Mexico banks' July private lending rises 14.6 pct

By Noel Randewich

MEXICO CITY, Aug 29 (Reuters) - Mexican bank lending to individuals and companies, a key engine of economic growth, grew 14.6 percent in July over the year-ago period, the central bank said on Friday.

Banks' consumer credit, which includes credit cards, fell 13.3 percent in July over the year-ago period, the Banco de Mexico said in a statement.

Much of the drop came because Banamex, the Mexican unit of Citigroup (C.N), recently moved credit card debt off its books and into its specialized lending company, Tarjetas Banamex, the central bank said.

Robust bank lending is seen as helping Mexico's economy grow despite the slowdown in the United States, the destination for more than 80 percent of Mexican exports.

In June, bank lending to the private sector rose 15 percent.

The government expects the Mexican economy to grow 2.8 percent this year, slowing from 3.2 percent in 2007.

Mexico's gross domestic product grew at a 2.8 percent annual clip in the second quarter.

Growth in consumer lending peaked at an annual rate of nearly 50 percent in 2005 and 2006. Since then, it has trended lower.

Bank mortgage lending rose 14 percent in July while bank loans to businesses were up 22.9 percent, the central bank said.

Credit from non-bank lenders rose 131.4 percent, reflecting the movement of Banamex's credit card portfolio to Tarjetas Banamex.

The average credit card interest rate in July was 34.24 percent, the same as in June, the central bank said.

Consumer credit was nascent in Mexico when its economy was dragged down by the last U.S. recession at the beginning of the decade. Now, lending is growing steadily, boosting domestic consumption and home building, and is expected to help offset a drop in U.S. demand for Mexico's exports.

Lending in Mexico dried up in the mid-1990s after a financial crisis devastated the country's banking industry.

Since then, international finance houses such as Citigroup and BBVA (BBVA.MC) have bought up most of Mexico's largest banks. (Reporting by Noel Randewich)