Mexican Banking System Remains Resilient Amid Global Uncertainty

Mexico City, March 15, 2023 - The Mexican banking system has continued to demonstrate its resilience in the face of global uncertainty, according to the latest Financial Stability Report published by Banco de México.

Overview of the Report

The report highlights that commercial banks’ liquidity, credit, contagion, and market risks remained stable and limited during the first quarter of 2023. Capitalization and liquidity positions of the Mexican banking system have remained far above regulatory minimums, contributing to the overall financial system’s resilience and sound position.

Development Banks and Financial Institutions

Development banks and other development financial institutions also maintained a sound financial position, with positive net profits and adequate capitalization levels. However, non-bank financial intermediaries continue to face challenges related to tighter financial conditions, which has affected their access to new financing.

Macro-Financial Risks

The report analyzes various macro-financial risks to financial stability, including:

A greater and longer-lasting tightening of financial conditions
Lower-than-expected global economic growth
The occurrence of a systemic event that affects the global financial system

Stress tests were conducted to evaluate the resilience and loss absorption capacity of Mexican banking institutions under extreme adverse scenarios.

Results of Stress Tests

The results suggest that Mexico’s banking system has sufficient capital levels to face simulated adverse scenarios, but some banks may conclude the stress horizon with more limited capital levels. Concentration risk would also generate additional pressures on the system’s capitalization level.

In addition to these risks, the report highlights the importance of monitoring cyber-risks, which remain a major threat to the global financial system. Banco de México has been actively working on making Mexico’s financial system participants include climate-related risks in their risk management practices.

Next Steps

The central bank will continue to monitor the evolution of Mexican financial markets and take actions if necessary to preserve the stability of the financial system and the proper functioning of payment systems.

Key Highlights

Commercial banks’ liquidity, credit, contagion, and market risks remained stable and limited during Q1 2023.
Development banks and other development financial institutions maintained a sound financial position.
Non-bank financial intermediaries continue to face challenges related to tighter financial conditions.
Stress tests suggest that Mexico’s banking system has sufficient capital levels to face simulated adverse scenarios.
Cyber-risks remain a major threat to the global financial system.
Banco de México is actively working on making Mexico’s financial system participants include climate-related risks in their risk management practices.