Mexico | The Financial System Is Well Positioned to Face an Uncertain Environment

Summary

According to the Financial Stability Report (Banxico) and the Analysis on the Stability of the Mexican Financial System (IMF), the most relevant risk to the Mexcian financial system is that of additional and sustained tightening of financial conditions in a context of high inflation and lower prospects for economic growth.

Key points

• Key points:
• Among the different financial intermediaries, multiple banking stands out for the reactivation of credit granting, with manageable levels of delinquency and maintaining high levels of capitalization and liquidity.
• Although economic activity in Mexico continues with its recovery process, financing has not yet reached its pre-pandemic levels.
• Both the corporate and household sectors maintain bounded levels of indebtedness. The interest expense of the former, and the credit level of the latter, compare favorably with their peers in emerging markets.
• The stress tests confirm the resilience of the Mexican financial system in the face of potential credit, liquidity and climate change shocks.

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