Mexico: Banking credit – Further fall in April on a more difficult base effect

  • Banking credit fell 14.6% y/y in real terms in April, dragged by an adverse base effect in corporate loans
  • NPLs were unchanged at 2.9% of the total portfolio, albeit with a relevant decline in consumer loans
  • We expect credit to improve in coming months, benefiting from a less challenging base effect
  • Today, Banxico published its banking credit report for April 2021 

  • Banking credit declined 14.6% y/y in real terms, lower than our -11.8% forecast and the -12.5% of the previous month. While performance is still impacted by the pandemic and its effects, there is also a negative base effect skewing the figures 

  • Specifically, corporate credit was most deteriorated at -19.8%, with the previously mentioned effect having the most significant impact on this sector. Moreover, mortgages decelerated to +2.5%, while consumer loans improved for a second in month in a row to -12.0% 

  • Non-performing loans (NPLs) were unchanged at 2.9% of the total portfolio. Inside, consumer loans corrected lower, with mortgages unchanged and corporates climbing slightly 

  • We expect credit to improve in coming months. However, overall dynamism will probably lag relative to the recovery of economic activity. The financial system remains healthy, with improvements in NPLs suggesting a more favorable outlook

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