As news broke Tuesday that the Mexican government was postponing its long awaited banking-reform bill for political reasons, the country’s biggest domestically-owned bank was preparing to report a tidy 27 per cent rise in first-quarter profits.

Banorte, Mexico’s third-biggest lender and the largest domestic bank in a sector dominated by foreign names, said that profits climbed between January and the end of March to 3.1bn pesos ($253m). It didn’t give the peso figure for the comparable quarter of 2012.

In a statement, the bank said that the results were “driven by favorable performance across business lines and lower growth in expenses”. Shares in Banorte have moved consistently skyward in recent months, gaining almost 58 per cent over the last year.

Tuesday’s first-quarter results also showed a strong expansion of Banorte’s performing loan portfolio, which grew 12 per cent compared over the last 12 months to 404.6bn pesos ($33bn).

Looking closer, consumer loans, which include mortgages, grew 17 per cent year on year. And loans to small and medium-sized companies grew 20 per cent over the 12 months.

That will no doubt come as welcome news for centrist President Enrique Peña Nieto and his administration as they prepare to introduce a banking-reform bill aimed precisely at increasing credit to the private sector.

Credit to the private sector in Latin America’s second-largest economy is only about 26 per cent of gross domestic product, and way below 60 per cent in the case of Brazil and close to 100 per cent for Chile. And economists have long seen that low level as one of the reasons why the Mexican economy doesn’t grow faster.

Related reading:
Peña Nieto suffers first setback, beyondbrics
Mexico: time to boost domestic demand, beyondbrics
Mexico’s poverty conundrum, beyondbrics
Mexico: Aztec tiger, FT
Mexico special report 2013, FT

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