A bullish market is expected in 2011,as Mexican banks are extremely optimistic about their growth prospects. A bull market stems from increased investor confidence and anticipation of capital gains and usually precedes a large growth in the economy.
According to the Wall Street Journal,consumer banks have shown double-digit growth in most of their product lines this year and the country’s top bank executives expect the trend to continue through next year.
The growth has allowed Mexican banks to extend credit to a larger number of individual and companies,and they are investing their profits by expanding branch locations.
Ignacio Deschamps,president of Mexico’s largest bank,BBVA Bancomer,noted that Mexican banks have serviced 42 million clients as of April. This number is up from 28 million just five years ago. BBVA Bancomer has increased from 9 million clients to 12 million in recent years,which represents about 10% of the country’s population.
“The recovery of consumer and producer confidence,as well as the trends we have seen in recent months,indicate that we’re going to keep seeing…double-digit grown in all credit segments during 2011,” Deschamps said.
Fees and credit expansion have made Mexico a key profit center for international banks such as Citigroup Inc. (C),Banco Santander SA (STD),HSBC Holdings PLC (HBC) and Bank of Nova Scotia (BNS). Moody’s Investors Service has rated the Mexican banking system as stable and notes its sound funding and asset quality,which should further boost investor confidence and investment spending.
One Mexican bank posted profits near 50%. Scotiabank’s chief executive in Mexico,Nicole Reich de Polignac,noted its pretax profit at 42% up to MXN2.06 billion. Scotia’s business in Mexico accounts for 5% of the Canadian parent’s total profits. Reich de Polignac adds that she’s “very optimistic” about growth prospects for 2011.