Recovery of credit to companies could be postponed

Although commercial bank credit for consumption has already shown a recovery and that for housing continues to grow, that for companies continues to contract and BBVA considers that it will remain weak for a few more months.

“The balances for the eighth month of the year seem to confirm the recovery trend observed in the consumer and housing portfolios. However, the business portfolio still seems to be far from showing variations in positive territory, either in annual or monthly terms, ”says an analysis by the bank.

There, it stands out that in August 2021 the nominal balance of the current loan portfolio granted by commercial banks to the private sector fell 3.1% annually (-8.3% in real terms). However, it highlights that this contraction was the smallest since March 2021, which indicates not only that the accounting effect of the provision of credit lines in 2020 has dissipated, but also that there is a certain reactivation of demand in some portfolios .

By aggregates, the annual nominal variations in August were: consumption -0.3%; housing 9.4%; and companies -8.4 percent.

Carlos Serrano, chief economist of BBVA Mexico, has mentioned in this regard that credit to companies is the one that has shown the most weaknesses, which is due to the fact that at the beginning of the pandemic this segment made use of the lines that were in force to deal with the contingency; but also to the fact that during all this time the businesses accumulated good levels of savings.

“We believe that we are still going to see a period of a few months with credit to companies weaker than usual, as companies, before demanding credit, are going to consume the liquidity they have accumulated. But eventually we will see a recovery, “he said.

However, the BBVA economist warned that, if the Energy Reform is approved as it is now, credit to companies could be further affected, as investment would be impacted.

“As we have shown, by far the factor that most determines the demand for credit is investment, therefore we believe that we would see a lower credit balance,” he said.

Serrano commented that credit in the country has had a heterogeneous behavior, since in the case of that destined to families, it has been recovering and that of housing has continued to grow.

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