Competition to attract customers into the banking sector in Panama and low interest rates account for the 12% growth in consumer credit between March 2014 and March 2015.
Between March 2014 and March 2015 the balance of the portfolio of consumer credit from Panamanian banks recorded an increase of 12.26%, exceeding $8 billion. The low interest rates of around 9% on average for personal installment loans up to 60 months, is the main incentive for borrowing.
Although they claim it will not be for long, interest rates remain at their lowest level for six years.
Laestrella.com.pa reports: "... in December 2007, the average interest rate on loans given for economic trade activities stood at 8.7%. Today, the average is 6.6%, which is a reduction of 2.1%. "
As for loans for personal consumption, during the same period they went from 12.2% to 9.2%, while for mortgages they market rate fell from 7% to 6%.
In the last three years loans for the construction sector increased by 427%.
Statistics of the Superintendency of Banks of Panama (SBP) reveal that between January and May 2013, $2.509 billion more has been provided than in 2011, when the amount of loans processed was $587 million. Loans for interim housing are the largest amount reported at $1.121 billion.
In spite of inflation and the world financial crises, Panamanians continue acquiring credit cards and the banks have not increased their restrictions.
As of September of this year the banking system credit card balance reached 629.8 million dollars, up 5.6 million dollars as compared to August's numbers of 324.2 million dollars, according to the Bank Superintendent's Office.