Mexican Banks See Over 10% 2012 Credit Growth On Domestic Demand

The Mexican Bankers' Association expects credit growth above 10% in 2012, supported by domestic demand in spite of a tricky external economic environment.

The projected growth "indicates that the strength of the internal market will continue being a crucial base for our business," Luis Nino de Rivera, a vice president for the association, told reporters late Monday.

Nino de Rivera is also chairman of Banco Azteca, whose credit portfolio represents about 1.5% of total bank credit in Mexico.

The banking association estimates that Mexican banks as a whole will have expanded their credit portfolios by roughly 15% this year versus 2010, driven by growth in consumer credit of more than 22%.

Mexico's manufacturing-heavy economy is highly correlated with that of the U.S., which absorbs around 80% of Mexican exports. The bankers' association's 2012 prediction for credit growth contemplates a decent economic performance for the country's chief trade partner next year but ongoing trouble in the euro zone.

The banks had extended 2.36 trillion pesos ($171 billion) in credit as of the end of October, with credit-card debt representing close to 10% of that tab and other types of consumer credit--such as car loans--accounting for a similar percentage, while home loans made up closer to 17% of bank credit.

Mexican banks showed a 3% rate of nonperforming loans at the end of October, up from 2.5% a year earlier.

Some banks are even more optimistic about 2012 than the association.

Marcos Martinez, country head for Spanish financial group Banco Santander SA (STD, SAN.MC), said earlier this month that he expects his bank will grow its credit portfolio in Mexico by 18% next year.

Santander is Mexico's third-biggest bank by deposits and loans, with more than a 12% market share in both areas. Banco Bilbao Vizcaya Argentaria SA's (BBVA, BBVA.MC) Bancomer unit is the country's largest bank, with close to 25% of deposits and loans, followed by Citigroup Inc.'s (C) Banamex unit, with more than 16% of the market for deposits and loans.

-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177; amy.guthrie@dowjones.com

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