A concentrated banking system with weak capital indicators faces the challenge of reducing past-due loans, which in large banks have grown from an average of 1.1% in 2013 to 2.3% this year.
From a report by Fitch Ratings:
Loan Performance Adequate but Impaired:The behavior of loans has been affected in the last 4 years; in the second half of 2017 (2Q17), non-performing loans (arrears of greater than 90 days) for the largest banks averaged 2.3%, from 1.1% in 2013. In general, this trend was due to the fact that the default of some large creditors from different sectors affected the banking system, as well as the gradual increase in consumer loans. The temporarily established credit card law, which limited interest rates and collection practices in 2016, did not have an immediate impact. Current indicators are adequate.
Fitch Ratings notes that the Guatemalan banking system reports one of the lowest rates of delinquency in the region.
From the report 'Panorama of Guatemalan Banks' by Fitch Ratings:
Local Majority Banking System: The largest banks (70% of loans in the system) belong to local shareholders. At the same time, foreign-owned banks increased their share after Bancolombia acquired the controlling stake in Banco Agromercantil de Guatemala, S.A. (BAM).
With the purchase of another 20% stake, Bancolombia Group now holds 60% of the shares of the Group Agromercantil de Guatemala.
Two years after the acquisition of a 40% stake of Argomercantil Holding Group, Grupo Bancolombia has decided to consolidate its presence in the country by acquiring a further 20%. The Colombian company said the acquisition is part of a consolidation strategy in Guatemala and Central America.
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.
The five largest banks account for 82% of total assets in the system, three of them focusing on the corporate credit segment and the other two on retail banking.
From the report by Fitch Ratings "Panorama of Banks and Guatemala"
Largest banks of Guatemala: Related to the Sovereign Ratings
Banking System Concentrated in Five Largest Banks: The five largest banks account for 82% of the system's assets.
Analysis by Fitch Ratings projects that banks in the region will maintain strong balance sheets and have stable profitability in 2014.
Excerpted from Fitch Ratings:
Differential Growth and Opportunities: Low financial depth, in most systems, continues to provide significant opportunities for expansion of bank balance sheets; although this is limited by low average income levels.
The group has announced that as part of its long-term strategy it will withdraw from the consumer banking business in Costa Rica, El Salvador, Panama, Guatemala and Nicaragua.
Extract from a statement issued by Citigroup:
Citigroup today announced strategic actions to accelerate the transformation of its Global Consumer Banking (GCB) to focusing on those markets where it has the largest scale and growth potential.