Fitch Sees Bright Outlook for Mexican Banks

Mexican bank ratings will not see downward pressure in the months ahead, barring a dramatic worsening of the global liquidity crisis, says Fitch. “Overall, Fitch expects that the major Mexican banks will continue recording sound earnings, as the domestic operating environment will likely remain benign,” says Fitch director Alejandro Garcia. He cites strengths like the low level of private sector loans to GDP, stable interest rates and strong internal demand. The ROA for the six largest banks continued strong, at 2.6% for the year to September. Fitch also believes that both retail and total loans will likely continue to post double-digit growth. However, a slowdown in loan growth in the sector cannot be ruled out, as tougher conditions to access long-term funding and/or capital in the global markets, coupled with the upward trend in delinquent retail loans, could eventually result in stricter credit policies toward the banks.