Central American Banking in October 2014

Analysis by Fitch Ratings projects that banks in the region will maintain strong balance sheets and have stable profitability in 2014.

Monday, October 20, 2014

Excerpted from Fitch Ratings:

Differential Growth and Opportunities: Low financial depth, in most systems, continues to provide significant opportunities for expansion of bank balance sheets; although this is limited by low average income levels. In 2014, assets in the region could increase about 10%, mainly driven by higher portfolios. Central American banking portfolio growth will reach double digits, except for the systems in El Salvador and Panama, which will grow at a slower pace.

Solid Balances: Fitch Ratings anticipates that banks will maintain strong balance sheets and have stable profitability in 2014. Balance sheet strength will make it easier for banks to properly manage and control expansion.

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Central American Banking: Outlook for 2017

January 2017

Fitch foresees returns for Nicaraguan banks, however the result will not be as good for the banking industry in Panama, Guatemala or El Salvador.

From Fitch's report "2017 Outlook: Central American and Dominican Republic Banks"

The 2017 Central American bank rating outlook is stable for 2017, reflecting slight changes in growth and financial performance, according to a new Fitch Ratings report. The evolution of some factors, such as interest rates and private investment, or the emergence of events that could increase reputation risk could alter the banking outlook. Stable Rating Outlook: The ratings of most banks in the region have a stable outlook, reflecting the fact that their credit profile will not undergo significant changes in Fitch's base scenario. Movements in the ratings will be derived mainly from adjustments in ratings of parent banks or sovereign ratings, or of unanticipated events.  

2016 Outlook for Banking Sector in Central America

December 2015

Fitch Ratings predicts headwinds and higher risks for banks in Central American countries in 2016, resulting in lower credit growth.

From a report by Fitch Ratings Central America:

Headwind: Central American Banking systems face greater risks in 2016. A slowdown in growth of gross domestic product (GDP) in the region and, consequently, lower credit growth is anticipated.

Central American Banks: Outlook 2015

January 2015

Slow growth is projected in El Salvador, very good performance in Nicaragua, stability in Panama, more competition in Guatemala and moderate growth in Costa Rica.

From a report by Fitch Ratings entitled "2015 Perspectives: Central American Banks":

Costa Rica:
Fitch Ratings has revised the outlook for the sector from positive to stable, because the agency does not anticipate substantial improvements in respect to the previous year. The system's profitability will remain low, with less than 1.0% ROAA. The results are limited because of the high dependence on net interest margin (NIM) and additional expenses in provisions for loan losses, due to regulatory changes that established gradual constitutions of general provisions for the best qualified loans. In addition, Fitch does not anticipate improvements in revenue diversification and also foresees a significant revenue exchange rate differential. This last factor has a significant influence on the results of the banks in Costa Rica.

Central American Banking Analysis

September 2010

A report from Fitch indicates that only in 2011 the Banks of Central America will reach profitabilitye levels that could be compared to those before the crisis.

Fitch thinks that the majority of Central America's banking systems will earn more profits than in 2009, but it will not be until 2011 when they reach profitability levels comparable to the ones they had before the crisis.