Central American Banks: Review and 2010 Outlook

According to Fitch Ratings, even though the economic scenario has improved, Central American banks face challenges related to the quality of their assets.

Tuesday, March 9, 2010

Central American banking systems have weathered the financial crisis relatively well. Even though profits fell considerably during 2009, industry solvency levels remain good. Profits fall mostly because banks opted for liquid assets and increased their expenses in provisions. In 2010, Fitch expects banks to perform better, as the economy recovers.

In order to shield from a negative economic environment, Central American banks chose to limit the growth of their credit portfolios, redirecting available resources to more liquid assets. This trimmed profits, but improved their capital solvency situation.

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More on this topic

Central American Banking: Results and 2010 Perspectives

March 2010

According to Fitch Ratings, even though the economic scenario has improved, Central American banks face challenges related to the quality of their assets.

Central American banking systems have weathered the financial crisis relatively well. Even though profits fell considerably during 2009, industry solvency levels remain good.

Central American Banks: Annual Results and Perspectives

April 2009

Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.

The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.

Fitch Ratings Special: Central American Banks

February 2009

From abundance to scarcity: Challenges faced by Central American banks in an environment of tight liquidity.

After having been hit hard by the US mortgage crisis in 2008, large US and international banks have considerably weakened, in some cases escaping from bankruptcy only thanks to strong government intervention.

Central American Banks: Biannual Results and Perspectives

August 2008

In Fitch's opinion (in the Special Report), the complex economic environment in the region is starting to have an effect on the performance of the banks in Central America.

"Results for the first half of 2008 indicate that the slump in the economy and the increase in inflation have weakened the quality of bank assets," indicated the report.

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