Although el financial system has shown strength in the face of adverse shocks generated by the covid-19 pandemic and has maintained high levels of capital and liquidity, there is still uncertainty about the magnitude of the effects that this may have on the credit card of the most vulnerable sectors, and with this, the profitability of the banks could be reduced by a lower granting of credit and the potential increase in the delinquency.
According to an analysis by BBVA Mexico, the acceleration in the rate of infections, which has led to the implementation of new containment measures in several countries, including Mexico, as well as the strategy for the distribution and application of vaccines, have generated greater uncertainty about the path of economic recovery. Given this, some of the risks faced by the financial system could intensify and affect its proper functioning.
Among these is the household financing which slowed down mainly as a reflection of the contraction in consumer credit. At the end of September 2020, the financial position of households, that is, total savings minus indebtedness, amounted to 39.6 percent of GDP, higher than the 36.4 percent registered in March 2020.
BBVA stated that the main cause of this increase was the slowdown in financing to households, while their financial savings registered greater dynamism. In the third quarter of this year, there was a reduction in the growth of financing to households in both its quarterly and annual comparisons.
“This trend is due to the unfavorable evolution of consumer credit, which continued to decline during the third quarter. In addition, the growth rate of housing financing has also decreased, although it still registers positive growth rates ”.
He added that from a sample of borrowers registered in one of the credit information companies (SIC), It is observed that the leverage of households as a proportion of the monthly income destined to the payment of the debt registered higher levels in September 2020 compared to the same month of 2019, being borrowers with lower income those that registered a greater increase in their level of leverage , in addition to being those who allocate a greater percentage of their income to pay their debts.
In addition to this, credit granted to companies lost dynamism in the third quarter of the year, financing to companies small and medium businesses from the country (SMEs) continued to contract, registering in September a real annual variation of 6.3 percent below the previous quarter, this result would be associated with a tightening of the general credit approval conditions during the first three quarters of the year.
The development banks and development institutions maintain a solid position, although some effects have been observed in their results as a result of the covid-19 pandemic.
BBVA added that in the Financial Stability Report he Bank of Mexico It has also identified as risks a less vigorous than anticipated recovery of the global economy, as well as greater volatility in international financial markets and a recomposition of flows towards lower risk assets, a slow recovery of the national economy and rating adjustments sovereign credit and Pemex, which could have an impact on the sector.
The bank’s area of analysis indicated that from now on, it will be of particular importance to follow the portfolio quality indicators of the different intermediaries, both due to the consequences that a higher default could have for the future access of households to credit, as well as the risks that financial institutions might face.
In addition, it is necessary to provide investors with greater confidence to attract capital flows. This is based on a solid macroeconomic framework that provides certainty and facilitates access to credit for the different sectors of the economy.