Figures up to October 2017 show a 3% YoY growth, well below the 12% increase registered in the same month in 2016.
The slowdown seen in economic activity during the last eleven months is one of the reasons that explain the lower demand for bank loans by companies in the country.
Elfinancierocr.com reports that "...In addition, the rise in interest rates in colones and dollars, the volatility presented by the dollar in the middle of last year, as well as the growing fiscal deficit, prevented companies from finding any stimulus to support the idea that it was a good time to borrow."
If the bill being promoted by the Hernández administration is approved, the business sector will have about $340 million in bank credit.
Without disclosing further details of the bill, the authorities estimate that with the implementation of the reform, approximately $337 million per year will be made available to the agricultural sector, housing sector, tourism and MSMEs.
Uncertainty caused by the complex political situation facing the country explains much of the stagnation in the growth of bank credit to the private sector.
Credit to the business sector has remained virtually unchanged since the end of last year to date, reflecting the difficulties faced by companies in planning investments in the short and medium term given the current political situation.Year-on-year growth stands at around 5%, a trend that has been maintained throughout the year.See: "Corruption, impunity and politics"
Confirmation of the decline in the financial capacity of the construction company has strengthened arguments by those calling for the revision of their contracts and that the firm not be awarded others.
From a statement issued by Standard & Poor's:
SAO PAULO (Standard & Poor's) March 29, 2016--Standard & Poor's Ratings Services lowered its global scale corporate credit rating on Odebrecht Engenharia e Construção S.A.
The drop from 20% to 6% in the annual growth rate of bank lending to companies as of June, illustrates the direct link between confidence in the future and demand for business loans.
Cathay Bank estimates that slower growth in bank loans for business activities is due to the uncertainty regarding the near future of the economy. The possibility of a tax reform, coupled with the lack of action by the government to reduce spending and increase public investment are factors that are raising questions and forcing companies to delay projects.
In the last three years there has been a decline in the amount of credit granted to private companies for purchasing property, land and construction of buildings.
In September 2014, on average, 834 transactions were formalized between banks and other financial companies, representing a decrease of 28% compared to the same month in 2013. The downward trend in granting of loans for these purposes has been observed since early 2012.
Between January and November 2013 credit to the private sector increased by 14% compared to the same period in 2012.
Personal consumption and trade were the sectors that experienced the largest growth in the period under review, beating construction loans and mortgages. Overall, the banking system awarded $24,815,000 in loans to the private sector.
In 2013 $334 million were traded in the primary market in bond debt securities issued by Guatemalan companies.
Figures from the National Stock Exchange (BVN) reveal that during 2013 $334 million worth of bonds were traded. Of that total, 25% were in dollar bonds, the rest were denominated in quetzals.
"... the volume of trade covering activities by industry, banking, agriculture, trade and finance, is growing," said Rolando San Román, CEO of the BVN.
The instrument which had been viewed as a way to circumvent the current credit squeeze, is now officially considered as another form of credit facility.
Bankers' acceptances had been relaunched by the National Stock Exchange (BNV) as a way to provide short-term funds to companies who require them, without having to apply for a formal loan, believing that banks would not have to count them as part of their portfolio credit growth which is currently limited by resolution of the Central Bank of Costa Rica (BCCR).
A bill has been presented to the Legislature which will regulate the use of inventories, intangible assets and other movable assets as security for financing.
A statement from the MEIC reads:
San Jose, February 7, 2013. In order to increase access to credit, particularly for SMEs, the financial sector, the private sector and the Government, with the help of international consultants, over the last few months have been working on the basis for a proposed Law on Secured Transactions.
In the past two years, over $2 billion worth of financing for large enterprises in Guatemala has been provided by large Colombian banks.
The main participant is Bancolombia, which in 2010 and 2011 was involved in syndicated loans for over $1 billion, including the acquisition of Deorsa and Deocsa by Britain's Actis, the extension of Ingenio Magdalena and financing for Cementos Progreso and Cabcorp.
In September the total amount of loans to large companies increased by 7.04%, compared to the same period in 2010.
Regarding the data from the Superintendency of Banks (SB), an analyst from the Association for Research and Social Studies (ASIES in Spanish), Ruben Dario Narciso, detailed several reasons that have lead to the increase.
Adequate accounting records and financial controls improve access to credit lines ...
In recent months the banking system has reduced interest rates on loans to large corporations.
In March 2009, the average interest rate on loans over $650,000, stood at 9.75%, changing to 9.29% in December 2010 and in March of this year is was 8.43%, showing a downward trend.
"Loans of less than $650,000 and higher than $23,000 show the same characteristic.
Banks are offering rates of up to 7.5% for mortgage loans, both consumer and corporate.
Mauricio Alvarez, manager of the Banco de los Trabajadores (Bantrab) noted that low interest rates abroad has meant that much "capital is returning to the country because the rates are better."
"Erasmo Velasquez, president of National Mortgage (CHN), noted that there are now market rates of between 8 and 10 percent annually, compared to a year ago when they were 11 and 12. From an article in Elperiodico.com.gt
The average interest rate charged by banks to corporate customers has fallen more than 10% over the last 2 years.
In December 2008, the average rate for corporate loans over $ 650.000 was about 9.72%, dropping to 8.55% in February 2011.
Luis Lara, CEO of Industrial Bank, stated that they have not seen such low rates in the country for a long time, which is good because "it allows for meaningful projects to get done."