January-June 2013

Macro and industry trends

As mentioned above, the economic activity indicators in Mexico are progressing moderately, despite the fact that demand from the United States continues to be fairly restrained, which negatively affects the Mexican manufacturing sector.

The country’s financial system is maintaining adequate levels of solvency, profitability and liquidity, as recognized by the Council for the Stability of the Financial System (CESF) in March. All the financial institutions comply with the capital ratio required by the new Basel III criteria (a minimum of 10.5%). Similarly, in its most recent statement of June 20, the CESF considers that the country has sound fundamentals that allow its financial markets to develop in an orderly fashion in an environment of greater volatility at international level.

Higher global volatility has had a particularly strong effect on the exchange rate in the final weeks of the quarter and put pressure on the price of the Mexican peso, whose fixing rate has depreciated significantly over the last three months with respect to the euro (down 7.2%), and is also slightly below the figure as of 30-Jun-2012. In contrast, the average exchange rate still remains above the figure for the first half of 2012 (up 4.2%). Therefore, the currency effect on the year-on-year evolution of the Group’s income statement is positive, but negative on the balance sheet and activity. As usual, all comments below on percentage changes refer to constant exchange rates, unless expressly stated otherwise.