Mexican banks face revenues and cost squeeze

Lower interest rates point to lower NIMs this year; Growing competition from newly regulated fintech sector will lead banks’ costs to rise.

Mexican banks are facing a tougher-than-expected operating environment in 2019.

In the short term, a sluggish economy is constraining credit demand growth and forecasts for interest rate cuts will pressure net interest margins (NIMs).

In February, the Mexican central bank reported sequential credit growth of just 0.4%. The disappointing result at the beginning of 2019, when bankers had been hoping to see credit growth accelerating as the presidential election faded from sight, was hampered by a -2.2% month-on-month fall in government loans.