Costa Rica: Bank Lending Slows

The scare liquidity of colones explains the lower growth of loans in this currency, while credit growth in dollars continues to lose strength.

Friday, August 15, 2014

Added to the diminished liquidity in colones putting downward pressure on credit growth in that currency, is uncertainty at enterprise-level over recent changes in the exchange rate and lower credit demand for real estate projects, power generation and tourism, as explained by bankers to Nacion.com.

In the private banking sector loans in colones are increasing at year on year rates (each month compared to the same month in the previous year) of 40%, but in July at least the rate was not higher than in the previous month; in the public sector it was 13%, where it has remained for the past three months. " In the case of colones, Gerardo Corrales, manager of BAC, said that "... 'There is no liquidity ... demand has had to be rejected.'"

"...In dollar loans, up to July there was a sharp slowdown. However, bankers expect the situation to change in the coming months.
Juan Carlos Corrales, deputy general manager of the National Development Bank, said "... 'In the field of large investment projects, there has been a reduction in demand for new investments in tourism, free zones, property development and power generation projects, which typically use dollar loans. '"

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