Key bank penetration ratio makes strong advance in Mexico

Financing provided by financial institutions to the private sector as a percentage of GDP increased 5 basis points to 31% during the last three years in Mexico, said Jaime González, head of the banking and securities regulator (CNBV).

Private banks were responsible for half of that lending, Gonzalez said during his remarks at the 79^th banking convention held in Acapulco on Thursday-Friday.

The increase in funding to the private sector is an example of the increased financial health of the Mexican banking industry, said Gonzalez said.

In the last 12 months, the total loan portfolio of the private banks has grown 15% which is three times faster than the country's GDP growth. During the five years prior, loan portfolio growth was only two times faster than GDP, Gonzalez noted.

Bad loans as a percentage of total loans was below 3% at the end of last year and capitalization levels have averaged 15% for the last eight years, increasing recently to almost 16%, he added.

Gonzalez also said that the total loan portfolio of Mexico's development banks has grown 23% in real terms since the financial sector reform in 2013.

Banks are now "part of the solution" to the country's financial problems rather than the cause as was the case past, he noted.