Fitch: Mexican Pawnshops, an Evolving Industry
Mexico, August, 31 2015 -
Gold prices and exchange rate volatility, amid increasing regulation and competition from microfinance companies, are pushing the consolidation of the pawnshop sector in Mexico, according to a new Fitch Ratings dashboard report.
The report also explains the key rating drivers affecting the credit profiles of these entities.
In Fitch's opinion, the evolution of the sector's business model towards unsecured personal lending or pawn lending collateralized with general merchandise and its commercialization, is one of the factors that is driving a partial recovery in profitability for some of the rated pawnshops.
The sector's capitalization ratios are reasonable considering the concentration in a segment with high operational and reputational risks. The entities' funding base is limited and undiversified, although its liquidity is high and sustainable.