Mexican Banks Sound in Downturn, Fitch Says

The Mexican banking system has maintained sound performance, and the outlook remains adequate for the foreseeable future, Fitch says in a report. However, strong loan growth domestically has affected delinquency ratios, and global capital markets conditions put pressure on the cost of credit and funding, as well as liquidity. “While continued asset quality deterioration may be of some concern, banks with the worst-performing retail portfolios are gradually tightening lending acceptance criteria, while risk-adjusted profitability remains sound,” the agency says. Fitch expects adequate performance from the major banks, spurred by continued double-digit loan growth, despite the likelihood that profitability will decline from recent historic highs.