GFAMSA Retail. Reinitiating Coverage. +55 (11) (55) ext GFAMSA Market Performer 12M FWD Price Target P$16.

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1 GFAMSA Market Performer 12M FWD Price Target P$16.5 GFAMSA s challenging scenario could keep pressuring short-term profitability. In our view, the risk/reward balance justifies our Performer rating on the stock considering: Price M Price Range / Shares Outstanding (Mill) 438 Market Cap (Mill) 6,736 Float 36% Net Debt (Mill) 20,517 EV (Mill) 27,270 Dividend Yield 0.0% 2013 TTM 2014e 2015e Revenues 15,040 14,827 14,878 15,661 EBITDA 1,757 1,584 1,602 1,551 Net Profit Free CF -4,142-2, ,229 EPS P/E EV/EBITDA EV/EBITDA adj P/BV Bank profitability: despite the strategy of cutting loan originations, increasing NPL levels (which reached a record 17.6% of consolidated portfolio and 27.4% of consumer loans) continues to mandate higher provisions. Furthermore, operating expenses entirely offset the financial margin gain. Thus, the harmful combination of lower asset quality and operating deleverage could hurt short-term profitability until healthier NPL levels are recovered (between 10 and 15%, considering the consumer banking and its closest peers). We believe that the main challenge for the company lies in a successful deployment of its clean-up strategy for its loan portfolio and stronger operating strategies such as a tighter credit scoring model and more restrictive credit procedures. Although we expect the company could post a healthy growth pace of roughly 5 to 6% in SSS for coming years, and a better mix could be achieved through a recovery in furniture and interest sales, in our view, the operating efficiencies could be limited by higher provisions (~30% of consolidated COGS). Moreover, we should highlight that the company has had a fiscal credit of P$362 million in the last 2 years, implying a tax rate of -22%; therefore, earnings generation going forward could be limited, considering our estimate for a normalized tax rate. Luis R. Willard lrwillard@gbm.com.mx +55 (11) (55) ext Liliana De León ldeleon@gbm.com.mx +52 (55) ext We are introducing our Market Performer rating and a price target of P$16.5. We reached this price through the average of our retail price (DCF and EV/EBITDA multiple approach) and the banking unit s price target through a P/BV approach. For the EV/EBITDA multiple approach, we consider it to pay GFAMSA s retail operation at 9.0x, with in our view justified lower EBITDA margins (~20% below D-store peers). While banking business a P/BV value multiple of 0.8x justified an underperformer ROE among the bank sample. Lastly, consolidated ROE and ROIC will remain subdued (and below WACC), until the banking unit reaches an operating leverage with a recovery in loans growth and a better asset quality, which we deem could not be achieved soon. Therefore, in our view, current valuations still do not justify entering the name. 35 P/E 12M PRICE PERFORMANCE VS. IPC EV/EBITDA 12M FWD 20% 22.0x 30 10% 21.0x /13 10/13 12/13 2/14 4/14 6/14 8/14 0% -10% -20% -30% -40% 08/13 11/13 02/14 GFAMSA IPC 05/ x 19.0x 18.0x 17.0x 16.0x 8/13 10/13 12/13 2/14 4/14 6/14 8/14

2 I. Investment Thesis We are reinitiating coverage on GFAMSA with a 12M FWD price target of P$16.5 and a Market Performer rating on the stock. GFAMSA is one of the leading specialized retailers in our country, focusing on the sale of furniture, electronics, appliances, clothing, and other general merchandise, targeting the low- to middle-income segments in Mexico and the Hispanic population in the US. Besides attending consumption needs, the company offers financing to its clients, in order to acquire the goods and services it offers. Roughly 80% of the company s sales involve credit, ultimately translating into higher profitability but also a high dependency on an efficient collection. We expect the company to continue to consolidate its presence in the department/specialized stores industry, orienting its efforts to its target niche the middle-low income sector. This performance should be boosted by its financial arm through loans and a wider range of financial services. However, the portfolio growth should be slowed down in order to improve the asset quality and maintain profitability levels for the retail business. GFAMSA s 1H14 was affected by a weak consumption scenario and higher restrictive loan origination. Going forward, regarding retail sales, we believe these could reach a stable SSS trend on the back of a more dynamic consumption scenario and a recovery of furniture sales mix, as well as the sequential improvement on the US front. Although the company is poised to grow at a healthy pace roughly 5% to 6% in SSS for coming years on the back of a higher dynamism in the national consumption scenario and a recovery trend in US consumption levels going forward we believe the main upside for the company lies in a successful deployment of its clean-up strategy in its loan portfolio and a consolidation in its US business supported by the Hispanic consumption, which we deem as an attractive niche, given the demographic expectations and a higher purchasing power. Moving on to our estimates, we are calling for a 4.4% 2014e 2018e CAGR in total sales floor driven mainly by Mexico. For the US, management s strategy should be focused on recovering and maintaining the profitability levels achieved in pre-crisis years. The sales floor growth could boost the banking services penetration with a CAGR (2014e-2018e) of 7.3% in total loan portfolio which should reach P$15 billion by 2018 mainly oriented to the consumer and commercial segment with 70 and 21%, respectively. The loan estimate could be a conservative scenario considering the last 5 years achieved by the financial system of 10 and 17% reached by consumer loans; however, BAF s loan has underperformed the industry by gradually cutting back its loan origination in order to improve its portfolio quality. Moreover, also among consumer niche players such as BanCoppel or Banco Azteca, there has been a delayed trend regarding loan growth. We believe that in order to return to sound loan growth operating strategies, which include a tighter credit-scoring model and more restrictive credit procedures, coupled with the loan portfolio clean-up, are necessary; together, this should boost earnings generation.

3 II. Valuation and Price Target We are valuing GFAMSA through the sum of the average prices of BAF and Famsa in order to better assess the contribution of each business to the company s value. Thus, we are introducing our 12M FWD price target of P$16.5 and a Market Performer recommendation. DCF Approach Perpetual EBITDA retail 1,353,385 1,418,288 1,555,819 1,690,494 1,842,361 1,925,267 WK -2,051, ,964-1,467, ,081-1,246,917 TX -91,831-98, , , , ,485 OPERATING CASH FLO -789, ,303-21,942 1,084, ,937 1,716,783 CAPEX -259, , , , , ,805 FREE CASH FLOW -1,049,661 55, , , ,728 1,347,977 WACC 10.9% TOTAL PRESENT VALUE 11,221,611 Net Debt 5,964,253 Equity Value (P$) 5,257,358 Shares Outstanding (000's) 438,247 THEORETICAL PRICE PER SHARE 12.0 Multiple Approach 12M FWD EBITDA Re 1,394,935 EV/EBITDA 9.0x EV 12,553,022 (Net Debt) 5,964,253 FWD FCF 121,634 (Minority Equity) 23,371 PBV 0.75 MARKET CAP. 6,449,664 Shares 438,247 THEORETICAL PRICE P$ 14.7 Bank Valuation

4 Financials (P$ Mill) 2013 TTM 2014e 2015e 2016e Operating Data 2013 TTM 2014e 2015e 2016e P&L SSS MX 3.3% 0.5% -1.5% 4.2% 5.2% Revenue 15,040 14,827 14,878 15,661 16,821 SSS US -6.2% -2.0% 1.6% 2.8% 3.0% Var (%) 6.5% 0.8% -1.1% 5.3% 7.4% Average Sales Floor YOY 0.9% 1.3% 1.7% 2.7% 4.3% Gross Profit 6,967 6,818 6,807 7,165 7,690 Gross Mg. 46.3% 46.0% 45.7% 45.7% 45.7% Valuation 2013 TTM 2014e 2015e 2016e Operating Profit 1,471 1,280 1,271 1,194 1,245 EPS Operating Mg. 9.8% 8.6% 8.5% 7.6% 7.4% P/E 10.0x 15.5x 18.9x 25.2x 23.7x EBITDA 1,757 1,584 1,602 1,551 1,634 EV/EBITDA 15.6x 17.3x 17.7x 19.1x 19.4x Var (%) -1.8% -15.1% -8.8% -3.1% 5.3% EV/EBITDA adj. 7.6x 8.1x 8.5x 9.0x 9.2x EBITDA Mg. 11.7% 10.7% 10.8% 9.9% 9.7% P/B 0.8x 0.8x 0.7x 0.7x 0.7x Interest P/Sales 0.5x 0.5x 0.5x 0.4x 0.4x Taxes (205) Net Profit Return 2013 TTM 2014e 2015e 2016e Var (%) 113.5% 20.5% -47.0% -25.2% 6.5% ROA 2.2% 1.4% 1.1% 0.8% 0.8% Net Mg. 4.6% 3.0% 2.5% 1.7% 1.7% ROE 8.0% 4.9% 4.0% 2.9% 2.9% Balance Sheet ROIC 4.6% 3.5% 3.5% 3.1% 3.0% Cash 1,510 1,679 1, ,316 FCF Yield -46.4% -13.4% -14.2% -19.7% -29.0% Accounts Receivable 21,904 21,459 20,567 23,135 23,158 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0% Inventory 2,174 2,150 2,031 2,433 2,446 Buyback Yield -0.2% -0.3% 0.0% 0.0% 0.0% Fixed Assets 3,030 3,285 3,901 4,208 4,924 Total Assets 33,077 33,426 33,335 35,138 36,965 Leverage 2013 TTM 2014e 2015e 2016e Accounts Payables 1,601 1,154 1,196 1,737 1,124 Debt/Equity 2.4x 2.4x 2.8x 2.9x 2.9x Debt 21,417 22,197 25,856 28,425 30,121 Net Debt/EBITDA 11.3x 13.0x 15.0x 18.0x 17.6x Deposits 14,067 14,553 13,786 14,701 15,633 Interest Coverage 1.6x 1.3x 1.5x 1.4x 1.4x Total Liabilities 24,106 24,269 24,053 25,439 26,504 Equity 8,971 9,157 9,282 9,699 10,460 Turnover (Days of) 2013 TTM 2014e 2015e 2016e FCF Accounts Receivable Operating Profit 1,471 1,280 1,271 1,194 1,245 Inventory Depreciation Payables Interests Cash Conversion Cash tax Working Capital -3,524-1,064-1,358-1,544-2,236 Liquidity 2013 TTM 2014e 2015e 2016e -CAPEX Current Ratio Free Cash Flow -3, ,359-1,995 Quick Ratio

5 III. The Sector The specialized retail industry focusing on the sale of general merchandise such as furniture, household appliances, electronics, etc., can be divided into different sectors including independent salespersons, self-service chains, department stores, discount retailers, and the informal sector. GFAMSA s most important local competitors are ELEKTRA and COPPEL, followed by other national retailers such as WALMEX, SORIANA, and CHEDRAUI, and certain regional players. Despite serving a different target, department stores such as LIVERPOL, and SEARS also represent competitive players in terms of their geographic scope. The company also faces competition in the financial industry for unbanked customers; the main names are: Banco Azteca, Banco Wal-Mart, BanCoppel however, this is not a complete picture of the whole pulverized credit industry, since the Mexican regulation allows the figure of Sofoms ( financial entities not subject to banking regulation that can provide loan services). Indeed, according to BANXICO, 25% of the total private financing is provided by leasing-factoring companies, credit unions, Sofoles (authorized by SCHP to provide mortgage loans), development banking, and INFONAVIT. Retail industry Despite the recent slowdown in consumption, the performance of Department stores has been consistently outgrowing Self-service and the specialized lines of business (+3.4% in Department stores SSS vs. -0.2% in Specialized and -1.2% in Self-Service TTM). Going forward, we are calling for a similar performance in D-stores, driven by improvements in consumer confidence and consumption indicators. Furthermore, the D-store segment should be aided by promotional efforts and growth in consumer credit, as well as penetration of new formats. ANTAD SSS performance (TTM) 15.0% ANTAD Sales Breakdown 10.0% 5.0% Specialized 18.2% 0.0% -5.0% Department 19.3% Self Service 62.5% 1/05/08 1/11/08 1/05/09 1/11/09 1/05/10 1/11/10 1/05/11 1/11/11 1/05/12 1/11/12 1/05/13 1/11/13 1/05/14 Self-service Department Specialized Source: ANTAD The specialized retail industry focusing on the sale of furniture, household appliances, and electronics has shown a recovery trend especially in computers and communications devices; however, they have not reached pre-crisis levels. We deem that in line with a better economic outlook, sales could show a healthier growth trend. Moreover, a recovery in the housing and construction sectors should be the engine for improvements in sales of household appliances and furniture.

6 Sales Index Furniture and other household Sales Index Computers, phones and other communication devices Sales Index GFAMSA Sales YOY 20% 15% 10% 5% 0% 70 5% TTM Source: BIE (INEGI) 10% Famsa Retail and Banco Ahorro Famsa Famsa Mexico. This business unit represents roughly 86% of consolidated revenues (including the financial income coming mainly from Banco Ahorro Famsa and Promobien) and has 362 stores (430k sq. mt. total footprint) located in 83 different cities with 11 distribution centers in the country. These stores are usually located within major cities with more than 50,000 inhabitants, and range from 500 to 3,000 sq. mt., offering roughly 2,000 SKUs. Famsa US. Begun in 2001, in order to attend the Hispanic population, with 25 stores (~64k sq. mt. ) in Texas and Illinois, where roughly 23% of the Hispanic population in the US lives. These stores range from 2,000 to 3,000 sq. mt. and also have roughly 2,000 SKUs, representing 13% of consolidated revenues. Banco Ahorro Famsa. The financial arm for the company with around 80% of the retail sales under an installment payments scheme. The bank unit supports the totality of deferred sales for the retailer, as well as offering financial services to its customers. Famsa Stores Retail sales breakdown Mexico USA YTD Appareal & Others 16% Motorcycles 9% Computers 7% Mobiles 15% Furnitures 20% Appliances 17% Electronics 16% Source: Company data

7 GFAMSA s main competitors in Mexico are specialized and department stores, such as ELEKTRA which, during the last 5 years, has lost market share as has GFAMSA, the best positioned being Coppel thanks to its financial arm BanCoppel. Mexican Peers 2009 Sales 2009 Sales GPH 9% GFAMSA 9% GFAMSA 15% ALMACO 25% ALMACO 41% ELEKTRA 27% LIVEPOL 30% ELEKTRA 44% TTM Sales TTM Sales GFAMSA 5% GSANBOR 5% GPH 8% GFAMSA 9% ELEKTRA 25% ALMACO 30% ALMACO 49% ELEKTRA 42% LIVEPOL 27% Source: Company data Gross Margin EBITDA Margin 60.0% 55.0% 50.0% 18.5% 16.5% 14.5% 45.0% 12.5% 40.0% 10.5% 35.0% 8.5% 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q14 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q14 LIVEPOL GFAMSA ELEKTRA ALMACO GPH Source: Company data LIVEPOL GFAMSA ELEKTRA ALMACO GPH Source: Company data

8 With close to 10% of consolidated revenues, Famsa US faces higher competition due to a bigger number of players and a more penetrated market. The main competition comes from Ashley Furniture, Rooms to Go, Best Buy, and Sears, in cash sales, and from local and regional retailers that directly target US Hispanics with credit line, such as Conn s, Continental, LDF, and Lacks. Consumer Financing The consumer and SME sectors have led the growth in the entire system with attractive returns and a healthy balance sheet. Also, the retail sector has shown an interesting performance in Mexico, mainly oriented to low-income customers that are not yet integrated into the financial system. Indeed, the middle and low-income segments have traditionally been excluded from financial services hence the low credit penetration. In this sense, non-bank entities have become a useful source of financial services (and most of the times, the first experience or the introduction level) for this segment. Loan and Retail Penetration as a % GDP 70% Loan % GDP Retail Spending %GDP 60% 50% 40% 30% 60% 20% 50% 18% 20% 37% 27% 10% 8% 6% 0% Mexico Brazil Chile Argentina Domestic Credit to Private Sector (% of GDP) 250% 200% 150% 100% 50% 0% World Denmark Netherlands United States Spain United Kingdom China Italy Greece France Germany Belgium Chile Brazil Croatia India Colombia El Salvador Bolivia Guatemala Mexico Peru Nicaragua Dominican Rep Argentina Loan % GDP (Domestic credit provided by financial sector) Retail Spending (Groceries, clothing, and furniture spending) Source: BMI Performing Loan Growth YOY 170% 176% BAF Banco Walmart Banco Azteca BanCoppel 18% 16% 120% Consumer Banking Financial System 14% 12% 70% 20% 7% 69% 53% 51% 49% 45% 36% 38% 11% 29% 27% 28% 17% 4% 2% 4% 10% 8% 6% 4% -30% Source: CNBV % -1% 2013 YTD -12% 2% 0%

9 Mexico The installment scheme represents around 80% of the sales in Mexico, with a weekly or monthly basis for periods of between 3 and 24 months. The loan origination is based on clients profile considering their payment capacity and disposable income, thus is required an income receipt or if it is not available, the approbation will be determinate on a visit home. The weekly payments can t exceed 30% of a client s weekly income, which is determined by the customer profile. Moreover, depending on the client s credit quality, a down payment of between 5 and 20% of the product s price might be required. To date, the company has roughly 2 million active credit accounts in Mexico. The loan generation in the store is managed by the banking unit until the collection period. When indebtedness extends for more than 270 days, the account is sold by BAF to a GFAMSA subsidiary at a discount price and moves into a legal collection channel. The company makes reserves for doubtful accounts related to all credit sales, based on its estimates and criteria, an average of 3% of all of its credit sales; however, the company faces a deteriorated scenario in NPL levels forcing it to increase its provisions. Moreover, considering only the bank s performance, the deterioration is even sharper. USA With 111,000 loan customers, the financing differs slightly in the US where only 13% of the sales are deferred. Indeed, in the US, cash sales generally have no discount as opposed to Mexico where this mechanism is used to incentivize cash sales. US operations also offer a program called Famsa-to- Famsa through which customers purchase goods at its stores and have them delivered to Mexico. Banco Ahorro Famsa BAF is the main financial arm for the company; the banking unit supports the totality of deferred sales for the retailer as well as offering full financial services to its customers through an integrated platform with around 70% of its current units inside the retail store. BAF began its operations during 2007, created to offer new financial services and strengthen Famsa s presence in the country. With a 9.3% CAGR in branches and 60% in loan portfolio, the financial arm has yet to reach an operating stability despite management s efforts to keep its loan quality deterioration at bay P&L Breakdown 5,000 Net Income 4,000 Net Comissions Financial margin 3,000 SG&A Provissions 2,000 1, ,000-2,000-3,000-4,000-5, TTM Source: GBM with Company data

10 The consumer bank holds an average rate spread of 2.5x above the total financial system. Besides, it has shown a marked growth in loans CAGR ( 08-12): 17% vs. 10% of the total system along with market share gains in terms of financial margin. However, despite BAF s strong position (with a market share of 10% in consumer banking loans) and an improvement in its funding cost, the consumer system holds a higher leeway in the financial margin to face loan provisions, which in our view, is currently the main drag for BAF s profitability. Active-Passive Spread rates 70.0% 60.0% 50.0% Total System BAF Banco Azteca Banco Wal-Mart BanCoppel Consumer Banking 40.0% 30.0% 20.0% 10.0% 0.0% TTM -10.0% Source: GBM with CNBV data **Consumer Banking CNBV classification includes: American Express, Autofin, Banco Azteca, Bancoppel, Compartamos, Banco Ahorro Famsa, Volkswagen Bank, Banco Wal-Mart, and Banco Forjadores. In order to stabilize the bank operation and in line with the system, BAF should continue a clean-up strategy normalizing the write-off and NPL levels. However, other areas such as non-financial expenses also pose a short-term challenge. Moreover, although the Montemex acquisition should improve its geographic scope, especially in the southern states, the pawnshop unit s transformation into BAF has increased operating expenses, weakening BAF s results. Operating Efficiency Consumer BanCoppel Banco Wal-Mart Banco Azteca Banco Ahorro Famsa TTM Source: CNBV ( G&A/ Total Revenues)

11 Other services Another relevant service the company offers is Famsa-to-Famsa, which is available only in the US and allows customers to buy something in any GFAMSA store (especially furniture and appliances) and have it picked up in any store in Mexico. Famsa-to-Famsa sales accounted for 3.5% of consolidated revenues in GFAMSA also offers Electronic Money Transfer and Money Exchange services. The Money Transfer services are available in all the stores in Mexico, where GFAMSA charges customers a commission for every transfer they make, which despite being a small revenue contributor could support the retail sales generation with the income received from the customers. Average Remittances by Operation -Figures in USD 700 Remittances as a % GDP % 2.0% 1.5% 1.0% % % 0 Money Orthers Checks Wire Transfers Cash YTD Source: Banxico Impulsora Promobien manages the employees available financing options, as well as financing pertaining to workers of affiliates. Payroll financing currently holds 4,000 affiliated enterprises, representing around 15% of GFAMSA s consolidated revenues. Furthermore in July 2013, Banco Ahorro Famsa acquired P$3.6 billion of collection rights of them 77% are from Promobien loans, which now are administered by the bank, and the credit origination keeps outside the bank, thus the bank receives other income for manage these A/R. GFAMSA Payroll loan Industry Payroll Loan Growth 140,000 CAGR: 11.7% 120,000 Oil Workers and Teachers Unions 31% Private 33% 100,000 80,000 60,000 Government 36% Source: Company Data 40,000 20, YTD Source: CNBV

12 Complementing financial services, the company offers automotive loans under the Auto Gran Credito brand, which is a lottery system where customers make weekly payments over a period of 48 months, on average. In March 13, GFAMSA launched Impulso Famsa to strengthen its SME credit portfolio. The credit amounts below P$10 million is used for CAPEX and ongoing working capital with monthly payments at an attractive interest rate of around 10% and an average period of 23 months. Lastly, in 4Q13, GFAMSA announced the integration of a pawnshop business (Montemex) with 173 units located in the Eastern part of Mexico, increasing its presence by 61.2% at the end of The deal included the transformation of Montemex s units into Banco Ahorro Famsa to offer a complete portfolio of services. By 2Q14, Montemex s guaranteed loan reached P$150 million with 14 units completely transformed and 10 more to be completed in IV. Main Estimates GFAMSA s revenues come mainly from the sale (credit and cash) of electronics, furniture, clothing, cell phones, and household products. We should note that, in Mexico, the price of the products sold under a credit scheme has a premium, which depends on various factors, such as the amortization period, and the client credit profile, among others. Over the last 5 years, GFAMSA s revenues has practically remained unchanged (CAGR: TTM: +0.1%), missing the double digit trend reached until 2008 which was explained mainly on the back of the company s expansion program (13.3% of CAGR in sales floor) in both Mexico and the US; however, the current strategy in Mexico is to consolidate SSS growth with a more selective store network in Mexico while in the US market, the strategy should be to improve its profitability. We are calling for a 6.6% CAGR for SSS aided by 5.7% growth in Mexico and 13.0% in the US. Retail sales performance is closely related to the disposable income of the middle-low class and housing industry considering GFAMSA s exposure to furniture and appliance sales. We deem that in line with an industry recovery and specific public programs such as increases in mortgage financing and subsidies for low income segments could increase the demand for household products and appliances. Indeed according to BMI residential and non-residential building industry could reach a recovery trend going forward at CAGR ( ) of 6.8%. The financial arm should remain being a trigger for the sales floor area origination, increasing credit penetration. However, the asset quality deterioration should keep loan growth at bay in the short term, affecting operating figures due to higher provisions. Considering the sales mix and COGS margin for the main categories, we call for a consolidated EBITDA 5-year CAGR of 5.5%. However, we deem that a higher furniture (and interest) sales mix should improve consolidated EBITDA considering that only around 10% are imported and GFAMSA owns its subsidiary engaged in furniture manufacturing (Expormuebles). Thus, our main long-term estimates are: 5.8% Revenues CAGR from 2013 to %Operating Profit CAGR from 2013 to % EBITDA CAGR from 2013 to % Net Income CAGR from 2013 to 2018 (as a result of a normalized tax rate) 7.3% Loan Portfolio CAGR from 2013 to 2018

13 Financials (P$ Mill) 2013 TTM 2014e 2015e 2016e Operating Data 2013 TTM 2014e 2015e 2016e P&L SSS MX 3.3% 0.5% -1.5% 4.2% 5.2% Revenue 15,040 14,827 14,878 15,661 16,821 SSS US -6.2% -2.0% 1.6% 2.8% 3.0% Var (%) 6.5% 0.8% -1.1% 5.3% 7.4% Average Sales Floor YOY 0.9% 1.3% 1.7% 2.7% 4.3% Gross Profit 6,967 6,818 6,807 7,165 7,690 Gross Mg. 46.3% 46.0% 45.7% 45.7% 45.7% Valuation 2013 TTM 2014e 2015e 2016e Operating Profit 1,471 1,280 1,271 1,194 1,245 EPS Operating Mg. 9.8% 8.6% 8.5% 7.6% 7.4% P/E 10.0x 15.5x 18.9x 25.2x 23.7x EBITDA 1,757 1,584 1,602 1,551 1,634 EV/EBITDA 15.6x 17.3x 17.7x 19.1x 19.4x Var (%) -1.8% -15.1% -8.8% -3.1% 5.3% EV/EBITDA adj. 7.6x 8.1x 8.5x 9.0x 9.2x EBITDA Mg. 11.7% 10.7% 10.8% 9.9% 9.7% P/B 0.8x 0.8x 0.7x 0.7x 0.7x Interest P/Sales 0.5x 0.5x 0.5x 0.4x 0.4x Taxes (205) Net Profit Return 2013 TTM 2014e 2015e 2016e Var (%) 113.5% 20.5% -47.0% -25.2% 6.5% ROA 2.2% 1.4% 1.1% 0.8% 0.8% Net Mg. 4.6% 3.0% 2.5% 1.7% 1.7% ROE 8.0% 4.9% 4.0% 2.9% 2.9% Balance Sheet ROIC 4.6% 3.5% 3.5% 3.1% 3.0% Cash 1,510 1,679 1, ,316 FCF Yield -46.4% -13.4% -14.2% -19.7% -29.0% Accounts Receivable 21,904 21,459 20,567 23,135 23,158 Dividend Yield 0.0% 0.0% 0.0% 0.0% 0.0% Inventory 2,174 2,150 2,031 2,433 2,446 Buyback Yield -0.2% -0.3% 0.0% 0.0% 0.0% Fixed Assets 3,030 3,285 3,901 4,208 4,924 Total Assets 33,077 33,426 33,335 35,138 36,965 Leverage 2013 TTM 2014e 2015e 2016e Accounts Payables 1,601 1,154 1,196 1,737 1,124 Debt/Equity 2.4x 2.4x 2.8x 2.9x 2.9x Debt 21,417 22,197 25,856 28,425 30,121 Net Debt/EBITDA 11.3x 13.0x 15.0x 18.0x 17.6x Deposits 14,067 14,553 13,786 14,701 15,633 Interest Coverage 1.6x 1.3x 1.5x 1.4x 1.4x Total Liabilities 24,106 24,269 24,053 25,439 26,504 Equity 8,971 9,157 9,282 9,699 10,460 Turnover (Days of) 2013 TTM 2014e 2015e 2016e FCF Accounts Receivable Operating Profit 1,471 1,280 1,271 1,194 1,245 Inventory Depreciation Payables Interests Cash Conversion Cash tax Working Capital -3,524-1,064-1,358-1,544-2,236 Liquidity 2013 TTM 2014e 2015e 2016e -CAPEX Current Ratio Free Cash Flow -3, ,359-1,995 Quick Ratio V. Risks GFAMSA s profitability depends highly on an efficient collection strategy. Reserves could damage profitability with a higher deterioration specifically in the consumer loan portfolio. Macroeconomic indicators: GFAMSA s revenues are strongly related to employment levels, consumer confidence, and disposable income and remittances. Changes in banking regulation: changes in fees or rates could affect the bank s profitability, as well as higher provision methodologies. Changes in the methodology to rate non-revolving consumer credit make allowance for loan losses now calculated based on the expected loss, instead of the incurred loss. Higher expected loss than consumer banking; 22.1% (vs. 10.9% in consumer loans); 11.6% (vs. 8.2% in credit cards) and 22.0% (vs. 8.9% in personal loans). However the higher risk is well provisioned with a coverage ratio of 100%. Failure to make its information readily available

14 Important Disclosures: The analyst or analysts involved in the creation of this document hereby certify that the views expressed in this document accurately reflect their personal opinions and that they have not and will not receive direct or indirect compensation for expressing specific recommendations or views in this report. This report has been prepared by GBM and is subject to change without notice. GBM and employees shall have no obligation to update or amend any information contained herein. This report is for informational purposes only, based upon publicly available information, which we believed is reliable, but its accuracy and completeness cannot be guaranteed. GBM makes no express or implied representations or warranties that such information is accurate or complete and, therefore, GBM and employees shall not in any way be liable for related claims. This report does not constitute an offer to buy or sell The information and analyses contained herein are not intended as tax, legal, or investment advice and may not be suitable for your specific circumstances. Each investor shall make their own determination of the suitability of an investment of any securities referred to herein and should consult their own tax, legal, investment, or other advisors, to determine such suitability. This report may discuss numerous securities, some of which may not be qualified for sale in certain countries or states therein and may therefore not be offered to investors in such countries or states. This report or any portion hereof may not be reproduced, reprinted, sold or distributed without the written consent of GBM. The current document is not issued with the purpose of ensuring a future business relationship with the Issuer; thereby, said document constitutes no promise or guarantee