Costa Rica: Fitch forecasts deterioration of bank portfolios

The accelerated growth of bank loans could result in a deterioration of portfolios due to a change in interest rate trends.

Tuesday, April 29, 2008

If interest rates increase, these portfolios could experience higher default levels, according to a report released yesterday from the risk rating agency Fitch Ratings.
Profits from the sector showed a 24 per cent year-to-year decline in real terms, yielding a return on assets of 1.5 per cent, compared with 2.1 percent in 2006. The Fitch study, called "The Costa Rican Financial System: Annual Results and Perspectives," with data up to December 2007.
Fitch said the lower yields reflect negative economic factors, including lower interest rates, appreciation of the currency and high inflation.

More on this topic

Central American Banks: Special Report

September 2011

Fitch Ratings has issued a special report entitled, "Central American Banking: After the Crisis, a Disparate Evolution"

In Fitch's opinion the banks have shown a mixed performance in Central America during the period of the global financial crisis. At the same time, banking systems have dissimilar perspectives on future performance, reflecting different economic growth prospects in the region.

Negative Perspective on Salvadorian Banks

June 2009

Fitch changed its long term perspective rating from "stable" to "negative" for the banks Agricola, HSBC, and Scotiabank in El Salvador

The reason for this change is the current "negative" perspective for the sovereign rating for the Republic of El Salvador, which could affect the Issuer Default Rating for the long term for the three main banks in El Salvador in the case that the rating is reduced again in the country.

Bank lending boomed in Honduras last year

May 2008

Lending by banks in Honduras rose by 34 percent last year thanks to a stable economy and a reduction in real interest rates, Fitch Ratings agency said.

The banks' growing business volumes in relatively more profitable sectors and their tightening of cost controls helped them to an overall increase of 30 percent in profits last year, Fitch added.

Fitch keeps BANPRO and BANCENTRO on Negative Rating Watch

April 2008

Fitch maintains a Negative Rating Watch on the national ratings of the Nicaragua's Banco de la Producción, S.A., and its subsidiaries (BANPRO) and Banco de Crédito Centroamericano, S.A. (BANCENTRO) following the announcement that 395.3 million córdobas (20.6 million dollars), equal to the amount of capital and interest of the bank bonds (CENIS) that matured April 15, 2008, has been deposited in an account in the name of the Minister of Finance and Public Credit in the Central Bank of Nicaragua.

The transfer of these funds from the banks that held these bonds is subject to the revocation of the judicial order that currently keeps the payments of these oblicgations suspended.

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