...Gradual Funding Diversification: Fitch Ratings rates 72 non-bank financial institutions (NBFIs) in Mexico; these operate in the microfinance, leasing, factoring, lending to small and medium-sized enterprises (SMEs), consumption, agriculture, and auto financing sectors. Compared to banks, these entities have limited access to funding due to the restriction to take deposits from clients, which is imposed by their legal figure; they have also had less access to institutional funding. Nevertheless, Fitch notes that the rated NBFIs have increased their access to more flexible and institutionalized funding, gradually diversifying their funding mix, and decreasing its cost, in line with the downward trend in reference rates. Nevertheless, this trend could revert as a result of the possible increase in rates, moderately pressuring the net interest margin of those entities that charge relatively high interest rates to their clients. Development Banks Play Relevant Role: Development banks are a relevant...
