The Moody's agency improved this Thursday to a 'positive' outlook from a 'stable' the rating of the Mexican bank (Baa2) by estimating that the “volume of business will rise with the sustained growth of the 'nearshoring'”, the phenomenon of relocation of value chains.
The rating agency also highlighted in its report “consumer confidence that stimulates domestic demand” in Mexicowhere he predicted that “after a record year, profitability will grow thanks to the expansion of loans and reduction in financing costs.”
Moody's listed strengths of Mexican banking, such as “ample” reserves for credit losses, “robust” capitalization, “prudent” origination standards and access to customer deposits.
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This, he argued, offsets the risks of its expansion into subprime lending, single-debtor concentrations, increased provisioning needs, and investment in digitalization and branches.
The agency highlighted that “business volume will benefit from favorable credit conditions” after the 3.2% increase in Mexico's gross domestic product (GDP) in 2023.
Although he estimated a slowdown, with a predicted GDP growth of 2.2% in 2024 and 2% in 2025, he highlighted that “private consumption remains solid” after an increase of 5.6% year-on-year at the end of 2023.
Our nearshoring investment outlook is favorable, which is likely to support long-term growth in commercial lending. The monetary policy of the central bank will continue to be prudent,” he noted.
Moody's rates six commercial banks in Mexico: BBVA México, Santander México, Banorte, Banco Nacional de México (Banamex), Banco del Bajío, and Banco Azteca, which represent 67% of the gross portfolio and deposits in commercial banks.
In addition, it evaluates Nacional Financiera (Nafin) and the National Foreign Trade Bank, which concentrate 39% of the gross portfolio in development banks.
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