...An Evolving Industry Consolidating Sector: Until 2011, pawn lending activity had increased in Mexico as the number of participants grew, attracted by high profitability, benefitting from the consistent rise in gold prices and favorable exchange rates. Since 2012, the sector's performance has been affected by volatility in these two factors. Recently, Mexican pawnshops redefined their strategy, while branch closures and sector consolidation continue amid increasing regulation and competition from microfinance lenders. Business Model Diversification: In response to changing market dynamics, the sector is diversifying its activities toward unsecured lending or pawn lending collateralized with general merchandise and its commercialization. The latter entails relevant capital expenditures to refurbish branches to a commercial format. Partial Recovery in Financial Performance: The use of hedging instruments and the depreciation of the Mexican Peso in 2014 and 2015, together with strategic actions...
