High interest rates prevent companies from requesting new loans: BdeM

Mexico City. The high interest rates prevailing in the bank credit market and the economic situation in general are the main limitations for companies in the country not to request new financing from these credit institutions, according to an analysis by the Bank of Mexico (BdeM).

According to the Evolution of Financing for Companies during the Second Quarter, six out of 10 companies in the country used loans offered by their suppliers, 27.7 percent used credit from commercial banks, 12.1 percent used financing from other companies in the corporate group or from the head office, 2.1 percent leveraged themselves through foreign banks, 1.3 percent through foreign banks, and 0.2 percent through the issuance of debt in financial markets.

According to the central bank, during the quarter, the percentage of companies that used new bank loans was 12.5 percent, down from 16.7 percent reported in the previous quarter.

Of the remaining firms that did not use new credits, 83.5 percent revealed that they did not request them, 3.3 percent said that they did request a loan and are in the process of obtaining authorization, 0.5 percent indicated that they requested one and were not authorized, and 0.2 percent specified that although they requested financing, they rejected it because they considered it to be “too expensive.”

The BdeM pointed out that the limitations indicated by companies for acquiring new credit are, in order of importance, the interest rates of the credit market, the general economic situation, the amounts required as collateral, as well as the sales and profitability of the company.

They also highlighted the conditions for accessing bank credit, the willingness of banks to grant a loan, the capitalization of the company, access to public support, the credit history of the company and the difficulties in servicing the bank debt they already have.

According to data from the central bank, at the end of the first half of the year, the outstanding credit portfolio that commercial banks grant to banks reached 3 trillion 316 thousand 794 million pesos, which implied an annual increase of 12.3 percent in nominal terms. This portfolio represents 52 percent of the total outstanding portfolio of the banks.