By the first half of 2021 all maximum annual interest rates that are estimated by the Central Bank will decrease compared to those imposed in the second half of 2020.
On January 8, 2021 the Central Bank of Costa Rica (BCCR) published, on its website and in the official newspaper La Gaceta, the new maximum annual interest rates for credit operations in colones, US dollars and other currencies.
Between July and October 2020, the number of people in El Salvador exploring mortgage options online increased by 18%, and the number of Costa Rican consumers looking to buy credit cards decreased by 60%.
CentralAmericaData's interactive platform Consumer Insights monitors in real time the changes in consumer habits in all markets in the region and in other Latin American countries, with fundamental information to understand their behavior, new trends and anticipate eventual changes in their purchase patterns.
Preventive reasons for unforeseen expenses in the context of the pandemic and low liable interest rates are some of the factors that explain the increase in the balance of short-term savings instruments in the Costa Rican market.
In the context of the spread of covid-19 and the restriction of several productive activities, the broad money supply (including cash held by the public and highly liquid financial instruments in national and foreign currency) showed a 35.7% year-on-year growth rate in June 2020, considerably higher than the 2.7% recorded in the same month in 2019, while the balance of term instruments fell, reported the Central Bank of Costa Rica (BCCR).
At a regional level, nearly 16 million people are looking to purchase financial services online. Of this group of consumers, approximately 11% are exploring options for acquiring a credit card.
The interactive information system developed by CentralAmericaData, monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
In order to help cooperatives, cope with the emergency caused by the spread of covid-19, the National Institute for Cooperative Development agreed to reduce the interest rate on loans.
This decision was taken to support the cooperative sector, especially the agricultural sector, which has been suffering from a variety of effects. The authorities also hope to make a significant contribution to the country, in the context of the current epidemiological situation, reported the National Institute for Cooperative Development (INFOCOOP).
The Costa Rican Assembly approved reforms that expand the powers of Sugef to regulate and supervise financial entities abroad and financial companies that are part of a Costa Rican financial group or conglomerate.
On October 15, 41 deputies approved, in the Second Debate, file 21355, which seeks to strengthen the supervisory framework of the Superintendency of Financial Institutions through reforms to chapter IV of the Central Bank Law, the Assembly reported.
Allowing the opening of branches of foreign banks in the country and creating a structure of consolidated supervision of the entire financial system is part of the reform proposed by the Alvarado administration in Costa Rica.
In March of this year, two bills were presented to the Legislative Assembly, one of them seeks that foreign banks can open branches in Costa Rica and the other includes several changes to the Securities Market Regulatory Law.
On February 14th and 15th, representatives of banks, international financial institutions and risk rating agencies will meet in Panama City to discuss issues related to the sector.
The event called "International Banking Congress for Regulators & Bankers," will be organized by the Superintendence of Banks of Panama (SBP) and seeks to address issues such as Basel III, prevention of money laundering, de-risking, new risks facing the industry, financial innovation-Fintech, cybersecurity, among others.
In 2017, money transfers made in Costa Rica through the Sinpe Móvil service added up to $34 million, 140% more than in 2016.
According to figures from the Central Bank "...In 2017, this service showed the highest growth in terms of quantity with 140.4% compared to 2016, being the service that showed the highest growth rates since its launch in May 2015."
In the second quarter of 2017, three entities accounted for 61% of the assets of the cooperative system, which represents 11% of the assets of the Costa Rican financial system.
From a report by Fitch Ratings :
Concentration of Business Model:The cooperative sector has moderate participation and accounts for 11% of assets in the national financial system. The participation of entities rated by Fitch Ratings (Coopenae, Coopeservidores and Coopeande No.1) has remained high and relatively stable in relation to the regulated cooperative system, accounting for 61.3% of the sector's assets. The business model continues to focus on consumer credit for its associates, mostly low- and middle-income public sector employees.Fitch believes that cooperatives face the challenge of diversifying products in their portfolio to reduce concentration risk in the consumer segment, which is typically more vulnerable to the business cycle.
After closing 2016 with a 37% drop in profits, financial companies expect to achieve better results diversifying their services in an increasingly competitive market.
The total profits generated by financial companies in 2016 barely exceeded $2.4 million, a decrease of 37% compared to earnings in 2015.This year companies in the sector projected better results, some on them betting on the SME segment, some focusing on generating new business in the construction sector and others expanding their offering of services.
On October 12 and 13 representatives from the banking and financial sector will be gathering together in Panama City to discuss issues relating to regulation, business and investment.
The International Finance Summit is an event being organized by the Banking Association of Panama and will be held at the Hotel Trump Ocean Club Convention Center.
In the second quarter of 2016 three entities accounted for 63% of the assets of the cooperative system, which accounts for 10% of the Costa Rican financial system.
From a report by Fitch Ratings:
Cooperatives in Costa Rica: Defaults and Pressured Profitability
Concentration of Business Model: The cooperatives rated by Fitch Ratings (Coopenae, Coopeservidores and Coopeande 1) are the three largest in Costa Rica and account for 63.3% of the assets of the cooperative system, a sector that still has a low participation in the national financial system(10.6%). These entities have a business model focused on consumer finance for its members, which makes them dependent on the behavior of a single segment.
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