However, the opportunity for growth lies in taking advantage of the low financial inclusion, the flows of Foreign Direct Investment (FDI) and the dynamism in domestic consumption.
“We expect the portfolio to grow between 6% and 8%, driven by consumer portfolios, specifically credit cards and payroll loans, which in recent times have grown in double digits,” said Alejandro Tapia, senior director of Fitch Ratings.
The specialist explained that loans to companies will be boosted in the face of a possible effect of the nearshoring.
The Mexican economy is estimated to have growth of 2.3% this year from the 3% it achieved in 2022, according to data from the Bank of Mexico.
On delinquency of banking, Fitch anticipates that there will be a deterioration, especially in the consumer credits by high inflation.
The non-performing portfolio (stage 3) is expected to stand at 2.4% at the end of the year from the 2% it maintained in the last two years.
“We believe that asset quality is considered at healthy levels due to the conservative approach of Mexican banks, especially large banks, which have a focus on medium to high-income individuals and corporate companies,” Tapia said.
How does the Banxico rate impact banks?
Interest rate increases have benefited banks despite the increase in credit costs.
Banks, according to Fitch, are going through a “positive economic cycle” due to the rapid recovery of credit placement after the pandemic and very low-cost financing through customer deposits.
“This has resulted in the strengthening of interest margins and profitability metrics that are currently among the best in the last 10 years,” the report highlighted.
Fitch’s expectation is that banks’ profitability will drop slightly, although they will remain at levels above those registered in the pandemic.
“Profitability will continue to benefit from consistent loan growth in an environment of high rates, constant fee income and efficiencies that banks have achieved with their digitization processes,” Tapia added.
Despite the arrival of players such as fintechs, which serve people not served by traditional banks, the impact is expected to be low in the medium term for banks, which continue to invest in digitization processes and have non-refundable assets. tangible as your reputation.