Irrecoverable Receivables Grow 37% in El Salvador

From January 2008 to January 2009, the banking system’s unrecoverable portfolio grew by 36.9%.

Monday, March 30, 2009

The portfolio with the riskiest loans, known as "E" and classified as "irrecoverable," reached $246 million in January 2009, while $179.7 million were recorded in January 2008, a variation of $66.3 million.

In percentage terms, this portfolio rose to 2.7% of total loans, while in 2008, it accounted for 2.0% of the total. The figure is closer to the maximum set at 4.0%.

A report in La Prensa Gráfica explained the impact this has on banking, indicating that for this loan portfolio banks have to separate the same amount of the loan (100%) as capital reserve, which directly affects earnings.

More on this topic

Guatemalan Credit Arrears Up 24%

August 2009

The banking system's late portfolio reached $283 million in June 2009, 24% more than the same month of 2008.

As a portion of the entire credit portfolio, late loans accounted for 3% of the total, while it was 2.5% in June 2008. Bad credits grew at a larger pace than the entire credit portfolio, which grew 5% in the last 12 months, reaching $8.856 million.

Guatemalan bank reserves increased

January 2009

Since yesterday financial groups offering loans will be required to have reserves that equal 100% of the expired credits portfolio.

According to prensalibre.com, "In order to achieve this, generic reserves have been established to support current (specific) requests.

Banks should have reserves representing a percentage based on the last accrued months of portfolio, which range from 5% for a 30-day accrual and up to three month, and 100% for more than a year."

Guatemala's hard times spur 24 percent growth in bad debt

July 2008

Bad debts are growing and a credit boom is losing steam within the Guatemalan banking system, reflecting the nation's economic problems, according to a report by the regulator, the Bank Superintendent's Office.

The banks' bad-debt portfolio rose from 2.1 billion quetzals (US$286 million) on January 1 to 2.77 quetzals (US$374 million) on July 13, an increase of 24 percent.

Banks in El Salvador under pressure from bad debts

July 2008

El Salvador's banks have had to increase their provision for bad debt by 15.2 percent, according to the latest report from the El Salvador Bankers' Association (ABANSA).

In May alone, the bad-debt portfolio grew by 4 percent, and the increase over the last year has been 25 percent.

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