Mexico's Bank Loans Flat In October At MXN1.889 Trillion - Regulator
26 November 2009 - 9:41PM
Dow Jones News
Mexico's banks reported 1.889 trillion pesos ($145.28 billion)
in loans on their books at the end of October, nearly unchanged
from the year-ago period as a recession crimped lending.
Commercial loans grew 3.4% to MXN896.95 billion, while mortgage
lending rose 8.5% to MXN307.84 billion, and loans to government
bodies surged 32.4% to MXN222.25 billion, according to data
published Wednesday by banking and securities regulator CNBV.
Consumer loan balances, however, fell 18.3% to MXN397.16
billion, with credit card loans tumbling 24% to MXN235.65
billion.
In a positive sign, lending expanded 0.8% compared to the
previous month, led by growth in personal, commercial, government
and mortgage loans.
Mexico's worst recession since the 1995 peso crisis has reduced
the both the supply and demand for credit amid high
unemployment.
Economists expect the economy to contract about 7% in 2009,
largely due to a recession in the U.S. earlier this year that
reduced demand for Mexico's exports. The unemployment rate was 5.9%
last month, down from 6.4% in September, but higher than the 4.1%
reported in October 2008.
The economic downturn has also made it harder for struggling
businesses and consumers to repay their debts.
The percentage of nonperforming loans to total loans fell to
3.38% in October from 3.43% the previous month, but was higher than
the 3.21% at the end of last year, the CNBV said.
The nonperforming ratio for commercial loans to businesses and
corporations rose to 2.09% in October from 1.39% at the end of
2008, while nonperforming mortgages climbed to 4.65% from
3.51%.
In credit-card loan portfolios, where banks have suffered the
highest levels of defaults after several years of easy lending, the
percentage of nonperformers continued to decline, falling to 9.63%
from a peak of 12.6% in May, and slightly above the 9.37% observed
in December 2008.
Mexico's banking industry is largely in the hands of foreign
institutions following a wave of acquisitions in the 1990s and the
first part of this decade.
Together, Banco Bilbao Vizcaya Argentaria SA (BBV) and Banco
Santander SA (STD) of Spain, Citigroup Inc. (C) of the U.S., HSBC
Holdings PLC (HBC), and Bank of Nova Scotia (BNS) control 68% of
total loans and nearly 70% of retail deposits in the banking
system.
The local subsidiaries of Santander and HSBC have posted the
biggest declines in loan balances of the seven largest banks during
the recession.
HSBC Mexico, which has steadily lost market share, reported a
13.2% drop in total loans to MXN157.12 billion at the end of
October, while demand and time deposits fell 9.6% to MXN221.91
billion, according to the CNBV.
The bank has been especially hard hit by bad loans this year,
especially in credit card lending where it tried to take market
share from bigger rivals. Its nonperforming ratio was well above
that of the sector at 5.55%.
Santander's loan balances tumbled 17.5% to MXN207.56 billion,
while demand and time deposits fell 13.8% to MXN247.11 billion.
Earlier this year, Bank of Mexico Gov. Guillermo Ortiz
criticized foreign-owned banks for cutting back on lending due to
the financial problems of their parent companies.
-By Ken Parks, Dow Jones Newswires, 52-55-5980-5177,
ken.parks@dowjones.com
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