September 14, 2021
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For the third consecutive month, the contraction in the annual growth rate of current portfolio balances to the non-financial private sector has been milder, which reaffirms that total bank credit is on the way to a recovery, although its magnitude differs across portfolios.
No surprises came out of last Thursday's ECB meeting, with the expected announcement of a reduction in asset buybacks under its pandemic emergency purchase program (PEPP). The big decisions on monetary policy measures will have to wait until its meets on December 16.
As expected, the ECB announced a moderate slower pace of net asset purchases under the PEPP for next quarter, as compared to that in the previous two quarters. The decision was taken by unanimity by the Governing council on the back of favourable financing conditions and slightly better inflation outlook
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.
Unlike in previous crises, lending has not slowed down during the pandemic—at least not in all segments— with a fall in household loans, but a big increase in corporate lending.
A year and a half after the pandemic began, the COVID-19 has highlighted the importance of households having the financial resilience to tackle the economic consequences of a scenario of high uncertainty.
August 20, 2021
Mexico | Bank lending falls 6.1%, a decline of a lesser magnitude than in previous months
A milder contraction in the annual growth rate of outstanding balances for the second consecutive month provides encouraging signs that the negative impact of the pandemic on banking credit has moved past its worst point and could be on a recovery path.