Deposits latest publications
The withdrawal of Accendo banking license does not represent a risk for the stabilility of the banking system. This was confirmed by the Financial System Stability Board as it stressed that the fundamentals of the system remain sound. However, concerns about the weakness of the credit granted to the private sector prevail.
September 27, 2021
Mexico | Deposits strengthened in July as formal employment and COVID cases increased
The growth of bank deposits accelerated in July due to higher demand deposits from both individuals and companies. This dynamic could be associated with a relevant growth in formal employment together with a non-generalized slowdown in consumption after the rebound in COVID infections.
Households did not consolidate their spending pattern and increased their liquid balances again in June, while bank credit reduced the magnitude of its contraction, falling 6.1%.
As some signs of an economic slowdown lurked in June, households were unable to consolidate their spending pattern and, once again, contributed to an increase of total bank deposits. Corporates unexpectedly supported this increase possibly influenced by the outlook of higher interest rates.
May could represent a turning point in the dynamics of total credit to the non-financial private sector, with an aggregate contraction smaller than the one experienced in April and a better performance by portfolios, while bank deposits also showed signs of a change in trend in its dynamics.
Slightly more than half of the upturn in bank deposits between February 2020 and April 2021 can be explained by the increase in demand deposits from individuals. How much longer will this trend last? The answer will be known in the coming months. However, May data give us a hint.
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.
At present the significant growth in demand deposits has more than offset the slump of term deposits. Given that the rise in demand deposits can be related to temporary factors, the underlying question is: To what extent and how fast will households and companies reduce their accumulated liquid balances as COVID cases drop?