Banco Bilbao Arg (NYSE:BBV)
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Mexico's banks reported 1.889 trillion pesos ($145.28 billion) in loans on their books at the end of October, nearly unchanged from the year-ago period as a recession crimped lending.
Commercial loans grew 3.4% to MXN896.95 billion, while mortgage lending rose 8.5% to MXN307.84 billion, and loans to government bodies surged 32.4% to MXN222.25 billion, according to data published Wednesday by banking and securities regulator CNBV.
Consumer loan balances, however, fell 18.3% to MXN397.16 billion, with credit card loans tumbling 24% to MXN235.65 billion.
In a positive sign, lending expanded 0.8% compared to the previous month, led by growth in personal, commercial, government and mortgage loans.
Mexico's worst recession since the 1995 peso crisis has reduced the both the supply and demand for credit amid high unemployment.
Economists expect the economy to contract about 7% in 2009, largely due to a recession in the U.S. earlier this year that reduced demand for Mexico's exports. The unemployment rate was 5.9% last month, down from 6.4% in September, but higher than the 4.1% reported in October 2008.
The economic downturn has also made it harder for struggling businesses and consumers to repay their debts.
The percentage of nonperforming loans to total loans fell to 3.38% in October from 3.43% the previous month, but was higher than the 3.21% at the end of last year, the CNBV said.
The nonperforming ratio for commercial loans to businesses and corporations rose to 2.09% in October from 1.39% at the end of 2008, while nonperforming mortgages climbed to 4.65% from 3.51%.
In credit-card loan portfolios, where banks have suffered the highest levels of defaults after several years of easy lending, the percentage of nonperformers continued to decline, falling to 9.63% from a peak of 12.6% in May, and slightly above the 9.37% observed in December 2008.
Mexico's banking industry is largely in the hands of foreign institutions following a wave of acquisitions in the 1990s and the first part of this decade.
Together, Banco Bilbao Vizcaya Argentaria SA (BBV) and Banco Santander SA (STD) of Spain, Citigroup Inc. (C) of the U.S., HSBC Holdings PLC (HBC), and Bank of Nova Scotia (BNS) control 68% of total loans and nearly 70% of retail deposits in the banking system.
The local subsidiaries of Santander and HSBC have posted the biggest declines in loan balances of the seven largest banks during the recession.
HSBC Mexico, which has steadily lost market share, reported a 13.2% drop in total loans to MXN157.12 billion at the end of October, while demand and time deposits fell 9.6% to MXN221.91 billion, according to the CNBV.
The bank has been especially hard hit by bad loans this year, especially in credit card lending where it tried to take market share from bigger rivals. Its nonperforming ratio was well above that of the sector at 5.55%.
Santander's loan balances tumbled 17.5% to MXN207.56 billion, while demand and time deposits fell 13.8% to MXN247.11 billion.
Earlier this year, Bank of Mexico Gov. Guillermo Ortiz criticized foreign-owned banks for cutting back on lending due to the financial problems of their parent companies.
-By Ken Parks, Dow Jones Newswires, 52-55-5980-5177, firstname.lastname@example.org