Costa Rica: Agricultural Credit Arrears Increases

In the last two years, non-performing loans to the agricultural sector increased from 2.4% to 5.9% between April 2017 and the same month in 2019.

Tuesday, May 28, 2019

Figures from the General Superintendence of Financial Entities (Sugef) indicate that the increase reported in the arrears of agricultural loans includes operations with delays of more than 90 days, as well as operations that are in judicial collection.

See "Unpaid Bank Credits Increase" reviews that "... Last April the two state banks, Banco Nacional and Banco de Costa Rica, were the only banks that showed a total delinquency indicator that reached 3%. This figure is still considered a normal level, but dangerous. But if you calculate the indicator only for the loan portfolios of the agricultural sector, all the alarms go off in public banks, including the two state banks."

Also see "Bad Times for the Agricultural Sector

The article adds that "... The Agriculture loan portfolios of six financial institutions show a high proportion of delinquencies greater than 90 days and operations in judicial collection: BCR with 13.1%, National with 7.3%, Banco Popular 5.1%, Coopesparta with 4.3% and Coopealianza with 4.1%."

The increase in arrears in the payment of agricultural loans is recorded in the context of a slowdown in economic activity in the sector, since in March 2019 the Central Bank of Costa Rica reported that "... agricultural activity contracted for the sixth consecutive month (-1.2% in the month mentioned in the commentary), as a result of supply shocks, mainly associated with: i) the El Niño phenomenon, which caused a notable decrease in rainfall in the province of Limón and maintained a predominantly dry condition throughout the country; ii) the increase in the exportable production of pineapple from the Philippines and Thailand, which led to a drop in international prices and a reduction in the number of hectares cultivated in our country. The products of greater reduction are pineapple and banana, and to a lesser extent the crops of onion, chayote and vegetables." See Central Bank report.

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More on this topic

Crisis is Reflected in the Financial Sector

March 2019

Since the political and economic crisis began in Nicaragua, credit placement has fallen, while delinquency and loan restructuring have increased.

Data from the Superintendence of Banks and Other Financial Institutions (Siboif) indicate that between April 2018 and February 2019, a period during which the political crisis in the country has deepened, the fall in the net credit portfolio was 16%.

Costa Rica: Credit Moratorium in Dollars Increases

November 2018

From July 2017 to September 2018, the percentage of loans in dollars with payment arrears over 90 days or in legal collection increased from 1.57% to 2.95%.

The default on dollar loans is still under 3%, which is still considered normal. However, according to the trend reported in recent months in the records of the General Superintendence of Financial Entities (Sugef), the indicator is likely to exceed the 3% barrier.

Complicated Economic Scenario

September 2018

The deterioration of the economy and rising unemployment are the main reasons behind the difficulties faced by companies and individuals in Costa Rica in paying back their bank loans.

According to figures from the General Superintendence of Financial Entities, between January 2017 and July 2018, the percentage of loans in defaults for more than 90 days or in judicial collection, went from 1.65% to 2.51%, showing an upward trend in recent months.

Bank Defaults on the Rise

June 2018

From June 2017 to May 2018, the average default rate of the Costa Rican financial system's credit portfolio increased from 1.36% to 2.14%.

According to figures from the General Superintendence of Financial Institutions (Sugef), between April and May of this year, Banco Nacional de Costa Rica (BNCR) saw an increased in its arrears of greater than 90 days and judicial collection from 2.65% to 4.18%, thus surpassing the 3% that is established as the prudent maximum limit.

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