The credit appetite of governments and companies is stagnant while consumption remains resilient. Governments, in an attempt to meet the fiscal deficit goal, restricted their credit requests and companies are reluctant to request credits until there is more clarity about what will happen with Mexico’s main trading partner: the United States and the renegotiation of the T-MEC.
“There was a combination of an environment with lower interest rates, given that Banco de México has been reducing its reference level and on the other hand we are seeing a slowdown in the growth rates in total credit portfolios,” Alik García, deputy director of Stock Market Analysis at Valmex Casa de Bolsa, said in an interview.
In addition, banks had to make greater preventive estimates due to increases in delinquencies, affecting profits.
One of the indicators that allow us to understand banking behavior is the net interest margin (MIN), which is the difference between interest income and expenses of financial institutions.
Among the group of the seven largest banks, only Banamex, HSBC and Scotiabank achieved growth while BBVA, Banorte, Santander and Inbursa saw a reduction.
The specialist added that during the third quarter of the year, banks had to increase preventive estimates for credit risks due to the increase in people who are not paying their loans on time.
“(The banks) also had to face a growth in administration and promotion expenses; then, we have a combination of a drop in income and growth in expenses,” he said.
Banks place less credit because of tariffs
In the credit portfolio, banks have mixed behavior: on the one hand, there is less dynamism in the placement of credit to companies and institutions such as HSBC were among the most affected, since their credit portfolio fell 4.72% in the third quarter.
Scotiabank barely grew its portfolio 0.37%; Banorte and Santander grew their placement by 6.9% and 6%, respectively.
Inbursa, driven by its automotive loan portfolio, had an increase in its portfolio of 7.45% while BBVA grew 9.5%.
Credit portfolios grew by double digits last year.
“This slowdown is mainly due to an environment of uncertainty due to tariffs, which has caused greater risk aversion among companies, especially those with more exposure to the external sector,” García highlighted.
For the expert, the impact of tariffs has slowed down the origination of new loans in the global corporate sectors and multinationals, but once there is certainty about the USMCA and commercial conditions, credit will be reactivated.
“Let’s see how this process goes, that can give greater confidence to the business sector,” he said.
Consumption supports banks’ results
Although the growth of the economy has deteriorated, especially in the third quarter, consumer credit, which is credit cards, auto loans, personal and payroll loans, have maintained a better performance in the growth rate.
This is because these loans have much higher interest rates than commercial loans. “Although the growth in the granting of credit decreases or moderates, the rates that this sector in particular is paying, we see growth.”
García considers that towards the fourth quarter of the year, credit may perform better.
“Consumer credit may maintain that double-digit growth,” he noted. “We have had this growth for several consecutive months now and the resilience of that sector will most likely persist.”
And some banks, such as Scotiabank, are beginning to focus their efforts on consumer loans to have better profitability as economic activity recovers.
