Alejandro Tapia Caldera, director of Financial Institutions at Fitch Ratings, said that banks continue to perform favorably, because they continue to see that they have growth opportunities in both the commercial portfolio and the consumer portfolio, mainly in the last.
“This dynamism that is occurring continues to be accompanied by an environment of high interest rates, which for Mexican banks is very beneficial because it strengthens the interest margin and therefore profitability,” he commented in an interview with Expansion.
Another favorable point is that despite high inflation, the level of delinquencies in financial institutions is stable.
“Mexican banks have the characteristic of being very focused on medium to large companies, corporate and some public sector, and in the consumer credit part we continue to observe banks very focused on medium to high income individuals, precisely this derives from a relatively controlled default.
Regarding capitalization, it has been strengthened by the generation of profits and liquidity continues to be good, since there continues to be a positive dynamic in attracting deposits.
“We have a perspective for the banking industry that we call neutral, in other words, stable. We do not expect a material deterioration in financial metrics, but neither does a substantial improvement. Why? Because 2023 for Mexican banks was a exceptional year in almost all financial metrics, especially profitability.
“And what we expect going forward is a slight drop in the profitability metrics, some deterioration, because there are some factors that will be weighed, one is the management of monetary policy, Banxico has already started with a reduction in the interest rate” , he commented.
Tapia Caldera assured that so far, of the institutions they evaluate, they are not detecting any red flags, only attention is being paid to factors that could negatively impact the financial system such as uncontrolled inflation, because this can affect the ability to pay. of those of the borrowers and therefore, impact the quality of the banks' assets and lead to higher credit costs that affect their profitability.
The other factor that can destabilize banks is a greater than expected economic slowdown.
Finally, regarding the expected benefit that banks would have with the relocation of companies from Asia to Mexico (nearshoring), he said that the investments are seen to materialize in the medium term.
“This maturation can lead to some business for Mexican banks, but our expectation, at least for 2024, is that we do not consider a very relevant impact due to nearshoring, we see it until 2025 onwards.”
