Credit Does Not Rebound, Even With Lower Rates

Although The Central Bank has been reducing the monetary policy rate to boost the issuance of bank credit, the speed with which the portfolio of loans in national currency grows continues to decrease.

Wednesday, November 27, 2019

Official data from the country's financial system indicate that by October 2017 the portfolio of loans in local currency grew to 14%, in the same month of 2018 the rate fell to 6% and by the tenth month of 2019 the increase was just 4%.

You may be interested in "Expectation for Changes in Monetary Policy"

This significant slowdown in the issuance of loans is reported despite the fact that during 2019 the Central Bank of Costa Rica (BCCR) has lowered the Monetary Policy Rate six times, from 5.25% to 3.25%.


Elfinancierocr.com reviews that "... This year growth has dropped steadily since April, that is, has seven months to slow down the pace. While some portfolios show very slight improvement (industry and transport), portfolios associated with consumption do not. The balances of consumer loans, housing, trade, tourism and construction, remain slow."

Not everything is adverse to banks, because according to Juan Manuel Jiménez, manager of Business Banking Promerica, "... The slowdown in the supply of credit in the state banking segment has caused some customers to start a migration to private banking, generating this possibility of issuance and portfolio growth."

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More on this topic

Expectation for Changes in Monetary Policy

September 2019

Although the downward adjustments made months ago in the bank reserve and monetary policy rate do not yet appear to have had an effect on the loan portfolio in Costa Rica, banks expect credit to be reactivated soon.

At the beginning of June, the Central Bank reduced from 15% to 12% the minimum legal reserve rate that banks must maintain as a reserve, arguing that the objective was to make credit more dynamic.

Pressure on Interest Rates

November 2018

Because of the adjustments made by the Central Bank to interest rates in recent days, financial institutions in Costa Rica will be forced to raise interest rates on savings in local currency.

Arguing that forecasts suggest that inflation in 2019 could be above the upper limit of the target range, on November 1st the Central Bank of Costa Rica (BCCR) decided to raise the monetary policy rate from 5% to 5.25%.

Costa Rica: Banks Start Raising Interest Rates

June 2017

Entities have already registered increases in rates for loans and investments in local currency, adjusting to the increases that the Central Bank has made in the monetary policy rate and the rate for electronic deposits.

The increase has occurred in a generalized way in most of the interest rates offered by banks and financial institutions for loans and deposits in colones, days after the Central Bank raised the rate for deposits made through its electronic platform. 

Costa Rica lowers basic interest rate to 11%

November 2008

The basic passive rate has remained close to 11% for almost a month with slight variations in either directions.

Starting today it will be lowered from 11.25% to 11%.

The basic passive rate is an average of the interest rates for saving in colones at terms of 150 days (5 months) and 210 days (7 months) and is calculated by the Central Bank.

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