...Mexican FX Banks: Diversification Goal Amid Fast Growth Market Leaders in FX Trading: Despite its narrow franchises in a highly concentrated market, FX banks have a strong position in the FX trading business segment. However, FX trading usually represents between 70% and 80% of such banks' total revenues, and there is a significant reliance on a volatile business, as defined in their aggressive business profiles, due to the monoline nature of their business. FX banks are looking for diversification through other segments, mainly by lending, and are experiencing faster growth than the industry average. Fitch expects that these banks will continue to grow rapidly, and the challenge will be to do so without altering their reasonable credit profiles. Low NPLs But High Concentrations: FX banks have lower NPLs + chargeoffs than the system average in commercial loans due to their corporate nature, conservative underwriting standards and prudent investment securities portfolios supporting their...
