Funds in the banking system have increased by 10.34% so far this year.
Data provided by the Superintendency of Banks (SB), indicates that loan funds have reported increases year after year. Figures up to December 2008 amounted to $2,449 million, for December 2009 it was $3,013 million, and the balance in December 2010 showed an increase of 4.2%.
According to Sigloxxi.com.gt, "High liquidity or cash available for lending may vary.
Companies are choose to seek financing in foreign banks, because they offer lower rates.
The Bank of Guatemala (Banguat) has revealed that domestic banks have lost their appeal compared to credit lines offered by foreign banks.
There seems to be a greater interest by Guatemalan companies in negotiating foreign loans, according to Banguat’s figures regarding transfers abroad for paying interest and capital repayments.
In May, Panamanian banks led the earnings ranking in Central America, followed by Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua, in that order.
The report of the Risk Rating Agency, Riesgo Equilibrium, affiliated to Moody's, said that the region’s banking sector - which consists of 118 banks – is showing "substantial improvement" in profits and performance with respect to the global financial and economic crisis in 2008 and 2009.
With three agencies in San Salvador, Banco Industrial will begin operations.
Alicia Maria Mayorga, president of the institution in El Salvador said they already have planned an expansion for next year with the opening of new agencies and more products and services.
"Juan Miguel Torrebiarte, president of the BI corporation, said that the arrival in El Salvador is a major event for the financial group, because through this new bank they will consolidate their presence in the Central American Northern Triangle (Guatemala, El Salvador and Honduras ) as well as allowing them to offer their present and potential customers greater regional coverage and services to facilitate trade", reported Elperiodico.com.gt
Along with the growing demand for sugar, credit applications from producers and industrialist in the sector are also growing.
In April, the portfolio of loans granted by the financial system to sugar producers totalled $529 million, 58.5% higher than in the same period in 2010.
"Banco Industrial has the largest number of loans from the sugar sector in its portfolio, with $187 million worth, followed by Banco General de Panamá with (
In an attempt to attract more customers banks are diversifying their product portfolios.
One example is the Agromercantil Bank (Bam) who will soon launch a product called 'Hazlo sencillo' (Make it Simple), which will be accessible to the institution's debit card users. "The service will consist of rounding off cardholder's accounts and transferring the balance to a small savings account, where the owner will earn interest on those savings.", said the general manager of the institution, Luis Fernando Caceres, in an article in Siglo21.com.gt
Business loans of more than $ 640.000 pay between 8% and 12.5%.
Business loans of less than $ 640,000 pay considerably more, between 11.3% and 34.4%.
The information comes from the monthly report generated by the Bank Superintendence of Guatemala, which for the first time includes interest rate information filtered by credit portfolio, economic activity, type of credit and rank.
Banking liquidity is above levels seen in recent years.
The president of the Banco de Guatemala, Edgar Barquin, said the bank plans for this year an increase in bank credit of 12.2%.
"Luis Lara, manager of Industrial Bank, said credit demand of individuals and companies have recovered since October 2010 and coincides with the growth of this variable estimated at 12 percent because it is expected for the economy to recover after the effects of the global financial crisis", reports the article in Elperiodico.com.gt.
By the end of February the Regional Interconnection Payments System (SIP) will be operational.
The new system will allow banking institutions in Central America and the Dominican Republic to receive electronic transactions at a lower cost than through private banks.
"According to the structure submitted by Sergio Recinos, financial manager at Banguat, to representatives of the Banking Association of Guatemala, the cost per transaction using SIP will be $5 and will be open to all banks operating in the region and with an account at their central bank," reported Elperiodico.com.gt.
Panama ranks second in Latin America in number of bank branches and ATMs per 100,000 people with 90.28, surpassed only by Brazil with 99.37.
"Banking, or access to banking services, plays an important role in economic development of countries and in reducing poverty while promoting income distribution."
The article by Ricardo J. Gonzalez in Capital.com.pa discusses the results of the report of the Latin American Banking Federation, highlighting the causes for the high rate of banks in Panama, and "the important relationship between financial strength and economic growth."
In the last ten years the number of banks operating in the country fell by 52.6%.
According to information from the Superintendency of Banks (SIB), in 1999 there were 38 banks operating in the country, dropping to 18 in 2010. In contrast, sector earnings rose 1736.7%.
Bankers and financial analysts agree today that the financial system is stronger.
A report from Fitch indicates that only in 2011 the Banks of Central America will reach profitabilitye levels that could be compared to those before the crisis.
Fitch thinks that the majority of Central America's banking systems will earn more profits than in 2009, but it will not be until 2011 when they reach profitability levels comparable to the ones they had before the crisis.
Luis Carlos Sarmiento Angulo, one of the richest men on earth, is the owner of Grupo Aval, which controls some of the largest banks in Colombia.
Grupo Aval agreed to purchase 100% of the shares of BAC-Credomatic from GE Capital for $1.9 billion. Currently, GE owns 75% of BAC-Credomatic and agreed to buy the remaining 25% to sell it to Grupo Aval.
Industry insiders were expecting the Colombian group to expand outside of it home nation, as it had no more room to grow in its domestic market.
The leading Central American banks believe that the presence of the Colombian financial holding group will bring greater dynamism to the market.
Nacion.com reports that most bankers drew attention to the group’s size and its success in Colombia.
Armando Arias, president of the Salvadoran banking association (ABANSA), commented that, “the arrival of such a large group is good news for Central America.
Following four years of continuous growth, net profits fell to $51.2 million in the first two months of 2010.
Data from the Banking Superintendence (SB) shows that in the first two months of 2007 banks made a profit of $37 million, $54 million in 2008 and $62.3 million in 2009.
Return over assets (ROA) grew from 0.32% in 2006 to 0.37 in 2009, but fell to 0.29% in 2010, the lowest figure in 5 years.