November 13, 2007: 05:52 PM EST

(Updates with more information on branch expansion and store traffic)

MEXICO CITY -(Dow Jones)- Mexico’s largest retailer, Wal-Mart de Mexico ( WALMEX.MX), still expects its recently launched banking unit to start making a profit in 2011 as it invests heavily in technology and branches over the next three years, according to Banco Wal-Mart Chief Executive

“Our business plan is to generate profits starting in the fourth year (of operations),” Bosco said during a conference call with analysts Tuesday.

Walmex, as the Mexican unit of U.S.-based Wal-Mart Stores Inc. (WMT) is known, launched Banco Wal-Mart last week with one branch at its corporate headquarters in Mexico City and three at stores in the city of Toluca with a view to finish the year with 16 branches.

Walmex is the latest Mexican retailer to follow in the footsteps of Grupo Elektra SA (ELEKTRA.MX), which opened Banco Azteca in October 2002 to offer simple savings accounts and loans to its mainly low-income clients.

Banco Azteca, which had 19.19 billion pesos ($1.76 billion) in loans and MXN43.40 billion in deposits at the end of September, has diversified its highly profitable business in recent years to include credit cards and car loans.

Grupo Coppel, Grupo Famsa SAB (GFAMSA.MX) and supermarket chain Chedraui launched banks earlier this year, while Organizacion Soriana SAB (SORIANA.MX) has formed a consumer finance joint-venture with Citigroup Inc.’s (C) Mexican arm, Banamex.

Walmex aims to leverage its national presence and success in retailing, where it had sales of MXN198.24 billion last year, to offer financial services to the 2.5 million people who enter its stores on a daily basis, many of whom have little or no credit history.

Banco Wal-Mart currently offers a savings account with a debit card, as well as consumer loans to buy merchandise in Wal-Mart stores.

The bank plans to expand its product offering to include small business loans, credit cards, and time deposits at a later date, Bosco said.

Walmex, which already pays out remittances sent by Mexicans living abroad, is also looking at ways to channel that money into savings accounts, he added.

Like other banks linked to Mexican retailers, Banco Wal-Mart is open 8 a.m. to 10 p.m. seven days a week.

Most of Mexico’s large universal banks only open for business during weekdays, with HSBC Mexico and Grupo Financiero Santander Mexicano SA (SANMEX.MX) opening some branches for several hours on Saturdays.

Bosco raised the company’s outlook for new branches next year to “maybe 70 or 80″ from previous guidance of 60 branches, with plans to have branches in all of Walmex’s large store formats by year four.

The executive said that Walmex’s restaurants, as well as many of its Superama and Bodega Aurera stores are too small or have too little customer traffic to justify a bank branch.

At the end of October, Walmex had 983 locations, including 130 Supercenters, 296 Bodega Aureras and 338 restaurants.

Walmex’s V shares rose 4% to close at MXN40.01 Tuesday amid a rally in Mexican stocks.