Credit Downwards: What Factors Affect Them?

Suspension of contracts, uncertainty about the economic future and reduction of salaries, are some of the factors that have affected the banks in Panama to place fewer loans in this context of health crisis.

Thursday, August 13, 2020

The amount of new loans granted by Panamanian banks was $589 million during May this year, a 26% reduction compared to what was reported in April 2020. This fall is explained by the economic crisis, which derives from the restrictions decreed due to the outbreak of covid-19.

The Superintendence of Banks reported that in May 2020, although some segments have shown positive variations, as a result of previous management, in general terms all segments have shown decreases.

See "Financial Services: Business Potential in Central America"

Giovanna Cardelicchio, manager of the Panamanian Credit Association (APC), told Prensa.com that "... in January 2019 there were 32,152 new loans, while in the same month of 2020 there were 33,433, but in May there were only 3,809. The suspension of contracts, the reduction in salaries, among other factors generated by the pandemic, are having an impact on banks."

Cardelicchio added that "... at the end of June, personal loans financed by banks totaled more than 540,078 for a total of 6.766 billion dollars granted and in financial or other institutions totaled 396,000 credits for more than 2.358 million."

Also see "Credits: Potential Market in the Region"

Reports from CentralAmericaData state that at the end of the first half of the year in Panama, more than 1.6 million people were looking for a financial service on the Internet. Of this group of consumers, approximately 14% are exploring options to acquire a credit card.

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