On the way, the new circulars that will help the management of credit unions: ConUnión

At credit union sector we are progressing gradually, although better numbers are already being seen, better activity, greater credit demand, not necessarily due to a better environment, but with signs of economic reactivation, we noticed a growth in the credit portfolios after the crash we had in 2019, he considered it that way Luis Morales Robles placeholder image, president of the Mexican Council of Credit Unions (ConUnion) in an interview with The Economist.

“This expectation is carried out with unofficial data, we have different communications, figures and some information that makes us see that the dynamics of the loan portfolios tends to advance, however, it does not mean that we reached the maximum levels that the sector presented in December of In 2018, when we had assets of 66,000 million pesos, now we come with a return, but this return is slow ”.


Morales considered that in 2022 the sector will gradually improve, the payment capacity of borrowers, which will have an impact on the delinquency rates that have been on a growing trajectory since the pandemic was declared, as of June data is at 5 percent.

“By having more delinquency, it is reflected in a lower Coverage Index (ICOR), which is called preventive estimates that protect past due loans and that also means that there are increasing levels of capital that, although they affect a positive indicator due to greater solvency, the sector is not registering greater solvency due to a persistent capital strength, but rather shows solvency, because there is a decrease in productive assets in the sector, this ratio of numbers makes strong capitals appear but with less productive assets ”, he said.

He specified that the second view from the economic activity that affects credit has to do with improving the overdue portfolio indexes. “I think that they will diminish and return to profitability levels. We are going to make better use of the balance sheet structures in the sector and consequently, we will have a better used solvency ratio, at the levels it is currently at, averaging the capitalization ratio for the sector at 21 percent ”.

New circulars

The president of ConUnión commented that they are making strong progress with different circulars that will be issued by the National Baking and Stock Commission (CNBV), “Will favor the management of the Credit Unions, and this is thanks to the dialogue that has taken place. Important circulars are coming that will help us run the business as risk mitigators and in turn help us to make the preventive estimate of the CUs more moderate based on certain mitigants and some other elements that have to do with the use in the UC products, such as: secured loans and member loans.

“Which will mean that this mitigating factor in the face of the new circular that will come into force in the coming months, when the CNBV stipulates it, we envision activity and capacity, gradually there will be greater economy and therefore, greater demand for credit, therefore, we see an upward trajectory forward. They already let us glimpse a draft of the circular ”, Luis Morales mentioned.

Interest rates

They predict that the primary rates towards the end of the year may be around 5% and that they will continue with an upward trajectory as long as the rates do not converge. inflation levels objective of Bank of Mexico which are above current estimates.

“We feel that by 2022 there could be increases between 25 and 50 basis points, we would see rates between 5.25 and 5.50% in the reference rate by mid-2022, these are the estimates we have from the consensus of analysis carried out in the sector.

“We do not believe that it is an issue that causes a significant inability to pay borrowers and the UC margins, consequently they should be adjusted in the same way, you charge a higher rate, it costs you more funding, but we feel that we are at very low levels. manageable and acceptable to continue with a healthy march of the sector ”, considered Luis Morales.

Development Bank

Development banking has played a mixed role. “The balances of the use of credit in the sector have had a noticeable decrease, we are talking about a fall year after year. According to data as of June 2021 compared to June 2020, they register a contraction of 8.4% in their balance, the sector uses 6,354 million pesos of direct funding from development banks, in addition to the other indirect schemes that exist through banks multiple. In June 2019 we were bringing 6,890 million pesos when it was the maximum peak.

“Although it is a general data for the sector, not all Credit Unions they tell the same story. There are some who make intensive use of development banks, but it is not the same circumstance for all, since it depends on the dynamics, the strength of the balance sheets, how the pandemic has taken the CU and the valuation criteria ” .

“There is a mixed use of this product, in general it is regrettable that there is not a balance at least constant in the use. Hopefully a return will soon be observed, not only due to the use of direct lines but also of guarantee schemes that the sector used to have, which have fallen into decline and would be very convenient in this counter-cyclical era ”.

He said that there are development banks, which are more active than others, for example, FAIR it continues with strong activity with the sector, but not the rest of the institutions.


Luis Morales considered that one of the great concerns is the slowness of the recovery of the main productive asset, which is the commercial loan portfolio and some entities that operate pure leasing or that do factoring operations.

“The concern has to do with the speed of reactivation and around the environment there are many doubts, there is a lack of Rule of law (Energetic reform) that prevails in Mexico and there is a crisis of confidence that affects the decisions of investors that ultimately means a blow to the use of credit ”.

He said that this atmosphere weakens the investment capacity and confidence, therefore, it has a negative impact on the use of financing in the clean energy sector.

”We must be extremely careful and prudent in granting credit, which has undergone a noticeable change due to the fact that it is a scenario in decline in the generation of operating cash flow from companies, we will probably have to see longer terms for the use of credit, I think there are opportunities ”, concluded Luis Morales, president of ConUnión.

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