The rating agency Moody's changed the outlook for the banking system in Mexico from positive to negative. This is due to the uncertainty stemming from US economic policies that affect the performance of the Mexican financial sector.
Moody's also warned about the fragility of the Mexican banking system. The recent judicial reform has created an environment of uncertainty that, combined with external pressures, threatens the stability of the country's financial sector.
The agency detailed that tariffs would affect Mexico's manufacturing, automotive, and technology industries. This would lead to a depreciation of the peso and impact inflation.
"The increasing volatility of exports, exchange rates, and inflation will reduce banks' appetite for risk in 2025"
There will be pressure on portfolio quality
Moody's report highlighted that delinquency rates are likely to increase as consumer loans mature
"A slight deterioration in portfolio quality is expected. 2.0% of gross loans in 2024 have benefited from the increase in real wages and remittance growth"
Thus, it estimated a more moderate portfolio growth in the next 12 to 18 months, which would be single-digit compared to the 13% recorded in 2024. This is due to caution in the face of short-term confidence crises.
It highlighted that tariffs would further pressure banks' business volumes, following growth in 2024.
"However, banks will maintain prudent credit policies, which will limit the risk of a sharp deterioration in delinquent loans, and will keep existing credit loss reserves high," it specified.
