Pension Draft Halted, Climate Change’s Financial Impact

This week, the Chamber of Deputies halted discussions on the creation of the Welfare Pension Fund due to discrepancies in the draft. Meanwhile, Grupo Financiero Banorte celebrated a profit surge but its digital venture, Bineo, faces losses. 

Mexico's banking sector maintains a positive outlook, poised for growth and stability. On the other hand, the International Monetary Fund (IMF) forecasts hint at a nuanced economic future, projecting a rise in public debt despite a drop in fiscal deficit.

Ready to dive in? Your weekly dose of Infrastructure is here!

Chamber of Deputies Halts Welfare Pension Fund Draft Over Discrepancy

On Wednesday, the Chamber of Deputies halted discussions over the creation of the Welfare Pension Fund because the draft differed from the approved version. The draft will be reviewed and voted on by the Social Security Commission, with a new session scheduled for Monday. Opposition deputies noted changes, particularly the omission of a clause specifying that only unclaimed retirement savings from inactive accounts would be transferred to the fund. 

Banorte's 1Q24 Report Delineates Profit Surges, Bineo's Losses, Future Plans

In 1Q24, Grupo Financiero Banorte saw a 9.1% YoY profit increase to US$835.9 million, while its new digital bank Bineo reported MX$188 million (US$11 million) in losses. Marcos Ramírez, CEO, Bineo, expects the company to turn profitable within three years. Launched in January with a US$150 million investment, Bineo offers savings accounts and personal loans without fees. Future plans include entering the remittance market, offering returns on savings, and introducing new products monthly until 2024, including mortgages.

IMF Forecasts: Rising Public Debt Despite Fiscal Deficit Drop

The IMF projects that Mexico’s public sector debt will continue to rise, surpassing 50% of GDP in the coming years, despite a decrease in the fiscal deficit. According to IMF forecasts, net debt will increase from 47.9% of GDP in 2023 to 50.3% in 2024, reaching 50.8% by 2029. Meanwhile, the fiscal imbalance will reach 5.9% of GDP this year, decreasing to 3.0% in 2025 and remaining at 2.7% in the following years. The rise in the deficit is primarily attributed to extraordinary spending to complete the current government’s emblematic infrastructure projects.

Climate Change to Generate a 19% Loss in Income, a US$38 Trillion Impact Globally

Climate change will reduce global income by 19% over the next 25 years, with the poorest and least responsible areas for global warming suffering the greatest economic blow, according to a new study published in the journal Nature. The economic toll of climate change on people's income has been estimated at about US$38 trillion per year by 2049.

Positive Outlook for Mexican Banking in 2024

The Mexican banking sector is expected to maintain good performance this year, with no indicators suggesting otherwise, says Fitch Ratings. The agency forecasts a 10% growth in banks' loan portfolios in Mexico in 2024, similar to 2023. Alejandro Tapia, Director of Financial Institutions, Fitch Ratings, highlights the favorable performance of banks, especially in commercial and consumer loan portfolios. 

Revolut Targets Over US$100 Million Investment in Mexico 2024

London-based fintech Revolut is expected to surpass US$100 million in investment for Mexico in 2024, according to Juan Guerra, CEO, Revolut. With over 40 million customers in over 150 countries, Revolut recently obtained authorization to operate as a multiple banking institution in Mexico, focusing on the remittance market. 

AI’s Looming Impact on Finance Entry-Level Positions

Financial institutions are increasingly turning to AI to streamline operations and mitigate risks, but this adoption also raises concerns for early-career professionals. AI's automation capabilities promise efficiency gains in tasks like information processing, reducing manual effort and enhancing outcomes. However, reports suggest that entry-level professionals may face displacement as AI takes on these roles.