Bank Credit Slows down

In recent months, the credit portfolio of public and private banks in Costa Rica has been growing at a slower rate, partly because of high levels of indebtedness of the population.

Tuesday, May 7, 2019

According to figures from the Central Bank of Costa Rica, between October 2018 and March 2019 the year-on-year growth of credit has generally slowed, since the increase in the portfolio of private banks fell from 14% to 12%, in public banks the decline was from 1.37% to 0.75%, and in the case of other financial intermediaries the decline was from 8.86% to 6.97%.

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Mauricio Hernández, director of private banking at Banco Prival, explained to Elfinancierocr.com that "... individuals and families are too indebted, which leaves no room for new commitments. This is evidenced in the increase in delinquencies in some lines of credit, such as consumption.

Regarding the non-payment of credits in the country, days ago it was reported that the low economic activity and the growth of unemployment explain the 25% increase reported between February 2018 and the same month of 2019 in the value of assets acquired by banks to recover credits.

See "Unpaid Bank Loans Increase"

Hernandez added that "... Despite the fact that the local economic and fiscal outlook has improved compared to last year, consumer and producer confidence are still not high enough to allow local private credit to take off.

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More on this topic

Uncertainty Slows Down Private Credit

September 2018

Explained in part by doubts about the economic future in the short term, in Costa Rica credit granted to companies and individuals went from growing at an annual rate of 8% in January to 4% in June of this year.

According to figures from the Central Bank of Costa Rica, in the first six months of the year credit to the private sector has reported a clear downward trend, since in January the amount registered amounted to $34.072 billion and the increase compared to the same month in 2017 was 7.9%. 

Private Credit Hits the Brake

August 2018

In Costa Rica, the active participation of the government issuing debt in the local market and the uncertainty over fiscal reform are some of the reasons behind the sharp slowdown in growth of credit to the private sector.

Although awards of loans to the private sector are still growing, they is doing so at a slower pace. According to official figures between January and June of this year, the inter-annual growth rate of the total credit portfolio went from 9.25% to 3.08%, which is equivalent to a drop of six percentage points. 

Private Sector Credit is Slowing Down

June 2018

Up to February 2018, the growth rate of bank loans for trade, services, consumption and housing activities decreased considerably compared to the same period last year.

According to figures from the Central Bank of Costa Rica, between February 2017 and the same month of this year, the annual growth rate of credit granted by the financial system to the private sector fell from 13% to 7%. 

Dominican Republic: Bank Credit Up 11%

June 2018

Up to March 2018, the financial system's credit portfolio totaled $20,811 million, which is equivalent to an increase of 11% compared to the amount reported in the same month in 2017.

According to figures from the Superintendency of Banks, between March 2017 and the same month this year, the total amount of the loan portfolio increased from $18,667 million to $20,811 million.

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