BBVA Mexico highlights recovery of credit to the private sector after the pandemic

After during the Covid-19 pandemic the bank credit fell for 19 consecutive months, today it continues to recover and since last April it has linked six months of real growth, highlights BBVA Mexico.

The report Banking Situationprepared by the area of ​​economic studies of BBVA Mexicohighlights that last September, the real annual growth of credit was 4.0%.

However, it specifies that the recovery of the current balances of the different portfolios has been slow, and is still below its pre-pandemic levels, with the corporate portfolio being the one that continues to show the greatest lag.

According to the report, the total credit balance was found to be 6.3% down in September, compared to the same month in 2019.

Consumer credit consolidates

BBVA Mexico exposes that the Consumer credit consolidated nine months of real growth, reaching an annual rate of 6.1% in September, with cards and payroll loans being the ones that have contributed the most to the recovery with 1.6 and 1.3 percentage points, respectively, at an average growth rate of 4.1 %.

“The dynamism of employment and real wages have contributed to promoting this type of financing,” he points out.

Card transactions pick up

The bank’s report highlights that the volume of monthly transactions with cards, both debit and credit, has increased both in amount and in number of operations.

“Between January and September 2019 and the same period in 2022, the monthly amount operated through cards increased 28% in real terms, while the number of operations increased 47%. Most of these operations were carried out through debit cards,” he says.

Housing slows down, but continues to grow

Similarly, the report mentions that the home loan -which is the only one that did not show a drop at any time during the pandemic- has slowed down its dynamism, although it continues to grow.

It details that, on average, the real growth of the housing loan portfolio was 3.2%, less than the 3.5% observed between January and September 2021.

Considers that the dynamism of this portfolio could decrease in an environment of higher long-term interest rates, and inflation levels that negatively impact real wages.

In companies, falls are not yet compensated

And in relation to credit for companies, BBVA states that although as of May it achieved positive real growth, as of last September it still had not compensated for the falls in the first months of 2022.

“On average from January to September, real growth was -0.3%. The recovery has been driven mainly by credit in foreign currency, which in August and September reached double-digit rates in real terms. The recovery of credit in national currency has been moderate”, he emphasizes.

It states that a greater dynamism of the corporate portfolio could be limited by the increase in interest rates and the weakness in investment.

Banking maintains solidity

The report highlights that the banking sector continues to register levels of capital and liquidity above the regulatory minimums, with a Capitalization Index (ICAP) of 18.7% last August, and a Liquidity Coverage Ratio (CCL) of 251% as of last June.

Meanwhile, delinquency maintains adequate levels, with an average of 2.7% in the first nine months of 2022, similar to that observed prior to the pandemic, when it was 2.6%.

Moderation in activity would come

BBVA considers, however, that going forward, the prospects for a significant reduction in economic growth are consistent with expectations of moderation in credit activity, particularly given the uncertainty about the degree of persistence of inflation.

kg