Mexico Market Chatter – Jan. 23 to 30, 2025

MARKETS

The S&P / BMV IPC was up 1.9% over the week due to expectations that the Banco of Mexico will accelerate its interest rate cuts, particularly after the 4Q24 GDP experienced a weaker-than-expected 0.6% QoQ contraction. Meanwhile, the Mexican peso lost 1.7% to close at MXN$20.73/USD in another volatile week, affected by the fear of US tariffs on Saturday, while the yield of the Mexican 10-year M-Bono fell 2 bps to 10.0%.

The S&P / BMV IPC’s top stock gainers for the week were: GENTERA * (+7.6%), GRUMA B (+7.6%) and VESTA * (+7.3%). The index’s biggest losers were: WALMEX * (-3.7%), ORBIA * (-3.4%) and GMEXICO B (-3.4%).

Banco de Mexico’s monetary policy meeting will take place on February 6th. Economists expect a 25 bps interest rate cut, according to the last Citi Mexico Expectations Survey. The following macroeconomic indicators will be announced: inflation rate, gross fixed investment, S&P manufacturing PMI, consumer confidence, and business confidence.

LISTED COMPANIES

GFNorte’s total loan portfolio increased 14% YoY (corporate +24%, commercial +18%, consumer +11% and government loans +7%) while the NPL ratio stood at 0.9%, down from 1.0% in the previous year. Total deposits were up 7% YoY supported by an 11% increase in non-interest-bearing demand deposits due to seasonal dynamics and strategic commercial initiatives in transactional accounts. Net interest margin was up 8% YoY as interest paid outpaced interest gains. Provisions rose 45% YoY driven by the growth in loan portfolios, particularly in consumer and corporate segments, reflecting a proactive stance on potential credit risks. Net profit was 5% higher driven by solid core banking performance and positive contributions from non-banking subsidiaries. In 2025, GFNorte expects an 8-11% loan portfolio growth with net profits between MXN$56.9-62.1 billion, implying ~6% growth at the middle point.

GCarso’s 4Q24 revenues were up 6.6% YoY driven mainly by its industrial (Grupo Condumex), construction materials (Elementia and Fortaleza) and Carso Energy divisions, which were supported by higher volumes and FX depreciation. The EBITDA grew 7.9% YoY with a 20 bps margin expansion, boosted by GSanborn’s higher profitability. Controlling net income was 27.1% higher, reflecting stronger operational results, reduced financing expenses and a lower fiscal reserve. The company plans to invest around US$800 million in 2025 in its industrial divisions, Carso Energy, and the materials business, through Elementia and Fortaleza.

Cemex has closed the previously announced sale of its operations in Dominican Republic and Haiti to Cementos Progreso Holdings for an enterprise value of US$950 million before standard post-closing adjustments.

Regional’s loan portfolio increased 14% YoY, with a solid asset quality as the NPL ratio stood at only 1.3%, 5 bps lower than in 4Q23. The financial margin advanced 12% with a 68 bps expansion in the NIM. On the other hand, provisions rose 46%, Net profits were up 4% YoY with a 21.3% ROE. In 2025, Regional expects a 10-15% loan growth with an 11-16% net income growth and a 20-22% ROE.

Qualitas’ 4Q24 net written premiums were up 27.3% YoY while earned premiums advanced 17.7% due mainly to a higher-than-expected underwriting of multi-year policies in fleets, better pricing and a 7.5% increase in total insured vehicles. The combined ratio improved 355 bps to 90.8% with a 455 reduction in the loss ratio that normalized after last year’s impact of hurricane Otis, while financial gains increased 41.9%. Net profits rose 22.4% to MXN$1.38 billion with a 22.2% ROE, up from last year’s 18.4%.

BBajio’s total loan portfolio grew 10.9% YoY fueled by a 13.8% increase in enterprises and 21.8% in consumer. The NPL ratio increased slightly to 1.48%, from 1.36% in 4Q23, indicating a minor deterioration in asset quality. The financial margin declined 4.0% YoY as a result of the high sensitivity to the reference rate, as well as lower credit commissions. Provisions rose 9.8% YoY due to adjustments in risk assessments amid a challenging economic environment. Net profits decreased 8.8% YoY with a 22.92% ROE, down from last year’s 27.95%. In 2025, Bbajio expects a 8-11% loan growth with net profits of MXN$ 9.3-9.8 billion, representing a 10-13% reduction as a result of lower margins and higher expenses.

GCC’s total revenues were down 1.3% YoY due to a 13.9% sales reduction in Mexico stemming from lower cement and concrete volumes, while US sales rose 4.1% due to favorable pricing dynamics both in cement and concrete. EBITDA grew 3.7% driven by efficiency improvements and cost management. Consolidated net income increased 3.9%. Free cash flow advanced 21.2% due to lower working capital requirements and effective cash management strategies.

Grupo Herdez expects 2025 sales to increase between 6-8% with two-thirds of projected net sales growth driven by higher volumes. EBITDA will likely grow +5-7% with a slight margin pressure due to rising costs, FX fluctuations, and higher logistics-related expenses due to increased storage capacity. Additional costs are expected from the implementation of the ERP project. Net profits are expected to rise +9-11% and majority net profits +27-29% supported by the normalization of avocado prices and operational efficiencies.

Planigrupo Latam has increased the offer price for 100% of GAV’s shares to MXN$172.00/share, from an original level MXN$156.0/share. The company also granted a sell option to the GAV shareholders that opt to receive Planigrupo shares as payment in the tender offer; the option has a price of MXN$16.699 and can be exercised on April 28th, 2028. Planigrupo also extended the tender period to next February 17th.

RLH properties completed the acquisition of the “Park Hyatt Los Cabos”, a property which is under development, and that will have 163 rooms, including 90 suites, and will be in the ultra-luxury category with 5 stars. The company also announced that the “Andaz Mayakoba Resort Riviera Maya” will be remodeled and transformed from March 2025. Such transformation will include the change to the “Alila” brand, property of the hotel operator.

Fibra CFE announced the appointment of Iván Cajeme Villarreal as the CEO of CFE Capital, the Fibra’s administrator. Mr. Cajeme has a 13-year expertise in the financial, energy and transportation sectors. He is an economist from UNAM, El Colegio de México and the University of Chicago and he was a visiting researcher at Yale University.

 

OTHER COMPANIES

Grupo Coppel will invest MXN$14 billion in 2025 of which 60% will be aimed at opening 100 new stores and the rest at remodeling existing outlets.

Fintual has expanded its product portfolio. Users will now be able to invest in more than two thousand shares and exchange-traded funds, or ETFs, of US companies. Fintual plans to carry out an initial public offering in the US in the long term.

Nestlé announced a US$1 billion investment in productive projects in Mexico over the 2025-2027 period, according to Steve Presley, CEO for the Americas, and Fausto Costa, Mexico’s Executive President.

Mexican Fintech Clara obtained authorization to operate as a Sofom which will allow it to offer a wider range of services. However, such license does not allow Clara to take client deposits.

Medline Group, a US manufacturer and distributor of medical supplies, will invest US$250 million in a new plant in Nuevo Laredo, Tamaulipas, according to its CEO Yogesh Wadhera.

 

TRADE AND ECONOMICS

Trump repeated that tariffs of 25% on Mexican exports to the US will go ahead on February 1st, even if hopes for a last minute deal, or scaling back of tariffs to certain sectors (steel), remain. Howard Lutnick, Donald Trump’s nominee for Secretary of Commerce, said at his confirmation hearing before the Senate that “tariffs could be avoided if Mexico and Canada take concrete actions to stop immigration and fentanyl traffic”. One day before Karoline Leavitt, the White House Spokeswoman said that “tariffs are on the agenda despite historically levels of cooperation from Mexico”.

Mexico registered a fiscal deficit of 5.7% of GDP in 2024, 0.2 percentage points lower than the forecast published in the “2025 General Criteria of Economic Policy”, according to Hacienda.

The Mexican economy continued to slowdown as 4Q24 GDP contracted 0.6% QoQ (seasonally adjusted figures), which was below the -0.2% consensus estimate and the worst figure since 3Q21. Primary activities experienced an 8.9% QoQ decline followed by secondary activities which were down 1.2% QoQ. As a result, Mexico’s GDP grew 1.5% in 2024 (original data), the weakest performance in four years, led by tertiary and secondary activities which were up 2.3% YoY and 0.3% YoY, respectively, while primary activities fell 2.5% YoY.

ANTAD’s SSS were up a disappointing 1.2% YoY while total sales increased 4.0% YoY in nominal terms in December. The strongest categories were other general merchandise, health care and fruits and vegetables. As a result, SSS rose 4.2% and total sales advanced 7.1% nominal in 2024. ANTAD’s affiliates opened 2,300 new stores after a MXN$2.1 billion investment in 2024.

Mexico registered a US$2.567 billion trade surplus in December 2024, reversing the US$133 million trade deficit in November 2024. Total exports increased 4.9% YoY with non-oil exports growing 6.1% YoY and oil exports falling 16.0%. Imports were up 9.1% YoY with oil imports rising 15%, while non-oil imports advancing 8.8%. For the full year, Mexico recorded a US$8.212 billion trade deficit due to a 4.1% increase in exports and a 4.5% rise in imports. This was the fourth year in a row with a trade deficit.

Unemployment reached a historically low level of 2.4% in December 2024, INEGI reported, which compares against the 2.6% rate in November last year and consensus forecast of 2.6%. Employees increased by 175 K in 2024.

Construction activity declined 2.9% MoM (seasonally adjusted data), and 24.0% YoY (original data) in November, according to INEGI.

Hacienda issued two new bonds amounting to €2.4 billion including: i) a €1.4 billion bond with an 8-year maturity and 4.625% coupon, and; ii) €1.0 billion bond with a 12-year maturity and 5.125% coupon.

Banco de Mexico’s Board is considering an acceleration in interest rate cuts in the first meetings of the year, according to the 2025 Monetary Policy Program.

President Sheinbaum and Energy Secretary Luz Elena González announced the Energy Sector’s secondary laws, with a focus on republican austerity and social justice. In addition, Pemex’s and the CFE’s subsidiaries will disappear, allowing their horizontal and vertical reintegration, and facilitating their efficient operation. Pemex will have preference in determining exploration and extraction areas, and has been granted a new simplified tax regime to increase its profitability. The National Energy Commission, a decentralized body of the Energy Ministry, with technical and operational independence to regulate the energy sector, will replace the recently disbanded autonomous regulators.

CETES auction: 28-day CETES +12 bps to 9.87%; 90-day CETES -10 bps to 9.64%; 175-day CETES -10 bps to 9.61% and 721-day CETES -43 bps to 9.75%.

 

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