The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
Fitch Ratings agreed to change the perspective of the region's banks from stable to negative, arguing that the current health crisis will affect financial institutions in all countries.
Considering the measures that countries have adopted in the last 15 days in economic matters, following the spread of covid-19, Fitch expects that there will be a decrease in the issuance of loans.
The impact of the coronavirus crisis on the financial sector in Central America is expected to be felt mainly in services related to stock brokerage and investment advice, where a drop is expected.
The "Information System for the Impact Analysis of Covid-19 on Business", prepared by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
According to Fitch Ratings, banks in Nicaragua will continue to be pressured by the remaining effects of an economic contraction for the second consecutive year, a situation derived from the political crisis affecting the country.
The Superintendence of Banks granted permission for Banco Atlántida, an entity of Honduran origin, to begin operating throughout the country under local supervision and regulation.
The constitution of Banco Atlántida in Nicaragua was authorized on October 24, 2017, but it was not until October 2, 2019 that the permit to operate in the financial system was published in La Gaceta.
Since the beginning of the political crisis in the country, several banks have decided to close some of their service centers, and only during the first half of 2019 have 56 branches been reported closed.
In April 2018, the country plunged into a political crisis that has dragged the economy into recession. As a result of this problem, official figures indicate that 49 bank branches were closed last year and 56 more were closed between January and June 2019.
Because of decreasing demand for credit since April last year, banks in the Nicaraguan plaza are filling up with money they can not place in the market.
According to estimates by the Nicaraguan Foundation for Economic and Social Development (Funides) based on official figures, so far this crisis has boosted the liquidity of banks, increasing the proportion of available money that financial institutions have with respect to their obligations to the public, going from 31.76% reported in March 2018 to 46.73% recorded in May this year.
From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
At the end of September of this year, the gross portfolio of the country's commercial sector reached $1.703 million, which is 2.1% lower than that reported in the same month of 2017.
Central Bank of Nicaragua (BCN) reported that, at the end of September of this year, the country's gross banking portfolio reached $4,891 million, 0.3% less than that reported in the same month of 2017.
Authorities stated that the start of operations of the Honduran bank Atlántida is scheduled for early May.
Following presentation of the annual report by the Superintendency of Banks and Other Financial Institutions (Siboif), the head of the institution took the opportunity to state that the bank which already is operating in the Honduran financial system will start operations in the coming weeks.
The financial group G & T Continental has obtained a general license to expand the services it provides in Panama, where it plans to strengthen its corporate and private banking area.
The financial institution started operations in Panama in July 2008 under the name of Banco Financia, S.A. (BMF) and in 2009 changed its name to Banco G & T Continental (Panamá) S.A.
Fitch Ratings forecasts that the performance of the banking system will remain stable in 2018, despite the expected slowdown in credit growth.
From a statement issued by Fitch Ratings:
Fitch Ratings-San Salvador-23 January 2018: Fitch Ratings has maintained its stable outlook for Nicaragua's banking system, considering that its financial performance is expected to remain adequate in 2018 despite the anticipated slowdown in credit growth.
Up to October 2017, commercial loans and personal loans reported a 10% YoY growth, respectively, while bank deposits grew 9%.
From a report by the Central Bank of Nicaragua:
The Report indicates that the indicators of the National Financial System (SFN by its initials in Spanish) show dynamism in intermediation, with adequate risk management and good indicators on profitability, solvency and capital.
As of September, credit granted by the financial system registered a year-on-year increase of 16%, driven by commercial credit and personal loans, which grew by 14% and 15%, respectively.
From a financial report by the Central Bank:
The financial system remains stable as of September. The loan portfolio grew by 15.6 percent year-on-year.The risk indicators continue below the average for the region and the liquidity of the system was above 31 percent. In relation to deposits,an interannual growth of 8.7 percentwasobserved (10.9% in September 2016).Finally, the indicators on profitability, solvency and capital have been found to be stable throughout the year.
The Honduran Banco Atlántida has received authorization to operate in the Nicaraguan financial market.
As of November 15, the Honduran bank will have 180 days to comply with the requirements in the law for banks and financial institutions.
"...Through a resolution published in La Gaceta on November 15, the board of directors of the Siboif made official the authorization for the constitution of a banking corporation under the name: `Banco Atlántida de Nicaragua S.A. or simply Banco Atlántida Nicaragua or Banco Atlántida'."