At Banorte, we are ready to capitalize on these opportunities. Based on our analysis, we anticipate a growth rate of 3.6% in the country and an important opportunity to participate in financing projects in various sectors.
The energy reform affects all energy-related industries including electricity. And if in the short term the significant fall in oil prices changes the course of investment projects, the electrical industry on the contrary — particularly the so-called green energy — acquires special relevance. Mexico not only has untapped reserves with a high cost of extraction; reserves in shallow waters and conventional underground reserves with low extraction costs — between $6 and $20 dollars per barrel — which pose very profitable projects.
The current government has undertaken the most ambitious national infrastructure program in history, with projects valued at 8% of the GDP, contemplating the combination of public and private investment. This represents a huge window of opportunity to activate the construction industry in our country.
The Mexican financial system is one of the most robust and well capitalized in the world. However, banking penetration is very low — loans from commercial banks to the non-financial private sector for example, barely exceeds 15% of GDP — one of the lowest ratios in Latin America. And although this low penetration could be explained by the high degree of informality in the country’s economic activity and the difficulty of banks to recover collateral, rapid technological advancement and financial reform could benefit the penetration of the banking process in the population.
The recent initiative to channel resources and support the housing industry in Mexico — by approximately Ps 370 billion, of which we have set aside Ps 35 billion to invest in the sector, makes us important participants. In addition, Banorte will make processes and products that enhance our offer available to new customers, facilitating and reducing time in processing mortgages and loans in general, both in areas where we already have a significant market share as well as in places where we have no presence yet.
The tendency of the Mexican population to become more aware of risks they face every day, the high costs of an accident and the large number of young adults are factors that have driven the demand for insurance. Another relevant factor are recent modifications to regulations for vehicles, particularly the requirement to have thirdparty insurance on federal roads in the country.