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President of ABM says Banxico rate hikes slight impact

The president of the Association of Banks of Mexico (ABM), Marcos Martínez, indicated that the complex international environment has caused the Banxico’s benchmark rate to go from 3 percent in December 2015 to 7.5 percent in February 2018, a rise in the rate of 4.5 percentage points.

At a press conference, he said that growth had proportionally less impact on the levels of credit granted by the bank.

He indicated that, as a whole, the banking credit portfolios only increased 1.3 percentage points, that is, less than a third of what the reference rate of the central bank increased.

The credits granted to the companies increased by 2.7 percentage points, while the mortgage loans decreased by 0.4 percentage points.

Martínez mentioned that the direct repercussion of the increase in the interest rate of Banxico on the rates of the banks is explained by the fact that there is greater competition in the union.

“The reason is competition. This is the result of Mexico having a competitive financial system, free to put their strategies and set their rates and when that happens and the banks are healthy and have a market to attend to,” he said.

Emiliano Romano, vice president of the ABM, said that although there is still uncertainty due to factors such as the renegotiation of the North American Free Trade Agreement (NAFTA), Mexico has absorbed economic shocks and also politicians, among them, the uncertainty over this year’s presidential elections.

“Something that has surprised us favorably is that the expectation of economists in 2018 was of a period with greater volatility in terms of rates and currencies, however, the economy has shown a strength and ability to absorb these volatilities in a very positive way,” he explained.

Carlos Rojo, vice president of the ABM, commented that “we are convinced that this is a year in which these factors, NAFTA and elections, generate certain volatility and are factors that must be observed but are not factors that are necessarily affecting the development of the credit (…)

“Today the states are financing themselves in a considerably lower way in a period when rates are rising.”