| How has the consumer durables/retail sector performed in the last six months? In the period January-August 2010 the sales trend for self service, department and specialized stores in Mexico was positive, with an 8.9% increase year-on-year. These results were driven mainly by the department stores, which increased their sales 14.7% and 11.5% for same-store sales [SSS]. The Mothers day festivities and pre-World Cup purchases helped to boost the results. In terms of type of merchandise, clothing/shoes [+11.9% year-on-year total sales / +8.3% SSS], and general merchandise [+10.1% / +5.7%] have registered higher increases than groceries [+7.7% / +0.8%]. 
What is the current trend in payment delays, payment defaults and insolvencies? We have not registered many payment delays in this sector. However, many companies selling consumer durables had a hard time last year, as their debtors were not paying on time and thus causing higher overdue account ratios, with a consequent deterioration in cash flow. Any suppliers who had a concentrated portfolio by region or social level would have had serious problems generating cash. What is Crédito y Caucions short term outlook for the consumer durables/retail sector? The consumer confidence index [CCI] rose to 91.6 points in September, the highest level since May 2008, when it was at 94.2 points. This improvement is driven by consumers´ sentiment that the Mexican economic performance and their own financial situation will be better in 12 months time. However, consumers confidence is still below pre-crisis levels because, while they expect an improved situation in the future, consumers are still cautious about how to spend their income. Another positive indicator is that, in September, consumer credit lending stopped falling - after 22 months of contraction - and is expected to increase again in the coming months. Therefore, Crédito y Caución expects a further improvement in this sector. | 
