The liquidity of the banking system grew by 30% in the last twelve months, helped by the growth of liquid assets of banks and the extension of terms for external loans.
The report by the Central Bank concludes in its study on financial stability that the Salvadoran banking system continues to show a position of robust solvency in terms of liquidity levels which have been expanded in recent months.
The reduction in interest rates generated by increased liquidity in the market lowers the cost of financing for the private sector.
Representatives from the banking sector in Guatemala assert that the reduction in interest rates generated by the increased liquidity in the market, lowers the cost of financing for the private sector.
Funds in the banking system have increased by 10.34% so far this year.
Data provided by the Superintendency of Banks (SB), indicates that loan funds have reported increases year after year. Figures up to December 2008 amounted to $2,449 million, for December 2009 it was $3,013 million, and the balance in December 2010 showed an increase of 4.2%.
Fitch Ratings highlights the liquidity of the insurance market in El Salvador for the first semester.
At the end of the first half of 2010, liquidity in the Salvadoran insurance market was far superior to that of other Central American countries, and even recorded an improvement over the end of the first half of 2009.
Fitch Central America published a special report called "Central American Insurance Sector: Performance in the First Half of 2009 and Outlook for 2010".
Despite the economic contraction of Central American economies in the first half of 2009, the region's insurance industry grew 3% (excluding Panama) when compared to the same period of 2008, reaching $928.1 million in net premiums. The countries experiencing the largest growth were Nicaragua (6.7%) and Costa Rica (4.2%), while Guatemala, El Salvador and Honduras grew just 2.3%, 2.2% and 1.4% respectively, although some of these markets grew just because prices increased or the local currency lost value.
"For the sector's improvement, it will be key to adjust fees for products with high accident rates, as well as more careful subscription"
By the end of June 2009, net premiums had grown at an inflation adjusted rate of 9.8%, although lower growth should be expected for the end of the year, due to worse economic performance. Growth in individual insurance was remarkable (14% average), specially in collective life and accident and health, while general damage insurance saw a 7% increase.
Fitch Rating's Special Report: "Insurance Industry Costa Rica: End of the State's Monopoly"
Costa Rica's insurance industry had been dominated by a state-owned monopoly until the new Insurance Law of 2008; up to December 2008 it is the largest and fastest growing market in Central America (excluding Panama). Total premiums by the end of 2008 summed $611.5 million, with the region's largest year-on-year growth (19.4%).
Profitability drops as asset liquidity increases, but liquidity is what ensures the life of the banking business and their customers' money.
Panamanian banks have not used the extra funds that the financial incentive program (PEF) made available to them in order to stimulate lending. In addition, it must be considered that said funds are very expensive, and they have simply not been needed.
Fitch Ratings highlighted a 26.5% growth in net results by the Salvadoran Insurance Sector as compared to 2007.
•Greater Earnings. The Salvadoran insurance industry recorded a 26.5% growth in its net results for 2007, resulting primarily from an increase in subscribed premiums coupled with a lower accident rate.
• Overestimation of production. The portfolio of net premiums totaled $439.2 million, an increase of 11.4% over 2007.
The finances of the Central Government of Costa Rica continued to show a marked deterioration. Up to and including April, the financial deficit stood at $222 million.
In the first quarter of this year, the results of the accounts of the Central Government showed a decline of 8.5% in revenue over the same period in 2008. Revenue from income taxes showed an inter-annual decrease of 9.8% and customs showed a contraction of 21.4%.
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.
Fitch Central America Special Report: "Salvadoran Insurance Sector: Bi-annual Performance and Short Term Outlook."
The main highlight in the Salvadoran insurance sector is that 80% of the premiums are in the hands of international conglomerates, which creates stability and strength and has resulted in improvements in the solvency, liquidity and management ratios.
The Panamanian Aseguradores Association (APADEA), is a non-profit organisation, that was created in 1952 with the objective of developing, enlarging and coordinating the activity of the insurance market throughout Panama.
Operates in Panama
Phone: (507) 225-4445