Outlook for 2014 for Banking Sector in Central America

Fitch Ratings describes the outlook as stable for Central American banks, and is unlikely to make changes to their ratings.

Wednesday, December 18, 2013

From a press release by Fitch Ratings:

The outlook on the ratings of banks in Central America and the Dominican Republic is stable, according to a new report published by Fitch Ratings.

"The industry outlook is "stable" in all countries except Costa Rica, where it is "positive". Fitch anticipates that the Costa Rican banking sector will recover its growth and profitability in 2014, after performing below expectation in 2013. This is due to state interventions which affected the behavior of the industry," said Rene Medrano, Senior Director.

The banks in the region will continue to finance their operations with domestic deposits, which have proven to be stable. In addition, diversification in source of funds and term matching could continue to improve as banks continue to make local and international debt emissions, although less frequently than in 2013.

More on this topic

Nicaragua: Prospects for Banking in 2018

January 2018

Fitch Ratings forecasts that the performance of the banking system will remain stable in 2018, despite the expected slowdown in credit growth.

From a statement issued by Fitch Ratings:

Fitch Ratings-San Salvador-23 January 2018: Fitch Ratings has maintained its stable outlook for Nicaragua's banking system, considering that its financial performance is expected to remain adequate in 2018 despite the anticipated slowdown in credit growth. Banking system performance has proven to be consistent, benefiting from the positive trend of the local economy. On average, Nicaragua's real GDP growth was 5.2% between 2012 and 2016 while credit growth was 21.5%. However, since 2016 there has been a slight slowdown in the economy and in the main credit segments (commercial and consumer loans). Fitch expects the country's economic growth in 2018 to reach 4.5%. This would imply a lower dynamism for the banking sector, with credit growth expected below 15%.

Nicaragua as Seen by the IMF in May 2012

May 2012

The Nicaraguan economy has recovered strongly supported by high export prices and a reasonable macroeconomic policy.

A statement from the International Monetary Fund (IMF) reads:

Mr. Marcello Estevao, Head of IMF Mission to Nicaragua, made the following statement:

"The Nicaraguan economy has recovered strongly from the global financial crisis of 2008-09.

Central American Banks: Annual Results and Perspectives

April 2009

Fitch Ratings reported that the risks to regional banks during the current crisis are growing and represent a major challenge for 2009.

The combination of reduced credit expansion, fund restrictions and increasing loan provisions have limited the profits of most banks and it is expected for these factors to continue to pressure the results in the coming months.

Fitch Ratings Special: Central American Banks

February 2009

From abundance to scarcity: Challenges faced by Central American banks in an environment of tight liquidity.

After having been hit hard by the US mortgage crisis in 2008, large US and international banks have considerably weakened, in some cases escaping from bankruptcy only thanks to strong government intervention.

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