ABM: Banks Have Restructured MX$11 Billion Worth of Loans

Mexico’s banks have restructured over MX$11 billion (US$552.4 million) in loans for 782,101 clients, following the end of the deferral scheme that was agreed upon during the early stages of the pandemic.

During a videoconference with El Economista, Luis Niño de Rivera, President of the Mexican Bank Association (ABM), said the restructuring option has had limited takers in comparison to the 9 million clients that requested deferrals. Of the loans restructured, 39.8 percent are micro loans, 38 percent are consumer loans and 17.2 percent correspond to credit card loans, El Economista reports. A further 18,111 restructurings, accounting for 2.3 percent of the total, have been on mortgage loans, while 21,253 SME loans were restructured and 8,548 restructures – 0.2 percent of the total – correspond to loans for large companies.

Big business loans accounted for 45.7 percent of the value restructured, some MX$5.3 billion (around US$267 million). Meanwhile, SMEs accounted for almost MX$2.4 billion (around US$121 million) in restructured loans, 21.8 percent of the total value.

Mexico’s economic recession and deferral agreement was part of the reason why banks reported losses in 2020. While Banco Azteca lost MX$4.394 billion (US$210 million), Citibanamex profits fell 50.2 percent and Scotiabank’s profits dropped by 47 percent, MBN reported in October.

But in Mexico, where MSMEs account for the grand majority of employment opportunities, it is vital for these players to access credit and loans.

At least 10,000 MSMEs have closed in Mexico as a consequence of the pandemic that has now claimed over 110,000 lives in the country. MSMEs cannot always meet the stringent requirements from traditional banks to receive financial credits. In September, Fernando Padilla, CEO of MSME-focused financial solution fintech Pretmex, told MBN that the lack of access to credits costs business success. “Only 30 percent of Mexican SMEs have access to financing. Companies cannot grow without it, especially during a crisis like this,” he said.  

Niño de Rivera also noted that non-payment rates remained at 2.1 percent in October but that they would have to be watched. With S&P today reporting an expected increase in unemployment, defaults may well rise. Banks must agree on a strategy with their own clients to avoid rates rising higher, said Adrian Otero, from AMB.