MEXICO CITY, April 23 (EL UNIVERSAL) – Moody’s Investors Service said that the banking business situation has improved in most Latin American markets, where Mexico has benefited from the transfer of companies with increased demand for credit.
“Positive news about labor markets, with the exception of Chile, and the gradual increase in investment, especially in Mexico with nearshoring, has increased local demand for credit volume and banking,” the company said.
In an analysis of the region’s banking sector, the group detailed that there was an increase in credit default rates at Latin American banks in 2023, with consumer loans decreasing.
“Inflationary pressures and high interest rates between 2020 and 2022, during a recovery in consumption, contributed to the increase in household debt. , we expect stability or better portfolio quality in the region over the next 12 to 18 months, although progress in this credit cycle varies from country to country,” he said.
The company explained that the quality of personal loans will improve in the coming months, and its advances will be driven by the stricter criteria for granting loans from banks from mid-2022 and the increase in the household disposable income.
“In Mexico, the accelerated growth of higher-risk consumer loans and exposure to government-related entities could neutralize the benefits of a more favorable operating environment. Small and medium enterprises (SMEs) will be a cause for concern, as that is still likely. to higher levels longer,” he said.
For the company, lower rates will gradually increase corporate capital expenditure and demand for long-term loans. Provisioning requirements over the next 12 to 18 months will decrease amid more favorable risk conditions, while banks will maintain strong credit loss protection coverage to protect against unexpected losses.
2024-04-23 22:28:14
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