...Strong Growth: Leasing companies have grown at a solid pace in recent years, benefiting from the still limited penetration of small and medium enterprises (SMEs) in Mexico. The top five leasing companies in the country have increased their portfolio at annual rates above 50% over the past two years. Leasing in Mexico is provided by bank subsidiaries as well as by regulated and nonregulated nonbank financial institutions. Fitch rates four of the latter, which are considered independent leasing companies. Consistent Profitability Metrics: The sector has maintained consistent financial performance across the business cycle. Profitability is underpinned by the portfolio's steady growth, the ability to charge somewhat higher interest rates and well contained costs. Potential Pressure on Margins: Leasing contacts are granted at a fixed rate, whereas the majority of the entities' funding is composed of floating-rate liabilities, producing a mismatch in interest rates. Fitch Ratings considers that,...
