Mexican investment bank Monex has reported an eight percent growth in its capital-protected notes issuance during the third quarter of 2020 compared with the same period a year prior.

According to Ricardo Guido (pictured), director at Monex, interest rates in USD are almost at zero while rates in MXN have decreased to their lowest levels in recent years. “More clients are looking to enhance their results while protecting their capital,” he said.

Dual currency deposit issuance has decreased and are perceived as riskier products despite offering attractive rates. But volumes during the second quarter were more than double what was sold during the third quarter.

We expect a 2021 with a growth in demand of capital-protected products 

Monex reported net earnings totalling almost MXN 1.4 billion for the third quarter of 2020, 11% higher than in the same period of 2019.

Total operating income reached about MXN6.63 billion at the end of September 2020, climbing 12% compared with the same period of 2019.

Revenues for September were composed of foreign exchange trading in Mexico (39%), foreign exchange trading by offshore subsidiaries (30%), and the remaining 11% comes from the derivatives segment.

Meanwhile, revenues from the derivatives business were MXN 732m during the period, soaring 93% compared with Q3 19.

Total operating revenues of the bank’s international subsidiaries stand at MXN 1.9 billion reflecting a growth of 14% compared to the first nine months of 2019.

SRP data shows that Monex continues to be the dominant issuer group in the Mexican structured products market, with 1,096 products issued in Q3 20 for US$2.1 billion, compared with 1,687 products in Q3 19 for US$2.7 billion.

Other key players in the market consist of BBVA (506/US$871m), Citi (44/US$184m), Santander (36/US$62m), and Scotiabank with 4 products with a sales volume of US$7.7m.

SRP’s database shows 50 live products issued by Monex that are wrapped as bank deposit certificates and structured bonds, all of which are domestically listed. The products all fall under the FX asset class at a sales volume of US$115.9m and are tied to the USD/MXN underlying.

“We expect a 2021 with a growth in demand of capital-protected products close to 10% as rates will remain low in Mexico, with some spikes of demand in dual currency deposits when volatility rises,” said Guido.

Click here to view Monex’s third quarter earnings.