| | |  Business News 
Mexico Bank Assoc Forecasts 10% Loan Growth In 2010
 Ken Parks - Dow Jones
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March 26, 2010
| | Consumer loans are expected to return to growth this year after banks cut back on lending amid a surge in defaults during the recession in 2009. | |
Mexico City - The Association of Mexican Banks said Thursday that it expects the sector's performing loans to grow by at least 10% this year.
Ignacio Deschamps, president of the association, said mortgages and small business loans could grow more than 15% and 20%, respectively, in 2010.
Consumer loans, which shrank 14.9% year-on-year to MXN380.87 billion at the end of February, are expected to return to growth this year after banks cut back on lending amid a surge in defaults during the recession in 2009.
"We think that in what is left of the year we are going to see growth in consumer credit," Deschamps said during a press conference.
Bank lending is slowly recovering along with the economy. Loan balances at the end of February were 1.968 trillion pesos ($157.7 billion), up 4.1% from a year earlier but nearly unchanged from December, according to preliminary data published this week by banking and securities regulator CNBV.
Economists have raised their forecasts for growth in gross domestic product as economic data in Mexico and the U.S. surprise to the upside.
A recent survey of financial institutions by Citigroup Inc.'s (C: 4.36, 0.08, 1.87%) unit, Banamex, forecast 4.4% GDP growth as the country piggybacks on a recovery in the U.S.
The Mexican economy contracted 6.5% last year due to the global financial crisis and recession in the U.S., which buys 80% of Mexico's exports. Even so, bank loans grew 4.1% in 2009 led by commercial, mortgage and public-sector lending.
The local banking industry is largely in the hands of seven commercial banks, including units of HSBC Holdings Plc and Citigroup, that hold about 87% of all loans and deposits.
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