Mexico Watch: strong H1 loan growth, new peso bills

Fast loan growth in 1H18

Mexican banking association (ABM) reported the sector wide loan book grew 11.6% year-on-year in the first half of 2018, with a total balance of almost 5tn pesos (US$265bn).

In a statement, ABM added Mexico's banking sector has now seen 17 years of sustained growth, the longest positive cycle on record.

Citing World Bank data, the association noted that total domestic lending to the private sector as a percentage of GDP came to 35.6% at the end of 2017.

This was the highest percentage of GDP in the country's modern history, surpassing the previous historical high of 34.1% in 1971.

The ABM also said sector non-performing loan ratios NPL stood at the lowest levels in the last decade at 2.2% for the general loan book, 1.7% for business loans, 2.6% for home loans and 4.6% for consumer lending.

Cenbank launches overhaul of bills

Mexico's central bank presented a new 500-peso (US$26.5) bill, set to go into circulation in January 2019, as part of a broad overhaul of the country's currency denominations.

Additional changes, presented at an event Monday afternoon, include the eventual removal of the 20-peso bill from circulation - to be replaced by a coin - and the possible introduction in the coming years of a 2000-peso bill if necessary to meet demand, said bank governor Alejandro Díaz de León.

The new 500-peso bill is the first of several modifications, with the 200-peso note set for a facelift in 2020, the 100-peso note in 2021 and the 50-peso note in 2022.

The overhaul is the latest change enacted under Díaz de León, who took charge of the monetary authority in December 2017, with other relevant changes being more detailed forecasts and the re-launch this month of the central bank website