Costa Rica: High Financial Intermediation Margins

The difference in the interest paid by banks on deposits and loans can be as much as 22%.

Monday, August 23, 2010

Intermediation margins are a measure how a financial sector performs its mediation role and is one indicator of efficiency. Though there are various ways to calculate the figure, Costa Rica's margin is higher than in other economies.

Gabriela Mayorga López in Elfinancierocr.com comments on a study from the Costa Rican Banking Association (ABC in Spanish) that indicates that in June, "Banco Promérica recorded the largest colones margin with 21.8%. It was followed by Citi with 14.3% and Banco General with 14%. Banco Popular had the highest dollar margin with 7.8%".

More on this topic

Costa Rican State Banking Profits Decrease

April 2009

In the first quarter of 2009 state bank profits fell by 25% when compared to the same period in 2008.

According to the Superintendent of Financial Institutions (SUGEF), the opposite happened with private banks, which increased their profits by 12% over the same period.

Costa Rica: Moderate Expansion of Bank Branches in 2012

January 2012

Only the Banco Popular plans to open ten new offices, the rest have plans from only one or two openings.

For the banks Nacional BCR, BCT, Lafise and others, it will be a year of moderate growth and their plans will be to participate in new developments or strategic communities.

Costa Rica has $320 Million for Development Frozen

March 2009

The money is intended for loans to small and medium sized businesses at preferential rates, but Bancrédito, the state bank which manages it, alleges legal flaws that prevent it from granting them.

For Bancrédito, the problems are that these funds require separate supervision and that the interest rates at which the loans need to be made as provided by law would cause the bank losses.

Costa Rica development loans to have subsidized rates

June 2008

Costa Rica's development bank program, which is to get underway in January, will provide loans at subsidized interest rates.

Credits for development loans in colons will pay only half the base rate plus 4.5 percentage points. In dollars the rate will be half of Libor plus three percentage points.

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