Financial System Still with Negative Outlook

According to Fitch Ratings, banks in Nicaragua will continue to be pressured by the remaining effects of an economic contraction for the second consecutive year, a situation derived from the political crisis affecting the country.

Friday, December 6, 2019

The operating environment of the Nicaraguan financial system continues to be negative, despite the agency's recognition that macroeconomic pressures have decreased significantly in recent months, as indicated by the recent review of the Sovereign to Stable Rating Outlook from Negative, reported Fitch.

In the opinion of the rating agency, the recovery of credit growth and financial indicators in general will be delayed.

The report explains that the agency "... will continue to monitor the performance of banks, mainly regarding growth and loan quality, capital position, profitability and financing of customer deposits. The high deterioration of the loan portfolio during 2019 (delinquency rate of 3.41% as of June 2019) and higher net cancellations, restructured loans and loan impairment charges will be the main constraints for the rapid recovery of the banking industry's profitability.

This despite modest deposit growth that could moderately boost loan portfolio growth
."

See full report.

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