“Significant holdings of Mexican government debt, including Petróleos Mexicanos (Pemex) and the Comision Federal de Electricidad (CFE), continue to represent downside risks for Mexican banks, reflecting increased volatility that could reduce net income due to commercial and market value losses,” Fitch highlighted in a report.
BBVA and Banorte have the largest amount in loans to government entities, according to figures from the National Banking and Securities Commission (CNBV).
BBVA had 190,864 million pesos lent to government entities until last March, while Banorte had loans of 139,891 million.
Fitch warned that deposits from government entities (Pemex and CFE included) may be more unstable in times of market stress.
“In addition, credit costs are normalizing to pre-pandemic levels, and pressure on interest margins from interest rate cuts continues to weigh on returns,” he added.
Add Comment