Equity interest 2005 2004 Equity investments (short- and long-term) SINCA Inbursa (held by Seguros y Patrimonial) 21.8200% $ 182 $ 473 Promotora Inbursa (held by Fianzas, Pensiones, Salud y Seguros) 92.8346% 877 8,662 Salud Inbursa (held by Seguros) 99.9999% 119 117 Patrimonial Inbursa (held by Seguros) 99.9924% 397 159 Autofinanciamiento Inbursa (held by Promotora y Seguros) 99.9999% 36 13 $ 1,611 $ 9,424 42

5. Foreign Currency Position

An analysis of the U.S. dollar position at December 31, 2005 and 2004 is as follows:

U.S. dollars 2005 2004 Assets 4,711,871,494 3,636,224,826 Liabilities 4,969,405,547 3,295,959,486 Net (short) long position (257,534,053) 340,265,340 Exchange rate 10.6344 11.1495 $ (2,739) $ 3,794 Restatement - 110 Total in Mexican pesos $ (2,739) $ 3,904

At December 31, 2005 and 2004, the exchange rate was Ps. 10.6344 pesos and Ps. 11.1495 pesos, respectively, per U.S. dollar. This exchange rate was defined by BANXICO for the settlement of foreign currency denominated liabilities. At February 28, 2006, the date of the audit report on these financial statements, the U.S. dollar exchange rate was Ps. 10.4761 pesos.

In conformity with regulatory requirements established by BANXICO, credit institutions must maintain a balanced daily foreign exchange position, both on a combined basis and in each foreign currency. The acceptable combined short or long positions may not exceed 15% of the Group’s net stockholders’ equity. This percentage is determined based on the operating position reported to BANXICO, which is different from the book amount due to the derivatives (futures and forwards position). 6. Cash and Cash Equivalents

An analysis of cash and cash equivalents at December 31, 2005 and 2004 is as follows:

2005 2004 Deposits in BANXICO (a) Ps. 5,852 Ps. 5,036 Demand deposits (b) 4,483 968 24/48 hour futures (c) 1,084 2,605 24/48 hour futures margin (d) 765 220 Cash 437 407 Deposits in domestic and foreign banks 95 79 Other liquid assets (e) 81 3 Call money (f) 51 900 Ps. 12,848 Ps. 10,218

(a) At December 31, 2005 and 2004, the Group had made the following deposits in BANXICO:

2005 2004 Special accounts (1) Monetary regulation deposits Ps. 5,826 Ps. 5,014 Accrued interest 23 20 Current accounts U.S. dollar deposits 3 2 Ps. 5,852 Ps. 5,036

(1) BANXICO requires banks to make a monetary regulation deposit based on their deposits and borrowings from the public in both Mexican pesos and U.S. dollars. Such deposit is for an indefinite term since the withdrawal date is to be deter- mined by BANXICO. The deposit bears interest at the average 28-day “TIIE” rate on deposits for the same term.

(b) These deposits consist of investments of the liquidity coefficient and treasury surpluses, which are denominated in U.S. dollars. Their equivalent in Mexican pesos is as follows:

2005 2004 Amount Interest rate Amount Interest rate Foreign credit institutions Barclay’s Bank $ 4,467 4.19 $ 367 2.50 Bank of America 15 3.10 15 4.92 Wachovia Bank 1 3.76 12 1.80 UBS - 574 2.50 $ 4,483 $ 968 c) 24/48-hour currency futures refer to transactions involving the buying and selling of foreign currencies, which are to be settled within a maximum period of two days and whose liquidity is restricted until the date of payment. An analysis is as follows:

2005

(Credit) Cash receipts Average debit clearing (disbursements) contracted account balances in U.S. dollars exchange rate in Mexican pesos U.S. dollar purchases U$ 172,003,352 $ 10.6364 $ (1,829) U.S. dollar sales (70,040,861) 10.6423 $ 745 U$ 101,962,491 Year-end exchange rate 10.6344 Net position in Mexican pesos $ (1,084) Grupo Financiero Inbursa 43 FINANCIAL STATEMENTS

2004

(Credit) debit Cash receipts Average clearing account Restated (disbursements) in contracted balances in clearing U.S. dollars exchange rate Mexican pesos account U.S. dollar purchases USD 486,232,036 Ps 11.1937 Ps (5,443) Ps (5,601) U.S. dollar sales (259,175,410) Ps 11.1800 Ps 2,898 Ps 2,982 USD 227,056,626 Year-end exchange rate 11.1495 Equivalent in Mexican pesos Ps (2,532) Restatement increment (73) Net position in Mexican pesos Ps (2,605)

(d) The futures margin required to enter into futures contracts in 2005 2004 recognized markets is restricted in terms of its liquidity until the un- CME Ps. 390 Ps. 50 derlying transactions have reached their maturity date. An analysis Mexder 125 21 of the 24/48 hour futures margin at December 31, 2005 and 2004 is Futures margin 515 71 as follows (Note 9b): Guarantee deposits for swaps 250 149 Total Ps. 765 Ps. 220 e) Other liquid assets are as follows: 2005 2004 Remittances in transit Ps. 61 Ps. 2 Demand notes 19 Fine metal coins 1 1 Ps. 81 Ps. 3 f) At December 31, 2005, in a three-day call-money transaction, Ps. 51 was assigned to Banorte at an 8.25% interest rate. At December 31, 2004, in a three- day call-money transaction, Ps. 900 was assigned to Banorte at an 8.70% interest rate. 7. Investments in Securities

At December 31, 2005 and 2004, investments held by the Group were valued using the information provided by a price supplier. Therefore, there are no situations in which the fair value of such investments were determined by means of other valuation methods.

See Note 27 for a description of risk management policies, as well as the risks to which the Group is exposed.

• Instruments for trading

2005 Accrued Unrealized gain Investment interest on valuation Fair value Sovereign debt (1) $ 1,273 $ 33 $ 80 $ 1,386 Corporate debt (2) 808 12 83 903 Domestics senior notes (UDIs) 414 1 3 418 Shares 442 532 974 POS 28 1 1 30 Mexican Treasury Certificates (CETES) (3) 6 6 Bank notes 1,551 2 1,553 Monetary Regulation Bonds (BREMS) 1 1 Total $ 4,523 $ 49 $ 699 $ 5,271

(1) At December 31, 2005, the Group holds investments in bonds issued by the Ecuadorian government. Such investment represents more than 5% of the Bank’s net capital (computed at November 30, 2005). The average interest rate in 2005 ranged from 9% and 12%.

(2) These investments includes MCIA bonds (39.44%), Grupo Minero México bonds (41.90%) and Corporación Interamericana de Entretenimiento bonds (18.66%). These investments together do not exceed 5% of the Bank’s net capital.

(3) Restricted investment used to guarantee collateralized repurchase agreements (Note 8c).

A total of 1.42% of debt instruments classified as “for trading” have maturities of less than one year.

2004

Accrued Unrealized gain Investment interest (loss) on valuation Fair value BREMS Ps. 6,610 Ps. 4 Ps. - Ps. 6,615 Corporate debt (1) 2,642 38 118 2,798 Sovereign debt (2) 2,405 324 2,729 Mexican Treasury Certificates (CETES) 2,640 14 (1) 2,653 Shares 1,008 1,302 2,310 Bansan 990 1 - 991 Bonds 62 - - 62 Cebur (Udis) 35 1 4 40 Isic 38 - - 38 Bondest 13 - - 13 Total Ps. 16,443 Ps. 58 Ps. 1,748 Ps. 18,249

(1) The Group maintains MCI bond and share positions, which represent 13% of all the instruments for trading. At December 31, 2004, the bond and share position of this issuer in companies not subject to consolidation is Ps. 764.

(2) At December 31, 2004, the Group holds investments in debt instruments issued by the Argentinean government with average maturities of 15 years and at an average 7.43% rate. Such investments represent 14.95% of the Group’s total instruments for trading. Other Group companies, not subject to consolidation, have investments in the same type of securities of Ps. 3,572. 44

In November 2004, Group management reclassified Ps. 226 interest 2005 accrued on its Argentinean bond position to the caption Intermedia- Number Securities to tion (loss) income. Such reclassification was derived from a comparison of securities be delivered Debtors made by the price supplier between the dirty price and clean price of the Buyer 1,073,431,721 securities in question. Agreed price $ 108,307 $ 108,382 In 2005, the Group sold all of its Argentinean bond position as a result Accrued interest on securities 28 of the debt restructuring made by the Argentinean government. The net Effect of valuation of securities 38 effect of this disinvestment was a credit to income of Ps. 27. Effect of valuation at present value 9 Total position 108,373 108,391 • Instruments available for sale Net credit balance $ 18 Net position At December 31, 2005, the Group had no instruments classified as avai- (Banco Inbursa and Inversora Bursátil) - lable for sale. At December 31, 2004, instruments classified as available Net position for sale consist mainly of CETES. The fair value of these instruments Arrendadora Financiera - was Ps. 2. Net consolidated position $ -

Accrued interest plus valuation result at December 31, 2004 did not exceed 2004 one million pesos. Number Securities to of securities be delivered Creditors • Instruments held to maturity Seller 15,545,466,055

Agreed price $ 82,070 $ 82,070 Accrued interest on securities 138 2005 Effect of valuation of securities (109) Effect of Effect of valuation at present value 22 Investment Accrued hedging Total position $ 82,099 $ 82,092 interest swaps Total Net debit balance $ 7

Credit Link Notes (1) Ps. 2,998 Ps. 39 Ps. (151) Ps. 2,886 2004 UMS bonds 1,680 15 (1,345) 350 Number Securities to Total Ps. 4,678 Ps. 54 Ps. (1,496) Ps. 3,236 of securities be delivered Debtors Buyer 1,307,182,844

In 2005, the Group reclassified 125,000,000 UMS bonds from instruments Agreed price $ 44,763 $ 44,763 for trading to held-to-maturity, without the express authorization of the Accrued interest on securities 136 CNBV. The fair value of such bonds at the date of reclassification was Ps. Effect of valuation of securities (114) 1,727. Effect of valuation at present value 16 Total position $ 44,785 $ 44,779 The Group maintains a swap position to hedge its UMS bond investment, Net credit balance $ 6 in which only the liability position offsets the investment in such bonds, Net position evidencing that there is a material reverse relationship between changes in (Banco Inbursa and Inversora Bursátil) - the fair values of derivatives in their liability portions and the investment Net position to be hedged Arrendadora Financiera - Net consolidated position $ 1 (1) 61% of Credit linked notes have maturities of six years, and the remai- ning 39% mature within two years. The effect of valuation of such instru- ments is Ps (7), which, as expressly requested by the CNBV, is presented as b) Reconciliation of debit and credit balances under security repurchase a liability in the Derivatives caption (Note 9a). agreements shown in the balance sheet derived from the offsetting of the asset and liability positions The average maturity term of UMS bonds is 17 years. At December 31, 2005 and 2004, in conformity with CNBV requirements, the balance sheet shows the net effect of debit and credit balances derived from the individual offsetting of asset and liability positions for each transaction. 2004 Effect of 2005 2004 Investment Accrued hedging Debit Ps. 151 Ps. 21 interest swaps Total Credit 151 21 Ps. - Ps. - Credit Link Notes (1) Ps. 3,513 Ps. 32 Ps. (268) Ps. 3,277

(1) 64% of Credit linked notes have maturities of five years. The effect of The difference between the debit and credit balances under security repur- valuation of such instruments is Ps (23), which, as required by the CNBV, is chase agreements shown in the balance sheet at December 31, 2005 does presented as a liability in the Derivatives caption (Note 9a). not exceed one million pesos.

c) Repurchase transactions with collateral 8. Repurchase Agreements (Repos) At December 31, 2005, the Group acting as a seller provided guarantees of a) Analysis Ps. 5. At December 31, 2004, for transactions in which the Group acted as a seller, it was not required to provide guarantees An analysis of repurchase agreements at December 31, 2005 and 2004 is as follows: d) Unrealized gain (loss) of repurchase agreements

At December 31, 2005 and 2004, the net result of the valuation of asset and 2005 liability positions under repurchase agreements is recognized in the state- Number Securities to ment of income in the caption Intermediation (loss) income (Note 25). of securities be received Creditors Seller 1,073,431,721 e) Premiums earned and paid

Agreed price $ 108,307 $ 108,372 The total amount of premiums earned and paid under security repurchase Accrued interest on securities 48 agreements is recognized in results of operations in Interest income and Effect of valuation of securities 18 Interest expense captions. At December 31, 2005, premiums earned and Effect of valuation at present value 9 paid were Ps. 7,649 and Ps. 8,165, respectively (Ps. 5,389 and Ps. 5,484 at Total position 108,373 108,391 December 31, 2004) (Note 24). Net debit balance $ (18) f) Terms and securities under repurchase agreements

The average term of security repurchase agreements at December 31, 2005 and 2004 was 4 and 5 days, respectively, and the main securities involved in such agreements are as follows: Grupo Financiero Inbursa 45 FINANCIAL STATEMENTS

As seller As buyer The futures position margin at year end is shown in Cash and cash equivalents (Note 6). • Mexican Treasury • Mexican Treasury Certificates (CETES) Certificates (CETES) The Group’s derivatives involve liquidity, market, credit and legal risks. To reduce exposure to such • Mexican government • Mexican government risks, the Group has established risk management policies and procedures (Note 27). development bonds (BONDES) development bonds (BONDES) • Monetary Regulation • Monetary Regulation An analysis of the asset and liability positions for derivatives at December 31, 2005 and 2004 is as Bonds (BREMS) Bonds (BREMS) follows (the offsetting of positions includes amounts of less than one million pesos that together might give rise to a credit of up to one million pesos): 9. Derivatives a) Analysis of derivatives 2005 Accounting records Offsetting At December 31, 2005 and 2004, the current position of this caption is as Description Asset Liability Asset Liability follows: Trading Currency swaps $ 14,122 $ 13,696 $ 600 $ 175 2005 2004 Interest rate swaps U.S. dollars 3,654 3,635 225 206 i) Futures Interest rate swaps Mexican pesos 21,721 21,680 496 456 Currency buying (selling) position (trading) Total trading swaps 39,497 39,011 1,321 837 Foreign currency to be delivered $ 17,312 $ 17,948 Hedging Less: Currency swaps 19,589 19,055 1,666 Foreign currency to be received Interest rate swaps U.S. dollars 27 27 (translated to pesos) (17,312) (17,948) Interest rate swaps Mexican pesos 9 10 Net futures position - - Total hedging swaps 19,625 19,092 1,666 Trading ii) Forwards Forwards 150,543 150,053 877 387 Currency buying position (trading) Futures U.S. dollars to be received (translated to pesos) 67,591 2,812 Trading futures 17,312 17,312 Unrealized loss on valuation (156) (20) Options Less: Delta Credit Linked value 6 6 Pesos to be delivered (Note 9b) (67,591) (2,812) $ 226,977 $ 225,474 $ 3,864 $ 1,230 (156) (20) Net long position $ 2,634 Currency selling position (trading) U.S. dollars to be delivered (translated to pesos) (83,108) (27,379) Unrealized gain on valuation 646 55 2004 Less: Accounting records Offsetting Pesos to be received (Note 9b) 83,108 27,379 Description Asset Liability Asset Liability 646 55 Trading Currency buying position (hedging) Currency swaps $ 11,504 $ 11,520 $ 182 $ 199 U.S. dollars to be received (translated to pesos) 22,851 Interest rate swaps U.S. dollars 1,753 1,760 27 36 Unrealized loss on valuation (203) Interest rate swaps Mexican pesos 13,975 13,102 1,057 183 Less: Total trading swaps 27,232 26,382 1,266 418 Pesos to be delivered (Note 9b) (22,921) Hedging (273) Currency swaps 18,696 19,458 Currency selling position (hedging) Interest rate swaps U.S. dollars 29 29 U.S. dollars to be delivered (translated to pesos) (6,389) Total hedging swaps 18,725 19,487 Unrealized gain on valuation 93 Trading Pesos to be received (Note 9b) 6,439 Forwards 30,171 30,136 56 21 143 Hedging Total net forwards position 490 (95) Forwards 29,087 29,217 143 272 Futures iii) Swaps Total trading futures 17,948 17,948 Trading position Options Interest rate swaps Delta Credit Linked value 23 23 Valuation of variable portion 25,185 15,623 $ 123,163 $ 123,193 $ 1,465 $ 734 Interest 190 105 Net long position $ 731 Valuation of fixed portion (25,124) (14,761) Interest (191) (101) 60 866 Due to their nature, hedging derivative positions are not offset, but instead grouped and presented Currency swaps together with the principal position. Long principal position 13,878 11,334 Valuation 99 46 b) Maturities Valorización 145 124 Interest (13,785) (11,616) l Futures Short principal position 213 199 Valuation (124) (103) At December 31, 2005 and 2004, the position in terms of number of currency and interest rate futu- Interest 426 (16) res entered into with the Chicago Mercantile Exchange (CME) and the Mexican Derivatives Market (MexDer), respectively, is as follows: Hedging position Interest rate swaps 36 29 Variable portion of cash flow (37) (29) 2005 Fixed portion of cash flow (1) - No. of agreements CME MexDer Maturity Currency swaps Selling 24,457 December 06 Variable portion of currency swaps 18,831 18,190 Buying 50,000 December 06 Variable portion valuation 652 447 Interest 106 58 2004 Fixed portion of currency swaps No. of agreements Fixed portion valuation (18,615) (19,020) CME MexDer Maturity (363) (391) Selling 3,740 March 05 Interest (77) (47) Buying 155,950 January 05 534 (763) Net swap position 1,019 87 The restated notional amount of CME and Mexder futures at December 31, 2005 is Ps. 11,821 and Ps. iv) Credit Linked Notes (Note 7) (7) (23) 5,491, respectively. The restated notional amount of CME and MexDer futures at December 31, 2004 is Total derivative position 1,502 (31) Ps. 1,900 and Ps. 16,048, respectively. Cash deposits (margin) of Ps. 390 and Ps. 125, respectively, were Offsetting to primary position made on the purchase of futures at December 31, 2005. Such amounts represent the cash or securities Investments in Credit Linked securities (Note 7) 1,496 268 that the Bank must deliver to fulfill its obligations on derivative agreements entered into in recognized Loan portfolio (Note 10) markets (Note 6d). Performing (364) 494 Past-due - - The valuation effect of futures transactions, which for the years ended 2005 and 2004 was Ps. 197 1,132 762 and Ps. 6, respectively, is recognized in the statement of income as part of the caption Interme- Net derivative position $ 2,634 $ 731 diation (loss) income. 46

l Forwards

2005 Maturity Amount in Contracted Fair Unrealized loss date U.S. dollars price value on valuation Buying January 06 1,105,000,000 Ps. 11,908 Ps. 11,778 Ps. (130) February 06 240,000,000 2,542 2,563 21 March 06 6,440,000 71 71 April 06 500,000 5 5 May 06 264,202,000 2,812 2,825 13 June 06 6,940,000 75 75 September 06 1,295,000 14 14 December 06 2,662,550,000 29,394 29,327 (67) March 07 1,581,200,000 17,520 17,557 37 December 15 200,000,000 3,250 3,220 (30) 6,068,127,000 Ps. 67,591 Ps. 67,435 Ps. (156)

2005 Maturity Amount in Contracted Fair Unrealized loss date U.S. dollars price value on valuation Selling January 06 1,363,000,000 Ps. 14,923 Ps. 14,528 Ps. 395 February 06 620,000,000 6,693 6,631 62 March 06 869,440,000 9,390 9,327 63 April 06 500,000 6 6 May 06 264,913,500 2,845 2,824 21 June 06 6,940,000 75 75 September 06 1,295,000 14 14 December 06 3,612,550,000 39,944 39,797 147 March 07 834,200,000 9,218 9,260 (42) 7,572,838,500 Ps. 83,108 Ps. 82,462 Ps. 646 Net Ps. 490

2004 Maturity Amount in Contracted Fair Unrealized loss date U.S. dollars price value on valuation Buying February 05 330,000,000 Ps. 3,855 Ps. 3,824 Ps. (31) March 05 1,858,000,000 21,855 21,662 (193) June 05 2,000,000 23 24 1 2,190,000,000 Ps. 25,733 Ps. 25,510 Ps. (223) Selling January 05 117,500,000 Ps. 1,390 Ps 1,362 Ps. 28 February 05 15,000,000 178 175 3 March 05 2,732,500,000 31,925 31,812 113 May 05 25,000,000 301 297 4 June 05 2,000,000 24 24 - 2,892,000,000 Ps. 33,818 Ps. 33,670 148 Net Ps. (75)

In April 2005, the Group transferred 80 hedging forwards to trading forwards. These reclassified transactions aggregated USD3,166,000,000 (buying) and USD3,273,200,000 (selling).

At December 31, 2004, the net balance of the buying and selling forward positions includes contracts used for trading or hedging purposes.

The unrealized gain on forwards, which for the years ended December 31, 2005 and 2004 was Ps. 562 and Ps. 258, respectively, is recognized in the statement of income as part of the caption Intermediation (loss) income. c) Swaps

At December 31, 2005 and 2004, the Group’s swap position for the exchange of cash flows is as follows:

2 0 0 5 Present value Present value Underlying of flows to be of flows to be Net Interest Interest amount received delivered valuation collected paid Total Trading Currency swaps Peso-dollar Ps. 10,631 Ps. 40 Ps. 249 Ps. 289 Ps. 103 Ps. (53) Ps. 339 Dollar-peso 3,154 59 (36) 23 42 (71) (6) Interest rate swaps Mexican pesos 33,373 21,592 (21,551) 41 129 (129) 41 U.S. dollars 14,976 3,593 (3,573) 20 61 (62) 19 Ps. 62,134 Ps. 25,284 Ps. (24,911) Ps. 373 Ps. 335 Ps. (315) Ps. 393 Hedging Currency swaps Peso-dollar Ps. 16,044 Ps. 435 Ps. (363) Ps. 72 Ps. 51 Ps. (60) Ps. 63 UDIS-dollar 1,467 217 217 13 (17) 213 Dollar-UDIS 29 Peso-UDIS 1,291 42 42 Interest rate swaps Mexican pesos 11 26 (27) (1) (1) U.S. dollars 2,071 10 (10) Ps. 20,913 Ps. 678 Ps. (390) Ps. 288 Ps. 116 Ps. (87) Ps. 317 Ps. (710) Grupo Financiero Inbursa 47 FINANCIAL STATEMENTS

2004 Present value Present value Underlying of flows to be of flows to be Net Interest Interest amount received delivered valuation collected paid Total Trading Currency swaps Peso-dollar Ps. 9,889 Ps. 25 Ps. 168 Ps. 193 Ps. 95 Ps. (40) Ps. 248 Peso-dollar 1,727 21 31 52 29 (63) 18 Interest rate swaps Mexican pesos 23,768 13,892 (13,017) 875 84 (84) 875 U.S. dollars 9,758 1,731 (1,744) (13) 21 (17) (9) Ps. 45,142 Ps. 15,669 Ps. (14,562) Ps. 1,107 Ps. 229 Ps. (204) Ps. 1,132

2004 Present value Present value Underlying of flows to be of flows to be Net Interest Interest amount received delivered valuation collected paid Total Hedging Currency swaps Peso-dollar Ps. 16,836 Ps. 447 Ps. (391) Ps. 56 Ps. 53 Ps. (47) Ps. 62 UDIS-dollar 31 - - - - Dollar-UDIS 32 - - - - Peso-UDIS 1,291 - 5 - 5 Interest rate swaps U.S. dollars 23 29 (29) - - - - Ps. 18,213 Ps. 476 Ps. (420) Ps. 56 Ps. 58 Ps. (47) Ps. 67 Ps. 1,199

In June 2004, the Group transferred certain trading swaps in the amount of US$ 1,204,957,138 to hedging swaps to offset asset and liability positions for commercial loans and securities held to maturity. An analysis of transactions is as follows:

Commercial Securities held portfolio to maturity Total swaps Swaps USD 996,604,197 USD 208,352,941 USD 1,204,957,138 Hedged position 944,432,819 208,352,941 1,152,785,760 Unhedged position USD 52,171,378 USD - USD 52,171,378 U.S. dollar (translated to pesos) Ps. 599 Ps. - Ps. 599

The unrealized (loss) gain on the valuation of swaps, which for the years ended 2005 and 2004 was Ps. 486 and Ps. 624, respectively, is recognized in the statement of income as part of the caption Intermediation (loss) income. 10. Loan Portfolio a) Analysis of the performing and past-due loan portfolio by type of credit

2 0 0 5 Performing portfolio Past-due portfolio Loan Principal Interest Total Principal Interest Total Consumer Ps. 1,365 Ps. 105 Ps. 1,470 Ps. 86 Ps. 1 Ps. 87 Discounts 2,218 2 220 15 15 Unsecured 7,740 42 7,782 127 4 131 Chattel mortgage 51 51 Simple and current account 33,228 362 33,590 143 2 145 Secured by capital assets 11 11 Home mortgage 851 7 858 52 2 54 Leases 212 1 213 4 4 Restructured (Note 10c) 7,371 31 7,402 Rediscounts 915 - 915 Total portfolio 53,962 550 54,512 Ps. 427 Ps. 9 Ps. 436 Effect of hedging offsetting 364 Total portfolio, net Ps. 54,876

2004 Performing portfolio Past-due portfolio Loan Principal Interest Total Principal Interest Total Consumer Ps. 803 Ps. 79 Ps. 881 Ps. 7 Ps. - Ps. 7 Discounts 3,789 2 3,791 2 2 Unsecured 12,518 83 12,601 116 4 120 Chattel mortgage 627 7 634 - - - Simple and current account 29,383 244 29,627 206 2 208 Secured by capital assets 29 - 29 Home mortgage 583 4 588 9 - 10 Leases 129 - 129 1 - 1 Restructured (Note 10) 7,531 34 7,565 - - - Rediscounts 979 - 979 - Total portfolio Ps. 56,371 Ps. 453 56,824 Ps. 341 Ps. 6 Ps. 348 Effect of hedging offsetting (Note 9a) (494) Ps. 56,330 48

Common risk

At December 31, 2005, the Group has 6 loans in excess of 10% of its net In 2004, two borrowers representing approximately 80% of the balance of capital. The total amount of such loans was Ps. 13,029, which represented the 2003 past-due portfolio restructured their loans and repaid their past- 63% of the Group’s net capital computed at September 30, 2005. due debts.

The maximum amount of financing due from the main three borrowers An aged analysis of the past-due loan portfolio at December 31, 2005 and aggregated Ps. 8,574 owed, which represented 42% of the Group’s net ca- 2004 is as follows: pital computed at September 30, 2005.

2005 2004 1 to 180 days Ps. 204 Ps. 265 181 to 365 days 78 83 365 days and thereafter 154 Ps. 436 Ps. 348 b) Analysis of economic environment

The Group performs a monthly analysis of the economic environment in which its borrowers operate, to identify promptly any possible problems, in the performing loan portfolio.

At December 31, 2005 and 2004, the Group’s management has identified the following D and E risk graded troubled loans:

2005 Performing portfolio Past-due portfolio Loan Principal Interest Total Principal Interest Total Simple Ps. 1,961 Ps. 6 Ps. 1,967 Ps. 167 Ps. 4 Ps. 171 Restructured 1,565 8 1,573 Home mortgage 178 2 180 31 31 Loan portfolio 171 171 Leases 4 4 Consumer 1 1 Total portfolio Ps. 3,879 Ps. 16 Ps. 3,895 Ps. 199 Ps. 4 Ps. 203

2004 Performing portfolio Past-due portfolio Loan Principal Interest Total Principal Interest Total Loan portfolio Ps. 195 Ps. 195 Simple 488 Ps. 1 489 Ps. 144 Ps. 1 Ps. 145 Restructured 884 9 893 36 1 37 Consumer 1 - 1 Total portfolio Ps. 1,567 Ps. 10 Ps. 1,577 Ps. 184 Ps. 2 Ps. 183 c) Performing restructured loans

2005 2004 Performing portfolio Performing portfolio Loan Principal Interest Total Loan Principal Interest Total Consumer Ps. 1,958 Ps. 1 Ps. 1,959 Consumer Ps. 2,080 Ps. - Ps. 2,080 Simple with Simple with other guarantees 824 8 832 other guarantees 875 9 884 Simple Simple mortgage 2,442 8 2,450 mortgage 1,497 2 1,499 Simple Simple chattel mortgage 1 - 1 chattel mortgage 302 2 304 Guaranteed simple 695 4 699 Guaranteed Simple and simple 913 6 919 current account 55 1 56 Unsecured Unsecured simple 1,863 15 1,878 simple 1,395 9 1,404 Home mortgage 1 - 1 Home mortgage 1 - 1 Total Ps. 7,371 Ps. 31 Ps. 7,402 Total Ps. 7,531 Ps. 34 Ps. 7,565 d) Additional guarantees obtained

At December 31, 2005 and 2004, additional guarantees obtained in restructured loans are as follows:

2005 2004 Type of loan Amount Nature of guarantee Type of loan Amount Nature of guarantee Mexican peso denominated Mexican peso denominated Simple Simple mortgage Ps. 1,196 Mortgage and guarantor mortgage Ps. 538 Mortgage and guarantor Simple with other guarantees 772 Public shares Guaranteed simple 947 Simple other trusts Simple other trusts 2,700 Trusts 926 Guarantor Trusts Individual home mortgage 1 Mortgage 2,411 4,669 U.S. dollar denominated U.S. dollar denominated Simple Stocks and bonds, home mort- Simple chattel Stocks and bonds and mortgage 5,930 gage and personal property mortgage 7,098 invoices for personal property 5,930 Simple mortgage 1,280 Guarantor and mortgage UDI denominated 8,378 Simple chattel mortgage 613 Personal property UDI denominated Simple mortgage 1 Mortgage Simple chattel mortgage 166 Stocks and bonds and guarantor 614 Ps. 11,213 Simple mortgage 22 Mortgage 188 Ps. 10,977 Grupo Financiero Inbursa 49 FINANCIAL STATEMENTS

11. Preventive Provision for Credit Risks

An analysis of the preventive provision for credit risks created in conformity with the rules for loan portfolio grading established by the SHCP at December 31, 2005 and 2004 is as follows:

2 0 0 5 2 0 0 4 Amount of Estimated Amount of Estimated liability at preventive liability at preventive Risk December 31 provision Risk December 31 provision A Ps. 570 Ps. 2 A Ps. 2,962 Ps. 15 A1 18,106 89 A1 18,950 92 A2 9,334 90 A2 7,424 72 B 49 1 B 5,524 206 B1 6,845 336 B2 8,177 618 B2 6,373 450 B3 11,911 1,950 B3 10,372 1,792 C 1 C 25 11 C1 2,061 719 C1 1,598 460 C2 153 92 C2 591 236 D 1,672 1,004 D 723 445 E 1,772 1,772 E 3,512 3,516 Graded portfolio Ps. 58,098 7,428 Graded portfolio Ps. 60,607 6,540 Additional estimate 22 Additional estimate 2 Required provision 7,450 Required provision 6,542 Amount provided for 7,450 Amount provided for 6,542 Over or understatement Ps. - Over or understatement Ps. -

Movements in the preventive provision for credit risks are as follows:

2005 2004 Balance at beginning of year Ps. 6,542 Ps. 5,556 Reversal of restatement of balance of prior year (185) (287) Nominal increase in reserve charged to income (1) 1,267 1,285 Valuation of UDIS and foreign currency portfolio (174) (12) Balance at end of year Ps. 7,450 Ps. 6,542

(1) A reconciliation of increases in the preventive provision for credit risks at December 31, 2005 and 2004 is as follows:

2005 2004 Increase in the provision Ps. 1,267 Ps. 1,285 Restatement 22 29 Ps. 1,289 Ps. 1,314

For the years ended December 31, 2005 and 2004, loan write-offs did not exceed one million pesos. 12. Other Accounts Receivable, net

An analysis of other accounts receivable at December 31, 2005 and 2004 is as follows:

2005 2004 Prepayments (1) 781 67 Debtors for settlement of transactions 745 2,981 Other debtors 167 187 Commission debtors $ 26 $ 3 Commissions receivable (Siefore) (Notes 4 and 14) 1 18 Commissions from investment funds (Notes 4 and 14) - 18 1,720 3,274 Allowance for bad debts (2) (4) $ 1,718 $ 3,270

(1) An analysis of prepayments at December 31, 2005 and 2004 is as follows:

2005 2004 Income tax prepayments $ 588 $ 52 Creditable taxes 152 15 Other 41 - $ 781 $ 67

13. Buildings, Furniture and Equipment

An analysis of buildings, furniture and equipment at December 31, 2005 and 2004 is as follows:

Depreciation rate 2005 2004 Buildings 5% $ 285 $ 380 Office furniture and equipment 10% 86 376 Computer equipment 30% 256 223 Machinery and equipment 30% 76 108 Automotive equipment 25% 207 85 Other 568 27 1,478 1,199 Accumulated depreciation (626) (532) $ 852 $ 667 50

Depreciation expense charged to operations of the years ended December 31, 2005 and 2004 was Ps. 159 and Ps. 113, respectively. 14. Long-term Equity Investments

An analysis at December 31, 2005 and 2004 is as follows:

2005 Amount Equity in Other Amount Issuer Dec. 2004 Additions net income movements Dec. 2005 Asociación de Bancos de México, A.C. Ps. 7 Ps. - Ps. - Ps. - Ps. 7 Bolsa Mexicana de Valores 26 - 6 (2) 30 Cebur 13 - 2 (15) - Fianzas Guardiana Inbursa 845 20 192 (270) 787 Impulsora Fondo México 2 - (2) - - Inbursa Siefore 798 (158) 46 (222) 464 Inbursa Siefore Básica 1 4 163 16 (11) 172 MexDer - - - - - Pensiones Inbursa 9,709 (147) 587 (7,649) 2,500 Procesar 5 - 2 - 7 Promotora Inbursa 669 (670) 24 38 61 S.D. Indeval 7 - 2 - 9 Seguros Inbursa 2,821 (448) 550 (166) 2,757 Sinca Inbursa 1,941 - 584 (82) 2,443 Investment funds 286 - 62 (10) 338 Other 2 - - 1 3 Total Ps. 17,135 Ps. (1,240) Ps. 2,071 Ps. (8,388) Ps. 9,578

In August 2005, the Group concluded a corporate restructuring process, whereby it spun off its equity investment in certain subsidiaries and created a new economic group engaged in making infrastructure investments in Mexico and Latin America. As part of the restructuring, the Group transferred its equity interest in the following spun off companies: Pensiones Inbursa, Banco Inbursa, Seguros Inbursa and Fianzas Inbursa, to Impulsora del Desarrollo Económico de América Latina, S.A. de C.V. (the newly created company).

The spin-off of such shares that gave rise to a decrease in stockholders’ equity of Ps. 8,920 had no effect in the Group’s results of operations.

2004 Issuer Amount Equity in Other Amount Dec. 2003 Additions net income movements Dec. 2004 Asociación de Bancos de México, A.C. Ps. 7 Ps. - Ps. - Ps. - Ps. 7 Bolsa Mexicana de Valores 22 - 6 (2) 26 Cebur 14 - - (1) 13 Fianzas Guardiana Inbursa 592 (11) 239 25 845 Impulsora Fondo México 2 - - - 2 Inbursa Siefore 737 42 58 (39) 798 Inbursa Siefore Básica 1 - 4 - - 4 MexDer - - - - - Pensiones Inbursa (1) 7,063 - 2,712 (66) 9,709 Procesar 5 - - - 5 Promotora Inbursa (2) 482 - 194 (7) 669 S.D. Indeval 8 - 2 (3) 7 Seguros Inbursa 2,131 - 684 6 2,821 Sinca Inbursa 1,873 - 35 33 1,941 Investment funds 209 1 87 (11) 286 Other 2 - 3 (3) 2 Total Ps. 13,147 Ps. 36 Ps. 4,021 Ps. (68) Ps. 17,135

1) During 2004, Promotora Inbursa, which is an 86.97%-held subsidiary of The column Other movements includes the results of holding non-monetary Pensiones Inbursa, made equity investments that gave rise to a gain of Ps. assets of the investees that include changes in their stockholders’ equity 2,664 of which Pensiones Inbursa recognized Ps. 2,316 in its own results of different from the results of their operations for the period. operations. As a result of such transaction, Promotora recognized deferred taxes of Ps. 799. The Group’s equity interest in the net income or loss of the investees is recognized in the statement of income. Increases or decreases in other (2) Corresponds to the Banco Insursa’s investment in Promotora Inbursa stockholders’ equity accounts of the investees, different from the results of (7.16%). The equity interest in net income of Ps. 194, includes Ps. 191 of the operations for the period, are recorded in the caption Result from holding aforementioned transaction. non-monetary assets.

15. Other Assets, Deferred Charges and Intangibles

At December 31, 2005 and 2004, this caption consists of the following:

2005 2004 Prepaid expenses Ps. 7 Ps. 3 Software licenses 288 278 Pre-operating expenses 104 104 Premium on loan operations (b) 250 228 Goodwill of Promotora Inbursa (a) 8 96 Goodwill of Sinca Inbursa (a) 146 146 Guarantee deposits 111 Other 27 91 941 946 Amortization of software licenses (220) (177) Accumulated amortization of goodwill (a) (31) (82) Amortization of pre-operating expenses (91) (83) (342) (342) Ps. 599 Ps. 604 Grupo Financiero Inbursa 51 FINANCIAL STATEMENTS

Amortization charged to results of operations of the years ended December 31, 2005 and 2004 was Ps. 51 and Ps. 48, respectively.

(a) Since January 1, 2005, the Group has determined that there are indications of impairment in the value of goodwill. The decrease in goodwill of Ps. 88 and Ps. 51 is directly related to the Group’s spin off. Through December 31, 2004, goodwill was being amortized using the straight-line method over a period of up to 5 years.

(b) The Group purchased a U.S. dollar-denominated portfolio from a foreign financial institution bearing interest at 11.93% over 12 years. Under the related loan agreements, the customers may not make early payments. An analysis of the balance of the portfolio, the premium paid and the related amortization for 2005 and 2004 is as follows:

2 0 0 5 Nominal amount Accumulated Balance of Date of purchase of portfolio in U.S. dollars Premium paid amortization unamortized premium December 03 41,387,091 Ps. 182 Ps. (30) Ps. 152 April 04 15,000,000 59 (8) 51 March 05 10,000,000 51 (4) 47 Balance 66,387,091 Ps. 292 Ps. (42) Ps. 250

2 0 0 4 Nominal amount Accumulated Balance of Date of purchase of portfolio in U.S. dollars Premium paid amortization unamortized premium December 03 41,387,091 Ps. 187 Ps. (16) Ps. 171 April 04 15,000,000 60 (3) 57 Balance 56,387,091 Ps. 247 Ps. (19) Ps. 228

16. Traditional Deposits a) Demand deposits

Checking accounts Mexican pesos Foreign currency translated to Mexican pesos Total 2005 2004 2005 2004 2005 2004 Interest-bearing Ps. 23,623 Ps. 16,802 Ps. 355 Ps. 289 Ps. 23,978 Ps. 17,091 Non-interest bearing 116 66 17 16 133 82 Other 14 3 - 14 3 Total Ps. 23,753 Ps. 16,871 Ps. 372 Ps. 305 Ps. 24,125 Ps. 17,176 b) Time deposits

This caption consists of fixed-term deposits, deposits by foreign compa- nies and banks and PRLV’s (notes with interest payable at maturity). The interest rate on Mexican peso denominated deposits is tied to the Mexican Treasury Certificate (CETES) discount rate and to the 28-day adjusted in- terbank rate (TIIE). Returns on foreign currency denominated deposits are 2005 2004 tied to the LIBOR rate. Accrued interest is charged to income with a credit Fixed-term deposits to liability accounts. U.S. dollars (1) Ps. 1,087 Ps. 604 UDIS (2) 277 276 At December 31, 2005 and 2004, time deposits are as follows: PRLV’s Placed through the market (2) 20,199 36,465 Placed over the counter (1) 553 475 Ps. 22,116 Ps. 37,820 At December 31, 2005 and 2004, deposits maturing in less than one year aggregated Ps. 21,846 and Ps. 37,545, respectively. (1) Placed with the general public (2) Placed in the money market.

17. Interbank and Other Borrowings

This caption consists primarily of borrowings from financial institutions and government entities at current market interest rates. Interest is charged to income with a credit to liability accounts.

At December 31, 2005 and 2004, an analysis is as follows:

2005 2004 Principal Interest Total Principal Interest Total Short term Translated foreign currency borrowings Cobank ACB $ 180 $ 2 $ 182 $ 290 $ 1 $ 291 BBVA Bancomer - - - 161 - 161 Other 9 2 11 7 - 7 189 4 193 458 1 459 Mexican pesos borrowings NAFIN 992 11 1,003 898 8 905 Total short- term borrowings 1,181 15 1,196 1,356 9 1,365

Long- term Translated foreign currency borrowings Cobank ACB 12 - 12 528 2 530 Other - - - 22 - 22 12 - 12 550 2 552 Mexican pesos borrowings Discounted portfolio (FIRA) 931 5 936 979 - 979 Total long-term borrowings 943 5 948 1,529 2 1,531 Total préstamos $ 2,124 $ 20 $ 2,144 $ 2,885 $ 11 $ 2,896 52

18. Income Tax, Asset Tax and Employee Profit Sharing 2005 2004 Creditors on settlement a) Income tax of transactions Ps. 1,830 Ps. 5,602 Sundry creditors 432 191 The Group’s book income and taxable income are not the same due Acceptances on behalf to: (i) permanent differences derived from the treatment of such items of customers 364 357 as the equity interest in net income of subsidiaries and associates, the Guarantee deposits 106 153 annual effect of inflation and non-deductible expenses, and (ii) tempo- Payable drafts 21 15 rary differences in the recognition of income and expenses for finan- Cashier’s checks 18 16 cial and tax reporting purposes, such as the valuation of derivatives Other 5 1 and securities, accrued present value premiums on security repurchase Provisions for sundry agreements, and certain provisions. Deferred taxes are recognized on liabilities 3 38 temporary differences for financial and tax reporting purposes of the Certified checks - 19 Group and its subsidiaries (Note 20). Contributions to contingency fund - - An analysis of current year income tax and employee profit sharing as Employee pension reserves - - shown in the consolidated statement of income at December 31, 2005 and Total Ps. 2,779 Ps. 6,392 2004 is as follows: Provisions for labor obligations at retirement 2005 Income Employee At December 31, 2005 and 2004, the reserves for labor obligations at reti- tax profit sharing Total rement do not exceed one million pesos. Arrendadora Financiera Inbursa Ps. 7 Ps. 7 20. Deferred Taxes Inversora Bursátil, Casa de Bolsa 109 109 In conformity with legal requirements with respect to income tax, certain Operadora Inbursa 64 64 items are recognized for tax purpose in periods other than those in which Banco Inbursa 306 306 they are recorded for book purposes, thus giving rise to deferred taxes. Other subsidiaries 4 $ 1 5 Ps. 490 $ 1 Ps. 491 In December 2004, a gradual reduction in the 33% corporate income tax rate was approved so that the rate will be 30% in 2005, 29% in 2006 and 28% in 2007 and succeeding years. The statutory rate applicable to the 2004 temporary differences that gave rise to deferred taxes at December 31, Income Employee 2005 was 32% (33% for 2004). tax profit sharing Total Arrendadora The most important temporary differences included in the computation of Financiera Inbursa Ps. 6 Ps. 6 deferred taxes are as follows: Inversora Bursátil, Casa de Bolsa 138 138 2005 2004 Operadora Inbursa 63 63 Deferred tax liabilities Banco Inbursa 56 56 Unrealized gain on valuation Other subsidiaries 2 Ps. 1 3 of financial instruments $ 48 $ 507 Ps. 265 Ps. 1 Ps. 266 Repurchase agreements 1 Derivatives 665 314 Premium on At the date of the audit report on these financial statements, the Group loan operation 73 69 subsidiaries have not yet to file their final income tax returns for the year Investments in investment funds 68 42 2005 with the tax authorities. Consequently, the income tax of subsidiaries Difference between book value shown in the preceding reconciliation may be subject to changes that are and tax cost of the securities portfolio 81 not deemed to be material. Other 77 - $ 1,012 $ 933 CNBV requirements establish the rules for offsetting the asset and liability positions. At December 31, 2005, management did not offset income tax 2005 2004 prepayments against the balance of the income tax provision. The net effect Deferred tax asset of such reclassification would be as follows: Amortization of goodwill of Sinca Inbursa $ (7) $ (7) Income tax prepayments Ps. 388 Amortization of goodwill FIMPE incentives 199 of Promotora Inbursa (1) (16) Subtotal 588 Unrealized loss on valuation Income tax provision for the year 222 of financial instruments (5) Income tax prepayments of subsidiaries 48 Tax loss of subsidiaries (5) (7) Subtotal 270 Amortization of premium on UMS bonds (5) - Total recoverable income tax Ps. 318 Other (13) - (31) (35) Net deferred tax liability $ 981 $ 898 Income tax and asset tax of the subsidiaries of the Group regulated by the CNSF are recorded in results of operations of such subsidiaries. Therefore, the caption Equity interest in net income of subsidiaries and associates, as The majority of the deferred tax assets recognized by the Group and its shown in the statement of income, is presented net of each subsidiary’s subsidiaries will be realized during 2006. taxes. The Group and each of its subsidiaries do not consolidate for tax purposes and, accordingly, file their tax returns on an individual basis. The controlling companies of the Group compute their deferred taxes on an individual basis and recognize the deferred tax assets and liabilities b) Asset tax in the counter item in the statement of income. For those companies not subject to consolidation under CNBV requirements, the effects of The 1.8% asset tax (which is a minimum income tax) is payable on the deferred taxes are recognized in the application of the equity method. average value of assets not subject to financial intermediation (e.g., fixed At December 31, 2005 and 2004, deferred taxes recognized by such assets, land, deferred expenses and charges) net of debts incurred to acqui- companies aggregate Ps. 409 (liabilities) and Ps. 830 (liabilities), res- re such assets. As a minimum income tax, asset tax is actually payable only pectively. to the extent that it exceeds current year income tax. The consolidated statements of income for the years ended December 31, 2005 c) Employee profit sharing and 2004 include deferred tax expenses of Ps. 133 and Ps. 615, respectively.

Employee profit sharing is determined basically at 10% of taxable income, As a result of the changes in the Income Tax Law related to the gradual excluding the taxable or deductible nature of the annual inflation adjust- reduction in the corporate income tax rate, the Group recognized the effect ment. In 2005 and 2004, Out Sourcing Inburnet, S.A. de C.V. is the only of the reduction in the rate applicable to the temporary difference that give subsidiary subject to consolidation that has personnel of its own. However, rise to deferred taxes in the amounts of Ps. 28 and Ps. 78, at December 31, the employee profit sharing base is not considered to be material. 2005 and 2004, respectively.

• Reconciliation of the statutory corporate income tax rate to the effective rate 19. Sundry Creditors and Other Accounts Payable A reconciliation of the statutory corporate income tax rate to the effective At December 31, 2005 and 2004, an analysis is as follows: rate recognized by the Group for the years ended December 31, 2005 and 2004 is as follows: Grupo Financiero Inbursa 53 FINANCIAL STATEMENTS

2005 2004 the legal reserve until it reaches 20% of capital stock issued and outs- Income before income tax tanding. Such reserve may not be distributed to stockholders during the and employee profit sharing $ 1,503 $ 2,317 life of the Group, except in the form of a stock dividend. The balance of Permanent differences: the legal reserve at December 31, 2005 and 2004 was Ps. 1,385 and Ps. Restatement of results of operations (33) (71) 1,679, respectively. Annual inflation adjustment (608) (940) Non-deductible expenses 31 59 (iii) Capital reduction Depreciation and amortization 22 2 Net monetary position loss 712 1,211 In the event of a capital reduction, the reimbursement to stockholders in Other permanent items 53 29 excess of the amount of the restated capital contributions, in accordance Income before income tax and employee with the Mexican Income Tax Law, shall be subject to taxation at the enac- profit sharing, plus permanent items 1,680 2,607 ted rate at the time of such reduction. Carryforward of tax losses from prior years (5) - c) Restrictions on earnings Income after carryforward of tax losses 1,675 2,607 The Mexican Income Tax Law states that dividends declared from income Statutory income tax rate 30% 33% on which corporate income tax has already been paid, shall not be sub- Total income tax 503 860 ject to further taxation; therefore, taxable earnings must be controlled in Effect of change in tax rates (28) (78) a so-called “net tax profit account” (CUFIN), which may only be used once $ 475 $ 782 the balance of the “net reinvested tax profit account” (CUFINRE) has been Effective income tax rate 31.57% 33.76% exhausted. Any distribution of earnings in excess of the CUFIN account balance will be subject to taxation at the enacted income tax rate at the time dividends are paid. 21. Stockholders’ Equity In conformity with the Income Tax Law, all capital contributions and net a) Capital stock stock premiums made by the stockholders, as well as capital reductions must be controlled in a so-called “restated contributed capital account” The Group’s authorized capital stock at December 31, 2005 and 2004 con- (CUCA). Such account must be restated for inflation from the time capital sists of 3,000,152,564 registered series “O” shares with a par value of $ contributions are made to the time capital is reduced. 0.827421620821 and $ 1.000227731563, respectively, Mexican pesos each. The nominal amount of paid-in capital at December 31, 2005 and 2004 is Capital reductions in excess of the CUCA account will be subject to taxation Ps. 2,594 and Ps. 3,000, respectively. Restated capital in Mexican pesos in terms of the Mexican Income Tax Law. The difference should be treated with purchasing power at December 31, 2005 and 2004 is Ps. 12,987 and as a distributed profit, which will be subject to taxation, payable by the Ps. 13,403, respectively. The shares of the Group are as follows: Group, at the enacted income tax rate at that time.

At December 31, 2005 and 2004, the Group has the following tax balances: Number of shares Shares issued and outstanding 3,000,152,564 Treasury shares 134,676,400 2005 2004 Total shares 3,134,828,964 CUCA Ps. 14,176 Ps. 17,708 CUFIN Ps. 4,342 Ps. 5,338 Additional capital stock will be represented by series “L” shares, which, in conformity with the Law Regulating Financial Groups, may represent up to 40% of the Group’s ordinary capital stock, with the prior authorization At a regular meeting held on April 13, 2005, the stockholders agreed to of the CNBV. pay a cash dividend at a rate of $ 0.30 Mexican pesos per each of the 3,000,152,564 common registered shares issued and outstanding at that Representative series “L” shares shall have limited voting rights, extending date. The total dividend was Ps. 918 (Ps. 900 nominal amount). Such divi- the right to vote only in matters involving a change in corporate purpose, dend was paid from retained earnings derived from the CUFIN account. merger, spin-off, transformation, dissolution and liquidation, as well as the cancellation of any stock exchange registration. Such series “L” shares may At a regular meeting held on April 14, 2004, the stockholders agreed to also confer the right to accumulative preferred dividend, and a higher divi- pay a cash dividend at a rate of $ 0.30 Mexican pesos per each of the dend than the one paid to shares of ordinary capital stock. In no circums- 3,000,152,564 common registered shares issued and outstanding. The total tances may the dividends paid on series “L” shares be less than those paid dividend was Ps. 959 (Ps. 900 nominal amount). Such dividend was paid on the other series of shares. from retained earnings derived from the CUFIN account. b) Restrictions on stockholders’ equity Since the aforementioned cash dividends were paid from the Group’s CUFIN account, they were not subject to tax withholdings. (i) Restrictions on ownership of capital stock. 22. Earnings per Share and Comprehensive Income Foreign corporate entities that exercise any form of authority may not hold any interest in the capital stock, nor may Mexican financial entities, even a) Earnings per share those comprising part of the respective group, unless they act as insti- tutional investors, in terms of Article 19 of the Law Regulating Financial Earnings per share were determined by dividing net income of the year by Groups. the weighted average number of the Group’s shares issued and outstanding at December 31, 2005 and 2004. An analysis is as follows: Any individual or corporate entity may own, through one or various simulta- neous or successive transactions, more than 5% of a controlling company’s series “O” shares, provided that such transactions have been authorized by 2005 2004 the Ministry of Finance and Public Credit. Net income based on statement of income Ps. 2,913 Ps. 5,527 ii) Capital reserves Weighted average number of shares outstanding 3,000,152,564 3,000,152,564 An analysis at December 31, 2005 and 2004 is as follows: Earnings per share (Mexican pesos) Ps. 0.9710 Ps. 1.8422

2005 2004 In 2005 and 2004, the Group’s shares have had no movements. Reserve for purchase of own shares Ps. 1,378 Ps. 1,670 Legal reserve 1,385 1,679 b) Comprehensive income Total capital reserves Ps. 2,763 Ps. 3,349 Comprehensive income consists of the net loss or income for the year, plus the result from holding non-monetary assets, the excess or deficit from res- Reserve for purchase of own shares tatement of stockholders’ equity and other items that, in conformity with accounting criteria, are reflected directly in stockholders’ equity (see Sta- The reserve for repurchase of own shares was created on the basis of reso- tement of Changes in Stockholders’ Equity). An analysis of comprehensive lutions adopted at stockholders’ meetings, using a portion of the Group’s income is as follows: retained earnings. At December 31, 2005 and 2004, the balance of this reserve was Ps. 1,378 and Ps. 1,670, respectively. 2005 2004 Net income of the year $ 2,913 $ 5,533 Legal reserve Result from holding non-monetary assets derived from valuation of In conformity with the Mexican Corporations Act, the Group is required long-term equity investments 46 74 to appropriate at least 5% of the net income of each year to increase Comprehensive income $ 2,959 $ 5,607 54

b) Money-market transactions Revenues Investments Ps. 1,066 Ps. 593 Exchange gains and derivatives 1,469 503 Revenues from customers’ transactions 648 Interest and premiums on repurchase agreements 7,676 5,469 10,211 7,213

Disbursements: Interest and premiums 23. Segment Information on repurchase agreements 8,161 5,345 Buying and selling of securities (161) Highlights of the results of operations of the principal operating segments Other 217 71 of the most significant subsidiaries in 2005 and 2004 are shown below. 8,378 5,255 A different classification is used to show the amounts presented from the Result of money-market one used in the preparation of the financial statements since operating and transactions Ps. 1,833 Ps. 1,958 accounting records are combined. c) Capital market transactions Buying and selling of securities Ps. 482 Ps. 57 2005 2004 Valuation of shares 200 789 a) Credit transactions Realized gain on valuation 203 125 Revenues: Capital-market results 885 971 Interest on credits Ps. 5,395 Ps. 3,530 Segment total result Ps. 2,784 Ps. 2,142 Bank interest 793 422 Retirement fund transactions - 290 Exchange gains and UDIS 104 55 Income from distribution commission, repurchase Commissions 301 shares and portfolio management transactions - 202 Other 481 41 Total result by segment Ps. 2,784 Ps. 2,634 6,774 4,349 d) Reconciliation of figures Total result by segment Ps. 2,784 Ps. 2,634 Disbursements: Less: Reserves 1,289 1,314 Loss on buying and selling of securities - 161 Interest on deposits 4,779 2,766 Own capital market transaction 885 971 Monetary position result 640 1,032 Retirement fund transactions - 290 Depreciation - 23 Commissions charged - 850 6,708 5,135 Add: Depreciation of leased equipment - 23 Result of Financial margin adjusted credit transactions Ps. 66 Ps. (786) for credit risks Ps. 1,899 Ps. 385

The aforementioned segment information refer to credit, money market and capital market transactions carried out basically by the subsidiaries Banco In- bursa, Inversora Bursátil-Casa de Bolsa and Arrendadora Financiera. The Group focuses other specialized activities developed by subsidiaries on businesses not subject to financial intermediation corresponding to the subsidiaries: Operadora de Fondos and Afore, which consolidate their financial information with that of the Group. There are other controlling entities, whose financial information is not consolidated with that of the Group, as they refer to entities with activities specialized in the insurance and bonding sector in the life, property and health and pension lines. e) Segment information of subsidiaries regulated by the CNSF (not subject to consolidation)

2005 Fianzas Guardiana Inbursa Seguros Inbursa Pensiones Inbursa Total companies regulated by the CNSF Premiums written Ps. 446 Ps. 8,478 Ps. 577 Ps. 9,502 Premiums ceded (67) (1,551) - (1,618) Retained premiums 379 6,927 577 7,883 Net increase in reserve for unearned premiums and bonds in force (3) (642) (230) (875) Retained accrued premiums 376 6,285 347 7,008 Net acquisition cost (34) 1,199 50 1,215 Net cost of losses, claims and other 222 4,643 758 5,623 Net increase in other technical reserves 2 (49) 76 30 191 5,793 883 6,867 Gross profit (loss) Ps. 185 Ps. 492 Ps. (537) Ps. 141

2004 Fianzas Guardiana Inbursa Seguros Inbursa Pensiones Inbursa Total companies regulated by the CNSF Premiums written Ps. 384 Ps. 9,241 Ps. 561 Ps. 10,186 Premiums ceded (77) (1,555) (1,632) Retained premiums 307 7,686 561 8,554 Net increase in reserve for unearned premiums and bonds in force (4) (1,536) (251) (1,791) Retained accrued premiums 303 6,150 310 6,763 Net acquisition cost (36) 1,452 19 1,435 Net cost of losses, claims and other 171 4,429 746 5,346 Net increase in other technical reserves (6) (185) (18) (209) 129 5,696 747 6,572 Gross profit (loss) Ps. 174 Ps. 454 Ps. (437) Ps. 191

2005 2004 24. Financial Margin Premiums on repurchase agreements (Note 8e) Ps. 7,649 Ps. 5,389 Credit portfolio (1) 5,396 3,526 An analysis of the financial margin presented in the statement of income at On investments in financial instruments 2,556 1,237 December 31, 2005 and 2004 is as follows: Other 489 429 On deposits with Banxico 436 282 a) Interest income On financing granted to domestic and foreign banks 357 139 Translation of U.S. dollars and UDI 102 54 Rents collected under operating leases - 41 Ps. 16,985 Ps. 11,097 Grupo Financiero Inbursa 55 FINANCIAL STATEMENTS

(1) An analysis of interest income by type of credit is as follows: At December 31, 2005 and 2004, the balances of transactions in which the Group’s bank subsidiary acts as trustee or operates under mandate are as follows: Type of credit 2005 2004 Simple Ps. 3,313 Ps. 2,099 Unsecured 784 572 2005 2004 Restructured 584 432 Trusts Additional benefit home Administrative Ps. 193,579 Ps. 180,810 mortgage subject to VAT 217 130 Investment 3,624 401 Other discounted loans 215 125 Guarantee 84 86 Home mortgage 104 40 Transfer of title 69 146 Discounts 90 35 197,356 181,443 Chattel mortgage 68 83 Mandates 34 206 Financial leases 14 11 Total Ps. 197,390 Ps. 181,649 Consumer 5 - Secured by capital assets 2 3 In the years ended December 31, 2005 and 2004, the subsidiary Banco In- Ps. 5,396 Ps. 3,530 bursa obtained income of Ps. 36 and Ps. 26, respectively, from activities performed in its capacity as trustee. b) Interest expense Transactions in which the aforementioned subsidiary acts as trustee are 2005 2004 recorded and controlled in memoranda accounts. In conformity with the Premiums on repurchase Mexican Income Tax Law, Banco Inbursa, as trustee, is responsible for see- agreements (Note 8e) Ps. 8,165 Ps. 5,484 ing that all tax obligations of the managed trusts, which engage in business Time deposits 2,580 43 activities, are fulfilled. Notes with interest payable at maturity 1,772 1,603 Bank loans 426 151 ii) Property held for safekeeping or under management Other 213 115 Checking account deposits 1 893 An analysis of the balance of this account at December 31, 2005 and 2004 Financing received from is as follows: foreign banks - 18 Discount - 58 Ps. 13,157 Ps. 8,365 2005 2004 Securities held for safekeeping Ps. 724,633 Ps. 541,903 Securities held in guarantee 71,867 50,212 c) Monetary position result, net (financial margin) Notes subject to collection (9,210) 5 Travelers checks held 10 At December 31, 2005 and 2004, the Group’s consolidated monetary posi- Other 22 523 tion result is Ps. (640) and Ps. (1,032), respectively. Ps. 787,312 Ps. 592,653

The average balance of the principal monetary assets and liabilities consi- dered in determining the monetary position result of 2005 and 2004 of the Securities held for safekeeping or under management are recorded at cost Group and its subsidiaries are presented in Note 2c. and marked-to-market.

25. Intermediation Income iii) Other contingent liabilities

An analysis of intermediation income for the years ended December 31, At December 31, 2005 and 2004, an analysis of the Group’s contingent lia- 2005 and 2004 is as follows: bilities is as follows:

2005 2004 2005 2004 Other income from buying Economic penalties appealed Ps. - Ps. 2 and selling of securities $ (629) $ (72) Opening of lines of risk exposure Result of marked-to-market valuation of: due to participation in the Investments in securities 517 1,416 interbank payment system SPEUA - 7,013 Repurchase transactions (Note 8d) (3) (24) Rent due under operating leases 321 131 Derivatives, net (105) 860 Residual value 67 - Other 50 (202) Ps. 388 Ps. 7,146 $ (170) $ 1,978 27. Administración de riesgos 26. Memoranda Accounts 27. Risk Management The Company has memoranda accounts for the purpose of recording the Group’s and subsidiary’s rights and obligations with third parties, as well as Due to the importance of the subsidiary Banco Inbursa, S.A. de C.V. (the securities, property received for safekeeping and property under mandate Bank), the following information refers only to such subsidiary: derived from the Group’s and subsidiaries’ transactions. The Bank’s management has policies and procedures manuals developed a) Transactions on behalf of others following CNBV and Banxico guidelines for reducing the risks to which the Bank is exposed. i) Customers’ securities received for safekeeping In conformity with SHCP regulations, credit institutions are required to disclose, by means of notes accompanying their financial statements, any information 2005 2004 regarding policies, procedures, methodologies and other risk management Money market instruments Ps. 152,181 Ps. 127,390 measures adopted, as well as information regarding the potential losses related Fixed-yield instruments 26,790 24,927 to each type of risk in the different markets in which they operate. Variable-yield instruments 751,701 534,328 Shares of investment funds 14,728 13,007 On December 2, 2005, the Commission issued provisions of general appli- Shares of variable-yield cation for credit institutions (Circular Única or “Sole Circular”). Such pro- investment funds 19,390 13,812 visions establish that the internal audit area will perform at least once a Ps. 964,790 Ps. 713,464 year or at year-end a comprehensive risk management audit. The Bank’s internal audit area carried out this activity using the applicable accounting criteria and submitted the results to the Board of Directors at a meeting ii) Securities and notes received in guarantee held in January 2006.

a) Environment 2005 2004 Customers’ securities As part of its efforts for increased corporate governance, the Bank practi- delivered in guarantee (shares) $ 956 $ 1,055 ces comprehensive risk management. To this end, it relies on the services provided by the Risk Analysis area, the Comprehensive Risk Management b) Proprietary transactions Unit and the Risk Management Committee, through which the Bank also identifies, measures, controls and monitors all of its quantifiable and un- ii) Property held in trust or under mandate quantifiable operating risks. 56

The Bank’s Risk Management Committee systematically analyzes the Additionally, the Bank uses the “Modified Duration” methodology to com- information it receives, together with the Risk Analysis area and ope- pute the Repricing Gap of its assets and liabilities. This methodology con- rating areas. sists of estimating the value of positions using an adjusted linear approxi- mation, based on a change in interest rates. Such methodology is applied Additionally, the Bank has a contingency plan to offset weaknesses detec- to both the Mexican peso denominated position as well as the U.S. dollar ted at the operational and legal levels and in the recording of transactions, denominated position. in excess of the maximum risk tolerance levels approved by the Risk Mana- gement Committee. To prove statistically that the market risk measuring model is giving reliable results, the Group Bank carries out a hypothetical test of the The Bank’s policies, in accordance with BANXICO requirements, state reliability level of the measuring system. This consists of a chi square that no transactions should be conducted with any persons with direct (Kupiec) test of the number of times that the actual loss observed ex- or indirect holdings of 1% or more of the Bank’s or The Group’s paid-in ceeds the estimated risk level. capital shares. At present, the market risk is computed for money-market, international b) Market risk bond and variable-yield and derivative instrument portfolios. An analysis of market risk at December 31, 2005 is as follows: In order to measure and evaluate the risks assumed in conducting its financial transactions, the Bank has computational tools at its disposal to calculate Value at Risk (VaR) and to perform sensitivity analyses and stress testing.

Nominal Unrealized Instrument Term Cost rate amount Market rate Market value gain (loss) Value at risk Nominal rate 11 8.14 11 8.28 11 - - Synthetics 39 9.16 38,005 8.87 37,657 27 (1) Subtotal money market 39 9.16 38,016 8.87 37,668 27 (1) International bonds 1,897 12.54 2,082 9.14 2,246 164 (34) Subtotal variable- yield 164 255 91 (90) Inmobiliaria/ Outsourcing 79 127 (48) (11) Subtotal derivatives (21,827) (87) (87) (83) Subtotal swaps at risk (Mexican pesos) (13,600) (13,552) 48 (103) Subtotal training fixed-rate swaps (USD) (6,118) (5,730) 388 (75) Securities held 7,313 3,469 42 (32) Overall total Inbursa 1,204 24,394 719 (165)

The Bank measured market risks using the so-called Value at Risk (VaR) adverse transactions on the portfolio on the day of the computation. model for the total valuation in a target investment term of one day with a Under the new risk factor stress conditions, the valuations of the por- reliability level of 95%, using the risk factor values of the last 252 days tfolios are determined, as well as the value at risk and their new mark- to-market values. The most important position for the Bank is the risk involved with currency derivative transactions, consisting of currency and interest rate futures and c) Liquidity risk Mexican peso and U.S. dollar denominated swaps. This information inclu- des the market risk of positions, the unrealized gain (loss) generated and In order to monitor liquidity, the risk management area computes liqui- the Value at Risk in one day with a reliability level of 95%. dity gaps, considering the Bank’s financial assets and liabilities, as well as loans granted. The model is based on the assumption that the distribution of variances in risk factors is normal. To validate this assumption, “back testing” is The Bank also measures the adverse margin by considering the diffe- carried out. rential between the buying and selling prices of its financial assets and liabilities. The measurement of market risk is conducted via stress tests consisting of sensitivity analyses of 100bps and 500bps, respectively, in addition Furthermore, the Bank monitors its foreign currency liquidity risk in to tests under historical extreme conditions of up to four standard va- accordance with BANXICO’s regimen of investment and admission of riances on a 60-day investment horizon. This simulates the effects of foreign currency denominated liabilities.

2 0 0 5 2 0 0 4 Coefficient % coefficient Coefficient % coefficient January 49,960 0.17 366,142 1.31 February 316,054 1.00 736,570 2.68 March 3,722 0.01 638,234 2.39 April 32,180 0.11 592,559 2.05 May 883 0.00 1,087,761 3.41 June 62,073 0.25 796,240 2.62 July 63,179 0.20 42,038 0.15 August 46,728 0.17 814,531 2.79 September 24,842 0.09 741,686 2.51 October 550,681 1.51 71,910 0.25 November 408,797 1.05 889,280 2.98 December 2,069,943 5.15 435,223 1.30 Average amount 302,420 0.81 601,015 2.05

The liquidity model considers the liquidity quality of portfolio assets, as well as the asset/liability gap and their status within each term. d) Credit risk

The Bank computes loan portfolio risks by applying quarterly analyses of credit risks using its own risk model, based on the interest coverage generated by its activity, which assumes that the deterioration of credit quality and of each borrower with time depends both on quantifiable economic factors, as well as qualitative factors. The total effect of these factors may be observed in the development of the operating margin generated by the borrower’s activities. In other words, it is reasonable to believe the deterioration of the operating margin firmly indicates that these factors together work against the borrower.

In order to carry out stress tests, the Bank determines a factor that represents the level of the operation’s flow resistance to cover the interest generated by the liabilities with costs.

Stress tests may be carried out by modifying the variables that affect the operating income and/or the financial expense derived from the liabilities with cost.

The value at risk and grading of the loan portfolio by currency at December 31, 2005 is as follows: Grupo Financiero Inbursa 57 FINANCIAL STATEMENTS

Total Mexican pesos U.S. dollars UDIS Net exposure 72,006 39,198 366,142 1,336 Expected loss in Mexican pesos 4,357 1,056 736,570 173 Grading of loan portfolio A AA BBB BBB 6.05% 2.69% 9.94% 12.99%

The expected loss considers the exposure net of guarantees and the probability of default as computed by the proprietary model.

Performing Past-due Times of allowance/ % allowance/ Currency portfolio portfolio Allowance past-due portfolio performing portfolio U.S. dollars Ps. 14,810 Ps. 181 Ps. 3,438 0.05 23.21 Mexican pesos 38,502 255 3,870 0.07 10.05 UDIS 1,471 142 - 9.65 Total Bank Ps. 54,783 Ps. 436 Ps. 7,450 0.06 13.59

Additionally, on a quarterly basis, the Credit Department monitors the quality of the credit The Bank is currently introducing this quantitative model, as well as the database for portfolio based on this grading and conducts an analysis by segment of the main sec- flowing up on its legal risk exposure. tors of the Mexican economy. Together with the quarterly credit monitoring analyses, concentration of risk is determined, not only for each borrower or risk group but also by h) Operating risk economic activity. With respect to its operating risk, in adherence to the Circular Única, the Bank currently In its future and forward contracts, the Bank acts on its own behalf with intermediaries has a plan for introducing operating risk measures that must be completed by July 2007. or financial participants authorized by Banxico, as well as with other participants who Such measures are as follows: must guarantee the obligations contained in the contracts signed with the participating parties. a) Identify and document the processes that include descriptions of the duties of each of the Bank’s units. e) Risk policies for derivatives b) Identify and document the operating risks inherent in the processes mentioned in the Generally, the risk assumed in currency derivative transactions refers to Mexican rates sin- preceding paragraph. ce U.S. dollar futures are positioned as a credit portfolio or other assets. The transactions conducted involve a counterparty risk. c) At least once per quarter evaluate and report on the possible consequences on the business of the materialization of identified risks and report such results to the The policies observed by the Bank establish that risk positions in securities and financial heads of each area involved so as to evaluate the different control measures in place derivatives may not be assumed by operators since risk-taking is decided on exclusively for such risks. by senior management by means of collective bodies. The Risk Management Committee defined the positions to which Banco Inbursa must adhere, as follows: d) Establish tolerance levels for each risk identified while defining the cause, source and factors of each risk.

Maturity of less Maturity of more e) Maintain an historical database that includes a systematic recording of the different than one year (*) than one year (*) types of losses and the related cost recorded in the Bank’s accounting duly identified by Nominal rate 2.5 2.0 the source business line or unit. Actual rate 2.5 2.0 Synthetic derivatives 4.0 2.5 The Bank currently has in place an electronic agenda to record the events associated with Capital markets (1) operating losses in each business unit so as to identify the possible consequences and potential losses derived from the materialization of such losses. (*) Times net capital for the immediately preceding quarter, computed by BANXICO (1) Limit defined in the third paragraph of clause III, of Article 75 of the Credit Ins- 28. Commitments and Contingencies titutions Act. a) Liability agreement f) Technological risk In conformity with Article 28 of the Law Regulating Financial Groups, the Group and The Bank’s corporate strategy with respect to offsetting technological risks rests in its its subsidiaries signed a liability agreement whereby the Group accepts responsibility contingency and business continuity plan, which includes the reestablishment of critical jointly and severally and without limitation for the performance of the obligations functions in the Bank’s systems in case of emergency, as well as the use of firewalls, the of its subsidiaries and for the losses derived from the performance of their own ac- security of on-line information and system access restrictions. tivities, even for those obligations incurred prior to the incorporation of the related subsidiaries into the Group. g) Legal risk The Group shall similarly be liable for their monetary obligations due to third par- The Bank’s specific policy regarding legal risks is as follows: ties, bankruptcy declared by the regulatory authorities, and the deterioration of their financial position to the point that they are unable to meet legally specified capital 1. It is the responsibility of the Comprehensive Risk Management Unit to quantify estima- requirements. tes of the legal risks the Bank faces. 2. The Comprehensive Risk Management Unit should inform the Risk Management Com- b) Legal contingencies mittee of the Bank’s legal risks on a monthly basis so as to follow up such risks. 3. The financial assessor together with the documentation traffic area is responsible for The Group and subsidiaries are party to a number of litigations of a labor, tax, regula- maintaining all customer files with the correct relevant legal documents and agree- tory and business nature whose possible unfavorable resolutions represent contingent ments. liabilities for the Group. Based on the opinions of the Group’s lawyers, management has 4. The Bank’s legal area is responsible for monitoring the adequate instrumentation of evaluated each suit based on the risk that they represent individually and their possible agreements and contracts, including the formalization of guarantees so as to avoid effects on the Group’s financial information and concluded that at December 31, 2005 and vulnerabilities in the Bank’s transactions. 2004, there was no need for creating a reserve for those issues. 5. The Bank’s legal auditor must perform a legal audit on the Bank at least once per year. 29. Subsequent Events The proposed model for the quantification of legal risks is based of the frequency of unfa- vorable events and the severity of losses so as to estimate the potential risk in this area. On January 1 2006, the requirements of the Mexican Financial Information Standards Research and Development Board (Consejo Mexicano para la Investigación y Desarrollo Computation of probability of unfavorable rulings: de Normas de Información Financiera, A.C. or CINIF) went into effect and replace the standards previously issued by the Mexican Institute of Public Accountants. The adoption of these new rules will give rise to no changes in the Company’s financial structure or in L= f1 X S1 the significant disclosures in its 2005 financial statements. Whereby: Lic. Marco Antonio Slim Domit Lic. Francisco Díaz Bocanegra f1 = No. of cases with unfavorable rulings / No. of cases in litigation. General Director Management Director

S1 = Average severity of loss (cost, legal expenses, interest, etc.) derived from unfavorable rulings. C.P. Federico Loaiza Montaño C.P. Raúl Reynal Peña L = Expected loss from unfavorable rulings. Audit Director Director de Contraloría 58

BANCO INBURSA, S.A. INSTITUCIÓN DE BANCA MÚLTIPLE

Consolidated Balance Sheets (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

December 31 2005 2004

Assets Cash and cash equivalents (Note 6) Ps. 12,847 Ps. 10,218

Investment in securities (Note 7) Instruments for trading 3,608 16,944 Available for sale - 2 Held to maturity 3,236 3,277 6,844 20,223

Securities and derivatives Debit balances under repurchase agreements (Note 8) 52 10 Derivatives (Note 9) 3,864 1,465 3,916 1,475

Performing loan portfolio (Note 10) Commercial loan portfolio 49,775 52,013 Loans to financial entities 1,085 833 Consumer loans 3,429 2,962 Home mortgage loans 858 588 Total performing loan portfolio 55,147 56,396

Past-due loan portfolio (Note 10) Commercial loan portfolio 295 331 Consumer loans 87 7 Home mortgage loans 54 10 Total past-due loan portfolio 436 348 Total loan portfolio 55,583 56,744

Preventive provision for credit risks (Note 11) 7,450 6,542 Net loan portfolio 48,133 50,202

Other accounts receivable, net (Note 12) 1,692 3,242 Foreclosed and repossessed property 25 20 Buildings, furniture and equipment, net (Note 13) 511 513 Long-term equity investments (Notes 3 and 14) 3,008 3,311 Other assets, deferred charges and intangibles, net (Note 15) 463 520

Total assets Ps. 77,439 Ps. 89,724 Banco Inbursa, S.A. Institución de Banca Múltiple 59 FINANCIAL STATEMENTS

December 31 2005 2004

Liabilities Deposits (Note 16) Demand deposits Ps. 24,135 Ps. 17,181

Time deposits General public 1,640 1,080 Money market 20,482 36,741 22,122 37,821 46,257 55,002

Interbank and other borrowings (Note 17) Short-term 1,196 1,365 Long-term 942 1,531 2,138 2,896

Securities and derivatives Credit balances under repurchase agreements (Note 8) 52 7 Derivatives (Note 9) 1,230 734 1,282 741

Other accounts payable Income tax payable (Note 18) 270 15 Sundry creditors and other accounts payable (Note 19) 2,730 6,344 3,000 6,359

Deferred taxes, net (Note 20) 837 800 Deferred credits 1 1 Total liabilities 53,515 65,799

Stockholders’ equity (Note 21) Contributed capital Capital stock 14,266 14,266

Earned capital Capital reserves 4,621 4,540 Retained earnings 13,495 13,178 Deficit from restatement of stockholders’ equity (9,680) (9,680) Result from holding non-monetary assets: On valuation of long-term equity investments 149 220 Net income 1,034 1,352 Minority interest 39 49 Total stockholders’ equity 23,924 23,925 Total liabilities and stockholders’ equity Ps. 77,439 Ps. 89,724 60

Memoranda Accounts 2005 2004

Other contingent liabilities Ps. 7,015 Irrevocable lines of credit Ps. 2,804 3,303 Property held in trust or under mandate (Note 26a) 197,390 181,649 Securities held for safekeeping or under management (Note 26b) 786,752 592,129 Other memoranda accounts 656,527 605,562 Ps. 1,643,473 Ps. 1,389,658

Securities to be received under repurchase agreements Ps. 50,843 Ps. 34,630 (Less) creditors under repurchase agreements 50,826 34,623 Net (Note 8) Ps. 17 Ps. 7

Debtors under repurchase agreements Ps. 50,826 Ps. 11,720 (Less) securities to be delivered under repurchase agreements 50,843 11,724 Net (Note 8) Ps. (17) Ps. (4)

Note: The historical capital stock is Ps. 6,189 at December 31, 2005 and 2004.

The accompanying notes are an integral part of these consolidated financial statements.

These consolidated balance sheets were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 99, 101 and 102 of the Investment Companies Law, of universal and mandatory compliance, applied in a consis- tent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions.

These consolidated balance sheets were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Javier Foncerrada Izquierdo Lic. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director Banco Inbursa, S.A. Institución de Banca Múltiple 61 FINANCIAL STATEMENTS

BANCO INBURSA, S.A. INSTITUCIÓN DE BANCA MÚLTIPLE

Consolidated Statements of Income At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

2005 2004

Interest income Ps. 12,400 Ps. 8,631 Interest expense 8,283 6,027 Monetary position loss, net (593) (947) Financial margin (Note 24) 3,524 1,657

Preventive provision for credit risks (Note 11) 1,289 1,314 Financial margin adjusted for credit risks 2,235 343

Commissions and fees collected 1,236 1,118 Commissions and fees paid (52) (30) Intermediation (loss) income (Note 25) (938) 1,648 246 2,736 Total income from operating activities 2,481 3,079

Administrative and promotional expenses 1,832 1,460 Operating income 649 1,619 Other income 434 184 Other expenses 322 190 112 (6) Profits before income tax and employee profit sharing 761 1,613

Current year income tax (Note 18) 306 56 Deferred income tax (Note 20) 85 555 391 611 Income before equity interest in net income of subsidiaries and associated companies 370 1,002 Equity interest in net income of subsidiaries and associated companies (Note 14) 636 278 Income from continuing operations 1,006 1,280 Discontinued operations, extraordinary items and changes in accounting policies, net (Note 20) 28 78 Consolidated net income 1,034 1,358 Minority interest - (6) Net income Ps. 1,034 Ps. 1,352

The accompanying notes are an integral part of these consolidated financial statements.

These consolidated financial statements were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 99, 101 and 102 of the Investment Companies Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions.

These consolidated financial statements were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Javier Foncerrada Izquierdo Lic. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director 62

Consolidated Statements of Changes in Stockholders’ Equity At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2 and 21)

Contributed capital Earned capital

Deficit from Result from Total Capital Capital Retained restatement of holding non-monetary Minority stockholders’ stock reserves earnings stockholders’ equity assets Net income interest equity

Balance at December 31, 2003 Ps. 14,266 Ps. 4,483 Ps. 12,784 Ps. (9,680) Ps. 116 Ps. 567 Ps. 43 Ps. 22,579 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2003 to retained earnings and increase in capital reserves, as per resolution adopted at stockholders’ meeting held on April 13, 2004 57 510 (567) - Dividends declared as per resolution adopted at stockholders’ meeting held on April 13, 2004 (116) (116) Total - 57 394 - - (567) - (116)

Recognition of comprehensive income (Note 22b) Comprehensive income Net income 1,352 1,352 Unrealized gain on valuation of long-term equity investments 104 104 Minority interest 6 6 Total - - - - 104 1,352 6 1,462 Balance at December 31, 2004 14,266 4,540 13,178 (9,680) 220 1,352 49 23,925 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2004 to retained earnings and increase in capital reserves, as per resolution adopted at stockholders’ meeting held on April 12, 2005 135 1,217 - (1,352) Dividends declared as per resolution adopted at stockholders’ meeting held on April 12, 2005 (326) (326) Effect of spin-off as per resolution adopted at extraordinary stockholders’ meeting held on May 19, 2005 (Note 14a) (54) (574) (42) (670) Total - 81 317 - (42) (1,352) - (996) Recognition of comprehensive income (Note 22b) Net income 1,034 1,034 Unrealized gain on valuation of long-term equity investments (29) (29) Minority interest (10) (10) Total - - - - (29) 1,034 (10) 995 Balance at December 31, 2005 Ps. 14,266 Ps. 4,621 Ps. 13,495 Ps. (9,680) Ps. 149 Ps. 1,034 Ps. 39 Ps. 23,924

The accompanying notes are an integral part of these consolidated financial statements.

These consolidated statements of capital stock were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 99, 101 and 102 of the Investment Companies Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions. Banco Inbursa, S.A. Institución de Banca Múltiple 63 FINANCIAL STATEMENTS

Consolidated Statements of Changes in Stockholders’ Equity At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2 and 21)

Contributed capital Earned capital

Deficit from Result from Total Capital Capital Retained restatement of holding non-monetary Minority stockholders’ stock reserves earnings stockholders’ equity assets Net income interest equity

Balance at December 31, 2003 Ps. 14,266 Ps. 4,483 Ps. 12,784 Ps. (9,680) Ps. 116 Ps. 567 Ps. 43 Ps. 22,579 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2003 to retained earnings and increase in capital reserves, as per resolution adopted at stockholders’ meeting held on April 13, 2004 57 510 (567) - Dividends declared as per resolution adopted at stockholders’ meeting held on April 13, 2004 (116) (116) Total - 57 394 - - (567) - (116)

Recognition of comprehensive income (Note 22b) Comprehensive income Net income 1,352 1,352 Unrealized gain on valuation of long-term equity investments 104 104 Minority interest 6 6 Total - - - - 104 1,352 6 1,462 Balance at December 31, 2004 14,266 4,540 13,178 (9,680) 220 1,352 49 23,925 Resolutions adopted by stockholders Appropriation of net income of year ended December 31, 2004 to retained earnings and increase in capital reserves, as per resolution adopted at stockholders’ meeting held on April 12, 2005 135 1,217 - (1,352) Dividends declared as per resolution adopted at stockholders’ meeting held on April 12, 2005 (326) (326) Effect of spin-off as per resolution adopted at extraordinary stockholders’ meeting held on May 19, 2005 (Note 14a) (54) (574) (42) (670) Total - 81 317 - (42) (1,352) - (996) Recognition of comprehensive income (Note 22b) Net income 1,034 1,034 Unrealized gain on valuation of long-term equity investments (29) (29) Minority interest (10) (10) Total - - - - (29) 1,034 (10) 995 Balance at December 31, 2005 Ps. 14,266 Ps. 4,621 Ps. 13,495 Ps. (9,680) Ps. 149 Ps. 1,034 Ps. 39 Ps. 23,924

These consolidated statements of capital stock were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Javier Foncerrada Izquierdo Lic. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director 64

Consolidated Statements of Changes in Financial Position At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

2005 2004 Operating activities Net income Ps. 1,034 Ps. 1,352 Items not requiring the use of resources: Depreciation and amortization 135 137 Goodwill amortization - 44 Mark-to-market valuation 20 (530) Equity interest in net income of subsidiaries (636) (278) Preventive provision for credit risks (Note 11) 1,289 1,314 Deferred taxes, net (Note 20) 37 425 1,879 2,464 Items pertaining to operating activities (Increase) decrease in: Treasury transactions 11,489 (9,746) Loan portfolio 780 (10,017) Other accounts receivable 1,550 (2,417) Foreclosed and repossessed property (5) 1 Other assets, deferred charges and intangibles (29) (13) (Decrease) increase in: Deposits (8,745) 20,539 Bank loans (758) (2,242) Sundry creditors and other accounts payable (3,359) 4,835 Deferred credits - (192) Resources provided by operating activities 2,802 3,212

Financing activities Minority interest (10) 6 Dividends paid (Note 21d) (344) (116) Resources used in financing activities (354) (110)

Investing activities Long-term equity investments 263 (6) Purchase of furniture and equipment (82) (57) Resources provided by (used in) investing activities 181 (63)

Net increase in cash and cash equivalents 2,629 3,039 Cash and cash equivalents at beginning of year 10,218 7,179 Cash and cash equivalents at end of year Ps. 12,847 Ps. 10,218

The accompanying notes are an integral part of these consolidated financial statements. These consolidated profit and loss statements were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 99, 101 and 102 of the Investment Companies Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions. These consolidated profit and loss statements were approved by the Board of Directors under the responsibility of the undersigning officers.

Lic. Javier Foncerrada Izquierdo Lic. Francisco Díaz Bocanegra C.P. Raúl Reynal Peña C.P. Federico Loaiza Montaño Chairman Chief Administrative Officer Chief Finance Officer Audit Director Seguros Inbursa, S.A. 65 FINANCIAL STATEMENTS

SEGUROS INBURSA, S.A.

Balance Sheets (In thousands of Mexican pesos with purchasing power at December 31, 2005)

December 31 2005 2004

Assets Investments (Note 7) Securities: Mexican government Ps. 7,360,854 Ps. 7,379,795 Private enterprises: Fixed-yield 3,306,736 3,477,815 Variable-yield 947,354 1,172,038 Net unrealized gain on valuation 1,840,352 1,607,113 Interest debtors 7,897 90,354 13,463,193 13,727,115 Loans: On policies 134,378 130,853 Secured 350,519 216,701 Unsecured 271 Overdue portfolio 26,907 5,102 Interest debtors 3,029 1,649 Allowance for write-offs 12,722 3,090 502,382 351,215 Real estate investments: Real estate 82,788 55,699 Net unrealized gain on valuation 937,095 933,698 Depreciation 60,527 57,831 959,356 931,566 Investments for labor obligations at retirement 757,644 654,365 Total investments 15,682,575 15,664,261 Cash and cash equivalents: Cash and banks 505,046 11,559 Debtors: Premium 2,249,073 2,079,239 Agents and adjusters 2,676 3,204 Notes receivable 60,908 50,375 Employee loans 54,527 57,446 Other 137,981 86,011 Allowance for write-offs 31,617 21,601 2,473,548 2,254,674 Reinsurers and rebonders (Note 5): Insurance and bonding companies 37,806 81,014 Retained deposits 497 533 Reinsurers’ share of unpaid claims (Note 5d) 1,153,585 494,496 Reinsurers’ share of unearned premiums 312 338 Other (Note 4f) 499,898 64,553 1,692,098 640,934 Total assets 4,670,692 2,907,167 Other assets (Note 9): Furniture and equipment, net 116,265 95,859 Foreclosed and repossessed assets 391 403 Sundry 153,094 114,103 Unamortized expenses (Note 8) 66,336 71,781 Amortization (Note 8) 34,141 28,368 Total other assets 301,945 253,778

Total assets Ps. 20,655,212 Ps. 18,825,206 66

December 31 2005 2004 Liabilities and stockholders’ equity Technical reserves Unearned premiums: Life Ps. 5,307,747 Ps. 5,088,148 Accident and health 575,574 405,600 Property and casualty 1,874,910 1,712,048 Bonds in force 7,540 7,851 7,765,771 7,213,647 Contractual obligations: Losses and maturities (Note 10a) 3,198,144 2,188,459 Losses incurred but not reported (Note 10b) 271,157 280,892 Policy dividends 209,316 184,955 Managed insurance funds 546,927 529,949 Deposit premiums 24,964 24,751 4,250,508 3,209,006 Prevision: Prevision: 7,211 102,288 Catastrophic 3,049,808 3,005,919 Contingency 2,291 2,343 Special 1,321 122 3,060,631 3,110,672 Total technical reserves 15,076,910 13,533,325 Reserves for labor obligations at retirement (Note 11) 756,601 651,526 Creditors: Agents and adjusters 216,948 239,322 Funds in custody for losses 6,107 6,357 Sundry 39,873 78,481 262,928 324,160 Reinsurers and rebonders: Insurance and bonding companies 609,429 392,169 Retained deposits 748 730 610,177 392,899 Other liabilities: Provision for employee profit sharing (Note 13) 38,711 33,814 Provision for income tax (Note 13) 130,622 132,841 Other liabilities 434,753 393,600 Deferred credits 587,052 530,883 1,191,138 1,091,138 Total liabilities 17,897,754 15,993,048 Stockholders’ equity (Note 14): Capital stock 1,148,170 1,148,170 Unsubscribed capital 160,000 160,000 Paid-in capital 988,170 988,170 Reserves: Legal reserve 206,566 137,885 Other reserves 2,019,047 1,772,102 2,225,613 1,909,987 Unrealized gain on valuation of investments 28,580 14,971 Subsidiaries 66,329 (20,086) Retained earnings 294,122 533,542 Net income for the year 550,152 686,804 Deficit from restatement of stockholders’ equity (1,395,508) (1,281,230) Total stockholders’ equity 2,757,458 2,832,158 Total liabilities and stockholders’ equity Ps. 20,655,212 Ps. 18,825,206 Seguros Inbursa, S.A. 67 FINANCIAL STATEMENTS

Memoranda Accounts (nominal amounts) December 31 2005 2004 Funds in custody Ps. 124,401 Ps. 124,633 Responsibilities under bonds in force 127,366 195,571 Memoranda accounts (Note 15) 847,212 1,093,448 Ps. 1,098,979 Ps. 1,413,652 68

Statements of Income (In thousands of Mexican pesos with purchasing power at December 31, 2005)

Year ended December 31 2005 2004

Premiums: Written (Note 4c) $ 8,478,124 $ 9,279,178 Ceded 1,551,087 1,561,489 Retained 6,927,037 7,717,689 Net increase in reserve for unearned premiums and bonds in force 641,970 1,542,749 Retained earned premiums 6,285,067 6,174,940 Net acquisition cost: Agent commissions 614,775 620,114 Additional agent commissions 379,566 369,766 Commissions on reinsurance and rebonding accepted 7,499 4,309 Commissions on reinsurance ceded 270,613 254,577 Excess of loss coverage 160,604 178,945 Other 307,159 539,115 1,198,990 1,457,672 Net cost of losses, claims and other contractual obligations: Losses and other contractual obligations 5,194,807 4,519,473 Recovered reinsurance or non-proportional reinsurance losses 551,678 72,319 4,643,129 4,447,154 Technical profit 442,948 270,114 Net increase in other technical reserves (Note 4g): Reserve for catastrophic risks 43,755 (81,347) Prevision reserve (94,017) (104,813) Contingency reserve (57) (39) Other reserves 1,258 (6) (49,061) (186,205) Gross profit 492,009 456,319 Net operating expenses: Administrative and operating expenses (308,043) (300,673) Employee compensations and fringe benefits 922,592 893,388 Depreciation and amortization 47,933 48,378 662,482 641,093 Operating loss (170,473) (184,774) Comprehensive financing income: On investments 482,445 313,539 On sale of investments 364,507 490,882 On valuation of investments 215,431 667,765 On premium interest 83,452 83,199 Result of similar or related transactions 169 5,838 Other 20,041 17,285 Net exchange loss (58,476) (9,132) Net monetary position gain 383,325 528,514 724,244 1,040,862

Income before income tax, employee profit sharing and equity interest in net income of subsidiaries 553,771 856,088 Provisions for (Note 13): Income tax 181,776 237,175 Employee profit sharing 57,528 72,369 239,304 309,544 Equity interest in net income of subsidiaries (Note 7e) 235,685 140,260 Net income $ 550,152 $ 686,804 Pensiones Inbursa, S.A. 69 FINANCIAL STATEMENTS

PENSIONES INBURSA, S.A.,

Balance Sheets (In thousands of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2, 3, 4, 6 and 7)

December 31 2005 2004

Assets Investments (Note 4) In securities: Mexican government Ps. 9,604,875 Ps. 8,197,539 Private enterprises: Fixed-yield 2,892,827 3,699,866 Variable-yield 402,500 4,633,074 Net unrealized gain on valuation (Note 4b) 2,834,215 6,046,756 Interest debtors 309,352 296,752 16,043,769 22,873,987

Cash and cash equivalents: Cash and banks 424 2,101

Debtors: For premiums 4,447 6,817 Notes receivable 216 223 Other 5,697 979 Allowance for write-offs 5,150 80 5,210 7,939

Other assets: Sundry 103,704 104,403 Unamortized expenses, net (Note 6) 11,349 160,457 115,053 264,860

Total assets Ps. 16,164,456 Ps. 23,148,887 70

December 31 2005 2004

Liabilities and stockholders’ equity Technical reserves (Note 3c) Unearned premiums reserve: Life Ps. 12,828,801 Ps. 12,669,734

Contractual obligations: Losses and maturities 50,299 43,940 Deposit premiums 2,459 2,569 52,758 46,509

Prevision: Contingency 256,576 253,394 Special 362,261 289,129 618,837 542,523 13,500,396 13,258,766 Creditors: Agents and adjusters 57 59 Sundry 10,009 6,376 10,066 6,435 Tax provision 148,543 132,115 Other liabilities 1 2 Deferred credits 5,588 3,225 154,132 135,342 Total liabilities 13,664,594 13,400,543 Stockholders’ equity (Note 7) Capital stock 1,376,617 7,410,095 Unsubscribed 350,000 2,120,000 Paid-in capital 1,026,617 5,290,095 Reserves: Legal reserve 413,158 140,850 Other reserves 160,921 124,814 574,079 265,664 Subsidiaries 295,918 1,152,571 Retained earnings 2,755,541 3,055,927 Net income for the year 586,701 2,723,081 Deficit from restatement of stockholders’ equity (2,738,994) (2,738,994) Total stockholders’ equity 2,499,862 9,748,344 Total liabilities and stockholders’ Equity Ps. 16,164,456 Ps. 23,148,887

2005 2004 Memoranda Accounts (Nominal amounts) Memoranda accounts Ps. 2,009,466 Ps. 5,365,687 Pensiones Inbursa, S.A. 71 FINANCIAL STATEMENTS

Statements of Income (In thousands of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2, 3, 4, 7 and 9)

Year ended December 31 2005 2004

Premiums written Ps. 577,223 Ps. 563,575 Premiums ceded Retained premiums 577,223 563,575 Net increase in reserve for unearned premiums 230,401 251,541 Retained earned premiums 346,822 312,034

Net acquisition cost: 49,513 19,246 Other 49,513 19,246 Net cost of losses, claims and other contractual obligations: 757,513 748,672 Claims and other contractual obligations 757,513 748,672 Technical loss (460,204) (455,884)

Net increase in other technical reserves: 76,313 (17,808) Contingency reserve 3,181 3,936 Other reserves 73,132 (21,744) Gross loss (536,517) (438,076) Net operating expenses: 34,150 47,341 Administrative and operating expenses 20,841 18,234 Depreciation and amortization 13,309 29,107 Operating loss (570,667) (485,417)

Comprehensive financing income 1,020,237 985,267 On investments 1,042,691 952,052 On sale of investments 40,164 55,576 On valuation of investments 419,323 701,188 Other 111 138 Net monetary position gain 482,052 723,688 Income before income tax and employee profit sharing 449,570 499,850

Provisions for: Current year income tax 157,094 141,624

Equity interest in net income of subsidiaries (Note 7c) 294,225 2,364,855

Net income Ps. 586,701 Ps. 2,723,081 72

OPERADORA INBURSA DE SOCIEDADES DE INVERSION, S.A. DE C.V,

Balance Sheets (In thousands of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

December 31 2005 2004

Assets Cash and cash equivalents Ps. 3 Ps. 4 Investments in securities Instruments for trading 75,770 121,252 Accounts receivable, net 20,364 22,421 Long-term equity investments (Note 4) 485,389 402,000 Total assets Ps. 581,526 Ps. 545,677

Liabilities and stockholders’ equity Other accounts payable Taxes payable Ps. 10,414 Ps. 2,045 Sundry creditors and other accounts payable 2,731 2,431 Deferred taxes, net (Note 5) 67,709 41,634

Total liabilities Ps. 80,854 Ps. 46,110

Stockholders’ equity (Note 8): Contributed capital Capital stock 22,140 22,140 Earned capital Capital reserves 4,114 4,114 Retained earnings 305,071 349,702 Excess or deficit from restatement of stockholders’ equity (50,007) (50,007) Net income 219,354 173,618 Earned capital 478,532 477,427 Total stockholders’ equity 500,672 499,567 Total liabilities and stockholders’ equity Ps. 581,526 Ps. 545,677

Memoranda Accounts 2005 2004 Authorized capital stock (historical amounts) Ps. 10,000 Ps. 10,000 Shares issued 603,335,758 603,335,758 Property held on deposit, delivered for safekeeping or under management Ps. 561,159 Ps. 523,252

The accompanying notes are an integral part of these financial statements. These balance sheets were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 76, 77, 79, & 80, Section I of the Investment Companies Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions. These balance sheets were approved by the Board of Directors under the responsibility of the undersigning officers. Ing. Guillermo Robles Gil Orvañanos Representante Legal Operadora Inbursa de Sociedades de Inversion, S.A. de C.V, 73 FINANCIAL STATEMENTS

Statements of Income (In thousands of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2 and 3)

Year ended December 31 2005 2004

Commissions and fees (Note 3) Ps. 222,293 Ps. 201,788 Trading result 5,658 3,050 Interest income 1,124 953 Fair value valuation result 10,686 3,696 Net monetary position loss (14,283) (23,898) Financial intermediation margin 3,185 (16,199) Total income from operating activities 225,478 185,589 Administrative expenses Professional fees 758 910 Leasing 157 159 Maintenance and repairs 122 123 Subscriptions and fees 391 346 Inspection fees 38 40 Insurance and bonds 258 323 Taxes and fees 10 28 Administrative and consulting services 8,157 7,902 Others 5 5

9,896 9,836 Operating income 215,582 175,753 Other income 173 131 Other expenses (81) (10,570) Income before income tax 215,674 165,314 Current year income tax (Note 5) 64,536 62,502 Deferred income tax (Note 5) 27,600 28,587

92,136 91,089 Income before equity interest in net income of subsidiaries and associated companies 123,538 74,225 Equity interest in net income of subsidiaries and associated companies (Note 4) 95,816 99,393 Net income Ps. 219,354 Ps. 173,618

The accompanying notes are an integral part of these financial statements. These financial statements were prepared in accordance with the accounting rules for Mutual Fund Management Companies issued by the National Banking and Securities Commission based on the provisions in Articles 76, 77, 79, & 80, Section I of the Investment Companies Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the Company until the above dates, which were performed and assessed abiding by sound practices and the applicable legal and administrative provisions. These financial statements were approved by the Board of Directors under the responsibility of the undersigning officers. Ing. Guillermo Robles Gil Orvañanos Representante Legal 74

INVERSORA BURSÁTIL, S.A. DE C.V., CASA DE BOLSA

Balance Sheets (or Profit and Loss Statement) At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

Memoranda Accounts (Note 3) December 31 2005 2004

Transactions on behalf of others Customers’ current accounts: Customers’ banks Ps. 1 Ps. 1 Settlement of customers’ transactions (124) (121) (123) (120) Customers’ securities: Customers’ securities received for safekeeping (Note 3a) 964,790 713,464 Securities and notes received in guarantee (Note 3b) 1,001 1,055 965,791 714,519 Transactions on behalf of customers Customers’ security repurchase agreements (Note 6a) 57,530 47,469 Total transactions on behalf of others Ps. 1,023,198 Ps. 761,868

Company’s own transactions Other memoranda accounts: Company’s own government securities delivered for safekeeping (Notes 3d and 5) Ps. 1,418 Ps. 1,145 1,418 1,145 Security repurchase agreements: Securities to be received under repurchase agreements (Note 6a) Ps. 57,530 Ps. 47,469 Creditors under repurchase agreements (Note 6a) 57,565 47,469 (35) - Debtors under repurchase agreements (Note 6a) 57,565 33,058 Instruments to be delivered under repurchase agreements (Note 6a) 57,530 33,061 35 (3) Total Company’s own transactions Ps. 1,418 Ps. 1,142 Inversora Bursátil, S.A. de C.V., Casa De Bolsa 75 FINANCIAL STATEMENTS

Balance Sheets (or Profit and Loss Statement) At December 31, 2005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1 and 2)

2005 2004 Assets: Cash and cash equivalents Ps. 1 Ps. 1 Investments in securities: Instruments for trading (Note 5) 1,418 1,145 Securities and derivatives: Debit balances under repurchase agreements (Note 6b) 99 10 Other accounts receivable (net) 4 7 Property, furniture and equipment (Note 7) 26 28 Long-term equity investments (Note 8) 41 48 Other assets: Other assets, deferred charges and intangibles (Note 9) 111 83

Total liabilities and stockholders’ equity Ps. 1,700 Ps. 1,322

Liabilities and Stockholders’ Equity Securities and derivatives: Credit balances under repurchase agreements (Note 6b) Ps. 99 Ps. 14 Other accounts payable: Income tax and employee profit sharing payable 47 75 Sundry creditors and other accounts payable (Note 11) 35 37 82 112 Deferred taxes (net) (Note 10a) 76 56 Total liabilities 257 182 Stockholders’ equity (Note 12): Contributed capital: Capital stock 677 600 Earned capital: Capital reserves 86 68 Retained earnings 575 322 Excess or deficit from restatement of stockholders’ equity (243) (243) Result from holding non-monetary assets derived from valuation of long-term equity investments 35 35 Net income 313 358 766 540 Total stockholders’ equity 1,443 1,140 Total assets Ps. 1,700 Ps. 1,322

The historical capital stock at December 31, 2005 and 2004 is Ps. 332 and Ps. 256, respectively. These balance sheets were prepared in accordance with the accounting rules for brokerage firms issued by the National Banking and Securities Com- mission based on the provisions in Articles 26 Bis, 26 Bis 2, 26 Bis 4, & 26 Bis 7 of the Securities Market Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the brokerage firm until the above dates, which were performed and assessed by abiding to sound securities market practices and the applicable legal and administrative provisions. The brokerage firm does not have permanent investments in subsidiaries, and due to that fact, the financial information is individual. These balance sheets were approved by the Board of Directors under the responsibility of the undersigning officers. Lic. Eduardo Valdés Acra C.P. Francisco Díaz Bocanegra C.P. Federico Loaiza Montaño C.P. Raúl Reynal Peña Chairman Chief Administrative Officer Chief Finance Officer Audit Director 76

INVERSORA BURSÁTIL, S.A. DE C.V., CASA DE BOLSA,

Statements of Income At December 31, 20005 and 2004 (In millions of Mexican pesos with purchasing power at December 31, 2005) (Notes 1, 2 and 14)

Year ended December 31 2005 2004

Commissions and fees (Note 14c) Ps. 469 Ps. 593 Trading income 669 219 Trading loss (17) Interest income 4,309 2,208 Interest expense (4,875) (2,338) Fair value valuation result (Note 5) 88 123 Net monetary position result, net (financial intermediation margin) (35) (51) Financial intermediation margin 156 144 Total income from operating activities (Note 14d) 625 737

Administrative expenses 194 217 Operating income 431 520 Other income 2 7 Other expenses - 7 Income before income tax and employee profit sharing 433 520 Current year income tax and employee profit sharing (Note 10) 109 138 Deferred income tax and employee profit sharing (Note 10) 21 32 130 170

Income before equity interest in net income of subsidiaries and associated companies 303 350 Equity interest in net income of subsidiaries and associated companies (Note 8) 10 8 Net income Ps. 313 Ps. 358

Certain captions in the 2004 financial statements, as originally issued, were reclassified for uniformity of pre- sentation with the 2005 financial statements (see Note 6d).

The accompanying notes are an integral part of these financial statements. These balance sheets were prepared in accordance with the accounting rules for brokerage firms issued by the National Banking and Securities Commission based on the provisions in Articles 26 Bis, 26 Bis 2, 26 Bis 4, & 26 Bis 7 of the Securities Market Law, of universal and mandatory compliance, applied in a consistent manner, and all the transactions performed by the brokerage firm until the above dates, which were perfor- med and assessed by abiding to sound securities market practices and the applicable legal and administrative provisions. These financial statements were approved by the Board of Directors under the responsibility of the undersigning officers. Lic. Eduardo Valdés Acra C.P. Francisco Díaz Bocanegra C.P. Federico Loaiza Montaño C.P. Raúl Reynal Peña Chairman Chief Administrative Officer Chief Finance Officer Audit Director Fianzas Guardiana Inbursa, S.A. 77 FINANCIAL STATEMENTS

FIANZAS GUARDIANA INBURSA, S.A.

Balance Sheets (In thousands of Mexican pesos with purchasing power at December 31, 2005)

December 31 2005 2004

Assets Investments (Note 6) Securities Mexican government Ps. 482,084 Ps. 332,957 Private companies Fixed rate 44,399 15,106 Variable rate 178,772 364,157 Net unrealized gain on valuation 131,446 206,167 Interest debtors 136 2,538 836,837 920,925 Loans (Note 4s) Secured 56,357 50,573 Unsecured 2,877 7,047 Past-due portfolio 2,956 5,108 Interest debtors 1,182 1,807 63,372 64,535 Real estate: Real estate 7,234 7,475 Net unrealized gain on valuation 55,989 55,748 Depreciation 3,662 3,013 59,561 60,210 Total investments 959,770 1,045,670 Investments for labor obligations at retirement 1,706 1,562 961,476 1,047,232 Cash and cash equivalents: Cash and banks 3,162 1,863 Debtors: Premium debtors 94,531 66,238 Agents (1) Other 2,155 2,243 96,685 68,481 Rebonding companies (Note 4) Surety bonding companies 12,668 9,756 Retained deposits - 51 Other shares 68 70 Rebonders’ share of reserve for bonds in force 5,516 6,083 Allowance for write-offs 1,581 1,633 16,671 14,327 Other assets Furniture and equipment net 79 98 Foreclosed and repossessed assets (Note 4i) 1,567 1,619 Sundry 65,928 54,232 Unamortized expenses net 402 5,268 67,976 61,217 Total assets Ps. 1,145,970 Ps. 1,193,120 78

FIANZAS GUARDIANA INBURSA, S.A. GRUPO FINANCIERO INBURSA

Estados de situación financiera (Miles de pesos de poder adquisitivo del 31 de diciembre de 2005)

December 31 2005 2004

Liabilities Technical reserves Reserve for bonds in force Ps. 48,870 Ps. 48,448 Contingency reserve 161,436 163,870 210,306 212,318

Reserves for labor obligations at retirement 641 515

Creditors Agents 67 250 Bond creditors 4 Sundry 6,816 7,071 6,887 7,321

Rebonding companies Surety bonding companies 1,285 4,232 Retained deposits 5,751 6,359 7,036 10,591

Other liabilities Tax provision (Note 10) 92,021 78,850

Other liabilities 19,679 15,634 Deferred credits 22,317 19,429 134,017 113,913 Total liabilities 358,887 344,658

Stockholders’ equity (Note 11) Paid-in capital 146,548 146,548 Legal reserve 107,274 83,250 Revaluation surplus 39,297 16,367 Subsidiaries 9,799 26,601

Retained earnings 362,640 447,832 Net income 191,625 240,238 Deficit from restatement of stockholders’ equity (70,100) (112,374) Total stockholders’ equity 787,083 848,462

Total liabilities and stockholders’ equity Ps. 1,145,970 Ps. 1,193,120 Fianzas Guardiana Inbursa, S.A. 79 FINANCIAL STATEMENTS

Memoranda accounts (Note 12) (nominal amounts)

2005 2004 Deposit securities Ps. 38,666 Ps. 38,760 Memoranda accounts 6,283,577 5,684,997 Other 9,640,746 9,282,375 Ps. 15,962,989 Ps. 15,006,132 80

Statements of Income (In thousands of Mexican pesos with purchasing power at December 31, 2005)

Year ended December 31 2005 2004

Premiums: Written (Note 7) Ps. 446,230 Ps. 385,959 Ceded 67,228 77,150 Retained premiums 379,002 308,809 Net increase in reserve for bonds in force 2,728 3,533 Retained earned premiums 376,274 305,276

Net acquisition cost: Agent commissions 1,558 1,142 Commissions on reinsurance and rebonding accepted 1,101 301 Commissions on reinsurance and rebonding ceded (32,386) (31,345) Other (3,779) (5,820) (33,506) (35,722)

Claims (Note 8) 222,125 172,186 Technical profit 187,655 168,812

Net decrease in other technical reserves Net decrease in contingency reserve 2,386 5,944 Gross profit 190,041 174,756 Net operating expenses: Administrative and operating expenses (44,502) (22,419) Depreciation and amortization 920 1,342 (43,582) (21,077)

Operating income 233,623 195,833

Comprehensive financing income: On investments 14,135 4,919 On sale of investments 24,906 14,836 On valuation of investments 13,845 38,734 Other 237 (892) Net exchange gain 169 194 Net monetary position loss (26,252) (28,359) 27,040 29,432 Income before income tax 260,663 225,265

Income tax provision (Note 10) 79,433 68,579 Equity interest in net income of subsidiaries (Note 6d) 10,395 83,552 Net income Ps. 191,625 Ps. 240,238 For more information, please contact:

Grupo Financiero Inbursa

Paseo de las Palmas No. 736 Lomas de Chapultepec 11000México, D.F.

Frank Aguado Tel.: (52 55) 56254900, ext3350 Fax.: (52 55) 5625 4965 e-mail: [email protected]

Alejandro Rodríguez Tel.: (52 55) 5625 4900, ext. 3354 Fax.: (52 55) 5625 4965 e-mail: [email protected] DESIGN. www.alldesignconsultores.com DESIGN. w w w . i n b u r s a . c o m