Panama: Cost of Equity Financing

Panama’s equity financing costs (2.4%), together with those of El Salvador (1.6%) and Peru (2.0%) are the lowest in Latin America.

Thursday, April 12, 2012

In the past 4 years the equity financing costs of the the National Banking System (NBS) in Panama have halved, going from 4.2% in 2007 to 2.2% in 2011, influenced by the international financial situation and low interest rates.

This has brought savings of $199 million to banks in 2011 alone, according to economist Ernesto Bazan, as reported by Capital.com.pa.

A similar trend was experienced by the International Banking Center (CBI) as a whole: The funding costs decreased from 4.7% to 2.4% compared to the same period. "An average CBI bank has $850 million in assets and $744 million in liabilities for each percentage point it reduces its funding costs, it increases its profits by $7 million a year," said the economist.

The Panamanian banking system, along with those of El Salvador (1.6%) and Peru (2.0%), currently has the lowest funding costs in Latin America. In this it beats Colombia (3.1%), Chile (3.5%), Costa Rica (3.8%) and even Mexico (2.7%).



More on this topic

Bank Profits Up 4% in 2018

March 2019

The entities of the International Banking Center of Panama generated during last year profits of $1.582 million, 4% more than reported in 2017.

The Superintendence of Banks of Panama (SBP) specify that during the last two years the profits of the 84 banks that operate in the International Banking Center (IBC) of Panama, grew by $70 million, going from $1,782 million in 2017 to $1,852 million in 2018.


Honduras: Foreign Direct Investment Up 8%

March 2015

Of the total $1,144 million received in 2014, 54% was reinvested earnings, 32% fresh capital and 16% transfers between companies.

The Central Bank of Honduras announced that the sectors which had the highest investment amounts recorded in 2014 were "... transport, storage and telecommunications, which received 31.6% of the funds, and services, 17.4%, goods for processing, 15.6% manufacturing, 14.7%, commerce, 9.5%, and other sectors accounted for the remaining 11.2%. "

Panamanian Banks Having a Great Time

March 2012

With average Return on Assets (ROA) of 2.30% and 20.28% on Equity (ROE) in 2011, there has been growth of 63% compared to profits in 2010.

Net earnings for January 2012 were $147 million, an increase of 62.9% compared to the same period in 2011, according to data from the Superintendency of Banks.

Return on Advertising Investment

September 2010

Marketing Managers are applying financial engineering methods to optimize their portfolio of marketing campaigns.

The growing concern from Marketing Managers about return on advertising is making them look more and more like financial managers.

Many millions are spent on advertising (in Central America about $ 1.8 billion per year), usually in a mix of different types of media and to apply expense optimization methods of portfolio investments, will lead to better rates of return on investments.

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