Savings in Sofipos equal credit portfolio in June: Moody’s

Mexico CityIn June of this year, and for the first time since their creation, the savings balance in Popular Financial Companies (Sofipos) is greater than that of the credit portfolio, a positive fact that provides the sector with the necessary resources to grow its business, announced the Moody’s rating agency.

According to figures from the National Banking and Securities Commission (CNBV), the agency indicated that until the end of the first half of the year, the amount invested by savers in immediately demandable deposits (those that can be withdrawn at any time by clients) was higher in an entire quarter than the amount that the same Sofipos have placed in credit to their clients.

“Initially, this is positive for that system, since it provides it with the necessary resources to grow its business. However, in the medium term, the sustainability of the strategy followed by some participants in this market in making generous offers to their savers would have to be analyzed,” said Moody’s.

He attributed this fact to the “successful strategy” that Sofipos, especially the digital ones (such as Nu or Stori) have offered their clients since last year, which consists of granting returns above inflation in their savings accounts, while also having insurance that covers up to 205 thousand pesos. In fact, he said, the number of clients of these non-banking intermediaries grew 67 percent between June 2023 and the same month this year.

“Additionally, the ability of these entities to place credit in a way that can sustain the pace at which their collection franchises grow, while maintaining placement standards, will be a significant credit challenge,” the rating agency noted.

The above, he emphasized, is especially due to the fact that a good part of them is dedicated to placing unsecured consumer credit to segments of the population that are not banked, but “it is too early to know the true quality of the credit portfolio of these entities, since the growth of the portfolio itself tends to dilute the default rates of the financing portfolios.”

“Maintaining prudence to mitigate risk on assets is a very significant challenge, especially for players that have grown their deposit franchise the most,” Moody’s added.