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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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.

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Credit Cards: Demand up 9%

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Between May 2019 and the same month this year, the number of credit cards circulating in the Salvadoran market increased by 9.2%.

According to figures from the Observatory of Credit Cards (OTC), of the Consumer Defense Office, in May 2020 there were 876,197 credit cards circulating in El Salvador, which is more than the 801,822 registered in the same month of 2019.

Impact of the Crisis on the Banking Sector

March 2020

Increased demand for credit and more requests for loan restructuring is part of what the covid-19 crisis has brought to Guatemala's banking sector.

According to representatives of the Guatemalan Banking Association (ABG), the spread of covid-19 and the restrictive measures that have been decreed in the country are affecting the liquidity of companies, many of which have no income and must use credit to pay their bills.

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