BAC Credomatic most profitable bank in field of poor performers

- Tuesday, January 4, 2011

BAC Credomatic most profitable bank in field of poor performers

The Costa Rican branch of BAC Credomatic is emerging as the most profitable of the major Costa Rican banks in what was a difficult 2010, according to regulator Sugef's numbers through the end of November.

BAC, the largest private-sector player in the market, reported an ROE of 10.6% through the end of November, down sharply from the 20% ROE the bank was reporting through the end of the same month 2009.

Peer banks did worse, with public sector Banco Nacional - the largest bank in the market - reporting ROE of 8.5%, and public sector Banco de Costa Rica - the second largest - with ROE of 6.7%.

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Other major private sector banks such as HSBC Costa Rica, Scotiabank and Citibank also saw ROE through the end of November fall to the low single digits.

LENDING DOWN

All major private sector banks also appear set to finish the year with a decline in their performing credit portfolios.

BAC's portfolio was down 0.76% year-on-year through the end of November, to 784bn colones (US$1.54bn), while Scotiabank's portfolio was down by 6.3%, to 696bn colones.

As most Costa Rican banks have heavily dollarized credit portfolios, the 14% depreciation of the US dollar against the colon since November 2009 played some role in the falling colon valuations of the portfolios.

Still, HSBC Costa Rica saw its loan portfolio fall by 14.5% year-on-year, to 435bn colones, a greater drop than the colon depreciation itself.

Likewise, Citibank saw its portfolio decline by 22% in the period in question, to 205bn colones.

The only major banks to see growth in their credit portfolios were Banco Nacional, up 3%, and Banco de Costa Rica, up 17%. Both banks traditionally do the majority of their lending in local currency.