Banorte, Banamex: High-Risk Loans

Moody's, the financial credit rating agency, has issued a warning to institutions such as Banorte, Banamex, and Inbursa due to the growth in the portfolio of loans with a higher risk of default within the Mexican banking sector.

Through its rating, Moody's warns of rising household debt and a deterioration in households' ability to pay. The loan portfolio is classified as Stage 3 and has increased by 14.35% to reach US$10 million, according to the National Banking and Securities Commission (CNBV).

According to Moody’s, there has been a decline in the quality of household-related assets across Latin America’s major banking systems. Although the level of indebtedness in the Mexican banking system is low, slower economic growth coupled with an expansion in consumer credit is a red flag for the country.

In the report titled “Increased Asset Risks in the Region amid Pressure on Consumers and Vulnerabilities Among SMEs”, the company stated that the increase in credit has outpaced the improvement in household repayment capacity in several Latin American countries.

Household debt has risen, coinciding with a slowdown in economic growth, formal employment, and wages, according to Moody's

Among the other institutions that make up the so-called banking G8: HSBC increased its Stage 3 loan portfolio by 8.61%, BBVA Mexico recorded a 6.10% increase, Santander raised this figure by 2.36%, and Scotiabank did so by 1.55%.