MEXICO CITY, Oct 30 (Reuters) - Mexican financial group

Banorte, owner of one of the country's largest banks and pension

funds, is working to mitigate the impact of a sweeping judicial

reform rolled out earlier this year, executives said on

Wednesday.

WHY IT'S IMPORTANT

Banorte expects the reform to affect day-to-day operations

in the next two to three years, the company said. It is already

opting for certain measures such as prioritizing asset-backed

collateral, third-party guarantees, modifying some financial

covenants and increasing use of special-purpose vehicles,

according to executives.

CONTEXT

Mexican President Andres Manuel Lopez Obrador, who was

succeeded by Claudia Sheinbaum earlier this month, pushed

through the reform in the twilight of his administration. It

requires all judges to be elected by popular vote and has shaken

investor confidence in the country and caused the peso to tank

against the dollar.

KEY QUOTES

"We are trying to protect our rights and also make our

customers feel comfortable in a reasonable manner because of the

effects" of the judicial reform, said Gerardo Salazar, Banorte's

head of risk and credit administration.

"It's going to be a long (path) to walk, to see how we adapt

to that," CEO Marcos Ramirez said.

WHAT'S NEXT

Banorte trimmed its full-year net profit outlook by around

1%, citing forgone interest on cash after paying for its share

buyback program, though executives said strong loan demand in

October could cause a pick up.

The company is considering another share buyback or

extraordinary dividend in 2025, and will decide after the Nov. 5

U.S. presidential election and announcement of the Mexican

government's next budget, CFO Rafael Arana said.

Banorte is also working to trim expense growth to single

digits next year, though it could be a "long shot," executives

acknowledged, after integrating some back-office teams and

hiring 1,200 bankers.

THE REACTION

Shares of Banorte were largely stable in midday trading,

down 0.46%, while Mexico's benchmark index fell 0.37%.