| | |  Business News 
Mexico's Bank Association Sees Credit Recovery On Track
 Ken Parks - Dow Jones Newswires
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June 24, 2010
 |  | Bank credit appears set to grow between 15% and 20% during the next several years.
- Ignacio Deschamps |  | | |
Mexico City - The recovery in bank lending in Mexico is on track to post double-digit growth this year as the economy rebounds from last year's recession, a top industry official said Wednesday.
Speaking at a press conference, Ignacio Deschamps, president of the Association of Mexican Banks, said that the recovery in loan growth is "firm" based on data through the end of May.
Deschamps, who is also chief executive of Mexico's biggest bank BBVA Bancomer, affirmed the association's forecast of "double-digit" loan growth in 2010.
Bank credit appears set to grow between 15% and 20% during the next several years, he added.
Mexican bank lending picked up during May, led by growth in commercial and public-sector loan balances, in an early sign that the supply and demand for credit is finally starting to recover along with the economy.
Total loan balances grew 8.9% year-on-year to 2.003 trillion pesos ($158.4 billion) at the end of May, according to preliminary data published Wednesday by banking and securities regulator CNBV. Loan balances were 1.9% higher compared with the previous month, and were up 1.7% from the end of 2009.
Most of the growth in bank loans so far this year has come from lending to the public sector, home buyers and financial institutions.
Commercial loan balances, although growing from April to May, are nearly unchanged from December levels, while consumer loans shrank month-on-month and are down from the end of 2009. Mexican banks are profitable and well capitalized, but are still somewhat hesitant to lend even as the economy rebounds from last year's 6.5% decline.
Mexico's gross domestic product, which measures the output of goods and services in an economy, expanded 4.3% in the first quarter of 2010, led by gains in manufacturing and--to a lesser degree--in services. The Bank of Mexico has forecast full-year growth in GDP of 4% to 5%.
Economic growth is largely being driven by a surge in manufactured exports to the U.S. The export boom, however, has yet to trickle down to the broader economy in the form of job creation and a rebound in domestic consumption.
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