Banco de Bienestar to Grow Its Coverage

The President’s State of the Nation address was an opportunity to spell out the government’s intentions toward 2024. AMLO divulged plans for the expansion of Banco de Bienestar to aid the government’s financial inclusion policies. Meanwhile, Afores remained on the up while consumer credits approvals from commercial banks took a nose dive.

All this and more in The Week in Finance!

AMLO Sets Out Banco de Bienestar Expansion

In his State of the Nation address, President Andrés Manuel López Obrador set out the govenrment’s intention to expand Banco de Bienestar, an institution created by the MORENA government from the National Savings Bank and Financial Services, to promote financial inclusion. 

According to El Economista, AMLO announced the intention to build 2,700 branches by the end of 2021 with particular attention paid to hard-to-reach and under-developed regions of the country. So far, 226 new branches have been constructed.

Some experts have suggested rethinking the construction plan in order to save money that could better be spent elsewhere after the arrival of COVID-19 and the need for the government to tighten its belt still further. The use of technologies is one area where the government should focus its efforts, experts say.

Banco de Bienestar’s intention is to increase financial inclusion in Mexico, a country where as little as 38 percent of the population is connected to a financial institution, according to 2018 World Bank data. Over 600,000 accounts were opened with the bank between January and July this year.

Afores Just Keep Growing

Mexico’s pension administrators have hit their stride during the COVID-19 pandemic and, in August, have marked their fifth consecutive month of equity growth, El Financiero reports.

According to data from the National Commission of the Retirement Savings System, Afores total MX$4.46 trillion (around US$20.54 billion). This figure represents around 17 percent of Mexican GDP, yet pension savings remain desperately short of the amount necessary for individuals to retire. For this reason, reforms, like the one presented in conjunction with the Business Coordinating Council, are being discussed.

Approval of Consumer Credit Falls 8.9 Percent in July

Banxico figures have shown that commercial banks registered 8.9 percent credit approval during July 2020 compared to the same month last year, as consumers cut unnecessary expenditure and reduced financial risk ahead of what is likely to be a long and painful recession.

According to El Economista, data indicates that the drop off in credit has accelerated steadily during 1H20 as job losses mounted and a major recession formed. However, the real drop off began in November 2019. During 2019, Mexico registered three quarters of GDP loss and was therefore in a technical recession.

Banxico data shows that personal credits and cards have shown the steepest fall in use. Some MX$174.8 billion (US$8.06 billion) was owed in personal credit in July 2020 compared to MX$204.2 billion (US$9.42 billion) in July 2020, a drop of 17.4 percent.