ACAPULCO, Mexico (Reuters) - Mexican banking credit will likely grow up to 25 percent in 2008, slightly above last year's expansion led by strong demand from the private sector and unaffected by the U.S. credit crisis, the Mexican banking association said on Thursday.
Enrique Castillo told the Latin America Investment Summit he expected lending in Mexico, one of the fastest-growing banking sectors in emerging markets, to grow 25 percent in the private sector and about 20 percent in consumer and housing loans.
The sector's loan portfolio overall grew 19 percent in 2007 and Castillo said the outlook was slightly stronger this year despite a slowing economy because businesses are still expanding, while demand for mortgages amid Mexico's housing boom is high. Demand for credit cards is also surging.
"There is no evidence that the situation in the United States is affecting Mexico's banking system. Loan growth is very strong and deposits are growing," Castillo said at an annual banking conference in the Pacific resort of Acapulco.
Deposits are expected to grow between 10 percent and 12 percent this year, he added.
Mexico does not have a subprime lending sector and Castillo brushed aside concerns that Mexican banks, which have enjoyed four years of strong growth due to low interest rates and economic stability, are lending too aggressively.
The percentage of non-performing loans to total loans has crept up over the past three years, especially in consumer finance, reaching 5.8 percent at the end of February. The figure for credit cards is at 6.8 percent.
He said Mexico's banking system, which is dominating by foreign-owned banks such as Citigroup's (C.N: Quote, Profile, Research, Stock Buzz) Banamex, still needed more competition and that the government should grant more licenses for niche banks.
Most low-income retail banks that started up last year should reach profitability from 2010, Castillo said.
(For summit blog: summitnotebook.reuters.com/)
(Reporting by Robin Emmott and Armando Tovar, editing by Maureen Bavdek)
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