Irrecoverable Receivables Grow 37% in El Salvador

From January 2008 to January 2009, the banking system’s unrecoverable portfolio grew by 36.9%.

Monday, March 30, 2009

The portfolio with the riskiest loans, known as "E" and classified as "irrecoverable," reached $246 million in January 2009, while $179.7 million were recorded in January 2008, a variation of $66.3 million.

In percentage terms, this portfolio rose to 2.7% of total loans, while in 2008, it accounted for 2.0% of the total. The figure is closer to the maximum set at 4.0%.

A report in La Prensa Gráfica explained the impact this has on banking, indicating that for this loan portfolio banks have to separate the same amount of the loan (100%) as capital reserve, which directly affects earnings.

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Bad debts are growing and a credit boom is losing steam within the Guatemalan banking system, reflecting the nation's economic problems, according to a report by the regulator, the Bank Superintendent's Office.

The banks' bad-debt portfolio rose from 2.1 billion quetzals (US$286 million) on January 1 to 2.77 quetzals (US$374 million) on July 13, an increase of 24 percent.

Banks in El Salvador under pressure from bad debts

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El Salvador's banks have had to increase their provision for bad debt by 15.2 percent, according to the latest report from the El Salvador Bankers' Association (ABANSA).

In May alone, the bad-debt portfolio grew by 4 percent, and the increase over the last year has been 25 percent.

Access to Credit Histories in El Salvador

December 2012

Salvadoran banks want restrictions to be eliminated so that all financial institutions can share and have access to positive or negative credit histories of their customers. reports that "The Credit Bureaus Act provides in Article 14 that the credit history of customers or consumers can only be supplied to operators with their 'express written consent'."

Increase in Unpaid Loans in El Salvador

May 2009

Difficult to recover or irrecoverable loan portfolios are growing, a result of the deterioration of the users’ payment capacity.

Banks’ highly rated loan portfolios, such as A and B are experiencing a decrease; such is the case with loans classified as A1 and A2, which in March had a decrease of 4%, "which represented $326.8 million in loans that dropped in category," according to data from the Salvadoran Banking Association (ABANSA), published in

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