Bank Loans become Less Expensive in Nicaragua

Between May and June of this year, the average lending rate of commercial banks has fallen from 11.52% to 10.28%, a drop that is explained by the high level of liquidity of the banks and the low placement of credits.

Thursday, September 24, 2020

The pandemic that caused the outbreak of covid-19 has hit the financial system, since due to the current market conditions, the active rates have come down between the months of May and July.

See "Financial Services: Business Potential in Central America"

Figures from the Central Bank of Nicaragua detail that in May the average lending rate of commercial banks was 11.52%, in June it was reduced to 10.79% and in July it fell to 10.28%.

According to representatives of Funides, "... with the pandemic, credit requests decreased and with this, a greater supply of liquidity is created, 'so if deposits continue to grow and there is nowhere to place those deposits, then yields go down, this can also be associated with international rates, because in March they went down."

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Another factor that could be influencing the volatility of passive and active interest rates is the degree of uncertainty in the economy.

In the last two years the credit portfolio has been affected by the political crisis that began in 2018 and in 2020 with the health emergency. Official data indicates that at the beginning of 2018 the portfolio in default was barely 1% and in July of this year the proportion rose to 3.7%.

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