Banking closes 2021 with good indicators

After the strongest impact of the Covid-19 pandemic, the banking that operates in Mexico closes 2021 with good indicators.

Although at the beginning of the year the sector registered a slight increase in the Delinquency Index (IMOR) as a consequence of the delays and defaults caused by the economic crisis derived from the pandemic, this could be controlled and today it is already at a low level.

Meanwhile, other indicators such as the Capitalization Index (ICAP) and the Liquidity Coverage Ratio (CCL), are well above the regulatory requirements.

According to information from the National Banking and Securities Commission (CNBV), in January 2021, the IMOR of banking in general rose to 2.70%, being the highest level that has been registered in the year, and from there began a gradual reduction. The most recent report from the regulatory body points out that in October, this indicator had dropped to 2.2 percent.

It should be remembered that during 2020, the banks made additional reserves to face possible defaults of customers who were affected by the crisis. During 2021, it was no longer necessary to increase the precautionary estimates for credit risks.

Well capitalized and liquid

Regarding the ICAP, which is the net capital over weighted assets subject to risk, it was 19% as of October, when the minimum required is 10.5 percent.

Although there are some banks that were close to the regulatory minimum during the year, they have managed to recover. This is the case of ABC Capital, which at some point was in this situation, but as of October its ICAP was already 13.96%, according to information from the banking commission.

Accendo Banco also had problems with this indicator and, due to bad practices applied, its banking license was revoked at the end of September.

But in general, the banking ICAP is at good levels, even above what the banking systems of other countries such as Spain, Brazil and the United States present, to name just a few.

“This puts us in a highly strong position and we compare ourselves with countries also with high regulations”, mentioned a few weeks ago Daniel Becker, president of the ABM. And as regards the CCL, at the end of the third quarter of 2021, it was an average of 231.9%, according to information from the CNBV itself.

Sufficient liquidity

These indicators mean that the bank, as the president of the ABM himself has commented, has sufficient liquidity to grant credit to the different productive branches and collaborate with it in the economic recovery of the country.

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