XNOR GFNORTE GBOOY Best Bank 2019 México 1 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App 1Q20
Duration of the quarantine and GDP forecasts Impact of COVID-19 on GDP and the unemployment rate % y/y, % Current government support Base case Extraordinary support Final date of the Days under ‘pandemic’ quarantine GDP Unemployment GDP Unemployment GDP Unemployment Apr-30 38 -4.8 5.9 -3.5 5.2 May-31 69 -10.7 8.1 -7.8 7.2 -7.1 6.3 Jun-30 99 -18.7 12.5 -10.5 6.2 Jul-15 114 -23.5 14.0 -12.3 6.2 GDP in the year after a leap year Impact to MSMEs: Percentage of vulnerable % y/y, difference in basis points businesses under the marginal support scenario NSA series (LHS) % Calendar-adjusted series (LHS) 7.1 80 6.8 8 Difference in bps (RHS) -23 2.6 1.6 60 2.3 1.4 2.4 4 2.1 -24 -25.0 40 0 -24.7 -25 -24.2 -24.3 -0.2 -0.4 20 -4 -26 -25.5 -5.0 -5.3 0 -8 -27 -26.2 27-Apr 17-May 6-Jun 26-Jun 16-Jul 1997 2001 2005 2009 2013 2017 Source: Banorte 2 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
We are experiencing the worst recession in the last 40 years GDP in Mexico during GDP in 1983 GDP in 1995 % y/y % y/y economic contractions % y/y 1Q83 2Q83 3Q83 4Q83 1Q95 2Q95 3Q95 4Q95 0 0 1983 -4.4 -1.5 -1.8 -5 -5 -4.6 -5.3 -5.7 -10 -6.9 -10 -7.5 1986 -3.7 -9.1 -15 -15 -20 -20 -6.3 1995 GDP in 2009 GDP in 2020f % y/y % y/y 2001 -0.4 1Q09 2Q09 3Q09 4Q09 1Q20 2Q20 3Q20 4Q20 0 0 2009 -5.3 -1.6 -5 -5 -2.6 -2.9 -5.0 -5.6 -10 -10 2020 -7.8 -8.9 -9.7 -15 -15 -10 -5 0 -16.2 -20 -20 Source: INEGI, Banorte 3 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
However, the great difference to those are inflation levels Nominal governmental interest rate, inflation and annual exchange rate depreciation % 300 Interest rate Inflation Annual exchange rate depreciation 250 200 150 100 50 0 -50 Source: Banorte with data from INEGI and Banxico *Interest rate(1980-Sep 1982: CPP; 1982- …: Cetes; Exchange rate: 1980- Nov 1991: ‘para solventar obligaciones en moneda extranjera’; Nov 1991 - …: Fix) 4 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
‘Recovery plan’ to return back to ‘normal’ from COVID -19 Programs from Development Banks ▪ Four-month advance to the senior citizen pension ▪ Support for: MX$ billion, US$ million, % of GDP ⎯ Fishermen Institution Measure MXN USD* % of GDP** ⎯ Children with disabilities Total 61.1 2,535 0.25 ⎯ Benito Juárez Universities Liquidity support for companies in the BANOBRAS 6.0 249 0.02 ⎯ Savings for people without access to financial services infrastructure sector ⎯ Agriculture NAFIN / Liquidity support for "first-floor" financial 10.0 415 0.04 ⎯ Upkeep for schools BANCOMEXT institutions ▪ Programs for: NAFIN / Liquidity support for "second-floor" financial 20.0 830 0.08 ⎯ Apprenticeships BANCOMEXT institutions NAFIN / Guarantees program for companies and ⎯ Internet for everyone 6.3 261 0.03 BANCOMEXT businesspeople ▪ Guarantee prices Stabilization of syndicated loans provided to ▪ Toluca – Mexico City Train SHF 8.8 365 0.04 construction companies ▪ Construction of branches of El Banco del Bienestar SHF Additional financing for "second-floor" bridge loans 6.0 249 0.02 ▪ Recruitment of 31 thousand new elements for the Army, Navy SHF Small loans for housing improvements 2.0 83 0.01 and National Guard Attention scheme for the restructuring of debtors' ▪ Rural concrete roads FND TBD loans ▪ New credits and refinancing from INFONAVIT FND Measures to support the Rural Economy TBD ▪ ‘Sowing Life’ program will extend to 200 thousand farmers Banco del Clients' Program 2.0 83 0.01 ▪ Expedited returns of VAT to taxpayers Bienestar ▪ No increase to taxes or adoption of counter-cyclical measures or Banco del Outreach Program TBD corporate bailouts to businesses or banks Bienestar ▪ Elimination of 10 deputy ministries Banco del Reactivation of credit demand TBD ▪ Reduction of 25% in wages of high-ranking workers (Deputy Bienestar Extension of the period to divest affected Director and upwards) and end-of-year bonus elimination FOCIR TBD companies ▪ Savings of 75% in general spending and supplies categories Suspension of commission payments for the FOCIR TBD management of FICAS Source: Banorte and Presentation from Beatriz Leycegui (SAI, April 15, 2020) FOCIR Emerging Program "COVID 2020 - FOCIR-SE" TBD USD/MXN: 24.10 **Nominal GDP in 2019 5 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
Policy response from Banxico and financial authorities to provide liquidity… Reference rate Measures announced by Measures from the Banking % Banxico and the MoF to Commission and Banxico for 9 improve liquidity financial institutions ▪ Adjustments to the accounting criteria 8 ▪ Reduction of the Monetary Regulation to facilitate the granting of support Deposit by $50 billion (US$3 billion) programs to clients ▪ Adjustments to the interest rate on the 7 ▪ Flexibility of the regulatory framework Ordinary Additional Liquidity Facility for capital and liquidity requirements ▪ US dollar credit auctions (using the Swap 6 6.00 ▪ Advice to banks to refrain from paying line with the Fed as a financing dividends and implementing share 5 mechanism) buyback programs ▪ Collaboration with the MoF to ▪ Delay of the implementation of 4 strengthen the Primary Dealers Program international regulations • Implementation of government securities ▪ Extension of deadlines for traded 3 swaps companies to present information to • Amendment to the purchase option of the Commission government securities for market makers 2 dic.-15 ene.-17 feb.-18 mar.-19 abr.-20 Source: Banxico, MoF, CNBV 6 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
…and strengthen credit channels Additional measures announced by Banxico to promote liquidity and strengthen credit channels MX$ billion, US$billion, % of GDP # Measure MXN USD % of GDP Total 750 30.7 3.1 Increasing liquidity during trading hours to facilitate the optimal functioning of financial markets and 1 - - - - - - payment systems Extending the securities eligible for the Ordinary Additional Liquidity Facility (FLAO, for its acronym in 2 - - - - - - Spanish), foreign exchange hedging program operations, and USD credit operations Extending the counterparts eligible for the Ordinary Additional Liquidity Facility (FLAO, for its acronym in 3 - - - - - - Spanish) 4 Government securities term repurchase window 100 4.1 0.4 5 Temporary securities swap window 100 4.1 0.4 6 Corporate Securities Repurchase Facility (FRTC, for its acronym in Spanish) 100 4.1 0.4 Provision of resources to banking institutions to channel credit to micro-, small-, and medium-size 7 250 10.2 1.0 enterprises and individuals affected by the COVID-19 pandemic Collateralized financing facility for commercial banks with corporate loans, to finance micro-, small- and 8 100 4.1 0.4 medium-size enterprises 9 Swaps of government securities 100 4.1 0.4 Foreign exchange hedges settled by differences in US dollars with counterparts not domiciled in the 10 - - - - - - country, to be traded during hours when Mexican markets are closed Source: Banxico 7 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
USD/MXN, inflation, and reference rate forecasts MXN forecasts Inflation forecasts Reference rate forecasts USD/MXN % yoy, bi-weekly frequency % 27.5 9 9 Headline 8 26.5 Core 8 2019: 7 Non-core 25.01 25.5 7.25 6 7 24.5 23.47 5 6 23.5 4 22.85 2018: 2020: 3 22.5 5 4.8 2019: 3.2 22.63 2 2020: 2.8 21.5 21.00 22.00 4.75 4 1 20.5 0 3 19.5 -1 19.68 18.5 -2 2 Jan-19 Dec-19 Dec-20 Dec-21 Dec-18 Aug-19 Apr-20 Dec-20 Dec-15 Mar-17 Jun-18 Sep-19 Dec-20 Source: Bloomberg, INEGI, Banxico, Banorte 8 Eco Hist DB NIM Rev C / I NI Div ROE TI L D Dep Loan ICAP BAP Guid Mkt App
Recommend
More recommend
