In the last two years, 100,000 loans that were up to date became arrears, and bankers attribute this mainly to the increase in unemployment and the decline in economic activity.
The slowdown that the Costa Rican economy has suffered in the last two years is taking its toll not only on businesses and families, but also on the banking sector.
Figures from the General Superintendence of Banks and Financial Entities (Sugef) detail that "...
The deterioration of the economy and rising unemployment are the main reasons behind the difficulties faced by companies and individuals in Costa Rica in paying back their bank loans.
According to figures from the General Superintendence of Financial Entities, between January 2017 and July 2018, the percentage of loans in defaults for more than 90 days or in judicial collection, went from 1.65% to 2.51%, showing an upward trend in recent months.
From June 2017 to May 2018, the average default rate of the Costa Rican financial system's credit portfolio increased from 1.36% to 2.14%.
According to figures from the General Superintendence of Financial Institutions (Sugef), between April and May of this year, Banco Nacional de Costa Rica (BNCR) saw an increased in its arrears of greater than 90 days and judicial collection from 2.65% to 4.18%, thus surpassing the 3% that is established as the prudent maximum limit.
At the end of August of this year, the default rate in the loan portfolio of the national financial system was 2.54%, higher than the 1.21% rate recorded four years ago.
Elperiodico.com.gt reports that "...When comparing payment delays between 2013 and 2017, the segment with the highest rate is that of small companies, made up of small and medium-sized companies, which went from 3.32% to 7.92%.
Compared with other economies, the indicator measuring non-payment in the banking system is relatively small, with marked fluctuations in different sectors.
An article on Prensalibre.com reports that according to the Superintendency of Banks (SIB), the indicator for defaults in the Guatemalan banking system "went from 1.55% in May last year to 1.43% in the same month this year."
The Congress of Honduras is analyzing lowering credit card interest rates from 60% to 30%, in a rescue plan that includes pension funds buying that debt from the banks.
The rescue plan on overdue credit cards, which uses resources from pension funds, could lead to bankruptcy for these entities, Honduran economists warn.
An advisor to the National Congress, Eval Diaz, told prensa.hn that the debt amounts to about $750 million and through a legislative decision the portfolio would be bought in addition to lowering interest rates on credit cards from 60% to 30%.
A passive base rate in excess of 12% would be problematic, affecting the behavior of borrowers and is likely to cause an increase in defaults.
The Passive Base Rate (PBR) reached 10% on May 9, a level not seen since October 2009. The banks set their interest rate according to the PBR and charge an additional margin. It is estimated that there are 400,000 public bank transactions related to this indicator, reported Elfinancierocr.com.
With the implementation of the statute of limitations, more than 1.6 million records have already been wiped.
Two years ago the Panamanian Credit Association began implementing the statute of limitations, which applies when a consumer so requests, seven years after having made the last payment on any commitments they had.
The law, enacted in 2002, states that the requirement also applies to consumers who haven’t finished paying or have not made any payments and have waited seven years.
The Department of Taxation in Costa Rica will send a list of tax defaulters to banks every month.
Francisco Villalobos, director of the entity, said that both banks and credit bureaus are not required to incorporate this information into their systems.
However, the move was seen as favorably by the banking sector, Franco Naranjo, President of the Costa Rican Banking Association (ABC), said, "We have not thoroughly analyzed the issue, but any information that is risk-related is welcomed by the guild. "
There have now been seven consecutive months during which the default rate of borrowers from the Banco Nacional de Costa Rica has increased, having exceeded the normal limit of 3% over the past three months.
The increase in defaults is due mainly to problems with real estate projects in Puntarenas and Guanacaste, said Bernardo Alfaro, deputy general manager of the bank’s risk management office.
The Superior Council of Private Enterprise has complained to the government about unfair competition regarding the importation of eggs from Honduras, and the illegal actions of the “No Pago” movement.
The Superior Council of Private Enterprise (COSEP) has released a statement in which it expressed its “deepest concern at two events in the economic sphere which if not remedied by the government in a timely and accurate manner in the short-term could bring irreversible consequences of great magnitude for our immediate economic performance as a nation.”
The partnership between the Executive Directorate of Revenue and the company Equifax, will mean that tax defaulters will be included in the credit bureau’s information.
This agreement will allow access by the financial system (private banks, finance companies, and cooperatives), to taxpayer’s debt information held with the Treasury.
"The measure of including tax debtors the credit bureau will help strengthen the credit analysis carried out by financial entities," said a source from the Honduran Association of Banking Institutions (AHIBA) ", according to an article in Elheraldo.hn
The Economy Ministry presented the quarterly survey on credit and debit cards, through October 2010.
Regarding credit cards during for this period, there were 29 issuers with 403 types of plastic.
If debt was distributed equally among the economically active population, it would represent a per capita debt of $ 837, which is almost double the minimum wage.
As of December 2010, debtors totaled 257.970, 17.4% less than the 312.158 existing in December 2009.
The Chairman of the parliament´s Production, Economy and Budget Committee, Wálmaro Gutiérrez, attributes the decline to May´s entering into effect of the new credit card governing regulation.
"In terms of card issuance, Gutierrez specified that in 2009 emissions added to 408.466.
Late loans summed $278 million in January 31, 24% more than the same date of 2009, when they stood at $224 million.
The situation is more pronounced for loans in dollars: in 2009 late loans accounted for $33 million, having now climbed to $68 million, a 108% increase.
Sigloxxi.com reports that “the variation has been subtler for loans in domestic currency: +9.7%".