Banks Slow Down Credit Issuance in June; Corporates and Public Sector Lead the Decline
Commercial banks’ total loan portfolio reached 7.8 trillion pesos in the first half of the year, registering a 0.4% month-on-month contraction in June—its first drop in nine months—according to data from the National Banking and Securities Commission (CNBV). The deceleration aligns with a slowdown in economic activity and a cautious environment following the 2024 election cycle.
By segment, federal public sector financing saw the sharpest adjustment, dropping 4.4% in June; loans to states, municipalities, and other financial entities each declined by 1.4%. Corporate credit decreased by 0.7%, reflecting more selective investment decisions and the impact of still-high interest rates. In contrast, consumer lending continued to grow at 1.1%, while mortgage loans barely increased by 0.3%, a performance consistent with resilient household spending and the relative weakness of the housing market.
The broader macroeconomic context helps explain June’s figures. After a dynamic 2023, Mexico’s economy lost momentum in the year’s first half: manufacturing was uneven due to normalization in external orders and bottlenecks in certain inputs, while services remained supported by formal job creation and rising real wages. Inflation has slowed from its peaks but remains above target, keeping monetary policy in restrictive territory. With high funding costs and greater risk aversion, both the supply and demand for credit have adjusted.
Historically, bank lending tends to amplify the economic cycle: when GDP loses steam, credit usually follows with a six-to-nine-month lag, as noted by the Mexican Banking Association. For 2025, analysts’ consensus projects moderate growth, below 2023’s pace, indicating that the credit recovery will likely be gradual and uneven across segments.
In the corporate sector, caution is linked to more selective capex and repricing of projects amid positive real rates. Still, loan portfolios tied to sectors benefiting from nearshoring—logistics, export manufacturing, industrial parks, and warehouse construction—remain more resilient. On the public front, stricter fiscal discipline following the election year could temper the financing needs of local governments and public entities, though concerns remain about liquidity needs at state-owned enterprises.
Subdued mortgage activity is driven by three factors: interest rates that, while below their peaks, remain high in real terms; rising housing prices due to supply constraints in several cities; and increased participation of non-bank lending schemes like Infonavit. In the consumer segment, credit cards and payroll loans keep expanding on the back of a strong labor market and record remittances, but banks are reporting closer risk monitoring: delinquency remains contained at low levels, with slight increases among lower-income borrowers.
Looking ahead, credit performance will hinge on three main anchors: the trajectory of inflation and the policy rate; the realization of investments linked to supply chain relocation and infrastructure projects; and financial stability, particularly the behavior of the exchange rate and local markets. The banking sector is starting from robust capital and liquidity levels, providing room to meet solvent demand. However, origination is expected to remain selective, with pricing reflecting the cost of funds and each client’s risk profile.
In summary, June’s contraction appears more like a tactical adjustment than a structural shift: corporate and public sector credit saw the largest pullback, while consumer and mortgage lending held steady. Interest rate movements, private investment associated with nearshoring, and fiscal discipline will set the tone for lending activity in the second half of the year.
