Sound leverage and low penetration levels still make Mexico's banking sector one of the most attractive from a long-term growth perspective. However, over the short-to-medium term a preference for corporate rather than consumer lending and a weak macroeconomi c environment look set to cap interest income and growth potential, in line with our moderate real GDP growth rates for 2010 and 2011. Growth of commercial banks' loan portfolios has moved back into the black since our last update, growing by 1.5% y-o-y in May 2010, but this has not been enough to drive sector-wide profitability, and is a far cry from the double-digit loan growth levels that many incumbents predict for the end of the year. With a loans-to-GDP ratio of just 14.0%, well below Brazil's 65.8% and Chile's 76.2%, there remains massive potential for growth in Mexico's banking sector. With low leverage ratios, loans make up just 76% of total deposits, there is a solid base from which to grow. However, this growth is likely to be limited to the corporate sector rather than the more profitable consumer segment, at least over the next 18 months, capping growth potential and interest income across the industry, in our view. Diverging Trends Commercial Banking Sector Loan Portfolio, MXNmn Source: Comision Nacional Bancaria y de Valores (CNBV), BMIOne trend consistent with our core outlook for the Mexican economy over the coming quarters is weak credit growth, as private consumption remains tepid in H210 and 2011. In aggregate terms the collapse of consumer credit appears to be levelling off, though data from individual banks' balance sheets highlight what we view as a strategic shift by many away from higher yielding consumer credit towards commercial lending. Shifting Preferences Banco Walmart Loan Portfolio, MXNmn Source: CNBV, BMI This trend is particularly evident among many smalle r players, some of which started out almost entirely focused on the consumer segment. Banco Walmart is a prime example, with a rapid surge in commercial credit in recent months to the extent that commercial loans now make up over 60% of the company's loan book, compared to zero just seven months earlier. While the divergence is not as extreme among the larger players, the recent growth in commercial credit at these banks as well supports our view that the Mexican consumer will not play a key role in banking sector growth or headline economic activity over the coming quarters.
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Report Table of Contents:
Executive Summary
- Table: Levels (MXNbn)
- Table: Levels (US$bn)
- Table: Levels At May 2010
- Table: Annual Growth Rate Projections 2010-2014 (%)
- Table: Ranking Out Of 59 Countries Reviewed In 2010
- Table: Projected Levels (MXNbn)
- Table: Projected Levels (US$bn)
SWOT Analysis
- Mexico Commercial Banking SWOT
- Mexico Political SWOT
- Mexico Economic SWOT
- Mexico Business Environment SWOT
Business Environment Outlook
- Commercial Banking Business Environment Ratings
- Table: Mexico Commercial Banking Business Environment Rating
- Commercial Banking Business Environment Rating Methodology
- Table: Latin America Commercial Banking Business Environment Ratings
Global Commercial Banking Outlook
Latin America Banking Sector Outlook
- Table: Latin American Banks' Bond Portfolios
- Table: Latin America Commercial Banking Business Environment Ratings
- Table: Comparison of Loan/Deposit, Loan/Asset & Loan/GDP Ratios
- Table: Anticipated Developments In 2010
- Table: Comparison Of Total Assets, Client Loans & Client Deposits, 2008-2009 (US$bn)
- Table: Comparison Of Per Capita Deposits, 2010 (US$)
- Table: Interbank Rates & Bond Yields, 2009-2010
Mexico Banking Sector Outlook
Economic Outlook
- Table: Mexico - Economic Activity, 2007-2014
Competitive Landscape
- Market Structure
- Protagonists
- Table: Protagonists In Mexico's Commercial Banking Sector
- Definition Of The Commercial Banking Universe
- List of Banks
- Table: Universal Banks In Descending Order Of Size Of Assets
- Table: Representatives Of Foreign Banks
Company Profiles
- BBVA Bancomer
- Table: Stock Market Indicators
- Table: Balance Sheet (MXNmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Banamex
- Table: Key Statistics For Banamex, 2007-2008 (MXNmn)
- HSBC Mexico
- Table: Key Statistics For HSBC Mexico , 2007-2008 (MXNmn)
- Banco Santander
- Banorte
- Table: Stock Market Indicators
- Table: Balance Sheet (MXNmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Inbursa
- Table: Stock Market Indicators
- Table: Balance Sheet (MXNmn, unless stated)
- Table: Balance Sheet (US$mn, unless stated)
- Table: Key Ratios (%)
- Scotiabank
- Table: Key Statistics For Scotiabank, 2007-2008 (MXNmn)
- ING
- Table: Key Statistics For ING, 2007-2008 (MXNmn)
BMI Banking Sector Methodology
- Commercial Bank Business Environment Rating
- Table: Commercial Banking Business Environment Indicators And Rationale
- Table: Weighting Of Indicators
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