Banking
From The Report: Mexico 2017
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For more than two decades Mexico’s banking sector has been characterised by sound regulation, high capital adequacy ratios and strong profitability. Having learned from previous experiences, the Mexican banking sector emerged relatively unscathed from the 2008 global financial crisis. Since then, lending growth and profitability have picked up, despite a relatively sluggish economy, as has the sector’s share of the economy, with assets as percentage of GDP standing at 41.4% at the end of 2016. With interest rates climbing higher, consumer confidence weakening and macroeconomic uncertainty prevailing, credit growth in Mexico is likely to continue to moderate through 2017, with market observers viewing mortgage lending as being particularly sensitive to the interest rate cycle. Over the longer term, the authorities’ efforts to boost financial inclusion across the country will be crucial to the development of the sector, as well as to socio-economic advances more generally. This chapter features an interview with Agustín Carstens, Governor, Banco de México.

Articles from this Chapter

Overview

Ahead of the pack: Double-digit growth and a commitment to international regulations have put the sector on a steady footing
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For more than two decades, Mexico’s banking sector has been characterised by sound regulation, high capital adequacy ratios and strong profitability. Nonetheless, it is still small for an economy of its size and stage of development, as lending policy remains relatively conservative after a series of financial crises in the latter decades of the 20th century. After the so-called Tequila crisis of 1994-95, the banking sector was reformed and liberalised, while regulation was greatly strengthened.…

Viewpoint

Forward planning: Agustín Carstens, Governor, Banco de México, on building a resilient and robust economy in the face of macroeconomic headwinds
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Viewpoint:Agustín Carstens It is estimated that during 2017 inflation will hover around the upper limit of the variable interval established by the Banco de México – this limit is 4% annually. It is, however, expected that during the last months of 2017 the rate will converge downwards towards this target and will lie around 3% at the end of 2018. Therefore, inflation for 2017 is expected to be temporarily affected both by the relative prices of goods in relation to services, due to…

Analysis

Building inclusion: Incentivising formal banking activity remains a major priority
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Since the economic, financial and banking crisis of 1994-95, many Mexicans have lacked full confidence in the integrity of the banking system. It shrunk greatly during and immediately after the crisis. In the intervening years, banking regulations have been greatly tightened, foreign entrants to the sector have come to dominate, and credit as a share of the national economy finally appears to have regained its historic peak reached in 1971. One reason for the banking sector’s arrested development…