Resolution modifying the General Provisions applicable to Popular Savings and Credit Entities, Integration Organizations, Community Financial Societies, and Rural Financial Integration Organizations under the Popular Savings and Credit Law — SHCP — MX

DOF: 18/04/2024

RESOLUTION modifying the General Provisions applicable to Popular Savings and Credit Entities, Integration Organizations, Community Financial Societies, and Rural Financial Integration Organizations, referred to in the Popular Savings and Credit Law.

At the margin, a seal with the National Coat of Arms, which says: United Mexican States.- TREASURY.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, based on the provisions of articles 116, first paragraph, fraction VII; 117 and 118, first and second paragraphs of the Popular Savings and Credit Law;

98 Bis of the Credit Institutions Law, as well as 4, fractions II, IV, V, XXXVI and XXXVIII and 16, fraction I of the National Banking and Securities Commission Law, and

CONSIDERING

That in accordance with article 78 of the General Law for Regulatory Improvement and with the purpose of reducing the compliance cost of this modifying resolution, the National Banking and Securities Commission will use the benefits derived from the issuance of this Resolution, in addition to the "Resolution modifying the General Provisions applicable to investment funds and to the persons who provide services to them", published in the Official Gazette of the Federation on January 4, 2018, with respect to the benefit derived from the extension of the deadline for accounting criteria; as well as the "Resolution modifying the general provisions applicable to general deposit warehouses, exchange houses, credit unions and multiple-object financial societies regulated", published in the Official Gazette of the Federation on June 23, 2018, with respect to the benefit derived from the elimination of the opinion on benefits to employees applicable to credit unions;

That during the financial crisis that began in 2008, countries identified the insufficient and late recognition of credit losses as one of the weaknesses in the existing accounting standards, so in July 2014, International Financial Reporting Standard 9 "Financial Instruments" (IFRS 9, by its name and acronym in English) was issued, which was adopted by the Mexican Council of Financial Reporting Standards, A.C., publishing new Financial Reporting Standards that entered into force on January 1, 2018, and

That, based on the aforementioned Financial Reporting Standards, the National Banking and Securities Commission has undertaken the task of adapting the regulation applicable to entities under its supervision to the new international framework, in order to have transparent financial information comparable with other countries. Consequently, it is necessary to modify the regulatory framework applicable to popular financial societies, community financial societies, and rural financial integration organizations in order to incorporate updates in the matter of accounting criteria, credit portfolio qualification, approval, dissemination and content of financial statements, regulatory reports, as well as norms in the matter of financial information disclosure, which is why it has resolved to issue the following:

RESOLUTION MODIFYING THE GENERAL PROVISIONS APPLICABLE TO POPULAR SAVINGS AND CREDIT ENTITIES, INTEGRATION ORGANIZATIONS, COMMUNITY FINANCIAL SOCIETIES AND RURAL FINANCIAL INTEGRATION ORGANIZATIONS, REFERRED TO IN THE POPULAR SAVINGS AND CREDIT LAW

SOLO.- Articles 1, first paragraph and fractions XXIII, XXXIX and LVIII Bis; 2, fraction VII, first, second and ninth paragraphs; 25, fractions I, letter e), third paragraph, as well as II, first paragraph and IV, fourth paragraph, letter j); 54, fraction II, second paragraph, letter b), numeral 10, subletter i), subnumeral 1), second paragraph; 54 Bis, first paragraph; 56, fraction V, letter b); 59; 62, third paragraph; 67, fraction I, third paragraph; 68, first paragraph; 74, fraction III, letter b), numeral 2; 88, fractions III, third paragraph and VI, sixth paragraph, letter e), numeral 1, subletter i), second paragraph; 91 Bis, first paragraph; 94; 96, first and third paragraphs; 102, fraction I, third paragraph; 110, fraction II, letter b); 130, fractions III, third paragraph, IV, VI, eighth paragraph, letter e), numeral 1, subletter i), second paragraph; 133 Bis, first paragraph; 136; 142; 145, third paragraph; 151, fraction I, third paragraph; 159, fraction II, letter b); 161, fraction I; 170, fractions I, II, letters b), c) and d) and III, first paragraph; 192, fractions III, third paragraph, IV and VI, ninth paragraph, beginning and e) numeral 1, subletter i), second paragraph; 196 Bis, first paragraph;

199; 200; 203, third paragraph; 208, fraction VI, letter c); 210; 211, first paragraph, Series B, criterion B-1, and Series D, criteria D-1, D-2 and D-3, as well as second, fourth and fifth paragraphs; 211 Bis; 211 Bis 1, first paragraph and fractions III, IV and V; 211 Bis 2; 211 Bis 3; 211 Bis 4; 211 Bis 5; 212, first paragraph, fractions I and its second and fourth paragraphs, II, second paragraph, III, second paragraphs, letters a), b), c) and d), fourth and fifth, IV, second and third paragraphs; VI, second and third paragraphs, VIII, second and third paragraphs, as well as IX, fourth, fifth and sixth paragraphs, letters e) and i); 300; 327, the name of Series R03, to be called "Investments in financial instruments" and its report I-0391, Series R04, reports C-0451, C-0452 and C-0453, Series R10, reports A-1011 and A-1012, Series R12, reports A-1219 and A-1220, Series R13, reports A-1311, A-1316, B-1321 and B-1322, Series R15, reports B-1522, B-1523 and B-1524, Series R24, report D-2441, Series R26, report A-2610; likewise, the name of Section Fourth of Chapter II, Title Third, to be called "Final Provisions"; of Chapter V of Title Fourth, to be called "On accounting, on the valuation of Securities and other financial instruments, as well as on financial information and its disclosure by Popular Financial Societies", as well as its First and Second Sections, to be called "On Accounting Criteria" and "On the valuation of Securities and other financial instruments", respectively; are REFORMED;

ARTICLES 1 with fractions I Bis, VII Bis, X Bis, XXXIV Bis 1, XXXIX Bis, XLVI Bis, LVIII Bis 1, LVIII Bis 2, LVIII Bis 3 and LXIX Bis; 29 Bis; Title Fourth; Chapter III with a First Section called "On the provisioning of consumer, microcredit, housing and commercial credit portfolios", which comprises articles 42 Bis, 42 Bis 1, 42 Bis 2, 42 Bis 3, 42 Bis 4, 42 Bis 5, 42 Bis 6, 42 Bis 7, 42 Bis 8 42 Bis 9, 42 Bis 10, 42 Bis 11, 42 Bis 12, 42 Bis 13, 42 Bis 14, 42 Bis 15 and 42 Bis 16, reordering in their order, denomination and content the following sections of that chapter; 211, Series C with a criterion C-3, as well as with a sixth paragraph; 211 Bis 1 with a fraction VI; 211 Bis 6; 211 Bis 7; 211 Bis 8; 212 Bis; 212 Bis 1; 327, Series R04, section "Detailed Information" with reports C-0454, C-0455, C-0456 and C-0457; likewise, Annexes D Bis 1, D Bis 2, D Bis 3 and D Bis 4 are ADDED;

ARTICLES 199 Bis; 211, Series B, criterion B-2 and Series C, criteria C-1 and C-2; 212, fraction III, letter d), sixth paragraph; 327, Series R14 and its report B-1413, Series R24, reports B-2421 and D-2442; are REPEALED; and

ANNEXES A, B, D, D Bis, E, G, I, K, and N of the General Provisions applicable to Popular Savings and Credit Entities, Integration Organizations, Community Financial Societies and Rural Financial Integration Organizations, referred to in the Popular Savings and Credit Law, published in the Official Gazette of the Federation on December 18, 2006 and modified for the last time by a modifying resolution published in said dissemination medium on February 13, 2024, are SUBSTITUTED to read as follows:

" INDEX

TITLES

FIRST and SECOND

. . .

TITLE THIRD

. . .

Chapter I

. . .

Chapter II

. . .

Sections First to Third

. . .

Section Fourth

Final Provisions

TITLE FOURTH

. . .

Chapters I and II

. . .

Chapter III

. . .

First Section

On the provisioning of consumer, microcredit, housing and commercial credit portfolios

Second Section

On prudential regulation for Popular Financial Societies with a total asset amount equal to or less than 15 ' 000,000 UDIS

Subsection A

Minimum capital

Subsection B

Capital requirements for risks

Subsection C

Internal control

Subsection D

Credit portfolio provisioning and adjudicated assets

Subsection E

Guidelines on liquidity coefficient

Subsection F

Risk diversification in operations

Third Section

On prudential regulation for Popular Financial Societies with a total asset amount greater than 15 ' 000,000 and equal to or less than 50 ' 000,000 UDIS

Subsection A

Minimum capital

Subsection B

Capital requirements for risks

Subsection C

Risk management

Subsection D

Internal control

Subsection E

Credit process

Sub Subsection A

Minimum guidelines for the credit manual

Sub Subsection B

Generalities of the credit manual

Sub Subsection C

Other provisions

Subsection F

Credit portfolio provisioning and adjudicated assets

Subsection G

Guidelines on liquidity coefficient

Subsection H

Risk diversification in operations

Subsection I

Information disclosure requirements

Fourth Section

On prudential regulation for Popular Financial Societies with a total asset amount greater than 50 ' 000,000 and equal to or less than 280 ' 000,000 UDIS

Subsection A

Minimum capital

Subsection B

Capital requirements for risks

Subsection C

Risk management

Subsection D

Internal control

Subsection E

Credit process

Sub Subsection A

Minimum guidelines for the credit manual

Sub Subsection B

Generalities of the credit manual

Sub Subsection C

Other provisions

Subsection F

Credit portfolio provisioning and adjudicated assets

Sub Subsection B.- Repealed

Commercial credit portfolio

Sub Subsection C

General Provisions

Subsection G

Guidelines on liquidity coefficient

Subsection H

Risk diversification in operations

Subsection I

Information disclosure requirements

Fifth Section

On prudential regulation for Popular Financial Societies with a total asset amount greater than 280 ' 000,000 UDIS

Subsection A

Minimum capital

Subsection B

Capital requirements for risks

Subsection C

Risk management

Subsection D

Internal control

Subsection E

Credit process

Sub Subsection A

Minimum guidelines for the credit manual

Sub Subsection B

Generalities of the credit manual

Sub Subsection C

Other provisions

Subsection F

Credit portfolio provisioning and adjudicated assets

Subsection G

Guidelines on liquidity coefficient

Subsection H

Risk diversification in operations

Subsection I

Information disclosure requirements

Chapters III Bis to IV Bis

. . .

Chapter V

On accounting, on the valuation of securities and other financial instruments, as well as on financial information and its disclosure by Popular Financial Societies

First Section

. . .

Second Section

On the valuation of Securities and other financial instruments

Third Section

. . .

Chapters VI to IX

. . .

TITLES FIFTH to NINTH

. . .

TRANSITORY

LIST OF ANNEXES

Annex

. . .

Annex B

. . .

Annex C

. . .

Annex D

Procedure for the qualification and constitution of preventive estimates for consumer, microcredit and housing portfolios.

Annex D Bis

Requirements that guarantees must meet to be recognized for the purposes of determining the capital requirement for credit risk and preventive estimates for credit risks.

Annex D Bis 1

Standard adjustment factors for financial guarantees.

Annex D Bis 2

Determination of the total credit score for credits held by legal and natural persons with business activity.

Annex D Bis 3

Determination of the total credit score for credits held by financial entities.

Annex D Bis 4

Guidelines for the calculation of credit reserves for credits held by federative entities and municipalities.

Annex E

. . .

Annex F

. . .

Annexes G

. . .

Annex H

. . .

Annex I

. . .

Annexes J and J Bis

. . .

Annex K

Mapping of ratings and risk grades.

Annexes L

and M

. . .

Annex N

. . .

Annexes Ñ to Y

. . . "

" Article 1.- For the purposes of these provisions, the definitions indicated in article 3 of the Popular Savings and Credit Law shall be applicable, in singular or plural, and additionally, it shall be understood as:

. . .

I Bis.

High Investment Grade, the Rating granted by any Rating Agency, which is located within Risk Grade 1 on a global scale for long term, and Risk Grades 1 and 2 on a global scale for short term, in accordance with what is established in the corresponding tables for short and long term of Annex K.

II to VII

. . .

VII Bis.

Ratings, in singular or plural, to the credit risk evaluations issued by Rating Agencies.

VIII to X

. . .

X Bis.

Unified Circular of Banks, to the General Provisions applicable to credit institutions.

XI to XXII

. . .

XXIII.

Accounting Criteria, to the accounting criteria for Popular Financial Societies, Community Financial Societies and Rural Financial Integration Organizations referred to in Title Fourth, Chapter V, First Section and which are contained in Annex E, all of these provisions.

XXIV to XXXIV Bis

. . .

XXXIV Bis 1.

Exposure at Default (EAD), to the expected, gross position, of reserves, of the credit operation if the debtor defaults. The Exposure at Default cannot be less than the amount disbursed of the operation at the time of calculating the capital requirement.

XXXV. to XXXVIII.

. . .

XXXIX.

Investment Grade, the Rating granted by any Rating Agency, which is located within Risk Grades 2 and 3 on a global scale for long term, and Risk Grade 3 on a global scale for short term, in accordance with what is established in the corresponding tables for short and long term of Annex K of these provisions.

XXXIX Bis.

Risk Grade, in singular or plural, to the risk grades indicated in the rating and risk grade correspondence tables, for long term and short term, both for the global scale and for the local Mexico scale, included in Annex K of these provisions.

XL to XLVI.

. . .

XLVI Bis.

Rating Agencies or Securities Rating Agencies, in singular or plural, to the Securities Rating Agencies included in Annex K of these provisions. Rating Agencies shall also be considered those that, attending to the criteria contained in these Provisions, the Commission makes known on the site http://www.cnbv.gob.mx.

XLVII to LVIII.

. . .

LVIII Bis.

Probability of Default (PD), to the probability that a borrower does not comply with its payment obligations on time and in due form.

LVIII Bis 1.

Provider of Protection, to the persons referred to in Groups 1, 2 and 3 described in Annex D, subsection IV of these provisions.

LVIII Bis 2.

Senior Position, to the credit portfolio and securities that, for purposes of payment seniority, have priority over other creditors of the debtor.

LVIII Bis 3

Subordinated Position, to the credit portfolio and securities that, for purposes of their payment seniority, are situated behind other creditors of the debtor.

LIX to LXIX

. . .

LXIX Bis.

Loss Given Default (LGD), to the loss in case of default expressed as a percentage of the Exposure at Default, once the value of the guarantees and the costs associated with realization processes (judicial, administrative collection and conveyancing, among others) are taken into account.

LXX to LXXXVI

. . . "

" Article 2.-

. . .

I. to VI.

. . .

VII.

Three-year projection on the statement of financial position and statement of comprehensive income, which must be presented in the format contained in Annex A of these provisions.

Additionally, the Societies that on the date of presentation of the authorization request are operating, must accompany their request with their statement of financial position, as well as their statement of comprehensive income, the latter for the period between January 1 of the corresponding year and the date of preparation of the statement of financial position. The aforementioned documents must be presented in accordance with the format contained in Annex B of these provisions. The age of the mentioned documents cannot exceed one year with respect to the date of presentation of the authorization request to which they correspond and must be duly audited by an external auditor at their expense.

. . .

With respect to this, the Societies must present information regarding the adjustments resulting from the initial application of the Accounting Criteria for Popular Financial Societies, Community Financial Societies and Rural Financial Integration Organizations referred to in the First Section of Chapter V of Title Fourth of these provisions. For these purposes, they must reveal in a clarifying note, which will form an integral part of their financial statements, a comparative table that includes the following:

The items of the statement of financial position that will be affected by the initial application of the aforementioned Accounting Criteria, with the figures that the Society would show prior to the application of said criteria (corresponding to the date of preparation of its statement of financial position).

The adjustments made to each of the aforementioned items referred to in letter a) above, as well as their total effect on the item called "Effect by incorporation into the popular savings and credit entity regime".

The figures of the items indicated in letter a) above, once the adjustments derived from the recognition of the aforementioned criteria are included.

A detailed explanation of the differences between the accounting treatment the Society had been applying and the corresponding Accounting Criterion, with respect to each of the items for which the accounting effect was made, as a result of the initial application of the Accounting Criteria for Popular Financial Societies, Community Financial Societies and Rural Financial Integration Organizations referred to in the First Section of Chapter V of Title Fourth of these provisions.

. . .

VIII. to XII.

. . .

. . . "

" Article 25.- . . .

. . .

a) to d)

. . .

to 5.

. . .

Regarding the reference rates provided for in numerals 1 and 2, above, the term of the TIIE in its case or the term of the CETES to which the rate of the operations is referenced must be indicated.

f) and g)

. . .

II.

Investments in Financial Instruments

a) to c)

. . .

III.

. . .

IV.

. . .

a) to i)

. . .

The Popular Financial Society ceding or discounting must notify in writing, the cession or discounting of the portfolio in question, to those persons who by virtue of the credits that are the object of the cession or discounting are its debtors, provided that the credits in question are not considered stage 3 in accordance with the corresponding accounting regulations, and

. . .

V. and VI.

. . . "

" Section Fourth

Final Provisions

Article 29.-

. . .

Article 29 Bis.- Popular Financial Societies may cede credit portfolio, through a trust whose purpose is the issuance of securities charged to the trust estate constituted by the assets of the ceded credit portfolio.

TITLE FOURTH

. . .

Chapters I and II

. . .

Chapter III

. . .

First Section

On the provisioning of consumer, microcredit, housing and commercial credit portfolios

Article 42 Bis.- Popular Financial Societies must qualify and constitute preventive estimates for credit risks corresponding to their consumer, microcredit and housing credit portfolios in accordance with the methodology established in Annex D of these provisions.

Article 42 Bis 1.- Popular Financial Societies must qualify and constitute preventive estimates for credit risks corresponding to their commercial credit portfolio in accordance with the methodologies established in this section and in Annexes D Bis 2, D Bis 3 and D Bis 4 of these provisions in accordance with the type of credit that corresponds.

Article 42 Bis 2.- Popular Financial Societies, prior to the qualification of the credits of the commercial credit portfolio, will classify each of the credits into groups, according to whether they are granted to the following persons:

Financial entities.

II.

Legal and natural persons with business activity.

III.

Federative entities and municipalities.

Article 42 Bis 3.- Popular Financial Societies must qualify and constitute the corresponding preventive estimates for their commercial credit portfolio, with figures on the last day of each calendar month, for which they must classify from their initial recognition the entirety of their commercial credit portfolio into credit risk stages, depending on the increase in credit risk that they evidence based on the number of days of delay or default elapsed from the day of the exigibility of the first amortization of the credit that has not been covered by the borrower on the date of qualification in accordance with the following table:

Credit risk stage

Days of delay / default

Stage 1

For credits with days of delay less than or equal to 30 days.

Stage 2

For credits with days of delay from 31 to 89 days.

Stage 3

For credits that present 90 or more days of delay or when the credit is in stage 3 in accordance with the terms established in these provisions and in Accounting Criterion B-4 "Credit Portfolio" of Annex E of these provisions.

For the purposes of counting the days of delay, Popular Financial Societies must consider natural days.

Popular Financial Societies that have any element to determine that a credit must migrate from

stage 1 to stage 2, or from stage 1 to stage 3, or from stage 2 to stage 3, may carry them out without the need to comply with what is indicated in the table above, for which they must have defined and formalized the criteria under which such migration can be carried out within their policy and procedure manuals, as well as their risk manuals, and always provided that these criteria are applied consistently.

Popular Financial Societies must document in a register or log the migration of stages based on the aforementioned criteria, including at minimum the identification of the personnel responsible for the approval, the criterion under which the migration was carried out, as well as the date from which the migration was made. The Commission may order Popular Financial Societies to rectify the reserves constituted in accordance with the foregoing, when in its judgment the policies and procedures corresponding to what is indicated in this article are not applied consistently, or if they do not reflect the difference between the observed credit deterioration and that identified by the Societies.

Credits granted by Popular Financial Societies that are in stage 3 and that have been subject to restructuring or renewal must consider their permanence within the aforementioned stage as long as there is no evidence of sustained payment, and they may migrate to a lower risk stage, provided that what is provided in Accounting Criterion B-4 "Credit Portfolio" of Annex E of these provisions is complied with.

Article 42 Bis 4.- Popular Financial Societies will qualify, constitute, and register in their accounting preventive reserves for each of the credits in their commercial credit portfolio, using for such effect the balance of the debt corresponding to the last day of the month, adhering to the methodology and information requirements established as follows:

For those credits classified in stage 1 or 3 in accordance with what is provided in article 42 Bis 3 of these provisions, the percentage that will be used to determine the reserves to be constituted for each credit will be the result of multiplying the Probability of Default by the Loss Severity by the Exposure to Default:

Where:

= Amount of reserves to be constituted for the i-th credit that is in stage 1 or 3, as applicable.

= Probability of Default of the i-th credit.

= Loss Severity of the i-th credit.

= Exposure to Default of the i-th credit.

II.

For those credits classified in stage 2 in accordance with what is provided in article 42 Bis 3 of these provisions, the estimation of lifetime reserves will be determined in accordance with the following formula:

Where:

= Amount of reserves to be constituted for the i-th credit that is in stage 2.

= Probability of Default of the i-th credit.

= Loss Severity of the i-th credit.

= Exposure to Default of the i-th credit.

= Annual interest rate of the i-th credit charged to the client. This variable must be expressed to five decimal places and always be greater than zero.

In cases where the annual interest rate is equal to zero, a fixed value of 0.00001% must be used.

= Remaining term of the i-th credit, number of years that, according to what is contractually established, remain to liquidate the credit on the date of portfolio qualification, calculated as follows:

In cases where the contractual term of the credit has already ended and there is still a remaining balance, the minimum horizon to be considered will be an annual horizon.

Regarding revolving credits, the remaining term for the i-th credit will correspond to the review term of the conditions of the line granted to the borrower; in case the Popular Financial Society does not have this information, the minimum term to be used will be 2.5 years.

The amount of reserves for credits in stage 2 will be the result of applying the following formula:

Article 42 Bis 5.- Popular Financial Societies must assign a PI i of 100% to the borrower in the following cases:

When the borrower has any credit with the Popular Financial Society that is in stage 3.

II.

When it is probable that the debtor will not fulfill all of its credit obligations before the Popular Financial Society, updating such assumption when:

The Popular Financial Society considers that there could be signs of deterioration for any of the credits owed by the debtor, or

The Popular Financial Society has demanded the commercial bankruptcy of the debtor, or the latter has requested it.

III.

If the Popular Financial Society has omitted for three consecutive months to report to the Credit Information Society any credit of the borrower, or when the information of any credit of the borrower related to the balance and payment behavior that must be sent to said society is outdated.

Article 42 Bis 6.- Popular Financial Societies, except for what is provided in article 42 Bis 5 of these provisions, will estimate the Probability of Default of each credit ( PI i ) using the total credit score determined in accordance with Annexes D Bis 2, D Bis 3 and D Bis 4 of these provisions, as applicable:

For credits classified in fraction II of article 42 Bis 2 of these provisions, with primary economic activity, in accordance with what is established in Annex D Bis 2:

II.

For credits classified in fraction II of article 42 Bis 2 of these provisions, with secondary economic activity, in accordance with what is established in Annex D Bis 2:

III.

For credits classified in fraction II of article 42 Bis 2 of these provisions, with tertiary economic activity, in accordance with what is established in Annex D Bis 2:

IV.

For credits classified in fraction I of article 42 Bis 2 of these provisions, in accordance with what is established in Annex D Bis 3:

For credits classified in fraction III of article 42 Bis 2 of these provisions, in accordance with what is established in Annex D Bis 4:

Article 42 Bis 7.- For the determination of the PI i in factoring operations, Popular Financial Societies will identify who bears the credit risk; for such purposes, the factor who transmits to the Popular Financial Society the credit rights that it has in its favor to the own Popular Financial Society factor and the subject obligated to the payment of the corresponding credit rights will be considered. In this sense:

The PI i corresponds to the subject obligated to the payment of the credit rights, depending on the group to which it belongs according to what is established in article 42 Bis 6 of these provisions.

II.

The PI i of the subject obligated with respect to the credit rights may be substituted by the PI i of the factor, when the joint and several obligation of the latter is agreed upon in the document that formalizes the factoring operation.

III.

Only credit rights that are not subject to conditions or controls by which the debtor could oppose their payment may be considered.

Article 42 Bis 8.- The Loss Severity ( SP i ) for the credits of the commercial credit portfolio that lack guarantee coverage will be as follows:

For credits classified in article 42 Bis 2, fractions I and III of these provisions, that are in stages 1 and 2, the value of the Loss Severity ( SP i ) will be equal to 45%.

II.

For credits classified in article 42 Bis 2, fraction II of these provisions, that are in stages 1 and 2, the value of the Loss Severity ( SP i ) will be equal to 55%.

III.

For credits classified in stage 3, the value of Loss Severity ( SP i ) will be assigned according to the following table:

Months elapsed since classification of the credit in stage 3 | SP i Credits classified in Article 42 Bis 2, fractions I and III | SP i Credits classified in Article 42 Bis 2, fraction II --- | --- | --- Up to 3 months | 45% | 55% Greater than 3 and up to 6 months | 55% | 62% Greater than 6 and up to 9 months | 62% | 69% Greater than 9 and up to 12 months | 66% | 72% Greater than 12 and up to 15 months | 72% | 77% Greater than 15 and up to 18 months | 75% | 79% Greater than 18 and up to 21 months | 78% | 82% Greater than 21 and up to 24 months | 81% | 84% Greater than 24 and up to 27 months | 88% | 90% Greater than 27 and up to 30 months | 91% | 93% Greater than 30 and up to 33 months | 94% | 95% Greater than 33 and up to 36 months | 96% | 97% Greater than 36 months | 100% | 100%

Article 42 Bis 9.- The Exposure to Default ( EI i ) of each credit will be equal to the outstanding balance of the i-th credit on the date of qualification, which represents the amount of credit effectively granted to the borrower, adjusted for accrued interest, minus principal and interest payments, as well as discounts, waivers, bonuses, and discounts that have been granted.

The amount subject to qualification must not include uncollected accrued interest recognized in off-balance sheet accounts for credits that are in stage 3.

Article 42 Bis 10.- When Popular Financial Societies in their commercial portfolio credits have guarantees that comply with what is provided in Annex D Bis of these provisions, they may recognize them for the purpose of reducing the preventive estimates of the credit or credits in question, considering the following:

Take the necessary measures so that the guarantee can be executed and adjudicated at the moment it is placed in stage 3 in accordance with what is established in article 42 Bis 3 of these provisions. In case the management for the execution of the guarantee does not begin within the 120 business days following the transfer of the credit to stage 3, Popular Financial Societies must cease to recognize the coverage provided by said guarantee and will assign the preventive estimates corresponding to the days of delinquency recorded.

II.

They may consider a guarantee, provided that guarantees granted reciprocally between persons who, in turn, guarantee the payment of the credit in question are excluded.

III.

Popular Financial Societies, in no case, may simultaneously take guarantees in Step and Measure Coverage Schemes or First Loss Coverage Schemes, financial and non-financial guarantees from the same guarantor.

IV.

Popular Financial Societies will take into account the coverage of the guarantee, the way in which said guarantee was structured and its ease of execution, considering other direct and contingent obligations owed by the guarantor, surety, or joint and several obligor, as applicable.

The part not covered by the guarantee will retain the preventive estimates corresponding to it.

VI.

In any case, Popular Financial Societies may opt not to recognize the guarantees if this results in higher reserves.

VII.

Guarantees must be duly constituted in the form and terms established in the applicable legal provisions.

VIII.

Upon receiving guarantees whose validity is subject to the fulfillment of terms and conditions by the Popular Financial Society creditor of the guarantee and fails to comply, the guarantee must not be taken into account for the purposes of the reduction of preventive reserves for credit risk.

Article 42 Bis 11.- Popular Financial Societies, to calculate preventive estimates for credit risk, may adjust the value of the Loss Severity considering financial guarantees that comply with what is established in Annex D Bis, fraction I of these provisions, in accordance with the following:

The Loss Severity adjusted by financial guarantees (SP*) will correspond to:

Where:

SP i * = Loss Severity of the i-th position adjusted by financial guarantees.

SP i = The resulting according to article 42 Bis 8 of these provisions.

EI i * = Exposure to Default of the i-th position after the risk coverage determined in accordance with fraction II of this article for the recognition of financial guarantees referred to in Annex D Bis of these provisions. Popular Financial Societies must continue calculating the Exposure to Default without taking into account the coverage through said guarantee, unless otherwise specified in these provisions.

EI i = Exposure to Default of the i-th position, as defined in article 42 Bis 9 of these provisions.

II.

Popular Financial Societies will determine a risk-adjusted value of their exposures ( EI* ), applying the following formula:

Where:

= Risk-adjusted value of exposures

EI = Exposure to Default in accordance with article 42 Bis 9 of these provisions.

C = Book value of the financial guarantee covering the operation.

Hfx = 8% (eight percent) in case of different denomination between the currencies of the exposure amount and the guarantee received, and 0 (zero) percent otherwise.

Hc = Adjustment factor corresponding to the financial guarantee received, in accordance with what is indicated in Annex D Bis 1 of these provisions and in the following paragraph.

When the admissible guarantees for a given operation are constituted by a basket of assets, the adjustment factor ( Hc ) of the above formula will be determined as the weighted average of the individual factors corresponding to each of the assets that make up the basket in question, as follows:

Where:

Hc = Adjustment factor when the admissible guarantees for a given operation are constituted by a basket of assets.

a i = Weighting of the title or instrument "i" included in the portfolios.

H i = Adjustment factor corresponding to said asset "i", in accordance with what is indicated in Annex D Bis 1 of these Provisions.

Article 42 Bis 12.- Popular Financial Societies, to calculate preventive estimates for credit risk, may adjust the value of the Loss Severity considering non-financial guarantees that comply with what is established in fractions II and III of Annex D Bis of these provisions.

Popular Financial Societies may obtain an effective Loss Severity (SP i ) in accordance with the following methodology:

The effective Loss Severity ( SPi ) for the i-th credit will be determined by comparing the coefficient C i GNF with the minimum admissible coverage level ( C ) and the over-coverage level ( C* ); as well as by the type of non-financial guarantee in question or other assimilable instruments in accordance with the following table:

Effective Loss Severity for Preferred Positions

II.

The coefficient C i GNF for the i-th credit will be what results from dividing the value of the received non-financial guarantee ( Ci ), by the estimated exposure to default ( ) in accordance with the expression indicated below:

Where:

= Coefficient for the i-th credit of the received non-financial guarantee.

C i = Value of the non-financial guarantee, which must correspond to the last available valuation of said guarantee.

Regarding real estate or movable property, a value that does not exceed the current fair value of the guarantee in the terms of Annex D Bis of these provisions must be considered. In case of having two or more guarantees of the same type, the value of these must be considered together.

In the case of participations in federal revenues or own revenues ceded to an administration and payment source trust or any other type of legal instrument that fulfills the same purposes, the committed amount of the next 12 months will be considered. In case the trust has any reserve account that acts as backing for the payment of the corresponding credit, this will be added to the aforementioned annual amount.

EIE i = Estimated exposure to default of the i-th position.

When the EIE i is guaranteed with participations in federal revenues or own revenues ceded to an administration and payment source trust or any other type of legal instrument that fulfills the same purposes, it will be considered as the estimated debt flow of the next 12 months (including capital and interest).

In the case that the debt is referred directly or indirectly to a variable rate and does not have any interest rate hedging mechanism, the estimated annual debt flow must be multiplied by 110%.

III.

For the purposes of determining the SPi applicable, non-financial guarantees will only be considered when they comply with the requirements of Annex D Bis of these provisions and the coefficient C i GNF is greater than or equal to C*, that is, when said coefficient reaches or exceeds the minimum admissible coverage level.

IV.

For each type of guarantee, the SPi and the levels C* and C established in the table contained in fraction I of this article must be used.

The SPi related to the type of guarantee will be assigned directly to the operation when the coefficient C i GNF is greater than or equal to C; that is, when said coefficient reaches or exceeds the over-coverage level.

VI.

For operations whose coefficient Ci GNF is between the levels C* and C, the following will apply:

For each operation, the fully covered portion must be identified, dividing the value of the non-financial guarantee by the level C corresponding to the type of non-financial guarantee ( Ci / C**), in accordance with the table contained in fraction I of this article. To said covered portion, the SPi** associated with said level C will be assigned.

The exposed portion will be obtained by subtracting from the EIEi the fully covered portion determined in accordance with subsection a) above. To this portion, an SPi will be assigned in accordance with fraction VII of this article.

VII.

For operations where C i GNF is less than C*, an SPi equal to the result of applying what is established in article 42 Bis 8 of these provisions will be assigned.

For the purposes of what is provided by this article, other assimilable instruments shall be understood as guarantee trusts or administration trusts or both, celebrated under the auspices of article 382 of the General Law of Titles and Credit Operations, as well as irrevocable instructions or guarantee mandate contracts or both, referred to in article 2596 of the Federal Civil Code, both instruments contained in subsection d), fraction II, Annex D Bis of these provisions.

When guarantees granted by financial entities, whether national or foreign, are received, whose validity is subject to the fulfillment of terms and conditions by the Popular Financial Society creditor of the guarantee and fails to comply, the guarantee must not be taken into account for the purposes of what is established in this article.

Article 42 Bis 13.- Popular Financial Societies will use the same Probability of Default for all credits of the same borrower.

In case there are joint and several obligors or guarantors, the Popular Financial Society must apply the following criteria:

In case there is only one joint and several obligor or guarantor who responds for the entire responsibility of the borrower, the Probability of Default of the borrower may be substituted by that of the joint and several obligor or guarantor, obtained in accordance with the methodology corresponding to said obligor.

II.

In case there are 2 or more guarantors who individually respond for the entire responsibility of the borrower, for the substitution, the Probability of Default of the borrower will be considered, that which results as lower among the Probabilities of Default of the obligors, after following the procedure indicated in fraction I of this article.

III.

Popular Financial Societies may recognize the protection of guarantors who cover part of the credit balance, employing the following procedure:

The part covered by each of the guarantors and the uncovered part of the credit will be identified.

The reserves of the part covered by each of the guarantors will be determined using the Probability of Default obtained in accordance with the previous fraction I.

The reserves of the uncovered part will be determined using the Probability of Default and the Loss Severity of the borrower in accordance with what is provided in this section.

In cases where the Popular Financial Society does not have information to determine the Probability of Default of the joint and several obligor or guarantor, they must calculate it in accordance with what is established in Article 112 of the Single Circular of Banks.

Article 42 Bis 14.- In case Popular Financial Societies have Step and Measure Coverage Schemes or First Loss Coverage Schemes for a commercial credit or for a portfolio of identified commercial credits with similar characteristics, only persons contained in groups 1, 2 and 3 indicated in section IV, Annex D of these provisions will be recognized, for the purposes of portfolio qualification, applying the following procedure:

Popular Financial Societies that are beneficiaries of a Step and Measure Coverage Scheme must constitute the amount of preventive reserves applying the following procedure:

They must constitute the amount of preventive reserves for the exposed part of the credit that results from the application of the following formula:

Where:

R PaMed_i = Amount of reserves to be constituted for the i-th credit covered.

Reservas Etapa Z i = Amount of reserves to be constituted in accordance with article 42 Bis 4 of these provisions, where Z corresponds to the credit risk stage 1, 2 or 3 as applicable, of the i-th credit.

% Cob PaMed_i = Percentage covered according to the Step and Measure Coverage Scheme contract corresponding to the i-th credit in particular.

Additionally, Popular Financial Societies will constitute the amount of preventive reserves corresponding to the covered part of the credit, as follows:

In the case that Protection Providers from the list in group 1 are available, the percentage of

estimates that will correspond to the covered portion will be

0.5 %.

In the event that Protection Providers from the list in group 2 are available, the percentage of estimates that will correspond to the covered portion will be 1 %.

In the event that Protection Providers from the list in group 3 are available, the preventive reserves corresponding to the covered portion of the credit will be established according to the following formula:

Where:

RPC PaMed_i

Amount of reserves to be established for the covered portion for the i-th credit.

EI i

The Exposure to Default of the i-th credit in accordance with Article 42 Bis 9 of these provisions.

PI GA_i

Probability of Default of the guarantor in terms of the methodology described in the present section.

SP GA_i

The Severity of Loss of the guarantor in accordance with Article 42 Bis 8 of these provisions.

% Cob PaMed_i

Percentage covered according to the contract of the Paso y Medida Coverage Scheme that corresponds to the i-th credit in particular.

II.

Popular Financial Societies that are beneficiaries of a First Loss Coverage Scheme, will establish reserves for the portfolios after recognizing the coverage of the First Loss Scheme (RPC PP), using the following procedure:

They must determine the covered percentage and the percentage of total reserves without coverage of the credit or portfolios beneficiary of the First Loss Coverage Scheme.

The percentage covered by the First Loss Coverage Scheme (%Cob PP) will be determined.

Where:

%Cob PP

Percentage covered by First Loss Coverage Scheme.

Mto_Cob PP

Limited amount intended to cover the first losses that might be generated from the default of a credit or a portfolio with a specific number of credits at the date of qualification.

= Sum of the outstanding balances of the credits, in accordance with the
Article 42 Bis 9 of these provisions, when the First Loss Coverage
Scheme covers a portfolio of credits.

In the event that the scheme covers a single credit, the denominator will be replaced by the outstanding balance of said credit.

The percentage of total reserves without coverage of the portfolio beneficiary of the First Loss Coverage Scheme is the difference between the percentage of total reserves of the portfolio before the recognition of the benefit of the coverage and the percentage covered by the First Loss Coverage Scheme (Dif pp). This difference provides the percentage of total reserves of the portfolio that is not covered by the scheme and is obtained from the following expression:

Where:

% RVAS CoP

Percentage of total reserves of the credit or portfolio beneficiary of the First Loss Coverage Scheme, resulting from the following formula:

RVAS CoP

Total reserves of the credit or of the "n" credits of the portfolio before the recognition of the coverage of the First Loss Scheme, i.e., without considering mitigants of the Severity of Loss applicable, as stated in the guarantee scheme contract in effect on the date of qualification, which will be calculated according to the following expression:

= Sum of the outstanding balances of the credits, in accordance with
Article 42 Bis 9 of these provisions, when the First Loss
Coverage Scheme covers a portfolio of credits.

In the event that the scheme covers a single credit, the denominator is replaced by the outstanding balance of said credit.

Reservas Etapa Z i

Amounts of reserves to be established in accordance with Article 42 Bis 4 of the present provisions, where Z corresponds to the credit risk stage 1, 2 or 3 as appropriate, of the i-th credit.

% Cob PP

Value obtained in accordance with what is established in paragraph 1 above.

They must obtain the amount of reserves of the exposed portion of the portfolio after recognizing the benefit of the coverage of the First Loss Coverage Scheme (RPE pp), adjusting as follows:

If the value of Dif pp is equal to or less than zero, Popular Financial Societies shall not establish reserves for the portfolio beneficiary of the First Loss Coverage Scheme, except for what is established in the following subsection c).

If the value of Dif pp is greater than zero, Popular Financial Societies must establish reserves up to the amount that, added to the value of the guarantee, are equal to the total amount of reserves of the portfolio, i.e.:

RPE PP = RVAS_Portafolios - Mto_Cob PP.

Where:

RPE PP

Amount of reserves to be established for the exposed portion of the portfolio after the recognition of the benefit of the coverage of the First Loss Coverage Scheme.

RVAS_Portafolios

Total reserves of the "n" credits of the portfolio before the recognition of the coverage of the First Loss Scheme, i.e., without considering mitigants of the Severity of Loss applicable as stated in the guarantee scheme contract in effect on the date of qualification.

Mto_Cob PP

Limited amount intended to cover the first losses that might be generated from the default of a credit or a portfolio with a specific number of credits at the date of qualification.

Additionally, Popular Financial Societies, for the portfolio beneficiary of the First Loss Coverage Scheme of identified credits with similar characteristics, will establish the amount of preventive reserves corresponding to the covered portion of the credit, as follows:

In the event that Protection Providers from the list in group 1 are available, the percentage of estimates that will correspond to the covered portion will be
0.5 %.

In the event that Protection Providers from the list in group 2 are available, the percentage of estimates that will correspond to the covered portion will be 1 %.

In the event that Protection Providers from the list in group 3 are available, the preventive reserves corresponding to the covered portion of the credit will be established by multiplying the Probability of Default and the Severity of Loss of the guarantor by the minimum amount between the total reserves of the "n" credits of the portfolio before the recognition of the coverage of the First Loss Scheme and the limited amount intended to cover the first losses that might be generated from the default of a credit or a portfolio with a specific number of credits.

Where:

RPC PP

Amount of reserves to be established for the proportion of the portfolio covered.

PI GA

Probability of Default of the guarantor in terms of the methodology described in the present section.

SP GA

The Severity of Loss of the guarantor in accordance with Article 42 Bis 8 of these provisions.

Mto_Cob PP

Limited amount intended to cover the first losses that might be generated from the default of a credit or a portfolio with a specific number of credits.

Rvas_Portafolios

In the event that the uncovered portion of the credit corresponds to a Probability of Default lower than that which corresponds to the covered portion, as stated in paragraphs 3, subsections b) and c), of fractions I and II respectively of the present article, Popular Financial Societies may use the lower Probability of Default for the entire operation.

For Popular Financial Societies to recognize guarantees and assign the corresponding estimate to the covered tranches of the credit or portfolio, there must be evidence of compliance with the terms and conditions established by the Protection Providers regarding the information they require, as well as compliance with the processes that, where applicable, are established in the corresponding contracts.

Article 42 Bis 15.- In the case of credits intended to finance the primary activity of the agricultural sector that have
an agricultural and animal damage insurance, which meets the characteristics referred to in subsection b), fraction X,
Annex D Bis of these provisions, Popular Financial Societies may multiply the estimates that
correspond to the direct borrower by a factor of 95 %, as long as no insurance claim is filed.

For the purposes of the preceding paragraph, "credits to the agricultural and rural sector" shall be understood as those directed to the primary production of the agricultural, livestock, forestry and fishing sectors, as well as to the industrial, commerce and services sectors when these are integrated into the primary activity of the initially mentioned sectors, whose branches and sub-branches of economic activity correspond to those designated as sector 11 of the North American Industry Classification System 2018 (NAICS) of the National Institute of Statistics and Geography (INEGI), or its successor.

In the event that the accrediting Popular Financial Society files a claim with the entity granting the insurance and said entity accepts it, as long as the covered amount has not been executed or paid and, therefore, the credit has not been removed from the financial statement of the Popular Financial Society, it may calculate the estimates by multiplying the balance of the covered credit by 0.5 % when the aforementioned insurance-granting entity has an Investment Grade rating on the national scale.

Guarantees established in accordance with this article may cover the total or a specific percentage of the outstanding balance of one or more credits when the deposit contracts or modifications thereto provide that there is no possibility of making withdrawals or disposing of the aforementioned guarantees during the validity of the credits, and that these can be covered from such deposits or values.

Article 42 Bis 16.- Popular Financial Societies, when qualifying credits that have 2 or more guarantees, once
the initial qualification has been assigned to each credit, may segment the outstanding balance of the credit into the parts that result from applying the following criteria:

They will determine the portion of the balance that is covered by 2 or more guarantees, whether they are financial guarantees, non-financial guarantees, Paso y Medida Coverage Schemes or First Loss Coverage Schemes, as well as the portion of the balance not covered by admissible guarantees.

II.

The covered portion of the credit balance may be divided into 2 or more segments, based on the type of guarantees that have been granted, provided that they comply with the following:

If it has 2 or more Paso y Medida Coverage Schemes or First Loss Coverage Schemes, each Protection Provider must respond for the guaranteed portion of the credit balance, provided that there are no exceptions or defenses of priority order for payment among the Protection Providers themselves.

If it has 2 or more financial or non-financial guarantees, each of them must cover the guaranteed portion of the credit balance, provided that it has been expressly agreed in the contracts that give rise to the guarantee the portion of the credit that will be guaranteed with each encumbered asset.

In the case of combinations of Paso y Medida Coverage Schemes or First Loss Coverage Schemes and financial guarantees or non-financial guarantees, each of them may be considered, provided that they are executable at the time of qualification and comply with the requirements established in the subsections a) and b) of this fraction.

Second Section

Of the prudential regulation for Popular Financial Societies with a total asset amount equal to or less than 15 ' 000,000 UDIS

Articles 43 to 53.-

. . .

Article 54.-

. . .

II.

. . .

to 9.

. . .

10.

. . .

Popular Financial Societies, in their credit manuals, must provide that appraisals are prepared in terms of what is provided by the Law of Transparency and Promotion of Competition in Secured Credit and in accordance with what is established in Annex D Bis, Section VI of these provisions.

2) and 3)

. . .

ii) and iii)

. . .

and 12.

. . .

c) and d)

. . .

Article 54 Bis.- Popular Financial Societies that grant Microcredits may use the table of preventive
estimates for credit risks contained in Annex D, Section II, of these provisions, provided that they prove to the Federation that supervises them auxilially, that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

. . .

Articles 54 Bis 1 and 55.-

. . .

Article 56.-

. . .

I. to IV.

. . .

b) The status of the Stage 3 portfolio and the results of the recovery process; c) and d)

. . .

Articles 57 to 58 Bis.- . . .

Section D

Provisioning of credit portfolio and adjudicated assets

Article 59.- Popular Financial Societies must qualify and establish preventive estimates for credit
risks corresponding to their credit portfolio in accordance with the methodology established in the First Section of this Chapter.

Articles 60 to 61.-

. . .

Section E

Guidelines on liquidity coefficient

Article 62.-

. . .

Popular Financial Societies must maintain a position of at least equivalent to 10 % of their short-term liabilities, invested in bank deposits of demand money, as well as in bank securities, government securities, other investments in debt financial instruments, and in cash and cash equivalents, whose maturity term is equal to or less than 30 days. This, in accordance with the investments they can make according to their Level of Operations.

. . .

Section F

Risk diversification in operations

Articles 63 and 63 Bis.-

. . .

Third Section

Of the prudential regulation for Popular Financial Societies with a total asset amount superior to 15 ' 000,000 and equal to or less than 50 ' 000,000 UDIS

Article 64.-

. . .

Section A

Minimum capital

Article 65.-

. . .

Section B

Capital requirements for risks

Article 66.-

. . .

Article 67.-

. . .

a) to c)

. . .

Without prejudice to what is established in this Section, the groups in which operations exposed to credit risk are classified, will be integrated by operations in national currency and in UDIS specified in the present fraction, as appropriate, as follows: i) deposits and investments in financial instruments comprise the respective accrued interests; ii) credit operations will be understood in their broadest sense and will include the taking of immediate collection documents, Stage 1, 2 and 3 portfolio; loans to staff; refinancing and capitalization of interests; guarantees, accrued interests, and accrued commissions and premiums; iii) the investments charged to the pension reserve fund for staff and seniority premiums, will be considered as another investment in the group to which they correspond, and iv) to determine the accredited person and the currency of the operation, the characteristics of the financing granted through the discount operation will be considered, in the portfolio taken at discount with responsibility of the transferor, and the characteristics of the credit object of the discount will be considered in the portfolio transfer operations with responsibility of the transferor (discounted titles with endorsement).

II. and III.

. . .

Article 68.- The capital requirement for market risk will be that obtained by applying 1 % to the total amount that
results from the sum of the credit portfolio granted by Popular Financial Societies, net of the corresponding preventive estimates for credit risks, and the total of investments in financial instruments.

. . .

Articles 69 to 73.-

. . .

Section C

Risk management

Article 74.-

. . .

I and II.

. . .

III.

. . .

Follow up on their evolution and possible deterioration, with the purpose of anticipating potential losses, as well
as analyzing the recovery value of the Stage 3 portfolio and estimating the expected loss.

IV.

. . .

Articles 75 to 78.-

. . .

Section D

Internal control

Articles 79 to 86 Bis.-

. . .

Section E

Credit process

Article 87.-

. . .

Sub Section A

Minimum guidelines of the credit manual

Article 88.-

. . .

I. and II.

. . .

III.

. . .

Likewise, they must establish evaluation and follow-up procedures. Such evaluations must be more frequent in the case of credits classified as Stage 3 portfolio, or with respect to which the terms and conditions agreed upon have not been fully met.

IV. and V.

. . .

VI.

. . .

a) to d)

. . .

ii) and iii)

. . .

and 3.

. . .

f) and g)

. . .

Sub Section B

Generalities of the credit manual

Articles 89 to 91.-

. . .

Article 91 Bis.- Popular Financial Societies that grant Microcredits may use the table of preventive
estimates for credit risks contained in Annex D, Section II, of these provisions, provided that they prove to the Federation that supervises them auxilially, that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

. . .

Article 91 Bis 1.-

. . .

Sub Section C

Other provisions

Articles 92 and 93.-

. . .

Section F

Provisioning of credit portfolio and adjudicated assets

Article 94.- Popular Financial Societies must qualify and establish preventive estimates for credit
risks corresponding to their credit portfolio in accordance with the methodology established in the First Section of this Chapter.

Articles 95 to 95 Ter.-

. . .

Section G

Guidelines on liquidity coefficient

Article 96.- Popular Financial Societies must maintain minimum liquidity levels in relation to their
short-term passive operations.

. . .

Popular Financial Societies must maintain a position of at least equivalent to 10 % of their short-term liabilities, invested in bank deposits of demand money, as well as in bank securities, Government Securities, other investments in debt financial instruments, and in cash and cash equivalents, whose maturity term is equal to or less than 30 days.

. . .

Section H

Risk diversification in operations

Articles 97 and 97 Bis.- . . .

Section I

Information disclosure requirements

Article 98.-

. . .

Fourth Section

Of the prudential regulation for Popular Financial Societies with a total asset amount superior to 50 ' 000,000 and equal to or less than 280 ' 000,000 UDIS

Article 99.-

. . .

Section A

Minimum capital

Article 100.-

. . .

Section B

Capital requirements for risks

Article

101.-

. . .

Article 102.-

. . .

a) to c)

. . .

II. and III.

. . .

Articles 103 to 108.-

. . .

Section C

Risk management

Article 109.-

. . .

Article 110.-

. . .

II.

. . .

b) Follow up on their evolution and possible deterioration, with the purpose of anticipating potential losses, as well as analyzing the recovery value of the Stage 3 portfolio and estimating the expected loss; c) and d)

. . .

Articles 111 to 117.-

. . .

Section D

Internal control

Articles 118 to 128 Bis.

. . .

Section E

Credit process

Article 129.-

. . .

Sub Section A

Minimum guidelines of the credit manual

Article 130.-

. . .

I. and II.

. . .

III.

. . .

IV.

Recovery of credit portfolio.

The functions of recovery of Stage 3 portfolio, in judicial collection process, must be performed by an area independent of the business areas.

Credits that, as a result of permanent follow-up or having fallen into Stage 3 portfolio, will presumably have recovery problems, must be subject to an exhaustive evaluation, in order to determine timely the possibility of establishing new terms and conditions that increase their probability of recovery.

. . .

VI.

. . .

a) to d)

. . .

Popular Financial Societies, in their credit manuals, must provide that appraisals be prepared in accordance with the provisions of the Transparency and Competition Promotion Law in Guaranteed Credit and as established in Annex D Bis, Section VI of these provisions.

ii) and iii)

. . .

and 3.

. . .

f) and g)

. . .

Sub-Section B

Generalities of the credit manual

Articles 131 to 133.-

. . .

Article 133 Bis.- Popular Financial Societies granting Microcredits may use the preventive risk estimation table for credit risks contained in Annex D, Section II of these provisions, provided they prove to the Federation that supervises them in an auxiliary manner that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

. . .

Article 133 Bis 1.-

. . .

Sub-Section C

Other provisions

Articles 134 and 135.-

. . .

Section F

Provisioning of credit portfolio and assigned assets

Article 136.- Popular Financial Societies must qualify and constitute preventive risk estimations for credit risks corresponding to their credit portfolio in accordance with the methodology established in the First Section of this Chapter.

Articles 137 and 137 Bis.-

. . .

Sub-Section B.-

. . .

Articles 138 to 141.-

. . .

Sub-Section C

General Provisions

Article 142.- The results of the credit portfolio qualification, obtained in accordance with the First Section of this Chapter, must be presented to the corresponding Federation, in the form and times indicated by them.

Articles 143 and 144.-

. . .

Section G

Guidelines on liquidity coefficient

Article 145.-

. . .

Popular Financial Societies must maintain a position of at least equivalent to 10% of their short-term liabilities, invested in bank deposits of demand money, as well as in bank securities, government securities, other investments in debt financial instruments, and in cash and cash equivalents, whose maturity term is equal to or less than 30 days.

. . .

Section H

Risk diversification in operations

Articles 146 and 146 Bis.-

. . .

Section I

Information disclosure requirements

Article

147.-

. . .

Fifth Section

Of prudential regulation for Popular Financial Societies with an asset amount superior to 280,000,000 UDIS

Article 148.-

. . .

Section A

Minimum capital

Article 149.-

. . .

Section B

Capitalization requirements for risks

Article 150.-

. . .

Article 151.-

. . .

a) and c)

. . .

Without limitation of what is established in this Section, the groups in which operations exposed to credit risk are classified will be integrated by operations in national currency and UDIS as specified in this fraction, according to the following: i) deposits and investments in financial instruments include the respective accrued interests; ii) credit operations will be understood in their broadest sense and will include the taking of immediate collection documents, stage 1, 2, and 3 portfolio; loans to staff; refinancing and capitalization of interests; guarantees, accrued interests, and accrued commissions and premiums; iii) investments charged to the reserve fund for staff pensions and seniority premiums will be considered as another investment in the group to which they correspond, and iv) to determine the accredited person and the currency of the operation, the characteristics of the financing granted through the discount operation will be considered, in the portfolio taken at discount with the responsibility of the assignor, and the characteristics of the credit object of the discount will be considered in portfolio assignment operations with the responsibility of the assignor (discounted titles with endorsement).

II. and III.

. . .

Articles 152 to 157.-

. . .

Section C

Risk management

Article 158.-

. . .

Article 159.-

. . .

II.

. . .

Follow up on their evolution and possible deterioration, with the purpose of anticipating potential losses, as well as analyzing the recovery value of stage 3 portfolio and estimating the expected loss;

c) to d)

. . .

III.

. . .

Article 160.-

. . .

Article 161.-

. . .

Evaluate and follow up on investments in financial instruments, using for such effect value-at-risk models that have the capacity to measure the potential loss in such positions, associated with price or interest rate movements, with a given probability level and over a specific period.

II. to VIII.

. . .

Articles 162 to 169.-

. . .

Article 170.-

. . .

Allow the measurement, monitoring, and control of the risks to which the Popular Financial Society is exposed, as well as the generation of reports on the matter;

II.

. . .

Risk factors such as interest rates and price indices, considering their impact on the capital value and the comprehensive income statement of the Popular Financial Society;

Exposure to risk, by line and business unit and by type of risk of the Popular Financial Society;

. . .

III.

Evaluate the risk associated with assets, liabilities, and off-balance sheet positions of the Popular Financial Society.

. . .

Articles 171 to 175.-

. . .

Section D

Internal control

Articles 176 to 190 Bis.-

. . .

Section E

Credit process

Article 191.-

. . .

Sub-Section A

Minimum guidelines of the credit manual

Article 192.-

. . .

I. and II.

. . .

III.

. . .

Such evaluations must be more frequent when dealing with credits classified as stage 3 portfolio, or with respect to which the agreed terms and conditions have not been fully met.

IV.

Credit portfolio recovery.

The functions of stage 3 credit portfolio recovery and in judicial collection process must be performed by an area independent of the business areas.

Credits that, as a result of permanent follow-up or because they have fallen into stage 3 portfolio, will predictably have recovery problems, must be subject to an exhaustive evaluation, in order to determine in a timely manner the possibility of establishing new terms and conditions that increase their probability of recovery.

. . .

VI.

. . .

a) to d)

. . .

ii) and iii)

. . .

and 3.

. . .

f) and g)

. . .

Sub-Section B

Generalities of the credit manual

Articles 193 to 196.-

. . .

Article 196 Bis.- Popular Financial Societies granting Microcredits may use the preventive risk estimation table for credit risks contained in Annex D, Section II of these provisions, provided they prove to the Federation that supervises them in an auxiliary manner that they have the necessary technology and infrastructure to carry out such operations and comply with what is provided in this article.

. . .

Articles 196 Bis 1.-

. . .

Sub-Section C

Other provisions

Articles 197 and 198.-

. . .

Section F

Provisioning of credit portfolio and assigned assets

Article 199.- Popular Financial Societies must qualify and constitute preventive risk estimations for credit risks corresponding to their credit portfolio in accordance with the methodology established in the First Section of this Chapter.

Article 199 Bis.- Repealed.

Article 200.- The results of the credit portfolio qualification, obtained in accordance with the First Section of this Chapter, must be presented to the corresponding Federation, in the form and times indicated by them.

Articles 201 to 202.-

. . .

Section G

Guidelines on liquidity coefficient

Article 203.-

. . .

Popular Financial Societies must maintain a position of at least equivalent to 10 percent of their short-term liabilities, invested in bank deposits of demand money, as well as in bank securities, government securities, other investments in debt financial instruments, and in cash and cash equivalents, whose maturity term is equal to or less than 30 days.

. . .

Section H

Risk diversification in operations

Articles 204 to 204 Bis.-

. . .

Section I

Information disclosure requirements

Article 205.-

. . .

" Article 208.-

. . .

I. to V.

. . .

VI.

. . .

a) and b)

. . .

Be holders of credits that are in stage 3 portfolio and it is not possible to locate the accredited person;

d) to h)

. . .

Articles 209 to 209 Bis 7.-

. . .

" Chapter V

Of accounting, of the valuation of securities and other financial instruments, as well as

of the financial information and its

disclosure of Popular Financial Societies

First Section

Of accounting criteria

Article 210.- Popular Financial Societies will adhere to the accounting criteria referred to in the provisions of this chapter.

Unless otherwise specified, the terms defined in article 1 of these provisions are not applicable to this chapter nor to Annex E of these provisions. Likewise, the terms defined in Annex E are not applicable to the rest of these provisions.

For the purposes of this chapter, Capitalization Level will be understood as the ratio that the net capital of Popular Financial Societies bears with respect to their capitalization requirements for credit and market risks, expressed as a percentage.

. . .

Article 211.- The accounting criteria for Popular Financial Societies contained in Annex E are divided into the series and criteria indicated below:

Series A.

. . .

Series B.

. . .

B-1

Cash and cash equivalents.

B-2

(Repealed)

B-3

. . .

B-4

. . .

B-5

. . .

B-6

. . .

B-7

. . .

B-8

. . .

Series C.

. . .

C-1

(Repealed)

C-2

(Repealed)

C-3

Securitization operations.

Series D.

. . .

D-1

Statement of financial position.

D-2

Statement of comprehensive income.

D-3

Statement of changes in equity.

D-4

. . .

In case there are systemic conditions that could affect the solvency or stability of more than one Popular Financial Society, the Commission may issue special accounting criteria.

. . .

Popular Financial Societies must disclose in the explanatory notes to the financial statements and in public communications of financial information the following:

That they have authorization from the Commission to apply the special accounting record referred to, by being in a financial sanitation or corporate restructuring process, or with a special accounting criterion in terms of what is provided in the second and third paragraphs of this article, specifying the period for which they have authorization to apply the criterion or record.

II.

A broad explanation of the special accounting criteria or records applied, as well as those that should have been made in accordance with the accounting criteria.

III.

The amounts that would have been recorded and presented, both in the statement of financial position and in the statement of comprehensive income, had they not had authorization to apply the special criterion or accounting record.

IV.

A detailed explanation on the concepts and amounts for which the accounting impact was made.

In their case, the impact that the application of said records and special accounting criteria generates in their solvency and liquidity indicators.

Regarding annual financial statements, the aforementioned disclosure must be made through a specific note.

The Commission may revoke the special criteria or records referred to in this article, when the Popular Financial Society does not comply with the following three aspects:

The aforementioned disclosure requirements.

II.

The disclosure and additional information required by the Commission.

III.

The specifications in the application of the authorized record or accounting criterion.

Second Section

Of the valuation of Securities and other financial instruments

Article 211 Bis.- The provisions provided in this chapter have the purpose of establishing the requirements that Popular Financial Societies must follow in matters of valuation of Securities and other financial instruments that form part of their statement of financial position.

Article 211 Bis 1.- For the purposes of this section, it will be understood as:

I. and II.

. . .

III.

Updated Price for Valuation, the market or theoretical price for each of the Securities and other financial instruments, obtained from the Account Statements that financial entities deliver to Popular Financial Societies, or the market or theoretical price obtained based on algorithms, technical and statistical criteria contained in a methodology developed by a Price Provider.

IV.

Price Provider, the legal entity authorized by the Commission to operate with such character in terms of the Securities Market Law.

Direct Vector Valuation, the procedure of multiplying the number of titles or contracts in position by the Updated Price for Valuation reported in the Account Statement, determined by the financial entities in which the Popular Financial Society maintains investment accounts or, in its case, the one performed by the Popular Financial Society using the Updated Price for Valuation provided by a Price Provider.

VI.

Securities, those considered as such by the Securities Market Law.

Article 211 Bis 2.- Popular Financial Societies that invest only in the Securities or financial instruments detailed in the following fractions may use for their valuation the Updated Price for Valuation provided by a Price Provider, or the one obtained from Account Statements:

Government securities.

II.

Bank securities.

III.

Securities of investment funds in debt instruments.

When the investments made by Popular Financial Societies are different from those referred to in the previous fractions, they must use for the valuation of Securities and other financial instruments the Updated Price for Valuation provided by a Price Provider.

The option that Popular Financial Societies select from those described in the first paragraph of this article must be applied for complete fiscal years.

In case Popular Financial Societies are using the Updated Price for Valuation provided by a Price Provider and decide to resume the use of Account Statements, they must notify the Commission of this situation, at least ten calendar days in advance.

Article 211 Bis 3.- Popular Financial Societies must apply Direct Vector Valuation on Securities and other financial instruments that, in accordance with their investment regime and applicable provisions, may form part of their statement of financial position.

Regarding credit portfolio, Popular Financial Societies must adhere to the applicable provisions in matters of credit portfolio qualification, as well as to the valuation rules established in the accounting criteria referred to in the First Section of this Chapter.

Article 211 Bis 4.- Popular Financial Societies will recognize Updated Prices for Valuation daily in their accounting, for the determination of the fair value of Securities and other financial instruments that make up their statement of financial position, considering the information made known by financial entities or by their Price Provider, in terms of these provisions.

Article 211 Bis 5.- The Board of Directors of Popular Financial Societies must approve the hiring of a single Price Provider for the purposes of this Section.

Article 211 Bis 6.- Popular Financial Societies must notify in writing to the Commission, through a free format and within ten business days following the celebration of the respective contract, the name of the Price Provider they hire, attaching a copy of the service contract.

In case of substitution of the Price Provider, this must be notified to the Commission thirty calendar days in advance, using a free format and attaching a copy of the service contract.

Article 211 Bis 7.- Popular Financial Societies must request from their Price Provider the necessary information to comply with the information disclosure requirements on the determination of the Updated Price for Valuation, contained in the accounting criteria.

Article 211 Bis 8.- The internal audit area of Popular Financial Societies must carry out periodic and systematic reviews, in accordance with their annual work program, that allow verifying due compliance with what is established in this chapter.

Third Section

Of the disclosure of financial information, financial statements

and texts that will be noted at the foot

Article 212.- Popular Financial Societies will adhere to the bases established in this Section for the formulation, publication, and texts that will be noted at the foot of the basic financial statements, considering the following:

. . .

Popular Financial Societies must formulate their basic financial statements in accordance with the accounting criteria.

. . .

When these provisions refer to the concept of consolidated basic financial statements of Popular Financial Societies and these lack entities subject to consolidation in accordance with the accounting criteria, it shall be understood that reference is made to individual financial statements.

II.

. . .

Popular Financial Societies will express their basic financial statements in thousands of pesos, which will be indicated in their header.

III.

. . .

Statement of financial position:

" This statement of financial position was formulated in accordance with the accounting criteria for

Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations,

issued by the National Banking and Securities Commission, based on what is provided in articles

117, 118, and 119 Bis 4 of the Popular Savings and Credit Law, of general and mandatory observance, applied

consistently, reflecting the operations carried out by the Popular Financial Society

up to the aforementioned date, which were carried out and valued in compliance with sound financial practices and

applicable legal and administrative provisions.

This statement of financial position was approved by the Board of Directors under the responsibility

of the executives who sign it. "

Statement of comprehensive income:

" This statement of comprehensive income was formulated in accordance with the accounting criteria for

Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations,

issued by the National Banking and Securities Commission, based on what is provided in articles

117, 118, and 119 Bis 4 of the Popular Savings and Credit Law, of general and mandatory observance, applied

consistently, reflecting all income and expenses derived from the operations

carried out by the Popular Financial Society during the aforementioned period, which were carried out and

valued in compliance with sound financial practices and applicable legal and administrative provisions.

This statement of comprehensive income was approved by the Board of Directors under the responsibility

of the executives who sign it. "

Statement of changes in equity:

" This statement of changes in equity was formulated in accordance with the accounting criteria

for Popular Financial Societies, Community Financial Societies, and Rural Financial Integration

Organizations, issued by the National Banking and Securities Commission, based on what is provided in

articles 117, 118, and 119 Bis 4 of the Popular Savings and Credit Law, of general and mandatory observance,

applied consistently, reflecting all movements in equity accounts derived from the operations carried out by the Popular Financial Society during the aforementioned period, which were carried out and valued in compliance with sound financial practices and applicable legal and administrative provisions.

This statement of changes in equity was approved by the Board of Directors under the responsibility

of the executives who sign it. "

. . .

Popular Financial Societies must include in the explanatory notes to the consolidated basic financial statements, the facts and data that must be disclosed in accordance with the Accounting Criteria, expressing such circumstance at the foot of said financial statements with the following statement: " The explanatory notes attached form an integral part of this financial statement. "

Likewise, Popular Financial Societies will note at the foot of the consolidated basic financial statements referred to in this article, the name of the Internet page corresponding to the said Popular Financial Societies, indicating the link through which they can access directly the financial information referred to in fraction IV of this article, as well as the site of the Commission http://www.gob.mx/cnbv where that financial information, in compliance with the general provisions, can be consulted, which is periodically provided to said Commission and to the Supervisory Committee.

Paragraph six.- (Repealed).

IV.

. . .

The basic consolidated financial statements with figures as of March, June, and September must be submitted for approval to the Board of Directors within the month immediately following the date they correspond to, accompanied by the necessary complementary supporting documentation, so that said Board has sufficient elements to know and evaluate the most important operations determining the fundamental changes that occurred during the corresponding period.

Regarding the annual basic consolidated financial statements, they must be submitted to said Board for their approval, within 90 natural days following the closing of the respective fiscal year.

. . .

VI.

. . .

Popular Financial Societies must disseminate through the Internet page corresponding to the Society itself, the basic consolidated financial statements including their notes with figures as of March, June, and September of the respective fiscal year, within the month immediately following their respective closing dates, as well as the annual basic consolidated financial statements audited with figures as of December of each year, including their notes, as well as the external audit report carried out by the Independent External Auditor within 90 natural days following the closing of the respective fiscal year.

In addition to what is stated in the previous paragraph, Popular Financial Societies must make known to their clients through the Internet page corresponding to the Popular Financial Society itself, the clarifying notes referred to in fraction III of this article, the Capitalization Level on assets subject to risk as determined in accordance with Title Fourth, Chapter III of these provisions, as well as the result of the qualification of their credit portfolio in the format contained in Annex G of these provisions.

. . .

VII.

. . .

VIII.

. . .

The Commission or the Supervision Committee may order corrections to the basic financial statements published in accordance with the aforementioned fraction VI, as well as regarding those received by the Commission for the purpose of publishing them on its Internet page, in the event that there are facts considered relevant in accordance with the accounting criteria for Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations.

The financial statements regarding which the Commission or the Supervision Committee order corrections and which have already been published or disseminated, must be republished or disseminated through the same medium, with the pertinent modifications within 15 natural days following the notification of the corresponding resolution, indicating the corrections made, their impact on the figures of the financial statements, and the reasons that motivated them.

IX.

. . .

" The undersigned declares under oath that, within the scope of my functions, I prepared the information regarding the Popular Financial Society contained in this annual report which, to the best of my knowledge and belief, reasonably reflects its financial situation, its operating results, its changes in equity, and its cash flows ".

The information that must be included in said report is complementary to that which appears expressly in the basic consolidated financial statements, so it must not only mention the growth or decrease of the different items that make up the basic consolidated financial statements, but the reason for these movements, as well as those events known by the administration that could cause the disseminated information not to reflect the financial situation, the operating results, the changes in equity, and cash flows of the Popular Financial Society.

Likewise, the report must identify any known trend, commitment, or event that could significantly affect the liquidity of the Popular Financial Society, its operating results, or its financial situation, such as changes in market share, incorporation of new competitors, regulatory modifications, launch and change in products, among others. The annual report will also identify recent behavior in the following concepts:

a) to d)

. . .

Policy on payment of surpluses or their reinvestment that the Popular Financial Society intends to follow in the future.

f) to h)

. . .

Relevant changes occurred in the main items of the statement of financial position of the last fiscal year and their explanation, as well as a general exposition of the evolution of said changes during the last three fiscal years.

Article 212 Bis.- When the Popular Financial Society decides to make public, through its Internet page, any type of information that, in accordance with applicable provisions, it is not obliged to disclose, it must be accompanied by the analytical detail and methodological bases, which allow to understand said information clearly, thus facilitating an adequate interpretation of it.

Popular Financial Societies, when disseminating through their Internet page the information referred to in fraction VI of the previous article 212, as well as the first paragraph of this article, must maintain it in said medium, for at least five quarters following the date of the financial statement, in the case of information published quarterly, and for three years following said date in the case of annual information.

Popular Financial Societies that are part of a financial group will not be obliged to disseminate the information indicated in article 212, fraction IX of these provisions, provided that the controlling society of the financial group to which the Popular Financial Society belongs elaborates and disseminates the one corresponding to said society, in compliance with the provisions issued in that matter by the Commission.

Article 212 Bis 1.- Popular Financial Societies may disseminate on their Internet page the unaudited consolidated statement of financial position and the consolidated statement of comprehensive income, provided that they have been approved by the Board of Directors and it is specified in notes such circumstance. Such disclosure may be made as long as the audited financial statements referred to in article 212, fraction VI of these provisions are not available. "

" Article 300.- The resources that make up the Protection Fund, must be invested in Government Securities or in titles representing the social capital of investment societies in Debt Instruments, whose specific characteristics preserve, at least, their purchasing power in accordance with the National Consumer Price Index published by the Bank of Mexico, in accordance with the following:

At least 30% and up to 100% must be invested, directly in government securities, or indirectly in said securities through investment societies that invest exclusively in instruments issued by the Federal Government.

II.

Up to 70% may be invested, in titles representing the social capital of investment societies in Debt Instruments, different from those indicated in fraction I of this article, which have Risk Grade 2 in the local scale in accordance with Annex K of these provisions, and whose average duration of their investment portfolio or securities portfolio is not greater than 3 years.

III.

Up to 30% may be invested, in titles representing the social capital of investment societies in Debt Instruments, different from those indicated in fraction I of this article,

which have the highest qualification within Risk Grade 3 in the local scale in accordance with Annex K of these provisions, and whose average duration of their investment portfolio or securities portfolio is not greater than 3 years.

. . . "

" Article 327.-

. . .

Series R01

. . .

Series R03

Investments in financial instruments

I-0391

Disaggregation of investments in financial instruments and repurchase agreements

Series R04

. . .

A-0411

. . .

A-0417

. . .

A-0419

. . .

C-0451

New commercial, consumer, and housing credits

C-0452

Follow-up of commercial, consumer, and housing credits

C-0453

Deletion of commercial, consumer, and housing credits

C-0454

Reserves for consumer, housing, and microcredit credits

C-0455

Reserves for commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

C-0456

Severity of Loss of commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

C-0457

Probability of Default of commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

Series R08

. . .

Series R10

. . .

A-1011

Reclassifications in the statement of financial position

A-1012

Reclassifications in the statement of comprehensive income

Series R12

. . .

A-1219

Consolidation of the statement of financial position of the popular financial society with its subsidiaries

A-1220

Consolidation of the statement of comprehensive income of the popular financial society with its subsidiaries

Series R13

. . .

A-1311

Statement of changes in equity

A-1316

Statement of cash flows

B-1321

Statement of financial position

B-1322

Statement of comprehensive income

Series R14

Qualitative information (Repealed)

B-1413

(Repealed)

Series R15

. . .

B-1522

Non-client users of services provided through electronic media of the popular financial society

B-1523

Client operations carried out through electronic media

B-1524

Clients of services provided through electronic media

Series R17

. . .

Series R20

. . .

Series R21

. . .

Series R24

. . .

B-2421

(Repealed)

B-2422

. . .

D-2441

General information on the use and frequency of financial services

D-2442

(Repealed)

D-2443

. . .

Series R26

. . .

A-2610

New and deleted administrators of commissionaires

A-2611

. . .

A-2612

. . .

A-2613

. . .

. . . "

TRANSITORY PROVISIONS

FIRST.- This Resolution will enter into force on January 1, 2025, with the exception of the modifications to the criterion " B-5 Assigned assets " contained in Annex E, which will enter into force on the first day of the calendar month immediately following the date of publication of this Resolution in the Official Gazette of the Federation.

SECOND.- Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations, regarding the effects caused by accounting changes resulting from the application of this Resolution, must adhere to what is established in the Financial Information Standard B-1 " Accounting changes and error corrections ", applicable to said Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations, by virtue of what is established in criterion A-2 " Application of particular standards " contained in Annex E.

Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations must disclose in notes to the financial statements, the main changes in accounting regulations that affect or could significantly affect said financial statements, as well as the adoption mechanics and adjustments carried out in the determination of the initial effects of the application of the Accounting Criteria contained in this Resolution.

THIRD.- The basic consolidated quarterly and annual financial statements that, in accordance with this Resolution, are required from Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations, corresponding to the period ended December 31, 2025, may not present comparative figures with each quarter of the 2024 fiscal year nor for the period ended December 31, 2024.

FOURTH.- The tests carried out by Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations in accordance with paragraphs 48 and 49 of Criterion B-4 " Credit portfolio " contained in Annex E of the " General Provisions applicable to popular savings and credit entities, integration organizations, community financial societies, and rural financial integration organizations, referred to in the Popular Savings and Credit Law ", to determine if the credit portfolio portfolios in force as of December 31, 2024 meet the assumption that the cash flows of the contracts correspond only to principal and interest payments, must be authorized by the credit committee of the Popular Financial Society and, in the case of Community Financial Societies and Rural Financial Integration Organizations, by said committee if it has one, or by the area or person performing the functions corresponding to said body. Subsequently, said tests and their results must be delivered in writing to the National Banking and Securities Commission no later than February 28, 2025.

FIFTH.- Any reference to the " balance sheet " or to the " income statement " contained in the " General Provisions applicable to popular savings and credit entities, integration organizations, community financial societies, and rural financial integration organizations, referred to in the Popular Savings and Credit Law ", must be understood to refer to the " statement of financial position " and the " statement of comprehensive income ", respectively. Likewise, references to past-due portfolio will be understood as portfolio with credit risk stage 3. This is in consistency with the Accounting Criteria applicable to Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations " contained in Annex E of the aforementioned Provisions.

SIXTH.- Popular Financial Societies, Community Financial Societies, and Rural Financial Integration Organizations, in order to constitute the total amount of provisions for credit risks that result from the use of the methodologies that are replaced with this instrument, must observe the determinations of this transitory article.

The initial financial effect will be understood as the difference resulting from subtracting the reserves that must be constituted in accordance with this instrument, applying the methodology in force as of January 1, 2025, using the total balance of the commercial credit portfolio as of December 31, 2024; minus, the reserves that were constituted with the methodology in force until December 31, 2024, using the balance of the commercial credit portfolio as of December 31, 2024. This calculation must be performed upon the entry into force of this Resolution.

The societies may opt for one of the following alternatives for the constitution of provisions for credit risks:

Recognize in equity, within the result of fiscal years prior to January 31, 2025, the initial financial effect derived from applying for the first time the credit portfolio qualification methodology that corresponds, provided that it is disclosed in the corresponding quarterly and annual financial statements of the 2025 fiscal year, as well as in any public communication of financial information, at minimum the following:

That it opted to recognize the total initial financial effect upon the entry into force of this Resolution.

A broad explanation of the accounting entry made for the recognition of said effect.

A detailed explanation regarding the items and amounts for which the accounting adjustment was made.

II.

Recognize in equity, within the result of prior fiscal years, the initial financial effect; that is, the amount of reserves for the commercial credit portfolio corresponding to the month of calculation, deferred over a period of 24 months counted from January 31, 2025, in accordance with the following formula:

Where:

= Amount of reserves to recognize in equity for the commercial credit portfolio corresponding in the month

. = Initial Financial Effect.

For this purpose, the entities must recognize in the statement of financial position 100% of the initial effect for the provision for credit risks and a deferred charge for the same amount that will be reduced monthly against the result of prior fiscal years, until completing the recognition of the initial effect on December 31, 2026.

Regarding this, the societies must disclose in the corresponding quarterly and annual financial statements of the 2025 and 2026 fiscal years, the effect derived from what is provided in this fraction, as well as in any public communication of financial information, at minimum the following:

That it opted for the deferred recognition of the initial financial effect, derived from the application of these provisions, over a period of 24 months.

A detailed explanation regarding the items and amounts for which the accounting adjustment was made and its effect on the capitalization index and its components.

The societies must have constituted 100% of the amount of reserves derived from the use of the methodologies applicable to the commercial credit portfolio, in accordance with this Resolution, by December 31, 2026.

Respectfully,

Mexico City, March 20, 2024.- President of the National Banking and Securities Commission, Dr. Jesús de la Fuente Rodríguez.- Rubric.

ANNEX A

FINANCIAL STATEMENTS PROJECTIONS

POPULAR SAVINGS AND CREDIT ENTITIES

PROJECTION BASES

Assumptions (See Table 1)

Year 1

Year 2

Year 3

1.1 National GDP (annual growth)

0.00%

1.2 Reference interest rates (nominal at year-end)

Year 1

Year 2

Year 3

e.g. 28-day Cetes.

0.00%

1.3 Interest rates offered to the public (nominal at year-end)

In case of using different reference rates, state their weighted average rate.

Year 1

Year 2

Year 3

Credits

Deposits

Issued credit titles

Financial information (figures in thousands of $)

The financial information must be prepared in accordance with the accounting criteria for popular savings and credit entities established for this purpose and must correspond to the level of operations requested and to the amount in UDIS of total assets, net of their corresponding depreciations and reserves, that the respective Society has on the date of the request.

Figures as of:

Year 1

Year 2

Year 3

STATEMENT OF FINANCIAL POSITION

ASSETS

Cash and cash equivalents

Investments in financial instruments

Receivables from repurchase agreements

Credit portfolio with credit risk stage 1

Credit portfolio with credit risk stage 2

Credit portfolio with credit risk stage 3

Credit portfolio valued at fair value

Deferred items

Provision for credit risks

Acquired receivables (net)

Benefits to be received in securitization operations

Other receivables (net)

Assigned assets (net)

Long-term assets held for sale or for distribution to shareholders

Prepayments and other assets

Properties, furniture, and equipment (net)

Right-of-use assets for properties, furniture, and equipment (net)

Permanent investments

Deferred income tax assets (net)

Intangible assets (net)

Right-of-use assets for intangible assets (net)

Goodwill

TOTAL ASSETS

LIABILITIES

Traditional Funding

Demand deposits

Time deposits

Issued credit titles

Global account for funding without movements

Bank loans and loans from other organizations

Collaterals sold or given as guarantee

Obligations in securitization operations

Lease liabilities

Other payables

Liabilities related to groups of assets held for sale

Financial instruments qualifying as liabilities

Obligations associated with the removal of components of properties,

furniture, and equipment

Income tax liabilities

Employee benefits liabilities

Deferred credits and advance payments

TOTAL LIABILITIES

EQUITY

CONTRIBUTED CAPITAL

Share capital

Contributions from community financial societies (1)

Founding equity (1)

Contributions for future capital increases formalized by its competent governing body

Share premium

Financial instruments qualifying as equity

Effect by incorporation into the regime of Popular Financial Societies

RETAINED EARNINGS

Social Reserve Fund

Community Reserve Fund

Reserve Fund

Other Reserves

Accumulated results

Other comprehensive income

Valuation of available-for-sale financial instruments

Valuation of financial instruments to collect and sell

Income and expenses related to assets held for disposal

Remeasurement of defined benefit employee benefits

Cumulative effect by conversion

Result from holding non-monetary assets

Participation in OCI of other entities

TOTAL CONTROLLING INTEREST

TOTAL NON-CONTROLLING INTEREST

TOTAL ACCOUNTING CAPITAL

TOTAL LIABILITIES AND ACCOUNTING CAPITAL

(1) Items applicable only to rural financial integration organizations

COMPREHENSIVE INCOME STATEMENT

Figures

from:

to:

Interest income

Interest expense

Net monetary position result (financial margin)

FINANCIAL MARGIN

Preventive estimate for credit risks

FINANCIAL MARGIN ADJUSTED FOR CREDIT RISKS

Charges and fees collected

Charges and fees paid

Intermediation result

Other operating income (expenses)

Administration and promotion expenses

OPERATING RESULT

Participation in the net result of other entities

RESULT BEFORE TAXES ON PROFIT

Taxes on profit

RESULT OF CONTINUOUS OPERATIONS

Discontinued operations

NET RESULT

Other Comprehensive Results

Valuation of negotiable financial instruments

Valuation of financial instruments to collect and sell

Income and expenses related to assets held for disposal

Remeasurement of defined benefits to employees

Accumulated effect from conversion

Result from holding non-monetary assets

Participation in OCI of other entities

COMPREHENSIVE RESULT

Net result attributable to:

Controlling interest

Non-controlling interest

Comprehensive result attributable to:

Controlling interest

Non-controlling interest

Basic earnings per ordinary share

See table 2

Number of depositors

Number of borrowers

Number of branches

Performance Indices

Year 1

Year 2

Year 3

Liquidity Coefficient (expressed in %)

((Demand deposits + bank securities with a term less than 30 days + government securities with a term less than 30 days)/short-term liabilities) *

Leverage (expressed in %)

(Total Assets/Total Liabilities)

Delinquency (expressed in %)

(Credit portfolio with credit risk stage 3/ (Credit portfolio with credit risk stage 1 + Credit portfolio with credit risk stage 2 + Credit portfolio with credit risk stage 3))

Capitalization Index (expressed in %)

(Net Capital/Risk-weighted Assets) *

Coverage (expressed in %)

(Preventive estimate for credit risks/Credit portfolio with credit risk stage 3)

ROE (expressed in %)

(Net Result/Accounting Capital)

ROA (expressed in %)

(Net Result/Total Assets)

Determined in accordance with prudential regulation issued by the CNBV.

Segmentation (See table 3)

Credit portfolio (credit portfolio with credit risk stage 1 + credit portfolio with credit risk stage 2 + credit portfolio with credit risk stage 3 + credit portfolio valued at fair value)

(Figures in thousands of $)

Commercial credits

Consumer credits

Housing credits

TOTAL

Direct Collection

(Figures in thousands of $, including their respective interests)

Demand deposits

Time deposits

Issued credit titles

TOTAL

TABLE 1

Year 1 refers to the first full year of operation once authorized by the CNBV. Years 2 and 3 shall be considered based on the calendar year, that is, from January to December.

Reference rates are those used to agree on the terms of their collection and credit operations.

Rates offered to the public are the average rate offered to users for their deposits and their credits.

TABLE 2

The entity will estimate its number of depositors and the number of people to whom credit will be granted and the branches based on its General Operation Plan.

TABLE 3

The entity must segment both direct collection and credit placement by type.

ANNEX B

FINANCIAL STATEMENTS

POPULAR SAVINGS AND CREDIT ENTITIES

Financial information (figures in thousands of $)

Financial information must be prepared, in accordance with accounting criteria for popular savings and credit entities established for this purpose and must correspond to the level of operations requested and with the amount in UDIS of total assets, net of their corresponding depreciation and reserves, that the respective Society has on the date of the request.

Figures as of:

Historical

Update

Total

STATEMENT OF FINANCIAL POSITION

ASSETS

Cash and cash equivalents

Investments in financial instruments

Repos debtors

Credit portfolio with credit risk stage 1

Credit portfolio with credit risk stage 2

Credit portfolio with credit risk stage 3

Credit portfolio valued at fair value

Deferred items

Preventive estimate for credit risks

Acquired receivables (net)

Benefits to be received in securitization operations

Other accounts receivable (net)

Adjudicated assets (net)

Long-term assets held for sale or for distribution to shareholders

Advance payments and other assets

Properties, furniture and equipment (net)

Assets by right of use of properties, furniture and equipment (net)

Permanent investments

Deferred tax asset on profit (net)

Intangible assets (net)

Assets by right of use of intangible assets (net)

Commercial credit

TOTAL ASSETS

LIABILITIES

Traditional collection

Demand deposits

Time deposits

Issued credit titles

Global collection account without movements

Bank loans and loans from other organizations

Collateral sold or given as guarantee

Obligations in securitization operations

Lease liability

Other accounts payable

Liabilities related to groups of assets held for sale

Financial instruments that qualify as liability

Obligations associated with the removal of components of properties, furniture and

equipment

Tax liability on profit

Employee benefit liability

Deferred credits and advance collections

TOTAL LIABILITIES

ACCOUNTING CAPITAL

CONTRIBUTED CAPITAL

Social capital

Contributions from community financial societies (1)

Foundational equity (1)

Contributions for future capital increases formalized by its governing body

authorized

Share premium

Financial instruments that qualify as capital

Effect by incorporation into the regime of popular financial societies

EARNED CAPITAL

Capital reserves

Accumulated results

Other comprehensive results

Participation in OCI of other entities

TOTAL CONTROLLING INTEREST

TOTAL NON-CONTROLLING INTEREST

TOTAL ACCOUNTING CAPITAL

LIABILITIES AND ACCOUNTING CAPITAL

(1) Items applicable only to rural financial integration organizations

COMPREHENSIVE INCOME STATEMENT

Figures

from

Interest income

Interest expense

Net monetary position result (financial margin)

FINANCIAL MARGIN

Preventive estimate for credit risks

FINANCIAL MARGIN ADJUSTED FOR CREDIT RISKS

Charges and fees collected

Charges and fees paid

Intermediation result

Other operating income (expenses)

Administration and promotion expenses

OPERATING RESULT

Participation in the net result of other entities

RESULT BEFORE TAXES ON PROFIT

Taxes on profit

RESULT OF CONTINUOUS OPERATIONS

Discontinued operations

NET RESULT

Other Comprehensive Results

Valuation of negotiable financial instruments

Valuation of financial instruments to collect and sell

Income and expenses related to assets held for disposal

Remeasurement of defined benefits to employees

Accumulated effect from conversion

Result from holding non-monetary assets

Participation in OCI of other entities

COMPREHENSIVE RESULT

Net result attributable to:

Controlling interest

Non-controlling interest

Comprehensive result attributable to:

Controlling interest

Non-controlling interest

Basic earnings per ordinary share

Number of depositors

Number of borrowers

Number of branches

Performance Indices

Liquidity Coefficient (expressed in %)

((Demand deposits + bank securities with a term less than 30 days + government

securities with a term less than 30 days)/short-term liabilities) *

Leverage (expressed in %)

(Total Assets/Total Liabilities)

Delinquency (expressed in %)

(Credit portfolio with credit risk stage 3/(Credit portfolio with credit risk

stage 1 + Credit portfolio with credit risk stage 2 + Credit portfolio with credit risk

stage 3))

Capitalization Index (expressed in %)

(Net Capital/Risk-weighted Assets) *

Coverage (expressed in %)

(Preventive estimate for credit risks/Credit portfolio with credit risk stage

ROE (expressed in %)

(Net Result/Accounting Capital)

ROA (expressed in %)

(Net Result/Total Assets)

Determined in accordance with prudential regulation issued by the CNBV.

Segmentation

Credit portfolio (credit portfolio with credit risk stage 1 + credit portfolio

with credit risk stage 2 + credit portfolio with credit risk stage

3 + credit portfolio valued at fair value)

(Figures in thousands of $)

Commercial credits

Consumer credits

Housing credits

TOTAL

Traditional Collection

(Figures in thousands of $, including their respective interests)

Demand deposits

Time deposits

Issued credit titles

TOTAL

The information refers to the date of preparation of the financial statements that must be presented together with the authorization request, which

cannot be older than three months with respect to the date of presentation of said request.

The entity will indicate its number of depositors and the number of people to whom credit is granted and the branches it has.

ANNEX D

PROCEDURE FOR THE QUALIFICATION AND CONSTITUTION OF PREVENTIVE ESTIMATES FOR PORTFOLIOS

OF CONSUMER CREDITS, MICROCREDITS AND HOUSING

Consumer credit portfolio

Popular Financial Societies must qualify and establish the corresponding preventive estimates for their

consumer credit portfolio, with figures as of the last day of each calendar month, adhering to the following procedure:

They must classify from initial recognition the entirety of their consumer credit portfolio into stages (stage

1, stage 2 and stage 3) of credit risk, depending on the significant increase in credit risk that these

evidence based on the number of days of delay or default elapsed since the day of the first amortization

of the credit that has not been covered by the borrower on the date of qualification.

For each credit risk stage, they must maintain and establish the preventive estimates resulting from

applying to the total amount of their consumer credit portfolio (including the interest they generate) the percentages

of preventive estimates, according to the following table:

Credit risk stage

Days of default

Percentage (%) of

preventive estimates

Percentage (%) of

preventive estimates

(Marginal Zone) *

Stage 1

1 to 7

8 to 30

Stage 2

31 to 60

61 to 89

Stage 3

90 to 120

121 to 180

181 or more

*Applicable to the consumer credit portfolio, whose credits have been granted to persons who reside

in a Marginal Zone.

The amount subject to qualification must not include accrued but uncollected interest, recorded in off-balance sheet accounts, of credits that are in stage 3.

Likewise, credits that meet the terms established for this effect must be classified in stage 3, in Accounting Criterion B-4 "Credit Portfolio" and this Annex.

II.

Microcredits

Regarding Microcredits, Popular Financial Societies must qualify and establish the preventive

estimates corresponding to their credit portfolio, with figures as of the last day of each calendar month, adhering to the

following procedure:

They must classify from initial recognition the entirety of their microcredit portfolio into stages

(stage 1, stage 2 and stage 3) of credit risk, depending on the significant increase in credit risk that

these evidence based on the number of days of delay or default elapsed since the day of the first

amortization of the credit that has not been covered by the borrower on the date of qualification.

For each credit risk stage, they must maintain and establish the preventive estimates resulting from

applying to the total amount of their microcredit portfolio (including the interest they generate) the

percentages of preventive estimates, according to the following table:

Credit risk stage

Days of default

Percentage (%) of preventive

estimates

Percentage (%) of preventive

estimates

(Marginal Zone) *

Stage 1

0 to 7

8 to 30

2.5

Stage 2

31 to 60

61 to 89

Stage 3

90 to 120

More than 120

*Applicable to the microcredit portfolio, whose credits have been

granted to persons who reside in a

Marginal Zone.

The amount subject to qualification must not include accrued but uncollected interest, recorded in off-balance sheet accounts, of credits that are in stage 3.

Likewise, credits that meet the terms established in Accounting

Criterion B-4 "Credit Portfolio" and this Annex must be classified in stage 3.

III.

Housing credit portfolio

Popular Financial Societies must qualify and establish the preventive estimates corresponding to their

housing credit portfolio, with figures as of the last day of each calendar month, adhering to the following procedure:

They must classify from initial recognition the entirety of their housing credit portfolio into stages of

credit risk, depending on the significant increase in credit risk that these evidence based on the

number of days of delay or default elapsed since the day of the first amortization of the credit that has not been

covered by the borrower on the date of qualification.

For each credit risk stage, they must maintain and establish the preventive estimates resulting from

applying to the total amount of their housing credit portfolio (including the interest they generate) the percentages of

preventive estimates, according to the following table:

The amount subject to qualification must not include accrued but uncollected interest, recorded in off-balance sheet accounts, of credits that are in stage 3.

Likewise, credits that meet the terms established in Accounting

Criterion B-4 "Credit Portfolio" and this Annex must be classified in stage 3.

IV.

Adjustments to preventive estimates and recognition of guarantees

Considerations for counting days of delay

For the purposes of determining the risk stages described in sections I, II and III of this Annex, the

societies may consider the following:

Popular Financial Societies that have any element to determine

that a credit should migrate from stage 1 to stage 2, or from stage 1 to stage 3, or from stage

2 to stage 3, may do so without the need to

comply with what is contained in the tables of sections I, II and III of this Annex, having to do so

have defined and formalized the criteria under which such migration can be carried out within their

policy and procedure manuals, provided that these criteria are applied consistently.

Popular Financial Societies must document in a register or log the migration of stages

based on the aforementioned criteria, including at minimum the identification of the responsible personnel for

approval, the criterion under which the migration was made, as well as the date from which the

migration was made. The Commission may order Popular Financial Societies to rectify the reserves

established in accordance with the above, when in its judgment the policies and procedures are not applied in a

consistent manner, or if they do not reflect the difference between the observed credit impairment and that identified by the

Societies.

Credits granted by Popular Financial Societies, which are in stage 3 and which have been

the object of a restructuring or renewal, must consider their stay within the mentioned stage

as long as there is no evidence of sustained payment. This is in terms of what is provided in Accounting Criterion B-4

"Credit Portfolio" of Annex E of these provisions.

In view of the foregoing, the debtor must comply in due form with the making of payments given the

renewal or restructuring of the credit carried out, and the Popular Financial Society will suspend the sum of days of delinquency from the celebration of the agreement.

The accumulated delinquency days prior to the restructuring or renewal will continue to be accounted for as long as there is no

evidence of sustained payment and its accumulation will be reactivated if the debtor does not make the payments agreed upon in the

deadline dates established in the agreement. Delinquency must start to be calculated the day after the deadline date

after the breach and days elapsed between the date of celebration of the agreement and the date of breach must not be considered as delinquency days.

Popular Financial Societies may only recognize reductions in delinquency days derived from the

application of Step and Measure Coverage Schemes, First Loss Coverage Schemes, non-financial guarantees and personal guarantees of credits that have been the object of restructuring or renewal when there is

sustained payment, considering what is stipulated in section IV of this Annex.

Considerations for the recognition of guarantees

When Popular Financial Societies have guarantees that comply with what is provided in Annex D Bis of

these provisions, they may recognize them for the purpose of reducing the preventive estimates of the credit or

credits in question, considering the following:

Take the necessary measures so that the guarantee can be executed and adjudicated at the moment it is

placed in credit risk stage 3 in accordance with what is established in this Annex. In case that

the management for the adjudication and execution of the guarantee does not begin at the moment the credit is

classified as a portfolio with credit risk stage 3, Popular Financial Societies must stop

recognizing the coverage provided by said guarantee and assign the preventive estimates that

correspond to the days of delinquency recorded.

Guarantees constituted in terms of the previous paragraph may cover the entire or a certain percentage

of the outstanding balance of one or more credits, provided that in the deposit contracts or in the modifications to

these it is foreseen that there is no possibility of making withdrawals or disposing of the referenced guarantees during the

validity of the credits and that these can be covered against such deposits or values.

Societies must ensure that the legal mechanism of delivery or assignment of guarantees ensures

that the Popular Financial Societies themselves maintain the right to execute the guarantees or to take their

legal possession, in case of breach, insolvency or commercial bankruptcy of the counterparty or the custodian of the

aforementioned guarantees, if applicable, or if any other event occurs as stipulated in the

documentation of the operation in question.

Upon receiving guarantees whose validity is subject to compliance with terms and conditions by the Society

Financial Society creditor of the guarantee and fails to comply, the guarantee must not be taken into account for purposes

of decreasing the preventive reserves for credit risk.

The uncovered portion will maintain the percentage of preventive estimates that corresponds to it.

Popular Financial Societies may opt not to recognize guarantees if doing so results in greater

preventive estimates.

Popular Financial Societies may never simultaneously take Step and Measure Coverage Schemes or First Loss Coverage Schemes and means of payment with immediate liquidity or

non-financial guarantees from the same guarantor.

Financial Guarantees

Regarding guarantees constituted with the means of payment with immediate liquidity provided for in Annex D Bis,

section I, subsections a), b), c) and d) of these provisions, against which the application of

such resources to the entire outstanding balance or to a certain percentage of the outstanding balance of the credit can be ensured, Popular Financial Societies may exempt the covered part of the credit with such guarantees from the

constitution of preventive estimates.

Regarding guarantees constituted with the means of payment with immediate liquidity provided for in Annex D Bis,

Fraction I, subsections e) and f) of these provisions, from which it can be ensured that the application of said resources to the total outstanding balance or, if applicable, to a determined percentage of the outstanding balance of the credit, the Popular Financial Societies will establish the estimates corresponding to the percentage of 0.5 percent.

Non-financial Guarantees

Popular Financial Societies that have non-financial guarantees covering at least 50 percent of the outstanding balance of the credit at the date of calculation of preventive reserves may recognize these guarantees for the purposes of provisioning their credit portfolio, up to the amount resulting from multiplying the recognition percentage provided in the following table by their last appraised value, updated for depreciation in the case of movable assets:

Type of non-financial guarantee or assimilable instrument	Recognition Percentage (%)
Commercial and residential real estate	75
Movable assets and others	50

To determine the estimates corresponding to the covered part of each credit or portfolios covered with non-financial guarantees and assimilable instruments, a provisioning percentage of 0.5 percent will be assigned.

Personal Guarantees, Step and Measure Coverage Schemes, and First Loss Coverage Schemes and Agricultural Insurance.

In both First Loss Coverage Schemes and Step and Measure Coverage Schemes or personal guarantees, only the following groups of admissible coverage providers will be recognized for the purposes of portfolio qualification:

Group 1:
a. Development banking institutions. b. Public trusts that are part of the Mexican financial system in accordance with Article 3 of the Credit Institutions Law.
c. Trusts celebrated specifically for the purpose of sharing credit risk, in which development banking institutions act as settlors and trustees, which have an express guarantee from the Federal Government.
d. The National Guarantee Fund for the Agricultural, Forestry, Fisheries and Rural Sectors, or the one that replaces it. e. National Infrastructure Fund, or the one that replaces it. f. Central governments of foreign countries and/or their central banks, which have a High Investment Grade. g. Entities of the Federal Public Administration under direct budgetary control, state-owned productive companies or programs derived from a federal law that are part of the Federal Expenditure Budget.

Group 2:
a. National multiple banking institutions that have a rating of at least Investment Grade and controlling societies of the accredited entity. b. Other entities belonging to the Mexican financial system and insurance companies that have at least Investment Grade.
c. Central governments of foreign countries and/or their central banks, which have Investment Grade.
d. Other entities with at least Investment Grade, including in their case controlling societies, subsidiaries or companies belonging to the same group. e. Programs derived from a Federal Law that are established in the Federal Expenditure Budget.

Group 3:
a. Other guarantees from clients of the same Popular Financial Society.

When coverage providers listed in Group 1 are available, the percentage of estimates corresponding to the covered part will be 0.5 percent. Regarding coverage providers listed in Group 2, an estimate percentage of 1 percent will be assigned to the covered part. In the case of guarantees granted by the persons referred to in Group 3, the estimate percentage corresponding to the maximum days of default that said client registers in other operations, applied to the estimate table of the covered operation, will be assigned to the covered part.

In the event that the uncovered part corresponds to a lower estimate percentage than that corresponding to the covered part, as indicated in the previous paragraph, Popular Financial Societies may use the former for the entire operation.

In the event that Popular Financial Societies are beneficiaries under the First Loss Coverage Scheme or the Step and Measure Coverage Scheme, they must consider the following:

a) Ensure that the credits comprising the portfolio covered by the received guarantee are clearly identified and have similar characteristics. b) The covered portion will be assigned the weighting of the guarantee provider as established in Groups 1, 2, and 3 of this fraction, while the rest of the position will retain the preventive estimates corresponding to it in accordance with this Annex. c) Calculate the estimate requirement for the credit or credits of the covered portfolio in accordance with the methodologies described in this Annex, as applicable, and in the case of credit portfolios, sum the results of each of the credits to determine the total estimate requirement for said portfolio. d) The total estimates calculated in accordance with subsection c) above must be compared with the value of the corresponding First Loss Coverage Schemes, in order to adjust as follows:

If the value of the First Loss Coverage Schemes is greater than or equal to the total estimate requirement for the credit or credit portfolio before the recognition of their own guarantees, the Popular Financial Society will only establish the estimates resulting from multiplying the estimate percentage corresponding to the coverage provider, in accordance with this Annex, by the amount of the estimates required for the credit or credit portfolio.
If the value of the First Loss Coverage Schemes is less than the total estimate requirement of the credit or credit portfolio before the recognition of their own guarantees, the Popular Financial Society must establish estimates for the uncovered part up to the amount necessary to reach the total of the required estimates, while for the covered part they must establish the estimates resulting from multiplying the estimate percentage corresponding to the coverage provider, in accordance with this Annex, by the amount of the guarantee.

For Popular Financial Societies to recognize guarantees and assign the corresponding reserve to the covered tranches of the credit or portfolio, there must be evidence of compliance with the terms and conditions established by the guarantors regarding the information they require, as well as compliance with the processes established in the corresponding contracts.

In the case of credits intended to finance the primary activity of the agricultural sector that have agricultural and animal damage insurance, which meets the characteristics referred to in subsection b) of Fraction X, Annex D Bis, of these provisions, Popular Financial Societies may multiply the estimates corresponding to the direct borrower by a factor of 95 (ninety-five) percent, provided that no insurance claim is filed.

For the purposes of the previous paragraph, credits to the agricultural and rural sector will be understood as those directed to the primary production of the agricultural, livestock, forestry and fishing sectors, as well as the industrial, commerce and services sectors, provided that these are integrated into the primary activity of the initially mentioned sectors whose branches and sub-branches of economic activity correspond to those designated as sector 11 of the North American Industry Classification System 2018 (NAICS) of the National Institute of Statistics and Geography (INEGI).

In the event that a claim is made to the insurance-granting entity by the lending Popular Financial Society and said entity accepts it without the covered amount having been executed or paid and, therefore, the credit has not been removed from the financial statements of the Popular Financial Societies, these may calculate the estimates by multiplying the balance of the covered credit by 1 (one) percent, when the aforementioned insurance-granting entity has a rating assigned by a rating institution of at least investment grade on the national scale.

Use of Multiple Guarantees

Popular Financial Societies, when qualifying credits that have 2 or more guarantees, may recognize the coverage of these guarantees considering the following:

a) They will determine the part of the balance that is covered by 2 or more guarantees, whether they are means of payment with immediate liquidity, non-financial guarantees, or Step and Measure Coverage Schemes or First Loss Coverage Schemes, as well as the exposed or uncovered portion in the terms described. b) The covered part of the credit balance can be divided into 2 or more segments, based on the type of guarantees that have been granted, provided that they adjust as follows:

If there are 2 or more Step and Measure Coverage Schemes or First Loss Coverage Schemes, each guarantor must respond for the guaranteed part of the credit balance, provided that there are no exceptions or defenses of priority order for collection among the guarantors themselves.
If there are 2 or more guarantees constituted with means of payment with immediate liquidity or non-financial guarantees, each of them must cover the guaranteed part of the credit balance, provided that it has been expressly agreed in the contracts giving rise to the guarantee the part of the credit that will be guaranteed with each encumbered asset.
Regarding combinations of Step and Measure Coverage Schemes or First Loss Coverage Schemes and means of payment with immediate liquidity or non-financial guarantees, each of them may be considered, provided that they are executable at the time of qualification and meet the requirements established in subsections a) and b) of this section.

ANNEX D Bis

REQUIREMENTS THAT GUARANTEES MUST MEET TO BE RECOGNIZED FOR THE PURPOSES OF

DETERMINING THE CAPITALIZATION REQUIREMENT FOR CREDIT RISK AND PREVENTIVE ESTIMATES FOR CREDIT RISKS

When Popular Financial Societies have guarantees constituted with means of payment with immediate liquidity (financial guarantees), with Step and Measure Coverage Schemes or First Loss Coverage Schemes, with non-financial guarantees or assimilable instruments, personal guarantees or credit insurance that comply with what is provided in this Annex, they may reduce the percentage of preventive estimates of the credit or credits, as well as the capital requirements of the operations in question in accordance with what is established in Title Four, Chapter III in their respective sections and in Annex D, fraction IV of these provisions.

The eligible guarantees, as well as the requirements they must meet for such purposes, are those indicated below:

Guarantees constituted with means of payment with immediate liquidity (financial guarantees).

Only guarantees constituted with means of payment with immediate liquidity will be considered when they are:

a) Cash or cash deposits and means of payment with maturity equal to or greater than the term of the credit granted to the client in favor of the Popular Financial Society in question, taking the necessary measures so that the guarantee can be adjudicated and executed at the moment the borrower is placed in credit portfolio with credit risk stage 3, when the debtor or a third party constitutes a deposit in the society itself and grants it an irrevocable mandate to apply the respective resources to the payment of the credits, or when they are negotiable credit instruments of immediate realization and wide circulation, and which in case of default, are available without any legal restriction for the Popular Financial Society and from which the debtor or any other person distinct from the society itself cannot dispose while the obligation subsists.

b) Securities and other financial instruments issued by the Bank of Mexico.

c) Financial instruments issued or guaranteed by the Federal Government.

d) Financial instruments and documents issued by the Institute for the Protection of Bank Savings, as well as obligations guaranteed by said institute.

e) Debt financial instruments issued by credit institutions or brokerage houses that have a credit rating issued by a recognized Rating Institution, greater than or equal to Risk Grade 3 of Annex K of these provisions.

f) Regarding Popular Financial Societies with operation levels III and IV, debt instruments in accordance with what is provided in Article 25 of these provisions, of short term, that have a credit rating issued by a recognized Rating Institution, greater than or equal to Risk Grade 3 of Annex K of these provisions.

g) Investments in shares representing the social capital of daily liquidity investment funds, in accordance with what is provided in Articles 23 and 25 of these provisions.

II.

Non-financial guarantees and assimilable instruments.

a) Commercial or residential real estate whose guarantee is considered in an amount that does not exceed the current reasonable value at which the property could be sold through a private contract between a seller and a buyer.

b) Movable assets or other guarantees provided for in Article 32 bis 1 of the Commerce Code, registered in the Unique Registry of Movable Guarantees referred to in the Commerce Code or deposited in general warehouses, including those assets granted in lease, regarding which there is no purchase option at the end of the contract term. The guarantee must be considered in an amount that does not exceed the current reasonable value at which the asset could be sold through a private contract between a seller and a buyer.

The guarantees provided for in Article 32 bis 1 of the Commerce Code cannot be previously registered in the Unique Registry of Movable Guarantees or covered by deposit certificates and pledge bonds issued by general warehouses and registered in the RUCAM.

c) Receivable and fiduciary rights, understood as such to be value titles whose settlement must be carried out through the flows derived from the underlying assets, regarding which the Popular Financial Society must have ownership and disposition of the cash flows derived from the receivable rights, in any foreseeable circumstance.

Self-liquidating debts arising from the sale of goods or services linked to commercial operations, as well as amounts of any nature owed by buyers, suppliers, the Federal or State Public Administration, state-owned productive companies, as well as other independent third parties not related to the sale of goods or services linked to a commercial operation, will be included within the concept referred to in the previous paragraph. Admissible receivable and fiduciary rights do not include those related to securitizations or sub-participations.

When the debtor makes payments directly to the assignor of the receivable rights, trust or collection administrator, the Popular Financial Society must periodically verify that these payments are forwarded to it within the terms included in the contract.

d) Participations in federal revenues or federal contributions, or both, corresponding to the federative entities or municipalities, which may be granted through:

Guarantee or administration trust, or both.
Irrevocable instructions or guarantee mandate contracts, or both.

e) Own revenues corresponding to the federative entities or municipalities, which may be granted through:

Guarantee or administration trust, or both.
Irrevocable instructions or guarantee mandate contracts, or both.

f) Deposit certificates and pledge bonds registered in the RUCAM, provided that the Popular Financial Society notifies the issuer general warehouse of said titles, that these were taken by said Popular Financial Society as guarantee and has the certification of the electronic file of the deposit certificate obtained in the RUCAM in which it indicates that the corresponding annotations of the taking of the referred certificates and pledge bonds as guarantee by the Popular Financial Society were made.

For the purposes of what is provided by this annex, other assimilable instruments shall be understood as guarantee or administration trusts or both, celebrated under Article 382 of the General Law of Credit Instruments and Operations, as well as irrevocable instructions or guarantee mandate contracts or both, referred to in Article 2596 of the Federal Civil Code, both instruments contained in subsections d) and e) of this fraction.

III.

Popular Financial Societies, in order to use financial guarantees or non-financial guarantees and assimilable instruments for the purposes of risk coverage and qualification and constitution of credit reserves, must have available to the Commission evidence that accredits the following:

a) The signing of contracts or other instruments documenting the constitution of the guarantees, in which the causes of default that generate the right of the Popular Financial Society to execute said guarantees are stated.

b) In the case of movable guarantees provided for in Article 32 bis 1 of the Commerce Code, the consultation or certification obtained from the Unique Registry of Movable Guarantees, and in the case of deposit certificates and pledge bonds, the consultation or, if applicable, the certification obtained from the Unique Registry of Certificates, Warehouses and Merchandise known by its acronym "RUCAM", referred to in Article 22 Bis 6 of the General Law of Organizations and Auxiliary Credit Activities.

Regarding pledge bonds negotiated for the first time separately from the deposit certificate, Popular Financial Societies must have evidence that they complied with what is provided in Article 236 of the General Law of Credit Instruments and Operations. In the event that Popular Financial Societies take deposit certificates as guarantee, they must notify the general warehouses of such situation and have evidence thereof.

c) The adoption of necessary measures to ensure the conservation of the assets subject to the guarantees, which include their registration in the Public Property Registry corresponding; in the case of movable guarantees provided for in Article 32 bis 1 of the Commerce Code, registration in the Unique Registry of Movable Guarantees, and in the case of participations in federal revenues, federal contributions and other own revenues of states and municipalities, in the register of borrowings and obligations of the corresponding federative entity, and in the Unique Registry referred to in the Financial Discipline Law of the Federative Entities and Municipalities or the one that replaces it, as well as those necessary to exercise the right to compensation based on the transfer of ownership of non-financial guarantees.

Popular Financial Societies that take deposit certificates and pledge bonds must exercise the right consigned in the second paragraph of Article 22 Bis 6 of the General Law of Organizations and Auxiliary Credit Activities and have the certification of the electronic file of the deposit certificate obtained in the RUCAM, in which it indicates that the corresponding annotations of the taking of the referred certificates and pledge bonds were made.

d) The existence of risk management processes that, in addition to what is provided by Title Four, Chapter III of these provisions, explicitly consider the legal, operational, liquidity and market risks derived from the use of non-financial guarantees. These processes must meet the requirements indicated in Fraction VI of this annex.

e) The incorporation in credit policies and manuals derived from them, of guidelines and procedures for the administration of non-financial guarantees, in general, and elements for the reduction of estimate requirements, in specific. Regarding this, Popular Financial Societies must have policies to ensure that:

A frequent valuation of non-financial guarantees is carried out, in accordance with what is indicated in Fraction VI of this Annex, including tests and scenario analysis under unusual or extreme market conditions.
Updated information is available regarding the situation, location and state of the non-financial guarantees received, as well as potential liquidation problems.
There is adequate risk diversification in relation to non-financial guarantees.
Correct administration of guarantees is carried out, so that differences in maturity dates and the consequent exposure periods are contemplated, once the non-financial guarantees expire.
Surveillance and attention to risks derived from external factors, which could affect the ability of non-financial guarantees to face credit risk (for example, liquidity behavior in the non-financial guarantee market) is carried out.
The governing bodies of the Popular Financial Society and the public know the policies related to the management and administration of risks, derived from the use of non-financial guarantees as coverage for credit risk.

f) The establishment of methods and internal controls that ensure:

That the non-financial guarantees granted are not financial instruments issued by the same Common Risk Group to which the borrower belongs.
The observance of the conditions and terms established in the contracts, as well as the identification of any default by the counterparty and, consequently, the ability to request the

execution of non-financial guarantees. For the foregoing purposes, the default event defined in the contracts must consider situations in which the debtor is in a credit portfolio situation with Stage 3 credit risk vis-à-vis the Popular Financial Society, or when it is probable that the debtor will not fulfill all of its credit obligations vis-à-vis the Popular Financial Society, the debtor has filed for commercial bankruptcy proceedings or the latter has requested it.

The taking of necessary measures to ensure the separation of non-financial guarantees from other assets when the guarantee is under the custody of a third party or the grantor themselves.

IV.

The guarantees and assimilable instruments referred to in the preceding subsection II of this annex, to ensure their legal certainty, must at least:

Be duly constituted in favor of the Popular Financial Society in question:

In the case of participations in federal revenues, federal contributions, and other own revenues of the federative entities and municipalities, they must:

Have authorization from the local legislatures, in accordance with what is established in the corresponding local debt laws.

ii.

Be registered in the registry of loans and obligations of the corresponding federative entity.

iii.

Be registered in the Single Registry referred to in the Law on Financial Discipline of the Federative Entities and Municipalities or its successor.

iv.

Have clear mechanisms for channeling resources in favor of the Popular Financial Societies for the payment of the Financing, such as, a valid irrevocable instruction letter to the Treasury of the Federation or through trusts or other structured products.

Have the opinion of an independent specialized legal firm, or that of the legal area of the Popular Financial Society, regarding the validity of the backing of the participations and contributions in federal revenues based on the documents supporting the obligations of the federative entity or municipality with the Popular Financial Society.

vi.

Have the opinion of an independent specialized legal firm, or that of the legal area of the Popular Financial Society, in the case of credits guaranteed with own revenues, regarding the validity of the backing of said revenues.

In the case of real estate, they must:

Be legally enforceable in the jurisdiction and be duly constituted.

ii.

Be registered in the Public Property Registry in question.

iii.

Have agreements or clauses that document the guarantees and that allow the Popular Financial Society in question to execute them.

In the case of receivables and fiduciary rights, the documents or legal instruments in which they are recorded must:

Ensure the enforceability of their yields.

ii.

Be binding on all parties and legally enforceable in the corresponding jurisdiction. Popular Financial Societies must monitor compliance with their terms, for which they will have the necessary mechanisms to allow such verification.

iii.

Establish certain and clearly defined procedures that allow for the rapid collection of cash flows generated by the receivables. In any case, the procedures available to Popular Financial Societies must guarantee compliance with all relevant conditions in the legal sphere for the declaration of client default and the rapid adjudication of the guarantee. Likewise, the documents or legal instruments in which the guarantees are recorded must provide for the possibility of selling or assigning the receivables to third parties without the prior consent of the debtors in cases where there are financial difficulties or default by the grantor.

Be free of encumbrances with third parties or, otherwise, that the Popular Financial Society in question appears first in the order of payment, considering for such effect the coverage of the guarantee.

Be easy to realize.

In the administration of movable and immovable property, Popular Financial Societies must clearly document the characteristics that must be met to be accepted as non-financial guarantees and the policies for their administration, as well as ensure that the assets accepted as collateral are insured in favor of the Popular Financial Society in question in case of damage or defects, and carry out continuous monitoring of the existence and degree of any preferential right over the property.

VI.

In the risk management of the guarantees referred to in subsection II of this annex, Popular Financial Societies must:

In the case of real estate, including residential use, related to credits that have been restructured or when it is probable that the debtor will not fulfill all of its credit obligations vis-à-vis the Popular Financial Society, have an appraisal at least every three years or when market conditions are unstable at the discretion of the Commission, where the real existence and current physical state are evidenced, as well as the monitoring of the existence and degree of any preferential right over the property.

The appraisals referred to in the previous paragraph must be carried out through valuation units or by professional appraisers, authorized by Sociedad Hipotecaria Federal, S.N.C., in accordance with what is established in the Law on Transparency and Promotion of Competition in Secured Credit regarding the authorization as a professional appraiser of real estate objects of secured credits to housing, and must be updated according to the policies of the Popular Financial Societies in question.

When, as a result of the application of value estimates of the assets, some are identified whose value has decreased and new valuations are required, the appraisal must be updated.

Likewise, when available information suggests that its value may have been significantly reduced, with respect to general market prices or when a default occurs, the real estate in question will not be considered as a credit risk mitigant.

In the case of receivables:

Have a clear process to determine the credit risk of the receivables. Said process must, among other aspects, include the analysis of the grantor's business and the economic sector in which it operates, considering the effects of the economic cycle, as well as the type of clients with which it negotiates. In the event that they use information provided by the grantor to evaluate the credit risk of the clients, Popular Financial Societies must examine the grantor's credit history to corroborate its solidity and credibility.

Ensure that the margin or coverage between the amount of the credit and the value of the receivables reflects all timely factors including the cost of adjudication, the degree of concentration of receivables from a single grantor, and the concentration risk with respect to the total positions of the Popular Financial Society in question.

Carry out a continuous and adequate monitoring process for each type of risk, whether direct or contingent, attributable to the guarantee used as coverage. This process must include reports on aging, control of commercial documents, certificates of the debt base, frequent audits of the guarantee, confirmation of accounts, control of income from paid accounts, dilution analysis, and periodic financial analyses of both the grantor and the issuers of the receivables, especially in the case that the guarantee is formed by a small number of high-value receivables. Likewise, they must observe the concentration limits that the Popular Financial Society in question establishes for its guarantees in receivables, as well as the agreements relating to the loan in question.

Ensure that the receivables pledged by a grantor are diversified. In the event that such receivables depend predominantly on the credit quality of the guarantor, the corresponding risks must be taken into consideration when establishing margins for the set of guarantees. Receivables from persons related to the grantor, including subsidiaries and employees, will not be recognized as risk coverages.

Have a documented collection process for receivables in situations of difficulty, including the necessary services to carry it out, even if the collection work is usually carried out by the grantor.

VII.

Assets granted under financial leasing may be recognized receiving the same treatment as admissible non-financial guarantees, described in this annex, when Popular Financial Societies are not subject to residual value risk, which consists of the exposure of said Societies to a potential loss derived from the fall of the fair value of the asset below its estimated residual value at the beginning of the lease.

Popular Financial Societies must comply with the minimum requirements for the type of admissible guarantee in question, in accordance with this annex, and additionally must observe the following criteria:

The lessor must carry out adequate risk management in accordance with the location of the asset, its use, its age, and its expected life cycle.

The lessor must have ownership of the asset, as well as the capacity to exercise its rights as owner in a timely manner.

The difference between the depreciation rate of the fixed asset and the amortization rate included in the lease payments must not be significant, in order to avoid overestimating the credit risk coverage attributed to the leased assets.

VIII.

Regarding Step and Size Coverage Schemes, First Loss Coverage Schemes, personal guarantees, credit insurance, or agricultural insurance, the following requirements must be met:

Have policies, procedures, and internal controls to carry out the coverage analysis that consider, at least, the following:

The periodic evaluation of the credit quality of the entity providing Step and Size Coverage Schemes, First Loss Coverage Schemes, credit insurance, or agricultural insurance. For such purposes, it must consider, at minimum, the monitoring and analysis of the Ratings assigned by Rating Agencies.

Regarding the Step and Size Coverage Scheme or First Loss Coverage Schemes, personal guarantees, credit insurance, or agricultural insurance, they must evaluate the way in which such operations were structured and the ease of their execution, considering, where applicable, other direct and contingent obligations borne by the Popular Financial Society or entity providing these.

Have contracts or other instruments that document the constitution of the guarantees in which the assumptions and the procedure to exercise the guarantee are recorded. Regarding this, the contracts, documents, or instruments in which the guarantees are recorded must:

Ensure that the Popular Financial Society in question maintains the right to execute the guarantees legally in the event of default, insolvency, commercial bankruptcy, or any other similar event, and that the contract or instrument in which they are documented does not contain any clause that allows the Protection Provider to unilaterally cancel the coverage or increase the cost of the guarantee in the event of a deterioration in the credit quality of the covered position.

Be irrevocable and unconditional, so the contracts or instruments in which they are recorded cannot contain any clause that allows the Protection Provider to exempt itself from paying promptly in the event that the original counterparty presents any default. In any case, the contracts or other documents may only be modified with the agreement of the Popular Financial Society.

Be mandatory for the parties involved and legally enforceable in the corresponding jurisdictions.

Provide that, upon the occurrence of a default or non-payment by the debtor, the Popular Financial Society can immediately initiate actions against the Protection Provider regarding the pending payment obligations. Likewise, the contracts, documents, or instruments in which the guarantees are recorded must stipulate that the guarantor can make a single payment covering the total amount of the pending obligations owed by the debtor, or can assume the future payment of the obligations owed by the debtor. In any case, the obligation of the Protection Provider must be established in the documentation formalizing the operation.

Comply with the legal requirements applicable to obtain and maintain the right to exercise Step and Size Coverage Schemes or First Loss Coverage Schemes, personal guarantees, credit insurance, and agricultural insurance, as well as carry out the necessary monitoring with the objective of ensuring compliance with said requirements.

Not recognize Step and Size Coverage Schemes, First Loss Coverage Schemes, personal guarantees, credit insurance, and agricultural insurance that are granted reciprocally between whoever provides any of these risk mitigation techniques and the Popular Financial Society beneficiary itself.

Disclose in notes to the financial statements the way in which they use Step and Size Coverage Schemes or First Loss Coverage Schemes to cover credit risk. Such disclosure must be published in a general and aggregated manner, highlighting the amount covered by the Step and Size Coverage Scheme or First Loss Coverage Scheme.

IX.

Regarding Step and Size Coverage Schemes, First Loss Coverage Schemes, or personal guarantees, Popular Financial Societies must ensure, at least, the following:

It must be an explicitly documented obligation assumed by the Protection Provider.

It cannot be unilaterally canceled by the Protection Provider.

The Protection Provider must cover any type of payments that the debtor is obligated to make by virtue of the legal instrument regulating the operation.

Regarding credit insurance or agricultural insurance, the following must be attended to:

Popular Financial Societies, regarding credit insurance, must at least comply with the following:

The insurance provider must be a specialized institution authorized by the National Commission of Insurance and Sureties to grant insurance and have at least Investment Grade in accordance with Annex K of these provisions.

The contracts or insurance policies must:

Consider the conditions of partial or total default of a grantor.

ii.

Be legally enforceable in the corresponding jurisdiction. For this effect, they must allow the beneficiary Popular Financial Society to execute the insurance under the agreed conditions and deadlines, unless:

The Popular Financial Society in question defaults on the payment of the insurance premium or the corresponding consideration for the granting of the guarantee.

It modifies without authorization of the granting entity the agreed conditions of the covered credits.

It cancels or transfers the insured credits under conditions different from those agreed, or commits any fraud linked to the secured credit.

iii.

Not include clauses that allow the entity granting the insurance:

To cancel or revoke unilaterally, except for what is provided in sub-clause ii. of this clause.

To increase the cost of the insurance in the event of a deterioration in the credit quality of the covered position.

To object to or omit payment in the event of any default by the grantor, except for what is provided in sub-clause ii., sub-number 2) of this clause.

To cover, in addition to the principal, the ordinary interest corresponding by virtue of the credit contract.

The payment of the premium is up to date in accordance with what is contractually established.

In the case of coverage with agricultural insurance, the following must be considered:

Regarding credits destined to finance the primary activity of the agricultural sector, agricultural damage and animal insurance may be recognized as credit risk mitigants, when they meet the following requirements:

Comply with the requirements established in clause a) of subsection X of this annex.

The contracts or policies include the granting Popular Financial Society directly as the beneficiary of the insurance, or there is some legal instrument that provides for such circumstance.

The insured amount covers, at least, the outstanding balance of the credit.

The corresponding insurance covers, at least, the following agricultural risks:

Frost.

ii.

Flood.

iii.

Clogging.

iv.

Heat wave.

Low temperatures.

vi.

Lack of floor to harvest.

vii.

Hail.

viii.

Fire.

ix.

Excess humidity (rain).

Impossibility to sow.

xi.

Drought.

xii.

Earthquake.

xiii.

Hurricane.

xiv.

Cyclone.

xv.

Tornado.

xvi.

Tromba.

xvii.

Strong winds.

ANNEX D BIS 1

STANDARD ADJUSTMENT FACTORS FOR FINANCIAL GUARANTEES

The following adjustment factors are expressed in percentages, assuming daily valuation of the asset at market prices, daily margin replenishment, and a holding period of 10 business days:

Adjustment Factors and Instruments and Assets

Instruments and Assets

Adjustment Factors

Risk Grade

(Annex K)

Remaining Maturity

Issuers with

Express Guarantee of

Federal Government

Other Issuers

Less than or equal to 1 year

0.5

Greater than 1 and up to 5 years

Greater than 5 years

2, 3

includes unranked bank securities

Less than or equal to 1 year

Greater than 1 and up to 5 years

Greater than 5 years

All

Shares and convertible titles included in main indices

Other securities and convertible titles traded on recognized markets.

Securities with risk grades 5 or 6.

Investment Companies

The applicable adjustment factor will be the highest presented by the instruments in which the Investment Company is permitted to invest.

Cash

ANNEX D BIS 2

DETERMINATION OF TOTAL CREDIT SCORE FOR CREDITS OWED BY CORPORATE AND INDIVIDUAL ENTITIES

WITH BUSINESS ACTIVITY

Prior to determining the total credit score of the credits granted to the clients in the commercial portfolio, the Societies must classify each client in the economic sector where it has greater preponderance, taking into account for this the economic sector from which it obtains the majority of its income. To carry out such classification, the keys corresponding to each economic sector will be considered in accordance with the catalog from the National Institute of Statistics and Geography (INEGI) called "North American Industry Classification System" (NAICS):

Activity

Description

Sector Code

(1)

Primary

When the economic activity of the client corresponds to any of the following:

agriculture, livestock, forestry, fishing and hunting.

Secondary

When the economic activity of the client corresponds to any of the following: mining,

electricity, water and gas supply by pipelines to the final consumer or construction. Or,

when the classification of the client cannot be carried out.

21, 22, 23 and no

classification

When the economic activity of the client corresponds to manufacturing industries.

31 ,32, 33

When the economic activity of the client corresponds to wholesale trade or retail trade.

43, 46

Tertiary

When the economic activity of the client corresponds to any of the following:

transport, mail and storage, mass media information, financial and

insurance services (other than those specified in Annex D BIS 3 of these provisions), real estate and rental of movable and intangible goods, professional, scientific and

technical services, corporate and business management, business support services and waste management and remediation services, educational services, health and social assistance services, entertainment, cultural and sports services, and other recreational services, temporary accommodation services and food and beverage preparation, other services (except government activities) or government activities and international and extraterritorial organizations.

48, 49, 51, 52, 53, 54,

55, 56, 61, 62, 71, 72,

81, 93

Popular Financial Societies will estimate the PIi of each credit considering the quantitative aspects of the client; each of the aspects will be reflected in a score. The scores of each aspect will be summed to obtain a total credit score in accordance with the following:

I.- Total credit score

Popular Financial Societies will determine the total credit score of the credits granted to legal or natural persons corresponding to this section, based on the score determined for the risk factor I-A, as well as in accordance with the sector in which the client was classified. The total credit score will be obtained as the result of the sum of points resulting for the indicators that make up the risk factor.

I-A Risk factor payment experience with the Society

II.- Definitions

ANNEX D BIS 3

DETERMINATION OF TOTAL CREDIT SCORE FOR CREDITS OWED BY FINANCIAL ENTITIES

For the purposes of what is stated by this Annex, financial entities will be understood as those indicated in subsection IX of Article 3 of the Law for the Transparency and Ordering of Financial Services, as well as in Article 12 of the Law to Regulate Financial Groups. Notwithstanding the foregoing, Popular Financial Societies, with prior authorization from the Commission, may consider other legal figures as financial entities.

Popular Financial Societies, prior to determining the total credit score of the credits granted to

financial entities, shall classify each borrower into one of the subgroups in accordance with the following table:

Credit-granting accredited financial entities

Credit Institutions.
Regulated and unregulated Multi-Object Financial Societies.
Popular Financial Societies, Savings and Loan Cooperatives.
Financial entities acting as trustees in trusts that grant credit, loans, or financing to the public.
Public trusts that have the status of parastatal entities and are part of the Mexican Banking System.
Credit Unions.
General Warehouses.
Exchange Houses.
Surety Institutions.
Insurance Institutions.
Brokerage Houses.
Investment Fund Operating Companies.
Investment Fund Share Distributors.
Retirement Fund Administrators.
Financial Technology Institutions

In the case of substituting the borrower's information with that of the guarantor for the calculation of the Probability of Default, the highest score shall be assigned to the variables of the Risk Factor: payment experience with the Popular Financial Society, provided that the guarantor does not have credit experiences with the Popular Financial Society itself and it is verified that they do not have negative payment experiences in Credit Information Societies. In any other case, the scores corresponding to the "No information" range shall be assigned to the variables of the Risk Factor: payment experience with the Popular Financial Society.

Popular Financial Societies shall estimate the Probability of Default of each borrower considering quantitative aspects thereof, each of which will be reflected in a score. The quantitative credit score shall be determined as follows:

I. Quantitative Credit Score

Popular Financial Societies shall determine the quantitative credit score by summing the points the borrower obtains for the risk factors included in this Section I. In turn, the score of the risk factors shall be the sum of the points obtained in each indicator, according to whether the borrower is classified as a credit-granting financial entity or as another financial entity distinct from credit-granting entities.

I-A. Quantitative credit score applicable to accredited financial entities that are themselves credit-granting entities

Risk Factor: Payment experience with credit information societies

For the purposes of calculating the indicators that make up this risk factor, Popular Financial Societies shall consider credit information with financial and commercial entities contained in all credit and identity records that allow identifying, as the same borrower, the corresponding financial entity, and that credit information societies have available on the date of the rating.

Popular Financial Societies shall assign the points of the "No information" range when the indicator does not meet the requirements established in Section II Definitions of this Annex or when there is no information in the credit information societies.

Risk Factor: Financial

Risk Factor: Payment experience with the Popular Financial Society

I-B. Quantitative credit score applicable to other accredited financial entities distinct from credit-granting entities

Risk Factor: Payment experience with credit information societies

Risk Factor: Financial

Risk Factor: Payment experience with the popular financial society

II. Definitions

Popular Financial Societies shall assign the points of the "No information" range when an indicator does not comply with what is established in Section II Definitions of this Annex.

ANNEX D Bis 4

GUIDELINES FOR THE CALCULATION OF CREDIT RESERVES FOR CREDITS OWED BY FEDERATIVE ENTITIES AND MUNICIPALITIES

Section I

Regarding credits owed by Federative Entities and Municipalities that are structured under irrevocable trusts of guarantee, administration, and/or source of payment, in accordance with what is stated in this section, or regarding credits granted to public trusts without structure in which Federative Entities and Municipalities act as settlors, provided they meet the following numerals, they shall have a credit reserve equivalent to the percentage of the credit established in each of the subsections of this Section:

The trust acting as the legal vehicle for payment of the credit shall have the status of irrevocable and be for administration, guarantee, or source of payment; including Public Trusts without Structure in which resource flows are delivered due to the special and irrevocable mandate granted to the Secretariat, in which an irrevocable instruction is implicit.
The source of payment of the credit comes exclusively from the resources affected by the trust acting as the legal vehicle for payment.
The credit is rated by at least one Rating Institution recognized by this Commission.

Rating Criteria

a) When the credit is Guaranteed State Debt, in accordance with what is stated in the Law on Financial Discipline of the Federative Entities and Municipalities, the credit reserve shall be 0.5% of the Exposure to Default (EI) obtained in accordance with article 42 Bis 9 of these provisions.

b) When the credits have as their primary source of payment, a specific percentage of the General Participation Fund, Funds corresponding to Branch 28, or Federal Contribution Funds, including those that in addition to the primary source mentioned have as a subsidiary source of payment own income of the borrower or other types of resources that do not come from Federal Funds, their credit reserve shall be determined by applying the corresponding percentage based on the Debt Service Coverage Ratio (DSCR) according to the following table, on the Exposure to Default (EI) obtained in accordance with article 42 Bis 9 of these provisions:

Debt Service Coverage Ratio (DSCR)	Applicable Percentage
3.0 < DSCR	0.50%
2.0 < DSCR ≤ 3.0	0.66%
1.5 < DSCR ≤ 2.0	0.82%
1.0 < DSCR ≤ 1.5	1.07%
0.75 < DSCR ≤ 1.0	3.44%
DSCR ≤ 0.75	9.75%
Default (Payment delay of 90 or more days or Portfolio in Stage 3)	45.00%

c) In the event that the primary source of payment of the credit is the borrower's own income, the credit reserve shall be the percentage that applies according to the debt service coverage ratio in the following table, on the Exposure to Default (EI) obtained in accordance with article 42 Bis 9 of these provisions:

Debt Service Coverage Ratio (DSCR)	Applicable Percentage
3.0 < DSCR	0.64%
2.0 < DSCR ≤ 3.0	0.84%
1.5 < DSCR ≤ 2.0	1.05%
1.0 < DSCR ≤ 1.5	1.37%
0.75 < DSCR ≤ 1.0	4.39%
DSCR ≤ 0.75	12.42%
Default (Payment delay of 90 or more days or Portfolio in Stage 3)	45.00%

d) Regardless of the source of payment of the credit, cases in which the early maturity of the credit has been declared, or the credit is in Stage 3 in accordance with Article 42 Bis -3 of these provisions, shall be considered as default.

Without prejudice to the foregoing, in order to monitor the credit quality of the Federative Entity or Municipality, Popular Financial Societies shall estimate and report the calculation of the Probability of Default (PIi) of the borrower or settlor, which shall be calculated in accordance with article 42 Bis -6 of the provisions, using for this purpose the quantitative and qualitative credit scores obtained as described in Section II of this Annex.

Section II

Popular Financial Societies shall calculate the PIi of credits owed by Federative Entities and Municipalities, in accordance with what is stated in this section, in the following cases:

Unsecured credits.
Credits that have instructions or contracts of mandate for source of payment, guarantee, or both, in all cases with Federal Participations, Federal Contributions, and/or Own Income as source of payment or as guarantee.
Credits not considered in Section I of this Annex.

The PIi of each borrower shall be obtained considering quantitative and qualitative aspects thereof, each of which will be reflected in a score. The quantitative and qualitative credit scores shall be determined as follows:

Section II-A Quantitative Credit Score

Popular Financial Societies shall determine the quantitative credit score by summing the points the accredited Federative Entity or Municipality obtains in each of the indicators.

For the purposes of calculating the indicators, for variables where there is no information for the Municipality being rated, the information of the Federative Entity to which it belongs shall be taken. In case the information of the Federative Entity is not available as established in Section II-D Definitions of this Annex, the score corresponding to the "No information" range shall be assigned.

Indicator	Range	Points
Current income to current expense	[0%, 55%]	82
	(55%, 70%]	90
	(70%, 90%]	99
	(90%, 110%]	106
	> 110%	120
	No information	86
Productive investment to gross expenditures	< 20%	77
	(20%, 45%]	108
	(45%, 60%]	122
	> 60%	130
	No information	93
Financing to total participations	[0%, 18.5%]	127
	(18.5%, 120.7%]	110
	(120.7%, 184.9%]	87
	> 184.9%	80
	No information	61
Average days of delinquency with banking financial entities in the last 12 months	0	124
	(0, 3]	92
	(3, 15]	67
	> 15	53
	No information	80
Percentage of balance without days of delay with the Society in the last 7 months considering the calculation month	[0%, 23%]	-103
	(23%, 54%]	-85
	(54%, 84%]	4
	(84%, 99%]	10
	(99%, 100%]	77

Section II-B Qualitative Credit Score

Popular Financial Societies shall determine the qualitative credit score by summing the points the borrower obtains from each of the indicators.

For the purposes of calculating the indicators, with the exception of the variable "Transparency in public finances and public debt", when there is no information for the Municipality being rated, the information of the Federative Entity to which it belongs shall be taken.

In case the information of the Federative Entity is not available as established in Section II-D Definitions of this Annex, the score corresponding to the "No information" range shall be assigned.

Indicator	Range	Points
Strength and flexibility of the normative and institutional framework both for the approval and execution of the budget, as well as for the approval and imposition of local taxes.	The political party or partisan coalition to which the representative of the Local Executive Power belongs forms an absolute majority in the Local Congress.	117
	The political party or partisan coalition to which the representative of the Local Executive Power belongs does not form an absolute majority in the Local Congress.	77
	No information.	61
Transparency in public finances and public debt.	In the event that the Federative Entity or Municipality publishes on its transparency portal or any public source, quarterly reports of Public Finances and Public Debt with a maximum delay of 75 days after the end of the quarter.	115
	No publication or with information with a publication delay greater than 75 days after the end of the quarter.	88
	No information.	61

Section II-C The Total Credit Score shall be obtained by applying the following expression:

Section II-D Definitions:

Concept and maximum permissible age at the time of rating	Definition
Debt Service Coverage Ratio (Age not greater than 4 months from the date of rating (month-end))	Coverage of debt service with respect to the incomes that serve as source of payment for the credit. Where: · FP: Estimation of the flow assigned as primary source of payment for the credit for the next 12 months from the date of rating. In the event that the credit has reserves acting as backing for the payment of the corresponding credit, these shall be added to the monthly amount of the aforementioned incomes. Amounts corresponding to sources of payment other than the primary source of payment, schemes of personal guarantees, first losses, step and measure, as well as any other mitigation scheme considered within the estimation of Loss Severity shall not be considered as part of the FP. · SD: Payment of principal and interests to be made by the borrower during the next 12 months from the date of rating. The interest rate to be used for the estimation shall be the last one in force.
Strength and flexibility of the normative and institutional framework both for the approval and execution of the budget, as well as for the approval and imposition of local taxes (Age not greater than 18 months from the date of rating (month-end))	Powers that the Federative Entity has both to approve and execute the budget, as well as to approve and impose local taxes, which gives the state or municipality tools of public policy to react with flexibility to changes in the environment.
Current income to current expense (Age not greater than 30 months from the date of rating (month-end))	Proportion of current incomes with respect to current expense. Where: Current Income: Incomes that borrowers obtain regularly or periodically. - Regarding Federative Entities, it shall be the sum of: Participations corresponding to the Entity (including municipalities) + State Own Income + Federal Contributions (including municipalities) - Regarding Municipalities, it shall be the sum of: Participations corresponding to the Municipality + Municipal Own Income + Federal Contributions Current Expense: Comprises expenditures destined to the operational management of the borrower. This variable shall be determined by the sum of: Personal Services + Materials and supplies + General services + Transfers, allocations, subsidies and other aids + Resources assigned to municipalities or mayoralties (if applicable) + Public Debt + Final Availability Personal Services: Groups the remuneration of personnel serving the federative entities or municipalities, such as: salaries, wages, per diems, fees assimilable to salary, benefits and social security expenses, labor obligations and other benefits derived from a labor relationship; which may be permanent or transitory. Materials and supplies: Groups allocations destined to the acquisition of all kinds of inputs and supplies required for the provision of goods and services, and for the performance of administrative activities. General services: Allocations destined to cover the cost of all types of services contracted with individuals or institutions of the public sector itself; as well as official services required for the performance of activities linked to public function. Transfers, allocations, subsidies and other aids: Allocations destined directly or indirectly to the public and private sectors, organisms and parastatal companies, as well as supports as part of their economic and social policy, in accordance with development strategies and priorities for the maintenance and performance of their activities. Resources assigned to municipalities: Allocations destined to cover participations and contributions, which the state governments transfer to municipalities, according to local regulations. Includes allocations destined to the execution of federal programs through the federative entities, by reassignment of responsibilities and budgetary resources, in terms of the agreements celebrated by the Federal Government with them. Public debt: Allocations destined to cover government obligations for internal public debt derived from the contracting of loans; includes amortization, interest, expenses and commissions of public debt, as well as expenditures related to the issuance and/or contracting of debt. Likewise, it includes arrears from previous fiscal years (ADEFAS). Final availability: Items existing at the end of the fiscal year, which represent goods that can be immediately destined to meet the
obligations of states and municipalities, in the subsequent exercise. For all components, accumulated annual information shall be used, either the accumulated at the end of the year immediately preceding the date of rating, or accumulated annual information at the most recent month of available information, according to the following formula: Where: t refers to the current year and k refers to the most recent month of available information.
Participations (Age not greater than 18 months from the date of rating for Federative Entities and not greater than 30 months for Municipalities (month-end))	Allocations of resources granted by the Federal Government to Federative Entities and Municipalities, through the Participation Funds established in Branch 28 in accordance with the Fiscal Coordination Law. Accumulated annual information shall be used, either the accumulated at the end of the year immediately preceding the date of rating, or accumulated annual information at the most recent month of available information, according to the following formula: Where: t refers to the current year and k refers to the most recent month of available information.
Federal Contributions (Age not greater than 18 months from the date of rating for Federative Entities and not greater than 30 months for Municipalities (month-end))	Resources granted by the Federal Public Administration to Federative Entities and Municipalities through Contribution Funds, conditioning their expenditure to the achievement and compliance with the objectives that for each type of contribution the Fiscal Coordination Law and Agreements with the Federation establish. Accumulated annual information shall be used, either the accumulated at the end of the year immediately preceding the date of rating, or accumulated annual information at the most recent month of available information, according to the following formula: Where: t refers to the current year and k refers to the most recent month of available information.
Own Income (Age not greater than 30 months from the date of rating (month-end))	Totality of perceptions coming from normal and ordinary sources of income; federal resources, other incomes, financings, and incomes that imply virtual or compensated movements calculated as: Taxes: Are contributions established by law that must be paid by natural and legal persons who are in the legal or factual situation foreseen by the same and that are different from social security contributions, improvement contributions, and rights. Rights: Are contributions established by law for the use or exploitation of public domain goods, as well as for receiving services provided by the federative entity or municipality in their public law functions, except when they are provided by decentralized organisms or decentralized organs when in the latter case, they are counter-prestations that are not foreseen in the respective fiscal laws. Rights are also the contributions borne by decentralized public organisms for providing services exclusive to the State. Products: Are counter-prestations for the services provided by the federative entity or municipality in their private law functions, as well as for the use, exploitation, or alienation of private domain goods. Proceeds: Are the incomes perceived by the federative entity or municipality for public law functions, different from contributions, incomes derived from financings, and those obtained by decentralized organisms and state participation companies. Improvement Contributions: Are those established by law borne by natural and legal persons who benefit directly from public works. For all components, accumulated annual information shall be used, either the accumulated at the end of the year immediately preceding the date of rating, or accumulated annual information at the most recent month of available information, according to the following formula: Where: t refers to the current year and k refers to the most recent month of available information.
Productive Investment to Gross Expenditures (Age not greater than 30 months from the date of rating (month-end))	Proportion of Productive Investment with respect to Gross Expenditures Public Investment: Allocations destined to works by contract and productive projects and promotion actions. Includes pre-investment study expenses and project preparation. Transfers, allocations, subsidies and other aids: Allocations destined directly or indirectly to the public and private sectors, organisms and parastatal companies and supports as part of their economic and social policy, in accordance with development strategies and priorities for the maintenance and performance of their activities. Gross Expenditures: The resources that governments disburse to cover the expenses that originate in the fulfillment of their functions and programs, according to the terms established in their respective Expenditure Budget and other laws on the matter. They are integrated by the sum of the chapters of: Gross Expenditures = Personal Services + Materials and supplies + General services + Transfers, allocations, subsidies and other aids + Movable, Immovable and Intangible Goods + Public Investment + Financial Investments and Other Provisions + Resources assigned to municipalities or mayoralties (if applicable) + Public Debt + Final Availability Personal Services: Groups the remuneration of personnel serving the federative entities or municipalities, such as: salaries, wages, per diems, fees assimilable to salary, benefits and social security expenses, labor obligations and other benefits derived from a labor relationship; which may be permanent or transitory. Materials and supplies: Groups allocations destined to the acquisition of all kinds of inputs and supplies required for the

provision of goods and services, as well as for the performance of administrative activities.

General services: Allocations intended to cover the cost of all types of services contracted with private parties or institutions of the

public sector itself; as well as official services required for the performance of activities linked to public function.

Transfers, allocations, subsidies and other aids: Allocations intended directly or indirectly to the public and

private sectors, organisms and state-owned companies, as well as support as part of their economic and social policy, in accordance with the strategies and

development priorities for the maintenance and performance of their activities.

Movable, immovable and intangible assets: Groups the allocations intended for the acquisition of all kinds of movable, immovable and

intangible assets, required in the performance of the activities of public entities. Includes payments for adjudication, expropriation and

compensation of movable and immovable assets in favor of the Government.

Financial investments and other provisions: Expenditures made by the public administration in the acquisition of shares, bonds, other

titles and securities; as well as in loans granted to various economic agents. Includes capital contributions to entities

public; as well as contingent and unforeseen expenditures for the fulfillment of government obligations.

Resources assigned to municipalities: Allocations intended to cover the participations and contributions, which transfer the governments of the

states to the municipalities, according to local regulations. Includes allocations intended for the execution of federal programs through the

federative entities, through the reassignment of responsibilities and budgetary resources, in accordance with the agreements celebrated by

the Federal Government with these.

Other expenditures: Expenditures that by their nature cannot be grouped into any other chapter of expenditure of the public sector.

Public debt: Allocations intended to cover government obligations for public debt derived from the contracting

of loans; includes amortization, interest, expenses and commissions of public debt, as well as expenditures related to the

issuance and/or contracting of debt. It also includes arrears from previous fiscal years (ADEFAS).

Final availability: Items existing at the end of the fiscal year, which represent assets that can be destined immediately to

meet the obligations of the states and municipalities, in the following exercise.

For all components, accumulated annual information must be used, either the accumulated at the close of the year immediately preceding the date

of rating, or accumulated annual information at the most recent available information month, according to the following formula:

Where: t refers to the current year and k refers to the most recent available information month.

Financing for participations totals

(Age not greater than 18 months

to the date of rating (close of

month))

Refers to the balance of financing granted to the Federative Entities as a percentage of the participations corresponding to

Branch 28 paid to them.

Average days of default with

banking financial institutions

in the last 12 months

(Age not greater than 2 months to

date of rating; information

corresponding to some Credit

Information Society (close of

month))

Number of average days of default that the borrower has with banking financial institutions in the last 12 months.

Where:

NPSA12: Number of payments without days of delay of the federative entity or municipality with banking financial institutions in the last

months.

NPCA12 i-j : Number of payments with i to j days of delay of the federative entity or municipality with banking financial institutions in the

last 12 months.

NPCA12 180 : Number of payments with 180 days or more of delay of the federative entity or municipality banking financial institutions of

credit in the last 12 months.

Days of Delay: Number of natural days to the calculation date, during which the borrower has not fully liquidated the amount

due

in the terms originally agreed. This variable must be expressed as a number that must be greater than or equal to zero.

Amount Due: Amount corresponding to be covered by the borrower in the agreed period. The amount due must consider both the amount

corresponding to the agreed period, as well as the amounts due from previous unpaid periods, if any.

Percentage of balance without days of delay with the Society in the

last 7 months considering the calculation month

( Calculated on the date of

rating (close of month) )

Where:

SSA t-n : Balance of the borrower with the Society with 0 days of delay in the period " t-i " , where " t-0 " corresponds to the date of

rating, and " t-n " corresponds to " n " monthly periods prior to the rating date.

S t-n : Outstanding balance of the borrower with the Society in the period " t-n " , where " t-0 " corresponds to the rating date, and " t-n "
corresponds to " n " monthly periods prior to the rating date.

The calculation must be made considering all exposures of the borrower with the Society.

Section II-E Sources of information:

This section aims to detail the public sources of information that must be used for the

obtaining of inputs necessary for the construction and updating of variables included in this Annex.

The official sources of information for the construction of the variables are:

Variable

Source of information

Solidity and flexibility of the regulatory and institutional framework both for the

approval and execution of the budget, as well as for the approval and

imposition of local taxes.

Internet portal of the local congresses.

Transparency in public finances and public debt.

Publication on the internet portal of the Federative Entity or Municipality; in

any public source of quarterly reports on public finances and

public debt; or the Mexican Stock Exchange.

Federal Participations and Contributions for Federative

Entities.

Timely statistics on public finances from the Ministry of Finance and

Public Credit.

Federal Participations and Contributions for Municipalities.

State and Municipal Database System of the National

Institute of Statistics and Geography.

Only when it is verified that the Municipality does not have

information in the State and Municipal Database System

of INEGI, it could be used as an additional source of information

the Public Account of the Municipalities, provided that said

information meets the criteria established in the Law

General of Governmental Accounting and the National Council

of Accounting Harmonization.

Own Income, Taxes, Rights, Products,

Improvements, Other Income,

Gross Expenditures, Personal Services, Materials and supplies,

General Services, Transfers, allocations, subsidies and other

help, Movable Assets, Immovable and Intangible, Financial

Investments and Other Provisions, Resources assigned to municipalities,

Other expenditures, Public debt, Final availability, Public investment.

State and Municipal Database System of the National

Institute of Statistics and Geography.

Only when it is verified that the Entity or Municipality does not

count with information in the State and Municipal Database System

of INEGI or in the information on public finances

of the Ministry of Finance and Public Credit, it could

be used as an additional source of information the Account

Public of the Federative Entities or Municipalities, provided that

said information meets the criteria established in the Law

General of Governmental Accounting and the National Council

of Accounting Harmonization.

Financing of federative entities or municipalities to total participations.

Statistical indicators of financing from the electronic portal of

financial discipline of the Ministry of Finance and Public Credit.

Average days of default with credit institutions.

Authorized Credit Information Societies.

ANNEX E

ACCOUNTING CRITERIA FOR POPULAR FINANCIAL SOCIETIES, COMMUNITY FINANCIAL

SOCIETIES AND RURAL FINANCIAL INTEGRATION ORGANISMS

CONTENT

SERIES A.

Criteria relating to the general scheme of accounting for Popular Financial Societies,

Community Financial Societies and Rural Financial Integration Organizations

A - 1

Basic scheme of the set of accounting criteria applicable to Popular Financial Societies,

Community Financial Societies and Rural Financial Integration Organizations

A - 2

Application of particular standards

A - 3

Application of general standards

A - 4

Supplementary application to accounting criteria

Series B.

Criteria relating to the concepts that make up the financial statements

B - 1

Cash and cash equivalents

B - 2

Repealed

B - 3

Repo transactions

B - 4

Credit portfolio

B - 5

Adjudicated assets

B - 6

Guarantees

B - 7

Custody and administration of assets

B - 8

Trusts

Series C.

Criteria applicable to specific concepts

C - 1

Repealed

C - 2

Repealed

C - 3

Securitization operations

Series D.

Criteria relating to basic financial statements

D - 1

Statement of financial position

D - 2

Statement of comprehensive income

D - 3

Statement of changes in equity

D - 4

Statement of cash flows

A-1 BASIC SCHEME OF THE SET OF ACCOUNTING CRITERIA APPLICABLE TO POPULAR

FINANCIAL SOCIETIES, COMMUNITY FINANCIAL SOCIETIES AND RURAL FINANCIAL INTEGRATION

ORGANISMS

Objective

This criterion aims to define the basic scheme of the set of accounting guidelines applicable to

popular and community financial societies with levels of operation

I to IV, as well as rural financial integration organizations (the entities).

Concepts that make up the basic structure of accounting in entities

The accounting of the entities will adhere to the basic structure that, for the application of the

Financial Reporting Standards (NIF), was defined by the Mexican Council of Financial Reporting Standards, A.C. (CINIF), in the

NIF A-1 " Conceptual framework of financial reporting standards " (NIF A-1) or the one that replaces it.

In virtue of this, the entities will consider in the first instance the standards contained in NIF A-1, as well as the

established in criterion A-4 " Supplementary application to accounting criteria " .

Thus, the entities will observe the accounting guidelines of the NIF, except when in the judgment of the

National Banking and Securities Commission (CNBV) it is necessary to apply a specific regulation or accounting criterion, taking into consideration that the entities carry out specialized operations.

The CNBV regulation referred to in the previous paragraph will be at the level of recognition, valuation,

presentation and, if applicable, disclosure standards, applicable to specific items within the financial statements of the

entities, as well as those applicable to their preparation.

The application of accounting criteria, nor the concept of supplementarity, will not proceed in the case of operations

that by express legislation are not permitted or are prohibited, or well, are not expressly authorized to the

entities.

A-2 APPLICATION OF PARTICULAR STANDARDS

Objective and scope

This criterion aims to clarify the application of particular standards of the NIF, as well as

clarifications to them.

The subject matter of this criterion is:

the application of some of the particular standards made known in the NIF, and

the clarifications to the particular standards contained in the NIF.

Financial Reporting Standards

In accordance with what is established in criterion A-1 " Basic scheme of the set of accounting criteria

applicable to popular financial societies, community financial societies and rural financial integration

organizations " , the entities will observe, until there is an express pronouncement by the CNBV,

the particular standards contained in the bulletins or NIFs detailed below, or in the NIFs that replace or modify them:

NIF Series B " Standards applicable to financial statements as a whole "

Accounting changes and corrections of errors ...................................................

B-1

Segment financial information ............................................................

B-5

Business acquisitions ..........................................................................

B-7

Consolidated or combined financial statements ...............................................

B-8

Financial information at interim dates .....................................................

B-9

Effects of inflation .................................................................................

B-10

Disposal of long-term assets and discontinued operations ..................

B-11

Compensation of financial assets and financial liabilities .................................

B-12

Events after the date of the financial statements ....................................

B-13

Earnings per share .....................................................................................

B-14

Conversion of foreign currencies ..............................................................

B-15

Determination of fair value .................................................................

B-17

NIF Series C " Standards applicable to specific concepts of financial statements "

Investment in financial instruments .............................................................

C-2

Accounts receivable ....................................................................................

C-3

Prepayments .....................................................................................

C-5

Property, plant and equipment .......................................................................

C-6

Investments in associates, joint ventures and other investments

permanent ............................................................................................

C-7

Intangible assets .....................................................................................

C-8

Provisions, contingencies and commitments ......................................................

C-9

Equity ........................................................................................

C-11

Financial instruments with characteristics of liability and equity ........................

C-12

Related parties ...................................................................................

C-13

Transfer and derecognition of financial assets ......................................................

C-14

Impairment of long-term assets .........................................................

C-15

Impairment of financial instruments receivable ........................ .. ..........................

C-16

Obligations associated with the removal of property, plant and equipment... ...................

C-18

Financial instruments payable ................................................................

C-19

Financial instruments to collect principal and interest ......................................

C-20

Joint control agreements ......................................................................

C-21

NIF Series D " Standards applicable to income determination problems "

Revenue from contracts with customers ................................................................

D-1

Costs from contracts with customers ..................................................................

D-2

Employee benefits ..........................................................................

D-3

Income tax ................................................................................

D-4

Leases ........................................................................................

D-5

Capitalization of comprehensive financing result .......................................

D-6

Share-based payments .........................................................................

D-8

Likewise, the glossary of terms of the NIFs will be applicable, regarding the NIFs detailed in this paragraph.

Additionally, the entities will observe the NIFs issued by CINIF on topics not foreseen in the criteria of

accounting for popular financial societies, community financial societies and rural financial integration

organizations, provided that:

they are in force;

they are not applied in advance to their validity;

they do not contravene the philosophy and general concepts established in the accounting criteria for

popular financial societies, community financial societies and rural financial integration

organizations, and

there is no express pronouncement by the CNBV.

Clarifications to the particular standards contained in the NIFs

Taking into consideration that the entities carry out specialized operations, it is necessary to establish

clarifications that adapt the particular standards of recognition, valuation, presentation and, if applicable, disclosure,

established by the CINIF. In virtue of this, the entities when observing what is established in the paragraphs above, must

adhere to the following:

B-9 Financial information at interim dates

The provisions of NIF B-9 " Financial information at interim dates " must be applied to the information

financial that is issued at interim dates, including the quarterly that must be published or disseminated through the

Internet page that corresponds to the entity itself, in accordance with the General Provisions

applicable to popular financial societies, community financial societies and rural financial integration

organizations, published by the CNBV (the Provisions).

For the purposes of disclosing the information issued at interim dates, the entities must observe the

provisions relating to the disclosure of financial information contained in criterion A-3 " Application of standards

general " (Criterion A-3).

B-10 Effects of inflation

Determination of the monetary position

In the case of an inflationary environment based on what is stated by NIF B-10 " Effects of inflation " (NIF B-10), the

entities must disclose the initial balance of the main monetary assets and liabilities that were used for the

determination of the monetary position of the period, differentiating in case, those that affect from those that do not affect the

financial margin.

Price index

The entities must use the value of the Investment Unit (UDI) as the price index.

Result by monetary position

The result by monetary position (REPOMO) that has not been capitalized in terms of what is established in NIF

B-10, must be presented in the statement of comprehensive income in a specific item within the financial margin when

it comes from financial margin items, otherwise it will be presented within the item of other income (expenses)

of the operation.

B-11 Disposal of long-term assets and discontinued operations

The entities must disclose the breakdown of the net amount generated by discontinued operations required in

NIF B-11 " Disposal of long-term assets and discontinued operations " (NIF B-11), as well as the amount

of income from continuing operations and from discontinued operations attributable to the controlling participation

instead of presenting this information in the statement of comprehensive income.

B-15 Conversion of foreign currencies

In the application of NIF B-15 " Conversion of foreign currencies " , the exchange rate to be used to establish the

equivalence of the national currency with the United States dollar, will be the closing rate of the

day on the date of the transaction or preparation of the financial statements, as applicable, published by the

Bank of Mexico on its Internet page, www.banxico.org.mx or the one that replaces it.

In the case of currencies other than the United States dollar, they must convert the respective currency to

United States dollars. To carry out this conversion, they will consider the quotation that applies to the

corresponding currency in relation to said dollar in international markets, as established by

the Bank of Mexico in the applicable regulation.

Likewise, the amount of transactions denominated in

foreign currency by the most relevant currencies for the entity must be disclosed in notes to

the financial statements, as well as the exchange rate used and its equivalent

in national currency, in accordance with what is stated in the two paragraphs above.

B-17 Determination of fair value

Regarding the values or financial instruments referred to in article 211 Bis 2 of the Provisions, the

entities will not apply what is established in this NIF, adhering at all times to what is established in Section

Second of Chapter V, of Title Fourth of the Provisions.

In the case of assets or liabilities other than those indicated in the previous paragraph, NIF B-17

" Determination of fair value " (NIF B-17) must be applied when another particular NIF or accounting criterion requires or allows

valuations at fair value and/or disclosures regarding the same.

C-2 Investment in financial instruments

The exception to irrevocably designate, upon initial recognition, a

financial instrument to collect and sell, to be subsequently valued at its fair value with effects on

net income referred to in paragraph 32.6 of NIF C-2 " Investment in financial instruments " (NIF C-2) will not be applicable to the entities.

Reclassifications

The entities that carry out reclassifications of their investments in

financial instruments under section 44 of NIF C-2, must inform this fact in writing to the CNBV within 10 business days

following the authorization for such purposes issued by its Risk Committee, exposing in detail the change

in the business model that justifies it.

C-3 Accounts receivable

Scope

NIF C-3 " Accounts receivable " (NIF C-3) will only be applicable to the " other accounts receivable " referred to in the

paragraph 20.1 of said NIF.

For the purposes of NIF C-3, accounts receivable derived from the operations referred to in:

criteria B-3 " Repo transactions " (Criterion B-3) and B-4 " Credit portfolio " (Criterion B-4), issued by the CNBV;

those corresponding to the acquired collection rights defined in Criterion B-4, and

paragraph 54 of this criterion, regarding accounts receivable arising from operating lease operations.

This is because the recognition, valuation, presentation, and disclosure standards applicable are contemplated in the aforementioned criteria or in the corresponding IFRS.

Operations between the entity and its branches

The items resulting from operations between the entity and its branches shall be cleared at least at the close of each month, so they shall not have a balance on that date.

C-9 Provisions, Contingencies, and Commitments

Scope

The provisions of IFRS C-9 "Provisions, Contingencies, and Commitments" (IFRS C-9) shall not apply for the determination of guarantees granted, in which case the provisions of Criterion B-6 "Guarantees" shall apply.

C-11 Equity

For the purposes of this IFRS, in the case of rural financial integration organizations, equity shall be understood as net worth, which is divided into:

contributed net worth, represented by the contributions of the community financial societies that comprise it, as well as by their foundational net worth in accordance with applicable legislation, and

earned net worth, which corresponds to the Social Reserve Fund and accumulated comprehensive income.

Net worth, both contributed and earned, includes its inflationary effect.

In the notes to the financial statements, in addition to what is established, the main characteristics and restrictions of the Social Reserve Fund constituted in accordance with applicable legislation shall be disclosed.

C-13 Related Parties

For the purpose of complying with the disclosure standards contained in IFRS C-13 "Related Parties" (IFRS C-13), entities shall additionally consider as a related party:

members of the board of directors or executive board of the controlling society or of the financial entities and companies comprising the financial group to which it belongs, if applicable;

persons other than key management personnel, relevant executives, or employees whose signature can generate obligations for the entity;

legal entities in which key management personnel or relevant executives of the entity are directors or administrators or occupy any of the first three hierarchical levels in said legal entities, and

legal entities in which any of the persons mentioned in the preceding subparagraphs, as well as in IFRS C-13, have command power, understood as the factual capacity to decisively influence the agreements adopted in shareholders' meetings or board of directors' sessions, or in the management, conduct, and execution of the business of the entity in question or of the legal entities it controls.

In addition to the disclosures required by IFRS C-13, entities shall disclose in aggregate, through notes to the financial statements, regarding related-party operations that may be carried out, the following information:

a generic description of the operations, such as:

credits granted or received;
operations with financial instruments in which the issuer and the holder are related parties;
repurchase agreements;
sale and acquisition of credit portfolios, and
those carried out through any person, trust, entity, or other legal figure, when the counterparty and source of payment for such operations depend on a related party.

any other information necessary for the understanding of the operation, and

the total amount of employee benefits granted to key management personnel or relevant executives of the entity.

Disclosure of related-party operations is only required when the amount exceeds the lesser of 50,000 UDI or 0.25% of the entity's net capital, corresponding to the month prior to the date of preparation of the financial information.

C-14 Transfer and Derecognition of Financial Assets

With respect to collateral received referred to in paragraph 44.7 of IFRS C-14 "Transfer and Derecognition of Financial Assets" (IFRS C-14), the recipient shall recognize the received collateral in off-balance sheet accounts. In cases where the recipient has the right to sell or pledge the collateral, the transferor shall reclassify the asset by presenting it as restricted.

Recognition of Financial Assets

When the transfer results in the derecognition of the financial asset by the transferor, the recipient entity shall recognize a financial asset (or portion thereof) or a group of financial assets (or portion of said group) in its statement of financial position, if and only if, it acquires the rights and contractual obligations related to said financial asset (or portion thereof). To do so, the entity shall:

recognize the financial assets received at their fair value, which presumably corresponds to the price agreed upon in the transfer operation. Subsequently, such assets shall be valued according to the corresponding criterion in accordance with their nature;

recognize the new rights obtained or new obligations incurred as a result of the transfer, valued at their fair value;

derecognize the consideration granted in the operation at its net book value (for example, considering any associated estimate) and recognizing in the results of the period any item pending amortization related to such consideration, and

recognize in the results of the period any difference, if any, arising from the transfer operation.

C-16 Impairment of Financial Assets by Receivables

Scope

For the purposes of IFRS C-16 "Impairment of Financial Assets by Receivables" (IFRS C-16), assets arising from the operations referred to in Criterion B-4, issued by the CNBV, shall not be included, as the standards for the valuation, presentation, and disclosure of such assets are contemplated in the aforementioned criterion.

Estimation of Expected Credit Losses

For those accounts receivable other than those related to credit portfolios, entities shall, if applicable, create an estimate that reflects their degree of uncollectability. Such estimate shall be obtained by applying what is provided in section 42 of IFRS C-16.

Overdrafts in the checking accounts of the entity's customers, which do not have a credit line for such purposes, shall be classified as past-due debts, and entities shall simultaneously constitute an estimate for the total amount of such overdraft at the moment such event occurs.

With respect to operations with immediate collection documents not collected referred to in Criterion B-1 "Cash and Cash Equivalents" (Criterion B-1), after 15 calendar days following the date on which they were transferred to the item that gave rise to them, they shall be classified as past-due debts, and an estimate for their total amount shall be simultaneously constituted.

Collection rights acquired by the entity that fall under the circumstances provided for in paragraph 22 of Criterion B-4 shall be considered as financial assets receivable with high credit risk (Stage 3), and cannot be transferred to another stage due to any subsequent effect.

When the entity uses the practical solutions referred to in paragraph 42.6 of IFRS C-16, the constitution of estimates shall be for the total amount of the debt and shall not exceed the following deadlines:

within 60 calendar days following their initial registration, when they correspond to unidentified debtors, and

within 90 calendar days following their initial registration, when they correspond to identified debtors.

No estimate of expected credit losses shall be constituted for:

tax balances in favor, and

creditable value-added tax.

Expected credit losses for the impairment of investments in financial instruments as indicated in section 45 of IFRS C-2 shall be determined in accordance with what is established in IFRS C-16. Regarding this, although the CNBV does not establish specific methodologies for their determination, it would be expected that expected credit losses for the impairment of securities issued by a counterparty, be consistent with the impairment determined for credits granted to the same counterparty.

C-19 Financial Liabilities

Scope

For the purposes of IFRS C-19 "Financial Liabilities" (IFRS C-19), liabilities related to the operations referred to in Criterion B-3 are not included, as they are contemplated in said criterion.

Traditional Deposit Taking

In addition to the disclosures required in IFRS C-19 itself, the characteristics of the issuance of credit instruments shall be disclosed in the notes to the financial statements: amount; number of titles in circulation; nominal value; discount or premium; rights and form of redemption; guarantees; maturity; interest rate; effective interest rate; amortized amount of discount or premium in results; amount of issuance expenses and other related expenses, and the proportion that the authorized amount bears to the issued amount.

Bank Loans and Loans from Other Organizations

Entities shall disclose in the notes to the financial statements the total amount of bank loans, as well as those from other organizations, indicating the type of currency, as well as the maturity terms, guarantees, and average weighted rates to which they are subject, if applicable.

In the case of credit lines received by the entity in which not all of the authorized amount is utilized, the unused portion of them shall not be presented in the statement of financial position. However, entities shall disclose the unused amount through notes to the financial statements, in accordance with what is established in Criterion A-3, regarding the disclosure of financial information. Letters of credit contracted by the entity are included in the lines referred to in this paragraph.

Initial Recognition of a Financial Liability

The provisions of paragraph 41.1.1 item 4 of IFRS C-19 regarding using the market rate as the effective interest rate in the valuation of the financial liability when both rates are substantially different shall not apply.

Financial Liabilities Valued at Fair Value

The exception for irrevocably designating at initial recognition a financial liability to be subsequently valued at fair value with effect on net income, referred to in section 42.2 of IFRS C-19, shall not apply to entities.

C-20 Financial Assets to Collect Principal and Interest

For the purposes of IFRS C-20 "Financial Assets to Collect Principal and Interest" (IFRS C-20), assets originated from the operations referred to in Criterion B-4, issued by the CNBV, shall not be included, as the standards for recognition, valuation, presentation, and disclosure for the initial and subsequent recognition of such assets are contemplated in said criterion.

Initial Recognition of a Financial Asset to Collect Principal and Interest

The provisions of paragraph 41.1.1 item 4 of IFRS C-20 regarding using the market rate as the effective interest rate in the valuation of the financial asset to collect principal and interest when both rates are substantially different shall not apply.

Fair Value Option

The option to irrevocably designate at initial recognition a financial asset to collect principal and interest, to be subsequently valued at fair value with effect on net income, referred to in paragraph 41.3.4 of IFRS C-20, shall not apply to entities.

Loans to Officials and Employees

Interest arising from loans to officials and employees shall be presented in the statement of comprehensive income under the item of other income (expenses) from operations.

Loans to Retirees

Loans to retirees shall be considered part of the credit portfolio, and must adhere to the guidelines established in Criterion B-4, except when, just like active employees, the collection of such loans is carried out directly, in which case they shall be recorded in accordance with the guidelines applicable to loans to officials and employees.

D-3 Employee Benefits

The identification of obligations for employee benefits in short-term direct benefits, long-term direct benefits, termination benefits, and post-employment benefits shall be disclosed through notes to the financial statements.

D-4 Income Taxes

With respect to the disclosure required in IFRS D-4 "Income Taxes" (IFRS D-4) regarding the concepts of temporary differences, in addition, those differences related to the financial margin and to the main operations of the entities shall be disclosed.

D-5 Leases

Finance Leases

Scope

The provisions of this IFRS shall not apply to credits granted by the entity for finance lease operations, which is the subject of Criterion B-4, except for what is established in paragraph 65 of said Criterion B-4.

For the purpose of the requirements established in paragraph 42.1.4 item c) and item d) of IFRS D-5 "Leases" (IFRS D-5), it shall be understood that the lease term covers the major part of the economic life of the underlying asset, if such lease covers at least 75% of its useful life. Likewise, the present value of the lease payments is substantially all of the fair value of the underlying asset, if such present value constitutes at least 90% of said fair value.

Operating Leases

Accounting for the Lessor

For the amount of amortizations that have not been settled within 30 calendar days following the payment due date, the lessor shall create the corresponding estimate, suspending the accumulation of rents, keeping control in off-balance sheet accounts under the item of other register accounts.

The lessor shall present the account receivable in the item of other accounts receivable and the lease income in the item of other income (expenses) from operations in the statement of comprehensive income.

A-3 APPLICATION OF GENERAL STANDARDS

Objective and Scope

The present criterion aims to specify the establishment of general application standards that entities must observe.

The subject of this criterion is the establishment of general standards that must be considered in the recognition, valuation, presentation, and disclosure applicable for the accounting criteria for popular financial societies, community financial societies, and rural financial integration organizations.

Restricted Assets

These are considered to be all those assets regarding which there are circumstances by which they cannot be disposed of or used, and must remain in the same item from which they originated. Likewise, those assets arising from operations that do not settle on the same day, i.e., are received with a value date different from the negotiation date, shall be considered part of this category.

For this type of asset, this fact and its balance by type of operation shall be disclosed in a note to the financial statements.

Goods Promised for Sale or with Retention of Title

In cases where a promise of purchase or sale contract with retention of title is signed, the good shall be recognized as restricted, according to the type of good in question, at the same book value it had on the date of signing said contract, even if a higher price was agreed upon. Such good shall follow the same valuation, presentation, and disclosure standards, in accordance with the accounting criteria for popular financial societies, community financial societies, and rural financial integration organizations, that correspond to it.

Payments received on account of the good shall be recorded in liabilities as an advance payment.

On the date on which the good promised for sale or the purchase and sale with retention of title is alienated, the profit or loss generated shall be recognized in the results of the period as other income (expenses) from operations.

In the event that the contract is rescinded, the good shall cease to be recognized as restricted, and those advance payments over which the entity can dispose or must settle in accordance with the conditions of the contract, shall be recognized in the results of the period as other income (expenses) from operations, or as other accounts payable, as appropriate.

Liquidating Accounts

Regarding the active and passive operations carried out by entities, for example, in matters of investments in financial instruments and repurchase agreements, once these reach maturity and while the corresponding settlement is not received or delivered, as agreed in the respective contract, the amount of the operations due or payable shall be recorded in liquidating accounts (debtors or creditors for settlement of operations).

Likewise, for operations in which immediate settlement or same-day value date is not agreed upon, including foreign exchange sales and purchases, on the negotiation date, the amount to be received or paid shall be recorded in liquidating accounts, until its settlement is effected. The estimate of expected credit losses corresponding to the aforementioned amounts receivable shall be determined in accordance with what is established in IFRS C-16.

For the purposes of the presentation of financial statements, liquidating accounts shall be presented in the item of other accounts receivable (net) or other accounts payable, as appropriate. The balance of debtor and creditor liquidating accounts may be offset in terms of what is established by the offsetting rules provided in IFRS B-12 "Offsetting Financial Assets and Financial Liabilities" (IFRS B-12).

With respect to the operations referred to in paragraph 10, the balance receivable or payable shall be disclosed for each type of operation from which they originate (currencies, investments in financial instruments, repurchase agreements, etc.), specifying that these are operations agreed upon in which settlement is pending.

Various Estimates and Provisions

Estimates or provisions with undefined and/or unquantifiable purposes shall not be created, increased, or decreased against the results of the period. In any case, entities must comply with the regulation that the CNBV indicates regarding the determination of estimates and/or provisions.

Trusts

When entities acquire contribution certificates, certificates of fiduciary rights, residual interests, or any other title, contract, or document that grants their holder participation in the possible excess or remainder that the trust or recipient may generate, it shall be evaluated whether such participation grants control, joint control, or significant influence in accordance with what is established in the corresponding IFRS. In any case, financial assets representing the residual participation of a securitization vehicle shall be presented in the concept "Benefits on the remainder in securitization operations" under the item "Benefits to be received in securitization operations" in the statement of financial position.

Accrued Interest

Accrued interest for the different asset or liability items shall be presented in the statement of financial position together with their corresponding principal.

Recognition or Cancellation of Assets and/or Liabilities

The recognition or cancellation in the financial statements of assets and/or liabilities, including those arising from foreign exchange sales and purchases, investments in financial instruments, repurchase agreements, and issued securities, shall be carried out on the date that they economically affect the entity, regardless of the date on which they are carried out.

Disclosure of Financial Information

With regard to the disclosure of financial information, what is established in IFRS A-1, Chapter 80, "Presentation and Disclosure" shall be taken into account, regarding the fact that the responsibility for providing information on the economic entity rests with its administration. Such information must meet certain fundamental qualitative characteristics and enhancements, such as relevance, faithful representation, comparability, verifiability, timeliness, and understandability, based on what is provided in IFRS A-1, Chapter 40, "Qualitative Characteristics of Financial Statements" (IFRS A-1, Chapter 40).

Entities, in compliance with the disclosure standards provided in these accounting criteria, shall consider materiality in terms of IFRS A-1, Chapter 40, that is, they shall show the most important aspects of the entity recognized accounting-wise as indicated by that characteristic associated with relevance.

The foregoing implies, among other elements, that materiality requires the exercise of professional judgment regarding the circumstances that determine the facts reflected in the financial information. In the same sense, an appropriate balance must be obtained between the qualitative characteristics of the financial information in order to fulfill the objective of the financial statements, for which an optimal point must be sought rather than the achievement of maximum levels of all qualitative characteristics.

However, with regard to materiality, it shall not apply to information:

required by the CNBV through general provisions issued for that purpose, other than those contained in these criteria;

additional specific required by the CNBV, related to its supervisory activities, and

required through the issuance or authorization, if applicable, of special accounting criteria or records.

Disclosures Related to the Determination of Fair Value

Entities, with respect to the Present Value for Valuation provided by the price provider, in

the determination of fair value in accordance with Section Two of Chapter V of Title Four of the Provisions, in addition to what is stated in the corresponding accounting criteria or NIFs, must disclose, at a minimum, the following:

a) the level of the updated price hierarchy for valuation (or fair value hierarchy) within which the fair value determinations are classified, in accordance with the following:

i.
Level 1, highest level, corresponding to prices obtained exclusively with Level 1 input data.

ii.
Level 2, prices obtained with Level 2 input data.

iii.
Level 3, lowest level, for those prices obtained with Level 3 input data;

b) if there is any change in the valuation model, that change and the reasons for making it must be disclosed;

c) when there are changes from one period to another in the classification of the updated price hierarchy for valuation regarding the same value or financial instrument:

i. the amounts of transfers between Level 1 and Level 2 of the updated price hierarchy for valuation, and

ii. the amounts of transfers to or from Level 3 of the updated price hierarchy for valuation.

d) for those updated prices for valuation classified in Level 3, a reconciliation of opening balances with closing balances must be performed, separately disclosing changes during the period attributable to total period gains or losses recognized in net income and those recognized in other comprehensive income (OCI);

e) when there is a significant decrease in volume or level of activity relative to the normal market activity for a certain value or financial instrument, or in the presence of disordered conditions, the adjustments applied to the updated price for valuation, if any, must be explained, and

f) the name of the price provider, if any, that provided the updated price for valuation.

Quantitative information must be disclosed in tabular format, unless another format is more appropriate.

Valuation of UDI

The value announced by the Bank of Mexico in the Official Journal of the Federation, applicable on the valuation date, must be used.

A-4 SUPPLEMENTARY APPLICATION TO ACCOUNTING CRITERIA

Objective and Scope

This criterion aims to clarify the application of the standards contained in NIF A-1, Chapter 90, "Supplementarity" (NIF A-1, Chapter 90) issued by CINIF, considering that, when applying it, financial information is being prepared and presented in accordance with accounting criteria for popular financial societies, community financial societies, and rural financial integration organisms.

Definition

For the purposes of the accounting criteria for popular financial societies, community financial societies, and rural financial integration organisms, the supplementarity process applies when, in the absence of specific accounting standards issued by the CNBV in particular, and by CINIF in general, these are covered by a formal and recognized set of standards.

Concept of Supplementarity and Basic Standard

In the absence of a specific accounting criterion of the CNBV for the entities, and secondarily for credit institutions, or in a broader context, of the NIFs, the bases for supplementarity provided in NIF A-1, Chapter 90, mentioned above, will be applied, together with what is provided in the provisions of this criterion.

Other Supplementary Regulation

Only in the event that the International Financial Reporting Standards (IFRS) referred to in NIF A-1, Chapter 90, do not provide a solution for accounting recognition, one may opt for a supplementary standard belonging to any other regulatory scheme, provided it meets all the requirements indicated in the aforementioned NIF A-1, Chapter 90, for a supplementary standard, as well as those provided in paragraph 6 of this criterion, applying supplementarity in the following order:

a)
Generally Accepted Accounting Principles (GAAP) definitive, applicable in the United States of America, and

b) any accounting standard that is part of a formal and recognized set of standards.

For the purposes of the previous paragraph, it is considered that both official (authoritative) and non-official (nonauthoritative) sources form part of the GAAP applicable in the United States of America, in accordance with what is established in Topic 105 of the Accounting Standards Codification (ASC), (Codification) of the Financial Accounting Standards Board (FASB), in the following order:

a) official sources: the Codification, rules or interpretations of the Securities and Exchange Commission (SEC), Staff Accounting Bulletins, and SEC positions regarding the FASB Emerging Issues Task Force (EITF) Consensuses, and

b) non-official sources: widely recognized and preponderant practices either generally or in a specific industry, FASB Concepts Statements, documents of the American Institute of Certified Public Accountants (AICPA) Issues Papers, pronouncements of professional associations or regulatory agencies, and questions and answers of the Technical Information Service included in AICPA Technical Practice Aids.

Requirements of a Supplementary Standard and Rules of Supplementarity

In addition to what is established in the aforementioned NIF A-1, Chapter 90, the standards applied supplementarily must comply with the following:

a) they cannot be applied in advance;

b) they must not contravene the philosophy and general concepts established in the accounting criteria applicable to popular financial societies, community financial societies, and rural financial integration organisms;

c) the supplementarity process, if any, provided within each of the standards used supplementarily will not be applicable, except when such supplementarity meets the aforementioned subsections and authorization from this CNBV is obtained, and

d) standards that have been applied in the supplementarity process will be replaced when a specific accounting criterion is issued by the CNBV or an NIF on the subject in which said process was applied.

Disclosure Standards

Entities following the supplementary process recorded in this criterion must communicate in writing to the CNBV vice-presidency responsible for their supervision within 10 calendar days following its application, the accounting standard that has been adopted supplementarily, as well as its basis of application and the source used.

Additionally, entities must disclose through notes to the financial statements, the information requested in the aforementioned NIF A-1, Chapter 90, and the quantification of their impacts on the financial statements.

B-1 CASH AND CASH EQUIVALENTS

Objective and Scope

This criterion aims to define the specific standards relative to the recognition, valuation, presentation, and disclosure in the financial statements of the items that make up the cash and cash equivalents heading in the statement of financial position of the entities.

Definitions

Cash.- Legal tender currency and foreign currency in cash, as well as deposits in financial entities made in the country or abroad available for the entity's operation; such as, availability in checking accounts, bank drafts, telegraphic or postal orders, and remittances in transit.

Cash Equivalents.- Short-term, highly liquid values, easily convertible into cash that are subject to insignificant risks of changes in their value and are held to meet short-term commitments rather than for investment purposes; they may be denominated in national or foreign currency, for example, the purchase of currencies that are not considered financial derivatives according to what the Bank of Mexico establishes in the applicable regulation, as well as other cash equivalents such as correspondents, immediate collection documents, and highly liquid financial instruments.

Highly Liquid Financial Instruments.- Values whose disposal is expected within a maximum of 48 hours from their acquisition, generate returns, and have insignificant risks of changes in their value.

Deposits in financial entities represented or invested in securities, which do not meet the assumptions provided in the two previous paragraphs, will be subject to NIF C-2.

Recognition Standards

Cash must be initially recognized at its fair value, which is its nominal value.

All cash equivalents, upon initial recognition, must be valued at their fair value.

Returns generated by cash and cash equivalents will be recognized in the results of the period as they accrue.

Immediate collection documents "in firm" will be recognized in accordance with the following:

a) in the case of transactions with entities in the country, they must not contain uncollected items after 2 business days from the operation that gave rise to them, nor those that, having been deposited in banks, have been returned;

b) when corresponding to transactions with entities abroad, they must be recorded in cash and cash equivalents only if they are collectible within a maximum period of 5 business days.

When the documents indicated in the previous paragraph have not been collected within the aforementioned periods (2 or 5 days, as applicable), the amount of these will be transferred to the item that gave rise to them, that is, if they come from:

a) various debtors, the provisions of NIF C-3 or NIF C-20 will be attended to, as applicable, or

b) credit portfolio, the provisions of Criterion B-4 will be attended to.

Immediate collection documents "subject to good collection", of operations carried out with entities in the country or abroad, will be recorded in off-balance sheet accounts in the heading of other registration accounts.

Currencies acquired that are agreed to be settled on a date subsequent to the negotiation of the purchase-sale operation will be recognized on said negotiation date as restricted cash and cash equivalents (currencies to receive), while sold currencies will be recorded as an outflow of cash and cash equivalents (currencies to deliver). The counterparty must be a liquidating, creditor, or debtor account, as applicable, in accordance with what is established in Criterion A-3.

Valuation Standards

Cash must be maintained valued at its nominal value, while cash equivalents must be valued at their fair value.

Highly liquid financial instruments must be valued based on what is established in the standards on financial instruments, according to the business model corresponding to each type of instrument.

Presentation Standards

Statement of Financial Position

The heading of cash and cash equivalents must be shown in the statement of financial position of the entities as the first item that makes up the asset, including restricted cash and cash equivalents.

In the event that there is an overdraft in checking accounts reported in the account statement issued by the corresponding credit institution, the amount of the overdraft must be presented in the heading of other accounts payable, even if other checking accounts with the same credit institution are maintained. Likewise, if the compensated balance of currencies to receive with currencies to deliver, or if any concept that makes up the heading of cash and cash equivalents, were to show a negative balance, said concept must be presented in the heading of other accounts payable.

Statement of Comprehensive Income

Returns generated by deposits in financial entities, as well as the valuation effects of those constituted in foreign currency, will be presented in the statement of comprehensive income, as an interest income or expense, while the results from valuation and sale of currencies will be grouped in the heading of intermediation result, referred to in criterion D-2 "Statement of Comprehensive Income" (Criterion D-2).

Disclosure Standards

The heading of cash and cash equivalents will be broken down through notes to the financial statements including, as appropriate, cash, deposits in financial entities made in the country and abroad, and finally, other cash equivalents. Likewise, the following rules must be observed, as applicable:

a) when any item within the heading has restrictions regarding availability or purpose to which it is destined, its amount, the reasons for its restriction, and the probable date on which it will expire must be disclosed;

b) in the event that the balance of cash and cash equivalents is presented in the liability, in terms of what is stated in paragraph 16, this fact and the causes that gave rise to it must be disclosed;

c) the existence of cash and cash equivalents denominated in foreign currency must be disclosed, indicating its amount, type of currency involved, settlement term, quotations used for its conversion, and its equivalent in national currency, and

d) disclose the effect of subsequent events that, due to their importance, have substantially modified the valuation of cash and cash equivalents in foreign currency and in highly liquid financial instruments, between the date of the financial statements and the date on which they are authorized for issuance, in accordance with NIF B-13 "Subsequent Events after the Date of the Financial Statements".

B-3 REPO OPERATIONS

Objective and Scope

This criterion aims to define the specific standards relative to the recognition, valuation, presentation, and disclosure in the financial statements of repo operations.

The treatment of operations that, in accordance with what is established in NIF C-14, meet the requirements to derecognize the financial assets subject to the same, in virtue that the risks, benefits, and control of said financial assets are transferred, is not the object of this criterion, therefore, the provisions of NIF C-2 must be attended to.

Definitions

Financial Asset.- A right arising from a contract, which grants monetary economic resources to the entity. Therefore, it includes, among others:

a) cash or cash equivalents;

b) financial instruments generated by a contract, such as an investment in a debt or equity instrument issued by a third party;

c) a contractual right to receive cash or any financial instrument from another entity;

d) a contractual right to exchange financial assets or financial liabilities with a third party on favorable conditions for the entity, or

e) a right that will be collected with a variable number of equity instruments issued by the entity itself.

Substantially Similar Financial Assets.- Those financial assets that, among others, maintain the same primary obligor, identical form and type (therefore generating substantially the same risks and benefits), same maturity date, identical contractual interest rate, similar collateral, same outstanding balance.

Derecognition of Financial Assets.- The total or partial elimination of a financial asset, previously recognized in the statement of financial position of an entity, which takes place when that item no longer meets the definition of an asset, that is, when the entity loses control over it.

Collateral.- It is the safeguard constituted by an asset or group of assets to guarantee the payment of agreed counterperformances. For the purposes of repo operations, the collateral will at all times be those permitted in accordance with current regulation.

Counterperformances.- Cash and cash equivalents, the right to receive all or specific portions of cash flows from a trust, entity, or other figure, equity financial instruments, or any other type of asset that is obtained in a transfer of financial assets, including any obligation incurred. For the purposes of repo operations, the counterperformances will at all times be those permitted in accordance with current regulation.

Amortized Cost.- It is a historical cost valuation basis applicable to financial assets and financial liabilities and reflects the present value of future flows. For variable rate instruments, the discount rate is updated to reflect changes in it. The amortized cost of a financial asset or financial liability is updated over time to describe subsequent changes, such as the accrual of interest, the impairment of the financial asset, and collections and payments.

Equity Instruments.- Any document or title originating from a contract that evidences the participation or the option to participate in the net assets of an entity.

Effective Interest Method.- It is used in the calculation of the amortized cost of a financial instrument to distribute its effective interest income or expense in the corresponding periods of the life of the financial instrument.

Cash-Oriented Repo Operations.- Transaction motivated by the need of the repo seller to obtain cash financing and the intention of the repo buyer to invest its excess cash.

Value-Oriented Repo Operations.- Transaction motivated by the need of the repo buyer to temporarily access certain specific financial instruments and the intention of the repo seller to increase the returns on its investments in financial instruments.

Fixed Price at Maturity.- It is that right or obligation, as the case may be, represented by the agreed price plus the repo interest, agreed upon in the operation.

Agreed Price.- Represents the right or obligation to receive or deliver resources, agreed upon at the beginning of the operation.

Repo Seller (Reportada).

That entity that receives cash, through a repo operation in which it transfers financial assets as collateral, with the obligation to reintegrate to the repo buyer (Reportadora) at the end of the operation the cash and agreed repo interests.

Repo Buyer (Reportadora).- That entity that delivers cash, through a repo operation, in which it receives financial assets as collateral, with the obligation to return them to the repo seller at the end of the operation and receiving the cash plus the agreed repo interest.

Repo.- Operation by means of which the repo buyer acquires for a sum of money the ownership of credit titles, and obligates itself to transfer to the repo seller the ownership of as many titles of the same species, within the agreed term and against reimbursement of the same price plus a premium. The premium remains for the benefit of the repo buyer, unless otherwise agreed.

Effective Interest Rate.- It is the rate that exactly discounts the estimated future cash flows to be collected or settled during the expected life of a financial instrument in the determination of its amortized cost; its calculation must consider contractual cash flows and related transaction costs.

Repo Rate.- It is the agreed rate with which the payment of interest for the use of cash in the repo operation is determined.

Fair Value.- It is the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the valuation date.

Characteristics

Economic and Legal Substance of Repo Operations

Repo operations for legal purposes are considered as a sale, where an agreement to repurchase the transferred financial assets is established. Nevertheless, the economic substance of repo operations is that of a collateralized financing, where the repo buyer delivers cash as financing, in exchange for obtaining financial assets that serve as protection in case of default.

In this regard, the financial assets granted as collateral by the repo seller, which do not meet the requirements to be derecognized in terms of what is established by NIF C-14, continue to be recognized in their statement of financial position, since they retain the risks, benefits, and control over them; that is, if there were any change in fair value, accrual of interest, or dividends were declared on the financial assets granted as collateral, the repo seller is the one exposed, and therefore recognizes, said effects in its financial statements.

In contrast, those operations where economically the repo buyer acquires the risks, benefits, and control of the transferred financial assets cannot be considered as repo operations, being subject to NIF C-2.

Intentionality of Repo Operations

In repo operations, there are generally two types of intentions, either of the repo seller or the repo buyer: the "cash-oriented" or the "value-oriented".

In a "cash-oriented" repo, the intention of the repo seller entity is to obtain cash financing, dedicating financial assets as collateral for this purpose; on the other hand, the repo buyer obtains a return on its investment at a certain rate and, not seeking any specific value, receives financial assets as collateral to mitigate the credit risk exposure it faces regarding the repo seller.

In this sense, the repo seller pays the repo buyer interest on the cash received as financing, calculated based on the agreed repo rate (which is usually lower than the rate existing in the market for financing without collateral in place). On the other hand, the repo buyer achieves returns on its investment whose payment is secured through the collateral.

In a "value-oriented" repo, the intention of the repo buyer is to temporarily access certain values

specifics possessed by the reporting entity (for example, if the reporting entity, through a prior repo operation in which it acts as the reporting party, contracted a commitment on a value similar to the object of the new operation), providing cash as collateral, which serves to mitigate the exposure to risk that the reporting party faces with respect to the reporting entity.

In this regard, the reporting party pays the reporting entity the agreed interest at the repo rate for the implicit financing obtained on the cash received, where said repo rate is generally lower than that which would have been agreed in a "cash-oriented" repo.

In repo operations, an agreed price is usually established whose value is above or below the cash exchanged, so the difference between the cash exchanged and the agreed price serves to protect the counterparty exposed to the risks of the operation (for example, against market risk). If the operation is "cash-oriented", the reporting party generally grants financial assets as collateral at an agreed price lower than market value, so its fair value is higher than the cash received; in contrast, if it is "security-oriented", the reporting entity will generally receive titles as collateral at an agreed price higher than market value, so its fair value is below the cash granted.

The delivery of collateral may occur at the beginning of the operation or during the life of the repo regarding variations in the fair value of the granted collateral.

Considering all the above, despite the economic intent, the accounting treatment of "cash-oriented" or "security-oriented" repo operations is the same.

Recognition and Valuation Standards

Reporting Entity

On the date of contracting the repo operation, acting as the reporting entity, it must recognize the outflow of cash and cash equivalents or a creditor clearing account, recording a receivable initially measured at the agreed price, which represents the right to recover the cash delivered.

During the life of the repo, the receivable referred to in the preceding paragraph shall be valued at its amortized cost, through the recognition of repo interest in the results of the period as it accrues, in accordance with the effective interest method, affecting said receivable.

The financial assets that the reporting entity has received as collateral must be treated in accordance with the following section.

Collateral Granted and Received Other Than Cash

The collateral granted by the reporting party to the reporting entity (other than cash) must be recognized as follows:

the reporting entity will recognize the received collateral in off-balance sheet accounts, following for its valuation the guidelines established in the applicable accounting criterion for popular and community financial societies, as well as rural financial integration organisms, as applicable;

the reporting entity, upon selling the collateral, must recognize the resources from the transaction, as well as a payable account for the obligation to return the collateral to the reporting party (initially measured at the agreed price) which shall be valued at its fair value (any difference between the price received and the value of the payable account will be recognized in the results of the period);

in the event that the reporting party fails to comply with the conditions established in the contract and therefore cannot claim the collateral, the reporting entity must recognize in its statement of financial position the entry of the collateral, as established in the accounting criteria for popular financial societies, community financial societies, and rural financial integration organisms, according to the type of asset involved, against the receivable referred to in paragraph 32, or, if the collateral had previously been sold, it must derecognize the payable account referred to in subsection b), relating to the obligation to return the collateral to the reporting party;

the reporting entity must recognize the collateral in its financial statements only in off-balance sheet accounts, except for what is established in subsection c) above, that is, when the risks, benefits, and control of the collateral have been transferred due to the default of the reporting party, and

the off-balance sheet accounts recognized for collateral received by the reporting entity must be cancelled when the repo operation reaches maturity or there is default by the reporting party.

In the case of operations where the reporting entity sells the received collateral, it must keep in off-balance sheet accounts control of said sold collateral, following for its valuation the guidelines of the accounting criterion applicable to popular and community financial societies, as well as rural financial integration organisms, as applicable.

The off-balance sheet accounts recognized for received collateral that has in turn been sold by the reporting entity must be cancelled when the entity acquires the sold collateral to return it to the reporting party, or if there is default by the counterparty.

Presentation Standards

Statement of Financial Position

The receivable representing the right to receive cash, as well as accrued interest, must be presented within the statement of financial position, under the item of debtors for repos.

The collateral received from the reporting party must be presented in off-balance sheet accounts under the item of collateral received by the entity.

The payable account referred to in subsection b) of paragraph 35, which represents the obligation of the reporting entity to return to the reporting party the collateral that it had sold, must be presented within the statement of financial position under the item of sold or pledged collateral.

The off-balance sheet accounts referred to in paragraph 36, regarding those collateral received by the reporting entity that have in turn been sold, must be presented under the item of received and sold collateral or delivered as guarantee by the entity.

Statement of Comprehensive Income

The accrual of repo interest derived from the operation will be presented under the item of interest income.

The difference referred to in subsection b) of paragraph 35 that, if any, was generated by the sale will be presented under the item of intermediation result.

The fair value valuation of the payable account referred to in subsection b) of paragraph 35, which represents the obligation of the reporting entity to return to the reporting party the collateral that it had sold, will be presented under the item of intermediation result.

Offsetting of Financial Assets and Liabilities

For the purposes of offsetting between financial assets and liabilities acting as the reporting entity, the provisions of NIF B-12 must be observed.

Disclosure Standards

Entities must disclose through notes to the financial statements, the information corresponding to repo operations as follows:

total amount of operations carried out;

amount of repo interest recognized in the results of the period;

average terms in the contracting of outstanding repo operations;

type and total amount by type of asset of received collateral;

for received and in turn sold collateral, the total amount by type of asset, and

the agreed rate in relevant operations.

B-4 CREDIT PORTFOLIO

Objective and Scope

The present criterion aims to define the particular standards relative to initial and subsequent recognition, valuation, presentation, and disclosure in the financial statements of the credit portfolio of entities.

This criterion also includes accounting guidelines relative to the recognition and presentation of the preventive estimate for credit risks.

The following are not subject to this criterion:

the establishment of the methodology for the qualification and constitution of the preventive estimate for credit risks;

accounting standards relative to financial instruments, which are traded on recognized markets and which the entity maintains in its own position, even if they are linked to credit operations, being subject to NIF C-2 or NIF C-20, as applicable;

receivables from customers and other receivables, which are subject to NIF C-3, and

the collection rights that the entity acquires that fall under the circumstances provided in the following paragraph 22, will be subject to NIF C-20.

Definitions

Borrower.- The natural or legal person, or trust to whom a credit is granted and who is obligated to pay the capital and other benefits agreed with the grantor.

Aforo.- The amount of the nominal value of the credit rights transferred in a factoring, discount, or assignment of credit rights operation, which the receiver does not finance to the factor or transferor and which is obligated to deliver to the latter, once the collection of the portfolio subject to factoring, discount, or assignment of credit rights is carried out.

Financial Lease.- That which transfers to the lessee substantially all the risks and benefits inherent to the ownership of the underlying asset.

Portfolio Qualification.- Methodology used by entities to determine the credit risk associated with credits granted by them.

Payment Capacity.- For the purposes of this criterion, it will be understood that payment capacity exists when the conditions established for this effect in the Provisions are met.

Credit Risk Portfolio Stage 1.- All those credits whose credit risk has not increased significantly since their initial recognition up to the date of the financial statements and which do not fall under the circumstances to be considered stage 2 or 3 in terms of this criterion.

Credit Risk Portfolio Stage 2.- Includes those credits that have shown a significant increase in credit risk since their initial recognition up to the date of the financial statements in accordance with the calculation models for the preventive estimate for credit risks established or permitted in the Provisions, as well as what is provided in this criterion.

Credit Risk Portfolio Stage 3.- Those credits with credit impairment originated by the occurrence of one or more events that have a negative impact on the future cash flows of said credits in accordance with what is provided in this criterion.

Write-off.-

Is the cancellation of the credit when there is evidence that formal collection efforts have been exhausted and, as a consequence, the entity's administration determines that it has no reasonable expectations of recovering it, either totally or partially.

Assignment of Credit Rights.- Operations of financing by virtue of which the ownership of credit rights is transmitted to an entity. Acquisitions of credit portfolios will not be considered as Assignment of Credit Rights operations.

Consolidation of Credits.- The integration into a single credit, of two or more credits granted by the same entity to the same borrower.

Amortized Cost.- Is a historical cost valuation basis applicable to financial assets and financial liabilities and reflects the present value of future flows. For variable rate instruments, the discount rate is updated to reflect changes in it. The amortized cost of a financial asset or financial liability is updated over time to describe subsequent changes, such as the accrual of interest, the impairment of the financial asset, and collections and payments.

Transaction Costs.- Are incremental costs directly attributable to the acquisition or generation of a credit, that is, those that would not have been incurred if the entity had not acquired or generated the credit, proceed directly from the transaction and are an essential part of it. Additionally, costs attributable to the restructuring or renewal of the credit will be considered transaction costs.

Credit.-

Is a transaction by which an entity delivers to a borrower an amount of cash as financing, which must be returned by the borrower within a certain period, adding an amount for the concept of interest. This without prejudice to what the applicable legal provisions establish.

Housing Credits.- Direct credits denominated in national currency or investment units (UDIs), as well as the interest they generate, granted to natural persons and destined for the acquisition, construction, remodeling, or improvement of housing without commercial speculation purpose that have a mortgage guarantee on the borrower's housing. Additionally, credits granted for such effects to exempted persons of the entities and those liquidity credits guaranteed by the borrower's housing are included.

Commercial Credits.- The following direct or contingent credits denominated in national currency or UDIs, as well as the interest they generate, are considered as such, among others:

those granted to legal persons or natural persons with business activity and destined for their commercial or financial activity (for example, bridge credits);

credits from factoring, discount, and assignment of credit rights operations;

productive microcredit;

credits from financial lease operations that are celebrated with legal or natural persons with business activity;

credits granted to trustees acting under trusts and credit schemes commonly known as "structured" in which there is an asset encumbrance that allows evaluating the risk associated with the scheme individually;

credits granted to financial entities;

liquidity loans granted to other popular or community financial societies in accordance with applicable legislation, and

federative entities and municipalities.

Consumer Credits.- Direct credits, including liquidity credits that do not have real estate guarantee, denominated in national currency or UDIs, as well as the interest they generate, granted to natural persons, derived from credit card operations, personal credits, payroll credits (different from those granted via credit card), credits for the acquisition of durable consumer goods (known as ABCD), which includes among others automotive credit and financial lease operations that are celebrated with natural persons, including those credits granted for such effects to exempted persons of the entities.

Restricted Credits.- Those credits are considered as such with respect to which there are circumstances by which they cannot be disposed of or used, and must be presented as restricted; for example, the credit portfolio that the transferring entity grants as guarantee or collateral in securitization operations.

Acquired Collection Rights.- Credits acquired by entities on which it is determined that, based on current information and facts, as well as in the credit review process, there is a considerable probability that the contractually exigible amounts (principal and interest) cannot be recovered in their entirety, in accordance with the originally agreed terms and conditions, and that at the time of their acquisition and during their life, they are considered credit risk portfolio stage 3, the price paid for each credit cannot be identified, or there is no element or information that allows the acquirer to apply the regulation in credit matters issued by the CNBV.

Debtor of Credit Rights.- The natural or legal person to whom the credit rights transferred from the factor (transferor) to the factor (receiver) in a factoring, discount, or assignment of credit rights operation are originally exigible.

Preventive Estimate for Credit Risks.- Affectation made against the results of the period that measures that portion of the credit estimated to have no collection viability.

Factor (Transferor).- The natural or legal person who transfers the credit rights in their favor, whose payment obligation is borne by the debtor of the credit rights subject to financial factoring.

Financial Factoring.- Operation by virtue of which the factor agrees with the factor, who may be a natural or legal person, to acquire credit rights that the latter has in their favor for a determined or determinable price, in national currency or UDIs, regardless of the date and form of payment, it being possible to agree that the factor remains obligated to respond for the punctual and timely payment of the credit rights transmitted to the factor.

Factor (Receiver).- The entity that acquires the credit rights in favor of the factor (Transferor).

Credit Line.- It is an agreement that, by its contractual conditions, has the characteristic of making a credit available to the client; that is, a certain amount of money for a determined period of time. Overdrafts on checking accounts derived from a credit line must be included in this category.

Productive Microcredit.- It is that credit granted by the entity to its borrowers or groups of borrowers, destined to finance their productive activity and whose source of payment constitutes the flows originated by said productive activity.

In any case, the groups of borrowers mentioned must be jointly or solidarily obligated.

Effective Interest Method.- It is the one used in the calculation of the amortized cost of the credit portfolio to distribute its effective interest income or expense in the corresponding periods of the life of the credit portfolio.

Discount Operation.- Operation by virtue of which the discounting entity obligates itself to anticipate to the discounted party the amount of a credit against a third party and with future maturity, in exchange for the alienation in favor of the discounting entity of said credit, decreased by an interest in favor of the discounting entity.

Payment.- Real delivery of the thing or quantity owed or the provision of the service that had been agreed. Financial income from accrual derived from financial lease, financial factoring, discount, or assignment of credit rights operations, nor interest that is capitalized, will not be considered as payment.

Write-offs, discounts, forgiveness, bonuses, and discounts made to a credit or group of credits are not considered payments.

Sustained Credit Payment.- Borrower's payment compliance without delay for the total exigible amount of principal and interest, in accordance with what is established in the sustained credit payment section, contained in this criterion.

Restructuring.- It is that renegotiation from which any modification to the original conditions of the credit results, among which are:

change of the interest rate established for the remaining term of the credit;
change of currency or unit of account (for example, UDI);
granting of a waiting period regarding the compliance with payment obligations according to the original terms of the credit;
extension of the credit term;
modification of the agreed payment scheme, or
expansion of guarantees that cover the credit in question.

Renewal.-

It is that renegotiation in which the balance of a credit is liquidated partially or totally, by the debtor, its solidary obligors, or another person who by their patrimonial links constitutes common risks with the debtor, through the increase in the original amount of the credit, or with the product from another credit contracted with the same entity or with a third party who by their patrimonial links with the latter constitutes common risks.

Notwithstanding the above, a credit will not be considered renewed by the provisions made during the validity of a pre-established credit line, as long as the borrower has liquidated the totality of the payments exigible to them according to the original conditions of the credit.

Credit Risk.- For the purposes of this criterion, it is defined as the potential loss due to the lack of payment of a borrower or counterparty in the operations carried out by entities, including the real or personal guarantees granted to them, as well as any other mitigation mechanism used by entities.

Common Risk.- As thus defined in the Provisions.

Outstanding Balance.- For the purposes of this criterion, it is integrated by the amount effectively granted to the borrower, adjusted by the accrued interest that has been recognized in accordance with what is established in this criterion, other financed concepts, collections of principal and interest, as well as by discounts, forgiveness, bonuses, and discounts that have been granted.

Effective Interest Rate.- Is the rate that exactly discounts the estimated future cash flows to be collected during the expected life of a credit in the determination of its amortized cost; its calculation must consider contractual cash flows and related transaction costs.

Unsecured Residual Value.- Is the part of the residual value of the underlying asset, whose realization by the lessor is not assured or that is only guaranteed by a related party of the same.

Recognition and Valuation Standards

Business Model

The business model refers to how the entity administers or manages the credit portfolio to generate cash flows. That is, the entity's business model determines whether the cash flows will proceed from obtaining contractual cash flows, from the sale of the credit portfolio, or from both.

The entity's business model to administer or manage the credit portfolio is a matter of facts and not of mere intention or assertion. It is generally observable through the activities that the entity carries out to achieve the objective of the business model.

The credit portfolio must be recognized in terms of this criterion, if the objective of the business model is to hold it to collect contractual cash flows and the contract terms provide for cash flows in

pre-established dates, which correspond only to principal and interest payments on the outstanding principal amount. If the above is not met, it must be treated in accordance with what is established in NIF C-2.

To determine whether the contractual cash flows of the credit portfolio will be realized through collection, it is necessary to consider the frequency, value, and timing of credit portfolio sales in previous periods, the reasons for such sales, and expectations regarding future sales activity. However, isolated sales do not determine the business model; instead, information on past sales and expectations regarding future sales provide evidence related to how the entity achieves its stated objective for managing or administering the credit portfolio and, specifically, how cash flows are realized. The entity must consider information on past sales in the context of the reasons for such sales and the conditions that existed at that time compared to current ones.

The business model may be to hold the credit portfolio to collect its cash flows, even if the entity sells it when there is an increase in its credit risk. Regardless of their frequency and value, sales originated by an increase in the credit risk of the credit portfolio are not inconsistent with a business model whose objective is to hold it to collect contractual cash flows, because credit risk quality is relevant regarding the entity's ability to collect contractual cash flows. Credit risk management activities aimed at minimizing potential credit losses due to credit deterioration are an integral part of a business model.

The entity must document the tests it performs to determine that a credit or portfolio of credits meets the assumption that the contract's cash flows correspond only to principal and interest payments, or that, due to its characteristics, it must be valued at fair value.

Previously evaluated credits or portfolios of credits whose contractual conditions are modified, and in the case of new products, must be subject to the tests referred to in the previous paragraph, and must be authorized by the entity's Credit Committee, as well as communicated in writing to the CNBV within the 10 natural days prior to their application, detailing the justification for their classification within the business model for collection of principal and interest, for trading, or for holding to collect and sell.

The entity must periodically evaluate, in accordance with its established policies for such purposes, the characteristics of its business model to classify the credit portfolio based on its objective. The aforementioned policies must be duly documented.

The CNBV may, at any time, order that financial instruments that had been valued at fair value in accordance with paragraph 45, be valued at their amortized cost, when in its judgment there are elements to conclude that its business model is to hold them to collect the corresponding cash flows for their principal and interest.

Initial Recognition

The transaction price corresponding to the net financed amount must be quantified, which results from adding or subtracting from the original credit amount, the insurance that has been financed, transaction costs, commissions, interest, and other items charged in advance. Such transaction price corresponds to the fair value of the credit portfolio at initial recognition and will be the basis for applying the effective interest method with the effective interest rate; that is, it is the basis for calculating the amortized cost of the credit portfolio for its subsequent recognition.

The balance in the credit portfolio will be the amount effectively granted to the borrower and will be recorded independently of transaction costs, as well as the items charged in advance referred to in the previous paragraph, which will be recognized as a deferred charge or credit, as appropriate, and must be amortized against the results of the period during the life of the credit, in accordance with the effective interest rate. Regarding commissions charged and transaction costs related to the issuance of credit cards, they must be recognized directly in the results of the period, at the time the credit is granted.

For the purposes of the previous paragraph, transaction costs include, among others, fees and commissions paid to agents, advisors, and intermediaries, appraisals, investigation expenses, as well as the credit evaluation of the debtor, evaluation and recognition of guarantees, negotiations for the terms of the credit, preparation and processing of credit documentation, and closing or cancellation of the transaction, including the proportion of compensation to employees directly related to the time invested in the development of those activities. On the other hand, transaction costs do not include premiums or discounts, which form part of the fair value of the credit portfolio at the time of the transaction.

Any other expense not associated with the granting of the credit such as those related to promotion, advertising, potential customers, administration of existing credits (follow-up, control, recoveries, etc.) and other auxiliary activities related to the establishment and monitoring of credit policies, will be recognized directly in the results of the period as they are incurred in the item corresponding to them according to the nature of the expense.

Commissions charged and transaction costs originating from a credit line will be recognized at that moment as a deferred credit or charge, which will be amortized against the results of the period for the period corresponding to the term granted in the credit line. In the event that the credit line is cancelled, the outstanding balance to be amortized must be recognized directly in the results of the period in the corresponding item, on the date the line is cancelled.

Determination of the Effective Interest Rate

To determine the effective interest rate, the entity must follow the following steps:

determine the amount of estimated future cash flows to be received. - By summing the principal and interest that will be received according to the credit's payment schedule, during the contractual term, or for a shorter term if there is a probability of payment before the maturity date or another circumstance justifying the use of a shorter term;

determine the effective interest. - By deducting from the estimated future cash flows to be received, determined in accordance with the previous item, the net financed amount, determined in accordance with the previous paragraph 52, and

determine the effective interest rate. - It represents the relationship between the amount referred to in the previous item 1 and the net financed amount referred to in paragraph 52 above.

When, in terms of the previous item 1, the entity uses a term shorter than the contractual one, it must have sufficient evidence of the circumstances justifying the application of that option.

The effective interest rate may be determined for a portfolio of credits provided that the contractual terms, as well as the costs and income associated with their granting, are identical for the entire portfolio.

When, in accordance with the terms of the contract, the interest rate is modified periodically, the effective interest rate calculated at the beginning of the period may be the one used throughout the life of the credit, that is, it should not be redetermined for each period. The above must be supported by the accounting policies of each entity.

There is a presumption that future cash flows and the expected life of the credit can be reliably estimated; however, in those cases where it is not possible to reliably estimate future cash flows or the estimated life of the credit or credits, the entity must use contractual cash flows. The above must be duly documented and authorized by the entity's credit committee.

Acquisitions of Credit Portfolios

On the commitment date, that is, the date on which the entity commits to acquire the credit portfolio, it must be recognized in accordance with the type of portfolio that the transferor had classified it, applying the following steps:

determine the fair value of the acquired credit portfolio, which corresponds to the price of the transaction, and

transaction costs must be added to the aforementioned fair value. This amount corresponds to the value at which the acquired credit portfolio must be recognized; being the basis for applying the effective interest method with the effective interest rate.

The amount determined in the previous item 2 minus the amount of the preventive estimate for credit risks determined in accordance with what is stated in this criterion, which must take into account the defaults that the credit has presented since its origin, represents the amortized cost of the acquired credit portfolio.

The balance to be recorded for the acquired portfolio will be that indicated in item 1 of the previous paragraph and will be recorded independently of transaction costs, which will be recognized as a deferred charge or credit, as appropriate, and must be amortized against the results of the period during the life of the credit, in accordance with the effective interest rate.

The calculation of the effective interest rate referred to in the immediately preceding paragraph must be carried out as follows:

the amount of estimated future cash flows to be received for principal and interest must be determined according to the agreed payment schedule during the contractual term, or for a shorter term, if there is a probability of payment before the maturity date or another circumstance justifying the use of a shorter term, and

the effective interest rate must be determined, which corresponds to the relationship between the amount determined in the previous item 1 and the amount determined in step 2 of paragraph 61.

In the event that there is any difference between the value of the acquired credit portfolio on the commitment date and on its settlement date, it must be recognized as part of interest to be collected.

Financial Leasing Operations

In financial leasing operations, in which the entity acts as the lessor, it will recognize at the beginning of the contract within its credit portfolio the contractual value of the leasing operation plus the unguaranteed residual value that will accumulate for the benefit of the lessor, against the cash outflow. The financial income to be accrued will be recognized based on the outstanding credit balance against the results of the period, in the item of interest income, in accordance with NIF D-5.

For the security deposits received by the lessor, it must record the cash inflow against the corresponding liability.

When the lessee opts to participate in the sale price of the goods to a third party, the entity will recognize the income corresponding to it at the time of the sale against the results of the period as other income (expenses) of the operation.

Financial Factoring, Discounting, and Assignment of Credit Rights Operations

At the beginning of the operation, the value of the received portfolio will be recognized in the asset against the cash outflow, the agreed allowance recognized as other accounts payable, and, if applicable, the financial income to be accrued that derives from factoring, discounting, or assignment of credit rights operations.

The financial income to be accrued referred to in the previous paragraph will be determined, if applicable, by the difference between the value of the received portfolio minus the allowance and the cash outflow. Such financial income to be accrued must be recognized within the item of deferred credits and advance collections and recognized in the statement of comprehensive income in accordance with the effective interest rate, attending to what is established in the previous paragraph 57.

In the event that the operation generates interest, these will be recognized as they accrue.

The amount of advances that, if any, are granted will be recognized as part of financial factoring, discounting, or assignment of credit rights operations, within the concept of commercial credits.

Subsequent Recognition

In subsequent recognition, the credit portfolio must be valued at its amortized cost, which must include increases due to accrued effective interest, decreases due to the amortization of transaction costs and items charged in advance, as well as decreases due to collections of principal and interest and for the preventive estimate for credit risks.

Commissions recognized after the granting of the credit, those generated as part of the maintenance of said credits, as well as those charged in connection with credits that have not been placed, will be recognized against the results of the period on the date they accrue. In the case of commissions charged for credit card annual fees, they will be recognized as a deferred credit and will be amortized over a period of 12 months against the results of the period in the item of commissions and fees charged.

Reclassifications

The entity must reclassify the credit portfolio only in the event that its business model is modified. Such changes must be infrequent and determined by the highest authority of the entity in operational decision-making, that is, by the general manager or operations manager, or a group of executives, and must be the result of external or internal changes that are significant for the entity's operations and that can be demonstrated to third parties.

Reclassifications must be communicated in writing to the CNBV, within the 10 business days following their determination, detailing the change in the business model that justifies them. The reclassification must be made prospectively and must not modify previously recognized gains or losses.

If the entity reclassifies a credit portfolio valued at fair value with effect in results, to be valued at its amortized cost, its fair value on the date of reclassification must be its initial amortized cost, calculating the effective interest rate in accordance with paragraph 63 of this criterion.

If the entity reclassifies a credit portfolio valued at fair value with effect in other comprehensive income, such effect must be cancelled against the value of the credit portfolio, so that it remains valued at its amortized cost, as if it had always been recognized on this basis.

Renegotiations of Credit Portfolio

If the entity restructures a credit with credit risk stage 1 and 2, or by means of a renewal it partially liquidates it, it must determine the gain or loss in the renegotiation as follows:

determine the book value of the credit without considering the preventive estimate for credit risks;

determine the new future cash flows, on the restructured or partially renewed amount, discounted at the original effective interest rate, and

recognize the difference between the book value and the cash flows determined in subsection b) above as a deferred charge or credit against the gain or loss from credit portfolio renegotiation in the statement of comprehensive income.

The amount of the restructured or partially renewed credit will serve as the basis for applying the original effective interest rate, which must only be adjusted, if applicable, to include, transaction costs, commissions, and other items charged in advance generated in the renegotiation. The deferred items referred to in paragraph 53 pending amortization, as well as those originated in the renegotiation, will be amortized during the new term of the credit based on the effective interest rate.

For the purposes of paragraph 78, the book value of the credit is considered the amount effectively granted to the borrower, adjusted for accrued interest, other financed concepts, collections of principal and interest, as well as for write-offs, forgiveness, bonuses, and discounts that have been granted, and, if applicable, transaction costs and items charged in advance.

The determination of the gain or loss from renegotiation referred to in paragraph 78 will not be applicable to credit cards, to the credits referred to in paragraph 56, or to credits with credit risk stage 3.

If the entity renews a credit, it will be considered that there is a new credit, so the previous credit must be derecognized in the case of a total renewal.

Credit Lines

In the case of credit lines that the entity has granted, in which not all of the authorized amount is exercised, the unused portion of them must remain recognized in off-balance sheet accounts.

Other Considerations of Subsequent Recognition

Partial payments received in kind to cover amortizations (principal and/or interest) accrued, due, or written off, will be recorded in accordance with what is established in criterion B-5 "Assets Adjudicated" (Criterion B-5).

Categorization of the Credit Portfolio by Credit Risk Level

Portfolio with Credit Risk Stage 1

Credits granted and acquired by the entity will be recognized in this category, provided they do not meet the categorization criteria referred to in the sections of Transfer to Credit Portfolio with Credit Risk Stage 2 and Transfer to Credit Portfolio with Credit Risk Stage 3.

Transfer to Credit Portfolio with Credit Risk Stage 2

Credits must be recognized as credit portfolio with credit risk stage 2, attending to what is provided in the Provisions, with the exception of the credits described in the following paragraph.

Transfer to Credit Portfolio with Credit Risk Stage 3

The outstanding balance according to the payment conditions established in the credit contract must be recognized as credit portfolio with credit risk stage 3 when:

it is known that the borrower is declared bankrupt, in accordance with the Commercial Bankruptcy Law.

Without prejudice to what is provided in this item, credits that continue to receive payment in terms of what is provided by fraction VIII of article 43 of the Commercial Bankruptcy Law, as well as credits granted under article 75 in relation to fractions II and III of article 224 of said Law, will be transferred to credit portfolio with credit risk stage 3 when they incur in the circumstances provided for in item 2 below.

the amortizations of non-revolving consumer credits have been partially paid, provided that the debts correspond to:

Credits with

Natural Days Past Due

Single payment of principal and interest

at maturity

30 or more days in principal and

interest

Single payment of principal at

maturity and with periodic

interest payments

90 or more days in interest, or

30 or more days in principal

Periodic partial payments of

principal and interest

90 or more days in principal or

interest

For the purposes of what is provided in this item, the payment made in each billing period will be used to liquidate first the oldest past-due billing and then the subsequent one, if any, and so on successively until the most recent billing.

the amortizations of credits not considered in the previous item, whose amortizations have not been fully liquidated in the terms originally agreed, provided that the debts correspond to:

Credits with

Natural Days Past Due

Single payment of principal and interest

at maturity

30 or more days in principal and

interest

Single payment of principal at

maturity and with periodic

interest payments

90 or more days in interest, or

30 or more days in principal

Periodic partial payments of

principal and interest

90 or more days in principal or

interest

the immediate collection documents referred to in Criterion B-1, will be reported as portfolio with credit risk stage 3 when they have not been collected according to the term established in said Criterion B-1.

Credits with respect to which entities have some element to determine that they must migrate from stage 1 or 2 to stage 3 must be recognized as credit portfolio with credit risk stage 3, in accordance with what is provided in the Provisions.

With respect to the terms referred to in items 2 and 3 of paragraph 87, monthly periods may be used, regardless of the number of days each calendar month has, in accordance with the following equivalences:

One calendar month

30 days

Three calendar months

90 days

Likewise, regarding credits in which the payment conditions established in the credit contract stipulate payments with a frequency less than one calendar month, for the purposes of the aforementioned terms, entities must consider the following equivalences:

Contractual

Payment

Frequency

Equivalence

30 days

90 days

Biweekly

fortnights

More than 6

fortnights

Biweekly

fortnights

Decadal

decades

More than 9

decades

Weekly

weeks

More than 13

weeks

Likewise, in the event that the fixed term expires on a non-business day, that term will be understood to be concluded on the first subsequent business day.

In the case of credit portfolio acquisitions, for the determination of past-due days and their corresponding transfer to credit portfolio with credit risk stage 3 as indicated in paragraphs 87 to 89, defaults presented by the borrower since its origin must be taken into account.

Credits with credit risk stage 3 or stage 2 in which the outstanding payable balances (principal and interest, among others) are fully liquidated, or, if they are restructured or renewed credits, comply with sustained payment of the credit, will be returned to credit portfolio with credit risk stage 1.

Renegotiations

Credits with credit risk stage 2 or stage 3 that are restructured or renewed cannot be classified in a

stage with the lowest credit risk as a result of such restructuring or renewal, as long as there is no evidence of sustained payment.

Credits with a single principal payment at maturity, regardless of whether interest is paid periodically or at maturity, that are restructured or renewed at any time during their term, must be transferred to the next immediate category with higher credit risk and remain in that stage until there is evidence of sustained payment, in accordance with the provisions of this criterion.

Drawn credit lines that are restructured or renewed at any time must be transferred to the next immediate category with higher credit risk, unless there are elements justifying the debtor's payment capacity and there is:

payment of all accrued interest due, and

coverage of all payments to which the debtor is obligated under the contract as of the date of restructuring or renewal.

In the case of commercial credits, the elements justifying payment capacity must be duly documented and integrated into the credit file.

Regarding disbursements made under a credit line, when they are restructured or renewed independently of the credit line that supports them, they must be evaluated in accordance with this section, taking into account the characteristics and conditions applicable to the restructured or renewed disbursement(s).

As a result of the evaluation referred to in the preceding paragraph, if it is concluded that one or more of the disbursements granted under a credit line must be transferred to the next immediate category with higher credit risk as a result of their restructuring or renewal, and such disbursements, individually or collectively, represent at least 25% of the total drawn balance of the credit line as of the date of restructuring or renewal, the total drawn balance, as well as subsequent disbursements, must be transferred to the next immediate category with higher credit risk.

The total drawn balance of the credit line may be transferred to a classification with lower credit risk when there is evidence of sustained payment of the disbursements that originated such transfer and all obligations due for the total credit line have been met as of the evaluation date.

Credits with credit risk stages 1 and 2 with characteristics different from those indicated in paragraphs 93 to 97 above, if restructured or renewed, without at least 80% of the original credit term having elapsed, may remain in the same category, only when:

the borrower has covered all accrued interest as of the date of renewal or restructuring, and

the borrower has covered the principal of the original credit amount that should have been covered as of the date of renewal or restructuring.

When it concerns credits with credit risk stages 1 and 2 with characteristics different from those indicated in paragraphs 93 to 97 above, if restructured or renewed during the final 20% of the original credit term, they must be transferred to the next immediate category with higher credit risk unless the borrower has:

paid all accrued interest as of the date of renewal or restructuring;

covered the principal of the original credit amount that should have been covered as of the date of renewal or restructuring, and

covered at least 60% of the original credit amount.

If the conditions described in paragraphs 98 or 99 above are not met, as applicable, the credit must be transferred to the next immediate category with higher credit risk from the moment it is restructured or renewed and until there is evidence of sustained payment.

The requirement referred to in paragraphs 98 and 99 above in their respective subsections a) shall be considered met when, having covered the accrued interest as of the last cutoff date, the time elapsed between said date and the restructuring or renewal does not exceed the lesser of half the current payment period and 90 days.

Credits with credit risk stages 1 and 2 that are restructured or renewed on more than one occasion must be transferred to credit risk stage 3 portfolio unless, in addition to the conditions established in paragraphs 98 and 99 above, as applicable, the entity has elements justifying the debtor's payment capacity. In the case of commercial credits, such elements must be duly documented and integrated into the credit file.

When there is a pending balance to amortize corresponding to profit or loss due to renegotiation and the credit must be transferred to credit risk stage 3 portfolio in accordance with the preceding paragraph, the entity must recognize said balance in the results of the period.

In the case where a restructuring or renewal consolidates various credits granted by the same entity to the same borrower, each of the consolidated credits must be analyzed as if they were restructured or renewed separately, and if such analysis concludes that one or more of said credits would have been transferred to credit risk stage 2 or stage 3 as a result of such restructuring or renewal, then the total balance of the consolidated credit must be transferred to the category corresponding to the credit subject to consolidation with the higher credit risk.

Credits classified in credit risk stage 2 as a result of a restructuring or renewal must be evaluated periodically to determine if there is an increase in their risk that causes them to be transferred to credit risk stage 3 in terms of paragraph 87 above.

Restructurings that, as of the date of the operation, show payment compliance for the total due amount of principal and interest and only modify one or more of the following original credit conditions shall not be subject to transfer to a category with higher credit risk:

Guarantees: only when they imply the expansion or substitution of guarantees with others of better quality.
Interest rate: when the agreed interest rate is improved for the borrower.
Currency or unit of account: provided that the rate corresponding to the new currency or unit of account is applied.
Payment date: only in the case that the change does not imply exceeding or modifying the payment periodicity. In no case shall the change in the payment date allow for the omission of payment in any period.
Expansion of the credit line: only in the case of consumer credits granted through revolving credit lines.

Sustained payment of the credit

Sustained payment of the credit is evidenced when the borrower covers the total due amount of principal and interest without delay, with a minimum of three consecutive amortizations of the credit's payment scheme when they are amortizations of 60 days or less, or the payment of two amortizations in the case of credits with periods between 61 and 90 natural days, and in the case of credits with amortizations covering periods greater than 90 natural days, the payment of one amortization.

When the amortization periods agreed upon in the restructuring or renewal are not homogeneous, the number of periods representing the longest term must be considered for the purpose of accrediting sustained payment.

For restructurings where the payment periodicity is modified to shorter periods, the number of amortizations of the original credit scheme must be considered.

In the case of consolidated credits, if pursuant to paragraph 104, two or more credits had originated the transfer to credit risk stage 2 or stage 3, to determine the required amortizations, the original payment scheme of the credit whose amortizations equate to the longest term must be followed.

In all cases, in demonstrating that there is sustained payment, the entity must have available to the CNBV and the Federation responsible for its auxiliary supervision, evidence justifying that the borrower has payment capacity at the time the restructuring or renewal is carried out to meet the new credit conditions.

The elements that must be taken into account for the purposes of the preceding paragraph are at least the following: the intrinsic probability of default of the borrower, the guarantees granted for the restructured or renewed credit, the payment priority vis-à-vis other creditors, and the borrower's liquidity against the new financial structure of the financing.

Regarding credits with a single principal payment at maturity, regardless of whether interest payment is periodic or at maturity, sustained payment of the credit is considered to exist when any of the following circumstances occur:

the borrower has covered at least 20% of the original credit amount at the time of restructuring or renewal, or

the amount of accrued interest has been covered according to the payment scheme for the corresponding restructuring or renewal for a period of 90 days and at least said period has elapsed.

Credits that are restructured or renewed on more than one occasion, that have been agreed with a single principal payment at maturity, regardless of whether interest payment is periodic or at maturity, will evidence sustained payment of the credit when:

the borrower covers at least 20% of the outstanding principal as of the date of the new restructuring or renewal;

the amount of accrued interest has been covered according to the new payment scheme for restructuring or renewal corresponding to a period of 90 days and at least said period has elapsed, and

the entity has elements justifying the debtor's payment capacity. In the case of commercial credits, such elements must be duly documented and integrated into the credit file.

The early payment of amortizations of restructured or renewed credits, other than those with a single principal payment at maturity, regardless of whether interest is paid periodically or at maturity, is not considered sustained payment. This is the case for amortizations of restructured or renewed credits that are paid without the natural days equivalent to the periods required pursuant to paragraph 107 having elapsed.

In all cases, credits that, as a result of a restructuring or renewal, are transferred to a stage with higher credit risk, must remain for a minimum of three months in that stage to evidence sustained payment and consequently be transferred to the next immediate stage with lower credit risk, except when it concerns restructured or renewed credits that were granted for a term of 6 months or less and are not restructured or renewed consecutively for the same term. The foregoing shall not apply to credits with principal payment at maturity, regardless of whether interest payment is periodic or at maturity, in which case paragraph 113 shall apply.

Suspension of interest accumulation

The accumulation of accrued interest on credit operations must be suspended at the moment the outstanding balance of the credit is considered as credit risk stage 3. Likewise, the pending balance to amortize of transaction costs, as well as items prepaid as established in paragraph 53, and if applicable, the effect of profit or loss pending amortization due to renegotiation, must be recognized against the results of the period.

The suspension of interest accumulation established in the preceding paragraph shall apply to credits that contractually capitalize interest to the debt amount.

As long as the credit remains in credit risk stage 3 portfolio, interest control shall be kept in off-balance sheet accounts. If such interest or financial income is collected, it shall be recognized directly in the results of the period under the interest income item, canceling, in the case of financial leasing, financial factoring, discounting, or assignment of credit rights, the corresponding financial income to accrue.

If the interest registered in off-balance sheet accounts pursuant to the preceding paragraph is forgiven or written off, it must be canceled from off-balance sheet accounts without affecting the item for the preventive estimate for credit risks.

Preventive estimate for credit risks

The amount of the preventive estimate for credit risks must be determined based on the different methodologies established or authorized by the CNBV for each type of credit and level of credit risk through the Provisions, as well as by additional estimates required in various regulations and those ordered and recognized by the CNBV, and must be recognized in the results of the period corresponding.

The additional estimates recognized by the CNBV referred to in the preceding paragraph are those constituted to cover risks not foreseen in the different credit portfolio rating methodologies, and prior to their constitution, entities must inform the CNBV of the following:

origin of the estimates;

methodology for their determination;

amount of estimates to be constituted, and

time estimated to be necessary.

Regarding credits with credit risk stage 3 in which the restructuring agrees on the capitalization of accrued interest not collected previously registered in off-balance sheet accounts, the entity must create an estimate for 100% of said interest. The estimate may be canceled when there is evidence of sustained payment.

The estimate for expected credit losses corresponding to items directly related to the credit portfolio such as legal expenses, shall be determined by applying the same risk percentage assigned to the associated credit, in accordance with the provisions of the Provisions.

Credits denominated in UDIS

For the case of credits denominated in UDIS, the corresponding estimate shall be denominated in the original unit of account corresponding.

Write-offs, eliminations, and recoveries of credit portfolio

The entity must periodically evaluate whether a credit with credit risk stage 3 should remain in the statement of financial position, or rather, be written off. In all cases, there must be evidence of formal collection efforts exercised, as well as elements accrediting the practical impossibility of recovering the credit in accordance with the entity's internal policies duly established in its credit manual.

The write-off referred to in the preceding paragraph shall be carried out by canceling the credit balance, determined as uncollectible by administration, against the preventive estimate for credit risks. When the credit to be written off exceeds the balance of its associated estimate, before carrying out the write-off, said estimate must be increased up to the amount of the difference.

In addition to what is established in paragraph 126, the entity may opt to eliminate from its assets those credits with credit risk stage 3 that are provisioned at 100% in accordance with paragraphs 121 and 122, even if they do not meet the conditions to be written off. For such purposes, the entity must cancel the outstanding balance of the credit against the preventive estimate for credit risks.

Any recovery resulting from previously written-off or eliminated credits pursuant to the preceding paragraphs must be recognized in the results of the period, under the item of preventive estimate for credit risks, unless the recoveries come from payments in kind, whose treatment must be carried out in terms of Criterion B-5.

The costs and expenses incurred for the recovery of credit portfolio must be recognized as an expense within the item of other income (expenses) of the operation.

Discounts, forgiveness, bonuses, and discounts on the portfolio

Discounts, forgiveness, bonuses, and discounts, that is, the amount forgiven of the credit payment in partial or total form, shall be recorded charged to the preventive estimate for credit risks. In case the amount of these exceeds the balance of the estimate associated with the credit, estimates must previously be constituted up to the amount of the difference.

The treatment provided in the preceding paragraph shall be applicable to those amounts that the entity forgives the borrower, resulting from an increase in credit risk. Not so, for example, discounts and bonuses, which are not associated with an increase in credit risk, which must be reduced from the income that gave rise to them.

Cancellation of excesses in the preventive estimate for credit risks

When the balance of the preventive estimate for credit risks has exceeded the amount required pursuant to paragraphs 121 and 122, the differential must be canceled in the period in which such excesses occur, against the results of the period, affecting the same concept or item that originated it, that is, the preventive estimate for credit risks.

Sale of credit portfolio

For credit portfolio sale operations in which the conditions established to derecognize a financial asset pursuant to NIF C-14 are not met, the entity must keep the amount of the sold credit in assets and recognize in liabilities the amount of resources from the recipient.

In cases where a sale of credit portfolio is carried out, in which the conditions to derecognize a financial asset established in NIF C-14 are met, the estimate associated with it must be canceled.

Presentation standards

Statement of financial position

the portfolio shall be grouped according to its level of credit risk, that is, with credit risk stage 1 or with credit risk stage 2 and with credit risk stage 3, according to the type of credit granted, whether commercial, consumer, or housing credits, and in turn, classified according to the destination of the credit. Regarding this, when two or more classification options are viable pursuant to this criterion, the one that is consistent with that used for the purposes of calculating its preventive estimate for credit risks must be applied;

the preventive estimate for credit risks must be presented in a separate item, subtracted from the credit portfolio;

the amount of transaction costs and income associated with the granting of credit that form part of the effective interest determined pursuant to this criterion must be presented net as a separate item, affecting the total credit portfolio;

the financial asset representing the financing granted to the transferor referred to in criterion C-3 "Securitization Operations" shall be presented as part of the commercial portfolio;

interest collected in advance must be presented together with the portfolio that gave rise to it;

the liability for deposit guarantees shall be presented in the item of other accounts payable;

within the item of other accounts payable, if relative materiality warrants it, creditor balances of credits shall be presented, for example, when there is a balance in favor resulting from revolving credits because the borrower made a payment greater than due;

the liability derived from credit portfolio sale operations shall be presented in the item of bank loans and from other organisms;

in off-balance sheet accounts, in the item designated as credit commitments, the unused amount of the credit lines granted by the entity shall be presented, and

in off-balance sheet accounts, in the item of accrued interest not collected derived from credit risk stage 3 portfolio, the amount of accrued interest not collected derived from credits that remain in credit risk stage 3 portfolio, as well as financial income accrued not collected derived from financial leasing, financial factoring, discounting, and assignment of rights operations that remain in credit risk stage 3 portfolio, shall be presented.

Statement of comprehensive income

Interest income shall be grouped as accrued interest, financial income accrued in financial leasing, financial factoring, discounting, and assignment of credit rights operations, and the result from UDIS revaluation (credit balance) and the profit from the effect of credit portfolio renegotiation. Likewise, interest expense shall be grouped as the result from UDIS revaluation (debit balance) and the loss from the effect of credit portfolio renegotiation.

The preventive estimate for credit risks shall be presented as a specific item, immediately after the financial margin, as well as the result from UDIS revaluation originating from the estimate denominated in UDIS.

Commissions and fees charged shall be presented in the item of commissions and fees charged, commissions other than those associated with the granting of credit, including commissions charged for credit card annual fees.

The profit or loss derived from the sale of credit portfolio shall be presented in the item of other income (expenses) of the operation, as applicable.

Disclosure standards

Through notes to the financial statements, the following must be disclosed at a minimum:

main policies and procedures established for the granting, acquisition, sale, control, and recovery of credits, as well as those related to the evaluation and monitoring of credit risk;

the characteristics of the business model to determine that the credit portfolio must be valued at amortized cost, as well as a brief description of the tests referred to in paragraph 48 above;

in the case of reclassifications due to changes in the business model, it must be disclosed:

the date of reclassification.

ii.

a detailed explanation of the changes in the business model and a qualitative description of their effect on the entity's financial statements.

iii.

the amount reclassified into each of those categories or outside of them.

iv.

the category from which the credit portfolio exits and the one it enters.

main policies for classifying the credit portfolio as restricted, as well as a brief description of the reasons for doing so;

policies and procedures established to determine credit risk concentrations;

breakdown of the total credit portfolio balance by credit risk stage 1, stage 2, and stage 3, as well as by type of credit (business or commercial activity, liquidity loans to other popular or community financial societies, federal entities and municipalities, consumer, and medium or residential and social interest), distinguishing those denominated in national currency and UDIS;

the amount of credits that the entity has migrated from stage 1 or stage 2 to stage 3, in accordance with what is established in the Provisions;

amount and nature of guarantees received, and the terms and conditions associated with the collateral;

identification by type of credit (business or commercial activity, liquidity loans to other popular or community financial societies, federal entities and municipalities, consumer, and medium or residential and social interest), of the balance of the portfolio with credit risk stage 3 from the date it was classified as such, in the following timeframes: 1 to 180 natural days, 181 to 365 natural days, 366 natural days to 2 years, and more than 2 years in such classification;

in aggregate, the percentage of concentration and main characteristics of the portfolio by sector, region, or economic group, understanding the latter as groups of natural and legal persons that due to their property or liability links constitute common risks, as well as the amount exposed to risk by the portfolio that shares such characteristics;

the amounts of transaction costs, as well as the elements that justify their direct relationship with the granting of credit;

explanation of the main variations in the portfolio with credit risk stage 3, identifying, among others: restructurings, renewals, adjudications, discounts, eliminations, write-offs, transfers to and from portfolio with credit risk stage 1 and stage 2;

amount of those credits that, in terms of numeral 1 of the previous paragraph 87, have remained in portfolio with credit risk stage 1 for continuing to receive payment in terms of what is provided by fraction VIII of article 43 of the Mercantile Bankruptcy Law, or by having been granted under the protection of article 75 in relation to fractions II and III of article 224 of said Law. Said amount must be disclosed stratified, if applicable, by each article and, if applicable, fraction;

brief description of the methodology for determining preventive estimates for credit risks;

balance of the preventive estimate for credit risks, broken down according to the methodologies for the classification of the credit portfolio, as well as by type of credit (business or commercial activity, liquidity loans to other popular or community financial societies, federal entities and municipalities, consumer, and medium or residential and social interest);

movements that have been made to the preventive estimate for credit risks during the exercise due to its creation, write-offs, eliminations, recoveries, cancellations, discounts, waivers, bonuses, discounts, and adjudications, among others, for each type of credit and for each credit risk stage;

amount derived from the cancellation of the preventive estimate for credit risks, and the reasons that motivated such cancellation;

amount and origin of the estimates recognized by the CNBV, as well as the methodology used for their determination;

amount of credits that, in accordance with paragraph 128, were eliminated from assets, breaking down those granted to related parties;

amount of the estimates corresponding to undrawn credit lines;

amount of credits with credit risk stage 3 that, in accordance with paragraph 126, were written off, breaking down those granted to related parties;

financing to related parties must be presented or disclosed separately, in accordance with NIF C-13;

the main policies and procedures regarding the granting of restructurings and renewals, including restructurings or renewals that consolidate various credits granted by the same entity to the same borrower, as well as the elements taken into account to evidence sustained payment;

accumulated total amount of what has been restructured and/or renewed by type of credit (business or commercial activity, liquidity loans to other popular or community financial societies, federal entities and municipalities, consumer, and medium or residential and social interest, distinguishing those originated in the exercise.) Each of these amounts must be broken down into:

credits with credit risk stages 2 and 3 that were restructured or renewed;

ii.

restructurings or renewals that were transferred to portfolio with credit risk stage 3 due to having been restructured or renewed, in compliance with paragraph 93;

iii.

restructured or renewed credits that remained in portfolio with credit risk stage 1 and stage 2 in accordance with paragraphs 94 to 102;

iv.

consolidated credits that as a result of a restructuring or renewal were transferred to portfolio with credit risk stage 3, in accordance with paragraph 104, and

restructured credits to which the criteria regarding transfer to portfolio with credit risk stage 3 were not applied based on paragraph 106.

amount and nature of additional guarantees and concessions granted in restructured credits;

total amount of the acquired credit portfolio, as well as the estimates related to said portfolio;

aa)

total amount of credit portfolio sales that the entity has carried out;

bb)

amount of recoveries of previously written-off or eliminated credit portfolio;

cc)

breakdown of interest and commissions by type of credit (business or commercial activity, liquidity loans to other popular or community financial societies, federal entities and municipalities, consumer, and medium or residential and social interest and housing);

dd)

amount of interest income that was recognized in the credit in question, at the time of the capitalization referred to in paragraph 123;

ee)

amount of credit lines registered in off-balance sheet accounts, distinguishing that which corresponds to revocable and irrevocable lines;

ff)

brief description of the effects on the credit portfolio derived from the application of the different methodologies established through the Provisions or authorized by the CNBV, and

gg)

the number of defaults of credits with payment periods of less than 30 days and the credit risk stage in which they are classified.

B-5 ADJUDICATED ASSETS

Objective and Scope

This standard aims to define the particular rules regarding the recognition, valuation, presentation, and disclosure in the financial statements of assets that entities adjudicate.

This standard does not cover the treatment of assets that entities adjudicate and are destined for their own use, as for this type of asset, the guidelines provided in the accounting standards applicable to the type of asset in question will apply.

Definitions

Adjudicated Assets.- Movable assets (equipment, securities, rights, credit portfolio, among others) and immovable assets that, as a consequence of an uncollectible account, right, or item, the entity:

acquires through judicial adjudication, or

receives through dación en pago (transfer of property in satisfaction of debt).

Disposal Cost.- It is that direct incremental cost derived from the sale or exchange of an asset or a group of assets, such as commissions, storage, transport, insurance, etc., without considering financing costs and profit taxes; it includes any distribution cost to owners that is directly attributable to said distribution.

Adjudication Value.- For the purposes of this standard, the book value of the asset. In the case of assets promised for sale or with reservation of ownership, it will be the book value decreased by the payments received on account of the asset, as referred to in Standard A-3.

Net Realization Value.- It is the amount estimated by an entity of what it expects to receive, in cash, cash equivalents, or in kind, from the sale of an asset minus the disposal costs.

Fair Value of the Adjudicated Asset.- For the purposes of this standard, it will correspond to that determined on the date of adjudication:

in the case of assets whose valuation can be made through an appraisal, this must comply with the requirements established by the CNBV applicable to providers of banking appraisal services, or

for those assets not subject to appraisal, the exit price that would be received on the date of valuation to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Recognition Standards

Assets acquired through judicial adjudication must be recorded on the date the approving order of the auction through which the adjudication was decreed becomes final.

Assets that have been received through dación en pago will be recorded, on their part, on the date the deed of dación en pago is signed, or on the date the transfer of ownership of the asset was formalized.

The recognition value of adjudicated assets will be:

the lower of the gross book value of the asset that gave rise to the adjudication, that is, without deducting the preventive estimate for credit risks that has been recognized up to that date, and the net realization value of the assets received, when the entity's intention is to sell said assets to recover the amount to be collected, or

the lower of the gross book value of the asset that gave rise to the adjudication and the fair value of the received asset, when the entity's intention is to use the adjudicated asset for its activities.

On the date on which an adjudicated asset is recorded in the accounting, the value of the asset that gave rise to the adjudication, as well as the estimate that may have been established for it, must be derecognized from the entity's statement of financial position for the total of the net asset of the aforementioned estimate deducted by the partial payments in kind referred to in Standard B-4 or the collections or recoveries corresponding to the acquired credits referred to in subsection d) of paragraph 3 of Standard B-4.

The difference between the value of the asset that gave rise to the adjudication, net of estimates, and the value of the adjudicated asset determined in accordance with paragraph 10, will be recognized in the results of the exercise as other operating income (expenses).

Valuation Standards

Adjudicated assets must be valued as established in the accounting standards for popular financial societies, community financial societies, and rural financial integration organizations, according to the type of asset in question, registering such valuation against the results of the exercise as other operating income (expenses), as appropriate.

The amount of the estimate that recognizes indications of impairment due to potential losses in value due to the passage of time of the adjudicated assets, will be that determined in accordance with the procedures established in the Provisions, and must be recognized in the results of the exercise as other operating income (expenses).

In the event that, in accordance with the aforementioned impairment procedures, it is necessary to modify the estimate referred to in the previous paragraph, such adjustment must be registered against the amount of the estimate previously recognized as other operating income (expenses).

At the time of the sale of the adjudicated assets, the difference between the selling price and the book value of the adjudicated asset, net of estimates, must be recognized in the results of the exercise as other operating income (expenses).

Transfer of Adjudicated Asset for Use

When opting to transfer adjudicated assets for the entity's use, such transfer can be made to the item in the statement of financial position that corresponds to it according to the asset in question, provided that the fact that the assets are used for the realization of its object is met and it is carried out in accordance with the investment strategies and purposes of the entity that are previously established in its manuals, with no possibility that said assets can again be considered as adjudicated.

Presentation Standards

Statement of Financial Position

Adjudicated assets must be presented in a separate item within the statement of financial position, net of estimates, immediately after other receivables.

Statement of Comprehensive Income

The result from the sale of adjudicated assets, adjustments to their value, as well as the establishment and adjustment of the respective estimate, will be presented in the item of other operating income (expenses), as appropriate.

The difference referred to in paragraph 12 for the adjudication of assets will be presented in the item of other operating income (expenses).

Disclosure Standards

It must be disclosed through notes to the financial statements the type of adjudicated asset in question (real estate, equipment, securities, rights, credit portfolio, among others), the procedure used for the valuation of said asset, the amount, type of asset, as well as the use that will be given to it, in the case of those adjudicated assets that have been opted to transfer for the entity's use, as well as the amount of its respective estimate, and a brief description of the procedure that was carried out for its determination.

When the value of the asset that gave rise to the adjudication is equal to the corresponding estimates, the adjudication value of the asset must be disclosed.

B-6 GUARANTEES

Objective and Scope

This standard aims to establish the accounting treatment that must be given to commitments acquired by entities in the granting of guarantees.

Definitions

Guarantee.- A contract by which the entity supports the creditworthiness of a certain borrower through the promise to pay the obligation in case of default.

In the contract that gives rise to the guarantee, the contingency that will generate the possible payment commitment is defined, so until such contingency materializes, guarantees represent only a commitment.

Commitment.- Represents an agreement made to carry out certain actions in the future, which does not meet the requirements to be considered as a liability, provision, or contingency, unless it derives from an onerous contract.

Onerous Contract.- It is one whose inevitable costs to fulfill the obligations it entails exceed the economic benefits expected to be received from it.

Recognition and Valuation Standards

Since the guarantee represents a commitment, it will not be part of the rights and obligations recognized in the entity's statement of financial position as long as the contingency does not materialize. Therefore, the recognition of guarantees must be carried out in off-balance sheet accounts.

The total amount for the concept of guarantees must include the total commitments that the entity has on a specific date. As the third party with whom the commitment is held settles the obligations that have been guaranteed, the entity must cancel said amounts from its records.

The entity must determine an estimate of the granted guarantees that may default, based on a study that considers the past behavior of the borrower, its economic viability, or the risk of the project on which the guarantee is granted, qualifying and provisioning them jointly with the credit portfolio under its charge.

The amount of said estimate must be recognized in the results of the exercise of the period that corresponds.

In the event of default by the person whom the entity is guaranteeing, the total amount for which the guarantee was granted will be recorded in the entity's statement of financial position as a credit portfolio, recognizing the corresponding liability. Once the portfolio is affected, the provisions contained in Standard B-4 will apply to it.

Income from commissions arising from the granting of guarantees will be recognized in the results of the exercise in accordance with what is established in NIF D-1 "Revenue from Contracts with Customers" (NIF D-1).

Presentation Standards

Statement of Financial Position

The amount corresponding to granted guarantees will be presented in off-balance sheet accounts, at the foot of the statement of financial position.

The balance of the liability for the default of the person whom the entity is guaranteeing will be included as a diverse creditor in the item of other payables.

Statement of Comprehensive Income

Commissions charged for the granting of guarantees will be presented in the item of commissions and fees charged.

Disclosure Standards

Through notes to the financial statements, the types of operations that gave rise to the guarantees must be disclosed, including the general terms on which this type of operation was carried out.

Losses caused to the entity by reason of default by the guaranteed parties, the amount of the estimate established, as well as the recoveries, must also be disclosed.

B-7 CUSTODY AND ADMINISTRATION OF ASSETS

Objective and Scope

This standard aims to define the particular rules regarding the recognition, valuation, presentation, and disclosure in the financial statements of custody and administration of assets operations carried out by entities.

Among the administration operations that are the subject of this standard, operations carried out by entities on behalf of third parties are contemplated, such as the purchase and sale of financial instruments (securities), receipt of payment for services as long as it does not imply for the entity the acceptance of direct or contingent obligations, and financial factoring operations.

The following are not included within this standard:

the custody of assets that by their very nature or by contractual agreement do not grant the responsibility of safeguarding to the entities;

safe deposit box services, and

trust operations.

Definitions

Assets in Custody or Administration.- These are movable assets (financial instruments, rights, among others) and immovable assets owned by third parties, delivered to the entity for their safeguard or administration.

Acquisition Cost.- It is the amount paid in cash or cash equivalents, or the fair value of the consideration delivered for an asset or service at the time of its acquisition.

Administration Operations.- Those carried out by the entity, in which it provides administrative services on certain assets, receiving, if applicable, a commission as consideration.

Custody Operations.- Those carried out by the entity, for which it is responsible for the safeguard of assets delivered to its facilities or to whom it has subcontracted the service, receiving a commission for it.

Fair Value.- It is the exit price that, on the date of valuation, would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Characteristics

Movable and immovable assets can be the subject of custody, administration, or a combination of both. In the case of financial instruments owned by third parties, these can be alienated, administered, or transferred in accordance with the conditions agreed in the contract.

By the essence of this type of operation, assets in custody or administration are not the subject of recognition by the entities:

since the entities do not acquire the rights and contractual obligations related to the financial assets in custody or administration (other than cash received by the entities for payment of services on behalf of third parties), and

because the definition of "asset" contained in NIF A-1, Chapter 50, "Basic Elements of Financial Statements" (NIF A-1, Chapter 50) is not met.

Notwithstanding the above, the entity is responsible for assets in custody or administration, assuming a risk in case of their loss or damage.

In addition, within the administration services that the entity can provide, are foreign exchange purchase and sale operations, receipt of payment for services as long as it does not imply for the entity the acceptance of direct or contingent obligations, and financial factoring operations, which consist of administration, alienation, and transfer operations of assets in custody or administration carried out in accordance with the prior instruction of their clients. These operations include financial instruments.

Recognition and Valuation Standards

Since the assets subject to this standard do not represent assets of the entities, they must not be part of the rights and obligations recognized in the statement of financial position. However, the estimated amount for which the entity would be obligated to respond to its clients for any future contingency must be recognized in off-balance sheet accounts, with the exception of cash received for the payment of services on behalf of third parties, because in that particular case, the conditions for its recognition contemplated in Standard A-2 "Application of Particular Standards" (Standard A-2) are met.

Income derived from custody or administration services will be recognized in the results of the exercise in accordance with what is established in NIF D-1.

In the event that the entity has an obligation with the depositor for the loss or damage of the asset in custody or administration, it will be recognized in the entity's statement of financial position as a liability against the results of the

exercise. The accounting recognition referred to in this paragraph shall be carried out at the moment the entity becomes aware of such situation, regardless of any legal action by the depositor aimed at repairing the loss or damage.

Custody Operations

The determination of the estimated valuation of the amount for goods in custody shall be made in accordance with the following:

in the event that the goods in custody are financial instruments, their fair value shall be determined in accordance with what is established in the Second Section of Chapter V of Title Four of the Provisions, and

with respect to movable and immovable goods in custody other than those established in the previous clause, their value shall be determined in accordance with the following:

at their fair value, in accordance with what is stated in NIF B-17, which shall be reviewed periodically, or
in the event that the fair value cannot be determined reliably, such goods shall be valued in accordance with the acquisition cost of the depositor, which, in the case of an inflationary environment, shall be updated in accordance with NIF B-10.

In the event that the goods in custody are also held in administration, they must be controlled in off-balance-sheet accounts, separate from those goods received in custody.

Administration Operations

The determination of the estimated valuation of the amount for goods in administration (including the receipt of service payments), as well as those operations on behalf of third parties, shall be carried out based on the operation performed in accordance with the accounting criteria for popular financial societies, community financial societies, and rural financial integration organisms. Within the various types of operations, the following are contemplated:

Receipt of service payments on behalf of third parties

Entities must recognize the entry of cash for the payment of services in the item of cash and restricted cash equivalents against the corresponding liability, valued at the same amount as the asset that gave rise to it, with no effect on the profit or loss of the period. At the moment the respective service payment is made on behalf of third parties, entities must cancel the cited liability against the corresponding asset.

In the event that the payment of services is made on behalf of an account holder of the entity itself and the service provider has an account with the entity for the purpose of receiving such payments, at the moment the account holder makes a payment, the corresponding amount must be reclassified within the item of traditional deposits.

Investments in Financial Instruments

For those investment operations in financial instruments carried out by entities on behalf of third parties, the received securities shall be recognized and valued at their fair value in accordance with what is established in NIF C-2.

Presentation and Disclosure Standards

The liability arising from the obligation with the depositor for the loss or damage of the good in custody or administration shall be presented in the statement of financial position in the item of other accounts payable, while in the results of the period it shall be presented in the item of other income (expenses) from the operation.

The amount of goods in custody or in administration shall be presented in off-balance-sheet accounts under the same item, with the exception of the cash received for the payment of services on behalf of third parties referred to in paragraph 19, which shall be presented in the item of cash and cash equivalents and the liability generated, in the item of other accounts payable.

The income derived from custody or administration services recognized in the results of the period shall be presented in the item of commissions and fees charged.

The following must be disclosed through notes to the financial statements:

Custody Operations

amount related to securities issued by the entity itself;

amounts recognized for each type of good in custody;

information regarding the type of goods, and

amount of income from the activity.

Administration Operations

amounts recognized for each type of good in administration;

information regarding the type of goods, and

amount of income from the activity.

Additionally, the amount that is restricted within the cash and cash equivalents of the entity with respect to the receipt of service payments on behalf of third parties must be disclosed.

B-8 TRUSTS

Objective and Scope

This criterion aims to define the particular standards relative to recognition, valuation, presentation, and disclosure in the financial statements for private trust activities carried out by entities in their capacity as trustees, as well as for mandate operations. Regarding this, it is worth mentioning that entities may only act as trustees in guarantee trusts.

Definitions

Trust. - The General Law of Credit Instruments and Operations establishes that "By virtue of the trust, the settlor transmits to a fiduciary institution the ownership or title of one or more goods or rights, as the case may be, to be destined to lawful and determined ends, entrusting the realization of said ends to the fiduciary institution itself".

For the purposes of these accounting criteria, it will be understood that, where applicable, this term also refers to mandate operations carried out by entities in their capacity as mandataries.

Beneficiary. - Person who has the necessary capacity to receive the benefit that the trust implies.

Settlor. - Person who transmits the ownership or title of the goods or rights object of the trust, as the case may be, to dedicate them to a lawful and determined end.

Trustee. - That entity authorized to carry out trust operations and to whom its realization is entrusted.

Mandate. - The Federal Civil Code establishes that "The mandate is a contract by which the mandatary obligates himself to execute on behalf of the mandator the legal acts that he entrusts to him".

Trust Estate. - With respect to each trust contract, the money, and other goods, financial instruments or rights entrusted to the trustee, as well as the increases or decreases, from the respective products or expenses.

Recognition and Valuation Standards

Trusts

Entities must recognize the trust estate in off-balance-sheet accounts, taking into account the responsibility that the realization or fulfillment of the object of said trusts implies for the fiduciary entity, whose commission is accepted.

In some cases, the responsibility referred to in the previous paragraph is limited to the accounting of the assets of the trust, while in other cases, it includes the recognition of assets and the liabilities that are generated during its operation.

The valuation of the trust estate recognized in off-balance-sheet accounts shall be carried out in accordance with what is provided in these accounting criteria for popular financial societies, community financial societies, and rural financial integration organisms.

Losses borne by the entity for the responsibilities incurred as trustee shall be recognized in results in the period in which they are known, regardless of the moment in which any legal promotion is made to that effect.

In addition to the recognition referred to in the previous paragraphs, entities must keep special accounting for each trust contract, registering in it all operations carried out. Invariably, the balances of the special accountings of each trust contract must coincide with the balances of the off-balance-sheet accounts in which the entity recognizes the trust estate.

When, due to the nature of the trusts established in the entity, there are assets or liabilities on behalf of or in favor of the same, these must be recognized in the statement of financial position of said entity, as appropriate.

The recognition of income from the management of trusts must be made based on what is established in NIF D-1. The accumulation of said income must be suspended at the moment when the debt for these presents 90 or more natural days of non-payment, being able to accumulate again when the pending payment debt is settled in its entirety.

While the income from the management of trusts is suspended from accumulation and not collected, its control shall be kept in off-balance-sheet accounts. In the event that said income is collected, it shall be recognized directly in the results of the period.

Presentation Standards

Statement of Financial Position

In off-balance-sheet accounts, the total amount of the trust estate shall be presented in the item of goods in trust or mandate, in accordance with the recognition and valuation standards provided in this criterion. Likewise, it must be presented in off-balance-sheet accounts in the item of other registration accounts, the accrued but uncollected income from the management of trusts.

Statement of Comprehensive Income

Losses borne by the entity for incurred responsibilities shall be presented in the item of other income (expenses) from the operation, while the income from the management of trusts shall be included in the item of commissions and fees charged.

Disclosure Standard

Through notes to the financial statements, the amount of income received by the entity in trust operations must be disclosed.

C-3 SECURITIZATION OPERATIONS

Objective

This criterion aims to define the particular standards relative to the treatment in the financial statements of securitization operations.

Definitions

Financial Asset. - A right arising from a contract, which grants monetary economic resources to the entity. Therefore, it includes, among others:

cash or cash equivalents;

financial instruments generated by a contract, such as an investment in a debt or equity instrument issued by a third party;

a contractual right to receive cash or any financial instrument from another entity;

a contractual right to exchange financial assets or financial liabilities with a third party under conditions favorable to the entity, or

a right that will be collected with a variable number of equity instruments issued by the entity itself.

Subordinated Assets. - Those are assets whose availability is conditioned to the occurrence of certain events.

Administration of Transferred Financial Assets. - Contract by means of which an entity provides services related to the administration of the financial assets object of securitization operations, such as: collecting and custodian the payments of principal and interest coming from the transferred financial assets; making payments of taxes and insurance related to said payments on behalf of the securitization vehicle; monitoring cases of default or following up on the credit risk attributable to the debtors of said assets; in its case, executing adjudication processes; temporarily investing received payments pending distribution; paying commissions to guarantors and other service providers in the operation; making payments to holders of securities placed among investors through stock exchanges or recognized trading mechanisms.

Overcollateralization. - Financial asset transferred by the transferor to the transferee in securitization operations, in addition to the financial assets transferred object of securitization operations, in order to cover possible defaults by the debtors of the financial assets transferred object of securitization, guarantee the payment of obligations to investors, among others.

Interest Benefits. - Right to receive the entirety or specific portions of cash flows from a trust, entity or other figure, including participations in the principal and/or interest of debt securities with priority of payment and/or subordinated, other cash flows coming from underlying assets, premiums, obligations, residual interest (whether in the form of debt or equity), among others.

Benefits on the Transferee's Remainder. - Interest benefits in the form of securities, contracts or documents that grant their holder participation in the possible excess or remainder that, in its case, the transferee generates, such as, contribution certificates, contribution certificates, fiduciary rights certificates, residual interests, among others.

Securitization. - Operation by means of which certain financial assets are transferred to a transferee, with the purpose that the latter issues securities to be placed among investors through stock exchanges or recognized trading mechanisms, which represent the right to receive what is established in the placement prospectus.

Transferor. - The entity that transfers to another a financial asset, a participation in a financial asset or a group of financial assets that it controls.

Transferee. - Securitization vehicle that receives a financial asset, a participation in a financial asset or a group of financial assets from the transferor.

Equity Financial Instrument. - It is the one originated by a contract that evidences the participation or the option to participate in the net assets of an entity.

Continuous Involvement. - The condition existing by means of which the transferor continues to be related to a transferred financial asset, either by continuing to have:

exposure to the risks and benefits of the future cash flows of the transferred financial asset; or

control over the cash flows of the transferred financial asset, with or without exposure to the relative risks or benefits.

Financial Liability. - It is an obligation arising from a contract, which will require the use of monetary economic resources of the entity. Therefore, it represents:

an obligation to deliver cash or another financial asset to a third party to settle it;

a contractual obligation to exchange financial assets or financial liabilities with a third party under conditions unfavorable to the entity; or

an obligation that will be settled with a variable number of equity instruments issued by the entity itself.

Revolver of Financial Assets in Securitization Operations. - Mechanism in securitization operations by means of which the transferee agrees with the transferor, the transfer of financial assets in a periodic manner and during a pre-established time (known as revolving period), in order to maintain an adequate financial relationship between the transferred financial assets and the securities placed among investors through stock exchanges or recognized trading mechanisms, and in this way comply with the obligations of the operation.

Substitution of Financial Assets in Securitization Operations. - Mechanism in securitization operations by means of which the transferor substitutes for the transferee one or more transferred financial assets during a pre-established period, when any of the previously agreed assumptions occur, such as deterioration in credit quality in the case of credit portfolio, deterioration in the rating of securities, or significant defaults coming from the transferred financial assets.

Fair Value. - It is the exit price that, at the valuation date, would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Securitization Vehicle. - It is an entity, trust or other legal figure, whose activities, in accordance with its object or statutes, are permanently limited to:

maintaining possession of the transferred financial assets;

issuing securities that represent rights over the financial assets;

receiving the flows coming from the transferred financial assets, reinvesting them in financial instruments and providing other services associated with the assets;

distributing the benefits to the holders of the securities placed among investors through stock exchanges or recognized trading mechanisms, and

distributing the benefits on the remainder that in its case has the obligation to deliver.

Characteristics

In securitization operations, the transferor may or may not transfer the risks and benefits on the financial assets to the transferee, and may also transfer or not the control thereof. The transferee issues securities to be placed among investors through stock exchanges or recognized trading mechanisms, which represent interest benefits or rights over what is established in the placement prospectus. As consideration, the transferor may receive, among others, cash or cash equivalents, financial instruments, benefits on the transferee's remainder or rights.

In operations that meet the definitions, concepts and assumptions established in NIF C-14 for derecognition of the entirety or a portion of financial assets (as the case may be), the transferring entity (transferor) must derecognize such entirety or portion of the securitized financial assets from its financial statements and recognize the considerations received or incurred in the securitization operation in accordance with what is stated in the cited NIF C-14. On the other hand, the receiving entity (transferee) will recognize such financial assets in its statement of financial position, as well as the considerations granted or received for the securitization operation in accordance with what is stated in Criterion A-2.

If, in accordance with what is established in the previous paragraph, the definitions, concepts and assumptions established in NIF C-14 for derecognition of the entirety, or well, of a portion of financial assets based on its continuous involvement are not met, the transferring entity (transferor) must not remove the securitized financial assets in their entirety or portion for which it retains continuous involvement from its financial statements and recognize the associated financial liability, as well as the considerations received or incurred in the operation, in accordance with what is stated in the cited NIF C-14. On the other hand, the receiving entity (transferee) will recognize the portion of the transferred financial asset that the transferor has derecognized and on which the transferee has obtained the rights and contractual obligations; the considerations received or incurred in the operation, considering the new financial assets and the new obligations assumed (including the account receivable for the financing granted to the transferor against the outflow of cash, as well as the entry of financial assets coming from the placement of securities among investors against the corresponding liability for the issuance of titles), in accordance with what is stated in Criterion A-2.

Additionally, in securitization operations, the transferor may grant overcollateralization (cash or cash equivalents, credit portfolio, securities, rights among others) in order to cover possible defaults by the debtors of the financial asset transferred object of securitization, or well, guarantee the payment of obligations to investors, among others. For the granting of said overcollateralization, the transferor may or may not maintain the right to receive assets as consideration, such as, the reimbursement of the overcollateralization itself, benefits on the transferee's remainder, interest benefits, among others.

Likewise, regardless of the granting of overcollateralization, the transferor may receive financial assets in the form of benefits on the transferee's remainder and interest benefits, among others.

Operations that meet the requirements for derecognition of financial assets

Recognition and Valuation Standards

At the moment the transfer of financial assets in securitization operations that meet the definitions, concepts and assumptions established in NIF C-14 for derecognition of the entirety or a portion of financial assets (as the case may be) is carried out, the transferring entity (transferor) must carry out the accounting records indicated in the cited NIF C-14 for such cases.

Regarding financial assets for which estimates of expected credit losses or similar concepts have been established, at the moment of recognizing their exit from the statement of financial position, their net book value at the date of their transfer must be considered.

Consistently with what is established in NIF C-14, the considerations received or incurred in the operation must be recognized, considering the new financial assets and the new obligations assumed, at their fair values (such as cash or cash equivalents, interest benefits, assets or liabilities for administration of the transferred financial assets, financial liabilities, rights on the granted overcollateralization), attending the recognition, valuation, presentation and disclosure standards in accordance with the accounting criterion that corresponds according to the nature of the item in question.

The considerations received in the form of benefits on the transferee's remainder must be recognized as benefits to receive in securitization operations and remain valued, from their initial registration, at their fair value at the valuation date, recognizing the adjustments resulting from their valuation in the results of the period. The fair value valuation of the benefits on the transferee's remainder must be, in its case, consistent with the accounting policies of an entity that must be consolidated in accordance with what is stated in NIF B-8 "Consolidated or Combined Financial Statements", in order to facilitate the consolidation of the transferee in the financial statements of the transferor.

For the recognition of operations that meet the requirements for derecognition of financial assets, what is established in NIF C-14 must be attended.

Subsequent collections or recoveries related to the benefits to receive in securitization operations

will be recognized according to the nature of the items received, following the recognition, valuation, presentation, and disclosure rules in accordance with the applicable accounting standard, and will be applied directly to reduce such benefits receivable.

Subsequent collections or recoveries in excess of the amount recorded in benefits receivable in securitization operations will be recognized according to the nature of the items received, following the recognition, valuation, presentation, and disclosure rules in accordance with the applicable accounting standard against the results of the period.

Revolving and Substitution of Financial Assets in Securitization Operations

In securitization operations where it is agreed that the transferor may transfer additional financial assets to those initially transferred, such as in the case of substitution or revolving, it must be verified whether such transfers comply with what is provided in NIF C-14 or, in its case, in Criterion A-2 in order to determine their recognition and/or derecognition from the statement of financial position.

Administration of Transferred Assets

In the event that the transferor provides administration services for the transferred financial assets, an asset or liability for the administration of initially transferred assets must be recognized at its fair value as part of the initial recording of the operation. When the consideration for such administration is reasonably expected to exceed the costs and expenses incurred for the administration service, an asset for the administration of transferred assets must be recognized; otherwise, a liability for the administration of transferred assets must be recognized. Subsequently, such assets or liabilities for administration will be valued at fair value, recognizing the effects of valuation directly in the results of the period.

At the time the transfer of financial assets in securitization operations that meet the definitions, concepts, and assumptions established in NIF C-14 for the derecognition of all or a portion of financial assets (as applicable) takes place, the transferee must make the accounting records indicated in Criterion A-2 for the recognition of financial assets, including the considerations granted or received for the securitization operation (such as: cash or cash equivalents, financial assets, and obligations regarding the received coverage). Subsequently, for valuation purposes, the recognition, valuation, presentation, and disclosure rules must be attended to in accordance with the applicable accounting standard according to the nature of the item in question.

In the event that the transferred financial asset corresponds to a credit portfolio, the difference between the contractual value of the acquired portfolio and the acquisition price must be recognized in accordance with the guidelines for the acquisition of credit portfolios provided in Criterion B-4.

Regarding the placement of securities among investors through stock exchanges or recognized trading mechanisms, the transferee must record in its accounting the entry of the financial assets resulting from said placement of securities, as well as the corresponding financial liability, including any other interest benefits, in accordance with what is established in NIF C-19.

The obligations that, in their case, the transferee incurs, which represent the benefits on its remainder, must be recorded as part of equity or capital, as applicable.

The issuance expenses of the securities placed among investors through stock exchanges or recognized trading mechanisms incurred by the transferee must be recorded in accordance with what is established in NIF C-19. Expenses for the concept of the administration of financial assets will be recognized in the results of the period.

Presentation Standards

Statement of Financial Position

The benefits on the remainder in securitization operations and the asset for the administration of transferred financial assets will be presented in the statement of financial position as part of the benefits receivable in securitization operations. The liabilities for the administration of transferred assets will be presented in the item of obligations in securitization operations.

The rest of the financial assets and obligations assumed arising from securitization operations that meet the requirements for derecognition of financial assets will be presented in the statement of financial position in accordance with the applicable accounting standard according to the nature of the item in question.

Statement of Comprehensive Income

The result from the derecognition of a financial asset in its entirety, as well as the result from the derecognition of a portion of a financial asset, will be presented in the item of the statement of comprehensive income that corresponds according to the nature of the asset or portion thereof, whether as a gain or loss.

The valuation of the benefits receivable in securitization operations, as well as of the assets or liabilities for the administration of transferred assets, will be presented in the statement of comprehensive income in the item of other income (expenses) of the operation, as applicable.

Collections or recoveries in excess of the amount recorded in benefits receivable in securitization operations will be presented in the item of other income (expenses) of the operation. The loss, if any, from the difference between the collections or recoveries and the amount recorded in benefits receivable in securitization operations will be presented in the item of other income (expenses) of the operation.

The presentation of the effects on results for the rest of the financial assets and obligations assumed arising from securitization operations will be carried out in accordance with the applicable accounting standard according to the nature of the item in question.

Statement of Financial Position

The financial assets subject to securitization operations that meet the requirements for derecognition of financial assets by the transferor will be presented in the statement of financial position of the transferee in accordance with the applicable accounting standard according to the nature of the item in question. Likewise, the amount of securities placed among investors through stock exchanges or recognized trading mechanisms, subject to the securitization operation, must be presented within the liability in a specific item in the statement of financial position as issued credit titles.

The obligations that represent the benefits on its remainder will be presented in the statement of financial position as part of equity or capital, as applicable.

Statement of Comprehensive Income

The interest accrued by the securities and other interest benefits placed among investors through stock exchanges or recognized trading mechanisms by the transferee, as well as the issuance expenses in terms of NIF C-19, will be recognized in the results of the period as interest expenses.

Expenses for the concept of the administration of financial assets recognized in the results of the period will be presented in the item of commissions and fees paid.

In the case of the acquisition of a credit portfolio, the amortization of the difference between the contractual value of the acquired portfolio and the acquisition price will be presented in the item of other income (expenses) of the operation in accordance with what is established in Criterion B-4.

In its case, the presentation of the effects on results for the rest of the financial assets and obligations assumed arising from securitization operations that meet the requirements for derecognition of financial assets will be carried out in accordance with the applicable accounting standard according to the nature of the item in question.

Operations that do not meet the requirements for derecognition of financial assets

Recognition and Valuation Standards

In the case of transfers of financial assets in securitization operations that do not meet the definitions, concepts, and assumptions established in NIF C-14 for the derecognition of all or, well, a portion of financial assets based on their continuous involvement, the transferor entity (transferor) must make the accounting records contained in said NIF C-14 for such cases.

In the case of transfers of financial assets in securitization operations that do not meet the definitions, concepts, and assumptions established in NIF C-14 for the derecognition of all or, well, a portion of financial assets based on their continuous involvement, the transferee must make the accounting records established in said NIF C-14 for such cases.

Among other records, the transferee must recognize in its statement of financial position the resources coming from investors for the placement of securities through stock exchanges or recognized trading mechanisms, against the corresponding financial liability for the placed titles. Likewise, the transferee must recognize the financing granted to the transferor against the outflow of resources.

Presentation Standards

Statement of Financial Position

The financial assets that the transferor entity grants as guarantee or collateral in securitization operations will be presented as a restricted asset, according to the type of asset in question. Likewise, the corresponding financial liability for the financing received from the transferee must be presented as part of bank loans or from other organisms. The liability associated with securitization operations in which continuous involvement is retained will be presented in the item of obligations in securitization operations.

The rest of the financial assets and obligations assumed arising from securitization operations that do not meet the requirements for derecognition of financial assets will be presented in the statement of financial position in accordance with the applicable accounting standard according to the nature of the item in question.

Statement of Comprehensive Income

In its case, the presentation of the effects on results for the rest of the financial assets and obligations assumed arising from securitization operations that do not meet the requirements for derecognition of financial assets will be carried out in accordance with the applicable accounting standard according to the nature of the item in question.

Statement of Financial Position

The financial asset that represents the financing granted to the transferor must be presented within the credit portfolio as part of the commercial portfolio. Likewise, the amount of securities placed among investors through stock exchanges or recognized trading mechanisms, subject to the securitization operation, must be presented within the liability in a specific item in the statement of financial position.

Statement of Comprehensive Income

The interest accrued by the securities and other interest benefits placed among investors through stock exchanges or recognized trading mechanisms by the transferee, as well as the issuance expenses in terms of what is stated in NIF C-19, will be recognized in the results of the period as interest expenses.

Expenses for the concept of the administration of financial assets, recognized in the results of the period, will be presented in the item of commissions and fees paid.

Disclosure Standards

The following information must be disclosed in notes to the financial statements for securitization operations:

the characteristics of the securitization operations carried out: the type of securitization celebrated (if they correspond to a securitization that met or did not meet the requirements for the derecognition of financial assets), generic type of transferred financial assets, restrictions on the transferee's rights over the ceded financial assets (mainly characteristics and amounts of restricted assets), characteristics of the coverage and collateral, as well as the amounts recognized for these operations in results in the item of other income (expenses) of the operation;

main characteristics of the considerations received and incurred in securitization operations;

the main characteristics of the assets and liabilities that make up the benefits on the remainder of the transferee that, in their case, are agreed upon, as well as description of the methodology used for their valuation;

detailed description of the valuation methodology of the benefits on the remainder of the transferee, main assumptions used, including a scenario that shows the valuation under adverse conditions, as well as the mention that such valuation was carried out, in its case, under parameters consistent with based on formal techniques recognized in the market (revealing said parameters);

amount of the valuation effect recognized in results from the valuation of benefits on the remainder of the transferee;

amount of financing received in securitization operations, as well as main conditions relative to the obligations acquired for its payment (term, rate, payment methods, among others);

description of the agreements for the revolving and substitution of transferred financial assets, which, in their case, have been agreed upon;

description of the agreements for the reacquisition of the ceded assets, which, in their case, have been agreed upon;

description of the rights or obligations that are held over the transferred financial assets that act as coverage or collateral, as applicable;

description of the agreements to provide the service of administration of transferred financial assets;

amount recognized in the results of the period from the fair value valuation of the asset or liability for administration of assets, as well as main assumptions used for the determination of said fair value;

information on early settlements of the transferred or ceded financial assets, and

description of the financial assets received as a result of the settlement of remainders or excesses of the transferee.

the characteristics of the interest benefits issued, subordinated or not, such as: type, amount, interest rate, term, rights and payment restrictions;

main characteristics of the considerations received and incurred in securitization operations;

qualification of the credit quality of the titles placed among investors through stock exchanges or recognized trading mechanisms, as well as of the financial assets subject to the securitization operation, and

description of the methodology used to value at fair value the obligations related to securitization operations.

D-1 STATEMENT OF FINANCIAL POSITION

Background

The financial information must comply, among other things, with the purpose of presenting the financial situation of the entities at a specific date, requiring the establishment, through specific criteria, of the objectives and general structure that the statement of financial position must have.

Objective and Scope

This criterion aims to establish the general characteristics, as well as the structure that the statement of financial position of the entities must have, which must adhere to what is provided in this criterion. Likewise, minimum guidelines are established with the purpose of homogenizing the presentation of this financial statement among the entities and, in this way, facilitate its comparability.

The statement of financial position aims to present information relative to the resources (assets) and sources of financing (liabilities and equity) of the entity at a specific date.

The statement of financial position, therefore, must adequately and on consistent bases show the position of the entities regarding their assets, liabilities, equity, and off-balance sheet accounts, in such a way that the economic resources available to said entities can be evaluated, as well as their financial structure.

Additionally, the statement of financial position must fulfill the objective of being a useful tool for the analysis of the different entities, so it is convenient to establish the concepts and general structure that said financial statement must contain.

Concepts that make up the statement of financial position

In a broad context, the concepts that make up the statement of financial position are: assets, liabilities, and equity, understood as such to the concepts so defined in NIF A-1, Chapter 50. Likewise, the off-balance sheet accounts referred to in this criterion are part of the concepts that make up the structure of the statement of financial position of the entities.

Structure of the statement of financial position

The structure of the statement of financial position must group the concepts of asset, liability, equity, and off-balance sheet accounts, in such a way that it reflects from greater to lesser their degree of liquidity or exigibility, as applicable.

In this way, the minimum items that must be included in the statement of financial position are the following:

Asset

cash and cash equivalents;
investments in financial instruments;
dealers in repurchase agreements;
total credit portfolio (net);
benefits receivable in securitization operations;
other accounts receivable (net);
adjudicated assets (net);
long-term assets held for sale or to distribute to shareholders;
prepayments and other assets;
properties, furniture, and equipment (net);
assets by right of use of properties, furniture, and equipment (net);
permanent investments;
deferred income tax asset (net);
intangible assets (net);
assets by right of use of intangible assets (net), and
goodwill.

Liability

traditional deposits;
bank loans and from other organisms;
collateral sold or given as guarantee;
obligations in securitization operations;
lease liability;
other accounts payable;
liabilities related to groups of assets held for sale;
financial instruments that qualify as liability;
obligations associated with the removal of components of properties, furniture, and equipment;
income tax liability;
employee benefits liability, and
deferred credits and advance collections.

Equity

contributed capital, and
earned capital.

Off-balance Sheet Accounts

guarantees granted;
contingent assets and liabilities;
credit commitments;
assets in trust or mandate;
assets in custody or in administration;
collateral received by the entity;
collateral received and sold or delivered as guarantee by the entity;
accrued interest not collected derived from credit portfolio with stage 3 credit risk, and
other registration accounts.

Presentation of the statement of financial position

The items described above correspond to the minimum required for the presentation of the statement of financial position; however, entities must break down, either in said financial statement or through notes, the content of the concepts they consider necessary in order to show their financial situation to the user of the information. At the end of this criterion, a statement of financial position prepared with the minimum items referred to in the previous paragraph is shown.

However, certain items of the statement of financial position require special guidelines for their presentation, which are described below:

Investments in Financial Instruments

The different categories of investments in financial instruments will be presented within this item, such as negotiable financial instruments, financial instruments to collect and sell, and financial instruments to collect principal and interest (securities) the latter at their amortized cost (that is, including accrued interest not collected and net of items to amortize and expected credit losses).

Dealers in Repurchase Agreements

The debtor balance arising from repurchase operations referred to in the corresponding criterion will be presented immediately after the concept of investments in financial instruments.

Total Credit Portfolio (Net)

In order to obtain higher quality information regarding the credits granted by the entities, the credit portfolio must be disaggregated in the statement of financial position according to the destination of the credit, classifying it into any of the following categories:

Credit Portfolio with Stage 1 Credit Risk

commercial credits;

business or commercial activity;

liquidity loans to other popular or community financial societies, and

federal entities and municipalities.

consumer credits, and
housing credits.

medium and residential, and

of social interest.

Credit Portfolio with Stage 2 Credit Risk

commercial credits;

business or commercial activity;

liquidity loans to other popular or community financial societies, and

federal entities and municipalities.

consumer credits, and
housing credits.

medium and residential, and

of social interest.

Credit Portfolio with Stage 3 Credit Risk

commercial credits;

business or commercial activity;

liquidity loans to other popular or community financial societies, and

federal entities and municipalities.

consumer credits, and
housing credits.

medium and residential, and

social interest.

Credit portfolio valued at fair value

commercial credits;

business or commercial activity;

liquidity loans to other popular or community financial societies, and

federal entities and municipalities.

consumer credits, and
housing credits.

medium and residential, and

social interest.

Credits denominated in UDIS must be presented in the category corresponding to them.

The credit portfolio will be presented, according to the credit in question, net of interest collected in advance and deferred credits corresponding to financial income from accrual in financial leasing contracts.

Also included within this item: deferred items (such as, the net amount between transaction costs and origination commissions, as well as effects from renegotiations) and estimates corresponding to the credit portfolio. Likewise, acquired collection rights, relating to acquired credits referred to in subsection d) of paragraph 3, of Criterion B-4, net of their estimate.

Other receivables (net)

Receivables not included in the credit portfolio will be presented, considering among others, liquidator accounts with debit balances, debtors for collateral provided in cash, and conditional receivables, deducted, if applicable, from the estimate of expected credit losses.

Long-term assets held for sale or for distribution to shareholders

Investments in long-term assets classified as held for sale, such as subsidiaries, associates, and joint ventures, as well as those held for distribution including discontinued operations, as referenced in NIF B-11, will be presented within this item.

Prepayments and other assets

Prepayments and other assets such as deferred charges and security deposits, as well as other short-term and long-term assets, must be presented as a single item in the statement of financial position. The asset for employee benefits arising in accordance with what is established in NIF D-3 "Employee Benefits" (NIF D-3), will form part of this item.

Assets for right of use of properties, furniture and equipment (net)

Those assets representing the lessee's right to use a property, furniture, or equipment during the lease term, reduced by accumulated depreciation, are presented here.

Permanent investments

Permanent investments in unconsolidated subsidiaries, associates, joint ventures, as well as other permanent investments added by goodwill generated, if any, will be presented within this item.

Assets for right of use of intangible assets (net)

Those assets representing the lessee's right to use an intangible asset during the lease term, reduced by accumulated amortization, are presented here.

Traditional funding

Traditional funding will constitute the first item within the entity's liabilities, which must be presented disaggregated into the following concepts:

deposits payable on demand;
term deposits;
issued credit instruments, and
global funding account without movements.

Deposits payable on demand include sight deposits and savings deposits, among others.

Term deposits include, among others, deposits withdrawable on predetermined days and withdrawable with prior notice.

Issued credit instruments will be presented as an independent category, forming part of these, among others, exchange-traded certificates.

The global funding account without movements includes, the principal and interest of funding instruments that do not have a maturity date, or, even if they do, are renewed automatically, as well as transfers or expired and unclaimed investments, as referenced in article 33 bis of the Popular Savings and Credit Law.

Bank loans and from other organisms

Bank loans and loans from other organisms will be grouped within a specific item, broken down into:

short-term (amount of installments whose remaining term is less than or equal to one year), and

long-term (amount of installments whose remaining term is greater than one year).

Liabilities generated in credit portfolio sale operations where the conditions established to derecognize a financial asset are not met, in accordance with what is established in NIF C-14, will be presented within this item.

Collaterals sold or pledged

Sold collaterals representing the obligation to return collateral received from the counterparty in repo operations and other sold or pledged collaterals must be presented within this item in a disaggregated manner.

In the case of repo operations, the creditor balance originating from compensation carried out in accordance with Criterion B-3 must be presented.

Other payables

Among others, creditor liquidator accounts, creditors for collateral received in cash, contributions payable, diverse creditors, and other payables, including in the latter overdrafts in checking accounts and the negative balance of the cash and cash equivalents item that, in accordance with what is established in Criterion B-1, must be presented as a liability, will form part of this item.

Liabilities related to groups of assets held for sale

Liabilities related to groups of long-term assets held for sale, including discontinued operations, will be presented within this item.

Financial instruments qualifying as liabilities

Contributions for future capital increases pending formalization by the competent governing body, as well as those financial instruments that qualify as liabilities, in accordance with what is established in NIF C-12 "Financial Instruments with Liability and Capital Characteristics", must be included in this item.

Obligations associated with the removal of components of properties, furniture and equipment

This item will include obligations arising from the permanent removal of service of a component of properties, furniture, and equipment, in accordance with what is established in NIF C-18 "Obligations Associated with the Removal of Property, Plant and Equipment".

Income tax liability

The amount corresponding to taxes incurred, as well as the resulting amount of the deferred income tax liability, determined in accordance with what is established in NIF D-4, will be presented in this item.

Employee benefits liability

The liability arising in accordance with what is established in NIF D-3, will form part of this item.

Deferred credits and advance collections

This item will be composed of deferred credits and advance collections, such as advance collections received on account of goods promised in sale or with reservation of ownership, among others.

Equity

Entities will present as part of the retained earnings item capital reserves, disaggregating the Social Reserve Fund, the Community Reserve Fund, or the Reserve Fund constituted in accordance with applicable legislation, as appropriate, as well as other reserves.

When preparing the consolidated statement of financial position, the non-controlling interest representing the portion of the subsidiary's equity corresponding to non-controlling shareholders, will be presented in a separate line, immediately after retained earnings.

Result from holding non-monetary assets

The entity will recognize in this item the unrealized result from holding non-monetary assets, in accordance with what is established in NIF B-10.

Off-balance sheet accounts

At the bottom of the statement of financial position, situations or events that, according to the definition of assets, liabilities, and equity mentioned above, should not be included within said concepts in the entities' statement of financial position, but that provide information about any of the following events, must be presented:

guarantees granted;

contingent assets and liabilities, such as contingent credit lines, irrevocable credit lines, and guarantees, as well as credit commitments such as unused granted credit lines and revocable credit lines, the foregoing in accordance with NIF C-9;

assets in trust or mandate;

assets in custody or administration;

collateral received by the entity;

collateral received and sold or pledged by the entity;

amounts that complement the figures contained in the statement of financial position, and

other accounts that the entity considers necessary to facilitate accounting records or to comply with applicable legal provisions.

NAME OF THE ENTITY

LEVEL OF OPERATIONS CORRESPONDING TO

ADDRESS

STATEMENT OF FINANCIAL POSITION AS ____ OF ____________ OF ______

EXPRESSED IN CURRENCY OF PURCHASING POWER OF _______________ OF ______ 1

(Thousands of pesos)

ASSET

LIABILITY AND EQUITY

CASH AND CASH EQUIVALENTS

TRADITIONAL FUNDING

Deposits payable on demand

FINANCIAL INSTRUMENT INVESTMENTS

Term deposits

Negotiable financial instruments

Issued credit instruments

Global funding account without movements

Financial instruments to collect and sell

Financial instruments to collect principal and interest (values)(net)

BANK LOANS AND FROM OTHER ORGANISMS

RECEIVABLES FROM REPO

Short-term

Long-term

CREDIT PORTFOLIO WITH CREDIT RISK STAGE 1

Commercial Credits

COLLATERALS SOLD OR PLEDGED

Business or commercial activity

Repos

Liquidity loans to other popular financial societies

Other collaterals sold or pledged

or community

Federal entities and municipalities

OBLIGATIONS IN SECURITIZATION OPERATIONS

Consumer Credits

Housing Credits

LEASE LIABILITY

Medium and residential

Social interest

OTHER PAYABLES

Creditor account for operation settlement

TOTAL CREDIT PORTFOLIO WITH CREDIT RISK STAGE 1

Creditor for collateral received in cash

Contributions payable

CREDIT PORTFOLIO WITH CREDIT RISK STAGE 2

Diverse creditors and other payables

Commercial Credits

Business or commercial activity

LIABILITIES RELATED TO GROUPS OF ASSETS

Liquidity loans to other popular financial societies or

HELD FOR SALE

Community

Federal entities and municipalities

FINANCIAL INSTRUMENTS THAT QUALIFY AS n
Consumer Credits

LIABILITY

Housing Credits

Subordinated obligations in circulation

Medium and residential

Contributions for future capital increases pending

Social interest

formalization by its competent governing body

Others

TOTAL CREDIT PORTFOLIO WITH CREDIT RISK STAGE 2

OBLIGATIONS ASSOCIATED WITH THE REMOVAL OF

CREDIT PORTFOLIO WITH CREDIT RISK STAGE 3

COMPONENTS OF PROPERTIES, FURNITURE AND EQUIPMENT

Commercial Credits

Business or commercial activity

INCOME TAX LIABILITY

Liquidity loans to other popular financial societies

or community

EMPLOYEE BENEFITS LIABILITY

Federal entities and municipalities

Consumer Credits

DEFERRED CREDITS AND ADVANCE COLLECTIONS

Housing Credits

Medium and residential

TOTAL LIABILITY

Social interest

TOTAL CREDIT PORTFOLIO WITH CREDIT RISK STAGE 3

EQUITY

CREDIT PORTFOLIO VALUED AT FAIR VALUE

CONTRIBUTED CAPITAL

Share capital

CREDIT PORTFOLIO

Contributions from community financial societies 2

Foundational heritage 2

(+/-) DEFERRED ITEMS

Contributions for future capital increases formalized by

its competent governing body

(-) LESS:

Premium on share sales

Financial instruments qualifying as equity

PROVISIONAL ESTIMATE FOR CREDIT RISKS

Effect from incorporation into the regime of popular financial societies

CREDIT PORTFOLIO (NET)

RETAINED EARNINGS

ACQUIRED COLLECTION RIGHTS (NET)

Capital Reserves

Social Reserve Fund

TOTAL CREDIT PORTFOLIO (NET)

Community Reserve Fund

Reserve Fund

BENEFITS TO RECEIVE IN SECURITIZATION OPERATIONS

Accumulated results

Other comprehensive income

OTHER RECEIVABLES (NET)

Valuation of negotiable financial instruments

Valuation of financial instruments to collect and sell

ASSIGNED ASSETS (NET)

Income and expenses related to assets held for

disposition

LONG-TERM ASSETS HELD FOR SALE OR

Remediation of defined employee benefits

FOR DISTRIBUTION TO SHAREHOLDERS

Accumulated effect from conversion

Result from holding non-monetary assets

PREPAYMENTS AND OTHER ASSETS

Participation in ORI of other entities

PROPERTIES, FURNITURE AND EQUIPMENT (NET)

TOTAL CONTROLLING INTEREST

ASSETS FOR RIGHT OF USE OF PROPERTIES, FURNITURE

TOTAL NON-CONTROLLING INTEREST

AND EQUIPMENT (NET)

TOTAL EQUITY

PERMANENT INVESTMENTS

DEFERRED INCOME TAX ASSET (NET)

INTANGIBLE ASSETS (NET)

ASSETS FOR RIGHT OF USE OF INTANGIBLE ASSETS

(NET)

GOODWILL

TOTAL ASSET

TOTAL LIABILITY AND EQUITY

OFF-BALANCE SHEET ACCOUNTS

Guarantees granted

Contingent assets and liabilities

Credit commitments

Assets in trust or mandate

Trust guarantees

Mandates

Assets in custody or administration

Collateral received by the entity

Collateral received and sold or pledged

by the entity

Uncollected accrued interest derived from

credit portfolio with credit risk stage 3

Other registration accounts

The concepts appearing in this statement are shown in an enumerative but not limiting manner.

This line will be omitted if the economic environment is "non-inflationary".

Applies only to rural financial integration organizations.

D-2 STATEMENT OF COMPREHENSIVE INCOME

Background

Financial information must meet, among other things, the objective of reporting the results of an entity's operations during a defined accounting period, requiring the establishment, through specific criteria, of the object and general structure that the statement of comprehensive income must have. This is to obtain judgment elements regarding, among other issues, the level of operational efficiency, profitability, and financial risk.

Objective and Scope

This criterion aims to establish the general characteristics for the presentation and structure of the statement of comprehensive income, the minimum content requirements, and the general disclosure norms.

Whenever this financial statement is prepared, entities must adhere to the structure and guidelines provided in this criterion, through which the presentation of this financial statement among entities is sought to be homogenized, and thus, facilitate its comparability.

The statement of comprehensive income aims to present information relative to the result of the entity's operations during a period.

Concepts Integrating the Statement of Comprehensive Income

In a broad context, the concepts integrating the statement of comprehensive income are: revenues, costs, expenses, net result, and comprehensive result, considering such concepts as defined in NIF A-1, Chapter 50.

Structure of the Statement of Comprehensive Income

The minimum items that the statement of comprehensive income must contain in entities are the following:

financial margin;
financial margin adjusted for credit risks;
operating result;
result before income tax;
result from continuing operations;
net result, and
comprehensive result.

Presentation of the Statement of Comprehensive Income

The items described above correspond to the minimum required for the presentation of the statement of comprehensive income; however, entities must disaggregate, either in the cited statement of comprehensive income or through notes to the financial statements, the content of the concepts they consider necessary to show their results to the user of financial information. At the end of this criterion, a consolidated statement of comprehensive income is shown, prepared with the minimum items referred to in the previous paragraph.

Characteristics of the Items Composing the Structure of the Statement of Comprehensive Income

Financial Margin

The financial margin must be formed by the difference between interest income and interest expenses, increased or decreased by the result from net monetary position, related to items of the financial margin (in the case of an inflationary environment).

Interest Income

Interest income includes, among others, returns generated by the credit portfolio, contractually called interest, those derived from acquired collection rights (impaired credits), amortization of interest collected in advance, financial income accrued in financial leasing operations, financial factoring, discounting, and assignment of credit rights, as well as premiums and interest from other financial operations such as deposits in financial entities, investments in financial instruments, repo operations, as well as premiums for debt placement.

Commissions charged for credit granting and the effect from credit portfolio renegotiation are also considered interest income, as well as dividends from financial instruments that qualify as equity financial instruments.

Similarly, valuation adjustments derived from items denominated in UDIS or in some other general price index, as well as exchange gains, are considered interest income, provided that such items come from positions related to income or expenses that form part of the financial margin.

Interest collected relative to credits classified as credit risk portfolio stage 3, whose accumulation is carried out upon collection, in accordance with what is established in Criterion B-4, forms part of this item.

Interest income generated by the credit portfolio of trusts denominated in UDIS, when consolidating with the entity's figures, is also included in this item.

Interest Expenses

Interest expenses include premiums, discounts, and interest derived from traditional funding, bank loans, and loans from other organisms, interest, transaction costs, and discounts associated with financial instruments qualifying as liabilities. Also, premiums paid for early redemption of financial instruments qualifying as liabilities.

Similarly, valuation adjustments derived from items denominated in UDIS or in some other general price index, as well as exchange losses on positions, are considered interest expenses, provided that such concepts come from assets or liabilities related to expenses or income that form part of the financial margin.

Likewise, amortization of costs and expenses associated with credit granting (transaction costs), the effect from credit portfolio renegotiation, those derived from lease liabilities, and the financial effect of provisions are considered interest expenses.

Result from Net Monetary Position (Financial Margin)

The result from net monetary position referred to in paragraph 7 will be that originating from items whose income or expenses form part of the financial margin (in the case of an inflationary environment).

Financial Margin Adjusted for Credit Risks

Corresponds to the financial margin deducted by amounts relative to movements in the provisional estimate for credit risks in a given period. Cash contributions for the constitution of provisions corresponding to trusts denominated in UDIS are considered part of this section.

Operating Result

Corresponds to the financial margin adjusted for credit risks, increased or decreased by:

commissions and fees charged and paid;

intermediation result;

other operating income (expenses) other than interest income or expenses included within the financial margin, and

administration and promotion expenses.

Commissions and Fees Charged and Paid

Commissions and fees charged and paid are those generated by credit operations other than those indicated in paragraphs 9 and 15, borrowed loans, debt placement (distinct from those associated with its issuance), and for the provision of services among others, handling, transfer, custody, or administration of resources, fiduciary activities, and for granting guarantees. Commissions related to the use or issuance of credit cards also form part of this item, whether directly as first and subsequent annual fees, inquiries, or plastic issuance, or indirectly as those charged to affiliated establishments.

Intermediation Result

Likewise, the intermediation result is considered part of the operating result, understood as the following concepts:

result from fair value valuation of negotiable financial instruments, as well as sold collaterals;

estimate of expected credit losses for investments in financial instruments;

result from currency valuation;

result from sale and purchase of financial instruments (values);

result from sale and purchase of currencies;

result from sale of received collaterals;

transaction costs for the purchase and sale of negotiable financial instruments, and

other financial results.

Other operating income (expenses)

Other operating income (expenses) include income and expenses derived from the entity's operations that are not included in the preceding paragraphs, nor do they form part of administration and promotion expenses, such as:

costs and expenses for credit portfolio recoveries;

recoveries of taxes, collection rights, and excess benefits to be received in securitization operations;

result from the acquisition or sale of portfolios;

income from purchase options in financial leasing operations;

income from participation in the sale price of goods in financial leasing operations;

charges to the estimate of expected credit losses;

losses;

contributions to the Fund for the Protection of Popular Financial Societies and the Protection of their Savers;

donations;

the result from the allocation of assets, the result from the valuation of allocated assets, the result from the sale of allocated assets, as well as the estimate for the loss in value of allocated assets;

loss in custody and administration of assets;

loss in trust operations;

loss from impairment or effect from reversal of impairment of other long-term assets held for sale;

interest charges in financing for the acquisition of assets;

result from the sale of properties, furniture, and equipment;

cancellation of other liability accounts;

interest income from loans to officials and employees;

income from leasing;

the result from the valuation of the asset (or liability) for the administration of transferred financial assets, as well as benefits to be received in securitization operations;

income from administrative services, and

other items of operating income (expenses).

In addition to the items previously mentioned, the result from monetary position, in the case of an inflationary environment, and the result from changes generated by items not related to the financial margin of the entities, shall be presented in the item of other operating income (expenses).

Administration and promotion expenses

Administration and promotion expenses shall be considered within the operating result, which must include, among others, all types of direct short-term benefits granted to the entity's employees, Workers' Profit Sharing (PTU) incurred and deferred, the net cost of the period derived from long-term employee benefits, fees, rents (for example, variable payments for leasing, short-term leases), promotion and advertising expenses, taxes and various duties, technology expenses, non-deductible expenses, depreciation and amortization, loss from impairment or effect from reversal of impairment of real estate and other assets in use, and other administration and promotion expenses.

Result before income taxes

This is the operating result, incorporating the participation in the net result of other entities, increased or decreased as appropriate by the effects of impairment and its reversals, dividends from permanent investments, adjustments associated with other permanent investments, and the effects of valuation of permanent investments available for sale.

Result from continuing operations

This is the result before income taxes, decreased by the effect of income tax expenses incurred in the period, increased or decreased as appropriate by the effects of deferred income taxes generated or realized in the period, as applicable, net of their estimate.

Net result

This corresponds to the result from continuing operations increased or decreased as appropriate, by discontinued operations as referred to in NIF B-11.

Comprehensive result

This corresponds to the net result increased or decreased by the OCI of the period, net of the effects of income taxes and PTU related, as well as participation in the OCI of other entities. OCI will be composed of: valuation of negotiable financial instruments, when they are non-negotiable capital instruments in the short term, valuation of financial instruments to collect and sell, income and expenses related to assets held for disposal, remeasurement of defined employee benefits, cumulative effect from conversion, and the result from holding non-monetary assets.

Disclosure standards

The following shall be disclosed in notes to the financial statements:

composition of the financial margin, identifying by currency type interest income and interest expenses, distinguishing them by the type of operation from which they originate (investments in financial instruments, repurchase agreements, credit portfolio, traditional funding disaggregated, as well as bank loans and loans from other organizations, among others);

in the case of credit portfolio, additionally, the amount of interest income by type of credit (business or commercial activity, microcredits, other popular financial societies, community or rural financial integration organizations, consumer, housing, among others) must be identified;

composition of the intermediation result, identifying the result from fair value valuation and, if applicable, the result from purchase and sale, according to the type of operation from which they originate (investments in financial instruments, as well as sold collateral);

amount of the result from the valuation of the credit portfolio valued at fair value;

amount of commissions charged disaggregated by the main products managed by the entity;

the amounts of transaction costs recognized in results and the weighted average term for their amortization, as well as the elements that justify their direct relationship with the granting of credit;

details of income taxes incurred and deferred;

details of the movements of OCI net of income taxes, corresponding to the period effect and recycling, if any, that was carried out;

the amounts of income taxes, as well as PTU related to OCI, and

the amount of basic earnings or loss per share and diluted earnings or loss per share, in case the entity trades on the stock exchange. The determination of both amounts must be made based on the NIF relative to earnings per share.

NAME OF THE ENTITY

LEVEL OF OPERATIONS CORRESPONDING

ADDRESS

STATEMENT OF COMPREHENSIVE INCOME FROM _______________ TO _______________ OF ___

EXPRESSED IN CURRENCY OF PURCHASING POWER OF ________ OF _______ (1)

(Numbers in thousands of pesos)

Interest income

Interest expenses

Net monetary position result (financial margin)

FINANCIAL MARGIN

Preventive estimate for credit risks

FINANCIAL MARGIN ADJUSTED FOR CREDIT RISKS

Charged commissions and fees

Paid commissions and fees

Intermediation result

Other operating income (expenses)

Administration and promotion expenses

OPERATING RESULT

Participation in the net result of other entities

RESULT BEFORE INCOME TAXES

Income taxes

RESULT FROM CONTINUING OPERATIONS

Discontinued operations

NET RESULT

Other Comprehensive Income

Valuation of negotiable financial instruments

Valuation of financial instruments to collect and sell

Income and expenses related to assets held for disposal

Remeasurement of defined employee benefits

Cumulative effect from conversion

Result from holding non-monetary assets

Participation in OCI of other entities

COMPREHENSIVE RESULT

Net result attributable to:

Controlling interest

Non-controlling interest

Comprehensive result attributable to:

Controlling interest

Non-controlling interest

Basic earnings per ordinary share

The concepts appearing in this statement are shown in an enumerative but not limiting manner.

( 1 ) This line will be omitted if the economic environment is "non-inflationary".

D-3 STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

Background

Financial information must fulfill, among other things, the purpose of reporting modifications in shareholders' investment during a defined accounting period, requiring the establishment, through specific criteria, of the objectives and general structure that the statement of changes in shareholders' equity must have, in order to evaluate, among other issues, the profitability indices of the entity, both for a specific accounting period and cumulatively as of the date of the financial statements.

Objective and scope

This standard aims to establish the general characteristics for the presentation and structure that the statement of changes in shareholders' equity of entities must have, the minimum content requirements, and the general disclosure standards. The foregoing, with the purpose of standardizing the presentation of this financial statement among entities and, in this way, facilitating its comparability.

The statement of changes in shareholders' equity aims to present the movements between the initial and final balances of contributed capital and earned capital during an accounting period. In general and non-limiting terms, the main items that make up shareholders' equity are:

contributed capital, which is composed of contributions from shareholders received by the entity and the amount of other financial instruments issued by the entity that qualify as capital. It also includes certain contributions for future capital increases, premiums in the issuance or sale of shares and financial instruments that by economic substance qualify as capital, and

earned capital, which is composed of accumulated comprehensive results, as well as reserves created by the entity's shareholders.

For the above, the basic elements of the statement of changes in shareholders' equity of entities are: shareholder movements, reserve movements, and comprehensive result, in accordance with NIF A-1, Chapter 50.

The movements presented in the statement of changes in shareholders' equity must be segregated into the amounts corresponding to:

controlling interest, which is the portion of the shareholders' equity of subsidiaries that belongs to the parent company, and

non-controlling interest, which is the portion of the shareholders' equity of subsidiaries that belongs to owners other than the parent company.

This standard does not aim to establish the mechanics by which the aforementioned movements are determined, as they are subject to accounting standards for popular financial societies, community financial companies, and rural financial integration organizations or specific NIFs established regarding this matter.

Structure of the statement of changes in shareholders' equity

The statement of changes in shareholders' equity must present, in a segregated manner, for each period for which it is presented, the amounts relative, if applicable, to:

initial balances of shareholders' equity;

adjustments from retrospective application due to accounting changes and error corrections;

adjusted initial balances;

shareholder movements;

reserve movements;

comprehensive result, and

final balances of shareholders' equity.

Initial balances of shareholders' equity

In this line, the book values of each of the items of shareholders' equity with which the entity began each period for which the statement of changes in shareholders' equity is presented must be shown.

Adjustments from retrospective application due to accounting changes and error corrections

This corresponds to adjustments derived from the retrospective application established in NIF B-1 "Accounting changes and error corrections". When retrospective adjustments have been determined that consequently affect the initial balances of the period, the corresponding amounts must:

be presented immediately after the initial balances, as they are adjustments to them;

be presented in a segregated manner by the amounts affecting each item of shareholders' equity, and

if applicable, be presented net of income taxes.

In cases where in the same accounting period retrospective adjustments have been determined both for accounting changes and for error corrections, both amounts must be presented in a segregated manner within the body of the statement of changes in shareholders' equity net of income taxes.

Adjusted initial balances

These result from the algebraic sum of the initial balances of shareholders' equity and the adjustments from retrospective application to each item individually.

Shareholder movements

These are changes to contributed capital or, if applicable, to earned capital, during an accounting period, derived from decisions made by shareholders regarding their investment in the entity. Some examples of this type of movement are as follows:

capital contributions;

capital reimbursements;

decree of dividends;

capitalization of items from contributed capital;

capitalization of comprehensive result;

capitalization of reserves, and

changes in controlling interest that do not imply loss of control.

Movements corresponding to shareholder contributions must be shown separately from those that are distributions to them, that is, they must not be shown in a net manner.

Reserve movements

In this line, the amounts representing increases or decreases to capital reserves must be shown.

Comprehensive result

This refers to the increase or decrease in the earned capital of an entity derived from its operations, during an accounting period, originated by net profit or loss, plus other comprehensive income. In this line, the comprehensive result will be presented broken down into the following components:

net result of the period;

other comprehensive income (OCI), and

participation in OCI of other entities.

Likewise, the net movement of the period of the components of the comprehensive result must be presented; as net movement, it must be understood as OCI net of income taxes, PTU, and recycling of OCI.

Final balances of shareholders' equity

The final balances of shareholders' equity are determined by the algebraic sum of the adjusted initial balances of each of the items of shareholders' equity plus shareholder movements, reserve movements, and comprehensive result.

Presentation of the statement of changes in shareholders' equity

The concepts described above correspond to the minimum requirements for the presentation of the statement of changes in shareholders' equity; however, entities must break down, either in the cited statement of changes in shareholders' equity or through notes to the financial statements, the content of the concepts they consider necessary for users of financial information to understand the movements that affected the shareholders' equity of the entities in the period. At the end of this standard, a statement of changes in shareholders' equity prepared with the requirements referred to in this standard is shown.

General considerations

In the event of an inflationary environment, all balances and movements incorporated in the statement of changes in shareholders' equity must be shown expressed in monetary units of purchasing power relative to the date of the financial statements.

Disclosure standards

The following shall be disclosed in notes to the financial statements:

the amount of dividends distributed in the period, the manner in which they were paid, as well as the data on dividend per share;

the reason for capital reimbursements made in the period, and

a description of how the capital contributions of the period were made.

NAME OF THE ENTITY

LEVEL OF OPERATIONS CORRESPONDING

ADDRESS

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FROM ______ OF _______________ OF _______ TO ______ OF

_________________ OF ___________

EXPRESSED IN CURRENCY OF PURCHASING POWER OF ________________ OF __________ ( 1 )

(Numbers in thousands of pesos)

Concept

Contributed capital

Earned capital

Total

controlling

interest

Total

non-controlling

interest

Total

shareholders'

equity

Social

capital

Contributions

Community

Financial

Companies

Founding

equity

Contributions

for future

capital

increases

formalized by

its governing

body

authorized

Premium in

sale of

Financial

instruments

that qualify

as capital

Effect from

incorporation

to the regime

popular

financial

societies

Capital

reserves

Accumulated

results

Valuation of

financial

instruments

negotiable

Valuation of

financial

instruments

to collect and

sell

Income and

expenses

to assets

held

for

disposal

Remeasurement

defined

benefits

employees

Cumulative

effect

from

conversion

Result from

holding

non-monetary

assets

Participation

in OCI of

other

entities

Balance at _____ of _________

of ______

Retrospective adjustments for

accounting changes

Retrospective adjustments for

correction of errors

Balance at ___ of _______ of

___ adjusted

SHAREHOLDER

MOVEMENTS

Capital contributions

Capital reimbursements

Decree of dividends

Capitalization of other

items of shareholders' equity

Changes in controlling

interest that do not imply

loss of control

Total

RESERVE

MOVEMENTS

Capital reserves

COMPREHENSIVE RESULT:

Net result

Other comprehensive income

Valuation of negotiable

financial instruments

Valuation of financial

instruments to collect and

sell

Income and expenses

related to assets

held for

disposal

Remeasurement of defined

benefits to employees

Cumulative effect from

conversion

Result from holding

non-monetary assets

Participation in OCI of other

entities

Total

Balance at _____ of _______ of

The concepts appearing in this statement are shown in an enumerative but not limiting manner.

This line will be omitted if the economic environment is "non-inflationary"

Applies only to rural financial integration organizations

D-4 STATEMENT OF CASH FLOWS

Background

Financial information must fulfill, among other things, the purpose of showing the manner in which entities generate and use cash and cash equivalents, which are essential to maintain their operations, cover their obligations, as well as distribute dividends.

Objective and scope

This standard aims to establish the general characteristics for the presentation, structure, and preparation of the statement of cash flows of entities, as well as the disclosures that complement said financial statement. Likewise, minimum guidelines are established, with the purpose of standardizing the presentation of this financial statement among entities and, in this way, facilitating its comparability.

The statement of cash flows has the main objective of providing users of the basic financial statements with information regarding the inflows and outflows of cash during an accounting period.

When the statement of cash flows is used together with the rest of the financial statements, it provides information that allows users to:

evaluate changes in the entity's assets and liabilities and in its financial structure (including its liquidity and solvency), and

evaluate both the amounts and dates of collections and payments, in order to adapt to circumstances and to opportunities for generating and applying cash and cash equivalents.

Likewise, the statement of cash flows presents the operations that were carried out in the period, that is, those that were materialized with the collection or payment of the item in question; while the statement of comprehensive income shows the operations accrued in the same period, that is, when they are recognized accounting-wise at the moment they economically affect the entity, regardless of the date they are considered carried out for accounting purposes.

The statement of cash flows allows entities to improve the comparability of information on operational performance with different entities, because it eliminates the effects generated by the use of different accounting treatments for the same transactions and economic events.

Historical information on cash flows is used as an indicator of the amount, timing of generation, and probability of future cash flows. Likewise, such information is useful to verify the accuracy of forecasts made in the past of future cash flows, to analyze the relationship between profitability and net cash flows, as well as, if applicable, the effects of inflation when there is an inflationary environment.

Definitions

Financing activities.- These are related to the obtaining, as well as the remuneration and reimbursement of funds from i) the entity's shareholders; ii) creditors granting financing not related to usual operating activities, and iii) the issuance by the entity of financial instruments that qualify as liability or well, of financial instruments that qualify as capital.

Investing activities.- These are related to the acquisition and disposal of i) properties, furniture and equipment, intangible assets and other assets intended for use or for the provision of services; ii) long-term financial instruments; iii) permanent investments in financial instruments that qualify as capital; and iv) activities related to the granting and recovery of loans not related to operating activities.

Operating activities.- These are those that constitute the main source of income for the entity, include other activities that cannot be classified as investment or financing.

Cash and cash equivalents.- This concept shall be understood as what is established to that effect by Criterion B-1.

Cash Inflows.- Are increases in cash during an accounting period, generated by the decrease of any other asset other than cash, the increase in liabilities, or by increases in capital by the entity's shareholders.

Cash Flows.- Are inflows and outflows of cash and cash equivalents. Movements between the items that constitute cash and cash equivalents will not be considered cash flows, since these components are part of the management of the entity's cash and cash equivalents, rather than its operating, investing, or financing activities.

Cash Outflows.- Are decreases in cash during an accounting period, generated by the increase of any other asset other than cash, the decrease in liabilities, or by the disposal of capital by the shareholders.

Nominal Value.- Is the amount in monetary units expressed in bills, coins, securities, and instruments.

Presentation Standards

General Considerations

Entities must exclude from the statement of cash flows all operations that did not affect cash flows. For example:

a) conversion of debt to equity and distribution of dividends in shares;

b) acquisition of an entity with payment in shares;

c) share-based payments to employees;

d) operations negotiated with the exchange of assets;

e) creation of reserves and any other transfer between equity accounts, and

f) effects from the recognition of fair value.

Structure of the Statement of Cash Flows

Entities must classify and present cash flows, according to their nature, in operating, investing, and financing activities, based on their economic substance and not the form used to carry them out.

The structure of the statement of cash flows must include, at a minimum, the following items:

operating activities;
investing activities;
financing activities;
net increase or decrease in cash and cash equivalents;
effects from changes in the value of cash and cash equivalents;
cash and cash equivalents at the beginning of the period, and
cash and cash equivalents at the end of the period.

Operating Activities

Cash flows from operating activities are an indicator of the extent to which these activities have generated sufficient liquid funds to maintain the entity's operating capacity, to make new investments without resorting to external sources of financing, and, where applicable, to pay for financing and dividends.

Because the cash flows related to these activities are those derived from the operations that constitute the entity's main source of income, this section includes activities that intervene in the determination of its net income, except those associated with either investing or financing activities. Some examples of cash flows from operating activities are:

a) payments for the acquisition of investments in financial instruments (securities);

b) cash and cash outflows for debtors under repo agreements;

c) cash and cash outflows for the granting of credits;

d) cash and cash outflows from other receivables;

e) cash and cash inflows from traditional deposits;

f) cash and cash inflows from collateral sold or pledged;

g) collections of interest income referred to in Criterion D-2, as well as its main associate, which come from, among others, the following concepts:

cash and cash equivalents (except for gains or losses from changes arising from this concept);
credit portfolio;
investments in financial instruments, and
receivables under repo agreements.

h) payments of interest expenses referred to in Criterion D-2, as well as its main associate, which come from, among others, the following concepts:

traditional deposits, and
financial instruments that qualify as liabilities.

i) collections and payments, as applicable, of commissions and expenses associated with the granting of credit;

j) collections and payments, as applicable, of commissions and fees generated by:

credit operations other than those indicated in the previous subsection;
loans received;
debt placement, and
provision of services (fund transfers, resource administration, and granting of guarantees, among others).

k) payments for contributions to the Protection Fund for Popular Financial Societies and Protection for their Savers;

l) collections and payments from the purchase and sale of foreign exchange, investments in financial instruments, and credit portfolio;

m) payments for the acquisition of receivable rights;

n) collections and payments from securitization operations;

o) collections from the sale of adjudicated goods;

p) payments for direct benefits to employees, fees, rents, promotion and advertising expenses, among other administrative expenses;

q) payments of income taxes;

r) refunds of income taxes, and

s) collections from recoveries of receivable rights and credit portfolio.

Income Taxes

Cash flows related to income taxes must be presented in a separate line item within the classification of operating activities, unless it is practical to relate them to investing or financing activities, as is the case of tax derived from discontinued operations, which is related to investing activities.

Investing Activities

Cash flows related to investing activities represent the extent to which entities have allocated resources to items that will generate income and cash flows in the medium and long term.

Cash flows from investing activities are, for example, the following:

a) payments for long-term financial instruments;

b) collections from long-term financial instruments;

c) payments for the acquisition of property, furniture, and equipment;

d) collections from the disposal of property, furniture, and equipment;

e) payments for discontinued operations;

f) collections from discontinued operations;

g) payments for the acquisition of subsidiaries;

h) collections from the disposal of subsidiaries;

i) payments for the acquisition of associates, joint ventures, and other permanent investments;

j) collections from the disposal of associates, joint ventures, and other permanent investments;

k) collections of dividends from permanent investments;

l) payments for the acquisition of intangible assets, and

m) collections from the disposal of intangible assets.

Acquisitions and Disposals of Subsidiaries and Other Businesses

Cash flows derived from the acquisitions or disposals of subsidiaries and other businesses must be classified in investing activities; likewise, they must be presented in a single separate line item involving the entire acquisition or, where applicable, disposal operation, instead of presenting the individual acquisition or disposal of the assets and liabilities of said businesses at the date of acquisition or disposal. Cash flows derived from acquisitions must not be offset with those from disposals.

Cash flows paid for the acquisition of subsidiaries and other businesses must be presented net of the balance of cash and cash equivalents acquired in said operation.

Cash flows collected from the disposal of subsidiaries and other businesses (discontinued operations) must be presented net of the balance of cash and cash equivalents disposed of in said operation. Likewise, this amount must be net of the income tax attributable to such disposal. In the case of foreign operations, this net amount must show the accumulated adjustment for attribution attributable to said operations.

Financing Activities

Cash flows generated by financing activities show the entity's ability to restore to its shareholders and creditors the resources they allocated to the entity at the time, and, where applicable, to pay them returns.

Cash flows from financing activities are, for example, the following:

a) collections from obtaining bank loans and from other organizations;

b) payments of bank loans and from other organizations;

c) collections from the issuance of shares of the entity itself, net of related issuance expenses;

d) payments to shareholders for repayments of share capital, dividends, or associated with the repurchase of own shares;

e) collections from the issuance of financial instruments that qualify as equity;

f) payments associated with financial instruments that qualify as equity;

g) collections from the issuance of financial instruments that qualify as liabilities;

h) payments associated with financial instruments that qualify as liabilities, and

i) payments of lease liabilities and interest.

Net Increase or Decrease in Cash and Cash Equivalents

After classifying cash flows in operating activities, investing activities, and financing activities, the net cash flows from these three sections must be presented.

Effects from Changes in the Value of Cash and Cash Equivalents

Entities must present in a separate line item, as applicable, the following:

a) effects from conversion referred to in paragraph 42, which arise from having used different exchange rates for the conversion of the initial balance, the final balance, and the cash and cash equivalents flows, of a foreign operation;

b) effects from gains or losses from changes in cash and cash equivalents referred to in paragraph 45, which includes the difference generated by the conversion of the initial balance of cash and cash equivalents at the closing exchange rate of the day at the end of the previous period, published by the Bank of Mexico on its Internet website, www.banxico.org.mx or its substitute, and of the final balance of cash and cash equivalents at the closing exchange rate of the day of the current period, published by the Bank of Mexico on the referred Internet website;

c) effects on the balances of cash and cash equivalents from changes in their value resulting from fluctuations in the exchange rate and in their fair value, and

d) effects from inflation associated with the balances and the cash and cash equivalents flows of any of the entities that make up the consolidated economic entity and that are in an inflationary economic environment.

The effects referred to in the preceding paragraph must be presented in the statement of cash flows in a segregated manner to allow for adequate reconciliation between the cash balance at the beginning and at the end of the period.

Cash and Cash Equivalents at the Beginning of the Period

Entities must present a separate line item named "Cash and Cash Equivalents at the Beginning of the Period", which corresponds to the balance of cash and cash equivalents presented in the statement of financial position at the end of the previous period (including restricted cash and cash equivalents), in order to reconcile it with the balance of cash and cash equivalents at the end of the current period.

Cash and Cash Equivalents at the End of the Period

Entities must present a separate line item named "Cash and Cash Equivalents at the End of the Period", which must be determined by the algebraic sum of the items: "Net Increase in Cash and Cash Equivalents" or "Net Decrease in Cash and Cash Equivalents", "Effects from Changes in the Value of Cash and Cash Equivalents", and "Cash and Cash Equivalents at the Beginning of the Period". This sum must correspond to the balance of cash and cash equivalents presented in the statement of financial position at the end of the period.

Additional Considerations

Dividends

Cash flows derived from dividends collected must be presented in a specific line item within the same group of activities in which the cash flows of the item with which they are associated are presented. For example: cash inflows from dividends collected from investments in financial instruments must be presented, as well as said instruments, in operating activities; if the dividends collected derive from a permanent investment in an associated entity, said cash flows must be presented in investing activities.

Cash outflows for paid dividends must be presented in financing activities because they represent the remuneration to the shareholders of an entity for the resources obtained from them.

Procedure for Preparing the Statement of Cash Flows

To determine and present the cash flows from operating activities, the entity must apply the indirect method, through which the income before income taxes is increased or decreased; this amount is adjusted for the effects of operations from previous periods collected or paid in the current period and; for operations of the current period of deferred collection or payment to the future; likewise, it is adjusted for operations that are associated with investing or financing activities.

Cash flows related to operating activities must be determined by increasing or decreasing the income before income taxes by the effects of:

a) items that are considered associated with:

i. investing activities, for example, depreciation and gains or losses on the sale of property, furniture, and equipment, amortization of intangible assets, impairment losses on long-term assets, as well as participation in the net income of other entities,

ii. financing activities, for example, interest associated with bank loans and from other organizations.

b) changes that occur during the period in the items that form part of the entity's working capital, that is, that occur in the balances of the operational items of the entities' statement of financial position during the period, such as those indicated in paragraph 20.

Investing and Financing Activities

Entities must determine and present separately, after the operating activities line item, the cash flows derived from the main concepts of gross collections and payments related to investing and financing activities, that is, collections and payments must not be offset against each other.

Conversion of the Statement of Cash Flows of a Foreign Operation to the Reporting Currency

In the conversion of the statement of cash flows from the functional currency to the reporting currency of a foreign operation that is in a non-inflationary economic environment, entities must adhere to the following:

a) cash flows of the period must be converted at the historical closing exchange rate of the day on the date each flow in question was generated, which will be the one published by the Bank of Mexico on its Internet website, www.banxico.org.mx, or its substitute;

b) the initial balance of cash and cash equivalents must be converted at the closing exchange rate of the day at the end of the previous period, published by the Bank of Mexico on the referred Internet website, and

c) the final balance of cash and cash equivalents must be converted at the closing exchange rate of the day at the end of the current period, published by the Bank of Mexico on the referred Internet website.

In the conversion of the statement of cash flows from the functional currency to the reporting currency of a foreign operation that is in an inflationary economic environment, entities must adhere to the following:

a) cash flows of the period must be converted at the closing exchange rate of the day at the end of the current period, published by the Bank of Mexico on its Internet website www.banxico.org.mx, or its substitute;

b) the initial balance of cash and cash equivalents must be converted at the closing exchange rate of the day at the end of the current period, published by the Bank of Mexico on the referred Internet website, and

For the conversion of the cash flows of the period, for practical reasons, a representative exchange rate of the conditions existing on the dates when the cash flows were generated may be used, such as the weighted average exchange rate of the period; notwithstanding the foregoing, when exchange rates have varied significantly during the period, said exchange rate must not be used.

The effect from conversion that arises from having used different exchange rates for the conversion of the initial balance, the final balance, and the cash flows must be presented in the line item called "Effects from Changes in the Value of Cash and Cash Equivalents", referred to in paragraph 30. This effect must correspond to what would have been obtained by converting both the initial balance of cash and the cash flows of the period, at the closing exchange rate with which the final balance of cash and cash equivalents was converted.

Conversion of Balances or Cash Flows in Foreign Currency

In order to determine the changes in the balances of operational items in foreign currency of operating activities, these must be converted at the closing exchange rate of the day published by the Bank of Mexico on its Internet website, www.banxico.org.mx, or its substitute, on the closing date.

Cash flows from foreign currency transactions related to investing and financing activities will be converted to the entity's reporting currency by applying to the amount in foreign currency the closing exchange rate of the day on the date each flow occurred, which will be the one published by the Bank of Mexico on the referred Internet page.

Gains or losses from changes originating from variations in the exchange rate are not cash flows. However, the effect of variations in the exchange rate of cash and cash equivalents held or to be paid in foreign currency is presented in the statement of cash flows in order to reconcile cash and cash equivalents at the beginning and at the end of the period. Said effect must be presented separately from the line items of operating, investing, and financing activities, within the line item called "Effects from Changes in the Value of Cash and Cash Equivalents", referred to in paragraph 30, which includes the differences, where applicable, of having presented the cash flows at the closing exchange rate of the current period.

Effects of Inflation

When, in terms of what is established in NIF B-10, the economic environment corresponds to a non-inflationary environment, entities must present their statement of cash flows expressed in nominal values, while if said economic environment is inflationary, entities must present their statement of cash flows expressed in monetary units of purchasing power at the date of the end of the current period.

In cases where the entity's economic environment is inflationary, as part of the operations that did not affect cash flows, the effects of inflation recognized in the period within the financial statements must be excluded, in order to determine a statement of cash flows at nominal values. Said cash flows must be presented expressed in monetary units of purchasing power at the date of the end of the current period.

When the entity's environment has changed from non-inflationary to inflationary, the statements of cash flows of previous periods must be presented expressed in monetary units of purchasing power of the date of the end of the current period.

In cases where the entity's economic environment has changed from inflationary to non-inflationary, the statements of cash flows of previous periods must be presented expressed in the monetary units of purchasing power of the last statement of cash flows presented within an inflationary environment and included in said comparative presentation.

Investments in Other Entities

Cash flows between the holding entity and its unconsolidated subsidiaries, associates, and joint ventures must be presented in the statement of cash flows, that is, they must not be eliminated; for example, cash flows related to intercompany operations or to the collection and payment of dividends.

In the preparation of the consolidated statement of cash flows, cash flows that occurred during the period between the entities that form part of the economic entity being consolidated must be eliminated. For example, cash flows derived from intercompany operations, capital contributions, and dividends paid.

In cases where a controlling entity purchases or sells shares of a subsidiary to the non-controlling interest, the cash flows associated with said operation must be presented as financing activities, within the consolidated statement of cash flows. This is because this operation is considered a transaction between shareholders.

Disclosure Standards

The following must be disclosed in notes to the financial statements:

a) when cash flows related to income taxes have been segregated in the different groups of activities within the statement of cash flows, total flows for said taxes must be disclosed;

b) the amount of unused loans that may be available for operating activities or for the payment of investing or financing operations, indicating restrictions on the use of funds from said loans;

c) relevant operations, investing, and financing, that have not required the use of cash or cash equivalents. For example, the acquisition of property, furniture, and equipment through financing;

the total amount of cash flows representing surpluses for future investments or for payments of financing or returns to shareholders, as well as those increases in operational capacity, separated from the cash flows essentially required to maintain the entity's operational capacity, and

in significant changes, whether or not they required the use of cash or cash equivalents, in liabilities considered part of financing activities, preferably, a reconciliation of the initial and final balances of such items must be made. An entity must disclose regarding liabilities from financing activities, the following:

changes in cash flows;

ii.

changes derived from gaining or losing control of subsidiaries and other businesses;

iii.

the effect of changes due to exchange rate fluctuations;

iv.

changes in associated financial assets, whose cash flows must be presented as part of financing activities, and

other considered significant changes.

Likewise, the following must be disclosed with respect to acquisitions and disposals of subsidiaries and other entities:

the total consideration derived from such acquisitions or disposals breaking down:

the portion of the consideration paid or received in cash and cash equivalents, and

ii.

the amount of cash and cash equivalents held by the acquired or disposed subsidiary or entity on the date of acquisition or disposal.

the amount of assets and liabilities other than cash and cash equivalents of the acquired or disposed subsidiary or entity on the date of acquisition or disposal. These amounts must be grouped by major categories, and

the amount of tax payment attributable to the disposal of subsidiaries and other entities.

NAME OF THE ENTITY

LEVEL OF OPERATIONS CORRESPONDING

ADDRESS

STATEMENT OF CASH FLOWS

FROM __ OF __________ TO __ OF __________ OF ____

EXPRESSED IN CURRENCY OF PURCHASING POWER OF ________ OF _______

( 1 )

(Figures in thousands of pesos)

Operating Activities

Result before income taxes

Adjustments for items associated with investment activities:

Depreciation of properties, furniture and equipment

Amortization of intangible assets

Losses or reversal of losses for impairment of long-term assets

Participation in net result of other entities

Other adjustments for items associated with investment activities

Discontinued operations

Long-term assets held for sale or for distribution to shareholders

Adjustments for items associated with financing activities

Interest associated with bank loans and other organisms

Interest associated with

financial instruments qualifying as liability

Interest on lease liabilities

Other interest

Sum

Changes in operating items

Change in bank loans and other organisms

Change in investments in financial instruments (securities) (net)

Change in repo debtors (net)

Change in credit portfolio (net)

Change in acquired receivables (net)

Change in benefits to receive in securitization operations

Change in adjudicated goods (net)

Change in other accounts receivable (net)

Change in other operating assets (net)

Change in traditional collection

Change in collateral sold or given as guarantee

Change in obligations in securitization operations

Change in other operating liabilities

Change in assets/liabilities for employee benefits

Change in other accounts payable

Change in other provisions

Tax refunds

Tax payments

Net cash flows from operating activities

Investment Activities

Payments for long-term financial instruments

Collections from long-term financial instruments

Payments for acquisition of properties, furniture and equipment

Collections from disposal of properties, furniture and equipment

Payments for discontinued operations

Collections from discontinued operations

Payments for acquisition of subsidiaries

Collections from disposal of subsidiaries

Payments for acquisition of associates, joint ventures and other permanent investments

Collections from disposal of associates, joint ventures and other permanent investments

Collections of dividends from permanent investments

Payments for acquisition of intangible assets

Collections from disposal of intangible assets

Other collections from investment activities

Other payments from investment activities

Net cash flows from investment activities

Financing Activities

Collections from obtaining bank loans and other organisms

Payments of bank loans and other organisms

Payments for lease liability

Collections from issuance of shares

Payments for social capital refunds

Collections from issuance of financial instruments qualifying as equity

Payments associated with financial instruments qualifying as equity

Dividend payments

Payments associated with repurchase of own shares

Collections from issuance of financial instruments qualifying as liability

Payments associated with financial instruments qualifying as liability

Other collections from financing activities

Other payments from financing activities

Net cash flows from financing activities

Net increase or decrease in cash and cash equivalents

Effects due to changes in value of cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

The concepts appearing in this statement are shown in an enumerative but not limiting manner.

(1)

This line will be omitted if the economic environment is "non-inflationary".

ANNEX G

NAME OF POPULAR FINANCIAL SOCIETY

CREDIT PORTFOLIO QUALIFICATION

AT ________________________

(Figures in thousands of pesos)

AMOUNT

CREDIT

PORTFOLIO

NECESSARY PREVENTIVE RESERVES

COMMERCIAL

CONSUMPTION

HOUSING

TOTAL PREVENTIVE

RESERVES

COMMERCIAL

MICROCREDIT

NON-REVOLVING

CREDIT CARD AND OTHER

REVOLVING

CREDITS

TOTAL

Less:

RESERVES CONSTITUTED

EXCESS (INSUFFICIENCY)

NOTES:

The figures for qualification and constitution of preventive reserves correspond to the last day of the month to which

the statement of financial position refers to ___ of ____________of ___.

The credit portfolio is qualified according to the methodology established by the National Banking and Securities Commission in

Section First, Chapter III of Title Fourth and annex D of these provisions.

The [excess] [insufficiency] in constituted preventive reserves is explained as follows _____________.

ANNEX I

AUXILIARY SUPERVISION GUIDE

Auxiliary supervision process

Extra-situ supervision

2.1

General Aspects

2.2

Financial Analysis

2.21

Objective

2.22

Tools

2.23

Activities

2.3

Follow-up

2.31

Objective

2.32

Activities

2.33

Accounting Criteria and Financial Statements

2.34

Legal Provisions

2.35

Sanctions and Conventional Penalties

2.36

Results

2.4

Reports

2.41

Monthly Financial Analysis

2.42

Quarterly Report

In-situ supervision

3.1

General Aspects

3.2

Planning

3.21

Annual Program

3.22

Visit Planning

3.3

Visit

3.31

Start of Visit

3.32

Development of Visit

3.4

Closing of Visit

3.41

Conclusion of Visit

Annexes

4.1

Annualization of Figures

4.2

Growth Rates

4.3

Code of Conduct Protocol

4.4

Questionnaires for Councilors and Officials

4.5

Sampling Techniques

4.51

Non-statistical Sampling

4.52

Statistical Sampling

Auxiliary supervision process

The purpose of auxiliary supervision is to review, verify, check and evaluate the resources, obligations and equity of

the Entities, as well as the operations, functioning, control systems and in general, everything that could affect

the financial position and legal situation of said Entities, which is recorded or should be recorded in their records, in order to comply with the provisions governing them and sound financial practices.

In the auxiliary supervision process, what is provided in the Single Chapter of Title Sixth of the

Provisions attached to this annex and in the guidelines established in this Guide shall be observed.

Extra-situ supervision

2.1

General Aspects

Auxiliary Supervisors will carry out extra-situ supervision functions using information sent by

Entities upon request of the Commission and the corresponding Federation Supervision Committee.

Extra-situ supervision will be composed of two activities:

Analysis, and
Follow-up.

2.2

Financial Analysis

It is a process consisting of applying tools to the financial information of an Entity, in order to

obtain from it measures and relationships that are significant and useful both for administration and for supervision.

2.21

Objective

The objective of financial analysis consists of carrying out an evaluation on the performance, financial situation and future

evolution of an Entity on a specific date.

As part of the supervision process, financial analysis must provide elements to adequately focus

in-situ supervision tasks, pointing out possible aspects that can be studied and clarified during visits.

2.22

Tools

The tools are a set of analytical techniques that allow the Supervisor to handle available already

validated information. The use of these tools will depend both on the desired complexity in the report and on the nature

of existing information, and will always be carried out ensuring that the results obtained have a useful interpretation

based on the topic of study.

The tools that can be used are very varied and range from percentages to statistical models of

projection and simulation. In general, the results derived from applying these tools can be presented

through tables or graphs to facilitate both understanding of the figures and reading of the report.

Below, considerations on some commonly used financial analysis tools are presented.

a) Percentage structures.

Percentage structures are a tool that allows detecting the composition of any financial statement or

concept on a specific date, under a certain criterion or set of criteria. For example, it is possible to construct the

percentage structure of an Entity's credit portfolio, by type of credit, destination sector, risk level, etc.

b) Growth rates.

Growth rates are a tool that detects the evolution of different concepts in a specific

period and under a certain criterion which is expressed in percentage. For example, it is possible to calculate the monthly, quarterly, accumulated or annual growth rate of any item of the financial statements, in nominal or real terms.

c) Estimates.

Estimates are tools that allow identifying what would be the future performance of an Entity under different

scenarios, taking as a starting point the prevailing situation on a given date. Possible scenarios are

constructed by modifying the observed levels of some variables, while the remaining elements remain

constant. Under the established assumptions, new indicators (percentages, financial ratios, etc.) are calculated and,

finally, the future situation of the Entity under the proposed conditions is evaluated. In general, this type

of estimates responds to the following questions

What would happen to the Entity if ... :

... the observed trend continues? (structure, growth, etc.)

... the observed trend changes? (structure, growth, etc.)

... the macroeconomic environment changes? (interest rate, exchange rate, etc.)

... the applicable regulation changes? (requirements, provisions, etc.)

... supervision measures are applied? (missing provisions, reclassification of credits, etc.)

... management changes? (capital contribution, opening of branches, new instruments, etc.)

d) Financial ratios.

Financial ratios are a tool that shows the relationship between two or more items of the financial statements

that allow detecting conditions and trends that cannot be determined through a review of the

individual components. For example, it is possible to calculate ratios to measure: financial coverage, asset quality,

financial structure, profitability and growth. Each financial ratio provides a different dimension about the

situation of the Entity, so normally several ratios are studied at once, as long as they

complement each other. This topic is treated in greater depth in section 2.23.2.

e) Comparisons.

Comparisons consist of examining two or more things to discover their relationships, differences or similarities.

They are indispensable to reach valid conclusions when using any tool (they allow interpreting

correctly what the figures indicate and establishing the true magnitude of the aspect in comment). They can

be carried out under different approaches, whose names derive from the traditional organization of data tables, as

shown in the following table:

Scheme 1

Structure of tables and comparison approaches of data

Entity X: Entity under analysis.

Entity Y: Entity with which to compare Entity X.

T1, Tn: Comparison period, months, quarters, years, etc.

A, B, C, D: Financial ratios, amounts, flows, etc.

e.1) Horizontal comparison: Consists of contrasting the data, indicators and/or estimates of the same Entity over

time for different periods, in order to observe the most important changes, detect trends and know

the individual evolution of the Entity;

e.2) Vertical comparison: Vertical comparison consists of contrasting the data, indicators and/or estimates of a

same Entity for a single period, in order to observe what is the relative importance of the concepts, detect

structural issues and know the individual evolution of the Entity, and

e.3) Cross-sectional comparison: Cross-sectional comparison consists of contrasting the data, indicators and/or estimates

of an Entity with information from all Entities of the same Level of Operations or a group of them, as well as

with the Entity that registers the best practices in the sector, in order to contrast its individual situation and detect

similarities and differences with other Entities.

2.23

Activities

The financial analysis process of Entities must adjust to the following procedure:

a) Information collection;

b) Apply financial analysis methodology, and

c) Determine conclusions.

2.23.1 Information Collection

Before starting analysis tasks, it is essential to verify that the collected information is necessary, sufficient,

reliable and validated; it should be mentioned that this is one of the functions of the follow-up process (see numeral

2.32.2).

The information to perform financial analysis can be classified into two types:

a) Fundamental information: The minimum data to prepare a financial analysis are found in the financial

statements of the Entity, however, it is important to have more detailed information, such as that contained in regulatory reports and qualitative information related to management performance;

b) Complementary information: Because the performance of Entities is conditioned to a certain extent, by the

economic environment in which they operate and in order to incorporate this impact as part of the context of the analysis, in

cases where it is pertinent to do so, additional information will be necessary. For example:

b.1 Macroeconomic indicators: inflation rates, GDP growth rates, unemployment rates, indicators

sectoral and regional, etc.;

b.2 Financial indicators: market interest rates, stock indices, etc.;

b.3 Corporate and governance information of the Entity, and

b.4 Various reports: specialized studies and publications, internal reports of the

Entities, etc.

2.23.2 Financial Analysis Methodology

A methodology is the application of a set of tools with which a result is intended to be obtained.

In this sense, the financial analysis methodology consists of using a series of financial ratios in order to

evaluate the condition of an Entity, which are grouped into five categories (see Table 1):

Financial Coverage.- Consists of evaluating the degree of protection the Entity presents to support its risks.

Asset Quality.- Measures the condition possessed by the Entity's assets.

Financial Structure.- Is the composition that different items of the financial statement hold in relation to total

assets.

Profitability.- Are ratios that measure the Entity's ability to generate profits.

Growth.- Detects the evolution of different concepts in a specific period and under a certain criterion.

TABLE 1

Coverage

Financial

Asset Quality

Financial

Structure

Profitability

Growth

Capitalization

Requirement

by Risks *

Asset Funding

Net Credit *

Operational Self-sufficiency *

Portfolio

Growth

Unproductive *

Liquid Investments

Administrative

Expenses

and Promotion *

Growth of

Investments

in Financial

Instruments

Savings Deposits

Return on

Assets *

Credit Portfolio Coverage

with

Credit Risk Stage

Delinquency Index *

Funding by Bank

Loans and Other

Organisms

Margin

Financial *

Income from Commercial

Credits

Growth in

Deposits

Solvency *

Unproductive Assets

Uncommitted Capital

Total Credit Income

Income from Housing

Credits

Growth in

Bank Loans and

Other Organisms

Liquidity Coefficient *

Institutional Capital

Income from Consumption

Credits

Growth in Social

Capital

Social Capital

Financial Cost

for Deposits

Short-term Bank

Loan Liquidity

Equity

Cost per

Demand Deposits

Cost per Savings

Deposits

Growth

in Institutional

Capital

Cost per Deposits

Withdrawable in Days

Pre-established

Cost per Time Deposits

Growth

in Partners

Funding Cost Bank

Loans and Other

Organisms

Growth

in Total of

Assets

Return on Capital

Personnel Expenses

Relevant Ratios

Except for the Growth category, within each of the others relevant reasons and complementary reasons are identified. Relevant reasons are the minimum to be used in the preparation of the monthly financial analysis and

the quarterly report referred to in numerals 2.41. and 2.42. of this Guide.

For each of the relevant reasons, this guide provides an objective against which the analyzed

Entity must be compared.

FINANCIAL COVERAGE (2)

Relevant Reasons

Capitalization requirement by risks (capitalization index).

Objective:

Measure the sufficiency of Net Equity of the Entity against the regulatory capital requirement, which is calculated

based on the risks incurred in their operation by Entities.

Formula:

Accounts:

a= Net capital.*

b= Assets subject to risk*

Determined according to prudential regulation issued by the Commission.

Target:

= 100%

Credit portfolio coverage with stage 3 credit risk

Objective:

Measure the correct estimation of reserves required to cover the credit portfolio with stage 3 credit risk.

Formula:

Accounts:

a= Preventive estimate for credit risks (statement of financial position).

b= Total credit portfolio with stage 3 credit risk.

Target:

= 90%

Solvency

Objective:

Measure the degree of protection the Entity presents for deposits and the capital of its members, in the

event of liquidation.

Formula:

Accounts:

a= Total asset.

b= Net credit portfolio with stage 3 credit risk.

c= Adjudicated goods.

d= Intangible assets and deferred.

e= Deposits.

f= Shareholders' equity.

Target:

= 100%

Liquidity coefficient

Objective:

Measure the sufficiency of easily realizable resources of the Entity to meet its short-term commitments.

Formula:

Accounts:

a= Demand deposits.

b= Bank bills with term less than 30 days.

c= Government securities with term less than 30 days.

d= Short-term liabilities. (3)

Target:

= 10%

Complementary Reasons

Short-term bank loan liquidity (4)

Objective:

Measure the sufficiency of liquid cash to satisfy payment requirements for short-term liabilities

contracted with banks and other organisms.

Formula:

Accounts:

a= Cash and cash equivalents.

b= Investments in financial instruments.

c= Short-term bank loans and other organisms.

ASSET QUALITY

Relevant Reasons

Delinquency index

Objective:

Measure the percentage of risky credits in relation to the total credit portfolio of the Entity.

Formula:

Accounts:

a= Credit portfolio with stage 3 credit risk.

b= Total credit portfolio.

Target:

<= 10%

Funding of unproductive assets

Objective:

Measure the proportion of unproductive assets financed by own resources.

Formula:

Accounts:

a= Credit portfolio with stage 3 credit risk.

b= Preventive estimate for credit risks.

c= Adjudicated goods.

d= Properties, furniture and equipment (net).

e= Other assets.

f= Social capital.

g= Institutional capital. (5)

h= Result of previous exercises.

Target:

<= 100%

Complementary Reasons

Unproductive assets

Objective:

Measure the percentage that of its total assets represent the unproductive assets of the Entity.

Formula:

Accounts:

a= Total credit portfolio with stage 3 credit risk.

b= Preventive estimate for credit risks.

c= Adjudicated goods.

d= Properties, furniture and equipment (net).

e= Other assets.

f= Total asset.

c= Total credit portfolio with stage 3 credit risk.

d= Assets adjudicated.

e= Total assets.

Liquid Investments

Objective:

To measure the percentage of total assets represented by the Entity's most liquid assets.

Formula:

Accounts:

a= Cash and cash equivalents.

b= Investments in financial instruments.

c= Total assets.

Savings Deposits

Objective:

To measure the percentage of total assets financed by savers' deposits.

Formula:

Accounts:

a= Deposits.

b= Total assets.

Funding from Bank and Other Organism Loans

Objective:

To measure the percentage of total assets financed by bank and other organism loans.

Formula:

Accounts:

a= Bank and other organism loans.

b= Total assets.

Social Capital

Objective:

To measure the percentage of total assets financed by the Entity's social capital.

Formula:

Accounts:

a= Social capital.

b= Total assets.

Institutional Capital

Objective:

To measure the percentage of total assets financed by institutional capital.

Formula:

Accounts:

a= Institutional capital.

b= Total assets.

Equity Capital

Objective:

To measure the percentage of its total assets financed by the Entity's equity capital.

Formula:

Accounts:

a= Equity capital.

b= Total assets.

PROFITABILITY

Relevant Ratios

Operational Self-Sufficiency

Objective:

To measure whether sufficient income generated by operations has been obtained to cover both financing costs, the creation of preventive estimates for credit risks, and administration and promotion expenses.

Formula:

Accounts:

a= Interest income.

b= Fees charged.

c= Interest expenses.

d= Fees paid.

e= Preventive estimate for credit risks.

f= Administration and promotion expenses.

Target:

= 100%

Administration and Promotion Expenses

Objective:

To measure the proportion that administration expenses represent in relation to the Entity's financial margin.

Formula:

Accounts:

a= Administration and promotion expenses.

b= Financial margin.

Target:

<= 70%

Return on Assets (ROA)

Objective:

To measure the sufficiency of income based on the total assets held by the Entity.

Formula:

Accounts:

a= Net result.

b= Average total assets (of the period being analyzed).

Target:

[>= 0]

Financial Margin

Objective:

To measure the financial margin generated in the period, expressed as a percentage of interest income (operational efficiency).

Formula:

Accounts:

a= Financial margin.

b= Interest income.

Target:

= 70%

Complementary Ratios

Total Credit Income

Objective:

To measure the performance of the credit portfolio during the period.

Formula:

Accounts:

a= Annualized interest from credit portfolio with stage 1 and 2 credit risk. (6)

b= Average credit portfolio with stage 1 and 2 credit risk during the period.

Income from Commercial Credits

Formula:

Accounts:

a= Annualized interest from stage 1 and 2 credit risk commercial credits.

b= Average stage 1 and 2 credit risk commercial credits during the period.

Income from Consumer Credits

Formula:

Accounts:

a= Annualized interest from stage 1 and 2 credit risk consumer credits.

b= Average stage 1 and 2 credit risk consumer credits during the period.

Income from Housing Credits

Formula:

Accounts:

a= Annualized interest from stage 1 and 2 credit risk housing credits.

b= Average stage 1 and 2 credit risk housing credits during the period.

Income from Investments in Financial Instruments

Objective:

To measure the yield generated by investments in financial instruments made by the Entity during the period.

Formula:

Accounts:

a= Annualized interest and yields in favor from investments in financial instruments.

b= Average investments in financial instruments during the period.

Financial Cost for Deposits

Objective:

To measure the cost of the period generated by deposits made by savers during the period.

Formula:

Accounts:

a= Interest payable on deposits. (7)

b= Average deposits.

Cost for Demand Deposits

Formula:

Accounts:

a= Interest payable on demand deposits.

b= Average demand deposits.

Cost for Savings Deposits

Formula:

Accounts:

a= Interest payable on savings deposits.

b= Average savings deposits.

Cost for Deposits Withdrawable on Predetermined Days

Formula:

Accounts:

a= Interest payable on deposits withdrawable on predetermined days.

b= Average deposits withdrawable on predetermined days.

Cost for Time Deposits

Formula:

Accounts:

a= Interest payable on time deposits.

b= Average time deposits.

Funding Cost from Bank and Other Organism Loans

Objective:

To measure the cost in the period of loans contracted with banking institutions and other organisms.

Formula:

Accounts:

a= Interest payable on bank and other organism loans.

b= Average bank and other organism loans.

Return on Equity (ROE) (8)

Objective:

To measure the sufficiency of income based on the Entity's equity capital.

Formula:

Accounts:

a= Net result.

b= Average equity capital.

Personnel Expenses

Objective:

To measure the percentage of operating expenses that the Entity uses to cover expenses generated by the personnel working there.

Formula:

Accounts:

a= Remuneration and benefits for personnel and board members.

b= Administration and promotion expenses

GROWTH

(9)

Below are the minimum concepts on which it is necessary to analyze growth rates; it should be mentioned that, in all cases, the result yields a percentage change.

Complementary Ratios

Portfolio Growth

Objective:

To measure the period-over-period growth of the Entity's credit portfolio.

Formula:

Accounts:

a= Total credit portfolio balance of the current period.

b= Total credit portfolio balance of the previous period.

Growth in Investments in Financial Instruments

Objective:

To measure the annual growth of investments.

Formula:

Accounts:

a= Balance of investments in financial instruments of the current period.

b= Balance of investments in financial instruments of the previous period.

Growth in Deposits

Objective:

To measure the annual growth of savings deposits.

Formula:

Accounts:

a= Total deposits of the current period.

b= Total deposits of the previous period.

Growth in Bank and Other Organism Loans

Objective:

To measure the annual growth of bank and other organism loans.

Formula:

Accounts:

a= Total bank and other organism loans of the current period.

b= Total bank and other organism loans of the previous period.

Growth in Social Capital

Objective:

To measure the growth of the Entity's social capital.

Formula:

Accounts:

a= Total social capital of the current period.

b= Total social capital of the previous period.

Growth in Institutional Capital

Objective:

To measure the growth of the Entity's institutional capital.

Formula:

Accounts:

a= Total institutional capital of the current period.

b= Total institutional capital of the previous period.

Growth in Members

Objective:

To measure the annual growth of the Entity's members.

Formula:

Accounts:

a= Total members of the current period.

b= Total members of the previous period.

Growth in Total Assets

Objective:

To measure the growth of the Entity's total assets.

Formula:

Accounts:

a= Total assets of the current period.

b= Total assets of the previous period.

2.23.3

Determination of Conclusions

Once the Supervisor has validated and organized the available information, applied various tools and techniques to said information, and detected the main trends of the Entity, they must interpret the result of all processed information to reach supported conclusions.

Regarding this, special emphasis must be placed on:

a) Summarizing the work performed and the results obtained;

b) Evaluating the business strategy observed in the Entity and the risks it represents;

c) Describing the Entity's financial situation, the internal and external factors that have led to said situation, and the concerning aspects thereof, and

d) Issuing recommendations and/or corrective actions that the Entity must carry out, as well as stating the advantages and disadvantages it presents.

2.3

Follow-up

2.31

Objective

Follow-up tasks will consist of maintaining continuous monitoring of the most relevant aspects of the Entities' performance, with the aim that Auxiliary Supervisors can prevent financial deterioration, as well as any possible regulatory non-compliance.

2.32

Activities

The Supervision Committee will provide permanent follow-up to the performance and evolution of the Entities, in order to know their situation at all times and detect possible anomalies or non-compliance in a timely manner.

The Supervision Committee will monitor that the Entities comply with the observations and corrective measures issued by the off-site supervision areas, resulting from the review of the sections contained in this Guide, which are detailed below:

Section 2.23.2 Financial Analysis;

Section 2.32.1 Information Collection;

Section 2.32.2 Mechanisms to Validate Financial Information;

Section 2.33 Accounting Criteria and Financial Statements;

Section 2.34 Legal Provisions, and

Section 2.35 Sanctions and Conventional Penalties.

Likewise, it will verify compliance with the observations and corrective measures resulting from on-site supervision generated in the different inspection visits contained in the Single Chapter of Title Six of the Provisions that this annex forms part of, as well as, if necessary, recommend extraordinary inspection visits.

The main follow-up activities must:

a) Prevent the deterioration of the Entities' financial situation, by analyzing the trend of results from previous quarters;

b) Identify the causes and consequences of the results obtained in the financial analysis;

c) Follow up on observations and corrective actions resulting from the latest inspection visits, off-site supervision reports, as well as external auditor reports;

d) Monitor compliance with regulations, and

e) Verify the application of the Accounting Criteria issued by the Commission.

2.32.1

Information Collection

Having timely and quality information from the Entities is fundamental in the auxiliary supervision process. The Federation must place special emphasis on ensuring this is met.

The Entities will send to the Federation the financial statements and regulatory reports requested by the Commission, in the terms and within the deadlines set by said reports.

The Federation, in accordance with what is established in its Internal Regulations and in the terms stipulated with affiliated Entities or those over which it exercises auxiliary supervision powers, may establish conventional penalties for those Entities that do not present their financial statements or regulatory reports on time, or that present them fraudulently, with false, inaccurate, or incomplete information.

If any Entity delivers any financial statement or regulatory report outside the specified deadline on more than two consecutive occasions, the Federation will summon the President of the Board of Directors of the Entity to analyze with them the causes of the delay.

If this behavior persists, based on fraction VI of article 77 of the Popular Savings and Credit Law, the Federation's Supervision Committee, prior to a hearing of the Entity in question and in accordance with the affiliation or auxiliary supervision contract that it has celebrated with the Entity, may request the removal of the Director or General Manager and the Board of Directors, informing this situation to the Technical Committee of the Protection Fund of the corresponding Confederation.

The Supervision Committee may also act as indicated in the previous paragraph, in accordance with fraction V of the aforementioned article 77, if the Entity fraudulently provides false or incomplete information to the Federation.

According to fraction IX of article 37 of the Law, a cause for revocation is that the Entity repeatedly refuses to present information, or fraudulently presents false, inaccurate, or incomplete information to the respective Federation.

2.32.2

Mechanisms to Validate Financial Information

The Federation will validate all electronic and documentary information received from the Entities, in order to check its consistency and correct presentation according to Chapter Five of Title Four, as well as Chapter Eight of the Provisions attached to this annex.

The Entities must send the information only once, and the Federation will receive it assuming it meets all required characteristics, by virtue of which it cannot be modified.

Once the information is received, it will be reviewed, and if it does not meet the required quality and characteristics or is delivered incomplete, the obligation of its presentation will be considered unfulfilled, and the Federation will proceed to impose the corresponding conventional penalties in accordance with what is established in its Internal Regulations and in the terms stipulated with affiliated Entities or those over which it exercises auxiliary supervision powers.

Items of Financial Statements

By way of example and not limitation, the Federation will validate:

a) In the accounting statement or statement of financial position that the amount of total assets is equal to the sum of total liabilities plus equity capital;

b) That all amounts of the items in the accounting statement or statement of financial position, as well as in the statement of comprehensive income, are equal to those shown in the regulatory report "Minimum Catalog";

c) That the balance of the net result item in the accounting statement or statement of financial position is equal to the net result figure in the statement of comprehensive income;

d) That the cash and cash equivalents item in the accounting statement or statement of financial position is equal to the final balance of the statement of cash flows;

e) That the balances of all accounts comprising the equity capital in the accounting statement or statement of financial position are equal to those presented in the statement of changes in equity capital;

f) That all sub-accounts comprising a general ledger account present balances, and

g) That all sums of said sub-accounts coincide with the balance of the general ledger account.

2.33

Accounting Criteria and Financial Statements

The Federation will monitor that the Entities' financial information is formulated in accordance with Chapter Five of Title Four of the Provisions attached to this annex.

2.33.2

Financial Statements

The Federation will monitor that the delivery, presentation, and publication of Financial Statements are made in terms of what is provided by the Provisions indicated in the previous paragraph and that the published Financial Statements are equal to those that the Entities provide to it monthly.

Financial statements regarding which the Commission or the respective Federation orders corrections and which have already been published, must be republished with the corresponding modifications, within 15 natural days following the notification of the respective resolution, specifying the corrections made, their impact on the figures of the financial statements, and the reasons that motivated them. (10)

2.34

Legal Provisions

2.34.1

Popular Savings and Credit Law

The Federation will monitor that the Entity complies with all provisions applicable to them established in the Popular Savings and Credit Law.

2.34.2

Secondary Regulation

The Federation will monitor that the Entities comply with all provisions established in General Rules issued by the Commission under the Popular Savings and Credit Law, focusing mainly on:

2.34.21

Prudential Regulation

The Federation will monitor that the Entities comply with the minimum prudential regulation guidelines contained in Chapter Three of Title Four of the Provisions attached to this annex and which refer to:

a) Minimum capital;

b) Capital requirements for risks;

c) Risk management;

d) Internal controls;

e) Credit process;

f) Credit portfolio provisioning;

g) Liquidity coefficient;

h) Risk diversification in operations, and

i) Disclosure requirements for prudential regulation purposes.

2.34.22

Operations Celebrated by the Entity

In accordance with what is provided by Title Three of the Provisions attached to this annex, the Federation must ensure that the Entities it supervises comply with the points detailed below:

a) Have the correct Operation Level assigned;

b) Carry out only the operations permitted according to the assigned Operation Level, and

c) Contract the celebration of operations complying with the terms established in such rules.

2.35

Sanctions and Conventional Penalties

The Federation, in its Internal Regulations and in the affiliation contracts celebrated with affiliated Entities or those over which it exercises the function of auxiliary supervision, must establish conventional penalties for those Entities that do not comply with the guidelines indicated in the Popular Savings and Credit Law and in the provisions emanating from it.

The Federation must verify that the Entities do not fall into any of the circumstances referred to in article 130 of the Popular Savings and Credit Law.

In the event that, in the exercise of auxiliary supervision powers, the Federation finds that an Entity is in any of such circumstances, it will apply the corresponding conventional penalty.

When the Federation does not apply such penalty, it must explain to the Commission the reasoned grounds regarding the matter, without prejudice to the latter imposing the corresponding sanctions on the Entity, as well as on the Federation in question.

For the purposes of what is provided in this paragraph, the Federation will adhere to what is established in Chapter I of Title Six of the Popular Savings and Credit Law.

2.36

Results

Follow-up tasks must be documented in order to evaluate them and reach a result. The minimum tools for this purpose are:

1.- Compliance Logs: List of provisions that must be complied with by the Entity and the dates on which compliance was evaluated and its result. See Section 3.32.72, and

2.- Observation Monitoring Sheets: In these, observations determined from the financial analysis or on-site inspection are recorded, to which deadlines for compliance or specific treatment are assigned. Subsequently, the progress the Entity reports on a specific observation will be recorded, thus building its observation history.

2.4

Reports

In particular and by way of example and not limitation, Auxiliary Supervisors must prepare the following reports:

2.41

Monthly Financial Analysis

It is a report for each Entity subject to auxiliary supervision that must at least contemplate:

a) General data of the Entity for identification purposes, including the name of the Federation performing the auxiliary supervision and, if applicable, the name of the Confederation in whose Protection Fund the Entity participates;

b) Analysis of the Entity's financial situation based on the information contained in basic financial statements and regulatory reports, applying at least the relevant financial ratios defined for such effect in section 2.23.2 and comparing the resulting values with the targets set for each of them, and

c) Formulation of conclusions and recommendations.

2.42

Quarterly Report

This report must at least contemplate:

b) Analysis of the Entity's financial situation based on the information contained in basic financial statements and regulatory reports of the period, applying at least the relevant financial ratios defined for such effect in section 2.23.2 and comparing the resulting values with the targets set for each of them;

c) Relate causes and effects derived from the financial analysis;

d) Analysis of trends observed in the last 12 months of at least the relevant ratios, as well as in the growth ratios indicated in the same paragraph;

e) Quarterly comparison with other Entities; using at least the relevant ratios;

f) Report on the follow-up of observations derived from the supervision process (On-site and Off-site), the internal control area reports, and external audit;

g) Follow-up on compliance with the Law and secondary regulation;

h) Determination of situations to which corrective actions must be applied; monitor their compliance and follow up on imposed sanctions and conventional penalties, and

i) Formulation of conclusions and recommendations.

On-site Supervision

3.1

General Aspects

On-site supervision will be carried out with the physical presence of Auxiliary Supervisors, through the performance of inspection visits in the offices, branches, and other establishments of the Entity.

On-site supervision will be composed of two successive activities, the planning of the visit and the inspection visit.

3.2

Planning

3.21

Annual Visit Program

3.21.1

The objective of the Annual Visit Program is to have an overview of the supervision work to be performed during the year, in order to hierarchize the application of available resources based on the risk represented by each Entity, anticipating the necessary inputs to execute supervision visits.

The Annual Inspection Visit Program prepared by the Supervision Committee must contemplate for each scheduled visit, at least, the following aspects:

3.21.11

General data of the Entities to be inspected, for identification purposes.

3.21.12

Planned start dates of the visit and estimated duration thereof.

3.21.13

Objectives: the specific reasons why the visit will be carried out.

3.21.14

Scope of the visit: items to be reviewed and the depth of the inspection visit, which will be closely related to the type of visit, whether Ordinary comprehensive, Ordinary specific, or Extraordinary.

3.21.15

Supervisory Team: the number of Supervisors designated, including the Lead Supervisor.

3.21.16

Cost of the visit: estimated cost in man-hours expressed in pesos. The expected hourly cost and the total expected cost must be indicated. Chargeable aspects may include: fees, per diems, etc.

3.21.2

Regarding the presentation format of the Annual Visit Program, a traditional schedule is suggested, in which the natural days of the calendar are related to the Entities reviewed and incorporating additional notes containing the information indicated in paragraphs 3.21.11 to 3.21.16.

3.21.3

Progress Report of the Annual Visit Program

As a result of the on-site supervision, the Supervision Committee will prepare a monthly Progress Report of the Annual Visit Program, including at least:

3.21.31

Progress recorded in the Annual Visit Program.

a) Comparison between scheduled visits and those carried out; b) Causes of deviations, and c) Proposed modifications to the Annual Visit Program.

3.21.32

Results obtained in inspection visits.

a) Main observations and findings detected in each inspection visit, and b) Visit performance:

Comparison of planned activities and objectives with those carried out;
Comparison of the planned visit scope and the obtained scope;
Description of unexpected situations and findings explored in the inspection visit, and
Any other relevant fact recorded during the inspection visit.

3.21.33

Based on the provisions of the Single Chapter of Title Six of the Provisions attached to the present annex, the Supervision Committee must inform the Board of Directors of the corresponding Federation at least quarterly about the progress recorded regarding the Annual Visit Program and the results obtained in the inspection visits carried out during the quarter. Likewise, the Supervision Committee will inform the Board of Directors of the Federation in a timely manner of any modifications made to said Program.

3.22

Visit Planning

Planning is the process by which the Federation prepares the inspection visit to its offices, in order to evaluate the situation of the Entity; determine the problems affecting it and plan the actions to be followed during the visit, as well as to define the human, financial, and material resources required for its execution.

3.22.1

Objective

The purpose of the planning stage is for the Supervisors to determine, before starting the inspection, both the additional information requirements that must be requested from the Entity to carry out the visit, and the following aspects:

a) Purpose and strategy of the visit; b) Scope; c) Duration; d) Organization, and e) Control.

3.22.2

Activities

In order to define the particular aspects required to prepare the visit, during the planning stage, Auxiliary Supervisors must carry out the following tasks:

a) Evaluate the financial situation and problems facing the Entity, through an analysis of the various available sources of information. These sources may be, at least, the following:

a.1 Monthly financial analysis reports prepared by off-site supervision; a.2 Quarterly supervision reports prepared as part of off-site supervision; a.3 Previous inspection reports of the Entity, and a.4 Reports on the public sector prepared by academic institutions, financial institutions, trade associations, or any financial authority, such as the Commission, the Ministry of Finance and Public Credit, or the Bank of Mexico.

b) Determine specific review points based on the results of the analysis carried out and on attention to the following aspects:

b.1 The specific requirements requested by the Supervision Committee of the Federation; b.2 The needs or concerns raised by the Commission or other financial authorities; b.3 Requests from the respective Confederation, in consistency with what is stated in Article 114 of the Law, and b.4 Complaints or reports filed by users of the Entity's financial services, within their competence.

c) Prepare the necessary documents to start the visit, that is, the visit program and the prior information request, in order for them to be signed by the auxiliary supervision managers and, if applicable, the prior request sent to the Entity in a timely manner before the start of the visit.

3.22.3

Results

The results of the planning must be synthesized and presented in the following documents:

3.22.31

Visit Program

The visit program is the central document derived from the planning stage. The Lead Supervisor responsible for the Auxiliary Supervisory Team will be in charge of coordinating both the planning tasks and the preparation of the program, which must be signed by the Lead Supervisor and by the President of the Supervision Committee or another official authorized to act on their behalf. It is recommended that the program be finalized at least five business days before the date scheduled in the Annual Visit Program to start it and that a copy be archived in the visit file.

This program must contain administrative information (date of preparation, visit start date, name of the Lead Supervisor, name of the supervisory team members) that allows identifying the Entity and must cover the aspects mentioned in paragraph 3.22.1, which are briefly described below:

a) Purpose and strategy.

The Purpose must clearly limit what results are expected from the visit and will be determined from the study of available information and the problems observed in the Entity, defining the strategy, which will be the course of action to be followed during the visit. In this sense, the particular aspects that intend to be addressed and investigated to fulfill the stated purpose must be defined.

b) Scope.

Items to be reviewed and the depth of the inspection visit, which will be closely related to the type of visit, whether Ordinary comprehensive, Ordinary specific, or Extraordinary. (11)

c) Duration.

The Duration will be the time measured in natural days, in which the visit is expected to be carried out, according to its purpose, strategy, and scope. Usually, this must be estimated based on the quantity and complexity of the topics addressed, the availability of resources, and the geographic location of the Entity.

d) Organization.

The Organization will be the way in which the relationship between the different aspects that make up the visit will be established; that is, the priority and sequence of activities or topics, as well as the allocation of resources (equipment, personnel) and the establishment of goals. An adequate organization is indispensable to achieve an effective and complete visit, for which the following points must be considered:

d.1 Divide tasks into manageable units, which allow obtaining partial results and allocating resources according to the characteristics of the topic; d.2 Establish clear priorities, and d.3 Define explicit responsibilities and estimated times for the execution of activities and the delivery of results.

e) Control:

Control is the set of mechanisms with which the correct execution of the visit will be verified. These mechanisms (meetings, progress reports, delivery of drafts) must explicitly consider aspects of team coordination, review of results, and information exchange, in order to:

e.1 Monitor compliance with the objective; e.2 Corroborate the adequate execution of particular activities, and e.3 Avoid deviations from the visit program.

3.22.32

Prior Information Request

As a result of the formulation of the visit program, it is foreseeable that the need to have additional information that is not available when carrying out the planning and that will be required to carry out the visit adequately will be detected. This information may be of various kinds, for example:

a) Minutes of general assemblies; b) Accounting analytics; c) Special reports on portfolio, capital, etc.; d) Clarifying notes on a situation; e) Operational manuals or their updates, and f) Questionnaires for councilors and officials (12).

To obtain this and other information, the Lead Supervisor will formulate a prior information request to the Entity, which must be sent with the necessary advance notice or, in some cases (13), upon starting the visit. Both the request and the responses obtained must be archived in the visit file.

3.3

Visit

Once the visit planning stage has concluded, the visit must be carried out according to the visit program prepared. The visit is defined as the physical presence of the Supervisors directly at the facilities of the Entity, whether head office, branches, information processing centers (computer center, general archive), etc.

At the time an inspection visit is executed, care must be taken regarding the presentation of the Supervisory Team with the people who receive them at the Entity, in order to facilitate their stay. Likewise, the "Code of Conduct" must be observed (see Annex 4.3), with the purpose that the Supervisors conduct themselves adequately when carrying it out.

In each visit, a Lead Supervisor will be designated, who will be responsible for it and the only contact between the Supervision Committee and the supervised Entity. Exceptionally, in case of disagreement, one may resort to the latter's hierarchical superior.

3.31

Start of the Visit

The Supervisory Team, upon starting the visit at the Entity, must follow the following minimum guidelines:

3.31.1

The Lead Supervisor and the rest of the members of the Supervisory Team will identify and present themselves to the highest-ranking official present at the Entity at that moment. Likewise, they will deliver to said official a copy of the document by which the President of the Supervision Committee notifies the Director or General Manager of the Entity of the inspection visit to be carried out.

3.31.2

The visit notification document must meet at least the following characteristics:

a) Date of the visit; b) Name and general data of the visited Entity; c) Supervisory Team that will carry out the visit; d) Name of the Lead Supervisor; e) The visit notification must be duly motivated and based on the Law and the regulation derived from it; f) The notification must be signed by the President of the Supervision Committee. If this is not possible, the signature of some official from that Committee who can act on their behalf must be obtained, in accordance with what is provided in the Internal Regulations of the Federation, and g) If applicable, request for additional information such as: information not yet delivered and requested in the prior request, etc.

3.31.3

The Lead Supervisor will request from the official who received them a physical place where they can carry out the visit in an orderly manner without obstructing the Entity's operations. Additionally, they will request that they be indicated how to access support services, such as: telephone, photocopies, connection to the Entity's information systems, Internet, etc.

3.31.4

An appointment will be agreed upon with the Director or General Manager of the Entity, to be held as soon as possible.

3.31.5

Without prejudice to the notification document indicated in paragraph 3.31.2, the Lead Supervisor must meet with the Director or General Manager of the Entity, or with the highest-ranking official present at the Entity, to formalize the start of the visit and comment, by way of example and not limitation, on the following:

a) The content of the visit program; b) The information obtained through any prior request, as well as, if applicable, the missing information to the same; c) The financial situation of the Entity and the problems detected in the visit planning; d) If applicable, the results of previous visits; e) The responses to questionnaires applied previously (See Annex 4.4.). Even, the questionnaire can be applied at this moment; f) Request an on-site visit of the Entity's facilities; g) Request interviews with the main councilors and/or officials of the Entity, and h) Any other matter considered pertinent to the visit.

3.31.6

In order to document this meeting, a document called "Record of Facts of Start of Visit" must be prepared, which must contain at least the following points:

Place, date, and time when it is drawn up;
Persons participating in the record;
Legal basis;
Date of the visit notification document;
Powers of the legal representative of the Supervised; Previously requested information not received at this time, and Appointment of attendance witnesses.

3.32

Development of the Visit

The personnel who, during the visit, have knowledge of irregular operations that affect the stability or solvency of the visited Entity and that in their judgment put the interests of clients or partners in danger, or detect situations that merit some type of immediate action or measure, will communicate this to the President of the Supervision Committee, through the fastest channel, so that they can resolve what is appropriate.

When the gravity of the situation warrants it, a detailed minutes will be drawn up in which the detected irregularities will be recorded, and the Lead Supervisor may place the documentation and information they deem necessary under custody, informing the corresponding Supervision Committee immediately. To this effect, said minutes must establish the relevant facts and must be signed by the responsible persons on behalf of the Entity and by the Supervisor, as well as the necessary witnesses.

During the visit, the following items will be reviewed in particular and by way of example and not limitation:

3.32.1

Risk Management.

3.32.11

Objective

This section intends to provide the Supervisor with a view of the risk management process in accordance with the Prudential Regulation issued by the Commission, which is a fundamental aspect for establishing an adequate internal control system.

Regarding this, it is important that the Entity has a clear process and an established methodology to identify, measure, monitor, and control the risks associated with its operation. Likewise, it is necessary that the system be adjusted when necessary and subject to continuous monitoring.

Once the system is duly established and implemented, its effectiveness will be constantly reviewed, supported by audits and taking into account the applicable regulation.

3.32.12

Aspects to Review

By way of example and not limitation, the Supervisor must consider and ensure that the Board of Directors of the supervised Entity has approved the policies and procedures for risk management and established goals on risk exposure. To this effect, the Supervisor will also review that said Board has approved the related manual and reviews, at least once a year, the Entity's objectives, policies, and procedures.

3.32.13

Procedure

The Supervisor must conduct interviews with the Director or General Manager and, if applicable, with the personnel responsible for risk management; review internal reports and review the manual and audit control measures to establish if the Entity complies with what is established in the Prudential Regulation.

3.32.2

Internal Controls

3.32.21

Objective

To ensure that the development of activities performed by the Entities is conducted through a framework of objectives, policies, procedures, and records; that these are documented in operation manuals; which will be known and applied by capable personnel. At the same time, there must be adequate internal supervision that ensures compliance with applicable regulations.

3.32.22

Aspects to Review

The Supervisor must evaluate the state and functioning of the internal control system, verifying that the different administration and operation areas comply with the policies and procedures established in the operation manuals, that these are approved by the Board of Directors and are reviewed annually.

3.32.23

Procedure

The Supervisor must conduct interviews with the Director or General Manager and with the personnel involved in Control and Surveillance tasks. Additionally, they will review the reports and prepared by said personnel, as well as the manuals and internal control measures to establish if the Entity complies with what is established in the Prudential Regulation, issued by the Commission.

3.32.3

Credit Process

3.32.31

Objective

The Supervisor must evaluate the quality of the credit process established in the Entity, verifying that the different business and operation areas comply with the functions and responsibilities that both the Entity and the Law have conferred upon them in the applicable regulation and corroborating that said Entity has the appropriate mechanisms to carry out the activities inherent to said process.

3.32.32

Aspects to Review

To fulfill this objective, the Supervisor will evaluate each of the following aspects:

a) That they have a credit manual in which strategies, policies, and procedures for the granting, control, and recovery of the credit portfolio are established, as well as for the evaluation and monitoring of credit risk. This Manual must be approved by the Board of Directors of the Entity, and b) That the cited credit manual contemplates in the minimum guidelines about the points listed below:

b.1 Promotion and granting of credit; b.2 Control of policies and procedures; b.3 Evaluation and monitoring; b.4 Credit portfolio recovery; b.5 Automated systems, and b.6 Integration of credit files.

3.32.33

Procedure

The Supervisor may use compliance logs as support tools for the evaluation of the Entity's credit process. It will be the responsibility of the person in charge to issue a conclusion on the functionality and compliance of the credit process.

3.32.4

Portfolio Provisioning

3.32.41

Objective

The purpose of this section will be to verify that the procedure for estimating portfolio provisions is adequate in accordance with the Prudential Regulation issued by the Commission.

3.32.42

Aspects to Review

The Supervisor must monitor that the Entity applies the corresponding methodology in accordance with the Prudential Regulation referred to in paragraph 2.34.21, issued by the Commission, in order to determine the sufficiency of the preventive estimates.

3.32.43

Procedure

The Supervisor will validate that the Entity in its daily operational processes applies the methodology in accordance with the Prudential Regulation issued by the Commission. Additionally, through the selection of a statistically representative sample of credits, they will validate that its results are consistent with the estimates presented by the Entity in its accounting. (14)

3.32.5

Systems

3.32.51

Objectives

Determine the level of risk to which the strategic business processes of the supervised Entities are exposed through the evaluation of their information technologies, as well as verify compliance with corrective measures to mitigate risks detected during the review process.

3.32.52

Aspects to review

The review points developed in this Guide are a tool that serves as a basis to carry out supervision of the information systems of the Entities, which includes the controls and processes of the computer systems in order to evaluate the consistency, security, timeliness, and integrity of the stored and processed information.

3.32.53

Procedure

Below, by way of example and not limitation, the points to be reviewed regarding this are mentioned:

Development and operation of systems

The Supervisor must review that the Entities have standards and controls for the development of information systems, maintaining adequate follow-up of the development of new projects and the maintenance of systems in operation.

The Supervisor must evaluate and verify that automated interfaces exist between the operating systems and the accounting systems, as well as identify and evaluate the degree of automation of the Entity's processes, such as the credit process from its study, authorization, and monitoring, collections, etc.

Suggested review aspects for Operation Systems:

Technical characteristics of the institution's critical systems (language, database, platform, age, volume of operations, internal/external development).
Interfaces with other systems (identification of double entries).
Review of information integrity.
Identification of data flow (preparation of flowcharts).
Control points for the functionality of the Entity's critical systems.
Compliance with existing regulation according to sector (banking e.g.: 1480, DCPMC, example of circulars by supervised sector).
Analysis and validation of processed data (use of exploitation tools).
Contingency and recovery plans.
Training in the use of systems.

Suggested review aspects for System Development:

Outsourcing control.
Compliance with system development methodology.
Change control.
Version control.
Project control.
Tests and quality.
Documentation of systems under established standards.

Administration of the IT area

The technological strategy that the Entities have must be in accordance with the Level of Operations of the Entity, so adequate administration of the IT area will allow optimizing operational processes and accessing information in a timely manner, in addition to guaranteeing the security of the information. For this, the Supervisor must verify physically and documentally:

a) The organizational structure, as this allows defining which areas are most involved with the Entity's automated processes, and

b) The internal and external controls that the Entities have implemented to correctly administer their systems, such as the reports issued to the General Directorate, the supplier service, audits of their systems, communication between the headquarters and its branches, staff training, etc.

Suggested Review Aspects:

Strategic Planning.
Organizational Structure.
Budgets.
Project Control.
Supplier Control.
Insurance.
Communication with the General Directorate or Management.
Follow-up on Audit Observations.
Acquisition Guidelines.
Organization Policies and Procedures.

Operation of the Computer and Telecommunications Center

The Supervisor must evaluate the infrastructure available to the Entity for the development of its functions, that is, the sufficiency of computer and IT equipment; as well as its capacity and performance characteristics, the maintenance provided to it; the identification of the type of links and telecommunications.

Suggested Review Aspects:

Security controls of the computer center, tape library, and telecommunications facilities (access and environmental controls).
Identification of computer equipment (production, development, and backup).
Operation of computer equipment.
Information backups (generation of backups, tools to control backup cycles).
Monitoring of computer equipment (tools and reports) Capacity Planning.
Identification of telecommunications equipment (topology, links, protocols).
Operation of telecommunications equipment.
Monitoring of telecommunications (tools and reports).
Monitoring of auxiliary services of the computer center (tools and reports).
Availability of specific equipment for these activities.

Security

Adequate security measures must be in place to protect the facilities and guarantee that the processing, transmission, and storage of information is secure. To this end, the Entity must maintain formal, authorized, and disseminated policies and standards among its staff. When evaluating such security, the following aspects may be considered, among others:

a) Logical (Security in the handling of information):

a.1. Standardization of logical access controls to information systems (inputs and outputs); a.2. Security policies; a.3. Procedures for adding, removing, and changing users in operating and application systems; a.4. Security in telecommunications, and a.5. Detection and protection against computer viruses.

b) Physical (Protection of facilities):

b.1. Location of computer centers and components; b.2. Environmental and access controls to the computer center, and b.3. Policies and procedures for the generation, access, use, and maintenance of backups of data processed by their computer systems, both internally and outside the facilities.

Suggested Review Aspects:

Policies and procedures for the administration and use of access keys (administration of adding, removing, and changing users, process of handing over access keys).
Security administration tools.
Characteristics of the security schemes of the systems (rotation of access keys, history management, number of failed attempts, disconnection after a certain period of inactivity, generation of access and transaction logs).
Antivirus software.
Vulnerability analysis.
Periodic scanning of defined processes.
Assignment of specialized security personnel.
Definition of a security strategy.

Contingency Plans

A contingency plan must be in place to guarantee the continuity of automated operations within the Entity's facilities and, where applicable, at an external site; therefore, the Supervisor will evaluate the following points:

a) Planning; b) Participation of involved areas; c) Business risk analysis; d) Recovery strategies (computer and telecommunications equipment); e) Information backups; f) Documentation; g) Tests, and h) Maintenance.

Suggested Review Aspects:

Scope of contingency plans (DRP).
Scope of business continuity plans (BCP).
Evaluation of the strategy.
Tests.
Maintenance of plans.
Constant dissemination to staff.
Audit participation.
Scheduled tests with staff participation and the development of the sequence of activities.

3.32.6

Prevention of Money Laundering

3.32.61

Objective

During inspection visits, the Supervisor must review the existence of processes to prevent, detect, and report operations with resources of probable illicit origin, as well as compliance with applicable regulation, in order to determine the Entity's capacity and efficiency.

3.32.62

Aspects to Review

The Supervisor must ensure that the Entity complies with the "General Provisions referred to in Articles 115 of the Credit Institutions Law and 124 of the Popular Savings and Credit Law", as well as what is stated in its Procedures Manual.

3.32.63

Procedure

By way of example, but not limitation, the Supervisor must:

a) Verify that the Entity has a Procedures Manual to prevent, detect, and report operations with resources of probable illicit origin, prepared in accordance with the "General Provisions referred to in Articles 115 of the Credit Institutions Law and 124 of the Popular Savings and Credit Law"; b) Verify, through the respective meeting minutes, the integration and functioning of the Communication and Control Committee and the appointment of its members, in accordance with what is established in the "General Provisions referred to in Articles 115 of the Credit Institutions Law and 124 of the Popular Savings and Credit Law"; c) Verify that the Entity's staff has been informed about the policies and procedures applicable to the topic, as well as the method by which this was done; d) Corroborate, through the respective records, that the Entity's operational staff has been subjected to a training program, at least once a year; e) Ensure, through necessary interviews, that the Entity's operational staff understands and implements the necessary measures to be adopted for the prevention, detection, and reporting of operations with resources of probable illicit origin; f) Verify, through the direct review of some randomly selected files, that the Entity's operational staff implements the policies established in the Manual regarding identification and knowledge of clients and partners; g) Corroborate with operational staff (or customer service) if the way they detect and report unusual and concerning operations to the Communication and Control Committee is consistent with what is established regarding this in their Procedures Manual; h) Evaluate the efficiency of the information system implemented by the Entity, to detect, monitor, and report relevant and unusual operations; i) Determine if the Entity has knowledge of the areas or operations that may constitute a potential risk for money laundering in its Entity, as well as evaluate the actions and policies it applies regarding this; j) Determine that the Entity complies with the deadlines established for the delivery of reports on relevant operations, in accordance with what is provided by applicable regulation; k) Verify that the Entity complies with the deadlines established for the delivery of reports on unusual and concerning operations, in accordance with what is provided in applicable legislation; l) Verify that the filing and conservation of reports sent to the authority comply with what is provided by applicable regulation; m) Verify that the staff is aware of the confidentiality they must maintain towards their clients and/or partners regarding reports of operations with resources of probable illicit origin; n) Verify that the Director or General Manager of the Entity coordinates the actions that, according to the Manual, officials and employees of the Entity must carry out, the method used for this, and that they have made the respective report to the Communication and Control Committee; o) Verify
that the Entity's Communication and Control Committee has held meetings within the established deadlines and has issued the corresponding ruling regarding all reports of unusual and concerning operations received; p) Ensure that the Comptroller, the members of the Communication and Control Committee, and the members of the Board of Directors know their obligations regarding the functions assigned to prevent, detect, and report operations with resources of probable illicit origin, as well as the legal sanctions applicable regarding this, and q) Determine if there is or is not a need to implement corrective actions in case the policies, procedures, practices, and internal controls are considered deficient or serious violations of the corresponding laws or regulations have been detected. If affirmative, it must be ensured that the Entity's Communication and Control Committee applies these corrective actions and constantly updates its internal standards, in order to prevent, detect, and report acts or operations with resources of probable illicit origin more efficiently.

3.32.7

Work Papers

A work paper is that documentation collected or prepared by the Supervisor that provides the necessary evidence supporting the conclusions obtained by him.

3.32.71 Objective

The object of having work papers is to have evidence and support for the Supervisor's findings and conclusions. Usually, these are the following:

a) Important documents; such as minutes, summaries, memoranda, contracts, negotiable instruments, etc.; b) Information regarding the structure of the Entity; c) Flowcharts of operational processes; d) Evidence of the execution of the points contemplated in the visit program; e) Compliance logs. See Section 3.32.72; f) Record of procedures applied, and g) Financial information.

Likewise, to facilitate the handling of work papers and streamline similar review treatments, the use of standard indexes and marks is feasible.

Work papers must be organized in folders that include an index consistent with the visit program and all particular aspects reviewed. Furthermore, they must be signed by the people who collaborated in their preparation and approval.

Generally, individual folders must be prepared for each inspection visit, and each of them is subdivided according to the characteristics of the work performed. Some sections that a folder might contain in a comprehensive visit are suggested:

a) The planning of the inspection visit; b) The financial structure; c) The organizational structure; d) The credit process; e) Risk management; f) Portfolio qualification; g) The prevention of money laundering; h) Computer systems; i) The application of Accounting Criteria, and j) The information generation procedure.

Additionally, each section of the folder may include:

1) Analysis and observation sheets;
2) Internal control questionnaires;
3) Compliance logs, and
4) Copies of documents, information, and analysis of the Entity.

3.32.72

Compliance Logs

The Compliance Log is a document, usually in the form of a sheet, which contains each of the elements that make up a specific rule.

The objective of using Logs is to measure the level of compliance of the Entity with all identifiable aspects of the content of the secondary regulation issued by the Commission, as well as the Entity's internal standards.

Its preparation is based on existing provisions and is complemented with information collected by supervision. This information refers to the documents and actions undertaken by the Entities and their commitments, thus obtaining a panorama of the Entity's regulatory compliance.

It is suggested that the construction of a log be like the example shown below:

Identify the points that make up the rule or provision in question; Relate each of these points in the first column of the matrix; In the second column, transcribe each related point into a question that can be answered simply, including a space to record the obtained answer, for example:
a) Questions whose answer can be: Yes/No b) Questions whose answer can be an indicator, a date, or a number: 30%; In the fourth column, the compliance achieved by the Entity is qualified according to the following categories:
a) High; b) Medium; and c) None.
The fifth column contains a comment from the Supervisor in which he explains the cause of the assigned value; The sixth column serves to refer to the document or work paper that describes the instance or action undertaken by the Entity to comply with that point, and Finally, the expected date on which such action will take place is established.

Example of a log:

CREDIT RISK MANAGEMENT

Article 116 of the LACP

LOG

LEVEL IV

Provision

Questioning

Response

Compliance

Comments/
Activity

Document

CLAUSE V.- CREDIT PROCESS

Entities must delimit the different functions and responsibilities in the development of credit activity, taking into account, among others, the following:

I. The establishment of credit strategies, policies, and procedures, as well as their implementation.
II. The promotion, granting of credit, as well as the recovery of the credit portfolio.
III. The control and review of compliance with credit norms, policies, and procedures.
IV. The evaluation and follow-up of the Entity's credit risk.

Does the Entity delimit the functions and responsibilities in the development of the establishment of credit strategies, policies, and procedures, as well as their implementation?

Yes

High

Interview with the Director of the Entity

Credit Policies
Manual/
Organizational Chart

Does the Entity delimit the functions and responsibilities in the development of the promotion, granting of credit, as well as the recovery of the credit portfolio?

Yes

High

Interview with the Director of the Entity

Credit Policies
Manual/
Organizational Chart

3.4

Closing of the Visit

3.41

Conclusion of the Visit

Once the visit program has been covered, a meeting will be requested with the Director or General Manager of the Entity in order to formally conclude the inspection visit by signing a document called "Closing Visit Fact Record". The minimum content that this record must have is:

Place, date, and time when it is drawn up.
People participating in the record.
Legal basis.
Date of the written notification of the visit.
It must be recorded that the Supervision Committee will disseminate the result of the visit as established in this Guide. It is necessary to clarify that the results of the visit will not be communicated to the Entity at this time; this act implies the formal departure of the Supervisors from the Entity. Appointment of assisting witnesses.

3.42

Visit Report

The purpose of preparing and sending a report to the supervised Entity is for it to know the situation it is in and, if appropriate, to expose what corresponds to its interest and adopt the corresponding regularization measures.

The Report will comprise the quantitative and qualitative aspects determined during the visit and must comply with the established standards.

It is very important to note that in the preparation of the Report, the staff of the visited Entity must not intervene, nor any person outside the Supervisor Team.

For the preparation of the Visit Report, it is necessary to have the work papers prepared by the Supervisors in order to have sufficient elements and the necessary evidence to issue an objective judgment. The use of compliance logs is suggested, in order to be able to evaluate in a simple and non-subjective manner the level of compliance of the Entity with the regulations applicable to it or with its internal policies.

3.42.1

Preparation of the Report

The Chief Supervisor will prepare a draft Report, from which the President of the Supervision Committee will prepare a Report with definitive character so that the Entity can expose what corresponds to its interest and adopt the corresponding regularization measures.

3.42.2

Characteristics and Structure of the Report

The Inspection Visit Report must, at least, contain the following items:

3.42.21

Characteristics

Some of the significant characteristics that this Report must contain are:

a) Have a logical structure, that is, its content must be organized and presented in an orderly manner; b) Be drafted in simple, clear, and direct language, avoiding ambiguities and imprecisions; c) Contain violations of the regulatory framework, which must be presented in order of importance, considering their impact on the Entity, and d) Provide all necessary elements that serve as evidence to strongly support the conclusions of the Supervisors. It is recommended that the report not contain extensive annexes or additional sections of little relevance.

3.42.22

Structure

The report must have a structure that, at least, contemplates the following points:

a) Supervised Entity: general data of the Entity must be mentioned; b) Items and areas of the Entity reviewed: the items of financial information that were studied must be mentioned, as well as the areas of the Entity examined as part of the visit; c) Conclusions: it is advisable to start the conclusions according to their relative importance, specifying each one clearly and understandably, and d) Unforeseen situations: situations detected that were not part of the original visit program must also be recorded. These situations must be noted in the report, mentioning the way they were detected and how they influenced the development of the visit.

3.42.3

Conclusions

The observations obtained from the inspection visit must be compared with the expected results and against the regulatory framework in order to establish a conclusion.

A conclusion will be the categorical affirmation of the degree of compliance with the applicable provisions; therefore, it is advisable to avoid ambiguities or contradictions. The conclusions must be clear, precise, and must be supported by sufficient evidence.

If the non-compliance is serious, the conventional penalties that arise from these facts must be clearly mentioned. These deviations from the legal framework must be duly motivated and justified.

3.42.4

Dissemination of the Report

The President of the Supervision Committee will be responsible for disseminating the results of the visit in the following manner (see Table 2):

a) Within a period of 20 business days, following the date of closing of the visit, he will send the Report to the following people:

National Banking and Securities Commission.
Director or General Manager of the visited Entity.
President of the Board of Directors of the visited Entity.
President of the Supervisory Board or Comptroller.

Regarding this, it should be mentioned that the President of the Supervision Committee, if he deems it necessary, may personally present the Report to the aforementioned instances.

b) The President of the Board of Directors of the visited Entity will be responsible for sending a copy of this report to each of the members of the Board of Directors, collecting the corresponding receipts of receipt and sending them to the Director or General Manager of the Entity. The deadline to make this delivery must be within 20 business days following the receipt of said report by the President of the Board.

c) The Director or General Manager of the visited Entity must have the aforementioned receipts of receipt available to the Commission.

d) The President of the Supervision Committee will inform, at least quarterly, the corresponding Board of Directors of the Federation about the results obtained in the inspection visits during the reference period.

TABLE 2

Annexes

4.1

Annualization of Figures

It is important to note that, in some of the ratios presented in the Financial Analysis, both items from the statement of financial position and the statement of comprehensive income will be used simultaneously. Considering that both financial statements are of a different nature, it is necessary to annualize the figures of the statement of comprehensive income so that they are comparable with those of the statement of financial position. Below, an example is presented:

Financial Ratio: Total credit income
Formula: a / b a: Annualized interest from the credit portfolio b: Average credit portfolio in the period

Items
January
February
Statement of comprehensive income
Interest income
450,000
800,000*
Statement of financial position
Credit portfolio
75,000,000
72,000,000
Figures in pesos
*Accumulated figures

Annualize interest income:
1.- Divide the income amount by the number of the month in question:
800,000 / 2 = 400,000
2.- Multiply the result by 12:
400,000 * 12 = 4,800,000. This is the amount of annualized income

Average portfolio:
1.- Sum the portfolio amount of the months in question and divide it by the number of months:
(75,000,000 + 72,000,000) / 2 = 73,500,000.

Total credit income
(4,800,000 / 73,500,000) = 0.065 = 6.5%

4.2

Growth Rates

The growth rates contemplated in the Financial Analysis are based on the comparison of the main concepts of the statement of financial position during a period of time. The most usual comparisons are:

Compare the current month with the previous month.
Compare the current month with the close of the previous year.
Compare the current month with the same month of the previous year.

It should be mentioned that these growth ratios yield results expressed in nominal terms; that is, without inflation discounted. To discount the effect of inflation and obtain real growth; the suggested procedure is the following:

Portfolio December 2001
$10,000,000
Portfolio December 2000
$ 8,000,000
Value of the UDI at Dec. 2001
3.055273
Value of the UDI at Dec. 2000
2.909158

1.- Express 2001 Portfolio at 2000 prices:

(10,000,000) / (3.055273 / 2.909158) = 9,521,761.23

2.- Calculate the growth rate between the 2001 portfolio at 2000 prices and the 2000 portfolio

((9,521,761.23 / 8,000,000) - 1) = 0.1902 = 19.02% Real growth rate of the 2000 to 2001 portfolio.

3.- This result differs from the nominal growth rate that would be obtained as follows:

((10,000,000 / 8,000,000)-1) = 0.250 = 25% Nominal growth rate of the portfolio from 2000 to 2001.

In order to achieve better comparability of data, it is suggested to use real growth rates since this way a net growth is obtained, free from the influence of inflation. In our example, the nominal rate is 25% and the real rate is 19.02%; this shows how a result can be overvalued if inflation is not discounted.

4.3

Code of Conduct

The Code of Conduct will be the basis upon which Supervisors must conduct themselves during the visit. Observance of this Code seeks to ensure appropriate and transparent conduct.

By way of example and not limitation, the "Code of Conduct" will contemplate the following points:

Supervisors must perform their duties in accordance with the schedule of the visited Entity, and once the visit has begun, it cannot be suspended without express authorization from the President of the Supervision Committee or, in their absence, from someone authorized to act on their behalf.

Supervisors must consider the information to which they have access as confidential and give it exclusive use to fulfill their functions; therefore, they must not disclose it to third parties.

The information and support equipment provided by the Entity to the Supervisors must be treated with the utmost diligence, avoiding any damage. Information must be received against the issuance of vouchers stating the documentation delivered to the Supervisors; these vouchers will be delivered to the Supervisors when the information is returned to the Entity.

Supervisors must show respect to employees, clients, partners, or any other person related to the Entity, avoiding arrogant, aggressive, or intimidating conduct.

Supervisors must strive not to unnecessarily distract the Entity's personnel from their daily tasks.

Supervisors must maintain a healthy distance with the Entity's officials and employees, in order to preserve transparency in the management of the visit and avoid situations that could be misinterpreted by any third party. This includes receiving goods or services under preferential conditions.

Supervisors assigned to the practice of inspection visits will not have executive powers regarding the Entity in which they are commissioned. Consequently, they will abstain from ordering any accounting movement, as well as issuing instructions to the Entity's personnel regarding its own business and operations.

Supervisors must report with due opportunity and foundation, situations and facts that have an illegal, fraudulent, or corrupt nature, even against intimidating acts by the offender, as well as proposals received, directly or indirectly, with the aim of preventing such acts from being revealed.

Supervisors must not use their position or commission to obtain personal benefits or favor third parties.

In the event that the Supervisor faces a conflict of interest (15)

for the development of their functions with one or more

Entities, they must manifest it in writing to the President of the Supervision Committee, in order to abstain from participating in the supervision of those Entities with which they may present such conflicts.

4.4

Questionnaires for Councilors and Officials

Questionnaire for the Director or General Manager.

Describe the actions you follow to develop the compliance function.

How do you stay updated regarding changes in applicable regulation, both issued by the Authorities and by the Federation and Confederation related?

What actions do you take to ensure your personnel stay updated on compliance with applicable regulation? How do you ensure this?

What is your participation in the review and definition of operational and administrative policies and strategies in the Entity? Do you participate in any Committee? If your answer is affirmative, detail which committees you participate in, the frequency with which meetings are held, and how you participate.

How frequently are the Entity's credit analysis and granting policies reviewed? Do you participate in this process?

Is there any policy for updating depositor and borrower files? What does it consist of?

Does your Entity provide services on behalf of third parties (purchase-sale of dollars, sending and receiving payment orders and transfers in national and foreign currency) to clients who do not maintain deposits or credits?

Have you had any kind of training in regulatory compliance matters?

How do you ensure that the regulatory compliance function is involved in the Entity's administrative, operational, and accounting processes?

10.

Describe your participation in community service programs. How do you encourage your employees to get involved with the community and obtain feedback from it?

11.

Do you prepare periodic reports for the Supervision Committee of your Federation? Which ones and with what frequency?

12.

Do you participate with the Supervision Committee of your Federation? If your answer is affirmative, detail your participation in compliance matters.

13.

Describe the most common complaint from your partners or clients regarding the services offered by the Entity.

14.

Does the Entity have operation manuals? Are they updated periodically?

15.

Is there a contingency plan in the Entity's Operation Manual? Is there an alternative information backup system in case of widespread failures in its computer systems?

16.

What is your opinion on the role of the Comisario and/or the Surveillance Council of your Entity?

17.

What is the role of the internal audit area regarding the management of the regulatory compliance function?

Questionnaire for members of the Surveillance Council (it is suggested to select two members) or the Comisario of

the Entity.

Do you know the role you must play in the Entity?

What was the main regulatory compliance problem you worked on during the past year? Could you describe if this is a typical or unusual situation in relation to your traditional work program?

Are there regulatory topics whose application is, in your opinion, confusing?

What additional activities do you perform in this Entity? How much time do you have available to perform compliance activities? Do you consider it adequate? Do you believe you should dedicate more time to regulatory compliance functions? Do you consider that you need additional personnel to carry out this function?

Describe the activities in which your regulatory compliance responsibility is linked to those of the administrative structure of this Entity.

How do you encourage the employees of this Entity to discuss problems and doubts with management regarding this?

Describe your experience and training in regulatory compliance matters. Where did you obtain training? Do you attend seminars periodically? If so, which ones and where?

How do you stay updated regarding changes in the corresponding regulation? How do you inform these changes to key personnel within your Entity?

What type of regulatory compliance training programs have employees of the accounting and credit analysis and granting areas taken, in particular? How much is the material and the number of attendees limited? Do you believe there is a training need that is not yet covered?

10.

How involved is the Board of Directors in regulatory compliance matters? Do they review formats, agreements, policies, etc.?

11.

Do you work jointly with the operational and development areas to ensure that regulatory compliance aspects are taken into account? Have there been changes in operational strategies and/or policies developed during the past year without your knowledge?

12.

Do you participate in any Entity Committee where operational policies and procedures are reviewed so that regulatory compliance aspects are included or considered? If your answer is affirmative, which ones and with what frequency?

13.

What is better to apply in this Entity: a self-regulation scheme or an audit program developed specifically?

14.

Describe the origin and flow of the reports you review.

15.

How frequently do you evaluate if your policies and procedures in the following topics are consistent and up to date with applicable laws and regulation?

Credits.

Training.

Customer complaints.

Promotions and advertising.

Branch administration and operational procedures.

16.

How do you ensure that the Board of Directors of your Entity corrects deficiencies discovered during your reviews?

17.

How do you verify that:

credit applications are evaluated adequately, based on established policies?

applicants only receive credits or maintain deposit accounts in their name, avoiding possible operations in which the holders act or appear in the name of third parties?

credit and savings files are kept up to date and with the documentation that applicable laws and provisions require?

18.

Has any mechanism been established to ensure that employees and members of the Credit Committee do not apply preferential policies or in contravention of sound market practices?

19.

How do you determine that the guarantees granted to back credits are sufficient and valid?

20.

Does your Entity present debts in the name of third parties? If so, describe how you register them in your accounting.

21.

Do you know the provisions of the Ministry of Finance and Public Credit regarding the prevention of money laundering?

22.

Describe your program for the detection, prevention, and reporting of money laundering. What periodic reports do you make regarding this? Do you personally review that the reports are correctly filled out and delivered on time? What type of analysis do you perform to ensure that there is no money laundering in your Entity? Do you have any system to aggregate multiple transactions?

23.

Do you believe there is any particular weakness in your regulatory compliance activities?

4.5

Sampling Techniques (16)

It is commonly difficult to examine all elements or files of an operational area of the Entity during an inspection, especially if there is a large volume of information. Faced with this situation, the Supervisor has the possibility of using some sampling technique to know the characteristics of a population from a sample. A population can be the total of the portfolio credits or the deposits received by an Entity.

To determine the type of sampling to be used, the Supervisor must consider the following:

Quantity, quality, and nature of the population under study.
Objectives and benefits of the different sampling methods.
Purpose and objective of the sample.
Limitations in available resources.

There are two types of commonly used sampling: Non-statistical and Statistical.

4.51

Non-statistical Sampling.

Non-statistical sampling is based on the Supervisor's criteria to select a sample to be examined. The selection criteria depend on the Supervisor's field experience and presupposes in advance that all Entities share strong similarities among themselves. It should be mentioned that the results of this sample cannot be extrapolated to the rest of the population. This means that the conclusions derived will be valid only for the

elements selected in the sample. For example, the selected loans could include ten loans from the portfolio granted since the last inspection, seven of the highest amounts, two of those granted to employees, and any other type of loan that the Supervisor decides to review.

4.52

Statistical Sampling

On the other hand, Statistical sampling uses statistical techniques to generate a representative sample of the population and can be done in two ways: Proportional and Numerical. In the first, the larger elements will be the ones that most easily end up in the sample and in the second, each element of the population has the same probability of being selected to form the sample. An advantage of this type of sampling is the possibility of extrapolating or projecting to the universe the results obtained from a sample.

During the statistical sampling process, the Supervisor determines which elements should be included in the sample and selects them, based on determined confidence and precision levels.

Confidence Level: This is the reliability given to the sample results; thus, by selecting a higher confidence level, the sample size will be increased. Usually, these move in levels close to 95%, which means that it is expected that only one in every 20 samples will yield biased results that do not represent the universe.

Precision Level: This refers to the Supervisor's tolerance for exceptions in the sample (also called "maximum tolerable error"). It can be interpreted as the margin of error with which one is working when extrapolating the sample results to the population. The smaller the desired error margin, the larger the sample size will be.

4.52.1

Proportional Sampling (17)

The sample design consists of selecting the confidence and precision levels. The Supervisor might consider using a precision level of 20% and a confidence level of 80%. These levels are justifiable when the Entity has an adequate capitalization level, an acceptable internal control system, sound risk management systems, and good asset quality.

Once the Supervisor establishes the precision and confidence levels, the sample is selected. The size for a proportional sample is estimated as follows:

From the previous formula, the monetary interval is calculated as follows:

Table 1.

Confidence Level

80%

85%

90%

95%

97.5%

Confidence Factor

1.61

1.90

2.3

3.69

From where the monetary precision is:

(social capital + preventive estimate for credit risks) X precision level

Written another way, the equation to estimate sample size is:

Example:

A Supervisor is examining an Entity with 808,255 pesos of social capital plus preventive estimate for credit risks. The loan portfolio sums 3,012,131 pesos.

If a precision level of 20% and a confidence level of 80% are desired, the formula to calculate the monetary interval is:

The estimated size for the sample is (rounding up to the greater or equal integer):

Once the sample size is defined, it will be necessary to select the elements that will be included in it. The Supervisor must start the selection from a random number between zero and the value of the monetary interval.

For example, if the monetary interval is 100,404.40, then the random start must be a number between zero and that number. The random number can be obtained in various ways, such as a table of random numbers or the serial number of a bill. The Excel program has an automatic random number generator that can be used.

Next, a method is described to select the elements of the sample using a standard calculator and any report that lists the elements of the population of interest (in this case, the loans in the portfolio).

For illustrative purposes only, the following example uses 61,244 as the random start.

Starting with the first element of the list, this method tries to add the amount of each loan to an accumulating total that starts at zero. The loan whose amount added to the accumulating total makes this (the accumulating total) equal or exceed the random start (i.e., 61,244) will be selected as the first element of the sample. The next elements will be selected by continuously adding the loan amounts, and selecting each loan whose amount causes the accumulating total to equal or exceed each increment of the monetary interval. Below, a graphical example of this selection process is exposed.

Once the analysis on the elements of the desired sample is done, we wish to estimate, with the chosen confidence level, the Expected Error in the total portfolio given that we found a certain amount of error in the sample.

We will define BV* k as the observed value (result of our analysis) of the k-th loan of the sample, BV k as the book value (registered) of the same k-th loan and t k as the proportion of error with respect to BV k, that is:

From the previous graphical example, we can suppose that the observed values or resulting from our analysis of each selected loan are:

Additionally, we define T k as the k-th proportion of error with respect to BV k largest of the sample (i.e., T 1 is the largest error proportion found, T 2 is the second largest proportion, etc.). In our example (considering only the seven loans exhibited),

is the largest proportion of error and therefore,

Having made the previous definitions, the Expected Error corresponding to the k-th largest proportion of error found:

Therefore, our final estimates of the Total Expected Error in the portfolio are:

that is,

4.52.2

Numerical Sampling (18)

The sample size for a numerical sampling is determined through the selected confidence and precision levels:

The following table shows the sample sizes associated with the desired precision and confidence levels:

Confidence - 90%

Confidence - 95%

Precision 5%

Precision 10%

When confidence is 95% (the corresponding confidence factor is 3.0 from Table 1) and precision is 5%, the Supervisor selects 60 loans. Similarly, when confidence is 90% (the corresponding confidence factor is 2.3, from Table 1) and the precision level is 10%, the Supervisor selects 23 loans.

Although it is possible to select and review a sample of less than 30 elements, the Supervisor must not project the results obtained due to the high degree of error inherent in such a small sample.

To select the loans to review, a random number must be sought (using a random number chosen from a bill, a table of random numbers, or another source); the loan that matches the random start will be the first element of the sample. The Supervisor will continue counting and selecting subsequent loans that match the sample interval.

For example, if the random start is 25 then the first element of the sample will be loan number 25 from the list. The next element will be 25 + 23 = 48 and so on until obtaining the 23 elements.

Example:

Since we have done the analysis of the selected loans, we are interested in estimating the expected number of errors (deviations) in the total loan portfolio given that we found a number x of errors.

In this case, we will understand an error as the deviation of certain prescribed internal control procedures. This can be, for example, the lack of documentation in loan files. It must be remembered that it is not possible to define compliance levels, but simply whether certain requirements or attributes are met, since it is a control test.

To achieve this, we calculate the observed error proportion:

It can be supposed, for example, that a control test of the files of

30 loans

selected in the sample was performed and that of these 30 files, 4 lack the necessary documentation (they are

incomplete

). Then the observed error proportion is:

The number of expected errors in the total portfolio is calculated as follows:

then if we suppose that the portfolio contains 5000 loans, the expected number of incomplete files in the total population is:

ANNEX K

MAPPING OF RATINGS AND RISK DEGREES

Table of Correspondence of Long-Term Ratings and Risk Degrees

Risk Degrees

Global Scale

Local Mexico Scale

S&P

MOODY ' S

FITCH

RATING

A.M.

Best

DBRS

S&P

MOODY ' S

FITCH

RATINGS

VERUM

A.M.

Best

DBRS

AAA

Aaa

AAA

AAA(G)

aaa

AAA

AA+

Aa1

AA+

AA+(G)

aa+

AA (high)

Aa2

HR AA

(G)

AA-

Aa3

AA-

HR AA-

(G)

aa-

(low)

A+

HR A+

(G)

A (high)

mxAAA

AAA.mx

AAA

(mex)

HR AAA

AAA/M

aaa.mx

AAA.MX

HR A (G)

A-

HR A- (G)

A (low)

BBB+

Baa1

BBB+

BBB+(G)

bbb+

BBB

(high)

mxAA+

AA+.mx

AA+

(mex)

HR AA+

AA+/M

aa+.mx

AA.MX

(high)

BBB

Baa2

BBB

HR BBB

(G)

bbb

BBB

mxAA

AA.mx

(mex)

HR AA

AA/M

aa.mx

AA.MX

BBB-

Baa3

BBB-

HR BBB-

(G)

bbb-

BBB

(low)

mxAA-

AA-.mx

AA-

(mex)

HR AA-

AA-/M

aa-.mx

AA.MX

(low)

BB+

Ba1

BB+

HR BB+

(G)

bb+

BB (high)

mxA+

A+.mx

A+ (mex)

HR A+

A+/M

a+.mx

A.N.MX

(high)

Ba2

HR BB

(G)

mxA

A.mx

A (mex)

HR A

A/M

a.mx

A.N.MX

BB-

Ba3

BB-

HR BB-

(G)

bb-

(low)

mxA-

A-.mx

A- (mex)

HR A-

A-/M

a-.mx

A.N.MX

(low)

B+

HR B+

(G)

B (high)

mxBB+

BB+.mx

BB+

(mex)

HR BB+

BB+/M

bb+.mx

BB.N.MX

(high)

HR B (G)

mxBB

BB.mx

(mex)

HR BB

BB/M

bb.mx

BB.N.MX

B-

HR B- (G)

B (low)

mxBB-

BB-.mx

BB-

(mex)

HR BB-

BB-/M

bb-.mx

BB.N.MX

(low)

CCC

Caa

CCC

HR C+

(G)

ccc+

CCC

(high)

mxB+

B+.mx

B+ (mex)

HR B+

B+/M

b+.mx

B.N.MX

(high)

HR C (G)

ccc

CCC

mxB

B.mx

B (mex)

HR B

B/M

b.mx

A.N.MX

HR C- (G)

ccc-

CCC

(low)

mxB-

B-.mx

B- (mex)

HR B-

B-/M

b-.mx

B.N.MX

(low)

inferior

mxCCC

CCC+.mx

CCC

(mex)

HR C+

C/M

ccc+.mx

CCC.N.M

X (high)

mxCC

CCC.mx

(mex)

HR C

D/M

ccc.mx

CCC.N.M

inferior

CCC-.mx

C (mex)

HR C-

inferior

ccc-.mx

CCC.N.M

X (low)

CC.mx

inferior

C.mx

inferior

II.

Table of Correspondence of Short-Term Ratings and Risk Degrees

Short-Term Risk Degrees

Recognized Rating Scales

Global Scale

Local Mexico Scale

S&P

MOODY ' S

FITCH

RATING

A.M.

Best

DBRS

S&P

MOODY ' S

FITCH

RATINGS

VERUM

DBRS

A-

P-1

F1+

HR+1 (G)

AMB-1+

R-1

(alta)

mxA-1+

ML A-

1.mx

F1+(mex)

HR+1

1+/M

R-1.N

(alta)

A-1

HR1 (G)

AMB-1

R-1

(media)

mxA-1

F1 (mex)

HR1

1/M

R-1.N

(media)

R- (baja)

R-1.N

(baja)

A-2

P-2

HR2 (G)

AMB-2

R-2

(alta)

mxA-2

ML A-

2.mx

F2 (mex)

HR2

2/M

R-2.N

(alta)

R-2

(media)

R-2.N

(media)

R-2

(baja)

R-2.N

(baja)

A-3

P-3

HR3 (G)

AMB-3

R-3

mxA-3

ML A-

3.mx

F3 (mex)

HR3

3/M

R-3.N

HR4 (G)

AMB-4

R-4

mxB

B (mex)

HR4

4/M

R-4.N

HR5 (G)

inferiores

R-5

mxC

inferiores

ML B.mx

C (mex)

HR5

D/M

R-5.N

inferiores

ML C.mx

inferiores

inferiore

inferiores

Anexo N

Regulatory Reports for Popular Financial Societies

Index

Series R01 Minimum Catalog

Frequency

A-0111

Minimum Catalog

Monthly

Series R03 Investments in Financial Instruments

Frequency

I-0391

Disaggregated investments in financial instruments and repurchase agreements

Monthly

Series R04 Credit Portfolio

Frequency

Financial Situation

A-0411

Credit by type

Monthly

A-0417

Credit portfolio rating and preventive estimate for credit risks

Monthly

A-0419

Movements in the preventive estimate for credit risks

Monthly

Detailed Information

C-0451

Registration of commercial, consumer, and housing credits

Monthly

C-0452

Tracking of commercial, consumer, and housing credits

Monthly

C-0453

De-registration of commercial, consumer, and housing credits

Monthly

C-0454

Reserves for consumer, housing, and microcredits

Monthly

C-0455

Reserves for commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

Monthly

C-0456

Severity of Loss for commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

Monthly

C-0457

Probability of Default for commercial credits held by legal and natural persons with business activity, financial entities, federative entities, and municipalities

Monthly

Series R08 Collection

Frequency

D-0841

Disaggregated traditional collection

Monthly

D-0842

Disaggregated bank loans and from other organisms

Monthly

Series R10 Reclassifications

Frequency

A-1011

Reclassifications in the statement of financial position

Monthly

A-1012

Reclassifications in the statement of comprehensive income

Monthly

Series R12 Consolidation

Frequency

A-1219

Consolidation of the statement of financial position of the popular financial society with its subsidiaries

Monthly

A-1220

Consolidation of the statement of comprehensive income of the popular financial society with its subsidiaries

Monthly

Series R13 Financial Statements

Frequency

A-1311

Statement of changes in equity

Quarterly

A-1316

Statement of cash flows

Quarterly

B-1321

Statement of financial position

Monthly

B-1322

Statement of comprehensive income

Monthly

Series R15 Operations by Service

Frequency

B-1522

Non-client users of services provided through electronic means of the popular financial society

Quarterly

B-1523

Client operations carried out through electronic means

Quarterly

B-1524

Clients of services provided through electronic means

Quarterly

Series R17 Staff Appointments and Dismissals

Frequency

A-1713

Staff appointments and dismissals

15 business days

afterwards

Series R20 Liquidity Ratio

Frequency

A-2011

Liquidity ratio

Monthly

Series R21 Capital Requirements

Frequency

A-2111

Capital requirements by risk

Monthly

Series R24 Operational Information

Frequency

B-2422

Information on operational variables

Quarterly

D-2441

General information on the use and frequency of financial services

Quarterly

D-2443

Information on the location of transaction points for financial services

Quarterly

Series R26 Information by Commission Agent

Frequency

A-2610

Registrations and deregistrations of commission agent administrators

Monthly

A-2611

Disaggregated registrations and deregistrations of commission agents

Monthly

B-2612

Disaggregated registrations and deregistrations of commission agent modules or establishments

Monthly

C-2613

Disaggregated tracking of commission agent operations

Monthly

SERIES R01 MINIMUM CATALOG

This series is integrated by one (1) report, whose frequency of preparation and presentation must be monthly.

REPORT

A-0111

Minimum Catalog

In this report, the balances at the end of the period for all concepts that form part of the statement of financial position (including off-balance sheet accounts) and the statement of comprehensive income of the entity are requested. The report is requested in two subtotals:

National currency and UDIS valued in pesos.
Foreign currency valued in pesos.

To fill out report A-0111 Minimum Catalog, the following aspects must be considered:

Within the report, in the column named "Applicable only to:", the concepts that only apply to Popular Financial Societies (marked as SOFIPO), Community Financial Societies (marked as SOFINCOS), or Rural Financial Integration Organizations (marked as OIFR), as applicable, are indicated. Concepts that apply equally to the three sectors are not marked.

The balances of the entity in question must be presented in the report without consolidation. The balances of all concepts presented in Series R01 Minimum Catalog must be consistent with those reported in the regulatory reports that are applicable.

Data referring to balances must be presented in national currency, foreign currency, and UDIS valued in pesos, with two decimal places and without commas. For example: $20,585.70 would be 20585.70.

CAPTURE FORMAT

Entities will carry out the submission of information related to report A-0111 Minimum Catalog, described above, by using the following capture format:

REQUESTED INFORMATION

SECTION REPORT IDENTIFIER

PERIOD

ENTITY KEY

REPORT

SECTION FINANCIAL INFORMATION

CONCEPT

CURRENCY

DATA

Entities will report the information indicated in this series, which must comply with the validations and quality standards indicated by the National Banking and Securities Commission (Commission), adjusting to the characteristics and specifications for filling out and submitting information presented in the support guides, which are published and updated in the Interinstitutional Information Transfer System (SITI) or in that which the Commission makes known, as applicable.

Once validations and quality standards are met, the SITI will generate an electronic receipt.

The information must be sent only once and will be received assuming it meets all characteristics and specifications, for which it cannot be modified and must present consistency with the various reports in which the same information is included with a different level of integration; therefore, if it does not meet the required quality and characteristics or has been presented incompletely, the obligation of its presentation will be considered unfulfilled, and consequently, the corresponding sanctions will be imposed in accordance with the applicable legal provisions.

Popular Financial Societies

Series R01 Minimum Catalog

Report A-0111 Minimum Catalog

Includes figures in national currency, foreign currency, and UDIS valued in pesos

Figures in pesos

Concept

Applicable

only to:

National currency and UDIS valued

Foreign currency valued

ASSET

Cash and cash equivalents

Cash

Banks

Deposits in other financial entities

Currencies to deliver

Immediate collection documents

High liquidity financial instruments

Restricted or pledged cash and cash equivalents

Currencies to receive

Cash administered in trust

Others

Investments in financial instruments

Negotiable financial instruments

Negotiable financial instruments without restriction

Government debt

Bank debt

Other debt securities

Equity financial instruments

Restricted or pledged negotiable financial instruments

Government debt

Bank debt

Other debt securities

Equity financial instruments

Financial instruments to collect and sell

Financial instruments to collect and sell without restriction

Government debt

Bank debt

Other debt securities

Restricted or pledged financial instruments to collect and sell

Government debt

Bank debt

Other debt securities

Financial instruments to collect principal and interest (securities)

Financial instruments to collect principal and interest without restriction

Government debt

Bank debt

Other debt securities

Restricted or pledged financial instruments to collect principal and interest

Government debt

Bank debt

Other debt securities

Expected credit loss estimate for investments in financial instruments to collect principal and interest (securities)

Financial instruments to collect principal and interest without restriction

Government debt

Bank debt

Other debt securities

Restricted or pledged financial instruments to collect principal and interest

Government debt

Bank debt

Other debt securities

Debtors by repurchase agreement

Credit portfolio with stage 1 credit risk

Commercial credits

Commercial credits without restriction

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Restricted commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Consumer credits without restriction

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Restricted consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Housing credits without restriction

Medium and residential

Social interest

Restricted housing credits

Medium and residential

Social interest

Credit portfolio with stage 2 credit risk

Commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Medium and residential

Social interest

Credit portfolio with stage 3 credit risk

Commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Medium and residential

Social interest

Credit portfolio valued at fair value

Commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Medium and residential

Social interest

Preventive estimate for credit risks

Preventive estimate for credit risks derived from rating

Credit portfolio with stage 1 credit risk

Commercial credits

Commercial credits without restriction

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Restricted commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Consumer credits without restriction

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Restricted consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Housing credits without restriction

Medium and residential

Social interest

Restricted housing credits

Medium and residential

Social interest

Credit portfolio with stage 2 credit risk

Commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Medium and residential

Social interest

Credit portfolio with stage 3 credit risk

Commercial credits

Business or commercial activity

Unsecured operations

Pledge operations

Bridge credits

Financial factoring, discounting, or assignment of credit rights operations

Financial leasing operations

Microcredits

Financial entities

Others

Liquidity loans to other popular or community financial societies

Federative entities and municipalities

Consumer credits

Credit card

Personal

Payroll

Automotive

Acquisition of movable goods

Financial leasing operations

Other consumer credits

Housing credits

Medium and residential

Social interest

Contingent operations and guarantees

Additional preventive estimate for credit risks

For operational risks (Credit Information Societies)

For accrued interest on credits with stage 3 credit risk

Ordered by the National Banking and Securities Commission

Ordered by the federation

Recognized by the National Banking and Securities Commission

Acquired collection rights

Preventive estimate for credit risks derived from acquired collection rights

Benefits to receive in securitization operations

Benefits on the remainder in securitization operations

Asset for administration of transferred financial assets

Other receivables

Debtors by settlement of operations

Foreign exchange sales

Investments in financial instruments

Repurchase agreements

By issuance of securities

Debtors by pledged collateral in cash

Operations with financial instruments

Credit operations

Others

Collection rights

Various debtors

Premiums, commissions, and rights to receive on active non-credit operations

Items associated with credit operations

Loans and other debts of personnel

Rents to receive

Overdue debts

Other debtors

Taxes to recover

Dividends to receive from equity financial instruments

Conditional receivables

Other receivables

Expected credit loss estimate

Collection rights

Various debtors

Conditional receivables

Other receivables

Adjudicated assets

Movable goods, financial instruments, and rights adjudicated

Restricted adjudicated movable goods

Adjudicated real estate

Restricted adjudicated real estate

Increase by updating adjudicated assets (1)

Estimate of adjudicated assets

Estimate for loss of value of adjudicated assets

Increase by updating the estimate for loss of value of adjudicated assets (1)

Long-term assets held for sale or for distribution to shareholders

Subsidiaries

Belonging to the financial sector

Not belonging to the financial sector

Associates

Belonging to the financial sector

Not belonging to the financial sector

Joint ventures

Belonging to the financial sector

Not belonging to the financial sector

Other permanent investments

Belonging to the financial sector

Not belonging to the financial sector

Others

Belonging to the financial sector

Not belonging to the financial sector

Assets related to discontinued operations

Prepayments and other assets

Deferred charges

Differential to amortize in credit portfolio acquisitions

Transaction costs associated with granting credit

Effect from renegotiation of credit portfolio

Insurance to amortize

Other deferred charges

Prepayments

Interest paid in advance

Commissions paid in advance

Advances or provisional payments of taxes

Rents paid in advance

Other prepayments

Guarantee deposits

Employee benefits assets

Plan assets to cover employee benefits

Long-term direct benefits

Post-employment benefits

Pensions

Seniority premium

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