January-December 2013


Macro and industry trends

In the first half of 2013, the Mexican economy experienced a sharp slowdown (including a fall in GDP in the second quarter). This was gradually corrected over the rest of the year, and by the end of 2013 there were signs of recovery, especially in the manufacturing sector, which was buoyed up by higher foreign demand. Moreover, inflation, despite the upturn registered in the fourth quarter has remained under control, particularly its core component. This has allowed the Central Bank of Mexico (Banxico) to make a further cut in interest rates in the second half of the year to fuel growth.

Against this background, the exchange rate of the Mexican peso against the euro depreciated again during the last 3 months of 2013, although to a lesser degree than in the previous quarter. This exchange-rate pattern has a negative impact on the comparison of the balance sheet and activity of the area, both in the quarter and 2013 as a whole. In earnings, the effect is also negative over the last 3 months, but practically neutral over the year. As in previous reports, all the comments that refer to exchange rates will be expressed at constant rates, unless expressly stated otherwise.

With regard to the banking sector, on November 22, Banxico published its report about the Mexican banking system, highlighting its strength, high level of solvency and return, but also lower rate of growth. The lagging growth in the first part of 2013 prompted a slowdown in credit growth (10.1% year-on-year as of November 2013, compared with 13.0% on the same date the previous year, according to figures by the National Banking and Securities Market Commission –CNBV–), and an upturn in the NPA ratio, largely among companies in the residential construction sector and in certain consumer finance segments.