BBVA expects lending to private sector to continue recovery in 2011

Thursday, March 10, 2011

Lending to the private sector in Mexico has recovered from the 2009 recession faster than after previous recessions, and is expected to continue doing so during 2011, Spanish bank BBVA (NYSE: BBVA) said in an extensive report on the country's banking sector.

The report pointed out that lending did not fully recover from the country's 1995 economic crisis until 2000, partly because that crisis included high inflation and was somewhat a function of the country's weak banking system.

In contrast, although the 2009 crisis caused a drop in lending to the private sector, it was noticeably minor compared with the sharp 6.1% decline in GDP the country saw that year.

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Also, the contraction only lasted until May 2010, when banks began expanding lending to the private sector once more.

Credit as a percentage of Mexico's GDP has been rising steadily since 2000 and only paused in its ascent in this recent crisis, in contrast to other crises where it has fallen sharply.


Looking to the future, BBVA researchers expressed optimism in their report over growth in lending to the private sector.

Assuming a 4.3% expansion in GDP in 2011, the report projected nominal growth in lending to the private sector of 13.5%, compared with 4% in 2010.

"As Mexico's experience shows, the sustained growth of lending requires a favorable macroeconomic climate... in addition to an absence of macroeconomic imbalances," the report said.

BBVA's Bancomer is the largest bank in the Mexican market.