Bank Capitalization Index At Adequate Level

The National Banking and Exchanges Commission (CNBV) announced that institutions are sufficiently capitalized, while experts forecast risks and uncertainty for credit applicants.

“In April 2020, the CNBV announced temporary regulatory facilities regarding capitalization, effective between April 1, 2020, and March 31, 2021, which allowed institutions to use up to 50 percent of the capital conservation supplement,” reads CNBV’s press release. This change aims to incentivize commercial banks to keep granting credit, while avoiding triggering the minimum corrective measures applicable by non-compliance with the conservation buffer.

The measure is part of the strategies to deal with the effects of the COVID-19 pandemic and in Sep. 2020 was extended until Dec. 31, 2021 and was expected to gradually disappear throughout 2022, according to CNBV.

Data from the CNBV puts the interest rate of personal loans at 30.81 percent, its highest figure since June 2020. The interest rates of payroll loans and auto loans are at 25.19 percent and 13.22 percent, respectively, according to El Financiero.

Increases in interest rate loans can have negative effects on consumption, “which naturally affects the momentum of the recovery and therefore, social welfare,” said Alain Jaimes, Economic Analyst, Signum Research. However, other elements hold more weight on the dynamism of consumption in Mexico such as the drop of disposable income, high inflation and the deterioration of the labor market, argued Pamela Díaz, Economist for Mexico, BNP Paribas, to El Financiero.

Mexico’s capitalization index averaged 19.53 among the total multiple banking options in Dec. 2021, as the CNBV recognized that designated institutions complied with the required systemic risk capital supplement to the adherence of the Basel III standards.