Although the mexican banking system remains solid, if some risks materialize, such as a further weakening of domestic demand and that the dynamism of exports is affected, the delinquency of some credit segments could increase, considered the Financial System Stability Council (CESF).
After its session on Tuesday, the council -made up of different financial authorities- stressed that the mexican banking system It continues to show resilience and a generally solid position with capital and liquidity levels well in excess of regulatory minimums.
“However, it should be noted that, if some of the indicated risks materialize, the delinquency of some segments of the bank’s credit portfolio could increase,” he said.
In his report, he explained that internally, national economic activity has continued its gradual recovery process.
However, he pointed out that going forward, the risk of a further weakening of domestic demand persists, both due to consumption and investment, while the dynamism of exports could be affected by the environment of weakness in global economic activity. .
In its most recent Financial Stability Report, the Bank of Mexico (Banxico) points out that in recent months there have already been slight increases in delinquency in some consumer credit segments such as personal and payroll.
While the Association of Banks of Mexico (ABM) has emphasized that the quality of the portfolio is good, with a general Delinquency Index (IMOR) of 2.1% as of last October. According to the agency, in companies it was 1.9%, in consumption 3.0% and in housing 2.8%.
NBFIs face difficulties
As for the Non-banking Financial Intermediaries (IFNB), the CESF He pointed out that some institutions have faced difficulties associated with the increase in cost and less availability of their funding sources.
In this sense, although he does not rule out that these difficulties could extend to other intermediaries, he clarified that this sector has a small participation and is relatively little interconnected with the financial system as a whole, so that said situation does not represent a risk of potential scope systemic.
Higher inflation, the main risk
The CESF reported that they also became aware of the results of the Systemic Risk Perception Survey.
In this regard, he explained, the results indicate that the risk of higher inflation than expected is the most mentioned, both among internal and external ones.
Regarding the probability of occurrence of an event that affects the financial system, there is a downward trend compared to the previous semester.
Economic activity recovers, but outlook for 2023 deteriorates
The council stated that the global economic activity It has presented a moderate recovery, although the outlook for 2023 continues to show some deterioration.
He mentioned that global inflation remains high, although in various economies it has decreased due to lower pressures on food and energy prices.
In this context, he emphasized, the monetary policy in various jurisdictions continued to increase their reference rates, although in some cases at a slower pace.
He highlighted that in Mexico, in line with what was observed globally, the national financial markets showed a mixed behavior and episodes of volatility, reflecting the environment of greater uncertainty and risk aversion, while short-term interest rates increased and those of medium and long decreased significantly.
In this environment, he pointed out, global risks to financial stability persist.
“On the one hand, it is possible that inflationary pressures will continue and there will be a worsening of geopolitical tensions. Likewise, financial conditions could tighten more and episodes of volatility appear in global markets, with possible implications for national markets. In addition, the risk persists that the recovery process of the world economy will be delayed by a slowdown greater than anticipated ”, he argued.
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