In recent months, commercial bank credit to the private sector has shown greater dynamism –mainly in the consumer portfolio–, however it has not fully recovered after the impact of the Covid-19 pandemic, especially the intended for companies. Going forward, there are better expectations despite the inflationary issues and the consequent rises in interest rates.
At the beginning of the pandemic, bank credit registered significant portfolio growth, especially because companies took out their financing lines to face the contingency, but as of August 2020, monthly decreases began in real terms.
The company portfolio had its worst fall, according to the Bank of Mexico (Banxico), in April 2021 when it contracted almost 20 percent.
The most recent data reported in Banxico’s Monetary Aggregates and Financial Activity indicates that while the drop in the total portfolio of commercial banks was already 0.6% last March, that of companies was still 3.3%; while in consumption there was already a growth of 2.8%, and in housing an advance of 3.4 percent. The latter did not register any contraction during the pandemic.
Different banks have already highlighted a recovery in the demand and placement of credit in recent months, and towards the following they expect growth to continue. Even in some the forecasts are in double digits.
This trend is ratified by the results of the Survey on general conditions and/or standards in the bank credit market (EnBan) corresponding to the period January-March 2022 prepared by Banxico, where commercial banks foresee, on average, an increase in demand in the segments of large, small and medium-sized companies (SMEs), other non-bank financial intermediaries, and credit cards for the April-June period.
“Regarding the mortgage credit segment, commercial banks, on average, do not anticipate significant changes,” the report states.
Greater demand in companies and credit cards
The EnBan considers the banks with the highest market share, as well as those with the lowest. In both groups, the result showed that in the first quarter of 2022, the institutions as a whole reported on average that the demand for credit increased in the business and SME segments; and for the next quarter, everyone anticipates an additional increase.
Regarding credit to non-banking financial intermediaries, the banks with the highest participation reported that the demand in this segment remained unchanged in the first quarter of the year; while those with less participation, perceived an increase. For the second quarter, the institutions as a whole expect an increase.
And as for consumer credit via credit cards, the banks with the highest participation reported that demand remained unchanged in the first quarter, and those with the lowest participation noted an increase. For the following period, both groups foresee an increase.
In other consumer portfolios, the banks with the largest share saw an increase in personal loans, but a decrease in automobiles and payroll, with no changes.
And in mortgage loans, the banks as a whole reported on average that the demand remained unchanged in the first quarter of the year, and for the following quarter it will continue to do so.
conditions will be relaxed
And just to seek to place more credit, banks have indicated a relaxation in general conditions and/or credit approval standards during the first quarter in some segments, a trend that will continue in the coming months.
According to the survey, for the second quarter, the banks with the highest participation foresee a relaxation in the SME and credit card segments, but a narrowing in the non-bank financial intermediaries; and unchanged in large companies and mortgages.
However, banks perceive, on average, a deterioration in the national and international economic environment, and in business and household confidence.