Banks in El Salvador under pressure from bad debts

El Salvador's banks have had to increase their provision for bad debt by 15.2 percent, according to the latest report from the El Salvador Bankers' Association (ABANSA).

Friday, July 18, 2008

In May alone, the bad-debt portfolio grew by 4 percent, and the increase over the last year has been 25 percent.
Carlos Cáceres, executive director of ABANSA, blamed high world food and fuel prices. "Family income is relatively low in El Salvador," he said. "People are having to spend more on gasoline and food, and that puts pressure on their disposable income."

More on this topic

Irrecoverable Receivables Grow 37% in El Salvador

March 2009

From January 2008 to January 2009, the banking system’s unrecoverable portfolio grew by 36.9%.

The portfolio with the riskiest loans, known as "E" and classified as "irrecoverable," reached $246 million in January 2009, while $179.7 million were recorded in January 2008, a variation of $66.3 million.

$200 Million need by Salvadoran industries

December 2008

The Association of Industrial Companies (ASI) indicated that it will need at least $200 million to reactivate the industry and investments that have been paralyzed due to lack of credit.

The proposal was made by the executive director of ASI, Jorge Arriaza, who pointed out that they are concerned about comments by the Salvadoran Banking Association (Abansa) which complained that credit from the Inter-American Development Bank (IDB) for 500 million dollars was too expensive and had short terms, in addition to the fact that certain sectors would not have greater access to the funds.

Salvadoran Banks ask for lower credit rate from the IDB

December 2008

ABANSA believes that the cost of accessing the $500 million made available with IDB funds is too high.

Armando Arias, president of the group said that the rate of the funds corresponds to the LIBOR plus 400 base points more in commissions and is practically the same as the rates offered by other international lenders.

Guatemala's hard times spur 24 percent growth in bad debt

July 2008

Bad debts are growing and a credit boom is losing steam within the Guatemalan banking system, reflecting the nation's economic problems, according to a report by the regulator, the Bank Superintendent's Office.

The banks' bad-debt portfolio rose from 2.1 billion quetzals (US$286 million) on January 1 to 2.77 quetzals (US$374 million) on July 13, an increase of 24 percent.

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