Wednesday, September 13, 2006

Scotiabank Inverlat has 6.7% Market Share in Mexico

Business News Americas, Maria Alejandra Moreno, 13 September 2006

Mexico's private sector banks reported a 17.9% increase in first half net profits thanks to strong lending and fees revenues.

Net income reached 29.5bn pesos (US$1.19bn) compared with 24.2bn pesos for the same period last year, banking and securities regulator CNBV reported.

Average ROE was up 2.46 percentage points to 21.5% in the second quarter compared to the first quarter, while average ROA improved 26 basis points to 2.63%.

Net interest income rose 23% to 70.1bn pesos in the first half over the same year-ago period, while fee income jumped 14% to 28.7bn pesos.

Lending increased 4.1% to 1.26tn pesos at end June compared to end-March this year. Growth was driven by commercial and consumer loans, which rose 7% to 456bn pesos and 11% to 313bn pesos respectively.

Commercial, consumer and mortgage loans accounted for 36.3%, 24.9% and 16.4% of banks' total loan portfolio respectively.

The past-due loan ratio showed the first quarter-on-quarter increase since the end of June 2004, moving up to 1.82% at the end of June from 1.67% at end-March.

The worsening of the past-due loan ratio is natural as credit expansion began in 2004 and some loans started to mature, Fitch Ratings financial institutions director Alejandro García told BNamericas.

Besides, consumer loans and credit card lending, which traditionally tend to increase the number of past-due loans, have been consistently growing and now represent a larger proportion of total loans than in previous quarters, the analyst pointed out.

However, the past-due loan ratio of the Mexican banks still remains at adequate levels, García said, adding there is still room for further loan growth without affecting asset quality as the proportion of credits to GDP is one of the lowest in Latin America.

Loans only account for about 16% of Mexico's GDP.

Deposits were up 9% during the 12 months ending June to 1.74tn pesos.

Banks held 2.49tn pesos in assets at end-June 2006, up 17% from end-June last year. Liabilities grew 18% to 2.19tn pesos at the end of the first half compared to the same date last year.

The average capitalization ratio fell to 14.6% at end-June compared to 16.0% at end-March as credit expansion put pressure on banks' capital and liquidity, García said.

At end-June, the Mexican banking sector comprised 30 banks. The six top banks had the following loan market shares: BBVA Bancomer (28.2%), Banamex (16.2%), Santander Serfin (14.7%), HSBC (11.3%), Mercantil del Norte (9.4%) and Scotiabank Inverlat (6.7%).

In recent months, new institutions have been authorized to enter the banking sector, namely Banco Autofin, Banco Compartamos, Banco Ahorro Famsa, Banco Monex, Banco Multiva and Barclays Bank.