Figures up to October 2017 show a 3% YoY growth, well below the 12% increase registered in the same month in 2016.
The slowdown seen in economic activity during the last eleven months is one of the reasons that explain the lower demand for bank loans by companies in the country.
Elfinancierocr.com reports that "...In addition, the rise in interest rates in colones and dollars, the volatility presented by the dollar in the middle of last year, as well as the growing fiscal deficit, prevented companies from finding any stimulus to support the idea that it was a good time to borrow."
Interest rates on bank loans have increased by between 0.11% and 6.6% in the last year, and those for loans for construction, livestock and commerce, are where the highest increases have been recorded.
Data published by the Central Bank of Costa Rica indicates that in the case of construction loans, interest rates went from around 11% at the beginning of the year to almost 18% last week.
After several months of discussions, approval has finally been given to the Bank of Costa Rica to take full control of the construction project for the route between San José and San Ramón.
The financial structure and execution of the work will now be the responsibility of the Bank of Costa Rica (BCR), which was awarded the contract for administration of the trust.For four months the discussion revolved around the conflict of interest that could arise if full control was given to the BCR, delaying the start of works.
Through a trust with the Bank of Costa Rica, plans are underway to build 30 health areas, 22 financial branches and a storage center for supplies and medicines.
Among the projects that will be built with the resources to be administered by the Bank of Costa Rica through the trust is the William Allen hospital in Turrialba, whosetenderwas announced recently.
At the close of 2016, there were 24 companies dedicated to providing factoring services, with a portfolio of $243 million, 6% below the balance of 2014 but 2% higher than the amount recorded in 2015.
The companies with the most experience in the business of factoring or invoice discounting in the country pointed to an increase in the presence of individuals or small private companies that provide the same service but with fewer requirements and a higher level of risk, which has affected the overall performance of the sector.Among the companies affiliated with the Costa Rican Chamber of factoring companies are banks, financial institutions and companies dedicated exclusively to the service of factoring.
In Costa Rica several banks expressed their disagreement with the new standard which will prevent them from deciding how much of their capital will be denominated in dollars and how much in colones.
In an attempt to gain more control of the risk involved in foreign exchange transactions by banks and their impact on the exchange rate, the Central Bank has changed therules for foreign exchange cash operations, forcing banks to change the composition of their assets so that the proportion denominated in dollars is equal to the proportion of assets in that currency.
The construction project which will be developed through a trust has three sections of 1.6, 12.6 and 41 kilometers each, with three, four and two lanes in each direction, respectively.
The details of the project"Trust for the San Jose-San Ramon Road Corridor and its ring roads", awarded to Banco de Costa Rica, note that the first tranche from the Metropolitan park La Sabana to the the Interchange of the Circumnavigation, there will be three lanes in each direction with external and internal shoulders and dividing rails.
It is difficult to understand - especially because it has been made public - how a major state bank has described the International Bank of Costa Rica as "high risk" while another main state bank has stated the opposite.
EDITORIAL
The banks involved are Banco de Costa Rica (BCR) and Banco Nacional (BN). Between them they are the owners of Banco Internacional de Costa Rica (BICSA), with 51% of the shares the first and 49% of the second.
The Bank of Costa Rica has been selected to hold the trust which will be used to manage the project to expand the highway between the capital and the city of San Ramon, which will cost approximately $500 million.
The extension of this road is a long-standing project, and has faced a host of problems, including the cancellation of the initial concession of the work, which involved a payment of $35 million to the Brazilian construction firm OAS, which in turn had bought the contract from Autopistas del Valle.
The criticism attracted by the latest "commercial" venture by the State Bank of Costa Rica should not stick to just the surface of the fairytale castle and pink marketing campaign, but should go to the heart of the concept of state banks, which today have degenerated into simple banking institutions with commercial privileges.
EDITORIAL
This is precisely what Sebastian Hernandez does in his lucid analysis of the launch of the new brand Banca Kristal in new branches of Banco de Costa Rica, an exclusive service for women, and one which is painted pink.
Noting that it is complying with the law relating to money laundering, the head of Banco de Costa Rica confirmed the closure of the accounts in local and foreign currencies belonging to Latinamerica Trust and Escrow Company.
An article on Nacion.com reports that the president of the State Bank of Costa Rica (BCR), Paula Mora confirmed that "... the legal director of BCR, Eduardo Ramirez, assured him that the prosecution has an open case against Latco for alleged money laundering. "
Lower demand for credit from the private sector is the main reason for the increase in liquidity in colones in the local financial system.
Although increased liquidity should be accompanied by a reduction in interest rates, this is not the case in Costa Rica, as expectations of a possible rate hike in the United States and internationally are being maintained and forcing them to be kept down.
The banks Banco de Costa Rica, Banco Nacional and the Banco Industrial de Guatemala "will have to reduce the growth rate of their loans, since their core capital levels remain modest."
From Moody's press release:
Mexico, July 21, 2015 -- Central America's leading banks will need to slow the pace of their loan growth as their core capital levels remain modest, said Moody's Investors Service in a new report.