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S&P affirms ratings of JPMorgan's Mexican banking, brokerage units

S&PGlobal Ratings on July 14 affirmed the national long-term ratings of and brokerage arm at mxAAA.

Theoutlook is stable. S&P also affirmed their short-term ratings at mxA-1+.

Theratings reflect S&P's view that both companies are strategically importantto their ultimate parent company, JPMorgan Chase & Co. The Mexican subsidiaries areintegrated with their parent and benefit from its global presence, while therest of the group would support them under nearly any foreseeable circumstance,S&P noted. The ratings also consider their "verystrong" levels of capital and profits, S&P said, adding it expectstheir consolidated risk-adjusted capital ratio to be around 18% during the next12 to 18 months.

Thebanking unit also has lower funding costs than the average for the Mexicanbanking system and adequate liquidity.

However,the ratings also consider its weak business position given that its incomeremains concentrated in capital intermediation on behalf of third parties,which is susceptible to high volatility.

Inaddition, the ratings are based on S&P's Banking Industry Country RiskAssessment, or BICRA, for Mexico, which stands at bbb. This reflects Mexico'srelatively low GDP per capita, which limits its capacity to withstand externaleconomic shocks and the capacity of households to take on debt, S&P noted.

"AlthoughMexico has remained stable in macroeconomic terms, its economy still lacksdynamism," S&P pointed out, adding that low income levels, largeinformality in the workforce and a poor legal framework limit credit growth andbanking penetration.

S&P Global Ratings andS&P Global Market Intelligence are owned by S&P Global Inc.