Without clarifying which companies or individuals could apply the measure, the Bukele administration announced a three-month exemption from payment of mortgage loans, services such as water, electricity, Internet, cable and telephone.
These measures may be applied by all those "... natural and legal persons, which are directly affected by the covid-19 pandemic and government institutions must ensure that in their implementation there is no abuse or exploitation". As a result of this announcement, uncertainty has arisen as it is not clear how those "directly affected" will be determined.
In Costa Rica, a law initiative under discussion seeks to set caps on interest rates on loans, a measure that could lead to a reduction in the offer of credit for debtors classified as higher risk.
As part of a bill being discussed in the Legislative Assembly, the heads of the Central Bank of Costa Rica (BCCR) and the General Superintendence of Financial Entities (Sugef) were asked to give their views on the content of the proposal.
Up to June 2019, the gross portfolio of the financial system totaled $4.047 million, 20% less than in the same month in 2018, partly explained by the performance of commercial and personal credit.
In terms of composition, the current loan portfolio represented 89.2% of the gross portfolio (89.7% in May 2019), while the portfolio at risk represented 10.8% (10.3% in May 2019).
Late loans granted by public banks to small companies amounted to 5.5% in May, 3.8% in the case of medium-size companies and 3.3% in the case of large companies, a situation attributed to the economic slowdown.
The percentage of credits reported by the General Superintendence of Financial Entities (Sugef), refers to loans that went into default for more than 90 days and judicial collection, granted by public entities such as the National Bank, Banco de Costa Rica and Banco Popular.
With the aim of making the classification of debtors more flexible and reducing the risk of non-payment, in a context where delinquent loans keep on rising, Costa Rica authorized the modification of two regulations that apply to entities in the financial system.
The General Superintendence of Financial Entities (Sugef) and the National Council of Supervision of the Financial System (Conassif), informed that changes were made to the "Regulation for the qualification of debtors" and the "Regulation on management and evaluation of credit risk for the development banking system", which ultimately aim to give access to new credits to about 63 thousand people.
In Costa Rica, low economic activity and rising unemployment explain the 25% increase reported between February 2018 and the same month of 2019 in the value of assets acquired by banks to recover loans.
Figures from the General Superintendence of Financial Entities (Sugef) specify that between February 2018 and the same month of this year, the amount of goods and securities acquired by financial entities because people and companies did not pay their loans increased from $425 million to $533 million.
If the reforms to the Banking Law that are being discussed in the Congress are approved, cooperatives will have to start reporting information in their loan portfolios.
Legal initiative number 5157which is pending final approval, proposes, among other changes, including in the Credit Registration Information System (SIRC by its initials in Spanish) information from financial institutions that are not yet sending reports.
Due to an increase in commercial credit and personal loans, the gross portfolio totaled $5.480 billion up to November 2017, 15% more than in the same month in 2016.
According to a Report on the Performance of the National Financial System, published by the Central Bank of Nicaragua in November 2017, the financial system increased its financial assets by 16%, while the credit portfolio grew by 15%, both in year-on-year terms.
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.
Trade and construction activities recorded the lowest demand for bank credit, which grew 6% in the first five months of the year compared to the same period in 2016.
Following trade and construction, electricity and water are the worst performers according to figures from the Guatemalan Superintendency of Banks.
By requiring banks to have additional capital requirements the Sugef aims to discourage consumer loans, mortgages and vehicles loans with long repayment terms.
Arguing that terms of over 30 years for housing loans and more than 5 in consumer loans encourages overindebtedness of Costa Ricans, the Superintendent of Financial Institutions (SUGEF) has presented a proposal toreform the ruleson capital adequacy of financial entities, in order to require entities that carry out these credit operations to have additional capital.
New regulations are being prepared for measuring currency risk for banks, whose loan portfolio in dollars grew by almost 13% in one year, while 78% of those who borrow in dollars receive their income in local currency.
Figures from the General Superintendent of Financial Institutions (SUGEF) indicate that 41% of the principal balance of outstanding loans is denominated in foreign currency and the rest in colones.Added to this it is the fact that 78% of borrowers of these loans in dollars earn their money in colones.
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.
Compared with other economies, the indicator measuring non-payment in the banking system is relatively small, with marked fluctuations in different sectors.
An article on Prensalibre.com reports that according to the Superintendency of Banks (SIB), the indicator for defaults in the Guatemalan banking system "went from 1.55% in May last year to 1.43% in the same month this year."
For the last four years the loan portfolio of the Salvadoran financial system has been growing at an average rate of 3.5%, below the 11% growth average in the rest of the region.
A report produced by the rating agency Moody's notes that growth in El Salvador's financial sector has been stagnant since 2010, as the total loan portfolio has not achieved growth rates above 3.5% per year.