In an analysis released this Friday, the rating agency highlighted that this may mean greater volumes of credit placement in commercial portfolios, which have been lagging behind in their growth compared to consumer portfolios.

The relaxation of monetary policy by the Bank of Mexico (Banxico), which on Thursday cut the reference interest rate for the first time in 10 months from 11.25% to 11.00%, is positive for Mexican banks. considered Moody's.

In an analysis released this Friday, the rating agency highlighted that this may mean greater volumes of credit placement in commercial portfolios, which have been lagging behind in their growth compared to consumer portfolios and which, in turn, are more susceptible to change in rate.

“In turn, this inflationary control by Banxico benefits the disposable income of Mexican households, which supports the payment capacity of banking consumer clients, mitigating increases in the cost of risk of banks in general, and supporting asset quality metrics in the future, which in turn have remained quite resilient despite the high inflation observed in the last two years in the country,” he explained.

BANKING IS READY

Moody's Local highlighted that Mexican banks have been preparing, for several months, their balance sheets for this inflection point, with which they have managed to partially desensitize margins to the downward change in the reference rate.

“Fundamentally, banks have set some of their rates in their credit portfolios, which has made the implicit rate of the bank's credit portfolio less sensitive to Banxico's target rate in this upward period, compared to the immediately preceding period in the central bank's monetary policy,” he explained.

In addition to this, he explained, the cost of bank financing immediately adjusts to the change in rate, which could also benefit the margin in the future, if rates continue to fall.

"While it is true that, in the medium term, in a context with much lower reference rates, banking assets would have to adjust to the new context, a gradual adaptation is always favorable to a sudden fall," he argued.

IMPROVEMENTS COULD BE EXPECTED IN ASSET QUALITY

The agency stated in its analysis that, in addition, improvements could be expected in general asset quality indicators such as delinquency, the cost of risk and the level of bank write-offs, since the relaxation in monetary policy can translate in a better payment capacity of Mexican households.

“It must be considered that the quality of banking assets in general has proven to be quite resilient to a challenging macroeconomic environment. Delinquencies and adjusted delinquencies in banking remain at fairly stable levels,” he emphasized.

He considered that a final positive boost for banking profitability would come from the volumes, especially in commercial credit portfolios, which have greater sensitivity to rates, and could be more dynamic.