Less Demand for Loans in El Salvador

Demand for credit is not growing as expected, as there are fewer investments in the country.

Friday, September 17, 2010

According to Roberto Orellana Milla, CEO of Banco Agrícola, "demand for credit has dropped 4%".

Elsalvador.com published more statements by Orellana: "Although we are in the midst of a slight economic recovery, we are still being affected by the 2009 crisis, and uncertainty and insecurity are contributing factors for the little demand for credit, 'because the crisis has affected a lot of companies and individuals'".

More on this topic

Credit Supply Stagnant in El Salvador

June 2011

Since the fourth quarter of 2008, credit extended by banks has been declining consistently.

An analysis published by the Salvadoran Foundation for Economic and Social Development reads:

“This decline has various interpretations, from suggestions that it is the result of reduced demand due to the lack of investment opportunities, to the internationalized banking system’s lack of identification with the needs of local businesses. Regarding the first scenario, this is a very limited conclusion and the second case offers an interpretation that doesn’t have an economic foundation.

El Salvador: Credit Portfolio Shrinks 6.3%

February 2010

During 2009, the banks’ credit portfolio lost $583.5 million; it is the first reduction in 5 years.

By the end of 2009, banks had $8.6 billion in loans, down from $9.2 billion at the end of 2008.

“Armando Arias, president of the Salvadoran Banking Association (ABANSA), explained that the contraction is relative higher than the performance of the economy, which shrank 3.3%”, reported Laprensagrafica.com.

Credit Drops 6.5% in El Salvador

October 2009

Approved loans fell 6.5% in the past 12 months (August 08 - August 09); loans for the productive sector where the most affected.

Experts agree in blaming the global economic crisis for this reduction in credit.

The President of the Central Bank explained that "...banks just reflects 'the economic deceleration' ...

Credit for Private Sector Drops to 8.3% in Guatemala

April 2009

Up to and including April 9, the total growth (including loans in local and foreign currency) was 8.3%, the lowest in the last two years.

Despite measures taken by monetary authorities to keep the money market liquid in order to stimulate credit, financing to companies has not reactivated. Directors of the Industrial Bank and G&T Continental state that they are receiving up to 20% fewer loan requests.

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