Political, economic uncertainty weighs on Mexican banks

Source: Xinhua | 2019-07-25

Mexican banks are facing increasing political and economic uncertainty that could affect credit growth in the year, Fitch Ratings said on Tuesday.
"Uncertainty is seen often in the year after a transition to a new presidential administration," said a report of the credit rating agency.
Mexican President Andres Manuel Lopez Obrador took office on Dec. 1, 2018.
In this special report, the agency estimated that credit growth will stay between 6 and 8 percent for 2019-2020, as compared with 13 to 14 percent in 2015-2016.
"The recent data from Banxico (Bank of Mexico) indicates that family loans have been less resistant and have decelerated more rapidly than commercial loans," Fitch Ratings said.
According to the report, big banks have cut back on their exposure to higher-risk small- and medium-sized companies.
Fitch Ratings foresees a 1-percent expansion in the Mexican gross domestic product (GDP) this year.
In 2018, Mexico's economy grew 2 percent. Banxico's forecast for this year is between 0.8 percent and 1.8 percent.
On Tuesday, the International Monetary Fund also lowered its forecast for the Mexican economic growth for 2019 to 0.9 percent, down from the 1.6 percent prediction in April.