Central American Banking Analysis

©image: Fitch Ratings

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. The perspectives of financial performance for the Nicaraguan Banking System are less favorable than the rest of the region; meanwhile the possibility that results in Costa Rica surpass the ones in 2009'will depend basically on the evolution of the currency exchange rate.

Credit growth recovery is still limited, however, some countries show signals of improvement, but they are still weak. Panama is the country with the highest loan growth level during 2010, and in the meantime, in El Salvador and Nicaragua this is still decreasing. Fitch thinks that loans will increase progressively when economic activity recovery consolidates. It is important to say that the normalization in the micro finances industry will happen afterward, as their portfolios are more sensible to the economic cycle.

More on this topic

Central American Banks: Special Report

September 2011

Fitch Ratings has issued a special report entitled, "Central American Banking: After the Crisis, a Disparate Evolution"

In Fitch's opinion the banks have shown a mixed performance in Central America during the period of the global financial crisis. At the same time, banking systems have dissimilar perspectives on future performance, reflecting different economic growth prospects in the region.

Central American Banks: Special Report

September 2009

Fitch Ratings issued a special report: "Central American Banking: Evolution of the Crisis and Learnt Lessons".

In Fitch's opinion, the negative impact the international crisis had on Central American banks was very evident in 2009. The current economic context poses growing risks for the sector, as well as an important challenge for this year.

Fitch Report: Efficiency in Banking Systems

March 2012

Fitch Ratings believes that improving the level of efficiency in the banking system would result in a notable increase in profits.

The required improvements in efficiency in the banking systems in Central America could have a positive impact on earnings, on the internal generation of capital and, ultimately, on risk ratings, according to a report by Fitch Ratings.

Central Banking in 2012

January 2012

A Fitch Special Report indicates better positioning in the face of external uncertainty.

SUMMARY

Strengthened Financial Performance:
The banking systems of Central America and the Dominican Republic (hereinafter the region) will continue to strengthen their financial performance as the region continues to recover its rate of GDP growth, estimated at about 4% by 2012 under Fitch’s baseline scenario.