I discuss the valuation of some of Mexico's largest companies, like America Movil, the largest bank of Mexico, airports, and a new addition to my portfolio.
I do not see a problem with the bank being the 8th largest one. The history of Mexico´s banking industry is very interesting, historically the government has significantly limited competition. In 1994 the banking industry was privatized, with Carlos Salinas de Gortari stating that new banking licenses would be very limited. Limited competition has made Mexico one of the most profitable markets for banks in the world. I recommend checking out margin.mx by Whitepaper, they do great deep dives on the banking industry.
I am curious to analyze how the industry's cost of funding has changed in recent years with the rise of fintechs. Most of these companies do not lend money, but they do take deposits, and offer very high returns. Recently, Nu Bank offered 14.75% interest rate on deposits. These companies have entered into a "price war" funded by VC capital and taking advantage of their lower cost structures.
Great article!
On Banco del Bajio´s competitive position,
I do not see a problem with the bank being the 8th largest one. The history of Mexico´s banking industry is very interesting, historically the government has significantly limited competition. In 1994 the banking industry was privatized, with Carlos Salinas de Gortari stating that new banking licenses would be very limited. Limited competition has made Mexico one of the most profitable markets for banks in the world. I recommend checking out margin.mx by Whitepaper, they do great deep dives on the banking industry.
I am curious to analyze how the industry's cost of funding has changed in recent years with the rise of fintechs. Most of these companies do not lend money, but they do take deposits, and offer very high returns. Recently, Nu Bank offered 14.75% interest rate on deposits. These companies have entered into a "price war" funded by VC capital and taking advantage of their lower cost structures.
Offering 14 75% is a great way to lose money and make it up on volume. Not good for competition though.