Fitch Ratings has projected higher profit margins for Central American banks.
The outlook on the ratings of banks in Central America and the Dominican Republic in 2013 is Stable. Strong balance sheets and ample liquidity levels that allow them to face external risks, continue to characterize most banking systems, according to Fitch Ratings.
Bank profits in 2013 will be driven by a reduced need for provisioning for bad loans, loan growth, the restructuring of assets and some efficiency gains,' said Rene Medrano, Senior Director of Financial Institutions at Fitch. 'Fitch anticipates that banking systems in the region will continue to grow at double-digit rates in 2013, except in the Dominican Republic and El Salvador where the pace is slower. The wide availability of funds combined with relatively low levels of banking in the region, suggest that banks could sustain growth for a longer period of time.
Guatemala banks earned $387 million in 2011, up 17.6% from $329 million in 2010.
Victor Mancilla, Superintendent of Banks, said that besides the increase in profits, the default rate fell to 1.6%.
"Meanwhile, the return on assets (ROA), which is what banks earn for each Q100 invested, rose from 1.6% in 2010 to 1.7% in 2011, meaning that for every Q100 the bank received Q1.60 and Q1.70, respectively.
In 2010 the insurance company's profits grew by 24% in 2009.
The regional growth strategy established five years ago has yielded great results. The significant increase in income is due, in large part, to the company’s operations in Panama, Costa Rica, Nicaragua and El Salvador.
The economic growth experienced by the region in the past has accelerated the insurance business, leading to the Assa Groups’s growth in operations in different countries.
The profits reported by insurers in 2010 were $ 32.7 million, 11.4% higher than 2009.
The information comes from data from the Superintendence of Banks and also states that in 2009 profits reported a 22.6% growth compared to 2008.
"The report submitted to Congress by the head of SIB, Victor Mancilla, explains that the return on capital invested by insurance companies increased from 17.4% in 2008 to 18.1% last year.
In the first half of the year, the ten financial groups operating in the country posted profits totalling $216 million.
According to Guatemalan Banking Regulator (SIB) figures, profits in the first half of 2009 were $210 million.
"The list of ten financial groups is led by a bank, followed by a mix of financing institutions and offshore banks. Some of the biggest are brokerage firms and credit card issuers," reports Prensa Libre online.
Despite the slowdown of the economy, banks reported on October 30 that they had an increase of 23% in comparison to October 2007.
The entity with the best results was Banrural, with $90 million (Q616.2 million) or an substantial increase compared tot he $73 million (Q559.3 million) recorded in the first ten months of last year.