MEXICO CITY The chief executive of Mexico's fourth-largest bank by assets, Grupo Financiero Banorte, is optimistic about expanding the bank's business this year despite of worries over a global economic slowdown.
Banorte expects to increase its lending by 15 percent this year, Chief Executive Alejandro Valenzuela told the Reuters Latin American Investment Summit. That would be in line with last year's increase in lending.
Mexican President Enrique Pena Nieto hopes to push through major energy and fiscal legislation later this year that could help boost growth, part of a wider raft of economic measures.
Earlier this month the government unveiled a bill aimed at spurring lending in Latin America's No. 2 economy, where banks boast high capital levels but lend much less than their counterparts in other countries.
The reform effort will be positive for lending, but it is "more of a long-term vision," Valenzuela said, adding that wider economic growth is a more important factor.
"If Mexico's economy expands, then obviously the banks and financial sector will be able to lend a lot more," he said.
But given an economic slowdown and political fault lines that could disrupt Pena Nieto's reform agenda, Valenzuela remains cautious.
"Much of what might happen in Mexico in the next 12 to 18 months is going to depend on the effectiveness of these reforms," he said. "If they go well as we expect ... then obviously Mexico could grow at much better levels."
A wider economic slowdown could drag on Banorte's growth, Valenzuela said, although he said the bank is not yet revising growth expectations even though Mexico's annual economic growth slumped in early 2013 to its weakest in three years.
Valenzuela said he expects Mexican economic growth to pick up in the second half of the year. However, the bank is not currently considering any acquisitions or capital raises.
"I think we have to be cautious, we have to be careful. I have never seen so much uncertainty in my life," he said.
Still, Valenzuela brushed off concern about Mexico's three largest homebuilders, Geo (GEOB.MX), Homex (HOMEX.MX) and Urbi (URBI.MX), which are struggling under heavy debt loads. Geo and Urbi have said they are considering debt restructurings.
All Mexico's banks are facing write-downs on loans to the homebuilders, he said, noting this is a one-off issue that will not affect the bank's results.
"It can still be a good year, in spite of the homebuilders' issues."
(Editing by Simon Gardner and Dan Grebler)