Fitch says legislative proposal to reduce rates is negative for Mexican banks | AmericaEconomy


Mexico City.- Risk rating agency Fitch Ratings said the proposal to limit certain bank fees may have negative implications for the prospects of banking services in Mexico, but stressed that being a legislative initiative is unclear whether it will be approved, or the terms.

Fitch referred to the matter a day after President-elect Andres Manuel López Obrador's Morena party proposed to the Senate to cancel the collection of certain bank commissions from clients.

"Fitch believes that the profitability of Mexican banks could be reduced if the initiative is approved, commission income is an important source of profits" for the entities, the rating agency said.

López Obrador will take office on December 1 and will be the first time in decades that the second Latin American economy will be led by a leftist party.

Fitch added that tariff revenue has averaged 18 percent of Mexican banks' total operating revenue in the past five years, and net interest income still accounts for the vast majority of total revenues.

Because of their relevance, rates also provide banks with a healthy diversification of their sources of income and have sustained the continued generation of profits, even in times of economic stress and past low interest rates, according to the company. qualification

Fitch also believes that this proposal, if approved, could have medium- and long-term negative effects on efforts to boost financial intermediation and inclusion in Mexico.

"This could discourage current and new bank participants and possibly have a negative impact on the supply and terms of financial products," he added.


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