El Salvador: Loan Portfolio Downwards

Given the outbreak of covid-19 and the imposition of restrictions on economic activity, between February and June of this year the amount of loans granted by the banking sector reported a 1.2% drop.

Monday, August 10, 2020

Data from the Superintendence of the Financial System (SSF) indicate that between February (the month before the beginning of the health and economic crisis) and June of this year, the credit portfolio contracted by $149 million, from $13.276 million to $13.127 million.

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Although generally the amount of financial resources placed in the market decreased, the credits demanded from international banks have been maintained.

Mauricio Choussy, former president of the Central Reserve Bank (BCR) and economic analyst, told Elmundo.sv that "... The credit lines from international banks to commercial banks have not been reduced, but have practically been maintained. This was not a feature of the 2008 crisis, when international banks withdrew their credit lines to Latin American banks."

See "Credits: What are Central American consumers looking for?"

Choussy added that in this scenario the credits are directed "... fundamentally to companies where we see a 9.29% growth and we can conclude that the demand for financing is low and this is encouraging competition for rates, despite the fact that the credit risk is increasing because in an economy that is contracting the credit risk is rising."

According to CentralAmericaData reports, more than 1.3 million people in El Salvador are looking for access to credit on the Internet. Of this group of consumers, approximately 9% explore options for contracting a personal loan.

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