The high levels of unemployment and the poor growth of credit are factors that have worsened in the context of the economic crisis generated by the outbreak of covid-19, which has led to the deterioration of the credit record of customers.
In line with the revision from stable to negative for the outlook for sovereign debt, Fitch Ratings has also downgraded the outlook for the debt of state banks and two private banks.
From a statement issued by Fitch Ratings:
Fitch Ratings-Monterrey/San Salvador-24 January 2018: Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of various Costa Rican banks and revised the Rating Outlook to Negative from Stable.
While financial regulators want to increase the quality of banks' management with better qualified managers, a bill intends to reduce the demands of professionalism for a "popular" bank.
The intention of six members in reforming the Organic Law of the People's Bank (Banco Popular) and Community Development (BPCD) is to increase control of the union on the bank's management which is "...
Fitch Ratings has revised from "stable" to "negative" its perspective for international long-term ratings of the private bank BAC San José and the state banks Banco Nacional, Banco Popular, Banco Internacional and Banco de Costa Rica.
From a statement issued by Fitch Ratings:
Fitch Ratings has revised the Outlook for international long-term ratings of four Costa Rican banks and a Panamanian subsidiary from Stable to Negative, after having revised the Perspective for Costa Rica's sovereign rating from stable to negative :
Up to April 30, 2014 the number of cards in circulation amounted to 1,764,609, 2% more than at the end of January of the same year.
From a press release issued by the Ministry of Economy, Industry and Trade of Costa Rica:
According to data from the latest survey by the Directorate of Economic and Market Research of the Ministry of Economy, Industry and Commerce (MEIC), defaults decreased by 3%, corresponding to a delay of payment over 90 days, compared to the previous study.
Credit card debt grew by 1.5% to a total of $1.482 billion, while the number of cards in circulation up to July 31, 2013 was 1,731,673.
A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:
The Ministry of Economy, Industry and Commerce (MEIC) through the Department of Economic and Market Research has conducted its latest study on debit and credit cards.
Using standardized issuances, the Costa Rican entity intends to raise funds in the financial markets of Nicaragua, El Salvador and Mexico.
The idea "... is to raise funds by issuing securities on the stock exchanges of these countries with the aim being that investors can obtain the funds and channel them into placing loans here," noted an article in Prensalibrecr.com.
Private banks operate with margins between interest rates which are considerably lower than state banks.
An article in Elfinancierocr.com points out that "the five banks with the lowest margins in the country are private ones, as is clear from a study by EF based on data reported to the Superintendent of Financial Institutions (Sugef) for December, 2012 ".
At the Banco de Costa Rica the volume of assets received in lie of payment increased by 70% compared to 2011.
A survey by Elfinancierocr.com between 6 financial institutions, including the four public banks in the country, revealed that in February of this year, there were 1259 properties in their possession, in contrast to the 884 properties that were reported in the same period 2012, ie there was a 42% increase.
The ceiling on the growth of the loan portfolios imposed on Costa Rican banks has forced financial institutions to adjust their lending strategies.
Elfinancierocr.com reports that "The Central Bank of Costa Rica (BCCR by its initials in Spanish) established a ceiling of 9% on the growth that credit loans might have between February and October this year. In 12 months, the figure will rise to 12%. "
Costa Rican Commercial banks closed 2012 with net income of $360 million, which is a 30% increase in nominal terms compared to 2011.
Those who reported the highest earnings were public banks, meanwhile private banks reported the highest growth last year in 2012, closing with $111 million, 32% higher than 2011. (This amount does not including the banks results from the banks Citibank, General, Bansol and Improsa).
While preparing a definitive ruling, a Costa Rica tribunal court ordered a mortgage lender to reduce the monthly fee paid by a debtor to its initial amount.
In Costa Rica, interest rate growth has led to significant increases in the fees paid by borrowers to banks and finance companies.
Now, faced with a class action, a Court of Appeals Dispute Tribunal has granted an injunction to one of the debtors, ordering that " the monthly payment for a home loan, from 1. ° December 2012, be kept at the same amount as when the loan was acquired in 2007. "
The presidents of Costa Rican state banks said they "do not know why they are paying higher fees" than those paid by private banks.
EDITORIAL
The phenomenon of the nerve with which too many Latin American officials are flaunting their irresponsibility is increasing.
Television pictures showed a formal meeting chaired by the Chief Executive of Costa Rica, President Chinchilla, accompanied by her Vice-Minister of Finance, Central Bank President and other members of the economic team, and presidents and directors of the three main public banks in the country, the Banco Nacional, Banco de Costa Rica and Banco Popular.
For the volume of assets and loan portfolios they manage, cooperatives together make up the fourth largest financial operator ivn the country.
In Costa Rica, the 30 cooperatives under the supervision of the Superintendent of Financial Institutions (Sugef) exceed in value the assets and loan portfolio of the "private bank BAC San José and are below the banks, Banco Nacional, Banco de Costa Rica and Banco Popular which are funded by public capital. "
State banks are leading this growth, although private banks still retain 61% of the total loan portfolio in the U.S. currency.
An article in Nacion.com reports that "The growth in dollar loans from public banks is striking because it is a market that traditionally is dominated more by private financial institutions."
As an explanation for the growth in dollar loans, one point mentioned is the lack of perception exchange risk due to the behavior of the exchange rate, which for a long time has been very close to the lower limit of the exchange rate band set by the Central Bank, this coupled with the relatively low interest rates for loans in foreign currency.