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.
Fitch Ratings issued a special report: "Central American Banking: Evolution of the Crisis and Learnt Lessons".
In Fitch's opinion, the negative impact the international crisis had on Central American banks was very evident in 2009. The current economic context poses growing risks for the sector, as well as an important challenge for this year.
"Banking systems of the region have witnessed a sensible reduction in their cumulative results in the first half of the year, mainly caused by a considerable increase in delinquent loan reserves", states the report. "These results will continue under pressure in the following months, and their potential bounce-back will depend on an improvement of the economic environment, which Fitch does not expect before 2010".
If we are to maintain growth and profitability in our portfolios, we should be much more aggressive in the types of instruments for investment.
The worst enemy of investment is inflation. In Costa Rica, this variable has increased significantly. According to estimates by the World Bank, it will remain one of the highest in the region.
Furthermore, it is very possible that there will be an increase in the money supply because the government is planning to ask the International Monetary Fund for a $750 million loan to strengthen the economy. Whether it is through the increase in bank credit if these funds are targeted to strengthen it or by other means, there will be more money in the street, which would elevate inflationary pressure.
Up to and including April 9, the total growth (including loans in local and foreign currency) was 8.3%, the lowest in the last two years.
Despite measures taken by monetary authorities to keep the money market liquid in order to stimulate credit, financing to companies has not reactivated. Directors of the Industrial Bank and G&T Continental state that they are receiving up to 20% fewer loan requests.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
FMI: "Recessions associated with financial crises tend to be severe. Recoveries from such recessions are typically slow."
If such recessions are globally synchronized then they tend to last even longer and be followed by recoveries that are even weaker.
Countercyclical policies can be helpful in ending recessions and strengthening recoveries. In particular, expansionary fiscal policies seem particularly effective.
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 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.
Sales are slower and getting credit is not as easy, but the effects of the crisis are, until now, softer in Panama than in other countries.
Although the situation is not the boom that it was two years ago, when Panama City was growing rapidly toward the sky, the figures are still in positive terrain. The toughening of the conditions imposed by banks for granting new loans is noticeable and, speaking of sales, the recurring word is "slow," and this has led to strategy variations by real estate operators.
Situation Report for March 2009 by the Executive Secretary of the Central American Monetary Council (SECMCA).
The Central American - Dominican Republic region could experience economic stagnation or a slight decline in 2009. According to what was published in the February report, econometric projections of regional economic growth already considered that the area of economic stagnation is at its bottom point.
Summa Financial Special: Presenting the classification and analysis of the regional financial system.
In the April edition, Revista Summa will present its bank, insurer and stock exchange rankings. On the whole, it shows a healthy sector with the capacity to face the challenges ahead. Regional banking groups have gained greater importance and the magazine identified ten that represented 33% of the assets for 2008.
The Central Bank of Honduras is pressuring bankers to enlarge their credit portfolios, but banks are resisting any change to their risk policies.
In statements in La Tribuna, the well-known banker, Jorge Bueso Arias, insisted that "it is not that [the Central Bank] wants to put forth mandates, but rather... it wants that we increase our credit portfolio, and I have said publicly that our main responsibility is to our depositors,...
An analysis of the changes in the dynamics of granting credit, in an interview with the Superintendent of the Salvadorian Financial System.
Luis Armando Montenegro, Superintendent of the Financial System, in an interview published in La Prensa Gráfica, responds to questions about the liquidity of the Salvadorian financial system, the contraction of external credit to the local banking system, changes in the granting of loans, and interest rates, among other issues.
Residential occupancy permits granted in the metropolitan area, which represents 80% of the total, diminished 27.1% in 2008 compared to 2007.
The decrease, accumulated primarily in the third quarter of 2008, were due to the increase in the costs of building materials and a decrease in available credit amid the backdrop of the financial crisis and weak global economy.
The effects are already visible, there is a strong reduction in the credit for housing and vehicles, as well as a restriction of credit cards.
This was confirmed by representatives of the sector, after participating in presentation of the fourth report on the economic situation by the Nicaraguan Foundation for Economic and Social Development, Funides.