December 16, 2016 / 9:47 PM / 7 months ago

Fitch: Mexican Commercial Banks Outlook Revised to Negative for 2017

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(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 2017 Outlook: Mexican Commercial Banks (Strong Financial Profiles but Downside Risks Could Rapidly Develop) here MONTERREY, December 16 (Fitch) Fitch Ratings has revised the rating outlook for banks to Negative after the Outlook revision of Mexico's sovereign rating, since now 50% of the banks with international-scale ratings have a Negative long-term outlook. No changes are expected in the national-scale ratings derived from a potential downgrade of the sovereign since these ratings are local relative rankings of creditworthiness. The sector outlook has been also revised to Negative since there is downside risk that performance will deteriorate over the next 12 to 24 months relative to recent metrics, according to a new Fitch Ratings report. Fitch believes that although there is no immediate direct effect from the U.S. election outcome, the prospects for loan growth and asset quality in 2017 looks less certain now and depends on the feasibility of the implementation of U.S. protectionist measures and the evolution of investor and consumer confidence. Fitch expects loan growth to slow to a range of 6% to 8% in 2017. The banking sector is entering into this period of uncertainty from a position of relative strength. The overall conditions in the industry include increasing interest rates, which have benefited bank's net interest margins, adequate funding and liquidity profiles, and a strong an resilient loss absorption capacity since Mexican banks are well capitalized and sustained by recurrent earnings. Although, asset quality metrics have trended positively, Fitch highlights that a material slowdown in the Mexican economy, inflation pressures and a tougher and more volatile global environment could put some pressure on asset quality metrics and loan provisioning. Fitch believes that the relatively recent Financial Reform Enhancements are positive. However, Fitch considers the financial inclusion target for 2018 of 40% of GDP will be further challenged by increased uncertainty. For more information, the special report "2017 Outlook: Mexican Commercial Banks" is available at www.fitchratings.com.] Contact: Veronica Chau Senior Director +52 81 8399-9169 Fitch Mexico, S.A. de C.V. Prol. Alfonso Reyes 2612, Monterrey, N.L. Mexico Monica Ibarra +52 81 8399-9150 Alejandro Tapia +52 81 8399-9156 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com'. 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