Banking in Mexico has restructured until October of this year 90 billion pesos in loans, with which it is sought to support customers with a lower monthly payment and longer term, which allows them to have greater liquidity to face the current economic situation, reported the Association of Banks of Mexico (ABM).
According to the agency, weakness in the economy and job loss are two factors that prevent account holders from facing the payment of their debts, so they have resorted to requesting a longer term to be able to settle their credits.
Luis Niño de Rivera, president of the ABM, detailed that from September to October the amount of the restructured loans went from 75 thousand to 90 thousand million pesos, and so far they are mainly from clients who signed up for deferral programs and they can no longer continue to pay the original amount, prior to the pandemic.
He indicated that for the most part, the deferral programs began to expire since August.
“For this reason, at the end of October, we have restructured 90 billion pesos of credits that participated in the deferral, and also those that did not do so, but now judge that a rescheduling or rescheduling of their payments is better for them”, detailed.
By accepting a restructuring, it was agreed “a decrease in the monthly payment, as a result of the increase in the term, with which we are allowing greater liquidity to customers, which is the most relevant point at this point in the economic contraction and incipient recovery that we have, ”he added.
Against this background, he acknowledged that one of the ways to keep banks solvent is the creation of reserves, which allows them greater strength facing the instability of credit risks.
Niño de Rivera stressed that the bank’s voluntary reserves they continue to grow and now account for 19 percent of total prevention, almost four times more than the 5 percent a year ago.
This means that the bank went from having 8 thousand 400 million in voluntary reserves in September 2019 to 38,600 million pesos in September of this year. Total, bank reserves they currently amount to 203 billion pesos.
There are resources, demand is lacking
Niño de Rivera stated that the bank has 1.2 billion pesos available to grant financing; however, clients are still very prudent in using credit and are saving money to cope with the uncertain economic situation.
He indicated that for stimulate demand for loans has contributed the fall in interest rates, and proof of this is in the mortgage credit, where there has been a growth of 9 percent, compared to products with fixed rates lower than 8 percent.
The ABM highlighted that from December 2018 to date, the rates in which they place new loans have decreased significantly in all segments, mainly in loans to companies, where the rate was reduced 35 percent, with a reduction of 36 percent in loans to large companies and about 30 percent in the SMEs. Even in housing, cars and personal rates are at historic lows.
“To benefit individuals, families, we are in a situation of reduction of rates on personal loans of 16 percent, which are at 31.3 percent, from 37.2 in December 2018, ”said Niño de Rivera.
However, he indicated that despite the existence of resources and low rates, so that The credit is reactivated, it is necessary for employment to recover, so that people can have more resources to apply for financing.
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