Mexico Banking Outlook. Second half 2021

Summary

The banking system maintains solid capital and liquidity levels that allowed it to weather the effects of the pandemic and will help sustain a more vigorous financing recovery. The nominal growth of financing to the Non-Financial Private Sector recovered 7.2 percentage points between April and September.

Key points

• Key points:
• Business credit shows a slow recovery, while consumer credit has begun to reactivate. The housing portfolio remains the most dynamic, although it has reduced its rate of expansion.
• Despite the economic contraction, there was no significant deterioration in portfolio quality. The provisions generated were sufficient to maintain manageable delinquency rates.
• Firms have changed the composition of their credit demand since the beginning of the pandemic. Working capital experienced the greatest contraction, while the payment of liabilities exhibited great dynamism.
• The proportion of low-cost financing from banks has consolidated. However, the growth of traditional deposits has slowed down.
• Access to domestic savings by the public sector continued to grow in an environment of less appetite for domestic assets on the part of foreign investors.

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