Mexico | Monthly Report on Banking and the Financial System. July 2021

Summary

Banco de México reiterated the resilience of the financial system in the face of the adverse shock of the pandemic, as credits granted remain weak (-8.8% YoY in April) and levels of bank deposits remain close to historical highs.

Key points

• Key points:
• The lack of dividend distribution by the banks, along with a reduction of the loan portfolio, contributed to increasing capitalization from 17.2% in September 2020 to 18.3% in March 2021.
• In the first quarter of 2021, commercial bank credit presented generalized contractions, although their magnitude was heterogeneous among regions and economic activities.
• Risk-on mood in financial markets lingered as FED communication outweighed FOMC “Dots”.

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