Banks dominate the Mexican stock market

Shares of banks listed on the Mexican Stock Exchange (BMV) fell sharply due to Morena's bill which prohibits the collection of commissions on some of its services.

The panic resulted in losses of 82.124 million pesos in the market capitalization of five banks listed on the local stock market, including Banorte, Santander, Banco del Bajío, Inbursa and Regional (formerly Banregio).

"The market is overreacting to the news, not because the news is not important, but because there is a long way to go for it. In fact, this would not have a significant impact on the operating profit of the banks on the stock market because it is a question of regulating very specific commissions that many banks do not charge any more ", said Manuel González, analyst from Signum Research.

Banorte, with a weighting of 12.96% in the main BMV index, was the one that recorded the largest decline. Its shares lost 11.90% at a price of 106.94 pesos per unit, against 121.39 pesos at the previous closing. With this decline, its capitalization value decreased by 41.666 million pesos.

Analysts said it was the worst loss since the 2008 financial crisis.

Inbursa, the financial arm of Carlos Slim, was the second most affected bank, with a loss of 10.08%, to 25.52 pesos per unit. Santander finished with a drastic drop of 8.12%. The story is told also for Regional and Banco del Bajío, who lost 7.32% and 6.98%, in that order.

Contagion

Subjected to the same negative market sentiment, shares of other financial groups on the stock market, such as Gentera, Credito Real and Unifin, fell by 10.23%, 7.33% and 3.15 respectively.

Analysts said that if the proposal was approved, the banks' revenues and profits would be reduced and, as a result, it would have to make adjustments in other products or services to offset the "losses".

"This means removing the bank's significant income to make up for the loss of revenue, the interest rate of the loans granted will explode, which will make them even more expensive," said independent trader Érick Arámbula.

The initiative, materialized in a document, is revealed by the feeling of "alarming and excessive abuse" on the part of the banking commissions that affect the Mexican population. In fact, this indicates that last year, the cost of this concept was 108,000 million pesos, or 8% more than in 2016.

The initiative of the National Regeneration Movement (Morena) proposes to prohibit banks from charging 12 commissions, such as annuities on credit cards, checking the balance at the counter, withdrawing money from their own ATMs , the creation of an additional statement of account. and replacement of the card in case of theft or loss.

For its part, Marisol Huerta, an analyst at Banco Ve por Más, pointed out that some commissions that want to be removed are no longer billed by some banks, without specifying which.

He stressed that it is only a legislative initiative that has yet to be approved and that nothing prevents the banking sector from taking action.

"Until the initiative is approved, the real impact for the banks can not be determined," he said.

Negative

Georges Hatcherian, an analyst at Moody & # 39; s, said that this initiative had negative effects on banks' credit because it would affect their profitability, with commissions accounting for about 17% of their net income.

"The proposal also generates uncertainty as to the direction that the new government will take in Mexico with regard to the independence of the central bank, because it asserts that the measures taken by Banxico to regulate the commissions have The cornerstone of Mexico's macroeconomic and financial stability over the past two decades has been the presence of an independent central bank, "he said.

Lawmakers said in the afternoon that they would consider proposals with the sector, including the new Treasury Secretary, Carlos Urzúa, said the decisions will not be made lightly. However, losses for investors were in the market.

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